All GLG News Analyses Filed Under: Transaction & Payment Processing

Western Union acts to co-opt mobile money transfers

April 28, 2008

Analysis by: GLG Expert Contributor

Analysis of:Western Union in Mobile Partnership | www.americanbanker.com

Money transfer Goliath Western Union is moving to co-opt the threat posed by hybrid mobile phone/stored value card person-to-person remittances. At a minimum Western Union’s new service is a validation of remote mobile phone-based money transfer and makes it likely it will achieve meaningful market share sooner rather than later.

Gil ManzonAssociate ProfessorTRUSTEES OF BOSTON COLLEGE

Is Western Union Market Share Taking Market Share from Competitors?

April 24, 2008

Analysis of:Western Union 1Q profit rises 7 percent on international | biz.yahoo.com

I think the information presented in the article is consistent with Western Union picking up market share from competitors. Despite flat U.S. revenues over 05-07 period and likely near flat revenues from the U.S. in Q108 in part attributable to the Mexican results, Western Union has gained significant international market share over the 05-07 period and, with Q108 gains coming from China and India, this trend appears to be continuing (international revenues up 9% relative to total in 05-07 period and 43% in absolute terms). Absent a significant shift in the size of the market for money transfers, these gains would have come at the expense of competitors.

Money Transfer Market Leader Western Union Sets Industry Tone with Solid Earnings

April 24, 2008

Analysis by: GLG Expert Contributor

Analysis of:Western Union 1Q profit rises 7 percent on international | biz.yahoo.com

Western Union's Q1 Earnings Report demonstrates the global breadth and reach expected from the money transfer market leader.          --Its non-US generated transactions were up 29%          --Growth in remittances to two largest recipient markets--India  (52%) and China (35%)--continue to impress. The broad-based growth in overseas markets indicates WU's ability to be less dependent on the traditionally strong US-Mexico corridor.            --CEO Christina Gold acknowledges "its not a fast-growing corridor any more." Moreover,  the nascent Canada-Mexico corridor--showing the high double digit increase common to a smaller transaction base--epitomizes the benefits accruing to companies operating in countries with an effective Guest Worker program.  The increase in Canada-Mexico volume is in part due to the inability of the US to formulate its own immigration policy i.e. a classic supply/demand model.

Kamala WorthingtonPresidentKW Marketing Consultant

TRM Gets $11 Million Lifeline; Buys Rival "Access to Money"

April 23, 2008

Analysis of:BREAKING: TRM Buys ATM ISO Access to Money for $15 million | www.atmmarketplace.com

TRM's $11 million "lifeline" from LC Capital Master Fund Ltd. helps the troubled ATM owner pay off its debts and gave TRM the seed money to acquire its rival, ATM deployer "Access to Money." When TRM acquired eFunds ATM Portfolio of 17,200 ATMs in 2004 for $150 million, TRM had over 22,000 ATMs and owned the largest international ATM network by a U.S. company. Since that time TRM has restructured its ATM Operations and its ATM Network fell to less than 9,300 ATMs and forced TRM to sell its international ATM Operations and what use to be its "core" business, its "Photocopier Unit" to remain in business. TRM grew way too fast through acquisitions and the acquisitions didn't generate significant cashflows or decent ROI. Since 2Q07, TRM has focused on its current assets rather than growing through acquisitions, reduced its expenses, simplified business operations, cleaned out those low transacting ATMs acquired from eFunds and added units to their legacy ATM fleet.   

Kamala WorthingtonPresidentKW Marketing Consultant

Alliance Data Sues Blackstone For $170 Million "Breakup Fee"

April 21, 2008

Analysis of:Blackstone Says Alliance Data Lawsuit Spurious | today.reuters.com

Blackstone Capital Partners V L.P. may have had a case of "buyer's remorse" with its $7.8 billion deal including the assumption of certain debt of ADS. The deal valued ADS at $81.75 a share, representing a premium of about 30% over ADS's closing price of $62.96 on 5.16.07. However, since that time ADS's share price has fallen to $52.84 a share as of 4.18.08. ADS is alleging that Blackstone "refused to accept reasonable and customary regulatory requirements and prolonged negotiations with the OCC," which resulted in a breach of the deal. ADS is seeking the $170 million "breakup fee" Blackstone agreed to when it entered into the deal with ADS on 5.17.07. The deal was expected to close by year-end 2007, however, due to lack of liquidity at Blackstone, the deal was delayed for a second time and ADS is suing Blackstone for "breach of contract." The deal was touted as a marriage amongst a leader in card processing with Blackstone's investment expertise would create a powerful partnership.

Kamala WorthingtonPresidentKW Marketing Consultant

Is 2008 The Tipping Point For Mobile Banking In the U.S.?

April 21, 2008

Analysis of:Online Banking Is Old News. Hello Mobile! | www.emarketer.com

The demand for mobile banking is growing and over the next 4-5 years, m-banking and m-payments will drive the boom in demand for wireless payments and banking. Banks, processors, card networks and mobile carriers are pushing two types of transactions with mobile devices, m-banking and m-commerce. The m-banking segment is projected to  grow to $50 billion by 2012 and m-payment transactions volumes will surpass $36 billion by 2012. Banks and credit unions have launched pilot programs to determine if SMS-Short Messaging Service, NFC-Near Field Communication or WAP-Wireless Application Protocol is the "killer application" for m-transactions. Consumers are interested in m-banking transactions that allow them to check balances (61%), account history (17%), transfer funds (11%), make bill payments and P2P payments (8%), password change (2%) and m-payment transactions enable consumers to download music, ringtones, games, access the Internet and conduct transactions at the POS.  

Art GillisPresidentComputer Based Solutions, Inc.

There are Fewer Bank Tech Companies but More Solutions in the Marketplace

April 14, 2008

Analysis of:The FutureNow List | www.americanbanker.com

In 2001 there were 165 companies selling 223 solutions to banks, thrifts and credit unions.Today there are 71 companies selling 306 solutions. That’s 57% fewer companies; 37% more solutions.During the past seven years there were a total of 162 mergers and acquisitions in the account processing sector of banking technology.

Richard BialekChief Executive Officer Bialek Group

Discover Goes Global With Diners Club Acquisition – A Positive Step

April 14, 2008

Analysis of:Diners Club assets sold to US card issuer | www.businesstravelworld.com

The Discover Card acquisition of Diners Club International is a positive step, addressing one of Discover's competitive weaknesses, the lack of a strong global merchant acceptance network. But it is only one component of the comprehensive solution needed to address Discover’s competitive weakness versus Visa, MasterCard and American Express.

Kamala WorthingtonPresidentKW Marketing Consultant

Check 21 Spinoff: Back-Office Conversion (BOC) E-Check Volumes To Grow In 2008 & Beyond

April 14, 2008

Analysis of:Bigger Volume Jumps Are in Store for BOC E-Checks, NACHA Says | www.digitaltransactions.net

Another spin-off product of the Check 21 Act, Back-Office Conversion (BOC) launched in March 2007 and one year out of the gate, BOC is viewed as a more user-friendly electronic check conversion tool than POP (Point-of-Purchase) transactions, because POP requires that all or most of the merchant's checkout lanes be equipped with check scanners, which are expensive and because checks are returned to the customer during the sale, which slows down the checkout process. In contrast, BOC checks can be converted in the back-office, which speeds up the checkout time and eliminates the need for check scanners at the register. In 4Q07, BOC transactions totaled 3,083,682, which was a 266% increase from 3Q07 with 840,743 transactions. Total BOC transactions in 2007 was 4,189,465, representing three quarters of transaction volumes. Although uptake has been slow because merchants and banks had to put the infrastructure in place to process BOC transactions, BOC is poised for growth in 2008.

Oh My ! No More Regulations

April 10, 2008

Analysis by: GLG Expert Contributor

Analysis of:Interchange act coming back stronger | www.greensheet.com

1.  Free Market at Jeopardy 2.  Merchants want everything free 3.  If it costs to much, eliminate acceptance Merchants have groaned for years about interchange rates though they have benefited from the billions of invested dollars to manage risk offered by the card associations and their member banks.  The cost of acceptance of Visa & MasterCard is less than their own private label brand offering and cash payments. It is a solid agrument to streamline and take the massive confusion out of the various rates and conditions, so let there be a forum to work out the details between the parties and eliminate having the US Congress involvelment.

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