Post image for Disruption and Innovation at the Point of Sale

Surprising disruptions and unanticipated consequences abound in payments.

Sometimes, it’s just a rule change that makes all the difference. In 2001, the NACHA rule enabling ad hoc web debits was put in place, primarily at the behest of banks who wanted to make it easier for their cardholders to pay their credit card bills. Great idea. But once in place, others saw its power, including PayPal who now uses that low cost avenue to fund a significant proportion of its customer transactions.

We’ve seen lots of technology upend entire industries. But in payments new technology usually affirms one set of incumbents while disrupting others. Take Square. At the outset, that combination of a smartphone with a simple magstripe dongle disrupted few. Indeed, Square’s innovation brought in a whole new base of merchants and a growing transaction volume that the payments industry had never seen before. It disrupted nothing except for cash and checks.


But since then—driven by the tablet and tablet-optimized software for the merchant—the incumbent terminal makers, electronic cash register manufacturers, and the sales channels who take these tools to market find themselves in competition with direct sellers like Square as well as a new crop of independent software vendors (ISVs) like Revel Systems, Shopify, Shopkeep, Vend, Breadcrumb, Toast, and dozens of others. The iPad and Android have forever changed what’s possible with an electronic cash register.

That change was in evidence at the Electronic Transaction Association’s TRANSACT conference earlier this month. You could hardly turn around without finding a booth selling EMV capable card readers or bumping into one of those ISVs looking to partner with an ISO to take its software to market.

Apple Pay is another technology that, while hugely improving the NFC experience, affirms the incumbent system’s economics and transaction flow. I doubt that, six months in, that Apple Pay has added much net new transaction volume. The still limited acceptance footprint is largely at fault. But that should change over the next couple of years thanks to Apple’s magisterial orchestration of the payments industry.

Apple Pay has excited financial institutions like no other recent event (how often do banks get to be the cool kids?) at the very same time as the US market is rushing to replace, almost wholesale, its entire point of sale infrastructure to support contact and contactless EMV.

The impact of these changes falls particularly heavily on the merchant services industry, the ISO, and the agents who, for decades, have been the feet-on-the-street for acquirers and processors. ISOs and agents find themselves selling against ISVs delivering more business value than card acceptance. The winners in the sea change are smaller merchants who find that they can get inventory, ecommerce, table management, and more for the cost of payment processing plus a small monthly fee.

Who’s doing what? How is this going to play out? What are the other moving pieces? Those are the questions we’re going to be answering in our upcoming Insight Workshop. Held May 21 in Menlo Park, the New Point of Sale is a deep dive into how payment initiation and acceptance are changing at the POS and what that means for the payments industry.

If you work in the acquiring space and need to get your arms around what’s happening or if you are a merchant trying to get a straight answer about your POS options, the New Point of Sale is for you.

This post was written by Glenbrook’s George Peabody.


Recorded about a month ago by VC firm Matrix Partners, Glenbrook’s Scott Loftesness and Dana Stalder of Matrix Partners discuss the evolution of mobile payments, the business model failure of Softcard, and other topics including:

  • The 8+ year journey to ApplePay
  • Technologies here to stay: NFC, tokenization, and biometrics
  • What it all means for the Networks
  • What’s driving merchant and consumer demand


Post image for PoF 17 – Aligning Bitcoin with B2B Remittances

Paying invoices and moving funds aross borders for small and medium business (SMB) is expensive and full of uncertainties. How much does the recipient actually get once the transaction is finished? (Hint: it’s not always what was sent.)  How long does it take a San Francisco firm to pay an invoice to a contractor in Berlin or Hyderabad? (Hint: it’s hard to know exactly when it gets there).

Since there’s no such thing as an international wire, entrepreneurs in the virtual currency space have been looking at how these new math-based “rails” can move money faster at lower cost across borders. In this Payments on Fire episode, Marwan Forzley, CEO of Align Commerce, talks with Glenbrook’s George Peabody about how his firm moves value for its SMB customers from the sender’s currency to the receiver’s over bitcoin rails.


Post image for Square’s $Cashtag. Smart. Very Smart.

Smart. Very Smart.

I applaud Square’s introduction of “$Cashtags” for a number of reasons.

First, some of you may know that I am a bit of a nut when it comes to brand names in payments – I think it is incredibly important that the sending and receiving party both know/understand the word being used for the payment. This can be a generic (“small b”) brand – “Do you take checks?” or a “big B” brand – “I’ll pay you with AmEx”. But both parties need to understand the term! This is a surprisingly important barrier to entry for payments startups.

So Square is expanding their Cash service to support merchant payments. By defining a term $Cashtag, they are giving the world a word that both parties will get – brilliantly piggybacking on the worldwide understanding of the term “hashtag”. And the idea of letting the receiver of payment claim their own “pay me” code, and publicize this – should have immediate and visceral appeal. Why isn’t my bank doing this? Where is my “Bankpay” tag?


Secondly, you really have to admire Square for being willing to cannibalize itself. A small merchant claiming a $Cashtag may prefer this to accepting a card with their Square dongle. You can argue about the relative economics for Square of the two transactions, but the more important point, in my opinion, is that Square isn’t falling victim to its own success, but rather embracing new methods of letting merchant get paid.

Smart. Very smart.

This post was written by Glenbrook’s Carol Coye Benson.


Post image for PoF 16 – Talking EMV in the USA

EMV and its moving parts presents a far more complex payments method for merchants, ISVs, payment processors, and financial institutions than the good old magstripe. It continues to have ramifications throughout the payments ecosystem.

As Executive Director of the Smart Card Alliance and director of the EMV Migration Forum, Randy Vanderhoof has shepherded a sometimes fractious payments industry as well as encouraged a a skeptical merchant community toward EMV adoption. Now that the US EMV deployment is a certainty, Randy and Glenbrook’s George Peabody discuss what got us here, where the challenges are, and how EMV will evolve in the US.


Post image for Nothing More Social

I read the Facebook announcement of payments through Messenger with interest, and just a touch of “about time”!

After all, there is nothing more social than sending money to family and friends. And although much attention is paid in the press to the friend-to-friend use cases, I suspect that the family-to-family opportunities are much greater. Not just kids’ allowances, but the whole wide world of both occasional and ongoing support payments among relatives. And how nice that it could easily solve that vexing problem of thank-you notes after sending off the birthday check.

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Post image for Pof 15 – Small Business Banking grown from Seed

It’s always intriguing to watch how a good idea evolves into new areas. Such evolution often happens when designers find new applications for their ideas. Brian Merritt and Ryan Hildebrand were part of the early team at Simple that was subsequently sold to BBVA. In mid-February, they announced the formation of Seed, a Y Combinator firm, designed to bring small business banking into the mobile and SaaS-based worlds. Listen to this conversation between Glenbrook’s George Peabody and Seed CEO Brian Merritt. While very early in the company’s development, Brian’s description of the company’s “API first” approach banking makes clear what’s possible when legacy technology and processes are in the rearview mirror.


Post image for Now What? Immediate Funds Transfer in the U.S.

The Federal Reserve’s recent announcement that it would not build a new payment rail for processing faster payments created some disappointment for many who are unsatisfied with our country’s current payments system capabilities.

In a welcome move, The Clearinghouse (TCH) has announced its intention to fill this void and build new real-time “rails”. There are, however still many unanswered questions about the path forward. How will the new capability work? And what are the implications for other system providers and end users?

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Post image for New POS Security from Old System Topology

Anyone around technology for a couple of decades recognizes how old ideas tend to return. To those folks, using a browser to do data entry into an enterprise database looks a lot like a mini or mainframe system’s terminal application.

Back for another incarnation in payments is an old fashioned topology familiar to anyone who used or deployed stand-beside dial-up terminals. In that mode, the POS terminal is not connected to the merchant’s system in any way. It sits next to the cash register and the sole integration point between the two is the staple the clerk uses to connect the cash register receipt to the print receipt from the POS terminal. The data flow went directly from the terminal to the acquirer’s modem bank and front end system, never touching the merchant’s system.

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Post image for A Different Type of Start Up: Payments in Afghanistan

Imagine a country where less than 10% of the adult population has a bank account and only about half of those account holders have a debit card. Credit cards are virtually non-existent. There are only a couple dozen banks in the whole country. Cash truly is king. Now imagine decades-long political and sectarian conflict that continues to wreak havoc throughout a vast geographic territory. This is Afghanistan.

By any stretch, I’m not an Afghanistan payments guru but I am always fascinated by societal transformation and that’s exactly what’s underway. Let me share my conversation at Sibos 2014 with representatives from the Afghanistan Banks Association. Against this turbulent background, Sibos might seem like an alien planet but for these bankers, it’s a chance to show the world that Afghanistan is open for business and see evolving international standards first hand.

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Post image for PoF 14 – A Ground Level View on Tablet POS

Tablet-based ePOS cash registers are growing in popularity and capability. A boon to smaller retailers who have been laggards in store automation. But without technical support staff on hand, solving issues when they arrive, never mind securing systems, is an expensive proposition. Join Glenbrook’s George Peabody and payments industry veteran Chip Kahn, founder of Boomtown, a marketplace for merchant tech support pros, for a discussion on tablet POS trends, what SMB retailers needs, and the payments programmability.



Post image for PoF 13 – Lexis Nexis Risk Solutions on Mobile Fraud

Aaron Press of Lexis Nexis Risk Solutions joins Glenbrook’s George Peabody for a discussion on mobile fraud trends based on the firm’s True Cost of Fraud mCommerce report. While the mobile channel presents fraud and risk professionals with a wide variety of tools to mitigate losses, the report concludes that the mobile channel represents a disproportionately large loss vector. In this Payments on Fire podcast, we talk about why and what needs to happen to fix the problem.


Post image for PoF 12 – Risk Management, Remittances, and Innovation – A Conversation with CBW Bank’s Suresh Ramamurthi

Glenbrook’s Elizabeth McQuerry and George Peabody talk with CBW Bank’s Suresh Ramamurthi on payment innovation, risk management, and international remittances. Suresh is also founder of Yantra Financial Technologies. He and his wife Suchitra Padmanabhan were featured in this NY Times Dealbook article last month. Also quoted in the Dealbook post, Elizabeth found both Yantra’s technology and their use of the CBW Bank business as an innovation platform exciting.


I am writing this post sitting on the front steps of our house in San Francisco. I have locked myself out three times recently, more than I have in the past three decades. Is it dementia? No, I blame mobile payments.

Last summer I bought a case for my iPhone that had handy little pockets for a credit card. Initially I only used it for my Clipper Card (the mass transit payment smart card we use here in the Bay Area). It was great to simply tap my phone as I boarded the tram or bus rather than fumbling in my briefcase or purse for my wallet. And it had the added benefit of making me look cool – hey, she paid with her phone, how’d she do that? (I know, I know, Pathetic Payments Geek.)

My first-gen mobile payment setup:


Eventually I started putting my credit card in the other pocket. If I was in town, I’d slide in my primary personal card and when I was traveling for work I’d substitute my work card. I even started sticking my drivers license in it, so that I could scan my boarding pass QR code, hand over my license, all without pulling out my wallet. Because I travel so much, I’d squeeze in my hotel key card, too (or rather, substitute it for the Bay Area-specific Clipper Card). I hate carrying a purse, and would simply slip my phone in my pocket and head out. Absolutely bliss. Yes, I am that person who really needs a mobile wallet.

Over the last month or so, I haven’t been traveling as much. Which means that I have to actually use my keys rather than a hotel room key card. And that’s when I started locking myself out of the house. Repeatedly.

I recognize that, eventually, my phone will unlock the car and the front door of our house. But in the meantime, I am going to have to go back to carrying a purse. Getting locked out repeatedly is absurd.

(Afterword: I picked up an iPhone 6 yesterday and immediately started using ApplePay. I stuck my Clipper card between the case and the phone to address the inconvenience of digging through my purse at the tram stop. But am resigned to carrying a purse for the time being to hold my house keys…no more getting locked out.)


Dennis MoserOn a bright sunny New Year’s Day 2015, we lost our long-time friend and colleague Dennis Moser.

Dennis had been battling a recurrence of cancer – undergoing treatment to battle the disease following the appearance of new symptoms at Thanksgiving.

I remember seeing him in the office just before Christmas – as he was about to complete his last round of radiation therapy. While tired from the treatments, he was as optimistic as ever that this was just going to be a brief battle.

When we heard the news of his passing just a few days later, we were stunned.

Dennis and I have worked together for over 40 years – having first met as IBMers in San Francisco early in our working careers. We both ended up later at Visa – and, ultimately, working together more closely as partners at Glenbrook. Our wives have had a similarly lengthy friendship over these many years.

A good friend, upon learning of Dennis’ passing, commented: “Dennis was one of the truly nice people I’ve known.” Indeed, everyone who has known Dennis must share that feeling – he was an optimist, a very hard worker, one who wanted and did add real value to whatever he was doing.

I remember Dennis also for his passion for reading – he was always quick to ask: “Read any good books lately?” to which I’d typically stumble trying to come up with something I actually had read and could recommend. Mostly, I just said – not really, how about you? – to which he’d always have a couple of great recommendations! I remember him most recently recommending “The Martian” as a recent favorite of his. It’s now on my Kindle and I’m sure I’ll enjoy it based on his recommendation – his recommendations were always the best!

They say with age comes some modicum of wisdom – but it’s still so hard when death of a colleague comes so out of the blue. I know Dennis would want us to remember the good times – and we’ll do that for sure. Meanwhile, we keep Dennis, his wife and daughter in our hearts and minds.

If you knew Dennis, we’d welcome you sharing some of your memories of him in the comments below. He was a very special friend and colleague – and we’ll miss him dearly.


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