Global Payments Acquisition of Heartland Payments a Sign of Things to Come

Brendan Miller

Global Payments Announced on Tuesday that is planning to buy Heartland Payment Systems, a rival payment processor for $4.3 billion in cash and stock.  The two companies’ combined will be the 6th largest U.S. payment acquirer based on card purchase volume and the largest U.S acquirer based on active merchant locations (using March 2015 Nilson data to re-calculate the size of the new company).    

Global Payments gets Heartland’s direct sales force focused on selling to higher margin SMB merchants as well as new ISV and Reseller distribution relationships for its OpenEdge Integrated Payments Channel.  Global also gains a stronger U.S. presence in restaurant, retail and education verticals.

  • The new combined company will need to determine how to avoid channel conflict with Heartland’s POS companies, Xpient, pcAmerica, Dinerware and Liquer POS.  OpenEdge has operated with a strict mantra not to compete against the channel in the past.  Heartland Payments has had a more blended go-to-market strategy – enabling its direct sales to sell its POS systems while simultaneously developing ISV/Reseller channel.
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Don't Build A Digital Strategy; Digitize Your Business Strategy

Martin Gill

Business leaders don't think of digital as central to their business because in the past, it hasn't been. But now your customers, your products, your business operations, and your competitors are fundamentally digital. To win in this new world, digital leaders must reimagine their businesses as fundamentally digital. Do this, and you can become a digital predator; fail, and your business will become digital prey.

This isn’t a fundamentally new message from Forrester. We’ve been saying this for a couple of years now. But what we have done is update our thinking and our data on the subject based on our most recent research and a major new survey in partnership with Odgers Berndtson.

The result is that we’ve updated the Digital Business Imperative- the anchor document for our Digital Business Transformation playbook. In some ways it's disturbing reading, because while the overwhelming majority of executives now acknowledge that digital will disrupt their industry, just over a quarter think that their firm has an appropriate strategy in place to respond.

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Yahoo’s Challenge: Mobile. Yahoo’s Answer: China.

Julie Ask

Yahoo’s board met yesterday amidst disappointing financial results that have failed to live up to the expectations of its investors. Prevailing rumors suggest that the board under pressure from investors will vote to break apart the business and sell the pieces.

While it is true that the majority of Yahoo’s revenue comes from online advertising, the future is clearly mobile. Mobile phone numbers are more important than email addresses, and consumers already use their mobile phones more than two hours a day in the U.S. Global expansion depends on mobile.

Power in mobile depends on two core factors: audience and data. Here’s why.

Audience will draw in developers, advertisers and service providers. Today in mobile, audience depends on a strong presence in social networking, instant messaging, and media (e.g., video, music, games, news and books).

Data is the context that drives the value of the audience. The more context brands have about consumers to offer them insights about needs and motivations, the better brands can win, serve and retain those customers in their mobile moments. Winning in data includes access to email, browser, maps, search, wallet, commerce, health, fitness, home and automotive data - as a start. Those who own the mobile OS (e.g., Apple, Google and Microsoft in the U.S.) own the trump card in data.

Simply put, despite a host of strategic mobile acquisitions (e.g., social media, mobile analytics) and new talent, Yahoo! is still too small. It lacks the scale of Facebook or Google. This makes Yahoo a good partner, but not the booming, independent success that each of these businesses has become.

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Announcing Forrester’s Inaugural Wave Evaluation of Subscription Billing Platforms

Lily Varon

Few industries are immune from the digitization of experiences, content, services, and products. In this era of cloud computing, IOT and mobile devices, firms are increasingly testing new product offerings that combine elements of content, software, services, and hardware together. Like the evolution of the products themselves, the rulebook on monetizing them is also evolving: firms are replacing the simple one-time sales models of yore with subscription and consumption-based business models that better sustain a continuous relationship with their customers. But unfortunately, in most cases, firms’ existing technology ecosystem doesn’t support the complex requirements of supporting a subscription business model- from customer lifecycle management to finance management.  Enter: subscription billing platforms.

Forrester has identified the eight leading vendors in the space and spent the last four months putting them through a grueling process of due diligence, product demos, capability assessments and customer reference checks. Here’s what we found.

■  Aria Systems, SAP hybris billing, and Zuora lead the pack. These three vendors represent thought leadership and the associated market innovation. All three commonly go head-to-head in opportunities at both midmarket and enterprise firms and in both B2C and B2B monetization scenarios. Each of the three has developed core industry vertical expertise in sectors such as IOT, healthcare, and telco and has established mature partnerships with global management consultancy and system integration firms.

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In 2016, Financial Services Executives Will Bet Big On APIs

Peter Wannemacher

We’ve just published our Predictions 2016 report, outlining eight shifts that banks and their partners can expect by December 31 of next year. I encourage you to read the full report with all of our predictions here.

As a preview of the report, here are two of our predictions for 2016:

  • APIs and open platforms will take center stage. APIs are becoming the most powerful technology in digital business design. Done right, APIs open new angles for business strategy. Financial services providers have been relatively slow to recognize and act on APIs as an opportunity to transform their businesses and, ultimately, better win, serve, and retain customers.* This will change in 2016, as digital executives collaborate with CIOs to champion big investments in internal, B2B, and product APIs. APIs won’t only help firms increase agility and provide services to clients and partners: They will enable financial firms to build dynamic ecosystems of value, reconnecting a fragmented value chain. They will be part of a wider, and longer-term, shift to open platforms as the foundation of digital financial services strategy.
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The Race To Digital Mastery Is On In 2016

Martin Gill

When it comes to digital, we are at a pivot point. Digitizing your business isn’t about technology: it’s about customer obsession - and in 2016, it will be among your ten critical business success factors helping position your firm for success in the Age of the Customer. In fact, next year will be a year of consequence: those firms that “get digital” will begin to pull ahead, and those firms that don’t will begin to look increasingly archaic, facing the risk of extinction.

The preliminary results from our recent digital business survey are telling. An increasing number of firms are reporting that they have a coherent and comprehensive digital strategy. While this is good news, these firms are still the minority. The vast majority of firms report that their approach to digital is limited at best, and non-existent at worst. But the consistently bleak picture is that most executives think the wrong people are in charge of their digital activities and few (very few) think they have the capabilities to deliver.

But there are some shining lights.

Leading firms like John Deere are pathing the path to digital mastery, demonstrating revenue and share price growth that outpaces less digitally savvy competitors. Executive committees are taking note. Innovation spend is on the rise, digital skills are in hot demand, and a new breed of digitally savvy senior leaders is finally emerging.

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2016 Predictions: Key Trends Will Transform Mobile Engagement

Julie Ask

2016 will be the most consequential year for companies on the path to customer obsession, and that includes adapting to empowered customers who expect to get anything they want immediately, in context on their mobile devices.  Today that represents nearly 50% of consumers in the U.S. alone. The consumers pick up their mobile devices 150 to 200 times a day. In aggregate, that adds up to nearly 30 billion mobile moments each day. These mobile moments are the next battleground where companies will win, serve and retain their customers. Tragically, few companies will make the leap. Those that do will reap the rewards.

 

What role does mobile play in customer obsession, and how can businesses leapfrog their competition to deliver superior customer experiences? Here are three ways Forrester predicts mobile will change the ways business leaders operate in 2016.

 

1. Mobile will act as a catalyst to transform businesses in the Age of the Customer.

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Digital Business Q&A with Liza Landsman, Jet.com

Martin Gill

Deliver exceptional digital experiences. It sounds easy enough, but to win in the age of the customer, businesses must realize that there is much at stake if they do not focus efforts on providing customers with a solid customer experience. Forrester even argues that, in the coming years, it’s the customer obsessed digital leaders who will push far ahead of their competition. But how can they get there?

To help digital leaders exceed the expectations of their empowered customers, Forrester has designed this week’s Digital Business Forum around how to build a strategy that works — now and in the future. Liza Landsman, executive vice president and chief customer officer of Jet.com will be on stage alongside Forrester analysts Stephen Powers, Adam Silverman and Alyson Clarke to share her experience in digital business transformation.

At Jet.com, Liza is responsible for producing a compelling end-to-end customer experience with the tools and technologies that drive growth. I’m happy to share the below Q&A session with Liza — I caught up with her in advance of her keynote, and she was kind enough to chat about digital strategy and customer behaviors, and the ways that Jet.com handles its competition.

Enjoy, and I hope to see you in Chicago today!

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Verifone Puts New Stake in The Ground With Developer Platform

Brendan Miller
 
Yesterday Verifone announced a next generation family of payment devices, called Verifone Engage.  Verifone promises to wrap more value around the merchant-consumer interaction at the point-of-purchase with new personalized marketing features, pay-with-points and rewards.  In addition, they introduced an expanded Verifone Commerce Platform giving developers the tools to publish POS apps to a new App Marketplace for merchants.  They Linux based devices will provide an accessible and well-known framework for developers to innovate upon.  Software based solutions are transforming the industry and Verifone risked getting commoditized as a hardware vendor if it didn’t act by building a platform and marketplace for developers.   
 
What does this mean for the rest of the Payments Industry? Two stakeholders in particular will be impacted.  
 
POS Developers (ISVs) – Engage is a good development for the POS developer community and merchants.  The whole mission of a POS is to improve the customer experience at the point of purchase and streamline back-office processes for the merchant.  ISVs could integrate with Engage hardware and offer merchants more services through the Verifone App Marketplace, publish apps of their own, and potentially earn new residual revenue sources from merchants paying to use those applications.
 
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Netflix Claims Earnings Are Down As Many Subscribers Cards on File Do Not Get Updated

Brendan Miller

On Thursday Netflix blamed card processing issues for disappointing subscriber growth. Netflix said the move by U.S. banks to replace hundreds of millions of credit and debit cards with new EMV chip-enabled cards this year has led to involuntary service cancellations as subscibers cards did not automatically renew when the new cards were issued.   It is estimated that 575 million new EMV chip cards are being issued to consumers in 2015*. Many of these new cards require updated account information to be collected by subscription or recurring businesses servicing the affected cardholders.  Although the cardholder’s account number may not change with the new card, the CVV and expiration date of the card most likely will change.

Do subscription type businesses that use Card-On-File need to be concerned they will also see increased declines?

Recurring and subscription billing merchants should be using Account Updater Services (as Netflix does) for updating new payment credentials. Over the past decade, the major card brands have introduced Account Updater services that allow merchants, via their processors, to submit card data on file to the networks for updating and correcting stale information. By utilizing these services merchants retain more customers and their customers enjoy uninterrupted service. Many payment platforms are now supporting this feature as a managed service to reduce the burden on the merchant of transmitting Card on file information to the processor.

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