Yes, No And Maybe: What We Learned About Worldpay, EMV and Twitter Last Week

In 1894, Labor Day was created by an act of Congress to honor the “social and economic achievements” of the American worker. The holiday is traditionally celebrated with sleeping late, grilling and avoiding labor of any kind as strenuously as possible.

However, by tomorrow the holiday will be done, Burning Man enthusiasts will be back at their desks and the summer of 2015 will begin the process of settling into our long-term memories. And it will be time to be looking sharp and back on the ball. Forgot everything that happened last week during that “Orange is the New Black” binge yesterday?

As always, we’ve got you covered.

Another Bidder In The International Worldpay Auction

Every season needs a cliffhanger, and this summer’s seems to be about Worldpay – and which power player will own it by the end of the year.

The new entrant to the field this week is French technology player, Ingenico.

The Paris-based firm tossed its bid for Worldpay into the ring this week. It joins a tussle for ownership already in progress between Germany’s Wirecard and a few private equity firms: the Blackstone Group, Hellman & Friedman and CVC.

In 2010, Worldpay was built out of RBS and is the largest merchant acquirer in Europe providing card processing services for businesses. It is currently co-owned by private equity firms Advent and Bain and is expected to touch a valuation of £6 billion, or $9.2 billion, after it heads for a flotation in London this fall.

If Ingenico wins big and snaps up Worldpay, it will end 2015 much the same way it began – with a big acquisition. Ingenico bought mobile commerce platform ROAM in January of this year with the goal of snagging some bigger market share in the North America. A successful bid for Worldpay will expand its footprint across the globe.

Ingenico stock market valuation is €7.42 billion, or $8.34 billion, and has a 30 percent global terminal market share with shipments rising 18 percent annually, according to a Nilson report. That on paper makes it a rather formidable competitor for Wirecard and its $5.2 billion stock market value. But then again, Wirecard has seen its profits increase tenfold over the last 10 years and it is the force in the acquisition dance that made the first big move to inflate the price tag with its reported $9.4 billion bid.

What all of the competitors for Worldpay have in common is a firm desire to stop the firm from going public – an option that still remains on the table.

Meet The New Boss – Same As The Old Boss (Literally)

Is Jack Dorsey going back to Twitter?


In what would be the greatest Silicon Valley return story since Steve Jobs retook Apple, the rumor-verse is becoming increasingly certain that the firm’s erstwhile captain might soon be back to retake helm on the S.S. Twitter.

Now granted, this rumor has been making the rounds since June, when the hashtag #JackIsBack started trending on Twitter since it was announced that Dorsey would be temporarily stepping in as CEO following the departure of Dick Costolo from the top spot. Dorsey is and remains the CEO of Square at the moment.

Costolo’s departure – and the apparent wave of executive departures it set off – have not been great for business. Since the search for a permanent replacement CEO began, Twitter has seen its stock take a 22 percent hit.

Twitter’s board met Friday to discuss the results of their search, though they made it clear their selection will not be announced until “sometime after Labor Day.

And according reports in CNBC, Bloomberg and Re/code, it is looking increasingly like Dorsey might be the candidate to beat.

“Unless they can sign a big star, he is probably their best bet. They have a very good candidate in Jack Dorsey,” Re/code’s Kara Swisher noted on CNBC last week. “Obviously, Jack Dorsey has had his on-the-job training, and they are trying to assess how he’s done.”

And while the announcement has filled some with elation, others have voiced concerns, considering that Dorsey is also the CEO of Square, which itself is heading for an IPO at present. Both Twitter and Square’s boards agree that sharing a CEO is not a feasible long-term plan.

“Jack Dorsey, on paper and with his history, is probably a great candidate, but not if he’s also going to be CEO of Square,” Sinan Aral, a corporate governance professor at the MIT Sloan School of Management, told Bloomberg. Aral also owns Twitter stock.

The length of the wait has also been a concern.

“The company, its employees and certainly its shareholders are in a little bit of limbo,” Colin Sebastian, an analyst at Robert W. Baird & Co noted. “That qualifies it as an urgent matter of business.”

Twitter has no public comment on the matter, but sources have indicated that its search firm, Spencer Stuart, has been speaking with potential candidates — which includes former Cisco Systems Inc. executive Padmasree Warrior and CBS Interactive Inc.’s Jim Lanzone, the sources said.

However, the same sources indicate those other candidates are more window dressing than anything since Dorsey is the founder of Twitter. Dorsey also just recently bumped his stake in Twitter, along with other executives, and has been getting increasing buzz as the man for the job.

Marc Andreessen of Andreessen Horowitz is one major name that’s come out supporting Dorsey, telling Bloomberg: “I’m reflexively in favor of founders leading companies whenever possible.”

Paul Holland, partner at Foundation Capital said on “Squawk Alley” of a Dorsey return: “He will come back in and provide a lot more clarity about the future of the business, the monetization strategy and how does the company enter the pantheon of the really, really strong companies in the social domain?”

SMB To EMV: “We’re Just Not Into You”

Hear that ticking noise?  That’s the sound of the EMV liability shift clock running down. In about three weeks the deadline will hit and by all accounts lots of business will be letting it pass without making the conversion — especially small ones. Almost two-thirds of businesses with fewer than 500 employees note being unready for the switch, as opposed to 44 percent of large merchants that claim they are.

So why no EMV love from small businesses?

Part of the issue is the expense of changing card readers, through The Wall Street Journal noted that card readers can be obtained for less than $100 a pop and many vendors are offering savings as the deadline draws near.

The two main reasons seem to be either because they don’t know the shift is coming or because they know but don’t see any particularly compelling upsides on offer with EMV.

“I have not taken a charge back in 15 years,” said Valerie Koehler, owner of Blue Willow Bookshop in Houston, whose average transaction is $30 to $50. “I am more likely to take a bad $100 bill, just because the staff wasn’t paying close enough attention.”

Should Koehler — or any other still mag stripe using business — get a chargeback after Oct. 1, they will be liable for the fraud.

And collectively those frauds are expensive. According to Aite Group estimates, $3.6 billion will go out the door on fake cards this year, up from about $1.7 billion in 2011.

But those risks are not exactly evenly applied, meaning some merchants are facing much more risk than others. Also what fraudsters use those cards for may not amount to enough risk for many individual small merchants to undertake the expense and difficulty of upgrading.

“Something as small as a $10 gift card can be very easily monetized,” said Patty Walters, a senior vice president with payments processor Vantiv Inc. “A $500 spa gift certificate, not so much.”

Apart from merchants that can’t afford it, don’t get it or don’t think they need it, there is a growing contingent of merchants that are not signing on in protest, specifically of what they consider dishonest tactics used to sell them EMV.

BBQ joint owner Shelli Warren complained that she was railroaded into a new card processor because she was told the shift was legally mandatory.

“He had me in fear that that day or the next day I wouldn’t be able to run a credit card because of the smart chip,” said Warren, who added that she is currently paying about $42 a month for the equipment.

And, it is worth noting, that while EMV fights card fraud, it does little to stop online fraud. In the U.K. when EMV was introduced, counterfeit fraud did drop, but online fraud spiked. Tokenization is the currently favored method for fighting fraud online.

“There are now more solutions to identify and detect online fraud,” said Stephanie Ericksen, a vice president with Visa Inc.

So what the short version of this week’s big news –  Everyone is saying “yes” to Worldpay, many small businesses are saying “no” to EMV and Twitter is saying “maybe” to Jack Dorsey.

Happy Labor Day.


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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our April 2019 Unattended Retail Report. 

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