Report from ETA: Innovators Rewarded, Industry Economics on Upswing
May 3, 2013
Payments innovators were highlighted this week in New Orleans at the 2013 Electronic Transaction Association (ETA) Annual Meeting & Expo. The ETA partnered this year with the Bill and Melinda Gates Foundation to award scholarships so cash-strapped startups could announce their ventures at the payment event in front of its 3,000 attendees. Four companies took advantage of a Gates grant to attend the show and unveil their new solutions. A panel of judges awarded Trak, which demonstrated its mobile marketplace and payment solution, a $10,000 prize as the winner of the Innovation Award.
Other scholarship winners included ActPay, which enables contactless mobile payments at any magstripe terminal; online payment provider Digital Wallet Plus; and Global Transaction Services Group, a provider of text-based mobile payments.
Separately, the ETA and Omaha, Neb.-based consultancy The Strawhecker Group delivered good news on the macro-economic environment to show attendees in the ETA’s U.S. Economic Indicators Report. The quarterly report, which tracks the performance of selected companies in the payments industry and compares their performance to the S&P 500, found average revenue at the 80 companies in its index grew 14.2 percent in Q1 2013, while average revenue of the S&P companies grew by only 1.6 percent.
The report also tried to quantify the disruption to “incumbent” acquirers caused by Square. It refutes the assumption small merchants are renouncing traditional card-processing relationships in favor of Square, instead suggesting that Square has created a new category of micro-merchants from which it is drawing most of its support. At an ETA press briefing on Wednesday, Mike Strawhecker, director of strategic research for The Strawhecker Group, said acquirer attrition in the small-merchant category is actually down since Square’s launch. The report did note, however, that ISOs serving the micro-merchant category could be affected by Square.
“Price neutral scenarios would suggest new entrant Square is not a threat to more complex acquirers that focus on non-micromerchants,” The Strawhecker Group wrote in its report. “However, it is a threat to ISOs that focus on very small merchants, have a non-vertically focused sales approach, and distribute basic POS solutions through a single-threaded sales model.”