Robert McKinley, Senior Analyst/Editor Robert McKinley is an analyst of the payments industry on a daily basis for 32 years covering payment cards and payment systems from both the business side and the consumer side. McKinley is the retired founder and chief executive of RAM Research, CardWeb and CardTrak. In his prior position, McKinley has participated in more than 10,000 documented news media interviews, testified as an expert witness in two separate $billion+ U.S. anti-trust trials, testified before the U.S. Congress, assisted the GAO with paymentsIMG_2006 (1).jpeg reports, chaired numerous business conferences and provided C-Suite opinion to a multitude of Fortune 500 companies. In retirement, he has continued developing and funding digital media assets as well as contributing payments related analysis/content to a broad list of online publishers, including CardFlash, CardTrak and CardData. McKinley is also a national certified mentor with the non-profit SCORE organization with a focus on assisting Fintech startups. www.robert-mckinley.com

USA Technologies Sends Letter to Shareholders

USA Technologies issued a letter to its shareholders, disclosed below:

“Dear Shareholder:

As we approach our Annual Meeting of Shareholders to be held on June 18, I wanted to share some highlights with you of our encouraging progress on several important fronts.

Your board of directors’ and management team’s top priority has been to drive USA Technologies to profitability, and deliver increased customer and shareholder value. We have executed on a vision that has delivered enhanced governance, market leadership in self-serve retail, and an unmatched and ever-expanding product and service portfolio. Most importantly, however, we believe that we have delivered a significant financial turnaround to our shareholders, and taken steps that we believe position USA Technologies to achieve our target over the next three to four years of $100 million in revenues and double digit operating margins as we continue to drive connections to our ePort Connect™ service.

We achieved profitability for the first time starting with our quarter ended December 31, 2012, and additionally, we have delivered six consecutive quarters of non-GAAP net income through our latest fiscal quarter ended March 31, 2014. By way of comparison, during our quarter ended September 30, 2011, the quarter ended prior to my taking the role as Chairman and CEO, we had a non-GAAP net loss of ($1,800,000) and for our most recent quarter ended March 31, 2014, we had non-GAAP net income of $321,526, a $2.1 million quarterly increase.

We achieved GAAP net income for the first time during our 2013 fiscal year of $854,123 as well as GAAP net income for our nine months ended March 31, 2014. In comparison, during our fiscal year ended June 30, 2012, we had a GAAP net loss of ($5,200,000), or a $6.1 million improvement in one year.

Due to earnings generated in our fiscal year 2013, and earnings continuing during the nine months of our fiscal year 2014, and what we believe to be the sustainable nature of our recurring revenue service model, in our March 31, 2014 quarter we recognized $26.7 million of deferred tax assets as it became likely that we would utilize these assets as the result of generating future taxable income.

Our business has now achieved what we anticipate will be sustainable cash flows from operations. For our fiscal year 2012, we generated just $78,000 of cash flow from operating activities, however, for fiscal year 2013 and for the nine months of fiscal year 2014, we generated $6.0 million and $4.8 million, respectively.

USA Technologies and its current board have created significant shareholder value. For example, on March 6, 2012, our shares closed at $.94, and recently, on May 29, 2014, our shares closed at $2.01, representing a 112% increase, a substantial increase in market capitalization”from approximately $30.6 million, to approximately $71.5 million.

Our strategy for growth has been straightforward and consistent”to continue to increase the number of new connections to our ePort Connect™ service”and, to continue to create more value for every connection to our service, for both customers and shareholders. Strategies in place to achieve these goals have resulted in a host of additions to our comprehensive solutions suite and to a record number of new connections in the first nine months of fiscal 2014.

Having achieved these important goals for profitability, in fiscal 2014 we set our sights on building momentum in important areas of the self-serve retail market based on our view of how those markets would continue to evolve. Our progress included:

Increasing the number of connections to our service, from 129,000 as of September 30, 2011, to 244,000 as of March 31, 2014, representing an increase of 89%;

Generating the largest portion of our connections from our existing customer base”a base that we believe manages over 2 million potential machines yet to transition to cashless payment;

Leveraging USA Technologies’ early start in mobile-based payment services with over 75,000 locations enabled for the Isis mobile payment and “Fifth Purchase Free” program, one of the nation’s largest implementations of a payment and loyalty program utilizing smartphone technologies;

New consumer engagement services such as our MORE loyalty program, including the recent introduction of a MORE consumer mobile app utilizing eBeacon™ mobile payment technology powered by Bluetooth Low Energy;

Evolution of our ePort Connect™ service to extend our service capabilities across the vending spectrum. New Integrated Payment Services expands USA Technologies’ growth potential beyond the vending machine level”to micro-markets, dining services and other business segments managed by our vending customers;

Important new sales and distribution relationships that allow us to extend our service to other similar markets with ease. For example, in commercial laundry, in fiscal year 2013, we became the exclusive service provider to Setomatic Systems, a relationship that has yielded over 7,500 new connections to our service since that time; and

In taxi and transportation, new agreements with systems integrators in this market have extended the reach of our sales and marketing efforts. For example, within just a few months of introducing ePort GO™ for taxi and transportation businesses, our work with the Verizon Wireless’ business to business team has already resulted in an encouraging number of new customers and connections to our service. We are pleased to report that, during the current fiscal year, our direct sales efforts and that of partners like Verizon have yielded over 12,000 achieved or contracted connections in this important new market.

Our innovation on behalf of our customers continues to earn recognition for USA Technologies. Recently, USA Technologies was honored with the Frost & Sullivan 2014 North American Customer Value Leadership Award in Financial Services and Retail M2M Communications, an award presented to a company that has demonstrated excellence in implementing strategies that proactively create value for its customers. We also earned the top award for the vending category at the 2013 Connected World Value Chain Awards, featuring our value chain partners, Verizon Wireless and Telit Wireless Solutions.

In closing, strong connections, a solid pipeline and a growing list of partners and customers leave us very encouraged about the business. Consumer preferences continue to shift toward cashless and mobile payment trends are already providing added stimulus. As a leader in the cashless movement, we believe that USA Technologies has the experience, the knowledge, the people and the vision to take advantage of these opportunities and build on our momentum.

Your board and management cordially invite you to attend our June 18 Annual Meeting of Shareholders. Whether or not you expect to attend the Annual Meeting in person, we strongly encourage you to vote your shares. If you have questions about USA Technologies’ business or the Annual Meeting, please contact investor relations at 1-800-633-0340, or send an email to shareholder@usatech.com .

I want to thank you for your support and hope you share the excitement that I feel for the future of USA Technologies.

Best wishes to you and your family,

Stephen P. Herbert
Chairman and Chief Executive Officer”

Gemalto USA EMV

Gemalto has acquired Rhode Island-based Shoreline and Atlanta, GA-based Source One Direct, two payment card personalization bureaus in the USA. Gemalto notes that the USA market is moving towards an October, 2015 liability shift which mandates EMV chip technology to replace the older magnetic stripe cards. Last year alone there were over 1.6 billion EMV (chip & PIN) cards in use across the globe and many issuers in the USA are now accelerating their own migration in light of the recent security breaches, e.g. Target, that have occurred with major retailers.

June Average Credit Card APRs Ebb .01%

[ihc-hide-content ihc_mb_type=”show” ihc_mb_who=”0″ ihc_mb_template=”1″] Average credit card APRs are down .1% from the May figure to 15.0% after averaging a meager .04% change over the past year. This continues the downward momentum seen throughout the early months of 2014. This also follows a relatively lengthy period of APR stagnation since the holiday months. Typically, card…

Geraint Williams to Address New PCI DSS Standard

IT Governance cyber security services and PCI QSA company announced that senior consultant and QSA Geraint Williams will deliver a talk at the OWASP AppSec Research 2014 conference in Cambridge in June. Williams’s presentation will examine the best practices in developing bespoke or custom written applications for use within the cardholder data environment of the PCI DSS. Geraint Williams is a PCI Qualified Security Assessor and is leading the PCI DSS and pen testing team at IT Governance.

Diners Club Announces Latest Merchant Acquiring Partnership

Diners Club International, part of the Discover Global Network, and Bangkok Bank are set to implement their merchant acquiring partnership. Under the agreement, merchants using the Bangkok Bank terminal network will be able to accept Diners Club International, Discover, BC Global, DinaCard and RuPay cards, which are all part of the Discover Global Network. The Discover Global Network is the third-largest payments network in the world, operating in more than 185 countries. Diners Club International became the first multi-purpose charge card in the world, launching a financial revolution in how consumers and companies pay for products and services.

Sipay Plus payment gateway gets PCI DSS 3.0 certification

Sipay Plus payment gateway has been approved for PCI DSS version 3.0 level 1. The new version 3.0 approved by PCI Security Standards Council, organization founded in 2004 by five major card brands, with the goal to ensure safety in card payments, includes important changes over the 2.0 version. Above all, with this evolution of the regulations it is intended to adapt it to the continuous market and technology changes related with payment industry, as well as to avoid some of the safety problems or deficiencies both in the standard itself as in the application, which have been identified in the past years. The incorporated requirements for the new 3.0 version mainly emphasize the proactive safety procedures, in particular the considerations, more restrictive, for the stored data regarding the card holders, the security in software development, the vulnerability evaluation with a higher demand in the penetration tests, the keys and passwords management, the review of the security records, as well as the extension of these requirements to the external providers.

MasterCard, WebMoney and Credit Saison Launch Prepaid Card

MasterCard, WebMoney Corporation and Credit Saison launched the WebMoneyCard MasterCard-branded prepaid card. The WebMoneyCard can be used both online and at physical merchants that accept WebMoney or MasterCard payment cards. With the WebMoneyCard, cardholders can make payments at approximately 38.1 million MasterCard acceptance locations[1] in more than 210 countries worldwide. The card can be used for diverse everyday purchases, ranging from apps to payment at restaurants, cafes and convenience stores. WebMoneyCard, which is obtainable without credit evaluation, ensures that cardholders can shop with ease, knowing that their spending will always remain within pre-loaded amounts.

Drive Thru Video POS

Revel Systems has launched its iPad POS system for drive-through. This expands Revel Systems’ product offering for fast food and enterprise-level clients, providing them with a fully integrated video chat experience with their fast tablet-based POS system. The Video Drive-Through POS operates with three iPad devices, including Revel’s QSR iPad POS terminal. This enables seamless drive-through functionality and allows guests an engaging and easy way to order their food.

PaymentVision Webinar Advises on New Data Security Essentials

PaymentVision PCI-compliant electronic payment gateway services will host a free Data Security Essentials webinar designed to help managers of compliance, accounts receivables, and operations professionals learn about payment card and data security. The event will share information and tools to help business owners and compliance managers understand payment card and data security, the benefits of PCI DSS v3.0, managing the PCI DSS scope, and the new PCI DSS v3.0 requirements.

Version 3.0 PCI Compliance Policies Available for Download at pcipolicyportal.com

Merchants and service providers can now instantly download version 3.0 PCI compliance policies and procedures containing hundreds of high-quality, professionally developed security templates for helping ensure rapid PCI compliance. The PCI DSS mandates are growing larger every day, expanding to more and more businesses, so now’s the time to obtain the very best security documentation found anywhere today.The version 3.0 PCI compliance policies and procedures from pcipolicyportal.com. It includes a comprehensive process for becoming compliant with the Payment Card Industry Data Security Standards (PCI DSS) that includes a step-by-step checklist for assessing one’s specific PCI requirements and overall needs. It also includes professionally developed information security and operational specific policies, procedures, forms, checklists, templates – and more – for ensuring rapid compliance with the PCI DSS standards. Additionally, section II contains dozens of critical provisioning and hardening documents for securing all in-scope system components.