Robert McKinley, Senior Analyst/Editor Robert McKinley, with 33 years experience covering payment cards and payment systems, is Senior Analyst/Editor for CardFlash and other payments-related publications. He is the retired founder and chief executive of RAM Research, CardWeb and CardTrak. McKinley served as an expert witness in 100+ litigations including two multi-$billion trials, testified before the U.S. Congress, chaired multiple payments conferences, hired as consultant by Fortune 100 companies and several overseas financial institutions. Full Bio: www.rbm4.com

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…

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.

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”

ROAM Expands Presence in Non-Profit Fundraising

ROAM, an Ingenico company and the leading mobile commerce platform provider, will provide a mPOS solution for the non-profit Direct Selling Education Foundation’s (DSEF) fundraising effort during the upcoming DSA 2014 Annual Meeting, taking place June 1-3, 2014 at the Hyatt Regency Orlando in Orlando, Florida. ROAM’s participation in the event is the latest example of the company’s growth within the non-profit fundraising segment. ROAM has partnered with key non-profit service providers such as Blackbaud, to help provide its clients with a secure, efficient way to accept card payments at events and through peer-to-peer solicitation. According to Blackbaud, non-profits are projected to double their investment in mobile technologies this year.

Discover to Present at Stock Conference

[ihc-hide-content ihc_mb_type=”show” ihc_mb_who=”0″ ihc_mb_template=”1″] Roger Hochschild, president and chief operating officer of Discover, will present at the William Blair Growth Stock Conference in Chicago on Tuesday, June 10, 2014, at 4:10 p.m. Central time. About Discover Discover Financial Services DFS +0.77% is a direct banking and payment services company with one of the most recognized…

Ukash Expands Market Base Through Touch Network

Ukash announced its latest expansion with its partnership with the Touch network, available at 10,000 chain and independent merchants. Touch has developed a range of transaction systems to support the banking, retail, telecommunications and government sectors across Europe and in Asia Pacific. It has established a strong network of outlets for its point of sale terminals in Australia, enabling consumers to purchase a wide range of electronic products. By adding the availability of Ukash voucher codes from its terminals, Touch founder, Keith Cleeve, believes merchants will see an increase in footfall throughout their stores. Ukash enables consumers to use cash to pay safely and conveniently online by exchanging notes and coins for a unique 19 digit code. Available for use across a variety of sectors, including shopping, gift cards, games, poker and bingo, Ukash is used to pay directly on thousands of websites worldwide.

MasterCard MasterPass Expands Global Presence

MasterPass, now present in Singapore, eliminates the need for consumers to enter detailed shipping and card information to complete their online shopping at MasterPass merchant sites. Consumers can securely store MasterCard and other branded credit, debit and prepaid card information address books and more. This simplifies the process of completing a transaction from any connected device, particularly those with smaller screens. MasterCard is continuing to lead the transition to digital payments and deliver solutions that are better, safer and faster. Shoppers in Singapore will be the first in Southeast Asia to experience the offering which promises a simplified payment experience while protecting the user’s card and personal details. By selecting “Buy With MasterPass” as the checkout option, customers reduce the risk of exposing their personal information over potentially unsafe networks and can look forward to more privacy as their details are not shared directly with merchants.

Paycorp Announces Latest Takeover

Paycorp payment services acquired 100% of the issued share capital of Saicom Group, the holding company of Kazang Prepaid and Saicom Payphones. Kazang provides prepaid voice, mobile data and electricity through proprietary mobile vending terminals that handle thousands of micro-payments every minute. Other services include DSTV subscription payments and RICA registration. Saicom Payphones, powered by Kazang, offers GSM-based community payphone services that run off the Vodacom network.The acquisition of Kazang is Paycorp’s first major transaction since private equity firm Actis acquired a majority stake in the group in November last year. This acquisition complements Paycorp’s existing suite of payment products and services and, with an established footprint across Africa, Kazang provides valuable new channels, expertise and insights to facilitate the business’s expansion further into the continent.Financial inclusion is a key strategic thrust fo for Paycorp which supplies a range of payment services to underserved rural and peri-urban areas.

Global Q1 GDV

The four major global payment card networks (excluding Visa Europe, CUP and JCB) produced a 6.6% year-on-year (Y/Y) gain in Gross Dollar Volume (GDV) during the first quarter of 2014 (Q1/14). Visa (VS), MasterCard (MC), American Express (AX) and Discover (DS) produced $3.087 trillion in Global GDV, compared to $2.896 trillion in the year ago quarter.