Goldman Puts Its FinTech Focus Squarely on Cards

The future of payments may be mobile, but its present is emphatically plastic.

For evidence, look no further than the third annual Financial Technology Conference at Goldman Sachs & Co., which featured presentations geared at investors from 17 financial services companies.

A slight air of disappointment over the as-yet unrealized promise of smartphone-based payments hung over the entire conference, coming through faintly at times and more clearly at others.

The conference was held at the company’s New York headquarters on Sept. 18. The preponderance of card issuers and card-based companies can be clearly seen in the list of companies below, in the order that they presented.

Cardlytics presents card-linked offers in a user’s online banking portal, and is currently expanding internationally and making strong moves into mobile alerts based on location. The company is based in Atlanta.

Higher One, based in New Haven, Conn., offers disbursement services for university students. One of its best known products is the OneAccount prepaid MasterCard.

Fleetcor provides fuel cards to commercial fleets and businesses. It does business with large petroleum companies such as BP, Chevron and EuroShell, as well as governments. Fleetcor is based in Norcross, Georgia, an Atlanta suburb.

Cardtronics operates a global fleet of 80,000 ATMs. The company’s presentation centered on the idea that cash is still king (though you need a card to get it,) especially in one of its major growth markets, Germany, where 80% of in-store purchases are cash-based, versus 30% in the US. And Germany is very light on ATMs — something Cardtronics hopes to remedy.

Edenred offers prepaid products to enterprises across the globe. 96% of its products are closed loop prepaid cards. The company offers cards to corporate employees that give rewards for purchases approved by the employer, such as healthy food or pharmaceuticals. MasterCard — along with InComm — introduced a similar idea at Finovate earlier this month. Edenred pointed out that, oddly, France lags behind the developing world in digital delivery of its services.

Cielo is Brazil’s #1 merchant acquirer and payment processor. The company began life as a Visa processor jointly launched by four Brazilian banks, but became a open network in 2010 and has seen tremendous growth despite increasing competition. 26% of Brazil’s purchases at point of sale are card-based, according to Cielo.

OnDeck Capital provides loans to small businesses not served by banks. OnDeck has its own proprietary metrics to identify underserved prospects — what lender doesn’t these days? — that allows it to make better bets and see fewer failures than traditional lenders. The company is seeing 400% year-over-year growth in its direct loan business. There are some 3.8 million SMBs in the country, according to OnDeck CEO Noah Breslow, so there is room to grow and then some.

Bluefin Payments, Ncino and Payscape Advisors presented together. All are SaaS (software-as-a-service) companies that operate in the cloud. Bluefin operates the PayConex Gateway for other SaaS vendors. Ncino is a cloud-based loan origination platform that provides core banking capabilities as well and will eventually face competition from the likes of Fiserv, FIS, and Jack Henry — but isn’t yet. Payscape provides a merchant gateway for online businesses.

Braintree is a payments processor behind Uber and many gaming sites. CEO Bill Ready talked tough about PayPal on stage, and no one present asked how Braintree’s talks with PayPal about being acquired were going. 40% of all e-commerce shopping sessions now take place on mobile, Ready said. He also said his company would pass PayPal in terms of US users in the next 12 months. Braintree has 40 million users, while PayPal has an estimated 65 million US users.

Vantiv is one of the nation’s largest PIN/debit processors and grew out of Cincinnati-based Fifth Third Bank. CEO Charles Drucker discussed competition from disrupters such as Square and pointed out that Vantiv’s card-processing rates are better than Square’s when it gets to the high-volume clients the company deals with. And the low-volume clients? Square can have them.

Worldline, an Atos company, is Europe’s second-largest payments processor. Based in France, the company has built — among many other things — a complete NFC wallet solution. The only challenge now, CEO Thierry Breton pointed out with dry humor, is to convince customers and merchants to use it.

InComm is a prepaid veteran perhaps best known for its Vanilla general purpose reloadable card. The company is a major producer of prepaid store-branded cards and gift cards. Its business, $21 billion in transactions annually, is split 80/20 between domestic and international accounts now, but the international side of the business is growing rapidly.

Heartland Payments is the nation’s 5th largest payments processor and focuses on reaching “Main Street merchants” with a large and active W2 sales force. Asked about mobile commerce, the Heartland team said “Small merchants don’t pay a lot of attention to their payment processing systems every day.” In other words, they’re busy making sales and not worrying about the latest gadget.

Blackhawk is a prepaid card network that grew out of the grocery space and offers store-branded cards and gift cards. “It’s Christmas for us now,” CFO Jerry Ulrich said, referring to the work going on readying gift cards for the 4Q shopping season. President Talbott Roche pointed out that prepaid phone plans, which dominate the world outside the US, are growing steadily in importance here. Prepaid iPhone, here we come!

Green Dot wrapped up the conference, which is appropriate for the company that invented the prepaid category. Based in the Los Angeles area, the company discussed its 4.5 million customers (and 1.8 million rejected customers.) Its mobile-first bank account GoBank and Green Dot cards’ growing presence in check-cashing facilities was also mentioned, though not at length.

In summary, it was cards, cards, cards, with mobile payments, at least at the point of sale, still over the next hill.