ooking back on a period of change in our lives, we often remember only one or two significant events; however, it's actually many events coming together that effect change. In retrospect, we might overlook most of them, but they are just as important to the big picture.

We can say the same for the payment processing industry, which experienced tremendous change in 2004.

It included grand events such as billion dollar mergers and acquisitions, important court rulings, and not-so- grand events, too, but the events of 2004 will contribute significantly to the direction of the payment processing industry in the coming years.

Momentous Mergers

The following noteworthy (and there were many) billion-dollar bankcard acquirers and payments networks changed hands in 2004. These included some of the largest combinations in the history of the business and will shake up the rankings of top acquirers:

• At the urging of the U.S. Department of Justice (DOJ), First Data Corp. (FDC) sold its majority stake in NYCE, the nation's third largest debit network, to Metavante Corp., a subsidiary of Marshall & Ilsley Corp. FDC was able to acquire Concord EFS Inc. and its STAR debit network, the largest debit network in the United States.
• Bank of America Corp. (BofA) acquired National Processing Inc.'s National Processing Co. (NPC) and also acquired FleetBoston Financial Corp.
• JPMorgan Chase Co. completed its acquisition of Bank One, creating JPMorgan Chase & Co.
• The Royal Bank of Scotland Group plc (RBS) acquired Atlanta-based Lynk Systems Inc.
• And Discover purchased PULSE EFT Association, the largest independent ATM/POS debit network in the United States, buying its way into the online debit card market.

For an in-depth discussion on these mergers and acquisitions, see the "2004 Payments Grand Prix" (GSQ, December 2004, Vol. 7, No. 4).

However, consolidation was not limited to bankcard acquirers. Several of the country's largest check clearing organizations merged and now operate under the name, "The Clearing House."

And many large ATM portfolios were also consolidated.

Cardtronics, one of the largest non-bank owners of ATMs in the United States bought all of the assets of E*Trade Financial Corp.'s ATM business, including 13,100 of its ATMs, for $106 million in cash.

eFunds Corp. sold its entire portfolio of 17,200 ATM contracts for $150 million in cash to TRM Corp., which now owns and manages almost 22,000 ATMs in North America and the United Kingdom. Card Associations Come to Blows The card Associations certainly gave us something to talk about in 2004, beginning with American Express Co.'s (AmEx) first-time deal with a financial institution, MBNA, to issue AmEx-branded cards.

As of November, MBNA said it had delivered to its customers more than 300,000 cards with the AmEx logo. AmEx also recently signed a deal with Citigroup to begin issuing its cards.

The deals were made possible by a 2001 federal court decision in an anti-trust case brought by the DOJ, in which Visa and MasterCard were ordered to drop their long-standing rules prohibiting member banks from issuing cards from competing brands, such as AmEx and Discover.

The Supreme Court upheld the lower court's ruling in October, which also prompted both AmEx and Discover to file lawsuits against the card Associations.

AmEx and Discover seek monetary damages for business they claim was lost as a result of Visa and MasterCard's anti-competitive practices for nearly 20 years (see "Payments Shaken and Stirred in 2004" by Patti Murphy, on page 16 of this issue).

Check 21 Has Arrived

Legislation signed into law in the fall of 2003 took effect Oct. 28, 2004. The Check Clearing for the 21st Century Act, or Check 21, allows banks to transmit electronic images of checks instead of flying or trucking paper checks across the country.

The law makes electronic images of checks legal documents, so banks now have a more affordable and faster way to move checks through the payments system.

This legislation will initially be most relevant for banks, but we expect to see check truncation happening at the point of sale and at ATMs further down the road.

The main reason: Truncated checks clear and post more quickly than checks converted to automated clearing house (ACH) transactions, which means better availability and a faster way in identifying potential fraudulent payments, according to Patti Murphy, President of The Takoma Group and Contributing Editor to The Green Sheet.

New Technologies Explode Onto Market

Although wireless-, contactless- and IP-based point-of-sale technologies are relatively new to the industry, discussion around implementing them in payments has been building for years, and now they've hit the ground running in 2004.

Suddenly, every terminal manufacturer and ISO is offering one or more of these products and services; it's no longer just talk. Opportunities abound for sale of these new technologies and if you're a merchant level salesperson (MLS), it's time to get on board.

Driving the adoption of new payment devices and methods is the fact that more types of merchant locations such as QSRs and vending machines are open to accepting electronic payments.

And, ISOs/MLSs are now able to offer traditional retail merchants payments solutions beyond checks and credit, including gift cards and prepaid/stored value cards.

Another milestone for 2004: This year, electronic payments surpassed checks for the first time, according to the latest data from The Federal Reserve.

A Banner Year for MLSs

For MLSs, 2004 proved to be an especially good year. Not only are there all kinds of new products and services to sell, and to businesses that were previously averse to accepting electronic payments, but good things are happening with industry organizations, too.

Now more than ever, MLSs have access to industry education and networking opportunities like never before.

The National Association of Payment Professionals (NAOPP), the recently formed organization run by MLSs for MLSs, announced that it now offers members access to health insurance, low cost legal consultation and representation, and a 401(k) plan.

Membership to NAOPP is extremely affordable ($25), making it easy for MLSs to participate in the organization and take advantage of the benefits.

In addition, Electronic Transactions Association (ETA) launched a new Affiliate Service Provider program, offering 1099 MLSs access to discounts on a range of ETA products and services.

For example, ETA provided discounts to MLSs who wanted to attend the 2004 ETA Annual Meeting and Expo in Las Vegas, an event that many feet-on-the-street have complained is too expensive for them to attend.

ETA also launched its affordable Expo Networks, which are educational seminars and networking opportunities for all MLSs held in different locations around the country.

And the regional acquirers' associations saw record attendance at meetings held throughout the year. From the Northeast Acquirers' Association (NEAA), Midwest Acquirers' Association (MWAA), Southeast Acquirers' Association (SEAA) and now the Western States Acquirers' Association (WSAA), if you're an MLS, no matter where you are, there are no excuses for not attending an industry event.

It's time to venture out into the world, or at least your area of the country. Between the ETA events and the regional acquirers' associations, you now have several educational and networking opportunities close to home to look forward to each year. So get out there and meet and greet!

The Green Sheet Is Recognized

Finally, The Green Sheet also achieved several milestones in 2004 we think are worth mentioning: On July 29, 2004, Paul Green received a Lifetime Achievement award, presented by the MWAA.

The award honors "the outstanding individual who has made significant contributions throughout a career of service to the merchant bankcard and electronic payments industry."

For the third year in a row, Communications Concepts Inc. recognized The Green Sheet's print and online publications in its annual APEX awards program.

We received six awards this year: five Awards of Excellence for Publication and one Grand Award.

Since 1983 The Green Sheet has been committed to providing people in the financial services industry with the right information in the right way, and what better way to know we're doing it "right" than by the numbers: In 2004 GS Online reached more than 2.5 million hits in one month and since then has continued to attract thousands of new readers.

In addition, our print publication grew to 120 pages this year, the largest issue of The Green Sheet yet.

It's been an exciting year for the payments business and for The Green Sheet. Thanks for being with us in 2004, and we look forward to another successful year ahead.