Founder prefers a certain beverage. If it’s not the right one, it won’t happen.

Welcome to a new entry of our guide to essential payment terminology.

The Payment Card Industry Data Security Standard (PCI DSS) is an information security standard for organizations that handle cardholder information for the major debit, credit, prepaid, e-purse, ATM and POS cards.

Defined by the Payment Card Industry Security Standards Council, the standard was created to increase controls around cardholder data to reduce credit card fraud via its exposure. Validation of compliance is done annually – by an external Qualified Security Assessor (QSA) for organizations handling large volumes of transactions, or by Self-Assessment Questionnaire (SAQ) for companies handling smaller volumes.

Internet fraud refers to the use of Internet services to present fraudulent solicitations to prospective victims, to conduct fraudulent transactions, or to transmit the proceeds of fraud to financial institutions or to others connected with the scheme. Internet fraud can occur in chat rooms, email, message boards or on websites. Organized gangs can obtain credit card information through phishing scams, fake websites or POS.

Purchase fraud occurs when a criminal approaches a merchant and proposes a business transaction, and then uses fraudulent means to pay for it, such as a stolen or fake credit card. As a result, merchants do not get paid for the sale. Merchants who accept credit cards may receive a chargeback for the transaction and lose money as a result.

Internet marketing and retail fraud is a fast-growing area perpetrated by dishonest internet marketing and retail sites involving a variety of products and services. The victim is tricked, by a legitimate-looking site and effective marketing, into giving their credit card information and in exchange for what they believe to be goods or services. The goods never arrive, turn out to be fake, or are products worth less than those advertised.

Consumers find that once these types of scammers obtain their credit card information, fraudulent charge attempts will be made even after the card is cancelled. Credit and consumer protection laws in many countries hold the credit card company liable to refund their customers’ money for goods or services purchased with the card that are not delivered. The credit card company then has to absorb the loss, but these costs are ultimately passed on to consumers in the form of higher interest rates and fees.

(entries are derived from Wikipedia)

Imagine the following scenario, you walk into a shop and want to pay with your credit card or alternatively a slip of paper with your credit card details on it.
This is no unfamiliar situation, every time when you have to fill out one of those online payment forms you are technically speaking giving away a little post-it with your credit card details.

So what do you think is more acceptable or safe?

Welcome to the first entry of our guide to essential payment terminology.

We will be introducing key terms for the payment professionals regularly, so you too can speak the money lingo.

A card not present transaction (CNP) is a credit card purchase made over the telephone or over the Internet where the physical card has not been swiped into a reader. It is a major route for credit card fraud. If a fraudulent transaction is reported, the bank that hosted the merchant account that received the money from the fraudulent transaction must make restitution. Whereas in a swiped transaction the bank that issued the credit card is liable for restitution.

A payment service provider (PSP) offers merchants online services for accepting electronic payments by a variety of payment methods including credit card, bank-based payments such as direct debit, bank transfer, and real-time bank transfer based on online banking online ban. Some PSPs provide unique services to process other next generation methods (payments systems) including cash payments, wallets and other payments methods such as Jumio.

Typically, a PSP can connect to multiple acquiring banks, card, and payment networks. In many cases, the PSP will fully manage these technical connections, relationships with the external network, and bank accounts. This makes the merchant less dependent on financial institutions and free from the task of establishing these connections directly – especially when operating internationally.

Furthermore, a full service PSP can offer risk management services for card and bank based payments, transaction payment matching, reporting, fund remittance and fraud protection.

A micropayment is a financial transaction involving a very small sum of money and usually one that occurs online. Payment service providers define the amount of a micropayment differently averaging from $10-20 and though micropayments were originally envisioned to involve much smaller sums of money, practical systems to allow transactions of less than $1 have seen little success.

One problem that has prevented their emergence is a need to keep costs for individual transactions low, which is impractical when transacting such small sums even if the transaction fee is just a few cents. Micropayments were initially devised as a way of allowing the sale of online content and were envisioned to involve small sums of only a few cents.

(entries are derived from Wikipedia)

The Hagenberg University of Applied Sciences has meandered through Jumio’s past press releases, interviews, blogs and classifieds. For a very good reason. The proximity of the Jumio development center to the school allows for a fruitful cooperation.

Start-up days in Hagenberg

Last weekend, Daniel finally made a personal appearance on the Hagenberg campus to talk about his start-up and entrepreneurial experiences and engage in an extended and quite personal Q & A. Interest was high, level of motivation beyond and the quality of the questions off the hook. Daniel once again leaned heavily on the messages “Network now!” and – more importantly – “Do it!”

The latter is what characterizes a lot of the so-called Silicon Valley spirit. A message perfectly portrayed by famous Vancouver hardcore band D.O.A. who said “Talk Minus Action Equals Zero”. Daniel again praised the Valley spirit and an environment that encourages creative young minds to start their own enterprise. An environment with little bureaucratic obstacles and the chance to network everyday while getting lunch.

“Hagenberg definitely has that feeling to it.” (Mattes)

Overall the three-day STARTeurope event clearly left the attendees motivated to get their own ideas off the ground. When? Now!

Everyone is listening, one loves the camera.

SIME called Vienna, and Vienna heard the call loud and clear.

Daniel sporting the finest footwear for SIME Vienna

On April 28th, more than 1200 digiheads gathered at the Ottakringer brewery in Vienna for the first Austrian Scandinavic Interactive Media Entertainment, organized by digital media expert and industry whirlwind Martin Drexler. The conference was, maybe unintentionally in its degree, sliced into two aspects. Listen to the impressive line-up of speakers, and socialize in a day-long beer-fuelled networking session.

SIME chairman Ola Ahlvarsson ran the conference like the good helmsman he is. Worth mentioning were the addresses of David Rowan, Wired UK and “former hacker” Pablos Holman. Jumio founder Daniel Mattes took the stage as part of a panel including Dan Schatt of PayPal and Thomas Labenbacher of Raiffeisen Bank to discuss the future of payment.

All presentations were broadcast on screens throughout the vast area of the event location. Hearty food was served, beer was consumed and the atmosphere was likened to a summer music festival. And even if there were no particular new and groundbreaking revelations on-stage, the networking aspect off-stage made the SIME Vienna both successful and necessary.

Here are a few reviews
SIME
Horizont (in German)
The Gap (in German)

Videos
SIME YouTube 1
SIME YouTube 2

Are you losing out on churn?
By Bjorn Evers

For retailers online fraud is one of the most difficult problems to get under control. From a consumer perspective, it can be very frustrating when you have to enter a lot of personal information before you can actually pay for something online. Can you imagine you are at the cashier at a high street retailer and you are about to pay for something, but instead you are being asked to fill out a form with your name, password, shipping address, age, phone number, credit card number, valid date, cvv code, your mother’s middle name and even the name of your first pet (in case you lost your password!).

When you travel abroad, fraud management might even go one step further. If you purchase something online, you might be asked to email or fax your scanned photo id, credit card, a utility bill (provides information about fraud size and address) or provide a specific code from your bank statement. This is the classic case of ‘false positives’, you want to pay for something but you can’t, for some reason the system does not match up your location with the credit card details or there is a problem with your IP address.

If that would happen to you, you would probably walk away in frustration! The store would lose the deal and might lose you as customer forever. High street retailers seem to be on top of the situation in the offline world with Chip and Pin and other technologies – but simplicity and fraud is still not solved for the online world.

The US department of Commerce announced in February this year that the estimate of US ecommerce was $44.1 billion for the fourth quarter of 2010 – an increase of 5.6 % from the previous quarter (WSJ, February 17., 2011). The numbers are increasing, however looking at the payment processes behind it consumers still have to go through a painfully long process every time they shop online. Let’s not forget, mobile shopping and payment will also be a critical factor in the near future, once shopping will be fully accessible on the mobile.

We have seen that online merchants lose a lot of customers in overcomplicated checkout processes. In some cases up to 50% of the customers drop out at the payment page. Remember, this is a customer that has already chosen a product or service and is ready to pay for it!

Fraud will continue to be a major issue for online merchants that’s why extensive fraud management will always be required. For customers and merchants, the key question is how to make payments more secure and easier at the same time?

Jumio’s staff is expanding rapidly.

And even though we operate in a state of anardemocracy here at the Jumio HQ and the development centre, the screens on the desks reveal who is important at Jumio and who is not quite there yet. As cruel as it sounds, once again it looks like size does matter.

Here are the gadgets, and the according position within the company.

Coffee Gophers/Interns

Marketing Assistants

Marketing Head Honcho and the Creative Cluster

Development Interns

Flash/Backend/Action Script Gurus and the Biz Dev Boss

HR Chief, Financial Master, Developer Villain

The Founder!

Some of you have read our recent announcement of closing our $6.5m Series-A round. The funding announcement led to tremendous international attention from television, press and online media like FOX, Wired, Techcrunch, Huffington Post, VentureBeat, Mercury News, All Things Digital, L’Expansion (France), O Dia (Brasil), Der Standard (Austria) and many others. As a result, I have received many messages asking me how I see the current Venture Capital and Private Equity market.

Venture Capital (VC) is what drove the U.S. to the forefront of the global economy. According to Peter Cohan from DailyFinance, investments in VC funds shrank by 39 percent to $4.3bn in the first quarter of 2009 (from $7.1bn in the same quarter a year ago). According to the National Venture Capital Association (NVCA), it has been 12 years since the venture industry has returned more cash than it has plowed into investments. The venture capital business model is simple – an early stage VC firm may have a portfolio of 10-15 companies, expecting 1-2 to generate high returns, 2-6 to break even (barely getting their money out) and the remaining 7-12 to fold. Late stage VCs should be more successful, but at lower expected returns. Below is a table showing possible returns and expected time frames:

(Source: www.riskoverreward.com)

The NVCA provides plenty more industry statistics: http://www.nvca.org/

Understandably, VC funds are moving their efforts more and more from early stage to mid stage investments to minimize the risk in their portfolio. Therefore, typical start-up valuations are currently happening in the range of 7-12 million USD post money, which leads to a significant dilution for the founders. In addition, conditions for entrepreneurs tighten – vesting rules and liquidation preference clauses are much more in favor of the VCs these days than a few years ago.

As an entrepreneur you need to ask yourself how to minimize this dilution effect (Series-A money is the most expensive money in the course of your start-up cycle) but also how to gain access to the network. The later you have to raise money, the higher your valuation will be. If you are able to provide a working business model, show revenues and if you have the proof that your solution is adopted by the market, your company’s value will be significantly higher.

In Jumio’s case, we decided to raise money from the private equity market instead. Currently, there are many successful start-up stories in the media like Facebook, Twitter, LinkedIn, Zynga or Groupon, just to name a few. Access to these projects is usually limited to VC funds or well-connected Business Angels, but there is also a lot of interest from wealthy individuals who would like to participate in these kinds of projects from the very beginning. We see a lot of activity in secondary markets where private investors are buying common stock from these mid- to late stage technology companies, but there are literally no offers available in early stage companies.

We screened the market for a good placement agent and finally decided to engage Felix Investments LLC, a boutique venture capital broker dealer located on Wall Street.

Emilio DiSanluciano
founding managing director
Felix Investments LLC

“At Felix, we know that it takes more than a solid financial support to get a company off the ground. We are passionately committed to helping our portfolio companies succeed. We make things happen.” says Emilio DiSanluciano, founding managing partner of Felix, and continues: “Jumio has a very strong management team with a track record, a disruptive product and is approaching the market at exactly the right time.”

Technically we created a Special Purpose Entity (SPE) in form of a LLC together with Felix, which eventually became Jumio’s shareholder. A participation in Jumio was offered to Ultra High Net Worth Individuals (Ultra HNWI) by Felix Investments, who became owners of the LLC. After agreeing on the terms, a due diligence was performed by Felix and a private placement memorandum was generated.

The whole process was very smooth and I can only recommend high profile start-ups to explore this way of financing.

by Daniel Mattes, Founder & CEO Jumio