1、Payments, Processors, ecosystem scaling FleetCor Technologies (FLT): King of the Cross-Sell Western Union (WU): The traditional money remittance power WEX (WEX): Operating in attractive FinTech swim lanes Verra Mobility (VRRM): Market leader in tolling payments processing and traffic safety solution

2、s Repay (RPAY): Integrated payments platform serving niche (but expanding) verticals International Money Express (IMXI): Focused competitor gaining share in important remittance corridors 24 January 2020Source: Credit Suisse estimates Payments, Processors, Emphasis on attracting new payments flows o

3、nto both card and non-card rails (Visa Direct + Earthport, efforts in both cross-border and B2B, recently announced pending acquistion of Plaid) MAMastercard, Inc.$330 OP $324$350 Higher exposure to faster growth international markets; Acquisitions (Vocalink, Transfast, Nets, Transactis) support mul

4、ti-rail approach, B2B (Mastercard Track), and bill-pay (Mastercard Bill Pay Exchange); Maestro card conversions PYPLPayPal Holdings, Inc.$140 OP $116$135 Share gainer 45% of merchant acquiring in global eComm Two deals worth of revenue synergies in 2020; Longer-term in-store expansion in new countri

5、es FISVFiserv, Inc.$84 NEUTRAL $121$133 FDC undervalued thesis now validated by market (valuation); Exposure to attractive swim lanes (ISV, eCommerce International) albeit at lower levels of total revenue vs. Outperform-rated acquirers; GBS tougher compares ahead (following impressive acceleration i

6、n 2019) GPNGlobal Payments, Inc.$60 OP $199$230 Highest relative exposure to the fastest growing channels (owned Leading credit issuer processor via TSYS; Potential for more bank/JV partnerships SQSquare, Inc.$33 OP $69$84 Intersection of software + payments, 3x recycling; Sentiment and number reset

7、 ahead of analyst day in March; Two recent price increases help alleviate a degree of the investment pressures (e.g., 50bps on Instant Transfer) FLT FleetCor Technologies, Inc. $28 NEUTRAL $310$335 Fuel, Corporate Payments, Lodging, Best at cross-sell Valuation recovered in 2019 (vs. 2017 and 2018 l

8、evels) with a return to LDD organic growth in fuel segment WUThe Western Union Co.$12 UP $28$26 Valuation at a meaningful premium to historical averages, dividend (3%) at low end of range; Market digested recent good news ($150mm cost savings, 3-year targets/guidance); Competition from traditional P

9、latform/asset value Awaiting further detail on timing/execution of ramp in Europe (recent acquistion of Pagetelia potential to improve timeline) RPAYRepay Holdings Corp.$0.9 OP $16$19 Integrated payments in niche verticals; Increasing debit penetration in core verticals, adding verticals, new mercha

10、nts Mexico Await further clarity on 2020 outlook given recent data points Payments, Processors, 2) 17% global eCommerce 3) 20% International growing 10%+; and 4) an emphasis on SMB and multi-nationals. Leading credit issuer processor with dominant share in the US, UK, Ireland, Canada, and China (+5-

11、7% growth vs. industry +3%); improved ability to win bank partnerships and joint ventures. Potential vertical software M (2) Includes $13T of non-PCE card purchases in China 87% Un-carded opportunity US Payments addressable market Large TAM driven by PCE growth + cash-to-card conversion 10 Our indus

12、try model (card volumes/penetration vs. adjusted PCE + cash-to-card penetration) suggests continued HSD volume growth should persist through at least 2023. We model V we note that V 20% of micro merchants fail per year1vs. LSD for larger merchants Opportunity to expand beyond payments (e.g., capital

13、/cash advances, website design, CRM/marketing tools, payroll, etc.) Merchant Acquiring: SMB is where the money is at SMB segment 17% of volumes, but 55% of revenue in US market 12 $7.5tr in US card volumes (2019E), of which $1.3tr is from SMB and micro merchants, which despite making up just 17% of

14、volumes, account for 55% of the acquiring/processing revenue opportunity Source: 1Small Business Administration, Company reports, Square, US Census, Credit Suisse estimates, US General Purpose Card Volume from The Nilson Report for 2018 base, and 2019E represents Credit Suisse estimates24 January 20

15、20 $3.2tr card volumes $3tr card volumes $850b card volumes $1mm - $100mm $250k - $1mm Less than $250k annual revenue 3mm SMB 20mm Micro merchants 20k mega merchants 1mm mid-market larger merchants 80-120bps net yield = $4.5b+ revenue 40-100bps net yield = $6b+ revenue 10-40bps net yield = $7.5b+ re

16、venue 1-10bps net yield = $1b+ revenue $450b “First of all, we stick to our knitting and we focus really on SMBs in a given country. So as good a company as Amazon is, were not interested in Amazon, right? So for us to be a commoditized providerno contracts, 30-day outs, no minimums, no service, low

17、 fee. Why is that interesting?” Jeffrey Sloan, CEO, GPN (May 15, 2019) $100mm+ 17% 11% 19% 10% 10% 3% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% Software-ledeCommerce (total) AmazoneTail ex- Amazon Other eCommTraditional Merchant Acquiring: Software Software-led defined as integrated payments sold throu

18、gh owned or partnered software platforms typically to small or medium-sized businesses. 13 Technology-enabled payments (software-led and eCommerce-related channels) is not a new trend, but it remains a powerful one, with software-led channels growing 2x the overall market (4-5x traditional channels)

19、 and eCommerce ex-Amazon growing 2-3x traditional. Share gainers will be payment providers with the best exposure to these channels (own the technology to serve, with business mix skewed toward these faster-growth swim lanes, along with the scale and resources required to keep up with increasing com

20、plexity and competition). Amazon makes up 35% of US retail eCommerce (and 55%+ of growth), a portion of payments that is less addressable for the majority of payments companies and with the lowest unit economics for acquirers for this reason, we separate the remaining portion of eCommerce, which we

21、define as eTail ex-Amazon (i.e., retail eCommerce for SMB and non-Amazon merchants) and other online commerce (e.g., eFood delivery, ride-sharing, online travel, etc.). Further, a large portion of the remaining eCommerce volume runs through marketplaces (50% of eCommerce globally) and multi-national

22、 companies (e.g., Uber, Netflix), placing additional emphasis on global gaining 6%, going from 15% to 21% share) and the remainder going to eCommerce payments channels (gaining 3%, going from 24% to 27%). 24 January 2020Source: Company reports, The Nilson Report, BCG, AZ Payments, eMarketer, Credit

23、Suisse estimates 12%13% 14% 15% 17% 18% 20% 21% 2% 2% 2% 3% 3% 3% 4% 4% 5% 5% 5% 5% 5% 5% 5% 6% 15% 15% 16% 16% 17% 17% 17% 17% 67% 65% 63% 61% 59% 56% 54% 52% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2016E2017E2018E2019E2020E2021E2022E2023E Traditional Other eComm eTail ex-Amazon Amazon Software

24、-led 17% 19% 20% 24% 27% 30% 0% 5% 10% 15% 20% 25% 30% 35% 2018E2019E2020E2021E2022E2023E Results in a highly recurring revenue streams with reduced attrition, and the potential for higher margins (i.e., distribution leverage “acquire the merchant once, sell the merchant many times”, including addit

25、ional ancillary products and services such as working capital loans, payroll processing, invoicing, etc.). Payments and software companies often strive to work with the same underlying merchants (SMB and mid-market, higher net revenue yields vs. larger merchants). Makes sense for payments and softwa

26、re to work together given payments data is valuable for decision making and planning (customer preferences, inventory planning, cash flow management), making the offering less commoditized. Merchant Acquiring: Software-led in two flavors owned and partnered Both support SMB access, cross-selling opp

27、ortunities, and reduced attrition 15 Platforms that combine payments + software (both owned and ISV partnered approaches) benefit from meaningfully reduced attrition, particularly impressive given SMB skew of these channels “as we drive deeper into software within cross-border, 2/3rdsare done via Ma

28、rketplaces (and a meaningful portion of the remainder is via larger multi-national merchants) Global eCommerce is a fast-growth swim lane (17% CAGR 2019-2023E), with the cross-border component growing 25%+ (with an even faster- growth sub-component, cross-border on Marketplaces, is growing 27%) “Its

29、 not unusual for a large global retailer to be managing 30 to 60 and sometimes 100-plus contracts and partnersIt is not unusual for a large international company to be eliminating potentially dozens of different partners and integrate one implementation across all of those regions with one set of co

30、ntracts and one solution” Brian Dammeir Head of Product, Adyen (April 2019) Global eCommerce (ex-CB) 80% Cross- border 20% Marketplace 67% Non-Marketplace 33% $1.5tr $1.9tr $2.4tr $2.8tr $3.3tr $3.9tr $4.4tr $4.9tr $0.4tr $0.5tr $0.6tr $0.8tr $1.0tr $1.3tr $1.9tr $2.4tr $2.9tr $3.5tr $4.2tr $5.0tr $

31、5.8tr $6.7tr $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 20019E2020E2021E2022E2023E Global eCommerce ex-CB CB Marketplaces CB ex Marketplaces 24 January 2020Source: Company reports, Worldpay, eMarketer, Forrester Research, Zion Market Research, Credit Suisse estimates Faster-growth inter

32、national markets, often in earlier stages of the secular cash- to-card conversion (e.g. APAC, Latin America, and Central / Eastern Europe). Processing in-store payments for domestic merchants requires local acquiring capabilities (owned or sponsored licensing), local support staff, local knowledge,

33、relationships with regulators, local payments methods, local language, etc. The ability to handle both in-store and eCommerce (omnichannel) is a differentiator, better positioning acquirers to win multi-national merchant contracts (e.g., Global Payments won Citi for global eCommerce Mastercard achie

34、ved 75% of its growth from international, only 65% of its total, and grew1.6x domestic volumes in 2018 24 January 2020Source: Company reports, Credit Suisse estimates 30-35 6 33 50-55 5858 0 10 20 30 40 50 60 70 First Data (Fiserv)Worldpay (FIS)Global Payments 2% 4% 3% 3% 3% 4% 6% 5% 5% 4% 1% 1% 1%

35、1% 1% 2% 4% 4% 3% 3% 10% 15% 13% 13% 12% 201720182019E2020E2021E USLatin AmericaEuropeCanadaAPMEA Merchant Acquiring: Channel and business mix matter Estimated revenue exposure within merchant acquiring business segments Source: Company reports, Credit Suisse estimates; Percentages are estimates (no

36、t precise, disclosed figures) of revenue mix within acquiring businesses for GPN, FISV, Revenue recognition based on home country of merchant, understating International. Fiserv (First Data) 12%14%50%24% Software-led includesboth CloveriPOS offering and ISV/integrated payments business (CardConnect

37、SMB relationships are via Clover, Partner Solutions (ISV, agent, ISO), referral partners (bank and non-bank), and JV alliances. PayPal1-2%98-99%65-70%47% Pure-playeCommerce, althoughiZettle representsoffline expansion, software-led payments (owned software-led iPOS); As of 2015, large merchant mix w

38、as 46% of volume (we assume an increase, and factor in P2P volume, pricing, and OVAS revenue). Repay100%0%*60%1% Pure-play integrated payments, with volumes integrated with ISV partners and directly into merchant systems; Top 10 clients account for 30% of revenue; Majority of payments made online or

39、 via phone, although we categorize as software-led vs. eCommerce. Square95%1-3%90%5% Horizontal software, with select vertical-specific solutions; Assumes 1/2 of Mid-Market sellers are SMB (by volume), remainder are larger (e.g., Shake Shack, Washington Nationals, Blue Bottle, etc.). 24 January 2020

40、 Merchant Acquiring: If these platforms gain share, who will lose it? Hundreds of sub-scale, country/regional, and local bank-owned acquirers Source: The Nilson Report, First Data estimates include JV proportionate share of transactions (BAMS, Wells Fargo, Citi, Santander, BBVA, PNC, Cardnet), Credi

41、t Suisse research estimates 19 RankAcquirerCountryTransactions (mil.)AcquirerCountryTransactions (mil.)AcquirerCountryTransactions (mil.) 1WorldpayGroup35,235 51BS PayoneGermany1,175 101BB from 2015 to 2018, the top five acquirers gained 500bps in acquiring share (by transactions). We expect the thr

42、ee recently merged, scaled platforms (Fiserv-First Data, FIS-Worldpay, Global Payments-TSYS), all with annual free cash flow in the $3-5b+ range, to resume acquisitions with an emphasis on merchant acquiring, the fastest growing part of their businesses. First Data 14% Vantiv 8% JPMC 8% Worldpay 5%

43、Cielo 3% Global Payments 3% Elavon 3% Sberbank 3% Barclays 2% Heartland 2% Nets 2% 11-30 24% 31-150 23% 24 January 2020 First Data 13% Worldpay / Vantiv 13% JPMC 8% Global Payments / TSYS 5% Cielo 3% Elavon 3%Sberbank 3% Barclays 2% Nets 2% Rede 2% 11-30 24% 31-150 22% Networks: New sources of volum

44、e supportive of 10%+ until at least 2023E Street underestimates growth persistence and power of compounding 21 We quantify the potential impact (illustrative in sensitizing volume CAGR from small portions of penetration) of five nascent drivers of US card payments (push-to-card and B2B - beyond PCE

45、- along with contactless, bill-pay, and underbanked additions to the card ecosystem) to determine their contribution to incremental growth. Industry incentives are designed to drive adoption providing economic benefits for issuers (interchange, incentives), networks (network fees), and consumers and

46、 business (rewards, speed, convenience, data) vs. cash, check, implies less onus on PCE growth and traditional cash-to-card conversion baked into estimates. 24 January 2020Source: Company reports, Visa, Aite, A.T. Kearney, FDIC, Mastercard, Credit Suisse estimates New source of volumeTAM Illustrativ

47、e incremental card penetration (2023E) Implied volume addition Implied addition to 2019-2023E CAGR Push-to-card$7.7tr5%$386b130bps B2B$22tr1%$220b70bps Contactless$3.0tr3%$90b30bps Bill-pay$2.5tr2%$50b20bps Un-banked although we expect Visa and Mastercard will pay away the majority of this premium o

48、pportunity in the near term (2-3 years) to incent the issuance and usage of contactless cards (i.e., rebates to both issuers and acquirers). Markets similar to the US (e.g., Australia, UK) with high card penetration have seen meaningful adoption 3-4 years (percentage increase in face-to-face transac

49、tions per card, years 1-5 post rollout) Illustratively, net yield opportunity in a steady state for contactless transactions has the potential to be 2x+ that of a traditional, larger ticket size transaction (although still 3-5 years away) 45% 9% 35% 0% 10% 20% 30% 40% 50% Year 1Year 2Year 3Year 4Year 5 New Zealand Ireland Switzerland United Kingdom Canada Australia 0.11% 0.11% 0.15% 0.50% 0.2