This will be my first predictions list, let’s see how many I get right. Sorry, this list isn’t for the weak at heart, you’ve been warned.

1) Google will suffer a major security breach.

Nearly 750,000 advertisers use their credit cards on Google accounting for nearly 3,000,000 unique credit card numbers. Millions more consumers use Google Checkout, while most are taking advantage of Google’s now twice holiday special, that still accounts for more than 25,000,000 unique credit card numbers. What happens when you combine this with a series of security breaches? Don’t get me wrong, Google is brilliant when it comes to search but when it comes to security, they really should get their act together. While they could certainly afford the avalanche of lawsuits that would follow a major security breach, can their market name survive that? The reality is that while we use Google for search, so much of that is built on trust and one can only imagine what will happen when they experience that major breach. It’s not a matter of if, but rather when; and I predict that will be 2008.

2) Users will find alternatives to Facebook.

As much as Mark Zuckerberg would love to believe that Facebook is the new business model, the reality is that the only thing keeping the users there is other users. While they have made a few good moves with their API access and a couple of nice tweaks, let’s face it, Facebook is all about users and it’s just a matter of time before they alienate their users to the point where most just pick up and move to the next Facebook. They have been all the buzz lately, but unless they manage to keep users there for more than chit-chat, users will just move to the next great social network. My advice would be to find some way to marry payment services and users, because while friends will keep their interest in the short run, money will keep them locked in for the long haul.

3) Government will crack down on shady merchant service providers.

For those not familiar with the merchant services industry, let me just say: it is, by far, one of the dirtiest and most despicable arenas on the planet. If you think your job makes you feel dirty, try the merchant services industry for a year and you will go running for the hills. It’s broken even the best of them and takes no prisoners. Fortunately, 2008 is a major election year and the U.S. government is going to have to shell out some symbolic victories to the American public to at least pretend that they care about what’s going on. It’s my prediction that in 2008, the government is going to impose stiff penalties and restrictions on the merchant industry, because it’s clear that in the area of handling sales reps and merchant service providers, this industry is lacking. With so many people coming in, making their quick buck, and exiting with so many causalities along the way, it is only a matter of time before government steps in.

4) Network Merchants will become a market leader in payment gateway services.

If you don’t service your clients, someone else will. Anyone who has dealt with Authorize.net support since the CyberSource purchase knows the meaning of bad service. While the Network Merchants platform is still very unprofessional at best, it has potential. These guys are good at what they do and it’s only a matter of time before someone comes in to clean up the interface, tools, and options. Short of that, they made the brilliant decision to allow merchant service providers to private label the solution and support it themselves rather than putting that back on Network Merchants. While this could spell problems in the long run, it’s this blogger’s opinion that they will find their direction in 2008 and come close to becoming the market leader by the end of 2008. What’s shocking is that Authorize.net will never know it hit them as Network Merchants has managed to stay under the radar, bravo.

5) Optimal Group will shut down.

Anyone who has ever dealt with Optimal Payments will probably have a horror story or two to tell you. While they try very hard to come off as a highly professional company, the truth is management stinks. You see this in blogs, you see this on message boards and you hear this when talking to any former clients or partners. Can they survive? Maybe. But buying a toy company? Come on guys, I believe in diversifying your options, but a toy company? Get as creative as you want with the projections but as much as you think getting the endorsement from Seinfeld’s recent “Bee Movie” would have killed this holiday season, your numbers will January will show it didn’t. In addition, when the Justice Department hands down its $50MM++ fine, it will be over. While some may believe that the other $50MM will tide them over, it’s only a matter of time before investors wise up and realize it’s not real cash but money they are holding onto from merchants, reserve accounts and other cash items that Wall Street is all too unfamiliar with. One can only question, why hasn’t anyone realized as of yet how they managed to hoard so much cash considering they never generated the revenues to support that? It’s my prediction that unless they fire senior management and the VP level folks and just dump the toy company that they will falter and go under in 2008—maybe not a full blown bankruptcy but definitely a major, major sell off of assets. Focus people, it’s not a difficult concept, heck, take $5MM and buy Volusion, while a bunch of snooty folks too, at least you’d get your money’s worth, Optimal.

6) The credit card industry will wise up to subscription billings.

Hoodia, health care benefits, diet products, the scams are out there and unfortunately the numbers at least by themselves are just too small for anyone to care. The reality is far from that, when in fact over $2 Billion was improperly billed to the American public in 2007 in the form of $1 authorizations and items ranging from $4.95 to $39.95 a month in a variety of MLM, health care, and related products. In 2008 Visa and/or MasterCard will wise up to these folks and make tracking this merchant-level type of fraud harder for the scammers to get away with. The fact is that too many people are coming into the space, milking the American public for millions, and going under just to start again. Unfortunately, government is years behind and because of the small dollar amounts, the matter lacks attention of the FBI. It’s going to be up to Visa and MasterCard to step in and impose strict regulations as they apply to monthly billing scams.

7) NACHA will roll out their version of a TMF list.

Let’s face it: ACH processing is the wild wild west of payment processing. Rules are sketchy at best and it’s amazing what people are getting away with. One of the biggest challenges is simply that there is no centralized database of bad merchants. I believe that in 2008, NACHA will fix this. While there has been talk about this for years, 2008 will be the year these guys realize how much benefit that will cause. Let’s just hope they don’t screw it up.

8) Credit card usage will slow.

Yup, while the last 10 years has presented itself with impressive growth rates on the credit card front, both on and offline, the reality is that credit cards will be the next victim in the housing crunch. Someone has to pay the bill for all those benefits consumers get, great rates and teaser offers and while incentives will continue in any market times, the reality is that while until now banks were able to pass those costs onto merchants through discount rates, they don’t have much wiggle room anymore. The offset is going to come at the expense of consumers and while people aren’t going to stop spending money tomorrow, cash may be the answer for consumers. While inconvenient, dirty and troublesome, cash will always reign as king and unless banks find some way to carry the bill for all those attractive offers that keep consumers coming back for more, Visa and MasterCard are going to see some surprising drop offs in new cards and spending towards the end of 2008.

Yup, that’s it; some obvious, some not so much. Whatever 2008 will hold, it will be interesting for the payment services industry.