The House Financial Services Subcommittee on Oversight and Investigations, chaired by Rep. Sue W. Kelly (NY), will be holding a hearing this Thursday, July 21 to continue the Committee’s investigation of personal data breaches and data security.

The hearing, which is entitled Credit Card Data Processing: How Secure Is It, will focus on data security gaps in the credit card transaction process. At issue is the integrity of the mechanisms in place at the time of a breach such as the high-profile cases that have been reported recently and the allocation of responsibility for maintaining data security throughout the credit card payment system.

Subcommittee Chairwoman Kelly said, “Consumers everywhere deserve to know for certain that their credit card accounts are safe and secure as they are processed. This hearing will help us learn more about the troubling breach by CardSystems as we develop ways to make sure this is an anomaly that will never be repeated.”

Scheduled to testify are:

• Joshua L. Peirez, Senior Vice President & Associate General Counsel, Law Department, Mastercard International
• Steve Ruwe, Executive Vice President, Operations & Risk Management, Visa U.S.A.
• Zyg Gorgol, Senior Vice President, Fraud Risk Management, American Express
• Carlos Minetti, Executive Vice President, Cardmember Services, Discover Card
• David B. Watson, Chairman, Merrick Bank
• Mallory Duncan, General Counsel, National Retail Federation
• John M. Perry, President and Chief Executive Officer, CardSystems Solutions
• Evan Hendricks, Editor and Publisher, Privacy Times

James Kelleher reports for Reuters on American Express' plans to cease using CardSystems Solutions by October. Amex's action follows earlier action by Visa USA to remove CardSystems as an approved processor and third-party agent for handling Visa card data.

We received the following question earlier today:

Q. I read a great article published by you in 2002 on credit cards and direct mail. Do you have any idea or guesses on direct mail volume for the following credit card issuers: Providian, Citibank and Discover? If not, do you know any good secondary or primary sources?

A. See the Mail Monitor service offered by Synovate.

Mail Monitor® is the credit card industry ‘standard’ for monitoring direct mail volume and response rates in the US and Canada. It provides real-world perspective on developing trends, defines the market’s competitive framework, and analyses the performance of credit card direct mail acquisition programmes.

Eric Dash reports for the New York Times that Visa USA said yesterday it would stop allowing CardSystems Solutions to handle Visa transactions as a result of recent security breach issues with the firm.

"CardSystems has not corrected, and cannot at this point correct, the failure to provide proper data security for those accounts," said Tim Murphy, Visa's senior vice president for operations in a memorandum sent to several banks. "Visa USA has decided that CardSystems should not continue to participate as an agent in the Visa system."

Dash reports that Visa has given eleven banks using CardSystems as a processor until the end of October to change to another processor.

Pacific Epoch has posted portions of an interview with PayPal China country manager Jeff Liao (reg. reqd).

We have Netease, we have Tom Online, we have a strategic alliance with ChinaPay - the alliance is to share their Internet merchant base with us. PayPal, "Bei Bao" in China is going to be an open platform. So almost any Chinese Internet site can use PayPal.

US Bank reported second quarter financial results this morning that included growth in revenues from merchant processing of 20 percent for the quarter over the same quarter last year. Merchant processing revenues were $198 million for the quarter vs. $165 million last year.

Merchant processing services revenue was higher in the second quarter of 2005 than the same quarter of 2004 by $33 million (20.0 percent), reflecting an increase in sales volume, new business, higher equipment fees and the expansion of business in Europe.

Jenifer Nil reports for the Deseret News that Wal-Mart applied yesterday afternoon to the Utah Department of Financial Institutions to establish a Utah industrial bank that would process credit card, debit card and electronic check transactions.

The company currently uses a third-party processor for the transactions. Bringing the operation in-house will save Wal-Mart a "significant" amount of money every year, Whitchurch said. He declined to specify how much money would be saved.

"It will be a significant savings when you add up the fractional savings on millions and hundreds of millions of transactions that can be paid to Wal-Mart Bank instead of a money center bank," said Alan Whitchurch, a University of Utah graduate and 20-year banking veteran who comes to Wal-Mart by way of Merrill Lynch Bank.

Spotya! has announced the launch of Spotya! QuickCash, offering short term loans for Internet users who are short on cash or don't have a credit card.   » Continue Reading

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Note: This posting is updated regularly throughout the day.