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August 30, 2002

San Francisco Chronicle: Financial privacy measure on its last legs

Christian Berthelsen reports that the California Assembly may not bring the Financial Information Privacy Act up for a vote before the end of the legislative session midnight Saturday. A group called Californians for Privacy Now has been formed to place an initiative on the ballot in the event the legislature fails to act. Craig Newmark of also speaks out on the issue.
Like Mr. Ed, I never speak, unless I have something to say ... and I happen to know a few things about forthcoming financial privacy legislation, so here goes.

San Jose Mercury News: Wal-Mart muscling in on banks' turf?

Deborah Lohse reports on Wal-Mart's plan to buy Franklin Bank of California. Legislation is pending in California to prevent the purchase.
But opponents fear Wal-Mart wants Franklin as a toehold to build a network of branches offering personal and business loans nationwide -- wiping out small lenders the way some gripe it has underpriced groceries, pharmacies and other small competitors in many local areas. Others fear Wal-Mart could use its future banking clout to deny loans to would-be competitors, coerce consumers to use only its own credit cards, or share private consumer data with its new financial-services arm.

August 29, 2002

Phil Windley: Credit card fees and eGovernment

Phil Windley, CIO of the State of Utah, provides an insider's view of credit card fees for government services.
The biggest challenge we face is that most of the revenue collected through fees is already appropriated, so an agency like the Tax Commission isn't free to use some of the oney they collect for licensing a vehicle to pay the credit card company. They have to get that money somewhere else. The somewhere else is a special "online fee."

Meredien Research: Visa's Online Authentication - Take Two

Meredien Research is out with a new report on Visa's 3D Secure.
Visa‚s 3D Secure is the latest protocol for online cardholder authentication, and it is one that has a great chance of success. Marketed globally under the Verified by Visa brand, this protocol and concurrent rule changes by both Visa and MasterCard are the right approach to battle online card fraud. If successful, 3D Secure will effectively bar the introduction of alternative payment mechanisms to settle traditional online shopping transactions. This report examines the genesis of 3D Secure, how success will be measured, the impact on participants, how adoption patterns will differ globally, and how online shopping will be impacted. Predictions of future chargeback rates and online shopping growth are included.
The Executive Summary notes that with card issuers and merchants largely on board, the big remaining question is consumer adoption.

August 28, 2002

Trintech reports 41% decline in revenues

Trintech is out today with its quarterly earnings report.
Revenue for the second quarter, FY 2003 was $10.9 million compared with $18.4 million for the corresponding quarter of the previous year. This was a decrease of 41%. The first half fiscal year decrease in revenue over the prior year resulted from the ongoing fragile state of the global economy. This resulted in slower payment infrastructure investment decisions that lead to a weak demand for Trintech's secure payment infrastructure solutions.

American Banker: Aussie test: will public pay price for card use?

David Breitkopf reports on yesterday's announcement of credit card reforms by the Reserve Bank of Australia. READ MORE »

CNET: E-wallets get a boost from Amazon

Margaret Kane reports on the use of Amazon's OneClick "wallet" across multiple stores.
In allowing customers using the same account to shop at multiple stores, Amazon has in effect created an e-commerce wallet. It's something companies from Microsoft to America Online to Yahoo have tried to do--with little success so far. But Amazon and technology providers are coming at the wallet game from two different points. Companies such as Microsoft are building the technology and hoping consumers will come. Amazon is counting on its huge customer base being attracted to its wallet feature, and it is using that popularity to pitch partnerships with key retailers.
The article doesn't mention that Apple has also licensed 1-Click from Amazon and uses it for the Apple Store -- although I don't believe that the wallets are integrated between the Amazon and Apple sites.

August 27, 2002

Dan Gillmor: Financial Institutions pretend to support privacy

Dan Gillmor comments on the Financial Services Privacy Coalition.
Don't fall for this.
The San Francisco Chronicle reported this morning on the industry's advertising initiative.

Reserve Bank of Australia: Reform of credit card schemes in Australia

The Reserve Bank of Australia has released its final reforms to credit card schemes in Australia. READ MORE »

American Banker: Amex wants to make ID standard a reality

Steve Bills reports on American Express' view of the Liberty Alliance efforts.
"We hope the Liberty Alliance will help solve the religious war," Mr. Salow said. The alliance - which also includes Bank of America Corp., Citigroup Inc., and a range of nonfinancial companies - is promoting a standard for online identity that he said could untangle today's confusing system of multiple log-ins and passwords.

August 26, 2002

The first week of PayBITS

Adam Engst reports on week one of PayBITS, a new honor-system payment approach to compensating authors for digital content.

CNET: Expert demonstrates Microsoft hack

Software security widely used for Internet banking and e-commerce can be easily circumvented, and customer accounts at several of Sweden's largest banks remain at risk as a result, a computer expert said Monday.

August 24, 2002

New York Fed: Why hasn't electronic bill presentment and payment taken off?

An article by Chris Stefanadis of the New York Federal Reserve Bank on why adoption of EBPP has been slow.
Although checks are still the primary instrument for bill payment in the United States, EBPP providers appear confident that they will become important players in the financial services sector. Their optimism stems from the significant efficiencies that the new technology can potentially provide: better communication links between the biller and the customer, lower processing costs, and greater convenience. Nevertheless, the spread of EBPP has been very slow, falling far short of initial projections. One key reason is the lack of coordination among potential participants.

August 23, 2002

California financial privacy bill moves to Assembly for vote

This bill, SB-773, which was introduced by Jackie Speier, D-San Francisco/San Mateo, intends to provide significant new protections to consumers regarding the sharing of personal financial information by financial institutions. It moved out of committee today and is now headed for a vote in the full Assembly.
Representatives of financial institutions told the committee Friday that Speier's bill is unworkable, expensive and would be too confusing for customers. Privacy advocates said it would give consumers a choice in how detailed financial information is shared among companies. Speier said the bill's main issue concerned private property rights and asked "what is more precious private property than our financial DNA?"
The County of San Mateo recently adopted an ordinance to protect consumers' financial information privacy.
With this ordinance, San Mateo County has become the first jurisdiction in California to provide consumers privacy protections in excess of those found in federal law, Gramm-Leach-Bliley Act. This ordinance would require financial institutions to ask for and receive consumer's permission before disclosing consumer's confidential information to third parties. "The Board, with its unanimous vote, has signaled its commitment to protecting the interests of consumers. Requiring financial institutions to get permission before sharing confidential consumer information is the only meaningful way to truly gauge a consumer's wishes," said Supervisor Mike Nevin, author of the privacy ordinance. "Placing the responsibility on consumers to stop the selling of their information defies common sense."

ePSO: ePayments database

The ePayments Systems Observatory maintains an epayments database focused primarily around epayments in Europe.
The ePSO project is part of the European efforts to leverage payment systems innovation in the move towards promoting e-commerce in Europe. Its objectives are:
  • to monitor and analyze the strategic views of market players and experts
  • to strengthen communication across groups of actors, sectors, channels and countries, with a view to assist standardization and regulatory bodies to keep pace with the evolution of technology.
The ePSO project is co-financed by the European Commission DG Enterprise ISIS Programme and the IPTS. It is supported by the European Parliament and European Commission Services involved in payments.

August 22, 2002

Celent: Global Money Transfers

Celent has published a new report on the market opportunity associated with global money transfers.
The global remittance market represents an increasingly attractive opportunity, driven by rising immigration and the huge pressures faced by informal networks, such as the Hawala/Hundi in the US and abroad, in the context of the war on terrorism. The remittance market should grow from US$143bn in 2002 to US$177bn by 2006, while informal networks‚ market share in developing countries should fall from 45% in 2001 to 34% by 2006, with the windfall going to official transmitters such as Western Union.

US Dept. of Commerce: Ecommerce sales grew 24% in second quarter

Interestingly, ecommerce as a percentage of total sales, reportedly shrunk -- although the numbers are so small that any conclusion is probably wrong:
E-commerce sales in the second quarter of 2002 accounted for 1.2 percent of total sales, while in the second quarter of 2001 e-commerce sales were 1.0 percent of total sales. In the first quarter of 2002 e-commerce sales were 1.3 percent of total sales.

August 21, 2002

Basel II Weblog

Just discovered the Basel II Weblog. Too bad (for me anyway) that it's in German!

PayPal settles with State of New York re: gambling

CNET reports that PayPal will no longer allow residents of New York State to use its online payment service for gambling.
Under the agreement, announced Wednesday, PayPal will stop processing payments from New York customers to Internet casino Web sites as of Sept. 1. PayPal will also pay $200,000 in disgorged profits, costs of investigation and penalties, the attorney general's office said. New Yorkers make up about 1.1 million of PayPal's 17.8 million member accounts, according to the agreement.
PayPal's press release is here.

August 20, 2002

CNET: Wells Fargo to close wireless banking service

A couple of years ago, wireless banking was hot. Companies went public on the basis of being able to provide wireless banking services and software to banks. Guess what -- nobody wanted it.
The service, which debuted last year and lets customers make transactions from cell phones and PDAs (personal digital assistants), had just 2,500 active customers, company spokeswoman Wendy Grover said. "When wireless first became available, people may have been overly optimistic about adoption rates," Grover said.
Such lemmings we humans can be!


With this morning's press release, it looks like the acquisition of PayPal by eBay is moving ahead.

Federal Reserve: Use of checks

The Federal Reserve has published an updated paper on the use of checks and other noncash payment instruments in the United States.
Taken together, the data show that an estimated 32.8 billion checks were paid in the United States in 1979, 49.5 billion in 1995, and 42.5 billion in 2000 (chart 1). The exact year in which check use peaked is unknown, but it appears that the number paid began to decline sometime in the mid-1990s. By 2000, retail electronic payments had gained considerable ground. Nonetheless, checks remained the pre-dominant type of retail noncash payment. Checks also continued to account for a large proportion of the total value of retail noncash payments in 2000, though the real value of total checks paid had declined since 1979.

August 19, 2002

CNET: Yahoo drops fees on PayDirect payment service

Stefanie Olson reports that Yahoo has removed some fees from its PayDirect person-to-person payment service.
In the last week, Yahoo split PayDirect to give customers two options. One, a free account, is designed for family and friends who want to exchange money online without using credit cards. (Previously, Yahoo charged all subscribers, even if they didn't use a credit card.) The "professional" service racks up fees from the customer who accepts credit card payments--a common practice for online auctioneers. Yahoo charges 30 cents plus 2.5 percent of the cost of each transaction made using the service.

Wired: Identity theft is rife in Russia

Major processing companies typically decline to reveal figures on how much money is lost to fraud in Russia, citing security concerns. Estimates of fraud amounts vary from 1 cent for every $100 up to 1 percent of all card transactions in Russia.

MasterCard: Second quarter growth figures

MasterCard has announced its growth figures for the second quarter, 2002.
"The first half of 2002 was an historic time for MasterCard, as we completed our integration with Europay International and our conversion to a unified, shareholder-owned global payments company," said Robert W. Selander, MasterCard's President and CEO. "The strong growth we are announcing today clearly demonstrates that even in a weak global economy, our members and their customers are increasingly turning to MasterCard as their payment brand of choice." "Moving forward, we expect that the new global MasterCard organization will provide even greater business-building opportunities to the industry by delivering creative, high-quality and reliable payments solutions to customers, whether they operate in one country, on one continent, or in markets around the world," he said.

ComputerWeekly: Japanese credit cards to carry contactless cash

CW360 reports that the Edy electronic money system created by BitWallet, a 25-member consortium headed by Sony and NTT DoCoMo, is to be adopted by seven of Japan's major banks and credit card companies for use with their credit cards.
The Edy system, which is based on Sony's Felica contactless integrated circuit card, does not require the card to be inserted into a special reader. The system can be activated for money debits when the card is placed within 10 centimetres of an Edy sensor. As money is stored on the card beforehand, the payment process takes 0.2 seconds to complete. The in-store terminal communicates with the Edy data centre once or twice a day to reconcile transactions and to check for fraud.
More information on Edy from a July report from
Today, around 200,000 Edy cards have been issued. At least one quarter of these double as corporate ID cards for Sony, Bank of Tokyo Mitsubishi and Sanden workers while around half have been bundled with Sony's Vaio W desktop personal computer. Transaction volumes are small. Each of the 100 stores currently online handles an average of around 1,000 Edy transactions per month but Yamada is confident the system will see around a 100-fold increase in transaction volume once AM/PM begins accepting the cards.

WSJ: Feds crack down on credit card lenders

A front page story in this morning's Wall St. Journal reports on how regulators are cracking down on credit card lenders out of concerns that they have over-expanded their lending to more risky, sub-prime customers.
An effort to slow the growth of credit-card lending to high-risk consumers, while healthy for the economy in the long run, could damp consumer spending at a difficult time. Consumer spending has propped up the U.S. economy during its recent slowdown but has been accompanied by a rise in personal debt. In the last several weeks, makers and retailers of goods such as furniture and consumer electronics, along with consumer-entertainment venues such as amusement parks, have reported lower sales tied to worries about the economy and the stock market.

August 17, 2002

Line56: MasterCard

Line56 reports on MasterCard's SmartLink and SmartData Online initiatives. IBM, Paybox offer wireless payment system

IBM Corp. and German software vendor AG will combine their efforts to offer customers the ability to make secure payments from wireless devices, the companies announced Thursday.

Omaha World-Herald: TSA could lose its listing on NASDAQ

Virgil Larson reports on the problems Transaction Systems Architects is facing because of delays in completing an audit as a result of questions about a possible financial restatement.


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