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October 31, 2002

Dave Birch: Bullish about mobile commerce?

Consult Hyperion's Dave Birch comments on the state of mobile commerce.
The evidence to date supports the view that m-commerce is going somewhere and reinforces the view that it needs integrated (and simple) payment management and identity management to realise its potential. These elements of infrastructure lag behind the physical networks, but they are coming.

Celent: New wave in US e-Banking - Account to Account Transfers

Celent is out with a new report on Account to Account Transfers and the revenue opportunities they represent to US banks.
Celent expects 2003 to be a critical year for the US payment industry as ACH payment networks (NACHA with Project ACTION) and EFT networks (NYCE, Star Systems) race to support A2A transfers and enroll institutions. Over the next 2-3 years, Celent believes that the introduction of A2A could drive Paypal out of business while making banks‚ electronic payments offerings more like the Fedex model, in which consumers trade off between speed of delivery and cost.
"Drive PayPal out of business." Now that's a bold prediction! Wonder how eBay feels about that? Speaking of eBay, the company held an analysts day yesterday. The presentation slides used are available for downloading.

October 30, 2002

Business Week: How plastic put Sears in a pickle

Business Week reports on Sears' difficulties with its co-branded MasterCard program.

October 29, 2002

Don Park: Extensions to 3D-Secure

Don Park discusses his thoughts on extensions to the 3D-Secure architecture used in Visa's Verified by Visa and MasterCard's SecureCode.
Extensions like these can and will make 3D-Secure the online payment protocol for the next twenty years.

October 27, 2002

Fortune: How blue will Christmas be?

Cora Daniels reports on predictions for sluggish retail sales this holiday season.
The shopper shortfall isn't affecting just clothing merchants, and it's not just a New York thing. Retail is tanking everywhere. September sales for the nation's largest retailers missed Wall Street estimates across the board. In fact, they barely beat figures from the same month last year, when stores were virtually empty after Sept. 11. The S&P index of retail stocks has fallen 30% from its peak in March 2002. It's no secret that luxury retailers have been struggling for some time. But now even discounters like Wal-Mart and Target are seeing sales dip.
I went shopping at a local CostCo yesterday -- at what is normally a peak shopping time (late morning on Saturday). The warehouse was actually pleasant to shop in, no bumper cart games required, lots of seasonal merchandise piled high, only had one person in front of me at checkout -- but certainly not as busy as I would have expected or endured on other Saturday's a year or two ago. Meanwhile, Philip Klein reports in a Reuters story about how credit is getting much harder to find -- particularly for so-called "subprime" consumers.
The so-called subprime lending market that caters to those with poor or thin credit histories has been brought to its knees, hit by the twin blows of a weak economy and increased scrutiny by regulators. The new climate not only threatens to slow long-term growth prospects for the consumer credit industry, led by firms such as Providian Financial Corp. PVN.N , Capital One Financial Corp. COF.N and retailers such as Sears, Roebuck and Co. S.N It also makes it more difficult for low-income borrowers to get credit cards and loans for homes and cars.

October 18, 2002

Don Park: Bill My Phone

Don Park writes about "Bill My Phone", an approach to enable payments to be charged to your phone bill. Seattle-based ECharge tried to do something similar a few years ago (without the 3D-Secure idea). The business issue here is whether the phone companies want to take on this kind of business -- historically, when I've talked to them, they've been afraid of the responsibilities associated with managing credit risks for goods/services other than telephone minutes. Bill Me Later is setup specifically to do real-time credit decisioning -- something the phone companies are clueless about.

CNN/Money: Americans feeling better about online financial transactions

CNN/Money reports on a survey that found that Americans are gradually feeling better about using the Internet for online financial transactions.
More than 31 percent of consumers who engage in online financial transactions trust that their personal information will be safe, compared with 27 percent at the end of 2001. Similarly, the number of people using the Internet for financial transactions rose to 41.5 percent from 38.9 percent at the end of 2001.

BS&T: Check 21 won't be grounded

Ivan Schneider reports on "Check 21", the Check Clearing for the 21st Century Act known formally as H.R. 5414. See also the House Subcommittee on Financial Institutions and Consumer Credit hearing held on Wednesday, September 25, 2002.

October 17, 2002

ZDNet: MasterCard re: Australia - merchant security standards

Iain Ferguson reports on new merchant security standards being piloted in Australia.

ZDNet: Ten predictions from Gartner

Dan Farber reports on ten predictions made by Gartner analysts. Number 7 is particularly interesting:
7. Banks become primary provider of presence services by 2007 Presence services can manage your preferences, personal information and experience on the Internet. Gartner consider what it calls "one-click Internet" as essential to bringing convenience and mobility to the Internet. Microsoft (Passport), the Liberty Alliance, AOL, and Yahoo (among others) are vying for a piece of your presence--if not all of it. But Gartner's Claunch said that the future belongs to independent companies or financial service providers, such as the banks. Banks have had to deal with security, privacy and issues of trust for centuries, and that legacy is a particularly relevant in the digital age. Gartner gives the banks a 70 percent chance of succeeding in the presence business by 2007. I am not sure that we will have the standards and politics worked out by that time, but Gartner predicts that the banks will play a major role and adopt something like Liberty or Passport as the underlying framework for the trust broker business.

October 16, 2002

NPC: Reduces outlook

National Processing, Inc. (NPC) announced earnings this morning. Importantly, the company provided updated guidance for the fourth quarter based upon their outlook for consumer spending. The company also commented on pricing pressures and competition in the industry.
Chairman and CEO Jon L. Gorney commented, "We are operating in an increasingly challenging business environment given the overall sluggish economy and competitive factors. Several factors have modified our view of the Company's near term outlook. We are experiencing weakness in overall volumes, particularly in the retail segment. In addition, our pricing strategy has been to sell a premium service for a premium price and we have been cautious to match current pricing in the marketplace. We did make an adjustment in the second quarter and have actually signed more deals this year than last, although they have been smaller in terms of volumes and margins. We are still seeing significant price compression as we compete for new national business as well as in retaining our existing base of national customers. Also, due to the seasonality of our business, our revenues and profits for the year are heavily dependent on the fourth quarter due to holiday shopping volume. Based on the weakness that we saw in our business in September and bleak economic forecasts for holiday shopping volumes, we are not optimistic about the chances of a robust holiday season."
On a conference call to discuss earnings, management reported they would be putting even more emphasis on regional (vs. national) merchants.

October 14, 2002

Wireless Week: Mobile phones to make credit cards obsolete

It looks like the Korean Ministry of Finance and Economy is serious about enabling competition for online banking services in Korea.
On Tuesday, the Cabinet passed a bill that allows non-financial companies to operate online banking services. The new rules, drafted by the Ministry of Finance and Economy, will be effective from early next year. Among the online financial business areas opened up are electronic money transfers, the issuance of debit cards, and online transaction settlement. The law requires non-financial companies with over 500 million won in capital to register with the Financial Supervisory Commission (FSC) before initiating online banking services. This is expected to encourage the expansion plans of telecom operators into the financial field.

October 13, 2002

National Post: CIBC's American banking folly

Derek DeCloet reports in Canada's National Post on CIBC's foray into expanding its banking efforts in the US. DeCloet reaches some interesting conclusions on why the effort has failed -- including a theory about there being a difference in technology adoption between Canadian and US consumers.

October 07, 2002

Visa International reports fiscal year 2002 volumes

Visa International this morning announced that its global sales volume has surpassed US$2.3 trillion for the year ending June 30 2002, an increase of 17 per cent over last year. Retail sales using a Visa card now account for 7 per cent of global personal consumer expenditure (PCE).
"It is very encouraging that, despite the downturn in the global economy over the past year, we continue to see strong double-digit growth, which reflects the value and convenience of electronic payments," said Malcolm Williamson, President and CEO of Visa International. "We are confident that we can obtain a 12 percent share of personal consumer expenditure by the end of the decade."
Over $1 trillion of Visa's volume last year was on debit cards which increased 22 percent over the prior year. Credit card volume grew 12 per cent. In the US, during the first six calendar months of 2002, Visa's debit card transactions were 3.04 billion compared to 2.96 billion credit card transactions.

October 05, 2002

Accenture: RFID - The Silent Commerce Imperative

Accenture's Institute for Strategic Change has recently published "Seize the Day: The Silent Commerce Imperative".
This 29-page study examines how companies like ExxonMobil, Figleaves.com, Marks and Spencer, Ford Motor Company and others are successfully using radio frequency identification (RFID) to create new value for customers, improve the efficiency of existing operations and transform the supply chain. The report˜a collaboration between the Accenture Institute for Strategic Change and Accenture Technology Labs˜recommends that executives act immediately by beginning value-targeting, developing business cases and deploying pilots to help them gain the competitive advantages silent commerce offers.

October 03, 2002

PayPal: Merger with eBay closes

PayPaleBay today completed the acquisition of PayPal. Congratulations to the whole PayPal team! PayPal is the "shining star" example -- and a lonely one at that -- of a new emerging payments company that built significant shareholder value over the last couple of years. What PayPal did was truly unique. My hat's off to whole the PayPal team!

FMI: What food retailers should know about smart cards in the US

FMI has published a study on smart cards in the US and what they might mean for food retailers.
With the smart card industry turning its attention toward the retail sector, a host of questions are being raised. This paper will give a brief overview of how smart cards work, where they are being used, and how the emergence of smart cards might impact the grocery industry in the years to come.

TI: FAQ on RFID

Texas Instruments has a useful FAQ on its 13.56 MHz RFID products -- the core of the "near field communications" technology that Sony and Philips are talking about. Philips has a good discussion on the application of their RFID products to banking. The Digital Pusan Card is a newly released implementation using Philips' technology.

October 02, 2002

ComputerWorld: Sony, Philips and Near Field Communications

In early September, Sony and Philips announced they were working together to commercialize "near field communications" based upon RFID technology -- basically it's a personal area networking technology that will compete with Bluetooth.
The aim is to build a ubiquitous open infrastructure of NFC-compliant devices which effectively incorporate smart-key and smartcard reader functions, providing a convenient communication method for services such as payment (including credit card), ticketing, and accessing online entertainment content (e.g. gaming) through the devices. This can be done simply by holding devices or smartcards near each other. It is anticipated that the technology will play a key role in allowing content and service providers to offer various new ways of accessing their services. The consumer's primary NFC device (e.g. mobile phone or PDA) acts as a smart-key to gain access to chosen services from any NFC device, anywhere, anytime.
Bob Brewin reports on the announcement in ComputerWorld:
Cohen said Philips already has a leg up in the mobile payments industry due to the fact that Visa International Inc. in Foster City, Calif., already uses the company's Mifare RFID chip technology in its smart credit cards, which are widely used in markets outside the U.S. Joe Chouinard, vice president of Visa and co-president of the Mobile Payments Forum, which includes American Express Co., MasterCard International Inc., Visa and Tokyo-based JCB, said Visa and the forum wouldn't take sides in a battle of payment technologies for now. "We're device-neutral," Chouinard said, adding, "There's a number of technologies that might take off for [mobile] payments. But as far as we're concerned, the jury is still out." The forum, Chouinard said, is working to create standards that will support all types of mobile payment technologies.
Ed Sutherland reports on NFC -- and its eight inch transmission range.

News.com: Web shoppers' new option: Bill me later

Troy Wolverton reports on CNET's News.com about Bill Me Later, a new payment option for online purchasing being introduced by I4 Commerce.
The "bill me later" feature works much like a credit card, said Mark Lavelle, vice president of business development for I4 Commerce. After entering their billing address during the checkout process, shoppers click on the "bill me later" button. Instead of asking for a credit card number, the service asks consumers to enter their date of birth and occasionally the last four digits of their Social Security number, Lavelle said. I4 pays the merchant, then within 10 to 15 days after the buyers complete their initial transaction, I4 will send them a bill for all of their "bill me later" transactions during that time period, Lavelle said. They can either pay the full bill at once or pay a portion of it. I4 charges 17.9 percent interest on any outstanding balances, he said. Much like a credit card company, I4 will bill customers on a monthly basis.

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