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November 30, 2002

San Jose Mercury News: Technology predictions for 2012

Mike Langberg makes five big technology predictions for life ten years from now in 2012. Most interesting is his prediction regarding RFID:
Stores without doors will rely on RFID, or radio-frequency identification, tags to keep track of inventory and payment. These tiny semiconductors communicate a small amount of information, such as a product serial number, when queried by inexpensive transmitter/receivers. Only recently selling for several dollars, RFID chips should cost only a few cents next year and will be smaller than a grain of rice. In 2012, RFID chips will sell for less than a penny and be printed onto packaging and price tags -- the beginning of the end for cash registers. You walk into a store, put what you want in a bag and walk out the door. An RFID transmitter/receiver in the entryway instantly totals up your purchases and makes a deduction from the RFID credit card in your wallet. If nothing else, RFID could have spared Winona Ryder her recent and very embarrassing shoplifting arrest.

Pioneer Press: Demand grows for gift cards

Scott Carlson reports on the growth in popularity of gift cards.
Nearly nine out of 10 Twin Cities' shoppers plan to give gift certificates, including gift cards, as a part of their holiday spending this year, according to survey released this week by the University of St. Thomas Institute for Retailing Excellence. The phenomenon of retail gift cards has exploded in the past three to five years, said Jim Nelson, a marketing manager at Datacard Corp., a Minnetonka-based designer of custom gift cards and maker of data-card equipment. Americans spent about $20 billion on gift cards in 2000; this year that figure could reach $50 billion, according to industry sources. Although buyers can have retailers load the little plastic cards with as little as $5, the average gift-card value is $60 this year, up from $51 a card a year ago, according to a survey from Denver-based First Data Corp.
First Data Corp.'s ValueLink is a leader in providing gift card solutions to retailers. More recently, the major card brands (Visa and American Express) have also gotten into the business of gift cards. Those cards work at many different merchants -- but also have hefty fees ($5.95-$11.95 depending on card amount and how you order) associated with them as compared to the single retailer gift cards.

November 29, 2002

Vnunet.com: Barclaycard has Christmas credit cracked

Bryan Glick reports on the behind the scenes IT efforts at Barclaycard.
Christmas is coming, and your credit cards are getting fat. The constant swiping of the plastic in your pocket brings seasonal joy for the retailers and humbug for your bank balance, but it's also a major IT challenge for Barclaycard, the UK's largest credit card provider. Last year, the company processed seven million transactions per day in the run-up to Christmas. The computers running the authorisation system are capable of handling more than 300 transactions per second.

November 27, 2002

Pew Internet: Online Banking

The Pew Internet and American Life Project has released a new study on the adoption and use of online banking by American consumers. Why do they do it? Convenience, period.
Convenience is the number one attraction for all online bankers, but younger Internet users are the most passionate about saving time. Eight out of ten (79%) e-bankers say that convenience was "very important" to their decision to first bank online - 82% of 30-49 year-old e-bankers agree, compared to 73% of 50-64 year-old e-bankers. Seven out of ten (71%) e-bankers say that the idea of saving time was "very important" to making that leap - 79% of 30-49 year-old e-bankers agree, compared to 66% of 50-64 year-old e-bankers.

CNN: New credit cards dangle from keychains

Jeordan Legon reports on the new keychain-based payment devices.
Firms are using radio frequency signals, scanners and stronger plastics to make it easier for customers to give in to impulse. It's too soon to know whether the new plastic will go the way of the 8-track. But analysts say in the cutthroat credit card business, impressing finicky customers counts -- especially when a product makes it faster and more convenient to get through a checkout line.

November 26, 2002

Federal Reserve: Economic Effects of Technological Progress

Allen N. Berger of the Federal Reserve has published an interesting working paper on the economic effects of technological progress in the US banking industry.

UPS Capital launches small business card

In partnership with BankOne, UPS Capital has announced a new small business credit card.
"The UPS Capital Visa Business card provides exceptional value to small business owners in two important ways," said Dan Frate, chief operating officer of Bank One's card services unit. "It offers UPS shipping rewards for everyday spending and helps small business owners monitor, control and manage their expenses."
For every $2,500 in spending charged to the card, the small business receives a $25 coupon good toward UPS shipping services. In other words, roughly a 1% reward is earned for using the card.

Wall St. Journal: The New Menu Option at McDonald's - Plastic

Shirley Leung and Ron Lieber report on McDonald's plans to finally accept credit cards.
If all goes according to plan, with the latest systems, a McDonald's customer will be able to place an order at a counter or drive-through, swipe his or her credit card, and get an approval in under five seconds -- no signature required -- in the same way that customers pay for gas at the pump. Cash, by contrast, can take eight to 10 seconds, says Jim Sappington, McDonald's vice president of U.S. information technology. The typical credit-card transaction takes 25 to 30 seconds from swipe to signature, according to The Nilson Report, a payment-card newsletter.

November 25, 2002

MasterCard introduces Installment Card

MasterCard International has announced the launch of the MasterCard Installment Card.
An alternative to paper-based installment loans, this MasterCard payment solution, which is supported by consumer research and subject to a U.S. patent (6,315,193), provides member financial institutions with an opportunity to increase revenue while simultaneously reducing processing and operating costs. "Consumers worldwide spent more than $500 billion on unsecured installment loans in 2001," said Randall Wheeler, senior vice president, customer solutions, MasterCard International. "The launch of MasterCard's Installment Card gives our member financial institutions a new strategic asset to penetrate this category. In addition to serving as an alternative to the traditionally expensive and laborious installment loan process for members, our research indicates that consumers are positively pre-disposed to the MasterCard Installment Card based on the flexibility, control and convenience this payment solution provides."

Australian Financial Review: Card fund seems a smart move

Ben Woodhead reports in the Australian Financial Review on plans to create a common fund among the Australian banks to pay for technology upgrades.
The fund would share upgrade costs among Australian banks using a model already adopted in Asia, marking a significant departure from the present approach, under which each bank finances modifications to its own payment systems. Credit card giant Visa will formally propose the new model to Australian banks soon as part of discussions about the new investment required to support the shift to more secure smartcard payments in the next few years. Adding pressure to the discussions is an emerging threat from card companies Eurocard, Mastercard and Visa, which have suggested that Australian banks become liable for credit card fraud after 2006 - giving the banks greater incentive to implement more secure cards.

November 24, 2002

UPI: Cash wiring grows despite high fees

A UPI report in the Washington Times says that immigrants from Latin American and the Caribbean are going to send $25 billion in "remittances" from the US to their homelands this year.
A report released Friday by the Pew Hispanic Trust and the Inter-American Development Bank's Multilateral Investment Fund predicted that the amount of monies wired from expatriates in the United States to the "LAC" nations of Latin American and the Caribbean was growing at a record pace.
The Pew report is available (in PDF format) here.

ComputerWorld: MasterCard completes payment-processing system

Lucas Mearian reports that MasterCard will announce tomorrow the completion of a new payment-processing system.
The peak shopping season, which began Nov. 15 and runs through Jan. 6, will top off a record year with more than $1 trillion in MasterCard transactions, according to Jerry McElhatton, senior executive vice president of global technology and operations at Purchase, N.Y.-based MasterCard.

Dan Gillmor: Cash cards rule in Hong Kong

San Jose Mercury News columnist Dan Gillmor reports from Hong Kong on the Octopus card.
Octopus is easily the world's most successful experiment to date in stored-value, electronic cash cards. Instead of pulling out bills and coins in subways, buses, fast-food restaurants and convenience stores, customers wave purses and wallets past devices that deduct dollars from their cards inside. These are not debit cards, the widely used system in the United States. With debit cards, money gets deducted from bank accounts during transactions. Octopus cards are the real thing when it comes to cash cards. They are equivalent to cash. You put value into them, spend it down and then replenish the money if you want to keep using it. They're like cash in another crucial way. If the user prefers, they are entirely anonymous -- that is, not linked to any bank account or other personal information.
An earlier report in ComputerWeekly mentions both Octopus and Sony's EDY e-purse as likely to succeed in their respective markets. Operating in Japan through a separate company named BitWallet, Sony's EDY electronic money system is being adopted by Japanese finance companies.

November 23, 2002

Boston Globe: Consumers caught in debit-credit duel

Scott Bernard Nelson reports on the duel going on between retailers and banks regarding acceptance of debit vs. credit cards.
With as much as $3 billion in annual fees at stake, banks and retailers have decided to take their long-simmering debit card fight to consumers. It all boils down to a question more vexing than ''paper or plastic'': Should you press the ''debit'' or the ''credit'' button when you use your check card? Make the wrong choice, and it could cost you as much as 75 cents extra for each transaction. Make the right one and you might be eligible for frequent flier airline miles, store credit, or cash-back bonuses.
At issue is the cost to the merchant for accepting one version of debit card vs. another. Merchants want to shift consumer behavior to the lowest cost (for the merchant) approach: consumer enters PIN. Card issuers, on the other hand, want consumers to use signature as that generates the highest income to them. Unfortunately, it's basically a zero sum game with the consumer in the middle.

November 22, 2002

Sun-Sentinel: Sunrise firm becomes player in prepaid cash cards

Christine Winter profiles WildCard Systems.
WildCard, founded in 1997 by Gary Palmer and partner Larry Park started as a company that provided "catastrophic cards" for insurance firms. The privately held company, which has grown to 200 employees, is backed by institutional investors, such as Sutter Hill Ventures, Greenwich Street Partners and Bank of America, which also uses Wildcards services for all its prepaid card products. Palmer said the company turned profitable in the later months of 2002, but will not be profitable for the year, though he is projecting that in 2003 the company will be in the black for the full year.

The Age: Vending machines

Allison Jackson reports on the future of the vending industry.
A recent 12-month trial at Sydney's Central Railway Station of vending machines operated by mobile phone led to a 10 per cent increase in sales compared with the coin-only machines. Mr Beder said younger consumers were more at ease with the technology, less concerned about paying a higher price and more likely to consume the products the vending machines sold.

November 21, 2002

CNET: AOL selling prepaid Internet access cards

CNET reports on AOL's new Internet access cards.
"Through research we found that this product appeals to those who don't want a commitment or a monthly fee," said AOL spokesman David Theis. "Some of them may not have a credit card or another billing method or may want to get online less frequently than unlimited usage." The cards are offered in all Target stores, and refill cards can be purchased in all Western Union locations. Starter kits will appear in Office Depot stores starting next month.

AP: Bank of America tests purchase card

Paul Nowell reports on Bank of America's QuickWave proximity payment pilot.
QuickWave is not a credit or debit card, so customers don't swipe it through a machine, punch in a PIN number or sign a receipt. It's connected to customers' bank credit cards or debit cards so the charges show up on their monthly bank statement. Moments after they wave it over the pad, customers get a confirmation and a receipt. "It benefits the customer because it's fast, it's convenient and it's secure," Bank of America spokeswoman Lisa Gagnon said. "They don't have to have cash with them to make a purchase. It helps the merchants because it attracts customers to their stores."

San Mateo County Times: Gift cards catch consumer fancy

Eve Mitchell reports on the surge in gift card usage by American consumers.

November 20, 2002

Radicchio: Why mcommerce is slow in Europe

Radicchio, a non-profit group focused on evangelizing mobile commerce, shares a Financial Times article (PDF) authored by Fiona Harvey on why mobile commerce uptake has been slow in Europe.

November 19, 2002

Visa EU launches Visa Direct

Visa EU has announced Visa Direct, a new cross-border money tranfer service.
The new service is set to revolutionise cross-border payments, enabling Visa‚s member banks to offer a convenient, end-to-end money transfer service to their customers. As it operates across the existing Visa infrastructure it is straightforward and cost-effective for banks to implement. The service precedes the introduction of tighter EU regulation on cross-border transfers. From July 2003 banks within the Eurozone will no longer be able to charge more for low value (below •12,500) EU cross-border transfers than they do for domestic transfers. Visa Direct provides member banks with a ready-made, low-cost means of complying with the new regulations. It also gives them an opportunity to play a part in a European money transfer market worth an estimated •25 billion a year.

November 18, 2002

New Zealand Herald: BNZ to begin issuing American Express cards

Kevin Taylor reports that the Bank of New Zealand will begin issuing American Express cards in addition to the Visa and MasterCard cards it already issues.
The BNZ general manager, credit cards, Pradeep Roy, said American Express had its own brand attraction, particularly among younger people. American Express has 1700 offices worldwide and was supported in 130 countries.

iPIN: New CEO, closes new financing round

iPIN has announced that Alexandre Gonthier, company founder, is taking over as chief executive officer and that it has secured $8 million in its most recent round of funding from Accel Partners, Cardinal Venture Capital, Invision AG, Nexus Group LLC, Sutter Hill Ventures and Verbena Communications.

The Age: MasterCard swipes at RBA

Melbourne's The Age reports on the contention between MasterCard and the Reserve Bank of Australia with respect to the court case on the RBA's reform of the Australian credit card system. READ MORE »

Denver Post: First Data strives to keep fund-transfer dominance

The Denver Post reports on the competitive threats to First Data's Western Union subsidiary.

Australian IT: Skim fraud problem gets worse

The Australian press has been buzzing lately about credit card magnetic stripe skimming. Here's the latest article by Caitlin Fitzsimmons from Australian IT.
"Magnetic stripe cards provide secure authentication between the ATM and the bank host, but the card is just an automated entry of the account details," Mr Fletcher said. "Chip cards hold certain information secret and can authenticate to the terminal and provide data to the host."

New York Times: Credit Cards Seek New Fees on Web's Demimonde

Matt Richtel and John Schwartz report on changes to the credit card association rules enacted last week that apply to so-called "high risk" merchants.
Visa will charge its member banks a $500 registration fee and an annual renewal fee of $250 for each high-risk company they pay a credit-card charge to. Those fees will be passed on, with a markup, to the sites themselves. MasterCard is expected to roll out similar fees, industry analysts say. The sums are insignificant to larger sites, but could well drive smaller sites into the red; tens of thousands of adult sites are home-grown entities, industry experts say.

Auction Bytes: Payment Options

Auction Bytes maintains a chart of payment options suitable for auction sellers.

November 16, 2002

Washington Post: Add-ons add up

Caroline Mayer writes about how add-on fees have taken over.
Citigroup started offering payment by phone -- for $9.95 per transaction -- after it saw a number of customers sending their payments by overnight mail. "That wasn't very economical, and our $9.95 fee is certainly better than a $15 to $20 overnight fee" as well as cheaper than a late fee, said Citigroup spokeswoman Maria Mendler. Citigroup late fees range from $15 to $35, depending on how much money is owed. And cardholders can always pay online, where payments are processed quickly without any fee.

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