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February 28, 2003

Seattle Times: Small banks prosper from personalized client service

Bradley Meacham writes about the Northwest Business Bank and its success in dealing with clients who want personal service from their bank.
Northwest and other tiny banks are prospering from business that falls between the cracks at larger local and nationwide lenders. Six banks have opened in Western Washington in the past year to meet demand from small businesses. "Customers are looking for personalized service, where they have a direct line to their banker," says Singh, who worked at Key Bank until two years ago. "Big banks like to think they own clients. They don't."

February 26, 2003

New Mobile Payment Services Association announced

Orange, Telefonica Moviles, T-Mobile and Vodafone have announced that they are forming a new Mobile Payment Services Association.
For customers, the aim is to provide the opportunity to purchase a wide range of digital and physical goods and services with their mobile phones using an easy, secure solution. The solution aims to become the industry standard for m-commerce payments. Merchants and merchant acquirers will benefit from a standard set of interfaces through which they will gain access to a potentially huge international customer base. Software and solution vendors will benefit from published technical interfaces enabling the development of compliant m-payment products and services. Operators will benefit from a standard way of integrating and efficiently managing their relationships with merchants, merchant acquirers and content providers.
Former NatWest executive Tim Jones will be CEO of this new organization.

February 24, 2003

FT.com: Shoppers to test PIN-code cards

Jane Croft reports on the UK's upcoming test of PIN's to replace signatures for credit card transactions.
The system, dubbed "chip and pin", will see Pin codes securely stored on a microchip embedded in the credit or debit cards. Customers will type in their Pin on a number pad by the till and hacker- proof technology will compare it with the Pin on the card. The system is designed to end Britain's position as the card fraud capital of Europe by replicating the low fraud losses of France, which uses an early version of chip and pin. It will also make theft of cards pointless because the card will not be usable in Britain without the secret Pin code - even if the thief can forge the signature on the back.

Atlanta Journal-Constitution: Coke in payroll deal with Citicorp, MasterCard

Scott Leith reports on Coca-Cola's plan to market a payroll card program to workers in the hospitality and restaurant business.
Coke will market the cards, while Citicorp will handle enrollment and customer service. The cards can be used at places that are part of the MasterCard network.
Jennifer Bayot covers the story in the New York Times.

Electronic Business: RFID Platform Supports ISO/IEC 14443 Type B

Mark Long reports on TI's announcement of a secure ISO/IEC 14443 Type B technology platform for proximity payment transactions.
Offering increased security option and faster data rates, the ISO/IEC 14443 standard enables transaction information to be securely stored on the RF chip and securely transmitted over the contactless interface. American Express, Mastercard and Visa have already announced their respective endorsements for contactless payment applications based on the new standard.

Omaha World-Herald: Berkshire quietly buys 1.5% of First Data stock

Grace Shim reports on Berkshire Hathaway's increased holdings in FDC stock.
Berkshire increased its First Data holdings from 4.8 million shares on March 31 to 11.2 million shares on Dec. 31, according to Securities and Exchange Commission filings released Monday. That's about 1.5 percent of First Data's shares. Although Berkshire more than doubled the number of First Data shares it owns, the value of the investment declined from $419.9 million to $397.8 million during that same time period. First Data's stock price dropped from $43.63 to $35.41 per share and closed Monday at $34.57. That would make 11.2 million shares worth $387 million.

February 21, 2003

The Register: How to get an ATM PIN number in 15 guesses

John Leyden reports on news from researchers Mike Bond and Piotr Zielinski at Cambridge University regarding weaknesses in hardware security modules used to handle PIN encryption/decryption. Their research report discussing their findings is available online. New Scientist is also reporting the story.

Washington Post: FBI probing theft of 8 million credit card numbers

Elinor Mills Abreu reports on the attack on Omaha-based Data Processors International that resulted in 8 million credit card accounts being compromised.

February 14, 2003

Speedpass expands to Stop & Shop

Speedpass Network has announced that three Boston area Stop & Shop supermarkets are now accepting Speedpass.
Stop & Shop is the first supermarket chain to accept Speedpass and its new features. These features allow customers to 1) link to the store's membership card, 2) link to a personal checking account, 3) instantly enroll for a free Speedpass device onsite, and 4) manage their Speedpass account online. These new enhancements help get customers in and out fast and provide a new level of convenience for Stop & Shop customers.

Financial Times: MasterCard warned over transaction fees

Bob Sherwood and Jane Croft report on the UK's Office of Fair Trading's decision regarding MasterCard's interchange fees.
The watchdog was annoyed about the fee - 1.1 per cent of any transaction - paid by the retailers' banks to the card-issuing banks. The OFT said this cost was passed on to retailers and, in turn, to consumers. That drove up prices at stores where cards were used. There are about £30bn worth of transactions carried out using MasterCard credit or charge cards each year, so shoppers are coughing up about £330m a year for the interchange fee alone. The OFT said MasterCard had failed to justify the level of its fee. It said the system breached competition rules because it was so widely used and there were no incentives for banks to agree a lower fee.
The full text of the OFT's decision is available online.

Business Week: The Bank of 7-Eleven?

Last week, Business Week did a Q&A with 7-Eleven's CEO Jim Keyes about his financial services strategy.
Take 7-Eleven's prepaid Vcom cards. Developed by retail-transaction-services concern Alliance Data Systems (ADS ), Vcom cards will let customers make ATM transactions as well as buy money orders, transfer funds, cash checks, and eventually pay bills. By the end of May, 7-Eleven will outfit 1,000 of its 5,800 U.S. stores with Vcom machines. Now that the U.S. has myriad all-night shopping options, Dallas-based 7-Eleven, which reported net income of $41 million on $10.1 billion in revenues in 2002, is betting big on the service. (Some 73% of 7-Eleven's common stock is owned by IYG Holding, which comprises Ito-Yokado Co. and Seven-Eleven Japan Co.)

February 13, 2003

Providian hosts Investor Conference

Providian hosted an Investor Conference today. Slides and an audio replay are available.

Smart Card Alliance: Smart cards can protect privacy

The Smart Card Alliance has released a new white paper, Privacy and Secure Identification Systems: The Role of Smart Cards as a Privacy-Enabling Technology.
"Smart cards provide a powerful tool for protecting an individual's privacy," said Robert Donelson, senior property manager of the Bureau of Land Management at the Department of Interior (DOI). "For those who have access to private information, smart cards ensure only legitimate users can access information, and they can only access the information they need to do a specific task. Other information that may be in the system can be kept confidential. Of course, privacy must be protected throughout the system, not just at the card level."

Concord EFS adjusts management structure

Concord EFS announced this morning that Dan Palmer and Bond Isaacson will be co-CEO's going forward. In addition, Richard Kiphart is replacing Palmer as Chairman of the Board. Ed Labry remains president.

February 11, 2003

Credit Card Management: Fast food meets fast payment

Linda Punch and Jeffrey Green report on quick service restaurants and their increasing acceptance of card payments.
Perhaps the most important obstacle overcome by the card industry was the time it takes to process a card transaction. „First and foremost, the through-put of the transaction was probably the biggest concern that merchants had in the QSR segment,‰ Gore says. „Obviously, that‚s critical to their livelihood. They can‚t afford any type of delay whatsoever in terms of getting that transaction through, expedited and get the next customer up in line.‰ To that end, fast-food restaurants are beginning to adopt the point-of-sale technology originally developed to speed processing of transactions for supermarkets and gas stations‚ pay-at-the-pump programs.

February 10, 2003

New York Times: More on Visa, MasterCard fees

Jennifer Bayot reports in Tuesday's New York Times on the tentative ruling by a California judge regarding currency conversion fees.
Visa said in a statement that it was disappointed with the preliminary ruling in the case, Adam A. Schwartz v. Visa International, Visa International Service Association, Visa U.S.A. and MasterCard International. "The court decision flies in the face of common sense," said Stephen C. Theoharis, senior vice president of Visa U.S.A. "Visa pioneered today's currency conversion system that protects consumers from exorbitant rates when traveling abroad. The decision is fundamentally flawed, has no basis in fact or law, and we will appeal."

BBC: Visa EU's online sales soar

Visa EU reports that online sales in the fourth quarter of 2002 grew at a rate of 136% over the prior year.

WSJ: Visa, MasterCard may face over $500 million in refunds

Paul Beckett and Ron Lieber report in this morning's Wall St. Journal that Visa and MasterCard could face a bill of at least $500 million for poorly disclosing fees to cardholders using their cards overseas.
Judge Sabraw of California Superior Court in Oakland, in his tentative opinion, didn't ban the charging of currency-conversion fees, which generate hundreds of millions of dollars of revenue each year for Visa, MasterCard and the card-issuing banks, people familiar with the matter said. But the judge did say that because of what he believed was inadequate disclosure to cardholders, Visa and MasterCard would have to refund many cardholders who have paid the 1% surcharge since 1996, these people said. The judge also ruled that Visa and MasterCard would have to mandate that banks that issue their cards disclose the fee clearly in statements in the future.

February 09, 2003

Washington Post: The Check's Last Writes

Jackie Spinner reports on the growth in electronic payments.
Checks still account for nearly 60 percent of all retail non-cash payments, according to Federal Reserve data. By comparison, electronic payments made up 7.9 percent of the pie in 2000. The Fed, which actually does not process the majority of checks written, now believes that check writing has peaked, for real. In an August 2002 report, the Fed said it appears that the number of checks written began to decline sometime in the mid-1990s after a high of 49.5 billion in 1995. A key point: Electronic payments are growing, at a rate of 18 percent from 1979 to 2000, compared with a growth rate of 1.2 percent for checks in the same period.

Kansas City Federal Reserve Bank: Nonbanks in the payment system

An excellent overview (by Terri Bradford, Matt Davies, and Stuart E. Weiner of the Federal Reserve Bank of Kansas City) of the US payment system and the many roles that nonbanks play in the system. PDF format.
Nonbanks have always been a key component of the nation‚s payments system. In recent years, however, nonbanks have become even more prominent. This heightened visibility raises several questions. What payments activities are nonbanks engaged in? What roles do nonbanks play in specific payments types? What types of risk are potentially associated with nonbank participation? This paper begins to address these questions. Preliminary findings include: (1) Nonbanks are involved in a myriad of activities and roles, both in traditional and emerging payments types; (2) Nonbank business relationships with banks and other participants in the payments systems are often highly complex and interrelated; (3) Nonbanks are rarely directly involved in settlement activities and, hence, appear to be associated with limited settlement and systemic risk; (4) Both nonbanks and banks appear to be increasingly susceptible to operational risk factors.

CNN: Cashless society gets mixed reviews

CNN carries an AP wire story about Moneo, the new French electronic purse chip cards. A friend, just back from Paris, notes that many Parisians don't like all of the change introduced by the conversion to the Euro. It's some of those subtle consumer convenience advantages that may just result in success. But some don't agree:
"We all know that the future of money is completely virtual," said Torris, the Forrester analyst. "Moneo is a first step toward that." Try telling that to Christine Berube. She is refusing to offer the service at her tobacco counter in a dimly lit bar that serves up endless glasses of cheap table wine and cups of coffee to mostly elderly regulars. "I think it's useless," the 46-year-old tobacconist said to nods of agreements from clients who draw heavily on their cigarettes. "I know how to count change quickly and don't want to enrich the banks."

February 07, 2003

WSJ: First Data's growth prospects

The Wall St. Journal's Heard on the Street column this morning focuses on First Data's growth prospects.
Chief among the risks: Western Union is losing market share to other money-transfer companies and big banks even as unwelcome headlines loom amid regulatory scrutiny of the unit's compliance in the wake of a settlement it reached recently with the New York State Banking Department over allegedly lax antimoney-laundering controls. In paying an $8 million fine, the company neither admitted nor denied wrongdoing.

February 06, 2003

Washington Post: Fed to cut 400 jobs as it processes fewer checks

John Berry reports on job cuts at the Federal Reserve resulting from fewer checks to process.
With Americans writing fewer checks, the Federal Reserve announced yesterday that it will stop processing checks at 13 of its 45 nationwide sites, close five of them and reduce employment by a net of 400 jobs.

Washington Post: Big stores to charge tax online

Brian Krebs and Jonathan Krim report on recent moves by online retailers to collect sales taxes on online sales.
Under a deal with 38 states and the District, several big retailers that also have major stores around the country -- including Wal-Mart Stores Inc., Target Corp. and Toys R Us Inc. -- will have their online divisions collect sales tax.

American Express Financial Community Presentations

American Express hosted a financial community update yesterday. Slides and text from the presentations are available.

Eula Adams leaving First Data Corp.

First Data Corp. announced this morning that Eula Adams, president of Card Issuing Services, is leaving March 1st. More from the Omaha World-Herald.

February 05, 2003

FCW: GAO flags smart card challenges

Federal Computer Week reports on smart card experience in the US government.
Prepared for Rep. Tom Davis (R-Va.) chairman of the Government Reform Committee, the report said that the 18 agencies have initiated 62 smart card projects among them. Most of them were small-scale demonstrations until the past two years. Since then, some agencies ˜ notably the Defense Department ˜ have launched much larger implementations. "While the technology offers benefits, launching smart card projects ˜ whether large or small ˜ has proved challenging to federal agencies," the report states.
The full GAO report is available here, highlights here.

February 04, 2003

Destination CRM: Outsourcing call centers

Ramin Ganeshram reports on call center outsourcing including CompuCredit's outsourcing of its call center to India-based ICICI One Source.
Rief has protected his company by making a huge stateside investment in redundancy. It costs more, Rief says, but he wants all the systems where he can control them. That translates to multiple IVRs and ACDs in multiple, colocated facilities--all controlled and monitored from Rief's Atlanta Office. There are even Web cams on the call center floor in India. "In terms of technology we even had to think about things like power sources--it's not uncommon to lose power in parts of India," he says.

Washington Post: Choice of credit card

Don Oldenburg reports on tailoring your credit card to your spending and repayment profile as well as intended use.

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