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March 30, 2003 XML standards for financial services

Ayesha Malik reports on XML standards for financial services applications.
The value of industry standards has been recognized for some time and industries as varied as bioinformatics to chemicals are using XML standards to streamline the communication between counterparties, suppliers and customers and so forth. In the financial services industry, there are currently several standards being developed. In light of STP, I will discuss FIXML, FpML, and SWIFT. FIXML is used to describe information exchanged on standardized instruments while FpML describes information for over the counter derivative instruments.

March 28, 2003

Bank of America: Growth in consumer comfort with banking online

Bank of America has released data on the growth in its online banking and bill payment services.
Bank of America has the most active online banking subscribers in the industry and has seen the most growth in the past year. The number of online bill pay customers has more than doubled since last May, when the bank announced it would offer the service free. About one-third of the bank's consumer deposit customers actively use Online Banking.

I4 Commerce completes $23 MM financing

I4 Commerce, the company behind Bill Me Later, has announced the completion of a $23 MM financing round led by GRP Partners.
"Given our heritage of working with retailers globally over the last 25 years we are honored to lead this round," said Steven Lebow, Managing Partner of GRP Partners. "The Bill Me Later® value proposition is unique and compelling for both retailers and their customers. It is rare to find a company with such an experienced management team whose product has already achieved impressive industry endorsement. We look forward to continuing the expansion of I4 Commerce's reach over the coming years and further meeting the needs of today's multi-channel retailers and their customers." In addition to GRP Partners, the existing investors are Crosspoint Venture Partners, Azure Capital Partners, First Data Corporation and Paymentech.

March 26, 2003

Sears: Exploring strategic alternatives for credit and financial products business

Sears announced this morning that it is exploring strategic alternatives for its credit and financial products business.
"Sears' Credit and Financial Products business is extremely attractive and highly profitable," said Alan J. Lacy, chairman and chief executive officer. "It continues to perform well and is on track to deliver on its 2003 financial plan. However, we believe the tremendous value and earnings power of these assets are not reflected in today's market valuation of Sears. By selecting the right strategic partner for this unique business, we believe we can create significant value for our investors. This strategic action will support our sharpened focus on strengthening and growing Sears' profitable Retail and Related Services business, while further streamlining our organization, reducing leverage and returning cash to shareholders," said Lacy.

Visa USA: Announces 2002 volumes

Visa USA this morning announced their 2002 performance.
Visa USA today announced that it processed $989 billion in consumer and commercial volume in 2002, an 8.1 percent increase over 2001, to maintain its position as the nation's leading payment brand and largest consumer payment system. The latest results bring Visa's domestic payment card industry volume share to 51.3 percent, larger than the combined share of all other U.S. payment brands. Debit continues to fuel growth across the payment industry and now represents 6.4 percent of payment share in the U.S., an increase of 23 percent over 2001. In line with the growing popularity of debit, Visa's overall volume dollar growth was driven by the Visa check card, which now represents a third of Visa's volume.

March 19, 2003

Fortune: Washington Mutual - a new banking model

Kimberly Allers reports on the unique approach that Washington Mutual brings to retail banking.
While banking behemoths like Citigroup and Chase were investing millions to steer customers out of their branches and to faceless ATMs and the Internet during the past several years, Washington Mutual courted customers in underserved urban markets by offering free checking and other wallet-targeted incentives. With its customer-oriented appeal to the mass market and its own version of everyday low pricing, the bank known as WaMu (pronounced "WAH-moo") has earned comparisons to retail giant Wal-Mart.

March 18, 2003

Concord EFS appoints new outside director

Concord EFS announced this morning that George F. Raymond has been elected to its Board of Directors. Raymond is president of Buckland Corporation, a consulting company to the information technology industry based in Moorestown, N.J.

March 17, 2003

Boston Globe: Privacy concerns with RFID

Hiawatha Bray reports on some privacy concerns with the deployment of RFID technology.
Still, the retailers and manufacturers are the real beneficiaries of these chips. And there's nothing wrong with that. But what about the rest of us? RFID chips could soon be in our groceries, our medicines, and our clothes. Will we know the chips are there? Will we know how to turn them off? Will we know who's scanning them, and what they're doing with the information? Even those who lack Albrecht's fervent love of privacy would be well advised to start asking these questions. Now.

Washington Technology: NIST rates facial recognition systems

Wilson Dizard reports on NIST's testing of 14 facial recognition systems.
The test had three parts. First, NIST asked the systems to match a facial image against the database of images and find 10, 20 or 25 similar images. Next, the systems had to verify identities using the database of images. Finally, NIST checked each system‚s reliability under different lighting conditions and monitored the speed of each application. The three top-rated systems verified identities correctly 87 percent to 90 percent of the time with a false-alarm rate of 1 percent. When NIST specified a false-alarm rate of 0.1 percent, the success rate dropped to between 79 percent and 82 percent. When checking facial images against a watch list of 25 images at a false-alarm rate of 1 percent, the top three systems were accurate about 80 percent of the time. The success rate fell to below 60 percent when NIST expanded the watch list to 3,000 images at the same false-alarm rate.

Toronto Star: Finger on the future

Tyler Hamilton reports on HP's new iPAQ 5450 which includes a biometric fingerprint scanner.
Experts say HP's decision to integrate biometric technology into a hand-held is an industry milestone and a sure sign of things to come as device makers draw up plans for next-generation products that blend tight security with one-swipe convenience. "The credibility you get from going into a consumer product like this is really high," said Michael Thieme, director of special projects for International Biometrics Group LLC, a New York-based consultancy that focuses on the biometric market. I think it's reflective of what we're going to start seeing over the next 18 to 24 months." For biometric software and hardware developers, it's been a long time coming. Biometrics ˜ a way of identifying people through a fingerprint, iris pattern or some other unique biological characteristic ˜ has for years been touted as a perfect fit for consumer electronic devices, keyboards and that mouse beside your home computer.

New York Times: Mag Stripe Readers - How They Work

Roy Furchgott provides an overview (including a multimedia graphic) of magnetic stripe readers and how they work. Includes coverage of card skimming and MagTek's Magneprint technology.

New York Times: Handwriting Biometrics

Ian Austen reports biometric signature authentication.
If such systems were widely adopted, Mr. Zimmerman said, it would be possible for people to abandon plastic credit cards. When making a purchase, a shopper would identify himself by typing a number (a telephone number, say) on a keypad at the cash register, then sign a digital pad. At the very least, Mr. Waisel of WonderNet said, credit card companies could eliminate the signatures and other personal details from cards, making them less attractive to thieves. Metris tries to rebuild its house of cards

Julie Forster reports from Minneapolis on Metris.
The company finds itself in this precarious position partly because of the economy but also because of a decision that was made in 2001 to extend the credit limits of the company's most profitable customers. Just after the credit limits were extended, other lenders, including Target and Sears, came out with their own credit cards and aggressively pursued customers, many of whom added debt from their new cards in addition to expanding their Metris balances. Then came the Sept. 11 terrorist attacks in 2001, and the sudden contraction of the economy, a phenomenon that always hits highly indebted borrowers hardest. "On Sept. 12, our payments stopped," said Matt Melius, executive vice president for credit risk management.

New Retail Payments Weblog by Simon Lelieveldt

Simon Lelieveldt has a new retail payments weblog from his base in the Netherlands.

March 15, 2003

New York Times: Tiny transactions, without the coins

Ken Belson reports from Tokyo on the Suica and the bitWallet Edy proximity payment cards -- both developed by Sony.
Pockets in Japan, however, are getting lighter with the growing use of integrated-circuit smart cards. The size of a credit card, they are packed with thin antennas and an encrypted integrated chip that can be used thousands of times to pay for train fares, meals at restaurants and snacks at convenience stores. In less than two years, nearly seven million people in Japan have started using one of two types of cards, both based on technology developed by Sony.
Discussion continues on Slashdot. Howard Rheingold also covers the story.

March 14, 2003

MasterCard seeks separation from Visa in merchant litigation

MasterCard has announced that it has asked the court to order separate trials of MasterCard and Visa in the Wal-Mart/merchant anti-trust lawsuit.
„After more than six years of litigation, 350 fact and expert depositions, and the exchange of millions of documents, plaintiffs have not - and cannot - prove by any evidence, much less a preponderance of evidence, any conspiracy between MasterCard and Visa,‰ Noah J. Hanft, MasterCard‚s general counsel, said. „MasterCard believes that if given the opportunity to have a full and fair trial based purely on its own acts, the case against it will fail, and its Honor All Cards rule, which requires that merchants who agree to accept MasterCard accept all MasterCard-branded cards, will be recognized as being pro-competitive and providing American consumers with the broadest choice of payment options in the world,‰ Hanft said.

MasterCard's US$1.99 multi-application smart cards

MasterCard has announced that a number of technology vendors are supporting its $1.99 multi-application smart card initiative.
MasterCard first introduced its MULTOS-based multi-application smart card under its US$2.99 chip program in December 2000. Now, MasterCard has brought down the price of its state of the art, 16K multi-application MULTOS card by 33 percent to US$1.99. The US$1.99 card contains MasterCard's EMV compliant M/Chip credit/debit application, Mondex e-cash, Public Key Infrastructure (PKI) file storage and PKI identification applications built into the chip, ready for enablement as required by MasterCard's member financial institutions. The ability to offer these high specification smart cards at such a competitive price was made possible by the increasing numbers of such cards being issued.

Biometrics in Financial Services: New Glenbrook Research

My partner, Allen Weinberg, has just completed a new research report on Biometrics in Financial Services.
This advisory report investigates the fit of biometrics to financial service applications, looking first at market structure, key biometric concepts, and common misconceptions before moving on to explore potential application areas in financial services and adoption challenges.

ComputerWorld: Don't ask, don't tell ecommerce

Robert Mitchell writes about the recent theft of 8 million credict card numbers from a processor.
The card associations' policies, as demonstrated, could be described thusly: Don't publicize credit card thefts in any way; don't require card issuers to notify affected card owners unless they ask; don't share the list of compromised account numbers with merchants; and don't require banks to reissue stolen cards. And don't worry -- banks will monitor accounts for "unusual activity" with automated, high-tech monitoring tools.

March 12, 2003

Visa Asia Pacific updates chip card progress

Visa Asia Pacific has put out a press release today updating the status of chip card activities within that region.

March 10, 2003

The Age: Catch me if you can

James Hall reports from Melbourne about the use of fraud detection technologies in a variety of financial services businesses.

March 06, 2003

Airport lockers can re-open -- after being upgraded with biometric readers

Martin Moylan reports on the Transportation Safety Administration's decision to re-open airport lockers -- after they've been updated to include biometric technology that requires travelers to provide a fingerprint to rent and open a locker.
The fingerprint ID system is 99.99 percent accurate, says Smarte Carte. Generally, the rental process goes smoothly, but folks with some gunk on their fingers can have trouble giving clean prints. And in anticipation of potential privacy concerns, Smarte Carte's snazzy $500 electronic lockers do not match customer names, obtainable via credit or debit cards, with prints. Prints are not compared to those of known or suspected terrorists, and the prints are discarded once a rental is concluded, the company says.

Visa USA announces Account Truncation Initiative

Visa USA today announced a new initiative intended to deal with increasing identity theft among American consumers. The basic idea is to limit the paper trail of receipts containing card numbers and expiration dates. Visa USA CEO Carl Pascarella made the announced today in Washington, DC.
"Today, I am proud to announce an additional measure to combat identity theft and protect consumers. Our new receipt truncation policy will soon limit cardholder information on receipts to the last four digits of their accounts. The card's expiration date will be eliminated from receipts altogether. This is an added security measure for consumers that doesn't require any action by the cardholder. We are proud to be the first payments brand to announce such a move to protect cardholders' identities by restricting access to their account information on receipts. "The first phase of this new policy goes into effect July 1, 2003 for all new terminals. I would like to add, however, that even before this policy goes into effect, many merchants have already voluntarily begun truncating receipts, thanks to groundwork that we began together several years ago.

March 04, 2003

Financial Times: UK biggest users of credit cards in EU

Jane Croft reports on a study published by the Credit Card Research Group on credit card usage in the UK.
Plastic card use in the UK accounts for more than half of all spending in high street stores. Currently 60 companies issue about 2,000 different types of credit cards in the UK. Melanie Johnson, minister for competition, consumers and markets, said: "This research shows that the use of credit and debit cards is growing in the EU and that consumers in the UK are at the forefront in terms of their use of cards."

Smart Card Alliance: Contactless Payments White Paper

The Smart Card Alliance has released a new white paper on contactless payments.
The latest trend in retail payment applications is contactless payment. Contactless payment systems are used successfully in Asia, Europe and North America and offer a number of advantages to issuers, retailers, and consumers. Contactless payment allows issuers to penetrate the cash payment market, enjoy increased customer transaction volume, and improve customer retention and loyalty. Retailers realize benefits due to faster transaction times, increased revenue, improved operational efficiency, and lower operating costs. Consumers enjoy the convenience of hands-free payment, the ability to pay for multiple services using one device, and the security of not having to display a card for payment.

March 03, 2003

New York Times: Credit cards far from home

Susan Stellin writes about notifying your credit card issuer before leaving on trips out of the country.
In most cases, such a red flag would only result in a merchant's being asked to verify the customer's identification at the point of sale before the purchase is approved, or the customer might be asked to call the card issuer and confirm a recent buying spree. But for those who are traveling when such a fraud alert occurs - particularly overseas, and especially in areas with a high incidence of credit card fraud - resolving the matter can get more complicated. In the most extreme scenario, the credit card might be temporarily suspended until the bank verifies it has not been stolen. Card issuers say this last possibility is unlikely, and some banks stop short of recommending that customers call before traveling to make sure their itinerary is on file. But at least some card issuers and those who follow the credit card industry say it is a good idea, particularly when traveling abroad, as do customers who have experienced problems far from home.

BankOne selects TSYS for card processing platform

BankOne and TSYS announced this morning that BankOne will move its credit card processing from First Data Corp. to TSYS in mid-2004. In addition, in 2006 BankOne intends to in-source its credit card processing under a license of TSYS' TS2 software.


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