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December 31, 2003

Micropayments - A Trend to Watch in 2004

Ryan Naraine reports on trends to watch in 2004 from the editors of and JupiterMedia -- including micropayments.

December 30, 2003

Visa's Peak Holiday Processing Volumes

InformationWeek reports on the planning that went into preparing Visa's VisaNet systems for handling peak holiday season volumes.
The company, which Monday reported a sharp increase in holiday-related shopping transactions, spent much of the year preparing its mainframe to handle a peak rate of 5,200 VisaNet transaction messages per second. Visa said Tuesday that the system reached its peak on Christmas Eve at 5,119 transaction messages a second.

Challenges for Prince at Citigroup

The Economist reports on what's ahead for new Citigroup CEO Charles Prince.

Star Raises PIN-Debit Interchange Fees

The American Banker reported yesterday (subscription required) that Concord EFS' Star network is raising interchange fees on PIN debit card transactions effective February 1st.

With the recent settlement of the anti-trust lawsuit against First Data and Concord EFS, Star will be competing in the marketplace with rival network NYCE, among others, for bank issuance of PIN debit cards. Increased interchange is one mechanism to motivate bank issuers to either stay with or join Star. Of course, it's the card accepting merchants that pay the price as the interchange increases come out of their bottom line.

Sun CTO Forecasts Micropayment Growth

Sun Microsystems CTO Greg Papadopoulos forecasts growth in micropayments on the Internet.
Micropayments could also hasten the arrival of Web services that interact with one another -- say, a calendar, map and traffic-monitoring service working together to automatically guide you to your next appointment via the shortest or least congested route -- with each collecting a small per-use fee.

Micropayments, along with marked improvements in network-identity management (a federated system that could make single sign-on a reality in 2004), mean that IT managers need to be thinking about new kinds of services their companies will be able to profit from, using all the latest advances.

Visa USA Details Holiday Spending

Visa USA has reported on the growth in US spending on Visa credit and debit cards over this holiday season.
Visa spending in the retail segment(1) topped $43.2 billion during the four weeks preceding December 28, a 10.3 percent increase over the same period of 2002. Visa debit cards (which include check cards and prepaid cards) showed the strongest year over year increase, growing 16.7 percent to $16.1 billion. None-the-less, the bulk of Visa spending on retail this holiday season was charged to credit cards for a total of $27.1 billion.

The first day of the traditional holiday season, Black Friday (November 28), was Visa's biggest retail day, with nearly $2 billion spent at retailers. However, December 20 sales came in a close second, accounting for over $1.9 billion in retail spending.

This holiday season, the highest grossing retail sectors for Visa cards have been Department Stores, Apparel, and Mail and Phone Order sales, for a total of over $10 billion from November 28 to December 28. Spending in the Specialty Retail and Hobby category grew the most among retail sectors, with dollar volume increasing 13.5 percent from 2002.

December 29, 2003

Big Gains for Internet Retailers

Bob Tedeschi reports in today's New York Times about the success online retailers have had this holiday season.
As of Dec. 26, year-to-date sales - excluding travel and auctions - reached $51.51 billion, up roughly 22 percent from $42.37 billion in the same period a year earlier. Those numbers could change slightly, ComScore said, as holiday returns are settled. And unlike most merchants, ComScore records revenues from gift certificates when the certificates are bought, not when they are redeemed.

Visa USA reported similarly positive results last week. Visa, which says its credit and debit cards are used in about half of all Internet transactions, said nontravel online retail sales from Nov. 17 to Dec. 25 increased 45 percent over the same period last year, to $4.9 billion. As of Dec. 25, year-to-date sales had jumped 37 percent, to $28.4 billion.

Phishing Attacks Soar

Gregg Keizer reports on on the growth in phishing attacks -- rogue emails sent out that attempt to get consumers to provide account details and passwords by impersonating financial institutions.
In the past two weeks alone, an estimated 60 million phishing e-mails have been sent to users, said Tumbleweed Communications, an anti-spam and secure messaging vendor that compiled the numbers from Because the phishing messages often look remarkably official, down to logos and professionally designed forms for entering credit card information, an average of 5 percent of those who receive them respond.

Actually, we've heard anecdotally of even higher response rates to these unfortunate emails. Founded by Tumbleweed, the industry has recently established the Anti-Phishing Working Group to help deal with the threats from phishing attacks.

December 27, 2003

How Internet Banks Have Inched Ahead on Rates

Sunday's New York Times has an article by John Kimelman on how Internet banks are providing better rates on accounts to consumers.
Traditionally, banks in small communities have often offered some of the highest rates on money market deposits and C.D.'s, to try to keep up with loan demand. But the emergence of the Internet has led to the rise of branchless banks, which benefit from low overhead to offer better rates on deposits, also backed by the F.D.I.C.

Indeed, the three banks that now advertise the best rates are not found on neighborhood streets, according to They are the Bank of Internet USA, Virtual Bank and National InterBank.

Taiwan Leads Asia-Pacific in Smartcard Adoption

Amber Chung reports in the Taipei Times on smartcard adoption in Taiwan.
Taiwan is the most active country in promoting integrated chip (IC) cards in the Asia-Pacific region, said a report by MasterCard International released yesterday. The nation's business operators more clearly comprehend the advantages of IC cards than those in any other Asia Pacific country, it said.

The survey, conducted by MasterCard International in eight Asia-Pacific countries, said Tai-wan, Japan and Malaysia's merchants have the most abundant knowledge of IC card technology, while those in Hong Kong and Singapore are comparatively ignorant in this regard.

Micropayments May Get Less Costly

Analisa Nazareno reports in the San Antonio Express-News on micropayments discussions at the recent Future of Money Summit.

December 23, 2003

Korean Credit Card Crisis

Reuters reports on the serious credit card crisis facing Korea.
The crisis engulfing South Korea's debt-laden credit card sector worsened on Monday when the largest issuer, LG Card, was granted an extra $250 million in emergency loans and its third-biggest issuer, KEB Credit, suspended cash advances.

Is the World Ready for Proximity Payments?

Alorie Gilbert reports in on 'wave and go' credit card payments.
The goal of the Us-wide launch is to build a critical mass of both PayPass cardholders and retailers, said MasterCard vice president Murdo Munro. But if the Orlando trial is any indication, MasterCard faces a classic chicken-and-egg dilemma: consumers are unlikely to take an interest in PayPass unless enough retailers support the system, and retailers are reluctant to invest in PayPass equipment until enough customers use the cards.

Several McDonald's store managers that participated in the Orlando trial expressed disappointment in the technology because so few customers had used it. Chung Tran, a manager of one Orlando McDonald's, said he'd seen PayPass used only about three times during the past year. "People are always asking what the heck it is," Tran said of the PayPass reader.

Retailers' Lawyers get $220 Million in Fees

Forbes reports that the law firm that represented retailers in the anti-trust lawsuit against Visa and MasterCard will receive $220 million in fees and an additional expense reimbursement of $18.7 million.
Lloyd Constantine, lead lawyer for the retailers, had requested roughly $600 million in fees, saying the sum was 18 percent of the settlement plus expenses. But Gleeson in his approval said the requested fee was "excessive."

Mobile Commerce in India

George Smith Alexander reports on mobile commerce in India.
"The customers will be able to use their mobile and pay through their debit card/credit card the way they use Internet banking. The customer will be able to authenticate the transaction and he can make bill payments, mobile top-ups and also on-line purchases," says Visa International's regional head consumer and commercial marketing (Asia -Pacific region) Rahul Khosla.

December 22, 2003

First Data to acquire CashCard Australia

First Data Corp. has announced that it is acquiring CashCard Australia.
"Today's announcement is exciting as we believe this transaction will offer a significant range of benefits to our many clients," commented Greg Nash, managing director of First Data International Australia, New Zealand and South Asia operations.

"We believe the combined EFT switching and processing lines of business will provide the scale necessary to ensure the merged enterprise will remain cost effective, technology efficient and people-smart in this rapidly changing marketplace, leading to the development of even more competitive products and services."

Founded in 1983 by Australian Building Societies to build and operate a shared ATM network, Cashcard now provides a range of services to other major financial institutions and retailers, as well as operating a large Merchant ATM acquiring network.

Comments re: Amazon Stores

Bob Tedeschi reports in today's New York Times on the new categories of 'stores' on

iPayment Acquires Portfolio from First Data

iPayment has announced that it has completed the acquisition of a portfolio of agent bank agreements and merchant accounts from First Data Corp.'s Merchant Services subsidiary for $55 million in cash. READ MORE »

Gift Cards - Responsible for Slow Retailer Sales?

Some retailers are pointing to revenue recognition of increased gift card sales as one reason this holiday season's same store sales results may be lighter than expected.
Sales of gift cards now represent about 8% to 10% of holiday retail spending, analysts estimate. But such spending can skew retailers' holiday results. Although consumers often purchase gift cards in December, retailers don't recognize revenue from such cards until they are redeemed, which often occurs weeks or months after Christmas.

"Gift cards really don't affect total sales," said Craig Johnson, president of retail consulting firm Customer Growth Strategies. "But they dramatically affect [same-store] sales," which seem unlikely to produce the kind of gains many investors were betting on this holiday season.

December 19, 2003

Annals of Online Shopping: Tricky Deals

Doc Searls shares his online experience with Reservation Rewards -- they stepped in following his online purchase at a Yahoo! Store. He was curious why a survey following his purchase was also asking for his credit card information -- and proceeded to read (and capture) the fine print.
I wonder if Amazon and other relatively reputable outfits support this kind of scammy stuff. Be interesting to know. This certainly makes me think less of both Yahoo and the store I bought the goods from, since it isn't clear to me where one ends and the other begins.

Retailers Surveyed on Mobile Commerce

Bern, Switzerland-based Sicap has released the results of a survey of 514 retail professionals conducted by Indro Celia, professor of e-business, at the University of Applied Sciences of Central Switzerland regarding their attitudes towards mobile commerce.
52 percent of those interviewed were positive about the prospects for mobile commerce with 50 percent attracted to its revenue generating potential. Window-shopping was identified as the "killer" application that would drive mobile commerce growth. By enabling consumers to purchase store items displayed in shop windows consumers would be able to make purchases outside store opening hours as well as avoid queuing at checkouts. In contrast, retailers questioned the added value to consumers of other often quoted mobile commerce scenarios like paying at the point of sale (POS) in a store and toping-up prepaid accounts.

Who'd have ever guessed that window shopping might be the mobile commerce "killer app"?

Holiday Shopping

VeriSign announced some data on holiday shopping volumes being processed by VeriSign Payment Services:
Since Thanksgiving through December 16, 2003, VeriSign Payment Services has processed more than 23.6 million Internet merchant payment transactions totaling approximately $3.54 billion in online sales volume. During the same period last year, VeriSign processed 16.9 million transactions totaling approximately $2.89 billion in online sales volume.

The average size of a single consumer transaction during this year's holiday season is also up by more than 16 percent at $142 per transaction, versus approximately $122 per transaction last year. In addition, total sales volumes for all VeriSign payments merchants combined increased by more than 22 percent over the same holiday shopping period during 2002.

So far, the single busiest online holiday shopping day of the year for VeriSign payment merchants was the Monday following Thanksgiving, when VeriSign processed 1.68 million of their online transactions.

Plastic Makes Perfect

In a pretty comprehensive look at the subject, Catherine Donaldson-Evans reports on Fox News on the growth in gift cards this holiday season. Starbucks, in particular, has had great success:
Since the company launched its gift card in 2001, there have been more than 100 million redemption transactions that have resulted in net sales of more than $400 million, according to spokeswoman Kristine Jimenez-Ortiz.

Jimenez-Ortiz said the Starbucks gift card business has seen a 30 percent increase from year to year; for fiscal year 2003, 10 percent of all company transactions were paid for with a gift card.

The article goes on to note that much of Starbuck's success is related to customers being able to reload the cards.

December 18, 2003

First Data announces Central/Latin American Processing Center

First Data has announced a new processing center to serve clients in Central and Latin America from Panama City, Panama.
"This new company solidifies First Data's commitment to meeting the processing needs of financial institutions across Latin America and the Caribbean," said Pam Patsley, president, First Data International. "The combined strength of First Data and Banco General will enable PROCESA to deliver a state-of-the-art operation that meets the unique needs of its customers and enable its customers to aggressively grow their business and respond quickly to changing market dynamics. This company will build upon First Data's core strength of delivering a trusted third party processing solution."

International Money Transfer Consumer Guide

From Australia, Paul Stewart-Day is running a new website focused on providing advice regarding international money transfer services for consumers.

December 17, 2003

Checkfree moves into Walk-In Bill Payment Market

Checkfree announced this morning that it is acquiring walk-in bill payment provider American Payment Systems.
Based in Wallingford, Connecticut, APS provides walk-in bill payment services through an extensive national network of more than 8,000 retail and agent locations, which reaches 70 percent of consumers in the top 75 U.S. metropolitan areas. Today, APS enables 7 million households to pay for services in-person. The company serves hundreds of billers with contracted payment services and manages a growing network of non-contracted billers for electronic transaction processing. For 2003, APS expects to process nearly 120 million payments.

December 16, 2003

Consumers now favor Credit and Debit Cards over Cash and Checks

The American Bankers Association and Dove Consulting have released the results of a new nationwide consumer payments study that concluded that, for the first time, electronic payments have surpassed cash and checks as consumers' preferred payment method for in-store purchases.
The 2003/2004 Study of Consumer Payment Preferences found that cash and checks now account for 47 percent of consumers' in-store purchases, as compared to 57 percent in 1999 and 51 percent in 2001.  This evolution of payment behavior continues to be driven by the increasing popularity of debit cards.  Four years ago, debit represented only 21 percent of in-store transactions; today consumers report that nearly one out of three (31 percent) in-store purchases are made with a debit card. 

This growth in debit card use has come at the expense of both cash and checks.  While cash remains the single most frequently used payment method in stores, its share of the transaction mix has fallen from 39 percent in 1999 to 32 percent in 2003.  Checks also play a diminishing role at the point-of-sale, accounting for just 15 percent of purchases. Comparatively, consumer use of credit cards for in-store purchases has remained relatively constant at 21 percent.  At 2 percent, the "other" payments category is made up of prepaid cards.

Today's Wall St. Journal also reported the survey results.

Worrying less about Card Readers?

Jon Udell, writing in his InfoWorld weblog about how an authenticated world would be better than today's, is worried less about card reader deployment to read cards.
It's unclear how the governments and banks and airlines and other entities who currently issue cards will evolve the identity infrastructures this solution implies, how those infrastructures will cooperate, and how revocation can be managed in a scalable way.

That said, I worry less nowadays about card-reader deployment. Maybe because I figure that we'll just authenticate to our phones, and let them talk Bluetooth to PCs and other devices.

Gift Givers Love Plastic

Jennifer Inez Ward reports in this morning's Oakland Tribune on the rapid growth in popularity of gift cards.
Leaving paper gift certificates in the dust, electronic gift cards are taking off this holiday season as the plastic present becomes more and more the norm. According to a survey by the National Retail Federation, consumers plan to spend $17.8 billion on gift cards this holiday, which accounts for nearly 8 percent of all holiday sales. The survey found that 69.9 percent of consumers plan to buy gift cards during the holidays as well.

MasterCard and eFunds form Debit Processing Alliance

MasterCard and eFunds have announced they are forming a new debit processing alliance.
 "MasterCard Complete Debit Processing is built on eFunds' industry-leading processing system and software platform used by most of the major payment networks in the United States, supporting more than 80 percent of the nation's debit transactions," added Paul Walsh, CEO, eFunds Corporation. "We are excited to partner with MasterCard to provide financial institutions with scalable technology and professional resources necessary to profit from every step in the debit transaction processing chain."

The press release indicates that MasterCard will have responsibility for marketing and sales of alliance services.


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