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« January 11, 2004 - January 17, 2004 | Main | January 25, 2004 - January 31, 2004 »

January 23, 2004

Malaysia Converts to Smart Cards

The Star reports from Malaysia on the migration to EMV smart cards.
According to a Visa International official, Malaysia is set to be the first country in the Asia Pacific to complete its national migration to EMV standards next year. Thailand, Vietnam and Indonesia are to be next.  In Malaysia, RHB Bank Bhd is among the early birds to migrate to EMV standards s with its EVO card. 

Credit Bureau in India

India's Business Standard reports on the Indian credit bureau negative file system being built by the MasterCard-led India Cooperation Committee. READ MORE »

Proximity Payment Systems

Dennis Nishi reports in the Chicago Tribune (subscription required) on RFID and infrared-based payment schemes.

How to Avoid the Phishing Bug

Bill Thompson of the BBC provides advice on how to avoid providing personal information in response to a phishing email attack.
There are some simple rules to avoid falling for this sort of scam. One is never to click on a link in an e-mail, even if it looks OK. It is safer to type it in yourself or to cut and paste it from the e-mail into your web browser.

This is really important because a recently discovered bug in Microsoft's Internet Explorer means that a scammer can make a fake website look real. A link which claims to be take you to PayPal might point to a fake site, but thanks to this as-yet-unpatched bug it will still say in the address bar.

Smart Parking Meters in Princeton, NJ

The Princeton Packet reports on the initial installation of new parking meters in Princeton, NJ capable of taking smart cards for payment.
The user may set the amount of money to be placed on the card, which will initially cost $10, he said. With each addition of money to the card, the user will gain a parking bonus, Mr. Bruschi said. For example, a $20 renewal would provide $22 worth of parking.

 The cards offer another advantage over paying with coins. If a smart-card user has time left over on a meter, the user simply inserts the card back in the slot and the remaining time is credited back to the card.

Chase's Harrison: Visa or MasterCard?

In an exclusive Reuters inteview, William Harrison, Chairman and CEO of JP Morgan Chase, commented on the combined credit card business of Bank One and Chase.
Harrison said the companies have not decided if they will stick with either Visa or MasterCard when they combine their card businesses. Analysts have said the merged bank will likely shift the majority of its card business to one association or the other. But their combined size gives them bargaining power with the associations. "We have a lot more leverage with whomever we want to strike a deal with," Harrison said.

RFID - They're Already Following You

Eweek's Guy Kewney surveys the action in RFID including proximity-based payment cards. Dave Birch from Consult Hyperion comments:
"In the UK and other countries we're doing the chip and PIN migration; we're catching up with France," Birch says. "All the boring old bank magnetic stripe credit and debit cards are being replaced by super new chip cards where push your card into a reader, and you punch in your PIN instead of signing. Millions are being rolled out, but it's actually old technology."

In the US, says Birch, they still haven't gone down that route. They may not ever do so. "What's sitting behind this, is that the US may decide to skip over that generation because their online fraud levels are so much lower," he says. "It's because they have far more online point-of-sale terminals, They may go directly to contactless."

NYCE Sues Concord EFS

NYCE has filed a lawsuit against Concord EFS over debit card transaction routing agreements.
 In the complaint filed yesterday, NYCE charges that Concord has violated a 1993 agreement and engaged in other unlawful conduct as a result of certain operating rules it has adopted and is attempting to enforce. Those rules generally require that point-of-sale (POS) transactions conducted with cards branded with NYCE and STAR at similarly branded POS terminals, be routed to Concord's STAR-branded network, even if the card issuer has designated that the transaction be routed to the NYCE network.

The 1993 agreement obligates NYCE and the Concord entities to permit financial institutions that participate in both EFT networks to direct how POS transactions using their cards are routed. The agreement established a precedent for issuer designation and honoring of network priority routing.

Phishing Expected to Get Worse

Patrick Gray reports in ZDNet from Australia on expectations that phishing scams will only get worse.
The introduction of a two-way verification process may help to mitigate these types of scams, MacGibbon said. Every time a user enters their log-in name the bank's Web-site, the system can display a pass-phrase given to the institution by the customer -- something easy to remember, such as "I like bananas in the morning" -- before they enter their password. By engaging in a two-way authentication process, not only is the bank verifying the authenticity of the customer's credentials, the bank is verifying itself to the user as well.

January 22, 2004

CyberSource Reports Profitable Q4

Payment processor CyberSource today reported a profitable Q4 which exceeded prior guidance.
"The fourth quarter is powerful testimony to the CyberSource value proposition," said Bill McKiernan, the company's chairman and CEO. "We saw strong growth in revenue, excellent margins, and most importantly, the company's first quarter of profitability. The dollar volume of our credit card authorizations was a record $5.4 billion. This was a very strong quarter for the company and highlights the solid momentum we have going into 2004."

Bank of America Sends Data to Wrong Customers

Loretta Kalb reports in the Sacramento Bee on a mailing error by a third party vendor that resulted in Bank of America sending tax documents to the wrong customers.
The customers received mailings addressed to them but containing 1099 tax forms meant for others. The bank attributed the blunder to a printer malfunction by a third-party vendor but would not identify the company. BofA spokeswoman Betty Riess said Wednesday that the bank will provide customers with a two-year credit-monitoring service called PrivacySource to help guard against identity theft. She added that customers would not be responsible for unauthorized account activity.

Identity Theft Tops FTC's Consumer Complaint List

The US Federal Trade Commission has released its list of the top consumer complaint categories for 2003. Identity theft topped the list accounting for 42 per cent of all complaints. The full report is available online.

Protect Yourself from Phishing Attacks

Mike Himowitz writes in the Baltimore Sun about how phishing attacks can be thwarted.
Millions of phishing messages bombarded the Internet over the holiday shopping season, and some security experts estimate that as many as 5 percent of recipients take the bait (which is why it's known as phishing - hackers like to substitute "ph" for "f").

Smart Cards Struggle

Bill Virgin writes in the Seattle Post-Intelligencer about smart cards in the US.
The dazzle of the technology itself was enough seven years ago. Now it's not. Those potential customers are putting this question to smart cards and those marketing the technology: "You're smart. So what? Now prove to me you're more convenient and less expensive than what I've got already."

Gift Cards Go Contactless

RFID Journal profiles Vivotech's new contactless gift card solution for retailers.
The new ViVOgiftcard adheres to ISO standard 14443B and can operate over multiple frequencies, including 134 KHz, the same frequency used by ExxonMobil Speedpass system. The only information stored on the ViVOgiftcard is the customer's card number and a security code that changes at each reading.

The monetary value on the card is stored centrally on a retailer's back-end server. The company says that the gift cards' data storage capacity—which ranges from 64Kbits to 4kbytes—can be expanded to accommodate additional user information. After a card is used to make a purchase, consumers can reload value in any of three ways: either at the register, at a store kiosk placed in or near the store, or over the Internet using a debit or credit card.

PayPal Fourth Quarter Update

eBay reported earnings yesterday including results for PayPal. PayPal payment volume in the fourth quarter was $3.7 billion coming from 41 million registered PayPal users. This payment volume represented 22% growth in volume from the prior quarter and a 74% increase from the same quarter a year earlier. PayPal's average ticket was slightly over $54. Supporting eBay's continued auction growth, 69% of PayPal's payment volume was auction-related, up from 67% in the prior quarter.

PayPal's revenues on that payment volume were $130 million representing a gross revenue of 3.52% of payment volume. This represented a 23% increase over the third quarter and a 68% increase over the same quarter a year earlier.

PayPal's user base grew at ten percent over the prior quarter and 49 per cent over the same quarter in the prior year. PayPal added about 42,000 new users each day during the fourth quarter.

PayPal's transaction loss rate jumped in the fourth quarter from 0.22% in the third quarter to 0.31% of payment volume in the fourth quarter -- totaling $11.5 million. Other expenses dropped slightly from 1.25% of payment volume to 1.23% indicating further economies of scale being achieved. PayPal generated about $57 million in profit for eBay during the quarter running at a margin of about 43% pre-tax.

January 21, 2004

TSYS Hammered

Payment processor TSYS was hammered in today's stock market action following a conference call yesterday where management forecast lower growth in 2004. A Dow Jones newswire story on the call is available.
"Certainly we recognize that this forecast is lower than our historic year over year projections," Chief Executive Phil Tomlinson said during a conference call Wednesday, adding that "by some measures, 2004 will be one of the more challenging years this company has ever experienced."


PayCircle has announced the harmonization of the co-branded PayCircle/Parlay specification with the JPay API along with its partnership with the Liberty Alliance Project.

Bank One and Private Label Cards

W.A. Lee reports in this morning's American Banker on Bank One's acquisition of the Circuit City portfolio and, as a result, its re-entry into the private label card business.
Bank One chief executive officer James Dimon said in a conference call Tuesday that "it has become obvious to us that we need to be in" private-label and "have knowledge about it, because in some cases private-label and cobranding in cards come together. We have to be a little bit more prepared for that. This is kind of our opening foray into that. We think Circuit City will be a great partner."

Combating Phishing Attacks

ComputerWorld reports on various initiatives to combat phishing attacks.
The rapid growth of so-called phishing scams has left IT managers, industry groups and technology vendors scrambling to deal with the e-mail fraud problem. A large part of the effort is focused on consumer awareness programs, cross-border law enforcement activities and improvements in information sharing between companies and authorities. But new tools and services that could help companies better detect and respond to such scams are also beginning to emerge.

Minnesota Public Radio reports on U.S. Bank's efforts to educate customers about phishing attacks.

January 20, 2004

Credit Card Slaves

The Wall St. Journal has a front page story this morning on the credit card crisis in Korea.
Because Korea's social structure makes family members feel accountable for each other's debts, one person's credit problems often ripple outward through entire families and social networks, curbing the spending of large groups of people and potentially prolonging a slump in consumer spending. Kim Jun Ho, an animator in Seoul, complains bitterly that his entire family has been turned into "credit-card slaves," with family members having to devote much of their income to supporting his sister and repaying her $42,000 in credit-card debt.

The RFID Imperative

Meredith Levenson writes in CIO Magazine about RFID.
Two years ago, 7-Eleven piloted a VIP (Virtual Instant Payment) card at the 7-Eleven store inside the company's corporate headquarters in Dallas and at a store in Plano, Texas. The VIP card was equipped with an RFID chip and functioned like a debit or credit card. By waving her VIP card near an RFID reader by the cash register, a customer could pay for purchases without having to stand in line or fumble through her purse or swipe her debit card through a reader (at just the right speed)—much as ExxonMobil customers use an RFID-enabled SpeedPass to pay for gasoline. This was the company's first foray into RFID, and it helped CIO Morrow understand what system changes he needed to make in order to integrate this new application with the company's back-end systems.

Phishing via the Phone

Don Oldenburg reports in the Washington Post on one recent phishing attempt over the phone.
When he asks you to read him the three-digit purchase code from the back of your card so he can "verify you are in possession of your card" and make sure it hasn't been lost or stolen, you cooperate. After all, he's not asking for your credit-card number -- which you know better than to give to a stranger.

Smart ID Cards - A Bad Idea?

The Bangkok Post questions the Thai government's plans to issue ID cards containing smart cards to Thai citizens.
The best that can be said is the government has good intentions and poor implementation. No other country moving to smart ID cards has made them mandatory. The government needs to back off this plan to issue cards in April, and start with much lower ambitions. Smart ID cards must be voluntary, perhaps for years to come, to permit project bugs to be ironed out. The government must explain the project and protect security far better that it has done.

January 18, 2004

Gold in Parking Meters

New Hampshire's Union Leader profiles Park Smart Technologies, a Hampton Falls, NH-based company hoping to bring cards to parking meters.
Using an “e-purse” technology developed by a partner in Dublin, Ireland, Park Smart makes use of a secure “pre-paid stored value card” that holds a specific dollar amount. The card can be easily inserted in newly built parking meters or those that have been modified to accept the plastic. While “smart card” technology has been around since the late 1970s, it’s gone largely unused by the parking industry.

Jamie Dimon: More Deals Ahead?

In this morning's New York Times, Landon Thomas Jr. profiles Bank One CEO Jamie Dimon -- following the announcement earlier this week of Dimon's merger of Bank One with JP Morgan Chase. READ MORE »

ICBA Expresses Concerns about Large Bank Mergers

The community bank oriented Independent Community Bankers of America is concerned about the implications of large bank mergers on the industry.
"These mergers have enormous public policy implications. First, the trillion dollar banks that will result from these megamergers will be too big to regulate effectively," said Ken Guenther, President of ICBA. "Secondly, these banks will be too big to fail and therefore will pose a systemic risk to the FDIC's Bank Insurance Fund."

Guenther also predicts that, following these mergers, the largest banks will attempt to amend the Riegle-Neal Interstate Banking and Branching Efficiency Act which prohibits a bank merger if the resulting bank would control more than 10 percent of the deposits in the United States. "Community banks will resist any attempt to increase the 10 percent cap imposed by the Riegle-Neal Act or to broaden the definition of "deposit" under that Act," said Guenther.

Hard Lessons from Bank Mergers

Arizona Republic columnist Jon Talton shares his personal perspective on bank mergers from the Phoenix perspective.
I spent the gaudiest years of the roaring '90s as a financial journalist in Charlotte, N.C., while the hometown banks conquered America. Charlotte became the nation's second most important banking center, after New York, and this dull Southern city was transformed into a rich, glittery metropolis. Every merger showered Charlotte with power, capital and high salaries.

Time for Canadian Banks to Merge?

Eric Reguly reports in the Globe and Mail on merger possibilities among the major Canadian banks.
Given the size differential, it's absurd to argue mergers among the Canadian banks would turn them into competitive, international players. Through no fault of Ottawa, that game was lost years -- maybe decades -- ago. The only debate now is whether the Canadian banks should strive to become solid third-tier players or give up entirely and hit the sell button.


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