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December 10, 2004

MBNA Stops Unsolicited Switching of Credit Cards

Patrick McGeehan reports in the New York Times that MBNA has decided it should ask for permission before switching its customers' credit cards to American Express cards. The company's decision follows publicized reports of some customers being upset at having their Visa or MasterCard-branded MBNA card replaced with an American Express card.

Fed Report: Payment Types at the Point of Sale

Terri Bradford of the Federal Reserve Bank of Kansas City has published a brief paper on Payments Types at the Point of Sale: Merchant Considerations (PDF).

Apple's iTunes Music Store Now Accepts PayPal

Apple and PayPal announced today that Apple's iTunes Music Store will now accept PayPal for purchases. The first 500,000 customers to open a new iTunes account in the US using PayPal as their form of payment before March 31, 2005, will receive five free songs.

"We are thrilled that PayPal users can now buy their music on the world's number one online music store," said Todd Pearson, general manager of PayPal's Merchant Services. "PayPal's virtual wallet offers iTunes customers the convenience of paying in the way they prefer."

Etailing Hits Its Stride

Business Week reports on the 10th anniversary of ecommerce.

Analysts at Forrester Research Inc. say U.S. online sales will reach $145 billion this year -- or 7% of U.S. retail sales. While growth has slowed from last year's hefty 38% gain, that's still a 26% leap from the $114 billion racked up in 2003.

Microcommerce Presents Mega-Opportunities

Jennifer LeClaire reports in Ecommerce Times on the potential for microcommerce.

Much attention has been focused on the promise of enabling large business-to-business transaction over the Internet -- and many corporations can testify to the Web's transforming power to streamlin inventory management. However, there's a new revolution coming online, and it's called microcommerce.


Online Shopping to Hit Holiday Peak on Tuesday, Dec. 14th

CyberSource predicts that online shopping volumes will peak this holiday season next Tuesday, December 14th.


December 09, 2004

US Consumer Average Credit Card Debt Up 14.5 Percent

Myvesta has announced the results of an annual credit card survey that indicates the average amount of credit card debt carried by individuals in the US has risen 14.5 percent.

The average American is now carrying $2,627 in credit card debt, up from $2,294 in 2003. Individuals are also carrying more credit cards in their wallets. Americans are now carrying an average of 2.9 credit cards, up from 2.3 in 2003.

ABA Warns Consumers About Phishing

The American Bankers Association has issued a warning to consumers to be on the lookout for phishing emails.

Password Imperfect

Robert Lemos reports for CNET on companies moving away from relying only on passwords for user authentication.

Credit Card Ruling Ripples

Raymond Keating writes a commentary in the Washington Times about the recent US Department of Justice anti-trust lawsuit against Visa and MasterCard.

As so often is the case with antitrust, this wasn't about consumers, but about competitors using the government to gain ground in the marketplace.
Meanwhile, the court mandate for Visa and MasterCard to allow banks to offer other cards easily could translate into higher fees for merchants.

After all, if Card Issuer A cuts a more lucrative deal with a bank at higher fees, then wouldn't that bank have an incentive to push more customers to Card Issuer A and away from the lower priced transactions charged by Card Issuer B? Wouldn't Card Issuer B be compelled to raise its fees and provide a bigger chunk to the bank? Meanwhile, the merchants, including countless small businesses, would face higher costs.

December 08, 2004

MBNA Takes Heat From Cardholders Over Amex Switch

Patrick McGeehan writes in the New York Times about the negative reactions some MBNA cardholders have been having to having their cards switched from Visa or MasterCard to American Express branding.

Linda Sherry, editorial director of Consumer Action, an advocacy group, said she saw the deal between MBNA and American Express as "a positive thing" for consumers, but she questioned the "heavy-handed" marketing approach. "This is a dumb way to do this," Ms. Sherry said. "You don't go to your existing customer base and force-feed them something like this."

Ace Cash Express Studies Unbanked

Ace Cash Express has published a report on the current state of the retail financial service needs of consumers in the United States. The report is available for downloading (PDF).

The report provides an overview of the evolving nature of how Americans access and utilize financial services at the retail level and the increasing number of consumers who periodically or rarely utilize the traditional retail banking system.

Cash Technologies Launches CashTech.Card

Cash Technologies' subsidiary Heuristic Technologies has announced the launch of a new debit card product called the CashTech.Card.

Heuristic plans an immediate distribution of CashTech.Cards for expense reimbursements, Health Reimbursement Accounts (HRA's) and Health Savings Accounts (HSA's). Other anticipated uses include payroll, check cashing, loyalty programs and personal uses.

MasterCard Offers Contactless Payments Symbol to Industry

Contactless Payments Symbol - Photo-small.jpgMasterCard has announced that it is offering its instructional symbol for contactless payments to the payments industry as an open universal identifier.

"As interest in contactless payments continues to grow, it is very important for the payments industry and merchant community to clearly educate consumers on how to use these new cards and devices," said Art Kranzley, executive vice president and Chief e-Business Officer, MasterCard International.

"Now that a universal symbol exists for the industry, we expect this education process to move quickly, allowing consumers to enjoy the simplicity and convenience of contactless payments."

Contactless Payment and the Financial Industry

Visa International's Sue Gordon-Lathrop writes in ContactlessNews about Visa's perspective on contactless payments.

2005 will be a year where contactless payments gain more significant traction as infrastructure continues to deploy. It will also be a year where the messaging for contactless payment will need to be further refined. The technology works, it’s been proven to be acceptable to all, but in order to mass market the potential it will be important to focus on some key areas of education.

American Express Launches First Cards in China

American Express has announced the launch of its first cards in China, issued in partnership with the Industrial and Commercial Bank of China (ICBC).


MasterCard's e-P3 Streamlines Procurement Process

Theresa Carey reports in eWeek on MasterCard's e-P3.

MasterCard e-P3 automates the financial and information value chain for corporations and public sector organizations by integrating MasterCard settlement options into electronic invoice payment and presentment (EIPP) platforms.

December 07, 2004

Citigroup Global Consumer Analyst/Investor Day

Citigroup is holding an Analyst/Investor Day briefing tomorrow for its Global Consumer business.

Dealing with Credit Card Interest Rate Increases

Ray Martin of CBS has some advice for credit cardholders who find themselves on the receiving end of a significant jump in the interest rate on their outstanding balances.

Most consumers agree that hiking interest rates like this seems unfair, but the credit-card companies say they are being prudent to raise interest rates for customers when they think the risk of being repaid had increased. The card issuer's position is that if a customer appears to be a higher risk category -- i.e. they may not pay their bills on other accounts on time -- then the card company needs to protect itself by charging higher rates.

Home Equity Encroaches on Credit Cards

Business Week reports on the increasing tendency of consumers to tap home equity loans or lines of credit to pay off their credit card outstandings.

Growth in credit-card receivables -- what card holders owe -- has slipped to low single digits for issuers in the last couple of years, and some industry watchers think the trend is here to stay.

"The logic of borrowing at 3% to 7% on a home-equity loan compared to 13% on a credit card is too powerful to ignore," says Morgan Stanley analyst Kenneth A. Posner.

Note: Tom Brown of includes a link to Posner's report on home equity lending (done in conjunction with Betsy Graseck) in this weblog posting

Commerce Bank Introduces Visa Gift Card with No Purchase Fee

Commerce_Visa_Gift_Card-sma.jpgCommerce Bank has announced a new Visa Gift Card now available for purchase at its branches with no additional fee.

"The new Commerce Visa Gift Card enables our customers to have choice and convenience, and naturally, we offer it for free and in a unique and memorable way - all the things Commerce is known for," said Dennis DiFlorio, President of Retail Banking and Operations, Commerce Bank.

Banks Need to Rethink Payment Strategies

Theresa Carey reports in eWeek on a panel at Oracle's OpenWorld session that concluded that banks must move beyond just moving money and consider managing the information embedded in payments.

American Express Launches Housewarming Gift Card

American Express Incentive Services has announced the Housewarming Gift Card, a gift card designed for the real estate industry.

"The Housewarming Gift Card was designed to let consumers choose something nice for their new homes, while taking the guess work out of the gift giving process for the real estate industry," says American Express Project Manager Phil Gorman.

According to a Realtor Magazine poll, 77% of all Realtors gave their clients a housewarming gift last year. Of those 77%, 44% gave gift cards. Those numbers should increase this year with the increasing popularity of gift cards.

Debit Cards Give Plastic Edge

Griff Witte reports in the Washington Post on the Fed's recent report that in 2003 the number of electronic payments exceeded the number of paper check payments.

The increased popularity of electronic payment, however, has spawned questions about whether the systems for processing transactions adequately protect consumers and whether they're fair to retailers.

December 06, 2004

Consumers Dissatisfied with Online Security

Paul Roberts of IDG reports on results of a recent Gartner survey that shows online consumers are growing frustrated with the lack of security provided by banks and online retailers including feeling that passwords are no longer sufficient to secure their online transactions.

According to the data, almost 60 percent of those surveyed by Gartner said they are concerned or very concerned about online security.

Even more important for online retailers: Over 80 percent of those surveyed said they would buy more from an online vendor who offered them more than just a user name and password to protect their accounts.

Electronic Payments Increase

ABC News interviews Wayne Best, Visa USA's senior vice president of strategic and economic analysis.

However, the most significant trend that we've seen in this industry over the past 10 years has been the mainstreaming of the debit card and a clear consumer movement toward using a mix of payment options, depending on the type of purchases that they want to make.

Gone are the days that electronic payments are the exclusive domain of credit. Instead we're now seeing consumers who have grown to expect — if not demand — the convenience, utility and security of electronic payments, whether making credit purchases or accessing "ready funds" in their checking account.

Fed Issues 2004 Payment Study

The Federal Reserve has announced the release of the 2004 Federal Reserve Payments Study (PDF) consisting of the results of two research efforts to estimate the annual number, dollar value, and makeup of payments in the United States.

Among other results, the study reports that in 2003 electronic payment transactions in the United States exceeded check payments for the first time. The number of electronic payment transactions totaled 44.5 billion in 2003, while the number of checks paid totaled 36.7 billion, according to recent surveys of U.S. depository financial institutions and electronic payments organizations.


Untapped Market for Credit Cards

Jennifer Kingson reports in the New York Times about opportunities for credit cards in China.

"It's a nascent business which is really beginning to explode," said Jim Allhusen, executive vice president and general manager of Visa International for China and the Philippines. "Consumers want your products; banks want to get into the market."


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