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« December 19, 2004 - December 25, 2004 | Main | January 2, 2005 - January 8, 2005 »

January 01, 2005

A Look at ING Direct: Rebels with a Cause

William Taylor writes in the New York Times about ING Direct in his article Rebels With a Cause, and a Business Plan.

In the case of ING Direct, Mr. Kuhlmann and his colleagues say that they aren't just building a bank. They are challenging and trying to change the common and what they call the misguided practices of an entire industry. "We looked around and said, 'The banking business is bust,' " Mr. Kuhlmann said. "The consumer always loses. Then we said, 'How can we do something radically different?' "

Chip and PIN Take Effect in the UK

The BBC reports on Chip and PIN taking effect today in the UK.

An Association for Payment Clearing Services (APACS) spokesman said shops who had made the upgrade would gain protection "regardless of whether it's an old card or a new chip-and-PIN card, as long as the retailer conducted the same security checks they previously did to ensure that the card is not lost or stolen".

The article goes on to point out that the upgrade is far from complete. Card issuing banks need to issue an additional 53 million replacement chip cards and retailers have upgraded about 600,000 of an estimated 860,000 card acceptance locations.

December 31, 2004

Happy New Year!

Best wishes for a very Happy New Year and a great 2005 from all of us at Glenbrook Partners!

December 30, 2004

Lawsuit Charges Capital One Ads Misled Customers

Caroline Mayer reports in the Washington Post on a lawsuit brought by the Minnesota attorney general against Capital One.

The ads suggest that Capital One's cards, unlike its competitors', would bear interest rates that remain at 4.99 percent, the lawsuit said. However, it alleged, for many consumers, the interest rates went up -- in some cases they could have increased to 25.9 percent -- if they were just a day late in paying their bills or if they exceeded credit limits.

Microsoft Fails to Successfully Commercialize Passport

Joseph Menn reports on Microsoft's announcement that it is abandoning its efforts to persuade others to adopt its Passport service.

Passport probably drew few new customers to Microsoft products. But it was initially seen as strategically important because it could have helped the Redmond, Wash.-based company put itself in the middle of most electronic transactions.

Because it would keep track of credit card numbers and passwords as people moved from Web site to Web site, Microsoft had predicted that Passport would smooth the way for widespread use of Web services based on a person's identity instead of those linked to information stored on a specific PC.

Americans More Focused on Shrinking Their Waistlines Than Shrinking Their Debt

Bankrate has announced the results of its annual New Year's Resolution poll.

According to a national survey conducted by Roper for Bankrate, 36% of Americans polled are focused on weight loss as opposed to 31% who are concerned with eliminating outstanding debt. This is a significant change from the 2003 poll in which 37% of those polled were more concerned about their debt, while only 29% were concentrating on losing weight. In fact, this is the first time in the three years that Bankrate has conducted the survey that Americans have chosen weight loss over controlling debt as their New Year's Resolution.

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VeriSign Reports Holiday Shopping Data

VeriSign has announced some of the results its payment processing unit saw during the 2004 holiday shopping season.

"The 2004 online holiday shopping season has proved highly successful, with virtually every indicator showing growth. From spikes in merchant categories to new shopping phenomena like 'Black Monday,' we continue to observe the impact the online marketplace has on traditional shopping-behavior patterns," said Trevor Healy, vice president of payment services, VeriSign.

"Through the online data we collected, we have seen clear changes in consumer behavior such as accelerated weekday shopping activity, more confidence in buying digital goods from e-commerce sites, an increase in gift-certificate purchases as well as the direct impact of shipping lead times on sales."

December 29, 2004

Card Spending in UK to Overtake Cash

Alex Falk reports in the Financial Times that UK consumer spending using plastic cards will for the first time exceed the use of cash.

"The key driver has been the introduction of debit cards," said Apacs' Jemma Smith. "We're seeing a generation of middle-aged customers coming through who have grown up with both debit and credit cards."

Iraq's Ailing Banking Industry Is Slowly Reviving

Borzou Daragahi reports in the New York Times on how banking in Iraq is slowly reviving.

The revival is being led by some private Iraqi banks that have begun using new economic rules, harnessing the surge of reconstruction money and, in some cases, forging foreign partnerships.

Online Sales Rise Dramatically

Information Week reports on the growth in online sales this holiday season.

Online sales using Visa-branded cards for the week ended Dec. 26 reached $1.8 billion, up 58% over the same period last year, while the number of online transactions reached 24 million, up 43% from a year ago, according to Visa USA's SpendTrak report.

For the week ended Dec. 19, Visa's online sales were $2.7 billion (up 39%) and online transactions were 34 million (up 34%). Similar increases were recorded for preceding weeks.

Card Fraud Liability Shift in the UK

The BBC reports on the January 1st shift in liability for fraud on card transactions in the UK -- from card issuer to merchant if the merchant hasn't implemented the new chip and PIN acceptance technology.

"Many retailers have made a business decision not to convert their tills to chip and pin," says Bob Jarrett, professional services director for the British Shops and Stores Association (BSSA) which represents 4,200 shopkeepers. "Some of our members simply do not do enough business on cards to warrant going to the expense of changing their tills," he says.

Pitfalls of Pre-Paid Gift Cards

Krysten Crawford writes on CNN Money about fees associated with certain pre-paid gift cards.

It's the dirty little secret of select gift cards: activation charges, monthly service fees, unreturned balances, and expiration dates that can render worthless Grandma's new and much-welcomed form of expressing love.

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December 28, 2004

The Credit Card King

SmartMoney.com profiles Scott Bilker of Barnegat, NJ who holds 80 credit cards with more than $300,000 in total available credit. Bilker operates the web site DebtSmart.com.

Coming Soon: A Swarm of American Express Pitches

Ron Lieber reports in the Wall St. Journal about the upcoming pitches consumers will be receiving for American Express cards.

Banks like the idea of issuing AmEx cards because an American Express generally pays them more than a Visa or MasterCard. But for consumers, AmEx has its limitations: It's not as widely accepted by merchants.

That fact was hammered home recently, when Walgreens -- the nation's biggest drug store chain -- announced it wouldn't accept American Express cards anymore. AmEx hits retailers with higher average service fees than MasterCard and Visa, and Walgreens says it decided the premium wasn't worth it.

Bank of America Online Banking Survey

Bank of America has released the results of a new study of consumer thinking regarding online banking.

Overall, when consumers were asked, "What prompted you to start banking online?" 64% cited 24-hour access to their accounts, 54% noted convenience and 48% answered that online banking saved time.

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RFID in Casino Chips

Gambling Magazine reports on the use of RFID in casino chips.

iPayment Acquires Portfolio of Merchant Contracts from First Data

iPayment has announced that it has acquired a merchant portfolio of approximately 25,000 small merchants from First Data Corp. The portfolio represents approximately $9 to $10 billion in annual charge volume and was acquired for $130 million in cash.

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Visa's Wire Transfer Push to Heat Up Rivalry with First Data

Aldo Svaldi reports in the Denver Post on the relationship between Visa International and First Data Corporation.

"On the one hand, they are our competitor, and on the other hand they are our customer. It is a unique dynamic," said Danielle Pereira, spokeswoman for Western Union, First Data's money-transfer subsidiary.

READ MORE »

December 27, 2004

Small Company Specializing in Suing Banks

Jennifer Kingson reports in the New York Times on DataTreasury Corporation, a Melville, NY-based company that has sued others, including several banks and processors, for patent infringement.

DataTreasury, for its part, said in court filings that the two patents were the brainchild of its founder, an inventor named Claudio Ballard. The filings are silent on Mr. Ballard's professional credentials and background, but they do assert that he met at least once with people from J. P. Morgan Chase and that they appropriated his ideas.

Amazon.com Reports Initial Holiday Season Results

Amazon.com has announced some early results from this holiday shopping season including setting a single-day record with more than 2.8 million units ordered, or 32 items per second, worldwide.

Card Issuers Pressing for Bankruptcy Law Changes

Bloomberg reports on new efforts by credit card issuers to press for changes in the US personal bankruptcy code.

Personal-bankruptcy filings have almost doubled in the last decade, reaching 1.58 million for the last 12 months, compared with about 800,000 in 1995, according to the Administrative Office of the U.S. Courts. The Bankruptcy Coalition, a lobbying group that includes JPMorgan Chase and HSBC, says those bankruptcies cost them $40 billion each year. The law the banks want would apply a means test to individuals seeking bankruptcy.

Gift Card Sales Rise More than Forecast

Bloomberg reports that US retailers' holiday gift card sales may have risen to more than $20 billion this holiday season.

Gift card sales may have accounted for 11 percent of holiday expenditures, said Michael Niemira, chief economist for the New York-based International Council of Shopping Centers, more than his earlier forecast of 8 to 10 percent. Wal-Mart Stores Inc., the world's largest retailer, on Dec. 18 said gift-card sales were ``significantly'' above last year's level.

Visa Pushes Cards for Money Transfer In Latin America

Joel Millman, Robin Sidel, and Carlta Vitzthum report in the Wall St. Journal on Visa's focus on growing the use of card-based money transfers among Latin American migrant workers.

The moves by Visa and banks are challenging the role of Western Union, which has a 14% market share in the fragmented money-transfer business but a much larger share -- as much as 50%, according to some estimates -- of the remittance market to Latin America. Western Union says it can also profit from proliferation of debit cards, since migrants can still use Western Union to wire cash directly into their relatives' card accounts back home.

MasterCard Reports 8.1% Increase in Holiday Spending

The Wall St. Journal reports that MasterCard saw an 8.1 percent increase in holiday spending this year.

The projection, compiled by SpendingPulse, a retail sales service from MasterCard Advisors, a consulting unit of MasterCard International, is rosier than holiday expectations inside the retail industry. The National Retail Federation is looking for a 4.5% gain for the season.

December 26, 2004

Good Season for Online Sales

Bob Tedeschi reports in the New York Times on the good holiday season that online retailers just experienced.

Gift cards, in particular, helped generate a considerable amount of sales, and Apple, it turns out, may be responsible for a large part of that. Amazon said that $15 iTunes gift cards redeemable at Apple's online music store were the most popular item on its site last week.

Checking Accounts Require Protection

Gail Liberman and Alan Lavine report in the Boston Herald on checking account issues.

Some 3.27 million ACH debits were expected to be returned as unauthorized in 2004, says NACHA-The Electronic Payments Association in Herndon, Va.

Gift Card Fees

Kathy Kristof reports in the Los Angeles Times on gift card fees In an article titled 'Some Cards Are the Gifts That Keep on Taking".

Over the last several months, national banking regulators and the California attorney general's office have issued consumer alerts about the cards. Their main message: Gift cards aren't all alike, so be sure to read the fine print before you buy — or before you use them.

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