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January 31, 2005

Consumers and ARC Check Conversion

NACHA has announced the results of a survey of consumer awareness of accounts receivable check conversion (ARC).

ARC allows companies that receive consumers' checks at remittance and lockbox locations to convert them into electronic ACH payments, the same, safe electronic payments system used for Direct Deposit. ARC is used for consumer bill payments such as credit cards, mortgages, insurance premiums, and telecommunications and utility bills. NACHA estimates that in 2004 there were 1.25 billion consumer checks converted into ARC payments, and that at its current growth rate may reach 2 billion payments in 2005.

When read a description of the ARC check conversion process, 69 percent of the consumers surveyed said that they are familiar with the process. When provided with an open-ended opportunity to express any objections or concerns about check conversion, 55 percent said they had none.

Fiserv Reports Record EFT Transaction Volumes in 2004

Fiserv has announced that its Fiserv EFT unit handled a total of 4.2 billion transactions during 2004, a 14% increase over the prior year. Its Accel/Exchange network also reported record volume handling 281 million transactions, a 26% increase. About 14.5% of that volume was for ATM transactions with 85.5% consisting of POS transactions.

Xign Reports $50 Billion in B2B Transaction Volume

Xign has announced that last year its Xign Payment Services Network has handled $50 billion in B2B transactions since its inception in July 2001. Xign also reported it has about 18,000 shared supplier active in its network.


MoPay Provides Cell Phone Payments

Stephen Timm writes in South Africa's Business Owner about MoPay, an SMS-based mobile payment system.


Banks Must Transform US Corporate Payments Structure

The Tower Group has announced new research into business-to-business payments that sees a tipping point fast approaching where checks will become the exception rather than the rule.

"With the growth of corporate electronic payments poised to explode, we are rapidly reaching a critical point in the transformation of domestic cash management," said Susan Feinberg, senior analyst in the Wholesale Banking research service at TowerGroup and author of the research. "Many business to consumer payments are already made electronically, and a majority of US corporations indicate plans to migrate the bulk of their business to business payments to electronics within three years."

Given this, Feinberg added, "there is a growing urgency for banking executives to reorient their check-centric product management and development focus, to facilitate payment and remittance processing in a complex world of rapidly converging payment methods."

ACH Payments

Ivan Schneider writes in Bank Systems & Technology about Leonard Heckwolf's perspective on the the move to electronic payments. Heckwolf, who just completed a two-year stint as chairman of NACHA, is senior VP at JPMorgan Chase where he's responsible for the bank's ACH and retail lockbox business.

Store Cards in the UK

Helen Loveless reports for on the interest rates charged by store credit card programs in the UK.

Borrowing on a store card can prove ruinously expensive for those who repay only the minimum. It can take between 40 months and 157 months - 13 years - before a debt of £200 is cleared, according to research by price comparison service uSwitch.

Cash? What's Cash?

Robin Sidel writes in the Wall St. Journal about the growth in card-based payments and some of the trends affecting the industry.

Digital River's Joel Ronning

Business Week interviews Digital River's CEO Joel Ronning.

The thing that gives us confidence is a huge shift in the software business from physical delivery to digital. The software company doesn't want to deliver boxes to Japan any more. The consumer takes it home and throws the box out, and it takes a month to get there. We deliver it in minutes. Digital delivery is getting more accepted.

Bank of America's Liam McGee

Business Week looks at Bank of America's consumer chief Liam McGee.

January 30, 2005

Visa USA 2004 Annual Report Available

Visa USA has published its fiscal year 2004 Annual Report (PDF) including highlights of the year, financial results, etc.

January 28, 2005

Morgan Stanley May Consider Selling Discover Card

Jed Horowitz reports for Dow Jones Newswires on comments made by Morgan Stanley CEO Philip Purcell at an investment conference regarding prospects its Discover business unit.

"The thing that would make me change my mind on Discover would be growth," he said at the conference. He added that Morgan Stanley isn't content with simply sustaining business profitability. "Restoring growth in Discover is the challenge."

See this page for information about the webcast of Purcell's comments.

Pay By Touch Acquires New Patent Portfolio

Pay By Touch has announced that it has acquired a new patent portfolio of issued US patents for additional biometric payment solutions.

"Our acquisition of the issued patent covering biometric authentication of check-cashing and our recently announced alliance with global transaction processing leader Certegy brings a compelling proposition to our check-cashing authentication services," said John Rogers, founder, chairman and CEO of Pay By Touch. "This acquisition is indicative of our market momentum as retailers and shoppers continue to sign up for Pay By Touch."

January 27, 2005

Tax Refunds on Stored Value Cards

TurboTax (Intuit) and Rush Card (UniRush Financial Services) have announced an alliance that tax filers using TurboTax for the Web to receive their refunds in as little as 10 days and deposited either into a checking account or to a prepaid Rush Visa card.


Bank of America to Drop Fees on Mexico Money Transfers

Reuters reports that Bank of America plans by year end to eliminate its fees for some of its customers to transfer money to Mexico. To benefit, there's a requirement that customers open checking accounts with the bank.

"Our goal in eliminating fees is to help millions of customers send money for free quickly and easily to friends and family in Mexico," said Liam McGee, Bank of America's president of consumer and small business banking, in a statement.

Wal-Mart, Your New Banker?

Wendy Zellner writes in Business Week about Wal-Mart's activities in financial services.

Many community bankers are convinced the behemoth won't rest until it has obtained full banking powers. "It's not a question of if Wal-Mart is going to be a bank, it's a question of when," says D. Anthony Plath, a finance professor at the University of North Carolina at Charlotte.

First Data Announces 2004 Financial Results

First Data Corp. has announced its financial results for the fourth quarter of 2004. The company reported earnings per share for the fourth quarter of 56 cents, an increase of 2 percent over the same quarter last year. Year over year revenue growth was 20 percent while expenses grew at 21 percent resulting in a growth in operating profit of 16 percent.

First Data has also announced that it will be providing processing services for the recently announced Wal-Mart Discover credit card which is being underwritten by GE Consumer Finance.

FDC seems to be using the new theme of "Making Life Easier" to describe its overall business.

January 26, 2005

Overnight Checks

Jennifer Saranow writes in the Wall St. Journal about Bank One's recently announced Overnight Check service.

Michael Cleary, executive vice president of retail marketing at Bank One, says the bank launched an electronic person-to-person transfer service four years ago called eMoneyMail, but took it off the market after two years when it didn't attract enough demand.

Bank One says customers using Overnight Check can send checks to anyone in the U.S. regardless of whether the recipient is a Bank One customer. The bank is also positioning the service as a last-minute bill-paying method, as not all bill issuers except electronic payments, according to Mr. Cleary.

Visa Gets NASCAR's Loyalty

Binyamin Appelbaum writes for the Charlotte Observer about Visa USA's NASCAR sponsorship campaign.

"When you look historically at NASCAR, it was fuel and lubricants and the tobacco sponsors," said Andrew Giangola, a spokesman for the company that runs the sport. "But in recent years, the two big ones have been pharmaceuticals and financial services."

Visa came first, signing up as the sport's official credit card in 1998, just as NASCAR was bursting onto the national stage with races from coast to coast and a network television contract. Giangola said the sponsorship was "a landmark" for NASCAR, underscoring its emergence as a sport whose average fan suddenly made more money than the average American.

January 25, 2005

How to Make a Magnetic Stripe Card Reader

O'Reilly Media is about to launch a new magazine titled "Make: Technology on Your Time".

The first issue includes an article titled "How to Make a Magnetic Stripe Card Reader". The table of contents reads:


Regulatory Efforts May Stifle Prepaid Products

The Tower Group has announced research results indicating that multiple state and federal regulatory efforts could jeopardize the success of prepaid products.

"Regulatory oversight is being pursued in the name of consumer protection. But the primary impact could be just the opposite," said Ed Kountz, senior analyst supporting the Bank Cards and Emerging Technologies research services at TowerGroup and co-author of the research.

"The Federal Deposit Insurance Corporation (FDIC), Federal Reserve Board, Office of the Comptroller of the Currency (OCC), and individual states are examining whether to reshape existing laws to regulate prepaid. But as they do so, the lack of accurate definitions and the failure to develop a harmonious regulatory framework around the valid consumer benefits of such products could unintentionally stifle the growth of certain payment products in this category," he said.

TSYS Finalizes Expanded Agreement with Bank of America

TSYS has announced that it has finalized an expanded processing services agreement with Bank of America that includes its entire credit card portfolio including its recently acquirer FleetBoston portfolio.

Federated Identity

I was speaking with a colleague last week about digital identity systems. We got to thinking about all of the hoopla around federated identity systems that began with Microsoft's ill-fated launch of Hailstorm which then, of course, led to the rest of the industry's Liberty Alliance response.

Then he made an interesting comment: arguably the largest federated identity system currently in use on the planet is Visa's Verified by Visa scheme.

Think about it: a three-party (cardholder, merchant, card issuer) identity management solution that already has millions of participating parties conducting more secure commerce transactions.

MBI and Team on Flexible Spending Account Solution

MBI and have announced a collaboration to facilitate the purchase of items eligible for flexible spending account (FSA) reimbursement using MBI's Benefits Card.


LexisNexis Teams with Verid to Authenticate Identity

LexisNexis has announced a strategic alliance with Verid to authenticate identity in phone and Internet-based transactions.


A Look at iPayment

David Isaac writes for Investor's Business Daily about iPayment.

Not only does iPayment have other firms do much of the actual card-processing, but it also outsources its sales force. "They're almost a virtual company in a way," Merrill Lynch analyst Gregory Smith said. "You could think of them as outsourcing sales and outsourcing the back-end processing."

Steve Ellis of Wells Fargo Elected NACHA Chairman

Steve Ellis, Executive Vice President of Wells Fargo's Wholesale Banking Group has been elected Chairman of NACHA's Board of Directors.


January 24, 2005

BioPay Files Biometrics Patent Lawsuit Against Pay By Touch

BioPay announced today that it has filed suit against Solidus Networks, Inc. d/b/a/ Pay By Touch, and Indivos Corporation.

BioPay's lawsuit, filed January 18, 2005, involves patents on the use of biometric technology in point-of-sale transactions. BioPay asks the court to declare patents held by Pay By Touch to be invalid and also asks the court to declare that BioPay has not infringed on Pay By Touch's patents.

American Express Reports 17% Increase in Card Payment Volume

American Express has announced earnings for the fourth quarter 2004 including a 17% increase in spending on Amex cards and a 16% increase in discount fees paid by merchants for accepting Amex cards. The company reported a growth in cards of 4.9 million.

Smart Payment Alliance

Several of the world's leading smart card manufacturers have announced the creation of the Smart Payment Alliance (SPA), a new non-profit association dedicated to fostering and facilitating the usage of smart cards to make payments. Participating companies include Axalto, Gemplus International S.A., Giesecke & Devrient, and Oberthur Card Systems. The alliance has a website at: and has posted a slide presentation introducing the alliance. (PDF).


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