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May 31, 2005

Xoom and HSBC Partner to offer online money transfer to Mexico

Xoom has announced the launch of its money transfer service to Mexico and a partnership with HSBC for pickup at any of its 1,300 locations.

“We understand that people work hard for their money and we are excited to launch our safe, cost effective and convenient service to Mexico. HSBC is a terrific partner and is certain to offer our recipients in Mexico the best possible money transfer experience.”, said James Joaquin, Xoom’s President and CEO.

American Express and USAA Announce Card Issuing Alliance

American Express and USAA have announced an agreement to offer American Express and USAA-branded charge and credit cards in the US. USAA will be the card issuer and manage customer relationships, credit management and customer service. The first cards are expected to be issued in the second quarter of 2006.

Separately, American Express announced that it had dismissed USAA from its antitrust litigation against Visa, MasterCard and a number of major US banks.

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GAO Issues RFID Report

The US Government Accountability Office on Friday released a report on the use of RFID technology by the federal government.

The use of the technology, however, raises several security and privacy considerations that may affect federal agencies’ decisions to implement the technology. Key security issues include protecting the confidentiality, integrity, and availability of the data and information systems. The privacy issues include notifying consumers; tracking an individual’s movements; profiling an individual’s habits, tastes, and predilections; and allowing for secondary uses of information.

May 30, 2005

Banks Turn to Photos, Other Tactics to Boost Online Security

Vauhini Vara writes for the Wall St. Journal about the latest tools banks are using against identity theft and online bank fraud.

Stanford Federal Credit Union, a small bank on the Stanford University campus, uses a validation system similar to the one that Bank of America will implement.

Both are designed by the same company, Redwood City, Calif.-based PassMark Security Inc., founded by former Intuit Inc. and PayPal chief executive Bill Harris.

Hong Kong Monetary Authority To Require Two-Factor Authentication For Online Banking

Doug Crets reports from Hong Kong for The Standard regarding new requirements by the Hong Kong Monetary Authority to require that banks move to two-factor authentication for online banking access beginning next month.

The Authority's press release announcing the move is available online as well as the text of a brief speech on the subject of two-factor authentication by Mr William Ryback, Deputy Chief Executive, Hong Kong Monetary Authority.

“Two-factor authentication further strengthens the security controls of Internet banking and protects bank customers from Internet banking frauds," said Mr William Ryback, Deputy Chief Executive of the HKMA.

“Hong Kong is one of the first places amongst the developed financial markets to establish such a regulatory requirement which enables Internet banking to continue to flourish under a safe and sound environment."

The Authority has also posted some initial consumer information explaining two-factor authentication.

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Online Auctions in China

Ling Liu writes for the San Francisco Chronicle from Shanghai exploring online auctions in China.

Unlike in the United States, where eBay is the clear leader in the online auction business, the company has considerable competition in China. In 2003, the popular Chinese business-to-business Web portal Alibaba.com started Taobao.com, a consumer auction site and eBay's biggest rival. In April 2004, Yahoo China paired up with the Chinese web portal Sina to start 1pai.com, another consumer auction site, but it lags far behind market leaders eBay and Taobao.

May 29, 2005

NTT DoCoMo Says Put It On My Cell Phone

Business Week reports on NTT DoCoMo's plans to enable cell handsets to be used as credit cards.

After introducing handsets last year that double as debit cards -- allowing users to pay for small purchases such as soda or coffee from vending machines and convenience stores -- the company this year plans to make those phones full-fledged credit cards.

Comdata's Future Is In Plastic

The Tennessean.com looks at Nashville-based Comdata and CEO Gary Krow.

Comdata was founded in Nashville 36 years ago and is a wholly owned subsidiary of Ceridian Corp. It has 1,200 employees and has expanded beyond the trucking industry, where it was well-known for its payment cards for fuel. It is a leading distributor of gift cards and has taken that product into other countries. And it also is the largest payroll card provider in the industry.

May 28, 2005

Online Banking Grows

Jenny Strasburg reports for the San Francisco Chronicle on the growth in online banking.

But for every Internet-banking disciple out there, at least one holdout vows never to bank online, recent industry research shows. Many nonusers say they're skittish about personal privacy and the security of their financial data, concerns that pose barriers to banks competing to lure business to the Internet.

May 27, 2005

Visa Cardholders Set to Bring $25 Billion to China

Visa International estimates that Visa cardholders from around the world are likely to spend about US$25 billion in China over the next five years. For the year ending March 2005, Visa cardholders spent $2.1 billion in China, an 83 percent growth year over year.

But merchant acceptance of plastic card payments remains a challenge in China.

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Visa International Appoints Terry Milholland to Chief Technology Officer

Visa International has announced the appointment of Terence "Terry" V. Milholland as executive vice president and chief technology office reporting to Visa International president and CEO Christopher J. Rodrigues. Most recently, Milholland served as CIO/CTO for Electronic Data Systems Corp. (EDS) and previously held the post of CIO at Boeing Company.

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May 26, 2005

Bank of America Launches SiteKey

Bank of America this morning announced the launch of a new protection service called SiteKey that helps confirm a customer's identification online.

Bank customers can sign up for the service for free. Customers pick an image, write a brief phrase and select three challenge questions. The customer and the bank can pass that information securely back and forth to confirm each other’s identity.

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Discover Financial Services and China UnionPay Announce Strategic Alliance

China UnionPayDiscover Financial Services and China UnionPay have announced they have entered into a strategic alliance that will lead to acceptance of Discover Network Cards at China UnionPay ATMs and point-of-sale terminals in China and acceptance of China UnionPay cards on the PULSE network in the U.S. Both also agreed to pursue ways to enable acceptance of China UnionPay cards at Discover Network's more than four million merchant and cash access locations in North America.

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New Type of Rewards Card for Delta Fliers

Ron Lieber reports for the Wall St. Journal on yesterday's announcement of the new American Express / Delta Air Lines SkyPoints credit card. The card gives customers a choice of earning discounts or miles for Delta flights.

People using the card earn a new frequent-flier currency called SkyPoints, which they can trade in for the airline discounts. The card also allows cardholders who don't want discounts to trade their SkyPoints for Delta frequent-flier miles.

May 25, 2005

Retailers as Financial Services Providers

The Center for Financial Services Innovation has released a new research paper titled "Retailers as Financial Services Providers: The Potential and Pitfalls of This Burgeoning Distribution Channel" (PDF).

The report, authored by CFSI's Senior Analyst, Katy Jacob, assesses the business and policy implications for both the financial services and retail industry as banks and retailers both partner and compete with each other in their efforts to provide financial services via retail locations.

MasterCard Holds Stored Value Forum

MasterCard has announced that it is holding its third annual Stored Value Forum today and tomorrow.

"Long gone are the days when prepaid was solely synonymous with long distance calls or store-bought gift certificates. Today prepaid cards are mainstream financial products applicable to virtually every type of transaction, in virtually every payment category, including consumer, business, and the public sector," said Ted Dargan, Vice President, Stored Value Team Lead for the Americas, MasterCard International.

"Prepaid cards can take on cash and checks where traditional credit or debit card programs may not fit the payment need. We estimate that the prepaid opportunity in the U.S. alone is more than $2.5 trillion."

$2.5 trillion is about what is currently spent annually in the US on Visa and MasterCard branded cards combined.

Bank Use of Stored Value Products

Jennifer Tescher and Katy Jacob write for Banking Strategies on bank use of stored value card products.

Alternative financial services providers tout stored value cards (SVCs) as the “un-bank account” to lure underbanked consumers who are turned off by — or have been turned away from — traditional banks. But as banks focus on the potential value of underbanked consumers, they are finding that SVCs can be a potent tool to initiate, extend and enrich their customer relationships, transforming SVCs from a niche product into one with broader appeal.

Decline Noted in Number of Credit Cards Students Carry

Eileen Alt Powell reports for AP on a study released yesterday by college lender Nellie Mae that said the percentage of undergraduate students with credit cards in 2004 was 76 percent as compared to 83 percent in 2001.

They carried an average of four cards last year, and their outstanding balances averaged a total of $2,169. While a seemingly hefty number, that was down significantly from $2,327 in 2001 and $2,748 in 2000, though up from the $1,879 average balance of 1998, according to study.

May 24, 2005

Social Security Numbers Are Far From Secure

Terri Cullen reports for the Wall St. Journal on the vulnerabilities of Social Security numbers.

Face it, your Social Security number is vulnerable. While there's a temptation to throw up your hands and hope for the best, you shouldn't give into it. Until government steps in to protect Social Security numbers, it's up to consumers to do what they can to keep track of their information.

Chase Picks Atlanta To Roll Out Contactless 'blink' Cards

Chase has announced that Atlanta will be the first U.S. market to receive the new Chase credit card with contactless functionality called blink. On its web site, Chase has provided a list of merchants (PDF) who will be accepting contactless card payments in the Atlanta area.

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Credit-Card Firms Bank on New Ways To Counter Fraud

David Enrich reports in the Wall St. Journal on new card technologies involving dynamic card numbers.

The next generation of credit and debit cards is squarely aimed at fighting theft and fraud. These cards will run on paper-thin batteries and feature liquid-crystal-display screens that frequently generate fresh card numbers. The theory is that oft-changing card numbers will be useless to thieves who intercept Internet transactions or get access to databases of card numbers.

MSNBC: Easy Check Fraud Technique Draws Scrutiny

MSNBC's Technology Correspondent Bob Sullivan reports on check fraud perpetrated using demand drafts (often called "remotely created checks") instead of real, personally signed checks.

What's needed to create a demand draft? Simply the account number and bank routing number — information found on every single check. Write a check to your 12-year-old babysitter, and she has all the information she would need to clean out your account.
In early March, the Federal Reserve requested public comment on amending Regulation CC to set forth rules governing demand drafts that would shift the liability for losses from the paying bank to the depository bank -- effectively shifting the burden of authorization verification to the depository bank.
In order to help reduce the potential for fraud, the proposed amendments to Regulation CC would create transfer and presentment warranties under which the depositary bank would warrant that the remotely created check that it is transferring or presenting to the paying bank is authorized by the person on whose account the check is drawn. The proposed warranties would apply only to banks and would ultimately shift liability for losses attributable to an unauthorized remotely created check from the paying bank to the depositary bank.

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