The AP reports on efforts to tighten access to Social Security numbers, saying they have evolved into "dangerous master keys for fraud."

One solution could be a "federated identity" system that relies on the mathematical principles of cryptography to ensure information can be transferred only among prearranged parties.

For several years, technologists with the Liberty Alliance, an industry consortium, have been developing a way for people to log in to one network and be automatically authenticated at another.

The idea is to avoid sharing a single password among multiple parties with which you transact business — the model followed when your bank and insurance carrier both ask for your Social Security number. Instead, one site sends another an encrypted numeric token that represents the user’s identity — but only for that single Web session or transaction. The token is useless to anyone else or at another time.

The alliance’s brain trust is now exploring ways its system can be applied more broadly in online systems where most identity thefts happen.

Jolayne Houtz of the Seattle Times answers a reader's inquiry about not signing the back of credit cards and instead writing: "See photo ID."

A Visa USA spokesman said the company "does not accept 'see ID' as a valid substitute for a signature." Leaving it blank hinders the merchant's ability to compare signatures, he said.

Your best bet: Do both, said Melissa Wolff, loss-prevention and compliance manager for the Washington State Employees Credit Union. It is OK for cardholders to squeeze both their signatures and the "see photo ID" phrase onto the back of the card, she said.

Ted Griffiths reports for the Wilmington, Delaware News Journal on the potential impact MBNA's acquisition by Bank of America may have on the local community.

For Delaware, the stakes are enormous. Wilmington-based MBNA has about 10,500 Delaware workers, more than any other business. Charlotte, N.C.-based Bank of America also has a sizable Delaware presence, operating credit card call centers in Dover and near Christiana that employ a total of about 1,300. MBNA and Bank of America have said they will eliminate 6,000 jobs between the two companies after the buyout closes, although they haven't said where.

Digital Transactions reports on why other class action lawsuits against Visa, MasterCard and a number of member banks are more likely to succeed that was the case with a California small business interchange anti-trust case that was dismissed earlier this week.   » Continue Reading

Joern Wettern writes for Redmondmag.com on the state of biometric authentication.

Biometric devices can fulfill one of two functions: identification or authentication. When performing identification functions, they mainly improve the ease of use of an access control mechanism. Today, most companies use devices like that to make it easier for employees to identify themselves—placing your hand on a palm reader is often quicker and more convenient than digging out an access card or typing a username.

The grand scheme of it all is that there are several places to attack, the sensor, the feature extractor, the storage computer and the comparison unit. You can also attack communication between these points, be they traces on a circuit board or a network link.

Matt Wade reports for tomorrow morning's Sydney Morning Herald on a new analysis performed by Network Economics and sponsored by Visa that shows that the changes introduced in credit card interchange fees in 2003 by the Reserve Bank of Australia "had either a negligible or, more likely, a slightly negative effect on consumer welfare."   » Continue Reading

Gayle Keck and R. Paul Herman report for the Washington Post on dynamic currency conversion -- where purchases are rung up in US dollars at merchants abroad.

It could be a bad deal. If the transaction is run in dollars, cardholders can get socked with a dismal exchange rate, compared with charges that are processed in the local currency (euros, for example) and converted at or near the interbank clearing rate by Visa or MasterCard.

TheDeal.com reports on Oracle's interest in potentially acquiring a controlling interest in India's i-Flex Solutions Ltd.

San Francisco Consumer Action has released the results of its 2005 Credit Card Survey (PDF) focusing on the use of universal default by card issuers to increase interest rates on revolving balances based upon changes in their credit profile as reported monthly to the issuers by credit bureaus.   » Continue Reading

Caroline Mayer reports for the Washington Post on the growth in the number of firms specializing in collections.   » Continue Reading

Jim McKay interviewed security technologist Bruce Schneier for Government Technology.

It's simply too easy to use identity information to commit fraud. Someone shouldn't be able to complete a form in a magazine and open a credit card in my name. Someone shouldn't be able to guess my password and make large monetary transfers in my name.

Financial services needs to slow down and take security more seriously. Europe is a good model here -- identity theft is less of a problem because it's harder to use personal information to commit fraud.

Of course, banks and credit card companies are going to oppose any limits on their business. They like the fact that it's trivially easy to get a credit card. But they're not bearing the full costs of identity theft.

• Commentary: Payday Loans, Now Online
• Bank of America Reorganizes To Better Serve Business Clients
• GSA wants specifics on smart cards, fingerprint biometrics
• Wells Fargo Named Best Corporate Internet Bank in US by Global Finance Magazine
• When Traveling, Your Card Offers More than Just Credit

Fiserv announced today that it has signed a definitive agreement to acquire BillMatrix Corp., a provider of electronic bill payment services.

BillMatrix is expected to generate revenue of approximately $90 million in 2006. The purchase price is approximately $350 million, and the transaction is expected to close in the third quarter. The transaction is expected to be neutral to earnings in 2005 and slightly accretive to earnings in 2006.

The UK's Office of Fair Trading has announced it has written to "eight major credit card companies regarding its provisional conclusion that the levels of default charges they impose (e.g. for late payments) are excessive." Jill Treanor reports on the story for the Guardian.   » Continue Reading

Robin Sidel reports for the Wall St. Journal on Monday's decision by a federal judge in California dismissing one of several recent lawsuits brought by merchants against the credit card industry.

In his decision issued Monday, Judge Jeffrey S. White of the U.S. District Court for the Northern District of California, said the plaintiffs in the case lacked legal standing to challenge the fees, in part because they aren't "direct purchasers" of Visa and MasterCard's services. Under federal antitrust law, only direct purchasers can sue on antitrust grounds.

• Wells Fargo & Company Announces Dividend Increase and Buyback Authorization
• Banks, Law Enforcement Officials Join Together To Better Fight Identity Theft and Consumer Fraud
• Wright Express Reports Second-Quarter 2005 Results
• Cogent Systems Announces Record Second Quarter Revenues
• Technology Veteran Mike Seashols Joins Avolent Team as Chairman
• Mid-Atlantic Convenience Store Chain Selects TNS Connectivity Solution
• Corillian, NameProtect Collaborate to Prevent Identity Theft and Fraud
• Nectar Continues Advance on The High Street
• Smart Cards Get Smarter: Market Sees Strong Growth

Jane Kim reports for the Wall St. Journal on the issue of currency conversion fees for credit card transactions overseas.

Although there are advantages to using plastic because of the favorable wholesale rate on currency exchanges, in some cases it may make sense to use an automated teller machine and pay cash instead, says Robert McKinley, chief executive of CardWeb.com, a payment-card industry Web site.

Jonathan Stempel reports for Reuters that Visa USA and MasterCard have won dismissal of a lawsuit by California merchants alleging antitrust violations in setting payment transaction fees.

James McGrath of the Payments Card Center of the Federal Reserve Bank of Philadelphia has published a new paper looking at the impact of online bill payment on paper checks (PDF).   » Continue Reading

The Federal Reserve Board has launched a new online project with USA Today that teaches middle school and high school students about economics and personal finances by challenging them to construct a newspaper front page.

Students are provided with instructions and a template of the front page of The Fed Today. Over four weeks, they are expected to consult the Federal Reserve's recently redesigned education web site--FederalReserveEducation.org--for information needed to complete all of the elements of the page, including headlines, photos, captions, graphs and statistics.

The project helps teachers meet national and state academic content standards for high school economics and personal finance courses. It may be found at: http://www.usatoday.com/educate/federalreserve/index_new2.html

Eric Dash reports for the New York Times on what just might be the data theft capital of the US.

While the banks and payment processors have been targets in the largest and highest-profile attacks, security specialists say the payment system's most vulnerable points may be the estimated five million merchants where cards are accepted.

Unlike banks and other financial institutions, merchants often lack technological expertise and management attention to keep their customers' information secure. The widespread use of wireless technology by businesses, as in homes, has left merchants' computer systems increasingly susceptible.

Identrus has announced the closing of a $20 million Series B round of financing led by Enterprise Partners Venture Capital and Rho Ventures with participation by existing investor Zions Bancorporation.

"Today's significant investment represents an important validation that identity authentication is a real issue for the banking community and financial services industry at large," said Karen Wendel, CEO, Identrus. "This additional funding will enable us to expand our solutions, deepen our client relationships and continue to build a world-class network."

• Cellphone Becomes New Tool of Trade in M-Commerce Era
• Euronet Launches Money Transfer and Bill Payment Services with the Acquisition of TelecommUSA
• TRUSTe Launches New Email Privacy Seal Program Enabling Accredited Companies to Confidently Say 'We Don't Spam'
• NOVA Appoints Stuart Harvey President of NOVA Information Systems and Chairman of euroConex
• Asia Payment Systems, Inc. Signs Agreement with Et-china Limited for Cooperation and Investment in e-Commerce Processing Venture in China
• Chicago Tribune: Plan to use credit cards for property taxes fizzles
• e-Smart Technologies, Inc., Delivers First of Five Million Super Smart Cards in Busan, Korea
• Valutec Selects Hypercom's HBNet to Speed Payment Transactions
• Wal-Mart ponders an industrial bank

American Express today reported second quarter financial results with net income up 16 percent and earnings per share up 19 percent from a year ago.

Record cardmember spending contributed to a 16 percent increase in discount revenue. This increase was driven by 13 percent growth in spending per basic cardmember, the continued benefits of rewards programs and the net addition of 4.8 million cards-in-force. Spending on cards issued by the company's network partners increased more than 35% from a year ago.

Mark Albright reports for the St. Petersburg Times on the payment plan for compensating merchants as a result of the settlement reached in 2003 in the Wal-Mart class action lawsuit against Visa and MasterCard.

Sara Clarke reports for the Newark Star-Ledger on MBNA founder Charles Cawley's views on the acquisition of MBNA by Bank of America.

During the telephone interview, he recalled the years when MBNA used innovation to make its mark in a financial world dominated by banking giants.

"The (financial) supermarkets were the easiest for me to compete with because they didn't focus well," he said. "The big banks have enormous power once they realize what they have to do. Companies like MBNA showed them how to focus."

Carrie Kirby reports for the San Francisco Chronicle on the work of Stanford professors John Mitchell and Dan Boneh on anti-phishing solutions.

Professor John Mitchell and Associate Professor Dan Boneh have attacked the phishing problem from two angles: helping e-mail users avoid fake sites and preventing thieves from getting other peoples' passwords in their digital clutches. Now they're working on stopping Trojan horse software, spread through viruses, that can steal passwords right off a computer as they are typed.

Steven Deare reports for ZD Net Australia on a meeting held last week by the Australian Bankers Association to discuss the security of online banking and commerce.

The issue of two-factor authentication, which requires two forms of identification, was a major talking point throughout the conference, attendees told ZDNet Australia . National Australia Bank and Bendigo Bank currently offer such security to customers, utilising SMS and password tokens as additional protective measures.

• Most Beijing college students pay in cash but want a credit card: survey
• Multi-Year Card Processing Contract with DBS Bank Propels First Data into South Asia Market
• Stored Value Systems And State of Washington Begin First-Ever Online Magnetic Stripe WIC Program
• Bank of America to Deliver Health Savings Accounts (HSAs) To the Commercial Marketplace This Fall
• Metavante Completes Acquisition, Forms MBI Benefits, Inc.
• Gander Mountain and Alliance Data Systems Sign Long-Term Agreement for Integrated Credit Card Services
• Q&A with Liberty Alliance on identity theft prevention
• Cyota Announces Next Generation Watermark Technology - eStamp
• S1 Corporation Appoints James S. Mahan III as its Chief Executive Officer
• US Dataworks Crosses Over One Billion Transactions Threshold
• India: UTI Bank, Visa International launch mobile refill facility

Jack Naudi reports for the St. Louis Post Dispatch uses the CardSystems' card data security breach to introduce an article on the credit and debit card industry.

In time, two groups evolved to consolidate the regional credit card operations into national -and ultimately, international - associations with uniform standards. Today, they're known as Visa and MasterCard, whose global technology and operations center is in O'Fallon, Mo.

The Sunday Herald reports on Barclaycard's decision to pull out of the UK's Nectar loyalty card scheme.

Barclaycard presents the move to stop awarding Nectar points as a pragmatic one. It followed “extensive research” showing that its customers valued benefits more, which, presumably, it was unable to offer while also a member of the Nectar scheme.

The company’s consumer affairs director, Mark Gonnella, says: “The vast majority [of our customers] are now saying to us very clearly that they value the back-up support we provide, particularly when it comes to travel. We have decided to make this change as a result. ”

Nectar professes to be unconcerned about the departure of Barclaycard. A spokeswoman points to the coincidence between the company’s announcement it was leaving and a separate announcement, on the same day, to the effect that American Express has signed up to offer its own co-branded card with Nectar.

Jon Van reports for the Chicago Tribune on the use of predictive analytics to analyze mountains of information from purchases, loyalty cards, etc.

SPSS' clients include some of the nation's major cell phone operators. While he declined to disclose their names, Noonan said one carrier has been particularly adept at using predictive analytics to single out customers likely to switch to another carrier.

This knowledge enabled the carrier to offer those customers sweeter deals--such as free phones or extra minutes--to renew their contracts. The carrier reduced customer churn by 25 percent, Noonan said, while others haven't been as effective in their execution.

Pamela Yip reports for the Dallas Morning News on credit bureaus and the credit reporting industry.   » Continue Reading

Melissa Allison reports for the Seattle Times on a provision in new bankruptcy law that requires consultation with a credit counseling agency prior to filing for bankruptcy protection.

"The ultimate nightmare scenario is that families struggling with serious debt trouble will be forced under the new law into the hands of unscrupulous credit counselors," said Travis Plunkett, legislative director for the Consumer Federation of America.

Much of AFS's revenue goes to a for-profit company called Amerix that handles its advertising, negotiations with creditors and disbursement of clients' payments to creditors.

The North Seattle Community College Foundation, like some other college organizations, got into credit counseling after being approached by Maryland-based Amerix.

The idea was for the new agencies to work with financially strapped consumers and put some of them into debt-management programs, which Amerix would service for a fee.

The Gannett News Service reports on the increasing use of payroll cards.

By 2006, the number of payroll cards in use by U.S. households without bank accounts will double to 3.8 million, said Ariana-Michele Moore, a senior analyst at Boston-based Celent LLC, a financial services research firm.

Michelle Singletary reports on how credit scores are affected by credit utilization rate for each active account.

Let's say you have four active credit cards, each with a credit limit of $5,000. Three of the cards have zero balances. The fourth card has a balance due of $5,000, making you maxed out (100 percent credit utilization). Being maxed out on that card will hurt your credit score.

Last night, the Special Committee of the board of directors of iPayment announced that it had determined that the May 13, 2005 offer by Greg Daily, CEO of iPayment, to buy all of the outstanding common stock of the company for $38 per share undervalues the long-term prospects of the company.   » Continue Reading

Russ Wiles reports for the Arizona Republic on the state of Arizona's rollout of Visa debit cards with JP Morgan Chase for child-support and other payments.

That makes Arizona the first state to combine payments from different programs on one debit card, said Brian Claire, senior vice president at JPMorgan Electronic Financial Services in Chicago.

John McCormick and John Blemer report for the Knight Ridder News Service on consumer usage of credit cards featuring frequent-flier mileage rewards.

Earning miles or points for free plane tickets, hotel nights and gifts has becoming something of a national obsession for Americans who have found ways to use plastic to pay for groceries, tuition, cars, rental payments, jail bonds and even the final expense -- funerals.

"People don't think they can," said Terry Hemeyer, a spokesman for Service Corporation International, the nation's largest funeral home chain. "But when they find out that they can, they want to do it because they want the miles."

Garth Buchholz writes for InformIT.com on Canada's INTERAC PIN-based debit card system.   » Continue Reading

The FDIC today issued guidance to financial institutions on steps they should be taking to mitigate risks from spyware from both a bank and a consumer perspective.

Spyware poses a significant risk to financial institutions and its customers. Practices to prevent and detect spyware should be regularly reviewed to ensure that an institution is aware of all risks to its systems and to sensitive customer information.

Juan Carlos Perez reports for InfoWorld on the trial in Germany of a new PayPal buyer protection program called "Pay with PayPal and You're Covered".

The trial expansion of the PayPal Buyer Protection program centers on removing requirements for sellers to qualify for it, which means more buyers will be covered, said PayPal spokeswoman Amanda Pires.

Daniel Thomas reports for Computing on plans by London Transport to extend the use of its Oyster smart cards to allow commuters to use them to pay for low value goods and services at newsagents, fast food outlets, supermarkets and parking machines.

'Oyster has the largest customer base of all smart cards in the UK, with 2.2 million users and a significant level of public trust,' said Jay Walder, managing director of finance and planning at TfL.

'Extending Oyster to include low value payments is a natural progression which will make the smart card even more convenient.'

Companies and consortia bidding to run the project are: alphyra; Barclays; BBVA, Accenture, MTR and Octopus; EDS and JP Morgan; Nucleus, Dexit, Ericsson, Hutchison 3G and Euroconex; PayPal; and Royal Bank of Scotland.

TfL first announced its plans for Oyster e-money in March and hopes to use the scheme to generate additional revenues for the London transport system.

Tom Van Riper reports to the New York Daily News on a potential new law that could result in big savings for consumers by boosting the amount of money transfer services offered by credit unions.

The Expanded Access to Financial Services Act, which was passed by the House in April and now awaits a vote in the Senate, would allow credit unions to offer money transfer services - along with check cashing and money orders - to nonmembers.

That could open a floodgate of new competition to challenge Western Union's and MoneyGram's combined 78% market share, significantly lowering transfer fees for local immigrants.

Josh Sanburn reports for the Altanta Journal-Constitution on testimony by CardSystems' CEO John M. Perry at yesterday's House subcommittee hearing on credit card data security.

In testimony before the House Financial Services subcommittee on oversight and investigations, Perry said that "as a result of coming forth with this important information, CardSystems is being driven out of business."

The CardSystems CEO said he was concerned that other companies might hesitate to come forward about security breaches if his company goes under.

Representatives of the credit card companies yesterday also supported proposals to extend federal security requirements to payment processors, not just banks and financial institutions covered by current law.

• ACE Cash Express Announces New Small Loan Product
• UK: Credit card advice site launched
• International Card Establishment Signs Two Additional ISO's to ISO Rep Program
• ID Analytics Identity 2005 Conference to Build Networks of Trust Across Businesses and Government, Helping Prevent Identity Fraud

The Subcommittee on Oversight and Investigations of the House Committee on Financial Services held a hearing today titled "Credit Card Data Processing: How Secure Is It?" The prepared testimonies from the industry speakers are available online.

David Bank reports for the Wall St. Journal on litigation against companies involved in security breaches that release customer data.

Some legal experts say the courtroom action may be more effective than legislation or regulatory action in spurring adoption of common-sense security practices. "These class-action suits will in a somewhat perverse way allow the forces of the marketplace to act as the enforcement mechanism," said Tom Holt Jr., a lawyer with Kirkpatrick & Lockhart Nicholson Graham LLP in Boston, which defends companies against data-loss claims. "The companies that have behaved most diligently will be in the best position to defend themselves."

Visa USA and the U.S. Chamber of Commerce have announced a nationwide data security campaign to encourage a more coordinated effort between the payments industry and merchants in the fight to protect customer data and reduce fraud.   » Continue Reading

• EmigrantDirect Raises Online Savings Rate to 3.5%
• Fifth Third Processing Solutions Earns Visa(R) Service Quality Award for 10th Consecutive Year
• Equifax and ID Analytics Partner to Offer ID Score to Help Businesses Prevent Identity Fraud
• Bank of America Launches Online Security Features in Florida to Help Prevent Fraud and Identity Theft
• Asia Pay Appoints Michael J. Oliver to Its Board of Directors
• BQE Software Launches New PayPal Button Payment Option on BillQuick 2005's e-Invoices
• CyberSource Connects to Oracle's PeopleSoft Integration Broker
• Wright Express(R) Launches Wright Express Business Card
• New Study Reveals 724,000 Americans Rely on eBay Sales for Income
• AmbironTrustWave to Perform Compliance Audit on CardSystems
• PELORUS Projects International Stored Value Will Top $5 Trillion
• How our home burglary became an identity-theft battle
• Their Kingdom for a PornPal
• China's TaoBao.com Q2 transaction volume tops 200 mln usd
• Central Illinois faces another wave of counterfeit cash
• Merchants offered tips on blocking fraud

Eric Dash reports for the New York Times on CardSystems Solutions CEO John Perry's criticism of Visa for stopping his company from processing its cardholders' transactions.

"If they decide to move forward, they will put us out of business," Mr. Perry said. "We are unaware in all of the breaches that have occurred on the system in the past that anyone has ever been terminated from the system."

PayPal's parent eBay announced second quarter financial results this afternoon.   » Continue Reading

Vertis has announced the results of its "Customer Focus 2005: Credit Card" study identifying the most attractive incentives for consumers.

According to the study, 29 percent of men 18-24 years old are interested in receiving points for merchandise/airline tickets, while 14 percent of women in the same age category prefer an initial sign-up bonus such as a rebate or coupon.

For 27 percent of men 25-34 the most alluring offer was money back on purchases; meanwhile, 34 percent of women 25-34 expressed most interest in receiving points for merchandise/airline tickets.

Getting an extended or higher limit on a credit card was only appealing to 8 percent of the credit card holders surveyed.

44 percent of total adults pay off their credit card balance each month, compared to 51 percent in 2002. 61 percent of adults 65+ stated they pay off their credit card balance each month, compared to 75 percent in 2002.

JP Morgan Chase this morning reported second quarter financial results (PDF). Chase's Card Services unit, which includes both card issuing and merchant acquiring businesses, reported revenues of $3.9 billion, up 3 percent over the same quarter last year.

On the issuing side, card charge volume was $75.6 billion, up 7 percent and average managed loans outstanding were $135.2 billion also up 7 percent. Chase opened a net of 2.8 million new accounts, up 27 percent.

Merchant processing volume was $141.2 billion, up 18 percent, on 4.7 billion transactions, up 21 percent.

Expenses overall increased only 1 percent.

• U.S. Bancorp Names Mccullough to New Payment Services Division Position
• Meta Payment Systems Announces Partnership With World's Largest Foreign Exchange Specialist
• Customers to receive new debit cards following data security breach
• Crunch Time For Payment Processors
• Securing mobile devices with PicturePIN
• Japanese to get thrill of slot machine at ATM
• PayPal founders find a match for new fund

The House Financial Services Subcommittee on Oversight and Investigations, chaired by Rep. Sue W. Kelly (NY), will be holding a hearing this Thursday, July 21 to continue the Committee’s investigation of personal data breaches and data security.

The hearing, which is entitled Credit Card Data Processing: How Secure Is It, will focus on data security gaps in the credit card transaction process. At issue is the integrity of the mechanisms in place at the time of a breach such as the high-profile cases that have been reported recently and the allocation of responsibility for maintaining data security throughout the credit card payment system.

Subcommittee Chairwoman Kelly said, “Consumers everywhere deserve to know for certain that their credit card accounts are safe and secure as they are processed. This hearing will help us learn more about the troubling breach by CardSystems as we develop ways to make sure this is an anomaly that will never be repeated.”

• Joshua L. Peirez, Senior Vice President & Associate General Counsel, Law Department, Mastercard International
• Steve Ruwe, Executive Vice President, Operations & Risk Management, Visa U.S.A.
• Zyg Gorgol, Senior Vice President, Fraud Risk Management, American Express
• Carlos Minetti, Executive Vice President, Cardmember Services, Discover Card
• David B. Watson, Chairman, Merrick Bank
• Mallory Duncan, General Counsel, National Retail Federation
• John M. Perry, President and Chief Executive Officer, CardSystems Solutions
• Evan Hendricks, Editor and Publisher, Privacy Times

James Kelleher reports for Reuters on American Express' plans to cease using CardSystems Solutions by October. Amex's action follows earlier action by Visa USA to remove CardSystems as an approved processor and third-party agent for handling Visa card data.

We received the following question earlier today:

Q. I read a great article published by you in 2002 on credit cards and direct mail. Do you have any idea or guesses on direct mail volume for the following credit card issuers: Providian, Citibank and Discover? If not, do you know any good secondary or primary sources?

A. See the Mail Monitor service offered by Synovate.

Mail Monitor® is the credit card industry ‘standard’ for monitoring direct mail volume and response rates in the US and Canada. It provides real-world perspective on developing trends, defines the market’s competitive framework, and analyses the performance of credit card direct mail acquisition programmes.

Eric Dash reports for the New York Times that Visa USA said yesterday it would stop allowing CardSystems Solutions to handle Visa transactions as a result of recent security breach issues with the firm.

"CardSystems has not corrected, and cannot at this point correct, the failure to provide proper data security for those accounts," said Tim Murphy, Visa's senior vice president for operations in a memorandum sent to several banks. "Visa USA has decided that CardSystems should not continue to participate as an agent in the Visa system."

Pacific Epoch has posted portions of an interview with PayPal China country manager Jeff Liao (reg. reqd).

We have Netease, we have Tom Online, we have a strategic alliance with ChinaPay - the alliance is to share their Internet merchant base with us. PayPal, "Bei Bao" in China is going to be an open platform. So almost any Chinese Internet site can use PayPal.

US Bank reported second quarter financial results this morning that included growth in revenues from merchant processing of 20 percent for the quarter over the same quarter last year. Merchant processing revenues were $198 million for the quarter vs. $165 million last year.

Merchant processing services revenue was higher in the second quarter of 2005 than the same quarter of 2004 by $33 million (20.0 percent), reflecting an increase in sales volume, new business, higher equipment fees and the expansion of business in Europe.

Jenifer Nil reports for the Deseret News that Wal-Mart applied yesterday afternoon to the Utah Department of Financial Institutions to establish a Utah industrial bank that would process credit card, debit card and electronic check transactions.

The company currently uses a third-party processor for the transactions. Bringing the operation in-house will save Wal-Mart a "significant" amount of money every year, Whitchurch said. He declined to specify how much money would be saved.

"It will be a significant savings when you add up the fractional savings on millions and hundreds of millions of transactions that can be paid to Wal-Mart Bank instead of a money center bank," said Alan Whitchurch, a University of Utah graduate and 20-year banking veteran who comes to Wal-Mart by way of Merrill Lynch Bank.

Spotya! has announced the launch of Spotya! QuickCash, offering short term loans for Internet users who are short on cash or don't have a credit card.   » Continue Reading

• Credit titans cut ties to firm
• Bangkok: Credit cards with chips hit market
• Forbes: Alibaba's Magic Carpet
• ViVOtech's Contactless Payment Products Receive MasterCard PayPass(TM) Approval
• TSYS Reports 41.1% Increase in Net Income for Second Quarter
• Australia: Net fraud losses 'exceed $200m'
• JPMorgan Chase Announces Dave Coulter's Decision to Leave the Firm
• Google to Open Research and Development Center in China
• Beware of Overdraft Fees
• eBay cancels Anything Points loyalty program
• Parents Say Back-to-School Spending on the Rise - MasterCard Survey Shows 37% to Spend More in 2005
• South Dakota: Local businesses follow trend, accept only cards, cash
• MBNA's quarterly profit falls 4%
• Sitting Down with PayPal China Country Head Jeff Liao
• Internet fraud is costing the National Australia Bank about $1 million a month
• WSJ: Citigroup Board Blocks Weill's Bid to Step Down Early
• DynTek Selected as a Qualified Independent Security Assessor for Visa Canada's Payment Compliance Program
• Digital Insight Demonstrates Commitment to Secure Online Support, Renews Strategic Partnership With LivePerson
• Longtime Barclaycard CFO Richard Sommers Appointed CFO for Juniper Bank

TransUnion has announced Common Point of Purchase, a new fraud detection service designed to identify merchants where magnetic stripe skimming may be occurring. A similar service has been available in Canada for five years.   » Continue Reading

eBay and PayPal have announced that, beginning August 19, all eBay sellers who offer PayPal as a payment option must accept all forms of PayPal payments "including payments made via PayPal account balances, bank accounts, or credit cards, regardless of whether sellers display the PayPal logo with credit card icons."

When the new policy takes effect, sellers who list with a PayPal Personal account may still receive payments funded via account balance or bank account transfers but must also be willing to upgrade to a PayPal Premier or Business Account if they receive a credit card payment via PayPal from their buyer.

SecurityPark.net reports on potential security risks associated with downloadable mobile banking applications such as the MobileATM service recently announced in the UK.

“We’ve tested other mobile Java applications on behalf of several clients and seen some concerning security issues,” said Ken Munro, Managing Director of SecureTest.

“Freeware decompilers make Java applications easy to exploit by hackers. Unless the bank has strong server-side validation, these mobile applications can and will be used to harvest sensitive information and, once the banks add transactional capabilities, they risk losing customers’ money.”

Bank of America this morning reported second quarter financial results with some interesting highlights:

Average managed consumer credit card outstandings rose to $58.5 billion as the company added a record 1.6 million consumer credit card accounts in the quarter.

The bank added a record 629,000 net new retail checking accounts in the quarter.

Debit card purchase volume rose to over $35 billion in the quarter, an increase of 27 percent from second quarter 2004.

Total retail deposits grew 11 percent from the second quarter of 2004 to more than $428 billion in the second quarter of 2005.

Active online banking users increased to 13.6 million, while 6.6 million active online bill-payers paid more than $30 billion worth of bills, an increase of 41 percent from the second quarter of 2004.

Citigroup this morning announced second quarter financial results that included a revenue decline of 3 percent in its North America Cards unit. Citi attributed the revenue decline to high payment rates and lower risk-based fees. Net income for the unit rose about 1 percent. Citi also reported a 9 percent growth in card purchase sales along with higher interchange fees.

Revenues declined 3%, as a 9% increase in purchase sales was offset by net interest margin compression, higher payment rates and lower risk-based fees. Net credit margin increased 7% as continued favorable credit conditions and asset sales offset the impact of a temporary increase in bankruptcy filings, which added approximately $175 million pre-tax to credit costs.

Brian Monroe reports for Florida Today on increases in monthly minimum credit card payments.

Barbara Grunkemeyer, deputy comptroller for credit risk, said the regulators were concerned that, when the minimums were set too low, consumers' payments were barely covering the interest and fees on the cards and not making a dent on the principal amount that was owed.

"It took the banks and other issuers awhile to deal with minimum payments because there were such broad implications," Grunkemeyer said.

The Cincinnati Enquirer, Kroger's home town newspaper, has an editorial about Kroger's anti-trust lawsuit against Visa.   » Continue Reading

ExtremeNano reports on Piggly Wiggly's adoption of Pay By Touch's fingerprint-based payment service.

In fact, initial statistics reflect consumer adoption rates that are more stunning than just satisfying. Just months after Piggly Wiggly introduced the service, it is finding that between 15 and 20 percent of its noncash customers, or those who typically paid by check, credit card or debit card, now use Pay By Touch, said Postell.

• Wachovia Announces Opening of Branch in Shanghai, China
• BioCert trademark tangle
• Typosquatters hijack US credit report site
• Space Coast Credit Union to Strengthen Its Online Banking with Corillian Consumer Banking
• Navy Federal Credit Union Offers Enhanced Web Bill Pay Service
• Fiserv's Personix Unit Expands Custom Card Capabilities by Adding Digital Technology
• First Data Selects AmbironTrustWave to Provide Compliance Services to POS Applications
• Hire of Putnam Solidifies BankServ's Expansion into International SWIFT Market
• CyberSource Enhances PCI Compliance Service with Scanning Service Powered by ScanAlert Technology
• American Express Gaining Ground
• Plastic has pitfalls for small businesses
• MBNA Reports Second Quarter 2005 Earnings

Eric Dash reports for the New York Times on the use of security features by card associations and card issuers in their advertising efforts.

"As it becomes a bigger consumer issue, more companies are going to talk about it," said David Sigel, the Citigroup account director at Fallon Worldwide in Minneapolis, a division of the Publicis Group. "It's a very competitive category, and you are looking to make your product as relevant as it can to consumers."

M.P. Dunleavey reports for the New York Times on her personal experience with having her debit card account data stolen.

While the bank reimbursed the money, and the nightmare seems to have passed - thus far no one has bought a small island in my name - I'm still slogging through an endless maze of questions and misinformation.

Another kind of headache started with some of the advice given to me as an identity theft victim - advice that sounds solid and sensible, but does nothing or may even make matters worse.

Asina Pornwasin reports for The Nation from Taipei on MasterCard's plans for its contactless PayPass product in countries in the Asia-Pacific region including Taiwan, Japan, Korea and the Philippines.

Jonathan Epstein reports for the Buffalo News on increasing complaints from consumer activists about rising credit card fees and policies.

Today, credit card fees cost consumers about $13 billion a year, representing more than one-third of industry revenues, according to CardWeb and Consumer Action. The Consumer Federation says card issuers earned an average $830 in interest and penalty fees from every household with cards in 2003.

Late and over-the-limit fees, which used to be as low as $10, are now reaching $39 at many banks. Most banks will now charge a late fee the day after a payment is due, and some have imposed cut-off times in the middle of the day, according to Consumer Action.

Gretchen Morgenson reports for the New York Times on the growth in Dell's financing business.

Clearly, Dell's shift into lending may soup up profits and please investors. But there is no denying that Dell shareholders will have to monitor the financing business closely to satisfy themselves that the risks do not outweigh the rewards.

Pia Sarkar reports for the San Francisco Chronicle on the antitrust lawsuit filed by a group of retailers including Pleasanton, CA-based Safeway against Visa.   » Continue Reading

Melissa McGrath reports for the Idaho Statesman on Albertsons joining the antitrust lawsuit filed by Kroger against Visa USA. Albertsons is headquartered in Boise, Idaho.   » Continue Reading

The Payments Card Center of the Federal Reserve Bank of Philadelphia has published a discussion paper by James C. McGrath titled "Will Online Bill Payment Spell the Demise of Paper Checks?" (PDF).

Today, the rapid growth of online bill payment looks to threaten checks’ last redoubt. However, bill payment technology is still in its adolescence; the interplay of many stakeholders in the industry, including technology firms, banks, billers, payment cards, and customers, has led to rapid, unscripted innovation in just a few years.

This paper quantifies some of the trends in the industry while addressing the interests and impact of the market’s prime movers in an effort to determine to what extent the displacement of checks will continue.

The National Retail Federation said today that it welcomed a new lawsuit against Visa USA by grocers and drug stores over credit card interchange fees.   » Continue Reading

Kroger has filed a federal antitrust lawsuit in U.S. District Court for the Southern District of New York against Visa USA and Visa International alleging that Visa has engaged in price fixing and restricting competition related to credit card transaction fees.   » Continue Reading