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August 31, 2005

More on MasterCard's Planned IPO

Robin Sidel reports for the Wall St. Journal on MasterCard's plan for an initial public offering early next year.

Analysts and consultants were scrambling yesterday to calculate a potential valuation for MasterCard. Craig Maurer, an analyst at Fulcrum Global Partners in New York, estimated MasterCard in its entirety could be valued at $7 billion, or just under 2.5 times projected revenue for 2005.

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Card Issuers Sued Over Forcing Arbitration

Carrick Mollenkamp reports for the Wall St. Journal on a lawsuit recently filed in federal court in New York City alleging credit card companies held secret meetings where they colluded to promote arbitration.

MasterCard IPO Planned

MasterCard today announced plans for a "new corporate governance and open ownership structure that will include the appointment of a new board of directors comprised of a majority of independent directors, the establishment of a charitable foundation and a transition to being a publicly traded company."

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Smart Card Alliance Forms Contactless Payments Council

The Smart Card Alliance has announced the formation of a Contactless Payments Council to facilitate the adoption of contactless payments in the U.S. through education programs for consumers, merchants and issuers.

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Chase to Purchase Sears Canada Credit Card Business

Chase has announced it has entered into an agreement to purchase the credit card operation of Sears Canada including both its private-label Sears credit card accounts and its co-branded Sears MasterCard® accounts. The credit card operation includes approximately 10 million accounts and CAD$2.5 billion in outstandings.

"This purchase offers many opportunities for Chase, including partnering with another of the world's leading brands, expanding our private-label business and entering a new and exciting market in Canada," said William I. Campbell, Chairman, Chase Card Services. "We look forward to working closely with Sears Canada and its employees to offer great products and services that consumers find valuable."

August 30, 2005

China's Credit-Card Industry Set to Take Off

Andrew Brown reports for the Wall St. Journal on China's credit card industry.

An industry survey by McKinsey, which hasn't yet been released to clients, backed up optimism about the market, which is still in its infancy but growing exponentially. The report estimates more than 12 million credit cards have been issued in China, up from three million in mid-2003. (There are also hundreds of millions of debit cards that don't offer credit.)

American Express Enhances Membership Rewards Program

American Express has announced a new Membership Rewards program benefit allowing cardmembers to use Membership Rewards points to book travel directly on the American Express travel website without blackout dates or restrictions for airlines, hotels or cruises.

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Chase, United Are First to Offer Airline Rewards With ''blink'' Technology

Chase and United United have announced that the United Mileage Plus Visa* card is the first airline rewards card to feature "contactless" technology called "blink." The United Mileage Plus Visa cards with blink were first issued this summer to over 200,000 cardmembers in Colorado.

"With blink technology we're giving our United Mileage Plus cardmembers yet another way to enjoy the power and versatility of this extraordinary card," said Joe Venuti, senior vice president for Chase's Card Services division.

"We're confident the idea will take flight with our cardmembers, who will enjoy gliding through check out lines while accruing mileage earning benefits."

MBNA-AmEx Relationship Threatened

Monee Fields-White reports for Bloomberg on American Express' relationship with MBNA to issue co-branded Amex cards and whether that relationship will continue after Bank of America's acquisition of MBNA.

MBNA and Bank of America officials have yet to say whether the American Express partnership will continue after Bank of America completes its buyout in late 2005 or early 2006.

August 29, 2005

Mobile ID for Credit Card Purchases

Michael Copeland writes for Business 2.0 in its September issue about venture capitalists looking to fund new companies in particular market segments. At the top of the list is John Occhipinti of the Woodside Fund who says he wants to fund a company providing "fraudproof credit card authorization via cell phones and PDA's".

Another request comes from Ryan Floyd of Storm Ventures who's looking for "a clever resurrection of the smart-card concept: a software platform for cell phones that allows consumers to make purchases or open doors by waving their phones in front of tiny infrared or RFID readers."

If other VCs are looking for people to pursue specific opportunities in the payments arena, contact us at Glenbrook and we'll be happy to post an item here.

Ticket to the Future: Smart Cards in Public Transportation

Accenture has published a study on the use of smart card technology in public transportation (PDF).

Smart cards are the ticket to the future for most of the world’s transit operators. According to Accenture’s global research, some implementations have been successful, and many have achieved their original objectives. But smart card implementation was viewed by many respondents as being more complicated than originally anticipated: many viewed e-ticketing solely as a means of systems imple- mentation. This limited view increases the risk of a difficult implementation and limits the ultimate benefit to passengers.
Although not specifically mentioned in the study, one of the things that's particularly interesting about the requirements for payments in the transit environment is the need for very fast (< 100 ms) response times between the turnstile and the card to ensure delays and queuing don't occur.

August 28, 2005

PIN Numbers At Risk?

The BBC reports on a study conducted by Mike Bond, Steven Murdoch, and Jolyon Clulow of the security group at the Cambridge University computer lab regarding the security of PIN numbers mailed to customers in so-called PIN mailers.

Bad Checks

Thuy-Doan Le reports for the Sacramento Bee on how bounced checks are still costly for small businesses.

About $5.5 billion worth of check fraud attempts were made in the United States in 2003, according to the most recent numbers from the American Bankers Association. The numbers include both counterfeit checks and those written without sufficient funds.

August 27, 2005

Purchases With A Wave Of A Bank Card

Seung Hwa Hong reports for the Seattle Times on new contactless card technologies.

"There are many, many people interested in this concept," said Carl Stauffenenger, senior vice president of product management for Key consumer-product development. "People like it for the speed and convenience, and they see it's cool."

MasterCard's PayPass, American Express' ExpressPay and Visa's Contactless cards — the only three cards available so far — tout convenience and speed, factors that translate into higher revenue because, studies show, consumers spend more when they use cards than when they use cash.

August 26, 2005

London's Oyster Card

CR80News profiles Transport for London's Oyster transit fare payment card.

Oyster, Transport for London's popular transit fare payment card, is about ready for a new benefit for its more than two million users. They'll soon be able to use their contactless card to make small purchases–coffee, newspapers, milk–at participating retailers. TfL in July released what it calls its shortlist of seven companies or consortia bidding on what could be a very lucrative contract.

New Papers: Identity Theft Definitions, Federal Consumer Protection Regulation

The Payments Card Center of the Federal Reserve Bank of Philadelphia has just posted two new discussion papers.

The first, “Identity Theft: Do Definitions Still Matter?,” is an original research discussion paper by Industry Specialist Julia S. Cheney. This paper examines four types of financial fraud – fictitious identity fraud, payment card fraud, account takeover fraud, and true name fraud – that fall under the legal term identity theft. It also identifies three areas key to the development of solutions that would benefit from further definitional delineation.

The second, “Federal Consumer Protection Regulation: Disclosures and Beyond (PDF),” summarizes a symposium hosted by the Center this past June at which industry leaders, legal scholars, economists, consumer advocates and policymakers discussed standardized credit card disclosures and other means of protecting credit card consumers. Written by Industry Specialist Mark Furletti, the paper details the key policy recommendations of symposium participants.

Glenbrook's Authentication Boot Camp

Glenbrook regularly conducts two day Executive Workshop "boot camps" covering the world of payments.

This fall, in response to the tremendous financial services industry interest in online authentication, we are also teaching a one day "Authentication in Financial Services" boot camp which is being held in New York City on September 20th and in the San Francisco Bay Area on October 13th.

The authentication workshop will present a comprehensive view of both the problem: fraud, hits to consumer confidence, financial losses, etc., along with many of the proposed solutions. More details are available at the Glenbrook web site.

If you have questions or want more information about the Authentication Boot Camp or any of Glenbrook's other boot camps, contact Carol Coye Benson.

Today's Headline News - Friday, August 26, 2005

Note: This posting is updated regularly throughout the day.

August 25, 2005

VeriFone Proposes Secondary Offering

VeriFone announced this afternoon that it is planning to sell 10 to 12 millions shares of common stock to the public in a secondary offering. VeriFone Holdings, Inc. completed its initial public offering in late April 2005.

UBS, City National Bank, First-Citizens Join the Clearing House

The Clearing House Payments Company has announced three new banks have become owners of the company: UBS, City National Bank (Beverly Hills, CA), and First-Citizens Bank (Raleigh, NC).

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August 24, 2005

A Matter of (Fading) Trust

Eric Dash reports for Thursday's New York Times on the steps taken by the card associations to ensure that personal information is secure at all times.

"These are akin to terrorist attacks; we must take very aggressive steps," John Philip Coghlan, the chief executive of Visa USA, said in an interview last month as he took over the card company's largest division.

"We can sit here and say we have zero liability and that no consumer will be harmed. If trust is eroded, the very foundation of the system will be eroded."

Citibank Introduces Tap-and-Go Convenience for Its Debit Customers

Citibank has announced that it will be introducing a MasterCard PayPass-based keyfob for its debit card customers later this year. Citi also announced that they will be piloting the use of PayPass with its credit card customers later this year.

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Visa USA and ID Analytics Partner to Fight Identity Fraud

Visa USA and ID Analytics have announced a partnership that will enable financial institutions to better identify and stop fraudulent debit and credit card applications.

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Ravens Add PayPass

Laura Smitherman reports for the Baltimore Sun on new POS terminals installed to support MasterCard's PayPass contactless cards at the M&T Bank Stadium.

August 23, 2005

Thinking Blink

Dee Ann Kuhn reports for Contactless News on Chase's blink card rollout.

By marketing its new payment vehicle “blink,” Chase hopes to differentiate the card’s brand name (blink) from the contactless chip technology (PayPass) and method of payment symbols (Visa and MasterCard) at the point of sale. “Blink refers to what the card does. PayPass refers to where to use it,” explains Tom O’Donnell, senior vice president, Chase Card Services.

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