« September 2005 | Main | November 2005 »
RIchard Taylor reports for the BBC on the growth in the use in Japan of mobile phones as wallets.
In a society where two out of three people own a mobile, and there is always one eye on the future, they have figured: why not take things one step further?Yes, it is time to say sayonara to your wallet.
John Boyd writes for the IEEE Spectrum Online about NTT DoCoMo's mobile payments activities in Japan.
The critical element in DoCoMo's Osaifu-Keitai, or mobile wallet, is a wireless smart card chip, FeliCa (from the English word "felicity"), which was developed by Sony Corp. and Royal Philips Electronics for close proximity, low-data-rate transactions. The wallet phones can be used to make electronic purchases at stores or vending machines equipped with FeliCa readers; can act as boarding passes on certain domestic air flights; and can authorize entry through corporate security doors—all with a wave of the handset.
Zhu Shenshen reports for the Shanghai Daily on action by the People's Bank of China to impose limits on online payment amounts in an effort to manage the potential risk.
Terry Milholland was appointed Chief Technology Officer of Visa International in May 2005. The current edition of The Visa Quarterly includes an interview with Milholland.
Q. Why did you choose to join Visa International?
At its core, Visa is a technology company. Everything Visa does, everything that is conveyed through its name, relies on the VisaNet processing system operating flawlessly and securely. Merchants, cardholders and even government agencies have come to rely on the 99.999% uptime of VisaNet–our processing network. That is an amazing accomplishment–every minute of every day, in nearly every corner of the world. And, I think it’s an incredible opportunity to help lead the teams that make it possible.
Red Herring reports on the rumored Google Wallet online payments system.
Google may launch its widely anticipated online payments system Google Wallet before the holidays, an analyst said Friday, giving the search giant yet another way to profit from its widening Web empire.
Chase and United Airlines have announced the United Mileage Plus Business Awards Visa card for small businesses to earn travel rewards, Mileage Plus miles and Perks Plus points, for their business purchases.
"With the introduction of the United Mileage Plus Business Awards Visa card, small business owners everywhere can earn rewards faster than ever before," said Joe Venuti, senior vice president, Chase's card services division. "Just by using one card, cardmembers earn miles for future United travel and Perks Plus points for a variety of exclusive benefits such as travel upgrades."
MasterCard has filed a lengthy definitive proxy statement with the SEC in preparation for a special stockholders' meeting scheduled for November 28 where existing shareholders will vote to approve MasterCard's plans to reorganize and sell a portion of its equity to the public.
Visa USA has announced its retail predictions for the 2005 holiday season.
Despite recent natural disasters and increasing energy costs, Visa USA's economist, Wayne Best, predicts that the 2005 holiday season in the United States will be moderate to strong, particularly as wage and income growth is expected to continue through the end of the year.» Continue Reading
MasterCard has reported the results of its 2005 MasterCard Recurring Payments Awareness, Behavior & Attitude study that concludes that more than two thirds of US household now pay some recurring bills automatically (67 percent) compared to those writing checks (64 percent).
Nearly four in ten households link payments automatically to a credit card (38 percent) and three in ten households charge them automatically to a debit card (31 percent). In addition, among automatic bill paying households, the number of bills paid automatically rose in the last five years, from an average of 3.1 bills per household in 2000 to 4.4 bills today. During the same period, the number of checks written declined by nearly 50 percent, from 4.4 to 2.4 among these households.
Chase Bank has announced the rollout of its new Chase contactless credit cards with "blink" in the greater New York and Philadelphia metro areas. Chase will start delivering the new cards with blink to more than two million cardmembers in the New York metro area for use at an initial base of approximately 1,800 merchant locations. Beginning this week, Chase will deliver the new credit cards with blink to approximately 900,000 cardmembers in the Philadelphia area for use at an initial base of approximately 1,200 merchant locations.
Separately, Chase announced a new co-branded Rewards Visa card with Wawa.Working in conjunction with Visa U.S.A. and MasterCard International, Chase has identified locations where speed and convenience are important to consumers and is introducing the new Chase card with blink with an impressive roster of participating Philadelphia merchants.
The number of merchants accepting the Chase card with blink is expected to grow steadily throughout this year and into next year. The new Chase cards with blink also feature the traditional magnetic stripe and can be used anywhere Visa and MasterCard are accepted.
Mike Langberg reports for the San Jose Mercury News on Visa's risk management technologies.
Nancy Hilgers, vice president of risk for Visa U.S.A., said Advanced Authorization goes beyond individual transactions to monitor what's happening across accounts.
Earlier, we covered news from Japan about Japanese credit card companies forming a 'mobile wallet' alliance. This morning comes the definitive press release on the new Mobile Payment Promotion Council established with the mission of promoting standardized mobile contactless payment systems in Japan. » Continue Reading
Lending Tree has announced a new research report "Living with Debt: A Life Stage Analysis of Changing Attitudes and Behaviors" by Robert D. Manning, Ph.D., economist and professor of finance at the Rochester Institute of Technology, and author of Credit Card Nation. The full report (PDF) is available online.
Lending Tree has also released a new resource for consumers "The LendingTree Guide to Smart Borrowing: How to Use Credit Wisely Throughout Your Life" (PDF) which is also available online. » Continue Reading
SAS and the Peppers & Rogers Group have announced the results of a research study "Measuring Customer Value in Retail Banking".
"Many retail banks have yet to realize the full potential of integrating customer value metrics into their business models," said Jeff Gilleland, financial services strategist at SAS. "While banks have a good understanding of a customer's value across multiple products, they have yet to link this insight to 'customer potential' and then implement coordinated customer development plans across products and channels. Competitive advantage lies in a bank's ability to integrate customer knowledge, which only that bank has about the customer, and then to act on that knowledge in ways that create intimacy with the customers that matter most."A white paper on the findings of the study is available online.
Glenbrook has announced its Winter 2006 executive payments workshop schedule. » Continue Reading
O'Reilly has published an excerpt by authors Robert Miller and Min Wu from O'Reilly's new book Security & Usability. The article provides a great overview of phishing attacks, the techniques that phishers use, various defenses against attacks, and what the future might bring in term of controlling phishing.
The ideal defense against phishing might be an intelligent security assistant that can perceive and understand a message in the same way the user does so that it can directly compare the user's probable mental model against the real implementation and detect discrepancies.The threat of phishing attacks succeeding was behind the FFIEC's recent guidance update to US banks regarding stronger authentication.
The American Bankers Association has announced the results of its 2005/2006 Study of Consumer Payment Preferences done in conjunction with Dove Consulting. » Continue Reading
Reuters reports on a new alliance formed by Japan's credit card companies to promote a standard to allow use of mobile phones in lieu of credit cards.
he new organisation denied that its move was a reaction to NTT DoCoMo and Sumitomo Mitsui Card Co. Ltd.'s partnership and said it was open to everyone, but both the No. 1 operator and the No. 2 credit card firm were absent from the membership list.The mobile transaction alliance has 39 member companies so far including Mastercard International Japan Inc., UFJ Nikos and Toyota Motor Corp. It expects to sign on 10 more companies including Fujitsu Ltd.
Payments News published its first reader survey last week on the subject of strong authentication for online banking - hot on the heels of the FFIEC issuing new guidance to banks on this subject.
The results of the survey (PDF) are in - unscientific but certainly very interesting! » Continue Reading
American Express has announced financial results for the third quarter that included growth in average spend per card of 12 percent and growth in total cards in force of 9 percent compared to the same quarter last year. Average per card spending during the quarter was $2,610 from 69 million cards. Amex's average merchant discount rate was 2.57% during the quarter, down 1 basis point from the prior quarter and 3 basis points from the same quarter last year.
TSYS has announced a long-term agreement with Canada's TD Bank Financial Group to provide a range of processing and support services for its consumer and commercial credit card accounts.
TSYS will support three of Canada's top five bankcard issuers after the conversion of the TD portfolio, supporting more Canada-based accounts than any other third-party processor.» Continue Reading
Aleksandra Todorova reports for the Wall St. Journal on two of the new savings approaches tied to payment cards: American Express' One card and Bank of America's Keep the Change debit card enhancement. » Continue Reading
James Kelleher reports for Reuters on the state of the US credit card industry. » Continue Reading
Editor's note: Glenbrook's Russ Jones recently reviewed an eMarketer report about online banking and found it quite useful. His report follows.
Glenbrook Review: Online Banking Customers - Attitudes and Activities
eMarketer recently completed a 34 page report on the attitudes and activities of online banking customers. Senior analyst David Hallerman pulled the study together in response to a September 3rd article by Eric Dash in The New York Times that explored why veteran Internet users continue to shun online banking.
» Continue Reading
The Emerging Payments Research Group at the Federal Reserve Bank of Boston is holding a two day invitation only conference next Thursday and Friday to explore why consumers choose one payment method over another. » Continue Reading
Jaikumar Vijayan and Eric Lai report for Computerworld on last week's issuance of guidance for stronger authentication by banks by the FFIEC.
The new guidelines are not a law, but are more like best practices that banks will be audited against by the end of 2006, a spokesman from the Federal Reserve said. At that time, federal examiners will begin documenting situations where financial institutions are not yet in compliance, he said.
The Payment Cards Center of the Federal Reserve Bank of Philadelphia has announced two new discussion papers. » Continue Reading
The Smart Card Alliance has released a new position paper -- The What, Who and Why of Contactless Payments.
Contactless payment devices use smart chip technology and are convenient, fast and secure. "They are an ideal solution for quick payment environments where speed is essential, such as quick-service restaurants, gas stations, drug stores, supermarkets and movie theaters," said Randy Vanderhoof, executive director of the Smart Card Alliance."And there's built-in security. The smart chip is designed to protect the internal information and any transactions made," he explained. "Plus, contactless payments are built on the current credit and debit card payment infrastructure and leverage their layered security systems."
RSA Security reports on a discussion at its European conference this week where panelists discussed consumer security concerns with online services.
The priceless benefits of customer retention and cost management afforded by online business channels will remain out-of-reach to the financial sector until it addresses its customers’ concerns over security, according to an industry panel at this week’s RSA Conference Europe in Vienna, Austria.[Editor: Don't you just love that phrase "priceless benefits"! Some great copywriting was done on this press release!]
Separately, Kevin Murphy reports for Computer Business Review Online on comments made by VeriSign CEO Stratton Sclavos on VeriSign's earnings conference call yesterday afternoon. » Continue Reading
[Update - 12/21/05 - Bank of America has notified TSYS that it will be bringing its consumer card processing in house.]
TSYS reported earnings yesterday and included commentary about the potential risk of loss of its Bank of America consumer credit card processing business following the bank closing on its previously announced acquisition of MBNA. MBNA currently processes its card portfolio in-house and Bank of America could decide to consolidate its card processing onto the MBNA platform. » Continue Reading
Jane Kim reports for the Wall St. Journal on how traditional banks are finally reacting to the success of ING Direct and other online financial institutions by offering new online accounts paying higher interest rates. » Continue Reading
PayPal's parent eBay announced third quarter financial results this afternoon.
The following highlights regarding PayPal's third quarter financial performance were included:
PayPal's expenses include the funding costs associated with card payments used to make payments via PayPal. PayPal's transaction processing expense rate, likely reflecting both a combination of economies of scale in processing as well as its hybrid cost of payment funding (from cards, via ACH and PayPal accounts), has declined from 1.30 percent in the third quarter of 2004 to 1.11 percent in the third quarter this year -- nearly a 15 percent improvement.
The UK's Office of Fair Trading has issued a statement of objections against Visa and its members regarding its domestic multilateral interchange fee (MIF).
The OFT said it is of the view that "the collective agreement between Visa and its member banks on the interchange fee charged between card issuing banks and merchant acquirers on Visa card transactions taking place in the UK restricts competition and infringes Article 81 of the EC Treaty and the Chapter I prohibition of the Competition Act."
» Continue ReadingThe OFT believes that, like the MasterCard MIF agreement, the Visa MIF agreement leads to an unduly high fee being paid to card issuing banks by merchant acquirers on every Visa transaction. The cost of these fees is passed on to retailers and ultimately to consumers.
AuctionBytes.com's Ina Steiner has written an editorial about eBay's recently announced "Safe Payment Policy". Her editorial has links to several other posts by other authors commenting on the new policy.
» Continue ReadingJennifer Kingson of the New York Times reports for the International Herald Tribune on wireless point of sale acceptance of payment cards.
Wireless credit card acceptance is not new. But within the last year or two, as wireless companies have improved their networks and hand-held devices have come down in price, the technology has started to look like an attractive alternative to dial-up payment machines.
As rumored last week, Citi today launched Simplicity, a new no annual fee, no late fee (for cardholders who make a purchase or cash advance in each billing period) credit card. » Continue Reading
The FDIC has released its 2005 Summary of Deposits Data that details bank deposits at the individual office level for every FDIC-insured financial institution.
Brian Bergstein, AP Technology Writer, reports on last week's FFIEC guidance to banks regarding stronger authentication beyond usernames and passwords.
Steven Oberbeck reports for the Salt Lake Tribune on Wal-Mart's plan to open an industrial bank in Utah.
Already there are rumblings in Congress that could make any Utah-based Wal-Mart Bank a short-lived financial institution. Last month, Rep. Jim Leach (R-Iowa) introduced legislation that would block commercial firms such as Wal-Mart from owning industrial banks and force those who already own them to get rid of their banks within five years. And that could impact the owners of at least a dozen industrial banks in Utah.Leach's bill, the Financial Safety and Equity Act, was drafted in response to a recent GAO report (PDF) prepared at Leach's request examining Industrial Loan Companies.
We've just posted the first Payments News reader participation survey and want to encourage you to participate.
The heat in the already hot arena of strong authentication just went up a few degrees, when the FFIEC last week issued new guidance to U.S. banks urging consideration of it for internet banking.
There are a lot of products and solutions for stronger authentication in the marketplace. We'd like to hear your views - which ones appeal to you and your institution? Please take a few minutes to fill out this short survey and share your opinions.
We'll keep the survey open for about a week and will then post the un-scientific, but, we hope, interesting results right back here on Payments News!
AuctionBytes' Ina Steiner reports on a new eBay policy that limits seller payment choices - citing safety concerns about some payment methods. The new eBay Safe Payments Policy also bans new online payment methods from being accepted - unless approved by eBay - and establishes certain criteria that any new online payment method must meet to be approved for use on eBay.
» Continue ReadingPay By Touch has announced that it has agreed to acquire substantially all of the assets of CardSystems Solutions.
On Saturday, CyberSource has announced it had terminated negotiations with CardSystems, withdrawing its earlier offer to purchase the company's assets. CyberSource said its termination was the result of the inability of the parties to reach agreement in a timely manner creating severe obstacles to closing the transaction.
Eric Dash reports on the story for the New York Times. » Continue Reading
Michael Barbaro reports for the New York Times on concerns about Wal-Mart's plans to enter banking.
A coalition has formed to keep Wal-Mart out of banking and includes the Independent Community Bankers of America (which provided a sample letter for its members to send to the F.D.I.C.), the National Grocers Association, the National Association of Convenience Stores and the United Food and Commercial Workers union, which is trying unionize Wal-Mart workers. A coalition of community groups called Wal-Mart Watch has sent a petition to the F.D.I.C. with 11,000 signatures opposing Wal-Mart's application.
MBNA has announced that it has begun issuing credit cards in Atlanta using MasterCard's PayPass contactless payment technology.
More details here.MBNA selected Atlanta to launch the product because hundreds of merchants in that area have already installed the specially equipped terminals, enabling cardholders to speed through checkout during their daily routines.
"We're always looking for new ways to make everyday life easier for MBNA Customers," said MBNA Group Executive David Turner. "Like our rewards programs, MasterCard PayPass is another way we're giving Customers the greatest value and convenience. And we're excited at how fast the list of merchants who have committed to accepting PayPass continues to grow."
Frederick Stakelbeck writes for Asia Times on the opportunity for a national credit bureau in China. » Continue Reading
[Update - 10/18/05: The Citi Simplicity cards launched today.]
Diya Gullapalli reports for the Wall St. Journal on plans by Citigroup to launch a new credit card next week called Simplicity. The Simplicity card will, among other features, have no late fees for customers who use it to make at least one purchase transaction each month.
» Continue ReadingThe Federal Financial Institutions Examination Council (FFIEC) has issued new guidance for banks regarding “Authentication in an Internet Banking Environment.”
For banks offering Internet-based financial services, the guidance describes enhanced authentication methods that regulators expect banks to use when authenticating the identity of customers using the on-line products and services. Examiners will review this area to determine a financial institution’s progress in complying with this guidance during upcoming examinations. Financial Institutions will be expected to achieve compliance with the guidance no later than year-end 2006.
The full text of the guidance letter (PDF) is available online.
» Continue ReadingVisa USA has announced several new upgrades to VisaNet, its global payment processing network. 'The demands of Visa cardholders never stop changing, so we never stop improving and expanding the technology that is at the core of Visa's value,' said John Partridge, CEO of Inovant LLC, Visa's IT organization responsible for global transactions processing and technology development. » Continue Reading
The National Association of Convenience Stores online news site reports on the recent passage by the US House of Representatives of H.R. 3893, the "Gasoline for America's Security Act of 2005."
» Continue ReadingPassMark Security has announced Version 2.0 of its Two-Factor Two-Way Authentication system incorporating neural network technology and a policy engine for customer authentication decisions. » Continue Reading
Simon Avery reports for Globeandmail.com on migration efforts underway in Canada to prepare for smart cards.
» Continue ReadingFor two years, card issuers and merchants have been building and installing new transaction systems that can handle credit and debit cards that store information on a computer chip. So-called smart cards will begin replacing magnetic strip cards late next year and the industry hopes to have the conversion completed by 2010.
The PULSE EFT Association has announced the result of a new study into debit card fraud, comparing PIN and signature debit. » Continue Reading
Chicago Business report on an unusual arrangement between United Airlines and JP Morgan Chase which allows the airline to switch credit card processors (from NPC to Chase's Paymentech) without having to post cash reserves.
» Continue ReadingThe new processing agreement’s rates are “more favorable than any new processing contract in the industry,” says a United spokeswoman. “Together, these arrangements represent substantial steps forward in our reorganization efforts and are further validation of the work we’ve done to successfully restructure and strengthen our business.”
eBay and VeriSign have announced a strategic alliance to collaborate on payment services and security initiatives for e-commerce. In addition, eBay's PayPal will be acquiring VeriSign's payment gateway business for $370 million in cash and/or eBay stock. The payment gateway business is expected to result in an incremental $100 million of revenue for 2006 with a 20 percent pro forma operating margin.
» Continue ReadingThe Association for Financial Professionals has released the results of its just completed AFP Interchange Survey.
» Continue Reading