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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.
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.
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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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.
Discover 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.
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.
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 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.$2.5 trillion is about what is currently spent annually in the US on Visa and MasterCard branded cards combined."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."
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.
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.
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 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.
READ MORE »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'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.
Mylene Mangalindan reports for the Wall St. Journal on a study of online retail sales sponsored by Shop.org and conducted by Forrester Research. The study concluded that U.S. online retail sales should climb 22% to $172 billion this year with the largest category of online sales, travel, projected to grow 20%, to $62.8 billion while the other categories are projected to reach $109.6 billion this year -- estimated to represent about 5.5% of all retail sales in the US.
NOVA Information Systems, the merchant acquiring subsidiary of US Bank, has announced an agreement to acquire Certegy's existing merchant acquiring portfolio consisting of 14,000 merchant locations representing about $3 billion in annual credit and debit card processing volume.
As part of the deal, NOVA has agreed to sell Certegy's regional check products and Certegy has agreed to provide NOVA with new merchant referrals through its sales representatives.
For 2004, NOVA processed about $119 billion in credit and debit card volume (according to the Nilson Report) from over 650,000 merchants.
READ MORE »Donald Greenlees reports on the state of electronic payments in China for the International Herald Tribune.
As China prepares to play host to a number of big global events like the Olympics and the World's Fair in Shanghai in 2010, it is scrambling to put an adequate electronic payments system in place.Despite staggering growth rates in the spread of debit and credit cards in recent years, the domestic network to allow customers and merchants to trade in plastic, rather than cash, is both patchy and unreliable.
First Data Corp.'s TeleCheck unit has announced that it has linked with a sister division, the Star Network, and its STAR CHEK Direct service.
READ MORE »Credit Card Management has published its annual Bank Card Profitability Study and Annual Report.
The exclusive study found that large issuers posted a collective after-tax return on assets of 3.7%, up from 2.5% in 2003. The issuers earned $21.44 billion last year, a 51% jump from $14.24 billion in 2003. Issuers were blessed with low funding costs, greater consumer use of plastic and timelier payments from cardholders. Issuers sought to expand their markets, stepping up their mailing of card offers and moving into new merchant sectors such as the $125 billion quick service restaurant arena.
Eric Dash reported for the New York Times on Saturday on credit card issuers not reporting credit limit information for consumers to credit bureaus, potentially affecting consumers' credit scores.
Ratings for an estimated 9.2 million Americans, or about 4.3 percent of the 210 million who have a credit score, were lowered by more than 10 points when information on their credit limit was omitted, according to a national study of more than 250,000 people with credit scores that was published by three Federal Reserve economists last year.
Ethan Preston is an attorney in Chicago practicing IT security law. In an email to Payments News, he writes:
I've collected some of the pleadings in the PSECU v. BJ's Wholesale case and written them up.See his comments here. READ MORE »
Reuters reports on preliminary figures released Friday by the US Department of Commerce reporting Internet retail sales rose 23.8 percent in the first quarter to $19.8 billion while total retail sales grew 7.3 percent. E-commerce accounted for 2.2 percent of total retail sales in the first quarter. The complete quarterly report along with lots of earlier reports is available online.
David Lazarus writes in the San Francisco Chronicle about legislation introduced last week by California Sen. Dianne Feinstein that would require credit card issuers to provide additional disclosures regarding monthly payments.
The real bite of the legislation comes in a separate provision. It stipulates that if a customer makes minimum payments for six straight months, the card issuer must offer an individual projection so the cardholder knows exactly how much and how long it'll take to crawl out of debt.
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