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June 04, 2005

Ask Glenbrook: Electronic Cash Payment Methods?

Here's a question we recently received:

Are the only electronic cash payment methods available today account based methods, e.g. PayPal?

Or are there available any forms of true electronic cash which have to be issued by a third party, e.g. the technique developed by DigiCash's ECash?


Barron's Looks at eBay...and PayPal

Barron's this weekend has a cover story on eBay looking into the recent decline in the price of the company's stock.

As is often the case in stories about eBay, PayPal is mentioned as one of the key growth engines for eBay.

Another wild card for eBay's growth rate will be the ability of PayPal to spread beyond eBay to become a commonly accepted payment mechanism for online commerce.

It's making headway. Payment volume grew 44% in the first quarter, while total accounts increased 57% to 71.6 million.

There are more PayPal accounts now than there are American Express or Discover accounts.

Visa Contactless Cards

Visa USA has updated its website to include more information about its Visa Contactless cards including providing an FAQ and a page listing issuers of Visa Contactless cards. Currently, Chase is the only Visa Contactless issuer listed.

Visa Contactless IndicatorVisa has also defined an identifying mark that is to be placed on the front and back of Visa contactless cards by the card issuer identifying the card as having the RF chip technology embedded in the card.

Q. Is this a “Smart Card"?

A. Visa contactless cards are a new form of smart card technology. Like smart cards it uses an advanced computer chip embedded in the card’s plastic to perform secure transactions. Thanks to the radio frequency interface, Visa contactless cards are easier and faster to use than more traditional smart cards.

June 03, 2005

Chase Merchant Services Hosts Bill Pay Forum

On Wednesday, Chase Merchant Services hosted a bill pay forum in Chicago. Many of the presentations from the forum are available online.

One particularly interesting presentation at the forum was by Marsha Lovell, Director, Student Financial Services at UCLA, describes UCLA's online payment evolution (PDF) and, specifically, the adoption of PIN-less debit as a cost savings technique that reduced the university's merchant credit card acceptance fees.

The Web-Driven Entrepreneur

According to Warrilow & Co., "the dramatic rise of online auction sites like eBay, the penetration of broadband Internet access, along with the availability of sponsored links from sites like Google and Yahoo!, have combined to create an environment that has spawned a new generation of American small businesses."


June 02, 2005

Federated Announces Strategic Credit Alliance with Citigroup

Federated Department Stores has announced it has entered into a strategic alliance with Citigroup to operate Federated's proprietary and co-branded Visa credit card businesses.


Improving Business Payments by Asking What Corporations Really Want

Sandy Krieger and Michele Braun of the Federal Reserve Bank of New York report on a recent study exploring changes in the payment process that large corporations would most like to see.


China UnionPay To Launch Pre-Paid Travel Cards

China Daily reports on China UnionPay's plans to introduce pre-paid travel cards for foreign visitors by the end of the year.

Customers will be able to purchase travel cards from UnionPay's overseas partners or at domestic airports, railway stations, tourist attractions and shops.

Government departments have set an ambitious target of having more than 60 per cent of merchants with sales volumes of at least 1 million yuan (US$121,000) accepting bank cards by 2008 to ensure most key business areas and streets, star restaurants, and important sightseeing areas are covered.

Separately, Sumitomo Mitsui Card Co. has announced it will be working with China UnionPay to enable Chinese travelers to use UnionPay credit and cash cards in Japan.

June 01, 2005

Ask Glenbrook: A Closer Look at Citi's Thank You Rewards Program

Citibank has launched its Thank You Rewards program -- last year for its credit card customers and earlier this year for its retail banking debit card customers.

Basically, by using a Citi debit or credit card, you can earn ThankYou Points that can then be redeemed for rewards - although the specifics of what you earn varies depending upon the particular Citi card that you're using to make a purchase and the value of the points varies depending upon which specific reward you redeem them for.

We recently had an Ask Glenbrook question about the relative value of debit and credit product participation in the Thank You Rewards programs. Based upon some quick research done on the Citibank web sites, here's what we learned. READ MORE »

MasterCard Advisors Launches First Fully Integrated Rewards Solution in Europe

MasterCard Advisors has announced the launch of the first fully integrated end-to-end rewards solution in the Europe region with MasterCard Rewards Services (MRS).


Reserve Bank of Australia Goes After Bill Payment Interchange Fees

Geoffrey Newman reports for Australian IT on the Reserve Bank of Australia's move to force publication of interchange fees in the Australian BPay bill payment scheme.

"In the event that BPay is unwilling to publish its interchange fees, (the RBA) will call for submissions on whether it would be in the public interest to designate the BPay system with a view to considering the possibility of setting a standard that would require BPay to publish these fees," the bank said in a statement.

More in this RBA press release.

Payments Card Center Releases New Discussion Papers

The Payments Card Center of the Federal Reserve Bank of Philadelphia has released two new discussion papers:

The first, “Forum on Validation of Consumer Credit Risk Models (PDF),” summarizes the discussion from a one-day conference of the same name held on November 19, 2004 in conjunction with Wharton’s Financial Institutions Center. The conference brought together leading academics, policymakers, and industry experts to discuss the general principles management can use as keys for effective model validation and risk assessment.

The second, “The Cost Effectiveness of Stored-Value Products for Unbanked Consumers (PDF),” is based on a March 30, 2005 workshop led by Sherrie L.W. Rhine and Sabrina Su of the Federal Reserve Bank of New York’s Office of Regional and Community Affairs. Rhine and Su discussed the relevance of stored-value cards to “unbanked” or underserved consumers.

GE Consumer Finance Secures Additional Patent For Its vPayment Settlement Tool

GE's Corporate Payment Services unit has announced it has secured an additional patent covering the account pooling aspects of its vPayment electronic settlement tool. Account pooling operates in a manner very similar to single use card numbers in that a unique card number is used for each payment transaction.

"vPayment is a supplier-friendly way to reduce your organization's dependence on the time-consuming check writing process. It offers the controls of a check, the float of a purchasing card, and the efficiency of electronic funds transfer," said Jeffery R. Dye, president and CEO of Corporate Payment Services, the commercial card unit of GE Consumer Finance.

"The account pool patent further strengthens vPayment's advantages for organizations looking for added control and efficiency."


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.


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.


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 started, a consumer auction site and eBay's biggest rival. In April 2004, Yahoo China paired up with the Chinese web portal Sina to start, 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 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.


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