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June 18, 2005

Security Lapse Laid to Tucson Company

Thomas Stauffer, Joe Burchell and Lynda Edwards report for Tucson's Arizona Daily Star on yesterday's announcement by MasterCard that the Tucson operations center of CardSystems Solutions was responsible for a security breach that could have exposed information on up to 40 million cardholders.

The company's technology staff identified the security breach on May 22, said Linda Ford, CardSystems' vice president and general counsel.

The FBI was notified the next day, and the bureau instructed the company to discuss the breach only on a "need-to-know" basis, Ford said at an impromptu press briefing Friday outside the company's office.

MasterCard gave CardSystems no warning of its Friday announcement, Ford said.

Also in today's morning papers, Carrie Kirby and Jenny Strasburg report for the San Francisco Chronicle on fresh questions being raised as a result of yesterday's announcement of a security breach involving payment card information on up to 40 million consumers.

In this case, victims should not be at risk for identity theft, because the information stolen appears to be transaction data taken from the strip on the back of cards, which generally does not include sensitive details such as Social Security number and date of birth that can be used to open new accounts in a person's name.

Beware the Phishing "Double Bluff"

Joe Morgan reports for the UK's Times of London on a recent phishing attack against customers of Barclays Bank.

Internet fraudsters are using an audacious double bluff to rob people of their cash: spam e-mails give warning of the risks of responding to unsolicited mail that asks customers to disclose internet banking log-in details — before inviting would-be victims to do just that.

June 17, 2005

WSJ: Google Payment Service?

Kevin Delaney and Mylene Mangalindan report for the Wall St. Journal on rumored plans by Google to offer an electronic Google payment service to compete with eBay's PayPal.

PayPal Launches PayPal Website Payments Pro

PayPalPayPal has introduced PayPal Website Payments Pro, a new all-in-one online payment solution for merchants that combines the features of a merchant account with a payment gateway into a single provider, PayPal.

Website Payments Pro supports merchant acceptance of Visa, MasterCard, American Express, Discover, bank transfers and PayPal balance payments. A comparison chart compares Website Payments Pro with other alternatives.

Pricing for Website Payments Pro ranges from 2.2 to 2.9 percent plus 30 cents per transaction. A $20 monthly fee is also charged. There are no setup or cancellation charges.

Signup requires a PayPal Business Account along with much of the same information required to setup a traditional merchant account (type of business, business owner's SSN, etc.). PayPal says applicants can expect a two day turnaround on their Website Payments Pro application.

MasterCard Identifies Security Breach at CardSystems Solutions

Late this afternoon, MasterCard announced it had identified a serious security breach of card information at CardSystems Solutions, Inc., a third-party processor of payment card data.

According to MasterCard's press release, the breach potentially exposed more than 40 million cards of all brands to fraud. MasterCard estimates approximately 13.9 millon MasterCard-branded cards may be affected.

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Goodbye MBNA, Hello Providian

James Gilden writes for the travel section of this Sunday's Los Angeles Times on the costs of currency conversion when using credit cards to pay overseas.

Last month, MBNA announced in a mailing to its cardholders that it would begin charging a 3% "cross-border transaction" fee. So for my foreign travels, it is goodbye, MBNA, and hello, Providian, which does not charge the added fee.

One-Fingered Discount At The Grocery Store

Arik Hesseldahl reports for Forbes.com on Pay By Touch's new president and COO John Morris and its current deployment of its fingerprint-based payment system with Piggly Wiggly.

Grocers, he says, sweat over seconds and track the average time it takes to get a customer through the check-out line. The faster the better. A transaction using a paper check takes on average about 64 seconds; credit card transactions take 40 to 45 seconds; debit cards about 35; and cash about 29, which includes the "fumble factor"--allowing the clerk to count out change. Once a consumer is enrolled with the Pay By Touch system, they can pay in as little as 14 seconds by holding their finger up to a scanner and entering a number--usually their home phone number, to add a little extra layer of authentication.

Bank of America Buys Stake in China Construction Bank

China Construction BankBank of America announced yesterday that it had entered into a definitive agreement with China Construction Bank (CCB), the second largest commercial bank in China, to purchase 9 percent of CCB's stock for $3 billion and obtained an option to increase its stake up to 19.9 percent in the future. As part of the deal, it looks like Bank of America has secured its retail banking and payment card partner for China.

As part of the transaction, CCB and Bank of America have entered into separate agreements for Bank of America to provide strategic assistance to CCB in the areas of corporate governance, risk management, IT, financial management, human resource management, retail banking (including credit card), and global treasury services.

As part of this strategic assistance program, Bank of America will provide approximately 50 personnel to advise CCB in these key areas. Bank of America will also have a seat on CCB's board of directors.

With the Bank of America partnership, CCB becomes the first of China's "Big Four" banks to reach an agreement with a foreign strategic investor. The transaction represents the single largest foreign investment in a Chinese company to date.

Last month CCB became the first commercial bank in China to win MasterCard's Asia-Pacific Best Innovation prize for MasterCard Debit Cards. CCB also was awarded MasterCard's Greater-China Best MasterCard Debit Card 2004.

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Morgan Stanley Reassessing Discover Spinoff Plans

Ann Davis and Robin Sidel report for the Wall St. Journal that Morgan Stanley's plan to spinoff Discover, announced in April, is being reassessed.

A big concern is that the credit-card unit may need a bigger capital infusion from Morgan Stanley to become a stand-alone, publicly traded entity, than previously was thought, these people say. The possible need for a larger infusion makes a spinoff of Discover less attractive, the people say.

Will That Be Cash, Credit, Or Cell?

Business Week takes a look at turning phones into virtual wallets for payments.

C-SAM Inc., a tiny, privately owned software developer in Oakbrook Terrace, Ill., is expected to announce plans on June 20 to roll out a service early next year that will allow people to use their phones as credit cards. Says C-SAM CEO Sam Pitroda: "I believe the whole concept of money is going to change."

"For U.S. consumers, it has to be simple to use," says Tom J. Manessis, Visa's head of emerging opportunities. "To click through six menus is not simple."

Walgreens and Next Estate Communications Partner on Prepaid Debit Cards

Next Estate Communications, which claims it has more than 90 percent market share with its association-branded prepaid cards, has announced that it is partnering with Walgreens to offer GreenDot prepaid cards to consumers.

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June 16, 2005

BJ's Wholesale Club Settles FTC Charges

The Federal Trade Commission announced today that BJ's Wholesale Club has agreed to settle FTC charges that it failed to take appropriate security measures to protect sensitive customer information.

According to the FTC, this information was used by an unauthorized person or persons to make millions of dollars of fraudulent purchases. The settlement will require BJ’s to implement a comprehensive information security program and obtain audits by an independent third party security professional every other year for 20 years.

"Consumers must have the confidence that companies that possess their confidential information will handle it with due care and appropriately provide for its security,” said Deborah Platt Majoras, Chairman of the FTC. “This case demonstrates our intention to challenge companies that fail to protect adequately consumers’ sensitive information.”

Details about the complaint and the consent agreement can be found on the FTC's website.

MasterCard Analysis of Mass-Affluent Consumers

MasterCard has announced the findings of a special report that describes factors shaping purchasing decisions among the mass-affluent demographic of consumers -- those households earning over $100,000 in annual income. The report is based on the Yankelovich MONITOR® 2004, an annual study of consumers.

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Visa’s CTO David Allen on Challenges, Change

Computerworld's Lucas Merian interviews Inovant's Chief Technology Officer David Allen.

What technology challenge keeps you up at night?

The No. 1 technology challenge that keeps anyone up at night at Visa is continuing our unparalleled availability. As we introduce more and more change, and we are introducing change at an ever-increasing rate, keeping that going and developing systems architecture that are more permissive to change is what keeps me going.

June 15, 2005

Visa Incentive Network - Helps Manage Cardholder Rewards

Visa has announced upgrades to its processing systems to allow for the management of cardholder rewards and enhancements at the individual account level.

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Fidelity Information Services and First Data Deliver Credit Card-Enabled HELOC Solution

Fidelity Information Services and First Data Corporation have announced a strategic alliance agreement through which First Data's credit card processing capabilities will be integrated with home equity lines of credit (HELOCs) serviced on Fidelity's industry-leading Mortgage Servicing Package (MSP) software.

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June 14, 2005

Bank of America Launches SiteKey for Tennessee Customers

Bank of America announced today that it has launched its new SiteKey fraud and identity theft protection service for the bank's customers in Tennessee.

Using SiteKey is like getting a safe deposit box that takes two keys to open. Before the customer and the bank agree to open the box together, they confirm each other's identity.

"SiteKey helps you know it's us and we know it's you," said Sanjay Gupta, e-Commerce executive. "It's a free way to increase your online security, and it's easy because you don't need extra hardware or other equipment."

Bank of America announced in late May that it was partnering with PassMark Security to deliver the SiteKey service.

T-Mobile Austria Enables Online Top-up

DMeurope.com reports on T-Mobile Austria's mobile top-up service introduced in partnership with Erste Bank.

T-Mobile Austria’s partners for Eps online payment currently include Erste Bank and Sparkassen, Raiffeisen Bankengruppe, BAWAG P.S.K. Gruppe, Hypo Bankengruppe and Volksbankengruppe. Three years ago, Austria’s largest banks agreed on a common standard for online payments known as Eps or ’e-payment standard’.

Chip Hassles in Malaysia

The Star Online reports on acceptance problems experienced by Singapore card holders attempting to use their magnetic stripe cards at merchants in Malaysia who were rejecting them because they didn't contain EMV chips.

Sovereign Bank To Offer American Express Cards

Joe Light reports in the Boston Globe on Sovereign Bank's decision to issue American Express cards. The bank's press release announcing the plan is available online.

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June 13, 2005

FDC Forms Merchant Acquiring JV in Italy

First Data Corp. announced the formation of a new merchant acquiring alliance joint venture in Italy with Banca Nazionale del Lavoro (BNL).

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Visa USA Launches Advanced Authorization Anti-Fraud Technology

Visa USA today announced the rollout of Advanced Authorization, a new technology designed to help prevent card fraud.

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Shunning Credit Cards On Principle

Shannon Buggs writes for the Houston Chronicle about her personal plan to abandon credit cards.

The bankruptcy reform taking effect in October gives credit card companies just about everything they want and waters down consumer protections. Not only did the industry succeed in restricting who can erase unsecured debts in bankruptcy, it also will have access to consumers' federal tax returns.

Citi's Ads Tell Of Faster Rewards

Theresa Howard reports for USA Today on Citi Card's advertising of its Thank You Rewards plan.

Citi plays up redemption possibilities in ads that urge consumers to use its cards for faster rewards. One ad shows a groggy husband driving with the radio blasting behind his jogging wife. He is standing in for the iPod she hasn't been able to get. Citi customers can get one for 50,000 points.
Separately, Citi announced the results of a new consumer survey today in a press release titled "New Survey Reveals Thanks are Sometimes Hard to Come By".

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Secret Rhythms: BioPassword Finds Security in Keystrokes

Jeff Meisner reports for MSNBC on BioPassword's use of typing rhythm as a biometric authentication technique.

Keystroke dynamics isn't actually a new science.The original technology is derived from the idea of identifying a sender of old Morse code messages using a telegraphy key called "the fist of the sender," whereby operators could identify senders based on the pace, syncopation and rhythm of signal taps.

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