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« July 3, 2005 - July 9, 2005 | Main | July 17, 2005 - July 23, 2005 »

July 16, 2005

Dell Financial Services

Gretchen Morgenson reports for the New York Times on the growth in Dell's financing business.

Clearly, Dell's shift into lending may soup up profits and please investors. But there is no denying that Dell shareholders will have to monitor the financing business closely to satisfy themselves that the risks do not outweigh the rewards.
Morgenson also mentions that last week Dell hired a veteran executive from MBNA to run its financial business.

More On Supermarkets, Drug Stores vs. Visa

Pia Sarkar reports for the San Francisco Chronicle on the antitrust lawsuit filed by a group of retailers including Pleasanton, CA-based Safeway against Visa.


Albertsons Joins Antitrust Suit Against Visa USA

Melissa McGrath reports for the Idaho Statesman on Albertsons joining the antitrust lawsuit filed by Kroger against Visa USA. Albertsons is headquartered in Boise, Idaho.


July 15, 2005

Will Online Bill Payment Spell the Demise of Paper Checks?

The Payments Card Center of the Federal Reserve Bank of Philadelphia has published a discussion paper by James C. McGrath titled "Will Online Bill Payment Spell the Demise of Paper Checks?" (PDF).

Today, the rapid growth of online bill payment looks to threaten checks’ last redoubt. However, bill payment technology is still in its adolescence; the interplay of many stakeholders in the industry, including technology firms, banks, billers, payment cards, and customers, has led to rapid, unscripted innovation in just a few years.

This paper quantifies some of the trends in the industry while addressing the interests and impact of the market’s prime movers in an effort to determine to what extent the displacement of checks will continue.

Retailers Welcome Grocer/Drug Store Lawsuit on Interchange

The National Retail Federation said today that it welcomed a new lawsuit against Visa USA by grocers and drug stores over credit card interchange fees.


Shanghai to Lead Migration to EMV-based Smart Cards for China

Jane Chen reports for on an announcement yesterday by the Shanghai city government that it will lead China in revamping existing bankcards to EMV-compliant smart cards.

China initiated the EMV program in the wake of a large-scale bankcard data leak reported in June, involving 40 million cardholders in the United States, officials said. It chose Shanghai to pioneer the revamp because the city has the highest bankcard usage in the country.

Banking experts pointed out that the up-grade is a huge and complicated project involving all financial parties ranging from individuals to banks, stores, restaurants and hotels. Therefore, it will be costly, they noted, revealing that it will cost over 100 million yuan (US$12 million) to upgrade the 60 percent of the city's banking computer systems involved.

July 14, 2005

OCC Guidance re: Phishing

Ethan Preston comments on the recent guidance (.doc) issued by the Office of the Comptroller of the Currency regarding countermeasures against phishing attacks.

I wonder how many banks comply with these measures, even this late in the game. In particular, analyzing web logs seems like an very good way to identify phishing websites early on, but I suspect relatively few banks (or any other commercial entities) do so.

And if litigation were to follow a successful phishing attack, it seems to me that a bank's failure to comply with the OCC's guidance here would be a strong indicator of negligence.

Rise in Health Savings Accounts Create Mixed Opportunities for Financial Institutions

Tower Group has announced some new research by senior analyst Ed Kountz regarding the implications of health savings accounts (HSAs) for financial institutions.

"The rise of these individual healthcare accounts comes at the intersection of two larger trends: the rise of electronic prepaid payments and the steady growth of healthcare costs," said Ed Kountz, senior analyst in the Bank Cards research service at TowerGroup and author of one report on the topic.

"A new pool of payments funds is being created, accessed by plastic payments cards. Conceptually, card-based accounts linked to an underlying asset management component could be a good product offering fit within a diversified financial institution, particularly those with a card-issuing business."

Mobile Banking to be Launched in the UK

ATM operator LINK and Morse plc have announced mobileATM, a jointly developed mobile banking service that will be available for consumer use in the UK before the end of the year.


Why AmEx Looks Vulnerable

Business Week's Mara Der Hovanesian looks at some of the tough problems facing American Express.

July 13, 2005

Australia: GE Declares Credit Card War

Richard Gluyas and Anna Fenech report for The Australian on GE Money's plans to become the largest credit card issuer in Australia based upon an interview in the Australian of GE Money's Tom Gentile.

We see ourselves going in the opposite direction to the banks," he said. "While they're increasing fees, lifting rates and reducing the value of loyalty programs, we're coming out with cards like Clear Advantage and Source, which has the best loyalty program in the market."

Retailers Gripe About Card Fees, Which Are Confusing And Rising

Donna Howell writes for Investor's Business Daily on merchant concerns about rising card acceptance fees.

Gartner analyst Avivah Litan says merchants have reason to be upset — they're being asked to eat an array of costs without sufficient explanation. "Everything's stacked against them," she said.

The View from Visa's New Boss - John Philip Coghlan

Business Week's Silicon Valley correspondent Justin Hibbard interviews Visa USA's new CEO John Philip Coghlan.

When the Visa opportunity came up, I tried to think about how I felt about this organization. I thought, with a company with such remarkable market share and transactions, I wonder if they're really tapped out.

As I dug deeper, I saw that for personal-consumption expenditures, you still have 60% of transactions being checks and cash, which, as I know from my own experience of being a merchant, are unbelievably expensive to handle. I just thought there's remarkable opportunity for Visa to grow and thrive.

Bofa's New Online Security System Targets Phishers, Spoofers

AP Business writer Paul Nowell takes a look at Bank of America's new SiteKey service provided by PassMark Security.

Bank of America spokeswoman Betty Riess said the bank looked at tokens and other options with focus groups before choosing SiteKey.

"We found this provides the right balance of added security and convenience," she said. "We found consumers did not want to have to get another device like a token to do their online banking."

July 12, 2005

American Express Launches Two New Rewards-focused Cards

American Express has announced the introduction of the Blue Sky Credit Card for consumers and the Platinum Business FreedomPass Credit Card for small business owners. Both cards are "fee-free" according to Amex.

"Consumers can find the best deals with any travel provider and Blue Sky can make their deals even better," said Larry Sharnak, executive vice president, American Express. "We know our consumers value travel rewards, easy redemptions and savings. Blue Sky offers one of the best consumer rewards in the market."

"Business owners are constantly looking for savings to help manage the overall cost of running a company," added Raymond Joabar, senior vice president and general manager, OPEN from American Express(SM). "The Platinum Business FreedomPass Credit Card can deliver significant value for our business customers and gives them the freedom to plan their travel without restrictions while earning terrific savings."

Japanese Banks To Establish Standard System For Biometric Identification

Japan's Asahi Shimbun reports on efforts underway by the Japanese Bankers Association to establish a standardized biometrics reading system to identify card holders for transactions at ATMs.

There are currently two biometrics systems at ATMs: One reads the palm vein; the other reads a fingertip vein. The palm-vein reading system, developed by Fujitsu Ltd., has been introduced at the Mitsubishi Tokyo Financial Group Inc. and Suruga Bank Ltd. More than 12 other banking institutions, including the Bank of Ikeda Ltd., intend to introduce the palm-vein reading system, and about 5,000 machines have been delivered.

July 11, 2005

New Visa USA CEO Coghlan Seeks Involvement With Merchants

Robin Sidel reports for the Wall St. Journal on Visa USA's new CEO John Philip Coghlan.

Mr. Coghlan said he placed a call yesterday to Mallory Duncan, senior vice president and general counsel of the National Retail Federation, a trade organization that has harshly criticized Visa's and MasterCard's fee structures.

"Merchants are under tremendous pressures. I want to be engaged with merchants," said Mr. Coghlan, who ran a grocery-distribution company for five years in the 1980s.

Visa USA Appoints John Philip Coghlan as President And CEO

Visa CEO John Philip CoghlanVisa USA has announced the appointment of John Philip Coghlan, 54, as president and chief executive officer, effective immediately. Coghlan joins Visa following 17 years at Charles Schwab and Company, where he most recently served as vice chairman of The Charles Schwab Corporation and as president of the Schwab Individual Investor Group. Coghlan succeeds Carl F. Pascarella, who held the chief executive officer and president positions for Visa USA since 1993.


Card Rewards Are Hot

Caroline Mayer reports for the Washington Post on credit card rewards programs, the latest form of enticement being used by card issuers to sign new customers.

MBNA says its reward cardholders charge twice as much as its regular cardholders, while American Express says its reward customers charge more than four times as much.

As American Express spokeswoman Desiree Fish said, "We make our money by encouraging consumers to spend with us, be loyal to us -- and we do that by rewards promotions."

FDC Announces New Deals in China, North Asia

First Data Corp. has announced a significantly expanded presence in China and North Asia including new deals with JCB and China's ICBC.


PayPal Launches Local Service in China

PayPal has announced the launch of PayPal China, a new service specifically designed for Chinese Internet users. has some more background on the announcement of the service from an interview of PayPal International vice president Mathias Entenmann.


July 10, 2005

China Banks: ICBC

David Barboza and Keith Bradsher report for the New York Times on discussions between Goldman Sachs and Allianz to acquire a $1 billion stake in China's Industrial and Commercial Bank of China (ICBC).

Private Investigators Concerned About Limits on SSN Access

Hiawatha Bray writes for the Boston Globe on concerns of private investigators about legislation that may limit the sale of Social Security Numbers in the wake of data security and information access breaches.

'We're under a lot of pressure to minimize the availability of Social Security numbers," said LexisNexis spokeswoman Mary Dale Walters.

Marco Piovesan, vice president of business services at ChoicePoint, said that his company has discussed the issue with private investigators, but has decided not to sell them Social Security numbers. ''We restrict that information to a large number of business types, including the PI group," Piovesan said.


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