Anthony Santomero, President of the Federal Reserve Bank of Philadelphia, spoke earlier today at the annual convention of the Pennsylvania Association of Community Bankers. His subject was the evolution of payments in the U.S.

Markets and consumers led us to a multiplicity of banks and a payments system that has been paper intensive. This is changing, as cards are replacing checks, and electronic clearing is truncating the maze of paper that fills our mailboxes. Our progress, while promising, occurs largely in fits and starts. We are a large nation with many providers, much complexity, and a philosophy of market-based solutions.

This has presented challenges for the Federal Reserve as a provider of financial services. It has necessitated restructurings, plant closings, and difficult decisions. Yet, we at the Federal Reserve are charged with the dual role of a regulator seeking to maintain the stability and efficiency of the payments system, even as we remain a provider of payment services. At times, these roles present different challenges. This is one of those times.

Nonetheless, as payments technology moves forward, our payments system will continue to change as evolutionary forces generate new innovations in payments and new ways to deliver them. This is why, in our own Reserve Bank , we have established a Payment Cards Center to add to our understanding of the use of electronic payment vehicles by consumers and their broader impact on the financial system.

Doug Young and David Lin report for Reuters on China's Alibaba and its plans following the major investment by Yahoo!

Xinhua Online reports on plans by China's central bank to launch interbank money transfers by the middle of 2006.

David Lazarus reports for the San Francisco Chronicle on Wells Fargo's relationship with Visa.

The UK's APACS reported yesterday on the release of its 2004 yearbook "The Way We Pay - A Market Review of the Plastic Card Industry in 2004".

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MasterCard International has announced a new card design option for customer financial institutions seeking greater product enhancement and differentiation.

So says Gartner's Avivah Litan in a new research note.

PayPal’s expansion is bad news for countless startups around the world that have tried to enter the micropayment market. Although credit/debit card companies could enter this market simply by lowering merchant transaction fees, these companies don’t have the PayPal advantage of funding payments from PayPal stored accounts, as well as traditional bank accounts.

Global Payments has announced it is forming a joint venture with The Hongkong and Shanghai Banking Corporation Limited to provide payment processing services to merchants in the Asia-Pacific region.

Michael Clarke reports for the UK's This Is Money on the slowing of credit card growth rates in the UK.

Apacs director of communication Sandra Quinn said: 'Instead of consumers simply taking out a new card to switch balances, they are contacting the issuers of cards they already own and asking 'what can you do for me?'.'

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MasterCard has reported second quarter results for its online debit card products reporting a 5.9 percent year over year growth in Maestro or MasterCard branded debit cards.

To provide financial assistance to the victims of Hurricane Katrina through the American Red Cross, NeuStar, CTIA's Wireless Foundation and many wireless industry carriers have established the Common Short Code "2HELP" (messaging to short code 24357, using the keyword "HELP").

Experian and The Gallup Organization have announced that the latest Experian-Gallup Personal Credit Index finds that about one in five consumers reporting theft of personal or financial information say that the perpetrator was someone they knew personally. In addition, 77 percent of consumers polled think of credit card fraud as identity theft. More results for the Personal Credit Index can be found online.

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• Rakuten, Leading Japanese E-Commerce Portal, to Acquire LinkShare, Leading U.S. Performance-Based E-Commerce Company
• QI Systems Inc. Developing Smart-Card ID and Payment System for Osage Nation
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Reuters reports that the UK's Office of Fair Trading said Tuesday that fees charged by members of MasterCardUK infringed competition rules and resulted in higher retail prices.

The OFT said a collective agreement between the MasterCard UK Members Forum (MMF) setting the interchange fee -- charges paid by retailers to issuing banks -- on almost all purchases between March 2000 and November 2004 restricted competition.

"The parties to this collective agreement set the interchange fee to derive revenues from retailers and their customers over and above the costs of providing the payment services," John Vickers, OFT chairman, said in a statement. "This unduly high interchange fee was like a tax on UK consumers."

AFX New Unlimited reports that MasterCard expressed strong disagreement with the OFT's conclusions and that it will appeal the decision.

David Enrich reports for the Wall St. Journal on new form factors for contactless payments.

Such credit-card alternatives contain radio-frequency technology that links the devices to customers' bank or credit-card accounts. But there are near-term hurdles, like higher costs associated with manufacturing the money clips, key-chain "fobs" and other devices. And not many stores have the equipment needed to scan the so-called contactless devices.

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• Official Payments Corp. to Process Employer Payroll Tax Payments for State of California
• Duane Reade Customers Can Now 'Tap and Go' When Making Purchases
• BankWest and First Data Form Australian Alliance for Enhanced Merchant Acquiring Services
• UK: Chip and PIN blamed for making ID theft easier
• India: GE Consumer Finance converts into GE Money
• Gemplus and Surgutneftegazbank First to Deliver the New Generation of MasterCard Cards in Russia
• PayPal Users Report Debit-Card Glitch
• FSSCC Reports Progress in Financial Services Sector Response to Customers Affected by Hurricane Katrina
• Wachovia Announces Receipt of First Image Cash Letter Sent Via SWIFTNet FileAct
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• VeriFone Gets First Order in Mexico Electronic Payments Initiative
• Morgan Beaumont Launches Employer Payroll Card Solutions
• Banks Worldwide Plan to Overhaul Aging Core Banking Systems to Gain Competitive Advantage, According to Global Survey
• Microsoft Corporate Treasury Connects to Its Banks Via SWIFTNet
• SmartPay Selected For "Red Herring Asia 100"

The Mobey Forum has the completion of the Security Element Technical Analysis of its Business Ecosystem effort. The analysis concludes that the three Security Element alternatives with the highest potential for general purpose Security Element, both in remote and local environments for mobile financial services, are: SIM, Embedded Chip, and Secure Memory Card (SMC) as Security Element platform. The