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February 05, 2005

Cybercash on Vacation

Writing for Technology Review, Peter Wayner takes a look back at financial cryptography.

Why JP Morgan Chase Really Dropped IBM

Paul Strassman reports in Baseline about JP Morgan Chase's decision in August 2004 to cancel its $5 billion, seven year outsourcing contract with IBM. Why? Because growth in the bank's spending on technology was out of line with peer banks in the industry. [Tnx: Phil Windley]

Hypercom Stumbles

Hypercom announced yesterday that it has to restate its 2004 financial results as a result of incorrectly accounting for certain equipment leases by the company's UK subsidiary.

The Company has also determined that the internal control deficiency that gave rise to this restatement represents a material weakness, as defined by the PCAOB's Auditing Standard No. 2.

Consequently, management will be unable to conclude that the Company's internal controls over financial reporting are effective as of December 31, 2004, and the Company's independent auditors, Ernst & Young LLP, are expected to issue an adverse opinion with respect to the Company's internal controls over financial reporting.

Hypercom's stock closed down over 18% yesterday on the news.

Bring Lenders, Not Borrowers, to Heel

William McLeod writes an op-ed piece in this morning's Boston Globe about bankruptcy reform legislation now under consideration in Congress.

What's missing in this new legislation? Any change to the current practice of lending money to just about anyone. These days, there is little difference between some credit card companies and a loan shark. Of course, credit card companies do not break legs, they just increase the percentage rate if a payment is late, add a late fee, add an overlimit fee, and some even charge an annual fee for the privilege of getting more fees. There are many people trying to get out of debt, but they are being thwarted by the perfectly legal fees and interest being levied against them.

February 04, 2005

Spitzer Sues Simon Property Group Over Gift Card Fees

New York State Attorney General Elliot Spitzer has announced that his office has filed a lawsuit against shopping mall operator Simon Property Group alleging that fees on its Simon Giftcard violate a recently enacted state law.


Chase Adds POS Discounts to New AARP Visa Credit Card

Chase and AARP have announced a new combined credit/membership card that they claim is the first of its kind to provide automatic discounts at the point of sale for AARP members.

Fiserv to Provide Check Processing for Three of Australia's Largest Banks

Fiserv has announced that it has signed a 12-year $460 million agreement with Commonwealth Bank, National Australia Bank, and Westpac to provide check processing and image archive services through a utility called Vipro Pty Ltd.

Fiserv will supply Vipro with proof-of-deposit, image capture, locked box processing, image archive services and capture-related exception processing to help the banks reduce costs, gain economies of scale and secure new technological capabilities.


February 03, 2005

Commerce Bank: Putting Fast Food in Banking

Some banks are using iPod's instead of toasters to encourage new accounts. Michael Fitzgerald reports in CIO Insight on Commerce Bank's strategy uses advanced IT to help drive quick responses for customers in branches.


PassMark Security Launches Service with Stanford Federal Credit Union

PassMark Security has announced that the Stanford Federal Credit Union has implemented its Two-Factor Two-Way Authentication System.

"We chose PassMark because it is simple. Online members have always had to prove their identities to us. But with the explosion of 'phishing' attacks, online service providers should have to prove their identities to the consumer. PassMarks give us an effective way to do so, one that's easy for our members to understand and to use," said SFCU President, John Davis.


MasterCard Reports 2004 Results

MasterCard International this morning announced 10.6% growth in gross dollar volume (GDV) on MasterCard-branded cards. For the full year 2004, 679.5 million MasterCard cards generated 16.7 billion transactions worth $1.5 trillion. GDV for worldwide credit and charge programs grew 8.8 percent to nearly $1.2 trillion, while GDV for offline debit programs rose 18.7 percent to $277.2 billion.

Banks Speed Process for Opening Online Accounts

Jennifer Saranow reports in the Wall St. Journal on steps banks are taking to speed up the process of opening online accounts.

By speeding up the online application process, banks hope to make better use of the Internet as a way to attract more customers to their online banking sites. Banks like online customers because they tend to keep high balances; cost less to serve; and are easier to market other banking products to than branch patrons.

Amex Plays Its Winning Card

Mara Der Hovanesian writes for Business Week on this week's announcement by American Express that it will be spinning off its brokerage and money management unit to shareholders later this year so that it can focus on its payment card business.

The move frees AmEx to focus ever more incisively on its core card business. "More companies like ours are recognizing that if you don't have focus, you're at a competitive disadvantage," Chief Executive Kenneth Chenault told BusinessWeek Online on Feb. 1, the day the deal was announced.


February 02, 2005

Japan Explores Biometric Systems

The Japan Times reports on the application of biometric technologies for financial transactions in Japan.

The growing number of bank account thefts involving stolen or forged bank cards is forcing financial institutions to adopt costly biometric technology to verify that only bona fide customers are using automated teller machines.

NIST To Hold Workshop on Biometrics and E-Authentication Over Open Networks

The National Institute of Standards and Technology has announced that it will be holding a Workshop on Biometrics and E-Authentication over Open Networks on March 30-31, 2005. Announces Amazon Prime

The Wall St. Journal reports that has introduced a new shipping program called Amazon Prime. For a $79 annual fee, customers can get free two-day shipping on all of their orders. More details on Amazon Prime are available on the site. Launches Online Payment Solution in China has announced the launch of its AliPay online escrow system in China.

''2005 will be the year online payment becomes a reality in China. With the help of our 10 million members, we expect AliPay will become the industry standard for safe online payments in China,'' said Jack Ma, CEO of

''Today marks a new milestone for e-commerce in China and a fundamental breakthrough for online payment systems serving buyers and sellers.''

Peppercoin Announces 3.0 Version of Small Transaction Suite

Peppercoin this morning announced version 3.0 of its Small Transaction Suite, designed to allow merchants to more cost effectively accept small payments.


American Express Focuses on Global Payments and Network Business

Yesterday, American Express announced that it will be spinning off its American Express Financial Advisors business unit thereby enabling Amex to focus on its payments and network business.

Amex is also hosting a semi-annual webcast meeting for the financial community later today.

Update: the slides for this meeting (3 sets) are now available online.


Pay by Touch and Thriftway Stores

Jo Best writes about Pay By Touch's technology installed at Washington State's Thriftway Stores.

The main benefit for his business, he said, is cost saving. It enables the retailer to shave cents off the average cost of an electronic payment transaction. With the biometric system, customers are encouraged to use debit cards, which cost the company almost half as much as the same payment by credit card, for example.

More on Visa's Super Bowl Ad

Visa USA has announced more information about its upcoming Super Bowl ad.

"In the real world, there aren't Super Heroes to rescue us -- but thanks to the Visa check card, consumers have a way to guard against fraud," said Susanne D. Lyons, chief marketing officer, Visa. "Even though we're delivering that message with Marvel's comic book characters in good fun, it's a serious message for millions of Visa cardholders. That's why we decided to deliver it during the high profile broadcast of the Super Bowl."

BB&T To Participate in FDC's STAR CHEK Direct

First Data Corp. has announced that BB&T has agreed to participate in FDC's STAR CHEK Direct check debit and verification service.


February 01, 2005

FSV Launches Flexible Spending Account Prepaid Benefit Cards

FSV Payment Systems has announced FlexFUNDS, a new prepaid benefit card platform designed for flexible spending account programs.

FlexFUNDS is a MarketReady(TM) prepaid benefit card with a configurable platform designed from the ground up. It features velocity tools associated with each purse, as well as backend administrative tools for third-party administrators.

Some of the many purses FlexFUNDS supports include flexible spending accounts (FSA), health spending accounts (HSA), health reimbursement accounts (HRA), dependant care FSAs, high deductible health plans, qualified transportation benefits, and many others -- along with the ability to link those purses.


Visa's Super Bowl Ad

Michelle Gershberg reports for Reuters on Visa USA's upcoming Super Bowl advertising designed to assure consumers about the security of Visa debit cards.

In the ad, a woman cries out for help from a dark city street, distressed that a stolen Visa check card will be easily used by the thief to drain her checking account.

Childhood heroes from Marvel comic books, including Spiderman and Captain America, rush to her aid, only to be disappointed by the false alarm: Visa cardholders are not liable for any fraudulent charges, they tell her.

January 31, 2005

Consumers and ARC Check Conversion

NACHA has announced the results of a survey of consumer awareness of accounts receivable check conversion (ARC).

ARC allows companies that receive consumers' checks at remittance and lockbox locations to convert them into electronic ACH payments, the same, safe electronic payments system used for Direct Deposit. ARC is used for consumer bill payments such as credit cards, mortgages, insurance premiums, and telecommunications and utility bills. NACHA estimates that in 2004 there were 1.25 billion consumer checks converted into ARC payments, and that at its current growth rate may reach 2 billion payments in 2005.

When read a description of the ARC check conversion process, 69 percent of the consumers surveyed said that they are familiar with the process. When provided with an open-ended opportunity to express any objections or concerns about check conversion, 55 percent said they had none.

Fiserv Reports Record EFT Transaction Volumes in 2004

Fiserv has announced that its Fiserv EFT unit handled a total of 4.2 billion transactions during 2004, a 14% increase over the prior year. Its Accel/Exchange network also reported record volume handling 281 million transactions, a 26% increase. About 14.5% of that volume was for ATM transactions with 85.5% consisting of POS transactions.

Xign Reports $50 Billion in B2B Transaction Volume

Xign has announced that last year its Xign Payment Services Network has handled $50 billion in B2B transactions since its inception in July 2001. Xign also reported it has about 18,000 shared supplier active in its network.


MoPay Provides Cell Phone Payments

Stephen Timm writes in South Africa's Business Owner about MoPay, an SMS-based mobile payment system.


Banks Must Transform US Corporate Payments Structure

The Tower Group has announced new research into business-to-business payments that sees a tipping point fast approaching where checks will become the exception rather than the rule.

"With the growth of corporate electronic payments poised to explode, we are rapidly reaching a critical point in the transformation of domestic cash management," said Susan Feinberg, senior analyst in the Wholesale Banking research service at TowerGroup and author of the research. "Many business to consumer payments are already made electronically, and a majority of US corporations indicate plans to migrate the bulk of their business to business payments to electronics within three years."

Given this, Feinberg added, "there is a growing urgency for banking executives to reorient their check-centric product management and development focus, to facilitate payment and remittance processing in a complex world of rapidly converging payment methods."

ACH Payments

Ivan Schneider writes in Bank Systems & Technology about Leonard Heckwolf's perspective on the the move to electronic payments. Heckwolf, who just completed a two-year stint as chairman of NACHA, is senior VP at JPMorgan Chase where he's responsible for the bank's ACH and retail lockbox business.

Store Cards in the UK

Helen Loveless reports for on the interest rates charged by store credit card programs in the UK.

Borrowing on a store card can prove ruinously expensive for those who repay only the minimum. It can take between 40 months and 157 months - 13 years - before a debt of £200 is cleared, according to research by price comparison service uSwitch.


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