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July 31, 2006

First Annapolis Navigator - July 2006 Edition

The July 2006 edition of the First Annapolis Navigator is now available. This month's issue features a review of opportunities and challenges for card-based payments in the U.S. transit market. Other articles include: commentary on credit card growth in the Latin American region, a comparison of merchant acquiring M&A transaction dynamics in the U.S. and Europe, a brief look at The Home Depot's potential bank acquisition and a summary of bank multi-product loyalty/rewards programs.

eCommLink To Process Allow Card Prepaid MasterCards

eCommLink has announced that it has been selected to process transactions generated by the Allow Card Prepaid MasterCard, a card designed to teach financial accountability to America's youth.

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Updated FFIEC Information Security Booklet

The Federal Financial Institutions Examination Council (FFIEC) has released an updated Information Security Booklet
(PDF), which replaces the booklet issued in December 2002. The Information Security Booklet is one of 12 that, in total, comprise the FFIEC IT Examination Handbook. The FFIEC also released an Executive Summary (PDF) that contains a high-level synopsis of each of the 12 booklets and describes the handbook development and maintenance processes.

Chase Reports 'blink' Results

One year after launching its first contactless credit cards, Chase has announced that it has so far issued nearly seven million cards with blink to cardmembers in Connecticut, Colorado, Delaware, Florida, Georgia, New Jersey, New York, Pennsylvania and Texas - and that the cards are now accepted at more than 25,000 merchant locations nationwide, ranging from convenience stores to sports stadiums. Among the statistics reported regarding blink transactions are a 40 percent increase in average ticket size and increasing frequency of purchases by 35 percent.

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APACS Releases 2005 UK eCommerce Statistics

APACS, the UK payments association representing card companies, has released 2005 e-commerce figures. The results show that 14 per cent of the 34 million adults who use the Internet (4.9 million) made their most recent purchase from an auction site in 2005. There were 79 million transactions over this period, and £2.8 billion was spent. Looking at the wider e-commerce market, for the first time more than half of all adults made an online purchase during 2005 - 25 million or 52 per cent of all adults (and 74 per cent of internet users). This is an increase of 11 per cent of Internet users over 2004.

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US Bank Issues 10 Millionth Gift Card

US Bank has announced it has recently issued its 10 millionth gift card and expects to surpass 15 million during the 2006 winter holiday season. US Bank saw gift card sales at 86 percent of its branches in May, and it sold 334,781 Visa Gift Cards during the first two weeks of June leading up to Father's Day. US Bank issues Visa Gift Cards in 41 states through its 2,430 retail branches and mall partners, including Simon Property Group, Macerich Malls and Crocker Park.

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Virgin Mobile USA Launches Prepaid Visa Debit Card With NetSpend

Virgin Mobile USA has announced the launch of the Virgin Mobile "Stash" Prepaid Visa Debit Card issued by Inter National Bank. The new prepaid debit card is linked to a Virgin Mobile phone, allowing users to earn free airtime. The extended offering of features includes peer-to-peer money transfers and wireless text alerts to manage spending and prevent fraud, as well as online account management and a savings program. Be sure to see the fee structure on this card - both "by-the-month" and "by-the-stripe" options are provided.

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Netherlands Banks Incur Loss On Payments Services

The Nederlandse Vereniging van Banken (NVB) (Netherlands Bankers' Association) and De Nederlandsche Bank (DNB) have announced results of a McKinsey study they commissioned to examine the revenues and costs incurred by banks in that country in providing payments services. A "EUR 23 million loss is the difference between total gross income of EUR 3,996 million and total expenses of EUR 4,019 million. The banks incur losses on nearly all payment instruments. 90% of total expenses is accounted for by checking accounts (EUR 1,215 million), cash (EUR 779 million) and transfers (EUR 329 million). This negative result is compensated for almost entirely by income from balances on retail and corporate accounts." A copy of the study is available for download.

Banks Face Web Security Deadline

Jaikumar Vijayan reports for Computerworld that "a majority of U.S. banks appear unprepared to meet the Dec. 31 deadline for complying with the guidelines, several analysts said last week. They placed much of the blame for the current lack of preparedness on the fact that the guide-lines aren't mandatory and don't specify what form of strong authentication banks should implement."

Google Checkout - One Retailer's View

Aj Moss inc., an online retailer of bedding ensembles and linens, has put out a press release about the addition of Google Checkout to their e-commerce website. According to the retailer, they hope Google Checkout enables them to "reach an audience of people who seek more simplicity, security and speed in their shopping experience."

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The Inaugural Underbanked Financial Services Forum Highlights

The Center for Financial Services Innovation has released "Highlights From The Inaugural Underbanked Financial Services Forum" (PDF) written by CFSI's Research Director, Katy Jacob.

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China Union Pay To Keep Credit Card Monopoly

AFX News Limited reports on comments by US Commerce Department Under Secretary Frank Lavin that China UnionPay is to maintain its credit card monopoly in China over the short-term despite US concerns.

More On Interchange Fees

Nicole Gaudiano writes for the Gannett News Service about merchant reaction to credit and debit card interchange fees. "Interchange fees in the United States last year averaged about 1.8 percent of the cost of a transaction, among the highest in the industrialized world. They cost retailers about $30.7 billion last year. Part of the frustration for merchants is that it’s hard to negotiate with the card associations, said Kenneth Posner, a Morgan Stanley analyst. “They have shown an ability to raise prices even when merchants complain,“ he said. “The big frustration is not necessarily the magnitude of the cost. It’s the inability to do anything about it.“

July 30, 2006

Life With Google Checkout

Blogger Kirby Witmer writes about some of his experiences trying to use Google Checkout to purchase from Buy.com. You can find and read more blog posts about Google Checkout using this Technorati search.

Online Banking Offers Better Rates With No More Risk

Gregory Karp writes for the Allentown (PA) Morning Call about online banking and asks "are you still using a bank just because it has branches near you? If so, you're probably getting a lousy deal."

July 29, 2006

Don't Trust Email from Financial Institutions

On Thursday, the Wall St. Journal's Walter Mossberg provided some blunt advice to consumers about how to avoid the latest scams. At the top of his list: Don't trust email from financial institutions. According to Mossberg, "email is so easily manipulated by crooks that you simply should never, ever consider any email from a financial institution as legitimate."

Minsheng/Smartpay Deal - China's Biggest Opportunity?

Philip Lin writes for Pacific Epoch about the recent Smartpay announcement that it would be working with China Minsheng Bank to enable the banks' customers to pay for all sorts of goods and services with SmartPay technology using cellular SMS. Lin concludes "one thing seems likely - the "network effects" in this model will probably drive a "winner takes all" ending. And the winner will be a very valuable company, easily more valuable than any public tech company in China."

Opinion - Let The Market Decide On Interchange Fees

Wayne T. Brough, chief economist at FreedomWorks, writes a lengthy opinion piece on the subject of credit and debit card interchange fees suggesting that "the value of card payment networks must be considered before imposing arbitrary caps or restrictions on how these markets function. Regulating this market could harm consumers, innovation, and the economy as a whole."

A Look At Personal Lending On Prosper.com

Kara McGuire writes for the Minneapolis-St. Paul Star Tribune about personal lending on Prosper.com. "In a recent report, Online Banking Report founder Jim Bruene predicted that, within five years, there could be as many as 100,000 person-to-person loans in the United States per year, worth more than $1 billion."

FDIC Six-Month Moratorium On Industrial Loan Company Applications

The FDIC announced yesterday that its Board of Directors had approved a six-month moratorium on applications for deposit insurance by Industrial Loan Companies (ILCs), as well as on notices of change in bank control for existing ILCs. The FDIC will not make any final decisions or accept any future applications for deposit insurance or notices of change in control for ILCs during this period.

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July 28, 2006

Pay By Touch Named to AlwaysOn AO100 List

Pay By Touch has announced that it has been named to the AlwaysOn AO100 List as one of the top privately-held companies. The AO100 List recognizes the 100 most innovative and successful private firms in the United States based on market potential, customer adoption and investor value.

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China Mobile's Mobile Wallet Service

The Beijing Star Daily reported earlier this week that "China Mobile's Mobile Wallet service will be available to Industrial Bank account holders from August. On activation users will be able to pay their mobile phone bill, check their bank account balance, and buy lottery tickets and mobile phone insurance via their handsets. The services will be available via SMS or call center, and both activation and use are currently free."

Fighting Payment Card Chargebacks

Glenbrook's Allen Weinberg has published an opinion piece outlining how chargeback analysis and chargeback management can and should be viewed as a strategic opportunity for merchants.

More On UK Plastic Card Spending

APACS, the UK payments association representing card companies, has released spending figures for the UK that show that debit cards continue to dominate as the more popular method of plastic payment, accounting for 70 per cent of the purchases made in the UK in the first half of 2006.

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Bank of America Poised To Take No. 1 Bank Title From Citigroup

Bloomberg reports that Bank of America is close to passing Citigroup as the number 1 bank as measured by market value. According to Bloomberg, "shares of Bank of America, run by Chief Executive Officer Kenneth Lewis, climbed 61 percent in the past five years, increasing the market capitalization to $231 billion. Shares of New York-based rival Citigroup, which has expanded outside the U.S. and built up a top three investment-banking franchise, rose 1.6 percent, bringing its value to $233.9 billion." Valerie Bauerlein and Clint Riley also report this story for this morning's Wall St. Journal.

Paymate: Pay Via Mobile At Restaurants!

Moneycontrol.com reports from India on Paymate India's plans to offer its mobile payment service at top restaurants in Mumbai. "We will begin with high-profile restaurants and hip and trendy joints where the customer base is more inclined to take up paying using mobiles," said Mr Ajay Adiseshan, Founder and Managing Director, Paymate India. He says the company will target coffee bars next.

Study: Credit Card Issuers Ensnare Many in Debt Traps

Patricia Sabatini writes for the Pittsburgh Post-Gazette about a new report on credit card debt that "accuses card issuers of pushing consumers to borrow beyond their means and calls for new regulations to end the most abusive industry practices." According to Sabatini, "The Life and Debt Cycle" (PDF), a 35-page report released yesterday by the National Consumer Law Center in Boston, "says the industry's tactics are particularly devastating to older Americans who have fewer resources to dig themselves out of a hole."

MasterCard Selects Students to Lead Campus Financial Literacy Programs

MasterCard Worldwide has announced it has chosen 11 college students currently serving as Capitol Hill interns to lead financial literacy programs when they return to their campuses in the fall. The effort is part of MasterCard's Are You Credit Wise? consumer education program, which utilizes a peer-to-peer teaching model to educate college students on the importance of financial management skills and the responsible use of credit cards.

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