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2006 was a momentous year for the payments industry in the US - as one of the two major bank card associations completed an initial public offering of its shares and the other announced its own plans to do so. Late in the year, the second largest closed loop card network announced it would be spinning out from its parent Morgan Stanley in the summer of 2007. » Continue Reading
In an article titled 'Immigrants Wary of Banks Put Faith in New Card", Steven Greenhouse writes for the New York Times about SiGo, a prepaid MasterCard debit card issued by MetaBank and distributed by IDT Stored Value Systems. Greenhouse reports that cards are an "ideal tool for 30 million workers, both foreign-born and native, who lack bank accounts and often face high check-cashing fees and frustrating obstacles in paying bills."
Yesterday, MasterCard filed with the SEC an 8-K report disclosing that "on December 27, 2006, MasterCard International Incorporated (“MasterCard”), the principal operating subsidiary of MasterCard Incorporated (the “Company”), amended its agreement (the “Agreement”) with HSBC Bank USA, National Association and HSBC Bank Nevada, N.A., as successor to Household Bank (SB), N.A., (collectively, the “HSBC Banks”), effective as of July 1, 2003, relating to certain pricing arrangements for the HSBC Banks’ use of the Company’s core authorization, clearing and settlement services in the United States. This amendment, among other things, restructures certain pricing, incentives and card issuance terms of the Agreement. The HSBC Banks, together with their affiliates, have approximately 5.55% of the total voting power of the Company’s Class M common stock."
Aleksandra Todorova writes for the Wall St. Journal about what credit card issuers have in store for their cardholders in 2007 - "from jacked-up fees to new technologies that encourage spending." She lists five industry trends - including new, higher fees on balance transfers, reduced or disappearing rewards, contactless card technology to encourage more card spending, prepaid cards (and fees) for teens, and other creative ways issuers are increasing fees - including tiered late fees.
comScore Networks has released its estimates of consumer online non-travel (retail) spending at U.S. sites for the 2006 holiday season through Tuesday, December 26. According to comScore, "during the first 56 days of the holiday season, total online retail spending reached $23.11 billion, marking a 26-percent increase versus the corresponding days in 2005. Sales during the week prior to Christmas (December 18 - December 22, 2006) rose 38 percent versus the corresponding week in 2005. Importantly, year-to-date non-travel e-commerce spending surpassed the $100 billion mark for the first time ever on Saturday, December 23, 2006." » Continue Reading
Over the last few days, the blogosphere has been chatting about PayPal's Virtual Debit Card offering - as PayPal reports that its current beta test of the new service has been opened up to more users. First offered to beta users last June, the Virtual Debit Card allows PayPal members who are Microsoft Windows Internet Explorer users to make purchases at non-PayPal accepting merchants through the use of a MasterCard number generated automatically by PayPal on the user's behalf. The PayPal Virtual Debit Card cannot be linked to a non-PayPal-issued credit card. Instead, there must be funds in the user's PayPal account or the user has to have provided PayPal with bank account information or signed up for either PayPal Buyer Credit or the PayPal Plus Credit Card. More details on PayPal's FAQ page for beta users and in this BetaNews story on VDC.
Eastman Kodak has announced a new check processing solution and strategic relationship with CFC Technology Corporation that is "designed to help organizations of all sizes take advantage of Check 21 benefits, allowing for businesses to remotely scan their incoming checks, which is a far more cost effective way to handle business deposits." » Continue Reading
Becky Yerak reports for the Chicago Tribune on Pay By Touch, saying that the company "continues to attract financing and beef up its management ranks, recently adding a former Home Depot Inc. and Sears, Roebuck and Co. executive to its payroll." Yerak interviewed Pay By Touch President John Morris who said "this is one of the rare times where you can deliver identity theft prevention for the shopper, better security in terms of fraud for the retailer and increased convenience."
The Wall St. Journal reports that J.C. Penney has "abruptly terminated" Catherine West, its chief operating officer, after being appointed to that position on June 5, 2006. Prior to joining Penney, West was the president of Capital One's US credit card business. Earlier, she had worked in the credit card businesses of First USA Bank and Chevy Chase Bank.
Obopay, a Redwood City, CA-based mobile payments service provider, is looking for a Vice President, Treasury Operations. A summary description for this position follows. » Continue Reading
Earlier in December, the UK's House of Lords Science and Technology Committee, as part of their investigations into personal Internet security, heard evidence from representatives of APACS, VISA and the FSA. eGov Monitor reports that story - saying that "the witnesses were pressed on what mechanisms the financial industry in the UK had put in place to protect people using online banking and other online financial services." A transcript (PDF) of the oral evidence presented is available online.
Back in early August, American Express held one of its semi-annual analyst meetings - with one of the focus topics being how the Internet has affected American Express. A copy of Jud Linville's presentation (along with his speech text) are available online and make for some very interesting reading. Linville is Amex's President of US Consumer Card and also responsible for the company's global interactive business development. During the presentation, Linville reviews the three major phases (1.0 - Cost Reduction, 2.0 - Business Accelerant, and 3.0 - Building Our Brand) of Amex's online efforts over the last decade. » Continue Reading
Amazon.com has announced its bestselling items for 2006 - and there's no mention of any gift cards on that list. Maybe next year?
The European Central Bank (ECB) has published the Blue Book Addendum, a statistical addendum to its publication on payment and securities settlement systems in the European Union (EU) and in the acceding countries known as the Blue Book. The statistical addendum provides data for the period from 2001 to 2005. » Continue Reading
In an article titled 'ATM Dynasty Dawns for Chinese Banks - Cash Machines Are Replacing People as Cost Cutting Pares Bloated Payrolls", Wall St. Journal reporter James T Areddy writes about the rapid growth of ATMs in China.
Endpoint Exchange has announced that 12 of the country’s top 25 banks (by asset size) joined the company’s national check image exchange network in 2006. » Continue Reading
The Canadian Payments Association has posted a new set of questions and answers about cheque imaging in Canada. Unlike the voluntary exchange of check images enabled by Check 21 in the US, the CPA notes that its imaging initiative is "designed as an industry-wide transition to image-based clearing, with all CPA members participating and exchanging cheque images." Implementation of the new clearing process is targeted to begin in 2008 and to be phased in over approximately a year.
CircleLending brings mortgage services to the masses through structured private loans, providing services that reduce the financial risks, administrative hassles and emotional pitfalls of interpersonal loans. » Continue Reading
Jim Bruene of the Online Banking Report posts on his blog that he's awarding the fifth and final OBR Best of the Web for 2006 award to Bank of America for being the "first major U.S. bank to provide full online personal financial management (PFM) within its online banking service." Powered by Yodlee's full MoneyCenter suite, Bruene reports that Bank of America is displaying the accountholder's Net Worth Summary, Investment Detail, Transactions, Rewards, Email, and Search on its main online banking page following login.
Sahir Anand of the Aberdeen Group has published a report titled "80% of Retailers Unfazed By Contactless Security Concerns" (PDF). Anand reports that his "results show that 80% of all respondents surveyed do not see security implications to be a chief reason for not considering contactless technology within their enterprise. In fact, a third of the enterprises who currently offer contactless payments have said that this technology is a benefit in terms of card security or privacy."
CompuCredit has announced it is "joining with the alternative credit bureau PRBC in an innovative program to help consumers build credit by reporting consumers' positive payment history that is neither received nor reported by other credit bureaus." » Continue Reading
James Covert reports for MarketWatch.com on Visa USA's holiday sales volume growth. According to Covert, "the average ticket size rung up by a holiday shopper at retail stores declined 1% during the holidays, according to Visa's data." Saturday, December 23, turned out to be this year's peak shopping day.
The latest Nilson Report has arrived featuring a 20-page special report on Visa and MasterCard Issuers worldwide ranked based upon their 2005 card purchase volumes (subscription only).
The Federal Reserve Board and the Office of Thrift Supervision have announced the availability of a revised Consumer Handbook on Adjustable-Rate Mortgages (the CHARM booklet), which provides information to consumers about the features and risks of such loans. In recognition of the growing use of nontraditional mortgage products that allow borrowers to defer payment of principal and sometimes interest, the agencies have substantially revised the CHARM booklet to include discussions about "interest-only" and "payment option" mortgages. » Continue Reading
Constantine Cannon, Lead Counsel for United States merchants in the Visa Check/MasterMoney Antitrust Litigation, CV 96-5238, has advised its merchant class members that 128,000 payments to merchants totaling over $300 million are now being paid (PDF) "for overcharges on Visa and MasterCard signature debit and credit card transactions during the period October 1992 to July 2003." According to the firm, "this is the third round of distribution, the first having occurred in December 2005 and the second in June 2006, involving more than $650 million in claim payments." In this distribution there are approximately 29,400 checks of $1,000 or more, 1,790 checks of $10,000 or more, 308 checks of $100,000 or more, and 40 checks of $1,000,000 or more.
Aleksandra Todorova writes for SmartMoney.com about "five credit-card trends that could affect your wallet in 2007" - including significant fees for balance transfers, more reductions in credit card rewards programs, and more creative fee hikes.
Sarah Kellogg reports for Mlive.com about plans by U.S. Sen. Carl Levin (D-MI) to "study credit card company practices this winter, looking into excessively high late fees and interest charges, as well as hidden fees.
Janne Uusilehto, head of product security at Nokia, writes for Mobile Handsetl Design Line about the Mobile Trusted Module (MTM) specification developed by the Trusted Computing Group's Mobile Phone Work Group. The goal of MTM is to establish trust in a mobile platform's ability to protect its information and functional assets, and to validate that protection capability. "Eleven different use-case scenarios were published a year ago to familiarize stakeholders with actual application security enhancements in areas such as platform integrity, device authentication, SIMLock/device personalization, secure software download, mobile ticketing and payment, user data protection and privacy, and more."
Ellen Cannon reports for Bankrate.com on the secondary market in gift cards - online web sites "such as cardavenue.com, plasticjungle.com and swapagift.com, are devoted exclusively to buying, selling or trading gift cards."
Andrew Mayeda reports for Canada's Ottawa Citizen about increasing concerns by law enforcement officials about gift cards becoming a hit with crime syndicates - particularly open loop cards. According to Mayeda, "RCMP officers said such cards are now accepted as valid currency between crime syndicates. Instead of a suitcase of cash, operatives might show up for a drug deal with a fistful of gift cards."
Metavante has announced it is the "first certified and first operational processor supporting reload transactions on a leading international card association's prepaid card load network." » Continue Reading
Law.com's Privacy and Data Protection Legal Reporter interviews Fred H. Cate, distinguished professor of law and adjunct professor of informatics at Indiana University, about his view that concerns about security breaches among the general public and lawmakers are overblown and misplaced fear.
In an article titled 'The U.S. Payments System: Needing Consolidation, or Fine As Is?" by Christopher Westfall, Managing Editor of the KPMG Banking Insider, one senior banker is quoted as saying "right now there are too many ways to pay into too many systems." Westfall's article looks at efforts underway examining potential consolidation of US payments - in particular, convergence of the ACH and check image exchanges.
Josh Fineman writes for Bloomberg about Safeway's Blackhawk Network subsidiary - reporting that "the unit is bringing unexpected gains to the third-largest U.S. grocery chain." Fineman notes that Blackhawk distributes the gift cards of more than 185 retailers, including Starbucks Corp., Barnes & Noble Inc. and Apple Computer Inc.'s iTunes.
In an article titled Taking Charge at Discover, Liz Moyer and Tara Weiss write for Forbes about David Nelms, CEO of soon to be independent Discover Financial Services. In their interview of Nelms, he comments "the ability to provide debit services made a huge change."
Zhu Wang of the Payments System Research Department of the Federal Reserve Bank of Kansas City has written a new paper titled "Market Structure and Credit Card Pricing: What Drives the Interchange?" (PDF) that "presents a model for the credit card industry, where oligopolistic card networks price their products in a complex marketplace with competing payment instruments, rational consumers/merchants, and competitive card issuers/acquirers. The analysis shows card networks demand higher interchange fees to maximize card issuers' profits as card payments become more efficient. At equilibrium, consumer rewards and card transaction volume also increase, while consumer surplus and merchant profits may not. The model provides a unified framework to evaluate credit card industry performance and government interventions."
Fumiko Hayashi of the Payments System Research Department at the Federal Reserve Bank of Kansas City has written a preliminary new paper titled "Pricing and Welfare Implications of Payment Card Network Competition" (PDF) that examines how competition among payment card networks—three-party scheme networks and four-party scheme networks—affects pricing as well as the welfare of various parties. » Continue Reading
Terri Bradford, Payments System Research Specialist at the Federal Reserve Bank of Kansas City, has written a briefing paper titled "Paper, Plastic......or Phone?" (PDF) that examines mobile-phone payment and banking alternatives in the United States. The paper explores prospects for growth, available technologies, and the outlook for one or more technologies coming to dominate the market.
Bankwatch's Colin Henderson blogs about his predictions for banking in North America in 2007. One of Colin's points caught my eye: "Quietly, web 2.0 offerings will start to chip away at the traditional banking business model by levering social internet to eliminate costly bank processes. Social lending, brokerage models, account acquisition models." Be sure to read his full list! Colin will be speaking at the Lift conference in Geneva in February.
Mercator Advisory Group has published a new report titled "EFT/ATM Network Processing Review: Purchasing Services, Building Volume" - a review of the major EFT and ATM processors' offerings to financial institutions that examines debit processing, the significant cost differences between PIN debit and signature debit, and the impact of rewards programs on issuers, merchants and the consumer. » Continue Reading
The latest issue of Smart Card Talk, the newsletter of the Smart Card Alliance, has arrived featuring an article titled "Contactless Payments: Consumer Attitudes and Acceptance in the United States". The article is based on a survey commissioned by the Smart Card Alliance and conducted by Javelin Strategy & Research in August, 2006. The article describes the results of the survey and the implications of these results for financial institutions contemplating adoption of a contactless payment option.
Chevron has announced that it has implemented partial authorization at the pump, claiming to be the first major gasoline brand to do so. Partial authorization allows American Express Prepaid Cards, including American Express Gift Cards and American Express Traveler Cheque Cards, to be approved at Chevron and Texaco gasoline dispensers by recognizing the dollar balance on the card. » Continue Reading
MasterCard Worldwide has announced that it is "managing a consumer trial of contactless “Tap & Go”™ payments in selected exit lanes and service plazas on the Ohio Turnpike. The trial is being conducted in partnership with the Ohio Turnpike Commission, USA Technologies and Paywerks, Inc." » Continue Reading
First Data Corp. held an investor/analyst call this morning to update its 2006 and 2007 outlook. A recording of the webcast and the presentation materials are also available.
Global Payments has announced the introduction of a Mobile POS Solution using the WAY Systems Mobile Transaction MTT 1556 Credit/Debit terminal. The company says the product "combines the security and performance of a traditional POS terminal with the ease of using a mobile phone." » Continue Reading
Nicholas Ning writes for the Shanghai Daily about comments made by eBay CEO Meg Whitman regarding PayPal in China saying that it will remain independent - but that she's also open to partnerships with local companies if regulation permits. There have been recent rumors about an upcoming Chinese government regulation that could require a local partner for financial services businesses.
James K. Glassman, resident fellow at the American Enterprise Institute, looks at the growth in online retailing and ecommerce - including some results from a survey he helped PayPal conduct earlier this year. "Online sales remain small in relation to total consumer purchases--only about two or three percentage points--but they are gaining tremendous speed while bricks-and-mortar retailers are laboring hard just to run in place."
MasterCard Worldwide and USA Technologies have announced that "Cadbury Schweppes Americas Beverages (CSAB) will equip vending machines in several U.S. markets with the e-Port cashless transaction solution to begin accepting all major credit cards, including those enabled with MasterCard PayPass contactless payment functionality." » Continue Reading
Better than toasters! ING DIRECT has announced it is running a promotion this morning providing "free gasoline to Atlanta commuters during today’s morning rush hour. Drivers who visit three Shell stations between 6:30 and 9:30 a.m. will receive a free gasoline fill-up as part of ING DIRECT’s campaign to lead Americans back to savings." » Continue Reading
Ylan Q. Mui writes for the Washington Post about the new variety of retailer issued gift cards showing up in stores this holiday season - as retailers are trying to make them more fun than just plain old mag stripe cards.
Dave Birch has posted his podcast interview of Barclay's Richard Mould, head of contactless payments and responsible for the recent deal between Barclays and Transport for London's Oyster card.
According to a new study commissioned by Visa USA, significant others and moms are the most troublesome on holiday shoppers’ lists, and the majority of Americans (83 percent) expect to spend up to three hours researching, shopping and buying a single gift. » Continue Reading
In an article titled 'Payroll cards offer convenience at lower cost", James A. Ambrosio writes for Bankrate.com about the advantages of payroll cards - particularly for the unbanked.
We have received news of the following recent management changes:
Becky Yerak writes for the Chicago Tribune about yesterday's announcement of the upcoming spin-off of Discover from Morgan Stanley - quoting David Nelms, Discover's chairman and chief executive, as saying the spin-off is "good for us and good for Chicago."
Glenbrook's Carol Coye Benson had been initially skeptical about Intuit's recent announcement to acquire Digital Insight - as she says "after all, banks have had a long and somewhat rocky road with Intuit over the years and some seem to still have very mixed feelings about their basic value proposition." But Carol has recently become convinced that the new Intuit/Digital Insight business combination could provide some very real value to a bank's small business customers. » Continue Reading
Richard Dalton writes for Newsday that reports of gift card numbers being stolen off racks in stores and then hijacked once loaded with funds are not a large-scale issue. Dalton reports that "Newsday examined about two dozen gift cards from a variety of retailers with an online presence. Nearly all of them had scratch-off codes to prevent theft."
Obopay has announced partnering with Helio to offer the Obopay end-to-end mobile payments solution to Helio members. » Continue Reading
Banksys sends word this morning from Brussels that on Saturday, December 16th, the milestone of 1 billion electronic transactions for 2006 was reached in Belgium. Banksys continues - saying "armed with their debit cards, Belgians have set a new record on December 16th. One week before Christmas, Banksys, the Belgian electronic payment services provider, recorded a yearly total of more than one billion transactions, for the first time in our country’s history."
Online Resources has published a new study of web-based collections and payments that demonstrates the growing adoption of the Web channel for debt collection. » Continue Reading
Jeffrey Grau writes for eMarketer.com about CyberSource's recent survey of online ecommerce fraud that estimated ecommerce merchants in the US and Canada will lose $3.0 billion to online payment fraud in 2006, representing 1.4% of total online sales.
Landon Thomas Jr. reports for the New York Times on yesterday's announcement by Morgan Stanley that it plans to spin-off its Discover unit by summer following an internal strategic review of the business. The on, off, now on again spin-off plan could result in Discover having a public stock market capitalization of as high as $10 billion - if it's not first taken over by any of the large card issuing banks in the US.
Dave McClure blogs about his issues with Yahoo!'s Bill Payment service - and closes with a tease: "As a matter of fact, the whole financial / payments online space seems ripe for some Web 2.0 innovation. Watch this space."
MIguel Helft reports for the New York Times about Google Checkout - and the bigger agenda to "expand Google’s base of advertisers." Google Checkout recently announced that its merchant fees would be waived through 2007. Yesterday, it offered consumers a matching charitable contribution program - helping to spur consumer signups for Google Checkout.
Wesabe's Marc Hedlund blogs on Wheaties for Your Wallet about the contrast between our desires to both give and receive gift cards - but then to leave billions of dollars unspent on them each year.
Oberthur Card Systems has announced that Bank of America has chosen it to provide Contactless payment Fobs as part of a trial to test radio frequency contactless payment companion devices. "As contactless cards continue to grow in issuance, Bank of America is testing consumer interest in companion devices for contactless payment, and plans to issue Oberthur Card Systems VersaFOBs with MasterCard PayPass – a first in the U.S. marketplace," the company said in a press release. » Continue Reading
[Update: March 27, 2007 - AT&T and Firethorn announced Wachovia as one of their partner banks for mobile banking services.]
Wachovia has announced the availability of Wachovia Mobile - saying it is "the patent-pending first phase of Wachovia wireless retail banking." Wachovia Mobile gives customers the ability to access account information through Internet-enabled wireless devices like PDAs and cell phones - although initial availability of the service is limited to devices running Windows Mobile 5 with Pocket Internet Explorer. » Continue Reading
Morgan Stanley CEO John Mack announced this morning that the company would be spinning off its Discover business unit. A presentation providing an overview of Discover is available online. Morgan Stanley reported Discover's full year net revenue grew 24 percent over 2005 and was up 39 percent in the fourth quarter.
In a press release this morning, Cubic Corporation, one of the principal members of the TranSys consortium (the developers of Transport for London’s Oyster smart card transit fare collection system) has provided some additional information about the previously announced exclusive deal with Barclays Bank for the development of a new card that will host both Oyster and Barclaycard Visa on one piece of plastic. » Continue Reading
MasterCard Worldwide and InComm have announced the successful completion of the first cardholder point of sale transaction using the MasterCard rePower Load Network. MasterCard describes rePower as a new service "that allows consumers to add money to eligible MasterCard or Maestro branded prepaid cards at participating merchant locations." » Continue Reading
Blackhawk Network has announced results of a national online survey - concluding that more than 80 percent of gift recipients would prefer to do their own shopping with a gift card from a favorite store. » Continue Reading
Google Checkout has announced they're matching contributions to several charities - saying they will "chip in $10 for your first donation of $30 or more."
Zhang Fengming writes for ShanghaiDaily.com about China UnionPay - reporting that "building up UnionPay as China's world-class payment brand is on the schedule of the grand plan to set Shanghai up as a global financial hub in the five years ending 2010."
Chevron Products Co. has announced that it has signed a deal with Blackhawk Network to sell Chevron and Texaco gift cards to consumers through Blackhawk's retail network. Chevron gift cards in $25 and $50 values are now available for purchase at select Safeway and Vons stores throughout California. » Continue Reading
BB&T Corporation has announced the selection of Evolution Benefits to provide card services for its Health Savings Account product. » Continue Reading
Small business owners around the world have differing views on the current business climate but feel more optimistic (28%) than not (21%) about the upcoming year, according to MasterCard's annual Global Small Business Survey. » Continue Reading
TowerGroup says that retail banks must begin to match the retail industry in how they interact with customer, process orders, and create relationships - or the future of banking could lead to a "powered-by" environment where banks compete for business on a per-transaction basis. » Continue Reading
Shanghai SmartPay Jieyin Ltd., ("SmartPay") an electronic payment services provider in China, has announced the completion of a Series B round of equity financing. Under the terms of the financing, RRE Ventures, Evolution Capital, Lunar Group Capital and other existing shareholders will provide equity financing of approximately US$ 10 million. » Continue Reading
Visa Europe has announced the appointment of Mariano Dima as Executive Vice-President Marketing & Products -responsible for advertising, marketing, sponsorships and product development for Visa Europe. Dima was previously European Marketing Vice President for Levi Strauss & Co., based in Brussels. » Continue Reading
comScore Networks has released its estimates of consumer online non-travel (retail) spending at U.S. sites for the 2006 holiday season through December 15. During the first 45 days of the holiday season, total online retail spending reached $19.48 billion, marking a 25-percent increase versus the corresponding days in 2005. » Continue Reading
Ann Carrns reports for the Wall St. Journal about branch expansion plans being curtailed at Washington Mutual. According to Carrns, the "pace of openings has been scaled back, and it doesn't plan to enter new markets."
Barron's reports on research from Morgan Stanley about Safeway (from its analyst meeting on Tuesday of this week) discussing Safeway's Blackhawk Network subsidary. According to the report, Safeway estimates that Blackhawk will sell $1.6 billion in gift card value in 2006 and estimates that sales could grow to $10-11 billion in gift card value by 2009.
Sheila Riley reports for Investor's Business Daily about the international remittance market - as big banks are growing increasingly interested in this market. Riley quotes Celent analyst Dan Schatt who says "the big opportunity is for banks to basically take back a market that they should have more control over and be able to succeed in."
Standard Chartered and First Data Corp. have announced an agreement to jointly establish a new company to provide merchant acquiring services to merchants across Asia. » Continue Reading
Dave Birch writes about the recently announced Barclays dual-interface chip cards - containing both contact and contactless interfaces for communicating to acceptance devices. Dave will shortly be posting a podcast with Barclay's project head Richard Mould talking about this new program.
Aneace Haddad blogs about a recent letter to the editor that we noted here on Payments News - sent by Peter Madigan, Director of the Electronic Payments Coalition. » Continue Reading
Intuit and Electronic Clearing House Inc. have announced signing of a definitive agreement for Intuit to acquire ECHO for a total purchase price is approximately $142 million on a fully-diluted basis. » Continue Reading
Mary Cathe
