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December 31, 2006

2006 Payments Industry Highlights - A Year In Review

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.


December 30, 2006

A Look At SiGo

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."

MasterCard Reports Revised HSBC Services Agreement

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."

Credit Card Caution Flags

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.

December 29, 2006

Holiday E-Commerce Spending Up 26 Percent

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."


Update On PayPal's Virtual Debit Card Beta

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.

Kodak Launches Check 21 Remote Capture Solutions

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."


Investors Feel Good About Pay By Touch

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."

Former Credit Card Exec Fired By JC Penney

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.

December 28, 2006

Obopay Seeking VP Treasury Operations

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.


UK House Of Lords Committee Examines Personal Internet Security

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.

The Internet And American Express - A Case Study

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.


Gift Cards Not On Amazon's Best Seller List has announced its bestselling items for 2006 - and there's no mention of any gift cards on that list. Maybe next year?

ECB Updates European Payments Data In Blue Book Addendum

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.


A Look At ATMs In China

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.

December 27, 2006

An Update From Endpoint Exchange Network

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.


A Look At Cheque Imaging In Canada

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.

The Bank of Mom and Dad - CircleLending

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.


December 26, 2006

Bank of America Wins OBR Best of the Web for 2006 Award

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.

Retailers Unfazed By Contactless Security Concerns

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, PRBC Help Consumers Build Credit

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."


Visa USA Sees Disappointing Finish To Holiday Sales

James Covert reports for 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 Nilson Report - Issue 870

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).

New Consumer Handbook on Adjustable-Rate Mortgages

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.


Merchants Payments Re: Visa Check/MasterMoney Antitrust Litigation

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.

Ugly Credit Card Trends

Aleksandra Todorova writes for 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.

Credit Card Reform On Senate To-Do List

Sarah Kellogg reports for 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.

How To Establish Mobile Device Security

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."


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