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October 13, 2006

Glenbrook Payments Boot Camp Update

Glenbrook's Carol Coye Benson writes: "We just finished holding our 7th public "Payments Boot Camp". At this week's session we had a great and diverse group of payments professionals - including people from banks, payments providers, technology companies, eCommerce merchants, investment firms and law firms. We're always fascinated to watch the shifting topics which absorb the interest of the audience. This session the emerging infrastructure of the prepaid card industry was particularly a hot topic - who the big players are and how they fit into the value chain. Check to ACH conversion, check imaging, and "Check/ACH Convergence" made for a lively discussion (and lots of boxes and arrows!). More than in our earlier sessions, we had a group that already had a good understanding of PayPal and its business model - maybe it's time we move PayPal from our "Emerging Payments Systems" section into our discussion of "Core Payment Systems"! Our next Payments Boot Camp session is being held next month - November 7th and 8th - in Denver. Please think about joining us."

Opinion: Lessons Visa Can Learn From MasterCard's IPO

Eric Grover, a partner at Menlo Park-based Intrepid Ventures, writes a viewpoint column for the American Banker today about what lessons Visa can learn from MasterCard's IPO completed earlier this year - suggesting that "Visa can improve upon MasterCard's experience, particularly in dealing with legal liability and corporate governance, aligning the interests of managers and owners, presenting a cohesive global story, and differentiating its strategy from MasterCard's."

Doing Finance For Peace And Good

"The Norwegian Nobel Committee has decided to award the Nobel Peace Prize for 2006, divided into two equal parts, to Muhammad Yunus and Grameen Bank for their efforts to create economic and social development from below. Lasting peace can not be achieved unless large population groups find ways in which to break out of poverty. Micro-credit is one such means. Development from below also serves to advance democracy and human rights." The New York Times says "microcredit, also known as microfinance, is the practice of giving or loaning seed money for small businesses to people -- often women traditionally excluded from normal financial channels -- in villages or towns across the developing world, on the theory that economic strength in a country or region can be built from the grass-roots level up."

An Update On NTT DoCoMo's Felica-based Payments

Martyn Williams provides an update for InfoWorld on NTT DoCoMo's DCMX payment service in Japan - reporting that it has enrolled over 860,000 people to the service. "The system relies on a non-contact smart card platform developed by Sony Corp. called Felica. Payment is made by placing the phone close to a reader/writer terminal in participating stores. There are already around 60,000 such terminals in place and NTT DoCoMo expects this to more than double by April 2007."

NFC Payment: Can Operators And Banks Work Together?

Dan Balaban writes for Card Technology about near field communications technology for mobile payments - and asks whether this time the mobile network operators and financial institutions can find enough common ground to work together - saying "as the NFC payment pilots continue to launch and thoughts turn to possible rollouts, the oft- debated question of “who owns the customer” continues to rear up."

Debit Cards: Going Cashless, Not Clueless

Consumer Reports has some advice for consumers about using debit cards - saying "you should get the most out of it, understand the trade-offs, and be aware of the gotchas." Among the recommendations: only use debit cards with Visa or MasterCard logos (to minimize liability) and don't choose a bank or debit card on the basis of reward programs (because it could take years to actually benefit).

October 12, 2006

Harvard Business School Case On ING Direct

A colleague recently brought to our attention a Harvard Business School case written about ING Direct. The case (No. 9-804-167), written by James L Heskett, published in April 2004 and revised in May 2005, provides some fascinating insights into the evolution of this major direct online bank. What struck me in reading this case were the many "real world" issues that the US ING Direct management team were struggling with as they "needed to walk a fine line ... in communicating that ING Direct was an entrepreneurial, fast-growing, irreverent organization without going too far in contrasting it with the characteristics of its large, more traditional parent." If you've been interested in ING Direct's success, you'll definitely find this case makes very interesting reading.

PayPal's Online Merchant Network

PayPal has launched an Online Merchant Network site - "a place to get information, advice from seasoned merchants, and resources to help increase your profits." The Online Merchant Network's mission states "The goal of the OMN is to build an objective, open, and welcoming environment for the exchange of ideas about business. Although the OMN is hosted by PayPal, we encourage and welcome any healthy discussion about all payment providers, both pros and cons. And from time to time PayPal, as well as third-party contributors, will provide content about topics concerning online businesses. In essence, we're building the OMN to help businesses grow - and thrive."

PayPal Expands To 103 Markets, Adds 10 Currencies

PayPal has announced that it now supports payments in 10 new currencies, allowing customers to send, receive and hold funds in a total of 17 currencies worldwide.


International Prepaid Market Readiness 2006: Opportunities and Obstacles

Mercator Advisory Group has announced its first International Prepaid Market Readiness report that is designed to provide an overview of the "state of readiness" for prepaid adoption to assist firms assessing international activity.


Finpago, WageWorks Partner To Enable FSA Debit Card Use

Finpago has announced the availability of the FSAok Debit Substantiation service including Finpago’s FSAok Real-Time Eligibility Engine. According to the company, these services provide "the industry’s most comprehensive set of tools for generating and documenting consumer driven health care claims automatically and ensuring IRS compliance for the widest possible number of merchant categories. Through WageWorks' Health Care Choice card program, the services provide flexibility and convenience to flexible spending account account holders by automatically selecting prescription and over-the-counter medication purchases and submitting them for reimbursement."


Fair Isaac Sues Major Credit Reporting Agencies

Fair Isaac Corporation has announced that it filed a lawsuit yesterday in Federal Court in Minneapolis "alleging that the three national credit reporting agencies and a jointly owned entity have violated antitrust laws and engaged in unfair competitive practices." Fair Isaac alleges that "Equifax Inc., Experian Information Solutions Inc., TransUnion LLC and VantageScore Solutions, LLC, through their launch and marketing of the VantageScore credit scoring model, are jointly engaging in unfair and anti-competitive practices that harm the FICO credit score brand and goodwill that Fair Isaac has spent 50 years creating."


More On GAO Study Of Credit Card Fees

Marcy Gordon writes for the Associated Press about yesterday's release by the Government Accountability Office of a study into the fees, interest rates and disclosure practices of 28 popular credit cards. Gordon reports on the findings that consumer disclosures explaining fees have "various weaknesses that reduced consumers' ability to use and understand" them. The GAO found that "the disclosures are written in language that is hard to understand, bury important information in text, fail to put related material together and use small typefaces."

JCB's Amsterdam NFC Mobile Payment Pilot

JCB, in cooperation with CCV Holland B.V., Gemalto, KPN, Nokia, NXP Semiconductors, PaySquare, and ViVOtech, has announced that the launch of Mobile J/Speedy, a Near Field Communication (NFC) mobile payment pilot project in Amsterdam. Following initial trials in September, the pilot service is now being rolled out to a broader group of JCB's customers. The project marks Europe's first contactless international credit payment scheme using a mobile phone with an NFC chip.


Prepaid Cards Push Profits

Julie Crenshaw writes for Convenience Store Decisions about a study done by Clickin Research for the NACS Coca-Cola Leadership Council into convenience store customer payment preferences. According to Crenshaw, "Payment options help forge retailers' relationships with their customers by making transactions more convenient. Whether closed loop merchant cards good only for gas and in-store purchases or branded, reloadable debit cards good anywhere the brand is displayed, prepaid cards are increasing consumer loyalty and boosting customer visits."

Banks Push Harder to Get You to Switch

Jane J. Kim reports for the Wall St. Journal about how some banks are making it easier for new customers to convert accounts - including helping make the conversion.

October 11, 2006

More Reaction to Visa Reorganization and IPO Plans

In a story titled "Visa IPO Should Speed Innovations In Payments", Robin Sidel writes for the Wall St. Journal's Thursday editions about Visa's announcement today that it will reorganize itself into a new company, Visa Inc., and prepare for an IPO. Sidel commented that "after years of battling MasterCard at the cash register, Visa will now find itself competing for investors, acquisitions and partners, as well as new products and services."

In tomorrow's New York Times, Eric Dash and Michael J. de la Merced report on Visa's plans saying that "Visa hopes to streamline its operations, invest more nimbly in emerging markets and new payment technologies like those using cellular phones, and insulate its member banks from potentially billions of dollars in legal damages over antitrust and unfair-pricing claims brought by merchants."

GAO Recommends More Effective Consumer Credit Card Disclosures

The US Government Accountability Office (GAO) has released a new report titled "Credit Cards: Increased Complexity in Rates and Fees Heightens Need for More Effective Disclosures to Consumers" (PDF) that finds that "consumer disclosures by the largest [credit card] issuers have various weaknesses that reduced consumers’ ability to use and understand them." The report recommends that the "Federal Reserve should ensure that such disclosure materials more clearly emphasize those terms that can significantly affect cardholder costs, such as the actions that can cause default or other penalty pricing rates to be imposed."


Consumer-Driven Healthcare Creating Need For Smart Medical Debit Cards

From a press release by HealthLeaders-InterStudy: "How futuristic is it to believe that one swipe of a debit card would reveal your identity, your health record, and your health plan coverage and eligibility information? Not as far off as you think."


Private-Label Credit Card Receivables To Reach $130 Billion by 2010

According to market research from Packaged Facts, the private-label credit card market continues to
soar despite repeated predictions of decline- reaching $106 billion in receivables in 2005, the market is projected to reach $131 billion by 2010. The research predicts that "the market will continue to grow steadily at a compound annual rate of 4.4% over the next four years as branded cards -- everything from gas and home-store cards to fashion and boutique cards -- continue to find favor with consumers, even amid the glut of other payment options."


First Data, Austin Logistics Launch Payments Risk Management Solution

First Data Corp. and Austin Logistics have announced they are working together to provide a new payment risk management offering for credit card issuers, NSF Solution, following the integration of Austin Logistics’ NSFGuard payment risk solution with First Data’s Payment Defender risk decisioning platform. The solution is intended to help issuers assess when payments received should be credited against an outstanding balance based upon the potential risk of non-sufficient funds.


UK: Credit Card Spending Levels Off, Repayments Rise

APACS has released its latest review of the highlights and trends of plastic card use in the UK saying the data reveals a shift in cardholder behavior – with spending on credit cards is levelling off while credit cardholders are concentrating on making repayments. APACS reports that 59 percent of cardholders are now paying off their credit card bill in full each month.


AirTran Airways Accepts Bill Me Later

I4 Commerce has announced that AirTran Airways is offering customers the ability to pay with Bill Me Later.


Visa Announces Global Restructuring, Upcoming IPO

[Update: On Friday, November 9, 2007, Visa Inc. filed its S-1 Registration Statement for an initial public offering.]

Visa has announced that it intends to restructure its organization in order to create a new public global corporation called Visa Inc. As a part of this restructuring, Visa Europe will remain a membership association, owned and governed by its European member banks, and become a licensee of Visa Inc. Visa says it "expects the proposed restructuring will best position the company to meet the evolving needs of its customers and will accelerate its growth by improving organizational efficiency, addressing certain legal claims that exist in some markets, and increasing access to capital."


BankServ Joins SWIFT As Corporate Member

BankServ has announced that it has applied to become a member of the SWIFT banking network, making the San Francisco-based financial technology firm the first accredited SWIFT Service Bureau to join the network as a corporate member. The company plans to become an active corporate member of SWIFT by January 2007. [Editor's note: One wonders when one of the card associations might open up membership to non-bank corporations - as SWIFT is apparently doing here?]


Bank of America Announces Free Online Equity Trades

Bank of America has announced that its primary retail brokerage company, Banc of America Investment Services, Inc. (BAI), will offer free ($0) online equity trades (up to 30 per month) for self-directed investors who maintain a combined balance of $25,000 or more in Bank of America, N.A. deposit accounts. The offering is available immediately in the northeast and expected to roll out nationwide through the spring of 2007. A few years ago, Bank of America was the first major bank to move to free online bill payment services for its customers.


CircleLending Seeks Product Manager, Mortgages

CircleLending, a specialty loan administration company, is seeking a Product Manager, Mortgages. Headquartered in Waltham, Massachusetts, CircleLending manages “person to person” loans and mortgages between relatives, friends and other private parties.



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