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« March 4, 2007 - March 10, 2007 | Main | March 18, 2007 - March 24, 2007 »

March 17, 2007

Bank of America's Back Office Conversion Solutions

Bank of America has announced that its suite of check transformation tools will allow retailers and other business clients to take full advantage of the new Back Office Conversion rule that took effect on March 16, 2007. The Back Office Conversion (BOC) rule was issued by NACHA to allow businesses to collect a check written at the checkout counter and convert it in the back office into an electronic form.

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Headline News - March 17, 2007

Note: Throughout the day, as Payments News happens, this post is updated. For job opportunities available for payments professionals, visit PaymentsJobs.com. Employers looking to hire payments professionals can post their job openings there as well.

March 16, 2007

FDIC Comments on Wal-Mart ILC Withdrawal

FDIC Chairman Sheila C. Bair issued a statement earlier today following Wal-Mart's decision to withdraw its bank application. According to Bair, "Wal-Mart made a wise choice. This decision will remove the controversy surrounding their intentions. They don't need an ILC to play an important role in expanding access to financial services, they can do so by partnering with banks and others. We look forward to working with Wal-Mart in meeting the need for low-cost financial services across all populations."

Priceless? The Competitive Costs of Credit Card Merchant Restraints

Adam Levitin has written a second paper examining rewards cards titled "Priceless? the Competitive Costs of Credit Card Merchant Restraints".

From the abstract: "Credit card transactions cost American merchants six times as much as cash transactions. Why, then, do consumers pay the same price for purchases, regardless of the means of payment? The answer lies in a set of credit card network rules known as merchant restraints. Merchant restraints forbid merchants from surcharging for credit and discounting for non-cash payments, while the framing effect, a well-documented cognitive bias, makes discounting for cash ineffective. Merchant restraints thus prevent merchants from pricing according to consumers' payment method and from signaling to consumers the costs of different payment methods. Accordingly, consumers never internalize the costs of their choice of payment system."

Priceless? The Social Costs of Credit Card Merchant Restraints

Aneace Haddad blogs about Adam Levitin's new paper titled "Priceless? The Social Costs of Credit Card Merchant Restraints".

From the abstract: "Who pays for credit card rewards? This article demonstrates that credit card rewards programs are funded in part by a highly regressive, sub rosa subsidization of affluent credit consumers by poor cash consumers. In its worst form, food stamp recipients are subsidizing frequent flier miles. The subsidization is created by a set of credit card network rules called “merchant restraints” that combines with a cognitive bias known as the framing effect to limit merchants' ability to price payments systems according to cost."

Wal-Mart Withdraws ILC Charter Application

Wal-Mart Financial Services President Jane Thompson released the following statement today: “We notified the FDIC today that Wal-Mart has withdrawn the application we made in July 2005 for an Industrial Loan Company (ILC) charter. This action follows January’s FDIC decision to extend the moratorium on a number of pending ILC applications. Unlike dozens of prior ILC applications, Wal-Mart’s has been surrounded by manufactured controversy since it was submitted nearly two years ago. At no stage did we intend to use the ILC to establish branch banking operations as critics have suggested -- we simply sought to reduce credit and debit card transaction costs. Wal-Mart’s financial services already save customers over $245 million a year so they can live better. Since the approval process is now likely to take years rather than months, we decided to withdraw our application to better focus on other ways to serve customers. We fully intend to continue to introduce new products and services that champion those who deserve convenient, lower priced financial services.”

Wells Fargo Adds MySpace.com Profile for Stagecoach Island

We heard yesterday about Wells Fargo's new MySpace profile for Cassie Hill, the bank's Stagecoach Island ambassador avatar. Wells Fargo's Stagecoach Island is an online virtual world where users can have fun, socialize and at the same time learn a bit about finance, such as saving money, earning interest, etc. By having a MySpace profile for Cassie, the bank hopes to drive increased awareness and usage of Stagecoach Island. Wells Fargo seems to recognize that participation in social media is more than hosting your own blogs, but also includes reaching out to networks of all kinds to make connections and to engage with the public.

Headline News - March 16, 2007

Note: Throughout the day, as Payments News happens, this post is updated. For job opportunities available for payments professionals, visit PaymentsJobs.com. Employers looking to hire payments professionals can post their job openings there as well.

March 15, 2007

Kmart Settles With FTC Over Gift Card Sales Practices

Earlier this week in its first law enforcement action involving gift cards, the Federal Trade Commission announced that "Kmart Corporation has agreed to settle Federal Trade Commission charges that it engaged in deceptive practices in advertising and selling its Kmart gift card. As part of the settlement, Kmart will implement a refund program and publicize it on its Web site."

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Contactless Infrastructure, Services Spending to Reach $800 Million by 2011

In a new report titled "RFID Contactless Payments", ABI Research is forecasting that spending on the contactless hardware, software, and services market will reach $800 million by 2011, up from $260 million in 2006. According to ABI, "because they speed retail payments and public transportation, contactless payment deployments are quickly expanding around the world. But these two largest contactless applications remain mostly separate, limiting the uptake of contactless cards and delaying the transition of contactless payment technologies into mobile phones."

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Small Business Payments Study Reveals Criticality of Payments Issues

Dove Consulting has released results of its 2006/2007 Study of Small Business Payment Preferences concluding that payments are a critical issue for small businesses. The study was sponsored by CheckFree, Discover, First Data Corporation, and NEACH.

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Visa Signature Preferred Cards

Robin Sidel reports for the Wall St. Journal on plans by Visa to introduce a new high-end "Signature Preferred" Visa card specifically aimed at consumers with the highest card spending. The card will have a higher interchange fee paid to issuers by merchants than the current Visa Signature cards - averaging 2.27% according to Sidel's report.

Wal-Mart and Banking

While it continues to wait for regulatory and legislative action to decide the fate of its application for an Industrial Loan Corporation charter in Utah, both the New York Times and the Wall St. Journal today are reporting on changes that Wal-Mart reportedly has made recently to the leases it has with a number of banks currently operating in its stores. According to Damian Paletta writing for the WSJ, the changes to the lease language appear to give Wal-Mart an "explicit right to offer mortgages, home-equity lines of credit and consumer loans."

General-Use Prepaid Cards: The Path to Gaining Mainstream Acceptance

The Payment Cards Center of the Federal Reserve Bank of Philadelphia has published a discussion paper by James C. McGrath titled "General-Use Prepaid Cards: The Path to Gaining Mainstream Acceptance" (PDF). According to the author, "this paper argues that the increased flexibility and more complete functionality [of "open loop" prepaid cards] carry with them substantial new costs, resulting in a “cost hurdle” that must be overcome in order to create economically viable business models."

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Grameen America Launches with Philliou As CEO

Philip J. Philliou has been named CEO of Grameen America, Inc., a for-profit microfinance company that "provides small loans, savings programs, and other services to poor people in the United States."

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Cash - A Look At Japan

On the Digital Money blog, Dave Birch digs into the impact that contactless mobile payments are having on the levels of cash in circulation in Japan. "The Feds say that the Bank of Japan reported that the total amount of cash in circulation has started to fall for the first time on record."

Headline News - March 15, 2007

Note: Throughout the day, as Payments News happens, this post is updated. For job opportunities available for payments professionals, visit PaymentsJobs.com. Employers looking to hire payments professionals can post their job openings there as well.

March 14, 2007

Netbanker Reports from the Mobile Payment Forum

Netbanker's Jim Bruene reports on his reactions to yesterday's public session at the Mobile Payment Forum's Spring Member Meeting being held in San Diego - saying that "despite being a payments forum, most of the talk centered around online banking (Firethorn, ClairMail, mFoundry, Sapphire), mobile advertising (Erico), and ecommerce (eBizMobility)."

Will Canada's EMV Migration Push US Banks To Issue Chip Cards?

Andy Williams reports for CR80 News about Canada's planned migration to EMV chip cards - and asks whether this will accelerate a migration to chip cards in the US.

ProfitPoint Raises Venture Financing

ProfitPoint, a gift and loyalty card program provider, has announced it has raised $6 million in equity capital led by New Spring Ventures II L.P., and joined by Clayton Associates.

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First Data International, NCS Partner for Mobile Payment Services

First Data International has announced it is partnering with NCS network and communication service Deutschland GmbH & Co. KG (NCS), a mobile payment provider, to offer mobile payment and e-commerce services to merchants and consumers globally.

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Pay By Touch Commissions Saatchi & Saatchi Lovemark

Pay By Touch has announced that it has formed a partnership with Saatchi & Saatchi Worldwide to provide Pay By Touch with strategic and creative counsel to build a global Lovemark.

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Payments Fraud a Top Concern for Financial Professionals

According to a payments fraud study (PDF) released by the Association for Financial Professionals (AFP), a majority of organizations are victims of payments fraud and the incidence of fraud continues to climb. Nearly three-quarters of organizations experienced attempted or actual payments fraud in 2006, up from 68 percent reported in 2005.

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UK Card Fraud Losses Decline

APACS reported today that the 2006 card fraud figures for the UK show that total card fraud losses fell by three per cent in the past year to £428m – a decrease of nearly £80m over the past two years. Card-not-present fraud losses have increased by 16 per cent over the last two years and now account for just under 50% of all card fraud losses.

Citibank Offers American Express Gift Card

American Express and Citibank have announced an agreement for Citibank to sell the American Express Gift Card in more than 980 of its Citibank retail Financial Centers nationwide. American Express says that the agreement with Citibank is its first with a national bank.

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March 13, 2007

A First Look at GratisCard

Brian Grow writes for Business Week about GratisCard - backed by former AOL Chairman Steve Case and scheduled for an April launch. According to Grow, GratisCard intends to stimulate merchant acceptance by charging only 50 basis points in merchant acceptance fees. Whether they can incent bank issuance at that level remains to be seen.

Robin Sidel reports for the Wall St. Journal on Gratis - quoting Jason Hogg, president and chief executive of GratisCard LLC, as saying that "the current [payment card] infrastructure is inefficient and costly."

For more information, see the GratisCard web site.

NFC Meets Money: Basics of Mobile Transactions

Jack Shandle writes for Wireless Net DesignLine about near-field communications (NFC) technology - saying that the "mobile-phone-based financial payment infrastructure being planned around Near Field Communications (NFC) technology will make it a "must have" technology in future wireless products."

Intuit Says It Is Changing the Face of Online Banking

Following its acquisition of Digital Insight by Intuit five weeks ago, they've announced Personal FinanceWorks and Small Business FinanceWorks - saying these two products are "expected to lead the next generation of online banking."

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Discover Introduces Discover Motiva Card

Discover Financial Services has announced the launch of the Discover Motiva Card - describing it as "the credit card that gives consumers cash rewards for good credit management. The Discover Motiva Card is designed for consumers who carry a balance and often feel underappreciated by card companies rather than rewarded for being some of their best customers. They believe current rewards programs focus on the biggest spenders and therefore don't meet their needs."

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