In the UK, Tesco has announced that it has reached an agreement with The Royal Bank of Scotland to buy from RBS its 50% shareholding in Tesco Personal Finance Group Limited for £950 million. Tesco says it "will enable Tesco over time to extend its financial services business from a collection of popular financial products to that of a full service retail bank offering more choice, innovation and value to customers, and better returns to shareholders."
MasterCard has reported financial results for the second quarter of 2008. MasterCard's worldwide purchase volume during the quarter rose 14.0% to $493 billion and its gross dollar volume increased 12.8% to $655 billion. Transactions processed grew 13.6% to 5.2 billion. MasterCard reported 951 million MasterCard cards issued, up 11%. Net revenue for the second quarter of 2008 was $1.2 billion, up 25.0%. Pricing changes contributed approximately 5 percentage points of the net revenue growth. A webcast and accompanying presentation are available online.
We have received news of the following recent management changes:
Last week in Seattle, the Federal Trade Commission and the Technology Law and Public Policy Clinic at the University of Washington hosted a Town Hall meeting to explore the growth of contactless payment systems and their implications for consumer protection policy. A webcast and transcripts of the presentations are available online. This agenda contains links to several of the presentations.
Yesterday, we noted that Amazon Payments had launched a new, fully featured ecommerce checkout service called Checkout by Amazon along with a new, payments-only service called Amazon Simple Pay. In this post, we take a deeper look at Amazon Simple Pay - which enables third-party web sites to simply enable existing Amazon.com customers to pay using their Amazon payment information.
Visa has announced the extension of its Visa MoneyTransfer service to millions of cardholders. "With the launch of Visa Money Transfer in Indonesia and the expansion of a program in Singapore, Visa is making it easier and more secure for people in 13 countries in Europe, the Middle East and Asia to send and receive funds."
U.S. Senate Small Business and Entrepreneurship Committee Members Tom Harkin (D-Iowa), Olympia J. Snowe (R-Maine), and Benjamin L. Cardin (D-Maryland) have requested that "the Government Accountability Office (GAO) investigate the structure of credit card interchange fees, which are used to reimburse credit card companies for processing transactions. While credit card companies contend that consumers and businesses receive great benefits from the current system, merchants are concerned that card issuers are pushing the cost of credit card incentives and rewards programs onto businesses and consumers through interchange fees. To examine both sides of the issue, the Senators asked GAO to take a balanced look at whether fees are properly disclosed, how the fees are set, and the level of competition in the marketplace."
Visa Inc. has reported third quarter financial results - reporting that payments volume grew 19% to $652 billion and total volume, including cash, grew 22% to $1.0 trillion. Cards issued grew 14% worldwide to 1.6 billion and payments transaction volume grew 15% to 10.7 billion transactions. Total processed transactions were 9.5 billion, up 13%. A webcast and a presentation on the quarterly results are available online.
Mercator Advisory Group has published a new report titled "Merchant Acquiring in the United States 2008: Birth of the Perfect Storm". Mercator talks about three major events influencing the US merchant acquiring business: 1) Legislation - interchange legislation being considered in Congress, 2) Dissolution - the split of Chase Paymentech between First Data Corp. and JP Morgan Chase, and 3) Recession - the potential effects of a slowdown in the US economy.
Wells Fargo has begun rolling out its new vSafe service to customers in 18 states – Arizona, Idaho, Illinois, Indiana, Iowa, Michigan, Minnesota, Montana, Nebraska, Nevada, New Mexico, North Dakota, Ohio, South Dakota, Texas, Utah, Wisconsin, Wyoming – and the Greater Sacramento area. The vSafe service was announced in March and has been undergoing internal testing since that time. With the new service, "customers can protect and easily access electronic copies of financial, legal and personal files, such as loan and tax documents, wills, passports, medical records, photographs and more, in a safe online location."
Eric Konigsberg and Sewell Chan report for the New York Times on failures on Monday and Tuesday of New York City MetroCard machines that were unable to handle credit and debit cards. They write: "The malfunction raised questions for riders about not only the efficacy of the MetroCard machines but also the larger notion of the American commercial culture’s movement toward an increasingly cashless existence." The outage also provoked this New York Times editorial complaining about the overall design of the MetroCard machines.
In a comprehensive article, Bank of America's Lance Drummond writes for Bank Systems & Technology about the lessons learned during Bank of America's rollout of mobile banking. Earlier this year, the bank announced it had enrolled over 1 million customers for its mobile banking services. Drummond notes that "until mobile banking transforms into customers authorizing mobile payments and interchange via their wireless devices, we might not see significant revenues being generated."
Javelin Strategy & Research has released a report on credit cards and consumer spending finding that Americans are cutting back on credit card use and having difficulty paying off balances. Javelin found "conservative spending behaviors as a result of the economic downturn and the ramifications of the mortgage crisis, soaring fuel costs and rising food prices."
Amazon Payments has launched both Checkout by Amazon, a complete ecommerce checkout solution including payments, shipping, sales tax, promotions, etc., and Amazon Simple Pay , a set of payment-only products that allows websites to enable their customers to use their Amazon.com payment information for payments. A comparison chart shows the key differences between Checkout by Amazon, Amazon Simple Pay, and Amazon's Flexible Payment Service.
The just passed H.R. 3221 - the Housing and Economic Recovery Act of 2008 - includes provisions requiring merchant acquirers and "third party settlement organizations" to provide annual reports to the IRS on the amounts paid to payees in settlement of payment card or third party network transactions. The bill passed the Senate on Saturday and is expected to be signed into law by President Bush shortly.
In an article titled "Are Airline Kiosks Safe?", MSNBC's Bob Sullivan writes in his latest edition of The Red Tape Chronicles about the possible theft of credit card data from airline check-in kiosks at the Toronto Airport.
Bill Me Later has announced a strategic partnership with Universal Air Travel Plan (UATP), the airline-owned corporate travel payment network. The partnership enables airlines to integrate Bill Me Later by utilizing their existing UATP Network for processing Bill Me Later transactions.
Consumer Action has released its annual 2008 Credit Card Survey, the latest annual survey that examined 41 cards from 22 financial institutions in the United States. The survey identified several credit card issuer practices that Consumer Actions says "put even good consumers at risk: Any time, any reason changes in terms; Reductions in cardholder’s credit limits; Default rate “purgatory” — once in, you may never get out."
New research from TowerGroup titled "Check, Please! Checks Still the Most Common Noncash Payment Type in the United States" concludes that while the rapid adoption of electronic payments is driven by the desire of payers (both businesses and consumers) for faster, easier, and more efficient ways to make purchases and pay bills, B2B payments remain the last bastion of checks - making up nearly 60 percent of US check dollar value. These persistent challenges in making and receiving electronic payments are a main reason why average US check values are increasing faster than any other payment type, even as the numbers of checks themselves decline.
"New competitors are taking on Visa and MasterCard’s interchange pricing scheme as both firms have been busy defending themselves against claims of duopoly pricing. The potential for competitive alternatives may never be better. Are card issuers and the networks (primarily Visa and MasterCard) vulnerable to competitive card-based alternatives? How will this story play out?"
Here's a review of this week's top stories on Payments News. If you missed it, last week's Weekly Wrap is here. Back to the future!: for fun, click for this same week's activity a year ago here on Payments News!
Looking for more payments reading? Checkout our Other Payments and Banking Blogs page for more from the blogosphere about the worlds of payments and banking.
Quote of the week:: From TranSys, the operator of London's Oyster Card system: "The technical problem which affected Oyster readers at London Underground stations has now been resolved and all stations are all fully functional. The problem affected pay as you go users only. Steps are being taken to ensure that this does not happen again and we will undertake a full root cause analysis. TranSys regrets any inconvenience caused to Transport for London’s customers."
You can find all of our Weekly Wrap summaries in the Payments News Weekly Wrap Archive. They're published every Saturday and look back at the highlights of the week's news. Please share on how we can improve the Weekly Wrap!