Aite Group has announced a new report titled "Card Networks' Rebates and Incentives" that "addresses the strategic implications of card networks' rebates and incentives for industry stakeholders, including details concerning networks themselves, issuers, merchants, acquirers and regulators."   » Continue Reading

Aite Group has published a new report titled "The Future of Card Networks: Gauging Battle-Readiness for a Post-Visa IPO World" that "considers how the world will look in a post-Visa IPO world, in which the four major card networks, Visa, MasterCard, American Express and Discover, are publicly traded companies."   » Continue Reading

The eFinancial Enablers Council (eFEC), a roundtable of CEOs and division heads of leading Internet banking and payments providers, has announced the election of David S. Fortney as chairman. Mr. Fortney represents Metavante Corporation, where he serves as a senior vice president heading Metavante’s electronic presentment and payments business.   » Continue Reading

The days of merchant-subsidized credit card rewards programs, rapid increases in interchange fees, and confusing fee structures for credit card purchases are numbered, according to new research by Diamond Management & Technology Consultants.   » Continue Reading

BITS has released a 10 year retrospective titled "Decade of Difference" that takes a look back at the contributions made since BITS was founded in 1996.

The Mobile Marketing Association has announced that it has launched an m-Commerce Committee to develop best practices, standards and other guidelines for mobile-commerce initiatives. The committee will serve as a consortium between wireless carriers and key players in the m-commerce ecosystem, including brands, retailers and media. The committee's goal is to create a framework that provides consumers with a simple, consistent, user-friendly m-commerce experience across the industry.   » Continue Reading

The Network Branded Prepaid Card Association (NBPCA), a non-profit, inter-industry trade association created to advance the success of network branded prepaid cards, has launched its first membership year with twenty-eight members, all leaders in the prepaid card industry. The NBPCA has developed a three-year business plan with specific deliverables for each year, the goal being to materially enhance the business environment for network branded prepaid cards.   » Continue Reading

The September 2006 issue of the Harvard Business Review has an article by David Yoffie and Mary Kwak titled "With Friends Like These - The Art of Managing Complementors" that's recommended reading. While this article is about the tech industry, the parallels to the US card payments world are striking.   » Continue Reading

The Smart Card Alliance has announced its annual conference will be held October 3-6, 2006 at the Hyatt Regency La Jolla in San Diego. The theme of this year's conference is "Preparing the Way for a Smart Future".

Aneace Haddad, founder and chairman of payment software company Welcome Real-time, posts an opinion piece on his blog titled "Has interchange hype brought us to the brink of a surcharging sea change?" in which he says "It would be more effective for banks to shift their frustration with merchants away from litigation and channel it into making payment cards more valuable for merchants."

The Journal of Financial Transformation's September 2006 issue contains an article by Adam Levitin - an attorney in Wilmington, Delaware - titled "The Merchant-Bank Struggle for Control of Payment Systems" (PDF). His conclusion: "The ultimate outcomes of these developments are uncertain, but one thing is not: the payments industry will look very different in a decade."   » Continue Reading

Marcia Vickers writes for Fortune about the future of the card associations - MasterCard and Visa - and asks whether this is the "end of a long, golden age for the two card behemoths" on the cusp of MasterCard's upcoming initial public offering.

A new working paper titled "The Future of Charge Card Networks" (PDF) by authors Robert E. Litan and Alex J. Pollock has been published by the Brookings Institution.

"At the end of the day, therefore, if none of the major scenarios or alternatives to the status quo is likely to produce significant benefits to consumers, as a class, one wonders what all of the controversy is about. It is a legitimate question."   » Continue Reading

Bloomberg reports on a US Supreme Court decision today that affirmed that "joint ventures have broad power to set prices without violating U.S. antitrust laws." The case, TEXACO INC. v. DAGHER ET AL (PDF), involved oil company joint venture pricing decisions.   » Continue Reading

Counsel for a group of merchants that has sued all the major credit card companies for antitrust violations has announced that, following negotiations, Discover has agreed to drop its "No Surcharge Rule'' and, consequently, that Discover would be dropped from the antitrust class action currently pending in a Brooklyn, NY federal court before District Judge John Gleeson.   » Continue Reading

[Update - October 11, 2006: Visa this morning announced plans to reorganize and, eventually, to pursue an IPO].

James Kelleher reports for Reuters on whether Visa's in any hurry to follow MasterCard in going public.   » Continue Reading

Visa USA Executive Vice President William M. Sheedy pens an op-ed column for the Washigton Times on "litigious merchants", particularly those in the fuel industry advocating new economics for payment card acceptance.   » Continue Reading

The Twin Cities Pioneer Press reports that MasterCard is requesting the disqualification of Minneapolis law firm Robins, Kaplan, Miller & Ciresi from a group of antitrust suits "because one of the firm's partners investigated MasterCard while he was a Justice Department lawyer."   » Continue Reading

MasterCard and Peppercoin have announced signing a Letter of Intent towards forming an alliance to accelerate card usage for small payments at the physical point of sale and online.   » Continue Reading

MasterCard this morning has filed an amended S-1/A Registration Statement with the SEC.   » Continue Reading

MasterCard International, Keycorp, Hitachi and Oak Hill Venture Partners have announced the formation of a new company to expand the MULTOS smart card platform.   » Continue Reading

The Alliance for Affinity Security has announced its launch focusing on administering new affinity programs designed to encourage the adoption of employer group health savings accounts (HSAs) and other defined contribution health care accounts, such as flexible spending accounts

Attempting to address the nature of competition between card schemes as it relates to the level of interchange fees, the Payments System Board of the Reserve Bank of Australia has announced a revised Standard to apply to the setting of interchange fees in the designated Bankcard, MasterCard and Visa credit card schemes in Australia.

The Economist Intelligence Unit has announced a new white paper sponsored by Visa International that assesses the
evolution of electronic payments systems in the six largest Latin American countries, as well as prospects for overcoming obstacles to full modernization. The study found that across the region collaboration between governments and the financial services industry has led to greater penetration of electronic payment products.

The Blue Cross and Blue Shield Association (BCBSA) and Visa USA have announced an agreement to support participating Blue Cross and Blue Shield companies nationwide in offering their members co-branded debit cards to pay for healthcare related expenses.   » Continue Reading

Visa International has released a global contactless payments specification.

MasterCard yesterday filed an amended S-1 registration with the SEC. Among the changes included in the amended version were the naming of additional investment bank underwriters (adding Citigroup, HSBC, and JP Morgan Chase as joint bookrunnners to Goldman, Sachs who is acting as both joint bookrunner and sole global coordinator) and the disclosure of a Consumer Cards Incentive Agreement signed in April of this year with MBNA. In June, Bank of America announced plans to acquire MBNA.

Stuart Elliott reports for the New York Times on yesterday's announcement by Visa USA that it is switching creative advertising agencies from its agency for the last 20 years, BBDO Worldwide, to TBWA/Chiat/Day. Both agencies are part of the Omnicom Group.   » Continue Reading

Eileen Alt Powell reports for the AP on two new class action lawsuits filed today against Visa USA, MasterCard Inc. and a number of major banks over interchange fees. The cases were filed by the American Booksellers Association and the National Grocers Association and several of its members, including Affiliated Foods Midwest, Coborn's Inc., D'Agostino's Supermarkets and the Minnesota Grocers Association.   » Continue Reading

Convenience Store News reports on a Nov. 10th amicus brief filing with the US Supreme Court by the Food Marketing Institute urging the court to reject an invitation from Visa to "create an antitrust safe harbor" regarding interchange fees. The complete brief (PDF) is available online on the FMI web site.

MasterCard and Travelex have announced a new turnkey prepaid travel card program enabling MasterCard banks to offer prepaid, reloadable MasterCard branded cards as a "more secure and convenient alternative to travelers cheques and cash."

CIO Today interviews John Partridge, president and CEO of Inovant LLC, Visa's global IT organization.

"When Visa updates VisaNet, it's like modifying a 747 engine while the plane is in the air and full of passengers," said Partridge. "The margin of error is zero."

Visa has announced a new contactless chip solution that aims to improve the business case for chip technology by making cards, terminals and personalization solutions more cost effective to financial institutions, merchants and consumers.   » Continue Reading

MasterCard has announced the launch of Debt Know How, a consumer education campaign designed to "empower and educate those in debt with free, easy-to-understand debt management tools."   » Continue Reading

Christian Sylt profiles for the UK's The Independent Visa International CEO Christopher Rodrigues.

Rodrigues is clear about what is driving Visa's growth: "It's growing at such a rapid rate because what was originally thought of as a credit card is now seen as an electronic payment system," he says.

Visa USA announced this morning plans to change the composition of its board of directors by having a majority of the board made up of independent directors. Of 17 Visa USA board seats, eight will be held by independent directors, seven by financial institution directors, and two non-voting Visa management directors. Visa said the change requires member approval and is expected to take nine to twelve months to implement.

"In light of the dynamic changes taking place in the payments industry, the Visa USA board of directors and Visa's management team believe the time is right to add independent directors to the board," said John Philip Coghlan, President and CEO of Visa USA.

"Visa and our stakeholders will benefit from the wider range of talent and diverse experience that independent directors will bring to the boardroom as they help shape the association's growth strategies. Independent directors will generate added confidence in the organization's decision-making and will ultimately strengthen Visa's position with regard to legal issues concerning the impartiality and autonomy of directors.

MasterCard has announced third quarter financial results with revenue for the third quarter of 2005 growing 18.6% to $792 million with its net income growing 8.2% to $106 million as compared to the same period in 2004. Details are available in a MasterCard 10-Q report filed today with the SEC.

"We are achieving success by implementing our customer-focused strategy globally and delivering innovative products and value-added processing, information and related services," said Robert W. Selander, president and chief executive officer.

"We believe the trend within the global payments industry of moving away from paper-based forms of payment such as cash and checks toward electronic forms of payment creates opportunities for continued growth in our business."

MasterCard has reported results for the third quarter with gross dollar volume on MasterCard-branded cards up 12.5 percent from the same quarter last year to 4.9 billion transactions and $424.4 billion.

“The strength of the MasterCard brand, and our portfolio of innovative payment solutions, continue to resonate around the globe, as illustrated by our operating performance this quarter,” said Alan Heuer, MasterCard's chief operating officer.

Visa USA has announced a new strategy to accelerate Visa card acceptance and consumer usage at traditionally cash-heavy, smaller ticket businesses.

"Consumers clearly expect more from their payments. From coffee to movies, consumers choose their cards over cash because of the ease, security, and rewards they offer," explains Elizabeth Buse, executive vice president, Product Development and Management, Visa USA.

"Our initiative will grow preference for Visa payments over paper by making checkout faster, offering consumers an undisputed convenience and delivering bottom-line value to merchants."

Terry Milholland was appointed Chief Technology Officer of Visa International in May 2005. The current edition of The Visa Quarterly includes an interview with Milholland.

Q. Why did you choose to join Visa International?

At its core, Visa is a technology company. Everything Visa does, everything that is conveyed through its name, relies on the VisaNet processing system operating flawlessly and securely. Merchants, cardholders and even government agencies have come to rely on the 99.999% uptime of VisaNet–our processing network. That is an amazing accomplishment–every minute of every day, in nearly every corner of the world. And, I think it’s an incredible opportunity to help lead the teams that make it possible.

MasterCard has filed a lengthy definitive proxy statement with the SEC in preparation for a special stockholders' meeting scheduled for November 28 where existing shareholders will vote to approve MasterCard's plans to reorganize and sell a portion of its equity to the public.

Visa USA has announced its retail predictions for the 2005 holiday season.

Despite recent natural disasters and increasing energy costs, Visa USA's economist, Wayne Best, predicts that the 2005 holiday season in the United States will be moderate to strong, particularly as wage and income growth is expected to continue through the end of the year.

Mike Langberg reports for the San Jose Mercury News on Visa's risk management technologies.

Nancy Hilgers, vice president of risk for Visa U.S.A., said Advanced Authorization goes beyond individual transactions to monitor what's happening across accounts.

The UK's Office of Fair Trading has issued a statement of objections against Visa and its members regarding its domestic multilateral interchange fee (MIF).

The OFT said it is of the view that "the collective agreement between Visa and its member banks on the interchange fee charged between card issuing banks and merchant acquirers on Visa card transactions taking place in the UK restricts competition and infringes Article 81 of the EC Treaty and the Chapter I prohibition of the Competition Act."

The OFT believes that, like the MasterCard MIF agreement, the Visa MIF agreement leads to an unduly high fee being paid to card issuing banks by merchant acquirers on every Visa transaction. The cost of these fees is passed on to retailers and ultimately to consumers.

MBNA has announced that it has begun issuing credit cards in Atlanta using MasterCard's PayPass contactless payment technology.

MBNA selected Atlanta to launch the product because hundreds of merchants in that area have already installed the specially equipped terminals, enabling cardholders to speed through checkout during their daily routines.

"We're always looking for new ways to make everyday life easier for MBNA Customers," said MBNA Group Executive David Turner. "Like our rewards programs, MasterCard PayPass is another way we're giving Customers the greatest value and convenience. And we're excited at how fast the list of merchants who have committed to accepting PayPass continues to grow."

Visa USA has announced several new upgrades to VisaNet, its global payment processing network. 'The demands of Visa cardholders never stop changing, so we never stop improving and expanding the technology that is at the core of Visa's value,' said John Partridge, CEO of Inovant LLC, Visa's IT organization responsible for global transactions processing and technology development.   » Continue Reading

Evan Schuman reports for eWeek.com on MasterCard's efforts to make contactless payment a reality.

MasterCard said it wants to take a central role in expanding contactless payment. But, Steeley said, the first step might very well be ditching the credit card itself and giving that payment power to some other device, most likely a cell phone.

"People think of MasterCard as a credit card company. But the truth is that we're about a payment brand and, in the future, we'll be less about the card itself," Steeley said. "The form factor issue is a crucial and critical one for the payments industry. Payments will be less about the cards and more about how devices communicate with one another."

Eric Dash reports for the New York Times on a proposal by Visa USA CEO John Philip Coghlan to create a private standard-setting agency for the credit card industry for security rules.

In a brief interview, Mr. Coghlan said a standard-setting body would allow for a "more balanced approach" of "carrots rather than sticks" by allowing banks and merchants to distinguish themselves as well as obtain financial rewards for tighter data security. But enforcement would remain a challenge.

ComputerWorld reports on comments by Visa USA CEO John Coghlan at this week's Security Summity regarding pending legislation regarding the obligations on companies following data breaches as well as potential rewards to merchants for improved security practices.

In a press release this morning, Visa USA has provided some of the commentary of President and CEO John Philip Coghlan at this week's Security Summit in Washington, DC.

MSN Money tonight has posted an FT.com story covering comments made Visa EU's Hans van der Velde that reports he dismissed suggestions that Visa should follow MasterCard with an initial public offering.

"The association model is very much in our DNA. To change that would be very difficult," he said in an interview with the Financial Times. "If you change your structure for litigation or regulatory reasons, it seems you don't have a good reason to do it."

Attention merchants: claim forms have recently been mailed regarding the Visa Check/MasterMoney Antitrust Litigation that was settled in April 2003.

Merchants who are in the class -- defined as "all businesses and organizations in the United States that accepted Visa and MasterCard debit and credit cards for payment at any time during the period October 25, 1992 to June 21, 2003" -- must complete claim forms to participate in the settlement proceeds. To be eligible for participation, all claim forms must be postmarked no later than November 28, 2005.

Visa USA has announced it will be holding a summit of security-minded professionals on October 5th in Washington, DC.   » Continue Reading

Visa USA announced today the "10-year anniversary of the integrated marketing campaign that enabled an innovative, ground-breaking product to transform the way people pay for goods and services throughout the country - the Visa check card."   » Continue Reading

A California judge ruled Friday that Visa USA and MasterCard don't have to send individual warnings to thousands of consumers whose personal account information was stolen during the breach at CardSystems earlier this year.

"I don't see the emergency," San Francisco Superior Court Judge Richard Kramer said in rejecting a request for an order against the nation's two largest credit card associations. "I don't think there is an immediate threat of irreparable injury" to consumers.

The San Francisco Business Times reports that Wells Fargo president and COO John Stumpf has been elected chairman of Visa USA.

Stumpf has served on Visa's board since 2002. As part of this week's move to Visa USA's chairmanship, Stumpf will resign his posts on the Visa International and Inovant boards.

Stumpf takes over the position of chairman from Pat Phillips, Bank of America's president of premier banking and investments. Phillips, a member of the Visa USA board since 1990, retires as Visa USA chairman, a post he has held for two years. Philips also retires from the Visa International board where he has served since 1995.

James Kelleher reports for Reuters on comments today by Ruth Ann Marshall, MasterCard's president for the Americas, saying that MasterCard expects there will be four million PayPass contactless cards in circulation by the end of the year.

Marshall said the pay-pass cards were "easier to use than cash" and were one of the products MasterCard was counting on to increase revenue and profits as it faces a variety of challenges in the marketplace, including new rivals and regulatory scrutiny.

[Update: 2/16/06 - The MasterCard IPO is delayed due to the CEO having surgery for prostate cancer.]

I took a bit of time this weekend to read through the MasterCard IPO S-1 registration filing filed mid-week with the SEC. These are my notes on some of the more interesting comments I found. Note that you can add your own comments by clicking on the link Comments below.   » Continue Reading

The Globe and Mail carries a Bloomberg report on MasterCard's IPO plans.

The $5-billion valuation gives Purchase, N.Y.-based MasterCard a price-to-earnings multiple of 11.7 times, similar to that of Capital One Financial Corp. The sale may push Visa International Service Association, the largest card company, to consider an IPO that could value it at triple MasterCard, said David Robertson, publisher of Nilson Report, a credit card newsletter.

"Now that there's a firm valuation to MasterCard, investment bankers and others are going to be pressuring Visa to make a similar move," Mr. Robertson said. "There's tremendous unrealized value in Visa."

MasterCard has announced it has filed a registration statement with the SEC for its proposed IPO.   » Continue Reading

David Lazarus reports for the San Francisco Chronicle on Wells Fargo's relationship with Visa.

MasterCard International has announced a new card design option for customer financial institutions seeking greater product enhancement and differentiation.   » Continue Reading

MasterCard has reported second quarter results for its online debit card products reporting a 5.9 percent year over year growth in Maestro or MasterCard branded debit cards.   » Continue Reading

Reuters reports that the UK's Office of Fair Trading said Tuesday that fees charged by members of MasterCardUK infringed competition rules and resulted in higher retail prices.

The OFT said a collective agreement between the MasterCard UK Members Forum (MMF) setting the interchange fee -- charges paid by retailers to issuing banks -- on almost all purchases between March 2000 and November 2004 restricted competition.

"The parties to this collective agreement set the interchange fee to derive revenues from retailers and their customers over and above the costs of providing the payment services," John Vickers, OFT chairman, said in a statement. "This unduly high interchange fee was like a tax on UK consumers."

AFX New Unlimited reports that MasterCard expressed strong disagreement with the OFT's conclusions and that it will appeal the decision.

The Economist speculates on reasons behind MasterCard's upcoming IPO.

But why, you might ask, would MasterCard's owners, who know a thing or two about finance, want to let it go? Why sell a fast-growing business, especially one whose scale and open, co-operative structure has allowed individual member banks to run their own, nicely profitable credit-card operations?

Robin Sidel reports for the Wall St. Journal on MasterCard's plan for an initial public offering early next year.

Analysts and consultants were scrambling yesterday to calculate a potential valuation for MasterCard. Craig Maurer, an analyst at Fulcrum Global Partners in New York, estimated MasterCard in its entirety could be valued at $7 billion, or just under 2.5 times projected revenue for 2005.

MasterCard today announced plans for a "new corporate governance and open ownership structure that will include the appointment of a new board of directors comprised of a majority of independent directors, the establishment of a charitable foundation and a transition to being a publicly traded company."   » Continue Reading

Eric Dash reports for Thursday's New York Times on the steps taken by the card associations to ensure that personal information is secure at all times.

"These are akin to terrorist attacks; we must take very aggressive steps," John Philip Coghlan, the chief executive of Visa USA, said in an interview last month as he took over the card company's largest division.

"We can sit here and say we have zero liability and that no consumer will be harmed. If trust is eroded, the very foundation of the system will be eroded."

Visa USA and ID Analytics have announced a partnership that will enable financial institutions to better identify and stop fraudulent debit and credit card applications.   » Continue Reading

Dan Richman writes for the Seattle Post-Intelligencer about the deployment of more than 400 terminals supporting MasterCard's PayPass contactless technology at Seattle's Qwest Field.

If it seems like yet another newfangled way to risk high-tech theft, the experts say don't worry. Fans were taking no financial risk by beaming their account information through a few inches of air, rather than swiping a card conventionally or handing it to a clerk. At most, they said, thieves determined and sophisticated enough to intercept the wireless transmissions might be able to discover a cardholder's name.

Péralte C. Paul reports for the Atlanta Journal-Constitution that Visa USA announced Wednesday it will stand by its original decision that CardSystems Solutions no longer will be allowed to process payments on Visa-branded credit and debit cards after Oct. 31.

After the breach was revealed, Visa gave its member banks who use CardSystems until Oct. 31 to find another processor. But Visa agreed to hold further talks with CardSystems at the request of U.S. Rep. Rick Renzi (R-Ariz.), because 90 of the Atlanta company's 115 employees work at a Tucson processing center. The remaining 25 are at CardSystem's Atlanta headquarters. Those talks did not dissuade the credit card giant from its earlier stance, a Visa spokesman said.

"Everyone in this business has got to understand that their security represents a real reputational risk, not only for them, but for the long-term health and well-being of the entire industry," said Phil W. Tomlinson, TSYS' chief executive officer. "We can't allow these breaches to continue," he said. "If not, the regulators will do it for all of us, and it will not eliminate the sloppy or rogue players."

MasterCard has announced its financial results for the second quarter.

MasterCard's revenue grew 19% to $772 million and its net income grew 82% to $120 million or $1.20 per share on a basic and diluted basis from the same period in 2004.

Visa USA has released performance data for the second quarter of 2005 (PDF).

Sales on consumer Visa credit cards grew 8.6 percent over the same period last year. Sales on consumer Visa debit cards grew 18.2 percent. Consumer credit card transactions were 1.8 billion vs 2.7 billion debit card transactions. Fraud as a percent of volume was reported at 0.06 percent, up twenty percent (1 basis point) from last year.

BusinessWeek Online carries an AP story about American Express' growth.

"American Express is taking share from Visa and MasterCard," said Fox-Pitt Kelton analyst Edwin Groshans in a report to clients. "The outlook for American Express is strong -- cards are growing, billed business has been growing, partnerships have been growing, capital is being generated, reinvested and returned."

Bloomberg reports that McDonald's is accelerating its rollout of MasterCard PayPass to many more restaurants.

The Oak Brook-based burger giant will offer MasterCard International Inc.'s Pay Pass service in more than 13,600 U.S. stores after introducing it in about 7,500, Cathleen Conforti, MasterCard's global Pay Pass product manager, said Thursday.

"We have actually gotten so much more interest from both the issuers' banks and the merchant side that we are going to be in many more markets than we expected to be in by the fourth quarter," Conforti said.

The Wall St. Journal Online is reporting tonight that a group of supermarket and drugstore chains that last month sued Visa USA has now filed a similar antitrust lawsuit against MasterCard.   » Continue Reading

MasterCard this morning reported operating results for the second quarter including an increase of 12.3 percent in payment volume to $408.4 billion from 4.8 billion transactions.

"MasterCard's customer-centric approach enables us to bring value to our key stakeholders as a thoughtful and innovative partner focused on helping them build, manage and enhance the profitability of their payments businesses," said Alan Heuer, chief operating officer, MasterCard International.

"MasterCard's results for the first half of this year are a testament to the global strength of the MasterCard brand and our ability to work with our member financial institutions to deliver the best payment solutions in the industry."

In a press release today, MasterCard said that more than 66,000 businesses are now using its proprietary web-based reporting and expense management solutions, MasterCard Smart Data OnLine and MasterCard Smart Data Express.   » Continue Reading

Digital Transactions reports on why other class action lawsuits against Visa, MasterCard and a number of member banks are more likely to succeed that was the case with a California small business interchange anti-trust case that was dismissed earlier this week.   » Continue Reading

Matt Wade reports for tomorrow morning's Sydney Morning Herald on a new analysis performed by Network Economics and sponsored by Visa that shows that the changes introduced in credit card interchange fees in 2003 by the Reserve Bank of Australia "had either a negligible or, more likely, a slightly negative effect on consumer welfare."   » Continue Reading