Bank of America Bank today reported second-quarter 2009 net income of $3.2 billion down slightly from last year's $3.4 billion. The bank's Global Card Services unit had a net loss of $1.6 billion compared to a $582 million of net income in the same quarter last year. Loans outstanding declined 8% to $220 billion. Credit card purchase volume fell dramatically, down 19.5% year/year to $51.9 billion. Debit card purchase volume increased slightly to $55.2 billion.

Canada's Interac Association has announced a partnership with INSIDE Contactless, the world leader in open-standard contactless chip technologies to develop chips containing the specifications for INTERAC’s contactless payment service. According to the companies, this partnership will enable Interac Association and its members to offer their debit card users a “next generation” retail payments solution. READ MORE

SunTrust and Delta Air Lines have announced that consumers and businesses will soon be able to earn Delta miles on all signature-based purchases made with a new SunTrust SkyMiles Check Card, launching June 22. According to the two companies, "this will be the first time Delta has offered mileage-earning opportunities through a check card, and is the first co-branded check card relationship for SunTrust." The card will have a minimum annual fee of $20. READ MORE

Photo: AustinEvan

71% of all cash acquired by consumers came from cash machines

2.9 billion cash machine withdrawals were made last year - equivalent to 91 withdrawals per second

Cash payment volumes are forecast to fall by 27% over the next 10 years

If current trends persist, next year for the first time debit card spending will overtake cash spending by value in the UK. READ MORE

A report in today's Business Standard (India) titled "Consumers prefer debit cards in slowdown" notes that, according to data from the Reserve Bank of India, consumers are preferring to use debit cards over credit cards. In fact, the number of credit cards in circulation in India actually declined from 28.3 million cards a year ago to 24.6 million cards today.

In an article titled "Revealing the Hidden Cost Of Credit Cards" in tomorrow's Sunday Washington Post, Michelle Singletary writes that "transactors" (those who pay off their credit card bills every month - sometimes called "convenience users") may soon see the return of "widespread annual fees" on their credit cards.

Could this result in a further acceleration of spending away from credit cards and toward debit cards - as transactors finally decide the float/rewards benefits of their credit cards just aren't worth the new money they might cost?

Who wins in that scenario? Debit cards are cheaper for merchants to accept. Would they be the beneficiaries?

APACS has published its latest quarterly statistical release - reporting that in the first quarter were 1.9 billion plastic card purchases made in the UK totalling £94.2 billion compared to 1.8 billion purchases totalling £91.2 billion in the first quarter of 2008. The number of purchases was 4.0% higher than in 2008 Q1, and spending was 1.7% higher. Debit card usage continued to outpace credit cards - with debit cards accounting for 74.5% of all plastic card purchases in 2009 Q1 compared with 73.3% in 2008 Q1.

India's ICICI Bank and Visa have announced a strategic relationship that will enable ICICI’s New York Branch to issue Visa Debit cards in the U.S. The bank will offer Visa Debit cards to its Global Indian Account and other checking account customers at its New York branch. The Global Indian Account service addresses the banking needs of Indians moving overseas who require access to local banking facilities in the United States. READ MORE

Victor Stango and Jonathan Zinman have published a paper titled "What Do Consumers Really Pay on Their Checking and Credit Card Accounts? Explicit, Implicit, and Avoidable Costs" . The authors say they're attempting to answer the following questions:

What do people really pay to use their bank and credit card accounts, and which components of cost are the largest? Of all the costs that people pay, which could they easily avoid by making different day-to-day choices? And how stable are both the level of costs and the share of costs that are “avoidable,” for a given person over time?

PULSE has launched PULSE Select, a surcharge-free ATM network alliance with the MoneyPass Network. The PULSE Select/MoneyPass Surcharge-free ATM Network provides financial institution participants with access to more than 16,000 surcharge-free ATMs in the US. READ MORE

Visa last week announced that spending on Visa debit cards in the U.S. had surpassed Visa credit card volume for the first time in the company’s history. For the period ending December 31, 2008, Visa's US debit payments volume was $206 billion, compared with credit payments volume of $203 billion. Debit transactions were nearly 70% of U.S. transactions for the same time period, representing an increasingly larger portion of Visa’s U.S. transactions. READ MORE

Similar statistics released earlier this week by APACS in the UK show the surging volume on debit cards in that particular market.

APACS has released new figures from the UK payments industry that give an authoritative overview of UK consumers’ spending habits last year.

The retail spending statistics, which cover all online and offline retail transactions in 2008, show that of a total £269.9bn spent by consumers, 43 per cent (£116.1bn) was by debit card, 32 per cent (£86bn) was by cash, 23 per cent (£60.7bn) was by credit card and only 3 per cent (£7.1bn) was by cheque."

In an article titled "Credit card wars, Part 2: Cards hugely benefit merchants" in Canada's Financial Post, Visa Canada head Tim Wilson writes about why he believes Canadian merchants should embrace Visa's debit products - rather than trying to get the Canadian regulators to impose regulation and price controls on cards.

Wilson writes:

The government intervention retailers are asking for has been tried in Australia and, while business costs have decreased, Australian consumers are worse off. They have seen credit card fees increase, card benefits reduced, the introduction of surcharging at the point-of-sale and savings realized by the retailer have not been passed to consumers."

In a new PaymentsViews.com article titled "Why Debit Cards Aren't a Product...and Why 'Decoupled Debit' Could Change All That", Glenbrook's Carol Coye Benson asks whether debit cards are products - or features?

Bank of America Corporation today reported first-quarter 2009 net income of $4.2 billion.

The bank's Global Card Services unit, which now includes Debit Card, swung to a net loss of $1.8 billion as the weak economic environment drove credit costs higher. Credit card purchase volume declined 19.7% to $48 billion compared to $59.8 billion in 1Q08. Credit card chargeoffs grew to 8.62% totaling $3.8 billion vs. 5.19% of $2.4 billion in 1Q08. Debit card purchase volume grew 2.2% to $51.1 billion.

In an article titled "Interac in a fight for its life", Theresa Ebden writes for Canada's Globe & Mail about how Visa and MasterCard are challenging Interac in Canada for debit card business. Merchants are concerned that debit card acceptance costs will increase if Visa and MasterCard are successful selling their debit card products to Canadian bank issuers.

In an article titled "Credit card companies should stay out of the debit card market", Craig McInnes writes for the Vancouver Sun about the costs to merchants of payment card acceptance. He discusses both the costs of rewards cards to merchants as well as a concern that replacing Interac debit cards would also increase costs to merchants. According to McInnes, "that would drive up the price of everything we buy."

In remarks given to a press conference yesterday, Neelie Kroes, European Commissioner for Competition Policy, noted that with MasterCard's changes to its interchange fees in Europe, "the aim of the new MIFs to be applied by MasterCard is that a merchant's costs in accepting card payments should be no higher than the benefits from avoiding receiving cash." Yesterday, MasterCard announced new interchange fees for cross-border transactions on consumer credit card transactions at 0.3% and at 0.2% for its consumer debit card transactions.

In a press release, MasterCard Canada said it "has accepted an opportunity to appear before the Senate Standing Committee on Banking, Trade and Commerce in order to discuss the payments industry, as well as to address the significant misinformation being propagated by retail sector lobbyists." MasterCard Canada also has a web site on the subject of interchange fees called InterchangeTruth.com. READ MORE

The "Stop Sticking It To Us" Coalition, representing over 200,000 Canadian businesses, small, mid and large, says it is gathering in Ottawa this week to combat overcharging by VISA and MasterCard. Speaking on behalf of the Coalition, Retail Council of Canada President, Diane J. Brisebois said, "The credit card companies are pushing to take over debit transactions and hike credit card service charges. That's bad for merchants, and bad for consumers. At a time when governments are asking Canadians to stimulate the economy by spending on goods and services, credit card companies skimming more off the top is not helping our economic recovery." READ MORE

A new Center for Responsible Lending survey finds that U.S. consumers overwhelmingly want to be asked their preference before a bank or credit union enrolls them in a program to cover debit card purchases when they do not have the funds. READ MORE

PULSE has signed an agreement with Acculynk under which PULSE will test Acculynk’s PaySecure Internet PIN debit technology in a pilot program. The pilot will involve selected PULSE merchant and financial institution participants and is slated to begin in the second quarter of 2009. READ MORE

In this morning's USA Today, Kathy Chu examines the practices of US banks with respect to how they handle overdrafts on checking accounts, how they clear checks, and more. She lists automatic enrollment, high-to-low clearing, confusing statements, and other practices as reasons consumers need to be careful about managing their checking accounts and debit card usage. Included in the story is a survey of the overdraft practices of the top 10 US banks.

On Thursday, the House Subcommittee on Financial Institutions and Consumer Credit held a hearing on H.R. 627, the Credit Cardholders' Bill of Rights Act of 2009 and H.R. 1456, the Consumer Overdraft Protection Fair Practices Act of 2009. READ MORE

Banks shouldn’t be allowed to automatically enroll their customers in expensive overdraft loan programs, according to Consumers Union, the nonprofit publisher of Consumer Reports. The group urged the Federal Reserve Board in a letter today to require banks to get their customers’ permission first before signing them up for high fee overdraft loan programs for overdrafts triggered by ATM and debit transactions. READ MORE

Glenbrook's Allen Weinberg and Jay DeWitt are participating in this year's Merchant Risk Council e-Commerce Payments and Risk Conference this week in Las Vegas. This is the seventh year for the conference and it's completely sold out.

On our new PaymentsViews.com web site, Allen has posted his highlights from today's morning and afternoon Platinum Day sessions. Today's topics included the CyberSource 2008 Fraud Survey findings and PIN-debit for eCommerce.

Jay will be leading a panel discussion on Thursday on "Payments as Business Strategy" - highlighting how payments management is an important part of any eCommerce Merchant's overall strategy, both in keeping expenses in line but also, and, even more importantly, contributing to top line merchant revenues.

Stay tuned for more updates here by Allen and Jay from this important annual conference for eCommerce merchants.

Bank of America has announced the launch of a new online shopping site that "allows enrolled customers to earn up to 20% cash back on their purchases at more than 270 online retailers, including top names such as Walmart.com, BestBuy.com and Barnes & Noble.com. Customers with a current Bank of America credit or check card who are enrolled in online banking can register for free through the Add It Up site at http://www.bankofamerica.com/additup." READ MORE

MasterCard Worldwide has announced the launch of the World Debit MasterCard card, calling it "a premium debit card that provides U.S. consumers with unique rewards and savings opportunities, purchase protection, and security benefits. KeyBank today became the first financial institution to introduce World Debit MasterCard to its customers." The new card includes MasterCard PayPass contactless payment functionality. READ MORE