Friday, October 31, 2008

Perfect Storm Brewing, HomeATM Perfectly Placed

There's a Perfect Storm Brewing and HomeATM is Perfectly Positioned...

Editor's Note: What a wonderfully pleasant surprise. Mainstream media is finally beginning to understand and write about the impact debit cards will have in shaping the purchasing habits of consumers in the foreseeable future.

Their next giant step would be to understand and write about the "Paradigm Shift" occurring within those very same consumers' preference to "shop online" versus "at retail stores" and then put the two together (click here to view this unbelieveable chart from eMarketer ) .

Only then would they possess the beginnings of a decent understanding of the future of the payments industry. They would still need to include other variables, such as convenience, security, angst from retailers against high interchange fees, the increase in fraud, decrease in consumer trust, etc. to be able predict with any accuracy at all, the future of online payments. But they'd have a good foundation with which to play.

Excuse the cliche' but it really doesn't take a rocket scientist to figure it out:
Consider these current trends:
  • Debit card use grows...
    credit card use decreases
  • Online shopping grows...
    bricks and mortar shopping decreases
  • Online Fraud grows...
    consumer trust in security decreases
  • POS Tampering grows... consumer trust in public POS device decreases
  • Retailers Angst Over Interchange grows, V/MC's Ability to Justify decreases
Now...Let's imagine for a moment that someone was to devise a way for "online shoppers "to use their "debit card" while "reducing fraud", and eliminating tampering...they just very well might be on the right track. Take into consideration all those retailers who are up in arms over the high cost of Interchange Fees and in addition to providing the aforementioned benefits here's another: By using this system, your Interchange Fees would be cut in half! The last piece of the puzzle has been placed. Like I said, Perfect Storm, Perfect Place. The eye of the tiger...

The Steady Ascent of the Debit Card - BusinessWeek
The Steady Ascent of the Debit Card

Debit cards may soon overtake credit cards, which is why banks are scrambling to boost their profitability

By Christopher Palmeri

For consumers reeling from a series of economic body blows, debit cards are increasingly becoming the plastic of choice. Some use the cards, which pull money directly from a bank or other account, as a budgeting tool to limit spending. Others are embracing them out of necessity as banks clamp down on credit.

All told, debit purchases are expected to climb 13% in 2008, to $1.2 trillion, according to The Nilson Report, an industry newsletter—compared with a 3% rise, to $1.9 trillion, for credit-card transactions. At Visa (V), the No. 1 card company, debit spending could surpass credit this year.

For the banks issuing the debit cards, the trend seems bittersweet. On the plus side, debit cards don't pose a threat to the banks' books like credit-card accounts; losses are mounting as borrowers fall behind on their payments. But the profits on debit cards aren't as plump since banks don't collect interest on them. Issuers largely make money from fees, which (on debit cards) pale next to those on credit cards. Retailers, for instance, three times the amount (they would pay for) on debit transactions.

The Next Frontier

Regulatory headwinds haven't deterred the banks from ramping up their debit-card businesses. Among the groups that offer the biggest potential for banks: people who earn more than $75,000 a year. According to MasterCard (MA), they're the least active debit users, usually turning instead to credit cards that offer frequent-flier miles and other rewards.

The aggressive push is paying off. These days, debit cards are as widespread as credit cards.

"Debit is becoming the payment card of choice for the American public," says Red Gillen of consultancy Celent. At the upscale suburban Atlanta restaurant Aqua Blue, waitresses now bring diners a device that lets them swipe their debit card and enter their PIN to pay for meals.

Editor's Note: That's "exactly" "my point"...of's what HomeATM does for the online shopper. We provide the device that allows online shoppers to swipe their debit (and/or credit) card and enter their PIN to "securely" pay for goods bought online" And in this "Perfect Storm" HomeATM is starting to see that they have been correct in their approach to bring secure "card present" and PIN based web transactions from ANY web device. The way we see it...

"if you can't bring the consumer to the point of sale device,
bring the point of sale device to the consumer"

What Makes the Card Present is the Ability to Present the Card

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PayPal - About as Secure as a Chocolate Teapot?

This story from The Industry Standard must make PayPal executives a little insecure...

PayPal accounts compromised over 16 months; No response from eBay | The Industry Standard

Online payment service PayPal has had an exploit on its hands for at least 16 months and counting, and seems to have no resolution for it.

A tipster forwarded us screenshots of the fraud, which involves a dummy subscription service to PayPal's sister company Skype, all part of the eBay corporate family. Using the fake Skype subscription, several small charges are made against a PayPal account, all in the same dollar amount.

The first mention of the exploit by a media outlet seems to have been an article in The Register back in June, but complaints on consumer boards like Complaints Board show the problem going back even farther, and a tech column in the Orange County Register appears to show the same problem back in June 2007, with PayPal and Skype reps saying at the time it was the first they'd heard of the problem.

As you can see from the screenshots we received, the phony subscription includes what appear to be Chinese characters in the Billing Description field, and all links are dummy links in the sections for logging back into the PayPal account and reporting errors. In addition, the email address for the "seller" is listed as "unavailable."

PayPal was quick to reverse the charges, but our tipster also had to cancel the credit card account, and PayPal offered no explanation for the problem.

A request made by The Industry Standard to eBay regarding the issues did not receive a reply.

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White Paper Coming on Future of Payments

NetWorld Alliance highlights payment trends for next 5 years

Louisville, Ky., Oct. 31, 2008 --
NetWorld Alliance, publishers of ATM Marketplace, announced the publication of "The Future of Cash: Survey Predicts Changes in Consumer Habits," an exclusive white paper that contains the results of a new survey of more than 500 financial-industry professionals.

"With credit markets tightening and consumers rethinking their established habits for dealing with their money, the world of payments is on the precipice of some major changes," said Tracy Kitten, senior editor of ATM Marketplace. "For this white paper, we've tapped the collective expertise of professionals who are out on the front lines every day and distilled their wisdom down to some useful numbers."

Topics addressed in the white paper include:
* Which payment methods will experience the most increase in usage in the coming months
* Changing consumer attitudes about the security and safety of their funds on deposit
* The evolving role of cash relative to other payment methods

The paper also includes expert commentary from Mike Lee, president of the ATM Industry Association.

The white paper is part of the development of a larger publication, "ATM Future Trends 2009," which ATM Marketplace and the ATMIA will release in early March. The publication will take a look at the future of the industry in these tight economic times and feature even more in-depth survey results, as well as expert commentaries.

About NetWorld Alliance

About ATM Marketplace

ATM Marketplace is the world's largest online provider of information about and for the ATM industry. The content, which is updated every business day and read by business and industry professionals throughout the world, is free.

Source: Company press release.

Mercator Report on Debit Rewards

Debit Advisory Service

Re-examining Debit Rewards at the Top Fifty Banks


Financial institutions are expanding and diversifying debit reward program offerings as more consumers are using debit cards to pay for their everyday purchases than ever before. Forty of the Top Fifty banks currently have at least one reward program in place, and nearly half of these financial institutions offer multiple loyalty programs to debit cardholders. Most debit loyalty programs at top fifty banks only reward signature-based transactions, while a select few reward both signature and PIN based transactions. Most of the reward programs are funded by interchange revenue, which is substantially greater for signature than PIN debit transactions, but significantly less than credit card transactions. As such, most debit reward programs are less lucrative than their credit card counterparts. While traditional airlines, points-based and cash back programs are still common, a number of financial institutions are offering philanthropic rewards whereby cardholders can choose to donate their reward earnings to a cause of their choice. Such programs enable customers to give more painlessly, and allow financial institutions to benefit from tax deductions. Rewards that promote savings and cash back are the most popular, especially since many consumers are facing financial challenges given current unfavorable economic conditions. Banks are increasingly promoting business across product areas and rewarding customers for using multiple services at the same bank. For example, financial institutions are allowing their customers to earn reward points faster from multiple types of accounts with the same back, and redeem them for additional deposit or a reduction in fees.

Given the significant rise in debit card usage, there is certainly opportunity for continued growth in debit reward programs, however, the overall effectiveness of these programs in fostering customer loyalty is less clear. "It is questionable how much weight customers put on a debit reward program when choosing a new checking account, since they are often viewed as a feature of the account. Although banks aim to differentiate themselves from their competitors with perks such as reward programs, they become less distinguishing when most financial institutions offer them," notes Elisa Athonvarangkul, Analyst, International Advisory Service. "Banks should continue to develop more innovative reward programs to attract loyal customers and set programs apart from their competitors. Sometimes, the most attractive reward is not necessarily redeemable by points or cash back, but rather an efficient and pleasant customer service experience. A customer that feels valued and well treated is more likely to be a loyal customer over the long haul."

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Traditional Payment Cards for Online Transactions Continue to Decrease

The ACH Network: The Bedrock of Alternative Payments; New Research Report by Mercator Advisory Group

Boston, MA (PRWEB) October 31, 2008 -- The ACH Network began as a low volume network transmitting large recurring transactions between well-established entities; however changes in rules and business models have brought about significant changes in the nature and volume of ACH activity.

More than 18 billion ACH payments were made in 2007, representing a 12.6% increase from the total number of transactions generated in 2006. Much of the growth in ACH volume can be attributed to fundamental changes in payment methods used by consumers and businesses with the network transforming into a high volume platform of relatively low-value, non-recurring transactions. These transactions are originated from a rapidly expanding number of merchants, aggregators, corporations, and financial institutions.

Alternative payment providers such as Google Checkout, Bill Me Later and of course PayPal leverage the ACH to provide consumers and merchants with a secure and efficient means of payment and in doing so are experiencing phenomenal growth.

Non-financial institutions have been beating the banking industry to the punch of developing unique and cost efficient payment solutions, especially in the e-commerce space. Ironically, alternative payment providers have succeeded using the banking industry's own infrastructure to capture interchange-like revenues.

Although signature debit and credit card usage online has yet to be hugely impacted by alternative payment solutions, in many cases, non-traditional payment providers offer significantly enhanced value propositions including discounts, sales and loyalty tools, and the ability for merchants to cross sell on non-competitive merchant Web sites. These value added services create significant competitive pressures for traditional payment types and are giving alternative payment methods solid traction.

Brent Watters, Senior Analyst of Mercator Advisory Group's Prepaid Advisory Service and principal analyst on the report, comments, "As alternative payment methods continue to evolve and more players step into the space, the use of traditional payment cards for online transactions will continue to decrease. It is foreseeable that merchants will increasingly promote alternative payments and consumers will become more accepting of new payment types. Mercator believes that in the next five years (2014) 35% of payments made online will be in the form of alternative payments, including prepaid cards, new forms of credit and programs leveraging the ACH."

Highlights from this report include:

  • The ACH continues to show solid growth and transaction volume will continue to escalate as more alternative payment schemes leverage the network.
  • The ACH is moving to push versus pull method of payment thus creating direct competition for EFT networks that have been eager to develop a PIN-less debit solution for online transactions.
  • The ACH's eCheck services continue to fuel the networks' transaction volume and penetrate markets currently targeted by debit and credit cards.
  • NACHA's Secure Vault Payment (SVP) creates an opportunity for banks to compete in online alternative payments.

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Taiwan E-Commerce Growth up 32.2% over 2007

E-commerce in Taiwan to witness expansion in 2008: up 32.3% over 2007

At the end of 2008, online shopping in Taiwan is expected to climb by 32.3 percent, as compared to 2007 and reach USD 7.42 billion, according to estimates made by a local research and consulting firm.

Due to lower prices and a broader range of products that online stores offer, customers across Taiwan prefer to turn to the internet for their purchases.

Business-to-consumer (B2C) e-commerce is estimated to represent USD 4.1 billion of the total e-commerce market and consumer-to-consumer (C2C) transactions are to account for USD 3.1 billion. B2C transactions are the equivalent of nearly 4 percent of the overall retail business.

Fashion and beauty products have registered the most rapid growth, as the compounded average growth rates (CAGR) of these categories hit 88 percent and 49 percent respectively.

For the consumer electronics and travel e-commerce categories, CAGRs have reached 25 percent and 21 percent respectively.

In terms of B2C transactions, the average value gets higher with the age of the consumer. Thus, Taiwanese online buyers who are aged between 20 and 29 spend USD 269, while those older than 50 spend USD 609 on average.

The study was conducted by the Market Intelligence Center.

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Contactless Tackles NFL

Chase launches Chicago Bears contactless debit card

Consumer and commercial banking service provider Chase joins forces with Illinois-based professional American Football team Chicago Bears and MasterCard Worldwide to launch the Chicago Bears Debit MasterCard. The new card aims to provide Chase personal checking customers who are also Chicago Bears fans with an alternative to cash payments intended to cut back on transaction time and improve access to Bears special offers.

The new branded debit MasterCard, which comes with no annual fee, has a PayPass-enabled Blink feature, which allows customers to use the MasterCard tap-and-go service at all accepting merchants. Blink is a Chicago Bears proprietary contactless payment system which allows fast cashless payments at the Soldier Field stadium in Chicago. The new debit MasterCard is available to all new and existing Chase customers and also provides access to exclusive discounts and promotions with the Chicago Bears as well as invitations to various Chase-hosted special Bears events.

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Merchant Risk Council (MRC) Announces eCommerce Payments Conference Speakers

The Merchant Risk Council (MRC) is pleased to announce the Keynote and Closing speakers for MRC's 7th Annual e-Commerce Payments and Risk Conference at the Wynn Las Vegas Resort on March 10-12, 2009. Terry Jones, founder of, has been chosen to deliver the opening keynote speech. Chris Hansen, Dateline NBC correspondent, will be delivering the conference's closing speech.

"We are very excited to have Chris Hansen and Terry Jones join us for our annual conference," said Tom Donlea, MRC Executive Director. "Terry and Chris will provide their own unique perspectives to an audience of e-Commerce and multi-channel merchants coming together and discussing payment strategies while identifying specific solutions in reducing online fraud and mitigating risk." Donlea adds, "With today's challenging economic environment, enhancing profitability is more important than ever before."

The conference will include approximately 40 speakers and panelists, more than 30 unique sessions, and more than 40 payment and risk industry exhibitors -- all delivering valuable insight and information on the growth, diversity and risks associated with e-Commerce payments; new global electronic commerce business models; the latest trends in global payment channels; as well as identifying current and future global cyber threats.

Those scheduled to exhibit at the 7th Annual e-Commerce Payments and Risk Conference include: Accertify, American Express, Bill Me Later, Chase Paymentech, Cybersource, Discover, Ethoca, Experian, GlobalCollect, Google, iovation, 41st Parameter, MasterCard, PayPal/eBay, Trustwave, and Visa.

Since 2002, the MRC annual conference has evolved from an informal group of select merchants into one of the world's foremost conferences on e-Commerce. The 7th Annual e-Commerce Payments and Risk Conference unites the world's top Internet merchants, credit card companies, risk management providers, law enforcement agencies and various consultants and educators in discussing how to make shopping on the internet easier, safer and more profitable for all involved.

"The world of e-Commerce is expanding rapidly," said MRC Board Chairman, Tom Sullivan, Expedia, Inc. "We are now addressing new and emerging e-Commerce communities such as gaming, social networking, digital downloads among many others." Sullivan adds, "As these markets continue to grow, so do complexities of market expansion, payment options, and risk management. These are just some of the issues we'll be exploring during the conference."

For registration or exhibition information at this conference, or to receive MRC membership information, please visit the MRC's website at

About the Merchant Risk Council

The Merchant Risk Council (MRC) is a merchant-led trade association focused on electronic commerce risk and payments globally. The MRC leads industry networking, education and advocacy programs to make electronic commerce more efficient, safe and profitable. Today, with over 7,500 members, the MRC is the leading trade association for managing payments, preventing online fraud and promoting secure e-Commerce. The MRC is dedicated to working with e-Commerce and multi-channel merchants, credit card issuers, credit card companies, risk management providers, and law enforcement to make the Internet a safer and more profitable place to do business. The MRC Board of Directors and Advisors includes: Expedia, Inc., Adobe Systems, Inc., Neiman Marcus Direct, 41st Parameter, Apple,, Bill Me Later, Blizzard Entertainment, Chase Paymentech, CyberSource Corporation, Dell, Inc., Discover Network, Gap, Inc. Direct, iovation, Microsoft, Trustwave, and Visa, Inc.

The MRC is headquartered in Seattle, Washington.

Jordan Rubin
TELEPHONE: 206.364.2789

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Thursday, October 30, 2008

Want Scary? How Bout 100 Posts in a Month...Happy Halloween!

PIN Authenticated Card Present  Rates versus Card Not Present Interchange Fees...

Question of the Day...Which Rates Higher?
Treat Yourself to Lower Rates with Dually Authenticated "Card Present" Interchange from HomeATM!

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American Express Lays off 7000

American Express CompanyImage via Wikipedia
Pink Slips Fly at American Express
Don't leave home without what ... a job?

Credit card giant American Express (NYSE: AXP) became the latest financial company to hack off a chunk of its workforce, announcing it will lay off 7,000 workers, or 10% of headcount. It'll also slash investment spending, cut consulting, travel, and entertainment expenses (bah humbug) and freeze management-level salary increases.

These moves "will help us to manage through one of the most challenging economic environments we've seen in many decades" said AmEx CEO Ken Chenault, whose compensation is more tightly linked to stellar performance than many other corporate bigwigs.

The cuts should save AmEx a hefty $1.8 billion in 2009, which it very well may need heading into a pitiful economy where consumer spending could nosedive and defaults are likely to blow up. Banks and card companies that extend credit -- names like AmEx, Bank of America (NYSE: BAC) and JPMorgan Chase (NYSE: JPM) -- have been ratcheting up lending standards and actually cutting people's existing credit limits, a pretty clear sign that they're hunkering down and preparing for the worst. Companies like Visa (NYSE: V) and MasterCard (NYSE: MA) don't issue credit, so their downside risk heading into a recession is far lower.

Despite the bad news and a less-than-impressive quarter, many investors look at AmEx as a pretty compelling value story, including possibly one Warren Buffett. Take a great company with one of the world's best reputations, mix in a once-in-a-lifetime economic storm, and you get an opportunity to snag a great company at a great price, the thought goes.

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Constatine Cannon Notches 2nd Billion Dollar Win Against Visa/MasterCard

Constantine Cannon $cores $econd Billion Dollar Win Against V/MC card Network

New York, Oct. 29, 2008 -- Constantine Cannon LLP helped Discover Financial Services Inc. secure a $2.75 billion settlement from Visa and MasterCard earlier this week in the third largest reported antitrust settlement in U.S. history.

The landmark settlement comes on the heels of Constantine Cannon's role in 2003 as lead counsel in the historic In Re Visa Check settlement, which remains the largest antitrust settlement in history, and established Constantine Cannon as a leading law firm specializing in payments.

Shortly after the In Re Visa Check settlement, Constantine Cannon was retained by Discover Financial Services to join forces with Kirkland & Ellis to bring a damages action against Visa and MasterCard concerning their rules that prevented banks from issuing Discover Network cards. After four years of hard fought litigation, Visa and MasterCard agreed to settle the case the night before the trial was set to begin.

"It was our privilege to represent Discover and help it achieve such a just result in its longstanding dispute with Visa and MasterCard," said Jeff Shinder, (pictured at left) Managing Partner of Constantine Cannon's New York office.

"This strong result reflects both the skill and collaborative spirit that our firm and our stellar co-counsel, Kirkland & Ellis, brought to bear on this case," said Matthew Cantor, (pictured at right) a Constantine Cannon partner, who co-ran the case at Constantine Cannon with Mr. Shinder.

Shinder and Cantor also were among the lead lawyers in the In Re Visa Check case. In that case, Wal-Mart, Sears Roebuck, Safeway Supermarkets, Circuit City and The Limited led a class of 5 million merchants in a challenge to Visa's and MasterCard's Honor All Cards rules, which forced merchants that needed to accept Visa/MC credit card transactions to also accept their debit card transactions.

As they did in the Discover case, Visa and MasterCard settled the In Re Visa Check case on the eve of trial for over $3 billion and injunctive relief, including the elimination of the Honor All Cards rules, that the courts conservatively estimated as being valued at $25-$87 billion for the class.

Constantine Cannon LLP is a law firm specializing in antitrust counseling and complex commercial litigation with offices in New York and Washington with over 40 attorneys. In addition to expertise to clients in financial services and electronics payments, Constantine Cannon also represents clients involved in telecommunications/media, health care, transportation, and technology businesses.

For more information visit

Source: Company press release.

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The Benefits of Debit Cards by Bruce Cundiff via - Ask The Expert
Ask The Expert
Bruce Cundiff
Javelin Strategy & Research

Paying and Accessing Your Money with Debit: A Safe and Convenient Alternative to Cash

The debit card has emerged as a payment method of choice for many American consumers, with 72 percent using debit cards for purchases in the past 12 months, according to Javelin Strategy & Research1. In 2007, there were nearly 31 billion debit transactions at the point of sale, totaling purchase volume of $1.2 trillion2. These statistics highlight consumers’ preference for using debit cards when making purchases at the point of sale, and with good reason. Debit cards provide a safe and efficient method of payment with multiple benefits over more traditional types of payments such as cash and checks.

Recent media coverage of debit card use among consumers has focused largely on the perceived lack of security when using debit cards. This article provides a factual source of information to enable consumers to make informed choices and make the most of their debit cards.

Safe and Secure Access - Reducing Fraud at the Point of Transaction

Debit card fraud is not spiraling out of control, as many in the media would have consumers believe.

Debit card networks, financial institutions that issue debit cards, ATM owners, and merchants that accept debit cards at their points of sale, are constantly making improvements to ensure that debit card transactions are secure, and that they quickly and efficiently remedy any issues that may arise - fraudulent transactions or otherwise. Despite reports to the contrary, fraud rates for debit cards remain relatively low. According to the 2008 Debit Issuer Study, commissioned by the PULSE® ATM/debit network, debit card fraud losses at ATMs were, on average, 2.5 cents per transaction in 2007. The fraud-loss rate was lower at the point of sale, with an average fraud loss of 2.1 cents per transaction when the cardholder used a signature and even lower - only half a cent - when the cardholder used a personal identification number (PIN) to complete the transaction.

Fraud Prevention and Assistance

Should consumers become victims of debit card fraud, however, financial institutions work hard to ensure that the cardholder is made whole again. Limited liability was developed with consumer protection in mind. Unlike with cash, limited liability means that if a consumer’s debit card is lost or stolen, consumers have a chance to get their lost funds back. With stolen cash, once it’s gone, there is little chance of recovering it.

The amount consumers are liable for depends on how quickly the financial institution is informed of the illegal activity. Consumers should check with their individual financial institution for specifics on the level of protection provided.

In most cases, debit card issuers often limit consumer fraud loss exposure to $50. Javelin’s Identity Safety Scorecard, a survey of the security mechanisms the top U.S. financial institutions have in place, indicates that most issuers effectively have a "zero liability" policy. This means that consumers are not responsible for any fraudulent transactions initiated on their accounts3, as long as they report the transactions within a given time frame - usually within 60 days of when the fraudulent transaction was discovered.

Limited liability highlights the benefits of debit over cash. With limited liability for a lost or stolen debit card, consumers have a measure of protection as compared to the "final" nature of lost or stolen cash - once it’s gone, there is little chance of recovering stolen cash.

Debit Cards as a Financial Management Tool

Given the current economic climate, consumers are increasingly seeking assistance from their financial institutions for help with financial management and spending control. Debit cards offer an element of control for consumers in that the money spent in a debit card transaction is drawn from existing funds in their account. Account holders often view debit cards as a vehicle to control their finances and spend responsibly. Since the funds from debit card transactions come out of a bank account or credit union and are not borrowed from a line of credit, it is important to keep track of account balances and how much is being spent to avoid overdrafts and associated fees.

With debit cards, though, keeping track of balances is easier than ever. In addition to available balance information provided on many ATM transaction receipts, online banking allows consumers to check balances and transactions 24/7. Many financial institutions also offer e-mail alerts that can be set up to notify consumers when their balances reach a certain threshold - often defined by the consumers themselves.

There are instances when using a debit card will cause a hold on funds in the account to cover the anticipated amount of the transaction. Financial institutions can place a hold on an account as a means of ensuring payment to the merchant. This "preauthorization" has attracted a significant amount of attention recently as consumers use their debit cards more frequently at gas stations, where holds are common. With gas prices rising dramatically over the past year, merchants are now submitting a preauthorization request to confirm that funds of $50 to $100 are available to cover the cost of a tank of gas.

Financial institutions that issue debit cards are responsible for actually applying the hold, as well as setting the length of the hold, which varies depending on how the debit card is used (PIN or signature transaction). The amount of money in the account available for use during the hold period is reduced by the amount of the hold. To avoid potential overdraft fees that could arise from a hold at the point of sale, consumers should check with their financial institution to determine its policy on the length of debit holds. If a hold lasts longer than an hour for a PIN transaction, or a few days for a signature transaction, ask why.

A Small Price for a Great Convenience

Contrary to some inaccuracies that have been reported, there is rarely a service charge passed on to customers when using debit cards to make purchases. In fact, less than 1 percent of cardholders in the U.S. are charged a fee by their financial institutions for using a PIN-based debit card for purchases.4

While some financial institutions are adding surcharge-free ATM access, most ATM owners charge a fee of $1 to $3 for withdrawing money from an ATM not owned by the account holder’s financial institution. This charge, like the premium paid for valet parking or to drive tollways, is for the convenience of getting cash from an ATM owned by an organization other than the debit cardholder’s financial institution.

To avoid the surcharge fee, consumers can use the cash-back option at available merchants or get cash from their financial institution’s ATMs.

Bruce Cundiff is Director of Payments Research and Consulting with Javelin Strategy & Research - a leading provider of nationally representative, quantitative research focused exclusively on financial services topics.

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eMarketer's 2008 Online Shopping Holiday Preview

Will the Grinch Steal This Year’s Online Holiday Shopping Season? - eMarketer

Will the Grinch Steal This Year’s Online Holiday Shopping Season? OCTOBER 30, 2008

Amid a season of bad economic news, when overall retail sales growth is forecast to remain nearly flat, online retailers have reason to be guardedly optimistic.

eMarketer estimates that online holiday season sales will reach $32 billion in 2008, up slightly more than 10% over 2007.

“More than ever, in order to save money on holiday gifts, consumers will turn to the Internet to get gift ideas, find bargains and locate retailers that stock desired products,” says Jeffrey Grau, senior analyst at eMarketer and author of the new report, Online Holiday Shopping 2008 Preview. “In addition, shoppers will shift a larger share of their purchases from stores to the Internet to save gas money and take advantage of free shipping offers.”

Even so, online merchants cannot afford to be complacent

“In the past, e-commerce analysts believed that online shopping was immune to economic downturns because affluent consumers—the core online buyers—had the financial resources to weather hard times,” Mr. Grau says. “But this time around the wealthy have become unnerved seeing their stock portfolios and home values shrink.”

Feeling the financial pinch, high-income shoppers have told pollsters that they will reduce their total spending online and offline this holiday season. When they do buy, they will hunt for bargains just like other consumers.

“This new frugality is a large reason why eMarketer predicts that growth in online holiday sales will drop to one-half of what they were last year,” Mr. Grau says.

See what to expect this holiday season—before the season arrives, download the new eMarketer report, Online Holiday Shopping 2008 Preview, now.

Key questions "Online Holiday Shopping 2008 Preview" report answers:

  • What is the outlook for online holiday sales this year compared with recent years?
  • How is the economic crisis likely to affect online shopping behavior this holiday season?
  • How are online retailers preparing for the challenges they face this holiday season?
  • Which retail Websites stand to benefit from the economic crisis?
  • And many others…
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HomeATM on Facebook, Other Retailers Too

More retailers have fan  pages/applications on it than on other social media sites including HomeATM:

Facebook is the social media site of choice for many US online retailers, judging by an August 2008 study by Internet Retailer and Vovici.

Nearly one-third of responding businesses said they had a Facebook page, compared with 27% that had a MySpace page and just over one-quarter that had a page on YouTube.

A September 2008 study by Rosetta (formerly Brulant) that focused on the top 100 online retailers in the US found that 59 had a fan page on Facebook, up from 30 in May 2008. Among the 29 who added Facebook pages since that time were Best Buy, Toys “R” Us, Kohl’s and Wal-Mart.

“Social media sites continue to be an important source of community connection, and savvy retailers are reaping the benefits of Facebook’s rapid extension into new demographics, such as Gen X and seniors,” said Adam Cohen, partner with Rosetta’s consumer goods and retail practice, in an interview with eMarketer.

However, Mr. Cohen said that retailers should guard against casual attitudes toward their Facebook presences.

“It’s important that retailers don’t just slap up a page because everyone is talking about Facebook. An effective presence requires that you carefully consider what your customers are looking for, what you would like to communicate, and what role a fan page should play in your overall online strategy.”

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What is a Chargeback and How Can HomeATM Eliminate Them?

One of many benefits derived from utilizing HomeATM's PIN Debit/Credit Solution to help drive eCommerce sales is the cost savings due to PIN based transactions being more secure. 

Based on the fact that PIN is more secure, Visa and MasterCard provide much lower Interchange Rates for PIN based transactions...these rates can save etailers up to 100 basis points on transactions.

PIN authorized transactions occur in real-time and are dually-authenticated
, thus another benefit is the virtual elimination of chargebacks.  Chargebacks are costly, (you lose the cash and you lose the product!) time consuming (see chart which you may click to enlarge)  and can be virtually eliminated via the HomeATM ePayment Solution

Let's take a closer look at chargebacks in order to take a look as to why this should be important to all Internet Retailers. 


A chargeback is a transaction that an issuer returns to a merchant bank - and most often, to the merchant - as a financial liability. In essence, it reverses a sales transaction, as follows:
  • The card issuer subtracts the transaction dollar amount from the cardholder’s credit card account. The cardholder receives a credit and is no longer financially responsible for the dollar amount of the transaction.
  • The card issuer debits the merchant bank for the dollar amount of the transaction.
  • The merchant bank will, most often, deduct the transaction dollar amount from the merchant’s account. The merchant loses the dollar amount of the transaction.
For merchants, chargebacks can be costly. You lose both the dollar amount of the transaction being charged back and the related merchandise. You also incur your own internal costs for processing the chargeback. On top of that, if your chargebacks amount to more than one percent of your card sales volume, you may be fined and ultimately, lose your small business merchant accounts. Credit card processing companies get fined by the Associations when their merchants have excessive chargeback levels and are very strict in monitoring them.

Chargeback reasons

The most common reasons for chargebacks are:
  • Customer dispute. A customer may dispute a transaction because a credit was not issued when the customer expected it to be; merchandise was not received; a service was not performed as expected; the purchase was fraudulent. Most of these reasons indicate customer dissatisfaction and addressing their causes should be an integral part of your sales and customer service policies.
  • Fraud.
  • Processing errors.
  • Improper authorization.
  • Inaccurate transaction information.
Although you probably cannot avoid chargebacks completely, you can take steps to reduce or prevent them. Many chargebacks result from easily avoidable mistakes, so the more you know about proper transaction-processing procedures, the less likely you will be to inadvertently do, or fail to do, something that might result in a chargeback. Always ask your credit card processing service provider for help.

Your responsibility

The main interaction in a chargeback is between the card issuer and the merchant bank. The issuer sends the chargeback to the merchant bank, which may or may not need to involve the merchant who submitted the original transaction. This processing cycle does not relieve merchants from direct responsibility for taking action to remedy and prevent chargebacks. In most cases, the full extent of your financial and administrative liability for chargebacks is spelled out in your merchant agreement.

Chargeback remedies

Even when you do receive a chargeback, you may be able to resolve it without losing the sale. Simply provide your merchant bank with additional information about the transaction or the actions you have taken related to it. For example, you might receive a chargeback because the cardholder is claiming that credit has not been given for returned merchandise. You may be able to resolve the issue by providing proof that you submitted the credit on a specific date. Send this information to your merchant bank in a timely manner.

Avoiding chargebacks

Most chargebacks result from inadequate payment processing procedures and can be prevented with appropriate training. The following best practices will help you minimize chargebacks.
  • Always conduct an AVS check and ensure that you received a “positive AVS,” i.e. Address + 5 ZIP or Address + 9 ZIP.
  • Only ship to a billing address with an approved AVS response.
  • Obtain evidence of receipt of goods (e.g. signed shipping receipt).
  • Use “Verified by Visa” and MasterCard’s “SecureCode” programs (for eCommerce merchant accounts only), which guarantees the card was used legitimately by its owner and gives you strong representment rights.
  • Require a card ID (CVC2, CVV2 or CID), the 3- or 4-digit code on the back of the card (or on the front for American Express cards).
  • Process refunds as quickly as possible.
  • Notify consumers in writing (e-mail or regular mail) when a refund has been issued or a membership canceled. Provide them with the date of refund and a cancellation number, if applicable.
  • Always provide a clear billing descriptor and phone number so the consumer can contact you directly rather than calling their bank to discuss any dispute.
  • State terms and conditions of the sale (or membership) clearly and in plain view.
  • Use e-mail to notify the consumer at each billing cycle.
  • Obtain a signature from the cardholder giving you permission to charge their card on a regular basis for monthly fees or recurring payments.
  • Make it very easy for members or subscribers to cancel – have a “no-questions-asked” policy.
  • Authorizations must always be done for every deposit.
  • Deposits must not exceed the amount you have authorized.
  • Authorizations must be “positive.”
  • Avoid using voice authorizations.
  • Avoid recycled authorizations– get a new authorization for each deposit.

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Wednesday, October 29, 2008

E-Commerce Transaction Risks That HomeATM Solves

E-Commerce Payment Transaction Risks Solved By HomeATM's Innovative ePayment Solution

Most eCommerce credit/debit card transaction risks fall into the following categories:

. Fraud usually occurs for one of the following reasons:
  • A criminal uses a stolen card or account number to fraudulently purchase products or services.
  • A family member uses a card to purchase products or services without authorization.
  • A customer falsely claims that he or she did not receive a shipment.
  • Criminals hack into an eCommerce merchant's payment processing system and issue credits to their card accounts. 

Virtual Account Information Theft: Card account information can be stolen in the virtual domain in a number of ways but most typically:
  • Hackers capture card account information during transmission between the merchant and its acquiring bank.

  • Hackers gain access to merchant services provider's payment processing system and steal customers' account information.

Physical Account Information Theft. Card account information can be stolen from physical sites as well:

  • Criminals gain access to and steal cardholder information from a merchant services provider's site and use it for fraudulent transactions.

  • A merchant or a merchant services provider's employee steals cardholder information and uses it for fraudulent transactions.

  • Cardholder information is stolen from trash bins at merchants' or merchant services providers' locations containing unshredded account information.

Customer Disputes and Chargebacks
. Customer disputes and chargebacks are among the biggest risk factors for eCommerce merchants.
        •   Products or services are not as described on the website.
        •   A customer is billed before the product is shipped or the service provided.
        •   There is a disagreement or confusion between the merchant and the cardholder regarding a return or a refund.
        •   A customer is billed twice for the same order or is billed an incorrect amount.
        •   A customer does not recognize the merchant's name on his or her credit card statement.
        •   Products or services are billed without customer approval.

        Fraudulent transactions involving unauthorized use occur when stolen cards or account information are used to purchase products and services. The cards and account numbers are legitimate but their use is not. Typically, fraud in card-not-present environment involves purchasing high-priced items that are easily resold (e.g. electronics, jewelry, etc.).
        Reblog this post [with Zemanta] Launches Today Provides Answers to Debit Card Users

        HOUSTON - (Business Wire), a new Web site that provides timely and accurate information about using debit cards, launched today, offering consumers practical details about debit’s role as a convenient payment method and valuable financial planning tool. The site addresses myths and misconceptions surrounding debit cards by offering fact-based information consumers need to know when using debit, as well as advice on making debit part of their personal money management strategy.

        The site (, sponsored by the PULSE® ATM/debit network, provides recommendations to help protect consumers’ personal finances when using debit cards, including tips for fraud and identity theft prevention.

        “The goal of this site is to raise awareness about debit card use and present consumers with reliable and balanced information about using debit for everyday purchases and as a means of managing their personal finances,” said Cindy Ballard, PULSE executive vice president. “ talks to consumers in easy-to-understand terms. The site gets to the heart of how debit cards are one of the valuable tools in a consumer’s financial planning portfolio.” also addresses issues of concern to debit cardholders, such as the risk of falling victim to card fraud.

        “Debit card networks, financial institutions that issue debit cards, ATM owners and merchants that accept cards at their points of sale are constantly making improvements to ensure both the security of card usage and the ability to readily and efficiently rectify any issues that arise,” said Bruce Cundiff, director of payments research and consulting with Javelin Strategy & Research and author of’s initial expert commentary article.

        “Despite reports to the contrary, fraud rates for debit cards remain relatively low,” Cundiff added.

        In the coming months, the site will feature articles from renowned financial planning experts, offering budgeting advice and personal finance recommendations.  “With today’s economy, most Americans are wondering how to start saving,” said Judy Lawrence, personal finance expert and author of The Money Kit and other money management works. “By contributing to this site, I hope to help people realize that saving can be very manageable, once you commit to starting the process and then learn how. Debit cards can be part of this saving process if consumers know how to make the most of their unique features.”

        Current site content includes a host of useful information, such as:
        • A video about the differences between PIN- and signature-authorized transactions
        • How to protect your personal identification number (PIN) from fraud
        • Understanding debit card liability
        • The benefits of debit cards as a financial planning tool will be updated regularly to include new expert articles, as well as additional videos about the importance of using debit cards wisely.

        About PULSE

        PULSE is one of the nation’s leading ATM/debit networks, currently serving more than 4,500 banks, credit unions and savings institutions across the country. PULSE is owned by Discover Financial Services (NYSE: DFS). The network links cardholders with more than 265,000 ATMs, as well as POS terminals at retail locations nationwide. The company is also a valued resource for industry research related to electronic payments and is committed to providing its participants with education on evolving products, services and trends in the payments industry. For more information, visit

        Anne Rhodes, 832-214-0234
        Rebekah Morgan, 972-341-2509

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        Disqus for ePayment News