Mobile Payment Industry News: 01/05/09

Monday, January 5, 2009

Global Smart Card Outlook

Smart card applications make transactions safer

New Dehli, India, Jan. 05, 2009 -- RNCOS in its new research report "Global Smart Card Market Outlook" says that the financial/retail sector is expected to continue to represent the largest application area for the global smart card industry. And the shipment of smart cards in financial/retail/loyalty is estimated to increase by 15% in the current year.

According to the report, the rising applications of smart cards in diverse sectors are due to the high security they provide. Consequently, smart cards are being widely used in financial applications such as payment cards and ATM or banking cards.

With robust growth in the global financial market, particularly in the Asia-Pacific region, the opportunities for the global smart card industry have increased tremendously, says the report. Rising number of fraudulent cases has highlighted the risks associated with using magnetic strip cards for transactions. Moreover, the growth opportunities for smart cards have further increased by the decision taken by Visa and MasterCard to use Europay, MasterCard and Visa (EMV) specification worldwide.

Besides, the banking sector represents an area of tremendous opportunities for smart card industry because its functionalities, such as value-added services and enhanced consumer benefits, have made smart card viable and the safest option for end users. Thus, the demand for smart cards is expected to grow at an unprecedented rate.

"Global Smart Card Market Outlook" provides in-depth and comprehensive information on the growing marketplace for smart cards at the global and national level. It contains thorough analysis along with statistical data on the present market trends, emerging markets and future growth prospects for the smart card industry.

Apart from this, the report contains statistical information on value, shipments and applications of smart cards at the global and national level that helps clients to identify critical opportunities for growth of the smart card industry. It helps clients to evaluate key factors driving growth in the industry and future avenues. The study also provides forecast on the number of mobile subscribers and smart card shipment by region.

Source: Company press release

Mob Implicated in Credit Card Scheme

Armenian Mob Imiplicated (sic) in Credit Card Scheme - beaconcast.com

Don't know if they spelled it wrong or if because they were illegal immigrants, they added the "Imi in plicated", but nontheless, here's a snippet from Beaconcast on an Armenian Mob Ring in Alpharetta, GA.

It all started around late August when four alleged Russian gang members of Armenian descent, all of them likely near the bottom of the crime mob totem pole, descended on Alpharetta from Glendale, Ca. to set up crime operations. All four entered the country illegally. No one knows exactly how the four made their way into the U.S. But like the millions of other foreigners who are in America illegally, they did...

Once established, the suspects engineered an elaborate credit card fraud scheme they perpetrated on unsuspecting late night BP customers. This involved changing out the electronic credit card swipe machine when no one was around and replacing the BP supplied one with their own version by simply unplugging BP’s and plugging in their counterfeit replica. This bogus machine would do everything the BP device did, like send the funds to the BP clearing bank, print out a BP receipt and balance BP’s cash register. What it also did was capture the name of the card user, the credit card number and electronically encode the metallic stripping.

Each time a customer would buy something in the store with a credit or debit card, Khalatyan caught the information in his fraudulent machine. The suspect would ask the customer if it was a debit. If so, the user would then enter his or her pin number in the device, and Khalatyan would capture that too by using a small hidden camera...

continue reading at Beaconcast

Macy's Multiple Debits = Multiple Questions?

Evan Shuman (and Fred J. Aun) wrote an interesting story regarding the recent "multiple debits" charged to 8000 Macy's debit card customers. Like the recent RBS breach, (see: Mother of All Hacks Coming?) it was "quietly" announced (purposefully?) during the busy holiday season when many reporters are on holiday. Unlike the RBS breach, and to Macy's credit...er...debit, they didn't wait 2 months (see below) to announce it. Here's the story from StorefrontBackTalk.com

Questions Surround Some 8,000 Macy's Debit Cards That Got Charged Repeatedly

When Macy's distributed a very cryptic statement on Dec. 23 that "some" debit card customers had been charged had seen "multiple" debits for single transactions, it went virtually unnoticed.

Much of that had to do with the very quiet way Macy's shared that knowledge, by E-mailing it to a handful of reporters, many of whom were on vacation. Unlike the typical way Macy's—and others—make statements, there was no statement issued to any of the major news release wires nor was it was placed on their own news release page. It was ideally handled if someone wanted to say that they "announced" something but have no one know about it.

Continue Reading at StorefrontBackTalk

In a related story, BTN came down on RBS for waiting two months before announcing that 1.5 million of it's customers were breached.

"Our Computers Were Compromised…Two Months Ago" - 01..2009 - Bank Technology News Article

"The institution discovered the breach shortly after Halloween, yet apparently waited almost two months—an eternity in ID theft time—before making a public announcement. That has some people scratching their heads. “Two months? That’s enough time for someone to go out and apply for a loan under your name, to get a credit card, to mess up your credit. The way to build trust in relationships is with communication,” says Jacob Jegher, an analyst at Celent."

Skim Through this Card Skimming Article

In addition to the fact that E-Commerce is outpacing bricks and mortar in several sectors, (see previous story) there is a mounting problem with bricks and mortar POS devices. They've been tampered with, they've had skimmers attached to them, or they've been replaced with clones and then taken back filled with credit/debit card numbers.

I am adamant in my beliefs that the safest transaction is online debit for online shopping. You swipe your own device outside the browser space and because you're left to your own devices, they are not in danger of being tampered with. So swipe your own card, with your own device...in your own home...and your card information will remain your own...

Here's a story about a Buffalo man, who is to be sentenced shortly. I'm curious to see how much time he'll do.

According to today's Buffalo News, a local skimmer was convicted and is scheduled to be sentenced 1/22. It'll be interesting to see how long this skimmer will be a "jail bird".

If you'd like to read the "entire" article, click the headline below. Otherwise you can "skim" through Dan Herbecks report below:

Skimmers prey on credit card users

By Dan Herbeck
NEWS STAFF REPORTER

Skimmer fraud is a growing international problem, according to police, and it all starts with a process that is so routine that it happens millions of times every single day at businesses all over the world.

A customer walks into a store or restaurant, makes a purchase and hands a credit card to a cashier. The cashier then swipes the card through an electronic device that reads the information on the card.

Usually the purchase is approved, but sometimes a dishonest cashier also swipes the card through a small, illegal, hand-held device called a skimmer.

This device — no bigger than a pager — steals information from the card and activates a form of identity theft that causes headaches for consumers and, in recent years, has cost credit card companies billions of dollars.

Fraud experts say these scams occur every day — often on a much bigger scale — in businesses all over the world. Some of the skimming operations are run by organized crime.

“Credit card scams and shady waiters can easily turn customers into identity theft victims,” said Dawn Handschuh of CreditFYI.com, an online educational forum on personal finance issues.

“Credit card skimming occurs when someone swipes the magnetic strip on a customer’s credit card to get the account number with a device small enough to hide in a pocket or hand. It takes about two seconds.”

Skimmers usually cost a few hundred dollars and can be purchased over the Internet, police said. Some Web sites even offer information on how to make such a device.

In Europe, a growing number of restaurants are fighting this form of fraud by using small portable devices that allow consumers to pay their bill at their table. A limited number of restaurants in the United States have begun using them.

“Industry and law enforcement sources estimate credit card fraud losses exceed a billion dollars annually. And it’s no wonder why, when thousands of skimmed credit card numbers can be sold and e-mailed anywhere around the globe in seconds,” the Consumer Affairs office of the State of Georgia said in a recent advisory on skimming.

Skimming affects every consumer because fraudulent credit transactions are sometimes charged back to the merchant who accepted the card. The merchant ultimately winds up raising prices to make up for the losses, the Georgia office said.

Authorities also warn about a second form of skimming that does not require the participation of dishonest cashiers. Some skimming rings have learned how to install skimming devices on automated teller machines, gasoline pumps and other legitimate devices that read credit cards or banking cards.

According to federal prosecutors in Orange County, Calif., a man pleaded guilty in 2007 after agents learned that he put illegal skimming devices on gas pumps at several gas stations in the region. The man admitted that he obtained credit card and debit card information from 90 customers and then used the information to steal $186,000 from his victims’ accounts.

E-Commerce Outperforms Bricks-and-Mortar Across Many Sectors

"eCommerce continues to grow says "JPMorgan Analyst Imran Khan as he pointed out in a research note that while U.S. retail sales grew just 2 percent in the first nine months of 2008, eCommerce grew by 8 percent.

Meanwhile...comScore, a leader in measuring the digital world, today released online spending data by category for the online holiday shopping season, which showed that trends in online spending outperformed offline in several key product categories. The study compared comScore e-commerce data to overall (online and offline) consumer spending data published by MasterCard Advisors' SpendingPulse Unit for the period of Nov. 1 -- Dec. 24 vs. year ago.

"For an online holiday shopping season that recorded a disappointing 3-percent decline in sales, a positive note is that e-commerce trends outperformed overall consumer spending in several product categories, which is to say that e-commerce continued to capture an increasing share of consumers' wallet," said comScore chairman Gian Fulgoni.

"Clearly, 2008 was an extremely challenging time for many retailers, and the beginning of 2009 may not be much better. But when the consumer economy eventually does rebound, e-commerce is poised to benefit from its emergence as an important consumer sales channel."

Wealthiest Households Spent More Online this Holiday Season

comScore also analyzed non-travel e-commerce spending by household income segment for the holiday shopping season, revealing that growth in online spending only occurred (up 7 percent) within households making at least $100,000 in annual income, while lower income segments logged significant declines in spending. Those households earning less than $50,000 per year appear to be the most affected by the current economic environment, with their online spending declining by 13 percent versus year ago.

Source: Company press release.

MC inC: "MasterCard inControl" of Orbiscom

After RBS implemented a commercial application called "MC inC," a collaboration between Orbiscom and MC, they have decided to purchase the company.

Deal enhances MasterCard's ability to deliver advanced and customizable payments solutions for today's demanding marketplace

PURCHASE, N.Y., Jan. 5 /PRNewswire-FirstCall/--

MasterCard Incorporated (NYSE: MA) announced today the acquisition of Orbiscom Ltd., a Dublin, Ireland-based leading payments solutions software provider for major financial institutions. The purchase price is approximately $100 million, a portion of which is contingent upon the future performance of Orbiscom's business.

The acquisition builds on the companies' existing partnership that created MasterCard inControl, an innovative platform featuring an array of advanced authorization, transaction routing and alert controls designed to assist financial institutions in creating new and enhanced payment offerings.

In 2008, Royal Bank of Scotland became the first financial institution to implement MasterCard inControl for its commercial card customers.

Click the following link to read the entire press release:MasterCard Acquires Orbiscom to Accelerate Development of Innovative Payment Solutions | MasterCard®