Tuesday, January 27, 2009

Here to Stay - AltPay

Alternative Payments are on the rise, and they are cutting into the margins of the Dynamic Duo-poly. As credit card use declines, and debit, ACH and Money Transfer options increase, V/MC will take an even bigger hit...especially as the lime leeches from the mortar in the bricks of the house that retail built.

This article, about alternative payments, doesn't even touch on PIN Debit for the web. But it's the consumers preferred payment, which is what make s the potential for this industry so enticing. BTW, the rest of the AltPay's aside, PIN based transactions for the web is really starting to gain some "major momentum." The chatter around PIN Debit for the web has picked up tremendously over the past 10 months or so. And rightfully so...after all what part of online debit for online shopping doesn't make sense?)

I'll answer my own question. The part that doesn't make sense is the part where it's more secure than the way it's done now... and the part whereby lower interchange rates would potentially save internet retailers hundreds of millions of dollars annually.

Is it that simple...the fact that because interchange is lower, it's not as profitable to the banks, EFT's, processors and networks? Nah...couldn't be...no matter anyway because that is all about to change. Hackers have changed the game and "now it's all about security." TJX, CardSystems, Hannaford, RBS Worldpay, and now Heartland have seen to that. We need a more secure transaction, one that's encrypted from beginning to end and not only have we already got it but it's already the consumers preferred method.

Here's a tidbit from Bala J.'s article:

Alternative Payments: More Ways to Close the Sale
By Bala Janakiraman
Online customers are increasingly turning to alternative payment methods, and merchants who don't want to miss out on sales should consider accepting some or all of them. Banks also are getting in on the act, creating Secure Vault Payments, which authenticate customers through online banking portals.

For the past few decades, checks, ACH, credit cards and debit cards have been the primary means of payments for consumers. These payment methods have been successful because consumers can pay for their purchases without carrying cash, merchants can increase sales by reaching a wider consumer base, and banks are able to establish themselves as trusted financial providers to both merchants and consumers. However, changing market trends are creating opportunities for alternative payment methods and practices.

The Driving Forces Behind Payments Innovation

Communications technologies, mainly the Internet and mobile phones, have dramatically altered the ways in which individuals interact with each other and, in turn, consumers are shifting more of their purchases from the physical world to the virtual. Merchants have adapted by becoming multichannel marketers and banks are following suit by providing new means for consumers to interact with their finances through popular tools such as online bill pay and mobile banking.

Second, the rise of online purchases has brought with it concerns of security. While most banks fully protect consumers against fraudulent transactions, consumers don't want to go through the hassle of identifying and fixing fraud. And merchants are even more concerned especially since they end up digesting most of the liability in the event of a security breach.

Merchants are also concerned about managing the rising costs of payment acceptance. Over the last 20 years, credit card interchange fees have gone up 25 percent to 90 percent, depending on the card type and the nature of the merchant business... continue reading

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Heartland - End 2 End Encryption 2 End Hacking

Here's an update on Heartland Payment Systems.  This is a better press release than the previous ones.  It makes sense that transactions are encrypted at all times.  I was miffed at the previous press releases, the first on inauguration day and the second being pure spin.  This one however, addresses the problem head-on.   It's a good move for Heartland in their valiant attempt to make "lemonade." 

It says here they hired former ICVerify founder/payments guru Steve Elefant as the executive director of the new division.  Mr. Elefant is also the Managing Director at VC Firm Soaring Ventures in Silicon Valley.  Click here for his bio.

Heartland Payment Systems, Inc. :: Heartland Payment Systems Accelerates Development of End-to-End Encryption

Payments Processor Forms Dedicated Department and Names Executive Director

PRINCETON,  N.J., Jan. 27 /PRNewswire-FirstCall/ -- Payments processor Heartland Payment Systems today announced it has formed an internal department dedicated exclusively to the development of end-to-end encryption to protect merchant and consumer data used in financial transactions.

For the past year, Robert O. Carr, Heartland's chairman and chief executive  officer, has been advocating for payments industry adoption of this technology - which will protect data at rest as well as data in motion as an improvement for payment transaction security.

Carr stated, "PCI is a good and effective standard, but the bad guys have become more sophisticated to the point where encryption of data in motion appears to be one of the next required steps. There is no single silver bullet that will secure payment systems, and constant vigilance and monitoring of the infrastructure will always be required.  Nevertheless, I believe the development and deployment of end-to-end encryption will provide us the ability to implement increasing levels of security protection as they become needed. 

"Heartland has been working on the development of end-to-end encryption, but in light of our recent data breach and the impact cyber fraud has had on the public and processors nationwide, we are ramping up our efforts," Carr continued. "To do this, we are forming a dedicated internal department  and have named Steven M. Elefant, a well-known expert in point-of-sale payments, executive director."

Elefant is a member of the US Secret Service Electronic Crimes Task Force and Infragard, a public/private partnership of the Federal Bureau of Investigation. He is the co-founder and former chief executive officer of ICVerify Inc. ICVerify became the leader in payment processing integration of PC-based point-of-sale software. In 1998, Elefant merged ICVerify with CyberCash Inc. to form an Internet service provider for electronic commerce.

Recently, Elefant has been involved in numerous technical ventures in the payments and venture capital industries. His breadth of experience spans a wide spectrum including merchant and  consumer services for online consumer auctions and ASP services for merchandise and payments management.

"Late last year, Steve began a consulting project to help us define a business model for  bringing Software as a Service (SaaS) applications to our merchant base," Carr noted. "Now, as a Heartland employee, he will focus on the first leg of end-to-end encryption - getting encrypted data from the point of swipe/entry at the merchant to our switch so malware cannot steal data in motion. The internal network encryption infrastructure will be handled by a combination of new and existing IT professionals under Steve's direction."

Elefant said, "I have known Bob Carr for more than 20 years. We gained respect for one another as  competitors in the late '80s and '90s, and I believe Heartland's desire to bring end-to-end encryption to market and work with other processors to share information about cyber crime incidents are significant steps for our industry."

Source: Company Press Release


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Money Transfers to Mexico Drop 3.6%

Annual Mexican Remittances Drop for 1st Time on Record

According to Yahoo News,  this is the first drop since they started tracking the money in 1996...

MEXICO CITY – Mexico's central bank says the amount of money migrants sent home fell 3.6 percent in 2008, the first drop on record.

The slide is part of a global trend that is expected to worsen as more emigrants from developing countries lose jobs in the financial crisis battering the United States, Europe and Japan.

The central bank said Tuesday it is the first time remittances have fallen year-to-year since the bank starting tracking the money 13 years ago.

It gave no forecast for 2009. But Mexico's largest bank, Banamex, has predicted that remittances could drop by at least 2.5 percent in 2009.

Experts blame the U.S. recession and a crackdown on illegal immigration.

(continue reading)

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TrialPay Adds 5 Million Users in 54 Days

TrialPay says it has 20 million "users" of it's service.  That's amazing, because last December 3rd, in a press release, TrialPay announced that their user base had reached 15 million with 7500 retailers.

They remain at the same "7500 merchant level  but their new users are multiplying like rabbits.   I guess it makes sense,  cause, come to think about it,  I'm pretty sure that  rabbits "get it" for free too.  Still, that's a whopping 5 million newbies in the 54 days (7.71 weeks) comprising the period between 12/3 and 1-26. 

It also equivocates into the following:
  • 2,777,777 new users per month (1.8 months)
  • 648,508 new users each week (7.71 weeks)
  • 92,593 new users per day (54 days)
  • 3858 trial users per hour (24 hours per day)
  • 64 newbies per minute and
  • 1.07 new users per second...
A most impressive 54 day marathon (in a good economy) .  At this rate, they'll add 33,333,324 newbies wanting buy one/get one freebies by 1/1/10.  I guess in a bad economy, you can't beat free.   A clever idea, yes, but sometimes being in the right place at the right time can't be beat iether. 

E-Commerce Payment Platform TrialPay Shines in a Dark Economy
Despite recession, TrialPay achieves record sales, tops 20 million users

Mountain View, Calif. (PRWEB) January 27, 2009 -- TrialPay has just marked its most profitable quarter, charted its highest sales day on record and reached an astonishing 20 million users--all at a time when most businesses are struggling to attract customers. By offering consumers a free product with every purchase and helping more than 7,500 industry-leading merchants increase their online sales, this rapidly growing alternative payment system is proving to be a bright spot in a bleak economy.

"In the midst of a holiday shopping season with the worst sales drop in four decades, TrialPay witnessed its highest sales day ever, experienced its best quarter to date and doubled its user numbers in less than 6 months," says Alex Rampell, co-founder and CEO of TrialPay. "TrialPay offers an inventive way for shoppers to stretch their dollars while providing a creative way for online merchants to increase sales from their current traffic."

Through TrialPay, more than 7,500 premier merchants such as McAfee, Match.com and The Wall Street Journal give away their products or services for free when shoppers try or buy one offer from one of 2,000 blue-chip advertisers (e.g. send flowers from FTD, sign up for Netflix or buy clothes from Gap). TrialPay pays the merchant the full value of the free product--and often even more--using revenue from the advertiser.

Online shoppers in more than 100 countries worldwide have stopped shopping the old-fashioned way and started checking out with TrialPay to get a 2-for-1 with every transaction. As a result, the 2-½ year-old company earned its place in the top 5 alternative electronic payments, along with PayPal, Bill Me Later, eCheck and Google Checkout, according to Javelin Strategy and Research.

"TrialPay's innovative payment method continues to be a compelling choice for consumers as our tremendous growth rivals that of the biggest names in the payments industry," adds Rampell. "Reaching 20 million users at such a rapid pace proves that TrialPay shows no signs of slowing down, even in the middle a recession." To see TrialPay in action and get products from many premier brands for free, please visit: http://www.trialpay.com/shop

About TrialPay
TrialPay is the only payment method that increases a customer's willingness to pay. Visa, MasterCard, PayPal and other standard payment options process transactions but they do nothing to boost sales. TrialPay entices shoppers to complete their purchase by giving a 2-for-1 with every transaction. Shoppers get their original product for free by completing one offer from blue-chip advertisers. With TrialPay, everyone wins: merchants make more sales from their current traffic, advertisers acquire new customers on a pay-for-performance basis and shoppers get a free product with every purchase.
TrialPay works with more than 7,500 premium merchants, including McAfee, The Wall Street Journal, Skype, Match.com and other industry leaders in software, games, publishing, online services and retail. TrialPay currently has more than 20 million registered users and offers 2,000 ways to pay by transacting with name-brand advertisers. For more information, visit http://www.trialpay.com.

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Apple Today Keeps ProcessAway

iPhone Credit Card Processing - ProcessAway Makes It Possible
iPhone Credit Card Processing - ProcessAway Makes It Possible

TUSTIN, Calif., Jan. 27 /PRNewswire/ -- Apple had no idea when it launched its iPhone that it would be releasing about 5 million mobile credit card terminals into the hands of business owners. That's exactly what Apple did. The sleek phone has been turned into a mobile credit card processing device, thanks to an impressive little application called ProcessAway.

The software is made for an Apple iPhone or iPod Touch and works over any available network connection. Transactions can be processed at places such as conventions, street fairs, antique shows, and by business owners performing mobile detailing, on-site consultation or construction. The list is endless on who could benefit by offering the convenience of accepting credit cards on the spot and the confidence of getting immediate authorization for a credit card payment.

Business owners can use their iPhone to conduct real business. The ProcessAway software utilizes the Authorize.net gateway. Authorize.net was one of the very first Internet payment gateways and today they have one of the largest customer bases. They are continually releasing new and innovative tools to make their payment gateway even more powerful. The Authorize.net API is what fueled the development of ProcessAway and allows the millions of iPhone (and iTouch) users to turn their device into a credit card terminal.

The business owner is not limited to mobile transactions through their device. The Authorize.net merchant account used with ProcessAway includes an option to download transactions into Quickbooks and also a comprehensive Virtual Terminal. This gives business owners the benefit of processing transactions out of the office with ProcessAway and in the office through the web-based Virtual Terminal, all with a single account. Even though the Virtual Terminal is available, ProcessAway was designed as a stand-alone comprehensive processing solution that can be used effectively in any environment.

The ProcessAway software will be sold through the iTunes AppStore for $19.99. A fully functional free version, called ProcessLite, is identical to ProcessAway except the charge amount is limited. Additional information, screenshots, and FAQs can be found at http://www.processaway.net. Both ProcessAway and ProcessLite were submitted to Apple for review on January 26, 2008, and will appear in the AppStore according to Apple's approval schedule.


Randy Palermo, 714/656-4426
Fax: 714/475-6957
Email: randy@rapadev.com

This release was issued through eReleases(TM). For more information, visit http://www.ereleases.com.

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AmEx Earnings Fall 79%

American Express CompanyImage via Wikipedia
Yesterday, American Express fell 5 percent to close at $15.20, and the credit card companies Visa, MasterCard and Discover closed lower. After markets closed on Monday, American Express reported that its net income fell by 79 percent in the fourth quarter.  Ouch.

The Associated Press

American Express earnings fall 79 percent -By SARA LEPRO

NEW YORK (AP) — American Express Co. said Monday that its profit tumbled 79 percent in the fourth quarter as cardmembers cut back their spending amid the harsh economy and the company took a big severance-related charge.

This marks the fifth-straight quarter of profit declines
at American Express — a credit card company that has prided itself on catering to a more affluent clientele — proving that few have been spared from the pain of the recession.

The New York-based company also said it expects spending to continue to slow in 2009, and forecast for higher delinquencies and loan losses as consumers and businesses battle worsening economic trends. The outlook echoes remarks made by fellow credit card issuer Capital One Financial Corp. last week.
  For the final three months of the year, AmEx earned $172 million, or 15 cents per share, compared with earnings of $831 million, or 71 cents per share, a year earlier.

During the quarter, AmEx set aside $1.4 billion to cover bad loans, down slightly from the $1.45 billion set aside in the prior-year period when the company took a $274 million credit-related charge. 
In the company's U.S. card segment, net income fell to $4 million from $7 million, as total revenue decreased 13 percent.  Average basic cardmember spending declined 13 percent to $2,758 from $3,161.  The international segment held up better in the fourth quarter, the company said, with net income falling 8 percent to $36 million. Average cardmember spending slipped 2 percent on a foreign exchange adjusted basis.

Adil Moussa, an analyst at Boston-based research firm Aite Group, said the international results were encouraging, but he warned of further deterioration to come.  "What happens in the U.S. is going to happen outside of the U.S. in a year or so," he said, referring to American consumers' pullback in spending.

The fourth quarter saw American Express transform itself into a bank holding company — a surprise move that signaled to investors just how severe the credit card giant's troubles had become.
  In approving AmEx's request for bank holding company status, the Federal Reserve cited "emergency conditions."  Funding its daily operations had become more difficult and more costly amid the credit crisis. The securitization market, which AmEx uses to raise operating capital, has dried up as investors shy away from purchasing all but the safest forms of debt.

As a bank holding company, AmEx can now accept deposits and permanently access financing from the Fed. The status change also enabled AmEx to tap into the government's $700 billion financial bailout package. In January, the company received a $3.4 billion investment from the U.S. Treasury Department in the form of a preferred stock purchase.

Additionally, AmEx said it raised $6.2 billion through a new retail certificate of deposit program it launched in October.  As a result of the additional capital, the company's total capital to total managed assets was 7.9 percent at the quarter's end, up from 6.7 percent at the end of 2007.  AmEx said it remains committed to growing its deposit base and plans to launch a direct deposit program in the second quarter. 

In October, AmEx announced plans to cut 7,000 jobs, or about 10 percent of its global work force, in an effort to slash costs by $1.8 billion this year.

For the full year, the company said net income fell 34 percent to $2.63 billion, or $2.27 per share, from $4.01 billion, or $3.36 per share. Revenue rose 3 percent to $28.37 billion.

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Are Smart Phones as Smart as Hackers?

Bank of America has launched a specialized mobile banking application for BlackBerry smartphones. The software is available at mobilebanking.bankofamerica.com//bbapp and it is available for BlackBerry devices with an Operating System 4.2 or higher.

With that said, Tom Wills, from Javelin Strategy and Research wrote an amusing blog post this morning...

Android: Beware the Dark Side

"Picture this. You’re the proud owner of a shiny new Googlephone. You’ve just spent the best part of Sunday afternoon getting it configured and transferring your data onto the device, and now you’re ready to load up on some cool apps. Browsing one of the Android download portals, you’re overjoyed to see that your financial institution has a mobile banking application available, and with a few deft clicks, you download it to your handset.

You eagerly launch the app, and then the fun starts. Or … hang on … maybe this isn’t so much fun. The screen goes dark for few seconds, and then your device freezes. The only way you can turn it off is by sticking a hairpin into that little hole on the back, and when the device reboots, all of your data is gone. Address book and calendar – both wiped.

Then later that evening, several of your friends and business contacts (including the one who interviewed you on Friday for that job you’ve always wanted) email you asking why you’ve been sending them messages offering to sell them C1ali$ and V1agra. You know that kind of message. Turns out that the friendly looking banking app was actually a virus..."

He goes on to ask if he's being paranoid or writing sci-fi.  The answer is neither.

continue reading at Javelin's blog site

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JCB Moves to Protect Online Customers

Finextra is reporting that JCB has made a move to shield customers from online fraud.  You'll be seeing a slate of press releases related to the card industry and protection in the weeks and months following the Heartland Breach.  
JCB selects RSA FraudAction to protect online customers

Japanese card issuer JCB has signed for US security vendor RSA's fraud protection service in a bid to shield customers from online fraud and phishing attacks.

The RSA FraudAction service uses a team of analysts to detect and control phishing attempts. The system will be used by JCB to protect its 60 million cardholders when they view statements and make credit application online.

Osamu Yamano, president, RSA Japan, says the country suffers from high levels of cybercriminal activity, with fraudsters setting up fake Web sites and sending phishing e-mails to trick customers into handing over sensitive information.

Masahiro Ogushi, SVP, media and channel management department, JCB, says: "We believe having the innovative RSA FraudAction service working on our behalf to find and shut down fraudulent activity targeting our business online is an essential measure of security."

VeriSign's VIP for PayPal UK

PayPal Security Key Goes Live With VeriSign® Identity Protection in the UK; Adds SMS Functionality From VeriSign to Secure Log-Ins via Text

VeriSign, Inc. (NASDAQ: VRSN), the trusted provider of Internet infrastructure services for the networked world, today announced that Internet users in the UK have the option of using VeriSign® Identity Protection (VIP) on their PayPal account as an extra layer of security to protect their online identity.

VeriSign is enabling PayPal's customers to log in to their accounts by receiving a one-time-password (OTP) via text message (PayPal SMS Security Key) or by using a security token (PayPal Security Key).

Users of the 'PayPal Security Key' and 'PayPal SMS Security Key' can now access their online accounts in a secure manner through a VIP security credential that generates an OTP for every sign-on. During an online session, this password is entered into the user log-in interface along with the user's usual account name and password. When PayPal verifies the OTP and matches it to the user, clients achieve strong -- or two-factor -- authentication.

"PayPal has always taken online security very seriously and is famous for not sharing customers' financial information," said Garreth Griffith, Head of Risk Management at PayPal UK. "As a result, successful fraud attacks on PayPal accounts are very rare. But we know that some people want extra reassurance, and that's what the PayPal Security Key will offer. It's like a combination lock for your account -- designed to let you in and keep others out, with the extra safeguard that the combination always changes."

PayPal's support of strong authentication through SMS messaging means that consumers who want the protection online can use the device of their choice -- the physical Security Key token or a mobile device for generating the OTP needed to access their accounts.

Griffith comments, "Offering the Security Key via text message is really important as we want to make it as quick and convenient as possible. You just need your mobile phone to use it, which prevents having to carry another gadget around with you."

Consumers whose devices support SMS -- and who subscribe to SMS services from their mobile providers -- can receive PayPal OTPs without having to download any special software. In addition to the token and SMS functionality that PayPal has chosen to use, the VIP Authentication Service supports a wide range of authentication credentials, including stand-alone tokens, software tokens for mobile phones and credit card-size form factors.

"PayPal has proven itself to be an innovator when it comes to online safety for consumers," said Mike Davies, director of Identity and Authentication Services at VeriSign. "With today's announcement, PayPal and VeriSign are deploying what is truly a token for everyone. Now, consumers have even easier access to proven safeguards from the most trusted security brand on the Internet."

Around the world, leading online businesses have joined the VIP Network to provide their customers with identity safeguards that go beyond standard secure log-ins with user names and passwords. Members of the VIP Network display a special VIP logo, a signal to users that the site accepts a special VIP security credential that generates an OTP for every sign-on.

The new SMS functionality is provided by VeriSign's Messaging and Mobile Media division, which offers one of the most robust, scalable and reliable mobile messaging delivery engines in the world, connecting to more than 700 carriers and reaching over 3 billion wireless subscribers in over 200 countries.

About VeriSign

VeriSign, Inc. (NASDAQ: VRSN) is the trusted provider of Internet infrastructure services for the networked world. Billions of times each day, VeriSign helps companies and consumers all over the world engage in communications and commerce with confidence. Additional news and information about the company is available at www.verisign.com.

Source: Company Press Release
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