Mobile Payment Industry News: 02/10/09

Tuesday, February 10, 2009

PayPal Says Don't Type...Swipe

I've been saying that for about a year now, you know..."You Should Be SwipePIN instead of Typin'."

Apparently PayPal, Magtek and Dell all agree as today they announced the new Magtek personal swiping device for use with PayPal. You can buy it at Dell.

You may purchase the Magtek personal swiping device from PayPal here for $86.99 WITHOUT a PIN Pad.

Or, you can get ours WITH a PED (PIN Entry Device) which also enables you to carry out a secure P2P (person to person) money transfer. The HomeATM Slider can be yours for much less money. One more thing...you don't have to download any software for our to work, which is not the case with the MagneSafe Secure Card Reader.

Here's today's press release:

PayPal Virtual Terminal Safeguards Merchant Transactions with MagneSafe Secure Card Reader from MagTek

SEAL BEACH, Calif. February 10, 2009 - MagTek®, Inc., a global leader in secure electronic payment technology, today announced that users of PayPal Virtual Terminal can save time and reduce errors by using the MagneSafe Mini secure card reader from MagTek. Designed to provide superior card data privacy as well as authentication for credit and debit card transactions, the MagneSafe Mini helps merchants avoid keying errors and speeds card transaction processing.

The MagneSafe Mini easy-to-use card reader plugs directly into a computer’s USB drive, and provides maximum security for all face-to-face transactions. The reader can be used anywhere there is a computer, Internet access, and a customer’s debit or credit card. With one quick swipe, the MagneSafe Mini reader captures the customer’s name, card number, expiration date, and card type and they are then all posted automatically to the merchant’s PayPal Virtual Terminal order form.

"PayPal Virtual Terminal is a powerful solution to help merchants expand their business, save money and deliver faster products and services for their customers, " said Doug Free, Vice President, Retail Business Unit for MagTek. "By using the MagneSafe Mini reader merchants can take the value of their Virtual Terminal services one step further with the assurance of encrypted data for enhanced security and PCI compliance."

Merchant benefits of the MagneSafe Mini secure card reader include:

Increased data accuracy: By swiping credit and debit card information, instead of typing, merchants can avoid keying errors and speed up the credit card payment process.
Assured security: Encryption provides increased security for credit card information and reduces risk relating to opportunity for stolen card data at PayPal merchant locations.
PCI Compliance: The MagneSafe Mini secure card reader meets PCI DSS requirements for secure cardholder data encryption.

"Today’s online merchants are looking for ways to shorten transaction processing times without risking information accuracy," said Rahul Bhargava, senior director of merchant solutions at PayPal. "The MagneSafe Mini secure card reader, in combination with PayPal Virtual Terminal, is a great solution because it saves time, reduces errors and gives merchants confidence that their customers’ data is always safe and secure."

About the MagneSafe Mini Secure Card Reader

At just 100mm in length, the MagneSafe Mini secure card reader has been specifically designed to meet PCI DSS requirements to secure cardholder data via 3 DES DUKPT encryption. Self-powered through a USB port, the secure reader can be connected to any PC or terminal with a USB interface. The device features MagnePrint card authentication technology that enables secure transactions for magstripe documents including credit cards, debit cards, gift cards, ATM cards and ID cards.

Pricing and Availability

The MagneSafe Mini is available now by ordering direct from Dell. Pricing starts at $79.99 USD. For more information, please visit: www.paypal.com/vtswipe

About MagTek
Founded in 1972, MagTek, Inc. is the leading provider of technology that makes electronic transactions safer, speedier and more comfortable. With its secure card readers, dependable check scanners, instant card personalization, robust PIN management, and identity verification systems, the company’s products and components are used today in thousands of companies around the world. Every day at supermarkets, gas stations, banks and credit unions, restaurants, casinos and hotels, on airplanes and time clocks, in ATMs, kiosks and POS terminals you may not see the MagTek logo, but the odds are great that you are using one of its products. Based in Seal Beach, California, MagTek has sales offices throughout the United States, Europe, and Asia, with independent distributors in over 40 countries.

Source: Press Release

CashEdge Executes $50 Million in Online Transfers

Bank Customers Transfer Nearly $50 Billion Online in 2008 Using CashEdge Intelligent Money Movement(TM) Products

Volume Up Over 32 Percent from 2007

NEW YORK, Feb. 10 /PRNewswire/ -- CashEdge Inc. (www.cashedge.com), the leader in Intelligent Money Movement(TM) products for financial institutions, announced today that in 2008, the Company executed nearly $50 Billion in online transfers, a more than 32 percent increase over 2007 volume. Furthermore, the Company reported an over 30 percent growth in the number of end users accessing its services, indicating a continued growth in user demand for online funds transfer services. The transfers were initiated through CashEdge's Intelligent Money Movement(TM) solutions that are currently in use at hundreds of leading financial institutions, including the majority of the nation's largest banks.

"This transaction volume and the significant increase in use of online funds transfer services demonstrate the demand in the market for solutions that enable consumers and small businesses to easily and safely move their money online," said Sanjeev Dheer, CEO, CashEdge. "With CashEdge's online transfer and payment products, including Me-to-Me Transfers and Third Party Transfers, financial institutions can meet this growing demand using solutions that are supported by industry-leading risk management tools, including fraud detection and prevention. As demand continues to grow, we expect to see additional transfer solutions - such as person-to-person payments - being offered by banks as well."

The growth in online transfers was also illustrated in the 2008 CashEdge Consumer Survey, which indicated that consumers are moving more money online and demanding additional funds transfer services, including the ability to transfer funds to their friends and family. In the survey, 88 percent of consumers polled expressed interest in direct account-to-account funds transfers to other people, such as friends and family, in lieu of cash or check, using account information provided by the recipient.

CashEdge's industry-leading products include TransferNow(R) for Consumers, TransferNow for Small Businesses and OpenNow(R)/FundNow(R) for new account opening and funding. The TransferNow for Consumers Product Suite includes Me-to-Me Transfers and Third Party Transfers, which enable financial institutions to offer their customers secure funds transfer services for inter-institution transfers between their own accounts or directly to third parties. The TransferNow for Small Businesses Product Suite is comprised of several offerings that can be used as either stand-alone services or as part of a cash management suite, including Small Business Invoicing and Payments, Employee Payments and Vendor Payments, and Small Business Me-to-Me Transfers.

All TransferNow modules leverage industry-leading risk management tools that satisfy all business, risk and compliance requirements, thus enabling safe and secure transfers between accounts held at over 23,000 banks, credit unions and brokerages via the ACH network.

To learn more about CashEdge's Intelligent Money Movement services, visit www.cashedge.com.

About CashEdge

CashEdge is the leader in Intelligent Money Movement(TM) services that enable financial institutions to engage customers in new ways. CashEdge's Intelligent Money Movement services provide a single point of access, through an online banking portal or mobile application, for multiple easy-to-use consumer and small business transfer routes. CashEdge's industry-leading products include OpenNow(R)/FundNow(R) for new account opening, TransferNow(R) for Consumers which includes Me-to-Me Transfers and Third Party Transfers, and TransferNow for Small Businesses which includes Invoicing and Customer Payments, Employee Payments and Vendor Payments, and Me-to-Me Transfers. These products are supported by industry-leading risk management capabilities that leverage comprehensive, proprietary technology, helping institutions mitigate risk and decrease fraud exposure.

CashEdge currently serves hundreds of leading financial institutions, including the majority of the nation's largest banks. The Company has offices in New York, Silicon Valley and India. For more information, visit www.cashedge.com.

SOURCE CashEdge Inc.

pin debit payments blog

Less Than Half Strongly Support UAE's Move to Chip and PIN

Joanna Hartley writes for Arabian Business.com that a little less than half of those polled welcome the UAE's recent Chip and PIN move.

Poll shows 50% support chip and PIN move in UAE - Banking & Finance - ArabianBusiness.com

Almost half of all responders to a poll have said they think the new chip and PIN idea that is to be rolled out across the UAE is a great idea that will have a major impact on fraud.

Last week's announcement by the UAE Central Bank that all banks in the country will be required to move to chip and PIN technology called widespread debate, with some experts citing the move as useless against the type of fraud residents suffered last summer at the hands of international gangs.

However, Arabian Business’s online survey showed that 48.6 percent strongly welcomed the move, with just 10.4 percent thinking it would be a better to invest in more advanced biometric tests, such as eye scans, to stop fraud.

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Hacker Breaches Kapersky - Dark Reading

Hacker Lays Claim To Breaches Of Two Security Vendors' Websites

SQL injection attack conceded by Kaspersky U.S.; subsequent attack on BitDefender Portugal still awaiting confirmation

By Tim Wilson -DarkReading

A single Romanian hacker claims he has broken through the Website defenses of two prominent security vendors in an attempt to show vulnerabilities in their security.

Kaspersky, one of the industry's best-known antivirus and security software makers, today gave a press conference confirming that a Romanian hacker had launched an SQL injection attack on its newly implemented U.S. customer support site, exposing a potentially data-threatening vulnerability in its Website. The attacker did not publish any sensitive data, even though he could have gained access to it, Kaspersky said.

The hacker, known as "unu," claims to have launched a similar SQL injection attack on the Website of security vendor BitDefender in Portugal. "It seems Kaspersky aren't the only ones who need to secure their database. Bitdefender has the same problems," unu said in an online message. As of this posting, BitDefender had not confirmed whether unu's claims were accurate.

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InterSwitch Introduces Africa's First Chip and PIN Card

InterSwitch introduces Africa’s first chip and PIN card

InterSwitch, Nigeria’s premier payment transactions switching company has launched the first African branded MasterCard MChip4 payment card brand into the vibrant e-payment market in Nigeria . This is in line with the Central Bank of Nigeria’s (CBN) directive which mandates all banks to convert all existing magnetic stripe cards to a more secure Chip and PIN platform by the end of 2009. The new product, Verve is accepted and being used across all available payment channels in Nigeria . Verve Cardholders can carry out payment transactions on over 11, 000 Point of Sale (PoS) terminals, 7, 300 Automated Teller Machines (ATMs), 200 Web merchants sites, and on 50, 000 mobile phones.

Mitchell Elegbe, chief executive officer (CEO) of InterSwitch, who spoke to newsmen at the verve media parley, noted that the CBNs directive is in the best interest of banks, merchants and cardholder as it is in tandem with global best practices.

This, he said, is because existing magnetic stripe cards have limited storage capabilities, offer little flexibility for business development and are easy to duplicate. He disclosed that the company has launched a campaign tagged “Get More Out of Life” to educate and enlighten Nigerians about the features of the verve card brand.

Elegbe explained that the Verve Chip and PIN card is specially designed by Nigerians for the world. Commenting on InterSwitch contribution to the development of the Nigerian e-payment space, Elegbe said: “Today, there are over 7, 300 ATMs on our network, over 12, 000 PoS terminals as at the last day of January, we have all the 24 banks in Nigeria connected to the switch while 19 state governments rely on the platform for the collection of internally generated revenue. There are over 28 million InterSwitch enabled cards active on the network as at today”.

He pointed out that despite the global switch to Chip and PIN cards the company and its partner banks in 2003 opted for the simple magnetic stripe technology because of its adaptability and cost at that point in time.

“Therefore, the next level for us is to begin to replace the 26 million cards out there with this new technology that is
more secure and customer friendly. After an extensive research and design that spans over two and the half years, we have come up a card that delivers more security features, more channels, more reward, more value to cardholders, banks and merchants”, he added. In terms of security, the Interswitch MD boasted that the company’s Chip and PIN smart card is one of the smartest cards around. “We have woven a number of security features and fraud management solutions incorporated into it. These fraud initiatives were developed to address various types of fraud which have been observed in the last couple of years.”

They include: Fraud Aware (this is the Cardholder Awareness initiative – aimed at educating cardholders about the importance of safeguarding their PINs), Fraud Insure – card fraud Insurance, Money Guard – SMS alert and response system.Also, Data Guard – this ensures that international standards such as PCI DSS standards, ISO 27001, Identity Guard – a token for two-factor authentication, Chip Authentication Program (CAP), Fraud Watch – a portal and email for fraud reporting.

Author of this article: Ben Uzor Jr

January E-Commerce Shows Some Bright Spots

Order dollar value up

January was a month of casual browsing, with limited purchases at online retailers, according to a report from marketing firm Coremetrics.

The number of online sessions in which consumers browsed a Web site, viewing at least one product page, stayed largely flat compared to December 2008. The number of sessions in which consumers actually completed an order was down 21 percent.

The only categories that saw increases were intimate apparel (up 5.5%) and office supplies retailers (up 8%). Specialty retailers reported a 56 percent drop in online orders, the largest decrease in any retail category tracked by Coremetrics.

"Our data suggest that consumers are very nervous about the economy and that an economic recovery fueled in large part by online consumer spending has not happened yet," said John Squire, chief strategy officer for Coremetrics. (pictured on right)

"It isn't all doom and gloom, however. Some categories are actually doing a good job of attracting consumers. And when we look at the average number of items per online order, we see that those consumers who actually decided to buy online bought more items for a higher total dollar amount."

Compared to December 2008, the average number of items that consumers purchased per order increased 23 percent in the online retail category as a whole. The average dollar value of those orders also rose by 8 percent.

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Mazooma Launches Alternative Payment

Here's an article from Digital Transaction News on the launch of Mazzoma, which purports to allow consumers to pay for online purchases in real time directly from their bank.

A downward-spiraling economy is accelerating what had already been a rapidly developing trend for startups to introduce online payment methods as alternatives to bank cards. Indeed, one such company, Miami-based Mazooma Inc., launched a cash-based commercial service on Tuesday with the premise that consumers are looking for ways to buy online without using credit. “It’s a Zeitgeist product right now,” says Sean Kelly, chief executive of Mazooma and a former retail entrepreneur, referring to what he sees as a consumer trend toward cash and frugality. “If you don’t have the money you don’t want to spend it [on credit].”

Kelly says 12-employee Mazooma currently processes for seven online sellers, but expects to bring on another 20 to 25 that are in the “integration queue.” Helping in the effort to attract merchants is Mazooma’s inclusion in the widely used Centinel platform managed by CardinalCommerce Corp. The platform, which features a number of alternative-payment and online-authentication products, allows client merchants to more readily adopt new payment methods. Mazooma is seeking more such deals with gateways and third-party processors, Kelly says.

But Mazooma is entering a crowded market that seems to attract more companies by the week. Just last week, Amazon.com Inc. launched the commercial version of its Flexible Payments Service, a product that allows wide-ranging customization by merchant developers and handles payments through multiple channels (Digital Transactions News, Feb. 5). And this week, Noca Inc., a startup founded and run by a former Visa Inc. executive, announced its beta version of a service that relies on the automated clearing house network.

The challenge for Mazooma, as well as for its many competitors, is getting consumers to change ingrained behavior patterns while online. “From a branding and behavior-change perspective, it’s going to be difficult in the early going,” says Bruce Cundiff, director of payment research and consulting at Pleasanton, Calif.-based Javelin Strategy & Research.

Mazooma is betting on more than the sour economy to attract consumers and merchants. Its service allows consumers to use their online-banking programs to pay merchants by authorizing a transfer from their demand deposit accounts to a holding account maintained by Mazooma. The company then wires payments to merchants, with next-day settlement. Transactions are authorized and authenticated through the online-banking system used by the consumer, but Mazooma doesn’t offer a funds guarantee to the merchant. “It’s extremely difficult for the consumer to repudiate [these transactions],” Kelly says. “It’s not guaranteed, but it’s as close as possible without being guaranteed.” The fee to the merchant starts at 1% for very high-volume retailers and goes up from there. A merchant in the range of $30 million to $40 million in annual sales would pay about 1.5% plus 20 cents, Kelly says.

To make the system work with as many consumer accounts as possible from the start, Mazooma offers connections to 14 major banks representing what Kelly says amounts to 70% of the country’s checking accounts. “And it’s growing,” he says. Unlike other payments systems that rely on online-banking programs—for example, the Secure Vault Payments product now in a pilot sponsored by NACHA, the regulator of the ACH—Mazooma’s service establishes no formal ties to the banks. Instead, it uses consumer log-in credentials to initiate an automated session with the chosen bank program to verify identity and funds availability. “We act as an intelligent agent for the consumer,” says Kelly. Mazooma’s servers, he says, do not store these credentials. “There’s nothing to breach,” Kelly says. As a result, Mazooma is designed for spontaneous online transactions rather than functions like recurring bill payments

To use Mazooma, consumers at checkout click on a Mazooma button with the tag line, “Would you like to pay directly from your bank account?” First-time users are asked to fill in five fields of information, including name, address, and date of birth, and to create a password. After that, Mazooma handles the log in to consumer accounts in the background and returns a confirmation to the consumer and merchant. Merchants must integrate a Mazooma application programming interface, a process Kelly says can take five hours, more for some merchants. With the system in place, consumers are briefly redirected to Mazooma’s servers but believe they are on the merchant site throughout the session.

The “intelligent agent” model may make for a smooth consumer experience, but it could present complications with consumers worried about malware that could enable links that appear to be legitimate but aren’t. The Mazooma model is “a double-edge sword,” says Cundiff. “How do I know I’m really connected to [my bank] right now? I’m popping my log-in in there, and I don’t know what I’m popping it into.”

Still, Kelly says Mazooma’s timing may have been just right. “The credit crisis is terrible, but we’ve had a ton of attention over the past few months,” he says. “Mazooma is a great product for the time.”

mazooma, homeatm, pin debit, e-commerce, alternative payments

New Payment Rules Before Parliament

On Friday I posted a press release announcing how the European Parliament wanted to strengthen the security of online payments. Yesterday they met and new rules have been laid out.

According to information provided by international law firm Pinsent Masons on their their webite: www.out-law.com, yesterday some new Payment Services Regulations were been laid before Parliament. They include (as have I) links to the 81 page 2009 Payment Services Regulations and the Explanatory memo from the HM Treasury.

Here's there report:

The regulation of credit and debit cards and other payment services will be tightened in the UK from November. New rules were laid before Parliament yesterday that aim to deliver greater competition in the market for payment services.

The Payment Services Regulations will apply to everyday payments such as cash deposits and withdrawals, credit transfers, direct debits, credit and debit card payments, money remittance payments and other digital payment services.

The Regulations implement the EU's Payment Services Directive (PSD) of 2007 into UK legislation. They are due to come into force on 2nd March 2009 and the PSD regulatory regime will be in place on 1st November 2009. The Financial Services Authority will be the regulator for most aspects of the regime.

The Directive stipulates the information that providers must give or make available to their customers before, during and after a transaction is made, for example, how long the payment will take to get to the recipient, and ensuring they are informed of the exchange rate and charges for any currency conversions prior to initiation.

It introduces a maximum one-month notice period for customers to be able to terminate a payment service contract with their provider, with no charges allowed for terminating a contract after 12 months.

The Directive also establishes what users must do, for instance in protecting their PIN number, and what providers must do, for instance in ensuring there is a phone line or other means of contact for the user at all times, in the event that their payment card is lost or stolen. The rules also explain what happens when things go wrong with a payment, providing refund rights for disputed payments, and set out the circumstances in which the payment service provider (e.g. the bank) will be liable.

The new Regulations affect domestic payments made in Sterling, in Euro and other non-Euro EU currencies, as well as cross-border EU payments from Sterling and other non-Euro EU currencies into Euro.

Lord Myners, Financial Services Secretary to the Treasury, said: "This legislation will drive competition in the market for payment services, leading to greater efficiency, transparency and more innovation, bringing further benefits and certainty to UK consumers and businesses making everyday payments."

"It will also enhance consumer protection, with the new rules for payment service providers," he said.

The PSD will also enable UK-based, non-bank businesses to enter and compete in the EU payments market on the basis of a licence obtained from the FSA in the UK. Licensing requirements are based on a prudential authorisation regime. Small firms operating in the UK only will only need to register with the FSA, and comply with the relevant anti-money laundering supervisory requirements.

The legislation also introduces statutory EU-wide conduct of business rules, requiring providers to properly inform their customers about the payments they are making, and rights and responsibilities for providers and users, to increase certainty about the way payments will be delivered.

The FSA will shortly be issuing guidance for businesses.

Payment Services Regulations 2009 (81-page / 332KB PDF)

Explanatory memo from HM Treasury (33-page / 163KB PDF)

Tuesday, February 10, 2009

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