Consumers Want P2P Payments from Banks - CashEdge

Consumers Want Person-to-Person Payments Services From Banks According To CashEdge Consumer Survey



Consumers Prefer Their Own Banks over Independent Services such as PayPal


New York – CashEdge Inc. (www.cashedge.com), the leading provider of Intelligent Money Movement™ services, today announced the results from its fourth annual Consumer Online Banking Survey, which demonstrated an increasing demand for simple, secure person-to-person (P2P) payment services and the preference by consumers to get these services from their financial institution, rather than an independent service such as PayPal.

Conducted annually by CashEdge, the study examines the behavior and preferences of more than 850 consumers nationwide aged 18 years and older who use online banking capabilities.

“This year’s survey demonstrates that not only has online banking clearly become a mainstream application for consumers, but consumers are now demanding more money movement services from their financial institutions, like person-to-person payments,” said Sanjeev Dheer, CEO, CashEdge.   “Additionally, we found that consumers would prefer to use their financial institution over an independent network to deliver these services – citing trust in their bank and convenience as key factors in this decision. This represents a tremendous opportunity for banks to compete in the lucrative P2P payments space.”

Editor's Note:  So, there you have it.  Not only would HomeATM's PCI 2.x certified PED provide secure two-factor authentication, identical to accessing cash at an ATM (swipe card/enter PIN) but it wouldalso empower their customers to conduct Person 2 Person money transfers via the very same device...using any Bankcard to any Bankcard!  (see HomeATM P2P Demo in top left corner)

Oh, I almost forgot.  It would also eliminate typing...which would in turn eliminate the threat of phishing, cloned bank websites, DNS Hijacks, Keylogging, even reduce the threat of malware. 

Oh...and it would provide online banking customers with a secure 2FA 3DES DUKPT End-to-End Encrypted eCommerce Transaction.  To learn more, click here!

The results further revealed an increasing use of online money movement services and a growing interest in mobile banking capabilities. Key findings include:



Online Banking Usage Remains Strong



According to the survey, online banking has become a mainstream application for consumers:

• 81 percent of respondents currently access their financial institution online at least four times per month


• 89 percent expressed a desire to ultimately move all banking and financial transactions online


• Consumer Interest in P2P Payment Services from Banks is Growing

Consumers are seeking additional online money movement services, including the ability to transfer funds to their friends and family in a simple, secure and convenient way. According to the 2009 survey:

• 81 percent of respondents would use a P2P service if offered by their financial institution


• 77 percent of respondents would prefer to use a P2P service offered by their own financial institution over an independent online P2P service (such as PayPal or a similar service)


• 73 percent of respondents felt that a P2P service offered through their bank would be more secure than an independent P2P service


• 69 percent of respondents felt that a P2P service offered through their bank would be more convenient than an independent P2P service

Consumers Desire Mobility



This year’s survey highlights that consumers are interested in mobile banking and would use it to conduct a variety of banking functions. According to the survey, 32 percent of respondents would use mobile banking technology if offered by their bank.


About CashEdge’s Fourth Annual Consumer Online Banking Survey


Commissioned by CashEdge in June 2009, the survey polled more than 850 consumers nationwide aged 18 years and older who use online banking capabilities. These respondents described themselves as bank customers (76 percent), credit union members (22 percent) and customers of “direct/virtual banks” (2 percent). The margin of error for the survey is three percent. The survey was conducted by the independent research firm Zoomerang.



For the complete summary of the survey findings, please contact Jennifer Moritz at jmoritz@0to5.com.



About CashEdge



CashEdge is the leader in Intelligent Money Movement™ 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 or mobile application, for multiple easy-to-use consumer and small business transfer routes. CashEdge's industry-leading products include OpenNow®/FundNow® for new account opening; TransferNow® for Consumers, which includes Me-to-Me Transfers and Third Party Transfers; POPmoney™ for person-to-person payments; and TransferNow for Small Businesses, which includes Invoicing and Payments, Me-to-Me Transfers, Employee Payments and Vendor Payments. 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 seven out of the top ten largest banks in the country. The Company has offices in New York, Silicon Valley and India. For more information, visit www.cashedge.com.

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ProPay Touts Encryption for PCI

ProPay is telling small businesses to encrypt credit card numbers and to avoid storing the critical data themselves.



"PCI requires that if you possess the PAN, the primary account number, you must encrypt it," Mark Johnson, ProPay CIO, told InternetNews.com. "If it's in the merchant's possession, it must be encrypted."



So why keep it?  ProPay wants to hold the number for the merchant. "Get rid of the jewelry from your house and put it in the bank. Protection is the bank's core competency," Johnson said.



The company's secure repository product is called ProPay. It promises to lower both the risk and the PCI compliance burden for businesses.



"The point is that micro merchants collect credit card data," said Scott Nelson, ProPay vice president of marketing. "They put them in spreadsheets and order forms and that's not secure."

Trackback:https://swarm.jupitermedia.com/mt-tb.cgi/8700

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First Data Bringing 250 Jobs Back to Atlanta

From the Atlanta Business Chronicle

First Data Corp. plans to bring 250 jobs to metro Atlanta as it relocates its global headquarters back to the Peach State.

The new jobs, which will be added over three years, will support product development work, First Data spokeswoman Elizabeth Grice said.

The global payment processor’s return to Atlanta was logical.  While First Data was officially based in Greenwood Village, Colo., the majority of the company's operations have been headquartered in Atlanta. First Data’s top management, including its CEO and CFO, are based in the city, where the company employs about 750, Grice noted. Considering “we have an establishment of a core group of executives and business leaders in Atlanta,” she said, “ it made sense for us to make the change.”  Atlanta is also a hub for the payments industry and home to many of First Data customers, Grice said.

Continue Reading

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Debit Purchases at Pump Only Allowed with a PIN

I would venture a guess as to the reason why that is true is because they are "unmanned" and PIN debit provides more security. (and lower Interchange Fees)

If in fact that is the reason, then what legitimate argument can there be for not using PIN Debit "exclusively" for online shopping? You know, the same way you are allowed to withdraw "cash" in real time at an ATM machine. By swiping your card and entering your PIN. The same way you do it at the gas pump and the same way you would do it at any other "unmanned" (merchant not present) location, be it kiosks, car washes, etc. It makes sense to me. You?

Excerpts from the August issue of CSP Magaziine:

Debit purchases at the pump are allowed only with a PIN

PIN debit transactions increased 12.5% from 2006 to 2007, according to the 2008 Study of Consumer Payment Preferences conducted by Hitachi Consulting, the Dallas-based consulting arm of the Japanese firm Hitachi Ltd.

They surpassed the number of U.S. credit card transactions in 2006. Of consumers who prefer PIN debit, 51% listed security as the reason for their preference, Hitachi Consulting reported.

And if a significant number of gas stations forgo the upgrade, customers who have only debit cards, or prefer them over credit cards, would find themselves increasingly forced to go inside the store to pay.

"It would of course be tremendously inconvenient for many consumers who routinely pay for gas with debit [cards]," Judy Dugan, research director and energy expert at Consumer Watchdog, told the paper. "It's an issue that ought to be solvable because you don't want consumers having to put more debt onto credit cards."

She said she thinks either the credit-card companies or the major oil brands should help small-station owners pay for the upgrade or work out a schedule to pay over time. "It's unfair for the people at the bottom of the chain the way it's structured now, which is the consumer and the small-station owner," Dugan said.

Costs to upgrade will depend on how old the equipment is, Ann Hines, executive vice president of the Arkansas Oil Marketers Association, told the Democrat Gazette. She said she does not fault the card companies for their objective—trying to stop fraud—but said most Arkansas gas station operators are alarmed at the cost. "I think the credit-card companies who are making so much money should be able to help retailers with this process," she said.

According to a survey by the National Association of Convenience Stores (NACS), credit-card costs to the industry totaled $7.6 billion in 2007, the latest year for which figures are available.

"One of our biggest expenses is taking credit cards to start with," Gibson said, citing numerous fees. "The credit-card companies make more money on gasoline than most of my operators."

Gibson and his operators plan to do surveys to see if customers at his locations prefer to use PIN debit. Siddique said his margins are already suffering because of fees levied on customers' PIN debit transactions.

The new security rules originate from an effort to coordinate security standards across the payment card industry, making it easier for retailers to avoid breaches, said the report.

The Payment Card Industry Data Security Council was formed in 2006 by American Express, Discover, Visa, MasterCard and JCB (a Japanese credit-card brand) to develop practices for securing cardholder information, said Troy Leach, technical director at the council. The council issued its latest version of its standard in October 2008; however, the council only makes recommendations. Each credit-card brand can choose which standards to enforce, can set its own deadlines for enforcement and can create other security standards above the council's requirements.

The resulting web of standards is confusing for many retailers. "It is extremely frustrating," Jeff Lenard, vice president of communications for NACS, told the paper. "The rules are complex, and the clock is ticking."

Leach said the system helps retailers because they know that if they buy software from approved developers and buy equipment from approved manufacturers, they will be compliant. Still, the cost of new software and equipment must be shouldered by retailers, who risk huge fines and having their ability to accept plastic taken away if their security is breached.

Gray Taylor, payment consultant for NACS, said the council's standards do not allow small businesses the flexibility to pursue more creative and potentially more effective methods of protecting their consumers. He said the council's standards emphasize security—not letting a hacker access information—more than encryption—rendering data useless so it will not matter if a thief hacks in.

"We can comply with everything [card companies] tell us to do, and it's going to raise the prices [consumers] pay at retail, and they're not going to be more secure," he told the paper.

Watch for coverage on how retailers are weighing debit at the pump against PCI costs in the August issue of CSP magazine.

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Recession Pushes Debit Card Spending Past Credit

New York Times/Associated Press

NEW YORK (AP) -- Debit card use was growing rapidly before the economy tanked, but the recession appears to have made them the preferred form of plastic.

Both in terms of the number of transactions and the total dollar amount spent, debit cards have overtaken credit cards for U.S. consumers.

In dollar terms, debit cards are now used for 50.4 percent of all noncash sales, though they have a lower average dollar amount per transaction, according to research from TowerGroup, a subsidiary of MasterCard Worldwide. Those smaller sales are key: debit card sales dominate small purchases like those made in convenience stores, coffee shops and gas stations.

Big ticket items like wide-screen TVs are still more often paid for using credit cards, said Brian Riley, a TowerGroup research director and co-author of the study.

The trend toward debit was apparent prior to the recession, but its growth was accelerated by the downturn, according to Riley. ''It certainly happened faster,'' he said. The study shows that in 1990, debit cards were used for just 1 percent of all noncash transactions.

Part of today's increased usage comes because cards linked to bank accounts are easier than ever to get and to use. More banks offer cards with bank card logos like MasterCard and Visa than in the past. At the same time, the technology that merchants needed to accept debit purchases has spread dramatically...



Continue Reading at NYTimes

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PIN Debit on the Internet Will Spell the Demise of Signature Debit - Analysis

(Secure) PIN Debit on the Internet will spell the demise of Signature Debit

• Analysis by:
  GLG Expert Contributor
  


• Analysis of: Debit Cards in Use to Reach 5.2 Billion By 2012, According to New Report by Global Industry Analysts, Inc.


• Published at: www.prweb.com

Summary

Signature
debit remains a payments alternative only because there still is no PIN
debit product on the Internet.  Also playing into the picture is that
Issuers prefer Signature Debit due to higher Interchange rates.  On the
otherhand, merchants, acquirers, and consumers are in favor of PIN
Debit.

Analysis

PIN
debit continues to grow despite the marketing efforts of Card issuers
who actively market against PIN debit in favor of Signature debit. 
(Who but bankers would spend marketing dollars demoting one of their
own products?).  PIN debit is preferred by merchants and consumers
because of percieved security, cash back availability, speed at the
POS, and less cost to the merchant.  Once we have a viable PIN debit
product on the Internet, we will see a real growth spurt in PIN over
Signature.  And, by the way, we should see PIN on the Internet by the
end of next year, 2010.

This author consults with leading institutions through GLG

Engage this author or other Transaction & Payment Processing experts

 

Analyses are solely the work of the authors and have not been edited or endorsed by GLG.

Contributed by a Member of the GLG Financial & Business Services Councils

Request a Consultation with this Author

Report a Concern

Other Analyses of the same Source Article

Debit Card Growth Continues to Skyrocket; Surpassing Other Payment Instruments

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$2.2 Billion Revenue for First Data

First Data Reports Second Quarter Revenue of $2.2 Billion

• Revenue growth of 4% on a constant currency basis



• Formed major alliance, Bank of America Merchant Services



• Renewed processing agreement with PNC and 67 other financial institutions

ATLANTA, Aug. 14, 2009 – First Data Corp.. today reported its financial results for the second quarter ending June 30, 2009. Consolidated revenues were $2.2 billion, or flat, and up 4% on a constant currency basis. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $607 million, down 5%, or down 1% on a constant currency basis. In addition to the adverse impact of the strong U.S. dollar, adjusted EBITDA comparisons were unfavorably affected by lower royalty revenue. Excluding currency effects and the change in royalty revenue, adjusted EBITDA was up 1%. The net loss attributable to First Data was $196 million, which includes after-tax interest expenses of $284 million. "We continue to execute well on all fronts," said Michael Capellas, chairman and CEO of First Data. "In particular, our unique strategic alliances continue to enhance our leadership position in delivering innovative payment services to merchants."


Segment Results


Retail and Alliance Services

Retail and Alliance Services reported revenue of $1.3 billion, up 8%. Retail and Alliance Services
formed a major new alliance, Bank of America Merchant Services, which will process more than one
billion transactions per month. In addition, 33 new independent sales organizations, 11 new referral
partners and one new revenue share agreement (RSA) were added to the distribution network. Excluding
debit network fees, segment revenue was down 5% and primarily was affected by weakness in the overall
economy reflected in lower average consumer tickets as well as continued transaction mix shifts. EBITDA
was $309 million, down 11%, and EBITDA margin excluding debit network fees was 38.6%. Operating
profit was $123 million, compared with $124 million in the second quarter of 2008. Operating profit margin
was 9.5%.


Financial Services

For the quarter, Financial Services revenue was $532 million, down 4%. Revenue excluding
reimbursables was down 1%. Financial Services renewed 68 contracts in the quarter and recognized $15
million in net revenue from early termination fees less the associated discontinued services. EBITDA was
$184 million, up 4%, and EBITDA margin excluding reimbursables was 48.7%. Operating profit was $74
million, compared with $92 million in the second quarter of 2008. Operating profit margin was 13.8%.



International

For the quarter, International generated revenue of $404 million, down 13%. Revenue on a constant
currency basis was up 3%. International transactions grew 7%. EBITDA was $109 million, up 12%, and
EBITDA margin was 27%. On a constant currency basis, EBITDA was $134 million, up 38%, and EBITDA
margin was 28.0%. Operating profit was $36 million compared with $30 million in the second quarter of
2008. Operating profit margin was 8.9%.


Significant Events


Bank of America Merchant Services Alliance

On June 29, 2009, First Data announced the formation of a new alliance, Bank of America Merchant
Services. The new company will deliver next-generation payment solutions to merchants ranging from
small business to commercial and corporate clients worldwide. Going forward the results of the alliance
will be reflected on a consolidated basis throughout First Data's financial statements.


PNC Merchant Services Alliance Extension

On June 30, 2009, First Data and PNC Bank extended their merchant alliance, PNC Merchant Services,
LLC for an additional eight years. PNC acquired National City in December 2008, and First Data's
agreement with PNC Bank now includes merchant referrals from most of the legacy National City Bank
footprint.


PNC Financial Services Processing Renewal

On Aug. 11, 2009, First Data and PNC Financial Services Group announced they had renewed and
expanded their agreement for transaction processing services. Under the agreement, First Data will
provide signature debit, PIN debit and ATM processing services, ATM terminal driving, credit card, small
business and home equity loan processing, fraud and collection services, remittance processing, prepaid
processing and plastic, statement and letter production services. PNC will transfer some credit card
processing not currently with First Data as well as adding PIN debit and ATM processing it had gained
through its acquisition of National City. First Data services more than 15 million total accounts on file for
PNC Financial Services.


Wells Fargo Card Processing Expansion

On June 8, 2009, First Data and Wells Fargo & Company announced they had expanded their agreement
for card processing services. Under the terms of the agreement, Wells Fargo will move its newly acquired
Wachovia credit card portfolios to First Data for comprehensive card processing services. Wells Fargo will
add the Wachovia credit card accounts, the Wells Fargo Private Label card accounts and the Personal
Credit Management line of credit accounts to the existing Wells Fargo portfolios serviced on First Data's
system.



New Global Headquarters in Atlanta

First Data is executing against an overall global site strategy. As part of this strategy, Atlanta will now
become First Data's global headquarters and principal executive office location. The company will
continue to maintain additional key administrative and operational sites including Denver and Omaha,
Neb.





The company will host a conference call and webcast on Friday, Aug. 14 at 8 a.m. EDT to review second
quarter 2009 financial results. Michael Capellas, chairman and CEO of First Data, will lead the call. Also
participating will be Phil Wall, chief financial officer, and Silvio Tavares, senior vice president, investor
relations.


To listen to the call, dial 877-723-9520 (U.S.) or +1-719-325-4817 (outside the U.S.) 10 minutes prior to
the start of the call. The call also will be webcast on the "Investor Relations" section of the First Data Web
site, http://ir.firstdatacorp.com/events.cfm. Please click on the webcast link at least 15 minutes prior to the
call. A slide presentation to accompany the call will be included in the webcast and also will be available
under the "Investor Relations" section of the Web site.


A replay of the call will be available through Aug. 20, 2009, at 888-203-1112 (U.S.) or +1-719-457-0820
(outside the U.S.), replay pass code 7940027, and via webcast at http://ir.firstdatacorp.com/events.cfm.


About First Data

First Data powers the global economy by making it easy, fast and secure for people and businesses to
buy goods and services using virtually any form of electronic payment. Whether the choice of payment is
a gift card, a credit or debit card or a check, First Data securely processes the transaction and harnesses
the power of the data to deliver intelligence and insight for millions of merchant locations and thousands
of card issuers in 36 countries. For more information, visit www.firstdata.com.


Click here to view financial tables.




Investor and Analyst Relations Contact:

Silvio Tavares

First Data

404-890-3000

silvio.tavares@firstdata.com


Media Relations Contact:

Elizabeth Grice

303-967-8526

elizabeth.grice@firstdata.com

Twitter Has More Marketing Power than Facebook?

Marketers Embrace Twitter over Facebook

AUGUST 14, 2009

“Follow me” replacing “friend me”?

Facebook may have recently passed MySpace as the most-visited social networking site in the US, but it’s facing stiff competition for the attention of social media marketers. By some metrics, Twitter is more popular in the marketing world.  

Burson-Marsteller, in a July 2009 study of Fortune 100 companies, found that more companies had a presence on Twitter (54%) than on Facebook (29%).

According to the study, which looked at corporate blogs in addition to Twitter and Facebook profiles, about one-fifth of Fortune 100 firms only used one of the three channels.

Those companies were overwhelmingly likely to choose Twitter (76%) over Facebook (14%) or blogging (10%).


Companies that used two of the three channels were most likely to have a blog plus a Twitter account (64%).



Burson-Marsteller found that these top companies were using Twitter for several purposes: company news, customer service, marketing promotions and employee recruitment.

PIN Debit Pricing Quadruples in 10 Years

Network Rivalry Sparks 10-Year Quadrupling of PIN-Debit Pricing - Digital Transactions News



(August 14, 2009) Merchants increasingly are complaining about the rising cost of accepting PIN-debit transactions, once by far the cheapest payment they could process from any piece of plastic. Now, data compiled by the Federal Reserve Bank of Kansas City show why: the cost of accepting PIN-debit cards rose 305% between 1996 and 2007.

Using the Kansas City Fed’s numbers, Digital Transactions News has calculated that the average interchange cost for a small retailer on a $50 face-to-face purchase processed on a PIN-debit card with a major electronic funds transfer network logo in 1996 was 9.9 cents. By 2007, that same sale generated 40.1 cents in interchange. Digital Transactions News’s sister publication, Digital Transactions magazine, obtained the figures while compiling a story about PIN-debit interchange for its upcoming September issue. The Kansas City Fed’s data are based on information about interchange rates from 1996 into 2009 for the Star, Interlink, NYCE, Pulse, Accel/Exchange, Shazam, Jeanie, Networks, AFFN, and Maestro networks. Data for each network in every year were not available, especially for 2008 and 2009. The bank’s sources included the ATM&Debit News newsletter from SourceMedia Inc., Visa Inc. and MasterCard Inc.



Continue Reading at Digital Transactions News

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More on PayPal's New Student Account Program

From the Wall Street Journal:
PayPal this week launched a student account, stepping further into the world of mainstream banking.



(Click on below for an interview by MarketWatch’s 

Jonathan Burton with PayPal vice president Don Fotsch about the program:)