Mobile Payment Industry News: 11/27/09

Friday, November 27, 2009

It's Official: US Treasury, Fed Delay Internet Gambling Ban 6 Months

* Move allows lawmakers time to overturn payments ban

* 2006 law failed to define "unlawful Internet gambling"

* Frank plans hearing on licensing Internet gambling firms (Adds statement from Representative Barney Frank)

By David Lawder

WASHINGTON, Nov 27 (Reuters) - The U.S. Treasury and Federal Reserve on Friday delayed the implementation date for a new Internet gambling payment ban for six months, a move that gives lawmakers time to overturn it or end confusion over illegal practices.

In a joint statement, the Treasury and Fed said the Dec. 1 implementation date for the law passed in 2006 would not be achievable for some financial institutions. They set a new compliance deadline of June 1, 2010.

"Commentators expressed concern that the act and the final regulation do not provide a clear definition of 'unlawful Internet gambling,' which is central to compliance," the two agencies said.

In addition, they said certain members of Congress have "expressed an intent to consider legislation that would allow problematic aspects of the act to be addressed."

The 2006 law, which cost European Internet gambling companies billions of euros in lost market value, prohibits credit card, check, and electronic fund transfer payments by U.S.-regulated financial institutions in connection with "unlawful Internet gambling."

But rather than define what types of gambling are illegal online, the bill relied on existing federal and state laws to answer that question. It also still allowed any online horse race betting permissible under the Interstate Horseracing Act of 1978.

FRANK SEEKING TO OVERTURN BAN

Congress passed the anti-gambling legislation in 2006, when Republicans still controlled both the House and Senate. The final regulations issued to enforce the ban were issued by the Treasury and Fed just before former President George W. Bush left office in January.

Representative Barney Frank, who chairs the House Financial Services Committee, in October urged a 12-month delay in the implementation because of confusion over what kinds of online gambling were illegal under the bill.

Frank's committee in September 2008 passed a bill to overturn the ban, but the full House never acted on the measure. Frank earlier this year reintroduced the bill, which would effectively overturn the ban and create a framework for the Treasury to license Internet gambling operators, collect taxes from them and enforce rules for transparency.

On Friday, Frank praised the Treasury and the Fed for delaying the regulations, which he said would "curtail the freedom of Americans to use the Internet as they choose" and put unrealistic burdens on financial institutions.

"This will give us a chance to act in an unhurried manner on my legislation to undo this regulatory excess by the Bush administration and to undo this ill-advised law," Frank said in a statement.

Frank has scheduled a hearing next Thursday on the legislation, dubbed the "Internet Gambling Regulation, Consumer Protection and Enforcement Act."

The six-month delay will allow banks to establish policies and procedures to require gambling businesses to document the legality of their activities, the Treasury and Fed said. (Editing by Kenneth Barry) ((david.lawder@thomsonreuters.com;

+1 202 898 8395

; Reuters Messaging: david.lawder.reuters.com@reuters.net))

Bank of Montreal/MasterCard Team on Contactless Blackberry Payments

Finextra: Bank of Montreal, MasterCard and Research in Motion (RIM) are teaming up on a trial that will see Canadians make payments using BlackBerrys equipped with contactless stickers.

The four month pilot will see participants use PayPass Mobile Tag-equipped BlackBerrys to make purchases at any of the 8500 merchant locations in Canada that accept MasterCard's contactless technology.

The Mobile Tag is a self-adhesive device that is attached to the BlackBerry, containing the same chip and antenna found in a regular PayPass card.

In what the partners call a first, participants will receive a confirmation e-mail of each transaction sent to the phone, including purchase details such as the amount, retailer and date of transaction.

Continue Reading at Finextra

MoneyGram Grows Postal!

MoneyGram International Grows Post Office Relationships as Cyprus Post and Post Cape Verde Join Agent Network

New post office locations doubled agent network in Cyprus, Cape Verde

MINNEAPOLIS--(BUSINESS WIRE)--MoneyGram International (NYSE:MGI), a leading global money transfer provider, today announced the addition of Cyprus Post and Post Cape Verde as new agents in its growing list of global post office networks. With these new post offices, MoneyGram doubled its agent locations for the island countries of Cyprus and Cape Verde.

“MoneyGram has long standing relationships with some of the world’s largest post offices,” said John Hempsey, chief executive officer of MoneyGram International Limited. “Country by country, post office locations are close to every household, providing convenient access to money transfer services.”

MoneyGram’s agent network in Cyprus and Cape Verde serve countries that combine for approximately $1 billion in money transfer flows, according to the 2008 World Bank estimates.

“While Cape Verde and Cyprus have different needs, post office locations have proven to be preferred by money transfer customers,” Hempsey added. “In Cyprus, we expect send services to be in high demand. Cape Verde, however, will primarily provide receive services as remittances produce nearly 10 percent of the country’s gross domestic product. Overall, our customers prefer post office locations as trusted, community institutions that provide affordable, reliable and convenient money transfer services close to their home.”

MoneyGram’s largest post office agent networks are in the United Kingdom, Italy, the Ukraine, Canada, Poland and Jamaica. Kenya Post also added MoneyGram money transfer services to its locations earlier this year.

About MoneyGram International

MoneyGram International offers more control and more choices to people separated from family and friends by distance or those with limited bank relationships to meet their financial needs. A leading global payment services company, MoneyGram International helps consumers to pay bills quickly and safely send money around the world with funds arriving at available agent locations in as little as 10 minutes. Its global network is comprised of 186,000 agent locations in 190 countries and territories. MoneyGram's convenient and reliable network includes retailers, international post offices and financial institutions. To learn more about money transfer or bill payment at an agent location or online, please visit www.moneygram.com.

UK Banks Win Overdraft Rulng

UK banks win overdraft ruling

The UK court battle between the Office of Fair Trading (OFT) and the country's major banks regarding overdraft fees has resulted in a ruling in favour of the banks.

The UK's Supreme Court found that the legal basis of the OFT's action could not be applied to overdraft penalty charges. The OFT had brought legal action against the banks, arguing that the charges amounted to a breach of the laws on consumer contracts. The Supreme Court, however, ruled that the charges were part of the cost of having a current account and that the legal argument of unfair contract terms did not apply.

The ruling overturned the previous judgments of the High Court and the Court of Appeal that overdraft charges could be applied to laws on unfair contracts. If the OFT is to pursue legal action against the banks, it will have to find different laws to argue its case.

The OFT is expected to make an announcement in December 2009 about the next stage of its action against overdraft fees.

The British Bankers Association said in a statement: "We recognise that this issue has been of real concern to a large number of our customers, and we are pleased that this decision now brings clarity for all parties. The banks will work with the regulators to ensure that the outstanding customer complaints are brought to a swift conclusion. We will also continue to work together with the OFT in connection with its on-going market study."

Issue: 2009/26

Date: 26 Nov 2009

UIGEA Rules Delayed Six Months

According to Casino Gambling Web: (and several other sources)

Representative Barney Frank is expected to announce on Friday the first victory for the online gambling industry in years. Frank will announce that the implementation of the Unlawful Internet Gambling Enforcement Act will be delayed.

The rules were supposed to take affect on December 1st. Lawmakers and interest groups, however, have been pushing for a delay in the process. They have sent letters claiming that more time is needed to discuss Internet gambling's future in the US.

Apparently, U.S. Treasury Secretary Timothy Geithner has given in to that request, and will delay the implementation until June 1st. That will give Frank much needed time to begin the process of changing online gambling laws.

Frank has introduced two pieces of legislation aimed at overturning the UIGEA and setting up the framework for a regulated Internet gambling industry. The economic crisis in the country, however, has kept Frank and other lawmakers from discussing these two proposed Bills.

Republicans who pushed for the UIGEA and helped pass it will now hope that the new administration is unsuccessful in swaying enough lawmakers to pass Frank's legislation. Already, sixty-three co-sponsors have signed on to H.R. 2267.

The House Finance Committee is set to begin discussions on December 3rd regarding the Frank legislation. Now, the lawmakers will have more time to mark up the legislation.

2009 China Online Payment Industry Report

DUBLIN--(BUSINESS WIRE)--Research and Markets has announced the addition of the "China Online Payment Industry Report, 2009" report to their offering.

Editor's Note: This title is also available in the following language: China Online Payment Industry Report, 2009 (Chinese Version)

The global economic crisis has impacted on the majority of industries, but China online payment market is growing against the adversity, and has shown rapid growth trend in market scale and number of users. In 2008, the number of users registered 52 million, and in 2009 the figure will exceed 90 million. In 2008, the online payment market valued RMB210 billion, and will reach RMB430 billion in 2009.

With the issuance of Management Measures for Payment and Settlement Organizations, the supervision on online payment industry has been enhanced. The central bank will build up the payment service organization system which is led by the People's Bank, primarily supported by banking financial institutions, and assisted by payment and settlement organizations. The chaos once in payment industry will be controlled and malicious market competition alleviated. Those online payment enterprises in unfavorable operation will be eliminated, only the profit-making enterprises will survive, so the industry concentration will be further strengthened.

The largest third-party online payment platform in China -- Alipay announced the number of its users broke 200 million formally in July 2009, overrunning the giant Paypal to take the first position in online payment industry. As of July 6, 2009, AliPay had boasted of 200 million registered users, with daily trading volume of RMB700 million and daily four million transactions.

With the development of the Internet, particularly the further development of online shopping, the future competition among online payment enterprises will rest with individuation, accuracy and service.

Key Topics Covered:

Overview of Online Payment

E-payment and Online Payment

Classification and Process of Online Payment

Development of Online Payment Industry

Industry Chain

Market Scale

Competition

Influencing Factors

Major Online Payment Application Fields in China

China Online Shopping Market

Online Game

Air Ticket

Online Charge Agency Service

Online Education

Digital Content

Independent Third-party Online Payment Service Providers

Future Development Trends of Online Payment

Companies Mentioned:

Zhejiang Alipay Internet Technology Co., Ltd

Beijing Cncard Internet Technology Co., Ltd.

Tenpay

ebay-Paypal China

China Payment and Remittance Service Co., Ltd.

Shanghai International Payment Solutions Limited

99Bill Corporation

Shanghai AllBuy

Mobilebest (YeePay)

Guangzhou UnionPay Network Payment Co., Ltd.

Chinabank Payment

Hangzhou XPay.cn Tech Co., Ltd.

IPay

ChinaPay

For more information visit http://www.researchandmarkets.com/research/1021fb/china_online_payme

New Position Paper on Security Risks in Online Banking Through European eID Cards

ENISA Launches New Position Paper on Security Risks in Online Banking Through European eID Cards

BRUSSELS and HERAKLION, Greece, November 26 /PRNewswire/ -- The EU's 'cyber security' Agency, ENISA (the European Network and Information Security Agency) today presents its new Position Paper. The paper is focusing on authentication risks with European eID Cards. It analyses 7 vulnerabilities, identifies 15 threats and gives security recommendations.

Major European eID interoperability projects, such as STORK and its successor ELSA are aiming at a European-wide take-up of new technologies. In this context, ENISA takes an independent look at the security risks related to online banking authentication by comparing smart eID cards with other authentication means in its latest Position Paper ( http://www.enisa.europa.eu/act/it/eid/eid-online-banking/).

Online banking in one of the most widely-used electronic services by European consumers. It is a strategic service for financial institutions and users. With 24 hour service availability, it is extremely convenient. It is often without any extra costs; or even at reduced costs compared to traditional banking processes. However, online banking fraud is on the rise. Thus, security is a major concern both for online banking, e.g. tax declarations. The report also includes a case study on privacy issues when authenticating with smart cards to online social networks.

The Agency report explains that because more and more internet applications require authentication, more standardized approaches to user identification and authentication are needed. In Europe, several states have already rolled out electronic ID cards. The first steps when we use internet services are usually to identify ourselves by our names and then authenticate that it is us. The security levels for these steps can vary from a simple combination of username, password, through a secret PIN, to credentials generated by some external device or a smart card using cryptography. Smart cards are increasingly being used for authentication purposes. Many European identity cards contain a smart-card chip, with functionalities for online authentication.

The ENISA Position Paper defines a comprehensive list of requirements for national ID cards to ensure that they become as flexible and as multi-purpose as possible.

The Executive Director of ENISA Dr Udo Helmbrecht concludes: "Electronic identity cards offer secure, reliable electronic authentication to Internet services, but banks and governments must cooperate better to be able to use national eID cards for banking purposes."

Privacy and Security Risks when Authenticating on the Internet with European eID Cards

Whenever we use internet services, the first steps we take are usually identification (we input our names) and authentication (we prove that it is us). How we actually identify and authenticate ourselves depends on the security level of the application.

The means used can vary from a simple combination of username and password, through a secret PIN, to a PIN generated by some external device or a smart card using cryptography. Smart cards are being used increasingly for authentication purposes. Many European identity cards now contain a smart-card chip, equipped with functionalities for online authentication.

They are usually called 'electronic identity cards' (eID cards). This report focuses on authentication using smart cards and compares this approach with other common means of authentication.

Publication date: Nov 26, 2009

Authors:

Ingo Naumann, European Network and Information Security Agency (ENISA), EU

Herbert Leitold, Zentrum für sichere Informationstechnologie (A-SIT), Austria

John Velissarios, Accenture, UK

Jens Bender, Federal Office for Information Security (BSI), Germany

Gregory Henwood, Home Office, UK

Andre Vasconcelos, Agency for Public Services Reform, Portugal

Giles Hogben, European Network and Information Security Agency (ENISA), EU

Jaan Priisalu, Swedbank, Estonia

Marc Stern, FEDICT, Belgium

Henning Daum, Giesecke & Devrient, Germany

Lorenzo Gaston, Gemalto, France

Arie Schilp, Rabobank, the Netherlands

Frank Zimmermann, Hewlett-Packard, Switzerland

Raul Sanchez-Reillo, Universidad Carlos III de Madrid, Spain

Downloads Full report:

eID_online_banking.pdf — PDF document, 760Kb

Radiant Systems Sued Over Data Breach - Million$ $ought

Secret Service Investigation, Class Action Lawsuit, Cast Shadow Over Radiant Systems and Distributors

Atlanta Company and Distributor Accused of Negligence in Widespread Identity Theft at Restaurants

FOR IMMEDIATE RELEASE

Secret Service Investigation and Class Action Lawsuit Cast Shadow Over Radiant Systems and Louisiana Distributor

Atlanta Company and Distributor Accused of Negligence in Widespread Identity Theft at Restaurants

ATLANTA, —PIN Payments News Blog - Forensic audit investigations conducted by credit company-approved experts concluded that the Louisiana-based distributor for Radiant Systems, Inc. (http://www.radiantsystems.com/) products violated data protocols that directly contributed to security breaches at restaurants in Louisiana and Mississippi. This finding of alleged negligence is at the heart of a collective action lawsuit filed by seven restaurants claiming that hundreds of customers had their identities stolen as a result of poor business practices and faulty software from Radiant and Computer World (the distributor).

The restaurants are seeking millions of dollars in damages from Radiant and Computer World.

“Our clients are restaurants. They are food experts, not technologists. When major players in the hospitality industry such as Radiant Systems and its distributors say their software and business practices are PCI-DSS compliant, our clients trust them,” said Charles Hoff of the Law Offices of Charles Y. Hoff, PC, general counsel for the Georgia Restaurant Association and one of the attorneys acting as a legal advisor to the restaurants in the lawsuit.

Hoff continued: “When those claims of compliance and proper security practices turn out to be false, the restaurants are left to suffer huge financial losses due to financial penalties imposed by the credit card companies. Their reputations are tarnished. We’re determined not to let Radiant and Computer World simply walk away from their responsibilities.”

PCI-DSS is a comprehensive set of technological requirements and consumer protections created by the major credit card companies to safeguard point of sale (POS) systems from hackers and protect consumers from identify theft. POS system vendors must follow these standards, and any business accepting credit cards for payments (such as restaurants) are contractually obligated to use equipment and software from PCI-DSS compliant vendors. The penalties for retailers that have their systems breached can be massive, even if the problems are the fault of the hardware and software vendors.

A special investigation by the United States Secret Service (the agency responsible for investigating cases of credit card fraud and identity theft) was also conducted given the multitude of Radiant POS systems subject to security breaches throughout Louisiana and Mississippi and the findings by the forensic reports that Computer World – exclusive area distributor of Radiant Systems’ “Aloha” POS software - violated PCI-DSS provisions. Among the findings:

1) Restaurants were sold earlier model POS systems although they were represented to be new models;

2) Computer World used a remote access system that did not have adequate security patches – a violation of PCI-DSS standards;

3) Computer World used the same password for at least 200 operators in violation of PCI standards;

4) The distributor failed to remove prior sensitive customer credit data upon installation of Radiant POS systems, again in violation of PCI standards.

As a result, the lawsuit’s plaintiffs are alleging that:

• Radiant Systems’ negligence and failure to either instruct or monitor Computer World’s actions led to systems being compromised and leaving the plaintiffs’ customers vulnerable to identity theft and fraud.

• That Radiant and Computer World were warned by Visa in 2007 that their programs were non-compliant. (The restaurants were unaware of these warnings at the time they purchased the Aloha system.)

• Once the breaches occurred and cases of identity theft and fraud began to appear, Visa, MasterCard and the card processing companies invoked their contracts and directly penalized the restaurants for the actions of Radiant and Computer World. The plaintiffs were hit with huge fines, required to pay for forensic audits to trace the problems, reimbursement of fraud costs to the credit card companies and payments for re-issuance of credit cards to affected individuals.

The lawsuit is seeking compensation to repay the penalties levied by the credit card companies and the massive costs to track down and repair the POS system problems. According to the attorneys, damages “could run well into seven figures”.

The restaurants have filed their lawsuit in the 15th Judicial District Court of Louisiana in Lafayette Parish and “will be seeking to raise awareness of the chaos and financial turmoil caused by companies such as Computer World and Radiant. We want other restaurants nationally to be aware of the hidden dangers posed by these technology companies and the unfair penalties imposed by the credit card companies,” said Shiel Gallagher of Gallagher & Gupta, PC, in Chicago, the second attorney leading the lawsuit. “These huge companies shouldn’t have the power to destroy these restaurants. It’s a classic David-versus-Goliath story and we’re going to do what we can to protect what these small business owners have struggled to build.”

Growth in Credit Card Usage in India and China

Unlike in the Western countries, people in Asian countries still use cash for most transactions. However credit card usage is slowly increasing. With about 50% of the global population, Asia holds plenty of potential for credit card growth. MasterCard (MA) and Visa (V) accounted for 90% of volume at the end of 2007.

Credit Card Usage by Country:

Japan ranks the highest in terms of card transactions followed by South Korea and Australia. India has the lowest card volume at just US $2.0 billion. Chinese spent nearly $24.0 billion using credit cards - 12 times that of India. With the world’s two largest populations, China and India offer substantial growth in the next few years.

Credit Card Growth in China

Due to strong competition, most banks waive annual fees for cardholders. Chinese banks have to deal with low rates of revolving credit on cards since most Chinese do not carry balances on their cards. This is a huge difference from other countries where credit card issuers earn most of their profits via interest on revolving balances. Hence Chinese banks cannot easily earn high profits on credit cards. The Credit and Debit card growth rate has increased from 18% in 2004 to about 58% last year.

Source: Card payments in Asia Pacific The state of the nations, KPMG

Friday, November 27, 2009

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