Thursday, June 2, 2011

Avivah Litan: Result of Michaels PIN Debit Scam Targets Issuing Banks with BIN (and PIN) Numbers

"It's not good news for the banks because they don't have good armor against it," - Avivah Litan, Gartner Research
Reuters is reportinig that those responsible for the theft of payment card data from Michael's sorted the data by their BIN's or Bank Identification Number, also known as IINs (Issuer Identification Number) to identify and then target said individual financial institutions "one-at-a-time" 

Reuters quotes Gartner reknowned data security expert Avivah Litan as saying: "

"They would knock the hell out of a bank. They've never done this before..."
By Ross Kerber and Maria AspanBOSTON/NEW YORK, June 1 (Reuters) - Thieves who stole payment card data from Michaels Stores Inc appear to have used a new method to maximize their take, a prominent data security expert said. Thieves apparently organized the scams they ran with stolen payment card numbers based on the banks that issued the cards, said Gartner Inc analyst Avivah Litan. By sorting the cards by their "BIN number" digits that indicate the issuing financial institution, they were able more at Reuters
List of Bank Identification Numbers:

The first 6 digits of a credit card number are known as the Issuer Identification Number (IIN), previously known as bank identification number (BIN). These identify the institution that issued the card to the card holder.

The IIN ranges used by the major card schemes are:

Visa: Card numbers start with a 4.
MasterCard: Card numbers start with the numbers 51 through 55.
Diners Club: Card numbers begin with 36 or 38. (There are Diners Club cards that begin with 5. These are a joint venture between Diners Club and MasterCard, and are processed like a MasterCard.)
Discover: Card numbers begin with 6011 or 65.
JCB: Card numbers begin with 35.
American Express (Amex): Card numbers beginning with 34 or 37.

KPMG Study: "Underserved" Market Represents Opportunity for Banks

NEW YORKJune 2, 2011 /PRNewswire/ -- The "underserved" market is considered one of the fastest growing segments in the United States and represents significant potential for banks willing to develop new products and services -- with the appropriate risk safeguards -- and channels to distribute them, according to a recent study from KPMG LLP, the U.S. audit, tax and advisory firm.
The KPMG study characterizes the underserved market -- the unbanked (consumers without a transaction account) and underbanked (those without access to incremental credit) -- as having grown significantly in the United States during the economic downturn.  The market represents about 88 million individuals with nearly $1.3 trillion in income, according to the KPMG study.  Based on forecasts, as many as six million people could be classified as "underserved" in the next two years.
"As banks transform their business models to address a new marketplace, they need to examine the potential of the underserved market as new revenue streams are necessary due to increasing compliance costs and various fees coming under pressure as a result of regulatory reform," said Carl Carande, national account leader of KPMG LLP's Banking and Finance practice.  "In the current environment, we see heavy competition among banks chasing customers with high credit scores, with decreasing margins, leaving the underserved market for those willing to invest in it."  
Carande also says that banks, before moving forward, need to ensure that appropriate risk-protections are built-in for the bank and customer.  "Risk management is a key element of the early opportunity assessment phase, as banks review their current state and design a portfolio of business opportunities for both the near-term and short-term," said Carande.   "From there, it is a matter of creating a target operating model before moving to the end game of deploying a multi-generational plan."
Customer Segmentation Critical
According to the KPMG study, banks can pursue a range of key target segments among the underserved, ranging from those who do not use a bank to young adults with little knowledge of financial products.  
The KPMG study categorizes the underserved market into the below four key target segments:
  • Unbanked (age 18 - 40; income of $12,000 - $35,000): Typically recent immigrants who are hourly workers and required to prepay most expenses.  They are predominantly users of cash and money orders and regularly transfer funds to a foreign country.
  • Rebuilder (age 30 - 55; income of $50,000 - $150,000): Typically a consumer that has recently experienced a negative event such as unemployment, foreclosure or bankruptcy, but held an above average credit score before this event.  They use at least one checking account, lack savings or monetary resources, use payday loans, and have limited access to credit cards.
  • Work-to-pay (age 18 - 30; income of $18,000 - $40,000): Typically an hourly worker that has a low credit score and difficulty maintaining a consistent job.  They regularly use payday lenders to meet cash flow needs, buy and use stored value cards, pay cash for cars or have above average interest loans, and are comfortable using a debit card.
  • Emerging retail (age 18 - 26; income of $25,000 - $60,000): Typically a recent high school or trade school graduate with limited access to liquidity and a paid-off older car or high interest car loan, but diligent in paying bills on-time and at saving.  They use mobile phones and online services heavily, are receptive to advice and new ways to manage their money, and are willing to pay fees for conveniences.

"Customer segmentation is critical to serving the underserved market and each target segment requires a disciplined and strategic approach," said Timothy Ramsey, managing director in KPMG LLP's Performance and Technology Advisory group.  "Those banks that carve out a niche that makes sense -- and can successfully market and brand themselves accordingly -- will distinguish themselves from the competition."  
"When serving this market, banks also have an opportunity to establish customer loyalty by helping these customers more effectively manage their personal finances and develop better saving and investing habits through educational, financial literacy programs," said Ramsey.  
New Product Offerings
Several examples of new product and services that banks can provide the underserved market are highlighted in the KPMG study.  Some services relevant for the unbanked segment include international wire/card transfers, check cashing (for non-customers), and walk-in bill pay and personal transfers.  For the underbanked segment, secured credit cards (savings account secured credit card), courtesy advances, and general purpose reloadable cards are some potential services highlighted.
"The KPMG study indicates that the underserved market is growing quickly because millions of wage-earning adults are unfortunately moving from the 'average' credit score to the 'damaged' credit score category due to negative events," said Atif Zaim, financial services sector leader for KPMG LLP's Performance and Technology Advisory group.  "There are a number of services that banks can offer this segment as they recover or move up the value chain."  
"Banks may also need to reach the underserved market by distributing these new products and services via ethnic- and cultural-focused marketing programs," added Zaim.
The KPMG study was conducted using publicly-available state and federal statistics and qualitative research data combined with consumer focus groups and market sizing computation and analysis.
KPMG LLP, the audit, tax and advisory firm (, is the U.S. member firm of KPMG International Cooperative ("KPMG International").  KPMG International's member firms have 138,000 professionals, including more than 7,900 partners, in 150 countries.

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Weekly International Payment News in Review


ICBC Asia rewards frequent flyers

ICBC Asia rewards frequent flyers

The Industrial and Commercial Bank of China (ICBC Asia), together with Hong Kong Airlines, has developed the ‘ICBC Asia Hong Kong Airlines Visa Platinum Card’ to give added privileges to frequent travellers.Free
PayPal makes further moves into Brazil

PayPal makes further moves into Brazil

E-commerce solutions provider Digital River is fuelling PayPal’s expansion into Brazil through its online payment processing solution.Free
Law firm calls prepaid into question

Law firm calls prepaid into question

US law firm Hagens Berman is conducting investigations into potential claims that five prepaid debit card companies engaged in deceptive practices.Free
UK Payments Council launches m-payments project

UK Payments Council launches m-payments project

The UK Payments Council has launched a collaborative project between banks and building societies to help facilitate the creation and adoption of P2P mobile payments.Free
PayPal sues Google over m-payments app

PayPal sues Google over m-payments app

Google has been accused of underhand tactics by PayPal as allegations of stealing "trade secrets" and poaching employees are unveiled on the very day the search giant launches its much -anticipated m-payments platform.Free
Metro Bank ups its m-banking services

Metro Bank ups its m-banking services

UK-based Metro Bank are to implemented banking software systems provider Temenos’ ARC Mobile platform as it looks to move into the m-payments space.Free
VeriFone acquires South African rival

VeriFone acquires South African rival

E-payments solutions provider VeriFone is set to acquire a South Africa-based rival Destiny Electronic Commerce, currently trading as CSC.Free
Customer-centric approach crucial to innovation

Customer-centric approach crucial to innovation

Customer insights are “crucial" for executing payment innovation, according to Kenneth Tan, head of debit cards and vice president at Singapore’s OCBC Bank.Free
Charity giving via ATMs agreed for 2012

Charity giving via ATMs agreed for 2012

UK banks, building societies and cash machine operators have unanimously agreed to enable charity giving via UK ATMs by 2012.Free
Online credit card spending remains popular

Online credit card spending remains popular

Credit cards are still proving popular among Latin American online shoppers with the payment method accounting for 70% of all transactions on the internet during 2010.Free

NRF 60 Day Ad Campaign for "Swipe Reform" Hits the Carolina's

06/01/2011 - 03:18 PM
NRF and South Carolina Retailers Air Radio Ads Urging Graham and DeMint to Support Swipe Fee Reform

BUSINESS WIRE)--The National Retail Federation and the South Carolina Merchants Association today announced the launch of a radio advertising campaign urging Senators Lindsey Graham and Jim DeMint to oppose efforts to delay a new federal law that would save retailers and consumers more than $1 billion a month by lowering “swipe” fees banks charge to process debit card transactions.

“Two out of every one hundred dollars we spend in stores or online go to the credit card industry,” an announcer says in the new radio ads. “America needs swipe fee reform now, not later. Call Senators Graham and DeMint today… Tell them to stop the big bank credit card industry from swiping our money.”

06/01/2011 - 03:02 PM

NRF and North Carolina Retailers Air Radio Ads Urging Hagan to Support Swipe Fee Reform
The one-minute ads are running on stations across North Carolina this week as part of NRF’s nationwide 60-day lobbying, grassroots and media campaign aimed at ensuring that swipe fee reform passed by Congress last year goes into effect as scheduled on July 21.

A provision in the 2010 Wall Street reform bill will reduce the fees by an estimated 70 percent, saving about $14 billion a year that retailers plan to pass along to their customers through discounts or other benefits, but the banking industry is spending millions of dollars to delay the reform.

As the world's largest retail trade association and the voice of retail worldwide, NRF's global membership includes retailers of all sizes, formats and channels of distribution as well as chain restaurants and industry partners from the United States and more than 45 countries abroad. In the United States, NRF represents the breadth and diversity of an industry with more than 1.6 million American companies that employ nearly 25 million workers and generated 2010 sales of $2.4 trillion.
Listen to Radio Ad at
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China Financial POS Machine Industry Report, 2010-2011

DUBLIN--(BUSINESS WIRE)--Research and Markets has announced the addition of the "China Financial POS Machine Industry Report, 2010-2011" report to their offering.
As of the end of 2010, there were 3.33 million networked POS machines in China, up 925,700 units or 38.5% year on year.With the rising consumption level and improving consumer awareness in China, the demand for bank card payment is growing, and the number of merchants in the POS network is rapidly increasing, promoting the demand for financial POS machines. As of the end of 2010, there were 2.18 million merchants in the interbank-payment-network, up 610,000 merchants or 38.9% year on year.
The fast-growing ownership of networked financial POS machines doesn't mean that the Chinese financial POS machine market has been saturated. In China, each POS machine corresponds to 724 bank cards, far outnumbering developed countries'. In the long run, there is still enormous potential demand for POS machines to be developed in China. In the short run, China's banking industry is accelerating the EMV migration from magnetic stripe card to IC card, making it possible for the demand from financial POS machine inventory transformation to increase rapidly. Furthermore, the improvement of the bank card payment security resulted from the EMV transformation will increase the incremental demand in the mid-to-long term.
LANDI Commercial Equipment Co., Ltd. is one of the largest financial POS vendors in China. In 2008, it was acquired by Ingenico, one of the largest financial payment providers in the world. It sold more than 500,000 financial POS machines in China in 2010.
PAX Global Technology Limited is an electronic funds transfer at point-of-sale (EFT-POS) terminal solution provider occupying a large share in the Chinese market. In 2010, it was spun off from Hi Sun Technology, and went public on the HKEx.
Key Topics Covered:

Market Opportunity for Pre-Paid Cards Growing, According to Firstsource Payments Industry Survey

June 02, 2011 09:30 AM Eastern Daylight Time

Attitudes evolve on social media and the changing regulatory environment
MUMBAI & NEW YORK--(BUSINESS WIRE)--Pre-paid is primed for explosive growth in the coming year, according to a survey conducted by Firstsource Solutions. The survey was conducted at the Card Forum & Expo, held recently in Miami.
“Our findings support recent research about the upward trend in the pre-paid market which shows that an estimated $37 billion was loaded onto prepaid cards last year, compared to $18 billion in 2009 and $9 billion in 2008.”
Fifty percent of payment industry professionals surveyed expect wider adoption of pre-paid cards as more consumers move away from credit cards and cash. Nearly 30 percent of respondents said that more consumers would become “loaders” (i.e. depositing more money to their pre-paid accounts).
“We’re seeing a growing interest in pre-paid cards in consumer segments that weren’t originally drawn to using such a form of payment,” said Tim Smith, Senior Vice President, Banking Financial Services & Insurance, Firstsource. “Our findings support recent research about the upward trend in the pre-paid market which shows that an estimated $37 billion was loaded onto prepaid cards last year, compared to $18 billion in 2009 and $9 billion in 2008.”
Survey respondents indicated that there is a huge opportunity for the pre-paid market to expand its customer base beyond the most likely consumer targets. Over 40 percent indicated that increased scrutiny from regulators regarding loading and set-up fees will pose the greatest risk to the industry. Additionally, 47 percent said educating card holders on the nuances of a pre-paid will be critical to successful adoption and overall growth in the market.
Financial Regulatory Environment
Firstsource’s survey also examined sentiment on the current regulatory climate in the payments industry. While Dodd-Frank was top-of-mind for 45 percent of payments professionals, the Consumer Financial Protection Act has fallen off the radar for most industry executives (only 9 percent of respondents indicated it was currently a priority issue).
Social Media Surge
The majority of survey respondents (66 percent) said that social media platforms have played a critical role in enhancing the customer experience. Three out of four respondents (74 percent) agreed that social media will be a significant factor in customer service in the future. Nearly 35 percent said their organizations use Twitter to connect with customers and monitor online conversations while 30 percent used Facebook to do so. Only 20 percent used blogs, while 18 percent used video sharing or other forms of social media.
“Despite contrary belief, social media adoption has become much more sophisticated in the payments industry,” said Smith. “Banks and credit card issuers are using social media platforms not only to improve the customer experience but to develop new products and service offerings based on customer preferences.”
About the Survey
The survey of 100 professionals in the banking and credit card industries was conducted by Firstsource at the Card Forum & Expo on April 27-29, 2011 in Miami, Fla. Respondents included credit card issuers, as well as banking and payments industry professionals, and service and outsourcing providers.
About Firstsource
Firstsource (NSE: FSL, BSE: 532809, Reuters: FISO.BO, Bloomberg: FSOL@IN) is a leading global provider of customized BPO services to the Healthcare, Telecom & Media and Banking and Financial Services industries. Its clients include Fortune 500, FTSE 100 and Nifty 50 companies. Firstsource has a “rightshore” delivery model with operations in India, U.S., UK and Philippines. (


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MasterCard Advisors Releases May 2011 SpendingPulse

U.S. Retail Sector Report: Mother’s Day and Graduation Drive Luxury and Jewelry Gains, While Home-Related Sectors Struggle

Following an April Boosted by a Late Easter, Sales Growth Loses Momentum
PURCHASE, N.Y.--(BUSINESS WIRE)--MasterCard Advisors:
“We have been seeing a regular decline in gasoline, with barrels pumped declining by 1% to 2%. The higher gas prices, though, do not seem to have had an impact on travel-related categories including Hotel or Restaurant sales or spending in Automotive-related sectors like tires, parts and service.”
Data Source:
A macroeconomic indicator, SpendingPulse reports on national retail and services sales and is based on aggregate sales activity in the MasterCard payments network, coupled with survey-based estimates for certain other payment forms, such as cash and check. MasterCard SpendingPulse does not represent MasterCard financial performance. SpendingPulse is provided by MasterCard Advisors, the professional services arm of MasterCard Worldwide.
MasterCard Advisors SpendingPulse, a macroeconomic report tracking national retail and services sales, today provided summary results for performance of specific U.S. retail industries in May 2011. Luxury, high-end Jewelry and e-Commerce enjoyed strong growth, as did the Hotel and Restaurant categories. Apparel also continued to show gains while housing-related sectors such as Furniture, Electronics and Appliances all saw sales decline compared to the same period in 2010.
Michael McNamara, Vice President, Research and Analysis for MasterCard Advisors SpendingPulse, notes, “Because the late Easter holiday boosted April’s year-over-year comparisons in some sectors, the May growth rates can look flattened by comparison, especially in Apparel, Luxury, and Groceries where the growth rates were only about half what they were in April. At the same time, Jewelry had its best year/year rate in 2011, and unlike the mixed results in April, every sub-category of Restaurants showed year-over-year growth in May.”
Mr. McNamara noted that while gasoline prices had declined somewhat since their peak, they were still cause for concern. “We have been seeing a regular decline in gasoline, with barrels pumped declining by 1% to 2%. The higher gas prices, though, do not seem to have had an impact on travel-related categories including Hotel or Restaurant sales or spending in Automotive-related sectors like tires, parts and service.”
Here are details of some specific sectors for May 2011:
With the travel season upon us, and, as noted above, gasoline prices continuing to stymie spending at the pump, it is interesting to note most sub-sectors of Travel have posted gains. Airlinesshowed only a modest 0.8% year-over-year growth rate, far below the 4-5% gains of March and February, while Lodging was up by 5.1% year-over-year. And Automotive stores (excluding dealers) posted sales year-over-year gains of 3.8% over May 2010, with repair sales up 3.8%, parts up 3.9%, and tires up 3.6%.
Though noticeably smaller than April’s gains, Total U.S. Apparel sales in May recorded a 5.9% year-over-year increase, its 18th consecutive monthly gain. While some of this month’s performance can be attributed to the late Easter holiday boosting April sales, all of Apparel’s sub-sectors recorded year-over‐year sales growth in May. Family Apparel posted modest year-over-year gains of 3.6%, its 16th positive out of the last 17 months. At 8.5%, Footwear weighed in with its 18th consecutive month of positive year-over-year growth, its May sales dollars being the second highest May dollar value in SpendingPulse history.
Up for the 7th consecutive month of double-digit year-over-year growth and 22nd straight month in positive territory, U.S. e-Commerce was up 15.9% year-over-year. Many eCommerce sectors posted impressive growth, with online Apparel sales gaining 19%, higher than the 17.9% growth rate observed in April.
In its 8th consecutive month of year-over-year gains, the SpendingPulse Luxury Index (excluding Jewelry) was up 4.7%, posting more modest results than in the first quarter of the year. The SpendingPulse Luxury category measures luxury sales at high-end restaurants, food stores, department stores and general apparel categories.
For more on SpendingPulse, please visit:
About MasterCard Advisors
MasterCard Advisors provides payments consulting, information, analytics, and customized services to financial institutions and their merchant partners worldwide. Addressing complex challenges in strategy, marketing, risk, and operations, MasterCard Advisors helps clients maximize the value of their payments businesses. As the professional services arm of MasterCard Worldwide, MasterCard Advisors is uniquely qualified to provide clients with insights and solutions that drive tangible impact and financial gain. For more information, go to
About MasterCard Worldwide
As a leading global payments company, MasterCard Worldwide prides itself on being at the heart of commerce, helping to make life easier and more efficient for everyone, everywhere. MasterCard serves as a franchisor, processor and advisor to the payments industry, and makes commerce happen by providing a critical economic link among financial institutions, governments, businesses, merchants, and cardholders worldwide. In 2010, $2.7 trillion in gross dollar volume was generated on its products by consumers around the world. Powered by the MasterCard Worldwide Network – the fastest payment processing network in the world – MasterCard processes over 23 billion transactions each year and has the capacity to handle 160 million transactions per hour, with an average network response time of 130 milliseconds and with 99.99 percent reliability. MasterCard advances global commerce through its family of brands, including MasterCard®, Maestro®, and Cirrus®; its suite of core products such as credit, debit, and prepaid; and its innovative platforms and functionalities, such as MasterCard PayPass™ and MasterCard inControl®. MasterCard serves consumers, governments, and businesses in more than 210 countries and territories. For more information, please visit us at Follow us on Twitter: @mastercardnews.


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