NFC Data Inc. is reintroducing the key fob form to contactless payments with its Sqwizz mobile decoupled debit card.
Sqwizz looks similar to popular small MP3 music players. A contactless decoupled debit card would sit at the front of the device. Users would link the card to any checking account via the automated clearing house system.
Though many companies are working to build contactless into mobile phones, NFC Data argues that this development path for the technology does not eliminate the audience for other forms.
"There are a lot of compelling reasons why NFC [phones] can be complemented by a device that fits on your key chain and not cannibalized by the phone and vice versa," said Ken Mages, NFC Data's co-founder and co-chief executive.
NFC Data, of Chicago, has an agreement with a Silicon Valley-area company to distribute 100,000 Sqwizz devices in August, Mages said.
NFC Data is positioning Sqwizz as more than just a payment device. It also is intended to mimic functions an NFC-enabled smartphone might perform, but at a lower cost.
For example, Sqwizz can communicate with near-field communication tags in smart posters, exchange data with NFC-enabled smartphones, store multiple loyalty cards and redeem coupons.
The front of the device features a light-emitting diode screen and scroll buttons to navigate a menu. The back has a secure PIN pad consumers would use as a security measure to access and use the device's multiple functions. <>
USA Today said in a followup post that "The American Bankers Association's advice to small and mid-sized businesses to only use a dedicated PC for online banking has surprised some tech security experts."
Here's more...
That's because the ABA's public stance has long been that online banking is completely safe and, in fact, makes banking safer since customers do not have to wait for a monthly statement to arrive in the mail to monitor for suspicious activity. They also benefit from checking their account balances in real time via the Internet.
After reading our story on how cyber-robbers are targeting small business online banking accounts, security consultant Jennifer Bayuk went scrambling to find the ABA's new guidance at the organization's Web site. Bayuk, former chief information security officer at Bear Stearns, could find nothing.
That's because the ABA's latest warning came in response to our initial request that it describe its current position on the safety of online banking, vis-a-vis small organizations. We asked the ABA to explain why it considers Internet banking safe for smaller firms. Here's the full response from Doug Johnson, Vice President and Senior Advisor for Risk Management:
ABA, along with the financial services community, developed precautions that we have communicated with all member banks. Small- and medium-sized businesses are strongly advised to heed the guidance issued by their banks. The fraudulent transactions represent a very small portion of the millions of safe and successful ACH transactions conducted daily by businesses across the country. However, ABA is actively monitoring the situation and believes that commercial bank customers can safely utilize online banking by taking the precautions outlined in the alert.
The alert he speaks of was issued privately to banks by the Financial Services Information Services and Analysis Center. It warns small and mid-sized organizations never to use a PC dedicated to Internet banking for e-mail or Web browsing. We also asked the ABA to elaborate on the rationale that it should be largely left up to small and mid-sized organizations to take full responsibility for keeping any PC used for Internet banking free of banking Trojans. Johnson's full answer:
Each bank sets its own policy regarding a business customer's liability related to unauthorized electronic transfers. The banking industry is committed to protecting all customers – including businesses – from the fraudulent activities of criminals. Therefore, banks urge business customers to be aware of their responsibility to keep computers used for online banking free of malicious programs. The American Bankers Association has encouraged member banks to distribute to their business customers guidance developed by the FBI and the financial industry on how to guard their computers against unauthorized security breaches. Specifically, ABA recommends that business customers always initiate ACH or wire transfers under dual control, with one person initiating the transaction and another person approving it. Such controls can greatly reduce the risk of unauthorized transactions made possible by a breach of computer security.
"I was actually surprised to see that the ABA put out this type of warning because member banks don't usually publicly address this issue," says Bayuk.
A month ago (June 10th) I submitted a post entitled: Use PIN Debit to Buy Gas and Save Big!!! in which I hypothesized a scenario whereby an individual bought $25.00 in gas and because they swiped at the pump, instead of paying by PIN Debit inside, were charged $105 in overdraft charges.
Well, apparently (and unfortunately) one Mr. Stanley Allen from Miramar, FL doesn't know about and therefore doesn't read the HomeATM PIN Debit blog...or he would've paid inside using his PIN and saved...$105!
Here's his real life story which closely (he only bought $20 in gas) mirrors my hypothetical one... The link to the video of the story is here and below (along with a YouTube Video on the same subject...bounced check fees from debit holds).
Using a debit or credit card to buy gas could diminish your bank account quickly...
MIRAMAR, Fla. -- Using a debit or credit card to buy gas could diminish your bank account more than you realize. Stanley Allen knew gas was expensive, but when he recently bought $20 worth of gas with his debit card, he found out that it cost even more.
"Later on that afternoon, I got home and I checked my account, and along with the $20 worth of gas that showed, there was a $100 hold put on my account," Allen said.
The $100 was not technnically gone -- it was just off limits. But what happened next was painful. "Everything that came in after I pumped the gas bounced, so I ended up with $105 in overdraft fees," Allen said.
Allen called the gas station owner. "He said he wasn't responsible for it. He said check with my bank," Allen said. "I checked with my bank. The bank said, 'Check back with the gas station.' So I basically got the runaround for about a week."
Because the system does not know how much a customer is pumping, a hold is placed on the account. In the past, $50 was common, but the hold has been increased to $100 as the price of gas has risen.
Even if you only pump $20, the hold is not removed when you drive away. It remains in effect for several hours to several days. In Allen's case, his account had a hold for four days.
The bank determines the length of the hold while the gas station determines the amount. Neither is required to tell the customer.
The American Bankers Association advises that consumers should use their debit card PINs to minimize the likelihood of holds. It said the banking industry is working to improve the system to eliminate all holds, and it suggested that if the hold causes an overdraft fee, customers should ask their banks to remove the fees.
The Center for Responsible Lending said consumer relief could be on the way. "The Federal Reserve is actually trying to address this issue right now, and they are proposing to put an end to any kind of hold resulting in an overdraft fee being charged," said Leslie Parrish of the Center for Responsible Lending.
Until that happens, Allen said he would use cash so he won't be held hostage by an account hold. "I don't know exactly how it works," he said. "I just know that right's right and wrong's wrong."
NFC Data Inc. is reintroducing the key fob form to contactless payments with its Sqwizz mobile decoupled debit card.
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