Did You Hear The One About...

This from a Technology Association of Georgia Blog: (The graphics are mine) It's created quite the stir...

If you haven’t heard by now (Lance Weatherby), ATM Direct won the 2008 TAG/GRA Business Launch Competition. On the one hand, I congratulate the ATM Direct team for their victory. They walked away with $100K in cash and $200K in services from various sponsors and partners. Not bad!

My other hand, however, is left wondering why a company that at one point was a significant going-concern, and was eventually bought out of bankruptcy court was even allowed to enter a competition aimed at fostering “new” companies. According to the rules of the competition:

The competition is aimed at “new” businesses, however the time and effort required to launch a successful business in the targeted areas may require that an entrepreneur form a company and begin certain limited functions before any meaningful business operations occur. These functions could include prototype or Intellectual Property development and for these or similar reasons up to $500K in external funding may be allowed. Market trials may also be required and for this or a similar reason some limited revenue may be allowed.

Some incredibly cursory research on the web revealed that back in 2005 or so, ATM Direct was bought by Pay to Touch for a little over $30M. One person told me that deal was a bankruptcy matter as well, although I can’t seem to find any reference to it. Just a few months ago (February, 2008), ATM Direct (or at least their patent portfolio) was sold under bankruptcy court supervision for a mere $600K to Accullink LLC (also located here in Atlanta).


No matter how you slice this, it bothers me. It bothers a lot of people that I’ve talked to over the past few days.

I volunteered this year as a pitch mentor for the other three companies that were in the competition (Skybloxx, Global Crypto Systems, and ProperNotice). Each of these embryonic teams worked extremely hard to make it to the finals of the competition. During our pitch mentoring sessions, ATM Direct was absent - no idea why.

But I know the other 3 teams came in and walked away with newly gleaned insights into their stories, and a genuine hope that they had a shot to win and get their companies off the ground. Instead, they lost to a company that had been auctioned off on the bankruptcy circuit (at least once, possibly twice).

In any event, the TAG/GRA business launch competition should be aimed at promoting and fostering the launch of new companies here in Georgia. Unless I am missing something obvious here, I can’t help but feel a little shame in this year’s affair.

It sort of reminds me of a 16 year old trying to play on a little league team - great for the team that recruited him, but not terribly fair for the other teams. I suppose one argument would be that since the assets of ATM Direct were sold to Accullink, it is a new incarnation, new company, etc. So that would qualify them for the competition. I still don’t like it, though. It just doesn’t give me that warm and fuzzy feeling that I expect from a winner of a competition like this.

In fact, one could counter-argue since the assets were purchased for $600K, that alone would disqualify Accullink/ATM Direct as that would constitute an investment that is greater than the $500K limit outlined in the rules of the competition. I’d have much rather seen a true green-field idea company in that slot (like the other three contestants).

Nevertheless, I sincerely hope that TAG/GRA addresses this matter at some point, if nothing else than to send a message to would-be entrepreneurs here in Georgia that your dreams and efforts still matter. Due diligence is a good thing. Hopefully, someone from TAG or GRA will come and post here and help make some sense of this.

Editor's Note: There's some interesting comments about ATMDirect not being "a startup." You can read them here

and here.The 2008 GRA/TAG Business Launch Competition Fiasco...

and here: http://blog.weatherby.net/2008/06/atm-cashes-in.html

ACCC Proposes to Revoke eBay's PayPal Only Policy

The ACCC (Australian Competition and Consumer Commissiion) proposed to revoke immunity for eBay's PayPal only policy. The ACCC has issued a draft notice proposing to revoke a notification* lodged by eBay International A.G. on 11 April 2008. Under the notification, eBay proposes to mandate the use of PayPal for almost all transactions on the eBay site.

"The ACCC is concerned that the notified conduct will allow eBay to use its market power in the supply of online marketplaces to substantially lessen competition in the market in which PayPal operates,"

ACCC Chairman, Mr Graeme Samuel, said today. "PayPal currently competes with a range of other providers to supply online payment services to users of online marketplaces. If the notified conduct is allowed to go ahead, there will be no competition for the supply of such services to buyers and sellers using eBay. "Given eBay's position as Australia's leading online marketplace, the notified conduct will substantially reduce competition to supply online payment services to users of online marketplaces more generally.

"The ACCC acknowledges that having PayPal as the only payment provider has the potential to deliver some benefits to users, such as increased buyer protection insurance in certain circumstances. However, the ACCC believes that consumers are in the best position to decide which payment method is most suitable for them.

"The notified conduct denies them that choice. Accordingly, the ACCC considers that these benefits do not outweigh the anti-competitive effects of the conduct," Mr Samuel said. eBay proposes to implement the conduct in two stages.

From 21 May 2008, all sellers on eBay were required to offer PayPal as one of their accepted payment methods. The second stage of the conduct is due to commence on 17 June 2008, with the requirement that all transactions on eBay must be paid for using PayPal or cash on pickup.

"In light of the serious competition concerns raised in the draft notice and the significant concerns raised by interested parties, I have asked eBay to delay implementation of the second stage of the conduct until a final decision is made by the ACCC," Mr Samuel said. eBay and interested parties now have time to lodge submissions in response to the draft notice, before the ACCC decides whether to issue a final notice revoking the notification.

More information regarding the notification and a copy of the draft notice will be available from the ACCC's website, or by emailing the Adjudication Branch at adjudication@accc.gov.au

Media inquiries

• Mr Graeme Samuel, Chairman, (03) 9290 1812 or 0408 335 555
• Mr Brent Rebecca, Media Unit, (02) 6243 1317
  
  General inquiries

• Infocentre 1300 302 502
  
  Release # MR 164/08
  Issued: 12^th June 2008
  
  Related register records

• eBay International AG - Notification - N93365
  
  *By lodging an exclusive dealing notification with the ACCC, a party obtains immunity from court action for that conduct. In this case, immunity is conferred automatically when the notification is lodged. Once the ACCC receives a notification, it reviews the purpose and effect of the notified conduct. If the ACCC forms the view that the conduct substantially lessens competition, and that it does not deliver a net public benefit, it may issue a draft notice proposing to revoke the notification. After considering any submissions from interested parties in response to the draft notice, and conducting a conference if any of the interested parties call for a conference, the ACCC must decide whether to issue a final notice.

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Debit Card Use, Particularly PIN Debit, Rising Sharply

According to the latest survey and analysis the use of debit cards for point-of-sale purchases is rising sharply, while cardholders continue to prefer PIN debit over signature debit, according to a study released recently by the Star electronic funds transfer network, a unit of Denver-based First Data Corp. (As always, click the graphic to enlarge to full size)

The study is the latest in a series of annual debit reports the network has sponsored since 2002.

Among consumers surveyed for the study last fall, some 74% reported having used a debit card for a POS transaction within the past 30 days, up from 70% in 2006 and 62% in 2005.

The increase in POS usage was most pronounced among consumers who earn $100,000 or more, with three-quarters reporting usage within the previous 30 days compared with 69% in 2006.

By age, the increase was greatest among those in the 25-to-41 group, where the usage rate rose from 77% to 82%. (See Chart on Right)

At the same time, reasons for not using a debit card for purchases are weakening, according to the survey. Only 48% of respondents said they preferred other means of payment (cash, credit card, or check) in 2007, down sharply from 62% in 2006.

Again, these preferences depend critically on income. Nearly two-thirds of those earning $100,000 or more per year preferred other means, with a strong preference for credit cards. By contrast, just 38% of those earning under $50,000, and 51% of those in the $50,000-to-$100,000 range, had a similar preference for other payment methods.

The study also asked those respondents who had not used their debit cards for POS purchases within the past 30 days what features would encourage them to start using their cards at the cash register.

Scoring highest on this list was fraud protection and assurances of no liability for fraud (70%), followed by ease of use (68%). The lowest scores were registered by avoiding pocket change (34%), attraction of the latest technology (32%), and family-member sharing of cards (26%).

As has been the case since 2002, consumers preferred PIN debit in the latest survey over signature debit, with 54% opting for PIN, 38% for signature. Some 6% said they like both equally or don’t care about the matter. This mirrors the results in 2006 and shows a significant increase for PIN since 2005, when 45% opted for that method of authentication.

The leading reason consumers give for preferring PIN is their perception that PINs offer greater security, with 44% citing this reason. This result has changed little over the years, despite news stories over the past year or so in which criminals have gained access to PINs with rigged devices and used the data along with fake cards at ATMs to loot consumer accounts.

Overall, respondents report making on average 24.6 POS transactions in the previous 30 days, flat with 2006. Of these, 13.6 transactions were performed with PINs and 11 with signatures. While PIN-only users made fewer transactions (12.2) than exclusive signature users (16.9), those who use both methods tended to use PINs more often than signature (23.3 total, with 14.3 using PINs and 9.1 signature-based).

For the latest report, which Star calls its “Consumer Payments Usage and Segmentation Study,” the network sponsored a survey of 3,523 consumers age 18 or older, conducted in a random phone canvass between Oct. 31 and Dec. 2 last year.

You can find the links to First Data/Star's three reports, including the Full Study below:

Related Articles

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• Segmentation Results from First Data/Star - PDF File
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Use PIN Debit to Buy Gas and Save Big!!!

Editors Note: The following may sound crazy, but it's happening more and more every day, especially with rising gas prices. If you use your debit card to make a gas purchase, DO NOT pay at the pump! Pay INSIDE and use your PIN number.

Otherwise...the higher price of gas has resulted in both account freezes and a windfall of overdraft charges for banks.

Consider the following scenario: You have $100.00 in your checking account. Early one morning on the way to work, you make a $25 dollar gas purchase with your debit card and pay at the pump. You have $75.00 left. However, unbeknownst to you, the gas station implements a $75 dollar hold on your checking account.

Now it's lunchtime and you buy lunch at McDonalds ($5.00). You have $70.00 left right? On the way home, you decide to buy a pack of smokes ($5.00), you have $65.00 left in your checking account, right? You pull in the driveway and the wife sends you out for Milk and Bread ($5.00) You have $60.00 left in your account right? WRONG!!!

Reality Check: The $75.00 hold triggers a $35.00 overdrawn checking (debit) account fee on the $5.00 McDonald's purchase. Same result with the pack of smokes. Ditto on the $5.00 Milk/Bread purchase. You now have $105.00 in overdraft fees. When the $75.00 hold is lifted early the next morning, the three $35.00 overdrawn fees (or $105.00) are applied to your account, but you only have $65.00 so you're left with a negative balance -$-45.00 instead of +$60.00.

End result? The $25.00 gas purchase cost you $130.00.

Want to avoid this scenario? Pay the attendant inside with your debit card and enter your PIN number. PIN based transactions involve no hold because the amount is deducted immediately. This can save you BIG headaches.

Here's an article from The Charlotte Observer regarding this subject:

‘Freezes' by service stations above what's paid for gas can unpleasantly surprise people with low balances.

Some drivers paying for gas with a debit card are experiencing a different kind of pain at the pump. Gas stations concerned about collecting on automated debit-card transactions are freezing large amounts of money in consumers' checking accounts, causing financial headaches for some drivers who carry low balances.

In the past, when gas cost $2.00 per gallon, when a consumer swipes a card at a gas pump, most gas stations froze $1 as a confirmation that a valid checking account exists. That hold usually lasted for a few hours, but can stretch for a couple of days. The station later debits the actual amount of the gas purchased from the account. But as gas prices soar to record heights this week and fill-ups reach into triple digits, some stations in the Charlotte area and around the country are freezing much higher amounts, some local bankers say. Some of the consumer complaints have centered on Shell and Exxon stations, which are usually independently owned, though the practice could include other local stations. The consumer protection division of the N.C. Attorney General's Office has received more complaints this year about the practice, said spokeswoman Jennifer Canada.

The office doesn't keep statistics on the specific complaint, but “as gas prices rise, gas stations tend to do this more,” she said. For instance, one consumer reported to the Observer that she purchased $25 of gas using her debit card at the Shell station on Gold Hill Road in Fort Mill, S.C. But she had $90 frozen in her checking account for several hours, along with the $25 for the purchase.

The manager of the station did not immediately return a message. And several other managers reached at various gas stations said they didn't know what amounts were being held or how it was determined. Despite the big-time names, most gas stations that sell Shell, Exxon and other brand names are independently owned.

Hotels have been placing extra holds on debit and credit cards for years in case customers run up extra expenses before checking out, such as for telephone calls, mini-bar items or other services.

But it has been happening at stations because some fear banks won't cover increasingly large gas purchases if the money ends up not being in a consumer's checking account, said Red Gillen, an analyst with Celent, a Boston-based financial services research firm. “Because there's a time lag between pumping and paying, there's a lot of money at risk. You're going to see more and more gas stations doing this,” he said. The hold policies can cause financial headaches for consumers in several ways, said Nathan Tothrow, director of marketing for Charlotte Metro Credit Union: A debit-card transaction might be rejected even though drivers have enough money in their accounts for the gas they want to purchase. “They have enough money for the gas, but not for the hold,” he said.

The holds can tie up cash that can't be used for at least a few hours. Unsuspecting consumers can have other transactions incur an overdraft fee since there's a danger that the holds can stay on for longer than a few hours, which can result in other transactions causing an account to be overdrawn, triggering fees. Tothrow said the credit union has received complaints about excessive holds. The bank investigated and found several gas stations were freezing $75 and $90. “For a lot of folks, a $90 unexpected hold can cause a problem,” he said. “I really don't like that they are doing it to our members.”

The way to avoid holds is to use the debit card with a gas station attendant and enter your PIN number because there are no holds involved and the account is charged immediately for the exact amount, the N.C. Attorney General's Office says.

Most gas stations and merchants send in charges as one bundle at the end of the day, after most holds have fallen away, Tothrow said. But some stations have started sending in the charge for pumping gas quicker, even before the hold has worn off. That can put double financial pressure on a checking account, at least for a few hours.

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Discover Seeks $6 Billion in Damages from V/MC

June 9 (Bloomberg) -- Discover Financial Services is seeking $6 billion in damages from Visa Inc. and MasterCard Inc. in an antitrust lawsuit accusing the bigger credit-card rivals of squashing competition.

The damages, which may be tripled, were included in confidential filings unsealed today in federal court in the Southern District of New York. Visa said today the amount was ``dramatically overstated'' and MasterCard called the suit ``baseless.'' Both companies fell in New York trading.

"The numbers on potential damages Discover is seeking are large,'' Sanjay Sakhrani, an analyst at KBW Inc. in New York, said in an interview. ``However we think a settlement for a meaningfully smaller amount still remains a likely scenario.''

Discover, the fourth-largest credit-card network, filed a lawsuit in October 2004 against Visa and MasterCard, claiming the two largest networks broke the law by barring member banks from offering rival cards. Visa agreed last year to pay $2.25 billion to American Express Co. in a settlement of a parallel suit, an amount Discover Chief Executive Officer David Nelms called ``cheap.'' MasterCard dropped $1.42 to $294.31 at 4 p.m. in New York Stock Exchange trading and Visa fell $1.51, or 1.8 percent, to $82.14. Discover fell 37 cents to $15.33. No Improvement Visa and MasterCard issued separate statements saying Discover's credit and debit businesses haven't benefited much since the ban was lifted, letting banks issue Discover cards along with Visa or MasterCard cards.

"Discover has not seen any increase in its overall percentage of the credit-card volume share'' after the policies were changed, Sharon Gamsin, spokeswoman for Purchase, New York- based MasterCard, said in the statement.

Visa, based in San Francisco, set aside $650 million for a possible Discover settlement from the $3 billion fund established after its record March initial public offering. The funds come from IPO proceeds of banks that owned the network, and the companies are obliged to pay for a larger Discover settlement if needed.

MasterCard didn't set up a similar system when it went public, which means shareholders may be affected by future settlements, Sakhrani said. He rates Visa and MasterCard ``outperform'' and Discover ``market perform.''

`Appropriate Settlement'

The documents had been filed under protective order since the case began. The lawsuits by Discover and American Express follow a U.S. Supreme Court ruling that Visa and MasterCard violated antitrust laws in competing against smaller companies.

I was a little surprised that AmEx settled as early or as cheap as they did,'' Nelms said in a Jan. 29 conference call with analysts. ``If we had an appropriate settlement at an appropriate time, we would consider that.''

Like New York-based American Express, Discover extends credit and runs a network that processes transactions for other lenders. Visa and MasterCard only operate networks and don't make loans to consumers.

Discover shares have declined 47 percent since the company was spun off a year ago by Morgan Stanley as the U.S. housing slump hurts consumers' ability to repay debt of all kinds. The company's market valuation is about $7.6 billion, according to Bloomberg data.

MasterCard shares have almost doubled in the past year and Visa shares have surged 84 percent since its IPO. The companies, which sidestep the rising customer defaults of lenders, capitalize on consumers' increasing preference for using credit and debit cards over cash and checks.

Visa's IPO raised $17.9 billion on March 18, the most for a U.S. company, and the tally passed $19 billion after more shares were sold to satisfy demand. It was the world's second-largest public offering after Industrial & Commercial Bank of China Ltd.'s $22 billion debut in 2006.

The case is Discover Financial Services, Inc. v. Visa U.S.A., Inc. et al, 04-CV-7844, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Hugh Son in New York at hson1@bloomberg.net

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Study: Use of Debit, ATM Cards on the Rise

GREENWOOD VILLAGE, Colo. — First Data Corp. has released its 2007/2008 Consumer Payment Usage and Segmentation Study, a research study based on data collected in a national survey.The study's findings indicate that:

• ATM/debit card penetration rebounded in 2007 (up to 82 percent), with gains across all age and income groups.
• Among consumers ages 18-42, penetration is almost universal, at 90 percent ownership of ATM/debit cards.
• Resistance to using a debit card at the point of sale is eroding.
• PIN debit continues to hold an edge over signature debit.

This edition marks the 21st year First Data's STAR Network has sponsored the study, aimed at gaining a deeper understanding of consumer payments, usage habits and attitudes.

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Speculation on Microsoft Internet Payment Platform...

A deal with a payment processing firm has sparked speculation the firm is to launch its own branded checkout service.

Microsoft has signed an agreement with a payment processing firm that experts have said could be a precursor to it launching an online checkout service. The agreement with Symmetric Systems will give the software giant access to the firm's online transactional platform, VitalPay.

VitalPay provides regulatory-compliant payment services, including mail and telephone order facilities and card-not-present transactions, to retailers and merchants, as well as travel and airline companies.

Microsoft refused to comment on why it had struck the deal with the firm or how it would link Vital Pay's capabilities with its own. But the software vendor has a variety of point-of-sale, customer relationship management (CRM) and web-based software offerings that could potentially integrate an online payment facility with.

It does not have its own payment facility, which could provide a way of capturing the internet consumer according to Martha Bennett, research director of financial services technology at Datamonitor.

"It's a pretty appropriate deal when you look at it in a wider context," Bennett told IT PRO. "Microsoft has been pretty desperate to capture the online consumer, if you look at recent activities concerning Yahoo. MSN isn't really a main competitor in search and Passport was a disaster. And, apart from the Internet facility on the X-box, it has been an also-ran when it comes to capturing Internet consumers."

She also said it was technically feasible for Microsoft to link with VitalPay to create a potential rival to Google's Checkout and Papal, particularly given its customer base of retailers using its Dynamics retail software suite. "The integration would be nice to have, but it will only be any good if it brings the merchants with it," she said.

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Debit Card Use Continues to Grow

DEBIT CARD PURCHASES STILL INCREASING, STUDY FINDS:

Debit card use at the point of sale continues to grow, with cardholders who use both PINs and signatures completing more total debit transactions than those who use one method or the other, according to a First Data Corp. study released Thursday.

Seventy-four percent of 2007 study respondents had used their debit card at the point of sale in the previous 30 days, an increase from 70% of respondents in 2006 and 62% in 2005, according to the study.

Cardholders using both PINs and signatures performed more debit transactions during the previous 30 days than those using only PINs or signatures, according to the study.

Cardholders using both methods completed 23.3 transactions during the previous month, while PIN-only users completed 12.2 and signature-only users completed 17, according to the study.

Greenwood Village, Colo.-based First Data conducted phone interviews with roughly 3,500 adults in November and December 2006 and between October and December 2007.

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More on Australia's PEN or PIN Program

Credit card users will be given the option of entering a PIN as an alternative to signing their name to authenticate a transaction under a banking industry initiative scheduled to start today. (June 4th)

Simon Greig, principle for Phoenix IT&T Consulting — contracted by the industry to manage the transition to the 'Pen or Pin' project for credit card transactions — says all of the banks are ready for the move. The main impetus for the initiative, led by Mastercard and Visa, is convenience and not necessarily security, he said. "The objective here is to provide a choice for cardholders," he said. "Australian consumers have been using PIN numbers for decades on their EFTPOS cards, and now they will have that option on their credit cards." "This is not a fraud-related activity," he said. "'It's simply about an option of convenience for cardholders that would like to use a PIN.

And for the retailer, they don't have to use their discretion to judge a signature." The initiative is unrelated, Greig said, to chip and PIN technology being pitched by some banks to reduce credit card fraud. Most Australian banks — including Westpac and the Commonwealth Bank, are trialing chip and PIN technology — which replaces the magnetic strip of a credit card with a microchip — and requires customers to enter a PIN number. It is deemed to be a far more secure approach to today's credit card transactions.

A spokesperson for the Commonwealth Bank told ZDNet.com.au that the bank does expect 'Pin or Pen' to "afford the customer additional [security] protection", but believes the real gains in security terms are more likely to be addressed by chip and PIN. "[Commonwealth] Bank takes card security very seriously and is currently working on its chip card solution," the spokesperson said.

Upon introduction in the UK, chip and PIN security faced its share of teething problems. However, the UK experience, says Greig, involved consumers that had rarely used PIN numbers engaging in a "massive leap" into chip and PIN. He doesn't expect such issues to arise in Australia, where consumers "have been using PIN numbers since the seventies. He also doesn't see 'Pen or Pin' being used as an excuse by banks to transfer liability for fraudulent transactions onto merchants and users, as UK banks have aimed to with chip and PIN. Greig said that under the new 'Pen or Pin' option, cardholders and merchants will be bound by the same rules and regulations using a PIN number as they would if a signature option was used."I have not heard of anybody changing their terms of use," he said.

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It's PIN...It's Smart...It's Embedded into the Future of Payments

MONTREAL — Digital technology is putting the power of a computer onto credit and debit cards to help cut down on fraud. Cards are being embedded with a microchip, or a tiny computer. That means the traditional swiping of a credit or debit card and signing a credit card slip won't be necessary.

Visa Canada, MasterCard Canada Inc. and Interac Association are moving to bring Canada in line with card technology that's already in use in much of Europe and parts of Asia and Latin America.

"The key driver for this is really on the security side," said Michael Stephenson, Visa's senior business manager of the chip initiative.

The three are involved in a pilot project in which credit and debit chip cards are being tested at businesses and financial institutions in Ontario's Kitchener-Waterloo region, west of Toronto.

Quebec-based financial institution Desjardins is leading a test in St-Jerome, north of Montreal. It's expected that Canada will move to chip technology over the next three years or so. However, the magnetic stripe is expected to remain on some cards to allow them to work in jurisdictions where chip technology isn't available.

Some test results have shown that transactions with chip cards are 40 per cent faster, Stephenson said. Instead of cards being swiped, shoppers insert them into a small chip-reading terminal.

Consumers using chip cards need to type in a PIN number when making a purchase instead of signing their names. If a card is lost or stolen, a thief shouldn't know an individual's PIN number.

Client information on a card's magnetic stripe can be copied by fraudsters to make fake credit cards, causing millions of dollars in losses to businesses and financial institutions.

Jack Jania of international digital security company Gemalto said it is more difficult to copy a chip card because the data and the transaction are encrypted. This brings a higher level of security to a transaction, said Jania, vice-president and general manager, secure transactions, for Gemalto in North America.

Gemalto is known as the world's largest provider of smart cards and develops operating systems for the cards. It's involved in the Canadian project to help implement the international standard known as EMV (Europay, MasterCard, Visa) standard.

"There's a secret key inside the computer chip that makes that card unique," said Jania, who's based in the Austin, Tex., area. Jania said the chip card randomizes how things are stored in its memory. He also warned: "If you try to pry open the card and take it apart, you expose the device to light and it automatically dumps its memory." The chip is encased in "very hard black epoxy" and will be damaged if taken apart, he said. "It's designed to be extremely tamper-resistant to ma\ sure the inherent data that's in that little computer is secure."

Waterloo Regional Police Staff Sgt. Wally Hogg said while it's too soon to say what impact the chip cards have had, it will be difficult to extract information from them. "There shouldn't be any concern about having the card double-swiped," said Hogg, who's in the fraud branch.

Interac Association's Kirkland Morris said consumers shouldn't have any privacy concerns about the switch to chip technology, but the move will take time.

"All of the debit and all of the banking machines have to be upgraded or replaced to chip (technology) before the end of 2012," said Morris, vice-president of enterprise strategy. "And all of the merchant terminals have to be upgraded by 2015. It's absolutely a multi-year exercise."

MasterCard Canada's Oliver Manahan said France was the first country to move to chip technology about 18 years ago and its fraud rates fell to almost zero. "Here's technology that can be used for the greater good of protecting payments and keep money out of criminals' hands," he said.

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Latest Malta-Pull...PIN Replacing Signature Debit

Malta

The Bank of Valletta in Malta announced that it has issued the first EMV Chip and PIN Cards through its systems.

“This is an important milestone in the process that will see us issuing EMV Chip and PIN Debit and Credit Cards to our customers over the coming weeks,” said Tonio Depasquale, CEO at Bank of Valletta. “By the end of the current year, we would have replaced most of the existing cards with the new EMV Chip and PIN Cards,” he added, explaining that this is a complex logistical exercise that is seeing the bank implement this new technology for the benefit of its customers.

“We are delighted to have reached this stage whereby, over the coming weeks, we will be starting the process of replacing the debit and credit cards of our customers who will be able to benefit from the new generation cards that we will be issuing,” added Mr Depasquale.

The new EMV Chip and PIN Cards that Bank of Valletta will be issuing over the coming weeks offer customers a number of benefits over the cards that are currently in circulation, including improved security and a more efficient payment process. In fact, when using the new EMV Chip and PIN Cards, the cardholder authorizes the transaction by entering his PIN on the keypad of the Electronic Point of Sale Terminal (EPOS). This is faster and more secure than the system in place today where the customer signs a receipt generated by the EPOS to authorize the transaction. The new technology also provides additional security and process-related benefits to the merchants.

Malta, officially the Republic of Malta (Maltese: Repubblika ta' Malta), is a small and densely populated island nation comprising an archipelago of seven islands, three of which are inhabited. It is located in the Mediterranean Sea in Southern Europe just 93 km (58 mi) south of Sicily, giving the country a warm, Mediterranean climate, and 288 km (179 mi) to its south is North Africa.

Throughout much of its history, Malta has been considered a crucial strategic location due in large part to its position in the Mediterranean Sea.^[3] It was held by several ancient cultures including Sicilians, Romans, Phoenicians, Byzantines and others. The island is commonly associated with the Knights of St. John who ruled it. This, along with the historic Biblical shipwreck of St. Paul on the island, ingrained the strong Roman Catholic legacy which is still the official and most practised religion in Malta today.

The country's official languages are Maltese and English, the latter a legacy from Malta's period as a British colony – the United Kingdom is the most recent outside ruling power. Malta gained independence in 1964 and is currently a member of the Commonwealth of Nations, as well as the European Union which it joined in 2004.

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Subscribe to ThoughtKey's Monthly Bulletin: PCI Today

ThoughtKey's President, Susan Kohl puts together a monthly bulletin designed to help understand the complex rules and programs surrounding PCI compliance with a focus on PIN Debit.

If you would like to subscribe to ThoughtKey's monthly newsletter please go to ThoughtKeyInc.com.

You may also mail your subscription request to information@thoughtkeyinc.com

As always, click on the graphic to enlarge and read...

NYCE Numbers

Study shows that from December 2007 until March 2008, Canadian shoppers have spent an average of over USD 68 per Cross-Border Debit transactions, up 45 percent than the average US debit purchase within the same period. The Cross-Border Debit service is offered as a result of the partnership between US debit card payments network NYCE Payments Network and payment services developer Acxsys. Since the service launch, the Canadian average has surpassed the US average by 33 percent.

The transaction number have jumped 94 percent in New York and Washington during November and December 2007, while for March 2008 the same states report 92 and 102 percent increases respectively in transactions alone over 2007.

NYCE is the first and only U.S. payments network to enable widespread PIN debit access at the point of sale for purchases initiated with debit cards issued by participating Canadian financial institutions.

NYCE Trend Developing Towards More PIN Debit Use

Image via Wikipedia

According to a press release from Acxsys and NYCE, during the four month period from December through March 2008, Canadian shoppers spent record amounts and made significantly more cross-border purchases in the US than last year.

U.S. retailers experienced even more value from accepting Canadian PIN debit cards during the holiday, spring break and snowbird season through the Cross-Border Debit service. The service is offered through an alliance between NYCE Payments Network and Acxsys Corporation.

NYCE Payments Network, LLC, is a leading U.S. debit card payments network and a Metavante company. Metavante is a leading provider of banking and payments technology. Acxsys Corporation is the architect of the national INTERAC debit service in Canada.

During the period from December 2007 through March 2008, Canadian consumers spent an average of more than $68 per Cross-Border Debit transaction—a figure that is 45 percent more than the average U.S. debit purchase during the same months. Since the service launch, the Canadian average has outpaced the U.S. average by 33 percent.

“The higher per-transaction average, combined with the lower cost to process PIN debit transactions versus credit, saves our retailers money while giving Canadian consumers instant access to funds that reside in their Canadian bank accounts,” said Steve Rathgaber, president and chief operating officer at NYCE.

“As they do at home, Canadians are choosing PIN debit at all types of retailers that accept NYCE, giving NYCE a unique value proposition to offer our participants.”

While the three-year-old program continues to enjoy steady growth overall, transaction numbers increased dramatically for the November and December shopping season last year in the states of New York and Washington. The combined transaction number for these states jumped 94 percent. Growth remained strong in the months following this period, with those same states logging 92 and 102 percent increases respectively in March 2008 transactions alone over the past year.

“Canadians are among the highest users of debit compared to other countries around the world, so it’s not surprising that Canadians are increasingly choosing debit in the United States as their preferred payment method,” said Tina Romano, public relations manager, Acxsys Corporation.

NYCE is the first and only U.S. payments network to enable widespread PIN debit access at the point of sale for purchases initiated with debit cards issued by participating Canadian financial institutions.

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MasterCard Investment Community Meeting

If you're interested in taking a look at the slide presentation from this morning's MasterCard Investment Community Meeting (it's in PDF format), simply click the link below:
http://library.corporate-ir.net/library/14/148/148835/items/296007/Master_File_2008_ICM_05_29_SLIDE_SHOW.pdf

On Global POS Interchange Fees

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Global POS interchange fees increased 140% between 2000 and 2006, to $64 billion (€48 billion). This massive growth in POS interchange fees was mainly fuelled by a phenomenal increase in payment card purchase expenditure worldwide and increased interchange rates in the USA, and occurred despite reduced interchange rates in Australia, Europe and elsewhere.

A new study by Retail Banking Research (RBR) analyses the evolving and increasingly complex landscape for POS interchange fees. It forecasts major changes to POS interchange fee arrangements and fee levels around the world. The study argues that the future for POS interchange fees is uncertain, for five main reasons:

• Competition and other public authority interest in POS interchange fees is continually growing
• Authorities are taking increasingly tough stances on multilateral interchange fee (MIF) arrangements
• The European Commission’s actions and findings – such as the December 2007 ruling that MasterCard’s MIFs are restrictive business practices – influence those of National Competition Authorities
• Pressure from merchants and retailer associations towards reduced interchange fees (or even their removal) is increasing
• There is political and regulatory pressure to converge and standardise fees in the SEPA area.

The study predicts a decline in the levels of POS interchange fees, which in association with changes to interchange rate structures and payment scheme rules will have major strategic implications for payment card organisations, issuers, acquirers, merchants and consumers.

"The Future for POS Interchange Fees" describes the background to the current controversy and provides an independent analysis of recent actions by competition and other public authorities. It looks at trends in interchange rates worldwide, and makes strategic predictions on the future of POS interchange fees and related matters such as MasterCard and Visa's honour-all-cards and (no) price discrimination rules.

For more information, interested parties should visit: www.rbrlondon.com/interchangefees.

Notes to editors

Retail Banking Research is a strategic research and consulting firm with three decades of experience in retail banking, banking automation and payment systems. RBR assists its clients by providing independent advice and intelligence through published reports, consulting and newsletters. RBR is recognised as the leading provider of premium research on payment cards and ATMs. Banking Automation Bulletin, a research newsletter founded in 1979, is published once a month by RBR.

The information and data within this press release are the copyright of RBR, and may only be quoted with appropriate attribution to RBR. The information is provided free of charge and may not be resold to third parties.

For more information about this report, please visit www.rbrlondon.com/interchangefees or email Rob Walker (rob@rbrlondon.com).

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