Blogging More Than a Marketing Tactic

"It seems like every company has a blog section of its own, and is also interested in what the blogosphere is saying about it," said Paul Verna, senior analyst at eMarketer.

Word-of-mouth is still a powerful marketing tactic, and since influential bloggers are so effective at spreading the word about their likes and dislikes, blogger demographics continue to matter. So, excluding major businesses and splogs, who blogs now?

Although most researchers have noted a young skew to the blog audience, a BIGresearch study found that the average age of adult bloggers is actually 37.6. (see chart on left)

A Deloitte & Touche study of blog usage by age found a direct relationship: the younger the user, the more likely he or she was to read or keep a blog on a weekly basis. For example, 55% of millennials (ages 13 to 24) surveyed read a blog, and the percentages declined for every age cohort in the study until reaching just 16% for matures (ages 61 to 75).

Similarly, 35% of millennials kept a blog, whereas only 1% of matures did. The age groups in between—Generation X (ages 25 to 41) and baby boomers (ages 42 to 60)—fell between those two extremes.

With regard to the ethnicity of US adult bloggers, BIGresearch found that 69.7% were white, 20% were Hispanic, 12.2% were African-American and 3.7% were Asian. These percentages were essentially in line with the US Census Bureau's most recent estimates of the demographic breakdown of the US population, allowing for differences in methodologies, mixed-race respondents and overlap between Hispanics and individuals of other ethnicities.

Once a haven for techies, there are now blogs for everything from celebrity gossip to political commentary to the most mundane personal minutiae. By 2012, more than 145 million people—or 67% of the US Internet population—will be reading blogs at least once per month.

The number of people creating blogs in the US will also grow, reaching 34.7 million people by 2012—16% of the Internet population. By contrast, there were some 22.6 million US bloggers in 2007, a number that correlates to 12% of Internet users.

Buoyed by these massive levels of consumer engagement, US blog advertising will reach $746 million in 2012, up from $283 million in 2007.

Payment Card Reporting = Bad Idea?

Payment-Card Reporting Nonsense...Another expensively bad idea from congressional Democrats.
By Phil Kerpen

Last week the House Ways and Means Committee marked up the so-called Alternative Minimum Tax Relief Act of 2008. As expected, the Democrats are proposing several permanent tax hikes in exchange for a provision to protect the middle class from the unintended consequences of the AMT. What wasn’t expected was the addition of a nasty new regulation.

The bill now includes a $30.98 billion capital-gains tax increase on the carried interest of general partners in investment partnerships and a $13.57 billion income-tax hike for oil companies. Basis reporting, which would require financial firms to report capital-gains basis information to the IRS, was thankfully not included in the bill.

However, payment-card reporting was. This is real bad news.

Payment-card reporting would require banks and other providers of merchant account services to report credit- and debit-card payments to the IRS. All credit-card sales essentially would be pre-audited, with detailed sales information given to the government.

The idea is to stop tax cheats, although the effectiveness of such a system is far from clear. Meanwhile, this new regulatory burden will cost credit-card networks, banks, and other payment systems in terms of time, money, and personnel. These costs will necessarily be passed on to businesses and retailers in the form of higher credit-card fees, and to consumers in the form of higher prices.

With tens of millions of payment-card transactions taking place each day, the amount of information reported to the IRS in this new scheme will dwarf anything that exists today. The collection, transmission, and storage of such a massive amount of personal data also raises serious concerns about privacy and security, particularly for the many smaller businesses that use Social Security numbers as tax ID numbers.

The Center for Democracy and Technology has explained that payment-card reporting will undo the standard practice of deleting personal information once it has served its purpose. Considering the rising incidence of online identity theft, this is a particularly bad idea.

Making matters worse, payment-card processors will be deputized by the IRS not only to collect personal data, but to collect money, too.

Under backup withholding provisions of the bill, if a processor is unable to verify a merchant’s taxpayer ID number, the processor will be required to withhold 28 percent of that merchant’s gross transactions. Any smaller merchant caught in this net will suffer a cash-flow nightmare.Ironically, this big-government scheme is certain to elevate spending — the cost of building and maintaining a database of such vast scope would be considerable — with no guarantee that tax cheats will be caught and tax revenues will be recovered.

Companies that cheat on their taxes by underreporting income typically fail to report cash transactions, not the credit-card transactions that are clearly documented and would be available during an audit.And how will analyzing credit-card transactions allow the IRS to successfully identify companies for the purposes of auditing? The IRS has not demonstrated this.

Most likely, this program will result in unjustified and unnecessary audits.Payment-card reporting is another expensive bad idea from House Democrats. American taxpayers can only hope this extortion attempt fails, and that Congress passes AMT relief in a clean bill with no tax and regulatory hikes.

— Phil Kerpen is policy director for Americans for Prosperity.

Revisting Gartner's Report on Consumers Preference for PIN Based Transactions

Banks and credit card issuers have put significant efforts into marketing contactless and signature-based debit card payments, but they have failed to win over U.S. consumers, according to a survey by Gartner. This is important news for online and brick-and-mortar businesses. Consumers prefer alternative payment types -- such as a debit card and PIN -- that earn banks less revenue, but which consumers believe are more secure.

“Despite significant marketing campaigns by banks and card issuers to steer consumers towards using debit cards with a signature -- ostensibly so that the banks can earn more interchange revenue -- consumers prefer entering their personal identification number (PIN) to pay for groceries with their debit card over all types of signature-based card payments, whether credit or debit,” said Avivah Litan, vice president and distinguished analyst at Gartner.

The findings are based on Gartner survey of 4,500 online U.S. adults conducted in August of 2007.

“Banks promote signature-based debit payments because they earn more fee revenue from card-accepting merchants, on the premise that they are riskier and more prone to theft, so the banks need to earn higher fees to compensate,” Ms. Litan said. “Fraud rates on signature-based debit card payments are at least 10 times higher, and banks usually eat these costs if they are incurred in a card-present (or store) environment. Higher interchange fees paid by merchants to banks and card issuers for signature-based transactions must offset these costs or else banks wouldn’t promote the signature variety.”

When shopping at grocery stories, consumers prefer debit card payments that require entry of a PIN despite the fact that only debit and credit card payments with physically signed receipts typically earn them reward points. Consumers’ least-favorite payment type when shopping for groceries is contactless (wireless) payments, and there is similarly small interest in using mobile phones for making payments.

Consumer Preferences: Gartner: If Making a Purchase at a Grocery Store, Respondents Were Asked to Rank Payment Methods

Ranking: 1 = Most Preferred and 7 = Least Preferred

Paying with Cash: 2.88
Using debit card and entering a PIN on a cash register device: 3.64
Using credit card and signing a payment receipt: 3.70
Using debit card and signing a payment receipt: 4.00
Using regular payment card (credit or debit), but not having to sign a payment receipt or enter a PIN: 4.08
Paying with a personal paper check: 4.41
Using contactless payment card that you just wave or swipe in front of a terminal: 5.28
Source: Gartner

“Brick-and-mortar businesses who accept electronic consumer payments should promote use of PIN-based debit card payments by steering consumers to them through payment terminal programs and/or by offering store-based incentive programs,” Ms. Litan said. “Businesses pay less to banks for PIN-based payments and since consumers prefer them anyway, this is a win-win strategy for all parties except credit card issuers and banks.”

Consumers who have been affected by the data breaches publicized in recent years are more prone to change their online payment behavior than other online or offline activities, such as shopping and e-mail preferences. These consumers are more likely to call the online store and give them their payment account number over the phone.

“Online businesses should therefore enhance their ability to offer secure automated phone payments,” Ms. Litan said. “For example, businesses can use a transaction number generated during the online shopping season to tie a purchase to an automated phone-based payment. For this customer base, online merchants should also promote alternative payments, such as PayPal and Bill Me Later, where interest in using them increases as age decreases.”

About this study

Additional information is available in the Gartner report “Consumer Preferences for Secure Payments Create Opportunities for Non-Banks."

Barron's on Amazon Online Payments Plans

Is Amazon Planning To Go Head-to-Head With PayPal?
Posted by Eric Savitz

Amazon.com (AMZN) has been aggressively rolling out a variety of Web-based services, including on-demand computing power and data storage. Could the company’s next move be to go after eBay (EBAY) subsidiary PayPal’s dominant franchise on online payments?

Cantor Fitzgerald analyst Derek Brown asserts in a research note this afternoon that Amazon “may soon launch a PayPal-esque Payments service for use by consumers and merchants across the Web, potentially siphoning growth and/or profit from eBay’s crown jewel.” Brown says that Amazon could launch such a service as soon as late summer or early fall of this year.

“We believe an Amazon Payments solution for use across the Web holds real promise,” he writes. Brown contends that Amazon “long-ago demonstrated that it understands (perhaps better than any company) the needs/wants of online retailers.” And he also says the company understands - maybe better than any company - the needs and wants of online buyers. “Coupling this pool of knowledge with its massive customer base, powerful technology platform and unique skills sets, Amazon.com may be among the best-positioned Internet companies to attempt to challenge PayPal’s growing dominance.”

Brown says taking on PayPal successfully would be no sure thing, but adds that it seems “equally foolish” to simply disregard the idea as just another PayPal wannabe. He notes that the company already offers a site called Amazon Payments that allows users to send money to any U.S. mobile number of e-mail address using credit card info on file with Amazon.com to fund the transaction. He also notes that the company already also offer Amazon Flexible Payment Services, “a set of APIs that allows the movement of money between any two entities.”

Brown also notes that Amazon.com job listings show a number of openings in the area of external payments; he quotes one of the listings as saying “there is incredible opportunity to further leverage our payment services assets.”

Meanwhile, Brown also contends that eBay may be readying a further tweak to its business model, with an additional reduction in listing fees combined with a hike in back-end success fees. He says the result in the long run would likely be more listings. But that’s a mixed blessing: he says it would creation an “even greater strain” on the company’s searching and finding algorithms.

Concerned about both the potential competition from Amazon in payments, and the disruption from a shifting business model, Brown today repeated his Sell rating on eBay, with a price target of $25. Today, eBay is up 16 cents, or 0.6%, to $28.97 . Amazon is off $1.06, or 1.3%, to $81.91.

Online Consumer Payments Report Available

Research and Markets has released an Online Consumer Payments Report in which it claims to examine the Past, the Present and the Future of Online Payments. Here's an overview:

Online consumer payment volumes continue to grow rapidly as more consumers warm to the online experience and begin to purchase goods and services online with an increasing appetite. As a result, the online consumer payments market is becoming competitive, fast moving and volatile. Having said this, the opportunities provided by online commerce are vast and should not be overlooked.

Scope

The scope of the discussion in this report is restricted to B2C (business-to-consumer) online commerce globally. In the B2C online commerce both goods and service sectors are considered. Although the bulk of the data provided covers Europe and the US, where possible general consumer trends are considered on a global scale. Online payment mechanisms discussed in this briefing include credit and debit cards, prepaid cards, eWallets and P2P payments solutions.

Highlights

Credit cards are the preferred method of payment online among consumers globally. However, ultimately the credit card does not perform well in a card-not-present context - the need to create 3D Secure protocols highlights this. Therefore, the credit card is flawed as an online payment tool and issuers must innovate to defend their share of the market from non-card providers. Indeed, PayPal has grown strongly into a major online payment solution provider. In 2007, €34.3 billion of PayPal transactions were made; equivalent in size to the value of card transactions in Austria. (anyone else feel that's an odd analogy???)

Reasons to Purchase Report:

Besides having a spare €3077 Euros (for the hard copy) ...the Online Consumer Payments examines the past, present and future of the online consumer payment market. It highlights which payment solutions have been developed, indicating the key components of a ‘winning’ online payment solution. Use this report to understand key trends relating to consumers and merchants behaviour online and their attitudes towards the online environment.

Key Topics Covered:

Overview
Catalyst
Summary
Table of figures
Table of tables
Introduction
What is this report about?
Who is the target reader?
Scope of the report
Our definition of an online consumer payment
Trends in Online Consumer Payments
Key findings

For more information visit: http://allpaynews.com/node/4443 or...
http://www.researchandmarkets.com/research/d645a9/online_consumer_pa

Source: Datamonitor
Contacts:
Research and Markets: Laura Wood, Senior Manager
Fax (U.S.): 646-607-1907 Fax (outside U.S.): +353-1-481-1716
press@researchandmarkets.com

PULSE Releases ATM Safety Tips for Summer Travelers

Discover's Pulse EFT Network Provides Safety Tips
Press Release: Monday June 16, 2008

ATM Safety Tips to Follow as You Withdraw Cash for Your Next Summer Road Trip or Anytime Throughout the Year

HOUSTON--(BUSINESS WIRE)-- As part of its annual ATM & Debit Card Safety Awareness Month, this week the PULSE^® debit network releases ATM Safety Tips. Although debit is a secure and convenient form of payment, it is a good idea for consumers to take some basic precautions when using their debit cards. As many vacationers make their way out of town this summer, trips to ATMs to withdraw cash are inevitable. Whether withdrawing before you leave town or when you arrive at your destination, follow these step-by-step safety tips before conducting your transaction:

• Survey your surroundings:
  Pay attention to suspicious activity that may be occurring in your immediate area. If anything appears to be out of the ordinary, or if the ATM is obstructed from view or poorly lit, leave the area and try another location.
  
• Take someone with you:
  Whenever possible, it is a good idea to take another person with you when using an ATM, especially at night.
  
• Have your card ready:
  Minimize your time at the ATM by having your debit card out and ready to use. Do not let a stranger assist you in making a transaction, even if you have trouble or your card gets stuck. Never count your money while at the ATM.
  
• Safeguard your personal identification number:
  Block the view of others when using the ATM by shielding the key pad when entering your personal identification number (PIN).
  
• Look for possible fraudulent devices attached to the ATM:
  If the ATM appears to have any attachments or alterations to the card slot or key pad, do not use it. If possible, report the problem to the financial institution or ATM owner.
  
  A comprehensive list of ATM/debit card safety tips is available at:
  www.pulse-eft.com/public/group/consumer/atmdebitsafety.html.
  PULSE also offers a brochure containing fraud/identity theft prevention tips, which can be downloaded at:
  www.pulse-eft.com/public/group/consumer/atmdebitsafety/idtheft.html.
  

About PULSE

PULSE is one of the nation’s leading ATM/debit networks, currently serving more than 4,500 banks, credit unions and savings institutions across the country. PULSE is owned by Discover Financial Services (NYSE: DFS - News). The network links cardholders with more than 265,000 ATMs, as well as POS terminals at retail locations nationwide. The company is also a valued resource for industry research related to electronic payments and is committed to providing its participants with education on evolving products, services and trends in the payments industry. For more information, visit www.pulse-eft.com.

---

Source: PULSE

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Wow...Talk About Disruption in the Payments World

It's early here but I (still) got Georgia on my mind... This from Jeff Haynie's "Introspection" Blog...

There has been quite a bit of debate in the past few days about the 2008 GRA/TAG Business Launch Competition here in Atlanta. Scott Burkett was spot on in my opinion and was one of the first to publicaly call this insanity out. There were some tweets by some local entrepreneurs and Lance Weatherby attempted to quell the crowd with his peacemaking around trying to turn this into a positive and looking for suggestions about how to improve it.

A little background for those just trying to get up to speed on what’s happened.

The 2008 GRA/TAG Business Launch Competition is a cool annual event that is intended to help provide funding and value-added services in-kind to the lucky startup that is launching a business here in Georgia and looking for help. We had quite a number of companies apply, that was widdledwhittled down to a much smaller group and then to a final set of four companies. I’m an advisor to one company, Skyblox, which I think is worthy of the top 4 status and one of the cooler startups here in town. I’m biased and I freely admit that. But, that’s not really the point here.

Where this all breaks down is that the winner was a company called ATMDirect. I freely admit I know jack about these guys, except that the hidden secret that’s come out since the win is that they’re not really a startup per se. Maybe to the letter of the law, but certainly not the intention of it. You can technically say they’re just launching the business, but really they’re reinventing a company that has had literally millions and millions invested in it and its IP and taking some smart advantages of a bad bankruptcy situation. (And good for them).

Here’s the stated purpose of the event (from their press release):

The purpose of the GRA/TAG Business Launch Competition is to support economic development in Georgia by encouraging and supporting the creation and growth of new companies that will strengthen and expand Georgia’s strategic high tech clusters. To accomplish this, the competition has two specific goals:

• to motivate and support entrepreneurs in creating new high tech businesses in Georgia that will support and expand existing strategic clusters, and
• to create greater awareness within the investment community that Georgia is a great place to launch and grow high tech businesses.

(SIDE NOTE: I have issues with the purpose, especially the clusters concept, but that’s an opinion for another day).

OK, here’s the rules:

Entrepreneurs interested in launching a new Georgia company within targeted technologies and industries are invited to compete for a $100K cash prize and a suite of related professional services (including priority consideration for ATDC membership) that is valued at more than $200K. The competition offers entrants the opportunity to be mentored by a successful high tech entrepreneur.

Entrants must legally reside in the State of Georgia. All awards will be conditioned on the company launching and/or maintaining its operations in Georgia. If the winning company moves a majority of the business outside Georgia within 3 years, the winning company must repay TAG for the $100K cash prize plus 8% annual interest. TAG will make a final determination as to whether a company “moves a majority of the business outside of Georgia” and will have discretion to negotiate a variety of forms of repayment of the cash prize plus interest.

Entrants can be existing companies under certain circumstances. 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. The judging process will take all these factors into consideration when making a recommendation to TAG’s President and the decision made by the TAG President is final.

OK, that’s where it gets a little fun. I think the rules are fair. And, it’s their money and their rules - Tino can do what he wants here.

An interesting comment on Lance’s post from John B. Frank:

ATMDirect was neither founded, NOR funded by Nandon Seth. It was founded nearly a decade ago by an individual named Robert Ziegler who raised a couple million dollars. Pay By Touch paid $30.5 Million Dollars for it and sank another couple million into it before their unfortunate demise. Nandon Seth "simply acquired" ATMDirect for $600k during the Pay By Touch bankruptcy. Thus to state that he “founded” and “funded” ATMDirect is simply a misnomer. Just thought I’d set the record straight. FYI: You can visit www.biometricpayments.blogspot.com or www.pindebit.blogspot.com and do an ATMDirect search to learn more about ATMDirect’s history as well as PIN Debit for the Web…

Even on the ATMDirect website it states: ATM Direct was purchased by Accullink, LLC of Atlanta, Georgia in March 2008. See our press release for more details. (Side note: i can’t find the press release they mention specifically from their website which is terrible).

This is from the about page: ATM Direct is a privately held alternative payments provider offering a suite of products that enable PIN debit payments over the Internet. The technology underlying our products are backed by a suite of intellectual property that includes 10 patent families. Our technology leverages a revolutionary encryption and authentication framework which is easy to implement and integrates seamlessly with existing payment processing protocols and systems.

OK, a “business launch” for a “new startup” doesn’t have 10 patent families. Ten fully prosecuted patents families would be worth at least a million or more dollars alone most likely.

Also, they seem to have violated clearly the investment criteria of less than $500K (at a minimum, not including their post purchase investment if any).

Comment from Malcolm
Time: June 9, 2008, 4:17 pm

I think the question here is a bit less of how “old” or “young” the company is. I think the other competitors wouldn’t complain about a stretch on $100K investment. The real question is, what motivated the judges to choose ATM Direct? “A good team that presents well”. By all other accounts in the transaction industry, their patents have been misrepresented and their solution doesn’t hold water.

I guess I’ll sell my failing cat waxing business to Arthur Blank and he can win next year.

Comment from Paul Freet
Time: June 9, 2008, 4:35 pm

First, I have no issue with the management team at ATM Direct and I sincerely wish them great success.

While I agree that “technically” they qualified as a new company, and the $600k was “technically” not an outside investment, I have also talked to a number of people in the Atlanta startup scene who are “technically” quite torqued off about this.

Comment from David Jones
Time: June 9, 2008, 7:52 pm

In all fairness TAG, ATDC and the GRA all have their own agendas and any entrepreneur in Atlanta that doesn’t understand that is doing themselves a disservice. These organizations are definitely not “one size fits all”. If your company is not a “fit” – and it’s likely you’re not - you have to learn what (if anything) you can glean from them and then go it on your own.

I think the biggest problem we as entrepreneurs can make is looking at TAG and ATDC as the center of the startup universe in Atlanta. They are significant and they do benefit some companies, but regardless of what many think, they are not the arbiter of success and their judgment on the viability of your venture should not always be taken to heart (except maybe for the cat wax dude…).

There is a vibrant startup community in Atlanta (and the surrounding area) and it’s just starting to get up on it’s wobbly legs. We’re busy people – this stuff isn’t easy you know – but we’re getting help with organizing and connecting, through the efforts of Scott (Startup Lounge, Capital Lounge, Pitchcamp), Sanjay Parekh (Startup Riot, Startup Drinks), David Ratajczak (YnR), Mike Schinkel (Atlanta Web Entrepreneurs), and a lot of others.

Regarding the Business Launch: Get real – yes, this is a promotional opportunity for the company that wins (for about a month or so), but it’s a bigger chest thumping exercise for the sponsors than anyone else. Is this really where you should devote your precious startup’s time? (I was told by one of the organizers that the semifinalists this year were sooooo much better that last year’s – I’m hoping they just forgot that I was a semifinalist last year… How much mileage did we get off of it? Not much. YMMV.)

Look, I’ve got nothing against ATM Direct – don’t know the guys, don’t understand what they do (they do seem to get good deals on blade servers…), but their backstory doesn’t paint a very pretty picture. The fact that their technology development is based in Dallas, TX and Bangalore as opposed to Atlanta seems to be squeaking by the rules a bit and I’m not sure how that plays into ATDC & TAG’s mission statements. Now I don’t know the founder’s financial situation (I assume after selling your company to American Express you’re probably not living off of ramen noodles any more), but nothing in the rules says you have to “need” the money to enter the competition. It’s a dog eat dog world guys and it’s rarely fair – suck it up and let’s beat them off the court.

Comment from Jeff Haynie
Time: June 9, 2008, 8:01 pm

I had the *same reaction* today when I heard of this company. Wow, i thought. Skyblox is a kick-ass startup pinching pennies and doing some really useful and valuable stuff. Of course, i’m helping skyblox so i’m biased big time.

Too bad, lots of other great companies out there in the competition that could have really used the money.

Comment from Sanjay Parekh
Time: June 9, 2008, 8:17 pm

Okay, so even though I’m currently on vacation I’ll chime in on this although I don’t have the bandwidth to do a blog post. I think the big issue here isn’t the $100k overage, but the fact that the technology has had WAY more than $500k spent on it in its various iterations - at least I assume so. Otherwise it would have never (I’d think) been bought once for $30m (regardless of if it was out of bankruptcy or not). Given that, even though it was later bought for $600k, the technology had much more *lifetime investment* in it than the $500k cap. That creates an uneven playing field for other companies that do adhere to this spending cap.

Beyond this, the company (or at least the technology) has been around for a long time in various forms. Not a startup by any stretch of any rules.

Finally, the management of the company already had a successful exit and have a large war chest to spend already. So is this money better invested in ATM Direct or elsewhere? I’d say elsewhere but then, I’m not GRA or TAG.

Comment from Sanjay Parekh
Time: June 9, 2008, 9:22 pm

Also, after reading David Jones’ comments above - I have to concur. It’s silly and we all know it’s silly. Go about your business and “win” a liquidity event since winning a launch competition isn’t (or shouldn’t be) your goal.

Comment from TerrenceT
Time: June 9, 2008, 9:27 pm

So since Delta Airlines stock has plummeted in value could I buy them for $600K and relaunch it as a new airline and win next years startup award?

Editor's Note: According to the logic used in the example above, if Microsoft would have bought Yahoo, Bill Gates would've been the "founder" of Yahoo! and Terrence T. has the potential to be the founder of Delta Airlines! On a side note, Did anyone else besides me notice that the CEO of Harbor Payments is on the Board of Directs of TAG? Why is that pertinent? Because the "founder" (sic) of ATMDirect is also the "founder" of Harbor Payments.

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

• Key Findings From 2007/2008 Consumer Payments Usage and Segmentation Study from First Data/Star - PDF File
• Segmentation Results from First Data/Star - PDF File
• The Annual Consumer Payments Usage and Segmentation Study (Full Study)
• Online Merchant Counsels Retailers on Controlling Payment Costs - From Digital Transaction News
  

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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