Mobile Payment Industry News

Monday, December 8, 2008

Loda Vodaphone with PayPal

According to various news accounts, Vodafone is now giving its prepaid mobile customers the ability to recharge their credit from their handsets using PayPal. The service provider claims it’s a first for Australia. Vodafone customers can register for a PayPal account online and select from either direct debit or credit card payment.

Once the PayPal account is activated, they can recharge their prepaid cap or extras pack directly from their handset via the Vodafone live! mobile content portal, according to Vodafone.

The PayPal payment engine authenticates the customer’s identity with a unique user name and password.

At the completion of the transaction, the customer receives a recharge PIN via SMS or email, with the prepaid credit redeemed with a free call to 1555, the carrier said.

Online Bill Payment Behavior Studied

Consumer Online Bill Payment Behavior Revealed in New Study

In an Uncertain Economy Consumers are Taking Advantage of Online Financial Transaction Tools to More Carefully Manage Their Money

SANTA CLARA, Calif., Dec 08, 2008 (BUSINESS WIRE) -- In an effort to retain some financial control in uncertain economic times, consumers are using tools to stay on top of bill payments. Billeo, Inc., the company that gives consumers unprecedented choice, control and convenience when paying bills online, conducted a 2008 customer behavior study focusing on online bill payment trends. The results show that consumers are utilizing free online tools to track, manage and organize their transactions. Three quarters of those who pay bills and shop online save electronic receipts of their transactions and identified ease of "tracking online purchases and payments" as a top motivator.

"The most important thing we glean from this study is that a growing number of consumers are not only more comfortable doing a variety of transactions online, but they prefer it," said Murali Subbarao, founder & CEO of Billeo, Inc. "We believe that the new economic situation will make them more savvy about how and when they spend their money and how they manage and store their online shopping and bill payment information. In uncertain times, they have the ability to exercise more control over how and when they pay bills, as well as how they track and evaluate expenses. To stay in control, consumers simply need to have some very basic online tools."

Billeo's survey revealed that more than half of people who transact online never pay late fees. The study found that more than 31 percent of those who transact online are baby boomers, and more than 58 percent are over the age of 45. The study also showed that more than 56 percent of those who transact online have attended college with more than half acquiring a graduate degree. In terms of credit cards, 90 percent have credit cards and 47 percent carry no debt on their cards.

"Currently, more than two-thirds of online consumers pay at least one of their monthly bills with a credit or debit card. As the growth rate for non-card based online bill payment slows, Aite Group believes that banks will find their highest rate of growth in online bill pay from card-based payers," said Ron Shevlin, Senior Analyst for Aite Group. "There is an opportunity for banks and billers to acquire an attractive set of consumers - consumers that are relatively affluent, are a low credit risk and actively engaged and loyal to the firms with which they do business."

In other research, Billeo found that credit card bills are the most popular bill paid online by consumers in terms of number of bills paid. Other categories in order of number of bills paid online were: Utilities, Telephone, Cable/Satellite Television, Wireless, and Insurance. In terms of average transaction amount, credit card bills were the highest with $602 per bill. Other categories in order of transaction amount include: Insurance (with $319), Utilities (with $217), Cable/Satellite Television (with $162), Wireless (with $159) and Telephone (with $143).

Splendid Search, a tool developed by Billeo to automatically save and categorize electronic copies of bill payment and shopping receipts, is available now to consumers. Splendid Search allows the search of financial transaction records by the retail store or company name, amount paid, credit card used, or even by date. Whether you want to save all of the records around the online booking of an airline ticket, hotel or car, are looking at all online transactions for a month, want to print a receipt for a rebate or in-store return, or want to file a warranty claim, Billeo automatically saves the full receipt, categorizes it and allows you to locate the right record in seconds. It takes all the work, frustration and clutter out of paying bills and shopping online.

Source: Press Release

Just Another Mega Monday

Online Shopping: Mega Monday Set To Be Busiest Day Of The Year For Web Retail Market | Business | Sky News

Online retailers are hoping today will be a 'Mega Monday' as experts say it will be the year's busiest online shopping day. The first Monday in December is usually the busiest for online sales. More than two million internet purchases are expected to take place today, with the hour between 1pm and 2pm the peak time for trading.

The commercial director of Visa Europe says buyers will turn to the web after failing to find what they wanted in the shops over the weekend. Steve Perry also predicted that savvy shoppers would look to the internet for a better deal on an item they had already viewed in store.

Martin Talbot, marketing director of online retailer Play.com, told Sky News said: "Last year was an historic high for us. But this year we are already breaking all the records.

"At peak periods today we expect to take over 800 orders per minute. By ten o'clock this morning our sales were up by seventy per cent on the same day last year." He added: "Now more than ever customers are looking for value and convenience. Because of the recession people are becoming more selective andmore demanding about what they want." "The average Brit is planning to spend £23 per gift, compared to £28 in 2007."

Figures from electronic retail industry body IMRG suggest that 77% of people plan to do at least half their shopping online - up from 56% last year.

They predict overall online spending in the run up to Christmas will top £13bn.

In other news, debit card usage is clearly rising.

In the four weeks from November 6 to December 3, the early part of the Christmas shopping season, total spending in the UK on Visa debit cards increased by 7%, with the number of transactions increasing to just over 206 million.

Visa debit card usage increased 29% for online purchases, compared with the same period in 2007, accounting for more than 15% of all Visa debit card spending.

Dr Perry said: "We expect the rise of online consumer shopping to continue. In the last week alone, online spending with a Visa debit card increased by 20% on the previous week, amounting to nearly £600 million.

Online Banking Passwords Stolen by Fake Firefox Plug-in

According to "The Paypers" a fake Firefox plug-in targets data exchanges between online banking and money transfer sites here, and abroad in Australia and Europe.

Romanian anti-virus company BitDefender warns online banking users that a Trojan virus posing as a plugin for the popular web browser Mozilla Firefox is currently targeting computers which are already infected with other strains of malware.

ChromeInject-A, the Trojan in question, sits in the Firefox plugin folder and is activated every time users start Firefox. It targets data exchanges between infected computers and a series of pre-defined online banking and money transfer sites in Europe, the US and Australia. Once the sensitive login information is acquired, it is forwarded to a rogue server in Russia. BitDefender reports that while incidents involving the Trojan posing as Firefox plugin have so far been rare, the virus can cause “very high” levels of damage once it infected a vulnerable computer.

Saturday, December 6, 2008

Friday, December 5, 2008

BioPay Launches Prepaid Debit Card Program

Back in April 2006 I put forth a proposal suggesting that Pay By Touch's Paycheck Secure launch a reloadable prepaid card that could be funded by the amount a payroll check was cashed for.

I specifically targeted the "underbanked" which is vastly of Hispanic origin, thus I even suggested calling the product "BonifiCard" from "Bonificar" which translates as follows:

Spanish to English

Bonficar - take into account, credit
Bonificar - refund, discount reimburse
Bonificar - to give a bonus to
Bonificar - ameliorate, receive a premium, to improve,
Bonificar - act of goodness, reclamation, to make better, bonafide

It would be an "open loop" card and at the tiime, PBT had a strategic partnership with Discover, so I suggested partnering with them. "Discover the Prepaid Touch" No word in the Press Release on whom they've partnered with in order to use it at "millions of locations" but I'm sure that will be available shortly. I even suggested tying in a "prepaid rewards" program which enticed them to use it for bill payment and build credit which would make them bankable and loyal. No word on that either, but they have announced a reloadable prepaid debit card that is funded by the amount a payroll check is cashed for with bill payment capabilities. Here's their press release:

BioPay Goes After Underbanked with Prepaid Card

Biometric check cashing company BioPay Paycheck Secure launches two new product offerings aimed at merchants who service the underbanked consumer sector: a prepaid debit card and a walk-in bill payment service.

Thus, the new prepaid debit card program allows retailers to cash customer checks and load the transaction proceeds onto a prepaid card which can subsequently be used for ATM cash withdrawals, online payments or at millions of other retailer establishments.

Biometric check cashing leader BioPay Paycheck Secure today announced that it has established partnerships that provide retailers with new, valuable product offerings, including walk-in bill payment and prepaid debit, to better serve underbanked consumers. This market constitutes more than 106 million individuals, who prefer to transact at alternate financial service centers, like grocery and convenience stores, rather than traditional banks.

The prepaid card program allows retailers to provide their check cashing customers with an alternative to cash. Now retailers can cash customer checks without stocking their stores with large sums of cash, instead loading the proceeds of a check cashing transaction directly onto a prepaid card.

The consumer may then use the value stored on the card at ATMs, online or at millions of retail and restaurant establishments. The card offers the consumer a safe means of building “savings”; providing protection should the card be lost or stolen and gives the consumer the convenience and prestige associated with mainstream card usage.

Both walk-in bill payment and prepaid cards markets are experiencing 30% plus growth rate, which offers grocery stores, convenience stores and other retailers the opportunity to increase their revenue, drive in-store traffic and increase their overall merchandise sales. Using Paycheck Secure, retailers may now provide this valuable service to the estimated 1 in 5 consumers who prefer to pay their bills in person.

"Providing our merchant customers with new tools to grow their business and meet the needs of the increasing alternate financial services market is our goal," said Jon Dorsey, CEO, BioPay Paycheck Secure. "The Paycheck Secure service positively enhances the transaction experience for underbanked consumers; and provides merchants with critical data to manage their businesses.”

Signing up to use bill pay and prepaid debit services or to cash checks using Paycheck Secure is quick and easy. The system's robust feature set and ease-of-use has facilitated over 53 million transactions worth $23 billion dollars for merchants and consumers nationwide.

For additional information about Paycheck Secure, please visit: www.paychecksecure.com.

Discover - Morgan Stanley Had Secret Talks with Visa/MC

Looks like Discover is today's HomeATM Blog topic of Day as the next post refers to them as well...

Finextra: Discover alleges Morgan Stanley had secret talks with Visa and MasterCard

Discover alleges Morgan Stanley had secret talks with Visa and MasterCard

In a lawsuit filed against Morgan Stanley, card scheme Discover claims that its former parent engaged in secret talks with its rivals, jeopardising its antitrust case against Visa and Mastercard and forcing it to agree to a lower $2.75 billion settlement than it might otherwise have been able to claim.

Discover was set to pay Morgan Stanley the first $700 million recovered from the anti-trust case and half of any proceeds above $1.5 billion, up to a total consideration of $1.5 billion, as part of a deal struck when the bank spun off the card company last year.

However the card scheme has refused to hand over the $1.2 billion claimed by Morgan Stanley from the settlement and disputed the bank's claims. Morgan Stanley has filed a suit seeking a declaratory judgement to resolve the issue.

Discover's counter-claim alleges that Morgan Stanley continued to have secret talks with Visa and MasterCard about the anti-trust case after it had spun off the card scheme. The alleged negotiations only came to light as Discover's legal team debated the merits of a $2.75 mediated settlement offered the day before the case was due to go to court.

Discover was was seeking damages that could have reached $18 billion, after being tripled under antitrust law, according to the claim, but was forced to choose between accepting the money on the table or "risking a trial without knowing whether its privileged and confidential information had been disclosed to its opponents."

Morgan Stanley has denied the claims.

More on Antitrust and Visa/MC...

Economists provide antitrust analysis in Discover settlement case

Boston, Dec. 4, 2008 -- CRA International, Inc., a worldwide leader in providing economic, financial, and management consulting services, today announced that the Company assisted counsel for Discover Financial Services with economic antitrust analysis pertaining to a lawsuit seeking damages from Visa Inc. and MasterCard Inc. for practices that suppressed third-party issuing on the Discover Network and the acceptance of its cards. On October 27, 2008, Discover announced that it had reached a $2.75 billion settlement agreement with Visa and MasterCard in the third largest reported antitrust settlement in U.S. history.

In October 2004, Discover filed a damages suit following the conclusion of a Department of Justice lawsuit, which determined that by barring banks from issuing cards on the Discover Network, Visa and MasterCard violated antitrust laws. After four years, Visa and MasterCard agreed to settle the Discover suit on the night before the trial was to begin.

CRA International had been retained by Constantine Cannon and Kirkland & Ellis LLP to assist in analyzing the anti-competitive effects of the rules of Visa and MasterCard in prohibiting their member banks from issuing Discover credit and debit cards.

CRA supported Discover's expert economist, Professor Jerry A. Hausman, MacDonald Professor of Economics at the Massachusetts Institute of Technology in Cambridge, MA, and a CRA Senior Consultant. The CRA team undertook economic analyses of market definition, market power, and the impacts of Visa's and MasterCard's rules on competition in the provision of credit and debit card network services. CRA also analyzed the monetary damages to Discover. This analysis contributed to determining the $2.75 billion settlement amount.

Jeffrey Shinder, co-lead counsel for Discover Financial Services and managing partner of Constantine Cannon's New York office, said, "CRA's analysis was invaluable to our case and helped us achieve one of the largest antitrust settlements in U.S. history. We are extraordinarily satisfied with CRA's economic analysis, as well as their depth of knowledge of the payments industry. CRA contributed with great teamwork and with the depth and skill of its economists."

"Our consultants are regularly tapped by leading companies seeking economic antitrust expertise," said James C. Burrows, CRA's President and Chief Executive Officer. "We are pleased that our economic antitrust analysis in this matter produced a positive result for our client."

CRA's work in this matter was directed by Craig Romaine, CRA Vice President, and Dr. Steven C. Salop, CRA Senior Consultant and Professor of Economics and Law at the Georgetown University Law Center. Other key CRA senior staff assisting in this effort included Spencer Graf, Stephen Kletter, and Mary Beth Savio.

About CRA International

Founded in 1965, CRA International is a leading global consulting firm that offers economic, financial, and business management expertise to major law firms, businesses, accounting firms, and governments. CRA's consultants combine uncommon analytical rigor with practical experience and in-depth understanding of industries and markets. CRA is adept at handling critical, tough assignments with high-stakes outcomes. The Company's analytical strength enables it to reach objective, factual conclusions that help clients make important business and policy decisions and resolve critical disputes. Headquartered in Boston, CRA has offices throughout North America, Europe, the Middle East, and Asia. Detailed information about CRA is available at www.crai.com .

Source: Company press release.

Discounts Pushed Sales on Cyber Monday

Ecommerce sales on Cyber Monday were pushed by discount offers according to a new report from comScore.

According to the company, Cyber Monday turning into the second highest online shopping day ever, reaching nearly $850 million. Year over year, shopping increased 15% but money spent per shopper actually declined.

Shoppers spent an average of $91 online this year versus nearly $97 in 2007. Despite the increase, though, there are signs that etailers need to do more to get shoppers in their online doors.

Both the number of transactions per consumer (9% decrease) and dollars spent per buyer (5% decline) dropped year over year, indicators that consumers are not buying as often or as much in 2008. It is also an indicator that consumers are shopping for price as much as for product.

"Because of the extremely attractive prices offered by a myriad of retailers, it shouldn't be surprising that nearly two million more consumers purchased online this Cyber Monday compared to last. But, because of their reduced spending power it's also evident that those who did buy were unable or unwilling to spend as much per person as we saw last year," said comScore chairman Gian Fulgoni. "That said, it's clear that Cyber Monday has become a well publicized event that has fundamentally captured consumers' attention and a meaningful share of their wallets."

As in year's past, consumers are still shopping from work. Shopping from work increased by 50% on Cyber Monday.

Thursday, December 4, 2008

Orange Money Launched in Ivory Coast

Orange has teamed up with French bank BNP Paribas to launch its Orange Money mobile payment and money transfer service in Ivory Coast.

Orange Ivory Coast is the group’s first company to launch the service.

The operator handles the services’ platform and marketing, while BNP Paribas’ Ivory Coast subsidiary BICICI is in charge of issuing and guaranteeing the electronic money.

With Orange money, Orange customers can deposit and withdraw up to XOF 100,000 (EUR 152.44) from the Orange Money account, make person-to-person money transfers, top-up their airtime credit with up to XOF 10,000 (EUR 15.24) and pay bills.

In order to use the service, customers have to open an Orange Money account which is activated for free without requiring any minimum deposit. Users do not need bank accounts to subscribe to the service. Orange Money is also to be launched in other countries over the coming months.

Worst In 3 Decades - November Retail Sales

Retailers post worst month on record, setting somber holiday tone - MarketWatch

Retailers post worst month on record

Dismal sales set somber tone for rest of holidays

By Andria Cheng,MarketWatch
Dec. 4, 2008

NEW YORK (MarketWatch) -- Retailers delivered the biggest drop in monthly sales in over three decades, an echo of their dismal October performance, as jittery consumers were pinched by the recessionary economy.

While Black Friday promotions helped bring in more shoppers and helped stem some sales declines, that still wasn't enough to help make up for poor results the rest of the month, which had about a week fewer post-Thanksgiving shopping days than last year.

This holiday season may shake out to be retailers' nightmare, with their worst combined November and December on record, analysts said.

Continue Reading

Prepaid Debit with Money Remittance Function

MiCash launches reloadable prepaid debit card with money remittance function

Pre-paid financial service provider MiCash launches a reloadable prepaid debit card with an integrated worldwide remittance function, aimed at unbanked or underserved consumers. The card is particularly targeted at immigrants working in the US who seek to send money home to their families.

The MiCash reloadable prepaid card allows cardholders to make electronic purchases, pay their bills online, make cash withdrawals at millions of available ATMs worldwide and employ such services as free direct deposits and mobile banking. Additionally, the cards can be used to carry out international card to card as well as card-to-cash transfers.

Card-to-cash transfers require that MiCash cardholders set up family members or friends as recipients then proceed to transfer funds to them via an online account or a call customer service. Recipients can take possession of the funds at over 12.000 Bancomer Transfer Services locations in such countries as India, China, Mexico, the Philippines, South and Central America.

Is Online PIN Debit For Real This Time Around?

In a post by Manju Murthy in his blog, Mobile Commerce Musings, he asks if Online PIN Debit is for real this time around. He also points out that a "hardware-based module needs to be involved to secure online commerce comprehensibly." Yeah...we're in resounding agreement.

Mobile Commerce Musings: Is Online PIN Debit for real this time around?

News of online PIN debit payment products popping up in the news often. ATM Direct/Acculynk and NYCE's SafeDebit are the but the latest examples.

Persistence over the past ten years to make online PIN debit a success is admirable. In an effort to overcome prior industry missteps, Acculynk and SafeDebit are offering software-based solutions.

As noted by others (last sentence) a hardware-based module needs to be involved to secure online commerce comprehensively.

Additionally, the usual suspects standing in the path of success include lack of ubiquity and changes to the user experience that make users uneasy.

The current interest in online debit payment options are driven by the credit squeeze being felt by consumers. If the current online PIN debit offerings can go commercial in the next 3-6 months with a broad array of merchants offering this payment option, there is a good chance of success.

PIN Debit on the Web

In an article recently published in Bank Technology News, Javelin Strategy and Research analyst Bruce Cundiff, seemed "pretty postive" that the time has arrived for PIN Debit on the Internet. There's two approaches. Hardware and Software Only. Software only is certainly sexier, as I've stated in the past, but is a software only approach secure? There's many who don't believe it is. Can it be PCI DSS certified? What happens when EMV is factored into the equation?

I agree with Mr. Cundiff that the stars looked to be aligned for PIN based transactions to emerge on the web. Two current trends: (1. Debit transactions outpacing Credit transactions and 2. eCommerce outpacing Bricks and Mortar.) point in favor of it happening. Combine those trends with the fact that PIN is more secure and it looks like the payments industry will see it's time has arrived.

Here's a post from Javelin's site:

Javelin Strategy and Research » A Very Tenacious Idea: Online PIN Debit

A Very Tenacious Idea: Online PIN Debit

Bank Technology News- “I’m pretty positive about it,” says Javelin Strategy & Research analyst Bruce Cundiff, who just authored the firm’s 2008 outlook on the online payments industry. “With the state we find ourselves, in terms of the credit space, I think a lot more people will be using debit cards [online].”

What Cundiff points to are results of Javelin’s 2008 Online Payments Forecast survey, which last month unearthed what the economic crisis has wrought in terms of declining credit-card transactions online. Not only are people cutting back on discretionary spending, but their credit limits are freezing as well (Thirty-seven percent of users said they’re using credit cards less often). Meanwhile, electronic spending directly from bank accounts is climbing, which means that the $148 billion online transaction market is increasingly comprised of alternative payments such as PayPal, prepaid cards and signature debit.

Sheth says it’s a perfect environment for PIN debit solutions, which could attract banks’ merchant clients looking to shave off interchange fees from credit and signature debit options; there are also some 80 million PIN-only debit cards that carry no card association ties. “The cost to adopt this payment type is negligible or zero,” says Sheth. “They’re riding the same rails they have established today, and there’s nothing for banks to change on the back end.”

The only major changes afoot appear to be the vendor’s own business model. In its original product, ATM Direct made consumers download an ActiveX control program to initiate the encrypted PIN-pad screen – not a way to pass many users’ smell test for malware. When it was a Pay By Touch company, former management attempted to build a revenue model that skewed fees and interchange for the company, but didn’t work for issuers, according to Sheth. Its biggest mistake may have been trying to collar merchants into signing separate processing agreements for the PIN debit transactions. “That’s an absurd proposition,” says Sheth, who points out those deals would have violated those clients’ existing and contractually exclusive card-processing deals with the likes of Chase Paymentech or First Data.

Read Full Article

CheckFree Not HackFree

CheckFree Hacked

First reported by The Register, it seems that CheckFree's website was, "webjacked" and users were redirected to a "blank" website that tried to install malware. Imagine how exponentially more "effective" the "webjacking" would have been if users were "redirected" to what looked to be CheckFree's site vs. a blank page. Here's a story about the hack from Brian Krebs of the Washington Post...the original Register report can be accessed in "Related Stories" below.

Hackers Hijacked Large E-Bill Payments Site

Hackers on Tuesday hijacked the Web site CheckFree.com, one of the largest online bill payment companies, redirecting an unknown number of visitors to a Web address that tried to install malicious software on visitors' computers, the company said today.

The attack, first reported by The Register, (Online payment site hijacked by notorious crime gang ) a security news Web site, began in the early morning hours of Dec. 2, when Checkfree's home page and the customer login page were redirected to a server in the Ukraine.

CheckFree spokeswoman Melanie Tolley said users who visited the sites during the attack would have been redirected to a blank page that tried to install malware. Tolley added that CheckFree regained control over its site by 5 a.m. on Dec. 2. The company said it was still having the malware analyzed by experts.

"The degree of exposure to users is dependent on how current their anti-virus software is and what browser they used to connect with," Tolley said, adding that the company will release more information about the attack as it becomes available.

But Paul Ferguson, a threat researcher with anti-virus firm Trend Micro, said Trend's analysis of the malware indicates that it is a new strain of Trojan horse program designed to steal user names and passwords.

It appears hackers were able to hijack the company's Web sites by stealing the user name and password needed to make account changes at the Web site of Network Solutions, CheckFree's domain registrar. Susan Wade, a spokeswoman for the Herndon, Va., based registrar, said that at around 12:30 a.m. Dec. 2, someone logged in using the company's credentials and changed the address of CheckFree's authoritative domain name system (DNS) servers to point CheckFree site visitors to the Internet address in the Ukraine. DNS servers serve as a kind of phone book for Internet traffic, translating human-friendly Web site names into numeric Internet addresses that are easier for computers to handle.

"Someone got access to [CheckFree's] account credentials and was able to log in," Wade said. "There was no breach in our system."

Among the 330 kinds of bills you can pay through CheckFree are military credit accounts, utility bills, insurance payments, mortgage and loan payments. Browsing through the first few letters of the company's alphabetized customer list reveals some big names, including Allegheny Power, Allstate Insurance AT&T, Bank of America, and Chrysler Financial. See the full list of companies here.

CheckFree's Tolley stressed that the attack occurred during off-peak hours when customer traffic to its Web site is typically low. Still, CheckFree has a huge customer base: The company claims that some 24.7 million consumers initiate payments through its services.

CheckFree declined to say how many of its customers and companies it handles payments for may have been affected by the attack. But this thread over at an Ubuntu Linux mailing list suggests that U.S. Bank may also have been affected by this attack. U.S. Bank did not return calls seeking comment.

Cogito Ergosum...

According to Finextra this morning, French mobile operators and retailers have formed a contactless payments working group they have dubbed the "Ergosum Project."

FYI: The latin term "Cogito, ergo sum" in English translates to: "I think, therefore I am"

The big French mobile operators Orange, SFR and Bouygues Telecom have teamed with eight major retail chains in the country to form a working group dedicated to contactless m-payments systems at the point of sale.

The Ergosum project will work towards a contactless payment system using international near field communication (NFC) standards and implementation specifications found in SIM cards.

The group says it "thinks" it wants contactless payments systems that work with all handsets, operators and retail chains. They should also apply to various services such as bank and loyalty cards and discount coupons, as well as be compatible with existing electronic money systems. The technology must also be coherent with the Payez Mobile system, developed by Orange, SFR and Bouygues Telecom with seven of the country's major banks.

The Payez Mobile pilot - overseen by the French "Secure Electronic Transactions" (TES) cluster in Lower Normanday - was launched in November 2007 to test customer satisfaction and interoperability among systems provided by different suppliers.

Following the trial's success, the banks and operators formed a not-for-profit association to promote the deployment of an interoperable mobile payment service in France.

Ergosum says its initial results are expected to be published in the first half of 2009 and will serve as the basis for pilots and deployments planned in 2009-2010.

The group - being run under the aegis of the private-public industry and commerce research centre Picom of the University of Lille - will also contribute to the work undertaken by the French government's Contactless Mobile Services Forum, sponsored by Luc Chatel, French secretary of state in charge of industry and consumer affairs.

Wednesday, December 3, 2008

Will eBay Pay Later for Bill Me Later Acquisition?

Image representing eBay as depicted in CrunchBase

Image by via CrunchBase

This story is from last week and I thought it made some interesting points which have coincided with some of the discussions I've had with associates...and there is one thing everybody agrees on. The big winners in this acquistion were the BillMeLater shareholders. We are apparently now (since December) "officially" in a recession. Worse than that, we are also in a severe "credit crisis" and people will tbe forced to turn to debit and cash as their cards get maxed out, or their balances get lowered. The risk is the credit worthiness of consumers using the BillMeLater platfrom. On the other hand, with credit tight, maybe more people will utilize it for budgetary concerns. After all, it is cash, it's just cash later, so maybe it'll work, but there certainly are some opposing forces they have working against. them. Like the article says...it appears, at the very least, eBay overpaid for BML.

At worst, they'll have $100 million in defaults on the books from 2008...

Was Ebay's BillMeLater Acquisition A Huge Blunder? - washingtonpost.com

Michael Arrington - TechCrunch.com

When eBay paid $945 million for BillMeLater in October, we blinked. The business assigns credit at the point of sale to ecommerce customers who can't use credit cards because they don't have them, have maxed out credit limits, or choose not to. It charges fees much like a credit card - currently 19% interest.

The credit markets were already a wreck in October, with accelerating defaults on credit card accounts. And worse, the securitization markets were starting to shut down, meaning credit companies couldn't get the debt off their books.

Still, a BillMeLater investor said not to worry. Their model is different than the credit card companies, he said, because they only issue credit on a per-transaction basis. Fast forward a month and a half, though, and things are much worse. Credit default rates are expected to hit 10% next year as personal bankruptcies soar, and the securitization markets are flat out closed.

And I don't really buy the argument that BillMeLater has a better model than the credit card companies. Card companies can (and do) lower credit limits in bad times, so they don't have much more exposure on credit limits compared to BillMeLater. Also, most of BillMeLater's customers don't qualify for credit cards in the first place, or are tapped out. That makes this debt super sketchy. And BillMeLater's credit models were created in a world of 5% default rates (the average over the last ten years), which are nowhere near as bad as what's coming.

On top of all of this, BillMeLater is pushing incentives that give people zero payments until April 1. What a teaser to buy stuff people can't afford for the holidays. This is adverse selection at work. People who don't need to wait until April 1 to pay won't use it. Those that do will, and those people are likely to be big credit risks.

At the very least eBay seems to have overpaid for BillMeLater. At worst they may have huge losses on the product next year. In 2008 they'll do $1 billion in payment volume. You can do the math on a 10%+ default rate.

Major Credit Card Hack Starting?

Credit Card Hackers in New Attack?

It's the last thing cash-strapped banks need right now: Holders of credit and debit cards are reporting an epidemic of unauthorized charges on their bills.

Could this be a sign of a massive card-fraud operation in the making?

A company called Adele Services, based in Melville, N.Y., has been charging cards small amounts — 21 to 29 cents. Such charges are usually attempts by card fraudsters to test whether a particular card number is valid.

The range of complaints suggests the people behind the Adele charges have gotten their hands on a sizable database of credit cards.

Here's some more on this breaking news from ars technica:

"A wave of unauthorized microtransactions is currently sweeping the accounts of a number of US credit card holders, though the size andscope of the fraud scheme have not yet been determined. Beginning on oraround November 20, consumers apparently began to notice smallcharges—typically for 19-29¢—appearing on their bank statements oronline account information. These small withdrawals or deposits aretypically test fees, sent to verify account authenticity. Paypal, for example, makes two small deposits in a user's bank account in order to verify its authenticity.

While legitimate companies will reverse the fee (or occasionally let you keep the extra quarter), thieves use the transactions to verify that a credit card number is good. If the deposits complete successfully, the hacker knows he's got a live card (or a live card number). The next step, at least usually, is to burn through the account's balance as quickly as possible before anyone notices what's happening.

Beginning on or about November 20, various card holders began complaining online about unauthorized microtransactions that were suddenly showing up on their accounts. The charges fit the model described above, and were labeled as coming from Adele Services. Adele Services appears to be a dummy corporation; the 1-800 number listed as the customer contact point is disconnected and there's no official
website.

The company may not officially exist, but that hasn't stopped it from continuing to test accounts. It's impossible to state how many card holders have been pinged in this manner, but the number of online reports is growing steadily.

Theories on which company's security was breached abound, although the mob of sages has collectively ruled out PayPal, given the number of non-PayPal users affected. Amazon seems to be a current favorite, based on the fact that a number of the irate forum posters recently shopped there. The factual likelihood that any number of random people have recently shopped at Amazon given the size of that company, and the time of year is much higher than some of the more fervent posters would like to admit.

For the time being, it's a good idea to keep a close eye on the day-to-day activities of your credit/debit account. If you want to be on the safe side, take a moment and review your financial institution's rules on contesting charges. The rules of this procedure can vary significantly from bank to bank. If you've been hit by these types of unknown charges (whether from Adele or another company), please let us know about it.

At this point, there's nothing much more than circumstantial evidence of a data breach. Such breaches can be disastrous when they occur, as TJ Maxx demonstrated back in 2007. It's possible that whoever is running Adele is working off randomly generated numbers, however; we won't know until more information becomes available."

Large-scale hacks have happened before; the worst was in 2005, when hackers obtained a file of 40 million card numbers from CardSystems, a credit-card processor. While most consumers worry about shopping with Internet retailers, online card databases are rarely the problem. In 2007 insecure cash registers at TJ Maxx and Marshalls stores exposed 45.7 million cards.

2nd Heaviest Online Spending Day on Record

E-Commerce Spending Jumps 15% on Cyber Monday to $846 Million, the 2nd Heaviest Online Spending Day on Record

Eclipsed Only by Green Monday 2007 with $881 Million in Online Spending

RESTON, VA, December 3, 2008 – comScore (NASDAQ : SCOR), a leader in measuring the digital world, today reported its tracking of holiday season retail e-commerce spending for the first 31 days of the November through December 2008 holiday season. For the holiday season-to-date, $12.03 billionhas been spent online, marking a 2 percent decline versus the corresponding days last year. However, Cyber Monday saw $846 million in online spending, up 15 percent. The four-day period from Black Friday through Cyber Monday saw e-commerce spending jump 13 percent as both weekend days and Monday all achieved double-digit gains.

2008 Holiday Season To Date vs. Corresponding Days* in 2007 Non-Travel (Retail) Spending Excludes Auctions and Large Corporate Purchases Total U.S. – Home/Work/University Locations Source: comScore, Inc.
Holiday Season to Date	Millions ($)
Holiday Season to Date	2007	2008	Pct Change
November 1 – December 1	$12,217	$12,025	-2%
Pre-Thanksgiving	$10,035	$9,588	-4%
Thanksgiving and Later	$2,182	$2,437	12%
November 27 (Thanksgiving Day)	$272	$288	6%
November 28 (“Black Friday”)	$531	$534	1%
November 29-30 (Weekend)	$645	$769	19%
December 1 (“Cyber Monday”)	$733	$846	15%

*Corresponding days based on equivalent shopping days relative to Thanksgiving (October 27-November 26 2007)

“Mark Twain might have said: ‘Rumors of the death of online holiday shopping have been greatly exaggerated’,” said comScore chairman Gian Fulgoni “Consumers are clearly responding positively to retailers’ aggressive online discounts. With Cyber Monday promotions beginning in earnest over the Thanksgiving weekend, consumers have finally begun to open their wallets, setting off a streak of four consecutive days of extremely strong growth, and culminating in a Cyber Monday that racked up an impressive $846 million in online spending, up 15 percent over last year and ranking it as the second heaviest online spending day on record. This is an extremely encouraging development for retailers and we can but hope that their aggressive discounting has still left room for profits.”

Consumers Seeing Less Foot Traffic in Retail Stores

The most recent comScore holiday retail survey, conducted from November 28 - December 1, revealed that some additional insights into consumers view of the 2008 holiday shopping season.

Some of the key survey findings include:

More than half (51 percent) of consumers indicated that the level of promotions and discounts is higher this year than last year, while only 12 percent said that there appeared to be fewer, suggesting that retailers are having to be more aggressive in discounting to spur consumer spending.
39 percent of consumers said that there seemed to be fewer people out shopping in retail stores this year than last year, while only 7 percent thought there were more.

Weekly Online Holiday Retail Sales

Members of the media interested in receiving the data behind the chart for use in a

graphical epresentation, please contact press@comscore.com

About comScore
comScore,
Inc. (NASDAQ: SCOR) is a global leader in measuring the digital world and
preferred source of digital marketing intelligence. For more information,
please visit www.comscore.com/boilerplate.

Contact:

Andrew Lipsman
Senior Analyst
comScore, Inc.
312-775-6510
press@comscore.com