Mobile Payment Industry News

Friday, October 31, 2008

Traditional Payment Cards for Online Transactions Continue to Decrease

The ACH Network: The Bedrock of Alternative Payments; New Research Report by Mercator Advisory Group

Boston, MA (PRWEB) October 31, 2008 -- The ACH Network began as a low volume network transmitting large recurring transactions between well-established entities; however changes in rules and business models have brought about significant changes in the nature and volume of ACH activity.

More than 18 billion ACH payments were made in 2007, representing a 12.6% increase from the total number of transactions generated in 2006. Much of the growth in ACH volume can be attributed to fundamental changes in payment methods used by consumers and businesses with the network transforming into a high volume platform of relatively low-value, non-recurring transactions. These transactions are originated from a rapidly expanding number of merchants, aggregators, corporations, and financial institutions.

Alternative payment providers such as Google Checkout, Bill Me Later and of course PayPal leverage the ACH to provide consumers and merchants with a secure and efficient means of payment and in doing so are experiencing phenomenal growth.

Non-financial institutions have been beating the banking industry to the punch of developing unique and cost efficient payment solutions, especially in the e-commerce space. Ironically, alternative payment providers have succeeded using the banking industry's own infrastructure to capture interchange-like revenues.

Although signature debit and credit card usage online has yet to be hugely impacted by alternative payment solutions, in many cases, non-traditional payment providers offer significantly enhanced value propositions including discounts, sales and loyalty tools, and the ability for merchants to cross sell on non-competitive merchant Web sites. These value added services create significant competitive pressures for traditional payment types and are giving alternative payment methods solid traction.

Brent Watters, Senior Analyst of Mercator Advisory Group's Prepaid Advisory Service and principal analyst on the report, comments, "As alternative payment methods continue to evolve and more players step into the space, the use of traditional payment cards for online transactions will continue to decrease. It is foreseeable that merchants will increasingly promote alternative payments and consumers will become more accepting of new payment types. Mercator believes that in the next five years (2014) 35% of payments made online will be in the form of alternative payments, including prepaid cards, new forms of credit and programs leveraging the ACH."

Highlights from this report include:

The ACH continues to show solid growth and transaction volume will continue to escalate as more alternative payment schemes leverage the network.
The ACH is moving to push versus pull method of payment thus creating direct competition for EFT networks that have been eager to develop a PIN-less debit solution for online transactions.
The ACH's eCheck services continue to fuel the networks' transaction volume and penetrate markets currently targeted by debit and credit cards.
NACHA's Secure Vault Payment (SVP) creates an opportunity for banks to compete in online alternative payments.

Taiwan E-Commerce Growth up 32.2% over 2007

E-commerce in Taiwan to witness expansion in 2008: up 32.3% over 2007

At the end of 2008, online shopping in Taiwan is expected to climb by 32.3 percent, as compared to 2007 and reach USD 7.42 billion, according to estimates made by a local research and consulting firm.

Due to lower prices and a broader range of products that online stores offer, customers across Taiwan prefer to turn to the internet for their purchases.

Business-to-consumer (B2C) e-commerce is estimated to represent USD 4.1 billion of the total e-commerce market and consumer-to-consumer (C2C) transactions are to account for USD 3.1 billion. B2C transactions are the equivalent of nearly 4 percent of the overall retail business.

Fashion and beauty products have registered the most rapid growth, as the compounded average growth rates (CAGR) of these categories hit 88 percent and 49 percent respectively.

For the consumer electronics and travel e-commerce categories, CAGRs have reached 25 percent and 21 percent respectively.

In terms of B2C transactions, the average value gets higher with the age of the consumer. Thus, Taiwanese online buyers who are aged between 20 and 29 spend USD 269, while those older than 50 spend USD 609 on average.

The study was conducted by the Market Intelligence Center.

Contactless Tackles NFL

Chase launches Chicago Bears contactless debit card

Consumer and commercial banking service provider Chase joins forces with Illinois-based professional American Football team Chicago Bears and MasterCard Worldwide to launch the Chicago Bears Debit MasterCard. The new card aims to provide Chase personal checking customers who are also Chicago Bears fans with an alternative to cash payments intended to cut back on transaction time and improve access to Bears special offers.

The new branded debit MasterCard, which comes with no annual fee, has a PayPass-enabled Blink feature, which allows customers to use the MasterCard tap-and-go service at all accepting merchants. Blink is a Chicago Bears proprietary contactless payment system which allows fast cashless payments at the Soldier Field stadium in Chicago. The new debit MasterCard is available to all new and existing Chase customers and also provides access to exclusive discounts and promotions with the Chicago Bears as well as invitations to various Chase-hosted special Bears events.

Merchant Risk Council (MRC) Announces eCommerce Payments Conference Speakers

The Merchant Risk Council (MRC) is pleased to announce the Keynote and Closing speakers for MRC's 7th Annual e-Commerce Payments and Risk Conference at the Wynn Las Vegas Resort on March 10-12, 2009. Terry Jones, founder of Travelocity.com, has been chosen to deliver the opening keynote speech. Chris Hansen, Dateline NBC correspondent, will be delivering the conference's closing speech.

"We are very excited to have Chris Hansen and Terry Jones join us for our annual conference," said Tom Donlea, MRC Executive Director. "Terry and Chris will provide their own unique perspectives to an audience of e-Commerce and multi-channel merchants coming together and discussing payment strategies while identifying specific solutions in reducing online fraud and mitigating risk." Donlea adds, "With today's challenging economic environment, enhancing profitability is more important than ever before."

The conference will include approximately 40 speakers and panelists, more than 30 unique sessions, and more than 40 payment and risk industry exhibitors -- all delivering valuable insight and information on the growth, diversity and risks associated with e-Commerce payments; new global electronic commerce business models; the latest trends in global payment channels; as well as identifying current and future global cyber threats.

Those scheduled to exhibit at the 7th Annual e-Commerce Payments and Risk Conference include: Accertify, American Express, Bill Me Later, Chase Paymentech, Cybersource, Discover, Ethoca, Experian, GlobalCollect, Google, iovation, 41st Parameter, MasterCard, PayPal/eBay, Trustwave, and Visa.

Since 2002, the MRC annual conference has evolved from an informal group of select merchants into one of the world's foremost conferences on e-Commerce. The 7th Annual e-Commerce Payments and Risk Conference unites the world's top Internet merchants, credit card companies, risk management providers, law enforcement agencies and various consultants and educators in discussing how to make shopping on the internet easier, safer and more profitable for all involved.

"The world of e-Commerce is expanding rapidly," said MRC Board Chairman, Tom Sullivan, Expedia, Inc. "We are now addressing new and emerging e-Commerce communities such as gaming, social networking, digital downloads among many others." Sullivan adds, "As these markets continue to grow, so do complexities of market expansion, payment options, and risk management. These are just some of the issues we'll be exploring during the conference."

For registration or exhibition information at this conference, or to receive MRC membership information, please visit the MRC's website at www.merchantriskcouncil.org.

About the Merchant Risk Council

The Merchant Risk Council (MRC) is a merchant-led trade association focused on electronic commerce risk and payments globally. The MRC leads industry networking, education and advocacy programs to make electronic commerce more efficient, safe and profitable. Today, with over 7,500 members, the MRC is the leading trade association for managing payments, preventing online fraud and promoting secure e-Commerce. The MRC is dedicated to working with e-Commerce and multi-channel merchants, credit card issuers, credit card companies, risk management providers, and law enforcement to make the Internet a safer and more profitable place to do business. The MRC Board of Directors and Advisors includes: Expedia, Inc., Adobe Systems, Inc., Neiman Marcus Direct, 41st Parameter, Apple, BestBuy.com, Bill Me Later, Blizzard Entertainment, Chase Paymentech, CyberSource Corporation, Dell, Inc., Discover Network, Gap, Inc. Direct, iovation, Microsoft, Trustwave, and Visa, Inc.

The MRC is headquartered in Seattle, Washington.

MEDIA CONTACT:
Jordan Rubin
TELEPHONE: 206.364.2789

Thursday, October 30, 2008

Want Scary? How Bout 100 Posts in a Month...Happy Halloween!

PIN Authenticated Card Present Rates versus Card Not Present Interchange Fees...

Trick Question of the Day...Which Rates Higher?

Treat Yourself to Lower Rates with Dually Authenticated "Card Present" Interchange from HomeATM!

American Express Lays off 7000

Image via Wikipedia

Pink Slips Fly at American Express

Don't leave home without what ... a job?

Credit card giant American Express (NYSE: AXP) became the latest financial company to hack off a chunk of its workforce, announcing it will lay off 7,000 workers, or 10% of headcount. It'll also slash investment spending, cut consulting, travel, and entertainment expenses (bah humbug) and freeze management-level salary increases.

These moves "will help us to manage through one of the most challenging economic environments we've seen in many decades" said AmEx CEO Ken Chenault, whose compensation is more tightly linked to stellar performance than many other corporate bigwigs.

The cuts should save AmEx a hefty $1.8 billion in 2009, which it very well may need heading into a pitiful economy where consumer spending could nosedive and defaults are likely to blow up. Banks and card companies that extend credit -- names like AmEx, Bank of America (NYSE: BAC) and JPMorgan Chase (NYSE: JPM) -- have been ratcheting up lending standards and actually cutting people's existing credit limits, a pretty clear sign that they're hunkering down and preparing for the worst. Companies like Visa (NYSE: V) and MasterCard (NYSE: MA) don't issue credit, so their downside risk heading into a recession is far lower.

Despite the bad news and a less-than-impressive quarter, many investors look at AmEx as a pretty compelling value story, including possibly one Warren Buffett. Take a great company with one of the world's best reputations, mix in a once-in-a-lifetime economic storm, and you get an opportunity to snag a great company at a great price, the thought goes.

Constatine Cannon Notches 2nd Billion Dollar Win Against Visa/MasterCard

Constantine Cannon $cores $econd Billion Dollar Win Against V/MC card Network

New York, Oct. 29, 2008 -- Constantine Cannon LLP helped Discover Financial Services Inc. secure a $2.75 billion settlement from Visa and MasterCard earlier this week in the third largest reported antitrust settlement in U.S. history.

The landmark settlement comes on the heels of Constantine Cannon's role in 2003 as lead counsel in the historic In Re Visa Check settlement, which remains the largest antitrust settlement in history, and established Constantine Cannon as a leading law firm specializing in payments.

Shortly after the In Re Visa Check settlement, Constantine Cannon was retained by Discover Financial Services to join forces with Kirkland & Ellis to bring a damages action against Visa and MasterCard concerning their rules that prevented banks from issuing Discover Network cards. After four years of hard fought litigation, Visa and MasterCard agreed to settle the case the night before the trial was set to begin.

"It was our privilege to represent Discover and help it achieve such a just result in its longstanding dispute with Visa and MasterCard," said Jeff Shinder, (pictured at left) Managing Partner of Constantine Cannon's New York office.

"This strong result reflects both the skill and collaborative spirit that our firm and our stellar co-counsel, Kirkland & Ellis, brought to bear on this case," said Matthew Cantor, (pictured at right) a Constantine Cannon partner, who co-ran the case at Constantine Cannon with Mr. Shinder.

Shinder and Cantor also were among the lead lawyers in the In Re Visa Check case. In that case, Wal-Mart, Sears Roebuck, Safeway Supermarkets, Circuit City and The Limited led a class of 5 million merchants in a challenge to Visa's and MasterCard's Honor All Cards rules, which forced merchants that needed to accept Visa/MC credit card transactions to also accept their debit card transactions.

As they did in the Discover case, Visa and MasterCard settled the In Re Visa Check case on the eve of trial for over $3 billion and injunctive relief, including the elimination of the Honor All Cards rules, that the courts conservatively estimated as being valued at $25-$87 billion for the class.

Constantine Cannon LLP is a law firm specializing in antitrust counseling and complex commercial litigation with offices in New York and Washington with over 40 attorneys. In addition to expertise to clients in financial services and electronics payments, Constantine Cannon also represents clients involved in telecommunications/media, health care, transportation, and technology businesses.

For more information visit http://www.constantinecannon.com

Source: Company press release.

The Benefits of Debit Cards by Bruce Cundiff via DebitFacts.org

DebitFacts.org - Ask The Expert

Ask The Expert
Bruce Cundiff
Javelin Strategy & Research

Paying and Accessing Your Money with Debit: A Safe and Convenient Alternative to Cash

The debit card has emerged as a payment method of choice for many American consumers, with 72 percent using debit cards for purchases in the past 12 months, according to Javelin Strategy & Research1. In 2007, there were nearly 31 billion debit transactions at the point of sale, totaling purchase volume of $1.2 trillion2. These statistics highlight consumers’ preference for using debit cards when making purchases at the point of sale, and with good reason. Debit cards provide a safe and efficient method of payment with multiple benefits over more traditional types of payments such as cash and checks.

Recent media coverage of debit card use among consumers has focused largely on the perceived lack of security when using debit cards. This article provides a factual source of information to enable consumers to make informed choices and make the most of their debit cards.

Safe and Secure Access - Reducing Fraud at the Point of Transaction

Debit card fraud is not spiraling out of control, as many in the media would have consumers believe.

Debit card networks, financial institutions that issue debit cards, ATM owners, and merchants that accept debit cards at their points of sale, are constantly making improvements to ensure that debit card transactions are secure, and that they quickly and efficiently remedy any issues that may arise - fraudulent transactions or otherwise. Despite reports to the contrary, fraud rates for debit cards remain relatively low. According to the 2008 Debit Issuer Study, commissioned by the PULSE® ATM/debit network, debit card fraud losses at ATMs were, on average, 2.5 cents per transaction in 2007. The fraud-loss rate was lower at the point of sale, with an average fraud loss of 2.1 cents per transaction when the cardholder used a signature and even lower - only half a cent - when the cardholder used a personal identification number (PIN) to complete the transaction.

Fraud Prevention and Assistance

Should consumers become victims of debit card fraud, however, financial institutions work hard to ensure that the cardholder is made whole again. Limited liability was developed with consumer protection in mind. Unlike with cash, limited liability means that if a consumer’s debit card is lost or stolen, consumers have a chance to get their lost funds back. With stolen cash, once it’s gone, there is little chance of recovering it.

The amount consumers are liable for depends on how quickly the financial institution is informed of the illegal activity. Consumers should check with their individual financial institution for specifics on the level of protection provided.

In most cases, debit card issuers often limit consumer fraud loss exposure to $50. Javelin’s Identity Safety Scorecard, a survey of the security mechanisms the top U.S. financial institutions have in place, indicates that most issuers effectively have a "zero liability" policy. This means that consumers are not responsible for any fraudulent transactions initiated on their accounts3, as long as they report the transactions within a given time frame - usually within 60 days of when the fraudulent transaction was discovered.

Limited liability highlights the benefits of debit over cash. With limited liability for a lost or stolen debit card, consumers have a measure of protection as compared to the "final" nature of lost or stolen cash - once it’s gone, there is little chance of recovering stolen cash.

Debit Cards as a Financial Management Tool

Given the current economic climate, consumers are increasingly seeking assistance from their financial institutions for help with financial management and spending control. Debit cards offer an element of control for consumers in that the money spent in a debit card transaction is drawn from existing funds in their account. Account holders often view debit cards as a vehicle to control their finances and spend responsibly. Since the funds from debit card transactions come out of a bank account or credit union and are not borrowed from a line of credit, it is important to keep track of account balances and how much is being spent to avoid overdrafts and associated fees.

With debit cards, though, keeping track of balances is easier than ever. In addition to available balance information provided on many ATM transaction receipts, online banking allows consumers to check balances and transactions 24/7. Many financial institutions also offer e-mail alerts that can be set up to notify consumers when their balances reach a certain threshold - often defined by the consumers themselves.

There are instances when using a debit card will cause a hold on funds in the account to cover the anticipated amount of the transaction. Financial institutions can place a hold on an account as a means of ensuring payment to the merchant. This "preauthorization" has attracted a significant amount of attention recently as consumers use their debit cards more frequently at gas stations, where holds are common. With gas prices rising dramatically over the past year, merchants are now submitting a preauthorization request to confirm that funds of $50 to $100 are available to cover the cost of a tank of gas.

Financial institutions that issue debit cards are responsible for actually applying the hold, as well as setting the length of the hold, which varies depending on how the debit card is used (PIN or signature transaction). The amount of money in the account available for use during the hold period is reduced by the amount of the hold. To avoid potential overdraft fees that could arise from a hold at the point of sale, consumers should check with their financial institution to determine its policy on the length of debit holds. If a hold lasts longer than an hour for a PIN transaction, or a few days for a signature transaction, ask why.

A Small Price for a Great Convenience

Contrary to some inaccuracies that have been reported, there is rarely a service charge passed on to customers when using debit cards to make purchases. In fact, less than 1 percent of cardholders in the U.S. are charged a fee by their financial institutions for using a PIN-based debit card for purchases.4

While some financial institutions are adding surcharge-free ATM access, most ATM owners charge a fee of $1 to $3 for withdrawing money from an ATM not owned by the account holder’s financial institution. This charge, like the premium paid for valet parking or to drive tollways, is for the convenience of getting cash from an ATM owned by an organization other than the debit cardholder’s financial institution.

To avoid the surcharge fee, consumers can use the cash-back option at available merchants or get cash from their financial institution’s ATMs.

Bruce Cundiff is Director of Payments Research and Consulting with Javelin Strategy & Research - a leading provider of nationally representative, quantitative research focused exclusively on financial services topics.

eMarketer's 2008 Online Shopping Holiday Preview

Will the Grinch Steal This Year’s Online Holiday Shopping Season? - eMarketer

Will the Grinch Steal This Year’s Online Holiday Shopping Season? OCTOBER 30, 2008

Amid a season of bad economic news, when overall retail sales growth is forecast to remain nearly flat, online retailers have reason to be guardedly optimistic.

eMarketer estimates that online holiday season sales will reach $32 billion in 2008, up slightly more than 10% over 2007.

“More than ever, in order to save money on holiday gifts, consumers will turn to the Internet to get gift ideas, find bargains and locate retailers that stock desired products,” says Jeffrey Grau, senior analyst at eMarketer and author of the new report, Online Holiday Shopping 2008 Preview. “In addition, shoppers will shift a larger share of their purchases from stores to the Internet to save gas money and take advantage of free shipping offers.”

Even so, online merchants cannot afford to be complacent.

“In the past, e-commerce analysts believed that online shopping was immune to economic downturns because affluent consumers—the core online buyers—had the financial resources to weather hard times,” Mr. Grau says. “But this time around the wealthy have become unnerved seeing their stock portfolios and home values shrink.”

Feeling the financial pinch, high-income shoppers have told pollsters that they will reduce their total spending online and offline this holiday season. When they do buy, they will hunt for bargains just like other consumers.

“This new frugality is a large reason why eMarketer predicts that growth in online holiday sales will drop to one-half of what they were last year,” Mr. Grau says.

See what to expect this holiday season—before the season arrives, download the new eMarketer report, Online Holiday Shopping 2008 Preview, now.

Key questions "Online Holiday Shopping 2008 Preview" report answers:

What is the outlook for online holiday sales this year compared with recent years?
How is the economic crisis likely to affect online shopping behavior this holiday season?
How are online retailers preparing for the challenges they face this holiday season?
Which retail Websites stand to benefit from the economic crisis?
And many others…

HomeATM on Facebook, Other Retailers Too

More retailers have fan pages/applications on it than on other social media sites including HomeATM:

http://apps.facebook.com/homeatmptop/

Facebook is the social media site of choice for many US online retailers, judging by an August 2008 study by Internet Retailer and Vovici.

Nearly one-third of responding businesses said they had a Facebook page, compared with 27% that had a MySpace page and just over one-quarter that had a page on YouTube.

A September 2008 study by Rosetta (formerly Brulant) that focused on the top 100 online retailers in the US found that 59 had a fan page on Facebook, up from 30 in May 2008. Among the 29 who added Facebook pages since that time were Best Buy, Toys “R” Us, Kohl’s and Wal-Mart.

“Social media sites continue to be an important source of community connection, and savvy retailers are reaping the benefits of Facebook’s rapid extension into new demographics, such as Gen X and seniors,” said Adam Cohen, partner with Rosetta’s consumer goods and retail practice, in an interview with eMarketer.

However, Mr. Cohen said that retailers should guard against casual attitudes toward their Facebook presences.

“It’s important that retailers don’t just slap up a page because everyone is talking about Facebook. An effective presence requires that you carefully consider what your customers are looking for, what you would like to communicate, and what role a fan page should play in your overall online strategy.”

What is a Chargeback and How Can HomeATM Eliminate Them?

One of many benefits derived from utilizing HomeATM's PIN Debit/Credit Solution to help drive eCommerce sales is the cost savings due to PIN based transactions being more secure.

Based on the fact that PIN is more secure, Visa and MasterCard provide much lower Interchange Rates for PIN based transactions...these rates can save etailers up to 100 basis points on transactions.

PIN authorized transactions occur in real-time and are dually-authenticated, thus another benefit is the virtual elimination of chargebacks. Chargebacks are costly, (you lose the cash and you lose the product!) time consuming (see chart which you may click to enlarge) and can be virtually eliminated via the HomeATM ePayment Solution.

Let's take a closer look at chargebacks in order to take a look as to why this should be important to all Internet Retailers.

Overview

A chargeback is a transaction that an issuer returns to a merchant bank - and most often, to the merchant - as a financial liability. In essence, it reverses a sales transaction, as follows:

The card issuer subtracts the transaction dollar amount from the cardholder’s credit card account. The cardholder receives a credit and is no longer financially responsible for the dollar amount of the transaction.
The card issuer debits the merchant bank for the dollar amount of the transaction.
The merchant bank will, most often, deduct the transaction dollar amount from the merchant’s account. The merchant loses the dollar amount of the transaction.

For merchants, chargebacks can be costly. You lose both the dollar amount of the transaction being charged back and the related merchandise. You also incur your own internal costs for processing the chargeback. On top of that, if your chargebacks amount to more than one percent of your card sales volume, you may be fined and ultimately, lose your small business merchant accounts. Credit card processing companies get fined by the Associations when their merchants have excessive chargeback levels and are very strict in monitoring them.

Chargeback reasons

The most common reasons for chargebacks are:

Customer dispute. A customer may dispute a transaction because a credit was not issued when the customer expected it to be; merchandise was not received; a service was not performed as expected; the purchase was fraudulent. Most of these reasons indicate customer dissatisfaction and addressing their causes should be an integral part of your sales and customer service policies.

Fraud.
Processing errors.
Improper authorization.
Inaccurate transaction information.

Although you probably cannot avoid chargebacks completely, you can take steps to reduce or prevent them. Many chargebacks result from easily avoidable mistakes, so the more you know about proper transaction-processing procedures, the less likely you will be to inadvertently do, or fail to do, something that might result in a chargeback. Always ask your credit card processing service provider for help.

Your responsibility

The main interaction in a chargeback is between the card issuer and the merchant bank. The issuer sends the chargeback to the merchant bank, which may or may not need to involve the merchant who submitted the original transaction. This processing cycle does not relieve merchants from direct responsibility for taking action to remedy and prevent chargebacks. In most cases, the full extent of your financial and administrative liability for chargebacks is spelled out in your merchant agreement.

Chargeback remedies

Even when you do receive a chargeback, you may be able to resolve it without losing the sale. Simply provide your merchant bank with additional information about the transaction or the actions you have taken related to it. For example, you might receive a chargeback because the cardholder is claiming that credit has not been given for returned merchandise. You may be able to resolve the issue by providing proof that you submitted the credit on a specific date. Send this information to your merchant bank in a timely manner.

Avoiding chargebacks

Most chargebacks result from inadequate payment processing procedures and can be prevented with appropriate training. The following best practices will help you minimize chargebacks.

Always conduct an AVS check and ensure that you received a “positive AVS,” i.e. Address + 5 ZIP or Address + 9 ZIP.
Only ship to a billing address with an approved AVS response.
Obtain evidence of receipt of goods (e.g. signed shipping receipt).
Use “Verified by Visa” and MasterCard’s “SecureCode” programs (for eCommerce merchant accounts only), which guarantees the card was used legitimately by its owner and gives you strong representment rights.
Require a card ID (CVC2, CVV2 or CID), the 3- or 4-digit code on the back of the card (or on the front for American Express cards).
Process refunds as quickly as possible.
Notify consumers in writing (e-mail or regular mail) when a refund has been issued or a membership canceled. Provide them with the date of refund and a cancellation number, if applicable.
Always provide a clear billing descriptor and phone number so the consumer can contact you directly rather than calling their bank to discuss any dispute.
State terms and conditions of the sale (or membership) clearly and in plain view.
Use e-mail to notify the consumer at each billing cycle.
Obtain a signature from the cardholder giving you permission to charge their card on a regular basis for monthly fees or recurring payments.
Make it very easy for members or subscribers to cancel – have a “no-questions-asked” policy.
Authorizations must always be done for every deposit.
Deposits must not exceed the amount you have authorized.
Authorizations must be “positive.”
Avoid using voice authorizations.
Avoid recycled authorizations– get a new authorization for each deposit.

Wednesday, October 29, 2008

E-Commerce Transaction Risks That HomeATM Solves

E-Commerce Payment Transaction Risks Solved By HomeATM's Innovative ePayment Solution

Most eCommerce credit/debit card transaction risks fall into the following categories:

Fraud. Fraud usually occurs for one of the following reasons:

A criminal uses a stolen card or account number to fraudulently purchase products or services.
A family member uses a card to purchase products or services without authorization.
A customer falsely claims that he or she did not receive a shipment.
Criminals hack into an eCommerce merchant's payment processing system and issue credits to their card accounts.

Virtual Account Information Theft: Card account information can be stolen in the virtual domain in a number of ways but most typically:

Hackers capture card account information during transmission between the merchant and its acquiring bank.
Hackers gain access to merchant services provider's payment processing system and steal customers' account information.

Physical Account Information Theft. Card account information can be stolen from physical sites as well:

Criminals gain access to and steal cardholder information from a merchant services provider's site and use it for fraudulent transactions.
A merchant or a merchant services provider's employee steals cardholder information and uses it for fraudulent transactions.
Cardholder information is stolen from trash bins at merchants' or merchant services providers' locations containing unshredded account information.

Customer Disputes and Chargebacks. Customer disputes and chargebacks are among the biggest risk factors for eCommerce merchants.

Products or services are not as described on the website.
A customer is billed before the product is shipped or the service provided.
There is a disagreement or confusion between the merchant and the cardholder regarding a return or a refund.
A customer is billed twice for the same order or is billed an incorrect amount.
A customer does not recognize the merchant's name on his or her credit card statement.
Products or services are billed without customer approval.

Fraudulent transactions involving unauthorized use occur when stolen cards or account information are used to purchase products and services. The cards and account numbers are legitimate but their use is not. Typically, fraud in card-not-present environment involves purchasing high-priced items that are easily resold (e.g. electronics, jewelry, etc.).

DebitFacts.org Launches Today

DebitFacts.org Provides Answers to Debit Card Users

HOUSTON - (Business Wire) DebitFacts.org, a new Web site that provides timely and accurate information about using debit cards, launched today, offering consumers practical details about debit’s role as a convenient payment method and valuable financial planning tool. The site addresses myths and misconceptions surrounding debit cards by offering fact-based information consumers need to know when using debit, as well as advice on making debit part of their personal money management strategy.

The site (www.debitfacts.org), sponsored by the PULSE® ATM/debit network, provides recommendations to help protect consumers’ personal finances when using debit cards, including tips for fraud and identity theft prevention.

“The goal of this site is to raise awareness about debit card use and present consumers with reliable and balanced information about using debit for everyday purchases and as a means of managing their personal finances,” said Cindy Ballard, PULSE executive vice president. “DebitFacts.org talks to consumers in easy-to-understand terms. The site gets to the heart of how debit cards are one of the valuable tools in a consumer’s financial planning portfolio.”

DebitFacts.org also addresses issues of concern to debit cardholders, such as the risk of falling victim to card fraud.

“Debit card networks, financial institutions that issue debit cards, ATM owners and merchants that accept cards at their points of sale are constantly making improvements to ensure both the security of card usage and the ability to readily and efficiently rectify any issues that arise,” said Bruce Cundiff, director of payments research and consulting with Javelin Strategy & Research and author of DebitFacts.org’s initial expert commentary article.

“Despite reports to the contrary, fraud rates for debit cards remain relatively low,” Cundiff added.

In the coming months, the site will feature articles from renowned financial planning experts, offering budgeting advice and personal finance recommendations. “With today’s economy, most Americans are wondering how to start saving,” said Judy Lawrence, personal finance expert and author of The Money Kit and other money management works. “By contributing to this site, I hope to help people realize that saving can be very manageable, once you commit to starting the process and then learn how. Debit cards can be part of this saving process if consumers know how to make the most of their unique features.”

Current site content includes a host of useful information, such as:
A video about the differences between PIN- and signature-authorized transactions
How to protect your personal identification number (PIN) from fraud
Understanding debit card liability
The benefits of debit cards as a financial planning tool
DebitFacts.org will be updated regularly to include new expert articles, as well as additional videos about the importance of using debit cards wisely.

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). 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.

PULSE
Anne Rhodes, 832-214-0234
arhodes@pulsenetwork.com
or
GolinHarris
Rebekah Morgan, 972-341-2509
rmorgan@golinharris.com

Identity Theft Now Fastest Growing Crime in U.S.

Consumers Show Increased Concern about Identity Theft

62% of Consumers Surveyed by IdentityTruth Said They are More Concerned about Identity Theft in Today’s Economic Climate

IdentityTruth, the leading provider of a new breed of services to help consumers safeguard their privacy and identity, today announced results of a survey that addressed consumer concerns about identity theft. Conducted in mid-October, the survey shows that a majority of consumers are more concerned today than a few months ago about protecting their identity. These are not times to skimp on consumer security and digital safety. During economic downturns, historically there is a noticeable increase of fraudulent activities.

62% of IdentityTruth subscribers say they are more concerned now about employees of banks and businesses stealing their identities as a result of the banking crisis. The majority of those surveyed believe their personal data is sold to the new bank when one bank buys another. Only 33% state they are concerned about what happens with their private information when their bank is acquired. The implication that can be garnered from the data is that many consumers perceive that identity theft occurs on an individual rather than institutional level. The risk is real and identity and privacy can be compromised at all levels.

Identity theft is the fastest-growing crime in the U.S., with millions of people being impacted each year by this form of fraud. However, many consumers are still under-informed about the issues that impact privacy and identity in today’s data rich world. The survey also shows that approximately 40% of consumers remain apathetic about the risk presented by the proliferation of personal data. This puts them at greater risk, as economic downturns provide an ideal time for an identity thief to strike. Confusion and anxiety make consumers prime targets for fraud scams and the lure of accessing funds illegally will only continue to grow as the economy flounders.

With the failures of Wachovia and Washington Mutual, many consumers are unsure of where their personal banking information is stored and are not sure who to trust with data. Consumer’s information is being shipped around from one organization to another and consumers are anxious about credit and banking. Ongoing mergers create further murkiness in the banking world. Consumers are wondering who owns the data and is it safe as well as who they should speak to about their money.

“The risk is real when it comes to identity theft,” said Steven Domenikos, CEO and founder of IdentityTruth. “Now is not the time for consumers to skimp on security when it comes to protecting their personal information. Consumers should be more proactive in gaining understanding about what is happening to their personal information from bank account numbers, social security numbers, etc.”

“I chose to sign up for IdentityTruth's premium service because it's the only identity theft solution that protects my entire identity from the earliest possible moment,” said Erin B., an IdentityTruth subscriber. “IdentityTruth provides me with the service and support I need to keep my identity safe. They not only watch my credit report, but their unique technology analyzes information from many different online and offline sources. For example, they continuously look at public records and watch Internet chat rooms--so I am alerted to suspicious activity before it's too late. I feel safe knowing IdentityTruth is looking out for me."

IdentityTruth’s unique Faster than Fraud™ technology combines data from many different sources--going beyond simple credit-based protections. The service monitors the Internet for suspicious activities that might indicate identity fraud, notifies members of company breaches where sensitive personal data such as Social Security numbers and dates of birth were lost, offers Social Security verification, fraud prediction, and much more. Armed with precise, actionable information these consumers can proactively reduce their risk of identity fraud.

Tuesday, October 28, 2008

Interac Chip and PIN Transition Rollout Begins

INTERAC Chip Transition Goes National

Chip debit cards and terminals begin to rollout across Canada

TORONTO, Oct. 28 /CNW/ - INTERAC, Canada's national debit network and leading payment brand, today announced the start of the national rollout of chip technology, a new generation of payment card technology that will combatdebit card fraud and the production of counterfeit cards.

"INTERAC is committed to providing the most secure and innovative financial services network," said Mark O'Connell, President and CEO, Interac Association. "By putting the power of a computer onto the debit card, chip technology will enhance security and enable new INTERAC product offerings that continue to keep Canadians connected to their money."

Beginning this fall, members of the Interac Association will begin to distribute chip debit cards to their customers. As well, members will continue to replace Automated Banking Machines (ABMs) and retail terminals withchip-enabled devices, a process currently underway. Each financial institution and payment processor has its own timeline in place for the distribution of cards and terminals across Canada; therefore the introduction of chip technology will vary from one organization to another.

The complete migration to chip technology will take a number of years, given the vast number of debit cards, ABMs and store terminals across Canada that must be upgraded. Interac Association has set transition requirements to ensure that the majority of Canadians will be able to fully benefit from this new technology by 2010, at which point the majority of ABMs and debit cards will be converted.

"Interac Association has put appropriate deadlines in place for the transition to occur in normal business cycles," said O'Connell. "Magnetic stripe transactions will no longer be accepted at ABMs after 2012 and at store terminals after 2015. These timelines will ensure a timely transition, while also ensuring a smooth transition for our members and for merchants."

Chip debit cardholders will experience only a minor change in the way they interact with the store terminal. When conducting a chip debit transaction, cardholders will no longer swipe the card through the machine. Instead, cardholders will insert their debit card chip first into the terminal and leave it in the device for the duration of the transaction, following the prompts and entering their PINs, just as they do today.

Chip cards will continue to carry the magnetic stripe, not only to facilitate the chip transition period, but also to allow cardholders to use their debit cards in other countries that do not use chip technology. (Editor's Note: and to allow fraudsters to clone cards :)

About Interac Association

A recognized world leader in debit card services, Interac Association is responsible for the development and operations of the INTERAC network, a national payment network that allows Canadians to access their money through Automated Banking Machines and point-of-sale terminals across Canada. Interac Association was founded in 1984 and is comprised of a diverse membership that includes banks, trust companies, credit unions, caisses populaires, merchants, and technology and payment related companies.

Other INTERAC-branded and related services include: INTERAC Online, for secure online payments directly from a bank account, INTERAC Email Money Transfer, for the transfer of money from a bank account to anyone with an email address, and Cross Border Debit, for point-of-sale access at more than 1.5 million U.S. retailers.

For further information: or to speak with an Interac Association spokesperson, please contact: Ian Lifshitz at Strategic Objectives, Tel.: (416) 366-7735, Email: ilifshitz@strategicobjectives.com; OR Tina Romano at Interac Association, Tel.: (416) 869-5062, Email: tromano@interac.ca

Discover Gets $2.75 Billion Antitrust Settlement from V/MC

In a follow up to a previous post, Discover announced their settlement amounts with Visa and MasterCard for less than half of what they were originally seeking.

The V/MC Duopoly said their legal settlement with Discover Financial Services from earlier this month will cost them $2.75 billion.

Discover was seeking $6 Billion.

In a statement distributed by PR Newswire Visa said that it will pay $1.8875 billion. Of that, $1.7425 billion will come from an existing escrow account.

MasterCard will pay $862.5 million to settle, that company said in a separate statement. MasterCard will take a $515.5 million after-tax charge, according to the statement.

In an interesting side story, Morgan Stanley was supposed to get some of that, but Discover said they breached the agreement so "no dough." More on that below...

American Express, which sued MasterCard and Visa separately, settled for a little over $4 Billion in June.( $1.8 billion from MasterCard and $2.25 billion from Visa and its bank partners).

The payments stem from a Discover lawsuit against MasterCard and Visa accusing them of blocking banks from issuing their cards. The parties settled on Oct. 14 without disclosing the terms. "This settlement will enable Discover to further strengthen its capital base,'' Discover Chief Executive Officer David Nelms said in a third statement. He said his company will develop its business by ``broadening global acceptance, expanding network volume and growing our deposit franchise.''

Discover said it will receive about $862 million in the current quarter and as much as $472 million a quarter in 2009. The quarterly payments are contingent upon Discover achieving ``certain performance levels in network sales volume,'' the Riverwoods, Illinois-based company said.

Here's an interesting twist

Under its agreement with New York-based Morgan Stanley, which spun off the card company last year, Discover was to pay it the first $700 million recovered. The bank was also to receive half of any settlement proceeds above $1.5 billion, up to a maximum of $1.5 billion, according to regulatory filings.

Discover said in its statement that it has notified Morgan Stanley that Morgan Stanley is in breach of the agreement,'' without elaborating. Discover said "the amount of Morgan Stanley's special dividend is a matter of dispute.''

Morgan Stanley filed a lawsuit in New York State Supreme Court last week seeking a declaratory judgment "to resolve this issue definitively,'' Mark Lake, a company spokesman, said in a statement. There is absolutely no basis for Discover's claim that the agreement was breached,'' Lake said. The firm "is due to receive approximately $1.2 billion pretax,'' he said.

U.S. District Judge Barbara Jones in Manhattan ordered Visa and MasterCard in 2001 to stop forcing banks to choose between their cards and ones from Discover and American Express Co. Her order came after the Justice Department sued the credit card giants for antitrust violations. Visa sued in 2004, after the U.S. Supreme Court refused to hear the case.

Reasonable Terms

Resolving this longstanding case on reasonable terms is in the best interest of Visa and our clients, cardholders and shareholders,'' Visa CEO Joseph Saunders said in the statement. We chose to settle this lawsuit to avoid the uncertainty and distraction of a lengthy jury trial,'' MasterCard General Counsel Noah Hanft said in that company's statement.

Visa, based in San Francisco, is the largest credit-card company, with 51 percent of the U.S. credit- and debit-card market last year, according to the Nilson Report, MasterCard, the second-largest card company and based in Purchase, New York, accounted for 28 percent. New York-based American Express is third with 17 percent, according to the newsletter. Discover's share of the market was 3.8 percent.

Visa had agreed with MasterCard to pay the bigger share of any settlement, primarily based on relevant business volumes. The value of U.S. credit card purchases was $2.17 trillion in 2007, up from $426 billion in 1993. The case is Discover Financial Services Inc. v. Visa USA Inc., 04-cv-07844, U.S. District Court, Southern District of New York (Manhattan).

Conference Call and Webcast Information

A conference call to discuss this announcement, as well as the impact of elevated funding costs on Discover's fourth quarter, was held this morning, at 7:30 a.m. Central time.

The general public is invited to listen to the call by dialing 866-362-4820 (U.S. domestic) or 617-597-5345 (international), passcode 13604805, or via a live audio webcast through the Investor Relations section of the Web site, www.discoverfinancial.com.

For those unable to listen to the live broadcast, a replay will be available on our Web site or by dialing 888-286-8010 (U.S. domestic) or 617-801-6888 (international), passcode 78817365, beginning approximately two hours after the event. The replay of the conference call will be available through Nov. 28, 2008.

First Data to Release Third Quarter Financials November 14th

DENVER, Oct 27, 2008 (BUSINESS WIRE) -- On Friday, Nov. 14, First Data will release its third quarter financial results. The release will be available on the First Data Web site: www.firstdata.com.

The company also will host a conference call and webcast on Friday, Nov. 14, at 8 a.m. MDT to review third quarter 2008 financial results. Michael Capellas, chairman and chief executive officer of First Data, will lead the call. Also participating will be Phil Wall, chief financial officer; and Silvio Tavares, senior vice president, Investor Relations.

To listen to the call, dial 877-741-4248 (in the U.S.) or +1-719-325-4785 (outside the U.S.) 10 minutes prior to the start of the call. The webcast will take place on the First Data Web site at http://ir.firstdatacorp.com/events.cfm. Please click on the webcast link at least 15 minutes prior to the call. A slide presentation to accompany the call will be included in the webcast and will be made available under the "Investor Relations" section of the Web site at http://ir.firstdatacorp.com/events.cfm.

A replay of the call will be available through November 21 by webcast on www.firstdata.com and at 888-203-1112 (in the U.S.) or +1-719-457-0820 (outside the U.S.). Use replay pass code 9481919.