Despite profound regulatory changes, debit card transaction volume experienced strong growth in 2011, according to a 2012 Debit Issuer Study commissioned by the PULSE network and Discover Financial Services. Since the implementation in 2011 of Regulation II, as mandated by the Durbin Amendment to the 2010 Dodd-Frank Act and which restricted debit interchange fees charged by financial institutions with at least $10 billion in assets, there has been speculation about the long-term financial implications of the regulation.

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The U.S. Department of the Treasury, the Doorways to Dreams Fund and the Center for Financial Services Innovation awarded the winners for the IdeaBank portion of the MyMoneyAppUp Challenge. The grand prize winner won $1,000 in cash for a mobile app idea that allows users to track the satisfaction quotient of purchases over time, while the two runner ups received $500 apiece for a purchase trading app and a college return on investment app, respectively.

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PayPal Inc. will be issuing cards and working with acquirers as it moves toward its goal of ubiquity in the payment marketplace, Don Kingsborough, PayPal Vice President of Retail and Prepaid Products, said in an investor conference call about PayPal's new alliance with Discover Financial Services. PayPal's wallet is expected to be available at more than 7 million U.S. merchant locations that accept Discover cards by the second quarter of 2013.

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A U.S. district court judge sentenced a "money mule" to two years and six months in federal prison for her role in the 2008 fraud scheme against Atlanta-based processor WorldPay US Inc. that netted fraudsters $9 million. Sonya Martin, a 45-year-old resident of Nigeria and Chicago, was convicted of conspiracy to commit wire fraud. The district court said Martin was part of a Chicago "cashing crew" that took account information stolen from the processor's systems to fraudulently withdraw approximately $80,000 from various Chicago ATMs on one morning in November 2008.

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Mobile payment startup Square Inc. apparently experienced a service glitch on the night of Aug. 22, 2012. As reported by media outlet The Next Web, the Square website went down for an hour, and payments could not be processed via its portal during that time. TNW quoted Square spokesman Aaron Zamost as saying, "The issue was quickly recognized by our engineering team and has been fixed. We're sorry for any inconvenience this may have caused and we're taking the appropriate steps to ensure it doesn't happen again."

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Buffalo, N.Y., paid out $32,140 in prepaid cards to people who turned in a total of 746 guns at the city's fifth annual Gun Buyback program held Aug. 18, 2012. The program is part of Buffalo's effort to remove weapons from the streets. "This year's gun buyback will continue to assist in our efforts to reduce the overall crime rate in the City of Buffalo," said Buffalo Mayor Byron W. Brown.

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Miami-based Unified Payments LLC has cause for celebration as the top company on the Inc. 500/5000 ranking of the nation's fastest-growing private companies for 2012. Rankings were determined based on percentage of revenue growth from 2008 to 2011. In securing the top position, the payment processor achieved three-year sales growth of 23,646 percent and generated $59.5 million in revenue during 2011. "To be recognized as the fastest growing private company in America is overwhelming," said Oleg Firer, Executive Chairman of Unified Payments.

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Visa Inc. will begin integrating its new point-to point-encryption (P2PE) service, Visa Merchant Data Secure, into payment terminals and critical systems across the payment processing industry in early 2013, the company reported Aug. 21, 2012. The company said merchants and acquirers will be able to add P2PE to their systems with minimal impact. For instance, merchants can choose a format-preserving option that allows merchants to integrate P2PE using a 16-digit encrypted value with their current systems.

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The Consumer Financial Protection Bureau is considering whether to impose its regulatory authority on states with gift card laws that are inconsistent with federal gift card laws. Specifically at issue are regulations in Maine and Tennessee that allow the states to seize funds on unused gift cards two years after the cards have been inactive, compared to federal law which generally imposes an expiration date of five years on cards, according to the CFPB.

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Paul Martaus, Chief Executive Officer and President of the payments industry research and consulting firm Martaus & Associates Inc., said ISOs should be alert to the possibility there is more to the Aug. 15, 2012, launch of the retailer-backed mobile payment technology company Merchant Customer Exchange than a mobile wallet.

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Square Inc. continued its aggressive entry into the payments world when it introduced a monthly flat processing fee for small businesses Aug. 16, 2012. Square said merchants who process up to $250,000 in card transactions a year can now choose a flat monthly processing fee of $250 with no additional fees or contracts. Merchants will still have the option of continuing to pay a fee of 2.75 percent of every transaction instead. Square said its new flat monthly fee is the first pricing option that gives small businesses a lower processing fee than bigger merchants.

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One significant hurdle faced by prepaid card providers is how to get consumers to use prepaid cards for longer periods of time. A report conducted by The Payment Cards Center of the Federal Reserve Bank of Philadelphia and the Center for Financial Services Innovation suggest that the answer may be to offer direct deposit on the cards.

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Sophisticated new malware programs are not only difficult to detect, track and contain, but they also have highly specific targets, said Andreas Baumhof, Chief Technology Officer of ThreatMetrix Inc. As a result, the reputation of electronic devices touted as "malware free" is eroding and the threat to financial institutions (FIs) and mobile devices is growing, he warned. An Aug. 9, 2012, report released by ThreatMetrix alerted FIs that a new FI-targeted, peer-to-peer Zeus Trojan malware called Gameover is the "largest financial botnet we've ever seen."

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In a joint venture revealed Aug. 9, 2012, global ISO and processor Total System Services Inc. (TSYS) acquired 60 percent of U.S. ISO acquirer and processor Central Payment Co. LLC. TSYS, a publicly traded company, said through its spokesman Cyle Mims, it is "unable to disclose the terms of the agreement." Central Payment focuses on restaurant, personal services and retail market segments. It serves more than 40,000 merchants and processes more than $3.5 billion in credit card sales annually.

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In a July 2012 report to Congress, the Federal Reserve said the government's Supplemental Nutrition Assistance Program (SNAP), formerly called the Food Stamp Program, disbursed nearly $73 billion in benefits in 2011, with all of those funds loaded onto prepaid cards. Out of a total of over $149 billion in government benefits disbursed last year, 67 percent were issued on prepaid cards, according to the Fed.

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Jason Oxman, Chief Executive Officer of the Electronic Transactions Association, said the addition of the four major mobile network operators (MNOs) to the ETA's member ranks and an increased focus on the emerging mobile payments industry will not alter the association's goal to help ISOs and other members grow their businesses.

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Sen. Richard Durbin, D-Ill., denounced a proposed settlement of claims that the interchange fees charged by MasterCard Worldwide, Visa Inc. and a number of issuing banks are unfair and violate provisions of the Sherman Antitrust Act. Durbin authored an amendment to the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act that gave the Federal Reserve Board authority to cap debit interchange fees. The more than $7 billion settlement proposal agreement was divulged in July 2012 by lawyers appointed by the Brooklyn Federal District Court to represent the nearly 7 million merchants in the class. If Federal Court Judge John Gleeson accepts the settlement, which merchant lawyers said will be submitted for the court's preliminary approval by Oct. 19, it would be the largest settlement in Sherman Antitrust history.

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The Consumer Financial Protection Bureau' will give certain financial service providers "safe harbor" exemption status from the new international money transfer rules. Community banks, credit unions and financial institutions that provide less than 100 international money transfers per year will not have to notify consumers of fee disclosures, exchange rates and the actual monetary amounts that money transfer recipients receive.

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Payment technology is changing at breakneck speed, and mobile solutions, in particular, have been making news throughout 2012. The first week in August continued that trend, with a number of noteworthy developments in the mobile sphere. #h2Fed looks at new regulatory needs The Federal Reserve is closely following mobile payment events. Among the Fed's concerns is the entry into the payments industry of companies with no payments background.

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A survey of small U.S. businesses reported merchants are more likely to fund businesses via loans on prepaid debit cards than with payday loans. The National Small Business Association's 2012 Small Business Access to Capital Survey said 13 percent of survey respondents were more inclined to use prepaid cards as a funding tool over the last two years, compared to only 1 percent of respondents who were likely to use payday loans in the same time period.

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The Smart Card Alliance formed a cross-industry forum to support the introduction of Europay/MasterCard/Visa (EMV) security standards and technology in the United States. The EMV Migration Forum is designed to help the payments industry transition from mag stripe cards to the more secure EMV contact and contactless cards.

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Here, from across the pond, are three recent Visa Europe developments of interest to the payments industry. They pertain to new European Commission objections to Visa's interchange fees, iZettle's inability to process payment cards in certain countries and an information technology (IT) snafu at the London Olympics. #h2More antitrust objections for Visa Visa's multilateral interchange fees (MIFs) may violate European Union antitrust rules, the EC contended in a formal statement of concerns the EC has about the card company's interchange policies. The EC informed the card company of its views in a supplementary statement of objections released July 31, 2012.

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As befitting its 10-year anniversary, the Midwest Acquirers Association Conference pulled out all the stops for the 2012 show. Held July 17 to 19, 2012, at the historic Chicago Hilton in downtown Chicago, the MWAA hosted a record 655 attendees and featured 106 vendors. "We had more vendors than we ever had, including a number of new vendors, many new faces and some new companies," MWAA President Donna Ayers said. "We had more room for vendors than we ever had. The rooms were big enough to open up and offer more booth space, and the vendors had room to spread out."

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International payment processor Global Payments Inc. said the data breach it discovered in March 2012 cost the company $84.4 million in remediation expenses and card company penalties this fiscal year. The company shared the price of the breach damage for the first time in its fourth quarter year-end earnings report released July 26, 2012. Global Payment's fiscal year ended May 31, 2012.

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The American Bankers Association believes the Consumer Financial Protection Bureau must walk a fine line to effectively regulate the prepaid card industry. In a July 23, 2012, letter, the ABA said the CFPB must make rules flexible and not over burdensome to the industry, even as they extend to prepaid cardholders the protections already afforded debt and credit cardholders.

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