The Green Sheet Online Edition
March 09, 2009 • Issue 09:03:01
E-commerce climb halted
For the first time in three years, customer satisfaction with e-commerce fell, dropping to 80 on a 100-point scale, a 2 percent decline. According to the American Customer Satisfaction Index (ACSI), the decline is driven by the plunge in satisfaction with online brokerages, which lost billions of dollars in investment capital as a result of the current financial crisis.
The annual ACSI e-commerce report, released by the University of Michigan in conjunction with e-commerce analysis firm ForeSee Results, measures customer approval with online retail, brokerage and travel merchants.
"Despite the drop in satisfaction, e-commerce is still one of the best-performing service sectors of the economy in all of ACSI, but it is far from immune to the challenging economic conditions," said Larry Freed, Chief Executive Officer of ForeSee Results.
New fraud blooming
According to payment processor Payex, fraudsters in Columbus, Ohio, are placing orders for flowers using stolen credit cards. Posing as customers, they request that florists incorporate cash into floral arrangements and bill the total amount to the credit card provided. Orders are being placed via fax, e-mail and hearing-impaired relay calls. A shipping address is normally given to the merchant.
In some cases the perpetrators hired accomplices to pick up floral arrangements in person and then ship the goods using UPS or the U.S. Postal Service. Merchants, not cardholders, are ultimately responsible for chargebacks resulting from these thefts.
To protect themselves, merchants should limit card not present transactions to a reasonable amount, never send cash with orders, and report any suspicious activity, Payex advised.
Senate bill addresses fraud enforcement
On Feb. 9, 2009, Senator Patrick Leahy, D-Vt., chairman of the Senate Judiciary Committee, introduced the Fraud Enforcement and Recovery Act to improve enforcement of financial institution fraud involving asset-backed securities, as well as fraud related to federal assistance and relief programs.
The proposed legislation only applies to major fraud cases in which the value of money stolen exceeds
The bill reportedly improves fraud and money laundering statutes to strengthen prosecutors' ability to combat this type of fraud. It amends federal securities fraud statutes to cover schemes involving commodities futures and options that include mortgage-backed securities. The bill also amends the definition of financial institution in the U.S. criminal code.
Australian ATM fees get overhaul
At its February 2009 meeting, the Payments System Board of the Reserve Bank of Australia addressed a number of issues on the reform of the country's ATM system, disclosure arrangements for equities securities lending, oversight of overseas central counterparties and restrictions imposed on merchants by PayPal Inc. The board reports that PayPal's rules prohibit merchants from surcharging customers and from discouraging the use of PayPal.
The Payments System Board is responsible for determining the Reserve Bank's payment system policy. These reforms, which take effect on Mar. 3, 2009, are intended to:
- Make the cost of cash withdrawals more transparent to cardholders and lower the cost of ATM withdrawals
- Help ensure continued widespread availability of ATMs by creating incentives to deploy them in a variety of locations
- Promote competition among financial institutions
- Make access less complicated for new entrants and therefore strengthen competition
The board emphasized the reforms are designed to make the pricing model for ATMs more transparent and responsive to competitive forces. It considers the continuation of foreign fees to be unjustified and against the spirit of the reforms. In the board's view, there should be no foreign fees; it intends to continue to monitor developments and report on them publicly.
Chase awarded patent for fraud technology
In January 2009, Chase Card Services, the credit card division of JPMorgan Chase & Co., received a patent for its fraud prevention solution, First Watch Intelligence. "Fraud protection is a top priority for Chase and our card members," said Tim Webb, Senior Manager of Fraud Operations at Chase Card Services and co-inventor of the technology.
"We also recognized that our fraud analysts needed a tool that could analyze fraud indicators more effectively."
High quality, low cost
Desktop check scanner provider Digital Check Corp. added franking capabilities to its new check scanner specifically designed for small and mid-sized merchants. Franking is the act of printing a message across the face of a check to indicate the paper check is now void and should not be deposited in physical form.
The CheXpress CX30 scanner is designed to deliver bank-quality images and MICR data without compromising functionality. With the addition of the franking feature, the CX30 is said to reduce the risk of duplicate deposit.
Doin' it right
Merchant acquirer and processor Chase Paymentech Solutions LLC and Angie's List, a provider of consumer reviews and ratings on local merchants, teamed up to bring electronic payment acceptance to small businesses who still accept only cash or paper checks. According to the alliance, dubbed Angie's List Merchant Services, it provides many small businesses their first affordable opportunity to accept electronic payments.
"What we really liked about this partnership is that Angie's List goes on reputation and the reputation of the companies that are listed on their site," said a Chase company spokesman. "So we set them up with Angie's List Merchant Services to help these well-run, smart businesses get over the hurdles of setups and costs to take card and check payments. In return, we're getting a potential clientele of a great group of companies."
#h4 A better way
Angie Hicks co-founded Angie's List 14 years ago when her business partner was renovating a 1920s-era house in Columbus, Ohio, and was having difficulty finding good merchants or getting recommendations on quality businesses.
"We thought there had to be a better way for consumers to share their experiences on the businesses they hired," Hicks said. The business started locally, rating merchants in the Columbus area. Today, Angie's List rates thousands of merchants in all vertical markets and has expanded its services to 225 cities nationwide.
"We collect ratings on any type of local businesses, and one of the things that we noticed was the disproportionate percentages of companies that still accepted old-fashioned means of payment," Hicks said. "So it seemed like a real opportunity to not only help the merchants, but also to make the process easier for the consumers who prefer to pay with credit cards."
#h4 Payment challenged
Small businesses have been challenged by the expenses involved in accepting card payments. A study conducted by Angie's List indicated that 41 percent of the businesses the company rates do not accept any form of electronic payment. Consumer and company reviews cover over 250 different types of businesses, including plumbers, contractors, health care providers, auto mechanics and landscapers.
Hicks said Chase does not solicit merchants directly. Rather, Angie's List promotes Chase via e-newsletters on the company's Web site, www.angieslist.com. "Angie's List is based on networking with friends, neighbors, colleagues and business associates about the merchants they use, and the companies that make our list do so based on these reviews and ratings," Hicks said. "So we're looking to draw interested parties together and hand them over to Chase."
"Through our alliance with Angie's List, our goal is to enable small businesses who traditionally might not accept cards an opportunity to do so," said Peter Gasparro, who heads Chase's partnership programs. "Angie's List has a long history of trust with their service providers. We believe combining two powerful brands reassures small businesses that, in these difficult economic times, they have somewhere to turn."
#h4 Reaching out
Hicks said Chase recognized the potential of this untapped market and reached out to Angie's List. "When they called it was definitely something that we had been thinking about," Hicks said. "This is such a great opportunity for businesses to enhance their offerings of payment acceptance.
"And our idea was let's lump together a comprehensive suite of products and services with one service provider and get a better rate for our merchants. So that kicked off a conversation that led to the program we have today."
Chase believes this partnership provides merchants more cost-effective POS payment options than they would be able to obtain on their own. Additionally, participation doesn't require costly upgrades or system replacement.
"What this program does is fill a void by giving these businesses the option of providing another payment method to the customers," the Chase spokesman said. "It's just a matter of us coming in and helping them to do something we know they obviously want to do anyway. This is an excellent opportunity for us to reach a great deal of quality companies. Finding a partner like Angie's List will give us that foot in the door. It's a great opportunity for all of us."
Smile, you're on mobile payments
Information technology (IT) company Efici Corp. launched EfiCash, a mobile payment platform for banks and wireless phone companies. EfiCash integrates with cell phone cameras to interpret bar codes at the POS and expedite mobile payments. However, according to EfiCash, mobile payment adoption in the United States and Latin America is progressing slowly compared to Europe, Africa and Asia.
"Success requires the introduction of a lower-cost model for financial institutions, mobile network operators, merchants and users, with a disruptive technology to break the barriers of adoption," said Andres Gonzalez, CEO of Efici. "More than 50 percent of existing phones in the U.S. have cameras, and if you already have that infrastructure in place, why not leverage it to enable mobile transactions with a low cost of entry for everyone? The technology is here today."
U.S. gets first electronic health care network
HealthTransaction Network, a third-party health care processing network, began operations in February 2009 with what is said to be the first national, electronic health care transaction network in the United States.
The program began with the launch of low-cost basic services at community health care facilities, a technologically advanced identification card and a payment platform to facilitate transactions between consumers and health care providers in western New York.
Consumers on this network can now get discounted health care services at five regional hospitals and urgent care centers. Payment services are provided on a pay-as-you-go basis; billing and insurance is unnecessary. The initiative is aimed at uninsured or underinsured consumers who can't afford primary medical care.
2008 ACH volume up
NACHA - The Electronic Payments Association reported that the number of automated clearing house (ACH) payments in the fourth quarter of 2008 grew by 4.5 percent over the same period in 2007, topping 3.8 billion. Internet-associated ACH payments increased 16.5 percent during the same time.
"The continued growth of ACH transactions during a period of intense economic pressures speaks to the fundamental value that financial institutions, businesses, governments and consumers recognize in the ACH network," said Janet O. Estep, NACHA President and CEO.
"The inherent safety, security and efficiency of the ACH network are resonating, as seen through the growth in specific market segments."
Metavante, a New Tradition
Orlando, Fla.-based New Traditions National Bank selected Metavante Corp. as its core processing solutions provider. NTNB is a de novo bank (a state member bank that has been in operation for five years or less) that provides loans for the community's small and mid-sized commercial businesses.
In addition to payment processing, Metavante will provide NTNB with image exchange capture, electronic funds transfer (EFT), card processing, mobile banking, risk and compliance services, marketing support, e-mail hosting and participation in its NYCE Payment LLC network.
Smart card makes SIMSense
Smart card solutions provider Oberthur Technologies Inc. introduced SIMSense, the first motion detection and handset-independent SIM (subscriber identity module) card. "SIMSense demonstrates the power of SIM technology," said Xavier Drilhon, Oberthur's Managing Director, Card Systems division.
"I am convinced that the motion detection SIM card can significantly enrich customer experience using any mobile phone and facilitate the introduction of voice/SMS [short message service] value-added services by mobile operators."
SCA opens nominations for OSCA awards
The Smart Card Alliance will honor individuals and companies that have significantly influenced the market for smart cards in North America; the Outstanding Smart Card Achievement awards will take place in New Orleans from May 4 - 7, 2009. Details and nomination forms can be found at www.smartcardalliance.org/pages/activities-osca-awards. All nominations must be received by March 20, 2009.
Nominations are open in the following three categories: outstanding issuing organization, technology organization and individual leadership. A panel of North American smart card industry suppliers, end-users and individuals from the analyst and media communities will review all qualified applications.
Precidia engine revs up DataSym POS
Internet Protocol (IP) payment and networking products provider Precidia Technologies Inc. said that its TransNet payment engine software is now available to merchants using Canadian-based cash register manufacturer DataSym's POS systems.
The TransNet solution routes credit, debit, gift and loyalty transactions directly to any processor without gateway fees or extra costs.
Williams recipient of SPSP award
The Society of Payment Security Professionals honored Branden Williams as its 2008 Payment Security Professional of the Year. Williams is the Director of the Payment Card Industry practice for VeriSign Inc.'s Global Security practice.
The award is designed to acknowledge individuals who personify SPSP's code of ethics and demonstrate exceptional knowledge, innovation and dedication to their profession.
Alliance advances mobile technology
Groupe Speciale Mobile Association (an organization focused on promoting the growth of the international mobile communications industry), Visa Europe and Visa Inc. are teaming up to help advance the delivery of mobile financial services worldwide.
GSMA selected Visa for its mobile money transfer solutions and is working to formalize a participation agreement.
An essential aspect of the collaboration is to create standards for mobile money transfer, mobile payments and related services. It will also enable carriers and financial institutions to deploy mobile payments more rapidly and limit market fragmentation.
Standardization also helps interoperability between financial organizations to promote faster adoption of this technology.
Partnership expands online services
Business Capital LLC and self-service banking and payment processor Postilion, a division of S1 Corp., signed Kensington, Md.-based Lafayette Federal Credit Union to deploy online-member business services. According to consulting firm Aite Group, credit unions that provide a full suite of member-business services are well-positioned to expand their online financial services and build member loyalty.
With Postilion's Business Internet Banking solution, members can manage bill payments, ACH origination and receipts, payroll services, wire transfers and funds transfers via the Internet.
Panini, RemitPro sign reseller agreement
Check capture solutions provider Panini North America Inc. signed a reseller agreement with remote deposit capture company RemitPro Inc. to offer the Panini Vision X check processor with eRemitPro software, which is designed and built specifically for corporate accounts receivable payment processing.
Herae for Purepay
Purepay Receivables Automation, a division of online payment processor Purepay, teamed up with health care payment solutions company Herae LLC (pronounced "hurray") to provide financial institutions with automated processing of explanation of benefits (EOB) documents, as well as services for receiving electronic remittance directly from insurance companies.
Currently, only 5 percent of U.S. health care remittances are settled electronically in conjunction with EFT. Every year, the health care industry generates more than 600 million checks and EOBs, creating a mountain of paper.
Migration to electronic processing has been slowed by the lack of industry standards for EOB. But government regulations and rising costs are creating an "urgent need for electronification," according to Purepay.
VeriFone, Secure EDI consolidate patient payments
Payment solutions provider VeriFone reported its IPCharge Web-based payment gateway has been integrated with IT company Secure EDI's platform to consolidate patient payments with the health care claims process.
IPCharge provides consolidated payment processing, settlement and reporting capabilities that enable Secure EDI to integrate patient payments with the claims reconciliation process at health care practices.
Bigger stake in outback
MasterCard Worldwide signed an agreement with Strategic Payment Services Pty Ltd. to increase its stake in the Australian payment processor. The deal makes the card brand the majority shareholder at 52.5 percent.
Bendigo and Adelaide Bank Ltd. and Customers Ltd. will remain partners in the joint venture. MasterCard's initial investment in the joint venture enabled it to develop outsourced processing platforms as an alternative to upgrading legacy systems.
Alliance Data's changing guard
The board of directors for loyalty and marketing solutions company Alliance Data Systems Corp. approved a leadership transition.
Edward J. Heffernan, Executive Vice President and Chief Financial Officer, will become the company's new President and CEO. J. Michael Parks, ADS' current chairman and CEO, will retain the role of chairman.
PAI hires Hooper
ATM network management and processing solutions firm Payment Alliance International recruited David Hooper as the company's new National Sales Director. Hooper's first tasks are to help strengthen and build the company's distributor organization and expand PAI's wholesale pricing program.
Pipeline adds two to get more
Raymond Leonardi and Sarah Skaggs joined payment processor Pipeline Data Inc. Leonardi will develop and manage the company's sales force, create an internal ISO and manage Pipeline's ISO relationships. Skaggs, a 15-year veteran in the payments industry, is responsible for recruiting new ISO relationships throughout the United States.
Schuyleman to Go Direct
Thomas J. Schuyleman, who has been in the industry since 2001, joined the ranks of Scottsdale, Ariz.-based processor Go Direct Merchant Services Inc. According to Go Direct, Schuyleman is the recipient of several sales awards, and with his energy, passion and industry experience, he is poised to help direct the expansion of Go Direct.
- Restaurant industry sales are expected to reach $566 billion in 2009, a 2.5 percent increase over 2008, as reported by the National Restaurant Association's 2009 Restaurant Industry Forecast.
- According to the comScore World Metrix audience measurement service, the Internet surpassed 1 billon visitors in December 2008. The United States has the second-largest online population; China ranks number one.
- The U.S. Census Bureau said total 2008 retail sales for the U.S. retail industry declined just 0.1 percent overall over 2007, from $4.48 trillion to $4.475 trillion.
- A J.D. Power and Associates study found that new vehicle sales for 2008 were projected at 10.8 million, down almost 2 million units from 2007. On average, consumers kept their vehicles four months longer in 2008 than in previous years.
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