In the latest findings from the Intuit Inc. Future of Small Business Report, written by Emergent Research and The Institute for the Future, innovation will be vital to small-business success over the next decade as merchants seek to identify new opportunities, fine-tune their market positioning and provide more value to their customers.
Small businesses have a number of advantages over large corporations that enable them to readily spot opportunities, quickly react to changing economic and cultural conditions, and remain competitive, making it easier and cheaper to try out new business models and ideas. "Innovation isn't restricted to science labs and corporations," said Roy Rosin, Vice President of Innovation at Intuit. "Small businesses instinctively use innovation to create new products and services, efficiently manage their business or find and acquire customers. These innovations are the keys to their future."
Kount Inc., an e-commerce fraud solutions provider, filed a patent infringement lawsuit against fraud management firm iovation Inc. The suit accuses iovation of infringing Kount's online machine data collection and archiving processes, which describe a method for identifying and physically locating customer computers involved in online transactions. The action seeks injunctive relief in addition to unspecified damages from iovation for infringing on Kount's device-fingerprinting and proxy-piercing fraud technologies. Proxy-piercing technology determines the accurate "geolocation" of computers being used to initiate online transactions, providing methods for determining the true physical location of said computers even if anonymous proxies are being used.
Financial services consultancy TowerGroup reported that noncash, person-to-person (P2P) payments in the United States totaled approximately $1.1 trillion in 2008. The research also found that checks, though in decline, remain the most significant payment method, accounting for over $1 trillion of that volume.
Noncash payments are defined as consumer-initiated transfers of funds to other consumers using channels and payment methods offered by the Internet and mobile devices. Consumers continue to use checks, and banks spend nearly $255 million annually processing checks. "Banks are losing money hand over fist as they absorb the processing costs associated with every check transaction," said Jennifer Roth, Research Director, Global Payment Services, TowerGroup. "The advent of the Internet and mobile devices is driving financial institutions to innovate and adopt new, more cost-effective and convenient means for their customers to transfer and process payments."
To help banks reduce payment risks associated with remote deposit capture (RDC), AQ2 Technologies LLC introduced its new risk mitigation solution RiskXP. "RiskXP is a unique solution that arms banks and payment transaction aggregators with comprehensive tools that address item-, deposit- and relationship-related payment risk associated with RDC," said Eston Fain, Product Director of RiskXP at AQ2. "This solution enables banks and processors to measure and determine the risk they accept from depositors regardless of who sends the deposit."
Doin' it right
POS equipment continues to get smaller, cheaper and faster. In March 2009, Montreal-based payment hardware and software provider, HomeATM ePayment Solutions, rolled out Safe-T-PIN, the first Internet POS PIN entry device (PED) to achieve Payment Card Industry (PCI) Data Security Standard (DSS) PED 2.0 certification.
"What Safe-T-PIN is all about is very simple," said Mitchell Cobrin, Chief Operating Officer of HomeATM. "All we've done is to replicate a POS device within PCI standards for home use.
"Our goal is to have our product with every small e-merchant and in every household of online consumers, and we're talking a couple of hundred million people."
Safe-T-PIN is a ready-to-use, pocket-sized universal serial bus (USB) "plug and play" device that requires no software upgrades, works with any operating system or Web browser, eliminates the need for keying in card numbers because the card is swiped, and works with any bank, processor or currency. It is also Europay, Visa Inc. and MasterCard Worldwide compliant to accommodate smart cards, mag stripes or chip and PIN technology.
Transactions for the masses
"Safe-T-PIN gives everyone - merchants and consumers alike - the ability to do a transaction that is more secure than any they could do in a card-not-present environment, including debit and credit card transactions and P2P [person-to-person] money transfers in real time," Cobrin said.
"Consumers swipe their cards, enter their password for a PIN debit, and it goes through the EFT [Electronic Funds Transfers] network in the same amount of time as a brick-and-mortar transaction - and it's fully encrypted. We're not inventing a system because it's really the mirror image of the POS EFT experience. All we're doing is making it accessible to home-based, online merchants and consumers."
According to many payments industry experts, the biggest problem with e-commerce is the lack of consumer confidence in the ability to make purchases or send money online securely. They cannot see e-commerce merchants face to face and hesitate to fully trust them.
To address consumer fears about identity theft, lack of brand recognition, malware and keystroke monitoring, HomeATM has a newsletter and blog that offer viable solutions to these common concerns. "Safe-T-PIN really speaks to the heart of this matter because it makes all of that totally impregnable," Cobrin said.
Additionally, HomeATM has made Safe-T-PIN cost effective for the smaller and mid-sized e-commerce merchants, as well as for those merchants with employees who take electronic payments off site.
"Safe-T-PIN's price almost pegs this unit as a disposable POS device, so if it's stolen, if it's discarded or disappears, you haven't lost the hundreds of dollars it would cost to replace it," Cobrin said. "We remove the notion of $30 a month leases on systems for merchants struggling in today's economy."
HomeATM has a minimal direct sales force; the company's preference is to support the ISO reseller channel and stay in the background. "We really respect and appreciate the role that the ISO can play," Cobrin said. "They're the frontline people who have the expertise in the industry, so we're here to support any particular initiatives that they might be working on to assist them in marketing this product."
Cobrin noted that in the past year same-store sales have steadily declined, and e-commerce is eroding business at brick-and-mortar locations, which has created a tremendous opportunity for ISOs and merchant level salespeople to put POS devices in the hands of merchants who would not otherwise be able to contemplate having merchant processing accounts. "Tomorrow's e-retail and P2P remittance commerce is going to happen with or without those merchants who choose not to participate," Cobrin said. "And we're not trying to cannibalize brick-and-mortar as much as we want to give all merchants, regardless of size, the opportunity to change a fairly antiquated type of thinking and not be a dinosaur.
"There are so many different approaches because a POS of this nature has never existed, so I think new markets are just inherently going to be developed in ways that, perhaps, our team has not yet even contemplated."
Payment gateway and software development firm eProcessing Network LLC certified the MagTek Inc. m20 Store-and-Forward solution within ePN's online terminal. Store-and-Forward sends data to an intermediate station that verifies the integrity of the message before forwarding it. It is also used in remote networks with high mobility and intermittent connectivity; networks that have long transmission delays; or when direct, end-to-end connections are unavailable.
Salt Lake City-based Galileo Processing Inc. introduced Galileo Analytics, a solution designed to give its clients independent access to data rich, real-time information and help them improve their business and marketing objectives. According to Galileo, traditional processor reporting is static. To help financial institutions maximize performance, Galileo Analytics delivers information to its clients regarding all aspects of their portfolios such as performance, cardholder behavior, profitability, results of marketing campaigns and even fraud statistics.
POS terminal maker Hypercom Corp. said Budapest, Hungary-based payment processor GBC, a division of SIA-SSB Group, selected Hypercom's Optimum T4200 terminals to expand GBC's payment network in Hungary and other Central and Eastern European countries, including Romania, Croatia, Slovenia, Slovakia and the Czech Republic.
Internet Payment Exchange Inc., an electronic billing and payment solutions company, released the second generation of eCareview Healthcare Billing Portal. IPayX's portal is a Health Insurance Portability and Accountability Act (HIPAA)-compliant technology that provides real-time billing information and payment functionality, as well as the ability to allocate a single payment across multiple bills.
E-commerce payment provider Merchant e-Solutions Inc. integrated Bill Me Later Inc.'s online payment solution into its payment gateway, processing platform and Web-based reporting system. Additionally, Bill Me Later is now offered as a payment option for qualified taxpayers through Link2Gov Corp., a Metavante company.
Check processor RP Solutions Inc. certified Digital Check Corp.'s CheXpress CX30 check scanner for use with the company's RDC software. "This device is very consumer-friendly, requires little maintenance and is cost effective," said John Gainer, Executive Vice President, Digital Check.
"Being able to offer RP's attractive RDC solution along with the CX30 will increase penetration in the small business market segment."
POS equipment and services provider TASQ Technology Inc., a subsidiary of First Data Corp., is offering additional revenue for ISOs, merchant level salespeople (MLSs) and financial institutions through its Merchant-Direct Online Store, which allows for the creation of customized, private-label views with logos, taglines and pricing appropriate for distinct merchant groups. Revenue shares are earned for each purchase made through the online store.
To help credit unions better manage credit and debit card fraud, payment solutions provider The Members Group rolled out its Fraud & Risk Analysis program. With this program, TMG experts can analyze 12 months of a credit union's fraud cases to pinpoint a fraud's origin. After completing the analysis, TMG recommends and helps implement new strategies to minimize future risk.
Fraud and identity theft solutions provider ThreatMatrix Inc. upgraded its software-as-a-service fraud and abuse prevention technology. ThreatMatrix's Fraud Prevention 2.0 includes more than two dozen feature enhancements, all of which are designed to help merchants and financial institutions stop cyber criminals before the first transaction is processed.
Rail Europe Inc., a provider of European rail travel products in North America, formed an alliance with Bill Me Later Inc. enabling U.S. customers to purchase products online without credit cards or user account numbers. Rail Europe offers point-to-point tickets, sightseeing passes, hotel and other related rail travel services for more than 35 railroad operators throughout the continent.
Diners Club International Ltd., a business unit of Discover Financial Services, and Six Multipay, a Switzerland-based payment services company, signed a long-term, multicountry merchant acquiring agreement to further European acceptance of Diners Club and Discover Network cards. Six Multipay will provide merchants electronic payment services for both cards in Switzerland, the U.K., France, Germany, Ireland, Belgium, the Netherlands and Luxembourg.
Payment solutions provider COCC and fraud and risk management company MarkMonitor Inc. are working together to help mutual clients protect their brands in the face of increasing Internet fraud. COCC will market MarkMonitor's anti-phishing applications under its Sentry Services suite of risk management solutions.
Richland, Wash.-based Gesa Credit Union is turning to TNB Card Services to help launch Gesa's new business member program and manage the credit union's $15 million retail card portfolio. More than 8,600 card accounts will be converted to TNB's processing platform beginning April 1, 2009. Additionally, Tarrant County Credit Union of Texas is converting its PIN and signature debit card and ATM terminal driving under an expansion agreement with TNB. TNB is now TCCU's sole card processor.
Risk, compliance and security consulting firm NetSPI Inc. and payment services company VeriFone formed an alliance to ensure that VeriFone payment applications comply with the Payment Application (PA) Data Security Standard (DSS).
International card-not-present payment solutions company Payvision and e-commerce payment provider Plug'n Pay Technologies Inc teamed up to offer merchants in Spanish-speaking countries worldwide the ability to add Payvision's comprehensive suite of multicurrency payment options to their networks.
Precidia Technologies Inc., an Internet Protocol payment and networking products firm, and 403 Labs LLC, a PA Qualified Security Assessor (QSA) for the Payment Card Industry (PCI) DSS, partnered to introduce a cheaper and simpler PA DSS assessment program for certain POS application developers using Precidia's TransNet payment engine software on the POSLynx220 payment router.
The focus of this new program is to benefit application developers whose software accepts cardholder data before passing it on to the POSLynx220, therefore requiring PA DSS validation. Since January 2009, transaction processors are prevented from processing transactions from any POS application that is not PA DSS validated.
RDM Corp., an Ontario, Canada-based payment solutions provider, signed an agreement with payment services company TriSource Solutions LLC to resell RDM's electronic check conversion software and hardware products to its ISOs and agent banks. RDM's software is "bank agnostic," which means merchants won't need to change their existing banking relationships to use it.
Payment software applications company S1Corp. teamed up with value-added hardware solutions firm Epson America Inc. to join Epson's Envisionism Partner Program. Two S1 divisions, S1 Enterprise and FSB Solutions, will resell Epson's line of receipt and validation printers, check scanners and other image capture devices.
"We are thrilled to welcome S1 as an Envision partner," said Bud Weist, Vice President of Sales and Marketing for Epson's System Device Group. "This new partnership brings end-to-end seamless integration and support for virtually every printing and scanning requirement."
Small business online marketing solutions firm Web.com Group Inc. signed on with Chase Paymentech Solutions LLC to offer processing solutions to all Web.com small and mid-sized merchants. Web.com customers will have access to multiple secure payment processing services, including all major credit, debit and customizable gift cards. Web.com merchants are also eligible for a free rate analysis to understand the total cost of accepting electronic payments.
Payment processor Tangarine Payment Solutions Corp. successfully completed its acquisition by 4491157 Canada Inc., an affiliate of Pivotal Payments Corp. Pursuant to the arrangement, Canada Inc. acquired all of the outstanding common and preferred shares of Tangarine for an aggregate price of $13,177,941. The name of the newly amalgamated company will be Tangarine Payment Solutions Corp.
Fremont, Calif.-based payment processor U.S. Merchant Systems LLC promoted Gary Breeds to Vice President of Sales. Breeds' initial focus is to expand USMS' card offerings and services to its ISO and MLS sales channels.
Payment processor First American Payment Systems LP added two new department heads. Mandy Jordan, the company's new Director of Marketing, will focus on continued growth of First American's brand within the industry. Rhoda Stewart, Director of Sales, will lead the entire strategic partner channel, which includes ISOs, financial institutions, associations, franchises and direct corporate sales.
Sparkbase, a customized stored-value programs processor, expanded its sales team. Bennett Kaufman is the company's new Sales Director and Alan Semel was appointed its National Sales Manager. Kaufman will focus on driving new business growth strategies. Semel brings 20 years of payments industry expertise to Sparkbase and will oversee all of the company's new business efforts.
Merchants' Choice Card Services, also known as DeltaCard Services, appointed Stan Paur as its new President and Chief Executive Officer. Paur also serves as an advisor to the Payments Card Center of the Philadelphia Reserve Bank, Woodforest National Bank and the Independent Bankers Association of Texas.
Payment services provider TSYS Acquiring Solutions appointed 25-year payment veteran Amit Sethi as its new Managing Director of TSYS India and South Asia. Sethi's responsibilities include all business development and outsourcing for the region.
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