The FBI reported an increase in fraudulent use of valid, online banking credentials belonging to small and mid-sized businesses, municipal governments and school districts. These crimes typically begin with a "spear phishing" e-mail directing the recipient to an infected Web site or an infected attachment.
Opening the attachment, or the Web site, initiates installation of key logger malware on the victim's computer that captures bank account log-in information. The cyber thief then either accesses the victim's funds immediately or creates another user account with the stolen log-in information. The criminals have used traditional wire transfer and automated clearing house (ACH) to transmit money.
The funds are laundered through bank accounts of people hired via work-at-home advertisements or job boards to "process payments" or "transfer funds" to offshore bank accounts using a wire transfer service.
The FBI urged online banking customers to keep their computer's anti-virus software up-to-date, use a firewall, and take advantage of fraud prevention and security measures offered by their financial institutions. Furthermore, individuals who have experienced cyber fraud or have been recruited for such work-at-home opportunities are advised to contact the Internet Crime Complaint Center at www.ic3.gov.
On Nov. 3, 2009, the Royal Bank of Scotland Group PLC, parent company of RBS WorldPay, reached an agreement with the U.K. government on revised terms of the February 2009 proposed asset protection scheme (APS). The key terms were revised to better reflect RBS' current needs and market changes. The revisions include a reduction in the overall asset pool and an increased first loss amount.
RBS also agreed in principle with the European Commission to a restructuring plan. The plan calls for the divestures of RBS' branch network, its insurance and global merchant services entities, and its interest in Sempra Commodities.
Stephen Hester, Chief Executive Officer of RBS, said, "Whilst the required divestitures include businesses which were part of our plans going forward, the Group's essential strengths remain intact, and the divestiture proceeds will help our future capital position, bringing forward the prospect of exit from APS altogether.
"That said, we will approach the divestments in a disciplined and thoughtful way over the next four years and continue to exercise strong and responsible stewardship of each of these businesses."
Billing Revolution signed a mobile commerce partner agreement with PayPal Inc., enabling the company to resell PayPal Payflow Pro gateway services. PayPal, in turn, can market the Billing Revolution service to its merchant customers. The approximately 45,000 merchants currently using the Payflow gateway can now sell digital and physical goods to any consumer via mobile phone. The gateway connects a merchant's online store to an existing merchant account to manage credit card transactions.
Card Activation Technologies reported its immediate intent to sue up to 45 retailers and other entities for patent infringement. "With the addition of Stinson Morrison Hecker LLP, teaming up with Orum & Roth, our legal team now has the size and strength to dramatically expand its ability to defend our patent and negotiate restitution from those retailers violating our company's patent," said Robert H. Kite, President of CAT.
CAT holds a patent on its POS technology for the activation and processing of transactions related to debit-styled cards, including gift cards, phone cards and other stored-value cards.
A recent study by Canadian payment processor Moneris Solutions found that merchants who process chip card transactions are experiencing fewer chargebacks than ever before due to increased security and fraud detection. According to Moneris, this is the first data of its kind from Canada and demonstrates that chip cards reduce fraud and chargebacks.
"Not only does the data illustrate the importance of chip cards to merchants but it shows their tremendous value to everyone along the payment value chain, including cardholders," said Santo Ligotti, Director, Marketing and Communications at Moneris. "As we head into the hectic holiday season, we expect to see a major migration to chip technology. Early adopters understand how chip card processing can significantly reduce chargebacks and enable more secure transactions."
Moneris Solutions compiled the findings after examining the data, including chargeback activity, of 21,000 merchants who processed 40 to 95 percent of their transactions using chip technology in September 2009. Gasoline merchants were excluded because they consistently experience a low number of chargebacks, Moneris stated.
Accuvant Inc. rolled out its new Merchant Suite for Payment Card Industry (PCI) Data Security Standard (DSS) which includes PCI Select for level 1 and 2 merchants and PCI Simplified for level 2, 3 and 4 merchants. Merchants can partner with Accuvant to address compliance or turn the whole project over to the company.
Comodo made its virtual private network TrustConnect available free to the public. Users can protect their information from sniffer software that intercepts unsecured wireless transmissions from virtual networks. For $49.99 per year, consumers can access an ad-free version.
Financial services technology provider Fiserv Inc. reported total revenues in the third quarter of 2009 at $992 million. Third quarter 2008 was $1.04 billion. Adjusted operating margin in the payments segment rose 70 basis points in the third quarter, partially due to cost savings associated with its CheckFree Corp. acquisition.
Merchant Services Inc. launched its Online Agent Sales Information System to help agents manage portfolios. "Our experience, combined with input from the field, has allowed us to come up with an exciting online management system that will drive our sales agents' business to the next level," stated Mario Parisi, co-founder and Director of Operations for MSI.
Payment service provider Netgiro Systems signed a new online processing agreement with e-retailers from Europe and North America that use Netgiro's platform and cash management solution for online sales in Europe, the Asia-Pacific region and the United States. Netgiro is a business unit of Digital River Inc.
Doin' it right
American Banker, Bank Technology News and independent research firm IDC Financial Insights released the FinTech 100 list of top global technology providers to the financial services industry. A number of companies on this list, many of which are found in the top 10, will be familiar to readers of The Green Sheet.
Following are companies operating in the payments space listed by their FinTech ranking:
3. Fidelity Information Services Inc.
4. Diebold Inc.
5. NCR Corp.
7. First Data Corp.
10. Metavante Technologies Inc.
18. Jack Henry & Associates Inc.
23. Open Solutions Inc.
27. Hypercom Corp.
28. ACI Worldwide Inc.
38. TransFirst Holdings Inc.
49. BancTec Inc.
84. Goldleaf Financial Solutions Inc.
86. Wausau Financial Systems Inc.
92. Panini North America Inc.
The 2009 FinTech 100 rankings are based on calendar year revenues for 2008 and percentages of revenues derived from sales to financial service industry clients.
Helping clients succeed
The Green Sheet asked three of the payments industry companies listed to identify the factors that contributed most to their success. According to Don MacDonald, Executive Vice President and Chief Marketing Officer for Fiserv, the company has been in the top five for the six years the FinTech 100 has been in existence.
MacDonald said, in Fiserv's 25-year history, "the number one consistent, non-negotiable theme has been keeping focused on and driving clients' success." While it is a privilege to gain the highest spot on FinTech's list, it's "more about how Fiserv makes its investment decisions that make our clients successful," he said.
"We really are witnessing or approaching, if we're not already there, a strategic flash point," he added. He believes the level of change seen in the economic, regulatory, social and technological arenas are huge individually. But having all four converge at once creates an environment that MacDonald calls a genuine and permanent transformation. "In times like that, companies like Fiserv have to work even harder to work out what our clients need, where the market's are going, what [our clients] need to make them successful today, but also what they need tomorrow," he said.
Philip W. Tomlinson, Chairman of the Board and Chief Executive Officer at TSYS, said, "The ranking is a direct result of our world-class technology and products, a well-earned reputation of leadership in our business and a passionate and diverse workforce."
Michael Pratt, CEO of Panini, cited the company's customer focus. He said every position, function and process within Panini is "aimed toward engaging and involving and benefiting the customer."
Watching the trends
What will be the technologies to watch for in the coming year? "We see great opportunities in prepaid, hybrid cards that help consumers better manage their finances, and in those services that drive greater loyalty for the merchant and retail sectors," Tomlinson said.
Pratt said distributed capture is growing in two areas. First, it represents an opportunity for operational savings at banks. Second, it provides bank customers the convenience of remote deposit capture (RDC) to make deposits from the office or home. Pratt also pointed out that distributed capture and RDC impact deposit acquisition, and that distributed capture helps banks defend their core deposits and grow them "even outside of their traditional brick-and-mortar footprint."
MacDonald is keeping his eye on person-to-person payments. What technology will you be watching?
Obopay Inc. entered the online gaming market with its mobile payment solution. While playing online games or interacting on social networking sites, users can link their credit and debit cards to their mobile phone numbers and utilize PINs (in conjunction with phone numbers) instead of having to enter sensitive bankcard information to make payments.
Franklin, Tenn.-based Passport Health Communications Inc. added a new solution, eCashiering, to its product offerings to include electronic check processing that requires no checks. Patients can pay online or by phone.
Remote Backup Systems unveiled an affiliate program for value-added resellers to add its Online Backup service to their sales offerings. The program, which features low start-up and operational costs, includes a branded Web site for sales of Online Backup to merchants.
Columbus, Ga.-based processor Total System Services Inc. reported total revenues of $432.3 million for the third quarter 2009, an increase of 4.9 percent over the previous quarter. Revenues were down 1.6 percent year over year.
Deloitte LLP named payment provider Vesta Corp. to its 2009 Technology Fast 500 list, which recognizes innovative companies. Deloitte compiles its list from technology, media, telecommunications, life sciences, and clean technology companies in North America, and bases its selection on companies' revenue growth over the past five years.
Palo Alto, Calif.-based Zong, a mobile payment service provider catering to gaming and social networking sites, added new payment options to its platform. Zong payments are processed through mobile phone accounts. With Zong +, users only enter payment card information one time to access that option from their Zong accounts going forward.
Chase Paymentech Solutions LLC, VeriFone and Semtek Corp. formed an allegiance to provide end-to-end encryption technologies to prevent cyber fraud. The three companies will cooperate to market and distribute VeriFone's VeriShield Protect solution to Chase Paymentech retailers.
TSYS and China UnionPay Data Services Co. Ltd. signed a multiyear processing contract with China Minsheng Bank. CUP Data is TSYS' joint venture with China UnionPay, which is the only payment network sanctioned by the People's Bank of China. China Minsheng Bank is a Chinese commercial bank owned primarily by nongovernment entities.
Payment provider US Alliance Group Inc. partnered with Coleman Consulting Group Inc. to offer an online alternative for charitable contributions for the Catholic Archdiocese of Chicago and its affiliates. The solution includes credit card processing, ACH processing and remote deposit capture.
Payment processor VerifySmart signed a revenue sharing agreement with i-Pay Commerce Ventures Inc., a subsidiary of the Intellectual Property Ventures Group Corp., to integrate the VerifyTransfer platform in IPCV's remittance offices. In the initial, three-month pilot, multiple IPCV offices will use VerifySmart's platform for prepaid Visa Inc. cards issued by China Trust Commercial Bank.
In other news, VerifySmart signed a memorandum of understanding with Theodore Permadi Rachmat of Indonesia to form a joint venture company to introduce VerifySmart's proprietary suite of fraud prevention and detection technologies in Southeast Asia, with the possibility of expansion into Asia and the Middle East.
Visa extended its relationship with the National and International Olympic Committees to sponsor the Olympic Games through 2020. Visa will enjoy exclusive card acceptance at the 2012 Olympic Games in London; the 2014 Olympic Winter Games in Sochi, Russia; the 2016 Olympic Games in Rio de Janeiro, Brazil; the 2018 Winter Games; and the 2020 Summer Games. Visa will also have rights to Olympic logos for marketing and promotions.
CO-OP Financial Services completed its acquisition of CO-OP LoanLink Center, which supports 350 credit unions with loan and member support via telephone and Internet. The transaction was completed on Oct. 31, 2009. CO-OP LoanLink Center had used CO-OP Financial Service's Next Generation Network per a previous agreement.
Jack Henry & Associates Inc. is set to acquire Pemco Technologies, a subsidiary of Pemco Corp. According to Jack Prim, CEO of Jack Henry, the acquisition will expand the processor's product offerings and its presence in the credit union space.
Klik Technologies Corp. finalized the acquisition of Boston-based Cash Management Services Inc. "This combination allows us to better serve our clients with additional products, strong processing infrastructure and the support team that Klik brings to the table," said Jeff Goff, President of CMS.
Autoscribe Corp., the provider of Payment Vision Gateway Services, named Gregory R. Adleson President and Chief Operating Officer of Autoscribe.
Karen Coover joined Apriva as Vice President of Human Resources. "Karen brings with her a wealth of tested experience with global companies and will be a tremendous asset to Apriva," said Chris Spinella, CEO of Apriva.
Fort Lauderdale, Fla.-based Direct Technology Innovations hired five people to its sales team. The company named Jordi De Joseph as Director of Strategic Alliances and Mia Christina Mayo to Regional Sales.
It added account executives Mark W. Badovick, Debbie Scott-Queenin, and Tony F. Saiz.
Bluestar Inc., a distributor of POS, bar coding, data collection, radio frequency identification, security and wireless mobility products, named Carmen Diaz as Inside Media Specialist to expand BlueStar's service and sales solutions for domestic and international customers.
ActivIdentity Corp., a provider of authentication, credential management, and GlobalPlatform, a smart card infrastructure developer, reported the election of Eric Le Saint, ActivIdentity's Director of Security, Internet Protocol and Standards Engagement, as GlobalPlatform's Systems Committee Chair.
Government Payments Service Inc. appointed Mark MacKenzie to the position of CEO. A payments industry veteran, MacKenzie brings 20 years of experience in business development to his new position.
Transaction Network Services Inc. appointed John M. Perry to its payments division as General Manager of the Americas. Perry is tasked with growing TNS' payment business through new market opportunities and building the company's global customer base.
Paymetric Inc. welcomed two new executives to its management team: Nick Sommerio as Chief Financial Officer and Kevin Ferguson as Senior President of Business Development. Sommerio joined Paymetric from RBS WorldPay.
Ferguson came to Paymetric from SunGard Banks, where he served as Senior Vice President and Managing Director of Global Field Operations.
Wright Express Corp. named Greg Strzegowski to Senior Vice President, Corporate Development. Strzegowski formerly served as the company's Vice President, International, Business Development and M&A. He joined Wright Express eight years ago as Controller.
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