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The Green Sheet Online Edition

June 28, 2010 • Issue 10:06:02

Research Rundown

Interchange fee regulation under scrutiny

#dch_On May 13, 2010, the U.S. Senate passed its version of financial regulatory reform that included an amendment sponsored by Sen. Dick Durbin, D-Ill., that would grant the Federal Reserve the right to set interchange fees for debit transactions. The reason given for the provision was that it could potentially benefit consumers and small businesses. However, many in the payments industry are concerned the provision could have negative impacts if signed into law.

In a new white paper, The Economics of Payment Card Interchange Fees and the Limits of Regulation, Todd Zywicki, a fellow at the International Center for Law and Economics, analyzes the benefits of electronic payments systems, the costs of paper-based payment systems, understanding the role of interchange, the case for regulation and the potential consequences of interchange fee regulation. To download the white paper, visit www.voiceofpayments.org.

Fraud trends 2010

#dch_First Data Corp. issued a white paper entitled Fraud Trends in 2010: Top Threats From a Growing Underground Economy. Fraud accounts for more than $200 billion in annual losses in the United States as highly sophisticated cybercriminals compete to deliver "fraud as a service" using a two-step process that involves stealing data and then converting it into cash.

To help mitigate risk and avoid fraud, the white paper details how cybercriminals operate. It outlines the top 10 targets for fraud, ranking credit card data and financial account information at the top.

It also features this year's top 10 fraud trends and the most popular methods used by the thriving underground economy. To download the white paper, visit http://www.firstdata.com/en_us/insights/fraud-trends-2010.

Data breach mitigation

#dch_In 2010 Data Breach Prevention and Response: Causes, Consumer Consequences, and Tools for Layered Defense (DLP and STEM), Javelin Strategy & Research recently reported that at least 28 percent of all consumers received a replacement debit or credit card in 2009 as a result of security issues at a cost of $252 million in card reissuance. Even with data breach notification laws in effect in all but four states, and the recent enactment of the Red Flag Rules of the Fair and Accurate Credit Transaction Act of 2003, many consumers fail to take advantage of identity protection services, not realizing that victims are five times more likely to experience other forms of fraud once a breach notification has been issued, according to Javelin.

The report indicated the problem facing financial institutions (FIs) is that 38 percent of consumers view their FIs less favorably after receiving breach notifications and that they are less likely to use reissued cards. The report suggests preemptive actions businesses can take and discusses data monitoring options. To view the report, visit www.javelinstrategy.com/research.

Smart phone adoption climbs

#dch_A new Javelin Strategy & Research report, 2010 Mobile Banking Behaviors: Fewer Handsets in the U.S., yet Smartphone Growth Exceeds Expectations, finds that mobile phone adoption dropped sharply from 85 percent in 2009 to 74 percent in 2010 as 23 million consumers cancelled their contracts. Smart-phone adoption for the same period rose by 7 percent. The report provides insight into mobile banking customers and their preferences, offering guidance on how financial institutions can capitalize on this growing trend with browser, text and application-based mobile offerings for remote deposit capture, mobile person-to-person payments and transferring funds between accounts.

Mobile banking research findings include:

  • One in five U.S. adults now owns a smart phone.
  • Consumers cite a lack of perceived value, concern about security and cost among the top reasons for not using mobile banking.
  • Mobile banking is done primarily through mobile Internet browsers.
  • Only 18 of the top 40 U.S. banks now offer mobile banking.

M&A activity rises in acquiring sector

#dch_According to management consulting firm The Strawhecker Group, acquisitions are heating up in the acquiring sector. Buyers with capital are ready to move quickly on acquisitions or joint ventures in properties valued at $1 million to $75 million. TSG reported that target acquisitions include enterprise, static merchant portfolios, and portfolios with sales engines or additional payments technology capabilities; buyers are primarily interested in portfolios on select platforms, as well as those focused on strategic verticals. end of article

The Green Sheet Inc. is now a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals. Click here for more information.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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