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The Green SheetGreen Sheet

The Green Sheet Online Edition

November 12, 2007 • Issue 07:11:01

Industry Update

The Green Sheet, Inc.NEWS

More mandates coming from Visa

Visa Inc. will issue a series of five security mandates pertaining to payment applications starting Jan. 1, 2008.

In a bulletin issued Oct. 23, 2007, Visa stated the mandates "require acquirers to ensure their merchants and agents do not use payment applications known to retain prohibited data elements and require the use of payment applications that adhere to Visa's Payment Application Best Practices (PABP)."

The mandates take effect over three years. Visa provided a summary of each:

  • Jan. 1, 2008: Newly boarded merchants must not use known vulnerable payment applications, and VisaNet Processors (VNPs) and agents must not certify new payment applications to their platforms that are known vulnerable payment applications.

  • July 1, 2008: VNPs and agents must only certify new payment applications to their platforms that are PABP-compliant.

  • Oct. 1, 2008: Newly boarded level 3 and 4 merchants must be Payment Card Industry (PCI) Data Security Standard (DSS) compliant or use PABP-compliant applications.

  • Oct. 1, 2009: VNPs and agents must decertify all vulnerable payment applications.

  • July 1, 2010: Acquirers must ensure their merchants, VNPs and agents use only PABP-compliant applications.

To download Visa's full Oct. 23 bulletin, visit www.greensheet.com/mc/visacisp_oct2007.pdf. For a list of PABP-validated applications, visit www.visa.com/pabp.

Pennsylvania replaces unemployment checks with debit cards

Pennsylvania will now issue unemployment benefits in the form of MasterCard Worldwide-backed debit cards. The option of having the money directly deposited into recipients' accounts is still available, but paper checks no longer will be issued.

By reducing check-processing costs and mailing fees, the change is supposed to eventually save the state $2 million annually. The new cards are anticipated to be more convenient for recipients, especially those without bank accounts. Due to statutory requirements, paper checks will continue to be an option for recipients of workers' compensation benefits, who will now have three methods of payment options available to them: direct deposit, check and debit card.

Class members in 'Wal-Mart suit' receive payment schedule

Constantine Cannon, Lead Counsel for U.S. merchants in the class-action Visa Check/MasterMoney antitrust case, informed merchant class members that most of the remaining claim forms involving payments for signature debit and credit card overcharges will be approved and ready for payment by Dec. 31, 2007.

Also called the Wal-Mart suit for the lead plaintiff in the case, the case concluded in 2003 and threw out the card Associations' honor-all-cards rules and established a settlement fund of nearly $3 billion.

U.S. merchants who accepted signature debit and credit cards from Visa and MasterCard between October 1992 and July 2003 have been eligible for monetary awards. More than $950 million has been paid to class members since 2005 for overcharges on Visa and MasterCard signature debit and credit card transactions that occurred during thatime. Merchants who accepted PIN debit transactions during the same period are also eligible for damages.

However, at this time there are insufficient funds for a PIN debit distribution. All or most qualifying class members will likely receive payments for online PIN debit overcharges in 2008, when the settlement fund is replenished. For more information about the claims and payment process, call 888-641-4437 or visit their Web site at www.inrevisacheckmastermoneyantitrustlitigation.com.

First Data study confirms incentive gift card popularity

According to a study by First Data Corp., merchants interested in persuading consumers to make purchases from them should consider gift card incentives. An online survey conducted with 526 participants showed mainstream awareness of gift card incentive programs. Sixty-seven percent of survey respondents said they were familiar with them.

Three out of four consumers are interested in purchasing or trying out a product based on receiving a gift card for doing so. In addition, 74% of respondents would be more likely to make a purchase at a store offering a gift card as an incentive promotion versus a store that

did not. Eighty-seven percent of consumers who have used an incentive gift card are interested in continuing to receive such cards.

Community banks use electronic payments

A survey issued by the Independent Community Bankers of America showed community banks are taking advantage of technology and electronic payments to serve small business customers and extend their market reach. They are also implementing check image clearing and settlement at a rapid rate.

According to another community bank survey, conducted by Aite Group LLC, 55% of community banks consider large regional and mega banks to be their primary competitors. In 2006, 6,000 transit routing numbers were image-enabled. That number is expected to triple by 2008.

Coin-counting machines could be lucrative for U.S. banks

Close to $6 billion in coins are brought into U.S. bank branches annually, according to new research from TowerGroup, a research and advisory service firm focused on the financial services industry. At supermarket coin-counting machines, almost $3 billion in coins is redeemed yearly, creating a steady revenue stream of service fees, as well as the opportunity to gain additional sales from consumers while they are in the store. If banks charged customers the same fee for coin redemption that retail locations do, they could produce a $500 million market, according to the study.

The Green Sheet, Inc.ANNOUNCEMENTS

AmEx reports 15% increase in third quarter

American Express Co.'s continuing operations income for the third quarter 2007 was up 15% from the same period last year: $934 million in 2006 and $1.1 billion in 2007. The company's earnings growth for the same quarter shows a 16% rise in the combined spending by small businesses, corporate card members and consumers, according to Kenneth I. Chenault, Chairman and Chief Executive of AmEx.

Digital Check celebrates decrease of CO2

Digital Check Corp., a provider of desktop check scanners for the remote deposit capture and branch automation industry, estimated an annual CO2 reduction of more than 100,000 tons resulting from remote deposit capture. The technology can eliminate customer trips to banks to make deposits and reduce banks' use of courier services.

More than 150,000 Digital Check TellerScan check scanners have been deployed across the U.S. by financial institutions. Digital Check scanners create check images that are transmitted electronically from customers to their banks.

ISTS Worldwide Inc. places fifth

Deloitte Development LLC's Technology Fast 500 ranked ISTS Worldwide Inc. the fifth fastest growing technology, media, telecommunications and life sciences company in North America. ISTS prides itself on delivering innovative, customer focused and cost effective solutions to the retail and payment market, ISTS President and Chief Executive Officer Viren Rana noted. The company gives credit to its "people, process, technology, global delivery model and domain expertise across the retail and payment board" for its ranking and its 19,254% revenue growth.

NCHA/PRO reports gains

The National Clearing House/Payment Resource One's image exchange settlement volumes for the third quarter 2007 reached 622.5 million items _ a 405% increase over the same quarter 2006 _ and exceeded 45% of overall volume. Image exchange dollar volume rose to $540 billion, up from $112.7 billion for the same period in 2006.

U.S. Bank hits gift card milestone

U.S. Bank issued its 20 millionth gift card, doubling its program in a little over a year and sealing its place as the leader in prepaid cards across the nation and the top Visa gift card issuer, according to the bank. U.S. Bank reached its 10 millionth gift card in July 2006.

U.S. Bank gift cards are available at shopping malls, all U.S. Bank branches or online. The bank has also enhanced its Visa gift card program.

For example, customers who purchase the cards online now have five gift card designs to choose from. In addition to gift cards, U.S. Bank issues prepaid cards for payroll, general purpose spending and rebates.

Wells Fargo offers text banking

Wells Fargo & Co. rolled out MobileSM: a new text banking service. Now customers can use cell phone text capability to access their Wells Fargo accounts in addition to accessing them via the Internet, which the bank has offered to consumers since 1995.

To activate the text banking service, customers must first register online and then send a text message to Wells Fargo. In about one minute, Wells Fargo sends a reply message. All mobile transactions are secured by the bank's online security guarantee. Confidential information, such as account numbers, is never transmitted via text banking.

The Green Sheet, Inc.PARTNERSHIPS

First Data, MasterCard to offer payment gateway

First Data will partner with MasterCard to make MasterCard Payment Gateway available to its network of 3.5 million merchant locations throughout the United States.

The gateway routes commercial payments between buyers, suppliers and their financial institutions. The plan is designed to give First Data customers a streamlined electronic solution to increase productivity and profits, while enhancing security and simplifying the entire payments process. The payment solution can manage multiple payment types, including card and electronic funds transfer.

Green Dot, Chase Paymentech offer cash alternative

Chase Paymentech Solutions LLC and Green Dot Corp. will provide merchants an alternative cash payment solution. Merchants who process on Chase Paymentech's proprietary multichannel payment platform will be able to accept cash transactions through their existing online and phone interfaces by accepting Green Dot's MoneyPak.

MoneyPak turns cash payments into digital form and enables Chase Paymentech merchants to more easily serve the 80 million consumers who are unbanked or prefer to transact in cash.

Litle & Co. tops at Jewelry Television

Jewelry Television designated Litle & Co. the transaction processing and payment engine for its network and Web site, www.jtv.com.

Lisa Tennant, Vice President of Cash Management and Merchant Services for Jewelry Television, said Litle's drive for consumer-direct business was the exact precision her company needed to enhance growth.

The Green Sheet, Inc.ACQUISITIONS

Heartland gains General Meters

Heartland Payment Systems, a provider of card processing, payroll and payment services, has acquired General Meters Corp., a developer and provider of multipurpose card systems for college and university campuses. General Meters' University One-Card System unites a range of functions, such as security access and dining, onto one identification card for students, faculty and staff.

Heartland recently launched the first university contactless payment system at Slippery Rock University in Pennsylvania. Using either an identification card or cell phone, students, faculty and staff can make payments on-campus or at participating off-campus merchants.

The Green Sheet, Inc.APPOINTMENTS

CBA elects new board members

Brendan McDonagh, CEO of HSBC Finance Corp. and Chief Operating Officer for HSBC North America Holdings Inc., was elected Chairman of the Consumer Bankers Association.

John F. Stewart, Citibank's Managing Director of National Distribution, was elected Chairman-Elect. Newly elected members of the CBA board of directors are Terry Renoux and Scott Powell. Renoux was also named Chairman of CBA's Government Relations Council.

The Green Sheet, Inc.BOTTOM LINES

  • A 2007 www.incentivemag.com Incentive Magazine survey found 82% of businesses give gift cards and gift certificates. Of that, 74% use them for employee recognition, and 46% for sales incentives. Also, 83% of businesses reported gift cards and certificates are equally or more effective than cash gifts, up from 69% in 2006.

  • According to Scarborough Research, 23 out of 79 markets measured were identified as organics. From those 23, more than 50% were on the West Coast. San Francisco was the top U.S. city for organics users, at 35%.

  • According to the NPD Group, the number of women in the work force, which had been on the rise for decades, is slowly reversing. The number of restaurant meals purchased per year is declining too. In 2001, meals purchased per person, per year was 211. In 2007, the number dropped to 207.
end of article

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