Back in March 2005, our industry was discussing many issues that remain familiar to us today, including the expanding role of prepaid cards from gifts to more traditional financial tools, how data breaches spur legislators into action and how much pricing affects merchant attrition.
"Prepaid cards: Not just for gifts anymore" stated that the nature of prepaid cards, also called stored-value cards (SVCs) was expanding to give consumers a wider range of options beyond making purchases at their favorite stores. "Consumers use prepaid cards because of the convenience and cost savings they provide. SVCs make it easier for people to manage their funds, pay bills, make purchases and to transfer money … they are also beginning to bring features typically associated with traditional bank accounts to 'unbanked' and 'underbanked' consumers.
A major data breach at consumer data broker ChoicePoint Inc. raised the call for a Senate Judiciary Committee hearing on whether the Federal Trade Commission should provide more oversight of companies that store sensitive data. Thieves created business licenses for what appeared to be legitimate companies in order to breach ChoicePoint's security system. The crooks then accessed records, which contained consumers' names, addresses, Social Security numbers and credit reports. The criminals operated undetected for more than a year and used the stolen data to steal the identities of at least 750 people.
In "Pricing and attrition in merchant acquiring," Marc Abbey and David Woynerowski stated that pricing drives 25 to 30 percent of attrition from merchants with annual processing volumes in the $100,000 to $1 million range and drives more than 90 percent of attrition among merchants with volumes of $20 million or more. "For merchants in the mid-market and higher, pricing is the overwhelming reason for attrition. However, that is not to imply that an acquirer's investment in personalized service for larger merchants through relationship management is foolhardy," the authors wrote.
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