The Green Sheet Online Edition
December 26, 2007 • Issue 07:12:02
The Fed says card payments rule
The numbers are in folks, and we have a winner: Electronic payments, especially debit cards, are Americans' preferred payments.
According to a just-released report - 2007 Federal Reserve Payments Study ® more than two-thirds of all noncash payments in the United States last year were made electronically. The Fed's much-awaited payments study found that in 2006 Americans made 19 billion more electronic payments than they did in 2003, when the Fed last surveyed Americans' payments habits.
Of approximately 93 billion noncash payments last year, about 63 billion were electronic, just 33 billion were checks, and about 3 billion of those were converted to electronic payments and cleared through the automated clearing house system.
The Fed's report also shows debit card use now outpaces credit card use, although total dollars spent using credit cards outstrips debit card spending by two to one. There were 25.3 billion debit card payments last year with a combined value of $1.0 trillion, according to the report, and 21.7 billion credit card payments totaling $2.1 trillion.
A summary of the report can be downloaded at www.frbservices.org/Retail/pdf/2007_payments_study.pdf.
ISF provides leakage information
Information Security Forum provides guidelines about identifying and avoiding information leakage on its Web site, www.securityforum.org. A new report from the ISF states that while the term "information leakage" may be considered new, it is an old problem.
Information leakage or a "breach of confidentiality of information" can take place at any weak point in a company's security system where data is being stored, processed, transmitted or copied.
Human error accounts for most of the loss. For example, insufficient protection, sending confidential information to the wrong e-mail address or laptop theft. Social networking Web sites like Myspace.com and Facebook.com have become liabilities, as well as high capacity storage devices such as USB keys or MP3 players, according to ISF.
MPS to ponder card practices
The Merchants Payments Coalition was encouraged by a congressional hearing to consider unfair credit card practices. In a recent hearing held by the Senate Permanent Subcommittee on Investigations, certain practices by credit card companies on consumers and merchants were analyzed.
"This hearing is another example of how serious the issue of credit card abusive practices is for everyone," said Mallory Duncan, MPC Chairman, and Senior Vice President and General Counsel of the National Retail Federation. "The credit card industry has profited from outrageous fees, and congressional attention is beginning to shed some light on a broken system."
Duncan testified on MPC's behalf in a July hearing on interchange held by the House Judiciary Committee's Antitrust Task Force. Duncan argued that Visa and MasterCard's interchange rates have violated federal antitrust laws. Credit card companies' interchange fees don't appear on monthly statements whereas other fees do, forcing stores to include the fee in the price of merchandise, meaning higher prices for consumers.
TJX settles with Visa
The TJX Companies Inc. has entered into a settlement agreement with Visa Inc. regarding the cardholder data security breach in January 2007. An alternative offer will be made to eligible U.S. Visa issuers of payment cards affected by the unauthorized computer intrusion. TJX has agreed to pay up to $40.9 million pretax in recovery payments.
Issuers will be paid by Dec. 27, 2007. Certain rights to any other recovery through litigation will be waived, and releases of TJX and its U.S. acquiring banks will be provided. The settlement will also provide for certain releases by Visa, TJX and Fifth Third Bancorp.
Level 4 merchants highest risk
TrustWave investigated card compromise statistics and has determined that in approximately 300 hundred cases, 85% happened at level 4 merchant locations. Visa and MasterCard Worldwide define level 4 as merch-ants who process fewer than 20,000 Visa or MasterCard e-commerce transactions per year or up to 1 million transactions regardless of the acceptance channel.
A payment card compromise occurs when an unauthorized individual finds a flaw in a system that processes, transmits or stores cardholder data. The intruder then gains access to card numbers, expiration dates, card validation codes or track data.
Ensuring compatibility with the Toys for Tots, run by U.S. Marine Corps Reserves. The goal is to raise $50,000 while collecting and distributing new toys to needy children.
"Every year during this special time the Marine Toys for Tots Foundation counts on special miracles to occur," said Maj. Bill Grein, retired Marine and the Vice President of the Toys for Tots Foundation. "This year we are so pleased that U.S. Bank and CheckFree have teamed up to help raise enough money to fulfill the Christmas holiday dreams of over 5,000 needy children."
GEAR measures payments services
Visa now measures the extent to which governments in 43 countries provide electronic payment services. Results are reloaded via the Government ePayments Adoption Ranking (GEAR) study. The countries make up approximately 83% of the human population and 91% of global economic output. The GEAR study determined Canada is the world's leading nation at 92.4 out of 100% for government electronic payments.
"The GEAR study provides Visa and our client financial institutions with valuable insights into the government payments sector, helping us generate new ideas to meet governments' needs through safe and reliable electronic payments alternatives," said Darren Parslow, Visa's Senior Vice President of Commercial Products.
"Visa is committed to working with governments around the world to develop innovative programs that help governments improve operational efficiencies to better serve their citizens and stimulate commerce," Parslow said.
Bill Me Later now an Amazon option
Amazon.com Inc. signed an agreement with Bill Me Later Inc., making the Bill Me Later payment option available on Amazon's Web site.
Amazon also stated it is making an equity investment in Bill Me Later. The transaction between the two is anticipated to close in the first quarter of 2008.
"Bill Me Later has developed a very customer-centric method to make online shopping even easier," said Matt Swann, Vice President of Payments at Amazon. "We are pleased to make the convenience of Bill Me Later available to our tens of millions of Amazon customers."
Surcharge-free ATMs at Costco
CO-OP Financial Services, the operator of the CO-OP Network and its surcharge-free ATMs, stated 26 million credit union cardholders now have surcharge-free ATM access at Costco Wholesale Corp.
The addition of 341 ATMs expanded the existing relationship with Cardtronics Inc. and CO-OP Financial.
Discover's new gift card
Discover Financial Services' new eGift Card is a prepaid, stored value card that can be used for purchases online or over the phone where U.S. merchants accept the Discover card. A recent survey conducted by Discover stated that 55% of participants plan to purchase a gift card this holiday season.
The eGift Cards allows shoppers to choose the denomination ranging from $20 to $500, and 49% of respondents listed this as one of its best features. It also allows the cards to be personalized by virtually giving them a name and a personal greeting.
"We've expanded our offerings to enhance the customer experience by delivering more choices, convenience, value and personalization," said Dana Traci, Vice President of Prepaid and Partner Marketing at Discover. "The Discover eGift Card is an innovative way to help consumers complete their holiday shopping. If need be, they can wait until the last minute to purchase their eGift Card and still make it in time for the holidays."
IdeaEdge offers American Idol gift card
IdeaEdge Inc. launched an online program that offers customers the ability to customize gift cards and greeting cards online for the "American Idol" fan, at www.americanidolgifts.com.
Gift card purchasers will have the option of choosing from several "Idol" themed designs or upload personal digital photos onto the card.
"Over 40 million fans visited the show's Web site during the most recent 'American Idol' season," said Jim Collas, Chief Executive Officer at IdeaEdge. "Our customized gift card and greeting cards will allow fans to continue their interactive experience and enjoy a vast array of great American Idol merchandise available from our Web site."
MasterCard offers prepaid travel
MasterCard's prepaid travel cards are now available through travel industry data and financial solution provider Airlines Reporting Corp.'s agent locations.
According to Bill Mathis, Executive Vice President of Relationship Management at MasterCard, the card can be used at more than 25 million locations in more than 210 countries.
"Travelers no longer need to fumble through foreign currency or carry bulky travelers' checks. Instead, they can simply swipe or tap and go and be on their way," Mathis said.
The card has the ability to be reloaded and features MasterCard PayPass. It is a prepaid travel card, including contactless technology and amenities such as lost luggage insurance and emergency traveler assistance. It also offers cardholders the ability to retain local currency at any ATM machine in the MasterCard Network.
Fiserv gains CheckFree
Fiserv Inc. has completed acquisition of CheckFree Corp. for approximately $4.4 billion ($48 per share). More than 3,000 financial service Web sites use CheckFree's electronic billing and payment services. Growth is expected to continue as the demand to move from paper to electronic processes increases.
The newly combined companies will support financial institutions in many areas such as electronic billing, core processing, risk management, payments and wealth management.
Purepay secures CybrCollect
Purepay, acquirer and operator of payments companies, has obtained CybrCollect, an electronic check recovery provider. This is Purepay's third recent acquisition this year.
"Electronic check collection helps merchants effectively recover funds due to them, and CybrCollect's system and reporting tools are among the best in the industry," said Steve Valachovic, Managing Director at Purepay.
"We believe an industry consolidation led by a best-in-class national player will result in strong economies of scale, benefiting both merchants and the industry."
CheckFree partners with Allstate
CheckFree, now a part of Fiserv, has entered an agreement with Allstate Corp., part of Allstate Insurance Co., to send electronic bills to customers through electronic billing and payment Web sites, powered by CheckFree.
In December, customers received electronic bills from Allstate at their preferred bank, brokerage or credit union's Web sites.
"CheckFree makes it easier to do business with Allstate and easy for our customers to do something good for the environment," said Cathy Lazaroff, Vice President of Customer Experience and Innovation at Allstate. "The savings in time, paper and hassle is a win-win for all involved."
First American, Metavante pen deals with Discover
· First American Payment Systems LP, a merchant credit card processing acquirer, entered a merchant acquiring agreement with Discover.
First American will provide a processing package that includes Discover Network card transactions and can offer merchants a full-service payments solution and their sales channels a competitive advantage. First American hopes to process Discover Network transactions within the first quarter of 2008.
· Metavante Corp., a payment solution company that delivers electronic money movement through an integrated payments network, signed an agreement with Discover that allows its merchant clients full-service processing for all Discover Network card transactions.
"Our agreement with Discover makes it possible for Metavante to provide integrated processing services for Discover Network and other card associations," said Bruce Hopkins, Metavante Acquiring Solutions' Division President.
"Beyond facilitating merchant acceptance of Discover Network card transactions and an enhanced range of point-of-sale payment options, Metavante now offers a streamlined payment processing solution, evolving into a single source for merchant services."
Festa to serve as Hypercom VP of Sales
Hypercom Corp. appointed Connie Festa as HBNet Vice President of Sales. Festa will drive sales globally and take responsibility of the company's high security network and transaction transport services and solutions.
Siner moves up at First American
First American Payment Systems, LP, promoted Dustin Siner to Vice President of Business and Product Development. Siner joined the company's sales team in September 2005 and has advanced recruiting for new independent sales offices.
- A National Retail Federation survey conducted by BIGresearch LLC showed hobby, book music and sporting goods stores' unadjusted sales grew substantially in November; 11.3% year-over-year and 2.2% since October.
- Safeway Inc. is placing prepaid kiosks and racks in more than 1,000 stores to boost sales this holiday season. The supermarket chain expects its Blackhawk Network gift card division will hit $100 million in pretax profits this year.
- Deloitte & Touche USA LLP's 22nd Annual Holiday Survey determined 18% of holiday shoppers planned to buy "green" products this season;17% said they were willing to pay more for eco-friendly gifts.
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