NEWSBoston-based consultancy Celent LLC rings the clarion call of change for the payments industry with a new report entitled Enterprise Payment Management: Banks Must Follow an Enterprise Approach to Payments to Compete and Lead. It outlines new practices and technologies financial institutions (FIs) must implement to meet the demands of an ever evolving marketplace.
"The wise bank needs to reevaluate its operation," said Edward Woods, Senior Analyst with Celent's Banking Group and author of the report. "'Don't fix it if it ain't broke' is a tempting argument until the bank realizes that a system incapable of supporting its future needs is 'broke' and, without the proper investment, could ultimately break the bank."
Accustomed to the Internet, consumers expect 24/7 banking, easy and instant access to their accounts from anywhere in the world, and lightning quick response times for bill pay and other services. Celent mapped out several forces bearing down on the aging payments industry systems, such as market consolidation, increasing merchant demands, product revolution and innovation, and an evolving regulatory environment.
With the next Payment Card Industry (PCI) Data Security Standard (DSS) deadline right around the corner, retailers are scrambling to get in compliance by June 30, 2008. But some will fail to meet requirements in time. According to the consulting firm Gartner Inc., a majority of retailers are not ready to meet the deadline for PCI DSS section 6.6 due to confusion over what should be upgraded. After June 30, all merchants accepting card transactions will be expected to complete one of two options. The first possibility is to have a Web application software code reviewed by a qualified third party (a QSA, for example) to find and fix vulnerabilities.
The review can be completed by conducting a manual review of application source code, properly using an automated Web application security vulnerability scanning tool, among others. Another option is installing a software or hardware, stand-alone or network integrated firewall between the Web application and the client end point, so the firewall will sit in front of the Web application. Companies that fail to implement either measure will be deemed out of compliance.
A survey by PaySimple Inc. and Market Platform Dynamics indicates that small businesses believe more of their commerce will be done using electronic payments over the next two years.
The study, released at NACHA - The Electronic Payments Association's Payments 2008 Conference in May, shows the majority of business owners who participated see the future of electronic payments coming quickly; roughly 70 percent believe that, within the next two years, 50 percent of their payments will be electronic. "Small businesses are the backbone of the U.S. economy and have generated almost 80 percent of new jobs in the last 10 years," said Jeff Gardner, President of PaySimple. "At the end of the day, these businesses want to make it as easy as possible for their customers to transact with them, and consumers are demanding more efficient payment options." Despite the increasing use of electronic payments, roughly 78 percent of companies that took part in the study still prefer cash and checks today; one-quarter favor cash and 28 percent choose electronic payments. E-payments are overwhelmingly preferred by businesses in the retail and travel sectors.
ANNOUNCEMENTSAdvantidge Inc., a provider of card printers, systems and supplies, unveiled the Corn Card, a new eco-friendly card solution, which, according to the company, has advantages over traditional, petroleum-based Polyvinyl Chloride (PVC) cards. Millions of PVC cards are used every day in various applications and industries, including photo identification for schools and companies, health club membership cards, hotel room key-cards, and gift and loyalty cards.
But since their production is dependent on oil, PVC cards adversely affect the environment, both in their manufacture and eventual disposal. In contrast, Corn Cards are made from corn, a readily available, renewable resource. The Corn Cards look the same as PVC cards, but are 100 percent biodegradable.
CheckFree Services Corp., now part of Fiserv Inc., rolled out the CheckFree International Payments Processing Suite. Its software products offer tools designed to assist FIs with regulatory and processing compliance. NACHA implemented a standard entry class code called International Automated clearing house Transaction (IAT) to differentiate international payments from domestic transactions. In response, CheckFree developed its suite of products, which includes two stand-alone modules: CheckFree AML Advisor and CheckFree IAT Format Validation.
By March 20, 2009, all FIs must comply with IAT and government mandates designed to help safeguard the U.S. financial system from abuses involving international payments, including money laundering and terrorist funding.
Eliot Management Group spotlighted the newest terminals in their private-branded equipment line: the Eliot 4000 and 4500X. This series follows the Eliot 1000 and 2000, launched in 2006. The new equipments' body has been significantly redesigned to be more compact and user-friendly, with a smaller footprint, brighter display and improved security. In addition, the 4500X offers a network port for high speed communication.
First Data Corp. signed an agreement with EUFiserv and its 15 shareholders with the intention of expanding and developing the European interbank processing network managed by EUFiserv.
Based in Brussels, Belgium, EUFiserv provides interbank switching of POS and automated teller machine (ATM) transactions, including authorization, clearing, settlement and value added services to payment card issuers, acquirers and payment schemes. EUFiserv and First Data will further develop these services, which will be compliant with the Single Euro Payment Area (SEPA) framework requirements.
Inside Contactless Corp., international provider of contactless microprocessor platforms, has joined the international not-for-profit association Advanced Card Technologies Canada to establish itself in the Canadian contactless payment technology market. Inside Contactless is now poised to deliver technology to aid in the convergence of EMV (Europay International, Mastercard Worldwide and Visa Inc.) and other noncontactless applications.
Javelin Strategy & Research published the 2008 U.S. Mobile Banking Benchmark Study, which examines three categories of consumer mobile banking: access, security and features. Phone and Web-based mystery shoppers contacted top U.S. FIs to find out their mobile banking offerings. Of the 135 FIs searched in early 2008, 23 provided mobile banking solutions widely accessible to consumers. Offerings were reviewed based on 20 separate functions in all.
NACHA handed out three honors at its Payments 2008 conference in May. The winners and their awards are as follows:
Open Solutions Inc. and Hypercom Corp. revealed HBNet Inc. will provide high-speed transaction transport services for Open Solutions Canada, a business unit of OSI, which operates one of Canada's largest off-premise ATM and POS networks.
The use of HBNet will enhance Open Solutions Canada's ability to smoothly and securely process millions of ATM and POS transactions each month. HBNet's performance is achieved through multiple network and equipment redundancies. Hypercom's HBNet network accelerates the authorization and processing of electronic transactions for retail POS, financial, government, health care and other customers in both the dial and Internet protocol POS markets.
San Antonio, Texas-based processor Payment Data Systems Inc. formed FiCentive Inc., a wholly-owned subsidiary.
FiCentive will focus on delivering industry leading prepaid card solutions for corporations and financial institutions. Louis Hoch will be at the helm as Chairman and Chief Executive Officer. He will also continue his role as Payment Data's Vice Chairman, President and Chief Operating Officer.
SignaPay recently launched SeñorPay, which will focus on the Spanish-speaking market and provide traditional merchant services, including a company-owned cash advance program and the SignaShare program.
In addition, SeñorPay will offer iPay Station, a group of payment products and services for the unbanked. IPay Station merchants will offer a broad range of prepaid phone cards and wireless products, plus BillPay, a system that pays more than 5,000 consumer bills, such as electric and gas, telephone, cable and rent.
All sales materials and contracts for iPay Station will be available in English through SignaPay and in Spanish via SeñorPay.
According to John Martillo, President of SignaPay, all processing forms, documents and agreements will be available in Spanish to make merchants comfortable with what they are signing. The company is in the process of building a bilingual work force able to converse knowledgeably and fluently in Spanish.
The Merchant's Guide LLC released Understanding Credit Card Interchange in Card-Not-Present Environments, a comprehensive guide developed to provide direct sellers with the tactical knowledge to minimize interchange fees.
In particular, the guide presents:
PARTNERSHIPSDisney Credit Card Services Inc., a wholly owned subsidiary of The Walt Disney Co., and Chase Card Services, a division of JPMorgan Chase & Co., will renew their co-brand card agreement for the Disney Rewards Visa Card from Chase.
With more than 2 million card members, the Disney Rewards Visa Card is one of the fastest growing rewards cards designed for families. This year marks the fifth anniversary that Chase and Disney have offered consumers the Disney Rewards Visa Card.
Points International Ltd., owner and operator of reward-management portal Points.com, expanded its agreement with American Express Co. to use Points.com technology to support AmEx's Membership Rewards bonus points program.
AmEx participates on the Points.com consumer portal, providing Membership Rewards enrollees with access to additional loyalty partners. Points International also continues to provide integration services and technology for the Membership Rewards program, including facilitating online transfers of Membership Rewards points into other loyalty programs.
The U.S. Postal Service has selected U.S. Bank, lead bank of U.S. Bancorp, to provide purchasing cards (p-cards) and Voyager fleet cards under the new General Services Administration (GSA) SmartPay2 contract. "With this win, we are extremely pleased to retain this important customer," said Doug Ichiuji, Senior Vice President and Head of Government Services for U.S. Bank Corporate Payment Systems. "As our partnership with the USPS extends beyond card products as a 'relationship bank' ensuring that we provide them with best in class banking products and services is at the core of our commitment to the USPS."
Wausau Financial Systems Inc., a distributed payment and receivables processor, and ClairMail Inc., a two-way, mobile phone-based customer interaction software maker, entered an agreement to integrate ClairMail's Mobile Lockbox technology with Wausau's remittance processing managed service. With ClairMail's Mobile Lockbox technology, a two-way alert message is sent to the payer's mobile phone with bill payment details such as payee name, dollar amount and due date. Payers reply to the messages to instantly pay bills from their mobile phones.
ACQUISITIONSFrontStream Payments Inc., payments consultants for ISOs, sales professionals and merchants, announced the acquisition of Direct Technology Innovations. Terms of the deal were not disclosed. "Direct Technology Innovations is a perfect fit for us in that they immediately strengthen our market footprint in the core areas of quick service restaurants and ground transportation," said Emmet Seibels, CEO and co-founder of FrontStream.
APPOINTMENTSCDE Services Inc. appointed Dennis Dickey as Vice President of Sales and Marketing. Dickey will be in charge of evolving and growing product offerings in CDE's primary POS market niche, as well as help lead CDE into the broader role of equipment support services outside the POS industry. Dickey has more than 25 years of experience in domestic and international strategic market planning, new business development and general operations management.
MasterCard named Rob Reeg as President of MasterCard Global Technology and Operations. Reeg has held this position on an interim basis since January 2008. Reeg is a 13-year veteran of MasterCard. He was named MasterCard Chief Technology Officer in 2005. He led the company's core processing systems reengineering effort. Before joining MasterCard, Reeg held positions at Sprint-Nextel Corp., Cleveland Pneumatic Co., Totco Inc. and Conoco Inc.
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