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The Green SheetGreen Sheet

The Green Sheet Online Edition

November 26, 2007 • Issue 07:11:02

Industry Update

The Green Sheet, Inc.NEWS

Visa fines Fifth Third Bancorp for TJX fiasco

According to a recent filing with the U.S. District Court for Massachusetts in a class action lawsuit brought by various banks against The TJX Companies Inc., Visa Inc. had fined Fifth Third Bancorp $880,000 as of June 2007 for the massive security breach disclosed by TJX in late 2006. TJX is the parent company of TJ Maxx and Marshalls, the retailers compromised by the breach.

The card Associations are technically only permitted to fine processors, but processors typically pass those costs on to the merchants involved in incidents leading to fines.

It is estimated the TJX breach affected at least 96 million consumers over a multiyear period during which credit card data was stolen by intruders. (For more details about how the theft was accomplished, see "Security breaches costly to all" by David Mertz in this issue of The Green Sheet.)

Fifth Third was fined $500,000 due to the seriousness of the incident and its effect on Visa. The remaining $380,000 was levied for failure to comply with the Payment Card Industry (PCI) Data Security Standard (DSS).

Visa reserved the right to escalate fines to Fifth Third, which reached $100,000 per month in April and May 2007, for what Visa Vice President Joseph Majka called "the largest data breach in the payment card industry."

ETA, NACHA want you

Two organizations of vital importance to the payments industry need new talent:

Cash still matters to BofA, Chick-fil-A

National restaurant chain Chick-fil-A Inc. is trying out new Bank of America Corp. technology designed to simplify cash handling and provide faster access to funds.

The cash handling device accepts, counts and secures cash. It also communicates directly with BofA, allowing funds to be credited to the account from different locations and offers "rapid recognition" which allows funds to be recognized even before they are physically deposited at a bank branch.

New competition for gift card dollars

Ebay now offers gift cards in amounts of $25 and $50 that can be used toward the purchase of any items on eBay for which sellers accept PayPal.

Available at retailers nationwide, the cards are primarily offered at major grocery stores.

Also, Highmark Inc. launched a Visa Inc. gift card for health care. The card can be used for both medical and dental office visits, prescriptions, counseling services or eye exams, regardless of a person's health insurance coverage. Cards can be loaded in amounts from $25 to $5,000.

Consumers cancel cards at lower rates

According to a syndicated market research report published by Auriemma Consulting Group Inc., consumers are canceling credit cards less frequently than in the past several years.

The most common reason for cancellation is that the cards are unused. More than half of credit cards canceled are consumers' secondary credit cards.

Economic shifts such as rising interest rates may be affecting consumers' decisions. ACG believes knowledgeable consumers might be hesitant to cancel existing cards, fearing they might need additional credit in the future.

Make-your-own gift cards

Visa and Card Lab Inc. launched a fully customized Visa gift card just in time for the holiday season.

Available online at GiftCardLab.com, shoppers can create a customized Visa gift card by uploading personal photos and designs, or by choosing from an online image catalogue. Shoppers can purchase their creations online in various denominations ranging from $10 to $250.

The Green Sheet, Inc.ANNOUNCEMENTS

ACI rolls out new ATM solution

ACI Worldwide Inc., an international provider of solutions for enterprise electronic payment systems, launched a new solution designed to support deposit automation requirements for domestic financial institutions.

ACI's BASE24-atm self-service banking modules and BASE24-infobase solution combine to offer financial institutions features to facilitate enhanced deposit automation offerings. The aim is to lower costs while providing new revenue sources for ATM deployers.

Crutchfield opts for Bill Me Later

Crutchfield New Media LLC, an integrated marketer of consumer electronics products, now offers Bill Me Later Inc.'s payment option to its customers via CardinalCommerce's Cardinal Centinel platform.

When placing phone orders and shopping online, the Bill Me Later payment option is designed to simplify the payment experience to gain lost sales, increase customer loyalty and maximize profits.

Diebold advances ATM skimming detection

Diebold Inc. released its new Advanced Skimming Detection technology for automated teller machines (ATMs) in an effort to support the Global Security Task Force research and development program.

An element of Diebold's secure antifraud enhanced ATM, the detector features a highly sophisticated proprietary detection algorithm that allows the sensor to discriminate between types of skimmers, environmental factors and cardholder activity. This is expected to reduce false alarms.

Pivotal Payments has record growth

Pivotal Payments continues to enjoy strong business growth. The number of new merchants boarded in October 2007 was 170% more than September 2007's total and 325% more than the October 2006 total. Sales have significantly increased since Pivotal began offering agents a $1,000 per merchant bonus.

RentPayment landlords now accept Visa

RentPayment, a division of YapStone Inc., a payment processor serving property managers, has renewed its agreement with Visa to supply an integrated payment system for landlords.

YapStone clients can now accept Visa for automatic rent payments and security deposits. This allows residents to use Visa cards without convenience fees.

Secure PumpPAY fights fraud

VeriFone rolled out Secure PumpPAY, a solution for upgrading gas pump card payments to meet the PCI DSS. An estimated 700,000 fuel dispensers in the United States and Canada are not yet secure.

Secure PumpPAY's mission is to help petroleum retailers protect themselves and their customers from data theft and fraud. The solution is designed to work with pumps manufactured by virtually all U.S. and most European suppliers.

ViVOtech releases new NFC software

ViVOtech, a provider of Near Field Communication mobile promotions and payments software, is launching the commercial release of its ViVOplatform Smart Poster Management Software (VpSPm). VpSPm is a one-on-one mobile marketing software system that enables merchants to create, manage and deliver personalized, context-sensitive information to consumers' mobile phones.

The Green Sheet, Inc.PARTNERSHIPS

Airline Training Council, Trustwave in PCI synch

The Airline Training Council and Trustwave reached an agreement to assist travel agencies, airlines and other travel services in meeting the requirements of the PCI DSS. Trustwave's TrustKeeper Web portal will be used to offer the travel industry access to vulnerability scanning and remediation services at affordable pricing.

Under this program, PCI compliant travel services that have passed the system scanning verification required under the PCI DSS will be able to place the seal to that effect on their Web sites.

Heartland, transmodus automate check processing

Heartland Payment Systems, a provider of credit, debit and prepaid card processing, as well as merchant payroll and payment services, and transmodus corp., an online check services provider, have joined forces to automate both check collection and processing of returned and cancelled checks.

The alliance will provide an end-to-end solution designed to enable merchants to handle all of their check processing actions online without leaving their offices.

Clear, AmEx to offer security express

Clear, part of Verified Identity Pass Inc., announced a strategic marketing partnership with American Express Co. Clear is a provider of registered traveler security express lanes at U.S. airports. AmEx intends to offer Clear to millions of its most frequent business travelers and corporate card members.

Card members can enroll online, but the process must be completed at a Clear location to validate a person's identification.

Once identity is verified, the enrollee receives an identification card containing encrypted fingerprint or iris images, which are obtained during the validation process.

Saddle River, NationalCard team up

Saddle River Valley Bank, a locally owned, full service community bank in Saddle River, N.J., and Rochelle Park, N.J.-based NationalCard Processing Systems have formed a credit card processing agreement.

NationalCard will provide direct sales and marketing support for the bank's existing and prospective merchant accounts.

The Green Sheet, Inc.ACQUISITION

Qualcomm gains mobile banking foothold

Qualcomm Inc., a developer of Code Division Multiple Access and other wireless technologies, is acquiring Atlanta-based Firethorn Holdings LLC, a mobile banking enabler.

The addition of Firethorn's expertise in the financial industry and key relationships with wireless operators, financial institutions and payment processors is expected to help Qualcomm enable end-to-end wireless services and applications that enhance the mobile experience and increase consumer adoption of new mobile data services.

Qualcomm will pay approximately $210 million in cash for Firethorn. When the acquisition is complete, Firethorn's employees will remain in Atlanta to support existing financial institution and operator partners.

The Green Sheet, Inc.APPOINTMENTS

Avery, Rustyak move up

Federated Payment Systems promoted Scott Avery to Senior Vice President of Sales and Frank Rustyak to Director of Information Technology.

Ezic expands product development team

Ezic Inc. elevated Kyle Bond to the position of Senior Software Engineer. His new responsibilities include maintenance and development for the Ezic Internet payment gateway. He is also responsible for overseeing technical support.

Fenley joins POS Card Systems

POS Card Systems, a division of Vision Bankcard Inc., appointed Ryan Fenley Vice President of Business Development. Fenley previously served as the Software Sales Manager for the VeriFone North American Financial Group.

3Delta Systems welcomes Ives

Howard Ives signed on as Vice President of Sales and Development at 3Delta Systems Inc. Ives will formulate new business commercial credit card payment tools for merchants and enhance the company's channel partner services for enterprise-level customers.

Narayen to sit on Metavante board

Metavante Technologies Inc. elected Shantanu Narayen to its board of directors. Narayen is President and Chief Operating Officer of Adobe Systems Inc.

He also serves on the advisory board of the Haas School of Business at the University of California, Berkeley.

Redwood names Payton VP

Michele Payton was appointed Vice President and National Sales Manager by Redwood Merchant Services, a division of Westamerica Bancorp. Payton has more than 30 years' experience in the payments industry. She will develop new partners and increase the direct sales staff.

Williams takes Intuit CFO spot

Intuit Inc. elected R. Neil Williams as its new Chief Financial Officer and Senior Vice President for 2008. Williams was previously the Executive Vice President and Chief Financial Officer for Visa.

The Green Sheet, Inc.BOTTOM LINES

  • According to the National Retail Federation's second annual Return Fraud Survey projections, nearly 9% of 2007 holiday merchandise returns will be fraudulent, up from 8.67% last year. As a result, it will cost retailers an estimated $3.7 billion, up from $3.5 billion last year.

  • A new survey conducted by Unity Marketing showed luxury consumer spending dropped 21% from an average $15,283 in the second quarter 2007 to $12,142 in the following quarter. Spending in households with incomes of $150,000 or more has remained steady.

  • Consumer Reports indicated 78.6% of retailers plan to offer free shipping this holiday season - with conditions. Stipulations will limit benefits to certain items or dollar amounts spent per order.
end of article

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