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Issue 05:09:02

Industry Update

MasterCard Plans IPO

CardSystems Meets Compliance Deadline, Visa and AmEx Retain Original Position

GS Online: 2.8 Million and Climbing

Financial DNA Explores the Unbanked


Industry Leader: Michael Nardy The 'Little Businessman' Grows Up

Katrina's Impact on ATM Industry Hard to Assess

By Tracy Kitten & Nick Wiselogel


FTC Has ISOs in Its Sights

By Patti Murphy

Rules and Fines: The Cost of Cardholder Data Security Breaches

By Ken Musante


Street SmartsSM:
Security and the MLS

By Kathy Harper

Finding New Revenue Streams in Your Current Merchant Base

By Nancy Drexler and Sam Neuman

The Leading Edge: Advanced ATM Functionality

By Tommy Glenn

Making the Call With a VoIP Solution

By Joel Rydbeck

The Nonpublic Personal Information Hot Potato

By Adam Atlas

Company Profiles

Merlin Solutions LLC

New Products

New Versions of an Old Technology

Integrating the Hologram and Mag Stripe


Hope for the Best ... Prepare for the Worst



Resource Guide


Payments Industry Responds to Hurricane Katrina

First the wind and rain came, then the flooding, all brought by Hurricane Katrina, possibly one of the worst natural disasters in U.S. history. Soon after, funds and relief began pouring in for victims of the catastrophe. From the largest card Association to the smallest ISO, many of the companies offering help are from the payments industry. American Express Co., MasterCard International and Visa U.S.A. each announced pledges of at least $1 million. Morgan Stanley's Discover Financial Services is donating $2 million. First Data Corp.'s Western Union cut its service fees in half for Western Union Money In Minutes transactions sent from within the United States to Mississippi, Louisiana and Alabama.

Ways You Can Help

» Red Cross:

» Salvation Army:

» AmeriCares:

Trade Associations Get Involved

To help the merchant acquiring industry support businesses that have lost the ability to process payments because of damaged or destroyed equipment, the Electronic Transactions Association (ETA) established an online resource to link businesses in need of supplies and equipment with ETA members willing to donate or lend those services (for more information, visit

"Rebuilding these Gulf Coast communities will take many months and the efforts of countless heroes working to assist those in need. ... I challenge the entire ETA community to do whatever possible to support those in need now and in the many months ahead that will be required for this recovery," said Carla Balakgie, ETA Executive Director.

The ATM Industry Association and ATMmarketplace, an industry trade publication, are seeking donations to assist hurricane victims. They will deposit them into ATMIA's Education and Development Fund, a nonprofit charity, and then dispense the funds to the American Red Cross and an ATM business hardest hit by the damage, said Tom Harper, President of AMTIA and publisher of ATMmarketplace.

(Read more about how the hurricane has affected the ATM industry in the ATMmarketplace article, "Katrina's Impact on ATM Industry Hard to Assess" by Tracy Kitten and Nick Wiselogel)

ISOs Helping, Too

ISOs and other payments businesses have responded with monetary donations, waiving minimum processing fees and supplying POS equipment for affected merchants. In conjunction with NOVA Information Systems, VeriFone donated 500 POS terminals to merchants.

The CO-OP Network pledged to contribute $50,000. Credit Union 24 pledged $25,000. Internet merchant account provider e-onlinedata Inc. donated $10,000 to the American Red Cross, and JRs POS Depot is donating $1 from each new/refurbished terminal sold.

IRN Payment Systems in Westbury, N.Y. said it will drop fees associated with credit card processing for its merchants affected by the disaster for an indefinite period of time.

Jared Isaacman, Chief Executive Officer of Hampton, N.J.-based United Bank Card Inc. said he anticipates reports in the coming weeks of damaged equipment and is prepared to provide priority replacement equipment.

"Dozens of our merchants in the area have been structurally damaged, businesses ruined, employees displaced," he said. "It has been our first priority to accommodate the merchants in the affected region as best as possible."

Global eTelecom Inc. (GETI), based in Destin, Fla., has dealt with its share of storms in the past. Chris Brundage, Senior Vice President of the company, said GETI has had to evacuate to an offsite facility for the previous two hurricanes. "Our contingency plan is always in place so that our ISOs and merchants can continue to receive uninterrupted service," he said.

In response to Katrina, GETI immediately took inventory of all merchants in the affected areas, approximately 500, and waived all monthly fees. "No fees will be charged until they begin to process again," Brundage said.

Schaumburg, Ill.-based Landmark Merchant Solutions is refunding merchants the last month's fees as well as any overdraft fees, said Landmark CEO Alan Gitles. In addition, "we will swap out equipment with supply and warranty and work on a case-by-case basis with those merchants who do not have supply and warranty," he said.

Sterling Payment Technologies LLC, based in Tampa, Fla., matched employee contributions to the Red Cross and has suspended billing to any merchant customers affected by the hurricane, said Sean Riley, Sterling's Vice President of Operations. "We will continue to pay residuals to sales partners, making them whole."

Jason Felts of Orange Park, Fla.-based Advanced Merchant Services (AMS) said the company has large accounts in the region, and many are now out of business. He said AMS has not had much contact with merchants in the hard hit areas. "Emotions are running high, and people have to regain their resolve," he said. "I'm not sure how many will rebuild."

AMS sent letters to every merchant [in the area] offering help, but is not sure if they received them. "Right now we have more questions than answers," Felts said.

Randy Sagar, National Processing Co.'s (NPC) Senior Vice President of Independent Sales said NPC is waiving multiple fees for merchants. He said the card Associations have also been proactive in helping with contingency plans and are waiving or suspending standard rules and regulations for affected areas.

'If We Can Help, Anyone Can'

Carlos Gavidia and Lon Gaddy, owners of Chantilly, Va.-based Universal Debit & Credit Corp. (UDC) watched the hurricane coverage on the news and grew frustrated that people in the affected region were not getting help from the government.

In addition to supplies donated by employees, friends and business partners, they bought 23,000 Meals Ready to Eat and 4,600 gallons of water. With the help of two hired drivers, Gavidia and Gaddy have brought five tractor-trailer loads of supplies to the Gulf Coast region.

They made arrangements with UDC's business partner ATM manufacturer Triton Systems, and the American Red Cross, to drop the goods at a coordinated distribution center set up at Triton's headquarters in Long Beach, Miss.

"We knew that Triton had over 50% of their employees lose everything in the hurricane, and the whole community needed help," Gaddy said. "We kept hearing reports of what was needed, and we made a decision to do whatever it takes to get these people what they need.

"We have never done much charity work with the exception of taking old clothes to the Salvation Army and making cash donations to various different causes throughout the year. Most of that was a result of our employees and friends asking us for the donations. All of that changed on Aug. 31," Gaddy said.

"We are basically just two sales guys ... If we can help, anyone can," Gavidia said.

SEAA Meeting Rescheduled

The Southeast Acquirers' Association (SEAA), which had scheduled its fifth annual meeting for Oct. 19 - 21 at the Wyndham Canal Place hotel in New Orleans, has postponed the meeting until "a suitable time and place that will allow all of us to focus our attention on those that are in greatest need at this time," said John McCormick, SEAA President.

SEAA's Board is working with Wyndham to reschedule the event for possibly March 2006 in Florida. McCormick said anyone who made reservations at the Wyndham Canal Place should call Wyndham's toll free number (800-WYNDHAM) to cancel their rooms. SEAA will apply all registrations for the New Orleans seminar to the rescheduled event. Continue to check SEAA's Web site, , for more information.

Last year, more than 350 people braved Hurricane Jeanne and the remnants of Hurricane Ivan to attend SEAA's meeting held in Atlanta Sept. 27 - 29. The hurricanes wreaked havoc with the event's agenda (several presenters could not make it), but SEAA called in pinch hitters and revamped or replaced sessions, and the overall flow of the meeting did not miss a beat.

When asked why SEAA consistently schedules its annual meeting during a time of year when the region is most vulnerable to hurricanes, McCormick said, "When we hosted our first seminar in 2001, the fall provided the least potential conflict [for vendors] with other similar shows.

"We are currently discussing a move away from the fall. As we move forward with these discussions, we will work with the members of the other regional associations to minimize any potential conflict."

Tales From the Storm

Vicki M. Daughdrill, Executive Director of the National Association of Payment Professionals (NAOPP), lives in Hattiesburg, Miss., a city about 60 miles from Gulfport, Miss. Daughdrill and her husband evacuated their home before the hurricane hit and stayed with her parents who live nearby. All four are fine, but Daughdrill has quite a story to tell.

"On Saturday night [Aug. 27], when we went to bed, it was a category 2 hurricane," she said. "On Sunday morning when we woke up, it was going to be a category 5. In less than 12 hours, it had mushroomed into a monster of a storm. ... There was one hour and 15 minutes where we were on our knees praying that we would survive. It was so frightening. I'm just so thankful that we're all OK.

"We lost power for 11 days; we had no drinking water for 13 days. Seven trees fell on my house, and more than 50 trees are down on my property. There is major structural damage to over 50% of the house. It is uninhabitable."

Daughdrill said that at one point, 90% of the streets in Hattiesburg were impassable. "The devastation is just unbelievable," she said.

"It's just been a big challenge, and it will continue for months to come. It's almost overwhelming. I had a few really bad days and could only cry all day, but things are looking up for us."

The power is now back on; she has access to e-mail and plans to continue her work with NAOPP and with her management and consulting company, Small Business Resources LLC.

One of the things that struck Daughdrill the most about the experience is the way that people in the community have come together. She said the churches, the community and all the neighbors have been working together, sharing supplies such as water and ice, clearing trees and debris and helping to place tarps over holes in roofs.

"A storm of this magnitude is a very equalizing factor," Daughdrill said. "Everyone here was affected by it and equally hard hit, no matter what section of the community you were in. The power of caring and sharing has been deeply touching.

"The way we cope is to take it one day at a time, focus on the positive, not dwell on the negative, focus on what really matters and keep a sense of humor."

'We Will Rebuild'

Kym Zayor, Operations Manager of Slidell, La.-based Budget Terminals & Repair said the eye of the hurricane passed right over the city. He and others evacuated Friday, Aug. 26. When they returned, they found little injury to Budget's warehouse, except for a leak in the roof where rain entered and caused some damage to equipment.

He said he was most worried about customers calling and not getting through. "Most of them were calling to check on us, and we appreciated their concern. We just want to make sure they get their orders filled."

Zayor said Budget wasn't able to fully open for business until the week of Labor Day, when the company installed generators. "We are up and running, although we still have some personnel out," he said. "Every one of our employees had some type of personal house damage, from flooding to wind-driven rain to trees falling."

Budget is also driving about 20 miles to the next city to ship orders because UPS and FedEx are not yet operational in Slidell. "We feel for the people of Louisiana and the Gulf Coast," Zayor said. "It was a tragedy beyond imagination. You watch the news every day, and you see the tragedy somewhere else, but it doesn't touch you until you feel it yourself.

"You would think that this disaster is beyond repair, but you drive around and see those people trying to get their lives together, and they are full of energy and they just want to rebuild their town. That gives you more energy to start over.

"It's very hard, but we will come back. Hopefully we will come back even stronger."

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