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Industry Update


Aite Group studies fraud management, banking trends and biometrics

In a new report, research and advisory firm Aite Group presents 13 competitive trends reshaping the fraud management industry. The report makes recommendations to financial institutions to take advantage of vendors' emerging value propositions and mentions 24 firms, including CheckFree Corp., eFunds Corp., Harland, ID Analytics Inc., Pay By Touch, PaymentOne Corp., Primary Payment Systems Inc., and Retail Decisions.

In a separate report, Aite highlights the top 10 U.S. banking industry trends that it foresees in 2006. Although risk and compliance issues will remain at the forefront, Aite predicts that banks will better leverage the Internet to attract new customers and cross-sell to existing ones and battle at the POS to deliver more value to merchants and consumers.

Aite also released a report examining the security environment at financial institutions and the factors driving interest in biometric technologies. Only about 5% - 7% of financial institutions have deployed biometric technologies. The study predicts that although that number has remained low, the technology is well positioned to take off over the next few years, especially at the POS and bank teller stations. To purchase any report call 617-273-5111 or e-mail .

ChoicePoint to pay $15 million in penalties

Consumer data broker ChoicePoint Inc., which last year acknowledged that the personal financial records of more than 163,000 consumers had been compromised, will pay $10 million in civil penalties, the largest civil penalty in Federal Trade Commission (FTC) history, and $5 million in consumer compensation as part of a stipulated final judgment and order to settle FTC charges that its security and record-handling procedures violated consumers' privacy rights and federal laws. (NOTE: A stipulated final judgment and order is for settlement purposes only and does not constitute an admission by the defendant of a law violation.)

DataTreasury and NCR settle patent-infringement suit

DataTreasury Corp. settled a patent-infringement lawsuit against NCR Corp. The agreement follows settlements with Bank One, Groupe Ingenico and RDM Corp. DataTreasury's pending lawsuits include actions against Citibank, Bank of America Corp. and Wells Fargo & Co.

DataTreasury accused these companies of infringing on its patents for image capture, centralized processing, and electronic storage of document and check information. As part of the settlement, DataTreasury has unrestricted use of all NCR patents that pertain to DataTreasury's business model and NCR has the freedom to operate in DataTreasury's field. NCR also agreed to pay DataTreasury an undisclosed sum of money.

Hypercom class action dismissed

The U.S. District Court for the District of Arizona dismissed the class action complaint alleging securities violations by Hypercom Corp. and two former exec-utives. The complaint focused on Hypercom's restate-ment of its financials for the first three quarters of 2004 because terminal leases were accounted for as sales-type leases rather than as operating leases. In other company news, Hypercom's multilane Optimum L4200 and Optimum L4250 have met the requirements of the Payment Card Industry (PCI) PIN Entry Device Security Standard.

Momentum build toward "cashless" society

New research from TowerGroup finds that a combination of market-ready and emerging technologies are aligning to drive a majority of consumer payment transactions from cash to other payment methods, including the Internet, mobile and contactless payments. TowerGroup expects the total market for micropayments in the United States to reach $11.5 billion by 2009, with almost $5 billion of that amount transacted via mobile phones.

Paper examines smart cards and parking

A new white paper, " Smart Cards and Parking: A Smart Card Alliance Transportation Council White Paper," illustrates the changes taking place in the parking industry and the emerging role of smart card-based payment strategies. The paper identifies two reasons for the parking industry to change the current payment technology: the desire for a cashless payment and improvement in data collection in on-street parking equipment. The free paper is available at .


COCARD achieves 20,000 merchants

COCARD, the largest independently owned acquirer/ISO, surpassed 20,000 active merchants for which it supplies credit card services.

Financial services industry association debuts

Financial Solutions Providers (FSPi) launched as a new nonprofit trade association for companies that market products and services to the financial services industry. FSPi membership is open to companies that develop, manufacture or service products for the financial marketplace. Membership information is available at or by calling 330-936-3794.

Global Electronic Technology opens new office; establishes ISO program

Global Electronic Technology Inc. recently opened its newest branch office in the Denver, Colo. area. The new location will serve as the National Sales office. The company also announced a new ISO program featuring the Simple BIN (S-BIN) program. The S-BIN concept will allow well-qualified organizations to enjoy the benefits previously only available to larger national bankcard companies.

Intelli-Check exceeds $3 million in orders

Intelli-Check Inc. exceeded the previously announced 2005 goal of $3 million in booked orders. Booked orders in 2005, which include orders shipped and orders received but not yet shipped as of year-end, were approximately $3.1 million.

iMax launches split rate program

iMax Business Solutions launched its new split rate program allowing businesses to process credit card transactions through any credit card terminal or machine at the lowest rate possible. The technology automatically detects the type of card being presented and processes that card at the lower split rate of 1.29% for merchants who belong to the program.

Lipman receives NOVA certification

Lipman Electronic Engineering Ltd.'s NURIT 8000S, 8230 and 2085 POS terminals received Class-A certification and the NURIT 8100 Class-B certification from NOVA Information Systems.

Pay By Touch raises $60 million

Pay By Touch closed more than $60 million in new financing. Following the company's September round of financing, which raised a cumulative total of $130 million, Pay By Touch completed the acquisitions of CardSystems Solutions Inc.; BioPay LLC; Capture Resource; 7th Street Software; and Convena LLC.

Shift4 doubles merchant base

Shift4's Web-based payment gateway solution, $$$ ON THE NET, processed nearly $15 billion in payments, representing over 92 million transactions for more than 11,000 merchants in 2005. The number of merchants handled in 2005 is more than double than that of 2004.

VeriFone achieves security approval

VeriFone announced that its Vx 570 payment solution and the MX870 multimedia payment system have met the requirements of the PCI PIN Entry Device Security Standard.


AmEx and GE Consumer Finance form alliance

GE Consumer Finance will issue American Express Co. (AmEx)-branded credit cards in the United States. The first product offered under the new agreement will be a Dillard's AmEx card. GE Consumer Finance will be responsible for issuing the cards, managing the customer relationships and providing customer service, billing and credit management.

Lipman USA signs agreement with Conquest Financial

Lipman USA Inc. signed a distribution agreement with Conquest Financial LLC. Conquest will sell complete systems consisting of Lipman's NURIT 2159 electronic cash register and the NURIT 222 PIN entry device. In addition, Conquest will purchase licenses for Lipman's NURIT Store. Lipman expects to recognize approximately $4 million of revenue by the end of 2006.

Heartland invests in Parcxmart

Heartland Payment Systems Inc. (HPS) is making a strategic investment in Parcxmart Technologies Inc. The investment will further solidify HPS and Parcxmart's existing marketing alliance, which provides Heartland limited exclusivity as Parcxmart's merchant acquirer to offer credit/debit card processing services to merchants who adopt the Parcxmart payment solution.

Ingenico and TPI Software form agreement

Ingenico formed a marketing agreement with TPI Software LLC. Ingenico will work with TPI to address the payment acceptance needs of mid-sized and smaller retailers that need a PC payment processing software solution.

ISD and MagTek team up

ISD Corp. and MagTek announced that H&R Block Inc. integrated the ISD Payment Switch transaction processing software with the MagTek Mini MICR check reader. H&R Block is using this solution to process and manage credit, debit and check transactions

NPS and Precidia partner

Nationwide Payment Solutions (NPS) is offering Precidia Technologies' POSLynx 400/220 devices in a "no upfront cost" rental program. The devices are designed to convert merchant's existing equipment from dial-up to Internet.


CheckFree purchases PhoneCharge

CheckFree Corp. acquired PhoneCharge Inc., a provider of telephone and Internet-based bill payment services, for approximately $100 million in cash. The company expects the acquisition to be neutral to earnings per share for fiscal 2006 and accretive thereafter.

Payment Processing acquires Paradata Systems' assets

Payment Processing Inc. (PPI) acquired substantially all the assets of Paradata Systems. The transaction added 15 employees. The Paradata payment system will be used to enhance the PPI PayMover payment gateway and to provide Canadian processing support.

Fifth Third Processing acquires CMC

Fifth Third Processing Solutions announced the acquisition of Card Management Corp. (CMC), which provides services to financial institutions and retailers for credit and debit card, merchant and private label programs.

The company operates a multilingual contact center in Tucson, Ariz. CMC will continue to operate under its name and operations will be maintained in existing CMC facilities.


Heartland appoints Chief Sales Officer

Sanford Brown was promoted to Chief Sales Officer for Heartland Payment Systems Inc. Brown served as Heartland's Senior Vice President of Sales Management since 2003. He began his career with Heartland in 1997.

First Data elects Coulter to board

David A. Coulter was elected to the First Data Corp. board of directors. Coulter serves as Managing Director and Senior Advisor at Warburg Pincus. Previously, he was Vice Chairman of JPMorgan Chase & Co. and Vice Chairman of The Chase Manhattan Corp.

RDM appoints CFO

RDM Corp. appointed James Merwin as Chief Financial Officer. Merwin has 20 years of experience in financial and operations management. Most recently he was a financial consultant to BTI Canada.

Peterson named NCHA Senior Vice Chairman

Kade Peterson was elected Senior Vice Chairman of the National Clearing House Association (NCHA). Peterson is Senior Vice President and Item Processing Director for Sterling Savings Bank.

ViVOtech hires three executives

ViVOtech announced the addition of three executives: Peter Slocum joined the company as Senior Vice President of Engineering. Prior to joining ViVOtech, he was Vice President of Engineering Operations at Brocade Communications.

Todd Ablowitz was appointed Senior Vice President of Sales. Previously he held positions at First Data. David Fiore was named CFO. Previously he managed his own consulting practice.

Van Fleet named President of RewardsNOW

Steven Van Fleet was named President and CEO of RewardsNOW. He has been a Senior Vice President with RewardsNOW since 2005. Previously he was with First Data as Senior Vice President and spent 10 years with MasterCard International.

Wied joins ECHO as CIO

William Wied joined Electronic Clearing House Inc. (ECHO) as its as new Chief Information Officer. Before joining ECHO, Wied was the Director of Software Technology for TransCore LP/Roper Industries.

Bottom Lines

  • Consumer advocates are criticizing JPMorgan Chase & Co.'s "blink" card, saying that transactions are more susceptible to fraud without protections such as signatures, PINs and photo IDs. Chase counters that its security protections are state of the art.

  • Identity theft topped the list of consumer complaints to the Federal Trade Commission for the sixth year in a row in 2005.

  • The "Atlanta Journal Constitution" reported on several Web sites that specialize in the purchase, sale and trade of used and unwanted gift cards. and are two of these sites. There are, though, instances of fraud in which sellers say that a card's value is more than it really is.

  • Sales in the beleaguered grocery store industry improved in 2005. The Food Institute, a trade group, reported that through October 2005, sales rose 1.8% compared with 0.6% the previous year. October was the eighth consecutive month of increases.

Article published in issue number 060201

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