Blog - Payment Industry Insights
| 2010-07-29T14:36:00.000-05:00 Internet crooks craft creative counterfeiting scam By JORDAN ROBERTSON (AP) - July 28, 2010 SAN FRANCISCO — Think of it as one more reason not to write checks. Hackers believed to be operating out of Russia have figured out a high-tech way to carry out the decidedly low-tech crime of check fraud, a computer security company says — writing at least $9 million in fakes against more than 1,200 legitimate accounts. But these hackers got the account information in an unusual way: They broke into three websites that specialize in a little-known type of business — archiving check images online. Check counterfeiting is a crime that savvy Internet criminals usually pass up. After all, it's far easier for them to make money by stealing credit cards and online banking passwords. The scam was discovered by SecureWorks Inc., an Atlanta computer security company. The organization says it is working with the FBI and says the hackers have not been caught. Retailers and other businesses use the sites to store records of all the checks they write. Check-cashing operations use them to sock away images of checks they receive. And some banks pay them to store images of customers' checks, so the customers can see them when they log in to their online banking accounts. The criminals downloaded all the images they could find, grabbing bank routing numbers, names and addresses and even signatures of legitimate account holders. They used the information to create their own checks using easy-to-acquire software and printers. (more)  |
| 2010-07-27T15:41:00.000-05:00 Making Tracks for Mobile Payments byKAREN EPPER HOFFMAN - BAI Banking Strategies - BAI.org As mobile payments gathers momentum, industry players need to decide on which type of technical infrastructure to route and process the transactions. As the number of mobile payment offerings continues to multiply, the question emerges: what system is going to be processing and managing all these cell phone transactions? Put another way, on what kind of tracks or rails will this mobile train be running? While the Automated Clearing House (ACH) and card networks present the most readily available and familiar mechanisms for running mobile transactions, both of these systems also have their drawbacks. Meanwhile a new, cell-phone-specific payments landscape is emerging where non-traditional players like PayPal Inc. and the mobile operators themselves could demand a stake in the backend – or at least influence how those payments are routed. After all, a consumer’s mobile-initiated purchase may be as easily charged to their monthly phone bill or their PayPal account as to their credit card. To date, a clear winner has not yet emerged. But industry experts say that the critical factors of who receives the revenue and the size of the transaction will likely affect the choice of technical infrastructure upon which specific payments are processed. From Front to Back Mobile payments have been long heralded by bankers as the means to make money in mobile services since mobile banking per se (checking balances, shifting money between accounts) has become a loss leader that is typically offered for free to consumers. Now, cell phone-initiated payments are beginning to percolate in the United States as more services emerge to allow consumers and businesses to make purchases online through their mobile device, as well as pay bills, make proximity payments (using a contactless chip embedded in or attached to the phone) and send money to friends. Mobile online shopping in the U.S. tripled to more than $1.2 billion in 2009 from $396 million in 2008, according to a recent study by New York City-based ABI Business Intelligence Inc. (more)  |
| 2010-07-26T15:23:00.000-05:00 Credit card fees transfer wealth to rich, study finds By Kristina Cooke Kristina Cooke – July 26, 2010 - Reuters NEW YORK (Reuters Life!) – Credit card fees and rewards programs exacerbate income inequality by acting as a transfer of wealth from poor to rich, according to a Federal Reserve Bank of Boston study released Monday. The researchers argue that reducing card rewards and merchant fees "would likely increase consumer welfare." Merchants usually don't charge different prices for card users to recover the costs of fees and rewards, but instead, mark up the prices for all consumers. As a result, people who pay cash -- and who are more likely to be lower income -- end up subsidizing those who pay by credit card. U.S. consumer finance data shows that people on a low income are less likely to have a credit card, and those who do, spend less a month on average, than higher earners. High-income consumers are also 20 percentage points more likely to receive credit card rewards -- be they frequent flier miles, cash back or other enticements. (more)  |
| 2010-07-19T07:43:00.000-05:00 Visa Releases Global Best Practices for Card Data TokenizationVisa has announced global industry best practices for card data tokenization. Visa has announced global industry best practices for card data tokenization. Based on Visa's experience working with the industry and also insights from data compromise investigations, the tokenization best practices are the latest in a series of guidance to help merchants reduce or eliminate sensitive card data from payment systems and simplify data security and compliance efforts. Tokenization is the process through which a credit or debit card's 16-digit primary account number (PAN) is replaced by proxy numbers. In a related announcement, Visa is clarifying existing operating regulations to ensure that acquirers and issuers allow merchants to present a truncated, disguised or masked card number on a transaction receipt for dispute resolution in place of the full 16-digit card number. Visa's Best Practices for Tokenization, Data Field Encryption, and PAN Storage and Truncation may be found online at www.visa.com/cisp. Merchants and processors that use tokens in accordance with best practices are able to limit PAN storage, significantly reducing the risk that sensitive cardholder data may be stolen by data thieves. Visa has provided a type of single-use token for many years; transaction IDs are provided in place of card numbers for every transaction processed by VisaNet, so merchants may utilize it for settlement and other ancillary processes with the support of their processors. The best practices also address multi-use tokens, which can be used for more complicated purposes such as fraud management, recurring or subscription payments, and merchant loyalty programs. (more)  |
| 2010-07-15T16:21:00.000-05:00 Facebook virtual currency to roll out in September By Charlotte McEleny | 15 July 2010 Facebook is aiming for a full launch of its virtual currency Facebook Credits in September, a move that could lead to it becoming the default online currency, rivalling leaders such as PayPal. Facebook Credits is in a beta trial, but sources said the social network is aiming to roll it out to all users and developers in September. Initially, Credits will be aimed at virtual goods likes games, but will eventually let consumers buy anything, including physical goods. Industry experts said it could provide big opportunities for brands to offer transactional services on Facebook and throughout the entire web via Facebook Connect. Credits accounts are topped up with any credit card, and charge a merchant 30% commission. This week, Facebook announced it would be shutting down its Facebook Gift Shop in August, which paves the way for Facebook Credits. (more)  |
| 2010-07-13T16:48:00.000-05:00 Credit rules will also cover retailers' offers By RICHARD MULLINS - July 11, 2010 For years, phrases such as "no money down" and "90 days, same as cash" seemed as American as anything in the Declaration of Independence - life, liberty and the pursuit of an HDTV, with no payments for 12 months. But no more. A slew of new rules regarding consumer credit are kicking into effect this year, and they'll likely turn inside out many of the deals that retail stores have offered for years. "Same as cash" deals or discounts for opening store credit cards are disappearing fast. Thankfully, so are high-interest bait-and-switch schemes and many "gotcha" penalties. Here's why. In the worst stage of the recession, Congress passed a slew of new rules in response to credit card companies that were suddenly jacking up interest rates or dumping even customers who never missed a payment. Turns out, those credit card rules will also apply to credit deals people sign in retail stores for furniture, jewelry, electronics and appliances. That's because when you sign one of those deals, what you're really applying for is a credit card, without actually getting the plastic card. Already, some stores are shifting how they handle credit. Target, for instance, is ending the practice of offering a 10 percent discount at the cash register if shoppers open a Target REDcard. Instead, Target will give 5 percent off to existing cardholders. (more)  |
| 2010-07-08T16:42:00.000-05:00 AT&T Enters Mobile Payment Acceptance Market Payments News - July 8, 2010 AT&T recently announced that it has joined forces with Apriva to turn smartphones into point-of-sale devices that accept credit and debit card transactions. "Sales increase when small businesses accept payment cards," said Michael Antieri, president, advanced enterprise mobility solutions, AT&T Business Solutions. "And given that an overwhelming majority of small businesses use smartphones, offering a mobile application that ties together payment cards and smartphones makes perfect sense." According to Generator Research, an independent market research firm, the worldwide mobile payments market is expected to grow from $68 billion in 2009 to more than $600 billion by 2014, a compound annual growth rate of more than 50 percent over the next five years. The Apriva applications provide small businesses with a reliable and secure vehicle to seamlessly tap into this growth. AprivaPay™ is a browser-based application that enables businesses to process credit and debit transactions through the browser of their mobile phones. AprivaPay Professional is a full featured application that is downloaded directly onto a smartphone. Additionally, the service can be integrated with an optional card reader and a receipt printer, allowing businesses to obtain the financial benefits of "card present" transactions, along with printing receipts. (more)  |