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July 15, 2008

News Digest

BoA joins existing strategic investors Motorola, PayPal, and NCR Corporation, and venture capital firms GRP Partners, Ignition Partners and Apax Partners.Mobile banking is a critical channel for our customers now and into the future, said BoA e-commerce and ATM head Lance Drummond This investment further solidifies the importance of having a strong mobile technology platform.BoA already boasts more than 1 million mobile banking customers and over 100,000 users daily on peak usage days.Founded in 2004 mFoundry numbers among users of its mobile payments technology Citibank and BB&T, the 14th largest financial-holding company in the US.ONLINE PAYMENTSHappy birthday PayPalOn 23 June PayPal celebrated its 10th anniversary

By Verdict Staff

COMPANIES

Bank of America backs mFoundry

US mobile banking technology developer mFoundry has added Bank of America (BoA) to its already impressive list of strategic partners. BoA joins existing strategic investors Motorola, PayPal, and NCR Corporation, and venture capital firms GRP Partners, Ignition Partners and Apax Partners.

“Mobile banking is a critical channel for our customers now and into the future,” said BoA e-commerce and ATM head Lance Drummond. “This investment further solidifies the importance of having a strong mobile technology platform.”
BoA already boasts more than 1 million mobile banking customers and over 100,000 users daily on peak usage days.
Founded in 2004 mFoundry numbers among users of its mobile payments technology Citibank and BB&T, the 14th largest financial-holding company in the US.

ONLINE PAYMENTS

Happy birthday PayPal

On 23 June PayPal celebrated its 10th anniversary. It was a 10-year period that saw the number of people connected to the internet soar from 150 million to 1.4 billion and the number of active PayPal accounts rise from 1 million in 2000 to 60 million at present.

“Over the past decade, PayPal has allowed people to do something that few ever dreamed possible 10 years ago – send and receive money all around the world through the click of a button,” said PayPal president Scott Thompson.
PayPal now operates in 190 countries and is processing $2,000 in payments every second, an amount equal to 9 percent of the world’s total internet-based commerce.
Marking its anniversary, PayPal released a survey on US internet usage conducted for it by Ipsos Research. Among notable findings was that 84 percent of respondents have been shopping online for five or more years, and 87 percent report they shop online at least once per month. Travel goods and services were the most widely purchased items (82 percent of respondents).

MOBILE BANKING

Canadagoes mobile

Canada is about to join the fast-growing number of countries to embrace mobile phone banking. This comes thanks to an agreement between mobile banking service provider Monitise Americas and a Canadian electronic transaction switching service provider Everlink aimed at delivering the country’s first commercially available mobile banking and payments service.

Close corporate-family ties are evident in the agreement. Everlink is a joint venture founded in 2003 by US banking and payments technology vendor Metavante and Celero Solutions, a provider of technology services to Canadian credit unions.
Monitise Americas is, in turn, a joint venture founded in 2007 by Metavante and UK mobile payments technology developer Monitise. Celero and Everlink will provide access to its client base of 375 credit unions and an undisclosed number of banks. Everlink processes 500 million transactions annually.

SECURITY

High praise for 41st Parameter

Founded just over four years ago by American Express’ former worldwide fraud director Ori Eisen, US venture capital backed 41st Parameter lays claim to “revolutionising the way businesses think about and employ effective internet security”. Adding weight to its claim is the decision by the world’s fifth largest airline Continental Airlines to entrust to it card-not-present fraud detection.

“After researching various alternates available for a specialised fraud detection and prevention solution, we found 41st Parameter has proprietary technologies not available from their competitors,” explained Continental Airlines cash & investments treasury unit MD Tom Ferazzi. “We believe these capabilities will allow us to capture more fraud faster than any of the alternatives we reviewed.”
Continental, which will deploy 41st Parameter’s FraudNet online retail solution, has more than 2,900 daily departures and carries about 69 million passengers annually.

MOBILE PAYMENTS

Upaid recharges Brazil

With a well-established presence in Brazil, UK mobile payments specialist Upaid Systems has launched RechargeBrazil, a service that extends its reach to Brazilian’s living in the US.

An internet-based service, RechargeBrazil is offered in conjunction with PayPal and enables Brazilian’s in the US to send mobile phone credits to Brazil by entering the mobile service operator, location and telephone number of the recipient. The service covers Brazilian mobile operators Vivo, Claro, TIM, Telefonica, and Embratel.
Upaid’s Brazilian recharge service processes nearly 2 million transactions monthly.

PAYMENTS PROCESSING

Visa Europe to migrate to BT network

In a move designed to greatly enhance payment processing efficiency Visa Europe is to migrate its transaction network spanning 36 countries onto UK telecommunications company BT Group’s (BT) internet protocol based 21st Century Global Network (21CN). The five-year managed services contract between Visa and BT builds on processing technology development relationship that has existed for seven years.

In a statement, Visa Europe said migration to 21CN will improve operations through the use of a single supplier and a flexible network making further upgrades and developments far simpler than previously possible. Conceived in 2004 21CN has been gradually replacing BT’s first generation internet service since November 2006.
Visa Europe’s 4,600 member banks currently have 350 million Visa debit, credit and commercial cards in circulation. In the 12 months ending December 2007, Visa card purchases and cash withdrawals totalled €1.3 trillion ($2.1 trillion) or 11.4 percent of consumer spending at POS in Europe.

 

SECURITY

UK security companies talk up alliance

Two UK online security companies 3rd Man and 192.com Business Services (192) have formed an alliance they believe will provide “a unique anti-fraud service to merchants”.

The alliance combines the two companies’ specific areas of expertise. 3rd Man provides screening services which detect fraud patterns by comparing transactions from different merchants while 192 specialises in aggregating databases against which electronic commerce providers run customer identity checks. 192’s aggregated databases comprise over a billion records.

192 director Ian Green said data sharing on its own is not a “silver bullet.” However, he added that when data sharing is coupled with customer identity verification it becomes an “immensely effective” solution.

“E-commerce and online gambling sites now need to integrate only one fraud prevention tool into their site so this is a massive step forward for the industry,” concluded Green.

COMPANIES

More backing for Inside Contactless

Korean conglomerate Samsung has become Inside Contactless’ latest investor in an extension of the French contactless payment technology developer’s series C funding round in which it has now raised a total of $42 million. Samsung, via its venture capital unit Samsung Ventures America (SVA), joins an impressive investor line-up that includes Nokia Growth Partners and Motorola Ventures.

“The participation of the top three global handset manufacturers in this round of funding is a ringing endorsement of Inside’s leadership in the emerging near field communication [NFC] market,” said Inside Contactless CEO Rémy de Tonnac.

“As the NFC market progresses, we are hopeful these partnerships will prove invaluable in propelling us forward to power the NFC revolution and extend our leadership.”

SVA MD Brian Kang said: “We are optimistic about NFC technology’s ability to bring exciting new payment and other applications to mobile handsets, and Inside’s leadership in moving this market forward is impressive.

“Our investment expresses our confidence in Inside’s ability to continue its success not only in the contactless payment market but also in the emerging NFC technology for mobile phones.”

  PAYMENTS PROCESSING

Clear2Pay delivers SEPA solution to PBS

Pengeinstitutternes BetalingsSystemer (PBS), Denmark’s electronic payments processor, has announced its single Euro payment area (SEPA) direct debit processing service is operational. Implemented by Belgian payment processing technology vendor Clear2Pay, 117 financial institutions have already signed up for the service, a total representing about 80 percent of the Danish Bankers Association’s membership.

PBS CEO Flemming Jensen said: “After a careful selection process we opted for Clear2Pay’s SEPA solution because it offers both the future proven technology we were looking for as well as the functionality we need to process credit transfers and direct debits for debtor and creditor banks and corporate creditors in a multi-bank, multi-currency environment.”

According to Clear2Pay the solution implemented for PBS can be easily extended to accommodate SEPA Credit Transfers.

CONTACTLESS PAYMENTS

Gemalto and Pegasus consolidate ties

Pegasus group, an alliance of seven major French banks and four mobile phone service operators, have extended Netherlands payments technology vendor Gemalto’s contract as supplier of independent intermediation services to their Payez Mobile contactless payments trial until the end of 2008.

Launched in November 2007 with 1,000 users and 200 merchants in Caen and Strasbourg, the Payez Mobile trial using mobile phones equipped to undertake contactless payments is proving successful and, according to Gemalto, studies by the Pegasus group revealed a satisfaction rate of over 90 percent. Users appreciated the all-in-one approach and ease of use and merchants the benefits of shorter payment waiting times in particular.

Gemalto also noted that five banks in the trial are using its Allynis data exchange system which links the banks and mobile service providers. The banks are BNP Paribas, Crédit Agricole-LCL, Crédit Mutuel-CIC, Caisse d’Epargne and La Banque Postale.

INTERNET BANKING

Korea smoothes the path for competition

Korea’s Financial Services Commission (FSC) has announced that it is to amend regulations to enable internet-only banks to be established in the country. The FSC said amendments, which could include the easing of equity capital requirements, would encourage financial services companies to enter the internet banking market.

The FSC’s desire to increase competition in the financial services industry has already elicited a positive response. Notably, in a release following the FSC’s announcement the state-owned Korea Development Bank (KDB) said it is “gearing up” to establish an internet bank. The KDB added that a similar move is being planned by another Korean bank, the Hyundai Swiss Savings Bank.

Revision of the FSC’s internet banking regulation is the subject of examination by a special task force. Finanlisation is scheduled for the end of 2008.

INTERNET BANKING

Better deal for New Zealand consumers

The New Zealand Bankers Association has bowed to strong pressure to amend the internet banking section incorporated for the first time last year in its Code of Banking Practice.

Amendments follow consultation with the Internet Society of New Zealand and advocacy group Consumer NZ.

The three key amendments to the code regarding internet banking are:

1. The current practice of banks reimbursing genuine victims of internet banking fraud is affirmed and is stated as a guiding principle,

2. The reference in the 2007 code to banks reserving the right to request access to verify protective systems has been removed, and

3. The requirement that customers accessing their accounts via the internet, have up to date security systems on their computer has been amended to ‘reasonably up to date’.

  INDUSTRY TRENDS

Solid incentives from Bank Negara

Malaysia’s central bank, Bank Negara has taken steps aimed at promoting the use of electronic payments and reducing the cost of doing business in the country.

In its first move Bank Negara has reduced the transaction fee for payments made by banks on behalf of their customers using RENTAS, its real time gross settlement system.

With effect from 15 July this year the transaction fee imposed on banks for third party payments was reduced by 40 percent, from RM2.50 ($0.77) to RM1.50. In tandem with this there was a corresponding reduction of RM1.00 in bank charges imposed by banks on their customers for RENTAS payments.

In its second move Bank Negara announced that the banking industry would review changing its current 0.03 percent inland exchange commission to a fixed fee. This said the central bank should result in a reduction in bank customers’ transaction fees on funds transferred between different states in Malaysia.

MERGERS AND ACQUISITIONS

Ingenico looks east for growth

Despite China having 1.5 million POS terminals installed density per million inhabitants is a mere 880, or about 5 percent of the density in Western European markets. It makes China an attractive market and one French electronic payment terminal vendor Ingenico intends to pursue with vigour.

Furthering its ambitions in China Ingenico has announced the purchase of a 55 percent stake in Chinese POS manufacturer Landi Commercial Equipment Company for $17.05 million, a development Ingenico said gives it the largest share in the country’s POS market.

“This acquisition is a significant step in our strategy to enter high-growth markets,” said Ingenico CEO Philippe Lazare. “Our combined product ranges will target both Chinese and North Eastern Asian markets, such as Korea.”

Established in 1992 Landi reported total revenue of about €18 million ($28 million) in 2007.

INTERNET BANKING

Citibank leads the pack

Citibank has regained its status as the best US internet bank in the latest Keynote Banker Scorecard, an analysis conducted biannually over the past 10 years by internet and mobile research firm Keynote Systems. Citibank together with 25 of its peers was assessed on more than 200 criteria in nine categories designed to measure each website’s design and function against industry best practices.

Out of a potential maximum score of 100 points Citibank scored 87 points, as well as achieving the first or second place in the nine categories. The categories include transactions, account opening, looking up information, functionality, ease of use, privacy and security and quality and availability. In addition, for the first time in its analysis Keynote included the availability of mobile banking and how banks offer it.

In gaining overall top position in Keynote’s analysis Citibank narrowly beat Bank of America into second place (85 points). They were followed by Wells Fargo (82 points), Chase (81 points) and Wachovia and Washington Mutual (77 points each).

The overall average score of bank websites assessed was 70.6 with the lowest scores achieved by TD Banknorth (51 points), Sovereign (51 points) and Regions, HSBC and First Tennessee Bank (55 points each).

  ONLINE PAYMENTS

Yodlee talks up online billpay solution

With US consumers feeling the economic pinch the temptation to pay bills at the last possible moment is growing. For banks this represents an opportunity to generate increased revenue services and one online banking systems vendor Yodlee has strenuously highlighted with the launch of its expedited bill payment solution, Yodlee PayToday.

Over 35 percent of US consumers use online expedited payments today while 75 percent of the top 50 US banks are offering or planning to offer expedited payments noted Yodlee, citing studies by research firms Edgar Dunn & Co and Aite Group, respectively.

“We think the data is very convincing, leaving little doubt that there is growing consumer demand for expedited payments, in particular through the online channel,” said Yodlee senior vice-president Joseph Polverari.

“Yodlee is able to deliver hundreds of well-known national and regional billers, so a typical consumer could expect to be able to pay four or more monthly bills on an expedited basis,” continued Polverari. “This translates into a very big revenue opportunity for financial institutions. We are not aware of any provider, other than Yodlee, that can deliver as rich an assortment of relevant billers across all of the major biller categories.”

PAYMENT PROCESSING

Clear2Pay and Experian team up for SEPA

Belgian payment processing technology vendor Clear2Pay and US risk management specialist Experian have established a partnership which they believe will enable them to seize opportunities set to flow from the Single Euro Payments Area (SEPA).

The partnership will see Experian’s bank account and validation software Bank Wizard embedded in Clear2Pay’s Open Payment Framework (OPF), an end-to-end payment processing system used by European banks in 44 countries.

Bank Wizard is designed specifically to undertake bank account validation for banks and corporates operating internationally and minimises errors by enabling users to check the validity of bank details before a payment is sent to a clearing house or another bank. The partners stressed that SEPA requirements such as direct credit and direct debit are reinforcing the importance of validation as a core part of banking in Europe.

Clear2Pay vice-president of strategy and marketing Mark Hartley said: “Experian Payments is a market leader when it comes to data validation and our partnership will enable us to offer customers the industry’s most sophisticated bank account validation tool as part of our end-to-end payments offering.”

TRANSACTION PROCESSING

MasterCard adds e-invoicing

Atlas Air Worldwide (AAW), operator of the world’s largest fleet of Boeing 747 freighter aircraft, has become the first company to integrate electronic invoice capabilities with MasterCard’s commercial payments processing platform Payment Gateway. Launched in October 2007 Payment Gateway facilitates the routing of payments between buyers, suppliers and their financial institutions.

For invoicing AAW has selected iPayables, a US electronic invoice specialist that manages invoices for over 800 customers and 30,000 suppliers from 150 countries and processes invoices worth $800 million per month. According to MasterCard iPayables is the first non-bank reseller whose functionality has been coupled with its Payment Gateway creating what it termed “an end-to-end solution that offers companies a more streamlined, faster and secure way to make payments”.

  PREPAID CARDS

South African first for Absa and Visa

South African bank ABSA and Visa have joined forces to launch the country’s first re-loadable prepaid card. Targeting the unbanked and consumers seeking an alternative to other payment-forms such as cheques, the cards are available for a one-time fee of ZAR30 ($4.50), are valid for three years and carry no management fees.

Other features of the card include free purchase transactions at POS, one free balance enquiry and cash withdrawal per month and free airtime top-ups. In addition the card has no minimum balance and can be topped up by transferring funds via mobile or online banking or from any ATM.

“Our presence in Africa and the partnership with Visa provides an opportunity for the prepaid concept to take root across the continent and reach new marketplaces,” said ABSA head of retail banking Venete Klein.

ABSA is a unit of UK bank Barclays.

  COMPANIES

Banco do Brasil selects Fiserv for US startup

Brazilian bank Banco do Brasil (BdB) has announced it is to expand its operations in the US with the establishment of a new unit, Federal Savings Bank (FSB), which will focus on Brazilian immigrants in the US. For this development BdB has selected US financial technology vendor Fiserv as its key partner.

Five FSB branches are to be established in quick succession and will involve deployment of the Premier core banking system from Fiserv’s Information Technology, Inc (ITI) unit. Fiserv will also supply other solutions including electronic funds transfer for ATM and debit cards, credit processing and risk management. In addition ITI will provide FSB with outsourced processing services.

“Opening five branches nearly simultaneously is not a typical situation,” said BdB deputy general manager Leonard Whyte. “We obviously need state-of-the-art solutions which is why we selected Fiserv solutions.”

Whyte continued that BdB had found “large pockets” of Brazilian immigrants throughout the US who are inadequately served mostly because they are primarily Portuguese speaking.

“This market is an obvious niche for the bank, and we chose Fiserv and ITI because they have a strong reputation for supporting clients serving niche markets,” said Whyte.

SECURITY

Stepping up the war on cybercrime

Google, eBay and PayPal have teamed up to provide consumers more effective protection against fraudulent e-mails and phishing attacks.

Available to users of Google’s Gmail email service protection is provided by DomainKeys and DomainKeys Identified Mail (DKIM) email authentication technology that enables Google to identify and intercept fake e-mails claiming to be sent by eBay and PayPal.

“The Gmail team’s decision to work with eBay and PayPal on this issue is a significant step forward in our fight to keep consumers safe from phishing and cybercrime,” said PayPal chief information security officer Michael Barrett.

“Today’s announcement will enhance online safety for millions of eBay and PayPal customers who use Gmail.”

In essence, DomainKeys and DKIM use cryptography to verify the domain of the sender. This enables email service providers to validate an email’s originating domain, making use of blacklists (emails that it won’t deliver) and whitelists (emails that it will deliver) more effective.

PREPAID CARDS

Prepaid industry prepares to police itself

In a move aimed at improving consumer confidence in prepaid products trade association the Prepaid International Forum (PIF) has launched an accreditation scheme which it said is designed to ensure “industry best practice”.

Established in June 2007 the PIF is an international body now boasting a 44 members that include American Express, GE Money, JPMorgan, MasterCard, Transport for London and Western Union.

The PIF explained that the accreditation scheme has come as result of demand from its members.

The members, added the PIF, are determined to establish best practice standards and are sensitive to the concerns expressed in recent adverse media coverage about prepaid such as alleged money laundering, aggressive marketing and poor customer service.

Members complying with the PIF’s standards will be licenced to use a PIF accreditation symbol on marketing materials. The PIF will carry out an annual audit of accredited programmes.

Commenting, the PIF’s chairman Chris Reddish said accreditation represents a “significant step forward” for the prepaid industry.

“As the demand for prepaid services gathers pace, it is essential that the industry takes the lead in establishing and policing the levels of service necessary to underpin consumer confidence and the continued growth of prepaid,” Reddish added.

SECURITY

HSBC’s lucky break

What could have been the perfect crime has been foiled, landing the perpetrator, UK bank clerk Jagmeet Channa, in jail for nine years.

At the heart of Channa’s attempt to steal £70 million ($140 million) from HSBC, was a plot involving a breach of the bank’s security that almost succeeded but for a minor error on his part.

To facilitate the crime Channa had stolen passwords from colleagues at HSBC’s head office in London. Armed with the required passwords he used them to transfer €90 million from an HSBC account, €30 million of which he sent to an account in Manchester and €60 million to an account in Morocco.

His only error was that the HSBC account was left with a huge debit, a discrepancy noticed and reported by vigilant HSBC staff in Malaysia.

Sentencing Channa, Judge Geoffrey Rivlin said: “This was a carefully planned and very serious attempt to transfer a fortune in money away, and it almost succeeded.”

BIOMETRICS

Equens trials pay by fingerprint

The Netherlands’ first trial of biometric finger print identification in the POS environment has been launched in a joint initiative between payments processor Equens and supermarket company Albert Heijn.

The trial dubbed Tip2Pay utilises technology developed by German biometrics specialist IT-Werke that scans and verifies a customer’s identity by comparing 24 unique points on the surface a finger.

IT-Werke’s biometric solution, which is branded digiProof, has already been deployed on a permanent basis by a number of German retailers including supermarket chain Edeka that now offers fingertip payment services at 120 of its stores.

Another German user is Gewandhaus Gruber a fashion retailer with 10 stores that utilises the IT-Werke solution in its loyalty card programme.

According to IT-Werke retailers using the system report a 25 percent share of payment transactions via digiPROOF after six months. In addition, digiPROOF customers have been found to shop more frequently and have an increased basket size, noted IT-Werke.

 

MOBILEPAYMENTS

Parkby SMS in Belgium

Pursuing its strategy of expansion in the mobile payments sector Belgian telecommunications company Belgacom has acquired Mobile-for, a specialist in mobile payments for parking services.

Established in June 2006 by Apcoa Belgium, an Antwerp parking operator, and NOW! Innovations, an Estonian digital permit and mobile payments specialist, Mobile-for’s service is based on a short message service (SMS) payment solution developed by NOW! Innovations and implemented in cooperation with Belgacom’s mobile phone service unit Proximus.

To use the service a motorist sends an SMS containing the code of the parking zone and the vehicle’s licence plate number to a dedicated four digit service number.

Vehicle details are verified by an attendant equipped with a handheld online device. When the parking session is complete the motorist sends a single letter Q to the service number and is billed only for the time the vehicle was parked.

First launched in Antwerp in September 2006 the Mobile-for service now accounts for 30 percent of parking fees in the city. The service is now available in seven Belgian cities and will be extended to a total of 10 by the end of 2008.

  MOBILEBANKING

ANZ brings mobile banking to Vietnam

Australia and New Zealand Banking Group (ANZ) which in 1993 became the first foreign bank to commence operations in Vietnam has added a new first: Vietnam’s first mobile banking service.

Launched on 10 July the free service is initially available in Ho Chi Minh City and Hanoi, cities with a combined population of 10 million.

ANZ’s decision to go the mobile banking route comes at a time when Vietnam’s mobile phone industry is booming. According to Vietnam’s Ministry of Information and Communications the number of new mobile phone subscribers reached 48.9 million at the end of the first quarter of 2008, up 23 percent compared with the end of last year.

Announcement of ANZ’s mobile banking service coincided with the announcement that it had been granted a full banking licence by the State Bank of Vietnam. ANZ currently operates

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