JPMorgan and First Data to part company…
ING DIRECT beefs up online security…
INSIDE Contactless shines in Canada…
CSC drive MasterCard flagship service…
An OSCA for Oberthur…
PAYMENTS PROCESSING
company
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Ending speculation, JPMorgan Chase and First Data have agreed to an
early termination of their joint venture (JV) Chase Paymentech
Solutions (CPS). The move represents early termination of the JV
formed in 2005 and which was originally due to run until 2010 and
follows a change of control early exit clause triggered by the $29
billion buyout of First Data by US private equity company Kohlberg,
Kravis, Roberts & Co in September 2007.
will retain allocated merchants, 51 percent of the JV’s assets,
including most of its employees, CPS’s Canadian and European
operations and Dallas headquarters. JPMorgan Chase will name its
payments and merchant acquiring business Chase Paymentech following
the JV’s termination in late-2008.
processing and data services for allocated merchants through its
technology platforms. First Data will also assume management of
CPS’s independent sales organisation and agent bank unit of the JV
and integrate 49 percent of the JV’s assets and a portion of CPS’s
employees into its merchant acquiring business.
world’s largest merchant acquirer, its customers including 600,000
merchants in nearly one million locations worldwide. CPS processed
19.7 billion payments valued at $719 billion in 2007.
SECURITY
security
Internet bank ING DIRECT’s US unit has begun offering online
security software developer Trusteer’s Raport identity theft
protection software to its customers. Recently ranked ‘America’s
safest bank’ by the Berkeley Center for Law and Technology at the
University of California in Berkeley, ING DIRECT is the first bank
in the US to offer Raport.
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By GlobalDataopportunity to install free fraud-prevention software that protects
against even the most sophisticated online threats,” said ING
DIRECTS’ chief information officer Rudy Wolfs. He added that Raport
forms part of ING DIRECT’s strategy of adding and changing security
layers and complements rather than replaces existing security
measures.
terms a ‘secure-pipe’ within the computer that protects all
information flowing between the machine and the ING DIRECT
website.
confidential information from the consumer, conducting unintended
transactions on the consumer’s behalf, or tricking the consumer to
enter their private banking or e-commerce credentials into
look-alike websites.
offer to all its 14 million customers worldwide.
CONTACTLESS PAYMENTS
Canada
A newcomer to the Canadian market, French contactless payment
technology developer INSIDE Contactless has made significant
inroads, delivering more than 5 million of its MicroPass
contactless payment chips for MasterCard PayPass deployments in
Canada in its first six months of operation. INSIDE Contactless
believes this is just the start of bigger things to come.
chain, Tim Hortons, began supporting contactless payments in its
2,200-plus locations last year the stage was set for a surge in
demand for this technology,” said INSIDE Contactless’ executive
vice-president of payments Charles Walton. “Canada is also in the
midst of a major EMV migration, creating what we believe will be a
substantial market opportunity for dual-interface cards later this
year, and we are preparing to support this market as well,” he
added.
the US where more than 50 million MicroPass-powered bank cards have
been deployed. Worldwide INSIDE Contactless has now delivered over
100 million contactless microprocessor platforms.
PAYMENTS PROCESSING
service
Announced in May MasterCard’s Integrated Processing Solutions (IPS)
service is set to streamline the launch of next-generation payment
systems, claims Tim Murphy, president of MasterCard’s US region.
When IPS is launched shortly in the US powering it will be CAMS II,
a payment card processing and management system developed by US
technology vendor Computer Sciences Corporation (CSC).
and signature debit and prepaid transaction processing, fraud
detection, rewards and loyalty programmes and ATM network
management.
software over the alternatives for its deep functionality,
scalability and flexibility,” said Philip Tollison, MasterCard
Worldwide’s group head of integrated processing solutions.
card issuers, CAMS II was the subject of a five-month assessment by
US technology giant IBM’s Performance Management Testing &
Scalability Services. The objective was to demonstrate CAMS II’s
scalability and ability to support large card portfolios.
three months developing test profiles and data based on real-world
card activity. According to CSC the assessment by IBM demonstrated
that CAMS II can process more than 100 million active card accounts
without sacrificing speed and performance.
CONTACTLESS PAYMENTS
French payment technology developer Oberthur Technologies has
scooped one of four Outstanding Smart Card Achievement (OSCA)
awards presented each year by industry body the Smart Card Alliance
(SCA). The award was presented at the recent CTST conference held
under the auspices of the SCA and the largest event in the US
dedicated to advanced payment and identification technology.
received an OSCA award in the Outstanding Supplier Organisation
category for its demonstration of leadership in several sectors of
the North American smart card market, particularly contactless
payment cards and the US Federal government’s Personal Identity
Verification card programme.
for its active involvement in contactless technology development in
the fields of transit, antennas and card shape.
delivered 115 million microprocessor cards in the first quarter of
2008, a 45 percent increase compared with the first quarter of
2007.
MERGERS AND ACQUISITIONS
SEPA
In a deal that will considerably strengthen its position in the
evolving Single Euro Payments Area (SEPA), US payments processor
First Data is to acquire a 50 percent stake in EUFISERV, a
Brussels-based provider of inter-bank switching of POS and ATM
transactions and settlement services to payment card issuers,
acquirers and payment schemes.
EUFISERV’s owners – 12 European banks and banking organisations and
the European Savings Banks Group – were disclosed
holders of 118 million cards access to cash at 60,000 ATMs in nine
European markets, and First Data’s European network will create a
processing service encompassing 165 million debit and credit card
accounts and providing cardholders access to 74,000 ATMs and 1.5
million POS merchants.
network, which it expects to grow rapidly, will give “a major
boost” to the creation of SEPA initiatives by making
inter-operability possible between previously closed markets and
increasing the choice of interbank providers.
organisations positions us to grow our business strongly in the new
market conditions created by SEPA,” said EUFISERV’s chairman, Chris
De Noose.
SECURITY
UK bank Barclays is to implement encryption software developer PGP
Corporation’s PGP Encryption Platform to form what it termed “the
foundation of its enterprise data protection strategy.” The
platform will be deployed across Barclays’ retail and commercial
banking operations in more than 50 countries.
delivering enterprise data protection solutions, the breadth of PGP
solutions assured us that it could address a wide variety of
encryption needs today, whilst supporting innovation for tomorrow,”
said Barclays’ COO of Global Retail and Commercial Banking
Technology, Rick Carey.
than 80,000 enterprises, businesses, and governments
worldwide.
PAYMENT PROCESSING
solution
In a European first, a bank, ING, and an IT services supplier, Atos
Origin, have joined forces to offer end-to-end services for
back-office payment processing to banks and corporations in Europe.
In a release the partners said that the offering combines ING’s
payment processing expertise with Atos’ consulting and systems
integration capability.
label service will enable them handle payment transactions as if
they were processed on their own systems under their own logo.
Fully compliant with Single Euro Payment Area regulations, the
service will also free banks of the expense of meeting SEPA
compliancy themselves.
said their offering will provide a centralised in-house banking
service, resulting in significant cost reductions. This has been
made possible by European Union regulations that permit
corporations to use a single account to handle all payments in any
of the 31 countries that form part of SEPA. Prior to SEPA
corporations were required to process transactions via local banks
in the countries where they operate.
nature in the “volatile payments market,” stressed ING and
Atos.
REGULATORY
deadline
MasterCard Europe (MCE) has heeded a December 2007 ruling by the
European Commission (EC) that it scrap its cross border interchange
fees on credit and debit cards in the European Economic Area. MCE’s
alternative was to face daily penalty payments of 3.5 percent of
its daily global turnover in the preceding business year.
lost cause. “MasterCard’s policy is to comply with all applicable
decisions and regulations, but to challenge them through
appropriate channels when we believe that is necessary,” said MCE’s
president Javier Perez. He added that MCE has “solid legal
arguments supporting our appeal of the decision to the European
Court of First Instance, and we will continue to vigorously pursue
that appeal.”
amount to less than 5 percent of MCE’s volume and no significant
near-term financial impact on MCE is anticipated.
ruling, Perez stressed that MCE believes that its cross-border
interchange system has kept the cost of payment cards low for
cardholders, and if left unchallenged the EC’s decision “will be
bad news for European consumers.”
CONTACTLESS PAYMENTS
Singapore
Launched in July 2004 Japanese mobile service provider NTT DOCOMO’s
payments solution Osaifu-Keitai which incorporates Sony’s FeliCa
contactless payments chip in a mobile phone has proved a notable
success and is now used extensively on public transport services
and accepted by more than 640,000 Japanese retail outlets. Building
on this success Osaifu-Keitai – Japanese for mobile wallet – will
soon be introduced in the first market outside Japan, Singapore, in
a joint initiative between NTT DOCOMO and StarHub, Singapore’s
second largest communication services company.
that has revolutionised mobile payment and commerce in Japan,” said
Takeshi Natsuno, MD of NTT DOCOMO’s Multimedia Services Department,
Products & Services Division, Takeshi Natsuno who has
championed the Osaifu-Keitai service since its infancy. “Singapore
has the right pieces in place to enable the mobile wallet feature –
factors such as high mobile penetration rate, the presence of a
powerful contactless payment infrastructure as well as savvy
consumers.”
Osaifu-Keitai has the ability to incorporate identity cards, credit
cards and loyalty cards. According to NTT DOCOMO the number of
users of its Osaifu-Keitai stood at 29 million as at 30 April
2008.
PAYMENTS PLATFORMS
Payment
UK multi-currency credit card payment service provider Planet
Payment’s Pay in Your Currency (PYC) platform has received another
boost with the decision by US payments processor Global Payments to
offer it in India. A single platform, PYC can instantaneously
perform conversions of up to 147 currencies.
relationship between Planet Payment and Global Payments which began
with an agreement in November 2007 to launch PYC in Malaysia and
Taiwan. This was followed in March 2008 with the decision of Global
Payments’ joint venture with UK bank HSBC in China to launch PYC in
China prior to the start of the 2008 Beijing Olympic Games.
significant market for PYC. According to India’s Ministry of
Tourism inbound tourist numbers increased by 11.9 percent in 2007
compared with 2006 while industry body the World Travel and Tourism
Council anticipates that India will be the world’s fastest growing
tourist destination during the next decade, with a CAGR of 8.8
percent predicted.
MOBILE PAYMENTS
US
Predictions that mobile phone-based payments are set for rapid
growth in the US have been given more credence by MasterCard’s
announcement that it is to offer a person-to-person mobile payment
service to MasterCard issuing banks.
delivered on US mobile payment technology developer Obopay’s
platform which enables access via all mobile devices and all mobile
carrier networks.
debit and prepaid MasterCard-branded products and enable consumers
to send and receive funds using their mobile numbers without
disclosing any payment account number details.
development of the mobile person-to-person payments framework to
the next level,” said MasterCard’s chief emerging technology
officer, Art Kranzley.
industry body the GSM Association in the development of an
international mobile phone remittance infrastructure.
REGULATION
card legislation
A housing legislation bill before the US Senate is an unusual place
for provisions relating to electronic payments. However that’s
where a provision that would impact nearly all card transactions is
to be found, according to Dick Armey, chairman of nonprofit
organisation FreedomWorks and former House of Representatives
majority leader.
said Armey. “Not only does it affect nearly every credit card
transaction but the bill specifically targets payment systems like
eBay’s PayPal, Amazon, and Google Checkout that are used by many
small online businesses. The privacy implications for America’s
small businesses are breathtaking.”
information reporting on payment card and third-party network
transactions by all payment settlement entities to the Internal
Revenue Service and to the participating payee.
businesses use their Social Security number for tax identification.
He posed the question: “How will their privacy be protected?”
across America’s payment processing systems and treats every
American small business or eBay power seller like a criminal on
parole by requiring an unprecedented level of reporting to the
federal government.”
ONLINE PAYMENTS
America
The internet is gaining ground as the preferred means of
undertaking bill payments in North America, indicates a study
released by research firm E SOURCE. So much so that the study
indicates “a major shift in customer behaviour,” stressed E
SOURCE’s director of customer satisfaction services, Andrew
Heath.
users surveyed in the US and Canada now pay at least one bill each
month online. This compares with 33 percent in a survey conducted
by E SOURCE in 2004.
accelerating E SOURCE noted that a study by nonprofit body the Pew
Research Center found that 38 percent of US internet users were
paying at least one bill each month online in 2005.
SECURITY
crime
Online criminals are eroding trust and confidence in the internet
economy yet not enough is being done by governments, regulators and
communications service providers to protect consumers’ personal
identity (ID) and financial details, stresses international body
the Organisation for Economic Co-operation and Development
(OECD).
online crime highlighted by the OECD is that online ID theft or
fraud is not a criminal offence per se in most of the 30 OECD
countries and a crime in only a few.
(CoE) Convention on Cybercrime which was adopted by the body
comprising 47 European countries in November 2001. The convention
is the first international treaty on crimes committed via the
internet and other computer networks.
member countries have signed the convention only eight have
ratified it. According to the CoE 40 of its member countries have
signed the convention and 22 ratified it. Four of its seven
non-member countries have signed it and one, the US, ratified
it.
include the UK, Sweden, Switzerland, Germany, Spain, Belgium and
Japan. Countries yet to sign the convention include Russia, Mexico
and Philippines.
ONLINE PAYMENTS
protection
PayPal has good news for US buyers using its services to make
payments for eBay purchases: they are soon to be protected for the
full price of an item’s purchase price with no limit on coverage.
In addition US sellers using eBay will receive enhanced protection
against claims, chargebacks and reversals due to an unauthorised
payment or an item that was not received when they are paid via
PayPal.
to give all buyers and sellers more confidence and trust,” said
Lorrie Norrington, eBay’s president, marketplace operations.
“Buyers who pay with PayPal on eBay will be covered, with no
limits, on most transactions. Any seller who gets paid with PayPal
will be covered on most transactions, too, and can ship to 190
countries worldwide where PayPal is accepted.”
offer PayPal and over 90 percent of active eBay users in the US
have PayPal accounts.
ONLINE PAYMENTS
doldrums
A third of consumers in the European Union (EU) have purchased at
least one item via the internet this year, up from 27 percent in
2006, EU Consumer Commissioner Meglena Kuneva revealed in a speech
in London.
cross-border purchases increased only marginally from 6 percent to
7 percent and as a proportion of online retailer sales revenues
from 16 percent to 17 percent.
embrace e-commerce at national level but internal [EU] market
barriers still persist online,” said Kuneva. “We need to redouble
our efforts to tackle the remaining borders,” she added.
not appear to result from consumer concerns.
are more confident making online purchases from sellers/providers
located in their own country, 57 percent are equally or more
confident making purchases online from sellers in another EU
country.
