End of the road for Pay by Touch…
Chase Paymentech takes a big step forward…
Pakistani breakthrough for First Data…
Citi teams up
with SK Telecom
Korean, SK Telecom Korea’s largest wireless communication provider,
and US bank Citi are combining forces in the mobile banking arena,
their efforts spearheaded by a new equally owned and funded joint
venture company Mobile Money Ventures (MMV). The objective of MMV
is, according to the partners, “to develop mobile financial
services and technologies that will deliver greater functionality,
speed, and convenience to consumers around the world”.
As a first step, MMV will develop a mobile phone platform
incorporating “all key mobile banking value propositions” including
near field communications contactless payments functionality. The
partners expect to test a beta version of the platform in the
second half of 2008.
based in San Francisco.
PowerPay powers ahead
In a significant new client gain, PowerPay has been selected as the
preferred supplier of US online payments processing by the
Publishers Associated to Gain Economies Cooperative (PAGE), the
largest purchasing entity in the US newspaper industry. “This is an
enormous opportunity to break into new markets,” said Charles
Mercer, PowerPay’s senior vice-president.
Established in 1984, PAGE is a non-profit organisation that enables
members to pool individual purchases with a combined value of about
$300 million annually. With a national coverage, PAGE’s members
include 560 daily newspapers, nearly three-quarters of all US
dailies, and more than 1,000 non-daily publications. PAGE’s
objective in its partnership with PowerPay is to enable its members
to furnish online payment solutions to their customers in areas
such as subscription and advertising billing.
Founded in 2003 PowerPay’s services include payment acceptance,
credit, debit, loyalty and gift cards, business-to-business and
government purchasing cards, fuel cards and standard, high-speed
and wireless POS solutions. The company supports all major credit
and debit cards.
At the end of 2007 PowerPay reported that it was providing services
to 30,000 merchants nationwide, 50 percent more than at the end of
2006. The company predicts that by the end of 2008 it will be
acquiring 2,000 new merchant clients every month as part of its
goal to become one of the US’s top ten payment processors.
Data breaches soar in the US
Security breaches involving the loss of sensitive personal
information remains on a steeply rising trajectory in the US,
reveals data published by non-profit organisation the Identity
Theft Resource Center (ITRC). According to the ITRC, it documented
448 paper and electronic breaches in 2007, potentially affecting
more than 127 million people or 62 percent of the US’s adult
Data breaches in 2007 represented a significant increase from 2006
when 315 publicised breaches affecting nearly 20 million people
were documented by the ITRC. In 2005 158 incidents affecting more
than 64.8 million people were documented.
Based on ITRC’s categorisation, the 2007 breaches break down
originated in the following sectors: 24.5 percent government and
military agencies, 24.7 percent from educational institutions, 29.3
percent from general businesses, 14.5 percent from healthcare
facilities and companies, and 7 percent from banking, credit and
other financial services entities.
Among criteria used by the ITRC to document a data breach are
incidents involving the loss or theft of names, social security
numbers, banking or financial account number, and credit card or
debit card numbers with or without PIN.
Visa debuts in fine style
Neither equity market volatility nor economic uncertainty could
dampen investor enthusiasm for Visa Incorporated’s initial public
offering (IPO) which, in terms of new capital raised, reached
$17.86 billion, the biggest in US history. After costs of listing
on the New York Stock Exchange, Visa anticipates that the net
amount raised in the IPO will be about $17.3 billion.
Trading on 19 March, Visa’s first day as a listed company, began on
a strong note and its share price closed at $56.50, 28.4 percent
above its listing price of $44 per share. The closing price equated
to a market capitalisation of about $47 billion compared with rival
MasterCard’s market capitalisation of about $27 billion.
Holding a 23.3 percent stake, US bank JPMorgan Chase is Visa’s
largest shareholder. Other major shareholders include Bank of
America, Citigroup, US Bancorp and Wells Fargo.
End of the road for Pay by Touch
In Chapter 11 bankruptcy since November 2007, US payments
processing company Solidus Networks has terminated the business for
which it is best known, its biometric authentication payments unit
Pay By Touch (PBT) which it launched in 2002. In a brief statement,
Solidus said PBT would as of 19 March 2008 “no longer process
biometric transactions on behalf of its merchant customers and
consumer membership base”.
PBT’s biometric authentication system Finger-Scan Payments was,
according to recent media releases by Solidus, deployed at about
3,000 locations in the US, UK and Singapore and used by 4 million
customers. Among merchant customers was fuel retailer Shell Oil
Products US which began offering a biometric payment option in a
pilot project at filling stations in Chicago in late 2007.
Pay By Touch’s closure followed the auctioning off of other Solidus
units this year. These included BioPay Paycheck Secure (BPS), the
cheque cashing business of BioPay, a biometric authentication
payments processor acquired by Solidus in December 2005 for $82
million. BPS was sold for $4.2 million. Also gone is ATM Direct, an
internet payments technology developer acquired in 2005 for $30.5
million and sold for $600,000.
PayItGreen Alliance on the offensive
Armed with compelling reasons for US consumers to switch from paper
bills and statements and make payments electronically, the
PayItGreen Alliance will launch its first initiative, PayItGreen
Month, in April. Members of the alliance, formed in 2007 and
co-ordinated by the National Automated Clearing House Association,
represent a broad spectrum of the financial services and
Backing the initiative is a study commissioned by the alliance.
Among the findings was that the average household receives 19 bills
and statements and makes seven paper payments per month.
Collectively, the production and transportation of those paper
bills, statements and payments consume 378,000 US tons of paper, 9
million trees and 512 million US gallons (1.94 billion litters) of
Providing further motivation, the alliance cited a study that found
that people who pay bills online do so in 15 minutes a month,
whereas those who write out cheques take two hours. Another study
revealed that annual postage costs for a household receiving 20
bills and financial statements each month are up to $100.
A wake-up call for US financial institutions
US automated clearing house (ACH) industry body the National
Automated Clearing House Association has urged US financial
institutions to begin preparing for introduction of the rule and
format for international ACH transactions (IAT) to be implemented
on 20 March 2009. The IAT will enable US financial institutions to
send and receive cross-border ACH payments bearing information
identifying all parties to the payment.
“Given the significance of this change, it is essential that
financial institutions start now to understand and implement the
rule,” said Richard Oliver, executive vice-president and retail
payments product manager of the Federal Reserve System. He added
that the testing process, both internally and with vendors, will be
The IAT applies to all financial institutions, even those not
currently originating or receiving international payments.
UK steps up war on crime
UK financial services body APACS has announced the creation of the
Payment Industry and Police Joint Intelligence Unit (PIPJIU), a
move aimed at enhancing the fight against payments fraud. The
PIPJIU forms part of the City of London and Metropolitan Police’s
Dedicated Cheque and Plastic Crime Unit (DCPCU), a unit staffed by
police and specialists from the banking industry.
According to APACS, the PIPJIU is anticipated to provide a more
efficient approach to the collation and dissemination of fraud
intelligence to police throughout the UK and will address all types
of banking fraud, not just cheque and payment card fraud. The
PIPJIU, which has been formed by combining the banking industry’s
Fraud Intelligence Bureau and the intelligence section of the
DCPCU, consists of 15 staff, five of who are seconded banking
industry fraud specialists.
APACS noted that since the DCPCU’s launch in April 2002 it has been
responsible for more than £230 million ($465 million) in savings
from reduced fraud activity and has recovered more than 244,000
counterfeit cards and card numbers. It has also secured 156
convictions and made almost 400 arrests on fraud-related
Chase Paymentech takes a big step forward
US payment service provider Chase Paymentech has commissioned its
European headquarters in Dublin, Ireland, a development central to
its global expansion strategy. “We consider this enhanced physical
presence a major milestone in our global strategy to expand and
support the growth of our US-based merchant customers into Europe,”
said Shane Fitzpatrick, MD of Chase Paymentech’s European
“We have a significant European client base, including household
names such as Google, Amazon, AOL and Yahoo. Initially, we’ll be
targeting new businesses in Western Europe, then eventually expand
into Asia-Pacific markets.”
Chase Paymentech, a joint venture between banking group JPMorgan
Chase and payment processor First Data, predicts that within three
years its Dublin office will provide support for a 100-person team
across Europe responsible for expanding operations, marketing and
customer support activities outside the US.
The world’s largest merchant acquirer based on its reported
transaction volumes of $719 billion in 2007, Chase Paymentech
embarked on what it termed “a comprehensive strategy of global and
cross-border automated clearing house initiatives” in early
Yodlee and Vodafone team up
US electronic banking systems developer Yodlee has sealed a key
agreement with mobile network operator Vodafone with the latter now
the exclusive reseller of the Yodlee’s mobile banking solution in
the UK. Off to a good start, Yodlee has announced that two “major
UK financial institutions” have already signed up for the
Vodafone/Yodlee Mobile Banking solution and will launch by year
Yodlee Mobile, which will be individually branded for each UK
financial institution, will provide customers with access to and
proactive monitoring of multiple financial accounts including
banking, investments, bills, credit cards, retirement accounts and
rewards programmes. In addition, Yodlee Mobile incorporates Yodlee
MoneyCenter, an integrated suite of consumer banking applications
that provide mobile bill payment and mobile funds transfer
capabilities. Other features include fraud monitoring alerts, bill
due reminders and account threshold notifications.
Barclays goes mobile in India
UK bank Barclays’ Indian unit has launched Hello Money, a mobile
banking service that offers users functions such as funds
transfers, balance enquiries and utility and credit card bill
payments. The service, which is available on the networks of mobile
carriers Vodafone, Airtel and Idea in 40 cities and will supplement
Barclays’ limited five-branch network in India. Barclays first
entered India’s retail banking market in May 2007.
Of note, Hello Money is the first mobile banking service in India
to use unstructured supplementary services data (USSD) as the
transaction method and not short message service (SMS), the more
commonly used method in mobile banking. USSD-based services are
generally quicker and also cheaper than those that use SMS.
Reserve Bank of India cracks the whip
The migration from paper-based to electronic funds transfer in
India is set to be accelerated in April when a new regulation
relating to large-value payments announced by the Reserve Bank of
India (RBI) come into force. The new regulation addresses what the
RBI said are still a large number of bulk payments made via paper
Under the RBI’s new regulation, all transactions of INR10 million
($250,000) between RBI regulated entities such as banks, primary
dealers and non-banking financial companies will have to be routed
via one of the RBI’s three electronic payment systems. The
regulation also applies to payments in RBI regulated markets such
as the money market, the government securities market and the
foreign exchange market.
Pakistani breakthrough for First Data
Marking its entry into Pakistan, US payments processor First Data
has begun processing the new MasterCard offering from the country’s
largest credit card issuer, Bank Alfalah, on its VisionPlus
platform. Bank Alfalah first entered Pakistan’s payment card market
in February 2003 with Visa-branded cards, of which it now has
586,000 credit and 266,000 debit cards in issue.
Speaking on prospects, Bank Alfalah’s head of consumer finance,
Adil Rashid, said: “Bank Alfalah is a very fast-growing financial
institution and will be able to benefit from First Data’s services
not only in Pakistan but also in other countries where we are
expanding our business.”
Bank Alfalah’s existing card and merchant portfolio will soon be
migrated to the First Data platform.