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May 1, 2008

News Digest

PREPAID CARDS PayPal beta tests virtual debit card The card is virtual, the security is very real this is the message PayPal is delivering in the run-up to the full-scale launch of its PayPal Virtual Debit Card (VDC), which is currently being beta tested by US customers Developed by Irish payments technology vendor Orbiscom, the new service will target customers reluctant to disclose account details online or those without cards, and will also provide access to merchants that do not accept PayPal payments PayPal VDC draws funds from a users PayPal account.The key security feature of the PayPal VDC is achieved by the generation of a new MasterCard number for every online purchase

By Verdict Staff


PayPal beta tests virtual debit card

The card is virtual, the security is very real – this is the message PayPal is delivering in the run-up to the full-scale launch of its PayPal Virtual Debit Card (VDC), which is currently being beta tested by US customers. Developed by Irish payments technology vendor Orbiscom, the new service will target customers reluctant to disclose account details online or those without cards, and will also provide access to merchants that do not accept PayPal payments. PayPal VDC draws funds from a user’s PayPal account.

The key security feature of the PayPal VDC is achieved by the generation of a new MasterCard number for every online purchase. Adding to PayPal VDC’s attraction is a form-fill feature that automatically fills in a customer’s relevant stored personal details when an online purchase is made. The form-fill feature is similar to that offered by the Google Checkout web payments service launched in 2006.


Cashless society approaches

The world is heading steadily towards becoming a cashless society, believe 56 percent of respondents to a survey conducted in 13 countries on behalf of MasterCard Worldwide. Globally, said MasterCard, consumers agree that they do not like to carry large amounts of cash, and their behaviours, such as unwillingness to queue for more than ten minutes for small purchases, are driving growth in cashless payments.

Backing the survey’s findings, said MasterCard, was deployment of the 20-millionth contactless card reader in the roll-out of its PayPass contactless payments system. As of November 2007, about 80,000 merchants in 20 countries accepted PayPass.

MasterCard said there was a growing acceptance of contactless payments and that 49 percent of respondents to its survey said they are likely to use a contactless card if one is provided by their financial institution. Of those likely to use a contactless card, 47 percent cited convenience as the greatest benefit.


Forex settlement records tumble

Established by a consortium of banks in September 2002 to eliminate settlement risk in the global foreign exchange market, the Continuous Linked Settlement (CLS) Group, spearheaded by its operational unit CLS Bank, has notched up a series of new records this year. The latest came on 13 November when CLS Bank settled 1,140,644 payment instructions with a gross value of $6.5 trillion. This beat the previous record of 905,478 payment instructions and was the first time the number of settlements exceeded 1 million.

The November record followed a new value record set on 19 September 2007 when gross settlements hit $8.4 trillion. CLS Bank reported an average of 492,000 payment instructions per day with an average gross value of $3.8 trillion in the first half of November.

This year has been characterised by surges in volume, brought on by market volatility and interest rate adjustments, said Rob Close, CEO of CLS Group and president and CEO of CLS Bank. According to the bank, it is settling over one-half of all global foreign exchange transactions.


Ukash enters alliance with Vodafone

A significant new marketing channel has opened up to Ukash, a UK-based provider of prepaid vouchers used for online payments. Previously marketed via newsagents, petrol stations and other high-traffic merchants, Ukash vouchers are now available via mobile phone following the forging of an alliance with mobile phone service giant Vodafone. The move makes Ukash vouchers available to Vodafone’s 18 million subscribers in the UK.

To use the new service, Voda­fone customers access the Ukash Mobile web page via their phone’s internet browser and confirm that they require a £10 ($20) Ukash voucher. The customer then receives a text message with a unique 19-digit Ukash number to use when making an online payment. The cost of the voucher is deducted from the subscriber’s mobile phone call credit balance.

This year has been an active one for Ukash. Only available in the UK, Ireland, Spain and Germany a year ago, the service is now available in an additional 16 European countries, where vouchers are distributed via bank branches.


UK shoppers cram online malls

More UK shoppers than ever will shun high-street shops in favour of the internet during this year’s Christmas shopping season, predicts the Association for Payment Clearing Services (APACS). The payments industry body estimates that online spending will hit £5.6 billion this year, up a whopping 55.6 percent from the £3.6 billion spent online in December 2006.

The £5.6 billion will represent 10.6 percent of the total of £53 billion APACS predicts shoppers will spend using cards, cash and cheques this December. Last December online shopping represented 7 percent of total spending of £51 billion. Over the past five years, the number of adults in the UK shopping online has more than doubled to almost 30 million, noted APACS.


A confident 3rd Man

Attempts at fraud against UK online merchants and shoppers surged 130 percent above normal monthly levels in the first four days of December, according to 3rd Man, an online fraud prevention specialist company. 3rd Man’s CEO, Paul Simms, said the attempted frauds were detected by the company’s SuperSearch online scanning system, which tracks the behaviour of thousands of fraudsters.

In essence, SuperSearch enables retailers to share information about fraudulent activity. When a transaction is rejected or when a chargeback is received, this information is made available anonymously to all SuperSearch users. Retailers and banks may then take action to prevent more incidences of fraud.

The shared SuperSearch database contains clearly fraudulent and highly suspicious data, including listings of bad or questionable details such as e-mail addresses, delivery addresses, phone numbers and card numbers. SuperSearch scans 20 million transactions per month.

According to 3rd Man, it “reliably detects” in excess of 95 percent of fraudulent attempts including organised and casual fraud. In mid-December 3rd Man reported having detected 322,176 fraudulent transactions so far in 2007, totalling almost £56 million.


UK first for Barclaycard

Following a successful internal pilot programme, Barclaycard is to publicly trial mobile phones incorporating contactless near field communications (NFC) payment technology, a first for a credit card provider in the UK. The trial forms part of O2 Wallet, the first large-scale NFC pilot in the UK to examine the use of mobile devices as mobile wallets for retail purchases and for use on London’s public transport services.

Of the 500 customers participating in Barclaycard’s trial, 250 will receive phones equipped with the Oyster travel cards used on London’s public transport system. The other 250 will, in addition to Oyster card functionality, have access to £200 provided by Barclaycard to make contactless payments of up to £10 each at merchants equipped with Barclaycard Business OneTouch payment contactless terminals. All trial participants will use the Nokia 6131 NFC-enabled handset.


TheCard opts for MobiClear Security

TheCard Scandinavia (TheCard) is to deploy MobiClear Card Security (MCS), a transaction security system developed by identification verification technology vendor MobiClear. TheCard, a Swedish company established in 1996, provides companies with internet-based travel expense management services via a bank account connected to a Visa card.

MobiClear explained that when performing any electronic transaction, users are called automatically on their mobile phone and prompted to enter a four-digit PIN (pre-selected by the user) via the phone. If the user cannot enter the correct code, the transaction will not be executed. MobiClear noted that MCS can be used for face-to-face, internet and ATM transactions. In addition to MCS, TheCard has adopted MobiClear’s solution that enables a user to switch a bank account and card on and off via his or her mobile phone.

MobiClear’s solutions may “revolutionise transaction security”, said TheCard’s CEO, Bo Gustafson.


Sagem Sécurité gains control of Ingenico

Negotiations under way since mid-year between POS terminal vendor Ingenico and electronics group Sagem Sécurité relating to the merger of Ingenico and Sagem Sécurité’s electronic payment equipment units, Sagem Monetel and Sagem Denmark, have reached fruition. Under the terms of an agreement reached by the two French companies in December, Sagem Monetel and Sagem Denmark will be transferred to Ingenico in exchange for the issue to Sagem Sécurité of 10.66 million new Ingenico shares.

After the transaction, Sagem Sécurité will become the largest shareholder of the merged entity, holding 25 percent of the shares in issue. The revenue of the units involved in the merger totalled €646 million in 2006.


ING to boost Belgian online capabilities

Netherlands bancassurer ING Group is to add new functionality to its Belgian internet banking platform and double its call centre capacity. ING estimates the cost of the five-year project at €94 million.

In parallel with the internet and call centre upgrades, ING said, it will also optimise its branch network by transforming its current 794 branches into 242 full-service branches and 552 smaller outlets with automated self-service cash functions. ING added that its overall strategy in Belgium is in line with its new retail banking strategy in the Netherlands.

ING expects the number of full-time employees in its Belgian retail banking unit to fall by 850 during the five-year transformation period. By 2012, ING predicts, improved product and distribution capabilities and increased efficiency in its Belgian unit will generate additional annual pre-tax earnings of over €100 million.


Wincor Nixdorf steps up self-service security

German payments hardware developer Wincor Nixdorf has set what it termed “a new standard” for protecting self-service systems against malicious software attacks. This, said Wincor Nixdorf, has been achieved by incorporating into its self-service terminals Platform Security Agent (PSA), a protection solution developed by US software vendor Cisco.

Wincor Nixdorf explained that unlike traditional protection solutions, such as virus scanners and personal firewalls that deliver protection based on knowing all possible threats, PSA provides protection based on the premise of “knowing what is allowed and excluding everything else”. In addition to protecting against malicious software attacks, Wincor Nixdorf added, PSA protects self-service terminals against the use of unauthorised hardware such as USB memory sticks.


Standard Chartered, First Data team in Asia

Formalities required to establish Merchant Solutions, a joint venture (JV) between US electronic payments service provider First Data and the UK’s Standard Chartered Bank (SCB), have been completed. First Data will have a 56 percent stake and SCB a 44 percent stake in the Singapore-based merchant acquiring services provider, establishment of which was first announced in December 2006.

Merchant Solutions will initially deliver payments solutions to SCB’s Asian merchant clients in India, Bangladesh, Brunei, Hong Kong, Malaysia, Macau, Singapore and Sri Lanka and sales-related services for internationally issued card acceptance in China. There are plans to expand to additional markets in Asia and the Middle East.

Merchant Solutions will offer First Data products and services for debit and credit cards, as well as additional forms of electronic payments such as e-commerce and contactless and prepaid card acceptance.


Colombia goes mobile with Gemalto

Mobile banking has become a reality in Colombia following the commercial launch by Netherlands electronic payments technology vendor Gemalto of its mobile banking platform. The service – which was launched in conjunction with Colombia’s mobile phone service operators and its largest payment card network, Redeban Multicolor – enables users to access banking services, pay bills, transfer money, check their account balance and recharge mobile phone prepaid airtime.

According to Gemalto, its mobile banking solution includes a secure software application stored in the mobile phone’s SIM card, a server and software that interprets encrypted messages that are exchanged between banks and the SIM.

The m-banking service is already available to more than 20 million mobile phone subscribers and the initial expectation is that 20 percent of this customer base will execute at least five transactions per month, said Valentin Echeverry, technology and operations vice-president at Redeban Multicolor. He added that initial uptake of the service has been “very successful”.


Scotiabank eyes Peru’s remittance market

Peruvian migrant workers remit almost $3 billion annually to their home country, according to the Interamerican Development Bank, an international bank providing finance to developing countries. The amount represents the third-highest level of remittances to Latin America and an attractive opportunity to offer a mobile phone-based funds transfers service – which has been grasped by Canadian bank Scotiabank.

In association with N-Via USA, a company specialising in marketing MasterCard prepaid cards to immigrants to the US, Scotiabank is to launch a mobile phone-based person-to-person money transfer service in Peru to be marketed under the N-Via brand. In addition to mobile-to-mobile transfers, Peruvians will be able to receive cash remitted via the service at Scotiabank Peru’s 400 service outlets in 27 cities across the country. The service will utilise mobile short message service technology.  

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