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May 1, 2008

News Digest

Mobile credit card payments from Cincinnati duoTwo companies headquartered in the US city of Cincinnati, electronic payment processor Infintech and telecommunications company Cincinnati Bell, have teamed up to offer a credit card payment service, MobileCharge to companies with mobile workforces.

By Verdict Staff

Mobile credit card payments from Cincinnati duo…Fiserv delivers blow to online fraudsters…ePayments aims to slash transaction costs… Second French pilot programme underway…First Data bolsters prepaid capabilities…

MOBILE PAYMENTS
Mobile credit card payments from Cincinnati duo

Two companies headquartered in the US city of Cincinnati, electronic payment processor Infintech and telecommunications company Cincinnati Bell, have teamed up to offer a credit card payment service, MobileCharge to companies with mobile workforces. Based on the use of BlackBerry mobile phones MobileCharge enables credit card payments transactions to be processed anywhere there is a wireless signal.

According to the service partners, MobileCharge is more cost effective than other portable credit card terminals that require a separate mobile communications plan. In addition the ability to electronically process credit cards at the point of service reduces processing costs by 45 percent or more compared with manual processing. MobileCharge can also be used for inventory control as it interfaces directly with a company’s accounts receivable software.
Two versions of MobileCharge are available. The basic version requires credit card details to be entered manually on a BlackBerry’s keypad and receipts are e-mailed to customers. The advanced version, MobileChargePro, has an integrated card swipe and thermal receipt printer.

  ONLINE BILL PAYMENTS

Fiserv delivers blow to online fraudsters

US financial technology service provider Fiserv’s CheckFree FraudNet, an automated online bill payments fraud detection system, has achieved outstanding results, blocking 21,000 attempted fraudulent bill payment transactions totalling $287.9 million since its launch in November 2005. FraudNet was developed by online banking technology vendor CheckFree which was acquired by Fiserv in late-2007.

A further indication of FraudNet’s effectiveness, the US’ largest credit union service organisation PSCU Financial Services reports that since implementing FraudNet in October 2007 an overall fraud prevention rate of 96 percent has been achieved by its members that generates nearly 2.8 million online bill payments each month.
In addition to preventing fraud, FraudNet holds other attractions. According to Fiserv by automating detection and prevention efforts for electronic billing and payment, FraudNet reduces the time and resources required to manage potential fraud cases to as little as 15 minutes, or $12.50, per case based on a total cost of $50 per hour. This compares with the industry average of 49 hours or $2,450 per case. According to Fiserv, FraudNet is in use by 462 financial institutions, including eight of the top 50 US banks.

  AUTOMATED CLEARING HOUSES

ePayments aims to slash transaction costs

A service being offered by US payment processor ePayments promises to slash payment processing costs of medical, legal and other professional firms. Key to the offering, Professional Payment Services, is the migration of professional firms’ clients from credit card to automated clearing house (ACH) payments.

“We are confident we can save our clients up to 50 percent on their credit card fees every month,” said ePayments’ president and chief sales officer, Rod Hill. “If our clients can work with their customers to accept cheques or cheque account debits in place of high cost credit cards, it’s a realistic and achievable goal.”
According to Hill professional firms incur credit card processing fees of about $300 to $1,000 per month. This includes 2 percent to 4 percent of each transaction, another fee of 20 cents to 25 cents per transaction and monthly fees and equipment costs. He added that ePayments can process payments for a flat monthly rate of $39 with no transaction cost using the ACH network to electronically process cheques and account debits.
ePayments installs its proprietary cheque processing software on-site at professional service firms opting for its service.

 CONTACTLESS PAYMENTS

Second French pilot programme underway

Visa and French bank Banque Populaire have combined forces to launch a contactless payments pilot project in France based on Visa’s payWave technology.

In the pilot in which 200 retailers are participating 4,000 Banque Populaire customers in the city of Besançon will be equipped with Visa Carte Bleue cards capable of contactless payments of up to €20 ($30) and conventional transactions. Technical support for the pilot is being provided by French financial services technology developer Natixis Paiements.
The Banque Populaire pilot is the second in France in which payWave technology is being used.
The first pilot launched in November 2007, Payez Mobile, is based on the use of near field communications equipped mobile phones and involves MasterCard, six major French banks and three mobile carriers.

  MERGERS AND ACQUISITIONS

First Data bolsters prepaid capabilities

US payments processor First Data has announced the acquisition of stored value gift and prepaid products specialist InComm for an undisclosed sum. Based on InComm’s 2007 results the deal will add about $8 billion in retail sales payments processing and net income of $300 million.

Commenting on the significance of the deal First Data’s US division’s president, Ed Labry, said: “The combination of First Data and InComm propels us into having a holistic prepaid product suite that includes banking products, payroll solutions, closed and open loop gift cards and now expanded distribution.” Notably, InComm’s president and CEO Brooks Smith will become the leader of First Data’s Global Prepaid Services division.
In addition to operations in the US, InComm has offices in Japan, Canada, the UK and Puerto Rico and in total provides products and services to more than 145,000 retail locations.

  AUTOMATED CLEARING HOUSES

NACHA campaigns for use of direct deposits

US industry body the National Automated Clearing House Association (NACHA) has launched a national awareness campaign to encourage greater use of direct deposits for the payment of salaries and other employee benefits. According to NACHA while three out of four workers who are offered direct deposit use it there are many workers who are not offered this benefit, primarily employees of small businesses.

The focus of the campaign is on cost savings. For small employers with fewer than 100 employees replacing pay cheques with direct deposits results in a saving of about $7,000 per year while for employees who use direct deposit to split their salaries or wages into more than one account the saving is about $300 per year.
NACHA is also highlighting that while virtually all large companies offer direct deposit for pay, very few consistently offer direct deposit for expense reimbursement, bonus payments and pension payments.

  PAYMENTS PROCESSING

Metavante shows its form in the UK

US payments processor Metavante’s acquisition of UK prepaid and debit card transaction specialist Nomad Payments in January 2008 for $58 million is paying off. UK prepaid card provider Advanced Payment Solutions (APS) has selected Metavante Technologies, formerly Nomad Payments, as its sole payments processing service provider, a decision that will involve transitioning over 200,000 account customers – the biggest move of its kind in Europe to date.

“Metavante have provided us with a reliable solution and flexible fee structures that will enable APS to offer a greater range of pay as you go charging combinations, and therefore a greater range of future products to our clients,” said APS’ CEO Rich Wagner. “This is a vital factor in the prepaid card business, which has tighter margins and more disparate cardholder behaviour than other debit and credit portfolios.”
APS offers a number of products including cashplus, the UK’s first general purpose MasterCard prepaid chip and PIN payment card. Cardholders, who can top-up cashplus cards at 20,000 outlets, have loaded £200 million ($390 million) onto the cards since its launch in 2005.
Research firm Mercator predicts that annual prepaid card spending in the UK will reach $34 billion by 2010 making it Europe’s largest prepaid market and the fourth largest market worldwide.

  MOBILE PAYMENTS

Bharti Telesoft enters the Middle East

Already having achieved notable successes with its mobiquity mobile phone banking solution in Asia and Africa, Indian mobile communications technology developer Bharti Telesoft is set to take on untapped markets in the Middle East. Partnering Bharti Telesoft in the venture are Arab Financial Services (AFS), the largest payment card processor in the Middle East and North African regions, and Bahrain management consultancy Riyada Consulting.

The mobiquity service is to be integrated into AFS’ card issuing platforms that serve over 50 banks and will be offered as a stand-alone service to financial service providers, explained AFS’ CEO Shankar Sharma. “We believe that many of our existing customers will take up the service,” he continued.
The venture forms part of Bharti Telesoft’s strategy to increase its annual revenue four-fold to $200 million in the next three years. According to the company it “is betting on newer offerings like mobile commerce for growth.” High on the agenda is mobile banking. “More people have mobile phones than bank accounts. It’s a great platform to expand banking services and we have products for that space. We see a lot of potential,” said Bharti Telesoft’s CEO Manoranjan Mohapatra.

  ONLINE PAYMENTS

NETELLER offers multi-currency option

UK online payments specialist NETELLER has deployed NETBANX International Payments Gateway (NIPG), a new version of its NETBANX payments service that incorporates multi-currency payments and multi-payment option capabilities.

“We believe that these new globalisation features in our NETBANX service significantly extend our lead over other payment brands,” said NETELLER’s president and CEO, Ron Martin.
One of NIPG’s key features is NETELLER’s Dynamic Currency Conversion application that permits online shoppers to pay in their local currency at the pertaining exchange rate. In addition NIPG facilitates the use of local and global payment cards and other local payment options including giropay and ELV for Germany, iDEAL for the Netherlands, Carte Bleu domestic and international for France and Carte SI for Italy.
NIPG also offers multi-lingual payment web pages to enable merchants to collect payment from consumers in the language of their preference, including English, French, German, Italian, Spanish and Welsh.
NETELLER reported having 3.94 million customers at the end of 2007, of which 2.95 million were in North America.

  INTERNET PAYMENTS

An easier path into China for merchants

US electronic commerce technology vendor CyberSource’s UK unit and Chinese payment services provider PayEase have joined forces to offer foreign merchants a simplified route into China’s internet commerce market.

Among the benefits the new service offers is swift and cost effective integration with China’s over 20 debit card issuers. This overcomes the current difficulty merchants face of having to integrate with each issuing bank on an individual basis, claims CyberSource.
The new service also incorporates CyberSource’s Decision Manager that has the ability to recognise the Chinese language character set and incorporates rules to automate the acceptance or rejection of orders. Financial transaction reports are available in English.
“We see this alliance with PayEase as an extraordinary opportunity for merchants who wish to expand into the Chinese eCommerce market,” said CyberSource’s president and COO, Scott Cruickshank.

  POS

North American POS deliveries stall

Tough economic conditions took their toll on the North American retail POS terminal market in 2007 with total revenue generated falling about 7 percent to $5.56 billion, according to research firm IHL Group.

Turnover in 2007, which includes maintenance on existing terminals, was also well below levels of around $6.5 billion seen during the period of booming demand between 2003 and 2005.
Microsoft’s Windows operating system again dominated the POS market in 2007, accounting for $3.8 billion or 68 percent of sales. This was little different from market shares enjoyed by Microsoft in previous years that have ranged from 69 percent in 2001 and 2002 to 71 percent in 2004 and 2005.
Second to Microsoft in 2007 was IBM’s sales of $1.02 million, representing an 18 percent market share. POS terminals running on the Linux operating system accounted for sales of $575 million or 10 percent of the market. Notably, Linux operating systems market share has increased from only about 2 percent in 2001.

  MOBILE PAYMENTS

M-PESA arrives in Tanzania

Vodacom Tanzania, in which South African telecommunications company Vodacom has a 65 percent stake, has launched its M-PESA service which allows mobile phone-based money transfers.

A big success in Kenya where it has garnered 1.7 million users since its launch in February 2007, M-PESA was developed by UK telecommunications company VodaFone which has a 50 percent stake in Vodacom.
“Vodafone M-PESA is a service that is expected to revolutionise the way Tanzanians manage money,” said Vodacom Tanzania’s managing director Dietlof Mare.
“Of the 21 million Tanzanians over the age of 16, only 1.6 million currently have a bank account, but more than 7.5 million Tanzanians have a mobile phone.” The largest mobile service provider in the country, Vodacom Tanzania had 4.1 million customers in April 2008.
Meanwhile VodaFone’s plan to launch an M-PESA based remittance service between the UK and Kenya has encountered problems in the UK involving banking, exchange rates and anti-money laundering regulatory requirements. Trials of the proposed service in conjunction with US bank’s Citigroup UK unit have been ongoing since early-2007.

  ONLINE PAYMENTS

US consumers demand choice and security

Choice of payments and security are the two paramount considerations of US shoppers when selecting internet merchants, and outweigh merchant incentives like rewards and discounts reveals a study conducted for PayPal by research firm JupiterResearch.

Key findings of the survey were:

• 66 percent of consumers prefer online merchants that offer multiple payment mechanisms;

• 62 percent of purchasers feel more secure when they do not have to enter credit card information online, even at merchants’ sites that they trust;

• 61 percent of online shoppers choose sites that offer both credit and debit card payment options;

• 55 percent of consumers think about which payment methods they will use before they click on the checkout button;

• 48 percent of all online adult shoppers prefer the convenience of alternative payment methods;

• One third of online shoppers want to avoid filling out name, address and credit card details; and

• Only one in eight consumers thinks about how they will pay even before deciding what to buy.

Notably, the survey’s finding that choice of payment option is the top consideration appears at odds with PayPal’s parent company, eBay’s controversial decision to offer PayPal as the only payments option on its Australian website. (see eBay stirs up a storm in Australian e-commerce market).

  SELF SERVICE

IBM launches pay anywhere self-checkout

Ten percent of consumers that leave a shop without making a purchase were deterred by having to wait for service at the POS, according to IBM.

The US technology developer believes it has the answer to this problem in its new self-checkout kiosk that can be placed practically anywhere in a shop.
A world-first, claims IMB, its AnyPlace Checkout, which accepts credit and debit card payments, also enables small businesses to affordably deploy advanced kiosk technology previously only available to large enterprises.
Stressing the significance of self-checkout facilities IBM cited a market study by research firm IHL Group 2007.
Among the findings were that 98 percent of respondents had used self-checkout, almost 50 percent had used it more than five times in the previous years and 72 percent had readily accepted the technology.
IHL Group predicts that US consumers will spend US $230.7 billion on self-checkout transactions at retail stores, up 28 percent compared with 2007.

  ATM

NCR takes new technology into the scrapyard

Scrap metal merchants rely heavily on peddlers who in turn have traditionally demanded cash payment for their wares.

Several years ago two US companies, self service technology specialist NCR Corporation and scrapyard services supplier Transact Payment Systems (TPS), teamed up to create a cashless solution based on onsite ATMs and magnetic striped cards issued in payment to peddlers by scrapyards. NCR and TPS have now significantly improved on that solution.
The new system replaces plastic cards with a printed receipt that includes an encrypted bar code that can be read by a scanner-equipped ATM.
NCR explained that this innovation has been made possible by the introduction of its two-dimensional (2D) barcode reading technology which will be used for the first time in the US for ATMs in the TPS solution.
According to NCR the 2D barcode is more scrambled in appearance than the common vertical lines of traditional bar codes, can hold more information and is significantly more difficult to copy.
The 2D code was recently introduced by the US airline industry for passenger boarding passes.
According to the US Department of Commerce metal scrap valued at $2.36 billion was traded in the US in 2006. This excluded imported scrap.

  BIOMETRICS

SmartMetric claims a world-first in security

SmartMetric, a US biometric technology developer, has released what it claims to be the world’s first practical fingerprint microchip based sensor for use in credit and other wallet size cards.

Accuracy of the chip is 99.999 percent even on dirty or calloused hands, according to SmartMetric.
“We believe this is the most sophisticated, yet functional security and identity solution in the world,” said SmartMetric’s president and CEO Colin Hendrick. “Not only is the technology reliable, but it simplifies the entire process of identity authentication since no central fingerprint database is required. Everything that’s needed is on the card itself.”
While SmartMetric’s product is no doubt an effective means of identification, its claim as a world-first could be disputed by other developers such as Biometric Associates in the US which produces a similar fingerprint smartcard solution, the BAI Authenticator.

  ONLINE PAYMENTS

Online bill paying takes off

Not only Australians paying more bills every month – an average of 8.2 compared with 3.4 in 2002 – their payment method is also changing markedly reveals a survey undertaken by BPAY, an internet bill payment specialist serving 14,000 businesses.

The most striking change is adoption of online bill payment with 80 percent of respondents reporting having regularly paid bills online in 2007, up from 36 percent in 2003.
BPAY noted that 70 percent of respondents used its service in 2007, a year in which it processed 16 million payments per month. BPAY has processed more than 1 billion payments since its launch in 1997.
The big loser in Australia’s bill payment market is the mail-borne cheque, with only 17 percent of respondents having regularly used mail bill payments in 2007, down from 43 percent in 2003.
Even growth in direct debits appears to have been halted. Usage as a regular payments means having climbed from 55 percent in 2003 to 72 percent in 2006, eased to 66 percent in 2007.

  PAYMENTS PROCESSING

First Data expands presence in India

First Data’s Asia Pacific expansion strategy has received a boost with its appointment as a payments processor by Kotak Mahindra, one of India’s largest financial conglomerates.

First Data’s first processing contract in India, it calls for the deployment within four months of its VisionPLUS platform to support the launch of a new credit card and loan portfolio by Kotak Mahindra Bank.
“Through this agreement, First Data has significantly extended its presence in India, an important market in which we see real opportunities for growth,” said First Data Asia Pacific’s president Nigel Lee.
Established in February 2003 Kotak Mahindra Bank operates 178 branches in 107 locations throughout India.
Parent company Kotak Mahindra, which has a diverse range of other interests including asset management, life insurance and investment banking, boasts a total of 4.4 million customer accounts.

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