Thursday, October 9, 2008

Zopa Says Nopa to US Operation

Zopa to Close U.S. Operation

Zopa's U.S. social deposit/lending site will be shuttered, just 10 months after its launch The site, which delivered loan applications and CD customers to six credit union partners, apparently was closed by Zopa. At this point the exact reason is unclear, Zopa blamed the U.S. credit situation and said it wanted to concentrate its efforts in other markets.  Live long and Prosper...

This from Zopa's Blog:

Zopa blog - Zopa U.S.
You probably know that Zopa’s US operation has a very different model to that in the UK and Italy in that it works in partnership with financial institutions (the credit unions) rather than being a pure peer to peer marketplace as it is here and in Italy.

So while our model is doing very well in current market conditions, the US has been adversely affected in a way that just couldn’t have been predicted when we launched int he US and is no way the fault of our partners. For us, a real shame is that we weren’t able to launch the original model over there for regulatory reasons.

So, sadly, our US colleagues have decided to withdraw from the US marketplace. This decision will have no impact on Zopa’s other activities in the UK, Italy and Asia.

Zopa’s UK operation has experienced significant volume increases in 2008 with huge growth in new members and increasing lender returns, while continuing to maintain excellent credit quality – currently less than 0.5% of loans are affected by any kind of late payment issue, with actual losses below 0.04%.
Zopa Italy has also achieved the highest growth of any European peer-to-peer operation since its launch in January, and has recently launched the first secondary market for any peer-to-peer operation.

Zopa’s US customers’ deposit accounts continue to be insured by the NCUA up to $250,000, and servicing of those accounts as well as the loans will be assumed by the credit unions within 90 days.

Zopa looks forward to continuing to develop and expand its operation worldwide as it continues to offer investors a safe return on their investments and a better deal for borrowers, and remains optimistic that it can return to the US market when conditions permit.

We’d like to thank our US colleagues for their hard work, dedication and the oustanding service they have provided for their customers. I’m sure you’ll join us in wishing them the very best.

India ePayments to Grow 70% within 2 Years

Brigade Road is a popular commercial district ...Image via Wikipedia
The Green Sheet 2.0 :: Newswire
Bangalore, India, Oct. 8, 2008

Payments in India Going e-Way
Report Published by Celent

At a rapid pace, the Indian payments system is transforming from paper to electronic. The retail e-payments market is likely to grow nearly 70 percent in the next two years. The value of retail e-payments should reach US$150 billion to $180 billion by 2010.

Increasing awareness and adaptability of various electronic channels has resulted in 60 percent growth in Indian e-payments over the last three years. A new Celent report, Payments in India Going e-Way , examines the constant innovation, adoption, and implementation of electronic mechanisms in the Indian payments system. Although the system is still dominated by paper-based transactions, there is great potential for a transition to electronic payments. Electronic transactions currently account for just 37 percent of total payments by volume. However, over 75 percent of payment value is electronic.

"The payment system in India has seen unmatched growth since the inception of electronic payment mechanisms," says Prathima Rajan , analyst at Celent and author of the report. "The introduction of various kinds of payment mechanisms into the retail payments space has ensured more timely and efficient completion of financial transactions," she adds.

With the growth of e-payments has come the increased usage of plastic payment cards. India has been one of the fastest growing countries for payment cards in the Asia-Pacific region. The country currently has approximately 130 million cards (both debit and credit) in circulation. Celent estimates that the number of cards in circulation will hit 210 million by 2010, with 169 million coming from debit cards and about 40 million from credit cards. However, credit cards will overtake debit cards in terms of transaction value as customers continue to use credit cards for purchases and bill payments.

This report analyses the payment patterns of Indian customers and looks at the potential for growth in the number of e-payment transactions. The report highlights the value proposition of banks outsourcing payment processing to various third party vendors. It also looks at the latest electronic payment mechanisms, such as card-based payments (smart cards and contactless cards), online payments, m-payments, POS terminals, etc. The report evaluates the market share of various players, including banks, non-banks, and other third party vendors in terms of payment processing, and profiles three major third party payment vendors.

About Celent

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally experienced analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is part of Marsh & McLennan Companies [NYSE: MMC].

Source: Company press release.

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Chinese SME Business eCommerce Adoption Grows 45%

Shanghai, .Image via Wikipedia
200,000 Chinese small, midsize businesses to adopt e-commerce in 2008, up 45 percent

Industry analysts claim that the number of small and midsize businesses across China is to grow by over 45 percent, from 135,000 in 2007 to 200,000 by the end of 2008.  By 2010, this number is expected to hit 370,000. The analysts only take e-commerce activities executed by businesses that have offline stores as well. For companies that are entirely focused on e-commerce, they predict a growth in business by 4 percent over 2007.

The small businesses use the Internet as a marketing medium and have succeeded in incorporating e-commerce features including online shopping, e-payment gateways and web-surveys to improve customer relationship management, according to analysts at Access Markets International Partners China.

According to a Mastercard study, new markets such as China have brought a significant contribution to an increase in online shopping payments, due to the rising upper-middle income urban elite demographic.

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27% of Lost Online Business ReCoupable with Coupons

Online retailers in danger of losing 27 percent of online business by not offering coupons

Online stores that do not provide online coupons as a payment method for US online buyers find themselves at risk of losing 27 percent of their business.

More than half (51 percent) of US online customers have expressed their intention to change spending habits as a result of the crisis in the economical sector. Of these, 9 out of 10 have made plans to spend less on gifts during this year's holiday season, as compared with the same period of 2007. In terms of strategies to be adopted by online customers in order to spend less, 35 percent mentioned the use of coupons. 16 percent of respondents have declared that they will buy a certain product only if they can find a coupon.

The study also indicates that offering coupons can be a successful strategy to be adopted by online retailers in order to attract customers. 67 percent of those involved in the study believe that coupons can drive customer loyalty, while three out of four US online customers are inclined to visit again a store that offers coupons.

Almost 72 percent of online adults are likely to visit a new store if the latter offers them the possibility of using a coupon. In case they do not find a coupon which is available for a certain purchase for an online store, 20 percent have stated that they will choose another store that offers coupons as well as the same product, while 8 percent will prefer to wait for an available coupon to purchase that item. According to the study, the most popular items among online shoppers are books (mentioned by 71 percent of respondents). 62 percent of online shoppers have referred to music, 55 percent electronics and 53 percent gift certificates.

The Online Shopping survey was conducted by market research firm Harris Interactive and commissioned by

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I Came, I Saw, I Clicked...

YouTube to enter e-commerce arena by adding 'click-to-buy' feature

In a move to monetize its popularity, the video sharing website YouTube is introducing the 'click-to-buy' option for users interested in purchasing goods and content related to the videos they are watching.

As part of this initiative, YouTube is to allow retailers to insert buttons below videos on its website which allow users to connect to Apple’s iTunes music store, Amazon’s shopping portal, or computing game publisher Electronic Arts to buy music and video games. The retail links are currently only available in the US.  YouTube plans to use this e-commerce service to sell music, films, TV shows, video games, books, concert tickets and other media-related products to generate additional revenue for both itself and companies placing videos on the website.

Industry analysts at research firm Piper Jaffray Research estimate that the video website could earn about USD 200 million in revenue in 2009, as compared with nearly USD 27 billion predicted for Google. ComScore reports that YouTube registered 330 million visitors in August 2008. In 2006, Google paid  $1.7 billion for the acquisition of YouTube. 

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12% of Online Buyers Have Been Victmized by Hacksters

12 percent of online buyers have fallen victim of fraud or identity theft

According to a study, one in ten shoppers (12 percent) claim their personal information has been stolen and used for online shopping in their name without their knowledge. 50 percent of respondents became aware of the situation by themselves, while 43 percent found out about the fraud from their bank or card provider and 7 percent were informed by the retailer. 93 percent of those involved in the study have succeeded in reclaiming the money.

In terms of customers' concerns regarding their online shopping experience, security is still an issue. 67 percent of customers who do not shop online have claimed that they have not made an online purchase yet because they favour a brick-and-mortar store, while 33 percent have not done so because of the fears related to the (lack of) security that online payment methods offer.

17 percent have more confidence in the safety of online shopping than they did a year ago, while 8 percent claim the contrary. When asked about whether the security measures that have already been adopted are adequate, 27 percent gave a negative answer. 25 percent consider that retailers should be held responsible for the security of online shopping, 18 percent mentioned banks, 8 percent referred to internet service providers and 7 percent the Government.

The study of 2,270 households was conducted by GfK.

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GreenSense - Go Green on our Dime

Charter One Bank, the fourth-largest bank in Greater Cleveland, is launching a new rewards program that pays customers 10 cents for each transaction done electronically -- meaning not with paper.

The bank's GreenSense is aimed at helping the environment and attracting and retaining customers.

The initiative is similar to other banks' rewards programs and Charter One's existing program. The big difference is that GreenSense pays cash directly into customers' accounts, and it's aimed at promoting only electronic transactions. The program is voluntary.

Charter One plans to offset the expense of paying customers cash rewards by reducing paper statements it mails out, said spokeswoman Carrie Carpenter. Only about 10 percent of Charter One's customers with checking, savings or money market accounts currently receive statements electronically.

Most banks with rewards limit cash perks to debit card transactions only, or award points that can be redeemed for merchandise or gift cards.

National City, for example, in early 2006 launched a groundbreaking program that rewarded customers with points every time they wrote a check, made an online payment, used a small-business credit line or did other routine business with the bank. Citibank also awards points for having multiple types of accounts or services, such as direct deposit or online bill payment.

Charter One rolled out its first rewards program in 2000, before online banking took off, and revamped it in early 2007.  Charter One caps rewards at $10 per month, or $120 per year. The money is deposited into customer accounts monthly.

Transactions that qualify are debit card purchases, online bill payments and recurring payments scheduled through the bank.  Customers aren't rewarded for writing checks because "that's not saving the environment," Carpenter said.

Charter One estimates that a million customers will enroll. If each normally makes 10 transactions a month and does them electronically instead of with paper, that would save 700,000 pounds of paper and 7 million gallons of water in one year, Carpenter said.

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Will Card Fraud Take Quantum Leap?

How quantum key technology may prevent online card fraud | Technology | The Guardian
The solace of quantum key technology

Encryption based on the fragility of quantum states could be used to protect consumers from card fraud
* Christine Evans-Pughe  * The Guardian, Thursday October 9 2008

If a fraudster copies the numbers from your bank debit or credit cards, there's little to stop them going on a shopping spree online. This kind of fraud - known as card-not-present (CNP)- exceeded £290m in the UK last year and is a growing problem. It could also be one of the first consumer applications to benefit from quantum key distribution.

Quantum key distribution - or QKD for short - exploits the quantum mechanical properties of light particles (photons) to generate secret keys (strings of random numbers) that can be shared between two parties (for example, you and your bank) and used to encrypt data to safeguard it from snoopers. Typically, QKD systems transmit a stream of differently oriented photons to represent 1s and 0s through an optical fibre or a free space link. The snooper-proofing is intrinsic due to the fragility of quantum states: if you try to measure them they collapse, which is a marker for tampering, alerting the legitimate users to the presence of an eavesdropper.

Can you keep a secret?

Using quantum keys to encrypt data is at present only of interest to banks, governments and defense organizations which might need to move lots of confidential information securely between sites. But a demonstration in Vienna this week takes the technology to a different level, by integrating quantum key distribution into a standard communications network.

The event will show VoIP, videoconferencing and web services encrypted with constantly refreshed quantum keys. It will also include a prototype solution to card-not-present fraud, developed by Professor John Rarity from the University of Bristol and Hewlett Packard Research Labs.

The idea is that we would fill up our mobile phones or similar handheld devices with secrets (random strings of digits) at a quantum ATM. During online transactions, we would gradually consume this personal stash of secrets to encrypt information, such as our PIN, or to authenticate ourselves.

"The quantum part gives you the promise that when you've topped up your secrets, only you and your service provider own this particular random digit string," says Tim Spiller of HP. "If you're doing an internet transaction, you send the merchant however many secret bits is deemed to be secure. The merchant sends them on to Visa, say, who checks they're OK and if so authenticates the transaction."
The Vienna event is the culmination of a four-year EU project called SECOQC (Secure Communication based on Quantum Cryptography) to bring QKD technology to the mainstream. The SECOQC partners - who are now defining a European technical standard - include Siemens, Toshiba, Hewlett Packard, ID Quantique, Thales and Qinetiq as well as leading quantum scientists.

For the demo, Siemens has installed seven quantum key links into a standard metropolitan fiber-optic communications network that runs around Vienna and connects several of its sites. The network has been successfully running in test mode for several weeks now, according to Wolfgang Richter of Siemens.

Quantum keys won't be able to encrypt data traffic in real-world networks until standards have been finalized. However, SECOQC project leader Christian Monyk is optimistic. " We could produce it in six months."

When (or if) consumers enter the picture is difficult to predict. Rarity and HP's technology is "on the banks' radars", according to Spiller. But the point about their system is that it's potentially very cheap. HP's vision is that mobile phones could easily include half a short-range QKD system (which they say can be built from some standard LEDS and a low-cost integrated optical circuit). "Getting that into the market would depend on demand but five years is reasonable," says Spiller.

No hiccups

Meanwhile, quantum cryptography is gaining interest. Last year, ID Quantique's simple point-to-point quantum key distribution technology was used to guarantee the security of votes cast in Geneva during the Swiss general election. This summer, the defence and security company Qinetiq has been doing trials in London with network operator AboveNet, which provides fibre-optic connections for businesses. "We've done some experiments sending polarised photons through part of their network," says Dr Brian Lowans of Qinetiq. "We didn't have any hiccups."

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More on the Alternative Payments Threat to V/MC Duopoly

Card brands, issuers to lose USD 345 million in volume in 2010 in favor of alternative payments

A study focusing on the market value gained by alternative payments indicates that these type of payments threaten to take away almost $345 million in potential transactions from card brands and issuers by 2010. This volume is expected to grow to $1.7 billion by 2015.

Presently, alternative payments represent 15 percent of the total e-commerce volume. Nevertheless, they could become a threat to traditional payment methods by making higher value proposition to buyers and they are already focusing on offering higher value than payment cards, the study suggests. Despite their dominance and wide acceptance, payment cards have serious weaknesses. The most important one is security, since 40 percent of consumers are reticent when it comes to revealing credit card information on the internet.

The study also reveals that every time a bank account is debited via ACH instead of a card, the card industry loses from 1.5 to 2.4 percent of the transaction size.

The 'Alternative Realities: The Commoditization and Allure of Alternative Payments' study was conducted by Celent.
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Pumping Gas Just Got Much Riskier - MSNBC

I've been blogging about the dangers of paying at the pump for a long time.  The security of the card readers leave much to be desired.  Frankly, a decent hacker wouldn't even need a skimming device,..that's for the amateurs.  Even  when you're not being skimmed by hackers, the banks are putting a hold on your account for up to $100, many times resulting in overdraft charges.  ALWAYS pay inside using your PIN, it's a real-time transaction, eliminating overdraft charges and significantly reducing the likelihood of falling victim to a skimscam.  For more on the subject of skimming, take a look at "related articles" located at the bottom of this post: 

Beware of debit card skimmers - ConsumerMan -

Secret Service, police warn of 'well-organized' debit card skimmers
By Herb Weisbaum
updated 9:37 a.m. MT, Wed., Oct. 8, 2008

Becki Turner got the call from her bank’s fraud department on Labor Day. The investigator wanted to know if she had withdrawn $500 from an ATM in California over the holiday weekend. She hadn’t. She couldn’t. Turner was home in Puyallup, Wash.

“I was just flabbergasted,” she says. “I had the card with me, the ATM was in another state, and the person using the machine had to have my security code.” Turner worried crooks had gotten into the banking system and stolen her password.

It wasn’t anything that complicated. Puyallup police say thieves snagged her account information — along with the debit card numbers and PIN codes of hundreds of other people — at two gas stations in the area.

They did it by installing their own hard-to-spot card reader, called a skimmer, on top of the card reader built into the pump. The skimmer is able to grab the account information from the card without interfering with the legitimate payment transaction.

The crooks used the stolen data to create (or clone) fake debit cards that were used at ATMs in Washington State over the Fourth of July weekend and in Northern California on Labor Day weekend. The bad guys like three-day holidays because it gives them more time to use the cards before the unauthorized withdrawals are spotted.

“We are looking at a sophisticated, very well-organized group of individuals,” says Detective Jason Visnaw with the Puyallup Police Department. When all the victims from these two incidents are identified, the total loss could reach half a million dollars.

Why steal debit card numbers? “With a credit card you have to go and buy merchandise and then you have to fence it or pawn it,” Det. Visnaw explains. “With a debit card, you’re getting cash money.”

This is not an isolated case. Gas pumps are being compromised in cities across the country. “We don’t view it as an epidemic, but there are cases open in at least a half dozen states right now,” says Ed Donovan, spokesman for the U.S. Secret Service. These investigations are underway in California, Nevada, Pennsylvania, Delaware and Washington.

Donovan tells me the Secret Service believes some of these crimes are inside jobs, involving someone at the service station.

Gas pumps are just the latest target
Skimming credit cards and debit cards is not new. Portable card readers make it possible for anyone to copy the information stored on a card’s magnetic stripe. This information is not encrypted so it’s easy to steal.

“You just run it through the skimmer and it has all the information right there in plain text,” says former White House cyber security advisor Howard Schmidt. “It’s very easy to imprint that data on another magnetic strip and use it somewhere else.”

The first skimming cases were reported at restaurants and stores where dishonest employees ran cards through their reader before ringing up the sale. As technology improved, the bad guys developed skimmers for ATMs. Now they’ve added gas pumps.

The skimmers are designed to slip over the real card reader. They can be hard to spot. And quite frankly, most of us would never look for something like this anyway. We want to pay and go.

So how do they get your PIN number? They can hide a little camera in the skimmer or on the pump. It shows your fingers as you type in the number.

There are also fake keypads that slip over the real keypad that can transmit the PIN code as you enter it.

In Las Vegas, police have discovered even more sophisticated technology – wireless transmitters installed inside the pump. “They can actually sit in the parking lot with a laptop and get real-time information as victims use their card,” explains Lt. Robert Sebby of the Las Vegas Metropolitan Police Department. Because there’s nothing on the outside of the pump, there’s no way you can tell the pump is compromised.

Not a safe way to pay
Nancy and Jim Tew no longer use their debit cards to pay at the pump — and for good reason. They both had their debit card numbers stolen at one of those gas stations in Puyallup, Wash.

Nancy Tew found out about the theft when her card was rejected at the grocery store. “To my astonishment, I had no money in the bank,” she said.

The thieves used her account number at ATMs in Hollywood, Calif., to steal $600. They got $900 from her husband’s checking account. She tells me it was “totally bizarre and really scary” to be targeted like that and not even know it.

The Tews now pay for their gas — with cash or debit card — at the register. That may sound paranoid, but other victims of this skimming attack tell me they now do the same thing.

Police in Puyallup and Las Vegas now advise residents not to use their debit card at a gas pump because there’s no way to be sure it hasn’t been tampered with.

That’s smart advice and here’s why. Debit cards do not offer the same fraud protection as credit cards. If crook armed with a skimmer snags your credit card number and uses it to buy things, you can dispute the charges with the credit card company. You won’t owe a thing while they investigate.

If the crook grabs your debit card number, he can go to a cash machine and pull money out of your checking account. It could take days for the bank to investigate and put that money back into your account. During that time checks could bounce or you might not be able to pay your bills. That’s why the only way I pay at the pump is with a credit card.

© 2008 MSNBC Interactive


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