Friday, October 31, 2008

Perfect Storm Brewing, HomeATM Perfectly Placed

There's a Perfect Storm Brewing and HomeATM is Perfectly Positioned...

Editor's Note: What a wonderfully pleasant surprise. Mainstream media is finally beginning to understand and write about the impact debit cards will have in shaping the purchasing habits of consumers in the foreseeable future.

Their next giant step would be to understand and write about the "Paradigm Shift" occurring within those very same consumers' preference to "shop online" versus "at retail stores" and then put the two together (click here to view this unbelieveable chart from eMarketer ) .

Only then would they possess the beginnings of a decent understanding of the future of the payments industry. They would still need to include other variables, such as convenience, security, angst from retailers against high interchange fees, the increase in fraud, decrease in consumer trust, etc. to be able predict with any accuracy at all, the future of online payments. But they'd have a good foundation with which to play.

Excuse the cliche' but it really doesn't take a rocket scientist to figure it out:
Consider these current trends:
  • Debit card use grows...
    credit card use decreases
  • Online shopping grows...
    bricks and mortar shopping decreases
  • Online Fraud grows...
    consumer trust in security decreases
  • POS Tampering grows... consumer trust in public POS device decreases
  • Retailers Angst Over Interchange grows, V/MC's Ability to Justify decreases
Now...Let's imagine for a moment that someone was to devise a way for "online shoppers "to use their "debit card" while "reducing fraud", and eliminating tampering...they just very well might be on the right track. Take into consideration all those retailers who are up in arms over the high cost of Interchange Fees and in addition to providing the aforementioned benefits here's another: By using this system, your Interchange Fees would be cut in half! The last piece of the puzzle has been placed. Like I said, Perfect Storm, Perfect Place. The eye of the tiger...

The Steady Ascent of the Debit Card - BusinessWeek
The Steady Ascent of the Debit Card

Debit cards may soon overtake credit cards, which is why banks are scrambling to boost their profitability

By Christopher Palmeri

For consumers reeling from a series of economic body blows, debit cards are increasingly becoming the plastic of choice. Some use the cards, which pull money directly from a bank or other account, as a budgeting tool to limit spending. Others are embracing them out of necessity as banks clamp down on credit.

All told, debit purchases are expected to climb 13% in 2008, to $1.2 trillion, according to The Nilson Report, an industry newsletter—compared with a 3% rise, to $1.9 trillion, for credit-card transactions. At Visa (V), the No. 1 card company, debit spending could surpass credit this year.

For the banks issuing the debit cards, the trend seems bittersweet. On the plus side, debit cards don't pose a threat to the banks' books like credit-card accounts; losses are mounting as borrowers fall behind on their payments. But the profits on debit cards aren't as plump since banks don't collect interest on them. Issuers largely make money from fees, which (on debit cards) pale next to those on credit cards. Retailers, for instance, three times the amount (they would pay for) on debit transactions.

The Next Frontier

Regulatory headwinds haven't deterred the banks from ramping up their debit-card businesses. Among the groups that offer the biggest potential for banks: people who earn more than $75,000 a year. According to MasterCard (MA), they're the least active debit users, usually turning instead to credit cards that offer frequent-flier miles and other rewards.

The aggressive push is paying off. These days, debit cards are as widespread as credit cards.

"Debit is becoming the payment card of choice for the American public," says Red Gillen of consultancy Celent. At the upscale suburban Atlanta restaurant Aqua Blue, waitresses now bring diners a device that lets them swipe their debit card and enter their PIN to pay for meals.

Editor's Note: That's "exactly" "my point"...of's what HomeATM does for the online shopper. We provide the device that allows online shoppers to swipe their debit (and/or credit) card and enter their PIN to "securely" pay for goods bought online" And in this "Perfect Storm" HomeATM is starting to see that they have been correct in their approach to bring secure "card present" and PIN based web transactions from ANY web device. The way we see it...

"if you can't bring the consumer to the point of sale device,
bring the point of sale device to the consumer"

What Makes the Card Present is the Ability to Present the Card

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PayPal - About as Secure as a Chocolate Teapot?

This story from The Industry Standard must make PayPal executives a little insecure...

PayPal accounts compromised over 16 months; No response from eBay | The Industry Standard

Online payment service PayPal has had an exploit on its hands for at least 16 months and counting, and seems to have no resolution for it.

A tipster forwarded us screenshots of the fraud, which involves a dummy subscription service to PayPal's sister company Skype, all part of the eBay corporate family. Using the fake Skype subscription, several small charges are made against a PayPal account, all in the same dollar amount.

The first mention of the exploit by a media outlet seems to have been an article in The Register back in June, but complaints on consumer boards like Complaints Board show the problem going back even farther, and a tech column in the Orange County Register appears to show the same problem back in June 2007, with PayPal and Skype reps saying at the time it was the first they'd heard of the problem.

As you can see from the screenshots we received, the phony subscription includes what appear to be Chinese characters in the Billing Description field, and all links are dummy links in the sections for logging back into the PayPal account and reporting errors. In addition, the email address for the "seller" is listed as "unavailable."

PayPal was quick to reverse the charges, but our tipster also had to cancel the credit card account, and PayPal offered no explanation for the problem.

A request made by The Industry Standard to eBay regarding the issues did not receive a reply.

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White Paper Coming on Future of Payments

NetWorld Alliance highlights payment trends for next 5 years

Louisville, Ky., Oct. 31, 2008 --
NetWorld Alliance, publishers of ATM Marketplace, announced the publication of "The Future of Cash: Survey Predicts Changes in Consumer Habits," an exclusive white paper that contains the results of a new survey of more than 500 financial-industry professionals.

"With credit markets tightening and consumers rethinking their established habits for dealing with their money, the world of payments is on the precipice of some major changes," said Tracy Kitten, senior editor of ATM Marketplace. "For this white paper, we've tapped the collective expertise of professionals who are out on the front lines every day and distilled their wisdom down to some useful numbers."

Topics addressed in the white paper include:
* Which payment methods will experience the most increase in usage in the coming months
* Changing consumer attitudes about the security and safety of their funds on deposit
* The evolving role of cash relative to other payment methods

The paper also includes expert commentary from Mike Lee, president of the ATM Industry Association.

The white paper is part of the development of a larger publication, "ATM Future Trends 2009," which ATM Marketplace and the ATMIA will release in early March. The publication will take a look at the future of the industry in these tight economic times and feature even more in-depth survey results, as well as expert commentaries.

About NetWorld Alliance

About ATM Marketplace

ATM Marketplace is the world's largest online provider of information about and for the ATM industry. The content, which is updated every business day and read by business and industry professionals throughout the world, is free.

Source: Company press release.

Mercator Report on Debit Rewards

Debit Advisory Service

Re-examining Debit Rewards at the Top Fifty Banks


Financial institutions are expanding and diversifying debit reward program offerings as more consumers are using debit cards to pay for their everyday purchases than ever before. Forty of the Top Fifty banks currently have at least one reward program in place, and nearly half of these financial institutions offer multiple loyalty programs to debit cardholders. Most debit loyalty programs at top fifty banks only reward signature-based transactions, while a select few reward both signature and PIN based transactions. Most of the reward programs are funded by interchange revenue, which is substantially greater for signature than PIN debit transactions, but significantly less than credit card transactions. As such, most debit reward programs are less lucrative than their credit card counterparts. While traditional airlines, points-based and cash back programs are still common, a number of financial institutions are offering philanthropic rewards whereby cardholders can choose to donate their reward earnings to a cause of their choice. Such programs enable customers to give more painlessly, and allow financial institutions to benefit from tax deductions. Rewards that promote savings and cash back are the most popular, especially since many consumers are facing financial challenges given current unfavorable economic conditions. Banks are increasingly promoting business across product areas and rewarding customers for using multiple services at the same bank. For example, financial institutions are allowing their customers to earn reward points faster from multiple types of accounts with the same back, and redeem them for additional deposit or a reduction in fees.

Given the significant rise in debit card usage, there is certainly opportunity for continued growth in debit reward programs, however, the overall effectiveness of these programs in fostering customer loyalty is less clear. "It is questionable how much weight customers put on a debit reward program when choosing a new checking account, since they are often viewed as a feature of the account. Although banks aim to differentiate themselves from their competitors with perks such as reward programs, they become less distinguishing when most financial institutions offer them," notes Elisa Athonvarangkul, Analyst, International Advisory Service. "Banks should continue to develop more innovative reward programs to attract loyal customers and set programs apart from their competitors. Sometimes, the most attractive reward is not necessarily redeemable by points or cash back, but rather an efficient and pleasant customer service experience. A customer that feels valued and well treated is more likely to be a loyal customer over the long haul."

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Traditional Payment Cards for Online Transactions Continue to Decrease

The ACH Network: The Bedrock of Alternative Payments; New Research Report by Mercator Advisory Group

Boston, MA (PRWEB) October 31, 2008 -- The ACH Network began as a low volume network transmitting large recurring transactions between well-established entities; however changes in rules and business models have brought about significant changes in the nature and volume of ACH activity.

More than 18 billion ACH payments were made in 2007, representing a 12.6% increase from the total number of transactions generated in 2006. Much of the growth in ACH volume can be attributed to fundamental changes in payment methods used by consumers and businesses with the network transforming into a high volume platform of relatively low-value, non-recurring transactions. These transactions are originated from a rapidly expanding number of merchants, aggregators, corporations, and financial institutions.

Alternative payment providers such as Google Checkout, Bill Me Later and of course PayPal leverage the ACH to provide consumers and merchants with a secure and efficient means of payment and in doing so are experiencing phenomenal growth.

Non-financial institutions have been beating the banking industry to the punch of developing unique and cost efficient payment solutions, especially in the e-commerce space. Ironically, alternative payment providers have succeeded using the banking industry's own infrastructure to capture interchange-like revenues.

Although signature debit and credit card usage online has yet to be hugely impacted by alternative payment solutions, in many cases, non-traditional payment providers offer significantly enhanced value propositions including discounts, sales and loyalty tools, and the ability for merchants to cross sell on non-competitive merchant Web sites. These value added services create significant competitive pressures for traditional payment types and are giving alternative payment methods solid traction.

Brent Watters, Senior Analyst of Mercator Advisory Group's Prepaid Advisory Service and principal analyst on the report, comments, "As alternative payment methods continue to evolve and more players step into the space, the use of traditional payment cards for online transactions will continue to decrease. It is foreseeable that merchants will increasingly promote alternative payments and consumers will become more accepting of new payment types. Mercator believes that in the next five years (2014) 35% of payments made online will be in the form of alternative payments, including prepaid cards, new forms of credit and programs leveraging the ACH."

Highlights from this report include:

  • The ACH continues to show solid growth and transaction volume will continue to escalate as more alternative payment schemes leverage the network.
  • The ACH is moving to push versus pull method of payment thus creating direct competition for EFT networks that have been eager to develop a PIN-less debit solution for online transactions.
  • The ACH's eCheck services continue to fuel the networks' transaction volume and penetrate markets currently targeted by debit and credit cards.
  • NACHA's Secure Vault Payment (SVP) creates an opportunity for banks to compete in online alternative payments.

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Taiwan E-Commerce Growth up 32.2% over 2007

E-commerce in Taiwan to witness expansion in 2008: up 32.3% over 2007

At the end of 2008, online shopping in Taiwan is expected to climb by 32.3 percent, as compared to 2007 and reach USD 7.42 billion, according to estimates made by a local research and consulting firm.

Due to lower prices and a broader range of products that online stores offer, customers across Taiwan prefer to turn to the internet for their purchases.

Business-to-consumer (B2C) e-commerce is estimated to represent USD 4.1 billion of the total e-commerce market and consumer-to-consumer (C2C) transactions are to account for USD 3.1 billion. B2C transactions are the equivalent of nearly 4 percent of the overall retail business.

Fashion and beauty products have registered the most rapid growth, as the compounded average growth rates (CAGR) of these categories hit 88 percent and 49 percent respectively.

For the consumer electronics and travel e-commerce categories, CAGRs have reached 25 percent and 21 percent respectively.

In terms of B2C transactions, the average value gets higher with the age of the consumer. Thus, Taiwanese online buyers who are aged between 20 and 29 spend USD 269, while those older than 50 spend USD 609 on average.

The study was conducted by the Market Intelligence Center.

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Contactless Tackles NFL

Chase launches Chicago Bears contactless debit card

Consumer and commercial banking service provider Chase joins forces with Illinois-based professional American Football team Chicago Bears and MasterCard Worldwide to launch the Chicago Bears Debit MasterCard. The new card aims to provide Chase personal checking customers who are also Chicago Bears fans with an alternative to cash payments intended to cut back on transaction time and improve access to Bears special offers.

The new branded debit MasterCard, which comes with no annual fee, has a PayPass-enabled Blink feature, which allows customers to use the MasterCard tap-and-go service at all accepting merchants. Blink is a Chicago Bears proprietary contactless payment system which allows fast cashless payments at the Soldier Field stadium in Chicago. The new debit MasterCard is available to all new and existing Chase customers and also provides access to exclusive discounts and promotions with the Chicago Bears as well as invitations to various Chase-hosted special Bears events.

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Merchant Risk Council (MRC) Announces eCommerce Payments Conference Speakers

The Merchant Risk Council (MRC) is pleased to announce the Keynote and Closing speakers for MRC's 7th Annual e-Commerce Payments and Risk Conference at the Wynn Las Vegas Resort on March 10-12, 2009. Terry Jones, founder of, has been chosen to deliver the opening keynote speech. Chris Hansen, Dateline NBC correspondent, will be delivering the conference's closing speech.

"We are very excited to have Chris Hansen and Terry Jones join us for our annual conference," said Tom Donlea, MRC Executive Director. "Terry and Chris will provide their own unique perspectives to an audience of e-Commerce and multi-channel merchants coming together and discussing payment strategies while identifying specific solutions in reducing online fraud and mitigating risk." Donlea adds, "With today's challenging economic environment, enhancing profitability is more important than ever before."

The conference will include approximately 40 speakers and panelists, more than 30 unique sessions, and more than 40 payment and risk industry exhibitors -- all delivering valuable insight and information on the growth, diversity and risks associated with e-Commerce payments; new global electronic commerce business models; the latest trends in global payment channels; as well as identifying current and future global cyber threats.

Those scheduled to exhibit at the 7th Annual e-Commerce Payments and Risk Conference include: Accertify, American Express, Bill Me Later, Chase Paymentech, Cybersource, Discover, Ethoca, Experian, GlobalCollect, Google, iovation, 41st Parameter, MasterCard, PayPal/eBay, Trustwave, and Visa.

Since 2002, the MRC annual conference has evolved from an informal group of select merchants into one of the world's foremost conferences on e-Commerce. The 7th Annual e-Commerce Payments and Risk Conference unites the world's top Internet merchants, credit card companies, risk management providers, law enforcement agencies and various consultants and educators in discussing how to make shopping on the internet easier, safer and more profitable for all involved.

"The world of e-Commerce is expanding rapidly," said MRC Board Chairman, Tom Sullivan, Expedia, Inc. "We are now addressing new and emerging e-Commerce communities such as gaming, social networking, digital downloads among many others." Sullivan adds, "As these markets continue to grow, so do complexities of market expansion, payment options, and risk management. These are just some of the issues we'll be exploring during the conference."

For registration or exhibition information at this conference, or to receive MRC membership information, please visit the MRC's website at

About the Merchant Risk Council

The Merchant Risk Council (MRC) is a merchant-led trade association focused on electronic commerce risk and payments globally. The MRC leads industry networking, education and advocacy programs to make electronic commerce more efficient, safe and profitable. Today, with over 7,500 members, the MRC is the leading trade association for managing payments, preventing online fraud and promoting secure e-Commerce. The MRC is dedicated to working with e-Commerce and multi-channel merchants, credit card issuers, credit card companies, risk management providers, and law enforcement to make the Internet a safer and more profitable place to do business. The MRC Board of Directors and Advisors includes: Expedia, Inc., Adobe Systems, Inc., Neiman Marcus Direct, 41st Parameter, Apple,, Bill Me Later, Blizzard Entertainment, Chase Paymentech, CyberSource Corporation, Dell, Inc., Discover Network, Gap, Inc. Direct, iovation, Microsoft, Trustwave, and Visa, Inc.

The MRC is headquartered in Seattle, Washington.

Jordan Rubin
TELEPHONE: 206.364.2789

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