Wednesday, February 4, 2009

Say it Aite So

Aite Says It Isn't...

Aite debunks unbanked, underbanked myths

Boston, Feb. 4, 2009 -- A new report from Aite Group, LLC debunks 10 myths commonly held by bank executives, regulators and consumer advocates about unbanked and underbanked consumers. The analysis is based on a 400-person survey with consumers at check-cashing stores, completed in November and December of 2008.

Among the myths debunked by the report is the belief that consumers are unbanked or underbanked because of cultural and attitudinal reasons. Instead, it reveals that people are unbanked for very practical reasons, including credit, pricing, cash flow and service issues. Fifty-three percent of unbanked consumers in Aite Group's survey are impeded by credit issues, while an additional 28% face pricing issues with checking accounts, 12% are impeded by cash flow issues, and 7% constrained by service issues.

"Consumers that are underbanked and unbanked often choose to be so for practical reasons rather than attitudinal ones," says Gwenn B├ęzard, research director with Aite Group and co-author of this report. "Greater education and marketing wizardry is unlikely to succeed in attracting this group to checking account relationships. The only way for banks to seriously compete is to deliver a better product and value proposition."

This 29-page Impact Note contains 22 figures. Clients of Aite Group's Retail Banking service can download the report by clicking on the icon to the right. Related Aite Group Research:

* Nine for '09: Opportunities and Challenges for Banks in 2009
* Mobile Banking for the Underbanked: Lessons from Africa
* Competing in Money Transfers

To purchase this report or for additional information, please contact: Aite Group Sales Tel: +1.617.338.6050 sales@aitegroup.com

About Aite Group, LLC Aite Group is a leading independent research and advisory firm focused on business, technology and regulatory issues and their impact on the financial services industry. It was founded by leading industry experts in Banking and Securities & Investments. Aite Group brings together a team of business strategy, technology and regulatory experts to deliver comprehensive, timely and actionable advice to financial institutions and technology vendors. It seeks to become a true partner, advisor and catalyst by exchanging ideas with and challenging basic assumptions of its clients, ensuring that they always stay one step ahead of the competition.

Source: Company press release.

10th Annual Online Fraud Report

Online payment fraud trends, merchant practices and benchmarks
This year's study found that online merchants estimate they lose 1.4% of their revenue to fraud or $4 Billion in annual sales.  Read about this and over 25 other fraud management benchmarks, trends and practices. 
The 2009 edition of CyberSource's Online Fraud Report is based on an independent survey of hundreds of web merchants.  This annual industry report is essential for finance, risk and eCommerce professionals.
 Download your copy of the CyberSource Online Fraud Report 2009 Edition today!
Get Your Copy
Contents:
  • Detailed fraud metrics (fraud, chargebacks & order rejection)
  • Detection tools used/planned at each stage
  • Manual review rates, staff turnover and training time
  • Full process/metric maping
  • Budgets (overall and how allocated) 

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KPG Ventures Funds Nat'l Payment Card


I wrote about National Payment Card earlier this year. Why $4.00 a Gallon Gas is More Appealing to NPS.   Now comes word that they've raised $2 million for expansion, so apparently KPG Ventures found something very appealing about their decoupled debit program.  Here's the press release:

KPG Ventures Funds National Payment Card Association With $2 Million for Expansion Into Supermarket and Chain Drug Verticals

SAN FRANCISCO--(BUSINESS WIRE)--KPG Ventures—a venture capital firm specializing in seed-stage disruptive technology companies, today announced it has invested $2 million in National Payment Card Association, an emerging company responsible for creating a large scale, low cost debit settlement system benefiting consumers and merchants with lower transaction fees. KPG Ventures’ investment will propel National Payment Card Association’s growth beyond the fuel and convenience markets and into supermarkets and chain drug outlets.

National Payment Card Association’s technology is currently being deployed in fuel and convenience stores across the country, allowing consumers to save money and merchants an alternative to the large transaction processing fees charged by traditional transaction processors.

“National Payment Card Association’s product is an innovative, money-saving concept that has already met with a great deal of success,” said National Payment Card Association CEO and Founder Joe Randazza. “In these difficult times, the support and vote of confidence we have received from a specialized venture capital firm like KPG Ventures is validation of our model and technology, and well positions us for future growth.”

“KPG seeks investments that can scale and solve a highly defined consumer problem and found both of them in National Payment Card Association,” said Dave Hills, a General Partner of KPG Ventures. “Joe and the team have built a great product and we’re happy to support them.”

National Payment Card Association first introduced its alternative payment solution in June 2006 and has earned much attention from industry insiders and consumers. The National Payment Card Association PIN based payment system processes transactions through the Federal Reserve Automated Clearing House (ACH), resulting in lower merchant fees and a self-funded loyalty program that can provide immediate savings to consumers. Specifically, the program benefits retailers by helping them shift away from the interchange fees credit card companies normally charge on each transaction by moving them to the lower cost ACH system. The merchant can then use some of the savings to change customers’ payment behavior by passing some of that savings along to them right at the pump.

Founded in 2006, KPG Ventures is a San Francisco-based venture capital firm. KPG focuses on the consumer Internet sector of technology-driven businesses, investing at the seed-stage cycle of a company’s development. With a proven track record of picking the right companies and teams who are focused on highly capital efficient opportunities that require little capital to reach profitability, KPG has launched many successful companies. The firm concentrates its efforts on a small handful of companies at a time so that it can leverage the strategic and operating expertise of its general partners.

For more information about KPG Ventures, please visit kpgventures.com. For more information on National Payment Card Association, please visit nationalpaymentcard.com or contact Shep Doniger at 561-637-5750.



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ATM Skimming Card News Video

In light of the previous post, whereby I mentioned that I knew how they got the PIN, I've dug up a news report from Cincinnati, (WCPO...not WKRP) called ATM Scam Targets Debit and ATM Cards.

I've embedded the video report below for your convenience:





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More ($9 million) on the RBS Breach (Video)

Below you'll  find a fascinating story by John Deutzman with Fox NY regarding the recent RBS WorldPay breach.  Didn't hear of it?  That's probably because they issued their press release concerning the breach during the busy Christmas season, December 23rd. 

To read about what I thought about it then, visit "Mother of All Hacks Coming?  from December 24th.

This incident happened after midnight on November 8th.  Now...I know how they got the PINs, (here's a hint, you're on candid camera), so the most intriguing part of this story, at least in my opinion, is the fact that the hackers were able to lift the daily limits on the cards, providing a larger payday. That's the coup de' tat. 

The coordination and scope of this effort is also amazing even causing the FBI to make comments to that effect.  130 different ATM machines in 49 cities with 100 cards in 30 minutes. 

As the story goes, no suspects, only mule drivers, but I think Clive Owens is going to be the guy behind it when they do the movie.  Speaking of movies, watch the video on the right if you have the time.


Reported by John Deutzman


A Fox 5  investigation   exposes a  worldwide ATM  scam that  swindled $9  million and  possibly  jeopardized sensitive information from  people around  the world. Law enforcement sources  told Fox 5 it's   one of the most frightening  well-coordinated heists   they've ever seen. (Watch video report at right.) 

Photos from security video obtained by Fox 5 show of  a small piece of a huge scam that took place all in one  day in a matter of hours. According to the FBI,   ATMs from 49 cities were hit -- including Atlanta, Chicago, New York, Montreal, Moscow and Hong Kong.


"We've seen similar attempts to defraud a bank through ATM machines but not, not anywhere near the scale we have here," FBI Agent Ross Rice told Fox 5.

These people in the photos are believed to be "cashers," low-level players, in a scheme devised from some mastermind -- a dangerous computer hacker or hacking ring authorities fear could strike again. Here's how it all came down, according to information Fox obtained from the FBI and law enforcement sources:

The computer system for a company called RBS WorldPay was hacked. One service of the company is the ability for employers to pay employees with the money going directly to a card, called payroll cards, a lot like a debit card that can be used in any ATM. The hacker was able to infiltrate the supposedly secure system and steal the information necessary to duplicate or clone people's ATM cards.

"We've never seen one this well coordinated," the FBI said.

Then shortly after midnight Eastern Time on November 8, the FBI believes that dozens of the so-called cashers were used in a coordinated attack of ATM machines around the world. "Over 130 different ATM machines in 49 cities worldwide were accessed in a 30-minute period on November 8," Agents Rice said. "So you can get an idea of the number of people involved in this and the scope of the operation."

Here is the amazing part: With these cashers ready to do their dirty work around the world, the hacker somehow had the ability to lift those limits we all have on our ATM cards. For example, I'm only allowed to take out $500 a day, but the cashers were able to cash once, twice, three times over and over again.

When it was all over, they only used 100 cards but they ripped off $9 million.
The RBS Web site says that card holders will not be responsible for any unauthorized transactions. But there is fear that the hackers might have had access to sensitive information used in identity theft for a potential 1.5 million customers -- including their including Social Security numbers.

"The number of machines that were accessed, the number of cities that were targeted, and the number of people that had to be involved in this is quite significant," Agent Rice said.

Investigators are hoping a break in the case may come from one of the cashers. The theory is they probably were recruited, paid a small fee to be solders in the scam, and might be likely to rat out the people who hired them.

There are millions of people out there these days with these payroll cards. RBS officials say they have sent out letters to anyone who might have been affected. They are also offering one-year credit protection for people whose Social Security number may have been jeopardized by this scam. However, the good news is that it doesn't look like any identity theft has occurred yet.

So far, the FBI has no suspects and has made no arrests in this scam. An attorney in Atlanta has filed a class-action lawsuit against RBS WorldPay for allegedly failing to protect personal information.

RBS WorldPay told Fox 5 the company has hired a security firm to try to figure out what happened and to prevent it from happening again.

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