Monday, February 22, 2010

Financial Times Cyber Expert: Online Banking isn't Safe

Financial Times cyber security expert, Joseph Menn, doesn't pull any punches when it comes to his thoughts regarding the safety of online banking. 

A couple weeks back, FT's Paul Murphy stated that "Every major bank in the Western world, is covering up the fact that online fraud - both sophisticated and unsophisticated - is running at EPIDEMIC LEVELS. 

There is a simple solution.  Stop "TYPING" and move online banking to a 3DES DUKPT secure environment with the only eCommerce PCI 2.0 Certified PED.  Only from HomeATM. 

Doing so would provide secure two-factor (what you have/bankcard and what you know/PIN) authentication.  It would also instantly eliminate the threats posed from phishing and keystroke logging

Banks trust this process to dispense $200 from an ATM, a thousand miles away at 2:00 AM.  Surely, the same system (without the threats of skimmers/hidden camera's) can be trusted to authenticate the online banking session. 

So is online banking safe?  Ask your bank...but remember, according to Joesph Menn, the answer will be a flat out lie.

WASHINGTON - Ask your bank how safe it is to do business online and it may tell you it's more secure than traditional banking. But cyber security experts would disagree.

"That's a lie," says Joseph Menn, who reports on cyber security for the Financial Times.

"The banks are stuck because they've been telling people it's safe, and the fraud they're on the hook for has gone up four-fold in six months," Menn says.

"The banks have been kidding people about all this because they save money when people bank online." Menn says the Internet was not designed with security in mind. He says it's fine for YouTube.

"But anything financial, anything commercial, anything government needs to be on a different network.

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Customer vs. Bank: Who is Liable for Fraud Losses?

Bank Information Security's Linda McGlasson writes the upcoming court case, involving Comerica Bank and Michigan based Experi-Metal, Inc will ultimately decide who is liable for losses stemming from phishing attacks. 

As far as I'm concerned, this is truly a No-Win situation for Comerica and online banking as a whole. 

I have to ask...instead of fixing the blame on who is responsible for a phishing attack, why not take another angle.  How about fixing what "causes" the problem.  Eliminate typing and it would eliminate phishing altogether.  That's what the bad guys are phishing phor...the information "you type" into a box in browser.  Authentication has to be done outside the browser.  Why not use the banks existing ATM rails to two-factor authenticate the online banking session?

If online customers, both business and consumers alike, swiped their bank issued card and securely entered their bank issued PIN, then there would be nothing to phish phor.  HomeATM's PCI 2.0 Certified PIN Entry Device 3DES DUKPT encrypts the data inside the box at the magnetic head.  When the device is attached to the online banking customers computer, HomeATM's API, which can be easily downloaded by any banking institution in less than an afternoon, recognizes it and requests the consumer to "Swipe their Card" and "Enter their PIN."  No more "typing" in online banking credentials.  So stop fixing to blame someone and start fixing the security gaffes involved with typing vs. swiping. 

Comerica/EMI Case Raises Key Questions About Responsibility, Security

February 22, 2010 - Linda McGlasson, Managing Editor

At first this court case was a curiosity: Experi-Metal Inc. (EMI), a Michigan-based metal supply company, sued Comerica Bank, claiming that the bank exposed its customers to phishing attacks.+

But now this story shapes up as a significant test case for the banking industry, raising several key questions that must be answered about fraud and responsibility.

"It will establish who is liable in the U.S. - the bank or the customer - for fraud losses that result from phishing," says Tom Wills, Senior Analyst, Security, Fraud & Compliance, Javelin Strategy & Research.
Continue Reading at

Discover Introduces New Resources to Help Consumers Better Understand Credit

“Straight Talk” Articles and Video Explain Credit Card Terms and CARD Act Changes in Easy-to-Understand Language

RIVERWOODS, Ill.--(BUSINESS WIRE)--Discover Financial Services (NYSE: DFS) today announced the launch of “Straight Talk,” an online video and series of articles designed to help consumers more easily understand how credit cards work, including changes from the Credit Card Accountability Responsibility and Disclosure (CARD) Act, which went into effect today. Discover “Straight Talk” is part of the company's long-standing commitment to providing products, services and resources that help its cardmembers spend smarter, manage debt better and save more.

The “Straight Talk” series consists of articles that explain in clear terms how credit card companies determine annual percentage rates (APRs) and credit card limits, why fees are charged, and what changes consumers can expect to see as a result of CARD Act. The online video explains changes to fees, payment allocation and APRs resulting from the legislation and offers tips to help consumers manage their finances.

“Over the years, we’ve listened to our cardmembers and know that they want ‘straight talk’ from their credit card company and our goal is to provide that to them,” said Carlos Minetti, executive vice president of Cardmember Services and Consumer Banking at Discover. “These online resources will help them better understand credit, while empowering them to achieve brighter financial futures.”

The “Straight Talk” video and articles can be found on Discover’s Financial Education Resources page:

In addition to the new video and articles, Discover offers a variety of tools and resources to help cardmembers manage their credit:


Free Online Tools that Help Cardmembers Make Smart Financial Decisions

  • The Spend Analyzer: The Spend Analyzer offers cardmembers a clear, visual way to track and compare their card spending so they can make informed spending choices.

  • The Paydown Planner: The Paydown Planner helps cardmembers create a simple plan to pay down their balance.

  • The Purchase Planner: The Purchase Planner helps cardmembers understand how a large purchase may affect their account.

  • Email Alerts and Reminders: Email alerts and reminders help cardmembers make payments on time, avoid unnecessary fees and stay safely within their credit line.

Online Resources to Educate and Inform

  • Financial Education: This online resource, found at, helps cardmembers understand the basics of credit management with clear and easy-to-understand articles.

  • Student Center: Discover’s Student Center, located at, is dedicated to providing students with tools and resources to better manage and understand credit.

  • This online resource provides guidance on managing money through debit card usage.

Services and Resources that Help Cardmembers Manage Difficulties with Payments

  • Payment Programs: Discover has special payment programs to help cardmembers who are experiencing financial difficulties and need help bringing their account up to date. Last year, Discover assisted more than one million cardmembers who were experiencing financial hardship.

  • Customer Service that Puts Cardmembers First: Cardmembers having trouble keeping up with their payments can reach a knowledgeable customer service representative on the phone typically within 60 seconds, 24 hours a day, seven days a week.

  • Debt Management and Credit Counseling Agencies: Discover supports, an industry effort to assist and educate people struggling to make their payments, as well as the National Foundation for Credit Counseling, the nation’s largest and longest-serving national nonprofit credit counseling network.

About Discover

Discover Financial Services (NYSE: DFS) is a direct banking and payment services company with one of the most recognized brands in U.S. financial services. Since its inception in 1986, the company has become one of the largest card issuers in the United States. The company operates the Discover card, America's cash rewards pioneer, and offers personal and student loans, online savings accounts, certificates of deposit and money market accounts through its Discover Bank subsidiary. Its payment businesses consist of Discover Network, with millions of merchant and cash access locations; PULSE, one of the nation's leading ATM/debit networks; and Diners Club International, a global payments network with acceptance in more than 185 countries and territories. For more information, visit


New Rights for Credit Cardholders

Consumer Action and American Express announce the update of their free, popular multilingual consumer education series, “Credit Cards: What You Need to Know”

WASHINGTON--(BUSINESS WIRE)--Consumer Action in partnership with American Express announce a revised version of the multilingual consumer education series “Credit Cards: What You Need to Know” to help consumers understand their new credit card rights and what they mean for credit cardholders.

Through the new federal rules, cardholders have gained the right to restrict interest rates on balances. Consumers can now say no to future rate hikes and over-the-limit fees. These and other new federal consumer protections for cardholders take full effect today.

Starting today, consumers can find the “Credit Cards: What You Need to Know” brochure updated to reflect new federal rules at or The complete module, including brochures available in Chinese, Spanish, Korean and Vietnamese, will be available over the next few months on Consumer Action’s website.

“Credit Cards: What You Need to Know”
has become a perennial favorite since we created the joint education campaign in 2005, alerting consumers to the ‘real deal’ on credit card terms and conditions,” said Ken McEldowney of Consumer Action. “We have distributed more than 286,600 of our education and training modules to 1,538 community-based organizations in 50 states. In addition, close to 200,000 visitors have viewed the brochure in one of five languages on our website to learn how to compare credit card offers, read and understand credit card terms and conditions, and avoid penalties and fees.”

“As consumers are making choices about credit cards, they need to know their rights and have them presented in a clear and concise way,” said Ralph Andretta, executive vice president and general manager, Consumer Services group, American Express. “In addition to our redesigned credit card agreements and enhanced online consumer resource tools, we are pleased to continue our work with Consumer Action to educate consumers on making smart, informed choices about credit cards.”

Five important new rights for credit card holders
No changes in terms or rates in the first year of a new card, except
When a promotional rate ends
If your variable rate adjusts
If you pay more than 60 days late
No rate hikes on existing balances
Interest rate increases generally apply only to new transactions
45 days advance notice of any significant changes
Right to decline the change, close card and pay off balance over time
More time to plan for and make payments
Same due date every month
Bills sent 21 days in advance
Payments received by 5 p.m. must be credited that day.
Control and choice on over-limit fees
Cardholder can control and avoid fees
Over-limit fees cannot be charged unless customer “opts in”
New information on your bill
Length of time to pay off your current balance if you make only minimum payments.
How to pay off your current balance in three years.
What will happen if your payment is late

For the last five years, Consumer Action and American Express have held regional train–the-trainer meetings in seven cities and trained 337 representatives of more than 250 community-based organizations, using these comprehensive materials.

Consumer Action ( is a non-profit 501(c)(3) advocacy and education organization, with offices in San Francisco, Los Angeles and Washington, DC that has served consumers since 1971. Consumer Action distributes two million free educational brochures annually on consumer financial services and other issues, through its national network of more than 8,000 community-based organizations. Consumer Action has been conducting surveys of credit card rates and terms since the 1980s, to track trends in the industry and assist consumers in comparing cards and understanding their rights when using credit.

American Express Company ( is a diversified worldwide travel, financial and network services company founded in 1850. It is a world leader in charge and credit cards, Travelers Cheques, travel, business services and international banking..

Online Resources and PeoplesBank Launch iPhone Application

PeoplesBank is Early Mover for Banking through the Most Popular U.S. Mobile Device

CHANTILLY, Va.--(BUSINESS WIRE)--Online Resources Corporation (Nasdaq: ORCC), a leading provider of online financial services, today announced that it has launched a downloadable application enabling customers of client PeoplesBank to access mobile banking and payment services through the iPhone®. The Massachusetts-based $1.5 billion asset bank is now one of fewer than 50 U.S. financial institutions that currently offer the iPhone application through the App Store or iTunes®.

“PeoplesBank chose to be a frontrunner in providing mobile access because it views the online channel, and the convenience it provides customers, as critical to their success”

PeoplesBank has used Online Resources’ full suite of retail and business Internet banking and bill payment services since 1999. An extension of these online services, the new iPhone application allows users to view account balances, transaction history, schedule same day transfers, pay bills, and send and receive secure in-session messages. PeoplesBank customers simply register online for mobile access and download the iPhone application, which also works on iPad® and iPod® touch devices.

“Mobile access for online banking furthers PeoplesBank’s goal to provide our customers highly convenient services,” said Karen Buell, Internet Branch Officer for PeoplesBank. “Online Resources has played a crucial role in our mobile strategy, from development to marketing to customer care. This is the latest example of continued innovation we have come to expect from an online channel specialist and trusted partner.”

“PeoplesBank chose to be a frontrunner in providing mobile access because it views the online channel, and the convenience it provides customers, as critical to their success,” said Ron Bergamesca, executive vice president and general manager of Community Bank and Credit Union Services for Online Resources. “It was our priority to enable PeoplesBank’s customers with an iPhone app that optimizes their mobile banking experience, and we are pleased to provide the necessary technology, operation and marketing support required for this highly sought after service.”

About Online Resources

Online Resources (Nasdaq: ORCC) specializes in powering financial interactions between millions of consumers and the company’s financial institution and biller clients, including 12 of the top 13 U.S. retail banks and 13 of the top 20 U.S. card issuers. Backed by its proprietary payments gateway that links banks directly with billers, the company provides web and phone-based financial services, electronic payments and marketing services to drive consumer adoption. Founded in 1989, Online Resources has been recognized for its high growth and product innovation. It is the largest financial technology provider dedicated to the online channel. For more information, visit .

Mobile Person-to-Person Payments Good Prospect for Developing but Not Developed Markets: ABI Research Survey Finding

NEW YORK--(BUSINESS WIRE)--A consumer survey conducted by ABI Research in November 2009 in seven countries on three continents has found consistently low levels of interest in making person-to-person payments via the mobile phone. The survey polled subscribers, equally divided by gender, in Germany, France, the UK, the US, Japan, Taiwan, and South Korea. About 200 respondents participated from each country.

“In parts of Africa, Asia, and Latin America which generally lack good tools for convenient P2P transactions other than face-to-face, mobile payment methods will be huge.”
While there were differences across age groups and between countries, the overall results showed that only 16% of Western Europeans surveyed considered themselves “extremely” or “very” interested in mobile P2P payments, while in the United States, the percentage was only 9%. Consumers in the three Asia Pacific countries showed much greater interest – 34%.

According to senior analyst Mark Beccue, “It’s tough to make a convincing case for mobile P2P in most developed markets. This survey confirms ABI Research’s assessment of mobile P2P’s potential in the United States and Europe. We believe it will have minimum impact in these markets because some forms of electronic P2P such as PayPal have operated there for several years with relatively low market penetration; and because these markets boast extensive ATM and banking networks, giving consumers easy access to cash to conveniently conduct P2P transactions.”

If a similar survey were to be conducted in developing markets the results would likely be very different, says Beccue. “In parts of Africa, Asia, and Latin America which generally lack good tools for convenient P2P transactions other than face-to-face, mobile payment methods will be huge.”

The survey results are summarized in chart form and interpreted in a new ABI Research Brief, “Mobile Person-to-Person Payments” (

It is part of the firm’s Mobile Money Research Service ( which also includes other Research Briefs, Research Reports, Market Data, ABI Insights, ABI Vendor Matrices, and analyst inquiry support. ABI Research provides in-depth analysis and quantitative forecasting of trends in global connectivity and other emerging technologies. From offices in North America, Europe and Asia, ABI Research’s worldwide team of experts advise thousands of decision makers through 28 research and advisory services. Est. 1990. For more information visit,

From the February Issued of Digital Transaction News

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InsurCard Visa® Prepaid Card Issued by The Bancorp Bank Named Winner in Fourth Annual Paybefore Awards
WILMINGTON, Del.--(BUSINESS WIRE)--The Bancorp Bank Payment Solutions Group, a division of The Bancorp Bank (“Bancorp”), a wholly owned subsidiary of The Bancorp, Inc. (Nasdaq: TBBK), is pleased to announce that Paybefore has chosen the InsurCard Visa Prepaid Card, which is issued by The Bancorp Bank in collaboration with InsurCard, as a Paybefore Awards winner in the Best Business/Corporate-Funded Program: B2B.

“Paybefore applauds the leaders in our industry who are applying the flexibility and appeal of prepaid to innovate on behalf of consumers, governments and businesses”

Paybefore Awards, now in its fourth year, is the most prestigious recognition of excellence in the prepaid industry. The awards are presented annually by Prepaid Media, whose Paybefore publications are the leading source of industry information for the global prepaid community.

“We are honored to receive the Paybefore Award for the innovation of the InsurCard Visa Prepaid Card,” said John Barbella, Senior Vice President, The Bancorp Bank. "We believe that prepaid cards will revolutionize the way the insurance industry makes payments as insurers seek ways to control payments and drive cost savings while providing enhanced customer care. We are very excited about the InsurCard program and we are anticipating rapid growth in this space."

InsurCard was selected by a panel of five industry experts who served as judges for this year’s competition. A record number of entries from around the world were received.

“Paybefore applauds the leaders in our industry who are applying the flexibility and appeal of prepaid to innovate on behalf of consumers, governments and businesses,” said Marilyn Bochicchio, Paybefore CEO and chair of the judging panel. “InsurCard has distinguished itself in a tough field of competition,” she continued. “We are proud to recognize its contributions to advancing the use of prepaid products.”

Issuing checks has become cumbersome in the world of electronic payments. The InsurCard offers great benefits for an injured worker or a displaced homeowner because they can begin using the funds immediately anywhere that Visa debit cards are accepted.

InsurCard, which has already been approved for use in workers compensation claims in 38 states, will vie for best-in-category distinction, which will be announced during the Paybefore Awards ceremony on Feb. 22 at the Prepaid Expo USA (

InsurCard Visa Prepaid Card is issued by The Bancorp Bank pursuant to a license from Visa U.S.A. Inc. The Bancorp Bank; Member FDIC.

About The Bancorp Payment Solutions Group

The Bancorp Payment Solutions Group, a division of The Bancorp Bank, a wholly owned subsidiary of The Bancorp, Inc. (Nasdaq: TBBK), offers secure, creative and innovative payment solutions to the prepaid card industry. As a leading issuer of prepaid cards, The Bancorp Payment Solutions Group develops cutting-edge prepaid card programs that meet the rapidly changing needs of the prepaid industry. Through long-standing relationships with the card networks, leading program managers and processors, The Bancorp Payment Solutions Group designs compliant, innovative and flexible prepaid card programs which deliver outstanding results. For more information about The Bancorp Payment Solutions Group please visit

About InsurCard

InsurCard is a wholly owned subsidiary of Service Network Design, LLC (SND), a management consulting firm with corporate financial clients in both the insurance and prepaid card industries. InsurCard Prepaid Cards evolved from SND’s experience in these industries where the need for new claim payment solutions was recognized. The InsurCard Prepaid Card was specifically designed to meet the stringent requirements of both the insurance and prepaid card industries. For more information about InsurCard, please visit

MasterCard Worldwide Partners Recognized for Contribution to Excellence in Prepaid

Company and prepaid partners from around the world recognized for program achievements in 2009

PURCHASE, N.Y.--(BUSINESS WIRE)--Paybefore, the premier provider of information to the network branded prepaid card industry, has recognized MasterCard-branded prepaid programs as top programs in the Paybefore Award categories. The Paybefore Awards are the most prestigious recognition of excellence in the prepaid card segment, acknowledging best-in-class prepaid programs from around the world. This recognition of numerous MasterCard programs demonstrates MasterCard’s leadership in prepaid as a strategic global partner.

“We would like to congratulate all of our partners on their achievement and recognition. We are honored to be included in this acknowledgement for our contribution to the prepaid programs and grateful to our partners for their vision, trust and collaboration in implementing these winning programs,” said Laura Kelly, Senior Vice President of Global Prepaid & Healthcare Solutions at MasterCard Worldwide. “The breadth of products recognized points to the increasing diversification of prepaid and its rapid global growth. This is an exciting time for the prepaid industry and we are thrilled to be at the forefront of this global momentum.”

MasterCard partners that received awards for their achievement include:
  • The Facecard MasterCard Teen Card

    edó Interactive, Meta Payment Systems

  • H&R Block Emerald Prepaid MasterCard

  • The Escape Card

    E.Z. Pay/Phones 4U

  • Wal-Mart Associate Electronic Pay Program

    Wal-Mart Stores, Inc., First Data Corp.

  • Just Energy Prepaid TruCa$h MasterCard

    DCR Strategies Inc., TruCa$h

  • Missouri Access MasterCard

    Central Bank

  • The Facecard Prepaid MasterCard Card Program

    edó Interactive, Meta Payment Systems

  • Contactless AlterKart Program

    Bank Zachodni WBK S.A.

  • Bonus Alimentacion/Provis Alimentacion

    NovoPayment, Inc.

    Transferencia Electrónica de Beneficios, C.A. (TEBCA)

  • Payoneer Prepaid MasterCard

    Payoneer, Meta Payment Systems

  • Cash Passport


  • Everyday Prepaid: Hispanic Marketing and Consumer Education Campaign


  • The PayPal Merchant Debit Card

    PayPal, Inc.

  • TransCard and UPMC/Pitt Research Study

    TransCard, LLC

  • Money Centers

    NovoPayment, Inc.

  • AccountNow’s “Finally Credit Free” Website

    AccountNow, Inc., Meta Payment Systems

  • Commonwealth Bank Travel Money Card

    Commonwealth Bank

Research commissioned by MasterCard and conducted by Boston Consulting Group and PSE Consulting estimates global prepaid card spend to reach $680 billion by 2015. Recognizing this opportunity, MasterCard is spurring innovation across industries by delivering prepaid solutions that best meet the needs of today’s marketplace. From payroll cards, to consumer reloadable cards, to government benefits programs, prepaid is one of the fastest-growing payment categories for MasterCard and is improving the distribution and flow of funds around the world.

About MasterCard Prepaid Programs & Solutions

Since introducing its first prepaid card in mid 1990s, MasterCard has quickly become a leading prepaid payment card brand. Today, MasterCard combines a set of global prepaid product solutions, processing and advisory services that is unique in the industry, making it a strong business partner for companies looking to successfully participate in the prepaid market. MasterCard prepaid card solutions are being used today to enable global financial inclusion and provide consumers an additional payment choice; deliver cost savings and efficiencies to business and public sector agencies; enhance channels for merchant profitability; and complement existing retail bank strategies by delivering innovation on emerging payments opportunities.

About MasterCard Worldwide

MasterCard Worldwide advances global commerce by providing a critical economic link among financial institutions, businesses, cardholders and merchants worldwide. As a franchisor, processor and advisor, MasterCard develops and markets payment solutions, processes over 22 billion transactions each year, and provides industry-leading analysis and consulting services to financial-institution customers and merchants. Powered by the MasterCard Worldwide Network and through its family of brands, including MasterCard®, Maestro® and Cirrus®, MasterCard serves consumers and businesses in more than 210 countries and territories. For more information go to Follow us on Twitter: @mastercardnews.


Mobile Banking Passwords "Prone to Attack"

TELECOMPAPER is reporting that Mobile Banking Passwords are prone to attack.  If you wish to subscribe to their site, I've provided the link below.  If you want to save the $5.00 for a one-day subscription, I'm sure there will be "lots of free" stories regarding how the bad guys are focusing their efforts on mobile banking attacks in the days/weeks/months to come...

Subscription Required

Visa Appoints Wireless Industry Veteran to Lead Worldwide Mobile Innovation

GSMA’s Bill Gajda to Head up Visa’s Mobile Initiative While Maintaining Role as President of the GSM Foundation

SAN FRANCISCO--(BUSINESS WIRE)--Visa Inc. (NYSE: V), the world’s largest retail electronic payments network1, announced today that Bill Gajda, currently Chief Commercial Officer at the GSMA, will join Visa as head of mobile. Gajda’s position at Visa is designed to further advance Visa’s mobile strategy, working in collaboration with the wireless and financial services industries to bring mobile payments and related services to consumers around the globe.

Gajda comes to Visa with nearly 15 years experience in the wireless industry, including seven years with the GSMA, the organization which represents the interests of the worldwide mobile communications industry. Spanning 219 countries, the GSMA unites nearly 800 of the world’s mobile operators, as well as more than 200 companies in the broader mobile ecosystem.

During his tenure at the GSMA, Gajda held senior level positions including chief marketing officer, and most recently, chief commercial officer, where he was responsible for strategic initiatives including Mobile Money, Mobile Money Transfer, Mobile Advertising, Strategic Partnerships, Mobile Innovation and Business Development. Gajda also currently serves as president of the GSM Foundation, a position he will continue to maintain as head of mobile at Visa Inc.

“Visa has made great strides in forming strategic alliances and working in collaboration with the wireless industry to bring mobile financial services to consumers in both mature and emerging markets,” said Elizabeth Buse, global head of product at Visa Inc. “Bill’s experience in working with mobile network operators, handset manufacturers and other leaders in wireless, combined with his track record in helping to developing successful business models, will be a significant asset as Visa’s aims to commercialize mobile financial services around the globe.”

Previous to his role at the GSMA, Gajda was head of marketing at Ericsson, and also held key positions at Bell Canada International and TELUS.

About Visa

Visa is a global payments technology company that connects consumers, businesses, financial institutions and governments in more than 200 countries and territories to fast, secure and reliable digital currency. Underpinning digital currency is one of the world’s most advanced processing networks—VisaNet—that is capable of handling more than 10,000 transactions a second, with fraud protection for consumers and guaranteed payment for merchants. Visa is not a bank, and does not issue cards, extend credit or set rates and fees for consumers. Visa’s innovations, however, enable its financial institution customers to offer consumers more choices: Pay now with debit, ahead of time with prepaid or later with credit products. For more information, visit 1 Based on payments volume, total volume, number of transactions and total number of cards in circulation.


Discover® Small Business WatchSM: Small Business Economic Confidence Flat in February

STIMULUS: 70% of Small Business Owners Say Federal Stimulus Has Had No Effect on Their Businesses

66% Unlikely to Hire New Workers With Proposed $5,000 Tax Credit

RIVERWOODS, Ill.--(BUSINESS WIRE)--America’s small business owners remained cautious about the economy in February as they expect economic conditions to largely stay the same in the coming months, according to the Discover® Small Business WatchSM, which fell less than a point to 84.9 in February from 85.5 in January. The index is up 13 points over the mark of 71.9 registered in February 2009.

“Compared to a year ago, small business owners are more confident about their businesses and the direction of the economy,” said Ryan Scully, director of Discover's business credit card. “But challenges still remain for most of this segment, as 71 percent say that the current economic environment has hurt their business.”

February Indicators:

  • 49 percent of owners have experienced cash flow issues in the past 90 days, down from 51 percent in January; 47 percent of owners have not experienced cash flow issues, and 4 percent are not sure.

  • The number of small business owners who think the economy is getting better is unchanged in February at 31 percent; 44 percent see the economy getting worse, down from 46 percent in January; 24 percent see the economy staying the same, up from 18 percent last month; and 1 percent are not sure.

  • 25 percent of small business owners see conditions for their own businesses getting better in the next six months, down from 29 percent in January; 37 percent see conditions getting worse, down from 43 percent in January; 34 percent expect things to stay the same, up from 23 percent in January; and 4 percent aren’t sure.

  • 4 percent rate the economy as good or excellent, down from 8 percent in January; 36 percent rate the current economy as fair, and 57 percent rate it as poor.

  • 21 percent of owners plan to increase business development spending on activities such as advertising, inventories and capital expenditures over the next six months, down from 25 percent in January; 34 percent plan to make no changes, while 43 percent will decrease spending, down from 45 percent in January.

Few Small Business Owners Getting Help from Federal Stimulus Efforts

Seventy percent of owners say that federal stimulus efforts have had no impact on their businesses, while 17 percent say it has actually hurt their businesses. Only 10 percent reported being helped by federal efforts.

Small business owners confidence in the federal government to help them out continues to decline: 76 percent of small business owners are “not very confident” or “not at all confident” that the federal government and Congress can address the needs of America’s small business owners, up from 62 percent in February 2009. Only 7 percent are “very confident” that the federal government can address their needs, down from 12 percent last year, and 15 percent are “somewhat confident,” down from 24 percent last year.

When asked if they are likely to hire new employees if offered a $5,000 tax credit, such as the one proposed by the Obama administration, 69 percent say that it is “not very likely” or “not at all likely,” 15 percent say they would be “very likely” to hire, 10 percent say they would be “somewhat likely,” and 6 percent weren’t sure.

However, when asked the last time they hired a full-time employee, 44 percent said they have always been sole proprietors, while 30 percent said it has been more than two years, 11 percent in the last one to two years, 7 percent in the last year and 2 percent in the last month. The remaining 6 percent weren’t sure.

The Watch surveys small businesses with five or fewer employees, who don’t always share the same concerns of larger small businesses, such as those with more than 100 workers. When asked how similar their issues are to their larger brethren, 66% of small business owners said their issues are “not very similar” or “not at all similar,” while 6 percent said they were “very similar” and 19% said they were “somewhat similar.”

41% of Small Business Owners Hurt by Economy Expect Another Year of Recovery

Seventy-one percent of owners say that the current economic climate has hurt their business, up from 69 percent in October 2009. Of this group, 41 percent say that it will be more than 12 months before their business rebounds, down from 43 percent in October; 21 percent say it will be six to 12 months, down from 24 percent in October; and 8 percent think a recovery will happen in less than six months, down from 13 percent in October.

Tax Cuts and Lending:

  • When asked what would do more for the health of small businesses: tax cuts or easing of credit, 48 percent of owners chose tax cuts over the easing of credit at 31 percent, with 21 percent unsure which would be better.

  • Small business owners remain uninterested in Small Business Administration loans: 91 percent of owners say that they have never applied for an SBA loan, up 1 percentage point from October 2009.

  • Of those who have never applied for an SBA loan, 54 percent say they did not need one; 13 percent would rather use personal assets, 13 percent received a loan from another source, 11 percent are unfamiliar with the programs and 6 percent say it takes too much time. At the same time, 61 percent of small business owners are “not very likely” or “not at all likely” to apply for a SBA loan if they become easier to get.

The views and opinions expressed by small business owners and consumers who participate in the Small Business Watch survey are their own and do not necessarily reflect those of Discover Financial Services or its affiliates.

About the Small Business Watch

The Discover Small Business Watch is a monthly index measuring the relative economic confidence of U.S. small business owners who have less than five employees, a segment that consists of 22 million businesses producing more than a trillion dollars in annual receipts. The Watch is based on a national random survey of 750 small business owners. It is commissioned by Discover Business card, which strives to offer the best business credit card for American small businesses, and is conducted by Rasmussen Reports, LLC (, an independent survey research firm. The numeric index is calculated by assigning values to responses to a set of six consistent questions. The base value of the Watch was established at 100.0 based on surveys conducted in August 2006. In addition to generating the index, the Small Business Watch surveys small business owners every month on key issues, and polls 3,000 consumers four times per year to gauge purchasing behavior and attitudes towards small businesses. For past results and survey data, visit For information on Discover Business card, visit

About Discover

Discover Financial Services (NYSE: DFS) is a direct banking and payment services company with one of the most recognized brands in U.S. financial services. Since its inception in 1986, the company has become one of the largest card issuers in the United States. The company operates the Discover card, America's cash rewards pioneer, and offers personal and student loans, online savings accounts, certificates of deposit and money market accounts through its Discover Bank subsidiary. Its payment businesses consist of Discover Network, with millions of merchant and cash access locations; PULSE, one of the nation's leading ATM/debit networks; and Diners Club International, a global payments network with acceptance in more than 185 countries and territories. For more information, visit .

Acculynk and EFT Networks Form Internet PIN Debit Advisory Council

Acculynk has formally announced the establishment of the Internet PIN Debit Advisory Council with partner EFT networks.

Acculynk is the first company to introduce a software-only service for PIN debit payments on the Internet, PaySecure®, which has been adopted by multiple EFT networks, merchant acquirers, E-commerce merchants and issuers.

The Advisory Council brings together leaders from the company’s partner EFT networks, including ACCEL/Exchange, Alaska Option, Credit Union 24, PULSE and SHAZAM. The purpose of the Council is to establish the processes, procedures, rules and best practices around PaySecure for Internet PIN debit.

“Any time you introduce a disruptive product that promises to be a game changer, you need to lay the groundwork for rules and procedures,” said Ashish Bahl, CEO of Acculynk. “Our EFT networks are a major partner in the success of PaySecure, and it was important for us to develop a Council where the networks could share their experience with PaySecure, provide feedback, and receive the tools they need to not only process PaySecure transactions, but roll-out this product to their base of issuers.”

PaySecure was introduced in March 2009 in a pilot program that included ACCEL/Exchange and a number of small merchants. PULSE announced a partnership with Acculynk in late March for Internet PIN debit, which was followed by partnership announcements from an additional four EFT networks and ACCEL/Exchange’s commercial roll-out of PaySecure across their eligible base of issuers in November. Acculynk expects to announce two additional EFT networks in the next 30-60 days.

“Acculynk is the only company with an Internet PIN debit product that is endorsed by 6 EFT networks to date, which makes us and our partners a first mover in this space,” said Bahl.

“Having this type of Council is important for the EFT network industry as a whole because PaySecure is rapidly becoming an established product that merchants are implementing, consumers are using and issuers are adopting,” said Michael Kelly, General Manager of ACCEL/Exchange. “We need to ensure, as a collective body, that we establish mutually beneficial processes that facilitate this growth in Internet PIN debit.”

Terry Dooley, Senior Vice President and CIO, SHAZAM, echoed this sentiment. “As SHAZAM gets ready to roll out Internet PIN debit to our issuers, this type of Council becomes invaluable in terms of learning from the experience of others that have already introduced the product to their base of banks and credit unions.”

Membership in the Council is currently open to EFT networks that have partnered with Acculynk for PaySecure, but the company is considering extending membership to E-commerce merchants, acquirers and senior executives in payment processing. The Council currently meets once a quarter as a formal body, with the second meeting of the Council held in February 2010.

About Acculynk

Acculynk secures online transactions with a suite of software-only services that are backed by a powerful encryption and authentication framework protected by a family of issued and pending patents. Acculynk’s services provide greater security, reliability, convenience and return on investment for consumers, merchants, networks, issuers and acquirers. Acculynk is the first company to introduce a software-only service for PIN debit payments on the Internet, PaySecure®. For more information, visit


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