Thursday, March 22, 2012

Consumers on the Future of Payments: Millennials To Lead Adoption & Security is King

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U.S. Consumers Want Trusted Financial Institutions, Not Startups to Lead the Way in New and Emerging Payment Methods, According to New Research by American Express

NEW YORK, March 22, 2012 /PRNewswire via COMTEX/ -- New research about the future of payments by American Express shows that over half (52 percent) of consumers ages 18-24 are likely to try new technology-enabled payment tools as they become available compared with 23 percent of those ages 55-65, suggesting that the fate of emerging payments clearly lies in the hands of millennials. However, all consumers agree that security is most important, with 83 percent of consumers ranking it higher than loyalty programs, benefits, fees/costs to use, user friendliness and convenience.

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"Millennials will be key to the success of online and mobile payments, but above all else, the research shows that consumers want their payment tools to be safe and secure," said Dan Schulman, President, Enterprise Growth at American Express. "At American Express, we agree. That's why we're developing products and pursuing partnerships for the new digital economy that match technological innovation, a seamless customer experience, and the service, benefits and security of American Express."

The findings are from recent research commissioned by American Express, including a quantitative survey and focus groups that explored U.S. consumers' attitudes and behaviors with current and emerging payments, such as payments made by prepaid cards, mobile phones, digital wallets, and near field communication (NFC), commonly referred to as "contactless payments."

Security Comes First - Trust the Experts Consumers want trusted institutions - not Internet or social media companies - to develop new payments, as 62 percent of consumers prefer financial institutions take the lead on new payment methods, rather than wireless providers and internet companies. This also might help suggest why more than three-quarters (77 percent) of consumers are not very confident that social media companies would protect their personal financial information.


75 percent of consumers are confident that financial services companies will do what is needed to protect the security of their financial information.

83 percent of consumers view security as the single most important concern for consumers when considering a new payment technology, with 62 percent saying that fees are the second most important factor.

Focus groups supported the findings that, while consumers are open to new technology like NFC, security is still top of mind. One focus group participant questioned how NFC signals were guaranteed secure, while another said, "I don't leave my purse anywhere but I sure left my phone places... the last thing I want is a device that has my whole life on it."

The Connected Generation How people choose to pay varies by generation, and it is clear that young people are at the forefront in terms of technology adoption. Respondents ages 18-24 are mobile gadget enthusiasts, owning laptops, mobile gaming devices, smartphones and music players, while those over the age of 45 are less likely to own and use these on a daily basis.

In addition to being open to using new digital tools, the research showed how the attitudes of millennials differed from older generations around key issues, such as security.

Millennials (18-24) continue to be at the forefront of technology, with 86 percent owning a laptop and more than 61 percent owning a smartphone.

When buying something online, 58 percent of 18-24 year olds find mobile apps somewhat or very convenient compared with only 26 percent of those between 55-65 who find mobile apps somewhat or very convenient.

Similarly, 69 percent of 55-65 year olds do not feel secure shopping on a social media site, while the same can be said for 55 percent of 18-24 year olds.

Choice is King, Checks Decline Consumers continue to want choice (87 percent) in their payment types, often selecting a payment type based on the payment destination. The evolution in payment types continues, driven in large part by the introduction of mobile technology. Some of the key trends include:

Debit card and online payment usage saw the greatest increases over the past five years, increasing by 39 percent and 30 percent, respectively.

49 percent of respondents reported using checks "less often over the last five years," while 27 percent of survey respondents report never using checks.

One-third (35 percent) of consumers expressed interest in trying a new option, such as digital wallets, person-to-person platforms or NFC.

Concerns around prepaid cards for many focus group participants focused on things such as the cards being 'fee heavy' or 'for those with bad or no credit.' However, 19 percent of survey respondents felt that prepaid cards could be good budgeting tools, suggesting that consumer education is needed about prepaid's benefits and how the cards can work in consumers' lives would be useful.

About Enterprise Growth Group Enterprise Growth, a new business unit at American Express, was formed in late 2010 to expand the company's footprint with new technologies, new types of customers, and new geographies. This includes growth opportunities for payment forms outside of the company's charge and credit products, such as Serve, reloadable prepaid cards, gift cards, travel cards, remittances and virtual currencies. Serve is a next-generation digital payments platform that helps consumers organize money, send and receive funds, and manage payment requests -- all from a single, unified online account. The American Express Prepaid Card is a prepaid, reloadable Card that gives consumers a safe and easy way to manage spending for themselves or the people they choose.

About the Survey This quantitative research survey was conducted by Ipsos Research and commissioned by American Express. The survey was conducted online between January 19, 2012, and February 2, 2012, to a nationwide sample of 1,600 adults ranging in age from 18-65. Survey results are weighted across gender, age and geographic location, matching U.S. Census distributions. Additionally, Ipsos conducted focus groups of people in Chicago, New York, San Francisco and Washington, D.C., who ranged in age from 21-45.

About American Express American Express is a global services company, providing customers with access to products, insights and experiences that enrich lives and build business success. Learn more at and connect with us on,,,, and

Smart Card Alliance Testifies Before Congress that NFC is Secure

Smart Card Alliance Executive Director Randy Vanderhoof testified this morning before the Committee on Financial Services, Subcommittee on Financial Institutions and Consumer Credit on NFC contactless payment technology and the future of money in the United States.  You can read his full testimony here:

March 22, 2012, 11:38 a.m. EDT

NFC Contactless Technology Provides Secure and Resilient Foundation for Mobile Payments

Smart Card Alliance Executive Director Randy Vanderhoof Testifies Before Congress

PRINCETON JUNCTION, NJ, Mar 22, 2012 (MARKETWIRE via COMTEX) -- Testifying before Congress on mobile payments today, Smart Card Alliance Executive Director Randy Vanderhoof detailed all the reasons why the future of money is in good hands with NFC mobile contactless payment technology, which builds on a well-established foundation created by the leaders in the financial services and wireless sectors.
Vanderhoof was called to be a witness today at the Committee on Financial Services, Subcommittee on Financial Institutions and Consumer Credit hearing, "The Future of Money: How Mobile Payments Could Change Financial Services."
Vanderhoof focused on the evolution of mobile payments technology and its potential future impact on financial services. His testimony echoed the views of more than 200 Smart Card Alliance member organizations that include major stakeholders in the mobile payments ecosystem including payment brands, financial institutions, mobile payments technology providers, and mobile chip security vendors, all of whom share a vision of making mobile payments safe, flexible and resilient as well as compliant with the appropriate legal, regulatory and security frameworks already serving the public interest.
"The future of money, as this hearing is entitled, is being positively impacted by mobile technology," said Vanderhoof. "The changes in financial services addressed at this hearing are being well managed and securely protected by the smart card elements that integrate NFC technology into mobile devices, and the collective knowledge and resources of the financial and mobile industries."
Vanderhoof's testimony summarized the 20-year collaborative involvement of multiple international standards bodies in applying smart card technology to protect payment accounts and mobile phone subscribers. The culmination of this global effort is that NFC contactless mobile payments technology is grounded in global standards, established certification processes and industry best practices that strongly position NFC to deliver consumer value, protection and reliability. The full testimony is available at .
For more information on the Smart Card Alliance and NFC mobile payments, visit the Smart Card Alliance NFC Resources page. Additionally, the Alliance is hosting a conference dedicated to NFC technology this May. The NFC Solutions Summit 2012, held in partnership with the NFC Forum, is May 22 - 24, 2012 at the Grand Hyatt San Francisco Airport Hotel in Burlingame, California.
About the U.S. House Financial Services Subcommittee on Financial Institutions and Consumer Credit The U.S. House Financial Services Subcommittee on Financial Institutions and Consumer Credit is a subcommittee of the House Committee on Financial Services. The subcommittee oversees all financial regulators, such as the Federal Deposit Insurance Corporation and the Federal Reserve, all matters pertaining to consumer credit including the Consumer Credit Protection Act and access to financial services, as well as the safety and soundness of the banking system.
About the Smart Card Alliance The Smart Card Alliance is a not-for-profit, multi-industry association working to stimulate the understanding, adoption, use and widespread application of smart card technology.
Through specific projects such as education programs, market research, advocacy, industry relations and open forums, the Alliance keeps its members connected to industry leaders and innovative thought. The Alliance is the single industry voice for smart cards, leading industry discussion on the impact and value of smart cards in the U.S. and Latin America. For more information please visit .

Google Said to be Rethinking Mobile Wallet Strategy, May Offer Revenue Sharing to Carriers

Google Wallet Logo
Google Wallet Logo (Photo credit: Wikipedia)

Google is weighing changes aimed at improving its Google Wallet mobile-payment system after slow adoption and the departure of two key managers, according to people with knowledge of the project.  The company is considering sharing revenue with carriers such as Verizon Wireless and AT&T Inc. to get them to embrace the technology, which lets users pay for items at checkout by tapping phones on a reader device, said the people, who asked not to be named because the discussions are private.

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American Express Partners with Office Depot to Offer the American Express® Prepaid Card in More Than 1,100 Stores Nationwide

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no original description (Photo credit: Wikipedia)

Partnership Marks First Reloadable Prepaid Card Available in Office Depot Stores

NEW YORK--()--American Express (NYSE: AXP) announced today that the American Express Prepaid Card, a prepaid reloadable Card with no monthly or maintenance fees, will soon be available in retail at select Office Depot stores. The Card will roll out in more than 1,100 stores across the United States in the coming weeks1 and provide Office Depot customers with a smarter spending and budgeting tool that can be used anywhere that American Express® Cards are accepted.
“We are excited to partner with Office Depot to provide consumers with a Prepaid Card that is simple to use, safer than cash and backed by the benefits and service of American Express”
“We are excited to partner with Office Depot to provide consumers with a Prepaid Card that is simple to use, safer than cash and backed by the benefits and service of American Express,” said Alpesh Chokshi, President, Global Payment Options, American Express. “This Prepaid Card is a smart solution for small businesses or families looking to manage their day-to-day finances and we look forward to working with Office Depot to provide a new payment option for their customers.”
“Office Depot is pleased to offer a prepaid reloadable card for the first time to our customers,” said Farla Efros, Executive Vice President and Chief Merchandising Officer, Office Depot. “Reloadable prepaid cards are quickly gaining traction for many different uses. We are excited to offer the American Express Prepaid Card which delivers premium value with no hidden fees, enables our customers to use the card immediately upon purchase and is backed with the safety and security that is synonymous with American Express.”
The temporary one-time load Card2 is available for purchase for $4.95 in more than 1,100 Office Depot stores nationwide or free online at The temporary Card can be funded with multiple loading options at the register with any dollar amount from $25 to $500.
Customers can order their permanent Card with full benefits online at the Card’s website with no fees for monthly maintenance, activation, balance inquiries, alerts, Card replacement, foreign currency conversion or loading via bank account or direct deposit. Once Cardmembers receive their permanent Card, funds can be loaded online through a bank account, such as savings or checking account, direct deposit, and through cash loading3 via MoneyPak or the Vanilla Reload Network by InComm, a new loading option for the Card. The permanent card comes with ATM access and there is no fee from American Express for the first monthly ATM cash withdrawal, after which a $2.00 fee applies per withdrawal (bank network charges may also apply to any ATM cash withdrawal). Permanent Cardmembers also have the ability to create, manage and specify additional user cards for others such as family members, colleagues, babysitters and contractors.
The temporary card can be used anywhere in the United States that American Express is accepted and the permanent card can be used internationally. The funds on the temporary and permanent card do not expire, and if lost or stolen, the funds can be replaced.
New features for the American Express Prepaid Card
In conjunction with today’s announcement, American Express is also rolling out new features on the permanent American Express Prepaid Card. Available today, these include:
  • Direct deposit: American Express Prepaid Cardmembers can now load their Card, up to $5,000 monthly, from their paycheck using direct deposit. This feature allows Cardmembers the ability to set up recurring loading directly from their employer.
  • Increased Limits on ATM Cash Access: The ability to access cash is an important feature for consumers with general purpose reloadable cards. In response to consumer demand, American Express Prepaid Cardmembers can now withdraw up to $400 per day from ATMs.
  • Additional Cash Loading Options: Cardmembers can now load their Cards via cash using the Vanilla Reload Network by InComm at Office Depot locations or other participating locations nationwide, giving American Express Prepaid Cardmembers the convenience and ease of more reload options.
Benefits and Protections
Permanent Cardmembers are also entitled to valuable protections and benefits (subject to terms and conditions), including:
  • Purchase Protection4 which can protect against accidental damage or theft of eligible items for 90 days from date of purchase, up to $1,000 per occurrence and up to $50,000 per Cardmember account per calendar year.
  • Roadside Assistance which provides dispatch services including towing, battery recharge, gas delivery, locksmith service and changing a flat tire.
  • Global Assist ® Services provide trip planning assistance as well as emergency assistance when the Cardmember is traveling more than 100 miles from home.
  • Entertainment Access provides Cardmembers access to special savings, exclusive events and advance tickets to some of the hottest events in music, sports and theater.
  • Exceptional 24-7 customer service that Cardmembers have come to expect from American Express.
Online management tools provide controls and full transparency for how the Card is being used. Permanent Cardmembers can:
  • View real-time transaction history and monitor spending.
  • Receive email or text alerts for low funds or notifications when a transaction has occurred. (Check with your mobile service provider for fees that may apply to text messages.)
  • Disable/enable ATM access for the Card.
  • Inquire about Card balance 24 hours a day/7 days a week.
  • Schedule reloading of funds automatically.
For more information, visit
About American Express
American Express is a global services company, providing customers with access to products, insights and experiences that enrich lives and build business success. Learn more at and connect with us on,,
About Office Depot.
Office Depot, dedicated to helping customers save time and money, provides office supplies and services through 1,677 worldwide retail stores, a dedicated sales force, top-rated catalogs and global e-commerce operations. Office Depot has annual sales of approximately $11.5 billion, and employs about 39,000 associates in 60 countries around the world.
Office Depot’s common stock is listed on the New York Stock Exchange under the symbol ODP. Additional press information can be found at: and
1American Express Prepaid Card not available in Hawaii, Alaska, New Jersey, Arkansas and Puerto Rico Office Depot retail locations.
2Temporary Card can be used at U.S. locations where American Express is accepted. Temporary Card is not personalized and cannot be used at ATMs.
3Retail Fees apply for cash loading
4Purchase Protection is underwritten by AMEX Assurance Company, Administrative Office, Phoenix, AZ. Coverage is determined by the terms, conditions, and exclusions of Policy AX0951 or Policy PP-IND and is subject to change with notice. This document does not supplement or replace the Policy.

Discover Reports Record Q1 Net Income of $631 Million or $1.18 Per Diluted Share

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Image via CrunchBase

RIVERWOODS, Ill.--()--Discover Financial Services (NYSE: DFS) today reported net income of $631 million for the first quarter of 2012, as compared to $465 million for the first quarter of 2011.
“Our results this quarter represent record first quarter earnings for Discover and are a great start for 2012”
First Quarter Highlights
  • Total loans grew $4.6 billion, or 9%, from the prior year to $56.3 billion.
  • Credit card loans grew $1.6 billion to $45.9 billion and Discover card sales volume was up 7%.
  • The delinquency rate for credit card loans over 30 days past due declined to 2.22% and the credit card net charge-off rate declined to 3.07%, each of which were record lows.
  • Payment Services pretax income was up 21% from the prior year to $52 million. Transaction volume for the segment was $46.7 billion in the quarter, an increase of 8% from the prior year.
"Our results this quarter represent record first quarter earnings for Discover and are a great start for 2012," said David Nelms, chairman and chief executive officer of Discover. "Continued improvements in credit performance, solid organic growth in each of our lending products and strong volume growth across our networks were key drivers of this quarter's earnings. We also recently announced that our board of directors approved a new $2 billion share repurchase authorization. This action, along with the two dividend increases we announced last year, reflect the strength of our capital base and our confidence in the future earnings power of the company."
Segment Results:
Direct Banking
Direct Banking pretax income of $962 million in the quarter was up $285 million, or 42%, from the prior year.
Discover card sales volume grew 7% from the prior year to $25.6 billion, primarily driven by an increase in the number of customers using their Discover card. Credit card loans increased, ending the quarter at $45.9 billion, up $1.6 billion from the prior year.
Total loans ended the quarter at $56.3 billion, up $4.6 billion, or 9%, compared to the prior year. Private student loans increased $3.0 billion, including the acquisition of a $2.4 billion student loan portfolio in the fourth quarter of 2011. Personal loans increased $764 million from the prior year. The company sold its remaining $698 million of federal student loans in the first quarter of 2012.
Net interest margin was 9.03%, down 19 basis points from the prior year and 7 basis points from the prior quarter. The decrease in net interest margin from the prior year reflects an increase in lower yielding student loans as well as a decline in credit card yield, partially offset by lower funding costs. Credit card yield was 12.21%, a decrease of 44 basis points from the prior year and 15 basis points from the prior quarter. The decline in credit card yield reflects the impacts of the CARD Act and an increase in promotional rate balances, partially offset by lower interest charge-offs. Interest expense as a percent of total loans decreased 55 basis points from the prior year and 13 basis points from the prior quarter as the company continued to take advantage of available low rate funding.
Net interest income increased $123 million, or 11%, from the prior year, primarily driven by an increase in income from student and personal loans and lower interest expense. Interest income on credit card loans increased modestly from the prior year as an increase in loan balances was partially offset by the decline in yield.
The delinquency rate for credit card loans over 30 days past due was 2.22%, an improvement of 137 basis points from the prior year, and 17 basis points from the prior quarter. The credit card net charge-off rate decreased to 3.07% for the first quarter of 2012, down 289 basis points from the prior year and 17 basis points from the prior quarter.
Provision for loan losses of $152 million decreased $266 million, or 64%, from the prior year, primarily driven by lower charge-offs as a result of the continued decline in delinquencies. The reserve release for the first quarter of 2012 was $226 million, versus a release of $271 million in the first quarter of 2011.
Other income decreased $22 million, or 5%, from the prior year. The first quarter of 2011 included a $16 million bargain purchase gain estimate related to the acquisition of The Student Loan Corporation.
Expenses were up $82 million, or 15%, from the prior year, due to increased compensation and benefits costs reflecting increased staffing, an increase in reserves related to litigation and regulatory matters, investments in growth initiatives and infrastructure, and higher fraud costs.
Payment Services
Payment Services pretax income was a record $52 million in the quarter, up $9 million, or 21%, from the prior year. Revenue increased $9 million, primarily driven by an increase in higher margin point-of-sale transactions on the PULSE network. Expenses were relatively flat, as higher compensation costs were offset by lower marketing costs related to the timing of programs.
Payment Services dollar volume was $46.7 billion for the first quarter, up 8% from the prior year, driven by higher PULSE, third-party issuer and Diners Club International volume.
Share Repurchases
As previously announced, the company’s board of directors approved a new share repurchase program authorizing the company to purchase up to $2 billion of its common stock and also terminated the prior share repurchase program. The company had repurchased a total of 18 million shares for $425 million under the prior program, all of which occurred in fiscal year 2011.
Conference Call and Webcast Information
The company will host a conference call to discuss its first quarter results on Wednesday, March 21, 2012, at 4:00 pm. Central time. Interested parties can listen to the conference call via a live audio webcast at

Gemalto Wins Two Awards for Mobile Commerce Innovation from Juniper Research

Recognizing NFC and TSM expansion
AMSTERDAM-- BusinessWire

Gemalto (Euronext NL0000400653 GTO), the world leader in digital security, announces it has won two Future Mobile Awards from Juniper Research in the Near Field Communications (NFC) and Mobile Ticketing categories respectively. The awards recognize Gemalto’s role in mobile commerce through Universal Integrated Circuit Card (UICC) deployment and Trusted Service Management (TSM) for NFC technology, as well as contactless services for mass transit.
“All mobile, financial and transport operators around the world benefit from lower risk and higher returns on their NFC programs by equipping their subscriber base with the highly reconfigurable secure technology found in Gemalto’s new UpTeq NFC cards and Allynis Trusted Service Management software,” said Jean-Claude Deturche, Senior Vice President of Mobile Financial Services at Gemalto. “Proactively deploying Gemalto UpTeq NFC cards and TSM software creates a solution prepared for new service and partners additions. NFC cards enable massive roll-out by sparing mobile operators the need to test all possible services and configurations and help identify the preferences and usage of each user. NFC is gaining tremendous traction and Gemalto has been there from the start. We are grateful to see this tremendous experience recognized and gaining traction in markets across the world.”These awards were decided by industry experts based on criteria including: product range, innovation, geographic market penetration, evidence of commercial campaigns, partnerships, and potential future business. Gemalto is already one of the world’s leading technology suppliers powering a number of high-profile commercial NFC deployments and pilots, notably with KDDI in Japan, Crédit Agricole in France and the ISIS venture in the U.S.
Juniper senior analyst and award panel judge David Snow commented: “Gemalto received the NFC award for being positioned in a pivotal role in the NFC market providing both UICC and the Trusted Service Manager for NFC services on a worldwide basis. The recent successes with major players such as IDA in Singapore as well as ISIS and JPMorgan Chase in the U.S. exemplify their leadership. Gemalto received the Mobile Ticketing award for its track record in delivering contactless solutions for mass transit systems for more than 10 years with more than 100 million contactless cards deployed and its continued innovations in the global migration to NFC ticketing.”
A full list of Future Mobile Award winners can be viewed at
For more information, see Gemalto's Mobile Financial Services offer.

Free Webinar April 18th: NFC Advertising in Practice

N-Mark Logo for certified devices
N-Mark Logo for certified devices (Photo credit: Wikipedia)

Wednesday 18 April, 14:00-15:00 UTC/GMT

Join NFC World's editor and speakers from UPM RFID, Nokia and Tapit for an in-depth guide to making the most of NFC in marketing and promotion.

Our three expert speakers will be discussing the potential of NFC for advertising and marketing everything from apps to brands and businesses. They will provide attendees with details of the lessons they have learned from NFC projects already carried out around the world and offer practical tips on how to run successful NFC campaigns.

This free to attend, one hour webinar offers a unique opportunity to learn from practitioners with real-world experience of NFC.

'NFC Advertising in Practice' will be of benefit to mobile operators, advertisers and marketers, app and game developers and more — anyone, in fact, who would like to learn more about the potential of NFC in marketing and advertising and how to get it right.

The webinar will be chaired by NFC World's Sarah Clark and there will be ample opportunity for questions and answers at the end.

There's no charge to attend this event and registration is quick and easy. Simply click on the button below and enter your details.

Your speakers

Mikko Nikkanen, UPM RFID

Mikko is UPM RFID's Business Development Director. He has several years of global experience in developing NFC and RFID tag-based concepts and applications and recently he has established a worldwide NFC partnership network around Mikko holds a Diploma in Marketing Management.

Kristiina Ilkka, Nokia

Kristiina is Nokia's NFC Product Marketing Manager. She is responsible for creating the company's NFC marketing strategy as well as leading and managing the successful implementation and execution of Nokia's NFC offering. During her nearly 20 years at Nokia, Kristiina has been responsible for marketing and marcomms activities in both the B2B and consumer arenas. 

Andrew Davis, Tapit

Andrew is Tapit's Agency Director. He started his career in the mailroom at McCann Erickson in Sydney, before working for eight years in digital advertising at UM and Initiative across clients such as Unilever, Coke, Microsoft and Hyundai. After seeing NFC in action, he was certain the technology would revolutionise the way people accessed digital content on their phone. Andrew is a co-founder of Tapit.

• Don't worry if you can't attend the live broadcast — register now and we'll send you a link to a recording afterwards.

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