Industry News

This section of our website is intended to keep our partners informed of the latest news surrounding the electronic payments industry.

December 16, 2011

PayPal Holding Your Funds? State Regulators Want to Know.

For many eBay sellers who use PayPal to process payments, holds of up to three weeks (or in some cases, even longer) are simply a reality of doing business.

PayPal generally explains the policy of holding funds as a response to transactions that are associated with risk or buyer disputes, though sellers often complain that the holds occur in situations where neither condition is in play. Moreover, critics of the policy have maintained that the holds are commonplace to the point of routine, occurring far too often to be explained by suspicions of fraud.

What many sellers may not know is that they can seek redress from state regulators if they feel the holds are unfair.

"If people feel that they have undue delays the best and the quickest way to find out why or how is to write a letter to their state regulator," said Joseph Rooney, assistant commissioner with Maryland's Office of the Commissioner of Financial Regulation.

According to Rooney, every state but two - South Carolina and New Mexico - has a law governing money transmitters, a broad classification that includes financial institutions such as money order and travelers check services, as well as online payment outfits like PayPal.

Many of those statutes cap the period of time that money transmitters can hold onto payments before releasing them to the recipient.

In California, for instance, where PayPal is headquartered and registered as a money transmitter, section 1841 of the state's Money Transmission Act reads:

"Every licensee or its agent shall forward all money received for transmission or give instructions committing equivalent money to the person designated by the customer within 10 days after receiving that money, unless otherwise ordered by his or her customer."

Alana Golden, public information officer at the California Department of Financial Institutions, explained that the hold period provided in the statute is "meant to protect the consumer against non-delivery by sellers."

Other states have similar provisions. In Florida, for example, the law requires that licensed money transmitters "shall, in the normal course of business, ensure that money transmitted is available to the designated recipient within 10 business days after receipt."

An eBay seller in that state shared his experience with Ecommerce Bytes. The seller, who claims a 100 percent feedback rating with no history of major complaints, received word from PayPal in October that funds owed him would be held for 21 days. In response, the seller appealed to the state attorney general's office. About two weeks later, PayPal contacted the seller, saying that it had conducted a "second review" of his account, and the funds were released.

"Bottom line: anyone that has a hold placed on their account, should take a few minutes to do some research, see if they have a leg to stand on, and complain to their state agency/agencies. It does work," the seller wrote.

November 19, 2011

28 Indicted in Theft of Steakhouse Patrons' Credit Card Data.

The customers went for the dry-aged sirloin and tender cuts of filet mignon, like many at New York City’s better steakhouses. And, like many, they handed their credit cards to the waiters after their meals, expecting to tip, sign and be on their way.

But in the last year and a half, at least 50 diners at restaurants like the Capital Grille, Smith & Wollensky, JoJo and Wolfgang’s Steakhouse ended up paying for more than just a fine piece of meat. Their card information — and, in effect, their identities — had been stolen by waiters in a scheme to buy and resell cases of vintage French wine, Louis Vuitton handbags, Cartier jewelry and even a Roy Lichtenstein lithograph of Marilyn Monroe.

The diners had unwittingly become pawns in a “very high-tech, evolving group of criminal organizers,” Cyrus R. Vance Jr., the Manhattan district attorney, said Friday during a news conference to announce the indictments of 28 people.

Seven waiters, he said, used lipstick-size electronic “skimmers” to extract data from the magnetic strips of American Express Centurion, or “black,” cards and other high- and no-limit credit cards belonging to patrons. Such customers, used to high credit card bills, would probably not have immediately noticed or been alerted by card companies to any suspicious activity on their accounts, Mr. Vance said.

Equipped with the stolen data, members of the ring allegedly manufactured counterfeit credit cards and identification cards in an Upper West Side apartment using what Mr. Vance called “the tools of their trade”: computers, scanners, encoders, embossing machines and other high-tech equipment.

The counterfeit cards, which the police commissioner, Raymond W. Kelly, described as high-quality duplicates, were used by “shoppers” associated with the ring to make purchases at high-end retailers like Bergdorf Goodman, Burberry and Chanel, in places as far away as Boston, Chicago and Florida. But first, to make sure the cards would be accepted, members of the ring used them for things like cab rides.

Mr. Kelly — standing behind a display that included thick stacks of $100 bills, designer handbags and aged bottles of red wine seized from the defendants — called the ring “well organized and very selective.”

October 20, 2011

Whole Foods Market customers hoping to use their checkbooks at the high-end grocery this week were told to find alternative ways to pay.

All five Triangle locations stopped accepting checks Monday in order to limit the amount of customer information the grocer collected and to increase checkout speed, said Whole Foods spokeswoman Teresa Jones. The policy is already in place at many of its 300 U.S. stores.

"It's a noticing of a trend and an opportunity to take advantage of a trend," Jones said.

It's true that check users are a dwindling minority in the retail world, but few stores have outlawed the payment method.

There's no discernible trend of retailers adopting no-check policies, said J. Craig Shearman, a vice president at the National Retail Federation. The trend is actually the opposite. "What (retailers) prefer most is cash or checks," Shearman said.

When customers pay by cash or check, the retailer receives 100 cents on the dollar. A retailer pays a transaction fee whenever a customer uses a credit or debit card.

Last year, just 5 percent of consumers reported that writing a check is their preferred method of retail payment, down from 11 percent in 2005 and 18 percent in 2001, according to a study by BAI Research and Hitachi Consulting.

Whole Foods let its customers know about the change in advance through signs posted at the checkout line.

September 12, 2011

ePay Management, LLC Introduces ePay Finance to Assist American Businesses by Lending to Underserved Consumers.

ePay Finance is specialized in helping consumers with credit challenges purchase goods and services from our business customers. While most lenders approve only well-qualified borrowers, ePay understands that anyone can experience financial difficulty at times due to reasons beyond their control.

ePay Finance offers unsecured loans up to $30,000 for prime to sub-prime credit customers, with credit scores as low as 550. Interest rates are as low as 8.99% with special promotions such as 12 month no interest or 90 days same as cash.

Through the ePay Finance program, business and private lenders come together to make affordable funding available to consumers through an online platform. Each ePay Finance business customer is set up with an online account to submit loan applications There is no recourse or liability to the business for payment defaults. There are no minimum years in business requirements to participate.

ePay Finance was created to help as many consumers as possible to purchase goods and services from our business customers within responsible lending limits.

August 29, 2011

The New Credit Score Rules: Forbes reports on credit scores in America in the following ariticle:

The average credit score nationwide is 666, according to CreditKarma.com. That's not only an ominous number, but can be a costly one.

Based on CreditKarma.com's data, the trend amongst lenders shows that a 660 credit score is the threshold to be approved for a mortgage, auto loan and unsecured credit card. Digging deeper into consumers' credit health, nearly 40% of consumers have a credit score below 660. That means 4 out of 10 Americans would likely be denied for a mortgage and auto loan, charged sky-high interest rates, and only qualify for a secured credit card.

With credit scores controlling consumers' access to credit and the prices they pay for lending products, Americans must take control of their credit health.

In the fine line between approval and denial in lending, consumers deserve to know more so they can do more about their credit health. While recent federal regulations have nudged open the door on consumers' access to credit, it's not enough. Consumers must be empowered to actively manage their credit, not just when they are transacting but also in their daily financial life.

As legislation and economic changes evolve the credit industry, consumers' access to credit scores must be broadened. Here's what you need to know about credit now.

• 1.) It's your consumer right to get a free credit score! Thanks to a recent federal regulation, consumers who are denied on a credit application or receive higher interests due to their credit profile are entitled to see their credit score for free. This only applies to declined consumers, so it begs the question: why aren't all consumers getting their credit score for free? With such significant impact on accessing and pricing of financial products, free credit score access should be a right of all consumers. We may see government efforts to provide free credit score access on the horizon. Once a mysterious and proprietary secret of the credit industry, credit scores are becoming a powerful tool in the hands of consumers.
• 2.) Standards for accessing credit are always in motion. Once upon a time, the general "good" credit score standard was 660. During the recession's credit crunch, the standard jumped to 720. It appears some credit card issuers are again expanding their credit standards and approving lower credit tiers. Some mortgage lenders say a 720 credit score is needed to get the best mortgage rate, while others say 750 is the new standard. Additionally, lenders are increasingly focusing on other credit details aside from your three digit score. For example, a consumer can have a 780 credit score, considered in the excellent range, and be denied on a credit card application because their credit history is simply not long enough. It'll take time and economic stability till lenders comfortably agree on credit score standards; hopefully that keeps you on your toes and improving credit health every day.
• 3.) It's not enough to check your credit score. One drawback of the federal regulation is its limitations. Giving consumers access to their credit after being denied is too little, too late. Credit scores can fluctuate suddenly, so a single snapshot isn't enough. What's necessary is for consumers to monitor their credit. Whether you have a 550 or an 800, tracking trends in your credit use and credit score helps identify areas to improve, habits to avoid, and most importantly, makes you conscious of how day-to-day financial decisions impacts your credit health. You might need several months' cushion to polish up your score, so begin monitoring your credit as soon as you plan to buy a home or car, or apply for a loan or credit card. If you aren't applying for credit but currently have a credit card, it's still imperative to stay on top of your credit health. Issuers periodically do an account review, and if any new credit blemishes appear, it could affect your card terms. Proactively use credit score monitoring services so you, and not lenders, are the first to know about recent changes on your credit.
• 4.) Expect credit score differences. The federal regulation also shined light on the fact that there are dozens of credit score models in use. While many consumers consider FICO to be the "real" score and everything else to be a "FAKO", the truth is that every lender chooses differently: there are the credit bureau-specific models, the VantageScore, the FICO score, scores specific to lender type like mortgage, auto and credit card issuers, and even models particular to certain banks. If your TransUnion score and VantageScore have a 40 point difference, there isn't a "more accurate" score. It's similar to weighing yourself at home versus the gym or the doctor's office; the scales show different numbers because they're calibrated differently, but ultimately, they all measure your weight. Rather than obsessing over the three-digit score, focus on the risk factors involved such as your debt, number of accounts, and credit use. Just like diet and exercise will reflect in your weight across all scales, taking action to holistically improve your credit health will reflect across the broad spectrum of credit score models.

While the recent federal regulation is a positive move for consumers, lenders have already found loopholes, reports SmartMoney. For example, if the lender uses its own scoring model, they aren't required to disclose that credit score to consumers. Also, insurance companies, which also use a credit score model to evaluate customers and price premiums, are excluded from this regulation and aren't required to disclose credit scores to consumers who are charged a higher premium.

As the Consumer Financial Protection Bureau stretches its reach and more financial reform finds its legs, consumers must keep challenging Uncle Sam to keep the heat on the financial industry when it comes to credit score access. Consumers must also keep putting in the legwork to build healthy credit and keep an eye on their credit score.

We're headed in the right direction when it comes to consumers' access to their credit score. But don't walk away from this topic just yet; we barely have our foot in the door.

July 11, 2011

Federal Reserve Sets Debit Interchange at $0.21: The Durbin Amendment went into effect on July 21, 2011. This legislation allows the Federal Reserve Board to reduce the cap of debit interchange at $0.21 per transaction plus 0.05% of the sale amount. There is much debate on who wins with this regulation.

The amendments supporters are hopeful the wealth transfer from banks to merchants will result in lower prices to consumers. Yet many predict that banks will likely respond by eradicating debit cards. Restricting purchases, ending free checking and driving up fees to offset revenue losses. In order for the merchant to benefit from the reduction in fees their payment provider must also pass along the reduction in Interchange.

ePay Management's merchants will no doubt be the winners of the lowered interchange cost due to their cost plus billing method. When Interchange costs go down, so does your bill with ePay.

May 5, 2011

$16 Billion In Rewards Points Go Unused: Companies that offer rewards reap the benefits when customers don't redeem them.

Americans are great at accruing loyalty rewards points, especially from retailers, banks and credit card companies. Unfortunately, they're just as good at not cashing those rewards in.

A new study from Colloquy, a marketing firm in Cincinnati, shows that about 33% of the 48 million rewards points earned by American consumers each year go unused, presumably due to neglect and misinformation, for a total value of $16 billion.

That news will probably make the companies that promote them happy, as the banks, credit card companies and retailers benefit from a huge de facto profit-making engine without having to lift a finger.

Of the $16 billion in unused loyalty points, the average American consumer squanders $205 -- enough to buy a round-trip plane ticket from Philadelphia to Miami, or to pay the average U.S. household phone bill for the month.

"American consumers are leaving significant dollars on the table every year," says Kelly Hlavinka, a managing partner at Colloquy. "This report should alert savvy consumers to a great opportunity to stretch household budgets, and to do so by simply consolidating their loyalty rewards participation with their favorite brands, making it easy to accumulate and redeem them faster than ever imagined."

Rules are hard to decipher. But one issue consumers have is trouble understanding what purchases do and don't qualify for the points. A cynic may wonder if complicated rewards rules are an intentional way for a company to make some extra cash, but it could be that either consumers are indifferent about using all their points (unlikely in this economy), or they're confused about how to leverage their rewards points, which the study's researchers feel is more likely.

The study also reveals some interesting data on which industries are the most aggressive about offering rewards and travel miles. Not surprisingly, the financial sector tops that list:

• The financial services sector is the biggest provider of rewards at $18 billion a year.
• The travel and hospitality sector is the second-largest industry in terms of rewards at $17 billion a year.
• The retail industry, although it makes up 40% of all loyalty program memberships, issues the smallest value in rewards at $12 billion a year.

On the demand side, membership in such programs is up:

• The number of loyalty memberships in the U.S. is 2.1 billion, up from 1.8 billion in the 2009 report and exceeding 2 billion for the first time.
• The average household has signed up for 18.4 programs, compared with 14.1 programs in 2009.
• Despite the increase in overall membership, the average number of programs in which households actively participate is just 8.4.

It's up to rewards points providers to urge consumers to use their points, although that's not an alluring option when providers can save big bucks when shoppers don't use them. Plus, if you push a consumer too far, that business may never come back.

"If redemption equals engagement, and engagement delivers customer satisfaction and profits, then loyalty marketers should encourage their members to make the most of their rewards," Hlavinka said. "In short, redemption is good."

March 9, 2011

Verifone Takes The Gloves Off, Accuses Square of Serious Security Hole: Mobile payments are heating up and companies are taking ruthless steps to knock down competitors. Today, VeriFone is claiming that Square’s mobile payments processor contains a serious security threat to credit cardholders and businesses.

In an “open letter,” VeriFone CEO Doug Bergeron warns consumers and the industry of a serious security threat with Square’s card reader and calls on Square to recall its devices (we’ve pasted the letter below). Bergeron claims that anyone can “skim” or steal personal information off of a credit card’s magnetic strip using the Square card reader with a hacked app and to illustrate the vulnerability, VeriFone wrote a test app that can “skim” to prove their assertions.

VeriFone says the flaw is in Square’s hardware, which the company says lacks the ability to encrypt credit card data. It’s unclear if VeriFone’s claims have grounds, but it is a serious move on VeriFone’s part to call out a competitor publicly. VeriFone offers its PayWare Mobile app and hardware to allow iPhone users to easily accept credit card payments. Clearly, Square is a threat to VeriFone’s product, so its intentions aren’t so pure when exposing this potential issue.

Credit card fraud is not new, of course. Criminals steal credit card numbers all the time, both online and offline. Consumers are not liable for fraudulent charges, the credit card companies are. But if Square becomes a magnet for fraud, the credit card companies won’t be happy with that.

We’ve contacted Square and are awaiting a formal response.

An Open Letter to the Industry and Consumers

Today is a wake-up call to consumers and the payments industry. Last year, a start-up named Square introduced a credit card reader for smartphones with the goal of making it very easy for anyone to accept credit cards through a mobile device. Seems like a great idea, but there is a serious security flaw that Square has overlooked that places consumers in dire risk.

In less than an hour, any reasonably skilled programmer can write an application that will “skim” – or steal – a consumer’s financial and personal information right off the card utilizing an easily obtained Square card reader. How do we know? We did it. Tested on sample Square card readers with our own personal credit cards, we wrote an application in less than an hour that did exactly this.

Let me explain how easy it is to exploit the vulnerability.

A criminal signs up with Square, obtains the dongle for free and creates a fake Square app on his smartphone. Insert the dongle into the audio jack of a smartphone or iPad, and you’ve got a mobile skimming device that fits in your pocket and that can be used to illegally collect personal and financial data from the magnetic stripe of a payment card. It’s shockingly simple.

The issue is that Square’s hardware is poorly constructed and lacks all ability to encrypt consumers’ data, creating a window for criminals to turn the device into a skimming machine in a matter of minutes.

There are hundreds of thousands of these unsecure devices already floating out there and more are given away for free every day. And because anyone can get their hands on these Square readers, anyone can masquerade as a legitimate business or vendor and swipe your payment card. Your card data is then instantly and illegally captured in the smartphone, un-encrypted – and voila, you’re a fraud victim.

Consumers who hand over their plastic to merchants using Square devices are unwittingly putting themselves in danger.

Don’t take our word for it. See for yourself at www.sq-skim.com where you can download the sample skimming application and view a video of this type of fraud in action.

Today we are handing a copy of the application over to Visa, MasterCard, Discover, American Express, and JP Morgan Chase (Square’s credit card processor), and we invite their comments.

Consumer trust is what’s really at stake. If the industry allows Square and other similar attempts to short-circuit security best practices, it will seriously jeopardize the integrity and security of the payment infrastructure and financial systems developed over the last three decades.

Secure payment systems, like those provided by VeriFone and other credible providers which adhere to the highest level of security practices, are critical in protecting consumers, merchants and banks. Without this protection, all commerce – conducted with plastic or mobile devices – is a catalyst for massive personal and institutional financial loss.

There is great promise in the future of mobile payments and our innovations will help drive the industry forward. It is our hope that both consumers and merchants will take it upon themselves to become educated on the security risks involved with some of these experimental payment acceptance methods, like Square, and make informed decisions to protect themselves and their customers.

We take security very seriously. Securing payment transactions is what we do, and yes – calling attention to and protecting against these types of security threats to consumers, merchants and banks is our responsibility.

We call on Square to do the responsible thing and recall these card skimming devices from the market.

Doug Bergeron

CEO, VeriFone

March 3, 2011

Merchant Coalition Backs Interchange Overhaul: The Merchants Payments Coalition Inc., an association of convenience stores, supermarkets, retailers, fuel stations, and an assortment of other business owners, large and small, who accept card payments, continues to be an active proponent of the Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The amendment was passed to regulate debit card interchange fees.

According to the 2010 Federal Reserve Payments Study, debit card transaction volume in the United States surpassed all other forms of noncash payments in 2009, representing an estimated 35 percent of total noncash payments. In the Federal Reserve's Regulation II; Docket No. R-1404, the card networks reported debit and prepaid interchange fees totaling $16.2 billion in 2009, with the average interchange fee of 44 cents per transaction, at 1.14 percent per the average $38.58 transaction.

"This has been an issue for our membership for well over a decade," said Liz Garner, Director of Government Relations, Food Marketing Institute, an MPC member.

"Our relationship with the card companies is unlike any other business relationship we have. We can't negotiate rates; we can't negotiate terms of card acceptance. And that's why this is one of the fastest growing line items for all of our member companies - everyone from large, national retailers to small, independent operators like ours."

Rachel Wolfe, a spokeswoman for the MPC, which represents an estimated 2.7 million stores and 50 million employees in the United States, said that in the price-competitive retail industry, every penny matters.

"Unfortunately we've been seeing more than a penny increase in swipe fees and these fees are completely anticompetitive," she said. "We've seen those fees triple in the past 10 years, even though the cost of actually processing those transactions has gone down."

According to Wolfe, much of the interchange debate has focused on large retailers, but smaller merchants have been hit hardest because most lack adequate capital reserves. "They don't have the corporate backing," she said, adding that escalating fees can even threaten the survival of small businesses.

Garner elaborated: "Our smallest supermarket members saw a 35 percent increase on their cost of accepting just one PIN debit card network last year alone," she said. "That's the smallest supermarkets. Ultimately, that type of increase is going to impact our customers."

Garner added that the card companies' fee structures "are different based on volume, the type of merchant, the type of transaction it is, but we've seen exponential increases.

"That's why it's so important for us that this process plays out at the Federal Reserve, because any month we delay reform, it costs merchants and consumers ultimately close to $1 billion."

Biff Matthews, President and Founder of CardWare International said, "The large merchants have always had the ability to negotiate better rates, but I think this will provide some opportunities for smaller merchants to participate in that a little better. Whether or not those savings to either merchant is passed on to the consumer is still very speculative."

Furthermore, Matthews noted, "More ISOs today are doing pass through, so any reduction is going to go to the merchant's bottom line. I wonder, too, especially from a standpoint of revenue, not only for the ISO, but also for the merchant level salesperson, because their net income is based in large part upon the interchange, are they going to pass that through to the merchant? Don't know."

He also believes card companies and financial institutions are likely to offset any revenue losses incurred through the new regulations with fee increases elsewhere. With about a month to finalize debit interchange regulations, Matthews said, "There very well could be a delay to allow for some initial refinement of the legislation to accurately reflect what the intent was."

"And, depending on how the final legislation is drafted, I would expect to see some lawsuits," he said.

February 12, 2011

PRC Reports Data Breaches Increase in 2010: According to two reliable sources - First Data Corp.'s SpendTrend and the U.S. Federal Reserve - consumer credit card activity was up during December 2010 and January 2011. And some industry experts feel this may indicate consumer confidence is on the rise.

A recently issued SpendTrend analysis for January 2011 indicates that transaction growth on credit cards was at a 13-month high in January, and year-over-year credit dollar volume growth was the second highest in over a year.

The report tracks same-store consumer spending at U.S. merchant locations by credit, signature debit, PIN debit, electronic benefit transfer and check at U.S. merchant locations.

The number of credit card transactions increased 5.9 percent year-over-year in January, while dollar volume growth for credit card purchases grew by 7.2 percent, according to SpendTrend.

In the report, Silvio Tavares, Senior Vice President and Division Manager of First Data Information and Analytics Services, stated, "Consumer spending during the fourth quarter of 2010 and the momentum from the strong holiday season carried over into January."

The SpendTrend report also pointed to year-over-year dollar volume growth increases in January for signature debit (9.7 percent) and PIN debit (5.4 percent) transactions; it also revealed a decrease for payments by check (-10.4 percent).

Meanwhile, figures recently released by the Fed for consumer credit card transactions also showed an increase in December 2010. It's the first time since mid-2008 that consumer credit card spending increased, according to the report.

The Fed report showed consumer revolving credit increased $2.3 billion, at an annual rate of 3.5 percent, to $800.5 billion during the last month of 2010. One or two months does not a trend make, but increased consumer spending, taken in concert with other signs, could strengthen the notion that the economy is improving.

Joanna Stavins, Senior Economist and Policy Advisor for the Federal Reserve Bank of Boston, refrained from sweeping predictions on economic recovery, but she said she is happy to see the increase "because that is an indication that people are more optimistic. It's a self-fulfilling prophecy in many ways: as long as consumers are feeling more confident ... that might indicate other things are going to improve."

December 1, 2010

Global Payments Remain Strong: Global payment volumes continued to see growth in 2009, despite the financial crisis, according to initial data compiled by Capgemini U.S. LLC, the Royal Bank of Scotland PLC, and the European Financial Management & Marketing Association in the 6th annual World Payments Report 2010. The report examines emerging payment trends and discusses the potential impact of payment-related regulatory initiatives on global banking.

The study found that cards remain the preferred noncash payment instrument globally, accounting for over 40 percent of payments in most markets, 58 percent worldwide.

While the average value of card transactions in North America dropped to $57 in 2008, down from $63 the previous year, consumer debit card usage for everyday purchases rose by 13 percent for the same period.

The growth of noncash payment volumes in developing economies, such as China, South Africa and Russia, is expected to outpace mature markets like North America, which saw a gain of 4 percent in 2008, accounting for more than 38 percent of world volume at 102.5 billion payments.

Total combined global electronic payments and mobile payments accounted for approximately 20.3 billion transactions valued at $1.15 trillion in 2009, according to the report.

Challenges to banks

Nontraditional payment providers like PayPal Inc. are making inroads into revenue and markets traditionally held by financial institutions. About 75 percent of U.S. online shoppers maintain an alternative payment account, of which 70 percent use the accounts for online purchases.

"Banks are currently facing a variety of challenges from the rapidly changing payments landscape," reported Brian Stevenson, Chief Executive, RBS Global Transaction Services.

"These challenges also present significant opportunities for banks that are able to adjust their strategies and move quickly to take full advantage of new ways of working in the global payment industry."

The report suggests banks will need to cooperate with third parties on revenue-focused opportunities to speed time-to-market, spread investment expenses and reduce operating costs of new payment initiatives.

One trend seen in banking is the integration of bank operations into centralized payment hubs that optimize costs and leverage the profitability of each payment instrument, creating a more flexible and scalable model.

November 4, 2010

Visa survey provides gift-giving insights in time for holidays: San Francisco, Nov. 4, 2010 -- A new survey commissioned by Visa Inc. (NYSE: V) reveals that 78 percent of respondents will have a holiday budget in place before they begin their shopping. Of that 78 percent, 42 percent start with a specific budget for each individual on their shopping list, and 36 percent start with a specific overall budget number and plan accordingly.

"At the same time, gift card recipients have the flexibility to treat themselves to a little luxury they've wished for, but might not otherwise experience, or to cover more practical needs."

For consumers trying to keep holiday spending under control, prepaid gift cards are seen as one way to stay on track: 64 percent of respondents agree that giving a Visa Gift card can help them stay within their holiday budget.

Visa Gift cards make it easy to stick to a financial plan while giving friends and family a gift that will be well-received. 85 percent of U.S. consumers would appreciate receiving a branded gift card - like a Visa Gift card - to buy something they really want or need. In fact, 65 percent of respondents would prefer to receive a branded gift card rather than a "non-essential" holiday gift, such as a holiday scarf or a bottle of cologne.

The data was collected in a national survey examining consumers' perceptions and habits relating to gift giving.

"Visa Gift card givers enjoy one-stop shopping and the ability to tailor gift card amounts to their budget - which is especially important as consumers keep a keen eye on spending this holiday season," said Hyung Choi, head of U.S. consumer prepaid products, Visa Inc. "At the same time, gift card recipients have the flexibility to treat themselves to a little luxury they've wished for, but might not otherwise experience, or to cover more practical needs."

Give a gift they really want

The survey also revealed the fate of well-intentioned, but off-the-mark gift ideas:

• 42 percent of consumers still have at least one unopened holiday gift from last year in the back of their closet
• Nearly as many (38 percent) admit to returning at least one holiday gift from last year
• 28 percent admit to re-gifting at least one of their holiday gifts from last year

The price of giving the wrong gift can add up. Of those unused and unwanted gifts, 24 percent of respondents estimate the dollar value to be worth $51-$100 and 11 percent estimate the gifts to be worth more than $100.

Visa Gift cards let recipients choose the gift that means the most to them. When asked how they would use a Visa Gift card if they were to receive one this holiday season, the top three responses were:

• To indulge in something they might not normally be able to afford, such as a special dinner, jewelry, clothing or personal electronics (65 percent)
• To get what they didn't receive from their holiday wish list (57 percent)
• To buy "life essentials" such as groceries or household products, or to pay bills (54 percent)

Visa Gift cards can be used at the millions of locations that accept Visa Debit cards, giving recipients the convenience and flexibility to use the card where they want, for exactly what they want.

September 27, 2010

Tealeaf survey: Online retailers potentially lost over $44 billion:San Francisco, Sept. 27, 2010 -- Tealeaf®, the leader in online customer experience management (CEM) software, today announced the results of its commissioned survey of Online Transactions, conducted online by Harris Interactive®. The survey found that retailers who operate in the online channel may have lost more than $44 billion dollars over this past year as a result of transaction problems on their website.1 As more consumers forego brick-and-mortar stores in favor of online shopping, the impact of lost revenue from poor online experiences directly impacts the bottom line of businesses across diverse industries. Significantly, the Online Transactions study found that more than one-fourth of online shoppers (27 percent) would turn to an online or offline competitor if they encountered an online transaction issue, which further validates the need for organizations to have comprehensive insight into the online experiences of their customers.

Specifically, the survey found that, if online shoppers were to encounter a problem while attempting to conduct an online transaction, they would react as follows:

• 66 percent - contact customer service, including:
• 53 percent - call customer service
• 36 percent - email or log a web complaint with customer service
• 32 percent - abandon transaction entirely, including:
• 27 percent - turn to a competitor

The Online Transactions survey also found that about 2 in 3 online adults (66 percent) have conducted a shopping transaction in the past year, and more than half (56 percent) have conducted a financial transaction such as managing their personal bank accounts, paying bills, and investing in the stock market. Nearly half of adults (49 percent) have conducted travel transactions online, while nearly 1 in 5 (17 percent) have conducted insurance transactions. Given the high volume of online transactions across industries, the need for delivering seamless online experiences is critical to avoiding potential lost revenue.

Bruce Temkin, managing partner of Temkin Group, recently surveyed large and small enterprises to highlight the differences these organizations face in achieving customer experience success. "One common thread remained throughout our research," said Temkin. "The lack of a clear customer experience management strategy posed a significant obstacle to improving customer experience, regardless of company size. This is truly a universal problem, and the bottom line is that companies cannot achieve success without making customer experience a 'real' priority through the right technologies, behaviors and best practices."

"The potential for lost revenue when customers have a negative online shopping experience is amplified by the rising use of social media," said Rebecca Ward, CEO of Tealeaf. "The 'echo chamber effect' caused by frustrated customers who voice their displeasure on social networks can significantly damage an organization's reputation. Proactively identifying website issues presents an opportunity for businesses to recover some of that $44 billion in potentially lost revenue, especially as we head into the upcoming holiday shopping season."

August 13, 2010

RSR Research says online retailers missing holiday opportunity: Coconut Creek, Fla., Aug. 13, 2010 -- Coming on the heels of passage of landmark finance reform, a new study from Mercator Advisory Group sponsored by National Payment Card Association, www.nationalpaymentcard.com , strongly indicates that consumers are likely to turn away from ubiquitous debit-based payment products if, as expected, issuers were to institute fees. The study found that consumers would first react to the institution of fees by turning to the use of cash but could be kept in the preferred electronic payments realm if merchants were to offer private label debit cards with no fees and rewards.

"Debit cards are currently the preferred form of payment for many consumers at convenience, drug and grocery stores but that preference is tenuous at best when even a modest monthly fee is introduced into the mix"

The study was designed to look at the effect fees and rewards would have on everyday purchase payment decisions at the point of sale with specific focus on the use of debit cards. With the ascendancy of debit cards as a preferred payment method, the impact of fees on their use could have a profound impact on merchants, issuers and consumers.

With tighter regulation on issuers, it is widely accepted that consumers will see more fees added to their debit card accounts in the months to come as these issuers move to regain lost income. Specifically, the study asked consumers about the impact of monthly fees on debit card usage. The results showed that by adding just a $10 monthly fee would cause a majority to stop using their cards, clearly indicating a primary threshold had been reached. In addition, women were more likely than men to say they would stop using their card and more than 3/4 of individuals with incomes over $75,000 would stop using their cards across all store types.

The study also showed that faced with a monthly debit card fee, consumers' first reaction would be to turn to cash above all other forms of payment. However, when asked about using a debit card product offered directly by merchants that was secure and without fees, an immediate 1/3 said they would be interested in such a product. When the benefit of merchant rewards was added to the offer, another 15% said they would be interested.

"Debit cards are currently the preferred form of payment for many consumers at convenience, drug and grocery stores but that preference is tenuous at best when even a modest monthly fee is introduced into the mix," said Patricia Hewitt, Director, Mercator Advisory Group. "For merchants, this is a slippery slope unless they can offer some type of alternative. The study strongly indicated that a branded debit card of the merchant's own, absent any fees and accompanied by rewards, could be very attractive. For merchants, cash is not king as spending levels and purchase volume are likely to drop. They need to offer an alternative to maintain their business and a branded debit card could very well be the answer."

"Consumers are seeking to avoid fees yet maintain the convenience of electronic payment and merchants must keep sales volume up and avoid having consumers turn to cash or checks for payment. Decoupled debit cards with no fees and rewards attached are a win/win for consumers and merchants," said National Payment Card Association President Joe Randazza. "This study clearly demonstrates just how price sensitive the consumer market is. Decoupled debit allows these consumers to avoid fees and obtain rewards and at the same time helping merchants regain control over payment choices, capture additional spend with the resulting incremental income and encourage loyalty."

The Mercator study was conducted via an online survey panel of US adults 18+ between July 21 & 25, 2010. 1,000 responses were collected. The margin of sampling error for samples of this size is +/-3.1% at a confidence level of 95%.

July 22, 2010

Visa Inc. (NYSE:V) announced today that its board of directors unanimously voted in favor of two amendments to the Company's certificate of incorporation: declassifying the board and adopting a majority vote standard in uncontested director elections. Approval of the amendments requires support by the majority of outstanding shares of the Company's class A common stock at the Company's next annual meeting, to be held on January 27, 2011 (the "2011 Annual Meeting").

Declassification of the board will permit Visa's stockholders to vote annually for all directors. Currently, the Company's three classes of directors are elected for staggered three-year terms. If the stockholders approve the proposal to declassify the board, all directors will stand for election each year beginning with the 2011 Annual Meeting.

Under the majority vote standard approved by the board, each nominated director must receive more votes cast for his or her election than against to be elected. An incumbent director will be required to tender his or her resignation prior to the annual meeting, which will become effective if the director fails to receive a majority of "for" votes and the board accepts the resignation. This proposed amendment applies to director elections beginning in 2012. In the case of contested elections, directors will continue to be elected by a plurality vote.

"The decisions to declassify the board and adopt a majority vote standard are consistent with Visa's commitment to sound corporate governance," said Joseph W. Saunders, Chairman of the Board and Chief Executive Officer, Visa Inc. "The board believes these proactive steps to amend the Company's certificate of incorporation are in the best interest of the Company and its shareholders."

The Company also announced that the record date for the 2011 Annual Meeting is December 3, 2010. The Company's class A common stockholders at the close of business on the record date will be entitled to vote at the 2011 Annual Meeting

June 2, 2010

Effective July 1, 2010 Visa will be increasing their Acquirer Service Fee from 0.0925% to 0.11%.

May 4, 2010

In a development that may lead to dramatic change in the payments industry, the so-called Durbin amendment to the financial services reform bill passed the U.S. Senate by a 64 to 33 vote. The amendment would mandate the Federal Reserve Board to regulate interchange.

In a statement following the vote on May 13, 2010, Sen. Dick Durbin, D-Ill., said, "Passage of this measure gives small businesses and their customers a real chance in the fight against the outrageously high 'swipe fees' charged by Visa and MasterCard."

But MasterCard Worldwide believes otherwise, arguing that the amendment "will reduce competition and hurt consumers" because big retailers will not pass onto consumers the savings from lower interchange fees.

Merchant advocacy groups, such as The National Retail Federation, the Merchants Payments Coalition and the National Association of Convenience Stores, support the amendment.

According to Hank Armour, President and Chief Executive Officer at the NACS, the Durbin amendment "would give equality for check card and paper check fees - meaning that debit interchange, or 'swipe,' fees could be significantly reduced or eliminated."

The Electronic Transactions Association, the payments industry's leading trade group, is opposed to the amendment. In a statement, ETA CEO Carla Balakgie said the amendment will "likely reduce credit availability for merchants and consumers, and raise the price of existing credit."

A similar financial reform bill is working its way through the U.S. House of Representatives. But the House bill reportedly does not contain the same interchange language as the Senate bill. The ETA urges all payment professionals to make their opinions known by contacting their senators. Phone numbers and website addresses can be found at www.senate.gov/general/contact_information/senators_cfm.cfm.

April 1, 2010

MasterCard and Visa's planned April 2010 cost increases will average about 1.5 basis points. In an effort to preserve current margin on all of your merchants, RBS Worldpay will implement the following changes effective April 1st. ePay Management merchants were notified through messages on the February statements that MasterCard and Visa were increasing costs. A specific message will be included on the March merchant statements that will drop in early April as to the net effect of the increases as it relates to a merchants current pricing. Cost plus merchants: Simply pass through the increase "as is". Tiered merchants: ePay and RBS Worldpay will apply a 2 basis point increase to all tiered merchants (to all tiers) in order to keep your margins relatively even.

March 16, 2010

Women Networking in Electronic Transactions (W.net), an organization devoted to the development of women leaders in the payments industry, launched its 2010 individual giving campaign. The theme is "Strive-for-Five," in honor of the nonprofit organization's fifth anniversary.

The campaign's goal is to raise $50,000 to help W.net further its mission "to inspire and empower women in the electronic transactions industry to maximize their individual potential and position themselves for greater personal success." Donations can be made at www.w-net.biz.

February 11, 2010

PCI Knowledge Base will be conducting a Webinar on Enterprise Tokenization Strategies on February 26. As more and more merchants try to lower their breach risk by reducing the amount of credit card data they collect and retain, the topic of tokenization comes up often. Although the term is most commonly used to refer to the replacement of credit card numbers with meaningless numbers that have no black market value, a few leading merchant and service provider are applying the process and technology to all confidential data. Visit KnowPCI.com for the webinar and other topics related to PCI Compliance.

January 09, 2010

ePay Gives Back - ePay Management is proud to announce the launch of the "ePay Gives Back" program. Merchants who choose ePay Management as their merchant service partner are making a difference in the community knowing that we donate 15% of the revenues generated from participating merchants to Cardon Children's Medical Center.

At ePay Management we are aware of the effects of our actions and choose to use our resources to benefit social and environmental efforts. It is all a part of the "ePay Gives Back" program.

December 03, 2009

New proposed legislation, to take effective Jan. 1, 2011, would require acquirers and other providers of credit and debit card settlement services to start keeping track of gross transaction totals, by individual merchant, for annual reports to the Internal Revenue Service. The first of these reports - detailing monthly and annual gross total credit and debit card payments by merchant during 2011 - are due to the IRS early in 2012.

The proposed rules contain an exemption from reporting for merchant accounts that process less than $20,000 in yearly credit card payments.

The new rules were imposed under the Housing and Economic Recovery Act of 2008, and they mirror closely the reporting requirements already governing many banks and companies (those familiar 1099 forms). The major difference is that the proposed IRS Form 1099-K, unlike other "miscellaneous" income reports, asks for monthly as well as yearly gross payment totals by merchant (payee).

November 05, 2009

Visa Prefers Data-Field Encryption - When Visa Inc. speaks, the payments industry listens. the world's largest card brand issued a global best practices paper that advises all merchants that accept electronic payments to consider data-field encryption (also known as end-to-end encryption) technology be installed on their private networks as a necessary compliment to the Payment Card Industry (PCI) Data Security Standard (DSS).

October 26, 2009

VeriFone addresses PCI enforcement confusion - Two important sunset dates are July 2010 and December 2014, and both relate to PIN Entry Device (PED) terminals. The first date is the time by which terminals manufactured before 2004 must be swapped; the latter pertains to terminals manufactured between 2004 and 2007. Those cannot be used after 2014, but their sale has been forbidden since the end of 2007. In regards to new fees be implemented; "We know there is one major acquirer that has come out and said they are going to be charging noncompliance fees," Breitzke said. "But we've heard that several large acquirer processors have been charging these fees, so it's really up to the ISO to communicate with the acquirer processor to figure that out. "But I think that's going to be very likely [that acquirers in general will began levying fees for noncompliance] because the acquirer is the one that's going to be liable. So a way for them to recoup some of those costs of noncompliance or a breach would be to charge some kind of a fee."