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  1. With the holiday giving season approaching, many are regularly engaging in risky behaviors which could leave them at risk of becoming victims, a new study shows.

    According to a new survey from the AARP Fraud Watch Network, 70% of consumers failed a quiz about how to stay safe from common holiday scams. The survey included seven questions about scams, with 70% of the survey participants answering four or fewer of the questions correctly.

    In 2014, US consumers gave USD 358 billion dollars to charity according to the National Philanthropic Trust. AARP's survey reveals that 70% of the people who donated to a charity or fundraiser in the past 12 months did so without asking any questions about how that donation would be spent, and 60% made donations without verifying that the charity groups were legally authorized to raise money in their state.

    About a third of consumers do not know (15%) or are not sure (18%) that, in most states, professional fundraisers must be registered with the government and report how much they raise and how much goes to the charitable purpose. Less than one in ten (8%) could correctly name the government agency they should contact to verify the legitimacy of the charity or fundraiser (the Office of the State Secretary).

    Almost two-thirds of the holiday shoppers surveyed (64%) say they will buy holiday gifts this year using a debit card. Also, online security experts warn that consumers should never use public Wi-Fi to access bank accounts or to buy products online. The survey indicates that 52% of internet users in this survey say they will use free public Wi-Fi. Many of them, while using public Wi-Fi, will make purchases (42%), access their bank accounts (28%), and check their credit card accounts (16%).

    Findings indicate that more than 40% of holiday shoppers are unaware that package delivery companies are not responsible for stolen packages that are left at your front door without requiring a delivery signature. A large majority of survey respondents (79%) say they ship packages to friends without requiring a signature at least some of the time. 73% say they receive home deliveries without having to provide a signature.
  2. The card industry has taken great steps to stay ahead of scammers,  introducing EMV cards with data-chips that make it more difficult to commit fraud. However criminals are not going away quietly. With every advancement in security and protective measures that are put in place, new scams arise that can impact card users and store owners.

    That is especially the case when it comes to online shopping. More hackers are obtaining credit card information through cracks in website security systems, as those platforms have not upgraded safety measures as quickly as the credit card companies. For business owners who complete transactions online with regularity, there are still great risks in credit cards, even with up to date EMV readers.

    Understanding the ways criminals are attacking the public, and how the new data-chip cards play a major role in these crimes is important to users of credit card processing platforms. Develop a strategy to combat these attacks to stay one step ahead of the criminals, and most importantly, keep your finances safe.

    Check for irregular purchases
    Online fraud is already among the most common - and most lucrative - ways criminals prey on the public. In 2012, businesses lost $3.5 billion to online fraud, according to Verifi. The average amount lost, per company, was more than $20,000 that year.

    With the new rules in place that merchants are now responsible for any fraudulent made on cards that are not EMV compatible, having a security system in place to prevent online hackers from stealing money is more important than ever. The credit card companies no longer have a business owner's back in the event of fraud if the technology is not up to date. Users of credit card processing platforms must be aware of the tactics thieves are taking in order to combat them.

    Small businesses are not often the direct target of online fraud, but can still feel the serious repercussions. According to the Associated Press, the most common way online fraud takes place is by hackers invading the large computer databases of major companies, such as Target. From there, the criminals take the credit card information of those businesses customers, then use those cards illegally at a small business.

    The best way to prevent or limit the damage done by online fraud is carefully reviewing purchases, to study for irregularities or inconsistencies. Study how much money the average customer spends at the business so you can note if any order comes in way above that. Also know where most of a company's orders come from. If the majority of business is done on the West Coast, and then a large order comes in from New York City, it may be worth looking into to ensure it is not a fraudulent charge.
    Criminals tend to spend money at places with less security, and small businesses often times fit that criteria. Companies may not have the budget for a large IT department, but reviewing purchases as they come in can help prevent fraud and save a business.

    Email scams prey on confused customers
    Online fraud can take place in other ways, and one of those comes from customers voluntarily giving up information without even knowing it. Email scams are rising in popularity with the new data-chip cards, preying on consumers who are unclear of the new liability rules.

    According to the USA Today, many scammers are emailing people acting as representatives of the credit card companies, asking members of the public to enter their credit card information in order to update their account. Since so many people are confused by the new EMV cards, they are offering up this information, resulting in more cases of scam and identity theft.

    Confirming orders through follow-up emails is a strong way to prevent this. Double check that purchases are being made by the actual card-holders and not scammers, so that a business is not at risk of being held accountable for fraudulent purchases.
    With new data-chip cards, many customers will want to ensure that a business is safe and secure. Taking preventative measures to combat the various types of online fraud will make sure that a credit card processing platform is not at risk.
  3. There was plenty of advanced warning about the Oct. 1 deadline that required merchants to use EMV credit card readers. Yet the message didn't get through to everybody. Many business owners still do not have the proper technology needed to process payments on credit cards with data-chips, meaning they are at risk of fraud if an incident takes place at their stores.

    Several business owners have cited the costs of the new credit card processing platforms. According to, the devices cost between $400 and $700, a large investment for some companies. However given the risk a business owner is taking, that cost is marginal. New rules from credit card companies state that if a company is not using a card machine that takes EMV cards, they are acquiring liability for any fraudulent charges.

    Others claim they are putting their efforts toward stopping online fraud, where they feel the majority of the threats are. According to the Chicago Tribune, EMV cards make it more difficult for criminals to counterfeit a card than previously used magnetic strip cards. But the new cards don't change the way hackers illegally purchase items over the Web, a great concern for store owners.

    Regardless of the reasoning, owners of credit card machines that are behind the curve need to catch up. EMV readers are vital, and will only rise in importance as time goes on.

    Still some reluctance
    The fact that many small-business owners are not caught up to the EMV technology should not come as a great surprise. According to a survey done by The Strawhecker Group in September, only 27 percent of business owners around the U.S. were set to be ready for the Oct. 1 deadline. That's a 21 percent drop from what was expected based off a survey done earlier in the year.

    Merchants gave several different reasons why they were not going to be EMV ready, with the leading cause being that the processors were not going to be made and delivered on time. Progress will occur as more card machines are produced and delivered, as the study found that by December 2016, more than 80 percent of businesses will have the updated card readers. By 2017, that total is expected to rise to more than 90 percent.

    The hope is that as EMV cards become more common in stores, more business owners will see the value in turning to the new readers. It helps when industry leaders take the charge, and that is happening with the updated machines. The drugstore chain Walgreens, which has more than 8,000 locations around the U.S., has upgraded all of its stores to the new technology, according to a press release issued by the company. To make the upgrade, Walgreens had to buy 60,000 point-of-sale terminals.

    Can't afford not to do it
    While many business owners are hesitant to upgrade to EMV readers, the facts are changes must be made. Despite the upfront costs and the remaining risks of online fraud, having a card processing platform that reads data chips is a top priority. There is expected to be $10 billion in credit card fraud this year, according to Payment Leader. With the new laws about liability, a business owner could be on the hook for a huge payment if his or her card machines have not been upgraded.

    Statistics show that operators of credit card processing platforms will eventually catch up and adapt to the new EMV readers. With the risk of fraud remaining high, the sooner that can be done, the better for everyone's security.
  4. One in five US households was impacted by a data breach in 2014, yet 40% failed to properly secure their wireless routers, a recent report unveils.

    According to a new survey from security company ESET and the National Cyber Security Alliance (NCSA), despite the number of breaches 79% of US still feel safe in their connected homes, with almost half (49%) showing a remarkably strong sense of confidence.

    67% of those surveyed had between one and five connected devices at home connected to the internet, with 30% owning six or more. Even more telling, 30% of those surveyed have two to three more devices at home compared to 2014.

    The study also looked at the effect of the connected world on parenting. Three-quarters of American parents say they have had a 'CyberEd' talk with their kids and 90% have made at least one rule about using the internet and connected devices. However, more than 61% of parents show a surprisingly high level of confidence in their kids' online activities and their abilities to use the internet and devices safely and securely.

    Nearly 60% of parents do not require permission before downloading a new app, game or joining a social network, 60% allow password sharing with friends and only 34% require children provide all passwords to their online accounts. Moreover, 70% do not limit the kind of personal information their kids can share on social networks.

    Only 33% have imposed a device free dinnertime rule and a mere 25% have rules about allowing the use of devices in bedrooms after a certain time. Just 30% of American parents have rules about not downloading pirated content from the internet such as illegal games, movies or songs.

  5. Businesses all across the country have been preparing for the Oct. 1 deadline that changes the liability on fraudulent credit card charges. If a merchant has an out-of-date system and is unable to handle new chip-enabled debit and credit cards, also known as EMVs​, and then processes a payment that winds up being fraudulent, the business is responsible for the full payment of the charge, not the credit union or bank.

    For months, credit card companies have been suggesting to consumers it is time to switch to EMV-compatible cards, but so far progress has been slow. According to CSO Online, only 25 percent of debit cards are expected to be ready with data chips come the new month, compared to 75 percent of credit cards that will be upgraded.

    Yet, while businesses are preparing for the change, new data shows many American consumers are completely unaware that this switch in cards is happening. A survey by ACI Worldwide released on Sept. 21 found that 59 percent of card users had not received a new EMV card. Some that did receive a new card were unsure why, as just 32 percent of Americans who received a chip-enabled card were aware of the law changes taking place.

    Lead by example
    Education about the new law varies greatly by age. The highest number of Americans aware of EMV are millennials. The ACI survey found 80 percent of 18-35 year-olds understood the change in liability, compared to just 66 percent of people between the age of 45 and 54 that had heard about the new laws.

    For those who utilize card readers in their regular business, the first step in informing customers about the change is making the adjustment yourself. New EMV card readers cost between $200 and $1,000 per device, the Federal Reserve Bank of Chicago reported. Once an upgrade has been made to improved readers, a company can showcase to customers the differences between the old and new systems, as well as convince customers to acquire updated cards.

    Preparing for a busy season
    Credit unions that utilize card readers should continue to educate members on the importance of switching to chip-enabled cards so all parties involved will be protected in case unauthorized spending takes place. The risk for business owners and consumers of using a fraudulent card increases with the new laws, and it comes right before a time on the calendar when spending historically rises. 

    The time between Thanksgiving and New Year's is when many Americans shop and travel, leading to an increase in charges. Respondents to a Consumer Reports 2014 Holiday Poll spent an average of $437 during that five-week stretch, while 18 percent of people surveyed plan to spend $1,000 or more. Fifty-two percent of these consumers made at least one purchase during the holiday season using a credit card.

    Mike Braatz, senior vice president at ACI Worldwide, said in a press release announcing his company's survey that because of the increase in spending on credit cards at the end of the calendar year, merchants need to be extra careful about the shift in EMV liability. Because so many consumers don't know the change is happening, the pressure falls on business owners.

    "If consumers are unaware, the implications for retailers come October and throughout the holiday shopping season could be major, especially as retailers prepare for this new payment experience," Braatz said. "Although October is the date for the liability shift, we know issuers, acquirers and retailers are still working on issuing cards and upgrading payment acceptance systems to address EMV."
  6. While mobile banking is already a huge aspect of American life, the technology is set to grow even more significant in the years to come. More people will be paying for goods and services using their phone, as opposed to cash or traditional credit cards. With this change taking place, credit unions will have to rework their payment plans to prepare for the rising onslaught of customers who will pay with their phones. 

    Understanding and maximizing the value of mobile payments can be valuable for credit unions. Develop a processing solution for mobile expenses will be useful in the long run as this modern style of payment grows in popularity.

    Growing trend in the financing industry
    Currently, mobile payments account for 22 percent of digital commerce revenue, a 2015 Gartner study revealed. Over the next two years, that figure should rise by more than double, as roughly 50 percent of digital commerce will take place through mobile phones in 2017.

    Those sales produce major revenue for business. In 2015, 19 percent of digital commerce sales were done on smartphones, DemandWare reported. Given how much money is transferred over mobile technology already, having the correct processing solutions becomes a top priority. Jennifer Polk, research director at Gartner, said the rise in popularity of mobile banking means businesses must adjust the way they process consumer transactions.

    "Some sectors will migrate more quickly than others to accepting mobile payments and promoting mobile commerce," Polk said. "However, new credit card standards will cause a shift in liability for fraudulent transactions in 2015, requiring retailers to update their point-of-sale systems for safer credit card transactions. This opens the door for point-of-updates to also accept mobile payment."

    Updating payment process technology to handle mobile banking needs must be a top priority for a credit union. With smartphones essentially becoming wallets when members want to spend money, having a plan in place is important. Credit unions should assist members with mobile banking questions while also being able to set up processing solutions that acquire and distribute money through these new technologies. 

    Ensuring safety
    Many members are not going to be aware of the difference between paying with a plastic credit card and paying through their mobile phones. For a credit union, the goal is to keep it that way. If nobody notices a difference on their monthly bill or in the speed of their payments being approved on their accounts, that means the mobile processing system is working perfectly.

    Some users of mobile banking will be skeptical of the technology, and a credit union can be there to explain how mobile spending works and walk those members through any problems. Members want to know their money is safe within their phones, and explaining the layers of fraud and theft detection in place will be paramount, Forbes explained.

    In 2014, only 7 percent of mobile banking customers found the technology to be "very safe" compared to 19 percent who found the technology to be "very unsafe," The U.S. Federal Reserve Board found in a study. While many are hesitant to call mobile banking safe, they are still enamored by the ease and handiness of the technology.

    As the number of mobile banking users increases, opportunities for credit unions grow. More members will be interested in working with a financial institution that can support the new technology for spending. Being prepared with modern payment processing solutions will highlight the awareness a credit union has for the ever-expanding world of mobile spending.  
  7. The Oct. 1 deadline that adjusts the liability of credit card fraud from card distributors to merchants is fast approaching. For many businesses, action is needed to upgrade EMV ​capabilities to ensure they are in compliance with the new guidelines. Without a change to their credit card processing systems, a company could be on the hook for serious costs if they ring up a fraudulent card.  

    The change requires using new microchip technology that enhances security. For small-business owners, that upgrade can be costly. A new payment system can cost between $150 and $600 per card reader, The Wall Street Journal reported. Because of those high costs, many independent companies are holding off on upgrading their card systems, opting instead to use their old card readers while taking the risk involved.

    Ignoring the changes could be a dangerous choice for small business, who could suffer great consequences if they opt to stick with the old method for charging credit cards.

    “Failing to upgrade to the new EMV system can be especially dangerous for a small-business owner.”

    Change happening slowly
    The dangers of credit card fraud are prevalent and growing. Combining counterfeit payments, lost and stolen cards used illegally and card-not​-present transactions, there was $6.7 billion worth of credit card fraud in the U.S. in 2014, according to the Aite Group. That total was projected to rise to $7.5 billion in 2015 and $7.7 billion next year.

    Many small-business owners feel, however, the change to card readers with microchips, which will improve security, is not worth the hassle. The new technology is expected to be slower than the older credit card machines, which could slow down lines and limit sales. The Wall Street Journal spoke with multiple small business owners who stated they were not at serious risk of credit card fraud, and they were more concerned about counterfeit paper currency than using illegal cards. 

    Then there were the small business owners who didn't even know that a change in card readers to EMV chip compatible machines needed to take place. A survey released Sept. 9 by Software Advice, a firm that compares POS Systems, found that 7 percent of small business owners were unaware there was a deadline approaching in less than a month. Only 22 percent of respondents to the survey stated they already had acquired EMV card terminals.

    Risks too tremendous to ignore
    Forbes reported that in other countries which have adopted EMV payments, the rate of fraud initially went up, especially in online purchases. That can put any company on high alert, especially a small business without a large cyber defense team. Failing to upgrade to the new EMV system can be especially dangerous for a small-business owner, as they will have no way to recoup defrauded money under the new guidelines.

    While small-business owners may be skeptical as to why the new system is needed, the risks of fraud are so high that change must take place. As the amount of money to be withdrawn illegally on credit cards goes up, and the liability for those losses shifting, a small business has to be up with the times on ways to limit the damages of the crimes. Using a modern processing platform is the only way to ensure a company is not on the hook for damages after the Oct. 1 deadline passes. 
  8. Credit cards are no longer just another form of payment, as many businesses are partnering with credit card companies to create branded cards that strengthen the bond between business and consumer. The payoff in this transaction is that consumers who favor certain stores over others can sign up for a branded card that features that particular store's logo and compiles reward points to be used at that same location.

    This trend has grown in recent years, and a survey from Packaged Facts, a market research firm, found 43 percent of American adults have at least one branded card. Sometimes referred to as affinity cards, payment cards that are co-branded form a financial relationship that benefits each party involved.

    Out of the $2.63 trillion tallied by total credit card purchase volume in 2014, $809 billion came from branded cards explicitly.

    "By providing more benefits to customers, credit card companies can edge out less-active competitors."

    The appeal
    One of the primary reasons the co-branding movement has taken off is because consumers are always looking to score a bargain on their purchases. Whether it's at a retail establishment, restaurant or through an online shopping platform, consumers know a deal when they see one. And to enhance customer loyalty and repeat visits, businesses are recognizing the value in offering reward programs tabulated with a credit card that's branded as their own.

    U.S. News & World Report noted selecting a specific credit card is not a light matter. In fact, due to the bevy of options available, consumers should identify cards that potentially offer loyalty discounts, cashback bonuses or in-store credit. Branded cards provide these benefits and more.

    Because businesses and credit card companies recognize how important it is to target this market of consumers, competition in issuing branded cards is heating up. And to best other branded options, companies are pursuing new ways to stand out from the pack. One of which is by targeting high net worth card holders, Packaged Facts indicated.

    By appealing to individuals with higher incomes, businesses may be more successful in increasing the number of branded card transactions in their stores, as well as the dollar amount spent per visit.

    Companies are also going after millennial consumers, as they realize the growth potential and customer retention possibilities inherent in the largest generation of buyers.

    Enrolling new customers
    Card providers are quick to jump into the branded market because it is a real-time source of additional revenue. By issuing more cards, creating more accounts and providing more benefits, credit card companies can edge out less-active competitors and engage customers in a meaningful way. After establishing this connection, customers aren't likely to switch credit card providers, meaning locking in cardholders early is key to future market share.

    Businesses are already moving quickly in the branded market, as Business 2 Community reported part of Target's $100-million EMV overhaul includes rolling out new branded cards to its customers.

    With the payments industry undergoing several large changes in such a short period of time, those that benefit the most from these developments are likely to be companies that take a proactive approach in seeking out new enrollees.

  9. Recent industry developments have demonstrated just what's on the minds of some of the nation's largest corporations. Finextra, a financial news site, stated that according to the company's quarterly Securities and Exchange Commission filing, JPMorgan Chase is doubling its annual cybersecurity budget in 2015.

    By increasing spending on cybersecurity, the company hopes to avoid future hacks. JPMorgan Chase was the victim of one of the largest corporate data breaches in history in 2014 when 76 million households and 7 million small businesses had their private information compromised. Such a security failure prompted worldwide scorn and signaled other companies to take their respective cybersecurity more seriously as a result.

    "High-profile cyberattacks have reshaped the business landscapes in many industries."

    Compared to 2014's cybersecurity budget of $250 million, JPMorgan Chase is expected to increase its spend to $500 million to account for stronger testing and defense measures.

    JPMorgan Chase hasn't been the only corporation to suffer from a lapse in security protections in recent memory, as several high-profile cyberattacks have reshaped the business landscapes in a number of industries, including health care, financial, retail and government.

    Target speeding toward EMV finish line
    Along with cybersecurity, full-scale EMV adoption has been a primary concern for businesses that rely on payment card processing. And with the deadline to finally make the shift to EMV-compliant terminals just one month away, businesses are now feeling the pressure to act.

    This can be seen in the recent announcement that Target has spent more than $100 million trying to make the switch to EMV - yet that's just the start, according to PaymentsSource. Though Target has implemented widespread hardware and software changes to its point-of-sale systems, it still has to convert the company's branded credit cards to EMV-encrypted versions as well.

    Target is expected to push its move to EMV into high gear in the days and weeks ahead to ensure it is completely up to date with the most recent PCI standards. If companies like Target are not able to fully comply by Oct.1, they will be at risk of heavy penalties if their customer data is breached.

    This is especially true for retailers that live and die on the revenue they generate from credit card sales. The good thing is that by switching to EMV, companies can likewise enhance their cybersecurity measures, which would help resolve the two main pressing concerns businesses currently face.
  10. Debit cards are being used at POS terminals an average of 21.2 times per month, according to the 2015 Debt Issuer Study. Compared to 2005, POS debit card usage has jumped 32 percent.

    It's not just POS activity that has increased, however, as the number of total debit card transactions has far outpaced those of credit cards in the last decade. In the U.S. alone, consumers purchase items with debit cards nearly twice as often as they do with credit cards - a trend that is likely to continue in the near future.

    "Consumer use of debit is nothing short of remarkable," Tony Hayes, co-leader of the study, stated. "Debit has steadily gained wallet share as consumer shift their spending to this payment type. The use of debit for small-ticket purchases is particularly noteworthy, where one-third of all debit transactions are for less than $10 - purchases that historically would have been made with cash or not at all."

    "More consumers are choosing to use prepaid debit cards rather than open bank accounts."

    Spend increasing, ATM withdrawals decreasing
    Other important findings of the study were that the number of withdrawals from ATMs per debit card have dropped in the last 10 years from 3.4 to 2.0 a month. This could be due to the fact that consumers now have a host of digital payment options that no longer necessitate carrying cash at all times.

    In fact, many countries are making the move to do away with cash altogether. With debit cards linked to digital wallets and online accounts, payments can be made quickly and with ease, rendering the frequency of ATM withdrawals less common.

    Further, payment card companies are trying to expand their customer outreach by providing cashback and reward points to debit users - something that was previously exclusive only to credit card holders, NBC News reported. Likewise, more customers are choosing to use prepaid debit cards rather than open a traditional bank account, giving card companies added incentive to focus more attention on debit.

    The combined average spend of PIN, signature and prepaid debit cards grew roughly $1,500 per card between 2005 and 2014, the Debt Issuers Study found. Leaders of the study chalk this increase in debit spend up to economic conditions and the confidence consumers have in debit.

    "The past decade saw a major shift in consumer preference to paying with debit cards, which accelerated after the 2008-2009 recession, said Steve Sievert, executive vice president of Marketing and Communications of Pulse, the company that commissioned the study. "We believe there is still opportunity for debit growth, considering that consumer use of debit for smaller purchases is rising, and the average active debit card is used about five times per week."

    The future of debit cards
    As more companies create customer incentives to use debit cards and consumers remain leery of credit cards that may not be encrypted or have reasonable interest rates, debit card issuing will likely continue its upward trajectory.

    Additionally, customers may feel more comfortable with debit cards because they can easily determine how much money is available to spend, thus allowing for proper budgeting.
  11. It appears American consumers are in a strong enough financial position to make regular payments on their credit cards, according to TransUnion's ​recent Industry Insight Report. Based on consumer data from the second quarter of 2015, the report indicated the national credit card delinquency rate fell from 1.37 to 1.19 percent quarter over quarter in Q2.

    The delinquency rate is defined as the percentage of card holders who are 90 days or more past due on their credit card bills. From this metric, government agencies and financial institutions can gauge how likely a borrower is to pay off his or credit card debt as well as whether a specific individual should be eligible for additional credit.

    Likewise, the report found credit card debt per borrower has declined by more than $1,000 since Q2 2008. With borrowers more capable of managing their debt loads and paying their monthly installments on time, credit card companies and lending institutions may find they have a larger base of credit-conscious customers.

    Renewed confidence and stabilization
    Just as consumers are becoming more comfortable with their debt obligations, businesses in the banking and capital markets sectors also believe a positive road lies ahead. A survey from PricewaterhouseCoopers stated 92 percent of CEOs in the BCM industry believe their companies will grow in the next three years.

    "Consumers are demanding more from their banks."

    This industry-wide confidence in future market performance bodes well for financial institutions that are able to stay ahead of risks and meet consumer expectations. And as PwC found, consumers are demanding more from their banks in 2015, ranging from on-demand services to new digital payment options.

    "Digital technology, as well as the changes resulting from the disruption it causes, is a big topic and a big challenge for the future," said Monique F. Leroux, CEO of Desjardins Group, a respondent to the PwC survey. "However, it also creates opportunities. What's important is that we provide the right conditions for our people to be able to integrate the knowledge of the new digital technologies in order to understand and confront the challenges created by them."

    Financial institutions may find they have a growing cohort of younger customers who are more reliable than ever, and catering to their needs would be an especially beneficial decision.

    "From Q2 2014 to Q2 2015, 1.6 million consumers under the age of 30 had a credit card balance, which demonstrates this group's appetite for credit," said Paul Siegfried, senior vice president for TransUnion, in the report. "The under 30 age group had the largest increase of any age group, yet average balances have remained steady year over year. We're observing consistent credit management skills from this group."

    Effects of debt
    One of the reasons the credit card delinquency rate has fallen in tandem with a higher demand for credit among younger consumers is that many in the millennial generation felt first-hand the effects of the recession. Observed through high amounts of student loan debt, fewer job opportunities out of college and the crunch on the housing market, millennials understand just how important it is to take credit seriously.

    A reduction in the delinquency rate indicates customers are no longer waiting so long to make payments on their credit cards, which is a promising sign for both consumers and the financial industry as a whole. This uptick in credit management capabilities may continue into the third quarter of the year, as interest rates remain low and consumer confidence high. Reuters reported consumer confidence reached a seven-month high in August while the consumer index - a measurement of optimism - is at its highest level since January - both strong signs for the future.
  12. The push toward full EMV adoption in the U.S. is in full effect, yet not everyone will be on board prior to the Oct. 1 deadline. As a result, credit card fraud may actually increase this year, highlighting just how important it is for merchants to make the switch to compliant payment terminals as quickly as possible.

    According to Payments Leader, credit card fraud generates $8.6 billion in annual losses every year. While EMV cards are meant to prevent such type of losses, if businesses don't install the requisite POS systems and card readers, EMV will fall far short of its intended goal. In fact, the U.S. could see more than $10 billion in credit card fraud this year because of such intransigence.

    Payments Leader noted 70 percent of non-U.S. payment terminals are EMV-functional and 62 percent of international transactions are completed via chip-enabled cards. However, Europe and other foreign nations introduced EMV cards years ago, giving them a significant head start to credit card fraud reduction. The U.S., on the other hand, delayed such a large overhaul until this year. And with the liability shift deadline less than two months away, the business community is scrambling to get their EMV affairs in order.

    "Businesses could be setting a dangerous precedent for the future of their companies."

    Businesses not ready
    Part of the issue with the transition to EMV is that some businesses simply aren't aware just how much they will be impacted by noncompliance. Further, a July survey conducted by Wells Fargo found that only 49 percent of small-business owners even knew about the Oct. 1 EMV deadline.

    This startling statistic is even more concerning since small businesses have fewer resources and capital to handle a lawsuit or legal penalty if credit card fraud occurred in their stores. For those who have yet to make the switch, 29 percent of business owners intend to do so prior to Oct. 1 while 34 percent will do so after the deadline.

    By choosing to watch the deadline come and go without taking action, businesses could be setting a dangerous precedent for the future of their companies. Even further, 21 percent of businesses have no intention of upgrading to EMV-compliant POS systems at all.

    With the business community still dragging its feet on matters of EMV implementation, not only will their bottom lines be at risk but so too will the finances of their customers.

    Consumers up in the air
    A new poll from The Associated Press indicated that roughly 90 percent of consumers haven't received chip-enabled cards in the mail. Though consumers' financial institutions are responsible for mailing out the new cards, it appears there is a serious disconnect so close to the deadline.

    "Many consumers have never seen a chip card, let alone actually used one."

    Banks and credit card companies have been aware of the Oct. 1 liability shift since 2012, yet many believe the new cards won't fully replace the old ones until 2016.

    With businesses not installing the correct terminals and consumers not yet receiving their chip cards, the likelihood of in-store confusion and frustration during transactions is high. Many consumers have never seen a chip card, let alone actually used one enough to be comfortable with it when paying for merchandise. Plus, the AP poll found those who do have chip cards often encounter businesses that don't yet have the technology installed to accept them.

    As EMV adoption slowly crawls along, credit card fraud will continue to have serious ramifications on retailers and customers alike. Consumers may potentially forgo shopping at noncompliant stores as a security precaution, which business owners should keep in mind if they are still on the fence about EMV adoption.
  13. The upcoming credit card fraud liability shift on Oct. 1 is a monumental change in both financial institutions and merchants. Many Americans have already received their EMV chip cards in the mail, effectively enhancing their protection against theft and fraud. However, with the transition to updated cards, retailers have had to modify their point-of-sale systems and terminals to accommodate the new cards - such a change has not gone smoothly for some businesses.

    NBC News reported small businesses in particular have faced budgetary concerns and a steep learning curve when it comes to installing new technology. As a result, many are falling behind with their EMV capabilities.

    The transition to greater protection
    EMV cards contain an embedded microchip that encrypts the cardholder's personal financial data. This chip is meant to be read by a compliant EMV microprocessor, but without the proper installation of the card reader, the cards are essentially the same as always. This means customers with EMV cards who purchase from non-EMV stores do not gain an added advantage or protection from the technology.

    "Getting the business community on board has been a challenge thus far."

    Part of this is due to the fact that many retailers are still relying on the swipe-and-sign method of payment, whereby customers are required to sign receipts to complete transactions. Under the new EMV standards, customers would enter a four-digit PIN after swiping. By doing away with signatures, the chance of forgery and fraud is reduced.

    The move to EMV has proved successful abroad, with cases of counterfeiting dropping 32.5 percent between 2004 and 2011, according to NBC News.

    The U.S. is looking to duplicate this success, but getting the business community on board has been a challenge thus far.

    Hesitant to move forward
    Though businesses have been aware of the October transition for some time, many have been putting EMV on the back burner. In fact, a survey from Randstad Technologies found 42 percent of IT decision makers have yet to make any progress or even take steps toward progress regarding EMV.

    Another 58 percent stated they don't believe the EMV liability shift will affect their companies all that much.

    "Because fraud liability has traditionally fallen to credit unions and banks, consumers have never borne the brunt, and thus aren't demanding more secure payment technology," said Dick Mitchell, solutions director for Randstad Technologies. "While businesses understand the importance of more secure payment technology, without this push from consumers, many merchants aren't feeling the pressure to get all their affairs in order to meet the October deadline."

    Many businesses aren't wanting to front the cost of such a large modification to their POS systems. Others believe EMV technology may confuse customers and harm in-store sales.

    MarketWatch indicated retailers don't want to impose burdens on their customers, which they believe EMV cards are doing. Because consumers are used to the conventional checkout process of swiping and signing, altering this routine could slow down transactions and frustrate customers.

    EMV chip cards are the new reality in the payment industry.

    Investing in the future
    Despite retailers' hesitance, Carolyn Balfany, senior vice president of product delivery, EMV, at MasterCard, stated the lead time for implementation has granted businesses a large enough window to determine when to make the investment in EMV, according to NBC News.

    In the past year, businesses have been able to upgrade their POS systems on their own schedules, using internal resources. But with the deadline looming, companies that forwent implementation must act quickly, which could place pressure on their Q3 budgets.

    Those that made the switch early face an easier road forward, as these businesses have allowed customers to become acquainted with EMV. Competitors that have yet to upgrade may not be able to work out all of the kinks in their new systems by October, which could spurn customers at a crucial time.

    Further, consumers will seek out merchants that take their security seriously.

    "Consumers actually expect merchants to upgrade and what consumers tell us is that they see a merchant that upgrades more positively because they see them as being willing to invest in their security," said Balfany.

    With October fast approaching, retailers should move forward with EMV implementation to ensure business does not suffer post-transition.
  14. Consumers are making their retail expectations known, as a new survey found 88 percent of shoppers want store checkouts to be faster. According to Digimarc Corporation, a provider of enabling technology, survey respondents' wishes for the checkout lane haven't been met.

    The vast majority of consumers believe retailers can do more to improve the seamlessness of transactions and the overall impression that employees give off. For instance, 61 percent of individuals believe store clerks spend too much time simply scanning merchandise rather than striking up conversation. Because workers are focused mostly on moving onto the next customer, buyers often feel like they are being a nuisance.

    Roughly 30 percent of the 2,079 survey participants indicated they felt as if they were burdening employees when they had a cart full of items - largely out of fear that clerks perceive them negatively. Likewise, without adequate conversation between retailer and customer, some believed there was little opportunity for businesses to gauge whether shoppers were satisfied. The result is a glaring disconnect between merchandisers and the core base of their customers - something that could pose serious problems moving forward.

    "Optimized payment terminals and POS systems can speed up checkouts."

    More efficient checkout procedures
    One issue with this empathy gap is that businesses run the risk of losing customers to more engaging and welcoming competitors. However, perhaps an even more pressing concern is that checkout processes simply aren't working as well as they could be. Half of respondents stated long lines and slow checkouts annoy them the most when shopping.

    For businesses, this information creates an avenue to capitalize on - that of faster transactions. So how can retailers manage this?
    One way is to optimize the types of terminals and point-of-sale systems being used during checkouts.

    By updating payment terminals to reflect the changing landscape of transactions, retailers can satisfy more customers while potentially streamlining the flow of checkout lines. Mobile payments may be a convenient solution, as people are starting to use smartphones for purposes beyond just text messaging and social media.

    Business Insider found 9 percent of consumers are now using their mobile devices to make purchases in-store. While many consumers prefer the at-home online shopping experience, Forbes contributor, Vijay Koduri, senior vice president of marketing at Ayden, noted 90 percent of all transactions still occur in-store.

    The proliferation of mobile technology combined with the continuing strength of in-store sales means retailers that are able to reconcile the two may be poised to take advantage of tech-conscious consumers and more efficient checkout lanes.

    Apps and mobile price comparison
    The checkout process is a meaningful part of the consumer-business exchange - perhaps the most meaningful. This is due to the fact that consumers form strong opinions about merchants based on their checkout experiences.

    "Checkout is the last opportunity a retailer has to make a positive impression on a shopper," said chief marketing officer of Digimarc, Larry Logan. "Asking customers to endure a lengthy wait to process and pay for their order can spoil what may have otherwise been an enjoyable shopping experience."

    A primary factor at play may be compounding dissatisfaction with the quality of service consumers receive inside certain stores. If prices are not ideal, the selection of offerings is not up to date or the opportunity to save money via discounts and sales isn't available, then by the time consumers reach long checkout lines, their negative opinion of a store has already been solidified.

    Some merchants are improving the shopping experience in an effort to cater to mobile demands, and as a result, boost customer satisfaction and loyalty.

    According to data from Razorfish, 59 percent of millennials use their phones when shopping, Business Insider reported. Among these actions are: researching product reviews, comparing prices online and looking for promo codes. A study from DigitasLBi indicated smartphone use in-store has increased from 75 to 85 percent in the last year alone.

    In essence, mobile devices are vital tools in ensuring that in-store transactions are seamless.

    The same is true for new apps that scan barcodes on items. The code is immediately registered, then a webpage pops up alerting consumers whether there are better prices elsewhere. Further, online barcode technology is also a critical component of mobile wallets. Smartphone users simply hold their phone up to a compliant terminal as it scans the wallet barcode, completing the transaction, Koduri noted.

    "New POS options can reduce checkout friction."

    Securing customer loyalty
    Satisfaction is the cornerstone of a strong, recurring customer base. But one enjoyable experience doesn't necessarily lead to customer conversions or loyalty. McKinsey & Company stated consistency is the key to driving high loyalty rates.
    That's because an up-and-down experience creates trepidation and uncertainty in the minds of consumers. Most individuals want to know what they are walking into and how quickly they can locate and purchase items. Checkouts are many times a deciding factor in how well a store is run and whether customers will return.

    Though many retailers experiment with self-service and express checkout lanes, customer frustration with finalizing their transactions is obviously still an issue to be resolved. It's no secret that the future holds a number of revolutionary payment options, which retailers will either be mandated to implement or will do so under their own volition in pursuit of higher customer loyalty.

    In either case, payment technology continues to drive change in the retail industry, and those that update their POS systems with new options can reduce checkout friction.
  15. As merchants turn their attention to attracting millennial shoppers, it's clear they envision "buy buttons" as a productive ecommerce strategy. Buy buttons may be new on the marketing and retail scenes, but the world's largest tech companies are already going all-in with this new payment trend.

    Online users can now purchase items directly from websites and mobile apps without having to go to the retailer's original webpage. When featured on social media platforms, buy buttons connect consumers with the products they seek. Twitter, Pinterest and Google have already developed their own versionwhile Facebook will soon enter the market as well, according to Fortune.

    By meeting consumers on their own terms, and through the online medium they prefer, businesses can market their products in a new way - one that is beneficial to every party involved.

    Driving customer engagement
    The foundation of this new development is the need to reach new buyers while keeping existing customers engaged in a specific brand. Whether it's a clothing store promoting a new product line or an electronics retailer pushing its latest sale, the potential benefits of more exposure are vast.

    "With buy buttons, customers are a few clicks away from finalizing a transaction."

    In the past, an advertisement may have appeared on a social media platform, which when clicked, would direct online users to another website. Then, individuals would have to navigate the checkout process before completing a transaction. However, by hosting buy buttons directly inside of apps and on other webpages, this process is streamlined.

    This technology allows businesses to collect and analyze purchasing data and buyer behaviors, including how long customers were on a specific website, how quickly they clicked a buy button and how often they made a purchase. Further, all of this can be conducted through mobile devices.

    Known as "mobile conversion," companies are customizing their ecommerce strategies specifically with mobile users in mind, according to USA Today. By combining mobile traffic from search engine results and social media shares with faster purchasing processes, buy buttons are an important step toward truly understanding and capitalizing on younger generations of consumers.

    Reshaping point-of-sale purchases
    The crux of this conversion lies at the immediate point of sale. Just as brick-and-mortar stores have introduced speedy checkout lanes and automated registers, online retailers are also trying to revamp transactions and customer interactions for greater efficiency.

    The first moment of contact a customer has with an ad should be used as a potential purchase opportunity. With buy buttons, customers are a few clicks away from finalizing a transaction without having to put forth too much effort on their own end.

    In essence, the buyer funnel is less burdensome and incentivizes fast transactions on the go. And with the expansion of smartphone use and mobile payment options, buyers can do even more with their digital devices.
    Digiday, an advertising firm, noted Facebook has roughly 1.44 billion active users. In the realm of retail, this is 1.44 billion people who will soon have access to buy buttons directly through Facebook.

    "Social media savvy with convenient ad placement is a new sales avenue to capitalize on."

    By embracing this first-person sales model, businesses can potentially reduce cart abandonment and drop​-off rates. Jennifer Polk, analyst at technology research company, Gartner, stated that by narrowing the buyer funnel, there is less of a chance shoppers will abandon their purchases prior to the online checkout process, according to TechRepublic.

    "From a standpoint of an ad placed on a site like Facebook or Twitter that then requires someone to click off of that site and go into a retailer's commerce site in order to complete a transaction, everyone of those steps is an opportunity to drop off," said Polk.

    Buy buttons circumvent this issue because there are fewer stages and impediments in the way of checkout.

    Ecommerce via social media
    In total, what buy buttons mean to merchants is that social media savvy tied to convenient ad placement is a new sales avenue to capitalize upon. Data from Juniper Research indicated e-retail sales are projected to jump 17 percent year over year in 2015, reaching $1.7 trillion worldwide, Computer Business Review reported.

    As more consumers experience online shopping that is easy to use, they will likely look to download apps that host various digital payment options, including buy buttons.

    Likewise, with well-funded companies and investors financing advancements in buy button capabilities, the future of ecommerce appears to be a measure of social media outreach and mobile interactivity.
  16. As U.S. consumers use more smartphones and mobile devices, it would seem natural for them to ditch their physical wallets and make digital payments whenever and wherever they could.

    But not so fast. While digital wallets -- technology that allows users to store credit and debit cards, cash, and loyalty cards and coupons to make electronic purchases using a digital device, most often a smartphone -- were first introduced as far back as the 1990s, U.S. consumers have yet to readily accept them.

    Though Apple is trying to change this trend with Apple Pay, Gallup analysis shows enthusiasm for digital wallets is still low. Only 13% of U.S. adults with a smartphone have a digital wallet on their device, and 76% of those who have a digital wallet have never used it or have almost never used it to make a purchase from a retailer in the past 30 days. Of the U.S. consumers using a digital wallet, men and millennials use it more than the rest of U.S. adults: 11% of men and 11% of millennials use it every time or almost every time if they can to make a purchase.

    Among consumers who have digital wallets, 38% don't see any benefits of using the technology. What's more, nine out of 10 consumers who don't have a digital wallet say they are very unlikely or unlikely to start using one in the next 12 months (91%). This suggests that providers either lack a strong value proposition or aren't communicating it well to prospective customers. Unless this situation changes, it's hard to imagine many consumers moving beyond considering or experimenting with the technology to become loyal, long-term customers.

    Consumers don't seem to be eager to start using digital wallets in the near future, with further analysis suggesting several reasons for their reluctance. More than half of nonusers cite security as a primary reason they're unlikely to use a digital wallet in the next 12 months (55%). Others don't know enough about the technology (21%) or see any benefits of using a digital wallet over just using credit cards (14%), while a few don't think they are accepted at enough places to make the technology useful or worth it (5%).


    How Companies Can Gain the Greatest Number of Early Adopters
    Though consumers' current enthusiasm for digital wallets is low, the competition in the market is becoming more intense. Apple has already shot to the No. 2 position in market share with the launch of Apple Pay, even though Google and PayPal have been in the digital wallet space longer.


    Whether digital wallet companies are incumbents or startups -- and regardless of whether they're technology firms, retailers, banks or credit card companies -- every provider is looking for opportunities to win share from consumers and merchants. Amplified by the "network effect" -- which suggests that a good or service becomes more valuable as more people begin to use it -- the provider that gains the greatest number of early adopters could well dominate the marketplace. Here are some ways providers can create timely strategies to overcome barriers to adopting their digital wallets:

    • Gain consumer trust on personal data security. Gallup's 2014 consumer trust study confirms that customers place some or a lot of trust in their banks to keep their personal data secure (91%), far more than they trust credit card companies (66%), cellphone platform providers (63%), cellphone carriers (59%), brick-and-mortar and online retailers (69% and 58%, respectively), and social networking services (23%). Though consumers' adoption of their bank's digital wallets is low, banks are well-positioned to overcome security concerns and increase use of their branded wallets. Given the complex network needed to make a digital wallet work, however, all companies involved -- including retailers, cellphone carriers, banks and credit card companies -- must strive to build trust among consumers and respond quickly to any security breaches. Consumers will remain reluctant to adopt this technology if they don't trust all parties involved to keep their personal data safe and secure. 
    • Educate consumers on what digital wallets are and how to use them. Following the launch of Apple Pay, many consumers have received emails and seen ads from companies and financial services firms encouraging them to adopt their company's product. Before more consumers become users, though, companies must help them understand what a digital wallet is and how to use it. Approaches include playing a video on how to use a digital wallet to customers waiting in line at a bank branch, or asking call center agents to close a call by asking customers if they are using a digital wallet, giving them the benefits of using one and answering any questions they might have about digital wallets. Retailers also could provide signage near checkouts explaining the benefits of a digital wallet and directing customers where to go for more information.
    • Provide a clear value proposition. Almost all digital wallet providers claim they offer convenience, relieving customers of the need to carry multiple cards and remember separate passwords for each. However, 14% of nonusers are unconvinced by this claim. Companies must be innovative and provide different value propositions based on their unique competitive advantages to connect with consumers. For example, with knowledge about a customer's disposable income, credit card ownership, and purchasing preferences and frequencies, banks can offer more than a convenient method to make purchases. Banks can also serve as trusted financial advisers, helping customers understand how they are spending their money and how to make informed decisions about future purchases. Technology giants such as Google -- with its coming Android Pay platform -- and PayPal -- with its purchase of the Paydiant platform -- also want to maximize their strong technology and programming capabilities to provide customized digital wallets that developers can use to create their own apps. Customized apps would allow merchants to have their own uniquely branded digital wallets. 
    The lukewarm state of the digital wallet market is mainly driven by consumer reluctance to adopt this new technology, according to Gallup analysis. The good news for budding providers is that both the technology and the market are still developing, which offers every player a chance to win. Companies that can convince consumers to adopt their digital wallets -- by gaining their trust, educating them on how to use the technology and by providing a clear value proposition on how using it will benefit them -- will likely be the market leaders of the future.

    Survey Methods

    Results are based on a Gallup Panel Web study completed by 11,043 national adults, aged 18 and older, conducted Nov. 20-Dec.1, 2014, and a Gallup Panel Web study completed by 6,032 national adults, aged 18 and older, conducted Dec. 29, 2014-Jan. 16, 2015. The Gallup Panel is a probability-based longitudinal panel of U.S. adults whom Gallup selects using random-digit-dial phone interviews that cover landlines and cellphones. Gallup also uses address-based sampling methods to recruit Panel members. The Gallup Panel is not an opt-in panel and panel members do not receive incentives for participating. For results based on this sample, one can say that the margin of sampling error is ±1.3 percentage points, at the 95% confidence level. Margins of error are higher for subsamples. In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

  17. Satoshi Nakamoto, the anonymous coding genius (or possibly a group of several geniuses) who created Bitcoin, mysteriously disappeared five years ago.  Since then the promise of this revolutionary payment system has captivated everyone from Silicon Valley venture capitalists to the big Wall Street bankers. During that time the best and the brightest have tried to monetize Satoshi’s peer-to-peer invention, but Bitcoin has remained a fringe payment solution.  If not for the Winklevoss twins and Silk Road, Bitcoin would have remained a much talked about but still underground technology that eventually would have disappeared like its inventor.

    That was until clearXchange launched this summer. This bank-led digital payments network is offering a real-time payments system that is figuratively the “blockchain” distributed ledger system that Bitcoin has always promised it would be.  Thanks to the account power of five of the nation’s largest banks, clearXchange is enabling transactions to pass from bank to bank without a centralized clearinghouse. 

    Of course, clearXchange is not a “blockchain.” It uses the same transaction data – routing and account numbers – that we’ve been using for decades to process paper checks. Which begs the question, “Is Bitcoin needed?”  The megabanks that created clearXchange didn’t think so.  Even though Bitcoin is a free, open-source technology, clearXchange was built from the ground up and is now available to 100 million online banking consumers.

    I believe that, in the end, the importance of Satashi’s invention will be that it got us to envision different and more innovative payment solutions.  In the last five years there have been more payment innovations than in the previous 20 and it’s exciting to contemplate what the next five years will bring. For a “whole new thinking about payments,” I encourage you to join us for our Annual Users’ Conference.  This looks to be one of our best user conferences yet as we explore the most important issues of concern for our credit unions, including a new and expanding array of fraud and risk solutions and proven card marketing and management solutions.   See Summer 2015 Newsletter.

    The origins of Bitcoin:  Nakamoto’s blockchain mathematics is a solution to a famous game theory puzzle called the Byzantine Generals Problem, in which competing armies are planning an attack but they’re worried about traitors lurking in their midst. Trust no one! But of course, an army needs to communicate to launch an attack. So the General needs to find a way to pass a message along that cannot be sabotaged. This is where the blockchain comes in. Every single time you make a transaction on the blockchain, that transaction is sent out to many nodes in the Bitcoin network. Basically, everybody participating in the Bitcoin process also has a copy of that ledger and can check it for inconsistencies; it’s a decentralized ledger. The order of transactions is also verified by a cryptographic process that relies on the combined computational power of the crowd. So if you try to pass off a fake exchange, you’ll get caught because your fellow Bitcoin users can trace every alteration and exchange that goes down.

  18. Near field communication (NFC) technology has revolutionized the use of mobile phones as payment devices, yet consumers are still reticent to fully make the transition to digital wallets. A new poll from Gallup found just 13 percent of smartphone users have a digital wallet on their device, with 38 percent believing there is nothing to be gained from using this technology.

    The poll highlights a stubborn reality for tech companies like Apple, Google and PayPal that are investing more time and resources in bringing digital wallet technology to market. The silver lining, however, lies with the millennial generation. Roughly 11 percent of millennial consumers told Gallup they use digital wallets as their sole form of payment when possible.

    Inside the numbers
    While digital wallets have yet to catch on en masse, for a number of reasons, companies are still flooding the market with new payment products. Despite Apple releasing Apple Pay just months ago, the platform is already second in total usage, behind Google Wallet. Meanwhile, Square, Venmo, Lemon and even bank-specific wallets have reached wider audiences.

    "New apps and wallet options may fuel widespread adoption of digital wallets."

    It's clear both the banking and financial communities see the future of payments resting in contactless, digital wallets. Noting just how far payment technology has come in recent years, CNNMoney reported Denmark is actually trying to get rid of all paper currency in the next year. The Danish government believes there will be fewer attempts by thieves to steal cash from merchants, while the reduced costs of no longer having to print physical money will free up resources.

    Additionally, eMarketer pointed out that by 2016, more than 2 billion people around the world will have smartphones. As smartphone manufacturers push the boundaries of payment technology, producing new apps and wallet options, the potential for a widespread adoption of digital wallets appears more likely every day.

    Addressing customer concerns
    Analysts note perceptions about the lack of security with digital payments is perhaps the primary impediment standing in the way of higher usage of virtual wallets. With a string of high-profile hacks that put customers' personal financial information at risk, consumers are wary of trusting their smartphones with so much valuable data.

    However, the key to circumventing these fears will likely be branded wallets. According to Gallup, 91 percent of consumers trust their financial institutions to keep their information secure; however, only 59 percent trust their cellphone providers. But if credit unions and other institutions begin branding their own digital wallets and offering them on smartphones, consumers may be primed to convert their preferred payment options. The efficiency of a digital payment backed by the confidence in one's financial account provider could quell worries, serving as an important turnkey moment in the industry.

    Howard Berg, senior vice president of Gemalto, a digital security firm, stated customers don't want to be told how they should pay, but would prefer more options, Reuters reported.

    Likewise, more options means solving the security-trust issue beforehand.

    "Payments is a really key element in the direction of technology at the moment," said Ben Wood, analyst for CCS, according to Reuters. "There are lots of companies trying to crack this nut, and the key is it needs to be secure and easy."

    Digital wallets have yet to break into the mainstream.

    Potential developments
    As consumers continue to become acquainted with EMV chip cards they are receiving in the mail, they may also see just how quickly their standard checkout procedures are changing. Merchants are required to update their payment terminals to comply with PCI standards, which means overhauling registries, software and point-of-sale systems.

    With these mandated changes, there may be an opportunity for retailers to also capitalize on contactless payment options by incorporating this feature into their systems as well.

    The idea of warming up to a completely frictionless transaction without the need to carry multiple credit and debit cards may not be so far-fetched in the months and years ahead, especially as more financial institutions onboard digital wallet technology.

    By storing loyalty programs, reward points, gifts cards and coupons into the same app as payment card information, business can benefit from a more customer-centric sales model. Further, financial institutions could see reduced handling and issuing costs by no longer having to mail updated cards to consumers.
  19. The Pew Charitable Trusts released a recent report that finds the use of general purpose reloadable (GPR) prepaid cards on the rise among consumers. In particular, prepaid cardholders who are known as "unbanked," because they don't have traditional bank accounts, use their cards like checking accounts. This fact is a key reason the Consumer Financial Protection Bureau should bring more safety and transparency to this market by adopting its pending proposal on prepaid cards. GPR prepaid cards, also called GPR prepaid accounts, allow consumers to load funds via direct deposit or with cash and can then be used to withdraw funds from ATMs or to make purchases at retail outlets. Today, about 23 million adults use prepaid cards regularly.

    The report, called "Banking on Prepaid" and based on a nationally representative telephone survey of adults who use GPR prepaid cards at least once a month, examined consumers' knowledge, attitudes, and perceptions based on whether they have a checking account.

    "Our data show that the unbanked use their prepaid cards like checking accounts, reloading them more frequently and registering them more often. In contrast,  people with bank accounts use the cards more like an ancillary financial product in that they load funds on a card, spend it down, and then buy another one," said Susan Weinstock, director of Pew's consumer banking project. "When a prepaid card is someone's only transaction account, it is especially important to ensure that the card is safe and comes with uniform protections against theft, loss, and deception."

    The report's key findings include:
    • Prepaid card use is becoming more common. Use jumped more than 50 percent between 2012 and 2014, driven primarily by increased adoption among consumers with bank accounts, many of whom purchased their prepaid cards at a bank or credit union. These individuals tend to have higher incomes and are more demographically similar to the general U.S. population than unbanked prepaid card users.
    • Unbanked prepaid cardholders use their cards more like traditional checking accounts. The unbanked check their balances more regularly, reload more frequently, and register their cards more often than banked cardholders do.
    • Unbanked prepaid card users tend to have lower incomes than banked users. More than 8 out of 10 unbanked prepaid cardholders have annual household incomes below $50,000—with about one-third under $15,000 per year.
    • Prepaid cards are often used as a budgeting tool. Consumers—especially the unbanked—use the cards to help control spending, stay out of debt, and avoid overdraft fees.
    • Most prepaid card users do not want the option to overdraw their accounts. Many cardholders use their cards to control their spending in part by not having the ability to exceed their balances. They do, on the other hand, want features such as saving and budgeting tools built into their accounts.
    • Most prepaid card users do not know whether their funds are FDIC-insured or whether their cards have an arbitration clause. Almost all cards carry FDIC insurance, and Pew previously found that about three-quarters (77 percent) of the cards studied included a binding arbitration clause. The availability of these features depends on the policy of the prepaid card manager, and consumers must read and understand their account agreement to determine their status.
    • Many prepaid cardholders who are covered by liability protections do not know it. Such safeguards minimize or eliminate a cardholder's liability for unauthorized use if a card is lost or stolen—but only if the card is registered and the problem is reported in a timely manner. Unbanked prepaid cardholders tend to be less knowledgeable about this protection than those who also have bank accounts.
    Currently, GPR prepaid cards are not required to have the same level of protection as traditional bank accounts, such as FDIC insurance, liability coverage for unauthorized transactions, and restrictions on overdrafts. The CFPB released proposed rules inDecember 2014 that would enhance consumer protections for prepaid accounts. Pew's report urges the CFPB to finalize these rules quickly.

    Pew commissioned the Media, Pennsylvania-based firm Social Sciences Research Solutions to field the survey from Oct. 15 to Dec. 10, 2014. A total of 8,641 respondents were screened in order to reach 587 respondents who use a prepaid card at least once a month.

    Read the report
    Read this release on Pew's website
  20. A new era of payment has begun in recent times: NFC, smart chips, Google Wallet, and Apple Pay. Yes, we are talking about contactless payments. Contactless payment systems are devices that use radio-frequency identification (RFID) or near field communication (NFC) to make secure payments. Contactless payments have been around since 1997, Mobil being one of the early adopters. Since then, major players in the industry have begun adopting this technology considering the amount of effort and resources that have been saved. Indeed, the benefits of contactless payments outweigh the adoption costs associated with it. Both the consumer and the retailers can enjoy the benefits of contactless payments. Consumers do not have to worry about carrying cash or cards while shopping and can enjoy an easier payment mechanism. Retailers can also benefit from this as faster checkouts mean customers spending less time at the POS terminal and retailers serving more customers.

    In Europe, the United Kingdom leads in the number of Visa contactless cards issued last year whereas Spain has the most contactless POS terminals. Europe surely has welcomed this innovative change in the card payment industry.  According to, there are 131 million Visa contactless cards that are carried and used at 2.6 million contactless POS systems across the continent. Last year, a billion contactless transactions were made in Europe alone. Major card issuers and brand merchants have laid the platform for the early adoption of the contactless payment technology. It also says that by 2020, all Visa POS terminals in Europe will accept contactless payments. More importantly, contactless payment is not just about waving your Visa card on the POS terminals of major retailers. Barclays Bank has partnered with Transport for London (TFL) to integrate the Oyster card with Barclaycard. TFL customers can use their Barclaycard to pay for their travel on any TFL service. Key fobs, phone stickers and wristbands are some of the contactless payment devices being introduced by major banks around Europe. Apple Inc. has recently launched Apple Pay for the UK market and iPhone users can now pay contactless at 250,000 locations across the country. Google already offers Google Wallet and is all set to introduce Android Pay.

    Evidently, we can see from the above findings that contactless payments will be the preferred medium for making payments. The rapid boom seen in this technology asserts the fact that nearly all of the Europe will adopt contactless payments by 2020. As more and more consumers adopt this new mechanism of payments, retailers will also have to cope up with the demand and provide NFC POS terminals for their customers. We will be able to see contactless POS terminals at almost every place where payments are involved. In fact, this will also lead to contactless POS terminals becoming one of the service offerings to attract customers.  Rapid changes are bound to happen in the way payments are made.
  21.  A new Bank of America survey sheds some light on how often mobile banking users access their accounts:
    • A majority check their app at least once a week: Over three-quarters (76%) of users check their app on a weekly basis. Specifically, 7% check it more than once a day, 13% once per day, 42% multiple times per week, and 14% once per week. 
    • A small fraction are disengaged from mobile banking: Only 5% of survey respondents visit their mobile bank account just a few times per year. 
    The survey ultimately shows that mobile banking users are, on the whole, very engaged with their finances. This is because accounts are now easier than ever to access via mobile banking apps. Although people are frequently accessing their accounts via mobile, the survey also suggests that activity is low in value.
    • 74% of app users check their balance or statement, 63% view transactions, and another 55% transfer funds internally between their own accounts. More complex actions, like peer-to-peer transfers, are only used by 16%.  
    While it's convenient for consumers to access mobile banking, if the bulk of their mobile activity is spent checking the status of their accounts, this doesn't generate any additional revenue for a bank. 

  22. A meaningful segment of millennials (20%) would prefer not to interact with cashiers at all in retail environments, according to a survey of 1,000 US adults by local shopping data aggregator Retale

    The survey also finds that 85% of respondents have used an in-store self-service kiosk to checkout. That number goes up for millennials, to 91%.

    According to the survey the following are the top reasons for using self-service checkout: “I have a limited number of items” (72%); “there was no line” (55%); “I prefer to keep my transactions and financial information private” (13%);“I don’t like interacting with cashiers” (12%).

    As mentioned, for millennials, “I don’t like interacting with cashiers” goes up to 20%. Yet, beyond this, other reasons on the list above (and several not mentioned) point to enabling in-store mobile payments, the report suggests.

    Among all respondents, nearly half (49%) wanted more self-service kiosks and 20% wanted to be able to pay with mobile or a smartwatch. Once again, among millennials, the figures were higher: “26% want to be able to pay at self-service kiosks using mobile devices.”

    The shopping data aggregator forecasts that by 2022, we may see a 40 – 50% reduction in the number of cashier jobs in the US.
  23. Apple Pay is violating the Dodd-Frank Act’s Durbin amendment, retailer groups say — at least the way Apple’s mobile payments system is currently implemented — and the groups are calling on Apple, Visa and MasterCard to meet the requirements of the law, American Banker reported on Monday (April 6).

    The problem: Durbin requires that merchants have payment routing options for debit-card transactions that aren’t affiliated with Visa and MasterCard, and which presumably have lower fees. But merchants complain that Apple Pay doesn’t let them choose how the tokenized transactions are routed — and as a result, they’re discovering that Apple Pay transactions are costing them more than regular plastic payment-card swipes.

    The accusations come after a month of complaints and finger-pointing over Apple Pay-related fraud, lack of usage by iPhone owners and failures of merchant support — and there’s no lack of finger-pointing on this issue either.

    While legal and technical opinions vary, all the players — merchants, card networks, processors, card-issuing banks and acquiring banks (which accept transactions for merchants) — seem to agree on two things: First, there are ways for Apple Pay and other mobile payments systems that use tokens to obey the Durbin requirements. And second, whoever’s fault it is, it’s not theirs.

    For example, merchant groups say they can’t choose less expensive routing because Visa and MasterCard haven’t provided technical information for them to do that. Mercator Advisory Group VP Tim Sloane agreed — “The problem is the merchants do not yet have a mechanism to see that alternative network,” he said — but Sloane suggested it’s the acquiring banks that should be providing merchants with the necessary routing tables.

    And while Merchant Advisory Group CEO Mark Horwedel said merchants “as a practical matter, don’t have the options that Durbin affords them” because they’re effectively locked into the networks of Visa and MasterCard, which operate Apple Pay’s tokenization technology, both First Data’s STAR Network and Fiserv’s Accel now say they can also handle Apple Pay transactions.

    Meanwhile banking groups said they haven’t heard any complaints about the issue from their bank members, so they don’t view it as a problem. An unidentified attorney interviewed by American Banker suggested it’s the merchants’ fault because they “decided to accept transactions in a way that only gives them one network. The merchant has opted to use an online technology where only one network is available. It doesn’t mean that the issuer or the networks are precluding other types of transactions.”

    That’s simply wrong, said National Retail Federation general counsel Mallory Duncan: “The Fed made it very clear that it was their intention that merchants were to have access to multiple [forms of] routing regardless of the configuration of the product.” According to the Federal Reserve’s rule implementing Durbin, that requirement “applies to any supplemental device, such as a fob or token, or chip or application in a mobile phone, that is issued in connection with a plastic card, even if that plastic card fully complies with the rule.”

    While the finger-pointing is likely to continue, the problem may not, said former big-bank executive Tom Noyes, who now leads a recently launched data-marketplace startup called Commerce Signals. “Over the next six months, this shouldn’t be an issue anymore,” Noyes said. “The other networks will be able to work with Visa and MasterCard to be able to make this work.”

  24. Four out of five global retailers and other merchants failed interim tests to determine whether they are in compliance with payment card data security standards, putting them at increased risk of cyberattacks, according to a new report by Verizon Communications Inc.

    Businesses must be vigilant in maintaining security to remain compliant with the Payment Card Industry Data Security Standard (PCI DSS), required by payment card issuers. Most of the companies have a tendency to run upgrades of security software and hardware only when they approach an annual compliance check, according to Verizon.

    The report, which gathered data in 30 countries by assessing more than 5,000 merchants including retailers, financial institutions and hospitality firms among others, found only 20 percent of those tested to be fully compliant less than a year after installing security safeguards.

    From 2013-2014, overall compliance went up by 18 percentage points for 11 out of the 12 payment data security standards.

    The report acknowledged the standards are only a baseline, an industry-wide minimal acceptable standard. The volume and scale of breaches in the past 12 months have shown that this is not stopping attackers, Verizon said.

    However, out of all the data breaches in the past 10 years that Verizon studied, not a single company was found to be compliant at the time of the breach.

    Credit and debit cards account for two-thirds of purchases by value in the United States. An additional $2.17 trillion is spent via electronic methods, such as PayPal and mobile payments — many of which are ultimately backed by card transactions, the report said.

  25. The world’s biggest maker of Android phones launched a major challenge to Google Wallet on Sunday, saying it will soon launch a rival phone-based payment system.

    Samsung Pay will appear first in the summer in the U.S.—later in other markets—and will allow consumers to make tap-and-go payments with a smartphone. It is being introduced as Google is moving to strengthen its position in the mobile payments market to better compete with Apple Pay.

    The system will first be available on the Galaxy S6, Samsung’s flagship smartphone that was launched on Sunday at Mobile World Congress in Barcelona. It will rely on the contactless NFC payment infrastructure already used by competitors including Google Wallet and Apple Pay.

    NFC not required

    In the U.S., where NFC payment acceptance is low, the phones will also be able to communicate with traditional magnetic card payment terminals, via technology recently acquired by Samsung when it bought LoopPay. That means a phone can be used to make purchases at almost any electronic payment terminal.

    Like Apple Pay, Samsung Pay will utilize one-time payment tokens instead of credit and debit card numbers. Tokens are said to be much more secure because they don’t reveal the customer card number and cannot be reused. And also like Apple Pay, users will be able to authorize payments by holding their finger on the home button, which includes a fingerprint reader.

    A major difference between Samsung Pay and Google Wallet will be the roles each company takes in the payment process.
    In Google Wallet, all payments are run through Google, which means the company sees every purchase a consumer makes. In Samsung Pay, as with Apple Pay, the company doesn’t have access to that data, said Jorn Lambert, an executive at Mastercard, which worked with Samsung on the system.

    Competition for Apple, Google...and credit cards

    Samsung Pay’s launch will heighten competition in the Android mobile payment market.

    Despite being on the market since 2011, Google Wallet has largely gone nowhere, and SoftCard, a competing app from three of the biggest U.S. cellular carriers, has also received little uptake from consumers. In February, Google acquired SoftCard technology to unite the two with the idea of strengthening Google Wallet to better compete with Apple.

    The Samsung Pay launch will muddy the waters a little, particularly if Samsung blocks Google Wallet from its phones—which it has not yet said it will do.

    But perhaps the biggest battle is against the plastic payment card. In use for years and intimately familiar to many consumers, plastic payment is fast and easy.

    “What’s lacking in the industry is a move beyond payments to offer more benefits and a reason to use a phone instead of cash or a card, which work pretty well today,” said Sandy Shen, an analyst at Gartner in Beijing. She doesn’t expect mobile payments to have a significant impact for a couple of years, and only when loyalty cards, promotions, and coupons are a more integrated part of the phone payment process.

    The mobile wallets support such loyalty cards, but many retailers are moving cautiously, in part because they don’t want to give away customer information to the likes of Google.

  26. The Federal Deposit Insurance Corporation (FDIC) has released a study showing that despite the increased use of online and mobile banking, brick-and-mortar banking offices continue to be the primary means through which FDIC-insured institutions deliver financial services to their customers. FDIC-insured institutions operated 94,725 banking offices as of June 2014, a decline of just 4.8 percent from the all-time high of 99,550 offices in 2009.

    The study identifies four main factors that have influenced the number and distribution of banking offices over time: population growth, banking crises, legislative changes to branching laws, and technological innovation. In terms of technological change, there is little evidence that the emergence of new electronic channels for delivering banking services has substantially diminished the need for traditional branch offices where banking relationships are built.

    Historically, net declines in branch offices have typically followed periods of financial distress, such as the Great Depression, the S&L and banking crisis of the 1980s, and the most recent financial crisis. The relaxation of branching laws in the 1980s and 1990s appears to have increased the prevalence of banking offices by removing legislative constraints on the size and geographic scope of the branch networks that each bank could operate. Since 1970, banks have introduced a series of new electronic channels for delivering banking services. Yet between 1970 and 2014 the total number of banking offices grew nearly twice as fast as the U.S. population, and as of 2014 the density of banking offices per capita was higher than it had been at any point prior to 1977.

    According to the 2013 FDIC National Survey of Unbanked and Underbanked Households, visiting a teller remains the most common way for households to access their accounts.

  27. The U.S. migration to EMV is well underway in advance of the October 2015 EMV network liability shift, with EMV card manufacturers shipping 185 million EMV cards last year, up more than 500 percent from 30 million in 2013, the Europe-based cross-industry Smart Payment Association announced today. EMV card shipments worldwide rose to 1.5 billion from 1.2 billion last year, Brian Russell, senior vice present of payment and transit for Giesecke & Devrient’s U.S. Mobile Security Division, told attendees at the Smart Card Alliance’s Payments Summit today in Salt Lake City.

    Contactless EMV cards are becoming more common in mature EMV markets, according to Russell. About 40 percent of all EMV cards shipped globally last year were contactless, and in Europe and Asia—where a large percentage of payment terminals support tap-and-go payments for lower-ticket purchases—about half of all consumers’ EMV cards are contactless, he noted. In the U.S. only about 10 million of all EMV cards shipped so far feature contactless payment capability, but that percentage is likely to rise, Russell suggested. “In the U.S., issuers are just beginning to look at contactless EMV card options and considering its expansion in light of the role mobile handsets will play in payments going forward.

  28. The U.S. Supreme Court on Tuesday declined to hear a challenge to controversial debit card "swipe fee" rules, dealing a blow to retailers, grocers and restaurant owners who argued the charges were unfairly high.

    Businesses pay the fees to banks when customers use debit cards to purchase goods or services. The fees reimburse banks for costs involved in offering debit cards.

    The high court's refusal to hear the case keeps intact a March 2014 ruling by the U.S. Court of Appeals for the District of Columbia Circuit that found the fees set by the Federal Reserve at 21 cents per transaction were appropriate.

    The dispute between banks and merchants centers involves swipe, or interchange, fees that are determined by Visa and MasterCard  and other card networks.

  29. Retailers continued to post strong sales numbers online as the holiday surge approached its end. In the final week before Christmas, e-commerce spending from desktop and laptop computers rose 18 percent from a year ago to $5.8 billion, according to digital measurement firm comScore. The Reston, Va.-based company said the entire season, from Nov. 1 through Dec. 21 generated more than $48 billion for online merchants, a 15 percent increase from 2013.

    "This final week of online holiday shopping before Christmas was very strong, finishing off the season on a high note and virtually guaranteeing e-commerce spending will outperform our pre-season forecast," said comScore chairman emeritus Gian Fulgoni. "We are now running at a 15-percent growth rate in desktop e-commerce for the season, which should be taken as a very positive sign for the economic health of both the American consumer and the e-commerce channel as a whole. While the heaviest spending days of the season are now behind us, there is still about another $5 billion that will be spent over the balance of the year that will get us to new all-time highs for e-commerce."

  30. This quote comes from Dave Dewalt, CEO of FireEye, as part of a report from last Sunday on CBS's "60 Minutes."  The report was broadcast on the news magazine in a segment about the massive data breaches at US Retailers entitled: "What happens when you swipe your card?"
  31. At least 47% of merchant terminals in the United States will be enabled with EMV chip technology by the end of 2015, according to the Payments Security Task Force (PST).

    According to the PST, the estimate is based on forecasts from entities representing approximately 80% of all U.S. purchase volume, including First Data, Bank of America Merchant Services, Citi, Chase Paymentech, Vantiv, Elavon, Wells Fargo and Global Payments. 

    The Credit Union National Association is a member of the PST, and CUNA Deputy General Counsel Mary Dunn said it was encouraging to see the collaborative efforts. However, she also said that it must be a high priority for the PST to focus on a long-term strategy to secure payments across all entities. 

    President Barack Obama issued an executive order Friday directing both payment terminals and payment cards to employ chip-and-PIN technology like EMV. Starting Jan. 1, all cards issued through the General Services Administration are mandated to contain additional security features. 

    In August, card issuers estimated more than 575 million EMV chip-enabled cards, which are more secure than the current magnetic strips on most credit and debit cards, would be issued by the end of 2015. 

    According to the PST, card and terminal forecasts will be updated on a quarterly basis.
  32. Holiday Outlook Rosy for Online RetailersAs retailer preparations for the 2014 holiday season continue at full steam, they have been buoyed by optimistic sales projections from a national retailer group. Overall, the National Retail Federation (NRF) expects holiday retail sales to increase 4.1 percent. Online, however, the NRF's arm that tracks digital sales said growth in online channels would at least double the overall number., the division of the NRF dedicated to digital retail, said online sales in November and December will be 8 to 11 percent higher than they were last year, reaching as much as $105 billion.

    "Though we have only seen consumer income and spending moderately - and erratically - accelerate this year, we believe there is still room for optimism this holiday season," said NRF Chief Economist Jack Kleinhenz. "In the grand scheme of things, consumers are in a much better place than they were this time last year, and the extra spending power could very well translate into solid holiday sales growth for retailers; however, shoppers will still be deliberate with their purchases, while hunting for hard-to-pass-up bargains."
  33. Apple will eat the credit card industry one bite at a time in the same way that they ate the music industry. With the Apple Pay announcement, they took the first bite. 

    Apple customers have shown that they outspend Android users by a wide margin. According to IBM, Apple users outspent Android by 500 percent last Christmas. Sales and transaction sizes on iOS e-commerce products are significantly higher than Android apps. Apple customers have shown themselves to be highly desirable to merchants. Payments have been a point of frustration for many merchants, and the idea that Apple can bring simplicity and security is a glimmer of hope. 

    The Apple Pay ecosystem will cover two core areas of converging interest: payments in brick and mortar stores, and in-app payments for goods and services. 

    The exciting thing about Apple Pay is that it’s an integrated solution. Customers will scan their existing credit cards and bank cards and the Apple Pay technology will import their information from partnering financial institutions. Initial launch partners will include American Express, Bank of America, Citi, Capital One, Chase, Wells Fargo and many others. Apple claims the participating institutions will cover over 83 percent of the issued cards in the United States.

    The technology will use the NFC chips in the upcoming iPhone 6 and Apple Watch products.

    What can we expect over the next six months?

    Additional merchants and financial institutions will be brought into the platform in large numbers. Every financial institution will come on board. Similar to the original iPhone, which was initially available only on AT&T, it took years to get support from every carrier, but the benefit was too great for them to ignore.

    The payments industry will quickly standardize on NFC. Google has already been pushing NFC technology. Now that Apple has put their weight behind NFC, solutions that are optical will be less appealing. In particular, camera-based solutions, such as Square and LevelUp, will become less common because NFC solutions don’t require you to open a specific app to operate.

    Merchant systems that offer NFC solutions in addition to chip & pin combinations will be deployed through 2015. This will be further accelerated by Apple’s Watch product, which will enable existing iPhone 5 and 5s customers to take advantage of the technology.

    Customers will interact less with physical cards when they can use Apple Pay with fingerprint biometrics. This trend will result in fewer cases of credit-card fraud for retail point of sale, because the customer’s card is hidden from prying eyes. In addition, card-not-present merchants will likely get a better in-app transaction rate for using Apple Pay. Decreased fraud will put further downward pressure on merchant and interchange fees. Apple controls the app approval process and could require that future e-commerce apps support Apple Pay to further increase volume and lower transaction fees.

    Google Wallet has had many of the right pieces in place, but they haven’t been able to make a dent in the market. The Apple Pay announcement will kick them into high gear. Google similarly has both phone and watch products, but it may take 6–12 months for them to enable similar end-to-end customer experiences.

    Payment processors will be quick to add support. Vantiv, First Data and Stripe have already announced support and others will do so as well.

    For Apple this is just the beginning. Make no mistake that Apple enjoys controlling the full experience. This is their first move but it won’t be their last. Apple retail stores offer a proving ground for payment technology and you can expect them to make it increasingly easy to separate you from your money in exchange for a shiny new product.

  34. Visa Inc. can now process a peak volume of 56,000 messages per second—a record high—and foresees no glitches resulting from a new card-number masking technology expected to go into production some time this fall.

    Visa arrived at these results upon completing an annual stress test earlier this month in anticipation of the upcoming holiday shopping season. The test takes “five very long and grueling days,” Manny Trillo, senior vice president of network processing at Visa.
    “We’ll unplug channel directors, sometimes an entire storage array,” says Trillo. “We’ll do things we never expect to happen, such as a sudden loss of components or surges in volume so we’re ready to process any anomaly.” Using a third-party facility in Gaithersburg, Md., Visa tests both its operating system and specific business applications, he says.

    One key result of this year’s test, the 22nd the company has conducted since 1992, is the finding that peak capacity has grown nearly 20% since last year’s 47,000 messages per second. “We pushed the system to new heights,” says Trillo. With the new peak volume number, Visa is in a position to handle a volume surge “in case we’re wildly successful,” Trillo says. It can also step in if needed when other systems fail, he adds. “We can be the backstop for the payments ecosystem,” he says.

    As part of the volume test, Visa can vary both the speed and mix of transactions. “We can tweak it so we’ll see more of a type of transaction than we’ll see in real life,” Trillo says.
    One new transaction type Visa, as well as other big networks, is likely to be processing by the time of the holiday rush is the tokenized payment. Both Visa and MasterCard Inc. have released specifications for this process, and Visa expects the first issuers to go live with it later in the year. With tokenization, issuers replace the actual card account number at the time of authorization with a randomly generated string of digits that is useless to data thieves. Typically, the message data are also protected by a cryptogram.

    While Visa’s stress test couldn’t include actual tokenized transactions, Trillo says the test did yield a better understanding of the process and its expected impact on the network at volume. It helps, he says, that the tokens look just like account numbers, and so can be handled without changes in processing logic. “This helps smooth out implementation,” he says. “We understand it.”

    In the end, Trillo says, Visa concluded tokenized transactions at the data center will look much like chip card transactions on the Eurocard-MasterCard-Visa (EMV) standard, which U.S. networks are moving to. A relatively small number of EMV cards are in circulation. “Tokenization will be in line with what we see with EMV,” he says.

    Visa conducts this test annually because the network makes system changes throughout the year whose cumulative effect is hard to estimate without a new test. “We always learn a lot,” says Trillo, who has managed the stress test every year. “We need to ensure the latency is within tolerable limits.” Latency refers to delays in processing time.
    Apparently, the system passed this latest test. “We confirmed with a high degree of comfort that we’ll be ready for the holiday period,” Trillo says.
  35. The 2014 NFL national promotion is designed to drive Visa card use by capitalizing on the passion and loyalty of NFL fans. Use the turnkey print and digital marketing materials to spread the word to your cardholders about the chance to win the Super Bowl experience of a lifetime.

    Cardholders who make eligible purchases with their Visa card between 1 September and 30 November 2014 will be automatically entered for a chance to win the Visa Super Bowl XLIX Sweepstakes. The more they use their Visa card, the more chances they'll have to win. One grand prize winner will experience Super Bowl XLIX like no one else will.
    • Get round-trip airfare for two to Phoenix, Ariz.
    • Receive two tickets to attend Super Bowl XLIX.
    • Enjoy five-day, four-night hotel accommodations.
    • Attend the head coaches’ press conference, an exclusive, insider-only event.
    • Take part in the on-field post-game celebration, and revel in glory with the Super Bowl champions.
    • Meet an NFL player.
    The following marketing materials for the Visa 2014 NFL national promotion are available for order now at Visa Online.
    • Wallet Card
    • Web Banners (Rotating and Static)
    • Poster
    • Email Template
    • Statement Insert
    • Take-One
    • Tent Card
    Non-purchase entries and purchase entries have an equal chance of winning. Open only to legal residents, 18 or older as of 9/01/14. For details on non-purchase entries, see the Official Rules (PDF). PIN-based and ATM transactions are not eligible. Void in Puerto Rico and where prohibited. Sweepstakes begins 9/01/14 and ends 11/30/14. Sponsored solely by Visa U.S.A. Inc. The NFL Entities have not offered or sponsored this sweepstakes in any way.
  36. According to the Natonal Retail Federation’s 2014 Back-to-School Survey conducted by Prosper Insights & Analytics, the average family with children in grades K-12 will spend $669.28 on apparel, shoes, supplies and electronics, up 5% from $634.78 last year. However, total spending on back to school will drop slightly, to $26.5 billion, as the survey found there are slightly fewer students in households this summer.

    “Slow improvements in the economy may have contributed to the growth in confidence among back-to-school shoppers, and while we are encouraged by the overall tone of the results and expect to see continued improvement in consumer spending through the year, we know Americans are still grappling with their purchase decisions every day,” said Natonal Retail Federation (NRF) President and CEO Matthew Shay. “Throughout the history of this survey, spending has fluctuated based on family needs each year, and this summer, we expect parents to continue to use caution, but also make smart decisions for their family budget that is a good balance between what their children ‘want’ and what they actually need.”  

    NRF this year broke out spending by grade, and according to the survey, families with high school students will spend the most. The survey found the average family shopping for high school students will spend $682.99, while spending on middle school/junior high comes in a close second at $682.13. arents with elementary school-age children will spend an average of $580.94.

    Overall, every category will see an increase in spending.

    While department and discount stores will be the most visited among school shoppers, millennial students may be driving an increase in planned spending at specialty stores. The survey found 53.8% of back-to-school shoppers will shop a clothing store, up from 51.5% last year and a survey high; 27.5% will shop at electronics stores, up from 25.9% last year and another survey high. Six in 10 (64.4%) will visit discount stores, 59.1% will shop at department stores, 42% will shop at office supply stores, 38.2% will shop online, and 20.5% will shop at drug stores.

    For the first time, NRF asked school shoppers about their plans to shop at local/small businesses for their needs: 17.4% will support local/small retailer to buy school items.

    Men are expected to spend more for back to school this summer. According to the survey, men will spend an average $754.30 on school items, up 12% from last year. Women will spend an average of $588.80, down $11 from $599.30 last year. Additionally, 25-34 year olds will be the highest spending age group at $822.01, followed by 35-44 year olds ($716.78), 45-54 year olds ($694.83), and 18-24 year olds ($682.66).
  37. Visa is investing in mobile wallet app LoopPay, a mobile payment solution accepted at a majority of retail point-of-sale terminals.
    LoopPay is designed to turn a phone into a credit card to swipe at a register. The app uses a traditional mobile wallet setup and a small dongle that plugs into the phone to allow users to swipe their virtual cards at the register.
    LoopPay does not require stores to update their point-of-sale systems in order to work with its software. It bridges the gap between mobile wallets and the existing payment systems in the United States retail market, making it easier for users to get the most out of their mobile payment program.
    Visa has already announced upgrades to its VisaCheckout program, so investing in LoopPay will allow the company to make an even bigger impact in the mobile payment sector. The details of the deal have not been disclosed yet, but the fact that Visa has invested in LoopPay shows its commitment to the mobile wallet industry.

  38. In April, Richland, Wash.-based Gesa Credit Union introduced Gesa P2P Express, a person-to-person payment service. The product allows Gesa members to send and receive money in a matter of minutes from their phone or online.

    Gesa is among one of the first credit unions in the country to offer this turnkey service to their members. Pocket-2-Pocket is a white-label solution that requires little credit union programing or cost to implement as it works directly as part of the CU24 gateway network. We sat down with Gesa’s Assistant Vice President of Marketing, Brian Griffith, to talk about the new P2P product.

    How does Gesa P2P Express work?

    “Utilizing a smart phone or PC, our members are able to send money to anyone with a U.S. banking account. The funds are withdrawn from their checking account via the members’ debit card and secure PIN.”

    How has P2P Express been received by members?

    “The product has been appreciated by those using it. We really wanted a product that was easy to use and also gave a sense of security. With the Debit and PIN method, P2P is just like paying for merchandise at a store. It’s a familiar process to our members.”

    Why did Gesa decide to create a P2P solution?

    “This was a missing piece to our eChannel offerings. The ability for a member to send money to others without the high cost of wires, and in most cases doing so in real time. We feel that offering P2P gives our members the added safety of secure payments, and the convenience of anytime banking.”

    What is Gesa’s approach to investing in new technology?

    “We look at member needs and what impacts technology can have on both Gesa and our Members.  When it makes sense, and the technology is mature we will proceed.” 

    What makes P2P Express stand out among other mobile payments platforms?

    “The best differential is no registration process. Our members can send money quickly and are not required to register unless they choose. Registration adds some enhanced features like history and debit card number storage.

    “Other competitive products say the funds are transferred in real time, but that only applies if both the sending and receiving institutions have the same product. With our P2P product, transactions are real time at the network level which is growing. We believe operating at the network level is the way to go.

    “It also works with guaranteed funds. As soon as our member sends money, the account is debited for the funds and held in settlement, until accepted by the receiver. This we feel protects not only Gesa, but also those expecting funds.”

    MAP and CU24 Bring P2P payments to credit unions

    Gesa’s P2P service is built on Pocket2Pocket, a secure fully-branded person-to-person payment solution launched earlier this year by Member Access Pacific (MAP) and CU24. P2P enables PIN-secured, instant transfer via web and mobile, utilizing PaySecure’s patented PIN pad. P2P allows users to send and receive money in real-time on a debit card or via traditional ACH.

    P2P supports both web- and mobile app-based payments, making it easy to send money anywhere without the need for cash, checks or third-party payment solutions. The receiver can be on any network with any financial institution. Money goes straight to their debit card or checking account.

    P2P helps credit unions strengthen relationships with members and reduce migration to third-party peer-to-peer enrollers by providing access to a network of 150 million cardholders. The service also revives the credit union’s debit business line by creating net new transaction volume.

    With MAP and CU24’s Pocket2Pocket payment solution, now being offered at Gesa Credit Union, members have access to a flexible, secure, simple and fast way to send money securely with just the tap of a button.
  39. Americans are using credit cards, but they're not carrying balances forward, according to a study conducted by the American Bankers Association. In the fourth quarter of 2013, consumer credit card debt as a share of disposable income dipped to 5.2 percent — the lowest it's been in over a decade.

    In addition, the ABA data shows the percentage of credit card users who pay off their entire balance each month and don't carry a balance forward reached its highest ever level, increasing from 28.6 to 29 percent. Ken Clayton, executive director of the ABA Card Policy Council, says that the findings indicate cardholders are seeing the benefits of credit cards in a different way since the recession. Consumer behavior has shifted from using credit cards as a debt instrument to using it as a payment instrument that offers better rewards and fraud protection than other forms of payment.

    "You still have the hangover of the financial crisis and that has sobered consumers," Clayton says. "They're still using a credit card to buy the refrigerator, because it's convenient and safe, but they're in the position where they can pay for it at the end of the month."

    The study also found that U.S. cardholders are more likely to use credit cards that offer rewards programs. The number of active rewards cards increased 18.4 percent from 2008 to 2013, while the number of active non-rewards cards decreased 40.6 percent during that timeframe.
  40. New research from Tufts University may finally debunk the rumor that cash is cheaper than using a credit or debit card. In an article for The Harvard Business Review, Dr. Bhaskar Chakravorti shares his findings on the economic and financial impacts of cash usage. His research shows that there are significant drawbacks to a cash economy for individuals, business and governments.

    "The use of cash involves several social costs to individuals — especially the poor — as well as business and the government," says Dr. Chakravorti. "For individuals, cash usage imposes a regressive tax with the highest impact on the unbanked. By FDIC estimates, 8.2% of U.S. households are unbanked and 20.1% of U.S. households are underbanked. The unbanked pay four times more in fees to access their money than those with bank accounts, and they pay $4 higher fees per month for cash access on average than those with formal financial services."

    For businesses, the risk of keeping large amounts of cash lies in paper currency's insecurity. In the U.S., businesses lose about $40 billion every year to cash theft — with the majority of theft affecting small and rural businesses. The government also loses when people rely on cash. Dr. Chakravorti estimates that the U.S. Treasury is losing $100 billion annually because of under-reported taxes due to cash payments made for products and services.

    In the end, it is impoverished, rural and underbanked populations that end up paying the most for their dependency on cash — and those who would benefit the most from access to a debit or prepaid card from a financial institution.
  41. With card issuers across the country rushing to put EMV chips in their debit and credit cards, many credit unions are still trying to figure out their strategy. They want to understand the technology and how it will affect their members before migrating their card portfolios. How does EMV protect against counterfeiters? How will the new cards change the payment experience? How long does it take to change over? Credit unions want the facts.

    Member Access Pacific's User Group aims to tackle those questions in its upcoming meeting, "EMV Next Steps." On June 24 from 11:00 am to 2:30 pm. MAP clients are invited to hear speakers Ron Silvia, Doug Frantz and Jung Lee of Visa and Joe Woods of CU24 discuss the migration process, the ins-and-outs of the chip, the implications of the October 2015 Visa Liability Shift, and how EMV works with mobile and online payments. The meeting will be held in-person in our offices and online via webinar.

    The meeting is free to attend for MAP client credit unions. MAP hosts the User Group quarterly, bringing in experts to discuss industry hot topics, providing training and facilitating networking among credit union professionals. Previous topics have included fraud prevention and mobile authentication.
  42. Learning financial skills is as easy and fun as playing a video game. Just in time for the 2014 FIFA World Cup, Visa, Inc. has released Financial Soccer, a new version of its fast-paced multiple-choice question game. The updated game, which features improved graphics and new questions, tests players’ money management knowledge to advance down the field and try to score goals.

    “Learning about budgeting, saving and responsible spending are vital skills all Americans should know,” said Alejo Torres, Senior Outreach Manager for the Federal Reserve Bank of Chicago. “Financial Soccer is a wonderful way to get students interested in their personal finances.”

    Visa’s Financial Soccer combines the world’s most popular sport with a high-quality financial literacy curriculum to create an innovative approach for learning about money management, while tapping the passion for the 2014 FIFA World Cup™ in Brazil. The game is designed for middle school and high school students and includes lesson modules for teachers and parents.

    “I wish this kind of educational video game existed when I was in school,” said Chicago Fire forward Mike Magee at an event promoting the game’s release. “Financial Soccer makes personal finance so fun and entertaining – you almost forget you’re learning.”

    Member Access Pacific (MAP), the nation’s only aggregator of the Visa® Debit Processing Service platform for credit unions, connects clients to resources like Financial Soccer, furthering its commitment to promoting financial literacy for all ages. Financial Soccer is part of Visa’s free financial education program, Practical Money Skills, which offers educational resources for educators, parents and students including personal finance articles, games and lesson plans.

  43. Everyone is talking about EMV. For years, there have been promises that the computer chip-embedded credit card was just around the corner. Skeptics have had a field day pointing out that EMV adoption will be too slow to counteract rising fraud. However, according to the Aite Group, a Boston-based financial services consultancy, it appears that EMV is about to explode in the U.S. In a new report, Aite Group projects that 70% of all credit cards and 41% of all debit cards issued in the United States will support EMV by December 2015.

    The optimistic projection comes as a reaction to an increased risk of counterfeit fraud, making EMV cards an attractive option for issuers. According to the report, credit card fraud rates have doubled to 10 basis points in recent years, representing 10 cents out of every $100 transacted from 2007 to 2014. The October 2015 Visa Liability Shift is also prompting card issuers and merchants to make the switch.

    "Taking the world's largest card market from mag stripe to EMV is a massive undertaking," says Julie Conroy, research director in Retail Banking at Aite Group."The 17 months before the liability shift takes effect will pass by quickly, though, and issuers, based on lessons learned from other countries, should consider issues like fraud migration paths and how to counter them, as well as how to educate the consumer and merchant alike on chip cards."
  44. Member Access Pacific (MAP), the nation’s only aggregator of the Visa® Debit Processing Service platform for credit unions, has released a white paper on mobile wallet solutions for credit unions. It covers the options available to consumers and the forces that will shape the future of mobile payments.

    “We are pleased to be able to offer this resource for credit unions who are unsure about what mobile wallets are and how they are going to affect their members,” says Cyndie Martini, President and CEO of MAP. “We hope this white paper will help them make an informed decision about the solution that works best for them.”

    The white paper outlines the current field of mobile wallets, consumer trends, how mobile wallets could affect interchange income and how mobile wallets are poised to change the way the world makes payments. The white paper is available as a free download from MAP’s website.
  45. Mobile devices are changing the way credit union members and employees interact with financial institutions. Smartphones and tablets make checking a balance, making a deposit or paying a bill easier than ever, but the mobile banking revolution also exposes instutitions to security risks, according to Gartner, Inc. While security incidents originating from mobile devices are rare, Gartner said that by 2017, 75 percent of mobile security breaches will be the result of mobile application misconfiguration.

    "Mobile security breaches are — and will continue to be — the result of misconfiguration and misuse on an app level, rather than the outcome of deeply technical attacks on mobile devices," said Dionisio Zumerle, principal research analyst at Gartner. "A classic example of misconfiguration is the misuse of personal cloud services through apps residing on smartphones and tablets. When used to convey enterprise data, these apps lead to data leaks that the organization remains unaware of for the majority of devices."

    With the number of smartphones and tablets on the increase, and a decrease in traditional PC sales, attacks on mobile devices are maturing. By 2017, Gartner predicts that the focus of many breaches will shift to tablets and smartphones. To do significant damage in the mobile world, malware needs to act on devices that have been altered at an administrative level.

    "The most obvious platform compromises of this nature are 'jailbreaking' on iOS or 'rooting' on Android devices. They escalate the user's privileges on the device, effectively turning a user into an administrator," said Mr. Zumerle.

    While these methods allow users to access certain device resources that are normally inaccessible (in fact, in most cases they are performed deliberately by users), they also put data in danger. This is because they remove app-specific protections and the safe 'sandbox' provided by the operating system. They can also allow malware to be downloaded to the device and open it up to all sorts of malicious actions, including extraction of enterprise data. 'Rooted' or 'jailbroken' mobile devices also become prone to brute force attacks on passcodes.

    The best defense is to keep mobile devices fixed in a safe configuration by means of a mobile device management (MDM) policy, supplemented by app shielding and 'containers' that protect important data.

    Gartner recommends that IT security leaders follow an MDM/enterprise mobility management baseline for Android and Apple devices as follows:

    • Ask users to opt in to basic enterprise policies, and be prepared to revoke access controls in the event of changes. Users that are not able to bring their devices into basic compliance must be denied (or given extremely limited) access.
    • Require that device passcodes include length and complexity as well as strict retry and timeout standards.
    • Specify minimum and maximum versions of platforms and operating systems. Disallow models that cannot be updated or supported.
    • Enforce a "no jailbreaking/no rooting" rule, and restrict the use of unapproved third-party app stores. Devices in violation should be disconnected from sources of business data, and potentially wiped, depending on policy choices.
    • Require signed apps and certificates for access to business email, virtual private networks, Wi-Fi and shielded apps.

    IT security leaders also need to use network access control methods to deny enterprise connections for devices that exhibit potentially suspicious activity.

    "We also recommend that they favor mobile app reputation services and establish external malware control on content before it is delivered to the mobile device," said Mr. Zumerle.

  46. Millennials who are members of a credit union are more likely to be satisfied with their financial institution than their bank customer peers, according to a new study by CO-OP Financial Services. The survey found that younger customers (those born after 1980) report having a better overall experience at credit unions than banks — and many Millennials who use a bank are open to switching if provided the right incentives.

    "Positive customer experiences (for Millennials) are largely driven by the basics – deliver on expectations and treat people with respect. Positive staff attitudes are more strongly recognized on a local scale. Both credit union members and bank customers are generally satisfied with financial institutions – credit union members much more so," says the study.

    Among the study's findings:
    • 81% of Gen Y credit unions members said that their institution provides an “outstanding customer experience” compared to 59% of bank customers responding so for their banks.
    • A total of 96% of credit union members said they were very satisfied or somewhat satisfied with their credit union, while the figure was 88% among bank customers.
    • Credit union members are much stronger advocates for their financial institution compared to bank customers. The survey found a “net promoter score” (likely to recommend) of 38% among credit union members, with bank customers registering only 16%.

    "The competition among financial service providers to attract Millennials is fierce and getting more so as technology-based products seem to change the market environment almost daily," said Stan Hollen, President/CEO of CO-OP. "By addressing the safe access and convenience demands of Millennials, and leveraging their traditional service strengths, credit unions can win the loyalty of this highly sought after consumer group."
  47. With schools getting out and warm weather creeping in, many families are planning out their summer vacations. Whether you're headed to a tropical beach or just one state over to see family, making and sticking to a budget can help save you headaches and surprises — leaving you time to focus on relaxing. Your wallet will thank you.

    When building a trip budget, try to anticipate all potential expenses. Consider things like:

    • Airfare-related expenses. Include taxes and fees for items like changing flights, extra leg room, priority boarding, Wi-Fi access, meals, and checked, oversized or overweight baggage.
    •, and provide handy charts that compare various fees for popular airlines; however, always double-check the airline's own posted rules before booking your flight.
    • Transportation to and from the airport – at home and all travel locations.
    • Car rentals. Factor in taxes, gas, fill-up penalties and insurance (check your auto insurance and credit card policies to ensure you don't pay for duplicate coverage).
    • Hotel/lodging. Don't forget taxes and other local fees, charges for phone/Internet, room service, early check-in or departure, gratuities, etc.
    • Hotel room rates often are based on double occupancy. Although kids usually can stay for free, many hotels charge extra for additional adults.
    • Entertainment. Include meals and snacks, event admission and ticket-ordering charges, transit passes or taxis, sporting equipment rental, babysitters, and special clothing or accessory requirements (sunscreen, hiking boots, etc.)
    • Throw in an extra 10 or 15 percent for unanticipated expenses – lost luggage, flat tire, etc.

    Try MAP's Practical Money Skills Travel Budget Calculator to help you plan your trip and see how much you should expect to pay for your getaway.

    A few additional tips:

    • Follow and "like" airlines and ticketing sites on Facebook and Twitter. They'll often share sales, discounts and promotional codes with their followers.
    • If the airfare goes down after you've purchased your ticket, ask the airline or ticketing site to refund the difference – it couldn't hurt to ask.
    • Print and carry a copy of your airline's Contract of Carriage, which outlines your rights and the airline's obligations should your flight be cancelled or delayed for reasons besides weather or other "acts of God."
    • Consider vacation rentals listed on sites like, and You can often find cheaper accommodations with more space and amenities than hotels offer.
    • Before booking a hotel room online, call the individual property to see if they can beat the company's posted rate. Also ask for member discounts for organizations you belong to like AAA or AARP.
  48. The Retail Gift Card Association surveyed U.S. consumers about what types of gift cards they will be giving for such occasions as weddings, Father's Day, graduation and teacher appreciation. Of over 1,100 consumers surveyed online in April and May 2014, the RGCA found that gift cards to department stores, online marketplaces, restaurants and home improvement stores will be most popular this summer, with $25 being the most popular amount loaded onto gift cards.

    "Our survey showed that gift cards remain popular choices for two key reasons: gift givers can be assured recipients will be able to purchase what they want, and the cards are convenient for recipients since they can be spent in-store, online or on their mobile phones," said Mary Donovan, Executive Director of the RGCA.
    Among the RGCA's key findings:
    • 100 percent of survey respondents have used a retail gift card in the last year
    • 77 percent or respondents have given a gift card in the last year
    • More than two thirds of respondents plan to give a gift card in the next three months
    • 45 percent of respondents said they would give a gift card for an online marketplace, such as Amazon, as a graduation gift
    • 79 percent of respondents would give a retail gift card as a wedding gift, with 26 percent choosing a department store gift card and 20 percent choosing an online marketplace card
    • 23 percent of respondents would give a home improvement store card as a Father's Day gift
    • 85 percent of respondents would give a gift card as a teacher appreciation present, with gift card to a restaurant being the most popular choice at 29 percent, followed by online marketplace cards (25 percent)
    • 44 percent of respondents said $25 gift cards are the denomination of choice, with 24 percent preferring $50 denominations and 6 percent giving $100 gift cards

  49. On May 7, Member Access Pacific was recognized for its work developing messaging for credit unions to use during the Target data breach. The Seattle-based credit union card management company won the Northwest Credit Union Association’s 2014 Spectrum Award for Excellence in Credit Union Marketing and Communications in the Business Partner Marketing category.
    “Congrats Member Access Pacific for helping your credit unions message the target data breach and providing technology to protect members,” said Troy Stang of the Northwest Credit Union Association.
    MAP’s winning entry included messaging and turnkey collateral designed to help its clients navigate the 2013 Target data breach and promote fraud management tools. MAP provided credit unions with material for traditional, online, email, newsletter and in-branch channels. MAP developed an instructional PowerPoint presentation to educate credit union employees on the breach and distributed a Best Practices document on how to communicate with concerned credit union members. MAP worked with card program managers to develop messaging that was tailored for each individual credit union.
    The annual NWCUA Spectrum Awards honor excellence in credit union communications, public relations, and marketing. Award categories recognize branding, online efforts, newsletters, and advertising.
  50. Member Access Pacific (MAP), the nation’s only aggregator of the Visa® Debit Processing Service platform for credit unions, is partnering with Alabama-based Corporate America Credit Union to bring its services to Corporate America’s 500 member credit unions. MAP is joining forces to bring its expertise in debit and credit card processing, fraud monitoring, prepaid and card fulfillment to Corporate America Credit Union members.

    “We are excited to have the opportunity to enter into this partnership with Corporate America Credit Union,” says Cyndie Martini, President and CEO of MAP. “We look forward to using our products and services to benefit Corporate America’s hundreds of credit unions and support the work they do.”

    Corporate America Credit Union will provide referrals to its members, as well as provide them with informational materials to connect its members to MAP’s proven products and services. MAP will also deliver industry-leading educational programs and webinars to Corporate America Credit Union members as part of the deal.

    “The partnership with MAP allows us to expand our offering of financial products to our members,” says Lauren Howle, Vice President of Member Alliance Group and Corporate America Credit Union. “Utilizing MAP’s experience and relationship with Visa, we are positioned to better serve our members across the country.”

  51. Prepaid cards are gaining traction among customers as an alternative to cash, checks and cards linked to a checking account. Aité Group projects that retail purchases made with prepaid cards will hit $200 billion in 2014 – that’s 5% of all retail spending in the U.S.

    Prepaid or GPR (general purpose reloadable) cards have taken off with American consumers and are especially popular among the younger generations, who prefer them to cash and checks and do not require a co-signer.

    “It has become a mass market product,” says Madeline Aufseeser, a senior analyst at Aité Group. “Twenty-three percent of the population in the U.S. hold a prepaid card.”

    All segments of the prepaid market have seen significant growth in recent years, including open cards that can be used anywhere (ie. Visa prepaid) or closed cards that are only valid at a particular merchant. According to the Pew Research Center, the majority of prepaid cardholders have used another financial product in the last 12 months, such as a checking account or a credit card, suggesting that prepaid cards are being used to complement existing accounts, rather than replace them.
  52. In an effort to become easier for merchant acquirers, merchants, and card issuers to deal with, Visa Inc. late this year will eliminate almost 50% of its operating rules, which currently total more than 1,500 pages, chief executive Charles W. Scharf said Thursday. Scharf made that revelation at Visa’s second-quarter of fiscal 2014 earnings conference call, in which he also noted that Visa is getting caught up in the international dispute arising from Russia-Ukraine tensions.

    Scharf disclosed the rules cut after reminding analysts that Visa had talked earlier about simplifying its regulations and that it recently announced changes in its Fixed Acquirer Network Fee (FANF) to make Visa acceptance more attractive to small merchants with less than $15,000 in annual Visa volume.

    “On Oct. 1st we will be eliminating close to half of our operating rules,” said Scharf in his opening remarks. “This includes reducing the complexity of our dispute-resolution processes.”

    Asked by an analyst for more details, Scharf said the reduction is the result of feedback Visa solicited from issuers, merchants and acquirers. He said Visa’s reputation among those groups historically was that “we were probably pretty difficult to deal with.” The increasingly competitive payments market, however, apparently forced Visa to consider ways to become more user-friendly. “We want people to enjoy doing business with us, and that we treat them openly, fairly, and clearly,” said Scharf.

    Visa asked issuers, acquirers, and merchants what they didn’t like and what should change in the rules, Scharf said. “A big part of the feedback that we received was on chargebacks and the processes that we had put in place, the reporting requirements, documentation, and things like that,” he said. More changes could be in the offing after Visa gets feedback about the October changes, according to Scharf.

    Meanwhile, Visa is facing a possible loss of business in Russia, where 100 million Visa cards have been issued, as a result of U.S. economic sanctions on Russia in the wake of that country’s recent annexation of Crimea, a part of neighboring Ukraine. President Vladimir Putin is pushing for a national payments system, and Russia’s government is considering regulations that could take effect soon to keep Russian transaction processing and settlement operations within the country.

    “We don’t know exactly what our position will be in the marketplace,” said Scharf.

    In the United States, Visa reported healthy payments growth in the second quarter. The network posted total U.S. payment volume of $575 billion, up 8.5% from the year-earlier quarter.

    Credit again led the way in growth, with $269 billion in U.S. volume, up 10.6% from $244 billion in fiscal 2013’s second quarter, on 3.15 billion transactions, up 10.7%.

    U.S. debit volume continued its recovery after taking a big hit when the Dodd-Frank Act’s Durbin Amendment took effect in late 2011. Debit payments totaled $305 billion, up 6.7% from last year’s second quarter, on 7.99 billion transactions, an increase of 6.3%. In the 12 months ended March 31, debit volume totaled $1.21 trillion, up 9% after slipping 4.5% in the prior year.

    Still, Visa is on the lookout for weakening debit card spending. “We think that there has been a downshift in debit spend, we saw some of it after the Target breach,” said chief financial officer Byron H. Pollitt. He noted, however, that April debit volumes have been encouraging so far.

    Visa reported net income of $1.6 billion for the quarter, up 26% from a year earlier, on revenues of $3.16 billion, up 7%.
  53. More details of the security breach at arts-and-crafts retailer Michael’s, first reported by Brian Krebs at, emerged before the weekend when the company disclosed the payment information of 3 million customers was compromised in the attack. While Krebs reported the intrusion on Jan. 25, the Irving, Texas-based company said it had not commented before this because an investigation by two independent security firms at first could not conclusively confirm a break in.

    In the company’s first public statement since January, however, it confirmed its POS systems had been compromised between May 8, 2013 and Jan. 27, 2014 affecting 2.6 million customers at Michael’s and 400,000 more at sister store Aaron Brothers. The company said the evidence showed the company’s systems were hacked using “highly sophisticated malware that had not been encountered previously by either of the security firms.”

    In its statement, the retailer said while card numbers and expiration dates were lost to fraudsters, other personal information including names addresses and PINs were not compromised.
  54. According to a new survey released by the Pew Research Center shows that more Americans have had personal information stolen or accounts compromised online. The number of online users who have experienced a personal data breach increased from 2013 to 2014. In the last year, 18% of adult Internet users in the U.S. had important personal information stolen, such as their Social Security Number, credit card, or bank account information. That's a steep increase from just 11% of respondents in 2013. Additionally, 21% said they had an email or social networking account hacked into, the same number as the previous year.

    "As online Americans have become ever more engaged with online life, their concerns about the amount of personal information available about them online have shifted as well," says Senior Researcher Mary Madden. "When we look at how broad measures of concern among adults have changed over the past five years, we find that internet users have become more worried about the amount of personal information available about them online—50% reported this concern in January 2014, up from 33% in 2009."

    The survey also found that while the incidence of online identity theft increased across all age groups, young adults and younger Baby Boomers were hit especially hard in the second half of 2013, seeing 8% and 9% percent increases, respectively.
  55. For ATM fleets still running on Windows XP, it’s time to upgrade to Windows 7. Microsoft is ending support for the 12-year-old XP operating system on April 8, 2014. While Microsoft will continue to provide security patches through mid-2015, credit unions wishing to receive technical support, protect their ATMs with the advanced security features of a modern operating system and maintain PCI compliance will need to upgrade.

    According to Businessweek, 95 percent of the world's ATMs run on Windows XP. Those ATMs still running the old operating system will be more susceptible to malware attacks without Microsoft's regular security patches. Machines will need to be audited for compatibility before migrating to the newer software, which may also require the installation of more powerful processors and updated ports.

    In addition to being less vulnerable to hackers, the Windows 7 OS brings increased performance to ATM fleets. Windows 7 holds several advantages over its predecessor, including fewer maintenance issues and a modern user interface that will support swipe gestures and scrolling much like a tablet or smartphone screen.

    "Windows 7 allows a true, modern touch ability,” says Robert Johnston, a marketing director at ATM supplier NCR. “You can swipe, pinch, drag things around. That starts to meet customers’ expectations of what self-service should be as they move into the 21st century."
  56. The card information stolen during the Target and Neiman Marcus breaches has not led to a huge spike in fraud cases. Target Chief Financial Officer John Mulligan and Visa Chief Legal Officer Ellen Richey testified before the Senate Commerce Committee at a hearing on the recent data breaches. Due to early notification and quick efforts by issuers to identify and reissue compromised cards, the stolen information has led to very little actual fraud.

    The percentage of cards stolen during the breach that have been used for fraudulent purchases is less than the 2-5% rate that Visa normally sees after a breach, Richey told the committee. Criminals infiltrated Target's computer system around November 12 and stole the data from over 40 million cards, along with the records of 70 million more customers, making it the largest retail compromise in history.

    Visa supports the implementation of EMV credit and debit cards to replace traditional magstripe cards that are more vulnerable to theft. Target has announced that it will spend $100 million to upgrade its in-store credit cards and point-of-sale devices to support EMV by the end of 2014.

    "Since EMV chip cards are nearly impossible to counterfeit, they eliminate one of the most important incentives for criminals to steal payment data today — their ability to use the data to create counterfeit cards," Richey told the Senate committee. "As such, EMV chip makes payment data a less attractive target for criminals."
  57. The U.S. Court of Appeals for the District of Columbia Circuit has reversed a lower court decision on the interchange cap and network routing options of the Durbin Amendment. The court struck down the previous ruling that ordered the Federal Reserve to rewrite its rules on the fees that card issuers collect from debit card swipes, known as interchange fees.

    In July, District Judge Richard Leon ruled that the Federal Reserve had set the upper limit on interchange fees too high, at 21 cents per swipe. Leon sided with merchants who argued that higher interchange fees would result in higher product prices for consumers. The appellate court decision gives the Fed the go-ahead to set the cap at 21 cents, still less than half of previous fees, which they argue is a reasonable interpretation of its directive under the Durbin Amendment. The amendment is part of the 2010 Dodd-Frank Act, which imposed new regulations on the financial industry.

    "The district court granted summary judgment to the merchants, concluding that the rules violate the statute’s plain language,” Judge David Tatel wrote. "We disagree. Applying traditional tools of statutory interpretation, we hold that the Board’s rules generally rest on reasonable constructions of the statute."

    The decision comes as a relief to credit unions, which rely on interchange revenue from debit cards as a key part of their income. The court also struck down the lower court's ruling on network routing options. This rule required issuers to provide merchants the option of two networks to route debit card transactions, creating problems for EMV implementation. With the new ruling not requiring multiple networks to be available for debit cards, issuers will be able to continue rolling out EMV cards without having to invest in costly new technology infrastructure.
  58. MasterCard and Visa have formed a new cross-industry group intended to increase payment system security, the companies announced today. Initially, the group will focus on the adoption of EMV chip technology in the United States, as well other security-related topics.

    "One of the critical roles we play is to protect consumers and businesses against criminals and fraudsters," said Chris McWilton, president of North American markets at MasterCard. "Only through industry collaboration and cooperation will we address the real and immediate issue of security and maintain consumer confidence and trust. EMV will be the next step in these efforts, alongside enhanced security solutions for online and mobile channels."

    The diverse group will include FIs, acquirers, retailers, point-of-sale device manufacturers and industry trade groups. Its formation will ensure that all voices are able to contribute to the strategic direction of payment security, the card companies said.

    "The recent high-profile breaches have served as a catalyst for much needed collaboration between the retail and financial services industry on the issue of payment security," said Ryan McInerney, president of Visa Inc. "As we have long said, no one industry or technology can solve the issue of payment system fraud on its own."

    The group will take on issues that include:

    • advancing the migration to EMV in the United States;
    • promoting additional security solutions like tokenization and point to point encryption; and
    • developing an actionable roadmap for securing the future across all segments of the payments industry.

    MasterCard and Visa also expect that the new group will complement and engage with other efforts across the industry, including proprietary risk councils, EMV task forces and standard management bodies.

  59. More than a quarter of Americans live partially or completely without access to mainstream financial services and are often forced to rely on costly services like payday loans or check cashing to cover their everyday expenses. These households spent $89 billion in 2012 just on fees and interest – an average of almost 10 percent of their income.

    A new Postal Service Office of Inspector General white paper explores how the U.S. Postal Service could offer a suite of non-bank financial services to help the financially underserved gain more financial stability and stay connected to the emerging digital economy. The paper examines how the Postal Service could partner with banks and other organizations to develop such services, which could help banks connect with new customers. The Postal Service already provides non-bank financial services like money orders and international money transfers, and many American families could benefit if the Postal Service expanded its offerings.

    Around the world, financial services are the single biggest driver for new revenue for postal operators, and the conditions may be ripe for similar success for the U.S. Postal Service. If just 10 percent of the money underserved Americans currently spend on alternative financial services were instead spent on more affordable products from the Postal Service, it could generate some $8.9 billion in new revenue.

    Millions of Americans do not have a bank account, or use costly services like payday loans and check cashing exchanges just to make ends meet. The entire underserved population comprises more than a quarter of all U.S. households — some 68 million adults. They are an economically diverse mix of working and middle class families, poor and unemployed people hurt by the recent economic crisis, young people, immigrants, and others who are trying to make it paycheck to paycheck.

    Together, they represent a huge market. In 2012, they spent about $89 billion just on interest and fees for alternative financial services. The Postal Service is well positioned to provide non-bank financial services to those whose needs are not being met by the traditional financial sector. It could accomplish this largely by partnering with banks, who also could lend expertise as the Postal Service structures new offerings.

    The Office of Inspector General is not suggesting that the Postal Service become a bank or openly compete with banks. To the contrary, we are suggesting that the Postal Service could greatly complement banks’ offerings. The Postal Service could help financial institutions fill the gaps in their efforts to reach the underserved.


  60. Visa Inc., reminds consumers of important fraud protections for credit and debit cards and offers tips to protect cardholders after a data compromise.

    All U.S. consumer Visa credit and debit accounts are protected by Visa's zero liability policy. Which means account holders won't have to pay for fraudulent purchases. Consumers should continue to feel confident using Visa whether shopping in stores, online or with a mobile device. 

    Visa is reinforcing these important consumer protections through its social media channels and in full-page print advertisements appearing in the New York Times, the Wall Street Journal and USAToday.

    Here some practical steps consumers can take to help protect against fraud:

    1. Be on guard

    2. Shop with confidence

    3. Take precautions

    Although fraud rates remain near historic lows, today's data thieves are dangerous because they don't just steal money, they steal peace of mind," said Rosetta Jones, vice president, Visa Inc. "Visa offers many layers of protection to help keep individuals safe, like zero liability. However, engaged consumers also play a critical role in their security.  That's why Visa is increasing our efforts to educate consumers not only about what Visa offers, but also how consumers can help better protect themselves."

  61. U.S. appeals judges appeared on Friday to side with the Federal Reserve over a group of retailers who are disputing the level of fees set by the Fed on the use of debit cards.

    Businesses pay "swipe fees" to issuers when customers use debit cards to purchase goods or services to cover the costs of offering the cards. At the instruction of Congress, the Fed in 2011 limited those fees, and settled on 21 cents per transaction.

    A U.S. district court agreed with the merchants that the agency set the cap higher than lawmakers intended and threw out the Fed's fee limits last year. The Fed appealed the ruling.

    The three-member appeals panel on Friday pushed back against the retailers' argument that the Fed's fee cap could only incorporate certain costs to banks that were identified by Congress.

    "You're climbing a really steep hill...none of us buy that," Judge Harry Edwards said to Shannen Coffin, an attorney with Steptoe & Johnson who was representing the retailers. The appeals panel did appear open to discussing whether each of the particular costs included by the Fed was appropriate.

    At issue is a section of the 2010 Dodd-Frank law that directs the Fed to limit swipe fees, also known as interchange fees. Visa, MasterCard and other card networks set the levels, which averaged about 44 cents per transaction before Congress intervened.

    Lawmakers hoped lower fees would trickle down to benefit consumers in the form of lower prices. They wanted the limits to account for reasonable costs of debit cards, but to exclude any costs that were not tied to specific debit transactions.

    The Fed decided labor, software, network processing fees and allowances for fraud losses were relevant costs under the wording of Dodd-Frank and, in 2011, set the limit at 21 cents.

    The National Retail Federation, National Restaurant Association and other groups sued in November 2011, arguing that those costs went beyond what was allowed under Dodd-Frank.

    Judge Richard Leon of the U.S. District Court for the District of Columbia in July 2013 ordered the Fed to lower the fee cap. He said the Fed was "inappropriately inflating all debit card transaction fees by billions of dollars.

    He allowed the Fed's current limit to remain in place while the agency appealed his ruling. The sides appeared before the U.S. Court of Appeals for the District of Columbia Circuit on Friday.

    The lawsuit also involves a Fed rule related to networks that process debit card transactions. Retailers say the Fed did not do enough to promote competition among those networks, as required by Dodd-Frank.

    But most of the hour-long session on Friday focused on the swipe fees. The appeals panel asked Katherine Wheatley, the Fed's associate general counsel, how the agency determined which costs it could consider. For instance, Judge David Tatel pointed out, the Fed did not include corporate overhead.

    "Help me understand how the board distinguished between those it included and those it didn't," Tatel said.

    Wheatley said the agency included only costs it could tie directly to debit card transactions.

  62. Visa Inc. today launched "Everywhere you want to be," a multi-stakeholder communications platform that reflects our ambition to deliver universal access to Visa's secure, reliable and convenient digital payments.

    For decades, Visa, the global digital payments network, has been driven by a set of ideals anchored in our vision of being the "best way to pay and be paid." This has expanded in recent years to include "for everyone, everywhere." By evolving our famous tagline - "It's everywhere you want to be" - the company is recommitting to these ideals and vision for consumers, merchants, governments, financial institutions and employees with a unified message tailored to each audience.

    "We recognized that, for the first time in Visa's 55-year history 'everywhere' is now within reach of 'everyone,'" said Antonio Lucio, Visa's chief brand officer. "New innovations, like mobile and e-commerce, are extending the value and reach of secure Visa payments to new people and places around the world. At this important inflection point in Visa's history, connecting to our heritage and vision was a powerful and irresistible idea."

    In the 21(st) century, "everywhere" transcends card usage at physical locations. It's about realizing potential and achieving dreams. "Everywhere" now is relevant for a farmer in Rwanda paying school fees on his mobile phone, a jewelry designer in California selling to a global online customer base or a government official in Brazil rebuilding a village using a Visa prepaid card.

    "We will express our vision to each of our audiences in ways that are directly meaningful to them," Lucio said. "This platform speaks to our dedication to change how we engage with all our partners, and helps underscore the defining characteristics of our business: convenience, reliability, security and access, that together deliver Visa's true value."

    New Visual Identity, Advertising

    With a new tagline, as well as a refreshed brand logo, Visa is introducing a new visual identity for one of the most recognized and powerful brands in the world.

    The first external expression of the new platform debuts today with a new Olympic-themed television commercial airing in the United States, and then expanding to reach key audiences through variety of other traditional and digital channels in the coming months.

    Visa's first new spot under the "Everywhere you want to be" tagline is entitled "Flying," and features U.S. Olympic women's ski jumping hopeful and Team Visa athlete, Sarah Hendrickson. The new brand platform will be brought to life in Visa's Olympic-themed creative, and via social and digital extensions, by spotlighting athletes' stories of accomplishment to help inspire viewers to imagine their own "everywhere." Visa has been a proud Worldwide Partner of the Olympic Games for more than 27 years.

    "The new platform is compelling because it encompasses strengths of Visa, past, present and future," continued Lucio. "'Everywhere' includes the tens of millions of merchant locations that accept Visa today. It's also the new ways and places people want to pay, including mobile and e-commerce. 'Everywhere' is also a celebration of everyone's aspirations, from an athlete achieving her Olympic dream to a single mother accessing her first bank account on a Visa card."

  63. When news broke about the theft of Target customers’ 40 million credit and debit card accounts over the 19-day period from Thanksgiving to Dec. 15, issuers of those cards quickly notified their cardholders.  Communication is an important tool in fighting fraud and Gesa Credit Union is armed with one of the best tools for detecting and stopping fraud, Real-Time Mobile Alerts from Visa.

    Real-Time Mobile Alerts allow Visa cardholders to set thresholds that will trigger an immediate transaction alert via text message, email or push notification to a mobile device.  Once an alert is received, a member can verify the transaction details, and if the transaction appears to be irregular, they can immediately contact the credit union to help stop further transactions on the card.

    In an effort to empower members to take a more active role in protecting their accounts, Gesa quickly got the word out to its members about enrolling in the alert service and registering their Visa debit and credit cards. Research shows that cardholders enrolled in card-based alerts have a lower fraud-run (the time between the first and last fraud), have fewer fraud incidents, and lower fraud rates.

    According to a study of Visa enrolled accounts, the fraud-run for cards with alerts is as much as 2 days less.  Real-Time Alerts can also reduce the number of multiple incidents as much as 20 percent.  Most convincing, the average dollar amount lost to fraud per account was more than $200 less for cardholders with Real-Time Alerts.

    “We see Real-Time Mobile Alerts from Visa as one of an arsenal of tools we use for detecting and stopping fraud early,” states Jeff Gegen, Gesa’s Vice President of Product and Risk Management.  “As criminals become more sophisticated stealing card and account information, we need to be especially vigilant fighting fraud and enlisting our members to help us.”
  64. By now, every credit card issuer, and most consumers, have heard about the massive privacy breach at Target stores in the U.S., affecting over 40 million consumers who shopped there using credit or debit cards between November 27 and December 15.  This is an overwhelming situation not to only consumers, but also to card issuers wanting to provide top-notch service to cardholders during a busy holiday shopping season.

    While I recently warned you of the dangers of “data breach fatigue,” it’s also important to be aware that when a breach occurs, the gossip mill swirls, and accurate information about the impact, risk and what to do can be hard to determine. This affects consumers, financial institutions and even Target’s shareholders, who are trying to understand how, and if, this high-profile breach will affect the company’s Q4 results and long-term prospects.

    Why did it take so long to discover the Target breach? Believe it or not, every mass compromise that the industry has seen this year develops over the course of several weeks. When one does occur, it’s important to listen to everything you hear, but then determine what seems logical and trustworthy. Unless the information you’re getting comes from a credible source, you might fall victim to gossip and take unnecessary measures that waste your time and resources.

    So – what are the real risks? And what should card issuers do?

    • Protect your high net-worth accounts aggressively. It’s not too late to consider lowering daily withdrawal limits during this period, provided the customer impact is minor.
    • Talk to your customers about card fraud and how you plan to protect their accounts. This is an excellent time to re-educate everyone on how a text “smishing” scam victimizes even the savviest consumer. My recent blog post “How the Grinch Stole my Credit Card Number” offers other smart anti-fraud tips for consumers.
    • Encourage your customers to report suspicious account activity immediately, and remind them that this is the perfect time to update contact information.
    • Promote electronic services that help your cardholder stay informed on their accounts. If you offer account alerts via online banking and mobile channels, I highly suggest your customer service push these offerings with every customer contact.
    • Instant-issue card replacements might be a great suggestion for consumers who need to replace their cards immediately. We often forget to make that suggestion when consumers call into our service centers and want immediate results.
    • Make sure that your corporate communication policy is clear so that consumers can quickly identify official communication coming from you as opposed to a fraudster.

    FICO has published two informative white papers that will help provide you with more information and guidance. On our Insights white paper page, you can download copied of Insights #72 “Best Practices for Preventing Data Breaches,” as well as Insights #60 “Managing Card Compromises from the Issuers Perspective.”

    Stay safe this holiday season and work smarter until we meet up again in the New Year!

    FICO Blog Post  by John Buzzard

  65. Using cash is costing Americans $200 billion per year. This amounts to an average of $1,739 per household, according to a new study by the Fletcher School at Tufts University. The report, "The Cost of Cash in the United States," examines the financial, time and productivity costs associated with cash use.

    A recent MasterCard report found that only 20 percent of all consumer spending in the U.S. is done with cash. Even so, the Tufts' study concluded there are a number of reasons consumers continue to use paper money. Many consumers (some 17 million) fall into the category of "unbanked."

    These individuals have little alternative to using cash. Other consumers, even those who are banked find the privacy of cash transactions appealing. Others take comfort in the nearly universal acceptance of cash.

    Then there is the set of people who believe cash is a less expensive option than credit cards or even debit cards that can get them into overdraft trouble. For these individuals, cash is a budgeting tool that helps keep their spending in check.

    "Obviously, cash is never going to go away — it's an important part of the economy," said Bhaskar Chakravorti, executive director of the Institute for Business at Tufts. "But we need to recognize the costs it's imposing, both real costs and opportunity costs."

    Some of those real and opportunity costs break down like this:

    • theft costs businesses $40 billion and individuals $500 million annually;
    • out-of-network and foreign ATM fees amount to $8 billion; and
    • the average American spends 28 minutes per month traveling to and from getting cash.

    Not surprisingly, the cost of cash is higher for lower income and unbanked Americans. In fact, the unbanked pay on average $3.66 more per month to transact with cash, than banked consumers. The study also found that less wealthy consumers carry larger amounts in cash and pay more fees for cash transactions than more affluent Americans. Also, the unbanked use greater amounts of cash each month than banked consumers.

    Of course, the cost of accessing cash depends on the source. Those receiving income by prepaid or payroll card paid more than four times as much as the rest of the surveyed group. The lowest fees for cash transactions come from electronic funds transfer. The study also found that check-cashing services cost consumers $200 million in annual fees.

    The significant cost of cash usage underscores the need for financial institutions to truly understand their customer bases. How do they prefer to transact and how can FIs deliver the highest-value products and services to address those preferences?

  66. A new survey from Tripwire, Inc., a provider of risk-based security and compliance management solutions, which looked at the attitudes of consumers towards mobile shopping, has revealed that 63% of UK consumers will use their mobile for Christmas shopping this year.

    The survey of 1000 employed consumers also revealed a quarter of respondents are willing to spend over GBP100 on mobile retailing, and 3% are willing to spend over GBP1000.

    Respondents also said that mobile shopping is likely to take place while travelling (45%), while at work (41%), when socialising with friends (22%) or while at a party (11%). Almost a third (30%) of consumers admits to being more impulsive when purchasing goods via their mobile, a trend retailers may be gearing up to exploit.

    The survey also looked at the differences in attitudes towards mobile shopping between men and women and revealed that 68% of Christmas mobile shoppers are women, compared with 55% of men.

    However, more men believe the convenience of mobile shopping overrides security concerns (40%), compared with woman (36%).

  67. It’s personal, it’s practical, and it comes with a price tag that matches anyone’s budget – it’s a gift card, and this holiday season 8 in 10 (80.6%) shoppers will look to add these small gift items to their baskets. According to NRF’s Gift Card Spending Survey conducted by Prosper Insights & Analytics, holiday shoppers will spend an average of $163.16 on gift cards, up 4.0 percent over the $156.86 they spent last year and the highest amount in the survey’s 11-year history. Total spending on gift cards will reach $29.8 billion.*

    Shoppers today recognize gift cards as the perfect fool-proof option for friends and family,” said NRF President and CEO Matthew Shay. “And traditional gift cards aren’t the only winners this holiday season, as more and more Americans are tied to their mobile devices, we expect digital gift cards to be especially popular with consumers.”  

    According to NRF’s first 2013 holiday survey, released in October, six in ten (59.4%) of those polled said they’d like to receive gift cards this year, the seventh year in a row gift cards have topped holiday celebrants’ wish lists.

    Consumers will also spend more on the cards they buy: those planning to buy gift cards will spend an average $45.16 per card, up from $43.75 last year and another survey high. Shoppers older than 65 years old will spend the most on gift cards at an average of $175.96, followed by 35-44 year olds who will spend $171.15 on average. Additionally, men will spend nearly $20 more than women on gift cards this holiday season ($171.35 vs. $155.42 respectively).

    Department stores (40.3%) and restaurants (34.2%) will be the top choices for those giving gift cards, but nearly one in five (19.0%) will give the gift of a hot cup of coffee – up from 13.0 percent in 2009. Additionally, 20.1 percent will purchase gift cards from an electronic store and 12.7 percent will head to an online merchant.

    With gas prices hovering around $3.19, some may see relief at the pump this holiday season from their friends or family members. According to the survey, 12.0 percent of shoppers will buy gift cards from gas stations, up from 11.0 percent last year and the highest amount seen in five years.

    “Gift givers know that many of their loved ones may have been holding back on spending on themselves all year long, and would love nothing more than to receive a gift card that allows them to purchase whatever they want,” said Prosper’s Consumer Insights Director Pam Goodfellow. “Shoppers hoping to add an extra touch to their gift cards will have plenty of opportunities to add audio, video or image enhancements to select retailers’ gift cards, making even the smallest gift still very personal.”

    When it comes to why people do or don’t buy gift cards, most agree (43.1%) that letting the recipient choose their own gift is what influences their purchases. However, some still feel gift cards are too impersonal (25.3%).

    Visit the Retail Insight Center for all NRF holiday survey results, additional consumer research, government data, and economic analysis. After creating a free account, all historical and demographic data comes available through customizable tables and charts that can easily be exported to Excel.

    About the Survey

    The NRF 2013 holiday spending survey was designed to gauge consumer behavior and shopping trends related to the winter holidays. The survey polled 6,201 consumers and was conducted for NRF by Prosper Insights & Analytics from November 1-7, 2013. The consumer poll has a margin of error of plus or minus 1.3 percentage points.

    Prosper Insights and Analytics delivers executives timely, consumer-centric insights from multiple sources. As a comprehensive resource of information, Prosper represents the voice of the consumer and provides knowledge to marketers regarding consumer views on the economy, personal finance, retail, lifestyle, media and domestic and world issues.

    As the world’s largest retail trade association and the voice of retail worldwide, NRF represents retailers of all types and sizes, including chain restaurants and industry partners, from the United States and more than 45 countries abroad. Retailers operate more than 3.6 million U.S. establishments that support one in four U.S. jobs – 42 million working Americans. Contributing $2.5 trillion to annual GDP, retail is a daily barometer for the nation’s economy. NRF’s This is Retail campaign highlights the industry’s opportunities for life-long careers, how retailers strengthen communities, and the critical role that retail plays in driving innovation.

    *  Total spending is extrapolation of US population 18+

    Download complete survey results
  68. U.S. companies cling to checks as their main method of business-to-business (B2B) payment, according to a report released today by the Association for Financial Professionals (AFP). The report demonstrates overall use of paper checks is on the decline, while corporate interest in mobile payments continues to grow.

    The 2013 AFP Electronic Payments Survey collected responses from more than 450 financial professionals in September 2013. Survey findings highlight trends, identify best practices and reveal solutions for advancing automation of B2B payments. 

    Wire payments and ACH payments are being adopted at a slower rate than in the recent past, as paper checks now can be converted directly into images or ACH debits. Meanwhile, the use of mobile payments at the corporate level is becoming increasingly popular, providing U.S. businesses with an expanding range of payment choices as they migrate from paper to electronic methods.

    "The typical organization makes half its B2B payments by check, down from 81 percent in 2004," said Jim Kaitz, AFP's president and CEO.  "AFP strongly supports electronic payments and we're pleased to see the payment innovations now available to corporate treasurers."

    Respondents identified a number of reasons why companies are often reluctant to adopt electronic payments methods:

    • 82 percent experience difficulty convincing customers to pay electronically
    • 74 percent have difficulty convincing suppliers to accept e-payments
    • 71 percent found a shortage of IT resources for implementation
    • 70 percent have a lack of standard format for remittance information with 66 percent acknowledging a lack of integration between electronic payment and account systems

    "This year's survey affirms the multitude of barriers that practitioners face when attempting to adopt new electronic payment trends," said Diane Quinn, Managing Director and Global Large Corporate Sales Executive, J.P. Morgan Treasury Services. "Practitioners who overcome these challenges and break through the status quo of limited electronic payment adoption are well positioned to achieve renewed growth, improved fraud control and efficiency gains."

    Additional findings highlight trends related to cross currency payments and remittance preferences:

    • When making cross-currency payments, contractual requirements and the size/type of transaction are key considerations when a company selects a payment method
    • Email is the delivery method most frequently used to deliver and receive remittance information tied to organizations' ACH payments
    • 78 percent of organizations have integrated their ACH systems with accounting while 56 percent have done so for card payments
    • A number of companies are evaluating use of mobile payment tools in the next three years in the following areas:
      • Reviewing payments sent or received (cited by 37 percent of respondents)
      • Reviewing balance and other payment information (37 percent)
      • Approving payments (36 percent)

    Download complete findings via

    AFP conducts a comprehensive electronic payments survey every three years.  In September 2013, AFP sent a 35-question survey to its corporate practitioner members with job titles of cash manager, director, analyst and assistant treasurer. The survey generated a total of 484 responses, which are the basis of the 2013 report. 

    Headquartered outside Washington, D.C., the Association for Financial Professionals (AFP) is the professional society that represents finance executives globally. AFP established and administers the Certified Treasury Professional and Certified Corporate FP&A Professional credentials, which set standards of excellence in finance. The quarterly AFP Corporate Cash Indicators serve as a bellwether of economic growth. The AFP Annual Conference is the largest networking event for corporate finance professionals in the world.

    AFP, Association for Financial Professionals, Certified Treasury Professional, and Certified Corporate Financial Planning & Analysis Professional are registered trademarks of the Association for Financial Professionals.

  69. Visa's annual Tooth Fairy survey shows that American children are receiving an average of $3.70 per lost tooth this year, which is a dramatic increase of 23% over the $3.00 per tooth left in 2012 and 42% over the $2.60 left in 2011. To help parents navigate the sensitive topic of the appropriate amount their children should receive for lost teeth, Visa has created a free Tooth Fairy app on iTunes, Facebook app and online calculator.

    Tooth Fairy Calculator:

    Tooth Fairy App:

    Tooth Fairy Online Calculator:

    Tooth Fairy InfoGraphic:

  70. You could be lying on the pristine beaches of Phuket this weekend, or trekking along the Great Wall of China the next. With budget flights on the rise and an ever abundant array of attractive travel packages on offer, getting away to an exotic locale or a dazzling metropolis has never been easier.

    It’s no wonder then that despite an uncertain economic climate, international tourist arrivals crossed the 1 billion mark in 2012, and is expected to grow another three to four percent.  Moving in tandem with the rise in travel is also the growth in tourism receipts. In 2012 alone, global travel spending grew a healthy seven percent to reach €875 billion, or US$1.15 trillion. 

    As travel becomes easier and more accessible, so have the methods of payment. Long gone are the days when cash or traveler’s checks were the only accepted forms of currency. Today, Visa cards are accepted at tens of millions of merchants around the world and provide 24-hour cash access at over 2 million ATMs in more than 200 countries.  Not only are payment cards more convenient than cash, they are safer too. Cash can be hard to keep track of and easy to misplace, especially when you’re changing planes or hotels. However, cards can be replaced if they get lost or stolen.

    Nevertheless, as you plan your next vacation, keep in mind that no matter where you go, criminals are on the lookout for new methods to commit fraud at the expense of your wallet and peace of mind. So, whether you’re traveling on business or taking a well-deserved vacation, refer to our infographic for some practical suggestions on how you can make travel more secure, hassle free and enjoyable:

    Click image to view full size infographic

  71. Millennials big fans of prepaid cards and payday loans.  And they are willing to pay for the convenience.

    That's what a new survey suggests when it comes to the generation's use of alternative financial products that often come with high fees.

    The survey of more than 1,000 people ages 18 to 34 by alternative financial products company Think Finance found that while 92% currently use a bank, nearly half, or 45%, say they have also used outside services including prepaid cards, check cashing, pawn shops and payday loans.

    For a generation in which many are finding themselves cash-strapped, in debt from student loans and underemployed, convenience appears to trump getting stuck with extra charges when it comes to quick access to cash and credit.

    "It's flexibility and controllability that's really important for Millennials," says Ken Rees, president and CEO of Think Finance. "Banks don't have great products for people who need short-term credit. They're not really set up for that."

    And he points out that more than 80% of survey respondents said emergency credit options are at least somewhat important to them.

    These are options that have been historically known for charging fees -- check cashing can cost up to 3% of the amount of the check, and more depending on the company and how much you're cashing. Most prepaid debit cards come with at least a monthly fee, and more fees for checking the account balance, ATM withdrawal or activation among others, found a survey of prepaid cards by in April.

    The Think Finance survey revealed that Millennials don't seem to mind. Nearly a quarter cited fewer fees and 13% cited more predictable fees as reasons for using alternative products, though convenience and better hours than banks won out over both of those as the top reasons.

    "With non-bank products...the fees are very, very easy to understand," Rees says. "The reputations that banks have is that it's a gotcha."

    These products may be winning because of marketing tactics, says Mitch Weiss, a professor in personal finance at the University of Hartford in Hartford, Conn., and a contributor to consumer site

    "The way they approach the business is, we're not charging you interest we just charge you a fee," he says. "When you think fee, your reaction is it's a one-time thing."

    Many companies that offer alternative products have developed an online savvy and cool factor Millennials appreciate, Weiss says.

    "The banking industry to a very large extent can't get out of its own way," he says. "These smaller companies that have popped up all over the place, they're cleaning up because they can move really quickly...and they just look younger and more with it than the banks do."

    Banks are trying to catch up. The Bankrate survey points out that five major banks started offering prepaid cards in the past year -- Wells Fargo, PNC, Regions Bank, JP Morgan Chase and U.S. Bank -- and the cards are starting to become more mainstream as free checking accounts become more scarce. The Bankrate survey found that just 39% of banks offer free checking, down from 76% in 2009.

    Austin Cook, 19, wanted to avoid racking up fees for using his bank debit card on a trip abroad last summer so bought a prepaid card at Target to use instead.

    "I just thought this was more convenient and very reliable," says Cook, of Lancaster, Pa. "I had gone and talked with my bank. And honestly it was confusing, and you could sign up for different policies. And I didn't want to bother with any of that."

  72. The Consumer Financial Protection Bureau is criticizing the U.S. banking industry for practices that it says range from confusing rules on overdraft fees to increasing the likelihood of multiple fees being charged to the same customer.

    The agency, created by the Dodd-Frank financial-overhaul law in 2010 to be a powerful voice for consumers, said it has no immediate plans to issue or recommend new overdraft-fee rules.

    But the report is the strongest signal yet that the CFPB is burrowing into the controversial fees, which generated about $32 billion in revenue in the U.S. last year, according to research firm Moebs Services Inc.

    Since its creation, the CFPB has examined areas from mortgages to student loans to credit reports. The agency's efforts come as banks and other financial institutions are struggling to regain profit momentum five years after the financial crisis erupted.

    Fees are a huge revenue source for banks but have exposed them to ire from regulators and consumers.

    In 2011, Bank of America Corp., BAC -0.86% the second-largest U.S. bank by assets, quickly abandoned plans for a monthly debit-card charge of $5 after it was denounced by lawmakers and mocked on "The Tonight Show."

    Richard Hunt, president and chief executive of the Consumer Bankers Association, a trade group of big and regional banks, said consumers "have the right to choose the products and features which best provide for their family's daily needs."

    New rules by the CFPB could push some consumers to use "unregulated industries with riskier and costlier alternatives," such as payday lenders, check cashers or pawn shops, he said.

    imageThe last regulatory crackdown on overdraft fees came in 2010. The Federal Reserve issued new rules that require banks to warn customers that a transaction would result in an overdraft fee. The customer must approve the transaction.

    The CFPB's report zeroes in on big banks, which usually charge higher overdraft fees than smaller banks.

    At banks with more than $25 billion in assets, the median overdraft fee was $35 at the end of 2012, according to Moebs. Banks with less than $100 million in assets charged a median price of $25.

    The CFPB has the power to conduct regular examinations of the operations of banks with more than $10 billion in assets and nonbank firms such as payday lenders.

    While bankers praise the agency for being more responsive than they expected in several areas such as mortgage lending rules, they still have complaints about the new regulator. For example, the agency has built a detailed database of consumer complaints and solicits them on its website.

    Deeper scrutiny of overdraft fees could wind up being more costly for small banks than big ones. The reason: Bad publicity and the 2010 regulatory squeeze caused many big banks to rely less on the fees. Customers who typically rack up lots of overdraft charges are being encouraged to take their business elsewhere, partly because banks prefer customers with whom they can have multiple financial ties.

    Since 2007, nearly 24 million checking-account customers have bolted from big banks to small banks and credit unions, said Mike Moebs, chief executive of Moebs.

    "They've lost checking accounts and they've lost them on purpose," he said.

    Many small banks are embracing overdraft fees as a source of revenue growth, while aiming to keep the charges low enough to avoid a revolt from customers or regulators.

    In Golva, N.D., population 61, First State Bank of Golva charges $8 if a customer overdraws an account.

    Chief Executive Dee Ann Baertsch said customers have told her the fee is so low that they aren't bothered by the possibility of tipping their account balance into the red.

    Overdraft fees have become a "reasonable" source of revenue, and First State is considering raising the fee, she said. "I expect if we raise it, it will only be a dollar."

    The Jack Daniel Employees' Credit Union charges $10 when a customer overdraws on an account. Pam Case, manager of the Lynchburg, Tenn., credit union, said keeping the fee low helps lure customers. "They like that we don't have a lot of fees," she said.

    In a sign of the shift, 12% of banks now charge less than $20 per overdraft, up from 7.4% in 2008, according to Moebs. Last year's total of $32 billion in overdraft fee revenue was up 1.3% from 2011. Overdraft fees dipped slightly in the first quarter.

    Bank of America charges $35 for each overdrawn item, according to its website. Wells Fargo Co.'s WFC -0.61% website says the bank's overdraft fees vary by state but are up to $35 per item.

    Even though small banks aren't directly subject to CFPB oversight, some have been pressing the regulator to refrain from issuing new overdraft-fee rules.

    "Overdraft services are important to community banks because they are important to their customers," said Viveca Ware, executive vice president for regulatory policy for the Independent Community Bankers of America, a trade group.

    Without overdraft coverage, consumers would have to pay other fees for returned checks, late fees and blemishes on their credit report, some bankers said. Consumers also get ample disclosure of all fees involved and understand them.

    In a conference call with reporters, the CFPB's director, Richard Cordray, said the agency is not out to ban the product entirely, but cited numerous concerns with industry practices. "What is marketed as overdraft protection can, in some instances, put consumers at greater risk of harm," Mr. Cordray said. "Consumers need to be able to control their costs and expenses, and they deserve clarity on those issues."

    In its report, the CFPB complains that heavy users of overdraft coverage pay about $900 a year more than consumers who don't incur overdraft fees. At many banks, overdraft policies are confusing and difficult for consumers to navigate.

    The agency also is expected to criticize banks for deducting larger transactions before smaller ones.

    In May, a federal-court judge in San Francisco ordered Wells Fargo to pay customers $203 million for engaging in the practice.

    A spokeswoman for Wells Fargo, based in San Francisco and the fourth-largest U.S. bank, said it was "disappointed" by the ruling and is appealing.

  73. Visa Looks To Usher in a New Era of Understanding with Merchants And Government.  Working closely with merchants, card issuers, and merchant acquirers to deliver more value through its brand at the point of sale, as opposed to enhancing revenues through price increases, is the road map Visa Inc. laid out Thursday at its Investor Day conference.

    “We don’t feel we have to raise prices to get the revenue growth we think we should, we want to compete on our capabilities and build the business in a way so that price is not the lever we  have to pull for growth,” Visa chief executive Charles Scharf told analysts at the tri-annual event.

    A key component of Visa’s growth strategy is mending its tattered relations with merchants and government. Merchants have long complained about high card-acceptance costs, and as the largest payment-card network, Visa frequently is the main target of their ire. The U.S. Department of Justice is investigating Visa’s debit card pricing, and the Federal Trade Commission reportedly is looking into the card networks’ rules.

    Scharf extended an olive branch to Visa’s opponents by suggesting that one of the reasons Visa and the card industry have come under such scrutiny by federal regulators is that both failed to engage and educate merchants, legislators, and regulators early on about the value of debit and credit card acceptance at the point of sale and the value the Visa brand brings to the table.

    “The underlying problem ... is that merchants across this country talk to politicians about their unhappiness,” Scharf said. “All this talk of working together to [provide products and services that are] adaptable, flexible, and bring added value is targeted at getting at the underlying issue, not trying to address it after the fact. If we try to address the underlying issues after the fact, we will always lose.”

    Scharf--a former top JPMorgan Chase & Co. executive who made repairing merchant relations one of his top priorities since taking over the Visa CEO job a few months ago from Joseph Saunders, who retired--emphasized that he felt it is not too late for Visa to change its dialog with merchants. As a caveat he added, “we are not naïve; it will take time to change it.”

    New products that help merchants facilitate sales to consumers and add value to both Visa’s brand and that of the card issuer and merchant acquirer are at the top of Visa’s to-do list. One product Visa is betting on is its digital wallet, which lets registered cardholders pay for online purchases by clicking on the option on the merchant's checkout page.

    Visa’s immediate plans for are to focus on making the wallet a premier product in the United States, which is the largest e-commerce market, then rolling it out to Australia and Canada, followed by rollouts in Asia and Latin America. “The U.S. is an e-commerce market we must win,” said Sam Shrauger, global head of commercialization.

    So far, 86 card issues in the U.S. representing 49% of Visa’s U.S. card accounts have committed to Issuers include Bank of America, U.S. Bank, and PNC. On the acceptance side, 240 merchants representing $25 billion in e-commerce volume have signed up for, 35 of which are live.

    Also coming out are products that leverage Visa’s transaction data to reduce the risk of fraud in online transactions and enable issuers and merchants to deliver personalized marketing messages to consumers via a mobile device. One is Visa Customer Authentication, which launched in late 2012. The service allows card issuers to capture identifying information from the personal computer or mobile device used by a Visa cardholder to cross-match that data with records in the Visa network indicating whether the device and the same account number have been used previously to make an online purchase. “When the match is positive, the chances of the transaction being fraudulent are quite low,” said Silvio Tavares, Visa’s head of global information products. A top-five card issuer in the U.S. is using the service, he added.

    Plans are also in the works to expand issuer adoption of the Visa Offers platform, which allows issuers to track cardholder behavior and historical spending patterns on their Visa cards and send customized offers in real time through mobile devices to the cardholder based on their proximity to a merchant. Visa also is developing applications that show merchants what portion of their digital marketing is generating in-store sales by Visa cardholders, according to Tavares.

    When asked about potential fallout from its recent deal with JPMorgan Chase to license a version of Visa’s network so that Chase’s acquiring operation can directly process transactions from holders of Chase-issued Visa cards when they make purchases at Chase merchants via the new Chase Merchant Services entity, Scharf said that if nothing else it has gotten acquirers and issuers thinking about new ways to work more closely with merchants. “This does not diminish the Visa brand,” he said. “When we say we are working with merchants, this does not mean we are cutting acquirers out.”

  74. The average ATM surcharge at banks and credit unions has gone up about 20 percent since 2007, not counting inflation, the U.S. Government Accountability Office said in a recent report.

    Surcharges in 2012 averaged $2.16 at banks and $1.99 at credit unions according to the report, "Automated Teller Machines." 

    However, most people are avoiding paying to get access to their cash. The report showed that only about 14 percent of cash withdrawals at financial institutions incurred a surcharge.

    "Consumers have many ways to obtain cash without incurring fees, such as using ATMs within their financial institution's network," the GAO said. In addition, some financial institutions participate in surcharge-free networks.

    The report, drawn from surveys of banks and market research data, provides a top-down view of how people are using the estimated 420,000 ATMs scattered around banks, bars, gas stations and convenience stores in the U.S.  In 2009, consumers made 6 billion ATM withdrawals for about $647 billion.

    Slightly more than half of all ATMs are operated by independent owners rather than financial institutions, the GAO report said. A nonrepresentative sample of 100 independent machines found an average surcharge of $2.24 in 2012, with a range of $1.50 to $3. However, independent machines outside the small sample may have a wider range of fees, the GAO said. Surcharges at financial institutions ranged from 45 cents to $5.

    The study found less of a change in the "foreign" fee that financial institutions charge customers for using an ATM outside the network.  The estimated average foreign fee at banks is up seven cents to $1.52 since 2007, in inflation-adjusted terms, GAO said. At credit unions, the foreign fee was up 2 cents to $1.29.

    The report shed little light on the use of credit cards to get cash at ATMs. The 11 banks in the survey that distinguished between credit cards and other cards said that cash advances ranged from less than 1 percent of transactions to 5 percent.

  75. A new financial literacy survey reveals a "disturbing" lack of knowledge pertaining to personal finance among U.S. adults.

    The 2012 Consumer Financial Literacy Survey, released in April, Financial Literacy Month, found that despite the recession, Americans still lack basic money skills. More than half of the 1,007 adults polled for the survey admit to not even having a household budget.

    Also revealed in the findings:

    • 33 percent, or more than 77 million Americans, do not pay all of their bills on time.
    • 39 percent of Americans carry credit card debt from month to month.
    • Only 59 percent of adults say they have savings -- a 5 percent decrease from last year.
    • More than one in four adults say they are now spending more than last year.
    • 42 percent of respondents give themselves ratings of C, D or F on their personal finance knowledge.

    "This year's survey unveiled some disturbing trends, showing that a significant number of Americans are saving less, spending more and carrying credit card debt over from month-to-month, suggesting that the painful financial lessons of the past are quickly being forgotten," said Susan C. Keating, president and CEO of the National Foundation for Credit Counseling, in a statement released on the NFCC blog. "Coupled with the two in five adults who gave themselves a C, D or F on their knowledge of personal finance, the need for an increase in financial education becomes not only clear, but urgent."

    The survey found that 55 percent of Americans now think it's acceptable to default on a mortgage if they can no longer afford the monthly payment, compared to 49 percent in 2011 and 46 percent in 2010.

    This is the sixth year the NFCC has fielded a study to measure American adults' financial literacy. It did have a few bright spots. For instance, we're getting smarter about the need to be aware of credit scores. The survey shows that the percentage of adults who have ordered or received their credit score in the past 12 months has increased since 2011, and is now at 44 percent. That's an improvement, but still leaves a majority not knowing their credit score or credit report. At least we're aware of our ignorance. According to the survey, the main source of information about personal finance for Americans is their parents. According to the survey, though, still 4 out of 5 adults -- that's 80 percent -- say they could benefit from additional advice from a professional.

  76. (From the Wall Street Journal 03-11-2013) The rising controversy over China’s alleged cyber espionage against U.S. companies has dominated the recent discussion over network security. While politically motivated intrusions are doubtless a threat to many corporations around the world, those concerns may be obscuring a much bigger and more immediate threat to many businesses and their customers—and that is the mounting sophistication of criminal gangs that operate online.

    “We are confronting a criminal population that continues to improve its sophistication and its attack vectors, so we can’t stand still,” says  Ellen Richey, chief enterprise risk officer at Visa Inc. “You see the criminal capability evolving on the technology side,” she said. “They are getting into the systems of [Visa] stakeholders and other companies that process payments,  and they are able to encrypt their own movements on networks, sometimes for months, and exfiltrate the data.”

    No company—and certainly not Visa, the credit and debit card processing giant—can afford to “stand still,” Richey says. The company risks losing trust, and standing, with its customers – something it cannot afford to let happen in an increasingly competitive payments market. To confront the risk, Visa introduced a new analytic engine in August 2011, which she says has changed the way the company combats fraud. The analytic platform harnesses the power of Big Data—a term that refers to larger and more varied set of data, powerful algorithms, and underlying hardware and software that runs calculations faster and more cheaply than traditional databases or analytic engines.  The company estimates that the model has identified $2 billion in potential annual incremental fraud opportunities, and given it the chance to address those vulnerabilities before that money was lost.

    Visa’s fraud detection efforts moved into the digital world 20 years ago, when the authorization system went online. Fraud has declined by two thirds, during that period of time. In 2005, it added advanced authorization techniques, in which a customer may be asked to provide more than a simple password. However, 6 cents out of every $100 in transactions are believed to be fraudulent.

    Earlier analytic models studied as little as 2% of transaction data. Now the company said it endeavors to analyze all of its data. In the past, the company based its security assumptions on average fraud rates for merchant categories, like grocery stores. Now it said it can analyze the actual market, right down to individual merchant terminals. That allows it to drill down on hundreds of attributes, such as average authorization volumes, average ticket sizes and frequency of purchases that turn out to be fraudulent, the company said.

    Visa said it can identify high-risk purchases such as big screen TVs and prepaid cards, that can easily be converted to cash. It determined, for example, that in certain merchant categories, for transactions of $200 or more, prepaid cards were included in 85% of cases that turned out to be fraudulent. The company is also on alert for other warning signs such as orders in which the billing and shipping address are different.

    Visa said that while this information is connected to a specific card number, “it’s not personally identifiable in the Visa system.”

    Visa said that the larger data set helps it identify fraud more quickly. While one transaction at a merchant might not look suspicious, a data set that includes hundreds or thousands of transactions makes it easier to spot a problem, such as a tampered PIN pad.

    The new analytic engine can study as many as 500 aspects of a transaction at once. That’s a sharp improvement from 2005, when the company’s previous analytic engine could study only 40 aspects at once. And instead of using just one analytic model, as it did in 2005, Visa now operates 16 models, covering different segments of its market, such as geographic regions.

    The models can be updated much more quickly, too. An attribute can be added to a model in as little as an hour. Back in 2005, it would take two or three days to make that happen.

    To accommodate larger data sets, Visa has updated its database technology. In 2010, it began using Hadoop, a software framework that is based on open-source technology from Google Inc. It is designed to quickly process huge amounts of information from disparate sets, and to work with clusters of lower-cost machines, instead of expensive servers.

    “From the strategic point of view, we are achieving an amazing improvement, year over year, in our ability to detect fraud,” says Richey. “It’s not just our ability to analyze our transactions, but our ability to add new kinds of data, such as geo-location, to that analysis. With every new type of data, we increase the accuracy of our models. And from a strategic point of view we can think about taking and additional step change of fraud out of our system.”

    In the future, Big Data will play a bigger role in authenticating users, reducing the need for the system to ask users for multiple proofs of their identify, according to Richey, and 90% or more of transactions will be processed without asking customers those extra questions, because algorithms that analyze their behavior and the context of the transaction will dispel doubts. “Data and authentication will come together,” Richey said.

    The data-driven improvement in security accomplishes two strategic goals at once, according to Richey. It improves security itself, and it increases trust in the brand, which is critical for the growth and well-being of the business, because consumers won’t put up with a lot of credit-card fraud. “To my mind, that is the importance of the security improvements we are seeing,” she said. “Our investments in data and analysis are baseline to our ability to thrive and grow as a company.”

    CORRECTION: This story has been updated to say that Big Data makes it easier to spot tampered PIN pads. An earlier version referred only to PINs, or personal identification numbers. The story also clarifies the role of prepaid cards in certain kinds of fraud. The cards were purchased fraudulently, not used to make fraudulent transactions.

  77. MAP's payments processing partner, Visa Inc., was recognized for leadership in business ethics when it was placed on the 2013 list of the World's Most Ethical Companies by Ethisphere Institute, a leading international think tank. Visa joins a group of global brands who are dedicated to doing business with world-class ethical practices and promoting ethical business standards.

    The Ethisphere Institute is dedicated to the creation, advancement and sharing of best practices in business ethics, corporate social responsibility, anti-corruption, and sustainability. This is the seventh year that the Institute has produced its annual list, and the first time Visa has earned a position on it since becoming a publicly-traded company in 2008.

    "Visa is honored to be part of this group of companies who are committed to operating at the highest level of ethics," said Ellen Richey, Chief Enterprise Risk Officer of Visa Inc. "This recognition reflects the commitment of Visa's employees worldwide to the highest levels of ethical business practices and trust. Trust is critical to our business of enabling electronic commerce, and that's what we've done for more than 50 years."

    Ethisphere uses a proprietary Ethics Quotient (EQTM) rating system to evaluate companies' performance in an objective, consistent and standardized way. The EQ framework consists of five core evaluation categories including ethics and compliance program; reputation, leadership and innovation; governance; corporate citizenship and responsibility; and culture of ethics.

    "Visa Inc. continues to set the bar within its industry for a number of its ethics programs," said Alex Brigham, executive director of the Ethisphere Institute. "As more companies each year strive for recognition, Visa Inc. was added to World's Most Ethical 2013 by demonstrating its strong commitment to ethical practices."

    Visa takes a comprehensive approach to ethical business practice, including industry-leading policies, trainings and programs. For example, Visa's Code of Business Conduct and Ethics, which applies to all employees and directors, emphasizes that honesty and integrity are of paramount importance in every activity. In addition, Visa's Corporate Responsibility program is focused on areas where its business expertise and philanthropic contributions can contribute to financial inclusion, humanitarian support, community involvement, and responsible business practices.

    View the complete World's Most Ethical Companies 2013 list here.

  78. Visa wants to make payments easier, or at least easier to understand. The payment giant announced the launch of a new partner program that it said is intended "to accelerate the introduction of innovative payment solutions globally and further drive the global migration from cash to electronic payments."

    The Visa Ready Partner Program gives providers of devices, software and payment solutions that accept Visa transactions a framework to ensure they are compatible with Visa's standards. It also provides those providers with best practices when working with Visa's massive payment network.

    "The pace of innovation in the payments industry requires a new approach that ensures innovative payment methods can be tested, approved and commercialized quickly," said Jim McCarthy, global head of product, Visa Inc. "While it is critical that we ensure new payment methods are secure and reliable, it is equally important to allow great ideas to become new ways to pay and be paid."

    Visa said that for financial institutions and merchants, its new partner program will make it easier for them to adopt new payment methods that are approved. Solutions and devices that are approved by Visa will sport a new symbol that says they are "Visa Ready."

    One goal of the program is to tame the ever-more competitive mobile point of sale market. Visa said its Visa Ready Partner Program will help define mPOS requirements and best practices, provide developers with applications and tools to enable the development of mobile acceptance solutions, open up payment gateways through open APIs and SDKs, and guide partners and providers through the approval process by supply documentation and resources.

    Visa is also looking to address the compliance testing process for mobile NFC devices and secure chips that host the Visa payWave application, the company said. The Visa Ready Partner Program will include establishing of guidelines for technical, security and usability testing; ensuring Visa transactions from NFC mobile devices are compliant with the global standard; and establishing a required signal range for mobile NFC-enabled devices hosting the Visa payWave application.

  79. According to a report from Mercator Advisory Group, consumer credit card use remains steady, but young adults age 18 to 35 are eschewing credit cards. In its "Consumers and Credit 2012: Come Back, Young Cardholders" report, Mercator said that only 59 percent of young adults in this age group have credit cards. That compares to 70 percent of seniors surveyed.

    What's more, the report found younger consumers are three times more likely than seniors to reduce their credit card use in favor of debit cards – 36 percent compared to 12 percent of seniors.

    "The anticredit card sentiment appears to be waning," said Karen Augustine, manager of CustomerMonitor Survey Series at Mercator Advisory Group and the author of the report. "But issuers need to address the needs of the young adults in order to stimulate greater credit card volume."

    The report is the fourth of eight consumer survey reports based on Mercator's CustomerMonitor Survey Series. Data was obtained during a national sample of 1,003 online consumer survey responses completed between June 8 and June 19, 2012.

  80. Prosper Insights & Analytics has released the results of a new survey of mobile users and found that three out of four users (77.1 percent) conducted banking activities using a smartphone or tablet. Additionally, more than half (57.9 percent) said they engage in shopping behaviors via mobile, the report said. Nearly half (44.5 percent) said they use their devices to pay bills.

    As for payment method, the new study found that mobile users who purchase an item via a mobile device were most likely to use a credit card (39.2 percent) or PayPal (31.5 percent). One in four (24.9 percent) used a debit card. Fewer than one percent (0.8 percent) said they used Google Wallet to purchase an item via a mobile device.

    The poll included 328 smartphone and tablet users surveyed between Jan. 28 and 30, 2013.

  81. A sense of ease and simplicity exists in uttering the words "I care about you" through a few sentences written on a card or an elaborate bouquet of flowers. The same sense of ease and simplicity should also be applied to online shopping, where we know we all want to get things done as quickly as possible.

    Soon, consumers shopping online for the perfect bouquet will be able to checkout hassle-free as 1-800-FLOWERS.COM is added to the list of leading eCommerce merchants that offer by Visa.

    Today, is available at a growing portfolio of leading online retailers, ranging from and to Rakuten and Blue Nile. We're seeing real traction behind these leading eCommerce sites that are now offering, as consumers and merchants alike have learned to appreciate the security, reliability and convenience of Visa.  Consumers benefit from a digital wallet service designed to make simple and secure online payments, without the bother of constantly entering card account numbers or billing and shipping information.

    This battle is starting to heat up but don't expect this year to be decisive. There is still so much education and development that needs to happen and most consumers and merchants don't have a clue as to which wallet they will want to use. Visa has the advantage of being the biggest credit card network and that trust will surely give it a boost in the new digital wallet wars. But there's so much more game to be played, it's still too early to say who will prevail.  

    Let's face it - life gets hectic. Deadlines loom, obligations arise and others rely on us to get the job done. When it comes time to truly take care of ourselves and our loved ones, we need services that help remove the hassle and allow us to breathe easier.

    The joy of online shopping is as much about convenience as it is about the shoes, the flowers, the clothes you are acquiring for yourself or your loved ones, and brings more of these goods into your life, safely, quickly and simply.

    Consumers are online, and Visa is where they want to shop. According to a Nielsen Global Online Survey, more than 85 percent of the world's online population uses the Internet to make purchases - increasing the market for online shopping by 40 percent in the past two years.  

    So, what are you waiting for? Start shopping!

  82. A newly launched FI information resource on the Internet,, offers a free database of FI routing transit numbers — the nine-digit code used by U.S. financial institutions, that appears at the bottom left-hand side of a check, just before the account number.

    " was created to allow access to critical financial information that is otherwise hard to find or difficult to read," says Stijn Norlesk, creator of the new site. "It's the one site that offers this information all in one place. We believe it is the best banking reference resource available online." is synchronized daily with the American Bankers Association to provide current and accurate listing. In addition to routing numbers, the site also provides access databases of bank addresses and ATM locations. The site is optimized for use on a computer, but it can also be viewed on mobile devices.

    "To have an easy to use and free bank routing number database can greatly benefit your payment processing, and therefore can optimize your business," says Stijn Norlesk. "And our databases of routing numbers, bank addresses, and ATM locations are just the beginning. We are working to become the most comprehensive and useful resource for this type of information on the Internet."

    The routing transit number system was designed more than a century ago by the ABA, for use on negotiable instruments such as checks and money orders. The purpose of the number is to identify the financial institution on which the check or other instrument is drawn, allowing for more efficient sorting and processing.

    The RTN system is also used by Federal Reserve Banks to process Fedwire funds transfers, and by the Automated Clearing House to process direct deposits, bill payments, and other automatic transfers of funds. It differs from the SWIFT code system, which is used primarily for international transactions.
  83. Prepaid debit cards have taken a few knocks in recent years because of the fees attached, but the price for Prepaid Debit may actually be cheaper than Checking according to report released last week from the Pew Charitable Trusts.  

    "I was really surprised," said Susan Weinstock, director of Pew's Safe Checking Project. "I didn't know that prepaid cards would be significantly cheaper for people who overdraft -- and they are."   

    Study Overview. Pew identified three different types of customers - savvy, average and hapless - and predicted the amount of fees they could incur over a typical month.  Also, it studied 52 prepaid debit cards that make up 65% of the market, and 237 conventional checking accounts offered by the 12 largest U.S. banks. The study used a $1,500 direct deposit and 17 point-of-sale purchases per month for each type of customer. Here's a break down for each type of customer:

    "Savvy" Customer - If you're familiar with your checking account's fees and pay attention during the month, you're better off using this traditional method. Savvy consumers averaged $3.99 a month in fees for a checking account, compared to $4.50 a month for a prepaid card.  

    "Average" Customer - Average consumers see a huge hike in fees for both banking methods, but a prepaid card becomes cheaper. Those with a checking account saw $28 in fees a month, while prepaid rang in at just $22.15. That'd make it a tougher call for many.

    "Hapless" Customer - If you have a poor grasp of how your checking account works and you throw caution to the wind in your transactions, you're going to be much lighter in the wallet. This group paid an astounding $94 a month in checking fees, compared to just $28.70 in prepaid.  

    See the full report here: Are Prepaid Cards a Smart Alternative to Checking Accounts?

    Also, take the Pew's interactive quiz: What kind of consumer are you?

    Interested in learning more about MAP's Prepaid and Gift programs?  Contact Bryan Elder at or 866-598-0698 x1624.
  84. With digital wallets from the likes of PayPal Inc., Google Inc., and the Isis consortium grabbing headlines, Visa Inc.’s staff has been quiet but busy. The payment service is live with five online merchants, and Visa plans to introduce it as a commercial product by year’s end.

    While Visa is concentrating its wallet on e-commerce for now, the product will ultimately allow mobile-device users to make purchases at physical stores. When this capability arrives, Visa will likely use some combination of the device’s secure element and cloud servers to store card credentials, Visa watchers say. This so-called hybrid approach contrasts with that of Isis, a joint venture of the country’s largest mobile carriers. Isis plans to use the secure chip in the phone, probably the SIM card, to house users’ payment details. Google this month revamped its wallet to store card credentials in the cloud, but retained reliance on the phone-based secure element to house a prepaid virtual card that identifies users and initiates transactions.

    Introduced late last year, allows users to store any payment card from any brand and use the credentials to make payments at participating merchants. So far, these include,,, Modnique, and PacSun. For the beta, “a good chunk” of Visa employees are using the wallet, but any consumer can sign up for it at any of the merchants’ sites, the spokesperson says. He adds he cannot quantify the number of users. Sign-ups at the merchant sites take place during checkout and allow users to load their cards without leaving the site. Once enrolled, consumers can use the wallet to make payments at any of the five merchant sites. went live on first, in May, with the other four following later. More merchants may be added before the beta ends. At that point, Visa will rely on its network of issuing financial institutions to promote the wallet to their account holders.

    Currently, users can load only payment media into the wallet, though Visa is likely to allow non-payment documents, such as transit tickets or forms of ID, later. Apple Inc. has already introduced this capability with its Passbook wallet, due out with its expected introduction of the iOS 6 operating system, and Google is planning a similar feature. Visa will include a location-based offers service with that will likely rely on what it learns from a pilot it is running with The Gap clothing chain. In the pilot, cardholders who buy at The Gap with their Visa card trigger an alert telling them they can claim a discount if they return to a Gap store within a specified period of time.

    Physical-world payments, however, are not likely to be enabled any time soon. While Isis hasn’t launched yet and rival MasterCard Inc. only introduced its wallet strategy in May, the nearly year-old Google Wallet has struggled in large part because of a paucity of retail locations equipped with readers capable of handling mobile devices using near-field communication (NFC) chips. “We’re big fans of NFC, but it’s not quite ready for prime time,” the spokesperson says. “There are 300,000-plus NFC terminals around the world, well below the millions of locations where people are shopping online.”

  85. Visa, MasterCard and some of the biggest U.S. banks agreed to a settlement of at least $6.05 billion with retailers in a price-fixing case over credit- card interchange fees, according to a court filing.

    The total value of the settlement is $7.25 billion on behalf of a class of about 7 million merchants in the U.S. that accept Visa and MasterCard credit cards and debit cards, a law firm for the merchants, Robins Kaplan Miller & Ciresi LLP, said in a statement.

    Visa, the biggest bank-card network, had $4.28 billion in uncommitted funds set aside to cover litigation at the end of March. Photograph: Tetra/Getty ImagesVisa, the world’s biggest payments network, said its share of the settlement filed today in federal court in Brooklyn, New York, was about $4.4 billion. Visa said the proposed settlement payments, including costs incurred by MasterCard Inc. (MA) and card- issuing banks, would be about $6.6 billion. That amount would include about $525 million for individual claims.

    “We believe settling this case is in the best interests of all parties,” Visa Chief Executive Officer Joseph W. Saunders said today in a statement.

    The agreement follows a seven-year legal battle with U.S. retailers that accused the two largest payment networks of conspiring with banks to fix swipe fees, or interchange.

  86. Want to reach young and underbanked consumers? Turn to mobile delivery options. Comprising an estimated 35 million U.S. adults (or 15 percent of the U.S. population), the underbanked are typically young, ethnically diverse, and more likely to use the “computer in their pocket” (i.e. their mobile phones) to conduct their banking, according to Javelin Strategy & Research’s latest report: “Reaching the Underbanked and Unbanked Consumers in 2012: Strategies for Connecting with Mobile Financial Services.”

    Javelin defines the underbanked as U.S. adults without a checking account, while unbanked consumers do not have a banking account.

    The report provides key recommendations on the specific types of mobile financial services FIs need to offer the underbanked to connect with this underserved market segment.

    FIs can engage the underbanked through mobile transfers. The U.S. underbanked are prime consumers for wire transfers and remittances. Twice as many underbanked consumers sent wire transfers as the average consumer, a market that totals $48 billion in outflows from the U.S. Underbanked consumers also make twice as many person-to-person transfers than the average mobile consumer. Further, one in three underbanked consumers is likely to conduct international mobile person-to-person transfers, taking a lion’s share of the $501 billion global remittance flow in 2011.

    Prepaid accounts will be another important offering, as prepaid cards are second to cash as the choice by the underbanked as their top-of-wallet payment method. FIs can focus their efforts on leveraging mobile P2P transfers and prepaid accounts to build the foundation of a relationship with the underbanked. By offering simple, easily understood mobile banking services, FIs can save the underbanked consumer time and expense at check cashers, and develop positive new relationships with these younger customers.

    “Mobile banking can be used to reach out to the underbanked segments for financial inclusion,” says Mary Monahan, EVP/research director at Javelin. "Smaller banks have a lower fee structure for traditional banking in place that is more appealing to this segment, but aren’t as likely to have mobile banking services. Larger banks are more likely to have the mobile banking infrastructure, but also charge higher fees on average than the smaller banks.”

    “FIs need to zero in on the youth and the tech habits of the underbanked who have the fastest growing income potential ahead of them,” says Jim Van Dyke, president of Javelin. “FIs need to connect with the underbanked and unbanked where they live and work and how they prefer to transact. Our report will help FIs understand the broad needs of the underbanked and unbanked, how to meet these needs, and develop revenue-generating relationships.”

    More statistics from the study:

    • The U.S. underbanked are less likely to own computers than all mobile consumers (60 percent vs. 72 percent).
    • Underbanked use mobile banking at higher rates than other consumers. 32 percent of unbanked used mobile banking in past 30 days compared to 25 percent for all mobile consumers.
    • Gen Y income is on the rise. In less than five years, Gen Y and Gen X incomes will outpace those of all other generations. By 2025 Gen Y will be responsible for almost half (46 percent) of total personal income.
  87. In a recent report titled, Prepaid and Gift Cards in the U.S., research firm Packaged Facts said that prepaid payment volume will jump more than 22 percent this year to $247.5 billion on nearly 10 billion transactions, compared with $202.2 billion in 2011.

    Dissatisfaction with banks and regulatory changes affecting debit cards were two reasons for the rise, according to an article in MediaPost magazine.

    According to Packaged Facts publisher David Sprinkle, card companies must increase customer retention, format card programs to serve the un- and underbanked, and build relationships with younger consumers, whose limited banking needs and mistrust of banks make them likely prepaid users.

    Prepaid card issuers must also solve the problem of high product abandonment compared with bank accounts, which tend to have a low rate of churn. The article suggested that one way to increase loyalty and use might be to encourage customers to opt for direct deposit of their paycheck to a prepaid card.

  88. As the federal government begins to take a closer look at the regulation of mobile payments, the first signs of a split within the payments industry are emerging.

    The nascent divide pits firms that argue Washington should ensure a level playing field between banks and their non-bank competitors against others that warn about the potential of new regulations to stifle innovation.

    The latter camp is represented by the Electronic Transactions Association, a trade group whose members include a range of payments firms, but not banks in their role as issuers of credit and debit cards.

    "What we're concerned about is that some entities who view the advent of mobile payments as a threat to their incumbent advantage might call for unnecessary regulation," said Jason Oxman, chief executive officer of the Electronic Transactions Association.

    Because the debate is still in its early stages, and no specific regulatory proposals are on the table, the argument remains largely abstract, though it figures to become more concrete as competition increases in the rapidly evolving world of mobile payments.

    The broad outlines of the disagreement were evident in statements issued Friday by the ETA and the Clearing House Association, a trade group that represents the largest commercial banks.

    The statements were released in connection with a House hearing on the regulation of mobile payments, which featured testimony from the Federal Reserve Board and the Financial Crimes Enforcement Network, but not from industry witnesses.

    The Clearing House Association submitted a six-page statement that made a forceful argument that regulators need to hold non-banks to the same standards that banks must meet.

    "Because the multitude of non-bank players entering the mobile payments ecosystem are generally not subject to the same functional regulation that applies to depository institutions, they are considered 'shadow payments providers,'" the Clearing House Association said.

    "The patchwork of regulatory and supervisory regimes applicable to shadow payment providers leaves consumers with varied and often uncertain protections and a supervisory and examination structure that unevenly regulates the soundness and integrity of providers in the mobile payments space."

    The trade group added that, "in general, the entrance of less-supervised providers is likely to result in a reduction in the reliability and integrity of payments."

    The Clearing House Association, which did not make a representative available for further comment Friday, argued in its statement that firms engaged in functionally similar activities need to be regulated in equivalent ways.

    "Although mobile payments technology holds great promise for the advancement of commerce and financial inclusion," the Clearing House said, "the rapid growth and fragmented ecosystem of mobile also presents serious regulatory and oversight challenges."

    Those comments stood in contrast to the tone of remarks from the ETA, which represents a wider range of firms in the payments world, including some banks in certain behind-the-scenes roles in the debit and credit payment processes.

    "We urge Congress to take care to avoid regulation that could stifle the innovation that gave birth to mobile commerce and will drive its future growth," Oxman said in that statement.

    In a follow-up interview, Oxman said that mobile payments are largely reliant on existing networks, which are also used to process credit card and debit card transactions, and already include many consumer protections.

    "All the consumer is doing is, instead of taking out a plastic card with a magnetic stripe on the back to pay for goods and services at the point of sale, they're taking out a mobile phone," he said. "It's essentially a new means, a new tool, for getting onto the credit and debit rails."

    "In fact, using your mobile phone as a payment vehicle is a great way to take advantage of all the legacy protections in the payment networks," Oxman added.

    During the House hearing, several lawmakers sounded loath to pick sides between different parts of the industry.

    Rep. Shelley Moore Capito, R-W.Va., who called the hearing, asked a series of questions that addressed the concerns raised by the Clearing House Association, but she also expressed concern that regulation might stifle innovation.

    "And so I think that the point of this hearing is to really see: Where are we? And where do we need to be?" Capito said.

    Rep. Francisco "Quico" Canseco, R-Texas, called mobile payments the most significant development in consumer payments since the advent of debit cards, and said they will bring great benefits to consumers.

    "Yet," he added, "it is essential that policymakers and regulators structure a regulatory framework that helps protect the private information of mobile users, but also encourages investment and innovation within the industry."

    Testimony from the regulators touched on the potential of mobile payments to be used for money laundering, as well as consumer protection and data security issues.

    One point that emerged was that a patchwork of regulatory agencies have potential jurisdiction over mobile payments, including the bank regulators, the Federal Communications Commission, the Federal Trade Commission and Fincen.

    Rep. Carolyn Maloney, D-N.Y., argued that one agency needs to have primary responsibility for mobile payments, but the regulators from the Fed and Fincen responded that the existing system is working.

    "It's such a broad area, and it covers so many different types of entities," said Stephanie Martin, associate general counsel at the Fed. "It's really hard to point to one agency with the right experience and expertise that can cover the gamut."

    Although the Consumer Financial Protection Bureau did not testify, it submitted a statement pledging to be flexible and responsive to the changing mobile payments market.

    "Innovation can be greatly advantageous to consumers, offering new tools for people to better control their own finances and plan their own lives," Marla Blow, the CFPB's assistant director for card and payment markets, said in the statement. "At the same time, innovation can introduce significant risks to consumers."

  89. More than half of the world's adults — 2.5 billion — are unbanked, according to research recently published by the World Bank Development Research Group. The American government, however, estimates that the U.S. is home to only 10 million of them, which means the vast majority of the unbanked live outside the country. And many of them reside in developing areas, such as India, where more than 40 percent of residents are unbanked, and Africa, where that number is at a staggering 80 percent.

    Instead of trying to coax these populations into getting on board with mainstream banking, many companies are finding new ways to provide them with financial services, whether it's deploying kiosks to help the unbanked cash checks, pay bills and transfer money, or offering mobile banking services that allow consumers to transfer money via smartphones.

    Help yourself

    Take, for example, India-based Cms Info Systems, which has been providing the country with finanical kiosks for the past two decades. Business is still booming for the company that has projected a kiosk deployment growth rate of 10 percent between 2012 and 2013.

    "A major factor in the continued growth of usage in India is due to the increasing market shift towards payment and cash-access of all types, the proliferation of locations, consumer reliance on the added functionality, speed and convenience of the banking kiosks, and the profitable strategic shift away from human-delivered service to 'self-serve,'" said J.B. Lalla, national sales manager for Cms.

    Also, newer banking kiosks now provide multiple services — such as cash deposits, check deposits, money-transfer, statement printing, passbook printing and gift-card dispensing — which is driving increased usage.

    Or take Europe-based Genkiosk, which has seen rapid growth of its bill-pay kiosks in the Middle East and in other regions with large migrant workforces, but isn't focusing only there. It's expanding its footprint to anywhere that the recession is driving customers to pay bills at the last minute, said James Oladujoye, CEO of GWD Media, the makers of Genkiosk.

    "We first saw the boom in bill-payment kiosks in Dubai," he said. "Next, it was Qatar and Saudi Arabia, where there are also large populations of migrant workers and people without bank accounts or credit cards. If you could find a way not to make a journey, then line up just to pay cash to a teller, wouldn't you grasp it?"

    Specifically, Genkiosk is penetrating new markets, including Indonesia and the Philippines, as its next geographical targets for bill-pay kiosks, but Oladujoye also noted how the global downturn has changed the financial sector in nearly every place in the world.

    "Today, you can go anywhere — even a rich country like the U.S.A. — and you will find people who are having a very hard time. We are seeing users paying their electricity bills on kiosks with cash at the very last moment before they are cut off. This is happening everywhere, not just the countries we first prioritized. It is a sign of the times."

    Going mobile

    Developing economies like those in India and Africa are not only embracing financial kiosks, they are quickly embracing mobile banking, even more so than their North American counterparts. For example, India's My Mobile Payments Ltd., a mobile payment service provider, recently launched its Money-on-Mobile mobile wallet to the Indian consumer market.

    The service, which is not tied to any mobile service provider or bank, allows mobile phone subscribers to pay for a wide range of goods and services by mobile phone.

    Consumers can load their MOM m-wallets with cash at one of 82,000 retail touch points (expected to be 2 million by year's end) and use it to pay for electricity, gas and mobile bills and top-ups, as well as airline, bus and movie tickets.

    MOM launched for the B2B market in India in 2010, and is now providing the semi-closed m-wallet for the consumer market. The service has 500,000 subscribers and does a business volume of INR 20 million ($358,422) daily.

    "In a country like India where mobile phones are more widespread than the financial systems, mobile payment is the next big alternative payment method," said Shashank Joshi, managing director of Money-on-Mobile. "MOM does all paperless transactions and it is in line with RBI's vision of making 70 percent of the financial transactions paperless by end of 2012. MOM is committed to ensuring consumers the ability to make safe, convenient and flexible payments."

    Paddy Micro Investments last month launched its newest platform to deliver financial services to Africa's unbanked people. Specifically, the company's "Pesa Pata " kiosks give low-income Kenyans access to quick loans, according to this story.

    At the kiosk, the customer obtains a Pesa Pata scratch card valued between $3 and $59, and each card has a unique number that is loaded onto the customer's mobile phone. The amount is then credited to the customer's Safaricom M-Pesa mobile money account.

    "We realized that there are times when people need instant cash, and going to a bank or micro-finance institution for a loan is not an option," Joyce Wangui, a director at Paddy Micro Investments. "Other people who work in the informal sector at most times cannot even qualify for bank loans."

    The loans, which have a 5 or 10 percent interest rate, allows the kiosk owner to profit, but the model is dependent on the level of trust between traders and their customers.

    Thousands of kiosk and shop owners countrywide have signed up as Pesa Pata agents, including Felistas Wanja, who runs a shop along Jogoo Road in Nairobi.

    "Last week one of my loyal customers had a sick child and she needed money urgently," she said in the story. "I gave her two $59 Pesa Pata cards. When she paid back I made profit of $5 on each card. In the past people would take sugar on credit, now I give them the card, they buy goods in cash, and at the end of the month I will make a profit when they repay the loan.

    Orange is yet another company targeting not only Africa, but also the Middle East.

    It recently announced that more than 4 million customers are now using its Orange Money, which provides the unbanked with access to basic financial services through their mobile devices. Customers can transfer funds, set up a savings account and make payments using the services.

    The services are available to consumers in 10 countries, including Botswana, Cameroon, Kenya, Madagascar, Mali, Niger and Senegal. The company plans to be in all 22 countries in Africa and the Middle East, where it provides wireless services.

    "Orange Money plays an important role in driving growth in our activities in emerging markets, allowing us to contribute to the economic and social development of these countries, while improving our customers' loyalty," said Marc Rennard, Orange's executive director for EMEA operations, in the announcement.

    The company's growth, said Rennard, indicates a strong consumer appetite for a simple and practical mobile payment service where people have limited access to bank accounts but are widely equipped with mobile phones.

  90. After years of being simple conduits for basic banking transactions, online banking sites are becoming marketplaces where banks sell additional financial services, according to a study completed this week by Forrester Research. In 2011, among U.S. consumers who bought financial services products, 37% applied for those products online, versus the 2% who bought products over a mobile device and the 36% who purchased financial services in a branch. These findings are pulled from a survey of 10,647 U.S. adults conducted in the third quarter of last year. In 2010, 40% of consumers bought banking products in a branch, while 32% applied online, 16% by phone and 12% by mail.

    Banks' websites are still the primary channel in which consumers take care of basic financial tasks such as viewing balances (79%), transferring money (78%), viewing statements (74%), and paying bills (68%). Check deposits are the only type of common transaction that consumers are more likely to conduct at a branch or an ATM.

    Matching the growing importance of the online channel, banks are stepping up their investment. Among 19 heads of retail banking at U.S. and Canadian banks surveyed, the average percentage of digital/e-business budget being devoted to online sales improvements is 14%. About 12% of these budgets are being devoted to online money movement, and 8% to online security.

  91. Citi, Bank of America and Other Giant Banks are Highly Vulnerable, According to Javelin Bankographic Benchmark

    A new report from Javelin Strategy & Research indicates 11% of consumers are likely to switch primary financial institutions (FIs) in 2012. Giant banks face even larger defections, with Citibank and Bank of America at risk of losing twice as many customers.

    The Javelin FI Vulnerability Index(TM) estimates huge potential losses for FIs because switchers manage $675 billion in deposits, and manage deposits that are 30% higher than customers who are unlikely to switch. Likely switchers also are willing to pay an estimated $92 million in fees for just four value-added services: money orders, cashier's checks, safe-deposit box rentals, and mobile deposit. The report examines the factors behind why customers stay - or leave - their primary FI and recommends specific strategies that giant banks, regional banks, community banks and credit unions can use to compete and capture these switchers -- and their billions in deposits.

    "Bank Transfer Day was a bust, but FIs of all sizes can learn from it," said Mark Schwanhausser, Senior Analyst, Multichannel Financial Services at Javelin. "Our Bankographic Benchmark(TM) research shows that banks are still in danger of losing customers to FIs that can better respond to their needs, especially in the areas of mobile banking and self-service technology. With $675 billion of deposits and $92 million in fee revenue at play, smaller banks and credit unions really have the opportunity to win new customers."

    "Ultimately, consumers are driven by convenience more than fees and protests," said Jim Van Dyke, President, Javelin. "Giant banks will need to drive home their messaging around convenience, mobile banking, and other services that smaller banks don't -- or can't -- offer. Smaller banks can play to their strengths of lower fees, convenience, and customer service, but they will need to beef up their mobile banking and mobile deposit offerings. Our report will show FIs how to re-engineer their product lines and customer acquisition and retention strategies to take advantage of these billions of dollars in deposits that are up for grabs."

    Javelin's Bank Switching in 2012: Giant Banks Remain Highly Vulnerable as Consumers Weigh Fees and Convenience and Fees report assesses the prevailing attitudes of consumers toward staying with or leaving their primary FIs. The 31-page report is based on three online surveys of 4,800 to 5,000 consumers each and prescribes the specific strategies that FIs of all sizes can use to compete for consumers likely to switch.

    More than half of recent switchers are under 35 years of age and use mobile technologies (smartphones and tablets) frequently. Mobile banking has emerged as a compelling factor for switchers, as they more than twice as likely as all consumers to use mobile banking.

  92. Despite recent improvements by the nation's largest banks, checking accounts are still too confusing for consumers and overdraft fees are too high, according to new findings by the Pew Charitable Trusts.

    Disclosures for checking accounts are too long, some fees for overdraft protection have increased and many consumers still are forced into binding arbitration to settle disputes with their bank, said the study released Friday by Pew's Safe Checking in the Electronic Age Project.

    "Consumers are expected to wade through long, confusing documents and may be subject to steep, unexpected fees to access their own checking accounts, the cornerstone of household financial management," said Susan Weinstock, the project's director.

    "Consumers must have understandable, transparent information that enables them to make educated choices when comparing one checking account's costs and benefits to another," she said.

    Pew called on regulators again to force banks to provide better disclosure and make overdraft fees proportional to the banks' costs.

    Nessa Feddis, vice president and senior counsel at the American Bankers Assn. trade group, criticized the report, saying many banks were "going the extra mile" to make sure that customers understood fees and disclosures.

    She also said consumer groups had an unrealistic expectation that banks could simply break even on fees for services such as overdraft protection.

    "We all want everything to be free," she said. "For any business or any household to be successful, income has to be higher than expenses."

    The study is an update to the Pew project's 2011 report, "Hidden Risks: The Case for Safe and Transparent Checking Accounts," which raised alarms about fees and disclosures at the nation's 10 largest banks.

    This time, Pew looked at the practices at the 12 largest banks, as well as the 12 largest credit unions, in a follow-up report titled "Still Risky: An Update on the Safety and Transparency of Checking Accounts."

    Improvements in key areas have been minimal, said the new report, which compared the data from 2010 with new data collected in October.

    The median length of bank checking account disclosures has decreased to 69 pages from 111 pages in the earlier report.

    But the disclosures still are too cumbersome and important policies and fee information are not summarized in a "uniform, concise and easy-to-understand format that allows customers to compare account terms and conditions," Pew said.

    Pew found that financial institutions do not provide clear and detailed information about options for overdraft protection and their costs. Many banks and credit unions have three options with very different fees and features, but "consumers may not be aware of lower-cost options," the Pew report said.

    The median overdraft fee for large banks remains $35, the same as in the first report.

    But more checking accounts now come with an extended overdraft penalty fee, which kicks in if the overdraft is not repaid in a timely manner. The median extended overdraft fee has increased 32% since the first report.

    The report also said consumers still faced hurdles in settling disputes. Of the 237 checking accounts offered by the largest banks, 66% forced customers to submit any disputes to binding arbitration, down from 71% in the first report.

  93. In the US, 59 percent of consumers prefer to make purchases online rather than using a mobile device or visit a traditional store, a recent study has unveiled.

    According to a survey released by research company Nielsen, 68 percent of consumers believe that online shopping is the easiest way to shop and another 68 percent say that it is the most convenient one.

    The same source has also pointed out that online fraud remains one of the largest concerns, with 69 percent of respondents mentioning that brick and mortar stores are the most reliable ones and 77 percent declaring that these are the safest. Results have indicated that mobile commerce has ranked the lowest across all measures apart from most convenient at 38 percent and easiest at 27 percent.

  94. The Dodd-Frank Act loophole that exempted general prepaid reloadable cards from fee controls could be closing in the not too distant future.

    The Consumer Financial Protection Bureau yesterday announced it will release an Advance Notice of Proposed Rulemaking (ANPR) pertaining to the nation’s growing prepaid card market.

    CFPB director, Richard Cordray, made the announcement at a field hearing on reloadable prepaid cards held in Durham, N.C., on May 23.

    He described a general prepaid reloadable card market that was growing “by leaps and bounds at an expected rate, we’re told, of over 40 percent each year from 2010 to 2014.”

    Cordray said that the manager of the largest prepaid program in the U.S. had told him that the number of prepaid users had more than doubled in three years from 3.4 million active cardholders to more than 7 million.

    “All of these consumers need and deserve products that are safe and whose costs and risks are clear upfront. Yet right now, prepaid cards have far fewer consumer protections than bank accounts or debit cards or credit cards, Cordray said.

    “We have a duty to make sure that these products are safe for consumers and that prepaid card managers do not make money by relying on trips and traps that are unsustainable for cardholders,” he added.

    Cordray said the CFPB would initiate a rulemaking process to address prepaid cards — particularly in the areas of safety and transparency. “[T]hese are and should be important hallmarks of all consumer financial products and services. As part of our rulemaking, we will explore how best to extend these basic protections to prepaid cardholders whose funds may be at risk.”

    The public is invited to submit comments on a number of points outlined in the CFPB’s Advance Notice of Proposed Rulemaking. The comment period will last for 60 days following the ANPR’s publication in the Federal Register.

    In addition to the ANPR, Cordray also announced the launch of a new interactive online tool, “Ask CFPB: Prepaid Cards.” The service will provide answers to more than 80 consumer FAQs, that Cordray said will give an overview of prepaids and address consumers’ questions about obtaining, reloading, and using prepaid cards.
  95. MAP is offering Visa Advanced Authorization scoring to all network transactions processed through Visa DPS beginning May 19, 2012. The service will integrate seamlessly into issuers’ existing risk strategies and enable participating clients to benefit from the risk intelligence currently applied to all VisaNet transactions.

    Now that U.S. debit cards are required to have at least two unaffiliated networks, credit unions should consider a comprehensive risk strategy for all their card programs.  Visa Advanced Authorization is a global tool designed to help financial institutions manage risk and prevent fraud loss through effective risk scoring and compromise indicators.
    For more information about this optional and affordable service, please contact Cyndie Martini or Herb Tajalle at (866) 598-0698.       
    Visa Advanced Authorization offers the following features and benefits:
    • Comprehensive view of risk by combining VisaNet transactions and all other issued network transactions into common account profiles used in scoring.
    • Detection of new and emerging domestic and international fraud schemes by evaluating authorizations and alerting issuers to potential fraud in real time.
    • Unique tools to help issuers prevent fraud.
    • Risk scores indicate the degree of risk associated with a given transaction.
    • Compromised Account Risk Condition Codes provide descriptive information about high-risk compromise events detected across VisaNet.
    • Compromised Event Reference IDs identify the association between an account and a specific compromise event identified by the Compromised Account Management System (CAMS).
    • Expanded set of Managed Real-Time eligible transactions to include transactions from non-Visa networks.
    • A new, detailed report with processor- and institution-level information about transactions that receive the Visa Advanced Authorization score, including the transaction date, time and amount, the Acquirer Network ID and Visa Advanced Authorization risk data.
  96. Retailers are paying significantly less every time a customer swipes a debit card under a rule capping the fees that banks are allowed to charge.

    The Federal Reserve says in a report Tuesday that the average fee paid by merchants for debit card transactions covered by the rule was 24 cents in the fourth quarter of 2011. That compares with an average of 43 cents before the Fed's rule took effect Oct. 1.

    The rule was mandated under the 2010 financial overhaul law. For most transactions, banks can charge merchants a maximum 21 cents for each debit card transaction plus an additional 0.05 percent of the purchase price to cover fraud protection costs.

    Transactions using debit cards issued by banks with less than $10 billion in assets, as well as some prepaid debit cards, are exempt from the cap.

    The average fee paid by merchants for those exempt transactions remained at 43 cents in the October-December quarter, the Fed found. Overall debit card fees -- for transactions both covered and exempt from the cap -- averaged 30 cents.

    The Fed also said that as a result of the cap, the gap narrowed between fees on debit card transactions requiring customers to sign and those requiring a personal identification number. Fees on signature transactions covered by the rule averaged 24 cents in the fourth quarter, close to the average for PIN transactions of 23 cents. That compares with an average 59 cents for signature transactions and 34 cents for PIN transactions from Jan. 1 to Sept. 30, 2011.

    The cap was the first limit ever on debit card fees, which banks traditionally had negotiated with merchants.

    Before the Fed set its level last June, merchants had said that reduced fees would allow them to lower their prices for consumers. Banks, on the other hand, had warned that a limit on what they can charge retailers would force them to cut back on other services, such as free checking and rewards programs.

    A coalition of retail groups sued the Fed in November, asserting that the regulator ignored the law by setting too high a cap on debit card fees.

    The National Retail Federation and other groups said the Fed buckled under pressure from bank lobbyists when it set the cap, which is significantly higher than the Fed's initial proposal of 12 cents.

  97. Member Access Pacific Provides Cost-Free Training to All Clients – Online & Onsite
    Member Access Pacific (MAP). The nation’s only aggregator of the Visa DPS Debit Credit, ATM, Prepaid, and Mobile Processing platform for credit unions, announced today the opening of its new Online Training Center ( In conjunction with MAP’s newly redesigned website, the Online Training Center will site offer expanded education resources for clients.

    In addition to offering extensive resources regarding card processing solutions, the Online Training Center provides clients with product tutorials, on-demand training videos, and third-party training tools.  MAP seeks to continually update its online services with the development of dashboards and popular collaboration capabilities, including social, blogs, wikis, tagging and ratings, as well as an updated analytics support and reporting.

    Future enhancements are on the way for, including a client portal, an electronic gateway for the collection of digital files and information. MAP credit union clients will have self-service access to a log in area where they can view, download, and upload records, including invoices, pricing, contracts, service guides, bulletins, manuals, and other resources that support their relationship with MAP.
  98. In response to today's news from the Krebs on Security website "MasterCard, VISA Warn of Processor Breach", I am writing to update you about the potential compromise and it's impact to you.         


    Our clients were first alerted to the potential compromise from a CAMS Alert on Friday, March 23, 2012.  At this time, we have not received information that our clients will be or have been directly affected by the breach.  


    Bryan Krebs wrote that "VISA and MasterCard are alerting banks across the country about a recent major breach at a U.S.-based credit card processor. Sources in the financial sector are calling the breach "massive," and say it may involve more than 10 million compromised card numbers."


    In response, Visa has provided the following statement:  


    "Visa Inc. is aware of a potential data compromise incident at a third party entity affecting card account information from all major card brands. There has been no breach of Visa systems, including its core processing network VisaNet.

    "Visa has provided payment card issuers with the affected account numbers so they can take steps to protect consumers through independent fraud monitoring and, if needed, reissuing cards.

    "It's important for U.S. Visa consumer cardholders to know they are protected against fraudulent purchases with Visa's zero liability fraud protection policy, which exceeds federal safeguards. As always, Visa encourages cardholders to regularly monitor their accounts and to notify their issuing financial institution promptly of any unusual activity. Additional consumer security tips are available at 

    "Every business that handles payment card information is expected to protect the security and privacy of their customers' financial information by adhering to the highest data protection standards. Visa also supports advanced security layers such as encryption, tokenization and dynamic authentication through EMV chip technology to further protect sensitive account information and minimize the impact of data compromises."

  99. CUNA, the Credit Union National Association, has filed an amicus brief in a lawsuit brought by merchants against Federal Reserve rules that set a debit interchange fee cap. CUNA is arguing against the merchants' case and said it is joining a broad coalition of trade associations that represent thousands of small and large financial institutions.

    According to CUNA, the joint brief describes how small and large financial institutions are harmed by the Fed's tight fee ceiling and that consumers have not seen any pricing benefits passed along by merchants who lobbied for the government-set cap last year.

    CUNA argues that fees, currently set under provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act are too low and do not allow debit card issuers to cover costs and receive a reasonable rate of return on investments.

    Dodd-Frank, signed into law last year, included a cap on interchange rates for debit card transactions. The final ruling on the legislation set the maximum charge at 21 cents, a significant decrease from previous rates, but still well above where merchants would like to see the rate set. The rule came into effect in October.

    CUNA filed the amicus brief even though most credit unions are exempt from the ruling. The Fed rules do not apply to issuers with less than $10 billion in assets. However, CUNA said the exemption may not be such a benefit as merchants can simply steer transactions towards non-exempt debit cards from bigger issuers where the costs are lower.

    CUNA said other organizations joining the filing of the amicus brief include the Independent Community Bankers of America,  National Association of Federal Credit Unions,  Midsize Bank Coalition of America, Consumer Bankers Association, National Bankers Association, The Clearing House Association, American Bankers Association, The Clearing House Payments Company,  and The Financial Services Roundtable.

  100. Visa prepaid cardholders can now load cash onto their cards at any one of 34 TwinStar ATMs in Washington’s South Puget Sound region thanks to TwinStar Credit Union’s new ReadyLink service. Using ReadyLink-enabled Visa prepaid cards, a cardholder can add money to his or her card at any of TwinStar’s cash-accepting ATMs.

    “Now our members—or anyone who has a ReadyLink-enabled prepaid card—can take their prepaid card to one of our imaging ATMs, insert cash into the machine and load those funds onto that prepaid card,” said Shanna Palmer, card services supervisor for TwinStar Credit Union.

    ReadyLink prepaid cards help meet the needs of more than 80 million unbanked consumers in the United States who rely heavily on cash for everyday transactions and are looking for a card payment alternative. With Visa ReadyLink at merchant locations—and now ATMs—consumers have an easy way to reload funds to Visa reloadable prepaid cards, including payroll, general purpose reloadable and government disbursement cards. This provides immediate access to funds with a safer, more convenient payment alternative to cash and checks.

    “We’re getting great feedback that people like the feature and think it is convenient, especially if it is after hours or they can’t make it to the branch,” Palmer said. “A lot of our customers use the cards to load a specific amount to give to their kids for school trips so if they run out of money, they can just reload funds onto the card while they’re traveling.

    “We’re looking forward to seeing how this grows over the coming months and year,” Palmer continued. “It is just another added feature of the ATM, like offering statements or stamps, and an opportunity to provide continued convenience and service to our customers.”

    TwinStar is the first credit union to complete an institution-wide installation of the ReadyLink network. Member Access Pacific (MAP) recommended TwinStar beta test the product for Visa.

    “MAP recommended us to Visa DPS since we already were selling Visa prepaid reloadable cards and gift cards to our membership that they could reload online or at the branch,” Palmer said. “We thought it would be advantageous, and that is how we got involved in launching the product.”

    TwinStar implemented the beta test in August 2011.

    “The feature has been up on the majority of our machines since November. We were upgrading our ATMs to ADA so we took that opportunity to also do the upgrade to ReadyLink,” Palmer said.

    MAP card and payment services offers industry-leading, full-service debit, credit, prepaid and ATM solutions. As the nation’s only aggregator of the Visa Debit Processing Service platform for credit unions, MAP has realized a special role in the marketplace, leveraging its one-of-a-kind partnership with Visa to provide clients the reliability, security and service that no other provider can offer. With MAP’s customizable, single-point technology systems, credit unions can achieve cardholder usage, loyalty and program efficiency to attain the most value from their payment products and services.

  101. Member Access Pacific (MAP), a leading provider of card processing solutions for credit unions, has received the 2011 All Star Award from Constant Contact®, Inc., the trusted marketing advisor to more than half a million small organizations worldwide. Each year, a select group of Constant Contact customers are honored with the All Star Award for their exemplary marketing results. MAP’s results ranked among the top 10% of Constant Contact’s customer base.
    ‘We’re happy to be recognized by Constant Contact for achieving strong marketing results. Constant Contact’s tools have helped us in the following specific ways to better manage customer/ constituent relationships and engagement,” states Karl Kaluza, MAP’s Marketing Director.
    Constant Contact customers using any combination of the company’s Email Marketing, Event Marketing, and Online Survey tools are eligible for this award. Constant Contact looked at the following criteria to select this year’s All Stars:
    ·    Frequency of campaigns, events, and surveys
    ·    Open, bounce, and click-through rates
    ·    Event registration rates
    ·    Survey completion rates
    ·    Use of social features
    ·    Use of mailing list sign-up tools
    “There is nothing we like more than to see our customers finding success. It’s the reason Constant Contact was founded, and it’s a thrill to see the fantastic results that our All Stars are achieving,” said Gail Goodman, CEO of Constant Contact. “MAP is really leading the charge when it comes to delivering relevant, engagingcontent that drives real business results. We salute this year’s All Stars for their success, and are honored to have played a part in their achievements.”
    About Member Access Pacific
    Member Access Pacific provides premium card processing and ATM services, connectivity, communications and technologies to credit unions throughout the United States. MAP's turn-key solutions for debit, credit, ATM and Prepaid Card processing and support, coupled with its 24/7 customer support and 99.9% uptime processing, reduce costs for members and provide members with best-of-class cardholder service in a safe and secure environment. MAP offers unparalleled employee and management training, reporting systems, service and portfolio management tools. Visit our for more information about our state-of-the-art programs and services.
    About Constant Contact, Inc.
    Constant Contact is revolutionizing the success formula for small organizations through affordable, easy-to-use Engagement MarketingTM tools that help create and grow customer relationships. More than half a million small businesses, nonprofits, and associations worldwide rely on Constant Contact to drive ongoing customer dialogs through email marketing, social media marketing, event marketing, and online surveys. All Constant Contact products come with unrivaled KnowHow, education, and free coaching with a personal touch, including award-winningcustomer support.
    Constant Contact and the Constant Contact Logo are registered trademarks of ConstantContact, Inc. All Constant Contact product names and other brand names mentioned herein are trademarks or registered trademarks of Constant Contact, Inc. All other company and product names may be trademarks or service marks of their respective owners.
    Media Contact:
    Karl Kaluza
    Member Access Pacific
  102. Credit and debit cards are ubiquitous, but they’re mostly pretty dumb. That’s about to change. Over 170 million people in the U.S. have credit cards, and the average card holder has 3.5 of them. And those totals are not even counting debit cards, which are roughly 40% of the total market and growing. That’s a crap load of plastic! In spite of the promise of mobile payments, plastic cards are not going away any time soon.

    We’re at the early stages of a massive wave of innovation in the payment industry. It’s like when Apple launched the iOS platform for mobile developers. The platform in this case is the payment network. Software developers will add new capabilities to cards by programming the payment network to link online applications to specific payment events. Consumers will be able to effectively “drag and drop” apps to their smart cards in the same way that they add apps to their smart phones today.

    We’re big believers at Greylock in the future of “online to offline” commerce, and we’re seeing a ton of innovation in this space. One of our portfolio companies, CardSpring, announced a major partnership with First Data earlier this week. We’ve invested in several other “online to offline” commerce companies including, Groupon, Shopkick, Swipely, TrialPay and Wrapp. And there are many other companies innovating in the space, including startups like Square, and established companies like Google, American Express and Visa.

    For all of the attention focused on online commerce, the market opportunity for “online to offline” commerce is way bigger. Online commerce is now a $200 billion industry, but it’s still small compared to offline transactions. Up to 70% of consumer spending is influenced by Web and mobile research, but over 90% of actual transactions are still conducted in the physical world. Several major industries are motivated to see this new app developer ecosystem take flight. Retail marketers know they can advertise more efficiently if they can actually track and close the redemption loop from online browsing to offline buying. Major consumer internet and financial services companies are also highly motivated, as they see a path to greater advertising and promotion-based revenue if they can demonstrate more marketing value through closing the loop. Online budgets that are directed at social ad campaigns will further expand as consumers share experiences connected to their offline card transactions, including reviews and gifting. So what will be the impact of this emerging app platform on the card carrying public?

    Expanded memory: If you’re like most people, it’s hard to keep track of all of your paper and plastic. With cloud-connected cards, you can clear out your desk drawer or wallet. Instead of holding on to that Red Lobster gift card, REI loyalty card and printed Groupon deal, you can add these to your card, and receive benefits automatically when you make a purchase. You can also store a digital receipt or warranty on your card rather than keeping these in a filing cabinet in the basement. You’ll be kind of like Bradley Cooper in “Limitless”, without the creepy smile or the terrible side effects.

    New spending habits: The ads and offers that you receive today via the Web and mobile are mostly blind to how you’re actually spending your money in the physical world. As these databases are more intelligently connected, the offers you receive will become significantly more relevant and compelling, based on where you spend your actual time and money. Note to payment network innovators: it’s critical that these programs are introduced in a way that protects consumer privacy and retains consumer trust.

    Our spending habits tend to be just that, habits. So if you drink coffee at Starbucks three times a week but never try any of their food, you’ll receive an offer to try one of their fruit plates. Or if you buy gas at a Shell Station on your way to work once a week, you’ll be offered a better deal at the Texaco that is right across the street. The discount you receive from a merchant may also vary based on how hard they think your existing habits are to break. Merchants will be able to dynamically manage supply and demand in their local market by testing real-time what types of discounts and offers they need to offer so as to acquire foot traffic. So Supercuts might offer “40% off” if your historical buying patterns are concentrated 5 miles away, and “10% off” if your transactions are centered 5 blocks away.

    Validated check-ins and reviews: One potential downside of most consumer review sites is that published opinions are dominated by a small, vocal minority. There’s value in getting a broader sampling of people to share their views. A growing percentage of reviews on sites like Yelp and check-ins on sites like Foursquare will over time be tied to actual transaction activity. When you and your friends buy, you’ll be asked via email or text message if you’d like to check-in or provide a review. As a result, more customers will provide feedback and recommendations, and the information they provide will be better validated, in connection with actual transaction activity. A review or check-in will carry additional weight when it’s been validated.

    Quantified self: The “quantified self” is an emerging trend in the digital health space. Early adopters and fitness buffs are wearing devices like Fitbits and Nike FuelBands to track their heart rates, calories burned, quality of sleep and more, so that they can measure and improve their health and performance. The cloud-connected credit card will also deliver a stream of valuable intelligence based on your transaction behavior. Your health data stream alone could include how much of your diet is fast food, how often you actually visited your health club, and how many times you stopped for coffee (aka “your caffeinated self”). Your appified card can also deliver you informed insights on your spending activities across other life categories so that you can optimize decisions and be your best self.

    Status Redefined: Today you receive mostly siloed benefits, based on your transaction history with a single company. So for example, you may get upgraded to first class on United Airlines or you may get access to the Red Carpet Club if you’ve amassed status through flying a hundred thousand miles with United. But in the evolving world of rewards, United might try to win you over with compelling offers if you are a high value traveler who currently travels mostly with other airlines, or they might offer you rewards if you’re someone who has especially high influence through your online social activity. You’ll earn points on your appified card based upon your reviewing, liking, pinning and sharing, and you’ll gain status with retailers and brands for reviewing and promoting what you believe in.

    It’s an exciting time in the payments industry. There are several hundred million people in the U.S. walking around with plastic in their wallets. Developers are now poised to build and launch a wide range of promising new applications to super-charge these cards. Game on!

    This is a guest post written by Reid Hoffman, Ali Rosenthal and James Slavet from Greylock Partners.

  103. Visa Inc. is making a lot of news during the Mobile World Congress in Barcelona this week.  Along with news of its partnership with Vodafone, Visa announced a new product developed in conjunction with trusted service management (TSM) company Oberthur Technologies. The new service, a so-called "one stop solution," lets financial institutions and mobile network operators securely download payment account information to NFC-enbabled smartphones. It's aimed at making it easier for companies looking to issue mobile payment products to provision, secure and manage the accounts on mobile devices.

    "In the same way we have enabled the secure provisioning of payment cards for decades, we are now using mobile technology to securely provision mobile payment accounts over the air,” said Bill Gajda, head of Visa's mobile products.

    "Financial institutions, mobile network operators and even transit operators now have a simple, secure process to activate payment applications at scale and make mobile payments part of everyday life for consumers around the world," Gajda said.

    Visa said the service will include support for Visa and non-Visa payment, loyalty or mass transit applications on mobile devices, giving the example of a consumer downloading the appropriate app for a mass transit system in another city as a possible use for the technology.

    According to the announcement, the new solution addresses a need for every member of the mobile payment ecosystem, from account holders to MNOs.

    Visa said its next step will be to expand the product to create a "hub" that will not only connect one device to one account, but enable frictionless "many-to-many" accounts, avoiding what it calls "the need for parties to form bilateral commercial and technical relationships."

  104. Billing it as the "World’s Largest Mobile Payments Partnership," Vodafone and Visa Inc. announced a new worldwide partnership today. The companies said they will work together to bring a Vodafone-branded, NFC-enabled mobile wallet to Vodafone’s 398-million subscribers in more than 30 countries using Visa’s payment network and products.

    The companies said the new mobile payment services will be based on Visa prepaid accounts through any Visa card issuer, and will use Visa's payWave technology and installed SIM cards in smartphones to handle the NFC transactions. The mobile wallet will also be able to manage other accounts like loyalty and rewards programs and gift cards.

    "The Vodafone mobile wallet represents the next stage of the smartphone revolution," said Vittorio Colao, Group Chief Executive Officer of Vodafone. Colao added that the mobile wallet offers customers the speed, simplicity and convenience of managing their everyday transactions with a single wave or tap of their smartphone.

    The companies also announced the new mobile wallet will be open to partners like financial institutions, retailers, transport and utilities.

    "Our mobile wallet will be open to any service provider and we are committed to enable all partners to provide our joint customers the richest service portfolio possible," Calao said.

    The service will be launched first in Germany, the Netherlands, Spain, Turkey, and the UK starting sometime in the next financial year and will roll out to other markets over time. 

    Visa Europe CEO Peter Ayliffe said the new partnership represents a huge stride forward for the entire mobile payment industry.

    "Visa’s future of payments initiative is more than just a promise," Ayliffe said, "these services are real, tangible and coming to the mainstream consumer market in the very near future."

    Ayliffe said that any Visa card issuers will be able to work with Visa and Vodafone to enable mobile payments for their customers, backed by all the security, trust and global acceptance the Visa brand represents.

    Visa Inc. president John Partridge echoed the belief that the agreement with Vodafone is a boost for mobile payments.

    "The convergence of global payment networks, such as VisaNet, with leading mobile telecommunication networks, such as Vodafone, has the potential to transform the way people pay and get paid the world over," Partridge said in the announcement.

    Vodafone said the partnership is just a part of its larger m-commerce strategy, a strategy it hopes will give consumers a comprehensive mobile-based alternative to the cash and cards. Vodafone said it is already in discussions with a large number of service providers like banks, retailers and event organizers to host a broad range of services on its new mobile wallet.

  105. Member Access Pacific is pleased to continue its long tradition of sponsoring legislative advocacy for credit unions in Oregon and Washington. Again, MAP will sponsor the Washington state Government Affairs Conference (WGAC) in Olympia, WA.

    The WGAC offers a crash course in legislative advocacy, followed by the immediate opportunity to put that knowledge to use in face-to-face meetings with legislators.

    This year is the first for MAP to sponsor the Oregon Legislative Leadership Summit,  an event aimed at bringing together credit union leaders and their elected officials in Salem, OR.  The Leadership Summer begins with a group lunch and briefing, followed by visits with Oregon legislators, who will be invited to join participants at a culminating reception at the state capitol.

    According to Mark Minickiello, vice president of legislative affairs for the NWCUA, coordinated advocacy efforts like the WGAC are critical to the well-being and growth of the credit union movement.

    “Every year, our state legislature passes laws that will have an effect on credit unions,” Minickiello said. “It’s important to be a part of that process to ensure credit unions are fairly represented. Our annual state GAC affords us the opportunity to educate a lot of legislators about pending legislation that would have an effect on credit unions—all at the same time.”

    The three-day WGAC agenda begins with a “Pizza and Politics” dinner on Wednesday, Feb. 1, in which Minickiello will give a briefing on the most important current legislative issues. Thursday’s intense schedule includes further updates, briefings and trainings from the NWCUA legislative affairs team, with visits with legislators occupying the afternoon. The event is capped by the Anchor Awards Breakfast on Friday morning.

    But more important than any one agenda item is what the WGAC represents as a whole: an opportunity to show the size and strength of the credit union movement in the Northwest while laying the groundwork for future advocacy.

    “Legislative hill visits are of prime importance during the state GAC,” he said. “When we can send 100 people to the Capitol to meet with their legislators simultaneously on one afternoon, we meet our goal of educating a large number of legislators. But it also makes a statement. Credit unions are paying attention, and credit unions get involved. It makes us part of the political fabric at the Capitol. So when representatives from our Association meet with a legislator or testify on a bill, that legislator knows who we are there representing.”

    The 2011 WGAC focused on prize-linked savings legislation, which successfully passed later in the year, and on setting the stage for a public funds bill, which continues to be a focal point in 2012.

    “Our main piece of legislation this year would allow public entities to deposit funds at any credit union in our state up to the level of federal insurance,” Minickiello said. “Currently, only state-chartered credit unions are approved depositaries for up to $100,000. This year’s state GAC would be a success if, when our legislation comes up for discussion in the caucus room or on the House or Senate floor, legislators already know about the issue and have just heard from credit union people in their district who want them to vote ‘yes.’”

    While the events of last fall have already resulted in unprecedented attention and coverage for credit unions around the nation, Minickiello stressed that now is the time to capitalize on that heightened awareness and leverage the growing power of the credit union movement.

    “Most legislators will clear their calendar if possible to meet with constituents coming to visit them in Olympia,” Minickiello said. “Especially credit union people! They know how important their credit unions are to their communities and their constituents, and if they don’t, a hill visit is the perfect time to let them know. They want to know how businesses and employers in their district feel about legislation that they may be asked to vote on.

    “And we have seen an invigorated interest in credit unions since the Occupy movement began and since Bank Transfer Day. Lots of legislators are asking what they can do to help credit unions. We tell them, pass our public funds bill!”

    The idea of jumping into the political arena and of sitting down with state legislators can be an intimidating one, and learning the intricacies of legislative advocacy can sound like a daunting task. But Minickiello explained that the WGAC is the ideal time for credit union leaders to make their voices heard, whether they are seasoned veterans or making their first trip to the Capitol.

  106. Recent debit card regulations have transformed market incentives for payments, creating a confusing environment for consumers, according to a recent study from Javelin Strategy & Research.

    A new Javelin study finds that 73 percent of consumers are satisfied with the debit card option. However, debit card issuers are facing a combined $12.2 billion loss due to new regulations. As a result, many FIs are now steering consumers toward more profitable credit cards.

    On the other hand, many merchants who benefit from Durbin-driven reductions in interchange fees are encouraging debit card use, while small-ticket merchants who have seen costs for debit acceptance rise significantly are encouraging the use of cash or other payment options besides debit cards. As a result, consumers are facing an onslaught of conflicting messages about which payment option to use.

    Other key findings from the Javelin report, Evolution in Consumer Payments Behavior:

    • Cash is the most regularly used payment option: 79 percent of consumers report that they had made a cash purchase within the past seven days.
    • 90 percent of consumers claim they would require a discount of 3 percent or more to switch to another payment option.
    • 72 percent of underbanked consumers indicate that they most frequently use cash for any type of purchase. Just 6 percent of these consumers use prepaid cards most frequently.
  107. Online merchants made significant progress fighting fraud in 2011, according to CyberSource, a payment management company. CyberSource, a Visa subsidiary, today announced results of its 13th annual survey of e-commerce fraud.

    According to the survey, the percentage of online orders that turned out to be fraudulent dropped from .9 percent in 2010 to .6 percent in 2011 -- the lowest in the 13-year history of the survey.

    However, the cost of combatting fraud continues to grow, according to CyberSource. Dollar losses were up, manual review continued to climb, and merchants reiterated their concern that fraud is becoming more difficult to detect. Twenty-seven percent of respondents said they are engaged in mobile commerce, and initial indicators regarding combatting fraud in that channel are promising.

    On average, merchants say 1 percent of online revenues were lost to fraud in 2011, a slight increase over last year's figure of .9 percent, according to the survey. That translates to an estimated 2011 merchant dollar loss of approximately $3.4 billion. This is the first time merchants have cited an increase in the fraud rate by revenue since 2004, said CyberSource. The decease in the amount of online fraud, accompanied by higher estimated revenue loss, means fraudsters are stealing more expensive items -- $250 on average as opposed to $150 on average for a valid order.

    "The continued growth in e-commerce is a welcome development for merchants and the economy overall," said Andrew Naumann, CyberSource senior business leader, fraud management solutions, in a statement. "The bad news is that fraudsters took in a higher dollar volume, the first such increase we've seen since 2008. Our study shows merchants are working harder than ever to keep fraud in check, using more tools and reviewing more orders. Clearly the criminal element is growing more sophisticated."
  108. Visa USA has made some recommendations for how to implement the shift from magnetic stripe payment cards to those which use a chip for authentication. And a Visa executive predicted the technology will have become a standard payment method by 2015.

    The broadly written guidelines for implementing the technology are written for card issuers, chip card transaction acquirers, chip vendors, chip card vendors, chip terminal vendors and chip card personalization bureaus. Stephanie Ericksen, head of authentication product integration for Visa., explained they were aimed at both clearing up misconceptions about the technology and assisting in the first part of the brand's implementation plan.

    The chief misconception that Visa appears primarily concerned with dispelling is that the new cards will carry both a chip and off-line personal identification number.

    The difference between an online and off-line PIN is that an online PIN is not stored on the card. Once the cardholder enters the PIN at the point of sale terminal, the PIN is encrypted by the PIN pad and sent online to the host for validation, similar to how PIN debit transactions are authorized today.

    In an off-line PIN situation, the PIN is stored securely on the chip card and during a transaction, when the cardholder enters the PIN, the POS terminal sends the PIN to the chip card for verification. The cardholder verification therefore takes place within the chip card.

    “One thing that’s clear from the questions is that there’s a lot of confusion around the myth that EMV means chip-and-PIN. It doesn’t in many countries, including the U.S.,” Ericksen wrote in an online entry about the recommendations. “That’s because, in the U.S., we can rely on online processing where transactions are transmitted in real-time to the issuer for approval. With that in place, there’s no need for the off-line authentication that was the genesis of chip-and-PIN.”

    The card brand announced it was prepared to start supporting the use of chips in payment cards in the U.S. in August 2011.

    “All chip transactions should leverage the robust, real-time online infrastructure for authorization and authentication,” Visa wrote in the guidelines. “The U.S. has a zero floor limit; therefore, nearly 100% of all transactions are authorized online in real time. Also, many U.S. issuers use host-based fraud mitigation tools enabled by online, real-time authorization. The existing online infrastructure should be used to optimize chip transaction processing in the U.S,” the card brand wrote.

    Visa added that it will also continue to support other ways of verifying cardholder identity for transactions, including signature, online PIN and no signature for low-value, low-risk transactions. Visa will not require a chip-and-PIN approach in the U.S. Instead, stakeholders will have the flexibility to choose which CVMs to support, the brand added.

    Ericksen said that since it indicated it would support the new technology in the U.S., the card brand has been focusing on building the infrastructure to allow more terminals and merchants to accept the cards.

    Ericksen described this process as being more akin to renovating a house than tearing one down and rebuilding it. She described the necessary changes as additions to different parts of the acceptance and processing technology to allow them to carry the additional data from the smart card transactions.

    “Card processors are already transmitting a good deal of data,” Ericksen observed, explaining that phase one is a matter of making sure they have the additional slots needed for the smart card data.

    She also explained that the costs for the technology has been largely falling as more retailers, acquirers and processors have adopted it, but she also said that the costs of point-of-sale terminals, which can handle both smart card payments and mobile payments, have remained higher.

    When Visa announced that it would support the smart card technology, Ericksen noted that the greatest relief from the PCI card data security compliance would come to retailers that installed terminals that both read smart cards and mobile payments. The brand hoped that savings from easing PCI compliance would be enough to offset the additional costs of terminals that accepted both smart card and mobile payments.

    Ericksen said that once the acceptance infrastructure was in place, the brand would rely on issuers to handle introducing the technology to consumers and she predicted it would not be too hard to do. A number of issuers, including some credit unions, have already begun making the smart cards available to cardholders who travel overseas, she noted, and the card brand has heard that friends and family members of those cardholders have also approached their institutions seeking the cards. 

  109. (MONEY Magazine) -- Does "ditch my bank" make your list of resolutions for 2012? Join the club. Americans' simmering resentment toward big banks seems to have finally bubbled over: In the month after Bank of America (BAC, Fortune 500) threatened a monthly fee on debit cards, 221,000 folks joined more consumer-friendly credit unions -- equal to about a third of the new members for the entire previous year.

    In addition, customers of the 10 largest retail banks are so fed up with rising fees and dismal rates that the institutions stand to lose a combined $185 billion in deposits over the next year, says consulting firm cg42.

    Simply switching banks, however, might result in a frustrating game of whack-a-mole; a different institution could adopt the same miserable practices a few months from now. On the other hand, stuffing your dough in the mattress isn't practical, let alone comfortable.

    How about a third way? Today "you can conduct most of your banking with institutions that aren't banks," says Alex Matjanec of

    While going bank-free isn't for everyone, the truly incensed might try these alternatives for managing cash, growing savings, even borrowing.

    Best checking alternative: Brokerage cash account

    Most major brokerages offer cash-management accounts that function exactly like bank checking: You can set up direct deposit, get an ATM/debit card, write checks, even pay bills online.

    "Brokerages are competing with banks to build a relationship with you," says McLean, Va., financial planner Gordon Bernhardt. Since the firms hope you'll use money you store to buy investments, they don't nickel-and-dime the cash accounts.

    In fact, the options at five of the six brokerages MONEY surveyed (e*Trade, Fidelity, Schwab, Scottrade, TD Ameritrade, and Vanguard) were virtually fee-free. No monthly charges or minimums; no fees for bill payments; gratis withdrawals from any ATM, including reimbursements for surcharges applied by banks. A brokerage account was typically required, so look first to the firm where you already keep investments.

    Vanguard was the anomaly among those that MONEY looked at. It alone required a certain threshold of assets -- $500,000 for access, $1 million to avoid fees. And it's the only one that didn't offer FDIC insurance; the rest hold uninvested funds with a partner bank or their own bank entity.

    Best savings alternative:

    Savings motivation site offers 0.7% on balances up to $50,000, 0.5% for amounts over that -- pretty decent compared with the average bank savings yield of 0.14%. And while the site isn't itself a bank, it stores your cash with one, so your money is insured.

    Of course, you can do a bit better, around 1%, at a handful of online banks, but SmartyPig serves up other benefits banks don't -- like helping you save.

    Savings: Get more yield on your cash

    Rather than offering traditional accounts, SmartyPig makes you create goals, such as "vacation," which you fund by direct deposit or transfers from a bank or brokerage.

    You can track progress graphically, and share the info with others. (Or set one generic goal, like "emergency fund," to simply take advantage of the rates.)

    Saving for a purchase? Once you've met your target, you can choose a retailer gift card worth up to 11% more than your balance.

    Best borrowing alternative: A credit union

    While credit unions offer similar services to banks, these not-for-profit cooperatives aren't beholden to shareholders or the bottom line.

    "That unique structure typically translates into more favorable terms for borrowers," says Greg McBride of

    Send The Help Desk your money questions

    A five-year new-car loan averages 4.9% at banks, vs. 3.5% at credit unions, reports Informa Research Services.

    For home-equity lines of credit, banks are offering 4.7%, credit unions 4.4%. Rates on fixed mortgages come up about equal, though you'll probably save a few hundred in fees and get more direct access to decision-makers at a credit union.

    Search options at And don't assume you won't qualify for one. Many have relaxed their membership policies, says Matjanec.

  110. The National Retail Federation, the Food Marketing Institute, the National Association of Convenience Stores and two retailers filed a lawsuit in federal court today saying the Federal Reserve failed to follow key requirements of a 2010 law when it adopted a flawed cap on debit card swipe fees that took effect this fall. NRF and the other groups say the failure has allowed big banks to continue charging unjustifiably high swipe fees and has discouraged price competition among credit card networks.
    “The Federal Reserve was required by law to come up with swipe fees that were ‘reasonable’ and ‘proportional’ but what we got were neither,” NRF Senior Vice President and CEO General Counsel Mallory Duncan said. “Instead, the Fed allowed themselves to be influenced by the very banks they are supposed to regulate and raised the originally proposed cap to include expenses the law said were not allowed. In doing so, they literally gave away half the savings that could have been seen by merchants and their customers. We want them to go back and follow the law this time.”
    “Rather than following the law, it’s almost as if the banks and the Fed were working hand-in-glove to block the genuine competition and common-sense price reductions Congress directed,” Duncan said. “The Fed’s regulations have blunted the competition that would have made greater savings possible.”
    The regulations, which took effect October 1, have also led to an increase in swipe fees for some small-ticket purchases, the lawsuit says. The suit was brought by NRF on behalf of both NRF and its National Council of Chain Restaurants division, which filed comments with the Fed earlier this year warning of the potential impact on small purchases. In addition to FMI and NACS, other plaintiffs include NRF member Boscov’s Department Store, based in Reading, Pa., and NACS member Miller Oil Co., a convenience store/gas station chain based in Norfolk, Va.
    The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 required the Federal Reserve to set guidelines that would result in debit card swipe fees that are “reasonable” and “proportional” to banks’ costs in processing debit card transactions. Financial institutions with less than $10 billion in assets were exempt.
    The Fed said in December 2010 that it had determined that it costs banks an average 4 cents to process a debit transaction, and proposed that the fees be capped at no more than 12 cents per transaction – triple banks’ actual cost. After intense lobbying by banks and the card industry, however, final regulations adopted in July 2011 set the cap at more than five times the actual cost – 21 cents plus 0.05 percent of the transaction and, in most cases, an additional 1 cent for fraud prevention.
    While the Dodd-Frank law said the Fed could consider the incremental costs of acquiring, clearing and settling each transaction and specifically prohibited any other expenses from being used to inflate those costs, the lawsuit alleges that the Fed – under pressure from the banks and card industry – included costs that were barred by the law. Doing so has deprived merchants and their customers of the full extent of the swipe fee relief to which they were entitled.
    The approximate 21-cent cap would lower swipe fees for most purchases, which averaged 44 cents but could range as high as several dollars under the previous formula of 1-2 percent of the transaction amount. This fall, however, both Visa and MasterCard announced that they would charge the maximum amount even on small-ticket transactions the card industry previously processed profitably for as little as 6 to 8 cents. The move would severely impact many members of NRF’s National Council of Chain Restaurants division, whose transactions often amount to only a few dollars.
    “Congress passed this law to cap swipe fees but the banks have turned a ceiling into a floor and raised fees dramatically higher for quick-service restaurants across the nation,” NCCR Executive Director Rob Green said. “This clearly was not the intent of Congress.”
    The plaintiffs also said that the Fed’s final rules discourage competition among debit card networks. In order to establish a competitive market between networks such as NYCE, Pulse and Plus as well as the Visa and MasterCard networks, the law required that merchants be given a choice of two networks on every transaction. Under the Fed’s final regulations, however, banks can limit their cards such that merchants may never have a choice of networks. The lack of competition will allow the dominant networks to continue increasing their fees.
    The lawsuit was filed in U.S. District Court in Washington, D.C.
  111. Vending machine payment-services provider USA Technologies Inc. has struck a one-year interchange deal with Visa Inc. that allows machine owners to accept debit cards without higher costs. New interchange pricing that took effect Oct. 1 had threatened to raise card-acceptance costs for USA Technologies’ clients by more than 200%. The Malvern, Pa.,-based company, which services 129,000 unattended locations that accept cashless payments, has not reached a similar deal with MasterCard Inc. but continues to accept that network’s debit cards.

    “The interchange reimbursement fees made available to the company by the network [Visa] pursuant to the agreement will allow the company to continue to accept the network’s debit products over the one-year term without adversely impacting the company’s historical gross profit from license and transaction-fee revenues,” says an Oct. 18 regulatory filing from USA Technologies. The company didn’t announce the deal until Friday.

    Both Visa and MasterCard on Oct. 1 replaced their identical small-ticket debit interchange rates (those applicable to transactions under $15) of 1.55% of the sale plus 4 cents with a single rate for each network of 21 cents plus 0.05% of the sale. That’s the new cap the Federal Reserve Board set for debit cards from issuers with more than $10 billion in assets, with another 1 cent pending for fraud-control expenses. USA Technologies didn’t disclose pricing details in the filing or Friday's news release, but the release underlines the term “no increase,” implying 1.55% plus 4 cents remains in effect.

    With an average ticket of $1.67, USA Technologies could have seen its interchange expense rise by 235%, from 6.6 cents to 22.1 cents, had 22 cents plus 0.05% been applied. Some 82% of purchases on the company’s network in fiscal 2011 were small-ticket debit card transactions, with 75% of those on Visa debit cards.

    “As a leading provider of cashless payments systems to the small-ticket, unattended markets like vending, USAT moved swiftly and successfully, working with its card-processing partners, to develop a solution to overcome the potential negative impact to our industry arising from recent increased debit card interchange fees,” Michael Lawlor, senior vice president of sales, said in the release. Lawlor was not available for an interview Friday afternoon.The USA Technologies release notes that in addition to Visa debit and prepaid cards, machines in its network will continue to accept Visa, MasterCard, American Express, and Discover credit cards but makes no mention of MasterCard debit cards. In a statement to Digital Transactions News, however, a company spokesperson said, “We currently continue to accept MasterCard debit cards and we hope to continue to accept them in the future.”

    This is the second deal for Visa and a provider of card services for vending machines. Apriva Inc. a major processor of payment transactions from vending machines, told machine owners that it is working to assure their card-acceptance costs will remain stable despite the uncertain status of a program it has with Visa Inc. that gives them an interchange break if they install hardware to accept contactless cards. The program could expire at the end of the year, just three months after the Durbin Amendment’s debit card price controls took effect.
  112. In 2010, identity theft and fraud claimed fewer victims than in any other period since Javelin began conducting surveys in 2003. Driving that decrease was the reduced rate of existing account fraud, although incidents of all types of fraud dropped from 2009. Meanwhile, consumer costs, the average out‐of‐pocket dollar amount victims pay, increased, reversing a downward trend in recent years. This increase can be attributed to new account fraud, which showed longer periods of misuse and detection and therefore more dollar losses associated with it than any other type of fraud. The Javelin 2011 Identity Fraud Survey Report provides a detailed, comprehensive analysis of identity fraud in the United States to help consumers and businesses better understand the effectiveness of methods used for its prevention, detection and resolution. A nationally representative sample of 5,004 U.S. adults, including 470 fraud victims, was surveyed via a 50‐question phone interview, providing insight into this crime and the affects on its victims. This report, supported by the Better Business Bureau, is issued as a longitudinal update to the Javelin 2005, 2006, 2007, 2008, 2009 and 2010 Identity Fraud Survey reports and the Federal Trade Commission’s (FTC’s) 2003 report.

  113. Seattle residents no longer have to worry about leaving a credit card at a bar or waiting to close their tab. Tabbedout, the mobile payment solution that enables customers to pay their bar or restaurant tab with their phone, has launched service in nearly 30 locations throughout Seattle, with more locations coming soon. Seattle is the latest market in which this Austin, TX-based company has expanded service.  Available for free on both iPhone and Android smartphones, the Tabbedout app was built by security experts who understand the value of a good time. Tabbedout allows users to store credit or debit card information directly on their phone, encrypted and under passphrase protection, instead of on host servers or in “the cloud.” Seattle consumers are safe from the threat of stolen identity due to lost or forgotten credit cards since they now can open and pay their tab directly from their phone, without handing their payment information to a server. In addition to security, Tabbedout users get the convenience of no longer having to wait in line while closing their tab. They can simply pay from their phone whenever they want, wherever they want Tabbedout allows customers to view a running tab of what they’ve ordered throughout the night, removing any buzz-kill surprises the next day. For a complete list of Tabbedout locations in Seattle or to download the app, visit
  114. Executives of Wal-Mart Stores Inc and McDonald's Corp say new U.S. rules limiting debit card processing fees will not cut their costs as much as they hoped, and could actually boost their expenses. Treasurers from the world's largest retailer and biggest restaurant chain said at a financial industry conference on Friday that debit card processing costs, or interchange fees, were not low enough despite the new limits to have a real impact on retailers.

    The interchange fees that banks charge to merchants were capped on Oct. 1 as a result of the Durbin amendment, a provision of the 2010 Dodd-Frank financial reform law.  Under the Durbin amendment, the Federal Reserve capped debit card processing fees at 21 to 24 cents per transaction, roughly half the previous industry average. Banks have said the new rule is a windfall for retailers, moving as much as $8 billion in revenues off lenders' books. But U.S. retailers that rely on a high volume of small dollar transactions could see an increase in their debit card processing costs, because prior debit costs for smaller purchases had lower fees. However, 7-Eleven gas stations and convenience stores will likely see a mixed impact from the capped fees. The world's largest convenience store chain's processing costs for gasoline purchases will likely drop, but costs will likely rise on purchases customers make inside their stores.

  115. A recent report by Visa shows the economic effects of mega-sporting events and the impact they have on tourism spending in the event host countries. The report analyzes Visa cardholder spending patterns of three recent mega-events: 2010 FIFA World Cup South Africa, the Vancouver 2010 Olympic Winter Games and the Beijing 2008 Olympics Games. According to the report, events of this scale create significant increases in expenditure and give host countries a chance to shine on the global stage.  For each of the three events analyzed, there was healthy growth in Visa payment card expenditure during the event compared to the year prior:
        82 percent for the 2010 FIFA World Cup South Africa
        93 percent for the Vancouver 2010 Olympic Winter Games
        15 percent for the Beijing 2008 Olympic Games
    These three events have been catalysts of economic recovery for the host country and nations surrounding it in terms of international tourism spending.

  116. Isis, the national mobile commerce joint venture between AT&T Mobility, T-Mobile USA and Verizon Wireless, today announced that Visa, MasterCard, Discover and American Express will join Isis in making mobile commerce a reality for millions of U.S. consumers and merchants. Isis’ relationships with all four payment networks mean that with Isis-enabled phones and payment terminals in place, merchants and consumers will have ubiquity and freedom of choice when it comes to payment network acceptance.

  117. When we think “mobile payments,” a slew of tech brands fly to mind: Google’s new Wallet app, the upcoming iPhone’s rumored payment-enabling chips and Twitter co-founder Jack Dorsey’s highly-touted and well-funded Square, to name a few. But ask consumers who they trust to handle mobile payments, and the answer is pretty clear: the same brands they currently trust with payments today -- namely credit-card companies such as Visa, American Express and Mastercard, according to a study by Ogilvy & Mather.
  118. The latest annual American Bankers Association survey of consumer banking preferences shows online banking continues to grow as the popularity of ATMs decline. The August survey of more than 2,000 online consumers found that 62% of respondents named the online channel, meaning laptops or personal computers, as their preferred banking method versus only 36% in the 2010 survey. From 2007 through 2009, Internet banking scored in the low to mid-20s in popularity. Consumers now prefer online banking to all other channels combined. While online banking has long been popular with tech-oriented younger Americans, older consumers are beginning to embrace the channel in a big way. Some 57% of respondents aged 55 and up said online was their preferred banking method against only 20% who stated that preference last year. The popularity of visiting branches fell a bit, from 25% of respondents naming the branch as their preferred banking channel in 2010 to 20% this year. Six percent of respondents said the mail is their preferred way of banking versus 8% in 2010. Only 3% of respondents preferred the telephone, down from 6% last year. Perhaps the biggest surprise in the results is the plunge in ATMs’ popularity: only 8% of consumers in 2011 prefer the ATM channel versus 15% last year.

  119. The number of dollar bills rolling off the great government presses fell to a modern low last year. Production of $5 bills also dropped to the lowest level in 30 years. And for the first time, the Treasury Department did not print any $10 bills. The meaning seems clear: Cash is in decline. In 1970, at the dawn of plastic payment, the value of United States currency in domestic circulation equaled about 5 percent of the nation’s economic activity. Last year, the value of currency in domestic circulation equaled about 2.5 percent.

    It might be easy to look down the slope of this trend and predict the end of paper currency. However, production of paper currency is declining much more quickly than actual currency use because the bills are lasting longer. Thanks to technological advances, the average dollar bill now circulates for 40 months, up from 18 months two decades ago, according to the Federal Reserve.

    The futurists who have long predicted the end of paper money also underestimated the rise of the $100 bill as one of America’s most popular exports.  For two decades, since the fall of the Soviet Union, demand has exploded for the $100 bill, which is hoarded like gold in unstable places. Last year Treasury printed more $100 bills than dollar bills for the first time. There are now more than seven billion pictures of Benjamin Franklin in circulation — and the Federal Reserve’s best guess is that two-thirds are held by foreigners.

    This is very profitable for the United States. Currency is printed by the Treasury and issued by the Federal Reserve. The central bank pays the Treasury for the cost of production — about 10 cents a note — then exchanges the notes at face value for securities that pay interest. The more money it issues, the more interest it earns. And each year the Fed returns to the Treasury a windfall called a seigniorage payment, which last year exceeded $20 billion.

    To meet foreign demand, the Fed has licensed banks to operate currency distribution warehouses in London, Frankfurt, Singapore and other financial centers. In March, largely because of the boom in $100 notes, the value of all American notes in circulation topped $1 trillion for the first time.

  120. A recent report by Aite Group claims that shifting consumers from debit cards use to prepaid cards is a ‘smart’ way to help banks recoup lost revenue from reduced debit interchange fees.

    “Big banks are anticipating a significant loss in debit interchange,” states Ron Shevlin, senior analyst at Aite and author of the report. “Their responses to this have been a little like chickens running around with their heads cut off.”  Eliminating free checking, adding new ATM fees and killing reward programs have all surfaced as ways to make up for the expected revenue losses caused by Durbin.

    But that’s not the smartest way to go. Shevlin recommends that banks increase their prepaid market focus, rather than opt for negative strategies that will lead to “unwanted customer behavior” like an increase in checks and cash usage. The shift to prepaid cards, he explains, is feasible because there’s already a population of “heavy” prepaid card users and because prepaid cards are not exclusive to the unbanked, like many financial players believe. In fact, Aite Group believes that banks can recoup somewhere from 20% to more than 50% of anticipated lost debit card interchange revenue by marketing prepaid cards to their customers, particularly by focusing the product to their “heavy” transactors.

    To achieve success, banks will need to educate and incentivize their consumers to use prepaid cards, much like they did in the debit space. This is where credit unions can step in and capitalize on a “new market” for prepaids. Traditionally, prepaids have been targeted to narrow segments, such as the unbanked and millennials.  With large FIs - and even Walmart - putting big dollars into marketing prepaid cards, demand from credit union members will grow even as cardholders continue to hold on to checking and debit.

    Credit unions benefit most by having a prepaid solution in place that is both robust and flexible. This means offering members both a gift and a reloadable solution.  For more information about MAP Prepaid solutions, contact Herb Tajalle at 866-598-0698, ext 1616 or

  121. Payment card issuers’ fraud prevention measures are lagging behind those for fraud resolution and detection, according to Javelin Research’s Seventh Annual Issuer Safety Scorecard. Most of the leading U.S. card issuers have received poor grades for consumer education and fraud prevention for the last three years, says Javelin’s Phil Blank. Javelin found that institutions are not collaborating with security vendors to deal with mounting anxieties about card-not-present fraud, nor are they deploying multifactor or second-layer authentication that relies on the mobile channel. The research implies that only the customer can combat card-not-present fraud, underscoring the need for card issuers to involve consumers in second-layer transaction approval. “The mobile channel could be used to send alerts to customers about card transactions,” Blank says. He says fraud would decline if issuers implemented policies for consumers to review and respond to mobile prompts as second layers for transaction authentication.

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