RBA Reforms Save Merchants A$430MM Annually

The Reserve Bank of Australia last week reported that merchant service fees charged by banks in Bankcard, MasterCard, and VISA credit card programs have fallen by 35 basis points, or A$430 million at an annual rate, since reforms to credit card interchange fees took effect in October 2003. The RBA says merchant service fees for American Express and Diners Club have fallen by less than 10 basis points over the same period. The RBA survey shows that by March of 2003, the average merchant service fee for Bankcard, MasterCard and VISA had fallen to 1.4% of the transaction value, compared to 1.8% prior to the reforms. Since March 2003, the average merchant service fee has fallen by a further 35 basis points to around 1.05%. This brings the cumulative decline since 1999 to around 75 basis points, which represents a fall of more than 40% in the average merchant service fee. The RBA says that overall, the 35 bps reduction in merchant service fees since the reforms came into effect is consistent with the reduction in the interchange fee for electronic transactions, although it is smaller than the reduction in the “standard” interchange fee.

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FTC Loses Beales Next Month

The Federal Trade Commission’s Director of the Bureau of Consumer Protection, Howard Beales, is leaving on August 6th to return to academic life. Beales’ leadership of the FTC’s Bureau of Consumer Protection yielded impressive law enforcement results, with the agency filing 258 federal district court cases and obtaining orders for nearly $1.3 billion in consumer redress, including the two largest consumer redress settlements in the Bureau’s history. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them.

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Majority of Internet Users Fear Card Use

A new survey has found that one in five Internet users have ever made an online purchase, and of those who do shop online, 69% think e-tailers should do more to make them feel secure. The survey by VISA Europe found that even existing online shoppers have concerns about the safety of shopping online with one in five only buying over the Internet as a last resort. More than half of those surveyed agreed this continued
reluctance of web users to shop online was due to an “irrational fear”
of the Internet. This perception was borne out by the fact that,
although a clear majority of Internet users believe it is not safe
to give your credit card details online, only 15% actually know
of anyone who has their credit card details misused online. The release of the VISA Europe report marks the launch to consumers of VISA’s
online payment card protection system, “Verified by Visa.” To date, “VbV” has already been adopted by 80% of US banks, and the European rollout is gathering pace – over 10,000 retailers, 50 acquiring banks and 54 issuing banks across Europe have signed up for the service. Acquiring banks registered for “VbV” now cover more than 90% of UK e-commerce traffic.

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Fifth Third Reward Programs Drive Profits

One of the nation’s first issuers to reward both credit and debit card use, says the program has produced more profitable consumer relationships. OH-based Fifth Third Bank reports that its two-year old rewards program produced cardholders who spend 90% more per statement cycle than all other Fifth Third consumer cardholders. The issuer also found that “Fifth Third Cash Rewards” MasterCards comprise almost 20% of all new credit card accounts opened monthly at the bank and that 80% of “Cash Rewards” cardholders have other account relationships with Fifth Third. The successful “Cash Rewards” program is a partnership between Fifth Third and MasterCard Advisors. Under the program, credit cardholders earn a 1% cash reward for every dollar of purchases on the “Fifth Third Cash Rewards MasterCard.” Debit cardholders can earn one point for every two dollars in purchases made using a “Fifth Third Enhanced Jeanie,” “CheckCard Plus” or “e53 debit MasterCard” card.

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BabyCenter Launches a Card with MBNA/Vesdia

San Francisco-based BabyCenter has teamed with MBNA and Vesdia to launch the “BabyCenter MasterCard” credit card. The new card enables parents to earn rebates swept into an investment account. Cardholders automatically earn a 1% rebate on all purchases and, with their registration in the “BabyCenter Savings Program,” parents earn an additional 5% rebate from purchases at the BabyCenter Store along with bonus rebates from hundreds of participating merchants. Cardholders can direct their rebates into an investment plan such as a 529 college savings plan, money market account, mutual fund or savings account. Atlanta-based Vesdia is also the savings engine behind the “BabyMint” and “NestEggz” programs.

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AEON & JCB

Non-bank credit card company, AEON Credit Service, has become the third major card issuer to receive a license for issuing the JCB Card in Hong Kong, following HSBC and Hang Seng Bank. The new “AEON/JCB Travel Card”,
which displays a kabuki motif, offers cardholders special deals at
merchants in Japan, as well as exclusive low-price tours to Japan. AEON and JCB anticipate that more than 10,000 cards will be issued in the first year. The “AEON/JCB Travel Card” will be advertised aggressively in newspapers and magazines, on the subway system and buses, and through various other channels to reach the target market of approximately 3,400,000 in Hong Kong. In 1993, AEON became the first non-bank in Hong Kong to issue credit cards and currently has about 720,000 cardholders. JCB began expanding globally as an international credit card brand by opening its first overseas subsidiary in Hong Kong in 1981, and the first JCB Card issuing program outside Japan was launched in partnership with HSBC four years later in 1985.

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HP to Upgrade 2,400 TD ATMs and POS Processing

TD Bank Financial Group and HP announced an initiative in
which HP will upgrade and manage TD’s national automated banking network
and POS transaction infrastructure. The seven-year outsourcing agreement, valued at $320 million, will upgrade approximately 2,400 ATMs across Canada and TD’s automated banking and POS transaction processing system. HP also secured outsourcing deals with MCI and Standard Register.

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AirPlus and GE Launch an U.S. Corporate MasterCard

Neu-Isenburg-based AirPlus International has added a corporate card to its arsenal of corporate travel payment solutions targeting the U.S. market. The “AirPlus Corporate MasterCard” will issued by GE Capital Financial. AirPlus already offers an UATP-based “AirPlus Company Account” worldwide. The “Company Account” provides detailed data including company, traveler and trip-specific information. All data generated through the use of an AirPlus payment product, including the new “AirPlus Corporate MasterCard,” is available to the client via the Web-based “AirPlus Information Manager.” Airplus says the addition of the new “Corporate MasterCard” enables U.S. companies to manage all corporate travel purchasing through a single provider worldwide. AirPlus also offers a “VISA Corporate Card” in the UK. The Company has a 30% market share in Europe in the business travel management business.

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MasterCard International Launches First European OneSMART Club

MasterCard International has launched its first “OneSMART Club” covering Central and Eastern Europe (CEE). “OneSMART Club” is an initiative to bring together MasterCard customers and industry suppliers across a number of markets to foster and support the deployment of added value chip-based business solutions. It was introduced globally by MasterCard earlier this year. The CEE “OneSMART Club” will initially focus on three areas: “OneSMART MasterCard Authentication” which ensures a higher level of security for online shopping and remote banking; “OneSMART MasterCard Web” that allows cardholders to securely store and manage a wide range of personal data (such as names, addresses, URLs, log-on passwords) on the smart card chip; and “OneSMART MasterCard Pre-Authorized” which is a new chip-based payment solution suitable for new markets and off-line payment environments. Financial institutions from six countries – Croatia, Czech Republic, Hungary, Poland, Slovakia and Slovenia – have already indicated their support of the OneSMART Club, as have a number of chip technology vendors.

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ABN-Amro Deploys Digipass GO3

ABN-Amro Singapore will provide its retail customers with VASCO’s “Digipass GO3” to guarantee secure online banking. ABN-Amro is the first bank in Singapore to use Digipass in a retail-banking environment. “Digipass GO3” is a lightweight, low cost strong user authentication token, especially designed for the large volume banking market. With a simple touch of a button, the end user
generates a unique one-time password. The password changes every 36
seconds and can be only used once, which means that it can’t be re-used
by fraudsters. Digipass says a its one-time password prevents phishing attempts.

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