BioPay Launches bCheck in Maryland and Virginia

VA-based BioPay has rolled-out its “bCheck” biometric payment service at nearly two dozen retail locations in Northern Virginia and Maryland. The system enables consumers to use their finger image to authorize a debit from checking account.M To use “bCheck,” customers simply enter their phone number and place their finger on the scanning device to confirm their purchase amount. Yesterday’s announcement represents the largest cluster of businesses using biometric payment systems anywhere in the USA. The company says “bCheck” transaction costs are 75% less than the costs of credit card and off-line debit transactions.

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RBA REFORMS DECISION

Justice Brian Tamberlin of the Federal Court ruled that the Reserve Bank of Australia’s credit card reforms are valid, thus rejecting VISA’s and MasterCard’s arguments to the contrary. The judge rejected the VISA and MasterCard claim that they are not a “designated payments system” and therefore not subject to RBA regulatory power. However, Tamberlin did not rule on whether the reforms are sound policy, that could impact bank earnings and possibly make the country less attractive for new entrants. Tamberlin did note that he was also not persuaded that the RBA failed to engage in a proper decision making process or misapplied the legislation. Last year, the RBA issued new reforms on the credit card business permitting merchants to recover from cardholders the costs of accepting credit cards. The new standard went into effect January 1st. Also under the new RBA rules, interchange fees will decrease from around 95 basis points to approximately 55-60 basis points by October 1st. The new interchange rates will cost bank credit card issuers an estimated US$300 million per year. At mid-year 2003, Australians owe a record $24.24 billion in credit card debt among 10,705,000 total credit card accounts. VISA and MasterCard are also facing possible regulation of interchange fee practices in the UK, Poland, Switzerland, and New Zealand.

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VISA and MasterCard Lose Battle Over Australian Card Reforms

Justice Brian Tamberlin of Australia’s Federal Court ruled Friday that the Reserve Bank of Australia’s credit card reforms are valid, thus rejecting VISA’s and MasterCard’s arguments to the contrary. The judge rejected the VISA and MasterCard claim that they are not a “designated payments system” and therefore not subject to RBA regulatory power. However, Tamberlin did not rule on whether the reforms are sound policy, that could impact bank earnings and possibly make the country less attractive for new entrants. Tamberlin did note that he was also not persuaded that the RBA failed to engage in a proper decision making process or misapplied the legislation. Last year, the RBA issued new reforms on the credit card business permitting merchants to recover from cardholders the costs of accepting credit cards. The new standard went into effect January 1st. Also under the new RBA rules, interchange fees will decrease from around 95 basis points to approximately 55-60 basis points by October 1st. The new interchange rates will cost bank credit card issuers an estimated US$300 million per year. At mid-year 2003, Australians owed a record $24.24 billion in credit card debt among 10,705,000 total credit card accounts. VISA and MasterCard are also facing possible regulation of interchange fee practices in the UK, Poland, Switzerland, and New Zealand.

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Scotiabank Becomes Fifth Largest Private Bank

Scotiabank has inked a deal to more than double the size of its operations in the Dominican Republic and to become the fifth largest private bank in the country. The transaction agreements provide for the purchase of 39 branches and the hiring of 460 employees of Baninter. The transaction also includes
the purchase of selected credit card, personal and commercial loans. Acquired branches will be converted into Scotiabank locations over the next three months and will supplement the Bank’s existing 20-branch Dominican network.

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Off-Shoring Jobs to India May Cause Irreparable Harm

A new study shows that off-shoring jobs to India may cause irreparable damage to a financial service firm’s brand image. The research by Amicus found that 62% of respondents said that choosing a life or insurance product would be influenced whether or not the provider off shored or not. Nearly 90% believed that cost savings were not being transferred to the customer and an overwhelming majority believed data protection was being compromised. Amicus says that many companies have been outsourcing jobs for the last 18 months to places like Bangalore and Mumbai in India where they can make up to 40% cost savings because of low rates of pay for sophisticated IT and call center workers. Deloitte Consulting believe 2 million jobs will be exported from the West to India by 2008.

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Americans Say Prepaid Cards are Best for Students

More than half of Americans prefer that college students use prepaid payment cards instead of debit cards or credit cards. Only 14% of consumers believe credit cards are best suited for students, while 34% favor debit cards. The results are based on an informal CardWeb.com homepage poll of more than 1,100 unique participants, which concluded this morning. Another recent survey conducted by the non-profit InCharge Institute of America, publishers of the YOUNG MONEY magazine, also found that 70% of consumers believe debit cards are a better option for college students than credit cards. The InCharge research also found that seven out of ten Americans believe it is a bad idea for credit cards to be in the hands of college students.

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MBNA Canada Bank Sued for Cash Advance APR

A class action lawsuit has been filed against MBNA Canada Bank in Ontario Superior Court of Justice in Toronto for damages arising from interest rates charged by MBNA on cash advance transactions on MBNA credit cards. The claim alleges that the rates of interest charged by MBNA on cash advances exceed the 60% rate allowed by the Criminal Code. The claim alleges that MBNA charged an interest rate at the rate of 94% per year. An application has benn made to the Ontario Superior Court of Justice to certify the action as a class action.

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