Net Rewards

The battle to incent consumers to sign for debit card purchases instead of using a PIN, is picking up more steam. Yesterday PULSE EFT Association and MasterCard rolled-out the “Signature Points” program after a full year of development. The program will enable banks of all types and sizes the opportunity to offer their cardholders rewards for using their signature debit cards when making purchases. “Signature Points” can be redeemed for a variety of goods and services, including airline tickets, hotel rooms, rental cars, merchandise and gift certificates at popular retailers. Rollout of the program to PULSE member financial institutions is expected in the third quarter 2002. The PULSE program is only for MasterCard debit cardholders but will be released to “VISA Check Card” holders early next year. PULSE processed more than 84 million signature-based debit transactions, totaling 10% of PULSE’s volume.

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Australia Fee Battle

The attack on interchange fees in Australia continues to unfold. Next week the Payments System Board is expected to release its report on The Reserve Bank of Australia’s final proposal for credit and debit card reform. The Australian Financial Review says it is likely that the PSB will recommend a 30% reduction in interchange fees on transactions, the abolishment of restrictions on retailers surcharging for card payments and easy access to the card business for new competitors. The RBA credit card proposal involves changes to what are known as four-party payment systems such as MasterCard, Bankcard and VISA. Three-party payment systems such as American Express and Diner’s Club, which typically carry higher fees than four-party systems, are excluded from the proposal. Under the terms of the proposals unveiled on December 14, 2001, the RBA would regulate three key areas of four-party credit card systems: the setting of interchange fees, surcharging, and who can join the system. VISA and MasterCard say the proposal would significantly reduce interchange fees with the result that credit card issuers would be forced either to raise fees or reduce services to cardholders.

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@pos & Sport Chalet

Sport Chalet’s 26 retail stores throughout southern California and Nevada will deploy the @pos “iPOS 3100” terminals and “Crossvue” receipt retrieval services starting by the end of this year. Sport Chalet customers will be able to swipe their card through the iPOS 3100 and enter their PIN for debit payments, sign their name for credit transactions and see items being purchased.

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Tidel 2Q/02

Houston-based Tidel Technologies reported 2Q/02 revenues of $6.2 million, an increase of 30%, over 2Q/01. An increase in the shipment of ATM units accounted for the majority of the increase in revenues. A total of 1,004 ATM units were shipped in the quarter, representing a 53% increase over the 657 units shipped in the first quarter, and an increase of 51% over the 666 units shipped in the comparable quarter of the prior year. The increase was largely due to business with new customers, including some customers outside the USA. However, Tidel incurred a net loss of $1.0 million for the quarter, compared to a net loss of $16.4 million in the same quarter of 2001. Last year Tidel had to deal with the bankruptcy of PA-based Credit Card Center, its largest client at the time. For complete details on Tidel’s 2Q/02 performance visit CardData ([www.carddata.com][1]).

[1]: http://www.carddata.com

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Chinese ATM Deal

Beijing-based Bank of China has signed a US$20 million deal with NCR Corporation for ATMs. Under the agreement, NCR will provide Bank of China with Personas 86, Personas 84, Personas 74 and Personas 75 ATMs with enhanced self-service functions. BOC already has over 6,000 ATMs, and the intention is to add multiple units to its 13,000 points of service. NCR helped Bank of China install China’s very first online ATM in 1988 at the bank’s Shenzhen branch. Last month, China Construction Bank inked a US$14.4 million hardware and software deal with NCR. CCB will deploy NCR’s “Personas 84” and “Personas 86” ATMs across China. CCB currently has 8,000 ATMs deployed across China. NCR and CCB have a 12 year relationship. There are 50,000 ATMs total in China, according to The RAM Report ([www.ramreport.com][1])

[1]: http://www.ramreport.com

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EDY CARDS

Sony’s new e-money smart card system, “Edy,” will be adopted by seven major consumer finance companies in Japan. The seven firms project they will issue between two and three million credit cards with “Edy” functionality by the end of next year. The credit card companies involved include: DC Card Co., Sumitomo Mitsui Card Co., UFJ Card Co., Life Co., Daiei OMC Inc., Kokunai Shinpan Co., and Sony Finance International Inc. “Edy” money was developed by bitWallet Inc., which was established in January 2001 by the Sony group and other firms, including Toyota Motor and NTT DoCoMo Inc.. According to the Nihon Keizai Shimbun, “Edy” smart cards are already being used at some retailers, such as convenience stores. bitWallet says by the end of next year, there will be more than 8 million ‘Edy” cards in use, with 30% integrated into credit cards.
bitWallet also says it expects to increase the number of “Edy” merchants to 23,000 by the end of 2003.

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INTERCHANGE FEES

The Reserve Bank of Australia’s final proposal for credit and debit card reform is currently being reviewed by The Payments System Board with its report expected next week. The Australian Financial Review says it is likely that the PSB will recommend a 30% reduction in interchange fees on transactions, the abolishment of restrictions on retailers surcharging for card payments and easy access to the card business for new competitors. The RBA credit card proposal involves changes to what are known as four-party payment systems such as MasterCard, Bankcard and VISA. Three-party payment systems such as American Express and Diner’s Club, which typically carry higher fees than four-party systems, are excluded from the proposal. Under the terms of the proposals unveiled on December 14, 2001, the RBA would regulate three key areas of four-party credit card systems: the setting of interchange fees, surcharging, and who can join the system. VISA and MasterCard say the proposal would significantly reduce interchange fees with the result that credit card issuers would be forced either to raise fees or reduce services to cardholders.

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E-SIGNATURE

Sydney-based Sentry Project Management says smart card e-signature application, “protectID,” is now available on the MULTOS and Java smart card platforms promoted by VISA and MasterCard.
A payment application, an e-signature authentication application and a loyalty application are the typical applications that are now being requested by card issuers. The ability of the Sentry system to provide a uniform card interface with their “protectID” e-signature application simplifies card personalization and the rest of the card lifecycle. Telstra’s “iTrust” project currently uses “protectID” on the MULTOS platform to satisfy security regulations in Australia.

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