E-Commerce Bottlenecks

The Global Internet Project said Tuesday there are four bottlenecks in key technology sectors that will impede the continued rapid growth of the Internet. While optimistic about overcoming these bottlenecks, the group is calling for a high-level summit later this year involving the 13 major companies in key sectors of the Internet industry to discuss appropriate actions. GIP says the bottlenecks are: end-user hardware and software; high-speed Internet access; backbone networks and server capabilities.

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Sinking Fraud

While fraud among VISA, MasterCard, Discover and American Express will top $1 billion again this year, overall fraud, as a percentage of total volume, is about half of what it was five years ago. According to updated figures released yesterday by CardData, credit card fraud among the four major general purpose cards has dropped from 23 basis points in 1992 to 12 basis points in 1997. Bankcard Barometer reported in its May issue that fraud has been averaging 9 basis points this year if American Express charge card volume is excluded.

GENERAL  PURPOSE  CREDIT  CARD  FRAUD
(VISA, Mastercard, Discover & American Express)

Total  % of Total Volume
1990: $439.8 million 13 basis points
1991: $702.6 million 20 basis points
1992: $909.6 million 23 basis points
1993: $897.9 million 19 basis points
1994: $973.0 million 17 basis points
1995: $937.8 million 14 basis points
1996: $991.5 million 13 basis points
1997: $1042.2 million 12 basis points
Source: CardWeb Inc.’s CardData

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VISA’s E-Purse

VISA and two international firms announced Monday they will create the first truly international electronic purse standard.  VISA,  ZKA in Germany and SERMEPA in Spain, said yesterday that common global specifications for the electronic purse (or stored value) will be published later this year, paving the way for world-wide interoperability of electronic purse schemes. The agreement between ZKA (Zentraler Kredit Ausschuss, which represents the German banking industry and operates the Geldkarte program), SERMEPA (the technology subsidiary of Visa Espana, which represents over 150 financial organizations and operates the world’s largest Visa Cash program), and Visa International, will mean that the 50 million electronic purse cards issued by the various members of the three associations will become interoperable. Commitments to adopt the new common specifications, once they are published, have also been received from the Italian electronic purse operator, SSB, and the national payment organization in Sweden.

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Y2K  Fears

A survey released yesterday at the World Congress on Information Technology in Fairfax, VA, shows that 80% of Americans are concerned that their financial records may be distorted due to Year 2000 computer related failures. According to the new ‘Wirthlin Worldwide’ poll commissioned by the Information Technology Association of America, one out of four Americans believe such 2000 failures will force them to undergo lifestyle changes. The study also showed that 72% believe there will be business losses, 68% anticipate possible telephone disruptions, 64% fear power outages, 56% worry that they may lose their jobs  and 42% foresee shortages of products or merchandise.

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Consumer Privacy

As the U.S. Department of Commerce’s ‘Online Privacy’ conference gets underway this morning in Washington, DC, two major self-regulation initiatives to protect consumer privacy on the Internet will be announced. The Council of Better Business Bureaus will announce it will proceed with the development and implementation of a privacy program through its subsidiary BBBOnLine.  Meanwhile Microsoft, and about 50 other U.S. companies and industry associations will announce they have joined together to create the ‘Online Privacy Alliance’ to protect the privacy of individuals on the Internet. Among the original founding sponsors of BBBOnLine are AT&T, Sony and Visa U.S.A.. Among participants in the ‘Online Privacy Alliance’ are AOL, IBM and American Express. The BBBOnLine privacy program will feature: privacy standard-setting, verification, monitoring and review, consumer dispute resolution, compliance “seal”, enforcement mechanism and educational components. The BBB’s privacy “seal” program, which incorporates the pertinent guideposts and self-regulation requirements outlined by the Federal Trade Commission and the U.S. Department of Commerce, is expected to go live late this year. The BBB has contracted with Alan Westin of Columbia University, a privacy issues expert, to assist with developing content. The goals of the ‘Online Privacy Alliance’ were summed-up as follows: “to identify and advance fair privacy protection measures across the private sector; support and foster the development and use of self-regulatory enforcement mechanisms and activities, as well as technology and standards that help protect privacy; and, support compliance with and strong enforcement of applicable laws and regulations.”

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$5,000 ATM

Diebold added the ‘CashSource Plus 100’ to its family of low-cost cash dispensers yesterday. The ‘100’ is geared towards low-transaction volume, off-premises locations. The ‘CashSource Plus 100’ features a monochrome LCD display and a single multimedia cassette with divert cassette, which can be upgraded to add a second cassette for dispensing revenue-generating media. To enhance security, the cash dispenser also includes an optional tilt switch and self-contained audible siren. The ‘100’, looks similar to the ‘CashSource Plus 200’ and ‘CashSource Plus 400’ models. Diebold says the new machine will be available later this summer.

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Air Quatro Certified

IVI announced Monday that its ‘Air Quatro’ is the first wireless product to receive certification for use on the Cantel AT&T AirPOS service, which uses Rogers Cantel’s Mobitex Data Network. The ‘Air Quatro’ is a wireless POS controller that allows a merchant to send its financial transactions directly to a bank through the use of packetized radio frequency. IVI says it will now aim for untapped electronic payment markets such as taxis, limousines, home and office delivery and stadium concessionaires.

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Partners First Card Bonds

Partners First Holdings priced $750 million each of three-year and five-year credit card asset backed securities yesterday.    The three year transaction included $528 million of Class A floating rate asset backed securities and $133 million of Class B floating rate asset backed securities that accrue interest at LIBOR+10 basis points and LIBOR+31 basis points, respectively. The five year transaction included $528 million of Class A floating rate asset backed securities and $133 million of Class B floating rate asset backed certificates that accrue interest at LIBOR+13 basis points and LIBOR+36 basis points, respectively.

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CreditFYISM Launched

Fair, Isaac and Company and Net Earnings unveiled ‘CreditFYISM’ yesterday, an easy-to-use service that enables small businesses to make faster, more informed decisions about extending credit tothe small businesses they serve. Available for less than $15, the service is substantially more affordable than traditional methods of credit evaluation. CreditFYI is the first product offered by the newly formed strategic alliance between Fair, Isaac and Net Earnings and is targeted to the more than 10 million small businesses in the U.S.

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Magic Line’s 98 EFT Conf

Magic Line’s Midwest EFT Technology Conference for the financial services industry will get underway tomorrow in Grand Rapids, Michigan.  The theme of this year’s conference and its two and a half days of workshops will address the greatest challenges in the financial services industry today. National experts will detail how to efficiently and cost-effectively balance the growing number of new technologies with the most important aspect of business: the human elements of quality and customer service.

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