A recent Fraud Management Institute survey reported that banks will spend an estimated $300 million in 2009 on change of address confirmation letters and considerably more time on Fair and Accurate Credit Transactions Act of 2003 Red Flag Identity Theft Rules compliance than originally predicted.
According to the survey of fraud management specialists, the true costs associated with managing address-related fraud risk may still be unknown.
"Especially now with the FACTA Red Flag requirements, a lot of new attention is being put on addresses by financial institutions," said Mike Freiling, FMI's Director of Professional Services.
"As the industry becomes increasingly aware of address fraud as a key component of many fraud and identity theft schemes, we wanted to assess fraud management perceptions as well as strategies to help prevent, detect and mitigate the fraud associated with address misuse."
Most businesses surveyed for this report said they needed more time to prepare for the Red Flag sunset date of May 1, 2009. More than half of these businesses said the Federal Reserve's estimate of approximately 41 hours to comply with the rules was "much too low."
The National Retail Federation told U.S. state attorneys general in early March 2009 that high interchange fees have damaged the credit card industry in much the same way lucrative origination fees changed the mortgage industry and contributed to the country's recession.
"We know that one of the causes of our financial crisis is that the business model of mortgage lending shifted," said NRF Senior Vice President and General Counsel Mallory Duncan. "Rising interchange has caused the same thing to happen in the credit card market."
Duncan believes interchange practices violate federal antitrust law because banks historically have agreed to charge the same rates for Visa Inc. and MasterCard Worldwide card categories. Interchange generates $48 billion annually for the two card brands. "Unless we can bring market forces to bear on that incentive, it will only grow," Duncan said.
The Retail Council of Canada and the Stop Sticking It To Us coalition, which represents over 200,000 Canadian businesses, supports the investigation by Canada's Senate Committee on Banking, Trade and Commerce of the country's credit and debit card system, specifically the impact of interchange rates the card brands and banks charge merchants. Interchange fees in Canada are among the highest in the world, exceeding 2 percent.
"At a time when many Canadians' businesses are struggling, the fees charged by the credit card companies and the banks that issue their cards are increasing at an unprecedented rate," said Diane J. Brisebois, the RCC's President and Chief Executive Officer.
"Our merchants are encouraged that the Senate sees this as a priority issue and that it will move forward to provide recommendations that help protect all Canadians."
Quova, Inc., a provider of Internet geolocation data that gives online businesses the ability to instantly determine where their Web visitors are located, published a white paper entitled Geolocation - Know Your Enemy. The report discusses how Internet Protocol geolocation technology can minimize fraudulent online orders, limit manual reviews and reduce false positives.
"In 2007 an estimated $3.6 billion in online revenues were lost to fraud," said Doug Schwegman, Director of Customer and Marketing Intelligence for CyberSource Corp.
"That same year, U.S. and Canadian merchants rejected, on average, 4.2 percent of their orders on suspicion of fraud. And internationally, those rejection rates were two-and-a-half times higher." For more information, visit www.quova.com.
Online credit card fraud prevention solutions provider Accertify Inc. reported its Interceptas platform was chosen by nutritional products manufacturer MonaVie Inc.
"As a direct selling company, we required a platform that could manage all potential fraud exposures," said Rob Ferguson, MonaVie's Director of Information Technology." Interceptas delivers the technology re-quired to manage our risk in a single, integrated and automated work-bench platform."
U.S. Bancorp subsidiary Elavon Inc. is reportedly the first acquirer to commercially market the American Express Co.'s OnePoint program to its third-party sales channels, including ISOs and agent banks.
Elavon performs all setup, processing, settlement, funding, customer support and reporting for eligible AmEx acceptance, thereby providing merchants with one processing relationship for all major card brands.
New Mexico-based bank holding company First Community Bank selected automated clearing house (ACH) solutions provider Laru Corp.'s risk and compliance software applications.
Laru's ACH services will enhance First Community's operational efficiency and help monitor its growing volume of ACH transactions. The bank stated it chose Laru's technology to provide bank personnel a comprehensive tool that can research, report and manage risk exposure.
Maponics LLC, a company that specializes in custom mapping services and geographic information systems (GIS) data for businesses, released Maponics Spatial API - Neighborhood Data, an application programming interface designed to save organizations the software and training costs required to create accurate virtual maps and charts. Maponics' GIS database covers more than 2,300 U.S. and Canadian cities.
Payment processor Metavante Corp. certified Digital Check Corp.'s CheXpress CX30 check scanner for the small business market. This certification makes Metavante an authorized reseller of Digital Check's technology; it will use the company's check scanners in conjunction with its remote deposit capture solution.
Doin' it right
POS and payment solutions provider Charge Anywhere LLC recently added automated clearing house (ACH) services to its proprietary ComsGate payment gateway. ComsGate enables merchants to use laptops or personal computers as POS terminals to send bills directly to customers who, in turn, complete transactions with their bank account information.
ComsGate can also integrate with Intuit Inc.'s QuickBooks to provide brick-and-mortar and e-commerce merchants more payment options for their customers.
The ACH is a nationwide, electronic payment and collection system associated with payroll direct deposit, recurring payments, electronic check clearance and other demand deposit account transactions. It is commonly used to settle merchant card accounts.
"ComsGate is the engine, the heart of our operation, and nobody ever touches it except the most trusted people on our team," said Dmitriy Lerman, Director of Marketing Programs and Products for Charge Anywhere. "It is PCI DSS Level 1 certified and is really designed to forward transactions from different sources to different destinations, whether from brick-and-mortar or Internet merchants."
Charge Anywhere also provides ACH services via its Web Terminal and QuickBooks-compatible card payment software.
Lion at the gate
According to Charge Anywhere, ComsGate is distinct because it is mostly a wireless gateway but can still accept Internet Protocol and dial-up transactions; it also offers a fully integrated solution that other companies currently cannot. "Some companies have to go through somebody else's gateway; some have a gateway but not the QuickBooks application, while others have payment solutions for credit and debit but not ACH," Lerman said.
"We have everything in one package that is not only convenient to our merchants, but it also contributes to security," he added. "We control security on both the front-end with the application and on the back-end with the gateway. This gives the merchants end-to-end services and products that they can purchase from one organization. There is no need for any other gateway or any other service provider. We'll do everything else."
QuickBooks is Intuit's accounting application designed specifically for small to mid-sized businesses. It enables merchants to log payments, manage payroll, debit and credit accounts, generate invoices, and track inventory.
"QuickBooks is the number one accounting application for small businesses," Lerman said. "I believe they hold about 80 to 85 percent of the market share. So any business that has a ledger, that needs to pay taxes, will likely have QuickBooks."
Lerman added that the QuickBooks application can also facilitate billing: Merchants can issue invoices, record payments and take ACH payments through Charge Anywhere using QuickBooks. "It really completes a full circle of what QuickBooks provides, and that is complete integration of payment applications for merchants," he said.
Because ACH is an interbank network, ACH transaction pricing is decided on a per-merchant basis, Lerman noted. "But generally the cost of an ACH transaction is lower than a credit card transaction, so merchants that do most of their business online, or whose organizations have recurring payments, would benefit greatly from more ACH activity," he said.
"There is a niche of merchants out there who wish to save money by doing more ACH and less credit and debit," Lerman added. "And as a value-added service, ISOs are now catering to that market and saying, 'Hey, we can sell that to you as well.'"
Lerman sees the current economic roller coaster as an opportunity to market the ComsGate platform to a wider audience.
"It is a cost-effective gateway, and everyone today is looking for a way to save money," he said. "But at the same time people are still doing business, still selling services and products and needing to take payment for it, which is where ComsGate can really come into play. So as an additional value-add, it helps merchants improve their efficiencies, saves them money on a transactional basis and gives them full compliance certification."
Moneris Solutions Inc., Canada's largest processor, selected VeriFone as its premier POS terminal provider for debit, credit and gift card payments.
Moneris indicated it will implement VeriFone's EMV- (Europay, MasterCard and Visa) and Payment Card Industry (PCI) Data Security Standard (DSS)-approved VX wireless, countertop and integrated terminals to help facilitate merchants' migration to EMV.
Monitise Americas, a mobile banking company created by payment processor Metavante Corp. and mobile money provider Monitise plc, allows consumers to use text messaging to obtain anytime balance information on their bank accounts, as well as set alerts to notify them when balances are low or payroll deposits have arrived.
According to Metavante, the integration of its solutions makes mobile services available to virtually all financial institution account holders. "In this economy, consumers have told us that they want immediate access to their financial information," said Lisa Stanton, CEO of Monitise Americas. "And mobile financial alerts will allow consumers to manage their money anytime, anywhere."
Training and consulting firm Performance Training Systems released an accelerated version of its Bankcard Boot Camp.
The first part of the Boot Camp Fast Track consists of eight training modules and question-and-answer sessions designed to address transaction flow, chargebacks, the PCI DSS, statement analysis, interchange, underwriting, risk and common terminology.
In addition, the course offers in-depth product training on debit and gift cards, check processing, ACH, wireless solutions and e-commerce. Part two of the course focuses on sales strategy development and the sales process.
It discusses how to generate leads, analyze buying signals, handle sales resistance and bundle value-added products. For more information, visit www.surviveandthrive.biz/index.html.
E-commerce payment gateway provider USA ePay, a subsidiary of GorCorp Inc., selected security management firm Trustwave to validate its compliance with the PCI DSS. To achieve this, USA ePay engaged Trustwave to demonstrate PCI compliance by submitting to a rigorous review of its information technology environment and data security policies and procedures.
The company also enrolled in Trustwave's TrustKeeper, which supports ongoing compliance with required quarterly network vulnerability scans.
In March 2009, Visa hosted its Innovative Briefing in Dubai, United Arab Emirates, at which the company showcased advances in electronic payments that are creating a future of "better money" - payment alternatives that are more secure and convenient than cash or checks.
Visa discussed and demonstrated several overall trends, including convergence of electronic payments and mobile phones, the Internet as a growing payment channel, transit and vending machine acceptance, as well as the importance of extending electronic transactions to the underbanked and unbanked.
Loyalty and marketing solutions company Alliance Data Systems Corp. signed a long-term contract with retailer Haband Company Inc. to provide it with private-label credit card services.
Under the agreement, Alliance will supply Haband with a comprehensive suite of services that include account acquisition and activation, receivables funding, card authorization, private-label card issuing, statement generation, remittance processing and marketing services.
AmEx and processing giant First Data Corp. are going to Poland. The two companies signed an agreement that makes First Data AmEx's exclusive merchant acquirer and processor for all AmEx card transactions in the central European country.
First Data will also manage and implement new solutions for AmEx merchants in Poland, including migration to the EMV standard.
Chase Paymentech Solutions LLC signed a preferred partner agreement with Verifi Inc., a risk management services company for card not present merchants. Under the agreement, Verifi will recommend Chase Paymentech as a preferred provider to its merchants and deliver transaction risk management services, including chargeback prevention, to Chase Paymentech's card not present merchants.
In other company news, Web.com, an online marketer for small businesses, joined with Chase Paymentech to offer payment processing solutions to small and medium-sized merchants. Web.com customers will now have access to multiple secure payment processing services, which process all major credit, debit and customizable gift cards.
Chetco Federal Credit Union consolidated its entire $4.7 million portfolio of credit and debit card programs with processor TNB Card Services. TNB will manage all back-office card operations, including chargebacks, call center support and fraud.
TNB will also analyze and restructure Chetco's credit card program so it can better establish pricing strategies and offer more competitive products.
European payment solutions provider Monext teamed up with secure identification and card personalization company Datacard Group to deliver an instant-issue card system that is EMV compliant and can encode, emboss and issue an active chip and PIN card in as little as one minute.
"By combining our card personalization experience with Monext's expertise in real-time management of confidential data, we were able to deliver an instant issuance solution that was fast, secure and helps to drive more revenue for issuers," said Sylvain Auchére, Head of Solutions for Datacard Group's European Operations.
Online payment processor On-Line Credit Card Services Inc. and Ontario-based check processing solutions company RDM Corp. teamed to offer small businesses Simply Deposit, RDM's image and transaction management for electronic check conversion.
"The system helps clear checks quickly and improves cash flow," said Michael W. Young, President of On-Line. "And the great thing about Simply Deposit is that you can use it at any bank."
Chandigarh, India-based private sector lender Yes Bank allied with mobile payment solutions company Obopay Inc. to offer Pay Anyone, a service that allows customers to transfer money to any bank through their mobile phones.
Pay Anyone can also accommodate ticket booking, mobile top-up and flower delivery. Yes Bank presently touts 5,000 mobile customers; reportedly India has over 300 million mobile users.
Tangarine Payment Solutions Corp. said its acquisition by 4491157 Canada Inc., an affiliate of processor Pivotal Payments Corp., was extended to March 13, 2009. The original closing date was Feb. 27, 2009.
The Western Union Co. recently completed its acquisition of Killorglin, Ireland-based Fexco's money transfer business. Western Union will manage and support more than 100,000 merchant locations in the U.K., Spain, Ireland, Sweden, Norway, Denmark and Finland. The acquisition of the Norway branch still awaits regulatory approval. As a result of the acquisition, approximately 300 Fexco employees will join Western Union.
Panini S.p.A., a global provider of solutions for remote image-capture and payment processing, appointed Nicola Aliperti as its CEO. He will also serve on the parent company's board of directors, as well as become Chairman of the Board for Panini North America.
Aliperti brings to the company extensive experience in the banking and information technology sectors. He has assumed leadership roles in technical and commercial areas within diverse industries and geographical regions during his 26-year career.
The Treasury and Payment Solutions division of SunTrust Banks Inc. appointed Robert Blair as its new Senior Vice President, Commercial Card Services. Blair previously served as SunTrust's Senior Vice President, Enterprise Delivery Services.
His new responsibilities include directing all aspects of its commercial card business, which consists of corporate, purchasing and prepaid card programs.
Valerie Nolte, the EastPay Regional Payments Association's Director of Professional Services since 2005, was promoted to Vice President, Audit Services. Nolte established the association's ACH audit services for its financial institution's members and will continue to expand EastPay's audit services line.
Payment and risk management solutions provider CyberSource Corp. appointed former Visa President and CEO Carl F. Pascarella to its board of directors. Pascarella came out of retirement to take his seat on March 5, 2009.
Small merchant security solutions provider ControlScan Inc. reported that Steve Robb joined its executive team as Vice President of Operations.
Robb brings 20 years of industry experience and will use his marketing and product knowledge to build efficiency and quality into the company's core business processes and technologies.
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