EUROSMART

Eurosmart international association representing the Smart Card industry
is following the issue related to the German payment cards usage that
occurred since January 1st, 2010. Effecting cards in Germany only, the
malfunction concerned verification procedure on the date, performed
prior to any critical transaction with the smart card, no security
standards or technologies used by the Payment industry are at stake.
Smart Cards are part of more complex systems and it is fundamentally
important that such technology demonstrates strong security behavior
while confronted to a potential system level issue. Eurosmart
international non-profit association located in Brussels was founded in
1995 to represent the Smart Security Industry for multi-sector
applications.

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INGENICO SECURITY

Ingenico payment solutions will now be providing secure end-to-end
solutions to assist merchants in the U.S. to comply with the PCI Data
Security Standards. These standards will concern Data in flight at the
point of card acceptance using encrypted data with no per terminal or
per transaction fees; Data at rest using unique data proxy to the POS
for eliminating the storage of sensitive card data; and Architecture
modeled on international PCI-DSS payment infrastructure with security
monitoring, estate management, and value added services to merchants to
support POS deployment from manufacturing to merchant operational
environment. Benefits retailers can expect from Ingenico’s end-to-end
secure payment transaction solution include a non-intrusive encryption
option; compliance with Visa’s best practices and no per terminal or per
transaction fees for data encrypting/decrypting, among many others.

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IMTS & VERIFONE

VeriFone Holdings signed a licensing agreement with iMobilise
Transportation Systems (iMTS) for the deployment of its taxi payment and
media solutions. iMTS anticipates installation of the VeriFone systems
in 1,500 taxis in the urban centers of Johannesburg, Durban and Cape
Town. Deployments will begin this spring and provide passengers
passenger information technology and credit cards, Chip and PIN-based
debit, and contactless payment options. VeriFone transportation systems
support both EMV and non-EMV bank-issued cards as well as closed-loop
cards while providing advertisers a compelling new venue for digital
content.

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U.S. Bank ReliaCard Visa Awarded OSCARD

U.S. Bank was awarded the OSCARD for its reloadable “ReliaCard Visa.” The “ReliaCard Visa” was selected as the winner in the Services category.
“ReliaCard Visa” is a reloadable card designed to replace
costly paper checks for government agencies with recurring cash and
check disbursement activities, such as child support or unemployment
insurance. Cards are issued through a partnership with state agencies,
and cardholders can use the cards everywhere Visa debit cards are
accepted worldwide. Visit www.usbank.com/reliacardvisa for details.
Overall, more than 500 cards were in competition for the 2009 OSCARDS.
U.S. Bank Retail Payment Solutions (RPS) is one of the nation’s leading
providers of payment processing, issuing and advisory services. RPS
offers credit, debit, and prepaid payment solutions to consumers and
small businesses through U.S. Bank and in partnership with financial
institutions, businesses, governments and employers.

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TRANSFORMERS CARD

JCB and China Construction Bank have teamed to offer the CCB “Transformers Credit Card.” The new card features the
robot toy design popular around the world. For CCB, partnering JCBI and
adding the major international credit card payment brand JCB that
originated in Japan will strengthen CCB’s product line, enhance customer
service, and further increase customer base. Since 1982, JCB and JCBI
have been expanding JCB card acceptance in China to increase convenience
for JCB cardmembers, now through alliances with eleven partner banks and
financial institutions for merchant acquiring for acceptance at nearly
80,000 merchants.

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RAM Research/CardWeb Co-Founder Dies Unexpectedly

Anita McKinley, co-founder of RAM Research in 1986 and a pioneer in the
information business of the payments industry, died unexpectedly
December 30th in Washington, DC. She was the wife of payments card
expert Robert McKinley for 36 years, the mother of six children and a
grandmother to eight. Anita, 55, was the “A” in “RAM,” an acronym for
“Robert and Anita McKinley”. After RAM became a viable entity in 1989,
she returned to being a full-time mother. The firm has since grown into
CardWeb, CardTrak and other related entities spanning six continents and
serving thousands of payment card executives worldwide. She battled
rheumatoid arthritis for many years. A memorial service was held in
Frederick, Maryland on Saturday, January 2nd. A second memorial service
is slated for tomorrow Saturday, January 9th in Estero, Florida. The
McKinley’s have homes in Frederick, MD, Bedford, PA and Estero, FL.
Details can be found in the obits carried by the Frederick, MD
News-Post; Hagerstown, MD Herald Mail; Johnstown, PA Tribune Democrat;
and the Fort Myers, FL News-Press. Arrangements are by Stauffer Funeral
Home, Frederick, Maryland. Online condolences may be expressed to the
family at www.staufferfuneralhome.com.

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Card Industry P/L Nose Dives Under Pressure in 09

Dollar amounts for the 2009 P/L revenue and expense streams for the
credit card issuing industry show $166.5 billion total for 2009, coupled
with an 18.30% ROA yield over the prior year. Interest income hit $87.6
billion (53% of total revenue), down from $101.4 billion in 2008 while
fee income hit $78.9 billion for 2009 (47% of total revenue), up from
$67.6 billion in 2008. CA-based R.K. Hammer says its data show expense
streams of $152.9 billion total for 2009 vs. $129.4 billion in 2008.
Operating expense was $46.4 billion (30.3% of total expense), up from
$45.3 billion in 2008. “Blended Cost of Funds” was $17.3 billion (11.3%
of total expense), down from $28.2 billion in 2008. Net charge-offs were
$89.2 billion (58.4% of total expense), up from $55.9 billion last year.
Hammer says we have “tri-variate” economy, where consumer spending
represents two-thirds of the U.S. economy, plus business, especially
small business, which does most of the new hiring when given legitimate
incentives to do so, and finally the federal government, which has
provided a very large yet artificial and unsustainable temporary
stimulus, compared to organic growth. Hammer concludes, arguably, it
will take a very complicated and successful set of financial and
marketing mechanics by issuers to reverse or at least mitigate what we
see as an all out attack on credit card industry profits in such an
economic state. We look for much of the same in 2010, however improving
starting in 2011.

U.S. Bank Credit Card Profitability Historical
(VISA, MasterCard, and Discover)
ROA
1989 4.10%
1990 3.70%
1991 3.40%
1992 3.10%
1993 3.30%
1994 3.90%
1995 3.60%
1996 3.30%
1997 2.60%
1998 2.50%
1999 3.10%
2000 3.60%
2001 4.00%
2002 4.20%
2003 4.40%
2004 4.50%
2005 4.30%
2006 4.60%
2007 4.65%
2008: 4.24%
2009: 1.50%
ROA-net pre-tax return-on-assets
Source: R.K. Hammer

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Heartland and Visa Reach Settlement for Data Breach

Heartland Payment Systems payments processor and Visa have reached a settlement agreement under Visa-branded payment resulting from a 2008 criminal breach for card issuers. Heartland will pay up to $60 million to fund the settlement program, based on the specified level of participation by U.S. Visa issuers, details of which will soon be disclosed. The settlement agreement is contingent upon acceptance by financial institutions representing 80 percent of the eligible issuers’ U.S. accounts that Visa considered to have been placed at risk of compromise during the Heartland intrusion.

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GiftCards.com Introduces BillPay Service

GiftCards.com has launched its “BillPay” service. The BillPay service allows customers to pay their bills with unwanted gift cards. The service is extremely flexible and allows the payment of any bill – from utility bills to cell phone bills to car payments. The BillPay Service was created to allow customers to liquidate their unwanted gift cards. This one-of-a-kind service expands the current GiftCards.com model allowing people to receive cash for their gift cards. GiftCards.com is a leading provider of gift cards to consumers and corporations to expend as gifts, rewards, or incentives.

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Global Axcess Inks 16-month, $16K/MO Contract

FL-based self-service kiosk provider Global Axcess Corp has signed a new, 16-month contract valued at $16,000 per month, with a southeastern-based grocery store chain that will cover 72 ATM locations. The contract includes upgrades for the customer from an in-house processing system to a full-turnkey Global Axcess program. The Company expects to begin generating revenues from these services in the first quarter of 2010. Global Axcess Corp currently owns, manages or operates more than 4,500 ATMs and other self-service kiosks in its national network spanning 43 states.

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Oberthur Technologies Says German Cards Okay

Following a problem encountered by certain cardholders in Germany at the beginning of this year, Oberthur specifies that banking cards produced by Oberthur Technologies and issued in Germany or
elsewhere are not impacted and function normally. Oberthur Technologies is a leader in the field of secure technologies. Innovation and high quality services. The Compasny had sales of 882 million Euros in 2008.

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JCB and China Construction Offer a Robot Visa

JCB and China Construction Bank have teamed to offer the CCB “Transformers Credit Card,” according to CardFlash International. The new card features the robot toy design popular around the world. For CCB, partnering with JCBI and adding the major international credit card payment brand JCB that
originated in Japan will strengthen CCB’s product line, enhance customer
service and further increase its customer base. Since 1982, JCB and JCBI
have been expanding JCB card acceptance in China to increase convenience
for JCB cardmembers, now through alliances with eleven partner banks and
financial institutions for merchant acquiring for acceptance at nearly
80,000 merchants.

Details