CARD SECURITY

Visa says it will engage the Australian financial and merchant communities to assist in providing greater protection against fraud for
cardholders, merchants and financial institutions. The five-year Visa agenda includes seven key security initiatives: 1.) ensuring all merchant terminals in Australia are chip-capable and operational; 2.) moving to 100% chip card issuance earlier than planned; 3.) introducing a broad rollout of PIN verification for all domestic transactions with the aim of ending the use of signature; 4.) enrolling all cardholders in “Verified by Visa”; 5.) requiring all online merchants in Australia to check the CVV2 code on the back of the card; 6.0 ensuring higher levels of data security protection at “Level Four” eCommerce merchants and, 7.) ensuring all ATMs are chip-enabled and activated. In early 2009, Visa will convene meetings with financial institutions and merchants to develop an appropriate timetable for the implementation of these
initiatives.

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U.S. Companies Rapidly Reign In Travel Expenses

A new quarterly poll has found that 88% of travel managers surveyed
have seen a marked increase in stringent policies and tighter
requirements for pre-trip approvals. The research by Rearden Commerce
shows that 82% say price has now taken precedence over comfort and
convenience and 68% say compliance is the top priority for businesses in
order to drive cost-savings. As a result, 71% of travel managers are
seeing a significant decline in the number of business trips overall.
The respondents included travel account managers at some of the largest
travel management companies in the USA, including Best Travel, Cain
Travel, Travison, and World Travel. Rearden Commerce offers a range of
online cost management services to about 2200 companies. Last week
American Express Business Travel introduced a complimentary travel
program assessment to identify cost savings. The assessment will use a
proprietary solution to analyze key performance indicators such as
online booking adoption, nonrefundable ticket usage and compliance to
preferred vendors and travel policies. (CF Library 12/04/08)

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ONLINE SECURITY

Results of a recent survey conducted by Capital One Canada reveal that 69% of Canadians are concerned about the safety of personal information online. Those surveyed indicated that on average they have nine online accounts, with at least two accounts in an inactive status. Canadians appear to be neglecting these inactive accounts primarily due to a lack of awareness or carelessness. For example, 28% of online Canadians did not know it was necessary to close an inactive account, 23% forgot about their account all together, and 15% forgot their password. The survey also found that 73% of Canadians are concerned about becoming a victim of identity theft, but many are not taking simple steps to protect themselves, with 20% of Canadians rarely/never look to see if a website is secure before purchasing an item online; 72% of Canadians rarely/never review their credit bureau report; 33% always/sometimes throw debit or credit card receipts in the recycling bin and 12% of Canadians rarely/never check their credit card statements for unexpected or incorrect charges.

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Online eCommerce Fraud Losses Rise 11% in 08

An annual survey of online merchants shows that losses due to fraud
will likely hit a record $4.0 billion in 2008, compared to $3.6 billion
last year and about $2.4 billion five years ago. About 50% of this fraud
is reported via credit card chargeback, with the remainder coming
directly through their customer support functions. However, the
fraud loss ratio has held constant for the past three years at 1.4% of
revenue. The tenth annual “CyberSource eCommerce Fraud Survey” also
found that order rejection rates due to suspicion of fraud, which have
been consistent for several years at around 4% of incoming orders,
showed a significant drop this year, falling from last year’s 4.2% to
2.9%. When compared with larger merchants (online sales of $25M+), the
mid-sized eCommerce merchants show higher order rejection rates (4.3%
versus 2.4%), higher manual review rates (34% of orders, versus 15%) and
higher fraud loss rates (1.6% of revenue versus 1.2%). Additionally,
data from this year’s survey shows that merchants currently fight only
about 50% of the fraud chargebacks they receive. A third of merchants
challenge less than 10%. But merchants that do elect to challenge
chargebacks recover, on average, 28% of their fraud chargebacks.

ONLINE FRAUD
2004: $2.6 billion
2005: $2.8 billion
2006: $3.0 billion
2007: $3.6 billion
2008: $4.0 billion
Source: CyberSource

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TRAVEL MANAGEMENT

Business travel payment solution provider AirPlus International has
released the “Travel Management Study” which reflects overall concerns
for the rising cost of travel. The 2008 study includes six new
countries, in three different markets. The results overall reveal that
of the 68% of the travel managers interviewed, there is concern about
the rising cost of travel and 75% expect to pay
more for air travel in the future. Thus, the reduction of costs emerges
as the top focus for both American travel managers and those worldwide.
With the use of a data analysis tool, such as the AirPlus Information
Manager, travel managers are more likely to uncover their savings
potential and build compliance to their travel program.

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FTC Settles a 2nd Operation Tele-PHONEY Claim

The FTC reports it has settled the second of 13 complaints
brought as part of the multi-agency law enforcement sweep in May 2008
against deceptive telemarketers and the companies they operated
throughout the USA. The “Operation Tele-PHONEY” sweep encompassed more
than 180 cases that included both civil and criminal actions
in the U.S. and Canada. The first “Tele-PHONEY” settlement came in
September, when the agency secured a court order requiring another
advance-fee telemarketer to turn over $1 million for consumer
redress. In the latest settlement Florida-based Integrity Financial
Enterprises and National Benefit Exchange allegedly deceptively marketed
advance-fee credit cards to consumers nationwide. The defendants charged
consumers who accepted the cards an up-front fee of between $200 and
$300, and promised them they would receive a credit card with a credit
limit of $2,500 to $7,500, as well as a $1,000 cash advance limit.
A court order imposed a monetary judgment of more than $2.4 million
against the two firms in the second “Tele-PHONEY” settlement.

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M2 GLOBAL & IKOBO

Online transaction processor M2 Global has relaunched the “iKobo Money
Transfer Service”. iKobo uses a Visa Prepaid card that enables users to
access funds at 1.2 million ATMs globally. M2 will be adding to the
iKobo service its patented mobile SMS account management and fraud prevention technology, making it
the most secure debit card available anywhere, which will be a big
advantage in attracting new customers. The iKobo brand and its worldwide
remittance business add to M2’s range of financial products and will
help solidify its strategy to be the leader in financial services
transaction and payment products.

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Shift4 4Go SafeSwipe is PABP Certified

Secure payment processor Shift4 has received validation from
Visa’s Payment Application Best Practices for the “4Go with SafeSwipe”
technology. On July 1, 2010, all credit card processors and bank card
acquirers must ensure their merchants and agents use only PABP compliant
applications. “4Go” is a driver-based, cardholder data firewall that
does not allow credit card information to enter a POS/PMS system. It
handles swiped and/or manually keyed cardholder data through secured
data channels and returns false cardholder data to an underlying POS/PMS
so that no actual cardholder data exists in the systems’ application’s
logs, database, or transport mechanisms.

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OCTOBER INDEX

The Conference Board reports that the leading index for Japan decreased
2.5%. In October, the leading index experienced its largest monthly
decline since 1975, due to substantial declines in stock prices, the
six-month growth rate of labor productivity, index of overtime worked,
Tankan business conditions index, new
orders for machinery and construction, dwelling starts, and (inverted)
business failures. With October’s large decline, the six-month growth
rate for the leading index fell to -5.8% (about a -11.2% annual rate)
from April to October 2008, down from the 2.1 percent decline (a -4.2%
annual rate) during the previous six-month period. Two of the ten
components that make up the leading index
increased in October. The positive contributors to the index include
interest rate spread and real operating profits. The leading index now
stands at 78.3 (1990=100).

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Changing of the Guard at BofA Card Services

A payment card industry veteran is retiring while a long time business
associate will take over. Bruce Hammonds, President of Bank of America
Global Card Services and a founding member of the management team that
established MBNA and subsequently its CEO, is retiring. He will be
replaced by Ric Struthers, the current BofA Consumer Credit Risk
executive. Struthers was also a founding member of the management team
that established MBNA in 1982. He served as the Executive Vice Chairman
for MBNA America Bank, responsible for the International and Consumer
Finance businesses from 2003 to 2006. After the BofA acquisition,
Struthers was the Card Services Operations executive until June 2007.
The change will take place on January 1st.

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WTA & VISA

Visa has been named “World’s Leading Credit Card” by the 2008 World
Travel Awards for the 11th consecutive year. The World Travel Awards
honors leading travel-related organizations in
worldwide and regional categories, which range from airlines, hotels,
beaches and cruise lines to credit cards, car rental companies and hotel
reservation services. Visa and other payment brands were evaluated
against criteria including scope of distribution, convenience and
overall services. Visa offers a network of more than 29 million
merchant outlets and 1.6 billion cards in circulation worldwide.
Visa.com provides Visa cardholders with retail, travel and entertainment
offers from hundreds of merchants in key destination markets or by
designated category around the world. The results were based on a poll
of 167,000 travel agencies and agents in 160 countries.

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Emporos Systems SIGIS Ready for FSA Cards

NC-based pharmacy POS solution provider Emporos been certified by the
Special Interest Group for IIAS standards. The Emporos Systems’ POS
solution will enable pharmacies to become IIAS certified in order to
meet new IRS regulations that go in effect in July 1, 2009. In order to
help pharmacies with the changes needed to meet the new IRS
guidelines, a new industry standards group known as the Special Interest
Group for IIAS Standards (SIGIS) was formed to produce and promote a
voluntary industry standard solution. Pharmacies without an IIAS
certified POS will lose the ability to process FSA credit cards after
July 1, 2009. This new Inventory Information Approval System
requirement allows “MerchantSoft” POS system to identify qualified
health products that are eligible for purchase using FSA cards. Emporos
Systems is one of the only POS vendors who has been certified by SIGIS
and as a SIGIS-certified Third Party Servicer, Emporos Systems is able
to help pharmacies quickly certify and accept FSA cards.

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