Micropayments & EBPP Study

Atlanta-based Collective Dynamics has released a consumer research study on micropayments and announced an initiative to develop a comprehensive consumer study of EBPP with CheckFree Corporation, US Bank, and VISA. One of the major findings in the study is that consumers want to use debit and credit cards in more and more places, especially places that have an average ticket under $20.

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Card Usage

A new study of 2,000 consumers has found that 36% of credit card owners are using their cards more frequently than last year driven by security concerns with handling cash, and by the need to use credit cards for making online or telephone purchases. The survey by New York-based RoperASW also found that today’s consumers are more financially savvy and no longer have 4-6 cards running at high balances at the same time. Rather, the focus today is on selectively using one or two major credit cards as “all-purpose” cards. The survey also revealed that most consumers are confident that they will be able to pay off their bills before large balances accrue. More than eight in ten Americans believe that credit cards are good for emergencies, up 7 points since 2000 and one in three say credit cards allow them to buy things they don’t have the money for right now.

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BIOMETRIC WELFARE CARDS

Parklands-based Net1 Applied Technology Holdings Limited has contracted
California-based SecuGen to provide fingerprint biometric technology to the
South African Department of Social Welfare’s smart card initiative. Aplitec
recently won a three-year contract from the South African Department of
Social Welfare to provide payment services using smart cards and
fingerprint biometric technology to an additional 400,000 people in the
Eastern Cape Province beginning in November. Approximately 300 Aplitec
vehicles equipped with a total of 2,000 fingerprint biometric readers
travel to 5,184 rural locations throughout South
Africa to dispense payments to over 1.8M qualified recipients each month.
Because these recipients are among the 80% of the South African population
who do not have bank accounts, payments are made in cash. To use the
biometric smart card system, recipients only need to present their
government-issued ID document once to authorize the enrollment of their
fingerprints into the Aplitec system. To receive payment, the recipients
present their smart card and provide identification by matching their
fingerprint against the encrypted template stored in the card.

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Biometric Welfare Cards

South Africa’s Net1 Applied Technology Holdings Limited has contracted California-based SecuGen to provide fingerprint biometric technology to the South African Department of Social Welfare’s smart card initiative. Aplitec recently won a three-year contract from the South African Department of Social Welfare to provide payment services using smart cards and fingerprint biometric technology to an additional 400,000 people in the Eastern Cape Province beginning in November. Approximately 300 Aplitec vehicles equipped with a total of 2,000 fingerprint biometric readers travel to 5,184 rural locations throughout South Africa to dispense payments to over 1.8 million qualified recipients each month. Because these recipients are among the 80% of the South African population who do not have bank accounts, payments are made in cash. To use the biometric smart card system, recipients only need to present their government-issued ID document once to authorize the enrollment of their fingerprints into the Aplitec system.

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Gap Check

Gap Inc. has set plans to pilot VISA’s new “POS Check Service” in January at 50 U.S. Gap stores, in partnership with First National Merchant Solutions. Next year, Gap plans to roll out the service to all of its more than 3,500 U.S. store concepts, including Gap, GapBody, GapKids, babyGap, Banana Republic and Old Navy. Utilizing the power of VisaNet, VISA’s new “POS Check Service” provides direct online access to consumer demand deposit accounts for real-time authorization, significantly reducing the inherent risks of accepting paper checks. Some check acceptance systems typically rely on a variety of historical databases or negative files to electronically verify check transactions. VISA says its new check service can reach 90% of the country’s demand deposit accounts and offers VisaNet’s 100% availability and reliability. VISA announced the availability of “POS Check Service” in February, and, to-date, nearly 200 merchants in more than 33 states have processed more than $24.9 million in transactions through the service. Checks are used as payment for approximately 85% of all non-cash personal spending. Annually, merchants incur approximately $23 billion in check handling and fraud costs, averaging more than one dollar for every check written at the point-of-sale.

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E-Checks

The use of e-checks is soaring, up 300% over last year, according to statistics compiled by NACHA. During the first six months of this year, more then 200 million e-check payments were made by consumers. In 2001 there were 88.7 million e-checks originated at the point-of-sale, 74.6 million originated on the Internet, and 8.7 million originated via the telephone. NACHA says an advantage for consumers is the fact that e-checks are covered by the Federal Reserve’s Regulation E, which defines specific consumer rights and protections from error and fraud. There is no comparable federal regulation covering paper check and demand draft payments. The ACH Network has been in use for 30 years for Direct Deposit and other electronic payments. In 2001 there were 7.99 billion ACH payments made valued at $22.2 trillion.

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PAYWARE FUSION

Trintech Group has launched “PayWare Fusion,” a complete framework and
components platform for online payments.The new solution layers together
Trintech’s “Fraud Management,” “Secure Infrastructure,” and “Multi-Channel”
payment technologies. “PayWare Fusion” is targeted at financial
institutions and service providers that want to provide Web-based
statements, bill payment, micropayments, person-to-person payments, and
account management services to their customers by utilizing the highest
security standards and payment technologies. The solution is also targeted
at government institutions that want to provide access to personal
information under the UK’s Data Protection Act and access to government
services, such as driving license applications, benefits entitlements and
applications, and public access to
legislation documents. The bill payment module of “PayWare Fusion” is of
particular interest to operators that want to allow their customers to pay
or top-up their mobile phone charges via credit card or ACH without the
regular re-entry of credit card or bank account details. The EBPP solution
provides ease of use for consumers combined with the back-end data security
and flexibility of integration required by service providers.

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Weatherized ATMs

Dallas-based Fujitsu Transaction Solutions rolled out of new, weatherized island ATM drive-up unit that defies “Mother Nature.” The self-contained “Model 8031” offers banks, credit unions and other financial institutions next-generation features, including a high-contrast color display and a small footprint. FiSource Inc., a Fujitsu business partner and ATM value-added reseller headquartered in Albuquerque, installed the first “Model 8031” unit at the First National Bank of Artesia. The Web-enabled “Model 8031” also offers full ADA compliance, including the industry’s first text-to-speech synthesis for the visually impaired; and the dispensing of cash as well as stamps, coupons, event tickets, and credit card-sized gift cards.

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RBA PROTEST

MasterCard International and VISA International have asked an Australian
Federal Court to review the new credit-card regulations proposed by the
Reserve Bank of Australia. The associations say the Reserve Bank of
Australia hasn’t complied with its obligations under the Payment Systems
Act, and that the proposed changes don’t meet the public-interest test
required under the act. In August, the Reserve Bank of Australia released
its final reforms on credit card programs which include dropping average
interchange fees by 40% and lifting the restriction imposed by credit card
programs which prevent merchants from recovering from cardholders the costs
of accepting credit cards. Under the new RBA rules, interchange fees will
decrease from around 95 basis points to approximately 55-60 basis points by
July 1, 2003. The Reserve Bank’s standard on merchant pricing will come
into force on January 1, 2003. The RBA also announced an end to
restrictions imposed by credit card networks which limit the entry of new
competitors. Specialist credit card institutions authorized and supervised
by the Australian Prudential Regulation Authority will now be eligible to
apply to participate in credit card programs. All the reform measures will
apply to the credit card networks operated in Australia by Bankcard,
MasterCard and VISA, which were formally designated by the Reserve Bank as
payment systems subject to its regulation under the Payment Systems
(Regulation) Act 1998. American Express and Diners Club have each indicated
to the Reserve Bank that they will remove their restrictions on merchant
pricing.

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ICBA Discounted Telecom

The Independent Community Bankers of America has partnered with Profit Technologies to offer ICBA members discounted telecom rates ranging from 20% to 40% off.ICBA members can contract for a telecommunications cost-management audit at reduced pricing. This service provides a detailed analysis of all telecommunications expenses with the objective of recovering past overpayments and reducing future operating expense.

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