Nadia Oehlsen

Visa USA's introduction of an independent advisory board and its shift to a more for-profit focus in 2005 had analysts debating whether the association is simmering its own plans to go public. Whether Visa was working toward such a goal last year in the midst of rival MasterCard International's plans for an initial public offering, it certainly generated more transactions for both high- and low-end spending.

It was an eventful 2005 for MasterCard, with big-news security breaches, protracted merchant and consumer lawsuits, ambitious contactless rollouts and announced plans to go public. Though MasterCard's credit and debit card transaction volume increased, receivables went south.

Thus far it has not been a good year for providers of "digital gold" currencies and payment services that claim to enable consumers to buy and sell products and services using shares of precious metals instead of U.S. dollars and other national currencies. A spate of negative consumer press and government reports has called the payment systems, at best, lax on financial crime prevention.

Some merchants believe check payments routed electronically through the automated clearinghouse system can help reduce their costs associated with accepting bank-issued debit and credit cards. Others, though, believe ACH payments at the point of sale represent a market with limited potential.

Electronic benefits transfer cards have replaced food stamps across the country, but most state manifestations of the federal Women, Infants and Children nutrition program have remained stubbornly dependent upon paper vouchers. A handful of states are testing electronic WIC card programs, some with offline smart cards and others with online magnetic stripe cards.

Take $10,000 in cash out of the country, and U.S. law says you have to declare it. But if a customs agent sees prepaid cards instead, there is no way to know how much value is loaded on them. So it is no surprise that law enforcement and some card-industry experts are concerned about the potential use of prepaid cards to launder money.

As mandatory arbitration clauses have proliferated in contracts between corporations and consumers in the past decade, so have charges that the arbitration system is unfair to consumers. And complaints about the arbitration outcomes between consumers and credit card issuers are among the most publicized.

As use and acceptance of credit and debit cards has grown around the world, travelers have less need for travelers checks than they did back when Carl Malden sternly warned, "Don't leave home without them." But travel-related payment vehicles still appear to be marketable.

As some banks and credit unions have improved their online-banking services by adding access to more account information, a growing number of institutions are approaching their logged-on customers with careful pitches for additional products and services. The trick to successfully cross-sell, experts say, is to provide the data customers want and keep the online banking experience simple, fast and secure.

As electronic payments technologies have spread to tollway systems across the United States and Southern Canada during the past decade, they have evolved regionally but with no standard, compatible communication protocols. Federal mandates for safer vehicles could unify electronic tolling technology, but the process may take more than a decade.

Bank consolidation, slowing growth in traditional payments such as credit cards, and consumer demand for access to emerging transaction methods are spurring processors to enter new markets. In fact, it is becoming increasingly likely financial institutions will hear sales pitches that ask, Want some online bill payment with your core bank processing? How about health savings account services? And everyone loves prepaid gift cards, right?

Every day, merchants across the United States accept millions of credit card transactions. Also each day, thousands of merchants break basic rules for how to handle those payments.

Whether they need to beat late fees or prefer the convenience and speed of electronic payments, a quarter of consumers surveyed recently said they had used some type of expedited payment method in the past 12 months.

Check use at the point of sale continues to decline, but not at the pace experts once predicted. NACHA-The Electronic Payments Association estimates that consumers still present 6.4 billion checks at checkout lanes each year.

Small to mid-size businesses that provide payment services to the unbanked have found themselves increasingly unable to find and keep bank accounts, thanks to a perfect storm of bank consolidations and banker nervousness about complying with anti-money laundering regulations.

How card-industry executives made out financially in 2004 depends on whom you ask. Overall salaries and bonuses certainly were up at most companies, but bonuses plus salaries actually declined as a percentage of total compensation from the previous year. As a result, other compensation components, particularly options exercised, are bringing home the bacon.

The spread of biometric point-of-sale systems has been predicted for a long time, but it is hard to tell how widely the technology is being accepted. Vendors claim the number of retailers giving their systems a try is growing, but they will not reveal specific details about their tests, and many retailers are not ready to talk, either.

It may have been one of the biggest events for the card industry in years, but Visa USA executives are downplaying last October's U.S. Department of Justice legal victory that forced Visa to allow its members to issue American Express and Discover cards. After all, they point out, Visa had a pretty good year.

Morgan Stanley's recent announcement that it plans to spin off its Discover Financial Services unit leaves the company's future ownership unclear. But the legal and marketing victories of 2004 positioned Discover well for growth in 2005.

Bob Cannon's a little nervous about letting his reloadable prepaid cards out of Texas. That is because the registration and licensing rules for issuers, sellers and redeemers of stored-value cards vary so much from state to state, and even federal rules are in flux.