An Evolving Theme

  As we start the New Year, a look back at some of the issues and potential trends that emerged in 2005 suggest this year the energy stirring up change in the industry could be just as potent. Contactless and biometric payments, data security, continued emergence of prepaid card products, the effects of bankruptcy reform, and payment systems that compete against traditional bankcards are among the various topics expected to receive high-level attention again in 2006.
  Oh, and there's the interchange litigation.
  As this month's Cover Story notes, Visa and MasterCard face continued pressure from merchants angry over what they believe are overly high prices to accept their branded cards. The early word among folks involved in that litigation is that K. Craig Wildfang, of Robbins, Kaplan, Miller & Ciresi LLP in Minneapolis, will be the de facto lead attorney representing the merchants in the consolidated litigation. Another firm, though, Milberg Weiss Bershad & Shulman, was lobbying to assume that role. Moreover, MasterCard has threatened to seek Wildfang's removal from the case because he may know too much inside information about the card association from his time with the U.S. Department of Justice a decade ago.
  The results of a recent Cards&Payments e-mail survey suggest that most of you, our readers, believe there will be little fallout from the litigation, at least in 2006. The vast majority of respondents, 78%, said they believe interchange rates will stay the same this year.
  The survey also found that many readers, 35%, expect cell phones to play a bigger role in initiating payments at the point of sale in the next five years. Other experts also agree (see story page 18). Among the other expected alternatives cited by respondents were key fobs, 39%, and fingertip/biometrics, 24%.
  Some other findings:
  * 41% of respondents, which included issuers and merchants, said they plan to issue or accept contactless payment products.
  * 88% said they expected to increase spending to protect data security this year.
  * 33% said their institution was victimized by phishing or other Internet fraud in 2005. Most, 88%, said losses were less than $10 million, though 9% said losses were between $10 million and $50 million.
  Stay tuned. It seems the industry is evolving at a pace not seen for quite some time.
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