Technology

No single market for new business surfaced in a recent survey of independent sales organizations and merchant acquirers. The survey findings, contained in the report from Aite Group LLC “ISOs and Merchant Acquirers: Two Sides of the Same Coin,” suggest ISOs and acquirers have different views on where they might find new card-accepting merchants.

VeriFone Holdings Inc., a San Jose, Calif.-based point-of-sale terminal maker, says the global recession forced it to trim its sales and marketing expenses by 19.7% this year compared with 2008, according to the company’s fiscal 2009 annual report filed with the U.S. Securities and Exchange Commission. VeriFone’s fiscal year ends Oct. 31.

The payment terminal is about to become a point-of-sale entertainment center, as VeriFone Holdings Inc. prepares to expand the marketing engine it designed for taxicabs to large retailers.

Price reductions could help spark demand for cards that display one-time passcodes consumers may use to secure online-banking and retail transactions, according to some observers. Consumers in various countries already use readers plugged into personal computers, passwords and challenge-response questions to authenticate themselves when using online-banking and merchant sites. Companies such as Los Angeles-based Innovative Card Technologies Inc. hope the increasing use of Web sites for transactions, combined with increasing awareness of fraud, persuade more consumers to use cards that display passcodes based on algorithms unique to each cardholder. Consumers type in the passcodes when prompted by Web sites for authentication. Innovative has shipped at least 500,000 such cards, Richard Nathan, the company’s president and CEO, tells PaymentsSource. Still, the market remains relatively small. “The reason the market is what it is is because of the price barrier,” he says. For instance, Bank of America Corp. charges consumers a one-time fee of $19.99 for its SafePass card, which displays a six-digit passcode, according to the financial institution’s Web site. Low demand for the devices has kept prices high, says Thomas Flynn, director of marketing for identity and access management for France-based smart card vendor Gemalto NV. Flynn says one-time passcode cards cost between $10 and $20, though he would not be more specific. Dennis Brestovansky, president and CEO of Minneapolis-based Aveso Inc., which makes modules for one-time passcode cards, tells PaymentsSource bringing the cost of such a card down to $5 would help increase demand. Aveso hopes to “be close” to that target by late 2010, he says.

Moneta Corp., an online alternative-payment processor, is introducing a new way for its bank customers to use its automated clearing house payment rails — for credit charges.

Albert Gonzalez of Miami Tuesday pleaded guilty to federal charges he conspired to hack into computer networks supporting major U.S. retail and financial organizations and to steal information pertaining to tens of millions of credit and debit cards. He additionally pleaded guilty in September to charges related to the 2007 data breach at TJX Cos. Inc. and pleaded guilty earlier this month to charges he breached the payment networks of Heartland Payment Systems Inc., Hannaford Bros. Co., 7-Eleven Inc. and two unnamed retailers (see story). http://www.paymentssource.com/news/hacker-pleads-guilty-heartland-hannaford-breaches-2711721-1.html This week, Gonzalez pleaded guilty in federal court in Boston before U.S. District Judge Douglas P. Woodlock to two counts of conspiracy to gain unauthorized access to payment card networks operated by Heartland Payment Systems Inc., 7-Eleven Inc. and Hannaford Bros. Co., among others. He leased or otherwise controlled several servers and gave access to them to other hackers, knowing they would use them to store malicious software and launch attacks, according to the plea agreement. Using the malicious software, it is feasible Gonzalez and his coconspirators would steal tens of million of credit and debit card numbers, affecting more than 250 financial institutions, according to the plea agreement. The government indicted Gonzalez in August in New Jersey for his criminal conduct and transferred the New Jersey case to the District of Massachusetts for plea and sentencing as part of the plea agreement with the government. Under the terms of the agreement, Gonzalez will not seek a prison term less than 17 years, and the government will not seek a term of more than 25 years. Gonzalez remains in custody.

Fannie Mae reported this week that delinquencies in its mortgage portfolio are still rising even as the financier's portfolio size shrinks. Fannie said October's serious delinquencies, those at least 90 days behind, rose to 4.98% on single-family homes from 4.72% in September and 1.89% in October 2008.

The Reserve Bank of India has increased limits for transactions initiated with mobile phones, the country’s central bank said in a notification released this week. The bank raised the limit for mobile phone funds transfers and retail purchases to 50,000 rupees (US$1,070 or 745 euros) per day, a bank spokesperson tells PaymentsSource. Previously, the central bank capped mobile funds transfers at 5,000 rupees, while it limited mobile purchases of goods and services to 10,000 rupees. Those limits stood for more than a year. “In addition, transactions up to 1,000 rupees can be facilitated by banks without end-to-end encryption,” the spokesperson adds. In addition, the central bank says it will allow banks to offer services that enable consumers to transfer funds from bank accounts that recipients can redeem in cash instead of account credits. “These funds can be [redeemed] by recipients via ATMs or through agents appointed by banks as business correspondents,” the spokesperson says. “The limit for cash transfer through ATMs or business correspondents has been capped at 5,000 rupees per transaction and 25,000 rupees monthly.”

Consumers worldwide cannot account for an estimated 20% of their weekly cash spending, according to statistics released last week by Visa.

The number of contactless smart cards shipped per year will break the 1 billion mark by 2014, United Kingdom-based IMS Research predicts in a recent report. “The market for contactless is set to nearly double between 2008 and 2014 as the three largest end-user sectors–government and health care identification, transportation, and payment and banking cards–all gain traction, analyst Don Tait said in a statement. The report cites health care as the biggest sector, but transportation is booming. IMS also expects bank and payment cards to move the fastest toward contactless. Though there are relatively few shipments in that sector thus far, consumer awareness and adoption are growing, the firm says. However, adoption is not always smooth, according to research director John Devlin. “One key area that has yet to fully adopt contactless is mobile,” he says, citing the lack of a common certification standard as a chief cause. The lack of agreements between various stakeholders also is holding back the growth in Near Field Communication payments, the company says. IMS is not forecasting major contactless shipments in the mobile segment until 2012.