Cards

Debit card use at the point of sale continues to grow, with cardholders who use both PINs and signatures completing more total debit transactions than those who use one method or the other, according to a First Data Corp. study released Thursday. Seventy-four percent of 2007 study respondents had used their debit card at the point of sale in the previous 30 days, an increase from 70% of respondents in 2006 and 62% in 2005, according to the study. Cardholders using both PINs and signatures performed more debit transactions during the previous 30 days than those using only PINs or signatures, according to the study. Cardholders using both methods completed 23.3 transactions during the previous month, while PIN-only users completed 12.2 and signature-only users completed 17, according to the study. Greenwood Village, Colo.-based First Data conducted phone interviews with roughly 3,500 adults in November and December 2006 and between October and December 2007. A First Data representative was unavailable to comment by CardLine deadline

Nautilus Hyosung America Inc., a company primarily known for making ATMs sold by independent sales organizations, has signed a breakthrough agreement to manufacture ATMs for Citibank, owner of one of the largest bank-owned ATM networks, ATM&Debit News, a CardLine sister publication, has learned. The deal is considered a major, if not a landmark agreement, because large financial institutions traditionally have given most, if not all, of their business to Diebold Inc., NCR Corp. and Wincor Nixdorf International GmbH, the world's three-largest ATM manufacturers. Nautilus Hyosung's deal brings a fourth ATM player into the U.S. financial-institutions market. The deal has buoyed Nautilus Hyosung's confidence in entering a market supplying ATMs to financial institutions. As a result, the company has been interviewing candidates for vice president of financial institutions, a new position. Coppell, Texas-based Nautilus Hyosung today wrapped up its second-annual customer conference in Grapevine, Texas. Nautilus Hyosung executives refused to confirm or deny the agreement, but ATM&Debit News has learned from several sources attending the conference the company has delivered to during the past year its model 7600D, a drive-up ATM, and its model 7600T, a walk up ATM, to Citibank branches in Long Island, N.Y., and Los Angeles. Both machines have bulk-note acceptors and take deposits made with envelopes. Technicians, however, can upgrade the ATMs to accept envelope-free deposits. Citibank purchased the ATMs from Nautilus Hyosung because the bank is upgrading its entire ATM network, ATM&Debit News has learned. One of Nautilus Hyosung's customers who knows about the contract says the agreement involves a large number of ATMs, but he declined to say how many. Nautilus Hyosung is sharing the Citibank contract with NCR and Diebold.

Etelcharge.com, a Web site that enables consumers to buy gift cards by billing them to their home phones, announced yesterday it is in negotiations with gift card providers to increase its offerings. Rob Howe, Etelcharge.com chairman and CEO, says customers have been asking the company to add new kinds of gift cards to the ones it already offers. "We wanted to let people know, don't huff and puff about having one option. There's more coming," Howe says. Based in DeSoto, Texas, Etelcharge.com enables consumers to register their home phones on its Web site and buy gift cards in $20 increments up to $80, Howe says. The amount is then added to their home phone bills, he says. Consumers can use the gift cards to buy movies, music, and television shows for their computers from CinemaNow Inc., which is based in Marina Del Rey, Calif., Howe says. Etelcharge.com is negotiating with a number of gift card providers, including Stored Value Solutions of Louisville, Ky., which is a division of the Minneapolis-based Ceridian Corp., Howe says. For now, Etelcharge.com plans to focus on offering products that can be downloaded over the Internet, such as movies, music and software, he says. AT&T serves as Etelcharge.com's billing and collections provider, and its service are available only to AT&T customers in Arkansas, Kansas, Missouri, Oklahoma, and Texas, Howe says. The company plans to expand to other states and other phone companies, he says.

GreenNote Inc., a Redwood City, Calif., company founded last year, launched a Web site Wednesday that facilitates student loans funded by the borrowers' acquaintances.

Necessity was the mother of invention for a card aimed at new mothers in the United Kingdom.

Last week, the Financial Crimes Enforcement Network released a ruling that says merchants and nonbank owners of ATMs that reload prepaid cards are not in a regulatory category called money services businesses. The ruling means a bank that sponsors ATM and point-of-sale locations must comply with the Bank Secrecy Act for the transactions conducted at locations it sponsors.

H&R Block Inc. has begun testing mobile-banking services for its Emerald MasterCard, the company announced May 28.

With consumers feeling pressure from the housing crisis and a tightening economy, retailers are facing a rough year. Lillian Vernon and The Sharper Image filed for bankruptcy protection in February, and Linens 'n Things Inc. filed May 2 for Chapter 11. Industry observers such as Dan Horne, associate professor of marketing at Providence College, expect the uptick in retail bankruptcies to continue.

Banks in Vietnam plan to start charging customers for ATM transactions, according to press reports and an interview with a bank official. ATM users will pay at least 1,000 dong (6 U.S. cents or 4 euro cents) per transaction, a spokesperson for Vietnam-based financial institution Techcombank tells CardLine Global. "The transaction fee is being charged to cover ATM-setup investments, and it will be re-invested in setting up more ATMs in the future," the spokesperson says, adding the institutions are adopting the fee as part of an agreement with the Vietnam Bank Card Association. Financial officials had planned to start charging the fees by 1 July but have delayed that start date because of inflation pressures, the spokesperson says. No new start date was announced. Vietnam has more than 4,500 ATMs.

Consumers in Finland made an average of 9,585 cash withdrawals from ATMs each month in 2007, the highest ATM activity among nations in Western Europe, according to a report released this week by Retail Banking Research. The average number of monthly ATM withdrawals for the entire region was 2,854, according to the London-based strategic research and consulting firm in a statement released Wednesday. Italy trailed the pack with an average of 1,340 ATM withdrawals per month. The high level in Finland "can party be explained by its low density of machines to population but also by the tendency of Finns to visit ATMs frequently and withdraw small amounts on each occasion," the statement says. Italians, by contrast, tend to withdraw more cash on each visit to the ATM, the firm says. The report also notes that ATMs in Western Europe are becoming more "sophisticated." For example, the region has about 24,900 ATMs with automated note acceptance, an increase of about 33% from 2006.

Philippines-based UnionBank reportedly will offer pensioners a way to receive benefits through ATMs. The service would apply to some 81,000 pensioners who receive benefits from the Government Service Insurance System, according to the Philippine Star newspaper. Neither government nor bank officials could be reached for comment by CardLine Global. The scheme would start 1 July. Pensioners would need a UnionBank Visa-branded ATM card and a savings account to participate in the scheme, which would enable pensioners to withdraw their benefit funds from ATMs.

Consumers in the United Kingdom spent £14.7 billion (US$28.7 billion or 18.6 billion euros) on retail goods bought online in 2007, a 35% increase from the previous year, according to Verdict Research, a UK-based research firm. Online retail spending "is growing at the fastest rate" in six years, the group says in a statement released this week. Online retail spending could reach £44.9 billion by 2012 and account for nearly 14% of all spending on the Internet, the group estimates. Some 22.6 million consumers in the UK shopped online in 2007, nearly 25% more than in 2006. Those consumers shopped online an average of 19.9 times in 2007, up from 17.2 in the previous year. Verdict Research cited the spread of higher speed broadband connections and the convenience of Internet shopping as major factors for the growth.

1st Source Bank is reissuing cards to all of its debit cardholders following a computer breach that occurred at the South Bend, Ind.-based institution May 12. Hackers accessed 1st Source's computer and compromised some cardholders' debit card information, says Larry Bauer, the bank's vice president of marketing. The breach affected 66 branches in Michigan and Indiana. "A small percentage of cards were affected," Bauer says, declining to say how many cards were affected or how many the bank issues overall. "We're pleased to report no evidence to date of fraud as a result of the breach. No money has been stolen," he said. The bank, which issues debit MasterCards, sent letters to its customers on May 28 informing them of the breach, says Bauer. Though the breach only compromised some cards, the bank chose to reissue all of its debit cards to ensure the safety of cardholder information, he says.

MasterCard Worldwide needs to catch up in the debit card market to meet its own goals, Timothy H. Murphy, president, U.S. region, told analysts during a conference last week. "We acknowledge the perception that MasterCard is late to the game in debit in the U.S., and we are not satisfied with our position," Murphy said. Debit is the fastest-growing type of payment in the U.S., and it represents the greatest opportunity to convert more payments from cash and check to the MasterCard network, Murphy noted, adding that approximately 90% of U.S. households have a debit card linked to a bank account. But the surprising fact is that activation of issued debit cards is still relatively low, and by some measures only about half of all debit cards issued have been activated, he said. To spur greater use of debit cards, MasterCard is consulting with its issuers on strategies to increase the distribution and use of its PayPass contactless technology, and on driving the development of signature debit and co-branded debit cards and rewards. Prepaid debit cards and converting consumer bill payment to debit cards are other growth areas, Murphy said. He suggested that large municipalities, such as the city of Sacramento, Calif., which this year began accepting one-time payment of utility bills using debit and credit cards, will drive this trend.

A cobranded card agreement between a military retailer and JPMorgan Chase & Co. has raised the ire of banks and credit unions that say the deal infringes on their exclusive contracts to provide financial services on bases.

BOSTON — To expand in the business-to-business payments market, credit card issuers may have to abandon the interchange structure, an analyst has predicted.

NCR Corp. has raised US$53,800 (34,800 euros) to help earthquake victims in China, Lorraine Russell, an NCR spokesperson, tells ATM&Debit News, a CardLine Global sister publication. NCR employees in China raised $23,800 and company employees in Japan raised another $5,000. The NCR Foundation, which is based in the United States, more than matched the employees' donations. NCR, the world's largest ATM manufacturer based on 2007 shipments, operates an ATM-manufacturing plant in Beijing. The earthquake, which struck on 12 May, killed 69,000 individuals, according to news reports. Nearly 19,000 are missing. NCR also is working with several banks, including Agricultural Bank of China in Sichuan Province, where the earthquake occurred. The disaster destroyed 65 of Agricultural Bank of China's ATMs. NCR employees are discussing with Agricultural Bank employees deployment of mobile ATMs and cash-recycling systems to replace the destroyed machines, Russell says. "China is a cash society, and by keeping cash circulation it helps restore normalcy," she says.

The Discover U.S. Spending Monitor rose 1.4 points in May to 86.8 as consumers braced for higher spending in the wake of record gas and food prices. The card issuer released its report Wednesday.

Michigan's Unemployment Insurance Agency on Monday began offering unemployed workers direct deposit and debit card electronic-payment options for receiving unemployment benefits. Michigan previously offered only check payments for unemployment funds, says Norm Isotalo, an agency spokesperson. The state added electronic payments to decrease costs and to increase the speed of disbursing funds, says Isotalo. The state issued 3.4 million unemployment checks in 2007. "With that number in mind, we are estimating these new electronic options will save $1.6 million annually in postage and paper costs," Isotalo says. Sixty-six percent of unemployed workers signing up for unemployment benefits on Monday chose an electronic-payment option over checks, says Isotalo. New York-based JPMorgan Chase & Co. is issuing the Visa debit cards, known as Michigan UI cards, for the agency. "The ultimate objective is to phase out the issuance of checks," says Isotalo. He predicts the agency will remove checks as payment options for unemployment benefits "sooner than later."

Visa Inc. announced late last month that it will include its PIN-based Plus ATM and Interlink debit purchases in its Account Data Compromise Recovery Service, which historically has applied only to signature transactions. Visa will add the PIN-debit transactions effective Nov. 1. For enrolled Visa card issuers, the recovery service assigns liability and collects reimbursement for counterfeit fraud losses and operating expenses incurred because of compromised cards. By including PIN-debit transactions in the recovery service, Visa is simplifying the fraud-liability and reimbursement process for issuers and acquirers, says Dave Van Horn, Visa senior business leader of global fraud risk products. If accounts were compromised today involving both PIN- and signature-debit transactions, an issuer would need to use a separate process to recover the PIN-debit losses, he says. Issuers enrolled in the service will not have to re-enroll when Visa adds PIN-debit transactions.