Cards

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.

Starbucks Coffee Co. yesterday began offering free wireless Internet access in its stores to customers who load at least $5 onto a Starbucks prepaid gift card and register it on the Starbucks Web site, Alisa Martinez, a company spokesperson, tells CardLine. Seattle-based Starbucks also is offering a free beverage to customers who register their cards through July 14. Providing free wireless Internet access and a free beverage to customers who register their gift cards represent the latest perks Starbucks started offering this year as part of a "Tranformation Agenda" to build customer loyalty, Martinez tells CardLine. Earlier this year, Starbucks began giving registered cardholders complimentary flavor syrups and milk alternatives in their drinks, complimentary tall beverages when they buy a pound of whole-bean coffee, and free refills of brewed coffee on the same visit (CardLine, 3/25). Customers must use their Starbucks card to get the benefits, according to the company. Starbucks plans to add other rewards to the cards, Martinez says.

MasterCard Worldwide is banking heavily on growth in emerging markets in Asia and Latin America to achieve average annual net-income growth of 20% to 30%, Walt M. Macnee, MasterCard president, global markets, told analysts during a conference last week. China and India present the biggest opportunities for MasterCard in Asia because mass urbanization in both countries is giving rise to second- and third-tier cities with populations of 1 million to 3 million residents, he said. The shift to cities is fueling middle-class growth and boosting discretionary spending, especially among women. "Women in Asia are becoming the key financial decision-makers in households, and they also appear to have more discretionary spending power than ever before," Macnee said. A growing sector of affluent Asian women also is driving new credit card products, such as the Lady's Solitaire World MasterCard launched in March by Singapore's largest issuer, United Overseas Bank Limited, he noted. The card pays triple points on purchases of luxury merchandise and also grants cardholders access to concierge-level services, events and fashion shows. Latin America presents another growth opportunity for MasterCard, as an increasingly youthful population shifts from almost exclusive reliance on cash to electronic payments, particularly debit cards. In Venezuela the government is using MasterCard prepaid debit cards to replace cash in a widely used public meal-voucher program. "By 2010, there will be more people in Latin America under the age of 35 than in the U.S. and Europe combined, and it's that younger segment that will be our engine of growth in Latin America," Macnee said.

L.L. Bean informed customers via its Web site that it is discontinuing its co-branded Visa card with Bank of America Corp.

U.S. Bancorp said it has started offering contactless debit cards to customers in California, Colorado, Missouri, and Utah.

The Chicago online travel company Orbitz Worldwide Inc. is offering a cobranded Visa Inc. credit card issued by Capital One Financial Corp. of McLean, Va.

When Canadian shoppers come to the United States, they spend significantly more on their average debit card transaction than their U.S. counterparts spend while shopping at home. That information comes from a report on cross-border PIN-debit transactions between December 2007 and March 2008 from NYCE Payments Network LLC and Acxsys Corp. Canadians spent an average of more than $68 per cross-border debit transaction, 45% more than the average U.S. debit cardholders spent while shopping at home in the U.S. during the same four-month period. NYCE, a Secaucus, N.J.-based PIN-debit network, and Acxsys, which designed Canada's Interac debit service, three years ago formed an alliance called the Cross-Border service. The service enables Canadians to pay with their debit cards at U.S. retailers that accept NYCE-branded cards. NYCE attributes increases in Canadian buying to holiday shopping and Canadians vacationing in the southern U.S. states to escape Canada's winter. However, two states that border Canada–Washington and New York–accounted for most of Canadians' U.S. debit card transactions, according to the announcement.