Cards

The Bangko Sentral ng Pilipinas is strongly advising banks in the Philippines to conduct ATM maintenance late at night or before dawn, according to an official from the central bank. Government officials do not want the machines to be unavailable during the busy holiday season while consumers are shopping, according to the official, noting the central bank expects higher than average cash withdrawals during the holidays. “The central bank will coordinate with the banks where necessary to make sure that routine maintenance is undertaken during off hours,” he adds. The central bank also advised financial institutions to keep their ATMs well stocked to avoid cash shortages.

Australian consumers continue to increasingly embrace debit cards, while credit card activity remains flat. Consumers made 177.2 million debit card transactions in October, up 15.2% from 153.8 million a year earlier, according to the Reserve Bank of Australia. Debit card sales volume increased 12%, to AU$12.1 billion (US$10.6 billion or 7.4 billion euros) from AU$10.8 billion. Credit and charge card holders made 127.3 million transactions in October, up 1.2% from the 125.8 million during the same month last year. Sales volume on those cards fell 1.5%, to AU$19.1 billion from AU$19.4 billion. Consumers in October repaid AU$19.6 billion in card debt, down 1% from AU$19.8 billion a year ago. Australia has at least 14.4 million credit cardholders and 31.2 million debit cardholders, the central bank says.

Cardtronics Inc. today named Steven A. Rathgaber as its new CEO, replacing Jack M. Antonini, who left the Houston-based company in March.

Driven in large part by the increasing popularity of card payments, a banking trade group in the United Kingdom has voted to abolish central check clearing on 31 Oct. 2018, which essentially would kill off checks as a means of mainstream payment. “Central check clearing is the system that allows all the bits of paper to be exchanged around the country,” says a spokesperson for the UK Payments Council, the group that organized last week’s vote. “It’s a possibility that some checks may still be used, but our aim is that by 2018 there will be no need for any users to have to rely on checks for making any of their payments.” The group includes 25 members. The group’s board, which did the vote, includes 11 representatives from the banking industry, four independent directors and a chairman. Vote details were not released. Check use is in “long-term, terminal decline,” the council said in a statement. Only £7.1 billion (US$11.4 billion or 7.9 billion euros), or 3% of retail spending, involved the use of checks, a 4.1% decline from 2007, the latest full-year figures from the UK’s Association for Payment Clearing Services show. UK consumers wrote 711 million checks in 2008, down 47.3% from 1.35 billion in 2003, according to the Cheque and Credit Clearing Co., a British industry group that manages the country's check-clearing system. In a report that accompanied the vote to end check clearing, the UK Payments Council noted that “the strongest influence on the decline has been the decisions by many merchants to no longer accept personal checks. The other sector seeing the most-rapid decline was personal bill payment, where continued migration to electronic payment methods has cut the proportion of all personal regular bills paid by check from 16% to 8% between 2003 and 2008.” Meanwhile, UK consumers continue to increase their use of payment cards, initiating 2.01 billion debit and credit card purchases during the third quarter ended 30 Sept., up 6.9% from 1.88 billion during the same period last year, according to the UK Cards Association, a trade group that works with the Payments Council. Purchases using payment cards totaled 97.5 billion pound during the quarter, up 4.4% from 93.4 billion pounds a year earlier, the group says. Debit cards accounted for 75% of UK plastic card purchases during the quarter, the group adds. The Payments Council, which plans to promote “alternative” payment forms, including prepaid cards, direct debits, “virtual” vouchers and payments made using mobile phones, says it will review check use in 2016 before making a final decision to end the clearing system. “The [council] will be especially concerned that the needs of elderly and vulnerable people are met,” the trade group said in a statement, noting for now consumers are unlikely to see any immediate changes. Check use also is declining rapidly in the United States. Though Federal Reserve banks have eliminated all but one clearing facility, in Cleveland, the Fed has no plans to do away with paper checks altogether.

The Harley-Davidson Motor Co. last week introduced a proprietary gift card redeemable at its 750 retail locations.

A Delaware-based merchant association last week launched a Visa-branded gift card. The Downtown Newark Partnership is using the gift card to replace a paper gift certificate used since 2003.

Ingenico S.A. will end 2009 with a better-balanced revenue model of products and services because of several moves the France-based point-of-sale terminal maker made this year, says Gil Luria, an analyst with Wedbush Securities in Los Angeles. In a research report, Luria says the completion of Ingenico's $426 million (292.2 million euros) acquisition of easycash Beteiligungen GmbH, a Germany-based payment processor, alters the balance in revenue between products, such as payment terminals, and services. "The integration of easycash will immediately create a 70/30 balance between products and services," Luria says, while Ingenico will continue to look for more recurring services and software revenue "both organically and through [mergers and acquisitions]." Ingenico will see growth in the United States, Brazil, China and India, Luria forecasts.

A general approach to marketing for independent sales organizations seeking new clients is more likely to fail than would a campaign that targets specific merchant segments, according to one analyst. “A lot of ISOs fail, and they spend a lot of time and a lot of money in marketing that is ineffective,” says Philip J. Philliou, a partner at Philliou Selwanes Partners LLC, a New York-based consulting firm. “Marketing that is generic, purely price-based and scattershot in approach is rarely successful.” Such marketing tactics work to create an overall awareness of a business in a market, notes Philliou. ISOs instead should educate their sales staffs about specific merchant categories, such as health care, and target the categories with tailored marketing campaigns that address each segment’s unique payment needs, he says. “If you are an ISO that understand health care enough to a least connect with a health care provider, they often will recommend you to someone else,” says Philliou.

Debit card use in India continues to grow, according to the latest data from the country’s central bank. Consumers in October made 14.4 million debit card transactions, up 21% from 11.9 million during the same month last year, the Reserve Bank of India says. The value of the debit card transactions increased 31.1%, to 25.7 billion rupees (US$549.1 million or 383.3 million euros) from 19.6 billion rupees. Meanwhile, credit card transaction volume fell 13.6% in October, to 20.4 million from 23.6 million a year earlier. The value of those transactions decreased 12.1%, to 56.6 billion rupees from 64.4 billion rupees. Indian consumers hold at least 21.2 million credit cards and 162.8 million debit cards, the central bank says.

NCR Corp. set aside additional funds to help clean up both the lower Fox River and adjacent bay in Green Bay, Wis., after United States District Court Judge William Griesbach ruled Wednesday that NCR and Appleton Papers Inc. were solely responsible for contaminating the water. Lawyers for the Duluth, Ga.-based ATM manufacturer are studying Griesbach’s ruling and will appeal, according to a Thursday filing with the U.S. Securities and Exchange Commission. Appleton and NCR had sought clean-up contributions from 20 other companies with plants located along the Fox River. In the SEC filing, NCR said it will reserve between $100 million to $150 million for the project, an increase from $59 million the manufacturer reserved in the third quarter ended Sept. 30. NCR said it expects to pay the cost for cleaning the waterways through 2019, followed by decades of monitoring, according to the SEC filing. The case concerns the presence of polychlorinated biphenyls or PCB sediments. Congress banned production of PCBs in 1976. The Wisconsin Department of Natural Resources and the U.S. Environmental Protection Agency identified NCR as a potential responsible party for the cleanup because at one time the manufacturer owned two plants on the Fox River that manufactured carbonless paper cited as the source of PCBs. Businesses use carbonless paper for invoices. NCR sold the factories in 1978 to Appleton Papers Inc. of Appleton, Wis., which manufacturers carbonless paper sold under NCR’s brand.

If the checking account's loss has been the prepaid card's gain, new overdraft regulations could kick that trend into overdrive.

Concerns that payment networks will increase their fees to merchant acquirers in 2010 tops a recent survey published by Boston-based Aite Group LLC. In the survey of 45 merchant acquirers conducted between July and October, Aite found that 84% of respondents believe an increase in fees assessed by payment networks likely will happen in 2010. Concerns about increases in PIN-debit processing fees also were significant, with 78% saying that was likely. Overall interchange increases appeared likely in 2010 to 76% of the respondents. Seventy-one percent of respondents expected card networks to issue cards assessing higher interchange rates next year. A majority–64%–also maintained that rate increases for signature-debit transactions are likely. Sixty-nine percent of respondents said it is unlikely interchange will fall under government regulation in 2010. Most–82%–also doubted that card networks would begin to work directly with independent sales organizations instead of through acquirers in 2010.

Boku Inc., which enables consumers to charge so-called micropayments to mobile-phone bills, has begun offering its services in Estonia and Venezuela, according to Ron Hirson, co-founder and senior vice president of product at the San Francisco-based firm. The company operates in 58 countries, though the United States remains among the top three markets for Boku, he says, declining to be more specific. Consumers use Boku to purchase such digital goods and services as virtual currency for online games and pay fees for online dating sites. For instance, a consumer who wants to buy virtual currency to buy extra “lives” or other goods useful in online games would, after registering for the service, make the purchase through the game provider’s Web site. The consumer would confirm the purchase through a text message, and the charge would appear on the consumer’s mobile-phone bill, eliminating the need to use a payment card, which could reduce or eliminate a merchant’s profit because of relatively high interchange fees for such small purchases. The average transaction processed by Boku is between US$8 and US$9, Hirson says. Boku serves more than 1,000 merchants and processes payments for three of the top five game applications offered on social networking site Facebook, Hirson says. A Facebook spokesperson declined to comment. Hirson would not disclose the number of transactions processed by Boku, which begun full operations during this year’s first quarter. However, he says, Boku has experienced “double-digit [transaction] growth every month since the first quarter.”

Heartland Payment Systems Inc. Thursday announced a settlement agreement with American Express Co. related to the 2008 breach of Heartland’s system, according to the Princeton, N.J.-based processor. Under the agreement, Heartland will pay American Express $3.6 million, resolving all intrusion-related issues between the two parties. The processor did not reveal additional settlement details. “This settlement marks the first agreement with a card brand related to the intrusion,” Bob Carr, Heartland chairman and CEO, said in a statement. Heartland disclosed the breach in January that affected an undetermined number of cards (CardLine, 1/20). Albert Gonzalez, the Miami man who pleaded guilty in September to charges related to the 2007 data breach at TJX Cos. Inc., pleaded guilty early this month to charges he breached the payment networks of Heartland Payment Systems Inc., Hannaford Bros. Co., 7-Eleven Inc. and two unnamed retailers (CardLine, 12/9). A Heartland representative did not return requests for comment by CardLine’s deadline. An AmEx representative declined to provide agreement details.

Hypercom Corp. today announced it has signed a letter of intent to form a joint venture with The McDonnell Group LLC that will provide payment processors, financial institutions and retailers globally with data-communication services for transaction-based applications. The venture, known as Phoenix Managed Networks LLC, will acquire and operate Hypercom’s HBNet transaction-transport business, according to the Scottsdale, Ariz.-based point-of-sale terminal provider. The Marietta, Ga.-based McDonnell Group is a technology-focused investment fund managed by Jack McDonnell, who will serve as CEO of Phoenix Managed Networks. McDonnell also is the founder and former chairman and CEO of Transaction Network Services Inc., a Reston, Va.-based provider of data-communication services. “HBNet is directly competitive with TNS,” notes McDonnell. “TNS was fortunate to become a dominant player at the time, but the market is looking for an additional provider.” Customers do not want to be locked into a single vendor relationship, he adds. Phoenix Managed Networks will be operational on Jan. 1 with a staff of 20 workers, including former TNS executives Mathew Mudd and Trevor Fall. McDonnell plans to grow the company over three years to roughly 100 workers domestically and another 30 to 40 in Europe, he says. “This joint venture will not only allow us to provide the hardware but additionally the [transaction] transport to all of our key customers,” says Philippe Tartavull, Hypercom CEO and president, noting the HBNet name will disappear.

Specialty store gift card redemptions increased 12.3% during the week ended Dec. 13 compared with the same period last year, according to a report from First Data Corp. The Atlanta-based processor based the report on aggregate transaction data from the company’s gift card-processing business. First Data’s specialty retail category includes merchants that sell clothing, electronics, books and sporting goods. First Data suggests the numbers indicate consumers already are redeeming gift cards they received as part of incentive shopping deals. The company did not release specific numbers. The first three weeks of the holiday season have seen the dollar amount of gift card activations increase 1.7% compared with the same period last year. Last week, however, the total dollar value of gift cards activated decreased 1.6% compared with a year ago. The number of gift cards activated also decreased 5.7%. The average gift card amount increased to $30.86 compared with $30.53 last year.

Dunkin’ Donuts has given its approval for Access to Money Inc. and Jarrett For Ca$h, two New Jersey-based ATM independent sales organizations, to deploy ATMs in Dunkin’ Donut franchise locations in New York, New Jersey and Connecticut, according to a Dunkin’ Donuts spokesperson. The business case for installing ATMs is “proprietary,” the spokesperson says. Richard Stern, Access To Money president and CEO, says Canton, Mass.-based Dunkin’ Donuts may expand the ATM deployment to other markets in 2010. Dunkin’ Donuts has 8,835 franchise locations nationwide and 1,500 in the New York Tri-State area. Cherry Hill-based Access To Money is one of the nation’s largest ATM ISOs with 12,000 machines under contract. Executives at Piscataway-based Jarrett For Ca$h could not be reached for comment.

The British financial industry wants to eliminate paper checks by 2018. The board of the UK Payments Council voted Wednesday to set Oct. 31, 2018, as the target date to end centralized check clearing. The strategy-setting council, which includes major British banks such as HSBC Bank PLC and Lloyds TSB Bank PLC, the British arms of U.S. companies including Bank of America Corp. and JPMorgan Chase & Co., the Bank of England and eBay Inc.'s PayPal Inc. unit, cited the "long-term, terminal decline" of the paper-payment instrument. Check use has been declining in the United Kingdom since 1990 and has fallen by 40% in the past five years, the council says. It set a goal to ensure there is "no scenario where customers, individuals or businesses still need to use a check" by its target phaseout date. The council said it would focus on the needs of elderly and vulnerable consumers, who may be less likely to use debit cards or online payments. It said it will conduct a review in 2016 before making a final decision. Check use is also declining rapidly in the U.S., and though the Federal Reserve banks have eliminated all but one clearing facility, in Cleveland, there are no plans to do away with paper checks altogether.

Independent sales organizations and bank acquirers predict the price merchants pay for debit card transactions likely will increase in 2010, survey data from Boston-based Aite Group LLC suggest. In the survey of 17 bank acquirers and 28 independent sales organizations, 69% of acquirers predicted PIN-debit rates would increase next year compared with 79% of ISOs who thought so. “This event, if it happens, would mean a lot in terms of potential income selling or cross-selling PIN pads or setting up merchants to accept PIN-debit transactions,” says Adil Moussa, the Aite analyst who conducted the survey. Many respondents also believed signature-debit rates also will increase, cited by 75% of participating ISOs and 62% of acquirers. Signature-debit price increases would mean ISOs and acquirers could adjust their qualifying rates, assuming the transaction meets conditions such as card present with full magnetic stripe data. ISO and acquirer debit rates often encompass signature and PIN debit as a way for the companies to build profit margin into such transactions, Moussa says. And because many merchants often buy based on the qualifying rates, rate changes could factor in which service provider the merchant chooses, he says.

Consumers are initiating more transactions online this holiday season, but the average ticket size is down, according to payment processor Chase Paymentech Solutions LLC. The Chase Paymentech Pulse Index, which samples a portion of the daily settlement activity of 50 of Internet Retailer’s Top 500 online merchants, reports that total online transactions from Nov. 5 through Dec. 13 were up 25.3% compared with the same period last year, while total purchase volume was up 14.7%. But the average ticket size was down 8.3%, to $53.74 this year from $58.62 last year. “We’re encouraged to see that overall e-commerce continues to grow,” Aaron Press, director of market analysis at Dallas-based Chase Paymentech, tells CardLine, adding that “a variety of forces” helped to drive down the average ticket size. “Promotional activity was very heavy in November, with discounts, free shipping and other deals. That, combined with economic conditions and the fact that consumer confidence is still tracking fairly low, is contributing to somewhat smaller transaction amounts,” Press says. Chase Paymentech, which estimates it processes some 50% of all online transactions, bases its findings on a fraction of the total number of transactions it processes.