Credit

High card-payment transaction costs are helping to keep the number of European vending machines that accept noncash payments low, Jürgen Göbel, chairman of European Vending Association’s cashless committee, tells PaymentsSource. The trade group represents 63 vending-machine companies and 20 national vending associations in Europe, where at least 3.8 million machines produced 2008 revenues of 13 billion euros (US$18.6 billion), the trade group says.

Luup International Ltd. plans to establish a mobile phone-based remittance service for the United Arab Emirates and Indonesia, a spokesperson for the Norway-based payments provider tells PaymentsSource. The service will enable the approximately 500,000 Indonesians in the United Arab Emirates to transfer funds home.

Thanks to the improving economy, Kasikornbank may lower the minimum salary requirements applicants need to obtain credit cards, a spokesperson for the Thailand-based financial institution tells PaymentsSource.

So-called power moms–those who meticulously shop for their families–prefer to use debit cards or cash to pay for purchases instead of credit cards, according to CheapToday.com, a Web site that features sale offers from various large U.S. merchants. The site regularly polls its members about financial and retail-shopping issues, says Chris Hill, president and CEO. In a survey earlier this month in which 134 power moms responded, 43% reported using Visa check cards for their holiday purchases, while 14% chose to pay with debit MasterCards. Of the other respondents, 32% reported using cash or checks to pay, 3% reported using retail store cards, 2% reported using American Express cards, and 6% reported using other options such as gift cards and Discover card. Respondents supplied myriad anecdotal comments on why they chose using debit cards instead of credit cards, Hill says. “We got a lot of responses around the credit hangover everyone experienced in 2009,” says Hill, noting that shoppers were specific about singling out credit as an undesirable choice. “One person said used she used her check book and was trying to hard not to use credit this year, so there’s a very conscious movement away from credit.” Survey participants tended to use cash to control how much they spent this year, he says. “When they did use credit, there was a negative connotation. But people love debit cards,” says Hill. For example, one respondent said she “unfortunately” had to use credit cards to get by this year.

American Express Co.’s Open small-business division has launched a national television spot that features 10 small-business entrepreneurs to demonstrate the functionality of its new AcceptPay invoice product. The ad’s subjects show how AcceptPay can help them get paid faster. In the spot, AmEx encourages small-business owners to ask their own questions about the service by logging on to OpenForum.com, an online resource and networking site for business owners. AmEx says it is planning future ads but did not disclose details.

American Express Co.’s small-business division, called Open, last week launched AcceptPay, an online invoicing and payment product designed to help merchants improve cash flow during these tough economic times. AcceptPay enables business owners to create, send and track invoices through one Web site. Through AcceptPay, customers can pay invoices using a major credit or debit card, cash or check, which businesses could convert into an electronic automated clearinghouse payment. The system deposits payments directly into the business owner's bank account.

Unlike in 2008, U.S. consumers’ credit card bills took priority over mortgage payments and other debts, according to survey data Auriemma Consulting Group released recently. In the consulting firm’s latest edition of Cardbeat, Editor Nancy Stahl contends credit cards rose in consumers’ payment hierarchies because card issuers tightened their underwriting rules while mortgage foreclosures became commonplace, “swaying borrowers toward the conclusion that it’s more important to be current on their credit card than on their mortgage.”

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.

Though as many as 46% of Americans are concerned with identity theft, banks that support efforts such as mobile banking should be cautious in how they communicate the issue to consumers, Susan Menke, behavioral economist at Mintel Comperemedia, tells CardLine in analyzing the results of an online Mintel survey of 2,000 Americans delving into their concerns about identity theft.

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.

The Indian state of Orissa plans to introduce an online-payment system for the payment of electricity bills, a spokesperson for Orissa’s State Power Ministry tells PaymentsSource. “While other states have such systems for electricity for consumers in the urban areas, no one has done (it) in both rural and urban areas like we will,” the spokesperson says. Power-distribution companies in Orissa have signed a memorandum of understanding to offer the service. Consumers with payment cards and Internet access would make payments through an Orissa Web site. Urban utility customers would be able to pay bills using credit cards, debit cards, prepaid cards and online funds transfers, according to the spokesperson. Customers in rural areas would use biometric readers that read fingerprint algorithms to make payments from bank accounts. The state expects to deploy at least 5,000 biometric readers, the spokesperson says, noting the service for urban customers is scheduled to begin on Jan. 1 followed by rural service in February.

The South Korean government has changed the rules governing tax deductions for credit card spending, a spokesperson for the Korean National Tax Service tells PaymentsSource. To promote the use of payment cards, the government previously offered a 20% tax deduction to citizens who used credit cards to spend at least 20% of their annual incomes. The government has raised the spending threshold to 25% while offering the same tax deduction, the spokesperson says. The government also reduced the maximum tax deduction a citizen can receive to 3 million won (US$2,600 or 1,800 euros) from 5 million won. The Korean tax authority made these changes because it has achieved its goal of promoting the use of payment cards for retail purchases, according to an official from the Credit Finance Association of Korea, a trade group. “Now they have more room for pulling back these deductions,” a spokesperson for the association tells PaymentsSource.

When Brian Moynihan next week assumes control of Bank of America Corp., among other challenges he will face daunting new competitive pressure in the credit and debit card arenas. Moynihan, 50, on Jan. 1 becomes the nation’s largest bank’s president and chief executive officer, succeeding Kenneth D. Lewis, who is retiring.'

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.

For the second consecutive month, consumers are feeling a little better about the economy, The Conference Board Inc., a New York-based research organization, reported Tuesday. The December index stands at 52.9, up from 50.6 in November. The baseline for the index, set in 1985, is 100. United Kingdom-based research company TNS conducts the monthly Consumer Confidence survey of 5,000 randomly selected households. The cutoff date for this month's survey was Dec. 21. "Consumer confidence posted yet another moderate gain in December as expectations for the short-term future increased to the highest level in two years," says Lynn Franco, director of The Conference Board Consumer Research Center. The survey breaks down how consumers feel about both current conditions in the Present Situation Index and short-term conditions, looking roughly six months ahead, in the Expectations Index. Survey respondents claiming business conditions are "bad" increased in December to 46.6% from 44.5%, while those claiming conditions are "good" decreased to 7% from 8.1%. Consumers' appraisal of the job market was mixed. Those claiming jobs are "hard to get" decreased to 48.6% in December from 49.2% a month earlier, while those claiming jobs are "plentiful" decreased to 2.9% from 3.1%. The short-term outlook improved in December. Those anticipating business conditions would improve over the next six months increased to 21.3% from 19.7%, while those expecting conditions to worsen decreased to 11.9% from 14.6%.

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.

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 in Indonesia will have to use chip-enabled credit cards starting on Jan. 1, a spokesperson for Bank Indonesia, the country’s central bank, tells PaymentsSource. “The domestic system will only process payments made by chip-enabled credit cards,” the spokesperson says. “However, tourists and foreigners will still be able to use magnetic stripe cards, provided they are issued overseas.” The directive does not apply to debit cards, though some Indonesian banks issue chip-enabled debit cards. The move to chip credit cards originally was supposed to occur in 2008, the spokesperson adds, noting officials pushed back the deadline because not enough banks and merchants were ready for the switch.