Credit

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.

Issuers in Malaysia can enter into alternative arrangements with their cardholders for the payment of the credit card service tax that goes into effect on Jan. 1, a spokesperson from the Association of Banks in Malaysia, a trade group, tells PaymentsSource. Banks may enable cardholders to pay taxes via rewards points and cash-back rebates, the spokesperson says. Banks earlier had said they intended to charge customers for the tax instead of absorbing the costs. Earlier this year, the Malaysian government announced that a service tax of 50 ringgits (US$15 and 10 Euros) a year would be imposed on each primary credit card and 25 ringgits a year on each supplementary card. The association spokesperson says that debit cards, gasoline cards and private-label cards are not subject to the tax. “The tax would be collected by banks and other card issuers from credit or charge card holders and paid to the customs and excise director-general,” the spokesperson says.

Aided by one extra day in the holiday shopping season, total retail spending between Nov. 1 and Dec. 24 rose an estimated 3.6% compared with the same period last year, according to the MasterCard Advisors SpendingPulse report released Monday.

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.

Monitise PLC, the British mobile banking vendor, says it plans a broader push next year into mobile retailing, initially in the United Kingdom, then across Europe and in the United States.

One more person-to-person payment application for mobile devices might seem merely like incremental progress toward mobile payments, but it demonstrates the increasing pressure to make phones into financial tools, analysts said earlier this month.

A new generation of person-to-person money transfer services is quickly gaining traction with banks, offering a way to regain a share of the electronic payments that was ceded long ago to nonbank rivals.

The state government of Victoria, Australia will launch the contactless ticket system for trains in Melbourne, a spokesperson for the Transport Ticketing Authority, which manages the ticketing system, tells PaymentsSource. “We are assuming that it will be at least a couple of weeks before the system can be [launched] on trams and buses,” the spokesperson says. The state government says that about 1,000 government workers have been testing the cards in the Melbourne area for about two months. Myki is designed to replace a number of ticketing systems in Victoria, primarily the Metcard (metropolitan Melbourne) and V/Line (regional) ticketing systems. “For the passenger‚s convenience, we will run the old ticket system alongside myki for at least six months before we scrap [the old system],” the spokesperson adds. The myki system has run into previous problems, including 11,000 instances of overcharging across the state and complaints from bus passengers in the region of Geelong about malfunctioning readers and wrongful charges. Matthew Sinclair, executive director with Australia-based Carpadium Consulting, tells PaymentsSource that if myki operators cannot get the system working in a town the size of Geelong, with a population of about 162,000, then the scheme likely will fail in a city as large as Melbourne, with a population of about 4 million. “And this will be a big problem because Melbournites are big users of public transport,” he adds.

Part one of our examination of prospectuses for recent credit card securitizations focused on higher-end balance activity among the top issuers. In this installment, it's lower-balance accounts' turn.

Tio Networks, the expedited bill-payment processor, recently signed agreements expanding customers’ bill-payment options with Cox Communications Inc. and Southern Company’s Georgia Power subsidiary, both based in Atlanta. The agreements enable both companies’ customers to pay their bills in cash at Tio’s self-service payment kiosks and retail locations where Tio operates payment centers. Burnaby, British Columbia-based Tio Networks owns1,500 kiosks and manages 18,000 payment centers nationwide. Tio Networks credits payments to customers’ accounts the same day, Tio executives say. Tio’s agreement with Cox, the nation’s third-largest cable television company with 6.2 million customers, expands its existing bill-payment services through Tio to a national basis from a regional contract that included only Phoenix and Las Vegas. Tio will deploy bill-payment kiosks in select retail locations throughout Atlanta for customers of Georgia Power, an electrical utility with 2.3 million customers. Tio signed both agreements in late November.

Citigroup Inc. elaborated on its denial that its systems had been breached last summer, suggesting that, if a breach occurred, it would have happened at a third party. "As with virtually all financial institutions, there are instances of fraud or breaches of third-party systems that result in our taking actions to protect our customers and Citi … , [but] there has been no breach of Citi's systems," the New York company said in a press release last week. It did not identify any third party that might have had a breach. The Wall Street Journal reported that morning that the Federal Bureau of Investigation has been looking into a Russian hacker group that targeted Citi during the summer. Citi was quoted in the story as denying it. The paper cited unnamed government sources who said the hacker group stole tens of millions of dollars from its target.