Credit

Consumers and financial institutions generally will embrace mobile payments in two stages over the next few years, a new report by Javelin Strategy and Research suggests. For consumers, the first stage will continue until 2011, as younger consumers, mobile-banking users and higher-income individuals begin using the services, the report says. Those users will influence others to use person-to-person mobile payments because funds-transfer recipients will need to subscribe to collect the funds, according to the report. About one of every 10 consumers, or 20 million individuals, say they would use mobile P2P payments if service providers offer the service, and 14% of consumers say they have a neutral opinion of the services, the report says. It says that the 75% who say they are not likely to use it do not yet know the benefits mobile person-to-person payments might offer. From 2012 to 2013, the demand for P2P mobile-payment services will grow as more consumers conduct them, according to the report. In the United States, 157 million adults have mobile phones today, and by 2013, Javelin estimates 198 million U.S. adults will have cell phones, the report says. For financial institutions, the first stage for adoption of P2P payments will focus on offering the service as a tool to recruit and retain customers. In the second stage financial institutions will offer the services because of competitive pressures. Financial institutions could earn income from mobile-payments services because customers would pay a small fee for each transfer, according to the report. Financial institutions also could reduce their cash- and check-processing costs and labor expenses by encouraging the use of P2P mobile payments, the report says. "It is our belief that your old-fashioned wallet or purse will be replaced by your phone," James Van Dyke, Javelin's president, tells CardLine.

India's ICICI Bank says it will charge customers 100 rupees (US$2.30 or 1.50 euros) to pay credit card bills at bank branches. The bank will begin levying the charges on 1 June. "This is a charge levied by most banks on card customers paying at branches," Sachin Khandelwal, head of the bank's cards group, tells CardLine Global. "Customers can avoid this by adopting all other options" such as electronic payments, deposit boxes and debit transfers. Other banks in India already have established such charges. Standard Chartered, for instance, in 2006 began charging 99 rupees for cardholders paying bills at branches. "This is a new trend [that] has emerged in the Indian banking sector over the last couple of years," Prathima Rajan, an India-based analyst with Celent LLC, tells CardLine Global. "Banks consider this as an additional facility that they are providing to their customers and are hence charging a service fee. On the other hand, banks also want to move customers away from depositing cash and alternatively use checks and [electronic payments] to pay back their cards." ICICI has about 5 million credit card customers.

Franco-German card vendor Sagem Orga GmbH has won what it calls a follow-up order to supply Germany's Postbank with debit cards that carry contact chips. Each customer who receives a card also will get what Sagem calls a "fully personalized enclosure." In essence, the enclosure serves as a marketing tool, a Sagem spokesperson tells CardLine Global. "The enclosure can contain any kind of completely personalized printed papers with customized extra information," says Sagem spokesperson Mareike Blumentrath. "The Postbank will announce in September what exactly their content will be." Sagem declines to release how many cards the new deal involves or how many cards Sagem has delivered to Postbank since the card vendor became a supplier for the bank in 2000. The new Postbank deal represents Sagem's first involvement with the enclosures, Blumentrath says.

Planet Payment, a United States-based payments company that specializes in enabling consumers to choose the currency used in their card transactions, has signed a deal that would provide its service to merchants in India, a company spokesperson tells CardLine Global. The deal, with U.S.-based processor Global Payments Inc., follows previous deals between the two companies to offer Planet Payment's services to merchants in Malaysia, Taiwan and China. The plan to offer the services in India is "still in the formative stages," the spokesperson says, declining to disclose a launch date or specify how many merchants the deal would involve.

A partnership between Citigroup Inc., Prudential Financial Inc. and Thailand telecommunications company mPay will enable customers to make insurance-premium payments with mobile phones, the companies have announced. Prudential policyholders can make payments at any time and will receive a text message to confirm the receipt and verify the transaction, a statement says. The service, called M-Collect is free, the statement says. Citi did not offer other details about the service to CardLine Global.

By exiting from a longstanding joint venture, JPMorgan Chase & Co. is signaling its intent to expand its focus on the merchant acquiring and processing side of its cards operation.

First Data Corp. and JPMorgan Chase & Co. today announced they have agreed to end their joint venture, merchant acquirer Chase Paymentech Solutions LLC, by the end of the year. New York-based Chase will retain 51% of Chase Paymentech's assets, including most of its employees, its Canadian and European operations and the company's Dallas-based headquarters, according to the announcement. Greenwood Village, Colo.-based payments processor First Data will assume management of the ISO and Agent Bank division of Chase Paymentech and will integrate 49% of the assets, including a portion of the staff, into its established merchant acquiring business. The September buyout of First Data by Kohlberg Kravis Roberts & Co. triggered a clause in the joint-venture contract that enabled Chase to end the alliance (CardLine, 3/14). Chase and First Data formed Chase Paymentech in 2005. Observers expect fierce competition between Chase and First Data when they operate as two separate entities, according to Adil Moussa, an analyst with Boston-based Aite Group LLC. Chase "used to compete quite openly with First Data. There's no secret about that," Moussa tells CardLine sister publication ISO&Agent Weekly. "They would go after the same accounts and really outbid each other. Now it's going to be even more so." Banks and ISOs typically use differing strategies to acquire merchants, with ISOs usually acting more assertively, Moussa says, adding that First Data has no such advantage in this case. Chase "has proven it's not that type of bank. [Chase is] not going to sit back and wait for merchants to show up. They will go after them aggressively."

MasterCard Canada announced today it has launched a four-month trial of PayPass transactions using Near-Field Communications-enabled mobile phones. Some 75 participants in the closed trial are using Samsung-brand phones provided by Bell Mobility Inc., the wireless network subsidiary of Bell Canada. Nagesh Devata, vice president of acceptance development and new products for MasterCard Canada, tells CardLine the participants are employees of MasterCard Canada, Bell Mobility and financial institutions involved in the trial. Devata declined to name the financial institutions. Trial participants are able to pay anywhere PayPass is accepted by tapping their phones against PayPass readers, Devata says. He added that the trial now only draws payments from single accounts but soon will expand to offer users the choice of multiple accounts from which to pay using their NFC phones. Configuring phones using over-the-air programming instructions will be another key part of the trial, according to Devata. "Another part is bringing together the financial institution with the [mobile network] carrier, trying to explore the optimal business model," he adds. Disputes over transaction revenue-sharing between banks and telcos have stymied the spread of NFC-enabled mobile payments in much of the world. Red Gillen, senior analyst at Celent LLC, calls the trial "another proof of concept test that the payment brands are rolling out in various national markets to raise the comfort levels of those countries' issuing banks." Gillen tells CardLine such NFC tests should not be limited just to technology and ease of use. "In addition, testing should provide answers to the big mobile NFC question: Will it lead to incremental card spend?"

United Technologies Corp., which made an unsolicited $2.66 billion bid for Diebold Inc., may withdraw its offer if it does not receive more financial information from Diebold. "We'll not buy that property without appropriate due diligence," Louis Chenevert, Hartford, Conn.-based United Technologies' new CEO, told analysts last week. Diebold, which is based in North Canton, Ohio, rejected United Technologies' offer, complaining that it was too low. Diebold is the world's second-largest ATM maker based on machines shipped in 2006.

Rewards are important to about a third of credit card customers, while more than half appear unlikely to participate actively in rewards schemes. That suggests many issuers are blanketing the wrong customers with rewards marketing offers, according to a new report by Boston-based Aite Group. In "Segmenting Rewards Program Members," Aite Group said card issuers could get better results from segmenting customers and sending rewards offers only to those most likely to respond. Aite Group surveyed 500 U.S. consumers online in January, and when asked to name the most important reasons for selecting their most recent credit card, consumers cited no annual fee (64%), a lower interest rate than their previous card (39%), rewards (35%), a 0% balance-transfer offer (33%), credit card company reputation (23%), clearly explained policies (15%), and dissatisfaction with a previous card company's customer service (11%). Rewards are most important to customers with the most cards in their wallets. Among survey respondents with six or more credit cards, 53% said rewards are the most important factor in selecting a new credit card. "Many issuers are wasting resources by pursuing customers who are unlikely to ever participate in rewards programs," Ron Shevlin, senior analyst for Aite Group, tells CardLine. He suggests issuers gauge potential participation in rewards offers by asking cardholders how many loyalty cards they already have; measuring customers' use of online account access, redemption activity and marketing response and segmenting their customer base annually to determine loyalty program participation status. As card issuers seek efficiency, they should craft rewards offers to engage the customers most likely to respond and then leverage those groups to improve their merchant-partnership efforts, Shevlin says.

Financial services companies are sending fewer direct-mail offers to consumers, according to Mintel Comperemedia, a division of Mintel International Group Ltd. The Chicago-based market research company estimates total financial services direct mail volume at 4.2 billion pieces in the first quarter, down 13% from 4.8 billion estimated mailings in the first quarter of 2007. Credit card issuers cut back the most, as Mintel estimates credit card mailings fell 14%, from 3 billion offers to 2.6 billion. Chase, Bank of America and HSBC reduced their direct mail by more than 15%, according to Mintel. Mortgage and Loan companies had a 6% decline in direct mail offers, Mintel says. "With credit lines tapped and people struggling to make ends meet, both consumer spending and savings are down," Chris Zagorski, senior analyst at Mintel Comperemedia, says in a statement. "Banks, card issuers and lenders have to look at today's consumers in a new light and find innovative ways to secure and maintain their business." In April, Mintel reported that credit card companies increased their mailings to consumers by 18% in 2007 compared with 2006, but changed their focus to cross-selling products to current customers from winning new customers

MoneyPass has signed a series of new agreements that the company's top executive says partly reflects banks' and credit union members' cardholders' nail biting about the worsening economy. Since April, the Minneapolis-based surcharge-free ATM network has made deals with South Valley Bank & Trust, a Klamath Falls, Ore.-based community commercial bank (CardLine, 5/23); Bellingham, Wash.-based Horizon Bank; and Vienna, Va.-based Navy Federal Credit Union. Those agreements represent only the surface of the problem, Doug Miraglia, president of MoneyPass, tells ATM&Debit News, a CardLine sister publication, in an e-mail message. Since January, MoneyPass has signed 100 financial institutions, and as a result the company anticipates a busy second half, Miraglia says. "It may have something to do with the economy because consumers seem particularly cost- and fee-conscious right now," he says. MoneyPass's surcharge-free ATM network has 12,000 to 15,000 surcharge-fee ATMs nationwide.

Payments processor Pipeline Data Inc. this week announced it signed a merger agreement May 16 to acquire CoCard Marketing Group LLC for approximately $79.5 million plus future considerations based on performance.

IMGCAP(1)]

IMGCAP(1)]

IMGCAP(1)]

IMGCAP(1)]

IMGCAP(1)]

IMGCAP(1)]

IMGCAP(1)]