The Bankwatch

Tracking the consumer evolution of financial services

Archive for the ‘Debit cards’ Category

North American ATM’s are falling behind


ATM’s across the world are being used for new and innovative services, that keep customers satisfied.  North American ATM’s just provide the basics.

WSJ.com – The Envelope-Free ATM

In Russia, a consumer can put rubles into an automated-teller machine and get U.S. dollars in return. In Brazil and Venezuela, the machines print checks. And banking customers in Indonesia can use an ATM to schedule and pay for the ritual sacrifice of a goat.

However something as simple as envelopeless cheque depositing which sounds cool, is not necessarily a good use of investment.

Unlike traditional machines that swallow an envelope and require the customer to key in the deposited amount, the new versions read checks and count cash themselves. They can display an image of the check on the screen, and also print an image of the deposited check on a customer’s receipt. Bank executives literally “oohed” and “aahed” when a representative of ATM maker NCR Corp. demonstrated the technology at an industry conference last fall.

The costs of the cameras and cheque handing, to achieve this are significant, and given cheques are going away, does this make sense?  Perhaps the North Americans have this part right.

Relevance to Bankwatch:
The ATM manufacturers find it easy to wow Bank Executives in the ATM space because those folks generally haven’t been engaged in the online banking space.  The online bankers know innovation, and understand the importance (now, post dot com crash) of not getting caught up in the technology, and remaining focussed on the customers needs.

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Written by Colin Henderson

May 7, 2006 at 00:18

Posted in ATM, Chip Cards, Debit cards, US

The weakness in combo chip/ mag stripe cards


In a move by the criminals they highlight the weakness in combo chip / mag stripe cards. These are cards that have chip and mag stripe on them. This is the primary transitional approach taken by banks, to circumvent issuing separate chip cards, and mag stripe cards. Customers would require mag stripe for usage abroad where chip has not been implemented yet.

Guardian Unlimited | UK Latest | Eight held over chip and pin fraud

The scam works by criminals implanting devices into chip and pin machines which can copy a bank card's magnetic strip and record a person's pin number.The device cannot copy the chip, which means any fake card can only be used in machines where chip and pin is not implemented – often abroad.

Relevance to Bankwatch:
As predicted in an earlier 'relevance' I remain convinced that combo cards could be the death of chip, and the better approach would be to issue chip cards only with no mag stripe. If customers need a mag stripe for travel or other purposes, then they can get those. The problem is the transition of merchants to chip, so customers desire to have chip only cards is the best impetus for them.

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Written by Colin Henderson

May 6, 2006 at 23:52

Posted in Chip Cards, Debit cards

Value of Annual U.S. Debit Card Transactions to Reach $2 Trillion by 2010


US debit card growth continues to climb. 

Value of Annual U.S. Debit Card Transactions to Reach $2 Trillion by 2010: Financial News – Yahoo! Finance

Packaged Facts projects that debit cards will continue to enjoy strong growth, with annual debit transactions exceeding $2 trillion by 2010.

More and more debit cards are part of US life.

With nearly half (48.2%) of U.S. adults carrying a debit card, it’s not surprising that debit is quickly catching up to credit cards and cash as a primary means of point-of-service and online transactions. According to Debit Cards in the U.S., a new report from market research publisher Packaged Facts, the total transaction volume in the U.S. debit card market reached a phenomenal $907 billion in 2005, up 18.6% from 2004.

Written by Colin Henderson

May 5, 2006 at 22:49

Posted in Debit cards, Payments

Everybody is a technologist


In a follow up to yesterdays Oyster setback, TfL indicate in The Times that they are still keen to proceed, but can’t get the economics to work.  Again refer to yesterdays commentary here.  Its going to be hard to make this work, no matter how many boffins are stuck into that shed.  That comment is typical of the frustration of big companies who haven’t achieved the right level of integration with their technology groups.  Everyone/ company is in the technology business now, whether they like it or not.

TfL’s Oyster-card ambitions hit delays – Industry sectors – Times Online

TfL wants to use the cards, which are currently used by 5 million commuters to buy travel on London’s tubes, busses and trains, as the base for a much larger “electronic wallet” network.

“We think we need to lock the boffins in a shed and get them to come up with a solution that works. “The financial and technical ideas that we have seen so far have been too complex and we have not progressed as far as we would have liked.”

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Written by Colin Henderson

May 2, 2006 at 09:47

Posted in Debit cards, Web/Tech

TfL decision to drop Oyster expansion, is to be expected


Courtesy of Payment News, FT reports that the costs associated with expanision of Oyster stored value cards, to cover other small payments has been dropped because its too expensive. Oyster has a proprietary POS terminal.

FT.com / World / UK – TfL drops proposal to expand Oyster card use

The transport agency had hoped to roll out a service this year that would have enabled passengers to use their Oyster cards – currently used on the London Underground, buses, and some trains – to buy low-value goods such as newspapers, coffee and sandwiches with “electronic money” that would be loaded on to the card in advance.But the transport agency said that setting up a link with a bank or financial services partner had so far proved too expensive.

The credit card companies in association with the big payment networks have a lock on this infrasctrucure because the costs associated with building a new network and acquiring devices (POS terminals) is simply prohibitive. It also doesn’t make sense otherwise you end up with the ludicrous situation shown in this picture from Thailand, that shows six separate acquiring terminals on the merchants desk. You’d have to be a computer scientist to work as a clerk there!

This problem applies to Dexit in Canada. They have a good business model, using a contactless key fob, for purchasing coffee, newspapers, lunch etc. They are destined to fail though, because merchants will not accept more terminals on their already crowded counters, where they would rather display last minute purchase items. Dexit have a few merchants, in Toronto, but after several years, its hard to consider this widespread uptake.

The better approach would be to lever the existing networks. This minimises costs, and simplifies the merchant processing end. It will increase the development/ software side of things, but in the long run that sounds more appealing. This is the approach taken by Cardis which offers micropayment capability, levering the current POS terminals.

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Written by Colin Henderson

May 1, 2006 at 13:37

Posted in Debit cards, Payments, US

Pinkomarketing definition – Google groups


I had to capture these five points, which brilliantly summarise the Pinko Marketing concept, courtesy of Tara.

Google Groups- Pinko Marketing

Pinko, to me anyway, describes an approach to things including:

  1. inbound, rather than outbound messages
  2. making tools available for a community, then getting out of the way
  3. being part of the community, not a tourist
  4. being 100% authentic
  5. advocating FOR your community to your company rather than the other way around

Relevance to Bankwatch:
Where do I start. All five points are the exact opposite for most Banks, a few believers aside, so any changes that can be made for even one of those points, is a gigantic leap forward.

Written by Colin Henderson

April 29, 2006 at 17:36

Posted in Debit cards

Australia equalises Interchange costs for debit & Visa debit


Basic change, which seems to be designed to level the paying field in the Australian payments market, due to an unfair advantage previously accorded to Visa. Previous story about ANZ Visa debit here.

As the Bank has previously noted, the current structure of interchange fees creates a strong incentive for financial institutions to promote the Visa Debit system over the EFTPOS system, despite the EFTPOS system having lower operating costs.

If a cardholder makes a payment with an EFTPOS card, the institution that issued the card must pay around 20 cents to the merchant's bank. In contrast, if the payment is made with a Visa Debit card, the institution that issued the card receives around 40 cents on average. This difference in fees is despite both forms of payment accessing a deposit account.

RBA: Media Release-Payments System Reforms

Following a meeting of the Payments System Board on 28 March 2006 the  Reserve Bank of Australia has today released a package of reforms to the EFTPOS and scheme debit systems.

Debit card systems

The reforms to the debit card systems have been developed over a number of years and follow extensive consultation with a wide range of interested parties. Broadly, the reforms involve:

  • the adoption of a cap and floor on interchange fees in the EFTPOS system, with the result that these fees, which are paid by financial institutions that issue EFTPOS cards, are likely to fall to around 4 to 5 cents per transaction, from an average of around 20 cents currently;
  • the adoption of a cap on the weighted-average interchange fee in the Visa Debit system, with the result that interchange fees in the Visa Debit system, which are paid to financial institutions that issue Visa Debit cards, are likely to fall to an average of around 15 cents per transaction, from around 40 cents currently;
  • requiring the Visa system to remove the restrictions on merchants that require them to accept Visa Debit cards if they accept Visa credit cards, and that prohibit merchants from imposing a surcharge on Visa Debit transactions; and
  • the adoption of a cap on the price that existing participants in the
    EFTPOS system can charge new and existing participants for establishing
    a connection.

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Written by Colin Henderson

April 29, 2006 at 09:58

Posted in Debit cards, Payments

City’s bank card system collapses


Something we take for granted in the West hit Shanghai as their debit card system collapsed.

City's bank card system collapses

SHANGHAI'S major department stores, restaurants and some automatic teller machines failed to accept bank cards since noon today because of a network breakdown at China Unionpay, the country's integrated system for bank cards transactions.

While the card base is enormous, the ATM base is smaller than I'd expect.

China has issued more than 920 million bank cards, including debit
cards and credit cards since the end of last year, up 142 percent from
2002, the year when China Unionpay was set up.There are 86,000 automatic teller machines and 406,000 point of sales machines in the country so far.

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Written by Colin Henderson

April 22, 2006 at 22:45

Posted in Asia, ATM, Debit cards

The biggest cyber-heist of customer debit-card numbers to date


In what was earlier referred to as the Citibank ATM fraud, the sheer scale of this fraud is only now coming to light.

Banks scramble after cyber-breach | Chicago Tribune

Exact figures are unknown — some banks have reported numbers; others have not. It is thought that at least 350,000 accounts across the country were defrauded, involving more than $10 million in losses, according to some experts.
….
“In terms of financial damage, this is definitely the biggest documented case of debit-card fraud we know of,” said Avivah Litan, a banking analyst and online-fraud expert for Gartner Inc., an information-technology research company.

Central Florida’s three major banks — Bank of America, Wachovia and SunTrust — have acknowledged notifying certain customers about the problem, closing an unspecified number of accounts and issuing new cards and PINs.

The frauds involve third party processors:

In one case alone, hackers invaded the
computers of an Atlanta-based credit-card-processing company, stealing
an estimated 40 million credit- and debit-card numbers. The company,
CardSystems Solutions Inc., processed card transactions for Visa,
MasterCard and all major card brands.

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Written by Colin Henderson

April 22, 2006 at 12:03

Posted in Debit cards, Fraud, US

Debit cards overtake cash on the high street


“In 2005 a generation of consumers who have grown up with Switch, Maestro and Solo in their wallets and purses spent a total of £89 billion on debit cards, a 9 per cent hike on 2004.”

Debit cards overtake cash on the high street – Industry sectors – Times Online

Across all payments, the use of cards once again eclipsed the use of cash in 2005, with consumers spending £295 billion on plastic during the year, compared with £272 billion in cash. Total use of debit cards, which celebrate their 20th anniversary this year, soared by 14 per cent to £171 billion. Credit card spending was just 1 per cent higher at £124 billion.

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Written by Colin Henderson

April 18, 2006 at 14:46

Posted in Debit cards

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