Industry News
Partnering for Innovation
As a result of the financial crisis and the sweeping regulatory changes that occurred over the past few years, banks face a crucial question: how to offer sustainable, reasonably priced products to millions of moderate- and low-income consumers. This consumer segment often carries low account balances, makes numerous small transactions, and needs credit and savings options. The answer lies in forging innovative, bank-nonbank partnerships that are designed specifically to meet this consumer segment’s financial services needs. In these partnerships, banks engage with nonbanks to provide products that feature low barriers to entry, are easily accessible and come with transparent, upfront prices. Banks play critical, yet behind-the-scenes roles in these business models. They may issue the products, underwrite the loans, and provide back-office processing and customer support. Meanwhile, nonbanks may include retailers, processors, program managers, and many others. They perform a variety of functions, including developing, distributing, marketing and managing the products. It’s the nonbanks that typically interface with consumers. These partnerships open up vast new possibilities for banks to provide products that benefit consumers and that leverage each bank’s particular value-add.
Banking Strategies – January 20, 2020
How Higher Oil Prices Help MasterCard. MasterCard charges customers for its payment-related services, primarily based on the volumes they generate on MasterCard-branded cards. MasterCard’s total revenues are largely a function of the number of transactions processed, as well as the gross dollar volume of purchases. Gasoline is one of the most frequent items purchased on credit cards. With U.S. consumption at 9.2 million barrels per day during December 2010, the growing mix of customers opting to purchases gasoline on a credit card makes this item a key revenue source for card networks.
Forbes – January 20, 2020
Obama Administration to Propose Online Identity System. BusinessWeek, and various other media outlets, are reporting that the Obama administration will be creating a new office in the Department of Commerce to oversee the government’s implementation of a national online identity ecosystem. A draft proposal entitled the National Strategy for Trusted Identities in Cyberspace (NSTIC) was published last June.
Payment News – January 10, 2020
65% of Internet users have paid for online content. Nearly two-thirds of internet users – 65% – have paid to download or access some kind of online content from the internet, ranging from music to games to news articles to adult material. Music, software, and apps are the most popular content that internet users have paid to access or download, although the range of paid online content is quite varied and widespread.
Pew Study – January 3, 2020
8 million fewer consumers use bank-issued credit cards. More than 8 million consumers stopped using bank-issued credit cards in the third quarter compared to a year earlier, according to a report released Tuesday by credit bureau TansUnion.
Chicago Sun-Times – January 3, 2020
Prepaid Debit Cards: More plastic, More Problems? There's a new kind of plastic on the rise. Prepaid debit cards are the fastest growing of all electronic payments, according to a new report by the Federal Reserve System. U.S. consumers loaded $28.6 billion on reloadable prepaid debit cards last year. In an increasingly card-based economy, issuers of prepaid debit cards say they are offering an affordable alternative for the millions of unbanked and underbanked Americans. Consumers are drawn to the convenience of using prepaid debit cards, Terry Maher tells NPR's Audie Cornish. Maher is general counsel of the Network Branded Prepaid Card Association (NBPCA), an industry group, and has spent the past 25 years advising financial institutions on their prepaid card businesses. Prepaid debit can be used anywhere the card's brand, such as Visa or MasterCard, is accepted. "It's a lot safer than carrying cash … [and] the consumer can better budget and keep track of what they're spending," adds Maher. Prepaid debit cards can also ease the worries of gift givers, allowing recipients to purchase their own gifts with the cards. Maher says prepaid debit cards help meet the needs for the millions of unbanked and underbanked in the U.S. "We're providing a solution to a community that otherwise would have a great difficulty in participating in everyday activities." At least 17 million unbanked adults do not have a checking or savings account, according to a 2009 survey by the Federal Deposit Insurance Corporation. The underbanked represent about 43 million adults who have a bank account but rely on alternative financial services such as check-cashing stores and payday loans. As the cost of keeping low-balance checking accounts rises, prepaid debit cards provide a more affordable option for increasingly more consumers, Maher says.
NPR – December 12, 2020
Federal Reserve Releases Draft Debit Interchange Rules. The U.S. Federal Reserve has released its draft proposal for debit interchange rules and is now soliciting public comment. The Board is requesting comment on two alternative interchange fee standards that would apply to all covered issuers: one based on each issuer's costs, with a safe harbor (initially set at 7 cents per transaction) and a cap (initially set at 12 cents per transaction); and the other a stand-alone cap (initially set at 12 cents per transaction). Under both alternatives, circumvention or evasion of the interchange fee limitations would be prohibited. The Board also is requesting comment on possible frameworks for an adjustment to the interchange fees to reflect certain issuer costs associated with fraud prevention.
Payment News – December 16, 2020
A Closer Look at Fed Payments Study Unveils Some Surprises. A major Federal Reserve payments study released last week grabbed headlines for documenting a dramatic three-year increase in electronic transactions, but a closer examination this week by officials who worked on the report highlights a number of subsidiary trends in such key areas as remote deposit capture, person-to-person payments, and credit cards. Electronic imaging of checks for clearing between banks has become nearly universal, with 96% of some 18 billion interbank checks settled via image or substitute check (a printout of an image) in 2009, according to the report. That’s more than double the 43% image share in 2006. But most of this imaging is taking place at the bank, it turns out. Some 87% of checks still arrive at the bank of first deposit as paper items. That means remote deposit capture, often cited as perhaps the fastest-growing form of electronic payment ever launched, still accounts for only 13% of deposited checks. Remote capture allows businesses to create and deposit check images instead of the paper originals. Another surprising result is that while the number of checks written declined overall, from 33.1 billion in 2006 to 27.5 billion last year, the volume of checks consumers write to each other actually grew, from 2.2 billion to 2.4 billion. All other categories of checks showed declines. Consumer to consumer is an area where little progress has been made toward electronic payment. Credit cards, meanwhile, are also running counter to the trend, according to the Fed report. While all other forms of electronic payment grew in the three-year period, credit plastic actually showed a slight decline in usage, from 21.7 billion transactions to 1.6 billion. “For the first time in these studies, we see a decline in an electronic payment instrument,” noted Richard R. Oliver, executive vice President at the Atlanta Fed. By contrast, debit card transactions soared to 37.9 billion from 25 billion, displacing checks as the most-used non-cash payment type
Digital Transactions– December 16, 2020
Study Shows More Than 75% of Noncash Payments Are Now Electronic. The Federal Reserve's 2010 study of noncash payments released today revealed that "in 2009 more than 75% of all U.S. noncash payments were made electronically, a 9.3% annual increase since the Federal Reserve's last study in 2007. This growth and other statistics in the study emphasize consumers' increasing adoption of electronic alternatives for payments in the United States. The 2007 study revealed that in 2006 roughly two-thirds of the payments were made electronically."
Payment News – December 8, 2020
Retailer See Gift Cards Boom As They Stress Reloadability. Closed-loop prepaid cards are growing more slowly than their newer, open-loop cousins, but recent numbers from big payment card processor First Data Corp. show the closed-loop sector still has plenty of life. First Data’s monthly SpendTrend report for October shows reload dollar volumes on closed-loop cards increased 25.2% from October 2009 and also were up from September’s 20.7% year-over-year growth rate. October’s reload transactions increased 34.4% from a year earlier and were up from September’s 30.4% growth rate. By dollar volume, reloads at specialty retailers grew 26% in October though redemptions grew only 1.3% and activations 1.4%. With transaction growth generally outpacing dollar-volume growth, closed-loop average tickets are declining.
Digital Transactions – November 22, 2020
Debit or Credit? The Choice can make a Difference. Debit or credit? That question is just as common at the supermarket checkout line as plastic or paper. While there are plenty of arguments for both sides, consumers are choosing to use their debit cards rather than credit cards in growing numbers. Debit card use is highest at the supermarket, with 53 percent reporting that they use debit most frequently, up 18 points from two years ago, according to research MasterCard published in January. And there is more evidence of consumers' growing use of debit cards. Forty-eight percent of consumers say debit is their primary payment method. For the last quarter of 2008, Visa reported that the total dollar volume of purchases made using its debit cards surpassed credit card purchases for the first time. For the third quarter ending in June, Visa reported that the total dollar volume of its debit programs was more than its credit programs.
ABC News – October 26, 20
Consumers Will Spend US$237 Billion on Online purchases in the United States alone in 2010, Javelin Strategy & Research predicts. That's almost 15 percent more than in 2009. Online retail is also growing globally. American businesses are eying overseas markets, where there is growth potential. Apple (Nasdaq: AAPL), for example, now gets over half its revenue from international sales. However, American companies seeking to expand their online retail sites abroad have to deal with differences in culture, process, language and laws, not to mention converting currency into U.S. dollars.
The E-Commerce Times – September 17, 2020
Waiting On The Chip. Americans traveling abroad, particularly in Europe, are increasingly stymied by the lack of acceptance of magnetic stripe payment cards. Will U.S. issuers respond to the challenge? “Don’t leave home without it” the old American Express commercial once exhorted American travelers. The advice may no longer be operable if the “it” references any credit card containing magnetic stripe technology. Increasingly, American cardholders report problems using their cards overseas, particularly in Europe, where most countries now issue chip and PIN (personal identification number) cards. As a result, fewer terminals are enabled to read magnetic stripe cards. And even if they are, merchants are not as familiar with them. Recent research indicates U.S. travelers, encountering these problems, are using their payment cards much less when they’re abroad. The issue is becoming exacerbated as banks in more countries, most recently Canada, are transitioning to chip and PIN-based cards, which are considered more secure than magnetic stripe. This all poses a challenge for U.S.-based issuers who want to accommodate their customers.
Banking Strategies – September 2010
Payment Card Market In China Experience Growth In 2010. The payment card market in China continues to witness growth in 2010, thanks to the rapidly increasing consumer spending and the adoption of electronic payment cards among mass consumers, a recent report has shown. According to the Payment Card Market in China 2010 report, at the end of June 2010, there were 2.27 billion payments cards in China, including 207 million credit cards and 2.06 billion debit cards. In the first half of 2010, approximately USD 672 billion (CNY4.52 trillion) purchase payments were made using these cards, up 62 percent from the same period a year earlier, far faster than all major developed card markets and most developing markets. There were 2.06 billion credit and debit cards in China by the end of 2009, almost twice the size of the US market. About CNY6.8 trillion (USD1 trillion) purchases were made using these cards during that period, roughly a third of the US card spending. Recently, MasterCard predicted that China is expected to overtake the US, as the largest market for credit cards by 2020, with about 900 million cards in circulation.
The PAYPERS – September 2010
Eight Out Of Ten US Consumers Shop Online At Least Once A Week. Compete recently released the findings of its quarterly Online Shopper Intelligence Study, revealing that 83% of consumers are shopping online at least weekly. The Q2 report was compiled from a survey of 3,119 online purchasers between May and July 2010. Study results exposed a number of consistent trends:
- Consumers are seeking out retailers on Facebook and Twitter in growing numbers, 31 percent report checking out Facebook fan pages or Twitter feeds of retailers, almost twice as many people as in Q3 2009.
- Data show that over the next six months, the "most shopped" products online will be entertainment products -- including movies, music, video games, e-media and books. Second on the list? Apparel.
- 44% of consumers reported that they research electronics online, but ultimately purchase electronics at a store, 30% do so with kitchen items, 28% with media and 28% prefer to research furniture online and buy it in the store.
- Top reasons why consumers opt to make purchases in a store are to avoid shipping costs (62%), to try on, touch or feel an item (57%) and immediacy (50%).
Congress Passes Financial Reform Legislation. The U.S. Senate gave final passage today to the long debated financial reform bill. While there are many provisions in the bill affecting all aspects of financial services in this country, the most important for payments professionals is that the U.S. Federal Reserve will now be responsible for setting debit interchange rates that are “reasonable and proportional” to costs incurred. The Fed has nine months from the effective date (when signed by the President) to complete its work. The legislation directs the Fed to consider functional similarity between debit cards and checks (i.e., checks having cleared at par for almost 100 years vs. debit cards having interchange fees), the distinction between incremental costs and other costs, and fraud prevention costs––including potential new steps to reduce fraud, and the fraud costs absorbed by various parties.
Payment News – July 15, 2020
MasterCard Europe Unveils Next Generation Debit Card. MasterCard Europe has unveiled a next generation debit card - with the first roll-out of a new display payment card. The 'Display Card' represents the next generation of payment card, providing the first interactive card in the market. It can work like any other payment card but has a small display window and touch-sensitive button. The cardholder can see information - numbers and/or text - on the small visual display, such as a dynamic passcode, an account balance and a spending limit.
Payment News – June 4, 2020
New J.P. Morgan Report Identifies Opportunities for Businesses to Further Reduce Paper-Based Check Payments. J.P. Morgan today issued a new report that highlights how businesses are using payments technology to improve working capital, increase visibility into cash management, and generate higher rebates on accounts payable (A/P) spending. The report “Payment’s New Land of Opportunity” features real-life success stories from J.P. Morgan clients that have implemented Single-Use Accounts and extended the use of their purchasing card programs to hold on to cash longer, pay suppliers sooner, increase rebates and reduce A/P manpower costs. “Corporate treasury departments are under great pressure to manage costs, control spending and increase working capital,” said Eduardo Vergara, Global Commercial Card Executive, J.P. Morgan Treasury Services. “Card programs are becoming the payment tool of choice as organizations increasingly migrate higher-value, paper-based transactions to electronic payment with complete confidence.”
Payment News – June 2, 2020
Will Proposed Interchange Legislation Actually Help the Prepaid Debit Card Industry? The regulation of debit card interchange fees in the U.S. took a step closer to reality this week with the Senate’s passage of Senator Durbin’s “Interchange Fee Amendment” as part of the “Restoring American Financial Stability Act of 2010″. Regulation of interchange is a hotly contested topic, and the amendment is sure to meet with opposition in the House from the financial services industry in general and Visa (NYSE: V) and MasterCard (NYSE: MA). But does the Interchange Fee Amendment actually help the prepaid debit card industry? The interchange fee amendment to the “Restoring American Financial Stability Act of 2010″, sponsored by Senator Durbin passed the Senate on a vote of 64-33 on May 13, 2020, surprising many in the financial services industry. (Investors in Visa and MasterCard sent those stocks down sharply in trading today). The amendment gives the Federal Reserve the authority to regulate debit interchange fees. The amendment requires that such fees be reasonable and proportional to the costs of the issuer or the payment network.
Prepaid Debit Card News – May 14, 2020
P2P Payments Offered by Financial Institutions Poised for Growth, According to New Research From NACHA. Nearly Half of Online Banking Consumers Likely to Use P2P Payments.Historically, cash and checks have dominated as the primary means of settlement for person-to-person (P2P) transactions, but that has the potential to change rapidly according to new research released by NACHA and eCom Advisors in partnership with FIS and PayPal. This research is being unveiled at NACHA’s PAYMENTS 2010 Conference at the Washington State Convention Center in Seattle.
“Financial institutions and solution providers are increasingly seeking to leverage the ACH Network to enable their retail customers to conduct electronic P2P payments,” stated Janet O. Estep, president and chief executive officer of NACHA—The Electronic Payments Association. “This research adds to our understanding of consumer demand for this payment service.” The February 2010 survey, completed by 1,180 active online banking consumers in the U.S., was designed to test consumer reaction to two new concepts. The first concept was using a P2P payment service offered within the online bill-payment applications of financial institutions. Nearly half (48 percent) of active online banking consumers are likely to use such a service, according to the research. The research also investigated consumer interest in several different scenarios for P2P payments offered by financial institutions. Results concluded that:33 percent of consumers are likely to use P2P payments to send money to a son or daughter at college;
- 31 percent are likely use P2P to send money out of the country to a family member, friend, or associate;
- 25 percent are likely to use P2P to split the cost of a gift with co-workers, friends, or family members.
The second concept tested in the research was an ePayment Portal, defined as a service provided by a financial institution allowing consumers to transfer money, pay bills, conduct P2P payments, and track all their money movement from a single place online. Nearly half of consumers (49 percent) expressed interest in the Portal concept. Of this interested population, 70 percent would likely use P2P payment services within the Portal.
NACHA – April 26, 2020
Six Months Later, MasterCard Softens a Controversial PCI Rule. MasterCard Inc. is changing a controversial policy, and pushing back a deadline, that it announced only six months ago regarding enforcement of the Payment Card Industry data-security standard. With the changes, which involve assessing computer systems for PCI compliance, MasterCard could be viewed as responding to valid complaints after first disclosing the planned changes, or it could be viewed has having done a flip-flop. Or both at the same time. In June, MasterCard adopted a new policy governing whether big merchants can do so-called self-assessments of their PCI compliance. The new policy applied to so-called Level 2 merchants, those submitting 1 million to 6 million total MasterCard and Maestro (PIN-debit) transactions annually, and Level 1 merchants, those submitting more than 6 million transactions. MasterCard previously had let Level 2 merchants to do annual self-assessments for PCI compliance unless they brought in a Qualified Security Assessor (QSA) certified by the PCI Security Standards Council for an on-site assessment. But come Dec. 31, 2010, MasterCard planned to require that all Level 1 and, for the first time, Level 2 merchants, use a QSA for the annual on-site PCI assessment. This month, however, MasterCard pushed back the deadline by six months, to June 30, 2020. And instead of requiring use of a QSA, MasterCard will let Level 2 merchants do the assessments themselves provided they have staff attend merchant-training courses offered by the PCI Council, and each year pass a PCI Council accreditation program. Level 2 merchants are free to use QSAs if they wish. Come June 30, 2020, Level 1 merchants can use an internal auditor provided the audit staff has PCI Council training and annual accreditation. Security experts had both praise and criticisms of MasterCard’s latest changes. “This is kind of good news for merchants,” says Avivah Litan, a technology analyst with Stamford, Conn.-based Gartner Inc. “I had expected MasterCard to retrench on this [the June changes] because No. 1, they were out of sync with Visa.” She adds that there were questions about whether there were enough QSAs to meet the new demand from Level 2 merchants. What’s more, she says, QSA pricing varies widely and the quality of their work reflects that. “It’s very uneven.”
Payment News – December 23, 2020
Are You Ready For International ACH? September 18th, the new International ACH format – IAT – and accompanying NACHA rule changes go into effect. This is the most significant change to the ACH network in decades, affecting corporate payment initiators, financial institutions of all sizes, financial software companies, and payment service providers. The new rules have been a huge nightmare for banks and their system providers, but will open the door to greater use of ACH for cross-border transactions. Attn: payment managers, this could be a big opportunity! IAT affects all International ACH transactions that flow through the US ACH network, regardless of currency or country. The NACHA rule change both redefines what an International transaction is and creates a new International ACH transaction format. NACHA implemented IAT in order to meet the demand for more efficient and accurate Office of Foreign Assets Control (OFAC) review to support national security and foreign policy restrictions on money movement (more on OFAC below). Today, many transactions initiated overseas are introduced to the US ACH network by correspondent banks in the US as domestic transactions, making it difficult to identify them for screening. In addition, the current ACH transaction formats do not include sufficient information to properly screen International transactions, let alone automate screening. Back in 2004 NACHA began working with OFAC to define new International ACH transaction rules and develop a new ACH format IAT with sufficient information to identify all the parties to a transaction. The rules governing IAT have evolved since the new transaction type was announced, in response to new guidance from OFAC and requests for clarification from corporate originators, financial institutions, and technology providers. The previous NACHA definition of “International ACH” relied on whether or not the originator or receiver of the ACH transaction was outside the United States. Under the new rules, a transaction is classified as International (and must therefore use the IAT format) if the financial institution moving the funds is located overseas. After September 18, the current cross border ACH transactions, CBR (corporate cross-border) and PBR (consumer cross-border), will no longer be used. However, returns of transactions originated before the deadline are allowed in CBR/PBR format until December 31st. Many transactions that are currently non-International ACH transactions such as PPD (pre-arranged bill payment or direct deposit), CCD (cash concentration or disbursement), WEB (web initiated), or TEL (telephone initiated), etc. will now have to be formatted as IAT transactions if they fall under the new International ACH definition. Nothing has changed in terms of OFAC compliance rules, the IAT change only affects ACH transaction formats and the definition of what an international ACH transaction is. Note that although specific individuals and countries are identified as suspect by OFAC, that is not what makes an ACH transaction IAT eligible.The new IAT format will usher in a wide range of International payment products and services from banks, supporting the increasing number of businesses large and small with global trading partners, and the increase in person-to-person remittance payments from one country to another. The Federal Reserve, in conjunction with the NACHA IAT initiative, is working toward ACH interoperability with Europe/SEPA, in partnership with Equens SE, and with Panama, in partnership with ACH Directo. Countries in key regions, such as Asia, are targeted next. At Glenbrook, we’re monitoring the evolution of those partnerships and ACH International interoperability and will provide updates here at Payments Views. International ACH is not intended to replace Wire transfers, but is meant to be an alternative to check payments for non-urgent, low dollar transactions to and from foreign countries. While IAT will enable banks of all sizes to originate International transactions, enabling both P2P remittance transfer services as well as business-to-business trade payments, as payments industry insiders well know, the ACH network has provided fertile ground for payment innovation by non-banks. Glenbrook anticipates that IAT will open the floodgates for increased cross-border transaction services by banks and non-banks alike.
Payment News - August 19, 2020
E-billing, electronic payments impact customer retention and profitability - study. Electronic billing and online payments have a positive impact on customer satisfaction, retention and profitability, a recent study indicates. According to the research - which evaluated data from 8 million residential online consumers over an 18-month interval – the most significant linkage between billing and business benefits is evident among the so-called early tenure customers, namely those who have been using online billing and payments for less than 28 months. The study also indicates that customers who receive paperless electronic bills via a company’s website or at a financial institution’s website, or who use recurring payments, are more profitable for the billing organization. Among early-tenure customers, e-bill users were revealed to be 12.5 percent less likely to stop using the service, as well as 35 percent more likely to pay their bills on time, and purchase 20 percent more products than paper bill users. Also, automatic, recurring payment users are 14 percent less likely to switch banks or give up e-billing and 86 percent more likely to pay their bills on time. From a cost perspective, the study highlights the importance of delivering e-bills not only via an organization's own website, but also via financial institution sites; this is due to the fact that the circumstances in which a bill is received impacts payment method. Among the survey participants, 74 percent of customers who receive an e-bill at a bank site pay using a deduction from their bank account, a low-cost form of payment. Also, 40 percent of customers who receive bills at a company’s website pay using a card-funded payment, a higher cost method of payment. The study was commissioned by US financial services technology provider Fiservand conducted by Aspen Marketing Services.
The PAYPERS - August 18, 2020
E-Payables: Electronic Payments. With current economic conditions forcing enterprises to focus on cost containment, top-performing organizations are driving efficiencies within the final phase of the accounts payable process to unveil a wealth of cost and time benefits, according to a new research study published by Aberdeen Group, a Harte-Hanks Company. The E-Payables: Electronic Payments research report, which examined the strategies, intentions, and performance of over 140 enterprises, found that nearly 70% of enterprises place a critical / high-priority level on improving overall payment processes and procedures, a figure that reinforces the notion that overall financial success within the enterprise rests on the operational shoulders of the accounts payable department. "Top-performing enterprises realize the value in automating the final phase of the A/P process," said Christopher Dwyer, research analyst and author of the study, Aberdeen. "By leveraging electronic payment methods, such as ACH, commercial cards and wire transfer, they have significantly cut payment-processing costs in addition to reducing the risk of payment fraud."
Money Central - August 11, 2020
SWIFTNet Goes Live In Hong Kong for High-value Payment. SWIFTNet went live on 25 May as Hong Kong’s financial messaging platform for Clearing House Automated Transfer System (CHATS) payments as the Hong Kong Monetary Authority (HKMA) switched from its proprietary network to SWIFT. The HKMA and Hong Kong Interbank Clearing Limited (HKICL) decided in 2006 that they would implement the new open platform and replace their proprietary platform. By mid-2010, SWIFTNet InterAct and Browse functions will be added to the platform. Customers will be able to use these two additional features to benefit from the interactive and query services available from SWIFT. Average daily traffic expected from the SWIFTNet platform is around 100,000 messages, mainly generated from the 30,000 payment transactions that have moved to SWIFT from the former proprietary platform.
China Payment New - August 5, 2020
Cash Carrying Consumers Look to Prepaid Debit Cards to Avoid Credit Card Woes. It's natural for consumers to want convenience, which explains why credit cards have been a hot item. But millions of consumers have either dropped them because of rising fees, or have been forced out by credit card issuers. Many of these cash carrying consumers have found a solution, by replacing their credit cards with reloadable prepaid debit cards. Unlike credit cards, prepaid debit cards are cash cards, putting consumers in control by preventing them from spending more than they have. While prepaid cards don't allow consumers to float balances, the good news is it means prepaid issuers do not charge interest rates. However, prepaid cards keep some of the best features of credit cards, making it a better option than cash.
Reuters - July 21, 2020
Healthcare Providers Want Electronic Payments. Payformance Corporation has released the results of a survey showing that healthcare providers want to transition to electronic claim settlement. The survey showed that only a small fraction of providers are receiving electronic payments and remittance advices, yet over 96 percent of respondents would like the option to settle claims electronically. An even greater percentage, 98 percent, believes that more health plans should offer this option to providers. The study was distributed to 3,343 healthcare providers; the electronic survey was completed and returned by 542 respondents. "Providers in the healthcare industry clearly want to settle claims electronically," said Dwayne L. McAfee, President and CEO of Payformance Corporation. "Electronic claim settlement lowers provider costs, improves cash flow, and reduces payment disputes. In fact, providers can save as much as $2.94 per claim settled electronically by using the comprehensive solution from Payformance." For the healthcare industry to effectively transition to an electronic claim settlement approach and address the issues raised by the survey, there are three key actions that payers and providers should focus on: (i) Payers -- elevate the priority of transitioning to electronic claim settlement and put solutions in place to deliver EFT and ERA to all providers desiring electronic settlement; (ii) Providers -- encourage all of their payers to offer EFT and ERA services; and (iii) Providers -- leverage inbound 835 ERA transactions to auto-post to their practice management systems, and avoid manual re-keying of remittance data. The study also found that providers believe that electronic claims settlement will be the industry standard within three years, as 92 percent of the providers who responded either agreed or strongly agreed to the upcoming trend in healthcare.
Payments News - July 18, 2020
US online shoppers suspend purchases mainly because of high shipping costs – study. For almost half of US online shoppers (45 percent), high shipping fees are the top reason for abandoning online purchases. According to The Wall Street Journal, some of the online merchants do not reveal shipping prices and fees at the outset because of their belief that "having a low show rate will drive people to the shopping-cart page." But it is precisely the lack of clarity regarding shipping charges which determines online shoppers to give up online purchases, a study indicates. The need to make price comparisons, as well as the customers' intention to look for a coupon, cited by 37 percent and 27 percent of those involved in the study, were some of the other reasons why US shoppers bail out on online transactions. In addition, 26 percent of respondents preferred to make the final purchase in a brick-and-mortar store, 24 percent abandoned their shopping carts because their favorite payment option was not available at checkout, while 21 percent expressed concerns related to the security of credit card information they disclose online.
The PAYPERS - June 24, 2020
The New Card Act Requires Limits, Disclosures on Gift, Prepaid Cards. Title IV of The Credit Card Act of 2009 imposes limits on issuers of gift cards and prepaid cards with respect to dormancy fees and expiration dates to become effective within 15 months. Dormancy fees can't be charged unless fully disclosed and only after a one year period of dormancy. Expiration dates cannot be less than five years from either the original date of purchase or from the date of the most recent reload to the card and must also be fully disclosed to the purchaser. The Act requires that the Federal Reserve within 9 months prescribe regulations to carry out this section ... "including such additional requirements as appropriate relating to the amount of dormancy fees, inactivity charges or fees, or service fees that may be assessed and the amount of remaining value of a gift certificate, store gift card, or general-use prepaid card below which such charges or fees may be assessed."
Payment News - May 25, 2020
Consumers Still Unimpressed by Mobile Banking and Payments. Several years of hype haven’t yet motivated many consumers to embrace banking and payments through cell phones and other mobile devices, though there are signs that consumers are warming to the new technology, according to new survey results from KPMG LLP. The audit, tax, and consulting firm asked more than 4,000 people in 19 countries, including 500 in the U.S., for their attitudes about banking and payments through mobile devices as part of a broader survey completed last November. The good news for banks and tech providers: 85% of U.S. respondents believe mobile banking is important, according to a KPMG release. The bad news: 91% haven’t tried mobile banking, and hardly any think they should pay for it. Some 48% of those in the “haven’t tried” group cited security and privacy concerns for avoiding mobile banking. Mitch Siegel, director of payment advisory services in KPMG’s Financial Services practice, calls that finding “not surprising,” especially with the heavy media coverage about payment card data breaches. “People are just broadly concerned with security and how that pertains to mobile as a channel,” Siegel tells Digital Transactions News. Regarding payments, 95% of U.S. respondents said they never made a purchase from a vending machine using their mobile device and 95% said they never made a purchase using a mobile device through a retailer’s mobile Web site, according to KPMG. Those results further suggest unfamiliarity with or lack of comfort in using a mobile device for transactions and payments, KPMG says. Contactless payments, now primarily conducted with chip-equipped cards that also have a conventional magnetic stripe, probably will be confined to low-ticket niches such as fast food or movie theaters, according to Siegel. “We think of contactless as a stepping stone” to payments through mobile devices, he says. The poll was New York City-based KPMG’s third annual “Global Consumers and Convergence” survey, but it was the first to ask questions about mobile banking and payments. Most of the research was done online, although KPMG did face-to-face interviews in India and South Africa.
Digital Transactions - April 9, 2020
New BCG Report: Global Payments 2009. The Boston Consulting Group has announced its ninth major study of the payments industry titled "Weathering the Storm: Global Payments 2009" find that "banks must take forceful steps to overcome major challenges to their payments businesses if they are to bolster their overall profitability amid the ongoing financial crisis." The report, "Weathering the Storm: Global Payments 2009," BCG's ninth major study of the payments industry, says that although payments businesses have proved to be reliable revenue generators -- global payments revenues hit $805.1 billion in 2008, up from $654.3 billion in 2006, and are forecast to reach $1.4 trillion by 2016 -- their momentum is slowing. The darkest cloud over the industry is the steady decline in average revenues per transaction. According to the report, a variety of factors are contributing to price erosion and margin pressure. Regulatory forces are playing a prominent role in some regions, such as the Single Euro Payments Area (SEPA) in Europe and congressional pressure on credit card revenues in the United States. Also, competition is intensifying, and infrastructure investments (both obligatory and discretionary) are leading to higher costs but not necessarily higher revenues. Furthermore, the payments needs of different customer segments vary increasingly, while all customers are becoming more sophisticated and demanding. "On the retail payments side, the key to success will be a lean, end-to-end business model aimed at achieving the highest possible level of efficiency. On the corporate side, the key will be end-to-end service excellence rather than focusing solely on efficiency." The report says that convenience, price, security in transaction processing, and accessibility of funds are most critical for retail customers -- defined as individual consumers and small-to-medium-sized enterprises. In North America, the imminent challenge for payments providers is maintaining growth amid the credit crunch. The demand deposit account is suffering from tightening net interest spreads. Noninterest income sources such as overdraft fees and interchange revenues are being squeezed. Ultimately, the report concludes, the strongest institutions in the wholesale transaction banking business will be those that are able to meticulously monitor the performance of their chosen business model and adjust it accordingly.
Payment News - March 3, 2020
Why You Need To Seriously Consider Using Payroll Debit Cards. According to figures from the American Payroll Association, only three percent of its members are using payroll debit cards, also known as Payroll cards, at present. However, about half of the association’s 22,000 members are looking into using these types of cards in their payroll system in the future. Although there are already a number of banks who offer such services for more than a couple of years, not many are aware about these so-called Payroll cards. For those employers out there who are interested on this new system of paying wages, you can read on to learn more about this type of debit card. Even if the US is considered as one of the most technologically advanced countries, there are a lot of companies that still use checks as the primary payroll system. There are many areas in the country that are not using payroll debit cards. However, those employers and companies that have started to use this system of paying out wages are really very satisfied with this new bank service. For small to medium businesses that mostly employ students or new immigrants, using Payroll cards can be very beneficial not only for the owners, but also for their workers. One of the benefits of payroll debit cards for employers is a drastic decline in payroll processing costs. Loading Payroll cards usually cost employers 20 cents per transaction. However, paper checks are worth about a dollar (or sometimes even two) each. So, even if there may be a one-time cost for each debit card, your company will see a return on investment in no time at all. This option is also a very convenient option for companies who are employing part-time workers that do not have bank accounts. Believe it or not, about 17% of the workforce in the US actually does not have any bank account. Also, a debit card payroll system can help growing businesses in managing their payroll electronically. Employees also enjoy various benefits from payroll debit cards. First, employees do not have to pay exorbitant fees to check cashing shops just to cash their salaries. Some of these shops actually charge 10% for every check that they cash in. Also, cards are safer to carry than cash. Besides, you can also use Payroll cards as debit or credit cards. So, employees can conduct online transactions and even pay their monthly bills online.
Articlesbase – January 2009
MasterCard White Paper on Open Payment Systems, Interchange. MasterCard Worldwide has announced it has published a new white paper titled "Benefits of Open Payment Systems and the Role of Interchange " that the company says "dispels misperceptions about payment systems and explains the tremendous economic value that electronic payments bring to the economy as a whole and their role in advancing commerce." The paper, entitled "Benefits of Open Payment Systems and the Role of Interchange underscores the enormous benefits delivered by electronic payments, which have become so ingrained in everyday life they are often taken for granted or misunderstood. Few people ever stop to consider the complex and sophisticated system that allows transactions to occur within seconds, almost anywhere in the world. "Perhaps the easiest way to grasp the value of electronic payments is to envision a world without them. Clearly, if electronic payments came to a sudden halt, many facets of commerce - travel, trade and the Internet just to name a few - would face dire consequences," MasterCard President and CEO Robert W. Selander says in the introduction. The paper also discusses the role of interchange - a relatively small fee paid for the benefits merchants get from card acceptance. Interchange is critical to ensuring the system provides maximum benefits to all participants, including consumers and merchants in a fiercely competitive marketplace.
Payment News – January 12, 2020
Fraudsters Run One-Stop Online to Sell Data-Stealing Code. Fraudsters are running an online trading post for highly sophisticated code that allows criminals to more easily steal consumers’ log-on credentials, Social Security Numbers, PINs, and other confidential information, according to the latest report from RSA Security Inc.’s Anti-Fraud Command Center. The fraudster Web site, which RSA analysts call a “Web Injection Shop,” sells so-called HTML injections, or bits of code that can allow phishing perpetrators to mimic the look of a financial institution’s Web pages, including pages that ask for log-on credentials. The code also allows fraudsters to add fields to the pages to ask for information the legitimate pages don’t ask for. The injections usually accompany Trojans, code that fraudsters install on the computers of unwary users when they visit certain sites or click on unknown e-mail links. Some 207 financial-institution brands were attacked in phishing campaigns in November, up significantly from 167 in October, the report says. The total includes 23 banks whose sites had not before been targeted by fraudsters. Regional U.S. banks were the target of 48% of the attacks, with credit unions accounting for 30% and banks that operate nationwide accounting for 23%.
Digital Transaction – December 29, 2020
Holiday Bonus to Workers: Pre-paid Plastic for Health Care. It’s increasingly hard in this economic environment for employers to give something a bit extra to their employees. But one company is providing something outside the box: a pre-paid card for workers to pay for health-care expenses, such as a doctor’s visit or a drug prescription. A few weeks ago, Farmacia Remedios of San Francisco, a chain of nine drugstores catering to the Latino community, began offering a $25 Christmas bonus on these prepaid MasterCard’s for health-care needs to 85 employees who aren’t on their health-insurance plans. In addition, when those employees use those cards at a specific clinic they are eligible to get a free flu shot and full health assessment, which would normally cost $128. “It’s a very easy program to use,” says Doug Ryan, chief financial officer of Farmacia Remedios. “For a small company to provide any kind of meaningful health care to employees, you have to look at what the company can afford and can easily administer, because we also have to look at what employees can afford and can contribute.”
Independent Street – December 24, 2020
Online Merchants May Have a Tougher Time with Fraud in 2009. While online merchants managed to keep a lid on fraud losses in 2008, a faltering economy could make 2009 a costlier year, a leading expert says. “It’ll be interesting to see if merchants can hold fraud rates steady” next year, says Doug Schwegman, director of market and customer intelligence at CyberSource Corp., an online-gateway provider in Mountain View, Calif. “As more people become unemployed, there might be more fraudsters out there.” While e-commerce merchants will lose a record $4 billion to fraud in 2008, growing revenues mean the loss rate will hold steady at 1.4% of sales, level with last year and 2006, according to CyberSource’s annual online fraud survey, released on Wednesday. Moreover, merchants kept the loss rate in check while at the same time approving more orders. On average, e-retailers are rejecting 2.9% of all orders on suspicion of fraud, down from 4.2% in 2007 and similar levels in prior years. “This was the first year we saw a statistically significant drop” in the rejection rate, says Schwegman. However, the merchants’ ability to continue driving down order-rejection rates while keeping fraud in check could come under pressure in 2009 as the recession sets in—though the relative youth of online selling means it’s hard to predict how well merchants will do. “They may be able to do that in ’09, but we haven’t been through too many economic cycles with e-commerce,” says Schwegman.
Digital Transaction – December 10, 2020
The New Card on Campus: Prepaid Debit. Many colleges have tightened rules on credit-card marketing on campus in order to discourage students from racking up huge amounts of debt. Now another kind of card is being pushed on campus -- with its own set of issues. This fall, financial-services companies are focusing more of their campus marketing on "prepaid debit cards," which work like standard debit cards except that they aren't linked to a traditional checking account. It's virtually impossible to incur an overdraft with prepaid debit cards. And students can't get into thousands of dollars of debt, as they can with credit cards. The average college graduate carries $2,748 in credit-card debt, according to a 2007 survey by student lender Nellie Mae. And nearly one in four graduates leaves school with more than $5,000 in credit-card debt, according to a recent survey by Zogby International that was commissioned by credit reporting agency TransUnion Corp.
Mary Pilin – Wall Street Journal – September 11, 2020
Electronic Payments Now Account for Majority of Consumer Payments. Consumers are increasingly using electronic payments at the expense of cash and checks, according to a new nationwide consumer payment preferences study conducted by BAI and Hitachi Consulting. The research was sponsored by First Data Corporation and its STAR® Network, Harland Clarke, MasterCard Worldwide, Metavante, and PULSE. The 2008 Study of Consumer Payment Preferences found that 63 percent of all consumer purchases are made using electronic payment methods. Electronic payments now account for the majority of payments across all three major payment venues-including bill payment. Internet payments have always been predominantly electronic, almost by default. For in-store payments, the balance between paper and electronic payments shifted in 2003, leaving bill payment as the last bastion of paper-based payments. This is no longer the case, however, as paper-based payments' share of bill payments shrank from 55 percent in 2005 to 38 percent in 2008. Checks and now cash are giving way to card-based payments at the point of sale. Checks' share of in-store purchases has declined from 18 percent in 1999 to 8 percent in 2008, and after holding relatively steady for the past several years, cash has dropped to 29 percent. Contrary to robust forecasts, gift/prepaid card's share of purchases has not increased significantly over the past three years. Looking forward, electronic payments will likely continue to erode the share of payments made using paper-based methods. As one young consumer observed when answering the survey, "paper is old school!", and over the next two years, consumers expect to increase their use of debit and decrease their use of checks and gift/prepaid cards.
Hitachi Consulting – October 6, 2020
Electronic Payment Industry Touts Its Green Benefits. In a new study, the Federal Reserve reports nearly 50 percent of the total number of checks in the U.S. are written by consumers to businesses. Companies in the industry say that if consumers would make most of those electronically, it would produce huge environmental savings. The PayItGreen Alliance, a nonprofit group formed to promote the environmental benefits of electronic payments, has produced a study of its own, hoping to demonstrate the impact one household can have by switching from paper checks to electronic payments. By switching to electronic bills, statements, and payments. the average American household would, every year: Save 6.6 pounds of paper; Save 0.08 trees; Not release 63 gallons of wastewater into the environment; Save 4.5 gallons of gasoline to mail bills, statements, and payments; Not produce 171 pounds of greenhouse gases.
ConsumerAffairs.com – April 1, 2020
Debit Traffic Now Bigger Than Credit Transactions for MasterCard. The weakening U.S. economy that’s provoking angst in Washington and on Wall Street has yet to crimp No. 2 payment card network MasterCard Inc., which on Thursday reported strong fourth-quarter financials and transaction growth. MasterCard, however, is seeing a shift away from discretionary spending and toward so-called “everyday” purchases such as groceries and gasoline, chairman and chief executive Robert W. Selander said at an analysts’ conference call. “Regardless of what happens, we expect consumers will continue to transact,” he said. Selander added that MasterCard generates half its business internationally, which helps insulate it from a U.S. downturn. MasterCard is still benefiting from the long-standing shift from paper to electronic payments, and it doesn’t issue credit cards and thus doesn’t have lending exposure, he also noted. In the U.S., debit cards, which again led MasterCard’s growth, now account for more transactions than credit cards for the Purchase, N.Y.-based card network. Signature-debit purchase transactions hit 1.72 billion in the fourth quarter, up 17% from 1.47 billion in the year-earlier period. Purchase volume increased 16.4% to $71 billion from $61 billion in 2006’s fourth quarter. For the year, debit purchase transactions grew 26% to 6.46 billion from 5.13 billion in 2006. Dollar volume jumped 23.8% to $267 billion from $216 billion in 2006.
Digital Transaction – January 31, 2020
Taking Prepaid Debit Cards to the Next Level. The growth of e-commerce and the continuing expansion of outsourcing and the remote workforce are fueling a new approach to paying for services. Internet-focused companies are replacing traditional online payment transactions with prepaid debit cards. Some industry watchers predict that online payment options such as debit cards will take off this year. For example, analyst firm Celent predicts alternative payment methods such as debit cards will more than double by the end of 2008. These new transactions, known as Web payouts, now comprise 26 percent of all transaction volumes, while credit card volumes decline.
Jack Germain – E-Commerce Times – January 16, 2020
REPORT: Debit Card Outlook Bright. Debit cards remain the fastest-growing payment devices and they seem likely to endure a possible economic slowdown better than credit cards, according to a new report from TowerGroup Inc. Nevertheless, financial institutions have a propensity to pump out many more debit cards than consumers want. Now embedded in consumers’ spending patterns, debit card growth rates will stay in their current ranges through 2009, with credit card transaction growth nearly flat, predicts TowerGroup, an editorially independent research unit of MasterCard Inc. The growth is coming at a time when the personal savings rate has plummeted, a trend attributed to consumers’ increasing preference for using debit cards for everyday spending such as groceries. “The transactions still need to come through”.
Digital Transaction – October 11, 2020
When It Comes To Online Security, It’s All About The Money. The electronic payments industry’s continued prowess in holding fraud in check despite the mounting scourges afflicting online transacting is all the more remarkable when you consider that the banking industry, whose fundamental business is risk management, is largely a no-show in this channel. Merchants and their security providers have managed to hold electronic crooks at bay along the front lines of the Internet security wars. But they still aren’t getting the help they really need—which is better economics. To be sure, Internet fraud is still a growing threat. The sophistication of electronic attacks is relentless and scary, what with new Trojan Horse viruses surfacing that are capable of automatically learning when they are being detected and shifting how they compromise credentials in order to evade further monitoring. And the proliferation of Internet-based business scams is aided in no small way by the ability of thieves to recruit their “mules”--needed for transshipping goods procured with stolen credentials--from the nation’s naïve and lovelorn, who offer assistance in return for promises of a quick buck or a hot date. So it’s hats off to all those who, according to CyberSource’s annual surveys on online fraud, have been able to keep the lid on fraud losses to just over 1% of sales volume. Yes, absolute dollars of fraud have been rising, along with transaction volume. But at a fraud rate of 1.4% in 2006, against an estimated $215 billion in sales, the industry deserves a big pat on the back. Or, at least parts of the industry do.
Steve Mott - Digital Transaction – March 15, 2020
Study Finds ‘Pervasive And Increasing’ Fraud In Payments. A survey released this week by a major trade association for corporate treasury officials raises an alarm about fraud in check and electronic payments and points to vulnerabilities in newer transaction channels, such as the Internet. “Payments fraud last year was pervasive and increasing,” says a report from the Association for Payments Professionals, which in January surveyed more than 3,000 of its members about their payments-fraud experience. The Bethesda, Md.-based AFP found that 72% of its 414 respondents had been victims of actual or attempted fraud in 2006, up from 68% in a 2005 survey. The January survey was underwritten by EPN, a unit of The Clearing House Payments Co. LLC. Electronic payments turn out to be significantly safer than paper, the survey finds, though payments flowing through the automated clearing house and the card networks are subject increasing fraud attacks, particularly in transactions on the Internet and over the phone. Nearly all respondents said they had been the target of actual or attempted check fraud in 2006, while 35% reported fraud activity in ACH debits. Seventeen percent said they had seen attempted or actual fraud with consumer credit cards. Of those who reported fraud activity with cards, consumer credit cards accounted for by far the most response (82%), with signature debit cards registering 18%, stored-value cards 7%, and PIN debit cards 4%.
Digital Transaction – March 15, 2020
Tab for E-Commerce Glitches Could Be $60 Billion By 2010. Problems with transactions could cost e-commerce merchants and other Internet businesses some $60 billion in sales through 2010, according to a consumer survey released Monday. Altogether, 88% of consumers reported problems with transactions at shopping, banking, travel, and insurance sites. About one-third of consumers who run into checkout or payment problems online go to a competing site, while another 7% simply abandon the transaction, the survey says. Problems cited by respondents canvassed by the survey include: payments that didn’t post, causing a late fee for the consumer; a Web site glitch that deleted all data entered by the consumer, including a credit card number; and an error message on a travel site that left the consumer in doubt whether his credit card had been accepted and he had booked the flight.
Digital Transaction – September 25, 2020
Survey: Online Payment Alternatives Could Tap $14 Billion In Missed Sales. Some 74% of consumers would be willing to spend about $960 more per year on music, games, subscriptions, and other digital content online if they could use a form of payment that’s safer and more convenient than a credit or debit card, a survey released Tuesday reveals. Given current estimates of active consumers online, that adds up to $14.4 billion in forgone sales annually for Internet-based content sellers, say Javelin Strategy Research and Paymentone Corp. Javelin polled 2,038 consumers in March for PaymentOne, a processor of e-commerce transactions. The latest survey shows young consumers are even more likely to use payment alternatives, with 79% of respondents aged 18-34 saying they would buy more. Income also matters, with 80% of those with incomes of $50,000 to $150,000 indicating they would press the buy button more often if given alternatives. For all respondents, payment choices mattered more in making a purchase decision than better content (a three-to-one margin) and affordable broadband service (six to one).
Digital Transaction – June 28, 2020
Online Bill Payments Show Big Gains, But Some Fret Over Security. In another indication of the erosion of paper checks in consumer transactions, the volume of bill payments made by check as a fraction of all bill payments has fallen to 37.5% from 61.1% four years ago, according to a report released this week by online bill-payment processor CheckFree Corp. with data based on a recent consumer survey. Some 35% of these payments are now made online, the report indicates, up from 13% in 2002, and more than half of these payers are in the 25-to-44 age group. At the same time, non-users of online bill payment services are becoming more interested in the channel, with 19% of those surveyed showing such interest, compared with 15% in a similar survey conducted early in 2005. But security concerns weigh heavily on the minds of non-adopters.
Digital Transaction – May 18, 2020
ACI Worldwide has announced the results of a global electronic payments market study conducted with Global Insight, Inc. Finding that the annual number of electronic payment transactions, currently at approximately 210 billion worldwide, will double by the end of the decade and is growing at a compounded annual rate equal to four times the expected growth in real gross domestic product (GDP). During the five-year period from 2004 to 2009, forecast volumes for electronic payments are expected to double across the world, with China and India doubling more quickly at a rate of every three and four years, respectively. Conversely, the use of checks as a form of payment is forecast to continue its decline; as measured in 2004, approximately 20 percent of non-cash transactions were check-based; in 2009, only 10 percent of total payments are predicted to be in check form.
Payment News – May 4, 2020
A study in 2005 showed debit card spending in retail outlets exceeded cash spending for the first time ever last year. The figures, which cover all retail transactions in 2005 (both online and offline) show debit card spending at 37 per cent (£89bn) of the total £240bn spent, against cash at 34 per cent (£81bn). This shows retail debit card use up nine per cent on 2004 figures of £82bn of retail spending, against cash retail spending down four per cent from £84bn. Sandra Quinn, director of communications at APACS says: “at the end of 2004, we saw total UK spending on plastic overtake cash for the first time, signaling a real sea change in our payment habits. This change was mainly driven by debit card use. The 2005 figures show that this trend is continuing with debit card spending in retail outlets crashing through the cash barrier for the first time ever.
Payment News – April 18, 2020
Young consumers trying to avoid the pitfalls of credit debt now have wallets full of other forms of payment, including prepaid and debit cards. Teenagers are a fickle bunch: first they wanted credit cards of their own and now it seems they don't. That is not to say they avoid all plastic. These days, their wallets are full of other cards, including debit cards, which draw money from banking accounts, and a wealth of prepaid cards that store a certain cash value that can be tapped with a swipe of the card.
Jennifer Alserver, New York Times – September 25, 2020
REPORT: Prepaid cards' growth will pressure money-transfer nets. with banks issuing or planning to issue more and more prepaid debit cards to handle remittances overseas, more banks are expected to enter the market, putting pressure on the established money-transfer businesses like western union holdings inc., a new research report concludes. According to the report, entitled "money transfer cards & the accidental global customer" and published by the AITE group, a Boston research firm, there will be 1.7 million active money-transfer cards issued by U.S. players by 2007, up from 400,000 this year. The cards will command 4.4% of the total value of outbound remittances two years from now, an increase from their current 0.7% share. Remittances of all kinds will total $70 billion in 2005, a number the report says will grow to $80 billion by 2007. At first glance, says the report, the ability of these banks to compete with Western Union (a unit of transaction-processing giant first data corp.) and MoneyGram may seem hampered by the relative paucity of ATM’s in most foreign destination markets. Of the top 10 recipient countries of workers' remittances, Brazil has the highest ATM density, at 750 machines per million inhabitants (compared to 1,295 in us). Mexico is a distant second at 186. But many of these countries still have more ATM’s than they have Western Union offices, the report says, leaving the established players with no advantage in locations. "Although Visa and MasterCard cards would likely be sufficient to fully penetrate the countries the most underserved by ATM’s, the possibility found by some new entrants to enter these markets using these cards means no Western Union or MoneyGram corridor is safe”, the report says.
Digital Transaction News – September 11, 2020
In the continual quest to reduce expenses, companies have traditionally focused on the size of the payroll. The actual cost of producing that payroll, however – which includes calculating pay, producing checks, making direct deposits and keeping track of employee information – has emerged as a new arena for savings, particularly since payroll production costs have been rising. Last year, for example, the median cost per paycheck rose 3.5% compared with 2003, according to a survey by the American Payroll Association (APA).
Forbes Magazine, September 2005
We are seeing more and more businesses implement or expand their direct deposit of payroll.
John Gruce, Senior Vice President of Prepaid Card Services, Bank of America, September 2005
A series of reports on the SVC industry by the center for financial services innovation (CFSI) finds that while still small overall, the SVC market has mushroomed in the last few years. Of the $157 billion loaded onto all prepaid products in 2003, Mercator Advisory Group estimates that general purpose SVC’s accounted for 15%, or $23.5 billion. According to the Pelorus Group, approximately 15 million prepaid debit cards have been issued, including payroll cards, and that figure is projected to rise to 34 million in 2005, with general purpose cards accounting for 35%, or 12 million cards.
Banking Strategies –May/June 2005
Consumers’ use of debit cards is skyrocketing. Use of debit cards, including automated-teller machine withdrawals, has grown 24 percent a year between 2000 and 2003. By comparison, credit card use was up less than 7 percent from 2000 to 2003, a Federal Reserve report shows. Use of checks shrank during that period by 4 percent. MasterCard International Inc. Reports that U.S. cardholders last year generated nearly $42 billion in transactions on debit cards, up 33 percent. Through the last three months of last year, Visa USA Inc. reported $346 billion in sales volume on its debit cards.
Mary Beth Mc Laughlin, The Blade – March 22, 2020
Debit cards a big hit with buyers. They offer convenience for consumers who don’t want credit balances. Because of their convenience and widespread acceptance by merchants, debit cards are rapidly becoming the new cash. In fact, for the first time last year, cash and checks account for less than half the payments for in-store purchases, according to by the American Bankers Association and Boston-based Dove Consulting Group. Just five years ago, they made up 57 percent.
Rochester Democrat & Chronicle – January 9, 2020
According to the federal reserve system, the number of payments made by check declined between 2000 and 2003 while the number of online and offline debit payments rose over the time frame. Based on two surveys, one of the depository institutions and one of the payment network operators and payment card issuers, the federal reserve system (FSR) reports that the number of payments made by check declined by a compound growth rate (4.3%) between 2000 and 2003 while the number of online debit payments grew by a CAGR of 21% and the number of offline debit payments rose by a CAGR of nearly 25%. Card payments in general – credit, debit and EBT – rose by 13.2% each year over the three year period.
eMarketer – January 7, 2020
Economists long have predicted a cashless society, where digital transactions replace paper money and coins. Now, nearly one in three in-store purchases is made with a debit card, a study by American Bankers Association and Boston-based Dove Consulting shows.
St. Louis Post-Dispatch - October 22, 2020
The massive jockeying for position that characterized much of this past year will accelerate in 2004 as stored value service providers scramble for a place in the ever-upward trajectory of the prepaid marketplace.
Matt Mott – Intelecard News Online – August 2004
Plastic paycheck is catching on. Employers like the savings offered by crediting pay to a card. Employees appreciate getting cash quickly. The payroll cards are an outgrowth of stored value cards that contain consumer rebates and gift certificates that carry a company logo. They can be spent or used to obtain cash and can be recharged. The potential market is huge. About $11 billion in payroll payments and $4 billion in benefit payments such as commissions and incentives were loaded onto prepaid cards in 2003, according to a study by the Mercator Advisory Group in Shrewsbuy,Mass. Such payments are growing at more than 11 percent a year, said Tom Sloane, Mercator’s director of debit advisory service. If cards replaced checks issued each year to 130 million employees who lack bank account, are temporary employees, or work at remote locations, such payments could reach an annual $108.8 billion.
Associated Press - June 19, 2020
Debit card transactions eclipsed credit cards in 2003. By 2006, there will be more debit card accountholders and cards than credit card equivalents. And by 2007, debit card spending will double from today’s levels, according to the Nilson reports.
Steve Mott, Banking Strategies – May 7, 2020
In November 2003, Nilson upped its 2007 forecast to $146 billion.
Matt Mott – Intelecard News Online – May 2004
The U.S. prepaid card market has potential to exceed USD 2 trillion and to include business-to-business, consumer-to-consumer and government-to-consumer transactions, according to MasterCard and Visa.
epaynews.com – March 9, 2020
It costs employers between $1 and $2 for every paycheck it processes (and between $8 and $10 to replace a lost or stolen paycheck) compared with 20 cents per transaction for direct deposit.
American Payroll Association – February 2004
Payroll cards are also a way for businesses and financial-services firms to target the “unbanked” population that includes students, part-time or low –income workers. At least 14.2 million households fall into this category. Within that category, about 12.4% are expected to have payroll cards by the end of 2004, up from about 8.5% last year.
Celent Communications – February 2004
Employers are rolling out a variety of “stored value” or prepaid cards that employees can use to spend their paychecks, cash bonuses, flexible spending accounts and other fixed allowances. Workers can conveniently access their funds. Employers, meanwhile, cut their processing, distribution and administrative costs. Payroll, incentive and flexible-spending cards represent the fastest-growing opportunities, but issuers say they are also seeing interest in prepaid cards for general business expenses, such as relocation, travel and other project costs. U-haul international, Inc. estimates that it saves half a million dollars a year by moving away from paper paychecks. If the prepaid cards are lost or stolen, the card issuer can immediately cancel or reissue a new card. So workers have better protections with a prepaid card than if they were to lose a paper paycheck, proponents say. Prepaid cards are also being tapped for general business expenditures. Instead of requesting a cash advance, employees who travel infrequently could use prepaid cards to pay for hotel rooms, or meeting planners could use the cards to reserve conference facilities.
Wall Street Journal – February 12, 2020
Credit, debit and stored value card transactions will surpass cash and checks combined in 2009.
Nilson Report - 2004
Debit, credit, prepaid & commercial transactions are processed at a rate of $32,000 per second. Personal consumption expenditure is about $17 trillion and card programs are roughly 24%. So if you look at that, we’re just scratching the surface.
Carl Pascarella, President, Visa USA – August 25, 2020
Shannon Phelps, Vice President of Card Products for First Banks, says many corporations want to shift more of their employees to automatic deposit in order to cut administrative costs, but are hindered by the fact that many employees lack bank accounts. Such workers include teens, part-time staff, temporary employees and immigrants. Stored-value cards provide the employer with the same cost savings as electronic payments while making it easy for employees to access their cash.
Lauri Giesen, Banking Strategies – July/August 2003
The number of prepaid debit cards in the United States will surge from 6.2 million issued in 2002 to over 40 million by 2007. The growth will come from an estimated 50 million U.S. Adults that do not possess credit cards and the 10 million unbanked households.
Pelorus Group – June 19, 2020
The big debate in the debit world is whether pin-based debit, which is typically processed over regional debit networks, will overtake signature-based debit. Glenbrook believes that pin-based debit usage will continue its strong growth.
Glenbrook Partners – January 9, 2020
For the past several years, U.S. corporations and financial institutions have focused on converting America’s payrolls from check to direct deposit. The motivation has been simple: money. Converting to an electronic system can result in cost savings as high as 75 percent. Today, over 55 percent of Americans are paid via direct deposit. However, many employees, especially those without transactional bank accounts, are unable to use direct deposit. They represent a missed opportunity for financial institutions and corporations. Providers of stored value products have leveraged their platforms to develop payroll cards, which capture this missed opportunity. Stored value programs can deliver funds electronically to employees, commonly referred to as the “unbanked”, who do not have a transactional bank account. Payrolls may be loaded onto these cards, which are then used to access payroll funds through ATM withdrawals, debit-card purchases and card drafts (checks written on card funds).
Celent Communications – December 19, 2020
