International IBC Banking

Merchant Discount Rates

2016-06-02T13:47:00.005-07:00

All of the accounts we offer are direct accounts so you won’t need to worry about sharing your MID or Virtual Terminal with other merchants on an aggregate account. We provide both domestic and offshore high risk merchant accounts.

We also provide back-up/secondary accounts if you already have a merchant account with another bank.

Please find our low discounted merchant account rates below!

Industry	Starting Rates
Pharmacy	6-8%(Minimum 50k+ with processing)
Tech Support	4-10% (Start-ups allowed)
Herbal/Nutra	3.5-6.95% (Minimum 50k+ with processing)
Medical Marijuana (MMJ)	4-6.95% (Start-ups allowed)
Forex	4-6.95% (Minimum 50k+ with processing)
Online Dating	3.5-6.95% (Minimum 50k+ with processing)
Replica	6-8.95% (Visa only/200k min with processing)
Binary	3.5-6.95% (Minimum 50k+ with processing)
MLM	4-7% (Start-ups allowed)
Travel	3.5-6.95% (Start-ups allowed)
Firearms	3-6% (Start-ups allowed)
Credit Repair	6-7.85% (Start-ups allowed)
Other	Please Inquire

For more information on our accounts and discounted rates please feel free to contact us at sales@internationalibcbanking.com

Check Your Credit-Card Bills for These Added Fees

2014-09-25T11:42:00.002-07:00

Some credit-card holders are unknowingly paying for identity-theft protection and related services. Cardholders, especially those who signed up for a new card over the past few years, should check their statements for fees related to services that they may not have asked for and may not want.

In an action announced Thursday, federal regulators fined U.S. Bancorp USB -1.43% $9 million and required it to return $48 million to customers over “illegal billing practices” related to the bank’s identity-theft products. The customers were signed up without th
eir consent and in many cases didn’t actually receive the promised service, the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau said.

The action follows related orders by the CFPB and the OCC against Bank of America BAC -1.86% and J.P. Morgan Chase JPM -2.01%.

When consumers sign up for a credit card, most issuers will offer so-called identity-theft protection services and credit-monitoring services that are supposed to inform cardholders of possible signs of fraudulent activity on their cards. The pitches have picked up over the past four years as large data breaches at retailers and elsewhere have increased, compromising more consumer information. Issuers’ customer-service call centers also pitch the services to existing cardholders, as do many automated call services customers contact to activate their cards.

One problem: Many issuers have been enrolling new cardholders in these services without the proper authorization, and those consumers are often unaware that they’ve signed up for them or that they’re being charged.

If cardholders see such charges on their statements they should go through their previous statements to find out how long they’ve been charged. Consumers who didn’t sign up for these services and don’t want them should contact their issuer and ask for a refund. If that doesn’t work, they can file a complaint with the CFPB on its website.

The services themselves, which cost around $10 to $30 a month, have some drawbacks. They can’t prevent identity theft. And even if consumers make no other charges on their card, they’ll still need to pay this or incur late fees.

Consumers can take steps on their own to track their credit for free. They can ask credit-card issuers to alert them by phone about charges beyond a certain dollar amount—a free service. They can check their credit report from each of the three major credit-reporting firms for free every 12 months at AnnualCreditReport.com.

They can also place a “fraud alert” on their credit report with one of the credit-reporting firms. In that case, lenders will take extra steps to confirm the identity of the person applying for credit in their name.

Credit experts say the add-on services tend to help banks more than consumers. They require little legwork for the banks, which market the services but rely on other companies to provide them. For banks, the services have provided an extra source of revenue at a time when generating fee income from checking accounts and credit cards has become harder due to recent regulations. In contrast, these services are largely unregulated, though recent regulatory actions could result in banks being more cautious about how they proceed in this space.

Original article can be found here.

Why The Bitcoin Price Dropped Today

2014-09-19T08:45:00.002-07:00

Normally in the Bitcoin world sudden price fluctuations ranging from $10-$30 can be attributed to market manipulation by large holders of the virtual currency. However, when the price changes greater than $30 in a short period of time there is typically something more behind it such as imposed government regulations or technical implications such as a mining pool nearing 51% of the total network hash rate.

Today, September 18, 2014, the price of Bitcoin is down 9.39% ($42.70) at the time of writing this article and has decreased by a whopping 17% this week (≈$70) with no clear indications as to why. Through our analysis we believe we have determined the reason. It has nothing to do with the Bitcoin industry but rather the upcoming IPO of Alibaba, the Chinese e-commerce giant, which is set to go public tomorrow, Friday the 19th, which would bring in a vast amount of support from Chinese investors from banks to individuals who have wanted to showcase that the Chinese market means business for quite some time, and this is their golden ticket to do so.

The Alibaba IPO has generated a lot of noise in the financial markets as the IPO date has drawn closer and tonight the leading Wall Street investment banks are holding a meeting to determine the official share pricing of Alibaba as it hits the markets tomorrow. Originally the price per share was said to be in the $60 range, but earlier this week Alibaba raised that estimate to $66-$68 per share. We believe that the Chinese Bitcoin holders began dumping their holdings earlier this week to free up capital to invest in Alibaba when it goes public.

The largest Bitcoin exchange by volume, BTC China, which covers an average of 38% of the total Bitcoin transactions has averaged around 19,000 Bitcoin per day in trades. Today, the volume is currently up over 52% at 29,400 Bitcoin and rising.

On top of increased volume on Chinese exchanges, the volume on the European exchange platform Bitstamp is up well over 100% today at around 21,400 Bitcoin compared to the monthly average of 9,200 Bitcoin. This is right after many of the leading German analysts from renowned investment banks have indicated that Alibaba is a strong buy.

Based on this information, we have concluded that many large Bitcoin investors from China and Europe have exited their positions in Bitcoin to put into the Alibaba IPO.

Are these investors gone for good? No, many factors will determine how long it is before these investors close their positions in Alibaba and re-enter the Bitcoin market. If the Wall Street banks issue an initial price lower than expected we could see the price rebound slightly as soon as tonight. After that, the key factors will include how the price fluctuates during the public offering tomorrow and Post-IPO early next week. If Alibaba remains strong and continues to grow in value, we may not see this money flow back into the Bitcoin market until a “bump” in the economy occurs.

The U.S. Federal Reserve has kept interest rates low as indicated in their public statement yesterday, but they intend to begin raising them as we head into 2015. If this scenario were to occur mid-2015 would be a definite point in time when the investment money flows back into Bitcoin, and at even greater volume due to the gains achieved by investing in Alibaba long-term.

Is it guaranteed that the money will flow back into Bitcoin? While nothing is ever set in stone, our research has shown a correlation between the price of Gold and Bitcoin price movements. This being said, Gold tends to rise, based on historical records, when the markets start to become unstable. So we do believe that a vast majority of the money invested in Alibaba and the gains associated will find its way back into Bitcoin.

Original article can be found here.

Apple Partners With Visa, MasterCard, AmEx for iPhone 6 Payments: Reports

2014-09-08T12:43:00.004-07:00

According to new reports from Bloomberg and other outlets, Apple has partnered with Visa, MasterCard and American Express to create a mobile payment platform, allowing users to pay with their iPhones in brick and mortar stores.

Last week Wired reported that the next iPhone will likely include a near field communication chip (NFC), which would make these types of mobile payments possible.

With an NFC chip, a small amount of data can be transferred between devices held near each other. Google Wallet is an NFC-enabled mobile payment platform that has been around for a while now but just hasn't quite caught on. Retailers could be partly to blame as some have been slow to adopt the new technology.

However, Visa and MasterCard have set an October 2015 deadline for U.S. retailers to make the switch from reading cards via magnetic strips to using newer embedded chips.

So it seems like the timing is perfect for Apple to start implementing a mobile payment feature.

And despite Google getting lackluster results with its efforts, a market analyst told Bloomberg things look better for Apple. "Love it or hate it, Apple drives a lot of standards in the industry. They are the mover in these markets. When they do something, the industry seems to follow."

If the reports are true, Apple is likely to announce the feature at its product event Sept. 9, when the iPhone 6 is expected to be unveiled.

Original article can be found here.

Russia launches China UnionPay credit card

2014-08-26T09:37:00.000-07:00

Forget Visa and MasterCard. After the two American credit system payment companies froze accounts without notice in March, Russia has been looking for an alternative in China UnionPay. China UnionPay plans to have 2 million cards in Russia in the next three years.

Instead of seeing the small Visa and MasterCard logo on credits cards, ATMs, and retail outlets, Russians will start to see the three words “China. Union. Pay.”

China UnionPay first emerged in 2002 on the domestic Chinese market as an alternative to Visa and MasterCard, but quickly expanded internationally, and now is already number one in terms of quantity of cards in the world.

Russia’s biggest banks - VTB- Gazprombank, Promsvyazbank, Alfa Bank, MTS, and Rosbank- are already making technical preparations, running tests on Union Bank cards.

“VTB24 already serves China UnionPay cards in its ATM network and now the bank is in negotiations with this payment system to start acquiring retail merchants,” VTB24’s press office said in a statement.

Most banks just began their relationship with China by offering clients corresponding services- none of the bankers imagined that they would be issuing Chinese credit cards.

In March, both Visa and MasterCard blocked the accounts of cardholders at BankRossiya and SMF Bank, both which were sanctioned by the US over Russia’s involvement in Crimea.

Russian financiers who used to keep their assets in dollars and euros were shocked by the event, and moved their capital back to Russia out of fear one day all their assets would be blocked by politicians in Washington DC.

“Visa and MasterCard have 100 percent trust, but right now, there is no trust in the system, and many, even our clients, have shifted their transactions from American dollar and Euro to Yuan. They are eager to receive this card- we already have a big list of people waiting to get this card instead of MasterCard and Visa,” Denis Fonov, Deputy Chairman at LightBank, a small Moscow-based bank, told RT.

LightBank was working with UnionPay long before it knew the cards would be coming to the Russian market - and ordered 10,000 cards pre-emptively as a side service for clients.

As a result of the freeze, Visa and MasterCard will now have to pay a security deposit to Russia’s Central Bank, which is estimated to be billions for each company. Similarly, once UnionPay begins operating in Russia, it will also put down a security deposit with Russia’s Central Bank, about $3-4 billion, Fonov said.

$5.3 trillion in payments

There are already 20,000 cards in circulation in Russia, and a second order of 100,000 cards is planned for September. In Russia many banks accept UnionPay cards, but not merchants, that’s the next step.

By the beginning of 2014, the payment system had already issued 4.2 billion cards, mostly in China.
In terms of total world trade turnover, China UnionPay is the leader in debt cards, with over $5.3 trillion in payments, or about 47 percent of the market share, whereas Visa has 40.6 percent, and MasterCard only 12.2 percent, according to the Nilson Report.

In overall transactions, Visa is still the leader with $4.6 trillion, and China UnionPay comes in second with $2.5 trillion in transactions in the first half of last year.

UnionPay already successfully operates in Australia and Canada, with their deposits tied to both the local currency and the yuan. In total, UnionPay operates in 142 countries.

China’s UnionPay will be a temporary solution for Russia to detach from the West while it prepares to launch its own payment system, which officially isn’t slated to begin operating for another 16 months, and according to sources in the industry, it could even be 2-3 years out.

Original article can be found here.

Visa, MasterCard Must Find Russian Partner to Avoid Paying Security Deposit

2014-07-28T11:55:00.001-07:00

The Russian government has officially declared the conditions that will allow international payment systems Visa and MasterCard to continue business in Russia without paying the massive security deposit that had threatened to shove them out of the country.

To avoid paying the security deposit and fines for interruption of service, the companies must find a Russian payment system deemed "of national importance" to process their transactions by Oct. 31, according to a decree signed by Prime Minister Dmitry Medvedev on July 15 and published Tuesday on the government's website.

This solution to the standoff was floated by Central Bank chief Elvira Nabiullina at a banking conference earlier this month.

Reuters reported previously that MasterCard had already begun searching for a Russian partner to help it circumvent the law.

Visa and MasterCard's problems in Russia began in March, when they abruptly cut off service to two Russian banks in an effort to comply with U.S. sanctions imposed on Russia following its annexation of Crimea.

The denial of service set off a movement spearheaded by President Vladimir Putin to end Russia's dependence on foreign payment systems, which culminated in a law signed by Putin in May that laid the groundwork for the creation of a national payment system to replace foreign players.

The law would also have forced international payment systems to submit a hefty security deposit to the Central Bank in order to continue operating in Russia. Morgan Stanley analysts at the time estimated that the joint deposit for Visa and MasterCard could amount to $2.9 billion, which is five times more than their annual revenues in Russia.

The law set off a flurry of negotiations and proposals on ways to keep Visa and MasterCard, who together process about 90 percent of transactions in Russia, from leaving the market altogether.

Also on Tuesday, the government published the requirements that payment systems will have to fulfill to be considered "of national importance" — a status that will exempt them from having to submit a security deposit.

At least 25 percent of the payment infrastructure, applications and software that the systems use must be developed by Russian organizations and provided under contracts lasting at least five years, among other requirements.

As of Tuesday, only one Russian payment system had received this status — the National Settlement Depositary, a part of the Moscow Stock Exchange group.

Nabiullina said at the end of June that the national payment system will be created within six months, ITAR-Tass reported.

Original article can be found here.

Is Gold Gaining Entry Into The World Of Bitcoin?

2014-07-24T23:04:00.000-07:00

While some industry veterans continue to advance skepticism concerning the future of bitcoin, some important developments are beginning to take place in favor of the digital currency. Gold-for-bitcoin trading is an emerging trend that might finally fully reinforce the belief of investors from new generation that bitcoin is headed to become an e-commerce standard. Other precious metals too are being traded for bitcoin as more companies are keen to capitalize on investment interests from China market.

Bitcoin is certainly the new “gold rush” and has also been called “gold 2.0”. Despite the volatility which has seen the virtual currency drop in value by as much as 50% in a day, companies that sell gold bullions are now joining its bandwagon. The movement from government regulated traditional currencies, which have increasingly become unpopular with new generation investors, to a globally accepted digital currency as things stand seems unstoppable. Anthem Vault from Nevada is one of the companies that have started exchanging gold and silver for bitcoins. Many other companies are doing the same because they have always wanted to take advantage of digital sales. Bitcoin to some of these precious metal sellers is a safer alternative to debit or credit cards which are prone to bad payment risks.

Smaller retailers in the precious metal industry have also discovered that by accepting bitcoin they can actually avoid the fees of processing payments associated with currencies that are backed by governments. For this reason, CBMint has joined the gold-for-bitcoin trading craze. The precious metal retailer believes that bitcoin is the future mainstream currency and therefore accepting it this early and fusing e-commerce will provide an edge over its competition. Despite the skeptics terming the exchange of gold for bitcoin as risky investments, the precious metal retailers engaging in this trade believe that hedging options are becoming available and getting better. In any case, volatility has not hit bitcoin only but also gold itself by as much as 25%.

For gold to gain entry into the bitcoin world, the market in China has a lot to do with it too. The largest bitcoin exchange in the world in terms of trading volume has been the BTC China. The China market was also the top consumer of gold for the year 2013. The move of precious metal sellers to start accepting bitcoin is therefore not much surprising as they are definitely attracted by the synergy in this market.

Perhaps the greatest risk facing sellers of gold and other precious metals if they do not accept bitcoin has to do with the expectation that the digital currency might finally win over any other medium of exchange. If you take bitcoin vs gold in terms of durability, portability, divisibility, fungibility, limited supply and acceptability, the virtual currency wins almost everything. Perhaps gold here is only a winner in terms of durability but this is still debatable.

Considering the way things are unfolding with gold now being exchanged for bitcoins, what looks like a big gamble for investors to take might end up with untold victory for them. Everyone who has not accepted bitcoin might find themselves forced to do so later to avoid losing business. That is exactly what happened to those who initially did not want to accept credit cards. Gold will never be a practical currency for the new generation, but bitcoin certainly is even at this stage without legislation. Precious metal sellers might have finally seen the light to start exchanging gold for the bitcoin.

Original article can be found here.

Visa, MasterCard Must Face Target, Macy’s Swipe-Fee Case

2014-07-24T13:09:00.001-07:00

Visa Inc. (V) and MasterCard Inc. (MA) lost their bid to dismiss more than 30 lawsuits by retailers seeking potentially billions of dollars in damages over fees for processing transactions.

Merchants including Target Corp. (TGT) and Macy’s Inc. (M) pursued their cases after dropping out of an earlier $5.7 billion settlement over the charges known as swipe fees. Today, a federal judge in Brooklyn, New York, refused to throw out those lawsuits. He also rejected Visa’s request to dismiss a similar lawsuit filed by Wal-Mart Stores Inc. (WMT) seeking at least $5 billion in damages.

U.S. District Judge John Gleeson said his decision was “in large part driven by the requirement that I accept all well-pleaded factual allegations as true” because the cases were in the early stages of litigation. It isn’t a ruling on the merits of the complaints.

Gleeson in December approved the card companies’ settlement with merchants nationwide following years of antitrust litigation over the fees.

Dozens of large retailers appealed the approval of the accord. Many also dropped out of the deal and filed their own lawsuits, contending it wasn’t enough compensation for the hundreds of billions of dollars in fees paid.

‘Market Power’

In a revised complaint filed this month, Target and Macy’s said the card companies “have obtained and maintained market power in the market for merchant acceptance of credit cards” causing merchants “to pay excessive interchange fees.”

Wal-Mart alleged in its complaint that “Visa’s monopoly power has enabled it to dictate price and inhibit competition.” The Bentonville, Arkansas-based retailer announced in April that MasterCard will handle transactions for store-branded credit cards. MasterCard isn’t named in Wal-Mart’s swipe-fee complaint.

Visa and MasterCard argued that the merchants’ claims for damages should be barred by legal releases in an earlier settlement in 2003. They also said the claims should be thrown out because the merchants don’t directly pay fees to banks that issue Visa and MasterCard branded cards. The fees are deducted from payments merchants receive after processing.

Separately, Gleeson also denied requests by Wal-Mart and another group of merchants to dismiss lawsuits filed against them by the card firms seeking to stop their litigation over the fees in its tracks. The request the card firms are making in those cases is “properly invoked,” Gleeson said.

‘Tactical Advantage’

“We’re not seeking an unfair tactical advantage, we’re seeking finality,” said Michael Shuster, a lawyer for Visa, during the hearing today.

Paul Cohen, a spokesman for Foster City, California-based Visa, declined to comment on the judge’s rulings.

“Judge Gleeson’s ruling was at the earliest stage of the case,” Seth Eisen, a spokesman for Purchase, New York-based MasterCard, said in an e-mail. “We look forward to putting this matter behind us and continuing to work productively with the merchant community.”

The case is In Re: Payment Card Interchange Fee and Merchant Discount Antitrust Litigation -- Opt Out Cases, 1:14-md-01720, U.S. District Court, Eastern District of New York (Brooklyn).

Original article can be found here.

Russia to Let Visa, MasterCard Sidestep Security Deposit

2014-07-22T14:56:00.003-07:00

The Russian government has officially declared the conditions that will allow international payment systems Visa and MasterCard to continue business in Russia without paying the massive security deposit that had threatened to shove them out of the country.

To avoid paying the security deposit and fines for interruption of service, the companies must find a Russian payment system deemed "of national importance" to process their transactions by Oct. 31, according to a decree signed by Prime Minister Dmitry Medvedev on July 15 and published Tuesday on the government's website.

This solution to the standoff was floated by Central Bank chief Elvira Nabiullina at a banking conference earlier this month.

Reuters reported previously that MasterCard had already begun searching for a Russian partner to help it circumvent the law.

Visa and MasterCard's problems in Russia began in March, when they abruptly cut off service to two Russian banks in an effort to comply with U.S. sanctions imposed on Russia following its annexation of Crimea.

The denial of service set off a movement spearheaded by President Vladimir Putin to end Russia's dependence on foreign payment systems, which culminated in a law signed by Putin in May that laid the groundwork for the creation of a national payment system to replace foreign players.

The law would also have forced international payment systems to submit a hefty security deposit to the Central Bank in order to continue operating in Russia. Morgan Stanley analysts at the time estimated that the joint deposit for Visa and MasterCard could amount to $2.9 billion, which is five times more than their annual revenues in Russia.

The law set off a flurry of negotiations and proposals on ways to keep Visa and MasterCard, who together process about 90 percent of transactions in Russia, from leaving the market altogether.
Also on Tuesday, the government published the requirements that payment systems will have to fulfill to be considered "of national importance" — a status that will exempt them from having to submit a security deposit.

At least 25 percent of the payment infrastructure, applications and software that the systems use must be developed by Russian organizations and provided under contracts lasting at least five years, among other requirements.

As of Tuesday, only one Russian payment system had received this status — the National Settlement Depositary, a part of the Moscow Stock Exchange group.

Nabiullina said at the end of June that the national payment system will be created within six months, ITAR-Tass reported.

Original article can be found here.

Visa, MasterCard lose ruling versus retailers over credit card fees

2014-07-18T15:14:00.003-07:00

NEW YORK - A federal judge declined on Friday to dismiss antitrust lawsuits filed against Visa Inc and MasterCard Inc by retailers who opted out of an estimated $5.7 billion class action settlement in 2012 over transaction fees.

Retailers such as Target Corp and Amazon.com Inc have accused Visa and MasterCard of fixing the fees charged to merchants each time their customers used credit or debit cards. They also alleged the two companies prevented merchants from steering customers to cheaper forms of payment.

U.S. District Judge John Gleeson of Brooklyn said on Friday the lawsuits could proceed, according to Jeffrey Shinder, an attorney for some of the retailers.
Shinder declined further comment.

In December, Gleeson approved an estimated $5.7 billion settlement between the two credit card companies and a nationwide class of merchants over similar allegations.

But thousands of retailers, including some of the biggest in the United States such as Wal-Mart Stores Inc, opted out of the settlement, complaining it was not adequate.

Those companies argued the settlement offered meaningless reforms that would not help them control the costs of accepting credit cards. Many of those retailers who objected to the settlement filed their own lawsuits.

A spokesman for MasterCard said in a statement that Gleeson's ruling on Friday was at earliest stage of the case.

"We look forward to putting this matter behind us and continuing to work productively with the merchant community," he said.

A Visa spokesman had no immediate comment.

The case is Payment Card Interchange Fee and Merchant Discount Antitrust Litigation - Opt Out Cases, U.S. District Court, Eastern District of New York, No. 14-01720.

Original story can be found here.

Visa Europe considers biometric authentication for payment

2014-07-16T08:42:00.001-07:00

In his latest blog post, Visa Europe director of new payment propositions Jonathan Vaux attributes the increase in the popularity of card-on-file payment to the growing use of biometrics.

Vaux writes in response to what he views as a recent spike in the number of announcements from major players in the technology sector relating to plans to open up access, identity authentication services, and new methods of uploading private card data to the cloud.

He makes it clear that card-on-file is not a new form of technology, and that in fact, it has been around for many years. However, he points out that what is particular intriguing about the technology is that “any developer can now take advantage of these capabilities and integrate them into their own applications.”

Vaux also points out that the increasing popularity of smart devices has led to a growing number of consumers who are using many different devices to make their online purchases.

The constant act of re-entering their credit card information every time they make an online purchase has become a frustrating ordeal for customers, writes Vaux.

This has prompted retailers and service providers to try different methods of storing this sensitive information in the cloud to make it as easily and quickly accessible as possible.

“What we’re seeing now is the advent of technology enablers (e.g. APIs) which will help card on file solutions become far easier to integrate into retailer apps. This could potentially lead to them becoming the preferred solution, since this kind of instant service minimizes friction at the critical moment of purchase,” writes Vaux.

“The addition of card scan technology – the ability to use a mobile device’s camera to ‘scan’ a card – also removes one of the key barriers for the customer: the need for card data entry at the time of enrolment and registration.”

Finally, Vaux talks a bit about biometric authentication technology and its ability to even further optimize the customer payment process on smart devices by offering a fast and secure way to pull up card data stored within an app and successfully authorize a purchase.

Vaux ultimately thinks these developments will push card-on-file solutions forward into greater mainstream use, especially as “merchants develop more proprietary apps for online and face-to-face-payments.”

He closes the entry by discussing Visa’s own digital payments objective, emphasizing that this technology can help the company to achieve that goal.

“We need to develop new standards, processes and capabilities that help enable these technologies which will, potentially, help us achieve our ambitions to be the world’s most trusted currency and displace cash and cheques,” writes Vaux. “For example, we will need to recognise other forms of authentication, such as thumbprint, in our process flows and evaluate its impact on the commercial framework. As well as driving card preference in digital payments, this will also create opportunities for our processing business and for us to extend our role as a trusted broker and facilitator in the payments to include new players such as Operating Systems.”

Original article can be found here.

VIP credit cards flaunt steel; plastic is fine

2014-07-15T11:58:00.002-07:00

A stark black envelope for this credit card pitch has the words "By Limited Invitation" printed in silver on the back flap.

The trappings of swanky lifestyle dot the flyer that talks of VIP treatment at hotels and villas, free luxury gifts, access to VIP airport lounges and 25,000 bonus points when you spend $1,500 on eligible purchases within 90 days of opening the account.

The Visa Black Card, issued by Barclays, is made of stainless steel and has a $495 annual fee to match that luxury look. Plus you could spend $195 each year for each authorized user.

Just seeing a high-end credit card promotion hit area mailboxes should be a clue that we're no longer talking about everyone's Great Recession. Credit card issuers are making pitches in time for summer vacations, back-to-school sales and holiday spending.

During the first three months of 2014, about 992 million credit card offers were mailed to consumers, up about 7% from the same time last year, according to Mintel Group in Chicago.

We're seeing more than twice the number of card offers hitting mailboxes than we did five years ago during the meltdown. In the first three months of 2009, Mintel reported that only 456 million credit card offers were mailed to consumers.

Lately, mailings are pitching credit cards that offer travel-related rewards, and yes, some high-end annual fees that many consumers would have deemed absolutely nuts when times were crazy-tight.

"A $495 annual fee a couple of years ago would have screamed 'Don't take me,'" said John Ulzheimer, president of consumer education for CreditSesame.com in Atlanta.

For consumers who watch every penny, such a high annual fee still shouts "Don't take me."
But the Visa Black Card isn't the only premium card with a stratospheric annual fee.

The American Airlines Admirals Club card's annual fee varies with one's frequent flier status and can range from $400 to $500 a year for the first year of membership. The American Express Platinum Card has a $450 annual fee, too. The United Club Card from Chase has a $395 annual fee.

Ulzheimer said he has a Delta Reserve Credit Card from American Express that has a $450 annual fee. Perks include double miles on Delta purchases, the ability to earn 15,000 in bonus miles and 15,000 in Delta Medallion Qualification Miles if $30,000 is spent on the card during a calendar year.
An additional 15,000 in bonus and 15,000 in medallion miles are available if you spend another $30,000 in the same calendar year.

Medallion miles enable travelers to move up on the SkyMiles level, which can lead to seating upgrades and priority boarding.

The list has "rewards that are meaningful to me," Ulzheimer said. He travels two to three times a month and always flies on Delta, given that he lives in Atlanta. He benefits when he renews his card and receives a free companion certificate each year for his wife.

For most people, a high-cost card isn't worth it just for miles or rewards. One way to look at it: You'd need to spend $45,000 on a card — if that card had 1% cashback and a $450 annual fee — in order to make back the fee.

Business travelers value other perks, too, such as bonus points for buying airline tickets, a free checked bag and airport lounge access. But vanity aside, many of us don't need all these extras.
"How frequently does one really need to access a VIP lounge?" said Jelena Ewart, general manager of credit and banking for Nerdwallet.com.

Premium credit cards with very expensive annual fees of $400 or more can work for only a "very, very select group of people," said Bill Hardekopf, CEO of LowCards.com.

As As for the Visa Black Card, the $495 annual fee is a "big negative," according to Odysseas Papadimitriou, founder and CEO of the personal finance websites CardHub and WalletHub.
He'd prefer the Barclaycard Arrival Plus World Elite MasterCard or the Santander Sphere Credit Card.

Sources have said some good travel-rewards cards are Barclaycard Arrival Plus, Capital One Venture Rewards Visa Signature Card and BankAmericard Travel Rewards. The Barclaycard Arrival Plus World Elite MasterCard has an $89 annual fee that's waived the first year; the Capital One Venture Rewards card has a $59 annual fee that's waived the first year. The BankAmericard Travel Rewards card has no annual fee.

American Express has its new Amex EveryDay Credit Card, that allows holders to transfer points to 17 airline and hotel partners.

Ewart said the Amex EveryDay card could be a good card for a young couple or a family wanting to build travel rewards. She sees it as an "intro to miles" card with no annual fee.

Sure, a sleek black card might be as flattering as a little black dress. But if you really want to travel in style, study all of your options.

Original article can be found here.

Children aged eight can have their own Mastercard: Debit cards can be topped up by parents for their offspring to use

2014-07-14T13:07:00.001-07:00

Children as young as eight are being offered celebrity-endorsed Mastercards to use in shops, online or at cash machines.

The cards, created by British company Osper, can be topped up by parents with the child’s monthly allowance so they can spend it at will.

Banks already issue debit cards to anyone over the age of 11, but it is thought this is the first time younger children will be able to use them.

TV presenter Davina McCall is endorsing the prepaid debit card on her website, after it was launched last week.

Osper, which is backed by MasterCard, said it aimed to help children learn how to manage their finances at an early age.

But critics questioned whether the cards were simply grooming children into becoming ‘mini consumers’.

Parents can open an account for their child through the Osper app, prompting an orange chip-and-pin card to be sent under the child’s name.

They can then activate the account by making a lump sum transfer or setting up a regular direct debit from their own bank account.

Children can only spend what is already in the account, as there is no overdraft facility.

The app allows parents to review what has been spent, while children can log in to check their balance and request emergency transfers.

The card can also be locked via the app if it is lost or stolen, blocking all purchases.

The service is free for the first year and then costs £10 per year thereafter.

McCall said in a video: ‘There’s something about the app and the way it works and how simple it is that just feels safe.

‘To me, that’s really important as a mother. It’s teaching me to relax a bit when it comes to finances and my children.’

But one critic wrote on an online forum: ‘My under 12s find it very hard to grasp the value of cold hard cash. When their total stash after a birthday comes to £100, they can’t appreciate that it would take many hours’ work to earn that in a typical Saturday job.

‘I can’t think that making cash something invisible would improve things. It would be even less tangible to them.’

Another wrote: ‘Religion works on the principle of ‘get ‘em while they’re young’.

Consumerism is the new religion so I guess debit cards for children was inevitable.’

The Osper card follows another prepaid card aimed at children called goHenry, which works in a similar way and allows parents to set controls.

There are also a variety of other prepaid cards aimed at teenagers, such as the MeCard, also a Mastercard.

Many British banks require youngsters to be 11 years old to receive a debit card, with some setting a minimum age of 16.

In 2008, it emerged Lloyds was sending children as young as 11 Visa-enabled debit cards without the knowledge of their parents.

It was feared children may begin using them to buy cigarettes, drugs and X-rated videos over the internet.

But both Osper and goHenry have pre-programmed restrictions preventing youngsters from using their prepaid cards to buy adult items.

Original article can be found here.

Do Patent Filings from eBay and Western Union Pose a Threat to Bitcoin?

2014-07-12T17:05:00.002-07:00

In recent months, there has been no shortage of potentially alarming headlines detailing how mainstream financial and tech giants such as eBay, IBM and JPMorgan may be looking to enter or impact the bitcoin space with strategic patent filings.

The most recent company to enter these ranks was Colorado-based remittance giant Western Union, which received a patent on 1st April that reports have suggested would give the company a claim to a key aspect of the bitcoin industry – the exchange of alternative currencies.

Despite the sensational headlines, however, it has remained unclear as to what potential effect, if any, such a patent would have on the ability of bitcoin businesses to provide similar services or offerings.
The question remained, how worried should bitcoiners be about these high-profile patent filings?

Community concern

One patent analyst and bitcoin enthusiast believes the threat of such actions is not only real, but that it’s one that the bitcoin industry needs to actively defend against.

To this end, Reed Jessen, founder of the Cryptocurrency Defense Foundation (CDF), is seeking to protect the bitcoin space from such intrusion through the strategic filing of patents.

“Our goal will be to protect the fledgling cryptocurrencies of the world from the repressive pressures of the patent system and allow them to compete based on the merits of their use, not on government-granted monopolies,” said Jessen in the CDF’s launch statement.

The service would be offered royalty-free to companies that agree not to assert their patents against others in the industry.

More broadly, the CDF would seek to build a patent portfolio to promote and defend the community’s interests and business ambitions, especially given that its research suggests 65 patents related to cryptography have been filed by companies such as QUALCOMM and Visa.

With this in mind, CoinDesk asked Jessen to analyze three recent digital currency related patents – filed by eBay, Gemalto and Western Union – to illustrate their potential impact on the bitcoin space.
Though he notes his assessments represent his opinion and not any legal judgement or advice, Jessen provides a look at how the claims – both those pending and those approved – could impact digital currency businesses.

Western Union

In Jessen’s view, the Western Union patent does give the company exclusive rights to an exchange that allows users to trade digital currency for fiat currency, though the actual system to which Western Union is entitled these rights is far more narrow.

For example, the system protected by Western Union’s patent would provide users with a list of people looking to sell fiat for digital currency and allow these individuals to select the person with whom they would like to trade.

Western Union’s patent also notably calls for an “assessor” that would analyze the offer and score them based on their value. The assessor would then award both individuals proposed trade scores, and both parties would decide whether to execute the trade based on such information.

Jessen concluded that due to these specifications, any effect on the bitcoin space as a result of the patent is likely to be limited, explaining:

“This patent only grants Western Union the right to stop someone from using the ‘assessor’ functionality for 20 years, not the right to exclude people from using exchanges to trade money. If your exchange does not have an ‘assessor’, it does not apply to you.”

Western Union provided comment on its filing to CoinDesk, though the statement did not provide clarity as to its goal for the patent:

“Western Union generally does not comment on specific intellectual property assets. That said, we have, and will continue to explore opportunities that build on our experience and expertise in the various facets of the money transfer market.”

eBay

Unlike Western Union’s filing, which was recently granted, eBay’s patent for a “System and method for managing transactions in a digital marketplace” is currently pending approval. However, it has grabbed headlines due to eBay’s past statements about its active interest in the digital currency space.

This patent, filed in December 2011, describes a system that determines whether a customer is buying unique digital goods and makes adjustments to avoid this overlap.

According to Jessen, the process would work like this:

“If you are attempting to buy the album ‘Abbey Road’ by the Beatles on iTunes (or some other music service), but have previously purchased ‘Maxwell’s Silver Hammer’, this program will identify that you already own the song and instead sell you ‘Abbey Road’ minus ‘Maxwell’s Silver Hammer’ at a reduced costs.”

Bitcoin, however, could still be affected by the system, he said:

“This patent relates to cryptocurrencies only tangentially in that [it describes] doing this process with a privately issued currency like airline miles or bitcoin.”

Gemalto

Of the three patents, the implications of software developer Gemalto‘s pending patent application for a “Transaction method between two entities providing anonymity revocation for tree-based schemes without trusted party” may be perhaps the most related to digital currency.

Filed in April 2008, Jessen described the patent application as “very closely related to the concept of the block chain”. He noted it uses public key encryption, but adds additional anonymity features.
Overall, Jessen suggests the patent could have implications for alternate uses of the block chain, saying:

“They are proposing a cryptocurrency scheme without the need for access to the Internet.”

As with eBay’s filing, however, the patent has not been approve and may never be granted.

Original article can be found here.

MasterCard Patent Would Add Bitcoin to Global Shopping Cart

2014-07-11T15:03:00.000-07:00

Global financial services giant MasterCard has filed a patent that would seek to incorporate bitcoin into its design for a planned global online shopping cart.

Entitled ‘Payment Interchange for Use With Global Shopping Cart’, the filing was submitted by the New York company to the US Patent and Trademark Office (USPTO) in March 2013.

The patent application is part of a series of filings related to MasterCard’s effort to build a global online shopping cart catering to online shoppers.

This global shopping cart would be based on each store offering its own individual cart, thereby making it easier for consumers to dedicate carts to larger projects, such as weddings or home renovations.

A representative from MasterCard told CoinDesk:

“Every day, we look for ways to bring additional convenience to consumers when they shop. This application is just one example of that – exploring how to create flexibility in how a consumer would fund a shopping cart purchase.”

Still, MasterCard added that the patent doesn’t suggest any particular support for bitcoin:

“The application was filed to protect our intellectual property and does not indicate a commitment to one idea or concept.”

The patent, published on 19th June, has not yet been approved by the USPTO.

Non-traditional payments

The filing notes that a global shopping cart would require a payment interchange that supports a variety of payment methods.

As such, MasterCard includes bitcoin in the filing under the broader term of “non-traditional modes or sources of payment”, stating:

“The payment interchange of claim 1, wherein the one or more payment modes or sources comprise cloud payment schemes, digital wallets, point of sale (POS) and non-traditional modes or sources of payment.”

The patent later expands on the definition of barter payments, listing “virtual currency, bitcoin, social media credits, automated clearing house (ACH) and coupons”.

Support for bitcoin wallets

MasterCard also details how it will aim to support a broad range of payments through a “flexible API framework sufficient to support the payment of interchange”.

Under the claim, the API would also be able to interface with bitcoin as well as other digital wallets such as its own MasterPass, Google Wallet, PayPal and potentially those offered by bitcoin companies.

The filing includes bitcoin among a number of other offerings, reading:

“The API can also support an interface to accept non-traditional modes or sources of payment such as Amazon virtual currency, paying with rewards points, bitcoin, virtual card numbers and the like.”

Bitcoin’s patent battles

With the news of the MasterCard filing, the credit card issuer adds its name to a list of other traditional financial companies that have sought to claim patent protection for various digital currency uses, including Gemalto, Visa and Western Union.

However, while potentially worrying to observers in the bitcoin community, there remains disagreement regarding just what kind of threat, if any, digital currency companies would face from the patent filings.

Reed Jessen, of the Cryptocurrency Defense Foundation, for example, called the patent “the perfect example of MasterCard attempting to control the future of the bitcoin economy”.

Further, he told CoinDesk he believes that this could be just the start of a wave of similar announcements, saying:

“I suspect that nearly all future patents from MasterCard covering electronic money exchanges will identify bitcoin as a possible payment option. It costs them nothing to include the ‘bitcoin’ phrasing in their patent applications and may increase the scope of their claims to cover the cryptoeconomy. I think we will see increasing inclusion of bitcoin-related language in patent drafting in coming months and years. It’s the rational thing to do for traditional electronic transaction companies.”

Original article can be read here.

Medical Marijuana Legalized in New York

2014-07-10T01:33:00.002-07:00

Medical marijuana or cannabis has now been legalized in New York by Gov. Andrew Cuomo. Cuomo’s signature on Saturday ensured New York would officially became the 23rd state to legalize marijuana for seriously ill or injured patients. The new law will only initially allow the drug in non-smokeable forms, such as pills, oils, and vapors. The measure was the subject of intense debate and closed-door discussions between Cuomo and lawmakers that culminated at the close of the state’s annual legislative session in June 2014.

Cuomo and top state lawmakers gathered at the New York Academy of Medicine in Manhattan on Monday for the bill-signing ceremony, which came two days after he officially signed the medical marijuana legislation into law and nearly two weeks since the NYS Legislature passed the measure. Governor Cuomo signed the legislation known as the Compassionate Care Act, which allows doctors to prescribe marijuana in a non-smokable form to patients with serious ailments that are recognized by the state on a pre-defined but flexible list of conditions. By signing the measure into law, an 18-month deadline has been initiated for the New York Department of Health to organize its efforts and launch the program, which will allow state-certified doctors to prescribe cannabis to patients with ALS, cancer, epilepsy, as well as other serious diseases and conditions.

Under the new legislation by Cuomo that has legalized medical marijuana in New York, the state will award five contracts to private cannabis growers, who will each be permitted to open up to four dispensaries to distribute the drug to certified patients. Cuomo estimated it will take approximately nine months just to grow the marijuana for distribution.

After many years of political debate, the bill was ultimately passed by the State Assembly and Senate in June 2014. Cuomo stated the decade-long political limbo involved in developing and passing the measure was needed to allow for increased medical acceptance of marijuana, while rejecting worse case scenarios that state legislators said could have “good intent and bad results.”

The New York Senate approved the bill that has legalized medical marijuana in New York under Cuomo by a vote of wide margin support (49-10) after a prolonged and intense debate. One of the key points of contention involved several Republicans who raised concerns about whether the state can handle regulation of the program and questioning whether the Food and Drug Administration (FDA) should be called into act.

The legalization of medical marijuana has had “overwhelming support” in state polls, which has nearly 90 percent of New Yorkers supporting the measure. The Compassionate Care Act will provide pain relief to thousands of people suffering from a myriad of conditions, and is being hailed as one of the safest, most closely regulated medical marijuana programs in the country.

New York has now become the 23rd state, along with the District of Columbia, to allow use of medical marijuana in some form. Some of the other states that allow medical marijuana are Connecticut, Vermont, and New Jersey, each of which borders New York. Of the 23 states with medical marijuana laws, only one state–Minnesota–prohibits the smokeable drug.

The first medication is not expected to be available to patients for at least 18 months as state regulators, physicians, and potential distributors of the drug work to implement the new program. Patients would get prescriptions from physicians approved by the state to participate in the program. Some of the approved conditions include AIDS, Lou Gehrig’s disease (ALS), Parkinson’s Disease, multiple sclerosis, spinal cord injuries, epilepsy, neuropathy, and Huntington’s Disease.

Cuomo also stated the act included criminal penalties for those who attempt to defraud the system, as well as a “fail safe” mechanism granting the governor the authority to “suspend the program at any time on recommendation of either the State Police Superintendent or the Commissioner of Health if there is a risk to the public health or public safety.”

Under the new legislation by Cuomo that has legalized medical marijuana in New York, the law requires medical marijuana be either ingested or vaporized. The details of exactly how the drug will be administered will be determined by the state health department. Officials chose to restrict distribution of marijuana plant material in order to discourage non-medical use. Some advocates argue the law is too restrictive and said efforts will continue to prompt lawmakers to expand it. Advocates also argued the state should allow people with chronic pain conditions, mobility issues, and other types of illnesses to benefit from the program.

Original article can be found here.

Shortchanged: Why consumers are snubbing mobile payments

2014-07-08T12:20:00.001-07:00

Disruption is all very well, but it's risky to depend on people to change their behavior to support your business model without a corresponding major benefit to them.

It's interesting, therefore, to consider what is going on in the global payments space. With payments being made on mobile devices, many consider it an industry that is ripe for disruption.

If you think about successful disruptions, they didn't usually require people to massively change their consumption habits—or if they did, it was to get access to something they couldn't have or couldn't afford before. The iPod, for instance, allowed people to do what they'd been doing for decades—carry music around in portable form—only in a simpler, more convenient way. Using Internet searches as a lure to get people to be exposed to ads did change behavior, but it offered a major benefit: namely, the ability to quickly find bits of information that would have previously required an extremely cumbersome process.

Back in the '60s and '70s, most Americans paid their bills by check. Early credit cards, such as Diners Club and American Express, did exist, but it wasn't until 1966 that the two behemoths of the payments business—MasterCard and Visa—came on the scene. Before this, most credit cards were store and gas cards that could be used only where they were issued. This, obviously, was a nuisance.

What MasterCard and Visa made possible was the ability to use a card anywhere that cards were accepted. They also introduced the concept of revolving debt, which eliminated the need to actually have money in the bank to pay for things (but that's another story). Debit cards came along in the 1980s and were embraced by consumers wary of overspending. By the mid 2000s, electronic forms of payment had overtaken cash and checks by volume.

With the increasing popularity of credit cards has also come a whopping big bill. These are the interchange fees that the two dominant card associations charge the merchants who want to accept payments using the cards. It's something on the order of a $50 billion "tax" on purchases and averages 2 percent of a merchant's take on a particular purchase. It's a big problem for merchants, who hate the fees. The problem is that in many cases the price for goods doesn't change depending on the form of payment, so the end consumer doesn't really notice.

Nonetheless, a whole fleet of would-be disruptors are attempting to dislodge the incumbents. The technology that much of the "smart money" is betting on is payment via a mobile phone. Everybody and their brother seem to be going after the mobile payments space. PayPal is, for sure, but also companies such as Braintree (oddly, acquired by eBay, the parent company of both), Square (whose swipe technology was copied in short order by PayPal), Swipe Payments, Stripe Payments, LevelUp and, of course, Google Wallet. For the most part, the entry into mobile has been disappointing as consumers and merchants fail to adopt in large numbers.

Square is reportedly losing money on its most high-profile deal, a partnership with Starbucks, and instead of an IPO that many thought might be coming for the company, Square recently raised another round of debt financing.

The mobile wallet concept has struggled, mainly because there doesn't seem to be a compelling difference, experience-wise, for consumers or a major benefit to merchants.

It isn't for want of trying. Google Wallet has been among the notable stumbles in the mobile payments "revolution." Google hoped to offset its expenses for the free-to-use service by offering ads. But here's the irony: Google reportedly spent $300 million on developing the app, but because it has to pay such high fees to the credit card companies that it works with, it loses money on most transactions, according to a Bloomberg BusinessWeek article from last June. In May 2013, the head of Google Wallet and former eBay executive, Osama Bedier, left the company.

"With the increasing reach of cybercrime and the risk that sensitive information can be released every time we use a piece of plastic or place an order over the Internet, the biggest threat to the payments industry may well not be another payments provider. It may, instead, be the relative safety of a most traditional form of payment: cash." -RIta Gunther McGrath, professor at Columbia Business School

Can we expect the established players to be disrupted anytime soon?

There is a model lurking just beyond view, where mobile payments are not only widely accepted but positively embraced. It's a model that allows individuals to exchange money via their mobile phones, with the payment and collection functions being handled by their mobile operators. There isn't a bank involved.

Mobile payment providers such as Vodafone's M-Pesa and Airtel's Mr. Money are wildly popular with large numbers of people who do need to make payments but don't have access to a bank account. Borrowing insights from their African experiences, firms such as Vodafone are looking to take the mobile wallet concept to places where large numbers of unbanked consumers live, such as Eastern Europe.

Will the mobile wallet eventually offer a compelling experience that would cause consumers with bank accounts to leave their cards behind? Will alternative ways be found to create the synergies between buyers, card providers and merchants that will unseat the incumbents? Will a firm like PayPal eventually become so ubiquitous and popular that it offers a real challenge? Whatever the scenario, it's likely with all this activity that disruption will happen at some point. What we don't know yet is what form it will take.

However, with the increasing reach of cybercrime and the risk that sensitive information can be released every time we use a piece of plastic or place an order over the Internet, the biggest threat to the payments industry may well not be another payments provider. It may, instead, be the relative safety of a most traditional form of payment: cash.

Original article can be read here.

AmEx’s Battle With the Feds Could Mean Lower Costs for Credit-Card Users

2014-07-07T14:52:00.002-07:00

American Express is facing off against the Justice Department today in a court battle that could shape the future of the credit card industry.
The suit, which concerns the fees merchants pay every time a customers uses plastic, is the culmination of a four-year war between federal authorities and the New York-based credit card giant. Its outcome won’t just affect the way American Express does business, but will likely impact consumers at the checkout counter as well.
Currently at stake is AmEx’s “take it or leave it” policy. Every time a customer pays with a credit card, the merchant must pay a processing fee, generally between 2% and 3% of the total purchase. American Express — which, according to the government, charges the highest merchant fees of any card network — forbids its merchant partners from offering customers incentives to use cards that are cheaper for the vender to accept.

The Department of Justice argues that the policy is anti-competitive because AmEx—which accounts for 26% of all money transacted through credit cards in the U.S.—is too important for most businesses to drop. It also claims customers, even those who use a different card, end up paying for AmEx’s higher rates because merchants compensate by increasing prices.
American Express, of course, disagrees. The company says it is too small to have an anti-competitive effect on the market. Court documents show that there were 53.6 million AmEx cards in circulation in 2013, compared to 178 million MasterCards and 254 million U.S.-issued Visa cards. It also argues these higher fees are necessary to provide merchants with services like fraud reduction programs, financing and marketing, and data analytics.

This is the latest battle in a four-year-old war over credit-card company business practices. In 2010, the Justice Department filed a lawsuit against MasterCard, Visa, and American Express for various merchant restrictions that the department found ultimately result in consumers paying more for their purchases. Visa and MasterCard quickly settled, later agreeing to a record-high $5.7 billion antitrust settlement with U.S. merchants over alleged fee fixing. But AmEx held out. In 2013, it reached a separate peace with merchants, allowing them for the first time to add a surcharge to AmEx purchases as long as they added the same charge to all credit-card transactions — the “take it or leave it” policy. But the settlement failed to satisfy the Justice Department, which now seeks to force AmEx into the same deal it cut with Visa and MasterCard.

For AmEx, the stakes are high. Merchant fees make up 65% of the company’s revenues, and it depends on high processing rates to offer its customers benefits like discounts and frequent-flyer miles. A loss would allow merchants to offer customers incentives for using a competitor’s card, and could cut into AmeEx’s profits by pushing the company to lower its merchant fees.

For consumers, a D.O.J. victory could potentially mean lower prices. Many businesses have historically priced in credit-card processing fees by raising the cost of their goods by 1% to 3%. Past settlements have allowed merchants to pass on these fees directly to credit card users, theoretically sparing cash and debit customers from having to share in the cost of accepting credit cards. However, many have questioned whether merchants are actually passing their savings onto consumers.
If American Express loses, merchants would be allowed to offer additional discounts to credit-card users with cards that charge lower fees. This won’t pacify those who say customers are paying the same prices as before plus new credit-card processing fees, but it does mean certain credit-card users might pay less than others.

Don’t expect AmEx to give up. The company may “need those rules in place to remain competitive with Visa and MasterCard,” Darren Bush, an antitrust law expert at University of Houston Law Center, told Bloomberg. “They’re willing to put more on the line.”

Original article can be found here.

Benfits of Offshore Banking

2014-07-06T15:30:00.000-07:00

Banking on your Assets

Questions we often receive from clients are often how and why we need to protect ourselves by opening an offshore account. There are obvious tax incentives to establishing several offshore entities as well as a great means of legal protection. We''ve compiled a short list of what should be kept in mind when think about going offshore.

Legal Protection

This is a very important reason for opening an offshore account or IBC. By internationalizing your infrastructure, on the chance that one of your clients or competitors opts to sue, you will be safe. Today we have individuals filing law suits with the hope of making a lot of money at your expense, with little or no reason at times. By having an IBC and offshore bank account, you are making it very difficult, if not impossible, for an individual (or even government in some cases) to pursue you beyond their jurisdiction. Also, even if they do manage to get past the legal barriers of their jurisdiction, with the aid of a nominee director, they'll never be able to figure out where your money and company are located.

Mobile Money

One reason to open an offshore bank account is that it is a handy, neutral base to keep your money if you are traveling the world from country to country. You can leave your money there gathering untaxed interest rather than move it around endlessly as you move, with the inevitable loss of interest and the possibility that you fall into a tax net. With secure internet messaging you can still operate your offshore account from however remote a destination your work takes you to.

Multi-Currency

Another reason to choose an offshore bank is that you are likely to find services which are attuned to the internationally-minded. You will find a range of currency facilities, allowing you to save – and often to borrow – in currencies other than sterling.

These of course are just a few reason why one should have an offshore account. It its very important that one looks out for their own interest in a world filled with sharks. To put it simply, you're either a shark, or shark bait. Make sure you've taken the steps to protect your ass(ets).

A Canadian Banking Crisis? 'Early Warning Indicators' Flashing, But Don't Panic

2014-07-06T13:56:00.000-07:00

When it comes to risky banking, Canada and the U.S. may be trading places.

The Bank for International Settlements (BIS) has identified Canada as one of a handful of countries whose economies are flashing "early warning indicators" of a banking crisis.

A new report estimates that credit has been growing about 5.6 per cent faster per year in Canada than it should be, given historical norms.

This is a problem because "credit extended during a phase of rapid credit growth could conceal problem loans, leading to financial instability when the boom turns to bust," the BIS says.

The U.S., which experienced a severe banking crisis in 2008-09, is now at the other end. Credit there has been growing 12.3 per cent slower than it could be, by the BIS’ estimates. None of the criteria used in the report indicated any risk of another banking crisis in the U.S.

The BIS is often called “the central bank of central banks,” for its role in coordinating activities between them. Since the financial crisis of 2008-09, it has been playing a more prominent role in preventing banking collapses. Its Financial Stability Board is chaired by former Bank of Canada and current Bank of England governor Mark Carney.

Growth in Canadians' household debt slowed slightly in the latest quarter, but it still remains near all-time highs above 163 per cent of household income. Debt as a percentage of income has doubled since around 1990.

The report estimates that a 2.5 percentage point increase in interest rates would cause enough hardship to Canadians paying off loans as to place the country at a moderate risk of a banking crisis.
Under that scenario, Canadians would be paying twice as much of total income (4.9 per cent) to cover interest on debt as Americans (2.6 per cent).

The BIS report is not specifically about Canada; it says many parts of the world are facing a heightened risk of a banking crisis at the moment, and Canada is not among the worst.
But almost all parts of the world that are at risk are seeing parallels with Canada’s situation -- years of very low interest rates that have led to large increases in debt and possible asset price bubbles, including in real estate.

In these countries, “there is a need to put more emphasis on curbing those booms and building strength to cope with a possible bust,” the report says.

While Canada’s debt is growing 5.6 per cent faster than it should be, by the BIS’ estimates, other countries’ numbers are far more alarming: China’s debt has been growing 23.6 per cent faster than it should be, while in Switzerland the number is 13.1 per cent.

Any number above 10 per cent suggests a banking crisis is likely within three years, the BIS report says.

Story continues below

The BIS report places part of the the blame for this on the shoulders of central banks around the world, which it suggests have kept interest rates too low for too long.

It also suggests that, with many stock markets hitting record highs this year despite ongoing economic sluggishness, financial markets may be becoming detached from economic realities.
“Despite the euphoria in financial markets, investment remains weak,” the report notes.

Canada’s lenders have often argued that lending here is more responsible than it was in the U.S. in the lead-up to the financial crisis. They argue estimates showing Canadian debt at record highs don’t fully reflect reality because they don’t measure the quality of the debt.

Some economists have criticized the calculation the BIS used to determine that debt in Canada has been growing too quickly. Many say the credit-to-GDP gap, as it’s known, is too inaccurate to be meaningful.

Original article can be found here.

Impending Financial Crisis? What is Happening in Bulgaria? Citizens Running to the Bank to Withdraw Funds.

2014-07-06T13:15:00.000-07:00

When the IMF visited Bulgaria’s capital Sofia in early June its verdict on the banking sector was that “the system is stable and liquid”. By the end of the month Bulgaria faced a financial crisis, thanks to runs on First Investment Bank (FIB) and Corporate Commercial Bank (CCB), the country’s third and fourth-largest lenders respectively.

It all started with a public spat between Tsvetan Vassilev, CCB’s largest shareholder, and Delyan Peevski, a controversial businessman. Mr Peevski suddenly removed large sums from CCB, which triggered a run on the bank. After more than 20% of the bank’s deposits had been withdrawn, Bulgaria’s central bank put CCB under supervision and suspended its operations on June 20th.
A week later, FIB was the target of another, seemingly unrelated, bank run. On June 27th rattled depositors withdrew around 800m lev ($550m) in a matter of hours. Bulgaria’s authorities appealed for calm and arrested several people suspected of instigating the crisis. Rosen Plevneliev, the president, said on June 29th that Bulgarians’ savings were safe and that there were “no reasons for panic”. On June 30th the European Commission, the EU’s executive body, approved a request by the Bulgarian government to extend an emergency credit-line of 3.3 billion lev to local banks.
FIB customers panicked after they received anonymous e-mails, social-media posts and mobile-phone messages fanning fears about the safety of their deposits. Bulgarians have bitter memories of a banking crisis in 1996-97 when 14 banks went under in a little over a year. One of the e-mails said that other banks “are in very bad condition and even a small percentage of withdrawals would push these institutions into bankruptcy.”

To make matters worse, Bulgaria also faces a political crisis: on June 29th, the president announced that he will dissolve parliament on August 6th and call elections for October 5th. The Socialist-led government of Plamen Oresharski has been the target of daily street protests against corruption since it took office in May 2013. “There is no banking crisis, but a crisis of confidence and a criminal attack,” said Mr Plevneliev.

Analysts reckon that the banking system should be stable thanks to its ample liquidity and one of the highest capital-adequacy ratios in Europe. But the bank runs reveal how little Bulgarians trust their institutions.

Original article can be found here.

Brazilian Scammers Score $3.75 billion in Malware Bank Fraud

2014-07-06T12:44:00.000-07:00

Brazilian criminal gangs have netted $3.75 billion in a micro-transaction fraud that compromises transactions made using the popular Boleto payment method.

RSA Research has discovered a Boleto malware or 'Bolware' fraud ring that may have compromised 495,753 Boleto transactions over a two-year period. The malware uses Man-in-the Browser attack vectors to intercept and modify Boleto information so that payments are redirected to a fraudster's account.

The Boleto system - in which consumers use merchant-generated invoices for B2B and retail purchases - is regulated by Banco Central do Brasil and has become the second most popular payment method (behind credit cards) in Brazil, accounting for an estimated 18% of all spending in the country during 2012.

Boletos can be generated both offline (printed copies) and mailed to customers, or online (by online stores for example) for electronic payments. Their popularity has risen because of the convenience for consumers who don't require a personal bank account to make payments using Boletos. Importantly, for the scammers, payments made via this method are not subject to chargebacks and can only be reverted by bank transfer.

To date, RSA Research has discovered the total value of all Boletos that were harvested by the Bolware C&C server amount to a total of US$3.75 billion. While the scammers behind this operation may have had the potential to cash out these modified Boletos, it is not known exactly whether all the funds were successfully redirected to fraudster-controlled bank accounts.

Up to 34 banks are believed to have lost money to the operation. RSA has turned over its research to both US and Brazilian law enforcement and has been in direct contact with the banks in question.

Original article can be found here.

National payment system for Russia to be ready 'in 18 months' — Central Bank Governor

2014-07-06T12:24:00.000-07:00

Start-up troubles plaguing progress towards integrating national and international payment systems for Russia should be settled over the next 18 months, Central Bank governor Elvira Nabiullina told President Vladimir Putin on Monday.

Negotiations continue with Visa and MasterCard on their current operations in Russia as moves advance to establish a system to clear domestic card transactions, Nabiullina said.

Processing and clearance centres are being developed to issue and administer full-service payment cards governed by Russian technology and operating inside its borders.

Developments follow finance sector tension over Russian insistance that Visa and MasterCard make security deposits against their continued operations in Russia. Suggestions that the global majors might withdraw from Russia has brought new thinking about lowering the size of any deposits or a postponement of their introduction.

Twin-track systems are now being developed in response to recent sanctions imposed by US authorities on Russian banks. Seeking to maintain Visa and MasterCard operations in Russia, compromise has delivered a deal in which the global systems will run in tandem with Russia's intended new process.

Russian payment card transactions internally will be processed by the national system while international transactions will be administered, as now, by Visa and MasterCard.

“Amendments have been introduced in legislation to create a fully-fledged national payment system. Citizens accustomed to using plastic cards will feel protected from any unfriendly actions which may be taken from somewhere outside,” bank chief Nabiullina said.

Original article can be found here.

Bill Gives Visa, MasterCard Reprieve on $2.9 Billion Security Deposit

2014-07-06T01:16:00.002-07:00

International payment systems Visa and MasterCard could get a reprieve until Oct. 31 on a security deposit of up to $2.9 billion that the Russian government has demanded they pay if they are to continue operating in Russia.

According to a draft bill by the Finance Ministry published Wednesday on the government's legislation portal, payment systems operating in Russia can be freed from the obligation to pay a security deposit until Nov. 1 this year — on one condition. To receive the exemption, the companies will need to stop providing information about money transfers carried out in Russia to clearing centers abroad.

The Federation Council on Wednesday approved a bill giving the government the right to set the details for Visa and MasterCard's payment of the security deposit, Vedomosti reported.

Visa and MasterCard, who together process about 90 percent of payments in Russia, fell victim to international tensions in March after they cut services to two Russian banks in order to comply with U.S. sanctions imposed following Russia's annexation of Crimea.

President Vladimir Putin soon after called for the creation of a national payment system to cut Russia's dependence on companies subject to the political policies of foreign governments. Signed into law in early May, the legislation also requires international payment systems to submit a massive security deposit to Russia's Central Bank in order to continue operating in Russia.

The deposit, estimated by Morgan Stanley at $2.9 billion, is five times more than Visa and MasterCard's joint annual revenues in Russia — a country that accounts for less than 4 percent of the companies' global revenues — and analysts suggested that the two companies might be better off simply leaving the market altogether. Under the law, the payment systems would also have to build processing centers in Russia and pay fines of up to 10 percent of the funds held by the Central Bank in the event of a unilateral denial of services.

The State Duma last week began discussing amendments to soften the law, and First Deputy Prime Minister Igor Shuvalov said that the deposit payments will be "substantially reduced."

MasterCard meanwhile said that it was looking for a Russian partner to process payments within the country, which could help the company sidestep the law. Visa, however, said that the requirement to pay the massive security deposit is "unworkable," Reuters reported.

The original article can be found here.

Visa and MasterCard given Russian boost

2014-07-05T14:35:00.002-07:00

Visa and MasterCard may escape having to pay billions of dollars in security deposits to carry on operating in Russia after the country's central bank rowed back on its initial demands.

In May Russia introduced a new law requiring the US card giants to deposit collateral with the central bank equivalent to the value of two days of processing volumes - estimated at $2.9 billion.

However, according to local reports, Russia has now had a change of heart, deciding that no deposits will be needed if the firms comply with another rule that requires them to process all transactions within Russian borders by the end of October.

MasterCard has already moved to address this, inviting local firms to bid for a contract to process its domestic payments. So far, more than 20 companies have registered their interest. According to Russia Today, Visa is looking to build its own processing centre in Russia.

The new requirements are part of a wider political battle between Moscow and Washington. In March, the card firms stopped processing transactions for several Russian banks because of US sanctions designed to put pressure on Vladimir Putin after he moved to annex the region of Crimea.

The Russian president responded with the new law, which will also see the creation of a national payments system within the next 18 months that will compete with the American-owned giants, which currently process around 90% of all card transactions in the country.

Original article can be found here.