All About Offshore and High Risk Merchant Accounts

UK Payments Council Board Says Good Bye to Cheques

noreply@blogger.com (Chris) — Tue, 02 Feb 2010 08:19:00 +0000

The UK Payments Council Board has targeted the 31st October 2018 as the date to close central cheque clearing. According to the council, cheque use is in long-term, terminal decline. Cheque use has been in decline since 1990, and has fallen by 40% over the last five years.

The Payments Council was faced with the choice of either managing the decline to ensure that personal and business cheque users have alternatives easily available to them; or to stand back and let the decline take its course. It has decided that its active involvement can help prevent confusion and deliver cheque alternatives that are acceptable to cheque users. The Payments Council wants to ensure that consumers and businesses are not left high and dry when the closure of the clearing occurs.

Over the next nine years the Payments Council plans to promote and explain alternatives. Alternatives include payments between individuals, and payments to sole traders, small businesses, clubs, charities and schools. The goal is to ensure that by 2018 there is no scenario where customers, individuals or businesses, still need to use a cheque.

The decision was made after 18 months of extensive research to understand where and when customers still use cheques, and where alternatives need to be developed. The payments council will take the lead on providing solutions which suit all customers currently using cheques/

Bank Payment Processing Fraud Worries World-Wide Buyers

noreply@blogger.com (Chris) — Mon, 18 Jan 2010 06:08:00 +0000

According to recent research from the Unisys bi-annual Security Index, consumers world-wide are worried about bank card fraud and identity theft The 2009 British Crime Survey found that credit card fraud cost the UK £610million last year, an 43% increase over 2 years ago. Between 25-50% of adults globally are concerned that banks and government agencies are unable to keep their personal information safe.

Customers are increasing open to using biometrics, such as fingerprint and eye (retina) scans for security rather than passwords and PINs. In the UK, 95% of those surveyed reported they are willing to provide fingerprint data; 90% would provide an eye scan; and 82% would agree to a facial scan.

The National Identity Fraud Prevention 2008 survey reported that ID fraud is one of the fastest growing crimes in Europe. In the U.S., the number of identity fraud victims increased 22 percent in 2008 to 9.9 million adults, according to Javelin Research. (www.javelinstrategy.com )

UK Payment Processing Security 2010

noreply@blogger.com (Chris) — Wed, 13 Jan 2010 05:21:00 +0000

According to a report by Thales 2010 payment processing fraud will continue to rear its ugly face in 2010. . Even though the fraudulent transactions statistically declined in 2009, the increasing use of electronic payments mean fraudulent transactions will still be a big issue in the UK.

The migration to EMV in the UK was helpful in reducing fraud. According to the UK Payments Administration , losses on high street transactions decreased by 67% from £218.8m in 2004 to £73m in 2007. EMV is required across the eurozone as part of the single euro payments area (SEPA) Cards Framework.

For card not present fraud, UK banks have championed two-factor authentication technologies. Despite this move, online banking fraud actually rose by 55% in the first half of 2009. This may be because not all banks have implemented the technology as of yet. Still, even with two factor authentication systems, PC users are vulnerable to phishing, pharming, and a variety of malware threats that infect their computer systems.

Ecommerce security has been beefing up. The card brands have heavily been promoting initiatives to encourage consumers to register to protect online transactions. The card brands allow financial institutions to confirm a cardholder’s identity to the online retailer, thus making transactions more secure against fraudsters. Extending two-factor authentication to the e-commerce environment is seen as another way further protect against fraud.

Payment Processing Interchange Status Quo in the US

noreply@blogger.com (Chris) — Tue, 05 Jan 2010 05:00:00 +0000

The US government was all talk but no action when it came to making any meaningful change in US interchange fees. The US Government Accountability Office (GAO) , the investigative arm of Congress, issued a report about interchange agreeing that it was expensive but endorsing no action plan for changing the status quo.

The GAO agreed that interchange fees increase merchants’ costs and that consumers end up absorbing the costs because merchants. Merchant organizations say that payment processing fees for card costs are among the top business operating expenses. Economists at the Federal Reserve estimated that interchange fees for cards increased from $20 billion in 2002 to between $35 billion and 45 billion in 2007.

The GAO said the complexity of interchange fees continues to get worse. In 1991, there were four standard domestic credit card interchange fee rate categories. By 2009, there were 60-243 different rate categories. The reason for increased interchange categories is that card networks attract bank card issuers to their brands by letting them to generate more transaction revenue though more interchange categories Interchange on rewards cards have risen 24% since 2005.

5 Security Breaches to Watch for in 2010

noreply@blogger.com (Chris) — Mon, 21 Dec 2009 07:54:00 +0000

Expert predictions from Lavasoft about upcoming danger to internet users in the coming new year. Top threats are:

1. Attacks on Windows 7. Microsoft’s new operating system is going to be a strong target for malware installations, with cybercriminals avidly seeking ways to penetrate the security of the system.

2. Increased attacks on application programs. Most PC users are less than diligent about updating application programs with new security features from their vendors. As a result, many program applications are vulnerable to attack.

3. Fake security products, also known as rogue or scareware, appear to be legitimate products for protecting computer operations. But, watch out. These trickster programs actually invade computer systems and create havoc for end-users.

4. Off-brand operating systems. As users become increasingly disillusioned with Microsoft, many are seeking new options for operating systems. That is not to say that some of the alternatives are not good solutions. But, cybercriminals may be able to hack into these systems fairly easily.

5. Mobile operating systems. Smartphones are being used for everything from banking transactions to making payments online. Mobile phone compromised security is a big issue now and cybercriminals will continue to seek ways to exploit security holes.

Indictment Reveals Sophisticated Cybercriminal Network

noreply@blogger.com (Chris) — Fri, 04 Dec 2009 05:17:00 +0000

Pursuant to a security breach last year against RBS WorldPay, a sophisticated group of cybercriminals from Russia and Eastern Europe has been indicted. The indictment revealed information about the how organized gangs of hackers can target vulnerable payment processors.
The indicted criminals used stolen data to create fake prepaid payroll cards. The cards were used to withdraw $9.5 million in cash within a 12 hour period. The cash was taken from 2100 ATM machines located in 280 cities around the world.
The criminals hacked into the RBS WorldPay system to steal encrypted data and PIN codes. Using reverse engineering, the hackers were able to decrypt the information. The system was breached a second time when the hackers return to modify data, raise the amount of funds availed on the cards, and increase the amount that could be withdrawn from an ATM machine.
The information was distributed to a group of people in different cities who carried out the withdrawals as instructed. The people who made the withdrawals were allowed to keep 30-50% of the money, with the rest being sent to the top-level organization. After the withdrawals were made, the cybercriminals sent commands to the RBS WorldPay system to destroy the data as a way to hide the security breach.

Facebook Games Get Slammed for Scamming Players

noreply@blogger.com (Chris) — Wed, 25 Nov 2009 07:38:00 +0000

There’s a good article in the recent addition of Time Magazine discussing the accusations against games with popular social network Facebook. The accusations are that unscrupulous business practices by the game publishers such as Zynga have been scamming players.

The games promote special offers that give players in-game currency in return for completing a survey. Part of the survey asks the player to enter a cell phone number and create password that is then used to bill the player’s mobile phone bill without the player’s knowledge. Many phone companies refuse to refund the charge since it was submitted to them by a third party, not the player.

Many of the games are geared to children or young teenagers that lack the necessary cognitive development to make informed decisions. Facebook says they are monitoring all applications closely and suspend companies that are found to be violation of their policies. Still, the sheer volume of applications on Facebook makes it unlikely that scams can be completely contained.

Privacy Policies Easy Way to Increase Sales

noreply@blogger.com (Chris) — Mon, 16 Nov 2009 05:37:00 +0000

With ecommerce showing declines for the first time since the beginning of the internet, online businesses must do everything possible to get a sale from every visitor to the site. Smart retailers will realize that inspiring trust in buyers helps avoid shopping cart abandonment and increases sales.
Shopping cart abandonment happens when the buyer has put items in the cart, proceeds to checkout, then decides not to buy and abandons the items in the cart without purchasing. One of the main reasons consumers abandon shopping carts is the fear of releasing personal information. According to Marketing Sherpa, 49% of consumers abandoned shopping carts out of fear of identity theft, while 53% did so out of fear of sharing personal information online.
.According to a survey commissioned by TRUSTe , 56% of small business websites have no privacy policy. Of those companies that do have a privacy policy, 35% said they cut-and-pasted their privacy policy from another company’s web site.
Posting a privacy policy goes a long way in reassuring consumers that personal information is protected and safe. Without a privacy policy, the buyer has to wonder how secure the site really is. Putting policy on privacy on a website is basic to successful selling and line. It makes so much common sense that it’s astounding companies are not doing it. It seems these companies would prefer to throw away sales rather than take the small extra step to reassure their customers with a statement of privacy protection.

Word-of-Mouth Advertising Powerful for Online Games

noreply@blogger.com (Chris) — Mon, 09 Nov 2009 04:44:00 +0000

According to a study by market researcher NPD Group called “Gaming Device Profiles”, advertising games on social networks, or in magazines was much less effective than word-of-mouth referrals from friends and relatives. Of course, this is not surprising. Consumers chose products and services based on reviews those they trust rather than from ads. But, it is particularly important for the young demographic of game players. Young people are keenly tuned in to peer group opinions and are easily influenced by them. More than 75% of pre-teenagers play video games. Households with children ages 12 and under account for 45% of all video game industry revenues.According to the study, 41% of video gamers relied on word-of-mouth to find out about games. More than three in 10 learned about video games by playing them in person at a friend or relative’s home.Users of the popular game consoles are 56% male and 44% female. The largest age group of players is 2-to-12-year-olds, who make up 24% of the total. Still a large percentage of players are older with one-fifth of players in the 25 to 34 age group and 17% are 35-to-44 years old.

Virtual Good Revenues Explosive Growth

noreply@blogger.com (Chris) — Tue, 03 Nov 2009 05:54:00 +0000

A recently released study by Piper Jaffray confirms what everyone already knows. The sales of virtual goods are on a steep upward curve which will continue for the next several years.
For evidence of the potential of virtual good marketing and money, look no further than Britney Spears launch of her branded virtual goods on Facebook. Projections are that she will sell millions of dollars of virtual goods.

The Piper Jaffray study is called “Pay to Play.” The study predicts triple digital growth of US virtual goods sales. US revenues alone will total $621 million in 2009, a 134 percent increase over the 2008 revenue figure. Rapid growth will continue at a double-digit pace through 2013 when the virtual goods marketplace should reach nearly $2.5 billion in the US.
Of course, this pales with China’s consumption of virtual goods. Chinese social network Tencent sold nearly $1 billion in virtual goods in 2008. Worldwide, the virtual goods sales will top $6 billion by 2013.

Secret Service Nabs Gonzolez

noreply@blogger.com (Chris) — Wed, 28 Oct 2009 06:26:00 +0000

In one of the largest payment processor security breaches ever, 130 million credit and debit card numbers were stolen from in the Heartland Payment Systems. The US Secret Service has indicted the ringleader of the breach, Albert Gonzalez.

The Secret Service uncovered Gozolas as he was following a trail from other data breaches. Gonzalez was linked to a payment card security data breach that occurred several years earlier at retailer TJX Companies.

It took the Secret Service years of investigation to track down Gonzalez. It used informants and pain-staking searches on sites-called carder web sites where cybercriminals post information on stolen cards. It’s difficult to infiltrate the sites because the users are of sites are leery of dealing with anyone new.

Shutting down the carder site seems easy but is actually quite difficult. A lot of sites are proxies through multiple places. For example, the site may appear to be hosted in Europe but is actually in China. And, even if the site is taken down, it’s back up within a few hours. Getting to the top of the organizations that run the sites takes the same type of exhaustive investigative work as penetrating any highly organized crime syndicate.

While the Secret Service is making some headway, as shown by the Gonzalez indictment, the problem is continuing to get worse. Technology is constantly changing and the cybercriminals have the financial wherewithal to stay far ahead of law enforcement.

Global Payments Processing Posts Quarterly Results

noreply@blogger.com (Chris) — Tue, 20 Oct 2009 05:57:00 +0000

Payment processor Global Payments posted net income of $57.8 million for the fiscal first quarter ended Aug. 31, up 0.5% from $57.5 million during the same period a year ago. Revenue totaled of $441.3 million, up 8.7% from $405.8 million.

The processor's North America Merchant Services segment posted revenues of $303.9 million, up 6% from $286.6 million during the fiscal first quarter last year. US merchant-services revenue was $222.8 million, up 11% from $200.7 million last year. Canadian operations were $81.2 million, a decrease of 5.5% from $85.9 million.

Global Payments' acquired HSBC's UK business in June 2008 which helped a 28.7% revenue increase for the International Merchant Services segment to $105.9 million from $82.3 million last year. Within the segment, European operations posted revenue of $80.5 million, up 30.7% from $61.6 million last year. Asia-Pacific revenue grew 23.2%, to $25.5 million from $20.7 million.

Shopping Carts Abandoned by 87% of Consumers

noreply@blogger.com (Chris) — Thu, 15 Oct 2009 07:42:00 +0000

Market research firm Amaze just released an excellent report on shopping cart abandonment. A full copy of the report is available on the Amaze website.

Interesting findings include that 87% of consumers abandon online shopping baskets. But, 75% of those abandoning carts said they would return at a later date to complete the purchase.

The study identified three types of online shoppers. The groups were labeled vague, cost conscious and window shoppers.

Vague shoppers were 42% of online shoppers. The vague label is applied to these shoppers because they seek more information from other people before completing the purchase.

Cost conscious shoppers were 42% of consumers. These shoppers said the reasons they didn’t buy were often attributed to high shipping costs or finding the item cheaper at another site.

Window shoppers accounted for 16% of people who abandoned cards. These consumers had no intention to purchase and were simply trying to get a thrill from shopping without purchasing anything.

Shopping basket abandonment was more common for books, movies and music, but less likely around more expensive items including clothing, jewelry, electrical and computing products.

Payment Processing Breach Expensive

noreply@blogger.com (Chris) — Wed, 14 Oct 2009 08:01:00 +0000

US payment processor Heartland Payment System experienced a payment processing breach which is considered the biggest involving payment card data. The breach compromised more than 100 million credit and debit cards. Heartland disclosed the breach in January 2009.

The company faced 16 separate class-action complaints have been consolidated into one suit which has been filed in US District Court. The complaints were lodged by brought by financial institutions and allege that Heartland was in its duty to protect card holder data. The lawsuit seeks compensation from Heartland for the costs that the financial institutions say they have had to bear in notifying customers about the breach and in reissuing new cards

Heartland has spent $13 million on breach-related costs, and analysts expect that the incident will cost the company millions more in the coming years. In addition to financial penalties, the payment processor has suffered from negative publicity in the marketplace and loss of trust by many merchants.

Online Video Soars

noreply@blogger.com (Chris) — Mon, 05 Oct 2009 08:12:00 +0000

How can video sharing sites monetize content? Mobile payments are the fastest and easiest way. There’s lots of free content. But, consumers have consistently demonstrated the willingness to pay for specialized video content.

Pew Internet and American Life Project released a new report on US online video viewing behaviors. Below are some key points that show the tidal wave of growth.

· 62% of U.S. adult Internet users watch videos on YouTube and other video-sharing web sites, up from 33% in late 2006. Online video viewing is almost universal among younger online users:

· Among Internet users 18 to 29 years old, 89% watch videos on video-sharing sites, up from 72% in 2008.

· Among Internet users 30 to 49 years old, 67% view content on video-sharing sites, up from 58% in 2008. mong Internet users 50 to 64 years old, 41% view content on video-sharing sites, up from 34% in 2008.

· Among Internet uses 65 and older, 27% view content on video-sharing sites, up from 19% in 2008.

· Among people who access the Internet with wireless devices, 71% visit video-sharing sites, compared to 38% of people who don’t access the web with wireless devices.

Noncash Payments Grow to $250 Billion

noreply@blogger.com (Chris) — Tue, 29 Sep 2009 05:54:00 +0000

The World Payments Report was released by Capgemini, RBS and Efma. According to the report, the growth non-cash payments continued in 2008. In 2007, non-cash payments increased 8.6% globally in 2007 to 250 billion transactions.

Much of the increase in non-cash payments is the result of increased use of credit and debit cards. The use of cards grew 14.5% in 2007 and 11.2% in 2008. Not surprisingly, the US and Eurozone, account for 61% of card transactions.

Global Transaction Services (GTS) is considered to be a stable and profitable source of income for financial institutions. GTS can have cost/income ratios as low as 50%. And GTS generates recurring, predictable revenues. Successful GTS required secure technology and strong international banking networks to drive network efficiencies.

The World Payments Report 2009 is available for download at this URL. Registration is required but there is no charge for the report.

Asia Leads the World in Spending on Virtual Goods

noreply@blogger.com (Chris) — Tue, 22 Sep 2009 05:22:00 +0000

Asians spend an estimated $5 billion a year on virtual goods. This accounts for over 80% of the current world-wide sales of virtual goods.

Of the $5 billion, about 80% of sales the sales are from online game. In Asia, online game playing is popular among adults as well as younger consumers and there is a huge portion of the population that is committed online games players.

Within social networks and virtual worlds, status consciousness is rampant. Therefore, Asians dress up avatars in the latest styles and each new outfit is a virtual item that produces revenues.

Most Asian social networking sites to be country specific but they have very active user bases. Qzone had 228 million active user accounts for the second quarter of 2009. In South Korea, Cyworld has 23 million visitors and month.

Asia has some innovative virtual business models as well. For instance, Cyworld rents background skins of popular South Korean baseball players for limited periods, driving repeat sales. Such rentals drive repeat sales and tap into continually changing trends.

Bank Risk from Merchant Chargebacks

noreply@blogger.com (Chris) — Thu, 17 Sep 2009 12:05:00 +0000

Merchants frequently don’t understand what the big deal is about chargebacks. After all, the bank is making money from the processing receipts flowing through the bank. So why should chargebacks a little higher than normal matter?

Consider the bank’s point of view about chargebacks. The acquiring bank relies on the credit worthiness of a merchant. Merchant chargebacks become a credit risk to the bank for when a merchant has engaged in fraud, declares bankruptcy or is unable to cover financial losses from chargebacks for other reasons.

Banks have often been forced to cover large chargeback losses. Chargeback losses from a single or group of merchants can soar to hundreds of thousands of dollars per day resulting in losses of millions of dollars to a bank.

The bank’s contingent liability spans several months of the merchant’s sales volume because of the cardholder’s rights to dispute the charge and the chargeback. Depleted earnings and loss of capital can cause a bank to fail.

Additionally, the bank is liable for fines to the card card companies for excessive chargebacks. A bank can lose its acquiring certification and no longer be able to offer merchant account services.

SEPA Slow but Steady

noreply@blogger.com (Chris) — Fri, 28 Aug 2009 10:46:00 +0000

The single euro payments area (SEPA) created a great deal of press. But, the number of cross-border transactions remains low and it could be years before the benefits of SEPA are fully realized and all European domestic payments are converted to SEPA.

The European Payments Council) is continuing to push the scheme forward because, ultimately, SEPA is a positive step towards truly opening up commerce across Europe.

Complying with SEPA is expensive for banks, although long-term cost savings justify the expense. The main reason SEPA has been a slow process only 2% of current payments traffic are cross-border. Therefore, there’s not much incentive or market demand for banks to move quickly. Even though the EU is a single economic region, each country within the eurozone is entrenched in it it’s own domestic payment system.

There is not much support for SEPA at a country level so banks corporations, consumers and banks are in no hurry for changes to take place. Each country has it’s own system in place which is working fine. For instance the French still write a lot of checks, whilst Germans prefer cash and Finland few consumers that use direct debits. .

Still there is no doubt that SEPA fundamental changes to the dynamics of the payments market will eventually take hold. The costs of running and maintaining separate payments systems can no longer be justified. Centralized payment systems that serve multiple regions, currencies and languages brings economies of scale and will sooner or later, the dreams of SEPA will be truly a reality across Europe.

AmEx Payment Processing Volumes Decline

noreply@blogger.com (Chris) — Mon, 24 Aug 2009 15:23:00 +0000

The slump in the US economy continues to negatively impact payment processing volumes. AmEx reported that second quarter volumes dropped 15% to $104.8 billion in the second quarter, from $123.5 billion in second quarter of 2008.

AmEx cards are favored for travel and entertainment, particularly for businesses. Cut backs in corporate travel accounts and drop in consumer spending caused average spending per card during the second quarter was $2,861, a 13% decrease from $3,293 of the year before. International card transactions fell 19% to $46.6 billion. .

Revenue from payment processing 17%. The average merchant discount rate was 2.55.

Cardholder base also dropped 7% the second quarter to 49.8 million from 53.5 million in the year-earlier quarter. International cardholder base increased 33.9 million, up from 36.6 million a year earlier. AmEx canceled approximately 2.7 million inactive cards, primarily in the U.S., to reduce exposure to credit risk.

The net chargeoff rate in AmEx’s credit card portfolio rose to 10% of managed receivables in the second quarter, from 8.5% at the end of the first quarter. The increase in chargeoffs reflects lower average cardholder receivables and loans, offset by higher writeoffs and past due loans.

Report from Reuters available at (http://www.reuters.com/article/businessNews/idUSTRE56M6HG20090723?feedType=RSS&feedName=businessNews )

EU Payment Council May Warn Agains Magnetic Stripe Cards

noreply@blogger.com (Chris) — Mon, 10 Aug 2009 09:12:00 +0000

By 2011, Americans travelling in the EU could have problems getting money from ATM machines using a bank card with magnetic strips. While the rest of the world has been moving towards chip and pin technology for years, US card issuers have held firm to magnetic stripe cards. As a result, Americans abroad may find it difficult to use US bank issued credit cards in Europe. .

The European Payments Council will decide by 2011 whether to advise its members not to issue or accept payment cards with magnetic stripes. The Council does not have enforcement power over its member banks but its advisories do carry a lot of bit of weight in banking circles.

EMV technology has certainly not eliminated fraud. In fact, a case could be made that fraud is as prevalent as ever before. The number of shops accepting the cards has increased significantly. Fraudsters simply have become more innovative in discovering methods of stealing PIN codes. They then create and use counterfeit cards at ATMs in countries not equipped to handle the more-secure chip technology, such as the United States and Canada

Online Games Reap Big Profits in China

noreply@blogger.com (Chris) — Wed, 01 Jul 2009 13:37:00 +0000

The online game market in China increased 8.3% during the first quarter of 2009 compared to the fourth quarter of 2008. First quarter revenues soared to CNY5.514 billion. Market research firm Analysys International reports the, the market scale growth during the first three months of 2009 is due to the increase in online game players.

Chinese online game companies Shanda , Tencent and NetEase led the market by revenues. Shanda was in first place with revenue of CNY1.08 billion and 19.6% market share. Tenmcent was second with revenues of CNY910 million and 16.5% share. NetEase came in third with revenues of CNY710 million and 12.9% market share.

In fifth place was The 9 . The9 revenues decreased 6% from the previous quarter, pushing down its ranking from its previous fourth place. Taking over fouth place was Changyou with revenues of CNY420 million. Changyou is a subsidiary of Suku

In 2008, total revenues for China’s game industry was CNY54 million, accourding to the Game Software Department of the China Software Industry Association Chinese-made animation games represent about a 70% share of the Chinese game market.

The best payment options for online game publishers hoping to reap profits from the Chinese market are mobile payments and Chinese debit cards. Credit cards are not widely used in China.

Chinese Ecommerce Payment Processing

noreply@blogger.com (Chris) — Mon, 29 Jun 2009 08:07:00 +0000

Most Chinese shoppers use a Chinese debit cards when shopping online. Credit cards, used primarily by non-Chinese citizens, make up only about 5% of online purchases. Low cost digital entertainment and purchases of virtual goods are often paid for by mobile phone.

Chinese debit cards are similar to cash payments. Online, Chinese debit cards function as a push payment whereby merchants are paid directly from the consumer’s bank account. Therefore, once payment has been authorized, the consumer cannot repudiate the payment unless proof of fraud can be demonstrated.

Prepaid cards are used often as a payment option. Prepaid mobile phone charge cards are particular popular. Close to 500 million Chinese have cell phones. Prepaid card mobile payment is hugely popular for purchasing digital content and low-ticket digital goods and services.

Recurring billing models are not common in China. Rather, merchants email customers notifying them that payment is due. The customer then uses a push payment through their bank to remit payment.

Chinese banks do not assist Chinese customers with payment disputes. Even if a credit card is used for payment, the banks have no chargeback provisions and there is no recourse for chargebacks on the part of the consumer. However, chargeback rights are available to buyers whose are not Chinese and who have cards not issued by Chinese banks.

If your business has presence in China, you must transact, settle and receive funds in Yuan (CNY). If you do not have a presence in China, you can only accept and receive payment in a currency other than CNY.

Pre-Paid Payroll Cards Fall Flat in the EU

noreply@blogger.com (Chris) — Tue, 23 Jun 2009 05:28:00 +0000

Pre-paid cards issued by banks (“open loop cards”) have experienced some success in the US markets. But, as US margins are getting squeezed, pre-paid card programs are looking to expand to international markets. Is that a good idea?
According to research from Mercator Advisory Group card programs will find the global market place difficult to successfully penetrate. Pre-paid card programs should not make the assumption that the rest of the world has the same opportunities as the US market.
The research points out that different legal and regulatory environments, business models, industry infrastructures, market readiness and product and market segmentation create part of the problem. Programs that have had some success in the US with particular market segments will find those markets cannot be replicated globally.
For example, the most profitable open-loop pre-pad card programs in the US are for payroll and government entitlement programs. In these applications, cards are reloaded on a regular basis, assuring continuing usage which generates associated fees. Cards are targeted to those who do not have direct deposit accounts or the “unbanked”, which constitute large numbers of people in the the US.
But in Europe, the unbanked make up a much samller part of the population. More people have direct deposit accounts at banks, along with debit cards associated with the account. Therefore, a large enough market to make pre-paid cards profitable doesn’t exist.

Mobile Carriers Face Powerful Competitors

noreply@blogger.com (Chris) — Tue, 16 Jun 2009 14:16:00 +0000

According to CTIA, one trillion text messages were sent in the U.S. in 2008, triple the number sent in 2007. In Australia, 6.9 billion text messages were sent by Telstra Telstra users alone during financial year 07-08, a 42.2 percent increase from the year before. The same dramatic growth in text messaging is occurring throughout the world.

Needless to say, SMS is a big money maker for mobile carriers. But, mobile carriers face increasing competition for the hearts and fingertips of text message users.

According to Liz Tay of IT News IT News the following are some competitors that are nipping at the heals of mobile carriers:

Skype Skype users incur on data access charges to send and receive messages from 400 million Skype users. The company free application already resides on the iPhone, Blackberry, and WindowsMobile.
Talki Any Java-enabled phone with an Internet connection can use Talki. Messages between Talki users are free. Text or picture messages to non-Talki users anywhere in the world cost five Euro cents
Meebo is used by 40 million people. As an ad-funded system, it is free to users