May 9th, 2014 by Elma Jane
Facebook is apparently ready to become a person-to-person (P2P) money transfer network. The clear decision to launch a money transfer service in the region can be seen as a test bed for Facebook’s larger ambitions of becoming a payments hub for its 1 billion user base. Facebook was only weeks away from gaining regulatory approval in Ireland for its remittance platform FT quoted unnamed sources. Facebook’s P2P platform will be geared to facilitating migrant remittances, with the goal of expanding its payment presence in emerging markets such as India. Facebook makes the bulk of its revenue from advertising, but 10 percent of its profits reportedly come from in-game payments for online and mobile games, such as Zynga’s popular FarmVille.
From WhatsApp to what’s next
Facebook’s February 2014 acquisition of mobile messaging service WhatsApp for $19 billion clarified the social network’s strategy. The WhatsApp acquisition and the expected P2P network launch as part of the first phase of Facebook’s deeper immersion into payments.
Tech giants face up to payments
When comparing the payment strategies of tech giants Google Inc., Apple Inc. and Facebook, the latter two competitors as having bigger potential upsides than Google. Facebook and Apple (via iTunes) already have established financial relationships with millions of users who have attached funding mechanisms – debit and credit cards – to their social media accounts. As primarily a search engine, Google is playing catch up to persuade its users to set up Google Wallet accounts.
In May 2013, Google launched its own P2P network by integrating Google Wallet with Gmail accounts, so that wallet users can facilitate money transfers via email. More recently, reports have surfaced indicating Google plans to extend Google Wallet to its wearable technology solution Google Glass. But the success of such ventures rests on users’ confidence with Google as a financial service provider.
Facebook as having a brighter financial services future than Apple. Apple’s reach is limited to consumers who have iPhones and iPads, whereas Facebook is not tied to any branded mobile devices, it is a very ubiquitous offering. It could apply to anybody with any type of phone or tablet.
Eventually, tech companies like Facebook will need to partner with payment businesses in order to expand into the merchant-centric brick-and-mortar world. The mobile POS solution provider, a business unit of global POS terminal manufacturer Ingenico SA, would be an ideal partner for Facebook. If they extend what they do from P2P payments to more of a wallet purchasing capability for their users, then the next step could very easily be an extension of that into servicing the merchant side.
Posted in Financial Services, Mobile Payments, Smartphone Tagged with: Apple Inc.Facebook, consumers, credit cards, debit, device, financial service, financial service provider, Gmail accounts, Google Glass, Google Inc., Google Wallet accounts, ingenico, iPads, iPhones, iTunes, merchant-centric brick-and-mortar, migrant remittances, mobile, Mobile Devices, mobile games, mobile messaging service, mobile pos, mobile POS solution, mobile POS solution provider, money transfer, money transfer network, money transfer service, network, online, p2p, P2P network, P2P payments, P2P platform, payment businesses, payments, payments hub, phone, POS terminal, remittance, remittance platform, search engine, service provider, social media, social media accounts, social networks, tablet, wearable technology
March 31st, 2014 by Elma Jane
Money remittance companies can achieve real benefits by embracing a mobile-first strategy. In fact, when it comes to financial institutions, I can definitely say this is a perfect match! Specially for us who are transferring money to our home country for our loved ones.
Here are some factors why.
It decentralizes transaction points, making it inherently safer for customers.
People carrying cash in and out of remittance centers are prime targets for criminals. In some countries, it’s not rare to have people mugged just outside of banks and remittance centers.
By allowing people to transact wherever they are, mobile remittance decentralizes the transaction points, making it harder for thieves to find unsuspecting prey.
It has the potential to reduce bottlenecks in branches.
Mobile remittance can reduce the number of people who would visit a remittance branch to complete transactions. It alleviates traffic inside the branch, reducing lines and wait times and making visits by other customers more hassle-free.
Makes remittances more accessible.
The reduction in costs of running a remittance operation means these companies can actually lower the costs of sending money for the end-customer. This makes remittances more accessible to the areas that most need it, such as developing nations and remote rural areas. Lower costs also make it more attractive for people to use formal remittance solutions to send over money. For the poor, every cent counts, so lower costs can make the added security only a financial institution can provide more attractive for them.
Mobile makes money transfers faster and more convenient.
While today’s contactless mobile payments solutions are still not as simple as handing over a wad of cash or swiping a card for over-the-counter payments, in the world of money remittances, mobile can actually smooth out friction points.
Through mobile, senders can send funds wherever they are. They won’t have to drive or commute to a local remittance center, they don’t have to fill out forms and they don’t have to fall in line to complete the transaction. It’s all seamless and convenient.
For the recipients, mobile remittance can save them the trouble of having to go to a remittance center, fill out a form and fall in line to receive their money. All they’ll need is a simple SMS code that they can use to withdraw funds from a nearby ATM through cardless transactions.
Money can stay within the remittance company’s network longer.
One of the side effects of successful mobile money campaigns is that users are also using these mobile money solutions as storage mediums for their money. They don’t withdraw the funds all in one go. Instead, they only take out what they need and withdraw funds later.
Having the ability to withdraw small sums at a time has multiple benefits. For one, carrying less cash makes it safer for the customer. For the remittance company, the money stays in its network longer.
Opens up doors for financial inclusion
This is particularly true for developing countries where a vast majority of the population are un-banked or under-banked. The costs of building and maintaining a physical presence in poor countries has made traditional financial services difficult to access for their citizens. Even in poor countries, a large number of the population has access to a mobile device, giving them an opportunity to receive financial services.
Opens up other opportunities for remittance companies
Having a mobile service can help remittance companies expand to other services. They can add bill payments into the app, for example, allowing their customers to pay for utility bills using funds sent to them through their mobile devices.
Paves the way forward to progress
Mobile use is so widespread that it is no longer wise for remittance companies to turn a blind eye to it. If they won’t embrace it, you can bet their competitors will. Whoever gains traction in the mobile channel will have a huge advantage in the market. It’s now a case of move now or be left behind.
Reduces costs for remittance companies
Mobile remittance can cut costs for remittance companies by reducing the need for physical branches and personnel to accommodate walk-in clients. Mobile can scale without incurring significant costs making a mobile investment much better in the long-term for remittance companies that want to expand their operations.
Posted in Best Practices for Merchants, Financial Services, Mobile Payments, Small Business Improvement, Smartphone Tagged with: atm, bill payments, cardless transactions, complete the transaction, contactless mobile payments, financial services, mobile channel, mobile device, mobile money, mobile remittance, mobile service, mobile-first, money remittance, network, payments, sms, swiping a card, transaction, transferring money
December 30th, 2013 by Elma Jane
MasterCard and Green Dot today announced an expanded relationship that allows all U.S. cardholders with MasterCard rePower -enabled prepaid cards to reload their cards via the Walmart Rapid Reload service.
Walmart Rapid Reload utilizes the Green Dot Network to provide cardholders with a fast and easy way to load funds directly to their cards by swiping their cards at any register at participating Walmart stores (not available in VT or WY). Cardholders can add funds directly to their prepaid account by using cash or a pre-printed payroll or government check. Cashier-added funds will be available for use by MasterCard rePower-enabled cardholders within minutes.
The MasterCard rePower network is open to any MasterCard issuer of reloadable prepaid card programs. Portfolios such as the Univision MasterCard Prepaid Card will be able to offer their cardholders the new cash reload option through Walmart Rapid Reload.
Prepaid products provide consumers with choices in how they manage and spend their money. In order to maximize the potential of prepaid, cardholders need to be able to conveniently and securely reload funds. Our expanded partnership with Green Dot now allows our cardholders to load funds to their prepaid cards at more than 4,000 Walmart stores that offer Walmart’s Rapid Reload service, said MasterCard Group Executive of U.S. Market Development Craig Vosburg.
Posted in Credit card Processing, Electronic Payments, Gift & Loyalty Card Processing, Visa MasterCard American Express Tagged with: cardholders, green dot, MasterCard, network, pre-printed, prepaid cards, rapid reload, register, reloadable, repower, securely, Swiping, univision, walmart
December 9th, 2013 by Elma Jane
Credit Cards accepted on the American Express network will be offered by U.S. Bank. in the fall of 2014.
U.S. Bank becomes another major bank to form a partnership with American Express. As previously reported in August, Wells Fargo began issuing new credit cards accepted on the American Express network on a limited basis this year, with a full scale launch planned for the first half of 2014.
Pam Joseph, Vice Chairman of U.S. Bank, said in a statement, We believe that the American Express network provides a combination of benefits and services that many of our customers want.
The cards will be available to bank customers in the 3,088 branches of U.S. Bank, as well as online and by phone. U.S. Bank customers will also have a choice of obtaining a Visa or MasterCard.
Posted in Credit card Processing, Electronic Payments, Financial Services, Visa MasterCard American Express Tagged with: accepted, American Express, credit cards, MasterCard, network, online, U.S. Bank, visa, Wells Fargo
October 21st, 2013 by Elma Jane
Good time for merchants to start noting how their provider is handling card company fee changes as well as any future rate and fee changes, especially if your contract will expire in 2014.
October 2013 Rate and Fee Increase Notices
Visa, MasterCard, and Discover Credit card companies generally make rate and fee changes in the April and October time frame, although they have also made changes at other times of the year. Inevitably, some banks and merchant account providers seem to take advantage of the card company changes by increasing or adding their own mark-ups and by pointing too much of the blame at the card companies for the increases. This time around isn’t much different than others and merchants have sent me some rate and fee increase notices that go well beyond any card company changes.
In understanding how your provider is handling the latest card company changes, keep in mind that there are two important changes for October 2013:
Discover introduced a .25 cent increase to all transactions.
MasterCard introduced a .25 cent increase to certain transactions.
Below are two examples of recent notices on the October changes. Understanding the above .25 cent changes, how would you rate these providers?
Notice 1: 0.02 Percent + $0.02 Increase
“MasterCard, Visa and Discover typically evaluate the Interchange rates and fees twice per year most often in April and October. Based on recent changes as well as analysis from other network providers and vendors, the following changes to your merchant account are being implemented and will be reflected in your merchant statements for transactions processed beginning in October:
Interchange Plus Merchants: Percentage charged in excess of Interchange will increase by 2/100ths of a percent; and
Transactions Fees for all authorized transactions will increase by $0.02/transaction.”
Tiered Pricing Merchants: Qualified Rate for Visa, MasterCard and Discover will increase 2/100th of a percent;
Notice 2: 0.40 Percent Increase
“Effective October 1, 2013, the discount rates charged for your Visa, MasterCard, and Discover (as applicable) credit card and non-PIN (signature) debit card transactions will increase by 0.400%. We have increased these charges based on a variety of factors, including recent Card Organization changes and our own pricing considerations. This change will appear beginning with your October month-end statement you will receive in November.”
Your Statements Now go back to the statements you received in August and September or any notices you received via mail and read the notice your provider posted for these changes. Did the provider announce the actual change or did it state something quite differently? If it’s the latter, make sure it adjusts pricing accordingly. Also, make sure you monitor your rates, fees, and notices going forward to determine the best long-term course of action. If the provider needs you to extend your contract to correct its overcharges, then there are probably bigger pricing issues and more assertive action required by you to investigate your overall processing cost.
EMV Capable Terminals
To reduce fraud in the U.S., the card companies are introducing cards that have a chip as well as the current magnetic strip. Chip cards are prevalent outside the U.S. and EMV — Europay, MasterCard, and Visa — established the technical standards for processing them.
Brick-and-mortar merchants should understand about EMV.
Brick-and-mortar merchants should have equipment capable of processing EMV chip card transactions by October 2015 as certain fraud liability will shift from the bank that issued the card to the merchant. The equipment may be a terminal or a chip card reader attached to the terminal or POS system.
Certain credit card transactions will require a PIN number instead of a signature similar to PIN debit transactions today. Also, like the current PIN debit devices, each chip reader will need to be encrypted and the encryption code is processor specific. Therefore, if a merchant has an encrypted device, changing processors may be more costly as the encryption cannot simply be downloaded over the phone or Internet as is done with terminal reprogramming now. Instead, the encrypted device will need to go back to the provider for encryption or swapped with an encrypted device or a new encrypted device may be needed.
“EMV capable” can mean very little. In fact, if you have purchased or leased an “EMV capable” terminal it may simply mean that it has the slot or contactless connection to place the chip card and the terminal may have the capability to eventually be encrypted to actually process chip cards. However, the cost and time required to do so could be prohibited.
However, merchants should be planning to have equipment capable of processing chip card by October 2015. In fact, they should be planning to have the equipment capable of processing chip cards well ahead of the October 2015 — perhaps as early as late 2014, to ensure receiving it in time.
If a merchant’s existing terminal fails or is no longer supported, the merchant should inquire about EMV terminals as a replacement. However, ask if it comes fully encrypted and capable of actually processing an EMV transaction or if it will need the encryption later. Right now, the answer is likely that the terminal will need encryption later. If so, the merchant should obtain the time frame, process, and cost for enabling the terminal to actually process chip cards. This should be in writing. Remember, new terminals cost the provider around $150 to $250 and the encryption may be an extra $25 to $50.
Make sure you are comfortable with your provider and have negotiated the best processing cost before changing to encrypted EMV equipment.
Merchants do not need EMV terminals today and very few providers actually have terminals that can process an EMV chip card transaction right now.
Posted in Credit card Processing, Electronic Payments, EMV EuroPay MasterCard Visa, Visa MasterCard American Express Tagged with: authorized, banks, chip card, contactless, cost, credit-card, debit, devices, Discover, EMV, encrypted, fee, increase, interchange, MasterCard, merchant account providers, network, overcharges, percent, percentage, PIN, POS, pricing, processor, prohibited, rate, rate and fee, statements, terminal, transactions, visa
October 1st, 2013 by Elma Jane
A payment card transaction involves some or all the following participants:
Acquirers or Payment Processors that market card acceptance services to merchants, obtain transaction authorization, and clear and settle card transactions for the merchant.
Consumers or Cardholders that use payment cards to purchase goods and services. Issuers that market and issue payment cards to consumers and set the terms and conditions for their use; Merchants that accept payment cards for the purchase of goods and services; Network Operator that oversees the system and coordinates the transmission of information and the transfer of funds between issuers and acquirers.
Since the network operators revenue depends on the value of transactions that flow through its network, it tries to ensure the widest possible acceptance among consumers and merchants. In order to increase use and acceptance, the networks use marketing techniques to gain brand recognition, create products that encourage consumer usage and merchant acceptance, and set fees and impose rules on system participants including:
Interchange Fees they are set by the network but are generally paid by acquirers to issuers and are usually reflected in the merchant service fee paid by merchants to acquirers. Interchange fees can be calculated either as a flat fee per transaction, as a percentage of the transaction value, or a combination of both.
Membership Requirements MasterCard and Visa require issuers and acquirers to be regulated financial institutions or be sponsored by a regulated financial institution. Interac also requires issuers to be regulated financial institutions.
Network Switch Fees these fees are charged to acquirers and/or issuers, and are set and collected by the network. They can be calculated either as a flat fee per transaction or as a percentage of the transaction value.
Merchant Acceptance Rule Includes:
No Discrimination Rules which prohibit merchants from encouraging consumers to consider (or steering consumers toward) lower cost payment instruments.
No Surcharge Rules which prevent merchants from charging consumers a fee for the use of a credit card rather than some other credit card or method of payment;
Honour-All-Cards Rules which require merchants that accept any of the networks credit cards to accept all of that networks credit cards (core, high spend and premium high spend in the case of MasterCard), regardless of the applicable interchange fee. The networks have also expanded this rule to include debit cards (i.e. if a merchant accepts one debitcard, they must accept all of that networks debit cards).
With four-party card networks, such as Visa and MasterCard, the card networks seek to maximize the transactions following through them by attacting more card issuers. The networks do this by offering the prospect of interchange income to issuers, thus creating an incentive to increase interchange as much as the market (i.e. the parties paying the interchange fees) will bear.
The ability to use credit cards and debit cards to purchase goods and services rests largely on a behind-the-scenes architecture of procedures, rules and technology that govern how funds and information are transferred between people and institutions in the process of settling accounts, i.e., of ensuring that merchants that sell goods and services get paid by the people who purchase them.
Posted in Best Practices for Merchants, Credit card Processing, Electronic Payments Tagged with: accept, account, acquirer, authorization, cardholder, credit card, debit, fees, interchange, issuer, merchant service, merchants, network, payment, processor, Rates, transaction
September 30th, 2013 by Elma Jane
Facebook this week began testing a new feature dubbed “Autofill with Facebook” that aims to simplify mobile purchases by filling in customers’ credit card information for them, thus eliminating the need to type it in each time. This “Autofill with Facebook gives people the option to use their payment information already stored on Facebook to populate the payment form when they make a purchase in a mobile app,” Facebook spokesperson told the E-Commerce Times. “The app then processes and completes the payment.” The feature “is designed to make it easier and faster for people to make a purchase in a mobile app by simply pre-populating your payment information.”During the test period, which began Monday evening, the feature will show up only to Facebook users who have already provided credit card information to the social network — in other words, those who have made in-game purchases or bought gifts for friends.
Facebook has partnered with PayPal, Braintree and Stripe as financial partners on the service, which is initially available only on the e-commerce iOS apps JackThreads and Mosaic.
Ironing Out the Wrinkles Autofill with Facebook isn’t a move to compete with PayPal and credit card companies, but to complement payment services by adding a layer for convenience, much the way Facebook, Google and Amazon have created a single login that works across a network of websites.
“Facebook is not interested in being a payments company,” an analyst, told the E-Commerce Times. “Instead, it is aiming to be the entity that irons out bumps in the payment process — something it is well-positioned to do. “With Autofill, Facebook will act as the lubricant that makes the commerce experience more seamless, providing a number of benefits to all stakeholders.”
Partners in the deal ensure that Facebook will succeed in Autofill with Facebook, it doesn’t care about payments, it cares about reaping the benefits that come from making the payment experience better.”
‘The Potential to Be Lucrative’ There could be significant financial benefits as well. “This approach has the potential to be lucrative for Facebook in that it will help plug the mobile conversion gap,” McKee suggested. “If Facebook can prove to its partner merchants that an ad on its site led to a purchase, the validity of its platform can easily be proven. Ideally, this will help convince other companies to advertise with Facebook as well.”
Taking it a step farther, Facebook will also gain transaction data, which McKee believes has considerable value. “Facebook can leverage transaction data with what it already knows about us for precision ad targeting. This will increase the relevance and placement of ads on Facebook.”
The Security Factor While many mobile customers will appreciate the Autofill function, security issues still lurk in the back of every consumer’s mind. Yet while privacy concerns have been an ongoing issue for Facebook, it has a good track record where security is concerned. “Facebook has been relatively incident-free when it comes to security breaches.” “However, this is more a problem of consumer perception. Will consumers feel comfortable storing their payment credentials with a social media platform?
“Facebook is already approaching ‘big brother’ status, and this takes it one step further.” “To succeed, Facebook must provide visibility into what it plans to do with transaction data.”
‘It’s a No-Brainer’ The convenience factor, meanwhile, could be a compelling one for consumers. “It’s no-brainer useful to mobile users…who wants to enter their credit card on a mobile phone more than once?” “It could be more secure than mobile payment alternatives.” If Facebook gets past its hurdles, it will also succeed in building strengths in areas where it has been lacking to date.
“Right now Facebook isn’t super strong at the conversion side of e-commerce.” “Autofill will give them a lot of data about purchases, which might help them remedy that.”
‘Strategic Smarts and Ambition’ As for those benefits to Facebook, there are potentially many. One example,”Autofill admits them to the online payments world.”
“This is another example of the strategic smarts and ambition of Zuck.” “One gets the sense that he wants to be a major competitor for everything online.”
Posted in Credit card Processing, Credit Card Security, Digital Wallet Privacy, e-commerce & m-commerce, Electronic Payments, Mobile Payments Tagged with: Amazon, commerce, credit card, e-commerce, Facebook, google, media, mobile, mobile phone, network, payment, payment information, payment services, PayPal, platform, processes, secure, social, transaction
