Thursday, July 31, 2003

Mobile phone becomes scanning / payment device

Ron Onrust pointed me to this article about an invention by Japanese firm Mediastick. The idea is that one uses the camera of the mobile phone to scan/photograph the barcode of a product of service that the consumer desires. By sending the photo of the barcode to the designated phone-number of Mediastick, the order is placed and payment will be effected by means of an agreed payment mechanism (credit card for example).

The system will be tested as of September this year with a selected group of NTT Docomo customers.

Wednesday, July 30, 2003

Dutch retailers aim for off-line debit with EMV

MKBnet reports on an article in FoodMagazine (n. 4) in which Henk Kok, director of Raad Nederlandse Detailhandel (representative organization of Dutch retailers) suggests that off-line debit (pre-authorized debit) would allow for substantial savings at the point of sale.

Dutch readers should note that the MKBNet web-article is somewhat misleading as it incorrectly suggests that the point of view of retailers and of the Dutch Society Council for Payments (Maatschappelijk Overleg Betalingsverkeer) is that off-line EMV should be implemented in five years time.

Tuesday, July 29, 2003

Questions in parliament on direct debit procedures

Repeatedly questions keep coming up about the direct debit procedures in the Netherlands and their applications in the on-line world. See this reply by the Minister of Finance (questions by MP Kant).

The issue has popped up repeatedly at this log. Most interesting is the fact that some of the answers of the Minister of Finance are not fully adequate. Asked how long the period is within which an illegitimate direct debit can be undone, the Minister replies one year. This is incorrect. If anyone succeeds in getting money out of your account without the existence of a prior legal agreement, we call this either a non-obligatory payment or robbery. Anyone facilitating such a transaction (bank / merchant) is for at least five years responsible/liable as an accomplice. Such an organization should thus undo the unlawful direct debit or prove that a prior legal agreement exists.

Replies such as the one of today do not help MP's or the public understand the issue properly. Hopefully, If I find the time, I'll try to provide an overview of this topic one of these days. Because there is also a competition element in this debate (some bankers are allowed usage of direct debit procedures that are denied to Internet merchants). paid content and increasing usage

Emerce reportsthat the number of Financial Times online paying users has increased from 16.000 last year to 57.000 now. This has neatly balanced the decrease in on-line advertising revenue. The numbers for the off-line Financial Times are less encouraging (see the full press release).

Monday, July 28, 2003

Fortis Rotterdam victim of skimming at ATM

De Automatiseringsgids reports that according to an article in the Rotterdams Dagblad, two weeks ago, criminals have successfully targeted a new Fortis ATM machine in Rotterdam (Coolsingel) to obtain magstripe information and execute false transaction in foreign countries. At this moment, the website of Fortis is still silent about the event.

The telco-sector as an example for banks...?

Quite often, the telecommunications sector is taken as an example for discussions on open payment networks and interchange and transport fees for bank/authorization messages. Right now, the Dutch Telco authority (OPTA) has issued a ruling on fees. It is applicable to KPN, the monopoly provider of network to end-customers. But KPN today announced that it will fight this ruling with all legal and political means. It labeled the economic model used by the OPTA to determine reasonable fees: "the Utopia model'.

In the Dutch payment arena, we are almost ready for a similar discussion. One year ago the Dutch Competition Authority issued a consultation paper on pin-authorisation network services as part of a process to determine:

- if the pin-authorisation network should be opened up (open access and access conditions),

- what fees would be applicable (the preliminary NMa-findings are that current fees are too high).

Although the outcome of both the telco- and bank discussion may be unclear, it is quite obvious that open access and reasonable fees are becoming the norm. Providers might actually consider a form of dual accounting; one for business reasons and one for the discussion with regulators (the Utopia models...).

The end of user-id / password ... ?

The use of user-id / password as the sole security mechanism has some disadvantages:

- the huge number of user-id/password combinations to be remembered,

- the possibility of keylogging at public Internet sites where one remotely accesses personal applications (webmail etc.).

This last risk is highlighted in a trial in New York City (see this article):

For more than a year, unbeknownst to people who used Internet terminals at Kinko's stores in New York, Juju Jiang was recording what they typed, paying particular attention to their passwords.

Jiang had secretly installed, in at least 14 Kinko's stores, software that logs individual keystrokes. He captured more than 450 user names and passwords, using them to access and even open bank accounts online.

Thursday, July 24, 2003

Risk management principles for electronic banking

The Basel Committee on Banking Supervision has published two publications on risk principles for electronic banking. Nr 98 deals with Risk management principles for electronic banking and Nr 99 is an extension discussing the cross-border issues that are relevant in todays day and age (Management and supervision of cross-border electronic banking activities).

The documents are generic guidelines for bank supervisors. Sometimes these local supervisors make these documents part of the local regulatory regime by referring to the documents as applicable guidelines. This makes the Basle Committee a powerful non-elected de facto legislator. Fortunately, the reports are not too specific and of a motherhood and apple-pie nature.

Micropayments news...

From Erwin Boogert I received a link about:

payment service provider Deltino agreed a £5m deal to resell BT Wholesale's micropayment service.

Ron Onrust pointed me to two articles in the New York Times. One about using the ATM for online payments and one about micro-payments systems Peppercoin and Bitpass.

Read also this Bitpass user experience by Brian Flemming.

Tuesday, July 22, 2003

Top Ticket Line chooses Bibit as Payment Service Provider

One of the markets where considerable improvement of payment/delivery is still possible is the ticket-market. Standing in line to wait for a ticket is quite fun and exciting, certainly if you spend the night in a sleeping bag together with other fans of your favourite star. Nevertheless, the ease of an internet- or call-centre order (followed) by payment may be quite attractive as well.

Today Bibit announces that TopTicketLine, the marketing and sales organisation for Joop van den Ende's Stage Holding, has chosen Bibit to provide the payment back-office for both Internet- and call centre payments.

One of the main considerations is to have the back office in line with the desired strategic position. TopTicketLine used to be the locally oriented Reserveerlijn, but is repositioning itself this summer towards a more diverse and international productline of tickets, hotel bookings etc. So given the expected increase of both Internet- and cross-border payments, Bibit has been chosen as the PSP.

Monday, July 21, 2003

Electronic Payments Help Drive Economic Growth, Says Visa-Sponsored White Paper

ZDNet India reports about a ministerial-level session of the UN's Economic and Social Council in Geneva. During the event, the white paper, 'The Virtuous Circle: Electronic Payments and Economic Growth,' was presented.

The event was co-hosted by Visa, Global Insight, and FINCA International. At the invitation of H.E. Amb. Gert Rosenthal (Guatemala), President, UN Economic and Social Council, the event brought together senior officials from the United Nations and specialized agencies and official representatives from 54 countries.

Essentially, the paper notes that the move (from cash) to a deposit-based economy allows any society to more efficiently use the savings/funds in an economy. The reason is that centralised funds can be used more quickly and efficiently than decentralised money. Global Insight repeats the estimate from a study by Humphrey, Willesson and Bergendahly:

Electronic payment networks, by increasing the efficiency and velocity of payments, have the potential to create cost savings of at least 1 percent of GDP annually over paper-based systems in any given economy.

The study itself may -for its research design- be quite interesting to macro-economists and historians. It is a nice example of biased research as it sort of summarizes the history of payments and payment theory into: the days and age before and those after Visa (Bank Americard). Still, the education effort should be commended.

Citigroup to Acquire Sears Credit Card Business

Some of the readers of this blog may know that initially the credit-card payment originated as a metal-card payment in the retail domain (where deferred payment was a custom and the card an easy tool for the administration). So the retail card was there first and then the credit-card. Yet, running a card scheme is a business in itself.

Citibank announced last week that it would buy the card-business from Sears (see this press release and the presentation). So the economy-of-scale game continues....

Thursday, July 17, 2003

Internet-search bot for supervisors in the Netherlands

De Nederlandsche Bank announces that the three financial supervisors in the Netherlands (DNB, AFM and PVK) will as of today start searching automatically on the web for illegal intermediaries and organisations that provide financial services without a license. The system will also be used to verify if legal suppliers comply with information provision rules.

The move is understandable from a historical perspective / starting point where one believes that the whole world can be monitored and regulated. However, there must come some time when supervisors will discover that it may be wiser to outline the boundaries and limitations of their work and leave some responsibility to consumers themselves. My guess is, that it's a lot more efficient to provide on-line access to bank supervision registers and educate consumers to check at the supervisors website if a provider exists in that register.

Tuesday, July 15, 2003

Internet Chat as Tool to Teach Theft of Credit Cards

Emerce reports about research by the Honeynet project on credit-card fraud. It shows that Internet Chat Rooms may be a vehicle for learning about credit-card fraud and exchanging information. The report is also covered byThe New York Times who have logged in and obtained credit-card numbers for 0,50 dollarcents and 1 $.

Now, lets have a closer look. One can obtain the numbers by picking up copies of receipts in restaurants (I was amazed to discover lately how sloppy customers are in taking care of their own copy). And one can use the numbers on the web or in mail-order telephone-order situations. So I'm not really sure if the suggestion that a move to IC-chip or migration to EMV will solve credit-card fraud is really true and can be the basis for liability shifts and all that....

Monday, July 14, 2003

Money makes one happy...?

Increasingly we have tv-shows about money, immediately followed by ads about moneyproducts. Some members of parliament have asked if this would not become too unclear for consumers. The Finance Minister has now answered that the rules for money-providers/lenders are clear and that consumers are educated enough to understand what's happening on tv. See his letter to MP's Crone en Heemskerk (in Dutch)

Saturday, July 12, 2003

Almost perfect falsifications of the Euro...

.. have popped up in Leeuwarden, in the North of the Netherlands, reports. The cashier in the supermarket felt something funny with the paper when she received the falso 100 euro notes. Went to the bank and found out about the falsifications. And as she also noted the license plate of the car that was being used by the crooks, they were captured rather quickly.

Earlier this week some more people were caught in Woerden en Mijdrecht with false notes of 100 and 200 euro. The police state that levels of bank note fraud are still lower than before the introduction of the euro.

Friday, July 11, 2003

Online-direct debit for gambling; case Sponsorloterij

The funny thing of on-line direct debits in the Netherlands is that they are legally/formally not allowed given that a written signature is required from the customer (who needs to send in a signed fax or form). If this signature is not available, the company may not use the direct debit mechanisms.

Despite the formal regulation, the reality is different. The Sponsorloterij (a lottery) for example allows customers to order lottery tickets and fill in a direct debit form on the web. Then, if some-one mistypes his account number on the web into your account number and you als a legitimate client try to undo the lottery direct debit that popped up on your account, it is impossible (all bank employees know that reversing a direct debit for lotteries is forbidden).

The sponsorloterij is one of the many experiences with the illegal online debit. Undoubtedly more will follow.

Thursday, July 10, 2003

On-line bankers are loyal customers

..according to research by NSS/Ernst and Young. The non-represenative sample shows that ABN AMRO, RABO and Postbank have a similar market share (about 30 %). Over all, Rabo customers are most satisfied (65 %), then ABN AMRO (61 %) and then Postbank (46 %, clearly the disadvantage of early mover with telebanking is in the way).

See also: Planet Internet and the Trends in ICT website.

Rabobank introduces virtual wallet...

De reports that Rabobank will introduce a virtual wallet for payments using the Internet and the mobile phone. It is meant for small value payments (between 1 and 10 euro) and aims at the market for payments of games and ringtones etc.

In its introduction plan, the virtual wallet very much looks like a copy of the Way2Pay initiative. First internet-payments and then mobile. So it looks as if the market for small payments starts moving once again.

Tuesday, July 08, 2003

Moxmo buys Paybox customers

Emerce reports that e-money payments provider Moxmo has bought the customer base of Paybox in an expansion move towards Germany. It becomes clear that Moxmo currently has 2000 customers in the Netherlands. See also the separate page for German customers.

Monday, July 07, 2003


July 1 also marks the moment in time where Dutch banks stop with the further dissemination of the I-connect interface/software. The future for sending/receiving payment transactions is going to be based on the Intersafe product.

Anyone interested in further automation of the payment interface might consider checking the Exploy Connect product which provides an automated secure ftp interface, that works both with Intersafe as well as with I-connect.

Friday, July 04, 2003

De Moneycard .... Geldkaart....

Geld kaart
Just came across a pop-up with the Geldkaart depicted here. Which is a card that would provide me with additional € 2300 spending power during vacation. But the website itself didn't really state clearly who was offering this so called Money Card. A closer look at the source reveals that it is an offer of the DSB-group (the new banking kid on the block....)

If one tries to fill in the form on the site the location box only provides space for 7 characters. And after succesfull completion of the form it says "we" will contact you. Not stating who the "we" is..... But it is clear that the offer is about consumer credit.

I guess this is what we call innovation ...?

Thursday, July 03, 2003

Chip and PIN: not enough to beat card fraud

Conversion to EMV-chipcards will not solve all fraud, The Register/Datamonitorreports:

Detective Chief Inspector Steve Eastwood, operational head of the dedicated check and plastic crime unit, has warned the outcome of the introduction of chip and PIN could be a shift in fraudsters' attentions to other, more vulnerable areas. In the payment space these are likely to be telephone, Internet and mail order transactions. Card not present (CNP) fraud, the collective name for fraud via these channels, amounted to GBP110 million in 2002, up by 15% on 2001.

We may therefore conclude that imposing a liability shift on POS-merchants that do not have an EMV-compliant terminal cannot be fully justified as a means to combat fraud. The Card-not-present transactions really generate the fraud, not so much the magstripe at a manned Point of Sale.

Railways contract East-West to use chipcard for access control

The Dutch Railways today announced that it contracted East-West consortium to do a trial with its OV-chipcard (chipcard for public transport). The chipcard should serve for access control on the railway Rotterdam-Hoek van Holland (often used to go to or return from the UK by boat). After this first trial, two more will follow near Schiphol and Almere.

The idea is that this chipcard (which in the future will also be used for payments) may help reduce the number of not-paying travelers and thus serve to reduce violent behaviour in and near trains.

Tuesday, July 01, 2003

Dutch 'Society Council on Payment Systems' publishes minutes

DNB, the chair of the 'Society Council on Payment Systems' now publishes information on the goal of the Council and minutes of the meetings. See this webpage (in Dutch).

Danish clearing house split up...

PBS, the Danish interbanc clearing house has announced that it will be split up into three companies:

-PBS Holding A/S

-Multidata Holding A/S

-PBS International Holding A/S

The reason for this split-up is related to the merger between Danske Bank and RealDanmark. This led to a demand from the Danish Competition Authority that Danske Bank should lower its share unit in those parts of PBS that are essential for the Danish payment infrastructure.

The interesting thing to note is that the Danish central bank has bought the shares of Danske Bank. Which, if this move were to continue when other shareholders step out, essentially comes down to a slow move from private to public provision of services......