Thursday, February 26, 2004

Social Platform on Payment Systems

The Dutch central bank has made the progress report of the Social Platform on Payment Systems available on its website. The report outlines the following plans:

- solve the availability issues of bank branches in a pragmatic way,

- create a good working group to discuss introduction of EMV,

- further work on fraud issues for false euro-notes,

- steer towards more efficiƫnt payment instruments on the basis of the outcome of cost-research (to be published in March 2004),

- introduction of the rounding rule (round towards 5 eurocents) provided that enough players agree.

Wednesday, February 25, 2004

European Commission aims to clarify e-money before the summer

In an interview with Erwin Boogert of Planet Multimedia, Commissioner Liikanen states that the Commission aims to clarify the interpretation of electronic money before the summer (see this article and this interview). The rest of the article states that it is unclear what Vodafone's role is. But the FSA website shows that Vodafone Ltd and Vodafone Mobile Commerce Ltd are a certified small e-money issuer in the United Kingdom.

PayPal guarantees eBay auctions up to £250

Planet Multimedia reports on a ZDNet-article that informs us that Paypal will protect its UK EBay buyers by launching a buyer-protection fee that gives customers £250 of insurance.

At first sight this looks great, but it should be noted that the PayPal Buyer Protection Programme is only available on transactions involving sellers who have sold at least fifty items and who have a 98 per cent positive feedback rating. Qualified sellers are indicated with a Buyer Protection logo at eBay, but buyers must use PayPal to settle to qualify for protection.

In other cases, eBay's standard purchase protection programme offers up to £120 of coverage with a £15 processing fee.

Postbank stops m-banking on April 1 this year

Postbank today announces to owners of its mobile-banking application on the Siemens phone, that it will stop offering m-payment facilities via WAP. Instead users are suggested to use the generic voice-response application Girofoon to transfer money (up to amounts of € 700 a day).

Transfer of POS-contracts Interpay to banks

The website of Interpay now informs us about the procedure and rules that govern the transfer of the Interpay-POS-contracts to the bank of the merchants. The interesting thing is that merchants now have to choose a single bank to which all payments will be credited. Previously they could opt for split crediting to accounts in both the Postbank and former BGC domain.

Most interesting is the possibility that this transfer leads merchants to reconsider their banking relationship altogether. The transfer can then be viewed as a switch-moment which leads to additonial decisions and changes with respect to the preferred bank relation of merchants.

And a solution to phishing...?

Passmark is a concept/technology that is furhther discussed here. It works like this:

When a customer logs in to a bank's Web site, the bank shows the customer his PassMark -- a personalized image known only to the customer and the bank -- before asking for his password. Since a fake Web site will not know the customer's PassMark, it's safe for the customer to enter his password once he sees his PassMark. And PassMarks can also be used to authenticate outgoing email from the bank to the customer.

See also this analysis by Scot Loftesness.

E-mail scam hits MBNA customers

BBC NEWS reports how another E-mail scam this time hits MBNA customers.

Break-In at one of Israel's largest banks

Ron Onrust sent me this link/article, that summarizes the news in Isreal on a break-in that allegedly resulted in theft and deletion of critical client information at one of Israel's largest banks.

Tuesday, February 24, 2004

Verifone SC 5000 pinpad certified

Finextra reports that the Verifone SC 5000 pinpad has now been certified by Interpay for use in the Dutch market. So the pinpad now complies with Belgian, Swiss, Dutch, Visa and Mastercard rules and complies with EMV level 1 and 2 requirements. And Dutch company CCV announces a commercial deal to go with the pinpad, thus allowing retailers to be ready (or almost ready) for the introduction EMV in the Netherlands.

Urban Legends Reference Pages show ATM Camera

The website called: Urban Legends Reference Pages shows pictures of an Automated Teller Machine (ATM) and skimming equipment, used to catch magstripe info and pincode.

Friday, February 20, 2004

Yahoo launches money service

Erwin Boogert just reffered me to where an article and further explanation can be found on the PayDirect money service offered by Yahoo, in collaboration with HSBC Bank. Essentially it is a money transfer service, rather than web-payment. Thus, Yahoo aims to get a slice of the global remittances market estimated to be $US140 billion ($189 billion) to $US200 billion dollars a year.

Moxmo also in the mobile top-up market

Planet Multimedia reports that e-money institution Moxmo will also offer its customer the possibility to top up their mobile phones from the m-purse that they have with Moxmo. This is all part of a trend in which pre-paid top-up cards are losing market share and operators either choose an additional Point of Sale application (Albert Heijn) or a connection with the banks (Orange and Interpay) to ensure that pre-paid customers can more easily load their airtime.

Meanwhile, the GTIAD is still working on its consultation document which will outline that mobile operator airtime earmarked for payment to others than the operator, will be treted viewed and regulated as electronic money. Both a short-term and long-term philosophy will be presented for comments to the market. And that will definitely change the regulatory wheather in favour of Moxmo.

Wednesday, February 18, 2004

Risk of magstripe continues

In this article of Globetechnology, Mary Kirwan deals with the security risks of still having debit-cards around that work with a magnetic stripe. It provides an insightfull overview of ATM-fraud risks.

Tuesday, February 17, 2004

More supervision on payments (systems)

Our Ministry of Finance has now published this letter to explain that a separate supervisory structure will be set up to ensure safe infratsructure for payments. Essentially all providers of payment infrastructures will need licenses. As such a long cherished desire of the central bank will be realised.

But as with e-money, we will undoubtedly face many more discussions on what payment systems are and what the specific roles will be of Authority Financial Market, De Nederlandsche Bank and the Nederlandse Mededingingsautoriteit.

Postbank unsafe..?

Rob Blaauboer sent me this link to an article in De It suggest that Postbank does not check the name and number for each credit-payment transaction. That suggestion, to my knowledge, is incorrect but may be widespread. I have recently received an acknowledgement that a payment order (of a very small amount) could not be executed due to the fact that name and number of the receiver of the payment did not match.

Legally, anyone who receives a payment without any underlying legal basis (contract, gift etc) has a legal obligation to pay it back to the sender ('onverplichte betaling'). So even if one tries to keep hold of the money, the judge will rule that is has to be paid back.

Friday, February 13, 2004

Phase 2 of revision of financial legislation: prudential supervision

This page of the Ministry of Finance has the details of its proposed reform of legislation with respect to prudential supervision (of banks, money transfer agents etc).

Report of Financial Expertise Centre: charitative foundations do whitewashing...

This report of the Dutch Financial Expertise Centre investigates the role that charitative foundations play in supporting illegal activities. It noted a number of weaknesses in law that allow illegal or suspect behaviour to go unobserved. Among the examples is a church foundation that effectively operated 0900-telephone lines with explicit sexual content. But also it observed that suspect money transfers that previously were done by individuals, are now done via the associations (which do not have members and only have to report if turnover/income is more than 3,5 million euro).

Whereas these observations are disturbing the report notes that what's most disturbing is the likelhood that the research group has definitely only seen the tip of the iceberg. So we have a serious issue here.

Vodafone launches first UMTS-service

Emerce reports that Vodafone launches the first UMTS-service. It is a datacard for laptops, allowing data access with ten times the speed of GPRS. The services focuses at the (postpaid) business segment of the market (which strategy is in line with the concept of Piet Maclaine Pont to always start new innovations for the business consumer first).

Wednesday, February 11, 2004

What to Think of Online Credit Card Fraud

Just a link to a nice article at

Paypal UK Ltd is an e-money institution as of February 12

Ben Putter informs us that Paypal has notified its European users that as of February 12 Paypal Europe Ltd will officially be an electronic money institution, supervised by the Financial Services Authority in the UK. More information can be found on their website.

This is a very remarkable moment, demonstrating that of all EU supervisors, the British FSA operates best. They did not hesitate to give licenses to Internet-based new entrants companies such as Moneybookers, Prepay Technologies and now Paypal. They've made Vodafone realize that a substantial part of its pre-paid business effectively is e-money, as a result of which Vodafone has a small issuer license. And as such they best contribute to creating a level playing field for electronic money.

Given the position of the FSA and Paypal, a lot of regulatory discussions on e-money may soon be untimely and out of date. All of a sudden EU-banks face a serious licensed competitor with a techological and market headstart. And while these main players battle for the digital e-money market, mobile telco's are left to find out how to solve their billing and regulatory issues. And unless they move quickly they will see their revenue from data-income from pre-paid users disappear completely.

Tuesday, February 10, 2004

Amex signs MBNA as its first U.S. issuer ; ABN AMRO prefers Mastercard reports that:

Amex and MBNA this year will roll out co-branded cards, "at which time product details will be available," a statement said. The companies will begin issuing cards in the United States, followed by Canada, Spain and the United Kingdom. Amex and MBNA first must await a final appeals ruling from the U.S. Supreme Court

At the same time, ABN AMRO announced that it has signed a worldwide deal with Mastercard as the preferred card. See this article in Newswire.

The costs of a single currency: false bank notes and slower payments

Newspaper de Volkskrant informs us that the central bank will start an awareness campaign for consumers. As a result consumers will be encouraged to take our time to check whether or not a bank note is false. Of course this is a good thing to do. But why not take a step back and muse about the (hidden) costs and benefits of the physical currency.

The introduction of the physical euro has been quite an expensive political endeavour. The monetary benefits of the physical bank note for the capital market are zero (as the euro was already used as an accounting and payments unit). There are however some benefits for Europeans when they travel. Yet let me explain why the physical Euro, in practice, is a serious loss maker.

1. We had to replace all EU bank notes before their economic lifespan had ended. This is costly and, as stated before, only gave Europeans a slight benefit (not having to change money when travelling).

2. The coins were designed at a designers table but are highly impractical. The result of giving the 1, 2 and 5 cents and 10, 20 and 50 cents the same colour is that longer time is required for payment in shops. The economic costs involved are considerable: the payment process at retailers takes more time to both consumer and retailer and thus costs more.

3. All Point of Sale systems needed to be upgraded to start working with the euro instead of the local currency. Again: a lot of costs, without gains.

4. The collectively designed bank notes can -for cost and negotiation reasons- never be as safe as the previously safest bank notes (presumably Dutch/German). So while for some countries the new bank notes are safer than before, for others they are more insecure. In the Netherlands the result is that we have higher costs related to having more false bank notes around.

I think it would be a good thing for the European tax payer if, the next time we do this single currency thing again, we would also endeavour on a rational calculation with respect to costs and benefits.

And it would definitely be the 'royal gesture' if the Dutch central bank takes its responsibility by partly compensating retailers for the extra costs incurred as a result of having brought into circulation bank notes that are less safe than the old one.

EPC Card Group report

The Cards Working Group of the European Payments Council has issued asummary of its work. Its goal was to formulate a long term vision on the positioning of cards and electronic means of payment in the context of SEPA, the Single European Payment Are(n)a. Thus they split up in two groups, one discussing card fraud, the other discussing business models.

The recommendations focus on practical issues such as deeper standardisation and combatting fraud. But more generally they intend to improve the governance structure between banks and card organisations so as to allow more transparent decisions on which part of the card business a bank wants to be in. To this end, interchange agreements are a must, so this is also noted in the document.

Of course the document outlines the desire to work closely together with regulators, but it also points out some issues where no further regulatory steps should be taken. What struck me particularly:

digital certification services in the payment sector (a deeper understanding of the issues is necessary before progressing in this field),

I couldn't agree more.

European Banking Industry Committee now coordinates contact with European Commission

This press release tells us that on Thursday 15 January, European banking industry federations launched the European Banking Industry Committee (EBIC), aimed at facilitating industry consultation by the EU institutions.

The EBIC was established by the main banking industry federations: the European Banking Federation (FBE), the European Savings Banks Group (ESBG), the European Association of Cooperative Banks (EACB) the European Mortgage Federation (EMF), the European Association of Public Banks (EAPB), the European Federation of Building Societies (EFBS), and the European Federation of Finance House Associations (Eurofinas) / the European Federation of Leasing Company Associations (Leaseurope).

Monday, February 09, 2004

Private or public identity?

One of our major future concerns will be to ensure that one is who one is (on the web, mobile phone etc). Ascertaining one's identity is therefore a very major market. Worldwide there is the Passport initiatieve by Microsoft and the countervailing Liberty. But these two private initiatives are now facing a third opponent. The European Forum for Electronic Business (EEMA) is working on a white paper that should be a basis for all in the identity market (including banks of course). This paper will be called ‘Towards Understanding Identity’.

TACD's online survey on spam

The TransAtlantic Consumer Dialogue has issued a report of their online survey on spam, Oct - Dec 2003. It becomes clear that 52 % of the consumers are shopping less (or not) on the Internet because they fear being spammed afterwards.

TSYS cuts 4 % of its workforce

Ledger-Enquirer reports that TSYS, the major credit card processor, cuts a lot of jobs to ensure future profitability. Its revenue base decreased due to the loss of 18 Mexican banks, price renegotiations and the sale by Sears and Circuit city of their credit-card portfolio's.

Saturday, February 07, 2004

Volkswagen will start bank in the Netherlands as well

Car producer Volkswagen often uses financing deals to stimulate the sale of cars. For that reason it already operates a German Bank. Ben Putter referred me to this article at It turns out that Volkswagen and Pon Holding (a car importer) will start banking in the Netherlands as of 2005. The name of the bank will probably Volkswagen bank and it will have an internet-branch.

Thursday, February 05, 2004

False 100 euro notes for retailers and false credit-cards for air line companies

Today it was announced that the number of Euro falsifications in the Netherlands is now bigger than the number of Guilder Note falsifications. The Council of Dutch Retailers (Raad Nederlandse Detailhandel) has thus decided to develop a sticker that can be used at the counter to tell customers the the 100-Euro note will not be accepted any more.

Meanwhile, air line companies (notably KLM) face an increasing number of fraudulant credit-card transactions. Flights to Afrika or Latin America that leave shortly are more often being paid with falsified cards or card numbers. Some of the tickets that are being ordered are then sold cheaply via The buyers of these tickets however may never be able to travel as air line companies are now checking the validity of payments (and sometimes withdraw the e-ticket).

SIIT 2003 Program on Standardization

Only too often policy makers call for standardization (in retail payments for example) without really understanding the process and pitfalls. Meanwhile there is a considerable body of knowledge. For those interested in further study the SIIT 2003 Program has online slides available.

How telco applications are useful to banks....

Where the banking sector used to be a sort of solitair developer of bespoke applications, we can increasingly see technologies and applications from other industries being used. One example is the mobile operators billing technology that is now being used by ING for billing their payments. Another example lies in money laundering detection.

Neteconomy for example is a company that started out detecting false/fraudulent phone calls, to discover that its technology is also useful for banks. This press release contains a testimonial by Nationwide Building Society to that effect.

Wednesday, February 04, 2004

Skimming fraudsters convicted

Automatisering Gids reports that the court in Breda has convicted two criminals who have been part of a skimming organization. They used a smart device to collect magnetic stripe information at unmanned pump stations and used camera's to obtain the pin-code of customers.

With the information they made new debit-cards, which were used at ATM's in the Nederlands, Belgium and Germany. The revenue was 600.000 euro. The two criminals face punishment of 4 years and 2,5 years in jail as well as a fine to be paid to government. Tomorrow, the main suspect will get to hear his verdict.

Update thursday: the big mind behind the crime is convicted to 3,5 years of prison and needs to pay 35.000 euro to the State.

Russians stop using the dollar... Olympics stick to Visa

What does one do in a country where trust in its own government and justice is low? Theory tells us that the local currency will not be used, but rather gold or foreign currency. Consequently Russians were used to think, pay and store value in dollars. In Het Financieele Dagblad, Karel Onwijn describes that, now the dollar loses value, the Russians reconvert the dollar into local currency and Euro.

To remain with the subject. Theory also tells that the use of payment instruments is contingent on force: the power to prescribe usage of particular instruments. In the same FD it is noted that Visa has established its 11th sponsorship of the Olympic Winter Games in Turin. Meaning that all people either pay cash or with Visa (but not with anything else...).

AT&T PrePaid Web Cents Technology: nice white labeling example

In this article AT&T announces an agreement with 7-Eleven to market AT&T Web Cards. These cards allow customers to download music from RealRhapsody, the Internet jukebox service from RealNetworks. The cards will be available in 5,300 7-Eleven stores.

Prepaid specialty cards supported by AT&T PrePaid Web Cents technology are sold at traditional retail outlets. They carry a specific content provider's brand and are used to purchase that provider's online content.

The specialty cards can be used to purchase a variety of online content such as interactive games, ring tones, graphics, maps, guidebooks, digital music, streaming audio and video, software, research services, and more. Each card is issued by the content provider and is exclusively for use on its site.

I think this trend may also come to Europe. In the end all retailers/content provider want their own relationship with the customer. And if they can avoid legal hassles with respect to e-money while doing so, it will be all the better.

Tuesday, February 03, 2004

Poynter Online - E-Media Tidbits

Erwin Boogert pointed me to Poynter Online that informs us that Coinclick, the micropayments system in Denmark will stop as of March 2, 2004 with running its system. With 27.000 users it had not reached the goal it desired (100.000). And apparently Coinclick did not have the time or desire to wait until the e-money regulators would create a level playing field vis a vis telco-players and htier payment methods for premium SMS, MMS etc.

With this news, I sincerely hope that regulators and supervisors will turn out to be somewhat self-reflective as to the effect of their behaviour in 'shaping' the e-money market of the future. It's quite easy to say that there is no business case for micropayments if one allows free riders to make the real bucks.

Postbank recoups with My Postbank NL

As of today, Postbank is back in the Internet-banking race. They've been out for a while, given that the off-line e-banking facility Girotel (or its on-line version) both appeared to be too dusty for the users. On top of that, fees were levied, which was quite incomprehensible in the situation that users do the data-entry for the bank. But now, with the introduction of Mijn they're back.

Mijn is a free Internetbased environment allowing identification with a user-id/password combination that is chosen by the users. Any transaction requires the use of a Transaction Authorisation Number. Whereas these used to be distributed in lists of 100 (via snail-mail) Postbank now offers to send these via SMS, at the moment of the transaction.

The environment offers users a full overview of all Postbank products and allows the user to reverse a direct debit and to view one year transaction history (often a problem with Internet-banking). And in comparison with other banks, it now allows world-wide web-access and usage.

What's missing in the information is the vision of the future. I cannot imagine that Postbank will support the old off-line Girotel until the end of times. So at one point in time I'll be forced to make the conversion to the off-line world. This is not being mentioned on the website. But if you look closer it shows that it is no longer possible to apply for Girotel and that Girotel (for now) will co-exist with

Dutch banks will be more open...

Last week the NVB, the Dutch Bankers Association, held their annual New Years Meeting. It's President, Mr Collee, held a speech"on the position of banks in society. In it he outlined the numerous roles and responsibilities of banks as well as the intention of the NVB to create a better understanding of the role of banks in society by being open, responsive and pro-active. The speech is quite reflective in nature and well worth reading.

Todays Financieele Dagblad notes that the Dutch competition authority does not recognize the critical note of Collee on their functioning. What Collee stated was that the new financial monitor of the NMa created a bad image while not containing any substantial evidence as to problems in the market. In reply the NMa now says that it finds that banks generally are satisfied with the supervision of the NMa..... (as if any supervised entity would ever tell its supervisor different...?).

Monday, February 02, 2004

eBay and Paypal penetrate by offering spam-free mail...

Planet Internet report that eBay will begin a spamfree e-mail service for its users. The service also provides for an overview of all the transactions of that user, done via Expedia, Amazon and Paypal.

Now, that looks like an interesting and timely penetration strategy.... People will use internet more often to buy and will need an overview. They are sick of spam. So this offer solves a part of their problems. And within the year they'll be using more eBay and Paypal.

Nedap takes a write-off on Mobile Pay

A press release of Nedap at Het Financieele Dagblad learns us that Nedap writes of 400.000 euro as its development costs for Mobile Pay. And although this looks like a loss, I'm convinced that the publicity gains of having this prototype product are bigger.

Does your IBAN work...?

Today I'm in my third week of trying to get a UK company to send me a payment. My regular IBAN and BIC-code did not make sense to them; neither did the alternative payment details that I provided.

Would you believe me if I said that this company was an FSA-licensed registered credit-institution?

US customers prefer debit now.... start of international convergence?

A customer survey by Edgarr Dunn reveals that the payment preference of US card holders is shifting towards using debit-cards. Their study shows the following preference profile:

- debit cards: 38 %

- standard credit cards: 22 %

- co-brander credit card: 20 %

- loyalty credit: 15 %

- smart credit: 2 %.

The study also showed that the desire to reduce the cost of their payment cards, increase their personal financial discipline and earn greater rewards have been the primary reasons that:

- nearly 50% of consumers are using a card that wasn’t in their wallet a year ago,

- nearly 40% of consumers have canceled or reduced the use of ~2 cards during the same period.

One might conclude that slowly, the payment arena might be moving towards a more similar usage of the best/cheapest/efficient payment methods (debit rather than credit). So although the old classification of the US a s credit-card country is still correct, it may not be in 5 years time.