Digital Transactions Authoritative, insightful and timely information for payments professionals
As we prepare to close out 2012, we thought we’d look back at the year’s major developments and pinpoint the ones that generated our biggest news stories. Here’s our list, arranged chronologically. Not surprisingly, given the events of the year in electronic payments, the list is dominated by mobile-payments and pricing-related stories. Heading into 2013, we have a feeling this dominance isn’t about to end any time soon.
Feb. 23 Visa to Launch New Acquirer Fee in April That Could Run up To Big Numbers
Digital Transactions News disclosed that Visa in April would introduce a new pricing structure calling for, among other things, a fee designed to encourage merchants to route more volume through Visa’s switch. The new levy, called the Fixed Acquirer Network Fee (FANF), was a response to routing freedom granted to merchants by the Durbin Amendment. Visa disclosed in May that its pricing plans had provoked an investigation by the U.S. Department of Justice. Later in the year, some major independent sales organizations charged that the fee’s structure favored so-called aggregators—companies like Square and PayPal that stand in as merchant for small-merchant clients—over ISOs, which underwrite clients for their own merchant account. And the Federal Trade Commission confirmed it was probing the card networks’ rules for possible Durbin violations.
Meanwhile, Visa Inc. revealed that its Interlink point-of-sale PIN-debit network lost 54% of its payment volume in the wake of new Durbin Amendment regulations that ended exclusive network ties between Visa and debit card issuers and gave merchants more freedom to route debit transactions over the networks of their choice.
March 2 Merchant Group Lays Plans for Retailer-Controlled Mobile Payments, with Or Without NFC
Eschewing Google Wallet, Isis, and a host of other competing schemes, a group of about two dozen big-box retailers and other major merchants, including Wal-Mart Stores Inc. and Target Corp., announced their plans for a merchant-controlled mobile-payments network. In August, the group said the new service would be called Merchant Customer Exchange (MCX). Later in the year, spokespeople for the group said they were committed to supporting only MCX in their stores for mobile payments.
April 30 Microsoft, NACHA, And Others Outline Legal Tools Used to Disrupt Zeus Botnet
Microsoft Corp. told how it used a number of legal remedies, including some unexpected ones, to disrupt a powerful malware network in an action that included raids of rogue server operations in Illinois and Pennsylvania. Working in cooperation with NACHA, the regulatory body for the automated clearing house network, and the Financial Services Information Sharing and Analysis Center, Microsoft deployed a trio of remedies against the cybercriminals, including an ex parte temporary restraining order, the Lanham Act, and the Racketeer Influenced and Corrupt Organizations (RICO) Act. The action represented the first known use in a civil case of RICO against a botnet. The Lanham Act, which regulates trademarks, allowed the Microsoft-led group to seize the botnet domains on the grounds that they were infringing on the marks of NACHA, FS-ISAC, and others in phishing attacks.
June 12 Speculation Ends As Apple Unveils a Digital Wallet That Works with QR Codes
Ending months of speculation about its intentions in mobile payments and promotions, computer icon Apple Inc. entered the increasingly crowded market for digital wallets with an application it called Passbook. The new app, which became available in the fall as part of Apple’s iOS 6 update, included the ability to store tickets, boarding passes, proprietary and loyalty cards, and other documents, but not general-purpose payment cards. At the same time, the company announced it had card credentials for some 400 million users on its rapidly growing App Store, creating what some experts saw as the potential to move its wallet into physical stores with its own payment accounts.
July 13 Merchants Wring More than $7 Billion out of Networks, Banks in Credit Card Settlement
Lawyers for merchant plaintiffs and Visa, MasterCard and some big banks announced a $7.8 billion settlement in a massive case challenging credit card interchange that began in 2005. Retailers almost immediately began suspecting the agreement gave them the short end of the stick because it would protect the card networks from future merchant challenges over interchange and card-acceptance rules. The settlement awaits final approval from the federal court in Brooklyn, N.Y., which has received hundreds of complaints from merchants and trade groups, some of which unsuccessfully sought help from Congress and an appellate court.
Aug. 8 Square Enters Big-Time Acquiring With Its Cube-Less Starbucks Deal
Square Inc., the hot mobile-payments processor for micro-retailers, rocked the merchant-acquiring world with its announcement that it would function as an ISO for Starbucks Corp. and that the coffee king would enable acceptance of Square’s wallet in its stores.
Aug. 22 High-Tech PayPal-Discover Tieup Rests on Huge Issuance of Old-Tech Mag-Stripe Cards
Discover Financial Services and PayPal Inc. unveiled a high-tech plan to bring online-payments leader PayPal to millions of physical merchant locations, in part by deploying an old-fashioned private-label plastic card.
Oct. 8 AmEx and Wal-Mart Target the ‘Unhappily Banked’ With Their New Bluebird Prepaid Card
Wal-Mart Stores Inc. expanded its already large footprint in the prepaid card business with the Bluebird card issued by American Express Co., which moved AmEx beyond its affluent core customer base with a low-fee card offering mobile deposits, bill payments and person-to-person payments and a promise of a check-writing feature in 2013.
Oct. 22 Isis Launches With Nearly 1,000 Merchant Locations, Nine Smart Phones
After months of delays, the carrier-backed Isis mobile-payments and customer-loyalty system based on near-field communication (NFC) technology finally launched in Salt Lake City and Austin, Texas. Isis got some help from ISOs distributing subsidized contactless terminals and a vending-machine payments provider. In August, rival Google Inc. had revamped its struggling Google Wallet to increase the appeal of the digital wallet founded on NFC technology to consumers and merchants.
Dec. 14 VeriFone To Exit Acquiring for Mobile Merchants; Will Revert to Tech-Supplier Role
Point-of-sale terminal maker VeriFone Systems Inc. threw in the towel on mobile acceptance for so-called micro-merchants—sort of. While the company said it would continue to offer its Sail mobile-acceptance solution to ISOs and other third-party resellers, it would no longer offer the product directly from its in-house ISO. Chief executive Doug Bergeron blamed paltry profits from tiny merchants. Another notable mobile-payments casualty was Obopay Inc., one of the earliest competitors in the market. Its profile fell as digital wallets took hold, and it put itself up for sale. The developments triggered intense debate about whether the crowded mobile-payments market was heading for a shakeout and whether micro-merchants using smart phones for card acceptance would prove profitable for processors.
