The Broken Link - Digital Transactions

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consumer disputes. Also, the bank said it would have been difficult to perform risk assessments on aggregated transactions. Aggregated transactions would affect NACHA also, McEntee says. “We didn’t feel we could analyze the data because the merchant would not appear on the transaction,” he says. Some observers assert the new ruling was aimed at Capital One, and could force the company to spend money to retool some of its processes. But McEntee denies the rule targets any particular issuer. The spokesperson at Capital One says the company will follow NACHA guidelines. Tempo Payments does not aggregate transactions, Grossman says. Real-Time Balances Another worry for the bank holding the checking account is how disputes will be resolved. Consumers may be confused about whom to call when problems arise. “It’s unclear to what extent the product is tricky for customers to use,” says Aite’s Bézard. Both HSBC and Capital One list their customer-service telephone numbers on the back of their cards. By regulation, the issuer of the card is responsible for dispute resolution. “In our program, we have seen very little consumer confusion,” says HSBC’s Eckert. “We are the point of first resolution because we are the [phone] number on the back of the card.” Others think consumers will call the bank where they have their DDA if, say, fraud occurs. A customer who sees money flowing out of his checking account isn’t likely to call the 30 • digitaltransactions • February 2008 Rewards Come to Debit Cards (rewards cards’ estimated share of category, in %) General- Purpose Credit Cards Debit Cards General- Purpose Credit Card Purchases Signature- Debit Purchases 2006 55% 13% 81% 20% 2007 61% 16% 84% 23% 2008 66% 19% 88% 26% 2009 72% 22% 91% 29% 2010 78% 25% 94% 31% debit card issuer, one source says. And, according to Celent’s Moore, banks don’t like losing control over their DDAs and potentially looking bad to their account holders if something goes wrong. “It’s all about the bank’s reputation,” she says. Settlements are another potential pitfall. An account may have insufficient funds, which the card issuer can’t determine until the transaction is “In our program, we have seen very little consumer confusion... We are the point of first resolution because we are the [phone] number on the back of the card.” settled, usually two days after the purchase. “There is a settlement risk,” says HSBC’s Eckert. At HSBC, transactions are analyzed at the point of sale based on proprietary risk algorithms and authorization data. Capital One approves or declines transactions based on the daily spend limit of $500, not Source: Aite Group the balance in the checking account, according to the spokesperson. Issuers screen applicants prior to issuing the card, using the same tools typically employed to evaluate traditional credit and debit card applications. “Issuers need to get comfortable with a new form of risk management,” notes Tempo’s Grossman. HSBC’s Eckert won’t say what percentage of transactions doesn’t clear. “The way we look at it, if you don’t get risk right you don’t belong in this business. We are comfortable with how our program is running or we would not be in this business,” he says. New technologies may help facilitate the growth of decoupled debit cards. Yodlee Inc., a software and service provider in Redwood City, Calif., offers systems to provide near real-time account balances and related services. Peter Hazlehurst, senior vice president of product development, won’t say whether Yodlee’s software is being used for decoupled debit accounts yet. But, he notes, “there are a lot of [institutions] at the point of launching these solutions.” Indeed, if these observers are right, many financial institutions and other players are ready to get into decoupled debit even if not all the implications are sorted out yet. For them, the potential returns appear to outweigh the possible problems. DT
Revolutionary Times Call for a Revolutionary Magazine We go to the players who are making revolutionary change happen. Subscribe to Digital Transactions today. Go to www.digitaltransactons.net and hit “Subscribe.” That’s why we created Digital Transactions. The consumer payments market isn’t what it was five years ago. It’s not even what it was five weeks ago. You know that. But how can you be sure you’re really staying on top of this fast-changing market? Getting the latest and best insights on competitive strategies, the most informed analysis of market moves and trends. From a single publication that understands this market and speaks to its key players as no other magazine does? By relying on Digital Transactions. A new magazine created specifically to cover the dizzying change sweeping over the consumer electronic transaction business in North America. To cover trends. To explain competitive strategies. To help busy executives sort out reality from hype, and make more money. Credit. Debit. ACH. Issuing, acquiring, originating, or receiving. Name the channel. Name the network. Name the platform. If it’s a consumerbased electronic transaction, we cover it. We talk to the players who are making the revolutionary change happen. Every other month. Rely on Digital Transactions to help you profit from a fast-changing, increasingly interconnected transactions market. Make the transaction revolution work for you.
Page 1: VOLUME FIVE, NUMBER TWO • DIGITAL
Page 4 and 5: SOME COMPANIES STAND OUT FOR OBVIOU
Page 6 and 7: D I G I T A L T R A N S A C T I O N
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Page 14 and 15: TRENDS & TACTICS TRENDS & TACTICS A
Page 16 and 17: ACQUIRING February 2008 digitaltran
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Page 20 and 21: In addition, 67% of retail treasury
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Page 31: From the merchant perspective, deco
Page 35 and 36: Yes, we’re on the Web. And in you
Page 37 and 38: SECURITY February 2008 digitaltrans
Page 39 and 40: they don’t want approved. Some cu
Page 41 and 42: ENDPOINT Behind the Experimentation
Page 43 and 44: ©2007 Digital Check Corp. All righ

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