Is Mobile Banking Getting Connected? - Digital Transactions

VOLUME SIX, NUMBER SIX • DIGITAL TRANSACTIONS.NET • JUNE 2009 

Is Mobile 

Banking 

Getting 

Connected? 

More and more banks are 

launching services that let 

customers use their handsets 

to receive text alerts, check 

balances, and pay bills. But can 

anyone make money on this? 

ALSO IN THIS ISSUE: 

• Nokia Shakes up NFC 

• A Screen Test for DVD Kiosks 

• Less Payoff in Prepaid Cards 

• A Taste for Online Ordering

2005 | 2006 |2007

Complete and affordable POS solutions 

custom designed for retail and 

hospitality merchants. 

In the current economic climate, merchants are looking for ways to save money. By offering 

Harbortouch, you can offer your merchants the opportunity to cut costs and operate more 

efficiently. Earn unparalleled commissions and revitalize your leasing revenue while providing your 

merchants with a complete and affordable POS solution. 

ONSITE INSTALLATION AND ONSITE MERCHANT TRAINING 

24 hour customer service and technical support 

Retail and hospitality software customization 

Remote support and offsite database backup 

LOWEST PRICING IN THE INDUSTRY FOR THE HIGHEST QUALITY POS SYSTEM 

Sell below the competition's cost and still earn impressive commissions 

GUARANTEED LEASING PROGRAM 

Revitalize your revenues from equipment leases which represent approximately 70% of all deals 

DESIGNED FOR DURABILITY 

Unlike standard PCs, which last 2-3 years, the average lifespan of a Harbortouch POS System is 7-9 years 

THE ULTIMATE MERCHANT RETENTION OPPORTUNITY 

Reduce account attrition by integrating a business management solution at your merchant locations 

Contact Harbortouch POS today and take advantage of the most advanced and lucrative sales 

opportunity in the payments industry! 

To learn more about Harbortouch POS, contact: 

Brian Jones, EVP Sales and Marketing: 800-201-0461 x 136 

Jonathan Brandon, National Sales Manager East: 800-201-0461 x 145 

Maxwell Sinovoi, National Sales Manager West: 800-201-0461 x 219 

Brian Fitzgerald, National Sales Manager Central: 800-201-0461 x 257 

www.isoprogram.com 

UBC1251_04152009

D I G I T A L T R A N S A C T I O N S . N E T 

CONTENTS 

June 2009 ■ Volume 6, Number 6 

“Banks face a confusing 

array of vendors and 

devices that 

change almost 

daily. And, 

even though 

mobile banking 

generates a 

lot of industry 

buzz, it has yet 

to generate 

any revenue.” 

page 28 

28 Is Mobile Banking 

Getting Connected? 

More and more banks are letting 

customers pay bills, transfer funds, 

and get alerts via mobile phones. 

And many services now play to 

the strengths of smart phones 

and text messaging. But nobody 

has yet figured out how to make 

money from all of this. 

6 The Gimlet Eye 

The Mind of the Regulator 

8 Trends & Tactics 

Who Says There Are No 

NFC Phones? How Remote 

Deposit Is Going Mobile; 

Think Twice Before 

Reissuing Debit Cards; 

Behind Online Resources’ 

Proxy Fight 

Plus, Security Notes describes 

some of the most recent ruses 

hackers have been up to, and 

the Web Transaction Performance 

Indexes spotlight winners and 

losers among the leading credit 

card and online-banking sites. 

18 Acquiring 

The DVD Kiosk Gold Rush 

Changing consumer preferences 

and strong economics are making 

kiosks that rent DVDs ubiquitous. 

With Blockbuster moving into 

the space to challenge dominant 

incumbent Redbox, kiosks 

could be just the ticket to revive 

sagging retail DVD rentals. Up 

next: digital downloads. 

23 Networks 

The Peril— 

And Opportunity— 

in Prepaid Banking Cards 

The market for prepaid cards 

that function like traditional 

debit cards is growing rapidly, 

but it faces slim profit margins 

and increasing pressure from 

the economic downturn and 

potential regulation. Winning 

issuers will be innovators that can 

drive adoption and revenue. 

38 Components 

It May Hurt to Be AWOL 

on OTP 

Dongles and cards that generate 

one-time passwords are nothing 

new overseas, but they’re only 

starting to gain favor in the 

United States. Two big reasons: 

A surge in online fraud and the 

move to mobile devices, which 

cuts costs for issuers. 

42 E-Commerce 

No Longer a Side Order 

Restaurants are finding that 

online-ordering systems are ideal 

replacements for phone orders. But 

with payments security, technology, 

and other issues, online ordering is 

not simply plug and play. 

47 Endpoint 

So You Want to Become 

a Prepaid Card Program 

Manager? 

In the world of prepaid cards, a 

program manager is much like 

an ISO. The rewards can be rich, 

especially as program managers 

share in the interchange pie, but 

the costs and risks are substantial. 

Plan carefully, says Lori Breitzke. 

Cover photo: 

LeifStiller/istockphoto 

Digital Transactions (USPS 024-247) is published monthly by Boland Hill Media LLC, 3 Golf Center, Suite 314, 

Hoffman Estates, IL, 60169. Periodicals Postage Paid at Schaumburg, IL, and at additional mailing offices. 

POSTMASTER: Send address changes to Digital Transactions, P.O. Box 3553, Northbrook, IL 60065-3553.

Harness The Power 

Of Thunder 

Break-Through Technology by Ingenico 

Ingenico’s unique dual Thunder/ 

Booster Chip technology and its 

innovative engineering takes 

transaction security, speed and 

dependability to a new stratosphere. 

With awesome processing 

power, dedicated security chip 

and optimized, robust design, 

Ingenico’s new Telium 2 product 

line blows away the competition. 

More Secure 

More Powerful 

More Opportunities 

More Reliable 

www.ingenico-us.com 

1-800-252-1140

THE GIMLET EYE 

JUNE 

2009 • VOL. 6, NO. 6 

The Mind 

of the Regulator 

Having raised a ruckus over interchange fees, merchants have at last 

attracted the attention of regulators to the subject. Here’s hoping they 

don’t come to regret it. 

In the U.S., Congress considered—but ultimately rejected—various amendments 

to a credit card bill. One would have addressed interchange head-on, the other would 

have attacked it indirectly by easing the way for merchants to offer customers discounts 

if they don’t use credit cards. In Europe, competition authorities within the 

European Commission have forced MasterCard to radically revise downward its socalled 

multilateral interchange fee, the charge that applies to cross-border transactions. 

Visa is next in the cross-hairs. The Reserve Bank of Australia has long since 

weighed in with heavy-duty interchange cuts in that country. 

Now, merchants may have good cause to cheer. These are victories for them, 

considering these results follow long decades in which merchants carried on a 

lonely battle against the villainy they saw behind the card networks’ interchange 

regime. But consider for a moment the way a regulator thinks. Publicly, at least, 

regulators say they’re for competition. They seek to intervene in markets they have 

concluded are non-competitive and against pricing structures or practices they perceive 

as anti-competitive. 

But of what does their intervention consist? At best, in nearly every market, 

they interfere in voluntary arrangements between consenting parties to a transaction. 

At worst, they mandate pricing ceilings (or caps, as they like to call them), 

or even dictate actual rates. In other words, the hand of the regulator is the hand 

that holds the policeman’s baton. It is a hand directed by a mind naturally inclined 

toward coercive remedies. 

We hold no brief here for the interchange regime as currently constructed. It has 

long struck us as irrational, for example, that the networks’ rates continue to give 

banks an incentive to issue and promote signature-based rather than PIN-based 

debit by offering higher rates on the former. Or that there is no incentive rate for 

contactless, a type of transaction the networks profess to be advantageous to merchants, 

banks, and consumers alike. 

But we lament the invocation of the heavy hand of the state into these matters. 

And we think merchants may, as well, once they see they’ve let a rather nasty 

genie out of its bottle. Give it time and the regulator’s natural fervor for intervention. 

Consider that there are scores of payment alternatives, with more emerging 

by the month. Not many will survive. Those that do will do far more for merchants 

than any hammer blow of that policeman’s baton. 

John Stewart, Editor-in-Chief 

john@digitaltransactions.net 

PUBLISHER 

Robert A. Jenisch 

EDITOR-IN-CHIEF 

John Stewart 

Senior Editor 

Jim Daly 

Correspondents 

Jane Adler 

Lauri Giesen 

Karen Epper Hoffman 

Peter Lucas 

Linda Punch 

Art Director/Production Editor 

Jason Smith 

Editorial Advisory Board 

Eula L. Adams 

John Elliott 

Alex W. “Pete” Hart 

Former Chief Executive Officer, 

MasterCard International 

William F. Keenan 

President, De Novo Corp. 

Dr. Gideon Samid 

Chief Technology Officer, 

AGS Encryptions Ltd. 

Director of Advertising 

Robert A. Jenisch, 877-658-0418 

bob@digitaltransactions.net 

Advertising Sales Representatives 

Robert Mitchell, 877-658-0418 

bmitchell@digitaltransactions.net 

Cathy Woods, 602-863-2212 

cathy.woods@mediawestintl.com 

Digital Transactions, Digital Transactions News, 

and digitaltransactions.net are publications of 

Boland Hill Media LLC, 3 Golf Center, Ste. 314, 

Hoffman Estates, IL 60169 

John Stewart, Managing Director 

Robert A. Jenisch, Managing Director 

For advertising information, call 877-658-0418. 

To subscribe, go to www.digitaltransactions.net 

and click on “Subscribe” or call 847-559-7599. 

To give us a change of address, call 847-559-7599. 

The views expressed in this publication are not 

necessarily those of the editors or of the members 

of the Editorial Advisory Board. The publisher 

makes reasonable efforts to ensure the timeliness 

and accuracy of its content, but is not engaged in 

any way in offering professional services related 

to financial, legal, accounting, tax, or other matters. 

Readers should seek professional counsel regarding 

such matters. All content herein is copyright 

© 2009 Boland Hill Media LLC. No part 

may be reproduced without the express written 

permission of the publisher. Subscription prices: 

$59/year for subscribers in the United States; 

$69/year for Canadian subscribers. All other subscribers, 

$119/year, payable in U.S. currency. 

6 • digitaltransactions • June 2009

TRENDS & TACTICS 


Who Says There Are No NFC Phones? 

Wondering whatever happened to 

NFC? You’re not alone. Three years 

ago, the notion of using near-field 

communication technology to let a 

mobile phone make point-of-sale payments 

through contactless readers was 

a hot topic. Pilots by Visa Inc. and 

MasterCard Worldwide seemingly 

blossomed everywhere. 

Then, static on the line. The mobile 

carriers said they wanted a portion of 

banks’ transaction revenues, a price 

the banks and the bank card networks 

weren’t willing to pay. And as all parties 

pointed out, there just weren’t all 

that many NFC-equipped handsets on 

the market. Just about zero, in fact. 

Now that second problem might 

be on the way to being resolved. 

Nokia introduced a new phone late 

in April, the Nokia 6216 classic, that 

is the first mobile device to link an 

embedded NFC chipset via circuitry 

to the phone’s SIM card, the smart 

chip that identifies the phone to the 

mobile network. That bit of engineering 

follows a recent technical standard 

and hands the payments industry 

a template that could speed up mobile 

payments in physical commerce. 

“It is definitely something that 

will move the conversation along,” 

8 • digitaltransactions • June 2009 

says Michael Friedman, who follows 

mobile payments as a senior analyst at 

Mercatus LLC, a Boston-based consulting 

firm. “It will start to tell the use 

case for NFC. Everything about NFC 

has been 

speculation.” 

Working 

with the 

SIM, 

which will 

store card 

and other 

paymentaccount 

data, the phone 

will allow users to perform 

contactless payments by waving 

or tapping the phone on or 

near a POS reader. The phone 

represents Nokia’s third NFCenabled 

device, though the previous 

models did not rely on the 

SIM card as the so-called secure 

element, the component in the 

phone that stores payment data and 

communicates with the NFC chip 

and antenna. 

By harnessing the SIM, Nokia 

may have made it easier for developers 

to write applications. “At this 

point, it’s about getting devices on 

the market so developers can work 

on [them] using the SIM as the 

secure element,” says Nick Holland, 

a senior analyst specializing in 

mobile payments at the Boston-based 

Aite Group LLC. 

It remains unclear, however, how 

soon Nokia might open the U.S. 

market for the new phone, which is 

expected to ship in the third quarter 

at a price of about $195. A 

company spokesperson 

says by e-mail that 

the product 

Following a 

standard: 

Nokia’s new 

6216 classic, with 

NFC embedded and 

linked to the SIM 

card as the secure 

element holding 

payment-account data. 

Photo: Nokia

will initially ship to markets in Europe 

and Asia. No plans yet for the U.S 

market, where NFC remains ensnarled 

in bank-carrier negotiations. 

Gerhard Romen, director of strategic 

partnerships and alliances at 

the Finnish mobile-phone maker, says 

the North American market remains 

a possibility. “It’s up to the network 

operators and banks to take the ball 

and move, because we’re ready,” he 

says. But Nokia remains, of course, 

a for-profit manufacturer. “It depends 

on the demand—meaning, we need 

the orders,” Romen says. 

Nokia can’t be faulted for looking 

at other regions first. The technology 

is faring somewhat better 

overseas, with the first commercial 

service having been launched by 

Visa in April in Malaysia. 

Plus, in the U.S., not enough 

merchants have installed readers for 

contactless transactions to provide 

a widespread acceptance infrastructure. 

“I could see [the 6216] being a 

device for markets where there are 

more readers in the marketplace,” 

says Holland. 

Nor are mobile network operators 

in the U.S. likely any time soon 

to offer a phone containing a costly 

technology that customers can’t 

use right away, Friedman argues. 

Holland estimates the NFC chipset 

raises the cost of a mobile device by 

about $10. “That chip isn’t cheap,” 

agrees Romen. 

Still, Holland points out that 

mobile operators have launched technology 

in the past, such as Bluetooth, 

without a proven use case. He argues 

the commercial availability of NFC 

phones with functionality based on 

the SIM, a component the mobile 

operators control, could present 

them with an opportunity to seize the 

initiative in payments. The excuse 

that there aren’t enough devices on 

the market, he says, “is wearing 

a bit thin.” 

How Remote Deposit 

Is Going Mobile 

Most players in the mobile-payments 

space are banks, big card and bankservices 

processors, and specialty 

tech companies. But the May acquisition 

of the assets of Commerciant 

LP by BankServ, one of the pioneers 

of remote deposit capture, 

shows that mobile financial services 

are attracting a truly diverse set of 

companies intent on profiting from 

the hot market. 

Among Commerciant’s Assets … 

Houston-based Commerciant 

offered merchants wireless payments 

software and a unique wireless terminal 

that scans checks and takes credit 

card payments. “It’s the only one in 

the world that we know can do both,” 

says David F. Kvederis, BankServ’s 

president and chief executive. 

But San Francisco-based BankServ 

is getting more than Commerciant’s 

line of Mobilescape-branded handheld 

terminals (the Mobilescape 3000 takes 

cards only, while the Mobilescape 

5000 handles cards and checks). It’s 

also getting the 9-year-old company’s 

processing platform and patents. 

Mobilescape line of wireless terminals, including one that reads checks. 

Mobilescape Manager processing platform 

6,000 merchants 

Various patents. 

Source: BankServ 

“The processing system in the 

background, Mobilescape Manager— 

that was really the key ingredient 

for us,” says Kvederis. He notes 

that Mobilescape Manager integrates 

with accounting-software programs 

such as Intuit Inc.’s QuickBooks 

and Sage Software Inc.’s Peachtree 

that are key elements of BankServ’s 

DepositNow remote-capture offering 

for small businesses. 

Just after announcing the 

Commerciant acquisition, BankServ 

launched a new check-and-card payments 

product called DepositNow 

Mobile that uses the Commerciant 

technology to provide a wireless version 

of remote deposit capture. With 

that, BankServ will be able to offer 

mobile financial services in addition 

to the online processing, point-ofsale 

card processing, and POS check 

processing that it already sold. 

The acquisition also included 

Commerciant’s independent sales 

organization relationships. Commerciant 

processed for about 6,000 merchants, 

including AirTran Airways and 

the Applebee’s restaurant chain. Bank- 

Serv came into the deal processing for 

about 40,000 merchants, about half of 

which are doing remote deposit capture. 

The patents involve the provisioning 

of software within the payment terminals, 

according to Kvederis. 

Kvederis says BankServ was 

looking for a mobile-payments 

June 2009 • digitaltransactions • 9



solution and first approached Commerciant 

about a year ago concerning 

a possible deal, but the two sides 

didn’t strike an agreement. Bank- 

Serv later found a potential partner 

in Europe, which Kvederis wouldn’t 

identify, but checked in with Commerciant 

one more time. With market 

conditions much different, the two 

sides resumed talking. Neither of the 

privately held companies disclosed 

terms of their deal. “We were able to 

find a middle ground that worked for 

everybody,” Kvederis says. 

BankServ is replacing the Commerciant 

name with its own. Commerciant’s 

chief executive, Tim D. 

Davis, will stay on for a few months 

but then move on to a startup company. 

Richard Howell, Commerciant’s 

chief operating officer, will head 

BankServ’s Houston office. 

Howell says mobile payments can 

be a tough sell with merchants, but 

technology and other market forces 

are converging to build a business 

case (“Is Mobile Banking Getting 

Connected?” page 28). “It’s going to 

be a very, very fun next three to five 

years,” he says. 

Think Twice Before 

Reissuing Debit Cards 

Banks’ reflexive move after getting 

word of accounts compromised in a 

data breach—to reissue boatloads of 

cards—may need some rethinking. 

Research released this spring 

shows issuers are assuming needless 

costs with mass reissuance, and 

forfeiting consumer trust in the bargain. 

And, with organized hackers 

now targeting merchant processors— 

which run data for thousands of merchants—the 

problem is only going to 

get worse. “[Breaches] occur all the 

Where Fraud Is Coming From 

(Noted incidents by data breach) 

TJX 

Heartland 

RBS 

BJ’s 

DSW 

Countrywide 

Others 

None 

31.25% 

30.00% 

6.25% 

8.75% 

12.50% 

7.50% 

1.25% 

Note: Respondents were 113 debit card issuers, 51% of which were in the U.S. They were 

asked, “Do you believe you have seen stolen data from the following mass compromise 

events used in fraud attacks (check all that apply).” 

Source: Actimize 

time, and don’t show any signs of 

going away,” says Paul Henninger, 

director of fraud solutions at Actimize 

Inc., the New York City-based 

vendor of anti-fraud software that 

sponsored the research. 

Issuers will have to find ways to 

more selectively shut off access to 

accounts, Henninger says. As it is, 

he figures reissuance costs as much 

as $30 per card, with postage, callcenter, 

and other operational overhead 

factored in on top of the actual cost of 

a card. “Banks have to decide what 

approach to take,” Henninger warns. 

Actimize’s research effort, which 

in April surveyed 113 institutions 

around the world (51% in North 

America) about fraud on PIN- and 

signature-based debit card transactions, 

sheds light on the scale of the 

recent processor breaches, including 

those at Heartland Payment Systems 

Inc. and RBS WorldPay Inc. 

Heartland has not released any 

figures for how many accounts were 

compromised in its attack, which 

occurred last year, but in the survey 

30% of respondents said they had 

seen fraud they believed stemmed 

from the breach. That’s nearly on a par 

with the 31.25% who reported attacks 

from data stolen in the TJX Cos. Inc. 

breach, which was reported more than 

55.00% 

two years ago and involved anywhere 

from 46 million to 100 million compromised 

accounts. 

The data suggest, says Henninger, 

that either hackers are getting 

more aggressive about using stolen 

card data or “the Heartland compromise 

was at least as big as TJX if 

not larger.” The RBS breach, which 

involved payroll card data, registered 

a 6.25% response. 

At the same time, banks aren’t 

finding all that many accounts are 

actually affected by post-breach fraud. 

Even though some 48% of respondents 

reported that fewer than 1% of 

the accounts they are notified of as 

having been exposed in a breach are 

actually hit with fraudulent activity, 

nearly 15% are replacing more than 

20% of their cards in the wake of a 

data breach. “These are cards they 

pre-emptively reissued without any 

indication of fraud,” says Henninger. 

“It’s a massive number of cards.” 

He credits the banks with taking 

fraud seriously, but says they are relying 

on a “blunt instrument,” namely 

legacy processing systems that were 

not designed to handle the aftermath 

of a mass data compromise. Two 

technologies that would help pinpoint 

reissuance, he says, are real-time 

transaction monitoring and analytical 


modeling updated to include characteristics 

of mass compromises. 

Some issuers, Henninger says, are 

getting the message that wide-ranging— 

and repeated—card replacements shake 

consumer confidence in the issuing 

institution. “These were risk professionals 

responding,” he says. “They 

appear to be as concerned about the 

impact on consumers as they are with 

the financial impact.” 

Indeed, more than 78% of respondents 

said they are seeing a decline in 

consumer trust as a result of data 

breaches, Henninger says, noting, “If 

you have a customer who lacks trust 

in the banking institution, that’s a 

serious problem.” 

price—off 70% since the company 

went public in 1999. The run-up to 

Online Resources’ May 6 annual 

shareholder meeting included dueling 

proxy cards, a “blue” one with 

the Tennenbaum-backed candidates 

and a management-backed “white” 

one. Management claimed Tennenbaum, 

which holds a 22% stake in 

Online Resources, wanted a quick 

sale of the company to recoup as 

much of its preferred-stock investment 

as possible, but that such a sale 

wouldn’t benefit common shareholders. 

Management also questioned 

whether the Tennenbaum nominees 

had the experience to properly guide 

Online Resources. 

Behind Online Resources’ 

Proxy Fight 

A rare payments-industry proxy fight 

this spring cast the top management 

of bill-payment technology provider 

Online Resources Corp. against the 

company’s largest shareholder. Ultimately, 

the challengers won, but the 

chairman and chief executive made 

peace with them—publicly, at least. 

“I think it’s going to work out,” says 

Matthew P. Lawlor, who co-founded 

the Chantilly, Va.-based company in 

1989. “There’s always a silver lining.” 

Three nominees backed by hedge 

fund Tennenbaum Capital Partners 

won seats on Online Resources’ 

10-member board of directors over 

a slate of three management-backed 

incumbents, one who had been a 

director for two decades. Counting 

another incumbent, Michael E. Leitner, 

Tennenbaum’s managing partner, 

Santa Monica, Calif.-based Tennenbaum 

now controls four board seats. 

The background of the fight was 

the drop in Online Resources’ stock 


Going up? Today’s shifting demands require a partner who shares your goals with the proven expertise 

to help you reach them. For more than 16,000 clients worldwide, Fiserv is transforming the way financial 

services are delivered. Helping turn possibilities into realities. With Fiserv, you have the power to go places. 

The power within. www.newfiserv.com 

Payments 

■ 

Processing 

Services 

■ 

Risk 

& Compliance 

■ 

Customer 

& Channel Management 

■ 

Business 

Intelligence & Optimization 

© 2009 Fiserv, Inc. or its affi liates.



Tennenbaum poured $160 million 

into Online Resources, an investment 

that enabled Online Resources in 

2006 to buy a rival bill-pay tech company, 

Princeton eCom Corp. Leitner 

didn’t return a call for comment, 

but in a filing shortly before the 

annual meeting, Tennenbaum denied 

it intended to sell the company and 

that its goal was to “create value for 

all common shareholders.” 

A day after the annual meeting, 

Online Resources and Tennenbaum 

issued a conciliatory joint 

press release. “We firmly believe 

Online Resources has the best online 

financial-information and payment 

service in the industry,” Leitner said 

in the release. “We are committed to 

growing the business and maintaining 

the company’s high quality of service 

and track record of innovation.” 

Lawlor, meanwhile, said in the release 

that, “I congratulate and welcome” 

the newly elected nominees. 

In an interview, Lawlor acknowledged 

that “we’ve had our differences” 

[with Tennenbaum,] but what 

good does it do? I said ‘Michael … 

let’s focus on those things we have 

in common.’ We all want a higher 

stock price.” 

Online Resources has taken on debt 

to position itself for growth, and that 

debt recently has been a drag on the 

stock, Lawlor says. But most of the stock 

price is less about Online Resources’ 

performance and more about the overall 

market, according to Lawlor. He says 

the company has fared well over the 

years against its tech peers. “It’s like 

your house—90% of your value is in 

your neighborhood,” he says. 

Now about midway through a 

five-year growth plan, Lawlor says 

Credit Card And E-Banking Web Transaction Indexes 

Following are the Keynote Credit Card Web Transaction Performance 

Index and the Keynote E-Banking Web Transaction Performance Index. 

The Keynote Credit Card Web Transaction Performance Index measures 

the performance and availability of going to a selected credit 

card site and logging in to conduct the appropriate intended actions 

and checking in or signing out. All measurements are taken from the 

10 largest U.S. metropolitan areas (Boston, Chicago, Dallas, Detroit, 

Houston, Los Angeles, New York, Philadelphia, San Francisco, and 

Washington, D.C.) on high-speed links attached to key points on the 

largest U.S. Internet Service Protocol (ISP) backbones. 

The Keynote E-Banking Web Transaction Performance Index shows 

the total execution time and success rate for logging into an account 

and checking the account balance on selected Internet banking sites. 

The sites included in the index were selected based on publicly 

Credit Card Web Transaction Performance Index 

Week starting May 4, 2009 

Rank by Speed (seconds) 

Response Rank week Rank week Rank week 

Rank Target 

Time (sec.) of 4/27 of 4/20 of 4/13 

1 Diners Club 4.78 1 1 1 

2 Chase 7.11 2 3 2 

3 US Bank 7.69 DNR 2 DNR 

4 Citibank 8.19 3 4 3 

5 Wells Fargo 8.36 4 5 4 

Credit Card Index 10.08 

6 HSBC 11.8 6 8 5 

7 American Express 12.17 5 6 6 

8 Capital One 13.32 7 7 7 

9 National City 15.89 8 9 8 

10 Bank of America 16.85 9 10 9 

E-Banking Web Transaction Performance Index 

Week starting May 4, 2009 

Rank by Speed (seconds) 

Response Rank week Rank week Rank week 

Rank Target 

Time (sec.) of 4/27 of 4/20 of 4/13 

1 Etrade 3.77 1 1 1 

2 WAMU 6.52 2 2 2 

3 Wachovia 6.73 3 DNR 3 

4 Chase 7.24 4 4 5 

5 US Bank 7.39 DNR 3 DNR 

6 PNC 7.8 DNR DNR 4 

eBanking Index 7.96 

7 Wells Fargo 8.11 5 5 6 

8 Citizens Bank 8.86 6 6 7 

9 Sun Trust 10.78 DNR DNR DNR 

10 Bank of America 11.41 7 7 8 

11 Citibank 12.17 8 8 9 

12 National City 15.32 9 9 10 

available market-share information published in The Wall Street 

Journal and other reliable industry sources. 

Data for these indexes, supplied each week by Keynote Systems 

Inc., San Mateo, Calif., reflect performance for the most recent 

week available before the production deadline for this issue, as 

well as rankings for the three previous weeks. Sites from these lists 

may be removed from weekly published results due to insufficient 

data points for a particular week. For other weeks the site was 

removed, its ranking will be indicated as “DNR”—did not rank. 

For more information on the methodology behind the indexes, 

visit www.keynote.com. For more complete statistics for the 

weeks indicated, go to www.digitaltransactions.net, click on “Web 

Transaction Performance Indexes,” and click on the hyperlink for the 

week you’re interested in at the bottom of the page. 

Rank by Success Rate (percentage) 

Success Outage Rank week Rank week Rank week 

Rank Target 

Rate (%) Hours of 4/27 of 4/20 of 4/13 

1 Citibank 100 0 1 8 4 

1 National City 100 0 7 4 8 

3 Wells Fargo 99.9 0 5 4 6 

4 Chase 99.6 0 5 4 3 

5 HSBC 99.5 1 1 11 1 

6 American Express 99.4 1 8 1 2 

6 Capital One 99.4 0 1 1 5 

8 Bank of America 98.9 0 9 9 9 

Credit Card Index 97.28 0 

9 Diners Club 95.1 4 4 1 10 

10 US Bank 80.9 6 DNR 10 DNR 

Rank by Success Rate (percentage) 

Success Outage Rank week Rank week Rank week 

Rank Target 

Rate (%) Hours of 4/27 of 4/20 of 4/13 

1 Sun Trust 100 0 DNR DNR DNR 

1 WAMU 100 0 1 1 1 

3 Chase 99.6 0 5 4 1 

3 Citibank 99.6 0 8 8 7 

5 Bank of America 99.2 0 2 3 4 

5 Etrade 99.2 0 2 1 3 

5 Wells Fargo 99.2 0 7 7 8 

8 National City 99 1 2 5 10 

eBanking Index 98.8 0 

9 Citizens Bank 97.9 1 9 6 9 

10 US Bank 97.6 0 DNR 9 DNR 

11 PNC 96.6 2 DNR DNR 6 

12 Wachovia 96.4 3 6 DNR 5 


Online Resources is differentiating 

itself from competitors such as Fiserv 

Inc. and Metavante Corp. and is 

poised to grow as banks and companies 

seek to replace paper bills with 

electronic payments. 

Tension between Lawlor’s deliberate 

style and Tennenbaum’s need 

for a quicker return on its investment 

may have caused the proxy fight, says 

James Van Dyke, president of Pleasanton, 

Calif.-based Javelin Strategy & 

Research. Back in 1989, while working 

for check printer and bank-services 

provider John H. Harland Co., 

Van Dyke forged a deal that made 

Harland one of Online Resources’ 

earliest customers. Harland at the time 

was looking for an electronic bill-pay 

provider. “What I’ll tell you is Online 

Resources always has been and is a 

very conservative organization,” says 

Recent Numbers from Online Resources 

(in millions) 

1st Q. 2009 1st Q. 2008 Change 

Banking payment transactions 39.04 41.81 -6.6% 

Biller payment transactions 14.74 12.04 22.4% 

Total users 13.84 13.51 2.4% 

Payment services revenues $31.13 $31.88 -2.3% 

Total revenues $39.24 $39.20 0.1% 

Net income -$1.62 -$3.58 54.8% 

Notes: The banking payment segment declined due to the loss of a large client in 2008’s 

second quarter and lower float revenue because of lower interest rates. Net income is that 

available to common shareholders. 

Source: Online Resources Corp. 

Van Dyke. “Matt is a remarkably conservative 

guy, grows the company 

slowly, places very safe bets.” 

Tennenbaum, meanwhile, comes 

from a different background. “You 

get a Wall Street guy that wants a 

quick and aggressive return—a quick 

return is a way of risk mitigation,” 

says Van Dyke. “I’m sure that’s the 

source of the conflict.” 

Lawlor plans to stick around at 

least until the five-year plan is completed. 

“Once that’s done, the board 

will decide if I’m the right guy or 

not,” he says. 

Online Resources’ release didn’t 

reveal the vote count from the annual 

meeting, but the company said final 

results would be reported in a Securities 

and Exchange Commission filing. DT 

THE PREPAID PRESS EXPO 

WHERE PREPAID CONVERGES 

EXHIBIT 

Pricing for 10’ x 10’ Booths: 

$4,100 from May 30 through June 30 

$4,300 thereafter 

High profile Sponsorships 

available from $8,960, 

including your booth. 

THE PREPAID PRESS EXPO 

THE SHOW FOR THE PREPAID SERVICES INDUSTRY 

AUGUST 18-20, 2009 · CAESARS PALACE, LAS VEGAS 

WWW.PREPAIDPRESSEXPO.COM 

expo@prepaidpressexpo.com · 866.203.2334 ext. 505 

NETWORK 

Meet, greet, and be part of the 

excitement! Learn about the latest 

and greatest ideas, products, and 

opportunities within the prepaid 

services industry. 

Toga Party Pass $125 

Exhibit Hall Pass $49 

LEARN 

With the help of industry 

leading conference organizer, 

The Pelorus Group, you can 

attend the most informative 

and most affordable conference 

program for prepaid services. 

Conference Passes from 

$275 for a One Day Pass 

$599 for all Three Days 

USE CODE DGTDISC FOR A 20% DISCOUNT ON ANY REGISTRATION 




Security Notes 

How Hackers Are Raising Their Game 


Gideon Samid • Gideon@AGSgo.com 

Phishing and pharming by 

now are routine stuff for 

hackers. Here are a few 

new schemes coming of age. 

First, there’s automatic billing. 

Busy as we are, we are likely to forget 

paying the monthly bill for the 

phone, gas, or power, so it is very 

convenient to allow trusted companies to siphon the money out 

of our account without us having to worry about it. 

But this practice is a tempting target for those who make 

a living by fraud. Some companies have become targets for 

hackers who set up unauthorized company accounts and then 

use the proper security protocol to transfer funds from your 

account to the company account—only they control that 

company account. The individual sums are small, and they 

tend to be identified with some obscure surcharge ID. Even 

if you complain, the company is likely to lose the trail of the 

inquiry. To set up the scheme, the hackers bribe an insider 

who gives them entry data to access the system remotely the 

way company executives do. The hackers themselves usually 

work from overseas, out of the reach of American law. 

Here’s another vulnerability, one that looms large in 

today’s economy. Low-paid, trusted workers are becoming 

targets for quick-buck artists. A fraudster befriends a lawyer’s 

administrative assistant and invites her to lunch. When 

she excuses herself to go to the restroom, the fraudster picks 

her pocketbook, checks out her personal organizer, finds her 

e-mail password, and tucks inside a few hundred dollar bills. 

All was agreed upon beforehand. 

The secretary is not too burdened by her conscience 

since she stole no money, betrayed no earth-shaking secret, 

and after all anyone can have their password stolen. And 

she knows she can change her mind at any moment by simply 

changing her password. Back in the office, the secretary 

simply adjusts her Outlook to leave the messages on the 

server for her partner-in-fraud to peruse. The clients of the 

firm may have robust security, and much to hide. But they 

tend to trust their attorney, and so rarely use encryption. 

Such leaks can stay functional for a long time because 

hackers have gotten very smart about how to exploit what 

they learn from this e-mail eavesdropping. In extreme 

cases, the hacker will blast out intelligent and well-targeted 

e-mails to the client of the lawyer, accountant, or doctor for 

whom that secretary works. The replies (quickly removed 

from the server) will be brimming with private—and 

profitable—data. 

One highly respected law office registered its domain 

name from the initials of the founding partners. The name 

was an unwieldy string of six letters. An enterprising 

hacker registered a very similar domain name (two letters 

transposed), and sent e-mails from his look-alike domain, 

exploiting our habit to simply hit the reply button. When 

the authorities caught up with the fraud, they hounded the 

person who registered the domain-name look-alike. The 

accused fellow was so much not the type that the authorities 

eventually suspected identity theft, which is what it was. 

The name and private data were compromised in one of the 

major bulk ID thefts. The accused had been notified of the 

theft, but was naively happy that nobody stole his money. 

Of course, the biggest indirect hack temptation is for a 

master hacker to get hired by a top-notch security company 

with very sensitive clients. Yes, these companies do extensive 

background checks, but on the other hand they cannot 

be too choosy. The caliber of programmers they require is 

not easy to find. Just having read “C++ for Dummies” won’t 

do. So they are quite conflicted when an ace software master 

has a minor blemish on his record. 

Alas, while hackers once bragged about their exploits 

in hack-chats, today the top players use stolen IDs, and 

keep their records clean. Also, hackers who get themselves 

hired in a position of trust guard it passionately. They do 

nothing to harm their employers, which are only the hackthrough 

agents. They use sophisticated means to communicate 

to their accomplices. One common way is to copy 

themselves on bona fide, yet very delicate, e-mails they 

send around the company. The accomplice, who knows the 

password, logs on to the account and reads the information 

from the server. 

Thus, the hack-through hacker approaches his victim 

via a bona fide front. He exploits our sense of comfort and 

writes the next chapter in the unending cyberwar.

Thank you to our Agents for their hard work and dedication. 

We are honored to be the ETA’s f irst ever ISO of the Year! 

With Merchant Warehouse you could be signing more accounts, building your portfolio, 

and With enjoying Merchant the Warehouse benef its that you come could from be signing working more with a winner! 

accounts, building your 

BINsmart 

portfolio, 

and enjoying the benefits that come from working 

Saving merchants on processing costs without lowering your margins 

with a winner! 

iPhone and Blackberry Mobile Processing Applications 

FREE real time processing application for the iPhone and Blackberry 

Restaurant and Retail POS Systems 

Help streamline your merchant's operations with easy-to-deploy and affordable systems 

The Security of a Financially Sound ISO and Guaranteed Lifetime Residuals 

We guarantee residuals with no minimums and unimpeded rights of sale to any third party 

In-Depth Sales Training 

Up to 70% Residuals 

6X Conversion Bonus 

Cash Advance Program 

Text Message Updates 

In-House Support 

Gift Card Program 

Check Guarantee Service 

2009 

ISO OF THE 

YEAR 

Contact Michael Gavin at 800-743-8047 or mgavin@merchantwarehouse.com to start 

working with us today! Visit www.merchantwarehouse.com/iso to learn more about 

our Agent Program and Products

ACQUIRING 

June 2009 digitaltransactions 

The DVD Kiosk 

Gold Rush 

Peter Lucas 

Changing consumer preferences and strong economics are making 

kiosks that rent DVDs ubiquitous. With Blockbuster moving into 

the space to challenge dominant incumbent Redbox, kiosks could 

be just the ticket to revive sagging retail DVD rentals. Up next: 

digital downloads. 

Whether consumers are at a 

supermarket, McDonald’s, 

Walgreen’s, 7-Eleven, or 

Wal-Mart or at an airport, picking up 

a DVD has never been more convenient 

thanks to Redbox Automated 

Retail LLC. Consumers need only 

swipe a credit or debit card, select 

the desired movie and return it at any 

one of Redbox’s more than 14,000 

locations nationwide, making it an 

ideal service for travelers or families 

on the go. 

The price—$1 a day plus tax— 

is the icing on the cake and a major 

reason why Redbox has rented more 

than 380 million DVDs since its 

rollout in 2004. Redbox now counts 

about 35 million unique customers 

and has an estimated 77% of DVD 

rental kiosks in the U.S. 

But with DVD rental revenues 

through kiosks projected to 

reach $1.3 billion in 2012, up from 

$485 million 2008, according to 

Monterey, Calif.-based Adams Media 

Research, Redbox is getting company. 

In April, ATM manufacturer NCR 

Corp., which also makes self-service 

kiosks for supermarkets and check-in 

at airports, acquired a majority stake 

in movie-rental kiosk operator TNR 

Holdings Corp. TNR plays second 

fiddle to Redbox with about 2,100 

machines in North America. Most 

of TNR’s kiosks are in Albertson’s, 

Ralph’s, and Kroger supermarkets. 

The Case for Kiosks 

In February, Bellevue, Wash.-based 

Coinstar Inc., which owned 51% 

of Redbox, announced that Redbox 

would become a wholly owned subsidiary. 

Coinstar bought McDonald’s 

Corp.’s stake in Redbox in a cash 

and stock deal reported to be worth 

between $134 million and $151 million 

(box, page 22). The remaining minority 

shareholders were to receive up to 

$25 million for their stakes. 

Redbox represents about 9% of 

the overall DVD rental market and 

is expected to install between 6,000 

and 8,000 new units in 2009, up from 

prior projections of 4,000 to 6,000 

kiosks, according to Coinstar. 

Paul D. Davis, the new chief executive 

for Coinstar, which operates 

self-service coin-counting kiosks, 

told analysts during Coinstar’s fourthquarter 

2008 earnings call in February 

that he expects DVD revenue to 

increase as much as 80% this year, 

possibly hitting $750 million. That 

would make Redbox the primary sales 

driver for Coinstar, which expects to 

take in $1.3 billion in overall revenue 

this year. 

“Factors driving success continue 

to be strong installations and the terrific 

unit economics,” Davis, chief operating 

officer at the time, told analysts. Coinstar 

did not respond to Digital Transactions’ 

requests for an interview. 

NCR’s acquisition of TNR, which 

developed the software behind its 

kiosks, dovetails nicely with its 

announcement last summer that it 

would partner with Blockbuster Inc. 

to deploy 10,000 rental kiosks in 

2010. Thanks to the deal, NCR and 

Blockbuster have the hardware and 

software needed to keep pace with the 

DVD kiosk market’s rapid growth. 

“Economies of scale work well 

in any business, but especially so in 

the DVD-rental kiosks market,” says 

Denis Cambruzzi, vice president at 

Adams Media Research. “TNR not 

only brings technical expertise, but 

more outlets and industry relationships, 

and that puts Blockbuster and 

NCR in a more advantageous position 

going forward.” 

The growth of DVD kiosks contrasts 

with slumping business inside 

DVD stores, where titles cost more to 

rent and lines can be long on weekends. 

Revenues from in-store DVD rentals 

have been in steady decline since 


Hungry to offer new technology 

and build revenue? 

Discover the latest payment processing 

solutions from the innovators at First Data. 

Make your selection from flexible programs 

that deliver more ways for you to make money. 

Innovative solutions. Flexible programs. Proven 

reliability. There are many reasons why more 

ISOs prefer to partner with First Data. Discover 

the products, programs and customer support 

that make it easy to build your business. 

Call us at 800-974-5171 for more information.

2001, when they hit $10.4 billion, 

and had fallen to $8.2 billion in 2008, 

according to Adams Media Research. 

Revenues have been flat since 2007, 

and Adams expects little or no overall 

growth in 2009 in total in-store 

rental revenues. 

About 3,800 specialty DVD retail 

stores closed during that period and 

more than 16,000 non-specialty DVD 

retail stores—which were usually 

found as departments within supermarkets 

or convenience stores—have 

also been shuttered. With DVD kiosks 

expected to post substantial growth, it 

is no wonder that DVD retailers are 

putting more resources behind them 

to stimulate their business. 

“A lot of the non-specialty retailers 

are installing kiosks to replace 

their DVD departments,” says Cambruzzi. 

“In Southern California some 

non-specialty DVD retailers found 

that customers were more willing to 

wait in line to use a kiosk than at the 

counter in the DVD department. It’s 

why many of these retailers added a 

second kiosk.” 

The benefits to non-specialty 

DVD retailers from deploying kiosks 

include eliminating or reassigning 

staff from the DVD department, freeing 

that retail space for other uses, 

and receiving a portion of the revenue 

generated through the kiosk. 

Specialty DVD retailers with kiosks, 

meanwhile, can expand their presence 

to remote locations such as airports 

and offer their service at all times 

without additional staff. 

“There is a strong business case 

for rental kiosks,” says Cambruzzi. 

Pricing out Pirates 

Blockbuster expects the deployment 

of Blockbuster Express kiosks will 

bolster its battered retail business, 

which has taken hits in recent years 

not only from Redbox, but also from 

Netflix Inc., the pioneer of DVD rentals 

through the mail. 

Blockbuster is teetering financially. 

The company’s 2008 annual 

report includes a “going concern” 

warning from its independent auditor. 

And in April securities rating 

agency Standard & Poor’s downgraded 

Blockbuster’s debt further into 

junk territory. 

Blockbuster, which in addition 

to Netflix and Redbox also faces 

stiff competition from cable operators 

that offer on-demand downloads and 

Internet sites that stream movies, has 

Blockbuster is distinguishing its NCRmade 

DVD kiosks with a deep blue that 

contrasts with Redbox’s trademark red. 

been looking for ways to diversify its 

distribution channels. Rental kiosks 

present the best opportunity for the 

chain to quickly regain its footing. 

“We believe NCR’s acquisition 

of TNR sets the stage for aggressive 

growth and will further our goal 

of deploying thousands of Blockbuster 

Express-branded kiosks by 

next year, providing another platform 

to give consumers added control, 

flexibility, and convenience in 

how they access their media entertainment 

from Blockbuster,” said 

a Blockbuster spokesperson in an 

e-mail response to questions from 

Digital Transactions about its plans 

for DVD rental kiosks. 

Blockbuster says it is pursuing a 

three-pronged strategy of restoring 

the company’s rental DVD business, 

transitioning its stores to include more 

retail offerings, and developing new 

channels for digital-content delivery. 

Observers expect that making the 

transition to the digital delivery of 

movies through 

kiosks and stores 

will play a major 

role in helping 

Blockbuster to 

regain its footing. 

But it won’t be just Blockbuster that 

goes digital. 

“The rental-kiosk business in its 

current form is not going last for 

many more years,” predicts Greg 

Buzek, founder and president of 

Franklin, Tenn.-based research and 

consulting firm IHL Group. “Within 

five years kiosks are going to be 

delivering content through digital 

downloads to SD cards that consumers 

can play on a variety of devices. 

It’s a technology that’s going to be 

needed to stay in the market.” 


SD, or Secure Digital, cards 

are widely used in digital cameras, 

handheld computers, media players, 

mobile phones, GPS receivers, and 

video-game consoles. Standard SD 

card capacities range from 4 megabytes 

to 4 gigabytes. 

NCR is developing a kiosk that 

will perform digital downloads with 

Seattle-based MOD Systems Inc., a 

provider of digital-media delivery 

systems for retailers, and Japanese 

electronics giant Toshiba Inc. Testing 

is expected to begin in 2009, with 

units rolling out in 2010. 

“By 2012, we expect to be seeing 

some meaningful market share 

for these kiosks,” says Brad Gleeson, 

senior vice president of business 

development for MOD Systems. 

“There is a logical lifecycle to the 

current kiosk technology.” 

The biggest advantage from 

a sales perspective is that digitaldownload 

kiosks can hold an infinite 

number of titles, which translates 

into greater sales per machine. 

Current NCR kiosks can hold up to 

1,000 titles. In comparison, Redbox 

kiosks, which are manufactured by 

Singapore-based Flextronics International, 

can hold up to 700 titles. 

Both companies are exploring 

digital downloads. 

“Kiosk inventory is primarily 

current releases, but with digital content 

the inventory can be expanded 

to represent the retailer’s entire catalog,” 

says Justin Hotard, vice president 

and dual acting general manager 

for NCR Entertainment, a division 

of Dayton, Ohio-based NCR Corp. 

“Plus, any kiosk can simultaneously 

rent the same title to multiple customers 

because they are not limited 

to a specific number of copies 

in the kiosk.” 

Configuring the Blockbuster 

Express kiosks to tap into the retailer’s 

catalog will require little additional 

engineering, according to 

Hotard. NCR will either link them by 

wire to handle the needed operations 

The DVD Rental Market 

($ billions) 

In-store video rentals, 2001 $10.4 

In-store video rentals, 2008 $8.2 

DVD kiosk rentals, 2008 $0.49 

Projected kiosk rentals, 2012 $1.3 

Redbox’s Booming Kiosk Business 

or connect them to a wireless network 

to perform card authorizations at the 

time of rental, he says. 

Whether the digital copy will actually 

be rented, sold, or both through 

kiosks is still being debated. Industry 

experts, however, say there is little 

risk of piracy since an electronic key 

Source: Adams Media Research 

Current kiosks deployed 14,000+ 

Share of total DVD rentals 9% 

Additional kiosk deployments, 2009 6,000-8,000 

Projected 2009 revenue 

$750 million 

Source: Coinstar Inc. 

code encrypts the downloaded content 

onto the SD card. Anyone attempting 

to download the content off the SD 

card would need the key code. 

Further, if digital downloads are 

priced low enough, such as the current 

price of $1 per rental, there is little 

incentive for bootleggers to pirate the 


content. “Redbox’s pricing has eliminated 

a lot of the risk of DVD piracy 

in the U.S.,” says Cambruzzi. 

Following ATMs 

On the payments end, analysts do 

not expect Blockbuster, Redbox or 

any other new entrants to add options 

beyond credit and signature debit as 

the installed base of kiosks grows. 

Unlike PIN debit, which requires the 

entry of the PIN for each transaction, 

credit and signature debit cards can be 

charged additional fees if the customer 

is late returning the DVD or does not 

return it at all. Redbox charges its daily 

fee plus tax for late returns for 25 days, 

at which point it considers the DVD 

purchased. The company says it has no 

plans to add cash acceptance. 

“To add PIN debit would require 

getting the PIN pads certified from 

the EFT networks,” says Bruce Cundiff, 

senior analyst with Pleasanton, 

Calif.-based Javelin Strategy and 

Research. “The current setup works 

well so there is really no need.” 

Aside from digital downloads, 

DVD retailers can enhance the appeal 

of renting through a kiosk by allowing 

consumers to log on to the retailer’s 

Web site, locate a kiosk with the 

title they want and reserve it. Redbox 

already offers this feature in its 

existing kiosks. MOD Systems plans 

to incorporate the reservation feature 

into its digital-download technology. 

With in-store DVD rentals down, 

kiosks represent a huge opportunity 

to revive retail rentals, and potential 

sales, of movies and television shows. 

“Consumers’ appetite for digital 

content is growing, but they want 

more distribution channels that offer 

greater convenience for renting this 

content,” says NCR’s Hotard. “Kiosks 

represent the best opportunity for tapping 

into this trend, much in the way 

ATMs did for bringing the convenience 

of 24-hour self-service to the 

banking industry.” DT 

Hatched as an idea within an entrepreneurial unit of 

McDonald’s Corp. near the outset of the decade, 

Redbox not only grew quickly to dominate the kioskbased 

DVD rental market but became a profitable 

venture for its investors, which included Coinstar Inc., 

king of the self-service coin-counting kiosk market. 

Coinstar bought a minority stake in Redbox in 2005 

and in February took full ownership of the company. 

McDonald’s Corp.’s 44.4% interest in Redbox was 

held by an affiliate, GetAMovie Inc. of Schaumburg, Ill. 

Although Redbox proved to be profitable, McDonald’s in 

recent years has been shedding its non-fast-food ventures. 

“In tough economic times, large corporations are 

more apt to focus on their core business,” says Denis 

Cambruzzi, vice president for Monterey, Calif.-based 

Adams Media Research. “Why not take the money from 

the sale and apply it to earnings in a down economy?” 

The sale was structured to yield up to $151 million in 

cash and stock for McDonald’s, according to Coinstar. A 

spokesperson for Oak Brook, Ill.-based McDonald’s was 

unavailable for comment. Some observers also say another 

factor that may have influenced the sale is Redbox’s litigation 

with Universal Studios Home Entertainment LLC 

over distribution of its films in Redbox kiosks. After being 

sued by Universal, Redbox countersued for alleged violation 

of antitrust laws and misuse of copyrights. 

Coinstar, meanwhile, is expecting big things from 

Redbox, which Adams Media estimates has a 77% 

share of the kiosk-based DVD rental market. In 2008, 

Redbox’s pro-forma DVD revenues increased 179% to 

approximately $400 million, Paul D. Davis, Coinstar’s 

Behind Coinstar’s Redbox Buy 

chief operating officer at the time and now chief 

executive, told analysts in February. “Our same-store 

sales growth for the full year 2008 was 52%,” said 

Davis, according to the Seeking Alpha transcript service 

(www.SeekingAlpha.com). 

According to Davis, DVD kiosks begin to produce 

handsome returns after three years. “Immature machines 

typically experience lower margins as they ramp up,” said 

Davis. “The revenue ramp continues to remain strong 

with year-three revenues of over $50,000 per unit. In addition, 

per-unit manufacturing and installation costs continue 

to decline, with units costing between $14,000 and 

$15,000 for 2009. Therefore, with a per-unit capital cost 

of just over $14,000 and increasing revenue trends, a Redbox 

unit produces a healthy return on investment.” 

Coinstar is so bullish on Redbox and the DVD-rental 

kiosk business that it is confident it can achieve an overall 

share of more than 20% of all DVD rentals in each 

of its local markets, more than double its current aggregated 

share. “When we made the initial investment in 

2005, we thought we might be able to get 15% share in 

any given market, but Houston and Denver, two of our 

oldest markets, suggest our ability to gain more than 

20% share,” said Davis. 

Consumer feedback reveals that price, ease of use, 

convenience, selection, the return-anywhere option, and 

online-reservation feature are what attracts consumers to 

Redbox and why they would recommend it to a friend. 

“The acquisition of the remaining equity stakes in Redbox 

represents an allocation of capital in a known entity 

that has already proven itself financially,” said Davis. 


NETWORKS 


The Peril— 

And Opportunity— 

in Prepaid Banking Cards 

Jarrett Helms and Nate Gonzalez 

The market for prepaid cards that function like traditional debit cards 

is growing rapidly, but it faces slim profit margins and increasing pressure 

from the economic downturn and potential regulation. Winning 

issuers will be innovators that can drive adoption and revenue. 

Given the current economic climate, 

where doom and gloom 

seem to abound (especially in 

financial services), it is natural to look 

for the few areas of growth and opportunity. 

Perhaps this is why the prepaid card 

market is getting more than a passing 

mention in the industry news recently. 

Unlike traditional credit cards, which 

will likely experience a retraction in 

growth in 2009, prepaid cards (specifically 

open-loop, prepaid banking cards), 

are poised for substantial growth. 

By Global Concepts’ estimates, 

payment volume on open-loop prepaid 

banking cards is likely to grow at a compound 

annual rate of 22% until 2012. 

On the surface, this seems astounding 

in our current climate. Industry analysts 

rationalize this growth by describing 

a consumer behavioral shift away 

from credit to prepaid, and an upswing 

in adoption by the underbanked. 

In spite of strong growth potential 

for prepaid banking cards, the market 

faces significant hurdles to achieving 

scale and profitability. 

Upper Bound 

Prepaid banking cards are part of a 

larger category of prepaid instruments 

marketed in a large variety of ways 

and with differing functionality. In 

general, there are three broad categories 

of prepaid instruments: 

General-purpose cards: operate on 

the open-loop networks of Master- 

Card or Visa. 

Private-label cards: primarily 

retailer-issued gift cards that run on 

closed, private networks. 

Disbursement cards: general purpose 

or private-label prepaid cards 

distinguished by their funding model; 

funds are loaded onto the card for the 

consumer by a custodial entity (government, 

employer, etc.); examples include 

payroll cards, government-assistance 

cards, and health-care benefits cards. 

Private-label cards account for the 

largest portion of total prepaid card 

spend (chart, page 26), but growth is 

beginning to slow as the market for 

gift cards is maturing. Disbursement 

cards make up the other substantial 

portion of overall prepaid. They 

could be an area for future innovation 

around Social Security benefits 

or health care, but currently are niche 

markets controlled by large players. 

General-purpose cards are the 

smallest section of prepaid. But an even 

smaller subsection of general-purpose 

cards, those called “open money” or 

“prepaid banking” cards, are typically 

what receives most of the press. 

These cards provide many of 

the features associated with a bank 

account and debit card. Consumers 

can purchase a prepaid banking card, 

reload it with cash when needed, 

and then use it to make purchases at 

a physical point of sale or online or 

by withdrawing cash from an ATM. 

Consumers can also manage their 

money by checking balances online or 

through a voice system. 

Prepaid banking cards, as a subsection 

of the smallest sector of the prepaid 

card market, are a very small part of the 

overall payments industry. According to 

Global Concepts’ estimates, dollar transaction 

spend for prepaid banking cards 

was an estimated $3 billion in 2008, in 

comparison with the $71 billion dollar 

spend on closed-loop prepaid gift cards 

or the $731 billion dollar spend for signature 

debit cards, which also leverage 

the MasterCard/Visa rails. 

With such a small market, why 

should we discuss prepaid banking 

cards at all? One important reason 

is that prepaid banking cards provide 

a transactional account for the 

financially underserved. This population 

comprises about 35% of the 

total U.S. population, or 106 million 

individuals, according to The Center 

for Financial Services Innovation 

(CFSI)’s “Underbanked Consumer 

Overview & Market Segments Fact 

Sheet,” released June 8, 2008. 


At 

Not Only Is The Grass Greener, 

It’s The Right Kind Of Green! 

The ISO Program 

That IS As Good As It Looks! 

Customized Interchange Programs 

Up To 80% / 20% Splits 

20 Years 

Strong 

Since 1989 

Our 20 Years of Experience Provides You A 

 

WWW.1800BANKCARD.COM 

Member Bank: First National Bank Of Omaha, Member FDIC; 150 years of secure transactions.

Our Program 

IS As Good As 

It Looks 

Exclusive BINs 

& ICAs 

Signing / Conversion 

Bonus 

Bad Credit Retail 

Business Accepted 

Direct Lease / 

Split Funding 

App In - Live MID / TID - 

3 Hrs. 

MSI Same Day 

Deployment 

Call 1-800-226-5227 and ask for: 

George Mayo at ext. 5923 

Rich Lopez at ext. 5912 

Joyce Seuhbetian Ext. 5925 

Ricardo Romero ext. 5978 

Both banks and third parties want to reach this market with a profitable 

product. Prepaid banking cards provide a targeted approach because banked 

consumers are less likely to pay the fees associated with a prepaid banking 

card when they have free alternatives, such as debit cards. 

Two primary groups comprise the underserved population: underbanked consumers 

and the completely unbanked. The underbanked as a group differs in attitudes 

based on age, ethnicity, citizenship status, income, etc., but the most important 

distinction might be their access to a primary checking (DDA) account. 

Global Concepts estimates the target market for prepaid banking cards 

includes the entire unbanked group and the small portion of underbanked 

consumers that have some form of a financial account but not a DDA or 

access to a debit card. Combined, these groups represent 32% of the underserved 

population, or 34 million total individuals, which provides an upper 

bound for the adoption of prepaid banking cards. 

Striking a Balance 

Despite the significant potential market, the prepaid banking card business 

operates on somewhat slim margins. By Global Concepts’ estimates, an average 

prepaid banking card issuer has a gross profit margin (total direct revenue 

over total direct expense) ranging between 19% and 23% before operating 

costs. Assuming typical operating expenses add 15% above the direct per-card 

costs, this leaves an average pretax profit margin of approximately 9%. 

Using these numbers, the total profit available in the industry, assuming 

100% penetration of the target market, is approximately $329 million— 

over which all issuers are in competition. Given this relatively small pie and 

economies of scale, this is a market in which we are likely to see only one 

or two long-term players. 

Issuers typically have three levers that they can pull on to increase these 

margins: interchange, cardholder-paid fees, and cost-reduction measures. 

Issuers face a tough dilemma when attempting to determine which of these 

actions will have the most favorable effect on their margins because acting 

on any of the three has negative side effects for the business. 

Driving interchange revenue is one area of difficulty. In the debit card 

market, issuers might drive transaction volume (and, by extension, interchange) 

by incenting consumers with rewards points. But in the world of 

prepaid, issuers have to get consumers to load more money onto the cards 

before consumers can generate more transactions, which is difficult. 

The target prepaid banking demographic has a median household 

income of $26,390, according to CFSI’s fact sheet, which indicates less 

available spending cash than their debit-card-using, banked counterparts. 

Even if consumers have more income to load onto the card, issuers need to 

use rewards to incent that behavior. 

Rewards programs can add anywhere from 35 to 50 basis points (bp) in 

cost to a debit program, however. If issuers build a rewards program similar 

to those used for debit cards, it could reduce overall pretax profit from 9% 

to less than 5%. 

Increasing fees is also problematic, due to the already extensive range and 

cost of fees to the user. Consumers already pay an average of $10 to activate a 

card, and then they pay a reload fee to add money, a monthly maintenance fee, 

a per-transaction fee for PIN debit transactions, check-balance fees, cash withdrawal 

fees, and so on. 

Global Concepts estimates that consumers pay an average of $12.50 

in fees per month. Some existing fees are simply counterproductive. For 


instance, if a prepaid banking card user 

goes to the convenience store and fills 

up with gas at an automated pump, he 

is likely to make a PIN debit transaction 

for which he will be charged a fee 

(because PIN transactions yield lower 

interchange for the issuer). But right 

after leaving the gas station, the consumer 

goes to the grocery store, where 

he checks out via a signature debit 

transaction that is free. 

Global Concepts’ research on debit 

card usage suggests that charging PIN 

fees in this manner causes consumers to 

stop using cards entirely. Consumers do 

not understand that they will be charged 

for PIN and not for signature. Instead, 

they perceive unpredictable fees associated 

with making purchases and discontinue 

using their cards altogether. 

The choices between using bank 

accounts and check cashing show 

how important predictability is. Bank 

accounts might be cheaper than prepaid 

banking cards for many consumers 

until they run into steep non-sufficient 

funds and overdraft fees. Even one 

NSF or OD fee can alter a tight budget. 

Some prepaid cards also have overdraft 

fees, but they are much less expensive. 

On the other hand, expensive 

check-cashing services might be better 

than prepaid banking cards because the 

one-time fee is a predictable expense to 

the consumer, while the multiple transaction 

fees and withdrawal fees associated 

with a prepaid banking card are 

difficult for consumers to budget for. 

Striking a balance with fees is vital 

for any account and especially for prepaid. 

Consumers do not have a significant 

incentive to continue reloading a 

prepaid card if they feel fees are too 

high, and maintaining a long consumer 

life cycle is important to overall success 

for prepaid companies. 

Analysts Have It Wrong 

With small margins to increase fees 

or card spend, reducing cost is the 

most likely avenue for improving 

issuer profitability. In this regard, 

we believe the prepaid market will 

favor companies that can consolidate 

the relatively complex issuing value 

chain and generate scale, both keys 

to reducing costs. 

Despite relatively low margins, 

the prepaid banking card value chain 

is at least as complex as that of any 

card instrument, consisting of card 

manufacturing and customization, 

multichannel promotions and merchandising, 

retail product packaging 

and distribution, transaction clearing 

and settlement, reload channel provision, 

customer support, and accountmanagement 

channel provision. 

This complex eco-system has 

forced most issuers to partner with or 

buy services from a large number of 

players, each of which gets its share 

of profits. For example, typical partners 

for an issuer include an issuerprocessing 

company that handles 

card manufacture and customization 

(through a subcontractor) and transaction 

processing; an ATM operator or 

store network for reloading cards; an 

issuing bank to settle transactions as 

per Visa and MasterCard rules; a distributor 

to deliver cards to stores; and 

retailers to merchandise cards. 

Generating scale has been a 

chicken-or-egg problem for many 

issuers. With a large base of users, 

margins would increase due to economies 

of scale. However, issuers have 

found that satisfying near-term cashflow 

needs requires cardholder fees, 

which limits adoption. 

In addition to internal economic 

considerations, the prepaid industry is 

closely watching other external drivers 

that could have a profound impact 

on the business. The banking and 

credit card industry in general is facing 

increased legislation, and while current 

bills do not specifically address prepaid 

cards, if the regulatory momentum 

continues, it is possible for the 

The Prepaid Card Market Reaches Maturation 

(U.S. prepaid card spend* by card type, in billions) 

• General Purpose 

• Private Label 

• Disbursement 

$95 

1% 

54% 

45% 

$227 

5% 

50% 

45% 

$366 

8% 

46% 

46% 

2002 2007 2012 

* Spend, in this case, is synonymous with flow, and is calculated by taking the $-value loaded onto 

the card and subtracting the breakage (the amount of loaded value left unused on the card) 

Source: McKinsey, US Payments Map 

prepaid banking cards’ account terms 

to receive more scrutiny. 

This is especially true considering 

the target demographic is lower 

income. Any legislative action that 

affects either interchange or the fee 

structure for prepaid cards has the 

potential to eliminate enough profit to 

make prepaid banking cards economically 

unviable. 

Although apparently somewhat 

countercyclical, a prolonged economic 

downturn will put pressure 

on prepaid banking card use. In this 

regard, we feel that industry analysts 

who forecast a surge in prepaid use as 

consumers lose access to credit have 

it wrong. Most low-income credit 


users use credit to borrow, not for 

transaction purposes. As these consumers 

lose access to credit, they will 

primarily turn to alternative lenders 

rather than prepaid as an alternative 

transaction mechanism. 

In the broader market, banked 

consumers with reduced credit access 

are far more likely to simply rely on 

their debit cards instead of opening 

prepaid accounts. In reality, prepaid 

debit cards likely will see a reduction 

in spending growth as a byproduct 

of the recession, especially considering 

that the target demographic may 

experience higher job-loss rates on 

top of already lower incomes. 

Watch out for Wal-Mart 

Wal-Mart Stores Inc.’s prepaid banking 

card is a unique exception to some 

of the problems facing the prepaid 

banking card. First, Wal-Mart brings 

economies of scale and distinctive 

core competencies to bear across the 

prepaid banking card value chain. For 

example, Wal-Mart is able to consolidate 

and efficiently run costly components 

of the value chain, including 

distribution, merchandising, 

and promotions. 

There is also strong overlap 

between Wal-Mart’s target market and 

the target market for prepaid banking 

cards, which further reduces marketing 

costs and improves value to users 

by eliminating extra trips for prospective 

users to reload cards. 

Scale and efficiency allow Wal- 

Mart to price its cards lower than 

anyone else—and they do. Currently 

Wal-Mart has a flat $3 fee for activation, 

reload, and monthly service, 

respectively. That is significantly less 

than other competitors, and, what’s 

more, it’s simple and predictable. 

Second, Wal-Mart also benefits 

from sales-lift potential from prepaid 

users, and may see this as a reason to 

continue lowering user fees. This sales 

lift could come from either an extra 

trip to Wal-Mart to reload the card, 

during which the consumer makes an 

extra purchase, or from usage patterns 

where the consumer buys an extra 

good because she is not limited by a 

finite amount of cash in her pocket. 

Next, Wal-Mart also offers other 

services, such as check cashing, that 

it can use to further incent prepaid 

banking card adoption. Check cashing 

carries a fee, but Wal-Mart will 

waive the reload fee for its prepaid 

banking card if you cash a check and 

then directly load the cash onto the 

card. By combining the two needed 

steps—paycheck to cash, then cash to 

prepaid—Wal-Mart drives more value 

for the consumer and increases the 

chance it will provide both services. 

Finally, Wal-Mart is also in a position 

to best answer both potential legislative 

concerns and the economic 

downturn. By lowering prepaid fees, 

Wal-Mart actually helps the industry 

as a whole make a solid case that prepaid 

banking card fees are appropriate 

for the service offered, especially in 

comparison to competitors. 

Wal-Mart also is one of the few 

counter-cyclical winners during the 

financial crisis, positioning itself as 

the best and cheapest provider of 

many goods and services, including 

financial products. 

Two Ideas 

Of course, Wal-Mart truly is an exception, 

so for other third-party issuers to 

compete, they are forced to innovate. 

Two ideas merit mention here: 

First, a partnership with a public 

transit provider offers both a simultaneous 

user base as well as an available 

reload network. Many municipal 

transit authorities already have 

cash-accepting machines that issue 

transit cards. If the cards issued had 

prepaid banking card capabilities and 

consumers could load the card at the 

same time they buy their fare, then an 

issuer might see some of the benefits 

Wal-Mart has enjoyed. 

Marketing costs are reduced, 

distribution costs are reduced, and 

reloading becomes a part of an already 

established system. Certainly the transit 

authority will want to share in 

some of the profit, but if the endeavor 

yields a larger base of consumers, 

the benefits could prove better than 

current models. 

Second, issuers should capitalize 

on the non-embossed standard 

for cards, which Visa is experimenting 

with. Currently, consumers grab a 

card off the shelf, hand cash to a clerk 

to load the card, and then go home to 

activate the card. In a week or so the 

consumer will receive an embossed 

card with her name and account number 

on it, which fulfills MasterCard 

and Visa rules. 

New standards allow for a personalized, 

non-embossed card to be 

Striking a balance with fees is vital for 

any account and especially for prepaid. 

printed on site from a small card 

printer. This adds the cost of a printer 

to targeted high-traffic issuance locations, 

but eliminates the cost of issuance 

for the second card, which may 

pay for itself over time. 

In summary, prepaid banking 

cards issuers face a difficult marketplace. 

The opportunity exists to 

reach an underserved population with 

a much-needed product, but the economics 

of the product seem to favor 

only the very largest of all issuers. 

Continued innovation, nimbleness, 

and smart partnerships will ultimately 

determine those issuers that 

remain viable. DT 

Jarrett Helms is an expert, and Nate 

Gonzalez is an analyst, at Global 

Concepts, an Atlanta-based subsidiary 

of McKinsey & Co. Reach them 

at jarrett_helms@mckinsey.com and 

nate_gonzalez@mckinsey.com. 


Is Mobile Banking 

More and more banks are 

letting customers pay bills, 

transfer funds, and get 

alerts via mobile phones. 

And many services now play 

to the strengths of smart 

phones and text messaging. 

But nobody has yet figured 

out how to make money 

from all of this. 

By Jane Adler 


Getting Connected? 

Mobile banking is definitely on the move. 

Bank of America Corp. has signed up 

more than 2 million customers for its relatively 

young mobile-banking program. The 

introduction of touchscreen smart phones like Apple 

Inc.’s iPhone is fueling greater usage. Consumer adoption 

is becoming less of a barrier, too, as large groups of 

cell-phone users outside the youth market become familiar 

with texting and its banking possibilities. 

But cost cutting brought on by a weak economy has 

delayed program rollouts at some financial institutions. 

Banks also face a confusing array of vendors and devices 

that change almost daily, making it difficult to know 

exactly where the market is headed. And, even though 

mobile banking generates a lot of industry buzz, it has yet 

to generate any revenue. 

“Mobile banking is reaching a tipping 

point,” says Nick Holland, analyst 

at the Aite Group LLC, a research 

firm in Boston. As the systems become 

more transactional, “revenue opportunities 

will be possible.” 

All the major banks offer some 

type of mobile service for bill payment, 

funds transfers, checking balances, 

and receiving alerts. Many 

offer the three available banking 

technologies: short message service 

(SMS) text-based, browser-based/ 

Wireless Application Protocol (WAP), 

and downloadable applications. 

Mid-tier and smaller institutions 

are introducing at least one or two of 

the technologies, often texting, just 

to keep up with the competition. But 

eventually most financial institutions 

will offer all three modes of service, 

industry analysts predict. 

Mobile-banking installations grew 

by 44% last year and are expected to 

double in 2009, according to an Aite 

report on mobile-banking vendors. 

Installations rose from 170 in 2007 to 

245 in 2008, and will hit about 614 

this year, the report says. While that 

sounds impressive, Aite estimates that 

only 1.5% of all U.S. financial institutions 

offer mobile banking. 

The report also notes that competition 

among vendors is heating up. 

Core banking processors and software 

vendors, such as Jack Henry 

& Associates, are jumping into the 

market, sometimes offering services 

for much less than specialist vendors 

(chart, page 32). 

Still, financial institutions are not 

advancing their mobile-banking systems 

as quickly as they might have 

if the economy weren’t in freefall, 

Aite’s Holland notes. “Systems are 

being rolled out just under the radar,” 

he says. “Institutions are being very 

incremental.” The big banks that 

had the budgets to experiment with 

mobile banking are taking a step 

back, he notes. “Mobile is not mission 

critical,” he notes. However, Holland 

warns that banks that don’t offer 

mobile are becoming conspicuous. 

Bankers and analysts alike agree 

the potential for mobile banking is 

huge. About 85% of Americans have 

cell phones, according to a research 

study by Javelin Strategy & Research. 

The firm forecasts that 191 million 

U.S. consumers will have mobile 

devices by 2012—and virtually all 

will have access to mobile banking 

from their primary financial institutions. 

About 108 million Americans 

will be mobile-banking customers 

within the next four years. 

Tweaking Systems 

But how to tap into that market? The 

big banks are tweaking their mobile 

systems. They figure top-notch services 

will generate new customers and 

boost brand loyalty. “Customer acquisition 

is the big play,” says John Pizzi, 

chief operating officer at mFoundry 

Inc., a mobile-banking software company 

in Sausalito, Calif. 

Some services, such as expedited 

payments, could generate revenue. 

Another possibility: mobile banking 

can cut call-center costs by reducing 

the frequency of customer calls. 

But eventually, analysts believe, the 


eal revenue opportunity lies in widespread 

mobile payments, where consumers 

use their phones to make 

purchases that generate fee and interchange 

income. 

Though fee income from payments 

may still be a year or so away 

(box, page 36), mobile transactions are 

becoming more prevalent and more 

complex. At Firethorn Holdings LLC, 

a service provider for AT&T, Verizon, 

and Sprint, the average mobilebanking 

user accesses the service 

three times a week. Multiple account 

holders are the biggest mobile users. 

About 25% of the user base transfers 

money and does bill pay. 

“Users aren’t just checking their 

balances,” says Rod Dir, chief operating 

officer at Atlanta-based Firethorn, a 

unit of telecom-software provider Qualcomm 

Inc. “The (system) has utility.” 

‘Blown Away’ 

For some banks, immediate profitability 

may not be a near-term goal. 

With one of the largest and mobilebanking 

programs, Bank of America 

has 2.4 million active customers. The 

service is a mobile Web product, 

a streamlined version of the bank’s 

online system. It runs on 800 different 

handsets, including Blackberries 

and iPhones. Customers move 

about $7 billion annually through 

the mobile-banking system, transferring 

funds and making bill payments. 

Activity is high: A typical customer 

logs in eight to 10 times a month. 

Launched in May 2007, the service 

hit 1 million customers in the 

first 13 months. Nine months later, 

it had 2 million users, indicating an 

accelerated pace of growth, according 

to Douglas Brown, senior vice 

president of mobile product development 

at Charlotte, N.C.-based BofA. 

“Smart-phone technology has boosted 

adoption rates,” he says. Smart phones, 

such as iPhones and Blackberries, with 

data capabilities and a user-friendly 

display screen give the customer a better 

mobile-banking experience. 

Despite growing mobile usage, 

Brown says the primary business 

driver for the bank is customer satisfaction, 

not revenue. BofA’s mobilebanking 

service is free—the standard 

business model employed by financial 

institutions throughout the United 

Some services, like that of BofA, play to 

the strengths of smart phones. 

States. “We are creating brand affinity 

and customers are referring new customers 

to us,” says Brown. 

That tactic may be paying off. 

Some 8% of BofA’s mobile users 

last year were new to the bank. “We 

know that mobile was one of the drivers 

of these customers opening a new 

account,” says a bank spokesperson 

in an e-mail. “Mobile and [the] ATM 

network and banking center convenience 

and online banking together 

influenced the decision to become 

new [a] BofA customer.” 

If adoption is a more immediate 

goal than profitability, then the type of 

mobile device in customers’ hands may 

matter more than anything else. As 

might be expected, younger customers, 

who are usually the earliest adopters of 

new technology, were big users during 

the first 15 months of BofA’s program. 

But Brown says the service now has a 

growing number of older and 

higher-income users. 

And smart phones are the 

preferred device, with 40% of 

customers using the iPhone or 

iPod Touch. 

A recent study by Javelin 

Strategy & Research shows 

that smart-phone users tend 

to be younger and wealthier 

than other cell-phone users. 

Among consumers with annual 

incomes over $100,000, one in 

every four uses a smart phone. 

Smart-phone usage jumped to 

14% of U.S. adults last year 

from 9% the previous year, and 

in the first few months of 2009 

it has climbed to 15%, according 

to Javelin. 

The study also shows that 

smart-phone users are four 

times more likely than nonsmart 

phone owners to adopt 

mobile banking, and 10 times 

less likely to abandon mobile 

banking once they’ve tried it. 

Targeting smart phone 

users makes sense, according 

to Mark Schwanhausser, 

research analyst at Javelin Strategy in 

Pleasanton, Calif. “These users tend 

to see the value of mobile banking. 

They are less in the dark,” he says. 

But smart-phone users are not necessarily 

young, according to another 

study, a finding that bucks the conventional 

wisdom of a mobile-banking 

market dominated by tech-savvy 

youth. A recent poll of 279 consumers 

shows that the use of mobile-banking 

services depends on the sophistication 

of the device, not the user’s 

age, according to survey author Fred 

Brothers, managing partner at eCom 

Advisors, Columbus, Ohio. 


SEE US AT 

IRCE+ 

NRF LP 

JUNE 15–17 

CERTEGY+CLEARCOMMERCE HAVE COMBINED FORCES TO FIGHT FRAUD 

WE FIND FRAUD 

BEFORE IT FINDS YOU 

Presenting 

Leveraging 45 years of risk management expertise and a full arsenal of advanced fraud detection technology, our solution is the most 

comprehensive payment processing and fraud management service available. Built to meet the performance and scalability requirements 

of high growth e-commerce merchants, ClearCommerce ® is introducing CommercePointe TM , our hosted suite of secure PCI compliant 

services, supported in our state-of-the-industry data centers and managed by our team of fraud experts. From sophisticated fraud 

detection and order review technology to a full range of managed services and payment processing tools—whatever your business 

demands, ClearCommerce ® has the solution. 

1-866-894-0807 toll-free | CommercePointe@fnis.com e-mail | fidelityinfoservices.com online > click check services > e-commerce 

SECURE PAYMENT PROCESSING | FRAUD MANAGEMENT SOLUTIONS | CUSTOMIZABLE MANAGED SERVICES | GLOBAL RESOURCES

Generation X (ages 28-48) spends 

more time on their mobile devices 

surfing the Web than Gen Y (ages 

18-27). The reason: Gen Y can’t afford 

the data plan, about $40 a month. 

About 14% of consumers surveyed 

said they had used mobile 

banking in the past month, but among 

those with a touchscreen smart phone, 

usage soared to 41%. “We were blown 

away,” says Brothers, noting that the 

iPhone was released less than two 

years ago, in June of 2007. “If older 

users have the right phone, they are 

doing more transactions.” 

Taken with Texting 

Smart phones figure in the growth 

plans at San Francisco-based Mobile 

Money Ventures, which started as a 

joint venture of Citigroup Inc. and 

Korea’s SK Telecom but was spun off 

in January as a standalone business. 

By the end of the second quarter, it 

will have six mobile installations for 

Citi, two in North America and four 

in the Asia/Pacific region. 

In March, Citibank North America 

began offering its mobile-banking 

application in Apple’s online iTunes 

store. About 100,000 customers so 

far have downloaded the application. 

“We have a satisfied customer base,” 

says Steve Kietz, chief executive at 

Money Mobile Ventures. He explains 

that, for the first time, Citi has been 

able to get a lot of feedback because 

the iTunes store allows buyers to rate 

their purchases. “We have a three-star 

rating,” notes Kietz. 

Last fall, Mobile Money introduced 

mobile banking and stock trading for 

Citibank Hong Kong. The service has 

10,000 iPhone customers who pay brokerage 

charges—a possible source of 

revenue in the future for other operators. 

Mobile Money is now rolling its 

services out to financial institutions 

outside of the Citi family. 

One factor that has slowed mobile 

banking adoption is that banks don’t 

know how to manage all the different 

types of cell phones, Kietz says. 

There are 300 phones on the market 

today and 600 models that are 

currently active. 

Mobile Money’s technology 

employs a “device sniffer” that can 

decipher which phone the user has 

when logging on to the site. “We get 

the information from the phone and 

push back the screen design that looks 

best and works best for the customer,” 

says Kietz. 

The next big innovation is the 

so-called App store, Keitz says, an 

online emporium where consumers 

can find smart phone applications. 

Apple has one for its iPhone and 

Research in Motion, maker of the 

Blackberry line of smart phones, is 

rolling out one of its own. 

As consumers become more 

accustomed to downloading programs, 

they’ll begin to see how much 

better a downloadable application is 

than a browser-type service, argues 

Kietz. “Before the App store arrived, 

downloading was just too difficult for 

the consumer,” he says. 

As smart phones lead the way 

for the big players, other solutions, 

such as texting, are making mobile 

banking available to groups with 

less sophisticated phones. City Bank 

of Lubbock, Texas, began offering 

mobile banking in October and now 

has about 3,000 users. About 64% of 

the user base interacts with the system 

on a weekly basis. 

Users overwhelmingly prefer the 

SMS-texting service over the browser 

solution, according to Jim Simpson, 

vice president of IT at City Bank. 

“People really like the speed and simplicity 

of a text message” which is 

“powerful and personal,” says Simpson 

in an e-mail. 

Popular text uses include balance 

checks, account-to-account funds 

Core Processors: Upstarts in M-Banking 

(Providers ranked by live U.S. deployments at end of 2008) 

Jack Henry 

M-Shift 

Harland 

Firethorn 

ClairMail 

18 

46 

64 

75 

71 

Source: Aite Group 

transfers, account history requests, 

and alerts. For example, City Bank’s 

solution, which relies on software 

from Novato, Calif.-based vendor 

ClairMail Inc., offers an alert to notify 

customers when a deposit is made 

into the account. Another alert notifies 

a customer of a withdrawal after 

a debit card transaction. 

City Bank executives discussed 

the revenue opportunities from mobile 

banking during the system’s design 

stage. But, like other banks, City 

decided to offer the solution for free. 

“Everyone in the mobile-banking 

spectrum is still looking for the ideal 

way to generate revenue from the 

offerings without impacting useradoption 

rates,” says Simpson. 

As the user base grows, revenue 

opportunities will arise, he adds. 


City Bank is considering other 

concepts to generate mobile banking 

revenue, though he declines to 

provide details. 

High-Value Alerts 

Monitise Americas LLC launched its 

mobile-banking service in the United 

States last fall. The company is a 

partnership between Monitise U.K. 

and processor Metavante Technologies 

Inc., which is being acquired by 

Fidelity National Information Services 

Inc. Monitise has a 60% share of the 

mobile-banking and -payments market 

in the U.K., with clients such as 

HSBC and Royal Bank of Scotland. 

Currently, Monitise works with 

60 financial institutions. It offers 

mobile banking for free, though some 

banks charge for expedited payments, 

according to Lisa Stanton, chief executive 

of the Providence, R.I.-based 

company. Transaction fees for an 

expedited payment range from $5 to 

$10 per transaction. 

Stanton says 50% of U.S. consumers 

don’t use online banking, so the goal 

shouldn’t necessarily be to repeat the 

online experience, or limit the service 

only to online customers. The underbanked 

population is a target group 

because a high percentage of these people 

have cell phones but are not online. 

Not all banks agree, however. Wells 

Fargo & Co. customers must be online 

in order to receive mobile service. The 

bank added a text service in October 

2007, three months after introducing a 

browser-based mobile service. 

“Text is phenomenal,” says Secil 

Watson, senior vice president of 

Internet services at Wells Fargo, San 

Francisco. Text is fast and customers 

don’t have to log on to a Web site, 

she notes. Watson reports that text 

usage is growing just as fast as Web 

usage, though she declines to provide 

numbers of users. Customers do not 

pay a fee to use the service, though 

Watson says revenue opportunities 

may be explored in the future. 

Mobile banking via texting is 

gaining traction among a wide swath 

of cell-phone users, according to Pete 

Daffern, chief executive at ClairMail. 

He says industry studies have shown 

that 90% of text messages are opened, 

compared to less than 3% of e-mails. 

“We see a trend evolving that text 

messaging is the predominant method 

consumers want (for banking),” says 

Daffern. Another texting plus: it’s less 

expensive than other technologies, and 

every type of phone supports texting. 

While texts, such as balance inquiries, 

are common, actionable alerts hold 

the most promise, Daffern says. As 

an example, a bank sends a text when 

the customer is close to a zero balance 

and allows the customer to transfer 

money to cover the shortfall. 


UBC1235_07092008 

2005 | 2006 |2007

YOU have the POWER with the 

most lucrative ISO Program available. 

United Bank Card has redesigned its ISO Program to give you even more opportunities to increase earnings. Now benefit from 

improved bonus programs and a vast array of products and services specially tailored to create a more profitable partnership. 

United Bank Card has earned a reputation for consistently setting the standard in innovation and this is no exception. With 

these initiatives, the sky is truly the limit when it comes to increased earnings! 

UP TO 70% REVENUE SPLITS! 

3 DIAL/2 IP TRANSACTION FEES! 

UP TO 40X BUY OUTS! 

UP TO $ 2,200 CONVERSION BONUSES! 

PER MERCHANT - PAID WEEKLY 

PLUS 

Free Equipment Program 

In-house Gift & Loyalty Program 

Harbortouch POS Systems 

Nationwide Petroleum Program 

Merchant Cash Advance Program 

Registered ISO/MSP Program 

In-house 24.7 Customer Service 

and Tech Support 

Dedicated Relationship Managers 

Outstanding Bonus Programs 

NOW 

FEATURING 

The Orion Terminal 

United Bank Card, Inc. is a top 40 merchant acquirer with an impeccable reputation of excellence in the payment processing industry. UBC 

provides payment services to over 100,000 businesses throughout the country and processes in excess of 9 billion dollars annually. Consistently 

recognized for being at the forefront of innovation, our programs will continue to provide our agents with a competitive edge. 

Contact United Bank Card now to find out how our dynamic programs can improve your sales performance and increase your earnings! 

To learn more about United Bank Card, contact: 

Brian Jones, EVP Sales and Marketing: 800-201-0461 x 136 

Jonathan Brandon, National Sales Manager East: 800-201-0461 x 145 

Max Sinovoi, National Sales Manager West: 800-201-0461 x 219 

Brian Fitzgerald, National Sales Manager Central: 800-201-0461 x 257 

or log on to www.isoprogam.com for more details 

United Bank Card, Inc. is a registered ISO/MSP of First National Bank of Omaha, 1620 Dodge St., Omaha, NE - Member FDIC

Alerts like these might carry enough 

value that users eventually might pay 

for them, Daffern says. Businesses also 

might pay for account services, such as 

payroll approval via text. 

ClairMail recently signed a textmessage 

deal with remittance company 

Wausau Financial Systems Inc. 

Consumers receive a message 30 

days prior to the due date for a bill. 

Messages are sent at regular intervals 

until the bill is paid. This eliminates 

paper bills and also can accelerate 

payments by reminding consumers 

a bill is due. Western Union recently 

announced a pilot to offer monthly 

car payments directly from mobile 

phone via text message. 

Search for Revenue 

Meanwhile, the search for ways to 

make money from mobile services 

continues. Financial institutions are 

looking at ways to cross-sell services 

through mobile-banking applications, 

according to Firethorn’s Dir. Special 

merchant offers might be another way 

to generate revenue. As Dir explains 

it, the bank would send the user a 

merchant discount. The bank would 

be reimbursed a certain amount for 

every offer that is redeemed. That 

approach isn’t being used yet, but Dir 

says, “It’s on the horizon.” 

The real revenue opportunity in 

mobile banking will arise from the cell 

phone’s global positioning capabilities, 

according to Mike Feliciano, senior 

vice president at Tyfone Inc., a contactless 

payments provider in Portland, Ore. 

He envisions a day when a consumer 

uses a phone to find a nearby store. 

The merchant along with its bank partner 

then sends a discount coupon to the 

consumer who then makes the payment 

at the store with his phone. “There’s 

a tremendous amount of money to be 

made there,” says Feliciano. 

Others agree that consumers will 

be motivated by discounts. “They’ll 

get excited about saving 20% at the 

point of sale by using their mobile,” 

says Firethorn’s Dir. 

For now, as the technology 

evolves, the best strategy for financial 

institutions could simply be to 

not lose customers. Mobile bill pay 

could help, according to analyst 

Schwanhausser at Javelin. He sees 

a lot of consumers who go directly 

to the biller, instead of through their 

bank. But banks have the advantage 

of a primary money relationship with 

the customer. 

“Bill pay is a great way to lock in 

loyalty,” says Schwanhausser. “Once 

you’re a regular bill payer, then the 

bank can find opportunities to sell 

more products.” DT 

Has NFC’s Time Come at Last? 

Payments. That’s the one-word answer to the question of how to turn 

mobile banking into a revenue stream. The solutions are still evolving 

and may yet be a year or so away. But experts believe that mobile payments 

will be widespread soon enough, providing financial institutions 

with a real return on their investment dollars. 

Mobile payments can generate transaction and interchange fees. Certain 

payments services could also generate fees. In a recent study by 

eCom Advisors, 38% of respondents charged online purchases to a cellphone 

account instead of to their credit or debit card. 

Much of the hype around payments centers on virtual wallets. Instead 

of carrying real credit and debit cards, users carry a cell phone equipped 

with a chip linked to a bank account. The system relies on near field communication 

technology, or NFC. A special terminal, or contactless reader, 

at the point of sale scans the chip to make the payment. 

“The dream is NFC,” says Steve Kietz, chief executive at Mobile 

Money Ventures, a mobile-banking services company in San Francisco. 

“That is where the real profit and the customer convenience comes in.” 

Carriers have been slow to add NFC to their phones because of the 

cost. The other obstacle is getting stores to install readers, which run 

about $150 a piece, so a money transfer can be made at the point of sale. 

As a bridge to NFC, some providers are relying on stickers, contactless 

“tags” that affix to phones or anything else. First Data Corp. plans to roll 

out its $50 prepaid GoTag in thousands of retail locations in the coming 

months. Items can be paid for at any store with the contactless readers. 

First Data’s pilot with corporate cafeteria operator Sodexo generated 

more revenue per consumer at a lower transaction cost than other payment 

options. About 300,000 contactless readers are already in stores, mostly 

convenience, drug, and fast-food outlets, according to Barry McCarthy, 

general manager at First Data Mobile Commerce & Point of Sale Solutions, 

Greenwood Village, Colo. 

Once the market has some momentum and readers are more commonplace, 

he expects carriers to start installing the chips in the phones. Nokia, 

a handset maker, will start shipping in the third quarter a new phone with 

NFC built into its SIM card. 

MFoundry Inc. plans two NFC initiatives later this year, according to 

Jon Squire, senior vice president of payments and wallet at the company. 

He says the time has come to kickstart the process with banks and merchants, 

though he declines to provide details of the pilot. “Mobile payments 

with NFC will be real in 2010,” he says. The time is past, he says, 

for “spending on pilots that go nowhere.” 


experience it. 

the next generation 

of payment applications 

PC 

Point-of-Sale Solution 

Ideal for retailers and 

professional services 

Introducing 

& 

from Infonox ® 

Virtual 

Point-of-Sale Solution 

Ideal for MOTO and 

recurring payments 

> Process a wide variety of payment transactions including 

credit, debit, CNP, recurring payments and more 

> Provide receipts via e-mail or SMS text 

> Run real-time reports 

> Easily maintain compliance with automatic updates 

> Get Class A support with a simple phone call to TSYS 

If seeing is believing, experiencing is everything. 

To experience the next generation of payment applications today, 

call us at (480) 333-7799 or e-mail acq-sales@tsys.com. 

www.tsysacquiring.com 

© 2009 Total System Services, Inc. ® All rights reserved worldwide. TSYS ® and Infonox ® are registered trademarks of Total System Services, Inc. Other trademarks are property of their respective owners

COMPONENTS 


It May Hurt 

To Be AWOL 

on OTP 

Karen Epper Hoffman 

Dongles and cards that generate one-time passwords are nothing 

new overseas, but they’re only starting to gain favor in the United 

States. Two big reasons: A surge in online fraud and the move to 

mobile devices, which cuts costs for issuers. 

When it comes to online transactional 

security, one time 

may well be the charm. 

One-time passcodes (OTP)— 

alphanumeric strings that are conveyed 

to a customer for a single 

usage, typically to access an account 

or conduct a transaction—are gaining 

traction as a more mainstream form 

of authentication with online bankers 

and shoppers in the United States. 

Bank of America Corp. and Pay- 

Pal Inc. are the two most high-profile 

and public examples, so far, of financial 

companies that have been offering 

the option of OTP authentication 

to their online users. Both offer users 

the option of receiving their one-time 

passcodes via a token or card, which 

the consumer purchases, or via their 

cell phones. 

Since OTP authentication involves 

a constantly changing passcode— 

not static, as with most basic passwords—it 

is widely believed to offer 

a greater level of protection to users 

against hacking or illegitimate access 

to accounts or personal information. 

“We’ve seen fraud attacks growing, 

and PKI (public key encryption) 

has its limitations in terms of 

usability… It’s just too unpredictable,” 

says Kerry Loftus, vice president of 

consumer authentication for VeriSign 

Inc., a Mountain View, Calif.-based 

authentication vendor that works with 

both PayPal and Bank of America on 

their OTP efforts. VeriSign has been 

offering OTP products and services 

for about six years. 

‘Toes in the Water’ 

PayPal started offering one-time passcode 

authentication two years ago 

through a key fob, called Security 

Key. Users of the eBay Inc. unit’s 

payment service can buy the Security 

Key hardware for $5, but don’t need 

to pay for the on-going service, which 

sends the user a one-time six-digit 

number to enter in addition to a login 

and a password to access accounts. 

The one-time passcode expires after 

30 seconds. 

In November, PayPal extended 

the offering to include a mobile version 

of Security Key, whereby users 

can have the one-time passcode sent 

to their cell phones via short-message 

service (SMS) instead of having to 

purchase a separate key fob. 

“What we wanted to do is give 

customers the opportunity to take 

privacy and security into their own 

hands, [and] this allows them to do 

that,” says Michael Oldenburg, a 

spokesman for PayPal. He would not 

disclose how many PayPal accountholders 

use Security Key. “We introduced 

the new form factor because 

there was a demand,” he says. 

Similarly, Bank of America introduced 

a one-time passcode option, 

dubbed SafePass, to its online-banking 

customers. But, in a reversal of Pay- 

Pal’s approach, the Charlotte, N.C.- 

based bank offered the mobile version 

first when it began piloting the 

service in April 2008. The rollout of 

the cell-phone version of SafePass 

began in June. Then, in December, 

Bank of America introduced a credit 

card-sized OTP device, which onlinebanking 

customers can purchase for 

about $20. (The mobile version of 

SafePass is free.) 

Like PayPal’s service, SafePass 

generates a six-digit, one-time passcode, 

which provides customers extra 

protection for online account transfers 

and bill payments, authorizes 

new individual and company payees, 

and allows customers to make 

higher-value account transfers. “We 

wanted to provide customers with an 

extra sense of security and additional 

value,” says David Shroyer, senior 

vice president for online security and 

enrollment for Bank of America. 

While these developments don’t 

yet represent widespread adoption of 

one-time passcodes in the U.S., they 


do point up a widening usage of the 

authentication technology by a broader 

base of U.S. consumers. “Identity theft 

is becoming a problem,” VeriSign’s 

Loftus says. “These are the first to put 

their toes in the water.” 

Shifting Attitudes 

One-time passcodes may be relatively 

new to most U.S. consumers, 

but the technology has been used 

(and, in some cases, required) for 

years by more affluent banking and 

brokerage customers and business 

users in this country, and by a greater 

percentage of online consumers in 

Europe and Asia. 

Cases in point: Citigroup Inc.’s 

Citibusiness unit requires online customers 

to use an OTP-generating token, 

in addition to a login and password, to 

be authenticated. Scotiabank has been 

issuing one-time passcode tokens to its 

online-banking customers in at least 

seven foreign countries, according 

to Steve Neville, director of identity 

products for Entrust, a Dallas-based 

security vendor. And in November, 

Visa Europe announced that Cornèr 

Bank in Switzerland would pilot the 

card network’s new OTP-generating 

card for online shoppers. 

The front of the Visa card looks 

like a traditional payment card, while 

the back has an eight-digit alphanumeric 

display and a button keypad. 

The card incorporates a technology 

that generates a secure one-time-only 

code displayed to the cardholder via 

the integrated alphanumeric screen. 

It has a battery designed to last for 

three years. 

According to Adam Dolby, director 

of strategic alliances with Oakbrook 

Terrace, Ill.-based Vasco Data Security 

International Inc., Europe is “at 

least 10 years ahead of the curve compared 

to the United States” in terms of 

authentication, specifically the use of 

one-time passcodes. He attributes the 

slower adoption of OTP here to less 

interest (or fear) on the part of American 

consumers, who he says have 

always expected to have their accounts 

safeguarded by the wide array of U.S. 

consumer-protection regulations. 

“There’s been a lack of incentive 

for customers to demand greater 

authentication,” Dolby says. Also, he 

adds, the transaction set available to 

the majority of online-banking and 

-buying customers is “significantly 

weaker here than in other parts of 

the world,” where real-time money 

movement and more advanced or 

high-value transactions are possible. 

Loftus agrees. “We’re a little new 

to the game in one-time passcodes,” 

he notes. 

So, what’s changing? For starters, 

U.S. consumers are finally becoming 

more concerned about online 


security, at least to the extent that 

their desire for greater authentication 

is outweighing their long-held preference 

for simplicity. 

“We see a growing desire for consumers 

to take the security of their 

PayPal account into their own hands,” 

Oldenburg says. He points out that 

since online shoppers are frequenting 

more sites than a few years ago, a lot 

of these consumers are “sharing their 

security measures such as two-factor 

authentication. Sixty-eight percent of 

respondents said they would like better 

systems to protect their identities, 

and 41% said they would consider new 

authentication applications, even if that 

meant extra work on their part. 

In addition, consumers here are 

demanding more high-value or risky 

transactions, and to indemnify themselves 

and protect their own interests 

As Online Fraud Spikes up ... 

(Number of rogue sites infecting PCs with malware that steals passwords) 

Jan. 2008 

April 2008 

July 2008 

Oct. 2008 

Dec. 2008 

3,362 

4,080 

5,680 

4,775 

passwords across multiple e-commerce 

sites” making their traditional static 

passwords more open to be phished 

or stolen, and exposing more of their 

accounts and information. “We wanted 

to be able to give consumers a way to 

protect themselves.” 

“We have a lot of customers 

who never change their passwords,” 

says BofA’s Shroyer. “Customer 

acceptance of additional security in 

the United States is different from 

other places. But that attitude is starting 

to shift. There’s more appetite for 

enhanced security.” 

According to a VeriSign/Synovate 

research study, 86% of consumers prefer 

Web sites that offer them proactive 

31,173 

Source: Anti-Phishing Working Group 

... More Consumers Are Warming to OTP 

86% 

68% 

41% 

Consumers who prefer Web sites that offer them proactive 

security measures such as two-factor authentication 

Consumers who would like better systems to protect 

their identities 

Consumers who would consider new authentication 

applications, even if that meant extra work on their part 

Source: VeriSign/Synovate research study 

(as well as their customers) banks 

are requiring customers to use OTP 

authentication if they want to conduct 

them. For example, Bank of America 

online-banking customers can transfer 

up to $1,000 online with their normal 

login and password, but need to use 

SafePass if they want to move up to 

$10,000 over the Internet. 

Options 

What makes one-time passcodes, as 

opposed to other secondary forms of 

authentication, compelling to consumers 

is the technology’s simplicity. “All 

this really is is coming up with a more 

creative way of doing what [consumers] 

already do,” Vasco’s Dolby says. 

Also driving the wider availability 

and cost-effectiveness of this technology 

is the ability to transmit one-time 

codes to mobile phones. With this channel, 

issuers can save the cost of purchasing, 

formatting, distributing, and 

supporting another piece of hardware. 

In turn, not having another key fob or 

card to carry around is a selling point, 

at least for a segment of potential users. 

Depending on the token itself and what 

quantities are being purchased, each 

OTP-generating key fob or card can 

cost from about $5 up to $20 or more, 

based on vendors’ comments. 

“Six years ago, the model was to 

give the consumer a hardware token 

to carry around and have with them 

all the time,” says Loftus. “But it’s 

costly for the enterprise to mail it out, 

to make sure they get it, to support 

it. And then there’s the convenience. 

Do you really have all your cards or 

keys on you when you’re browsing 

the Web?” Loftus says 30,000 people 

downloaded VeriSign’s OTP application 

for the iPhone in the first 10 days 

after it was launched. 

Many financial companies will 

likely choose to offer their customers 

the option to use the mobile channel 

or purchase a separate dongle, as 

PayPal and Bank of America already 

have done. Shroyer says Bank of 

America conducted extensive consumer 

research around authentication, 

which indicated that a segment of customers 

would be willing to pay a premium 

to have a tangible and separate 

piece of hardware for their one-time 

passcodes. Hence, the bank’s decision 

to offer a SafePass Card as well as the 

cell-phone service. 

Oldenburg agrees. “For PayPal, as 

an Internet service, having something 

you can touch provides a psychological 

benefit,” he says. He notes that 

the $5 that PayPal charges consumers 

who want a separate piece of hardware 

for OTP generation does not 

cover the payment company’s cost for 

even the device, “but the benefit outweighs 

the cost for us.” 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 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 month. 

Rely on Digital Transactions 

to help you profit from a 

fast-changing, increasingly 

interconnected 

transactions market. 

Make the transaction 

revolution work 

for you.

E-COMMERCE 


No Longer 

a Side Order 

Jim Daly 

Restaurants are finding that online-ordering systems are ideal 

replacements for phone orders. But with payments security, technology, 

and other issues, online ordering is not simply plug and play. 

How do restaurants reduce 

labor costs and increase 

order size and frequency all 

at once? The answer: implement an 

online-ordering system. For merchant 

acquirers, integrating payments 

with restaurant online-ordering systems 

can be a competitive advantage. 

But online-ordering systems involve 

much more than just plugging in a PC 

and disconnecting the phone. 

Online ordering is particularly suited 

for take-home and delivery types of restaurants. 

Such establishments are some 

of the last bastions of cash and checks, 

notes payments researcher James Van 

Dyke, president of Pleasanton, Calif.- 

based Javelin Strategy & Research. 

“It’s an opportunity,” he says. But 

he quickly adds: “I don’t know if it’s 

going to move the overall needle.” 

It’s true that from a payments 

perspective, online ordering represents 

a new menu option rather than 

a sweeping change from current practice. 

Both phone and Web-generated 

orders remain card-not-present transactions. 

For an acquirer with a diverse 

merchant portfolio, online-ordering 

technology may not give a huge lift to 

overall charge volume. 

Online ordering, however, has 

a growing corps of devotees in the 

food-service industry that is diverting 

transactions from the phone and 

onto the Web. Acquirers that aren’t 

ready to accommodate this switch 

could miss out on the incremental 

volume that comes from online 

ordering. 

‘Faster Experience’ 

After testing it for years, the big takeout 

chain Domino’s Pizza Inc. made 

a major commitment to online ordering 

in 2006 and started 2009 with all 

but about 200 of its approximately 

5,000 U.S. locations able to accept 

orders from the Web, according to 

Jim Vitek, director of emerging technologies. 

Now online ordering is 

coming to Domino’s 300 locations 

in Canada, which run on the same 

technology as the Ann Arbor, Mich.- 

based U.S. operation. 

Other chains that have at least 

partially implemented online-ordering 

systems include Papa John’s in pizza 

and Subway and Jimmy John’s in sandwiches, 

according to Chicago-based 

restaurant consultancy and research 

firm Technomic Inc. Their fare, business 

models, and many outlets, across 

which the fixed costs of the onlineordering 

system can be spread, make 

them naturals for Web-based ordering 

systems, says Darren Tristano, executive 

vice president at Technomic. 

Tristano, while not claiming 

to be an expert about the financing 

of such systems, estimates costs for 

online-ordering systems can range from 

$1,000 to $10,000 per location, depending 

on capabilities and scale. “The costs 

are going to be much lower for multiunit 

organizations,” he says. “Pizza and 

sandwich [chains] seem to be the two 

areas where it fits best with delivery.” 

Online-ordering systems started to 

gain traction three to four years ago, 

but really came on about a year ago 

as Domino’s rolled out its system that 

allows customers to track their orders 

through Global Positioning System 

(GPS) technology, Tristano says. In 

that way, a customer tracking his 

order online can know if his pizza is 

in the oven or whether the driver has 

left the store, according to Vitek. 

Besides the gee-whiz factor such 

as the Domino’s tracking system 

for customers and the conversion of 

some cash and check payments to 

cards for restaurants and processors, 

online ordering has several other 

attributes, those familiar with it say. 

Orders are more accurate than those 

taken over the phone, where misunderstandings 

and background noise 

on either end can cause the restaurant 

to make something other than 

what the customer wanted. And going 

online offers the ability to gather data 

about customers, which can lead to 


JULY 22-24, 2009 

The 7th Annual MWAA Conference 

The Westin Lombard Yorktown Center in Lombard, IL 

EXCLUSIVE PRESENTER OF THE LIFETIME ACHIEVEMENT AWARD 

Join us this year as we focus on 

Creating Opportunity from Uncertainty. Hear about: 

• Pending Legislative impact to our industry 

• The IRS & Data Security 

• The ABC’s of Remote Deposit and PrePaid 

• NEW – Industry topics for Financial Institutions 

GREAT PASSPORT 

GIVEAWAY 

• Pricing Methodologies – Retail vs. ISO 

• Field Guide Seminar and much more… 

For the First Time Ever, visit our “Opportunities 

In Innovation Room” featuring the latest in 

innovative products and services. 

FRIDAY, JULY 24 

GOLF OUTING 

Submit your choice for the Lifetime Achievement Award, register, apply for entry 

to the “Innovation Room”, and see complete details at: 

www.midwestacquirers.com 

As a special treat the 

MWAA will feature funny 

man Greg Morton at our 

Wednesday night dinner. 

Greg Morton is graciously 

sponsored by our friends 

at First Data. 

Wednesday night dinner 

sponsored by our friends 

at Bluepay. 

Wednesday night afterdinner 

party sponsored 

by our friends at EMS.

acquirers are emphasizing security 

services as they seek new merchants. 

While hackers have embarrassed 

many retailers and processors 

because of data breaches that have 

compromised millions of card numbers 

in recent years, online ordering 

nonetheless has an inherent security 

advantage over phone orders, 

according to Mobo Systems’ Glass. 

After all, the person taking the card 

number on the phone could pocket it 

and use it fraudulently. 

“That’s a big risk, taking credit 

card details over the phone,” he says. 

But since online ordering involves 

business processes beyond just payenhanced 

and more targeted loyalty 

programs, according to Tristano. 

Even more important, online 

ordering tends to boost ticket volumes. 

Orders coming in over the 

Web at about 100 Subway restaurants, 

most in Manhattan, that use Mobo 

Systems Inc.’s GoMobo ordering 

technology are 15% to 20% higher on 

average than phone orders, and about 

25% higher than in-store orders, says 

Noah N. Glass, Mobo’s founder and 

chief executive. He adds that customers 

who use the online channel 

tend to patronize the restaurant more 

frequently—up to 40% more often. 

“It’s a much faster experience, 

especially for large group orders,” 

says Glass, whose company’s technology 

also supports restaurant orders via 

text message from mobile phones. 

‘A Big Risk’ 

Now with about 15 years of exposure 

to the commercial Internet, American 

consumers seem willing to order 

on the Web. A January survey of 500 

consumers by Technomic on behalf 

of American Express Co. found that 

34% had ordered food online from a 

restaurant, and 7% had ordered food 

via text message. 

Some 54% of the survey group 

said they were somewhat or extremely 

likely to order online in the future. 

Eighty-nine percent of consumers who 

had ordered online had placed orders 

with pizza chains, far more than any 

other restaurant category (chart). 

Indeed, while benefiting from 

higher transaction volumes and order 

sizes, payment processors can mine the 

online-ordering fields in other ways. 

One is helping restaurants reduce 

their security burden, or, more specifically, 

meeting the requirements of the 

Payment Card Industry data-security 

standard (PCI), a requirement for all 

entities that touch transactions on the 

major-brand credit and debit cards. 

For instance, Bartlett, Ill.-based 

Braintree Payment Solutions, an independent 

sales organization that works 

with Mobo Systems’ clients, has a 

data-management system that spares 

merchants from handling and storing 

payment card data, says Bryan Johnson, 

Braintree’s chief executive. 

“We say we can significantly 

reduce the scope of PCI compliance 

and reduce the risk they face,” he 

says. 

That doesn’t mean the restaurants 

have no PCI responsibilities, Johnson 

adds. But with data breaches a 

fact of life, more and more merchant 

ments, the impetus for deploying such 

systems comes mostly from merchants 

themselves and specialty tech 

companies working with them rather 

than merchant acquirers. 

Seeking a Switch 

As a large national chain of take-out 

pizzerias, Domino’s saw in online 

ordering a way to take orders more 

efficiently than over the phone, which 

accounted for about 90% of its business. 

Domino’s actually first tested 

Logging into Online Ordering 

Consumers who have ordered food from a restaurant: 

Online 

Via text message 

Types of restaurants where consumers place online/text orders 

Pizza chains 

Sandwich shops 

Take-out, ethnic 

Casual, sit-down 

Bakery cafes 

7% 

21% 

19% 

15% 

8% 

Note: Based on January 2009 survey of 500 consumers. 

34% 

89% 

Source: American Express Co./Technomic Inc. 

online payments before 2000, according 

to Vitek. About three years ago, 

however, online ordering came to the 

forefront as Domino’s implemented a 

centralized ordering system. 

“It took a little while for the market 

to be ready,” he says. 

Microsoft Corp.’s Tellme subsidiary, 

which provided the technology 

for the company’s call centers, developed 

the core of the online-ordering 

system while Domino’s outfitted the 

point of sale and handled the networking, 

according to Vitek. He won’t say 

how much the system cost. 

So far, so good for Domino’s, 

whose acquirer is First Data Corp. 


Yes, we’re on the Web. 

And in 

your inbox. 

You’d expect the publisher 

of a magazine called 

Digital Transactions to have 

a digital product. Actually, 

we have two. Visit us at 

www.digitaltransactions.net 

and read the latest news 

on the consumer electronic 

transactions business, posted 

daily. Keep up with industry 

events and statistics. Search 

our archive of news. Read 

the entire contents of 

the latest issue of Digital 

Transactions (no, you don’t 

need a password). 

No superficial writing. 

No fluff. No irrelevant 

detail. And it’s FREE. 

Subscribe to Digital Transactions News, meanwhile, and you’ll receive our weekly 

newsletter via e-mail. Every Friday, we bring you the week’s developments in one 

concise, to-the-point publication. No superficial writing. No fluff. No irrelevant 

detail. And it’s FREE. 

Digitaltransactions.net. 

Digital Transactions News. 

From the publishers of Digital 

Transactions, the only magazine 

covering the entire consumer 

electronic transactions market in 

North America.

Vitek says a “significant percentage” 

of orders now comes in online, though 

he doesn’t give a specific figure. 

“Ticket size is good online,” Vitek 

adds. He notes another benefit is that 

customers “can see the whole menu” 

on the Web. When they phoned in, they 

often limited their orders to pizzas for 

which they had coupons. Now they 

know “we have cheese bread, chicken 

wings” and other items, Vitek says. 

Customers using the onlineordering 

system can pay with majorbrand 

credit cards and signature debit 

cards in addition to gift cards, or they 

can pay the delivery person in cash. 

But more than 50% of Web-based 

outstanding. Such systems “can speed 

authorizations, they can allow for a 

centralized settlement,” says Vitek. 

“Certainly they can enable you to 

better negotiate with your merchant 

acquirer, [and] they allow you to take 

alternative forms of payment.” 

An iPhone App 

While Domino’s is a national merchant 

whose brand is familiar to millions 

of consumers, the companies 

that provide the technology behind 

online ordering are numerous, with 

no one having dominant market share, 

says Technomic’s Tristano. Some 

merchants develop inhouse systems. 

Domino’s saw in online ordering a way 

to take orders more efficiently than 

over the phone, which accounted 

for about 90% of its business. 

orders are charged to credit/debit 

cards, Vitek says. 

Next up for Domino’s is a payments 

switch, or gateway, for which the 

company has a request for proposals 

“There’s a lot of programmers out of 

work that can write one of these programs 

pretty quickly,” he says. 

For specialists such as New York 

City-based Mobo Systems, however, 

online ordering is much more than 

a techie quickie. Launched in 2005, 

the company started serving restaurants 

around Manhattan’s Madison 

Square Park in 2006. Then it 

added some Subway and Dunkin’ 

Donuts franchisees. 

Now about 650 of what Glass calls 

restaurant groups in 20 U.S. cities use 

the GoMobo system. Most are single-location 

restaurants, though some 

groups have up to 100 locations. The 

largest users include Burger King as 

well as Subway and Dunkin’ Donuts 

operators. Glass is aiming to have 

2,000 units served by year’s end. 

Instead of forcing the GoMobo 

brand on users, Mobo Systems is 

doing “white-label” launches with 

restaurant operators that want to 

brand their Web-ordering operations. 

The company’s Subway group, 

for instance, uses the “Subway 

Now” moniker. 

Next up for Mobo Systems: more 

attention to the mobile-phone space. 

The company is coming out with 

an application for Apple Inc.’s popular 

iPhone (“The iPhone Effect,” 

March). 

Another specialist is Seattle-based 

DishCloud Online Ordering, which 

makes Web- and kiosk-based applications. 

Last month, Dinerware Inc., 

a developer of restaurant point-ofsale 

software, certified the DishCloud 

system for an application programming 

interface, or API, that Dinerware 

sells to hotels, golf courses, and 

casinos, and all varieties of restaurants, 

including takeout and delivery. 

DishCloud’s payments partner is Mercury 

Payment Systems, a Durango, 

Colo.-based ISO. 

These efforts by DishCloud and 

Mobo Systems are just two examples 

of the opportunities created by the 

Web and the proliferation of mobile 

phones for a sector that less than a 

generation ago seemed to have few, if 

any, obvious prospects for changing 

the time-tested way of ordering and 

paying for a meal. DT 


ENDPOINT 

So You Want 

To Become a Prepaid 

Card Program Manager? 

Not only does the 

program manager 

earn a piece of the 

interchange on 

each transaction, 

but also gets a 

portion of each fee 

that is recorded, 

such as an ATM 

withdrawal, 

overdraft, or 

monthly fee. 

In the world of prepaid cards, a program manager is much like an ISO. The rewards 

can be rich, especially as program managers share in the interchange pie, but the 

costs and risks are substantial. Plan carefully, says Lori Breitzke. 

With prepaid cards booming, the market 

is likely to attract independent 

sales organizations looking for new 

opportunities for profit. The most likely role for 

ISOs is that of a program manager, which in the 

prepaid world functions much like an ISO in the 

acquiring world. This is a role well worth investigation 

for ISOs, but it’s also one that requires 

a lot of planning, sharp pencils, and a healthy 

appetite for risk. 

Prepaid cards can be a confusing business, 

so let’s start by defining some terms. To begin 

with, the prepaid business encompasses a number 

of different products, including store gift 

cards, long-distance and wireless cards, and 

branded cards used for health-care benefits or 

payroll deposits. 

Store gift cards have been around since 1995, 

when Blockbuster partnered with merchant processor 

Nabanco to create the first program. Many 

of the players have changed since then but the 

basic economic model has not. In the large retailer 

tier, money for a prepaid provider is made on the 

initial card number activation and ongoing file 

maintenance of that account. Margins are slim, 

which is to be expected with this type of client, as 

with merchant acquiring. For mid-size to smaller 

merchants, prepaid providers make money by 

selling 50-to-500-card packages at a buy rate. 

Acquirers mark up the buy rate to create their own 

unique offering. Some gift card providers allow 

the acquirer to private-label the solution thereby 

creating their own gift card program. 

Long-distance cards are used as a replacement 

for a home or mobile phone. Wireless 

prepaid cards are used to top-up or increase 

the minutes of a prepaid wireless phone. These 

cards are activated at the point of sale in a 

process referred to as POSA (point-of-sale 

activation). This technology came of age about 

five years ago and has turned a very paper-based 

system into a paperless one. Providers of these 

types of cards are ones you may not recognize, 

such as PaySpot, ePayNgo, and Now Prepay. 

Their economic model is driven by card sales. 

Resellers and retailers are given a percentage of 

the card value sold. 

‘Good’ Interchange 

Branded prepaid cards are used in many unique 

segments: health care, payroll, as gifts, transit, 

youth, campus, and travel, to name a few. 

Branded gift cards are sold at many large retailers, 

discounters, drug stores, and supermarkets. 

Other cards are distributed via banks or through 

the providers themselves direct to employers or 

consumers. Acquirers have an excellent opportunity 

to resell these cards to their base of merchants 

and banks. 

Every card in the branded-card segment 

has one thing in common: they earn interchange. 

Acquirers may not like interchange, 

Lori Breitzke is 

president of E&S 

Consulting LLC, 

an Atlanta-based 

firm specializing in 

the prepaid card 

market. Reach her 

at lori_breitzke@ 

bellsouth.net. 


ut for a branded card issuer, interchange 

is a good thing. 

Now let’s look at the distribution 

chain. At the top of the hierarchy are 

the card networks. They make the 

rules and govern the financial institutions 

that act as issuers. Each issuer has 

associated program managers (or independent 

sales organizations, in acquiring 

terms) that control the program 

details and provide card distribution. 

The program manager is responsible 

for cardholder service, card fulfillment, 

a Web site, and so on—all of the 

details that go with the card program. 

A program manager chooses a 

processor, which may or may not 

have direct access to the card networks. 

There are other complexities 

to this—for example, a program 

manager can also be a front-end 

processor—but these are the basic 

roles. At the bottom of the hierarchy 

is the cardholder. The merchant will 

be in the middle and loads the card, 

may distribute the card, and may 

redeem the value on the card. 

The issuer (or financial institution) 

earns interchange, float, and associated 

fees. The program manager pays 

all of the fees to the financial institution 

and processor but earns part of 

the interchange as well as the margin 

on cardholder fees. Cardholder fees 

vary by card type. 

Here is a simplified example: a 

general-spend reloadable prepaid card 

is sold at retail for $10 and loaded for 

the first time. (These cards are branded 

and target the unbanked as a way to pay 

bills.) The merchant makes $2 per card. 

The issuer makes float on the deposit. 

The processor makes a 10-cent load fee. 

The program manager makes the rest 

minus the cost of making the plastic, 

associated packaging, and distribution. 

As the card is used, the issuer earns 

interchange, which is shared with the 

program manager and sometimes the 

processor. The processor earns transaction 

fees (just like it does in acquiring). 

Not only does the program manager earn 

a piece of the interchange on each transaction, 

but also gets a portion of each fee 

that is recorded, such as an ATM withdrawal, 

overdraft, or monthly fee. 

Great Rewards 

Of course, it’s not that easy or everyone 

would be doing it! Program managers 

confront significant costs and 

infrastructure needs. 

How do you know if becoming a 

program manager is a good fit for you? 

How do you determine profitability? 

You need to know your merchants and 

whether a prepaid card program would 

be beneficial to their consumers. Common 

types of merchants for these types 

of offerings are: convenience stores, 

gas stations, pharmacies, grocery stores, 

check cashers, dollar stores, bodegas, 

liquor stores, game shops, electronic 

stores, and hardware stores. After 

making assumptions for your forecast 

(based on the cards sold, cardholder fees 

charged, interchange earned), you need 

to consider the costs involved. 

Startup costs to become your own 

branded program manager can be anywhere 

from $150,000 to $2 million. 

These costs vary according to several 

factors, including volumes, reserve 

needed to cover fraud losses, distribution 

risk, complexity of the program, 

card packaging, marketing, consumer 

education, processor fees, and what’s 

built and what’s outsourced. Most 

prepaid card processors and sponsoring 

institutions ask for three-year contracts 

with monthly committed minimums. 

Some also ask for significant 

upfront fees in order to get started. 

Another option is to offer a current 

established program. There are a number 

of these available. For example, 

Green Dot, NetSpend, and nFinanSe 

allow acquirers to resell their card 

programs to merchants. The return is 

much less, but so is the risk. 

Still want to be a program manager? 

There is a lot to consider, but 

with careful thought and planning, 

you can earn great rewards in the prepaid 

industry. DT 


ADVERTISER INDEX 

Allied Wallet 888-255-1137 www.alliedwallet.com Page 7 

Certegy 866-894-0807 www.fidelityinfoservices.com Page 31 

Digital Transactions 877-658-0418 www.digitaltransactions.net Pages 11,41,45 

Direct Response Forum www.directresponseforum.org Page 33 

First Data 800-974-5171 www.firstdata.com Page 19 

Fiserv 800-872-7882 www.newfiserv.com Pages 12-13 

Harbortouch 800-201-0461 www.isoprogram.com Pages 1-3 

Humboldt Merchant Services 877-635-3570 www.hbms.com Page 46 

Infonox, a TSYS Company 480-333-7799 www.tsys.com Page 37 

Ingenico 800-252-1140 www.ingenico-us.com Page 5 

Merchant Services Inc. (MSI) 800-226-5227 www.1800bankcard.com Pages 24-25 

Merchant Warehouse 800-743-8047 www.merchantwarehouse.com/iso Page 17 

MWAA Annual Conference www.midwestacquirers.com Page 43 

North American Bancard 888-229-5229 www.gonab.com Back Cover 

NYCE Network 201-865-9000 www.nyce.net Inside Front Cover 

ProfitStars, A Jack Henry Company 866-554-2224 www.profitstars.com Inside Back Cover 

TAWPI 2009 Forum & Expo 617-426-1167 www.tawpi.org Page 39 

The Prepaid Press Expo 866-203-2334 Ext 505 www.prepaidpressexpo.com Page 15 

United Bank Card 800-201-0461 www.unitedbankcard.com Pages 34-35 

USAePay 866-490-0042 www.usaepay.com Page 21

How Will You Pick 

Your RDC Partner? 

If you’re an ISO looking for a Remote Deposit Capture partner, 

ProfitStars® is the best of the bunch! A division of Jack Henry 

& Associates Inc.®, we’ve been a leader in the electronic 

payments industry since 1988. 

Our complete RDC solution 

puts success within your 

reach by opening the door 

to new relationships and 

greater revenue opportunities 

from existing customers. 

ProfitStars’ ISO Program offers: 

• An integrated, easy-to-use platform for processing including Check 21, ACH, credit and debit cards 

• Advanced technology, featuring robust reporting tools and QuickBooks® import capabilities 

• Competitive buy-rate program generating upfront revenue and generous residual payments 

• Convenient purchase and leasing options for all major check scanners 

• Next day funds availability for qualified customers 

Find out why more than 20,000 businesses rely on ProfitStars’ RDC. 

Visit our Web site at www.discover.profitstars.com/teamiso 

866.554.2224 | teamiso@profitstars.com | www.profitstars.com

Let NAB’s 2¢ pricing supercharge your 

career. The best products. The lowest 

rates. The biggest bonuses. With NAB, 

your profits are limitless. Join us today 

and leave the competition in the dust. 

Higher Residual Income 

With NAB you will receive a true revenue split up to 65%. 

And only with NAB can you share income on every available 

revenue stream. 

Better Pricing 

Get the power to close any deal with 2¢ IP pricing and 

2.5¢ dial-up! 

Free Equipment 

The Most Flexible & Most Profitable! Now, more free 

terminal choices than ever. No Annual fee or Batch Header 

fee required! If you charge one, you share in it. 

More Products = More Opportunity 

More to sell means more opportunity to make money. 

You’ve built your list of merchants, now build more 

income with our ever-growing list of product offerings: 

Fleet Cards, Cash Advances, Check Services, ATMs, and 

Gift/Loyalty Card Programs. 

It’s Time You Got Paid! 

$3,000 Signing Bonus! 

Up to $750 Conversion Bonus! 

$200 Activation Bonus! 

Don’t Need Free Equipment? 

Get an additional $100 Bonus! 

Monthly Sales Promotions for Maximum 

Productivity and Profitability! 

Get Paid Daily or Weekly – 

Why wait weeks to get your cash? You choose with 

North American Bancard! 

Complete Medical Benefits 

NAB will reimburse 50% of your current health insurance 

premium up to a maximum amount of $300 per month. 

Discover the difference NAB can make for you! 

1-888-229-5229 www.GONAB.com 

North American Bancard is a registered ISO/MSP of HSBC Bank USA, National Association, Buffalo, NY 

and Wells Fargo Bank, N.A., Walnut Creek, CA. American Express and Discover require separate approval.

Is Mobile Banking Getting Connected? - Digital Transactions

Create successful ePaper yourself

Delete template?

Save as template?