Visa and MasterCard Cut Interchange Fees to 1.5% in Canada by Bloomberg News

news_18810_nVisa Inc. and MasterCard Inc., facing pressure from Canada’s federal government, agreed to lower credit-card transaction fees for the nation’s merchants by about 10 percent.

The two payment networks submitted proposals to reduce their average effective interchange rate in Canada to 1.5 percent on consumer credit cards, the finance department said in a statement posted on its website today. The rate will stand for five years and take effect no later than April, it said.

Prime Minister Stephen Harper’s Conservative government, which has been rolling out consumer-focused policies ahead of next year’s federal election, pledged in its 2014 budget to take additional measures to lower card fees for retailers, a move that would also reduce revenue for Canada’s banks. Merchant groups including the Retail Council of Canada have been the biggest advocates for government action on the fees, which the government claims are among the highest in the world.

“These commitments represent a meaningful long-term reduction in costs for merchants that should ultimately result in lower prices for consumers,” Finance Minister Joe Oliver said in the statement. “As a result of the voluntary proposals, there is no need for the government to regulate the interchange rates set by the credit card networks.”

In a separate statement, Visa said it is entering the agreement on the expectation there will be a level playing field in the industry.

“If Visa or our clients are disadvantaged as a result of entering into this undertaking, Visa reserves the right at any time to terminate or amend it,” the Foster City, California-based company said today in a statement.

Source: http://www.paymentssource.com/news/compliance/visa-and-mastercard-cut-interchange-fees-to-15-in-canada-3019602-1.html

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Alto Global Processing: DID WE JUST SEE THE FUTURE OF MOBILE PAYMENTS?

CEO, Market Platform Dynamics for http://www.pymnts.com/
Apple Pay Feature

Say hello to Apple Pay. It’s the new kid on the payments block and, depending on how things unfold, it could be the new Gorilla in the mobile payments ecosystem.

Here’s what it is.  When consumers get an iPhone6 or 6 Plus, they can use Apple Pay almost right away (obviously in October when it is live at merchants) as long as they have an iTunes account – and there are 800 million of those now in the world. All these 800 million consumers need to do is to enter their CVC code and they’re up and running.

Consumers can then use those Apple Pay accounts to pay at places that have NFC terminals by holding their phone near the device and holding their thumb on TouchID. (Whether this is faster than swipe remains to be seen.) Want to put another card in? Just snap a picture and Apple will do the rest—so long as it’s with one of its affiliated banks (which now includes those that control more than 80 percent of the consumer transactions in the U.S.).  Consumers can always do it the new old fashioned way and type in all the card details into Passbook.

Card info isn’t actually stored on the phone at all. Cardholder information is tokenized and stored in the secure element and never makes it onto the phone’s memory or on Apple’s servers in the cloud.  That’s a pretty big deal. Apple Pay leverages the card network’s tokenization standard, which pretty much seals the deal on how cardholder security will be done in a digital world. Between that and fingerprint ID, Apple Pay seems pretty secure. The spiffy Apple Watch that they showed also enables payments but must be paired with the phone to do it.

There are two other big deals here.

The first is that Apple Pay is also headed online, which means it is going head to head with every other digital online acceptance mark, e.g. PayPal, Visa Checkout and MasterCard PayPass.   With 800 million iTunes accounts worldwide, Apple is millions of miles ahead of all three of those guys combined. All Apple needs is for online merchants to accept it. And with all those iTunes accounts, that doesn’t seem like it will be that hard.

The second is the API. Apple is doing with its payments app what it did with Beacons and the apps store before that: creating an ecosystem that stimulates innovation and strengthens the power of its own walled garden. Allowing developers to embed Apple Pay in their apps is an efficient way for Apple Pay to get massive distribution and scale.

As great as this sounds, there are two limitations of Apple Pay right now for consumers and merchants.  And it’s that old chicken and egg issue that gets in the way of every new payments system.

At least as of today, no one has an iPhone 6 capable of working with Apple Pay. That will change on September 19th, but most people won’t be able to use Apple Pay next year because they won’t have the right phones.  Estimates say that Apple will sell roughly 180 million phones over the next 12 months worldwide and about 25 million of those are in the U.S.. Since that is where Apple Pay works today, analysts say that the addressable market for Apple Pay is 25 million when they count the number of people whose contracts are up and who are eligible to buy a new phone. Apple is, of course, hoping that enough people find the iPhone 6 cool enough that they buy it anyway, contract terms notwithstanding, which could make that number much higher.

Then consumers that do have Apple Pay can’t really use at it very many places right now. Apple says that there are 220,000 merchant locations today that accept NFC but that’s a small fraction of the 8 million plus point of sale locations in the U.S..  Apple Pay ignition depends on merchants believing in Apple and consumers believing that merchants will believe in Apple.

So that’s why what happens next will be really important to watch.

Apple clearly did not intend to innovate payments in its purest sense of the word. It preserved, yet made digital, the core tenants of the four party system that has defined the payments world for the last 60 years. It has given NFC an entirely new lease on life and all but crowned it as the technology standard for payments. As we’ve said many times, NFC needed a catalyst to ignite it and the longer that it lacked one, the more it was at risk of becoming obsolete. Apple Pay is banking on the fact that enough merchants in the U.S. will light up the NFC capabilities that come with their new EMV terminals. The promise of millions of high spending Apple Pay consumers may be that catalyst.

It appears that Apple did intend, however, to reinvent the experience of buying.  We’ve seen hints of it already as making a payment with Apple Pay in a physical store doesn’t require popping open an app to activate the card. This is just the tip of a very deep iceberg. Expect that experience on steroids as the beacon and payments ecosystems mash up, inspire innovators to spring into action to create entirely new sources of value for consumers and merchants.

The other subtle, yet potentially game changing observation I had today is how Apple chose to name its payments capability. Apple introduced us today to Apple Pay, not iPay, not iWallet. Apple wants the consumer association with Apple first and foremost. Sure, card brands and network brands are visible, but Apple Pay will make every other brand subordinate to it because that is how the consumer and the merchant will view it.

That means that the power, at least in the iOS ecosystem, is likely to accrue over time to Apple. And with 800 million registered accounts, well, it might not need that much time.  Just ask the mobile operators what happens when Apple exercises its power over an ecosystem: the balance of power shifts in a pretty dramatic way to them.

Fast forward a few years and it is quite likely that payments becomes an ecosystem defined by apps in the cloud, assembled in Passbook under the control of Apple at least for the iOS ecosystem.   Not only did we meet Apple Pay yesterday, we might also have just met one of the most powerful players in the payments ecosystem.

Let’s not get ahead of ourselves. The news is still fresh and many details are still not known and those that are must still be digested. Today, in many ways, marks the beginning of mobile payments 3.0.  The next couple of years will be something to watch now that Apple is in the game.

Source: http://www.pymnts.com/news/2014/did-we-just-see-the-future-of-mobile-payments/#.VBBj42RdX84

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Alto Global Processing: Canadian Bitcoin Processor Nets $8.5 Million Round

alto global processing-Canadian-Bitcoin-Processor-Nets-8pt5-Million-RoundVogogo, a Canadian e-commerce processor based in Calgary, said last week it has secured an $8.5 million round of financing that will enable it to expand its recent success in processing bitcoin and other cryptocurrencies in Canada to the U.S. and other countries around the world. The 13-year old company said it handles $6 to $10 million in cryptocurrency-based transactions monthly and that its dedication to “[meeting] strict compliance and risk mitigation requirements of conventional banks and regulators” will help bitcoin shed any negative perception that remains.

“We had been watching Bitcoin and crypto currencies closely. As a payments company we were very intrigued by the potential of Bitcoin,” said Vogogo Co-Founder Geoff Gordon. “We watched several crypto groups enter the Canadian market, have a lot of success only to then be shut down by their bankers due to payment-related fraud and/or no compliance structure. We put the Vogogo platform in front of a few crypto groups to resounding success in Canada. We are now adjusting our platform to scale these services and we will be replicating the service in the U.S., EU and other target markets.”

Cormark Securities led the funding round with participation from Salman Partners Inc., Clarus Securities Inc., Beacon Securities Limited and Canaccord Genuity Corp.

Source: http://cardnotpresent.com/news/default.aspc?id=6234

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Amazon Quietly Launches Its Consumer-Facing Mobile Wallet App, Amazon Wallet

Originally posted on TechCrunch:

Amazon’s first attempt at its own mobile wallet application, designed for use at the point-of-sale, has made a quiet debut on the Amazon Appstore and on Google Play. However, the current implementation of the new “Amazon Wallet” application is fairly barebones – it doesn’t yet support mobile payments or the ability to store credit cards or debit cards. Instead, the wallet only offers the ability to store and organize your gift cards and other store and loyalty cards.

Wallet-Feature-Doc-FirePhone._V347550681_According to the app’s description, Amazon Wallet lets you either scan or type in your gift card, loyalty card and membership card’s information to “reduce the clutter in your leather wallet or purse.” The cards are then available in a digital format as a barcode, QR code, text or image. For dozens of supported merchants, consumers are also able to check the balance of their stored gift cards.

In addition to…

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ALTO GLOBAL PROCESSING: Why Some Businesses Don’t Like Virtual Cards

By Jeff Green for @pymnts

alto global processing b2bVirtual card use is gaining momentum in the B2B market, with their use growing particularly in travel, invoice and health care payments, where use of paper checks remains common. But not all companies favor network automatic opt-in rules tied to acceptance of virtual card products.

Through virtual card products, issuers provide to companies specific 16-digit card numbers they may use online or by phone to apply to specific transactions or payees, thus providing an extra layer of security compared with traditional card products. There is no actual plastic card issued.

Visa reportedly soon will launch a B2B tool to make it simpler for corporations to pay supplier invoices using virtual payment cards. The offering would complement a cloud-based payment initiative Visa launched last year using the SAP Financial Services Network.

Virtual card use for invoicing is especially important for the card brands, as nearly half of all corporate payments are still paid by check, according to Visa, which estimates global commercial consumption expenditures at US$112 trillion.

Firms may embed the Visa tool, which is scheduled to launch later this summer, into their general ledger software, reports FierceFinanceIT.com. In doing so, companies would make it simpler to choose Visa’s virtual credit card offerings when companies pick their payment method online.

“One of the big areas of opportunity for the B2B payments industry is moving upstream into the accounts-payable process, where corporations are making decisions on how to pay invoices,” Tad Fordyce, Visa head of global commercial solutions, told the publication. “Visa has virtual card products that address this opportunity, and one of the challenges we face, as checks are being displaced by electronic payments, is we want to make sure that Visa’s virtual card solutions are present and available for the corporates to use at that time of the payment decision.”

Visa said it expects a new solution in launched recently with SAP to help corporations who want to move toward electronic B2B payments and easily automate and process their invoice payments without the need for significant investment in custom software.

“As companies shift from labor-intensive, paper-based processes to more efficient electronic procurement systems, having the option to pay with Visa will help simplify the process and bring many benefits,” Fordyce said in a Visa/SAP announcement. “We anticipate that being able to make Visa payments via connection to the SAP Financial Services Network will help corporations streamline accounts payable processing, while avoiding the upfront and ongoing costs that would be associated with custom software for the payment process.”

Opt-out request

Virtual cards also have caught the attention of health care providers, which have mixed feeling about the products when used to settle claims.

Last month, a hospital representative told the Department of Health and Human Services’ National Committee on Vital Health Statistics Subcommittee on Standards that some health plans are automatically using virtual credit cards to pay claims, resulting in significant banking charges and administrative work for health care providers.

In his testimony, Doug Downey, speaking for Hospital Corporation of America (HCA), said the committee should discourage health plans from imposing a transaction fee for electronic payment or requiring hospitals to “opt out” of virtual card payments.

Health plans or their agents switch payments from check to virtual cards with no business discussion between the two parties, effectively automatically enrolling the provider in the program automatic opt-in. Health plans or their agents are also incorrectly leveraging the card-network rules, which apply to consumer-to-business payments, and applying these rules to B2B payments, Downey said.

“This is a misapplication of the rules,” he said. “HCA merchant credit card fees in 2013 increased by an estimated $3 million as a result of the un-negotiated use of [virtual credit card] payments by health plans and/or their clearinghouse/aggregator payment service agents.”

HCA is not opposed to virtual card use because it may be appropriate for some providers, but it is against network rules that automatically opt in providers to accept such payments, Downey said.

A long history

Virtual cards have been around for some time. One of the first companies to introduce them was Ireland-based Orbiscom, which MasterCard acquired in 2009. MasterCard also works with other virtual card companies, including Europe’s Conferma, which also does business with Visa Europe issuers, according to Business Travelers News.

Though initially marketed primarily as a way for consumers to improve the security of online payments, virtual cards more recently have gained the interest of B2B companies, including firms in the travel industry.

Last fall, MasterCard announced MasterCard Travel Controller, which provides companies with information necessary to allocate charges to appropriate cost centers and allows them to expand control over travel spend by setting customer virtual accounts for each transaction.

Virtual fleet cards

Fleet card specialist Wex is among the major issuers of B2B virtual cards, providing a MasterCard-branded product to its fleet customers.

Last year, the company added 700,000 new fleet cards globally, growing its virtual card volume by 20 percent, according to the company’s fourth quarter earnings release.

In April, Wex’s European unit signed an international deal with Conferma, bringing to that company a prepaid virtual product for the first
time. It enabled Conferma’s partners to optimize travel payments by selecting the payment method that is most appropriate for each transaction type.

Source: http://www.pymnts.com/in-depth/2014/why-some-businesses-dont-like-virtual-cards/#.U7wHBRb2pnE

Please visit http://www.pymnts.com/ for more payment news!

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Alto Global Processing: Amazon Launches Recurring Payments for Third-Party Sellers

 

alto global processing amazon launchesAmazon this week expanded its third-party payments service to include support for recurring billing. Two hundred and forty million consumers have Amazon accounts and the company has long been seen as a sleeping giant in the e- and m-commerce world. Amazon will now enable online sellers to access those accounts for sales made using a subscription model. The Seattle-based company tested the service with several Websites including mobile phone company Ting, according to a Reuters report confirmed by Amazon.

Amazon’s hope, according to the report, is that startups like Ting, which might have trouble convincing consumers to hand over their credit-card details for automatic periodic payments, will have no such trouble when that information is already vaulted by Amazon. A Ting representative told Reuters that customers who used Amazon recurring payments spent 30 percent more than customers who did not.

Amazon is expected to expand its payment activity even further next week, when, industry observers say, the company will launch its own smartphone.

Source: http://cardnotpresent.com/news/default.aspx?id=5826

Please visit http://cardnotpresent.com/ for more payment news! For more information on this please feel free to contact Luca Bizzotto, CEO of Alto Global Processing

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Alto Global Processing: American Express Expands OptBlue Merchant Acquirer Program

American Express has announced the expansion of OptBlue, its new merchant acquiring program that extends U.S. small merchant acceptance coverage for its cards. alto global processing amex

Amex reports there are now 10 participating acquirers in OptBlue, five of which are among the top 10 in the United States. New to the program are: First Data, EVO, Merchant e-Solutions and First American Payments Systems. The program was announced at American Express’ Financial Community meeting earlier this year with Vantiv, Global Payments, Heartland Payment Systems, Worldpay, Transfirst and JetPay as the first participants. Participating acquirers will provide a full one-stop servicing solution for American Express Card® acceptance to eligible U.S. small merchants.

OptBlue is part of American Express’ ongoing commitment to enhance the U.S. small merchant experience and is an evolution of our acquiring business,” said Ed Jay, Executive Vice President, Merchant Services – Americas, American Express.

“The program will help deliver a smart and easy solution for U.S. small merchants to enjoy the benefits of American Express Card acceptance while making it convenient for consumers to Shop Small® year round.”

With OptBlue, participating acquirers can offer U.S. small merchants the benefit of a single statement, one settlement process, and one contact for all the major card brands. Acquirers determine merchant pricing in addition to providing payment processing and servicing. OptBlue will help expand American Express’ U.S. small merchant coverage, providing consumers more payment options at local businesses. American Express continues to receive the same transactional information it does today, allowing OptBlue merchants to benefit from the valuable tools, services and marketing that the Company delivers to small merchants. OptBlue is limited to eligible U.S. small merchants that have a projected American Express charge volume of less than $1 million per year.

Source: American Express Expands OptBlue Merchant Acquirer Program.

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