Saturday, April 30, 2011

Visa adding clout to Square

Last May, AndrĂ©a Cecil introduced the Square, a mobile payment system. The credit-card reader device — founded by Twitter's cofounder, Jack Dorsey — lets anyone accept credit card payments via their mobile device. The apps for iOS and Android are free, as is the card reader. The only fee you'll pay is a per-transaction payment of 2.75 percent.

Since its debut, Square has seen considerable growth with merchants that typically don't accept credit cards. The company processed more than $66 million during the first three months of 2011 and is expected to triple that amount during the second quarter. Merchants of all types are signing up and changing their approach to payment collection. Here are a few examples of the individuals and small businesses (from the Square website) flocking to the service:

  • Food trucks needing a simple and easy way to accept payments on the move.
  • Small corner stores tired of the complexity and high rates incurred by their credit card machine.
  • Photographers who want to be paid on the spot instead of waiting weeks for checks to arrive.
  • Arts and craft vendors who don't want to pay a monthly fee for a merchant account since they only sell seasonally.
  • Housemates who need to split utility costs.

The big news this week was that Visa announced its strategic investment into Square. The partnership will help Square become mainstream as it competes with entrenched companies that sell terminals to merchants that process credit card payments. The arrangement is also a vote of confidence for Square's enhanced security features; instant email/SMS receipts and photo and location of transaction.

Like many payment companies, Visa is interested in the enormous small-business market. The digital payment juggernaut already offers a cashless person-to-person payment process, but transfers are only available between Visa accounts.

This partnership follows on the heels of Square's agreement with Apple to make its plug-in device available in the 235 U.S. Apple retail stores and the announcement of a new card reader geared at adding additional anti-fraud measures. Visa hopes the arrangement will provide access to the estimated 27 million merchants that don't already accept credit cards.


 

Friday, April 29, 2011

First Hawaiian Bank to accept Korean credit card

First Hawaiian Bank, the state's largest credit card processor with 7,500 locations, said today it will now accept the BC Global Card, a South Korean credit card, to make it easier for South Korean tourists to shop in Hawaii.

The issuer, BCcard, implemented an agreement with Discover Financial Services that allows the card to be used on the Discover network, as well as the Diners Club International and PULSE networks.

First Hawaiian Bank, which has a long-standing partnership with Discover, processed the first global transaction yesterday during a ceremonial purchase of a Koa wood bowl by BCcard President and CEO Jong Ho Lee at a Halekulani Hotel boutique.

BCcard, founded in 1982, has 54 million cards issued through 11 financial institutions and has marketed the BC Global Card as the first Korean domestic card with international acceptance. Altogether, Korean cardholders spent more than $13 billion outside of Korea in 2010, according to the Korea Tourism Organization.

 

Aussie PSN User Has $2000 Of Unauthorised Charges On His Credit Card

The ABC has just run the story of an Adelaide PSN user whose credit card has been compromised in the wake of the PSN breach. His card has racked up $2000 of debt over the past couple of days.

Rory Spreckley noticed that the charges were preceded by a handful of $1 charges, a technique cyber criminals typically use to test if credit card details check out.

"I logged into my bank account just to check everything was OK and I found out there was some just over $2,000 in charges which I didn't personally accrue," claimed Spreckley.

Although we can't be 100% sure if this is related to Sony's breach, this is a timely reminder to be vigilant with your details, and contact your bank the second you see any suspicious activity on your account.

Thursday, April 28, 2011

Bank of America's New Credit Card Penalty Interest Rate Is Nearly 30%

Bank of America credit card holders, beware. If you're late on a monthly payment, that little "oops" might become a big "ouch": Your future balances could be subject to a penalty rate of nearly 30%, notes a report Wednesday in The Charlotte Observer. The penalty rate will not be applied to previous balances, however.

Nor will the penalty interest rate be applied automatically, the article notes, but rather on a case-by-case basis after other risk factors are considered. And, if the bank does chose to hit an account with the penalty rate hike, it will give the customer a 45-day heads up before the new rate goes into effect, as required under 2009's Credit Card Accountability, Responsibility and Disclosure Act, otherwise known as the CARD Act. Bank of America (BAC) began notifying customers about the penalty rate increase via their bills this month: Those who are affected soonest will see their rate increase coming afterJune 25.

The penalty interest rate can scale up to a maximum of 29.99% on future balances, and card holders will have their accounts reviewed every six months as required by the CARD Act for potential reductions in the penalty rate, BofA spokeswoman Betty Riess told DailyFinance.

Before the CARD Act went into effect, consumers faced an interest rate death spiral with their credit cards, Greg McBride, a senior financial analyst with Bankrate.com, told DailyFinance.

"Prior to the CARD Act, penalty interest rate increases were a one-way ticket," says McBride. "Now, they have to review them every six months. And while the requirements are still kind of loose, it's a step in the right direction."

He added another major change that came out of the CARD Act is that any penalty interest rate increases can only be applied toward future credit card balances and not existing balances, unless the payment is delinquent by more than 60 days.

The bank's adoption of a penalty rate follows a path that other financial institutions have taken since the late 1990s, according to a CreditCards.com report. Back in 1998, for example, the average default rate hovered at 22.75% and remained in a relatively tight range in the years that followed, reaching as high as 25.28% in 2009. But despite the passage of the CARD Act, penalty interest rates have continued to climb.

Last summer, banks were charging an average median penalty interest rate of 29.99%, according to a BankRate.com report. That puts Bank of America squarely in the middle of the pack with its competitors. If it's any consolation to their customers, CreditCards.com noted last year that HSBC's penalty rate had exceeded the 30% threshold -- topping out at 31.99%.

To avoid those penalty interest rates, credit card users simply need to make payments on time, advises McBride.

Says McBride: "People complain about the penalty interest like they complain about speeding tickets. If you don't want the ticket, then don't speed."

Wednesday, April 27, 2011

PSN Down: Security expert warns users should cancel credit cards

Marc Chacksfield over at TechRadar is reporting the expert from security specialist Sophos said PSN users should "cancel that card immediately". Potentially at least seventy million users are at risk from identity or financial fraud.

The security expert Graham Cluely said "now isn't the time to sit back on your sofa and do nothing". He goes on to say the criminals who may now have the information, won't just hang around and do nothing.

Other information at risk besides credit card details include, email account information, dates of birth, and names and address. A senior threat researcher form GFI Software Christopher Boyd, is also concerned about the risks of the data breech.

He said that the issue is really serious but wondered if details of all the PSN users were obtained, or just some of them. Another problem is that for the time being no one knows if there information has been obtained of not.

Will you be cancelling your credit cards?

PlayStation hacking scandal: police chief says contact your bank now

The head of the NSW Police fraud squad has warned Australian PlayStation users that they may have to cancel their credit cards after hackers stole enough information to even take out loans on the victims' behalf.

The Australian Privacy Commissioner, Timothy Pilgrim, said he was "very concerned" and would contact Sony for more information on the breach, which security researchers have said may be the largest theft of identity data on record. His office has begun an "own motion investigation" into the matter.

Story continues below Despite its PlayStation Network being knocked offline for the past week, Sony waited until today to notify its 77 million customers that an "illegal and unauthorised person" gained access to their names, addresses, email address, birthdates, usernames, passwords, logins, security questions and more.

The company also could not rule out credit card numbers and expiry dates being stolen. But even if no credit cards were stolen, the other details are enough to cause significant identity theft issues.

"If you're armed with enough personal information you could basically do anything that the legitimate person could do themselves ... [such as] obtain various forms of credit, you could target their banking accounts," said NSW Police Detective Superintendent Col Dyson in a phone interview.

Detective Superintendent Dyson said those who obtained the personal information could use it to commit identity crimes or use the information to build a profile of the victims, which would then be used to gather further information about them before committing the crime.

"Personal or financial information is a valuable commodity and generally these days we find organised groups harvesting information and then selling it to other groups to use," he said.

NSW Police advises affected Australians to consider cancelling their credit cards or at the very least call their banks to inform them that their cards may have been compromised. People should also change their passwords if they use their same PlayStation Network password for other services.

Sony Australia confirmed that the issue affected all PlayStation Network users, including Australian account holders. It said it had not received any reports or claims that credit card information had been used improperly to date.

"For the security of our valued customers, we are encouraging all account holders to be aware of email, telephone, and postal mail scams that ask for personal or sensitive information," Sony Australia said.

The Australian Bankers' Association said there had yet to be any Australian reports of credit card details being compromised or other fraud that has occurred as a result of the Sony breach. It said banks would be in contact with individual customers if their cards need to be re-issued and any credit card holders who become affected would be protected from loss in genuine fraud cases.

With many web services now requiring users to give out personal information, which is then stored on company servers in the internet "cloud", privacy breaches such as this are becoming more common.

Detective Superintendent Dyson said the move to storing personal information in the cloud had created new issues for law enforcement as the data was usually stored overseas, often in multiple jurisdictions.

"People should always be cautious about putting any personal information online or providing information to companies and the fact that the information or data is stored overseas is a challenge for law enforcement on a global scale really," he said.

"It creates issues for law enforcement and makes the importance of us having a strong network with overseas law enforcement more important than ever."

Detective Superintendent Dyson said he would wait for the lead overseas law enforcement agency on this matter to make contact and provide a briefing before he would assign local officers to investigate.

"There's no use in us going out and starting interviewing people without knowing the full background of it and receiving a formal request," he said.

It's not clear how the PlayStation Network break-in occurred or how many Australians out of the 77 million global users are affected, but it is believed to include everyone with a PlayStation Network account.

The loose-knit group of online miscreants, Anonymous, has denied that it was responsible for the hack, despite it issuing a statement last week warning Sony it would be targeted as payback for Sony suing customers who cracked the PlayStation 3 software.

Colin Jacobs, chair of the online users' lobby group Electronic Frontiers Australia, criticised Sony for the delay in notifying customers of the breach, which Sony said occurred between April 17 and April 19.

"A week is too long. If that information fell into the wrong hands, and you have to assume that it did immediately, those users could have been receiving sophisticated scams all week long," he said.

"It's a shame that it has come to this, but mandatory reporting laws might be necessary to prod companies to do the right thing regardless of the public relations consequences."

Since Australia does not have mandatory notification laws for when data breaches occur, companies are not obligated to even inform customers when their personal information has been stolen. Dell Australia opted to inform customers when their details fell into the wrong hands recently but there were many more affected companies who did not come forward.

A recent report on privacy laws compiled by the Australian Law Reform Commission recommended that new data breach notification requirements be implemented, but the Federal Government has yet to say whether it will take this recommendation on board.

The Australian Privacy Commissioner, Timothy Pilgrim, said when breaches occur it was important for organisations to "notify their customers promptly" as this would help "mitigate any potential impact on individuals such as the risk of identity theft and fraud".

"This is a massive data breach, with millions of users' personal data compromised," said Jacobs.

"Sony have an uphill battle in restoring their reputation and we can only hope their users don't suffer too much for this lapse."

Despite the criticisms that it took too long to notify people, Sony Australia believes it "responded quickly and are behaving responsibly". It said that as soon as it learned of the issue it temproary turned off the PlayStation Network, engaged an outside security firm to conduct a full investigation and took steps to enhance security and strengthen its network infrastructure.

Man used a forged credit card

AN electrician tried to buy more than £700 worth of cigarettes and lottery scratch cards using a forged credit card.

Arburas Sabirovas, 31, went into Tesco in Hollington, St Leonards, and tried to buy £336 worth of Marlboro cigarettes using a Visa card.

But the signature he used was completely different to the one on the back of the card and the transaction was declined.

Less than two hours later Sabirovas tried again, this time at Tesco in Ravenside Retail Park in Bexhill.

He asked for £385 worth of cigarettes and scratch cards but the card was refused. He was arrested and police discovered the credit card was a forgery.

At a court hearing on Monday, Jeremy King, prosecuting, said the crimes happened on May 11 last year but it took almost a year to track down Sabirovas.

He was due to return to the police station in Hastings on June 8 last year.

Sabirovas, who lives in London, pleaded guilty to fraud and one Bail Act offence when he appeared in the dock in front of Hastings magistrates on Monday.

Lynda Kerry, defending, said: "He failed to return to the police station when he had to, and because he was back in London and not working it was expensive to travel down to Hastings.

"The defendant also lost the paperwork telling him when to return. He was spotted in London during a routine police check in London on Saturday."

Magistrates gave Sabirovas a 12-month conditional discharge and ordered to pay £85 court costs.

 

Tuesday, April 26, 2011

Misinformation exacerbates student debt peril

As if we needed more alarming statistics in a post-recession economy, student loan debt has recently surpassed collective credit card debt in the United States.

Even more worrisome, student loan debt is projected to top $1 trillion in 2011, partially the result of poor job markets for students after college graduation. Also contributing to the increasing weight of loan debt is the rise of college tuition, another consequence of post-recession budget restrictions.

These statistics present students like us with the perilous situation of wanting college degrees to ensure future success, while also acknowledging the true lack of job opportunities and consumer protection.

Exacerbating the situation is the misleading communication of those with interest in the financial aid market, namely the Office of Student Financial Aid.

In response to the state of student loan debt, Office of Student Financial Aid Director Jim Brooks thought it worthwhile to mention MU's context in the national scheme of debt issues. Citing a national average of about $24,000, Brooks said MU's average student loan debt upon graduation is $20,689.

Although it's encouraging to hear things could be worse, it's not particularly satisfying knowing ultimately, our situations are still bad, and our incurred debt is often not just "average."

Even worse, through years of legislation, student loans have curiously found themselves in a position of unusual stipulation, as, unlike credit card debt, they cannot be claimed under bankruptcy.

Therefore, if a person cannot pay for his or her government student loans, the government has the power to dig into that person's salary until the loan is finally paid off.

As students who hope the government has a vested interest in the education of its constituents, we find it agitating that student loan policies handcuff those whose intentions are to get an education. We want a degree, we want jobs, yet we are treated with a vastly different attitude than someone who, say, wants to partake in a thousand-dollar, credit-card-funded shopping spree.

Government policy aside, though, we do not feel the Office of Student Financial Aid is adequately fulfilling their responsibility to inform us of the realities of student loans. Students need more than just cursory, basic definitions of their loan situations to navigate the difficult and paralyzing world of student loans, and we hope financial aid advisors communicate more honestly, more consistently.

Consumers once again feel comfortable with credit card debt

Americans are making more money these days than they were during the depths of the national recession, and the improvement in their financial situation has led them to increase their spending, according to a new report on credit card spending from comScore. In addition, card companies have tried to entice consumers to open news accounts by offering lower interest rates and fees on their credit cards.

In all, 20 percent of consumers said they shopped around for a new credit card in the last year, and 34 percent indicated they were feeling more confident about the economy, the report said. Low interest rates on their credit card debt was deemed the most important factor in selecting such an account, with 40 percent saying this was their primary consideration. Another 28 percent cited cards with no annual fee as being most important.

"As we see consumer economic sentiment improve, we're also seeing a corresponding increase in retail and e-commerce spending along with increased card shopping, especially among those in the subprime sector," said Sarah Lenart, comScore vice president of financial services. "With shopping and card applications expected to continue to increase in 2011, consumers are likely to place even greater emphasis on competitive card features and offerings as well as enticing rewards programs."

However, many consumers - 13 percent - also wanted to earn rewards points for every dollar of credit card debt they took on, the report said. Among these options, 57 percent of respondents said they would like to earn cash back rewards the most. Meanwhile, the ability to earn points with a specific merchant and flexibility in redeeming accrued rewards were tied for second-most popular at just 13 percent.

Most consumers also spent the year adopting new digital banking methods, as 74 percent of respondents said they learned about their account by going online, and 59 percent said this was their primary method. Another 29 percent used their mobile phone - either through a Web browser or specific application - to complete transactions.

Consumers may be getting a better handle on their finances, as instances of delinquent and defaulted debts of all types have been steadily declining in the last year.

Monday, April 25, 2011

improving your credit

Q. I am paying debt settlements on my credit cards from several years ago. I fell behind because of unemployment. We do not use credit cards now. We pay all of our bills with a debit card. It feels great to pay directly and on time. Plus, we are not accumulating any more debt. How long does a debt settlement stay on a credit report? I have heard that it's seven years. Also, does this mean we will never be able to get loans or credit at reasonable rates? How will debt settlement affect our ability to finance a car or obtain student loans?

A. In most cases, negative items are removed from your credit report seven years after the first date of delinquency. In your case, think back to the date you first fell permanently delinquent on the debt that got charged off. This is the start date of your seven years. (A bankruptcy may remain on your credit report for 10 years, however.)

You mention the accounts you are settling are already several years old, so you won't have to wait seven more years for their removal. From your letter, I'm estimating it will be more like four years or so.

As far as future credit, paying the past due accounts in full would be best. But paying an agreed-upon settlement amount is better than paying nothing.

Here's a hypothetical illustration of how lenders will feel about you. Let's say you have a cousin who borrowed $1,000 from another relative. You happen to know that the relative was repaid only $500, and the cousin long ago missed the repayment deadline. Now the cousin is asking you for a $1,000 loan. What would you do?

Your priority should be to add positive information to your credit report once you have completed settling all your accounts. Here are some thoughts on how to do that.

You say you are strictly using your debit card for purchases and bill paying. I understand your pride in paying cash, and appreciate your determination not to get into credit card trouble again. But debit card purchases are not reported to the credit bureaus. So this record of on-time payments doesn't make it to your credit report.

If you don't have any revolving or installment accounts — other than a mortgage — consider opening one of each. You can get the positive reporting on your credit report with a secured credit card. Secured cards are issued with a low credit limit, based on the amount of money you have deposited in a savings account with the bank issuing your card. A low limit will help you refrain from overspending.

Shop around for a secured card with no annual fee that reports to the credit bureaus. Likewise, you can open a passbook savings account and take out a passbook installment loan from a lender that reports to the bureaus. That will also get some positive reporting for your credit score.

The key to improving your credit is to make on-time payments as agreed, on the credit card and the loan. The more time that elapses from your old credit troubles and the more positive information you add to your credit report, the more likely you are to receive affordable rates and terms for new loans in the future.