Thursday, August 4, 2011
Banks and Debit Networks Prepare for Future
By Michael Scheibach, Executive Editor, BankNews
Recent regulations set down by the Federal Reserve Board concerning debit networks have many banks on alert. The regulations, implemented in accordance with the Durbin amendment of the Dodd-Frank Wall Street Reform and Consumer Protection Act, require many banks now using a single network to diversify by joining an additional, unaffiliated network.
The August issue of BankNews features an article by Kevin Barry, general manager of the STAR Network, on the impact of these regulations. Click here to read the article in our digital edition.
STAR, a leading PIN debit networks, is backed its parent company, First Data. According to the company, "STAR continues to deliver innovative product advancements in security, online payments and network management that simplify service delivery for members and improve the end-user experience."
Two other networks, SHAZAM and PULSE, also responding to the new regulations, are quoted in the August issue, as well.
SHAZAM is a member-owned network committed to open access and member control that owns its own processing systems. According to a spokesperson, SHAZAM is "focused on maintaining and developing strategic business partnerships with each of our participating financial institutions and committed to helping them improve their technological capabilities in order to compete effectively in their local markets."
PULSE offers U.S. debit card issuers broad national reach and a comprehensive set of debit products, including ATM services, PIN and signature point-of-sale debit products, PINless bill payment, Internet PIN debit, fraud detection services, and an optional surcharge-free ATM alliance.
From my perspective, these new regulations are another element in the changing landscape in "traditional" banking. And although the Durbin amendment is a regulatory change, other, and perhaps more significant, changes are revolving around technology.
BankNews asked each company to discuss briefly how it is dealing with technological changes, such as mobile payments.
SHAZAM: SHAZAM provides a comprehensive suite of services, such as card services (including gift cards); debit MasterCard and Visa debit processing; switch services; Card Authorization Service (CAS); ATM services; Privileged Status (surcharge-free ATM alliance); SHAZAM R.A.D.A.R (Risk Assessment, Detection, and Response); Automated Clearing House (ACH) services; merchant services; and support services.
SHAZAM is in the process of deploying a mobile infrastructure that will allow us to enhance card management and fraud alerting. We will add payment applications to this platform over time, including person-to-person transfers and near field communications for contactless payments.
FIRST DATA: STAR’s parent company, First Data, has an innovative mobile roadmap that addresses today’s changing technology and consumer demands with a focus on mobile payments in particular. Most recently, First Data teamed with Google, Citi, MasterCard and Sprint to unveil Google Wallet, a new app that essentially makes your phone your wallet, letting consumers simply tap and pay when they shop.
The STAR Network last year introduced STAR CertiFlash, the aforementioned PIN debit application that advances point-of-sale (POS) security using one-time card number technology.
STAR CertiFlash is designed to evolve with the mobile payments landscape. The STAR specification supports STAR transactions with RFID implementations now, but was written with the future in mind and can be used when payments move to mobile. The application works with currently available payment devices such as fobs, payment stickers or any consumer device that incorporates an SD micro-chip. It is designed to migrate to use on NFC chips as well, when those are available on mobile handsets.
As consumers increasingly rely on their mobile phones in their everyday lives, incorporating STAR CertiFlash to increase security in mobile phone contactless payments is an obvious next step.
PULSE: PULSE also offers a back-to-basics approach focusing on the advantages that set our service apart: personal service through a http://www.blogger.com/img/blank.gifdedicahttp://www.blogger.com/img/blank.gifted account manager; a consultative relationship that provides participants customized solutions for maximizing the value of their electronic payments programs; continued commitment to providing professional development programs, http://www.blogger.com/img/blank.gifresearch, debit-focused publications and industry research; and a commitment to continuing to serve as a source of vital information and leadership for our participants on the interchange regulations.
PULSE intends to offer a suite of secure, cost-effective mobile payment product offerings to issuers. We are investing our time and resources to ensure that our mobile payments solution will be accessible to a majority of consumers, regardless of device, carrier or mobile operating system.
To learn more, visit the websites for Star (First Data), SHAZAM and PULSE.