Debit card

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A debit card (also known as a bank card or check card) is a plastic payment card that can be
used instead of cash when making purchases. It is similar to a credit card, but unlike a credit
card, the money comes directly from the user's bank account when using a debit card.
Some cards may bear a stored value with which a payment is made, while most relay a message
to the cardholder's bank to withdraw funds from a payer's designated bank account. In some
cases, the primary account number is assigned exclusively for use on the Internet and there is no
physical card.
In many countries, the use of debit cards has become so widespread that their volume has
overtaken or entirely replaced cheques and, in some instances, cash transactions. The
development of debit cards, unlike credit cards and charge cards, has generally been country
specific resulting in a number of different systems around the world, which were often
incompatible. Since the mid-2000s, a number of initiatives have allowed debit cards issued in
one country to be used in other countries and allowed their use for internet and phone purchases.
Unlike credit and charge cards, payments using a debit card are immediately transferred from the
cardholder's designated bank account, instead of them paying the money back at a later date.

Debit cards usually also allow for instant withdrawal of cash, acting as the ATM card for
withdrawing cash. Merchants may also offer cashback facilities to customers, where a customer
can withdraw cash along with their purchase.

Contents

1 Types of debit card systems

o 1.1 Online debit system
o 1.2 Offline debit system
o 1.3 Electronic purse card system
o 1.4 Prepaid debit cards

2 Consumer protection

3 Financial access

4 Issues with deferred posting of offline debit

5 Internet purchases

6 Debit cards around the world

o 6.1 Angola
o 6.2 Armenia
o 6.3 Australia
o 6.4 Bahrain
o 6.5 Brazil
o 6.6 Bulgaria
o 6.7 Canada

6.7.1 Consumer protection in Canada

o 6.8 Chile

o 6.9 Colombia
o 6.10 Denmark
o 6.11 Finland
o 6.12 France

6.12.1 Liability and e-cards

6.12.2 Cashback or Tip

o 6.13 Germany
o 6.14 Hong Kong
o 6.15 Hungary
o 6.16 India
o 6.17 Indonesia
o 6.18 Iraq
o 6.19 Ireland
o 6.20 Israel
o 6.21 Italy
o 6.22 Japan
o 6.23 Kuwait
o 6.24 Malaysia
o 6.25 Mexico
o 6.26 Netherlands
o 6.27 New Zealand
o 6.28 Philippines

o 6.29 Poland
o 6.30 Portugal
o 6.31 Russia
o 6.32 Saudi Arabia
o 6.33 Singapore
o 6.34 Spain
o 6.35 United Kingdom
o 6.36 United States

6.36.1 FSA, HRA, and HSA debit cards

o 6.37 Uruguay

7 See also

8 References

Types of debit card systems

An example of the front of a typical debit card:

1. Issuing bank logo
2. EMV chip (optional and may depend on the issuing institution or bank)
3. Hologram (in some cards it's located at the back especially in most MasterCard)
4. Card number (may vary in length but mostly 16-digits with unique last 4 digits. However
in dinner cases such as Discover, Diner's Club, UnionPay & American Express it has a
unique 15-digit card number)

5. Card brand logo

6. Expiration date
7. Cardholder's name

An example of the reverse side of a typical debit card:

1. Magnetic stripe
2. Signature strip panel
3. Card Security Code
There are currently three ways that debit card transactions are processed: EFTPOS (also known
as online debit or PIN debit), offline debit (also known as signature debit) and the Electronic
Purse Card System.[1] One physical card can include the functions of all three types, so that it
can be used in a number of different circumstances.
Although the four largest bank card issuers (American Express, Discover Card, MasterCard, and
Visa) all offer debit cards, there are many other types of debit card, each accepted only within a
particular country or region, for example Switch (now: Maestro) and Solo in the United
Kingdom, Interac in Canada, Carte Bleue in France, EC electronic cash (formerly Eurocheque)
in Germany, UnionPay in China, RuPay in India and EFTPOS cards in Australia and New
Zealand. The need for cross-border compatibility and the advent of the euro recently led to many
of these card networks (such as Switzerland's "EC direkt", Austria's "Bankomatkasse" and
Switch in the United Kingdom) being re-branded with the internationally recognised Maestro
logo, which is part of the MasterCard brand. Some debit cards are dual branded with the logo of
the (former) national card as well as Maestro (for example, EC cards in Germany, Switch and
Solo in the UK, Pinpas cards in the Netherlands, Bancontact cards in Belgium, etc.). The use of a
debit card system allows operators to package their product more effectively while monitoring
customer spending.

Online debit system

Online debit cards require electronic authorization of every transaction and the debits are
reflected in the users account immediately. The transaction may be additionally secured with the
personal identification number (PIN) authentication system; some online cards require such

authentication for every transaction, essentially becoming enhanced automatic teller machine
(ATM) cards.
One difficulty with using online debit cards is the necessity of an electronic authorization device
at the point of sale (POS) and sometimes also a separate PINpad to enter the PIN, although this is
becoming commonplace for all card transactions in many countries.
Overall, the online debit card is generally viewed as superior to the offline debit card because of
its more secure authentication system and live status, which alleviates problems with processing
lag on transactions that may only issue online debit cards. Some on-line debit systems are using
the normal authentication processes of Internet banking to provide real-time on-line debit
transactions.

Offline debit system

Offline debit cards have the logos of major credit cards (for example, Visa or MasterCard) or
major debit cards (for example, Maestro in the United Kingdom and other countries, but not the
United States) and are used at the point of sale like a credit card (with payer's signature). This
type of debit card may be subject to a daily limit, and/or a maximum limit equal to the
current/checking account balance from which it draws funds. Transactions conducted with
offline debit cards require 23 days to be reflected on users account balances.
In some countries and with some banks and merchant service organizations, a "credit" or offline
debit transaction is without cost to the purchaser beyond the face value of the transaction, while a
fee may be charged for a "debit" or online debit transaction (although it is often absorbed by the
retailer). Other differences are that online debit purchasers may opt to withdraw cash in addition
to the amount of the debit purchase (if the merchant supports that functionality); also, from the
merchant's standpoint, the merchant pays lower fees on online debit transaction as compared to
"credit" (offline)

Electronic purse card system

Smart-card-based electronic purse systems (in which value is stored on the card chip, not in an
externally recorded account, so that machines accepting the card need no network connectivity)
are in use throughout Europe since the mid-1990s, most notably in Germany (Geldkarte), Austria
(Quick Wertkarte), the Netherlands (Chipknip), Belgium (Proton), Switzerland (CASH) and
France (Moneo, which is usually carried by a debit card). In Austria and Germany, almost all
current bank cards now include electronic purses, whereas the electronic purse has been recently
phased out in the Netherlands.

Prepaid debit cards

Prepaid debit cards, also called reloadable debit cards, appeal to a variety of users. The primary
market for prepaid cards are unbanked people,[2] that is, people who do not use banks or credit
unions for their financial transactions, possibly because of poor credit ratings.[3]

The advantages of prepaid debit cards include being safer than carrying cash, worldwide
functionality due to Visa and MasterCard merchant acceptance, not having to worry about paying
a credit card bill or going into debt, the opportunity for anyone over the age of 18 to apply and be
accepted without regard to credit quality and the option to directly deposit paychecks and
government benefits onto the card for free.[4] Some of the first companies to enter this market
were: MiCash, RushCard and Netspend, who gained market share as a result of being first to
market. However, since 1999, there have been several new providers, such as TransCash,
247card and iKobo, that offer a number of other benefits, such as money remittance services,
card-to-card transfers, and the ability to apply without a social security number.[citation needed]
As of 2013, several city governments (including Oakland, California[5] and Chicago, Illinois[6])
are now offering prepaid debit cards, either as part of a municipal ID card (for persons such as
undocumented immigrants, who are unable to obtain a state driver's license or DMV ID card) in
the case of Oakland, or in conjunction with a prepaid transit pass (Chicago). These cards have
been heavily criticized[7][8] for their higher-than-average fees, including some (such as a flat fee
added onto every purchase made with the card) that similar products offered by Green Dot and
American Express do not have.
The U.S. federal government uses prepaid debit cards to make benefits payments to people who
do not have bank accounts. In 2008, the U.S. Treasury Department paired with Comerica Bank to
offer the Direct Express Debit MasterCard prepaid debit card.[9]
In July 2013, the Association of Government Accountants released a report on government use
of prepaid cards, concluding that such programs offer a number of advantages to governments
and those who receive payments on a prepaid card rather than by check. The prepaid card
programs benefit payments largely for cost savings they offer and provide easier access to cash
for recipients, as well as increased security. The report also advises that governments should
consider replacing any remaining cheque-based payments with prepaid card programs in order to
realize substantial savings for taxpayers, as well as benefits for payees.[10]

Consumer protection
Consumer protections vary, depending on the network used. Visa and MasterCard, for instance,
prohibit minimum and maximum purchase sizes, surcharges, and arbitrary security procedures on
the part of merchants. Merchants are usually charged higher transaction fees for credit
transactions, since debit network transactions are less likely to be fraudulent. This may lead them
to "steer" customers to debit transactions. Consumers disputing charges may find it easier to do
so with a credit card, since the money will not immediately leave their control. Fraudulent
charges on a debit card can also cause problems with a checking account because the money is
withdrawn immediately and may thus result in an overdraft or bounced checks. In some cases
debit card-issuing banks will promptly refund any disputed charges until the matter can be
settled, and in some jurisdictions the consumer liability for unauthorized charges is the same for
both debit and credit cards.
In some countries, like India and Sweden, the consumer protection is the same regardless of the
network used. Some banks set minimum and maximum purchase sizes, mostly for online-only

cards. However, this has nothing to do with the card networks, but rather with the bank's
judgement of the person's age and credit records. Any fees that the customers have to pay to the
bank are the same regardless of whether the transaction is conducted as a credit or as a debit
transaction, so there is no advantage for the customers to choose one transaction mode over
another. Shops may add surcharges to the price of the goods or services in accordance with laws
allowing them to do so. Banks consider the purchases as having been made at the moment when
the card was swiped, regardless of when the purchase settlement was made. Regardless of which
transaction type was used, the purchase may result in an overdraft because the money is
considered to have left the account at the moment of the card swiping.

Financial access
Debit cards and secured credit cards are popular among college students who have not yet
established a credit history. Debit cards may also be used by expatriated workers to send money
home to their families holding an affiliated debit card.

Issues with deferred posting of offline debit

To the consumer, a debit transaction is perceived as occurring in real-time; i.e. the money is
withdrawn from their account immediately following the authorization request from the
merchant, which in many countries, is the case when making an online debit purchase. However,
when a purchase is made using the "credit" (offline debit) option, the transaction merely places
an authorization hold on the customer's account; funds are not actually withdrawn until the
transaction is reconciled and hard-posted to the customer's account, usually a few days later.
However, the previous sentence applies to all kinds of transaction types, at least when using a
card issued by a European bank. This is in contrast to a typical credit card transaction; though it
can also have a lag time of a few days before the transaction is posted to the account, it can be
many days to a month or more before the consumer makes repayment with actual money.
Because of this, in the case of a benign or malicious error by the merchant or bank, a debit
transaction may cause more serious problems (for example, money not accessible; overdrawn
account) than in the case of a credit card transaction (for example, credit not accessible; over
credit limit). This is especially true in the United States, where check fraud is a crime in every
state, but exceeding your credit limit is not.

Internet purchases
Debit cards may also be used on the Internet either with or without using a PIN. Internet
transactions may be conducted in either online or offline mode, although shops accepting onlineonly cards are rare in some countries (such as Sweden), while they are common in other
countries (such as the Netherlands). For a comparison, PayPal offers the customer to use an
online-only Maestro card if the customer enters a Dutch address of residence, but not if the same
customer enters a Swedish address of residence.

Internet purchases can be authenticated by the consumer entering their PIN if the merchant has
enabled a secure online PIN pad, in which case the transaction is conducted in debit mode.
Otherwise, transactions may be conducted in either credit or debit mode (which is sometimes,
but not always, indicated on the receipt), and this has nothing to do with whether the transaction
was conducted in online or offline mode, since both credit and debit transactions may be
conducted in both modes.

Debit cards around the world

In some countries, banks tend to levy a small fee for each debit card transaction. In some
countries (for example, the UK) the merchants bear all the costs and customers are not charged.
There are many people who routinely use debit cards for all transactions, no matter how small.
Some (small) retailers refuse to accept debit cards for small transactions, where paying the
transaction fee would absorb the profit margin on the sale, making the transaction uneconomic
for the retailer.

Angola
Main article: Multicaixa
The banks in Angola issue by official regulation only one brand of debit cards: Multicaixa, which
is also the brand name of the one and only network of ATMs and POS terminals.

Armenia
ArCa (Armenian Card) - a national system of debit (ArCa Debit and ArCa Classic) and credit
(ArCa Gold, ArCa Business, ArCA Platinum, ArCa Affinity and ArCa Co-branded) cards popular
in the Republic of Armenia. Established in 2000 by 17 largest Armenian banks.

Australia
Main article: EFTPOS
Debit cards in Australia are called different names depending on the issuing bank:
Commonwealth Bank of Australia: Keycard; Westpac Banking Corporation: Handycard;
National Australia Bank: FlexiCard; ANZ Bank: Access card; Bendigo Bank: Cashcard.
EFTPOS is very popular in Australia and has been operating there since the 1980s. EFTPOSenabled cards are accepted at almost all swipe terminals able to accept credit cards, regardless of
the bank that issued the card, including Maestro cards issued by foreign banks, with most
businesses accepting them, with 450,000 point of sale terminals.[11]
EFTPOS cards can also be used to deposit and withdraw cash over the counter at Australia Post
outlets participating in GiroPost, just as if the transaction was conducted at a bank branch, even
if the bank branch is closed. Electronic transactions in Australia are generally processed via the

Telstra Argent and Optus Transact Plus network - which has recently superseded the old
Transcend network in the last few years. Most early keycards were only usable for EFTPOS and
at ATM or bank branches, whilst the new debit card system works in the same way as a credit
card, except it will only use funds in the specified bank account. This means that, among other
advantages, the new system is suitable for electronic purchases without a delay of two to four
days for bank-to-bank money transfers.
Australia operates both electronic credit card transaction authorization and traditional EFTPOS
debit card authorization systems, the difference between the two being that EFTPOS transactions
are authorized by a personal identification number (PIN) while credit card transactions can
additionally be authorized using a contactless payment mechanism. If the user fails to enter the
correct pin three times, the consequences range from the card being locked out for a minimum
24-hour period, a phone call or trip to the branch to reactivate with a new PIN, the card being cut
up by the merchant, or in the case of an ATM, being kept inside the machine, both of which
require a new card to be ordered.
Generally credit card transaction costs are borne by the merchant with no fee applied to the end
user (although a direct consumer surcharge of 0.5 - 3% is not uncommon) while EFTPOS
transactions cost the consumer an applicable withdrawal fee charged by their bank.
The introduction of Visa and MasterCard debit cards along with regulation in the settlement fees
charged by the operators of both EFTPOS and credit cards by the Reserve Bank has seen a
continuation in the increasing ubiquity of credit card use among Australians and a general
decline in the profile of EFTPOS. However, the regulation of settlement fees also removed the
ability of banks, who typically provide merchant services to retailers on behalf of Visa or
MasterCard, from stopping those retailers charging extra fees to take payment by credit card
instead of cash or EFTPOS.

Bahrain
In Bahrain debit cards are under Benefit, the interbanking network for Bahrain. Benefit is also
accepted in other countries though, mainly GCC, similar to the Saudi Payments Network and the
Kuwaiti KNET.

Brazil
In Brazil debit cards are called carto de dbito (singular) and are got popular from 2008 and on.
In 2013, Brazil had got the mark of 100 milion of debit cards.[12] The initial usage of it was to
replace the Check usage, that was common until the first decade of 2000's.
Today, the majority of the financial transactions (like shopping, etc.) are made using debit cards
(and this system is quickly replacing the cash payment). Nowadays, the majority of debit
payments are processed using a card + pin combination, and almost every card comes with a chip
to make transactions.

The major debit card vendors in Brazil are Visa (with Visa Electron cards) and MasterCard (with
Maestro cards).

Bulgaria
In Bulgaria debit cards are allowed in almost all stores and shops, as well as in most of the hotels
and restaurants in the bigger cities. Smaller restaurants or small shops will probably accept cash
only. All Bulgarian banks can provide debit cards when you open a bank account, for
maintenance costs. Usually debit cards used on ATMs owned by the same bank do not cost a
thing, and used on ATMs of other banks costs low (3-10 times cheaper than using credit card).
The most common cards in Bulgaria are Maestro and Visa Electron, accepted everywhere
together with VISA and MasterCard.

Canada
Main article: Interac
Canada has a nationwide EFTPOS system, called Interac Direct Payment. Since being introduced
in 1994, IDP has become the most popular payment method in the country. Previously, debit
cards have been in use for ABM usage since the late 1970s, with Credit Unions in Saskatchewan
and Alberta, Canada introducing the first card-based, networked ATMs beginning in June, 1977.
Debit Cards, which could be used anywhere a credit card was accepted, were first introduced in
Canada by Saskatchewan Credit Unions in 1982.[13] In the early 1990s, pilot projects were
conducted among Canada's six largest banks to gauge security, accuracy and feasibility of the
Interac system. Slowly in the later half of the 1990s, it was estimated that approximately 50% of
retailers offered Interac as a source of payment. Retailers, many small transaction retailers like
coffee shops, resisted offering IDP to promote faster service. In 2009, 99% of retailers offer IDP
as an alternative payment form.
In Canada, the debit card is sometimes referred to as a "bank card". It is a client card issued by a
bank that provides access to funds and other bank account transactions, such as transferring
funds, checking balances, paying bills, etc., as well as point of purchase transactions connected
on the Interac network. Since its national launch in 1994, Interac Direct Payment has become so
widespread that, as of 2001, more transactions in Canada were completed using debit cards than
cash.[14] This popularity may be partially attributable to two main factors: the convenience of not
having to carry cash, and the availability of automated bank machines (ABMs) and Direct
Payment merchants on the network.
Debit cards may be considered similar to stored-value cards in that they represent a finite amount
of money owed by the card issuer to the holder. They are different in that stored-value cards are
generally anonymous and are only usable at the issuer, while debit cards are generally associated
with an individual's bank account and can be used anywhere on the Interac network.
In Canada, the bank cards can be used at POS and ABMs. Interac Online has also been
introduced in recent years allowing clients of most major Canadian banks to use their debit cards

for online payment with certain merchants as well. Certain financial institutions also allow their
clients to use their debit cards in the United States on the NYCE network.[15]
Consumer protection in Canada
Consumers in Canada are protected under a voluntary code entered into by all providers of debit
card services, The Canadian Code of Practice for Consumer Debit Card Services[16] (sometimes
called the "Debit Card Code"). Adherence to the Code is overseen by the Financial Consumer
Agency of Canada (FCAC), which investigates consumer complaints.
According to the FCAC website, revisions to the Code that came into effect in 2005 put the onus
on the financial institution to prove that a consumer was responsible for a disputed transaction,
and also place a limit on the number of days that an account can be frozen during the financial
institution's investigation of a transaction.

Chile
Chile has an EFTPOS system called Redcompra (Purchase Network) which is currently used in
at least 23,000 establishments throughout the country. Goods may be purchased using this
system at most supermarkets, retail stores, pubs and restaurants in major urban centers. Chilean
banks issue Maestro, Visa Electron and Visa Debit cards.

Colombia
Colombia has a system called Redeban-Multicolor and Credibanco Visa which are currently used
in at least 23,000 establishments throughout the country. Goods may be purchased using this
system at most supermarkets, retail stores, pubs and restaurants in major urban centers.
Colombian debit cards are Maestro (pin), Visa Electron (pin), Visa Debit (as Credit) and
MasterCard-Debit (as Credit).

Denmark
The Danish debit card Dankort is ubiquitous in Denmark. It was introduced on 1 September
1983, and despite the initial transactions being paper-based, the Dankort quickly won widespread
acceptance. By 1985 the first EFTPOS terminals were introduced, and 1985 was also the year
when the number of Dankort transactions first exceeded 1 million.[17] Today the Dankort is
primarily issued as a multicard combining the national Dankort with the more internationally
recognized VISA (denoted simply as a "VISA/Dankort" card). In September 2008, 4 million
cards have been issued, of which 3 million cards were VISA/Dankort cards. It is also possible to
get a Visa Electron debit card and MasterCard.[clarification needed]
Miscellaneous facts & numbers

In 2007, PBS (now called Nets), the Danish operator of the Dankort system, processed a
total of 737 million Dankort transactions.[18] Of these, 4.5 million were processed on just
a single day, 21 December. This remains the current record.[when?]

At the end of 2007, there were 3.9 million Dankort cards in existence.[18]

As of 2012, more than 80,000 Danish shops had a Dankort terminal, and another 11,000
internet shops also accepted the Dankort.[18]

Finland
Most daily customer transactions are carried out with debit cards or online giro/electronic bill
payment, although credit cards and cash are accepted. Checks are no longer used. Prior to
European standardization, Finland had a national standard (pankkikortti). Physically, a
pankkikortti was the same as an international credit card, and the same card imprinters and slips
were used for pankkikortti and credit cards, but the cards were not accepted abroad. This has now
been replaced by the Visa and MasterCard debit card systems, and Finnish cards can be used
elsewhere in the European Union and the world.
An electronic purse system, with a chipped card, was introduced, but did not gain much traction.
Signing a payment offline entails incurring debt, thus offline payment is not available to minors.
However, online transactions are permitted, and since almost all stores have electronic terminals,
today also minors can use debit cards. Previously, only cash withdrawal from ATMs was
available to minors (automaattikortti or Visa).

France
Carte Bancaire (CB), the national payment scheme, in 2008, had 57.5 million cards carrying its
logo and 7,76 billion transactions (POS and ATM) were processed through the e-rsb network
(135 transactions per card mostly debit or deferred debit). Most CB cards are debit cards, either
debit or deferred debit. Less than 10% of CB cards were credit cards.
Banks in France usually charge annual fees for debit cards (despite card payments being very
cost efficient for the banks), yet they do not charge personal customers for checkbooks or
processing checks (despite checks being very costly for the banks). This imbalance dates from
the unilateral introduction in France of Chip and PIN debit cards in the early 1990s, when the
cost of this technology was much higher than it is now. Credit cards of the type found in the
United Kingdom and United States are unusual in France and the closest equivalent is the
deferred debit card, which operates like a normal debit card, except that all purchase transactions
are postponed until the end of the month, thereby giving the customer between 1 and 31 days of
"interest-free"[19] credit.
The annual fee for a deferred debit card is around 10 more than for one with immediate debit.
Most France debit cards are branded with the Carte Bleue logo, which assures acceptance
throughout France. Most card holders choose to pay around 5 more in their annual fee to
additionally have a Visa or a MasterCard logo on their Carte Bleue, so that the card is accepted
internationally. A Carte Bleue without a Visa or a MasterCard logo is often known as a "Carte
Bleue Nationale" and a Carte Bleue with a Visa or a MasterCard logo is known as a "Carte Bleue
Internationale", or more frequently, simply called a "Visa" or "MasterCard".

Many smaller merchants in France refuse to accept debit cards for transactions under a certain
amount because of the minimum fee charged by merchants' banks per transaction (this minimum
amount varies from 5 to 15.25, or in some rare cases even more). But more and more
merchants accept debit cards for small amounts, due to the massive daily use of debit card
nowadays. Merchants in France do not differentiate between debit and credit cards, and so both
have equal acceptance. It is legal in France to set a minimum amount to transactions, but the
merchants must display it clearly.
In January 2016, 57.2% of all the debits cards in France also had a contactless payment chip .[20]
The maximum amount per transaction is set to 20 and the maximum amount of all contactless
payments per day is between 50 and 100 depending on the bank.
Liability and e-cards
According to French law,[21] banks are liable for any transaction made with a copy of the original
card and for any transaction made without a card (on the phone or on the Internet), so banks have
to pay back any fraudulent transaction to the card holder if the previous criteria are met. Fighting
card fraud is therefore more interesting for banks. As a consequence, French banks websites
usually propose an "e-card" service ("electronic (bank) card"), where a new virtual card is
created and linked to a physical card. Such virtual card can be used only once and for the
maximum amount given by the card holder. If the virtual card number is intercepted or used to
try to get a higher amount than expected, the transaction is blocked.
Cashback or Tip
There is absolutely no possibility of cashback in France. Cash can only be withdrawn from
ATMs or, less and less, from banks. Tipping with a debit card is usually not proposed but a
service fee of 15%, where applicable, is already included in the price.

Germany
Debit cards have enjoyed wide acceptance in Germany for years. Facilities already existed before
EFTPOS became popular with the Eurocheque card, an authorization system initially developed
for paper checks where, in addition to signing the actual check, customers also needed to show
the card alongside the check as a security measure. Those cards could also be used at ATMs and
for card-based electronic funds transfer (called Girocard) with PIN entry. These are now the only
functions of such cards: the Eurocheque system (along with the brand) was abandoned in 2002
during the transition from the Deutsche Mark to the euro. As of 2005, most stores and petrol
outlets have EFTPOS facilities. Processing fees are paid by the businesses, which leads to some
business owners refusing debit card payments for sales totalling less than a certain amount,
usually 5 or 10 euro.
To avoid the processing fees, many businesses resorted to using direct debit, which is then called
electronic direct debit (German: Elektronisches Lastschriftverfahren, abbr. ELV). The point-ofsale terminal reads the bank sort code and account number from the card but instead of handling
the transaction through the Girocard network it simply prints a form, which the customer signs to

authorise the debit note. However, this method also avoids any verification or payment guarantee
provided by the network. Further, customers can return debit notes by notifying their bank
without giving a reason. This means that the beneficiary bears the risk of fraud and illiquidity.
Some business mitigate the risk by consulting a proprietary blacklist or by switching to Girocard
for higher transaction amounts.
Around 2000, an Electronic Purse Card was introduced, dubbed Geldkarte ("money card"). It
makes use of the smart card chip on the front of the standard issue debit card. This chip can be
charged with up to 200 euro, and is advertised as a means of making medium to very small
payments, even down to several euros or cent payments. The key factor here is that no
processing fees are deducted by banks. It did not gain the popularity its inventors had hoped for.
However, this could change as this chip is now used as means of age verification at cigarette
vending machines, which has been mandatory since January 2007. Furthermore, some payment
discounts are being offered (e.g. a 10% reduction for public transport fares) when paying with
"Geldkarte". The "Geldkarte" payment lacks all security measures, since it does not require the
user to enter a PIN or sign a sales slip: the loss of a "Geldkarte" is similar to the loss of a wallet
or purse - anyone who finds it can then use their find to pay for their own purchases.

Hong Kong
A popular payment instant method widely used in Hong Kong is EPS. Bank customers can use
their ATM card to make an instant EPS payment, much like a debit card. Most banks in Hong
Kong provide ATM cards with EPS capability.
The British banking firm HSBC's subsidiary Hang Seng Bank's Enjoy card and American firm
Citibank's ATM Visa are two of the Visa debit card available in Hong Kong. It is linked to the
cardholder's savings or transactional account and funds can be moved upon request or on a
regularly scheduled basis to cover the charges that are incurred, whether in person or on-line.
Overdraft privileges are not offered for holders of this card. The card is in limited use due to the
virtual monopoly of the EPS Corporation which is co-owned by 21 major banks. EPS can be
utilised overseas only in limited circumstances, such as for POS transactions. The Mainland
Chinese and Indian equivalents of EPS, UnionPay and RuPay, can on the other hand be utilised
overseas more extensively, for example at ATMs, casinoes, and hotels.

Hungary
In Hungary debit cards are far more common and popular than credit cards. Many Hungarians
even refer to their debit card ("betti krtya") mistakenly using the word for credit card
("hitelkrtya").[22]

India
The debit card had limited popularity in India as the merchant is charged for each transaction.
The debit card was mostly used for ATM transactions. RBI has announced that such fees are not
justified so the transaction has no processing fee.[23] Most Indian banks issue Visa debit cards,
though some banks (like SBI and Citibank India) also issue Maestro cards. The debit card

transactions are routed through Visa or MasterCard networks in India and overseas rather than
directly via the issuing bank.
The National Payments Corporation of India (NPCI) has launched a new card called RuPay.[24] It
is similar to Singapore's NETS and Mainland China's UnionPay [25][26]

Indonesia
Foreign-owned brands issuing Indonesian debit cards include Visa, Maestro, MasterCard, and
MEPS. Domestically-owned debit card networks operating in Indonesia include Debit BCA (and
its Prima network's counterpart, Prima Debit) and Mandiri Debit.

Iraq
Iraq's two biggest state-owned banks, Rafidain Bank and Rasheed Bank, together with the Iraqi
Electronic Payment System (IEPS) have established a company called International Smart Card,
which has developed a national credit card called 'Qi Card', which they have issued since 2008.
According to the company's website: 'after less than two years of the initial launch of the Qi card
solution, we have hit 1.6 million cardholder with the potential to issue 2 million cards by the end
of 2010, issuing about 100,000 card monthly is a testament to the huge success of the Qi card
solution. Parallel to this will be the expansion into retail stores through a network of points of
sales of about 30,000 units by 2015'

Ireland
Today, Irish debit cards are exclusively Chip and PIN and almost entirely Visa Debit. These can
be used anywhere the Visa logo is seen and in much the same way as a credit card. MasterCard
debit is also used by a small minority of institutions and operates in a very similar manner.
Irish debit cards are normally multi-functional and combine ATM card facilities. The cards are
also sometimes used for authenticating transactions together with a card reader for 2-factor
authentication on online banking.
The majority of Irish Visa Debit cards are also enabled for contactless payment for small,
frequent transactions (with a maximum value of 15 or 30). Three consecutive contactless
transactions are allowed, after which, the card software will refuse contactless transactions until
a standard Chip and PIN transaction has been completed and the counter resets. This measure
was put in place to minimise issuers' exposure to fraudulent charges.
The cards are usually processed online, but some cards can also be processed offline depending
on the rules applied by the card issuer.
A number of card issuers also provide prepaid debit card accounts primarily for use as gift cards /
vouchers or for added security and anonymity online. These may be disposable or reloadable and
are usually either Visa or MasterCard branded.

Previous system (defunct since 28 February 2014):

Laser was launched by the Irish banks in 1996 as an extension of the existing ATM and Cheque
guarantee card systems that had existed for many years. When the service was added, it became
possible to make payments with a multifunctional card that combined ATM, cheque and debit
card and international ATM facilities through MasterCard Cirrus or Visa Plus and sometimes the
British Link ATM system. Their functionality was similar to the British Switch card.
The system first launched as a swipe & sign card and could be used in Ireland in much the same
way as a credit card and were compatible standard card terminals (online or offline, although
they were usually processed online). They could also be used in cardholder-not-present
transactions over the phone, by mail or on the internet or for processing recurring payments.
Laser also offered 'cash back' facilities where customers could ask retailers (where offered) for
an amount of cash along with their transaction. This service allowed retailers to reduce volumes
of cash in tills and allowed consumers to avoid having to use ATMs. Laser adopted EMV 'Chip
and PIN' security in 2002 in common with other credit and debit cards right across Europe. In
2005, some banks issued customers with Lasers cards that were cobranded with Maestro. This
allowed them to be used in POS terminals overseas, internet transactions were usually restricted
to sites that specifically accepted Laser.
Since 2006, Irish banks have progressively replaced Laser with international schemes, primarily
Visa Debit and by 28 February 2014 the Laser Card system had been withdrawn entirely and is
no longer accepted by retailers.

Israel
The Israel bank card system is somewhat confusing to newcomers, comprising a blend of
features taken from different types of cards. What may be referred to as a credit card, is most
likely to be a deferred debit card on an associated bank current account, the most common type
of card in Israel, somewhat like the situation in France, though the term "debit card" is not in
common usage. Cards are nearly universally called cartis eshrei () , literally, "credit
card", a term which may bely the card's characteristics. Its main feature may be a direct link to a
connected bank account (through which they are mostly issued), with the total value of the
transactions made on the card being debited from the bank account in full on a regular date once
a month, without the option to carry the balance over; indeed certain types of transactions (such
as online and/or foreign currency) may be debited directly from the connected bank account at
the time of the transaction. Any such limited credit enjoyed is a result of the customer's assets
and credibility with the bank, and not granted by the credit card company.[27] The card usually
enables immediate ATM cash withdrawals & balance inquiries (as debit cards do), instalment &
deferred charge interest free transactions offered by merchants (also applicable in Brazil),
interest bearing instalment plans/deferred charge/revolving credit which is transaction specific at
the point of sale (though granted by the issuer, hence the interest), and a variety of
automated/upon request types of credit schemes including loans, some of which revolve or
resemble the extended payment options sometimes offered by charge cards.

Thus the "true" debit card is not so common in Israel, though it has existed since 1994. It is
offered by two credit companies in Israel: One is ICC, short for "Israeli Credit Cards" (referred
to as "CAL", an acronym formed from its abbreviation in Hebrew), which issues it in the form of
a Visa Electron card valid only in Israel. It is offered mainly through the Israel Post (post office)
bank[28] (which is not allowed, by regulation, to offer any type of credit) or through Israel
Discount Bank, its main owner (where it is branded as "Discount Money Key" card). This
branded Israel Discount Bank branded debit card also offered as valid worldwide card, either as
Visa Electron or MasterCard Debit cards.[29] The second debit card is offered by the Isracard
consortium to its affiliate banks and is branded "Direct". It is valid only in Israel, under its local
& unique - though immensely popular - private label brand, as "Isracard Direct" (which was
known as "Electro Cheque" until 2002 and while the local brand Isracard is often viewed as a
MasterCard for local use only). Since 2006, Isracard has also offered an international version,
branded "MasterCard Direct", which is less common. These two debit card brands operate offline
in Israel (meaning the transaction operates under the credit cards systems & debited officially
from the cardholder account only few days later, after being processed - though reflected on the
current account immediately). In 2014 the Isracard Direct card (a.k.a. the valid only in Israel
version) was relaunched as Isracash,[30] though the former subbrand still being marketed - &
replaced ICC Visa Electron as Israel Post bank debit card.[31]
Overall, banks routinely offer deferred debit cards to their new customers, with "true" debit cards
usually offered only to those who cannot obtain credit. These latter cards are not attractive to the
average customer since they attract both a monthly fee from the credit company and a bank
account fee for each day's debits. Isracard Direct is by far more common than the ICC Visa
Electron debit card. Banks who issue mainly Visa cards will rather offer electronic use, mandate
authorized transaction only, unembossed version of Visa Electron deferred debit cards (branded
as "Visa Basic" or "Visa Classic") to its customers - sometimes even in the form of revolving
credit card.
Credit/debit card transactions in Israel are not PIN based (other than at ATMs) and it is only in
recent years that EMV chip smart cards have begun to be issued, with the Bank of Israel ordering
the banks and credit card companies - in 2013 - to switch customers to credit cards with the
EMV security standard within 3.5 years.[32]

Italy
Debit cards are quite popular in Italy. There are both classic and prepaid cards. The main classic
debit card in Italy is Bancomat/PagoBancomat: this kind of card is issued by Italian banks.
Bancomat is the commercial brand for the cash withdrawal circuit, while PagoBancomat is used
for POS transactions. Unlike other European countries such as UK, only a few Italian banks are
issuing Visa/MasterCard debit cards (such as Intesa Sanpaolo NextCard). The main international
debit circuit used by Italian banks is Maestro: for this reason almost every debit card issued in
Italy has both PagoBancomat and Maestro logos, with Bancomat/PagoBancomat being used in
Italy and the Maestro circuit when abroad. Sometimes, instead of using the Maestro circuit, the
Bancomat/PagoBancomat debit card is issued along with V-Pay or Visa Electron logos, or
sometimes with credit card functions (so you get a dual-mode card). In this last case, only the
credit-card mode is allowed for abroad/Internet transactions, while the debit card mode is used

only in Italy. The most popular prepaid debit card is "Postepay". It is issued by Poste italiane
S.p.A., and runs on the Visa Electron circuit. It can be used on Poste Italiane's ATMs (Postamat)
and on Visa's Electron-compatible bank ATMs all over the world. It has no fees when used on the
Internet and in POS-based transactions. Other cards are issued by other companies, such as
Vodafone CashCard, Banca Popolare di Milano's Carta Jeans and Carta Moneta Online.

Japan
This section needs to be updated. Please update this article to reflect recent events or
newly available information. (June 2011)
In Japan people usually use their cash cards ( kyasshu kdo?), originally
intended only for use with cash machines, as debit cards. The debit functionality of these cards is
usually referred to as J-Debit ( Jeidebitto?), and only cash cards from certain
banks can be used. A cash card has the same size as a Visa/MasterCard. As identification, the
user will have to enter his or her four-digit PIN when paying. J-Debit was started in Japan on
March 6, 2000. However, J-Debit has not been that popular since then.
Suruga Bank began service of Japan's first Visa Debit in 2006. Rakuten Bank, formally known as
Ebank, offers a Visa debit card.[33]
Resona Bank and The Bank of Tokyo-Mitsubishi UFJ bank also offer a Visa branded debit card.
[34][35]

Kuwait
In Kuwait, all banks provide a debit card to their account holders. This card is branded as KNET,
which is the central switch in Kuwait. KNET card transactions are free for both customer and the
merchant and therefore KNET debit cards are used for low valued transactions as well. KNET
cards are mostly co-branded as Maestro or Visa Electron which makes it possible to use the same
card outside Kuwait on any terminal supporting these payment schemes.

Malaysia
In Malaysia, the local debit card network is operated by the Malaysian Electronic Clearing
Corporation (MyClear), which had taken over the scheme from MEPS in 2008. The new name
for the local debit card in Malaysia is MyDebit, which was previously known as either bankcard
or e-debit. Debit cards in Malaysia are now issued on a combo basis where the card has both the
local debit card payment application as well as having that of an International scheme (Visa or
MasterCard). The same card also acts as the ATM card for cash withdrawals.

Mexico
In Mexico, many companies use a type of debit card called a payroll card (tarjeta de nmina), in
which they deposit their employee's payrolls, instead of paying them in cash or through checks.

This method is preferred in many places because it is a much safer and secure alternative
compared to the more traditional forms of payment.

Netherlands
In the Netherlands using EFTPOS is known as pinnen (pinning), a term derived from the use of a
Personal Identification Number. PINs are also used for ATM transactions, and the term is used
interchangeably by many people, although it was introduced as a marketing brand for EFTPOS.
The system was launched in 1987, and in 2010 there were 258,585 terminals throughout the
country, including mobile terminals used by delivery services and on markets. All banks offer a
debit card suitable for EFTPOS with current accounts.
PIN transactions are usually free to the customer, but the retailer is charged per-transaction and
monthly fees. Equens, an association with all major banks as its members, runs the system, and
until August 2005 also charged for it. Responding to allegations of monopoly abuse, it has
handed over contractual responsibilities to its member banks through who now offer competing
contracts. The system is organised through a special banking association Currence set up
specifically to coordinate access to payment systems in the Netherlands. Interpay, a legal
predecessor of Equens, was fined 47 million in 2004, but the fine was later dropped, and a
related fine for banks was lowered from 17 million to 14 million. Per-transaction fees are
between 5-10 eurocents, depending on volume.
Credit card use in the Netherlands is very low, and most credit cards cannot be used with
EFTPOS, or charge very high fees to the customer. Debit cards can often, though not always, be
used in the entire EU for EFTPOS. Most debit cards are Maestro cards. Visa debit cards are often
not accepted, V PAY cards are accepted at most locations. In 2011 spending money using debit
cards rose to 83 billion euro whilst cash spending dropped to 51 billion euro and creditcard
spending grew to 5 billion.[36]
Electronic Purse Cards (called Chipknip) were introduced in 1996, but have never become very
popular. The system was abolished at the end of 2014.

New Zealand
EFTPOS (electronic fund transfer at point of sale) in New Zealand is highly popular. In 2006, 70
percent of all retail transactions were made by Eftpos, with an average of 306 Eftpos transaction
being made per person. At the same time, there were 125,000 Eftpos terminals in operation (one
for every 30 people), and 5.1 million Eftpos cards in circulation (1.27 per capita).[37]
The system involves the merchant swiping (or inserting) the customer's card and entering the
purchase amount. Point of sale systems with integrated EFTPOS often sent the purchase total to
the terminal and the customer swipes their own card. The customer then selects the account they
wish to use: Current/Cheque (CHQ), Savings (SAV), or Credit Card (CRD), before entering in
their PIN. After a short processing time in which the terminal contacts the EFTPOS network and
the bank, the transaction is approved (or declined) and a receipt is printed. The EFTPOS system
is used for credit cards as well, with a customer selecting Credit Card and entering their PIN, or

for older credit cards without loaded PIN, pressing OK and signing their receipt with
identification through matching signatures. Fixed EFTPOS terminals in most businesses utilise
the public switched telephone network to contact the EFTPOS network, either utilising dedicated
phone lines or sharing the merchant's voice line (especially in smaller businesses). The uptake of
broadband internet in the 21st century has seen some terminals move to internet protocol
connections.
Virtually all retail outlets have EFTPOS facilities, so much that retailers without EFTPOS have
to advertise so. In addition, an increasing number of mobile operator, such as taxis, stall holders
and pizza deliverers have mobile EFTPOS systems. The system is made up of two primary
networks: EFTPOS NZ, which is owned by VeriFone[38] and Paymark Limited (formerly
Electronic Transaction Services Limited), which is owned by ANZ Bank New Zealand, ASB
Bank, Westpac and the Bank of New Zealand.[39] The two networks are intertwined and highly
sophisticated and secure, able to handle huge volumes of transactions during busy periods such
as the lead-up to Christmas: on 24 December 2012, the Paymark network alone recorded an
average of 132 transactions per second between 12:00 and 13:00.[40] Network failures are rare,
but when they occur they cause massive disruption, resulting in major delays and loss of income
for businesses. Most businesses have to resort to manual "zip-zap" swipe machines in such case.
Newer POS-based terminals have the ability to "capture" transactions in the event of a
communications break-down - instead of entering a PIN, the customer signs their receipt and the
transaction is approved on a matching signature, The transaction details are stored and sent for
processing once the connection to the network is restored. A notable example of this occurs on
the Cook Strait ferries, where in the middle of Cook Strait there is no mobile phone reception to
connect to the EFTPOS network.
Depending on the user's bank, a fee may be charged for use of EFTPOS. Most youth accounts
(the minimum age to obtain an Eftpos card from most banks in New Zealand is 13 years) and an
increasing number of 'electronic transaction accounts' do not attract fees for electronic
transactions, meaning the use of Eftpos by younger generations has become ubiquitous and
subsequently cash use has become rare. Typically merchants don't pay fees for transactions, most
only having to pay for the equipment rental.
One of the disadvantages of New Zealand's well-established EFTPOS system is that it is
incompatible with overseas systems and non-face-to-face purchases. In response to this, many
banks since 2005 have introduced international debit cards such as Maestro and Visa Debit
which work online and overseas as well as on the New Zealand EFTPOS system.

Philippines
In the Philippines, all three national ATM network consortia offer proprietary PIN debit. This
was first offered by Express Payment System in 1987, followed by Megalink with Paylink in
1993 then BancNet with the Point-of-Sale in 1994.
Express Payment System or EPS was the pioneer provider, having launched the service in 1987
on behalf of the Bank of the Philippine Islands. The EPS service has subsequently been extended

in late 2005 to include the other Expressnet members: Banco de Oro and Land Bank of the
Philippines. They currently operate 10,000 terminals for their cardholders.
Megalink launched Paylink EFTPOS system in 1993. Terminal services are provided by
Equitable Card Network on behalf of the consortium. Service is available in 2,000 terminals,
mostly in Metro Manila.
BancNet introduced their point of sale system in 1994 as the first consortium-operated EFTPOS
service in the country. The service is available in over 1,400 locations throughout the Philippines,
including second and third-class municipalities. In 2005, BancNet signed a Memorandum of
Agreement to serve as the local gateway for China UnionPay, the sole ATM switch in the
People's Republic of China. This will allow the estimated 1.0 billion Chinese ATM cardholders
to use the BancNet ATMs and the EFTPOS in all participating merchants.
Visa debit cards are issued by Union Bank of the Philippines (e-Wallet & eon), Chinatrust,
Equicom Savings Bank (Key Card & Cash Card), Banco De Oro, HSBC, HSBC Savings Bank,
Sterling Bank of Asia (Visa ShopNPay prepaid and debit cards)& EastWest Bank. Union Bank of
the Philippines cards, EastWest Visa Debit Card, Equicom Savings Bank & Sterling Bank of Asia
EMV cards which can also be used for internet purchases. Sterling Bank of Asia has released its
first line of prepaid and debit Visa cards with EMV chip.
MasterCard debit cards are issued by Banco de Oro, Security Bank (Cashlink & Cash Card) &
Smart Communications (Smart Money) tied up with Banco De Oro. MasterCard Electronic cards
are issued by BPI (Express Cash) and Security Bank (CashLink Plus).
Originally, all Visa and MasterCard based debit cards in the Philippines are non-embossed and
are marked either for "Electronic Use Only" (Visa/MasterCard) or "Valid only where MasterCard
Electronic is Accepted" (MasterCard Electronic). However, EastWest Bank started to offer
embossed Visa Debit Cards without the for "Electronic Use Only" mark. Paypass Debit
MasterCard from other banks also have embossed labels without the for "Electronic Use Only"
mark. Unlike credit cards issued by some banks, these Visa and MasterCard-branded debit cards
do not feature EMV chips, hence they can only be read by the machines through swiping.

Poland
In Poland, the first system of electronic payments was operated by Orbis, which later was
changed to PolCard in 1991 (which also issued its own cards) and then that system was bought
by First Data Poland Holding SA. In the mid 90's international brands such as Visa, MasterCard,
or the unembossed Visa Electron or Maestro were introduced.
Visa Electron and Maestro work as a standard debit cards - the transactions are debited instantly,
although it may happen on some occasions, that a transaction is processed with some delay
(hours, up to one day). These cards do not possess the options that credit cards have.
In the late 2000s contactless cards started to being introduced. The first technology to be used
was MasterCard PayPass, later joined by Visa's payWave. This payment method is now universal

and accepted almost everywhere. In a everyday use this payment method is always called
Paypass. Almost all business and stores in Poland accept debit and credit cards.
In the mid 2010s Polish banks started to replace unembossed cards with embossed electronic
cards such as Debit Master Card and Visa Debit, allowing the customers to own a card that has
all qualities of a credit card (given that fact that credit cards are not popular in Poland).
There are also some banks that do not possess an identification system to allow customers to
order debit cards online.

Portugal
In Portugal, debit cards are accepted almost everywhere: ATMs, stores, and so on. The most
commonly accepted are Visa and MasterCard, or the unembossed Visa Electron or Maestro.
Regarding Internet payments debit cards cannot be used for transfers, due to its unsafeness, so
banks recommend the use of 'MBnet', a pre-registered safe system that creates a virtual card with
a pre-selected credit limit. All the card system is regulated by SIBS, the institution created by
Portuguese banks to manage all the regulations and communication processes proply. SIBS'
shareholders are all the 27 banks operating in Portugal.

Russia
In addition to Visa, MasterCard and American Express, there are some local payment systems
based in general on Smart Card technology.

Sbercard. This payment system was created by Sberbank around 19951996. It uses BGS
Smartcard Systems AG smart card technology that is, DUET. Sberbank was a single retail
bank in the Soviet Union before 1990. De facto this is a payment system of the SberBank.

Zolotaya Korona. This card brand was created in 1994. Zolotaya Korona is based on CFT
technology.

STB Card. This card uses the classic magnetic stripe technology. It almost fully collapsed
after 1998 (GKO crisis) with STB bank failure.

Union Card. The card also uses the classic magnetic stripe technology. This card brand is
on the decline. These accounts are being reissued as Visa or MasterCard accounts.

Nearly every transaction, regardless of brand or system, is processed as an immediate debit

transaction. Non-debit transactions within these systems have spending limits that are strictly
limited when compared with typical Visa or MasterCard accounts.

Saudi Arabia

In Saudi Arabia, all debit card transactions are routed through Saudi Payments Network (SPAN),
the only electronic payment system in the Kingdom and all banks are required by the Saudi
Arabian Monetary Agency (SAMA) to issue cards fully compatible with the network. It connects
all point of sale (POS) terminals throughout the country to a central payment switch which in
turn re-routes the financial transactions to the card issuer, local bank, Visa, Amex or MasterCard.
As well as its use for debit cards, the network is also used for ATM and credit card transactions.

Singapore
Singapore's debit service is managed by the Network for Electronic Transfers (NETS), founded
by Singapores leading banks and shareholders namely DBS, Keppel Bank, OCBC and its
associates, OUB, IBS, POSB, Tat Lee Bank and UOB in 1985 as a result of a need for a
centralised e-Payment operator.
However, due to the banking restructuring and mergers, the local banks remaining were UOB,
OCBC, DBS-POSB as the shareholders of NETS with Standard Chartered Bank to offer NETS
to their customers. However, DBS and POSB customers can use their network atms on their own
and not be shared with UOB, OCBC or SCB (StanChart). The mega failure of 5 July 2010 of
POSB-DBS ATM Networks (about 97,000 machines) made the government to rethink the shared
ATM system again as it affected the NETS system too.
In 2010, in line with the mandatory EMV system, Local Singapore Banks started to reissue their
Debit Visa/MasterCard branded debit cards with EMV Chip compliant ones to replace the
magnetic stripe system. Banks involved included NETS Members of POSB-DBS, UOB-OCBCSCB along with the SharedATM alliance (NON-NETS) of HSBC, Citibank, State Bank of India,
and Maybank. Standard Chartered Bank (SCB) is also a SharedATM alliance member. Non
branded cards of POSB and Maybank local ATM Cards are kept without a chip but have a Plus
or Maestro sign which can be used to withdraw cash locally or overseas.
Maybank Debit MasterCards can be used in Malaysia just like a normal ATM or Debit MEPS
card.
Singapore also uses the e-purse systems of NETS CASHCARD and the CEPAS wave system by
EZ-Link and NETS.

Spain
Debit cards are accepted in a relatively larger amount of stores, both large and small in Spain.
Banks often offer debit cards for small fees in connection with a chequing account. These cards
are used more often than credit cards at ATMs because it is a cheaper alternative.

United Kingdom
In the UK debit cards (an integrated EFTPOS system) are an established part of the retail market
and are widely accepted both by bricks and mortar stores and by internet stores. The term

EFTPOS is not widely used by the public; debit card is the generic term used. Cards commonly
in circulation include Maestro (previously Switch), Debit MasterCard, Visa Debit (previously
Visa Delta) and Visa Electron. Banks do not charge customers for EFTPOS transactions in the
UK, but some retailers make small charges, particularly where the transaction amount in question
is small. The UK has converted all debit cards in circulation to Chip and PIN (except for Chip
and Signature cards issued to people with certain disabilities), based on the EMV standard, to
increase transaction security; however, PINs are not required for internet transactions (though
some banks employ additional security measures for online transactions such as Verified by Visa
and MasterCard Secure Code).
In the United Kingdom, banks started to issue debit cards in the mid-1980s in a bid to reduce the
number of cheques being used at the point of sale, which are costly for the banks to process; the
first bank to do so was Barclays with the Barclays Connect card. As in most countries, fees paid
by merchants in the United Kingdom to accept credit cards are a percentage of the transaction
amount,[41] which funds card holders' interest-free credit periods as well as incentive schemes
such as points, airmiles or cashback. Debit cards do not usually have these characteristics, and so
the fee for merchants to accept debit cards is a low fixed amount, regardless of transaction
amount.[41] For very small amounts, this means it is cheaper for a merchant to accept a credit card
than a debit card. Although merchants won the right through The Credit Cards (Price
Discrimination) Order 1990 to charge customers different prices according to the payment
method, few merchants in the UK charge less for payment by debit card than by credit card, the
most notable exceptions being budget airlines, travel agents and IKEA.[42] Most debit cards in the
UK lack the advantages offered to holders of UK-issued credit cards, such as free incentives
(points, airmiles, cashback etc. (the Tesco Bank debit card being one exception)), interest-free
credit and protection against defaulting merchants under Section 75 of the Consumer Credit Act
1974. Almost all establishments in the United Kingdom that accept credit cards also accept debit
cards (although not always Visa Electron), but a minority of merchants, for cost reasons, accept
debit cards and not credit cards.

United States
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In the U.S., EFTPOS is universally referred to simply as debit. The same interbank networks that
operate the ATM network also operate the POS network. Most interbank networks, such as
Pulse, NYCE, MAC, Tyme, SHAZAM, STAR, and so on, are regional and do not overlap,
however, most ATM/POS networks have agreements to accept each other's cards. This means
that cards issued by one network will typically work anywhere they accept ATM/POS cards for
payment. For example, a NYCE card will work at a Pulse POS terminal or ATM, and vice versa.
Debit cards in the United States are usually issued with a Visa, MasterCard, Discover[43] or
American Express[44] logo allowing use of their signature-based networks.
U.S. Federal law caps the liability of a U.S. debit card user in case of loss or theft is up to
$50 USD if the loss or theft is reported to the issuing bank in two business days after the

customer notices the loss.[45] Most banks will, however, set this limit to $0 for debit cards issued
to their customers which are linked to their checking or savings account. Bank of America, for
example, ran advertisements as far back as 2009, promising customers using its debit card zero
liability for fraud, and restoration of the amount taken in one day, subject to certain requirements.
The fees charged to merchants on offline debit purchasesand the lack of fees charged
merchants for processing online debit purchases and paper checkshave prompted some major
merchants in the U.S. to file lawsuits against debit-card transaction processors such as Visa and
MasterCard. In 2003, Visa and MasterCard agreed to settle the largest of these lawsuits and
agreed to settlements of billions of dollars.[46]
Some consumers prefer "credit" transactions because of the lack of a fee charged to the
consumer/purchaser; also, a few debit cards in the U.S. offer rewards for using "credit" (for
example, S&T Bank's "Preferred Debit Rewards Card" [47]). However, since "credit" costs more
for merchants, many terminals at PIN-accepting merchant locations now make the "credit"
function more difficult to access. For example, if you swipe a debit card at Wal-Mart or Ross in
the U.S., you are immediately presented with the PIN screen for online debit; to use offline debit
you must press "cancel" to exit the PIN screen, then press "credit" on the next screen.[citation needed]
2009-07-08: Minimum and Maximum Charges for Visa in USA
The Merchants Agreement for Visa states (page 9, or 14/141 in PDF):
Always honor valid Visa cards in your acceptance category, regardless of the dollar amount of
the purchase. Imposing minimum or maximum purchase amounts in order to accept a Visa card
transaction is a violation of the Visa rules.[48]
As a result of the Dodd-Frank Act, U.S. merchants can now set a minimum purchase amount on
credit cards (but not debit cards), not to exceed $10. [49][50]
FSA, HRA, and HSA debit cards
In the United States, an FSA debit card only allows medical expenses. It is used by some banks
for withdrawals from their FSAs, medical savings accounts (MSA), and health savings accounts
(HSA) as well. They have Visa or MasterCard logos, but cannot be used as "debit cards", only as
"credit cards", and they are not accepted by all merchants that accept debit and credit cards, but
only by those that accept FSA debit cards. Merchant codes and product codes are used at the
point of sale (required by law by certain merchants by certain dates in the USA) to restrict sales
if they do not qualify. Because of the extra checking and documenting that goes on, later, the
statement can be used to substantiate these purchases for tax deductions. In the occasional
instance that a qualifying purchase is rejected, another form of payment must be used (a check or
payment from another account and a claim for reimbursement later). In the more likely case that
non-qualifying items are accepted, the consumer is technically still responsible, and the
discrepancy could be revealed during an audit. A small but growing segment of the debit card
business in the U.S. involves access to tax-favored spending accounts such as FSAs, HRAs, and

HSAs. Most of these debit cards are for medical expenses, though a few are also issued for
dependent care and transportation expenses.
Traditionally, FSAs (the oldest of these accounts) were accessed only through claims for
reimbursement after incurring, and often paying, an out-of-pocket expense; this often happens
after the funds have already been deducted from the employee's paycheck. (FSAs are usually
funded by payroll deduction.) The only method permitted by the Internal Revenue Service (IRS)
to avoid this "double-dipping" for medical FSAs and HRAs is through accurate and auditable
reporting on the tax return. Statements on the debit card that say "for medical uses only" are
invalid for several reasons: (1) The merchant and issuing banks have no way of quickly
determining whether the entire purchase qualifies for the customer's type of tax benefit; (2) the
customer also has no quick way of knowing; often has mixed purchases by necessity or
convenience; and can easily make mistakes; (3) extra contractual clauses between the customer
and issuing bank would cross-over into the payment processing standards, creating additional
confusion (for example if a customer was penalized for accidentally purchasing a non-qualifying
item, it would undercut the potential savings advantages of the account). Therefore, using the
card exclusively for qualifying purchases may be convenient for the customer, but it has nothing
to do with how the card can actually be used. If the bank rejects a transaction, for instance,
because it is not at a recognized drug store, then it would be causing harm and confusion to the
cardholder. In the United States, not all medical service or supply stores are capable of providing
the correct information so an FSA debit card issuer can honor every transaction-if rejected or
documentation is not deemed enough to satisfy regulations, cardholders may have to send in
forms manually.

Uruguay
Debit cards are accepted in a relatively large number of stores, both large and small in Uruguay;
but their use has so far remained low as compared to credit cards at ATMs. Since August 2014,
with the Financial Inclusion Law coming into force, end consumers obtain a 4% VAT deduction
for using debit cards in their purchases.[51]

Alternative payments
From Wikipedia, the free encyclopedia
(Redirected from Alternative Payments)
This article needs additional citations for verification. Please help improve this article
by adding citations to reliable sources. Unsourced material may be challenged and
removed. (August 2010) (Learn how and when to remove this template message)
Alternative payments refers to payment methods that are used as an alternative to credit card
payments. Most alternative payment methods address a domestic economy or have been
specifically developed for electronic commerce and the payment systems are generally supported
and operated by local banks. Each alternative payment method has its own unique application
and settlement process, language and currency support, and is subject to domestic rules and
regulations.

Contents

1 Types

2 Usage

3 Merchant advantages

4 Consumer advantages

5 See also

6 References

Types
The most common alternative payment methods are debit cards, charge cards, prepaid cards,
direct debit, bank transfers, phone and mobile payments, checks, money orders and cash
payments.
A debit card (also known as a bank card or check card) is a plastic card that provides an
alternative payment method to cash when making purchases. A charge card is a plastic card that
provides an alternative to cash when making purchases in which the issuer and the cardholder
enter into an agreement that the debt incurred on the charge account will be paid in full and by
due date. Debit and charge cards are used and accepted in many countries and can be used at a
point of sale location or online.
Prepaid or stored-value cards provide payment through a monetary value held on the actual card
or on deposit in an account. One major difference between stored-value cards and prepaid cards
is that prepaid cards are usually issued in the name of the individual account holders, while
stored value cards are usually anonymous. In the United States, prepaid and stored-value cards
typically can be processed on the credit card network, but this is not the case for all cards,
especially those outside of the United States.
A direct debit or direct withdrawal is an instruction that a bank account holder gives to his or her
bank to collect an amount directly from another account. It is similar to a direct deposit but
initiated by the beneficiary. Direct debit is available in several countries including the United
Kingdom, Germany, Austria and the Netherlands. It is scheduled to be available across the whole
Single European Payments Area by the end of 2010. In the United States, where checks are more
popular than bank transfers, a similar service is available through the Automated Clearing House
network.
A bank transfer (also known as a wire transfer or credit transfer) is a method of transferring
money from one person or institution (entity) to another. A wire transfer can be made from one

bank account to another bank account or through a transfer of cash at a cash office. A bank wire
transfer is often the most expedient method for transferring funds between bank accounts. The
transfer messages are sent via a secure system (such as SWIFT or Fedwire) utilizing IBAN and
BIC codes. Online bank transfer systems in Europe are popular alternative payment methods,
where the bank transfer is authorized by the consumer who logs onto his bank website and
authorizes the funds transfer for payment to a merchant.
A giro transfer is a bank transfer payment, whereby order is given by the payer to his or her
bank, which transfers funds into the payee's bank account; the receiving bank then notifies the
payee. Giro is often used by post offices as well. The term is little used in the United States,
although an ACH Transfer or direct deposit is the US electronic version of the giro transfer.
Online Banking ePayments (OBeP) are similar to giro transfers, but are designed specifically for
use with online commerce. With OBeP, during the online checkout process, the merchant
redirects the consumer to their financial institutions online banking site where they login and
authorize charges. After charges are authorized, the financial institution redirects the consumer
back to the merchant site. All network communications are protected using industry standard
encryption. Additionally, communications with the OBeP network take place on a virtual private
network, not over the public Internet. OBeP systems protect consumer personal information by
not requiring the disclosure of account numbers or other sensitive personal data to online
merchants or other third parties.[1]
Electronic bill payment is a feature of online banking, similar in its effect to a bank transfer,
allowing a depositor to send money from his demand account to a creditor or vendor such as a
public utility or a department store to be credited against a specific account. The payment is
optimally executed electronically in real-time, though some financial institutions or payment
services will wait until the next business day to send out the payment. The bank can usually also
generate and mail a paper check or banker's draft to a creditor who is not set up to receive
electronic payments.
With phone payments, consumers are billed via their regular telephone number, whereby the
charges are added to their phone bill. Premium-rate telephone numbers or 900 numbers are
telephone numbers for telephone calls during which certain services are provided, and for which
prices higher than normal are charged.
Mobile payments is a new and rapidly adopting alternative payment method especially in Asia
and Europe. Instead of paying with cash, check or credit cards, a consumer can use a mobile
phone to pay for wide range of services and goods. The charges are then added to their phone
bill.
A check or cheque is a negotiable instrument instructing a financial institution to pay a specific
amount of a specific currency from a specified demand account held in the maker/depositor's
name with that institution. Both the maker and payee may be natural persons or legal entities.
An electronic check, often referred to as ACH or eCheck, allows United States and Canadian
customers to make payments instantly using their checking accounts. Instead of a physical check,

the payer provides the name, amount, routing and account number, and the transaction is then
electronically processed and the funds are withdrawn from the checking account.
Electronic money refers to money which is exchanged only electronically. Typically, this
involves the use of computer networks, the internet and digital stored value systems. Electronic
Funds Transfer (EFT) and direct deposit are all examples of electronic money.
Money orders, postal money orders, certified checks, cashiers checks and travelers checks are
all alternative payment types that are used in commerce in place of cash.

Usage
The number of Alternative Payments has grown exponentially in the last few years due to the
need for billing solutions on the Internet. Limited credit card penetration and customary local
payment habits, combined with tight credit and security fears to use credit cards for online
payments has increased the usage of Alternative Payments on a worldwide level.
Alternative payments are offered by domestic banks and payment processors that offer
merchants a variety of billing solutions. Most Alternative Payments have online applications and
are integrated into electronic shopping carts used by online merchants.
Several billing solutions have been devised specifically for web-based merchants to accept
alternative payments online and to support and access distant markets. Alternative payments are
used throughout North America, Europe and Asia, and have penetration levels of sixty percent or
more in various countries. Language, currency and support, including trust and familiarity, often
contribute to the success of a domestic alternative payment solution.
Debit cards and charge cards are accepted worldwide as alternative payment and in some cases,
debit cards are designed exclusively for use on the Internet, and there is no physical card only a
virtual card. Certain systems also require the use of a PIN when a debit is used for online
purchases.
European online direct debit solutions are particularly popular due to the lower use of credit
cards in Europe as compared to other countries like the United States. Transactions can be
approved in real-time and funds in 1 to 3 business days. Chargebacks remain a risk inherently
when debiting a consumers bank account, however, using additional verification systems
reduces the risk significantly and many payment processors maintain an extensive fraud database
that mitigates the risks.
Using bank transfers to accept payments does not carry any inherent risk to the merchant, which
makes it particularly attractive to both high and low risk merchants seeking to reduce
chargebacks. The drawback to this approach from a merchants perspective are that re-billing
cannot be made automatic and billing does not occur quickly, as their customers must manually
transfer the funds.

Electronic checks allow funds to be withdrawn directly from the consumers account. Recurring
payments can be set up and the consumers personal information can be verified instantly.
Merchants that opt to accept electronic checks enjoy convenient processing that reaches a large
number of consumers that do not own credit cards or do not wish to use credit cards to make
payments. Electronic checks are known to have long clearing times of up to five business days
and carry an inherent risk of charge-backs. Checks that have been verified may come back after
the clearing time as insufficient funds, meaning that the consumer does not have sufficient
funds in their account to pay the balance of the transaction.
Phone payments describe a system of allowing consumers to purchase products or services using
their phone number. In most cases, the charge is verified via phone or SMS messaging before the
transaction is approved. The resulting charge is then added to the customers phone bill.
Phone billing is accepted in many countries and offers a flexible way for merchants to accept
payment, especially online, where the risk of fraud is elevated. While convenient for the
consumer, phone billing has several inherent issues for merchants. Payment processors that
support phone billing typically charge a higher rate because the payments must go through an
additional party, the phone provider, before reaching the merchant. The clearing time on funds is
also exceptionally high because the funds are not collected until the consumer pays their phone
bill.

Merchant advantages
Alternative Payments have increasingly become more popular with merchants, as more options
means more sales, and because nearly all Alternative Payments offer a variety of service specific
features that addresses a global online marketplace. Geolocation software, automatic language
translations, instant currency exchange and worldwide support are generally included to allow
foreign buyers to make use of their domestic payment solution, while shopping outside of their
country at a foreign based web merchant.
Unlike traditional credit card transactions, many alternative payments often provide additional
security features that protect the merchant from fraud and returned transactions, because the
funds availability is verified and payment is made directly from a bank account. The banks
guarantee the funds and because there are no chargebacks, merchants are often not required to
provide collateral or keep a reserve. Furthermore, accounts are validated in real-time and fraud
modules scrub transactions, similar to the approval process with credit cards.

Consumer advantages
Alternative Payments have, in many areas, become the dominant form of online payment for
consumers. Alternative payments gives consumers more options to pay and allows them to select
payment methods that they are comfortable with. Language, domestic applications and
familiarity with the payment method, coupled with the trust they place in their own bank,
increases usage. Furthermore, consumers may simply elect to use alternative payment methods
due to security concerns with credit card purchases. Many alternative payments often require

additional security steps, such as a user name, password or personal identification number (PIN)
to further protect the consumer.

Comparison of payment systems

From Wikipedia, the free encyclopedia
Comparison of Payment Systems (also known as Comparison of Payment Processing
Services, aka Comparison of Payment Processors, aka Comparison of Merchant Services) is
displaying list of comparative information & fee rates on various Payment systems (aka
Payment Processing Services, aka Payment Processors, aka Merchant Services). Information
such as these are compared & shown: seller's/merchant's fees, buyer's fees, banking transfer fees,
clearing-house fees, interchange fees, chargeback/return fees, currency conversion fees, monthly
fees, usage, verification time, deposit time, technology support, customer-service quality, etc.
There are too many payment systems & services providers (which are aka Payment Processing
Services, aka Merchant Services, aka Payment Processors, Merchant Service Providers) to list in
detail or in brief, all under same page. So we will mainly focus on payment/merchant systems &
services which are most popular among majority of sellers & buyers, and which have
comparatively lowest fee rate or free options, and which have comparatively most features for
sellers/merchants, (and also buyers), lowest cost or free Payment receiving (Card Readers, PT,
POS) & printing equipments, and which have good or better track record, (good or better)
customer service quality, etc according to BBB & similar credible rating services.
Displayed Fees, rates can change anytime. Displayed fee-data & rate info may not be actual
fee or rate in use currently right-now. And also be aware that, fee-rates also vary, based on
volumes/quantities of sale, for different seller/business, i.e. Sellers/Merchants can negotiate with
payment-system or merchant-service provider to obtain a comparatively lower & better rate,
when their selling volume is comparatively very high. When this page is edited by Wikipedia
editors, then they will usually add at-that-moment minimum-fee or flat-rate info, for the section
which they are editing. Visit payment-system's referenced linked webpage (shown at bottomside), for payment service provider's current information.

Contents

1 General Comparison information

2 See also

3 References

4 External Websites

General Comparison information

If you see an abbreviation used in this page, which you do not know means what, then please
press: Ctrl+F (or Cmd+F) to find word, and then type-in that abbreviation letters & press ">" or
"<" button, to find the location where it is shown in full.
Retail
Payment System Name: brief comparative, key-points & highlighted description. Y =
Shoppin
Yes. N = No. I = Incomplete. P = Partial. aka = also known as, aka Alias. Vsa = Visa. Ds
g
Centers /
= Discover. AmEx = American Express. MC = MasterCard. Dn = Diner. TR / Tx =
Transaction. TX = Transmit/Send. RCV / RX = Receive. RCVd / RXd = Received. POS Markets
= Point of Sale. PT = Payment Terminal, aka POS. NFC = Near Field Communicator.
HCE = Host Card Emulation. MS / MSC = Magnetic Stripe card. MST = Magnetic
Secure Transmission (used to emulate MSC). EMVCo / EMV = Europay, MasterCard,
and Visa (cards with electronic IC/Chip). ACH = Automated Clearing House. Crd / Cr
= Credit, Credit Card. Dbt / Db = Debit, Debit Card. ETF = Early Termination Fee.
PTF / PTC = Minimum Per Transaction Fee (aka, Per Transaction Cost). BBB = Better
POS
Business Bureau. M.Phn.App / M.App = Mobile Phone/Device App. Bnk = Bank. Acnt / Support
Accnt = Account. Chk = Checking, Checking/Deposit acnt. Sav = Savings, Savings acnt.
Thru = Through. Frm = From. Pswrd = Password. KB / kB = KiloBytes (equals to 1024
Bytes). BTC = XBT = = B = bitcoin (virtual currency, aka, virtual commodity). DOSP
= Depends On Service Provider. DD / DC = Direct Deposit (aka Direct Credit, aka ACH,
aka Giro, aka Direct Entry). DW = Direct Debit aka Direct Withdrawal, aka ACH, aka
PAD, aka PAP. Tech = Technology.

Monthly
Fee.
Vsa/MC/Ds Swipe
Yearly
Fee
Fee

AmEx Fee

Keyed-In Fee

Free
Equipment

ACH/DW/
DC/chk Fee

Amazon Local Register (ALR[1]): no chargeback/return fees, no international

fees. A $10 card-reader device purchase is necessary, (and a free App from Apple
app-store or Android play-store), to attach with seller's own (non-rooted or nonjailbroken) mobile device, and then Amazon gives credit of $10 into seller's accnt
(after opening account), so card-reader is free (but this policy may have been
changed currently by Amazon, so inquire on this before proceeding). Fees which
are charged to sellers/merchants are shown in below table-row. Next-day deposit.
Bank statement (as PDF file) is required to be submitted to ALR to verify bnk
acnt, or bnk-acnt password is needed to be shared with ALR, (change pswrd after
they verified bnk acnt, or change pswrd 1st to something temporary but not too
easy, and then share it to verify bnk acnt). Keyed-in TR may be kept on-hold for 7
to 14 days. ALR m.app forcefully requires GPS geo-location access.
N.
N

Vsa/MC/Ds Swipe:

2.5%

AmEx:

2.5%

Keyed-In:

2.99%

Free
Equipment:
Yes (See
Descrption)

Apple Pay: it is used, for example in iTunes stores or in Apple Store, etc. Apple
based services, products, and it is also supported by many retail shopping
centers+markets & POS. Apple initially charged (or taken-away or cut) around
0.15%--0.30% fee from each payment TR paid by buyer (using their Crd/Dbt
cards), and rest ended-up going into seller's hand. This was changed in Sept,
2015, Apple now charges around 15% + $0.15 from each payment TR, before
giving rest of the amount to seller. And, banks take-away around 2% fee from

Online
Shopping
Carts
Support

Tech

ETF

MSC

ETF:

No
Y

NFC

Apple's portion for each (Apple Pay) TR. If seller's or merchant's PT/POS
supports NFC, then it will also accept Apple Pay based payment. If NFC support
Free
Vsa/MC/Ds Swipe: AmEx: 15%
N.
Equipment:
15% + $0.15
N
+ $0.15
No
Bitcoin Payment System: bitcoin transaction fees.[2] Such payment processing
services are used by bitcoin (virtual currency, aka virtual commodity) supporting
trading services, products. It is supported by some retail shopping
centers+markets & POS, and it is supported by many online
(centralized+decentralized) shopping centers/markets/stores. Usually btc
transaction (TR/Tx) fee was 0 (zero), but changed into "Cost very little". To
transfer bitcoin virtual-currency (aka, bitcoin virtual-commodity) from one
bitcoin-wallet to another wallet, and to include that proof of transfer in Bitcoin
blockchain (decentralized distributed database) and to receive verification (or
proof, or confirmations) on that transfer very quickly (within 15 minutes or 1:30
hour:minutes), then there is a variable higher fee rate which is charged by bitcoin
miners. But currently minimum fee for miners is close to or around 0.00001 btc
per KB (kilobytes) of data/info for a confirmed btc transfer. A typical btc TR may
contain around 0.5 KB (or 512 Bytes) of data. Some bitcoin mining service
providers also support free or almost-free or very very low cost bitcoin-currency
transfer (usually for a TR which has less than 1 KB data), though verification
might be slightly delayed. For more info on such very-low cost or free
confirmation, view: Free Tx Relay policy and Eligius mining pool. Sellers who
cannot run their own btc mining hardware, bitcoin node, etc to include a Tx into
the blockchain, or sellers who cannot integrate plugin/addon[3] into their
shopping-cart for connecting with their own btc mining & related servers/nodes,
for receiving btc-Tx verification (aka, confirmations), for a sale/purchase, then
such sellers have to use 3rd-party services from other btc exchange or other btc
merchant service processor, etc and their processing fees are much higher, see:
BitPay (pricing[4]), Coinify (pricing[5]), Stripe (brief info on Stripe rates/fees, is
shown few rows below in this webpage). Seller/Merchant should not ship-out or
deliver products or services, before receiving sufficient number of confirmations
(>3) on a BTC/XBT payment.
N
(DOSP)
Vsa/MC/Ds Swipe:
.
AmEx: DOSP
DOSP
N
(DOSP)

Keyed-In:

DOSP

Free
Equipment:

ACH/DW/
DC/chk:

DOSP

DOSP

Capital One Merchant Services (Spark Pay[6]): it has a no monthly-fee plan:

Go plan. Fees which are charged to Go-Plan sellers/merchants, are shown below
in table-row. Minimum PTF is $0.05. No minimum number of TR requirement.
Mobile card reader device is included for free (it needs to be attached with
Seller's own mobile device). Receipt can be emailed or network printer can be
used for printing the receipt when paper/hard-copy receipt is required. SparkPay

ETF:

No
Y

DOSP

ETF:

DOS
P
Y

MSC
M.Ap
p

m.app (v1.5.0) forcefully requires GPS geo-location access, (when this info was
added here on July 2, 2016). Mobile card reader does not support EMV/IC-chip
Go.Plan Vsa/MC/Ds Swipe: AmEx: 3.7%
2.65% + $0.05
N. N
+ $0.05

Keyed-In:

3.7% +
$0.05

Free
Equipment:
Yes (Card
Reader)

Google Pay (aka, Google Wallet,[7] upgraded into Android Pay[8]): GoogleCheckout was upgraded into Google-Wallet, then Google-Wallet was upgraded
into Android-Pay (also known as Google-Pay). Android Pay (or Google Wallet) is
used by Google based services, products, and supported by many retail shopping
centers+markets & POS. Google Wallet allows users to send money from Wallet
to other users, relatives, etc via their Android or iOS based phone, it also allows
to receive money. Android Pay (GAP) is used by buyers for purchasing, and
available mostly on Google Android OS based phone. Google charges[9]
sellers/merchants (or takes-away) around 30% fee from each payment TR what
buyer pays. Google Wallet charged 2.9% fee to users when a fund was added
(into Wallet) from Debit-card, but changed policy on May 2, 2016[10] that fund
addition into Wallet is not allowed anymore from bnk-acnt or Dbt-card (after May
1, 2016), fund must be RCVd from another Wallet account or RCVd from another
(Android Pay) user, and, fee for receiving fund is $0 (zero). Google Wallet
(v15.0-R265-v4) and Android Pay (v1.4.125363284) m.apps both forcefully
require access to GPS geo-location, (when this info was added here on July 2,
2016), Google Wallet (GW) even reads contacts-list, modify systems settings,
etc. Such app need to ask user, before each access, and single contact needs to be
copied out of user's Contacts-List and pasted manually into GW when needed.
Usually Android v4.4 (KitKat) Phones & above, have NFC & HCE feature,
which are needed for initiating payment from Google-Pay/Android-Pay supported
devices. If seller's or merchant's PT/POS supports NFC, then it will also accept
Google Pay based payments. If NFC support is not present in PT/POS then
Google Pay will not work.
N.
N

Vsa/MC/Ds Swipe:

30%

AmEx:

30%

Keyed-In:

30%

Free
Equipment:

No

Payment System Name: brief comparative, key-points & highlighted description. Y =

Yes. N = No. I = Incomplete. P = Partial. aka = also known as, aka Alias. Vsa = Visa. Ds
= Discover. AmEx = American Express. MC = MasterCard. Dn = Diner. TR / Tx =
Transaction. TX = Transmit/Send. RCV / RX = Receive. RCVd / RXd = Received. POS
= Point of Sale. PT = Payment Terminal, aka POS. NFC = Near Field Communicator.
HCE = Host Card Emulation. MS / MSC = Magnetic Stripe card. MST = Magnetic
Secure Transmission (used to emulate MSC). EMVCo / EMV = Europay, MasterCard,
and Visa (cards with electronic IC/Chip). ACH = Automated Clearing House. Crd / Cr
= Credit, Credit Card. Dbt / Db = Debit, Debit Card. ETF = Early Termination Fee.
PTF / PTC = Minimum Per Transaction Fee (aka, Per Transaction Cost). BBB = Better
Business Bureau. M.Phn.App / M.App = Mobile Phone/Device App. Bnk = Bank. Acnt /
Accnt = Account. Chk = Checking, Checking/Deposit acnt. Sav = Savings, Savings acnt.

ETF:

No
Y

NFC
HCE
M.Ap
p

ETF:

No
Retail
Online
Shoppin
Shopping
g
Carts
Centers /
Support
Markets

POS
Support

Tech

Thru = Through. Frm = From. Pswrd = Password. KB / kB = KiloBytes (equals to 1024

Bytes). BTC = XBT = = B = bitcoin (virtual currency, aka, virtual commodity). DOSP
= Depends On Service Provider. DD / DC = Direct Deposit (aka Direct Credit, aka ACH,
Monthly
Fee.
Vsa/MC/Ds Swipe
Free
ACH/DW/
AmEx Fee Keyed-In Fee
ETF
Yearly
Fee
Equipment DC/chk Fee
Fee

National Processing (NP[11]): it has low monthly fee. No long term contracts.
Crd/Dbt-card processing service fees which are charged to sellers/merchants are
shown in below table-row. Per return fee $2.00. Communicate early & make sure
that your contract/agreement includes clause for No-ETF, if you obtained
PT/POS.
Y
($2.00 Vsa/MC/Ds Swipe: AmEx: 2.7%
/month). 2.7% + $0.20
+ $0.20
N.

Keyed-In:

2.7% +
$0.20

Free
Equipment:

No

ACH/DW/
DC/chk:
$15/month +

$0.24/TR

North American Bancard (NAB[12]): per TR fees charged to sellers/merchants

are shown in below table-row. Month-to-month contract. No Startup fees.
Gateway/Virtual-Terminal: Authorize.Net. Communicate early & make sure that
your contract/agreement includes clause for No-ETF, if you obtained PT/POS.

N.
N

Vsa/MC/Ds Swipe:

AmEx:

Keyed-In:

0.29%

0.29%

0.29%

Free
Equipment:
Yes (Virtual
Terminal App)

PayPal: fees charged to sellers/merchants for each TR by the PayPal[13] is shown

in below table-row. PayPal payment system can be integrated with other shopping
cart systems, which enables individual website, retail+online shopping
centers/markets or POS to accept payments on their own. And PayPal can also be
used by any individuals for TX/RX (send/receive) personal payments. PayPal
m.app v6.3.5 forcefully requires GPS geo-location, reads contacts-list, (when
these info were added here on July 2, 2016). "PayPal Here"[14] (PPH) service can
allow sellers/merchants to receive payment on their own mobile devices with a
free magnetic-stripe (MS) card-reader (a 2nd card-reader is $14), or with a $149
EMV(IC-chip)+MS card-reader from PayPal. Fees charged to sellers/merchants
are shown in below table-row. PPH charges sellers/merchants 2.9% + $0.30 for
any invoiced TR. PayPal-Here m.app (v2.6.2) forcefully collects list of all
running apps, and reads sensitive log data from all apps, and forcefully accesses
GPS based geo-location, reads contacts-list, (when these info were added here on
July 2, 2016), so m.app very likely violating seller/merchant's Privacy-Rights.
Also see Braintree, a subsidiary of PayPal, which owns Venmo (and Braintree

MSC

ETF:

No
Y

MSC
EMV
NFC
Tablet
M.Ap
p

ETF:

No
Y

MSC
M.Ap
p

also accepts bitcoin).

PayPal: Vsa/MC/Ds Swipe:
2.90% + $0.30
N. N
PayPal
Here:
N. N

2.70%

AmEx:

Keyed-In:

2.90% +
$0.30

2.90% +
$0.30

2.70%

3.50% +
$0.15

Free
Equipment:

ETF:

No

No

Yes (Card

No

Reader)

Samsung Pay: it is used by Samsung-based services, products, and supported by

many retail shopping centers/markets & POS. When Samsung Pay is used via
Samsung smartphone devices, then fee for buyer is $0.000 (zero), and fee for
seller is also $0.000 (zero). In S. Korea (home/origin nation of Samsung) it is
already free even for non-Samsung devices. According to a March, 2015 report,
[15]
when Samsung Pay is used via other non-Samsung devices then Samsung may
charge seller or may take-away 0.015% fee from each payment TR. But
according to a later April, 2015 report, Samsung indicated this 0.015% fee per-TR
policy for sellers/merchants, may be changed into "free" per transaction, when the
service will be finalized for US & other countries. Then according to a June, 2016
report,[16] Samsung Pay is now totally free, (zero) $0.00 fee, for any TR, for both
sellers/merchants and buyers. Mobile phone users (buyers) in US (and other
countries) need to use specific series of Samsung mobile phones, for Samsung
Pay based buying+payment to work. If seller's or merchant's PT/POS already
supports NFC, then it can also accept Samsung Pay based payments easily. Many
(or most) sellers/merchants are still using magnetic-stripe (MS) card reader based
PT/POS. Most of such PT/POS will still work with Samsung Pay supported
payment devices, but some PT/POS may need a software update, or a
plugin/addon software tool can be loaded into the PT/POS to enable MST[17]
support. Even when a PT/POS does not support NFC, but if it supports regular
magnetic-stripe (MS) payment cards, then Samsung Pay based payments can still
work.
N.
N

Vsa/MC/Ds Swipe:

AmEx:

0.000% +
0.000% + $0.000
$0.000

Keyed-In:

0.000% +
$0.000

Free
Equipment:

Vsa/MC/Ds Swipe:

2.90% + $0.30

AmEx:

Keyed-In:

2.90% +
$0.30

2.90% +
$0.30

No

MSC
MST
NFC
EMV
M.Ap
p

No

No

Free
Equipment:

ETF:

Stripe: Stripe charges sellers/merchants[18] fees, which are shown in below tablerow. Each ACH TR has a max-fee, capped-at max-$5, (when buyer used their
bank's chk acnt for sending payment). Stripe charges seller 0.50% from bitcoin
based payment. Each chargeback/return fee includes $15 fee. Stripe payment
system can be integrated with other shopping cart systems, which enables
individual website, retail+online shopping centers+markets & POS to accept
payments on their own. Does not require a Merchant-Account.
N.
N

MSC

ACH/DW/
DC/chk:

0.8% +
$0.30

Total Merchant Services (TMS[19]): No long-term contracts. Month-to-month

contract. Recently they may be offering free equipment, (must be returned when
service is cancelled), inquire on this before proceeding. Free online marketing
tool. 2 days deposit. Cr/Db goes thru Global Payments. Groovv POS Terminal for
retail outlets. Communicate early & make sure your contract/agreement clearly
includes clause for No-ETF, and also make sure No-ETF exists for "Global
Payments" too.
Virtual
Terminal web
app is free.
USB Reader is
free. Mobile
PaymentJack
rent is
$5/month

N.
N

ETF:

No

Retail
Payment System Name: brief comparative, key-points & highlighted description. Y =
Shoppin
Yes. N = No. I = Incomplete. P = Partial. aka = also known as, aka Alias. Vsa = Visa. Ds
g
Centers /
= Discover. AmEx = American Express. MC = MasterCard. Dn = Diner. TR / Tx =
Transaction. TX = Transmit/Send. RCV / RX = Receive. RCVd / RXd = Received. POS Markets
= Point of Sale. PT = Payment Terminal, aka POS. NFC = Near Field Communicator.
HCE = Host Card Emulation. MS / MSC = Magnetic Stripe card. MST = Magnetic
Secure Transmission (used to emulate MSC). EMVCo / EMV = Europay, MasterCard,
and Visa (cards with electronic IC/Chip). ACH = Automated Clearing House. Crd / Cr
= Credit, Credit Card. Dbt / Db = Debit, Debit Card. ETF = Early Termination Fee.
PTF / PTC = Minimum Per Transaction Fee (aka, Per Transaction Cost). BBB = Better
POS
Business Bureau. M.Phn.App / M.App = Mobile Phone/Device App. Bnk = Bank. Acnt / Support
Accnt = Account. Chk = Checking, Checking/Deposit acnt. Sav = Savings, Savings acnt.
Thru = Through. Frm = From. Pswrd = Password. KB / kB = KiloBytes (equals to 1024
Bytes). BTC = XBT = = B = bitcoin (virtual currency, aka, virtual commodity). DOSP
= Depends On Service Provider. DD / DC = Direct Deposit (aka Direct Credit, aka ACH,
aka Giro, aka Direct Entry). DW = Direct Debit aka Direct Withdrawal, aka ACH, aka
PAD, aka PAP. Tech = Technology.

Monthly
Fee.
Vsa/MC/Ds Swipe
Yearly
Fee
Fee

AmEx Fee

Keyed-In Fee

Free
Equipment

MSC
NFC
EMV

ACH/DW/
DC/chk Fee

Online
Shopping
Carts
Support

ETF

Payment system
From Wikipedia, the free encyclopedia

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page. (Learn how and when to remove these template messages)
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This article may be too technical for most readers to understand. (June 2015)

Tech

A payment system is any system used to settle financial transactions through the transfer of
monetary value, and includes the institutions, instruments, people, rules, procedures, standards,
and technologies that make such an exchange possible.[1][2] A common type of payment system is
the operational network that links bank accounts and provides for monetary exchange using bank
deposits.[3]
What makes a payment system a system is the use of cash-substitutes; traditional payment
systems are negotiable instruments such as drafts (e.g., checks) and documentary credits such as
letters of credit. With the advent of computers and electronic communications a large number of
alternative electronic payment systems have emerged. These include debit cards, credit cards,
electronic funds transfers, direct credits, direct debits, internet banking and e-commerce payment
systems. Some payment systems include credit mechanisms, but that is essentially a different
aspect of payment. Payment systems are used in lieu of tendering cash in domestic and
international transactions and consist of a major service provided by banks and other financial
institutions.
Payment systems may be physical or electronic and each has its own procedures and protocols.
Standardization has allowed some of these systems and networks to grow to a global scale, but
there are still many country- and product-specific systems. Examples of payment systems that
have become globally available are credit card and automated teller machine networks. Specific
forms of payment systems are also used to settle financial transactions for products in the equity
markets, bond markets, currency markets, futures markets, derivatives markets, options markets
and to transfer funds between financial institutions both domestically using clearing and realtime gross settlement (RTGS) systems and internationally using the SWIFT network.
The term electronic payment can refer narrowly to e-commercea payment for buying and
selling goods or services offered through the Internet, or broadly to any type of electronic funds
transfer.

Contents

1 National

2 International

3 See also

4 References

5 External links

National
An efficient national payment system reduces the cost of exchanging goods, services, and assets
and is indispensable to the functioning of the interbank, money, and capital markets. A weak

payment system may severely drag on the stability and developmental capacity of a national
economy; its failures can result in inefficient use of financial resources, inequitable risk-sharing
among agents, actual losses for participants, and loss of confidence in the financial system and in
the very use of money[4] The technical efficiency of payment system is important for a
development of economy. Real-time gross settlement systems (RTGS) are funds transfer systems
where transfer of money or securities takes place from one bank to another on a "real-time" and
on "gross" basis. Settlement in "real time" means that payment transaction does not require any
waiting period. The transactions are settled as soon as they are processed. "Gross settlement"
means the transaction is settled on one to one basis without bunching or netting with any other
transaction. Once processed, payments are final and irrevocable.
TARGET2 is a RTGS system that covers the European Union member states that use the euro,
and is part of the Eurosystem, which comprises the European Central Bank and the national
central banks of those countries that have adopted the euro. TARGET2 is used for the settlement
of central bank operations, large-value Euro interbank transfers as well as other euro payments.
TARGET 2 provides real-time financial transfers, debt settlement at central banks which is
immediate and irreversible.

International
Globalization is driving corporations to transact more frequently across borders. Consumers are
also transacting more on a global basisbuying from foreign eCommerce sites; traveling, living,
and working abroad. For the payments industry, the result is higher volumes of paymentsin
terms of both currency value and number of transactions. This is also leading to a consequent
shift downwards in the average value of these payments.
The ways these payments are made can be cumbersome, error prone, and expensive. Growth,
after all, is often messy. Payments systems set up decades ago continue to be used sometimes
retrofitted, sometimes force-fittedto meet the needs of modern corporations. And, not
infrequently, the systems creak and groan as they bear the strain.
For users of these systems, on both the paying and receiving sides, it can be difficult and timeconsuming to learn how to use cross-border payments tools, and how to set up processes to make
optimal use of them. Solution providers (both banks and non-banks) also face challenges,
struggling to cobble together old systems to meet new demands. But for these providers, crossborder payments are both lucrative (especially given foreign exchange conversion revenue) and
rewarding, in terms of the overall financial relationship created with the end customer.
The challenges for global payments are not simply those resulting from volume increases. A
number of economic, political, and technical forces are changing the types of cross-border
transactions conducted. Consider these factors:

Corporations are making more cross-border purchases of services (as opposed to goods),
as well as more purchases of complex fabricated parts rather than simple raw materials.

Enterprises are purchasing from more countries, in more regions.

Increased outsourcing is leading to new in-country and new cross-border intracompany

transactions.

More enterprises are participating in complex, automated supply chains, which in some
cases drive automatic ordering and fulfillment. Online purchasing continues to grow, both
by large enterprises as part of an automated procurement systems and by smaller
enterprises purchasing directly.

There is continued growth in the use of cross-border labor.

Individuals are increasingly taking their investments abroad.

Clearing (finance)
From Wikipedia, the free encyclopedia

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page. (Learn how and when to remove these template messages)
This article includes a list of references, but its sources remain unclear because it has
insufficient inline citations. (January 2014)
The examples and perspective in this article deal primarily with the United States and do not
represent a worldwide view of the subject. (March 2013)
This article may require copy editing for grammar, style, cohesion, tone, or spelling.
(February 2016)

In banking and finance, clearing denotes all activities from the time a commitment is made for a
transaction until it is settled. Clearing of payments is necessary to turn the promise of payment
(for example, in the form of a cheque or electronic payment request) into actual movement of
money from one bank to another.
In trading, clearing is necessary because the speed of trades is much faster than the cycle time for
completing the underlying transaction. It involves the management of post-trading, presettlement credit exposures to ensure that trades are settled in accordance with market rules, even
if a buyer or seller should become insolvent prior to settlement. Processes included in clearing
are reporting/monitoring, risk margining, netting of trades to single positions, tax handling, and
failure handling.
Systemically important payment systems (SIPS) are payment systems which have the
characteristic that a failure of these systems could potentially endanger the operation of the
whole economy. In general, these are the major payment clearing or real-time gross settlement
systems of individual countries, but in the case of Europe, there are certain pan-European
payment systems. TARGET2 is a pan-European SIPS dealing with major inter-bank payments.
STEP2, operated by the Euro Banking Association is a major pan-European clearing system for

retail payments which has the potential to become a SIPS. The Federal Reserve System is a
SIPS.

Contents

1 History
o 1.1 Cheque clearing
o 1.2 Securities clearing

2 United States payment system

3 Clearing loans

4 Clearing during the financial crisis

5 See also

6 References

7 External links

History
Cheque clearing
Main article: cheque clearing
One of the first payment methods that required clearing were cheques, these would have to be
returned to the issuing bank for payment.
Though many debit cards are drawn against chequing accounts, direct deposit and point-ofpurchase electronic payments are cleared through networks separate from the cheque clearing
system (specifically the Federal Reserve's Automated Clearing House and the private Electronic
Payments Network).

Securities clearing
From the time the Amsterdam Stock Exchange was founded in 1602 there was a requirement to
clear the trades as the speed of trades was much faster than the cycle time for completing the
underlying transaction.[1] This meant there was always a few days delay between the trade date
and final settlement. Clearing was required to make sure payment had been received and the
physical stock certificate delivered. To reduce the risk associated with failure to deliver on the

trade on settlement date a clearing agent or clearing house often sat between the two counterparties. The trading parties would deliver the physical stock certificate and the payment to the
clearing house and they would make sure that the certificate was handed over when payment was
complete. A process known as delivery versus payment.
During the 1700s the Amsterdam stock exchange had close links with the London stock
exchange and they would often list each other's stocks. To clear the trades, time was required for
the physical stock certificate or cash to move from Amsterdam to London and back. This led to
standard settlement period of 14 days which was the time it usually took for a courier to make
the journey on horseback and by ship. Most exchanges continued to use the same model over the
next few hundred years. With the advent of new technology in the 1970s and 1980s there was a
move to reduce settlement times and settlement dates in most exchanges reduced to three days
(known as T+3 or Trade date plus three days).
With the advent of electronic settlement and the move to dematerialisation of securities, specific
clearing systems were required as well as securities depositories, custodians and registrars. Up
until this point many exchanges would act as their own clearing house. However the additional
computer systems required to handle volumes and the opening up of financial markets in a
number of countries in the 1980s, such as the 1986 big bang in the UK, led to a number of
exchanges separating or contracting out the clearing and settlement functions to dedicated
organisations.
In some specialist financial markets clearing had already been separate from trading. One
example was the London Clearing House (later renamed LCH.Clearnet) which cleared
derivatives and commodities for a number of the London exchanges since the 1950s. Another
example was Euroclear that acted as the clearing house for the Eurobond market.

United States payment system

The United States payments system is the largest in the world. Each day, millions of transactions,
valued in the trillions of dollars, are conducted between sellers and purchasers of goods, services,
or financial assets. Most of the payments underlying those transactions flow between depository
institutions, a large number of which maintain accounts with the Reserve Banks. The Federal
Reserve therefore performs an important role as an intermediary in clearing and settling
international bank payments. Banks settle payment transactions efficiently by debiting the
accounts of the depository institutions making payments and by crediting the accounts of
depository institutions receiving payments. Moreover, as the U.S. central bank, the Federal
Reserve is immune from liquidity problems not having sufficient funds to complete payment
transactions and credit problems that could disrupt its clearing and settlement activities.
The Funds Service provides a real-time gross settlement system in which more than 9,500
participants are able to initiate electronic wire funds transfers that are immediate, final, and
irrevocable. Depository institutions that maintain an account with a Reserve Bank are eligible to
use the service to send payments directly to, or receive payments from, other participants.
Depository institutions can also use a correspondent relationship with a participant to make or
receive transfers indirectly through the system. Participants generally use Federal Wire Transfer

to handle large-value, time-critical payments, such as payments to settle internal bank purchases
and sales of federal funds; to purchase, sell, or finance securities transactions; to disburse or
repay large loans; and to settle real estate transactions. The Department of the Treasury, other
federal agencies, and government-sponsored enterprises also use the Wired Funds Service to
disburse and collect funds. In 2013, the Reserve Banks processed 123 million Federal Wire
Transfer Payments having a total value of $436.7 trillion.
The Federal Wire Securities Service provides safekeeping, transfer, and settlement services for
securities issued by the Treasury, federal agencies, government-sponsored enterprises, and
certain international transactions. The Reserve Banks perform these services as fiscal agents for
these entities. Securities are safe kept in the form of electronic records of securities held in
custody accounts. Securities are transferred according to instructions provided by parties with
access to the system. Access to the Fed-wire Securities Service is limited to depository
institutions that maintain accounts with a Reserve Bank, and a few other organizations, such as
federal agencies, government-sponsored enterprises, and state government treasurers offices
(which are designated by the U.S. Treasury to hold securities accounts). Other parties,
specifically brokers and dealers, typically hold and transfer securities through depository
institutions that are Federal Wire participants and that provide specialized government securities
clearing services. In 2013, the Federal wire Securities Service processed 20.4 million securities
transfers with a value of $267.6 trillion.
The Automated Clearing Funds is an electronic payment system, developed jointly by the private
sector and the Federal Reserve in the early 2012 as a more-efficient alternative to checks. Since
then, the A.C.F has evolved into a nationwide mechanism that processes credit and debit
transfers electronically. A.C.F. credit transfers are used to make direct deposit payroll payments
and corporate payments to vendors. A.C.F. debit transfers are used by consumers to authorize the
payment of insurance premiums, mortgages, loans, and other bills from their account. The A.C.F.
is also used by businesses to concentrate funds at a primary bank and to make payments to other
businesses. In 2013, the Reserve Banks processed 6.5 billion A.C.F. payments with a value of
$16.8 trillion.The Federal Reserve in the U.S.and the World Bank are Agree to release the funds
in your local servicing bank.

Clearing loans
Financial institutions such as the Swiss WIR Bank and Panamanian European Standard Bank
allow, within their clearing platforms, conduct clearing operations for any business entities. In
addition they have the opportunity to receive a so-called clearing loans - is money that can be
used exclusively in intra-bank (intra-clearing) transactions, effectively replacing 100% of money
that the government issues. These loans are offered at low interest rates (from 1% to 7% per
annum) and sometimes as collateral will be for purchased assets.
Business entities need to be trained at the WIR Bank or European Standard Bank to have the
necessary deep knowledge and understanding of the clearing transactions. As an alternative to
training, participants recommended for clearing transactions to have Director of Development,
which owns the technique of clearing transactions and required level of education. Clearing loans

provided by the legislation of individual states and is a synonym for "technical credits", a
reference to legislation can be found in the Wikipedia article "clearing" in other languages.

Clearing during the financial crisis

During the financial crisis clearing transactions were beyond its traditional use in international
turnover as compensatory transactions and began to be used as an auxiliary intra-bank payment
instrument for any legal entities, which allowed compensate for the lack of money that takes
place during the financial crisis anywhere in the world. For the first time a non-traditional use of
clearing transaction was used by Swiss WIR Bank at the beginning of the 20th century in
Switzerland and internationally by Panamanian financial institution European Standard Bank.
This has enabled many enterprising entities not only to overcome the negative effects of financial
crises, but also significantly build-up turnover and profits at a time when neglect this opportunity
entities reduced turnover and walked along the path of bankruptcy.

Society for Worldwide Interbank Financial

Telecommunication
From Wikipedia, the free encyclopedia
(Redirected from SWIFT)
"SWIFT" redirects here. For other uses, see Swift (disambiguation).
Society for Worldwide Interbank Financial
Telecommunication

Type
Industry
Founded
Headquarters
Key people
Products
Number of
employees
Website

Cooperative
Telecommunications
1973; 43 years ago
La Hulpe, Belgium
Yawar Shah (Chairman);
Gottfried Leibbrandt (CEO)
Financial Telecommunication
>2000
www.swift.com

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) provides a

network that enables financial institutions worldwide to send and receive information about
financial transactions in a secure, standardized and reliable environment. SWIFT also sells
software and services to financial institutions, much of it for use on the SWIFTNet Network, and
ISO 9362. Business Identifier Codes (BICs, previously Bank Identifier Codes) are popularly
known as "SWIFT codes".
The majority of international interbank messages use the SWIFT network. As of September
2010, SWIFT linked more than 9,000 financial institutions in 209 countries and territories, who
were exchanging an average of over 15 million messages per day (compared to an average of 2.4
million daily messages in 1995).[1] SWIFT transports financial messages in a highly secure way
but does not hold accounts for its members and does not perform any form of clearing or
settlement.
SWIFT does not facilitate funds transfer: rather, it sends payment orders, which must be settled
by correspondent accounts that the institutions have with each other. Each financial institution, to
exchange banking transactions, must have a banking relationship by either being a bank or
affiliating itself with one (or more) so as to enjoy those particular business features.
SWIFT is a cooperative society under Belgian law owned by its member financial institutions
with offices around the world. SWIFT headquarters, designed by Ricardo Bofill Taller de
Arquitectura are in La Hulpe, Belgium, near Brussels. The chairman of SWIFT is Yawar Shah,[2]
originally from Pakistan,[3] and its CEO is Gottfried Leibbrandt, originally from the Netherlands.
[4]
SWIFT hosts an annual conference every year, called SIBOS, specifically aimed at the
financial services industry.

Contents

1 History

2 Standards

3 Operations centers

4 SWIFTNet network
o 4.1 Architecture
o 4.2 SWIFTNet Phase 2

5 Products and interfaces

6 Services
o 6.1 SWIFTREF

o 6.2 SWIFTNet Mail

7 U.S. government involvement

o 7.1 Terrorist Finance Tracking Program
o 7.2 Sanctions against Iran
o 7.3 U.S. control over transactions within the EU
o 7.4 Monitoring by the NSA

8 Use in sanctions

9 Security

10 See also

11 References

12 External links

History
SWIFT was founded in Brussels in 1973 under the leadership of its inaugural CEO Carl
Reuterskild (19731983) and was supported by 239 banks in 15 countries. It started to establish
common standards for financial transactions and a shared data processing system and worldwide
communications network designed by Logica.[5] Fundamental operating procedures, rules for
liability, etc., were established in 1975 and the first message was sent in 1977. SWIFT's first
United States operating center was inaugurated by Governor John N. Dalton of Virginia in 1979.
[6]

Standards
SWIFT has become the industry standard for syntax in financial messages. Messages formatted
to SWIFT standards can be read by, and processed by, many well-known financial processing
systems, whether or not the message traveled over the SWIFT network. SWIFT cooperates with
international organizations for defining standards for message format and content. SWIFT is also
Registration authority (RA) for the following ISO standards: [7]

ISO 9362: 1994 BankingBanking telecommunication messagesBank identifier codes

ISO 10383: 2003 Securities and related financial instrumentsCodes for exchanges and
market identification (MIC)

ISO 13616: 2003 IBAN Registry

ISO 15022: 1999 SecuritiesScheme for messages (Data Field Dictionary) (replaces
ISO 7775)

ISO 20022-1: 2004 and ISO 20022-2:2007 Financial servicesUniversal Financial

Industry message scheme

In RFC 3615 urn:swift: was defined as Uniform Resource Names (URNs) for SWIFT FIN.[8]

Operations centers
The SWIFT secure messaging network is run from two redundant data centers, one in the United
States and one in the Netherlands. These centers share information in near real-time. In case of a
failure in one of the data centers, the other is able to handle the traffic of the complete network.
SWIFT opened a third data center in Switzerland, which started operating in 2009.[9] Since then,
data from European SWIFT members are no longer mirrored to the U.S. data center. The
distributed architecture partitions messaging into two messaging zones: European and TransAtlantic.[10] European zone messages are stored in the Netherlands and in a part of the
Switzerland operating center; Trans-Atlantic zone messages are stored in the United States and in
a part of the Switzerland operating center that is segregated from the European zone messages.
Countries outside of Europe were by default allocated to the Trans-Atlantic zone but could
choose to have their messages stored in the European zone.

SWIFTNet network
SWIFT moved to its current IP network infrastructure, known as SWIFTNet, from 2001 to 2005,
[11]
providing a total replacement of the previous X.25 infrastructure. The process involved the
development of new protocols that facilitate efficient messaging, using existing and new message
standards. The adopted technology chosen to develop the protocols was XML, where it now
provides a wrapper around all messages legacy or contemporary. The communication protocols
can be broken down into:
InterAct

FileAct

Browse

SWIFTNet InterAct
Realtime

SWIFTNet FileAct
Realtime

SWIFTNet InterAct
Store and Forward

SWIFTNet FileAct
Store and Forward

SWIFTNet Browse

Architecture
SWIFT provides a centralized store-and-forward mechanism, with some transaction
management. For bank A to send a message to bank B with a copy or authorization with
institution C, it formats the message according to standard and securely sends it to SWIFT.
SWIFT guarantees its secure and reliable delivery to B after the appropriate action by C. SWIFT
guarantees are based primarily on high redundancy of hardware, software, and people.

SWIFTNet Phase 2
During 2007 and 2008, the entire SWIFT Network migrated its infrastructure to a new protocol
called SWIFTNet Phase 2. The main difference between Phase 2 and the former arrangement is
that Phase 2 requires banks connecting to the network to use a Relationship Management
Application (RMA) instead of the former bilateral key exchange (BKE) system. According to
SWIFT's public information database on the subject, RMA software should eventually prove
more secure and easier to keep up-to-date; however, converting to the RMA system meant that
thousands of banks around the world had to update their international payments systems to
comply with the new standards. RMA completely replaced BKE on 1 January 2009.

Products and interfaces

SWIFT means several things in the financial world:
1. a secure network for transmitting messages between financial institutions;
2. a set of syntax standards for financial messages (for transmission over SWIFTNet or any
other network)
3. a set of connection software and services allowing financial institutions to transmit
messages over SWIFT network.
Under 3 above, SWIFT provides turn-key solutions for members, consisting of linkage clients to
facilitate connectivity to the SWIFT network and CBTs or 'computer based terminals' which
members use to manage the delivery and receipt of their messages. Some of the more wellknown interfaces and CBTs provided to their members are:

SWIFTNet Link (SNL) software which is installed on the SWIFT customer's site and
opens a connection to SWIFTNet. Other applications can only communicate with
SWIFTNet through the SNL.

Alliance Gateway (SAG) software with interfaces (e.g., RAHA = Remote Access Host
Adapter), allowing other software products to use the SNL to connect to SWIFTNet

Alliance WebStation (SAB) desktop interface for SWIFT Alliance Gateway with several
usage options:

1. administrative access to the SAG

2. direct connection SWIFTNet by the SAG, to administrate SWIFT Certificates
3. so-called Browse connection to SWIFTNet (also by SAG) to use additional services, for
example Target2

Alliance Access (SAA) is the main messaging software by SWIFT, which allows message
creation only for FIN messages, but routing and monitoring for FIN and MX messages.
The main interfaces are FTA (files transfer automated, not FTP) and MQSA, a
WebSphere MQ interface.

The Alliance Workstation (SAW) is the desktop software for administration, monitoring
and FIN message creation. Since Alliance Access is not yet capable of creating MX
messages, Alliance Messenger (SAM) has to be used for this purpose.

Alliance Web Platform (SWP) as new thin-client desktop interface provided as an

alternative to existing Alliance WebStation, Alliance Workstation (soon) and Alliance
Messenger.

Alliance Integrator built on Oracle's Java Caps which enables customer's back office
applications to connect to Alliance Access or Alliance Entry.

Alliance Lite2 is a secure and reliable, cloud-based way to connect to the SWIFT network
which is a Lite version of Alliance Access specifically targeting customers with low
volume of traffic.

Services
There are four key areas that SWIFT services fall under in the financial marketplace: Securities,
Treasury & Derivatives, Trade Services and Payments & Cash Management.
Securities

SWIFTNet FIX
(obsolete)

SWIFTNet Data
Distribution

SWIFTNet
Funds

Treasury &
Derivatives

SWIFTNet
Accord for
Treasury (end of
life October
2017)[12]
SWIFTNet
Affirmations

Cash Management

SWIFTNet Bulk
Payments

SWIFTNet Cash
Reporting

SWIFTNet
Exceptions and
Investigations

Trade Services

SWIFTNet
Trade Services
Utility

SWIFTNet
Accord for
Securities (end
of life October
2017)[12]

SWIFTNet CLS
Third Party
Service

SWIFTREF
Swift Ref, the global payment reference data utility, is SWIFTs unique reference data service.
Swift Ref sources data direct from data originators, including central banks, code issuers and
banks making it easy for issuers and originators to maintain data regularly and thoroughly.
SWIFTRef constantly validates and cross-checks data across the different data sets.[13]

SWIFTNet Mail
SWIFT offers a secure person-to-person messaging service, SWIFTNet Mail, which went live on
16 May 2007.[14] SWIFT clients can configure their existing email infrastructure to pass email
messages through the highly secure and reliable SWIFTNet network instead of the open Internet.
SWIFTNet Mail is intended for the secure transfer of sensitive business documents, such as
invoices, contracts and signatories, and is designed to replace existing telex and courier services,
as well as the transmission of security-sensitive data over the open Internet. Seven financial
institutions, including HSBC, FirstRand Bank, Clearstream, DnB NOR, Nedbank, and Standard
Bank of South Africa, as well as SWIFT piloted the service.[15]

U.S. government involvement

Terrorist Finance Tracking Program
Main article: Terrorist Finance Tracking Program
A series of articles published on 23 June 2006 in The New York Times, The Wall Street Journal,
and the Los Angeles Times revealed a program, named the Terrorist Finance Tracking Program,
which the US Treasury Department, Central Intelligence Agency (CIA), and other United States
governmental agencies initiated after the 11 September attacks to gain access to the SWIFT
transaction database.[16]
After the publication of these articles, SWIFT quickly came under pressure for compromising the
data privacy of its customers by allowing governments to gain access to sensitive personal
information. In September 2006, the Belgian government declared that these SWIFT dealings
with American governmental authorities were a breach of Belgian and European privacy laws.

In response, and to satisfy members' concerns about privacy, SWIFT began a process of
improving its architecture by implementing a distributed architecture with a two-zone model for
storing messages (see Operations centers).
Concurrently, the European Union negotiated an agreement with the United States Government
to permit the transfer of intra-EU SWIFT transaction information to the United States under
certain circumstances. Because of concerns about its potential contents, the European Parliament
adopted a position statement in September 2009, demanding to see the full text of the agreement
and asking that it be fully compliant with EU privacy legislation, with oversight mechanisms
emplaced to ensure that all data requests were handled appropriately.[17] An interim agreement
was signed without European Parliamentary approval by the European Council on 30 November
2009,[18] the day before the Lisbon Treatywhich would have prohibited such an agreement
from being signed under the terms of the Codecision procedureformally came into effect.
While the interim agreement was scheduled to come into effect on 1 January 2010, the text of the
agreement was classified as "EU Restricted" until translations could be provided in all EU
languages and published on 25 January 2010.
On 11 February 2010, the European Parliament decided to reject the interim agreement between
the EU and the USA with 378 to 196 votes.[19][20] One week earlier, the parliament's civil liberties
committee already rejected the deal, citing legal reservations.[21]
In March 2011, it was reported that two mechanisms of data protection had failed: EUROPOL
released a report complaining that the USA's requests for information had been too vague
(making it impossible to make judgments on validity)[22] and that the guaranteed right for
European citizens to know whether their information had been accessed by USA authorities had
not been put into practice.[22]

Sanctions against Iran

In January 2012, the advocacy group United Against Nuclear Iran (UANI) implemented a
campaign calling on SWIFT to end all relations with Iran's banking system, including the Central
Bank of Iran. UANI asserted that Iran's membership in SWIFT violated U.S. and EU financial
sanctions against Iran as well as SWIFT's own corporate rules.[23]
Consequently, in February 2012, the U.S. Senate Banking Committee unanimously approved
sanctions against SWIFT aimed at pressuring the Belgian financial telecommunications network
to terminate its ties with blacklisted Iranian banks. Expelling Iranian banks from SWIFT would
potentially deny Iran access to billions of dollars in revenue and spending using SWIFT but not
from using IVTS. Mark Wallace, president of UANI, praised the Senate Banking Committee.[24]
Initially SWIFT denied it was acting illegally,[24] but now says "it is working with U.S. and
European governments to address their concerns that its financial services are being used by Iran
to avoid sanctions and conduct illicit business."[25] Targeted banks would be amongst others
Saderat Bank of Iran, Bank Mellat, Post Bank of Iran and Sepah Bank.[26] On 17 March 2012,
following agreement two days earlier between all 27 member states of the Council of the
European Union and the Council's subsequent ruling, SWIFT disconnected all Iranian banks

from its international network that had been identified as institutions in breach of current EU
sanctions and warned that even more Iranian financial institutions could be disconnected from
the network.
In February 2016, Iranian banks reconnected to the network following lift of sanctions on Joint
Comprehensive Plan of Action.[27]

U.S. control over transactions within the EU

On 26 February 2012 the Danish newspaper Berlingske reported that US authorities have
sufficient control over SWIFT to seize money being transferred between two European Union
(EU) countries (Denmark and Germany), since they have seized around US$26,000 which was
being transferred from a Danish businessman to a German bank. The transaction was
automatically routed through the US, possibly because of the USD currency used in the
transaction which is how the United States was able to seize the funds. The money was a
payment for a batch of Cuban cigars previously imported to Germany by a German supplier. As
justification for the seizure, the U.S. Treasury stated that the Danish businessman had violated
the United States embargo against Cuba.[28][29]

Monitoring by the NSA

Der Spiegel reported in September 2013 that the National Security Agency (NSA) widely
monitors banking transactions via SWIFT, as well as credit card transactions.[30] The NSA
intercepted and retained data from the SWIFT network used by thousands of banks to securely
send transaction information. SWIFT was named as a "target", according to documents leaked by
Edward Snowden. The documents reveal that the NSA spied on SWIFT using a variety of
methods, including reading "SWIFT printer traffic from numerous banks."[30]

Use in sanctions
As mentioned above SWIFT has disconnected all Iranian banks from its international network as
a sanction against Iran. Similarly, in August 2014 the UK planned to press the EU to block
Russian use of SWIFT as a sanction due to Russian military intervention in Ukraine.[31] However,
SWIFT refused to do so. In their official statement they said, "SWIFT regrets the pressure, as
well as the surrounding media speculation, both of which risk undermining the systemic
character of the services that SWIFT provides its customers around the world".[32] SWIFT also
rejected calls to boycott Israeli banks from its network.[33]

Security
See also: 2016 Bangladesh Bank heist
In 2016 an $81 million theft from the Bangladesh central bank via its account at the New York
Federal Reserve Bank was traced to hacker penetration of SWIFT's Alliance Access software,
according to a New York Times report. It was not the first such attempt, the society

acknowledged, and the security of the transfer system was undergoing new examination
accordingly.[34] Soon after the reports of the theft from the Bangladesh central bank, a second,
apparently related, attack was reported to have occurred on a commercial bank in Vietnam.[35][36]
Both attacks involved malware written to both issue unauthorized SWIFT messages and to
conceal that the messages had been sent. After the malware sent the SWIFT messages that stole
the funds, it deleted the database record of the transfers then took further steps to prevent
confirmation messages from revealing the theft. In the Bangladeshi case, the confirmation
messages would have appeared on a paper report; the malware altered the paper reports when
they were sent to the printer. In the second case, the bank used a PDF report; the malware altered
the PDF viewer to hide the transfers.[35]
In May 2016, Banco del Austro (BDA) in Ecuador sued Wells Fargo after Wells Fargo honored
$12 million in fund transfer requests that had been placed by thieves.[36] In this case, the thieves
sent SWIFT messages that resembled recently canceled transfer requests from BDA, with
slightly altered amounts; the reports do not detail how the thieves gained access to send the
SWIFT messages. BDA asserts that Wells Fargo should have detected the suspicious SWIFT
messages, which were placed outside of normal BDA working hours and were of an unusual
size. Wells Fargo claims that BDA is responsible for the loss, as the thieves gained access to the
legitimate SWIFT credentials of a BDA employee and sent fully authenticated SWIFT messages.
[36]

During 2016, dozens of banks have been hit through the SWIFT network, and lost hundreds of
millions of dollars. The attackers have repeatedly overcome local security measures to get into
the SWIFT system, then made money orders through the banks' SWIFT account, and sent
millions to fraudulent accounts. [37]

Credit card
From Wikipedia, the free encyclopedia

Visa and MasterCard are the two most prominent payment

processors for credit cards.

Personal finance

Credit Debt

Mortgage

Car loan

Credit card

Unsecured personal loan

Rent-to-own

Student loan

Title loan

Pawn

Payday loan

Refund anticipation loan

Refinancing

Debt consolidation

Bankruptcy

Employment contract

Salary

Wage

Salary packaging
Employee stock option

Employee benefits

Retirement

Pension

Defined benefit

Defined contribution

Social security

Business plan

Corporate action

Personal budget

Financial planner

Financial adviser

Stockbroker

Financial independence

Estate planning

See also

Bank

Cooperative

Credit union

This article is part of a series on

Banking in the

United States of America

Federal Reserve System

Monetary policy

Regulation

Lending[show]
Deposit accounts[show]
Payment & Transfer[show]
Banking charters[show]

United States portal

An example of the front in a typical credit card:

1. Issuing Bank Logo
2. EMV chip (only on "smart cards")
3. Hologram
4. Card number
5. Card Network Logo
6. Expiration Date
7. Card Holder Name
8. Contactless Chip

An example of the reverse side of a typical credit card:

1. Magnetic Stripe
2. Signature Strip
3. Card Security Code
A credit card is a payment card issued to users (cardholders) as a method of payment. It allows
the cardholder to pay for goods and services based on the holder's promise to pay for them.[1] The
issuer of the card (usually a bank) creates a revolving account and grants a line of credit to the

cardholder, from which the cardholder can borrow money for payment to a merchant or as a cash
advance.
A credit card is different from a charge card, where it requires the balance to be repaid in full
each month.[2] In contrast, credit cards allow the consumers a continuing balance of debt, subject
to interest being charged. A credit card also differs from a cash card, which can be used like
currency by the owner of the card. A credit card differs from a charge card also in that a credit
card typically involves a third-party entity that pays the seller and is reimbursed by the buyer,
whereas a charge card simply defers payment by the buyer until a later date.

Contents

1 Technical specifications

2 History
o 2.1 Edward Bellamy's Looking Backward
o 2.2 Charge coins, medals, and so on
o 2.3 Early charge cards
o 2.4 BankAmericard and Master Charge
o 2.5 Development outside North America
o 2.6 Vintage, old, and unique credit cards as collectibles

3 Usage
o 3.1 Advertising, solicitation, application and approval
o 3.2 Interest charges
o 3.3 Grace period
o 3.4 Parties involved
o 3.5 Transaction steps
o 3.6 Credit card register

4 Features

o 4.1 Consumers' limited liability

5 Types
o 5.1 Business credit cards
o 5.2 Secured credit cards
o 5.3 Prepaid cards
o 5.4 Digital cards

6 Benefits and drawbacks

o 6.1 Benefits to cardholder
o 6.2 Detriments to cardholders
o 6.3 Detriments to society
o 6.4 Benefits to merchants
o 6.5 Costs to merchants

7 Security
o 7.1 Code 10

8 Costs
o 8.1 Interest expenses
o 8.2 Operating costs
o 8.3 Charge offs
o 8.4 Rewards
o 8.5 Fraud

9 Revenues
o 9.1 Interchange fee

o 9.2 Interest on outstanding balances

o 9.3 Fees charged to customers

10 Over limit charges

o 10.1 United States
o 10.2 United Kingdom

11 Neutral consumer resources

o 11.1 Canada

12 Controversy
o 12.1 Hidden costs

13 Credit cards in ATMs

14 Credit cards as funding for entrepreneurs

15 Problems

16 See also

17 References

18 Further reading

19 External links

Technical specifications
The size of most credit cards is 85.60 mm 53.98 mm (3.370 in 2.125 in) and rounded corners
with a radius of 2.883.48 mm,[3] conforming to the ISO/IEC 7810 ID-1 standard, the same size
as ATM cards and other payment cards, such as debit cards.
Credit cards have a printed[4] or embossed bank card number complying with the ISO/IEC 7812
numbering standard. The card number's prefix, called the Bank Identification Number, is the
sequence of digits at the beginning of the number that determine the bank to which a credit card
number belongs. This is the first six digits for MasterCard and Visa cards. The next nine digits
are the individual account number, and the final digit is a validity check code.

Both of these standards are maintained and further developed by ISO/IEC JTC 1/SC 17/WG 1.
Credit cards have a magnetic stripe conforming to the ISO/IEC 7813. Many modern credit cards
have a computer chip embedded in them as a security feature.
In addition to the main credit card number, credit cards also carry issue and expiration dates
(given to the nearest month), as well as extra codes such as issue numbers and security codes.
Not all credit cards have the same sets of extra codes nor do they use the same number of digits.

History
Edward Bellamy's Looking Backward
The concept of using a card for purchases was described in 1887 by Edward Bellamy in his
utopian novel Looking Backward. Bellamy used the term credit card eleven times in this novel,
although this referred to a card for spending a citizen's dividend from the government, rather than
borrowing.[5]

Charge coins, medals, and so on

Charge coins and other similar items were used from the late 19th century to the 1930s. They
came in various shapes and sizes; with materials made out of celluloid (an early type of plastic),
copper, aluminum, steel, and other types of whitish metals.[6] Each charge coin usually had a little
hole, enabling it to be put in a key ring like a key. These charge coins were usually given to
customers who had charge accounts in department stores, hotels, and so on. A charge coin
usually had the charge account number along with the merchant's name and logo.
The charge coin offered a simple and fast way to copy a charge account number to the sales slip,
by imprinting the coin onto the sales slip. This sped the process of copying, previously done by
handwriting. It also reduced the number of errors, by having a standardised form of numbers on
the sales slip, instead of various kind of handwriting style.[7]
Because the customer's name was not on the charge coin, almost anyone could use it. This
sometimes led to a case of mistaken identity, either accidentally or intentionally, by acting on
behalf of the charge account owner or out of malice to defraud both the charge account owner
and the merchant. Beginning in the 1930s, merchants started to move from charge coins to the
newer Charga-Plate.[8]

Early charge cards

Western Union, oil companies, and other companies
Western Union began issuing charge cards to its frequent customers in 1921.[citation needed] In 1938,
several companies started to accept each other's cards. In the 1940s, oil companies in the United
States used them to sell fuel and other oil based products to a growing number of automobile
owners.[citation needed]

Charga-Plate
The Charga-Plate, developed in 1928, was an early predecessor of the credit card and was used
in the U.S. from the 1930s to the late 1950s. It was a 2 in 1 in rectangle of sheet metal
related to Addressograph and military dog tag systems. It was embossed with the customer's
name, city, and state. It held a small paper card on its back for a signature. In recording a
purchase, the plate was laid into a recess in the imprinter, with a paper "charge slip" positioned
on top of it. The record of the transaction included an impression of the embossed information,
made by the imprinter pressing an inked ribbon against the charge slip.[9] Charga-Plate was a
trademark of Farrington Manufacturing Co.[10] Charga-Plates were issued by large-scale
merchants to their regular customers, much like department store credit cards of today. In some
cases, the plates were kept in the issuing store rather than held by customers. When an authorized
user made a purchase, a clerk retrieved the plate from the store's files and then processed the
purchase. Charga-Plates speeded back-office bookkeeping and reduced copying errors that were
done manually in paper ledgers in each store.
Air Travel Card
In 1934, American Airlines and the Air Transport Association simplified the process even more
with the advent of the Air Travel Card.[11] They created a numbering scheme that identified the
issuer of the card as well as the customer account. This is the reason the modern UATP cards still
start with the number 1. With an Air Travel Card, passengers could "buy now, and pay later" for a
ticket against their credit and receive a fifteen percent discount at any of the accepting airlines.
By the 1940s, all of the major US airlines offered Air Travel Cards that could be used on 17
different airlines. By 1941 about half of the airlines' revenues came through the Air Travel Card
agreement. The airlines had also started offering installment plans to lure new travelers into the
air. In October 1948, the Air Travel Card became the first internationally valid charge card within
all members of the International Air Transport Association.[12]
Early general purpose charge cards: Diners Club, Carte Blanche, and American Express
The concept of customers paying different merchants using the same card was expanded in 1950
by Ralph Schneider and Frank McNamara, founders of Diners Club, to consolidate multiple
cards. The Diners Club, which was created partially through a merger with Dine and Sign,
produced the first "general purpose" charge card and required the entire bill to be paid with each
statement. That was followed by Carte Blanche and in 1958 by American Express which created
a worldwide credit card network (although these were initially charge cards that later acquired
credit card features).

BankAmericard and Master Charge

Until 1958, no one had been able to successfully establish a revolving credit financial system in
which a card issued by a third-party bank was being generally accepted by a large number of
merchants, as opposed to merchant-issued revolving cards accepted by only a few merchants.
There had been a dozen attempts by small American banks, but none of them were able to last
very long. In September 1958, Bank of America launched the BankAmericard in Fresno,

California, which would become the first successful recognizably modern credit card. This card
succeeded where others failed by breaking the chicken-and-egg cycle in which consumers did
not want to use a card that few merchants would accept and merchants did not want to accept a
card that few consumers used. Bank of America chose Fresno because 45% of its residents used
the bank, and by sending a card to 60,000 Fresno residents at once, the bank was able to
convince merchants to accept the card.[13] It was eventually licensed to other banks around the
United States and then around the world, and in 1976, all BankAmericard licensees united
themselves under the common brand Visa. In 1966, the ancestor of MasterCard was born when a
group of banks established Master Charge to compete with BankAmericard; it received a
significant boost when Citibank merged its own Everything Card, launched in 1967, into Master
Charge in 1969.
Early credit cards in the U.S., of which BankAmericard was the most prominent example, were
mass-produced and mass mailed unsolicited to bank customers who were thought to be good
credit risks. But, "They have been mailed off to unemployables, drunks, narcotics addicts and to
compulsive debtors, a process President Johnson's Special Assistant Betty Furness found very
like 'giving sugar to diabetics'."[14] These mass mailings were known as "drops" in banking
terminology, and were outlawed in 1970 due to the financial chaos they caused. However, by the
time the law came into effect, approximately 100 million credit cards had been dropped into the
U.S. population. After 1970, only credit card applications could be sent unsolicited in mass
mailings.
Before the computerization of credit card systems in America, using a credit card to pay at a
merchant was significantly more complicated than it is today. Each time a consumer wanted to
use a credit card, the merchant would have to call their bank, who in turn had to call the credit
card company, which then had to have an employee manually look up the customer's name and
credit balance. This system was computerized in 1973 under the leadership of Dee Hock, the first
CEO of Visa, allowing transaction time to decrease substantially to less than one minute.[13]
However, until always-connected payment terminals became ubiquitous at the beginning of the
21st century, it was common for a merchant to accept a charge, especially below a threshold
value or from a known and trusted customer, without verifying it by phone. Books with lists of
stolen card numbers were distributed to merchants who were supposed in any case to check cards
against the list before accepting them, as well as verifying the signature on the charge slip against
that on the card. Merchants who failed to take the time to follow the proper verification
procedures were liable for fraudulent charges, but because of the cumbersome nature of the
procedures, merchants would often simply skip some or all of them and assume the risk for
smaller transactions.

Development outside North America

The fractured nature of the U.S. banking system under the GlassSteagall Act meant that credit
cards became an effective way for those who were traveling around the country to move their
credit to places where they could not directly use their banking facilities. There are now
countless variations on the basic concept of revolving credit for individuals (as issued by banks
and honored by a network of financial institutions), including organization-branded credit cards,
corporate-user credit cards, store cards and so on.

In 1966, Barclaycard in the United Kingdom launched the first credit card outside the United
States.
Although credit cards reached very high adoption levels in the US, Canada and the UK in the
mid 20th century, many cultures were more cash-oriented, or developed alternative forms of
cashless payments, such as Carte bleue or the Eurocard (Germany, France, Switzerland, and
others). In these places, adoption of credit cards was initially much slower. Because of strict
regulations regarding bank overdrafts, some countries, France in particular, were much faster to
develop and adopt chip-based credit cards which are seen as major anti-fraud credit devices.
Debit cards and online banking (using either ATMs or PCs[clarification needed]) are used more widely
than credit cards in some countries. It took until the 1990s to reach anything like the percentage
market penetration levels achieved in the US, Canada, and UK. In some countries, acceptance
still remains low as the use of a credit card system depends on the banking system of each
country; while in others, a country sometimes had to develop its own credit card network, e.g.
UK's Barclaycard and Australia's Bankcard. Japan remains a very cash-oriented society, with
credit card adoption being limited mainly to the largest of merchants; although stored value cards
(such as telephone cards) are used as alternative currencies, the trend is toward RFID-based
systems inside cards, cellphones, and other objects.

Vintage, old, and unique credit cards as collectibles

The design of the credit card itself has become a major selling point in recent years.[citation needed]
The value of the card to the issuer is often related to the customer's usage of the card, or to the
customer's financial worth. This has led to the rise of Co-Brand and Affinity cards, where the
card design is related to the "affinity" (a university or professional society, for example) leading
to higher card usage. In most cases a percentage of the value of the card is returned to the affinity
group.
A growing field of numismatics (study of money), or more specifically exonumia (study of
money-like objects), credit card collectors seek to collect various embodiments of credit from the
now familiar plastic cards to older paper merchant cards, and even metal tokens that were
accepted as merchant credit cards. Early credit cards were made of celluloid plastic, then metal
and fiber, then paper, and are now mostly polyvinyl chloride (PVC) plastic. However the chip
part of credit cards is not made from plastic but from metals.

Usage
A credit card issuing company, such as a bank or credit union, enters into agreements with
merchants for them to accept their credit cards. Merchants often advertise which cards they
accept by displaying acceptance marks generally derived from logos or this may be
communicated in signage in the establishment or in company material (e.g., a restaurant's menu
may indicate which credit cards are accepted). Merchants may also communicate this orally, as
in "We take (brands X, Y, and Z)" or "We don't take credit cards".

Visa, Master Card, American Express

The credit card issuer issues a credit card to a customer at the time or after an account has been
approved by the credit provider, which need not be the same entity as the card issuer. The
cardholders can then use it to make purchases at merchants accepting that card. When a purchase
is made, the cardholder agrees to pay the card issuer. The cardholder indicates consent to pay by
signing a receipt with a record of the card details and indicating the amount to be paid or by
entering a personal identification number (PIN). Also, many merchants now accept verbal
authorizations via telephone and electronic authorization using the Internet, known as a card not
present transaction (CNP).
Electronic verification systems allow merchants to verify in a few seconds that the card is valid
and the cardholder has sufficient credit to cover the purchase, allowing the verification to happen
at time of purchase. The verification is performed using a credit card payment terminal or pointof-sale (POS) system with a communications link to the merchant's acquiring bank. Data from
the card is obtained from a magnetic stripe or chip on the card; the latter system is called Chip
and PIN in the United Kingdom and Ireland, and is implemented as an EMV card.
For card not present transactions where the card is not shown (e.g., e-commerce, mail order, and
telephone sales), merchants additionally verify that the customer is in physical possession of the
card and is the authorized user by asking for additional information such as the security code
printed on the back of the card, date of expiry, and billing address.
Each month, the cardholder is sent a statement indicating the purchases made with the card, any
outstanding fees, and the total amount owed. In the US, after receiving the statement, the
cardholder may dispute any charges that he or she thinks are incorrect (see 15 U.S.C. 1643,
which limits cardholder liability for unauthorized use of a credit card to $50). The Fair Credit
Billing Act gives details of the US regulations. The cardholder must pay a defined minimum
portion of the amount owed by a due date, or may choose to pay a higher amount. The credit
issuer charges interest on the unpaid balance if the billed amount is not paid in full (typically at a
much higher rate than most other forms of debt). In addition, if the cardholder fails to make at
least the minimum payment by the due date, the issuer may impose a "late fee" and/or other
penalties. To help mitigate this, some financial institutions can arrange for automatic payments to

be deducted from the cardholder's bank account, thus avoiding such penalties altogether, as long
as the cardholder has sufficient funds.
Many banks now also offer the option of electronic statements, either in lieu of or in addition to
physical statements, which can be viewed at any time by the cardholder via the issuer's online
banking website. Notification of the availability of a new statement is generally sent to the
cardholder's email address. If the card issuer has chosen to allow it, the cardholder may have
other options for payment besides a physical check, such as an electronic transfer of funds from a
checking account. Depending on the issuer, the cardholder may also be able to make multiple
payments during a single statement period, possibly enabling him or her to utilize the credit limit
on the card several times.

Advertising, solicitation, application and approval

Credit card advertising regulations in the US include the Schumer box disclosure requirements.
A large fraction of junk mail consists of credit card offers created from lists provided by the
major credit reporting agencies. In the United States, the three major US credit bureaus (Equifax,
TransUnion and Experian) allow consumers to opt out from related credit card solicitation offers
via its Opt Out Pre Screen program.

Interest charges
Credit card issuers usually waive interest charges if the balance is paid in full each month, but
typically will charge full interest on the entire outstanding balance from the date of each
purchase if the total balance is not paid.
For example, if a user had a $1,000 transaction and repaid it in full within this grace period, there
would be no interest charged. If, however, even $1.00 of the total amount remained unpaid,
interest would be charged on the $1,000 from the date of purchase until the payment is received.
The precise manner in which interest is charged is usually detailed in a cardholder agreement
which may be summarized on the back of the monthly statement. The general calculation
formula most financial institutions use to determine the amount of interest to be charged is
APR/100 x ADB/365 x number of days revolved. Take the annual percentage rate (APR) and
divide by 100 then multiply to the amount of the average daily balance (ADB) divided by 365
and then take this total and multiply by the total number of days the amount revolved before
payment was made on the account. Financial institutions refer to interest charged back to the
original time of the transaction and up to the time a payment was made, if not in full, as a
residual retail finance charge (RRFC). Thus after an amount has revolved and a payment has
been made, the user of the card will still receive interest charges on their statement after paying
the next statement in full (in fact the statement may only have a charge for interest that collected
up until the date the full balance was paid, i.e. when the balance stopped revolving).
The credit card may simply serve as a form of revolving credit, or it may become a complicated
financial instrument with multiple balance segments each at a different interest rate, possibly
with a single umbrella credit limit, or with separate credit limits applicable to the various balance
segments. Usually this compartmentalization is the result of special incentive offers from the

issuing bank, to encourage balance transfers from cards of other issuers. In the event that several
interest rates apply to various balance segments, payment allocation is generally at the discretion
of the issuing bank, and payments will therefore usually be allocated towards the lowest rate
balances until paid in full before any money is paid towards higher rate balances. Interest rates
can vary considerably from card to card, and the interest rate on a particular card may jump
dramatically if the card user is late with a payment on that card or any other credit instrument, or
even if the issuing bank decides to raise its revenue.

Grace period
A credit card's grace period is the time the cardholder has to pay the balance before interest is
assessed on the outstanding balance. Grace periods may vary, but usually range from 20 to 55
days depending on the type of credit card and the issuing bank. Some policies allow for
reinstatement after certain conditions are met.
Usually, if a cardholder is late paying the balance, finance charges will be calculated and the
grace period does not apply. Finance charges incurred depend on the grace period and balance;
with most credit cards there is no grace period if there is any outstanding balance from the
previous billing cycle or statement (i.e. interest is applied on both the previous balance and new
transactions). However, there are some credit cards that will only apply finance charge on the
previous or old balance, excluding new transactions.

Parties involved

Cardholder: The holder of the card used to make a purchase; the consumer.

Card-issuing bank: The financial institution or other organization that issued the credit
card to the cardholder. This bank bills the consumer for repayment and bears the risk that
the card is used fraudulently. American Express and Discover were previously the only
card-issuing banks for their respective brands, but as of 2007, this is no longer the case.
Cards issued by banks to cardholders in a different country are known as offshore credit
cards.

Merchant: The individual or business accepting credit card payments for products or
services sold to the cardholder.

Acquiring bank: The financial institution accepting payment for the products or services
on behalf of the merchant.

Independent sales organization: Resellers (to merchants) of the services of the acquiring
bank.

Merchant account: This could refer to the acquiring bank or the independent sales
organization, but in general is the organization that the merchant deals with.

Credit Card association: An association of card-issuing banks such as Discover, Visa,

MasterCard, American Express, etc. that set transaction terms for merchants, card-issuing
banks, and acquiring banks.

Transaction network: The system that implements the mechanics of the electronic
transactions. May be operated by an independent company, and one company may
operate multiple networks.

Affinity partner: Some institutions lend their names to an issuer to attract customers that
have a strong relationship with that institution, and get paid a fee or a percentage of the
balance for each card issued using their name. Examples of typical affinity partners are
sports teams, universities, charities, professional organizations, and major retailers.

Insurance providers: Insurers underwriting various insurance protections offered as credit

card perks, for example, Car Rental Insurance, Purchase Security, Hotel Burglary
Insurance, Travel Medical Protection etc.

The flow of information and money between these parties always through the card
associations is known as the interchange, and it consists of a few steps.

Transaction steps

Authorization: The cardholder presents the card as payment to the merchant and the
merchant submits the transaction to the acquirer (acquiring bank). The acquirer verifies
the credit card number, the transaction type and the amount with the issuer (card-issuing
bank) and reserves that amount of the cardholder's credit limit for the merchant. An
authorization will generate an approval code, which the merchant stores with the
transaction.

Batching: Authorized transactions are stored in "batches", which are sent to the acquirer.
Batches are typically submitted once per day at the end of the business day. If a
transaction is not submitted in the batch, the authorization will stay valid for a period
determined by the issuer, after which the held amount will be returned to the cardholder's
available credit (see authorization hold). Some transactions may be submitted in the batch
without prior authorizations; these are either transactions falling under the merchant's
floor limit or ones where the authorization was unsuccessful but the merchant still
attempts to force the transaction through. (Such may be the case when the cardholder is
not present but owes the merchant additional money, such as extending a hotel stay or car
rental.)

Clearing and Settlement: The acquirer sends the batch transactions through the credit
card association, which debits the issuers for payment and credits the acquirer.
Essentially, the issuer pays the acquirer for the transaction.

Funding: Once the acquirer has been paid, the acquirer pays the merchant. The merchant
receives the amount totaling the funds in the batch minus either the "discount rate", "midqualified rate", or "non-qualified rate" which are tiers of fees the merchant pays the
acquirer for processing the transactions.

Chargebacks: A chargeback is an event in which money in a merchant account is held

due to a dispute relating to the transaction. Chargebacks are typically initiated by the
cardholder. In the event of a chargeback, the issuer returns the transaction to the acquirer
for resolution. The acquirer then forwards the chargeback to the merchant, who must
either accept the chargeback or contest it.

Credit card register

A credit card register is a transaction register used to ensure the increasing balance owed from
using a credit card is enough below the credit limit to deal with authorization holds and payments
not yet received by the bank and to easily look up past transactions for reconciliation and
budgeting.
The register is a personal record of banking transactions used for credit card purchases as they
affect funds in the bank account or the available credit. In addition to check number and so forth
the code column indicates the credit card. The balance column shows available funds after
purchases. When the credit card payment is made the balance already reflects the funds were
spent. In a credit card's entry, the deposit column shows the available credit and the payment
column shows total owed, their sum being equal to the credit limit.
Each check written, debit card transaction, cash withdrawal, and credit card charge is entered
manually into the paper register daily or several times per week.[15] Credit card register also
refers to one transaction record for each credit card. In this case the booklets readily enable the
location of a cards current available credit when ten or more cards are in use.[citation needed]

Features
As well as convenient credit, credit cards offer consumers an easy way to track expenses, which
is necessary for both monitoring personal expenditures and the tracking of work-related expenses
for taxation and reimbursement purposes. Credit cards are accepted in larger establishments in
almost all countries, and are available with a variety of credit limits, repayment arrangements.
Some have added perks (such as insurance protection, rewards schemes in which points earned
by purchasing goods with the card can be redeemed for further goods and services or cashback).

Consumers' limited liability

Some countries, such as the United States, the United Kingdom, and France, limit the amount for
which a consumer can be held liable in the event of fraudulent transactions with a lost or stolen
credit card.

Types
Business credit cards
See also: Stored-value card
Business credit cards are specialized credit cards issued in the name of a registered business, and
typically they can only be used for business purposes. Their use has grown in recent decades. In
1998, for instance, 37% of small businesses reported using a business credit card; by 2009, this
number had grown to 64%.[16]
Business credit cards offer a number of features specific to businesses. They frequently offer
special rewards in areas such as shipping, office supplies, travel, and business technology. They
can be harder to apply for than personal cards, however, and often carry high credit score
requirements.[citation needed]

Secured credit cards

A secured credit card is a type of credit card secured by a deposit account owned by the
cardholder. Typically, the cardholder must deposit between 100% and 200% of the total amount
of credit desired. Thus if the cardholder puts down $1,000, they will be given credit in the range
of $5001,000. In some cases, credit card issuers will offer incentives even on their secured card
portfolios. In these cases, the deposit required may be significantly less than the required credit
limit, and can be as low as 10% of the desired credit limit. This deposit is held in a special
savings account. Credit card issuers offer this because they have noticed that delinquencies were
notably reduced when the customer perceives something to lose if the balance is not repaid.
The cardholder of a secured credit card is still expected to make regular payments, as with a
regular credit card, but should they default on a payment, the card issuer has the option of
recovering the cost of the purchases paid to the merchants out of the deposit. The advantage of
the secured card for an individual with negative or no credit history is that most companies report
regularly to the major credit bureaus. This allows building a positive credit history.
Although the deposit is in the hands of the credit card issuer as security in the event of default by
the consumer, the deposit will not be debited simply for missing one or two payments. Usually
the deposit is only used as an offset when the account is closed, either at the request of the
customer or due to severe delinquency (150 to 180 days). This means that an account which is
less than 150 days delinquent will continue to accrue interest and fees, and could result in a
balance which is much higher than the actual credit limit on the card. In these cases the total debt
may far exceed the original deposit and the cardholder not only forfeits their deposit but is left
with an additional debt.
Most of these conditions are usually described in a cardholder agreement which the cardholder
signs when their account is opened.

Secured credit cards are an option to allow a person with a poor credit history or no credit history
to have a credit card which might not otherwise be available. They are often offered as a means
of rebuilding one's credit. Fees and service charges for secured credit cards often exceed those
charged for ordinary non-secured credit cards. For people in certain situations, (for example,
after charging off on other credit cards, or people with a long history of delinquency on various
forms of debt), secured cards are almost always more expensive than unsecured credit cards.
Sometimes a credit card will be secured by the equity in the borrower's home.

Prepaid cards
See also: Stored-value card
A "prepaid credit card" is not a true credit card,[17] since no credit is offered by the card issuer:
the cardholder spends money which has been "stored" via a prior deposit by the cardholder or
someone else, such as a parent or employer. However, it carries a credit-card brand (such as
Discover, Visa, MasterCard, American Express, or JCB) and can be used in similar ways just as
though it were a credit card.[17] Unlike debit cards, prepaid credit cards generally do not require a
PIN. An exception are prepaid credit cards with an EMV chip. These cards do require a PIN if
the payment is processed via Chip and PIN technology.
After purchasing the card, the cardholder loads the account with any amount of money, up to the
predetermined card limit and then uses the card to make purchases the same way as a typical
credit card. Prepaid cards can be issued to minors (above 13) since there is no credit line
involved. The main advantage over secured credit cards (see above section) is that the cardholder
is not required to come up with $500 or more to open an account. With prepaid credit cards
purchasers are not charged any interest but are often charged a purchasing fee plus monthly fees
after an arbitrary time period. Many other fees also usually apply to a prepaid card.[17]
Prepaid credit cards are sometimes marketed to teenagers[17] for shopping online without having
their parents complete the transaction.[18] Teenagers can only use funds that are available on the
card which helps promote financial management to reduce the risk of debt problems later in life.
[19]

Prepaid cards can be used globally. The prepaid card is convenient for payees in developing
countries like Brazil, Russia, India, and China, where international wire transfers and bank
checks are time consuming, complicated and costly.[citation needed]
Because of the many fees that apply to obtaining and using credit-card-branded prepaid cards,
the Financial Consumer Agency of Canada describes them as "an expensive way to spend your
own money".[20] The agency publishes a booklet entitled Pre-paid Cards which explains the
advantages and disadvantages of this type of prepaid card.see #Further reading

Digital cards

A digital card is a digital cloud-hosted virtual representation of any kind of identification card or
payment card, such as a credit card.[citation needed]

Benefits and drawbacks

Benefits to cardholder
The main benefit to the cardholder is convenience. Compared to debit cards and checks, a credit
card allows small short-term loans to be quickly made to a cardholder who need not calculate a
balance remaining before every transaction, provided the total charges do not exceed the
maximum credit line for the card.
Different countries offer different levels of protection. In the UK, for example, the bank is jointly
liable with the merchant for purchases of defective products over 100.[21]
Many credit cards offer rewards and benefits packages, such as enhanced product warranties at
no cost, free loss/damage coverage on new purchases, various insurance protections, for
example, rental car insurance, common carrier accident protection, and travel medical insurance.
Credit cards can also offer a loyalty program, where each purchase is rewarded with points,
which may be redeemed for cash or products. Research has examined whether competition
among card networks may potentially make payment rewards too generous, causing higher
prices among merchants, thus actually impacting social welfare and its distribution, a situation
potentially warranting public policy interventions.[22]
Currently, there are credit cards a 0% intro APR on Balance Transfers and no late fees.[23]
Comparison of credit card benefits in the US
The table below contains a list of benefits offered in the United States for consumer credit cards.
Benefits may vary in other countries or business credit cards.

Return Extension
Extended
Warranty
Price Protection
Loss/Damage
Coverage
Rental Car
Insurance
Main article:

MasterCard[24]
60 days
up to $250
2x Original
up to 1 year
60 days
90 days
15 days: Collision,
theft, vandalism

Visa[25]
American Express[26] Discover[27]
90 days
90 days
90 days
[28]
up to $250
up to $300
up to $500[29]
1 Additional
1 Additional Year
depends
Year
6 years max
4 years max[30]
90 days
Varies
up to $500[31]
90 days
90 days
depends
up to $1,000
up to $500[32]
15 days:
30 days: Collision, 31 days:
Collision,
theft, vandalism[33]
Collision[34]
theft

Damage waiver

Detriments to cardholders
High interest and bankruptcy
Low introductory credit card rates are limited to a fixed term, usually between 6 and 12 months,
after which a higher rate is charged. As all credit cards charge fees and interest, some customers
become so indebted to their credit card provider that they are driven to bankruptcy. Some credit
cards often levy a rate of 20 to 30 percent after a payment is missed.[35] In other cases, a fixed
charge is levied without change to the interest rate. In some cases universal default may apply:
the high default rate is applied to a card in good standing by missing a payment on an unrelated
account from the same provider. This can lead to a snowball effect in which the consumer is
drowned by unexpectedly high interest rates. Further, most card holder agreements enable the
issuer to arbitrarily raise the interest rate for any reason they see fit. First Premier Bank at one
point offered a credit card with a 79.9% interest rate;[36] however, they discontinued this card in
February 2011 because of persistent defaults.[37]
Complex fee structures in the credit card industry limit customers' ability to comparison shop,
help ensure that the industry is not price-competitive and help maximize industry profits.[38]
Research shows that a substantial fraction of consumers (about 40 percent) choose a sub-optimal
credit card agreement, with some incurring hundreds of dollars of avoidable interest costs.[39]
Weakens self regulation
Several studies have shown that consumers are likely to spend more money when they pay by
credit card. Researchers suggest that when people pay using credit cards, they do not experience
the abstract pain of payment.[40] Furthermore, researchers have found that using credit cards can
increase consumption of unhealthy food.[41]

Detriments to society
Inflated pricing for all consumers
Merchants that accept credit cards must pay interchange fees and discount fees on all credit-card
transactions.[42][43] In some cases merchants are barred by their credit agreements from passing
these fees directly to credit card customers, or from setting a minimum transaction amount (no
longer prohibited in the United States, United Kingdom or Australia).[44] The result is that
merchants are induced to charge all customers (including those who do not use credit cards)
higher prices to cover the fees on credit card transactions.[43] The inducement can be strong
because the merchant's fee is a percentage of the sale price, which has a disproportionate effect
on the profitability of businesses that have predominantly credit card transactions, unless
compensated for by raising prices generally. In the United States in 2008 credit card companies
collected a total of $48 billion in interchange fees, or an average of $427 per family, with an
average fee rate of about 2% per transaction.[43]

Benefits to merchants

An example of street markets accepting credit cards. Most simply display the acceptance marks
(stylized logos, shown in the upper-left corner of the sign) of all the cards they accept.
For merchants, a credit card transaction is often more secure than other forms of payment, such
as cheques, because the issuing bank commits to pay the merchant the moment the transaction is
authorized, regardless of whether the consumer defaults on the credit card payment (except for
legitimate disputes, which are discussed below, and can result in charges back to the merchant).
In most cases, cards are even more secure than cash, because they discourage theft by the
merchant's employees and reduce the amount of cash on the premises. Finally, credit cards
reduce the back office expense of processing checks/cash and transporting them to the bank.
Prior to credit cards, each merchant had to evaluate each customer's credit history before
extending credit. That task is now performed by the banks which assume the credit risk. Credit
cards can also aid in securing a sale, especially if the customer does not have enough cash on his
or her person or checking account. Extra turnover is generated by the fact that the customer can
purchase goods and/or services immediately and is less inhibited by the amount of cash in his or
her pocket and the immediate state of his or her bank balance. Much of merchants' marketing is
based on this immediacy.
For each purchase, the bank charges the merchant a commission (discount fee) for this service
and there may be a certain delay before the agreed payment is received by the merchant. The
commission is often a percentage of the transaction amount, plus a fixed fee (interchange rate).

Costs to merchants
Merchants are charged several fees for accepting credit cards. The merchant is usually charged a
commission of around 1 to 4 percent of the value of each transaction paid for by credit card.[45]
The merchant may also pay a variable charge, called a merchant discount rate, for each
transaction.[42] In some instances of very low-value transactions, use of credit cards will
significantly reduce the profit margin or cause the merchant to lose money on the transaction.
Merchants with very low average transaction prices or very high average transaction prices are
more averse to accepting credit cards. In some cases merchants may charge users a "credit card
supplement" (or surcharge), either a fixed amount or a percentage, for payment by credit card.[46]
This practice was prohibited by most credit card contracts in the United States until 2013, when a

major settlement between merchants and credit card companies allowed merchants to levy
surcharges. Most retailers have not started using credit card surcharges, however, for fear of
losing customers.[47] Surcharging is actually illegal in 10 states.[45]
Merchants in the United States have been fighting what they consider to be unfairly high fees
charged by credit card companies in a series of lawsuits that started in 2005. Merchants charged
that the two main credit card processing companies, MasterCard and Visa, used their monopoly
power to levy excessive fees in a class-action lawsuit involving the National Retail Federation
and major retailers such as Wal-Mart. In December 2013, a federal judge approved a $5.7 billion
settlement in the case that offered payouts to merchants who had paid credit card fees, the largest
antitrust settlement in U.S. history. Some large retailers, such as Wal-Mart and Amazon, chose to
not participate in this settlement, however, and have continued their legal fight against the credit
card companies.[47]
Merchants are also required to lease or purchase processing equipment, in some cases this
equipment is provided free of charge by the processor. Merchants must also satisfy data security
compliance standards which are highly technical and complicated. In many cases, there is a delay
of several days before funds are deposited into a merchant's bank account. Because credit card
fee structures are very complicated, smaller merchants are at a disadvantage to analyze and
predict fees.
Finally, merchants assume the risk of chargebacks by consumers.

Security
Main article: Credit card fraud
See also: Wireless identity theft
Credit card security relies on the physical security of the plastic card as well as the privacy of the
credit card number. Therefore, whenever a person other than the card owner has access to the
card or its number, security is potentially compromised. Once, merchants would often accept
credit card numbers without additional verification for mail order purchases. It's now common
practice to only ship to confirmed addresses as a security measure to minimise fraudulent
purchases. Some merchants will accept a credit card number for in-store purchases, whereupon
access to the number allows easy fraud, but many require the card itself to be present, and
require a signature. A lost or stolen card can be cancelled, and if this is done quickly, will greatly
limit the fraud that can take place in this way. European banks can require a cardholder's security
PIN be entered for in-person purchases with the card.
The PCI DSS is the security standard issued by the PCI SSC (Payment Card Industry Security
Standards Council). This data security standard is used by acquiring banks to impose cardholder
data security measures upon their merchants.
The goal of the credit card companies is not to eliminate fraud, but to "reduce it to manageable
levels".[48] This implies that fraud prevention measures will be used only if their cost are lower

than the potential gains from fraud reduction, whereas high-cost low-return measures will not be
used as would be expected from organisations whose goal is profit maximisation.
Internet fraud may be by claiming a chargeback which is not justified ("friendly fraud"), or
carried out by the use of credit card information which can be stolen in many ways, the simplest
being copying information from retailers, either online or offline. Despite efforts to improve
security for remote purchases using credit cards, security breaches are usually the result of poor
practice by merchants. For example, a website that safely uses SSL to encrypt card data from a
client may then email the data, unencrypted, from the webserver to the merchant; or the
merchant may store unencrypted details in a way that allows them to be accessed over the
Internet or by a rogue employee; unencrypted card details are always a security risk. Even
encryption data may be cracked.
Controlled Payment Numbers (also known as virtual credit cards or disposable credit cards) are
another option for protecting against credit card fraud where presentation of a physical card is
not required, as in telephone and online purchasing. These are one-time use numbers that
function as a payment card and are linked to the user's real account, but do not reveal details, and
cannot be used for subsequent unauthorised transactions. They can be valid for a relatively short
time, and limited to the actual amount of the purchase or a limit set by the user. Their use can be
limited to one merchant. If the number given to the merchant is compromised, it will be rejected
if an attempt is made to use it a second time.
A similar system of controls can be used on physical cards. Technology provides the option for
banks to support many other controls too that can be turned on and off and varied by the credit
card owner in real time as circumstances change (i.e., they can change temporal, numerical,
geographical and many other parameters on their primary and subsidiary cards). Apart from the
obvious benefits of such controls: from a security perspective this means that a customer can
have a Chip and PIN card secured for the real world, and limited for use in the home country. In
this eventuality a thief stealing the details will be prevented from using these overseas in non
chip and pin EMV countries. Similarly the real card can be restricted from use on-line so that
stolen details will be declined if this tried. Then when card users shop online they can use virtual
account numbers. In both circumstances an alert system can be built in notifying a user that a
fraudulent attempt has been made which breaches their parameters, and can provide data on this
in real time. This is the optimal method of security for credit cards, as it provides very high
levels of security, control and awareness in the real and virtual world.
Additionally, there are security features present on the physical card itself in order to prevent
counterfeiting. For example, most modern credit cards have a watermark that will fluoresce
under ultraviolet light.[citation needed] Most major credit cards have a hologram. A Visa card has a
letter V superimposed over the regular Visa logo and a MasterCard has the letters MC across the
front of the card. Older Visa cards have a bald eagle or dove across the front. In the
aforementioned cases, the security features are only visible under ultraviolet light and are
invisible in normal light.
The United States Secret Service, Federal Bureau of Investigation, U.S. Immigration and
Customs Enforcement, and U.S. Postal Inspection Service are responsible for prosecuting

criminals who engage in credit card fraud in the United States.[citation needed] However, they do not
have the resources to pursue all criminals, and in general they only prosecute cases exceeding
$5,000.
Three improvements to card security have been introduced to the more common credit card
networks, but none has proven to help reduce credit card fraud so far. First, the cards themselves
are being replaced with similar-looking tamper-resistant smart cards which are intended to make
forgery more difficult. The majority of smart card (IC card) based credit cards comply with the
EMV (Europay MasterCard Visa) standard. Second, an additional 3 or 4 digit Card Security
Code (CSC) is now present on the back of most cards, for use in card not present transactions.
Stakeholders at all levels in electronic payment have recognized the need to develop consistent
global standards for security that account for and integrate both current and emerging security
technologies. They have begun to address these needs through organizations such as PCI DSS
and the Secure POS Vendor Alliance.[49]

Code 10
Code 10 calls are made when merchants are suspicious about accepting a credit card.
The operator then asks the merchant a series of YES or NO questions to find out whether the
merchant is suspicious of the card or the cardholder. The merchant may be asked to retain the
card if it is safe to do so. The merchant may receive a reward for returning a confiscated card to
the issuing bank, especially if an arrest is made.[50][51][52][53]

Costs
Credit card issuers (banks) have several types of costs:

Interest expenses
Banks generally borrow the money they then lend to their customers. As they receive very lowinterest loans from other firms, they may borrow as much as their customers require, while
lending their capital to other borrowers at higher rates. If the card issuer charges 15% on money
lent to users, and it costs 5% to borrow the money to lend, and the balance sits with the
cardholder for a year, the issuer earns 10% on the loan. This 10% difference is the "net interest
spread" and the 5% is the "interest expense".

Operating costs
This is the cost of running the credit card portfolio, including everything from paying the
executives who run the company to printing the plastics, to mailing the statements, to running the
computers that keep track of every cardholder's balance, to taking the many phone calls which
cardholders place to their issuer, to protecting the customers from fraud rings. Depending on the
issuer, marketing programs are also a significant portion of expenses.

Charge offs
When a cardholder becomes severely delinquent on a debt (often at the point of six months
without payment), the creditor may declare the debt to be a charge-off. It will then be listed as
such on the debtor's credit bureau reports. (Equifax, for instance, lists "R9" in the "status"
column to denote a charge-off.)
A charge-off is considered to be "written off as uncollectable". To banks, bad debts and fraud are
part of the cost of doing business.
However, the debt is still legally valid, and the creditor can attempt to collect the full amount for
the time periods permitted under state law, which is usually three to seven years. This includes
contacts from internal collections staff, or more likely, an outside collection agency. If the
amount is large (generally over $1,5002,000), there is the possibility of a lawsuit or arbitration.

Rewards
Many credit card customers receive rewards, such as frequent flyer points, gift certificates, or
cash back as an incentive to use the card. Rewards are generally tied to purchasing an item or
service on the card, which may or may not include balance transfers, cash advances, or other
special uses. Depending on the type of card, rewards will generally cost the issuer between
0.25% and 2.0% of the spread. Networks such as Visa or MasterCard have increased their fees to
allow issuers to fund their rewards system. Some issuers discourage redemption by forcing the
cardholder to call customer service for rewards. On their servicing website, redeeming awards is
usually a feature that is very well hidden by the issuers.[citation needed] With a fractured and
competitive environment, rewards points cut dramatically into an issuer's bottom line, and
rewards points and related incentives must be carefully managed to ensure a profitable portfolio.
Unlike unused gift cards, in whose case the breakage in certain US states goes to the state's
treasury, unredeemed credit card points are retained by the issuer.

Fraud
In relative numbers the values lost in bank card fraud are minor, calculated in 2006 at 7 cents per
100 dollars worth of transactions (7 basis points).[54] In 2004, in the UK, the cost of fraud was
over 500 million.[55] When a card is stolen, or an unauthorized duplicate made, most card issuers
will refund some or all of the charges that the customer has received for things they did not buy.
These refunds will, in some cases, be at the expense of the merchant, especially in mail order
cases where the merchant cannot claim sight of the card. In several countries, merchants will lose
the money if no ID card was asked for, therefore merchants usually require ID card in these
countries. Credit card companies generally guarantee the merchant will be paid on legitimate
transactions regardless of whether the consumer pays their credit card bill. Most banking services
have their own credit card services that handle fraud cases and monitor for any possible attempt
at fraud. Employees that are specialized in doing fraud monitoring and investigation are often
placed in Risk Management, Fraud and Authorization, or Cards and Unsecured Business. Fraud
monitoring emphasizes minimizing fraud losses while making an attempt to track down those
responsible and contain the situation. Credit card fraud is a major white collar crime that has

been around for many decades, even with the advent of the chip based card (EMV) that was put
into practice in some countries to prevent cases such as these. Even with the implementation of
such measures, credit card fraud continues to be a problem.

Revenues
Offsetting the costs are the following revenues:

Interchange fee
Main article: Interchange fee
In addition to fees paid by the card holder, merchants must also pay interchange fees to the cardissuing bank and the card association.[56][57] For a typical credit card issuer, interchange fee
revenues may represent about a quarter of total revenues.[58]
These fees are typically from 1 to 6 percent of each sale, but will vary not only from merchant to
merchant (large merchants can negotiate lower rates[58]), but also from card to card, with business
cards and rewards cards generally costing the merchants more to process. The interchange fee
that applies to a particular transaction is also affected by many other variables including: the type
of merchant, the merchant's total card sales volume, the merchant's average transaction amount,
whether the cards were physically present, how the information required for the transaction was
received, the specific type of card, when the transaction was settled, and the authorized and
settled transaction amounts. In some cases, merchants add a surcharge to the credit cards to cover
the interchange fee, encouraging their customers to instead use cash, debit cards, or even
cheques.

Interest on outstanding balances

Interest charges vary widely from card issuer to card issuer. Often, there are "teaser" rates in
effect for initial periods of time (as low as zero percent for, say, six months), whereas regular
rates can be as high as 40 percent. In the U.S. there is no federal limit on the interest or late fees
credit card issuers can charge; the interest rates are set by the states, with some states such as
South Dakota, having no ceiling on interest rates and fees, inviting some banks to establish their
credit card operations there. Other states, for example Delaware, have very weak usury laws. The
teaser rate no longer applies if the customer does not pay their bills on time, and is replaced by a
penalty interest rate (for example, 23.99%) that applies retroactively.

Fees charged to customers

The major fees are for:

Late or overdue payments

Charges that result in exceeding the credit limit on the card (whether deliberately or by
mistake), called overlimit fees

Returned cheque fees or payment processing fees (e.g. phone payment fee)

Cash advances and convenience cheques (often 3% of the amount)

Transactions in a foreign currency (as much as 3% of the amount). A few financial

institutions do not charge a fee for this.

Membership fees (annual or monthly), sometimes a percentage of the credit limit.

Exchange rate loading fees (sometimes these might not be reported on the customer's
statement, even when applied).[59] The variation of exchange rates applied by different
credit cards can be very substantial, as much as 10% according to a Lonely Planet report
in 2009.[60]

In the U.S., the Credit CARD Act of 2009 specifies that credit card companies must send
cardholders a notice 45 days before they can increase or change certain fees. This includes
annual fees, cash advance fees, and late fees.[61]

Over limit charges

Consumers who keep their account in good order by always staying within their credit limit, and
always making at least the minimum monthly payment will see interest as the biggest expense
from their card provider. Those who are not so careful and regularly surpass their credit limit or
are late in making payments are exposed to multiple charges that were typically as high as 25
35[62] until a ruling from the Office of Fair Trading[63] that they would presume charges over 12
to be unfair which led the majority of card providers to reduce their fees to 12.

United States
The Credit CARD Act of 2009 requires that consumers "opt-in" to over-limit charges. Some card
issuers have therefore commenced solicitations requesting customers to opt into overlimit fees,
presenting this as a benefit as it may avoid the possibility of a future transaction being declined.
Other issuers have simply discontinued the practice of charging overlimit fees. Whether a
customer opts into the overlimit fee or not, banks will in practice have discretion as to whether
they choose to authorize transactions above the credit limit or not. Of course, any approved over
limit transactions will only result in an overlimit fee for those customers who have opted into the
fee. This legislation took effect on February 22, 2010. Following this Act, the companies are now
required by law to show on a customer's bills how long it would take them to pay off the balance.

United Kingdom

The higher fees originally charged were claimed to be designed to recoup the card operator's
overall business costs and to try to ensure that the credit card business as a whole generated a
profit, rather than simply recovering the cost to the provider of the limit breach, which has been
estimated as typically between 34. Profiting from a customer's mistakes is arguably not
permitted under UK common law, if the charges constitute penalties for breach of contract, or
under the Unfair Terms in Consumer Contracts Regulations 1999.
Subsequent rulings in respect of personal current accounts suggest that the argument that these
charges are penalties for breach of contract is weak, and given the Office of Fair Trading's ruling
it seems unlikely that any further test case will take place.
Whilst the law remains in the balance, many consumers have made claims against their credit
card providers for the charges that they have incurred, plus interest that they would have earned
had the money not been deducted from their account. It is likely that claims for amounts charged
in excess of 12 will succeed, but claims for charges at the OFT's 12 threshold level are more
contentious.

Neutral consumer resources

Canada
The Government of Canada maintains a database of the fees, features, interest rates and reward
programs of nearly 200 credit cards available in Canada. This database is updated on a quarterly
basis with information supplied by the credit card issuing companies. Information in the database
is published every quarter on the website of the Financial Consumer Agency of Canada (FCAC).
Information in the database is published in two formats. It is available in PDF comparison tables
that break down the information according to type of credit card, allowing the reader to compare
the features of, for example, all the student credit cards in the database.
The database also feeds into an interactive tool on the FCAC website.[64] The interactive tool uses
several interview-type questions to build a profile of the user's credit card usage habits and
needs, eliminating unsuitable choices based on the profile, so that the user is presented with a
small number of credit cards and the ability to carry out detailed comparisons of features, reward
programs, interest rates, etc.

Controversy
Credit card debt has increased steadily. Since the late 1990s, lawmakers, consumer advocacy
groups, college officials and other higher education affiliates have become increasingly
concerned about the rising use of credit cards among college students. The major credit card
companies have been accused of targeting a younger audience, especially college students, many
of whom are already in debt with college tuition fees and college loans and who typically are less
experienced at managing their own finances. Credit card debt may also negatively affect their
grades as they are likely to work more both part and full-time positions.[citation needed]

Another controversial area is the universal default feature of many North American credit card
contracts. When a cardholder is late paying a particular credit card issuer, that card's interest rate
can be raised, often considerably. With universal default, a customer's other credit cards, for
which the customer may be current on payments, may also have their rates and/or credit limit
changed. The universal default feature allows creditors to periodically check cardholders' credit
portfolios to view trade, allowing these other institutions to decrease the credit limit and/or
increase rates on cardholders who may be late with another credit card issuer. Being late on one
credit card will potentially affect all the cardholder's credit cards. Citibank voluntarily stopped
this practice in March 2007 and Chase stopped the practice in November 2007.[65]
The fact that credit card companies can change the interest rate on debts that were incurred when
a different rate of interest was in place is similar to adjustable rate mortgages where interest rates
on current debt may rise. However, in both cases, this is agreed to in advance, and is a trade off
that allows a lower initial rate as well as the possibility of an even lower rate (mortgages, if
interest rates fall) or perpetually keeping a below-market rate (credit cards, if the user makes
their debt payments on time). The universal default practice was encouraged by federal
regulators, particularly those at the Office of the Comptroller of the Currency (OCC), as a means
of managing the changing risk profiles of cardholders.[citation needed]
Another controversial area is the trailing interest issue. Trailing interest is the practice of
charging interest on the entire bill no matter what percentage of it is paid. US Senator Carl Levin
raised the issue of millions of Americans affected by hidden fees, compounding interest and
cryptic terms. Their woes were heard in a Senate Permanent Subcommittee on Investigations
hearing which was chaired by Senator Levin, who said that he intends to keep the spotlight on
credit card companies and that legislative action may be necessary to purge the industry.[66] In
2009, the C.A.R.D. Act was signed into law, enacting protections for many of the issues Levin
had raised.
In the United States, some have called for Congress to enact additional regulations on the
industry to expand the disclosure box clearly disclosing rate hikes, use plain language,
incorporate balance payoff disclosures, and also to outlaw universal default. At a congress
hearing around March 1, 2007, Citibank announced it would no longer practice this, effective
immediately. Opponents of such regulation argue that customers must become more proactive
and self-responsible in evaluating and negotiating terms with credit providers. Some of the
nation's influential top credit card issuers, which are among the top fifty corporate contributors to
political campaigns, successfully opposed it.[citation needed]

Hidden costs
In the United Kingdom, merchants won the right through The Credit Cards (Price
Discrimination) Order 1990[67] to charge customers different prices according to the payment
method. As of 2007, the United Kingdom was one of the world's most credit card-intensive
countries, with 2.4 credit cards per consumer, according to the UK Payments Administration Ltd.
[68]

In the United States until 1984, federal law prohibited surcharges on card transactions. Although
the federal Truth in Lending Act provisions that prohibited surcharges expired that year, a
number of states have since enacted laws that continue to outlaw the practice; California,
Colorado, Connecticut, Florida, Kansas, Massachusetts, Maine, New York, Oklahoma, and Texas
have laws against surcharges. As of 2006, the United States probably had one of the world's
highest if not the top ratio of credit cards per capita, with 984 million bank-issued Visa and
MasterCard credit card and debit card accounts alone for an adult population of roughly 220
million people.[69] The credit card per US capita ratio was nearly 4:1 as of 2003[70] and as high as
5:1 as of 2006.[71]

Credit cards in ATMs

Many credit cards can also be used in an ATM to withdraw money against the credit limit
extended to the card, but many card issuers charge interest on cash advances before they do so on
purchases. The interest on cash advances is commonly charged from the date the withdrawal is
made, rather than the monthly billing date. Many card issuers levy a commission for cash
withdrawals, even if the ATM belongs to the same bank as the card issuer. Merchants do not offer
cashback on credit card transactions because they would pay a percentage commission of the
additional cash amount to their bank or merchant services provider, thereby making it
uneconomical. Discover is a notable exception to the above. A customer with a Discover card
may get up to $50 cash back if the merchant allows it. This amount is simply added to the card
holder's cost of the transaction and no extra fees are charged as the transaction is not considered
a cash advance.
Many credit card companies will also, when applying payments to a card, do so, for the matter at
hand, at the end of a billing cycle, and apply those payments to everything before cash advances.
For this reason, many consumers have large cash balances, which have no grace period and incur
interest at a rate that is (usually) higher than the purchase rate, and will carry those balances for
years, even if they pay off their statement balance each month.

Credit cards as funding for entrepreneurs

Credit cards are a risky way for entrepreneurs to acquire capital for their start ups when more
conventional financing is unavailable. Len Bosack and Sandy Lerner used personal credit
cards[72] to start Cisco Systems. Larry Page and Sergey Brin's start up of Google was financed by
credit cards to buy the necessary computers and office equipment, more specifically "a terabyte
of hard disks".[73] Similarly, filmmaker Robert Townsend financed part of Hollywood Shuffle
using credit cards.[74] Director Kevin Smith funded Clerks in part by maxing out several credit
cards. Actor Richard Hatch also financed his production of Battlestar Galactica: The Second
Coming partly through his credit cards. Famed hedge fund manager Bruce Kovner began his
career (and, later on, his firm Caxton Associates) in financial markets by borrowing from his
credit card. UK entrepreneur James Caan (as seen on Dragons' Den) financed his first business
using several credit cards.

Problems

Travelers from the U.S. had encountered problems abroad because many countries have
introduced smart cards, but the U.S. had not. As of 2010, the U.S. banking system had not
updated the cards and associated readers in the U.S., stating that the costs were prohibitive. As of
2015, the smart cards are now introduced and used in the United States.[75]

American Express
From Wikipedia, the free encyclopedia
American Express Company

Type
Traded as
Industry
Predecessor
Founded
Headquarters
Area served
Key people
Products
Services
Revenue
Operating
income
Net income

Public
NYSE: AXP
Dow Jones Industrial Average
Component
S&P 500 Component[1]
Banking, Financial services
Livingston, Fargo & Company
Wells, Butterfield & Company
Wells & Company[2][3]
March 18, 1850; 166 years ago
Buffalo, New York, U.S.
Three World Financial Center, New
York City, New York, U.S.
Worldwide
Kenneth Chenault
(Chairman & CEO)[4]
Charge cards, Credit cards,
Traveler's cheque
Finance, Insurance, Travel
US$ 34.44 billion (2015)[5]
US$ 7.93 billion (2015)[5]
US$ 5.16 billion (2015)[5]

Total assets
Total equity
Number of
employees
Website

US$ 161.0 billion (2015)[5]

US$ 21.0 billion (2015)[5]
54,000 (2015)[5]
www.americanexpress.com

The American Express Company, also known as Amex, is an American multinational financial
services corporation headquartered in Manhattan's Three World Financial Center in New York
City, United States. Founded in 1850, it is one of the 30 components of the Dow Jones Industrial
Average.[6] The company is best known for its credit card, charge card, and traveler's cheque
businesses. Amex cards account for approximately 24% of the total dollar volume of credit card
transactions in the US.[7][8]
BusinessWeek and Interbrand ranked American Express as the 22nd most valuable brand in the
world, estimating the brand to be worth US$14.97 billion.[9] Fortune listed Amex as one of the
top 20 Most Admired Companies in the World.[10]
The company's logo, adopted in 1958, is a Centurion[11] whose image appears on the company's
traveler's cheques, charge cards and credit cards.

Contents

1 Early history
o 1.1 American Express buildings
o 1.2 Nationwide expansion
o 1.3 Financial services
o 1.4 Loss of railroad express business
o 1.5 Investment banking

2 Recent history
o 2.1 Charge card services
o 2.2 "Boston Fee Party"
o 2.3 Cable TV
o 2.4 Conversion to bank holding company

o 2.5 Controversy in the UK

o 2.6 Acquisition of Loyalty Partner (2011)
o 2.7 Costco TrueEarnings card

3 Business model
o 3.1 Typical credit card business model

4 Card products
o 4.1 Consumer cards
o 4.2 Card design

4.2.1 ExpressPay

o 4.3 Small business services (also known as American Express OPEN)

o 4.4 Commercial cards and services
o 4.5 Non-proprietary cards
o 4.6 Merchant account

5 Non-card products
o 5.1 Traveler's checks
o 5.2 Shearson/American Express
o 5.3 Financial advisors
o 5.4 Travel
o 5.5 Publishing
o 5.6 Individual banking

6 Advertising
o 6.1 Don't Leave Home Without Them

o 6.2 The Adventures of Seinfeld & Superman

o 6.3 My life. My card.
o 6.4 C F. Frost
o 6.5 Cause marketing
o 6.6 Animals

7 Workplace
o 7.1 Offices
o 7.2 Job satisfaction

8 Management and corporate governance

9 In popular culture

10 See also

11 References

12 External links

Early history

American Express Co. shipping receipt, New York City to St. Louis, MO (August 6, 1860)
In 1850, American Express was started as an express mail business in Buffalo, New York.[12] It
was founded as a joint stock corporation by the merger of the express companies owned by
Henry Wells (Wells & Company), William G. Fargo (Livingston, Fargo & Company), and John
Warren Butterfield (Wells, Butterfield & Company, the successor earlier in 1850 of Butterfield,
Wasson & Company).[2][3] Wells and Fargo also started Wells Fargo & Co. in 1852 when

Butterfield and other directors objected to the proposal that American Express extend its
operations to California.
American Express initially established its headquarters in a building at the intersection of Jay
Street and Hudson Street in what was later called the Tribeca section of Manhattan. For years it
enjoyed a virtual monopoly on the movement of express shipments (goods, securities, currency,
etc.) throughout New York State. In 1874, American Express moved its headquarters to 65
Broadway in what was becoming the Financial District of Manhattan, a location it was to retain
through two buildings.[13]

American Express buildings

In 1854, the American Express Co. purchased a lot on Vesey Street in New York City as the site
for its stables. The company's first New York headquarters was an 1858 marble Italianate palazzo
at 5561 Hudson Street, which had a busy freight depot on the ground story with a spur line from
the Hudson River Railroad. A stable was constructed in 1867, five blocks north at 48 Hubert
Street.
The company prospered sufficiently that headquarters were moved in 1874 from the wholesale
shipping district to the budding Financial District, and into rented offices in two five-story
brownstone commercial buildings at 63 and 65 Broadway that were owned by the Harmony
family.[14]
In 1880, American Express built a new warehouse behind the Broadway Building at 46 Trinity
Place. The designer is unknown, but it has a faade of brick arches that are redolent of preskyscraper New York. American Express has long been out of this building, but it still bears a
terracotta seal with the American Express Eagle.[15] In 189091 the company constructed a new
ten-story building by Edward H. Kendall on the site of its former headquarters on Hudson Street.
By 1903, the company had assets of some $28 million, second only to the National City Bank of
New York among financial institutions in the city. To reflect this, the company purchased the
Broadway buildings and site.[14]

The American Express Company Building at 65 Broadway the former headquarters of the
American Express Company

At the end of the Wells-Fargo reign in 1914, an aggressive new president, George Chadbourne
Taylor (18681923), who had worked his way up through the company over the previous thirty
years, decided to build a new headquarters. The old buildings, dubbed by the New York Times as
"among the ancient landmarks" of lower Broadway, were inadequate for such a rapidly
expanding concern. After some delays due to the war in Europe, the 21-story neo-classical
American Express Co. Building was constructed in 191617 to the design of James L.
Aspinwall, of the firm of Renwick, Aspinwall & Tucker, the successor to the architectural
practice of the eminent James Renwick, Jr.. The building consolidated the two lots of the former
buildings with a single address: 65 Broadway. This building was part of the "Express Row"
section of lower Broadway at the time. The building completed the continuous masonry wall of
its block-front and assisted in transforming Broadway into the "canyon" of neo-classical masonry
office towers familiar to this day[16]
American Express sold this building in 1975, but retained travel services there. The building was
also the headquarters over the years of other prominent firms, including investment bankers J.&
W. Seligman & Co. (194074), the American Bureau of Shipping, a maritime concern (1977
86), and currently J.J. Kenny, and Standard & Poor's, who has renamed the building for itself.[14]
[16]

Nationwide expansion
American Express extended its reach nationwide by arranging affiliations with other express
companies (including Wells Fargo the replacement for the two former companies that merged
to form American Express), railroads, and steamship companies.[13]

Financial services
In 1882, American Express started its expansion in the area of financial services by launching a
money order business[13] to compete with the United States Post Office's money orders.
Sometime between 1888 and 1890, J. C. Fargo took a trip to Europe and returned frustrated and
infuriated. Despite the fact that he was president of American Express and that he carried with
him traditional letters of credit, he found it difficult to obtain cash anywhere except in major
cities. Fargo went to Marcellus Flemming Berry and asked him to create a better solution than
the letter of credit. Berry introduced the American Express Traveler's Cheque which was
launched in 1891 in denominations of $10, $20, $50, and $100.[17]
Traveler's cheques established American Express as a truly international company. In 1914, at the
onset of World War I, American Express in Europe was among the few companies to honor the
letters of credit (issued by various banks) held by Americans in Europe, because other financial
institutions refused to assist these stranded travelers.

Loss of railroad express business

American Express became one of the monopolies that President Theodore Roosevelt had the
Interstate Commerce Commission (ICC) investigate during his administration. The interest of the

ICC was drawn to its strict control of the railroad express business. However, the solution did not
come immediately to hand.[13] The solution to this problem came as a coincidence to other
problems during World War I.
During the winter of 1917, the United States suffered a severe coal shortage and on December 26
President Woodrow Wilson commandeered the railroads on behalf of the United States
government to move federal troops, their supplies, and coal. Treasury Secretary William Gibbs
McAdoo was assigned the task of consolidating the railway lines for the war effort. All contracts
between express companies and railroads were nullified and McAdoo proposed that all existing
express companies be consolidated into a single company to serve the country's needs. This
ended American Express's express business, and removed them from the ICCs interest. The
result was that a new company called the American Railway Express Agency formed in July
1918. The new entity took custody of all the pooled equipment and property of existing express
companies (the largest share of which, 40%, came from American Express, who had owned the
rights to the express business over 71,280 miles (114,710 km) of railroad lines, and had 10,000
offices, with over 30,000 employees).

Investment banking
During the 1980s, American Express embarked on an effort to become a financial services
supercompany and made a number of acquisitions to create an investment banking arm. In mid1981 it purchased Sanford I. Weill's Shearson Loeb Rhoades, the second largest securities firm in
the United States to form Shearson/American Express.

Shearson Lehman logo

After the purchase of Shearson, Weill was given the position of president of American Express in
1983. Weill grew increasingly unhappy with responsibilities within American Express and his
conflicts with American Express' CEO James D. Robinson III. Weill soon realized that he was
not positioned to be named CEO and left in August 1985. In 1984, American Express acquired
the investment banking and trading firm, Lehman Brothers Kuhn Loeb, and added it to the
Shearson family, creating Shearson Lehman/American Express. It was Lehman's CEO and
former trader Lewis Glucksman who would next lead Shearson Lehman/American Express.
In 1984, Shearson/American Express purchased the 90-year-old Investors Diversified Services,
bringing with it a fleet of financial advisors and investment products. In 1988, Shearson Lehman
acquired E.F. Hutton & Co., a brokerage firm founded in 1904, this was merged with the

investment banking business and the investment banking arm was renamed Shearson Lehman
Hutton, Inc.[18]
However, when Harvey Golub became CEO of American Express in 1993, American Express
decided to get out of the investment banking business and negotiated the sale of Shearson's retail
brokerage and asset management business to Primerica. The Shearson business was merged with
Primerica's Smith Barney to create Smith Barney Shearson. Ultimately, the Shearson name was
dropped in 1994.[19]
In 1994, American Express spun off of the remaining investment banking and institutional
businesses as Lehman Brothers Holdings Inc. After almost fifteen years of independence,
Lehman Brothers filed for bankruptcy protection in 2008 as part of the late2000s financial
crisis.

Recent history
Current CEO Ken I. Chenault took over leadership of American Express in 2001 from Harvey
Golub, CEO from 1993 to 2001. Prior to that, the company was headed by James D. Robinson
III from 1977 to 1993.

Charge card services

American Express Tower (tallest, left) in New York City

American Express executives discussed the possibility of launching a travel charge card as early
as 1946, but it was not until Diners Club launched their card in March 1950 that American
Express began seriously to consider the possibility. At the end of 1957, American Express CEO
Ralph Reed decided to get into the card business, and by the launch date of October 1, 1958
public interest had become so significant that they issued 250,000 cards prior to the official
launch date. The card was launched with an annual fee of $6, $1 higher than Diners Club, to be
seen as a premium product. The first cards were paper, with the account number and
cardmember's name typed. It was not until 1959 that American Express began issuing embossed
ISO/IEC 7810 plastic cards, an industry first.[20]

In 1966, American Express introduced the Gold Card and in 1984 the Platinum Card, clearly
defining different market segments within its own business, a practice that has proliferated across
a broad array of industries. The Platinum Card was billed as super-exclusive and had a $250
annual fee (it is currently $450). It was offered by invitation only to American Express customers
with at least 2 years of tenure, significant spending, and excellent payment history; it is now
open to applications on request.
In 1987, American Express introduced the Optima card, their first credit card product.
Previously, all American Express cards had to be paid in full each month, but Optima allowed
customers to carry a balance (the charge cards also now allow extended payment options on
qualifying charges based on credit availability). Although American Express no longer accepts
applications for the Optima brand of cards, since July 13, 2009, Optima cards are still listed on
the American Express website, as a reference to existing members only. According to American
Express, Optima accounts were not converted or closed. However, Blue from American Express
has prevailed as the replacement for the original Optima style of credit card. Blue includes
multiple benefits free of charge, unlike Optima, including the Membership Rewards program. In
October 2012, The Consumer Financial Protection Bureau (CFPB) announced an enforcement
action with orders requiring three American Express subsidiaries to refund an estimated $85
million to approximately 250,000 customers for illegal card practices. This action was the result
of a multi-part federal investigation which found that at every stage of the consumer experience,
from marketing to enrollment to payment to debt collection, American Express violated
consumer protection laws. American Express sent letters to some previous customers: "We invite
you to apply for the Optima Card from American Express. This opportunity is in connection with
a settlement solicitation, which did not clearly disclose that a settlement could prevent you from
being approved for a new account with us in the future. This is in response to an enforcement
action by the Federal Deposit Insurance Corporation and Consumer Financial Protection Bureau
regarding this issue. Your attached application will be approved unless we determine that you do
not have the financial capacity to make the minimum payment on this new Optima Card account,
or we receive the application after 04/25/2013."
In April 1992, American Express spun off its subsidiary, First Data Corp., in an IPO. Then, in
October 1996, the company distributed the remaining majority of its holdings in First Data
Corp., reducing its ownership to less than 5%.
In 1994, the Optima True Grace card was introduced. The card was unique in that it offered a
grace period on all purchases whether a balance was carried on the card or not (as opposed to
traditional revolving credit cards which charge interest on new purchases if so much as $1 was
carried over). The card was discontinued a few years later; the now discontinued One from
American Express card offered a similar feature called "Interest Protection."

"Boston Fee Party"

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From early 1980s until the early 1990s, American Express was known for cutting its merchant
fees (also known as a "discount rate") to merchants and restaurants if they accepted only
American Express and no other credit or charge cards. This prompted competitors such as Visa
and MasterCard to cry foul for a while as the tactics "locked" restaurants into American Express.
The practice ended in 1991, as several restaurants in Boston started accepting and encouraging
the use of Visa and MasterCard because of their far lower fees as compared to American Express'
fees at the time (which were about 4% for each transaction versus around 1.2% at the time for
Visa and MasterCard). A few even stopped accepting American Express credit and charge cards.
The revolt, known as the "Boston Fee Party" (alluding to the Boston Tea Party), was orchestrated
by a PR firm hired and paid by Discover Card. The campaign spread to over 250 restaurants
across the United States, including restaurants in other cities such as New York City, Chicago,
and Los Angeles. In response, American Express reduced its discount rate gradually to compete
more effectively and add new merchants such as supermarkets and drugstores to its network.
Many elements of the exclusive acceptance program were also phased out and American Express
pursued other programs to effectively encourage businesses to add American Express cards to
their existing list of payment options.

Cable TV
American Express formed a venture with Warner Communications in 1979 called Warner-Amex
Satellite Entertainment, which created MTV, Nickelodeon, and The Movie Channel. The
partnership lasted only until 1984. The properties were sold to Viacom soon after.

Conversion to bank holding company

On November 10, 2008, during the financial crisis of 2008, the company won Federal Reserve
System approval to convert to a bank holding company, making it eligible for government help
under the Troubled Asset Relief Program.[1][21] At that time, American Express had total
consolidated assets of about $127 billion.[21] In June 2009, $3.39 billion in TARP funds were
repaid plus $74.4 million in dividend payments.
In July 2009, they ended their obligations under TARP by buying back $340 million in Treasury
warrants.[22][23][24]

Controversy in the UK
In November 2010, the UK division of American Express was cautioned by the Office of Fair
Trading for the use of controversial charging orders against those in debt.[25] The regulator said
that the company was one of four companies who were encouraging customers to turn their
unsecured credit card debts into a form of secured debt.

Acquisition of Loyalty Partner (2011)

In March 2011, American Express completed the $685 million acquisition of Munich-based
Loyalty Partner, operator of the Payback loyalty program in Germany and Poland and the i-Mint
loyalty program in India.[26]

Costco TrueEarnings card

The TrueEarnings Costco-American Express card and Costco-American Express business card,
promoted in Costco stores, was issued between 2004 and 2016. The cards did not have annual
fees and offered cash back on certain tiers of purchases. The TrueEarnings card was an extension
of an exclusive credit card network deal between Costco and American Express dating to 1999.
On February 12, 2015, it was announced that the partnership between American Express and
Costco would dissolve March 31, 2016, which was later extended to June 19, 2016. American
Express and Costco failed to reach an agreement that would have continued their partnership. By
March 2, 2015, Costco announced that Citigroup would become the exclusive issuer of Costco's
credit cards and that Visa Inc. would replace American Express as the exclusive credit card
network accepted at Costcos stores. The Costco deal with Visa began on June 20, 2016, and in
addition to the new Citi card, Costco accepted all other Visa cards.[27][28] All TrueEarnings card
accounts and balances held by American Express were sold to Citigroup, and new Costco
Anywhere Visa cards were sent to Costco members prior to the switch date. Concurrent with the
switch to Visa in their stores, Costco no longer accepted American Express in their US stores, at
Costco.com, or through Costco Travel.
Costco was the last major US merchant that exclusively accepted American Express for generalpurpose credit cards. In November 2011, Neiman Marcus, which gave similar general-purpose
card exclusivity to American Express since 1987, began accepting Visa and Mastercard. Costco's
Canadian stores had ended their exclusive deal with American Express in 2014 in favor of one
with Capital One and Mastercard. However, the deal with Capital One was different from the
Citi deal because Capital One did not buy accounts and balances from American Express. This
required Costco Canada members to obtain new cards.
The Costco partnership represented 8%, or $80 billion, of AmEx's billed business and about
20%, or about $14 billion, of its interest-bearing credit portfolio, according to Richard Shane of
JPMorgan Chase & Co.[28]

Business model
Typical credit card business model
When a consumer makes a purchase using a credit or charge card, a small portion of the price is
paid as a fee (known as the merchant discount), with the merchant keeping the remainder. There
are typically three parties who split this fee amongst themselves:
1. Acquiring bank: the bank which processes credit card transactions for a merchant,
including crediting the merchant's account for the value charged to a credit card less all
fees.
2. Issuing bank: the bank which issues the consumer's credit card. This is the bank a
consumer is responsible for repaying after making a credit card purchase. The issuer's
share of the merchant discount is known as the interchange fee.

3. Network: the link between acquiring banks and issuing banks. These banks have
relationships with a network, rather than with each other, for fulfilling card purchases.
This allows a card issued by a community bank in Peru to be used at a shop in South
Africa, for instance, without requiring the banks to have a direct relationship with each
other. The two largest networks in the world are Visa and MasterCard. American Express
operates its own network.
The average merchant discount in the United States is 1.9%. Of this, approximately 0.1% goes to
the acquirer, 1.7% to the issuer, and 0.09% to the network.[29]
Most Prime and Superprime card issuers use the majority of their interchange revenue to fund
loyalty programs like frequent flyer points and cash back, and hence their profit from card
spending is small relative to the interest they earn from card lending.

Card products
American Express currently has over 109.9 million cards[30] running on its proprietary network,
these include consumer, small business and corporate cards issued by American Express
themselves and cards issued by its Global Service Network partners that run on its network (such
as Commonwealth Bank, Westpac and NAB in Australia and Lloyds Bank and Barclays Bank in
the UK).
American Express is also the largest card issuer in the world based on purchase volume.[31] It is
the 4th largest card network in the world, based on the number of cards it has in circulation.[32]

Consumer cards
An advertisement for the Platinum Card in Hong Kong
See also: Centurion Card, American Express Red, Accolades Card, and ExpressPay
American Express is best known for its iconic Green, Gold, and Platinum charge cards, and
offers credit cards of similar color levels in most countries.
In the 1950s, American Express issued its first charge card, which caught on quickly in the
booming postwar economy and signaled the company's transition to a wider consumer base. In
1966, the company issued its first gold card, in an effort to cater to the upper echelon of business
travel. Its platinum card debuted in 1984 and continues to be immensely popular as it is second
in exclusivity only to the Centurion Card.
In 1999, American Express introduced the Centurion Card, often referred to as the "black card,"
which caters to an even more affluent and elite customer segment. The card was initially
available only to select users of the Platinum card. The annual fee for the card is $2,500 (up from
$1,000 at introduction) with an additional one-time initiation fee of $7,500. American Express
created the card line amid rumors and urban legends in the 1980s that it produced an ultraexclusive black card for elite users who could purchase anything with it.[33]

American Express cards range between no annual fee (for Blue and many other consumer and
business cards) and a $450 annual fee (for the Platinum card). Annual fees for the Green card
start at $95 (first year free), while Gold card annual fees start at $125.
American Express has several co-branded credit cards, with most falling into one of three
categories:

Airlines: e.g., Aerolineas Argentinas, Air Canada, Air France, Alitalia, British Airways,
Cathay Pacific, Delta Air Lines, Icelandair, KLM, Qantas, Scandinavian Airlines,
Singapore Airlines, SriLankan Airlines, Virgin Atlantic, Virgin Australia, among others.

Hotels: e.g., Best Western, Hilton Hotels. Starwood Hotels & Resorts Worldwide

Retailers: e.g., David Jones, Holt Renfrew, Harrods, Macy's, Bloomingdales, Lowe's,
Mercedes Benz, and others.

Their card aimed at young adults is called Blue from American Express. A television media
campaign for Blue adopted the 1979 UK Synthpop hit "Cars" by Gary Numan as its theme song.
Based on a successful product for the European market, Blue had no annual fee, a rewards
program, and a multi-functional onboard smart chip. A cashback version, "Blue Cash", quickly
followed. Amex also targeted young adults with City Reward Cards that earn INSIDE Rewards
points to eat, drink, and play at New York, Chicago and LA hot spots. American Express began
phasing out the INSIDE cards in mid-2008, with no new applications being taken as of July
2008.
In 2005, American Express introduced Clear, advertised as the first credit card with no fees of
any kind. Other cards introduced in 2005 included "The Knot" and "The Nest" Credit Cards from
American Express, co-branded cards developed with the wedding planning website theknot.com.
In 2006, the UK division of American Express joined the Product Red coalition and began to
issue a Red Card. With each card member purchase the company contributes to causes through
The Global Fund to Fight AIDS, Tuberculosis and Malaria to help African women and children
suffering from HIV/AIDS, malaria, and other diseases.
In 2009, American Express introduced the ZYNC charge card. White in color, this card was
created for people in their 20s and 30s. American Express is no longer taking applications for the
ZYNC charge card.
In late 2012, American Express and Walmart announced the launch of Bluebird, a prepaid debit
card similar to that of Green Dot.[34] Bluebird is being touted as having some of the benefits of
traditional American Express cards, such as roadside assistance and identity theft protection. The
card can also be used as a substitute to a traditional checking account. Unlike other such cards,
Bluebird is FDIC-insured.[35] Bluebird accounts have standard FDIC deposit insurance and check
writing capabilities, and customers can now have Social Security payments, military pay, Tax
Return, paycheck and other government benefits deposited directly into their accounts.

American Express credit cards are noted by travel guides, including Rough Guides and Lonely
Planet, as being less commonly accepted in Europe than Visa or MasterCard.[36][37][38][39] In an
interview with an American Express spokesman in 2010 about card acceptance in the UK, the
Daily Mail's financial website ThisIsMoney noted that "The list of places that are taking Amex
appears to be growing, rather than slowing, but it seems to be a little hit-and-miss. It's not a good
feeling to enter a shop, not knowing whether or not they accept the card."[40] As of February 2016
American Express is one of the partner banks to both Google and Apple's mobile wallet systems
(Android Pay and Apple Pay, respectively) meaning that cardholders can use their American
Express-issued cards to pay at establishments where NFC payments are accepted.[41]

Card design
The company mascot, the Roman Gladiator or Centurion, appears at the center of the iconic
Zync, Green, Gold, Platinum, and Centurion cards. The figure and his pose evoke classical
antiquity. These cards also feature intricate border and background designs that read "American
Express." The designs on these cards, especially the Green card, bear resemblance to those on
United States Federal Reserve Notes.
ExpressPay

A Platinum American Express Charge Card issued in the UK that is contactless enabled
In 2005, American Express introduced ExpressPay, similar to MasterCard PayPass and Visa
payWave, all of which use the symbol appearing on the right. It is a contactless payment system
based on wireless RFID, where transactions are completed by holding the credit card near a
receiver at which point the debt is immediately added to the account. All three contactless
systems use the same logo. The card is not swiped or inserted into a smart card reader and no
PIN is entered. Many U.S. merchant and restaurant partners now offer ExpressPay, including
Meijer, CVS/Pharmacy, Best Buy, Chevron Corporation, Noah's Bagels, and some McDonald's
locations. Office Depot has implemented ExpressPay in all 1200 of its stores.[42]
American Express also issue EMV compatible ExpressPay cards in many countries.[43]

Some notable users of contactless payment include Australia and the UK where contactless (tap
and go) is used almost 10 times as often in Australia and almost 5 times more often in the United
Kingdom on a per capita basis compared to the United States.[44]

Small business services (also known as American Express OPEN)

For more details on this topic, see American Express Plum Card.
American Express offers various types of charge cards for small businesses to manage their
expenses, and the company is also the largest provider of corporate cards.[citation needed]
In late 2007, the company announced the new Plum Card as the latest addition to their card line
for small business owners.[45] The card provides a 1.5% early pay discount or up to two months to
defer payment on purchases. The 1.5% discount is available for billing periods where the
cardmember spends at least $5,000. The first 10,000 cards were issued to members on December
16, 2007.[46]
In 2008, American Express made a decision to close all Business Line of Credit accounts. This
decision was reached in tandem with the Federal Reserve's approval of American Express's
request to become a Commercial Bank.
As of July 2016, American Express has several credit cards designed for small business.[47] These
include SimplyCash Plus Business Credit Card. Cash back earned is automatically credited to
the cardholder's statement and other benefits are included.[47] Other cards include the Business
Platinum Card from American Express OPEN, the Business Gold Rewards Card from American
Express OPEN, the Blue for Business Credit Card from American Express, Business Green
Rewards Card from American Express OPEN, the Business Green Rewards Card from American
Express OPEN and the Plum Card from American Express OPEN.[47] These cards have return
protection, year-end summaries and other tools to help with the business accounting and control.
[47]

Commercial cards and services

In 2008, American Express acquired the Corporate Payment Services business of GE, which
primarily focused on providing Purchasing Card solutions for large global clients.[48] As part of
the $1b+ transaction, American Express also added a new product, called V-Payment, to its
product portfolio. V-Payment is unique in that it enables a tightly controlled, single-use card
number for increased control.
As of July 2016, American Express offered several business, corporate and travel credit and
charge cards and services and data and information services related to their use in the
competitive markets for these cards.[49]
The online American Express @ Work function gives corporations a site on which to apply for,
cancel or suspend cards, monitor policy compliance and track expenses. The cardholder
company can create and generate reports for a corporate expense account program, including

analytics and data consolidation or integration.[50][51] Reports can be tailored for various sized
companies. Through a Standard Expense Reporting feature in its "Manage Your Card Account
site", American Express corporate cards provide cardholders access to pre-populated expense
reports. The cardholder needs to annotate expenses and add out-of-pocket charges upon
completion of which the report can be downloaded in electronic or paper format.[50]
American Express Corporate Card program can be used with a third-party on-demand expense
management tool by Concur, a provider of integrated travel and expense management services.[50]
This tool simplifies the creation of expense account reports and the corporate approval process.
[50]
Corporate card activity, including viewing statements, making payments, setting up alerts and
making inquiries and disputing charges, can be managed through an account online or via mobile
device through this service.[50]
The corporate cards have benefits including discounts and rebates for travel and transportation,
travel and emergency help, travel insurance and baggage protection.[50] Upgrades from the
Corporate "Green" Card to the Corporate Gold Card or Corporate Platinum Card, although
subject to fees and terms and conditions, have several additional benefits at each card level, such
as free breakfast or late checkout at many hotels.[50] The American Express/Business Extra
Corporate Credit Card is affiliated with American Airlines and provides a 4% rebate on eligible
American Airlines travel purchased with the card.[50]
American Express has a specialized corporate meeting credit card.[52] Another specialized
American Express business card is the American Express Corporate Purchasing Card, which can
be assigned to individual employees or departments. Reconciliation and accounting services are
available to make these functions easier for the corporation.[53]

Non-proprietary cards
In December 2000, American Express agreed to acquire the US$226 million credit card portfolio
of Bank of Hawaii, then a division of Pacific Century Financial Corp.[54] In January 2006,
American Express sold its Bank of Hawaii card portfolio to Bank of America (MBNA). Bank of
America will issue Visa and American Express cards under the Bank of Hawaii name.
Until 2004, Visa and MasterCard rules prohibited issuers of their cards from issuing American
Express cards in the United States. This meant, as a practical matter, that U.S. banks could not
issue American Express cards. These rules were struck down as a result of antitrust litigation
brought by the U.S. Department of Justice, and are no longer in effect.[55] In January 2004,
American Express reached a deal to have its cards issued by a U.S. bank, MBNA America.[56]
Initially decried by MasterCard executives as nothing but an "experiment", these cards were
released in October 2004.[57] Some said that the relationship was going to be threatened by
MBNA's merger with Bank of America, a major Visa issuer and original developer of Visa (and
its predecessor, BankAmericard). However, an agreement was reached between American
Express and Bank of America on December 21, 2005.[58] Under the terms of the agreement, Bank
of America will own the customer loans and American Express will process the transactions.
Also, American Express will dismiss Bank of America from its antitrust litigation against Visa,
MasterCard, and a number of U.S. banks. Finally, both Bank of America and American Express

also said an existing card-issuing partnership between MBNA and American Express will
continue after the Bank of America-MBNA merger. The first card from the partnership, the noannual-fee Bank of America Rewards American Express card, was released on June 30, 2006.
Since then, Citibank, GE Money, and USAA have also started issuing American Express cards.
Citibank currently issues several American Express cards including an American Airlines
AAdvantage co-branded card.[58] In January 2006[59] Amex issued Dillard's American Express
card in joint cooperation with GE Money, however, in Mar 2008[60] GE sold its card unit to Amex
for $1.1bn in cash only deal.[48] HSBC Bank USA is currently testing both HSBC-branded and
Neiman Marcus co-branded American Express rewards credit cards, with a full rollout scheduled
for late 2007 or early 2008. Also, UBS launched its Resource Card program for US Wealth
Management clients issuing Visa Signature credit cards and American Express charge cards
linked to their customers accounts and employing a single rewards program for the two cards.

Merchant account
Many retailers do not accept American Express cards.[61] American Express charges merchants
significantly higher fees[62] than other credit card providers. In a court case United States v.
American Express Co., merchants filed a class action lawsuit against American Express[63] and
claimed that charging high fees is a violation of the Sherman Antitrust Act.[64] According to the
lawsuit, accepting American Express cards costs merchants the most.[65]

Non-card products
Traveler's checks
Amex is the largest provider of traveler's checks in the world.[citation needed]
In 2005, American Express released the American Express Travelers Check Card, a stored-value
card that serves the same purposes as a traveler's check, but can be used in stores like a credit
card. The card has since been discontinued as of October 31, 2007, due to "changing market
conditions". All cardholders were issued refund checks for the remaining balances.

Shearson/American Express
See also: Shearson/American Express

Shearson/American Express logo c. 1982

During the 1980s, American Express began purchasing stock brokerage firms as part of an
expansion. In mid-1981 it purchased Sanford I. Weill's Shearson Loeb Rhoades, the second
largest securities firm in the United States to form Shearson/American Express. Shearson Loeb
Rhoades, itself was the culmination of several mergers in the 1970s as Weill's Hayden, Stone &
Co. merged with Shearson, Hammill & Co. in 1974 to form Shearson Hayden Stone. Shearson

Hayden Stone then merged with Loeb, Rhoades, Hornblower & Co. (formerly Loeb, Rhoades &
Co. to form Shearson Loeb Rhoades in 1979. With capital totalling $250 million at the time of its
acquisition, Shearson Loeb Rhoades trailed only Merrill Lynch as the securities industry's largest
brokerage firm. After its acquisition by American Express, the firm was renamed
Shearson/American Express.
In 1984, Shearson/American Express purchased the 90-year-old Investors Diversified Services,
bringing with it a fleet of financial advisors and investment products. Also in 1984, American
Express acquired the investment banking and trading firm, Lehman Brothers Kuhn Loeb, and
added it to the Shearson family, creating Shearson Lehman/American Express. In 1988, the firm
acquired E. F. Hutton & Co., forming Shearson Lehman Hutton until 1990, when the firm's name
became Shearson Lehman Brothers. When Harvey Golub took the reins in 1993 he negotiated
the sale of Shearson's retail brokerage and asset management business to Primerica and in
following year, spun off of the remaining investment banking and institutional businesses as
Lehman Brothers Holdings Inc.

Financial advisors
On September 30, 2005, American Express spun off its American Express Financial Advisors
unit as a publicly traded company, Ameriprise Financial, Inc..[66] Due to this, American Express
revenues for 2005 are down around $5 billion, however, like-for-like they are up 10.5% in 2005.
Also, on September 30, 2005, RSM McGladrey acquired American Express Tax & Business
Services (TBS).[66]
On September 18, 2007, Standard Chartered Bank agreed to acquire American Express Bank
Ltd, a commercial bank, from American Express Co,[67] for an estimated US$823 million,
through a friendly divestiture process.[68][69][70][71][72]

Travel
American Express established a Travel Division in 1915 that tied together all of the earlier efforts
at making travel easier, and soon established its first travel agencies. In the 1930s, the Travel
Division had grown widely. Albert K. Dawson was instrumental in expanding business
operations overseas, even investing in tourist relations with the Soviet Union. Dawson during
World War I had been a photographer and film correspondent with the German army. Today the
focus of the Travel Division is on business customers and business travel, that is, corporate travel
management.

Publishing
The American Express Publishing Corporation published the Travel + Leisure, Food & Wine,
Executive Travel, Black Ink, and Departures magazines until October 1, 2013, when it sold those
titles to Time Inc.[73] It publishes American Express Skyguide and is based in New York City.[74]
As of February 2014, Time Inc. is restructuring the portfolio of publications.[75]

Individual banking

American Express FSB (federal savings bank) is a direct bank offering a standard savings
account to individuals. Checking account services are not provided.

Advertising
Don't Leave Home Without Them
In 1975, David Ogilvy of Ogilvy & Mather developed the highly successful Don't Leave Home
Without Them ad campaign for American Express Traveler's Cheques, featuring Oscar-awardwinning actor Karl Malden. Karl Malden served as the public face of American Express
Travelers Cheques for 25 years. In the UK the spokesman was the television personality Alan
Whicker.
After Malden's departure, and as the card assumed importance over the traveler's cheques,
American Express continued to use celebrities, such as Mel Blanc and ballerina Cynthia
Gregory. A typical ad for the American Express Card began with a celebrity asking viewers: "Do
you know me?" Although he/she gave hints to his/her identity, the star's name was never
mentioned except as imprinted on an American Express Card, after which announcer Peter
Thomas told viewers how to apply for it. Each ad concluded with the celebrity reminding
viewers: "Don't Leave Home Without It." The "Don't Leave Home Without It" slogan was
revived in 2005 for the prepaid American Express Travelers Cheque Card.[citation needed]

The Adventures of Seinfeld & Superman

The Adventures of Seinfeld & Superman

American Express continues to use celebrities in their ads. Some notable examples include a late
1990s ad campaign with comedian Jerry Seinfeld, including the two 2004 webisodes in a series
entitled "The Adventures of Seinfeld & Superman."

My life. My card.
In late 2004, American Express launched the "My life. My card." brand campaign (also by
Ogilvy & Mather) featuring famous American Express cardmembers talking about their lives.
The ads have featured actors Kate Winslet, Robert De Niro, Ken Watanabe, and Tina Fey; Duke
University basketball coach Mike Krzyzewski; fashion designers Collette Dinnigan and Diane
von Frstenberg; comedian and talk show hostess Ellen DeGeneres; golfer Tiger Woods;
professional snowboarder Shaun White; tennis pros Venus Williams and Andy Roddick; Real

Madrid manager Jos Mourinho; film directors Martin Scorsese, Wes Anderson, and M. Night
Shyamalan; and most recently, singer Beyonc Knowles.[citation needed]

C F. Frost
Many American Express credit card ads feature a sample American Express Card with the name
"C. F. Frost" on the front. This is not a fabricated name; Charles F. Frost was an advertising
executive at Ogilvy & Mather.[76]

Cause marketing
American Express was one of the earliest users of cause marketing, to great success.[77] A 1983
promotion advertised that for each purchase made with an American Express Card, American
Express would contribute one penny to the renovation of the Statue of Liberty. The campaign
generated contributions of $1.7 million to the Statue of Liberty restoration project. What would
soon capture the attention of marketing departments of major corporations was that the
promotion generated approximately a 28% increase in American Express card usage by
consumers.
Building on its earlier promotion, American Express later conducted a four-year Charge Against
Hunger program, which generated approximately $22 million for a charity[which?] addressing
poverty and hunger relief.[citation needed]
In 2006, as part of Bono's Product Red, American Express launched the American Express Red
Card with a campaign starred by supermodel Gisele Bndchen. The card, currently available
only in the United Kingdom, makes a donation to fight AIDS with every purchase made using
the card.[which?]
In May 2007, American Express launched an initiative called the Members Project.[78][79]
Cardholders were invited to submit ideas for projects, and were told American Express was
funding the winning project. The winner, a provide clean drinking water project, received
$2 million.[which?]

Animals
In 2007, a two-minute black-and-white ad, entitled "Animals" and starring Ellen DeGeneres,
won the Emmy Award for Outstanding Commercial.[80][81]

Workplace
Offices

Two rescue workers entering the American Express Tower following September 11 terrorist
attack on World Trade Center.

Amex House in Brighton, England, was built in 1977.

American Express Italy HQ in Rome

In April 1986, American Express moved its headquarters to the 51-story Three World Financial
Center in New York City. After the events of September 11, 2001, American Express had to leave
its headquarters temporarily as it was located directly opposite to the World Trade Center and
was damaged during the fall of the towers. The company began gradually moving back into its
rehabilitated building in 2002.
The company also has major offices in Fort Lauderdale, FL, Salt Lake City, UT, and Phoenix,
AZ. It has a technology center in Weston, FL. The main data center is located in North Carolina.
AMEX Bank of Canada was founded in 1853 in Toronto, however it currently has its
headquarters of 3,000 employees in Markham, Ontario (a northern suburb of Toronto), as well as
an office in Hamilton, Ontario. The company began operations as a bank on July 1, 1990
following an order-in-council made by the Brian Mulroney government on November 21, 1988.
This decision was not without controversy as federal banking policy at the time would not
ordinarily have permitted American Express to operate as a bank.[82] It is also a member of the
Canadian Bankers Association (CBA) and is a registered member of the Canada Deposit
Insurance Corporation (CDIC), a federal agency insuring deposits at all of Canada's chartered
banks.
American Express has several offices in the UK, including a 9-story European Service Center,
known as Amex House, in the Carlton Hill area of Brighton, England. It is a large white tower
block, built in 1977[83] and surrounded by several other smaller offices around the city. Amex
House deals with card servicing, sales, fraud and merchant servicing. The official Europe,
Middle East, and Africa HQ is located in the Belgravia district of Westminster, in central
London, at Belgrave House on Buckingham Palace Road, SW1; other UK offices are based in

Sussex at Burgess Hill. In November 2009, Brighton and Hove City Council granted planning
permission for American Express to redevelop the Amex House site.
The Japan, Asia-Pacific, and Australian Headquarters is co-located in Singapore, at 16 Collyer
Quay, and in Sydney's King Street Wharf area, with the new state-of-the-art building receiving
greenhouse status due to the environmentally friendly workspace that it provides.
The headquarters of the Latin America and Caribbean division is in Fort Lauderdale, FL.
American Express also has a significant presence in India. Its two centres are located at Gurgaon,
Haryana and one at Mathura Road, New Delhi. The Indian operations of American Express
revolves around the back office customer services operations apart from the credit card business
for the domestic Indian Economy, arguably the American Express campus in Gurgaon is the
largest employee location by head count for Amex and supports business continuity objectives of
Amex including during Hurricane Sandy, the center works 24/7 and includes a co-located second
building which was recently transferred to a third party service provider but does much work for
Amex.

Job satisfaction
For 2008, American Express was named the 62nd best company to work for in the United States
by Fortune, ranking it number one for bank card companies.[84] In October 2008, Amex Canada
Inc. was named one of Greater Toronto's Top Employers by Mediacorp Canada Inc., which was
announced by the Toronto Star newspaper.[85]

Management and corporate governance

The officers of the company are listed on the company's website as follows:[86]

Kenneth Chenault: Chairman and Chief Executive Officer

Douglas E. Buckminster: President, International Consumer and Global Network

Services

James Bush: Executive Vice President, World Service

Kevin Cox: Executive Vice President, Human Resources

William H. Glenn: President, Global Corporate Payments and Business Travel

Ash Gupta: Chief Risk Officer and President, Risk and Information Management

John D. Hayes: Executive Vice President and Chief Marketing Officer

Jeffrey C. Campbell: Executive Vice President and Chief Financial Officer[87]

Laureen E. Seeger: Executive Vice President and General Counsel[88]

Thomas Schick: Executive Vice President, Corporate and External Affairs

Neal Sample: President, Enterprise Growth[89]

Joshua G. Silverman: President, U.S. Consumer Services

Stephen J. Squeri: Group President, Global Corporate Services

Anr Williams: President, Global Merchant Services

The members of the company's board of directors are listed on the company's website as follows:
[86]

Daniel F. Akerson: Managing Director of the Carlyle Group

Charlene Barshefsky: Former United States Trade Representative

Ursula M. Burns: President of Xerox Corporation

Kenneth I. Chenault: Chairman and CEO of American Express Co.

Peter Chernin: Former President and COO, News Corporation

Vernon E. Jordan, Jr.: Senior Managing Director with Lazard Freres & Co. LLC

Jan Leschly: CEO of Care Capital LLC

Richard C. Levin: President, Yale University

Richard A. McGinn: Former CEO of Lucent Technologies, Partner, RRE Ventures

Edward D. Miller: Former President and CEO of AXA SA

Frank P. Popoff: Former Chairman Chemical Financial Corp.

Steven S. Reinemund: Former Chairman and CEO, PepsiCo Inc.

Robert D. Walter: Chairman and CEO, Cardinal Health

Ronald A. Williams: Chairman and CEO, Aetna Inc.

In popular culture
These slogans have been parodied numerous times:

In The Sopranos episode, "Mr. & Mrs. John Sacrimoni Request...", Christopher
Moltisanti concludes his sale of stolen credit card numbers to Middle Easterners with a
quip: "Don't leave home without them!" This statement confuses the Middle Easterners,
who are unfamiliar with the ad campaign.

The long-running PBS children's TV series Sesame Street parodied the "Do you know
me?/Don't Leave Home Without It" ad campaigns with three skits involving a Muppet
character holding a Grown-Up Friend's hand while crossing the street. One skit featured
Forgetful Jones (performed by Richard Hunt) with Olivia (Alaina Reed Hall) as his
Grown-Up Friend, a second featured Bert and Ernie (Frank Oz and Jim Henson
respectively) with Gordon (Roscoe Orman) as their Grown-Up Friend, and the third
featured Big Bird (Caroll Spinney) with Bob (Bob McGrath) as his Grown-Up Friend. All
three skits ended with the grownups' names being embossed at the bottom of a card
resembling an American Express card that had a big human left hand in the middle, with
the words "Grown-Up Friend's Hand" above it, and a voiceover saying "A Grown-Up
Friend's Hand. Don't cross the street without it."

Another parody was seen on an episode of the CBS game show Press Your Luck, when
the animated "Whammy Character" would give the "Do you know me?" tag line,
followed by the display of an Amex card-parody, which then had "WHAMMY" typed in
on the bottom line of the card.

In the pilot episode of "Masquerade (TV series)", a KGB general says the line, "I suppose
you never leave home without it", to a KGB agent when he sees that agent's "National
American" card.

In a campaign speech during the 1984 Election, President Ronald Reagan said "If the big
spenders get their way, they'll charge everything to your taxpayer's express card, and
believe me, they never leave home without it."

In the final episode of The Dukes of Hazzard, Boss Hogg is shot at by a former associate,
the bullet striking a wallet he had kept in his pocket and being lodged in several credit
cards. Narrator Waylon Jennings takes note of the situation and says, "I bet he's glad he
didn't leave home without them" (referring to his credit cards).

On the 1997 film Hercules during the song "Zero to Hero", the credit card is "Grecian
Express".

The 1989 movie Major League also parodied the campaign. In one scene, in which every
player is dressed in a tuxedo, the Cleveland Indians tell viewers of the film why every
player carries the American Express Card with much of the explanation done one line at a

time by players Jake Taylor (Tom Berenger), Eddie Harris (Chelcie Ross), Rick "Wild
Thing" Vaughn (Charlie Sheen), Pedro Cerrano (Dennis Haysbert), and Roger Dorn
(Corbin Bernsen), and Manager Lou Brown (James Gammon). The scene ends with
Willie "Mays" Hayes (a tuxedo-clad Wesley Snipes) sliding into home plate in front of
the rest of the team, holding up his card and saying to the viewers: "The American
Express Card. Don't steal home without it."

In the film Batman & Robin, Batman pulls out a Bat-Credit card and says he never leaves
the cave without it.

Foreign exchange company

From Wikipedia, the free encyclopedia
(Redirected from List of foreign exchange companies)
A non-bank foreign exchange company also known as foreign exchange broker or simply
forex broker is a company that offers currency exchange and international payments to private
individuals and companies. The term is typically used for currency exchange companies that
offer physical delivery rather than speculative trading. i.e., there is a physical delivery of
currency to a bank account.
Foreign exchange companies are normally distinct from money transfer companies or remittance
companies and bureaux de change as they typically perform high-value transfers unlike their
money transfer counterparts that focus on high-volume low-value transfers generally by
economic migrants back to their home country or to provide cash for travelers. Transactions can
be either spot transactions or forward transactions.[1]

Contents

1 United Kingdom

2 See also

3 Notes
o 3.1 Footnotes
o 3.2 References

United Kingdom

It is estimated that in the UK, 14% of currency transfers/payments[2] are made via non-bank
Foreign Exchange Companies. These companies' selling point is usually that they will offer
better exchange rates or cheaper payments than the customer's bank. UK forex brokers are not
covered under the Financial Services Compensation Scheme.[3] The 10 largest companies in the
UK by net profit as at August 2012.
No.

Company

2
3
4
5
6
7
8

Western Union Business Solutions (formerly

Travelex)[nb 1]
Moneycorp[nb 2]
World First UK Ltd
HiFX
Currencies Direct Ltd
Schneider (renamed Monex Europe Limited)
OPT
Foreign Currency Direct

AFEX

10 Global Reach Partners/Corporate FX

Accounting Date
31 December
2010
31 August 2011
31 January 2012
30 June 2011
30 June 2011
31 March 2012
09 Feb 2014
31 October 2011
31 December
2011
31 December
2011

Pre Tax Net

Profit
11,048,000
7,660,000
4,494,000
4,486,000
4,471,000
3,500,278
3,387,157
1,687,364
1,583,459
1,289,000

China UnionPay
From Wikipedia, the free encyclopedia
This article may be expanded with text translated from the corresponding article in
Chinese. (May 2014) Click [show] for important translation instructions. [show]
Quick Pass redirects here. For the toll transponder system in North Carolina, also called
Quick Pass, see North Carolina Turnpike Authority.
China UnionPay

Zhnggu Ynlin

Type
Industry
Founded
Headquarters

Public
Banking, Finance
March 2002
Pudong, Shanghai, China

Members
Number of employees
Website

296 (232 in China)

200-500
www.unionpayintl.com

China UnionPay (Chinese: ; pinyin: Zhnggu Ynlin), also known as UnionPay

(Chinese: ; pinyin: Ynlin) or by its abbreviation, CUP, is a Chinese financial services
corporation headquartered in Shanghai, China. It provides bank card services and a major card
scheme in mainland China. Founded on March 26, 2002, China UnionPay is an association for
China's banking card industry, operating under the approval of the People's Bank of China
(PBOC, central bank of China).[1] It is also the only interbank network in China excluding Hong
Kong and Macau, linking the ATMs of all banks throughout mainland China and widely
accepted by the ATMs in Hong Kong and Macau. It is also an EFTPOS (Electronic Funds
Transfer at Point of Sale) network.

Contents

1 History

2 QuickPass

3 Use abroad

4 Members

5 See also

6 References

7 External links

History
With the approval of the People's Bank of China, China UnionPay was launched on March 26,
2002 in Shanghai by PBOC governor Dai Xianglong, with the Industrial and Commercial Bank
of China, the Agricultural Bank of China, the Bank of China and the China Construction Bank
serving as its first members.[2] However, the concept of a unified Chinese bank card network
dates back to 1993, with the formation of the "Golden Card Project" advocated by then-Chinese
president Jiang Zemin. UnionPay is considered the descendant of the Golden Card Project,
although attempts at unifying China's various credit card and interbank networks have been in
place since the 1990s.[3]
In 2014, UnionPay has been reported to be contributing to capital flight from China, through
poorly regulated store front operations in Macau.[4]

QuickPass
Upon the introduction of EMV chips into China UnionPay cards, many banks also introduced
QuickPass (Chinese: ) a contactless payment feature similar to MasterCard's PayPass or
Visa's payWave. However, unlike MasterCard or Visa's implementation, in the case of debit
cards, QuickPass does not operate on a trust-based system, but rather as a stored-value card
(similar to girogo/GeldKarte in Germany).
Payments by QuickPass-enabled debit cards can only be made using funds which have been
"withdrawn" () from the account and stored on the card itself as electronic cash (essentially
preauthorising the funds for use, eliminating the possibility that an offline transaction may
exceed the account holder's balance) .

Use abroad
UnionPay cards can be used in 141 countries and regions around the world, making it the thirdlargest payment network by value of transactions processed, behind Visa and MasterCard.[5]
Some UnionPay credit cards are also affiliated with American Express, MasterCard or Visa, and
they can be used abroad as an American Express, MasterCard or Visa. UnionPay debit cards,
however, can only be used in the UnionPay network and other networks that have signed
contracts with UnionPay. Since 2006, China UnionPay cards can be used in over 100 countries
outside China.[6]
In May 2005 Discover Network announced an alliance with China UnionPay Network. The two
companies have signed a long-term agreement that allows acceptance of Discover Network
brand cards at UnionPay ATMs and point-of-sale terminals in China and acceptance of China
UnionPay cards on the PULSE network in the U.S.[7] As of November 1, 2007, China UnionPay
cards may be accepted where Discover Network Cards are accepted in the United States, Canada,
Mexico, Central America and the Caribbean.[8] As of early 2013, the cross acceptance agreement
was expanded to support e-commerce or card-not-present transactions.
In March 2010 PayPal announced a partnership with China UnionPay enabling the use of PayPal
with UnionPay member cards.
In 2015 Chinas SAFE placed a 100,000 yuan annual cap on overseas UnionPay cash
withdrawals [9]

Members
This section does not cite any sources. Please help improve this section by adding
citations to reliable sources. Unsourced material may be challenged and removed.
(December 2014) (Learn how and when to remove this template message)

UnionPay is the primary network of these Chinese banks:

Agricultural Bank of China

Bank of China (including its Hong Kong-based subsidiary Nanyang Commercial Bank)

Bank of Communications (Credit cards co-issued with HSBC)

Bank of Ningbo

Bank of Shanghai

Beijing Commercial Bank

China Construction Bank

China Everbright Bank

China CITIC Bank

China Merchants Bank

China Minsheng Banking Corporation

Guangdong Development Bank

Huaxia Bank (Credit cards co-issued with Deutsche Bank)

Industrial Bank (Credit cards co-issued with Hang Seng Bank)

Industrial and Commercial Bank of China (ICBC)

Postal Savings Bank of China (formerly known as the China Postal Savings and
Remittance Bureau)

Shanghai Pudong Development Bank

Shenzhen Development Bank

Shenzhen Ping An Bank

Taizhou City Commercial Bank

Other UnionPay-affiliated organizations include municipal commercial banks as well as rural

credit cooperatives. Overall, there are 165 financial institutions that issue UnionPay cards.[citation
needed]

UnionPay had partnered with JETCO in Hong Kong and Macau until January 1, 2006. As of
January 2013, Bank of East Asia and Citibank were the only banks allowed to independently
issue UnionPay credit cards in Hong Kong and the mainland. HSBC and its subsidiary Hang
Seng Bank independently issue UnionPay credit cards in Hong Kong, while they issue cards in
the mainland in cooperation with local banks as noted above. Deutsche Bank only has co-issued
cards, with no independently issued UnionPay credit cards.
The following ten foreign banks have the right to issue UnionPay debit cards in China[contradictory]:

Standard Chartered Bank

Bank of East Asia

Citibank

HSBC

Hang Seng Bank

Woori Bank (as of May 2009)

Development Bank of Singapore (as of July 2009)

Hana Bank (as of November 2009)

OCBC Wing Hang Bank (as of 2010)

OCBC Bank (as of 2010)

UnionPay in other countries:

Mitsui Sumitomo Bank offers a UnionPay credit card in Japan.

United Overseas Bank offers a UnionPay credit card in Singapore.

DBS Bank offers a UnionPay debit card in Singapore.[10]

Kasikornbank offers a UnionPay credit card in Thailand

Bangkok Bank offers a UnionPay credit card in Thailand

Krung Thai Bank offers a UnionPay debit card in Thailand

RuPay
From Wikipedia, the free encyclopedia
RuPay

Founded
Area served
Website

26 March 2012; 4 years ago

India
RuPay

RuPay is an Indian domestic card scheme conceived and launched by the National Payments
Corporation of India (NPCI).[1] It was created to fulfil the Reserve Bank of Indias desire to have
a domestic, open loop, and multilateral system of payments in India. RuPay facilitates electronic
payment at all Indian banks and financial institutions, and competes with MasterCard and Visa in
India.[2] NPCI maintains ties with Discover Financial to enable the card scheme to gain
international acceptance.[3][4]

Contents

1 Background

2 Acceptance

3 Core Promoters

4 Issuers

5 Jan Dhan Yojana

6 RuPay EMV

7 RuPay Global Card

8 Market Share

9 RuPay for Farmers

10 See also

11 References

12 External links

Background
The IndiaPay scheme was conceived by the National Payments Corporation of India as an
alternative to the MasterCard and Visa card schemes,[2][5] and to consolidate and integrate various
payment systems in India. It was renamed to RuPay to avoid naming conflicts with other
financial institutions using the same name.[6]
RuPay is a portmanteau of the words rupee and payment.[7] The colors used in the logo are an
allusion to the tricolor national flag.
The RuPay card was launched on 26 March 2012. NPCI entered into a strategic partnership with
Discover Financial Services (DFS) for RuPay Card, enabling the acceptance of RuPay Global
Cards on Discovers global payment network outside of India.[8][9][10]
On 8 May 2014, RuPay has been dedicated to India by President of India, Pranab Mukherjee at
Rashtrapati Bhavan, New Delhi.[11][12][13][14][15]

Acceptance
RuPay cards are accepted at all automated teller machines (ATMs) across India under National
Financial Switch, and under the NPCI's agreement with DFS, RuPay cards are accepted on the
international Discover network.[16] According to the data published by National Payments
Corporation of India, there are around 145,270 ATMs and more than 875,000 point of sale (PoS)
terminals in India under the RuPay platform. In addition to the ATMs and PoS terminals, RuPay
cards are accepted online on 10,000 e-commerce websites.[17] with the same PIN which they use
for ATM transactions.[18][19][20][21]
RuPay cards are accepted at all PoS terminals in India. To enable this, RuPay has certified 29
major banks in India to accept the RuPay card at their respective PoS terminals located at
different merchant locations.[22]

Core Promoters
RuPay's Parent Organization, National Payments Corporation of India has been backed by 10
leading banks, of which 6 are public sector banks namely State Bank of India, Bank of Baroda,
Punjab National Bank, Canara Bank, Union Bank of India and Bank of India; 2 private sector

banks ICICI bank and HDFC Bank with 3 foreign banks namely Citi Bank Doha Bank India and
HSBC.

Issuers

A sample of RuPay Debit Card

Banks in India are authorized to issue RuPay debit cards to their customers for use at ATMs, PoS
terminals, and e-commerce websites. About 240 banks, including all major public sector banks,
currently issue RuPay cards to their customers,[23] and about 25 million cards have been issued as
of March 2014.[24] RuPay cards are also issued at about 200 cooperative and rural banks to
promote financial inclusion.[23]

Jan Dhan Yojana

RuPay cards got a major boost through the Pradhan Mantri Jan Dhan Yojana as RuPay cards
were issued to all Jan Dhan accounts. In spite of the critics saying most accounts are dormant,
RuPay cards are now widely used by Jan Dhan Card holders.

RuPay EMV
NPCI has rolled out its chip card for high security transactions using EMV (Europay,
MasterCard and Visa) chip technology, which is a global standard for debit and credit cards.
RuPay chip cards have an embedded microprocessor circuit containing information about the
card holder and because transactions are PIN-based rather than signature-based.

RuPay Global Card

RuPay Global Card with Discover Card, Diners Club International, Pulse (interbank network),
China UnionPay & JCB Co., Ltd. is accepted at over 17.5 million POS outlets and over 874K
ATM locations in Asia Pacific region,over 10+ million POS outlets and over 458K ATM
locations in North America, over 4.3 million POS locations and over 35K ATM locations in Latin
America & at over 2.8+ million POS outlets and over 280K ATM locations in Europe, Middle
East & Africa region.

Market Share

RuPay cards presently has over 35% of market share in Indian card payment scheme behind Visa
which has over 50% of the market share. More than 20% of the transactions in India is done
through RuPay cards in India today.

RuPay for Farmers

RuPay also provides a unified "Kisan Card", issued by banks across the country under Kisan
Credit Card, enabling farmers to transact business on ATMs and PoS terminals.
PUNGRAIN (Punjab Grains Procurement Corporation Ltd), pays commission agents through the
RuPay Debit Card, and developed a commission agents network called the Kisan Arhtia
Information and Remittance Online Network (KAIRON) with the help of the National Payments
Corporation of India.[25][26][27]
Kotak Mahindra Bank in partnership with RuPay rolled out an initiative for financial inclusion,
where the dairy farmers across 75 cooperative societies of AMUL in regions of Burdwan and
Hooghly of West Bengal will be able to get their payments directly into their account on the
same day of sale of milk.[28]
The same model is planned to be adopted in the state of Gujarat where 1200 cooperative
societies comprising over 300,000 dairy farmers will be the part of the programme.[28]

Aadhaar
From Wikipedia, the free encyclopedia

Aadhaar

Country India
Launched 28 January 2009[1]
Budget 6,678.32 crore (US$990 million) (up-to

August 2015) [2][3]

Website uidai.gov.in
Republic of India

This article is part of a series on the

politics and government of
India

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Other countries

Atlas

Government of India portal

The Unique Identification Authority of India (UIDAI) is a central government agency of

India.[4] Its objective is to collect the biometric and demographic data of residents, store them in a
centralised database, and issue a 12-digit unique identity number called Aadhaar to each
resident.[5][6] It is considered the world's largest national identification number project.[7][8]
As of March 2016, the original legislation to back UIDAI is still pending in the Parliament of
India.[9] However, on 3 March 2016, a new money bill was introduced in the Parliament for the
purpose.[10] On 11 March 2016, the Aadhaar (Targeted Delivery of Financial and other Subsidies,
benefits and services) Act, 2016, was passed in the Lok Sabha.[11] On 26 March, 2016, The
Aadhaar (Targeted Delivery of financial & Other Subsidies, Benefits & Services) Act, 2016 was
notified in the Gazette of India.[12]
Some civil liberty groups, like Citizens Forum for Civil Liberties and Indian Social Action
Forum (INSAF), have opposed the project on privacy concerns.[13][14][15][16]
On 23 September 2013, the Supreme Court of India issued an interim order saying that "no
person should suffer for not getting Aadhaar" as the government cannot deny a service to a
resident if s/he does not possess Aadhaar, as it is voluntary and not mandatory.[17] In another
interim order on 11 August 2015, the Supreme Court of India ruled that "UIDAI/Aadhaar will
not be used for any other purposes except PDS, kerosene and LPG distribution system" and
made it clear that even for availing these facilities Aadhaar card will not be mandatory.[18][19][20]

Contents

1 Overview

2 Enrolment

3 Expenditure

4 History
o 4.1 Previous identity card programs
o 4.2 2009-2014
o 4.3 2014-2015
o 4.4 2016-present

5 Applications and related projects

o 5.1 Direct Benefit transfer (DBT)
o 5.2 Aadhaar-enabled biometric attendance systems
o 5.3 Other uses by central government agencies
o 5.4 Other uses by states

6 Impediments and other concerns

o 6.1 Feasibility concerns
o 6.2 Lack of legislation and privacy concerns
o 6.3 Legality of sharing data with law enforcement
o 6.4 Security concerns
o 6.5 Overlaps with National Population Register

7 See also

8 References

9 Further reading
o 9.1 Supportive views
o 9.2 Critical views
o 9.3 Other

10 External links

Overview
The Unique Identification Authority of India (UIDAI) was set up by the Government of India in
January 2009,as an attached office under aegis of Planning Commission vide its a gazette
notification.[21] The UIDAI is mandated to assign a 12-digit unique identification (UID) number
(termed as Aadhaar) to all the residents of India. As per the notification, the UIDAI has been
given the responsibility to lay down plan and policies to implement UID scheme, to own and
operate the UID database and be responsible for its updation and maintenance on an ongoing

basis. The implementation of UID scheme entails generation and assignment of UID to residents;
defining mechanisms and processes for interlinking UID with partner databases; operation and
management of all stages of UID life cycle; framing policies and procedures for updation
mechanism and defining usage and applicability of UID for delivery of various services among
others.[21] The number is linked to the resident's basic demographic and biometric information
such as photograph, ten fingerprints and two iris scans, which are stored in a centralised
database.[5]
The UIDAI data center is located at Industrial Model Township (IMT) Manesar in Haryana state.
[22]

Starting with issuing of first UID in September 2010, the UIDAI has been targeting to issue UID
- a unique 12 digit Aadhaar number to all the residents that (a) is robust enough to eliminate
duplicate and fake identities, and (b) can be verified and authenticated in an easy and costeffective way online anywhere, anytime.[6] The Government of India in a notification dated 16
December 2010 recognizes the letter issued by Unique Identification Authority of India (UIDAI)
containing details of name, address and Aadhaar number, as an officially valid document.[23] It
neither aims to replace any existing identity cards nor it is a cognizance of citizenship.[24]
Aadhaar neither confers citizenship nor guarantees rights, benefits, or entitlements. Aadhaar is a
random number which never starts with a 0 or 1, and is not loaded with profiling or intelligence
into identity numbers that makes it insusceptible to fraud and theft. The unique ID would also
qualify for as a valid ID while availing various government services, like a LPG connection or
subsidised ration or kerosene from PDS or benefits under NSAP or pension schemes, e-sign,
digital locker,[25] Universal Account Number (UAN) under EPFO;[26] and for some other services,
like a SIM card or opening a bank account.[27][28] According to the UIDAI website, any Aadhaar
holder or service provider can verify an Aadhaar number for its genuineness through a userfriendly service of UIDAI called Aadhaar Verification Service (AVS) available on its website.[29]
[30]
Also, a resident already enrolled under National Population Register is not required to enrol
again for Aadhaar.[31]

Enrolment
As of 30 July 2016, 103.6 crore (1036 million) Aadhaar numbers have been issued in the project.
[32]

AADHAARs Issued (state-wise)

Rank
State / Union Territory
Population AADHAARs Issued
INDIA
1,210,601,445 1,036,873,603
1
Uttar Pradesh
199,581,477 157,646,430
2
Maharashtra
112,372,972 107,259,234
3
West Bengal
91,347,736
75,166,446
4
Bihar
103,804,637 71,358,388
5
Madhya Pradesh
72,597,565
67,127,074

% of Population
85.65%
78.99%
95.45%
82.29%
68.74%
92.46%

Rank
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36

AADHAARs Issued (state-wise)

State / Union Territory
Population AADHAARs Issued
INDIA
1,210,601,445 1,036,873,603
Tamil Nadu
72,138,958
63,646,850
Rajasthan
68,621,012
59,607,297
Karnataka
61,130,704
56,728,151
Gujarat
60,383,628
51,383,264
Andhra Pradesh
49,386,799
50,157,274
Telangana
35,286,757
37,645,908
Odisha
41,947,358
34,081,451
Kerala
33,387,677
34,061,747
Jharkhand
32,966,238
31,013,867
Punjab
27,704,236
28,835,296
Haryana
25,753,081
26,594,574
Chhattisgarh
25,540,196
25,627,545
Delhi
16,753,235
19,921,854
Uttarakhand
10,116,752
8,935,662
Jammu and Kashmir
12,548,926
8,354,931
Himachal Pradesh
6,856,509
7,090,768
Tripura
3,671,032
3,588,379
Manipur
2,721,756
1,748,484
Goa
1,457,723
1,441,166
Assam
31,169,272
1,391,646
Puducherry
1,244,464
1,251,543
Nagaland
1,980,602
1,078,237
Chandigarh
1,054,686
1,074,643
Arunachal Pradesh
1,382,611
891,122
Sikkim
607,688
585,550
Mizoram
1,091,014
480,645
Andaman and Nicobar Islands 379,944
377,424
Dadra and Nagar Haveli
342,853
310,499
Daman and Diu
242,911
193,838
Meghalaya
2,964,007
152,748
Lakshadweep
64,429
63,668

% of Population
85.65%
88.23%
86.86%
92.80%
85.09%
101.56%
106.69%
81.25%
102.02%
94.08%
104.08%
103.27%
100.34%
118.91%
88.33%
66.58%
103.42%
97.75%
64.24%
98.86%
4.46%
100.57%
54.44%
101.89%
64.45%
96.36%
44.05%
99.34%
90.56%
79.80%
5.15%
98.82%

Expenditure
By July 2013, the government had spent a total of 3,062 crore (US$460 million) on the project.
[4]
By February 2015, the government had spent 5,630 crore (US$840 million) on the project
and generated 78.65 crore (786.5 million) Aadhaar numbers.[33]
Expenditure by UIDAI (by year)[34]

Fiscal year
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
Total

Expenditure
26.21 crore (US$3.9 million)
268.41 crore (US$40 million)
1,187.50 crore (US$180 million)
1,338.72 crore (US$200 million)
1,544.44 crore (US$230 million)
1,615.34 crore (US$240 million)
5,980.62 crore (US$890 million)

In September 2013, the Delhi Development Authority accepted a complaint from the India
Against Corruption activist group and cancelled a land allotment to UIDAI. The land was
previously owned by BSNL, and MTNL had also laid claims on it. It was of an estimated 900
crore (US$130 million) value, but it had been allotted to UIDAI at a very cheap rate.[35]
The issue of constructing UIDAI HQs and UIDAI Regional Office, Delhi's building was resolved
with Department of Telecom (DoT). Following which, the Ministry of Urban Development has
issued a notification on 21 May 2015 clearing the titles of the land in favour of UIDAI including
land use.[36]

History
Previous identity card programs
In 1999 after the Kargil war, the Kargil Review Committee, headed by security analyst K.
Subrahmanyam, was formed to study the state of national security. It submitted its report to
Prime Minister Atal Bihari Vajpayee on 7 January 2000.[37] Among its various recommendations,
was the proposal that citizens in villages in border region be issued identity cards on a priority
basis, later such id cards should be issued to all people living in border states.[38][39]
A Group of Ministers (GoM), headed by L. K. Advani, was formed to study the
recommendations and examine possible implemenatation. The GoM submitted its report in May
2001. It had accepted the recommendation for an id card. The report said the a "multi-purpose
National Identity Card" project would be started soon. The card would be first issued in border
villages and then elsewhere.[39][40] In late September 2001, the Ministry of External Affairs
proposed that a mandatory national identity card be issued. This announcement came after
reports that some people had multiple Indian passports with different details. This was attributed
to the lack of computerisation between the passport centres.[41][42] In December 2003, the
Citizenship (Amendment) Bill, 2003 was introduced in the Lok Sabha by L. K. Advani. It
primarily aim to provide various rights to persons of Indian origin.[43] However, the bill also
introduced the Clause 14 (a) that said "The Central Government may compulsorily register every
citizen of India and issue national identity card to him."[39][44][45][46]

2009-2014

The UIDAI was established on 28 January 2009 after the Planning Commission of India issued a
notification. On 23 June 2009, Nandan Nilekani, the co-founder of Infosys, was appointed by the
United Progressive Alliance government to head the project. He was given the newly created
position of the Chairman of UIDAI which was equivalent to a Cabinet minister.[7][27][47] In April
2010, the logo and the brand name Aadhaar was launched by Nilekani.[48] In May 2010, Nilakani
said he would support a legislation to protect the data held by the UIDAI.[49]
In July 2010, UIDAI published a list 15 of agencies which were qualified to provide training to
personnel to be involved in the enrollment process. It also published a list of 220 agencies which
were qualified to take part in the enrollment process. Before this, the project had been only 20
states and with Life Insurance Corporation of India and State Bank of India as qualified
registrars. This announcement introduced several private firms. It was estimated that to achieve
the target of enrolling 40% of the population in two years, 31,019 personnel would be required
and 155 training centres would be required to train them. It was also estimated that 4,431
enrollment centres and 22,157 enrollment stations would have to be established.[50]
On 7 February 2012, the UIDAI launched an online verification system for Aadhar numbers.
Using the system banks, telecom companies and government departments could enter an
Aadhaar number and verify if the person was a resident of India.[51]
On 26 November 2012, Prime Minister Manmohan Singh launched an Aadhaar-linked direct
benefit transfer scheme. The project aimed to eliminate leakages in the system by directly
transferring the money to the bank account of the recipient. The project was to be introduced in
51 districts on 1 January 2013 and then slowly expanded to cover all of India.[52][53]
In late November 2012, a former Karnataka High Court judge, Justice K S Puttaswamy, and a
lawyer, Parvesh Khanna, filed a Public Interest Litigation (PIL) against the government in the
Supreme Court of India. They contented that the government was implementing the project
without any legislative backing.[54] In December 2011, the Parliamentary Standing Committee on
Finance, led by Yashwant Sinha, rejected the National Identification Authority of India Bill, 2010
in its then present form and suggested modifications. It termed the project "unethical and
violative of Parliament's prerogatives".[55] On 23 September 2013, the Supreme Court issued an
interim order saying that the government cannot deny a service to anyone who does not possess
Aadhaar, as it is voluntary.[17]
In late September 2013, following the Supreme Court verdict, Union Minister of State for
Parliamentary Affairs and Planning Rajeev Shukla said that the National Identification Authority
of India Bill, 2010 would be attempted to be passed in the winter session of the Parliament.[56] On
9 October 2013, the National Payments Corporation of India launched an Aadhaar-based
remittance system. Using the system funds could be transferred to any Aadhaar-linked bank
accounts, if only the Aadhaar number was known. It was announced that an SMS could be used
for amounts up to 5,000 and for amounts over that a mobile bank app could be used. By this
time around 44,000,000 Aadhaar numbers had been issued.[57]
In March 2014, Nandan Nilekani resigned as the Chairman to contest in the general election on
an Indian National Congress nomination from Bangalore South.[58] His responsibilities taken over

by 1981-batch Indian Administrative Service officer Vijay Madan, who was given an extension
of his term as the director-general and mission director by the government.[59] Nilekani lost to
Ananth Kumar.[60]

2014-2015
Before elections in March 2014, BJP national spokesperson Meenakshi Lekhi and general
secretary Ananth Kumar had criticised the project for issuing Aadhaar to illegal immigrants.
Lekhi pointed out that project continued to be run even after a parliamentary committee voted
againist and despite the Supreme Court order.[61] Subramanian Swamy, another BJP leader and
economist, said that UIDAI was a useless scheme and Nilekani should be prosecuted for wasting
resources by hiring US firms.[62][63]
On 10 June 2014, the new government disbanded four Cabinet Committees to streamline the
decision making process; among them was also the Cabinet Committee on Aadhaar.[64] Also in
June 2014, the IT Department held a meeting with the secretaries of the states to receive
feedback on the project.[65]
On 1 July 2014, the former UIDAI Chairman Nandan Nilekani met with the Prime Minister
Narendra Modi and Finance Minister Arun Jaitley to convince them of the project's merits.[66] On
5 July 2014, Modi announced that his government retain the project and asked official to look
into linking the project with passports.[67] In the 2014-15 Budget, 2,039.64 crore
(US$300 million) was allotted to the project for the fiscal year 2014-15. It was a substantial
increase from the previous year's 1,550 crore (US$230 million).[68] Also in July, it was reported
that UIDAI would hire an advertising agency and spend about 30 crore on an advertising
campaign.[69]
On 10 September 2014, the Cabinet Committee on Economic Affairs gave approval to the PhaseV of the UIDAI project, starting the enrollment process in Uttar Pradesh, Bihar, Chhattisgarh and
Uttarakhand.[70] The Union Cabinet allocated 1,200 crore (US$180 million) to the project to
reach the target of 100 crore enrollment by 2015 end.[71]
On 18 June 2015, in a high level review meeting on the progress of the UID project and DBT
scheme, Prime Minister Narendra Modi asked the officials to accelerate the delivery of benefits
and expand the applications of the Aadhaar (UID) platform. He also asked them to examine the
possibility of incentivising the states, through a one-time sharing of a portion of the savings. It
was reported that the government was saving up to 14-15% in the direct benefit transfers of
subsidies on LPG to the beneficiaries through Aadhaar.[72]
Finding the experience with DBT scheme in LPG "very encouraging" with a reported savings to
the tune of 12,700 crore (US$1.9 billion) to the public exchequer this year, Finance Minister
Arun Jaitley on 5 July 2015, said, "If we can realize the government's JAMJan Dhan, Aadhaar,
Mobilevision we can ensure that money goes directly and more quickly into the pockets of the
poor and from the savings we achieve, we can put even more money for the poor. If we can be
careful in our design and implementation, we can extend DBT to other commodities, so that the
poor get more money to spend for their upliftment." [73]

In March 2015, the Aadhaar-linked DigiLocker service was launched, using which Aadhaarholders can scan and save their documents on the cloud, and can share it with the government
officials whenever required without any need to carry them.[74]

2016-present
During the budget presentation on 29 February 2016, Finance Minister Arun Jaitley announced
that a bill will be introduced within a week to provide legislative support to the Aadhaar.[75] On 3
March 2016, the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and
Services) Bill, 2016 was introduced in the Parliament as a money bill by Jaitley.[10] The decision
to introduce it as a money bill was criticised by the opposition parties. Ghulam Nabi Azad, an
INC leader, wrote in a letter to the Jaitley that the ruling party BJP was trying to bypass the
Rajya Sabha, as they did not have the majority in the upper house. A money bill is only required
to pass in the lower house Lok Sabha.[76] Tathagata Satpathy of Biju Janata Dal (BJD) raised
concerns that the project could be used for mass surveillance or ethnic cleansing in the future.[77]
On 11 March 2016, the Aadhaar (Targeted Delivery of Financial and other Subsidies, benefits
and services) Act, 2016, was passed in the Lok Sabha.[11] During the Rajya Sabha debate on 16
March, Sitaram Yechury of Communist Party of India (Marxist) (CPI-M) said that bill should not
have been passed when the issue right to privacy was still in the Supreme Court.[78] On 16 March
2016, the bill was returned to the Lok Sabha by the Rajya Sabha with some suggested
amendments. The Lok Sabha was free to accept or reject the amendments.[79] But, Lok Sabha
rejected the amendments.[80]

Applications and related projects

Direct Benefit transfer (DBT)
Main article: Direct Benefit Transfer
Aadhaar project has been linked to some public subsidy and unemployment benefit schemes like
the domestic LPG scheme and MGNREGS. In these Direct Benefit Transfer schemes, the
subsidy money is directly transferred to a bank account which is Aadhaar-linked.[81][82]
On 29 July 2011, the Ministry of Petroleum and Natural Gas signed a memorandum of
understanding with UIDAI. The Ministry had hoped the ID system would help them eliminate
loss of the subsidised kerosene and LPG.[83] In May 2012, the government announced that it will
begin issuing Aadhaar-linked MGNREGS cards.[82] On 26 November 2012, a pilot project was
launched in 51 district.[52]
Under the original policy for liquified petroleum gas subsidies, the customers bought gas
cylinders from retailers at subsidised prices, and the government compensated companies for
their losses. Under the current Direct Benefit Transfer of LPG (DBTL), introduced in 2013,
customers had to buy at the full price, and the subsidy would be then directly credited to their
Aadhaar-linked bank accounts. This scheme, however, did not take off, as in September 2013, a
Supreme Court order put a halt on it.[17] Subsequently, GOI constituted a committee to review the

"Direct Benefits Transfer for LPG Scheme"[84] to study the shortcomings in the scheme and
recommend changes. The DBTL scheme was modified later as PAHAL by the new government
in November 2014. Under PAHAL, subsidies could be credited to one's bank account even if the
one did not have an Aadhaar number. Official data show that cooking gas consumption during
the JanuaryJune period grew at a slower 7.82%, nearly four percentage points less than 11.4%
growth in the same period last year.[85][86]
The PAHAL scheme has covered 11.89 crore of the 14.54 crore active LPG consumers till
March, as stated by the Petroleum Minister in the Parliament. Thereby, the DBT has become a
"game changer" for India, claimed the Chief Economic Adviser to the Finance Ministry,
Government of India, Arvind Subramanian, for in case of LPG subsidy, DBT had resulted in a
24% reduction in the sale of subsidized LPG, as "ghost beneficiaries" had been excluded. The
savings to the government were to the tune of 12,700 crore (US$1.9 billion) in 2014-15.[87] The
success of the modified scheme helped fuel marketing companies save almost 8,000 crore
(US$1.2 billion) from November 2014 to June 2015, said oil company officials.[85] The DBT for
the public distribution system (PDS) will be rolled out in September 2015.[87]
Prime Minister Narendra Modi has asked for integration of all land records with Aadhaar at the
earliest, emphasising at his monthly PRAGATI (Pro-Active Governance And Timely
Implementation) meeting on 23 March 2016 that this is extremely important to monitor the
successful implementation of the Pradhan Mantri Fasal Bima Yojana or crop insurance scheme.
[88]

Aadhaar-enabled biometric attendance systems

In July 2014, Aadhaar-enabled biometric attendance systems (AEBAS) was introduced in
government offices. The system was introduced to check late arrival and absenteeism of
government employees. The public could see the daily in and out of employees on the website
attendance.gov.in.[89][90][91] However, in October 2014, the website was closed to the public but is
now (as on March 24, 2016) active and open to public access.[92] The employees use the last four
digits of their Aadhaar number and their fingerprints, for authentication.[93]

Other uses by central government agencies

In November 2014, it was reported the Ministry for External Affairs was considering making
Aadhaar a mandatory requirement for passport holders.[94] In February 2015, it was reported that
people with Aadhaar number will get their passports issued within 10 days, as it allowed the
verification process to be easier by checking if applicant had any criminal records in the National
Crime Records Bureau's database.[95] In May 2015, it was announced that the Ministry of
External Affairs was testing the linking of passports to the Aadhaar database.[96]
In October 2014, the Department of Electronics and Information Technology said that they were
considering linking Aadhaar to SIM cards.[97] In November 2014, the Department of Telecom
asked all telecom operators to collect Aadhaar from all new applicants of SIM cards.[98] On 4
March 2015, Aadhaar-linked SIM cards began to be sold in some cities in a pilot project. The
purchase could activate the SIM at the time of purchase by submitting his Aadhaar number and

pressing his fingerprints on a machine.[99] It is part of the Digital India plan. The Digital India
project aims to provide all government services to citizens electronically and is expected to be
completed by 2018.[99][100]
In July 2014, Employees' Provident Fund Organisation of India (EPFO) began linking provident
fund accounts with Aadhaar numbers.[26] In November 2014, EPFO became an UIDAI registrar
and began issuing Aadhaar number to provident fund subscribers.[101] In December 2014, Labour
Minister Bandaru Dattatreya clarified that an Aadhaar number was not necessary for any
provident fund transaction.[102]
In August 2014, Prime Minister Modi directed the Planning Commission of India to enroll all
prisoners in India under UIDAI.[103]
In December 2014, it was proposed by the Minister for Women and Child Development Maneka
Gandhi that Aadhaar should be made mandatory for men to create a profile on matrimonial
websites, to prevent fake profiles.[104] In July 2015, the Department of Electronics and
Information Technology (DeitY) called a meeting of meeting of various matrimonial sites and
other stakeholders discuss the use of Aadhaar to prevent fake profile and protect women from
exploitation.[105]
On 3 March 2015, the National Electoral Roll Purification and Authentication Programme
(NERPAP) of the Election Commission of India was started. It aims to link the Elector's Photo
Identity Card (EPIC) with the Aadhaar number of the registered voter. It is aims to create an
error-free voter identification system in India, especially by removing duplications.[106][107]

Other uses by states

In Hyderabad region of Telangana state, Aadhaar numbers were linked to ration cards to remove
duplicate and illegal ration cards. The project was started in July 2012 and was carried out
despite the 2013 Supreme Court order. More than 63,932 ration cards in the white category, and
2,29,757 names were removed from its database in the drive between July 2012 and September
2014.[108][109][110] In August 2012, the neighbouring state of Andhra Pradesh, asked citizens to
surrender illegal ration cards, before it began to link them with Aadhaar numbers. By September
2014, 15 lakh illegal ration cards had been surrendered.[111][112] In April 2015, the state of
Maharashtra began enrolling all school students in the state in the Aadhaar project to implement
the Right to Education Act properly.[113]

Impediments and other concerns

Feasibility concerns
In October 2010, R. Ramakumar, an economist at the Tata Institute of Social Sciences,[114] wrote
in an editorial for The Hindu that the project was being implemented without any cost-benefit or
feasibility studies to ensure whether the project will meet its stipulated goals. He also pointed the
government was obscuring the security aspects of Aadhaar and focusing on the social benefit

schemes. He quoted former chief of the Intelligence Bureau Ajit Doval who had said that
originally Aadhaar aimed to weed out illegal aliens.[39]
In March 2011, Rajanish Dass of IIM Ahmedabad's Computer and Information Systems Group,
published a paper titled "Unique Identity Project in India: A divine dream or a miscalculated
heroism". Dass claimed that even if enrollment is voluntary, it is being made mandatory by
indirect means. He pointed out that essential schemes like the National Food Security Act, 2013
was being linked to UIDAI. He also pointed the feasibility of a project of this size had not been
studied and raised concerns about the quality of the biometric data being collected. He cited
another researcher Usha Ramanathan that UIDAI will ultimately have to become profit-making
to sustain itself.[115][116]
On 9 November 2012, the National Institute of Public Finance and Policy published a paper
titled A cost-benefit analysis of Aadhaar. The paper claimed that by 2015-16 the benefits of the
project will surpass the costs, and by 2020-21 the total benefit would be 25,100 crore against
the total expenditure of 4,835 crore. The benefits would come from plugging leakages in
various subsidy and social benefit schemes.[117][118]
In March 2016, the International Institute for Sustainable Development released a report that the
benefit from Aadhaar-linked LPG subsidy scheme for 2014-15 was 14 crore and for 2015-16
was 120.9 crore. This sum was much lower than the number stated by Finance Minister Arun
Jaitley in the Lok Sabha. He had said in March 2016 that the government had saved 15,000
crore from the scheme. The paper said that the government was also including the savings from
the efforts of oil marketing companies (OMCs) prior to the introduction of Aadhaar. The method
used by the OMCs to weed out duplicates and ghost customers was 1520 times more effective
than the Aadhaar-based method.[119]

Lack of legislation and privacy concerns

In late November 2012, a former Karnataka High Court judge, Justice K. S. Puttaswamy, and a
lawyer, Parvesh Khanna, filed a Public Interest Litigation (PIL) against the government in the
Supreme Court of India. They had contended that government was implementing the project
without any legislative backing. They pointed out that the National Identification Authority of
India Bill, 2010 which introduced in the Rajya Sabha was still pending.[54] They said that since
UIDAI was running on only an executive order issued on 28 January 2009, it cannot collect
biometric data of citizens as it would be a violation of privacy under Article 21 of the
Constitution.[1]
On 23 September 2013, the Supreme Court issued an interim order saying that "no person should
suffer for not getting the Aadhaar card in spite of the authority making it mandatory". The court
noted that the government had said that Aadhaar is voluntary.[17][120][121]
On 2 February 2015, the Supreme Court asked the new government to clarify its stance on the
project. This was in response to a new PIL filed by Mathew Thomas, a former army officer.
Thomas had claimed that government was ignoring previous orders while pushing ahead with the
project and that the project was unconstitutional as it allowed profiling of citizens. The

government in a reply on 12 February said that it will continue the project.[122][123] On 16 July
2015, the government requested the Supreme Court to revoke its order, saying that it intends to
use Aadhaar for various services.[124] On 21 July 2015, the Court noted that some states were
insisting on Aadhaar for benefits despite its order.[125]
On 11 August 2015, the Supreme Court directed the government to widely publicise in print and
electronic media that Aadhaar is not mandatory for any welfare scheme. The Court also referred
the petitions claiming Aadhaar is unconstitutional to a Constitutional Bench.[126]

Legality of sharing data with law enforcement

In 2013 Goa, the CBI was trying to solve the case of a rape of a schoolgirl. It approached a Goa
local court saying that they had acquired some fingerprints from the scene and they could be
matched with the UIDAI database. The court asked UIDAI to hand over all data of all persons in
Goa to CBI.[127][128]
The UIDAI appealed in the Bombay High Court saying that accepting such a request would set
precedent for several more such requests. The High Court rejected the argument and on 26
February 2014 in an interim order directed Central Forensic Science Laboratory (CFSL) to study
technological capability of the database to see if it can solve such a crime. The UIDAI then
appealed in the Supreme Court. It argued that the chance of a false positive was 0.057% and with
60,00,00,000 people in its database it would result in lakhs of false results.[128][129]
The Supreme Court, on 24 March 2014, restrained the central government and the Unique
Identification Authority of India from sharing data with any third party or agency, whether
government or private, without the consent of the Aadhaar-holder in writing. Vide another
interim order dated 16 March 2015, the Supreme Court of India has directed the Union of India
and States and all their functionaries should adhere to the order passed by this court on 23
September 2013. It observed that some government agencies were still treating Aadhaar as
mandatory and asked all agencies to issue notifications clarifying that it was not mandatory.[127]

Security concerns
In an August 2009 interview with the Tehelka, former chief of the Intelligence Bureau (IB), Ajit
Doval, said that it was originally intended to flush out illegal immigrants, but social security
benefits were later added to avoid privacy concerns.[130] In December 2011, the Parliamentary
Standing Committee on Finance, led by Yashwant Sinha, rejected the National Identification
Authority of India Bill, 2010 and suggested modifications. It expressed objections to the issuing
of Aadhaar numbers to illegal immigrants. The Committee said that the project was being
implemented in an unplanned manner and by bypassing the Parliament.[55]
In May 2013, deputy director general of UIDAI, Ashok Dalwai, admitted that there had been
some errors in the registration process. Some people had received Aadhaar cards with wrong
photographs or fingerprints.[131] According to Aloke Tikku of Hindustan Times, some officials of
the Intelligence Bureau (IB) had criticised the UIDAI project in September 2013. The unnamed
IB officials have said that Aadhaar number cannot be treated as a credible proof of residence. As

under the liberal pilot phase, where a person claims to live was accepted as the address and
recorded.[132]
Gajanan Khergamker of the Tehelka has argued that the Aadhaar threatens to legitimise the
illegals living in the country. He said that frequently local bureaucrats and politicians give away
documents like ration cards to illegal immigrants for political or personal gains. He pointed out
that the Genetic Information Nondiscrimination Act, 2008 of US prohibits discrimination based
on collected biomedical data, but India has no such safeguards for its citizens. He said the data
being collected was worth fortunes and India was a "sitting duck" without proper protective
legislation.[133]

Overlaps with National Population Register

Main article: National Population Register
The Aadhaar and the similar National Population Register (NPR) projects have been reported to
be having conflicts. In January 2012, it was reported that UIDAI will share its data with NPR
and NPR will continue to collect its own data.[134] In January 2013, then Home Minister
Sushilkumar Shinde said that Aadhaar was not an identity card but a number, while NPR was
necessary for national security purposes.[135] The 2013 Supreme Court order did not affect the
NPR project as it was not linked to any subsidy.[136]
In July 2014, a meeting was held to discuss the possibility of merging the two projects Aadhaar
and National Population Register, or making them complementary. The meeting was attended by
Home Minister Rajnath Singh, Law and Justice and Telecom Minister Ravi Shankar Prasad and
Minister of State for Planning Rao Inderjit Singh.[137] However, later in the same month, Rao
Inderjit Singh told the Lok Sabha that no plan to merge the two projects has been made.[138]

Permanent account number

From Wikipedia, the free encyclopedia

Permanent Account Number

Date first issued 1972

Issued by
India

Purpose

Identification and Income Tax

Permanent Account Number (PAN) is a code that acts as an identification for Indian nationals,
especially those who pay Income Tax. It is a unique, 10-character alpha-numeric identifier,
issued to all judicial entities identifiable under the Indian Income Tax Act, 1961. An example
number would be in the form of ARLPA0061H. It is issued by the Indian Income Tax
Department under the supervision of the Central Board for Direct Taxes (CBDT) and it also
serves as an important proof of identification.[1]
Unlike the Aadhaar Number and Driving License, it is also issued to foreign nationals (such as
investors) subject to a valid visa and hence, it is not acceptable as a proof of Indian citizenship.
The PAN is mandatory for a majority of financial transactions such as opening a bank account,
receiving taxable salary or professional fees, sale or purchase of assets above specified limits
etc.; especially high-value transactions.
The primary purpose of the PAN is to bring a universal identification to all financial transactions
and to prevent tax evasion by keeping track of monetary transactions, especially those of highnet-worth individuals who can impact the economy.
The PAN is unique to each individual and is valid for the life time of the holder, throughout
India. An important point to note would be that once issued, the PAN is not affected by a change
of address.

Contents

1 Structure and provisions

2 Use of PAN

3 Obtaining PAN

4 Prescribed PAN application forms

5 Operating model

6 PAN for Foreign Citizens

7 Concerns with PAN Cards

8 See also

9 References

10 External links

Structure and provisions

Income Tax PAN card is issued under Section 139A of the Income Tax Act.

The PAN structure is as follows: AAAPL1234C: First five characters are letters, next four
numerals, last character letter.

The first three letters are sequence of alphabets from AAA to ZZZ

The fourth character informs about the type of holder of the card. Each holder is uniquely
defined as below:
A Association of Persons (AOP)
B Body of Individuals (BOI)
C Company
F Firm
G Government
H HUF (Hindu Undivided Family)
L Local Authority
J Artificial Juridical Person
P Individual
T AOP (Trust)
K Krish (Trust Krish)

The fifth character of the PAN is the first character

o (a) of the surname or last name of the person, in the case of a "Personal" PAN
card, where the fourth character is "P" or
o (b) of the name of the Entity, Trust, society, or organisation in the case of
Company/ HUF/ Firm/ AOP/ BOI/ Local Authority/ Artificial Judicial Person/
Govt, where the fourth character is "C","H","F","A","T","B","L","J","G".

The last character is an alphabetic check digit.

In recent times, the DOI (date of issue) of the PAN card is mentioned at the right (vertical) hand
side of the photo on the PAN card if issued by NSDL and will not be mentioned if issued by
UTI-TSL.
The central government has introduced a new online service called "Know Your PAN"[2] to verify
or validate new and existing PAN numbers.[3]

Failure to comply with the provisions of Section 139A of Income Tax Act, penalty of Rs.
10,000/- for each default is payable u/s.272B by Assessing Officer.[4]

Use of PAN
Quoting the PAN is mandatory when filing Income Tax returns, tax deduction at source, or any
other communication with Income Tax Department. PAN is also steadily becoming a mandatory
document for opening a new bank account, a new landline telephone connection / a mobile
phone connection, purchase of foreign currency, bank deposits above Rs. 50,000/=, purchase and
sale of immovable properties, vehicles etc.[5] [6]

Obtaining PAN
Obtaining PAN is optional and voluntary like passport, driving license, Aadhaar etc. However, its
use is mandatory at required places, like PAN for high-value financial transactions, Driving
License for motor driving, passport for foreign travel etc..
One can apply for PAN by submitting the prescribed PAN application to the authorized PAN
agency of the district or through online submission to NSDL, UTI along with 2 recent passport
size color photographs, proof of ID, Address and Date of Birth and fee. In case of Re-print (reissue), a photocopy of the old PAN is also required. It takes about 1015 days to receive the card.
[7]

W8EQ==Paperless online PAN application== Now, one can fill online application, upload
scanned supporting documents, photo/signature and eSign his/her application by giving
Aadhaar and OTP. Simple and easy to use.
https://www.onlineservices.nsdl.com/paam/endUserRegisterContact.html

Prescribed PAN application forms

There are two types of PAN applications:
1. Application for allotment of PAN: - This application form should be used when the
applicant has never applied for a PAN or does not have PAN allotted to him. Applicant
may visit ITDs website www.incometaxindia.gov.in to find whether a PAN has been
allotted to him or not.
Following forms have been notified by ITD for submitting applications for allotment of
new PAN:
FORM 49A: - To be filled by Indian citizens including those who are located outside
India.[8]
FORM 49AA: - To be filled by foreign citizens.[9]
2. Application for new PAN Card or/and Changes or Corrections in PAN Data: - Those who
have already obtained the PAN and wish to obtain the new PAN card or want to make
some changes / corrections in their PAN data, are required to submit their applications in

the following form prescribed by ITD:

'REQUEST FOR NEW PAN CARD OR/AND CHANGES OR CORRECTION IN
PAN DATA:[10] - The same form can be used by Indian as well as foreign citizens. A new
PAN card bearing the same PAN but updated information is issued to applicant in such
case.

Operating model
The issuance of PAN, verification, delivery and maintenance works on public private partnership
(PPP) model like Passport Seva Kendra (PSK) for reasons of economy, efficiency and
effectiveness. The reputed entities like NSDL e-Governance Infrastructure Limited (formerly
National Securities Depository Limited) [11] and UTI Infrastructure Technology Services Limited
(UTIITSL) has been entrusted by Income Tax Department as managed service providers for
processing of applications, collecting, handling and verifying personal documents like proof of
ID, age and address, clarification with the applicants, printing the card and the letter and then
mailing it. The processing agencies obtain the new PAN number online from the server of the
income tax department after successful processing of the application documents. Some critiques
in India may call the handling, processing and delivery of personal ID and financial documents
by private contractors as violation of privacy, however it is not so.[12][13][14][15]
One should avail services from the authorised PAN Centres established by NSDL e-Governance
and UTIITSL which have been entrusted by the Income Tax Department.
NSDL e-Gov centres can be located at TIN website.[16] It is now very easy to apply online using
Aadhaar based eSignature at NSDL e-Gov's website. One can register first at NSDL e-Gov's
website https://www.onlineservices.nsdl.com/paam/endUserRegisterContact.html. After
registration, applicant receives a token number. One can continue with filling form. Applicant
can save the details and complete the form at his convenience by logging using his/her registered
details. Onefcan upload photo/signature and supporting documents and finally eSign the
application using Aadhaar and OTP. After successful eSign one can download and keep copy of
signed form for his reference. Acknowledgement receipt & form is also received through e-mail
at registered email ID. This facility is very simple and easy to use. ort gefsuccsf y
UTIITSL centres can be located at its website [17]

PAN for Foreign Citizens

PAN is an important document for foreign citizens also, who wish to undertake business in India
or wish to invest in India. Procedure to obtain PAN is same as applicable for Indian citizens.
However, the application is required to be filled using Form 49AA meant for foreign citizens and
submitted at any of the authorized PAN Service Centre through the authorized representative in
India. List of documents applicable for foreign citizens are given below:
Individuals and HUF

Documents accepted as Proof of Identity

1. Copy of passport, or
2. Copy of Person of Indian Origin (PIO) card issued by Government of India, or
3. Copy of Overseas Citizen of India (OCI) card issued by Government of India, Or
4. Copy of other national or citizenship Identification Number or Taxpayer Identification
Number duly attested by Apostille (in respect of countries which are signatories to the
Hague Convention of 1961) or by the Indian Embassy or High Commission or Consulate
in the country where the applicant is located or authorised officials of overseas branches
of Scheduled Banks registered in India (in prescribed format) .
Documents accepted as Proof of Address
1. Proof of Identity documents mentioned above bearing address of the applicant or
2. Copy of Bank account statement in the country of residence, or
3. Copy of Non-resident External (NRE) bank account statement in India, or
4. Copy of Certificate of Residence in India or Residential permit issued by the State Police
Authorities, or
5. Copy of Registration certificate issued by the Foreigner's Registration Office showing
Indian address, or
6. Copy of Visa granted & Copy of appointment letter or contract from Indian Company &
Certificate (in original) of Indian address issued by the employer.
For other than Individuals and HUF (Including those having no office of their own in
India)
Documents accepted as Proof of Identity & Proof of Address
1. Copy of Certificate of Registration issued in the country where the applicant is located,
duly attested by Apostille (in respect of the countries which are signatories to the
Hague Convention of 1961) or by the Indian Embassy or High Commission or Consulate
in the country where the applicant is located or authorised officials of overseas branches
of Scheduled Banks registered in India (in prescribed format) ; or
2. Copy of registration certificate issued in India or of approval granted to set up office in
India by Indian Authorities.

At present, PAN Service Centres are located in India only. However, foreign citizens may find
online mode of application more convenient and easy. The online facility allows payment of fees
using credit card option for foreign citizens. Also, the fees charges is reasonable; i.e. Rs. 107 if
the PAN card is to be received in India and Rs. 989 if the PAN Card is to be received at a foreign
location.

Concerns with PAN Cards

Although there are only 30 million (3 crore) income tax payers in India, yet there are 170 million
genuine PANs issued as of 2014.[18] While the alphanumeric PAN number is unique, individuals
and corporate entities have been able to obtain multiple PAN cards fraudulently. It is illegal to
obtain multiple PANs and there is a penalty of Rs.10,000/= when caught. In addition, there are
fake PAN cards due to ubiquitous plastic card printers.[19][20][21][22][23] Additionally, illegal
immigrants have also got PAN cards issued to them; most have used the services of PAN card
agents.[24][25][26][27][28][29][30]
One should take due care to refrain from using services of tout agents who claim to provide hand
delivery of PAN cards and charge extra. Also, there are certain sites that have proliferated on the
web that provide online PAN service at additional charge. However, there are only two
authorised entities who are also authorised to host online PAN application services on behalf of
ITD, i.e. NSDL e-Governance & UTIITSL.

Unified Payments Interface

From Wikipedia, the free encyclopedia
Unified Payments Interface
Industry
Finance
Founded
2016
Headquarters Mumbai, Maharashtra, India[1]
Key people
Products
Parent
Slogan
Website

Nandan Nilekani
Raghuram Rajan
Online platform for transactions
National Payments Corporation of
India
Less cash more digital
Official site

Unified Payments Interface (UPI) is an architecture and a set of standard APIs to facilitate the
next generation online immediate payments leveraging trends such as increasing smartphone
adoption, Indian language interfaces, and universal access to Internet and data.[2] UPI was

launched by National Payments Corporation of India with Reserve Bank of India's vision of
migrating towards a 'less-cash' and more digital society. NPCI has built on the Immediate
Payment Service(IMPS) platform through which one could transfer money instantly by going
online-by adding another layer that allows easy debit capability even on mobile phones.[3]
Trupay India was the first private entity to give a functional C2C and B2C UPI solution.Trupay
by-passes all intermediate layers, allowing the user to pay anyone on its contact list directly from
ones bank account instantly. It securely transforms ones bank account into a pay on the go
solution which can then be used to pay anyone with just their phone number.[4]
The UPI payments can be used for:[5]

Paying to Cash on Deliveries.

Merchant transactions at Physical/e-commerce stores.

Making IMPS alike payments without the need of knowing Bank A/c or IFSC's.

Allows merchants cash settlements in real-time.

Pay utility Bills, insurance premiums.

Transfer Money to friends and relatives

Once the Bank Apps and Non-Bank Apps with UPI are launched, users will simply have to
register for UPI and generate a Unique Identifier. Those who use Mobile Banking will already
have their M-PIN, the others will have to generate the M-PIN. The M-PIN will be the 2nd factor
authentication for payments through UPI. To make a transaction, the payer will require the
unique identifier of the payee and will require his/her M-Pin. UPI will eliminate the need of
sharing long Bank account numbers and IFSC codes and making the payment hassle free.[6]

How it works
Any Android smartphone user who has an account with a UPI-partnered bank can download the
app to make person-to-person and e-commerce transactions with the use of a virtual address such
as name--@--bankname.com or mobilenumber--@--bankname.com.
You just need to download the app, set the PIN, create a virtual address and link any account of
any bank that has partnered with NPCI for UPI service, said Axis Banks Singh.
Here, the customer doesnt have to disclose any sensitive information such as bank account
number or IFSC code during a financial transaction.[7]
As of now, 29 banks are a part of the UPI network, out of which 15 major banks have already
integrated the interface into their smartphone apps. These banks include ICICI Bank, Axis Bank

and few others. UPI can be used for grocery shopping at the supermarket, or online shopping as
well. It will eliminate the need of entering card details such as number, expiry date, CVV code
and OTP.[8]

Discover Card
From Wikipedia, the free encyclopedia
Discover Financial Services
Industry
Founded
Founder
Area served
Parent
Divisions
Website

Financial services
1985; 31 years ago
Sears
United States (primary)
Discover Financial
Discover Bank
discover.com

The Discover Card is a credit card, issued primarily in the United States. It was announced by
Sears in 1985 and was introduced nationwide the following year. Discover was part of Dean
Witter, and then Morgan Stanley, until 2007, when Discover Financial Services became an
independent company. Novus was once the major processing center that partnered with the
company. The Novus logo was retired, replaced by the Discover Network logo.
Most cards with the Discover brand are issued by Discover Bank, formerly the Greenwood
Trust Company. Discover Card transactions are processed through the Discover Network
payment network. As of February 2006, the company announced that it would begin offering
Discover Debit cards to banks, made possible by the Pulse payment system, which Discover
acquired in 2005.[1]
Discover Card is the third-largest credit card brand in the United States, with nearly 61 million
cardholders.[citation needed]

Contents

1 History
o 1.1 Discover Bank

2 Business developments

3 Advertising

4 In popular culture

5 References

History
At the time the Discover Card was introduced, Sears was the largest retailer in the United States.
It had purchased the Dean Witter Reynolds Organization (brokerage) and Coldwell, Banker &
Company (real estate) in 1981[2] as an attempt to add financial services to its portfolio of
customer services. Ray Kennedy, Sr, father of country singer Ray Kennedy and the credit
manager for Sears, conceived the card.[3] Together with the Discover Card (and its issuing bank,
the Greenwood Trust Company, owned by Sears), this was named the Sears Financial Network.
Early Discover Cards bore a small embossed symbol representing the Sears Tower, then the
company's headquarters.

Discover and Novus retired acceptance mark (still seen in many places)
Unlike other attempts at creating a credit card to rival MasterCard and Visa, such as Citibank's
Choice card, the Discover Card quickly gained a large national consumer base. It carried no
annual fee, which was uncommon at the time, and offered a typically higher credit limit than
similar cards. Cardholders could earn a "Cashback Bonus," in which a percentage of the amount
spent would be refunded to the account (originally 2%, now as high as 5%), depending on how
much the card was used. Retailers were wooed by merchant fees significantly lower[citation needed]
than those of other widely accepted credit cards. The Discover Card was also noteworthy for
being the only credit card accepted by the U.S. Customs Service to pay customs duty.[citation needed]
Due to its not charging a percentage fee to retailers, unlike Visa, MasterCard, and American
Express, Discover Card was also the only credit card accepted at Sam's Club; until recently they
have started to accept MasterCard, and now American Express (see below).
The plan to create a one-stop financial-services center in Sears stores was not as successful as
Sears had hoped, and its promotion of the Discover Card was thought both to hurt Sears turnover
and to restrict the card's potential. Other retailers resisted it, as they believed they would be
helping their competitor.
In light of these developments, and with strong competition both from Wal-Mart and from socalled category killers such as Toys "R" Us, Sears began to face difficulties in the late 1980s.
Sears sold its financial businesses in 1993, and began to accept MasterCard and Visa in addition
to its store credit card and the Discover Card. The Discover Card became part of the Dean Witter

financial services firm. Dean Witter Discover merged with Morgan Stanley in 1997. In 2000,
Greenwood Trust changed its name to Discover Bank. [4]

Discover Bank
The Greenwood Trust Company was founded in 1911 and is based in Greenwood, Delaware. It
was acquired by Discover Financial Services in 1985 and renamed Discover Bank in 2000. The
first and original location of Greenwood Trust Co. on East Market Street is still operating and
remains the only banking location of the Discover Bank. [5]

Business developments

Discover it card, the flagship card issued by Discover Financial Services.

In October 2004, the Supreme Court upheld a ruling in Discover Card's favor that challenged
exclusionary policies of Visa and MasterCard. Before this ruling, Visa and MasterCard would not
allow banks to issue a Discover (or American Express) Card if they issued a Visa or MasterCard.
Within days of the court ruling, Discover Card filed a lawsuit in federal court seeking damages
from Visa and MasterCard. In 2005, Discover Card acquired Pulse, an electronic funds transfer
association, allowing it to issue and market debit and ATM cards.
Shortly after the 2004 Supreme Court ruling, Discover struck its first deal to have its card issued
by another bank, GE Consumer Finance, which began to issue credit cards for retailer Wal-Mart
and its wholesale warehouse stores, Sam's Club. Transactions for both cards were processed on
the Discover Network. Sam's Club exclusively accepted Discover Card for many years; since
November 2006, it has also accepted MasterCard for purchases. In April 2014, Walmart
announced that they were ending their relationship with Discover and would begin converting all
Discover Network-branded cards to MasterCard beginning in June 2014.[6]
HSBC has issued credit cards processed through the Discover Network, and branded with the
Discover logo, since its acquisition of card issuer Metris in late 2005. Metris had originally
signed an agreement with Discover in September 2005, three months prior to the HSBC
acquisition.
Morgan Stanley had long desired to sell the Discover Card business, and in April 2005,
announced that it would divest Discover Financial Services as an independent company within
six months. By June industry sources reported that Morgan Stanley was reassessing its plan to
spin off Discover. Finally, in August 2005, the company confirmed it would not sell Discover. In

yet another reversal, in December 2006, Morgan Stanley announced it would spin off Discover
as a standalone company by the end of August 2007. The spin-off was finalized ahead of
schedule, on June 30, 2007.
In September 2012, Discover was ordered to pay over $200 million in fines and customer
reimbursements to settle accusations by U.S. federal regulators that it had engaged in deceptive
telemarketing tactics.[7]

Advertising
From 1998 to 2007, Discover Card owned a billboard at One Times Square, just above the
flagpole where the Times Square Ball is placed, until Toshiba bought the space. As a result, its
logo could be seen on national television during New Year's Eve, while the ball was dropped.
Discover also sponsored the ball drop itself.[8][9]
From its opening in 2001 to 2012, Sugarloaf Mills Mall in Lawrenceville, Georgia was named
Discover Mills in a naming rights partnership with Discover Card. The slogan for the mall was
"Where Discover Card is the Smart Choice." It was the first shopping mall to have granted
naming rights to interested companies.[10] [11]

In popular culture
In the Futurama episode "A Fishful of Dollars", Fry attempts to buy a pair of briefs with his
various credit cards. As he lists the card companies, the cashier apologizes and says they have
been closed for multiple centuries. When he gets to his Discover card, the cashier says they do
not take Discover.
In 2007, American animated television series Family Guy made fun of the Discover card. In the
episode, "No Meals on Wheels", which first aired on March 25, A customer asks Peter if his
restaurant accepts the Discover card, which leads Peter to list several comical alternative
methods of payment that he would rather accept.
In 2016, the American animated television series American Dad! poked fun at the Discover card.
In the episode, "The Devil Wears a Lapel Pin", which first aired on March 7, Roger gets a
"Discovery" card, and he and Steve search for stores that will accept it, finally finding them in a
mall which hasn't changed since the 1980s.

Entrust Bankcard Company

From Wikipedia, the free encyclopedia
(Redirected from Entrust Bankcard)
Entrust Bankcard Company

Type
Industry
Founded
Area served
Key people
Products
Services
Number of
employees
Website

Private
Merchant Services, Financial services
Mesa, Arizona, U.S. 2006
Worldwide
Nathan J. Reis (CEO)
Point of sale, online gateway, wireless
payment services, and gift card/loyalty
programs
Finance
158 (2010)
www.entrustbankcard.com

Entrust Bankcard is a payment processing company based in Phoenix, Arizona in the United
States. Founded in 2006, Entrust Bankcard was listed at #18 on Inc.'s 2011 "Inc. 500" of the 500
fastest growing companies in America.[1] Entrust Bankcard provides point of sale, online gateway
and wireless payment services for small and mid-sized businesses, as well as gift card and
loyalty programs.
2010 revenue for Entrust Bankcard was $9.4 million, an increase of 8,417% over 2007's $110
thousand. Entrust grew from 6 employees to 158 employees during that time.[1] Since 2008,
Entrust Bankcard has gone from serving 800 customers to almost 4,000 by November 2010.[2]
Entrust Bankcard claims to donate 10% of its profits toward Engage Foundation but never
followed through. The Engage Foundation is a charity owned by Nathan J. Reis, the Entrust
Bankcard CEO. The Engage Foundation is directed towards single mothers and young children
as Reis was raised by a single mother in Wisconsin.[2]
Entrust Bankcard was an IMPACT award finalist in 2011.
On May 20, 2011, the Better Business Bureau revoked the accreditation of Entrust Bankcard,
leaving it with a rating of "F".[3]

Contents

1 Entrust Bankcard Swipe Safe

2 Careers

3 References

4 External links

Entrust Bankcard Swipe Safe

Swipe Safe is the primary product of Entrust Bankcard. The Swipe Safe product allows Entrust
Bankcard customers to be reimbursed for their chargebacks. Chargebacks can be a very large
burden on small to mid-size businesses, which are Entrust Bankcard's target market. The
chargeback policy Entrust Bankcard has implemented through their Swipe Safe product has
made them the first merchant processor to reimburse for chargebacks.

Careers
As Entrust Bankcard has grown from 6 to 158 employees, there have been many career
opportunities within the company. Entrust Bankcard has been primarily focused on growth
surrounding account managers as their customer base has increased by 400% from 2008-2010.

MasterCard
From Wikipedia, the free encyclopedia
MasterCard

Logo since July 14, 2016

Type
Public
NYSE: MA
Traded as
S&P 500 Component
Industry
Financial services
December 16, 1966; 49 years ago
(as Master Charge: The Interbank
Founded
Card)
December 16, 1979; 36 years ago
(as MasterCard)
Headquarters MasterCard International Global

Area served
Key people
Products
Revenue
Operating
income
Net income
Total assets
Total equity
Number of
employees
Website

Headquarters
Purchase, New York, United States
Worldwide
Richard Haythornthwaite
(Chairman)
Ajaypal Singh Banga (President &
CEO)
Credit cards, payment systems
US$ 9.66 billion (2015)[1]
US$ 5.07 billion (2015)[1]
US$ 3.80 billion (2015)[1]
US$ 16.26 billion (2015)[1]
US$ 6.02 billion (2015)[1]
10,300 (2015)[1]
www.mastercard.com

MasterCard Incorporated (NYSE: MA) or MasterCard Worldwide is an American

multinational financial services corporation headquartered in the MasterCard International
Global Headquarters, Purchase, New York, United States,[1] in Westchester County. The Global
Operations Headquarters is located in O'Fallon, Missouri, United States, a suburb of St. Louis,
Missouri. Throughout the world, its principal business is to process payments between the banks
of merchants and the card issuing banks or credit unions of the purchasers who use the
"MasterCard" brand debit and credit cards to make purchases. MasterCard Worldwide has been a
publicly traded company since 2006. Prior to its initial public offering, MasterCard Worldwide
was a cooperative owned by the more than 25,000 financial institutions that issue its branded
cards.
MasterCard, originally known as Interbank/Master Charge,[2] was created by several California
banks as a competitor to the BankAmericard issued by Bank of America, which later became the
Visa credit card issued by Visa Inc. From 1966 to 1979, MasterCard was called "Interbank" and
"Master Charge".

Contents

1 History
o 1.1 IPO
o 1.2 Litigation

1.2.1 Anti-trust lawsuit by ATM operators

1.2.2 Debit card swipe fee price fixing

1.2.3 Antitrust settlement with U.S. Justice Department

1.2.4 Payment Card Interchange Fee and Merchant Discount Antitrust

Litigation

2 Criticism
o 2.1 Anti-trust issues in the United States
o 2.2 Anti-trust investigations in Europe
o 2.3 Sanctions of Russia
o 2.4 Regulatory action in Australia and New Zealand
o 2.5 Blocking payments to WikiLeaks
o 2.6 Corporate branding of all Nigerian ID Cards

3 Prepaid debit cards

4 Advertising
o 4.1 Litigation of "Priceless" ad campaign

5 MasterCard MarketPlace

6 Sports sponsorships

7 Corporate affairs
o 7.1 Headquarters
o 7.2 Management and Board of Directors

8 MasterCard Contactless

9 QkR

10 Banknet

11 Publications

12 See also

13 References

14 External links

History

The 1966-1979 Master Charge and Interbank logos

First MasterCard logo used from December 16, 1979 to 1988

MasterCard logo used from December 16, 1988 to 1995

MasterCard logo used by the corporate and the cards from December 16, 1995 to December 16,
2006, and on the cards until July 14, 2016.

MasterCard corporate logo used from December 16, 2006 to July 14, 2016.

mastercard logo used since July 14, 2016.

Logo of Maestro, a debit card subsidiary, with a similar design to the MasterCard logo.

Logo of Cirrus, the interbank network subsidiary, with a similar design to the MasterCard logo.
The original banks behind MasterCard were United California Bank (later First Interstate Bank
and subsequently merged into Wells Fargo Bank), Wells Fargo, Crocker National Bank (also
subsequently merged into Wells Fargo), and the Bank of California (subsequently merged into
the Union Bank of California).
In 1966, the aforementioned group of California banks formed the Interbank Card Association
(ICA). With the help of New York's Marine Midland Bank, now HSBC Bank USA, these banks
joined with the ICA to create "Master Charge: The Interbank Card". The card was given a

significant boost in 1969, when First National City Bank joined, merging its proprietary
Everything Card with Master Charge.
In 1968, MasterCard International and Eurocard started a strategic alliance, which effectively
allowed MasterCard access to the European market, and for Eurocard to be accepted on the
MasterCard network. The Access card system from the United Kingdom joined the
MasterCard/Eurocard alliance in 1972.
In 1979, "Master Charge: The Interbank Card" was renamed simply "MasterCard". In the early
1990s MasterCard then bought the British Access card and the Access name was dropped.
In 2002, MasterCard International merged with Europay International SA, another large creditcard issuer association, which for many years issued cards under the name Eurocard (payment
card).
In 2006, MasterCard International underwent another name change to MasterCard Worldwide.
This was done in order to suggest a more global scale of operations. In addition, the company
introduced a new corporate logo adding a third circle to the two that had been used in the past
(the familiar card logo, resembling a Venn diagram, remains unchanged). A new corporate
tagline was introduced at the same time: "The Heart of Commerce".[3]
In 2010, MasterCard expanded its e-commerce offering with the acquisition of DataCash, a UKbased payment processing and fraud/risk management provider.[4][5]
In 2012, MasterCard announced the expansion of its mobile contactless payments program,
including markets across the Middle East.[6]
In 2014, MasterCard acquired Australian leading rewards program manager company Pinpoint
for an undisclosed amount.[7]
MasterCard teamed with Apple in September 2014, to incorporate a new mobile wallet feature
into Apple's new iPhone models, enabling users to more readily use their MasterCard, and other
credit cards.[8]

IPO
The company, which had been organized as a cooperative of banks, had an initial public offering
on May 25, 2006 at 39.00 USD. The stock is traded on the NYSE under the symbol MA with the
market capitalization of $105.15B (as of August 2016).[9]

Litigation
Anti-trust lawsuit by ATM operators
MasterCard, along with Visa, has been sued in a class action by ATM operators that claims the
credit card networks' rules effectively fix ATM access fees. The suit claims that this is a restraint

on trade in violation of federal law. The lawsuit was filed by the National ATM Council and
independent operators of automated teller machines. More specifically, it is alleged that
MasterCard's and Visa's network rules prohibit ATM operators from offering lower prices for
transactions over PIN-debit networks that are not affiliated with Visa or MasterCard. The suit
says that this price fixing artificially raises the price that consumers pay using ATMs, limits the
revenue that ATM-operators earn, and violates the Sherman Act's prohibition against
unreasonable restraints of trade. Johnathan Rubin, an attorney for the plaintiffs said, "Visa and
MasterCard are the ringleaders, organizers, and enforcers of a conspiracy among U.S. banks to
fix the price of ATM access fees in order to keep the competition at bay." [10]
Debit card swipe fee price fixing
Both MasterCard and Visa have paid approximately $3 billion in damages resulting from a classaction lawsuit filed by Hagens Berman in January 1996.[11] The litigation cites several retail
giants as plaintiffs, including Wal-Mart, Sears, Roebuck & Co., and Safeway.[12]
Antitrust settlement with U.S. Justice Department
In October 2010, Visa and MasterCard reached a settlement with the U.S. Justice Department in
another antitrust case. The companies agreed to allow merchants displaying their logos to decline
certain types of cards (because interchange fees differ), or to offer consumers discounts for using
cheaper cards.[13]
Payment Card Interchange Fee and Merchant Discount Antitrust Litigation
Main article: Payment Card Interchange Fee and Merchant Discount Antitrust Litigation
On November 27, 2012, a federal judge entered an order granting preliminary approval to a
proposed settlement to a class-action lawsuit filed in 2005 by merchants and trade associations
against MasterCard, Visa, and many credit card issuers. The suit was filed due to price fixing and
other anti-competitive trade practices employed by MasterCard and Visa. A majority of namedclass plaintiffs have objected and vowed to opt out of the settlement. Opponents object to
provisions that would bar future lawsuits and even prevent merchants from opting out of
significant portions of the proposed settlement. Stephen Neuwirth, a lawyer representing Home
Depot, said, Its so obvious Visa and MasterCard were prepared to make a large payment
because of the scope of the releases being given. Its all one quid pro quo and merchants like the
Home Depot are being denied the chance to opt out of that quid pro quo and say this is a bad
deal. [14]
Plaintiffs allege that Visa, MasterCard, and major credit card issuers engaged in a conspiracy to
fix interchange fees, also known as swipe fees, that are charged to merchants for the privilege of
accepting payment cards at artificially high levels. In their complaint, the plaintiffs also alleged
that the defendants unfairly interfere with merchants from encouraging customers to use less
expensive forms of payment such as lower-cost cards, cash, and checks.[14]

The settlement provides for the cash equivalent of a 10 basis-point reduction (0.1 percent) of
swipe fees charged to merchants for a period of eight months. This eight-month period would
probably begin in the middle of 2013. The total value of the settlement will be about $7.25
billion.[14]

Criticism
Anti-trust issues in the United States
Few companies have faced more antitrust lawsuits both in the US and abroad.[15]
MasterCard, along with Visa, engaged in systematic parallel exclusion against American Express
during the 1980s and 1990s. MasterCard used exclusivity clauses in its contracts and blacklists to
prevent banks from doing business with American Express. Such exclusionary clauses and other
written evidence was used by the United States Department of Justice in regulatory actions
against MasterCard and Visa.[16] Discover has sued MasterCard for similar issues.[15]
In 1996 about 4 million merchants sued MasterCard in federal court for making them accept
debit cards if they wanted to accept credit cards and dramatically increasing credit card swipe
fees. This case was settled with a multibillion-dollar payment in 2003. This was the largest antitrust award in history.[15]
In 1998, the Department of Justice sued MasterCard over rules prohibiting their issuing banks
from doing business with American Express or Discover. The Department of Justice won in 2001
and the verdict withstood appeal. American Express also filed suit[15]
On August 23, 2001, MasterCard International Inc. was sued for violating the Florida Deceptive
and Unfair Trade Practices Act.[17]
On November 15, 2004, MasterCard Inc. paid damages to American Express, due to
anticompetitive practices that prevented American Express from issuing cards through U.S.
banks,[18] and paid 1.8 billion dollars for settlement.[19]

Anti-trust investigations in Europe

The European Union has repeatedly criticised MasterCard for monopolistic trade practices. In
April 2009, MasterCard reached a settlement with the European Union in an antitrust case,
promising to reduce debit card swipe fees to 0.2 percent of purchases.[20] In December 2010, a
senior official from the European Central Bank called for a break-up of the Visa/MasterCard
duopoly by creation of a new European debit card for use in the Single Euro Payments Area
(SEPA).[21]
WikiLeaks published documents showing that American authorities lobbied Russia to defend the
interests of Visa and MasterCard.[22] In response MasterCard blocked payments to WikiLeaks.
Members of the European Parliament expressed concern that payments from European citizens

to a European corporation could apparently be blocked by the United States, and called for a
further reduction in the dominance of Visa and MasterCard in the European payment system.[23]
As of 2013, MasterCard is under investigation by the European Union for the high fees it charges
tourists who use their cards in Europe, and other anti-competitive practices that could hinder
electronic commerce and international trade, and high fees associated with premium credit cards.
The EU's competition regulator said that these fees were of special concern because of the
growing role of non-cash payments. MasterCard charges non-European tourists much more than
customers using cards issued in Europe. MasterCard could be fined up to 10 percent of its 2012
revenue or around $740 million. MasterCard was banned from charging fees on cross-border
transactions conducted wholly within the EU via a ruling by the European Commission in 2007.
[24]
The European Commission said that their investigation also includes large differences in fees
across national borders. For instance, a 50-euro payment might cost 10 euro cents in the
Netherlands but eight times that amount in Poland. The Commission argues that MasterCard
rules that prohibit merchants from enjoying better terms offered in other EU countries may be
against anti-trust law.
The European Consumer Organisation (BEUC) praised the action against MasterCard. BEUC
said interbank fees push up prices and hurt consumers. BEUC Director General Monique Goyens
said, ""So in the end, all consumers are hit by a scheme which ultimately rewards the card
company and issuing bank." [24]

Sanctions of Russia
On December 27, 2014, Visa Inc. and MasterCard suspended servicing some Russian banks in
Crimea:[25] Rossiya Bank, Sobinbank, SMP Bank and Investcapitalbank,[26] after the USA issued
sanctions against the Russian government due to the 2014 Russian military intervention in
Ukraine.

Regulatory action in Australia and New Zealand

In 2003, the Reserve Bank of Australia required that interchange fees be dramatically reduced,
from about 0.95% of the transaction to approximately 0.5%.[citation needed] One notable result has
been the reduced use of reward cards and increased use of debit cards. Australia also prohibited
the "no surcharge" rule, a policy established by credit card networks like Visa and MasterCard to
prevent merchants from charging a credit card usage fee to the cardholder. A surcharge would
mitigate or even exceed the merchant discount paid by a merchant, but would also make the
cardholder more reluctant to use the card as the method of payment. Australia has also made
changes to the interchange rates on debit cards and has considered abolishing interchange fees
altogether.
As of November 2006, New Zealand was considering similar actions, following a Commerce
Commission lawsuit alleging price-fixing by Visa and MasterCard. In New Zealand, merchants
pay a 1.8% fee on every credit card transaction.

Blocking payments to WikiLeaks

In December 2010, MasterCard blocked all payments to WikiLeaks due to claims that they
engage in illegal activity.[27] In a response, a group of online activists calling themselves
"Anonymous" organised a denial-of-service attack; as a result, the MasterCard website
experienced downtime on December 89, 2010.[28] On December 9, 2010 the servers of
MasterCard underwent a massive attack[29] as part of an Operation Avenge Assange for closing
down payments of whistleblowing platform WikiLeaks. According to several news sites, security
of thousands of credit cards was compromised during that attack due to a phishing-site set up by
the attackers.[30] However, MasterCard denied this, stating that "cardholder account data has not
been placed at risk".[31] WikiLeaks spokesman said: We neither condemn nor applaud these
attacks."[32] U.N. High Commissioner for Human Rights, Navi Pillay said that closing down
credit lines for donations to WikiLeaks "could be interpreted as an attempt to censor the
publication of information, thus potentially violating WikiLeaks' right to freedom of expression".
[33]

The company that enables WikiLeaks to accept credit and debit card donations[who?] said it would
take legal action against Visa Europe and MasterCard.[34] Iceland-based IT firm DataCell said it
would move immediately to try to force the two companies to resume allowing payments to the
website.[citation needed] DataCell had earlier[when?] said that suspension of payments towards WikiLeaks
is a violation of the agreements with their customers. On July 14, 2011 DataCell announced they
had filed a complaint with the European Commission claiming the closure by Visa and
MasterCard of Datcells access to the payment card networks violated the competition rules of
the European Community.[35]
On July 12, 2012 a Reykjavk court ruled that Valitor, Visa and MasterCard's partner in Iceland,
had to start processing donations within fourteen days[36] on pain of daily fines to the amount of
ISK 800,000 (some $6000) for each day after that time, to open the payment gateway. Valitor
also had to pay DataCell's litigation costs of ISK 1,500,000.[37][38]

Corporate branding of all Nigerian ID Cards

In 2014, pursuant to an agreement between MasterCard and the Nigerian Government, acting
through the National Identity Management Commission, the new Nigerian ID cards will bear
MasterCard logo, contain personal database data and double as payment cards, irrevocably
linking such payments to the individuals,[39] sparking criticism by the Civil Rights Congress
alleging that it "represents a stamped ownership of a Nigerian by an American company ...
reminiscent of the logo pasted on the bodies of African slaves transported across the Atlantic."[40]

Prepaid debit cards

MasterCard, Comerica Bank, and the U.S. Treasury Department teamed up in 2008 to create the
Direct Express Debit MasterCard prepaid debit card. The federal government uses the Express
Debit product to issue electronic payments to people who do not have bank accounts, who are
often referred to collectively as the unbanked. Comerica Bank is the issuing bank for the debit
card.
The Direct Express cards give recipients a number of consumer protections.

In June 2013, MasterCard announced a partnership with British Airways to offer members the
Executive Club Multi-currency Cash Passport, which will allow members to earn extra points
and make multi-currency payments. The Passport card allows users to load up to ten currencies
(euro, pound, U.S. dollar, Turkish Lira, Swiss franc, Australian dollar, Canadian dollar, New
Zealand dollar, U.A.E. dirham and South African rand) at a locked-in rate. When used, the card
selects the local currency to ensure the best exchange rate, and if the local currency is not already
loaded onto the card, funds are used from other currencies.[citation needed]

Advertising
MasterCard's current advertising campaign tagline is "Priceless". The slogan associated with the
campaign is "There are some things money can't buy. For everything else, there's MasterCard."
The Priceless campaign in more recent iterations has been applicable to both MasterCard's credit
card and debit card products. They also use the Priceless description to promote products such as
their "priceless travel" site which features deals and offers for MasterCard holders,[41] and
"priceless cities", offers for people in specified locations.[42]
The first of these Priceless ads was run during the 1997 World Series and there are numerous
different TV, radio and print ads.[43] MasterCard registered Priceless as a trademark.[44] Actor
Billy Crudup has been the voice in the US market; in the UK, actor Jack Davenport is the voice.
The original idea and concept of the campaign stems from the advertising agency of McCann
Erickson (as it was named in 1997).[45]
The purpose of the campaign is to position MasterCard as a friendly credit card company with a
sense of humor, as well as responding to the public's worry that everything is being commodified
and that people are becoming too materialistic.[46]
Many parodies have been made using this same pattern, especially on Comedy Central, though
MasterCard has threatened legal action,[47] contending that MasterCard views such parodies as a
violation of its rights under the federal and state trademark and unfair competition laws, under
the federal and state anti-dilution laws, and under the Copyright Act. Despite these claims,
however, noted US consumer advocate and presidential candidate Ralph Nader emerged
victorious (after a four-year battle) in the suit MasterCard brought against him after he produced
his own "Priceless" political commercials.[48] In the election ads Nader had criticized the
corporate financing of both the Bush and Gore campaigns. Using the theme and some of the
language behind the MasterCard "Priceless" campaign the election specified the dollar amounts
contributed by corporate interests to both candidates and then summed it up with "finding out the
truth ... priceless". MasterCard sued Nader's campaign committee and filed a temporary
restraining order to stop the ads. The TRO was not granted and Nader defended the ads by
claiming they were protected under the fair use doctrine.[49]

Litigation of "Priceless" ad campaign

In 1994 Argentinian born Edgardo Apestguia created in Paraguay an ad campaign for Bancard's
credit card. Its slogan was "There are things money can't buy, but, for everything else, there is
Bancard".[50] Plagiarism lawsuits were filed in Paraguay and Chile against MasterCard and their

publicist Mc Cann, who registered the "priceless" slogan ads in the US in 1999 and was
represented in Paraguay by Nafta and Biedermann publicists at the time.

MasterCard MarketPlace
Through a partnership with an Internet company that specializes in personalized shopping,
MasterCard introduced a Web shopping mall on April 16, 2010 that it said can pinpoint with
considerable accuracy what its cardholders are likely to purchase.[51]

Sports sponsorships
MasterCard engages in the sponsorship of major sporting events throughout the world. These
include the New Zealand All Blacks the country's rugby team,[52] Major League Baseball, the
UEFA Champions League, the PGA Tour's Arnold Palmer Invitational Presented by MasterCard,
[53]
the Canadian Hockey League's Memorial Cup and recently announced a new sponsorship deal
with Australian Cricket team. Previously it also sponsored FIFA World Cup but withdrew its
contract after a court settlement and its rival Visa took up the contract in 2007.[54] In 1997,
MasterCard was the main sponsor of the MasterCard Lola Formula One team, which withdrew
from the 1997 Formula One season after its first race due to financial problems.

Corporate affairs
Headquarters
Main article: MasterCard International Global Headquarters
MasterCard has its headquarters in the MasterCard International Global Headquarters in
Purchase, New York.[55]
The Global Operations Center is located in O'Fallon, Missouri, a suburb of St. Louis.

Management and Board of Directors

Key executives include:[56][57]

Ajay Banga: President and Chief

Executive Officer

Chris McWilton: President North

American Markets

Walt Macnee: Vice Chairman

Ann Cairns: President - International

Markets

Robert Reeg: President Global

Technology & Operations

Javier Perez: President Europe

Raja Rajamannar: Chief Marketing

Officer Global Marketing
Gary Flood: President Products &
Services

Noah Hanft: General Counsel, Chief

Franchise Officer and Corporate
President

Ron Garrow: Chief Human Resources

Officer

Vicky Bindra: President Asia/Pacific

Betty Devita: President - Canada

Gilberto Caldart: President - LA/C

Michael Miebach: President - Middle

East & Africa

Prior to its IPO in 2006, MasterCard was an association that had a board of directors composed
of banks. The current Board of Directors includes the following individuals:

Richard Haythornthwaite, Chairman of the Board MasterCard Incorporated, President,

PSI UK Ltd

Ajay Banga, President and Chief Executive Officer, MasterCard Worldwide

Silvio Barzi, Former Senior Advisor and Executive Officer, UniCredit Group

David R. Carlucci, Former Chairman and Chief Executive Officer, IMS Health
Incorporated

Steven J. Freiberg, Senior Advisor, The Boston Consulting Group

Nancy J. Karch, Director Emeritus, McKinsey & Company

Marc Olivie, President and Chief Executive Officer, W.C. Bradley Co.

Rima Qureshi, Senior Vice President Strategic Projects, Ericsson

Jose Octavio Reyes Lagunes, Vice Chairman, Coca-Cola Export Corporation, The CocaCola Company

Mark Schwartz, Vice Chairman, The Goldman Sachs Group, Inc., Chairman, Goldman
Sachs Asia Pacific

Edward Suning Tian, Chairman, China Broadband Capital Partners, L.P.

Jackson P. Tai, Former Vice Chairman and Chief Executive Officer, DBS Group and DBS
Bank Ltd.

In June 2013, MasterCard has announced the promotion of Gilberto Caldart to head of Latin
America and Caribbean division. Ann Cairns, the president of MasterCards international
markets division, stated that she is certain that Gilberto, as the new regional head will continue to
help customers grow their business, and provide MasterCard cardholders with innovative
payment products and solutions. Caldart joined MasterCard from Citi Brazil in 2008, where he
served as country business manager and oversaw the retail bank, consumer finance and cards
business. He holds a bachelor's degree in business administration and accounting, as well as a
master's degree from Duke University.[citation needed]

MasterCard Contactless

PayPass RFID chip from a MasterCard

MasterCard issued by the Commonwealth Bank of Australia. Semi-transparency shows PayPass

antenna, connecting to RFID chip.
MasterCard Contactless (formerly branded Paypass[58]) is an EMV-compatible, "contactless"
payment feature similar to American Express' ExpressPay, and Visa payWave. All three use the
same symbol as shown on the right. It is based on the ISO/IEC 14443 standard that provides

cardholders with a simpler way to pay by tapping a payment card or other payment device, such
as a phone or key fob, on a point-of-sale terminal reader rather than swiping or inserting a card.
PayPass can currently be used on transactions up to and including 30 GBP, 25 EUR, 50 USD,
100 CAD, 200 NOK, 80 NZD, or 100 AUD.
In 2003, MasterCard concluded a nine-month PayPass market trial in Orlando, Florida with
JPMorgan Chase, Citibank, and MBNA. More than 16,000 cardholders and more than 60 retailer
locations participated in the market trial.[needs update] In addition, MasterCard worked with Nokia,
AT&T Wireless, and JPMorgan Chase to incorporate MasterCard PayPass into mobile phones
using near-field communication technology, in Dallas, Texas. In 2011, Google and MasterCard
launched Google Wallet, an Android application which allows a mobile device to send
credit/debit card information directly to a Paypass-enabled payment terminal, bypassing the need
for a physical card.
During late 2015, Citicards in the USA stopped issuing Paypass-enabled plastic, but the keyfob
was still available upon request. Effective July 16, 2016, Citicards will stop supporting Paypass
completely. While existing plastic and keyfobs will continue to work until their expiration date,
no new Paypass-enabled hardware will be issued to US customers after that date.

QkR
QkR is a mobile payment app developed by MasterCard, for the purpose of ordering products
and services through a smartphone with payments charged to the associated credit card. It is
being deployed for use in large scale events, such as sport events, concerts, or movie theaters.
Unlike other MasterCard mobile payment apps such as Pay Pass, QkR does not use NFC from
the phone, but rather an Internet connection.
Users can open the app, scan a QR code located on the back of the seat in front of them, and
place orders for refreshments of their choice.[59][60] The order is dispatched to a nearby concession
stand, from where a runner delivers the items to the patrons' seats. It is already deployed in
Australian movie theaters and is being tested in Yankee Stadium.
QkR is being marketed to vendors as a replacement for other mobile payment apps and a mobile
ordering app, either distributed by the vendor (such as Starbucks's app, McDonalds' app, or
Chipotle's mobile ordering app) or by a third party, such as Square, headed by Twitter cofounder
Jack Dorsey.

Banknet
MasterCard operates Banknet, a global telecommunications network linking all MasterCard card
issuers, acquirers, and data processing centers into a single financial network. The operations hub
is located in St. Louis, Missouri. Banknet uses the ISO 8583 protocol.
MasterCard's network differs significantly from Visa's. Visa's is a star-based system where all
endpoints terminate at one of several main data centers, where all transactions are processed

centrally. MasterCard's network is an edge-based, peer-to-peer network where transactions travel

a meshed network directly to other endpoints, without the need to travel to a single point. This
allows MasterCard's network to be much more resilient, in that a single failure cannot isolate a
large number of endpoints.[61]

Publications

Worldwide Centres of Commerce Index

Emerging Markets Index

3-D Secure
From Wikipedia, the free encyclopedia
(Redirected from MasterCard SecureCode)
Not to be confused with card security code.
3-D Secure is an XML-based protocol designed to be an additional security layer for online
credit and debit card transactions. It was originally developed by Arcot Systems, Inc and first
deployed[1] by Visa with the intention of improving the security of Internet payments and is
offered to customers under the name Verified by Visa. Services based on the protocol have also
been adopted by MasterCard as MasterCard SecureCode, and by JCB International as
J/Secure. American Express added 3-D Secure on November 8, 2010, as American Express
SafeKey, in select markets and continues to launch additional markets.[2] Analysis of the protocol
by academia has shown it to have many security issues that affect the consumer, including
greater surface area for phishing and a shift of liability in the case of fraudulent payments.[3]
3-D Secure adds an authentication step for online payments.

Contents

1 Description and basic aspects

2 Implementations
o 2.1 ACS providers
o 2.2 MPI providers

3 Merchants

4 Buyers and credit card holders

5 American Express SafeKey

6 General 3-D Secure criticism

o 6.1 Verifiability of site identity
o 6.2 Limited mobility
o 6.3 Geographic discrimination
o 6.4 3D Secure as strong authentication
o 6.5 ACCC block 3D Secure proposal

7 See also

8 References

9 External links

Description and basic aspects

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The basic concept of the protocol is to tie the financial authorization process with an online
authentication. This authentication is based on a three-domain model (hence the 3-D in the
name). The three domains are:

Acquirer Domain (the merchant and the bank to which money is being paid).

Issuer Domain (the bank which issued the card being used).

Interoperability Domain (the infrastructure provided by the card scheme, credit, debit,
prepaid or other type of finance card, to support the 3-D Secure protocol).
Interoperability Domain includes the Internet, MPI, ACS and other software providers

The protocol uses XML messages sent over SSL connections with client authentication[citation needed]
(this ensures the authenticity of both peers, the server and the client, using digital certificates).
A transaction using Verified-by-Visa or SecureCode will initiate a redirection to the website of
the card issuing bank to authorize the transaction. Each issuer could use any kind of
authentication method (the protocol does not cover this) but typically, a password-based method

is used, so to effectively buy on the Internet means using a password tied to the card. The
Verified-by-Visa protocol recommends the bank's verification page to load in an inline frame
session. In this way, the bank's systems can be held responsible for most security breaches.
Today, with the ease of sending white-listed text messages from registered bank senders, it is
easy to send a one-time password as part of an SMS text message to users' mobile phones and
emails for authentication, at least during enrollment and for forgotten passwords.
The main difference between Visa and MasterCard implementations lies in the method to
generate the UCAF (Universal Cardholder Authentication Field): MasterCard uses AAV
(Accountholder Authentication Value) and Visa uses CAVV (Cardholder Authentication
Verification Value).
Since January 2015 , EMVCo, a company which is collectively owned by American Express,
Discover, JCB, MasterCard, UnionPay and Visa, is responsible for the development of the EMV
3DS 2.0 Specification.[4]

Implementations
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The specifications are currently at version 1.0.2. Previous versions 0.7 (only used by Visa USA)
and 1.0.1 have become redundant and are no longer supported. MasterCard and JCB have
adopted version 1.0.2 of the protocol only.
In order for a Visa or MasterCard member bank to use the service, the bank has to operate
compliant software that supports the latest protocol specifications. Once compliant software is
installed, the member bank will perform product integration testing with the payment system
server before it rolls out the system.

ACS providers
In the 3-D Secure protocol, ACS (Access Control Server) is on the issuer side (banks). Currently,
most banks outsource ACS to a third party. Commonly, the buyer's web browser shows the
domain name of the ACS provider, rather than the bank's domain name; however, this is not
required by the protocol. Dependent on the ACS provider, it is possible to specify a bank-owned
domain name for use by the ACS.

MPI providers
Each 3-D Secure transaction involves two Internet request/response pairs: VEReq/VERes and
PAReq/PARes. Visa and MasterCard don't license merchants for sending requests to their
servers. They isolate their servers by licensing software providers which are called MPI
(merchant plug-in) providers.

Merchants
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The advantage for merchants is the reduction of "unauthorized transaction" chargebacks. One
disadvantage for merchants is that they have to purchase MPI to connect to the Visa or
MasterCard Directory Server. This is expensive[clarification needed] (setup fee, monthly fee and pertransaction fee); at the same time, it represents additional revenue for MPI providers. Supporting
3-D Secure is complicated and, at times, creates transaction failures. Perhaps the biggest
disadvantage for merchants is that many users view the additional authentication step as a
nuisance or obstacle, which results in a substantial increase in transaction abandonment and lost
revenue.[5]

Buyers and credit card holders

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The intention behind the system is that cardholders will have a decreased risk of other people
being able to use their payment cards fraudulently on the Internet.
In most current implementations of 3-D Secure, the issuing bank or its ACS provider prompts the
buyer for a password that is known only to the bank/ACS provider and the buyer. Since the
merchant does not know this password and is not responsible for capturing it, it can be used by
the issuing bank as evidence that the purchaser is indeed their cardholder. This is intended to help
decrease risk in two ways:
1. Copying card details, either by writing down the numbers on the card itself or by way of
modified terminals or ATMs, does not result in the ability to purchase over the Internet
because of the additional password, which is not stored on or written on the card.
2. Since the merchant does not capture the password, there is a reduced risk from security
incidents at online merchants; while an incident may still result in hackers obtaining other
card details, there is no way for them to get the associated password.
3-D Secure does not strictly require the use of password authentication. It is said to be
possible[citation needed] to use it in conjunction with smart card readers, security tokens and the like.
These types of devices might provide a better user experience for customers as they free the
purchaser from having to use a secure password. Some issuers are now using such devices as
part of the Chip Authentication Program or Dynamic Passcode Authentication schemes.[citation
needed]

One significant disadvantage is that cardholders are likely to see their browser connect to
unfamiliar domain names as a result of vendors' MPI implementations and the use of outsourced
ACS implementations by issuing banks, which might make it easier to perform phishing attacks
on cardholders.

American Express SafeKey

American Express SafeKey is live in the following markets: Algeria, Australia, Austria, Bahrain,
Bangladesh, China, Cyprus, Egypt, Finland, France, Germany, Greece, Hong Kong, India, Iraq,
Italy, Japan, Jordan, Kenya, Kuwait, Lebanon, Lesotho, Libya, Malaysia, Mauritania, Mongolia,
Morocco, Nambia, Netherlands, New Zealand, Oman, Peru, Philippines, Qatar, Russia, San
Marino, Singapore, Somalia, South Africa, Spain, Sweden, Switzerland, Tanzania, Tunisia,
Turkey, UAE, Uganda, United Kingdom, Vatican City, Vietnam, Yemen.[6]

General 3-D Secure criticism

Verifiability of site identity
The system involves a pop-up window or inline frame appearing during the online transaction
process, requiring the cardholder to enter a password which, if the transaction is legitimate, their
card-issuing bank will be able to authenticate. The problem for the cardholder is determining if
the pop-up window or frame is really from their card issuer, when it could be from a fraudulent
website attempting to harvest the cardholder's details. Such pop-up windows or script-based
frames lack any access to any security certificate, eliminating any way to confirm the credentials
of the implementation of 3-DS.
The Verified-by-Visa system has drawn some criticism,[7][8][9][10] since it is hard for users to
differentiate between the legitimate Verified-by-Visa pop-up window or inline frame, and a
fraudulent phishing site. This is because the pop-up window is served from a domain which is:

Not the site where the user is shopping.

Not the card issuing bank

Not visa.com or mastercard.com

In some cases, the Verified-by-Visa system has been mistaken by users for a phishing scam[11]
and has itself become the target of some phishing scams.[12] The newer recommendation to use an
inline frame (IFrame) instead of a pop-up has reduced user confusion, at the cost of making it
harder, if not impossible, for the user to verify that the page is genuine in the first place. As of
2011, most web browsers do not provide a way to check the security certificate for the contents
of an iframe.
Some card issuers also use Activation During Shopping (ADS),[13] in which cardholders who are
not registered with the scheme are offered the opportunity of signing up (or forced into signing

up) during the purchase process. This will typically take them to a form in which they are
expected to confirm their identity by answering security questions which should be known to
their card issuer. Again, this is done within the iframe where they cannot easily verify the site
they are providing this information toa cracked site or illegitimate merchant could in this way
gather all the details they need to pose as the customer.
Implementation of 3-D Secure sign-up will often not allow a user to proceed with a purchase
until they have agreed to sign up to 3-D Secure and its terms and conditions, not offering any
alternative way of navigating away from the page than closing it, thus suspending the
transaction.
Cardholders who are unwilling to take the risk of registering their card during a purchase, with
the commerce site controlling the browser to some extent, can in some cases go to their bank's
home page on the web in a separate browser window and register from there. When they return
to the commerce site and start over they should see that their card is registered. The presence on
the password page of the Personal Assurance Message (PAM) that they chose when registering is
their confirmation that the page is coming from the bank. This still leaves some possibility of a
man-in-the-middle attack if the card holder cannot verify the SSL Server Certificate for the
password page. Some commerce sites will devote the full browser page to the authentication
rather than using a frame (not necessarily an iFrame), which is a less secure object. In this case,
the lock icon in the browser should show the identity of either the bank or the operator of the
verification site. The cardholder can confirm that this is in the same domain that they visited
when registering their card, if it is not the domain of their bank.
Mobile browsers present particular problems for 3-D Secure, due to the common lack of certain
features such as frames and pop-ups. Even if the merchant has a mobile Web site, unless the
issuer is also mobile-aware, the authentication pages may fail to render properly, or even at all.
In the end, many[vague] analysts have concluded that the Activation During Shopping (ADS)
protocols invite more risk than they remove and furthermore transfer this increased risk to the
consumer.
In some cases, 3-D Secure ends up providing little security to the cardholder, and can act as a
device to pass liability for fraudulent transactions from the bank or retailer to the cardholder.
Legal conditions applied to the 3-D Secure service are sometimes worded in a way that makes it
difficult for the cardholder to escape liability from fraudulent "cardholder not present"
transactions.[14]

Limited mobility
When a 3-D Secure confirmation code is required, if the confirmation code is sent by SMS on
mobile phone (assuming she/he owns one) the customer may be unable to receive it depending
on the country he currently is in (not every mobile network accepts SMS). The system is also not
convenient for customers who tend to change mobile numbers from time to time - such as due to
travelling (and some banks require a visit to their office to change the mobile number on the
account). Some Wifi providers who charge for usage by credit card don't actually allow

accessing the 3-D Secure site before the payment is completed, so the user is unable to purchase
Internet access.

Geographic discrimination
Banks and merchants may use 3-D Secure systems unevenly with regard to banks that issue
cards in several geographic locations, creating differentiations, for example, between domestic
US- and non-US-issued cards. For example, since Visa and MasterCard treat the United States
territory of Puerto Rico as a non-US international, rather than a domestic US location,
cardholders there may confront a greater incidence of 3-D Secure queries than cardholders in the
fifty states. Complaints to that effect have been received by Puerto Rico's Department of
Consumer Affairs "equal treatment" economic discrimination site.[15]

3D Secure as strong authentication

The newest variant of 3D Secure, which incorporates one time passwords, is a form of softwarebased strong authentication. However, the legacy variant with static password does not meet the
European Central Bank's (ECB) January 2013 requirements.
3D Secure relies upon the issuer actively being involved and ensuring that any card issued
becomes enrolled by the cardholder, making it very much an issuer focused solution.
The ECB has mandated in its January 2013 requirements 'Security for Internet Payments'[16] that
all transactions acquired within the Single Euro Payment Area (SEPA) must be authenticated
using strong customer authentication by 1 February 2015. This mandate by the ECB, and
supported by the European Commission's Payment Services Directive Mk2 (PSD2), is intended
to provide a level and technology neutral playing field within SEPA to foster eCommerce,
mCommerce and supporting technologies, including competitive forms of strong customer
authentication.
As 3D Secure relies upon issuer advance involvement and enrollment of cards, acquirers cannot
rely upon 3D Secure to meet their acquiring side authentication requirements, until such time as
3D Secure has a meaningful enrollment approaching 100% of all cards issued.
This in turn makes 3D Secure a weak solution for the acquiring side strong customer
authentication requirements, particularly as 3D Secure is not available on the 25 smaller card
schemes recognised by the ECB. 3D Secure must also be implemented for each card scheme to
which it is to be applied, generally on a case by case basis, unless a specialist integration
company is used.
Thus, acquirers may be faced with either accepting cards that are not enrolled and susceptible to
fraud, or, to reject such cards until a means of strong authentication is available. As acquirers and
payment gateways are liable for fraud on their networks from 1 February 2015, unless they have
strong customer authentication in place, it is unclear what impact the ECB's requirements will
have on SEPA eCommerce.

Acquiring side authentication differs from issuing side authentication, in that cards are enrolled
upon being acquired as part of a transaction, rather than requiring to be pre-enrolled following
issue. Acquiring side authentication can thus enroll cards progressively on demand, achieving an
effective enrollment rate of 100%. Card enrollment and authentication can thus be at the same
time.
Examples of acquiring side authentication include PayPal's patented 'verification'[17] method,
where one or more dummy transactions are directed towards a credit card, and the cardholder
must confirm the value of these transactions. The iSignthis patented[18] method uses the
transaction value at the point of sale, such that the sales amount as agreed between the
eMerchant and cardholder, is split into two (or more) amounts, with the first amount being a
randomly generated value, and the second value being the balancing amount between sales
amount and the random value.
Both of these methods rely upon the cardholder accessing the account associated with the credit
card, and confirming the value of the random transaction in order to prove that they are the
owner of the account. PayPal's method however does not specifically relate to a transaction
between an eMerchant and card holder, so unless it is augmented with another process that
relates directly to a transaction, the method is not a form of strong customer authentication as is
thus not an alternative to 3D Secure.[19]

ACCC block 3D Secure proposal

A proposal to make 3D Secure mandatory in Australia was blocked by the Australian
Competition and Consumer Commission (ACCC) after numerous objections and flaw-related
submissions were received. [20]

E-commerce
From Wikipedia, the free encyclopedia
(Redirected from ECommerce)
It has been suggested that Web commerce be merged into this article. (Discuss) Proposed
since September 2015.

Part of a series on

E-commerce
Online goods and services

E-books

Software

Streaming media

Retail services

Banking
DVD-by-mail

Flower delivery

Food ordering

Grocery
Pharmacy

Travel

Marketplace services

Advertising

Comparison shopping

Auctions

Social commerce
Trading communities

Wallet

Mobile commerce

Payment

Ticketing

Customer service

Call centre

Help desk

Live support software

E-procurement
Purchase-to-pay

Electronic commerce, commonly written as e-commerce or eCommerce, is the trading or

facilitation of trading in products or services using computer networks, such as the Internet or
online social networks.[1] Electronic commerce draws on technologies such as mobile commerce,
electronic funds transfer, supply chain management, Internet marketing, online transaction
processing, electronic data interchange (EDI), inventory management systems, and automated
data collection systems. Modern electronic commerce typically uses the World Wide Web for at
least one part of the transaction's life cycle although it may also use other technologies such as email.
E-commerce businesses may employ some or all of the following:

Online shopping web sites for retail sales direct to consumers

Providing or participating in online marketplaces, which process third-party business-toconsumer or consumer-to-consumer sales

Business-to-business buying and selling

Gathering and using demographic data through web contacts and social media

Business-to-business electronic data interchange

Marketing to prospective and established customers by e-mail or fax (for example, with
newsletters)

Engaging in pretail for launching new products and services

Online financial exchanges for currency exchanges or trading purposes

Contents

1 Timeline

2 Business application

3 Governmental regulation

4 Forms

5 Global trends

6 Impact on markets and retailers

7 Impact on supply chain management

8 The social impact of e-commerce

9 Distribution channels

10 Examples of new e-commerce systems

11 See also

12 References

13 Further reading

14 External links

Timeline
A timeline for the development of e-commerce:

1971 or 1972: The ARPANET is used to arrange a cannabis sale between students at the
Stanford Artificial Intelligence Laboratory and the Massachusetts Institute of Technology,
later described as "the seminal act of e-commerce" in John Markoff's book What the
Dormouse Said.[2]

1979: Michael Aldrich demonstrates the first online shopping system.[3]

1981: Thomson Holidays UK is the first business-to-business online shopping system to

be installed.[4]

1982: Minitel was introduced nationwide in France by France Tlcom and used for
online ordering.

1983: California State Assembly holds first hearing on "electronic commerce" in Volcano,
California.[5] Testifying are CPUC, MCI Mail, Prodigy, CompuServe, Volcano Telephone,
and Pacific Telesis. (Not permitted to testify is Quantum Technology, later to become
AOL.)

1984: Gateshead SIS/Tesco is first B2C online shopping system [6] and Mrs Snowball, 72,
is the first online home shopper[7]

1984: In April 1984, CompuServe launches the Electronic Mall in the USA and Canada.
It is the first comprehensive electronic commerce service.[8]

1989: In May 1989, Sequoia Data Corp. Introduced Compumarket The first internet
based system for e-commerce. Sellers and buyers could post items for sale and buyers
could search the database and make purchases with a credit card.

1990: Tim Berners-Lee writes the first web browser, WorldWideWeb, using a NeXT
computer.[9]

1992: Book Stacks Unlimited in Cleveland opens a commercial sales website

(www.books.com) selling books online with credit card processing.

1993: Paget Press releases edition No. 3 [10] of the first[citation needed] app store, The Electronic
AppWrapper [11]

1994: Netscape releases the Navigator browser in October under the code name Mozilla.
Netscape 1.0 is introduced in late 1994 with SSL encryption that made transactions
secure.

1994: Ipswitch IMail Server becomes the first software available online for sale and
immediate download via a partnership between Ipswitch, Inc. and OpenMarket.

1994: "Ten Summoner's Tales" by Sting becomes the first secure online purchase through
NetMarket.[12]

1995: The US National Science Foundation lifts its former strict prohibition of
commercial enterprise on the Internet.[13]

1995: Thursday 27 April 1995, the purchase of a book by Paul Stanfield, Product
Manager for CompuServe UK, from W H Smith's shop within CompuServe's UK
Shopping Centre is the UK's first national online shopping service secure transaction. The
shopping service at launch featured W H Smith, Tesco, Virgin Megastores/Our Price,
Great Universal Stores (GUS), Interflora, Dixons Retail, Past Times, PC World (retailer)
and Innovations.

1995: Jeff Bezos launches Amazon.com and the first commercial-free 24-hour, internetonly radio stations, Radio HK and NetRadio start broadcasting. eBay is founded by
computer programmer Pierre Omidyar as AuctionWeb.

1996: IndiaMART B2B marketplace established in India.

1996: ECPlaza B2B marketplace established in Korea.

1998: Electronic postal stamps can be purchased and downloaded for printing from the
Web.[14]

1999: Alibaba Group is established in China. Business.com sold for US $7.5 million to
eCompanies, which was purchased in 1997 for US $149,000. The peer-to-peer filesharing
software Napster launches. ATG Stores launches to sell decorative items for the home
online.

2000: The dot-com bust.

2001: Alibaba.com achieved profitability in December 2001.

2002: eBay acquires PayPal for $1.5 billion.[15] Niche retail companies Wayfair and
NetShops are founded with the concept of selling products through several targeted
domains, rather than a central portal.

2003: Amazon.com posts first yearly profit.

2003: Bossgoo B2B marketplace established in China.

2004: DHgate.com, China's first online b2b transaction platform, is established, forcing
other b2b sites to move away from the "yellow pages" model.[16]

2007: Business.com acquired by R.H. Donnelley for $345 million.[17]

2009: Zappos.com acquired by Amazon.com for $928 million.[18] Retail Convergence,

operator of private sale website RueLaLa.com, acquired by GSI Commerce for $180
million, plus up to $170 million in earn-out payments based on performance through
2012.[19]

2010: Groupon reportedly rejects a $6 billion offer from Google. Instead, the group
buying websites went ahead with an IPO on 4 November 2011. It was the largest IPO
since Google.[20][21]

2014: Overstock.com processes over $1 million in Bitcoin sales.[22] Indias e-commerce

industry is estimated to have grown more than 30% from 2012 to $12.6 billion in 2013.[23]
US eCommerce and Online Retail sales projected to reach $294 billion, an increase of 12
percent over 2013 and 9% of all retail sales.[24] Alibaba Group has the largest Initial
public offering ever, worth $25 billion.

2015: Amazon.com accounts for more than half of all ecommerce growth,[25] selling
almost 500 Million SKU's in the US.[26]

Business application

An example of an automated online assistant on a merchandising website.

Some common applications related to electronic commerce are:

Document automation in supply chain and logistics

Domestic and international payment systems

Enterprise content management

Group buying

Print on demand

Automated online assistant

Newsgroups

Online shopping and order tracking

Online banking

Online office suites

Shopping cart software

Teleconferencing

Electronic tickets

Social networking

Instant messaging

Pretail

Digital Wallet

Governmental regulation
In the United States, certain electronic commerce activities are regulated by the Federal Trade
Commission (FTC). These activities include but not limit to the use of commercial e-mails,
online advertising and consumer privacy. The CAN-SPAM Act of 2003 establishes national
standards for direct marketing over e-mail. The Federal Trade Commission Act regulates all
forms of advertising, including online advertising, and states that advertising must be truthful
and non-deceptive.[27] Using its authority under Section 5 of the FTC Act, which prohibits unfair
or deceptive practices, the FTC has brought a number of cases to enforce the promises in
corporate privacy statements, including promises about the security of consumers' personal
information.[28] As result, any corporate privacy policy related to e-commerce activity may be
subject to enforcement by the FTC.
The Ryan Haight Online Pharmacy Consumer Protection Act of 2008, which came into law in
2008, amends the Controlled Substances Act to address online pharmacies.[29]

Conflict of laws in cyberspace is a major hurdle for harmonization of legal framework for ecommerce around the world. In order to give a uniformity to e-commerce law around the world,
many countries adopted the UNCITRAL Model Law on Electronic Commerce (1996) [30]
Internationally there is the International Consumer Protection and Enforcement Network
(ICPEN), which was formed in 1991 from an informal network of government customer fair
trade organisations. The purpose was stated as being to find ways of co-operating on tackling
consumer problems connected with cross-border transactions in both goods and services, and to
help ensure exchanges of information among the participants for mutual benefit and
understanding. From this came Econsumer.gov, an ICPEN initiative since April 2001. It is a
portal to report complaints about online and related transactions with foreign companies.
There is also Asia Pacific Economic Cooperation (APEC) was established in 1989 with the
vision of achieving stability, security and prosperity for the region through free and open trade
and investment. APEC has an Electronic Commerce Steering Group as well as working on
common privacy regulations throughout the APEC region.
In Australia, Trade is covered under Australian Treasury Guidelines for electronic commerce,[31]
and the Australian Competition and Consumer Commission[32] regulates and offers advice on
how to deal with businesses online,[33][34] and offers specific advice on what happens if things go
wrong.[35]
In the United Kingdom, The Financial Services Authority (FSA)[36] was formerly the regulating
authority for most aspects of the EU's Payment Services Directive (PSD), until its replacement in
2013 by the Prudential Regulation Authority and the Financial Conduct Authority.[37] The UK
implemented the PSD through the Payment Services Regulations 2009 (PSRs), which came into
effect on 1 November 2009. The PSR affects firms providing payment services and their
customers. These firms include banks, non-bank credit card issuers and non-bank merchant
acquirers, e-money issuers, etc. The PSRs created a new class of regulated firms known as
payment institutions (PIs), who are subject to prudential requirements. Article 87 of the PSD
requires the European Commission to report on the implementation and impact of the PSD by 1
November 2012.[38]
In India, the Information Technology Act 2000 governs the basic applicability of e-commerce.
In China, the Telecommunications Regulations of the People's Republic of China (promulgated
on 25 September 2000), stipulated the Ministry of Industry and Information Technology (MIIT)
as the government department regulating all telecommunications related activities, including
electronic commerce.[39] On the same day, The Administrative Measures on Internet Information
Services released, is the first administrative regulation to address profit-generating activities
conducted through the Internet, and lay the foundation for future regulations governing ecommerce in China.[40] On 28 August 2004, the eleventh session of the tenth NPC Standing
Committee adopted The Electronic Signature Law, which regulates data message, electronic
signature authentication and legal liability issues. It is considered the first law in Chinas ecommerce legislation. It was a milestone in the course of improving Chinas electronic

commerce legislation, and also marks the entering of Chinas rapid development stage for
electronic commerce legislation.[41]

Forms
Contemporary electronic commerce involves everything from ordering "digital" content for
immediate online consumption, to ordering conventional goods and services, to "meta" services
to facilitate other types of electronic commerce.
On the institutional level, big corporations and financial institutions use the internet to exchange
financial data to facilitate domestic and international business. Data integrity and security are
pressing issues for electronic commerce.
Aside from traditional e-Commerce, the terms m-Commerce (mobile commerce) as well (around
2013) t-Commerce[42] have also been used.

Global trends
In 2010, the United Kingdom had the biggest e-commerce market in the world when measured
by the amount spent per capita.[43] As of 2013, the Czech Republic was the European country
where ecommerce delivers the biggest contribution to the enterprises total revenue. Almost a
quarter (24%) of the countrys total turnover is generated via the online channel.[44]
Among emerging economies, China's e-commerce presence continues to expand every year.
With 668 million internet users, China's online shopping sales reached $253 billion in the first
half of 2015, accounting for 10% of total Chinese consumer retail sales in the same period.[45]
The Chinese retailers have been able to help consumers feel more comfortable shopping online.
[46]
E-commerce transactions between China and other countries increased 32% to 2.3 trillion
yuan ($375.8 billion) in 2012 and accounted for 9.6% of China's total international trade [47] In
2013, Alibaba had an e-commerce market share of 80% in China.[48] In 2014, there were 600
million Internet users in China (twice as many than in the US), making it the world's biggest
online market.[49] China is also the largest e-commerce market in the world by value of sales,
with an estimated US$899 billion in 2016.[50]
In 2013, Brazil's eCommerce was growing quickly with retail eCommerce sales expected to
grow at a healthy double-digit pace through 2014. By 2016, eMarketer expected retail
ecommerce sales in Brazil to reach $17.3 billion.[51] India has an internet user base of about 243.2
million as of January 2014.[citation needed] Despite being third largest user base in world, the
penetration of Internet is low compared to markets like the United States, United Kingdom or
France but is growing at a much faster rate, adding around 6 million new entrants every month.
[citation needed]
In India, cash on delivery is the most preferred payment method, accumulating 75% of
the e-retail activities.[citation needed]
E-Commerce has become an important tool for small and large businesses worldwide, not only to
sell to customers, but also to engage them.[52][53]

In 2012, ecommerce sales topped $1 trillion for the first time in history.[54]
Mobile devices are playing an increasing role in the mix of eCommerce, this is also commonly
called mobile commerce, or m-commerce. In 2014, one estimate saw purchases made on mobile
devices making up 25% of the market by 2017.[55]
For traditional businesses, one research stated that information technology and cross-border ecommerce is a good opportunity for the rapid development and growth of enterprises. Many
companies have invested enormous volume of investment in mobile applications.The DeLone
and McLean Model stated that 3 perspectives are contributed to a successful e-business,
including information system quality, service quality and users satisfaction.[56] There is no limit
of time and space, there are more opportunities to reach out to customers around the world, and
to cut down unnecessary intermediate links, thereby reducing the cost price, and can benefit from
one on one large customer data analysis, to achieve a high degree of personal customization
strategic plan, in order to fully enhance the core competitiveness of the products in company[57]

Impact on markets and retailers

Economists have theorized that e-commerce ought to lead to intensified price competition, as it
increases consumers' ability to gather information about products and prices. Research by four
economists at the University of Chicago has found that the growth of online shopping has also
affected industry structure in two areas that have seen significant growth in e-commerce,
bookshops and travel agencies. Generally, larger firms are able to use economies of scale and
offer lower prices. The lone exception to this pattern has been the very smallest category of
bookseller, shops with between one and four employees, which appear to have withstood the
trend.[58] Depending on the category, e-commerce may shift the switching costsprocedural,
relational, and financialexperienced by customers.[59]
Individual or business involved in e-commerce whether buyers or sellers rely on Internet-based
technology in order to accomplish their transactions. E-commerce is recognized for its ability to
allow business to communicate and to form transaction anytime and anyplace. Whether an
individual is in the US or overseas, business can be conducted through the internet. The power of
e-commerce allows geophysical barriers to disappear, making all consumers and businesses on
earth potential customers and suppliers. Thus, switching barriers and switching costs may shift.
[59]
eBay is a good example of e-commerce business individuals and businesses are able to post
their items and sell them around the Globe.[60]
In e-commerce activities, supply chain and logistics are two most crucial factors need to be
considered. Typically, cross-border logistics need about few weeks time round. Based on this low
efficiency of the supply chain service, customer satisfaction will be greatly reduced.[61] Some
researcher stated that combining e-commerce competence and IT setup could well enhance
companys overall business worth.[62] Other researcher stated that e-commerce need to consider
the establishment of warehouse centers in foreign countries, to create high efficiency of the
logistics system, not only improve customers satisfaction, but also can improve customers
loyalty.[weasel words].

Impact on supply chain management

For a long time, companies had been troubled by the gap between the benefits which supply
chain technology has and the solutions to deliver those benefits. However, the emergence of ecommerce has provided a more practical and effective way of delivering the benefits of the new
supply chain technologies.[63]
E-commerce has the capability to integrate all inter-company and intra-company functions,
meaning that the three flows (physical flow, financial flow and information flow) of the supply
chain could be also affected by e-commerce. The affections on physical flows improved the way
of product and inventory movement level for companies. For the information flows, e-commerce
optimised the capacity of information processing than companies used to have, and for the
financial flows, e-commerce allows companies to have more efficient payment and settlement
solutions.[63]
In addition, e-commerce has a more sophisticated level of impact on supply chains: Firstly, the
performance gap will be eliminated since companies can identify gaps between different levels
of supply chains by electronic means of solutions; Secondly, as a result of e-commerce
emergence, new capabilities such implementing ERP systems have helped companies to manage
operations with customers and suppliers. Yet these new capabilities are still not fully exploited.
Thirdly, technology companies would keep investing on new e-commerce software solutions as
they are expecting investment return. Fourthly, e-commerce would help to solve many aspects of
issues that companies may feel difficult to cope with, such as political barriers or cross-country
changes. Finally, e-commerce provides companies a more efficient and effective way to
collaborate with each other within the supply chain.[63]

The social impact of e-commerce

Along with the e-commerce and its unique charm that has appeared gradually, virtual enterprise,
virtual bank, network marketing, online shopping, payment and advertising, such this new
vocabulary which is unheard-of and now has become as familiar to people. This reflects that the
e-commerce has huge impact on the economy and society from the other side.[64] For instance,
B2B is a rapidly growing business in the world that leads to lower cost and then improves the
economic efficiency and also bring along the growth of employment.[65]
To understand how the e-commerce has affected the society and economy, this article will
mention three issues below:
1. The e-commerce has changed the relative importance of time, but as the pillars of indicator of
the countrys economic state that the importance of time should not be ignored.
2. The e-commerce offers the consumer or enterprise various information they need, making
information into total transparency, will force enterprise no longer is able to use the mode of
space or advertisement to raise their competitive edge.[66] Moreover, in theory, perfect
competition between the consumer sovereignty and industry will maximize social welfare.[67]

3. In fact, during the economic activity in the past, large enterprise frequently has advantage of
information resource, and thus at the expense of consumers. Nowadays, the transparent and realtime information protects the rights of consumers, because the consumers can use internet to pick
out the portfolio to the benefit of themselves. The competitiveness of enterprises will be much
more obvious than before, consequently, social welfare would be improved by the development
of the e-commerce.
4. The new economy led by the e-commerce change humanistic spirit as well, but above all, is
the employee loyalty.[68] Due to the market with competition, the employees level of
professionalism becomes the crucial for enterprise in the niche market. The enterprises must pay
attention to how to build up the enterprises inner culture and a set of interactive mechanisms and
it is the prime problem for them. Furthermore, though the mode of e-commerce decrease the
information cost and transaction cost, however, its development also makes human being are
overly computer literate. In hence, emphasized more humanistic attitude to work is another
project for enterprise to development. Life is the root of all and high technology are merely an
assistive tool to support our quality of life.
5. Online merchants gather purchase activity and interests of their customers. This information is
being used by the online marketers to promote relevant products and services. This creates an
extra convenience for the online shoppers.
6. Online merchandise is searchable, which makes it more accessible to the shoppers. Many
online retailers offer a review mechanism, which helps shoppers decide on the product to
purchase. This is another convenience and a satisfaction improvement factor.
The e-commerce is not a kind of new industry, but it is creating a new economic model. Most of
people agree that the e-commerce indeed to be important and significant for economic society in
the future, but actually that is a bit of clueless feeling at the beginning, this problem is exactly
prove the e-commerce is a sort of incorporeal revolution.[69] This is due to the fact that the cost of
running an e-commerce business is very low when compared with running a physical store.
There is no rent to pay on expensive premises, business processes are simplified and less manhours are required to run it smoothly. Generally speaking, as a type of business active procedure,
the e-commerce is going to leading an unprecedented revolution in the world, the influence of
this model far exceeded the commercial affair itself.[70] Except the mentioned above, in the area
of law, education, culture and also policy, the e-commerce will continue that rise in impact. The
e-commerce is truly to take human beings into the information society.

Distribution channels
This section does not cite any sources. Please help improve this section by adding
citations to reliable sources. Unsourced material may be challenged and removed. (June
2013) (Learn how and when to remove this template message)

E-commerce has grown in importance as companies have adopted pure-click and brick-and-click
channel systems. We can distinguish pure-click and brick-and-click channel system adopted by
companies.

Pure-click or pure-play companies are those that have launched a website without any
previous existence as a firm.

Bricks-and-clicks companies are those existing companies that have added an online site
for e-commerce.

Click-to-brick online retailers that later open physical locations to supplement their
online efforts.[71]

Examples of new e-commerce systems

According to eMarketer research company, "by 2017, 65.8 per cent of Britons will use
smartphones".[72]

Merchant plug-in
From Wikipedia, the free encyclopedia
A merchant plug-in (MPI) is a software module designed to facilitate 3D-Secure verifications
to help prevent credit card fraud.[1] The MPI identifies the account number and queries card
issuer (Visa, MasterCard, or JCB International) servers to determine if it is enrolled in a 3DSecure program and returns the web site address of the issuer access control server (ACS) if it is
found.[2] Merchants are responsible for installing an SSL/TLS MPI at their servers.[3]
Each card issuer is required to maintain an ACS used to support cardholder authentication.[3] A
customer authenticates to this ACS by providing their username and password and the ACS signs
the result (success or failure). This signature is then passed through the customer's browser and
to the MPI. The plug-in verifies the ACS signature and decides if it wishes to proceed with the
transaction.[4]
Commercial MPI software is available from a number of vendors.

Visa Inc.
From Wikipedia, the free encyclopedia
"VISA" redirects here. For other uses, see Visa (disambiguation).
Visa Inc.

Visa Inc. headquarters at Metro Center in Foster City

Type
Public company
NYSE: V
Dow Jones Industrial Average
Traded as
Component
S&P 500 Component
Industry
Financial services
1958; 58 years ago (as
BankAmericard)
Founded
Fresno, California, United
States
Founder
Dee Hock
Foster City,[1] California,
Headquarters
United States
Area served
Worldwide
Joseph Saunders
Key people

(Executive Chairman)

Charles Scharf
(CEO)

Products
Credit cards, payment systems
Revenue
US$13.88 billion (2015)[2]
Operating income
US$9.06 billion (2015)[2]
Net income
US$6.32 billion (2015)[2]
Total assets
US$40.23 billion (2015)[2]
Total equity
US$29.84 billion (2015)[2]
Number of
11,300 (2015)[2]
employees
Website
visa.com

Visa Inc. (/viz/ or /vis/) is an American multinational financial services corporation

headquartered in Foster City, California, United States.[3] It facilitates electronic funds transfers
throughout the world, most commonly through Visa-branded credit cards and debit cards.[4] Visa
does not issue cards, extend credit or set rates and fees for consumers; rather, Visa provides
financial institutions with Visa-branded payment products that they then use to offer credit, debit,
prepaid and cash-access programs to their customers. In 2015, the Nilson Report, a publication
that tracks the credit card industry, found that Visas global network (known as VisaNet)
processed 100 billion transactions with a total volume of US$6.8 trillion.
Visa has operations across all continents worldwide with the exception of Antarctica. Visa
Europe is a separate membership entity that is an exclusive licensee of Visa Inc.'s trademarks and
technology in the European region, issuing cards such as Visa Debit and Visa Credit.
Nearly all Visa transactions worldwide are processed through VisaNet at one of two secure
facilities: Operations Center East, located somewhere near Ashburn, Virginia; and Operations
Center Central, located somewhere near Highlands Ranch, Colorado. Both data centers are
heavily secured against natural disasters, crime, and terrorism; can operate independently of each
other and from external utilities if necessary; and can handle up to 30,000 simultaneous
transactions and up to 100 billion computations every second. Every transaction is checked past
500 variables including 100 fraud-detection parameters - such as the location and spending
habits of the customer and the merchant's location - before being accepted.[5][6]

Contents

1 History
o 1.1 Corporate structure
o 1.2 Billing & finance charge methods
o 1.3 IPO and restructuring
o 1.4 Visa Europe

2 Criticism and controversy

o 2.1 Sanctions of Russia
o 2.2 WikiLeaks
o 2.3 Litigation and regulatory actions

2.3.1 Anti-trust lawsuit by ATM operators

2.3.2 Debit card swipe fees

2.3.3 U.S. Justice Department actions

2.3.4 Anti-trust issues in Europe

2.3.5 Payment Card Interchange Fee and Merchant Discount Antitrust

Litigation

o 2.4 High swipe fees in Poland

o 2.5 Confrontation with Wal-Mart over high fees

3 Corporate affairs
o 3.1 Headquarters

4 Operations
o 4.1 Operating regulations

5 payWave

6 Visa Checkout

7 Trademark and design

o 7.1 Logo design
o 7.2 Card design

8 Sponsorships
o 8.1 Olympics and Paralympics
o 8.2 Others

9 See also

10 References

11 External links

History

A 1976 ad promoting the change of name to "Visa". Note the early Visa card shown in the ad, as
well as the image of the BankAmericard that it replaced.
In mid-September 1958, Bank of America (BofA) launched its BankAmericard credit card
program in Fresno, California, with an initial mass mailing (or "drop", as they came to be called)
of 60,000 unsolicited credit cards.[7] The original idea was the brainchild of BofA's in-house
product development think tank, the Customer Services Research Group, and its leader, Joseph P.
Williams. Williams convinced senior BofA executives in 1956 to let him pursue what became the
world's first successful mass mailing of unsolicited credit cards (actual working cards, not mere
applications) to a large population.[8]
Williams' pioneering accomplishment was that he brought about the successful implementation
of the all-purpose credit card (in the sense that his project was not cancelled outright), not in
coming up with the idea.[9] By the mid-1950s, the typical middle-class American already
maintained revolving credit accounts with several different merchants, which was clearly
inefficient and inconvenient due to the need to carry so many cards and pay so many separate
bills each month.[10] The need for a unified financial instrument was already evident to the
American financial services industry, but no one could figure out how to do it. There were
already charge cards like Diners Club (which had to be paid in full at the end of each billing
cycle), and "by the mid-1950s, there had been at least a dozen attempts to create an all-purpose
credit card."[10] However, these prior attempts had been carried out by small banks which lacked
the resources to make them work.[10] Williams and his team studied these failures carefully and
believed they could avoid replicating those banks' mistakes; they also studied existing revolving
credit operations at Sears and Mobil Oil to learn why they were successful.[11] Fresno was
selected for its population of 250,000 (big enough to make a credit card work, small enough to
control initial startup cost), BofA's market share of that population (45%), and relative isolation,
to control public relations damage in case the project failed.[12]

Visa logo used from July 1, 1992 to 2006

Visa logo used 20062014

Visa logo used in 2014

Visa acceptance logo from 2015

The 1958 test at first went smoothly, but then BofA panicked when it confirmed rumors that
another bank was about to initiate its own drop in San Francisco, BofA's home market.[13] By
March 1959, drops began in San Francisco and Sacramento; by June, BofA was dropping cards
in Los Angeles; by October, the entire state had been saturated with over 2 million credit cards,
and BankAmericard was being accepted by 20,000 merchants.[14] However, the program was
riddled with problems, as Williams (who had never worked in a bank's loan department) had
been too earnest and trusting in his belief in the basic goodness of the bank's customers, and he
resigned in December 1959.[15] 22% of accounts were delinquent, not the 4% expected, and
police departments around the state were confronted by numerous incidents of the brand new
crime of credit card fraud.[16] Both politicians and journalists joined the general uproar against
Bank of America and its newfangled credit card, especially when it was pointed out that the
cardholder agreement held customers liable for all charges, even those resulting from fraud.[17]
BofA officially lost over $8.8 million on the launch of BankAmericard, but when the full cost of
advertising and overhead was included, the bank's actual loss was probably around $20 million.
[17]

However, after Williams and some of his closest associates left, BofA management realized that
BankAmericard was salvageable.[18] They conducted a "massive effort" to clean up after
Williams, imposed proper financial controls, published an open letter to 3 million households
across the state apologizing for the credit card fraud and other issues their card raised, and
eventually were able to make the new financial instrument work.[19]

The original goal of BofA was to offer the BankAmericard product across California, but in
1966, BofA began to sign licensing agreements with a group of banks outside of California, in
response to a new competitor, Master Charge (now MasterCard), which had been created by an
alliance of several other California banks to compete against BankAmericard. BofA itself (like
all other U.S. banks at the time) could not expand directly into other states due to federal
restrictions not repealed until 1994. Over the following 11 years, various banks licensed the card
system from Bank of America, thus forming a network of banks backing the BankAmericard
system across the United States.[20] The "drops" of unsolicited credit cards continued unabated,
thanks to BofA and its licensees and competitors, until they were outlawed in 1970[21] due to the
serious financial chaos they caused, but not before over 100 million credit cards had been
distributed into the American population.[22]
During the late 1960s, BofA also licensed the BankAmericard program to banks in several other
countries, which began issuing cards with localized brand names. For example:[citation needed]

In Canada, an alliance of banks (including Toronto-Dominion Bank, Canadian Imperial

Bank of Commerce, Royal Bank of Canada, Banque Canadienne Nationale and Bank of
Nova Scotia) issued credit cards under the Chargex name from 1968 to 1977.

In France, it was known as Carte Bleue (Blue Card). The logo still appears on many
French-issued Visa cards today.

In Japan, The Sumitomo Bank issued BankAmericards through the Sumitomo Credit
Service.

In the UK, the only BankAmericard issuer for some years was Barclaycard. The branding
still exists today, but is used not only on Visa cards issued by Barclays, but on its
MasterCard and American Express cards as well.[23]

In 1968, a manager at the National Bank of Commerce (later Rainier Bancorp), Dee Hock, was
asked to supervise that bank's launch of its own licensed version of BankAmericard in the Pacific
Northwest market. Although Bank of America had cultivated the public image that
BankAmericard's troubled startup issues were now safely in the past, Hock realized that the
BankAmericard licensee program itself was in terrible disarray because it had developed and
grown very rapidly in an ad hoc fashion. For example, "interchange" transaction issues between
banks were becoming a very serious problem, which had not been seen before when Bank of
America was the sole issuer of BankAmericards. Hock suggested to other licensees that they
form a committee to investigate and analyze the various problems with the licensee program;
they promptly made him the chair of that committee.
In June 1970, Bank of America gave up control of the BankAmericard program. The various
BankAmericard issuer banks took control of the program, creating National BankAmericard Inc.
(NBI), an independent Delaware corporation which would be in charge of managing, promoting
and developing the BankAmericard system within the United States. In other words,
BankAmericard was transformed from a franchising system into a jointly controlled consortium
or alliance, like its competitor Master Charge. Hock became NBI's first president and CEO.

However, Bank of America retained the right to directly license BankAmericard to banks outside
of the United States, and continued to issue and support such licenses. By 1972, licenses had
been granted in 15 countries. The international licensees soon encountered a variety of problems
with their licensing programs, and they hired Hock as a consultant to help them restructure their
relationship with BofA as he had done for the domestic licensees. As a result, in 1974, the
International Bankcard Company (IBANCO), a multinational member corporation, was founded
in order to manage the international BankAmericard program.[24][citation needed]

Sample Barclaycard (left), as issued in the UK in the 1960s/70s. Co-branded cards were also
issued by affiliates, such as the Co-operative Bank and Yorkshire Bank. The Chargex logo (right)
used in Canada.
In 1976, the directors of IBANCO determined that bringing the various international networks
together into a single network with a single name internationally would be in the best interests of
the corporation; however, in many countries, there was still great reluctance to issue a card
associated with Bank of America, even though the association was entirely nominal in nature.
For this reason, in 1976, BankAmericard, Barclaycard, Carte Bleue, Chargex, Sumitomo Card,
and all other licensees united under the new name, "Visa", which retained the distinctive blue,
white and gold flag. NBI became Visa USA and IBANCO became Visa International.[citation needed]
The term Visa was conceived by the company's founder, Dee Hock. He believed that the word
was instantly recognizable in many languages in many countries, and that it also denoted
universal acceptance.[citation needed]
In October 2007, Bank of America announced it was resurrecting the BankAmericard brand
name as the "BankAmericard Rewards Visa".[25]

Corporate structure
Prior to October 3, 2007, Visa comprised four non-stock, separately incorporated companies that
employed 6,000 people worldwide: Visa International Service Association (Visa) the
worldwide parent entity, Visa U.S.A. Inc., Visa Canada Association, and Visa Europe Ltd. The
latter three separately incorporated regions had the status of group members of Visa International
Service Association.

The unincorporated regions Visa Latin America (LAC), Visa Asia Pacific and Visa Central and
Eastern Europe, Middle East and Africa (CEMEA) were divisions within Visa.

Billing & finance charge methods

Initially, signed copies of sales drafts were included in each customer's monthly billing statement
for verification purposesan industry practice known as "country club billing". By the late
1970s, however, billing statements no longer contained these enclosures, but rather a summary
statement showing posting date, purchase date, reference number, merchant name, and the dollar
amount of each purchase. At the same time, many issuers, particularly Bank of America, were in
the process of changing their methods of finance charge calculation. Initially, a "previous
balance" method was usedcalculation of finance charge on the unpaid balance shown on the
prior month's statement. Later, it was decided to use "average daily balance" which resulted in
increased revenue for the issuers by calculating the number of days each purchase was included
on the prior month's statement. Several years later, "new average daily balance"in which
transactions from previous AND current billing cycles were used in the calculationwas
introduced. By the early 1980s, many issuers introduced the concept of the annual fee as yet
another revenue enhancer.

IPO and restructuring

On October 11, 2006, Visa announced that some of its businesses would be merged and become
a publicly traded company, Visa Inc.[26][27][28] Under the IPO restructuring, Visa Canada, Visa
International, and Visa U.S.A. were merged into the new public company. Visa's Western Europe
operation became a separate company, owned by its member banks who will also have a
minority stake in Visa Inc.[29] In total, more than 35 investment banks participated in the deal in
several capacities, most notably as underwriters.
On October 3, 2007, Visa completed its corporate restructuring with the formation of Visa Inc.
The new company was the first step towards Visa's IPO.[30] The second step came on November
9, 2007, when the new Visa Inc. submitted its $10 billion IPO filing with the U.S. Securities and
Exchange Commission (SEC).[31] On February 25, 2008, Visa announced it would go ahead with
an IPO of half its shares.[32] The IPO took place on March 18, 2008. Visa sold 406 million shares
at US$44 per share ($2 above the high end of the expected $3742 pricing range), raising
US$17.9 billion in the largest initial public offering in U.S. history.[33] On March 20, 2008, the
IPO underwriters (including JP Morgan, Goldman Sachs & Co., Banc of America Securities
LLC, Citi, HSBC, Merrill Lynch & Co., UBS Investment Bank and Wachovia Securities)
exercised their overallotment option, purchasing an additional 40.6 million shares, bringing
Visa's total IPO share count to 446.6 million, and bringing the total proceeds to US$19.1 billion.
[34]
Visa now trades under the ticker symbol "V" on the New York Stock Exchange.[35]

Visa Europe
Visa Europe Ltd. was a membership association and cooperative of over 3,700 European banks
and other payment service providers[36] that operated Visa branded products and services within
Europe. Visa Europe was an entirely separate company to Visa Inc. having gained independence

of Visa International Service Association in October 2007 when Visa Inc. became a publicly
traded company on the New York Stock Exchange.[37] Visa Inc. announced the plan to acquire
Visa Europe on November 5, 2015, creating a single global company.[38] On 21 April 2016 the
agreement was amended in response to the feedback of European Commission.[39] The
acquisition of Visa Europe was completed on 21 June 2016.[40]

Criticism and controversy

Sanctions of Russia
On March 20, 2014, Visa and Mastercard suspended servicing some Russian banks in Crimea:[41]
Rossiya Bank, Sobinbank, SMP Bank and Investcapitalbank,[42] after the USA issued sanctions
against the Russian government due to the 2014 Russian military intervention in Ukraine.

WikiLeaks
Visa Europe began suspending payments to WikiLeaks on December 7, 2010.[43] The company
said it was awaiting an investigation into 'the nature of its business and whether it contravenes
Visa operating rules' though it did not go into details.[44] In return Datacell, the IT company that
enables WikiLeaks to accept credit and debit card donations, announced that it will take legal
action against Visa Europe.[45] On December 8, the group Anonymous performed a DDoS attack
on visa.com[clarification needed], bringing the site down.[46] Although "the Norway-based financial
services company Teller AS, which Visa ordered to look into WikiLeaks and its fundraising body,
the Sunshine Press, found no proof of any wrongdoing, Salon reported in January 2011 that Visa
Europe "would continue blocking donations to the secret-spilling site until it completes its own
investigation".[44]
The United Nations High Commissioner for Human Rights Navi Pillay stated that Visa may be
"violating WikiLeaks' right to freedom of expression" by withdrawing their services.[47]
In July 2012, the Reykjavk District Court decided that Valitor (the Icelandic partner of Visa and
MasterCard) was violating the law when it prevented donations to the site by credit card. It was
ruled that the donations be allowed to return to the site within 14 days or they would be fined in
the amount of US$6,000 per day.[48]

Litigation and regulatory actions

Anti-trust lawsuit by ATM operators
MasterCard, along with Visa, have been sued in a class action by ATM operators that claims the
credit card networks' rules effectively fix ATM access fees.[49] The suit claims that this is a
restraint on trade in violation of federal law. The lawsuit was filed by the National ATM Council
and independent operators of automated teller machines. More specifically, it is alleged that
MasterCard's and Visa's network rules prohibit ATM operators from offering lower prices for
transactions over PIN-debit networks that are not affiliated with Visa or MasterCard. The suit

says that this price fixing artificially raises the price that consumers pay using ATMs, limits the
revenue that ATM-operators earn, and violates the Sherman Act's prohibition against
unreasonable restraints of trade. Johnathan Rubin, an attorney for the plaintiffs said, "Visa and
MasterCard are the ringleaders, organizers, and enforcers of a conspiracy among U.S. banks to
fix the price of ATM access fees in order to keep the competition at bay."[50]
Debit card swipe fees
Visa settled a 1996 antitrust lawsuit brought by a class of U.S. merchants, including Wal-Mart,
for billions of dollars in 2003. Over 4 million class members were represented by the plaintiffs.
According to a website associated with the suit,[51] Visa and MasterCard settled the plaintiffs'
claims for a total of $3.05 billion. Visa's share of this settlement is reported to have been the
larger.
U.S. Justice Department actions
In October 2010, Visa and MasterCard reached a settlement with the U.S. Justice Department in
another antitrust case. The companies agreed to allow merchants displaying their logos to decline
certain types of cards (because interchange fees differ), or to offer consumers discounts for using
cheaper cards.[52]
In 1998 the Department of Justice sued Visa over rules prohibiting its issuing banks from doing
business with American Express and Discover. The Department of Justice won its case at trial in
2001 and the verdict was upheld on appeal. American Express and Discover filed suit as well.[53]
Anti-trust issues in Europe
In 2002 the European Commission exempted Visas multilateral interchange fees from Article 81
of the EC Treaty that prohibits anti-competitive arrangements.[54] However, this exemption
expired on December 31, 2007. In the United Kingdom, MasterCard has reduced its interchange
fees while it is under investigation by the Office of Fair Trading.
In January 2007, the European Commission issued the results of a two-year inquiry into the retail
banking sector. The report focuses on payment cards and interchange fees. Upon publishing the
report, Commissioner Neelie Kroes said the "present level of interchange fees in many of the
schemes we have examined does not seem justified." The report called for further study of the
issue.[55]
On March 26, 2008, the European Commission opened an investigation into Visa's multilateral
interchange fees for cross-border transactions within the EEA as well as into the "Honor All
Cards" rule (under which merchants are required to accept all valid Visa-branded cards).[56][needs
update]

The antitrust authorities of EU Member States other than the United Kingdom are also
investigating MasterCard's and Visa's interchange fees. For example, on January 4, 2007, the

Polish Office of Competition and Consumer Protection fined twenty banks a total of PLN
164 million (about $56 million) for jointly setting MasterCard's and Visa's interchange fees.[57]
In December 2010, Visa reached a settlement with the European Union in yet another antitrust
case, promising to reduce debit card payments to 0.2 percent of a purchase.[58] A senior official
from the European Central Bank called for a break-up of the Visa/MasterCard duopoly by
creation of a new European debit card for use in the Single Euro Payments Area (SEPA).[59] After
Visa's blocking of payments to WikiLeaks, members of the European Parliament expressed
concern that payments from European citizens to a European corporation could apparently be
blocked by the US, and called for a further reduction in the dominance of Visa and MasterCard
in the European payment system.[60]
Payment Card Interchange Fee and Merchant Discount Antitrust Litigation
Main article: Payment Card Interchange Fee and Merchant Discount Antitrust Litigation
On November 27, 2012, a federal judge entered an order granting preliminary approval to a
proposed settlement to a class-action lawsuit filed in 2005 by merchants and trade associations
against Visa, MasterCard, and many credit card issuing banks. The suit was filed due to price
fixing and other anti-competitive trade practices employed by MasterCard and Visa. A majority
of named-class plaintiffs have objected and vowed to opt out of the settlement. Opponents object
to provisions that would bar future lawsuits and even prevent merchants from opting out of
significant portions of the proposed settlement. Stephen Neuwirth, a lawyer representing Home
Depot, said, Its so obvious Visa and MasterCard were prepared to make a large payment
because of the scope of the releases being given. Its all one quid pro quo and merchants like the
Home Depot are being denied the chance to opt out of that quid pro quo and say this is a bad
deal.[61]
Plaintiffs allege that Visa, MasterCard, and major credit card issuers engaged in a conspiracy to
fix interchange fees, also known as swipe fees, that are charged to merchants for the privilege of
accepting payment cards at artificially high levels. In their complaint, the plaintiffs also alleged
that the defendants unfairly interfere with merchants from encouraging customers to use less
expensive forms of payment such as lower-cost cards, cash, and checks.[61]
The settlement provides for the cash equivalent of a 10 basis-point reduction (0.1 percent) of
swipe fees charged to merchants for a period of eight months. This eight-month period would
probably begin in the middle of 2013. The total value of the settlement will be about
$7.25 billion.[61] According to court filings, Target, Wal-Mart, Home Depot, Neiman Marcus,
Saks, and 1,200 other plaintiffs oppose the settlement. A group of large merchants including
Kroger, Walgreens, and Safeway have reached a separate agreement with the defendants over
swipe fees.[61] The NACS, for example, harshly criticised the settlement and is urging its
members to opt out.
Tom Robinson, chairman of NACS and president of Robinson Oil, said, "This proposed
settlement allows the card companies to continue to dictate the prices banks charge and the rules
that constrain the market including for emerging payment methods, particularly mobile

payments. Consumers and merchants ultimately will pay more as a result of this agreement
without any relief in sight."[62] Josh Floum, general counsel for Visa, responded, Our belief that
the agreement will eventually receive final approval was strengthened today. As we have said
from the beginning, this settlement is a fair and reasonable compromise for all parties.[61]
In January 2013, the United States Court of Appeals for the Second Circuit ruled that any appeals
against the settlement that received preliminary approval in November 2012 would not be heard
until objections to the settlement are filed and considered by the trial court in September 2013.
The practical effect of this ruling was to allow settlement notices to be sent to eligible merchants.
[63]

High swipe fees in Poland

Very high interchange fee for Visa (1.51.6% from every transaction's final price, which also
includes VAT tax) in Poland started discussion about legality and need for government
regulations of interchange fees to avoid high costs for business (which also block electronic
payment market and acceptability of cards).[64] This situation also led to the birth of new methods
of payment, which avoid the need for go-between (middleman) companies like Visa or
MasterCard, for example mobile application issued by major banks,[65] and system by big chain
of discount shops,[66] or older public transport tickets buying systems.[67]

Confrontation with Wal-Mart over high fees

On June 16, 2016 the Wall Street Journal reported that Wal-Mart threatened to stop accepting
Visa cards in Canada. Visa objected saying that consumers should not be dragged into a dispute
between the companies. [68]

Corporate affairs
Headquarters
As of October 1, 2012, Visa's headquarters are located in Foster City, California.[1] Visa had been
headquartered in San Francisco until 1985, when it moved to San Mateo.[69] Around 1993, Visa
began consolidating various scattered offices in San Mateo to a location in Foster City.[69] Visa
became Foster City's largest employer.
In 2009, Visa moved its corporate headquarters back to San Francisco when it leased the top
three floors of the 595 Market Street office building, although most of its employees remained at
its Foster City campus.[70] In 2012, Visa decided to consolidate its headquarters in Foster City
where 3,100 of its 7,700 global workers are employed.[1] Visa owns four buildings at the
intersection of Metro Center Boulevard and Vintage Park Drive.
On December 11, 2012 Visa Inc. confirmed that it will build a global information technology
center off of the US 183 Expressway in northwest Austin, Texas.[71]

Operations
Visa offers through its issuing members the following types of cards:

Debit cards (pay from a checking / savings account)

Credit cards (pay monthly payments with or with out interest depending on a customer
paying on time.)

Prepaid cards (pay from a cash account that has no checkwriting privileges)

Visa operates the Plus automated teller machine network and the Interlink EFTPOS point-of-sale
network, which facilitate the "debit" protocol used with debit cards and prepaid cards. They also
provide commercial payment solutions for small businesses, midsize and large corporations, and
governments.[72]
Visa teamed with Apple in September 2014, to incorporate a new mobile wallet feature into
Apple's new iPhone models, enabling users to more readily use their Visa, and other credit/debit
cards.[73]

Operating regulations
Visa has a set of rules that govern the participation of financial institutions in its payment system.
Acquiring banks are responsible for ensuring that their merchants comply with the rules.
Rules address how a cardholder must be identified for security, how transactions may be denied
by the bank and how banks may cooperate for fraud prevention, and how to keep that
identification and fraud protection standard and non-discriminatory. Other rules govern what
creates an enforceable proof of authorization by the cardholder.[74]
The rules prohibit merchants from imposing a minimum or maximum purchase amount in order
to accept a Visa card and from charging cardholders a fee for using a Visa card.[74] In ten U.S.
states, surcharges for the use of a credit card are forbidden by law (California, Colorado,
Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas) but a
discount for cash is permitted under specific rules.[75] Some countries have banned the nosurcharge rule, most notably the UK[76] and Australia[77] and retailers in those countries may apply
surcharges to any credit-card transaction, Visa or otherwise.
Visa permits merchants to ask for photo ID, although the merchant rule book states that this
practice is discouraged. As long as the Visa card is signed, a merchant may not deny a transaction
because a cardholder refuses to show a photo ID.[74]
The DoddFrank Act allows U.S. merchants to set a minimum purchase amount on credit card
transactions, not to exceed $10.[78][79]

Recent complications include the addition of exceptions for non-signed purchases by telephone
or on the Internet, and an additional security system called "Verified by Visa" for purchases on
the Internet.
In September 2014, Visa Inc, launched a new service to replace account information on plastic
cards with "token" - a digital account number.[80]

payWave

In September 2007, Visa introduced Visa payWave, a contactless payment technology feature
that allows cardholders to wave their card in front of contactless payment terminals without the
need to physically swipe or insert the card into a point-of-sale device.[81] This is similar to the
MasterCard PayPass service and the American Express ExpressPay, with both using RFID
technology. All three use the same symbol as shown on the right.
In Europe, Visa has introduced the V PAY card which is chip-only and PIN-only. [82] In Australia,
Visa payWave cards are issued by select financial institutions only. [83]

Visa Checkout
In 2013 Visa launched Visa Checkout, an online payment system that removes the need to share
card details with retailers. The Visa Checkout service allows users to enter all their personal
details and card information, then use a single username and password to make purchases from
online retailers. On November 27, 2013 V.me went live in the UK, France, Spain and Poland,
with Nationwide Building Society being the first financial institution in Britain to support it.[84]

Trademark and design

Logo design
The blue and gold in Visa's logo were chosen to represent the blue sky and gold-colored hills of
California, where the Bank of America was founded.
In 2006, Visa changed its logo, removing the horizontal stripes in favor of a simple white
background with the name Visa in blue with an orange flick on the 'V'.[85] The orange flick was
removed in favor of the logo being a solid blue gradient in 2014. In 2015, the gold and blue
stripes were restored as card branding on Visa Debit and Visa Electron, although not as the
company's logotype.[86]

Card design

The hologram
In 1984, most Visa cards around the world began to feature a hologram of a dove on its face,
generally under the last four digits of the Visa number. This was implemented as a security
feature - true holograms would appear three-dimensional and the image would change as the card
was turned. At the same time, the Visa logo, which had previously covered the whole card face,
was reduced in size to a strip on the card's right incorporating the hologram. This allowed issuing
banks to customize the appearance of the card. Similar changes were implemented with
MasterCard cards. Today, cards may be co-branded with various merchants, airlines, etc., and
marketed as "reward cards".
On older Visa cards, holding the face of the card under an ultraviolet light will reveal the dove
picture, dubbed the Ultra-Sensitive Dove,[87] as an additional security test. (On newer Visa cards,
the UV dove is replaced by a small V over the Visa logo.)
Beginning in 2005, the Visa standard was changed to allow for the hologram to be placed on the
back of the card, or to be replaced with a holographic magnetic stripe ("HoloMag").[88] The
HoloMag card was shown to occasionally cause interference with card readers, so Visa
eventually withdrew designs of HoloMag cards and reverted to traditional magnetic strips.[89]

Sponsorships
Olympics and Paralympics

Visa has been a worldwide sponsor of the Olympic Games since 1986 and the
International Paralympic Committee since 2002. Visa is the only card accepted at all
Olympic and Paralympic venues. Its current contract with the International Olympic
Committee and International Paralympic Committee as the exclusive services sponsor
will continue through 2020 and 2016 respectively.[90] This includes the Singapore 2010
Youth Olympic Games, London 2012 Olympic Games, the Sochi 2014 Olympic Winter
Games, the Rio de Janeiro 2016 Olympic Games, the 2018 PyeongChang Olympic
Winter Games, and the Tokyo 2020 Olympic Games.

Visa extended its partnership with the International Paralympic Committee through 2014,
which includes the 2010 Vancouver Paralympic Winter Games, the 2012 London
Paralympic Games and 2014 Sochi Paralympic Games. In 2002, Visa became the first
global sponsor of the IPC.[91]

Others

Visa was the jersey sponsor of Argentina's national basketball team at the 2015 FIBA
Americas Championship in Mexico City.[92]

Visa is the shirt sponsor for the Argentina national rugby union team, nicknamed the
Pumas. Also, Visa sponsors the Copa Libertadores and the Copa Sudamericana, the most
important football club tournaments in South America.

Until 2005, Visa was the exclusive sponsor of the Triple Crown thoroughbred
tournament.

Visa sponsored the Rugby World Cup, and the 2007 tournament in France was its last.[93]

In 2007, Visa became sponsor of the 2010 FIFA World Cup in South Africa. The FIFA
partnership provides Visa with global rights to a broad range of FIFA activities including both the 2010 and 2014 FIFA World Cup and the FIFA Women's World Cup.

Since 1995, Visa has sponsored the U.S. National Football League (NFL) and a number
of NFL teams, including the San Francisco 49ers whose practice jerseys display the Visa
logo.[94] Visa's sponsorship of the NFL extended through the 2014 season.[95]

Starting from the 2012 season, Visa became a partner of the Caterham F1 Team. Visa is
also known for motorsport sponsorship in the past: it sponsored PacWest Racing's
IndyCar team in 1995 and 1996, with drivers Danny Sullivan and Mark Blundell
respectively.[96]

Point of sale
From Wikipedia, the free encyclopedia
This article is about checkout technology. For managed care, see point of service plan.

Points of sale at a Target store

Marketing

Marketing

Marketing management

Key concepts[hide]

Product marketing

Pricing

Distribution

Service

Brand management

Retail

Brand licensing

Account-based marketing

Effectiveness

Research
Segmentation

Ethics

Strategy
Activation
Management
Dominance

Marketing operations

Social marketing

Identity

Digital marketing

Promotion

Promotional content[show]
Promotional media[show]

The point of sale (POS) or point of purchase (POP) is the time and place where a retail
transaction is completed. At the point of sale, the merchant would calculate the amount owed by
the customer and indicate the amount, and may prepare an invoice for the customer (which may
be a cash register printout), and indicate the options for the customer to make payment. It is also
the point at which a customer makes a payment to the merchant in exchange for goods or after
provision of a service. After receiving payment, the merchant may issue a receipt for the
transaction, which is usually printed, but is increasingly being dispensed with or sent
electronically.[1][2][3]
To be able to calculate the amount owed by a customer, the merchant may use any of a variety of
aids available, such as weighing scales, bar code scanners, electronic and manual cash registers.
To make a payment EFTPOS terminals, touch screens and a variety of other hardware and
software options are available.
The point of sale is often referred to as the point of service because it is not just a point of sale
but also a point of return or customer order. Additionally, today POS software may include
additional features to cater for different functionality, such as inventory management, CRM,
financials, warehousing, etc.
Businesses are increasingly adopting POS systems and one of the most obvious and compelling
reasons is that a POS system does away with the need for price tags. Selling prices are linked to
the product code of an item when adding stock, so the cashier merely needs to scan this code to
process a sale. If there is a price change, this can also be easily done through the inventory
window. Other advantages include ability to implement various types of discounts, a loyalty
scheme for customers and more efficient stock control.

Contents

1 Terminology

2 History
o 2.1 Software before the 1990s
o 2.2 Modern software (post-1990s)
o 2.3 Hardware interface standardization (post-1980s)
o 2.4 Hardware issues

3 User Interface Design

4 Cloud-based (post-2000s)

5 Retail industry
o 5.1 Physical configuration

6 Hospitality industry

7 Accounting forensics

8 Security

9 See also

10 References

11 External links

Terminology
Retailers and marketers will often refer to the area around the checkout instead as the point of
purchase (POP) when they are discussing it from the retailer's perspective. This is particularly
the case when planning and designing the area as well as when considering a marketing strategy
and offers.
Some point of sale vendors refer to their POS system as "Retail Management System" which is
actually a more appropriate term given that this software is no longer just about processing sales

but comes with many other capabilities such as inventory management, membership system,
supplier record, bookkeeping, issuing of purchase orders, quotations and stock transfers, barcode
label creation, sale reporting and in some cases remote outlets networking or linkage, to name
some major ones.
Nevertheless, it is the term POS system rather than Retail Management System that is in vogue
among both end-users and vendors.

History
Software before the 1990s

McDonald's POS device by Brobeck

Early electronic cash registers (ECR) were controlled with proprietary software and were limited
in function and communications capability. In August 1973 IBM released the IBM 3650 and
3660 store systems that were, in essence, a mainframe computer used as a store controller that
could control up to 128 IBM 3653/3663 point of sale registers. This system was the first
commercial use of client-server technology, peer-to-peer communications, local area network
(LAN) simultaneous backup, and remote initialization. By mid-1974, it was installed in
Pathmark stores in New Jersey and Dillard's department stores.
One of the first microprocessor-controlled cash register systems was built by William Brobeck
and Associates in 1974, for McDonald's Restaurants.[4][5] It used the Intel 8008, a very early
microprocessor. Each station in the restaurant had its own device which displayed the entire
order for a customerfor example: [2] Vanilla Shake, [1] Large Fries, [3] BigMacusing
numeric keys and a button for every menu item. By pressing the [Grill] button, a second or third
order could be worked on while the first transaction was in progress. When the customer was
ready to pay, the [Total] button would calculate the bill, including sales tax for almost any
jurisdiction in the United States. This made it accurate for McDonald's and very convenient for
the servers and provided the restaurant owner with a check on the amount that should be in the
cash drawers. Up to eight devices were connected to one of two interconnected computers so that
printed reports, prices, and taxes could be handled from any desired device by putting it into

Manager Mode. In addition to the error-correcting memory, accuracy was enhanced by having
three copies of all important data with many numbers stored only as multiples of 3. Should one
computer fail, the other could handle the entire store.
In 1986, Gene Mosher[6] introduced the first graphical point of sale software[7] featuring a
touchscreen interface under the ViewTouch[8] trademark on the 16-bit Atari 520ST color
computer.[9] It featured a color touchscreen widget-driven interface that allowed configuration of
widgets representing menu items without low level programming.[10] The ViewTouch point of
sale software was first demonstrated in public at Fall Comdex, 1986,[11] in Las Vegas Nevada to
large crowds visiting the Atari Computer booth. This was the first commercially available POS
system with a widget-driven color graphic touch screen interface and was installed in several
restaurants in the USA and Canada.

Modern software (post-1990s)

In 1992, Martin Goodwin and Bob Henry created the first point of sale software that could run
on the Microsoft Windows platform named IT Retail.[12] Since then a wide range of POS
applications have been developed on platforms such as Windows and Unix. The availability of
local processing power, local data storage, networking, and graphical user interface made it
possible to develop flexible and highly functional POS systems. Cost of such systems has also
declined, as all the components can now be purchased off-the-shelf.
In fact as far as the computer is concerned, off-the-shelf versions are usually newer and hence
more powerful than those proprietary POS terminals provided by POS vendors and more RAM
can also be easily added if needed. Furthermore, touchscreen tablets and laptops - both Windows
or Android types - are readily available in the market. And they are also more portable than
traditional POS terminals. The only advantage of the latter has is usually because they are built to
withstand rough handling, food and drink spillages; however this is not a concern for non F & B
businesses.
The key requirements that must be met by modern POS systems include high and consistent
operating speed, reliability, ease of use, remote supportability, low cost, and rich functionality.
Retailers can reasonably expect to acquire such systems (including hardware) for about $4000
US (as of 2009) per checkout lane.
Reliability depends not completely on the developer but at times on the compatibility between a
database and an OS version. For example, MS Access database used very widely for POS
systems is known to fail for Windows 7 and higher versions and no solution has been offered by
Microsoft. However through community support a registry tweak solution has been found by a
developer for this.
That such a serious compatibility bug has emerged for MS Access database is shocking even to
veteran developers using Windows, some of whom may not be able find the solution. Businesses
using POS systems with MS Access database were caught off-guard when they upgrade from
Windows XP to a newer version of the OS. As a result, their business were seriously disrupted

but some suspecting it had something to do with OS upgrade took the initiative to quickly
downgrade back to Windows XP.
POS systems are by far one of the most complex of software because of the features that are
required by different end-users. Many if not most POS systems are really a suite of software that
includes sale, inventory, add stock, vendor record, membership and reporting modules.
Sometimes you will find also purchase ordering, stock transferring, quotation issuing, barcode
creating, bookkeeping or even accounting capabilities included. Furthermore, each of these
modules are interlinked if they are to serve their practical purpose and to maximize their
usability.
For instance, the sale window is immediately updated on a new member entry through the
membership window because of this interlinking. Similarly when a sale transaction is made, any
purchase by a member is on record for the membership window to report providing information
like payment type, goods purchased, date of purchase, points accumulated. Another example is
when goods are sold the report window is able to generate an account of the balance stock, of the
performance of goods from various vendors, and sometimes for more comprehensive analysis
need to present these in ascending or descending order for different fields - like selling price,
balance, average cost, quantity sold, description and department. Highly complex programming
is involved not to mention the kind of computer resources to be considered for generating such
extensive analyses.
POS systems are designed not only to serve the retail, wholesale and hospitality industries as
historically is the case. Nowadays POS systems are also used in goods and property leasing
businesses, equipment repair shops, healthcare management, ticketing offices such as cinemas
and sports facilities and many other operations where capabilities such as the following are
required: processing monetary transactions, allocation and scheduling of facilities, keeping
record and scheduling services rendered to customers, tracking of goods and processes (repair or
manufacture), invoicing and tracking of debts and outstanding payments.
Within each trade different customers have different expectations. The reporting functionality
alone is subject to so many demands especially from those in the retail/wholesale industry. Just
to cite special requirements, for some businesses goods may include perishables and hence the
inventory system must be capable of prompting the admin and cashier on expiring or expired
products. Some retail businesses require the system to store credit for their customers, credit
which can be used subsequently to pay for goods. Some companies even expect the POS system
to behave like a full-fledged inventory management system, including the ability to provide even
FIFO (First In First Out) and LIFO (Last In First Out) reports of their goods for accounting and
tax purpose.
In the hospitality industry, POS system capabilities can also diverge significantly. For instance
while a restaurant is typically concerned about how the sale window functions, whether it has
functionality such as for creating item buttons, for various discounts, for adding a service charge,
for holding of receipts, for queuing, for table service as well as for takeaways, merging and
splitting of a receipt, these capabilities may yet be insufficient for a spa or slimming center which

would require in addition a scheduling window with historical records of customers' attendance
and their special requirements.
The complexity of a mature POS system even extends to remote networking or interlinking
between remote outlets and the HQ such that updating both ways is possible. Some POS systems
even offer the linking of web-based orders to their sale window. Even when local networking is
only required such as in the case of a high-traffic business like a supermarket there is already the
challenge for the developer to keep most if not every of their POS stations always running. And
this puts high demand not just on software coding but also designing the whole system covering
how individual stations and the network work together, and a special consideration for the
performance capability and usage of databases.
With regards to databases, POS systems are very demanding on their performance because of
numerous submissions and retrievals of data - required for correct sequencing the receipt
number, checking up on various discounts, membership, calculating subtotal, so forth - just to
process a single sale transaction. The immediacy required of the system on the sale window such
as may be observed at a checkout counter in a supermarket also cannot be compromised. This
places much stress on certain enterprise databases if there are just several tens of thousands of
sale records in the database. Enterprise database Ms SQL for example has been known to freeze
up (including the OS) completely for many minutes under such conditions showing a "Timeout
Expired" error message. Even a lighter database like Ms Access will slow to a crawl over time if
the problem of database bloating is not foreseen and managed by the system automatically.
Therefore, the need to do extensive testing, debugging and improvisation of solutions to preempt
failure of a database before commercialization further complicates the development.
With the rise of POS system hacking which an Internet search will readily confirm, developers
nowadays have to think also about the security aspect of the system, thus compounding the
complexity of a POS system. In 2015 alone the POS systems of two major hotels, Mandarin
Oriental and Hilton were compromised by hackers allowing them to steal credit card information
of their guests.
It may be said that a POS system can be made to serve different things to different end-users
depending on their unique business processes. In fact quite often an off-the-self POS system is
inadequate for customers; some customization is required and this is why a POS system can
become very complex.
Because of the complexity, therefore do not be surprised as a user if there are many bugs and
errors encountered in POS systems as a search on 'pos system reviews bugs' would reveal.
At the same time the fact that a POS system typically can cost thousands of dollars just for a
software license alone just goes to show what work - extensive software coding, debugging and
testing, integration with database, hardware and networking requirements - has been invested by
the developer.
POS systems are also very demanding in terms of accuracy given that monetary transaction is
constantly involved not only via the sale window but also at the backend through the receiving

and inputting of goods into the inventory. Calculations involved are not always straightforward.
For example, on the sale window if there are quantity discount, promotional discount, mix and
match discount, manually inputted receipt discount, membership discount, service charge,
surcharge, delivery charge and sale tax (GST or VAT) involved they are not always known in
advance but only after all the goods in a sale receipt have been processed. The complexity of
programming involved just for these aspects of the sale processes can only be imagined
especially when no error in calculation can be allowed.
A POS system in some retail/wholesale businesses is often attempted to be used as inventory
management system which is a highly complex software by itself not to mention that inventory
management is a full-time job which many businesses are not really prepared to undertake.
Anyway when a user wants to find out how his products are performing the POS system must be
able to provide a comprehensive report of not only the sales but also the balance quantity, profit
margin, so forth.
Other requirements include that the system must have functionality for membership discount and
points accumulation/usage, quantity and promotional discounts, mix and match offers, cash
rounding up, invoice/delivery-order issuance with outstanding amount. It should enable a user to
adjust the inventory of each product based on physical count, track expiry of perishable goods,
change pricing, provide audit trail when modification of inventory records are performed, be
capable of multiple outlet functionality, control of stocks from HQ, doubling as an invoicing
system, just to name some.
It is clear that POS system is a term that implies a wide range of capabilities depending on the
end-user requirements. POS system review websites cannot be expected to cover most let alone
all the features; in fact unless one is a developer himself it is unrealistic to expect the reviewer to
know all the nuts and bolts of a POS system. For instance a POS system might work smoothly on
a test database during review but not when the database grows significantly in size over months
of usage. And this is only one among many hidden critical functionality issues of a POS system.
Although POS systems based on the sale window interface alone all appear to be similar it is
really under the hood that end-users come to know by and by whether the software functionality
they required not only are available but working properly. The latter is cited because POS
systems are notorious for many bugs and errors. For this reason for those looking to purchase a
POS system, perhaps one of the best routes to a prudent purchase decision is to find out from
other users in a similar trade about their experience with various POS systems. Given the
complexity of the software even this fact-finding process takes much effort but it is far better
than ending up with a system that you will live to regret for years.
Another way is to ask for a demo installation of the POS system from a vendor so that you can
test out the functionality. However, because of the complexity of the software it is not likely that
you may get to test out the features comprehensively enough.
Another alternative is to consider engaging an expert in POS systems to source for a suitable
one. However experts in this field are not easy to find. Nevertheless, if found investing in such

consultation is very critical especially when your business is large and highly dependent on
acquiring the right system. This implies not just in terms of technical functionality of the system
but also in terms of licensing issues such as whether your company can acquire the source code
to ensure that future development of the software is not dependent on the survival of the original
developer.
Given these challenges, large companies should consider seriously developing their own
proprietary POS systems from ground up. Although this also implies the need for continual
maintenance of the system by a tech department, the budget allocated for this can be worth it
given the gain in internal control and assurance of technical support. Technical support for POS
systems in particular has always surfaced as a very serious issue for end-users if user comments
at POS system review sites are anything to go by. This is because for one thing there is a large
knowledge gap between the call center and the actual developers of a POS system.
Should a company opt for a POS system completely developed in-house, this is not a project that
can be expected to be completed in a matter of months. The lead time can be measured in terms
of years after factoring in the work of exhaustive testing, debugging, modifications and
improvements. This caveat of course applies to an enterprise-level POS system - one for a large
inventory, multi-outlet inventory and purchasing management, auto-reordering, CRM and
accounting features - which is worth putting the company resources into developing.

Hardware interface standardization (post-1980s)

Vendors and retailers are working to standardize development of computerized POS systems and
simplify interconnecting POS devices. Two such initiatives are OPOS and JavaPOS, both of
which conform to the UnifiedPOS standard led by The National Retail Foundation.
OPOS (OLE for POS) was the first commonly adopted standard and was created by Microsoft,
NCR Corporation, Epson and Fujitsu-ICL. OPOS is a COM-based interface compatible with all
COM-enabled programming languages for Microsoft Windows. OPOS was first released in
1996. JavaPOS was developed by Sun Microsystems, IBM, and NCR Corporation in 1997 and
first released in 1999. JavaPOS is for Java what OPOS is for Windows, and thus largely platform
independent.
There are several communication ways POS systems use to control peripherals such as:

Logic Controls \ BemaTech

Epson Esc/POS

UTC Standard

UTC Enhanced

AEDEX

ICD 2002

Ultimate

CD 5220

DSP-800

ADM 787/788

HP

There are also nearly as many proprietary protocols as there are companies making POS
peripherals. Most POS peripherals, such as displays and printers, support several of these
command protocols in order to work with many different brands of POS terminals and
computers.

Hardware issues
There are some issues about POS hardware that need to be addressed. POS receipt printers are of
particular concern as they seem to be lagging behind office printers technologically in certain
essential aspects.
Typically after installation of the driver the POS receipt printer is not immediately usable
because a virtual port for the printer on the Printers window would still has to be selected for it to
work. It is not clear why this must be done for receipt printers when office printers have become
plug and play devices.
In one case, a slightly lower-end receipt printer even has to be ridiculously re-initialized
manually during every bootup of the computer for it to work. This appears to be a self-defeating
business tactic by the manufacturer to coerce customers to purchase their more expensive
printers.
Some receipt printers restrict paper size setting to receipt sizes only, providing no option for
large paper sizes like A4. Because of this when a POS system is being used also to generate and
print A4-size documents like delivery orders the user has to remember to select A4 for paper size
when printing - otherwise the printout would be messed up compressed into a receipt layout. If
however A4 or letter paper size is available and then selected in the receipt printer setting, then
there is no need for the user to change from receipt to A4 paper size when printing such large
documents. At the same time, the receipts will still print properly because the layout is already
programmed into the POS software. Clearly some manufacturers of receipt printers have not
recognized that their omission of large paper size options has resulted in inefficiency for the enduser especially when A4 documents are being issued regularly.

Another curiosity is that in one case a receipt printer failed to work properly but only
intermittently when used from another networked computer. The instruction manual belabors on
IP addresses, ethernet cabling and other technicality to get it to work. It turned out after much
troubleshooting by the POS vendor that the problem lies in the lack of the use of a Windows
password by the user at the POS station computer. However the fact that two other brands of
receipt printers have no issue with network printing for the same situation just goes to show that
not all receipt printers are created equal. Receipt printers ought to work properly like office
printers for network printing.
Furthermore, not every receipt printer in the market provides the functionality to open the cash
drawer on demand through a button press on the sale window and not only when a sale receipt is
printed. There are cases when a business such as a grocery shop would prefer not to issue
receipts to customers who may litter the receipts all over the place but still would need to open
the cash drawer for a sale without having to continually use the cash drawer key - which would
be laborious - but with a touch of a button on the sale window. Apparently some printer
manufacturers simplistically assume the cash drawer is only to be opened when a sale receipt is
printed out.
For one widely used brand of receipt printer upon installation of its driver the icons of other
printers and devices on the Printers window were removed. It is not clear why this is done
because the POS system is sometimes used to also issue and print other documents through an
office printer or through the PDF writer. Therefore, there is a need for other devices be it an
office printer, fax or PDF writer to be available.
Some users have been flabbergasted to find themselves in such a situation and do not know what
had caused the disappearance of other printers and devices icons from Printers window. Only by
uninstalling that particular receipt printer driver will the other printers and devices reappear in
the Printers window. This renders that receipt printer unsuitable when other devices need to be
used.
Note also that some receipt printers may restrict the maximum length of the receipt such that a
long receipt may be split into two or more printouts. This length limitation is really unnecessary
for a sale receipt.
Unlike office printers, there are probably hardly any receipt printers that are capable of printing
in rich text format which would otherwise render receipt more interesting with text formatting
and images. In fact some less expensive or newly introduced receipt printers are not even capable
printing a company logo at the top of the receipt.
Nowadays more and more businesses are opting for thermal printers instead of dot matrix
printers because for the about the same price range thermal printers are faster than dot matrix
ones. This is unless one goes for the higher-end dot matrix printers which may cost twice the
price. Apart from this dot matrix requires more maintenance in terms of ribbon changing and
stocking.

Because of such aforesaid issues, the selection of a receipt printer requires some consideration
and research. There should also be more collaboration among receipt printer manufacturers, POS
vendors and end-users on such practical issues, so as to make receipt printers as user-friendly as
office printers.
As regard to customer display, traditionally a pole display is used to show the description and
price of an item being scanned and the subtotal. This is a limiting functionality from the point of
customer service and marketing when compared to the use of a second LCD monitor to show the
full receipt, a photo of the product being scanned and to display some advertising message,
slideshow or even video. This should be the new option for end-users and one that is not very
difficult for the POS developer to implement. Yet surprisingly at some large supermarkets one
can still see pole displays being used.
For speedy scanning of items in high-traffic business such as a grocery shop or a supermarket, an
omni-directional barcode scanner plus a handheld scanner are recommended. Buyers of such
scanners should however beware that counterfeit omni-directional scanners of established brands
are nowadays being sold over the Internet for as low as one third or less of the real price but
these counterfeits lack the sensitivity and powerful performance of the genuine products.
QR code scanners should be seriously considered by businesses that create their own product and
service codes. A spa outlet for instance may want to issue membership cards to its customers
with a QR code that can store far more information than ordinary barcodes and also in some nonEnglish languages as well. When the QR code is scanned by the QR scanner, member ID, name,
address, member category, privileges and other information stored in it can be extracted for the
service staff to view and use.
Because in many instances much processing and printing are involved, a POS system requires
high computer resources in terms of CPU and RAM. Buying a more compact computer with
lower specification to save space or a lower-end one to save money can result in computer
crashes and failure to print receipts, thus resulting in lost sales as the customer queue stalls
because of these problems. Very cheap POS terminals from some third world countries selling on
the Internet also carry a catch because their motherboards look like old laptop motherboards and
indeed they come with laptop power plugs to power them. Some such POS terminals arrive
broken even before they are used.
Probably one of the best choice to run a POS system is to buy a latest off-the-shelf touchscreen
computer locally - with hardware specifications clearly documented - and then to request for
more RAM to be added to boost its performance. A small LCD monitor as a customer display
can then be plugged into it and fixed in position. If a POS terminal is bundled with the POS
system, it is necessary to look at the hardware specifications to ensure that they meet your needs
which in some cases may include generating highly complex perpetual reports after business
hours that may freeze up even fairly powerful computers for minutes while doing so.
Note that certain established POS vendors may supply their proprietary POS terminals that do
not provide any USB ports for the user to save data. While this makes the POS system more
secure from point of sale malware and viruses and thus from information theft like the stealing of

credit card data stored in the system, it also represents a point of dissatisfaction for some endusers.

User Interface Design

Among more than a dozen windows in a mature POS system, the design of the sale window is
the most important one for the user. It user interface is even more critical than those in other
software like a billing application, a word editor or a spreadsheet program where speed is not so
crucial for business performance.
For businesses at prime locations where real estate comes at a premium, it is common to see a
queue of customers. The faster a sale is completed the shorter the queue and hence the more
room available in a store for customers to shop around and employees to do their work. Hightraffic operations like some grocery outlets and cafes must work fast at the sale counter. If there
are popup windows here and there such as during payment processing even when it is paid in
cash, it can slow the queue down significantly compared to using an ordinary cash register.
It can be very challenging for the developer to create a fast-operating let alone an appealing or
cool interface for the sale window like a smartphone interface. As it is sometimes said by
reviewers, the sale windows of POS systems often look rather ugly. One reason this is so is
because of the numerous features required.
Although polishing up the sale windows in terms of colors used and improving the ergonomics is
always possible, a cool and clean look may come at the expense of sacrificing numerous
functions that are often wanted by end-users. Discounts of half a dozen kinds, service charge,
surcharge, on-the-spot membership registration, hold receipt, easy split and merge checks and
table service for F & B, split tender, manual entry of unrecorded item, comment entry, rounding
adjustment for cash payment, layaway, switching to delivery order issuance, quick retrieval and
refund of receipts and daily product summary, linking a sale person to a sale for subsequent
calculation of his/her sale commission, all these count among such wanted capabilities. Endusers never seem to run out of ingenuity when it comes to wanted features.
Not only are such features challenging to build into the system flawlessly, it is also difficult to fit
all such features into the sale window neatly while ensuring that they are easy to use and with as
few popup windows as possible. Every precious inch of the sale window is optimized for such
use; yet for all the laborious work there is still a need to test out the user interface on different
monitors set with different resolution. The two accompanying screenshots illustrate this point.
It may be surprising to realize that end-users can fuss even about having to click a left or right
arrow on the sale window just to get to a particular category of products to display on item
buttons. They may also critique that they have to enter the tender amount in a popup window
thus slowing their work when it was quite straightforward previously when using an old cash
register.
Aside from the need for a friendly user interface, POS systems with rich features though very
useful are also not always easy to master and to use. If the user manuals of some such POS

systems typically run into hundred of pages, this challenge is certainly something to be expected
by the user. This challenge however can be made easier by narrowing the choice of a POS
system by first examining how straightforward the often-used functions are on the sale window which is the most frequently used window. It stands to reason that if one can get the hang of a
rich-featured sale window in a matter of a few hours, that indicates the system can be shortlisted
for a buying decision.

Cloud-based (post-2000s)

Cloud-based point of sale.

The advent of cloud computing has given birth to the possibility of POS systems to be deployed
as software as a service, which can be accessed directly from the Internet, using any internet
browser. Using the previous advances in the communication protocols for POS's control of
hardware, cloud-based POS systems are independent from platform and operating system
limitations. Cloud-based POS systems are also created to be compatible with a wide range of
POS hardware and sometimes tablets such as Apple's IPad. Thus cloud-based POS also helped
expand POS systems to mobile devices, such as tablet computers or smartphones.[13] These
devices can also act as barcode readers using a built-in camera and as payment terminals using
built-in NFC technology or an external payment card reader. A number of POS companies built
their software specifically to be cloud-based. For example, Epos Now's POS software has been
cloud-based since it launched in 2011.[14] Other businesses who launched pre-2000s have since
adapted their software to adapt to evolving technology. Cybertill which is based in the UK,
claims to be the world's first multichannel cloud-based POS system.[15]
Cloud-based POS systems are different from traditional POS largely because user data, including
sales and inventory, are not stored locally, but in a remote server. The POS system is also not run
locally, so there is no installation required.[16]
Depending on the pos vendor and the terms of contract, compared to traditional on-premises
POS installation, the software is more likely to be continually updated by the developer with
more useful features and better performance in terms of computer resources at the remote server
and in terms of lesser bugs and errors.
Other advantages of a cloud-based POS are instant centralization of data (important especially to
chain stores), ability to access data from anywhere there is internet connection, and lower startup costs.[16][17][18]

Cloud based POS requires an internet connection. For this reason it important to use a device
which has its own 3G capability in case the device's primary internet goes down. First Data's
Clover mini and mobile are examples of cloud based POS which have their own internet
capability in the event that the primary internet fails.
In addition to being significantly less expensive than traditional legacy point of sale systems, the
real strength of a cloud based point of sale system is that there are developers all over the world
creating software applications for cloud based POS. Cloud based POS systems are often
described as future proof as new applications are constantly being conceived and built.
A number of noted emerging cloud-based POS systems came on the scene less than a decade or
even half a decade back. These systems are usually designed for restaurants, small and mediumsized retail operations with fairly simple sale processes as can be culled from POS system review
sites like MerchantMaverick. It appears from such software reviews that enterprise-level cloudbased POS systems are currently lacking in the market.
By "enterprise-level" is usually meant that the inventory should be capable of handling a large
numbers of records ranging from tens to few hundred thousands even. Such will be the case for
grocery stores and supermarkets respectively. It can also mean that the system - software and
cloud server resource wise - must be capable of generating reports such as analytics of sale
against inventory for both a single and multiple outlets that are interlinked for administration by
the headquarter of the business operation.
POS vendors of such cloud based systems should also have a strong contingency plan for the
breakdown of their remote server such as represented by failover server support. However,
sometimes even a major data center can fail completely, such as in a fire.[19] On-premises
installations are therefore sometimes seen alongside cloud-based implementation to preempt
such incidents, especially for businesses with very high traffic. However the on-premises
installations may not have the most up-to-date inventory and membership information.
For such contingency, a more innovative though highly complex approach for the developer is to
have a trimmed down version of the POS system installed on the cashier computer at the outlet.
On a daily basis the latest inventory and membership information from the remote server is
automatically updated into the local database. Thus should the remote server fail, the cashier can
switch over to the local sale window without disrupting sales. When the remote server is restored
and the cashier switches over to the cloud system, the locally processed sale records are then
automatically submitted to the remote system, thus maintaining the integrity of the remote
database.
Although cloud-based POS systems save the end-user startup cost and technical challenges in
maintaining an otherwise on-premises installation, there is a risk that should the cloud-based
vendor close down it may result in more immediate termination of services for the end-user
compared to the case of a traditional full on-premises POS system where it can still run without
the vendor.

Another consideration is that a cloud-based POS system actually exposes business data to service
providers - the hosting service company and the POS vendor which have access to both the
application and database. The importance of securing critical business information such as
supplier names, top selling items, customer relationship processes cannot be underestimated
given that sometimes the few key success factors or trade secrets of a business are actually
accessible through the POS system. This security and privacy concern is an ongoing issue in
cloud computing.

Retail industry
Main article: Retail
The retail industry is one of the predominant users of POS terminals.

A woman in Jordan is ready to pay for her groceries.

A retail point of sale system typically includes a cash register (which in recent times comprises a
computer, monitor, cash drawer, receipt printer, customer display and a barcode scanner) and the
majority of retail POS systems also include a debit/credit card reader. It can also include a
conveyor belt, weight scale, integrated credit card processing system, a signature capture device
and a customer pin pad device. While the system may include a keyboard and mouse, more and
more POS monitors use touch-screen technology for ease of use, and a computer is built into the
monitor chassis for what is referred to as an all-in-one unit. All-in-one POS units liberate counter
space for the retailer. The POS system software can typically handle a myriad of customer based
functions such as sales, returns, exchanges, layaways, gift cards, gift registries, customer loyalty
programs, promotions, discounts and much more. POS software can also allow for functions
such as pre-planned promotional sales, manufacturer coupon validation, foreign currency
handling and multiple payment types.
The POS unit handles the sales to the consumer but it is only one part of the entire POS system
used in a retail business. "Back-office" computers typically handle other functions of the POS
system such as inventory control, purchasing, receiving and transferring of products to and from
other locations. Other typical functions of a POS system are: store sales information for enabling
customer returns, reporting purposes, sales trends and cost/price/profit analysis. Customer
information may be stored for receivables management, marketing purposes and specific buying
analysis. Many retail POS systems include an accounting interface that "feeds" sales and cost of
goods information to independent accounting applications.

A multiple point of sale system used by big retailers like supermarkets and department stores has
a far more demanding database and software architecture than that of a single station seen in
small retail outlets. A supermarket with high traffic cannot afford a systemic failure, hence each
point of sale station should not only be very robust both in terms of software, database and
hardware specifications but also designed in such a way as to prevent causing a systemic failure such as may happen through the use of a single central database for operations.
At the same time updating between multiple stations and the backend administrative computer
should be capable of being efficiently performed, so that on one hand either at the start of the day
or at any time each station will have the latest inventory to process all items for sale, while on the
other hand at the end of the day the backend administrative computer can be updated in terms of
all sale records.
This gets even more complicated when there is a membership system requiring real-time twoway updating of membership points between sale stations and the backend administrative
computer.
Retail operations such as hardware stores (lumber yards), electronic stores and so-called
multifaceted superstores need specialized additional features compared to other stores. POS
software in these cases handles special orders, purchase orders, repair orders, service and rental
programs as well as typical point of sale functions. Rugged hardware is required for point of sale
systems used in outdoor environments. Wireless devices, battery powered devices, all-in-one
units, and Internet-ready machines are typical in this industry.
Recently new applications have been introduced, enabling POS transactions to be conducted
using mobile phones and tablets. According to a recent study, mobile POS (mPOS) terminals are
expected to replace the contemporary payment techniques because of various features including
mobility, upfront low cost investment and better user experience. Convenience of conducting
remote financial transactions is expected to augment the demand from small and medium
businesses for mPOS.[12]
In the mid-2000s, the blind community in the United States engaged in structured negotiations to
ensure that retail point of sale devices had tactile keypads. Without keys that can be felt, a blind
person cannot independently enter her or his PIN. In the mid-2000s retailers began using "flat
screen" or "signature capture" devices that eliminated tactile keypads. Blind people were forced
to share their confidential PIN with store clerks in order to use their debit and other PIN-based
cards. The blind community reached agreement with Walmart, Target, CVS and eight other
retailers that required real keys so blind people could use the devices.

Physical configuration
Early stores typically kept merchandise behind a counter; staff would fetch items for customers
to prevent the opportunity for theft, and sales would be made at the same counter. Self-service
grocery stores like Piggly Wiggly in 1916 allowed customers to fetch their own items, and pass
the point of sale on the way to the exit. Many stores have a number of cash registers for
checkout, possibly now including self checkout. This requires customers to guess which line will

move the fastest, if they want to minimize their wait times; they are often frustrated to be wrong
or be stuck behind another customer who encounters a problem or who takes a long time to
check out. Some stores use a single, much longer but faster-moving line, that is served by
multiple registers, which produces the same average wait time, but reduces the frustration and
variance in wait time from person to person.[20] Regardless of the configuration, checkout lines
usually pass by impulse buy items to grab the attention of otherwise idle customers.

Hospitality industry
Main article: Hospitality industry

Reception desk POS

Restaurant POS

Tablet-based POS
Hospitality point of sale systems are computerized systems incorporating registers, computers
and peripheral equipment, usually on a computer network to be used in restaurants, hair salons or
hotels. Like other point of sale systems, these systems keep track of sales, labor and payroll, and
can generate records used in accounting and bookkeeping. They may be accessed remotely by
restaurant corporate offices, troubleshooters and other authorized parties.
Point of sale systems have revolutionized the restaurant industry, particularly in the fast food
sector. In the most recent technologies, registers are computers, sometimes with touch screens
like iPad POS.[21] The registers connect to a server, often referred to as a "store controller" or a
"central control unit". Printers and monitors are also found on the network. Additionally, remote
servers can connect to store networks and monitor sales and other store data.
Typical restaurant POS software is able to create and print guest checks, print orders to kitchens
and bars for preparation, process credit cards and other payment cards, and run reports. In
addition, some systems implement wireless pagers and electronic signature-capture devices.
In the fast food industry, displays may be at the front counter, or configured for drive-through or
walk-through cashiering and order taking. Front counter registers allow taking and serving orders
at the same terminal, while drive-through registers allow orders to be taken at one or more drivethrough windows, to be cashiered and served at another. In addition to registers, drive-through
and kitchen displays are used to view orders. Once orders appear they may be deleted or recalled
by the touch interface or by bump bars. Drive-through systems are often enhanced by the use of
drive-through wireless (or headset) intercoms. The efficiency of such systems has decreased
service times and increased efficiency of orders.
Another innovation in technology for the restaurant industry is wireless POS. Many restaurants
with high volume use wireless handheld POS to collect orders which are sent to a server. The
server sends required information to the kitchen in real time. Wireless systems consist of drivethrough microphones and speakers (often one speaker will serve both purposes), which are wired
to a "base station" or "center module." This, in turn, will broadcast to headsets. Headsets may be
an all-in-one headset or one connected to a belt pack.
In hotels, POS software allows for transfer of meal charges from dining room to guest room with
a button or two. It may also need to be integrated with property management software.
Newer, more sophisticated systems are getting away from the central database "file server" type
system and going to what is called a "cluster database". This eliminates any crashing or system
downtime that can be associated with the back office file server. This technology allows 100% of
the information to not only be stored, but also pulled from the local terminal, thus eliminating the
need to rely on a separate server for the system to operate.
Tablet POS systems popular for retail solutions are now available for the restaurant industry.
Initially these systems were not sophisticated and many of the early systems did not support a
remote printer in the kitchen. Tablet systems today are being used in all types of restaurants

including table service operations. Most tablet systems upload all information to the Internet so
managers and owners can view reports from anywhere with a password and Internet connection.
Smartphone Internet access has made alerts and reports from the POS very accessible. Tablets
have helped create the Mobile POS system, and Mobile POS applications also include payments,
loyalty, online ordering, table side ordering by staff and table top ordering by customers.
Regarding the payments, mobile POS can accept all kinds of payment methods from contactless
cards, EMV chip-enabled cards, and mobile NFC enabled cards.[22] Mobile POS (AKA mPOS) is
growing quickly with new developers entering the market almost on a daily basis. An updated
list of developers is maintained and available for downloading at no charge.[23]
With the proliferation of low-priced touchscreen tablet computers, more and more restaurants
have implemented self-ordering through tablet POS placed permanently on every table.
Customers can browse through the menu on the tablet and place their orders which are then sent
to the kitchen. This apparently improves service and saves manpower on the part of the
restaurant. However this depends on how intelligently the system has been programmed to be.
As a case in point, some self-ordering systems not requiring staff assistance may not properly
recognize a subsequent order from the same customer at a table. As a result, the customer is left
waiting and wondering why his second order of food and drink is not being served.
Another example of how intelligent the system can be, is whether an order that has been placed
but not yet been processed by the kitchen can be modified by the customer through the tablet
POS. For such an unprocessed order the customer should be given the option to easily retrieve
his order and modify it on the tablet POS. But when his order is being processed this function
should then be automatically disabled.
Self-ordering systems are not always free completely from intervention by the staff and for some
good reasons. For example, some restaurants require that items selected by the customers be
attended to and can only be placed by the waiter who has the password required to do so. This
prevents fake orders - such as may be entered by playful kids - and subsequent dispute on the
items ordered. If alcoholic drinks are ordered, it also becomes necessary for the waiter to first
verify the age of the customer before sending the order.
The technical specifications for implementing such self-ordering system are more demanding
than a single cashier-controlled POS station. On the software and hardware side each tablet on a
customer table has to be networked to the cashier POS station and the kitchen computer so that
both are continually updated on orders placed. The common database that serves this network
must also be capable of serving many concurrent users - cashier, customers, kitchen and perhaps
even a drink bar.
It is therefore to be noted by developers that some databases like popularly used Ms Access may
have the specifications that it is capable of usage by multiple concurrent users. However under
the stress of a POS system, they can fail miserably resulting in constant errors and corruption of
data.

POS systems are often designed for a variety of clients, and can be programmed by the end users
to suit their needs. Some large clients write their own specifications for vendors to implement. In
some cases, POS systems are sold and supported by third-party distributors, while in other cases
they are sold and supported directly by the vendor.
The selection of a restaurant POS system is critical to the restaurant's daily operation and is a
major investment that the restaurant's management and staff must live with for many years. The
restaurant POS system interfaces with all phases of the restaurant operation and with everyone
that is involved with the restaurant including guests, suppliers, employees, managers and owners.
The selection of a restaurant POS system is a complex process that should be undertaken by the
restaurant owner and not delegated to an employee. The purchase process can be summarized
into three steps: Design, Compare and Negotiate. The Design step requires research to determine
which restaurant POS features are needed for the restaurant operation. With this information the
restaurant owner or manager can Compare various restaurant POS solutions to determine which
POS systems meet their requirements. The final step is to Negotiate the price, payment terms,
included training, initial warranty and ongoing support costs.[24]

Accounting forensics
Main article: Automated sales suppression device
POS systems record sales for business and tax purposes. Illegal software dubbed "zappers" can
be used on POS devices to falsify these records with a view to evading the payment of taxes.

Security
Despite the more advanced technology of a POS system as compared to a simple cash register,
the POS system is still as vulnerable to employee theft through the sale window. A dishonest
cashier at a retail outlet can collude with a friend who pretends to be just another customer.
During checkout the cashier can bypass scanning certain items or enter a lower quantity for some
items thus profiting thereby from the "free" goods.
The ability of a POS system to void a closed sale receipt for refund purpose without needing a
password from an authorized superior also represents a security loophole. Even a function to
issue a receipt with a negative amount which can be useful under certain circumstances, can be
exploited by a cashier to easily lift money from the cash drawer.
In order to prevent such employee theft, it is crucial for a POS system to provide an admin
window for the boss or administrator to generate and inspect a daily list of sale receipts,
especially pertaining to the frequency of cancelled receipts before completion, refunded receipts
and negative receipts. This is one effective way to alert the company to any suspicious activity such as a high number of cancelled sales by a certain cashier - that may be going on and to take
monitoring action.

To further deter employee theft the sale counter should also be equipped with a closed-circuit
television camera pointed at the POS system to monitor and record all the activities.
At the backend, price and other changes like discounts to inventory items through the
administration module should also be secured with passwords provided only to trusted
administrators. Any changes made should also be logged and capable of being subsequently
retrieved for inspection.
The sale records and inventory are highly important to the business because they provide very
useful information to the company in terms of customer preferences, customer membership
particulars, what are the top selling products, who are the vendors and what margins the
company is getting from them, the company monthly total revenue and cost, just to name some.
It is therefore important that reports on these matters generated at the administrative backend be
restricted only to trusted personnel. The database from which these reports are generated should
also be secured via passwords or via encryption of data stored in the database so as to prevent
them from being copied or tampered with.
Despite all such precautions and more, the POS system can never be entirely water tight in
security from internal misuse if a clever but dishonest employee knows how to exploit many of
its otherwise useful capabilities.
News reports on POS system hacking show that hackers are more interested in stealing credit
card information than anything else. The ease and advantage offered by the ability of a POS
system to integrate credit card processing thus has a downside. In 2011, hackers were able to
steal credit card data from 80,000 customers because Subway's security and POS configuration
standards for PCI Compliance - which governs credit card and debit card payment systems
security - were "directly and blatantly disregarded" by Subway franchisees.[25]
In June 2016, several hundred of Wendy's fast food restaurants had their POS systems hacked by
an illegally installed malware.[26] The report goes on to say that "the number of franchise
restaurants impacted by these cybersecurity attacks is now expected to be considerably higher
than the 300 restaurants already implicated" and that the "hackers made hundreds of thousands of
fraudulent purchases on credit and debit cards issued by various financial institutions after
breaching Wendy's computer systems late last year".
Again this exploit by hackers could only be made possible because payment cards were
processed through the POS system allowing the malware to either intercept card data during
processing or steal and transmit unencrypted card data that is stored in the system database.
In some countries credit and debit cards are only processed via payment terminals. Thus one may
see quite a number of such terminals for different cards cluttering up a sale counter. This
inconvenience is however offset by the fact that credit and debit card data is far less vulnerable to
hackers, unlike when payment cards are processed through the POS system where security is
contingent upon the actions taken by end-users and developers.

With the launch of mobile payment particularly Android Pay and Apple Pay both in 2015, it is
expected that because of its greater convenience coupled with good security features, this would
eventually eclipse other types of payment services - including the use of payment terminals.
However, for mobile payment to go fully mainstream, mobile devices like smartphones that are
NFC-enabled must first become universal. This would be a matter of several years from the time
of this writing (2016) as more and more models of new smartphones are expected to become
NFC-enabled for such a purpose. For instance iPhone 6 is fully NFC-enabled for mobile
payment while iPhone 5 and older models are not. The aforesaid disastrous security risks
connected with processing payment card usage through a POS system would then be greatly
diminished.

Back-office software
From Wikipedia, the free encyclopedia
Retail back-office software is used to manage business operations that are not related to direct
sales efforts and interfaces that are not seen by consumers.[1] Typically, the business processes
managed with back-office software include some combination of inventory control, price book
management, manufacturing, and supply chain management (SCM).[2] Back-office software is
distinct from front-office software, which typically refers to customer relationship management
(CRM) software used for managing sales, marketing, and other customer-centric activities.[3]
Back-office software solutions have evolved with the emergence of cloud-based Software as a
service (SaaS). Several back-office software providers offer cloud-based services that simplify
and streamline back-office management functions, particularly for companies with multiple
locations. These simplified platforms have given companies an alternative to business process
outsourcing (BPO), which involves handing over the management of a company's back-office to
a third-party service provider. With back-office software, companies can derive actionable
intelligence from the system without any particular expertise.

Contents

1 Cloud-Based Back-Office Software

2 Applications
o 2.1 Franchises
o 2.2 Convenience & Retail Stores
o 2.3 Accounting
o 2.4 Supply Chain

o 2.5 Human Resources

3 See also

4 References

Cloud-Based Back-Office Software

Cloud-based back-office software provides the functionality necessary to manage numerous
back-office functions from a single web-based interface. Many back-office software platforms
can be accessed from both mobile and desktop devices, and are cross compatible with backoffice accounting software such as Quickbooks.
Some of the most common back-office software functionality options include:

Item-level inventory management

Cash register management/point of sale (POS) management

Price book management

Loyalty program management

Sales promotion

Sales forecasting

Data exchange (e.g. electronic data interchange (EDI))

invoice processing

Key performance indicator (KPI) monitoring (e.g. gross margin, profit margin)

Workflow management

Applications
Franchises
Cloud-based back-office solutions are used by franchisors for sales, inventory, and price book
management. Franchisors can control inventory prices, optimize inventory supply based on
projections, manage company-wide promotions, and monitor sales performance at each
franchisee location from one centralized platform.

Convenience & Retail Stores

Companies in the convenience and retail industries use back-office software to manage inventory
and identify opportunities to improve profit margins by keeping popular items in stock,
preventing spoilage and shrink, as well as reducing overstock of unpopular items (by offering
discounts and promotions, for example). Software allows back-office store operators to forecast
inventory levels based on sales volumes and therefore optimize the store's turnover ratios (the
ratio of how many times inventory is sold and replaced over a given period).[4] Moreover, the
measurement of inventory performance data allows store operators to benchmark their
performance with published industry averages (e.g. from the National Association of
Convenience Stores).
Though turnover ratios depend on demand-side factors such as how desirable a product is, they
can be increased through efficient back-office management. For instance, a case study involving
a Pittsburgh-based convenience store operator showed that the company was able to achieve an
average turnover ratio of 16.12 (compared to the 2013 US convenience store average of 11.36)
by using cloud-based back-office software for inventory management.[5]
Back-office software can also be used to account for the effects of demand substitution and
subsequently determine the optimal inventory level for each item stocked. Researchers have
attempted to predict the increases in demand for complementary items (resulting from demand
substitution) using a probabilistic model for selecting item inventory levels in order to maximize
expected profit.[6] Another study employed a stochastic model to optimize the inventory
management process at Spain-based retailer Zara: the new model increased sales by $275 million
(3-4%) in 2007 and Zara continues to use the process for all of its products and at all retail
locations.[7]

Accounting
According to research from IDC Industry Insights, more than half of all small businesses in the
US use Intuit software (Quickbooks) for accounting.[3] But with the growth of the SaaS market,
Quickbooks along with other emerging online accounting options such as Outright and Mint.com
are now being adopted. These options are simple to use, but may have limited functionality
compared to desktop accounting solutions.
Accounting software is often integrated into or connected to back-office software for inventory
management to simplify the exchange of store data between operational and other retail systems.

Supply Chain
Supply chain managers use back-office software to match sales data with supply chain data and
to streamline product ordering. All of the steps in supply chain management (SCM), including
procurement, conversion, transportation, distribution, and partner coordination/collaboration can
be controlled via back-office software. This process of enhanced information sharing and supply
chain streamlining has been demonstrated to decrease supply chain costs by an average of 2.2%.
[8]

Though back-office software reduces the likelihood of inventory record inaccuracies, they can
still occur if items are not properly tracked as they enter/exit the retail space. One way to limit
the impact of record inaccuracy is to use a Bayesian belief network of the physical inventory,[9]
creating a probability distribution that is updated as inventory inaccuracies are discovered. The
application of Bayesian principles to inventories can avoid instances of inventory freezing (when
physical inventory levels reach zero but records indicate otherwise).

Human Resources
There are many cloud-based HR solutions available for payroll management, timesheet tracking,
and hiring. Using cloud-based HR software for payroll management is particularly advantageous
because the software usually has up-to-date information on local tax rules, which otherwise
require specialized tax knowledge. HR departments use back-office software to match labor
supply with demand based on sales forecasts.
Merchant account
From Wikipedia, the free encyclopedia

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The examples and perspective in this article may not represent a worldwide
view of the subject. (May 2010)

A merchant account is a type of bank account that allows businesses to accept payments in
multiple ways, typically debit or credit cards. A merchant account is established under an
agreement between an acceptor and a merchant acquiring bank for the settlement of payment
card transactions. In some cases a payment processor, independent sales organization (ISO), or
member service provider (MSP) is also a party to the merchant agreement. Whether a merchant
enters into a merchant agreement directly with an acquiring bank or through an aggregator, the
agreement contractually binds the merchant to obey the operating regulations established by the
card associations.
Contents

1 Methods of processing credit cards

o

1.1 Credit card terminal

1.2 Automated Response Unit (ARU)

1.3 Payment gateway

1.4 Level 2 or Level 3 Processing - Purchasing Cards

1.5 Merchant Account Marketing

1.6 Marketing by Banks

1.7 Marketing by Independent Sales Organization (ISO)/MSPs

2 Rates and fees

o

2.1 Discount Rates

2.1.1 3-Tier Pricing

2.1.1.1 First Tier - Qualified Rate

2.1.1.2 Second Tier - Mid-qualified Rate

2.1.1.3 Third Tier - Non-qualified Rate

2.1.2 6-Tier Pricing

2.1.3 Interchange Plus Pricing

2.1.4 Bill Back/ERR (Enhanced Recover Reduced)

2.1.5 Authorization fee

2.2 Transaction fee

2.2.1 Statement fee

2.2.2 Monthly minimum fee

2.2.3 Batch fee

2.2.4 Customer Service fee

2.2.5 Annual fee

2.2.6 Early Termination fee

2.2.7 Chargeback fee

2.3 The Durbin Amendment

3 Terms to know

4 See also

5 References

Methods of processing credit cards

Today a majority of credit card transactions are sent electronically to merchant processing banks
for authorization, capture and deposit. Various methods exist for presenting a credit card sale to
"the system." In all circumstances either the entire magnetic strip is read by a swipe through a
credit card terminal/reader, a computer chip is read, or the credit card information is manually
entered into a credit card terminal, a computer or website. The earliest methods, submitting credit
card slips to a merchant processing bank by mail, or by accessing an Automated Response Unit
(ARU) by telephone, are still in use today but have long been overshadowed by electronic
devices. These early methods used two-part forms and a manual device for mechanically
imprinting the embossed card number information onto the forms.
Credit card terminal
Main article: payment terminal

A credit card terminal is a stand-alone piece of electronic equipment that allows a merchant to
swipe or key-enter a credit card's information as well as additional information required to
process a credit card transaction. A credit card terminal is a dedicated piece of equipment that
only processes credit cards although it is common for related transactions including gift cards
and check verification to also be performed. A credit card terminal typically must be plugged into
a power supply and connected to a telephone line. However, some terminals may be powered by
batteries and communicate over the Internet or through a cellular phone data network. When a
credit card is processed (either swiped through the magnetic stripe reader or keyed into the
keypad), the terminal contacts the network to verify if the credit card can be authorized. The

transaction is then stored on the machine until the polling window is opened. The machine will
either upload the electronic funds directly to the merchant bank, or a polling service provider will
dial in to collect, process then submit the data to the merchant bank. The most popular credit card
terminals consist of a modem, keypad, printer, magnetic stripe reader, power supply and memory
card. They have had the same basic design since the 1980s. As with computers, there is a wide
range of memory capacities and other features like built-in printers and debit card pinpads that
affect the manufacturing cost of a credit card terminal.
Automated Response Unit (ARU)

An ARU (also known as a voice authorization, capture and deposit) allows the manual keyed
entry and subsequent authorization of a credit card over a cellular or land-line telephone. With
this method a merchant typically imprints their customer's card with an imprinter to create a
customer receipt and merchant copy, then process the transaction instantaneously over the phone.
Payment gateway
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by adding citations to reliable sources. Unsourced material may be
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template message)

A payment gateway is an e-commerce service that authorizes payments for e-businesses and
online retailers. It is the equivalent of a physical POS (point-of-sale) terminal located in most
retail outlets. A merchant account provider is typically a separate company from the payment
gateway. Some merchant account providers have their own payment gateways but the majority of
companies use 3rd party payment gateways. The gateway usually has 2 components: a) the
virtual terminal that can allow for a merchant to securely login and key in credit card numbers or
b) have the website's shopping-cart connect to the gateway via an API to allow for real time
processing from the merchant's website.
Level 2 or Level 3 Processing - Purchasing Cards

Visa and Mastercard have created a specialized type of credit card used primarily by government
agencies and businesses. Increasingly, corporations and government agencies are relying on this
form of payment to compensate their service providers and suppliers. Businesses benefit by
receiving their funds quickly and by winning competitive bids and government contracts where
purchasing cards are the required form of payment. The downside, however, is the increased
costs associated with receiving these payments. These costs will usually be much higher than
accepting a standard consumer credit card.
The solution is that some businesses may qualify for ways to process these transactions that
allow them to pay lower fees if they can supply additional information, called "level 2 or level 3

data". For example, if government transactions are over $5,000, businesses can significantly
reduce their transaction costs by including "level 2 or level 3 data" about the purchase along with
each transaction. Examples of level 2 or level 3 data is a purchase order number associated with
the transaction that the credit card will be paying. This data is passed on to the purchaser so that
it may be many times easier to reconcile the transaction. If all the required data is not collected
and passed on during the transaction, the merchant can have surcharges added to the basic fees or
be forced into a non qualified transaction category.
Merchant Account Marketing

Merchant accounts are marketed to merchants by two basic methods: either directly by the
processor or sponsoring bank, or by an authorized agent for the bank and additionally directly
registered with both Visa and MasterCard as an ISO/MSP (Independent Selling Organization /
Member Service Provider). Marketing details are by card issuers like Visa and MasterCard, and
are enforced by various rules and fines. A few of the largest processors also partner with
warehouse clubs to promote merchant accounts to their business members.
Marketing by Banks

A bank that has a merchant processing relationship with Visa and Mastercard, also known as a
member bank, can issue merchant accounts directly to merchants. To reduce risk, some banks
limit approval to merchants in its geographical area, those with a physical retail storefront, or
those that have been in business for 2 years or more.
Marketing by Independent Sales Organization (ISO)/MSPs

To market merchant accounts, an ISO/MSP must be sponsored by a member bank. This

sponsorship requires that the bank verify the financial stability and suitability of the company
that will be marketing on its behalf. The ISO/MSP must also pay a fee to be registered with Visa
and Mastercard and must comply with regulations in how they may market merchant accounts
and the use of copyrights of Visa and Mastercard. One way to verify if an ISO/MSP is in
compliance is to check a website or any other marketing material for a disclosure "company is a
registered ISO/MSP of bank, town, state. FDIC insured". This disclosure is required by both Visa
and Mastercard and will cause a fine of up to $25,000 if it is not clearly visible. In almost all
cases, if there is no disclosure, the company is likely to be an uninformed 4th party or worse. In
many cases unregistered operators have been responsible for some of the worst horror stories
from merchants.[citation needed]
Rates and fees

A Merchant Account has a variety of fees, some periodic, others charged on a per-item or
percentage basis. Some fees are set by the merchant account provider, but the majority of the
per-item and percentage fees are passed through the merchant account provider to the credit card

issuing bank according to a schedule of rates called interchange fees, which are set by Visa,
Discover, and Mastercard. Interchange fees vary depending on card type and the circumstances
of the transaction. For example, if a transaction is made by swiping a card through a credit card
terminal it will be in a different category than if it were keyed in manually.
Discount Rates

The discount rate comprises a number of dues, fees, assessments, network charges and mark-ups
merchants are required to pay for accepting credit and debit cards, the largest of which by far is
the Interchange fee. Each bank or ISO/MSP has real costs in addition to the wholesale
interchange fees, and creates profit by adding a mark-up to all the fees mentioned above. There
are a number of price models banks and ISOs/MSPs used to bill merchants for the services
rendered. Here are the more popular price models:
3-Tier Pricing

The 3-Tier Pricing is the most popular pricing method and the simplest system for most
merchants to understand, if not the most transparent. The newer 6-Tier Pricing, including
additional tiers covering debit, business, or international cards is gaining in popularity. In 3-Tier
Pricing, the merchant account provider groups the transactions into 3 groups (tiers) and assigns a
rate to each tier based on a criterion established for each tier. A possible drawback from the
merchant's perspective, is that these "tiers" or "buckets" are variable from one processor to the
next prohibiting any direct comparison from a Tier 1 provided by one provider to a Tier 1
provided by another provider.
First Tier - Qualified Rate

A qualified rate is the percentage rate a merchant will be charged whenever they accept a regular
consumer credit card and process it in a manner defined as "standard" by their merchant account
provider using an approved credit card processing solution. This is usually the lowest rate a
merchant will incur when accepting a credit card. The qualified rate is also the rate commonly
quoted to a merchant when they inquire about pricing. The qualified rate is created based on the
way a merchant will be accepting a majority of their credit cards. For example, for an internet
merchant, the internet interchange categories will be defined as Qualified, while for a physical
retailer only transactions swiped through or read by their terminal in an ordinary manner will be
defined as Qualified.
Second Tier - Mid-qualified Rate

Also known as a partially qualified rate, the mid-qualified rate is the percentage rate a merchant
will be charged whenever they accept a credit card that does not qualify for the lowest rate (the
qualified rate). This may happen for several reasons such as:

A consumer credit card is keyed into a credit card terminal instead of being
swiped

A special kind of credit card is used like a rewards card or business card

A mid-qualified rate is higher than a qualified rate. Some of the transactions that are usually
grouped into the Mid-Qualified Tier can cost the provider more in interchange costs, so the
merchant account providers do make a markup on these rates.
The use of "rewards cards" can be as high as 40% of transactions. So it is important that the
financial impact of this fee be understood.
Third Tier - Non-qualified Rate

The non-qualified rate is usually the highest percentage rate a merchant will be charged
whenever they accept a credit card. In most cases all transactions that are not qualified or midqualified will fall to this rate. This may happen for several reasons such as:

A consumer credit card is keyed into a credit card terminal instead of being
swiped and address verification is not performed

A special kind of credit card is used like a business card and all required fields
are not entered

A merchant does not settle their daily batch within the allotted time frame,
usually past 48 hours from time of authorization.

A non-qualified rate can be significantly higher than a qualified rate and can cost the provider
much more in interchange costs, so the merchant account providers do make a markup on these
rates.
6-Tier Pricing

As a result of the Wal-Mart Settlement and to compete against PIN-based debit cards (which are
processed outside of the Visa and Mastercard networks), Visa and Mastercard lowered the
interchange rates for debit cards well below those for credit cards. Some providers can pass on
the lower cost of these cards directly to merchants. Consequently, the 3 tiers programs have
added 2 classifications for debit cards that are processed without a PIN or with a PIN for a total
of 6 rate classifications.
Interchange Plus Pricing

Some providers offer merchant account services priced on an "interchange plus" basis. These
accounts are based on the "interchange" tables published by both Visa Visa Interchange and
MasterCard MasterCard Interchange. This type of pricing creates a discount rate by adding

interchange rates plus a percentage and authorization fees. This is a common pricing model for
very low and very high average tickets.
Bill Back/ERR (Enhanced Recover Reduced)

A bill back/ERR is a variation on interchange plus pricing. It has some variations but the basic
concept is that the merchant pays one set rate for qualified cards then is billed back for mid or
non qualified cards. Merchants will be charged the qualified rate for all of their transactions.
Then, for the transactions that are mid or non qualified, merchants will be charged again for the
difference of the qualified rate (the rate they already paid) and the interchange rate (cost) plus a
surcharge. There are two reasons this is called bill back. You are billed one rate and then billed
back another. Also because you will typically see the surcharges on the next month's statement. It
requires a great deal of time to research the actual cost per transaction with the bill back system.
Example of BILLBACK/ERR: Bill Back pricing: 1.75% + 0.50% surcharge
If you ran $1000 and you keyed in a regular credit card, that charge is now considered mid
qualified because you did not swipe it. Interchange for a keyed credit card is 1.8%-1.9%. The
difference of the interchange plus the surcharge is 0.55%-0.60%. Below is how it would look on
your bill.
$1000 X 1.75%= $17.50
$1000 X 0.55%= $5.50
TOTAL= $23.01
Authorization fee

The Authorization fee (actually an authorization request fee) is charged each time a transaction is
sent to the card-issuing bank to be authorized. The fee applies whether or not the request is
approved. Note this is not the same as Transaction fee.
Transaction fee

The Transaction fee is charged when you accept your authorization. This fee only applies to an
authorization that is accepted without error.
Statement fee

The statement fee is a monthly fee associated with the monthly statement that is sent to the
merchant at the end of each monthly processing cycle. This statement shows how much
processing was done by the merchant during the month and what fees were incurred as a result.

Many times, the statement fee is not directly linked to "paper" statements but rather general
overhead. This means that a provider would not waive this fee if a merchant chose to have a
"paperless" statement.
Monthly minimum fee

The monthly minimum fee is a way to ensure that merchants pay a minimum amount in fees
each month to cover costs from the provider to maintain the account. If a merchant's fees do not
equal or exceed the monthly minimum they will be charged the difference up to the monthly
minimum.
Example: A merchant has signed a contract with a $25.00 monthly minimum fee. If all the fees
for the most recent month of processing total (CLARITY: this is only for processing costs, so it
does not include monthly fees, chargeback fees, etc.) only $15.00, this merchant will be charged
an additional $10.00 to meet their monthly minimum requirements. Sometimes there are fees that
are charged that are not a part of the monthly minimum, such as statement fees. It is industry
standard to charge a monthly minimum, though not all acquirers charge this, nor do all that do
charge it for every agreement.
Batch fee

A batch fee (also known as a batch header fee) can be charged to a merchant whenever the
merchant "settles" their terminal. Settling a terminal, also known as "batching", is when a
merchant sends their completed transactions for the day to their acquiring bank for payment.
Some providers perform this automatically. It is important to close a batch every 24 hours or a
higher rate will be assessed by Visa, Discover or Mastercard. The term "batch header" originally
came from processing pre-electronic terminal era, when each batch of credit card receipts was
turned into the merchant's local bank for deposit. The batch header was a mini report
summarizing those receipts bundled within.
Customer Service fee

The customer service fee (also known as a maintenance fee) can be charged by some providers to
pay for the cost of customer service. Also referred to as a "merchant support fee", "customer
support fee", or simply, "service fee" by some merchant providers.
Annual fee

The Annual fee can be charged by some providers to pay for costs of maintaining the merchant's
account. Sometimes these fees can be quarterly. The fee can be from $79$399.
Early Termination fee

The early termination fee can be charged by some providers if the merchant ends the contract
before the end of the contract term. While contract terms of 13 years are typical, some providers
have terms of up to 5 years with a one-year prior notice to cancel or the fee will be assessed.
Some providers also assess all statement fees and monthly minimums remaining when the
contract is terminated. Some providers may also assess a "lost profit" fee based on an assumption
of profits they concluded they would have earned during the full term of the contract.
Chargeback fee

The chargeback is the largest risk that is presented to banks and providers. This is not to be
confused with a refund, which is simply a merchant refunding a transaction. In the Visa,
Discover, and Mastercard rules, the merchant's processing bank is 100% responsible for all the
transactions that the merchant performs. This can leave the provider open to millions of dollars
of potential losses if the merchant operates in an illegal or risky manner and generates many
chargebacks. The providers pass this cost on to the merchant, but if the merchant is fraudulent or
simply does not have the money, the provider must pay all the costs to make the card holder
whole. The chargeback risk is the largest part taken into consideration during the contract
application and underwriting process. Some banks are much more stringent than others when
assessing a merchant's chargeback risk.
If a merchant encounters a chargeback they may be assessed a fee by their acquiring bank. A
potential chargeback is presented on behalf of the card holder's bank to the merchant's credit card
processing bank. A reason code is established by the card issuer to properly identify the type of
potential chargeback based on the card holder's complaint. The most common complaint is that
the card holder can not remember the transaction. Usually, these potential chargebacks are
corrected when the merchant's processing bank sends over more details about the transaction.
Some providers charge a fee for this service, known as a "Retrieval Request". A chargeback can
also be related to a fraud or similar dispute that the card holder is claiming to the merchant. This
fee can be charged by some providers whether the chargeback is successful or not and is not
dependent on the amount of the chargeback.
Currently both Visa and Mastercard require all merchants to maintain no more than 1% of dollar
volume processed to be chargebacks. If the percentage goes above, there are fines starting at
$5000 $25,000 to the merchant's processing bank and ultimately passed on to the merchant.
In all cases, a chargeback will cost the merchant the chargeback fee, typically $15$30, plus the
cost of the transaction and the amount processed.
The Durbin Amendment

This section is written like a personal reflection or opinion essay that

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On October 1, 2011, new rules, resulting from the Durbin Amendment, went into effect that
lower the debit card interchange fees the Visa and MasterCard networks charge merchants. The
new rules apply only to debit cards issued by banks with more than $10 billion in total assets.
Prior to the implementation of the Durbin Amendment, the swipe fee for a debit card transaction
averaged 44 cents. Under Durbin, the Federal Reserve has set a cap of .05% + 21 cents per
transaction (22 cents if the card has security features).
Terms to know

Following are some useful definitions that pertain to pricing merchant transactions:
Basis Point: 1/100 of a percentage point. The term is used to describe discount rates, which are
the bulk of card processing fees paid by merchants.
Discount Rate: includes fees, dues, assessments, markups and network charges merchants must
pay for accepting credit and debit cards. Interchange is the discount rate's largest component.
Interchange: the fee paid to the card issuing bank by the card acquiring bank by way of the card
brands. Interchange rates vary widely based on card type, transaction amount, risks and retail
sector. Interchange is assessed on all Visa Inc.- and MasterCard Worldwide-branded credit and
debit cards.
Mid-Qualified: the percentage rate merchants are charged when accepting credit cards that do
not meet qualified rate requirements. Also known as a partially qualified, the mid-qualified rate
applies in such cases as when cards are keyed into terminals instead of swiped or if the cards are
of a special type such as rewards cards.
Non-Qualified: often the highest percentage rate merchants are charged for accepting credit
cards. In most cases, transactions that are neither qualified nor mid-qualified fall into this
category. The bulk of these transactions are done with corporate cards.
Qualified: the percentage rate merchants are charged when they accept regular consumer credit
cards and process them with an approved processing solution in a manner defined as standard by
their merchant account providers. Qualified is typically the lowest rate merchants incur when
accepting credit cards.

Merchant services
From Wikipedia, the free encyclopedia
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removed. (September 2008) (Learn how and when to remove this template message)
Merchant services is a broad category of financial services intended for use by businesses.[1] In
its most specific use, it usually refers to merchant processing services that enables a business to
accept a transaction payment through a secure (encrypted) channel using the customer's credit
card or debit card or NFC/RFID enabled device. More generally, the term may include:

Credit and debit cards payment processing

Check guarantee and check conversion services

Automated Clearing House check drafting and payment services

Gift card and loyalty programs

Payment gateway

Merchant cash advances

Online transaction processing

Point of sale (POS) systems

Electronic benefits transfer programs, such as ration stamps (called food stamps in the
U.S.).

Merchant service providers typically require the merchant to have a merchant account with the
provider, either directly or through a referral partner, such as banks or B2B service companies.
All banks in the United Kingdom, except for Barclays/Barclaycard, offer merchant services by
referring customers to a merchant service provider.
In the case of mPOS systems, mobile pin entry devices (PED) are typically connect to a mobile
phone through Bluetooth and then use the phone's WiFi or mobile data to connect with the banks.
This system does not require a merchant account although the companies that offer this type of
service will still have a relationship with an acquirer. The cost of payments made through mPOS
are significantly more so it is more suitable for businesses that do not put through many card
transactions. There is usually also a charge for buying the device from the mPOS system
provider.

Payment gateway
From Wikipedia, the free encyclopedia
A payment gateway is a merchant service provided by an e-commerce application service
provider that authorizes credit card or direct payments processing for e-businesses, online
retailers, bricks and clicks, or traditional brick and mortar.[1] The payment gateway may be
provided by a bank to its customers, but can be provided by a specialised financial service
provider as a separate service.
A payment gateway facilitates a payment transaction by the transfer of information between a
payment portal (such as a website, mobile phone or interactive voice response service) and the
front end processor or acquiring bank.

Contents

1 Providers

2 Typical transaction processes

3 See also

4 References

Providers
There are more than 900 payment providers around the world.[citation needed] More than 300 offer
services in Europe and North-America.[citation needed]

Typical transaction processes

When a customer orders a product from a payment gateway-enabled merchant, the payment
gateway performs a variety of tasks to process the transaction.[2]
1. A customer places order on website by pressing the 'Submit Order' or equivalent button,
or perhaps enters their card details using an automatic phone answering service.
2. If the order is via a website, the customer's web browser encrypts the information to be
sent between the browser and the merchant's webserver. In between other methods, this
may be done via SSL (Secure Socket Layer) encryption. The payment gateway may
allow transaction data to be sent directly from the customer's browser to the gateway,
bypassing the merchant's systems. This reduces the merchant's Payment Card Industry

Data Security Standard (PCI DSS) compliance obligations without redirecting the
customer away from the website.
3. The merchant then forwards the transaction details to their payment gateway. This is
another (SSL) encrypted connection to the payment server hosted by the payment
gateway.
4. The payment gateway forwards the transaction information to the payment processor
used by the merchant's acquiring bank.
5. The payment processor forwards the transaction information to the card association (e.g.,
Visa/MasterCard/American Express). If an American Express or Discover Card was used,
then the card association also acts as the issuing bank and directly provides a response of
approved or declined to the payment gateway. Otherwise [e.g.: a MasterCard or Visa card
was used], the card association routes the transaction to the correct card issuing bank.
6. The credit card issuing bank receives the authorization request and credit or debit checks
and then sends a response back to the processor (via the same process as the request for
authorization) with a response code [e.g.: approved, denied]. In addition to
communicating the fate of the authorization request, the response code is used to define
the reason why the transaction failed (such as insufficient funds, or bank link not
available). Meanwhile, the credit card issuer holds an authorization associated with that
merchant and consumer for the approved amount. This can impact the consumer's ability
to further spend (e.g.: because it reduces the line of credit available or because it puts a
hold on a portion of the funds in a debit account).
7. The processor forwards the authorization response to the payment gateway
8. The payment gateway receives the response, and forwards it on to the website (or
whatever interface was used to process the payment) where it is interpreted as a relevant
response then relayed back to the merchant and cardholder. This is known as the
Authorization or "Auth"
9. The entire process typically takes 23 seconds.[3]
10. The merchant then fulfills the order and the above process can be repeated but this time
to "Clear" the authorization by consummating the transaction. Typically, the "Clear" is
initiated only after the merchant has fulfilled the transaction (e.g.: shipped the order).
This results in the issuing bank 'clearing' the 'auth' (i.e.: moves auth-hold to a debit) and
prepares them to settle with the merchant acquiring bank.
11. The merchant submits all their approved authorizations, in a "batch" (e.g.: end of day), to
their acquiring bank for settlement via its processor. This typically reduces or "Clears"
the corresponding "Auth" if it has not been explicitly "Cleared".
12. The acquiring bank makes the batch settlement request of the credit card issuer.

13. The credit card issuer makes a settlement payment to the acquiring bank (e.g.: the next
day)
14. The acquiring bank subsequently deposits the total of the approved funds into the
merchant's nominated account (e.g.: the day after). This could be an account with the
acquiring bank if the merchant does their banking with the same bank, or an account with
another bank.
15. The entire process from authorization to settlement to funding typically takes 3 days.
Many payment gateways also provide tools to automatically screen orders for fraud and calculate
tax in real time prior to the authorization request being sent to the processor. Tools to detect fraud
include geolocation, velocity pattern analysis, OFAC list lookups, 'black-list' lookups, delivery
address verification, computer finger printing technology, identity morphing detection, and basic
AVS checks.

List of online payment service providers

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The following is a list of notable online payment service providers and payment gateway
providing companies, their platform base and the countries they offer services in:-

Company
2C2P
Adyen
Alipay[1]
Amazon Payments[2]
Atos
Authorize.Net
BIPS
BitPay

Platform

China
France
bitcoin
bitcoin

Denmark
United States
United States, United Kingdom,
Israel
Australia

CardEase

United Kingdom, United States

BlueSnap
BPAY
Braintree
CentUp
Creditcall
CyberSource

Location
Thailand, Southeast Asia

Company
DataCash
DigiCash

Platform

Minnetonka, Minnesota, United

States
United States

Digital River
Dwolla
ecoPayz
Edy
Elavon
Euronet Worldwide

Ria

Web, Android, Windows Phone

GoCardless

Australia, New Zealand, United

Kingdom
Atlanta, Georgia, USA
Now defunct
94 countries. [3]
United Kingdom

SecureSubmit

United States

eWAY
First Data
Flooz
Fortumo
GoCardless
Heartland Payment
Systems
Helcim

First Data

Virtual Terminal, Payment

Canada, United States
Gateways, API & Developer Tools

Hyperwallet Online
Instamojo Payment
Gateway

India
Australia, New Zealand, United
Kingdom

IP Payments
iTransact

Location

Virtual Terminal, Mobile,

eCommerce and POS terminals

Klarna
Live Gamer
Molpay
ModusLink
MPay
MPP Global Solutions
MultiSafepay
Neteller
Nochex
Ogone
Oxigen Wallet
Digital wallet
PagSeguro
PayPal
Payoneer
Paymentwall

Farmington, Utah
Sweden, Germany, Norway, Finland,
Netherlands, Austria, Denmark
Malaysia, Southeast Asia
Thailand
Amsterdam, Netherlands

India
Brazil
Global

Company
PayPoint
Paysbuy
Paytm
PayXpert
Payzone
PlaySpan
Qiwi
Realex Payments
Red Dot Payment
Sage Group
Skrill (formerly
Moneybookers)

Platform
Thailand

Russia and neighboring countries.

Singapore, Southeast Asia
Sage Pay

United States, United Kingdom,

Ireland, Australia

Stripe[4]
Square, Inc.
TFI Markets
TIMWE
TransferWise
True Money
Ukash
Verifone
Vindicia
WebMoney
WePay
Wirecard
WorldNet TPS

Location

Thailand

CashBox
Russia

Virtual Terminal, Mobile,

eCommerce and POS terminals

Dublin, Ireland

Worldpay
Xendpay
Xsolla

Payments as a service
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Payments as a service (PaaS) is a phrase used to describe a SaaS-based methodology used to

connect a disparate group of international payment systems. The architecture is represented by a
layer or overlay that resides on top of these disparate systems and provides for two-way
communications between the payment system and the PaaS. Communication is governed by
standard APIs created by the PaaS provider.

Contents

1 History

2 PaaS layer

3 See also

4 References

History

Since the 1980s, credit cards and international wire transfer systems like SWIFT[1]have been the
primary methods for making and receiving electronic cross-border payments. Within individual
countries, payers and payees have used various electronic systems to make such payments. In the
United States, for instance, the Federal Reserve Bank operates the automated clearing house

(ACH) system.[2] In most EU countries direct debit is the preferred method of facilitating
electronic payments.
With the advent of the World Wide Web, it became necessary to provide alternative payment
systems. At first, consumers were hesitant to use their credit cards on the Web due to security
concerns. Entrepreneurs capitalized on this problem with the creation of the electronic wallet. As
early as 1994, solutions like CyberCash allowed consumers to make secure purchases over the
Internet.[3]
While CyberCash eventually failed, more elegant solutions began to take hold. In March of
2000, PayPal was formed and is now the predominant electronic wallet in the U.S. Similar
regional electronic wallet solutions are operating in different countries including WebMoney and
Yandex.Money in Russia and Alipay in China. While popular in their own countries, these
solutions do not have significant global reach. PayPal and Moneybookers (Skrill)[4] have evolved
into regional electronic wallets, providing greater liquidity, but still do not provide for the free
flow of funds between all popular electronic wallet solutions.

PaaS layer
PaaS is designed to allow merchants and other market participants to utilize local, regional and
global payments options through a single interface. The complexity of moving funds between
providers is handled by the PaaS layer and is hidden from the user. Generally speaking, there is
only one interface between a merchant and PaaS. Because only one interface is required,
merchants or users are only required to maintain one financial repository.

E-commerce payment system

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An e-commerce payment system facilitates the acceptance of electronic payment for online
transactions. Also known as a sample of Electronic Data Interchange (EDI), e-commerce
payment systems have become increasingly popular due to the widespread use of the internetbased shopping and banking.
Over the years, credit cards have become one of the most common forms of payment for ecommerce transactions. In North America almost 90% of online retail transactions were made
with this payment type.[1] Turban et al. goes on to explain that it would be difficult for an online
retailer to operate without supporting credit and debit cards due to their widespread use.

Increased security measures include use of the card verification number (CVN) which detects
fraud by comparing the verification number printed on the signature strip on the back of the card
with the information on file with the cardholder's issuing bank.[2] Also online merchants have to
comply with stringent rules stipulated by the credit and debit card issuers (Visa and MasterCard)
[3]
this means that merchants must have security protocol and procedures in place to ensure
transactions are more secure. This can also include having a certificate from an authorized
certification authority (CA) who provides PKI(Public-Key infrastructure) for securing credit and
debit card transactions.
Despite widespread use in North America, there are still a large number of countries such as
China, India and Pakistan that have some problems to overcome in regard to credit card security.
In the meantime, the use of smartcards has become extremely popular. A Smartcard is similar to
a credit card; however it contains an embedded 8-bit microprocessor and uses electronic cash
which transfers from the consumers card to the sellers device. A popular smartcard initiative is
the VISA Smartcard. Using the VISA Smartcard you can transfer electronic cash to your card
from your bank account, and you can then use your card at various retailers and on the internet.
There are companies that enable financial transactions to transpire over the internet, such as
PayPal. Many of the mediaries permit consumers to establish an account quickly, and to transfer
funds into their on-line accounts from a traditional bank account (typically via ACH
transactions), and vice versa, after verification of the consumer's identity and authority to access
such bank accounts. Also, the larger mediaries further allow transactions to and from credit card
accounts, although such credit card transactions are usually assessed a fee (either to the recipient
or the sender) to recoup the transaction fees charged to the mediary.
The speed and simplicity with which cyber-mediary accounts can be established and used have
contributed to their widespread use, although the risk of abuse, theft and other problemswith
disgruntled users frequently accusing the mediaries themselves of wrongful behavioris
associated with them.

Contents

1 Methods of online payment

o 1.1 Net banking
o 1.2 PayPal
o 1.3 Paymentwall
o 1.4 Google Wallet
o 1.5 Mobile Money Wallets

2 See also

3 Further reading

4 References

Methods of online payment

Credit cards constitute a popular method of online payment but can be expensive for the
merchant to accept because of transaction fees primarily. Debit cards constitute an excellent
alternative with similar security but usually much cheaper charges. Besides card-based payments,
other forms of payment have emerged and sometimes even claimed market leadership. Wallets
like PayPal and Alipay are playing major roles in the ecosystem. Bitcoin payment processors are
a cheaper alternative for accepting payments online which also offer better protection from fraud.

Net banking
This is a system, well known in India, that does not involve any sort of physical card. It is used
by customers who have accounts enabled with Internet banking. Instead of entering card details
on the purchaser's site, in this system the payment gateway allows one to specify which bank
they wish to pay from. Then the user is redirected to the bank's website, where one can
authenticate oneself and then approve the payment. Typically there will also be some form of
two-factor authentication.
It is typically seen as being safer than using credit cards, with the result that nearly all merchant
accounts in India offer it as an option.
A very similar system, known as iDEAL, is popular in the Netherlands.

PayPal
PayPal is a global e-commerce business allowing payments and money transfers to be made
through the Internet. Online money transfers serve as electronic alternatives to paying with
traditional paper methods, such as cheques and money orders. It is subject to the US economic
sanction list and other rules and interventions required by US laws or government. PayPal is an
acquirer, a performing payment processing for online vendors, auction sites, and other
commercial users, for which it charges a fee. It may also charge a fee for receiving money,
proportional to the amount received. The fees depend on the currency used, the payment option
used, the country of the sender, the country of the recipient, the amount sent and the recipient's
account type. In addition, eBay purchases made by credit card through PayPal may incur extra
fees if the buyer and seller use different currencies. On October 3, 2002, PayPal became a wholly
owned subsidiary of eBay. Its corporate headquarters are in San Jose, California, United States at
eBay's North First Street satellite office campus. The company also has significant operations in
Omaha, Scottsdale, Charlotte and Austin in the United States; Chennai in India; Dublin in
Ireland; Berlin in Germany; and Tel Aviv in Israel. From July 2007, PayPal has operated across
the European Union as a Luxembourg-based bank

Paymentwall
Paymentwall, an e-commerce solutions providing company launched in 2010, offers a wide
range of online payment methods that its clients can integrate on their website.

Google Wallet
Google Wallet was launched in 2011, serving a similar function as PayPal to facilitate payments
and transfer money online. It also features a security that has not been cracked to date[when?], and
the ability to send payments as attachments via email.[4]

Mobile Money Wallets

In undeveloped countries the banked population is very less, especially in tier II and tier III
cities. Taking the example of India, there are more mobile phone users than there are people with
active bank accounts. Telecom operators, in such geographies, have started offering mobile
money wallets which allows adding funds easily through their existing mobile subscription
number, by visiting physical recharge points close to their homes and offices and converting their
cash into mobile wallet currency. This can be used for online transaction and eCommerce
purchases. Many payment options such as Airtel Money and M-Pesa in Kenya , ATW are being
accepted as alternate payment options on various eCommerce websites.

E-commerce credit card payment system

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Electronic commerce, commonly known as e-commerce or eCommerce, or e-business consists of

the buying and selling of products or services over electronic systems such as the Internet and
other computer networks. The amount of trade conducted electronically has grown
extraordinarily with widespread Internet usage. The use of commerce is conducted in this way,
spurring and drawing on innovations in electronic funds transfer, supply chain management,
Internet marketing, online transaction processing, electronic data interchange (EDI), inventory
management systems, and automated data collection systems. Modern electronic commerce
typically uses the World Wide Web at least at some point in the transaction's lifecycle, although it
can encompass a wider range of technologies such as e-mail as well.
A large percentage of electronic commerce is conducted entirely electronically for virtual items
such as access to premium content on a website, but most electronic commerce involves the
transportation of physical items in some way. Online retailers are sometimes known as e-tailers
and online retail is sometimes known as e-tail. Almost all big retailers have electronic commerce
presence on the World Wide Web.

Electronic commerce that is conducted between businesses is referred to as business-to-business

or B2B. B2B can be open to all interested parties (e.g. commodity market) or limited to specific,
pre-qualified participants (private electronic market). Electronic commerce that is conducted
between businesses and consumers, on the other hand, is referred to as business-to-consumer or
B2C. This is the type of electronic commerce conducted by companies such as Amazon.com.
Online shopping is a form of electronic commerce where the buyer is connected directly online
to the seller's computer usually via the Internet. There is no specific intermediary service. The
sale and purchase transaction is completed electronically and interactively in real-time, such as
when buying a new book on Amazon.com. If an intermediary is present, then the sale and
purchase transaction is called consumer-to-consumer, such as an online auction conducted on
eBay.com.
This payment system has been widely accepted by consumers and merchants throughout the
world, and is by far the most popular method of payments especially in the retail markets.[1]
Some of the most important advantages over the traditional modes of payment are: privacy,
integrity, compatibility, good transaction efficiency, acceptability, convenience, mobility, low
financial risk and anonymity.[1]
This flow of ecommerce payment system can be better understood from the flow of the system
below.

Figure: Online Credit Card (VISA) Transaction Process

See also

Payment service provider (PSP)

Electronic money

List of free and open source eCommerce software

Multichannel ecommerce

Non-store retailing

Online marketplace

Paid content

Payments as a platform

Virtual economy

Comparison of Payment Systems

Payment service provider

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Proposed since September 2015.

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A payment service provider (PSP) offers shops online services for accepting electronic
payments by a variety of payment methods including credit card, bank-based payments
such as direct debit, bank transfer, and real-time bank transfer based on online banking.
Typically, they use a software as a service model and form a single payment gateway for
their clients (merchants) to multiple payment methods.
Typically, a PSP can connect to multiple acquiring banks, card, and payment networks. In
many cases, the PSP will fully manage these technical connections, relationships with the
external network, and bank accounts. This makes the merchant less dependent on
financial institutions and free from the task of establishing these connections directly,
especially when operating internationally. Furthermore, by negotiating bulk deals they
can often offer cheaper fees.
Furthermore, a full-service PSP can offer risk management services for card and bank
based payments, transaction payment matching, reporting, fund remittance and fraud
protection in addition to multi-currency functionality and services. Some PSPs provide

services to process other next generation methods (payment systems) including cash
payments, wallets, prepaid cards or vouchers, and even paper or e-check processing.
A PSP is thus a much broader term than a payment gateway which is how the payment
card industry refers to them.
PSP fees are typically levied in one of two ways: as a percentage of each transaction or a
fixed cost per transaction.
US-based on-line payment service providers are supervised by the Financial Crimes
Enforcement Network (or FinCEN), a bureau of the United States Department of the
Treasury that collects and analyzes information about financial transactions in order to
combat money laundering, terrorist financiers, and other financial crimes.
There are more than 900 payment providers in the world. More than 300 offer services
for Europe and North-America.