Some recent news and government actions affecting online retailers enrolling consumers in membership clubs warrants a follow up to my blog a few months ago about post transaction marketing.

In late January, NY Attorney General Cuomo made some strong moves in the battle against post-transaction marketing.  His office reached an agreement with Fandango, in which the online movie ticket retailer will no longer engage in any marketing practices that enroll consumers in membership/discount clubs – without the consumer’s approval.   Additionally, Cuomo launched an investigation into 22 well-known online retailers who deceptively enroll consumers in these membership clubs.  Continue reading "More Crackdown on Post-Transaction Marketing"

In January, MasterCard made an effort to enforce new regulations and best practice guidelines pertaining to online direct marketing – specifically “negative option” marketing, which they consider to be a “brand damaging” practice.  The FTC Negative Option staff report, featuring five key marketing principles, triggered both Visa and MasterCard to make changes to their operating guidelines. Continue reading "Card Association Response to Updated FTC Regulations"

Recent reports about the security of mobile phone payments has raised red flags on the next hot payment channel.  Encryption on GSM calls has already been hacked and various researchers have released findings and tools that might encourage cyber crime.  Well, maybe not exactly the motive, but a GSM encryption codebook – a “how-to” guide to break GSM encryption – has been released by a team of German researchers.  Their goal was not to assist cyber criminals, but to encourage stronger security protocols for mobile technology.  Continue reading "Can You Trust Mobile Phones With Your Money?"

The EMV Standard

In the UK, the migration to EMV technology has reduced fraud in face-to-face transactions since EMV adoption in 2003.  The EMV standard operates with EMV-compliant cards (which have embedded chips instead of magnetic stripes) and EMV-compliant POS terminals.  The chips require a PIN entry for a secure EMV transaction.  The acronym EMV is derived from the initial letters of Europay, MasterCard, and Visa, all of whom cooperated to create the technology standard.  MasterCard merged with Europay in 2002.  JCB and American Express have since joined the organization as well.

EMV is a perfect example of two-factor authentication, where two different factors are required to complete a transaction, and has been referenced as a key solution for secure, fraud-resistant transactions.   Continue reading "Where Are We With Payment Security?"

This spring, U.S. Representatives Peter Welch (D-VT) and Bill Shuster (R-PA), introduced HR 2382, the Credit Card Interchange Fees Act of 2009.  Welch, the bill’s author, states that “credit card fees are killing small businesses.”  The act, targeted to help small retailers, would limit the fees charged to merchants.  It would also prohibit charging higher fees to merchants when customers use reward cards and would give the Federal Trade Commission the right to review interchange fees. Continue reading "Interchange Fee Legislation – Who Will Pay The Price?"

According to MasterCard’s presentation at the Goldman Sachs US Financial Services Conference on Dec 8, retail sales are showing positive signs – relative to payment cards.  They cited November as the third consecutive month of growth since July, 2008.  They attributed the growth to changes in consumer attitudes.  Consumers are focusing more on quality and value, have more control over finances and have become more frugal, which is a shift back to traditional roots of credit card use.  When the first payment card, Diners Club, was introduced in 1950, members had to pay off their balances each month.  There was no such thing as revolving credit.  Today, consumers are still using credit, but more responsibly. Continue reading "What Card Payment Usage is Telling Us"

In the first half of 2009, e-commerce revenue amounted to approximately $64 billion of all retail sales in the U.S., according the U.S. Census Bureau.  While e-commerce sales dropped from the same period in 2008, the percentage of total retail sales increased slightly from 3.3 to 3.5 percent.  What this shows is that more consumers are finding confidence in online shopping.  This is good news for online merchants.  However, the rapid growth of e-commerce has created tons of new sales opportunities, including aggressive direct marketing companies who have found ways to target online shoppers. Continue reading "Post Transaction Marketing: Is It Worth The Risk For E-commerce Merchants?"

As a follow-on to my blog about alternative payments, it looks like one big player is either afraid of the competition – or maybe it is simply making smart business decisions.

Announced yesterday was American Express’ deal to purchase Revolution Money, launched by AOL Co-founder Steve Case’s Revolution LLC in 2007. Continue reading "American Express Acquires Revolution Money"

1-800-Flowers is paving the way, yet again, for retailers to reach consumers. The company has jumped on the Facebook bandwagon and is taking advantage of the viral social networking phenomenon. In late July, they became the first store to sell their products directly through Facebook, via a Facebook application. They simply added a “Shop” tab to their page where users can shop, purchase, and ship, all without leaving Facebook. Continue reading "New Avenues For E-Commerce"

Answer:  Offer alternative payment options

Okay, so what exactly does that mean?  Well, traditionally, merchants only had the option of accepting electronic payments online in the form of bank drafts, and debit and credit cards from the major card brands – Visa, MasterCard, American Express, Diners Club and JCB.  That is until payment product innovators discovered that merchants were losing potential business from consumers who did not have bank accounts or credit cards.  Most importantly, in the ecommerce space, some consumers are simply wary of using cards and bank account information for online transactions because of the fraud risk.  Most of this concern stems from consumers’ lack of trust in web site security.  Additionally, with card companies cutting cardholder credit limits, alternative payment methods are the only option. Continue reading "Want To Gain More Online Customers?"