Prosecutor calls for prison sentence for Jerome Kerviel

The prosecutor in the trial of Jerome Kerviel has called for the former Societe Generale trader to spend four years in prison, if convicted. Mr Kerviel is standing trial over allegations that he bet €50bn euros of SocGen's money without the bank's knowledge. The bank says his actions cost it around €5bn.

Mr Kerviel, whose lawyer said he would fight the prosecution's call, maintains the bank knew about his risk taking. He is facing charges of forgery, breach of trust and unauthorized computer use. The maximum sentence for the allegations is five years.

In his summing up of the case, prosecutor Jean-Michel Aldebet has requested the maximum sentence, but with one year suspended. The trial has seen Mr Kerviel's former bosses and colleagues line up to testify against him.

SocGen's lawyer, Jean Veil, accused Mr Kerviel of "duplicity" for reassuring his bosses that nothing was wrong while racking up the huge losses.

On Tuesday, the bank's president and chief executive at the time of the losses, Daniel Bouton, called the trading scandal a "catastrophe".

"It's not an issue of losses or amounts," he told the courtroom.

"The trust that should exist between us is shattered. I cannot believe for one second any of Jerome Kerviel's supervisors were aware [of his actions]."

Mr Bouton maintained that Mr Kerviel's actions were unauthorised, and "outside any remit".

But he acknowledged that there had been flaws in SocGen's risk management systems.

At the start of the trial earlier this month, Mr Kerviel said his superiors at the bank had "encouraged" him to take risks.

The bank was fined 4m euros by French regulators for failures in those systems following the scandal.

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Canadian government launches payment system review

Canadian Finance Minister, Jim Flaherty, has launched a task force to review the way the payments system in Canada. The minister said it was important to ensure the payments system facilitates the introduction of new technologies to the benefit of users without compromising safety and efficiency or consumer protection.

“Today, Canadians can pay for things in a bewildering number of ways, even by tapping a cell phone against a scanner,” Flaherty said in a statement Friday.

The task force will be chaired by Pat Meredith, a professional associate and senior adviser at the strategy consulting firm Monitor Group. Meredith is a former executive vice-president of corporate strategy at CIBC. The task force is expected to provide recommendations to the minister by the end of 2011.

Earlier this year, the federal Competition Bureau turned down a request by the Interac Association to allow the debit payment processor to become a for-profit business. Interac is governed by a consent order issued by the Competition Tribunal to prevent the company from engaging in anti-competitive practices. Interac’s desire to restructure from a not-for-profit association structure to a for_profit model requires a change to that order.

The federal regulator suggested that Interac could make other changes, including to its governance structure while maintaining its non-profit status, that would allow it to remain competitive to new challenges in the market.

However the bureau said it would be open to revisiting its rulings if things change in the future.

Visa and MasterCard have been eyeing the Canadian debit card market, which is dominated by Interac. MasterCard has also been actively expanding its Maestro debit program in Canada and has been working since late 2008 to increase acceptance.

Wells Fargo becomes first bank to introduce ATM e-receipts

US bank Wells Fargo has introduced its new ATM e-receipt service to its all online banking consumers. The new option allows customers to decide on whether they want to have an ATM receipt sent an Online Banking inbox or to the specified email address. Wells Fargo is the first and only bank, so far, to launch the kind of service.

All Wells Fargo customers can use the service while Wachovia consumers will be able to access it soon after they convert to Wells Fargo. The conversion is scheduled to take place through 2011.

In order to start using the service customers need to continue using the ATM the same way they do it at present time. They can select the new option on the receipt selection screen. When they visit the inbox they have prespecified before they will see an email sent to them from Wells Fargo Online titled “Your Wells Fargo ATM Receipt.”

FBI issues warning over denial-of-service phone scam

The FBI has issued a warning to Americans after a spate of telecommunications denial-of-service (TDoS) attacks left fraudsters able to access online bank and brokerage accounts. The TDoS attacks use automated dialing programs and multiple accounts to overwhelm victims' mobile phones and land lines with thousands of calls.

When victims answer the calls they hear dead air, an innocuous recorded message, advertisement, or a telephone sex menu. The attacks are a diversionary tactic, enabling the fraudsters to use personal information about the victim they've acquired through social engineering techniques or malware to pilfer online accounts.

Because the victim's phone lines are tied up, their banks are unable to contact them to verify transfers, enabling the fraudsters to empty accounts.

The FBI says it discovered the new-style attacks through a private industry partner, which found a Florida dentist who lost $400,000 from his retirement account after a denial-of-service attack on his phones.

Since April "there has definitely been a noticeable surge in telephone denial-of-service attacks, with numerous incidents having been reported in several Eastern states" says the agency.

It has now teamed up with the Communication Fraud Control Association - comprised of security professionals from communication providers - to analyze the patterns and trends of telephone denial-of-service attacks, educate the public, and catch the fraudsters.

Mobile payments set to soar in 2010 - Gartner

The number of people using their mobile phones to make payments is set to grow from 70.2 million in 2009 to 108.6 million this year, a 54.5% rise, according to research firm Gartner.

This represents 2.1% of all mobile users, with the fastest take-up of the technology witnessed in developing markets such as Asia, Eastern Europe, the Middle East and Africa, driven by the unbanked and underbanked.

In Asia Pacific, m-payment users will surpass 62.8 million in 2010 and represent 2.6% of all mobile owners. In Europe, the Middle East and Africa there will be 27.1 million while in North America the figure is expected to be just 3.5 million, or 1.1% of all mobile users in the region.

SMS remains the dominant mobile payment technology, says Gartner, because of its ubiquity and ease of use although Web and app-based systems gaining some ground in developing markets. However NFC technology has failed to take off, with many banks seeing no business case.

Sandy Shen, research director, Gartner, says: "Developing markets have found the right formula for mobile money services - functions that users want and an ecosystem that can sustain the service. The answer for developed markets, however, remains elusive. The offerings for developed markets will take a different format. Instead of a point offering for mobile payment, the service needs to be built on top of the existing payment behaviour and infrastructure so that users can choose any channel - retail, phone, online or mobile - that suits their context at the moment of payment."

Meanwhile, a separate report from Juniper Research suggests that the number of mobile subscribers who use their phones for mobile banking will exceed 400 million globally by 2013.

China regulates third party payments

The People's Bank of China (PBOC) has announced that non-bank payment service providers would need a license to conduct third party payment transactions in China. Under the new rules, the companies will have to report to the central bank the commission rates it charges for third party transactions. The companies would also be subject to periodic checks by the PBOC.

According to the central bank, the service providers will have to apply for a license within one year after the policy comes into effect on 1st September.

Analysts said the new rules will help regulate the online payment market, which reached 555 billion yuan ($81.4 billion) last year, up 135.6 percent from 2008.

Non-bank payment service providers will need to have a registered capital of at least 100 million yuan for a nationwide business license, and should have been making profits for two successive years, the central bank said.

"The policy will help in the healthy development of the online payment industry," said Cao Fei, an analyst with domestic research firm Analysys International.

China’s online payment market has been growing at more than 100 percent annually in the past five years. It has also been attracting more and more players. According to industry experts, there are more than 100 online payment companies in China at present.

But at the same time, there are also problems due to lack of regulation.

Some online payment companies have been accused recently of making money through illegal activities. Online payment company 99Bill Corp allegedly helped a gambling company to collect funds of over 3 billion yuan, and one of its senior officials was detained.

"The license rule is fair for all online payment companies," said Wang Ziling, who looks after public relations at Alipay.com Co Ltd, the largest online payment company in China.

Alipay had a 52 percent share of the online payment market in 2009, followed by Tenpay, an online payment unit of Tencent, with 24.7 percent.

Since companies have to be profitable for at least two successive years, analysts said the policy will restrict entry of newcomers in the market.

As for foreign funded companies, the central bank will issue separate rules.

Cao from Analysys International said the new rules are likely to mean stricter requirements for foreign funded online payment companies.