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.

More Indian women go abroad to work

Deepa Gupta, 22, a mathematics graduate from Ludhiana, thought it a great opportunity to go to a postgraduate course in Michigan University. Two years down the line, she is settled in the US and has been joined by her widowed mother.

Gupta represents a trend — that of Indian women increasingly leaving home turf for professional, rather than personal reasons. The World Bank’s report on ‘Gender, Poverty Reduction and Migration’ says more women from developing countries such as India are migrating to the West independently rather than as dependents. It also says that female migration indirectly helps alleviate poverty.

Neelam Soni, executive with an overseas placement agency in Delhi says women in nursing, teaching, social and voluntary work, the hospitality industry, data-entry operations, sales and even housework are able to migrate to foreign shores.

Social scientist Mala Kapur Shankardass says that even though a large proportion of female migration can still be explained away by marriage (estimates say 80%) it is significant that 20% of all women migrants leave for professional reasons. A decade ago, less than 5% of women migrants worked She says that earlier, male migrants used to belong to the ‘Employed’ category and female to the ‘Not in the Labour Force’. This is changing. Shankardass.

But Shankardass cautions that Indian female contribution to forex remittances is still not properly documented. Official data largely focuses on male remittances.

Nepal’s formal remittances drop because of increased use of non-banking channels

Experts blamed the inflow of remittances through non-banking channels for a reduced recorded remittance flow to the country in the current fiscal year.

“Around 30 to 35 per cent of remittance is suspected to flow through non-banking channels,” said Chandra Prasad Dhakal, president of Nepal Remitters Association (NRA) during an interaction organised here in the capital jointly by NRA and Society of Economic Journalists-Nepal (Sejon).

Since the beginning of this financial year, the inflow of remittance has started slowing down to around 10 per cent against the growth rate of 40 per cent in the last financial year, said the remitters.

Nepal has seen a boom in inflow of remittances due to increased number of Nepali workers going abroad for work. “However the number of migrant workers has not come down in the current fiscal year,” he said adding that it has gone up by 23.7 per cent. “But the remittance inflow has slowed down to an average of 10 per cent,” Dhakal added.

He also suggested the government to exempt tax on remittances and bring a new policy to refund the taxes collected from workers to discourage non-banking channels and an increase in remittance inflow through banking channels.

Nepal received Rs 209 billion through remittances alone in the last fiscal year. In this fiscal year, by the end of first nine months, Nepal has received Rs 1,164.93 billion. “It shows that the inflow in monetary terms has not decreased,” said Bhasker Mani Gyawali, Executive Director of the Forex Department of the central bank. But he did not deny the slowdown.

“It’s not possible to register 50 per cent growth every year,” said former governor of the central bank Krishna Bahadur Manandhar.

“In the last one decade, remittances have become the lifeline of the national economy as its slowdown has pulled the Balance of Payment (BoP) into a deficit of Rs 22 billion,” said economist Dr Chiranjeevi Nepal.

“The slowdown of remittance can be felt badly in the foreign currency reserve,” he said adding that the forex reserve has depleted in the recent months.

“Nepal Rastra Bank’s data of the first nine months reveals that the forex reserve is enough to pay for imports for six months only wheres it was enough for a year during the same period last year,” Nepal added.

“However, the other side of story has been completely ignored. A remittance-dependent economy cannot attain high growth rate,” he pointed out, “In the remittance-fuelled economy, employment generation and productivity take a beating as the money will be pouring in even without much efforts by the citizens. “

The political instability might have contributed to people loosing faith in banking channels and they are resorting to the informal channels for remittance.

The banking sector is feeling the heat of the slowdown in remittances as they are facing the liquidity crunch.

“The government has taken the problem seriously,” assured revenue secretary Krishna Hari Baskota. “Awareness among workers can also help solve the problem,” he said adding that the remittance should be used in the productive sector as the remittance economy can not last long.

“Around 40 per cent of the remittance goes in the savings and 60 per cent is spent on consumption, which in turn fuels imports,” said secretary. “The trend has to be reversed.”

There are around 52 remittance companies in the country. Remittance contributes 23.6 per cent to the GDP and 30 per cent of the population depends on remittance for their livelihood. It has also helped reduce poverty level.