Debit card fees will drive US consumers back to cash – Report

US consumers would react by turning to cash if any debit-based payment fees were instituted, a recent study by Mercator Advisory Group has shown.

The survey, carried out by Mercator Advisory Group and sponsored by the National Payment Card Association, has shown that the addition of a mere $10 monthly fee could drive most consumers to stop using their debit cards for regular day-to-day payments and force them to start looking for other payment alternatives, the main one being cash. The study has also revealed that women are more likely than men to halt their card usage and that more than three quarter of individuals with incomes totaling over $75,000 would stop using their debit cards across all store types.

The study was designed to examine the effect that fees and rewards would have on everyday purchase payment decisions at the point-of-sale with specific focus on the use of debit cards.

Australia not yet ready for mobile banking

While KPMG’s recently released global survey, “Consumers and Convergence IV” finds a dramatic rise globally in the usage of mobile applications over the past two years, but that financial transactions use lags other uses. The survey covered 5,627 consumers in 22 countries.

The Asia Pacific region leads the world - although there were increases globally from 2008 to 2010 for banking and financial transactions over mobile phones, Asia Pacific which has one of the highest densities of mobile devices, had the most significant growth in the adoption of mobile banking transactions.

An astounding 43% of Asia Pacific respondents make mobile banking transactions at least once a month, compared to 30% globally. But in Australia only 19% of mobile phone owners use their phone for banking monthly, partly due to the lack of awareness of mobile banking offerings. Surprisingly 40% of Australian respondents did not even know whether their bank offered mobile banking compared. This is much higher than the 10% in Asia Pacific and 24% globally.

In Australia, only 8% have conducted investment transactions over their mobile phones within the last 6 months, and only 5% in the last seven to 12 months. And interestingly, 87% had never made an investment transaction, such as selling a stock or bond, over their mobile. This is much higher than the 53% for Asia Pacific region and 71% globally.

Australia also lagged Asia Pacific region and global respondents when it came to the level of comfort in using their mobile phone for financial transactions. 21% of Australians are comfortable with mobile banking compared to 40% in the Asia Pacific region and 34% globally. Furthermore, 70% of Australians have never done any banking on a mobile device compared with 55% globally and 38% in the Asia Pacific region.

But as awareness and prevalence of mobile devices and comfort with their usage increases, this gap is expected to reduce quite sharply in the future, as the business advantages to both parties are quite substantial.

Peter Russell, KPMG Financial Services Partner sounded quite optimistic about the ability of Australian banks and consumers to catch up, saying “Australian banks have tended to let consumers find their mobile banking solutions and have focused on this channel as primarily a way to facilitate mobile payments. As Australian banks are rushing to develop and improve applications for smart phones and the Apple iPad tablet this gap will narrow very quickly. These numbers are not surprising given the maturity of mobile phone transaction activity. We predict growth in investment transactions as business conditions improve and the functionality of mobile applications to conduct transactions improves.”

"Mobile banking offers a real source of competitive advantage to Australia banks. While our results seem to show we lag other regions, Australian Banks are fast catching up following the release of a variety of mobile applications in the early part of 2009. Our survey provides Australian Banks with global and regional benchmarks of how popular mobile applications are likely to become in the very near future" Mr Russell advised.

Armenian remittances on the rise

Following a sharp fall caused by the global recession, cash remittances from Armenians working abroad rose by about 10 percent in the first half of 2010, contributing to Armenia’s ongoing economic recovery.

Latest data from the Armenian Central Bank put the total amount of incoming non-commercial wire transfers processed by local banks at almost $490 million, up from $447 million recorded in the same period of last year.

The overall amount of cash inflows, including funding for business transactions, rose by only 3 percent to $617 million. It was equivalent to 16.7 percent of the country’s first-half Gross Domestic Product.

Both commercial and non-commercial remittances, which benefit an considerable part of the country’s population, tumbled by roughly 30 percent last year due to the economic downturn around the world and Russia in particular. That was one of the reasons for a double-digit contraction of the Armenian economy registered in 2009. Official statistics show the economy expanding by 6.7 percent in the first half of 2010 parallel to the global recovery.

Russia, which is home to most of the hundreds of thousands of Armenian migrant workers abroad, accounted for more than 70 percent of cash sent by them to Armenia in January-June. The United States, which also has a sizable Armenian community, remained the second largest source of the remittances, contributing about 7 percent of the total.

The remittances not only boost consumer spending but also enable Armenia to run massive trade and current-account deficits. Their renewed growth was accompanied by a deepening of the country’s trade imbalance.

According to the National Statistical Service (NSS), the first-half trade deficit increased by 15.5 percent to $1.28 billion, despite a 56 percent surge in Armenian exports. It was more than offset by a 24 percent rise in imports, totaling $1.72 billion and exceeding almost four-fold exports.

Rising hard-currency inflows, which accelerated after the first quarter of 2010, appear to have also contributed to a renewed appreciation of the national currency, the dram. It has gained more than 6 percent in nominal value against the U.S. dollar since April.

Are Google and Skype going to follow the fate of RIM in India?

Google and Skype Internet-based messaging services may soon be shut down in India over security concerns as the country threatened the similar blocking of BlackBerry services, according to reports in the Financial Times.

The Financial Times has quoted from the minutes of a July 12 meeting between Indian telecommunication ministry security officials and operator associations to look at possible solutions to "intercept and monitor" encrypted communications.

"There was consensus that there more than one type of service for which solutions are to be explored. Some of them are BlackBerry, Skype, Google etc," according to the department's minutes. "It was decided first to undertake the issue of BlackBerry and then the other services."

Thursday this week, the Indian government became the latest of several nations that have threatened to cut off Research In Motion's encrypted BlackBerry email and instant messaging services if the Canadian company does not address national security concerns.

India has set an August 31st deadline for RIM. It wants access in a readable format to encrypted BlackBerry communication, on grounds it could be used by militants. Pakistani-based militants used mobile and satellite phones in the 2008 Mumbai attacks that killed 166 people.

The Financial Times report said representatives from two of the telecom operator associations present confirmed the details of the meeting earlier this month.

"At the last security meeting, the agencies were talking about BlackBerry. They were also coming out heavily on Skype and Google," said Rajesh Chharia, president of the Internet Service Providers Association of India.

US FX market free from official intervention in second quarter

US monetary authorities did not intervene in the foreign exchange markets during the April—June quarter, the Federal Reserve Bank of New York said in its quarterly report to the US Congress.

During the three months that ended June 30, 2010, the dollar appreciated 10.4 percent against the euro but depreciated 5.4 percent against the Japanese yen. In this period, the dollar’s trade-weighted exchange value appreciated 3.6 percent as measured by the Federal Reserve Board’s major currencies index.

You can download the Report HERE.

Free Hugs

We are just too serious most of the time. Please take a break and watch this video - relax and unwind! HUGS from Citadel Advantage.

Mobile Banking – Free to all Lloyds TSB customers

Lloyds TSB has introduced free mobile banking for all of its customers. This is aimed at enabling more people to take control of their finances.

Lloyds TSB first introduced mobile banking in 2008. Customers can manage their finances whilst on the move using a wide range of services that includes;

• Inter account transfers,
• Low and High Balance alerts (when clients current account balances go above or below certain pre specified levels),
• A 'near limit' alert when a customer's balance is within £50 of its account or planned overdraft limit, could help customers avoid unplanned overdraft fees,
• An 'over limit' alert is sent when a customer's balance is over its limit or if a payment can't be made because there is not enough money in the account

According to a recent survey commissioned by Lloyds TSB, just under two thirds of consumers stated that there should be more tools like mobile banking available, to help people manage money more effectively. A quarter of those surveyed said they would be motivated to use mobile banking if it were free.

The rise in online banking and similar options, such as mobile and telephony, now provides consumers with more options to manage their money than ever before. In response to this demand, the mobile banking service was made available, free for all customers from 3 August.

Customers can also benefit from more specific financial tools that should help them avoid incurring overdraft charges. These include;

• Grace period - If a customer's account goes into a planned or unplanned overdraft they have a grace period until 3.30pm the same day to pay in enough money to cover the payments and avoid any fees,
• £10 Buffer - The introduction of the fee free and interest free £10 buffer in December will help customers who dip into their overdraft by less than £10, avoid charges.

Jatin Patel, Personal Current Accounts Director, Lloyds TSB, said: "We are keen to provide our customers with a variety of tools, enabling them to take more control of their finances. Mobile banking provides the perfect way for people to manage their money on the move.

"Our decision to offer free mobile banking to everyone, from August 3 (currently £2.50 per month) should really encourage more customers to embrace the range of tools available, as well as helping them manage their finances more efficiently."