New US smartphone payment system rumored

According to a report from Bloomberg, AT&T, Verizon and T-Mobile - the companies that will soon introduce the smartphone payment system tentatively called “Mercury” - have chosen at least three US cities to test run their new program. Minneapolis, Salt Lake City and Austin, are said to have been chosen according to the report said. The program should begin its initial testing phase around the middle of 2011.

The Mercury program is designed to cut into the profits enjoyed by major credit card providers, the report said. In particular, it targets Visa and MasterCard, the largest credit networks in the world. Together, those two companies alone handled 82 percent of all U.S. card transactions last year, a total of $2.45 trillion.

The system works when a consumer implants an RFID chip with their payment information into their smartphone, allowing them to simply wave their handset in front of a wireless sensor to make a purchase.

You could catch something nasty on your smartphone

Smartphones are increasingly getting infected with different kind of malware and now they are even involved into botnets, according to recent reports.

"Mobile phones are a huge source of vulnerability," Gordon Snow, assistant director of the Federal Bureau of Investigation's Cyber Division, recently told the Wall Street Journal. "We are definitely seeing an increase in criminal activity." Snow also told WSJ that the FBI's Cyber Division is working on cases based on tips about malicious apps that can compromise banking or be used for espionage. The FBI does not allow its employees to download apps on FBI-issued smartphones.

Usually vulnerabilities are exploited after we download some application on our phone. Experts note that if we cannot help downloading apps for our mobile devices we should at least treat the practice like safe sex. “You can still engage in it, but you need to be wise and to take precautions in order to avoid complications”.

Sex and "sexy malware" played a part in one of the first alerts of mobile botnets aimed at the Symbian. "Sexy Space" was a variant of another mobile malware called "Sexy View". It was capable of downloading new SMS templates from a remote server in order to send out new SMS spam.

"No malware for a mobile device has been known to do that before," said Rik Ferguson, senior security advisor for Trend Micro. Trend Analysts had "heated internal discussions" about whether Sexy Space qualified as botnet code. It took a little bit of social engineering to get users onto a malicious site where it was unknowingly downloaded. Part of its lure was that the vendor seemed to point to "Playboy." Many users were caught without protection and voila! Sexy mobile malware gives a whole new meaning to phone sex.

Apple manager charged with taking bribes and kickbacks

The Apple manager responsible for global supply has been charged in California with taking kickbacks. Paul Shin Devine has been accused by federal authorities of accepting kickbacks from six Asian companies. In addition to this Devine faces a civil suit filed by Cupertino, the California-based Apple, which accuses him of accepting more than $1 million in payments and bribes over a number of years.

Electronics component suppliers that allegedly paid the kickbacks to gain business from Apple have declined to comment on the allegations.

"I can't comment on anything right now," said Andric Ng, CEO of Singapore's Jin Li Mould Manufacturing, which was one of the companies named in papers filed last week with the US District Court for the Northern District of California in San Jose.

China's Kaeder Electronics declined to comment and Paul Kim, an employee of South Korea's Cresyn, said there were no staff in the company's Seoul office able to answer questions regarding the allegations.

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.