Tag Archives: E-Commerce

coin summit

Here Comes CoinSummit! [2023 Update]

Today marks the start of CoinSummit San Francisco, a two-day event ”connecting virtual currency entrepreneurs, angel and VC investors, hedge fund professionals and others who are looking to learn and network in the virtual currency industry.” CoinSummit will take place on March 25-26 2014 at the Yerba Buena Center for the Arts in San Francisco.  Many in the bitcoin community have been waiting for this event for a while.

The event with feature notable entities in the virtual currency community that include Marc Andreessen of Andreessen Horowitz, Brian Armstrong of Coinbase, Nic Cary of Blockchain.info, and Tony Gallippi of BitPay.

The Official Merchant Services Blog has been tapped into the ongoing saga of Bitcoin since this article in November — delving into the fascinating gimmick of Bitcoin mining. Traversing the ups and downs of this unstable and chaotic currency led to the crazy month of February and then the fall of Mt. Gox. Since that fateful day, the virtual currency industry has been scrambling. And now we have this much anticipated summit of industry experts discussing the details and potential future of BitCoin and its competitors.

Don’t Miss a Moment of the Action

For those interested, a live stream of the event begins at 9 AM Eastern time today, and can be viewed here.

Points of Interest

So some of the things we’ll be hoping the Summit delves into are: The Mt. Gox crisis, its aftermath and the future of the currency exchange. Of course industry insiders are all going to be sharing their thoughts, rants and frustrations about MtGox. Many will be raging about the losses incurred by the public and so many bitcoiners, and how badly Mark Karpeles has handled this debacle. But more importantly the issue of malleability will be explained and also how the currency and its exchanges can survive well into the future.

Which leads right into the fact that the crisis didn’t imply a complete price crash for BTC, even after hundreds of millions of dollars in permanent losses. How will exchanges guaranty transparency? Audits? Open balance sheets? These are critical issues if Bitcoin is to be adopted by mass markets. So let’s hope the summit dives right into the answers for those questions.

And then there’s the heavyweight presence to consider. The “big 4″ (Coinbase, Blockchain.info, Bitstamp, and BitPay) will all be present at this summit through its founders. Let’s see if the industry leaders explain their current strategies and growth trends.

The competitors also have some spotlight. Ripple, DogeCoin, Litecoin, and Ethereum will be pitching the advantage of alternative options, but also talking about the future of Bitcoin through smart contracts and smart property, two functionalities many think will catapult BTC prices to new levels.

That’s a quick roundup of what to expect at CoinSummit San Francisco.

The VX 520 Embraces the Future

Sometimes the future just sort of sneaks up on you. Even if you’ve given yourself reminders, sticky notes, calendar alarms, and the proverbial string tied around your finger, the future still has a way of creeping up on you unawares.

Which is why Host Merchant Services is happy to offer its customers a payment processing terminal that comes with a reminder built in. Verifone with its VX 520 Terminal is here to prevent any memory lapses about the future from happening to your business and its PCI compliance needs. The VX 520 is PCI PTS 3.0 compliant right out of the box and is a forward thinking terminal designed specifically to be prepared for the PCI compliance mandates that are changing the rules of the industry.

Verifone terminals use end-to-end encryption with SSL v3.0 and 3DES to maintain the highest levels of security. This encryption, coupled with Master/Session and DUKPT key management, provide maximum protection from fraud and misuse of the terminal. The VX 520 terminal is also certified with PCI PED 2.0 approval.

All About Security

Security and secure transactions have been a hot button issue in the payments processing industry for the past few years. Everything from the Global Data Breach to Bitcoin to the Target Breach has people wondering about how secure their payment information really is. This is the root of the creation of PCI and its standards. In the ten years since the PCI DSS emerged as a consensus industry standard for the major credit card vendors, PCI DSS succeeded wildly in some areas – such as the use of endpoint security, encryption and network monitoring technology.

The Clock is Ticking

However, the success of PCI DSS in some areas highlighted others in which the standard had little to say or created perverse incentives—rewarding “compliance” over real security. Subsequent updates have attempted to right those wrongs. And the VX 520 is on the cutting edge of those PCI updates.

In January 2012 the PCI DSS released version 2.0 of their standards. And the VX 520 was built to be compliant to those standards and more.

In November 2013, the PCI DSS released version 3.0 of their standards. And again the VX 520 was compliant.

The 520, offered by Host Merchant Services, is a nimble processor that is ahead of the curve on security standardization. This is helpful because by December 2014, changes are coming from the credit card companies where older terminals will no longer be valid. Host Merchant Services offers a free terminal to new customers that sign up and are available 24x7x365 to help upgrade existing customers to terminals that will be PCI compliant.

Getting Secure and Staying Secure

Host Merchant Services knows that your business needs secure transactions to function. And we’re here to make the process of PCI Compliance easy, understandable and consistent for you each year. We offer the lowest PCI Compliance fee in the industry, at just $4.95 per month. PCI Compliance is essentially the process of adhering to the standards set forth by the Payment Card Industry Data Security Standards Council (PCI DSS). Essentially the standards are a set of requirements designed to ensure that all companies that process, store or transmit credit card information maintain a secure environment.

Secure transactions are important for merchants and a key element of the customer service Host Merchant Services provides. As part of our commitment to our Merchants and their transaction security, HMS offers a PCI ComplianceInitiative to anyone interested in processing with us. We are happy to offer this initiative as well as our free resources to help our merchants see what needs to be done to become compliant … and stay PCI compliant.

Mt. Gox

The Doom of Mt. Gox [2023 Update]

February was the month that the all-seeing eye of the media turned its lidless gaze upon Bitcoin and the craggy peaks of Mt. Gox, the Japanese Bitcoin exchange site. Almost half a billion dollars went missing from Mt. Gox, the exchange was rocked, Bitcoin was scorched, and the site went bankrupt.

The Official Merchant Services Blog has been tapped into the ongoing saga of Bitcoin since this article in November — delving into the fascinating gimmick of Bitcoin mining.

Wait, What is Bitcoin?

Bitcoin is a virtual currency introduced in 2008 by a programmer or group of programmers under the name Satoshi Nakamoto. It has no central issuing authority and uses a public ledger to verify encrypted transactions. The flashy shiny aspect of it is it’s a currency that can be bought, sold and mined electronically. The famous internet comic strip Penny Arcade defines Bitcoin for its readers here.

Wrapped Bitcoin

In 2013 the currency captured the imagination of the virtual and business worlds by soaring in value, rising from $10 to $1,200 per coin. It surpassed the value of gold at its peak. And then i crashed down to $500.

The currency was also embroiled in the huge Silk Road scandal as federal authorities seized millions of dollars worth of Bitcoins when it shut down the notorious black market web site the Silk Road.

The real trick of Bitcoin and why it’s so fascinating to payment processors is that it’s a cryptographic protocol, or crypto-currency. The protocol creates unique pieces of digital property that can be transferred from one person to another. It’s essentially the legitimization of microtransactions linked to actual monetary value. Each Bitcoin is defined by a public address and private key, both long strings of numbers and letters giving it a unique identity in virtual reality. In addition to its digital fingerprint, Bitcoins also have a place in a public ledger. This blockchain gives the Bitcoin a physical identity. So Bitcoins bridge the virtual and the physical.

Mt. Gox: Hackers Gonna Hack

Hacker

But no matter how elegant and ingenious the actualization of Bitcoin is, the currency apparently can be hacked.

  • On February 25, Mt. Gox, the leading Bitcoin exchange located in Tokyo Japan shut down. It had discovered that hundreds of thousands of Bitcoins had gone missing, and more than $400 million had been stolen.
  • On February 28, Mt. Gox filed for bankruptcy and said it was under orders not to pay its debts. The exchange publicly apologized to users for “causing so much inconvenience.”

February was actually filled with problems for Mt. Gox and Bitcoin, as we reported previously.

Everything from Russia banning Bitcoins to China half embracing it just piled onto the Bitcoin craze. And then the hack and the bankruptcy happened. Since then, pieces of code showing parts of Mt. Gox’s Bitcoin source have cropped up around the web according to VentureBeat. Mt. Gox set up a phone support line but that got blitzed. Two other sites vied to fill the void of Mt. Gox, with BitStamp edging out BTC China for the title of largest Bitcoin exchange — for now. And then things got funny weird.

Virtual Theft

Mt. Gox

The authorities are now tasked with investigating the crime. And well, there’s this book, Halting State by Charles Stross, written in 2007. The premise of the book seemed so novel back then: A police officer is called to the offices of a big corporation because a robbery was reported. The robbery as it turns out took place in a virtual world, as the company runs a video game system with virtual currency. And then the novel goes on to explore technology, and how it is quickly evolving to affect the physical world from the virtual world. It was set just a few short years in the future.

And here we are, a few short years into the future, and authorities are investigating the theft of real value currency stolen from a virtual environment.

The amount of coins hacked and stolen from Mt. Gox amounts to about 6 percent of the entire Bitcoin market in circulation. And law enforcement is now tasked with trying to find the identity of the perpetrators — which may seem like an obvious and standard step in the investigative process. But it’s Bitcoin, which is famous for its anonymity and unregulated status. So authorities are filing subpoenas to Mt. Gox to gather information about how the virtual currency is transferred and converted into dollars. While stuck investigating even the basics of how the model works, authorities haven’t even gotten to the stickier situation of how Bitcoins are designed to be untraceable and finding the phantom thieves who stole the strings of encrypted numbers may not happen.

Leaving a half billion dollar hole in an industry that’s already proving to be volatile and susceptible to hacking.

pay pal

PayPal President Hacked [2023 Update]

Twitter, the modern equivalent of Mad Libs and the yellow journalism of the late 19th century, has revealed to us a gem of irony that makes the whole Target getting hacked story seem that much more poignant.

No one is safe in this bold new era of credit card hackers and identity thieves. Not even the president of a major payment processing company.

PayPal President David Marcus has been the victim of credit card fraud, he said on Monday. The leader of the online payments company revealed via Twitter that his credit card information had been stolen on a trip to the United Kingdom and he’d racked up a “ton” of fraudulent transactions on his account.

Smart Chip Didn’t Help

Marcus speculated that thieves probably skimmed the info from the magnetic stripe on his card, even though his card had an EMV chip, a technology that makes cards in Europe more secure than the ones commonly used in the U.S.

EMV® chip technology– or EMV — is a worldwide standard for credit and debit card payments based around the use of chip card technology. The acronym stands for Europay, MasterCard, and Visa, who collaborated to create the technology. The goal of this project was to create a card that worked based off of a microprocessor chip that is read by the payment terminal. Because the U.S. has yet to widely deploy embedded chip technology, the nation has increasingly become the focus of hackers seeking to steal such information. The stolen data can easily be turned into phony credit cards that are sold on black markets around the world.

Is it Just a Marketing Ploy?

Marcus adroitly used the incident as an opportunity to plug his own company, suggesting that the fraud wouldn’t have happened if the merchant had accepted PayPal. His company is currently trying to expand its presence as a payment option in physical stores, putting it in direct competition with platforms like Square and Google Wallet.

It also comes right when data breaches are major news in the payment processing industry. On December 19 2013, Target confirmed a sophisticated data breachoccured. In their press release they stated: “Approximately 40 million credit and debit card accounts may have been impacted between Nov. 27 and Dec. 15, 2013. Target alerted authorities and financial institutions immediately after it was made aware of the unauthorized access, and is putting all appropriate resources behind these efforts.  Among other actions, Target is partnering with a leading third-party forensics firm to conduct a thorough investigation of the incident.”

So Marcus’ misfortune happens right at the time identity theft, credit card fraud and hackers are on everyone’s mind. With EMV chip cards being touted as one of the best solutions to the hacking problem, Marcus’ mishap even taps into that buzz.

The Bitcoin Roller Coaster

Back in November, The Official Merchant Services Blog dove into the Bitcoin currency craze with an in-depth look at Bitcoin mining.
Bitcoin, introduced in 2008 by a programmer or group of programmers under the name Satoshi Nakamoto, has no central issuing authority and uses a public ledger to verify encrypted transactions. It is a virtual currency that can be bought, sold and mined electronically.

The Hammer is Dropped

We focused on the technological gimmick that is Bitcoin mining – essentially powering multiple computers to create the virtual currency from virtually nothing. The rest of the media since then has been concentrating on the other aspects of Bitcoin, including its use as a money laundering tool. In that same month of November, Federal prosecutors in New York filed charges against Ross William Ulbricht for running the Silk Road website, where customers allegedly used Bitcoins to buy and sell drugs.

And on February 9, Florida stepped into the spotlight concerning virtual currency and money laundering. Bitcoin traders. Florida prosecutors have charged three men, saying that their use of a site called localbitcoins.com violates laws against unlicensed money transmitters, according to a report in the Krebs on Security blog.

Bitcoin Banned in Russia

More bad news for Bitcoin came from Sochi Olympics host country Russia. The country banned Bitcoin altogether. Russia’s Prosecutor General’s Office recently made its stance on Bitcoin abundantly clear. “Systems for anonymous payments and cyber currencies that have gained considerable circulation — including the most well-known, Bitcoin — are money substitutes and cannot be used by individuals or legal entities,” the office said in a recent press release reported by Reuters. Any use of Bitcoin will be considered “potentially suspicious,” as the Russian government has linked Bitcoin usage to illicit activities.

Russia is only the latest country to release a statement detailing its position on Bitcoin. In early December, China barred financial institutions from using Bitcoin, though it didn’t ban the currency outright. In late January, Canada released a statement that said Bitcoin is not legal tender in the country. Countries like these have expressed skepticism in Bitcoin not only because of its links to money laundering, but also for its overall volatility.

Market Troubles

Bitcoin has plunged more than 8 per cent after a Tokyo-based exchange halted withdrawals of the digital currency, citing technical malfunction. Mt. Gox, a popular exchange for dollar-based trades, said in a blog post it needed to “temporarily pause on all withdrawal requests to obtain a clear technical view of the currency processes.”

It promised an “update” – not a reopening – on Monday, February 10, Japan time. Bitcoin exchange Mt. Gox said customers can take out cash “as normal” and it’s working to resolve technical issues that prompted it to halt withdrawals of the digital currency.

“It’s not about cash at all, only about Bitcoin,” Michael Keferl, a communications officer for Tokyo-based Mt. Gox, said. “There is a problem in the way transactions are verified.”

Things then rebounded. The price of Bitcoin rose 0.3 percent to $683.66 at 9:07 a.m. London time, according to the CoinDesk Bitcoin Price Index, which averages prices from exchanges including Mt. Gox.

Bitcoin App Dropped by Apple

On February 5, Apple struck a blow against Bitcon. The Blockchain app, downloaded 120,000 times during its two years in Apple’s iTunes App Store, was the most popular way for people and companies to transfer bitcoins from one another. Apple removed it from the store on February 5. Blockchain immediately shot back with a statement, accusing Apple of getting overly aggressive with future competitors. Apple is rumored to be developing its own mobile payment system.

And Speaking of …

With the crazy ups and downs of Bitcoin, one thing is undeniable: Virtual currency is a profitable new marketplace. Which means Apple isn’t the only group trying to develop their own alternative. An untraceable currency called Zerocoin is being designed by Johns Hopkins University researchers to compete with other virtual moneys such as Bitcoin. The researchers say that if virtual currencies are going to exist, there should be one that provides the same kind of privacy that people have when exchanging traditional forms of money.

What Does This all Mean?

The virtual currency movement has the potential to be the next stage in the evolution of payments and transaction processing.
Advocates say such digital currencies, made possible by complex computer formulas, will eventually be widely embraced by users who want to exchange money instantly and directly, without a bank as middleman.

While it may seem like the wild west in terms of security and long term viability, the concept of virtual currency is actually well in line with what we’re already surrounded with as consumers. By and large we continually swipe plastic through card readers when we buy everything from a coffee at Wawa to a down payment on a new automobile. So a paperless and coinless world is already one in which we exist. It’s not hard to envision a next step where the currency itself is virtual.

But that does leave security issues which are relevant and real. Relying on even the best encryption still leaves risk and susceptibility to fraud.

However, it seems governments are still playing catch up to the technology itself. Focusing on money laundering and the instability the anonymous exchange of currency brings to the banks themselves, as well as the sale of illegal goods and services. All of which are certainly part of their purview. It’s just a weird transition period as the infrastructure of the old school banking system doesn’t seem all that prepared to deal with the fluidity of a virtual currency snaking through the world’s consumers.

In short, it’s an interesting time to bear witness to the evolution of money and the marketplace. Governments will catch up with virtual currency. And consumers will embrace convenience more and more until we face a world that may actually give up on paper and coins completely, in favor of your PIN numbers and some encryption codes that store the value of you.

Hacker

Hackers find new target: Mariott [2023 Update]

hackers

Holiday Inn, Marriott Hotels Suspected Targets of Data Breach

The Official Merchant Services Blog has breaking news regarding the ongoing series of credit card data breaches. One the heels of the major hack of discount retailer of Target that stole credit and debit card data from 40 million accounts right smack dab in the middle of the holiday shopping season, there’s yet another target of hacker greed: Holiday Inn. Lodgers at Holiday Inns, Marriott and Renaissance hotels may have had their payment card details compromised for much of 2013 as revealed a hotel management company  on Monday.

White Lodging Services, a hotel management company, warned in a news release it suspects point-of-sale systems at restaurants and lounges on 14 of its properties were compromised between March 20, 2013 and Dec. 16, 2013. Guests who did not use their card at restaurants and lounges, as well as those who used their room account for purchases from those outlets, were not affected, the press release revealed.

The Merrillville, Indiana-based company said it manages hotels like Holiday Inn under agreement with hotel owners. The company is a separate entity from the specific hotel brands it operates. White Lodging Services said it has contacted federal law enforcement and initiated a forensic review of its properties. It runs more than 169 hotels in 21 U.S. states.

databreach1

The Full List

The full list of the food and beverage outlets affected by the suspected breach were located at the following hotels:

  • Marriott Midway, Chicago, IL
  • Holiday Inn Midway, Chicago, IL
  • Holiday Inn Austin Northwest, Austin, TX
  • Sheraton Erie Bayfront, Erie, PA
  • Westin Austin at the Domain, Austin, TX
  • Marriott Boulder, Boulder, CO
  • Marriott Denver South, Denver, CO
  • Marriott Austin South, Austin, TX
  • Marriott Indianapolis Downtown, Indianapolis, IN
  • Marriott Richmond Downtown, Richmond, VA
  • Marriott Louisville Downtown, Louisville KY
  • Renaissance Plantation, Plantation, FL
  • Renaissance Broomfield Flatiron, Broomfield, CO
  • Radisson Star Plaza, Merrillville, IN

 

White Lodging last week told the New York Times it was investigating a potential security breach, covered in a report from security writer Brian Krebs. The same Krebs who broke the news on the Target Data Breach as well as the Global Data Breach.

What Was Hacked?

The unlawfully accessed data may have included names printed on customers’ credit or debit cards, credit or debit card numbers, the security code and card expiration dates.  Guests who used or visited the affected businesses during the nine month-period and who used a credit or debit card to pay their bills at the outlets might have had such information compromised and are encouraged to review their statements from that time period.

One idea posited on how this happened is RAM scraping. Attackers are planting malicious software, known as “RAM scrapers,” on POS devices, which capture unencrypted card details after a customer has swiped a card, defeating other security measures in place intended to protect sensitive details. White Lodging said customers’ names as printed on credit or debit cards, the card numbers, the cards’ security code and expiration dates may have been unlawfully accessed.

What’s Next?

Financial institutions have reissued some payment cards and are monitoring other credit and debit cards for unauthorized activity, the company said. White Lodging is also arranging to offer one year of complimentary personal identity protection services to all affected cardholders.

The unfolding disclosures have drawn the attention of the U.S. Congress. The House Energy and Commerce Committee is scheduled on Wednesday to hear from senior executives from Target and Neiman Marcus along with the U.S. Secret Service about how data breaches can be prevented.

Host Merchant Service’s PCI Compliance Initiative

Looking at the threat of a data breach, Merchants must wonder what the solution can be. Is there protection available? PCI Compliance is a great foundation for transaction security. The standards and protocols set up by the PCI-DSS Council are the first step a merchant needs to take to protect their data. And Host Merchant Services offers a PCI Compliance Initiative that helps its merchants quickly and seamlessly take that step.

Also, one thing to consider if you are a merchant and you are worried about data breaches affecting your bottom line: Host Merchant Services Data Breach Security Program. Click that link to download a PDF explaining the value-added service HMS provides its merchants that goes above and beyond just simple PCI Compliance and helps ensure a merchant’s peace of mind.

 

Credit Cards

Can Chip Cards Stop the Hax? [2023 Update]

The massive data breach at Target is a big shining beacon illuminating exactly how behind the times the United States remains when it comes to credit card security — namely EMV® chip technology.

EMV is a worldwide standard for credit and debit card payments based around the use of chip card technology. The acronym stands for Europay, MasterCard, and Visa, who collaborated to create the technology. The goal of this project was to create a card that worked based off of a microprocessor chip that is read by the payment terminal. Because the U.S. has yet to widely deploy embedded chip technology, the nation has increasingly become the focus of hackers seeking to steal such information. The stolen data can easily be turned into phony credit cards that are sold on black markets around the world.

In fact, KrebsOnSecurity, the website that broke the news of the Target hack, has reported that the card information stolen in the Target Data Breach has been showing up on the black market. Credit and debit card accounts stolen during the security breach have reportedly flooded underground black markets, going on sale in batches of one million cards. The cards are being sold from around $20 to more than $100 each.

Over the last decade, most countries have moved toward using credit cards that carry information on embeddable microchips rather than magnetic strips. The additional encryption on these aptly named smart cards has made the kind of brazen data thefts suffered by Target almost impossible to pull off in other countries. Which is why as of Q4 2012, there were roughly 1.62 billion EMV cards in consumers’ hands and 23.8 million terminals deployed throughout Europe, Asia, and Africa. About 80 countries have adopted the technology as a standard. By comparison, about 1% ofcredit cards issued in the U.S. contain such technology, making the United States a tasty target for hackers.

“The U.S. is one of the last markets to convert from the magnetic stripe,” Randy Vanderhoof, director of the EMV Migration Forum told the LA Times. “There’s fewer places in the world where that stolen data could be used. So the U.S. becomes more of a high-value target.”

The credit card industry reports the U.S. accounted for only 24 percent of global credit card payments by volume in 2012, but it accounted for 47 percent of the fraud.

So Why No Chips in the U.S.?

According to experts the reasons the U.S. lags so badly in adopting smart cards are complicated. In part, there hasn’t been the political will to demand that businesses and financial institutions make the change. One might think the Target data breach would spur politicians to action or at least get consumers to light a fire under those politicians. But the Target hack is just one in a growing list of data breaches, and the 40 million compromised cards are rather mundane.

In April of 2011, the Playstation Network was hacked, compromising the vital information of 77 million accounts, and 24.5 million Sony Online Entertainment accounts. This has been touted as one of the largest personal data heists recorded in history, and prompted Sony to shut down its services for a month. In 2009, credit card processor Heartland Payment Systems disclosed that thieves had broken into is internal card processing network, and installed malicious software that allowed them to steal track data on more than 130 million cards.

If neither of those data breaches could spur on the adoption of EMV cards, it’s unlikely the Target hack will move the needle. The inertia built up against the smart cards then must be due to some other reason Analysts also say the payment processing system in the U.S. is more complicated, with merchants, credit companies and banks reluctant to spend the big bucks it would take to convert a system with 1 billion credit cards to EMV from magnetic stripes. But that’s still too murky.

The primary reason such technology has taken so long to make its way into the U.S. is far more simple: Chip-embedded cards are more expensive to produce. Each merchant would have to purchase new equipment to hand them.

What the Future Holds …

The good news for consumers is that the U.S. is indeed moving to embrace smart credit cards. The Official Merchant Services Blog reported almost two years ago that the United States was moving slowly but surely toward adopting chip cards. Visa took the lead in the U.S. push, reporting that as of December 31, 2011, the credit giant had issued more than 1 million credit cards that use “chip” technology to store consumer payment information. Visa made an announcement in August 2011 hat it planned to start issuing more EMV — Europay, Mastercard, Visa — smart cards to push the industry toward better security and an easier transition to mobile payments.

In the last couple of years major card issuers have laid out road maps for upgrading the card technology, and many have set out to achieve this by October 2015.

TransFirst, Host Merchant Services’ acquirer and one of the premier providers of transaction processing services and payment processing technologies in the U.S., issued a mandate in response to the EMV push. TransFirst said that Visa will require U.S. acquirer processors and sub-processor service providers to be able to support merchant acceptance of chip transactions no later than April 1, 2013. Visa also intends to institute a U.S. liability shift for domestic and cross-border counterfeit card-present point-of-sale transactions effective October 1, 2015, and for fuel-selling merchants by October 1, 2017.

Ocotber 2015 was chosen because at that point major credit card companies will change their rules about who is liable for fraudulent purchases caused by security breaches. Under the new rules, the entity in the payment chain — merchant, credit card, banks — deemed to have the weakest security will be liable. Credit card companies can’t make anyone adopt the technology, but they’re giving them a hard nudge.

The Bottom Line

While the Target Data Breach once again brings up the topic of credit card security, it seems like the U.S. is still poking along with its slow adoption of EMV chip cards. Hackers will still continue to target the low hanging fruit that the largely magnetic stripe based U.S. credit card industry still works with. But EMV chips and increased digital security of cardholder information is coming. October 2015 looms closer and closer.

Marketplace Fairness Act Looms

Marketplace Fairness Act Looms [2023 Update]

With the 2014 holiday shopping season about to grind down to the home stretch, the sales figures are already rolling in. And once again, online transactions have maintained their brisk and healthy growth from years past.

Cyber Monday chalked up record sales, rising a reported 17 percent from 2012 according to USA Today. Cyber Monday, the Monday after Thanksgiving, has been embraced by the media as a flashpoint date for online retail sales during the traditional holiday shopping cycle. The convenience of online shopping versus the hassle of holiday shopping traffic gets the consumers interested. Combining that convenience with the staggeringly low sale prices of the time period and suddenly the appeal of online shopping becomes apparent for folks looking to get their holiday shopping done inexpensively and hassle free.

So with the boom in online shopping, there exists a disparity in sales tax in some instances. This isn’t something that comes up too often in Delaware, the original home base of Host Merchant Services. But many states have sales tax for purchases, and are finding it difficult to compete with the surging online retail business.

While legislation in some states requires sales tax be paid on some online transactions, most sales are still untaxed. In many states that translates into a 5-10 percent price advantage for the online vendor. But it also is a 5-10 percent disadvantage for local brick-and-mortar stores that not only collect sales taxes, but also pay property taxes, employ local residents and support local causes.

Thus there’s been a movement to level the playing field by attacking the sales tax disparity. The Marketplace Fairness Act is the solution to the sales tax disparity. The marketplace fairness act is:

“Marketplace Fairness Act of 2013 – Authorizes each member state under the Streamlined Sales and Use Tax Agreement (the multistate agreement for the administration and collection of sales and use taxes adopted on November 12, 2002) to require all sellers not qualifying for a small-seller exception (applicable to sellers with annual gross receipts in total U.S. remote sales not exceeding $1 million) to collect and remit sales and use taxes with respect to remote sales under provisions of the Agreement, but only if such Agreement includes minimum simplification requirements relating to the administration of the tax, audits, and streamlined filing. Defines “remote sale” as a sale of goods or services into a state in which the seller would not legally be required to pay, collect, or remit state or local sales and use taxes unless provided by this Act.”

Which means out-of-state online, catalog or remote would need to collect sales tax at the time of the transaction, just as local retailers are required to do. For this to happen each state would have to simplify their sales tax laws, making it easier for national vendors to calculate the tax and manage it.

The Marketplace Fairness Act would pave the way for states to require online sellers from out of state to begin paying the sales tax they’ve escaped for years. Senator Dick Durbin (D-Ill.) said “The Marketplace Fairness Act would level the playing field for small businesses by allowing states — if they so choose — to treat brick and mortar retailers the same as remote retailers.” Durbin, who is sponsoring this bill, is best known for authoring the Durbin Amendment, a piece of legislation that caused much controversy in the Payment Card Industry when enacted.

The act passed the Senate. But has yet to be voted on in the House, with all signs pointing to it not passing the House.

There’s been an uptick in media coverage and analysis of this bill. Essentially the verdict is that the increased sales volume from the holiday shopping season is going to push the political infrastructure to once again address the issue of state sales tax and online merchants.

And that raises the most interesting question of all for the credit card processing industry:  Is the global aspect of online shopping going to take a huge step towards pushing sales tax to a federal layer and remove it from the states? 

That’s a very big picture outlook on the issue. But as online shopping becomes more and more prevalent, the issue gains traction. The world is becoming a pretty tiny place due to the saturation and convenience of communication. You can video-call people on the other side of the globe instantly with your smartphone right now. Mobile Wallets and NFC are seeking to make it so that you can wave your magic wand, or iPhone, and pay for things instantly. State based sales tax laws look to fall behind the curve of quick evolving technology. Five, ten, even fifteen years down the line the way we make purchases and the marketplace wherein we make those purchases may have evolved past the scope state sales tax. The Marketplace Fairness Act seems to be just a precursor to a larger movement afoot in the retail sales industry.

Isis Mobile Wallet is Here

Isis Mobile Wallet Debuts Using NFC Technology

A joint venture between AT&T, Verizon Wireless and T-Mobile known as Isis Mobile Wallet has released a revolutionary mobile payments app that promises to change the way people pay for goods and services. The trio of mobile service providers are ecstatic to finally debut this mobile payment platform right before Black Friday and the rush of the holiday shopping season, as this technology lets consumers conveniently utilize their mobile phone to pay for goods and services. Use of the platform makes it easier for merchants to accept a wider variety of payments and the Isis system itself encourages repeat purchases through loyalty programs tied into the app and its software.

The debut of Isis also heralds a huge step forward for Near Field Communication technology (NFC), a topic we’ve been consistently covering since our Official Merchant Services Blog began.

What Is the Mobile Wallet Platform?

The Isis Mobile Wallet platform is a completely free mobile application that utilizes NFC technology to allow consumers to pay for purchases by waving their mobile device in the air at a terminal that captures the pertinent information out of thin air.  The mobile payment industry has been dealing with one large obstacle from NFC recently, as Apple hasn’t made its iPhones compatible with NFC. And so an Isis representative said that iPhone support would come at a later time. Until then, the app is available on all other compatible phones, but users should be aware that downloading the app could cost money if they are not subscribed to a monthly plan with unlimited data.

 

How the Platform Works

The NFC technology used in the mobile payments app allows mobile devices to transfer information when they are tapped together.  Merchants who use devices with this technology can accept payments quickly and securely from customers who have compatible devices. But wait, there’s more.

Mobile payments represent just one of the benefits of the Isis app.  Merchants can offer loyalty rewards to customers through the app.  These rewards can be earned and stored directly on a mobile device. We’ve delved into some of these types of incentives in our coverage of the Barclays bPay app, as well as social gifting articles. The basic idea of what’s happening is the app is giving customers yet another avenue for savings through their mobile device, in hopes to spur more purchases. Discounts are automatically deducted from a sale when Isis is used to pay for a product or service.  There’s no need for merchants to have cards or keychains printed, and customers do not have to worry about keeping track of dozens of loyalty cards.

Some specific incentives that are tied with the Isis debut: Isis Mobile Wallet customers can use My Coke Rewards and Isis to get three free drinks at select vending machines, while Jamba Juice is giving away 1 million free smoothies to Isis users. Purchases made from an American Express Serve account through the Isis wallet are eligible for a 20 percent discount (up to $200).

A PIN is used to protect personal information if a phone is lost or stolen.  The wallet can be locked when a phone is lost to prevent information from being breached.

Phone Compatibility With NFC Technology

NFC technology requires a cellphone user to have personal payment information stored on their phone.  The sensitive nature of this information means that extra precautions must be taken.  An enhanced SIM card that specifically details that it has been made for secure data storage must be used in conjunction with the application. Interested customers will have to get an enhanced SIM card to run Isis. They will also have to download the app on Google Play or get signed up at retail stores run by the three carriers.