Credit Cards Online Information

CHAMPIONSGATE, Fla. -- TransUnion, a leading global information solutions company, today led a general session panel discussion entitled "Gearing up for Bankruptcy Reform - A Unique Industry Perspective" at the 14th Annual Credit Card Collections Conference in ChampionsGate, Florida.

The panel was comprised of industry leaders from Citibank; the Association of Independent Consumer Credit Counseling Agencies; Money Management International, a credit counseling company; and a leading bankruptcy law firm. Participants discussed their respective roles in preparing for the bankruptcy reform laws that went into effect today. The panel also addressed new technologies and processes aimed at helping lenders, collection agencies and credit counseling companies more effectively work together in the post-reform environment.

Addressing a crowd of more than 200, panel moderator Mike Rosenthal, director of Debt Management Solutions at TransUnion, initiated the discussion by saying, "some innovative tools have entered the marketplace to assist credit grantors in devising treatment strategies that match an individual consumer's financial situation. Our panelists today represent industry leaders who are adapting and improving their roles based on this technology and on the needs of both consumers and businesses."

Earlier this year, TransUnion announced a debt management model, which credit counseling companies can use along with their core services to quickly assess whether consumers exhibit strong indicators for rehabilitation through temporary budget restructuring or a debt management plan. The score also assists lenders in making objective decisions to offer improved concessions, such as lower minimum payments, reduced interest rates or the removal of late penalty fees to those consumers who are most in need.

In addition to the bankruptcy reform discussion, TransUnion shared insights during the conference's "Collection Technology Showcase" on October 16. Michael Browning, president of TransUnion's direct marketing agency, Douglas-Danielle, contributed to a panel discussion on Online Collections. TransUnion offers an Online Payments solution that provides collectors with a customized Web site for collecting past-due payments that is cost-effective and less confrontational for consumers than traditional collection methods. Kevin Derbyshire, senior consultant in TransUnion's Analytic Decision Services group, shared his expertise in a panel discussion on Scoring and Strategy Management. In the scoring arena, TransUnion offers incidence-based models to help collections organizations identify which customers are most likely to pay in order to prioritize work effort and apply the most cost-effective treatment strategies.

# posted by Medical Information : 1:49 AM  0 Comments

SOME $36 billion is likely to be spent at Web "e-tail" stores this year, up 145 percent from 1998. That estimate comes from shop.org, a trade association for online retailers.

Stressed-out workers are learning the value of e-shopping during their lunch breaks, or at midnight from their computer at home. And for the first time, you're seeing an explosion of Internet credit cards.

"Some of the very best and very worst cards are now offered on the Web," says Robert McKinley, president of CardWeb, a credit-card tracking service (www.cardWeb.com)

With a Web card, you apply online, get statements electronically or by mail, monitor your account online and pay by computer, too. Old-fashioned folk can still opt to pay by check.

For people seeking more credit this Christmas, the special appeal of Web cards is their speed. You give the same information you would in a mailed application. Approval (assuming you qualify) might come in just half a minute. From that moment, you can make purchases online.

At Citibank, however, plastic has become uncool. Instead, Citibank is offering ClickCredit, a virtual card (www.clickcredit.com). It works like a credit card but exists only in Citi's computer. You use it solely for making purchases on the Web.

ClickCredit offers the usual credit-card bells and whistles, such as frequent-flier miles or cash-back rewards for frequent shoppers. The most desirable customers pay no annual fee and a 9.9 percent variable interest rate on unpaid balances. (Poorer credit risks pay 18.55 percent and perhaps a $50 annual fee.)

Here are McKinley's two favorite cards on the Web, plus the low rates they offer their better customers. Each has an introductory program, with low or zero rates for the first few months. Neither charges an annual fee.

(Who's a "better customer?" People who make payments on time and carry unpaid balances, or at least use their cards a lot. If you don't qualify, these issuers will charge you more.)

Wingspan Platinum Visa (www.wingspan.com) is issued by BankOne at a fixed 9.99 percent. With Wingspan, you get 5 percent off the cost of online purchases from 28 merchants.

NextCard Visa (www.nextcard.com) is issued by NextBank. You apply for a standard card with a fixed 15.9 percent rate. Once approved, you could be offered a rate as low as 9.9 percent, depending on your credit profile.

"That's fuzzy pricing," McKinley concedes, but he likes NextCard's rich rewards program. You get more frequent-flier miles per dollar spent than on any other card. But to get them free, you have to carry unpaid balances.

When checking a card's Web site, always click on the phrase "terms and conditions," to see what else the issuer may charge. For example, both of these cards punish people who pay late, pay less than the minimum or go over their credit limit.

Transgressors lose their low fixed rates. NextCard currently charges as much as 23.2 percent on unpaid balances, for those who pay less than the minimum. Wingspan goes to 22.99 percent for certain late payers.

Web credit cards provide the same fraud protection you'd get from any other credit card. Officially, you're liable for the first $50 in fraudulent charges. Most issuers, however, cover even that.

As for the bad apples, McKinley names three: Future Card Visa, First National Credit Card Visa and Global 1 Visa or MasterCard. They charge big fees up-front, substantial monthly fees and high interest rates.

Global 1, for example, charges $348 in setup fees, against a minimum credit limit of just $375 - which wouldn't leave you much to spend. First National charges $169, against a credit limit as small as $250. Even if your limit is higher, you're starting out in debt to the bank.

Global and Future didn't return calls. First National's Molly Fleming calls high fees the natural result of accepting people with poor credit.

Please, if you have poor credit, skip these cheesy offers and use a secured card, instead. With secured cards, you also pay money up-front, but it goes into your own interest-paying savings account. The bank taps that money only if you don't pay your bills.

# posted by Medical Information : 1:48 AM  0 Comments

As the technology barriers to e-commerce fall, more and more small businesses are looking to take their sales online, eager to tap into a pool of online consumers that IDS projects will reach 128 million by 2002. E-commerce application and hosting service providers make it relatively simple and inexpensive for Web-enabled businesses to turn their home pages into full-fledged online stores, opening up the e-commerce arena to even the smallest businesses. However, there's a hidden danger that many newly minted e-business owners fail to take into consideration: the problem of credit card fraud.

While conventional wisdom holds that merchant fraud is the main form of credit card abuse, the reality in the e-commerce world is that the merchants are far more frequently the ones defrauded, whether through credit card theft or so-called "friendly fraud," in which customers dispute the charges but nevertheless keep the merchandise. A survey conducted by the Gartner Group this year of major online retailers has shown an average of 2.64 percent of Internet transactions are charged back, compared with 1.24 percent among bricks-and-mortar retailers. Gartner research also shows that credit card fraud is at least 10 times as prevalent online as in the physical world, accounting for 1 percent of all e-commerce transactions.

The issue may not even occur to many business owners as a potential problem. After all, in the world of the physical store-front, credit card companies typically shoulder the risk in the case of fraudulent or disputed charges. So long as the merchant can provide a receipt with a customer signature, that merchant cannot be held responsible for charges that have been approved by the card issuer.

In the online world, things are very different. Merchants are frequently surprised to discover that they are held responsible for the entire cost of charge-backs, whether due to disputed charges, credit card theft, or any other cause. This is because, more often than not in a disputed online transaction, the merchant cannot produce a customer signature, and thus cannot definitively prove that the goods or services were provided to the customer. Merchants may also be liable for "investigation" fees to the credit card company that can amount to $25,000 a month if their charge-backs are consistently over a pre-defined percentage, which in many cases is as low as 1 percent. Merchants with high charge-back rates also risk having their accounts shut down entirely.

Since as many as 98 percent of e-commerce transactions are currently conducted via credit card, online retailers have no choice but to expose themselves to these risks if they want to succeed. Other payment options, such as Internet cash, e-checks, and other mechanisms have not achieved anything like the prevalence they would need to offer a viable alternative, and, in any case, credit card transactions are preferable to other methods of payment because they provide better customer information and instant approval.

Unfortunately, no simple technology solution to the problem of card-not-present credit card transactions is on the horizon, but credit card companies have made some efforts to enhance security. Visa/MasterCard offered a scheme called security-embedded transactions (SET) two years ago, but the program proved too complicated to administer, requiring customers to download software and certificates. American Express recently debuted a feature that allows customers to create one-time-use credit card numbers. And Visa/MasterCard has begun adding a three-digit number to the back of a credit card (called CVV2) that can offer an additional level of proof-of-ownership. The problem is that customers have little incentive to participate in these programs since they're indemnified against losses by the credit card companies anyway. And neither credit card companies nor merchants are interested in making life more difficult for the online consumer.

At present, the only effective method for merchants to reduce their exposure to charge-backs is by taking steps to control fraud prior to processing the transaction. Fortunately, there are some common-sense techniques that have proven effective in significantly reducing charge-backs:

1. Employ Real-Time Processing: Small businesses typically pay significantly higher fees (as much as 66 percent higher than for physical transactions) for the ability to process card-not-present transactions; nevertheless, real-time processing is invaluable, not only for making the customer happy but also for reducing fraud. Real-time authorization from a clearinghouse such as FDR provides a first line of defense against credit card fraud, instantly notifying the merchant in the case of a stolen card or credit problem.

# posted by Medical Information : 11:42 PM  0 Comments

ENTREPRENEURS HAIL FROM HUNDREDS of disparate cities, industries and backgrounds, but one thing they have in common is an appreciation for plastic. Paying by credit card is convenient, it allows business owners to maximize their cash flow, and it offers the accumulation of rewards or points that can add up to thousands in free services each year. For regularly recurring bills, however, nothing beats the convenience of automatic bill payment, the kind typically offered online through consumer and business checking accounts.

Now, paying recurring bills automatically by credit card, which offers the best of both worlds, is catching on big with small businesses. Over the past two years, New York City-based American Express has seen its charge volume for automatic bill pay for small-business customers grow by 30 percent per year, says Karen Rosenberg, vice president of OPEN from American Express, the company's small-business trait. She sees it as a way to replace check-writing, with added benefits. "It helps [business owners] consolidate spending on the card and lets them better track and manage cash flow," she says.

American Express and its rivals, MasterCard and Visa, have all developed sophisticated online reporting tools to enable users to keep track of expenses and slice and dice them for budget purposes. Looking at a monthly or quarterly statement, business owners can see how much they're spending on utilities or subscriptions, or on overnight deliveries, says Doreen Amano, vice president of global product development at MasterCard International in Purchase, New York. "That can potentially help with negotiation with vendors when it comes to rate reduction," she notes.

For Ava Seavey, president of Avalanche Creative Services, an advertising firm based in New York City, convenience and the consolidation of expenses were key reasons to sign up for automated bill payment with half a dozen recurring vendors. Seavey's company employs only four full-time people but boasts several high-profile clients, and she only has part-time financial help from her controller and bookkeeper. "So anything I can do to save my time is worthwhile," says Seavey, who uses American Express for most business expenses. "I find that this minimizes the paperwork. Time is money, and writing checks costs money."

Then again, credit can cost money, too, if balances are allowed to slide. One finance charge or late penalty can erase a month's benefits of card use, so it's only worth doing if the balance is paid in full each month. In an effort to minimize debt, many entrepreneurs are turning to debit or check cards instead, which offer a lot of the same benefits.

"There's an overall concern about accumulated debt among small-business owners," says Diana Knox, senior vice president of Visa USA in San Francisco. She notes that business credit spending is up, but Visa has seen both business credit and debit growing by double digits over the past few years. Business owners can sign up for automatic bill pay with Visa and earn points or rewards through the Visa check card, just as they would with a credit card. And through its online reporting tool, Visa Information Source Select, launched this past summer, entrepreneurs can view all their credit and signature-based debit transaction information in one place.

# posted by Medical Information : 11:41 PM  0 Comments