From the Retail Payments Risk Forum December 5, 2011, The future of mobile payments is explored. Although mobile payments have been much slower to develop in the United States than many industry observers had predicted, there have been a number of encouraging recent developments. Starbucks, for example, has processed more than 20 million mobile payments since launching its app, and the Chicago Transit Authority’s new fare collection system will be able to accept mobile payments starting in 2013. Still, despite these small successes, the United States has not seen the mobile phone really take off as a vehicle for point-of-sale payments.

The Retail Payments Risk Forum recently interviewed David Evans, a payments industry consultant and the founder of Market Platform Dynamics, in a podcast exploring some of the challenges facing widespread mobile payments adoption. Evans maintained that a couple of obstacles have kept mobile payments from taking off in the United States. “Barrier number one is that there is not a very persuasive mobile payments alternative for consumers to use at the point of sale, and the second is that there’s really not the technology at the point of sale capable of processing a mobile payments-type transaction.”

In addition to these barriers, he said, is the simple fact that most consumers are satisfied with the way things are. Evans explained, “I can pull out a credit or a debit card at the point of sale, I can swipe it, and it works beautifully. Takes about a second. No fuss, no muss—the clerk knows what to do. The technology is all there. So we have this wonderful system that works really well right now that’s extremely efficient.” To change the status quo, a compelling value proposition must emerge for all parties. “Someone’s going to have to come up with a really great alternative that adds value to the merchant and adds value to the consumers to make both of them want to do something different than [what] they are currently doing,” said Evans.

Regarding the prospects for mobile payments outside the United States, Evans said, “I think that where we are going to see mobile payments take off around the world is primarily in countries that do not already have a very well-developed payment card industry with acceptance at the point of sale and that have very well-developed mobile phone systems.”

The role of different types of market players has been a major source of debate among those forecasting mobile payments. Many disagree how the mobile carriers, such as Verizon and AT&T, will fit into the new landscape. Evans predicted that “the likely role of the carriers in payments is basically being a pipe.” He stressed that mobile carriers do not have the expertise to operate mobile payments and are more likely to become pipes for others who will develop mobile payments alternatives.

When asked about his predictions about the type of technology that will ultimately support mobile payments, Evans said that it was still too early to know. However, he did say that “it’s really the solution that is going to drive the adoption of a particular acceptance technology at the point of sale, rather than the acceptance technology driving the solution.” There are clearly still a lot of unknowns with regards to mobile payments, and Evans wisely concluded that “we should talk about this in 10 years when we may actually know the answer!”

By Jennifer C. Windh, a payments risk analyst in the Retail Payments Risk Forum at the Atlanta Fed

In some respects, the Common Short Code Administration (CSCA) is to Common Short Codes as ICAAN and Whois are to Domains. Common short codes are administered by the CSC Administration (CSCA) for wireless carriers. In addition, the CSCA oversees the CSC Registry, which provides the technical and operational aspects of CSC functions and maintains a single database of available, reserved, and registered CSCs.

With mobile messaging exploding, CSC’s are certain to become as valuable as URL’s. Businesses cannot buy short codes, rather they lease them for a specified period of time, and for a specific campaign type. Leases are offered at different prices fromt the four provider types (see below).

What is a Common Short Code (CSC)?

Common Short Codes (CSCs) are short numeric codes to which text messages can be sent from a mobile phone.

• They’re compatible across all participating carriers.
• CSCs are either five-digit or six-digit numbers.
• CSCs can be leased by anyone.
• USA CSC’s are not recognized by phones issued in other countries, which are developing their own CSC’s.
• Applications route all messages addressed to a registered CSC number from any and all wireless networks initiating a message.
• There are four (4) groups of companies that work together to bring CSCs to wireless subscribers; they include content providers , application providers , connectivity aggregators, and wireless service providers. Merchants lease short codes from a provider.

Should I lease my short code directly from the CSCA?

Not necessarily.  If you’re ready to begin a campaign, research what solution you’ll be using for delivering and managing your SMS messages and payments first. They may offer a bundled package. If you’re not ready and have the funds to spare, you may want to reserve your short code to ensure availability when you need it.

501(c)(3) Non-profits must lease directly from the CSCA to be eligible for a 60% reduction in published rates.

How much does a short code lease cost? On the CSCA site 1/1/2012, registering and leasing a CSC costs $1,000 per month for each “Selected CSC” and $500 per month for each “Random CSC.” THESE FEES ARE NON-REFUNDABLE REGARDLESS OF WHETHER ANY WIRELESS CARRIER AGREES TO ACTIVATE YOUR CSC. The Registry must receive payment in full for the duration of the registration at the time your application is approved. The CSCA offers Registration Terms of 3 months, 6 months and one year. Because fees are due up front, if you register a Selected CSC for three months the cost is $3000.00, and Random CSC for three months is $1500.00.

Do I need to register a CSC for each type of campaign? Yes.

Are there discounts for charities? Yes, provided that all conditions of the Mobile Giving program are complied with. That includes donations only, no recurring billing, and not product sales.

LINKS:

More information about the Mobile Giving program.

Official Common Short Code (CSC) directory (links to CSCA) and information center.

Official CTIA Guidelines for Mobile Giving (links to CTIA PDF)

@EDInomics horrifying. I commend Johnson for having a global standard.

CenPOS – CenPOS Mobile app in itunes – http://t.co/SnJ9RDrn #iTunes

On October 27, 2011, the IRS announced that backup withholding will be postponed for one year. Backup withholding will be applied to amounts paid after 12/31/2012.  The penalty relief will not, however, extend to entities that fail to file or make no effort to file 2011 Forms 1099-K as required.

Bottom line: If your IRS TIN does not match your merchant account information, then you could be subject to penalties.
“First Data continues to review State regulations related to Section 6050W backup withholding.    Based on our research to date, we currently believe that the backup withholding delay will apply to both Federal and State.    As a result, First Data is in the process of adjusting our project timelines to support backup withholding for missing / invalid TINs as of January 1, 2013. Although the delay impacts activation of backup withholding processes, development efforts continue for timely implementation.
We are in the process of researching IRS plans for the CP2100 process, expected for the Fall of 2012. Once we have additional details we will notify you.
The above announced changes do not impact our client’s responsibility to obtain valid Tax Filing Names and Tax Identification Numbers from their merchants as applicable. This information is required to ensure accurate filing of the form 1099-K reporting to the merchants and the IRS.”

Related article, Jan. 1, 2011 Deadline for credit processing reporting to IRS looms.

The CenPOS Apple Mobile app provides CenPOS customers with an easy way to accept credit cards on their mobile devices. The application runs on IPhone, iPad and iTouch, and works with any compatible ID Tech device.

http://itunes.apple.com/us/app/cenpos-mobile/id469066557?ls=1&mt=8
CenPOS Mobile transforms the mobile device into a secure credit card terminal, allowing the user to accept card swiped, hand-keyed and/or tokenized transactions and connect to all of the CenPOS payment acceptance platforms.

The CenPOS Mobile Apple app acts as an entry point to the CenPOS network allowing the mobile user to view detailed reporting for transactions that occur throughout the business enterprise, not only on their CenPOS Mobile device. Furthermore, the app integration does not require the user to change their financial services providers.

CenPOS Mobile Features

•     Receive credit card authorizations quickly and securely on the go.
•     Full transactional array including: Sale, Repeat Sale, Create Token, Authorization, Force, Return, Credit, and Void
•     Capture signatures electronically by having the customer sign on the Mobile Device.
•     Deliver customized receipts instantly to customers by email.
•     Easy enterprise level reporting that allows you to view all payment activity.
•     Payments made through the CenPOS Mobile device, retail location, and ecommerce website can all be seen in one location.
•     Generate credit card authorizations by either swiping a credit card, manual entry, or through the use of a token.
•     Payment information is hosted and not stored on mobile device.
•     Free software and no surcharge to use any other CenPOS products

About CenPOS : “Creating efficiencies through payment innovation”

Founded in 2009, Miami-based CenPOS is a payment technology provider committed to providing its customers and partners with innovative solutions for today’s rapidly evolving consumer payment choices. CenPOS is an intelligent payment-processing network that streamlines the payment experience for businesses and consumers by using state-of-the-art technology to replace inefficient, outdated payment systems.

CenPOS sales: Christine Speedy direct (954)942-0483, HQ (305) 630-7960, or toll free: (877) 630-7960.

ID Tech Devices are available through 3D Merchant Services

This is a great question. Should non-profits have a field on their mail order donor response cards? Reading the 2011 Visa Card Acceptance Guidelines for Visa Merchants, it’s still  open to interpretation as to whether to ask for CVV on mailings. Here’s the official excerpts:

General Card-Absent Transaction Procedures

Pg 46 “Always ensure that, at a minimum, you collect the following details from your customer:

• The card account number
• The name as it appears on the card
• The card expiration date as it appears on the card
• The cardholder’s statement address”

Pg 46 “If you are taking an order through the mail or via a fax:

• Obtain a signature on the order form .
•  Always retain a copy of the written order .
• Get proof of delivery”

Pg 48  “A cardholder’s CVV2 may never be stored as a part of order information or customer data . The storage of CVV2 is strictly prohibited subsequent to authorization.”

“An initial, or set-up, recurring transaction should be processed the same as any MO/TO or Internet transaction . If set up by mail or telephone, you should submit both AVS* and CVV2** queries with the authorization.

The sales receipt for an initial recurring transaction must include the following information:

• The phrase “recurring transaction.
• The frequency of the charges.
• The period of time the cardholder has agreed to for the charges.”

* In certain markets, CVV2 is required to be present for all card-absent transactions . ** In some markets, if the transaction is approved, but the CVV2 response is a no match, the merchant is protected against fraud chargebacks.

In summary, the merchant can leave the CVV off and reduce risk, but should use the correct indicator for authorizations, “You have chosen not to submit CVV2.”

If the merchant has a history of mail order fraud, then the merchant may want to collect the CVV2 using a lockbox service to reduce risk. If the merchant is retaining response cards, then the response card should be designed so that the CVV can easily be detached after the initial authorization, and securely shredded. If the response card is scanned, the fields with sensitive data cannot be scanned.

Please note PCI DSS compliance rules always take precedence over individual card network rules.

See also, new 2011 card absent receipt requirements.

My answer to Stack Exchange Stack Overflow Q: Advice for setting up recurring billing? http://t.co/57p3GeeM