The last presidency (as we know it)?

August 31st, 2013

The president of the world’s oldest constitutional democracy announced today, that as a government of the people, by the people and for the people, he made a decision to seek authorization for the use of force from the American people representatives in Congress. In a following speech, Secretary of State, Kerry, suggested: “to discuss this directly with the American People”.

By giving up his presidential authorities, president Obama might have initiated a process, which would eventually change presidency and Congress forever. The quest for the voice of the American People could easily grow beyond the current debate regarding acting in Syria.

Though one can argue that under American constitutional law, a US president is not authorized to declare war, and that for this exact reason the Framers of our Constitution, required such a decision to be approved by the Congress, presidents have ignored same constitutional requirement for decades.

Like it or not, at the end of the day, the president of the United States needs to be able to make a decision. Same chosen one must be strong enough to act when action is needed. Right or wrong, when you are the Commander-in-chief – it’s your call…

It may very well be that such decisions are better made by the “People”, rather than by one person, which may not be moral enough, or have the stomach to make the call, yet if this is indeed the case, why stop at Congress?

We need to remember that the Framers of our Constitution were not familiar with Facebook… If indeed we wish to “discuss this directly with the American People” and put it to vote, we don’t need to wait full nine days for the Congress to act. The American People can make the call today, online, and have the issue resolved, one way or another…

Though president Obama declared today: “I wasn’t elected to avoid hard decisions”, he avoided from making one today. If the American People can no longer choose one person, which is capable of making a decision, the mechanism of decision making might needs being changed!

Gidi Argov, Founder and CEO

Largest card processing antitrust settlement

July 14th, 2012

Visa Inc, MasterCard Inc & several US acquiring banks have agreed to settle an interchange fee and merchant discount antitrust litigation. The suggested settlement, still pending a judge approval, is setting a new industry record – amounting to $7.25 billion!

The Credit Card Processing Blog has repeatedly posted regarding the lack of transparency currently existing in the credit card processing industry. Taking a look at our latest posts: Rolling Reserve – the fine print, A new way to shop for a merchant account and Credit Card Processing – The right to know are three good examples.

One of the plaintiffs’ allegations was that Visa, MC & the acquiring banks are collaborating to directly and indirectly disable merchants from mitigating credit card costs. In order to mitigate costs one first need to be familiar with all relevant facts and understand the data gathered. Lack of transparency as well as artificial complexity does not enable merchants to effectively negotiate fees.

On top of the suggested settlement amount, the associations will now allow merchants, for the first time, to add a surcharge when accepting cards. Though such will not apply in: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma & Texas, were such practice violates existing state discrimination laws, it is a huge shift from Visa’s and MC’s rules – prohibiting retailers from charging an additional fee when processing a credit card transaction.

Hopefully this historic suggested settlement would direct the associations towards transparency and simplicity for the benefit of all.

Gidi Argov, Founder and CEO

Credit Card Processing – The right to know

March 14th, 2011

One could have expected, that in March 2011, when US most embarrassing secrets are all in the open, getting access to Visa and MasterCard rules would be an easy task. Surprisingly as it may sound, this is not the case.

Visa and MasterCard both, disable the general public, as well as merchants, ISOs and IPSPs access to the rules which are only shared with Members. This lack of transparency generates an incoherent processing market, in which, each acquirer, comes up with its own set of processing “rules”, all based, believe it or not, on same rules set by the associations…

From a simple MCC definition, up to complex aggregation models, each acquirer will present its own interpretation and enable a different processing flow.

While most acquirers will enable FX merchants to report under MCC 6211, others will demand same activity to be reported under the notorious MCC 7995.

Same would apply to different aggregation models – some acquirers would religiously argue that aggregation or IPSP models are not supported by the associations, while others would happily enable different models to run through them.

Regional processing is also interpreted differently by different acquirers. Some would request a real entity, within their region, to enable a merchant to process through them. Others would accept a shell entity, or a subsidiary which is not directly related to the processing flow, up to acquirers that believe that merchants coming from different geographies can process through them.

It’s about time the associations publicize the rules, and eliminate the need to use “experts” that have “first hand access” to “the rules” as well as “experience” with different processing “Schemes”.

Until such occurs, the associations’ policy to maintain opacity with regards to credit card processing rules effectively generates a ‘black market’ environment, where neither rules nor logic applies. Inventive solutions can always be reached with the right acquirer.

Gidi Argov, Founder and CEO

iPhone might bypass the credit card associations

January 25th, 2011

Rumors say iPhone 5 may include Near Field Communication (NFC) technology. If Apple will indeed equip its next iPhone generation with NFC technology, it can change the way we pay.

NFC technology enables easy data authentication and therefore facilitates safely transmission of financial transaction data. iPhone 5 could easily replace the physical plastic card and communicate directly with retailers’ terminals.

Looking one step forward, Apple can turn the iPhone 5 into a fully functioning eWallet, bypassing the credit card associations altogether! As Apple already holds balances on iTunes gift cards, it can connect same balances, as well as pre-set bank checking accounts, to an iPhone 5 device and user, enabling same user to perform purchases using nothing but his new iPhone 5 device.

It’s still not clear if the upcoming iPhone 5 will indeed include NFC technology, nor if Apple is to take that extra step generating a new way of pay, yet assuming it does, with the current adoption pace of new iPhone apps, we might see the change coming our way sooner than we think.

Gidi Argov, Founder and CEO

Credit Card Processing Tokenization

December 13th, 2010

There’s a lot of buzz around Tokenization lately and for a good reason. Format Preserving Tokenization™ is a rising data security model that can be used alone or to augment strong encryption to benefit companies that accept credit card numbers, including credit card processors.

Here’s how it works: Tokens are meaningless surrogate values that replace credit card numbers in systems, applications and databases, while the encrypted values they represent remain locked in a central repository, called a data vault.

This provides a number of benefits for companies that need to protect credit card information, including: safe internal and external tokens mobility, credit card data format preservation and taking data, applications and systems out of scope for Payment Card Industry Data Security Standard (PCI DSS) compliance and audits.

Several industry organizations are working on tokenization definitions, standards and guidelines. The PCI SSC Scoping Special Interest Group (SIG) is working on definitions and the application of tokens as it relates to PCI DSS and the Accredited Standards Committee X9 is working on a standard to define tokenization requirements related to credit card data in the financial services industry.

Format preserving tokens enable practical applications, such as: post authorization sales and marketing analysis, analytics, loss prevention and fraud detection. For example, a data warehouse program can use format preserving tokens to determine what type of credit card – standard, private label or gift card – was used for a purchase. In this scenario, the data warehouse contains only tokens, not the actual card numbers.

A word of caution for merchants: There is no such thing as token portability between credit card processors. Because of this, companies need to be cautious of vendor lock-in when outsourcing tokenization to protect cardholder data to their payment processor. This becomes a problem when the company decides to change processors, because the tokenized values are not transferrable. The new credit card processing company has no way to determine what credit card number is linked to each token, so the data is effectively lost.

The solution: In-house tokenization: The way to avoid this problem is for merchants to tokenize credit card data in-house using a commercial off-the-shelf tokenization solution that’s properly maintained by the vendor.

Gary Palgon,
CISSP, Vice President, Product Management, nuBridges