Posted by Mark Brousseau
A short video demonstrating the Canon DR 7580C Document Scanner:
http://www.youtube.com/watch?v=6arVZqpXqL8
Saturday, August 30, 2008
Convergence Still A Hot Topic
By Mark Brousseau
The convergence of payments and document automation was a hot topic at last week’s TAWPI Forums & Expo in Orlando. During a meeting of TAWPI’s Payments Capture and Clearing (PCC) Council, panelists Jim Bunn of IBML, Bo Minogue of Mavro Imaging, and John Kincade of J&B Software, offered the following tips for ensuring that a payments and document automation initiative delivers the greatest return on investment.
… Before purchasing or implementing any new technology, thoroughly review the way your operations currently do things, to avoid automating bad business processes and work rules. You want to re-engineer process flows to eliminate as many hand-offs as possible, Kincade said. And you don’t want to stop the process flow for exceptions handling.
… Be sure to benchmark and measure the throughput of every process. Minogue said organizations could do this through the use of simulation software that compares current and proposed processes. Modeling the impact of various processing scenarios helps organizations make workflow changes that deliver the most payback. And don’t put the cart before the horse: organizations should never select a technology solution until they have considered potential process improvements.
… Look at document and payments automation from an enterprise level, rather than from a departmental or process perspective. Organizations can achieve significantly higher payback by implementing solutions that reach across an enterprise, Bunn noted. Ideally, payments and document automation solutions would also link the front and back office, but Bunn said this typically is not happening.
Do you have tips for automating payments and document processing applications?
Post them below.
The convergence of payments and document automation was a hot topic at last week’s TAWPI Forums & Expo in Orlando. During a meeting of TAWPI’s Payments Capture and Clearing (PCC) Council, panelists Jim Bunn of IBML, Bo Minogue of Mavro Imaging, and John Kincade of J&B Software, offered the following tips for ensuring that a payments and document automation initiative delivers the greatest return on investment.
… Before purchasing or implementing any new technology, thoroughly review the way your operations currently do things, to avoid automating bad business processes and work rules. You want to re-engineer process flows to eliminate as many hand-offs as possible, Kincade said. And you don’t want to stop the process flow for exceptions handling.
… Be sure to benchmark and measure the throughput of every process. Minogue said organizations could do this through the use of simulation software that compares current and proposed processes. Modeling the impact of various processing scenarios helps organizations make workflow changes that deliver the most payback. And don’t put the cart before the horse: organizations should never select a technology solution until they have considered potential process improvements.
… Look at document and payments automation from an enterprise level, rather than from a departmental or process perspective. Organizations can achieve significantly higher payback by implementing solutions that reach across an enterprise, Bunn noted. Ideally, payments and document automation solutions would also link the front and back office, but Bunn said this typically is not happening.
Do you have tips for automating payments and document processing applications?
Post them below.
Friday, August 29, 2008
Remote Deposit Capture Video
Posted by Mark Brousseau
Take a look at this neat one-minute video from National Bank of California about their remote deposit capture product.
http://www.youtube.com/watch?v=XCUP-O9wN4M
Take a look at this neat one-minute video from National Bank of California about their remote deposit capture product.
http://www.youtube.com/watch?v=XCUP-O9wN4M
Operations Tips
By Mark Brousseau
During the interactive networking lunch at this week’s TAWPI Forums & Expo in Orlando, FL, attendees shared the best operations strategy that they have implemented in the past year. Below is a list of their winning strategies.
... Go to a one-pass workflow for remittance processing, versus a two-pass environment where each document has to be handled twice. If your solutions vendor doesn’t offer this option, find one that does.
... Be sure that your processing system supports the functions dictated by your business needs.
... When developing a business case for a new processing solution, don’t forget to consider soft costs, such as maintenance and training.
... When purchasing a remittance system, be sure to do a complete cost analysis. Understand what functionality comes with the base system, and which additional modules you’ll need to support your business; ask what these modules cost. Also inform yourself about the frequency and cost of upgrades, and the resources required to implement them.
... Always get references for any solution or service that you purchase.
... Be mindful of the amount of document preparation required for any solution.
... Look for online tracking of quality and productivity in new solutions.
... As part of your cost analysis of low-volume scanners, require vendors to bring a machine into your operations that your people can test with your documents and workflow.
... Never limit yourself to only evaluating your incumbent vendor for a replacement solution. Thoroughly look at the top two or three. Compare functionality, and where the solutions are installed. Visit sites that are similar to your own.
... Leverage remote sites for data correction. This distribution of work significantly improves throughput. One user outsourced data entry to at-home keyers, providing only snippets of images to prevent distribution of sensitive information, such as Social Security Numbers.
... Consolidate the document preparation and batching functions to reduce processing times. The best part: there are no hard costs involved in this change.
... Use the United States Postal Service for initial mail sorting.
... Consider implementing a document tracking system. One user deployed bar code wands to track batches of documents through work processes. The solution interfaces with the organization’s scanner capture processes to identify documents contained in the batches, and who the documents below (offering customer service greater visibility, faster).
... Convert from paper-check processing to electronic payment processing using remote deposit capture. This speeds processing and reduces bank fees. An international user also noted that remote deposit capture has helped his organization reduce fraud.
... Evaluate the new form identification solutions available from software and hardware vendors alike.
... Consider automating loan processing to cut processing costs and improve document control.
... Require vendors to provide line-item pricing for their solutions, rather than lump-sum costs that hide over-priced components.
... Build strong relationships with your IT department … before you need them.
... Test and validate document design changes before going into live production.
... Involve your customer service group early on as you prepare to deploy a new solution. This will streamline training, and help you identify potential issues.
... Benchmark, benchmark, benchmark.
... Measure and capture statistics for each processing function so you can easily identify areas for improvement.
... If you haven’t done so already, implement an employee pay-for-performance plan.
... If you have multiple processing sites, be sure to implement load balancing.
... Define important capture fields early on when developing your system requirement.
Do you have operations tips to share?
Thursday, August 28, 2008
Online Card Processing
Posted by Mark Brousseau
An informative video from HSBC on online card processing:
http://www.youtube.com/watch?v=fSmcG7bP5EY
An informative video from HSBC on online card processing:
http://www.youtube.com/watch?v=fSmcG7bP5EY
Motivating Survivors of Layoffs
Posted by Mark Brousseau
An interesting and timely article from the New York Times:
After a Downsizing, How to Motivate?
By KELLEY HOLLAND
DOWNSIZING. Restructuring. Headcount reduction. Whatever they are called, layoffs instill dread, guilt or both in managers. The loss of a job is among life’s most traumatic events, and even many hard-nosed managers hate to force that experience on their colleagues.
Because of this, managers can become so consumed by the prospect of firing people that they fail to adequately reassure and remotivate the employees who remain.
But they make this mistake at their peril. Study after study has found that employers who eliminate jobs may not bolster productivity over the long run. Too often, their anxious and overworked remaining employees become risk-averse and unproductive, or leave for other jobs.
As companies hire new workers or turn to outside vendors to compensate, the short-term savings from layoffs can evaporate.
The wobbly economy is producing a steady stream of layoff announcements — the number of extended mass layoffs rose 8 percent in the second quarter, based on preliminary numbers, versus the period a year earlier. So it’s more important than ever for managers to understand how best to handle these downsizings, not just for those who lose their jobs, but also for those who are still working.
Some experts believe that workers have developed a certain amount of resiliency after decades of corporate firings and layoffs. That may be true for some of them, but others are still hit hard when co-workers lose their jobs, and managers need to let each employee process the cutback in a way that seems appropriate.
Warren Bennis, a professor of management at the University of Southern California and the author of “On Becoming a Leader,” laid out a core precept for managers dealing with layoffs.
“Respect is the key word,” Professor Bennis said. Too often, he said, “business today just seems to be so callous.”
He decried bureaucracies that “lay down edicts” about cutbacks and treat employees as if they were invisible or indistinguishable — the opposite, he said, of respecting them, which in essence means seeing them clearly and individually.
“It seems to me that the main job of any leader is to help define reality,” Professor Bennis said. Leaders who can help employees understand the reasons for layoffs, and also acknowledge the pain incurred, will have a better shot at rebuilding trust and motivating those who remain.
Employees need to hear right away where cutbacks are being made, and whether additional reductions are coming. Many employees wonder about the fairness of layoffs, and managers can go a long way toward re-establishing trust if they can describe sacrifices of their own, like pay cuts or forgone bonuses.
Managers also need to listen to employees’ reactions to layoffs. This can help employees move on and focus on new responsibilities and objectives.
For example, ComPsych, a provider of employee assistance programs, runs seminars at companies that have eliminated jobs; the first half of the program often consists of employees talking about their reactions to the layoffs, said Anita Madison, the company’s vice president for training and consulting.
Articulating an organization’s goals is particularly important during layoffs. Some managers solicit employee ideas about how to reach those goals. That can help with motivation — especially when employees are being asked to do more with less.
“Often the first casualty in a downsizing is employee morale,” said Wayne F. Cascio, a professor of management at the University of Colorado, Denver, who has studied the effect of layoffs on productivity. Employees who outlast a round of staff cuts, Professor Cascio said, “are looking for signals, and they want to know how they are going to be better off.”
“They want to know if they have a future,” he added.
Any organization can reach out to employees after layoffs, but sometimes the process can be simpler in smaller settings.
Reflexite, a maker of reflective safety products and films, laid off more than half of the 75 employees in one division in 2002, said Michael F. Foley, the president and chief executive. The division had lost its biggest customer, and the weak economy was impeding the search for replacements.
Mr. Foley recalled gathering the division’s remaining employees on the day of the layoffs.
“We got everyone together and said: ‘Here’s what we did, here’s why, and we don’t intend to do any more. And here is the expected outcome,’” he said. Managers also described the pay and other benefits that the laid-off workers received.
Employees had been involved in the discussions about the business, Mr. Foley said, so the layoffs were not a surprise.
In fact, he said, because Reflexite is employee-owned, everyone understood the financial issues, and “there was relief that it was over.”
“The general reaction was, ‘Thanks for trying all you could,’” he added.
The division in question has since rebounded, and Reflexite was even able to offer jobs to many former employees, Mr. Foley said. All but one of them came back.
An interesting and timely article from the New York Times:
After a Downsizing, How to Motivate?
By KELLEY HOLLAND
DOWNSIZING. Restructuring. Headcount reduction. Whatever they are called, layoffs instill dread, guilt or both in managers. The loss of a job is among life’s most traumatic events, and even many hard-nosed managers hate to force that experience on their colleagues.
Because of this, managers can become so consumed by the prospect of firing people that they fail to adequately reassure and remotivate the employees who remain.
But they make this mistake at their peril. Study after study has found that employers who eliminate jobs may not bolster productivity over the long run. Too often, their anxious and overworked remaining employees become risk-averse and unproductive, or leave for other jobs.
As companies hire new workers or turn to outside vendors to compensate, the short-term savings from layoffs can evaporate.
The wobbly economy is producing a steady stream of layoff announcements — the number of extended mass layoffs rose 8 percent in the second quarter, based on preliminary numbers, versus the period a year earlier. So it’s more important than ever for managers to understand how best to handle these downsizings, not just for those who lose their jobs, but also for those who are still working.
Some experts believe that workers have developed a certain amount of resiliency after decades of corporate firings and layoffs. That may be true for some of them, but others are still hit hard when co-workers lose their jobs, and managers need to let each employee process the cutback in a way that seems appropriate.
Warren Bennis, a professor of management at the University of Southern California and the author of “On Becoming a Leader,” laid out a core precept for managers dealing with layoffs.
“Respect is the key word,” Professor Bennis said. Too often, he said, “business today just seems to be so callous.”
He decried bureaucracies that “lay down edicts” about cutbacks and treat employees as if they were invisible or indistinguishable — the opposite, he said, of respecting them, which in essence means seeing them clearly and individually.
“It seems to me that the main job of any leader is to help define reality,” Professor Bennis said. Leaders who can help employees understand the reasons for layoffs, and also acknowledge the pain incurred, will have a better shot at rebuilding trust and motivating those who remain.
Employees need to hear right away where cutbacks are being made, and whether additional reductions are coming. Many employees wonder about the fairness of layoffs, and managers can go a long way toward re-establishing trust if they can describe sacrifices of their own, like pay cuts or forgone bonuses.
Managers also need to listen to employees’ reactions to layoffs. This can help employees move on and focus on new responsibilities and objectives.
For example, ComPsych, a provider of employee assistance programs, runs seminars at companies that have eliminated jobs; the first half of the program often consists of employees talking about their reactions to the layoffs, said Anita Madison, the company’s vice president for training and consulting.
Articulating an organization’s goals is particularly important during layoffs. Some managers solicit employee ideas about how to reach those goals. That can help with motivation — especially when employees are being asked to do more with less.
“Often the first casualty in a downsizing is employee morale,” said Wayne F. Cascio, a professor of management at the University of Colorado, Denver, who has studied the effect of layoffs on productivity. Employees who outlast a round of staff cuts, Professor Cascio said, “are looking for signals, and they want to know how they are going to be better off.”
“They want to know if they have a future,” he added.
Any organization can reach out to employees after layoffs, but sometimes the process can be simpler in smaller settings.
Reflexite, a maker of reflective safety products and films, laid off more than half of the 75 employees in one division in 2002, said Michael F. Foley, the president and chief executive. The division had lost its biggest customer, and the weak economy was impeding the search for replacements.
Mr. Foley recalled gathering the division’s remaining employees on the day of the layoffs.
“We got everyone together and said: ‘Here’s what we did, here’s why, and we don’t intend to do any more. And here is the expected outcome,’” he said. Managers also described the pay and other benefits that the laid-off workers received.
Employees had been involved in the discussions about the business, Mr. Foley said, so the layoffs were not a surprise.
In fact, he said, because Reflexite is employee-owned, everyone understood the financial issues, and “there was relief that it was over.”
“The general reaction was, ‘Thanks for trying all you could,’” he added.
The division in question has since rebounded, and Reflexite was even able to offer jobs to many former employees, Mr. Foley said. All but one of them came back.
How Telcos Can Replace Banks
Posted by Mark Brousseau
Extremely interesting 5-minute video on how telcos can replace banks.
http://www.youtube.com/watch?v=JRa86nqUCgM&feature=related
Hat tip to Les Lorenzo at Metavante for passing this along.
Extremely interesting 5-minute video on how telcos can replace banks.
http://www.youtube.com/watch?v=JRa86nqUCgM&feature=related
Hat tip to Les Lorenzo at Metavante for passing this along.
Tuesday, August 19, 2008
PayPal Still Growing
Posted by Mark Brousseau
An interesting article from the Austin American-Statesman about PayPal's plans:
PayPal doubles Austin office space
Many of the online payment company's 200 people here develop software.
By Kirk Ladendorf
AMERICAN-STATESMAN STAFF
Friday, August 15, 2008
In a little over a year in Central Texas, PayPal has grown to 200 people, most of them software developers, at its new Northwest Austin technology center.
Now, the online payments company has doubled its office space in Austin and plans to keep hiring aggressively.
Chief executive Scott Thompson offered explanations for the expansion: His company is growing fast, it needs more technical workers and it likes what it sees in Austin.
"PayPal is a technology and risk-management company more than anything else," Thompson said. "Our product development is done by engineers. They are all technology people who have a lot of talent, skills and capabilities in doing things with software."
The company is entrusting some of its most important work — software for new payment products, fraud detection and help-desk assistance —to the Austin technical team.
"It was a big decision, but we are extremely happy with what the result has been in a very short period of time," Thompson said. "We have been able to get tremendous quality and many more people than we thought. When we tell people we have openings and we are PayPal, lots and lots of people turn up. We get to pick from the best of the best because our brand in this market has a lot to it."
PayPal, which is owned by eBay, is the leading alternative payments company for e-commerce and other online payment transactions. Much of the company's transaction business is tied to eBay, but it is also expanding into other areas of e-commerce and electronic payment.
Thirty-three of the top 100 e-commerce sites in the United States use PayPal as a payment option. It is growing rapidly in Europe, and it is just starting its growth in Asia and Latin America, where e-commerce is in its infancy.
"They are the largest alternative payment company," said analyst Bruce Cundiff, with Javelin Strategy and Research in Pleasanton, Calif., who estimates that PayPal handles roughly 5 percent of e-commerce payments now but probably will double its market share to 10 percent over the next four to five years. "They are growing with e-commerce. We have them growing faster than credit card or debit card payments, but they are starting from a smaller base."
The company, with more than 60 million active customer accounts worldwide, handled $47 billion in transactions in 2007, and its first-quarter business this year was up 35 percent from a year ago. The company employs 7,000 people worldwide, and its major business operations centers are in San Jose, Calif.; Scottsdale, Ariz.; Omaha, Neb.; Dublin, Ireland; and Austin.
Thompson said the company is giving the Austin development center more responsibility because it has done very well so far.
"So far, it has been fabulous, and that type of success breeds on itself," he said. The company subleases office space in Freescale Semiconductor's Northwest Austin campus, and it is doubling its lease space to 70,000 square feet.
Some of the most interesting work being done in Austin is tied to the company's sophisticated software that detects fraudulent activity.
The software examines the online behavior of customers using PayPal and shuts down transactions involving those that exhibit fraudulent behavior patterns. The company said its loss rate to fraud is 0.27 percent, which it said is among the best in the payments industry.
PayPal's software developers work hard, Thompson said, but they get a chance to relax on the job, too.
The company break room has a pool table and a foosball table. And workers on motorized carts deliver free beverages to workers' cubicles. Sometimes the cart drivers conduct impromptu races in the halls.
The culture, Thompson said, is about moving fast and having fun doing it.
"The best part of our culture is, we have a furious desire to go fast and build stuff and have customers use products that are uniquely PayPal and very special in their lives," Thompson said.
Although other companies also do electronic payments, Thompson said, his company does it very quickly, safely and conveniently.
kladendorf@statesman.com; 445-3622
An interesting article from the Austin American-Statesman about PayPal's plans:
PayPal doubles Austin office space
Many of the online payment company's 200 people here develop software.
By Kirk Ladendorf
AMERICAN-STATESMAN STAFF
Friday, August 15, 2008
In a little over a year in Central Texas, PayPal has grown to 200 people, most of them software developers, at its new Northwest Austin technology center.
Now, the online payments company has doubled its office space in Austin and plans to keep hiring aggressively.
Chief executive Scott Thompson offered explanations for the expansion: His company is growing fast, it needs more technical workers and it likes what it sees in Austin.
"PayPal is a technology and risk-management company more than anything else," Thompson said. "Our product development is done by engineers. They are all technology people who have a lot of talent, skills and capabilities in doing things with software."
The company is entrusting some of its most important work — software for new payment products, fraud detection and help-desk assistance —to the Austin technical team.
"It was a big decision, but we are extremely happy with what the result has been in a very short period of time," Thompson said. "We have been able to get tremendous quality and many more people than we thought. When we tell people we have openings and we are PayPal, lots and lots of people turn up. We get to pick from the best of the best because our brand in this market has a lot to it."
PayPal, which is owned by eBay, is the leading alternative payments company for e-commerce and other online payment transactions. Much of the company's transaction business is tied to eBay, but it is also expanding into other areas of e-commerce and electronic payment.
Thirty-three of the top 100 e-commerce sites in the United States use PayPal as a payment option. It is growing rapidly in Europe, and it is just starting its growth in Asia and Latin America, where e-commerce is in its infancy.
"They are the largest alternative payment company," said analyst Bruce Cundiff, with Javelin Strategy and Research in Pleasanton, Calif., who estimates that PayPal handles roughly 5 percent of e-commerce payments now but probably will double its market share to 10 percent over the next four to five years. "They are growing with e-commerce. We have them growing faster than credit card or debit card payments, but they are starting from a smaller base."
The company, with more than 60 million active customer accounts worldwide, handled $47 billion in transactions in 2007, and its first-quarter business this year was up 35 percent from a year ago. The company employs 7,000 people worldwide, and its major business operations centers are in San Jose, Calif.; Scottsdale, Ariz.; Omaha, Neb.; Dublin, Ireland; and Austin.
Thompson said the company is giving the Austin development center more responsibility because it has done very well so far.
"So far, it has been fabulous, and that type of success breeds on itself," he said. The company subleases office space in Freescale Semiconductor's Northwest Austin campus, and it is doubling its lease space to 70,000 square feet.
Some of the most interesting work being done in Austin is tied to the company's sophisticated software that detects fraudulent activity.
The software examines the online behavior of customers using PayPal and shuts down transactions involving those that exhibit fraudulent behavior patterns. The company said its loss rate to fraud is 0.27 percent, which it said is among the best in the payments industry.
PayPal's software developers work hard, Thompson said, but they get a chance to relax on the job, too.
The company break room has a pool table and a foosball table. And workers on motorized carts deliver free beverages to workers' cubicles. Sometimes the cart drivers conduct impromptu races in the halls.
The culture, Thompson said, is about moving fast and having fun doing it.
"The best part of our culture is, we have a furious desire to go fast and build stuff and have customers use products that are uniquely PayPal and very special in their lives," Thompson said.
Although other companies also do electronic payments, Thompson said, his company does it very quickly, safely and conveniently.
kladendorf@statesman.com; 445-3622
Are We Vulnerable to Identity Theft?
Posted by Mark Brousseau
An interesting article from The Boston Globe about identity theft:
The breach
A loose-knit ring of hackers stole credit card data from unsuspecting US retailers. Though 11 people have been indicted, experts say the case shows how sophisticated identity-theft schemes have become.
By Ross Kerber, Globe Staff August 17, 2008
Five years ago, Albert Gonzalez allegedly used an unsecured radio link to tap into the computers of a BJ's Wholesale Club store in Miami and access customer credit-card numbers.
It was a simple trick, but it was only the beginning.
From that first break-in, Gonzalez and a ring of accomplices flew up the learning curve, prosecutors charge. They wirelessly broke into the computer networks of other stores including those operated by OfficeMax Inc., Boston Market Corp., Barnes & Noble Inc., and TJX Cos. And they apparently learned to decrypt customer PIN numbers, install sophisticated software, and park payment card data in offshore databases, in what the Justice Department on Aug. 5 called the biggest hacking and identity-theft case it has ever prosecuted - compromising more than 40 million credit and debit card accounts.
Court filings and interviews with investigators paint a picture of an international ring of 11 loosely knit conspirators from China to Ukraine, and show how quickly such criminal groups can graduate to increasingly sophisticated schemes to exploit the vulnerabilities that remain in the payment card network.
Despite the arrests, Gartner Inc. technology analyst Avivah Litan said it's too soon to relax. Though prosecutors tied the ring to some of the biggest breaches in this decade, their cases don't mention other intrusions such as one of Maine grocer Hannaford Bros. earlier this year.
Also worrisome, Litan said, was that the group allegedly was able to use fake ATM cards with real account numbers to withdraw money from bank machines, indicating they cracked the encryption of PIN numbers.
"The implications are ominous," Litan said. While many banks and retailers have begun using tougher encryption since then, some companies are still on the older standards that she called "inherently vulnerable."
Another technology analyst, Mary Monahan of Javelin Strategy & Research, said more stores have met data-security standards spelled out by Visa and MasterCard since the time of breaches like the one at TJX in 2005, which should make customers' card numbers more secure. Still, Hannaford met those standards at the time of its breach, illustrating how criminal tactics have evolved to stay ahead of defensive measures.
One lesson from this months' indictments, Monahan said, is how the hackers learned to become more sophisticated and global. "You can see that they're developing their skills over time, and transferring skills among one another," she said.
A defense attorney for Gonzalez, Rene Palomino, said his client will plead not guilty to the charges. He described Gonzalez, 27, as a self-taught computer consultant who first met several of the other defendants online.
Former informantIronically, the story of how the group of accomplices came to be begins with Gonzalez helping law enforcement officials. Though arrested in connection with theft from an automated teller machine in 2003, Gonzalez soon became a key Secret Service informant and even gave the agency security lectures, Palomino said. Gonzalez was best known for helping officials bring charges against a group known as the "Shadowcrew" after one of the online message boards that served as a marketplace for stolen payment card numbers - 1.7 million of them in all, prosecutors would charge.
Despite serving as an informant, the Justice Department claims, Gonzalez also began "wardriving" in the areas around US Highway 1 in Miami, according to this month's indictments. The term refers to the tactic of cruising in a vehicle with a laptop computer to spot unsecured connections to wireless systems maintained by various stores.
Gonzalez' partner in the wireless probes allegedly was another twentysomething, Christopher Scott, who Palomino said Gonzalez had met in online circles in Miami. Scott's attorney said he hasn't yet entered a plea.
According to the indictments, the pair first got lucky in 2003 at a BJ's Wholesale Club store, which wasn't using encryption software to protect customers' data, and accessed the account numbers of payment cards used by customers.
The next year Scott and another accomplice, described only by the acronym "J.J.," went further. Tapping into a similar access point at an OfficeMax store near the highway, they located data including customers' encrypted PIN numbers punched in when they used debit cards. They turned the data over to Gonzalez, who allegedly sent it to an unnamed coconspirator for decryption.
Filings and investigators say other stores hit by the ring included Barnes & Noble and Sports Authority, many in the Miami area. The indictments suggest the biggest breach began in July 2005 when Scott compromised two wireless access points of Marshalls' stores in the Miami area, both operated by Framingham retailer TJX Cos.
Soon the group was downloading payment card data from TJX's home servers. By the following May, in 2006, Scott had graduated to setting up a "virtual private network" connection to a TJX server, making it harder to detect the intrusion.
Next, Gonzalez brought in a Ukrainian, Maksym Yastremskiy, who prosecutors describe as an international trafficker of stolen card data who sold it on the Web. Via instant message in May 2006, Gonzalez allegedly asked Yastremskiy for help finding an undetectable "sniffer" program that would pick up customer card numbers and provide a feed of stolen data. Several days later, Scott, Gonzalez, and others installed sniffer programs onto a TJX server - likely provided by Yastremskiy, the indictment implies.
Craig Magaw, special agent in charge of the Secret Service's criminal investigative division, which led the probe of the hacker ring, said he had no evidence that Gonzalez and Yastremskiy ever met or spoke outside of their electronic communications. But their virtual connections, he said in an interview, were a common trait to criminal rings using web-based message boards.
"It's the usual M.O., where they can go to be anonymous and help each other further their activity," he said. "It's not just that they're selling the information but, if you go on these [message] boards, it's how to do compromises and giving advice. It's the criminals' playground."
Authorities arrested Yastremskiy in Turkey a year ago while he was visiting a resort. The US Postal Inspection Service confirmed to the Globe at the time that he was tied to the TJX probe.
Since then, neither the Justice Department nor Turkish officials have provided contact information for Yastremskiy or an attorney representing him.
Yastremskiy's laptop provided a trove of details including an e-mail tie to Gonzalez, Magaw said. Gonzalez was arrested May 7 at a hotel room in Miami in connection with a related hacking case to which he has also denied wrongdoing. Court papers show officials seized from him three laptop computers, and a Glock 27 automatic pistol.
Encoding blank cardsIn addition to showing how the group allegedly stole information, the indictments also shed light on how the ring may have used the data on the streets.
In 2005 and 2006, Gonzalez allegedly sold large amounts of payment card data to a person named only by the initials "J.W." This person allegedly encoded the information on the magnetic stripes of blank plastic payment cards, then used the cards to withdraw hundreds of thousands of dollars from ATMs and split the money with Gonzalez. Another unnamed San Diego purchaser also bought 100 blank payment cards from an individual in China connected to Yastremskiy in 2005, prosecutors charge.
Both examples recall cases in Florida last year in which state prosecutors won guilty pleas from six people who misused card numbers stolen from TJX. After obtaining blank cards magnetically encoded with the stolen numbers, they took the plastic to various Wal-Mart stores in Florida to buy gift cards that could be used like cash. In turn they used those cards to buy $8 million worth of expensive electronics, jewelry, and other items, officials said, returning some items for cash.
Details of how to encode blank cards with stolen account numbers are among the topics typically discussed on underground websites, security experts say; the Secret Service estimates there are 20 message boards or websites in the United States and overseas where criminals sell stolen numbers, trade tips, and form bonds like those between Gonzalez and Yastremskiy. Was theirs like an underground university? "I guess, but there's no diplomas coming out of there," Magaw said.
Or, as Massachusetts US Attorney Michael Sullivan put at a press conference announcing the indictments on Aug. 5: "There's no evidence that any of these people had PhDs."
Globe staff reporter Marion Schmidt contributed to this report. Ross Kerber can be reached at kerber@globe.com.
An interesting article from The Boston Globe about identity theft:
The breach
A loose-knit ring of hackers stole credit card data from unsuspecting US retailers. Though 11 people have been indicted, experts say the case shows how sophisticated identity-theft schemes have become.
By Ross Kerber, Globe Staff August 17, 2008
Five years ago, Albert Gonzalez allegedly used an unsecured radio link to tap into the computers of a BJ's Wholesale Club store in Miami and access customer credit-card numbers.
It was a simple trick, but it was only the beginning.
From that first break-in, Gonzalez and a ring of accomplices flew up the learning curve, prosecutors charge. They wirelessly broke into the computer networks of other stores including those operated by OfficeMax Inc., Boston Market Corp., Barnes & Noble Inc., and TJX Cos. And they apparently learned to decrypt customer PIN numbers, install sophisticated software, and park payment card data in offshore databases, in what the Justice Department on Aug. 5 called the biggest hacking and identity-theft case it has ever prosecuted - compromising more than 40 million credit and debit card accounts.
Court filings and interviews with investigators paint a picture of an international ring of 11 loosely knit conspirators from China to Ukraine, and show how quickly such criminal groups can graduate to increasingly sophisticated schemes to exploit the vulnerabilities that remain in the payment card network.
Despite the arrests, Gartner Inc. technology analyst Avivah Litan said it's too soon to relax. Though prosecutors tied the ring to some of the biggest breaches in this decade, their cases don't mention other intrusions such as one of Maine grocer Hannaford Bros. earlier this year.
Also worrisome, Litan said, was that the group allegedly was able to use fake ATM cards with real account numbers to withdraw money from bank machines, indicating they cracked the encryption of PIN numbers.
"The implications are ominous," Litan said. While many banks and retailers have begun using tougher encryption since then, some companies are still on the older standards that she called "inherently vulnerable."
Another technology analyst, Mary Monahan of Javelin Strategy & Research, said more stores have met data-security standards spelled out by Visa and MasterCard since the time of breaches like the one at TJX in 2005, which should make customers' card numbers more secure. Still, Hannaford met those standards at the time of its breach, illustrating how criminal tactics have evolved to stay ahead of defensive measures.
One lesson from this months' indictments, Monahan said, is how the hackers learned to become more sophisticated and global. "You can see that they're developing their skills over time, and transferring skills among one another," she said.
A defense attorney for Gonzalez, Rene Palomino, said his client will plead not guilty to the charges. He described Gonzalez, 27, as a self-taught computer consultant who first met several of the other defendants online.
Former informantIronically, the story of how the group of accomplices came to be begins with Gonzalez helping law enforcement officials. Though arrested in connection with theft from an automated teller machine in 2003, Gonzalez soon became a key Secret Service informant and even gave the agency security lectures, Palomino said. Gonzalez was best known for helping officials bring charges against a group known as the "Shadowcrew" after one of the online message boards that served as a marketplace for stolen payment card numbers - 1.7 million of them in all, prosecutors would charge.
Despite serving as an informant, the Justice Department claims, Gonzalez also began "wardriving" in the areas around US Highway 1 in Miami, according to this month's indictments. The term refers to the tactic of cruising in a vehicle with a laptop computer to spot unsecured connections to wireless systems maintained by various stores.
Gonzalez' partner in the wireless probes allegedly was another twentysomething, Christopher Scott, who Palomino said Gonzalez had met in online circles in Miami. Scott's attorney said he hasn't yet entered a plea.
According to the indictments, the pair first got lucky in 2003 at a BJ's Wholesale Club store, which wasn't using encryption software to protect customers' data, and accessed the account numbers of payment cards used by customers.
The next year Scott and another accomplice, described only by the acronym "J.J.," went further. Tapping into a similar access point at an OfficeMax store near the highway, they located data including customers' encrypted PIN numbers punched in when they used debit cards. They turned the data over to Gonzalez, who allegedly sent it to an unnamed coconspirator for decryption.
Filings and investigators say other stores hit by the ring included Barnes & Noble and Sports Authority, many in the Miami area. The indictments suggest the biggest breach began in July 2005 when Scott compromised two wireless access points of Marshalls' stores in the Miami area, both operated by Framingham retailer TJX Cos.
Soon the group was downloading payment card data from TJX's home servers. By the following May, in 2006, Scott had graduated to setting up a "virtual private network" connection to a TJX server, making it harder to detect the intrusion.
Next, Gonzalez brought in a Ukrainian, Maksym Yastremskiy, who prosecutors describe as an international trafficker of stolen card data who sold it on the Web. Via instant message in May 2006, Gonzalez allegedly asked Yastremskiy for help finding an undetectable "sniffer" program that would pick up customer card numbers and provide a feed of stolen data. Several days later, Scott, Gonzalez, and others installed sniffer programs onto a TJX server - likely provided by Yastremskiy, the indictment implies.
Craig Magaw, special agent in charge of the Secret Service's criminal investigative division, which led the probe of the hacker ring, said he had no evidence that Gonzalez and Yastremskiy ever met or spoke outside of their electronic communications. But their virtual connections, he said in an interview, were a common trait to criminal rings using web-based message boards.
"It's the usual M.O., where they can go to be anonymous and help each other further their activity," he said. "It's not just that they're selling the information but, if you go on these [message] boards, it's how to do compromises and giving advice. It's the criminals' playground."
Authorities arrested Yastremskiy in Turkey a year ago while he was visiting a resort. The US Postal Inspection Service confirmed to the Globe at the time that he was tied to the TJX probe.
Since then, neither the Justice Department nor Turkish officials have provided contact information for Yastremskiy or an attorney representing him.
Yastremskiy's laptop provided a trove of details including an e-mail tie to Gonzalez, Magaw said. Gonzalez was arrested May 7 at a hotel room in Miami in connection with a related hacking case to which he has also denied wrongdoing. Court papers show officials seized from him three laptop computers, and a Glock 27 automatic pistol.
Encoding blank cardsIn addition to showing how the group allegedly stole information, the indictments also shed light on how the ring may have used the data on the streets.
In 2005 and 2006, Gonzalez allegedly sold large amounts of payment card data to a person named only by the initials "J.W." This person allegedly encoded the information on the magnetic stripes of blank plastic payment cards, then used the cards to withdraw hundreds of thousands of dollars from ATMs and split the money with Gonzalez. Another unnamed San Diego purchaser also bought 100 blank payment cards from an individual in China connected to Yastremskiy in 2005, prosecutors charge.
Both examples recall cases in Florida last year in which state prosecutors won guilty pleas from six people who misused card numbers stolen from TJX. After obtaining blank cards magnetically encoded with the stolen numbers, they took the plastic to various Wal-Mart stores in Florida to buy gift cards that could be used like cash. In turn they used those cards to buy $8 million worth of expensive electronics, jewelry, and other items, officials said, returning some items for cash.
Details of how to encode blank cards with stolen account numbers are among the topics typically discussed on underground websites, security experts say; the Secret Service estimates there are 20 message boards or websites in the United States and overseas where criminals sell stolen numbers, trade tips, and form bonds like those between Gonzalez and Yastremskiy. Was theirs like an underground university? "I guess, but there's no diplomas coming out of there," Magaw said.
Or, as Massachusetts US Attorney Michael Sullivan put at a press conference announcing the indictments on Aug. 5: "There's no evidence that any of these people had PhDs."
Globe staff reporter Marion Schmidt contributed to this report. Ross Kerber can be reached at kerber@globe.com.
Monday, August 18, 2008
Ways To Help Prevent Fraud
Posted by Mark Brousseau
Deutsche Bank offers the following tips for proactively helping prevent fraud:
1. Know your customer
2. Create new account opening procedures
3. Never provide personal information in response to an unsolicited request
4. If you believe a contact may be illegitimate, get in touch with the financial institution yourself
5. Review account statements regularly to ensure all charges are correct
6. Know your employees
7. Employees need to be aware of and report any suspicious transactions or activity
8. Review hiring and mailroom procedures
9. Monitor activity (new accounts/establish thresholds)
10. Secure all check stock
11. Replace paper documents with electronic payments when possible
12. Move check disbursement activity to electronic payment
13. Conduct surprise audits
14. Understand the liability for fraud
15. Utilize positive pay (payee) services
16. Educate and train employees
17. Never share passwords or utilize them as generic passwords
18. Recertify users and access priveleges regularly
19. Do not write down passwords
20. Ensure segregation of duties
21. Assign priveleges based on job responsibilities, not convenience or availability
22. Do not deviate from procedures without a documented exception approval process
23. Carefully destroy papers with sensitive or identifying information
24. Ensure supervisory oversight by making managers accountable
For more information, you can access Deutsche Bank's Payments Fraud Prevention Webcast at www.highlinewebseminars.com/deutschebank or visit www.db.com/gtb.
Deutsche Bank offers the following tips for proactively helping prevent fraud:
1. Know your customer
2. Create new account opening procedures
3. Never provide personal information in response to an unsolicited request
4. If you believe a contact may be illegitimate, get in touch with the financial institution yourself
5. Review account statements regularly to ensure all charges are correct
6. Know your employees
7. Employees need to be aware of and report any suspicious transactions or activity
8. Review hiring and mailroom procedures
9. Monitor activity (new accounts/establish thresholds)
10. Secure all check stock
11. Replace paper documents with electronic payments when possible
12. Move check disbursement activity to electronic payment
13. Conduct surprise audits
14. Understand the liability for fraud
15. Utilize positive pay (payee) services
16. Educate and train employees
17. Never share passwords or utilize them as generic passwords
18. Recertify users and access priveleges regularly
19. Do not write down passwords
20. Ensure segregation of duties
21. Assign priveleges based on job responsibilities, not convenience or availability
22. Do not deviate from procedures without a documented exception approval process
23. Carefully destroy papers with sensitive or identifying information
24. Ensure supervisory oversight by making managers accountable
For more information, you can access Deutsche Bank's Payments Fraud Prevention Webcast at www.highlinewebseminars.com/deutschebank or visit www.db.com/gtb.
The Value of Business Intelligence
Posted by Mark Brousseau
An interesting article from ComputerWeekly.com on the value of document management:
Information management to deliver real value to businesses
Author: Joe O'Halloran
Posted: 14:32 11 Aug 2008
Topics: Data Management Business Intelligence Compliance
Information management (IM) solutions are moving to the centre of IT strategies as a way of driving IT and business alignment and delivering real and visible value to the business, according to a recent survey from Forrester research.
The market analyst believes that the driver for such a move is the fact that wherever there is a hot growth market in IT, there will be plenty of IT consultants, systems integrators, and managed services providers to help architect, plan, implement, and manage the solution.
After surveying vendors of both IM software and services to assess the size of the IM services market, Forrester expects the global information services market to grow from its present value of $7.9 billion to $10.9 billion by 2012, representing a compound annual growth rate (CAGR) of 8.2%.
Business intelligence (BI) and business performance solutions will likely dominate this spend, although Forrester adds that the information strategy segment will see the fastest growth throughout the forecast period.
Data warehouse services should also witness strong growth over the next two years as with greater interest in and deployment of BI and BPS solutions, the requirements for data warehouses to store all of the data should also grow commensurately. On a long term basis, data warehouses will likely start to take over some of the functions typically found in the data management segment and also require more consulting and integration services.
Forrester also thinks that content management and portal services should witness high growth in 2009. It says the content management market has consistently underperformed the high expectations set for it and that even though the promise of enterprise content management (ECM) solutions has never really been delivered by the software providers, in those cases where heavy ECM solutions have failed, portals are beginning to deliver. Some organisations are beginning to use portals as their ad hoc ECM solution, and Forrester predicts that this trend will accelerate in 2009.
Forrester advises firms to define clearly and information management services strategy and adhere to it, ensuring that it can take the company forward, should the current focus segment start to merge with another. It adds that firms should assess core competencies as part of the strategic due diligence in defining a strategy, put them into context with the total market opportunity, and balance a portfolio of new areas and old areas.
Are business intelligence intelligence solutions playing a more central role in your enterprise IT planning? Post your comment below.
An interesting article from ComputerWeekly.com on the value of document management:
Information management to deliver real value to businesses
Author: Joe O'Halloran
Posted: 14:32 11 Aug 2008
Topics: Data Management Business Intelligence Compliance
Information management (IM) solutions are moving to the centre of IT strategies as a way of driving IT and business alignment and delivering real and visible value to the business, according to a recent survey from Forrester research.
The market analyst believes that the driver for such a move is the fact that wherever there is a hot growth market in IT, there will be plenty of IT consultants, systems integrators, and managed services providers to help architect, plan, implement, and manage the solution.
After surveying vendors of both IM software and services to assess the size of the IM services market, Forrester expects the global information services market to grow from its present value of $7.9 billion to $10.9 billion by 2012, representing a compound annual growth rate (CAGR) of 8.2%.
Business intelligence (BI) and business performance solutions will likely dominate this spend, although Forrester adds that the information strategy segment will see the fastest growth throughout the forecast period.
Data warehouse services should also witness strong growth over the next two years as with greater interest in and deployment of BI and BPS solutions, the requirements for data warehouses to store all of the data should also grow commensurately. On a long term basis, data warehouses will likely start to take over some of the functions typically found in the data management segment and also require more consulting and integration services.
Forrester also thinks that content management and portal services should witness high growth in 2009. It says the content management market has consistently underperformed the high expectations set for it and that even though the promise of enterprise content management (ECM) solutions has never really been delivered by the software providers, in those cases where heavy ECM solutions have failed, portals are beginning to deliver. Some organisations are beginning to use portals as their ad hoc ECM solution, and Forrester predicts that this trend will accelerate in 2009.
Forrester advises firms to define clearly and information management services strategy and adhere to it, ensuring that it can take the company forward, should the current focus segment start to merge with another. It adds that firms should assess core competencies as part of the strategic due diligence in defining a strategy, put them into context with the total market opportunity, and balance a portfolio of new areas and old areas.
Are business intelligence intelligence solutions playing a more central role in your enterprise IT planning? Post your comment below.
Thursday, August 7, 2008
Shocking Internet Hack
Posted by Mark Brousseau
An interesting article from newsday.com about the incredible scope of a recent Internet hack case:
Feds astounded by volume, scope of Internet hack case
BY KEIKO MORRIS
mailto:keiko.morris@newsday.com?subject=Newsday.com
August 7, 2008
The sheer volume of the credit and debit card numbers stolen was astounding as was the far-flung cast of multinational characters in one of the largest Internet hacking and fraud cases federal prosecutors say they've seen in this country.
And while many credit card users are protected from full or partial liability, the scope of the impact of the mammoth case that snagged 11 people in the heist of more than 40 million card numbers is unknown.
For retailers, banks and credit card companies, Tuesday's announcement by federal prosecutors that they had unraveled a case stretching back years, highlighted the constant battle against Internet criminals. And although most consumers won't bear the burden immediately, the price of Internet fraud to banks and retailers could end up costing customers in the long run, technology security experts say.
"... The overall cost is high and you can bet your bottom dollar that that cost will get passed on to us, Joe Average card holder," said Ed Moyle, manager at CTG, an Internet technology firm in Amherst, N.H.
The unveiling of the ring and the numerous charges, including fraud and identity theft, was reason for retailers to rejoice, industry experts said. The conspiracy, allegedly led by Albert "Segvec" Gonzalez, 27, of Miami, hit some of the biggest retailers, including TJX Cos., BJ's Wholesale Club, OfficeMax, DSW and Barnes & Noble, among others."
This was a very targeted attack on our industry," said Scott Krugman, spokesman for the National Retail Federation. "It took a very sophisticated network to do this."
The incidents in which the defendants -- hailing from Belarus and China and Ukraine -- found wireless access points to steal credit and debit card numbers date to 2003. TJX Cos. Inc. based in Framingham, Mass., discovered its computer system allegedly had been attacked by the defendants in 2006. Shoe retailer DSW was hit in 2005. Most of the major credit card companies and banks contacted declined to comment about the case specifically but said they know of the investigation and they have procedures to secure information. For card issuers, the cost to reissue cards is significant and, eventually will get passed down to consumers, Moyle said.
"The sheer number of retailers attacked by these cyber criminals demonstrates the much broader challenges in protecting sensitive customer data from this increasing threat," Sherry Lang, a TJX spokeswoman, said in a statement. "... Broader action beyond retailers alone is required to protect consumer data. Banks and the U.S. payment card industry must join retailers and work together."
Technology security experts said retailers and credit card companies fight a constant battle against cyber crimes and have made strides over the years to comply with technical standards set by the PCI Security Standards Council, a group founded by five of the major credit card companies, to protect information systems.Retailers worry more about their credibility with consumers and their confidence in using the electronic systems, said Brit Beemer, chairman of the market research firm America's Research Group.
The idea that more than 40 million card numbers were stolen from major national chains will make consumers wary, but both retail and technology security experts said they were skeptical the case will change the way consumers used their credit or debit cards.
Both experts and prosecutors said consumers should check their accounts as well as their credit reports and set up fraud alerts if they believe their information has been stolen. Consumers face the hassle of requesting new cards or accounts but institutions' zero-liability policies mean that consumers won't suffer the losses.
"They have zero-liability protection so that definitely helps them get over those fears associated with data breaches," said Bruce Cundiff, director of payments research at Javelin Strategy & research in San Francisco.
What do you think is the solution to these types of hacks?
Post your comment below.
An interesting article from newsday.com about the incredible scope of a recent Internet hack case:
Feds astounded by volume, scope of Internet hack case
BY KEIKO MORRIS
mailto:keiko.morris@newsday.com?subject=Newsday.com
August 7, 2008
The sheer volume of the credit and debit card numbers stolen was astounding as was the far-flung cast of multinational characters in one of the largest Internet hacking and fraud cases federal prosecutors say they've seen in this country.
And while many credit card users are protected from full or partial liability, the scope of the impact of the mammoth case that snagged 11 people in the heist of more than 40 million card numbers is unknown.
For retailers, banks and credit card companies, Tuesday's announcement by federal prosecutors that they had unraveled a case stretching back years, highlighted the constant battle against Internet criminals. And although most consumers won't bear the burden immediately, the price of Internet fraud to banks and retailers could end up costing customers in the long run, technology security experts say.
"... The overall cost is high and you can bet your bottom dollar that that cost will get passed on to us, Joe Average card holder," said Ed Moyle, manager at CTG, an Internet technology firm in Amherst, N.H.
The unveiling of the ring and the numerous charges, including fraud and identity theft, was reason for retailers to rejoice, industry experts said. The conspiracy, allegedly led by Albert "Segvec" Gonzalez, 27, of Miami, hit some of the biggest retailers, including TJX Cos., BJ's Wholesale Club, OfficeMax, DSW and Barnes & Noble, among others."
This was a very targeted attack on our industry," said Scott Krugman, spokesman for the National Retail Federation. "It took a very sophisticated network to do this."
The incidents in which the defendants -- hailing from Belarus and China and Ukraine -- found wireless access points to steal credit and debit card numbers date to 2003. TJX Cos. Inc. based in Framingham, Mass., discovered its computer system allegedly had been attacked by the defendants in 2006. Shoe retailer DSW was hit in 2005. Most of the major credit card companies and banks contacted declined to comment about the case specifically but said they know of the investigation and they have procedures to secure information. For card issuers, the cost to reissue cards is significant and, eventually will get passed down to consumers, Moyle said.
"The sheer number of retailers attacked by these cyber criminals demonstrates the much broader challenges in protecting sensitive customer data from this increasing threat," Sherry Lang, a TJX spokeswoman, said in a statement. "... Broader action beyond retailers alone is required to protect consumer data. Banks and the U.S. payment card industry must join retailers and work together."
Technology security experts said retailers and credit card companies fight a constant battle against cyber crimes and have made strides over the years to comply with technical standards set by the PCI Security Standards Council, a group founded by five of the major credit card companies, to protect information systems.Retailers worry more about their credibility with consumers and their confidence in using the electronic systems, said Brit Beemer, chairman of the market research firm America's Research Group.
The idea that more than 40 million card numbers were stolen from major national chains will make consumers wary, but both retail and technology security experts said they were skeptical the case will change the way consumers used their credit or debit cards.
Both experts and prosecutors said consumers should check their accounts as well as their credit reports and set up fraud alerts if they believe their information has been stolen. Consumers face the hassle of requesting new cards or accounts but institutions' zero-liability policies mean that consumers won't suffer the losses.
"They have zero-liability protection so that definitely helps them get over those fears associated with data breaches," said Bruce Cundiff, director of payments research at Javelin Strategy & research in San Francisco.
What do you think is the solution to these types of hacks?
Post your comment below.
Wednesday, August 6, 2008
Final Call For Checks
Posted by Mark Brousseau
An interesting article from Compass Bank on remote deposit capture:
The Check isn’t in the Mail—it's on Life Support
In a speech to a trade group in Las Vegas last fall, Federal Reserve Board vice chairman Donald L. Kohn noted that a check-less society has been predicted for decades. “The decline in check use has already caused the Reserve Banks to reduce by half the number of offices at which they process paper checks,” he stated.
To some observers, the idea of a checkless society echoes predictions of a cashless society that have been circulating since the advent of the first electronic payment forms. In fact, while there are clearly identifiable changes taking place in how payments are transacted, it’s unlikely that anyone alive today will live to see a time when either cash or checks become extinct.
The amount of U.S. paper currency in circulation actually has risen dramatically over the past 30 years, up to $731 billion in 2006 from $81 billion in 1975, and it’s unlikely cash will ever disappear. The use of paper checks, on the other hand, clearly is on the wane, declining by 12% from 1996 to 2004, according to research published in the Review of Network Economics in June 2006. Check usage for transactions between $20 and $80 fell more than 20% during the same period. That trend is likely to accelerate, and even where checks continue to be used, the way they are processed is evolving with the spread of new technologies such as remote deposit capture (RDC).
The advantages of RDC
“RDC is particularly significant for businesses because it opens up the way they collect their receivables on several levels,” says Joan Baraba, executive vice president at Compass Bank. “A host of industry surveys make it clear that RDC is on a rapid growth track throughout the banking industry,” she adds.
RDC offers a number of benefits to business customers, most notably improved cash flow resulting from later posting deadlines and efficiencies from eliminating the need for branch deposits. It may expedite bad-check detection in some cases, improving a business’s ability to collect on funds, and it offers the potential of significant transportation and time cost-savings.
Remote deposit capture uses imaging equipment to take paper checks and convert them into electronic images, which are transmitted to the company’s bank for processing. The convenience and time- and cost-savings from eliminating the need to physically transport paper checks to the bank coupled with the positive impact on cash flow are so compelling that market researcher Celent Communications predicts the number of business locations using RDC will grow from about 100,000 at the end of 2006 to about 1.4 million in 2012.
While RDC offers significant benefits to many types of businesses, Baraba warns it is important to keep in mind that there is no one-size-fits-all solution when it comes to payment systems—and that is a key reason why a truly cashless or check-less society is unlikely to develop any time soon.
“There are so many variables to consider when it comes to payment systems, starting with the type of payment involved,” she explains. Four general categories of payment types are business-to-business, business-to-consumer, consumer-to-business and consumer-to-consumer. Each comes with different value statements in terms of the volume, dollar value and amount of information involved.
“Regulation and fraud prevention are other issues that must be considered,” she adds. Much existing fraud-prevention technology is embedded in the paper of a check and does not survive the imaging process, for example.
“The bottom line is that RDC is just one of many different tools available to process payments,” Baraba says. “Businesses need to sit down with their financial partners and put together payment solutions that best meet their needs. In many cases, those solutions will involve multiple components.”
An interesting article from Compass Bank on remote deposit capture:
The Check isn’t in the Mail—it's on Life Support
In a speech to a trade group in Las Vegas last fall, Federal Reserve Board vice chairman Donald L. Kohn noted that a check-less society has been predicted for decades. “The decline in check use has already caused the Reserve Banks to reduce by half the number of offices at which they process paper checks,” he stated.
To some observers, the idea of a checkless society echoes predictions of a cashless society that have been circulating since the advent of the first electronic payment forms. In fact, while there are clearly identifiable changes taking place in how payments are transacted, it’s unlikely that anyone alive today will live to see a time when either cash or checks become extinct.
The amount of U.S. paper currency in circulation actually has risen dramatically over the past 30 years, up to $731 billion in 2006 from $81 billion in 1975, and it’s unlikely cash will ever disappear. The use of paper checks, on the other hand, clearly is on the wane, declining by 12% from 1996 to 2004, according to research published in the Review of Network Economics in June 2006. Check usage for transactions between $20 and $80 fell more than 20% during the same period. That trend is likely to accelerate, and even where checks continue to be used, the way they are processed is evolving with the spread of new technologies such as remote deposit capture (RDC).
The advantages of RDC
“RDC is particularly significant for businesses because it opens up the way they collect their receivables on several levels,” says Joan Baraba, executive vice president at Compass Bank. “A host of industry surveys make it clear that RDC is on a rapid growth track throughout the banking industry,” she adds.
RDC offers a number of benefits to business customers, most notably improved cash flow resulting from later posting deadlines and efficiencies from eliminating the need for branch deposits. It may expedite bad-check detection in some cases, improving a business’s ability to collect on funds, and it offers the potential of significant transportation and time cost-savings.
Remote deposit capture uses imaging equipment to take paper checks and convert them into electronic images, which are transmitted to the company’s bank for processing. The convenience and time- and cost-savings from eliminating the need to physically transport paper checks to the bank coupled with the positive impact on cash flow are so compelling that market researcher Celent Communications predicts the number of business locations using RDC will grow from about 100,000 at the end of 2006 to about 1.4 million in 2012.
While RDC offers significant benefits to many types of businesses, Baraba warns it is important to keep in mind that there is no one-size-fits-all solution when it comes to payment systems—and that is a key reason why a truly cashless or check-less society is unlikely to develop any time soon.
“There are so many variables to consider when it comes to payment systems, starting with the type of payment involved,” she explains. Four general categories of payment types are business-to-business, business-to-consumer, consumer-to-business and consumer-to-consumer. Each comes with different value statements in terms of the volume, dollar value and amount of information involved.
“Regulation and fraud prevention are other issues that must be considered,” she adds. Much existing fraud-prevention technology is embedded in the paper of a check and does not survive the imaging process, for example.
“The bottom line is that RDC is just one of many different tools available to process payments,” Baraba says. “Businesses need to sit down with their financial partners and put together payment solutions that best meet their needs. In many cases, those solutions will involve multiple components.”
Gaining Supply Chain Visibility
Posted by Mark Brousseau
An interesting article from Compass Bank on supply chain visibility:
Supply Chain Visibility for the Mid-Market
In the summer issue of Compass on Business magazine, we offered, “Fast Forward: The Demand-Driven Supply Chain.” The article contained a sidebar called “Global Supply Chain Success Factors.”
Among the best practices we’re now hearing more about is supply chain visibility, which has been in place for large companies with complex operations for some time, but is now becoming more prevalent for companies of all sizes.
“Supply chain visibility is about balancing supply and demand, and using the links in the chain to understand how each impacts your entire business,” says Kai Trepte, co-founder of supply chain consultant John Galt Solutions. “How you go at it depends on your focus. Let’s say you’re a customer-focused company. If we break the supply chain view down into three parts, you start with having visibility around what the customer needs. Part two is what the people who support those customers need (i.e., retailers, distributors, manufacturing partners, etc.) The third component is looking at what you need for the people who support you—what you require of your manufacturing organization or of the outsourced partners who support you.”
In essence, total supply chain visibility offers the opportunity to look backward at all the isolated elements that went into creating and delivering the final product, and using that visibility to make every part of the process more efficient.
Supply Chain Challenges
It seems logical enough, yet, according to a recent survey of supply chain professionals by global supply chain research group Aberdeen Group, 75% of respondents rate supply chain visibility as among of the most challenging issues they currently face. Why has it been such a challenge?
It’s only recently that many companies have put enterprise resource planning (ERP) technology, warehouse management or return management systems—the technology that tracks the supply chain—in place.
“There have always been a number of tools available, but they’ve been expensive and time-consuming to implement,” Trepte says. “Solutions that are less complex and expensive are fairly new to mid-market companies. With lead times getting shorter and global outsourcing making product delivery times longer, greater inventory and supply chain planning have become the tools executives and managers use to make the most of the process. Five years ago, you never saw anything written about supply chain efficiency, now it’s the ‘next big thing’ in terms of gaining or maintaining marketshare.”
Benefits and strategies
The key benefit of supply chain visibility is that it allows for highly efficient planning, giving companies the opportunity to collect and analyze distributed data, generate specific recommendations and match insights to strategy.
“When you look at the metrics stored in any ERP or related system—inventory turns, forecast accuracy, periods of coverage, etc.—they’re typically backward-looking,” Trepte says. “Having data that allows you to plan and forecast going forward really changes your focus. That forward plan lets you know, for example, when inventory turns are decreasing and that you may need to get additional capital funding to cover a brief down period. Supply chain visibility allows you to do more than just react to immediate issues; it shows you the trends and makes the entire company more forward-thinking.”
In the current supply chain environment, visibility is taking on an increasingly key role. With new technologies, like radio frequency identification (RFID), becoming the norm in retail and government contracting applications, a planning system is rapidly becoming a “must have.”
“RFID is a tool that offers even greater granular and faster, real-time visibility, but it can’t exist in a vacuum,” Trepte notes. “It works best as part of a solution, improving the ability to see products at any time, anywhere in the chain and plan accordingly.”
As far as implementing a system is concerned, Trepte says that it need not be a complex endeavor. “In the mid-market, it makes sense to start small and use a solution that can scale up with you,” he notes. “We look at it as a ‘walk, fly, drive’ continuum, in which you take a series of small steps until you get to a more robust supply chain solution that meets your needs.”
Here’s how Trepte classifies each step:
• Walk—The first step can be as simple as using an Excel spreadsheet to do statistical forecasting and order planning, so you move from simply placing orders to order planning based on the history you’ve developed. You want to get people to buy into and utilize the plan.
• Drive—“Next comes automation and systemization,” says Trepte. “This is where you’ll create your key performance indicators, or KPIs, and benchmarks. The process supports demand and inventory management, sales and operations planning, rough cut capacity planning, promotion management, etc., and provides output to people who execute on those parts of the operation.”
• Fly—At this stage, you’re sharing information, in real time, throughout the supply chain.
“At the end of the process, you’ve achieved true supply chain visibility, and it’s transparent throughout your organization,” concludes Trepte. “Once you’re synchronized to that degree, planning and communication become easier and support is better—you begin to benefit from the optimum efficiencies you’re developed.”
What is your organization doing to gain supply chain visibility?
Post your comment below.
An interesting article from Compass Bank on supply chain visibility:
Supply Chain Visibility for the Mid-Market
In the summer issue of Compass on Business magazine, we offered, “Fast Forward: The Demand-Driven Supply Chain.” The article contained a sidebar called “Global Supply Chain Success Factors.”
Among the best practices we’re now hearing more about is supply chain visibility, which has been in place for large companies with complex operations for some time, but is now becoming more prevalent for companies of all sizes.
“Supply chain visibility is about balancing supply and demand, and using the links in the chain to understand how each impacts your entire business,” says Kai Trepte, co-founder of supply chain consultant John Galt Solutions. “How you go at it depends on your focus. Let’s say you’re a customer-focused company. If we break the supply chain view down into three parts, you start with having visibility around what the customer needs. Part two is what the people who support those customers need (i.e., retailers, distributors, manufacturing partners, etc.) The third component is looking at what you need for the people who support you—what you require of your manufacturing organization or of the outsourced partners who support you.”
In essence, total supply chain visibility offers the opportunity to look backward at all the isolated elements that went into creating and delivering the final product, and using that visibility to make every part of the process more efficient.
Supply Chain Challenges
It seems logical enough, yet, according to a recent survey of supply chain professionals by global supply chain research group Aberdeen Group, 75% of respondents rate supply chain visibility as among of the most challenging issues they currently face. Why has it been such a challenge?
It’s only recently that many companies have put enterprise resource planning (ERP) technology, warehouse management or return management systems—the technology that tracks the supply chain—in place.
“There have always been a number of tools available, but they’ve been expensive and time-consuming to implement,” Trepte says. “Solutions that are less complex and expensive are fairly new to mid-market companies. With lead times getting shorter and global outsourcing making product delivery times longer, greater inventory and supply chain planning have become the tools executives and managers use to make the most of the process. Five years ago, you never saw anything written about supply chain efficiency, now it’s the ‘next big thing’ in terms of gaining or maintaining marketshare.”
Benefits and strategies
The key benefit of supply chain visibility is that it allows for highly efficient planning, giving companies the opportunity to collect and analyze distributed data, generate specific recommendations and match insights to strategy.
“When you look at the metrics stored in any ERP or related system—inventory turns, forecast accuracy, periods of coverage, etc.—they’re typically backward-looking,” Trepte says. “Having data that allows you to plan and forecast going forward really changes your focus. That forward plan lets you know, for example, when inventory turns are decreasing and that you may need to get additional capital funding to cover a brief down period. Supply chain visibility allows you to do more than just react to immediate issues; it shows you the trends and makes the entire company more forward-thinking.”
In the current supply chain environment, visibility is taking on an increasingly key role. With new technologies, like radio frequency identification (RFID), becoming the norm in retail and government contracting applications, a planning system is rapidly becoming a “must have.”
“RFID is a tool that offers even greater granular and faster, real-time visibility, but it can’t exist in a vacuum,” Trepte notes. “It works best as part of a solution, improving the ability to see products at any time, anywhere in the chain and plan accordingly.”
As far as implementing a system is concerned, Trepte says that it need not be a complex endeavor. “In the mid-market, it makes sense to start small and use a solution that can scale up with you,” he notes. “We look at it as a ‘walk, fly, drive’ continuum, in which you take a series of small steps until you get to a more robust supply chain solution that meets your needs.”
Here’s how Trepte classifies each step:
• Walk—The first step can be as simple as using an Excel spreadsheet to do statistical forecasting and order planning, so you move from simply placing orders to order planning based on the history you’ve developed. You want to get people to buy into and utilize the plan.
• Drive—“Next comes automation and systemization,” says Trepte. “This is where you’ll create your key performance indicators, or KPIs, and benchmarks. The process supports demand and inventory management, sales and operations planning, rough cut capacity planning, promotion management, etc., and provides output to people who execute on those parts of the operation.”
• Fly—At this stage, you’re sharing information, in real time, throughout the supply chain.
“At the end of the process, you’ve achieved true supply chain visibility, and it’s transparent throughout your organization,” concludes Trepte. “Once you’re synchronized to that degree, planning and communication become easier and support is better—you begin to benefit from the optimum efficiencies you’re developed.”
What is your organization doing to gain supply chain visibility?
Post your comment below.
Sunday, August 3, 2008
Economy Wallops Credit Card Use
Posted by Mark Brousseau
An interesting article from CNN on declining credit card use:
Study: Some Americans cut credit card use
By Ronni BerkeCNN's American Morning
STRATFORD, Connecticut (CNN) -- When Cappie and Don Perras saw their stock market investments tank this year, they decided to tighten their belts. They drive fuel efficient cars around their Connecticut town and eat at cheaper restaurants if they eat out at all.
To avoid impulse buying, they avoid the mall. And for now, at least, they've put away the credit cards.
This marks a big change from their old attitude.
"I felt secure with my credit cards like, 'Oh well, I always have my credit cards,' " says Cappie Perras, a special education teacher. "Now I feel like, it's almost like there's a big caution sign in front of the credit card, 'Do Not Use, Only In Case of Emergency,' " she adds.
The Perrases are examples of a trend building among middle-income and middle-aged consumers to cut back on credit card use, according to a new study by Javelin Strategy & Research, a financial research firm. Forty percent of consumers surveyed said they're pulling out their credit cards less than they were at the beginning of the year.
Don Perras, a college professor approaching retirement age, says the family has stopped using cards, except for rare instances like booking hotel rooms on the road. Instead, the couple uses their debit cards.
The aim: to soon be free of credit card debt.
"It would be a top priority," Don Perras said.
But with the high cost of living, the Perrases are having trouble making a dent in their $8,000 credit card balance.
"I used to be able to maybe put $600 towards the debt. ... Now it's maybe if I'm lucky, $200," his wife says.
The Perras family has plenty of company. Americans carry approximately $961.8 billion in revolving debt, according to the Federal Reserve Board. Delinquency rates on credit cards are at the highest levels since the end of 2002.
Even as consumers cut back on using credit cards, they're finding it harder to pay down their balances, says Javelin President James Van Dyke.
"In some cases they're out of work or perhaps their wages have been cut back, or maybe they had a variable rate which they have to pay more for than ever before," Van Dyke said. When people use their credit cards less, "this changes what goes on in the industry because credit card companies typically make a lot of their money on the fees they charge merchants."
The reduction in revenue from new purchases, combined with concerns about new delinquencies, pose big worries for the credit card industry, Van Dyke says.
"Credit card companies are running a bit scared right now, and for good reason, because people are having a difficult time paying off their balances; and everyday consumers, they're cutting into their purchases right now -- both luxury goods and even the basic necessities," Van Dyke says.
According to the Javelin study, nearly 70 percent of financial institutions say they have cut back on credit card solicitations. Six of 10 say they are limiting the amount of credit offered to customers.
James Chessen, chief economist for the American Bankers Association, says the industry is well prepared for the economic downturn. "It's all a matter of managing that risk, because you know the volume will be off, you know the economy is riskier today than it was a year ago. So you naturally take that into account so you have the capacity to come out of this even stronger than you came into it," he added.
For Cappie Perras, being stronger means cutting back on plastic. "I don't feel good about the credit cards," she says. "I regret that we got into so much credit card debt."
Think this is part of a trend?
Post your comment below.
An interesting article from CNN on declining credit card use:
Study: Some Americans cut credit card use
By Ronni BerkeCNN's American Morning
STRATFORD, Connecticut (CNN) -- When Cappie and Don Perras saw their stock market investments tank this year, they decided to tighten their belts. They drive fuel efficient cars around their Connecticut town and eat at cheaper restaurants if they eat out at all.
To avoid impulse buying, they avoid the mall. And for now, at least, they've put away the credit cards.
This marks a big change from their old attitude.
"I felt secure with my credit cards like, 'Oh well, I always have my credit cards,' " says Cappie Perras, a special education teacher. "Now I feel like, it's almost like there's a big caution sign in front of the credit card, 'Do Not Use, Only In Case of Emergency,' " she adds.
The Perrases are examples of a trend building among middle-income and middle-aged consumers to cut back on credit card use, according to a new study by Javelin Strategy & Research, a financial research firm. Forty percent of consumers surveyed said they're pulling out their credit cards less than they were at the beginning of the year.
Don Perras, a college professor approaching retirement age, says the family has stopped using cards, except for rare instances like booking hotel rooms on the road. Instead, the couple uses their debit cards.
The aim: to soon be free of credit card debt.
"It would be a top priority," Don Perras said.
But with the high cost of living, the Perrases are having trouble making a dent in their $8,000 credit card balance.
"I used to be able to maybe put $600 towards the debt. ... Now it's maybe if I'm lucky, $200," his wife says.
The Perras family has plenty of company. Americans carry approximately $961.8 billion in revolving debt, according to the Federal Reserve Board. Delinquency rates on credit cards are at the highest levels since the end of 2002.
Even as consumers cut back on using credit cards, they're finding it harder to pay down their balances, says Javelin President James Van Dyke.
"In some cases they're out of work or perhaps their wages have been cut back, or maybe they had a variable rate which they have to pay more for than ever before," Van Dyke said. When people use their credit cards less, "this changes what goes on in the industry because credit card companies typically make a lot of their money on the fees they charge merchants."
The reduction in revenue from new purchases, combined with concerns about new delinquencies, pose big worries for the credit card industry, Van Dyke says.
"Credit card companies are running a bit scared right now, and for good reason, because people are having a difficult time paying off their balances; and everyday consumers, they're cutting into their purchases right now -- both luxury goods and even the basic necessities," Van Dyke says.
According to the Javelin study, nearly 70 percent of financial institutions say they have cut back on credit card solicitations. Six of 10 say they are limiting the amount of credit offered to customers.
James Chessen, chief economist for the American Bankers Association, says the industry is well prepared for the economic downturn. "It's all a matter of managing that risk, because you know the volume will be off, you know the economy is riskier today than it was a year ago. So you naturally take that into account so you have the capacity to come out of this even stronger than you came into it," he added.
For Cappie Perras, being stronger means cutting back on plastic. "I don't feel good about the credit cards," she says. "I regret that we got into so much credit card debt."
Think this is part of a trend?
Post your comment below.
Friday, August 1, 2008
Gaining Control Over Stranded Payments
Significant changes in the payments landscape and the intense growth of Remote Deposit Capture (RDC) over the last three years has triggered the necessary expansion of RDC from capturing check deposits only to providing the capability of capturing retail and wholesale remittance payments, as well.
That’s according to Sam Golbach, senior product manager for WAUSAU Financial Systems.
These changes have created new payment processing workflows and allow financial institutions and remittance processors (lockbox providers, corporate billers) to offer new, creative solutions to customers and in-house operations for capturing “stranded payments,” Golbach told me.
Stranded payments can be defined as payments received at remote locations via walk-in, over-the-counter, mail or other delivery methods. Goldbach said the steps to process, post and deposit are different than the central remittance processing site or sites. “Today, remittance solutions can be tailored based on customer needs or an organization’s internal processes to address the challenges that stranded payments pose,” he said.
To capture remote payments, remittance processors can combine remote and central payments into a single workflow with aggregated reporting, A/R file updates and archives, which creates a compelling business case when one considers the revenue-generating benefits realized through remote capture such as lower processing costs, improved workflow efficiency and funds availability and reduced bank accounts and sweeps, Goldbach explained.
He said early adopters are enjoying an innovative offering that is quickly gaining momentum and driving demand for other remittance processors to take notice and invest in remote capture technology. While vertical growth has been most evident in the healthcare segment, this is just the tip of the iceberg. Interest from brokerage, insurance and property management firms is quickly taking shape, Goldbach noted.
“For lockbox providers, this is a solution that continues to open doors to new markets, enhancing existing customer relationships, driving additional fee revenue, expanding market share and increasing deposits to succeed in today’s marketplace,” he concluded.
Is your lockbox offering corporate remittance capture?
Post your comment below.
That’s according to Sam Golbach, senior product manager for WAUSAU Financial Systems.
These changes have created new payment processing workflows and allow financial institutions and remittance processors (lockbox providers, corporate billers) to offer new, creative solutions to customers and in-house operations for capturing “stranded payments,” Golbach told me.
Stranded payments can be defined as payments received at remote locations via walk-in, over-the-counter, mail or other delivery methods. Goldbach said the steps to process, post and deposit are different than the central remittance processing site or sites. “Today, remittance solutions can be tailored based on customer needs or an organization’s internal processes to address the challenges that stranded payments pose,” he said.
To capture remote payments, remittance processors can combine remote and central payments into a single workflow with aggregated reporting, A/R file updates and archives, which creates a compelling business case when one considers the revenue-generating benefits realized through remote capture such as lower processing costs, improved workflow efficiency and funds availability and reduced bank accounts and sweeps, Goldbach explained.
He said early adopters are enjoying an innovative offering that is quickly gaining momentum and driving demand for other remittance processors to take notice and invest in remote capture technology. While vertical growth has been most evident in the healthcare segment, this is just the tip of the iceberg. Interest from brokerage, insurance and property management firms is quickly taking shape, Goldbach noted.
“For lockbox providers, this is a solution that continues to open doors to new markets, enhancing existing customer relationships, driving additional fee revenue, expanding market share and increasing deposits to succeed in today’s marketplace,” he concluded.
Is your lockbox offering corporate remittance capture?
Post your comment below.
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