Fly Away: Netspend Prepaid Card Offers United Airlines MileagePlus Rewards

Netspend has launched a Visa-branded prepaid card that enables cardholders to earn miles good for travel through United Airlines’ MileagePlus loyalty program. The product addresses one of the main issues facing prepaid providers—long-term cardholder retention.

TSYS-owned Netspend said the MileagePlus GO Visa Prepaid Card will be available to consumers this summer. “We are eager to offer the opportunity to earn airline miles to consumers who are looking for new financial solutions to help them manage their money,” said Chuck Harris, Netspend president. “Several of our prepaid cards offer a loyalty component, but no other prepaid card in the U.S. offers the ability to directly earn miles through a major airline.”

Consumers can order the new cards by using active MileagePlus account numbers. Republic Bank will issue the cards.

The fall 2016 issue of Pay Magazine looked in-depth at the topic of “Powering Prepaid Loyalty.” Among the ways prepaid providers are striving to increase that loyalty is cash rewards. For instance, American Express launched a version of its Pay Award-winning Serve GPR card that offered 1 percent cash back on all purchases. After that program was announced, Walmart said it would add cash rewards to its MoneyCard prepaid program, issued and managed by Green Dot.

Such rewards certainly work for credit cards. Merchant-funded rewards drove $4.7 billion in U.S. credit card purchases in 2014, a figure expected to increase at a 20 percent annual growth rate through 2020, according to Mercator Advisory Group. But it remains unclear how well they will work in prepaid.

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FIS Details How Younger Consumers—and Some Older Peers—Are Driving Digital Banking

Nearly half—49 percent—of millennial consumers had paid a bill via mobile within 30 days of a survey conducted for a new report from FIS. That data point underscores the growing importance of digital financial services and payments not only for younger consumers but their older counterparts.

The “2017 FIS Consumer Banking Pace Report” found that 46 percent of millennial consumers transferred funds between bank accounts; 34 percent deposited a check remotely using a mobile app; and 22 percent paid someone using a payment service app within 30 days of the FIS survey. FIS based its findings on a December 2016 survey of 8,000 banking consumers in eight countries: Australia, Brazil, Canada, Germany, India, Thailand, the U.K. and the U.S.

More broadly, the study found increasing support for digital payments:

  • 47 percent of millennial consumers now consider digital payments important, up from 41 percent for the previous year’s study.
  • 41 percent of Generation X consumers now consider digital payments important, up from 35 percent for the previous year’s study.
  • 40 percent of baby boomer consumers now consider digital payments important, up from 31 percent for the previous year’s study.

Among the digital financial services that are becoming more important are P2P payments, the report said. During the 30 days previous to the survey, 30 percent of consumers between the ages of 18 and 25 conducted a P2P transaction via a financial institution’s app. That compares with 17 percent for consumers age 26 to 36; 3 percent for consumers age 37 to 51, and 1 percent for consumers age 52 to 79. “Payments help cement connections to the banking provider and support consumers in fulfilling their aspirations,” the report said.

The report also identified a consumer segment that is driving financial services innovation: Gen MX, or what FIS called “higher-income Gen Xers and senior millennials that share strikingly similar banking behaviors and who are increasingly transferring their personal preferences for digital channels into all areas of how they bank and run their businesses.” That segment, for instance, is more likely to use regional banks as primary financial institutions; handle roughly 75 percent of banking interactions online or via mobile; and soon will have “one major life event” that will impact their finances.

“These digital power users are creating the future of banking and payments, and financial institutions of all sizes need to be paying attention to serving their needs,” said Anthony Jabbour, chief operating officer, banking and payments, FIS.

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Target to Pay $18.5 Million to States in Data Breach Settlement

Target Corp. has agreed to pay $18.5 million in a settlement with 47 states and the District of Columbia that stems from a November 2013 data breach of the Minneapolis-based retailer. The breach affected more than 41 million customer payment card accounts and exposed contact information for more than 60 million customers.

The agreement represents the largest multistate data breach settlement, according to a May 23 announcement by Connecticut Attorney General George Jepsen. The states’ investigation was led by Jepsen and Illinois Attorney General Lisa Madigan.

The investigation determined that hackers accessed Target’s server using credentials stolen from a third-party vendor. The credentials enabled the hackers to access a customer service database, install malware on the system and collect customers’ full names, telephone numbers, email and mailing addresses, payment card numbers, expiration dates, credit card verification codes and encrypted debit PINs.

In addition to the monetary settlement, which will be shared among the states, Target has agreed to implement and maintain an information security program and hire an officer responsible for executing the plan; hire an independent third-party company to conduct a security assessment; maintain software on its network for data security purposes; employ encryption policies, particularly as they pertain to cardholder and personal information data; and separate cardholder data from the rest of its computer network; and take steps to control access to its network, including implementing password-rotation policies and two-factor authentication.

In addition to Connecticut and Illinois, states participating in the settlement include: Alaska, Arizona, Arkansas, California, Colorado, Delaware, Florida, Georgia, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New York, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia and the District of Columbia.

The breach has proved costly for Target, which also settled various lawsuits with banks, Mastercard, Visa and consumers for a total of $68.3 million.

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Compliance Titans: Jani Gode, Payoneer

Jani Gode’s knowledge of payments compliance reaches to parts of the globe that are about as far away from the small Minnesota farm where she grew up as you can get.

Gode leads the global compliance program as chief compliance officer at Payoneer, an online payments company founded in 2005 that enables businesses to send and receive cross-border payments. Not only must she be an expert on anti-money laundering (AML), sanctions, consumer protections, escheatment and third-party risk, but Gode must understand regulations and requirements for the more than 200 countries in which Payoneer operates. “Luckily, I have a great team to help me out,” she says.

Gode’s early experience included learning many facets of traditional banking, including credit risk analysis and vendor risk management. Her introduction to alternative payments started at BANKFIRST, now The Bancorp, when it launched subprime credit and prepaid card programs. From there, she moved to Meta Payment Systems, creating its AML program and becoming the AML subject matter expert for prepaid. “That’s probably the smartest career move I ever made because it was the decision to go into AML that laid the foundation for the rest of my career,” she says.

An Ever-Changing World

Gode later would spend a few years as a consultant with SightSpan Inc., a risk management and AML advisory firm, “which afforded me the opportunity to expand my knowledge outside of prepaid and into the vast world of global payments,” she says.

“The biggest compliance challenge Payoneer is facing right now is the inconsistent application of state money transmitter licensing requirements in the payments industry. This is leading to an uneven playing field and increasing AML risk by allowing non-regulated players to offer products and services that are weak in compliance controls.”

Lured by a strong compliance background, family-like corporate culture and entrepreneurial spirit, Gode joined Payoneer in 2014. Throughout her career, being involved with the Association of Certified Anti-Money Laundering Specialists, Association of Certified Financial Crimes Specialist and the NBPCA “really helped me expand my knowledge and network,” she says.

Gode has more than 15 years of experience managing risk and AML rules for prepaid, credit, money service businesses and traditional bank products—and the compliance field still keeps her on her toes.

“Had I stayed in the AML field for traditional banking, I would not be challenged or interested,” Gode says. “What keeps it interesting for me is the ever-changing world of payments. At Payoneer, we focus on cross-border B2B payments for online businesses, which requires understanding new businesses cropping up on the Internet, and embracing the challenge of building compliant financial products and services to best serve these companies.”

Gode credits her career to “some very good mentors and bosses who gave me guidance to grow professionally, the opportunity to learn new things and supported me even when I made mistakes,” she says. “I hope they are reading this, and I say ‘thank you.’”

When Gode isn’t working, she’s reading, golfing or hanging out with friends. Because she travels a lot, she says “keeping her friendships active” when home is important to her. She’s also a diehard Minnesota Vikings fan and is “pretty sure” this is their year. And, Paybefore was able to get her to share a secret not many of her colleagues know. She enjoys singing Karaoke, “even though it’s so embarrassing.”

Comdata Adds Spend Escalator to ePayables to Save Clients Time, Money 

Comdata is making it easier for clients who use the B2B payment and financial technology provider’s virtual credit cards, or ePayables, which it says will drive adoption. The company is so convinced its new Spend Escalator technology is beneficial, it has applied for a patent.

Comdata already integrates its virtual credit cards system into its clients’ accounting systems to expedite the payment and reconciliation process, according to Meitra Aycock, vice president of product and strategy, and Spend Escalator expands on that integration to reduce the effort of managing and enrolling vendors to accept card payments. A virtual card—or ePayable—is a single-use, 16-digit virtual credit card which can be used to securely and quickly make supplier payments.

Users of Spend Escalator enroll vendors and convert spend volume at nearly double the average rate of other Comdata clients, according to the company. The automation results in greater cost reduction by minimizing costly check payments and manual review for finance staff.

“When it comes to accounts payable automation, we focus our development on easy administration and vendor enrollment because we believe those are the two biggest drivers of a successful program,” said Vijay Ramnathan, senior vice president of product and strategy at Comdata. “A lot of firms and banks sell virtual credit cards, but our mission is to help clients build a world-class ePayables program. Spend Escalator is our latest innovation in support of that mission.”

The B2B virtual card market is big business, estimated at more than $95 billion in gross spending in 2016, according to Mercator Advisory Group. WEX Inc. announced in April the corporate payment solutions provider was promoting its virtual card program to travel suppliers, such as hotels, car rental agencies and tour operators because of the advantages the program offers to them, including getting paid faster, easier reconciliation across borders and improved analytics.

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