Tuesday, 23 August 2011

NXPI: NFC Chip Maker Stock Soars 130% In Three Months Read more: http://www.businessinsider.com/nxpi-nfc-chip-maker-stock-soars-130-percent-in-three-month

Tech stocks are flying high again. During the past three months, none has climbed higher than NXP Semiconductors, the leading maker of near field communications chips that turn cell phones into digital wallets. Shares of the Netherlands-based company have climbed 130 percent during that period, more than any publicly traded stock in the world with a market capitalization of at least $2  billion, tech stock or otherwise.

The chart above shows the performance of four tech companies with market caps above $5 billion whose shares have skyrocketed during the past 90 days. NXP heads this elite group, which includes JDS Uniphase, Nvidia and ARM Holdings.

The performance of my iTech portfolio, which is comprised of 22 tech stocks including the four listed in the chart above, also confirms the tech rebirth. iTech has outperformed the S&P  by 111 percent during the past two years and bettered the index by some 31 percent annually since inception.

Investors are enthusiastic about NXP  because many analysts are predicting that NFC cell phone payments will gradually replace cash and credit cards in the near future. Smartphones equipped with NFC technology will probably account for about a third of the $1.13 trillion worldwide market in mobile transactions  by 2014, according to IE Market Research.

JDSU shares have doubled during the past three months due to huge demand for the Silicon Valley company's optical gear.

Nvidia's stock surged after the company introduced the world's first dual-core mobile chip at the Consumer Electronics Show in Las Vegas in January. The chip maker is also the first to develop a quad-core processor for tablets, which it demonstrated at the Mobile World Congress in  Barcelona, Spain earlier this month. Nvidia's Tegra chips for smartphones and tablets use a core licensed from ARM. The processors designed by ARM are used by virtually every cell phone maker in the world. Nvidia announced plans at CES to also make chips with ARM cores for personal computers and servers. Both ARM and Nvidia  plan to challenge Intel's longtime monopoly of the PC and server chip market.

NXP shares have climbed rapidly since its IPO last August. NXP was spun off last year from Phillips, the electronics giant based in Amsterdam.

NFC technology is not new. What has spurred this sudden euphoria about the technology is the many unconfirmed reports that Apple will include a NFC chip in the iPhone 5. To date, no one has been able to overcome the seemingly insurmountable obstacles to implementing NFC mobile phone payments. Many feel that Apple will solve the problems and upset the payment industry dominated by Visa and MasterCard just like it did the music, mobile phone and tablet markets with the iPod, iPhone and iPad. The payment industry is now making a renewed effort to embrace NFC in a preemptive strike against Apple.

In order for NFC chips to be deployed on a large scale, the machines used for payment processing have to be  upgraded. Duetsche Telekom, the largest phone company in Europe, is reportedly interested in buying or forming a partnership with a payment processor as part of its plan to prepare for the use of NFC phones to make purchases. T-Mobile is a Deutsche subsidiary.

Google, for example, has had limited success with its NFC payment initiatives because it does not have a payment platform that could be used as an alternative to Visa or MasterCard. "Google does not have a billing relationship with 99 percent of its customers," points out Deutsche chief technology officer Ed Kozel. "That's our opportunity."

Kozel admits  that "everyone" expects Apple "to get into the market, and they know the price of being late" after seeing the impact of the iPod, iPhone and iPad.

NFC technology was originally developed in the late 1800's when Thomas Edison was experimenting with radio. NFC is now an extension of the ubiquitous radio-frequency identification (RFID) technology used in payment processing today.

Apple has applied for  several NFC patents recently, one of which revealed an e-Wallet icon, reports Patently Apple.

Patently Apple

Apple is considering launching a mobile payment service this summer, according to Richard Doherty, director of consulting firm Envisioneering Group. He thinks Apple will revamp iTunes, its popular service for purchasing digital music and videos. "When NFC meshes with iTunes, the world suddenly changes," Doherty said.

Apple has a prototype of a payment terminal for small businesses that could be used with the iPhone 5 and iPad 2, which will reportedly include NFC technology, Doherty said. Apple may subsidize or give away the terminals to retailers in an effort to speed adoption of NFC transactions, he said.

Toward the tail end of last year, U.S. carriers AT&T, Verizon Wireless and T-Mobile joined forces to create a nationwide payment network called ISIS. The partnership, which includes Discover Financial Services, plans to offer an alternative to the Visa and MasterCard networks.

Visa plans to defend its turf. Later this year, it plans to introduce its PayWave NFC payment system for mobile phones. MasterCard plans to offer a similar contactless network called PayPass.


Have We Seen The Last Of Credit Cards As We Know Them?

Nearly two decades ago Visa, MasterCard and Europay (now part of MasterCard) joined together to develop smartcard standards in order to ensure global interoperability for an emerging technology that promised to increase credit card security.
Since then, most European nations as well as Japan and Canada have adopted this so-called EMV international credit card standard and abandoned magnetic stripe credit cards for chip-and-pin cards in the process. The U.S., however, has yet to make such a move, as a look at the back of your credit card will quickly reveal.
Change appears to be afoot though, given Visa’s August 8 announcement that it will expedite implementation of the infrastructure needed to support chip-based payments and the fact that Wells Fargo, Chase and U.S. Bank recently became the first major U.S. credit card companies to offer a limited release of chip-and-pin credit cards. But do these moves really mark the beginning of the end for the magnetic stripe?
Previous threats to the magnetic stripe
To understand the present and predict the future, we must look to the past, specifically previous attempts to replace magnetic stripe credit cards. One of the first supposedly major threats to the magnetic stripe credit card was American Express’ Blue Cash, introduced in 1999 as a way to increase the security of still-novel e-commerce. The card had problems though – it protected billing and shipping information stored by users in “virtual wallets” but did nothing to protect offline transactions. Given this and the fact that consumers are generally insulated from fraud by $0 liability guarantees, the Blue Cash failed as viable alternative to magnetic stripe cards.
One of the next big things was Radio-frequency identification (RFID) contactless payment technology, which was said to provide a simple method of payment that could reduce time spent in checkout lines. However, security concerns and a lack of consumer interest led credit card companies to deem the benefit of the technology not worth the cost of equipping cards. So, contactless payments also failed to catch on.

With the U.S. again appearing poised to adopt new credit card technology, the following two questions must be answered in order to determine whether a shift from magnetic stripe technology is actually likely: “Why now?” & “What’s different this time around?”
Visa explained “why now” in announcing its plans to fast-track EMV within the U.S., saying that the trend of major issuers offering chip-and-pin cards as well as the anticipated popularity of Near Field Communication (NFC) mobile payments made it necessary to start building a foundation for chip-based payments. NFC, for those of you who don’t know, is a chip-based contactless payment technology that, among its multiple applications, allows one’s mobile phone to moonlight as a credit card.
The differences between this and other attempts to dethrone the magnetic stripe card are as follows:
  1. Infrastructure – This time around emerging smartcard technology will have the infrastructure necessary for success, given that Visa will not only waive the costly Payment Card Industry (PCI) Security Standard for merchants who enable their businesses to accept chip-based cards, but also shift credit card fraud liability toward the merchant for transactions where consumers cannot use the chip-based feature of their cards. In other words, merchants have the necessary incentive to provide a platform that will allow chip-based payments to catch on.
  2. Security – NFC lowers the range of communication between a payment device and the receiver from the few yards (in the case of RFID) to 4 inches, thereby significantly decreasing the likelihood of signal intercept. In addition, a PIN is required in most cases to unlock sensitive information.
  3. Influential backing – Google, Visa, Apple, MasterCard, Verizon, T-Mobile and AT&T have all invested in contactless payment technology.
  4. Varied applicability – NFC technology can also turn your smartphone into a boarding pass, coupon or means of acquiring information from NFC receptors anywhere, such as in a museum or from a bus stop ad.
  5. Reduces hassle – While contactless technology was previously added to existing magnetic stripe credit cards, NFC allows you to leave your wallet at home.
Without a doubt, big companies have a significant interest in replacing magnetic stripe credit cards with virtual wallets and thereby creating new revenue streams. However, for most consumers the magstripe works very well. It’s reliable, it’s small and, while it has fraud liabilities, consumers aren’t liable. So, the question therefore becomes: Are the corporate sponsors of contactless payment, so to speak, willing to go all-in? After all, consumers will only move en masse to virtual wallets if magnetic stripe cards are no longer available, and that would require wholesale changes to the payments industry. Whether or not we will soon see the last of credit cards as we know them in the U.S. therefore depends on how committed big companies truly are.

This article is from the editorial team at Card Hub, a leading online marketplace for all types of credit cards, including no international fee credit cards and other no fee credit


Capital One’s New 1.5 Percent Cash-Back Credit Card

Today, Capital One is introducing a new cash-back credit card that ultimately yields 1.5 percent in refunds on each purchase, as long as you’re patient.
The Capital One Cash MasterCard works like so: You get 1 percent of your purchases back in the form of a cash refund. Then, on the anniversary of the date that you first activated your card, you get a 50 percent bonus on whatever you’ve already earned during the past year.
For example, if you activate a new card on Oct. 1, 2011, and use it for $30,000 in purchases between then and Oct. 1, 2012, you’ll earn $300 during that year. Then, on Oct. 1, 2012, you’ll get another $150 added to your refund. You continue receiving the annual bonus on each anniversary.
So where’s the fine print here?
To be honest, I’m having trouble finding any other than the wait for that extra anniversary money. You can request the cash back whenever you like, even if you’ve earned only $1. You can get it in the form of a credit on your monthly bill or as a check. And you can ask the company to issue the refunds automatically, which eliminates the possibility that you will forget to request the money.
There is no limit on how much you can earn. The rewards never expire. And there is no annual fee.
Per usual, it’s a bad idea to run up debt on this or any credit card, since the value of the rewards is a tiny fraction of what you’ll pay in interest. Using reward cards drives up costs for merchants, who pass them along in the form of higher prices. Then again, if you sit out of the rewards game on principle, you’ll still pay those higher prices but not get any rewards.
As always when a good deal like this comes around, you have to wonder whether the company will be able to sustain it. Charles Schwab introduced a 2 percent cash-back card a few years back, insisted that it knew what it was doing and then got out of the card business when it became clear that its projections were way off. Time will tell whether Capital One has it right.
My primary credit card is still the Starwood Preferred Guest American Express, since I’m able to redeem the Starwood points I earn (one point per dollar spent) for Starwood hotel stays that yield a value per point of about 3 cents. That’s twice as much as the 1.5 pennies that Capital One customers will get for every dollar they spend on this new card.
Still, I do carry a Capital One No Hassle Rewards cash-back Visa card for two reasons. First, I need a backup card for merchants that do not accept American Express. Plus, Capital One cards do not hit users with the outrageous fees that most other card companies do when a transaction originates outside of the United States.
My No Hassle card yields just 1.25 percent cash back, so I plan to try to upgrade my current card to the new one. According to a Capital One spokeswoman, Sukhi Sahni, people like me can call the phone number on the back of our cards to make the request.
How do you think this new card stacks up to the Visa and MasterCard cash-back competition?


URL: http://bucks.blogs.nytimes.com/2011/08/23/capital-ones-new-1-5-percent-cash-back-credit-card/

Friday, 12 August 2011

Visa chip card push could spur mobile payments but raise web fraud risks

New payment terminals and software will ease NFC adoption, Visa says.

Visa Inc. this week announced a plan to replace the familiar magnetic stripe payment card with cards carrying chips, a move that experts say could hasten the day when consumers pay in physical stores with a wave of a mobile phone but also raise new fraud threats for online merchants.
The chip cards that Visa is pushing would let consumers pay as they do today in Europe and much of the rest of the world, by inserting the card into a reader and tapping in a PIN that the card’s chip then verifies. This is considered far more secure than the magnetic stripe, which can be easily copied and used to make phony cards.
But the part that impacts mobile commerce is the Visa requirement that the cards also carry an embedded antenna so that the chips can communicate with payment terminals wirelessly, for example, using the Near Field Communication technology that’s starting to be built into some mobile phones. The Visa plan includes incentives for merchants to install new payment terminals that can read the chip in both contact and contactless mode, which would mean there would be millions of merchant locations where consumers could also pay with a wave of mobile handsets containing NFC chips.
To spur adoption, beginning Oct. 1, 2012, Visa will offer bricks-and-mortar merchants who have payment terminals with dual contact and contactless capability an exemption from validating their compliance with the PCI Data Security Standard if at least 75% of the merchant’s Visa transactions originate from chip-enabled terminals. That will be especially appealing to larger merchants that have to undergo annual audits to verify their PCI compliance, audits that cost on average $225,000, according to a study last year by the Ponemon Institute.“As NFC mobile payments and other chip-based emerging technologies are poised to take off in the coming years, we are taking steps today to create a commercial framework that will support growth opportunities and create value for all participants in the payment chain,” says Jim McCarthy, Visa global head of product.
Visa’s plan will force bricks-and-mortar retailers to install NFC readers, says Avivah Litan, an analyst at technology consulting firm Gartner Inc. “This is all about card issuers and Visa pushing NFC,” Litan says.
There is nothing in this plan for online or mobile retailers, she adds. That’s because consumers will still have to enter card numbers on their computers or mobile devices to complete a transaction.
In fact, in the United Kingdom, the adoption of chip cards nearly a decade ago led initially to more online fraud, as criminals thwarted by the improved security at bricks-and-mortar stores turned their attention to defrauding e-retailers.
That has started to subside since 2008 when payment networks pushed online retailers to adopt the web security systems Verified by Visa and MasterCard SecureCode, says David Smith, chief marketing and communications officer at IMRG, a UK-based e-retailer trade association. Those Visa and MasterCard systems, which both use an approach known as 3-D Secure, require the cardholder to register his payment cards and authenticate himself with a password when making an online purchase. Visa and MasterCard did not immediately respond to a request for the number of merchants participating in Verified by Visa and MasterCard SecureCode.
Card-not-present fraud peaked at 328.4 million pounds ($531.4 million) in 2008, according to the UK Payments Administration, but dropped in 2009 to 266.4 million pounds ($431.1 million) and to 226.9 million pounds ($367.2 million) in 2010.
Some payment experts expect to see a similar increase in online fraud attempts in the U.S., if Visa’s plan does indeed lead retailers to upgrade their card-accepting terminals at store checkout counters.
 “For the card-not-present space it really means a lift in actual fraud attempts,” says David Montague, president of The Fraud Practice LLC, a consulting firm specializing in online fraud. He says that increase could start showing up in three years. “Fraud’s not going to go away,” he says. “It’s just going to move to whichever channel provides the least barriers.”
While Visa is acting alone it likely will force most merchants to follow its directive, as U.S. merchants use a single terminal to accept cards from all major brands.
Visa’s chief rival, MasterCard Inc., says it will wait and see how banks and merchants react to Visa’s directive.
“To date, consumer demand and market economics have not justified a migration in the United States,” a MasterCard spokesman says, but it is educating its customers about EMV. “Obviously, Visa’s decision will impact market direction and we will continue to consider our actions accordingly.”
American Express Co. did not respond to an Internet Retailer inquiry. Discover Financial Services says it is prepared to process chip card transactions in the United States and is committed to global standards, including EMV, the smart card standard that Visa, MasterCard, American Express and other global card brands all support.