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HSBC fault ’caused’ by Mega Payment

A fault at banking giant HSBC that left thousands of people without their wages before a bank holiday was caused by a mega-payment being rejected.

Some 275,000 payments were stranded by the problem that caused anger among customers ahead of the bank holiday in parts of the UK in late August.

In a letter to a committee of MPs, the bank said the delays were caused because it tried to push too big a payment through the system in one go. HSBC has now changed its methods.

Mega file

The fault meant that it was not just HSBC customers who were affected, but also customers of other banks who were expecting payments, such as wages, from HSBC accounts.

The bank received 326 complaints as a result and has had to pay £29,000 in compensation.

BBC News reported one case in which a payment was stranded, preventing a couple to move into their new home. They were forced to check into a hotel, with all their belongings in the back of removal vans.

In a newly published letter to the Treasury Committee, HSBC explains that on the Wednesday night a file was sent to BACS – the system that processes electronic payments in the UK – which exceeded the £1bn limit placed in the system.

As a result, the payment was declined, causing the backlog. The bank said this was the first time in 47 years of using the system that this had happened.

It said it had changed its systems to ensure the problem did not happen again.

Mega payment ’caused HSBC fault’ – BBC News. 2016. Mega payment ’caused HSBC fault’ – BBC News. [ONLINE] Available at: http://www.bbc.co.uk/news/business-35409005. [Accessed 27 January 2016].

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Europe’s big banks remain wary of doing business with Iran

A week after the lifting of sanctions against Iran, major European banks are still reluctant to handle Iranian payments as they remain wary of being the first to test the reaction of US authorities.

Despite guidance issued by the US treasury aimed at reassuring Europe that it was permissible to do business with Iran, excluding a number of entities and individuals that remain blacklisted, the continent’s big banks still err on the side of caution.

The Guardian approached 10 banks this week to see if they would process Iranian payments. The majority were unwilling to disclose whether they had plans to deal with Iran, a few said there was no change in their existing policy, and the London-based Standard Chartered, which was fined £400m by the US authorities in 2012, issued a statement to make clear it was not dealing with anyone or any entity that had anything to do with Iran.

This contrasts with the desire of European companies and European governments to increase trade with Iran from the current €7.6bn (£5.8bn) to the pre-sanctions figure of almost €28bn. An unprecedented number of EU business delegations have already visited Tehran and the Iranian president, Hassan Rouhani, is expected in Rome on Monday and then Paris on Wednesday to revamp Iran’s relations with Europe.

“I am yet to find one tier-one European investment bank that wants to go back into Iran,” said a senior European banker who did not want to be named. Sanctions compliance departments in big banks are busy digesting a 50-page guidance provided by the US treasury’s office of foreign assets control (OFAC) – some say the text is so complicated it may deter businesses from returning to Iran, while others fear it may be open to interpretation.

The Guardian visited an HSBC branch in London last week to see if it was possible for an Iranian resident in the UK to open a personal bank account. It was not still possible but that was likely to change in two weeks’ time, a branch officer said.HSBC later issued a statement, saying: “There are a number of factors we take into consideration when opening a new account and we judge each application on an individual basis.”

Barclays, Société Générale, RBS, Citi, Commerzbank and Deutsche Bankdeclined to say if an Iranian national unrelated to the Iran government, such as a student, was able to open a personal account with their banks. “Deutsche Bank will, for the time being, stick to its decision of withholding from doing business connected to Iran,” said a spokesperson.

The general mood is to wait and let the others risk first. Smaller European banks or those in China and Russia that are not concerned about the US market, however, are more likely to lead the way.

Banks are particularly worried about US primary sanctions related to terrorism and human rights violations that remain in place. “We know the Iranian Revolutionary Guards (IRGC) are sanctioned as a terrorist entity. They own a vast amount of economy through bonyads [trusts], ownership schemes which we can’t fathom, so it’s very difficult to operate in Iran without hitting the Revolutionary Guards or somebody else who is sanctioned by the Americans, and you are extra-territorially sanctioned by the Americans if you do deals with IRGC-linked elements,” the senior banker said.

“Moreover, the FATF [an inter-governmental body combating money laundering and terrorist financing] stills views Iran as a non-compliant jurisdiction of money laundering, as we all know corruption is rampant, so it’s not just worth the candle at the moment.”

Citing the case of BNP Paribas, which was heavily fined last year over sanctions violations involving Iran, the senior banker said European banks were worried that the US could ban them from dollars in the US capital market.

“Sanctions are still in place in the US really. It’s only nuclear-related sanctions that have been relaxed, even if you even open an office in Tehran and you’re using Microsoft operating system, you can still be in trouble,” said the banker.

“It’s not just OFAC, you’ve got other regulatory authorities in the US, which are not as transparent about their guidelines, particularly New York department of financial services, which doesn’t offer FAQs and won’t meet non-American entities to discuss issues about sanctions. You’ve got the Federal Reserve, you’ve got a lot of agencies out there which can punish you for the same offence, so it’s not just OFAC.

Iranians using Bank Melli Iran cash machines in Tehran. Smaller European banks or those in China and Russia are expected to make the first moves into the country. Photograph: Vahid Salemi/AP

“There’s also a reputational risk, whoever goes in first they’re going to be watched like a hawk by those who oppose the deal, the Israelis, Saudi Arabians, Republican American entities,” the banker said, saying that his bank was particularly under pressure from the US pro-Israel lobby, AIPAC. “I can’t see any movement for at least six to 12 months.”

“Whoever goes in first they’re going to be watched like a hawk by those who oppose the deal”

A senior European banker

The banker added: “Most banks in Europe and UK have been sanctioned for transgression on Iran, and some of them have entered agreement with OFAC, what’s called the deferred prosecution agreement, where they’ve said they won’t do any deals with Iran, so do they break that agreement, has that agreement changed?”

Iran’s Middle East Bank said this week it has requested to be linked up with 40 international banks through the Swift global transaction network. “My feeling is it is going to take a couple of weeks or so before we start to see proper re-engagement. It will be slowly, slowly,” the bank’s head, Parviz Aghili, told Reuters.

Many services are denied to Iranians not because providers are legally bound to refuse them but because they err on the side of safety for fear of running foul of the policy. At least one Iranian said his account was closed down recently after 10 years. “I know six other ordinary Iranians in the UK who’ve had their bank accounts closed abruptly,” he told the Guardian.

A businessman from Switzerland who visited two major Swiss banks this week said he was told they were waiting for other banks to try first and see the reaction of the Americans. “Banks are worried about interpretations of these guidance’s, so they’re still waiting for others to test the water.”

Emil Dall, an analyst at the Royal United Services Institute who has read the guidance, said European companies still fear being caught up in what remains a complex US sanctions web. He said while the US treasury has offered substantial clarifications, they reveal a number of possible practical complications for EU companies.

“One complication is the matter of the definition of ‘US control’ or ‘US ownership’. US-owned or controlled entities will still be bound by the US trade embargo on Iran if a US person holds a 50% or greater stake or ‘otherwise controls the actions, policies or personnel decisions’ of the entity,” he said. “Exactly where the lines of control will be drawn and how the definition will be enforced remains to be seen, but EU companies with a US parent will need to ensure that their business is conducted without US involvement – whether that be in terms of decisions, materials or support.”

However, Dall said EU banks can rest assured that they will not be subject to US penalties for their relations with Iranian banks, even if those Iranian banks conduct business with still-sanctioned clients. “This clarification is highly noteworthy. It was feared that the financial sector would be one of the slowest moving in terms of re-engagement with Iran. This clarification may now alter the calculations of banks, in the process increasing the likelihood that other sectors are less inhibited by their inability to find methods of financing for Iranian trade.”

“All of the clarifications provided by the US and EU authorities make one thing clear: companies looking to re-engage with Iran face a monumental due diligence task in ensuring that their Iranian business does not have a sanctioned beneficiary.”

Europe’s big banks remain wary of doing business with Iran | World news | The Guardian. 2016.Europe’s big banks remain wary of doing business with Iran | World news | The Guardian. [ONLINE] Available at: http://www.theguardian.com/world/2016/jan/24/europes-big-banks-remain-wary-doing-business-with-iran. [Accessed 26 January 2016].

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Millions of bank customers face increase in fees

Millions of current account customers are being advised to consider their options, following an increase in fees, and changes in interest rates.

From Monday, monthly charges on the Santander 123 account – held by 3.6 million people – will more than double.

At the same time HSBC is cutting interest payments to customers on its range of cash Individual Savings Accounts (Isas).

Barclays also announced more cash rewards for those who switch.

The change in Santander fees – announced in September – will see customers paying £60 a year, instead of the previous fee of £24.

The charge for its 123 credit card rises from £24 a year to £36.

‘Do the maths’

Last year the Santander account proved very popular, with more than 27,000 people switching to it in a single month.

But experts said that – even after the changes -it still offered relatively generous interest payments of up to 3% a year, and cashback of up to 3% on some household bills.

“Don’t jump ship until you’ve done the maths,” said Hannah Maundrell, editor in chief of advice site Money.co.uk.

“To put it simply, you need to look at how much you’re earning in interest and cashback. If it’s less than the new £60 a year fee you need to take it as a wake-up call to seriously consider your options.”

Analysis: Simon Gompertz, Personal Finance Correspondent

This is a sign of how dramatically current accounts are changing.

For years there was little to choose from between banks – the accounts were described as free but paid no interest and had hefty charges for going into the red.

Now switching is easier and banks are jostling for business with offers of interest and perks but adding new fees as well, features which can change at any time.


Santander said it was raising fees because of the increased cost of running a bank, such as capital requirements and the government’s bank levy.

It was raising the cost of owning a credit card because of new European limits on interchange fees – the amount that banks can charge retailers for processing payments.

But Kevin Mountford, banking expert with Moneysupermarket.com, said banks were simply trying to improve their profitability.

“Banks are trying to increase their margins, through stealthy changes in fees,” he said.

man with cash

‘£220 to switch’

From Monday, HSBC is reducing the amount it pays to savers who hold HSBC Loyalty Cash Isas to as low as 1.19%, part of a continuing trend of falling savings rates.

Six of the UK’s biggest lenders cut rates last month, and Santander will reduce Isa rates in February.

Indeed last week the Bank of England announced that average savings rates fell to a record low in December.

As a result, consumers looking for better savings rates have turned to current accounts, which can offer better deals.

Barclays has said it will double its cash rewards programme for those who take out an account this month.

Marks and Spencer is already offering incentives worth up to £220 to anyone who switches.


Millions of bank customers face increase in fees – BBC News. 2016. Millions of bank customers face increase in fees – BBC News. [ONLINE] Available at: http://www.bbc.co.uk/news/business-35265467. [Accessed 18 January 2016].

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Former Co-op Bank executives banned from senior financial roles

The Bank of England has banned two former Co-operative Bank executives from holding senior banking positions.

The BoE’s Prudential Regulation Authority said former chief executive Barry Tootell had been banned for “breaches” in the running of the bank.

Keith Alderson, a former managing director of the Co-op Bank’s corporate and business banking division, was also hit with a ban.

The Co-op Bank came close to collapse in 2013.

In addition to the bans, the PRA fined Mr Tootell £173,802 and Mr Alderson was fined £88,890.

The PRA said Mr Tootell “did not exercise due skill, care and diligence in carrying out his role as chief financial officer and later chief executive”.

PRA chief executive Andrew Bailey said: “This action makes clear that there are serious consequences for senior individuals who fall short of the PRA’s expectations.”

Between July 2009 and May 2013 Mr Tootell “was centrally involved in a culture within the Co-op Bank which encouraged prioritising the short-term financial position of the firm at the cost of taking prudent and sustainable actions to secure the firm’s longer-term capital position,” the PRA added.

Mr Alderson “did not take reasonable steps to ensure that Co-op Bank adequately assessed risk arising across the Britannia Corporate Loan Book”.


Co-operative Bank merged with the Britannia building society in 2009. The deal was later held responsible for the near collapse of the bank.

In 2013, the bank revealed a £1.5bn black hole in its accounts.

Co-op Bank chairman Paul Flowers also stepped down over concerns about expenses in 2013, before pleading guilty to drug possession in 2014.

Simon Walker, director general of the Institute of Directors, said: “This is further proof that the leadership of the Co-operative Bank in the run up to its spectacular failure was woefully lacking in the skills, knowledge, and decision-making needed for a major financial institution.”

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Ikea opens a bank with a fixed-rate savings account paying 2.55% – and it plans to launch more simple deals next year

It plans to launch more simple savings accounts next year and already offers loans and store cards.

Unlike the majority of savings deals offered by banks in the UK, your cash – up to £75,000 – is not protected under the UK Financial Services Compensation Scheme for if a bank or building society goes bust.

Instead, it comes under the European scheme, where the maximum is €100,000 (around £72,000).

Similarly, another top payer, RCI Bank, which pays a slightly higher 2.7 per cent for three years is also covered by the European scheme.

The top one-year deal comes from United Trust Bank, with its rate for new savers to 2.15 per cent from last week.

In the High Street, the best you can do is 1.85 per cent with Yorkshire BS’s bond, which launches tomorrow. It is also available from its offshoots, Chelsea, Barnsley and Norwich & Peterborough.

For two years, the best rates come from RCI Bank and Harrods Bank, both at 2.35 per cent, while on the High Street, the top deal is 2.1 per cent from the Yorkshire BS.

On fixed-rate cash Isas, the best one-year deal comes from AA Savings at 1.76 per cent and Tesco Bank at 1.75 per cent.

For two years, you can earn 2.01 per cent with AA Savings or 2 per cent with Shawbrook Bank or Principality BS.

Savers need to be quick to snap up these top rates. Smaller banks and building societies only want to attract a relatively small amount of money.

As a result, their top deals do not stay around for long – in some cases, no more than a week.

Meanwhile, larger banks continue to cut their rates. Last week, Halifax, one of the biggest, cut the rate it pays on its one-year bond to just 1 per cent – less than you can earn on easy-access accounts with more generous providers.

Its three-year deal pays just 1.6 per cent. It also cut its cash Isa rate to a tax-free 1 per cent for one year and 1.25 per cent for two years.


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Bank jobs could fall by 50% in 10 years says ex-Barclays boss

Half of banking jobs and branches could be scrapped in the next 10 years as smaller start-up firms take on traditional lenders, according to a former bank chief executive.

Big lenders will struggle to keep up with technological change, former Barclays boss Antony Jenkins said.

For Barclays that would mean the loss of 66,000 jobs globally and 700 UK branches.

Mr Jenkins added that high pay for bankers was coming to an end.

“The number of branches and people employed in the financial services sector may decline by as much as 50% over the next 10 years, and even in a less harsh scenario I predict they will decline by at least 20%,” Mr Jenkins said in a speech.

‘Unstoppable force’

Mr Jenkins was implementing a cost-cutting drive at Barclays, involving the loss of thousands of jobs, when he was fired in the summer.

He described finance as getting close to an “Uber moment”, referring to the taxi firm which is causing disruption among traditional private hire firms.

Technology was “an unstoppable force”, he said in the speech.

A large amount of capital is being invested in the new firms, he said, and they could soon become household names among their customers.

What is stopping the very fast changes seen in industries such as taxi hire are regulation and other hurdles, which limit new entrants into finance.

Analysis: BBC Today presenter Simon Jack

So far finance hasn’t had much tech, Mr Jenkins said in his speech. We are at “fintech 1.0” and we are about to hit “fintech 2.0”, he said. Because of the drop in staff numbers, the challenge will be to find new ways of employing people displaced plus replacing revenue, he added.

When asked (by me) whether he was “too nice” to run a bank, he said none of his colleagues had ever described him as too nice. But, he thinks he did move the needle on values and ethics and stuck to his position that the bank’s reputational issues are the work of the few not the many.

High pay over?

“The barriers to entry are quite high in financial services, so that will allow the incumbents to probably last longer than in many other industries.”

“The risk is that incumbents will be pushed into this utility, capital-heavy role that we’ve seen in other industries like telecoms. Ultimately, that will become intolerable to shareholders, so we could see consolidation and mergers,” he said.

The days of high pay in banking may also be numbered, he said.

“If banks want to really compete for talent successfully, they are going to have to make themselves interesting places to work. It can’t just be about the money, because frankly the money isn’t going to be there the way it was before 2008.”




– Via BBC News



“Hard work beats talent when talent doesn’t work hard” – Tim Notke

I didn’t go on to further education. With hindsight, would I have done? Maybe. Once I left school I went straight into work; £20 a day collecting donation bags for a charity whilst hanging out the side of a white transit van. It wasn’t the most glamorous of jobs but I worked hard and took home my money, and back then I had no bills so it was gloriously wasted on new clothes, shoes and other things I didn’t particularly need.

I then found my calling – people. The majority of the rest of my working life has been spent in customer facing roles in the retail industry selling mobile phones, cameras and jewellery. More recently I worked door-to-door fundraising for national charities.

Jobs like this have always excited me – after all I am a people person – and I am in my element when I can have a conversation with somebody. I enjoy finding out more about them, offering a solution, and closing a sale where the customer and I are both happy.

I have learnt that it pays to build a rapport. If you develop a relationship and create trust, that’s when customers remain loyal to your company and that’s what customer service, in my eyes, is all about. In the past there have been many times I have received a warm handshake or a return visit to say thank you from people who I’ve built a friendship with, which essentially leads to further business from these loyal customers.

Though jobs like this are highly KPI driven there is no need to ignore the needs and wants of people, and despite focussing on targets it has never stopped me putting the customer first.

I think what I enjoy the most about the role is the diversity of people, as not one person I speak to is the same, each with different mannerisms, interests, and lifestyles, meaning everybody wants something different. It is exciting exploring their different needs and matching it to a product or service I can offer.

Now I find myself as the Customer Retentions Manager at CheaperGroup. I’ve been here two weeks now and so far I feel like I’m settling in well, despite it being a new role to me (I’m generally in front of the customer not on the other side of a phone). The job has been exciting, educational and interesting, and these are the main factors I look for in a job.

A large part of my role is exploring customers’ needs – it’s a great feeling working together with the rest of our team, the suppliers, and the customer to explore what they need and provide that service to the best of my ability.

I have had numerous phone calls and incoming/outgoing emails, and the diversity of people is still evident. No two people are the same; some prefer a more formal approach, some are more than happy to chat about their weekend for a little while before looking into resolving their issue or query.

I guess the reason behind the title quote, is although I have no university qualifications (despite a couple of NVQ’s I have picked up through work) I have worked extremely hard in every role and it’s always been recognized. I’ve never enjoyed ‘standing still’ in a job; I am forever looking to move forward and sometimes throwing yourself into your work and looking to constantly improve is better than feeling like you know everything and doing the bare minimum.

With this in mind CheaperGroup feels like more than just a job. It feels like a strong career move.  With the company growing rapidly, I’m excited to be part of its expansion and personally progress alongside it. With a wealth of customer service experience already and the desire to constantly improve, I know this position, and this company, will help me further develop, and I’ll be doing so with what seems to be a diverse team. We have people from different backgrounds with different interests and lifestyles, all working together towards the shared goal of the development and progression of the company, and I feel so privileged to be a part of it.

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A history of UK banks’ system failures

HSBC’s meltdown has left business customers unable to pay salaries or suppliers, but this is not the first time such a crisis has hit a British bank …


9 June 2012

The worst banking meltdown to date hit millions of customers of RBS, NatWest and Ulster Bank, locking them out of their accounts for days, and in the case of Ulster Bank customers, for weeks.

The meltdown hit not only customers of the three brands owned by RBS Group, but also people who were expecting salary payments from businesses that held accounts with the bank and other transfers between banks. RBS was later fined £50m by regulators, but the episode is understood to have cost the bank more than £100m.

27 March 2013

Less than a year later, NatWest’s systems fall over again, leaving millions of customers temporarily unable to withdraw cash or make transactions.

2 December 2013

A technological banking glitch on one of the busiest online shopping days of the year left millions of shoppers unable to pay for transactions using their credit or debit cards. The bank? You might have guessed by now: it was RBS Group.

6 December 2013

This time it wasn’t actually RBS’s fault, as the bank came under cyber attack, which, just four days after the earlier one, prevented some customers accessing their accounts.

26 January 2014 

Lloyds and TSB become the latest high-street banks to experience a technological meltdown, which led to many people being unable to withdraw money or use their cards.

Lloyds said the problem was affecting debit cards and its internet banking service but not credit cards, while TSB said some customers were unable to use debit cards or withdraw money from ATMs.

17 June 2015

RBS suffers yet another IT fiasco after admitting it could take days for customers to receive 600,000 payments that failed to enter accounts overnight.

28 August 2015

HSBC joins the ranks of IT failures, with many business customers unable to pay salaries to staff or make payments to suppliers – as the bank holiday weekend looms.



– Via The Guardian


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Police warning after card skimming devices discovered on Warrington cash points

THREE suspected card skimming devices have been seized by officers after the technology was uncovered on cash points in the town this weekend.

This is not the first time similar devices have had to be removed from ATM machines in the town this year.

Police have released a photograph of the latest devices seized so members of the public are aware of what to look out for.

One devices was found at the Natwest Bank on Warrington Road in Culcheth at 8.15pm on Sunday.

Other devices have been found in the town centre including at Barclays Bank in Golden Square.

A spokesman for Cheshire Police has issued a reminder to shoppers to always cover the pin pad when entering details.

He added: “Please use your eyes around the cash point and check for anything out of place on the machine or anyone acting in a suspicious manner such as paying close attention to the cash point.”

The design of the device used by the thieves is simple but effective.

A false cover, which is often made in a similar colour and material of the cash machine, is inserted into the card slot.

This is connected to an iPod which is installed above the keypad and captures the customer entering their pin via a camera.

The iPod is hidden by a case which again is often made in a similar colour and material as the cash machine.

The card becomes lodged in the machine leaving the customer with no choice but to walk away without the card.

The skimming device is quickly retrieved then by the fraudster who now has the means to go on a shopping spree at the customer’s expense and can potentially run up staggering bills.

The spokesman for Cheshire Police thanked the ‘observant members of the public’ who spotted the devices and have ‘frustrated the efforts of the alleged offenders’.



– Via Warrington Guardian



The Launch of CheaperPay

I come from relatively humble beginnings as a salesman, and my employment experience is layered with marketing and promotions. My career to date has afforded me a broad and integrated perspective on sales and marketing, including elements of design, development and the implementation of programs and activities; I am no stranger to the creative aspects of launching a business. From my early days as an events manger to my new founding role at CheaperPay, I have a proven ability to identify, nurture and deliver a business’s requirements for growth.  My career path has been driven by my desire to adapt and learn, and now sees me advance to my position as one of the Directors at CheaperPay.

My first position within the payment industry was with Jonathan Atkins, the area manager for Handepay Merchant Services. It was under his tuition that I gained my first exposure to the industry, and it was thanks to him that I acquired so much knowledge so quickly. During my employment with Handepay, I successfully completed my WorldPay Accreditation exam, which then permitted me to join the field as a sales consultant. As I reflect on my time at Handepay, I am thankful for the exposure, professional wisdom, attention to process detail and the fine-tuned sales approach that I witnessed in my time there.

I was flattered and excited when James Jukes (founder of CheaperGroup and other successful companies) came to me with the opportunity to start an Independent Sales Organisation within the card payment industry.  I knew that it would entail a long road, personal sacrifice and hard work, but with a shared vision and agreed direction, I was motivated to make it happen.

I was welcomed by a wonderfully vibrant, ambitious and dedicated group of people when I arrived at CheaperGroup. It was obvious from the outset that James and co-Director Lucas Borthwick have built up a portfolio of thousands of customers so rapidly for good reason. My time here thus far has shown me that there is never a dull day working out of this office, as we share ideas, knowledge and experiences with one another. I was also lucky enough to join CheaperGroup just as they took over their 2,500 square feet of brand new offices on Collingwood Street in the heart of Newcastle. This bigger and better headquarters is a sign of the company’s growth from strength to strength.

Setting up an ISO within this sector certainly has its barriers to entry. As you may expect in the financial services industry, everything is heavily regulated. After much groundwork, we secured a partnership agreement with Allied Irish Bank Merchant Services (AIBMS) and finalised an agreement with a third party terminal supplier (Global Payment Solutions), a move that very quickly made CheaperPay a reality rather than just an idea. This inception period has been a very exciting time as we prepare to go ‘live’ and begin trading.

Our plans for the direction, development and sustained growth of CheaperPay have been clear from the start. We each understand that we want to create a broad portfolio of clients and be in a position where we own our customer contracts, ultimately taking us from an ISO to a fully fledged PI (Payment Institution). Taking the major step from ISO to PI has certain criteria that must be adhered too, such as formal approval from the FCA (Financial Conduct Authority) and other government bodies that monitor and regulate PI’s in the United Kingdom.

This is an exciting time for myself personally and another great expansion for the CheaperGroup, which I look forward to reporting back on as we grow into the market. Thanks for reading and please follow me on social media.

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Most Credit and Debit Cards Will Have Microchips By End of 2015

Rochester, N.Y. (WROC)- In 2014, big name retailers such as Target and Home Depot, took big financial hits thanks to identity theft.  Hackers stole consumer credit and debit card information right under their watch.

“The risk over the years has really escalated,” says Jeffrey Bocach, President & CEO of Advantage Federal Credit Union.

Now by October 2015, banks, card issuers and retailers will be expected to upgrade all credit and debit cards with EMV microchips.  EMV stands for Europay, Mastercard, Visa– a system other countries have long implemented to protect consumers.  Their microchips function similarly to SIM cards that are in cell phones, encrypting information.

“It’s encrypted and it changes for every transaction,” says RIT Professor Rick Mislan, a computing security expert.

Mislan says the chips are an improvement over traditional magnetic stripes.

“They’re not encrypted or secured in any way so when the card is swiped they go across the communication channel identifiably as numbers,” says Mislan.

But the transition to EMV isn’t cheap.

“There’s a good deal of expense, every single plastic card has to be reissued,” says Bocach. “Both debit cards and credit cards.”

Bocach says his bank has already started the transition and expects to meet the year end deadline:

“We have various plans to reach out to people.  If you’ve already had a compromised card, you’re gonna understand it right away.  It’s why we’re doing this.”

If not, Advantage Federal Credit Union will follow suit as many other banks have, including Bank of America and Chase, adding explanations on their website for the types of plastic hitting your wallet.

“Will it entirely eliminate fraud? Probably not,” says Bocach. “Will it reduce it dramatically? Yes.”

Those are odds that banks and consumers can hope– fall in their favor.



-Via Rochester First