1Q 2010

pulsationsThe Debit News MagazineSM PULSE Fraud Prevention 360° New Web-based Resource Supports Participants in Combating Card Fraud reventing and responding to payment fraud requires rigorous management techniques Pand strategies on the part of the financial institutions that issue cards. To assist participants in this endeavor, PULSE has launched a new online resource for payment card fraud prevention information. PULSE Fraud Prevention 360° is a Web-based resource encompassing information PULSE gathered from its fraud experts and a wide variety of industry and government sources. The site is available to PULSE network participants 24/7 should they need to view the latest fraud-related news, review considerations for reissuing debit cards following a breach or read tips on spotting fraud in transaction data. “PULSE Fraud Prevention 360° is a resource dedicated to assisting network participants in combating the continued onslaught of card fraud,” said James Cichy, PULSE vice president, fraud management. “The site is designed to help institutions curb fraud losses and maintain the secure electronic payments services that consumers expect.” The site will be updated on a regular basis to keep participants abreast of fraud-related news and the latest fraud-management strategies. (continued on page 10) The Value of PIN Debit Security, Reliability and Ease are Responsible for PIN’s Popularity

s the payments industry has evolved through the recession, PIN debit continues to be the debit payment of for consumers, delivering exceptional value for issuers and merchants through lower fraud losses and . A Consumers increasingly are choosing PIN debit over signature debit, especially in the in-store environment. According to the 2009 Debit Issuer Study, PIN debit usage grew nearly twice as fast as signature debit (15 percent versus 8 percent) during the second half of 2008. More recently, First Data’s SpendTrend report revealed that, on the Friday after Thanksgiving 2009, PIN debit transactions were (continued on page 11)

PULSE Internet PIN Debit PULSE Select® Goes Virtual to Launch Surcharge-free Page 4 Network-wide ATM Network Insights & Solutions Page 8 Page 9 VIEW FROM THE TOP

Dear PULSE Participant,

hether or not the U.S. has emerged from “The Great Recession,” one thing is certain: debit has remained a bright spot for financial institutions throughout Wthe economic downturn. As consumers have become more diligent about managing their finances, debit cards have become increasingly popular. According to the December 2009 Nilson Report, 51 percent of U.S. card transactions (including credit, debit, prepaid and EBT cards) came from debit cards in 2008, compared to 36 percent in 2003. The publication also reported that debit cards represented Dave Schneider 37 percent of total U.S. card spend in 2008, compared to 28 percent in 2003. PIN debit growth has outpaced that of signature debit for the past several years. When you consider the value PIN debit offers financial institutions, merchants and consumers, that fact “At PULSE, we strive to should come as no surprise. One of the primary differentiators between PIN and signature debit maximize the value of PIN is a measurable reduction in fraud losses. According to PULSE’s 2009 Debit Issuer Study, net fraud losses per card per year were more than twice as much for signature debit transactions than for debit for your financial PIN debit and ATM transactions combined. And, because cardholders must enter their PIN to authorize transactions, rates and back-office costs are much lower than with other institution. And the payment methods. PIN debit also offers faster settlement. benefits of PULSE On May 1, 2010, PULSE will introduce pricing changes for 2010 that will increase PIN debit revenue paid to issuers (see related article on page 10). Collectively, the pricing changes are participation are more projected to increase the average interchange revenue paid to PULSE issuers on PIN debit transactions (net of PULSE’s new issuer fee for these transactions) by 18 percent. than just monetary. We At PULSE, we strive to maximize the value of PIN debit for your financial institution. And are continually making the benefits of PULSE participation are more than just monetary. We are continually making investments in our business, such as the roll-out of Internet PIN debit network-wide, as an investments in our optional payment product, to increase debit-based payment choices (see related article on page 8). business...” In addition, PULSE continues to support industry research, provide enhanced professional development opportunities and offer value-added services such as DebitFacts.org, a consumer- focused debit informational Web site. All these advantages are possible because debit remains our sole focus. If you would like to review any aspect of your PIN debit program, simply give your account manager a call. They will be happy to assist you.

Sincerely,

Dave Schneider President

All debit all the time SM 2 PROFESSIONAL DEVELOPMENT PULSE Webinars Where You Want, When You Want

ULSE hosts a wide range of profes- Currently, available sessions include: • Regulatory and Legislative sional development webinars PULSE Debit Performance Developments Pand webcasts to keep network Webcast Series • Fraud Prevention & Security Forum participants informed about trends and • Innovative Deposit Products to • Mitigating Card Issuing Risks developments in electronic payments. Increase Revenue Through Fraud Prevention In addition to the live events, sessions • Resolution Fundamentals – are recorded and are available to partici- A participant log-in ID and password an Introduction to Chargeback pants through on-demand replay. are required to PULSE’s on-demand Management Participants who were unable to webinars. To view the available webinars, • Advanced Chargeback Resolution attend a particular session can listen to go to www.pulsenetwork.com/pd. To be Forum webinars online at their convenience. added to PULSE’s professional develop- Or, if you attended a session and found ment notification list, e-mail your name, it particularly valuable, on-demand PULSE Academy company, e-mail address and phone replays enable you to share the • Maximizing Your Network number to Melissa Voelkner at information with your colleagues in Participation [email protected]. a convenient format. • Beyond Customer Service: Turning Customers Into Partners Questions? Comments?

E-mail us at [email protected]

PULSE has launched a new e-mail address dedicated to responding to your feedback. Queries and comments will be answered within one business day. We look forward to hearing from you.

3 p u l s e n e t w o r k . c o m PULSE Goes Virtual Online Forum to Feature Expert Panel his year, PULSE is going virtual. In lieu Industry experts will focus on best prac- The 2010 Insights & Solutions eForums, of the PULSE Conference, PULSE is tices and offer additional insight into what provided free of charge to all PULSE T adding two interactive eForums to makes certain programs successful. participants, will deliver industry insights its professional development agenda. Questions and comments submitted in a concise, efficient approach. Individuals may conveniently access prior to the eForum will be addressed Both eForums will be 90-minute these eForums from their home, office or during this roundtable discussion for sessions, compared to the one-hour virtually anywhere else in the world. Each further exploration of the topics at hand. sessions used in PULSE’s other Web-based 90-minute session will provide targeted The event will also feature live audience professional development programs. This information on the topics most requested questions throughout the session. change is a direct response to feedback by PULSE financial institution participants. “This new offering is designed to from PULSE participants requesting longer, The 2010 Insights & Solutions eForums, augment our current professional develop- more in-depth sessions with additional the first of which will take place in April, ment lineup,” said Cindy Ballard, PULSE time for audience questions. will be conducted via webcast, featuring executive vice president, Communications For more information on how to live streaming video. The first eForum will and Marketing. “By using interactive register and submit questions and focus on revenue generation, marketing technologies, we have created a program discussion topics prior to the event, visit strategies and customer service. Financial through which our participants can receive www.pulseeforum.com. For event institutions that have experienced unique the same level of education that has updates, log onto Twitter and follow success in these areas will share their become standard at the PULSE Conference @pulsenetwork/eforum. accomplishments through case studies while benefiting from the convenience The PULSE Conference will return in that pinpoint the key tactics of their and cost savings of an online program.” the spring of 2011. Dates and location will programs and the outcomes they PULSE is sensitive to the current be announced later this year. have achieved. economic climate and the expenses Each case study will be followed by a associated with traveling to a conference. live discussion with a moderated panel.

April 29, 2010 Insights & Solutions 1:00 - 2:30 p.m. CDT

Patricia Hewitt is director of Debit John Moore, a long-time believer in Doug Rappoport is a product manager Advisory Services for Mercator Advisory word-of-mouth marketing, shares business on the Rewards Management and Group. In addition to her previous role as and marketing advice with companies Enhancement Services team at Wells Fargo. principal in her own consulting firm, Hewitt seeking to earn unwavering devotion from He is a member of the core group focused has held senior leadership positions at a both customers and employees. Drawing on integrating the Wachovia Possibilities major commercial bank, a leading software from his unique experiences with Rewards® program with the Wells Fargo development firm and a Fortune 500 finan- Starbucks and Whole Foods Market, he Rewards® program. Doug brings to this cial services company. Her broad range of began the Brand Autopsy Marketing role experience and expertise in building experience includes merchant acquisition, Practice in 2005. Moore focuses on the rewards programs, specifically focusing on debit product development and strategic influential power of devoted customers merchant-funded rewards. He successfully business and alliance management, as well and brings a sense of urgency and launched the Wachovia Earn More MallSM as retail and software support innovation to audiences, creating new merchant-funded program. and development. ideas and spurring on business and brand advancement.

All debit all the time SM 4 IndustryVoice The Business of Financial Institution Security

confidential information. According to a recent survey by Wolters Kluwer Financial “Protecting the Services, two-thirds of banks polled rely on unencrypted delivery methods to send confidentiality confidential data. One-third use regular e-mail, while another third rely on regular and integrity of or overnight mail or are unsure of the method they employ. information, and Savvy businesses like STAR Financial Bank are proactive about securing their monitoring for By Geoff Bibby Zix Corporation customers’ personal information because they realize their reputations – and their and detecting inancial institutions are increasingly bottom line – are on the line. According to concerned with protecting privacy the Ponemon Institute, the average cost of unauthorized access Fand preventing data breaches, and a data breach to an organization that has to information, are with good reason, because millions of experienced one is $6.6 million, or more dollars and the corporate reputation are than $200 per compromised record. on the line. In a recent survey by the federal mandates.” American Institute of Certified Public Regulatory Mandates Accountants on crucial technology For a financial institution, information customers build their financial security. This initiatives facing businesses globally, is one of its most important assets. The PULSE participant is now helping protect information security management, privacy Federal Financial Institutions Examination account holders’ personal financial infor- management and secure data storage, Council considers the use of encryption mation online, as well. transmission and exchange topped the list. for information in transit a prudent layer “We’re very aware of our customers’ E-mail has become a primary way to of security and a recommended default privacy, and we’re determined it won’t be transfer and exchange sensitive informa- practice. breached,” said Information Security Officer tion. It must be protected. Gartner, Inc. says Protecting the confidentiality and Barry Birchards. “Before we implemented recent federal compliance legislation puts integrity of information, and monitoring an e-mail encryption solution, we were pressure on organizations to encrypt elec- for and detecting unauthorized access getting privacy questions from customers tronic transmissions of personal data, and to information, are federal mandates. all the time. Now they can see right away encourages states to implement similar Individual state laws requiring customer that our e-mail is encrypted, and that legislation. notification of compromised unencrypted makes them feel safer.” Some organizations were already electronic information are quickly becom- Financial institutions’ reputations and onboard with encryption technology, even ing the norm. A federal bill that may be financial well-being are at risk if they do before the legislation. STAR Financial Bank, even more stringent is currently under not secure personal information. Financial a PULSE participant based in Fort Wayne, debate. companies have also losses can occur from identity theft, loan Ind., uses encryption to safeguard its implemented data protection require- fraud, money laundering and other crimi- e-mail traffic. ments that include use of data encryption nal acts that can stem from data leaks. The Don Smith, STAR Financial’s Security for transmissions of cardholder data and cost of notifying each affected customer Information Officer, said, “Securing the sensitive information over public networks. and subsequent reactions will have signifi- delivery of information to customers is a E-mail encryption complies with federal cant negative bottom-line impact, not to high priority for us, not only from a legal and state regulations. Policy-based e-mail mention the cost of regulatory fines. and regulatory point of view, but more encryption inspects outbound e-mail to Institutions must keep government importantly, because of the peace of mind see if it violates corporate policy. If the compliance and customer security a top it provides. We had been receiving e-mail policy says an e-mail should be encrypted, priority. E-mail encryption is a simple and from customers that contained unen- it is automatically encrypted. Employees do cost-effective way to ensure both. crypted confidential information. Now, not have to remember to secure an e-mail. when we respond, the data automatically These services should have send-to-any- Geoff Bibby joined ZixCorp in September 2003 and gets encrypted, demonstrating our com- one capability, allowing encrypted e-mail serves as vice-president of Corporate Marketing. Mr. Bibby mitment to protecting clients’ privacy.” to be delivered automatically in the man- has over 15 years of experience in the high-tech industry, ner that works best for the end-user. most recently spending six years at Entrust Inc., an Internet Unsecured E-mail is Dangerous security vendor. Mr. Bibby is responsible for all aspects of Despite a growing awareness of e-mail Earning Customers’ Trust ZixCorp corporate marketing. For more information, visit security breaches, many financial institu- For more than a century, The National www.zixcorp.com. tions do not encrypt e-mails containing Banks of Central Texas has been helping

5 p u l s e n e t w o r k . c o m Louisiana Credit Union Sets Sights on ‘Green’ Headquarters

elican State Credit Union in Baton six months, while leasing Rouge, La., has purchased a 42,000 some space back to Piccadilly. Psquare foot office building from Renovations began in January and Piccadilly Restaurants. The credit union will continue for approximately will use the building as its headquarters, three years. undertaking limited renovations focused “This is a big move for us on energy efficiency and employee- at Pelican,” said Conrad. “The friendly ‘green’ initiatives. Piccadilly building is over four The decision to purchase and renovate times the size of our original an existing structure instead of building Lake Sherwood Office operations from the ground up was part of a green building.” initiative. Pelican State CU hopes to achieve Pelican worked with its Leadership in Energy and Environmental Board of Directors in selecting Design (LEED) certification for the project. the location because it will “We are recycling $3.5 million in office benefit both staff and membership. space,” said Jeffrey Conrad, Pelican CEO. “Our objective was to provide a workplace “This was an opportunity for us to make a environment that we are proud of and huge environmental impact in our own comfortable within,” he said. community.” For more information on this and other Pelican will begin moving into the Pelican State Credit Union news, please 42,000 square foot building over the next visit www.pelicanstatecu.com.

Reg E Changes to Impact Debit Overdrafts

he Federal Reserve Board’s Final Rule “The rule provides for a limited excep- cost of processing overdrafts and obliga- amending Regulation E requires sub- tion to the notice and opt-in requirements,” tions for reordering transactions so they T stantial changes to issuers’ said Duncan Douglass, a partner with law post in an order that prevents avoidable overdraft services. It is essential for financial firm Alston & Bird LLP, at a recent PULSE overdrafts. institutions to become familiar with all of Academy session, Regulatory and Legislative Industry associations and analysts the regulations under the rule, as well as Developments: A Review of the Federal across the country have offered several additional legislation being considered. Reserve’s Rule on Overdraft Services and strategies for implementing long-term The Final Rule, issued November 12, Related Legislative Proposals. plans to offset the impact of current and 2009, prohibits financial institutions from “The exception applies to financial upcoming regulations and legislative charging overdraft fees for ATM withdraw- institutions that already have a policy and changes in the debit industry. To effectively als and one-time debit card transactions practice of declining to authorize and pay respond to the evolution, financial institu- that overdraw a consumer’s account unless ATM and one-time debit card transactions tions must evaluate current operations the consumer has expressly opted-in to an when the institution has a reasonable and develop a comprehensive plan to overdraft program. As part of the rule, belief that the consumer has insufficient implement changes. Plans should include there are several regulations financial insti- funds to cover the transaction. It applies effective campaigns for communicating tutions must comply with, including giving only to the notice and opt-in requirements; the changes to consumers, means for consumers proper notification of the pro- it does not permit the institution to charge identifying affected transactions and gram, ample time to respond and written a fee for any resulting overdrafts,” Douglass approaches for responding to both opt-in confirmation if they opt in. Institutions also clarified. and non-opt-in consumers. cannot base account terms and conditions Additional legislation being considered A PULSE white paper on this approach on opt-in preferences. Necessary provisions could further restrict overdraft fees for is available at www.pulsenetwork.com/ must be implemented by July 1, 2010 for debit transactions. Under consideration are research. new customers and August 15, 2010 for limits on the number of overdraft fees a For more information, on-demand existing ones. financial institution can charge, require- access to the December PULSE Academy ments for fees to be proportional to the session is available on the PULSE Web site at www.pulsenetwork.com/pa.

All debit all the time SM 6 Discover® Debit Provides DNMDEBIT NEWS MINUTE Cardholders Range of Education a Priority for Benefits Prepaid Industry PaymentsSource iscover Debit not only delivers a valuable merchant sales on popular The prepaid industry is continuing to comprehensive signature debit brands. From Sports Authority to Marriott grow as consumers become more product with all the industry- to Walgreens, numerous brand-name D comfortable with prepaid products. The standard services issuers expect, but also retailers offer cardholders discounts and consensus among attendees at the 2010 offers a wide range of consumer benefits, in-store coupons. Prepaid Card Expo is that the industry including a rewards program, discount By making purchases with Discover should do more to educate consumers online shopping and an account analyzer. Debit, consumers also can monitor their about the products’ features and ben- Perks Everyday® is a points-based loyalty spending through Discover’s Spend efits to achieve widespread adoption. program designed to provide cardholders Analyzer. As a component of the com- Education should be focused not only with a variety of reward options. By using a pany’s Financial Management Tool Suite, at underbanked consumers, but at the Discover Debit card for transactions made the analyzer helps cardholders manage affluent as well, according to panelists in-store or online at national and regional their money by showing exactly how who spoke at the conference. merchants, consumers can earn points much they spent. Easy-to-read charts that can be redeemed for gift cards, cash show cardholder transaction history and rewards, merchandise, green rewards, trend information, including where the travel and charitable donations. cardholder shopped and how often, as Wells Fargo Offers Paperless In addition to earning rewards, consum- well as monthly comparisons. ATM Receipts ers using Discover Debit while shopping The consumer benefits for Discover The Tech Chronicles online can benefit from numerous Debit make it a comprehensive product Wells Fargo is offering account holders discount offers through the Perks eShopSM. that will engage cardholders while the option of receiving ATM receipts The secure shopping Web site features encouraging loyalty and creating electronically, either as an e-mail or in differentiation from other brands. their account inbox. The e-mail will Marketing collateral and support include an image of the ATM receipt. are available for all aspects of Cardholders can select the electronic Discover Debit, including custom- receipt option at the end of their ATM ization and co-branding for the transaction. The move provides “green” Perks Everyday rewards program. benefits by reducing paper usage, as For more information on all well as litter at ATM sites. It also suits the of the benefits of Discover Debit, lifestyle of many tech-savvy account contact your PULSE account holders. Account holders must be manager. online banking users to receive the new service.

U.S.-issued Cards Increasingly Declined Overseas American Banker U.S. payment card issuers are facing a growing number of cardholder complaints about denied transactions overseas. The denials stem from incompatibilities between magnetic stripe and EMV card formats, the latter of which incorporates a microchip and requires a PIN. U.S. issuers have long resisted conversion to the EMV format, but that resistance may be declining, despite the prospect of high conversion costs. The Alliance expects to see U.S. financial institutions issue EMV cards beginning this year.

7 w w w . p u l s e - e f t . c o m Internet PIN Debit to Roll Out Network-wide espite the recession, debit usage and increased interchange income. is still rising, and overall consumer Although PULSE is still evaluating the Dpreference for the payment results of the pilot, the network expects method shows no sign of cooling off. to roll out the product to all partici- Consumers continue to decrease their pants in the near future. debt loads and shift to debit payments. Internet PIN debit is easy to use. In 2008, debit and prepaid card pay- The technology features a scrambling ments constituted 25 percent of Internet online PIN pad that is displayed when payments, according to the BAI/Hitachi a shopper chooses to check out of a 2008 Study of Consumer Payment Preferences. participating Internet merchant site Although consumers’ comfort with online using PIN debit. This PIN pad is secure debit payments has grown since the because at no time is the PIN saved, Payment Preferences Study first inquired transmitted or stored. Instead, data about it in 2001, it still lags behind comfort associated with the PIN-entry process is When rolled out, the Internet PIN with online credit card, prepaid card and encrypted and transmitted. debit service will be optional for issuers. Internet payment services. PULSE believes Issuers appreciate the added security For more information, or to view a short this is about to change. presented by Internet PIN debit. It can be demonstration of how the scrambling The network has been piloting difficult to authenticate cardholders in the PIN pad works, visit Products and Services Acculynk’s PaySecure® Internet PIN debit Internet’s card-not-present environment. in the About PULSE section of the PULSE technology for six months. Pilot partici- By requiring PIN entry, an Internet PIN Web site at www.pulsenetwork.com. pants are pleased with the results because, debit transaction is far more secure than not only is consumer adoption strong, but other online transactions. In addition, the Internet PIN debit also gives debit card- payment method helps to build transac- holders a new payment option, thus tion volume and provide an edge against enabling incremental debit transactions non-bank Internet payment alternatives. PULSE Launches Online Security Compliance Tool

o protect the security of its PIN www.pulsenetwork.com/ debit transactions, PULSE has compliance-ebook), to T developed procedures and controls provide processors easy for its network and participants. These access to information rules and systems help PULSE participants and Web links to assist in maintain compliance with the network’s submitting TR-39 reviews. technical, operational and security-related The guide also provides requirements. information about the For U.S. processors, PULSE requires review itself, submission submission of the approved Security procedures and a direct link Compliance Review (TR-39), additional to the automated online inventory and identification forms, prior to submission tool. coming live and by December 31 of each Questions regarding the Security even-numbered year thereafter. Compliance Review or the guide should PULSE has recently added an online be directed to the compliance department tool, called the Security Compliance by calling 800-420-2122 or e-mailing Review Information Guide (available at [email protected].

All debit all the time SM 8 PULSE Select® Surcharge-free ATM Network Expanded coverage taking you further

ccording to the PULSE 2009 Debit McGuire, PULSE senior vice president of Issuer Study, approximately 75 per- product management. “Since we launched Acent of ATM transactions in 2008 PULSE Select at the PULSE Conference last were performed “on-us,” or at an ATM that year, we are seeing continuous growth in is owned or branded by the card issuer, the program.” presumably to avoid surcharge fees. PULSE has formed a strategic alliance Program Benefits with the MoneyPass® network that con- Expanded access to surcharge-free nects financial institutions, ATMs and cash has positive effects for all parties. First, cardholders across the country. The participants may experience increased PULSE Select® Surcharge-free ATM Network interchange revenue due to heightened enables participating financial institutions traffic on their ATMs. Participating institu- to provide nationwide surcharge-free ATM tions’ cardholders don’t pay a surcharge access to their cardholders by enabling at participating ATMs, but your institution them to use cash machines in both the can earn surcharge revenue by assessing PULSE and MoneyPass networks without fees to cardholders from non-participating incurring a surcharge. financial institutions. In addition, when PULSE Select cardholders have access a MoneyPass cardholder from another to their money at more than 13,000 financial institution uses your ATM, your convenient, accessible ATMs at financial institution will receive higher interchange institutions and retail locations. The pro- than it receives today. gram includes marketing materials to assist Financial institutions that currently offer participants in promoting the network to rebates on surcharge fees may also see cardholders, including a dedicated Web higher profit margins by reducing those site with ATM locator for all PULSE Select expenses. Most importantly, cardholders and MoneyPass ATMs. appreciate the convenience of broader Participants in Select ATM®, PULSE’s coverage and more prevalent access to savings enables financial institutions to previous surcharge-free ATM alliance, are their cash, especially when travelling. attract and retain account holders in a required to sign new agreements to join Open to all PULSE participants, PULSE burgeoning marketplace. the PULSE Select/MoneyPass network. Select affords financial institutions the For more information on how to join Program implementation takes an ability to remain competitive with larger the PULSE Select Surcharge-free ATM estimated 45 to 60 days. entities by extending their coverage Network, contact the client services “Our alliance with the MoneyPass without incurring the cost of deploying team at 877-247-8573 or log onto network allows PULSE the opportunity new ATMs. Providing a service that gives www.pulsenetwork.com/pulseselect. to broaden the scope of our previous cardholders greater convenience and cost surcharge-free network,” said Judith

Industry Boosts Debit Card Fraud Protections ebit card issuers are providing Javelin calls this a “major milestone for greater security protection than the industry” because, for the first time, it Dever before, says Javelin Strategy & puts debit card protections on equal foot- Research. The firm’s 2009 Banking Identity ing with those provided by credit cards. anti-phishing e-mail education to their Safety Scorecard indicated that all of the In addition to zero-liability protections, account holders. 25 largest U.S. banks and credit unions all of the top financial institutions also offer For more information on the study, visit now offer zero liability policies on debit next-day replacement of lost or stolen www.javelinstrategy.com/brochure-160. cards that cover PIN, signature and debit cards. They also provide online card-not-present purchases.

9 p u l s e n e t w o r k . c o m New Web-based Fraud Resource (continued from page 1)

PULSE Fraud Prevention 360° contains a Defense Techniques pro- wealth of information to support financial vides an overview of the institutions in their efforts to minimize available fraud prevention debit card fraud, including a real-time fraud tools and how they can be news feed on the home page. used in your institution’s fraud program. Available Information: Prevention offers details The site is divided into the following areas: on training institution staff to spot fraud, as well as Fraud Trends provides an overview of the how to decide whether to various types of fraud, such as card fraud, reissue cards following card identity fraud and disputed transactions. It data exposure. also offers information about techniques such as accessing data “in flight” rather What’s Next offers details than “at rest.” on fraud trends anticipated for the next three years, as Resources provides links to additional Reducing Losses features checklists for well as areas where regulation and over- sources of information on fraud prevention both internal and external fraud incidents. sight are expected to increase, such as the and management. This area also includes tips on preparing Payment Card Industry standards. for fraud losses, working with customers Visit PULSE Fraud Prevention 360° today who have fallen victim to fraud, develop- FAQ answers several common fraud at www.pulsenetwork.com/fp360. ing reissuance criteria, containing losses, prevention questions. evaluating lessons learned, logging activities and communicating with Quick Tips explains what to look for when cardholders impacted by fraud. onboarding account holders to prevent fraud, as well as information hidden in transaction data that may indicate fraud has occurred.

PULSE 2010 Pricing Announced

n late 2009 and early 2010, PULSE The 2010 PULSE Participant and PULSE’s 2010 initiatives will include conducted a comprehensive review Acquirer fee schedules are available for expansion of the DebitProtect® fraud Iof its pricing structure, with the objec- download on the PULSE Web site. Visit detection system with rules optimization, tives of delivering value to all network www.pulsenetwork.com and go to the point-of-compromise detection, real-time participants while maintaining fair and Documents & Forms area in the Financial transaction blocking, automated card competitive fees. In early March, PULSE Institutions, Processors or Retailers/ISOs lockdown and an online fraud prevention announced the details of its 2010 pricing section. social networking forum. We also will roll changes in a series of communications In addition to periodic revisions to out a new Management Information distributed to network processors, financial its fee structure, PULSE strives to further Systems platform that will substantially institutions, merchants and ISOs. enhance the benefits of PIN debit for improve online transaction reporting, participants through regular improvements transaction analytics and billing, and Key changes to PULSE’s fee in network capabilities. In 2009, the net- drive additional debit usage and financial structure include: work expedited funds, fees and PIX2 settle- institution revenue. Both projects will be • Revisions to several components of ment by adjusting its settlement calendar. implemented in phases starting this year, tiered merchant PIN POS debit PULSE now settles interchange and funds and continuing into 2011. interchange fees; from weekend transactions a day earlier Questions regarding the pricing • Introduction of an issuer PIN debit than it did previously. PULSE also enabled revisions should be addressed to your switch fee; and acceptance of Diners Club International PULSE account manager or processor • A change to determining merchant cards at its ATMs, providing participants a relationship manager. switch fee tiers. new acquiring opportunity that is only available through PULSE.

All debit all the time SM 10 PULSE 2010 Speaker Resource Program Industry Experts Offer Key Insights

ULSE works closely with state and Debit Trend Spotting, providing results national banking associations and of the latest Debit Issuer Study Pcredit union leagues throughout the year by exhibiting at trade shows, Exclusively PULSE, explaining how to sponsoring events and participating in maximize the value of debit programs joint activities. Another way in which through participation in PULSE PULSE supports these organizations is by making PULSE subject matter experts Drivers of Consumer Debit Use, available to present timely information providing an understanding of how on a variety of electronic banking and and why cardholders use debit technology topics. Each year, the network offers a new Security and Compliance Today, array of topics under the PULSE Speaker offering insight into the why’s and how’s Resources Program. The program is offered of various compliance requirements to associations and leagues at no cost. Dave Schneider Prepare, Protect, Prevent: How to Topics for 2010 include: Safeguard Against Fraud, reviewing fraud trends and prevention techniques Technology Evolution, detailing emerg- ing payment technologies To request a PULSE speaker, contact the Association Relations department at Making Social Media Work for Your 800-420-2122. Institution, exploring social networking options and benefits

The Value of PIN Debit (continued from page 1) up 9 percent from the previous year, com- debit. Consumers choose PIN debit for cardholder. Because cardholders must pared to 6 percent for credit and signature 27 percent of discount store purchases, enter their PIN, chargeback rates are debit. And, on December 24, 2009, PULSE’s compared to 13 percent for signature much lower than with other payment daily transaction volume reached an debit. methods. An additional benefit for financial all-time high. institutions is the exceptional value PULSE Debit now accounts for the biggest Benefits of PIN delivers by providing high PIN debit share of in-store purchases at 37 percent, Consumers have long appreciated the interchange revenue. comprised of 20 percent PIN and 17 per- pay-as-you-go aspect of debit, a benefit When compared to other payment cent signature, according to the BAI/Hitachi that has become even more important in methods, the benefits of PIN debit are clear. 2008 Study of Consumer Payment Preferences. today’s economy. Debit usage has been From continued consumer preference to On average, consumers make eight PIN accelerated by the recession, said lower fraud losses and chargebacks to debit in-store purchases per month, TowerGroup in a research report released increased interchange revenue, PIN debit compared to seven in-store signature last fall. According to the report, debit transactions through the PULSE network debit purchases, the study found. usage now accounts for more than half provide tremendous value. “Consumers continue to show a marked of all non-cash purchases. To help maximize your debit program preference for PIN debit, citing security, As consumers continue to opt for PIN and realize all of the benefits of PIN debit, convenience and speed as their primary debit, issuers and merchants benefit in contact your PULSE account manager, or reasons,” stated the BAI/Hitachi report. several ways. Transactions initiated with call the client services team at 877-247-8573. Consumer preference for PIN debit a PIN result in lower fraud losses than is particularly prevalent in certain retail signature debit. In addition, PIN debit settings, with PIN debit accounting for offers a single-message transaction that is 32 percent of grocery store purchases, completed in-person by the authorized compared to 16 percent for signature

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PULSATIONS is produced bi-monthly by PULSE. Please send information for the newsletter to: Anne Rhodes, PULSATIONS Editor PULSE 1301 McKinney, Suite 2500 Houston, TX 77010 [email protected] PULSATIONS can be viewed on the PULSE Web site at www.pulsenetwork.com/PULSATIONS.

Seconds with... Carrie Brown Senior Vice President, Enterprise Project Management Office Adding Value Through Technology PULSE is often thought of as a financial The inclusion of these cards in PULSE The IPP will provide PULSE processors services company, but it is also a technol- represents an additional and highly com- and financial institutions with a powerful ogy company. Underlying the switching petitive revenue opportunity for PULSE reporting tool. The data available from and settling of electronic transactions is a ATM acquirers. In addition, PULSE cards are these new systems will enable participants vast and complex network of hardware, now accepted at selected ATMs in Canada, to benchmark themselves against their software, telecommunications and data- Mexico and the Caribbean. peers based on geography, asset size or bases. While it is challenging at times to One focus for the Project Management a host of other factors. explain this technology to non-technical Office in 2010 will be the rollout of an This ability will be a great value-add for people, it is much easier to describe the Integrated Processing Platform (IPP) that our participants. It will enable them to see impact it has on network participants and has been in development for more than a where and how their cardholders are using debit cardholders. year. This initiative includes new fee billing, their debit cards, in terms of merchant PULSE’s Project Management Office has settlement, dispute processing and data types, card spend and other metrics. This been working on some far-reaching proj- warehousing/analytics platforms. It will be level of insight will allow participants to ects in recent months. In 2009, we were implemented in phases beginning this year develop campaigns to make their portfo- busy with the integration of the PULSE, and continuing into 2011. lios more profitable. Discover and Diners Club networks. The The IPP project involves a cross- Technologies such as the PULSE IPP do end result is that Diners Club cardholders functional team of PULSE and Discover more than just increase efficiencies; they can now use their cards at ATMs and cash staff members. The work of this team create new opportunities for improving locations worldwide, including throughout touches virtually every department in the bottom line of not only our business, the PULSE network in the U.S. PULSE, from Finance to Sales and Product but yours as well. Management.

IN CLOSING

Changing Lives ... One Bike at a Time On December 16, 2009, more than stay in school and out of trouble while 30 PULSE employees participated in the improving their health. Employees annual Elves & More bike-building event. donated at least three hours of time Elves & More designs programs to buy, at the bike-building facility. build and deliver bicycles to underprivi- In 2009, Elves & More gave away its leged children in the Greater Houston area. 100,000th bicycle to a Houston child. The bicycles are incentives for children to

©2010 PULSE A Services Company

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