Thursday, March 20, 2008

HABBO President of North American Business Says Bank of America is Not Cool

This is funny. HABBO's President of North American "Business" dissing North America's biggest Bank; "One example of music marketing in game is that the Virtual World Habbo Hotel Canada is working to break Tokio Hotel over here and they have created a lounge that will go live later this month. "Habbo is actually pretty well known for saying no to advertisers. If the advertiser doesn't add some value to the virtual world, they don't belong there. We can't make a brand cool, the brand has to be relevant and acceptable to the community already. That is why you don't have Bank of America in Habbo, says Teemu Huuhtanen, President, N. A. Habbo Business for Sulake."

Webkinz World Recognized for Safety with Best of the Web Award

Toronto, ON — Ganz is proud to announce that Webkinz World has been recognized by with a Best of the Web Award for 2008. The Best of the Web Award honors child-focused Internet sites that offer fun and entertainment for kids while protecting them from revealing personal information which could lead to cyberbullying, stalking and other potential dangers. The presentation was made at the 8th Annual Wired Kids Summit, held in the Congressional Buildings in Washington D.C. on February 9th. "We are proud to be recognized by the leading advocates of children's online safety with this award," stated Ganz president, Howard Ganz. "We take our members' online safety very seriously, and are committed to providing a friendly and protected world where members can have fun with their pals, and parents can feel comfortable while their children visit us."

Harper Collins Launches Virtual World For Tween Girls

Over the last 9 months I estimate we have seen 1 new virtual world launched per week. Here is one from Harpercollins, Sky Digital Media and Mykindaplace for tween girls called "HarperCollins will launch Lola's Land, a brand new interactive world for tween girls, on 14 April. The site is based on the character, Lola Love, created by teen magazine writer Lisa Clark. Designed and built by Mykindaplace and with Sky Digital Media handling advertising sales, Lola is the first HarperCollins fictional character to be given her own online world, to further enhance her popularity and strengthen the brand. Lola's Land will reinforce the Think Pink manifesto of the feisty Lola Love character. Lola encourages girls to feel good about themselves in every way – loving who they are, feeling confident, standing up to peer pressure and thinking positively. Lisa, who is an agony aunt, qualified Personal Social & Health Education practitioner and youth expert, will be Editorial Director for the site. It will be the first site aimed at girls in the tween bracket and will be the only site aimed at this age-group to combine editorial content, games, safe social networking and a virtual world. The site will cover pop star interviews, fashion, beauty, make'n'do, a pets gallery and lots of inspirational articles to promote positive thinking. Lola's Land will be an interactive world that can be completely customised by users, who will be able to spend the points they've earned by playing games and entering competitions. The site will use safe social networking features to allow users to interact with one another.


Adam Levitin, Associate Professor of Law at Georgetown University, posts on the Credit Slips blog about this week's scheduled Visa Inc. initial public offering. This is must read stuff for payment geeks. He writes: "The Visa IPO, along with the 2006 MasterCard IPO and the end to MasterCard and Visa's dual-exclusivity setting the stage for a major reconfiguration of the payments world in the next decade. These changes could have far-reaching effects for consumers, merchants, and banks because of potential shifts in the way payment networks will compete with each other." The full post here; "The Visa IPO" posted by Adam Levitin; "Visa is scheduled to have its IPO later this week. The IPO could potentially be the largest in history. This market seems like terrible timing for an IPO, although for liquidity-strapped banks, the IPO could be a much-needed source of cash. The Visa IPO, along with the 2006 MasterCard IPO and the end to MasterCard and Visa's dual-exclusivity rules, which prohibited banks that issued MC/Visa cards from issuing Amex or Discover cards, is setting the stage for a major reconfiguration of the payments world in the next decade. These changes could have far-reaching effects for consumers, merchants, and banks because of potential shifts in the way payment networks will compete with each other. A major factor driving Visa’s IPO is antitrust liability. It is Visa's litigation exposure, including a not just the $2.1 billion antitrust settlement with American Express for the dual exclusivity rule, still unresolved liability to Discover for the same behavior, and, on a much larger scale, the potential antitrust liability connected to interchange and merchant restraint litigation and the possibility of legislative changes to interchange. Visa has a lot to fear from changes to interchange. Although Visa does not itself collect interchange revenue, much of its raison d’ĂȘtre is related to its role in coordinating the interchange rate and rules for its member banks. Take away this coordinating role, and Visa is basically a really big computer clearing transactions. That's its core business line. Anyone with sufficient capital could get into that game. (First Data Corp. tried to a few years ago, only to get pushed out of it by litigation from Visa.). Other than coordination, there just isn’t much value added to the clearing role for banks, merchants, or cardholders. Recent developments on interchange and merchant restraints don’t bode well for Visa. The European Union, Australia, Brazil, Colombia, Germany, Honduras, Hungary, Israel, Mexico, New Zealand, Norway, Poland, Portugal, Romania, Singapore, South Africa, Spain, Sweden, Switzerland and the United Kingdom have all moved against or begun to regulate interchange fees and the merchant restraints that shield interchange from normal market pressures. US regulators have been behind the curve on this, but there’s now interchange legislation pending in several states (none of its particularly aggressive—at worst prohibiting interchange on sales tax) and a bipartisan bill was recently proposed in the House that would create as special administrative law judge panel to oversee interchange rate arbitration and set rates if necessary. The Visa IPO creates a company with an unusual 3 stock-class capital structure that can only be explained as an antitrust shelter. Like MasterCard’s post-IPO structure, the Visa post-IPO capital structure is designed to permit banks to retain effective control over the company without holding a majority of shares and giving a veneer of independence to decisions about the setting of the interchange rate and network rules, in short plausible antitrust deniability. The structure also reduces banks' antitrust exposure going forward, albeit at the cost of some of Visa's revenues, but as a mutual-type member association, Visa was not designed to be a profit center in the first place. Visa’s IPO also raises the question of who needs Visa. Consumers and merchants don’t. Indeed, consumers and merchants have virtually no relationship with Visa itself; only banks do. (I say “virtually” because of the existence of small programs like Visa concierge for high-end cardholders.) The reason Visa exists in the first place is because of the state of federal banking regulations in the 1960s and 70s. These regulations prevented multi-state branch banking. This meant that if banks wanted to form a national, private payment system that cleared at par, they would need to form a multi-bank association. (The Fed has to clear checks from member banks at par, 12 U.S.C. § 360, which has led to virtually all checks clearing at par today.) First Bank of America attempted to accomplish this through licensing and franchising, but soon it converted to the free-standing multi-bank association that became Visa. The current interchange system, in which acquirer banks pay issuer banks on each transaction was one (but only one) of the possible ways of encouraging banks to join the system and allocating transaction costs within the system. (Issuers could just have easily paid acquirers or no revenue whatsoever. In any case, there was never a historical need for interchange fees to vary by type of merchant and merchant transaction volume, except to maximize on merchants’ price elasticities.) The historical state of federal banking regulation also explains the origins of many of the merchant restraint rules, such as honor-all-cards and no-surcharge rules—these were needed to insure par clearance of all member banks’ cards. Fast forward to today. Federal law no longer prohibits multi-state branch banking. We now have several banks with truly national presence: Bank of America, JPMorgan Chase, Citi, Washington Mutual, Wachovia, Wells Fargo, to name a few. We also have national monoline card issuers, like Capital One, whose card business is separate from depositary banking (yes, CapOne has gotten into the deposit business recently, but the monoline card business is still its core, and its new decoupled debit card shows that monoline is possible not just for credit, but for debit too.) These banks dominate the credit card industry and do not need national associations like Visa in order to ensure par clearance. Many of them could strike out on their own and be stand-alone networks like Discover and American Express. To be sure, smaller banks still benefit from multi-bank networks like Visa, and for all banks, international transactions present certain some of the par clearance problems that interstate transactions used to pose. But it is far from clear what JPMorgan or BoA gain from Visa—they end up subordinating their brand to Visa’s and functionally give a free leg up to their smaller competitors.

The end of dual exclusivity has created significant inter-network competition for issuers. (This has a negative impact on consumers and merchants, unfortunately, because the networks compete in part by offering issuers higher interchange.) The ability for banks to shift their card portfolios between networks has forced networks to be more responsive to issuers’ concerns, which may curtail the demand for new network possibilities. But it has also weakened bank loyalty to networks—networks have become simply suppliers of clearing services to issuers, and nothing more. And if a bank (or anyone else) can do the clearing more cheaply than the existing networks, we can expect to see a new clearing service develop. Freely tradable Visa shares provide a lot of flexibility to member banks. They can stick around in the association and keep doing business as usual, but with a potentially reduced antitrust exposure going forward (the precise allocation of liability for past behavior among Visa and its member banks is not explained in the S-1 registration statement). Alternatively, they can decrease their relationship with Visa by selling shares. This makes it much easier for a large bank to exit Visa without taking a loss; there’s now a market for the shares. The IPO also makes it more feasible for member banks to create their own competing networks with Visa. Just as Ford could buy a limited number of GM shares without antitrust concern, so too could BofA own Visa shares and start up its own network. And the enhanced exit possibilities also increase the potential value of Visa for those banks that would remain. If many of the large banks left Visa, the power of those that remained would be relatively larger. What would the world look like if banks started breaking off from the big 4 networks and becoming stand-alones? There's a whole post or two to write about that, but here's one thing to consider: the basis for competition in the payments field might switch. Payments networks need to balance demand from merchants, consumers, and banks. Currently the dominant strategy is to cater to banks, which means catering to consumers in the form of rewards that are extracted from merchant fees. But if a network isn't competing to sign up issuer banks, perhaps the incentives change. This might lead to the development of real value-added services for merchants (data mining, e.g.) or to more meaningful product differentiation (not just variations in rewards programs) for consumers. In short, shaking up the structure of the payments field might encourage payment companies to do a little more thinking outside the box. (Enough of this faux consultant-speak, though.) We should not expect to see changes in card networks happen immediately. For one thing, there is a 3-year lock-up of the stock classes received by the banks in the IPO. But over the next 5 years, I would not be surprised if we saw a major reshaping of the payment card clearance landscape.

Dubai Palm Island Builders Start Virtual World Development

Creative Kingdom, Inc., the architectural design firm renowned for designing the Palm Islands, the World Islands and the Madinat Jumeirah resort in Dubai, has partnered with Entropia creators Mindark to design an entirely new planet for the Entropia Universe MMOG. This really is the same design firm behind the Palm themed island resort in Dubai ( building stuff in an Virtual World MMOG / Wow!

Payment Hero of the Week (Obopay!)

Obopay is doing cool things in the mobile money space. This company is a pioneer in realizing the dream of the truly mobile wallet. The idea that consumers can employ mobile devices at retailers or transfer funds was hindered in the past because of a combination of inadequate technology and questionable business models. But the market has seen a flurry of activity in the last 18 months with startups, retailers and financial institutions rise getting in on the action to help consumers spend with their mobile devices. Obopay is leading the way with deals with MVNOs, Operators like Verizon and banks like Citi for a service that allows users to set up stand-alone accounts, Obopay Prepaid MasterCard cards, that can be used to send and receive money between users or make purchases. The company charges 10 cents per transfer of funds between users, paid by the sender. Retailers are charged based on the amount of each transaction. Obopay Prepaid MasterCard cards are accepted at 24 million merchant locations and over 1.1 million ATMs around the world. Obopay recently inked an impressive deal with Citi to allow Citi customers to send and receive money from their phones. Peer-to-peer services like Obopay's account for a small percentage of the overall mobile payment space today, but their business model is more viable long-term given the likelihood consumers may well be willing to pay a few cents per transaction to transfer funds or send money to a friend, and financial institutions are scrambling to lure new customers with such services. They recently began the launch of their peer-to-peer mobile money transmitter service in India where it is in hot and growing demand: ""We are in talks with more than 15 banks and are close to sealing deals with three banks. We hope to launch our service here within a month," said Obopay Vice-President Business Development Balachandra Unni." For such smart and agile moves we chose Redwood City California's Obopay as our Payment Hero of the Week. Congrats on this most illustrious recognition which we trust will reassure your Board, Investors, partners and customers of your future prospects!

Virtual Hero of the Week (Philip Rosedale!)

This was a crazy week for PR the PR maestro but he is still the Virtual World Yahweh and for being such a remarkable fellow and true visionary PaymentGuy recognizes Philip Rosedale as Virtual Hero of the week. Congrats Mr, Chairman! From the Linden Blog; "Changing my Job - Friday, March 14th, 2008 at 10:20 AM by: Philip Linden "We’ve decided to search for a new CEO, and I wanted to briefly talk to everyone here about the reasons for that decision. I feel that the most important contributions I have made and will continue to make to Second Life are related to building both the product and the company through my direct contributions to vision, strategy, and design. As we grow, the role of our CEO will increasingly be to hire and grow the right team - to lead and help the company scale - to thousands of people and tens of millions of users of Second Life. I believe that we can hire a fantastic person in that role, and also give me the ability to totally focus myself on the job that I do well. I bet this will be the most interesting job opening in the technology world. As to title, I will become chairman of the board. I will be 100% involved and fulltime at Linden Lab. Second Life is my life’s work, and I am not going anywhere! I will focus on product strategy and vision, continuing to design the right kind of company, and being an effective communicator and evangelist about Second Life. As a community member, you will probably see more of me in-world. Again, this is a decision driven by my desire to best grow SL and match my job to both our needs and my passions. We don’t have a specific timeline, and I don’t expect my job to change while we are looking for someone. We’ll organize some further conversations in SL on this topic soon, and as always, feel free to talk to me about this if you run into me in-world. This entry was posted on Friday, March 14th, 2008 at 10:20 AM and is filed under -Miscellaneous. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site."

HABBO Mini Friday - from Sulake (Mobile Virtual World)

From the dev guru's at Sulake ... HABBO has such technical chops! WOW!

Eero Aarnio’s classics now available in Playray

I really love this. "Users of the Finnish Playray site (and later the users of other Playray countries as well) can now decorate their avatars’ Playforia rooms with genuine virtual furniture by designer, professor h.c. Eero Aarnio. Playray collection includes for example the classics like the Ball (1963) and the Pastil (1968)." Here is a full screenshot example of the Playforia room with Aarnio products. These guys (and gal) at Playray often are much more innovative than HABBO although they tend to follow their virtual-world big brother a little too closely, especially when it comes to its international expansion strategy that seems copied directly from HABBO's playbook and unfortunately has not exactly been perfected by Sulake as it continues its quest for profitability. But this is truly cool and innovative so congrats Playray!

PaymentGuy Recommended By Playray Founder

PaymentGuy is flatterred to be tipped by Asmo Halinen one of the Founders of Apaja ( and publisher of the innovative Playray (; March 17th, 2008 Blog recommendations; "I was happy to hear that Reinout has started his own blog. Interesting stuff for example about casual gaming. Check it out! Another blog tip: Payment Guy ... He has pretty good coverage about gaming & virtual world related issues." Thanks dude!

eWise launches payments system for online shopping in UK

International financial software firm eWise Systems has activated the online payment system eWise's network in UK which supposedly protects customers from fraud. Transactions via eWise network do not require any financial or personal details to be revealed to the retailer or eWise, since they imply a transfer of funds directly between bank accounts. Consumers are able to pay for goods and services online from any account they choose. The client of any UK bank can pay via the eWise network if the online retailer provides this payment option. Customers can access it by downloading the eWise network software and choose the bank from a drop down menu. They enter their bank’s website, log in and confirm the payment. The eWise technology offers the customer and online retailer a receipt containing transaction details. There are no monthly fees for retailers, as they are charged only per transaction.
The eWise Systems payment technology is part of the payment systems for online merchants and billers in Australia, USA, South Africa and New Zealand. Mark Matthews, managing director of eWise Systems, comments: “Security remains a key concern for online buyers, and shopping cart abandonment is still very high. Surveys show that as much as 40% of credit and debit card fraud occurs online, and consumers are understandably wary about having to pass on sensitive financial information in order to shop on the internet. “

Virtual Law Bibliography

From TerraNova; "As part of the preparation for the book on law and virtual worlds that I'm writing, I've been trying to make a comprehensive list of published law review articles and student notes that focus on the intersection of law and virtual worlds. Just in case readers are interested, the current version is attached below. If I'm missing something, please let me know in the comments or by email. As you'll see, the rate of publications has been increasing, with the majority of the publications coming out in the past couple of years."

Experts cast a wary eye over new online payment systems

The Guardian features security concerns for new payment systems titled "Experts cast a wary eye over new online payment systems"; "Two new payment systems remove the risk of giving credit card details online, but if the banks won't play ball the hackers will pounce" writes Sean Hargrave. "Two new systems claim to make it easier and safer to shop online, by letting you pay for goods directly from your bank account without having to hand over card details. But experts are warning consumers not to be "lulled into a false sense of security ... "

Wednesday, March 19, 2008

Miniaturize your real life into MyMiniLife

MyMiniLife (which I have blogged about previously) have added a cool feature to their virtual world and it is pretty cool! Reminds me of Sceencaster of Toronto but with a virtual world with avatars. Here is what one of the 3 founders, Zhao Yang says; "our goal was to allow anyone to easily mirror his or her real life into MyMiniLife. All it takes is a digital camera and some basic tools with Gimp/Photoshop. ... Here are some items created by users:


Lizart's NV Chef Ramsey:

Bottle of Wine:

Initially the item system was in beta because we wanted to see if users were actually going to use it. Now after 2 months, we have 9000 public and private items in the system with soccer moms and non-technical people creating items. We also allow users to create wallpaper and tiles using their own pictures. We try to make it very user friendly and simple to represent your real life. We currently have 750,000 users growing by 200,000-300,000 per month, ~900,000 visits per month, 9 million pageviews per month, and 15 million widget views per month (google analytics across the main site and our applications)." I like it! Nice work guys ...

OBPAY India Demo Vid

Do any of our Indian readers think this works? I mean either the service potential itself or the vid as a marketing tactic for Obopay's forthcoming launch into the Indian market for peer-peer payments?

Interview With PayPal's Head of Mobile Payments

The Hospital of the Future (IBM Health Care Island & CISCO's Palomar)

So which virtual hospital would you like your avatar to be treated in?

Layoffs at EBAY & PayPal?

From the funny folks at ValleyWag; "In the last 24 hours, we've heard that eBay has laid off 40 members from its bloated middle-management ranks and that its PayPal subsidiary has let its entire branding department go. Has Wall Street already gotten word of these cutbacks? We all know how much the market loves "fat trimming," and EBAY is up nearly two points so far today."

Second Skin (doesn't even mention Second Life ...)

Here is a preview of this most controversial, somewhat disturbing yet fascinating cinematic take on hard-core MMORG players and Virtual World addicts. Jessica Maguire at Gamasutra offers an insightful review of the film; "The title, Second Skin, seemed to imply this film documentary would address Linden Lab’s Second Life and the general impact of virtual worlds on personal identity. As the lights dimmed, I was excited to explore how interactive media is changing our experience of ourselves. But instead, I just wound up feeling sorry for the losers playing World of Warcraft. Not that I think WoW players are losers -- I don’t. But if my only contact with them were this film, I would."

From Russia With Love - A New Payment Monopoly

This is an interesting "behind the scenes" development in the Russian payment industry uncovered by Russian IT review CNews titled "Secret leader emerges on payment system market"; "Attempts undertaken by Centrobank to exert control over payments for mobile communication services have caused an absolute leader to emerge on the market. CNews found out that late last year two Russian leading payment system companies – OSMP and E-port – merged. The resulting group of companies drives out the Cyberplat system from the first position by revenue and the number of terminals."

ex-Linden CEO Philip Rosedale's First Interview Since His Resignation

Philip has some interesting things to say to Mitch Wagner of Information Week about his decision and the internal workings of Linden Lab; One-On-One With Second Life Creator Philip Rosedale; "Rosedale, who announced last week that he's stepping aside as CEO of Linden Lab, describes the challenges of continuing Second Life growth while preserving the crazy culture that made it popular.

Real Toys & Virtual Worlds Vid

Single Euro Payments Area (SEPA) makes buying games easier

Downloadable casual computer games that were previously only available for purchase with a credit card or PayPal system can now also be paid by bank transfer in 31 European countries. Helsinki, Finland (March 19, 2008) -- XIHA Games (, a digital games store supported by a large international online community, now offers a selection of over a 1000 casual game titles and adds bank transfer to the payment options as the first pan-European online store. "Casual games differs in many ways from other, so called 'hardcore' games, which usually require a high-end game console or a PC", describes Jani Penttinen, XIHA's Co-Founder and Chief Technology Officer. "In brief, casual games are suitable for the whole family, and they are fun and easy to play. The games work on almost all standard PC and Mac computers". According to the U.S. -based Casual Games Association, last year 74% of the casual game buyers were female and 72% were over 35 years old, whereas a typical hardcore gamer is 15-35 year old male.
XIHA Games store is powered by its user community - 1.2 million people visited the site during the 6-month beta testing period. Users are encouraged to write game reviews and recommend the games they enjoy playing on their personal profile pages. The completely open, so called "social media" approach to marketing helps game buyers to base purchasing decisions on peer reviews. For publishers, this minimizes the cost of advertising, as the games get promoted by fans to a global audience speaking over 20 different languages. Casual games are one of the fastest growing segments of the gigantic video games industry. "Casual gaming revenues reached USD 675 million in 2007 and the annual growth has recently been as much as 30%," says Juhani Polkko, XIHA's Chief Strategy Officer. "SEPA enables us to finally consider Europe as a single market area. Bank transfers have become faster and cheaper, and by 2011, they work just like domestic payments". XIHA Games offers free downloads on all its titles without mandatory registration. Games can be bought after the trial period by sending an order and paying the email invoice for example through electronic bill payment. XIHA Games Top-10 selling titles for February 2008 were:

1. Jojo's Fashion Show
2. Sally's Salon
3. Paradise Pet Salon
4. Turbo Pizza
5. Jane's Hotel
6. Mystery Case Files: Madame Fate
7. Baby Luv
8. Cake Mania 2
9. Wedding Dash
10. Cradle of Rome

XIHA Games is part of the international and multilingual XIHA Life. The service is developed and operated by XIHA Ltd, a Helsinki, Finland, based startup company. XIHA Life currently supports over 20 languages, and receives most of its traffic from China, U.S., Brazil, France and Spain.

SEPA countries - Single Euro Payments Area (SEPA) consists of 31 countries, including those that have not introduced the euro currency. SEPA's first phase became operational on January 28, 2008, and the payment instruments will replace national systems by 2011. SEPA countries are Austria, Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom, as well as non-EU member states Liechtenstein, Iceland, Norway and Switzerland.
Press contact information Juhani Polkko XIHA Ltd Tel. +358 40 543 0825 (GMT +2)