Saturday, March 29, 2008

QWAQ vs. Second Life

Qwaq Not All It’s Cracked Up to Be March 27th, 2008 (6:00am) Aliza Sherman; "Call me skeptical. Call me cynical. Call me shortsighted. But I just can’t see what the new company Qwaq offers that is different or better than what is already out there. Here’s how the company describes its offering: "Qwaq, Inc. creates virtual spaces for real work. The company’s product, Qwaq Forums, is the leading secure virtual workspace application for the enterprise, and enables collaboration in ways that weren’t possible before. Designed for enterprises and groups with distributed teams, Qwaq Forums significantly increases productivity by bringing critical resources together in virtual spaces, and allowing people to work together as if they were in the same physical location." Can someone say “Second Life?” or any other virtual world or virtual world application already out there? I have a 30-day trial access to Qwaq, have logged into the Welcome Forum and followed the 3 minute tutorial that explained about:

1. moving around,
2. my avatar, and
3. documents.

I’m thinking - hey, there’s nothing to it. Simple and easy is a good thing, right? qwaqavatarThen as I experimented with building my own office - one with a modern, warm “decor” - I began thinking that…there’s nothing to it. Basically, you can “build” a space such as a campus, a conference room (blue for boys, rose for girls?), a gallery, a modern office (cool or warm colors), a personal office and several other configurations. Breaking it down, this is how Qwaq felt to me:

1. Moving around: I can use either my keyboard or arrows to move my avatar and view around. This is basically the same set of controls for Second Life and other virtual world environments out there, so nothing revolutionary here. Moving around as a new user is just as quirky and clunky and takes time to get used to the flow. 2. My avatar: Ugly. I look like colored boxes stacked on top of each other. It is almost embarrassing how primitive the avatars in Qwaq look. I saw a promo image of a more “custom” avatar and it consists of the photo of a person’s face on the top box that represents the avatar’s head. How can you seriously interact with a business colleague when they look like a box with their photo pasted on it? 3. Documents: This may be where Qwaq has a slight leg up over Second Life and more or less of an advantage over other virtual world environments depending on their document integration tools. On Qwaq, I simply drag a document into my virtual office space, and it appears on the office wall about a minute later, either fully readable or editable, depending on the file type. qwaqofficeQwaq offers true document integration in a virtual space whereas Second Life users, for example, still struggle to find the right tools to handle a PowerPoint presentation versus a collaborative document or whiteboard. They do include voice capabilities, and although I haven’t tried it, I’m venturing to guess it is much more stable than Second Life’s voice feature. They also have a useful feature: a 3-D pointer that works similar to a real-life laser pointer so collaborators can draw attention to something. Despite the cool pointer, I can’t help but think that Qwaq is a watered down version of the more elegant, graphically enhanced and feature rich environments of virtual worlds. Even a cartoonish world like at least has avatars that appear to be people rather than cardboard boxes. And any meeting space in Second Life that is well-designed makes Qwaq’s virtual spaces look like…cardboard boxes. If I’m going to be doing collaborative work with my clients or team members in a virtual space, I would much prefer that space to have some degree of aesthetics in addition to functionality. Otherwise, I might as well just use 2-D collaborative Web-based tools because they simply…work.

Adam Levitin's "Very Own Risk-Based Repricing Experience"

posted by Adam Levitin; "People sometimes assume that I have a personal issue with credit cards because I write a lot about the card industry and often argue that its practices are harmful to consumers and to general welfare. I really don't. I just think they are an amazing laboratory for examining contractual relationships and bargaining power. Frankly, I'm surprised that more people don't study them, because they are the most ubiquitous type of consumer contract and are at the very core of the network of contracts that makes up our consumer economy. This week, however, it got personal. I fell into the card industry's billing practice traps. And the funny thing is that this is because the card issuer screwed up. In the end I don't actually owe any money (alas, there's still some issues to resolve)--but I could have very easily ended up paying a lot of money I didn't owe. The ridiculous twists and turns in my saga are illustrative of the serious problems that exist with credit cardholder agreements and why there needs to be legislative limits placed on the terms of these agreements. Last month I saw a large charge on my Citibank Amex from PACER, the federal courts' on-line docket system. I have court orders from a number of courts that granting me exemption from PACER fees, so I knew the charge amount was incorrect. I didn't have an itemized breakdown from PACER, however, so I didn't know exactly how much of the charge was incorrect. I called Citi and disputed the charge. The charge is a billing error under 15 CFR part 226.113(a)(1). Unfortunately my dispute did not compute in the Citi system. Because I was contesting an unliquidated amount of the charges, however, my case didn't fit into one of their eight dispute check boxes. (Note that Reg Z does not require that I know the amount of the error. See 15 C.F.R. Part 226.113(b)(3).) Finally, after speaking to a supervisor, I just decided to dispute the entire amount because that was the only way I could go forward with a dispute given the unbending parameters of Citi's computer system. I also contacted PACER to make sure that they had processed all my fee exemptions.

Fast forward to earlier this week. I still hadn't heard anything from Citi or PACER about the dispute's resolution. But, to my great surprise this month's Citi statement arrived. It says that I owe the full PACER balance and there's a finance charge tacked on for the disputed amount. When I called Citi to inquire, I was told that I hadn't disputed the charge the previous month. This was in spite of fact that there were numerous notes about the nature of the dispute in my file. In other words, Citi had taken down all sorts of details about my dispute, but never actually processed that I was disputing the charge. Citi entered the dispute a month late, and only after I called to check up on it. Well, Citi has now (supposedly) removed the finance charge and recorded the charge as contested. But Citi tells me that I need to submit documentation about the dispute or the charge will be reinstated. That means I have to send some 50 pages of court orders to Citi at my own time and expense for a merchant's mistake. The duty to investigate a billing error is Citi's. Nothing in Reg Z requires that the cardholder submit written documentation to the card issuer at my own expense. So why am I footing the bill? (Maybe there's language to that extent buried in my cardholder agreement...) So what comes out of my own personal sob-story? Five major problems. (1) It remains unclear to me whether my credit report will show a late payment now. Citi is not permitted to report me if the bill is in dispute. But the dispute was registered a month late because of Citi's mess up. The Citi customer service reps I spoke to were so incompetent (and my suspicion is that they were based on the other side of the world) that it was pointless to try and get this sort of issue straightened out with them. Thus, I might have been reported during the time when I had disputed the bill, but Citi hadn't yet recorded the dispute. I don’t have any control over the reporting. The only way I can learn if reporting happened is to get a copy of my credit reports (and I only get one free copy per year) to verify that I have not been reported as late, and if I have been, then I have to challenge that…all at my own time and expense and with no guarantee of a correction. We really have misplaced burdens in the credit reporting system. (2)-(3) My (supposed) unpaid balance was $176.96. My nominal APR is 11.49%. For a 29 day billing cycle, compounded daily, this should mean a finance charge of $1.62. Instead, I was hit with a finance charge of $14.27. That means my effective rate was 101.211%. Wow! That's never disclosed on my statement. I had to go play with a compound interest calculator to figure it out.

Where did the extra $12.65 in the finance charge come from? Well, it turns out that my finance charge was not based on my actual balance. Instead, it was based on a "Balance Subject to Finance Charge," which is "the average of the daily balances during the billing period. If you multiply this figure for each balance by its daily periodic rate and by the number of days in the billing period, the result is the total periodic finance charge on that balance. Rounding may produce a small difference.” The result is that I am paying a finance charge not just on the $176.96 that Citi claims I owe, but also on the $2,661.33 I paid off from the previous month’s balance (pro-rated for the 16 days of the cycle I owed it before payment was credited). Citi claims that this yields an average daily balance of $1,563.42, but I can’t get the math to work (and I’m a former mathlete). And I’ve even tried rounding. (Gee, does Citi round my balance up or down, I wonder?) There are two serious problems here. First is that Citi is calculating my balance in a way I cannot replicate, even after playing with different methods for half an hour, and this is what I do for a living. Most people don’t have the interest or that type of time to waste on verifying that they are being billed correctly by their card issuer. They just have to take it on faith that their card issuer isn’t making mistakes or doing aggressive “rounding” or worse. This should all be computerized, but given Citi’s incompetence elsewhere in its dealings with me, I don’t have a lot of faith in the accuracy of their calculations (or alternatively in their disclosure of their methodology). Second, this isn't double-cycle billing, but it is just as bad. I should only be paying interest on my actual balance. Or if I'm not, the disclosed APR should reflect the effective APR on the balance I actually pay. Citi is one of the cleaner issuers, and they're not above a practice like this. (4) The late payment to Citi might trigger cross-default clauses or unilateral term changes on other cards. Here I am with federal court orders saying that I do not have to pay certain charges that are on my Citicard, and I properly disputed the charges, yet I could be hit with higher interest rates from other card issuers because Citi messed up. Citi's incompetence could lead to me having to pay more to Bank of America or Capital One or Chase or Wachovia. This is risk-based repricing. If other card issuers raise their rates on me, I wonder if they'll change them back after Citi corrects the error? If I had a balance, would a downward adjustment in interest rate be applied retroactively to existing balances? Is risk-based repricing a two-way street? Or is it like the rounding? My guess is that the house always wins.

A less assertive cardholder than I would have just lumped it on the $14 finance charge from Citi. Fortunately, I don't have any balances on other cards, but for a lot of other Americans, Citi's negligence could have cost them a lot of money, and there'd be no realistic recourse against Citi. What happened to the basic tort principle of the least cost avoider bearing the risk? (5) I was sufficiently frustrated from all of this that I considered closing the account. But that would hurt my credit score. And I those $33 cashback dollars that I've accrued would be forfeit--Citi won't cut checks for less than $50. Citi screws up and it will cost me $33 and a hit to my credit score to sever my relationship with them. So here I am, locked into Citi despite its incompetence. Ouch. This shouldn't be.

* * * * *

As it turns out, today PACER contacted me to tell me that they had made a mistake and were issuing me a credit. So maybe this will all get resolved neatly. But that is only because I’m diligent with my record keeping and assertive about billing errors. Not every consumer is so diligent or assertive.

The next time consumer witnesses are blocked from testifying to Congress about credit card billing practices unless they sign a broad, last-minute waiver of their financial privacy rights, I'm happy to walk across the Mall and sub-in. I'll sign any waiver given to me. And maybe the card issuers will have to show their math and books in return. I’m still flummoxed how the calculated my finance charge.

Where the Law Stands on Virtual Property

By Shari Claire Lewis, New York Law Journal March 28, 2008; "The filing of a complaint by a Pennsylvania lawyer against the operators of an online virtual world, and last year's decision by a Pennsylvania federal district court in that case, Bragg v. Linden Research Inc.,[FOOTNOTE 1] has generated a great deal of interest in the media and among lawyers, as well as in the virtual world community.[FOOTNOTE 2] The attention has gone well beyond that which the decision would have garnered if it had not involved a virtual world and virtual property, given that it simply found an arbitration clause in a terms of service agreement to be unconscionable and therefore unenforceable. It is clear, however, that the case reflects the growth of real-life litigation over virtual-world property. Undoubtedly, as participation in virtual worlds increases, real-life lawsuits will be growing in number, too. So-called "massively multiplayer online role-playing games" are online games with names like "World of Warcraft," where players interact and compete with other players by creating images (known as avatars) to represent themselves and by acquiring, selling or building property and even dating and having children.[FOOTNOTE 3] Online virtual worlds are wildly popular, attracting millions of people every day, and a recent Google search for MMORPG yielded approximately 32 million results. Second Life, one of the more popular online virtual worlds, was involved in the Bragg case. Second Life describes itself as "a 3-D virtual world entirely created by its Residents" (i.e., players). It promises a "vast digital continent, teeming with people, entertainment, experiences and opportunity," including a "perfect parcel of land to build your house or business." Second Life says its residents have "near unlimited freedom" to create what they want to create in the virtual world: "If you want to hang out with your friends in a garden or nightclub, you can. If you want to go shopping or fight dragons, you can. If you want to start a business, create a game or build a skyscraper you can." Moreover, players "retain the rights to their digital creations" and therefore they "can buy, sell and trade with other residents." [FOOTNOTE 4] Interestingly, numerous lawyers have set up legal offices in virtual worlds, as have well-known retailers and other companies; even the Department of Homeland Security has considered establishing a presence there.[FOOTNOTE 5]

To further blur the boundary between the real and virtual worlds, Second Life participants use "Linden dollars" (named after the company that created Second Life) in that world's commerce, and Second Life property can be bought and sold on eBay and other Web sites while Linden dollars can be converted to U.S. dollars on various online exchange sites. With all of this going on, can real-life lawsuits be far behind? The answer is that, as the Bragg case illustrates, real-life litigation over virtual world property is already here. Some disputes over virtual world property probably can be resolved in the virtual world, based on the service or end-user license agreements and the rules establishing the virtual world. Indeed, one can imagine that a real-life lawyer with a presence in a virtual world might be asked to help a player resolve a property dispute with another player. On the other end of the spectrum are cases in real-life courts dealing with real-life property that players use to participate in virtual world environments, such as Robinson v. Fakespace Labs Inc.[FOOTNOTE 6] The dispute in Robinson was over a patent issued to the plaintiff directed to a pair of gloves adapted for use as a controller for a joystick control port of a video game or computer. The defendant, Fakespace, produced hardware and software tools for virtual reality analysis and design, including a product known as the "Pinch Glove System," which was used for interacting with three dimensional data.
The plaintiff believed the Pinch Glove System infringed his patent, and brought suit. The case reached the U.S. Court of Appeals for the Federal Circuit after a district court dismissed the case and entered final judgment in favor of Fakespace. The appellate court upheld the district court's decision, finding the Fakespace glove did not infringe on the plaintiff's patent. Then, there are the lawsuits in real-life courts that directly involve virtual property. For example, plaintiffs in one case who were selling virtual products in Second Life brought suit in October in a federal district court in New York, alleging that the defendant sold virtual property in Second Life that infringed on the trademarks and copyright they held. The complaint asserted causes of action under Section 43(a) of the Lanham Act, among other things, and was settled in December.[FOOTNOTE 7] In a case filed in July in a Florida federal court, the plaintiff, a Second Life participant, claimed that an avatar the complaint identified as "Volkov Catteneo" had sold software the plaintiff had created that enabled avatars to engage in sexual acts. The plaintiff's attorney was quoted as saying that the case involved "a piece of software and software is copyrightable" and he equated it to "basic intellectual property principles."[FOOTNOTE 8] There also has been international litigation over virtual world issues. For example, as reported at, a court in China ordered an online video game company to restore virtual property to a player that had been lost to a hacker.


Future litigation over virtual world property is likely to be as diverse as litigation in real-life courts is today. For instance, one can imagine that well-known avatars, such as Anshe Chung, who claims to be the first online personality to achieve a net worth exceeding $1 million in a virtual world,[FOOTNOTE 9] might assert property rights in their avatars including the right of publicity and perhaps the right of privacy that would limit the ability of others to use those avatars in virtual worlds (and even in real life). Additionally, real-life corporations may have to take steps to protect their property rights in virtual worlds to ensure that they are not misused -- to the possible detriment of their real-life assets. Not too long ago, the Internet was not something considered in corporate strategic plans and concerns over legal issues involving the Web were easily dismissed. It certainly seems likely that virtual world property, and legal issues that it will engender, may become just as significant to businesses in the near future as the Web is today. Shari Claire Lewis, a partner at Rivkin Radler in Uniondale, New York, specializes in litigation in the areas of the Internet, domain name and computer law.

Viacom's 11 Virtual Worlds

From Forbes; "Since being named president of global digital media for Viacom's MTV Networks in late 2006, Mika Salmi has presided over a rapid expansion of the company's online properties. MTV Networks' Internet and digital businesses run the gamut from multimedia Web sites associated with hit shows on MTV, Comedy Central and Nickelodeon to standalone Web video properties, virtual worlds, online gaming sites and console videogames. Salmi has been with Viacom (nyse: VIA - news - people ) since 2006, when MTV Networks acquired his company Atom Entertainment. In an interview, Salmi discussed the company's strategy of using its sprawling portfolio of brands to target niche audiences online. (Sorry--if you're looking for any updates on Viacom's lawsuit against YouTube for copyright infringement, Salmi said he couldn't comment on the litigation.) MTV Networks has been growing its network of online distribution partners to expand the reach of its programming on the Web. At the same time, you've continued to launch new vertical Web sites for The Daily Show, iCarly and other hit shows. So what's more important--building destination sites or getting your content to where your viewers hang out online?

Mika Salmi: I don't think we actually view this as which is more important. Our goal is to go deep with the consumer, we want to really meet the consumer's needs. And the Web is fragmenting in a big way. People are using search to find what they are looking for, and they want to go deep into what their passions are. We're building our own verticals. We're also allowing people to take content from our verticals via embeds and other mechanisms to put them where they want, on their blogs, on their social networks. We're also doing some deals with select partners for distribution.
So the whole end result is, we think, that we're trying to serve the consumer wherever they might be and do our best on our own also. That's why our sites have become much deeper, things like [,]. Real deep vertical, all the clips available, all the episodes, community built into it, the whole thing.

You've suggested before that giant portal sites will decline in importance over time. AOL, MSN and Comcast's site are among your distribution partners. What does the future hold for them?

I think they all have a fairly large audience to date, so people do go there. The way they get there generally is through their ISP service, Comcast Fancast or AOL--they tend to be the default place to go. Depending on the surveys you see ... over 50% [of Web surfers] are using search as their electronic program guide. They're typing into a search box for what they want and they go in deep. That tends to bypass the portal model. But a lot of the "portal" sites are breaking themselves up and trying to get closer to the niches and the targeting. I think they're meeting that need. They're understanding the consumer behavior out there.

MTV Networks said last year that it would invest more than $500 million in developing its gaming business over the next two years. It also secured an exclusive deal with Jerry Bruckheimer in December to develop videogames. What can we expect from that business in the next 12 months?

Our gaming business we've split into four categories. The first is games media and that's things like Game Trailer, which is all about information about games or video about games. Then we have casual games, which is Addicting Games, Shockwave plus some of the Nickelodeon properties. Very simple flash-based games, which is a huge category for us. is the most trafficked Web site of all our 300-plus Web sites. Then we have console games, with "Rock Band" kind of leading the charge there. And there are probably some Bruckheimer games in the console area. And our fourth category is virtual worlds, and we now have 11 virtual worlds.

For each of those, it's very much a vertical entertainment strategy. We've really gone after certain types of verticals, even in the casual gaming area. There's Addicting Games [for] teen boys, and Shockwave, which is parents and moms. What's coming is more of that. We haven't done a lot in teen girls. So we're looking at what we should do in the teen girl space.

How has advertiser interest been in Neopets and your other online virtual properties?

Neopets has the longest [average monthly] time spent of any of our Web sites. Advertisers like that because people spend a lot of time there. The more [teen-oriented] virtual worlds, "Virtual The Hills," "Virtual Pimp My Ride," "Virtual Skate Park," those have been fantastic. In "Second Life," [advertisers] kind of get lost with where to put something in there. There aren't many mainstream plays [in online virtual worlds] and I think even though our plays are very vertical and very niche, they are attached to television shows or least some of our brands, so they have a much more mainstream or palatable flavor to advertisers.

The music industry is desperately in search of new revenue streams as music sales continue to slide. and work regularly with record labels to promote new releases. Is there anything that the recording industry isn't doing online that it should be doing?

[ Chuckles.] That's a loaded question. The simple answer is they're doing a lot they should be doing. The whole new artist area, we have been doing quite well with. We started something last fall called 52 Bands. It's not just on TV, but it's also online. [Record labels are] not funding as many new bands because they're not seeing the returns on them, obviously. A lot of companies [like MySpace and Facebook] have done well with new-artist discovery and new-artist promotion. And I think there's more to be done in that area.

Another Virtual World

Kooc Media Ltd. ( has created an online virtual world that currently has more than 23,000 inhabitants although this virtual world,, is only nine months old. Manchester, UK (PRWEB) March 26, 2008 –- Kooc Media Ltd. ( has created an online virtual world that currently has more than 23,000 inhabitants although this virtual world,, is only nine months old. Since launched, the site has reached 1.5 million forum posts and 10 million page views monthly. The Kingdom of Roliana is described as a large kingdom of extraordinary beauty. With its current population of 23,000 (and growing daily), Roliana features a busy shopping district. Roliana’s shops range from those catering to women’s elegant clothing and men’s fashionable wear to salons focusing on hairstyles and accessories. At, members earn currency, which they can spend on clothes and accessories to dress up their avatars. Users earn their currency by posting in the forums and playing online games. They can also purchase Roliana currency with Paypal, by post, or by mobile. A feature of Roliana that attracts the strong interest that made it possible for the site to grow as quickly as it has, is the ability it offers for a member to have a customisable avatar. With Roliana’s real life staff of artists, there is a constant stream of new sets of clothing appearing in the shops. With the hundreds of thousands of different combinations there are no two avatars alike. Echoing the top designers in non-virtual reality, the Roliana designers present items that are valuable because of their uniqueness. Each month one-off items appear in the shops, which users can purchase with real-world currency for their avatars. Because these are one-off items, they increase their in-game value over time. At Roliana, the busiest activities take place in the forums. At the rate of 1.5 million messages posted within the first 9 months, Roliana is poised to become one of the largest forums on the Internet. Currently Roliana's forums are ranked 1054th on, a site that ranks only those forums that have more than half a million posts. Roliana’s forums have climbed 150 places this month alone, making them the fastest growing site listed. Kooc Media ( is a web publishing company based in Manchester, England. Kooc Media specialises in building branded web properties and communities.

Mobile payments adoption gathers pace

Posted by Miya Knights at 1:14PM, Tuesday 25th March 2008; "Following previous analyst predictions that mobile banking and payments are set to take off, research released today reveals new optimism for growth in the sector. Companies operating in the advanced payments sector are optimistic about growth, a survey released today has found, building on previous analyst predictions that areas like mobile banking and payments are set to take off. The survey of 30 European players and ventures in the growing industry - including Monitise, LUUP and Paybox - were asked about their views on 'advanced payments,' which management consultancy Oliver Wyman (who also conducted the research) characterised as enabling "consumers to transact through a variety of non-traditional devices, such as their mobile phone, contactless cards and the internet". Just over half (57 per cent) of companies in this sector told the consultancy they expect to see strong growth over the next 12 months, and respondents were "very confident" that the advanced payments industry will make significant progress in 2008/09. The report said this could be attributed to the increasing sophistication and cost effectiveness of the technology involved. This is particularly true of mobile phones, which the survey highlighted as the next area for big development in payments technology. This echoes the findings of telecoms analyst Juniper Research, which only this January said mobile payment technology amounted to a "gold rush" for the financial services industry. It predicted that just over 612 million mobile phone users would generate over $587 billion (£295 billion) worth of financial transactions by the end of 2011. The Wyman survey said emerging markets would be key battlegrounds for the industry. The majority of respondents ranked the Middle East, Asia, Central and Eastern Europe as most critical for their growth, with Asia being cited by 64 per cent of respondents as a key market for the future. The findings are supported by the fact that emerging markets generally have less developed traditional payments infrastructures in place, like a network of bank branches, and therefore are more likely to adopt new technology. In developed countries, the Wyman survey said the industry would focus in the near term on competing for the most compelling contactless card payments schemes and mobile banking systems, using near field communications (NFC) technology, like those pilots launched by Barclaycard and Transport for London late last year. But stimulating customer demand was seen as potential barrier to increased adoption, with a strong majority of respondents (64 per cent) saying this was one of their primary challenges.

Friday, March 28, 2008

ex-HABBO CHINA Manager Launches iLemon

You be the judge if this will be the next HABBO CHINA, or .... drum-roll please .... just another Lemon ... From VWN; "iLemon, a Chinese virtual world developer, is developing Adventure Island, a virtual world designed to help Chinese users learn English through ties to the Adventure Learning Channel's "Adventure Girls." The world is currently going through an internal beta test at the ALC, though it looks like it was targeted for a February launch, and "combines web 2.0 social networking features with web 3.0 virtual world providing users a real-time graphical environment to interact with each other and the show hostesses while learning English in a totally different way." From looking at a case study, it looks like Adventure Island is meant to generate its own revenue through virtual goods and advertising, while tying users back to the main show. Feedback from the virtual world and, potentially users, will make their way onto the show itself. There are options for maintaing private spaces (which come with karaoke and digital video chat setups) and customizing avatars, but the Web-based world also features guest modes, allowing users to try it out with no registration and minimal barrier of entry. iLemon will be exhibiting at Virtual Worlds 2008, April 3-4 in New York City: Booth 15."

Second Life Developer Electric Sheep COO Loses Interest in Second Life

From the esheep blog. Given these electric sheep guys would not even exist without Linden Lab and Second Life, this whiny diatribe by virtual world developer Electric Sheep's COO is sorta like a dog biting the hand that feeds it;

"I’m reading an oldie-but-goodie, Smart Mobs by Howard Rheingold, and there’s a quote Takeshi Natsuno, one of NTT’s innovators behind the DoCoMo i-mode platform, who says: “AOL became the number one Internet service where so many others failed because they provided an easy to use interface, useful content developed by others, and ways for users to communicate with each other.” Unsurprisingly, I looked at those three items and stacked them up against Linden Lab’s Second Life, where the first two (usability and content) still get in the way of the last (a new form of communication). SL’s usability challenges are like a series of doors that all need to be unlocked. Open door 1 with a better, customer registration experience but hit door 2 with a large download. Those who open door 2 hit door 3, technical requirements (typically the graphics card). Get past door 3 and confront door 4, a difficult user interface. Start to unlock door 4 with the simpler OnRez viewer, but then the first thing people want to do is customize their avatar. Bam! That’s door 5, because the avatar skins and hair people really like are totally separate from the avatar sliders. Let’s skip past avatar and camera movement difficulties and get to… what? An event? We were creating compelling events back in 2006 with Major League Baseball (Yankees-Red Sox) and SonyBMG (loony Ben Folds concert), but scaling events in a user-friendly way in SL is cost prohibitive due to hosting fees, human support resources required, and inefficient sharding/load balancing systems. A game? We created some fun games for movies such as I am Legend and Smokin’ Aces, but lag, limitations of the SL scripting language, and word of mouth inefficiencies get in the way of scaling centralized games to truly impressive numbers (Tringo being a bold exception, which was a decentralized game which enabled land owners to make money). Usability and a compelling experience go hand in hand, and can compensate for each other. I found KartRider difficult to use (it also had a big download), but you knew what you were there to do and how to have fun. As open as Second Life is — anyone can rent virtual space and create whatever you want without asking permission from Linden Lab — it remains extremely closed if you run up against technical limitations (and you will). Then you have to pray that Linden Lab’s business priorities align with yours, and that they are able and willing to technically solve the bottleneck in a timely fashion. Linden Lab has been extremely helpful to ESC on many occasions, but the joy of open source platforms like Ogoglio or OpenSim (an open source version of Second Life) is that if something needs to be fixed, you can roll up your sleeves and fix it rather than crossing your fingers and waiting for someone else. My interests have switched over to lighter, Web-based experiences that change the situation entirely. Instead of thinking big worlds and network effects, I’m excited about melding the dynamics of casual games (i.e. light, efficient, fun user experiences) with the benefits of avatar communication and multi-user interactions. As I noted to Joey Seiler the other day, we are experimenting with Flash/Papervision experiences with Ogoglio and ElectroServer on the back end. Flash virtual worlds are nothing new, I think we can push them in some good directions. To be clear, I have a huge amount of respect for what Linden Lab has accomplished. Second Life has been an incredible innovation, and a wonderful platform to test the dynamics of virtual worlds. We have learned a huge amount by pushing the boundaries, watching usage patterns, examining voice versus text interactions, and comparing synchronous versus asynchronous communication tools. We learn from doing, from observing, and of course from stumbling. I agree with Charlene Li that if you’re never failing, it means you’re not trying hard enough. I think Second Life has been great for learning and great for PR, but by-and-large is a poor platform for marketing. I still think it could be an effective component of a cross-platform virtual goods play, especially if you use in-world entrepreneurs as a channel. Second Life continues to grow. If you examine their latest metrics, you’ll see that Linden Lab’s hosting business (the primary revenue source) continues to grow every month. New user concurrency records continue to be broken on a regular basis (latest high is over 64K). Second Life remains a hotbed of experimentation in education and corporate collaboration. It is still one of the cheapest and fastest places to prototype ideas and virtual world interactions. I think, however, that Linden Lab’s IPO goals are not realistic until they are able to (re)create a compelling story for their future — there are good reasons for them to go public, and their financials support it, but they won’t get the EV/R multiples they are dreaming of until the growth story sizzles once more. Perhaps it is very self-serving but I have always believed that Linden Lab’s strength would lie in enabling a deep and wide ecosystem of 3rd party developers. This requires both fostering that ecosystem and creating a robust and open technical platform for those developers to work upon. Linden Lab has been well-meaning with the former, but has fallen down on the latter. It has moved in inches, rather than miles, and been afraid to cannibalize its existing community and economy. Not surprisingly, many 3rd party developers have lost patience and shifted to OpenSim and Multiverse or shifted back to Flash and the Web browser. I would think that once OpenSim is able to create its own viewer from scratch and break free from the SL GPL license, it too will split from Second Life compatibility. Still, our culture is not quite ready for an avatar for every soul, and Linden Lab’s window of opportunity is far from over. Perhaps there will be a second life for Second Life. However, there are a lot of Linden Lab decisions and some very good technical implementation between now and then.

Obopay Partners with YES BANK in India for Money Transfer

Obopay has announced the launch of its instant money transfer service in India through an alliance between wholly-owned subsidiary Obopay India and YES BANK, an Indian private sector bank. The launch of Obopay's service in India represents a significant development in Obopay's commitment to delivering on a unique and market- shaping vision for the future of mobile money transfer and mobile payments. "Since our launch in 2005, Obopay has grown based on our recognition of the enormous market need for immediate, secure and convenient mobile money transfer," said Obopay Chief Executive Officer Carol Realini. "We have recently announced significant product enhancements, including the ability to use Obopay with any existing American bank account, and our expansion into the Indian market demonstrates Obopay's viability in the global market." With Obopay, YES BANK customers securely and instantly transfer money to and from any mobile phone number with Obopay's mobile application, text message or mobile Web. YES BANK customers can instantly withdraw cash received using their YES BANK debit card. YES BANK customers can sign up for Obopay through forms available at YES BANK branches and ATMs in Mumbai and National Capital Region (NCR)."Together, Obopay and YES BANK give Indian mobile consumers power over their money no matter where they are," said Obopay India Executive Director Aditya Menon. "This service is built for today's mobile lifestyle, making funds available to consumers anytime, anywhere. We're excited to bring this innovative service to India." With more than 250 million mobile phones in use, India's mobile consumer population is on par with America's 257 million mobile consumers. India's mobile market has grown exponentially in recent months, adding more than 8 million customers each month in 2008.

Introducing the New International L$ Marketplace

From the Linden Blog Posted: 26 Mar 2008 02:12 PM CDT; "It’s astounding that with so many residents outside of the United States, we still only accept U.S. Dollars as payment. Localizing payment systems and maintaining the highest level of security possible for our residents is no easy task. Today we’re pleased to announce a new initiative to make the Linden Dollar more accessible! Through our Risk API program, we have already established relationships with some of the biggest 3rd party Linden Dollar exchanges to keep transactions secure and protect our residents. We are pleased that these Linden Dollar resellers have chosen to work with us and we are now making their services even more accessible to our residents. A new article on our public wiki page lists the payment options they offer by country, currency, and payment method. The wide range of payment systems these sites offer for Linden Dollars is now also directly available through via a link on our currency page to that wiki article. To keep the information up-to-date, we've created two surveys. For those Linden dollar sellers that do not use our Risk API, we'd like to know what payment methods and currencies you accept and whether you'd be interested in using our Risk API. You can fill out a survey to tell us here. For our residents outside of the U.S., we'd like to know what currencies and payment methods you would like to see available to purchase Linden Dollars. A survey for Linden Dollar buyers is here. By making it easier for our residents outside of the U.S. to attain Linden Dollars, we hope to make Second Life and all of the wonderful creations of our residents more accessible to everyone!"

Translated this means Linden now directs its Linden $ buyers to three 3rd party Linden "exchanges" (a grand term for buyers buying Lindens at market price from the Lindex at controlled pre-set batches by Linden Lab who then resell Lindens with a margin to buyers who want to avail of alternative payment methods than credit cards and use Euro's or other currencies), namely Dutch Exchange, Anshe Chunge's site and ELDEX.


Thursday, March 27, 2008

Are Mobile Payments Ripening in Developing World?

A survey by UK consultancy Oliver Wyman shows that mobile phone, contactless and Web payments are expected to show strong growth in the emerging markets, perhaps moving at an even faster pace than established payments markets in the developed world.

Single Euro Payments Area (SEPA) Makes Buying Games Easier

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. Over 1.2 million people have visited the website during the 6-month beta testing period, top-5 countries being China, U.S., Brazil, France and Spain. Helsinki, Finland (PRWEB) 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. 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)

EU report says cross-border payment rules should include direct debit transfers

BRUSSELS (Thomson Financial) - EU rules on charges for cross-border euro payments should be extended to include direct debit payments, according to a new European Commission report. In addition, it argues the rules should be revised to reduce the burden of statistical reporting for banks and cut the costs for cross-border bank transfers. The reports envisages a phasing out of the balance of payments reporting obligations imposed on banks in some member states, arguing such obligations 'hamper the development of the Single Euro Payments Area (SEPA)'. The obligations differ between countries and 'prevent fully automated processing of cross-border payments', which ultimately leads to higher costs for banks and consumers, according to the report. Placing particular emphasis on the protection of consumers, the report concludes all member states should set up a competent authority as well as out-of court redress procedures to deal with disputes between a bank and a customer or to flag up problems with the application of the rules. EU rules on cross-border payment have levelled fees for payments up to 50,000 eur into an account in another member state with those charged for payments made within a customer's home country.

EU rules on cross-border euro payments should be extended

EU rules on cross-border euro payments should be extended by Georgios Athanasiadis, 26/2/2008,17:21; "EU rules on cross-border euro payments should be extended EU rules on charges for cross-border euro payments should be modified to improve consumer protection and include direct debit payments, according to a new European Commission report. Revision of these rules should also alleviate the burden of statistical reporting placed on banks and reduce the processing costs of cross-border bank transfers. Internal Market and Services Commissioner Charlie McCreevy said: 'The Regulation on cross-border euro payments has already brought real benefits to consumers. We have seen price reductions in many countries. We now want to build on this by improving consumer protection and by extending the scope of the Regulation to direct debits. We also want financial institutions to provide consumers with clear and transparent information on their payment services which can be easily compared between banks and countries.' The report analyses how Regulation 2560/2001 on cross-border payments in euro is applied in the Member States and examines the practical problems encountered in its implementation. It concludes that a number of proposals should be made in order to address the identified issues, better reflect developments in retail financial markets and align the Regulation with the recently adopted Payment Services Directive.

European Online Shoppers To Grow from 100 million to 174 million

According to Forrester Research, the number of Europeans shopping online will grow from 100 million to 174 million. In the United Kingdom, the average yearly per consumer Web retail spend will grow from around 1,000 euro to 1,500 euro, as UK consumers outspend even their US counterparts online. Overall, this will cause European ecommerce to surge to 263 billion euro in 2011, with travel, clothes, groceries, and consumer electronics all above the 10 billion euro per year mark.

Doing away with paper invoices could save EUR 400 million

Only around 15 per cent of Finns use electronic billing "Doing away with paper invoices could save EUR 400 million a year" by Petri Sajari; "The costs incurred in sending bills to consumers inside envelopes add up to enormous sums each year.“If all consumers in Finland were to use electronic invoicing, the annual savings for those sending out the bills could be in the region of EUR 400 million”, says Bo Harald, who chairs the the European Commission’s expert Task Force on e-Invoicing. Harald believes that the savings enjoyed by the invoicers would ultimately trickle down into consumer prices. The Federation of Finnish Financial Services (FFFS), representing companies operating in the financial sector in this country, has made the same sort of calculations as Harald.
By using e-invoices and online banking, consumers could reduce the use of paper, cut emissions arising out of the delivery of mail, and they would also be spared the chore of keying in long invoice reference numbers. "More than one in five of online banking users in Finland would be keen to use e-invoicing. Around 15 per cent actually use e-invoices”, estimates Kaija Erjanti, who heads the FFFS’s financial markets and payment systems division. For example in Norway, around 40% of consumers now handle their regular payments without paper invoices. The share of e-invoices in consumer invoicing is surprisingly low in Finland, notwithstanding the fact that nearly 70 per cent of Finns between the ages of 15 and 74 years already pay their bills via the Net. Finnish consumers receive around 250 million invoices for goods and services each year. In the view of Bo Harald, changing over to electronic invoicing will not bring additional costs either for the sender of the invoice or for the person receiving and paying it. Currently the situation does somewhat resemble the old army joke about digging a hole and filling it in again. Large billers, like utilities, have their paper invoices made for them by subcontractors. The billing information is passed electronically to the subcontractor, which prints the invoice out on headed paper and then stuffs it into an envelope. Fourteen days or so later, the recipient of the invoice logs in to his or her online bank, and keys in the data on the paper invoice, turning it back into electronic form, before the payer approves the payment with another few keystrokes. I have not been able to come up with any intelligent arguments in defence of paper invoices”, sighs Bo Harald.

Harald has been developing e-banking from the early 1980s, when the then SYP or Union Bank of Finland started home banking. He first worked for SYP, then for Merita and Nordea as Director of Payments and e-Services and Deputy CEO, and since 2005 he has headed a new Executive Advisors unit at IT services company Tietoenator. The advantages and ease of electronic invoicing has been trumpeted in Finland for close on a decade now. Harald believes that the conditions are already right for doing away with paper invoicing on business-to-business payments, since around 100,000 companies have agreed on e-invoicing. "In Norway and Sweden cooperation between banks and the corporate sector on electronic payments initially took off rather less well than it did in Finland. Partly for that reason, the decision was made to develop the idea in those countries firstly for consumers. In Finland, meanwhile, the consumers were forgotten for years on end”, Bo Harald comments. Another brake on the onward march of e-invoicing in Finland has been a shortage of companies who have had e-billing to consumers on their agenda. In Norway, consumers are given a sharp prod in the direction of e-payments by additional charges.

If the payee absolutely insists on getting an invoice through his letterbox in an envelope, then he may find himself having to pay the equivalent of an additional 5 to 10 euros for the privilege. From the beginning of April of this year, the Finnish teleoperator TeliaSonera intends to add a EUR 1.00 fee for sending a paper broadband invoice to customers. “The Norwegian model confirms the argument that it is only with measured use of the stick that consumers can be persuaded to act in their own interests”, says Harald. Bo Harald himself was rapping consumers across the knuckles for the first time in 1983, at SYP. "The introduction of a 50 penni handling charge on payments by cheque caused the number of cheque transactions to fall practically to zero overnight.” The European Commission is now throwing in a big gear to get electronic invoicing into business-to-pusiness payments in all member countries. The Commission is fervently advocating the Single European Payments Area, SEPA. If the EU can succeed in revamping invoicing through electronic means to the extent that Finland currently has a readiness for, then according to the Internal Market and Services Commissioner Charlie McCreevy, the cost-savings across the Union as a whole could amount to a thumping EUR 240 billion a year, if SEPA is used as a platform for e-invoicing.

Oliver Wyman survey finds mobile payments in Eastern Europe poised for strong growth

A survey conducted by Oliver Wyman, the leading management consultancy firm, shows a significant increase in activity across the advanced payments sector in Europe. Advanced payments enable consumers to transact through a variety of non traditional devices, such as their mobile phone, contactless cards and the internet. The survey encompassed 30 of the leading European new players and ventures in this fast growing industry, companies with an expertise and specific focus on advanced payments including Monitise, LUUP, paybox and Margento. The survey found that 57% of companies in this sector expect to see strong growth over the next 12 months. Respondents were very confident that the advanced payments industry will make significant progress in 2008/09. This could be attributed to the increasing sophistication and cost effectiveness of the technology involved. This is particularly true of mobile phones, which the survey highlighted as the next big development in payments technology. A key battleground for the industry will be in the emerging markets. The majority of respondents ranked the Middle East, Asia and Central/Eastern Europe as most critical for their growth, with Asia being cited by 64% of respondents as a key market for the future. These findings are supported by the fact that emerging markets generally have less developed traditional payments infrastructures in place (i.e. bank branches), and therefore are more likely to adopt new technology. One particular area that is attracting the attention of industry players in emerging markets is cross border remittances: the market for transferring money across state borders. Mobile phones can be an extremely useful device to increase reach and reduce costs.

In developed countries, the industry in the near term will focus on competing for the most compelling contactless card payments solutions as well as mobile banking solutions. In contrast, contactless mobile payments will take a much longer time to evolve as they will require collaboration between banks and telecom operators.
Other findings from the Oliver Wyman survey uncovered that the challenges that lie ahead for the industry include stimulating customer demand, with a strong majority of respondents (64%) stating this as one of their primary challenges. Another difficulty is finding a workable business model for many parties typically involved in taking the solution to market. Paul Mee, Partner at Oliver Wyman said: “The global advanced payments market is evolving fast and undergoing strong growth. However, we expect that many of these new species will have to be especially fit and strong to survive. Right now, it is unclear who the most profitable players in the industry will be, which makes this an exciting sector to watch. We expect significant consolidation in due course, with major players buying up firms who have distinctive operating assets, customer traction and capabilities that can adapt rapidly.”

Frequent announcements of new propositions and new trials, often launched by new non-traditional players, make this a confusing market to assess at present. The diversity of new players in this industry is highlighted in the report. Examples include Margento, a Slovenian company, offering a mobile payment system which requires no software or hardware change to the handset, and LUUP, a Norwegian company launched in 2002 enabling customers to pay, send and receive money via their mobile phones including international and domestic money transfers. Zilvinas Bareisis, Senior Manager at Oliver Wyman added: “Europe’s fragmentation means a lot of ‘pretenders’ are pursuing a niche strategy at present focusing on a particular geography, proposition or customer segment, and to a certain extent it’s land grab time. However, lack of common standards implies that future profits are limited. In order to be successful, the players in the industry will need a sophisticated strategic marketing capability, a workable business model and clear approaches to interoperability. The winners will be those who can break out of their segments and constraints.”

First Fully Integrated Contactless Payment System i

In the UK, EAT, Commidea Ltd and Barclaycard Business have announced that EAT, a sandwich, soup and coffee shop, has become the first retailer in the UK to introduce a fully integrated contactless payment system. Using Commidea’s Ocius Chip & PIN solution with contactless technology, Eat will now be able to process both Visa (Paywave) and MasterCard (Paypass) contactless transactions for its customers using Barclaycard Business as their merchant acquirer.

European Commission Initiates Formal Proceedings Against

From their press release: "The European Commission has decided to open formal antitrust proceedings against Visa Europe Limited in relation to its multilateral interchange fees (MIF) for cross-border point of sale transactions within the EEA using Visa branded consumer payment cards, and the "Honour-All-Cards-Rule" as it applies to these transactions. The proceedings will seek to establish whether these practices constitute infringements of Article 81 of the EC Treaty and Article 53 of the EEA Agreement, which forbid restrictive business practices such as price fixing."

Wednesday, March 26, 2008

Mobillians Vid

This is a cool and innovative payment service that has great potential in the USA (having already been wildly successful in Korea). PaymentGuy recommends it for digital goods and service vendrs. And yes, Mr. Shaw, I fixed the link thanks for the tip! "Noticed on your blog that in left margin, under Payment Companies (ISP), hyperlink to "Mobilians" was not working. Kindly request that the link be set to: Thank you kindly. Prag-"
Pragnesh Shah
President & CEO
Mobilians International, Inc.
Bridging the Worlds of Online and Mobile Commerce

Metanomics 101 - Upcoming Events

Here is the upcoming action at Prof. Robert Bloomfield/Beyers Sellers, Cornell University/Metanomics ( Metanomics series;

"Thanks for the post. This series has been a fascinating experience for me. We have a number of great sessions coming up. People can get more info at, and for convenience, here is a list:

Friday, March 28th, 10:30 Pacific Time (SLT): Mitch Kapor, Chairman of the Board, Linden Lab will talk about recent changes in management and policy at Linden Lab.

Monday, March 31st, 11am SLT. Accountants and Taxes in the metaverse. A panel to discuss taxes and financial reporting for virtual businesses, with Rocky Maddaloni, Director of the Maryland Association of CPAs (and also Director of SLACPA), Chili Carson, who has an accounting practice in SL, and Bryan Camp, Tax Law Prof from Texas Tech (and Metanomics guest from the Fall).

Monday, April 7th, 11am SLT. Experimental Economics in Virtual Worlds. We will hear from a panel of experimental economists on how to use virtual worlds for experimentation. I am expecting Metanomics’ own Steve Atlas, John Duffy from Pitt, and Thomas Chesney from the UK.

Monday, April 14th. Wagner James Au and Cory Ondrejka discuss the history and future of Linden Lab, Second LIfe and the Metaverse.

Monday, April 21st. Gartner Analyst Steve Prentice will provide his take on the future of virtual worlds.

Monday, April 28th, we will have Karen Herzog of Sophia’s Garden, to discuss the virtual world platform they set up for families with seriously ill children to communicate with one another, friends and their medical providers. The platform is based on Qwaq, and Qwaq’s CEO, Greg Nuyens, will join us, and we will film the episode in Sophia’s Garden.

PaymentGuy thinks this is well worth watching with such excellent guests! Nice job Rob.

EU Opens Inquiry Into Visa Europe's Payment-Card Fees (Update3)

March 26 (Bloomberg) -- European Union antitrust regulators opened a probe of fees set by Visa Europe Ltd., the regional franchise of the world's biggest credit-card network, three months after ruling MasterCard Inc.'s similar transaction fee is illegal. The European Commission in Brussels said in a statement today it is examining so-called interchange fees, paid between banks on each transaction, after a 2002 settlement expired at the end of last year. Visa Europe -- which separated from Visa Inc. before the U.S. company's initial public offering -- responded today that it is seeking a new settlement. EU Competition Commissioner Neelie Kroes has likened the fee to a tax driving up prices on all consumers. The investigation opens the way for an overhaul of the industry, which potentially could cost banks billions of euros of fee revenue, after the EU agency on Dec. 19 ordered MasterCard to revise how it sets its fee. ``The interchange fee is probably set at well over what it actually costs the process and the gap has been a substantial source of revenue for the banks,'' Derek Chambers, a banks analyst at Standard & Poor's Equity Research Ltd. in London, said in a telephone interview. ``If it is lowered or removed it would free up competition and that could mean lower fees for banks potentially.'' Visa Europe said in a statement it expected the investigation as ``a standard procedural step.'' The London- based company said it is continuing talks with the commission toward a new settlement. ``Interchange is a mechanism for ensuring the maximum benefit to all who use card payment systems,'' Visa Europe said. ``A substantial reduction in interchange would see a disproportionate shift in the costs of the card payments system from retailers to consumers.'' Merchants argue that interchange fees inflate prices for shoppers by as much as 13.5 billion euros ($21.2 billion) a year in the 27-nation EU, according to the European Retail Round Table, a lobby group for 14 retailers. Since stores typically charge the same for cash or cards, the cost is borne by all shoppers, not just those who make the 23 billion card payments worth more than 1.35 trillion euros in the region each year, according to the commission.
While Visa and MasterCard set the interchange fees, the money goes to banks that issue credit cards. Europe's biggest card issuers include Royal Bank of Scotland Group Plc and Barclays Plc of the U.K., as well as Credit Agricole SA and Credit Industriel & Commercial, a unit of Credit Mutuel. In the MasterCard case, the EU decision applied to transaction fees on purchases made by consumers outside their home countries. MasterCard has appealed the ruling to a European court in Luxembourg.
To contact the reporter on this story: John Rega in Brussels at
Last Updated: March 26, 2008 09:24 EDT

JPMorgan Makes $1.36 billion on Visa’s I.P.O

Thanks to Visa’s blockbuster initial public offering last week, JPMorgan Chase won’t have to look very hard to come up with the extra money for its sweetened bid for Bear Stearns. JPMorgan’s $1.36 billion windfall from Visa’s I.P.O. will cover its new $1.2 billion stock deal for Bear, with a little extra to spare. JPMorgan is the largest of six principal bank stockholders of the the card processor, who all reaped big bucks from the offering. The debut was so successful that Visa sold additional shares. “It’s hard to raise that kind of cash in today’s market,” Chip MacDonald, partner in the capital markets group of the law firm Jones Day, told CNN Money. “It gives them more flexibility.” Other banks receiving big windfalls from the I.P.O. include: Bank of America, with $675.3 million; Citigroup, with $324 million; U.S. Bancorp, with $298.7 million, and Wells Fargo, with $295 million, according to Securities and Exchange Commission filings.

Tuesday, March 25, 2008

HAPPY EASTER by the way

Unlawful Internet Gambling Enforcement Act of 2006 is Unworkable Says Payment Companies (and we are losing a lot of money!!!)

Banks, Processors Struggle with Proposed Regs for Web Gambling (March 24, 2008) Nearly 18 months after President Bush signed into law the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), regulators are still struggling to come up with rules to guide financial institutions and payment processors in blocking payments to online gaming sites. And if comments from the financial industry are any indicator, there’s still a lot of work ahead. In comments filed between October and December with the U.S. Department of the Treasury and the Federal Reserve Board on proposed regulations for implementing UIGEA, many financial-industry players say the law is unworkable. “We believe that UIGEA will in the end catch more banks in a compliance trap and do greater damage to the competitiveness of the American payments system, than it will stop gambling enterprises from profiting on illegal wagering,” say Nedda Feddis, ABA senior federal counsel, and Richard R. Riese, director of the ABA Center for Regulatory Compliance. The ABA says that the law puts an “exceptional burden” on banks, noting that the UIGEA admits that even traditional law-enforcement mechanisms often are inadequate for enforcing gambling prohibitions or regulations on the Internet, especially where such gambling crosses state or national borders. “In other words, in the view of the drafters of the legislation, all the sophistication of the FBI, Secret Service, and other police computerized detection systems and investigative expertise devoted to fighting terrorism and financial crime are inadequate to the task of apprehending the unlawful gambling business or confiscating its revenue. ABA believes that punting this obligation to the participants in the U.S. payment system is an unprecedented delegation of government responsibility with no prospect of practical success in exchange for all the burden it imposes,” the ABA says. The Consumer Financial Service Committee of the State Bar of California echoes the ABA’s concerns: “It is curious, and quite telling that the private sector is expected to perform the Herculean task that government is admittedly not qualified to handle.” One common complaint cited is the vague definition of unlawful Internet gambling. In its comment, Citibank N.A. says there is no workable guideline as to when unlawful Internet gambling activities occur. The proposed regulations state that a transaction is considered “unlawful” if it is “unlawful under any applicable Federal or State law…in which the bet or wager is initiated, received or otherwise made.” Says Citibank: “We need bright-line rules that can be applied to assist us in determining what activities are considered lawful.” MasterCard Worldwide and PayPal Inc. also objected to the proposal’s requirement that payment systems take appropriate remedial action against online gaming sites that use their brands to “promote” restricted transactions. “Even if it were possible to locate a party to hold accountable for a trademark violation, it can be extremely costly to attempt to litigate or take other remedial action against such a party,” MasterCard says. “Any suggestion that MasterCard is expected to investigate and prosecute all Internet casinos’ unauthorized use of its marks could divert enforcement resources from more pressing and fruitful enforcement strategies.”

Mobile Banking Down Under

Banks rush to offer services via mobiles phones, writes Brad Howarth; "IT HAS taken the better part of a decade, but Australians are finally on the verge of getting access to a range of banking services delivered through their mobile phones. Australian banks whipped themselves into a frenzy at the turn of the century as mobile banking looked set to take the lead from internet banking as a more convenient service delivery platform. But a series of expensive failed experiments using handset-based web browsers and a technology called wireless application protocol (WAP) failed to catch on with consumers. But, as handsets have improved and mobile network speeds have increased, many banks believe that the time is now right to introduce services. The ANZ has already launched a free service, called M-Banking, which requires consumers to download a small Java-based application to their handset. It has launched a second, simpler service using SMS messaging that allows customers to check account balances and statements, and create automatic alerts. The M-Banking service also allows them to make payments. In April, Suncorp will launch a WAP-based service providing similar functions to ANZ's M-Banking. An SMS service from Suncorp will follow later this year. The National Australia Bank is working with Telstra to develop an SMS-based service, but access will be restricted to customers on the Telstra network. Westpac has launched an SMS-based service in New Zealand, but has not set a public timetable for its introduction in Australia. One company that will not be joining the party is the Commonwealth Bank, which closed a mobile banking service delivered on the Vodafone network in late 2005 due to a lack of customers. The bank found that customers preferred to use the internet or teller machines for activities such as checking balances. A spokesman said the bank would consider reintroducing a mobile service if customer demand warranted it. According to Matthew Talbot, vice-president of m-commerce at mobile-banking technology supplier Sybase 365, , the first attempts to develop mobile-banking services based on WAP were a disaster. "Consumers didn't know how to set it up, the networks didn't work effectively for it and consumer education just wasn't there," Mr Talbot says. "People knew they could use SMS, but when it got to WAP and Java, the consumer didn't know."
Mr Talbot says most consumers are now better aware of the capabilities of their handsets. The company's own research has indicated that as many as 25% of Australian mobile-phone users would adopt mobile banking. Australia is also one of the strongest users of internet banking services. "You are never going to get 100% of people using the mobile phone, but there is a segment that is still using the call centres that will migrate to mobile," Mr Talbot says. "Consumers are looking at it as a requirement for what they think their bank should offer." Mr Talbot says for services to work, it is important that the bank offers a range of options to catch the greatest number of consumers. Sybase has yet to sign a client in Australia, but is providing technology to Citigroup and Standard Chartered Bank internationally. The managing director of banking products at ANZ, John Harries, says the goal for his company is to provide more convenient banking. "We needed to be a leader with this application to offer customers the option and the alternative of accessing their banking in this manner," Mr Harries says. The bank is taking a cautious approach to the service's introduction, with minimal promotion so far. Even so, ANZ, recorded more than 1000 registrations in its first few weeks of operations, but Mr Harries says this is only a tiny fraction of its 1.4 million internet banking users. "I see it as much about another way to get people information in an easy and convenient manner as much as it is about banking. And time will tell what the take-up will be."
According to Terry Wasmund, head of payments at Suncorp, the WAP-based service that his bank will launch in April has been in development for 12 months and is based on extensive customer research. He believes the strongest take-up will be in time-poor" customer segments such as young families and small-business operators. Suncorp chose WAP as he believes using the mobile-phone browser is easier for consumers than having to download software. "Customers are more familiar with the technology and have become quite comfortable with its use," Mr Wasmund says. "There is an even greater need these days for more convenience. And the technology itself is a lot better." He says the rate at which these services will catch on is unknown.
"The mobile-banking platforms are an investment in the future, and you'll see a gradual take-up that will continue to build," Mr Wasmund says.

ClickandBuy Delisted

No, not from any stock exchange. They are a privately held company. This is a delisting notice as an online payment service provider recommended on PaymentGuy's site. As a trusted and relied upon purveyor of payment industry expertise, PaymentGuy simply cannot endorse, either tacitly or implicitly, any payment service provider that voluntarily ceases corporate communications for such an extended period of time. Stay tuned should any positive developments transpire in the interim that would convince PaymentGuy to alter this most unfortunately unprecedented yet necessary decision.

PayPal Strips Nudists of Service

Nudist group stripped of service claims PayPal exposes ignorance print this article
VANCOUVER CP The Federation of Canadian Naturists believes it is the victim of naked aggression. The federation, which publishes the magazine Going Natural, says after four years of processing subscription payments for the magazine, PayPal has abruptly cancelled its service. According to the federation, PayPal has ruled Going Natural sells sexually oriented goods or services involving minors or services which facilitate meetings for sexually oriented activities. Federation government affairs director Judy Williams says the decision is "born of ignorance" because Going Natural is devoted to naturism, or nudism, a social movement over a hundred years old and unrelated to sexual activity. She says PayPal is a global leader in online payment solutions and has a near monopoly on the market so she urges it to avoid making arbitrary and narrow judgements. Williams says the Federation of Canadian Naturists is mulling a class action lawsuit and wants to hear from any organization which believes it has been refused service by PayPal because of political, social, or religious views.

Visa's IPO Victory

"The company's initial offering was a hit and a rare sign of strength in a weakened stock market. But the post-Visa IPO landscape looks bleak" by Ben Steverman; "By conventional measures, Visa (V) chose a terrible time for an initial public offering. Just days after the collapse of a major investment bank, with credit market turmoil at its worst and the recent IPO market drier than a desert, it would be easy to understand if investors showed no appetite for shares of a new financial firm. Instead, investors fought for a chance to bite off a piece of the Visa IPO. Out of the Gate with a Bang - Visa was expected to debut at a price of $37 to $42 per share, but there was enough initial interest to price the deal at $44 on Mar. 18. On Mar. 19, Visa, under the stock ticker "V," opened on the New York Stock Exchange at 59.50 per share, and finished the session 29% above the offering price, at 56.86. The price action in Visa was in stark contrast to the rest of the market: Major U.S. indexes each declined more than 2% on Mar. 19 amid continued worries about the banking sector. Visa's IPO could raise as much as $19.6 billion, giving a big payday to its former bank owners. Also, the 41 Wall Street brokers that underwrote the deal should net fees of more than $500 million. Those are welcome sources of revenue at a dark time for the financial sector. That's one reason Visa chose this unpredictable time to go public. Also, the IPO is the culmination of a complicated, two-year long reorganization of Visa, a process that gave the firm little flexibility to postpone its offering. Confidence in the Brand - Scott Sweet of IPO Boutique says the IPO might have faced trouble due to the recent collapse of Bear Stearns (BSC). But an interest rate cut by the Federal Reserve and solid earnings from Lehman Brothers (LEH) and Goldman Sachs (GS) on Mar. 18 "gave a lot of people the feeling that the worst may be over for the time being." (Sweet spoke before the late-session stock market decline on Mar. 19.) The timing of Visa's IPO might be irrelevant. Investors might have been waiting for the chance to get in on an impressive company from the very beginning. "Maybe people view [Visa] as a safer place to put their money," says Nick Einhorn, a research analyst at Renaissance Capital, which tracks the IPO market. "Management did a good job of selling [Visa] as a good company even in an economic downturn." Visa runs the network over which credit-card transactions run, but it doesn't issue the cards to consumers or mail out their bills. Banks, not Visa, take on the risk that recession-battered consumers won't pay their credit-card debt. Plus, Visa benefits from long-term trends. Visa and rivals like MasterCard (MA)—which had its own successful IPO in 2006—profit from the global shift from cash and checks toward credit and debit cards. Prospects for Growth - The more transactions it performs, the more money Visa makes. And according to the Nilson Report, an industry publication, the number of card transactions globally is expected to grow 11% each year through 2012. Morningstar (MORN) analyst Michael Kon estimates Visa's revenue could increase an average of 12% per year for the next eight years. Visa credit cards have been around for decades, but it is a new company in the sense that it links separate bank-owned Visa associations around the world. That reorganization gives Visa the opportunity to cut costs deeply, Kon said. The danger for Visa investors are mostly legal and regulatory. Looming Regulatory Issues? By far the largest credit-card network in the world, Visa for years has faced critics who say it unfairly dominates the industry, pushing out competitors and squeezing merchants for higher fees. Some lawsuits against Visa already have been successful and others are pending, so the Visa IPO sets aside $3 billion for settlement payouts.
Even if this lawsuit fund is sufficient, regulators could put pressure on profits or cause problems for Visa's worldwide expansion plans by forcing more competition between card networks and by making it tough for Visa to expand in new markets.
Clearly, investors are betting Visa can conquer these issues and get a big share of the market in places where credit-card use is booming, like Latin America, the Middle East, and Asia. Visa has "a great brand name and a solid track record," Einhorn says. It is a market leader in its industry, with "strong financials" and fast growth for such a big company. "All the trends are working for them," he added. MasterCard, which has seen its stock price more than quadruple since its IPO in 2006, traded slightly lower Mar. 19, but did much better than the broader market. That's a good sign for Visa, Sweet says, because it indicates investors aren't simply shifting dollars from one credit-card network to another. "They're buying Visa solely on its potential, which I believe is very high," Sweet says. "

ChinaLife Makes $150,000,000 on VISA IPO

China Life invests $300 million in Visa IPO Monday March 24, 6:07 am ET BEIJING (Reuters) - China Life Insurance Co (Shanghai:601628.SS - News; HKSE:2628.HK - News), the country's biggest life insurer, said on Monday that it had invested $300 million in Visa Inc's (NYSE:V - News) initial public offering in its maiden overseas investment. A day after Visa's record $17.9 billion IPO last Tuesday, Ping An Insurance Co Ltd (HKSE:2318.HK - News; Shanghai:601318.SS - News), China's No.2 life insurer, paid 2.15 billion euros ($3.4 billion) for half of the investment arm of Belgian-Dutch financial group Fortis NV Chinese financial institutions are actively exploring overseas markets in search of new profit streams. China Life Chairman Yang Chao has said that he was interested in taking a stake in China Development Bank and Agricultural Bank of China as well as in buying into foreign banks. At Visa's closing share price last Thursday of $64.35, China Life noted that it was enjoying paper gains of about 50 percent from the credit card company's IPO price of $44.

Payforit Does Deal With Flirtomatic

Mobile Interactive Group (MIG) has been won a deal to provide "Payforit" services for mobile payments within the Flirtomatic mobile Internet portal, which apparently is one of the UK’s largest. Payforit is the payment service, supported by all licensed UK mobile operators, designed to make it easy to pay for low cost services on the mobile phone.
Mark Curtis, the Flirtomatic CEO, says that “Flirtomatic is one of the largest off-deck WAP portals in the UK, therefore it’s essential to integrate with the new Payforit payment scheme to increase consumer confidence when purchasing products and services via mobile”


Anout "Moneybookers to go..." that let's you;
* send payments from your mobile phone to any other mobile phone number - worldwide!
* receive payments to your mobile phone
* check your Moneybookers account balance while being offline
* get instant SMS notification every time you receive a payment over an amount of your choice
How it works:
Step 1: You must be a registered member of Moneybookers to use this service - if you do not have a Moneybookers account yet, click here to open one.
Step 2: Log in to your account, click on 'My Account' then 'Profile'. Register your mobile number from/to which you wish to send/receive payments and select a 6 digit PIN number, which you will need to access our mobile service. We also ask you to set a limit which the total of all your outgoing monthly mobile payments cannot exceed. If you wish, you can also select to receive an instant SMS every time another Moneybookers member makes a payment to your email address with a minimum amount chosen by you.
Step 3: You are ready to use our mobile service. Simply use the following numbers:
0871 8713280 (if you are calling from the UK; 10 p/minute)
01805 979999 (if you are calling from Germany; 0.12 EUR/minute)
+49 30 5200 51710 (if you are calling outside the UK and Germany)
to call from the mobile phone you registered with us, enter the PIN chosen by you and follow the simple instructions to either send a mobile payment or enquire about your balance. Remember you must have money in your Moneybookers account to be able to send a payment.
Step 4: In case you sent a mobile payment: a SMS is sent to the mobile number which you have chosen to pay to notify its owner of the received mobile payment. If the recipient is not a Moneybookers member yet, he will just need to register and verify his mobile number in order to get his money. Our mobile service is available only in English.
Fees: You pay only the cost of your call and EUR 0.50 to make a mobile payment. You are charged at a rate of EUR 0.13 per requested receive money SMS notification.

ADYEN's Payment Method Mix

What payment methods do you support? It is Adyen's philosophy to support those payment methods that matter in Europe. This means you can enable all your customers to complete an order in your store without disappointment at checkout. At this moment we support the following methods:
- All major credit cards
- Maestro and Solo (UK)
- iDeal (NL)
- ELV (DE)
- Walliecard
- Bank transfers and direct debit across Europe
We are constantly expanding out network of payment methods.

Alternatives to PayPal.

Yes, there are alternatives to PayPal by Sarah Jordan; "Since we provide a payment processing solution, many of our customers came to us seeking an alternative to PayPal. We’ve heard various complaints about the company including high prices, bad customer service, and even, “They just won’t give me my money.” Today, I found out about the Worldwide Ebay Strike, which since its purchase in July of 2002, is also an indirect strike against PayPal. For a short explanation, if you haven’t heard this news, a group of eBay users are trying to gain momentum against the auction giant to combat its recent regulation changes, which have been adversely affecting the business of eBay sellers. What businesses should know is, yes, there are alternatives to PayPal. EBay and PayPal are excellent solutions for consumer to consumer buying and selling, but have limitations for businesses. If you are a legal business (i.e you have a business bank account and business license) looking to sell your products online, I strongly recommend getting a merchant account for both ACH (e-checks) and credit cards, rather than accepting payments solely through a PayPal account. What’s the difference?

Control over funds: PayPal is a service primarily for consumers and does not protect a business as well as a merchant account would against fraudulent chargebacks. A merchant account is strictly bank and processor related, which follow established regulations. PayPal is a separate entity that can hold your funds by rules that it sets—whatever those may be.

Recurring billing: If you are a service industry business, or offer payment plans, you could save yourself quite a bit of work and expense by setting up recurring billing. PayPal does not offer an automatic billing program for PayPal accounts.

User experience: As a consumer, I would be weary of purchasing anything from a business only offering PayPal as a form of payment. The funny thing about merchant accounts is that they not only protect businesses better, but they also provide the consumer some assurance. By offering customers eCheck or credit card payment options, you’re showing that you are a real business that has qualified for a merchant account and are much less likely to be fraud.

Why the paper check will disappear

March 11, 2008 at 7:59 am · Filed under Insider Commentary by Lisa Hephner; "It seems we’re always hearing some pundit or other forecast of the demise of a familiar piece of our lives as a result of a “new technology.” These forecasts are sometimes extremely shortsighted and never come to fruition (think Radio) or so much on target that we wonder why it took us so long to realize the truth (think 8-Track tapes). So how do you know what to believe? Think about it this way—if a new technology is demonstrated to meet current needs better than an old technology, and if it makes business sense for all parties involved, then it has a very good chance of taking hold, and displacing an older way of doing things. This is the case with paper checks. Paper checks cost money to print, cost time and money for businesses to manually deposit and record, cost time and money for the individual banks that process them, and also generate significant costs for the regional Federal Reserve Banks that serve as a clearinghouse for all checks. Additionally, as occurred on 9/11, an infrastructure interruption can cause delays in processing of hundreds of thousands of checks—impacting billions of dollars of consumer and business transactions. Eliminating the submission of actual paper checks for processing, in favor of ACH and other types of electronic payment processing, not only streamlines processes for businesses, it also saves money for banks and for the Federal Reserve, and has the added bonus of helping the environment by reducing paper use and saving trees. Thus, banks have a financial incentive to eliminate paper checks, and the Federal Reserve System has a financial incentive to eliminating paper checks, and large businesses (particularly those handling large check volumes) have a strong financial incentive to eliminate paper checks—which I believe amounts to an overwhelming market force that will ultimately prevail to eliminate the paper check. So what happens to small businesses that rely on paper check payments? And what happens to consumers who like receiving copies of their canceled checks? Unfortunately for the latter, they will simply have to adjust. For the former—there is help. Companies like PaySimple are dedicated to helping small businesses not only adjust to technology changes, but also leverage them to streamline processes and enhance revenue. We make the transition easy, and our simple system enables even the novice computer user to easily convert paper checks to electronic transactions and set up other electronic payment processing services that can help eliminate the need for collecting paper checks altogether. So, embrace the disappearance of the paper check, and view it as an opportunity to utilize new cost-saving technologies that will improve your business.

Monday, March 24, 2008

Another Virtual World (this time a modern casual gaming one ... well it's about time!!!)

From VWN; "Mytopia, a privately funded company based out of the Bay Area and Israel, launched today with a casual gaming virtual world meant to work across all social networks and widget communities. Currently, it looks like it's only available through its own website, Facebook, Myspace, Bebo, and various widget sites, though Orkut and Hi5 are mentioned as future locales. The games are casual classics--though without any of the big-name brands behind them--like solitaire ad sudoku. An MMO-style environment ties it all together with an economy and teams. Users can socialize in various public settings, but also use earned points in a store for virtual goods to customize their avatars or houses--or cash them out for out-of-game rewards like Amazon and iTunes gift cards. Right now it doesn't look like users can pay cash for virtual goods, though the company has an eye on microtransactions for the future. For now, it's a free-to-play environment based on selling ads and premium accounts (with no ads and extra content) for $5/month. Out of 300,000 registered user in the public beta, 150,000 are paying the premium price. The eventual goal, and one that seems like the best shot for success, is to let users sign in to Mytopia with their existing social network profiles and contact lists. It minimizes the barrier to entry and lets users leverage the work they've already put to building up a community on their favorite social network. Now if Mytopia can just license Scrabulous.... "Finally, we can all just play together," said Guy Ben-Artzi, founder and chief executive officer of Mytopia. "Games have been connecting people around the world for centuries, but until now, people who play games on the web have been sandboxed into their respective networks. Mytopia unleashes the true social potential of games by creating a seamless gaming community that everyone can enjoy."