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ISO Opportunities

by Ken Sturm

   In last month�s column we talked about the emergence of new electronic transaction mediums in the stored value arena.
   Another product that we have seen is the dual card package which will have an ATM debit card , plus an ATM debit card that has links to Cirrus and Maestro, printed on the reverse side. This second card requires the Patriot Act compliance before it is activated, and again, the perspective cardholder can upgrade to a personalized bankcard product. Interestingly enough, our discussions with a few banks have produced some questions as to the legitimacy of this style of format. While there are some banks that have issued this product and stand behind the underwriting of the program packaging, there are other banks that have said that they would not approve such a package. Each bank can interpret the MasterCard regulations in different ways.
   It appears that the retail market of these types of products though small, (probably under 100,000 retailers), has been dominated by MasterCard. This, however, will probably change.
   In a member letter early in the first quarter of 2004, Visa announced new Visa Flag product options. Citing that debit volume at the point-of-sale was increasing globally at twice the rate of credit volumes, Visa decided to leverage the existing Electron product to create a new revenue vehicle for its Issuing members here in the United States. Previously the Electron product was only available overseas. (At the time of this article Visa had announced that there would be a name change to the Electron product, which would now be named Electronic).
   Seen as an entry level prepaid debit card product, the Electron product was viewed as a product that could leverage the Visa mark with low risk through enhanced Issuer controls. The Issuance of these instant issue cards will be limited to countries that have at least 95% of transactions processed at on-line capable terminals. One of the most interesting features of these Electron cards was the fact that that there is no embossed card number and no cardholder name in the package. The card will bear the familiar Dove hologram, must have an �Electronic Use Only� legend on it�s face and must have an expiration date within three years of issuance. When the card is re-issued, the card must comply with all personalization requirements for unembossed Visa Cards. It is important to note that the card production as well as retail product manufacture of these products, as well as the MasterCard counterparts, must take place at an Association approved, certified secure facility, of which there are only a handful in the United States. We have been working with clients that desire a retail instant issue product, and have been pushing the Electronic product as of late because of the convenience of instant gratification at the point-of-sale. At the time of this article, there were no U.S. banks that we knew to be issuing the Electronic product, but we expect that to change very quickly. This Electronic product is good for point-of-sale purchases and, if coupled with Plus and Interlink, useful at almost 1 million ATM devices world-wide. The estimated online Visa acceptance locations worldwide where this card may be utilized is estimated at almost 12 million locations.
   These instant issue products, coupled with the right processor, will open a whole new world to cardholders. Seamless money transfer, real-time reporting, and the availability of value- added pre-paid products such as cellular phone minutes, long distance payphone calling and others will only enhance the cardholder experience and drive increased revenues for ISO�s, Merchants, Issuers and Acquirers in the coming years.