from: http://prisms.cs.umass.edu/~kevinfu/papers/RFID-CC-manuscript.pdf
This is a great article, worth a read.
Archives for : Credit
27 September 2006
Kommersant International
The New System will be Offered to 20 Banks<br>Yesterday, at a press conference dedicated to the five-millionth visa card issued by Sberbank, Visa International representative Oliver Hughes announced that a project introducing a system of card-to-card money transfers in Russia has launched its third stage. The project, called Visa Money Transfer (VMT), is now being tested in six Russian banks. Also yesterday, Rosbank announced its intention to participate in the trial. Twenty credit organizations have expressed interest in joining the program, of which ten will be included in the project within the next year. The trial phase of the program will last another six months, after which the VMT system is expected to be unveiled in its full form. The VMT system allows any Visa cardholder to electronically transfer or receive funds to or from another Visa cardholder via an ATM transaction. To make the transaction, all that is needed is the other cardholder’s card number. Though the company “at this point is not positioning the new service as an alternative to the system of traditional money transfers,” VMT promises to be competition for that system. The only restriction is that the laws of the Russian Federation permit such transfers to be made in Russia only in rubles. Market analysts believe that the success of the system will depend on Visa’s commission policies. Bank commissions for transfers stand at around 1%, and if Visa’s commission is more than 0.5%, it is predicted that banks will find it hard to do business within the project. According to some sources, the commission earned by the bank whose client sends the transfer will be 1% of the transfer sum. The bank whose client receives the money will make $0.48 on each transaction. The commission charged by the payment system will be $0.05 + $1. Many Russian banks have expressed interest in the project, but most for now are observing the program’s development from the sidelines, preferring to judge for themselves its power to attract customers. http://www.kommersant.com/photo/75/DAILY/2006/180/KMO_032838_00111_1h_t75.jpg
http://www.kommersant.com/photo/512/DAILY/2006/180/KNN_001535_00046_1m.jpg
http://www.kommersant.com/photo/512/DAILY/2006/180/KMO_073625_00010_1m.jpg
http://www.kommersant.com/photo/512/DAILY/2006/180/KMO_069500_00019_1m.jpg
© 2006 ZAO Kommersant Publishing House. All rights reserved.
I have been astounded by the take-up by card holders and the push from the major banks in Australia, for customer to embrace the VISA Debit card instead of the traditional Credit Card.
This, although advantageous to the banks, provides a much higher risk to the card holder, especially if the card is used online or in a location where the card could be skimmed.
The problem and the advantage of the VISA Debit card is that it allows access to your savings account funds via a VISA transaction.
This sounds great in theory, as there is no need to transfer money from your savings account to periodically pay off the credit card.
The problem exists where the VISA debit card is skimmed or stolen and money is withdrawn from the card. These funds are taken directly from the card holder savings account and not credit, therefore this increases the risk to the card holder not being able to pay bills/mortgage/loans/etc.
In the traditional credit world, if the credit card was skimmed or stolen, the dept remains the responsibility and risk of the bank, until the fraudulent transaction is investigated.
With the VISA Debit Card this risk is placed upon the card holder, who is often convinced to get one of these cards through good television marketing, when opening a new account or establishing an off-set loan, with no idea of the associated risks.
I dont like the increased risks associated with these cards not being explained adequately to the card holders so the card holder can make an educated decision as to where he/she uses the card (internet, phone, periodic utility payments, ISP charges, etc.
This risk assumes that the card holder does not rely on credit only to live and does not have any savings to withdraw, but the banks may not give you a debit card anyway if this is the case.