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LAS VEGAS–SOCIAL MEDIA, REGULAtory  issues and security were among top issues at the ATM Debit & Prepaid Forum conference last week.

Dominic Venturo, chief innovation officer at U.S. Bancorp, told conference participants that joining the social-media revolution and signing up for a Facebook or Twitter account could help banks' payments operations.

During a keynote address focused on payment trends and innovation, he described the Minneapolis-based banking company's broad view of product development. "We follow trends," he said. "It's not enough to focus on payments" and try to rush products of the future. "We absolutely keep ideas for a long time."

Some of these ideas are finding their way into pilot tests. This summer alone, the banking company began testing an instant-issuance, contactless debit card service and a multiple-account card that has both a magnetic stripe and contactless-payment features. The same card can confirm identification and serve as a key card to unlock doors.

U.S. Bancorp's attention to emerging trends, however, does not end with the latest smart phone or laptop, Venturo said. The company also is evaluating consumers' evolving preferences, particularly their growing demand for immediate access to account data.

"Customer expectations of quick information are increasing, and that's something we need to think about," he said.

Innovation is "a top priority" at U.S. Bancorp, "and I know that because it's right there on our annual report," Venturo said.
Executives also discussed potential changes in the rapidly growing prepaid card market.

Financial institutions must make sure that any federal government regulatory changes involving general-purpose, reloadable prepaid debit cards are in consumers' best interest, said Frank Cotroneo, chief operating officer at NetSpend Corp. "The industry needs to be the consumer advocate and stay in front of regulations with self-regulation and a good product," he said.

Consumer education about the various forms of prepaid cards remains a task the industry must perform, and this effort should extend to the mainstream media, which often do not understand the product, Cotroneo said. "We really need to go out of our way to make sure everyone fundamentally understands" prepaid cards, he said.

Timothy H. Murphy, group executive of core products at MasterCard Worldwide, urged financial companies to become more daring in the prepaid market. "Prepaid is no longer a niche opportunity for financial institutions," he said during a speech. "It joins credit and debit at the core. ... The time is indeed now to build out your prepaid relationships."

MasterCard has gone so far as to start a Spanish-language advertising campaign for its Everyday Prepaid reloadable products.

But prepaid remains the province mostly of third-party providers, and Murphy said after his speech persuading financial institutions to invest in the relatively nascent field is still difficult because "some of the gift programs in the past have had a thinner profitability, so I think people are looking back at that."

Some products available will have to demonstrate their value to financial institutions, Murphy said. "I wouldn't say they're beating down the door yet," he said, "but there's some interest, and people are trying to get it done.

Security issues are always important, and Robert Carr, chief executive of Heartland Payment Systems Inc., said executives must pay more attention to securing payments initiated online or through mobile devices.

Protecting these kinds of payments is an issue, but "it's a really hard problem to solve because there is not a PIN-type of end-to-end encryption solution out there to copy, which is what we're working on now," Carr said.

Carr said he believes the industry is on the right track in trying to target card-present transactions because the data on cards is so valuable to criminals.
 "But there is another problem to be solved" in Internet and mobile payments," he said.

A group of industry consultants and executives has formed a trade association whose mission is to focus on the security of such payments (ADN, 10/22). ATM
(Maria Aspan is a reporter for American Banker.)

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