Foursquare has teamed up with Visa and Mastercard to expand its check-in deals service that lets users earn better specials by using their credit cards.

The deal, which was first reported by AdAge, is quite similar to the one Foursquare struck with American Express back in June 2011. Just connect your Visa, Mastercard, or American Express credit card to your Foursquare accounts to earn specials at select locations. When you check-in at that place and use your connected credit card, you earn the special.

The technology that is actually enabling the new deals for Foursquare is First Data’s OfferWise, which simplifies the offer redemption process. That company makes it possible to use Visa and Mastercard for check-in deals, while American Express has its own setup with Foursquare.

Foursquare also takes a cut of any transaction done with the program, so this could be a promising way to make the startup some cash. It also gives more Foursquare users more incentive to check in and see if there is a deal at the place they are shopping or eating at.

“This is going to be a pretty core part of our revenue model going forward,” Foursquare product manager Noah Weiss told AdAge.

The first deal will the expanded programs will run today at 8,000 Burger King locations in the United States. If you check in and use a connected Visa, Mastercard, or American Express card, you can get a $1 discount when you spend at least $10.

Check out what that deal looks like below.

“Delighting our customers every day with great, simple products and experiences is a priority for me, and for everyone at PayPal.”

PayPal chief executive David Marcus, that’s who.

A few short months after reporting $3.4 billion in revenue — a 23 percent increase — and nearly $700 million in revenue, almost half of it due to the surging PayPal division, eBay is axing 325 employees and 120 contractors from that very same unit.

The press release calls it a restructuring, which eBay says is necessary to simplify and speed up how products are developed. As part of that restructuring, Marcus says that PayPal has consolidated nine product groups into one and is refocusing teams around products, not projects.

I can only suppose those 470 people were in charge of slowing things down.

Interestingly, the laid-off personnel were primarily in product and technology roles, according to Marcus. PayPal, while growing, is in a major fight over who will control the future of digital payments with players such as Google, Square, and, potentially, Apple, as well as the credit card companies and other incumbents. You’d think technologists and product managers might come in handy for such a battle.

Job losses and layoffs are a fact of life in the corporate world. But it’s more than a little troubling to see a successful, profitable, growing company toss almost 500 people aside. And it’s more than a little annoying to see a press release detailing that jettison start with the word “delighting.”

The release ends with the obligatory ode to future corporate glory:

Moving forward, I’m confident these changes will make PayPal even better and stronger. Our customers can expect faster innovation and great products and experiences that make their lives simpler. That’s our commitment — every day.

For the former PayPal workers, it’s got to be wonderful to be told that your absence will make your company “better and stronger.” And if you’re a PayPal user, are you delighted?

Updated 3:25pm Pacific: We updated the number of workers losing their jobs to reflect the number in eBay’s press release.

via Business Insider

photo credit: nsub1 via photopin cc

Payments startup Braintree has received a $35 million to continue expanding its platform and stay competitive in an increasingly saturated space.

Braintree powers online and mobile credit card transactions for e-commerce vendors. It provides a gateway that makes issuing and accepting online payments more accessible and simple than before, when payment processing required extensive infrastructure and resources. By integrating the software, retailers can not only process credit cards, but also create merchant accounts, enable single click checkout, safely store information, and manage recurring billing.

The company strives to democratize e-commerce by making it possible for new and small businesses that do not want to use a middleman.

“We are working to do for payments and e-commerce what Apple did for mobile: providing a developer-friendly platform that sparks a new wave of innovation and company-building,” said CEO Bill Ready in a statement. “By making it simple to access the most sophisticated elements of the payment networks without having to be experts in payments, we will help countless businesses capture new market opportunities while consumers gain a world of exciting new mobile and online shopping experiences.”

Startups like Airbnb, Uber, LivingSocial, Heroku, AngryBirds, Fab.com, Github are Braintree clients, along with 3,000 others. The platform can deal with international payments in over 130 currencies and is processing more than $5 billion in payments annually.

In August, Braintree acquired social payments platform Venmo which specializes in mobile transactions. The acquisition was part of an effort to introduce digital wallets. The company also recently rolled out Braintree Instant, which gives merchants the ability to instantly approve payments.

With this $35 million, Braintree will continue to develop its product line and expand internationally. This second round of financing was led by New Enterprise Associates, with participation from venture capital firm Accel Partners, which led the $34 million Series A round last June, RRE and Greycroft. This brings Braintree’s total investment to $70 million.

Its main competitors are PayPal and Stripe. The company is headquartered in Chicago with offices in Silicon Valley and New York and was founded in 2007.

Edo has raised $15 million in third round funding to brings its local-offers technology to small businesses across the country.

Edo delivers card-linked offers targeted to spenders through credit cards, debit cards, and mobile devices. Unlike many of its competitors, Edo doesn’t require a check-in, or any point-of-sale hardware. Instead, it links to your bank card and then tracks your spending behavior so it knows which offers to send you. Edo directly competes with Cartera and Cardlytics, loyalty companies which are in the race to partner with the nation’s leading banks.

Solutions like these allow retailers to stay competitive. For instance, if you frequently buy sandwiches at Subway (one of Edo’s merchants), you might be offered a free coffee with your next ham and cheese at Quiznos. Edo is currently partnered with 120 banks and more than 200 local and national merchants, including Target, Crate & Barrel, and The Home Depot.

The Nashville, Tennessee-based company says its technology will benefit consumers, retailers, and banks. “Payments and advertising are colliding; to stay competitive, banks must deliver value to cardholders that goes beyond the traditional realm of services, while advertisers are searching for solutions to drive customer acquisition, loyalty, and return on marketing investment,” said Ed Braswell, CEO of Edo, in a statement.

The round was led by VantagePoint Capital Partners, with participation from Baird Venture Partners and other existing investors. Edo has raised a total of $54.3 million to date.

Top Image via Flickr

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Who needs Starbucks? In an effort to ramp up its mobile payments offerings, PayPal announced today that it will team up with Discover to bring its technology to more than 7 million merchants next year.

In terms of sheer numbers, the deal one-ups Square’s partnership with Starbucks to replace credit card processing for its 7,000 stores in the U.S., since it brings PayPal’s technology to millions of retail locations. Though it’s worth noting PayPal will be just one of many payment options at Discover locations — with the Square/PayPal deal, Square is taking over all of the coffee shop’s card processing (and getting plenty of publicity to boot, along with $25 million in funding).

Once the integration is implemented, consumers will be able to pay for purchases using their PayPal debit card or their mobile phone number (plus a PIN), at Discover merchants. PayPal has already partnered with retailers like Home Depot and Cumberland Farms (though our correspondent Rocky Agrawal didn’t have many good things to say about the Home Depot experience).

During a conference call today, a PayPal representative noted that eventually all of the company’s payments services will be available in retail, since they’re all cloud-based. PayPal didn’t have a response as to how widespread its PIN-based payment offering would be on Discover’s network, after a caller noted that only a small segment of Discover merchants support PIN payments.

Above: PayPal president David Marcus introducing PayPal Here, photo by Meghan Kelly

Over 500,000 credit card numbers in Australia were discovered compromised today, stolen through a hack on a business’ point of sale system.

Law enforcement suspects a group of Romanian hackers is behind the attack.

According to SC Magazine, law enforcement was alerted to the scheme when banks started noticing fraudulent activity on the credit cards. It is expected that the 500,000 credit cards will be sold on the black market. The banks have already shut down access to those credit card numbers.

The hack was allegedly executed by the same Romanian hacker ring that stole credit card information from point of sale terminals in Subway restaurants across the United States. Reports say the hackers were able to access the point of sale systems using Microsoft Remote Desktop Protocol, which was left open and unprotected so that the company could “monitor stocks.” From there they installed a program to grab credit card information when a card is swiped.

Australian law enforcement has otherwise not disclosed the name of the business due to the ongoing investigation.

In March, a similar hack occurred on Global Payments’ point of sale system. Over 1.5 million credit card numbers were stolen from systems installed in New York City parking garages. The attack was uncovered when Visa and Mastercard suddenly began warning banks about a large number of compromised credit cards. By the time the story surfaced in April, law enforcement said the issue was “contained.”

hat tip Wired, via SC Magazine; Photoshop via Meghan Kelly, Australian Flag and POS images via Shutterstock

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

In surprising news tonight, mobile payments startup Square has announced an extensive partnership with Starbucks. Among the terms of the partnership, Square will power Starbucks’ credit and debit card payments nationwide, and Starbucks will invest $25 million in the startup as part of its fourth round of funding.

Additionally, Starbucks president and CEO Howard Schultz will join Square’s board, and Starbucks will accept Pay with Square across the nation later this year (which will let you pay for orders directly from your phone; don’t expect to see the iconic Square card readers).

[Dorsey and Schultz invited press to breakfast to discuss further details about the deal, check out our full coverage.]

The Square Directory will also see a tremendous boost from the deal: The directory within the Pay with Square app will list nearby Starbucks locations (and will alert Starbucks customers of Square-equipped businesses), and Starbucks will eventually integrate the directory into its digital services, including its already popular mobile app.

The news has tremendous implications for Square, since it’s the company’s first major partnership with a national chain. Square has sold itself as the best solution for individuals and small businesses to take credit card payments, but if it can power a massive enterprise like Starbucks, it’s clear that the company’s ambitions lay far beyond hipster tag sales.

San Francisco, Calif.-based Square has raised $141 million so far and is rumored to be working on a massive $200 million round, which would value it at $3.25 billion. Starbucks’ large investment today definitely points to something major happening in Square’s next round.

Square CEO and founder Jack Dorsey sent along the following e-mail to the company’s customers tonight:

I am pleased and proud to announce that today Starbucks signed up for Square.

Square began with a really simple idea: everyone should be able to accept credit cards. It should be easy and free to get set up, it should use simple technology people already own, and, most importantly, it should instantly adapt to any size business—from the person chasing a dream to the largest organization on the planet. By embracing Square, Starbucks has validated these ideas as powerful tools—not just for small businesses, but for smart businesses.

It’s amazing to think that Starbucks began as a single coffee shop in Seattle. The concept of taking a good idea and helping it grow is not foreign to them, and Starbucks doesn’t just view Square as the simplest way to accept payments. They see an opportunity to extend and accelerate a model they grew up with: the idea that business is local and that community plays a vital role in job creation and economic vitality. When Starbucks builds the Square Directory into their apps and in-store Digital Network, it gives Square new visibility, driving more customers to opt-in to Square. And with nearly 7,000 Starbucks stores soon accepting Square, these new payers will be able to find your business (including coffeehouses) and pay with their name, building community and creating value.

Our customers make us who we are, and we are proud of every single one of you—including our newest. Our promise to you remains the same: build simple, affordable, and fast tools that level the playing field for everyone. Thank you for helping us build Square. And please share your thoughts and tweets; I’m listening.

As Howard Schultz says: #Onward

Jack Dorsey, CEO

Mobile credit card transactions startup Square is rumored to be closing a new $200 million round of funding, according to a New York Times report that cites anonymous sources familiar with the matter.

If the news is true, the round would push the startup’s valuation to $3.25 billion. The round, according to the Times’ source, will be led by private equity firm Rizvi Traverse Management head Suhail Rizvi, who has also invested in Twitter. The round would be Square’s third in the past two years, including the $100 million it raised just over a year ago. We started hearing rumors of Square seeking a higher valuation back in April, so it’s plausible that this has been in the works for a while.

Square is a mobile credit card reader that uses a “dongle” that connects to devices, which allows people to accept credit card payments on those devices. Square is processing over $6 billion in payments annually and has more than 2 million users as of June.

The company is facing a growing number of competitors in the mobile transaction space, including PayPal, Google, and Inuit. A new round of funding could certainly help Square maintain its edge. Square declined to comment about the round when contacted by VentureBeat.

Founded in 2009, the San Francisco, Calif.-based company has previously raised $141 million in funding to date.

Image via Square

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Making sure to keep its fingers in all of the mobile payment pies, PayPal announced today that it has snapped up Card.io, a startup that has developed technology to capture credit card information with your smartphone camera.

Card.io, which was one of the startups featured in our MobileBeat competition last year, caught PayPal’s eye when it was working on integrating the credit card capture technology in the PayPal Here app, according to new PayPal mobile head Hill Ferguson.

“We were simply blown away by the creativity and drive of their employees,” Ferguson wrote on the PayPal blog today. “They are a passionate and independent team that likes solving large, complex problems, and we wanted them to join our team.”

Card.io’s credit scanning technology can be found in popular apps like Uber and TaskRabbit. For consumers, it’s a dead simple way to input payment information without typing in your credit card number by hand. (Seriously, all you need to do is hold your card up.) And it’s a seamless way for developers to get hold of valuable consumer payment information within their apps.

The Card.io team will join PayPal’s global product team in San Jose, Calif., and will work on “new experiences” that will simplify PayPal’s wallet app. PayPal says the existing Card.io technology will still be available for developers to use in their apps.

Card.io was founded by two early AdMob employees: Michael Mettler (CEO) and Josh Bleecher Snyder (CTO). The company’s angel investors include Michael Dearing of Harrison Metal, Jeff Clavier and Charles Hudson of SoftTech VC, Manu Kumar of K9 Ventures, Alok Bhanot (former VP, Risk Technology at PayPal), and Omar Hamoui (CEO and founder of AdMob).

The U.S. Federal Bureau of Investigation arrest 24 hackers today, in a string of cyber crime that could have cost victims $205 million.

According to Reuters, the FBI was able to find the hackers after creating a forum called Carders Profit in 2010. The website acted as a black market for selling personal data such as hot credit card credentials. The agency prevented the sale of over 411,000 credit and debit card numbers. Of the 24 hackers arrested, 11 were from the United States. All those arrested were male between the ages of 18 to 25.

One of the arrested hackers named Mir Islam, is said to be a part of a new cyber criminal group UGNazi. Islam, who is otherwise known as JoshTheGod, shows up on the UGNazi Twitter account as one of the more prominent contributors. The group recently claimed to have taken Twitter down last week. The social network, along with its content manager Tweetdeck, went down around 9 am Pacific time on June 21, and was quickly returned to life about an hour later. The company denied the hacking and blamed its downtime on, “a cascaded bug in one of our infrastructure components.”

Islam is accused of offering to sell over 50,000 stolen credit card numbers.

via Reuters

Zynga announced today the launch of Zynga Serve Rewards, a new virtual game cash rewards program with a prepaid card that is co-branded with American Express and connected to the Serve digital wallet from the credit card company.

Customers will need to register for the Zynga Serve Rewards program to get a prepaid card in the mail, which they will need to fund via bank account, debit card, or cash. Once the Serve card is activated online or by phone, it can be used anywhere American Express cards are accepted for purchases.

Once registered with the rewards program, Farmville players will be able to plant a special “Money Tree” in their online farms, which will start to produce virtual awards, according to Jeff Karp, chief marketing and revenue officer at Zynga. The money tree will evolve or level up as players progress in the game with virtual items like colors, glow effects, butterflies and toucans. The virtual tree will also serve as a dashboard for the prepaid card service, said Karp, allowing players to check their rewards status in-game. The plan over the next year is to extend the virtual rewards for real life spending to other Zynga games as well, like CastleVille and CityVille.

At launch, only the first five purchases of $25 or more on the Zynga Serve Rewards card will earn Farm Cash rewards. The program is set to eventually provide rewards above the initial first five purchases of $25 or more.

“We’re excited to partner with American Express to invent new ways for people to experience Zynga play in more parts of their day,” said Mark Pincus, chief executive and founder of Zynga. “Together we can add surprise and delight to every day shopping.”

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July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Soon you’ll be able to apply that famous American Express slogan (“Don’t Leave Home Without It”) to your smartphone. Isis, the mobile payments venture between AT&T, T-Mobile, and Verizon, announced Thursday that it’s adding support for AmEx cards.

The news means Isis will be able to support even more consumers when it launches later this year in Salt Lake City, Utah, and Austin, Texas. The AmEx cards will join those from Chase, Capital One, and BarclayCard — Isis’ first bank partners announced back in February.

Isis is developing a mobile payments wallet based on near-field communication (NFC) technology. The idea is that you’ll be able to swipe your phone to make purchases instantly and securely. NFC-based swipe and pay is something Google is also exploring with Google Wallet, as well as PayPal with its upcoming wallet (PayPal already offers a way to easily transfer money with NFC).

American Express — along with Mastercard, Visa, and Discover — opened up its payment network to Isis last year, but today’s announcement will allow consumers to add their own AmEx cards to the Isis app.

While Isis seems to be taking its sweet time to launch, CEO Michael Abbott explained to me at Mobile World Congress that the company only had one shot to get this right. And it’s also a particularly complicated problem that Isis is trying to solve.

“We’re solving for a four-sided market,” Abbott said, pointing to the fact that Isis needs to make sure consumers, merchants, payment companies, and its parent carriers are happy with the product.

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Now that almost every payments-related company has a digital wallet of its own, it’s about time MasterCard showed off its digital plans.

The credit card company unveiled PayPass Wallet Services today at the CTIA conference in New Orleans. Just like the Verifone Sail mobile payments platform announced earlier today, MasterCard’s digital wallet feels very familiar to PayPal’s Wallet, Google Wallet, and a plethora of similar solutions.

It consists of the PayPass Acceptance Network, which includes PayPass Online and the company’s existing contactless payments service; PayPass Wallet, a secure digital location to store credit cards, bank cards, and the like; and PayPass API, which lets MasterCard’s partners connect to the PayPass network.

The whole point of PayPass Wallet, as well as all of its competitors, is to give you a single location to store your payment information. If you’re looking to buy something online, or in-store, you’ll ideally tap into your digital wallet instead of opening up your actual wallet. If you’ve ever opted to pay for something via PayPal on a new shopping site, instead of filling out your shipping and billing info by hand, you can understand just how convenient a robust digital wallet can be.

Eventually, PayPass Wallet will offer features like seeing information about a product before purchase, setting up spending alerts and controls, and receiving coupons and targeted offers. MasterCard acknowledges that there won’t be just one digital wallet winner, which means it may be able eke out some market share amid the many competitors.

The company says it will make PayPass Wallet Services available to its partners in the third quarter of this year. It will first launch in the U.S., Canada, Australia, and the U.K.

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Life just got a bit rosier for merchants using Square’s mobile credit card reader. Merchants will now have access to cash on sales made before 5 p.m. by the next business day — meaning they won’t have to wait several days before getting access to their money, as they would with competitors PayPal Here and Intuit’s GoPayment.

Additionally, the company is now processing $5 billion worth of transactions at an annualized rate, Square chief operating officer Keith Rabois told Bloomberg in an interview. That’s up from a $4 billion per year rate a month ago.

“Sole proprietors and small businesses live and die by their cash flow,” Rabois told Bloomberg. “They don’t have access to capital; banks don’t give them loans. They need to take the money they make today and use it to pay bills, buy things and pay employees the next day, so having access to funds is super-crucial for them.”

While PayPal and Intuit are competing with Square by offering lower transaction fees and integration with other software (like Intuit’s financial suite), Square has an ace card with the promise of next-day payments. It’s a huge leap forward for payment processing, and for cash-strapped small businesses besieged with bill deadlines. For those businesses, this could be the difference between staying in business, or shutting their doors.

Square, coyly, isn’t revealing how it’s managing to move cash to merchants so quickly, due to competitive reasons. I don’t blame the company for keeping this secret — it’s a major feature that its competitors have somehow never figured out. (It’s especially embarrassing for PayPal, since it’s been handling online payments for over a decade.)

As Bloomberg points out, the past method for handling credit card payments through payments processors had several steps that delayed merchant access to cash. Payments were first evaluated for risk exposure, sent to the merchant’s bank, and then sent to a national network (or clearinghouse), before they reached a merchant’s bank account.

Square has released a handy schedule that shows when merchants can expect to see transactions in their bank accounts.

We’ve asked PayPal for comment on Square’s announcement, and will update when we hear back.

10 months after mobile payments startup Square raised $100 million at a valuation of $1 billion, the company is now said to be seeking a new round that could value it at up to $4 billion, reports All Things Digital.

ATD’s Tricia Duryee cites multiple sources for the news, but she also notes that the deal is still in negotiations, which means investors could end up valuing the company for less. Still, even at a valuation of only $3 billion, Square’s growth would be impressive. The company, not surprisingly, hasn’t commented on the news.

Former VentureBeat executive editor Owen Thomas pointed out several days ago that Square CEO Jack Dorsey made a trip to Baltimore, and he later confirmed that Baltimore-based Legg Mason was “looking into Square.”

Square started out by offering a credit card reader that plugs into your phone’s headphone jack, letting individuals and small businesses accept card payments on the fly. More recently, the company launched a virtual wallet (“Pay with Square”) and register app for the iPad.

The company hasn’t yet divulged its financials, but Duryee estimates that it could be earning annual revenue of around $122 million. Square takes a 2.75 percent cut from swiped credit card transactions, and 3.5 percent plus 15 cents from keyed in transactions. The company is likely handing over most of its earnings to credit card companies for processing fees, Duryee notes.

Square has big plans ahead: The company hopes to expand internationally, and it has hired former PayPal exec Alyssa Cutright to lead the effort. It has also brought on Google Wallet co-founder Rob von Behren, a sign that it could be interested in near-field communications (NFC) technology.

San Francisco, Calif.-based Square has raised around $137 million so far from investors including Kleiner Perkins, Tiger Global Management, Sequoia Capital, and Khosla Ventures.

Update: DealBook’s Evelyn Rusli reports that Square may be seeking up to $250 million in this round.

PayPal announced that it has consolidated its payments system today, with some upgrades to the way small businesses accept payments online, offline, and in the mobile world.

“PayPal Here was just part of a fundamental change for small businesses,” said Peter Karpas, PayPal’s vice president of customer engagement, in an interview with VentureBeat. “Small businesses are the heart of PayPal, just like they’re the heart of the country.”

The new, tiered system is called PayPal Payments, a small departure from its original “Website Standard” and “Website Pro” offerings. The company is dropping “website” in a move that it compares to Apple dropping “computer” from Mac Computers to define itself a broader technology company.

PayPal has added an “Advanced” tier in between its Standard and Pro offerings, which Karpas says will help less programming-savvy SMBs. Prior to this, entrepreneurs could only choose between the free product, or a $30 a month Pro product, that required more coding skills. The pricing is similar, at free, $5, and $30 a month for the Standard, Advanced and Pro offerings respectively.

PayPal is also immediately turning on a mobile-optimized checkout system for all of its customers. If a small business using PayPal for its checkout process doesn’t have a mobile-optimized website, customers will still get the optimized payments experience.

The tiers generally mirror each other. All offerings allow you to accept credit cards and PayPal online, receive a free PayPal Here dongle, accept payments on eBay and Etsy, and more.

What are you paying for in the extra tiers? For $5 a month, PayPal will make sure people can pay without ever leaving your site. For the $30 a month, small businesses get everything in the Standard and Advanced offerings, as well as the ability to accept credit cards over the phone, fax and mail, as well as design and host your own checkout pages with PayPal. The company will also make sure your payments are completely PCI compliant in the Pro model.

The announcement comes soon after the launch of PayPal Here, its mobile phone credit card processor, as well as the promotion of its newest president David Marcus. Marcus told VentureBeat at the PayPal Here event that he wants to bring a focus on design to PayPal, a task the company has struggled with since the beginning.

Credit card processor Global Payments released a statement yesterday, admitting that its systems have been compromised. The announcement came after reports surfaced that thousands of credit card accounts had been breached through its machines.

Last week, security researcher Brian Krebbs, discovered Visa and Mastercard were alerting U.S. banks to a credit card hack. The companies were informing the institutions that a vulernable payments processor was allowing cyber crimainls to obtain data associated with a number of credit cards. The affected processors were believed to be located in parking garages around the New York City area. Soon after the report surfaced, Visa issued a statement confirming the breach. At the time, Krebs cited the PSCU as estimating the total compromised credit cards at over 50,000.

“We are making rapid progress toward bringing this issue to a close,” said Global Payments chief executive Paul R. Garcia. “We are open for business and continue to process transactions for all of the card brands.”

Garcia confirmed that “Track 2″ data, or credit card account numbers, were indeed stolen and that the total number is now up to 1.5 million. Names, addresses, and social security numbers belonging to these accounts, however, remain safeguarded, according to Global Payments. The company assured customers that it “identified and self-reported” the issue when it was discovered in early March. Law enforcement is currently working with Global Payments, and the incident has been “contained.”

Credit card image via Shutterstock

Cyber-criminals have stolen Visa and Mastercard credit-card data by hacking into payment processors in New York City parking garages. Visa confirmed that the data — enough to create counterfeit cards — was stolen, and both companies are doing damage control by alerting banks and credit unions for the 56,455 cards.

According to security researcher, Brian Krebs, a group of individuals have compromised the a payments processor, rumored to be Global Payments Inc. The group is believed to be New York-based, targeting the payment systems in New York garages. The criminals gained access through the processor to “Track 1 and Track 2 data,” which gives them enough information to make fraudulent purchases on the compromised cards.

Visa and Mastercard have alerted a number of banks and credit unions associated with the cards, warning that they should be on the lookout for fraud.

“Visa has provided payment card issuers with the affected account numbers so they can take steps to protect consumers through independent fraud monitoring and, if needed, reissuing cards,” the company said in a statement, “As always, Visa encourages cardholders to regularly monitor their accounts and to notify their issuing financial institution promptly of any unusual activity.”

The company takes a small jab at the individual business (potentially the NY garages themselves). It explains that each business accepting credit payments is responsible for updating its systems and putting in place the most recent security measures.

According to Krebs, the PSCU is saying 56,455 cards have been compromised, with only around 1.5 percent of those cards actually showing fraudulent charges. Joe Levy, chief technology officer of Solera Networks, believes there may be more to the hacks, which have occurred in the past in cases like Heartland Payment Systems.

“It would not be surprising if the investigation slowly reveals that the breach involved techniques such as web application exploitation, maneuvering from a compromised public system into the internal systems, and that the presence on the network was a longer-term than estimated,” said Levy in an e-mail. “These tend to be common characteristics of these kinds of events. And it underscores the fact that perimeter defenses are imperfect and will almost always be breached by a sufficiently motivated adversary.”

The hack has seemingly been isolated at the third-party payments processor, according to Visa. Visa’s own systems have not been compromised.

Credit card image via Shutterstock

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

PayPal is expected to show off a credit card reader tomorrow that will compete directly with Square’s product. Now we have a clearer idea of what the company is planning — and it could give Square a run for its money (literally).

PayPal will reportedly charge merchants using its card reader only 2.7 percent of every transaction, lower than Square’s 2.75 percent charge, two sources told Bloomberg. The sources said that the device will be shaped like a blue triangle, an obvious jab at Square’s design, and will sport a high-end design, courtesy of the Yves Behar-founded design firm Fuseproject, best known for designing Jawbone’s bluetooth headsets and wireless speakers.

Both of those details make it clear that PayPal is aiming for Square’s jugular. But, if true, they don’t seem like big enough improvements over Square to entice consumers away. Square could easily lower its transaction fees to compete, and a fancy design likely won’t matter much to people who just want to make payments easily. Square, which was founded in 2009, also has a huge head start on PayPal, and is free from the terrible customer service reputation that haunts PayPal.

Square isn’t PayPal’s only competitor either: Intuit’s GoPayment device, which also plugs into your smartphone’s headphone jack, has been available longer than Square (though doesn’t get nearly as much hype).

The card swiper will be just one of many strategies PayPal will use to be a prominent force in mobile payments. The company just showed off its digital wallet at SxSW, is currently dabbling in NFC money transfers and carrier payments, and has recently expanded its pilot payments program with the Home Depot to include all of the store’s locations. (VentureBeat’s Rocky Agrawal doesn’t have many nice things to say about the latter.)

VentureBeat will be on the ground at PayPal’s media event tomorrow, so stay tuned for more.

The FBI has revealed that there were $700,000 worth of fraudulent credit card charges after hacktivist group Anonymous stole nearly 200 gigabytes of data, including credit card numbers, from security firm Stratfor.

“At least $700,000 worth of unauthorized charges were made to credit card accounts that were among those stolen during the Stratfor Hack,” said Mahil Patel of the FBI to a judge overseeing the Stratfor case.

Stratfor, which has a number of high-profile clients including the Department of Defense, Lockheed Martin, and Bank of America, was breached in December. Soon thereafter hacker Jeremy Hammond was arrested for leading the attack.

Anonymous stole a large amount of user names and passwords, in addition to some 60,000 credit card records, after exploiting vulnerabilities to reach Stratfor’s servers. At the time, Anonymous said it would use the credit cards to make charitable donations — money that would obviously never see the hands of the needy. One VentureBeat tipster claimed Anonymous actually charged $300 worth of hooded sweatshirts to an account.

The damages may still be growing, however. The FBI explained that the $700,000 figure did not include any charges on credit card records that have not yet been reviewed. The number Patel offered the judge only referenced records reviewed between December 6 and early February.

In addition to the credit card numbers and other personally identifiable information, Anonymous also stole emails from Stratfor executives, including chief executive George Friedman. These emails were subsequently fed to Wikileaks which, with participation from a number of publications around the world, began publishing the emails in late February. Some emails held what Wikileaks considered damning information, including odd nicknames such as “Hizzies” for members of Hezbollah and “Adogg” for referencing Iran president Mahmoud Ahmadinejad.

via SecurityWeek

Anonymous image via Shutterstock

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

We’ve reported on how Jack Dorsey has been able to fulfill his lifelong love affair with dispatch systems by having credit card readers from his company, Square, installed in the back of 30 NYC taxi cabs. It’s part of a pilot program the city hopes will drive down fees. Today the company showed off its new custom design for NY cabbies: an iPad encased in black metal with a vertical slot for swiping credit cards. You can see it above.

Dorsey’s emphasis on design and maniacal work ethic have some people comparing him to a young Steve Jobs. The Square taxi tablet and reader is certainly easy on the eyes. Whether it can delight riders, satisfy drivers, and survive the Big Apple’s byzantine governmental bureaucracy remains to be seen.

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

It’s easy to think of mobile wallet solutions from companies Google, PayPal, and Isis as locked in a heated battle for the future of payments. But according to Michael Abbott, CEO of the mobile payments company Isis, that’s far from the case.

“There is no mobile wallet war out there,” Abbott told VentureBeat in an interview at the Mobile World Congress yesterday. Instead, he sees all the companies exploring mobile payments now as something that will benefit everyone, including consumers, retailers, carriers, and everyone else involved in the mobile payments chain.

For lack of a proper meeting space, we sat outdoors on a couch in the middle of the Mobile World Congress madness. Directly behind Abbott was the National Art Museum of Catalonia, an imposing and grand building that looks down on the conference housed at the Fira de Barcelona convention center.

The spirit of Barcelona gives almost everything at MWC an extra layer of magic, so my judgement may have been clouded. But as I discussed the future of mobile payments and Isis’ slow-and-steady launch with Abbott, I couldn’t help but think he had a point. We’re facing a sea change with the rise of mobile payments, and now anything that helps to communicate the benefits of paying with your phone versus a dumb credit card will help consumers understand, and ultimately adopt, mobile payments.

Isis, which is jointly owned by AT&T, Verizon, and T-Mobile, is developing a mobile payments network based on near-field communication (NFC) technology. The idea is that you’ll be able to swipe your phone to make purchases instantly and securely. NFC-based swipe and pay is something Google is also exploring with Google Wallet, as well as PayPal with its upcoming wallet (PayPal already offers a way to easily transfer money with NFC).

Isis yesterday announced its first bank partners, Chase, Capital One, and Barclaycard, a big step for the company. The banks have agreed to let their credit, debit, and prepaid cards work with Isis’s mobile wallet. Isis test users in Salt Lake City, Utah and Austin, Texas will be able to add their cards from the companies to Isis in mid-2012.

The bank support comes on top of the payment network partnerships Isis made last year with Visa, MasterCard, Discovery, and American Express.

It may seem like things are moving slowly for Isis, which was first announced back in November 2010. But Abbott says he wouldn’t have it any other way. The company is putting the pieces together for a payment network that will last for more than a decade, Abbott said, so he sees no need to rush out with a half-baked solution.

“We’re solving for a four-sided market,” he said, pointing to the fact that Isis needs to make sure consumers, merchants, payment companies, and its parent carriers are happy with its product.

When I asked if Isis has any contingency plans in mind if NFC doesn’t take off, Abbott said that the company is “looking at everything that works.” He stressed that any mobile payments technology must be secure, cost-effective, and most importantly, fast. After all, if it’s faster and easier to keep using your credit card for purchases, mobile payments will never take off. PayPal, and its parent company eBay, currently have their fingers in other mobile payments solutions, like carrier billing and scanning with QR codes.

So what’s next for Isis? Abbott says that the company will now focus on the consumer side of things, as well as with device makers in the fall. Isis has no release schedule in mind for its mobile wallet, instead, the company is taking a “when it’s ready attitude.”

Given that Isis basically has one shot to get mobile payments right, I don’t blame the company for taking its time to launch.

CardSpring has produced an Application Programming Interface (API) that developers can use to make online applications for your credit or debit card. Each time you swipe your card, the card’s information is sent over the payment network to process the purchase. CardSpring has created a link between that payment system and other online process, such as coupon redemption or loyalty programs so every swipe can do more than just complete a purchase.

“When we looked at the payment system, we realized that everyone had a different point of view on how to connect credit and debit cards to it,” CardSpring chief executive Eckart Walther told VentureBeat in a interview,”We built a platform that delivers a simple interface for developers to use to connect to the payment system.”

The types of apps that can be connected to cards is limited only by the developers’ imaginations. In CardSpring’s current platform, the first apps are likely to focus advertising and promotions. Developers will likely create apps that encourage patrons to review businesses after they make a purchase there or offer promotional discounts after a card is swiped.

While mobile discounts and loyalty apps have caught on in recent years, CardSpring eliminates the need for business specific smartphone apps, or even a smartphone at all. CardSpring bridges the gap between developers and the payment network — a system that is traditionally hard to access due to strong security measures. The API lets developers build apps quickly that access the payment network without compromising the security of your information.

“It’s a really new platform and we are working on building it up now,” said Walther, “We will use the funding for scaling the team and scaling the platform.”

CardSpring launched its private beta today, which developers can request access to on CardSpring’s website. The series A round announced today was led by Accel Partners and Greylock Partners, with participation from SV Angel, Morado Ventures, Felicis Ventures, which is an investor in VentureBeat, and WIN. CardSpring is based in Palo Alto, California.

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Mobile payments startup Square now has more than 1 million merchants charging credit cards with the service, the company announced today.

“Just as small businesses are growing with Square, we’re growing with them: Over 1 million merchants now accept credit cards via Square,” the company said on Twitter.

Square is one of a handful of companies, along with names like PayPal, Google and Intuit, that are quickly transforming the mobile payments landscape. The company’s service has seen huge growth since its debut in late 2009. At last check, the company was signing up between 30,000 and 50,000 new merchants each month, so it’s no wonder Square finally hit the 1 million merchant mark.

One of the latest ways Square, which is led by Twitter co-founder Jack Dorsey, is evolving is with its Card Case app for iOS 5. The app allows for hands-free payments to merchants that use Square. Ideally, as more small businesses accept Square, more users will adopt the Card Case application to speed up the payment process.

During the next few years, Square will be heavily competing with Google Wallet, Isis, Sequent, and other NFC-related services that will be directly connected to smartphones. But having a clear 1-million-merchant head start will certainly give Square an edge.

San Francisco-based Square’s funding now totals $137.5 million. It last raised $100 million in a third round of funding led by Kleiner Perkins Caufield & Byers, with the company’s valuation at more than $1 billion.

Money transfer company Xoom received a $25 million round of funding today, according to a Form D filed with the SEC. The round comes from existing investors, including Sequoia Capital and Keith Rabois, chief operating officer of payments service Square.

The company allows people from 30 different countries to transfer money to one another without needing a bank account. In lieu of a bank account, you can use a debit card or credit card, though bank account transfers are also accepted. Associated fees are dependent on your country and the amount of money changing hands. Xoom assures privacy and is “accredited by third party privacy organizations.”

This round of funding follows a $33 million round, which closed in March 2010, another “inside round” from this round’s same investors, including DAG ventures, Fidelity Ventures, and New Enterprise Associates. The company stayed with these investors because it’s an easier route to raise money when you have supportive existing investors.

“It was easier to do it as an inside round,” said Xoom chief executive officer John Kunze said in an interview with VentureBeat, “And our business is just on fire. We needed to expedite the raise.”

The company needed to raise the round for working capital to cover expenses in the money transfer business. Kunze cited the speed of Xoom’s transactions as “moving money in seconds,” which becomes taxing on a company’s P&L sheet. The funding will also be used for regular operating costs, as the company expands into new areas of the industry. Xoom recently launched its mobile website m.xoom.com for international money transfers on the go, which Kunze says counts for a third of the company’s Mexican sign-ups. Xoom also recently announced a partnership with Walmart.com to allow online money transfers to Latin America, Europe and Asia through the website.

“[The Walmart partnership] foreshadows a strategy where we are willing to co-brand with offline customers,” said Kunze, “Basically it makes Xoom more ubiquitous.”

In terms of competitors, Western Union takes the number one spot. Xoom sees Western Union as more inconvenient, however, as a physical presence is necessary to complete transactions, as well as a bank account. The company does not, however, look at online transaction companies such as PayPal as competitors.

“We don’t compete at all with [PayPal] because they’re very focused on commercial payment and serving merchants,” said Kunze, “Thought they’re thinking peer-to-peer.”

Xoom’s board of directors includes Keith Rabois, who once worked for PayPal, and early investor Peter Thiel who co-founded the e-commerce payments company.

The multi-year deal will combine MasterCard’s expertise in payment processing and commerce with Intel’s strength in chip-based security. The idea is to make checkout simpler and safer for online merchants and consumers using Ultrabooks (thin laptops like the Macbook Air) and future PCs.

The two companies will work on emerging payment technologies such as MasterCard’s PayPass and Intel’s Identity Protection Technology. The latter uses two-factor authentication and hardware-based display protection and security against malware. Consumers will be able to pay for online purchases in the future with a simple tap of a PayPass-enabled card, tag, or smartphone on an Ultrabook device.

PayPass can be used in plastic cards, mobile phones and other devices. Instead of swiping a credit card, you can simply tap on another device that contains the same technology. It is currently in use with Google’s mobile wallet service for Android mobile devices.

Ed McLaughlin, chief emerging payments officer at MasterCard, said the collaboration will focus on a simple click or tap from the consumer point of view. Online sales hit $176.2 billion last year in the U.S. and are expected to grow at double-digit rates for the next five years, according to market researcher Forrester Research. Intel’s George Thangdurai, general manger of PC Client Services at Intel, said online commerce is a key focus area for Intel. MasterCard is competing with rivals such as Visa, American Express, Discover Financial Services, and PayPal.

The facility is located in Pennsylvania in the Pittsburgh region, where the company is based, and includes around 100,000 square feet of “clean room” engineering and manufacturing space.

Dynamics CEO Jeff Mullen said in a release that the new property is a “world-class consumer electronics production facility” and will help bring more Dynamics cards to mass market.

“This facility gives Dynamics the capacity to scale to this demand and produce tens of millions of these next-generation payment cards per month — a capacity that rivals even the largest consumer electronics manufacturers,” Mullen said.

The company is currently moving its proprietary production machinery to the new facility. Dynamics stated it is also setting aside parts of the facility for credit card personalization; this means the distinctive Dynamics cards will be branded with the Visa, MasterCard and American Express marks for card issuers.

Dynamics raised a substantial $35 million round of funding earlier this summer and has been working with the Regional Industrial Development Corporation of Southwestern Pennsylvania (RIDC) to secure the new property.

The company launched its cards almost exactly one year ago at DEMO Fall 2010, where it won the People’s Choice award and $1 million in free advertising from IDG magazines like Computerworld, PC World, InfoWorld, and CIO Magazine.

Dynamics then proceeded to win best innovation in personal electronics at CES and scored a significant deal to manufacture Citi’s hybrid credit/rewards cards.

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Visa’s mobile payments future just got real. The company announced today that it will deploy dual-mode chips in its infrastructure that will pave the way for NFC-based mobile payments, and it has also come up with an aggressive strategy to bring retailers on board.

Other credit card companies will have to face the same challenges. Despite the buzz that mobile payments has in tech circles, it will still require massive infrastructure changes, and retailers will need to be convinced the changes are necessary.

Visa says that it will speed up the migration to EMV (Europay, Mastercard and Visa) contact and contactless chips in the US — a standard for chip-enabled credit cards that has failed to find much ground in America, despite widespread popularity internationally. “By encouraging investments in EMV contact and contactless chip technology, we will speed up the adoption of mobile payments as well as improve international interoperability and security,” Jim McCarthy, Visa’s global head of product, said in a statement today.

Additionally, Visa says the use of chip technology in credit cards will allow for dynamic authentication, which adds an extra security layer by requesting additional information (not just a signature) during transactions. The company says it will continue to rely on signatures and PINs for “low-value, low-risk transactions” but that eventually they will be replaced entirely by dynamic authentication methods.

Visa listed the following three initiatives as part of its grand plan to bring retailers on board with dynamic chip authentication:

• Beginning October 1, 2012, Visa will will expand its Technology Innovation Program to the US, eliminating the requirement that merchants validate their PCI data security compliance if 75 percent of their payment terminals are chip-enabled. Visa says that terminals need to accept both contact and contactless chips, including NFC chips, to qualify. Retailers will likely jump on board with this plan since it will mean forgoing the annoyance of PCI compliance.
• Visa will require processors and sub-processors to support chip transactions no later than April 1, 2013. “Chip acceptance will require service providers to be able to carry and process additional data that is included in chip transactions, including the cryptographic message that makes each transaction unique,” Visa wrote in a statement today.
• As of October 1, 2015, Visa will shift liability of fraud to merchants instead of card companies. Since dynamic card authentication offers better fraud protection, most merchants will opt to upgrade their terminals instead of having to deal with fraud charges. Fuel merchants will have an extra two years before liability will shift for terminals at self-service gas pumps.

In May, Visa unveiled its digital wallet for smartphones, which would allow consumers to use their phones for transactions like credit cards and would offer up several features not possible with a simple piece of plastic.

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

I have a bit of a crush on group-texting application GroupMe, which lets a bunch of phone owners jump into an ad-hoc chat room that’s powered by text messages. It’s simple, and best of all, it doesn’t use data.

The company unveiled a new version of its mobile app today, which sports some new messaging features that make it more lightweight. But while the app is powered by wireless data networks, you still get the option to stick with text messages. So when you’re stranded at a music festival with a dozen other people and no data network, you can still access its new features.

GroupMe is a group-texting service that creates a virtual chat room around text messages. You create a phone number that anyone who signs up to the group can text. That text is then delivered to everyone in the group. You can make as many groups as you want. It works for conference calls as well — anyone can dial in to the number and start a group chat.

The GroupMe app is a glossy BlackBerry Messenger-like app on top of the service’s typical texting service. Instead of going through text messages, the app creates a visual room where users can parse messages and photos and see the members of the GroupMe group. They can see on a map where previous messages were sent and also start a conference call with all GroupMe group members.

The app’s new direct messaging feature is equivalent to sending a direct text message to someone within the group, but it’s a little easier. Instead of hunting down an individual’s phone number, you can just send a message directly through the app. There is also a “questions” feature, which lets users quickly direct a message to specific GroupMe group or individual.

“We kept seeing people going to their old groups to ask a question,” GroupMe co-founder Steve Martocci told VentureBeat. “We wanted a way for groups to become more lightweight, we’ve really driven our features from our own users.”

That doesn’t mean the SMS part of GroupMe is going away. When you install the app, it asks whether you want to receive SMS messages or push notifications. Any messages sent within the GroupMe app are also texted out to members in the GroupMe group. They show up in both text message and in the App’s chat interface. If a user has a weak data connection, the app also prompts them to drop down to SMS.

“The commitment to SMS has not gone down … you can invite anybody over SMS, they chat right over SMS, everything is backwards-compatible with SMS,” Martocci said. “SMS is something that we are still very heavily focused on, we think it’s a huge benefit of giving people able to use it.”

The app is now available in more than 90 countries for BlackBerry, Windows Phone 7, iPhone and Android users. The new features in the app are cool, and they don’t get in the way of what made GroupMe great — its support of just about every phone out there by using SMS. The company is still working to roll out its SMS service in as many countries as possible, Martocci said.

Startups like GroupMe are constantly showing us that there are ways to make text messaging even more useful. All it takes is a little bit of thinking outside the box, and GroupMe’s $10.5 million in cash doesn’t hurt either.

GroupMe is built on top of a service provided by Twilio, a San Francisco-based startup that provides access to voice and text-messaging services that might otherwise be out of reach to small companies. The first version of GroupMe was built over a weekend in May 2010 during a hackathon, a type of programming contest that challenges developers to swiftly create a working Web service.

The company, which made its public debut at the TechCrunch Disrupt conference in New York City Monday, touts its services as “antivirus for our bills” because it scans each credit card transaction and sends out alerts for all questionable charges.

BillGuard identifies those questionable transactions using the same automated tests credit card companies use to determine fraud, scouring the web for trends and crowdsourcing transactions flagged by other BillGuard users.

Many banks offer online services that show you detailed information on each transaction made, but that information isn’t always easy to parse. BillGuard’s interface helps make sense of transaction data points and groups them to show what’s safe and what’s questionable (as shown in the image below). It also gives its users statistics and a detailed description of the merchant for each transaction.

While some people might be scared off at the idea of allowing a third-party in to manage their financial security, BillGuard seems pretty low risk. The site doesn’t store credit card data on its servers and has read-only access to credit statements. So, users can’t actually make changes to their credit accounts from BillGuard. They can only view and manage activity that’s been made.

The startup has $3 million in funding and has entered into partnerships discussions with some major banks and identity theft companies, according to TechCrunch.

Check out the video embedded below for the company’s official demo.