Asia Payment Systems has inked a credit card processing services agreement with e-Charge Processing Services Corporation. e-Charge’s card sales volume is in excess of US$3 million per month. Asia Pay is in the process of developing a network to provide credit card clearing services to merchants and financial institutions in China. Even though Asia Pay does not have adequate capital to begin the operation, its mission is to become a leading provider in China of third-party processing services to bankcard accepting merchants, issuers of bank credit cards, of petroleum station retail cards, and to issuers of merchandise and other retail cards. e-Charge Processing Services Corporation is a partially owned subsidiary of e-Lux Corporation of Japan.
Costco has signed a multi-year renewal with American Express to continue accepting AmEx Cards at all its U.S. warehouse locations, continue its two co-branded AmEx cards, and to offer other AmEx financial products. Over the past few years, the partnership has evolved and expanded. Today, Costco also offers to its members auto and homeowners insurance from American Express Property Casualty Company, installment loans and lines of credit from OPEN: The Small Business Network(SM), and financial planning services from American Express Financial Advisors. American Express Company is a world leader in charge and credit cards, Travelers Cheques, travel, financial planning, business services, insurance and international banking.
Moneris Solutions has enhanced its online sales reporting tool to give business owners the ability to gauge both their monthly and annual sales growth against the national average for their industry. Moneris’ Internet-based reporting application, “Merchant Direct,” now includes the “Peer Reporting” comparison report. “Merchant Direct” allows merchants to view their company’s daily card transaction activity by 7:00 am
the next morning. Business owners can view dollar amounts and a breakdown of credit card versus debit card sales, plus thirteen-month historical data that can be used for forecasting and trend analysis purposes.
The “Peer Reporting” comparison report takes this a step further by giving merchants a monthly snapshot comparing their sales growth to that of the average for their industry. “Peer Reporting” appears on customer online monthly statements in a simple, easy-to-understand format.
Capital One reported that its first quarter U.S. card profits increased 26% year-over-year, and 20% sequentially. The issuer also experienced sharply lower delinquency and charge-offs as domestic card loans increased more than 17%, compared to 1Q/03. For the first quarter, COF posted net income for US cards of $386.8 million, compared to $322.7 million in the fourth quarter, and $308.1 million one-year ago. The managed delinquency rate (30+ days) for U.S. credit cards was 3.99% for the first quarter, compared to 4.60% at the end of the previous quarter, and 5.55% for the first quarter of 2003. The net charge-off rate for U.S. credit cards was 5.41% for the first quarter, compared to 6.16% for the fourth quarter, and 7.72% one-year ago. Capital One also reported its overall, managed revenue margin declined to 13.38% in the first quarter from 13.89% in the previous quarter, and 15.70% in the first quarter of 2003. The issuer says it is continuing to shift its product mix upmarket and expects little to no growth in the sub-prime portion of the its credit card portfolio. At the end of the first quarter Capital One had $45.3 billion in U.S. card loans, and a global managed loan portfolio of $71.8 billion. For complete details on Capital One’s first quarter performance visit CardData ([www.carddata.com]).
COF U.S. CARD NET INCOME
1Q/03: $308.1 million
2Q/03: $274.2 million
3Q/03: $276.2 million
4Q/03: $322.7 million
1Q/04: $386.8 million
Source: CardData (www.carddata.com)
STMicroelectronics Becomes the First Smart Card Chip Manufacturer to Win MasterCard Card Quality Management Approval
STMicroelectronics has been certified by MasterCard’s “Card Quality Management” program as an approved supplier of secure microcontrollers for its chip-based debit and credit cards. STM is the world’s first silicon manufacturer to receive the approval. The certificate applies to specific members of ST’s “ST19” microcontroller family, which is dedicated to smart card applications, and to their production processes at the company’s Rousset site in southern France. “CQM” is a quality program applied to all stages of MasterCard-branded card production, from chip manufacture to card personalization, and each of the
suppliers in the manufacturing chain must be CQM Certified before a card issuer — typically a bank or other financial institution — can issue cards to its customers under MasterCard’s “M/Chip 4” program.
Precidia Technologies has introduced “POSLynx”, with distribution partner Vital Processing Services, to connect up to four existing POS terminals to the Internet for payment processing. POSLynx can connect up to four POS terminals to the Internet for payment processing. POSLynx is a cost-effective IP solution that is easy to implement, offers full transaction processing security and requires little support or maintenance. Vital Processing ServicesÂ® is a leader in technology-based commerce enabling services. Precidia Technologies Inc. is a global leader in the design and manufacture of IP access devices for a wide range of industries, including retail payments and building automation.
SCM Microsystems and Royal Philips Electronics have teamed with Irdeto Access to introduce the “Irdeto Chip On Board” module for TV set top box payments. The module combines SCM’s conditional access module with Philips’ high-security smart card chip. The new ICOB module is one of the first devices on the market to combine the unique features and security functions of a standard common-interface
conditional access module (CI-CAM) with an embedded smart card chip. By integrating an auto-expiring Irdeto Access smart card with the ICOB module, content providers gain the opportunity to cost-effectively distribute auto-expiring “teaser” promotional subscriptions with every CI-CAM purchased. Once the promotional subscription has expired, consumers can upgrade easily to a normal subscription (either billed monthly
or pre-paid) through the addition of a new smart card. This all-in-one solution operates in any DVB-compliant set top box that features a CI-CAM slot, enabling pay TV operators – or even free-to-air operators – to take
advantage of the large existing installed base of STBs to offer their premium content. Irdeto Access is a subsidiary of multinational media group Naspers.
Tower Records has agreed to settle FTC charges that a security flaw in the its Web site exposed customers’ personal information to other Internet users in violation of federal law and has agreed to have audits of its Web site security every two years by a qualified third-party security professional for ten years. The settlement will bar misrepresentations in the future, require Tower to implement an appropriate security program, and require audits of its Web site security every two years by a qualified third-party security professional for ten years. The Commission vote to accept the proposed consent agreement was 5-0. The FTC will publish an announcement regarding the agreement in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through May 21, 2004, after which the Commission will decide whether to make it final.
Sears, which sold its card business to Citigroup in the fourth quarter, reported an $859 million loss in the first quarter, primarily due an $839 million charge for an accounting change. The prior year quarterly results include the results of the domestic Credit and Financial Products and National Tire & Battery businesses divested in the fourth quarter of 2003. Net loss after the effect of the cumulative effect of this accounting change was $859 million, or $3.90 per share for the first quarter of 2004. Sears, Roebuck and Co. is a leading broadline retailer providing merchandise and related services.
Citigroup is reportedly in discussions with MasterCard to move its Diners Club card products to the MasterCard network by year end to provide greater acceptance.
The current Australian consumer credit reporting system is antiquated, and replacing it with a model that captures more comprehensive consumer credit histories could drive down credit defaults by 25% to 63%. A new research report found that the current system, which restricts lenders to accessing only the negative credit history of the potential borrower, unnecessarily allows some Australians to spiral into debt, while denying basic forms of credit to others who do not have a defined credit history. The ACIL Tasman Report, commissioned by MasterCard, found that a comprehensive system would generate a one-off increase in capital productivity of up to 0.1%, which would translate into economic benefits to the Australian economy of up to $5.3 billion, in net present value terms, over the next ten years. Baycorp Advantage, which operates Australia’s largest consumer credit bureau, noted that a comprehensive approach would enable more accurate credit decisions, reduce the level of risk, and, at the same time, apply the same standards of data integrity and privacy protection currently in place. According to the Australian Bureau of Statistics the annual consumer credit market in Australia is valued at around $202 billion and over the past decade the overall rate of growth in consumer credit has averaged more than 14% per annum. ACIL Tasman says Australia stands at odds with the rest of the world by maintaining its current credit reporting regime. The sharing of comprehensive credit information now extends to more than 40 countries, including most countries in the OECD and the Asia-Pacific region. Earlier this year India became the most recent economy to transition to a more comprehensive credit reporting system, joining countries like the USA, UK, Singapore, Hong Kong and Canada.
The U.S. Supreme Court yesterday unanimously ruled that credit card over-limit fees are not finance charges. The decision overturned a U.S. appeals court ruling that card issuers must disclose over-limit fees as part of the finance charges. The case involved a class action lawsuit brought against Household Bank and MBNA which claimed that over-limit fees violated the Truth in Lending Act. The litigation did not consider whether over-limit fees were legitimate if the issuer authorized the excessive charges, or charged an over-limit fee when monthly finance charges push the account into an over-limit situation. Washington, DC-based Consumers for Responsible Credit Solutions responded that Congress should now pursue new regulations on creditor practices, examining whether credit card fee policies are abusive.