Discover Begins Public Trading Monday

Discover will officially become a independent company tomorrow and will begin regular trading Monday, July 2. This morning CEO David Nelms and other top Discover executives rang the New York Stock Exchange Opening Bell. The new public company will trade next week on the NYSE under the symbol “DFS” and will become part of the “S&P 500.” Earlier this month, Discover Financial Services reported net income of $209 million for the quarter ended May 31st, compared with record net income of $343 million for the second quarter of 2006. The second quarter of 2007 included approximately $20 million of pretax costs related to the spin-off from Morgan Stanley. Philip Purcell, Morgan Stanley’s last CEO, first announced in early 2005 that he wanted to spin-off the Discover unit which the Board approved in April 2005. After Purcell was forced into retirement a few months later, his successor, John Mack, shelved the spin-off plan only to revise it in December 2006. (CF Library 12/19/06; 3/26/07; 6/20/07)

Bankruptcy Filings Neared 200,000 in Q1

Total bankruptcy filings soared by 66% in the first quarter compared to the year ago period, and jumped 9% sequentially. During the first quarter total filings hit 193,461 compared to 177,599 for the fourth quarter and 116,771 one-year ago. However, according to the Administrative Office of the U.S. Courts filings in the 12-month period ending March 31st, 2006, when bankruptcy cases totaled 1,794,795, the latest figures represented a 61% drop in filings. The 12-month period ending March 31, 2006, included the surge in filings that occurred prior to the October 17, 2005, implementation date of the “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.” Based on the latest official figures bankruptcy filings were running about 15,000 per week during the first quarter. However, other tracking firms are suggesting the weekly figures are moving to about 20,000 per week in the second quarter.

QUARTERLY BANKRUPTCY FILINGS
1Q/06: 116,771
2Q/06: 155,833
3Q/06: 171,146
4Q/06: 177,599
1Q/07: 193,461
Source: Administrative Office of the U.S. Courts

Reg E Lifts Small Ticket Debit Receipts

The Federal Reserve has modified the receipt requirement of “Regulation E” permitting merchants to no longer make a required receipt available for debit card purchases of $15 or less. Previously, “Reg E” required that a paper receipt be made available to consumers for all debit card transactions conducted in physical environments, including those unattended areas where consumers may not expect a receipt. In many of these environments, the cost and operational challenges of receipt printing has limited the deployment of card acceptance terminals. The Fed’s decision will help increase payment card acceptance in unattended cash and coin-heavy merchant segments. VISA says its research indicates that consumers want the option to use their payment cards at more traditionally cash-heavy locations, including environments where the card terminal is not attended, such as: parking (23%), public transit (21%), vending machines (18%) and laundry (16%).

Key U.S. Business Spending Trends Released

VISA USA has released a detailed analysis revealing key insights into how U.S. businesses large and small are spending their money based on its “Commercial Consumption Expenditure Index.” The “CCE Index” reveals that the top five individual spending categories, representing 54% of total spending for all businesses in 2006 were: raw materials and manufactured goods ($2.58 trillion, up 2.3%); information technology-related spending ($2.12 trillion, up 8.8%); professional services/consulting ($1.67 trillion, up 5.4%); personnel supply services ($1.57 trillion, up 6.5%); and rent ($1.38 trillion, up 13.8%). VISA says the data show an increase in personnel supply services, which indicates that more companies of all sizes are relying on temporary workers as the labor market continues to tighten. Moreover, robust IT of more than $2 trillion points to the fact that more U.S. companies are looking to harness technology to streamline their operations and improve efficiencies. Lastly, a sharp increase in rent year-over-year points to the continued demand for space to expand their businesses even as the economy slows in other areas.

VCs Pump More in a Prepaid Card Specialist

Card marketer AccountNow has closed on $12.75 million in a third round of venture funding and added two new board members.Trident Capital led the round and all current investors and board investors participated. Investors include INVESCO Private Capital, Oak Hill Investment, VSP Capital, Grayhawk Venture Partners, Granite Hill Capital Ventures and CEO Tim Coltrell. Stephen B. Galasso, Strategic Advisor, and Christopher P. (Woody) Marshall, Managing Director, both from Trident Capital have joined AccountNow’s board, while all other board members will continue to serve. AccountNow is a provider of financial solutions for the 40 million US consumers who do not have established credit or traditional banking relationships. Trident Capital is a leading venture capital and private equity firm with over $1.6 billion of capital under management. The firm has invested in over 120 companies since its founding.

Jack Henry Names Internet Banking Channel Head

Jack Henry & Associates, has named director of software development Vernon E. “Pete” Hopkins, Jr. to GM of Internet solutions and Ron Moses will move into the director’s role. Hopkins will join the company’s senior management team that currently encompasses 13 functionally aligned general managers. He will provide executive oversight of the development, quality assurance, support, installation, operations, communications, and education departments that support the company’s Internet banking channels. Moses has extensive industry and software development experience, including more than 18 years with Jack Henry & Associates. He most recently served as development manager for the company’s “Core Director” core banking platform. Jack Henry & Associates is a leading provider of integrated computer systems and processor of ATM/debit card/ACH transactions for banks and credit unions.

Pacific Merchant Services Offers Charity Option

1st Global Financial Corporation has implemented the “1st Global Charitable Give-Back Program”, targeted at Pacific Merchant Services credit processing clients. The “1st Global’s Give-Back Program” donates a portion of all their credit card transaction fees collected by the various merchants to Friends of Rollo â“ U.A., a non-profit organization focused on providing disabled and at-risk children with the opportunity to experience the joy of outdoor fishing. Pacific Merchant Services clientele are expected to collectively process between $10 million and $12 million annually through 1st Federal Financial. 1st Global’s business model is a three-pronged cause marketing program designed to help customers give-back to their local communities and support charitable organizations of their choosing.

PAYPASS STATISTICS

A recently conducted study by Mastercard Worldwide in collaboration
with Taiwan Mobile and Taipei Fubon Bank has revealed that 75% of
consumers prefer the use of Mastercard’s “PayPass” product in mobile
phones over traditional means. One hundred consumers were given the
NFC enabled Nokia 3220 mobile phone, with “PayPass” embedded, by
Taiwan Mobile to test the product. Other findings of the study include
participants using the Nokia made payments more often in comparison to
traditional contact-based cards, more than 25% whom previously used their
“Paypass” less than 3 times a months began to use it more, more than 40%
expressed preference towards using “e-coupons”, and 67.8% of participants
plan continued use of the product. The Mastercard “PayPass” is accepted
at 51,000 merchants globally and by over 2,000 merchant locations in
Taiwan.

Givex Gift Cards on Merchant Link’s Gateway

Givex and Merchant Link have integrated Givex gift card programs with Merchant Link’s gift card gateway. Retailers and other merchants using Merchant Link’s gift card gateway will benefit from the enhanced customer support services offered by the two organizations, including around-the-clock technical support, online reporting, program administration, card marketing and card production. Givex is a provider of card management systems. Merchant Link provides comprehensive, secure solutions to the integrated point-of-sale industry and handles more than one billion transactions annually.

RESERVE BANK & CONSUMER

The Reserve Bank of New Zealand has reported a slight increase in card
spending as of May 2007. This reflects only a marginal rise in consumer
spending, an area of economic concern as of late. Findings include a 1.1%
increase, to $4.6 billion, in electronic card spending between the months
of April and May, a .1% rise in total consumer spending, and a drop in
core retail spending by .4%. Furthermore, the overall trend was 8.4%
higher in May ’07 than May ’06. These findings reflect waning consumer
confidence despite high employment and rising home prices.

Experian Buys a Major Stake in Brazilian Firm

From a consortium of Brazilian banks, Experian has acquired a 65% stake in Serasa Credit Bureau for 1.2 billion USD. Serasa sales have grown at a rate of over 20% per annum for the past two years, has a database of 161 million Brazilian consumer records and 5 million Brazilian company records. The Brazilian credit bureau has a 60% market share and will consolidate Experian’s position in Credit Services, who will control three of the top five credit bureaus worldwide with this development.

MERCHANT CONNECT EMV

TD Merchant Services has introduced a “chip ready” POS solution by
Tender Retail called “Merchant Connect EMV”. “Merchant Connect
EMV” allows businesses to connect POS systems to the payment
processor for the acceptance of chip-based cards and ensures
merchants meet requirements of EMV. This is a reflection of
TD Merchant’s foresight concerning the payment industry conversion to
chip technology. Companies implementing the solution can also take
advantage of increased fraud protection, reduced liability for charge
backs, global interoperability, checkout efficiency, transactions at
offline and unattended locations and the elimination of dual receipts.