Bank of America has acquired the commercial card technology and related business of Austin-based Works. The Company provides solutions to give organizations the control, spending visibility and automated workflow needed to seamlessly integrate cards into their procurement and accounts payable processes and make commercial cards their payment method of choice. The acquisition enables BofA to consolidate multiple card payment platforms and rapidly expand both its product capabilities and commercial card market share.
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Bank of American has rolled-out a unique program that rounds up debit card transactions and funnels the difference to a savings account. The new Bank of America “Keep the Change” option will automatically round up debit card purchases to the nearest whole dollar and transfer the money from the customer’s checking account into their savings account at the end of the day. In addition, BofA will match 100% of the “Keep the Change” transfers for the first three months. After that the bank will contribute five percent a year. The maximum match is $250 annually. The bank pays the rewards annually.
FL-based Publix Super Markets has filed a federal antitrust lawsuit against VISA and MasterCard over their interchange business practices. The suit alleges the associations and their members engaged in deceptive practices and restricted competition. The suit also claims that interchange charged to retail merchants is anti-competitive. Publix, with 865 stores in the South, joins the wave of approximately 40 other interchange lawsuits filed by merchants making similar charges. Last week, the National Association of Convenience Stores, the National Association of Chain Drug Stores, the National Community Pharmacists Association and the National Cooperative Grocers Association filed an antitrust, class-action lawsuit against VISA, MasterCard, BofA, Citibank, Bank One, Chase, Capital One, among others, alleging the defendants colluded in setting interchange fees for credit cards. The first major lawsuit by merchants to take on U.S. interchange fees was filed in October 2004, shortly after the U.S. Supreme Court refused to hear VISA and MasterCard appeals in the “Wal-Mart” debit card lawsuit. (CF Library 9/27/05)
Bank of America has expanded its money remittance service to all its customers nationwide. “SafeSend,” is available to anyone who has a BofA personal checking account. Earlier this year, Bank of America became the first major financial institution in the USA to offer free remittances when it introduced the product in Chicago. Recipients will be able to pick up cash at more than 4,500 locations throughout Mexico through Santander, BANSEFI/[email protected] de la Gente, TELECOMM-TELEGRAFOS and Banorte. Customers can identify up to three beneficiaries and send up to $1,500 per remittance and up to a total of $3,000 over a rolling 30-day period. Almost half of all U.S. Hispanic immigrants send money regularly to their home country. According to information from Mexico’s Central Bank, Mexico received $16.6 billion in remittances in 2004. This figure is expected to grow to almost $20 billion in 2005.
More merchant associations have jumped on the litigation bandwagon to take on credit card interchange fees. The latest group represents thousands of drug stores, convenience stores and food stores. The National Association of Convenience Stores, the National Association of Chain Drug Stores, the National Community Pharmacists Association and the National Cooperative Grocers Association filed an antitrust, class-action lawsuit against VISA, MasterCard, BofA, Citibank, Bank One, Chase, Capital One, among others, alleging the defendants colluded in setting interchange fees for credit cards. The suit was filed in the U.S. District Court for the Eastern District of New York on Friday by Robins, Kaplan, Miller & Ciresi. Last month, Kroger and six other major merchants filed a similar lawsuit against MasterCard, and in July against VISA. To-date, more than two dozen interchange-related lawsuits have been filed. The first major lawsuit by merchants to take on U.S. interchange fees, filed in October 2004, was thrown out of court in July for lack of standing under current antitrust laws. The judge found that the merchants had no factual basis to support their allegation that VISA and MasterCard set the merchant discount fee. A recent Morgan Stanley study determined that VISA and MasterCard interchange dollar volume grew to $17.4 billion last year, compared to $9.4 billion six years ago. (CF Library 6/23/05; 7/27/05; 8/4/05)
A new report has found that online banking sites are laggards in service levels compared to credit card and stock trading sites. Keynote Systems says Bank of America, Wachovia and US Bank were determined to be the best sites in its study. The study also found that Washington Mutual is the current industry leader in online service levels, a measure of overall site responsiveness and reliability. Bank of America, which has the industry’s highest satisfaction with online bill payment, according to the study, also has the industry’s highest use of online bill payment and the greatest percentage of customers accepting online statements. The Keynote “Customer Experience Ranking” is a measure of online customer experience based on evaluation of more than 250 metrics.
Bank credit card issuers and networks have pledged more than $10 million so far for relief expenses related to Hurricane Katrina. In addition, issuers are waiving fees, relaxing payment requirements and raising credit lines for victims of the USA’s worst natural disaster. First Data’s Western Union Financial Services is reducing its current service fees by 50% on Western Union “Money In Minutes” transactions sent from within the U.S. to Mississippi, Louisiana and Alabama between September 2nd and September 30th. Western Union also has established a special, no-transfer fee service for U.S. consumers who wish to help by sending donations directly to the American Red Cross. VISA USA is donating $1 million directly to the American Red Cross and matching contributions from its employees dollar-for-dollar, up to $500 per donation. Bank of America announced a $1 million donation including $500,000 to the American Red Cross “Disaster Relief Fund”, $100,000 to the Houston Food Bank and $400,000 to the areas of greatest need. BofA is also matching associate pledges through the bank’s “Matching Gifts” program and will not limit its overall relief donation. JPMorgan Chase is donating $1 million to the American Red Cross and will match employee donations dollar-for-dollar up to $1 million. Citigroup is donating $1 million directly to the Red Cross and will match any eligible donation made by a Citigroup employee dollar-for-dollar to the Red Cross up to $1 million. Capital One has pledged $1 million to the American Red Cross to aid its disaster relief efforts. Wells Fargo is contributing $500,000 to the American Red Cross “Hurricane Katrina Relief Fund” and will match contributions from its 151,000 team members dollar-for-dollar, up to $250,000 total. AmSouth Bank has given its customers in the affected areas flexibility on loan repayments, discounted loan rates, and fee waivers. CardWeb.com made several $1,000+ contributions earlier this week to selected “Hurricane Relief” charities and is matching employee donations up to $500 each. Additionally, CardWeb.com posted a direct link to the Red Cross “Hurricane Relief Fund” on its homepage encouraging consumers to use their credit cards to expedite contributions.
Among the top five U.S. issuers, which represent more than $436 billion in credit card outstandings during the second quarter, Bank of America is the only issuer posting solid organic growth in both outstandings and volume. BofA reported a 2.4% sequential gain in outstandings and a 14.0% sequential increase in volume during 2Q/05. Chase posted a 3.2% gain in outstandings but volume growth, quarter-to-quarter, was a lackluster 7.5%. MBNA posted the largest gain in sequential volume growth of 15.6%, but, outstandings growth was less than 1%, according to CardData ([www.carddata.com]).
TOP FIVE OUTSTANDINGS/VOLUME
(Growth Over Prior Quarter)
Chase: +3.2% +7.5%
Citi: -1.1% +13.0%
MBNA: +0.5% +15.6%
BofA: +2.4% +14.0%
Disc: NC + 4.1%
Source: CardData (www.carddata.com)
Bank of America and Make-A-Wish Foundation launched a VISA credit card this week that generates 65 basis points for each purchase and $2 for each account activation to the charity. The Make-A-Wish Visa card will give consumers a way to use their everyday spending to help the Foundation grant wishes to the thousands of children facing life-threatening medical conditions. There is no cap on the dollar amount that is donated to the Make-A-Wish Foundation. Bank of America is one of the world’s largest financial institutions, serving 33 million consumer relationships. The Make-A-Wish Foundation grants the wishes of children with life-threatening medical conditions with more than 11,700 wishes a year and 144,000 wishes granted worldwide since 1980.
Bank of America’s credit card loans grew 14% in the second quarter ending with $59.3 billion. The issuer opened a record 1.6 million new credit card accounts during the quarter as pre-tax card income hit $414 million. Second quarter charge-offs were 6.23%, compared to 6.17% in the prior quarter, and 5.88% one year ago. BofA says the increased charge-offs reflected growth and seasoning in the portfolio, the impact of last year’s changes in minimum payment requirements and bankruptcy reform. The managed 30+ day delinquency was 4.25%, compared to 4.20% in the first quarter and 3.86% for 2Q/04. Managed 90+ day delinquency was 1.96%, compared to 2.10% in the first quarter, and 1.76% for 2Q/04. BofA also reported that its merchant acquiring business handled $84.3 billion in processing volume during the second quarter on total transactions of 1.8 billion. Additionally, the issuer noted that debit card purchase volume rose to over $35 billion in the quarter, an increase of 27% from second quarter 2004. For complete details on Bank of America’s 2Q/05 performance, visit CardData ([www.carddata.com]).
BOFA CARD LOAN HISTORICAL
2Q/03: $30.8 billion
3Q/03: $33.6 billion
4Q/03: $36.6 billion
1Q/04: $37.3 billion
2Q/04: $52.0 billion
3Q/04: $55.4 billion
4Q/04: $58.6 billion
1Q/05: $57.9 billion
2Q/05: $59.3 billion
Source: CardData (www.carddata.com)
The Bank of America and MBNA combination will increase the U.S. VISA/MasterCard market share of the top three issuers, based on gross dollar volume, to 75% next year. In early 2006, the top three issuers will each have at least $100 billion in credit card outstandings and $300 billion in annual gross dollar volume. Last year, Chase posted $346 billion in gross dollar volume, while Citi reported $302 billion. MBNA reported $206 billion for 2004 as BofA posted $93 billion, according to CardData. VISA and MasterCard reported a total of $1269 billion in U.S. gross dollar volume on credit cards in 2004.