Family Account

MasterCard’s new “Family Account MasterCard” has found its first issuer. El Paso, TX-based GECU has launched the “GECU Family Account Credit MasterCard Card.” The new card features a family credit line with individual credit cards and customized spending limits for each adult family member. The primary accountholder may set and change the spending limits. The “Family Account” will also include cash access to ATMs and monthly-itemized statements. GECU is offering the card with no annual fee. Gold cards offer an APR of 9.9% and standard cards carry a 12.5% APR. In November, MasterCard and Texas-based Town North Bank/TNB Card Services teamed to offer the “MasterCard Family Account” in 2003. (CF Library 11/7/03).

D-Day

A major antitrust lawsuit filed in 1996 against VISA and MasterCard over debit cards finally gets its day in court this week. However in a stunning decision this morning, the presiding judge ruled that MasterCard is no longer a part of the trial. MasterCard, which has a 23% share of the off-line debit card market, asked the court on March 14th to sever the plaintiffs’ claims against MasterCard saying it would be prejudicial and could cause substantial jury confusion. Following jury selection this morning, the trial got underway in U.S. District Court for the Eastern District of New York in Brooklyn before Judge John Gleeson. The class action lawsuit, representing five million merchants in the USA, was filed by Wal-Mart, The Limited, Sears Roebuck, Safeway, Circuit City, and three trade associations. The lawsuit charges the card associations with violating U.S. antitrust law by monopolistic and uncompetitive business practices concerning debit cards. The merchants also claim that VISA and MasterCard and their member banks have forced merchants to accept their off-line signature debit card transactions under their “Honor All Cards” rule at rates five to ten times higher than on-line PIN debit card transactions. VISA and MasterCard say that despite several favorable rulings for the plaintiffs in Judge Gleeson’s April 1st Summary Judgment proceeding, the merchants have yet to prove there was any harm to competition and consumers from the “Honor All Cards” rule. The card associations point to the fact that PIN debit card transactions are growing faster than off-line debit and that their competitors control more than two-thirds of the PIN-based debit market. VISA and MasterCard also say that if the merchants prevail, the benefits of universal acceptance will be undermined and consumers will suffer by being denied their right to choose their preferred method of payment. MasterCard noted that its online debit mark, “Maestro,” is currently the least expensive online debit alternative. The trial is expected to conclude by August 1st.

PRICELESS GAME

MasterCard is airing a new “Priceless” TV commercial, entitled “The Game,” in Japan. The new commercial depicts the excitement and anxiety that university graduates experience during the traditional hiring season in spring when corporations hire en masse. The storyline depicts real purchases that these new graduates will need as they enter the business world. The Priceless line, “The start of a dream and an adventure: priceless,” taps into the insight that this is a key turning point in these graduates lives as they enter a new world of business and new responsibilities. MasterCard’s “Priceless” campaign, launched in October 1997, has appeared in 98 countries and 46 languages.

AmEx Fees

Emboldened by a court victory this week over foreign exchange fees charged on VISA and MasterCards, attorneys representing the plaintiffs have now filed suit against American Express. The class action against AmEx was filed in the Alameda County Superior Court for the State of California. The suit asserts violation of certain sections of California’s “Unfair Competition Law” and the California “Consumer Legal Remedies Act.” AmEx says it will vigorously defend the action. On Tuesday of this week, a California Superior Court judge ordered VISA and MasterCard to refund more than $800 million in foreign currency conversion fees to cardholders. The court also ordered the card associations to amend their operating rules to require their issuing members to make effective disclosure of the currency conversion fees charged to consumers. VISA was ordered to refund the one percent currency conversion fees to all cardholders in the USA while MasterCard was ordered to refund the currency conversion fees to all its California consumers. Both VISA and MasterCard plan to appeal. (CF Library 4/9/03).

MASTERCARD E-P3

MasterCard this week launched the first electronic payment and information management service fully integrated with the its “Corporate Purchasing Card” product. The new “e-P3” service, which runs on the Xign platform, automatically links electronic purchase orders, invoices, receipt of goods, and other transaction documents with purchasing card transactions. “e-P3” enables “Level III” data to be exchanged electronically between buyers and suppliers with every single transaction by leveraging the MasterCard “Global Data Repository.” Online reporting of transaction data is available through MasterCard “Smart Data OnLine.” For suppliers, enrollment in MasterCard “e-P3” can be completed over the Internet with any Web browser. The first “e-P3” adopters include Memorial Sloan-Kettering Cancer Center with its “JPMorgan Chase MasterCard Corporate Purchasing Card” and Pantellos with its “Citibank MasterCard Corporate Purchasing Card” programs.

Control-Pay

Orbiscom has introduced a new solution that enables card issuers to drive increased card usage among families with teens and young adults by enabling the account holder to set controls and monitor how family members or other authorized users utilize the parent’s credit line. “ControlPay” also offers enhanced controls at the transaction level,including controls that limit maximum spend per transaction and expiration date. Additionally, “ControlPay” features individual comprehensive monthly statements and complete web-based servicing. The solution is available for all card issuers and all card brands. The product also supports MasterCard’s new “Family Account Program.”

Exchange Fees

A California Superior Court judge yesterday ordered VISA and MasterCard to refund more than $800 million in foreign currency conversion fees to cardholders. The court also ordered the card associations to amend their operating rules to require their issuing members to make effective disclosure of the currency conversion fees charged to consumers. Judge Ronald Sabraw found that VISA and MasterCard violated California’s unfair competition law by failing to adequately disclose the currency conversion fees they have charged to U.S. cardholders. However Judge Sabraw also found that VISA and MasterCards currency conversion process does not violate Truth-In-Lending regulations, nor is it in any way unconscionable. Nevertheless, VISA, which is headquartered in California, was ordered to refund the one percent currency conversion fees to all cardholders in the USA who paid the fees from February 15, 1996 to the present. MasterCard, which is headquartered in New York, was ordered to refund the currency conversion fees to all its California consumers who paid the fees during the same period. The court ordered the card associations to devise a plan of restitution by April 28th. VISA and MasterCard quickly responded last night saying they will appeal the decision. VISA said it was disappointed by the court’s decision particularly since the judge himself acknowledged that the process is “uniquely beneficial” to consumers as cardholders receive currency conversion rates that are favorable to their other conversion options. MasterCard said the judge’s decision sends a chilling message to the business community that if you do business in California, you cant rely on existing laws, and you could be subject to sanction based on previously unknown notions of commerce and jurisprudence. MasterCard also said that mandating how its members disclose the currency conversion process to their customers is usurping authority that properly resides with federal authorities, who regulate financial disclosure.

Wal-Mart Suit

Washington, DC-based The Small Business Survival Committee reiterated Friday that it will be a severe blow to the ability of small businesses to compete against giant retailers if VISA and MasterCard lose in the Wal-Mart debit card lawsuit. Meanwhile, talk of a potential settlement by the parties in the antitrust lawsuit is spreading. The settlement speculation is fueled by the dismissal last week of all of VISA and MasterCard’s summary judgement motions by federal judge John Gleeson. The judge granted most of the plaintiff’s motions. The SBSC says small businesses like the current debit card system because the transaction costs are lower than credit cards, paper checks and American Express. The SBSC says large retailers are trying to dismantle consumer choice, uproot a payments system, gain more control over the card networks, and squeeze small businesses. Jury selection is scheduled to begin April 21st with a trial date of April 28th

MasterCard e-P3

MasterCard this morning launched the first electronic payment and information management service fully integrated with the its “Corporate Purchasing Card” product. The new “e-P3” service, which runs on the Xign platform, automatically links electronic purchase orders, invoices, receipt of goods, and other transaction documents with purchasing card transactions. “e-P3” enables “Level III” data to be exchanged electronically between buyers and suppliers with every single transaction by leveraging the MasterCard “Global Data Repository.” Online reporting of transaction data is available through MasterCard “Smart Data OnLine.” For suppliers, enrollment in MasterCard “e-P3” can be completed over the Internet with any Web browser. The first “e-P3” adopters include Memorial Sloan-Kettering Cancer Center with its “JPMorgan Chase MasterCard Corporate Purchasing Card” and Pantellos with its “Citibank MasterCard Corporate Purchasing Card” programs.

PayPass Theater

OTI has developed a POS solution for Loews Cineplex to use in MasterCard’s “PayPass” pilot in Florida. The new OTI reader enables customers to pay for admission tickets, as well as their snacks at the concession stands, by simply placing their MasterCard “PayPass” enabled payment cards in front of a glass window. OTI also provided a turnkey “PayPass” drive-thru solution for one local Orlando retailer. MasterCard “PayPass” is currently being tested with three of MasterCard’s key member financial institutions, more than 15,000 cardholders, and approximately 40 merchant locations in Orlando.

HP Pseudo Numbers

HP and Orbiscom have inked an agreement to create technical, marketing and sales initiatives for Orbiscom’s controlled payment technology. HP says it will offer a full range of security applications based on the technology to its clients. The Orbiscom platform also supports “Verified by Visa,” and “MasterCard SecureCode.” The company’s “Controlled Payment Number” technology prevents the unauthorized access to and theft of a cardholder’s real credit card number by generating a substitute account number each time a purchase is made. More than 190 million cardholders worldwide have access to Orbiscom controlled payment technology. Clients include Citibank, MBNA, Discover Card, Allied Irish Bank, Carte Bleue, Swedbank, Abbey National, Societe Generale, Credit Lyonnais, and Nippon Shinpan.

Maestro Fees

MasterCard is planning to make a big push for “Maestro” PIN debit cards in the USA. The “Maestro” brand is now carried on 505.2 million cards worldwide, including 226.1 million in Europe. MasterCards U.S. Board last month approved an increase to the “Maestro” interchange rate structure which will go into effect July 1st. The rate will apply to domestic transactions. The move is an effort to put “Maestro” on a competitive level with other online debit programs. MasterCard has added four new rate categories within the “Maestro” structure: a supermarket/warehouse rate; a convenience rate category (for small ticket transactions such as those in convenience stores, gas stations, fast food restaurants and movie theaters), a category for all other merchants, and a cash back rate. Globally, “Maestro” is accepted for purchases at more than 7.3 million merchant terminals in 93 countries and territories, and at 821,766 MasterCard/Maestro/Cirrus ATMs around the world.