Bank Of America Card Services Down $400MM Y/Y

Bank of America reported second-quarter 2010 net income of $3.1 billion, compared to net income of $3.2 billion a year ago. Results were driven by lower credit costs, which improved for the fourth straight quarter, and the sale of non-core assets as the company focused on strengthening key business lines and divesting assets that do not directly contribute to providing financial services to customers. With average retail deposit balances having risen 3% year over year to $649.6 billion, Bank of America extended approximately $174 billion in credit in the second quarter of 2010, including $3 billion in domestic consumer and small business cards and $8 billion in other consumer credit. Bank of America agreed to sell its equity position in MasterCard, resulting in a pretax gain of approximately $440 million to focus on its core businesses and strengthen capital ratios. Global Card Services net income increased $2.4 billion compared to a year ago due to declining credit costs reflecting continued improvement in the U.S. economy; Revenue decreased $401 million from a year ago, driven by lower average loans and reduced interest and fee income primarily resulting from the implementation of the CARD Act, partially offset by the $440 million pretax gain on the sale of the MasterCard position.

BOFA CARD REVENUE($billions)
2Q/10 6.9
1Q/10 6.8
2Q/09 7.3
SOURCE: BofA

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Smart Card Alliance Endorses Obama NSTIC

The Smart Card Alliance endorses the Obama Administration’s National Strategy for Trusted Identities in Cyberspace (NSTIC). Developed under Obama’s Cyberspace Policy Review by the National Security Staff and an interagency writing team, the NSTIC Framework is intentionally broad in scope, providing a wide range of trusted identity constructs and identity protection technologies. The Healthcare and Identity Councils of the Smart Card Alliance strongly agree with the ideas of using federal, state and local government and academia programs to accelerate development of the Identity Ecosystem, while leveraging existing procedures, standards and technologies such as FIPS 201 and the Federal Identity, Credentialing and Access Management Roadmap used to achieve Personal Identity Verification (PIV) and interoperability (PIV-I) in Homeland Security Presidential Directive (HSPD)-12. The NSTIC document explains that the need for such a strategy is due to the rising tide of identity theft, online fraud and cyber intrusions, the proliferation of usernames and passwords that individuals must remember, and the need to deliver online services more securely and efficiently.

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One World Ventures Announces Impressive Growth

One World Ventures subsidiary, 1World Cash, money transfer service, announced revenue growth of over 60% for June over May and sales in the first 15 days of July have surpassed June’s totals. One World also announced the opening of a new 1World Cash retail location at Planet Square in Hunghom, Hong Kong. The Planet Square center is in the heart of Kowloon and serves both Filipino and Indonesian overseas workers with shopping, food, freight and remittance capabilities. Furthermore the Company is pleased to announce that it has signed an agreement with “Citi Express Payment,” a business providing at home delivery of remitted money in Metro Manila and in the remote provinces of the Philippines.

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USAA Deposit@Mobile Exceeds All Expectations

The USAA “Deposit@Mobile” has seen more than 1.5 million checks deposited from a mobile device, totaling more than $928 million. USAA Federal Savings Bank, which has only one teller-supported branch, located in San Antonio, has seen over 35% of all checks deposited into accounts using remote deposit capture, where an image of the check is sent directly to the bank from a remote location. USAA was the first to offer remote deposit capture for its bank customers. In 2007, the bank revolutionized consumer banking with Deposit@Home®, which allows customers to deposit checks using their personal scanners at home.

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NRF Hails Swipe Fee Fix a Major Victory

Provisions in the financial services reform bill passed by the Senate for reasonable debit card swipe fees are being touted as a victory by the National Retail Federation. Making it easier for merchants to give discounts to customers who don’t use credit cards, the Senate voted 60-39 to approve the conference report on H.R. 4173, the Dodd-Frank Wall Street Reform Act of 2010. The report was approved by the House on June 30 and now heads to President Obama. The Fed would be required to consider banks’ actual costs for processing the transactions and the fact that paper checks drawn on the same accounts are paid at face value. The amendment would also bar the card industry from interfering with merchants who offer a discount or other benefit to customers who pay by cash, check or debit card rather than credit cards, and would allow merchants to set minimum purchase amounts of up to $10 for credit cards. Swipe fees average between 1 and 2 percent for debit cards and 2 percent or more for credit cards. Overall swipe fees charged to retailers and other business by Visa and MasterCard banks totaled $48 billion in 2008, with debit swipe fees accounting for $20 billion of the total.

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MasterCard Announces Opt-in Threshold Met

Pursuant to the settlement agreed to by MasterCard and Heartland
Payment Systems, MasterCard announced issuing financial institutions
accounting for more than 99% of eligible MasterCard-branded payment
cards have accepted the Alternative Recovery Offers they received.
This confirms the fulfillment of the 80% opt-in threshold that is one
of the requirements of the $41.4 million settlement. The settlement
provides applicable issuers with a recovery from Heartland for losses
they claim to have incurred by reason of the 2008 intrusion into the
processor’s payment system.

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FedPrimeRate.com Recommends SMB Credit Cards

The United States Prime Rate website at www.FedPrimeRate.com is now recommending small business credit cards on offer in the American market. To date, the FDIC has closed 90 banks in 2010, so far a faster pace of bank closures when compared to 2009. Between the beginning of 2009 and July 17, 2009, the FDIC closed 57 banks. The FDIC closed a total of 139 banks during all of 2009. Another troubling fact: unnumbered banks across the country are defaulting on their TARP payments. Subsequently, the credit card industry contracted sharply and the market for credit-card receivables completely dried up. Credit-card securitization contributed much to the ready flow of credit to all types of consumers and businesses, as banks were more than happy to pass the risk associated with unsecured debt onto Wall Street. Chase emerged from the global banking crisis and subsequent Great Recession as one of America’s strongest and most resilient banks.

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FNDS3000 Appoints President and Country CEO, South Africa

Robert Klein has been appointed as President and Country CEO, South Africa, responsible for leading FNDS3000 Corp international prepaid processing company in South African. Klein was a consultant engaged to review mobile banking platforms to be integrated into FNDS3000’s system. His remit quickly extended to key account management and customer service. His success in these areas led to his becoming the logical choice for assuming the key executive management role in South Africa. Prior to FNDS3000, Klein served as Executive Director of International Sports Media digital media and content provider owned by Raymond Goldsmith, the Chairman of the Company, where he managed key industry partnerships in North America, Europe and Australasia. He graduated from Bangor University with a BA honors degree in French.

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GETI Integrates Inovium Payment System

Inovium Corporation electronic invoicing and payment systems has partnered with Global eTelecom electronic check processing and gift/loyalty card provider. Integrating Inovium’s flagship “InoviumPay 2.0” full function payment gateway with the GETI processing system, the partnership will provide clients capabilities in accounts receivable and accounts payable, including electronic invoicing, billing, automatic payments, and direct deposit to vendors. This partnership marries GETI’s proven processing reliability with Inovium’s innovative payment solutions. The “InoviumPay 2.0” solution also offers Direct Deposit payment capabilities.

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Airdrie Bank Inks Five-year FIS Hosted Card Contract

Airdrie Savings Bank independent savings bank has signed a five-year hosted debit card processing contract with FIS for its “Cortex” card management solution to go live by 3Q/10. FIS “Cortex” modular software application processes card-based transactions for electronic funds transfers, allowing organisations to issue debit, credit and prepaid cards from a single platform. FIS delivers banking and payments technologies to more than 14,000 financial institutions and businesses in over 100 countries worldwide. It provides financial institution core processing, and card issuer and transaction processing services, including the NYCE Network.

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Emerging Market Banks Need to Push Debit Use

Banks need a more vigorous approach to both customer education and co-operation with retailers to increase debit card usage at the point of sale (POS) in emerging markets, which is as low as 10%. This, compared with 70 to 80% in the US, especially pertains to the unbanked and underserved populations in developing markets, according to First Data’s ‘Worldwide Opportunities for Debit.’ Examining the growth of debit around the world and assess both the drivers behind this increase and its implications for the banking industry, the report incorporates data from interviews of 34 banks across a mix of 10 mature and emerging markets around the world. It concludes increasing debit usage at the POS is a clear priority for banks in Europe, and in emerging markets where ATM withdrawals can account for up to 90% of debit card transactions; regulation of debit usage is increasing in nearly all of the markets included in the study and is challenging current debit business models; and tight margins on debit mean fraud levels can make the difference between profit and loss.

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Visa Promotes Prepaid Card Use to Underbanked

Visa’s first phase of a national marketing campaign touting the benefits of reloadable prepaid debit cards is underway. Designed to reach the 80 million financially underserved US consumers in particular – those without a traditional banking relationship, access to a payment card or mainstream financial services, and who rely heavily on cash for everyday transactions- the campaign highlights how prepaid debit cards can enable better money management. The campaign focus is on control; convenience; security; and access. The multi-channel campaign integrates social media, mobile, digital, grassroots events, and radio advertising, as well as in-store demonstrations, displays, and promotions.

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