Penalty fees in 2009 grew to $22.9 Billion, up from 19.0 Billion in 2008, breaking the trend over the past several years of an annual increase of about $1 Billion. With an increase of nearly four times that past run rate, this is most thanks to an anemic economy and near jobless recovery having altered card debt repayment patterns coupled with the amount of the average late fee having risen $10 to as high as $39. This, according to the R.K. Hammer model, published each January together with other card industry metrics and recent trends and developments, shows there has been a steady annual progression of credit card penalty fees paid by consumers. Also to blame for the higher penalty fee income throughout 2009 is late fees expected to rise to as high as $49 per delinquent event in the coming year or two; regulatory pressure on interest rates and the ability to raise rates under fire by new rules; card fee income growing in importance; an average of 9 cardholder fees and costs found in cardholder fee disclosures; and the fact late fees contribute 86% to the Penalty Fee income segment, with only 14% coming principally from over limit fees.Details
Prepaid card program provider Trycera Financial has launched a new
branded prepaid card program that features non-traditional payment
These payments include but are not
limited to rent, household utilities, cable, phone, insurance, etc., and
are categorized as ‘nontraditional’ or previously unreported payments.
By reporting each payment, reporting agencies are able to better
generate a risk score for consumers who have ‘thin’ credit or no credit
at all. In addition to the rollout of the branded prepaid card program,
has commenced marketing, via the company website, a
suite of financial services designed to help consumers improve their
credit profile by reporting nontraditional and recurring payments to
national credit reporting agencies.
ClearPoint Credit Counseling Solutions is providing accessible information about the consumer
protections outlined under the “Credit CARD Act
of 2009.â Creditors must print a number on monthly credit card statements
directing users how to access legitimate credit counseling from at least
three Federally-approved agencies, like ClearPoint Credit Counseling
Solutions. Credit counselors at ClearPoint stress that consumers need to understand
the basics to help them avoid racking up debt. ClearPoint Credit Counseling Solutions (CCCS) is a member of the
National Foundation for Credit Counseling (NFCC) and a system-wide
accredited business with the Council of Better Business Bureaus.
NJ-based MSI Merchant Services merchant acquirer has reported a 16% increase in total bankcard processing with an 18% increase in both Visa/MasterCard transactions, for subsequent positive revenue growth. MSI continues to demonstrate significant growth in its number of merchant accounts, servicing over 75,000 merchants nationwide. Its annual number of sales representatives, reportedly also witnessed substantial growth, making MSI most sought after by ISOâs in 2009, which posted 37 million dollars in paid residuals to its ISOâs, despite a sluggish national economic growth. Founded in 1989, MSI as a nationwide leader in the payment processing industry has an established BIN relationship with the First National Bank of Omaha.Details
ID verification provider Intellicheck Mobilisa has signed with a leading
provider of loyalty and marketing solutions
an agreement to pilot the “IDCheck FastForm.” The agreement allows for
the integration of Intellicheck Mobilisaâs
“IDCheck FastForm” technology into retail clientsâ points of sale systems.
This technology automates the credit card application process by using
the same scanner that reads the merchandise prices at the checkout
station. The “IDCheck FastForm” technology scans the bar code or magnetic
strip on the back of a driverâs license and uses the data to
automatically fill in the information on a digital form. The entire
scanning process takes about 1 second. Intellicheck Mobilisa maintains
the patent for the ability to process this data accurately for all 50
states and Canada.
Pinnacle Financial Strategies has rolled out its “Reg E Opt-In
Total Solution” for overdraft regulation. The “Opt-In Total Solution” is a phased program designed
to help community banks and credit unions modify their overdraft
programs to ensure full compliance with the regulatory changes.
The new Regulation E amendment will require all financial institutions
to make changes to their overdraft programs. As of July 1, 2010 the
amendment will prohibit financial institutions from charging consumers
fees for paying overdrafts on automated teller machine (ATM) and
one-time debit card transactions, unless a consumer consents in advance,
or âopts-inâ, to the overdraft service for those types of transactions.
Furthermore, the rule prohibits discriminating against individuals who
do not opt-in for one-time debit and ATM coverage when considering the
payment of checks, ACH items or recurring debits, if the financial
institutionâs program normally pays these items. Pinnacle provides financial products and services
to more than 1,000 community banks and credit unions.
Digital security provider Gemalto will provide Setefi
(Intesa Sanpaolo), with its “Optelio” solution for the first large-scale
rollout of “EMV PayPass” contactless payment cards in Italy.
The new Gemalto technology provides Intesa Sanpaolo customers with a
convenient and innovative means of payment, as they simply tap their
card on a reader for purchases of up to 25 euros. Eleven brands of
national or European relevance with a presence in Italy’s major cities,
spanning a wide range of outlets from fast food restaurants and
supermarkets to sports and home improvement stores, will provide
acceptance points. Hundreds of smaller merchants are also expected to
join in the program as it unfolds. The project, developed in collaboration with MasterCard, will be first
deployed in the Milan area and Intesa Sanpaolo plans to extend it
nationwide while upgrading the Point of Sale terminal base.
The Financial Services Information
Sharing and Analysis Center has elected and re-elected Board members.
The recently elected and re-elected Board members include Max Morris,
Vice President, Threat Intelligence Services, Wells Fargo (re-elected);
Anish Bhimani, Managing Director IT Risk Management, JPMorgan Chase;
Mark Clancy, Managing Director, CISO, Depository Trust and Clearing
Company and James Doyle, VP Â Corporate Investigations Division,
Prudential Financial. Launched in 1999, FS-ISAC was established by the financial services
sector in response to 1998’s Presidential Directive 63. That directive,
later updated by 2003’s Homeland Security Presidential Directive 7,
mandated that the public and private sectors share information about
physical and cyber security threats and vulnerabilities to help protect
the U.S. critical infrastructure.
Building on the strong success and momentum seen over the last year,
BOKU m-payments has raised $25 million in series C capital led by DAG
Ventures, with continued participation from Benchmark Capital, Index
Ventures and Khosla Ventures. Representing a strong vote of confidence
for the companyâs future, the investment rounds are contributing to the
mobile payment processing relationships with over 1,000 game and
application developers. BOKU, which was introduced in June 2009, and its
mobile payment service, Paymo, is enabled across 190 carriers worldwide
in 58 countries, and reaches a potential 1.8 billion customers.
Card Penalty Fees commonly draw the most attention and came in higher
than expected earlier at $22.9 Billion for 2009 in the Hammer model, up
from $19.0 Billion for 2008, up from $18.1 Billion in 2007, $17.1
Billion for 2006, $16.4 Billion for 2005, and $14.8 Billion for 2004.
Approximately 85% of this $22.9 Billion in total penalty fees in the
Hammer model is for late fees (the remaining 15% is for over limit fees,
NSF fees, currency conversion, etc.), according to RK Hammer. As in
prior years, this figure again does not include higher APRâs charged to
cardholders who go delinquent (thus incurring âpenalty pricingâ to be
imposed), as this greater interest rate would appear in an âInterest
Incomeâ category, not fee income. Typically 50% of all credit card loan
losses are attributable to delinquency in the Hammer model, rotating
through the consecutive monthly various billing cycles to charge off,
typically at 4-5 cycles, 120-150 days past due. Charge offs last year
were $89.2 Billion (9.8% of outstanding loans), up sharply from $55.9
Billion in 2008.
Spirit Airlines Ultra Low Cost Carrier (ULCC) serving more than 40
destinations in the United States, Latin America and the Caribbean will
be adding Acculynk “PaySecure” to its online checkout in 2010. Acculynk
“PaySecure” software-only service for PIN debit payments on the
Internet, providing online shoppers a convenient payment experience that
is both secure and familiar. “PaySecure” is integrated directly into the
airline checkout and appears as a payment option when the consumerâs
debit card qualifies to be used with the service. Transactions are
processed using existing payment connections, and merchants gain
immediate benefit from lower transaction fees, and reduced fraud and
charge-backs. PaySecure requires only a consumerâs existing debit card
and bank-issued PIN, and online shoppers pay right at the merchant
checkout, with no redirection to a third-party site.
Research and Markets has announced the addition of the “Card Protection Metrics: Consumer
Approaches to Card Protection Insurance in Spain” report to their offering.
“Card Protection Metrics” offers detailed and unique insights into the
behaviour of Spanish cardholders in the context of card protection
insurance. Based on a primary survey of over 1,000 consumers in Spain
carried out in July and August 2008, the research provides valuable data
describing the extent to which consumers with debit and/or credit
cards take out card protection insurance and clarifying the proportion
of uninsured cardholders who value the benefits of the insurance but
have simply not got round to acquiring cover. In addition to calculating
the percentage of Spanish cardholders possessing card protection
insurance, the investigation also analyzes the types of policy that they
hold, the range of benefits that they believe that they derive from their
insurance, which distribution channel and interface they use to take out
paid-for card protection insurance and whether they buy cover within a
week or a month of acquiring a given payment card or at a later stage.
Finally, the report measures the degree to which insured cardholders in
Spain are satisfied with their insurance, whether they find it expensive
and if they are likely to discontinue it the next.