Consumer Want Regulators to Rein in Issuers

As the Federal Reserve Board, the Office of Thrift Supervision and the National Credit Union Administration are gearing up to approve new credit card regulations this week for 2010, consumer groups are rallying for quicker action to rein in card issuers amidst a potentially disastrous economy for 2009. Yesterday, the Center for Responsible Lending released two new studies detailing the “Hall of Shame” of alleged deceptive and abusive business practices. The reports, entitled “Priceless or Just Expensive? The Use of Penalty Rates in the
Credit Card Industry” and “What’s Draining Your Wallet? The Real Cost of Credit Card Cash Advances,” concludes that credit card issuers
consistently choose complex pricing tactics that exploit borrowers’ lack of information. Among findings: only 3% of consumers understand the differences among introductory teaser rates and rates on purchases and on cash advances causes; 10% of credit card balances carry a penalty interest rate the cardholder doesn’t understand or know about; more than 50% of cardholders paying penalty rates do not know it; and, the spread between borrowers’ regular interest rates and their penalty rates, averaged 16.9 percentage points in 2008, more than double from seven years ago. Besides the interest rate and fee issuers, the reports also focused on the allocation of payments to outstanding balances and the triggering of penalty pricing.

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CKI MOBILE BANKING

Citibank Korea has launched “Virtual Machine mobile banking service”.
CKI customers can execute fund transfers and GIRO
payments as well raise queries and request more information related to
saving, credit card and loan accounts. They will also be able to check
the latest FX rates. Current CKI Internet banking customers can apply
for, and download the
program via the Citibank web site. CKI is offering VM free services
until the end of the year.
While the service will be offered to SKT and KTF mobile phone
subscribers immediately, it will be made available to LGT mobile phone
customers in the near future.

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Fifth Third Processing to Offer eBillme

Fifth Third Processing Solutions has partnered with eBillme to extend
payment options for consumers.
Fifth Third can refer the payment alternative to its merchant
processing customers and eBillme
will have access to extend its payment product offering to more online
retailers. eBillme transactions occur securely, bank to bank, with no
personal or
financial information required or transmitted over the Internet. Because
shoppers pay directly from their online bank account, they don’t release
any financial information online. eBillme’s Buyer Protection Program is
provided at no cost to shoppers and retailers, the buyer
protection features have the same or a better level of buyer protection
than premium credit cards. Protection features include a return
guarantee, price guarantee, in-transit protection, and fraud protection.

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Debt Collectors Shutting Down/Cutting Jobs

NCO Group yesterday laid off 175 technical service representatives at its Bridgeview Surrey Canadian call center. The B.C. Government and Service Employees’ Union says workers are entitled to and will receive 60 days paid notice. Meanwhile, Elite Recovery Services of Buffalo, citing cash flow issuers, abruptly shut down late last week putting 73 people out of work. Last month, First American Recovery Services, also of Buffalo, shut down and filed Chapter 11 bankruptcy protection after its lender closed a credit line. In November NCO Group reported that its third quarter net loss soared to $26.5 million, compared to a net loss of $4.6 million for 3Q/07. NCO says all three of its operating divisions: Accounts Receivable Management, Customer Relationship Management and Portfolio Management posted lower revenues for the quarter than anticipated. (CF Library 11/14/08)

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TALF – Credit Card Biz Helper or Destroyer?

New analysis suggests that the “Term Asset-Backed Securities Loan Facility” is likely to have only marginal success in its current form and may amount to a virtual freeze-up of the U.S. consumer credit markets, partly because of lack of funding hitherto available from ABS.
The TowerGroup report entitled “Can TALF Save U.S. Consumer Lending, or Have Forces Already Killed the Goose That Laid the Golden Egg?,” finds that the proposed rule changes by the Financial Accounting Standards Board would repatriate billions of dollars of credit card debt onto card issuers’ balance sheets, effectively changing the character of the U.S. credit card industry indefinitely. Also, the size of “TALF” as initially configured is dwarfed by the size of the market of outstanding asset-backed securities; “TALF” does not address lenders’ anxiety about the source of their funding and the flexibility of their portfolio management, especially regarding recent changes to rules and legislation; and the proposed changes by the Federal Reserve Board and legislation before both houses of Congress could inhibit pricing flexibility and reconfigure the risk profile of U.S. consumer lending.
However, TowerGroup notes that a positive provision of “TALF” is its focus on new loans to stimulate activity for small business lending and consumer loans, including auto loans, student loans, and credit cards.

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Inc.com Ranks NetSpend Among the Top 100

TX-based prepaid card provider NetSpend has been ranked 58th on Inc.Com’s
Top 100 List in the Financial Services category. The 5000 companies
that made the master list
reported aggregate revenue of $185 billion and median three-year growth
of 147 percent. Most important, the 2008 Inc. 5000 companies were
engines of job growth, having created more than 826,033 jobs since those
companies were founded. The 2008 Inc. 5000 list measures revenue growth
from 2004 through 2007.
To qualify, companies must be U.S.-based and privately held,
independent as of December 31,
2007, and have had at least $200,000 in revenue in 2004, and $2 million
in 2007. NetSpend has approximately 300 employees and experienced
368.4% growth from 2004 to 2007.

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SIX CARD & M-CARD

Card processor SIX Card Solutions will begin processing for the new “M-Card”
issued by the Migros Bank, starting October 2009. SIX Card will issue and acquire processing of the new
debit card, which means the IT-supported handling of card issuing and
the processing of card transactions. The new M-Card will be selectively
available as a chip card with or without the Maestro function.
The M-Card has previously been in use as a Migros Bank account card and
as a separate Maestro card. The Maestro function can now be directly
integrated into the new M-Card. The range of use of the new M-Card with
Maestro function thus expands worldwide to all ATMs and points of sale
marked with the Maestro/MasterCard logo.

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ICMA Personalization EXPO Slated for April

The International Card Manufacturers Association will hold its “Annual Card Manufacturing
and Personalization EXPO” March 31 through April 3, 2009 in San Juan, Puerto Rico. This year’s agenda features numerous
timely seminar topics ranging from advanced security, emerging markets,
personalization and production issues, industry statistics and trends,
to global/environmental issues affecting card manufacturing. The Annual EXPO also serves as the venue for presenting the
association’s annual Élan Awards for Card Manufacturing Excellence,
which are given out in multiple categories for outstanding card design
and innovation; and the Spiritus Award, which goes to one member company
that has implemented noteworthy, community-based programs designed for
the betterment of society. During the EXPO, ICMA will hold the third meeting of the Green Task Force, a
group of members and industry stakeholders that has been meeting since
November in order to determine a standard for environmentally
responsible practices within the industry and the ACE-M Accreditation
exams for registered member applicants will take place on April 3.

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XMAS SPENDING

A new survey shows that 35% of Brits will use a credit card, 14% will use a store credit card, 5% will use a personal loan with the rest using cash or debit cards to cover the cost of their Christmas spending.
For those using the “buy now, pay later” strategy, the leftover debt from Christmas spending is expected to average about GBP 449. The survey by Halifax reveals that consumers are keeping a firm hold of their purse strings this year with 21% changing their shopping habits to beat the credit crunch and 39% admitting to spending less this Christmas. Consumers are also finding other ways to help avoid the Christmas pinch; of those who admitted to changing their Christmas shopping habits, over half will be taking advantage of pre Christmas sales and a third will be cutting back on the number of presents they buy. Halifax also found that a shopper who pays for presents in cash this Christmas will spend on average GBP 317, but it seems people spending on credit cards are cutting back – on average they will spend GBP 234.

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Visa to Offer SCORE Workbook/Tools Online

Visa and small business consultant SCORE have teamed to offer “The
Financial Management Workbook” and “Ask SCORE” widget.
The free workbook offers small business owners an
easy-to-follow curriculum and information on key areas of concern for
small businesses and is available through the Visa Business Network on
Facebook, at SCORE.org and at the more than 370 SCORE chapters
nationwide. The workbook covers how to efficiently manage cash flow;
how to maximize income and the speed with which you get paid, how to
minimize expenses; knowing your funding options;
being prepared for your business’s growth and “what if” scenarios. “Ask
SCORE” enables
business owners to locate and connect with SCORE mentors in their area
who have relevant experience in their business or industry. Small
business owners can easily download the Ask SCORE widget to their
desktop by visiting www.AskScore.org or the Visa Business Network.
Entrepreneurs can ask SCORE mentors about topics ranging from personnel
issues to how to write a business plan and typically receive a response
within 48 hours. SCORE “Counselors to America’s Small Business” has helped
more than 8 million aspiring entrepreneurs and small business owners
through counseling and business workshops.

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