Citi North American Cards Post an $873MM Loss

Citigroup reported a stunning $873 million third quarter loss for its North American Cards unit, compared to $178 million in the prior quarter, and compared to an $808 million profit in the year ago quarter, due to soaring losses. Third quarter revenues for North American cards dropped 60% year-on-year from $3.5 billion to $1.4 billion. The managed net charge-off ratio increased 262 basis points to 7.13% for North American cards from 3Q/07 and jumped 60 basis points from the prior quarter. The 90-day delinquency ratio for North American cards increased 9 basis points from the prior quarter to 2.11%, and as compared to 1.60% for 3Q/07. Citi also reported 145.3 million open accounts at the end of the third quarter in North America, compared to 149.1 million one-year ago. Purchase volume for North American cards dropped 3% to $80.3 billion, compared to $83.1 billion for 3Q/07. North American managed loans rose 3% year-on-year to $151.1 billion and flat compared to the prior quarter. Citi also reported that it also took card losses in the EMEA region and Latin America. For complete details on Citigroup’s 3Q/08 performance, visit CardData ([www.carddata.com](http://www.carddata.com)).

CITIGROUP
North American Credit Card Net Income
3Q/07: $808 million
4Q/07: $322 million
1Q/08: $537 million
2Q/08: $178 million
3Q/08: (-$873 million)
Source: CardData (www.carddata.com)

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Fiserv Processing Upgrades the Back-Office

Fiserv has partnered with CAPITAL Card Services to offer Fiserv
Credit Processing Services’ clients with back-office
contact center services. The combination of CAPITAL’s new state of the
art contact center integrated with Fiserv’s credit processing system
will enable personalized customer service, and add a full
range of back office enhancements, including 24 x7 bilingual
multi-channel support, fraud mitigation, collections and customized
marketing services. CAPITAL Card Services is a servicer of MasterCard
and Visa accounts for financial and non-financial institutions
nationwide. CAPITAL provides turnkey account acquisition services,
underwriting strategies, marketing, customer service, collections, and
portfolio management services.

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ADVENT & EXPERIAN

Experian has reached an agreement to sell its
transaction processing activities, including card
processing and business process outsourcing activities, to Advent
International and Doc@Post, respectively.
The agreed gross cash consideration is EUR203m, on a debt and cash free
basis. After taxes and other transaction costs net cash inflow is
estimated to be approximately EUR150m. Proceeds from the sale will be used
to repay bank borrowings. For the year ended 31 March 2008, revenue from
Experian’s transaction processing activities in France was EUR240m
(US$341m) and EBIT was EUR26m (US$37m). The transaction processing
activities in France will be treated as a
discontinued operation in the statutory financial statements for the
year ended 31 March 2009. Experian will continue to have a strong
presence in France, through its
Decision Analytics and Marketing Services activities, which form part of
its growing core activities.

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Fiserv Sells CareGain to Canopy Financial

Fiserv has sold health care administrator CareGain to Canopy Financial.
Under the terms of the acquisition, CareGain’s clients will now be
served by Canopy. The move expands Canopy’s flagship product
“HealthDirect”, electronic payment, administration and account
management, and investment
technology platform for Health Savings Accounts, Flexible
Spending Accounts, and Health Reimbursement Arrangements.
CareGain’s “Asset Management Platform” will be integrated with
Canopy’s “HealthDirect”, and the combined product is expected to be
available during the fourth quarter of 2008.
The combined entity, which powers the CDH programs of
many of the top 25 health plans and financial institutions, today
administers over one million CDH related spending accounts nationally.
Fiserv retains its healthcare banking solutions for its financial
institution clients. With this acquisition, Canopy consolidates the
healthcare banking technology market, and
is now the market leader in delivering innovative, scalable, account
management and electronic payment solutions to leading health plans and
financial institutions.

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AUG DEBT

Credit card debt flattened again in August, rising a mere A$138 million to A$44.6 billion, but still setting a new record. However, credit card volume sank in August dropping to A$17.8 billion, 1.7% lower August 2007 and down 6.3% sequentially. Year-on-year credit card debt growth has slowed to 8.5%, compared to 10% in June. Credit card volume has been slowing over the past year due to merchant surcharges imposed on consumer card transactions. However, the dip in volume is also a reflection of the global economic depression currently underway. Three months ago credit card volume was up 16% year-on-year. Credit card limits reached a new high at A$121.3 billion, marking the 24th consecutive month of A$100+ billion. According to the Reserve Bank of Australia there are currently 14.2 million credit card and charge card accounts in Australia, compared to 13.7 million one-year ago.

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Voiceprints May Stop Career Card Fraudsters

A Silicon Valley-based firm has developed a new credit risk management
solution that identifies fraudsters by their voice during credit card
authorization phone calls. Victrio says its patented technology works by
comparing the caller’s voice against a database of known criminals. The
Victrio voiceprint call screening process is completely transparent to
customers. The Company notes this is the first technology that can
actually target the career fraudster. The company plans to pool
information across its client base to build the world’s largest fraud
voiceprint database. Victrio is targeting big-ticket online merchants as
well as banks and other credit card issuers.
Founder and CEO Tony Rajakumar is a technologist specializing in voice
recognition. Mark Goines, former chief marketing officer of PassMark
Security, is a board advisor to Victrio.

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Aruba Releases a PCI DSS V1.2 White Paper

Aruba Networks has released “Security Is In The Air” which details how
merchants can meet PCI-DSS v1.2 requirements. The
white paper describes compliance solutions for both wired and wireless
networks. The v1.2 standard defines security guidelines for merchants and
service providers that store, process and transmit cardholder data.
Firewalls, encryption, authentication, and wireless intrusion detection
are mandated for use with all wireless LANs, and some safeguards are
required even if the wireless LAN does not transmit cardholder data.
Aruba offers integrated security and wireless/wired access solutions
that meet or exceed the wireless LAN-specific security requirements in
PCI DSS v1.2. Merchants using an Aruba solution can cost-effectively
implement the security controls required for PCI compliance without
compromising the performance of business applications or upgrading
legacy networks.

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Holiday Shoppers Prefer Bytes Over Bricks

A holiday survey has found that for the first time the web has
surpassed the store as the preferred way for multi-channel shoppers to
purchase holiday gifts. The poll, sponsored by e-commerce specialist
ATG, found that 49% intend to do their holiday gift buying online while
44% plan to do so in-store. ATG predicts that 42% of consumers will
purchase gift cards this holiday season, compared to 30% last year. Of
those buying gift cards it will account for 11% to 50% of their online
holiday spending. More than half of consumers plan to buy fewer holiday
gifts this year. ATG noted that the #1 reason for shopping online was to
save time while the #1 customer reason for not buying or buying more
online is the high cost of shipping.

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ThankYou Net to Offer Prepaid Visa Cards

Citi’s ThankYou Network has partnered with Citi Prepaid
Services to introduce a new prepaid card rewards option for members of
“ThankYou Network”. The prepaid cards are available in $25, $50 and $100
denominations that can be used everywhere Visa debit cards are accepted
and feature Visa’s “Zero Liability” protection against fraudulent
charges. ThankYou Network has grown to 13 million members, who can now earn
points by making purchases with their “Smith Barney Financial Management”
account cards and by booking qualified travel on Expedia. They can also
earn even more points by shopping through ThankYou Network’s Online
Shopping Mall, which features more than 300 brand-name online and
in-store retailers.

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Payment Related Patents Go to Auction

Ocean Tomo Auctions is offering several strategic and essential patents
at the upcoming Live Intellectual Property Auction at the
Chicago Cultural Center on October 30th. Several innovative offerings
related to e-commerce systems and security
are included in the Online & Mobile Commerce category. Among them, Lot
36 allows for a more convenient and less confusing online shopping
experience by improving the interface of each step in the shopping and
check-out processes; Lot 38 relates to a system allowing a user to
complete a number of transaction types (i.e., online shopping,
securities trading, etc.), via a personal cell phone, with convenience
and security; and Lot 38a is directed to the field of social e-commerce,
allowing shoppers to form groups determined by a commonly desired
product, potentially accumulating demand and increasing buying power.
Patents in the Transactions & Financial Services category may be useful
to credit card companies; Lot 51a relates to a method for correcting
credit report errors in conjunction with processing a loan application.
Ocean Tomo Auctions is the auctions arm of
Ocean Tomo, LLC, an Intellectual Capital Merchant Banc firm.

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AEIS Discounts its Prepaid Corp Gift Cards

American Express Incentive Services’ has introduced its online store
“RewardCardStore.com”, offering a portfolio of prepaid gift cards
specifically designed to be ideal employee recognition gifts, drive
sales, and foster
strong corporate relationships. The product portfolio includes a mixture
of universal prepaid cards and card products utilizing “DirectSpend”,
patented prepaid card acceptance process that strategically directs
cardholder spend to a specific merchant or group of merchants.
The one-stop business gifting and incentive solutions available at
RewardCardStore.com were developed to appeal to the special needs of
small business customers. In
addition, the Select Shopping Card is ideal for those seeking discounted
gift cards for the holidays. RewardCardStore.com is offering the
“Select Shopping Card” at 5% off the card value now through the end of
the year. AEIS is a joint venture between American Express Travel
Related Services Company, Inc. and Maritz Inc. and provides
business-to-business reward solutions.

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