OCC’s Dugan Concurs on Disclosure Rules

Comptroller of the Currency John C. Dugan told Congress that current credit card disclosure rules should be changed to improve consumers’ ability to make well-informed decisions. According to the Controller, disclosures have not kept pace with the changes and complexities of credit card terms and practices. Many consumers do not understand sophisticated features like “universal default” and “double cycle billing” because current rules do not provide adequate disclosure of these practices. Changes to Regulation Z, which establishes rules for credit card disclosures, would set new standards that apply to all participants in the credit card industry, and uniform standards help to ensure equal protection for consumers across the credit card industry. The OCC does not have the legal authority to issue regulations under the primary consumer protection statutes that govern credit card lending, and it faces limits on what it can accomplish alone to reform disclosure practice. According to the Government Accountability Office, the credit card market has grown to provide unsecured, open-end credit to more than 691 million consumers as of 2005. The Office of the Comptroller of the Currency was created by Congress to charter national banks, to oversee a nationwide system of banking institutions, and to assure that national banks are safe and sound, competitive and profitable.

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MC Intros Worldwide Centers of Commerce

A new “Index,” developed by a panel of economists, has identified London as the top commerce hub in the world followed by New York, Tokyo, Chicago and Hong Kong. The MasterCard “Worldwide Centers of Commerce” program, which is designed to provide insights and knowledge on how leading cities influence the global economy, says that New York City, once considered the unchallenged financial capital of the world, cedes the “Financial Flow” category to London primarily because bond market regulations in New York affect the volume of listed sales. New York’s score is also impacted by the less stable US economy and the more volatile US dollar. Complementing the “Worldwide Centers of Commerce Index,” MasterCard also released the “Worldwide Centers of Commerce Insights” report titled, “The Dynamics of Global Cities and Global Commerce.” The report includes additional, in-depth expert commentary on the vital role cities play in connecting networks to enable global commerce and is available at mastercardworldwide.com. In the coming months, subsequent reports will be released as part of this initiative, including a growth index that measures the pace and scope of changes taking place within each city identified in the “Centers of Commerce Index,” and an additional index that will identify and track emerging Centers of Commerce in the developing world.

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VISA Takes payWave to New York Taxis

VISA USA has launched a new TV spot showing New Yorkers making small ticket purchases via “Visa payWave” and swipe transactions. The new commercial coincides with a partnership with Creative Mobile Technologies that will enhance the payment experience for New York taxi passengers. The Taxi & Limousine Commission has mandated that beginning October 1st all 13,000 medallion yellow taxicabs are to install an interactive electronic passenger map and information screen, and credit/debit card acceptance. To date, there are approximately 7.3 million “payWave” cards issued worldwide and more than 31,000 merchant locations in the USA accept “Visa payWave.” VISA says its research shows that increasingly consumers want to use a payment card for purchases under $25 for convenience (73%), efficiency (44%) and speed (39%).

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First Data to Issue Discover Payroll Cards

Discover has signed a deal with First Data to issue Discover Network payroll cards provided by FDC’s “Money Network Financial.” Money Network will issue Discover Network-branded payroll cards and handle card administration. The program offers instant-issuing capabilities, a 100% authorization requirement, and enables payroll cardholders to check account balances in the authorization messages on their sales receipts after every signature-based purchase. Last month, FL-based nFinanSe launched a suite of “Discover Network Payroll Cards” that carry no fees to the employer. (CF Library 5/7/07)

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New BofA/AmEx Targets Affluent Customers

Bank of America has launched a premium credit card for its most affluent customers with at least $100,000 on deposit. The new “Bank of America Accolades American Express” card will be targeted at BofA’s clients served through Premier Banking & Investments, The Private Bank of Bank of America and its extension, Family Wealth Advisors. The new card offers extensive concierge type benefits as well as access to premier events and attractions. BofA will rebate the $295 annual fee for its Premier Banking & Investments, Private Bank and Family Wealth Advisors clients. Clients with more than $200,000 in assets with BofA will receive access to enhanced benefits, such as comprehensive identity theft protection and recovery services, and complimentary access to more than 500 airport lounges worldwide. Clients in The Private Bank and Family Wealth Advisors will also have the ability to use rewards points to make charitable contributions matched by Bank of America.

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SPS Teams With Orgamation Technologies

VA-based Smart Payment Solutions has partnered with Orgamation Technologies, to integrate ACH payments into Orgamation’s software, delivering automated electronic payments to its clients. SPS offers ACH processing, Returned Check processing, credit card merchant accounts, and check conversion. Clients include corporations and non-profit organizations that benefit from increased profits; reduced bank fees; improved donation rates; convenience for customers, suppliers and employees; expanded customer base including non-credit card purchasers; heightened collection rates on non-sufficient funds checks; and greater cash and working capital management through ACH transaction use. Orgamation Technologies’ delivers management solutions to childcare centers, private schools and family daycare agencies. Smart Payment Solutions is a payment processing company that helps non-profit organizations and corporations enhance productivity, increase contributions and electronically process payments efficiently and securely.

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Chase Renews the SWA Co-Brand Deal

Southwest Airlines and Chase Card Services have renewed their credit card agreement for the Rapid Rewards VISA Signature product line. The new products mark the 20th anniversary of the airline’s frequent flyer program, “Rapid Rewards”, and the continuing, long-standing relationship between Southwest Airlines and Chase. The enhanced rewards program includes: Eight Rapid Reward bonus credits (up from four Rapid Rewards credits) after a Cardmember’s first use of the card, plus up to eight more (up from five credits) when making a balance transfer within the first 90 days of opening an account; Two Reward Dollars for every one dollar spent on Southwest Airlines flight purchases and now on Southwest Airlines Vacations package purchases; Double Reward Dollars on Rapid Rewards Preferred Hotel and Rental Car Partner purchases; 1,200 Reward Dollars equals 1 Rapid Rewards credit, and it only takes 16 credits to equal a free, fully transferrable roundtrip Award; Two Rapid Rewards credits every year on the Cardmember’s Anniversary; and exclusive offers for Cardmembers who go to www.chase.com/southwest and provide their e-mail address. Southwest Airlines currently serves 63 cities in 32 states. JPMorgan Chase & Co. is a global financial services firm with assets of $1.4 trillion and operations in more than 50 countries.

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Convenience Drives Mobile Banking Roll-Outs

A new report has found that over 90% of the top 100 U.S. deposit institutions surveyed responded that the ability to provide greater convenience to their customers is an important or very important factor in the decision to roll-out a mobile banking service. Nearly half of these banks view the service as a defensive response and are considering adding mobile banking to avoid being left behind the competition. The report from Boston-based Aite Group also noted that within the next 24 months, basic fund transfer capabilities will be increasingly common as barriers such as security and standardization are overcome.

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Credit Risk Advisor is Launched

Experian has teamed with eCredit to launch “Credit Risk Advisor”, an end-to-end new account and portfolio management credit decisioning tool. Credit Risk Advisor enables users to develop and easily implement a credit policy that identifies areas of risk and opportunity across their entire portfolio. The new service also provides clients with flexible scorecards that meet the evolving demands of trade credit companies, including manufacturers, wholesalers and transportation businesses and automates the new account decisioning process by allowing business credit applications to be entered and instantly evaluated in a paperless online environment. All account information — including Experian credit scores, payment history, notes and approved credit limits — can be electronically routed within the credit department or between credit and sales, enabling clients to save time, reduce out-of-policy exceptions and improve cash-management productivity. The new service also will evaluate account portfolios using automated customer-defined rules and will aid in the immediate identification of unwarranted credit exposures before significant problems arise. Experian supports clients in more than 60 countries with annual sales of $3.5 billion.

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VantageScore Gains More Traction

Fingerhut has decided to leverage “VantageScore” for its portfolio reviews and I4 Commerce have recently decided to utilize “VantageScore” within its underwriting process. VantageScore is recognized as an alternative risk management scoring solution jointly developed by Equifax, Experian and TransUnion. All three credit reporting companies use the same VantageScore algorithm to calculate the credit score. VantageScore leverages the collective experience of the industry’s leading experts on credit data, scoring and analytics. In addition to Fingerhut and I4 Commerce, several other Equifax customers have begun using VantageScore within their underwriting processes for mortgage, credit card and pre-screen decisioning.

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VISA’s Debit Card Exit Fee Struck Down

A VISA By-Law that penalized larger debit card issuers for moving to MasterCard, after the settlement of the Wal-Mart litigation in 2003, has been ruled as unlawful and must be repealed. Federal Judge Barbara Jones made the ruling last week regarding to VISA’s By-Law 3.14 which subjected VISA issuers to “Settlement Service Fee” if they moved to MasterCard. Judge Jones also issued an order allowing all of VISA’s top 100 debit issuers, with VISA debit agreements that were signed while the “SSF” was in place, to terminate such agreements in the event that they enter into a new agreement with MasterCard to issue debit cards on MasterCard’s network. MasterCard sued VISA over the “SSF” in September 2003 after VISA declined to act on a “cease and desist” letter sent by MasterCard. The VISA by-law required VISA’s top off-line debit card members, who switch to MasterCard’s off-line debit card, to pay a $20 million fine for each percentage point of lost VISA off-line debit volume. (CF Library 9/19/03; 12/9/03)

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May U.S. Bankruptcy Filings Top 83,000

Bankruptcy filings have continued to surge this year running more than 60% over the year-ago levels. Momentum exploded in May with approximately 83,000 filings compared to 62,500 in April and 74,000 in March. If the current pace holds, it is likely the total filings for 2007 could approach one million. Also driving the momentum is the collapse of the sub-prime mortgage market. According the Administrative Office of the U.S. Courts the all-time quarterly record was set in the fourth quarter of 2005 when 667,431 bankruptcy filings were made. New bankruptcy laws took effect in late 2005.

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