Once among the top credit card issuers in the country, Chevy Chase Bank recently agreed to pay more than $16 million to former cardholders in a class action lawsuit filed in 1999. The bank, formerly based in Maryland, was renowned for charging cardholders double digit interest rates well above the Maryland usury limit of 24% per annum, in most cases up to 28%. It was among the first card issuers in the U.S. to introduce punitive interest rates on high risk cardholders. The bank subsequently moved its card operation to Virginia to avoid the Maryland usury law. The issuer also notified cardholders in early 1996 it was switching to an arbitration requirement. The Maryland court hearing the case approved the settlement this week. First USA/Banc One (now Chase) purchased the $4.9 billion credit card operation of Chevy Chase Bank in September 1998. (CF Library 9/3/98; 3/9/01)Details
San Francisco-based Zopa, an online exchange service for P2P lending and borrowing, has named Phillip Riese, the former president of American Express Consumer Cards Services Group, as chairman of its board of directors. Riese brings more than 20 years of financial service expertise to his role as chairman. He is the former president of American Express Consumer Cards Services Group, where he spent 18 years of his career developing, marketing and servicing charge and credit card products. During that time, Mr. Riese and his team were credited for the successful turnaround of the flagship business of American Express. Zopa (www.zopa.com), a Delaware company, is the world’s first online, person-to-person lending and borrowing exchange.Details
Smart card specialist Gemplus International reports a 5% jump in net sales for the second quarter driven by robust revenue growth in the Financial Services and ID & Security units. Second quarter revenues climbed to 247.3 million euros, compared to 230.3 million euros in the prior quarter and 236.2 million euros for 2Q/05. Gemplus shipped 20.8 million units of payment microprocessor cards during the quarter, up 24% year-on-year. Payment microprocessor card revenue rose 2% year-on-year.
The Company noted that it been chosen by Commonwealth Bank of Australia for Australia’s first MasterCard “PayPass” pilot. The six-month trial will be rolled out in New South Wales, with the first phase involving 33,000 cardholders who will be able to use their MasterCard “PayPass” cards at more than 150 participating merchants. Gemplus is currently merging with Axalto to create Gemalto. For complete details on Gemplus’ second quarter performance visit CardData (www.carddata.com).
NC-based Wachovia is launching new VISA card products that enable customers to combine debit and credit card points in its new “Possibilities Rewards” program. The issuer is re-entering the market after a five-year hiatus. The new credit cards also provide late fee and over-limit fee waivers. Wachovia’s new credit card product suite consists of three different products including “Wachovia Classic,” “Wachovia Platinum” and “Wachovia Signature.” The issue also noted that will not engage in repricing the interest rate until a customer has two consecutive payments past due three times or three consecutive payments past due once in a 12-month-period. Wachovia announced in November that it had terminated its existing joint marketing agreement with MBNA and re-entered the credit card business.Details
Giesecke & Devrient has selected MD-based SafeNet’s “Hardware Security Modules” for its cryptography needs including smart card production, personalization and key management. SafeNet HSM is a PCI adapter-based HSM that provides high-performance secure cryptographic processing in server systems and supports applications requiring high-performance symmetric and asymmetric cryptographic operations. By integrating the HSM’s smart card cryptographic key transfer into its security solutions, G&D can ensure the ultimate level of secrecy and integrity of keys and sensitive data for its customers. SafeNet is a global leader in information security. Giesecke & Devrient (G&D), based in Munich, Germany, is an international technology group operating subsidiaries and joint ventures throughout the world.Details
Business card specialist Advanta posted a 25% rise in managed outstandings during the second quarter to nearly $4.4 billion. Advanta’s Business Card unit earned net income of $23.0 million as compared to $13.6 million for second quarter 2005. During the second quarter, Advanta opened 86,398 business card accounts and ended the quarter with 978,517 gross accounts. About 70% of the accounts were active. Transaction volume increased 24% to $3.0 billion during the second quarter. Charge-offs dropped from 3.62% in the first quarter to 3.24% for the second quarter. Over 30 day delinquencies on managed receivables declined 38 basis points to 2.66% and over 90 day delinquencies on managed receivables increased two basis points to 1.31%, compared to the first quarter of 2006. Advanta says it anticipates growth in managed receivables in the range of 20% to 30%, with transaction volume increasing 20% to 25%. In addition, the Company plans on investing more in acquisition and marketing activities which should result in new account growth in 2006 to be 45% to 50% higher than full year 2005 new account growth. For complete details on Advanta’s second quarter performance, visit CardData ([www.carddata.com]).
ADVANTA’S CARD PORTFOLIO SNAPSHOT
Period Card Loans
2Q/05: $3.51 billion
3Q/05: $3.60 billion
4Q/05: $3.76 billion
1Q/06: $3.89 billion
2Q/06: $4.39 billion
Source: CardData (www.carddata.com)
This week Bank of America has made more than 350 affinity credit cards-endorsed by sports, colleges and universities, and cause related organizations, available in all of its 5,700 retail domestic banking centers. The initiative follows the the acquisition of MBNA. Affinity cards were successfully test-marketed in approximately 800 banking centers before the nationwide rollout this month. More than 170 collegiate affinity card programs are currently offered in BofA banking centers. Bank of America Card Services has more than $190 billion in managed balances.Details
TX-based Cardinal Software has hired Suzette Junier, a 25-year veteran of community banking, as VP/Compliance. Suzette Junier comes to Cardinal Software with an extensive background of over 25 years in community banking. Her previous roles include Senior Vice President of North Bay and The Vintage Bank, Vice President with SierraWest Bank, Vice President of Information Services and Operations Administrator for Continental Pacific Bank, and various management positions with Fremont Bank. Cardinal Software has served the banking industry with a full suite of integrated solutions for over 15 years.Details
CA-based International Card Establishment has obtained a $1 million line of credit from a private party and has decided to grow its credit card processing business organically through a network of independent agents. In addition to its recent retirement of approximately $1,700,000 in debt (associated with the sale of its GlobalTech leasing unit), the Company was successful in retiring an additional $500,000 in debt and accrued interest from the proceeds of the GlobalTech sale. The restructuring efforts, which have culminated with the acquisition of the $1,000,000 credit facility, are designed for I.C.E. to rapidly, but organically attain positive EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) and in the near future, profitability. I.C.E. is a rapidly growing provider of diversified products and services to the electronic transaction processing industry.Details
Co-Op Financial Services has hired Caroline Willard, formerly with American First CU, as VP/Corporate Development. Willard, a 16-year marketing veteran with more than five years in the credit union industry, will be tasked with identifying new opportunities for Co-Op in the payments space. Before joining Co-Op, Willard was vice president of marketing and strategic planning for American First Credit Union in Orange County, CA.Details
Fiserv reported revenues for the second quarter of more than $1 billion, a 10% increase over the prior year. The “Financial Segment,” the company’s largest operating segment, produced revenues of $768 million for the quarter with operating income of $159 million. Fiserv Electronic Funds Transfer posted strong sales activity for the first half, signing 111 new clients of which nearly 80% were sales within the Fiserv client base. Also during the second quarter, Fiserv named Thomas Hirsch as EVP/CFO effective July 1st replacing the retiring Kenneth Jensen. The Armed Forces Financial Network signed a contract extension with Fiserv EFT for network switching services through December 2009. Additionally, the Company chose PassMark Security as a partner in providing multifactor authentication technology to its banking and credit union clients. For complete details on Fiserv’s current and past performance, visit CardData ([www.carddata.com]) (CF Library 4/11/06/ 4/26/06; 6/21/06)
MN-based Ceridian reported that Comdata’s revenue was up 13% in the second quarter to $115.8 million. Higher fuel prices accounted for about 3% of the increase. Comdata’s “BusinessLink,” private label processing and merchant processing accounted for about 3 points of Comdata’s year over year growth. Stored Value Systems grew in double digits, including a tripling of international SVS revenue during the quarter which added a full point to Comdata’s overall growth rate. Ceridian says Comdata revenue for 2006 is expected to be between $455 million and $465 million. During the quarter, Comdata and TransMontaigne inked a four-year contract to provide a fleet card to the state of Texas’ 30,000 vehicles. The Company was also retained by the state of Florida as its fleet card provider. Comdata will issue fuel cards for the 25,000 FL state-owned vehicles and will provide line-item detail and authorization prompting data on the usage under a five-year contract. Additionally, Stored Value Systems acquired Salt Lake City-based SASH Management d/b/a Gift Card Solutions. For complete details on Ceridian’s current and past performance, visit CardData ([www.carddata.com]) (CF Library 5/8/06: 5/17/06/ 5/18/06)