Corp Card Usage Poised for Robust Growth

Half of corporate cash management professionals plan to increase their use of corporate payment cards this year, compared to 40% one-year ago. According to VISA USA’s annual cash management survey, 56% plan to reduce use of checks, compared to 51% last year. VISA also found that satisfaction with card-based payments has increased to 77% from 70% last year, and preference for ACH payments appears to be declining. Respondents reporting use of ACH for commercial payments has significantly dropped 20 percentage points to 35% in 2005. The “VISA Cash Management Survey” was conducted by Survey.com over 10 days in August and September and included responses of 410 financial executives and cash managers from across more than 20 industries.

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MLA and AHA and ARA Endorse Heartland

The Massachusetts Lodging Association has selected Heartland Payment Systems as their preferred provider to process members’ credit/debit cards, and the Alabama Hospitality Association and Alabama Restaurant Association have selected HPS as their preferred provider to process their credit/debit cards. The Heartland partnerships offers members local, statewide representation from an established company that focuses on credit/debit card and payroll processing services, including special association pricing to help streamline their operations. Additionally, HPS offers gift card programs to help merchants increase sales and generate repeat traffic and offers a simple pricing plan to association members called Association Simplified Pricing (ASP). Heartland Payment Systems Inc. provides credit/debit card processing, payroll solutions, gift and loyalty card programs, paper check authorization, and sells and rents point-of-sale devices and supplies to more than 100,000 small to medium-sized merchants throughout the United States.

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Kountz Heads to the Evans/Schmalensee Group

Massachusetts-based Market Platform Dynamics has hired Ed Kountz, former senior member of TowerGroup’s Bank Cards Group, as a Principal. Kountz’s has demonstrated expertise in the areas of credit and debit products, bank card processing and technology assessment, and new electronic payment technologies and instruments, including contactless radio frequency (RF) technologies, the Europay MasterCard Visa (EMV) standard, chip-based products, and prepaid payments and is a recognized authority on the industry’s technologies, architectures, and business models. Market Platform Dynamics (MPD) is a management consulting firm with payment industry experience. Core competencies include entry and growth strategies, demand studies, customer segmentation/analysis, and pricing and product design.

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BofA Rounds Up Debit Tx for Savings

Bank of American has rolled-out a unique program that rounds up debit card transactions and funnels the difference to a savings account. The new Bank of America “Keep the Change” option will automatically round up debit card purchases to the nearest whole dollar and transfer the money from the customer’s checking account into their savings account at the end of the day. In addition, BofA will match 100% of the “Keep the Change” transfers for the first three months. After that the bank will contribute five percent a year. The maximum match is $250 annually. The bank pays the rewards annually.

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IRN Offers Free Hypercom T7Plus Terminals

New York-based IRN Payment Systems has become the first organization to adopt a Hypercom product for a free terminal program and named Hypercom as its preferred terminal vendor. Hypercom’s T7Plus is a compact countertop POS terminal that accepts all magnetic stripe cards, authorizes online transactions and provides “One-Touch” shortcut keys. The T7Plus units will be configured to support credit, debit, EBT, gift card and loyalty card transactions as well as IRN’s proprietary Paid On Signing 9-second real-time check debit processing solution. IRN expects to purchase the terminals over the next 12 months for free placement in merchant locations by its ISO partners. IRN Payment Systems provides electronic payment processing solutions to businesses. Hypercom provides card payment terminals, network access devices, server and transaction networking solutions.

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Groupe Caisse d’Epargne to Offer GemLucence Cards

Gemplus International announced that it has delivered limited
edition “GemLucence” cards to the French bank Groupe Caisse d’Epargne.
The volume roll-out of the translucent payments cards, which began in
September, is a first for the French market as well as for Gemplus.
The “GemLucence” card has a mandarin tinted transparent card body and is
been specifically designed to appeal to the youth market. It has a
limited production of 100,000 units. Gemplus International is a
global provider to the smart card industry in both revenue and total
shipments, selling over 5 billion smart cards. Gemplus’ revenue in 2004
was 865 million Euros.

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EFMARK Launches ATM Image Guard Service

EFMARK Premium Armored has launched its “ATM Image Guard” service, which adds exterior maintenance and refurbishment to its ATM capabilities. EFMARK’s ATM Image Guard is made possible through a partnership with ATA Services of Salt Lake City,that specializes in the cleaning, branding and exterior upkeep of ATMs and their surrounding environments. The ATM Image Guard service helps financial institutions and other ATM owners maintain a clean, attractive and inviting setting for their customers to conduct ATM transactions. EFMARK Premium Armored is the nation’s largest “ATM only” service company.

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Most Consumers Carry 3+ Credit Cards

The total number of U.S. payment cards-in-force rose 9% at mid-year topping 926 million, setting the pace to pass the one billion milestone in mid 2006. A recently concluded CardWeb.com poll revealed that 52% of Americans carry three or more credit cards. As of June 30th, there were 682.2 million credit cards and 243.8 million off-line debit cards. Over the past five years, credit cards have grown 24% while signature debit cards have expanded by 63%, according to CardData ([www.carddata.com][1]). The recent CardWeb.com poll of 10,143 consumers showed 25% carry two credit cards, 20% carry three credit cards and and 13% carry four credit cards. Seven percent said they carry no credit cards while 3% said they had at least 11 credit cards in their wallet.

Q2 Payment Cards-in-Force
(VISA, MasterCard, Discover, American Express)
[millions]
Credit Debit Total
Q2/01 551.3 149.9 701.2
Q2/02 597.2 166.4 763.6
Q2/03 620.8 186.8 807.6
Q2/04 641.2 207.6 848.8
Q2/05 682.2 243.8 926.2
Source: CardData (www.carddata.com)

[1]: http://www.carddata.com

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AmEx Offers a Cash to Savings Acct Card

American Express has launched a new credit card that generates cash rewards automatically swept into a savings account. The new “American Express One” card also features “Interest Protection” wherein cardholders can separate purchases to pay off and those to pay over time. The card is linked to a high-yield savings account with American Express Bank, and currently pays 3.15% per annum. The “Savings Accelerator” feature also permits cardholders to contribute extra funds to their account. The annual fee for “One from American Express” is $35 which is waived for the first year. The APR is prime +5.99%. All new cardholders also receive a $25 bonus contribution to their savings account, upon first purchase. The new card is an expansion of AmEx’s success in credit card cash rewards. After receiving a strong response to its “Cash Rebate Card” in 2002, AmEx extended the program to “Blue” and its business cards in 2003. (CF Library 4/3/03; 5/4/05)

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HBC CARD SALE

Toronto-based Hudson’s Bay Company has decided to unload its C$1.25 billion credit card business to cash-in on the current high portfolio valuations. After peaking in 2003, HBC’s credit card outstandings have been steadily declining due to lower store sales and higher customer payments. The portfolio produced an operating profit of C$162 million last year. Hbc expect its portfolio to be worth between C$500 million and C$600 million. In August, J.P. Morgan Chase inked an agreement to acquire Sears Canada’s C$2.5 billion credit card portfolio for $2.2 billion in cash. Sears anticipates an after-tax gain of approximately C$650 million. The deal included both its private-label Sears credit card accounts (C$2.3 billion) and its co-branded “Sears MasterCard” (C$200 million). Totally, the Sears Canada portfolio has about 10 million gross accounts and four million active accounts. At July 31, 2005, there were 3.2 million gross accounts and 2.9 million active Hbc customer accounts (1.6 million Bay cardholders and 1.3 million Zellers cardholders). Hbc has retained Goldman Sachs and BMO Nesbitt Burns as financial advisors for the sale. (CFI Library 9/1/05; 9/16/05)

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Private Label Issuers’ Share to Hit 92%

A new report says there has been a dramatic shift in the ownership of U.S. store credit card receivables as the share of private label credit card issuers has grown from 45% in 1999 to 85% last year. Based on portfolio transactions this year, private label credit card issuers will increase their market share to more than 92% by the end of 2006. The research by Mercator Advisory Group calculated that GECF’s share was 31% at the end of last year while Citi Commerce Solutions had a 31% share. HSBC Retail Services had an 18% share as Alliance Data Systems held a 4% share at year-end 2004. The Group says private label credit issuers are still hungry for more acquisitions but will soon face the organic growth challenge. Mercator says co-branding, such as the “Starbucks Duetto Card” or the “Wal-Mart Discover,” could be the answer.

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Pipeline Data Raises Cash for Acquisitions

Massachusetts-based Pipeline Data has entered into a $2 million financing arrangement with Centrecourt Asset Management to fund new merchant portfolio acquisitions. Under the arrangement, Pipeline will issue up to $2 million of its convertible term notes at a conversion price of $1.10 to Centrecourt and Centrecourt will also be issued five-year warrants to purchase up to 700,000 shares of Pipeline’s common stock. Pipeline Data provides integrated transaction processing services for all major credit cards and serves over 15,000 accounts.

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