Cap One and Hibernia Postpone Merger

Capital One and Hibernia have mutually agreed to reschedule their merger as a result of the devastation and disruption caused by Hurricane Katrina until September 7th. Capital One Financial Corporation and subsidiaries collectively had 48.9 million accounts and $83.0 billion in managed loans outstanding. Hibernia has $22.1 billion in assets and 321 locations in 34 Louisiana parishes and 36 Texas counties.

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MasterCard to Launch BusinessCard Sweepstakes

MasterCard plans to launch its new “Get Wired” sweepstakes in the
United Kingdom, Netherlands and Canada. The sweepstakes launched this
week in the USA and is for business cardholders. The
sweepstakes is one component of a larger global “Get Wired” campaign
that will run into 2006. To support the U.S. “Get Wired” campaign,
MasterCard plans to roll-out new broadcast, print and online “priceless”
advertising that highlights the difference technology can make for small
businesses. A new television commercial titled “Flex” launches this week
and will be featured during television broadcasts of this year’s World
Series. The sweepstakes provides all “MasterCard BusinessCard” and
“Debit MasterCard BusinessCard” cardholders with a chance to win one of
three $50,000 technology makeovers for their small business, including a
technology expert to help put it all together. Business cardholders will
automatically be entered into the sweepstakes with each card transaction
between September 1st and November 30th.

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PayPal Reprices Fees for Micropayments

PayPal announced new micropayments processing fees for payments less than $2. The new fees will enable merchants to process payments at a rate of 5% plus 5 cents per transaction. PayPal’s current standard, volume-based transaction fees, ranges from 1.9% to 2.9%, plus 30 cents per transaction. PayPal says that because of the reduced fixed fee, merchants can save 40% to 60% when processing low-cost payments, compared to the industry’s current payment processing rates of approximately 2% plus 20 to 30 cents per transaction. At the end of the second quarter, PayPal had 78.9 million accounts and handled 113.2 million payments during the quarter. (CF Library 7/22/05)

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Axalto Palmera Earns EMV Certification in China

Axalto’s “Palmera” product has achieved the first EMV certification issued in China. Based on the debit/ credit specification by People’s Bank of China, this certification is awarded by the China Banking Card Test Center. It is also fully compliant to the international EMV2000 standard. With this certification, Axalto “Palmera” has also become the world’s first product that supports VISA, MasterCard, JCB and the latest China EMV applications all on a single card.

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Sears Canada Sells Card Portfolio to Chase

Chase has inked an agreement to acquire Sears Canada’s C$2.5 billion credit card portfolio for $2.2 billion in cash proceeds net of securitized receivables and other related costs and taxes. Sears anticipates that an after-tax gain of approximately $650 million will be recorded when the transaction closes. The deal includes 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. It is the third largest credit card portfolio in Canada. When the transaction closes, Chase will manage operating centers in four Canadian locations with approximately 1,000 employees. Sears Canada announced in June it was looking to unload its Credit and Financial Services unit. Goldman, Sachs advised Sears Canada on the sale.

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Mandatory Arbitration Clauses Under Attack

The arbitration clauses imposed on credit cardholders are now under attack for possible collusion violations. A new federal lawsuit charges that credit card issuers shared notes on arbitration at least 20 times between 1999 and 2003. The lawsuit names Bank of America, Capital One, Chase, Discover, Citigroup, MBNA, Providian and HSBC (formerly Household). According to this morning’s Wall Street Journal, the banks named allegedly convened a group in 1999 called the “Arbitration Coalition” or “Arbitration Group.” The WSJ says the central allegation in the case is that the banks worked together to create or maintain mandatory arbitration clauses as a way to thwart class-action lawsuits brought by consumers. The plaintiffs, represented by Berger & Montague of Philadelphia and other firms, are seeking to have the mandatory arbitration provisions in the complaint declared void.

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First Data Hellas Deploys Ultimus BPM

First Data Hellas has deployed the Ultimus “BPM Suite” as a
platform to streamline business processes across multiple systems.
First Data Hellas processes more than 1.5 million debit cards and 2 million credit cards, drives more than 1,200 ATMs and manages more than 12 million POS transactions annually in Greece, the Balkans and Middle East. Hampered by a complex technology infrastructure and redundant systems that were difficult and expensive to maintain, First Data Hellas needed to overhaul its technology infrastructure in order to process an average of 3,000 customer credit card and loan applications per day.

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MasterCard IPO in the Works for 2006

MasterCard is planning to go public early next year by selling 49% in an IPO. The card association will use the IPO’s proceeds to redeem stock from its existing 1,400 financial institution shareholders and plans to retain $650 million for litigation and marketing expenses. Over the past twelve months MasterCard has produced $2.782 billion in revenue and $312.3 million in net income, according to CardData (www.carddata.com). The proposed new structure will include the appointment of a new board of directors comprised of eight independent directors, three bank directors and the CEO. It would also include the establishment of a charitable foundation. MasterCard’s current institutional shareholders are expected to retain a 41% equity interest in MasterCard through their ownership of non-voting Class B common stock. Existing shareholders will also receive Class M common stock that will have no economic rights but will provide them with certain rights, including the right to elect several directors from financial institutions around the world. MasterCard also intends to issue shares of voting Class A common stock to public investors through an initial public offering. Upon successful completion of the offering, these public investors will hold shares representing an expected 49% of the company’s equity and 83% of its voting rights. Additional shares of Class A common stock, representing an expected 10% of the company’s equity and the remainder of its voting rights, will be issued to a new MasterCard charitable foundation. VISA yesterday responded that it is well positioned to compete with MasterCard regardless of its ownership structure.

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3V VOUCHER

Permanent-TSB has launched a pre-paid credit card. The new “3V Voucher”
is a disposable 16-digit prepaid VISA debit number which is printed onto
a paper receipt from a retailer terminal. It can be used to make any
number of transactions up to the monetary value of the “3V Voucher”
purchased, and when the funds are all spent, it is discarded.
Cardholders can also check their balance and previous transactions
online, anytime. The “3V Voucher” is issued by permanent tsb in
association with VISA and 3V Transaction Services Ltd.

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