VISA Intros a Hispanic Education Prog

VISA USA has launched the “Hispanic Financial Education Campaign” which includes financial wellness columns, a Spanish-language magazine and a partnership with local chapters of the League of United Latin American Citizens. The U.S. Census Bureau recently announced the Hispanic population has reached 41.3 million and a recent study indicates the Hispanic consumer will represent 9% of the total US buying power by 2009. Visa cardholders in over 150 countries carry more than 1 billion cards, accepted at nearly 22 million locations, accounting for $3 trillion in annual transaction volume.

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Swedbank Selects ActivCard for Online Banking

ForeningsSparbanken has chosen ActivCard to deploy secure Internet access for approximately 600,000 more Internet banking customers, bringing the total deployment to over 2 million
online retail banking customers in the near future. This represents one
of the largest such retail banking deployments in the world. ActivCard
technology will therefore be used by more than 80% of Swedbank’s
online customers. Swedbank has 4.2 million household customers and 225,000 corporate customers in its home market.

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Fleet One Renews/Expands 3 Contracts

Nashville-based Fleet One has renewed contracts with Thorntons, Love’s Travel Stops & Country Stores, and MAPCO Express. Fleet One agreed to 3-year contract extensions with Louisville, Kentucky- based Thorntons Inc. and Oklahoma City based-Love’s Travel Stops & Country Stores and an 18-month extension with Tennessee-based MAPCO Express. Fleet One, an affiliate of SunTrust Banks, Inc., provides private label fuel card programs, electronic payment authorizations and billing.

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Phishing Attacks Hit 73MM Americans

An estimated 73 million U.S. adults who use the Internet were hit with phishing attacks over the past twelve months, a 28% increase over the prior year. Approximately 2.4 million online consumers reported losing money directly because of the phishing attacks, however, most of the money stolen was repaid by banks and credit cards. Gartner says its study for the prior year showed that 1.2 million consumers lost $929 million during 2004 due to phishing attacks. In the twelve months ending in May 2005, about 77% of online Americans shopped online while 73% of respondents regularly logged on to banking accounts and 63% paid bills online. More than 80% of U.S. online consumers said their concerns about online attacks have affected their trust in e-mail from companies or individuals they don’t know personally. Of these consumers, more than 85% delete suspect e-mail without opening it.

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Japan Cash Machine Gets a Suit from Mars

Japan Cash Machine Co. has drawn a lawsuit from U.S.-based MEI over patents that cover the MEI “Cashflow SC” bill acceptor and other MEI currency validation products. MEI is owned by Mars. JCM American Corp. was also named in the suit filed in U.S. District Court in New Jersey. U.S. patent laws allow the owner of a patent to stop the manufacture, importation, sale and/or use of products in the United States that are found to infringe, and the action against JCM seeks this type of specific relief. MEI developed the first electronic coin mechanism in the 1960s, followed by the first electronic non-contact bill acceptor, and more recently its vending management system. Today MEI has the largest worldwide installed base of unattended payment mechanisms. In 2004, MEI reached a milestone of selling more than 3.5 million bill acceptors, 4.5 million coin mechanisms and 1 million control boards worldwide.

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Interchange Antitrust Lawsuit is Filed

A small group of merchants are leading an antitrust class action lawsuit against the major card networks and their top issuers. The suit alleges collusive practices in setting credit card interchange fees at supra-competitive levels. The lawsuit was filed yesterday in the U.S. District Court of Connecticut. Defendants include VISA, MasterCard, Bank of America, Citibank, Bank One, Chase, Fleet, Capital One, MBNA and Wachovia. National law firm, Robins, Kaplan, Miller & Ciresi, is representing the merchant plaintiffs with CT-based Koskoff, Koskoff & Bieder acting as co-counsel. Craig Wildfang and David Balto are heading the litigation for RKMC. The law firm says that VISA and MasterCard have previously been found to have market power in the relevant markets, so the card networks and their members have the burden of proving that they have set the interchange fees at the correct competitive level. The lawsuit says that due to the networks’ market power, the USA has the highest credit card interchange fees among industrialized countries. A recent Morgan Stanley study determined that VISA and MasterCard interchange dollar volume grew to $17.4 billion last year, compared to $9.4 billion six years ago. The research revealed that the weighted average for VISA and MasterCard interchange had increased from 1.58% in 1998 to 1.75% in 2004 and will likely grow to 1.86% in 2010. (CF Library 4/6/05)

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CVS Loyalty Card Suspends Data Access

The CVS drugstore chain has shut-down Internet access to customers purchase data after a security hole was uncovered by a consumer group. The “CVS ExtraCare” loyalty card provided easy access to the database by requiring the card number, the customer’s zip code and the first three letters of the customer’s last name. The purchase information was then sent via email to the customer. The service was launched six-months ago. The data security flaw was exposed earlier this week by Consumers Against Supermarket Privacy Invasion and Numbering, or CASPIAN. CVS has issued 50 million cards in the program. CVS has 5,400 stores in 36 states and the District of Columbia. The Company says it plans to add an extra layer of security such as passwords before restarting the program.

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HSBC Acquires Bon-Ton Card Business

HSBC Retail Services has sealed a deal to acquire Bon-Ton’s private label credit card business. At the end of the first quarter, the
accounts receivable balances in the portfolio was about $300 million
compared to approximately $200 million five years ago. Under the
multi-year HSBC agreement, Bon-Ton will participate in the revenue
generated by future credit sales. Effective November 1st, Bon-Ton will cease to operate its corporate credit center and nearly all of the 84 corporate credit positions will be eliminated. The Bon-Ton
Stores operates 139 department stores and two furniture stores in 16
states from the Northeast to the Midwest under the Bon-Ton and
Elder-Beerman names. The deal is expected to close next month.

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Card Payment Rates Plummet in the UK

While charge-offs and delinquencies rose in the first quarter among UK credit card-backed securities, the monthly payment rate continued to deteriorate. The drop in Q1 MPR was driven in part by the reduced availability of free balance transfer offers. According to Fitch Rating’s “UK Credit Card Index,” the MPR on a three-month average basis was 16.5% in 1Q/05, compared with 16.7% in the previous quarter and compared to 17.3% one-year ago. Fitch says that looking back, the “MPR Index” has shown some peaks over 2004, driven by market growth, with competition for customers leading to easy and frequent availability of balance transfer offers. It appears as the product offerings settle down that the “MPR Index” is returning to the levels of early 2003. Meanwhile, a combination of staffing issues, system problems and changes in policy has contributed to the unprecedented rise in charge-off and delinquency rates across UK ABS in the first quarter. The charge-off index ended the quarter at 4.7%, up from 3.9% in December. Owing to the same issues that caused the increase in charge-offs, delinquencies also increased to 3.0% from 2.5% in the first quarter. Q1 yield increased on a three-month average basis to 18.7% from 18.5% in the last quarter. Fitch says the increase is most likely owing to a combination of higher revenue from penalty fees on delinquent accounts and portfolios maturing so that more accounts come out of their low interest teaser periods.

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Discover Spin-Off: Nothing Definitive

Morgan Stanley left the door open yesterday regarding its plans to spin-off Discover as a stand-alone public company. The Company indicated that the market environment has grown weaker over the past quarter. Yesterday, Morgan Stanley reported that Discover’s profits fell nearly 19% during the quarter ending May 31st. Nevertheless, the Company said its focus is on understanding how the spin-off will enhance overall shareholder value. MS also said it is working closely with the ratings agencies to make sure Discover will be well-positioned. MS expects a Discover spin-off to be capitalized at $4.5 to $4.7 billion. The Company says no definitive decision has been made regarding the spin-off. The upcoming departure of the MS CEO has led to speculation that the Discover deal, announced in April, may be put on hold. (CF Library 4/5/05)

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