The boards of directors of Capital One Financial Corporation and Hibernia Corporation have each approved a merger involving the two companies. In the merger, Hibernia will merge into Capital One and Hibernia shareholders will be entitled to elect to receive their merger consideration in the form of Capital One common stock, cash or a combination of both.Details
There is mounting scuttlebutt that search engine king Google is gearing up to launch an electronic-payment service this year. The new “Google Wallet” may function similar to eBay’s PayPal e-payment service which enables buyers and sellers to link their credit cards or checking accounts to the service. In April, Google filed papers in California to form Google Payments Corp. The New York Times reports that the chief executive of a major online merchant has been approached by Google to take part in the proposed service. The Wall Street Journal says the move would highlight the growing rivalry between the two Internet companies, even while eBay itself is a big buyer of Google’s online ads. According to CardData, PayPal handled $6.23 billion in gross payment volume during the first quarter, generating $227.1 million in transaction fees. As of March 31st, PayPal had 71.6 million accounts.Details
After aggressive competition, American Express has landed the JetBlue cobrand deal. This is JetBlue’s first credit card program. AmEx says its “Membership Rewards” partnership with JetBlue, launched in December, was one of keys to the expanded relationship. The partnership between JetBlue’s “TrueBlue flight gratitude” program and “Membership Rewards” program exceeded its one-year goal within the first three months. The new “JetBlue Card from American Express” will be launched in the third quarter. The new card will enable cardholders to earn “Award Dollars” that can be converted to “TrueBlue” points redeemable for JetBlue flights. Pricing details were not disclosed.Details
Walgreens is teaming up with Next Estate Communications to distribute “Green Dot Prepaid VISA” and “Green Dot Prepaid MasterCard” cards. The deal adds 5,000 locations to Next Estate’s distribution channel. The prepaid VISA and MasterCard specialist now has more than 45,000 locations nationwide. The Company claims a 90% share of the U.S. market. The Next Estate cards are issued by Columbus Bank and Trust.Details
A new study suggests that card issuers have their hands full trying market to households earning over $100,000 annually. The emerging mass-affluent demographic has become very demanding, willing to speak up, walk out, or refuse to buy a product or service due to a poor experience. The MasterCard report, based on Yankelovich’s annual study of consumers, concludes that customization is becoming a necessity and that financial services companies must offer more choice and convenience to tap the mass-affluent market. According to the findings, 85% of mass-affluent consumers say they will speak up when experiencing bad service. Nearly three-quarters will walk out of a store if mistreated, even if the store has exactly what they are looking for. More than half have refused to buy a particular product or service over the past year as a form of activism. However, only 12% of mass-affluent consumers describe themselves as having “a lot of money.”Details
Heartland Payment Systems recently exceeded its 100,000th active customer. Heartland has experienced rapid growth in the restaurant industry over the past several years, as well as achieving significant penetration in the hotel and retail markets. Restaurant merchants now account for 33% of its customer base. Heartland Payment Systems is a multiple product transaction processor of low-risk businesses across all 50 states and a portfolio in excess of $30 billion in annual bank card processing volume.Details
Credit card delinquency in Canada has increased to 5.3% this year, compared to a 4.6% ratio for late 2004. The modest upturn is expected to produce a similar increase in gross charge-offs in the next several months. A new report from CIBC World Markets also shows that the
growth in credit card portfolios has leveled off to about 10% and that the rates of growth of “Standard” and “Premier” cards have converged.
The research found that during the first quarter, overall household debt rose by 2.2% while personal disposable income rose by only 0.3%. Therefore, the debt-to-income ratio, has grown from 113% to 115%. CIBC believes the debt ratio will continue to rise. At the same time, the debt service ratio, as measured by debt interest payments as a share of disposable income, has risen a bit in the first quarter, but at 7.6% it is still extremely low. CIBC also noted in its report that personal bankruptcies in Canada are on the decline with the cumulative number personal bankruptcies during the year ending April 2005 falling by 1.5%.
Bank of America announced a definitive agreement to buy approximately 9% of the stock of China Construction Bank for $3 billion, with the option of increasing its stake in future years. CCB, the second largest commercial bank in China, has RMB 3,910 billion ($472 billion) in assets and RMB 3,491 billion ($422 billion) in deposits and 136 million active retail deposit account relationships. The bank is currently majority owned by China SAFE Investments Limited, an entity of the government of China. Bank of America is one of the world’s largest financial institutions, serving 33 million consumer relationships.Details
Scottsdale, Arizona-based LifeLock has launched a proactive identity theft protection service for consumers that places alerts on credit bureaus, stops pre-approved credit card applications, and monitors credit files. LifeLock guarantees the effectiveness of its system by offering up to $25,000 in reimbursement for any cash losses if an identity is compromised while a LifeLock customer. The company will also resolve any credit issues, no matter the cost or hours, at LifeLock’s expense. Last year, nearly 10 million people were victims of some form of identity theft. Losses to victims and businesses last year exceeded $50 billion.Details
A recent report by a German firm has found that even though the average chargeback ratio in European e-commerce seems to be quite low at only 83 basis points, there are significant concerns revealed in a more thorough analysis. Pago says the share of chargebacks resulting from manipulated credit card data has risen from just over 4% in 2003 to more than 7% in 2004. Pago believes the overall increase is due to a rise in organized credit card fraud. The report also found that the relationship between chargeback ratio and shopping cart value has deteriorated. Whereas the chargeback ratio for transactions of under 10 Euros is only 28 basis points, transactions over 500 Euros carry a 371 basis point chargeback ratio. The research was based on 20 million real purchase transactions processed through the Pago platform last year.Details
Minnesota-based Ceridian has named Randy Strobel as its new VP/Finance and Controller. Strobel brings more than 15 years of financial management experience to Ceridian. He formerly was vice president of finance for Minneapolis-based Mesaba Aviation, Inc. He will be responsible for managing Ceridian’s internal and external accounting and reporting processes. Ceridian Corporation provides information services and human resources outsourcing.Details