Citi to Acquire Federated’s Card Portfolios

Citigroup has inked a deal to acquire $6.6 billion in credit card outstandings from Federated Department Stores for a premium of approximately 11.5%. Under terms of the agreement, Citi will initially acquire Federated’s $3.2 billion owned proprietary and VISA receivables, then in April 2006 acquire $1.2 billion in Federated card receivables currently owned by GECC and finally acquire the $2.2 billion credit card receivables portfolio of May Department Stores within one year following the merger with Federated, which is expected to close in 3Q/05. Additionally, Federated and Citigroup have signed a multi-year agreement for performance payments after the receivables sale is completed as well as engage in various joint marketing initiatives. The Federated and May credit card portfolios have about 17 million active accounts. The companies noted that Federated and May credit card customers will continue to be serviced through Federated’s service centers located in Mason, OH, Clearwater, FL and Tempe, AZ and May’s service centers in Lorain, OH and Earth City, MO. Federated was advised in the transactions by Credit Suisse First Boston, First Annapolis Consulting, Simpson Thacher & Bartlett, Jones Day and Sidley Austin Brown & Wood. At the end of the first quarter, Citigroup had $24.7 billion in private label credit card outstandings and $115.8 billion in bank credit card outstandings, according to CardData ([www.carddata.com][1])

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

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HSBC North America Names a Marketing Head

HSBC North America has hired Brian Hughes, formerly with Booz Allen Hamilton, as national director of marketing for HSBC’s retail services business. Hughes will be responsible for the strategy, execution and measurement of marketing programs to support merchant business growth. Prior to joining HSBC in 2004, Hughes worked primarily in strategy consulting and was a principal with Booz Allen Hamilton, developing marketing and growth strategies. HSBC – North America has more than $300 billion in assets and serves more than 60 million customers.

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GE Secures a Third Patent for vPayment

GE has been awarded a patent covering aspects of the account pool feature of its “vPayment” electronic settlement tool. This is GE’s third patent associated with “vPayment,” a payment automation tool that integrates with corporate procurement and accounts payable systems and processes. With “vPayment,” an organization requests a “vPayment” account to pay an invoice or purchase order. The GE-hosted “vPayment” server selects a unique MasterCard account number from an account pool and provides it to the organization via a secure Web site or encrypted link to the organization’s procurement or AP system. The account number selected has dollar- and date-range controls specific to the transaction in question. The supplier given the “vPayment” account number cannot subsequently charge to the account once the specified amount is settled. If the merchant attempts to charge above the dollar amount or beyond the date range specified, the transaction is declined. When fully used, the account number returns to the account pool and remains inactive until selected at a later date, usually for a different amount with a different supplier.

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Small Business Good, Except in Ohio

Six out of ten small businesses have expressed a high level of optimism about prospects for their business in the next three months, except for small-business owners in the Midwest. The finding comes from a recent survey for the National Federation of Independent Business and VISA USA. VISA says its payment card data shows retail spending in the Midwest continues to gain momentum, but still trails the national average. VISA data show strong consumer spending continues throughout the U.S. with 17.7% growth, while consumer spending in the Midwest grew 13.3%. Card spending in retail sectors shows a disparity with retail spending in the Midwest lagging behind the rest of the nation by 5%.

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GreenZap Positions to Take On PayPal

La Jolla, CA-based GreenZap has launched a new consumer-based, online payment service. Since accepting account pre-registrations on April 2nd, the firm has signed up 200,000 members. “GreenZap” is similar to eBay’s payment processor PayPal, but offers lower transactions fees. “GreenZap” also unveiled its interactive, community tracking system, the “ZapMap.” “ZapMap” enables users to dynamically view their friends and family that have opened accounts. In fact, “GreenZap” rewards account holders for telling their friends and family about the service. Account holders are rewarded anywhere from $5 to $30 and receive their earnings as a combination of cash and “WebCash.” GreenZap offers two types of accounts, a basic “GreenZap” account and an upgraded “Gold” account. The “Gold” account offers reduced transaction fees, increased rewards and a “GreenZap Stored Value MasterCard/VISA” for off-line spending.

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Government Officials Want Efficient Payments

A survey of 50 government officials from Japan, Korea, South Africa, Thailand, U.K., and the U.S. found that 68% believe that there is further opportunity for improving their procure-to-pay process. The VISA survey also found that 22% of government officials expect that improving process automation will be the most important benefit their organization will derive by implementing a commercial card program, followed by replacing cash (18%) and increasing procurement transparency (18%). Almost all government services agencies surveyed report that within the next five years they plan to implement a variety of new measures, including new technologies, such as enterprise resource planning systems, centralized processes and outsourcing to third parties. All of these measures support e-purchasing and expense management initiatives and translate to improved efficiency and cost savings. The survey was released in conjunction with the 7th annual “VISA International Government Services Conference.”

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Tourism Recovery is Slow Except Bali

A survey shows that tourism recovery in selected tsunami-affected countries remains volatile, with international traveler confidence showing signs of weakening following the series of earthquakes and aftershocks on Nias Island, Indonesia in March.
The VISA visitor card spending in the three tourist destinations hardest hit by the tsunamis of December, Maldives, Phuket and Sri Lanka, after a period of steady positive recovery through February and March, has fallen since April and is still experiencing year-on-year decline.
During the week ended May 8th, international VISA cardholder spending
declined by 35% year on year in Maldives, and by three percent in
Sri Lanka. To support the recovery of tourism into Bali, VISA is
running a “Visit Bali 2005” program till October. In collaboration with 56 merchants in Bali, the VISA program promotes the best of the tourist destination to domestic and international cardholders, offering them special privileges and discounts with a “VISA Savings Passport.”

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EFMARK Tops 50,000 ATMs in 43 States

Illinois-based EFMARK Premium Armored, a single-source ATM hardware and services provider, has surpassed the 50,000 ATMs milestone. EFMARK has focused exclusively on ATM and provides turn-key operations offering a full range of ATM services, including cash replenishment and management, equipment sales and services, real-time online monitoring and reporting tools and overall ATM program management.

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MAR CARD DEBT

Credit card balances remained above the A$30 billion milestone in March, up 13% over year ago levels. However, gross dollar volume on credit cards slipped to an annual growth rate of just 4%, compared to 10% in the previous month, and 22% one-year ago. Credit card balances at the end of March were A$30.3 billion, compared to A$30.3 billion in February, and A$26.7 billion for March 2004. Gross dollar volume on credit card and charge cards in March of A$13.8 billion was A$900 million higher than the prior month, and up more than A$500 million from one-year ago. Based on data from the Reserve Bank of Australia, consumers charged A$12.9 billion in purchases on credit/charge cards during March compared to A$12.4 billion one-year ago. Card credit limits reached A$83.8 billion at the end of March, compared to A$73.8 billion for March 2004. There are currently 11.8 million credit card and charge card accounts in Australia, compared to 11.1 million one-year ago.

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ScoreNet Now Offers 202 Credit Attributes

Fair Isaac has expanded its “ScoreNet” service to offer card issuers a choice of up to 202 credit attributes from the Experian consumer credit files to accompany Fair Isaac scores calculated at Experian. Fair Issac says the expanded service enables small lenders to check their customers’ payment status across all lenders every month, just as the largest credit card issuers do. In addition to standard credit attributes such as “worst public record” and “number of trade lines on file,” businesses tapping Experian credit files now can choose from a wide variety of additional attributes such as “time of most recent delinquency,” “aggregate monthly payment for open trades” and “highest utilization” of specific types of financial services products.

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Study Shows the 3 Cs of Electronic Payments

A new study has found that convergence, conversion and convenience are driving the growth of consumer preferences and electronic payments. First Data’s Market Intelligence Group says its study revealed that more than a quarter of all purchases made in U.S. retail stores use PIN-secured debit at the retail POS. FDC previously found that 47% of debit-card users prefer PIN-payment as a more secure method. The FDC study also found that some of the most popular payments developments are those that speed transactions and expand the electronic payment universe, such as increased acceptance for low-value purchases at quick service restaurants and elsewhere, contactless payments and the emergence of new generation multipurpose cards. The findings are in a new FDC white paper titled: “Electronic Payments in America: Today and Tomorrow.”

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