Encore Card Services Signs 4 D.C. FCUs

Massachusetts-based Encore Card Services & Merchant Services has recently signed four credit unions in Washington, DC including the AFL-CIO Employees FCU; Department of Labor FCU; General Services Administration FCU and the Transit FCU. Encore ® Card Services offers credit unions full service MasterCard or Visa credit card issuing and processing solutions. Encore ® Merchant Services is a division of Primax Payment Systems, currently has over 5,000 merchants located in 48 states. Encore ® Merchant Services targets new business through credit unions to offer full service credit and debit card acceptance services to credit union member businesses nationwide and offers check guarantee, electronic check conversion, Internet processing solutions, and private label card support. Full service help desk support is also provided as well as point-of-sale equipment and supplies.

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Comdata Launches Merchant Bank Card Processing

Comdata has closed its acquisition of Illinois-based Tranvia, a merchant processor for credit, debit, pre-paid and e-commerce activities. Tranvia currently serves a range of merchants nationally and is also a direct provider of processing services to financial institutions, independent sales organizations, and providers of stored value payment products for educational institutions. Comdata provides credit and debit processing and reporting for commercial fleets and merchants, electronic cash, gift and smart/chip card programs for retailers and governmental agencies, Comchek eCash payroll services for food, retail and other service industries, and point-of-sale equipment, software and auxiliary services for merchants and convenience stores.

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MasterCard Profits Up 187% 04 to $238MM

MasterCard reported a profit for full-year 2004 of $238 million, compared to a net loss of $386 million for 2003. However, fourth quarter profits came in at $1.27 million due to a huge increase in advertising and market development expenses. For the full-year, advertising and market development expenses were only up 8% over 2003 to $915.8 million. MasterCard noted that it spent $192 million last year as part of a four-year plan to build brand recognition worldwide. The 2003 loss was related to the settlement of the U.S. merchant lawsuit, which unfavorably impacted 2003 net income by $469 million. Operating expenses as a percentage of total revenue were reduced to 86% from 93% in 2003, excluding the impact of the U.S. merchant lawsuit and other legal settlements, resulting from an emphasis on cost control and streamlining of operations. For complete details on MasterCard fourth quarter performance, visit CardData ([www.carddata.com][1]).

MASTERCARD 2004 HISTORICAL ($ millions)
1Q/04 2Q/04 3Q/04 4Q/04
G&A: $276.8 $284.6 $284.9 $338.7
A&M: $167.5 $228.8 $190.1 $329.5
Net Income: $ 73.6 $ 65.7 $ 97.5 $ 1.3
Note: G&A: General & Administrative Expenses; A&M:
Advertising & Market Development Expenses.
Source: CardData (www.carddata.com)

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

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Hypercom Revenues Rise 26% in 4Q/04

Phoenix-based Hypercom reported that fourth quarter revenue rose 26% to $79.7 million compared to one year ago. Fourth quarter income before discontinued operations was $4.5 million, compared to $2.8 million or $0.05 per diluted share for the prior year. The Company closed the quarter with a sales backlog of $35.4 million versus $49.5 million as of September 30th and $57.0 million as of December 31, 2003. During the fourth quarter, Hypercom introduced a contactless version of the “L4100” terminal; joined the VISA “Smart Breakthrough Acceptance Device” program; signed a $4 million terminal contract with European processor euroConex and landed its largest order ever in the Middle East market with its distributor Alhamrani Universal for “ICE 5500Plus” terminals to be delivered to some of Saudi Arabia’s largest banks. For the full year, revenue increased more than 10% to $255.2 million. However, the Company posted a full year loss before discontinued operations of $8.7 million, compared to net income, before discontinued operations of $4.0 million in 2003. The loss was largely attributed to a second quarter reserve of $11.3 million related to the uncertainty of future payments from the Brazilian Health Ministry. For complete details on Hypercom’s fourth quarter performance visit CardData ([www.carddata.com][1]).

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

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JAN 05

Credit card outstandings dipped seasonally to GBP 54.1 billion during January, but remained up about 4% over one year ago. Total net lending to consumers for January was GBP 183.6 billion. Overall, consumer credit grew by GBP 2.3 billion or 1.3% in January, seasonally adjusted, GBP 0.7 billion stronger than the increase in December. The three-month (annualized) growth rate rose to 12.3% from 10.5% in December and the twelve-month growth rate rose to 12.6% from 12.5%. Gross advances were GBP 18.7 billion, GBP 0.4 billion stronger than the average in the three months to December. The Monetary Policy Committee of the Bank of England decided February 10th to maintain its benchmark interest rate at 4.75%.

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Walgreens Gift Card Adds a Distributor

Chicago-based SVM has signed an agreement to market and distribute the “Walgreens Gift Card” for promotional and incentive programs nationwide. Walgreens launched its gift card for sale at its drugstores in 1998. SVM issues, markets, distributes and services cash card programs for over 70 major retailers and oil companies; SVM is also one of the fastest-growing privately held companies in the United States. Walgreen Co. is the nation’s largest drugstore chain with fiscal 2004 sales of $37.5 billion. Based in Illinois, Walgreens operates 4,714 stores in 44 states and Puerto Rico, and plans to open approximately 450 new stores nationwide in 2005. In addition, Walgreens provides services to pharmacy patients and prescription drug plans.

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PVN Lowers Estimates for Accounting Adjustments

Providian lowered its estimate regarding the impact of adjustments to the value of interest-only strips recorded in connection with securitized receivables by $37 million for last year. The company will also be revising prior year amounts, which results in a cumulative impact on net income for years 1999 through 2003 estimated to be $29 million. The changes announced today are based on Providian’s recent review with its external auditors of its accounting for securitizations, specifically interest-only strips. The focus has been on a series of changes to the interest-only strip valuation methodologies that were adopted in 2001 and 2002 as part of a larger effort to refine its forecasting and estimation processes following the credit deterioration experienced at that time. San Francisco-based Providian Financial is a leading provider of credit cards to mainstream American customers throughout the U.S.

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Trilegiant Targets Gen Y with New Services

Virginia-based credit card enhancement specialist, Trilegiant Loyalty Solutions, has introduced a new suite of products designed for the 74 million pre-teen through college-age market. The new services for “Generation Y” include a “Music/Movie Incentive,” “Cell Insure,” “Burglary Protection,” “Buyers Appreciation” and more. The “Music/Movie Incentive” offers certificates for hot CD or DVD releases. “Cell Insure” provides insurance protection for lost, stolen or damaged cell phones. The “Burglary Protection” offers protection in the event of a burglary while staying in a hotel. “Buyers Appreciation” enables young adults to extend the manufacturer’s warranty on retail credit or debit purchases for up to an additional year for warranties of one year or less and provides 90-day insurance protection against lost, stolen or damaged items. Other Trilegiant “Gen Y” services include: “Rewards Cash,” “AutoVantage,” “Trip Assurance,” and “Legal Assistant.”

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VISA Creates a Dashboard for VisaNet Data

VISA yesterday unveiled a set of new monitoring tools that provides a real-time dashboard of critical and complex transaction information via graphical displays. “VISA Service Views” enables VISA to track every transaction running through “VisaNet,” and display the data in a myriad of formats, from red-yellow-green traffic indicators, to color graphs, to tickers crawling across the bottom of a desktop computer or PDA screen. VISA says the new tools have been under development for two years. “VISA Service Views” allows real-time alerts about any problems or bottlenecks in the payment network. The new tools have also enabled VISA to move from a reactive approach to system issues to a proactive one – even to the point of alerting members and other processing partners about impending issues with their own networks. In the first year of operation, the new system has enabled VISA to issue 44 proactive calls to member financial institutions alerting them to potential issues that could have affected their payments business. Over the next year, VISA will be extending some of these services directly to its member financial institutions, as well as large merchants and others with a direct connection into “VisaNet.” This will allow members to obtain real-time reporting that matches up with the metrics they choose to gauge their business, and measure how their products are performing in the marketplace.

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MBI Offers FSA OTC Electronic Substantiation

Massachusetts-based FSA specialist MBI has developed a payment processing system that works with participating retail chains to electronically substantiate eligible items. When purchasing prescriptions and/or over-the-counter FSA-eligible items, new special coding and MBI’s proprietary payment technology will match the items and automatically approve the transaction with no follow-up request. The “MBI Benefits Card” is currently used by more than 14,000 employers.

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Simon GiftCard and NY AG Resolve Disputes

Simon Property Group has inked a consent agreement with the New York Attorney General to resolve the dispute regarding its “VISA Giftcard” program. Simon agreed to modify its inactivity fees and make full disclosure of all fees on cards issued in New York. Attorneys General from Massachusetts, New Hampshire and Connecticut have also filed lawsuits claiming the “Simon VISA” card program violates consumer protection laws. Simon announced other changes that became effective nationwide on March 1st including extension of the card’s expiration date from 12 months to 18 months; elimination of the 50 cents charge for calls to the customer service line; and the addition of an adhesive label to the front of the card that clearly spells out any charges that may be associated with the card. Simon reported that it sold 6.3 million cards with more than $400 million in load value last year, a 20% increase over 2003. Simon piloted its “VISA Giftcard” in 2002, taking the card nationwide in 2003. (CF Library 1/14/03; 11/17/04)

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