High-End Payment Cards Gear Up for an 05 Showdown

Yesterday’s U.S. Supreme Court decision will give way to a new battleground as the American Express and MBNA alliance takes shape and takes aim at high volume, affluent, cardholders in the USA. The forthcoming MBNA AmEx cards will compete head-to-head with VISA’s fast growing “VISA Signature” card and Citibank’s expanding “Diners Club/Carte Blanche MasterCards”. MBNA says it looks to complement its affinity marketing approach with the introduction of enhanced AmEx products targeted to its core high-spending affinity card members. MBNA believes many affluent customers will prefer the AmEx brand as being “better positioned to reflect their affinity interest.” MBNA has more than 5,000 affinity and co-branded programs worldwide, including most of the top professional groups such as doctors, lawyers, etc. MBNA also is skilled in the management of higher credit limits such as the “Quantum MasterCard,” a program offering credit limits of up to $250,000. AmEx cards have historically carried high annual fees for consumers and higher transaction fees for merchants. Additionally, this is the first time that a credit card network will issue a card directly as well as through a partnership, within the same market. Therefore, it is unlikely that yesterday’s U.S. Supreme Court action will spur any meaningful price competition to the benefit of consumers. It may ignite a perks war as cards issued through AmEx partnerships may use reward programs or other benefits to overcome lower merchant acceptance. The jury is still out on whether AmEx can successfully compete against itself.

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Cyota Combats Barclaycard Phishing

Barclays has become the first bank to to publicly
announce the use of an anti-phishing service. Barclays and
Barclaycard have selected and successfully deployed Cyota’s “FraudAction” service to combat phishing attacks. Cyota’s service includes real-time detection of phishing attacks, shutting down fraudulent sites as well as conducting forensic work on behalf of the bank, patent-pending counter-measures and more. The service is currently in use by four top-tier banks.

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EXS and GPN Renewal their Acquiring Contract

Electronic Exchange Systems has extended its relationship with Global Payments, Inc. by signing a multi-year agreement calling for a variety of acquiring solutions including authorization, capture, settlement and BIN sponsorship for credit, debit, and EBT payment card processing. Garry O’Neil, President and CEO of Electronic Exchange Systems, claims that a continued relationship with Global will allow Electronic Exchange to become a leader in customer service excellence. Electronic Exchange and Global Payments are chief suppliers and providers of transaction processing services.

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Discover Thanks the Court and Files a Lawsuit

Discover Financial Services said the decision by the U.S. Supreme Court is a victory for consumers, merchants and financial institutions. Discover also announced it has filed a lawsuit in federal court in New York seeking damages from VISA and MasterCard as compensation for harm caused by anticompetitive business practices of the two associations. The lawsuit was filed shortly after the U.S. Supreme Court denied the appeal. Discover says it is seeking triple damages for the harm that the VISA and MasterCard violations have caused Discover.

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Patterson Press Becomes Personix Nashville

Plastic card manufacturer, Patterson Press, a unit of Fiserv, has changed its name to Personix Nashville. Senior Vice President and General Manager of Personix, Steve Knapp, claims that the integration between Personix and Patterson Press is the result of the name change. Personix has strengthened Patterson Press with the installation of new pre-press, printing and finishing equipment, along with a web press. Personix is a leading company of plastic card manufacturing. 100 million cards were projected for 2004. Personix is a chief provider of business-critical communications to the financial services, healthcare, telecommunications and retail sectors. Fiserv, Inc. provides information management systems and services to the financial industry, serving over 15,000 clients worldwide.

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InfiCorp Buys a $3.3MM Maryland CU Portfolio

Atlanta-based InfiCorp has purchased the $3.3 million credit card portfolio of Prince George’s Employees Credit Union in Upper Marlboro, Maryland, with the assistance of NH-based Brookwood Capital. Prince George’s Credit Union reported 2,600 credit card accounts and $3.3 million in receivables as of June, 2004. Total estimated assets for the credit union is $73 million. Brookwood Capital provides services including brokerage, consulting, and advisory services to credit card issuers across the nation.

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TNB Card Services Adds 4 Processing Contracts

TNB Card Services has recently taken over credit card processing services for Kings FCU in California, the FAA Technical Center FCU in New Jersey, and St. John Tulsa FCU and Muskogee FCU, both in Oklahoma. All of the new clients have transferred their credit card programs to TNB to obtain benefits associated with TNB’s variety of processing services. The four credit unions claim that TNB will provide better service to their members, perform a high level of customer service, provide more support than previous processors, and increase the use of credit cards. TNB Card Services provides credit and debit card processing across the nation. It serves more than 400 credit unions and manages over 1.5 million cards.

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Cap One to Sponsor a PBS Broadway Documentary

Capital One has made its first corporate sponsorship of a PBS series with the sponsorship of “BROADWAY: THE AMERICAN MUSICAL” documentary. This will be Capital One’s first corporate sponsorship of a series on PBS. BROADWAY: THE AMERICAN MUSICAL along with Capital One, strives to make American’s realize their own dreams. Capital One is partnered with Thirteen/WNET and PBS in order to bring the series to American viewers. Hosted by Julie Andrews, the series will feature archival footage, newsreels, autobiographical material, and still photos to name a few. BROADWAY: THE AMERICAN MUSICAL is co-produced by Ghost Light Films, Thirteen/WNET New York, NHK, and BBC. Capital One is a Fortune 500 company and is one of the largest providers of MasterCard and Visa credit cards worldwide. Thirteen/WNET New York is a central program provider for public television.

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MC Predicts AmEx Experiments to be Short-Lived

MasterCard says it is disappointed that the Supreme Court has chosen not to review the lower court decisions. MasterCard says the decisions by the trial court and the appeals court benefit only American Express, rather than the consumers that the antitrust law is supposed to protect. American Express may, in the short run, be able to induce a small number of financial institutions to experiment with AmEx issuance in the USA, MasterCard says. However, MasterCard believes that the vast majority of issuers, just like those outside the U.S., will realize that these arrangements stand to benefit American Express more than it benefits them or their cardholders. MasterCard predicts that issuers enticed by AmEx’ higher merchant fees could find they are losing transaction volume because of the smaller number of merchants who accept AmEx, particularly outside the USA.

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DioneDirect Introduced for Terminal Gizmos

Dione has launched its own e-commerce web site to provide a convenient way for its customers to support their payment terminal estates. “DioneDirect” provides a growing range of accessories,
consumables and maintenance items that can be ordered for next day delivery. The Web site will sell accessories such as PIN pad cradles,
terminal wet covers and holsters, plus consumables like printer paper
rolls and batteries. Maintenance items including card reader cleaners
will also be available. Launched initially to UK customers, the site
will be opened up to additional Dione markets with different language
versions during 2005.

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The Supervisor of Banks to Rein in Card Points

The Bank of Israel’s Supervisor of Banks wants to regulate point programs linked to credit cards. Yoav Lehman wants card issuers to detail how much the customer must spend in order to accumulate each point. Lehman also wants issuers to inform the customer of the minimum value of each point. He also is asking banks not to condition the
cashing in of accumulated points on anything other than a time deadline.

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