OCC Concerned About Unfair Credit Card Practices

The OCC has issued an advisory citing concerns over what it calls unacceptable credit card practices that may constitute unfair or deceptive acts, potentially exposing a national bank to compliance issues. The regulator specifically listed as problem areas, inadequate disclosure of penalty pricing policies, promotion of unrealistic “up to” credit limits, and, insufficient disclosure of the limitations of promotional rates. The OCC said banks should disclose fully and prominently in promotional materials the circumstances under which the credit card agreement permits the bank to increase the consumer?s cost, or that the issuer can make the changes unilaterally. The OCC also said banks should not advertise maximum credit limits to sub-prime consumers when most applicants receive a significantly lower default credit line. The OCC also criticized sub-prime issuers who advertise the possible uses of the card when the initial available credit line is likely to be so limited that the advertised possible uses are substantially illusory. Additionally, the OCC said that banks need to disclose fully and prominently any material limitations on the applicability of promotional rates, and not make representations that create the impression that material limitations regarding the applicability of the promotional rate do not exist. The OCC also suggested that some issuers have not properly disclosed fees connected to promotional pricing.

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Sharenet Selects Fiserv EFT/CNS to Operate its ATMs

Liverpool, NY-based Sharenet, a local cooperative of 28 credit unions, has selected Fiserv EFT/CNS to operate its 61 ATMs. The agreement calls for Sharenet credit unions to select their own transaction processor. Sharenet provides surcharge-free access for members and the lowest surcharge fees for non-members of any ATMs in Central New York. Sharenet ATMs can be used by non-credit union ATM users to save on surcharge fees. Non-credit union ATM users can also join a participating credit union to enjoy fee-free access. Fiserv EFT/CNS serves 3,000 client endpoints across the nation. EFT/CNS operates over 16,500 ATMs, processes an estimated 360 million ATM and debit transactions per month, and is one of the largest electronic funds transfer processors in the U.S. Fiserv, Inc. is a provider of information management systems and services to the financial industry. It serves over 15,000 clients worldwide. Fiserv reported $2.7 billion in processing and services revenues for 2003.

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iPayment Adds 4,000 Merchants from an ISO Purchase

Nashville-based iPayment has acquired ISO Transaction Solutions. The deal adds approximately 4,000 small merchants and annual charge volume of approximately $500 million to iPayment’s portfolio. Last month, iPayment reported second quarter charge volume of nearly $3.2 billion, compared to $2.9 billion in the previous quarter, and $1.6 billion one-year ago. Second quarter revenues jumped by 65% to $89.4 million compared to $80 million for the first quarter, and $54 million for 2Q/03. For complete details on iPayment’s second quarter performance visit CardData ([www.carddata.com][1]).

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

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ATM USA Signs Processing Deal with Lynk Systems

Lynk Systems has inked a long-term processing agreement with ATM USA, an independent owner and operator of more than 1,400 ATMs, of which more than half are company-owned placements. The agreement calls for ATM USA to rely on Lynk’s full range of services including transaction processing via fully redundant, load-balanced data centers, comprehensive ATM monitoring, Web-based reporting, and terminal management. ATM USA, LLC (R) is one of the largest and fastest growing ATM distribution and service providers in the nation. Lynk is a full-service provider of electronic payment processing services and is considered to be the 6th-largest non-bank acquirer and the 9th largest merchant acquirer in the U.S. market. It is also the 3rd largest processor of ATMs in the U.S.

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AmEx/CFA to Study Credit Counseling Effectiveness

Washington, DC-based Consumers for Responsible Credit Solutions has taken on American Express and the Consumer Federation of America for conducting a study on the value of nonprofit credit counseling agencies to creditors. The CRCS says the study is being carried out by a creditor-sponsored research group. The CRCS says the solicitation sent out to credit counseling agencies indicates the American Express/CFA study will gauge the success of credit counseling as to how effective they are in getting consumers to pay back creditors. The solicitation states: “Effectiveness of counseling and financial education will be gauged by examining the creditworthiness profile of counseled clients at the time of the intake interview, and then subsequently over time, possibly for up to 2 or 3 years. In addition, for DMP clients, effectiveness will also be measured by repayment experience on the plan, and subsequent repayment behavior for those that leave the agency-administered DMP. Credit bureau data will be essential to support various measures of creditworthiness. A major credit reporting agency has agreed to cooperate in providing these data for clients in the sample.” AmEx and the CFA is offering up to $40,000 to agencies to participate.

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QUIC-PAY TRIAL

JCB’s new contactless payment system will get a workout in November as a two-month pilot gets underway by Kanachu Hire taxi company. The “QUICPay” trial will use NTT “DoCoMo” mobile wallet service handsets for customers and contactless readers for cabs. The POS readers and data processing system at Kanachu Hire will be provided by SAXA.
With “QUICPay” (“Quick and Useful IC Payment”), part of the customer’s existing credit limit is assigned to a contactless IC chip, which may be embedded in a plastic card, or incorporated in the customer’s “i-mode FeliCa” mobile wallet service phone. The “QUICPay” amount is billed to the customer’s existing credit card just like any other card purchase.
JCB expects to make a full-scale release of the “QUICPay” system in the spring of 2005.

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Payroll Cards Soon to Come Under Reg E

The Federal Reserve Board is seeking public comment on proposed amendments to designate payroll card accounts as “accounts” to be covered by “Regulation E.” The proposed revision would provide that payroll card accounts that are established either directly or indirectly by an employer on behalf of a consumer for the purpose of providing salary, wages, or other employee compensation on a recurring basis are covered by “Reg E.” A payroll card account would be subject to the regulation whether the account is operated or managed by the employer, a third-party payroll processor, or a depository institution. Other proposed revisions to the regulation would provide guidance regarding the rights, liabilities, and responsibilities of parties engaged in electronic check conversion transactions. Among the proposed changes, persons, such as merchants and other payees, that use information from a check to initiate an electronic fund transfer from a consumer’s account, would be required to provide notice to the consumer for each electronic fund transfer and obtain the consumer’s authorization for the transaction. Comments are due November 19th.

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RBC to Offer Double Dining Cardholder Rewards

RBC Royal Bank has signed an agreement with Chicago-based Rewards Network to provide its VISA cardholders with additional rewards points when dining. The is the first Canadian bank alliance for the Rewards Network. Last month, Hudson’s Bay Company introduced the “Hbc Rewards Dining & Hotels Program” in partnership with the Rewards Network. With plans to add non-dining merchants throughout Canada, Rewards Network currently includes more than 10,400 restaurants in Canada and the U.S. Under the arrangement, once registered, “RBC Rewards VISA” cardholders in Canada will automatically earn one additional point for every dollar spent when they dine at participating restaurants and pay using their card. These points are earned in addition to the “RBC Rewards” points cardholders already collect for these purchases, and for most cardholders, that means doubling their points.

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ActivCard Launches eAuthentication EMV Globally

ActivCard has released an integrated solution of “ActivReader Solo” and “ActivCard Authentication Software Developers Kit” for e-commerce smart card transactions. ActivCard’s new “eAuthentication EMV” solution supports MasterCard’s “Chip Authentication Program.” “ActivReader Solo” is a stand-alone smart card reader that generates one-time passwords for strong two-factor authentication to networks. “ActivCard Authentication SDK” allows retail banks to integrate strong authentication into their online banking systems through EMV cards and readers as well as support for ActivCard one-time password generating tokens.

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Lightbridge to Cut 12% of its Workforce

MA-based Lightbridge is undertaking an immediate restructuring. About 65 jobs will be cut from its workforce, or about 12%. The company expects to save $8.0 million in annual pre-tax savings. The Company also reaffirmed its revenue guidance of $31.5 – $33.0 million for the third quarter. Last month, the Company announced that Pamela Reeve resigned as President/CEO/Board member. For the second quarter revenues increased 17.2% to $36.7 million, driven primarily by the addition of revenue from the Company’s new payment processing business. Lightbridge purchased Authorize.Net on March 31st. Authorize.Net revenues increased 22.4% for the second quarter to $8.1 million, compared to $6.6 million during the comparable quarter of 2003. (CF Library 7/29/04; 8/3/07)

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