Union Bankshares ATMs Coming to Food Lions

VA-based Union Bankshares has signed an agreement with Nationwide Money Services to place “Branded Cash” ATMs in a significant number of Food Lion stores throughout the state of Virginia. These ATMs will be installed in 34 stores within the communities served by three of Union Bankshares’ affiliate banks — Union Bank & Trust, Northern Neck State Bank, and Bank of Williamsburg. Union Bankshares is one of the largest community banking organizations based in Virginia, providing full service banking.

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Australia Targeting Excessive Card Rewards

The Australian Tax Office is going after cardholders who earn more than 250,000 reward points or frequent-flyer miles per year. The ATO announced last week it will audit all highly rewarded cardholders and those channeling business purchases through their reward credit cards for no commercial reason. The ATO is reportedly preparing to ask credit card companies to release data on cardholders accruing more than 250,000 points or miles per year. Under the new “ATO Practice Statement,” the government wants to tax excessive rewards as a fringe benefit. The Australian press is reporting that card issuers say the measure could kill their credit card reward programs.

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Waiter Card Processing Fees Challenged

A showdown is brewing over the practice of deducting credit-card processing fees from food servers’ tips. A lawsuit filed in 2002 against TX-based Landry’s Restaurants has now gained class action status. According to the Denver Post, the lawsuit sprang from a DePaul University student that questioned why her managers at Joe’s Crab Shack in Chicago, owned by Landry’s, deducted a fee from her tips. The case has since moved to the U.S. District Court for the Southern District of Texas, where it has been in front of a judge since March 2003. Colorado’s Fox & Robertson and Illinois attorney Steven Greenberger are representing food servers. The attorneys are arguing that the fee deduction is illegal under the “Fair Labor Standards Act.” Some states make it illegal for companies to take a portion of servers’ tips. However, the U.S. Department of Labor has written a fact sheet for employers that says credit-card processing fees can be deducted from servers’ tips.

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Cap One Charge-Offs Drop for the 7th Month

Capital One’s charge-off ratio dropped for the seventh consecutive month, however delinquency slipped upwards for the second straight month. During June, the issuer added $783 million in managed outstandings. Cap One reported that charge-offs dropped to 4.17% for June, compared to 4.40% in May, and 5.57% in November. In June 2003, Cap One’s managed charge-off ratio stood at 6.20%. Delinquency edged up to 3.76% during June, compared to 3.73% for May, and 4.39% for January. Delinquency peaked exactly one-year ago at 4.95%. At the end of the second quarter Cap One had $45.2 billion in U.S. card loans, compared to $45.3 billion in the first quarter. COF’s global managed loan portfolio grew by $1.6 billion to $73.4 billion in 2Q/04. For complete details on Capital One’s monthly metrics and 2Q/04 performance visit CardData ([www.carddata.com][1]).

Capital One 2003-2004
Month Charge-offs Delinquency
Jun 03 6.20% 4.95%
Jul 03 5.75% 4.92%
Aug 03 5.34% 4.74%
Sep 03 5.24% 4.65%
Oct 03 5.30% 4.52%
Nov 03 5.57% 4.46%
Dec 03 5.10% 4.46%
Jan 04 5.00% 4.39%
Feb 04 4.75% 4.14%
Mar 04 4.74% 3.80%
Apr 04 4.70% 3.69%
May 04 4.40% 3.73%
Jun 04 4.17% 3.76%
Source: CardData (www.carddata.com).

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

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TNS Up 13%; First Data Contract Doubtful

VA-based TNS reported that revenue for the second quarter increased 12.6% to $60.9 million from 2Q/03. Revenue from the Financial Services Division increased 19.7% to $6.2 million from second quarter 2003. During the quarter, TNS purchased two groups of assets from the bankrupt U.S. Wireless Data. The Company paid $6.1 million for the assets related to USWD’s Synapse platform and paid $3.7 million for the assets related to USWD’s vending operations. The Synapse assets enable wireless POS terminals to initiate transactions for mobile and other merchants, and the vending assets support cashless transactions at vending machines. The Company indicated it is negotiating a new contract with First Data but it now looks like FDC may not remain a significant domestic POS customer in 2005. For complete details on TNS’ monthly metrics and 2Q/04 performance visit CardData ([www.carddata.com][1]).

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

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CIBC to Drop its AmEx Card in the Fall

CIBC, Canada’s largest VISA issuer, is putting an end to “Entourage,” its co-branded venture with American Express, on October 31. CIBC says that “Entourage” failed to meet financial expectations. The company will instead refocus on its core VISA business. “Entourage” was introduced in January 2002, AmeEx’s first card-partnership in Canada, and made CIBC the first Canadian bank to issue both American Express and VISA. At the time, American Express referred to Canada as a “critically important credit card market” for the company. The venture had also been a milestone for American Express because CIBC was the first bank in either Canada or the U.S. to partner with the company for a co-branded card. Since then, however, MBNA has signed with American Express to offer co-branded cards in both countries, and that agreement awaits the Supreme Court’s decision on whether to uphold two lower courts’ nullification of VISA and MasterCard’s exclusionary rules. Under terms of the agreement between American Express and CIBC, CIBC issued the cards, held the accounts and handled all customer service functions. The company marketed three versions of the “Entourage” card. The “Entourage American Express Card” was Canada’s first smart chip credit card, offering consumers tighter security for online transactions; the “Entourage Platinum American Express” offered exclusive features for consumers; and the “Entourage Business American Express” offered features for the business card holder.

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Global Rewards for Consumers in the Works

Global Vision Holdings and BSP Rewards have signed an agreement to launch “Global Rewards,” a consumer purchases incentive program. BSP currently has enrolled more than 4,000 restaurants and chain restaurants as well as more than 400 merchants in the program. The merchants include department stores (such as Target and Macy’s), office supply stores (such as OfficeMax), drug stores (such as Eckerd), grocery stores, specialty stores, sporting goods stores and travel services providers. Under the terms of the agreement, GVHL will function as the mass-distribution marketer of the program and set up major channel distributors. GVHL is a developer and wholesale marketer of a new generation of prepaid (also known as “Stored-Value”) financial services.

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Thales and iBIZ Make 3D Secure In-House

Thales and iBIZ Software have partnered to launch a joint
product offering to help banks and financial services providers migrate
to the new “3D Secure” standard. Developed by VISA, then co-sponsored by
MasterCard and followed recently by JCB, “3D Secure” helps make the Internet a secure place to trade while also reducing charge-backs and increasing card usage. To date, most of these implementations were made
through outsourced services, at the expense of sharing vital customer
data with third parties and implementing complicated key management
schemes. The partnership between Thales and iBIZ allows financial
institutions to efficiently and cost-effectively implement this
protocol, making it possible for them to choose a more secure and
manageable in-house implementation.

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iBill Funder Mercator Invests into Penthouse

Mercator Advisory Group, which assisted Penthouse International in its acquisition of iBill, has made a $2.75 million private placement in Penthouse. Penthouse is using the net proceeds for investment purposes. Penthouse also issued three-year warrants to Mercator Advisory Group and its designated funds. Mercator Advisory Group, through its designated managed equity funds, specializes in direct equity investments in public companies.

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VASCO Revenues Climb 21% in the Second Quarter

VASCO Data Security International reported that revenues for the second quarter increased 21% to $7.2 million. Net increased 10% to $888,000. During the second quarter VASCO won 115 new customers with 244 year-to-date new customers including 33 new banks and 211 corporate customers. The Company also signed HSBC Brazil to use its “Digipass GO3.” VASCO also launched four new products: “VACMAN Middleware 2.2,” “Digipass 585,” “Digipass 850 Integration Toolkit for PKI” and “Digipass Plug-In for RACF. The Company says the third quarter is normally its weakest quarter due to vacations, but the company has a backlog of firm orders to be shipped in the third quarter of $5.6 million.

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