Command Technology and SVC Financial Form a Strategic Alliance

Command Technology and SVC Financial Services have signed a strategic marketing alliance. The SVC-Command partnership offers European financial services, entertainment and media companies scalable rich media application generator software, SVC Payment Services, robust Digital Rights Management and a powerful mobile commerce application solution. Command Technology sells ICT products and services in the marketing services, CRM, digital rights management and data extract, transform and load sectors to help its clients create and manage successful online real time enterprises. SVC Financial Services is a provider of an integrated suite of secure electronic payment, web application development, digital rights management and multimedia authoring solutions with a focus on the online retailing and entertainment industries as well as the companies that serve them.

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Card APRs May Rise 100 bps by Spring 06

If the Feds raise short-term interest rates by 25 basis points next week and continue with subsequent hikes, then credit cards interest rates are likely to rise 19 basis points within two months, and perhaps increase by 96 basis points within nine months, based on historical patterns. In April 1994, the prime rate moved to 6.25% after sitting at 6.00% for 21 months. By June credit card APRs increased 20 basis points, and nine months after the rate increases began, credit card interest rates were 106 basis points higher. In April 1997, the prime rate moved to 8.50% after sitting at 8.25% for 14 months. By June credit card APRs increased 18 basis points, and nine months after the rate increases began, credit card interest rates were 87 basis points higher. The current prime rate has been sitting at 4.00% for 11 months. In 1994, less than half of bank credit cards in the USA were variable rates. By 1997, variable rates represented more than 75% of the market. Today, the market is split between variable and fixed rates. More than 95% of current variable rate cards are holding at their floor rate. Therefore, the expected rate hikes will promptly impact issuers’ bottom line, given the typical 45 day pass-through period for cardholders.

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CardWorks Deploys Incurrent Web Tools

NY-based CardWorks and NJ-based Incurrent have teamed to provide state-of-the-art control for co-branded Web sites using Incurrent’s “InSite” product line. Incurrent’s products will permit CardWorks-managed cardholders to view multiple credit card accounts with one user name and password, use an online message center to contact customer service, create reports, and set up online payments. CardWorks says it gives them the flexibility to make cost-effective branding and text changes to its various Eeb sites, rather than having a service provider perform the work. CardWorks is incorporating the “InSite Account Maintenance” and “InSite Billing” modules as well as InSite’s “Integrated Issuer Controls” which include “Inquiry Manager” and “Content Manager.” Incurrent says its growing relationship with CardWorks is due to its recent shift in focus to concentrate on more R&D and to develop new product offerings aimed at better serving the credit card vertical niche. Incurrent has 130 million card accounts under management. CardWorks is the parent company of Cardholder Management Services.

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Pennsylvania Sues Cross Country & ACS

The Pennsylvania Attorney General has filed a civil lawsuit against DE-based Cross Country Bank and PA-based Applied Card Systems. This is the seventh lawsuit filed by a state Attorney General. Cross Country currently faces lawsuits in New York, Texas, West Virginia, Minnesota, Wisconsin and New Hampshire over its credit card program. Pennsylvania claims that hundreds of consumers with impaired credit were targeted for pre-approved credit cards that were deceptively marketed. Cross Country and ACS are also accused of improperly disclosing charges and fees, and engaging in abusive and illegal debt collection tactics when cardholders defaulted on their accounts. Pennsylvania says its investigation involved complaints from more than 400 consumers throughout Pennsylvania. The lawsuit asks the court to require the defendants to pay restitution to cardholders; pay civil penalties of $1,000 per violation, and $3,000 for each violation involving a consumer age 60 or older; forfeit their right to conduct business in the state until all restitution and fines are paid; and, disgorge all profits derived from the alleged illegal business practices.

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Bankruptcies Show a Slow Recovering Economy

While bankruptcies are running about 3% lower than last year, there is still a significant impact on the card industry. In March, bankruptcies topped 150,000, a factor noted in MBNA’s charge-off figures for May. MBNA reported last week that its charge-off rate edged up by 18 basis points in May due to the March filings. According to the Administrative Office of the U.S. Courts, a record number of filings took place in the quarter ending June 30, 2003, when 440,257 filings were made. So far, 282,052 filings have been made in the second quarter of this year, about 158,000 short of the all-time record.

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Monthly Filings Historical
Jun 03: 130,242
Jul 03: 138,400
Aug 03: 138,266
Sep 03: 127,079
Oct 03: 148,044
Nov 03: 131,921
Dec 03: 113,383
Jan 04: 114,737
Feb 04: 124,719
Mar 04: 152,567
Apr 04: 145,543
May 04: 136,509
Source: CardData (www.carddata.com)

[1]: http://www.cardweb.com/images/g/graphs/monthlyfilings.jpg

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Australian Charge Volume Takes a Breather

Consumer purchase volume on credit cards slowed during April to a 13% annual growth rate, as balances grew 12.6%, and credit lines edged up 12.0% per annum. During April, Australians charged A$11.2 billion in purchases on credit cards compared to A$9.9 billion one-year ago. At the end of the April, consumers owed A$26.9 billion on credit cards versus $23.9 billion for April 2003. The ratio of credit card balances to card credit limits increased slightly during April, from 37.4% to 37.5%, compared to one-year ago, according to data released by the Reserve Bank of Australia. One-year ago, consumers owed A$23.9 billion with total credit lines of A$64.0 billion. Card credit limits reached A$71.7 billion at the end of April.

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Pago Tackles Chargeback and Fraud for CNP Transactions

Cologne-based Pago has launched “Pago Fraud Screening” to minimize fraud risk and charge-backs associated with online credit card transactions.
Both credit card data and the other customer information are analyzed in real-time and the fraud risk is assessed using the five-tier “ebitGuard” system. The five tiers include: the transaction is checked against fraud detection rules specific to the shop’s business processes and/or industry; neural networks detect fraudulent behavior and fraud patterns; the credit card number is compared to negative lists of the card organizations and merchant-specific databases; pattern detection engines that detect specific fraud patterns are utilized; and, charge-back and other historical data are used as feedback for ongoing development of rules and models. Pago eTransaction Services GmbH was founded January 1999 and is jointly-owned by Deutsche Bank and Beisheim Holding Schweiz.

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