MBNA Canada Fined for Using Risk-Based Pricing

The Commissioner of the Financial Consumer Agency of Canada has issued to MBNA Canada a penalty of $50,000 for a violation of subsection “11(1) of the Cost of Borrowing (Banks) Regulations.” According to the subsection, any bank that issues credit cards with a fixed rate of interest, and that distributes application forms for credit cards, must specify the regular annual interest rate at the time of the application. The Commissioner determined that credit card application forms indicating a “rate as low as” was in violation of the “Regulations” in that it failed to disclose an annual interest rate. MBNA Canada Bank filed an appeal.


Credit Union Shared Branching Boosts TX Volume

CO-OP Network’s Service Center Corporation says its shared branching network for credit unions has produced extraordinary results. The financial success of Chessie FCU has spurred six credit unions in the mid-Atlantic region to open SCC outlets in the past year, including February 2004 when Fairfax County FCU launched the first SCC outlet in Virginia. SCC ([www.servicecenters.org][1]), based in Southfield, Mich., developed the nation’s first shared branching network in 1975, allowing multiple credit unions to conduct business in one facility.

[1]: http://www.servicecenters.org


iGames and Chex Services Deal is Terminated

The acquisition of Equitex’s Chex Services subsidiary by PA-based iGames Entertainment has been terminated. iGames says it terminated the deal as the result of material adverse changes in Chex Services’ business, including the loss of revenues due to the termination of contracts at casinos operated by the Seminole Tribe. iGames also claims breaches by Equitex of representations and warranties in the stock purchase agreement, the failure by Equitex and Chex to perform under the stock purchase agreement and the decision by Equitex’s management that Equitex could not consummate the transaction as originally structured due to adverse federal tax consequences. Equitex says it terminated the stock purchase agreement due to material adverse changes in iGames business and seeks $2 million. In November, iGames Entertainment inked a deal to acquire Chex Services for $63 million. (CF Library 11/13/03)


Elan Drives ATM/Debit for a Baton Rouge Bank

Elan Financial Services has partnered with First National Banker’s Bank of Baton Rouge to provide terminal driving, authorization and routing for all ATM and debit card transactions. Under this agreement, Elan will provide the terminal driving, authorization and routing for all ATM and debit card transactions, as well as the administrative and support functions such as system and fraud monitoring, client support and settlement. FNBB customers will also have access to Elan credit card programs that can generate revenue and support all application processing and underwriting, marketing, training and support. Elan Financial Services supports more than 7,000 ATMs, 15 million ATM/POS cards, and two million credit cardholders with a complete range of products and services including credit card issuing, ATM and debit card processing, and merchant services. First National Banker’s Bank is a full service correspondent bank that was created by Louisiana community bankers in 1984.


Seceti Licenses ACI Proactive Risk Manager to Fight Debit Card Fraud

ACI Worldwide has sold its “Proactive Risk Manager” software solution running on the Stratus “ftServer” high-availability platform to Seceti. Seceti will implement ACI’s fraud detection software to help reduce debit card fraud and provide a fully integrated authorization and fraud detection service. Seceti provides services to 140 member banks in Italy. ACI recently verified compatibility of the Intel-based “ftServer” line with its PRM software, a neural network-based fraud detection system that helps card issuers, financial institutions, merchants and acquirers combat fraud schemes. Last year ACI certified “ftServer” systems for “WINPAY24,” its feature-rich EFT processing application used to authorize and route credit, debit, gift, phone and loyalty card transactions, as well as refunds, checks, and electronic benefits transfer transactions.
Seceti is the second largest card payments processor in Italy.


Biz Card Launched for Natural/Health Foods Retailers

MBNA and NY-based IdeaSphere have launched the “Integrative Health Solutions Platinum Plus for Business MasterCard” to support the growth of natural/health foods retailers in conjunction with IdeaSphere’s “Twinlab” brand. Benefits of the card include no annual fee, the highest credit lines in the industry, a low introductory annual percentage rate for new balance transfers, and MBNA’s world-class customer service, 24 hours a day, seven days a week. MBNA Corporation is an international financial services company that provides lending, insurance and deposit account products and services through MBNA America Bank, N.A., in the United States, MBNA Europe Bank Limited in the United Kingdom, Ireland, and Spain, and MBNA Canada Bank in Canada. IdeaSphere, Inc., with offices in New York, NY, Hauppauge, NY, Grand Rapids, Michigan, and American Fork, Utah, is the champion of the Wellness Revolution.


Providian Metrics Continue to Significantly Improve

Providian reported that charge-offs for its securitized card loans declined again during February compared to the previous month and one-year ago. For February, Providian posted a charge-off rate of 16.08%, compared to 17.36% for January, and 18.23% one-year ago. Providian’s delinquency rate dropped to 11.07%, compared to 11.48% in January, and 12.89% for February 2003. Providian reported net income for the fourth quarter of $67.1 million, a five-fold increase over one-year ago, but down from the third quarter’s $85.3 million. For complete details on Providian’s 4Q/03 performance visit CardData ([www.carddata.com][1]).

Month Charge-offs Delinquency
Feb 03 18.23% 12.89%
Mar 03 19.89% 12.46%
Apr 03 19.80% 12.27%
May 03 20.40% 11.92%
Jun 03 16.76% 11.98%
Jul 03 17.39% 11.96%
Aug 03 17.04% 12.12%
Sep 03 15.65% 12.17%
Oct 03 17.19% 12.38%
Nov 03 16.16% 12.27%
Dec 03 17.55% 11.94%
Jan 04 17.36% 11.48%
Feb 04 16.08% 11.07%
Source: CardData (www.carddata.com)


[1]: http://www.carddata.com
[2]: http://www.cardweb.com/images/c/charts1/prov_feb04.jpg


Sub-Primer Metris Finally Posts a Profitable Quarter

After recently restating its financial results for the past five years, Metris Companies yesterday reported its first quarter of profitability in more than a year. For the fourth quarter Metris posted net income of $35 million, compared to a net loss of $41 million for 4Q/02. The sub-prime specialist also announced a $1.7 billion, two-year commitment from MBIA Insurance to provide financial guaranty insurance policies to refinance a portion of our maturing asset-backed securitization transactions in 2004 and 2005. At year-end, the issuer’s managed credit card loans were $8.1 billion, compared to $11.4 billion one-year ago. The decline was due to the $494.3 million portfolio sale during the fourth quarter, the $590.9 million portfolio sale during the third quarter, and, the sale of two portfolios of delinquent accounts totaling $69 million. The managed net charge-off rate for the fourth quarter was 21.6%, compared to 22.9% in the previous quarter, and 18.0% for 4Q/02. The managed delinquency rate was 11.1% at year-end, compared to 11.1% at the end of the third quarter, and 11.0% at year-end 2002. Metris stock is trading about 20% higher this morning around $7.35. For complete details on Metris’ fourth quarter performance visit CardData ([www.carddata.com][1]).

4Q/02: -$41.0 million
1Q/03: -$82.5 million
2Q/03: -$24.7 million
3Q/03: -$75.0 million
4Q/03: +35.0 million
Source: CardData (www.carddata.com)

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



The Office of Fair Trading released its much anticipated report on credit card disclosure and found that three-quarters of credit cardholders do not know what APR applies to their card, despite being aware that this is the key piece of comparative cost information. The research also revealed that 60% of consumers have a very good understanding or understands a fair bit as to credit card terms and conditions, but they couldn’t generally answer specific questions or extract key information. The OFT found that 21% of those surveyed who did not pay off the balance in full each month have credit card balances of £1,000 or more. Also, brand loyalty is an important factor, with many consumers simply taking cards from their own bank. Consumers say key financial information must be displayed prominently and separately from the general terms and conditions of agreement if consumers are to use it effectively.Additionally, consumers like the concept of a simple summary box, containing the APR charged, details of any additional charges, the interest rate, the minimum payment to be made, the interest free period, the period over which interest is charged and the credit limit. The research involved interviews with a representative sample of 1,890 consumers. Based on the responses, the survey found that over 70% of people surveyed have at least one credit card, with 37% of cardholders having two or more credit cards.


Dual Function Corporate MasterCard Launched

The first business payment card in the USA to offer both credit and debit functionality has been launched by TN-based Comdata Corporation. The new “BusinessLink Corporate MasterCard” is also the first in the transportation industry to offer virtual card capability as part of its fleet solution. The “BusinessLink” card offers corporate credit card functionality as well as PIN-based debit capabilities, providing, for the first time, a one-card, B2B payment system, that allows employers to distribute company-provided personal funds to employees for access at ATMs and via purchases at point-of-sale debit terminals. The cornerstone of the new “BusinessLink” product is its ability to allow a company to establish purchasing authorizations and controls at the individual cardholder level, and the flexibility to change them in real-time via the Web if, and as, needed. The virtual card service is designed as a secure, fast method for making unscheduled, emergency and Internet purchases. The “BusinessLink” card can also provide the added functionality of serving as a facilities access card, with several levels of authentication built in to circumvent I.D. card tampering or theft. Comdata provides credit and debit processing and reporting for commercial fleets and merchants.


Precidia Technologies Receives a Five-Star Rating

Ottawa-based Precidia Technologies has been recognized with a “Five-Star Rating” by VARBusiness magazine as one of North America’s top information-technology vendors. Of the more than 280 vendor program entries reviewed in six categories, 87 individual companies received the coveted five-star rating in the magazine’s tenth annual “Partner Programs Guide” survey. Precidia Technologies is a leader in the design and manufacture of IP access devices for a wide range of industries, including retail payments and building automation.


Turnkey Satellite IP Payment Solution Introduced

San Diego-based Systech and EchoSat have teamed to deploy Systech “Internet Payment Gateways” to convert dial-up payment transactions to IP-based transactions over EchoSat satellite networks. Systech Internet Payment Gateways convert dial-up payment transactions to high-speed IP transactions. The gateways connect POS payment terminals, POS payment controllers and ATMs to the EchoSat network. The EchoSat network transports the transactions to the EchoSat HUB, and then forwards them via a secure Internet connection to the merchant’s payment processor of choice. EchoSat Communications Group provides turnkey satellite solutions designed and implemented for ease of operation, efficient use of personnel and equipment, speed of communications and cost effectiveness. Systech Corp. is an industry leader in the design and manufacture of Internet Payment Gateways for electronic transaction markets.