MasterCard Sues VISA Over its Major Debit Issuer Exit Fines

MasterCard, the first to settle the lawsuit filed by merchants over debit card pricing and policies, has decided to take VISA to Federal Court after VISA declined to act on a “cease and desist” letter sent by MasterCard. MasterCard asked VISA to rescind its new bylaw, which imposes huge fines on the top 100 VISA issuers if they switch to MasterCard and/or reduce their VISA debit volume. The “Settlement Service Fee” bylaw requires VISA top off-line debit card members, who switch to MasterCard’s off-line debit card, to pay a $20 million fine for each percentage point of lost VISA off-line debit volume. Following the recent settlement of the Wal-Mart litigation, VISA told its top 100 debit issuers that for the next 10 years, they would face significant fines, based on a share of VISA’s $2 billion settlement with the merchants, if they reduced their VISA debit volume from September 30, 2002 levels. MasterCard says “VISA is changing the rules mid-stream and bullying its members so it becomes virtually impossible for them to switch brands.

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ECHO Launches Recurring Payment Manager

Electronic Clearing House has released its new “Recurring Payment Manager” service. RPM can process recurring payments from customers with weekly, bi-weekly or monthly payment arrangements. RPM can accept either credit cards or checks as a form of payment and ECHO offers RPM as a free service to merchants who process their credit cards and/or checks through ECHO. The product was successfully beta tested with a number of merchants over a two-month period.

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COMMERCIAL CARDS

VISA International reported that its total commercial card sales volume for the year ending June 30th, was up 25% in Canada, 16% in Europe, 36% in Asia/Pacific, 25% in Latin America, and up 76% in CEMEA. VISA says that small business nearly outpaced corporate and government usage of VISA products over the past year. Usage growth by small businesses is up 26.4% for the year ending June 30th, to more than $79.3 billion, which includes transactions using “VISA Business” credit and debit cards, as well as small business inventory payments using “VISA Distribution.” Transactions by medium-to-large business and government clients grew 21.3% to just under $79.5 billion per year, including volume on “VISA Corporate” and “VISA Purchasing” credit and debit cards. The commercial sector was up 11.8%. Annual growth rates in VISA’s commercial debit products are 27.6%, and volume amounted to more than $29 billion per year at the end of June.

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ShareBuilder Platinum VISA is Launched

The first online brokerage to offer a VISA card with cash rewards that are deposited directly into customers’ accounts for automatic reinvestment has been launched. ShareBuilder Securities Corporation and Bank One have teamed to launch the “ShareBuilder Platinum VISA” which offers one point for every dollar of credit card purchases. Once the cardholder earns 2,500 points, a $25 deposit will be swept into a ShareBuilder brokerage account. Cardholders can earn a maximum of 60,000 points per year. Unredeemed points expire after 24 months. In addition to the cash rebate benefits of the new card, ShareBuilder’s “Investor Rewards” program provides customers with additional incentives such as cash back promotions, commission rebates from Costco ShareBuilder, and mileage rewards on Alaska Airlines. A 12-month 0% APR is offered on purchases and balance transfers. Thereafter, the rate is Prime +4.65%, Prime +6.65%, or Prime +10.65% based on credit score. There is no annual fee.

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Ecommerce Templates Integrates UPS Online Tools

Lerida-based Ecommerce Templates has integrated “UPS Online Tools” into its suite of software solutions. Other recent additions to the shopping cart software include offline credit card processing and new template designs for “Dreamweaver,” “Frontpage” and “GoLive.” Ecommerce Templates’ software is available in ASP for Windows and PHP for Unix/Linux servers.

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Infineon Opens New Chinese Headquarters in Shanghai

Germany’s Infineon has opened a new Chinese headquarters in Shanghai. The new facility will house central administration, as well as a large software center. The Infineon China headquarters has already more than 100 employees. Infineon has been a player in China since October 1994. Today the company employs about 800 people in China. In Shanghai, the company cooperates with SMIC, which enables it to secure production capacities for memory chips without having to invest in its own facilities. In return Infineon licenses its leading 300-mm technology to its Chinese partner.

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China Construction Bank Adds 800 More Diebold ATMs

Beijing-based China Construction Bank has inked a deal with Diebold to added 800 more ATMs this year. All of the terminals will be installed in CCB’s nationwide branches before the end of this year. Diebold handled an initial installation of ATMs to CCB in the first seven months of the year. This will be the second ATM contract for this year. CCB customers will have access to bill payment and electronic funds transfer between foreign currency and savings accounts, and will be able to review stock transactions, account balances, banking statements and advertisements via the ATM. Some provincial bank branches differentiate themselves from competitors by selling airline tickets at ATMs.

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International Paralympic Committee and VISA International Ink Deal

The International Paralympic Committee and VISA International have signed an exclusive partnership agreement for the “Paralympic Games,” including the “ATHENS 2004 Paralympic Games.” VISA will also sponsor the “International Paralympic Day 2003,” which takes place from 26 to 27 September in Bonn. Under terms of the agreement, VISA will become the official payments sponsor of the IPC until the end of December 2004 with exclusive marketing and promotional rights within the payment services category. VISA and its member banks will be able to develop promotions featuring the IPC, which, in return, will receive a financial contribution as well as marketing and media support through VISA
cardholder communications, promotions and advertising. VISA already sponsors the “Paralympics Games” as part of its agreement with
the International Olympic Committee to support both the “Olympic Games” and “Paralympic Games.” VISA has the exclusive global marketing rights and official status for the “Paralympic Games” through 2012. More than 4,000 athletes from approximately 140 countries will
be competing for medals in 19 sports, making the Paralympics the second-largest international sporting event of 2004.

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Switch/Maestro Foreign Transactions Soar

“Switch/Maestro” ATM debit card usage outside the UK is up 19% at mid-year, with 9.6 million transactions year-to-date, according to this week’s issue of CardFlash International. Last year, over 20 million “Switch/Maestro” transactions were made outside the UK, with ATM transactions accounting for over 18 million. There are currently 22 million UK “Switch/Maestro” cardholders who can use their debit card in over 890,000 cash machines and at over 7.8 million retailers worldwide. The “Maestro” logo has traditionally appeared on the back of “Switch” cards, but is starting to move to the front following the agreement between Switch and MasterCard to replace “Switch” with the “Maestro” global debit brand over the next few years. The “Maestro” brand mark now appears on 466 million cards worldwide and is accepted for purchases at over seven million merchant terminals in 93 countries and territories.

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Court Decision on Exclusionary Rule Upheld

A three-judge panel of the Second Circuit Court of Appeals yesterday affirmed the 2001 court decision which required VISA to drop its “bylaw ‘210(e)” and MasterCard to end its “Competitive Programs Policy.” Federal district court Judge Barbara Jones ruled on October 9, 2001 that the card association’s exclusionary rules, which prevented member banks from issuing American Express and Discover cards, were anti-competitive. The hearing before the appeals court took place on May 9th of this year. The U.S. District Court for the Southern District of New York granted a stay in its Jones ruling in February 2002. The status of the stay is unclear following Wednesday’s ruling. However, both VISA and MasterCard indicated last night they will seek further appellate review, including requesting a hearing en banc before the Second Circuit Court of Appeals. MasterCard said it believes that Judge Jones legal approach incorrectly led her to conclude that American Express must have access to every distributor of its choosing, even if its intent is to cherry-pick banks and to destabilize the MasterCard joint venture. MasterCard says it has strong legal grounds for a further appeal. Meanwhile, American Express said this morning it is pleased with the appellate court’s ruling and believes it will ultimately lead to more competition and a broader choice of innovative products. (CF Library 10/10/01; 2/8/02)

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GlobalPlatform’s Card Compliance Program and Test Kit is Completed

GlobalPlatform’s “Card Compliance Program and Test Kit” has been completed. The Kit consist of procedures and testing components which provide the processes and tools necessary to verify a smart card’s functional compliance to the “GlobalPlatform Card Specification v2.1.” GlobalPlatform’s Card Committee worked in conjunction with ICC Solutions to develop and implement the new Test Kit. The first version was released in April 2002, which tested only mandatory features of GlobalPlatform compliant cards. The updated version addresses all mandatory and optional features of the specification and allows verification of a card’s functional compliance for any card configuration and combination of optional features.

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