The recent $3 billion Wal-Mart debit card settlement with VISA and MasterCard may produce a windfall for the plaintiff’s attorneys. Constantine & Partners and 29 other law firms have submitted a bill for nearly $600 million. If Judge John Gleeson approves the request, the legal fees would be the largest in the history of class-action antitrust settlements. A fairness hearing is scheduled before the court on September 25th. According to published reports, the attorneys are seeking to be compensated for conducting 400 depositions, processing five million documents, and handling more than 50 expert reports. The lawsuit took seven years. Constantine & Partners is expected to receive up to $300 million of the total fee.Details
Alliance Data Systems has completed the issuance of $600 million of asset-backed notes as part of the securitization program for its private label credit card banking subsidiary, World Financial Network National Bank. The notes are rated AAA through BBB, or its equivalent, by each of Standard and Poor’s, Moody’s and Fitch, and are secured by a beneficial interest in a pool of receivables that arise under WFNNB’s private label revolving credit card accounts. The proceeds of the notes were used to reduce outstanding indebtedness for one or more series of investor certificates and notes.Details
Chipotle Mexican Grill Restaurants is deploying Netopia’s “Cayman” series gateways to access Netifice’s “Retail Connect” IP VPN service to enable faster credit card transactions at its 250 restaurants nationwide. As one of the fastest growing restaurant companies in the United States, Chipotle is depending on Netifice to enable customer support applications, including credit card transactions for its entire network of restaurants. Netifice is deploying Netopia’s Cayman series gateways at Chipotle sites that use ADSL connections.Details
Independent U.K. supermarket chain SPAR is deploying “VeriFone SC 5000” PINpads across 1,200 of its convenience retail stores in the UK. Approximately 2,800 units will be deployed beginning in September, transitioning “SPAR” payment systems in readiness to meet the January 2005 deadline set for EMV migration. In addition, later this month SPAR will be installing units at selected retailers in Northampton, as part of the UK town trial of Chip and PIN.Details
The Electronic Funds Transfer Association announced Monday it will host a one-day conference focusing on the effect of the VISA and MasterCard debit card settlements. The conference will offer six sessions that will include “The New Debit Reality,” “What the Settlement Means to Merchants,” “Issuers and Acquirers Sound Off: The Challenge of the New Debit Model,” and “The Three Billion Dollar Question: Is the Consumer Better Off?” The event is scheduled for October 1st at The Plaza hotel in New York City.Details
NWH’s Electronic Network Systems has signed a multi-year agreement with NPC to utilize NPC’s “HealthePay” payment platform to expand their payer services offering to include ACH payment capabilities, payment consolidation, and electronic remittance advice reporting for healthcare payers and providers. Recognizing the demand for e-commerce from healthcare payer organizations and physician offices, ENS’ state-of-the-art services not only eliminate paper and labor-intensive processes in the administration of healthcare, but increase productivity by automating and streamlining the workflow between healthcare payers and providers. Health-e Exchange(TM) also offers hosting services for all transactions allowing ENS and NPC to offer a complete solution to healthcare payers to meet all of their HIPAA outsourcing needs.Details
The Defense Finance and Accounting Service reminded military service members who travel on temporary duty and use government credit cards, that they must now use the split disbursement feature which automatically pays Bank of America, for credit card charges for travel. The requirement also affects partial/accrual payments for long-term temporary travel and local travel, if the credit card is used. The new procedures require the supervisor/travel approving official/reviewer to return to the traveler any claims that do not accurately reflect the charges to be sent to the credit card vendor. Money owed to the service member that is above the amount owed Bank of America will be sent by electronic funds transfer to the service member’s bank account. The requirement was effective April 23, 2003.Details
Los Angeles-based credit card processor Accesspoint reported that revenues for the first six months of 2003 were $6.8 million compared to $6.3 million for the first half of 2002. Since new management assumed operational control of the Company in January 2002, the Company continues to report strong operating results. The second quarter of 2003 continues the trend of growing revenue, lowered expenses, increased EBITDA and improved cashflow.Details
Struggling Laurentian Bank is unloading 57 branches and shrinking its market footprint to the Quebec area. However, the Bank said it will now maximize its efforts to reach the entire Canadian market through its ABM network, “Telebanking Centre,” and, its “VISA Card” program.
Based on the number of branches in Quebec, Laurentian Bank is the third largest financial institution. The Bank is also a leader in the indirect sales field. As such, it offers independent merchants a broad range of financing products for their clients. Doing business with more than 7,632 merchants across Canada, the Bank says it is very active in this field and intends to continue its efforts to expand the point-of-sale network it serves. Laurentian Bank is selling 57 branches and a loan portfolio valued approximately at CDN $2.0 billion and a deposit portfolio valued approximately at CDN $1.9 billion to TD Bank Financial Group.
CompuCredit’s new collection subsidiary is paying off, as the business produced nearly 18% of the issuer’s second quarter net income. Late last year, CompuCredit formed Jefferson Capital Systems to target the defaulted receivables recovery area. The issuer says it entered the business because it believes many charged off credit card receivables are undervalued and because of the firm’s excess servicing capacity resulting from the declines in managed receivables. Through Jefferson Capital, CompuCredit acquired defaulted accounts with an aggregate face value amount of approximately $302 million at a cost of $9.4 million during the second quarter, and these activities generated pre-tax net income of $5.8 million during this same period. For the first six months of this year, the firm acquired defaulted accounts with an aggregate face value amount of $1.8 billion at a cost of $24.3 million, and these activities generated pre-tax net income of $10.2 million during this same period. All but one of the Company’s acquisitions of previously charged off credit card receivables during the first two quarters of 2003 were from the securitization trusts underlying the Company’s retained interests investments ($23.9 million in purchase price). For complete details on CompuCredit’s 2Q/03 performance visit CardData ([www.carddata.com]).
According to a new survey, the most common reason cited for choosing electronic checking was to avoid late payment fees. The survey, commissioned by payment processor Paymentech, also found that only half of 18-34 year olds pay bills with a paper check and that households with incomes of more than $75K a year are twice as likely to pay bills online. Other key findings: half of households with 6-8 people have used e-checking in the last year; Hispanics are more likely to use e-checking than Caucasians and African Americans; and, 45% of Americans who e-checked four to 10 times in the last year did so to avoid late charges. Electronic checking allows consumers to provide their bank account information to have a bill debited from their account – either on a one-time or recurring basis.Details
Providian reported Friday that charge-offs for its securitized card loans headed north during July to 17.39%, but remain substantially lower than levels posted for the first five months of this year. However, Providian’s delinquency rate resumed its downward trend during July, after a one-month uptick in June. Providian’s securitized delinquency rate for July dropped 2 basis points to 11.96%, compared to 11.98% in June, and 13.26% in January. On a reported basis, Providian’s charge-offs dropped to 12.05% for July, compared to 12.85% in June, and 15.16% for May. Reported delinquency declined to 7.70% in July, from 8.31% in June and 8.68% in May. On August 1st, Providian sold approximately $824 million in credit card receivables, representing about 435,000 credit card accounts, to CompuCredit and Merrill Lynch. (CF Library 8/14/03)
SECURITIZED PVN 2003
Month Charge-offs Delinquency
Jan 03 19.38% 13.26%
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%
Source: CardData (www.carddata.com)