Rate Cut

There is a wide consensus that the Federal Reserve will cut interest rates next week by 25 bps, however, some expect the cut to be as much as 50 bps. The federal funds rate is already sitting at 1.25%, a 45-year low, and could dip to a 60-year plus low next week. The impact of a rate cut next Tuesday on credit card interest rates will be minimal. However, 0% APR intro offers may expand among smaller issuers and existing zero rate offers by major issuers could be extended to longer periods. Most card issuers have instituted floor rates on new cards. Credit card interest rates have been rising over the past year as punitive interest rates are assessed on more accounts.

Average Credit Card Interest Rates
Jan 01: 16.49%
May 01: 15.83%
Jan 02: 14.33%
May 02: 14.60%
Jan 03: 14.81%
May 03: 14.94%

Source: CardTrak ([www.cardtrak.com][1])

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



VISA reported that transactions for its PLUS ATM network fell 30% in the first quarter while Interlink transactions rose 32%. VISA has 357,000 PLUS ATMs in the USA which produced 118 million transactions in the first three months of this year. Interlink transaction dollar volume rose 38% during the first quarter to $7.3 billion. VISA handled nearly 210 million Interlink transactions in 1Q/03. At the end of the first quarter, there were 70 million Interlink-branded cards-in-force. VISA has more than one million acceptance locations for Interlink cards in the USA.


Mexican Swap

Bank of America and Mexico’s Grupo Financerio Santander Serfin have inked a reciprocal ATM access deal. Effective this week, BofA customers will now have free access to 1,770 Santander Serfin ATMs throughout Mexico. In return, Santander Serfin customers will have free access to 13,000 Bank of America ATMs in the USA. In December 2002, Bank of America acquired 24.9% of Santander subsidiary, Grupo Financerio Santander Serfin. Bank of America says 75% of the total U.S. Hispanic population lives within its service area. Grupo Financerio Santander Serfin is the most profitable and the third largest bank in Mexico.



British travelers will make about 40 million holiday visits abroad this year and spend close to £18 billion. The number of overseas visits and the level of holiday spending has been steadily increasing over the last 20 years, from less than 15 million holidays in 1983 with under £3 billion spent. The “Switch/Maestro” card is reminding its 23 million cardholders that they can use their 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 an agreement between “Switch” and “MasterCard” to replace “Switch” with the “Maestro” global debit brand over the next few years.


Branded Cash ATMs

FL-based Global Axcess and its Nationwide Money Services subsidiary have signed three more financial institutions for its “Branded Cash” ATM service to bring its total branded ATMs in operation to more than 300. The Program welcomes the Carolina Collegiate Federal Credit Union, the 1st Bank of Tennessee, and Community South Bank. The “Branded Cash Program” is designed to provide turnkey, economical ATM solutions to financial institutions. A total of four branded ATM sites will be initially deployed in geographic areas serving the customers of these institutions.


Opteva 740

Diebold is expanding its “Opteva” line of ATMs next week with the introduction of a new through-the-wall, drive-up unit. The new “Opteva 740” is the first drive-up ATM to offer a two-color graphical receipt printer with high-resolution graphic printing capabilities. The new ATM can also be upgraded with full deposit automation functions. It is powered by “Agilis,” Diebold’s open-standard, cross-vendor software platform, and is also supported by Diebold “Premier Services.” It also employs “USB 2.0” architecture which is an exclusive feature of the “Opteva” line. Diebold has installed more than half of all bank-owned ATMs within the USA.


Greenland Judgement

Greenland Corporation has won a $4 million judgement against Intelli-Corp and IntelliGroup for fraudulently entering into a private placement transaction to fund Greenland. The amount was comprimised of an award of $2,950,640.02 for compensatory damages and an award of $1,000,000.00 for punitive damages. The Court found, by clear and convincing evidence that Defendants acted maliciously and with the intent to defraud Plaintiff Greenland Corporation when they entered into a private placement transaction to fund Greenland Corporation.


ECHO Hires Shankar

Electronic Clearing House has hired Sharat Shankar, former VP at First Data’s TeleCheck International subsidiary, as VP of Risk Management and Business Intelligence, a new position on the Executive Committee. Shankar was responsible for business analytics, operations support and risk management on a multi-billion dollar transaction portfolio while he was with TeleCheck. An industry expert in risk management, Mr. Shankar brings nearly a decade of diverse functional experience in marketing, operations, customer retention, financial analysis and risk management to ECHO. ECHO provides a complete solution to the payment processing needs of merchants, banks and collection agencies.


Club Rewards

Diners Club is hiking its late fee and is making its “Club Rewards” points subject to forfeiture for delinquent cardholders. Effective with the July billing cycle, cardholders will forfeit points if they fail to make the minimum payment within two billing cycles of the statement date. Diners will reinstate the forfeited “Club Reward” points if the cardholder brings their account current and pays a $15 fee for each billing period of points missed. The 55-62 day grace period is a standard feature on the Citigroup’s charge card product. Cardholders who fail to pay the minimum payment due by the two-month cut-off date, will also be assessed a $30 late fee plus 2.5% per month on the unpaid portion. The change in the late charge from $20 to $30 will be effective next month. Diners Club’s new point forfeiture policy is not unique in the industry. American Express also imprisons or cancels “Membership Rewards” points for delinquent cardholders. Other popular reward programs such as “Citibank American Airlines AAdvantage” and Bank One’s “United Airlines Mileage Plus” have similar penalties for late paying cardholders.


[1]: http://www.cardweb.com/images/d/dinersclub/clubterms.jpg


STV Cards

A new study projects that the number of prepaid debit cards issued annually will surge from 6.2 million in 2002, to almost 40 million in 2007. The research also found that among people in the U.S. with credit cards, more than 40% own a credit card that is within 5% of its credit limit. The PELORUS Group report entitled “Stored Value: 21st Century Currency” says this forces cardholders to use their credit cards like debit cards as they must pay down the balance to make additional purchases. PELORUS also says that approximately 50 million adults in the USA don’t possess credit cards and nearly 10 million households do not have bank accounts. The report concludes that due to these facts, a possibility exists for a major shift from credit to debit cards in the near term. The major areas of potential growth include prepaid debit cards for retail, payroll and insurance claims applications.


ID Theft Complaints

The FTC noted yesterday that it added nearly 279,000 complaints from identity theft victims last year to its “Identity Theft Data Clearinghouse” database, compared to 117,000 complaints filed in 2001. Consumers are advised to contact the three national consumer reporting agencies and have a fraud alert placed in their file; close accounts identity thieves have accessed and dispute unauthorized charges; and report the theft to the police and get a police report. The FTC also has worked to provide consumers with information through its consumer education and outreach efforts.



Atlanta-based Terminal Cash Solutions, a/k/a SMARTBanks has taken license with Toronto-based TNS Smart Network for its “Smart Processing Suite.” The proprietary software enables processing for ATMs, cashless ATMs, POS and POS scrip devices, as well as stored value, payroll and gift cards. SMARTBanks is currently processing PIN-based ATM and POS transactions from more than 2,200 locations, with a network operations center in Birmingham, Alabama and banking, marketing, and sales teams based in Southern Florida. TNS Smart Network is Canada’s largest privately owned transaction processor.