BofA OBP

A new study on Bank of America’s unprecedented decision last year to eliminate its $5.95 per month online bill payment fee has produced a significant spike in bill pay penetration within BofA’s online banking customer base and has attracted a new customer group to the service. The research by Compete reveals that the new pricing had the greatest appeal to a new demographic segment: customers who signed up since free service began tended to be younger (7% higher composition of 18-to-34 year-olds), and had a lower income (5% higher concentration in the under $60,000 annual income category) than prior OBP customers. Furthermore, the free service also attracted consumers with a markedly different banking profile: new BofA online bill pay customers were more interested in credit card products and less interested in investing and lending products than existing OBP customers. They also showed a higher propensity to research service offerings on competitive bank sites compared to existing OBP customers. The free service also stimulated online bill pay penetration, but not overall online banking customer growth: BofA averaged just 6% monthly online banking customer growth from April to December (following the May elimination of fees) versus 8% growth from January to April.

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Qualteq Acquisition

After six months of seeking a partner to continue growth in the North American plastic card industry, NJ-based Qualteq is being acquired by IL-based Versatile Card Technology. Terms of the deal were not disclosed. VCT says Qualteq’s customer base and unique patented products including the “Foil Card” and “Life Guard Card,” as well as its location were key factors in its decision. QualTeq’s parent company, AmaTech AG of Pfronton, Germany, filed for insolvency last summer. However, QualTeq is a separate Delaware incorporated entity and is independently financed in the USA. The firm operated as a separate business from AmaTech. QualTeq has a capacity to produce more than 100 million secure transaction cards per year. VCT has the card capacity to produce over one billion cards per year. Qualteq will join the VCT group of Companies which include: Creative Automation, Unique Embossing Services, Unique Mailing Services, Unique Data Services, Automated Presort, Global Card Services and Fulfillment Xcellence Inc. (CF library 7/22/02)

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Sears Shakeup

The remake of Sears’ top management continues as its general counsel resigned yesterday and its SVP of public relations is set to depart next month. Meanwhile, the abrupt October 2002 firing of Sears’ top credit executive late last year, which turned into a personal lawsuit, will be heard in court on March 6. Kevin Keleghan, the former president of Sears credit division, filed a lawsuit in mid-November alleging that Sears has failed to pay him severance benefits, and that CEO Alan Lacy scurrilously attacked his character and credibility. Lacy said last year he had lost confidence in Keleghan after the company uncovered serious problems in its credit card portfolio. Sears has asked the court to dismiss the lawsuit alleging that Keleghan fraudulently induced Sears to sign a severance agreement after Keleghan realized he would inevitably face termination over Sears’ credit problems. Sears also believes Lacy’s personal comments were protected expressions of opinion. Meanwhile, Anastasia Kelly resigned as general counsel yesterday after four years. She will be replaced by Steve Cook, VP/deputy general counsel. Ronald Culp, Sears SVP/public relations is retiring at the end of February. (CF Library 10/7/02)

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FREESTAR FUNDING

Dublin-based FreeStar Technologies has signed a $7.5 million equity
funding agreement with a U.S. investment fund. FreeStar enables ATM and
debit card transactions on the Internet and credit card processing through
a its Northern European processor, Rahaxi Processing Oy. The company’s
“Enhanced Transactional Secure Software” is a proprietary software package
that empowers consumers to consummate e-commerce transactions on the
Internet with a high level of security using credit, debit, ATM (with PIN)
or smart cards. It sends an authorization number to the e-commerce
merchant, rather than the consumer’s credit card information, to provide a
high level of security.

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Metris 4Q/02

Metris Companies/Direct Merchants Credit Card Bank reported this morning an eye-popping fourth quarter net loss of $48.5 million, topping its previous loss of $36.4 million in 2Q/02. The sub-prime issuer also reported its EOY 2002 credit card outstandings dropped by $270 million as the company has taken deliberate actions to slow account growth, utilize tighter underwriting standards, and implement more stringent credit line management strategies. Last month, Metris sold off $72.5 million worth of revoked and 2-cycle plus delinquent accounts. The managed net charge-off rate for the fourth quarter was 18.2%, compared to 16.5% in the third quarter, and 11.8% one year ago. Excluding the asset sales, the managed net charge-off rate would have been 16.1% in the fourth quarter, compared to 15.1% in the third quarter. The Company says the higher charge-offs are the result of the weak economic environment, higher bankruptcies, a declining receivable base, and the 2001 credit line increase program. The managed delinquency rate was 11.1% for the fourth quarter, compared to 10.8% percent in 3Q/02, and 9.4% in 4Q/01. Excluding the asset sales, the managed delinquency rate would have been 11.7% at EOY 2002, compared with 11.1% for the third quarter. As of December 31st Metris had $11,319,109,000 in credit card loans and 3,425,000 active accounts. Over the past twelve months Metris has shed nearly 500,000 accounts. Last week the Company announced it would take a $4.9 million charge in the first quarter for a workforce reduction. For complete details on Metris 4Q/02 results and past results visit CardData ([www.carddata.com][1]). (CF Library 1/23/02)

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

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CONSUMER CONFIDENCE

MasterCard International’s latest report on consumer confidence
shows that China, Malaysia, Thailand, New Zealand, India and Indonesia have
a more positive outlook for the next six months than other Asia/Pacific
countries. The “MasterIndex of Consumer Confidence,” which measures
employment, economy, regular income, stock market and quality of life,
found less optimism in markets such as Japan, Hong Kong, Singapore and the
Philippines .Australia consumer sentiment currently appears to be cautious.
The latest index of 44.6 reverses the trend in Australia, which has
manifested improved consumer sentiment over the four previous “MasterInde”
surveys. There is a decline across four out of five variables, and the
biggest drop is reflected in stock market (from 58.6 to current score of
44.6). Consumers in China are extremely upbeat about the future. Not only
does China presently register the highest “MasterIndex” score in the
region, but there is a substantial increase across all five variables. The
current index of 84.4 is almost at par with the highest China “MasterIndex”
ever of 84.8 (for December 2001 survey). In particular, employment (from
53.6 to current index of 74.6) and stock market (from 57.1 to current 68.3)
show notable gains. Within China, Shanghai (89.5) respondents are the most
hopeful today, although those in Beijing (83.2) and Guangzhou (80) appear
to be almost as positive, registering scores in the 80s levels. The
Japanese “MasterIndex,” at 15.0, is the lowest score for the latest survey.
Respondents are most anxious about the economy (6.6), employment prospects
(8.9) and quality of life (9.3) Within Japan, there appears to be a
slightly more hopeful outlook for the stock market (39.4).

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CompleteAssistant

Trilegiant Loyalty Solutions and VIPdesk have launched “CompleteAssistant,” a new personal concierge services tool that companies can customize for their customers. By giving CompleteAssistant as a customer benefit, a company can build consumer loyalty. Trilegiant Loyalty Solutions, a leading provider of motivation, retention and reward enhancements, joined force with world-class concierge services supplier, VIPdesk, to create CompleteAssistant.

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Diebold & Radia

Diebold has certified Novadigm’s “Radia Management Suite” to remotely manage the software and configuration of Diebold ATMs. Through the use of Novadigm’s advanced policy-based management, Diebold customers will benefit from rapid automated management of software, content, and security updates. This software suite reduces the need for manual onsite intervention that requires opening an ATM, which may interrupt the availability of ATMs to consumers. Novadigm’s solution also helps manage content, for example, by allowing the distribution of multi-media advertising videos as scheduled, and by collecting electronic journal files according to pre-set intervals.

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NPC & MGMA

National Processing Company has signed a contract to become a Medical Group Management Association AdminiServe partner offering card processing services including authorization and settlement services to MGMA’s 19,000 members. Founded in 1926, MGMA is the nation’s principal voice for medical group practice. MGMA’s mission is to improve the effectiveness of medical group practices and the knowledge and skills of the individuals who manage and lead them. MGMA leads the profession and assists members through information, networking, education and advocacy.

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payENKRYPT

San Diego-based InstaPay Systems has introduced “payENKRYPT” which uses a PIN pad to encrypt transaction data and once the transaction is complete the PIN entered is destroyed. To use an ATM card, payENKRYPT uses a PIN pad that easily attaches to a PC to securely encrypt transaction data per banking industry standards. The device is called a PIN pad because it allows the consumer to swipe their card, and then safely enter their Personal Identification Number (PIN) when an ATM/Debit card is used.

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Hispanics Online

A new study shows that Hispanic consumers spend more time online than total U.S. online consumers, nearly 10 hours a week at home (9.5) vs. 8.4 hours for all U.S. online consumers and 13.8 hours a week at work vs. 9.6 hours for all U.S. online consumers. The research by America Online and RoperASW also found that Hispanic online who have made purchases online, report spending an average of $439 over the past three months, on the heels of the generally more mature total online U.S. shoppers with a reported average of $543. Additionally, more than one-third of online Hispanics surveyed reporting they expect to increase their number of online purchases. The study also found that Hispanic online consumers surveyed who have not yet made a purchase online agree that concerns about security of credit card information (58%), lack of a 100% satisfaction guarantee (56%) and lack of free shipping (44%) are acting as impediments to shopping online.

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OMAN ID CARD

Munich-based Infineon Technologies has signed a contract to be the sole
supplier of secure micro-controller chips for use in smart identification
cards being issued by the Government of Sultanate of Oman. Oman plans to
issue about 1.2 million smart cards to citizens starting in the end of
2003. The ID card will be used for personal identification and
authentication, as a drivers license, as a passport and later as emergency
health card. The micro-controller chip incorporated into the card securely
stores an individual name, address, and data on the digital characteristics
of the card holder’s thumbprint.

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