Bank of America announced yesterday it has expanded the mini card program to its “Check Card.” BofA, the largest issuer of “VISA Check Cards”, is the first financial institution to offer a mini card linked to a customer’s checking account. Initially launched to credit card customers in October, the BofA mini card is about half the size of a regular “Check Card,” and is designed to be attached to a key chain. The card can only be used with swipe terminals, not ATMs. Bank of America has more than 17 million “Check Card” holders. By the end of this year, the company says it will have issued mini cards to more than 11 million BofA customers. BofA also holds the patent for the new mini card. Following the first year, under a license from Bank of America, VISA member banks will be permitted to issue VISA-branded mini cards, for which Bank of America will receive royalty payments. (CF Library 10/2/02)Details
Vodafone and LogicaCMG have teamed to launch Vodafone’s m-pay cards service which enables Vodafone’s UK customers to use a phone card to purchase theatre tickets, books, CDs, etc. without the need to enter credit card details every time. The first retailers to participate in the mobile wallet program are customers of WorldPay, the electronics payment specialist owned by Royal Bank of Scotland Group. Logica’s integration with WorldPay will potentially enable more than 20,000 Web merchants to use the Vodafone m-pay cards service. LogicaCMG also assisted Vodafone in integrating Digital Rum, a WAP Merchant
Aggregator. To register for the m-pay cards service, customers simply access Vodafone m-pay on the vodafone.co.uk web site, and enter their credit/debit card number and address details these are verified by unique software integrated, customized and implemented by LogicaCMG.
Speakers from leading technology companies, government agencies and industry research firms will address technology and policy considerations for protecting identity at the Smart Card Alliance February Mid-Winter Conference to be held in Salt Lake City, Utah from February 12 ÃÂ 13, 2003. The Smart Card Alliance is a not-for-profit, multi-industry association of member firms working to accelerate the widespread acceptance of multiple applications for smart card technology. Through specific projects such as education programs, market research, advocacy, industry relations and open forums, the Alliance keeps its members connected to industry leaders and innovative thought.Details
The OCC confirmed yesterday it has forced SD-based First National Bank in Brookings to pay $6 million in restitution to credit card customers harmed by its marketing practices. FNB operated a number of sub-prime credit card programs that ended up producing little or no available credit to its customers. For example, customers were required to pay $75 to $348 in application fees, and were subject to security deposits or account holds ranging from $250 to $500. Because of the high fees and required deposits, a high percentage of applicants received cards with less than $50 of available credit when the cards were issued. In another program, the bank’s television commercials promised a “guaranteed” card with no “up-front security deposit” and a credit limit of $500. The bank then placed a $500 “refundable account hold” on the $500 credit line. As a result, customers received a credit card with no available credit when the card was first issued. In another program, customers were required to make a $100 security deposit before receiving a card with a $300 credit limit. An additional security deposit of $200 and a $75 processing fee were charged against the card when it was first issued. As a result, the customers who received the card had only $21 of available credit when the card was first issued. The OCC says the bank also engaged in a number of practices that the OCC believes may have confused customers. For example, in a third program, the bank advertised a card with no annual fee, but which carried monthly fees. Although those fees were disclosed, the OCC believes that monthly fees effectively function as annual fees. The OCC also ordered the Bank to terminate, by March 31, merchant processing activities conducted through First American Payment Systems. The OCC found that the bank had an unsafe volume of merchant processing activities and that bank insiders with financial interests in the company impermissibly participated in bank decisions that affected their personal financial interests.Details
J. P. Morgan Chase reported this morning that its credit card outstandings were flat compared to the third quarter, but 23% higher than 4Q/01 due to its acquisition of $8.2 billion in Providian outstandings last year. Charge-offs were also higher than the previous quarter and year-ago quarter, due primarily to the inclusion of the Providian portfolio. Gross dollar volume of $21.2 billion for 4Q/02 was down 8% compared to 3Q/02 but up 4% over 4Q/01’s $20.3 billion. Outstandings at EOY 2002 were $51.1 billion compared to $41.6 billion at EOY 2001. On a managed basis, the credit card net charge-off ratio was 5.75% for the fourth quarter, compared to 5.59% for the third quarter, and 5.56% for the fourth quarter of 2001. The 30+ day delinquency rate was 4.67%, up 20 basis points from 3Q/02 but down 10 basis points from 4Q/01. For the fourth quarter, Chase added 600,000 net new accounts, ending 2002 with 29.2 million gross credit card accounts. One year ago Chase announced its purchase of a slice of the Providian portfolio which included $7.0 billion in “Platinum” accounts and $1.2 billion in “Classic” accounts. For complete details on Chase’s 4Q/02 performance, plus prior results, visit CardData ([www.carddata.com]). (CF Library 1/16/02)
Wells Fargo reported yesterday its fourth quarter outstandings were up 5.0% compared to the previous quarter, and up 6.7% compared to 4Q/01. Credit card volume increased by 9.0% to $3.5 billion, compared to $3.2 billion one year ago. Wells active account ratio was 59.2% at EOY 2002. For the fourth quarter Wells added more than 28,000 net new accounts. At the end of 2002, Wells had 5.3 million gross accounts and 6.9 million cards-in-force. For complete details on Wells Fargo’s 4Q/02 performance, plus past performance, visit CardData ([www.carddata.com]).
WELLS FARGO PORTFOLIO SNAPSHOT
4Q/02 4Q/01 CHANGE
OUT: $5,672,931,433 $5,317,074,186 +6.7%
Q/VOL: $3,475,663,433 $3,189,876,838 +9.0%
ACCTS: 5,326,341 5,209,428 +2.2%
ACTIVES: 3,153,681 3,044,835 +3.6%
CARDS: 6,912,602 6,767,490 +2.2%
Source: CardData (www.carddata.com)
Capital One reported 4Q/02 profits of $239.7 million, a 34.9% increase over the fourth quarter 2001. However, Cap One’s managed net revenue margin decreased to 16.11%, from 17.49% in the previous quarter primarily due to its shift away from the sub-prime market. Cap One’s account base also dropped by nearly 800,000 accounts during the fourth quarter to 47.4 million accounts. The managed net charge-off rate increased to 6.21% in the fourth quarter from 4.96% in the previous quarter. The managed delinquency rate (30+ days) increased to 5.60% for 4Q/02, compared to 5.36% for the third quarter. Cap One says the increase in delinquency and charge-offs reflects the seasoning of sub-prime accounts added to the portfolio in 4Q/01 and early 2002, and the slower growth in the portfolio in the fourth quarter of 2002. The company now expects its managed charge-off rate to increase to the mid-to-high six percent range in the first quarter of 2003 and remain in this range in the second quarter of 2003. In the second half of 2003 the company now expects the charge-off rate to decline to the low-to-mid six percent range. Managed loan balances for EOY 2002 increased by 32%, to $59.7 billion. For complete details on Capital One’s 4Q/02 performance as well as historical performance visit CardData ([www.carddata.com]).
GE Consumer Finance will be expanding the use of Mosaic’s EFT product,
“Postilion,” worldwide within two years. “Postilion” is used to perform
stand-in authorization for GE’s “PaySys VisionPLUS” host systems.
Transactions are currently routed from retail facilities worldwide to the
“Postilion” system in either Thailand or the United Kingdom for
verification and approval. Once other countries adopt the new system,
consumer-generated transactions will be routed to the “Postilion” server
closest to the country where the transaction originated. The success of the
first two Postilion installations for GE Consumer Finance’s businesses in
the United Kingdom (2001) and Thailand (2002) resulted in a commitment from
GE Consumer Finance to roll out “Postilion” services in Indonesia, Poland,
Hungary and Mexico by the end of 2004.
Arbitration clauses in consumer credit card agreements were strengthened last week as California’s Second District Court of Appeals ruled that the Federal Arbitration Act preempts provisions of the California Unfair Practices Act. Under the ruling class action arbitrations are effectively prohibited. Card issuers began switching to arbitration clauses in 1999 to stem the flood of class action cardholder lawsuits over business practices. The move has drawn widespread opposition by trial attorneys, who benefit the most from class action credit card lawsuits. The California case resulted from an action taken by a Discover cardholder who claimed that Discover breached its cardholder agreement by imposing a late fee on payments that were received on the due date but after an undisclosed 1 p.m. cut-off time.Details
NV-based Horseshoe Gaming Holding Corp. has signed an agreement to deploy 3,000 new IGT machines and three “EZ Pay” systems to be installed over the next three years, along with retrofits of “EZ Pay”-ready machines. The program includes the purchase of more than 3,000 new IGT machines and three EZ Pay(R) systems to be installed over the next three years, along with retrofits of EZ Pay(R)-ready machines to offer ticket functionality on 100% of the machines on Horseshoe’s three casino floors.Details
Euronet Worldwide is selling its UK ATM network to Bridgepoint Capital
Limited for $29.6 million. Bridgepoint, a London-based private equity firm,
plans to operate the 745 ATM UK network under the name Bank Machine
Limited. Bridgepoint has also signed an outsourcing agreement with Euronet
to drive the ATMs from its European Operations Center in Budapest, Hungary.
Euronet plans to use the proceeds to repay debt and/or invest in new
business. Euronet Services (UK) Ltd. was formed in 1998. All 22 of its
current employees will remain with Bank Machine Limited. Euronet says it
will focus on obtaining additional outsourcing contracts in UK and
CardinalCommerce announced it has hired Roger Connolly as senior vice president, International Sales. He is located at Cardinal’s executive offices in Cleveland, Ohio and London, UK.
Michael A. Keresman, III, CEO and co-founder of CardinalCommerce, stated, “Roger Connolly is a highly significant addition to our executive team. He brings us extensive international experience and a successful track record in the development and sale of secure banking systems and commerce platforms. We are pleased that he has joined us, and we look forward to his contribution.”
Mr. Connolly has more than 20 years’ experience in assisting banks and other financial institutions around the world. Previously, he was employed as vice president, Global Sales at The Brodia Group, a leading global vendor of transaction authentication technology for web-based, mobile and other network devices. Prior to joining Brodia, Mr. Connolly held globalexecutive sales positions at Trintech Technologies, Commerce Direct International and Wang (Europe).
Mr. Connolly commented “I am very excited to join Cardinal’s executive team at a time when the demand for authentication technology is soaring. As the expanding volume of online transactions brings with it increasing levels of fraudulent activity, especially in emerging markets, Cardinal’s authentication solutions are perfectly positioned to become the #1 choice for banks and financial institutions around the world, who demand a safe, secure and confidential onlinepayment method for cardholders and merchants.”
About CardinalCommerce Corporation
CardinalCommerce Corporation is a leading provider of a technology-neutral authentication platform for securing electronic and wireless commerce, thus ensuring that individuals, businesses and government agencies can process electronic transactions and access confidential information safely, securely and privately. A significant application of Cardinal’s proprietary technology, the Cardinal Payment Authentication Platform, provides consumers, merchants, credit/debit card issuers, and processors the ability to conduct fully authenticated Internet-based e-commerce, while protecting the transactions from fraud. For more information, visit [www.cardinalcommerce.com].