ABNH 2Q/02

Credit card hologram manufacturer, American Bank Note Holographics, reported 2Q/02 revenues of $5.1 million, the same amount as comparable quarter in 2001. However net income for the quarter was $100,000, compared with net income of $200,000 for the second quarter of 2001. NY-based ABNH says the weakness in the U.S. and other economies has resulted in reduced volumes of transaction cards, and it expects this will continue to impact sales in this segment for the balance of this year. The company also noted that long evaluation and sales cycles continue to impact its short-term results. For complete details on ABNH’s 2Q/02 performance visit CardData ([www.carddata.com][1]).

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

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Fraud White Paper

Fair Isaac is sponsoring a new Lafferty Group White Paper highlighting global payment card fraud trends and technology solutions designed to mitigate fraud. This coincides with the recent completion of Fair Isaac’s merger with HNC Software, National Fraud Awareness Week and the 10th anniversary of the former HNC’s industry-leading Falcon Fraud Manager. Lafferty Group is expected to complete the “Global Payment Card Fraud” paper by Oct. 15, 2002.

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CellBucks

A Ontario-based startup has launched a new program that enables sports fans to order and pay for food and beverages from their cell phones and have it all delivered right to their seats. CellBucks confirmed Friday it has sealed its first deal with the Bowie (Maryland) Baysox and Ovations Food Services, the concessionaire at Prince George’s Stadium in Maryland. The new CellBucks payment system is compatible with any type of cell phone on any cellular service provider’s network. The new service will be available for fans seated in reserved or field box seats of the stadium. Users need to visit the CellBucks Web site to register and provide some basic information and a credit card number. Members will instantly be given a personal pass code for immediate use of the service. CellBucks says it is partnering with major restaurant chains to provide efficient ordering for home delivery and drive-through. The service will enable consumers to access menus online and pay via cell phone. Patrick Bird is the founder, president and CEO of the new firm. Bird was the founder and former CEO of Isolation Systems Limited, and developed and deployed first commercial VPN in partnership with Cisco Systems.

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CANADIAN TIRE 2Q/02

Canadian Tire Financial Services reported that its “Project Accelerate” program to convert retail credit accounts to “Options MasterCard” continues to accelerate receivables growth. Approximately 230,000 new “Options MasterCards” have been issued so far this year. The number of Canadian Tire MasterCard accounts increased to 2 million by the end of the second quarter, up 57.3% from the end of the same period last year. Direct acquisition of MasterCard accounts has begun in most markets across the country. At the end of the second quarter, gross receivables at CTFS were $1,586 million, a 31.4% improvement over the comparable quarter last year. “Options MasterCard” receivables grew by 113.2% due primarily to higher sales and average balances from the conversion program. At the end of the second quarter, MasterCard receivables represented 78.4% of the total credit charge receivables. During the balance of 2002, the final group of qualifying retail card accounts will be converted to MasterCard and all in-store account acquisition
programs will be converted from retail card to MasterCard. In this wave of conversions, approximately 186,000 additional retail card accounts and $56 million of retail credit charge receivables are expected to be converted to MasterCard.

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SUREFIRE 2Q/02

Montreal-based SureFire Commerce reported a second calendar quarter loss of $4.9 million, compared to net earnings of $1.0 million in same quarter one year ago. Revenue for the quarter was $11.7 million, compared to $25.8 million for the comparable period of the previous year. The decline in revenue was due to continued softness in its core business of transaction processing for the licensed online gaming industry.
SureFire Commerce adopted a restructuring plan in March, and is executing a strategic plan, announced in May, to accelerate its penetration into three additional niche markets. The restructuring and strategic plans called for a workforce reduction from approximately 275 employees as at March 31 to 175 by June 30. SureFire Commerce’s strategic plan emphasizes revenue diversification, by leveraging existing assets, into the niche markets of bill payments and MOTO, Internet payments processing, and check payments processing.

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MOSAIC 2Q/02

Toronto-based Mosaic Group reported second quarter revenue of $144.7 million compared to $213.0 million for the same quarter one year ago. Gross profit also declined from $58.3 million in 2Q/01 to $43.2 million. In the second quarter Mosaic continued to implement its restructuring plan announced in January. Key restructuring actions include the consolidation of a number of physical locations, the exit from various unprofitable customer accounts, divestiture of certain non-core businesses and a reduction in the work force. The Company ended the second quarter with total assets of $756.3 million, a decrease of 8% from the year ended December 31, 2001. The largest component of this decrease was goodwill, with a value of $521.3 million, a decrease of $68.4 million over last year. This decrease is primarily due to the impairment loss of $75 million taken on goodwill related to the UK and Marketing and Technology divisions as a result of the adoption by the Company, with effect from January 1, 2002, of the new accounting standards applied to
acquisition related goodwill and intangible assets.

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E-TREC Cards

The U.S. GSA officially announced the award of a task order from its Smart Access Common ID Contract to issue the Electronic Treasury Enterprise Card or “E-TREC” card to U.S. Treasury employees. GSA’s FTS issued the $1.4 million task order to Maximus, one of four prime vendors selected under its multiple award indefinite delivery, indefinite quantity contract to develop smart card products and services. Approximately 9,000 employees are expected to receive “E-TREC” cards beginning in the fall of 2002. The Secret Service, Bureau of Alcohol, Tobacco and Firearms, the Federal Law Enforcement Training Center, the Bureau of Engraving and Printing, the Internal Revenue Service, and Treasury Departmental Offices will participate in the implementation.

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WORLDPAY UCAF

Cambridge-based WorldPay has launched a global program using MasterCard’s “UCAF” authentication infrastructure which shifts the liability of online transactions away from the online merchant and its acquirer. The implementation of MasterCard UCAF will enable WorldPay’s 17,000-plus multi-currency merchants in 115 countries to accept cardholder authentication information from MasterCard issuers following successful verification of the cardholder’s identity by password, PIN, or other issuer approved authentication techniques. As a result, WorldPay merchants will benefit from MasterCard rule changes that shift liability for fraudulent transactions not authorized by the cardholder away back to the issuer. As WorldPay’s European-based merchants are enabled, they will benefit from this liability shift immediately for all intra-European MasterCard transactions. Subsequently, all of WorldPay’s merchants are positioned to benefit from a MasterCard global liability shift, planned for November for fully authenticated transactions. WorldPay’s Asia Pacific regional center is in Singapore. It also has operations in Germany and South Africa.

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Card Securitizations

Credit card asset-backed securitization issuers may face new challenges in the wake of actions taken by the FDIC as receiver NextBank. The recent developments have impacted ABS bondholders and may result in higher credit enhancement levels and potential rating actions for certain credit card ABS issuers going forward. Fitch said Thursday that of the actions taken by the FDIC as receiver, its decision not to fund purchases during early amortization and effectively close charging privileges of the cardholder base has the broadest and most significant ramifications on credit card securitizations. Therefore, Fitch says the most obvious candidates for more severe purchase rate treatment are monoline credit card issuers with significant sub-prime exposure, regulated financial subsidiaries of retail issuers, and issuers currently operating under higher regulatory scrutiny including Providian, Metris, Capital One, and First Consumers.

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NPC & Oasis

National Processing Company has selected Oasis’ IST/Merchant Accounting System product as a component in its new merchant payment processing and settlement system. IST/MAS provides merchant processors a comprehensive solution for processing merchant credit and debit card transactions. MAS provides processors with the flexibility to manage an unlimited number of merchant business models with highly specific service requirements and processing fee relationships. In addition to financial processing charges for sales, authorizations and chargebacks, MAS provides the flexibility to price transactions according to non-financial services such as point-of-sale terminal rentals, as well as seasonal fees and discount rates. The flexibility of tiered transaction pricing also lets processors price transactions according to volume, and increase or decrease service charges in accordance with volume fluctuations. To facilitate revenue tracking, MAS also interfaces to general ledger systems so merchants can better track revenue and accounting processes.

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