Sony & GlobalCollect

TPG N.V.’s GlobalCollect subsidiary has inked a contract with Sony Online Entertainment to provide the WebCollect global online payment service for Sony’s multiplayer online subscription-based gaming business which includes the EverQuest series with more than 430,000 subscribers. With WebCollect, Sony is no longer limited to only accepting credit card payments. The company can now process subscription-based orders anywhere in the world in the currency and payment method that customers choose.

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AB 865

A new law that is set to go into effect in California on July 1st which requires credit card issuers to show certain consumers the impact of making minimum payments may be blocked at the end of this month. A group of major credit card issuers, including Citibank, who had a hand in crafting the legislation last year, have filed a lawsuit in U.S. District Court this month to block the new law. As a result, consumer groups are furious. The new law, AB 865, requires credit card companies to disclose on customer bills the total costs and length of time it will take to retire credit card debt of $1,000, $2,500, and $5,000 if a consumer makes just the minimum payment. Consumers who make the minimum payment for six months will receive this information based on their exact outstanding balance. Credit card companies are also required to maintain a toll-free telephone number to call a “live” customer service representative so that individualized minimum payment information can be obtained. The new disclosure requirement was a compromise proposal signed into law after the financial industry lobbied Governor Gray Davis in 2000 to veto a stronger version of the bill that would have required credit card issuers to send minimum payment warnings to all cardholders. Citigroup drafted the outline of the compromise that eventually watered-down the legislation. Consumers Union says no financial institutions opposed the compromise proposal when it was considered and adopted by the California legislature last year. The card issuers’ lawsuit claims that the new state law is preempted by the National Bank Act and that national banks cannot be required to abide by state laws that impede their business. It also alleges that the California law violates the commerce clause by significantly impeding interstate commerce. The case is scheduled for a hearing on June 28.

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Slot Machine ATM Access

FDC’s Global Cash Access and its QuickPlay Infonox subsidiary have inked a deal to deploy Infonox’s Active Payment Platform to enable casino customers to use their ATM cards at the slot machine. The Active Payment Platform has been extended to not only manage the EFT side of transactions but also to operate the entire monitoring and configuring of the transaction system. Key requirements in such a system, including message and data encryption, key management, POS and server configuration and management as well as back-end systems such as dispute resolution, transaction tracking and reporting, reconciliation, and settlement are all handled by the Infonox APP.

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ICE PocketChange

Kansas-based Wirca has introduced the first software application that allows consumers to complete mobile-phone-initiated, cashless payments at retail stores and restaurants equipped with Hypercom’s ICE card payment terminals. Wirca’s PocketChange application is running in test markets on Hypercom’s 5500 and ICE 5500/5700Plus terminals. The mobile payment functionality can be added to the Hypercom terminals via a simple software download. The Learning Tree store chain is currently testing PocketChange. Hypercom’s ICE 5500Plus and ICE 5700Plus are high performance, high speed, touch screen card payment terminals that incorporate Hypercom’s new SureLoad clamshell printing technology and ePOS-infocommerce framework.

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PayPal/UPS Shipping

UPS and PayPal have partnered to completely integrate the online payment process with digital shipping tools. This is the first time that UPS has integrated its shipping API into a third party’s branded product. The “PayPal Shipping With UPS” enables customer shipping information to be populated into the shipping label as a one-step process. Any PayPal user may utilize the new feature, enabling sellers to pay shipping charges via a PayPal virtual debit card. UPS bills sellers directly for shipping charges. As a result, sellers do not need to worry about collecting additional money for shipping and buyers are not overcharged. The PayPal service automatically sends payment to the seller at the close of a transaction. Since going public in February, PayPal has formed a number of strategic alliances and is in the process of switching its U.S. credit card processing services from InterCept’s Electronic Payment Exchange to Wells Fargo. PayPal also offers a co-branded MasterCard debit card which is linked to PayPal’s interest earning “Money Market Reserve Fund” which holds funds pending PayPal transactions. (CF Library 12/22/00; 6/13/02)

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Discover 2Q/02

While Morgan Stanley experienced sharply lower profits from its securities business during the second quarter, its Credit Services division, which includes Discover Card, posted a 15% increase in earnings to $196 million. Although credit card receivables and volume declined in fiscal 2Q/02, higher net interest, cardholder late fee revenues, and lower marketing expenses produced the strong profits. The interest rate spread widened 123 basis points compared to 2Q/01, driven by a decline in credit services cost of funds. Merchant and cardholder fees rose 8% to $552 million as a result of higher cardholder fees, especially late charges, and an increase in the merchant discount rate. The credit card net charge-off rate rose to 6.30%, 132 basis points higher than a year ago, a 26.5% increase. Discover says this is due to continued weakness in the U.S. economy and the adverse impact of the seasoning of cardholder accounts. The over-30 day delinquency rate improved to 5.63%, the lowest level in the last seven quarters. Discover add 200,000 net new accounts during the quarter, but the number of active accounts declined by 400,000 compared to the previous quarter. For complete details on Morgan Stanley/Discover’s second quarter performance visit CardData ([www.carddata.com][1]).

DISCOVER CARD PORTFOLIO SNAPSHOT
2Q/01* 3Q/01* 4Q/01* 1Q/02* 2Q/02* Y/Y CHNG
Receivables: $50.2b $49.7b $49.3b $49.6b $49.4b -1.6%
Volume: $23.5b $23.3b $22.1b $24.1b $23.5b NC
Accounts: 44.7m 45.4m 45.7m 46.0m 46.2m +3.4%
Actives: 24.3m 24.0m 24.0m 23.8m 23.4m -3.7%
Chargeoffs: 4.98% 5.79% 5.85% 6.49% 6.30% +26.5%
Delinquency: 5.84% 6.31% 6.85% 6.75% 5.63% -3.6%
Yield: 13.34% 13.34% 13.48% 12.63% 12.64% -5.2%

2Q/01 fiscal quarter ended 5/31/01; 3Q/01 fiscal quarter ended 8/31/01;
4Q/01 fiscal quarter ended 11/30/01; 1Q/02 ended 2/28/02; 2Q/02 ended 5/31/02.
Source: CardData (www.carddata.com)

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

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@pos VAR

Cleveland-based Datavantage has become a certified VAR for @pos’ POS signature capture and payment terminals in the specialty retail market. Datavantage will sell the full line of @pos signature capture and PIN-based debit products, including PenWare 1500, iPOS 3100, TX.C, and iPOS TC terminals, and its Crossvue receipt and signature storage services. The combined @pos and Datavantage solution offers retailers opportunities to lower payment processing costs and chargebacks while encouraging customer interaction at the point-of-sale.

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DataCard & OneSMART

MasterCard International and Datacard Group have signed a multi-year strategic alliance to support the deployment and management of smart card programs by MasterCard members including smart card security consulting services, training and education programs. The multi-year agreement will provide MasterCard’s members with Datacard’s solutions for developing, testing, personalizing and managing smart cards. The solutions are specifically designed to simplify the migration from traditional magnetic stripe cards to smart cards by creating and collecting new smart card data and personalizing the data needed on the chip.

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