The French firm Ingenico made it official last week that it is merging with IVI Checkmate. The two firms entered into merger discussions in February. Under terms of the deal, Ingenico will acquire all of the outstanding shares which it does not already own of IVI Checkmate in a cash acquisition valued at approximately $55.3 million. Prior to the deal Ingenico owned about 9% of IVI. Simultaneously with the execution of the merger agreement, Ingenico made a direct investment in IVI Checkmate by purchasing approximately 2.6 million shares of newly issued IVI Checkmate common stock for an aggregate purchase price of approximately $5.2 million. IVI Checkmate will use these proceeds for working capital and other general corporate purposes. This investment immediately increases Ingenico’s ownership of IVI Checkmate’s outstanding common stock to approximately 19.9%. (CF Library 2/5/01)Details
Hypercom Corporation has delivered 6000 T7PS and S8 Point of Sale terminals to Privredna Banka Zagreb in Croatia with a further 1000 to be shipped in May. This deal makes Hypercom the leading provider of POS payment terminals, and PBZ the largest POS acquirer in the country.
With its strategic partner, The New Intesa Group, one of the top ten European banking Groups, out of Italy, PBZ’s business strategy is to become a client-driven organisation using modern banking techniques and introducing new products into a newly dynamic market.
In 1998 PBZ installed a card processing host system and together with Hypercom built a fast modern transaction authorisation network, in order to facilitate profitable merchant acquisition. Since then, the bank has become the largest acquirer in the country. It now has a complete Hypercom infrastructure in place, POS – PIN pads Term Master IENs – IEN View, so that PBZ, unlike other banks in Croatia, can now accept all card types (Europay/MasterCard, VISA, American Express, Diners) on their POS terminals and perform extremely fast authorisations.
“Recently we have seen dynamic changes in the economic and social structure of Croatia as it adjusts to the standards of other European countries. PBZ is committed to matching this growth and our partnership with Hypercom allows us to provide the best service that our customers demand,” said Flora Lendvai, head of the card department at PBZ.
Hypercom’s T7PS terminal, upgrades authorisation-only equipment, allowing merchants to move to electronic data capture and accept debit cards for the first time. T7PS can read all types of credit, debit, check and charge cards. The T7PS can also accept new smart cards, is EMV certified, and an external PIN pad can be attached to support cardholder entry of PIN numbers. Dedicated function keys allow one-step operation of everyday processes, simplifying operations and making it an extremely popular choice with merchants. “We are pleased to have been chosen by PBZ as their strategic POS partner and look forward to working with them in the future as they roll out smart card programs, provide more cash register integration and communication options to merchants,” said Robert McLaughlin, Managing Director of Hypercom EMEA. “In addition, plans are being discussed to migrate the bank to Hypercom’s ICE platform with the many value-added services that it offers.”
About Hypercom ([www.hypercom.com])
Hypercom Corporation (NYSE: HYC) is a leading global provider of electronic payment solutions that add value at the point-of-sale for consumers, merchants and acquirers. Hypercom’s products include secure card payment terminals and web appliances, networking equipment and software applications for e-commerce, m-commerce, smart cards and traditional payment applications. Headquartered in Phoenix, Arizona, Hypercom maintains an installed base of more than 4 million card payment terminals which operate in over 100 countries and conduct more than 2.85 billion transactions annually. Hypercom’s Internet address is [www.hypercom.com]
About Privredna Banka Zagreb
PBZ has been in operation since 1962, when it was formed as an investment bank in the former Republic of Croatia. In 1989, PBZ was constituted as a joint stock company. It is fully licensed for all domestic and international banking activities through its business divisions. PBZ has a network of 16 branches and over 150 offices throughout Croatia (and representative offices in Frankfurt and Zurich).
Furthering the security of e-Transactions, ValiCert, Inc., a premier provider of trust solutions for electronic business transactions, announced that its newly announced ValiCert Trust Services has been selected by Visa U.S.A., the world’s largest consumer payments system. As part of this strategic relationship, Visa U.S.A. has selected ValiCert Trust Services to support its recently unveiled Visa Payer Authentication Service, which is part of Visa’s Secure Commerce Program. The ValiCert Trust Service solution is expected to allow Visa U.S.A. to quickly deploy the necessary infrastructure to provide proof management services to Visa member banks worldwide through the new Visa Payer Authentication Service.
Visa’s Payer Authentication Service enables card issuers to confirm the cardholder’s identity to the online merchant during the virtual checkout process. This service delivers a major benefit to consumers by protecting them against unauthorized use of their cards and gives merchants increased confidence in accepting payment cards for online transactions. Visa’s Payer Authentication Service uses the flexibility of ValiCert Trust Services to provide a record of the authenticated transaction. ValiCert’s new set of managed services, which is designed to simplify and speed up the deployment of secure business transaction infrastructures, allows customers of VTS in finance, banking, healthcare, e-Business, m-Commerce and other areas to rapidly and effectively address complex business problems in a valid, highly secure and provable environment with a minimal ramp up period.
“ValiCert’s security solution has played an important role for Visa in building our Payer Authentication Service,” said Kevin Weller, senior vice president of Technology at e-Visa, a division of Visa U.S.A. “Through partnerships with leading security firms like ValiCert, Visa can deliver on its promise to build consumer confidence in online shopping and protect cardholders and merchants from fraud.”
“Our mission with ValiCert Trust Services is to provide e-Commerce enterprises with the fundamental Internet infrastructure they require to perform online Transactions,” said Yosi Amram, president and chief executive officer of ValiCert. “Through our partnership with Visa U.S.A., ValiCert is able to dramatically extend its reach around the world, demonstrating the value of securing online transactions against fraud, as well as providing a valid forum for dispute resolution. Working closely with Visa U.S.A. is an excellent opportunity to showcase the benefits of selecting a ValiCert solution as a viable trusted source.”
About ValiCert Trust Services
ValiCert Trust Services (VTS) has been designed to deal with complex business challenges while providing a fully managed service that results in a complete business solution for the customer. Outsourcing e-Commerce infrastructure to ValiCert through the ValiCert Trust Services offering provides many benefits, including:
— Faster time to market through quick and easy deployment
— Cost-effective deployment, leveraging ValiCert’s investment in:
— Deployed trust infrastructure
— Managed systems and applications
— Staff trained in secure operations
— Investment protection against technology obsolescence and staff turn-over
— Peace of mind from bank-grade data center security and mission-critical reliability
— Trusted Third Party neutrality
To allow customers to greatly reduce time-to-market, ValiCert Trust Services also features a range of useful QuickStart programs. In addition, if a project requires customization or integration of third-party software, the ValiCert Professional Services Organization can deliver complete solution integration.
ValiCert Trust Services has been designed for applications within several vertical markets. For each of these distinct applications, ValiCert Trust Services can be tailored to provide a unique solution to meet the demands and challenges of each market.
ValiCert is a leading provider of trusted transaction infrastructure products and managed services for conducting business safely over the Internet. The company’s open and neutral security solutions are designed to enable enterprises and service providers to protect all phases of the transaction lifecycle regardless of the type of credentials that are used for authentication purposes. ValiCert’s products and services are available through its direct sales force, resellers and global affiliate network.
ValiCert has technology and marketing alliances with a range of security and e-Commerce companies, as well as systems integrators. The company’s customers include Global 2000 organizations in financial services, telecom, healthcare and government sectors. ValiCert is headquartered in Mountain View, California and has offices throughout the US, Canada, Europe and Asia. ValiCert is available on the World Wide Web at [http://www.valicert.com].
Early returns for the first quarter are showing a sharper decline in receivables than usual. Last year, first quarter outstandings were flat and in prior years, the 1Q contraction ranged from 1% to 3%. Among smaller issuers reporting thus far, the contraction has averaged about 6%, according to CardData ([www.carddata.com]). A few of the top issuers have also indicated a sharp drop in 1Q/01 receivables on the heels of the sinking economy. 1Q/01 results for the top issuers will be released starting next week.
1Q/01 EARLY SAMPLE GROUP
(Receivables in $Millions)
ISSUER 1Q/01 4Q/00 CHANGE
Baxter CU (IL) $85.2m $91.8m -7.2%
Trustmark Natl (MS) $61.5m $65.8m -6.5%
Pulaski Bank (AR) $46.0m $47.1m -2.3%
Pacific Service CU (CA) $39.1m $41.5m -5.8%
Provident Central CU (CA) $37.3m $40.1m -7.0%
Total $269.1m $286.3m -6.0%
Source: CardData (www.carddata.com)
The acquisition of the Wachovia card portfolio should give Bank One/First USA a badly needed shot-in-the-arm. Since the third quarter of 1998, Bank One/First USA has lost more than ten million gross accounts (5.6 million active accounts) in the wake of aggressive pricing policies that produced a strong consumer backlash and a fair amount of litigation. Bank One/First USA’s image has also been badly tarnished over the past 18 months among shareholders, resulting in a massacre of management. Yesterday’s announced acquisition of Wachovia’s portfolio will add about 2.8 million active accounts to Bank One/First USA’s portfolio, effectively replacing half of the issuer’s recent losses in its account base. More importantly, Wachovia’s pristine portfolio will add more than $8 billion to Bank One/First USA’s outstandings and may immediately add as much as $100 million per year to Bank One’s aftertax earnings. Combined, Bank One/First USA’s new portfolio will exceed $75 billion, making it second only to Citibank. However MBNA, with about $71 billion in domestic outstandings, is not far behind. As the new top management for First USA continues to dig in, it appears the horse race among the top ten issuers is switching gears.Details
Schlumberger Test & Transactions, a business segment of Schlumberger Limited announced the availability of its Cyberflex Palmera Java-based smart card in the US. Dramatically shortening time-to-market for secure financial applications and information technology, the new multi-application card builds on the proven security, functionality and performance of the Schlumberger Cyberflex smart card family.
Building on experience amassed by Schlumberger since introducing the world’s first Java-based smart card in 1997, the Cyberflex Palmera card is the cornerstone of a complete solution that includes a software development kit, applications, training, card and project management, consulting, technical support and integration services. It conforms to the full Java Card 2.1.1 and Visa Open Platform 2.0.1 standards, and is designed for today’s needs for high level of security.
“This new card redefines expectations for time-to-market for smart services,” said Francois Lasnier, field marketing director in North America for Schlumberger. “Going from service definition to prototype card could now take as little as a few months, compared to a year or more with non-Java solutions. This provides a real edge to our customers as they compete to be first to market with secure, standards-based services.”
Ready for innovative, next generation applications, the Cyberflex Palmera card is designed to complement any existing card infrastructure. The card enables card infrastructures to easily migrate to new smart applications, while providing continuity for current customers and preserving their investment in existing terminals, networks and other equipment.
Designed as a modular platform, parameters such as memory size, protocol-type and cryptographic services can be activated on demand, maximizing the card’s flexibility for the security and convenience for their customers. Post-issuance applications, the adding of applications while the smart cards are in the field – such as e-purse, loyalty and network access – can be added and deleted in the field to complement the bank’s marketing strategy to support the new generation of mobile commerce applications.
The Cyberflex Palmera card can be supplied with powerful, easy-to-use test and management tools for easy integration and rapid application development. Underpinning its advanced capabilities are exceptionally high levels of security, including powerful algorithms, unparalleled security know-how from Schlumberger experts, and the availability of the most advanced physical security for smart cards in the world.
Schlumberger Test & Transactions provides consulting, integration and products for smart card-based transactions, IP (Internet Protocol) network, security and wireless services, and for testing and measurement of semiconductor devices. With 2000 revenue of $1.4 billion and over 8000 employees in more than 40 countries, it is a business segment of Schlumberger Limited (NYSE: SLB), a global technology services company with 2000 revenue of $9.6 billion. More information is available at [www.slb.com].
Datacard Group announced it has been awarded a smart card management contract by GlobalPlatform, the cross-industry organization promoting a standardized framework for multi-application smart cards.
Under the agreement, Datacard will provide the software and services required to manage the smart cards GlobalPlatform plans to issue to its Member companies. Approximately 300 cards will be issued. Initially, Members will use the cards for logical access to secure areas of the GlobalPlatform web site. Eventually, the organization plans to offer a variety of applications to its Members that will be securely delivered using Open Platform technology. “This is a tremendous honor for Datacard and an important milestone for our Platform Management Architecture (pma),” said Martin Kearsley, senior vice president and managing director of Datacard’s software and solutions division. “We are delighted that the Business Committee of GlobalPlatform, one of the world’s leading smart card organizations, selected Datacard’s pma. This helps to confirm our view that pma is the most robust and versatile card life cycle management product available today.”
! pma is a software solution that securely executes the remote loading, changing, blocking and deleting of applications across a distributed multi-application smart card base. The GlobalPlatform pma site will be housed in Datacard facilities where application additions, deletions, card replacements and similar cardholder services will be performed. “We’re looking forward to this program, because it provides an excellent opportunity to demonstrate the power and flexibility of the Datacard solution,” Kearsley said. ” Effective management of applications in a post-issuance environment is vital to any organization planning to issue multi-application smart cards. Our success with GlobalPlatform provides both organizations with an excellent opportunity to demonstrate effective solutions involving the management of a widely distributed and dynamic card population.”
Datacard Group is a world leader in innovative plastic card personalization and identity management solutions. The company provides its customers with integrated systems for a variety of financial, identification and healthcare applications. A diverse solutions portfolio features a broad range of card-related products and services, including the world’s best-selling card personalization and printing systems. Datacard Group also offers smart card life cycle management software, smart card personalization systems, smart card personalization applications and a variety of products and services designed to enhance card-issuing operations. Datacard Corporation, doing business as Datacard Group, is privately held and based in Minnetonka, Minn. The company serves customers in more than 200 countries worldwide. [www.datacard.com]
Payment Systems for Credit Unions, Inc., (PSCU), the nation’s largest Credit Union Service Organization (CUSO), today announced a record year-end cooperative dividend for its member-owners.
PSCU disclosed it is returning an aggregate dividend of $14.3 million to its credit union member-owners as a result of the PSCU operations during 2000. Since the cooperative’s inception in 1994, PSCU has returned in excess of $50 million in year-end patronage dividends to its member-owners.
Dave Serlo, PSCU’s president said, “Our return of dividends corresponds with growth and productivity gains achieved through PSCU’s commitment to deliver superior service and innovative technology solutions to our member-owners. This year’s record dividend can be attributed to increased operational efficiencies, strong account growth, and a rise in active accounts realized during the past year.” Serlo adds, “We are committed to our member-owners, and as the only credit and debit service provider dedicated to credit unions, we will continue to Partner for Success with our credit union member-owners to lead change within our industry.”
PSCU, founded in 1977, is owned by more than 500 member credit unions representing in excess of 6 million cardholder accounts across the nation. PSCU provides technology and cost-effective, high quality financial services and products solely to credit unions and their members. Additional information can be obtained by visiting PSCU’s web site at www.pscu.net. For information on ePSCU, a division of PSCU dedicated entirely to Internet product development and delivery, visit [www.epscu.com].
The Federal Trade Commission Friday announced a stipulated final judgment and order against an Ohio-based marketer of prepaid calling cards, settling charges that the company “crammed” recurring payments for the cards onto consumers’ telephone bills without their consent. Through the order, T2U Co., Inc. (“T2U,” formerly doing business as RCP Communications) and its principal Richard C. Peplin Jr. would be barred from a variety of deceptive “telephone billing” transactions, including making false representations about their authority to charge for — and consumer’s obligation to pay for — any product that consumers did not agree to purchase. The defendants also would be required to specify how consumers will be billed, what the service will cost, whether the billing will be recurrent and how any recurring charges can be cancelled. In addition, they would be subject to a suspended financial judgment of $3.2 million.
“Cramming is a pervasive problem,” said Jodie Bernstein, Director of FTC’s Bureau of Consumer Protection. “The best advice for consumers is to go over their phone bills with a fine-tooth comb before they pay, and challenge any charges they don’t recognize or understand.” According to the Commission’s complaint, T2U and Peplin violated the FTC Act through business practices associated with the marketing, sales and billing for prepaid calling cards. The FTC alleges that in many instances the defendants placed charges on consumers’ telephone bills for prepaid phone cards that consumers had not ordered or agreed to purchase. According to the FTC, the defendants also failed to mail consumers a phone card for several months, and when the card did arrive consumers discovered that while they had been billed for two or three months of service, the card had already expired and could not be used. Before the card arrived, many consumers had no idea they were being charged for its use.
The stipulated judgment and order covers the advertising and sale of prepaid phone cards – T2U’s principal business – as well as any other “telephone-billed” transaction. Under its terms, the defendants would be prohibited from making any misrepresentations regarding their business practices, including: 1) that consumers are obligated to pay for any product or service that they did not purchase; and 2) that the charges for such product or service have been authorized.
Further, the order would prevent the defendants from using solicitation materials in any telephone-billed transaction that fail to clearly and conspicuously disclose – before consumers are billed – the following material terms and conditions of a sale: 1) the cost of the product or service; 2) the amount of any recurring charge; 3) how a recurring charge will be billed; 4) any limitations on the use of a product or service, such as an expiration time for a prepaid phone card; and 5) how a consumer can cancel any recurring charge.
The defendants also would be barred from billing consumers before delivering any product or service whose time or value expires within the billing period. For any other product or service whose time or value does not expire within the billing period, the defendants would be enjoined from failing to disclose that the cost for such product or service will be billed to the consumer’s telephone number prior to delivery. In addition, the defendants would be required to get a consumer’s express authorization for any telephone-billed transactions.
The order also calls for a $3.2 million judgment against the defendants, which approximates the amount that they defrauded from consumers and have not paid back. However, the judgment would be suspended due to the defendants’ financial condition. If the Commission determines in the future, however, that any defendant made false statements or omissions concerning its financial condition, the FTC could seek to obtain the full amount of the judgment.
Finally, the order contains several record-keeping and monitoring provisions designed to ensure the defendants’ compliance with its terms.
The Commission vote to authorize staff to file the complaint and stipulated final judgment was 5-0. The complaint and stipulated final judgment were filed in the United States District Court for the Northern District of Ohio, Eastern Division on April 4, 2001.
NOTE: This stipulated final judgment is for settlement purposes only and does not constitute an admission by the defendants of a law violation. Consent judgments have the force of law when signed by the judge.
Copies of the complaint and stipulated final judgment are available from the FTC’s Web site at [http://www.ftc.gov] and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form. The FTC enters Internet, telemarketing and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies worldwide.
After a sluggish December and January, American consumers are racking up credit card debt at a record pace. During February, U.S. cardholders added $10.8 billion to outstanding balances representing an annual growth rate of 19.9%. According to preliminary figures released Friday afternoon by the Federal Reserve, revolving debt, mostly credit card debt, hit $680.9 billion in February, compared to $669.8 in January and $608.5 billion for February 2000. The growth in revolving credit was the biggest one month gain since September 1995. Overall, consumer credit is growing at a 10.5% rate. At the end of February, American consumers were $1.564 trillion in debt, exclusive of home mortgages. The latest FRB data shows the average annual interest rate charged on credit card accounts that revolve is 15.66%.
REVOLVING CREDIT HISTORICAL
Feb01 Jan01 Dec00 Nov00 Oct00 Sep00 Aug00
%GRWTH: 19.9% 11.6 5.0 10.9 4.7 7.8 12.6
$OWED: $680.9 669.8 663.4 660.6 654.8 649.3 645.1
Jul00 Jun00 May00 Apr00 Mar00 Feb00 Jan00
%GRWTH: 6.7% 11.2 12.7 13.5 13.8 9.4 18.5
$OWED: $638.2 634.7 628.9 622.5 615.5 608.5 605.0
Source: Federal Reserve; revised figures as of 04/06/01;
For complete historical data visit www.carddata.com.
People’s Bank said Friday that the sale of its UK credit card portfolio to Citigroup will result in a pre-tax gain of approximately $70 million. Even though the UK operation was growing at a brisk 18% annual rate, People’s said the portfolio had reached a point where it needed significant, additional financial and management resources to support and grow the business. As reported in Friday morning’s CardFlash, People’s sold its $426 million UK portfolio to Citibank International PLC for approximately $526 million. People’s also indicated Friday that its first quarter earnings, to be released Apr 19, will be about half of analyst estimates. People’s said the reduced earnings for the first quarter reflect securities losses due to declines in market value of portions of the bank’s equities portfolio, an additional charge related to a single commercial loan previously classified as non-performing and increased charge-offs and reserves in the Credit Card Services division. The bank says increased credit card charge-offs, caused in part by a weakening economy and a rise in national bankruptcy filings, will likely limit the earnings progress of this division over the next several quarters. According to CardData ([www.carddata.com]) People’s had $3,127,273,492 in outstandings and 1,368,399 active accounts at the end of 4Q/00.
Two months after confirming its intention to unload its credit card portfolio, Wachovia will announce at 10am this morning the sale of its $8 billion portfolio to Bank One. Wachovia says it expects to report a pretax gain of approximately $1.4 billion when the deal closes this quarter. As part of the deal, Wachovia has signed a long-term agent bank relationship with First USA, Bank One’s credit card subsidiary. Bank One says it expects that the transaction, when completely integrated, will add $100 million per year to Bank One’s aftertax earnings, assuming current economic conditions. Following the transaction, Bank One/First USA, will reclaim its ranking as the second largest U.S. issuer with $75 billion in receivables. According to CardData ([www.carddata.com]), Wachovia had $8,102,714,907 in outstandings and 2,768,887 active accounts as of Dec. 31. At year end 2000, Wachovia’s chargeoff rate was 4.83%. The 30+ day delinquency rate was 4.21%. (CF Library 2/7/01)