On Track Innovation’s Revenue Off 17% in 2009

NJ-based On Track Innovations reported that revenues declined 17% to $16.9 million in the first half of this year. Gross profit slipped 6% to $7.7 million. The Company previously reported that revenues were flat for the first quarter at $9.3 million. The GAAP net loss for the first quarter was $3.8 million, a 44% decrease, compared to the year ago quarter. OTI says its main goal is to bring the company to operating break-even position as quickly as possible. Based on the higher than expected decline in revenues in the first half, which is mainly attributed to the revenue reduction in the OEM and payments business segments and the delays in customers’ projects timetables, OTI updated its target revenues for 2009 to $34 million. OTI designs, develops and markets secure contactless microprocessor-based smart card technology. For complete details on OTI’s latest performance visit CardData (www.carddata.com).

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FCAC TIPS

With pressing matters to potentially impact students’ long-term
financial health, the FCAC has made available its “Before You Sign Any
Contract: The 10 Things You Need to Know” tip sheet. To help college
students through their newfound financial independence, whom will be
asked to enter into contracts to obtain services such as gym memberships
and cell phone plans, “Before You Sign Any Contract: The 10 Things You
Need to Know” addresses the difference between short term and long term
periods. To help make informed decisions, the tip sheet also includes
useful advice to keep in mind before signing a binding contract with
companies selling products and services at special discounts or offering
additional services for “free” for an initial period. FCAC also provides
a range of tools and information to help people develop financial
literacy through its website (www.fcac.gc.ca), which includes an
interactive Credit Card Comparison tool and quizzes to help people
measure their own financial knowledge.

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MX ATM

VeriFone Holdings has has partnered with PROSA electronic switch and
processor to introduce its “MX ATM” family of secure payment retail
kiosks in Mexico. Designed for the Latin America market, the “MX ATM”
customized solution offers cash dispensing, deposit functionality and
will be deployed nationally throughout retail locations across the
country. The “MX ATM” is intended for deployment in hotels, department
stores and night clubs to offer telco top-up; bill payment; redemption;
prepaid card reloading; advanced monitoring security using 3DES, EMV,
and PCI-PED; an ink dye systems and a virus-free Linux environment.
Additionally, the “MX ATM” decreases cash management and security costs
for retailers by providing cash recycling.

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DOCOMO M-Payment Service Tops 10MM in Japan

CardFlash International reports that subscribers to “DCMX,” DOCOMO’s credit payment service, topped 10 million in Japan yesterday.
“DCMX” enables subscribers to make purchases using their mobile phones as credit cards via “iD,” DOCOMO’s branded mobile payment platform for handsets equipped with contactless IC cards (Osaifu-Keitai). Currently, over 30 million DOCOMO customers use Osaifu-Keitai-compatible handsets and about 60% of all DOCOMO customers are using Osaifu-Keitai services. As of July 31st there were approximately 420,000 “iD” readers/writers nationwide. Subscribers of the standard “DCMX” and “DCMX GOLD” plans can also earn DOCOMO’s loyalty points each time they make a purchase transaction. Launched in April 2006, DCMX reached 1 million subscribers in November 2006, 5 million in February 2008 and 10 million, just three years and four months since the original launch.

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GEMALTO 2Q/09

Smart card specialist Gemalto reported 433 million euros in revenue for the second quarter, up 7.4% from one-year ago. For the first six months of 2009, operating income (EBIT) was flat at 74 million euros. At constant exchange rates, Secure Transactions revenue was up 3% to 119 million euros driven by further deployment of contactless payment cards, mainly in the EMEA region, offset the effects of inventory optimization measures of many customers. The proportion of personalized card improved again year on year, resulting in a 4% constant-rate increase in the revenue from personalization services. During 2009, Gemalto announced that its personalization service was chosen to support the NFC pilot in Singapore by Citibank, M1 mobile and Visa. In addition to successes in EMV migration projects and growth in personalization services, Gemalto also continues to gain market traction with its innovative offers, such as the selection by Nigeria’s “InterSwitch” for its “Instant Issuance” offer, and France’s LCL for its web-based photo-customization solution. Gemalto also notes that market traction for more advanced DDA products and contactless payment cards continued to be strong. Year on year, gross margin was lower by 3 percentage points, mainly due to the unfavorable currency evolutions against the Euro. For more details on Gemalto’s second quarter performance visit CardData (www.carddata.com).

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Credit Card ABS MPR and Yield Soar in July

The overall performance metrics for credit card-backed securities is now showing all green “UP” arrows as, most notably, charge-offs and delinquency are settling down. More importantly, the monthly payment rate and the yield has been sharply improving. For July, the monthly payment rate posted its highest point since October and the third consecutive monthly improvement. According to Moody’s “Credit Card Index” for ABS, the MPR for July was 17.43%, compared to 16.53% in June and 16.01% in May. Moody’s found increases in the payment rates across all of the “Big 6” issuers. The MPR measures the average amount of principal that cardholders repay each month, measured as a percentage of total outstanding principal balance. The yield jumped to its highest level since December of 2007 and is the fourth consecutive monthly improvement. According to Moody’s “Credit Card Index” for ABS, the yield for July was 19.82%, compared to 18.52% in June, 18.11% in May and 17.54% in May. Yield is the annualized percentage of income, primarily finance changes and fees, collected during the month as a percent of total loans.

2009 CC ABS METRICS
MPR YIELD
Jan 16.39% 16.58%
Feb 15.16% 17.49%
Mar 16.46% 18.25%
Apr 16.18% 17.54%
May 16.01% 18.11%
Jun 16.53% 18.52%
Jul 17.43% 19.82%
Source: Moody’s

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CUP & OBERTHUR

Oberthur Technologies smart card vendor has completed CUP (China Union
Pay) certification for its Shenzhen manufacturing center. Established in
China, the Oberthur Technologies Shenzhen manufacturing site is already
providing SIM cards globally for the Telecom industry and magnetic
stripe/EMV cards to banking customers throughout the Asia-Pacific
region. The Oberthur Technologies Shenzhen
production unit is increasing its operations with this certification
payment scheme and is already certified by Visa, MasterCard and Amex.
Allowing the smart card vendor to operate closer to its customers, this
certification makes Oberthur the first major smart card vendor certified
for magnetic stripe, contact and dual interface cards on all four
schemes in China and allows it to strengthen its position regionally.

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TSYS Signs GCA for Processing Services

Las Vegas-based Global Cash Access has executed a processing services
agreement with TSYS Acquiring Solutions. GCA will use TSYS’ processing services to connect with card associations
and electronic funds transfer networks to complete ATM cash withdrawals,
credit card cash advances and POS debit card transactions initiated by
the patrons of GCA’s casino customers. TSYS will provide processing
services for the majority of GCA’s world-wide operations. GCA’s products and services provide
gaming patrons access to cash through a variety of methods, including
ATM cash withdrawals, point-of-sale debit card transactions, credit card
cash advances, check verification and warranty services, and Western
Union money transfers.

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Debit Card/Payday Loan Scam Settles with FTC

The FTC has reached a settlement with VirtualWorks, LLC, a/k/a Virtual
Works, EverPrivate Card and Secret Cash Card, and f/k/a Private Date
Finder, over an alleged debit card scam. The FTC alleged that thousands
of consumers who applied for a payday loan online
were charged up to $54.95 for a prepaid debit card with a zero balance.
According to the FTC, the debit card company sold Visa- and
MasterCard-brand debit cards through a payday loan marketer whose Web
site homepages contained a loan application form and a button for
submitting it. On numerous Web sites, consumers who clicked the submit
button were taken to another page offering four products unrelated to
the loan, each with tiny “Yes” and “No” buttons. “No” was pre-clicked
for three of the products; “Yes” was pre-clicked for a debit card, with
fine-print disclosures asserting the consumers’ consent for their bank
account to be debited. Consumers who failed to change the debit card
offer to “No” and simply clicked the prominent button labeled “Finish
matching me with a payday loan provider!” incurred the fee for the debit
card. On other Web sites, the homepage touted the debit card
as a “bonus” and disclosed the enrollment fee only in the fine print
below the submit button.

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INTERCHANGE SETTLEMENT

The Commerce Commission and MasterCard have settled a dispute over interchange rate practices that mirrors the August 12th settlement with Visa. Under the settlement credit card issuers will now be able to individually set the interchange rates that will apply to transactions using their credit cards, subject to maximum rates determined by MasterCard, which will be publicly available. Merchants will no longer be prevented from applying surcharges to payments made by credit cards or by specific types of credit cards. Any surcharges will be disclosed to cardholders at the time of sale and bear a reasonable relationship to the merchant’s costs of accepting MasterCard products. Merchants will also be able to steer customers to pay by other means. Additionally, non-banks or companies who might wish to provide acquiring services to merchants are now permitted to join the MasterCard network as acquirers if they meet relevant financial and prudential criteria.

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Elavon Acquires the MB Financial Portfolio

Global payment provider Elavon has acquired the merchant processing
portfolio of IL-based MB Financial Bank. Elavon will provide its robust
payment processing solutions, customer service and support operations to
MB Financial Bank’s merchant customers.
The transition of merchant services to Elavon will not affect MB
Financial Bank clients’ banking relationships; however, merchants will
benefit from robust debit and credit card processing, a comprehensive
PCI Compliance Program, a choice of point-of-sale devices and software,
advanced e-commerce products, gift card solutions, electronic check
services, and enhanced reporting and industry-leading customer service.
In addition, new merchant services referrals to Elavon will be marketed
through the bank’s more than 70 branches across the greater Chicago
metropolitan area.

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Visa/MC Settle New Zealand Interchange Dispute

The New Zealand Commerce Commission and MasterCard have settled a dispute over interchange rate practices that mirrors the August 12th settlement with Visa. Under the settlement, credit card issuers will now be able to individually set the interchange rates that will apply to transactions using their credit cards, subject to maximum rates determined by Visa and MasterCard, which will be publicly available. Merchants will no longer be prevented from applying surcharges to payments made by credit cards or by specific types of credit cards. Any surcharges will be disclosed to cardholders at the time of sale and bear a reasonable relationship to the merchant’s costs of accepting MasterCard/Visa products. Merchants will also be able to steer customers to pay by other means. Additionally, non-banks or companies who might wish to provide acquiring services to merchants are now permitted to join the MasterCard or Visa networks as acquirers if they meet relevant financial and prudential criteria.

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