BMO & ADS

Effective August 3rd, BMO Bank of Montreal is enhancing its AIR
MILES credit card program for the “Canadian BMO MasterCard” cardholders
and AIR MILES Collectors to increase miles issued on the Alliance Data
Systems Corporation loyalty and marketing platform. With these
enhancements, BMO AIR MILES MasterCard cardholders will now earn 1
reward mile for every $20(CDN) spent vs. previously every $40 spent;
cardholders will earn 1.5 reward miles for every $20 spent when they
shop at AIR MILES Sponsors(where they will continue to earn 2 times the
reward miles); BMO Bank of Montreal is eliminating the $35 annual fee
assessed to some of its MasterCard cardholders and BMO Gold AIR MILES
MasterCard cardholders will receive a 25% discount on flight
redemptions. BMO Financial Group has total assets of CDN$375 billion and
employs 37,000 while TX-based Alliance Data offers its loyalty and
marketing solutions derived from transaction-rich data and employs
approximately 7,000 at 50 locations worldwide.

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Chase Card Posts $672MM Loss; Charge-Offs Top 10%

Chase’s Card Services unit posted a net loss of $672 million in the
second quarter as charge-offs topped 10%. However, 30+ day delinquency,
the precursor of future charge-offs, eased during the quarter dipping
below the 6% level. Within the WaMu portfolio, charge-offs hit 19.17%,
compared to 14.57% in the first quarter and 12.09% at year-end 2008.
End-of-period managed loans were $171.5 billion, an increase of 10% from
the prior year, but down 3% from the prior quarter. Charge volume was
$82.8 billion, a decrease of 12% from the prior year. Excluding
Washington Mutual, charge volume was
$78.3 billion, a decrease of 16%. The managed net charge-off rate for
the quarter was 10.03%, up from 4.98% in the prior year and 7.72% in the
prior quarter. The 30-day managed delinquency rate was 5.86%, up from
3.46% in the prior year and down from 6.16% in the prior quarter.
Excluding Washington Mutual, the managed net charge-off rate
for the second quarter was 8.97% and the 30-day delinquency rate was
5.27%. Merchant processing volume was $101.4 billion, on 4.5 billion
total transactions processed. Chase also noted that ROE was negative
18%, down from positive 7% in the prior year and that ROO was negative
2.46%, compared with positive 1.04% in the prior year and negative 1.92%
in the prior quarter. For complete details on Chase’s second quarter
performance visit CardData (www.carddata.com).

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The Receivables Exchange Grows Exponentially

A/R traders The Receivables Exchange has seen greater than 300% quarter-over-quarter
growth in client growth. The Receivables Exchange is the world’s first online auction marketplace for real-time trading of
accounts receivable. It has seen an exponential increase in
quarter-over-quarter trading volume as more businesses adopt receivables
financing as a new standard in working capital management.
The Receivables Exchange Q2 Cash Flow Index includes: Quarter-Over-Quarter Growth in Receivables Sold=300%;
Average Auction Size=$65K; Average Length of Auction=1 day; Shortest Auction = Less than 1 minute;
Percent Selling at Buyout Price=85%; Percent Repeat Customers=86%; Average Revenue of Sellers=$30 million;
A/R Inventory for Sale=$9 billion; A/R Buying Power=$20 billion and Industries Represented=37

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MN AG Tackles Mandatory Arbitration Issues

The Minnesota Attorney General has sued the National
Arbitration Forum of Minnesota, alleging that it misrepresented its
independence and hid from consumers and the public its extensive ties to
the collection industry. AG Lori Swanson notes that credit card
companies are among the most prolific users of mandatory arbitration
clauses. The lawsuit alleges that the Forum pays commissions
to executives whose job it is to convince creditors to put mandatory
arbitration clauses in their customer agreements. The suit alleges that
the Forum does this to generate arbitration filings in the Forum and
therefore, revenue for itself.
The lawsuit further alleges that beginning in
2006 and through 2007, Accretive engineered two transactions. In the
first transaction, Accretive formed several equity funds under the name
“Agora”, which invested $42 million in the Forum. In the second
transaction, three of the country’s largest debt collection law firms —
Mann Bracken of Georgia, Wolpoff & Abramson of Maryland, and Eskanos &
Adler of California — merged into one large national law firm called
Mann Bracken. Accretive then acquired the majority interest in a debt
collection agency called Axiant, which acquired the collections
operations of Mann Bracken. Through these transactions, Accretive took
control of one of the country’s largest debt collection enterprises and
became affiliated with the Forum, the country’s largest consumer
collection arbitration company. The lawsuit alleges that Accretive
principals remain actively involved with the Forum.

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EPAY

Euronet Worldwide, an electronic payments distributor, is rebranding its
global Prepaid Division as ‘epay,’ subsequently combining six different
names worldwide. This development marks Euronet’s Prepaid Division from
a prepaid mobile top-up distributor to a major provider of payment
services and technology. Prepaid subsidiaries are already carrying the
epay name while PaySpot, Telerecarga, Movilcarga, Brodos and Transact
have yet to adopt the new branding. The ‘epay’ division hosts a retail
network of approximately 227,000 locations across a number of
international markets, allowing service providers to deliver electronic
payment products and services to consumers throughout the world, having
processed over 700 million payment transactions totaling $11 billion.
Euronet Worldwide processes secure electronic financial transactions for
financial institutions, mobile operators and retailers through
comprehensive ATM, POS and card outsourcing services in 42 countries.

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Visa Announces New PA-DSS Global Deadlines

Visa announced that in Asia Pacific; Central and Eastern Europe, Middle
East and Africa; and Latin America and the Caribbean regions, Visa
acquirers must ensure that newly signed merchants use “PA-DSS” compliant
applications by July 1st, 2010. By July 1st, 2012, those acquirers must
ensure existing merchants and agents in the Visa network use “PA-DSS”
compliant applications. In the U.S. and Canada, Visa acquirers must
ensure that all new and existing merchants and agents in the Visa
network use “PA-DSS” compliant applications by July 1st, 2010.
“PA-DSS” compliant applications do not store prohibited data such as
track data, sensitive authentication data, or PIN data, helping
merchants and agents who use them mitigate compromises and support
overall compliance with the PCI DSS.

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REAL & FDC

First Data electronic commerce and payment services has signed a
merchant services agreement with Real Polish hypermarket chain of the
Metro retail group for its “POLCARD.” In doing so, First Data is to
upgrade Real’s POS network to accept chip-based cards for current EMV
standards and provide installation, maintenance and processing services
for the 4,000 POS terminals at 54 Real hypermarkets across Poland. The
terminals themselves feature cash-back capabilities, offering cash
access as an alternative to ATM use. First Data currently provides
processing services for more than 70,000 terminals and card acceptance
devices throughout Poland.

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MBNA Exec and GTCR Create Palladian Financial

A former top executive for MBNA has teamed with a major private equity
investment firm to form a new payments services company.
Michael Rhodes and GTCR have teamed to create Wilmington, Delaware-based
Palladian Financial Holdings, LLC. The new company will provide a
variety of services related to consumer credit, payments and
loyalty/rewards. Rhodes, a 15-year financial services industry veteran,
was formerly Vice Chairman at MBNA and also as Chief Marketing Officer.
After the sale of MBNA to Bank of America, he became CEO of MBNA Europe
Bank. Rhodes will serve as CEO of Palladian. GTCR plans to invest up to
$300 million of equity capital to support management’s strategy.

Details

VISA PCI PA-DSS

Visa announced that in Asia Pacific, Central and Eastern Europe, Middle East and Africa; and Latin America and the Caribbean regions, Visa acquirers must ensure that newly signed merchants use “PA-DSS” compliant applications by July 1st, 2010. By July 1, 2012 those acquirers must ensure existing merchants and agents in the Visa network use “PA-DSS” compliant applications. In the U.S. and Canada, Visa acquirers must ensure that all new and existing merchants and agents in the Visa network use “PA-DSS” compliant applications by July 1st, 2010. “PA-DSS” compliant applications do not store prohibited data such as track data, sensitive authentication data, or PIN data, helping merchants and agents who use them mitigate compromises and support overall compliance with the PCI DSS.

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Mobile X Platform Integrates in MS Dynamics POS

OR-based mobile POS solution provider New West Technologies has
integrated the “Mobile X Platform” into Microsoft Dynamics POS 2009.
The new MXP is portable and ready to take Dynamics POS 2009 retail to
the next level with the ability to customize mobile according to POS
experience and behavior. This easy, efficient and cost effective
solution starts simple for the entrepreneur and scales, able to grow
with the business need. MXP is targeted towards industry needs and designed to be customizable
according to your retail specifics and reporting needs.

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T4200 & M4200

Hypercom Corporation has been certified for its 32-bit multi-application
“Optimum T4200” and “M4200” countertop and mobile payment terminals with
the GIE Cartes Bancaires national French payment authority. With this
certification, Hypercom is launching its campaign for the “Optimum
T4200” product series across the country. As France’s top card payment
solution providers, the Hypercom GIE Cartes certification is in addition
to Optimum PCI PED security approval, MasterCard Payment Terminal
Security approval for IP and wireless communication and EMV Level 1 & 2
certifications for chip card transactions. Hypercom global payment
technology offers high security, end-to-end electronic payment products
and services for high security electronic transaction needs for
businesses in more than 100 countries.

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Aite Analyzes Merchant Acquiring Opportunities

A new Impact Report from the Aite Group focuses on three opportunities
that the merchant acquiring industry, card issuers and network should
jump on.
These opportunities include capturing wallet share from other payments
types, increasing merchant satisfaction, and looking at opportunities
from terminal sales and banking-product cross-selling. While ISOs and
acquirers face a decline in the volume of transactions
processed due to reduced consumer spending, opportunities do exist in
merchant acquiring. In particular, ISOs and acquirers need to increase
wallet share, change merchants’ behavior at the POS, and better engage
existing merchants in order to increase their satisfaction level.
Aite Group is a leading independent research and advisory firm focused
on business, technology and regulatory issues and their impact on the
financial services industry.

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