OFT & PIN DEBIT

The Office of Fair Trading investigation into interchange fees is
expanding beyond credit cards, charge cards and off-line debit cards to
PIN debit cards. Earlier this month the European Commission released a
report that claims large variations in merchant and interchange fees for
payment cards, barriers to entry in the markets for payment systems and
credit registers, obstacles to customer mobility and product tying. The
EC’s Competition Commission says it will use its powers to level the
playing field in the payment card industry. The OFT says its expanded
investigation is consistent with the scope of the EC’s current
investigation into MasterCard’s European intra-regional interchange
fees. Last June the OFT announced it was continuing its campaign to
contest the lawfulness of current interchange fee practices by both VISA
and MasterCard. The OFT issued the statement shortly after the
Competition Appeal Tribunal annulled a 2005 decision by the OFT which
claimed that MasterCard’s pre-November 2004 UK credit card interchange
fees violated EU and UK competition law. The OFT pursued MasterCard for
six years over prior UK interchange fees. (CFI Library 6/21/06; 2/1/07)

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Southwest Upgrades Chase Cobrand

Southwest Airlines and Chase have added new cards, incentives and a sweepstakes to their co-brand. The program now offers a “VISA Signature” and “VISA Business Card.” Under the upgraded program cardholders will receive eight “Rapid Rewards” credits the first time they use the card, plus up to eight additional credits when they make a qualified balance transfer within the first 90 days after their account is open, enough for a free round-trip. New benefits also include “Double Reward Dollars” for every one dollar spent on Southwest Airlines Vacations package purchases or at preferred hotels and rental cars. Additionally, cardholders earn two “Rapid Rewards” credits every year on their account anniversary. Next week Chase and Southwest Airlines are kicking off a “Valentine’s Day” contest with a grand prize of a Southwest Vacations package for two to Las Vegas. The “Rapid Rewards” program is 20 years old this year.

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PAI Hires a Wholesale ISO Expert

KY-based Payment Alliance International has hired Dennis J. Hamilton SVP of the Partner Services Group. Previously, Hamilton was with Global Payments Inc. as the Director of Business Development in their Third Party Acquiring Group where he served ISOs and financial institutions. Prior to joining Global, Dennis was with Concord EFS (now First Data) as Vice President of Client Relations and Implementation for the ATM/POS/Debit Card acquiring services division responsible for both ISO clients as well as Financial Institutions. Dennis has a BS Degree in Business Management from St. Francis University in Loretto, PA. Payment Alliance International provides credit card, check processing, ATM network management, cash management and business information services.

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250K ID Fraud Complaints in 2006

For the seventh year in a row, identity theft topped the list in the FTC’s annual report on consumer complaints. The FTC says ID theft accounted for 36% of the 674,354 complaints received last year. Advance-fee loans and credit protection/repair ranked seventh while Internet auctions ranked fifth. The FTC found that credit card fraud (25%) was the most common form of reported identity theft, followed by phone or utilities fraud (16%), bank fraud (16%), and employment fraud (14%). Consumers reported fraud losses totaling more than $1.1 billion; the median monetary loss was $500. Eighty-five percent of the consumers reporting fraud also reported an amount lost.

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CRS RetailStore Simplifies Encryption

CA-based Epicor|CRS and RSA have entered into a strategic technology alliance to provide key management capabilities, based on RSA Key Manager software within the CRS RetailStore point-of-sale solution that will enable joint-customers to quickly reduce the complexities in inherent in encryption implementation by quickly enabling key management capabilities and centralize the provisioning and lifecycle management of encryption keys. RSA Key Manager software centrally manages symmetric encryption keys used in enterprise applications, and retires compromised or lost keys. The technology can assist retailers in providing complete data protection throughout the data lifecycle, and in meeting the PCI Data Security Standard (PCI DSS) guidelines for data security. Epicor provides integrated enterprise resource planning (ERP), customer relationship management (CRM), supply chain management (SCM) and professional services automation (PSA) software solutions. RSA offers solutions in identity assurance & access control, encryption & key management, compliance & security information management and fraud protection.

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Tully’s Coffee Goes Contactless

Seattle-based Tully’s Coffee is now accepting Mastercard’s “PayPass and American Express'”ExpressPay” at its 350 branded locations in Washington, Oregon, California, Idaho and Arizona. In addition to this new payment option, Tully’s will continue to accept traditional magnetic-stripe payment cards. Both Mastercard and American Express implement the platform of Chockstone, a strategic payment processing provider.

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UK’s OFT Now Targets PIN Debit

The OFT has decided to expand the scope of its investigation into interchange fees to include immediate debit cards. This follows on from the OFT’s current investigation into MasterCard and Visa’s current UK interchange fee arrangements relating to consumer and commercial credit cards, charge cards and deferred debit cards.

The expansion of this investigation is consistent with the scope of the European Commission’s current investigation into MasterCard’s European intra-regional interchange fees. In conducting the new investigation the OFT will seek information from card issuers and other parties as it considers appropriate.

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MasterCard Q4 Revenues Rise 17%

MasterCard posted net income of $41 million for the fourth quarter compared to a $53 million loss one-year ago as net revenues climbed 17% to $839 million. In the prior quarter MasterCard earned $193 million on revenues of $902 million. Gross dollar volume climbed 14% for 4Q/06 to $532 billion and worldwide purchase volume increased 17% to $391 billion. As of December 31st, the Company’s customers had issued 817 million MasterCard cards, an increase of 12% over the same period in 2005. General & Administrative Expenses rose 6% to $399 million. However, Advertising & Market Development Expenses declined almost 9% to $353 million. Litigation Settlements dropped from $27 million in 4Q/05 to less than $2 million for 4Q/06. MasterCard also made a $14.5 million contribution to its Foundation during the quarter which was more than offset by higher investment income. MasterCard also announced it is raising its quarterly dividend by 67% to 15 cents a share. For complete details on MasterCard’s fourth quarter performance, visit CardData ([www.carddata.com][1]).

MASTERCARD HISTORICAL ($ millions)
4Q/05 1Q/06 2Q/06 3Q/06 4Q/06
G&A: $375.2 $347.8 $365.2 $392.1 $399.3
A&M: $385.8 $182.7 $307.1 $290.2 $352.9
Net Income: ($52.9) $126.7 ($310.5) $193.0 $ 40.9
Note: G&A: General & Administrative Expenses;
A&M: Advertising & Market Development Expenses.
Source: CardData (www.carddata.com)

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

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Wincor Nixdorf Names a New U.S. Chief

Wincor Nixdorf has named retail industry executive Tad Shepperd as VP of the U.S. Retail Group. Shepperd is most widely known as the co-founder and former co-CEO of ShopperTrak, a company that established a line of intelligence solutions for retailers that rely on foot traffic. He steered the organization to $20 million in sales with 30,000 systems installed in 20 countries. Previously, he was Chief Business Development Officer at Spencer Technologies. His responsibilities at Spencer included leading worldwide sales and marketing programs. Wincor Nixdorf is one of the world’s leading suppliers of IT solutions to the retail and banking industries.

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Carmen Electra MasterCard Gets a Boost

Payment Data Systems has announced a Valentine’s Day $1000 gift card contest for consumers who purchase a “Carmen Electra Gift MasterCard”. Each card ordered can be embossed with a special message to be displayed below the recipient’s name. Messages that can be selected are “Happy Valentine’s,” “I Love You,” or “We Love You.” The gift card may be purchased and the message selected at www.electragift.com. Payment Data Systems, a subsidiary of MetaBank, is an integrated payment solutions provider to merchants and billers and is the owner of the electronic bill payment portal, http://www.billx.com, which has the ability to transmit payments to thousands of national billers.

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Mobilescape 5000 is Class B Certified

Commerciant LP announced that CA-based CrossCheck has awarded Class B platform certification to its “Mobilescape 5000” wireless payment solution. CrossCheck’s nationwide network of 1,400 independent sales offices and 122 partners can now offer the Mobilescape 5000 combination check and credit card processing solution with the confidence that Commerciant will provide 24×7 support and technical maintenance. CrossCheck processes and approves billions of dollars worth of check transactions annually for retail and dealer outlets throughout the U.S. Commerciant provides wireless handheld payment processing technology.

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