Wright Express Adds a New Board Member

ME-based Wright Express has named Larry McTavish, currently the CEO and chairman of AL-based Source Medical Solutions, to its board of directors. Prior to joining Source Medical, McTavish was chairman of Ben View Capital, a private investment company. He also served as a full-time consultant for the investment firm Welsh Carson Anderson & Stowe. For 10 years, McTavish was chairman and CEO of Comdata Corporation, a provider of information services, financial services and software to the transportation industry.

Details

NCR to Spin-Off Teradata Business

NCR this morning confirmed its intention to separate into two independent publicly traded companies by spinning-off the company’s Teradata Data Warehousing business to NCR shareholders. Teradata had revenues of $1.5 billion, operating income of $309 million in 2005,and is a market leader in the enterprise data warehousing. NCR will continue to provide self-service technologies, retail point-of-sale technologies and customer-support services as well as business consumables and check-processing and imaging solutions. Combined, these businesses had revenues of $4.5 billion and operating income of $251 million in 2005. Bill Nuti will serve as president and CEO of NCR, and Mike Koehler, currently SVP of the Teradata Division, will serve as president and CEO of Teradata.

Details

PaySimple Powers Market Hardware Sites

Denver-based Pay Simple has teamed with Market Hardware to provide e-commerce capability for all Market Hardware Web sites. Pay Simple simplifies billing and collection processes by enabling customers to invoice, collect and deposit payments automatically. The customized, secure ASP solution includes auto-recurring billing, electronic check, direct debit and credit card processing.

Details

Windows-based ATMs Present Challenges

A specialist provider of ATM software solutions is warning banks that the costs of migrating ATMs to the “Windows” operating system may outweigh the benefits. According to a Retail Banking Research report about 64% of ATMs in Western Europe had been converted to run on the “Windows” operating system. Level Four Software says frequent “Windows” updates and stability issues relating to interoperability of the many applications resident on the ATM have resulted in ATMs that can be even more problem-prone than the early deployment of “OS/2” ATMs in the late 1980s. Level Four notes that the scale of testing needed for “Windows” ATMs has proved challenging, especially considering a full regression test can take banks two to three months to execute. The Company says it’s vital that banks exercise caution and look carefully at their
testing and software deployment strategies to ensure they do not
compromise the customer experience.

Details

GE Money Extends Dixie Homecrafters Deal

GA-based Dixie Homecrafters has signed a five-year extension of their agreement with GE Money to provide consumer financing including the Dixie Homecrafters-branded credit card. GE Money – Sales Finance provides both revolving and installment financing to Dixie customers through its PROJECTLINE and PROJECTLOAN programs, and has funded more than $140 million in Dixie sales over the past several years.

Details

ACH and Wire Transfers Need to be Merged

A new report concludes that the U.S. payments industry could save $7 billion per year if the ACH and the wire transfer systems were converged into a single electronic wholesale payments system. The study from Boston-baed Aite Group found that financial institutions typically maintain both ACH and wire transfer systems, and in many cases, they maintain multiples of these systems as a result of mergers and acquisitions. Because of this, participants throughout the entire payments industry are incurring meaningful expenses that could be reduced through the adoption of a single electronic payments system. The report outlines iterative steps and alternatives to improve the current electronic payments environment without eliminating existing systems.

Details

Comerica Offers Miles on New Debit Cards

Detroit-based Comerica Bank has introduced new debit cards that earn “WorldPerks” miles for signature-based purchases. The new “Comerica WorldPerks Check Card” and the “Comerica WorldPerks Business Check Card” offers two earning options. The “Standard Award” options has a $20 annual fee and earns one mile for every $2 spent. The “Enhanced Award” option has a $55 annual fee and earns one mile for every $1 spent. The business debit card has a $55 annual fee and earns 1 mile for every $1 spent. cardholders receive 1,000 “Bonus Miles” for signing up. Miles earned through the program can be redeemed for travel on Northwest Airlines, and their “SkyTeam Global Alliance Partners” and other “WorldPerks Airline Partners.” Comerica say it plans to further expand its check card rewards program in 2007.

Details

Constantine Joins the New York Governor

NYC-based Constantine Cannon, the lead counsel for the debit card â¨litigation, announced that Lloyd Constantine is stepping down as â¨Chairman of the firm to become Senior Advisor for New York Governor â¨Eliot Spitzer, while Stephen Cannon will become Chairman and continue to â¨serve as Managing Partner of the firm’s Washington, D.C. office. Constantine Cannon represents its clients in employment, â¨telecommunications, intellectual property, electronic payments and â¨retail industry issues.

Details

Bank Credit Card ROA Hits 19-Year High

In their annual card issuer industry earnings report, 2006 P/L revenue and expense streams for the credit card industry calculated by R.K. Hammer are shown below, reporting a 30 bps rise from 2005 earnings:

Card Earnings Trends/Highlights:

Revenue Streams ($145.3 Billion for ’06 vs. $144.2B in ’05) 17.30% ROA

Interest Income $90.1 Billion, representing 62% of total revenue; up from $89.4B in ’05

Fee Income of $55.2 Billion, representing 38% of total revenue; up from $54.8B in ’05

Expense Streams ($106.7 Billion for ’06 vs. $108.5B in ’05) 12.70% ROA

Operating Expense of $39.5 Billion, 37% of total revenue; up from $37.9B in ’05

Blended Cost of Funds of $33.6 Billion, 31.5% of total revenue; up from $23.9B in ’05

Net Charge Offs of $33.6 Billion, 31.5% of total revenue; down from $46.7B in ’05

Net Pre-Tax Profit (4.60% ROA net pre-tax for ’06 vs. 4.30% for ’05)

$38.6 Billion, vs. $35.7 Billion in ’05

Comments:

R.K. Hammer is a leading U.S. card portfolio sale broker, and an expert witness for portfolio valuations. Hammer has been tracking credit card portfolio profitability since 1983. The expected gain in lower charge offs for the year were mostly offset by higher funding costs during the period. Revenue was also up slightly, in a very competitive industry, leading to a 30 bp net rise in pre-tax ROA% for the year over 2005. Charge offs, unusually low for 2006 (after the rush to BK filing during 4Q05), will resume to more normal levels for 2007, rising a forecast 40 bps in the Hammer metrics.

Details

Wal-Mart Adds a Seamless FSA Card Solution

Wal-Mart and Sam’s Club this morning announced a new system to enable customers to pay for FSA eligible health care merchandise with their FSA debit card. The “Inventory Information Approval System” automatically identifies FSA eligible merchandise during the checkout process. Once all items have been scanned, a total is displayed for the entire transaction showing both FSA and non-FSA merchandise. The customer can then use an FSA card for payment of FSA eligible merchandise and then pay for the non-FSA merchandise with another form of payment.

Details