MPS Adds CVV to its Gift Card Program

Durango, CO-based Mercury Payment Systems has added a card-validation code to its gift cards with the first deployment of cards for Edible Arrangements, a franchise with an online store and nearly 300 locations nationwide. A card-validation code is known as the Card Validation Value (CVV), which apears on credit cards to raise the level of fraud protection. The CVV code helps protect the merchant from fraud, particularly on “card not present” transactions for online store purchases. Mercury Payment Systems is an integrated transaction processing company created to enhance point-of-sale systems by offering credit, debit, check, gift card and loyalty processing.

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GreenZap Picks Up 250,000 Accounts

San Diego-based GreenZap has acquired 250,000 account holders previously serviced by Mazumah, an online transaction competitor bringing its total customer base to 650,000. On average, GreenZap receives more than 800 new account sign-ups each day and has been averaging monthly revenue of just over 25 cents per member. GreenZap enables any business or individual with an email address to send and receive money securely and cost-effectively online.

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Morgan Stanley Acquires the UK’s Goldfish

Morgan Stanley has agreed to purchase Lloyds TSB “Goldfish” credit card program for $1.76 billion which includes a 22% premium. The deal adds 800,000 credit card accounts to the MS card portfolio which currently has 1.5 million accounts in the UK, according to today’s CardFlash International. Lloyds TSB fully acquired the “Goldfish” business in August 2003 in a $198 million deal with energy supplier Centrica (f/k/a British Gas). At the time Centrica held a 70% stake in Goldfish Bank Ltd. At the time of the 2003 deal, the “Goldfish” credit card portfolio had 1.18 million cardholders, 11,000 personal loan accounts and 17,000 retail savings accounts. However, Goldfish Bank had an operating loss of $52 million in the first half of 2003. Centrica began the “Goldfish” credit card program in 1996 in a partnership with Household International. In September 2001 Centrica purchased HFC Bank’s entire rights and interests in the “Goldfish” credit card for $150 million. (CF International Library 8/7/01; 8/1/03)

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Bankruptcy Spike Drives Discover Profits Down

Morgan Stanley reported this morning that its Discover unit posted $65 million in pre-tax profits for the quarter ending November 30th, compared to $271 million for the year-ago quarter. The recent spike in bankruptcies reduced pre-tax income by about $180 million. Discover also noted that the higher cost of funds reduced net interest income during the quarter. Managed outstandings were down 3% to year-ago levels, but transaction dollar volume increased 2% year-over-year while overall credit quality continued to improve. Managed merchant, cardholder and other fees were $520 million, up 7% from last year. However, managed net interest income fell $92 million from a year ago, reflecting a tighter interest rate spread. At quarter end, managed credit card loans were $46.9 billion. The managed credit card net charge-off rate for the fourth quarter was 5.76%, 31 basis points higher than a year ago. The managed credit card over-30-day delinquency rate was 3.98%, a decrease of 57 basis points from the fourth quarter of 2004 and the managed credit card over-90-day delinquency rate was 1.75%, 43 basis points lower than a year ago. Total transaction volume increased to $26.1 billion, compared to $25.7 billion for 4Q/04. The account base declined during the fourth quarter by approximately 100,000 accounts from the third quarter. Domestic active accounts declined 3% from 4Q/04 to 19.2 million, the same as the prior quarter. For complete details on Discover’s fourth quarter performance, visit CardData ([www.carddata.com][1]).

DISCOVER CARD PORTFOLIO SNAPSHOT
4Q/04* 1Q/05* 2Q/05* 3Q/05* 4Q/05 Y/Y CHNG
Outstandings: $48.3b $47.8b $46.8b $47.1b $46.9b -3%
Volume: $25.7b $25.9b $25.4b $26.7b $26.1b +2%
Accounts: 46.2m 46.0m 45.9m 45.6m 45.5m -2%
Actives: 19.7m 19.5m 19.3m 19.2m 19.2m -3%
Chargeoffs: 5.45% 5.11% 4.94% 5.12% 5.76% +31bps
Delinquency**: 4.55% 4.24% 3.90% 3.91% 3.98% -57bps
Yield: 11.59% 11.23% 11.69% 12.04% 11.94% +35bps
Notes: * 4Q/04 ended 11/30/04; 1Q/05 ended 2/28/05; 2Q/05 ended 5/31/05;
3Q/05 ended 8/31/05; 4Q/05 ended 11/30/05. ** delinquency is 30-90 days
and excludes 90+ days. Source: CardData (www.carddata.com)

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

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Internet and Telephone Payments Gain Speed

APACS says it has completed the first phase of its project to deliver a faster payments system for UK Internet and telephone banking payments in 2007. Currently payments by the phone or Internet take three business days. Under the new system the money will be transferred within hours. The UK banking industry also confirmed that LINK and Voca are the suppliers who will jointly develop and provide the new payment system so that banks are able to offer this service to customers before the end of 2007. LINK is the UK’s cash machine network provider and Voca currently provides the infrastructure for the 5 billion automated debits and credits generated each year. Currently Internet, phone and standing order payments account for just 7% of automated payment volumes, but these are growing rapidly as customers increasingly turn to them instead of more traditional payment methods such as checks. APACS is a banking trade association.

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ClickPay Solutions Names a New CEO

California-based check-casher ClickPay Solutions has named A.J. McCann, formerly with HiMC, EDS and Wells Fargo, as its new CEO. McCann is a published strategist in the emerging payment industry with more than 10-years of proven expertise in financial strategy mapping, financial analysis, corporate planning, joint ventures and strategic partnerships. Previously, McCann was an emerging payments expert at Wells Fargo Bank.In this capacity, he was instrumental in the bank’s large channel and strategic payment service sales/strategies and coordinated strategic planning processes for emerging payment services. ClickPay Solutions is a sales and marketing organization that provides ‘Cashless-Check-Cashing’ services to retail locations nationwide.

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JCB Completes ATM Gateway Agreement with CUP

JCB International has signed an ATM gateway agreement with China UnionPay. This will enable CUP cardholders to have access to ATM networks in Japan through a gateway platform provided by JCBI. The acceptance will begin March 2006 with the UFJ Bank ATM network of more than 6,000 ATMs, marking the first time that CUP’s 800 million members will be able to use an ATM network in Japan. The acceptance will be expanded to Japan Post which will open its network of 26,000 ATMs to CUP cards starting in May 2006. China UnionPay is China’s only national payment network and is the only bankcard association. JCB is an international credit card brand and the largest card issuer and acquirer in Japan.

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Consumers Say They’re Tight Wads This Year

Boston-based Compete reports that 41% of consumers surveyed say they plan to spend less on holiday gifts than last year and 42% plan to spend the same. In its latest “Spark!” report, Compete found that one out of every two consumers surveyed reported they plan to do 50% or more of their holiday shopping in a discount store up from the 30% they estimated they did in a discount store last year. Nearly 50% of consumers responded that the price of gasoline and the price they expect to pay to heat their homes this winter will have a strong or very strong impact on their holiday spending. Only current job situations ranked higher in terms of influence. Interestingly, Compete found that 60% of Republicans say they will spend about the same or more this holiday season.

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International Online Spending Soars 71%

VISA Asia Pacific announced that online spending by VISA cardholders
outside their home countries, for the third quarter, exceeded $377
million, a 71%
growth over the same period in 2004. The number of international online
VISA card transactions also increased exponentially from 1.9 million in
the third quarter of 2004 to more than 3.6 million for the same period
in 2005, a 94% gain. Singapore, Hong Kong, Thailand and the Philippines
all doubled when compared with the same quarter in 2004. VISA
cardholders spent the most on transportation, about $109 million, an
increase of 79% year on year, followed closely by retail and
trade, at about $103 million, a 90%. For the 12 months ended September
2005, $509 billion was spent at point of sale or withdrawn from ATMs in
Asia Pacific using VISA cards.

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NACBA Names a New Executive Director

The National Association of Consumer Bankruptcy Attorneys has named Brad Botes, an Alabama bankruptcy attorney, as its new executive director.Botes will serve as the Association’s first full-time executive director. Botes received his undergraduate degree from the University of North Alabama and his J.D. from Cumberland School of Law at Samford University. Prior to commencing legal practice, he served one-year clerkships each with the United States Trustee for the Northern District of Alabama. NACBA serves more than 3,500 members in all 50 states and Puerto Rico, serving the interests of consumer bankruptcy attorneys and protecting the rights of consumer debtors in need of bankruptcy relief.

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PEONY MASTERCARD

The Industrial and Commercial Bank of China has introduced the
first EMV-compliant, chip-based card in China. The new “Peony MasterCard” carries both a chip and mag stripe, enabling cardholders traveling overseas to utilize EMV-compliant POS systems and ATMs. The new card is also an international dual-currency card, and can be used for both RMB and USD transactions. MasterCard says there has been a significant reduction in fraud levels with migration to EMV chip-based
cards in markets such as Malaysia. ICBC says the new card provides huge opportunities for the local payments industry, especially in light of the “2008 Beijing Olympics.” At the end of November 2005, MasterCard had issued over 41 million MasterCard-branded smart cards in Asia/Pacific.

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Intuit Expands OPC Option in TurboTax

Official Payments has signed a deal to provide a new integrated payment option within Intuit’s “TurboTax Online” and “TurboTax” desktop products, as well as Intuit’s “ProSeries” product for tax professionals, allowing customers to pay their federal tax balance due with all four major U.S. cards. Official Payments charges citizens a convenience fee for the service, however, taxpayers using credit or debit cards with bonus rewards programs may, depending on their card’s program, earn reward points, airline frequent flyer miles or cash back for paying their taxes and fees. Tier is a leading provider of transaction processing and packaged software and systems integration services for public sector clients.

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