NCR Lowers Guidance on its ATM Sales

NCR says that full-year revenue growth guidance for its ATM division is being lowered to 0% to 2%, due to less-than-expected growth from demand drivers, the effect of price erosion and the company’s continued focus on price discipline. NCR expects to report third-quarter revenue of approximately $1.49 billion to $1.50 billion, an increase of 3 percent from the third quarter of 2004. In addition, the company’s cost reduction actions are progressing ahead of schedule. Of the $350 million of cost reduction the company expected to achieve by the end of 2006, more than $300 million is now expected to be achieved by the end of 2005.

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Prepaid Card Expo Planned for February

New Hampshire-based Prepaid Media is planning its first “Prepaid Card Expo” in Orlando in mid-February, featuring Russell Simmons and Frank Abagnale as speakers. The 2006 Prepaid Card Expo is the first conference to be dedicated entirely to the rapidly expanding network branded prepaid and stored value card industry and will feature four primary tracks targeting different segments of the industry, including: Unbanked, Underserved, and Payroll; Healthcare, Consumer; and Corporate and Government. Prepaid Media provides media services to the rapidly growing network branded prepaid card industry.

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V12 Formed to Lead BTL Direct Marketing

Three direct marketing firms, Datagence, Media Solution Services and Spectra Products, have merged. The new V12 Group, based in New York City, uses its proprietary databases and multi-channel delivery model to provide measurable customer acquisition results for 47 of the top 50 U.S. credit card issuers. Media Solution Services and Spectra Products are the #1 and #2 largest instatement media providers. Therefore, V12 will deliver about three billion instatements annually, giving it a 70% market share. V12’s databases contain records for 228 million consumers, 116 million household and 22 million businesses all updated monthly. Paul Chachko, former CEO of Datagence, led the merger effort and will serve as CEO of V12. The new Company says it is the complete provider of below-the-line marketing services.

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Hypercom Forms New Sales Leadership Team

Hypercom has restructured its worldwide sales organization, dividing up the job among two executives. EVP Guilherme Blumenthal, who was responsible for Global Sales, is leaving the payment terminal maker. Instead, Emilian Elefteratos and O.B. Rawls will head sales. Elefteratos will serve as SVP, International Sales, and Rawls will serve as SVP, North American Sales. Elefteratos most recently served as President and CEO of SiVault Systems. Rawls has served five years as President of Hypercom North America. Both will report directly to William Keiper, CEO of Hypercom. Keiper was named CEO and President in August. Hypercom reported that net revenue for the second quarter was flat year-over-year at $64.0 million. (CF Library 8/9/05; 8/31/05)

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UBC Lands a Moneris Executive as EVP

New Jersey-based United Bank Card has hired J. Brian Merena, former SVP of Financial Institutions at Moneris Solutions, as EVP of Financial Institutions. Merena boasts an extensive background in the financial services industry with a track record of developing new business opportunities and strategic partnerships. As the Senior Vice President of Financial Institutions at Moneris Solutions, Merena focused on defining and executing the company’s sales strategies, with particular emphasis on leveraging the company’s relationships with financial institutions. United Bank Card, Inc. is a payment and transaction processor serving businesses nationwide, handling the merchant accounts for over 40,000 locations and processes in excess of 3 billion dollars annually.

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CHIP & PIN & FRAUD

Counterfeit and lost/stolen fraud on payment cards dropped by nearly a third in the first half of this year due to the new “Chip and PIN” system. Card fraud involving counterfeit and lost/stolen cards was GBP 89.9 million this year, compared to GBP 126.6 million for the first six months of 2004. The “Chip and PIN Program” announced yesterday that effective February 14th “Chip and PIN” cardholders must use their PIN to be sure of being able to pay at the point-of-sale. APACS says the vast majority of people are already using PIN at the POS. For debit cards, 97% of transactions, and for credit cards, 89% of transactions, are already successfully verified by PIN. To encourage the PIN stragglers, the “Chip and PIN Program” launched the “I LOVE PIN” campaign this week. It will run for four months and will include a PR campaign, online information, a customer leaflet and POS material for shop staff to use.

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Merchants Have a Love-Hate Card Relationship

While many merchants are fighting the card associations over the fees they pay to accept credit cards, a new study shows that refusing to accept such cards would result in a significant decline in sales for most merchants. The Association for Financial Professionals’ “Interchange Survey” found that virtually all organizations that accept credit or debit cards from consumers indicate that they do so to satisfy customer demand. However, merchants say the blended rate for accepting credit cards has risen by 4%, almost one-quarter report increases of 10% or more, including 18% that report a 10-24% increase and 6% that report an increase of more than 25%. More than 82% of survey respondents agree to some extent with the lawsuits filed against the associations alleging price fixing and anti-competitive behavior. Two-thirds favor to some degree caps on interchange fees. More than half of merchants have attempted to negotiate lower fees, while 30% restrict consumer choice to certain cards and 29% requested unbundled pricing. A third of organizations that sell to consumers have programs to encourage customers to use the payment method preferred by the seller.

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Sig Debit Fraud 15X Above PIN Debit Fraud

A new study has determined that the use of a PIN to authorize debit card purchases is about 15 times more secure than signature debit transactions. The research also found that only 57% of debit cards are active even though 73% of eligible checking and similar accounts now can be accessed by debit cards. The study commissioned by the PULSE EFT Association calculated that the costs associated with PIN debit fraud at the point of sale currently amount to $.001 per transaction, or .29 basis points. By comparison, losses related to signature debit are $.016 per transaction, or 4.21 basis points. However, on a per-transaction basis, a typical incidence of PIN debit fraud costs $160, while signature debit losses average $86 per incidence. Annually, PIN-related fraud costs financial institutions approximately $.04 per card per year, while signature debit losses amount to $1.15 per card. Last year, financial institutions lost $193 million to signature debit losses and $8 million to PIN debit fraud. The PULSE study was conducted by Dove Consulting, a division of Hitachi Consulting.

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$800B Credit Milestone Remains Uncrossed

Revised figures released Friday show that revolving consumer credit did not pass the $800 billion mark in June and July. However, Americans are fast approaching the historic milestone as revolving credit for August hit $798 billion. According to data released by the Federal Reserve, June’s measurement is now $796.5 billion instead of $806.0 billion and July’s figure is now $795.7 billion instead of $805.0 billion. The annual rate of growth for August was 3.5%, compared to -1.3% for July, and 1.0% for August 2004. One-year ago revolving credit stood at $776.7 billion. Bank credit card debt (excluding store and gas credit cards) at the mid-year was $664.5 billion, or roughly 83% of total revolving credit, according to CardData (www.carddata.com). At the end of August, Americans were $2152.3 billion in debt, excluding home mortgages.

REVOLVING CREDIT HISTORICAL ($billions)
Aug 05 Jul 05 Jun 05 May 05 Apr 05 Mar 05
GRWTH: 3.5% -1.3 10.9 2.1 -0.9 -0.1
$OWED: $798.0 795.7 796.5 789.3 786.6 787.3
Source: Federal Reserve; revised figures as of 10/10/05;
For complete historical data, visit CardData (www.carddata.com)

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CASH-BACK CARD

Citibank has launched the “Cash Back Card” offering instant cash rebates between 0.5% to as high as 4.0% in a month. Citi has been offering cash back as an option within its free rewards program for
two years in Australia, with up to one in five points now being redeemed for cash. Cardholders who take advantage of the special balance transfer rate of 5.90%, which applies for the life of the balance, will earn their first cash back on the transferred balance. Generally, the cash back rate is determined by taking the opening balance (less
payments and credits) for the statement period. This rate is then
applied to all new purchases and bill payments (PAY or otherwise) made
on the card during that statement period. The amount is credited
directly to your account the following month. Cit notes that about 40% of all credit cards in the U.S. are now offering cash rebates to customers and this is also a growing trend within Asia and the United Kingdom.

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PayPal Acquires VeriSign’s Payment Gateway

PayPal has inked a deal to acquire VeriSign’s payment gateway business for $370 million in cash and/or eBay stock. The deal will boost PayPal’s annual payment processing volume from $26 billion to $66 billion. With the acquisition, PayPal plans to accelerate its merchant services business by expanding its customer base to tens of thousands of new small and medium-sized business customers online. VeriSign’s payment gateway processed more than $40 billion in total payment volume in 2004. PayPal currently has about 79 million accounts and expects to hit $26 billion in annual payment volume this year. eBay and VeriSign also signed a multi-year security technology agreement that calls for eBay to invest in the deployment of VeriSign technologies that enable and protect online transactions, including the purchase of up to one million two-factor authentication tokens. eBay and PayPal plan to begin the rollout of two-factor authentication to customers in 2006. The deal is expected to close in the fourth quarter.

$VOLUME #ACCOUNTS
2Q/04 $4.3 billion 50.4 million
3Q/04 $4.6 billion 56.7 million
4Q/04 $5.6 billion 63.8 million
1Q/05 $6.2 billion 71.6 million
2Q/05 $6.5 billion 78.9 million
SOURCE: CardData (www.carddata.com)

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Gulf Oil Extends/Expands Wright Express Deal

Gulf Oil signed a five-year contract extension with Wright Express for payment processing and information management services as well as extending Gulf Oil’s acceptance of the Wright Express universal fleet card. Gulf Oil Limited Partnership is a wholesaler of refined petroleum products and distributes motor fuels through a network of 1,800 Gulf branded gas stations. Wright Express is a provider of payment processing and information management services for more than 290,000 commercial and government fleets containing more than 4 million vehicles.

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