Toronto-based Hudson’s Bay Company has decided to unload its C$1.25 billion credit card business to cash-in on the current high portfolio valuations. After peaking in 2003, HBC’s credit card outstandings have been steadily declining due to lower store sales and higher customer payments. The portfolio produced an operating profit of C$162 million last year. Hbc expect its portfolio to be worth between C$500 million and C$600 million. In August, J.P. Morgan Chase inked an agreement to acquire Sears Canada’s C$2.5 billion credit card portfolio for $2.2 billion in cash. Sears anticipates an after-tax gain of approximately C$650 million. The deal included both its private-label Sears credit card accounts (C$2.3 billion) and its co-branded “Sears MasterCard” (C$200 million). Totally, the Sears Canada portfolio has about 10 million gross accounts and four million active accounts. At July 31, 2005, there were 3.2 million gross accounts and 2.9 million active Hbc customer accounts (1.6 million Bay cardholders and 1.3 million Zellers cardholders). Hbc has retained Goldman Sachs and BMO Nesbitt Burns as financial advisors for the sale. (CFI Library 9/1/05; 9/16/05)Details
A new report says there has been a dramatic shift in the ownership of U.S. store credit card receivables as the share of private label credit card issuers has grown from 45% in 1999 to 85% last year. Based on portfolio transactions this year, private label credit card issuers will increase their market share to more than 92% by the end of 2006. The research by Mercator Advisory Group calculated that GECF’s share was 31% at the end of last year while Citi Commerce Solutions had a 31% share. HSBC Retail Services had an 18% share as Alliance Data Systems held a 4% share at year-end 2004. The Group says private label credit issuers are still hungry for more acquisitions but will soon face the organic growth challenge. Mercator says co-branding, such as the “Starbucks Duetto Card” or the “Wal-Mart Discover,” could be the answer.Details
Massachusetts-based Pipeline Data has entered into a $2 million financing arrangement with Centrecourt Asset Management to fund new merchant portfolio acquisitions. Under the arrangement, Pipeline will issue up to $2 million of its convertible term notes at a conversion price of $1.10 to Centrecourt and Centrecourt will also be issued five-year warrants to purchase up to 700,000 shares of Pipeline’s common stock. Pipeline Data provides integrated transaction processing services for all major credit cards and serves over 15,000 accounts.Details
Seattle-based Nordstrom has introduced a VISA debit card that offers rewards. The “Nordstrom MOD VISA” is issued through Nordstrom fsb. Cardholders earn two points for every net dollar spent at Nordstrom. Once a customer reaches 2,000 points they automatically receive a $20 “Nordstrom Notes” certificate in the mail redeemable toward any Nordstrom product or service. Rewards points can be earned whether a customer uses a Nordstrom retail card, “Nordstrom VISA” card or a “Nordstrom MOD” card. Nordstrom has 154 US stores in 27 states. The Nordstrom VISA credit card portfolio currently has about $700 million in outstandings and one million cardholders, according to CardData ([www.carddata.com]).
San Francisco-based Pay By Touch Solutions has raised $130 million in new financing from two major hedge funds. $75 million was raised in senior secured notes with major investments from New York based hedge fund Och-Ziff Capital Management, Farallon Capital Management and Plainfield Asset Management. The additional $55 million was raised in a convertible promissory notes from three of the Getty Trusts, Ron Burkle, the founder and managing partner of The Yucaipa Companies and Rembrandt Ventures. Pay By Touch Solutions recently completed the largest chain-wide biometric payments rollout. Pay By Touch Solutions’ patented biometric payment products enable shoppers to quickly and securely pay for purchases or cash checks using a finger scanDetails
U.S. Bank and Heritage Affinity Services have made a soft launch of their new affinity card that supports Israel-related charities. The new “HAS Advantage Platinum VISA” will roll-out nationally in November and target Jewish households. The card also rewards cardholders with one point for every dollar you spend. Additionally, new cardholders receive 1,000 bonus points with their first purchase. Points can be redeemed, after November 20th, for miles on EL AL Airlines, domestic and International travel rewards, brand-name merchandise, gift certificates and Judaica. Heritage Affinity Services has alliances with EL AL Airlines, Dan Hotels Israel, Sheraton Hotels Israel, Avis Israel and Budget Israel. The no-fee card carries an interest rate between prime +5.99% and prime +14.99%.Details
Vital Processing Services has renewed its merchant processing service agreement with Bank of America merchant services, the second largest U.S. bankcard merchant acquirer. The agreement continues the longterm relationship between the two companies, with Vital providing full service transaction processing and related support services. Terms of the agreement were not disclosed. Vital provides end-to-end payment solutions to acquirers and their merchants.Details
GECF has inked a long-term card deal with North Carolina-based Stock Building Supply offering a private label commercial open account receivables program and a business revolving charge account with flexible payment options. Stock Building Supply Holdings, Inc, is a nationwide supplier of lumber, building materials and associated services with annual sales in excess of $4.1 billion. GE Business Credit Services will work with Stock to extend its market reach and increase sales – enhancing Stock’s ongoing efforts to serve more of the remodel and repair builder market. GE Consumer Finance, a unit of General Electric Company, is a leading provider of credit services with $150 billion in assets.Details
Gemplus confirmed that one of the top ten leading banks in North America has selected its “GemInstant” cards for its contactless payment program. The cards are MasterCard “PayPass” compliant. The cards will be produced at Gemplus’ recently enhanced card manufacturing facility in
Pennsylvania. Gemplus has sold over 5 billion smart cards worldwide.
VISA yesterday announced it will increase its spending on anti-fraud measures by at least $200 million over the next four years. The announcement was made at the first “Cardholder Security in the New Electronic Payments Age” summit held in Washington, DC. VISA also released fraud statistics that show VISA’s fraud rate has decreased by 7% annually since 1990 while volume has increased 16% per year. VISA flags roughly 250,000 possibly fraudulent transactions daily. VISA also says it has been involved in more than 80 separate fraud investigations during 2005. VISA noted it has experienced a 54.3% drop in chargebacks over the last 5 years due to programs such “Re-Engineering Disputes.” Additionally, merchants saved $12.6 million last year as a result of the fraud protections provided by “Verified by Visa.”Details
First Data and Chase have merged the jointly owned Chase Merchant Services and Paymentech merchant businesses, renaming it Chase Paymentech Solutions. The combined operation, which processed $535 billion last year, will be 51% owned by Chase and 49% by FDC. Michael Duffy, Paymentech’s current president and CEO, is leading the combined executive team. As part of the deal, Chase Paymentech Solutions has entered into a five year processing relationship with First Data Merchant Services. Chase also agreed to continue to be a member of First Data’s “STAR Network” for a part of its debit business. Founded in 1985 as MPACT Merchant Services, Paymentech was combined in 1999 with Banc One Payment Services after First Data Merchant Services acquired shares of Paymentech. The combined business was jointly owned by First Data and Bank One. Last year, Bank One merged with Chase, thus Chase became the majority owner of Paymentech. In 2004, Chase Merchant Services processed $335 billion in card transactions, while Paymentech processed about $200 billion. Both business have nearly doubled in volume since 1999.
2000: $109 billion $179 billion
2001: $114 billion $196 billion
2002: $123 billion $225 billion
2003: $162 billion $272 billion
2004: $200 billion $335 billion
Source: CardData (www.carddata.com)
Phoenix-based Celebrity Theatre has deployed NCR’s “RealPOS 20” terminals, “NCR RealPOS” thermal printers and NCR pole displays via Dalton Management Information Systems. NCR RealPartner Dalton Management Information Systems, Inc. (DMIS) managed the implementation of the solution including NCR NeighborhoodPOS software, NCR RealPOS 20 terminals, NCR RealPOS thermal printers and NCR pole displays. DMIS is also providing consulting and customer services. The 14 units were installed in July to handle concession and merchandise purchases.Details