Providian Settles a 2003 Bulk Mail Lawsuit

Providian said this week that it reached a settlement with the Civil Division of the Department of Justice last month in regard to discounted bulk mail postage rates. In 2003, Providian said an individual made a claim against it and TSYS as a vendor, alleging they received discounted bulk mail postage rates between 1997 and 2001 that they were not eligible for. The allegations involve claims that such mailings were not eligible for bulk mail postage rates because requirements relating to the updating of mailing lists were not satisfied. Providian did not disclose the amount of settlement with the DOJ and the individual but said it requires court approval.

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JCB Expands Merchant Acquiring in Russia

Russia’s Industry & Construction Bank is set to begin JCB merchant acquiring this month, after inking a deal in March. The agreement with ICB for merchant acquiring operations marks the second in Russia for JCB, following a license granted in 1995 to Moscow’s United Card Services. ICB has about 850,000 credit/debit cardholders and the largest share of merchants in the St. Petersburg area, according to tomorrow’s edition of CardFlash International. JCB cards are now issued in 19 countries and territories, with 55.14 million cardholders.

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Top 10 Outstandings Only Up 4% at Mid-Year

At mid-year, credit card outstandings among the top 10 issuers are up a modest 4% over 2Q/04, as consumers continue to shift card debt to home mortgages/equity and increase debit card usage. Among the nation’s top issuers of general purpose credit cards, Wells Fargo and Bank of America posted the strongest gains of 18% and 14%, respectively. Citibank, a long-time industry leader, posted a paltry 1% gain while former powerhouse, MBNA, contracted by 8%. Discover was flat year-over-year as American Express expanded by 8% domestically. Capital One, a former driver of growth via IT drilling, reported an unimpressive 3% gain in the U.S. market. As a group, the top 10 issuers had $573.4 billion in second quarter outstandings versus $549.6 billion one-year ago, according to CardData ([www.carddata.com][1]).

TOP 10 U.S. ISSUER SNAPSHOT
($ billions on outstandings)
(as of June 30, 2005)
RANK/ISSUER LOANS Y/Y
1. JPM Chase $137.7 +10%
2. Citibank $114.5 + 1%
3. MBNA $ 77.2 – 8%
4. Bnk of Amer $ 59.3 +14%
5. Discover $ 46.8 NC
6. Cap One $ 46.4 + 3%
7. AmEx $ 41.5 + 8%
8. HSBC $ 22.2 +10%
9. Providian $ 18.6 + 8%
10. Wells Fargo $ 9.2 +18%
TOTAL $573.4 + 4%
Source: CardData (www.carddata.com)

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

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ICB & JCB

St. Petersburg-based Industry & Construction Bank is set to begin JCB merchant acquiring this month, after inking a deal in March.
The agreement with ICB for merchant acquiring operations marks the second in Russia for JCB, following a license granted in 1995 to Moscow’s United Card Services. ICB has about 850,000 credit/debit cardholders and the largest share of merchants in the St. Petersburg area. JCB cards are now issued in 19 countries and territories, with 55.14 million cardholders.

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Juniper Bank to Take Over US Airways Cobrand

US Airways is switching its co-branded VISA card from Bank of America to Barclay’s Juniper Bank. Effective in 2008, Juniper will have the exclusive rights to market the frequent flyer card. The change is the result of Barclays decision to invest $455 million into the merger of US Airways and America West Airlines. The agreement includes a signing bonus of $130 million, as well as a $325 million pre-purchase of air miles. Juniper will begin marketing the credit card in January 2006, offering cardholders a chance to earn miles in the combined airline’s frequent flyer program, similar to America West’s current “FlightFund” offering through Bank of America, which expires at the end of the year. Juniper provides co-branded credit cards and credit card services to about 40 organizations including AirTran Airways, Carnival Cruise Lines, Frontier Airlines, and Orbitz.

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Indala Names a Western States Sales Manager

San Jose-based contactless and contact smart card specialist Indala has hired Rick Mohr, formerly of Siemens Building Technologies, to be western regional sales manager for North America. Rick comes to Indala from Siemens’ Security Systems Division, where he served four years as a national accounts executive. Prior to his tenure at Siemens, Rick was CEO/managing partner of Andersen/Mohr Associates, LLC, a former Napa, California-based international security consulting firm that developed physical security programs for Fortune 500 companies. Indala Corporation is a security technology company that develops and distributes 125 kHz proximity; 13.56 MHz contactless and contact smart cards; and associated readers for physical and network access-control applications.

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Prime Rate Hits 6.50%, Pushing Some APRs to 30%+

Banks reset the prime rate late yesterday to 6.50% following the Federal Open Market Committee decision Tuesday to raise its target for the federal funds rate by 25 basis points to 3-1/2 percent. The Board of Governors unanimously approved a 25-basis-point increase in the discount rate to 4-1/2 percent. The FOMC noted that aggregate spending, despite high energy prices, appears to have strengthened since late winter, and labor market conditions continue to improve gradually. The FOMC signaled that more rate increases are on the way. The increase will push some punitive rates by top issuers to 30.49% by the end of September.

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First Data to Acquire Citi Merchant Services

First Data yesterday afternoon confirmed it has sealed a deal to acquire Citibank’s current U.S.-based Citi Merchant Services. At the same time, FDC announced it has decided to exit the Encorus business, a provider of mobile payment software. Citi Merchant Services provides credit and debit card payment processing services to approximately 15,000 merchant locations. The FDC-Citi deal also includes a merchant services alliance agreement wherein First Data will contribute sales and management personnel and Citibank will support marketing efforts through all of its sales channels, including domestic retail branch locations. FDC currently provides transaction processing services for Citi’s private label and co-branded private label credit cards along with official check and money order services. Citibank is also a member of First Data’s “STAR Network.” In June, Citi decided to move the processing of its Sears consumer MasterCard and private-label accounts from TSYS to First Data. FDC says the write-off of its Encorus investment will result in a $0.04 charge in the third quarter, $0.03 of which is non-cash. However, the Company will post a pre-tax gain in Q3 of $8 million from the sale of its remaining interest in International Banking Technologies, which had been substantially divested in 2001.

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ChexCard Goes on the Green Dot Financial Network

Texas-based PayPro and its ChexCard subsidiary has signed a deal with Next Estate Communications to enable ChexCard’s prepaid cards to be loaded at Next Estate’s “Green Dot Financial Network” retail locations. The Green Dot Financial Network, with over 13,000 locations nationwide, provides cash acceptance services including prepaid card reloading and remittance cash collection. Pay Pro’s stored value debit cards are sold under the brand names CHEXCARD(R) and MYBANKCARD to businesses, governmental agencies and individuals.

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Professional Photographers Join OneLynk Alliance

The Professional Photographers of California has joined RBS Lynk’s “OneLynk Alliance” program to offer members a complete range of processing services. Members of the PPC will be able to leverage several services designed for flexibility including MobileLynk, a new wireless payment device that allows payments to be processed anywhere cellular coverage is available and gift card promotion opportunities. Professional Photographers of California, Inc. is a non-profit, 501(c)6 trade association of professional photographers, employees, suppliers and others allied to the profession. RBS Lynk is a single-source provider of electronic payment processing services and is a member of The Royal Bank of Scotland Group.

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American Express Gears Up for a Chicago Card

American Express plans to launch a credit card offering special rewards tied to Chicago. The “IN:CHICAGO Card,” to be launched this fall, will target young adults in the city. The card will come with no annual fee, a 0% introductory APR and a rewards program just for Chicagoans. The “IN:CHICAGO Card” is the second city-centric credit card from American Express. One-year ago AmEx introduced the “IN:NYC Card” for New Yorkers.

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Parents Top Concern: Personal Financial Skills

According to a recent VISA survey, parents of high school students said developing good personal financial skills and being able to handle their money ranked ahead of following the wrong crowd and drugs/alcohol use in terms of concerns parents have for their children’s futures. In response, Visa offers a free, online financial education program called Practical Money Skills for Life, which contains comprehensive, interactive materials to help parents work with their children to develop strong financial skills. Visa USA is the nation’s leading payment brand and largest payment system with cardholders in over 150 countries carrying more than 1 billion Visa-branded cards, accounting for more than $3 trillion in annual transaction volume.

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