FDIC Proposes a New Rule on STV Cards

The FDIC proposed a new rule on the insurability of funds subject to transfer or withdrawal through the use of stored value cards and other nontraditional access devices, such as computers. Under the new proposed rule, the party who places the funds at the bank would be treated as the insured depositor unless (1) the records of the insured depository institution indicate that the first party is not the owner of the funds and (2) records maintained by the depository institution or the first party reflect the identities of the cardholders and the amount payable to each cardholder. If both of these requirements are satisfied, the funds held by the depository institution would be insured on a “pass-through” basis to the cardholders. The FDIC is opening the proposed rule for comment.

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Rahaxi to Process for Neocard

Rahaxi Processing Oy has signed an agreement with Neocard Oy
to provide electronic payment processing for Neocard’s credit and
loyalty cards. The “Neocard” was introduced to the Finnish youth
market in fall 2004 and offers loyalty benefits to their cardholders in
nightclubs, restaurants, movie theaters across Finland. Rahaxi is a
robust Northern European “BASE24” credit card processing platform. It currently processes in excess of 1 million card payments per month.

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Wal-Mart Seeks an IB to Process Transactions

Wal-Mart has filed an application to operate an Industrial Bank in Utah. The retailing giant says it wants to be its own credit and debit card processor to lower its costs. Wal-Mart says it receives more than 140 million credit, debit and electronic check payments per month. The retailer says the bank will accept limited deposits from non-profit and charitable organizations, but has no plans to operate branch banks or to engage in lending of any type. Wal-Mart noted it has independent banks in more than 1,000 of its stores and is actively seeking new financial institutions as tenants.

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VISA Canada Selects DynTek as a QISA for AIS

California-based DynTek has been selected as a “Qualified
Independent Security Assessor” for the VISA Canada “Account Information
Security” program. DynTek is one of only six firms to obtain the “QISA” certification in Canada. DynTek provides review and assessment services to any entity that processes or stores VISA account data, including merchants, processors and service providers, to determine if they
meet mandated security requirements. DynTek is also a qualified network security scanning vendor, which enables the company to help entities meet PCI program requirements to scan their Web sites for security vulnerabilities.

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First Data Signs 1,500 Major Supermarkets

First Data has signed a contract to process credit, debit and EBT transactions for the more than 1,500 combined locations of Food Lion, Hannaford Supermarkets, Sweetbay/Kash n’ Karry Supermarkets and Harveys First Data Corp. provides electronic commerce and payment solutions for 4.1 million merchant locations, 1,400 card issuers and millions of consumers worldwide. Delhaize America is a leading supermarket operator in the United States with over 1,500 stores in 16 states in the eastern United States.

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CoopDesarrollo Selects Fiserv for a Core Processing

The country’s sixth largest credit union, CoopDesarrollo, has selected Fiserv CBS Worldwide for a core processing agreement. The move that will make the credit union one of the first to comply with new Mexican government regulations. CoopDesarrollo has 100,000 members and 24 branches in Guanajuato and Jalisco. The credit union will operate under the regulations known as Ley de Ahorro y Credito Popular and will be supervised by the Comision Nacional Bancaria y de Valores and by the Confederacion de Cooperativas Financieras de la Republica Mexicana.
Fiserv CBS Worldwide enables more than 280 financial institutions
to deliver integrated solutions for managing the entire customer
lifecycle from core banking to multi-channel customer contact and data
warehousing.

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SCA Creates a New Latin American Chapter

The Smart Card Alliance has formed a new Latin American chapter to bring together smart card suppliers, partners and customers. The Alliance plans to use specific projects such as bi-lingual education programs, market research, advocacy, industry relations and open forums to keep Latin American chapter organization members connected to industry leaders and innovative thought. The Smart Card Alliance is a not-for-profit, multi-industry association working to stimulate the understanding, adoption, use and widespread application of smart card technology.

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Smart Card Alliance Targets Latin America

A not-for-profit, multi-industry association working to stimulate the understanding, adoption, use and widespread application of smart card technology has now targeted Latin America. The Smart Card
Alliance has announced the formation of a new Latin American chapter.
The Alliance plans to use specific projects such as bi-lingual education
programs, market research, advocacy, industry relations and open forums
to keep Latin American chapter organization members connected to
industry leaders and innovative thought. The SCA is making ten “Foundation Memberships” available on a first come, first served basis until October 1, 2005.

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Fraudulent Debt Negotiators Settle with FTC

The FTC this week settled charges made against a group of fraudulent debt negotiators who caused nearly $10 million in losses to consumers. The FTC’s complaint charged that the defendants did not negotiate with consumers’ creditors to reduce or eliminate consumers’ debts as advertised and that consumers who stopped communicating with their creditors found themselves deeper in debt, sometimes forced to pay additional charges and incurred further damage to their credit ratings. The defendants are barred from advertising or participating in any debt negotiation business in the future.

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Chase Card Profits Up 33%; ROO Hits 2.56%

J.P. Morgan Chase reported this morning that credit card profits for the second quarter rose 32.5% to $542 million while revenues increased less than 3% to $3.89 billion, compared to one-year ago. Managed card loans of $137.3 billion were up 6.6% year-on-year and up 2.9% sequentially. Pre-tax income to average managed loans (ROO) was 2.56% for 2Q/05, compared to 2.52% in 1Q/05 and 2.07% for 2Q/04. During the second quarter, Chase opened 2.79 million net new credit card accounts, ending the quarter with 95.5 million cards in-force. Charge volume for 2Q/05 was $75.6 billion, compared to $70.6 billion one-year ago. The managed net charge-off ratio for the quarter increased to 4.87%, from 4.83% in 1Q/05 and 5.56% one-year ago. The 30-day managed delinquency ratio declined to 3.34%, down from 3.54% in the prior quarter. The 90-day managed delinquency ratio was 1.54%, down sharply from 1.71% in the first quarter. Bank card volume for Chase’s merchant acquiring business was $141.2 billion with 4.7 billion transactions. Chase also reported that it ended the quarter with 8,834,000 debit cards. For complete details on Chase’s second quarter performance, visit CardData ([www.carddata.com][1]).

JPM CHASE HISTORICAL ($billions)
2Q/04 3Q/04 4Q/04 1Q/05 2Q/05
EOP Outstandings: $128.8 131.5 135.4 133.4 137.3
Charge Volume: $ 70.6 73.3 75.3 70.3 75.6
Source: CardData (www.carddata.com)

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

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Pipeline to Acquire Charge.com for $17MM

Massachusetts-based Pipeline Data has executed a merger agreement to acquire Florida-based merchant acquirer, Charge.com, for $17 million. The merger will result in the servicing of 25,000 accounts for Pipeline and is expected to generate in excess of 1,000 new merchant applications monthly by year-end. Pipeline Data Inc. provides integrated transaction processing services for all major credit cards.

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MC Projects $573 in Back-to-School Spending

MasterCard released its second annual “Back to School Spending Index” survey which shows that parents of U.S. students college age and younger plan to spend $573 this year on back-to-school items, with 27% using a credit card and 26% using a debit card. MasterCard commissioned the Ipsos-Insight study as a part of an ongoing effort to better understand consumer attitudes and behaviors with regard to school spending and money management. Ipsos is a leading global survey-based market research company, owned and managed by research professionals. MasterCard International manages a family of well-known, widely accepted payment cards brands including MasterCard, Maestro and Cirrus.

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