ViVOpay Readers Certified for ExpressPay

ViVOtech’s “ViVOpay 3000” and “4000” readers have been certified by American Express for use in its “ExpressPay” program. ExpressPay, the American Express contactless payment alternative to cash is being incorporated into the Blue from American Express credit cards. Payment is authorized in seconds and no signature is required. ViVOtech provides an end-to-end transaction platform that allows consumers to make contactless payments with radio frequency-enabled payment methods.

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40MM Accounts Exposed by Lax Security

Nearly a month after discovering a potential security breach affecting as many as 40 million credit card accounts, Atlanta-based CardSystems Solutions publicly acknowledged the incident late Friday. The Company said the FBI, who was notified on May 23rd, requested silence to avoid compromising the investigation. However, MasterCard began notifying members and issued a press release Friday afternoon indicating that 13.9 million MasterCard-branded cards may have been exposed by the breach. VISA and MasterCard also acknowledged that CardSystems Solutions has failed to meet the association’s security requirements. The breach reportedly took place following the installation of new data mining software which enabled a rogue computer program to extract files. In an interview with The New York Times, the CardSystems Solutions CEO said the 200,000 account records actually stolen were being held in a file being stored for “research purposes” to determine why certain transactions had registered as unauthorized or uncompleted. The chief executive acknowledged this was a violation of network rules. The company processes payment transactions for more than 115,000 customer locations and handles about $15 billion in annual volume.

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Cap One D.C. Stash Your Cash Program Ends

Capital One’s six week “Stash Your Cash” financial education program in Washington, DC has ended with an auction of several giant piggy banks to benefit D.C. Public Schools. The Stash Your Cash program, based on a curriculum developed by the Dallas Federal Reserve Bank, introduced local middle school-aged students to basic money management skills, with an emphasis on saving for the future. The program reached more than 4,000 students. Capital One’s subsidiaries collectively had 49.1 million accounts and $81.6 billion in managed loans outstanding as of March 31, 2005.

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Google to Launch an ePayment Service?

There is mounting scuttlebutt that search engine king Google is gearing up to launch an electronic-payment service this year. The new “Google Wallet” may function similar to eBay’s PayPal e-payment service which enables buyers and sellers to link their credit cards or checking accounts to the service. In April, Google filed papers in California to form Google Payments Corp. The New York Times reports that the chief executive of a major online merchant has been approached by Google to take part in the proposed service. The Wall Street Journal says the move would highlight the growing rivalry between the two Internet companies, even while eBay itself is a big buyer of Google’s online ads. According to CardData, PayPal handled $6.23 billion in gross payment volume during the first quarter, generating $227.1 million in transaction fees. As of March 31st, PayPal had 71.6 million accounts.

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AmEx Lands the JetBlue Cobrand Deal

After aggressive competition, American Express has landed the JetBlue cobrand deal. This is JetBlue’s first credit card program. AmEx says its “Membership Rewards” partnership with JetBlue, launched in December, was one of keys to the expanded relationship. The partnership between JetBlue’s “TrueBlue flight gratitude” program and “Membership Rewards” program exceeded its one-year goal within the first three months. The new “JetBlue Card from American Express” will be launched in the third quarter. The new card will enable cardholders to earn “Award Dollars” that can be converted to “TrueBlue” points redeemable for JetBlue flights. Pricing details were not disclosed.

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Walgreens to Distribute Green Dot Cards

Walgreens is teaming up with Next Estate Communications to distribute “Green Dot Prepaid VISA” and “Green Dot Prepaid MasterCard” cards. The deal adds 5,000 locations to Next Estate’s distribution channel. The prepaid VISA and MasterCard specialist now has more than 45,000 locations nationwide. The Company claims a 90% share of the U.S. market. The Next Estate cards are issued by Columbus Bank and Trust.

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Affluent Market Demands Customized Products

A new study suggests that card issuers have their hands full trying market to households earning over $100,000 annually. The emerging mass-affluent demographic has become very demanding, willing to speak up, walk out, or refuse to buy a product or service due to a poor experience. The MasterCard report, based on Yankelovich’s annual study of consumers, concludes that customization is becoming a necessity and that financial services companies must offer more choice and convenience to tap the mass-affluent market. According to the findings, 85% of mass-affluent consumers say they will speak up when experiencing bad service. Nearly three-quarters will walk out of a store if mistreated, even if the store has exactly what they are looking for. More than half have refused to buy a particular product or service over the past year as a form of activism. However, only 12% of mass-affluent consumers describe themselves as having “a lot of money.”

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Heartland Payment Tops 100,000 Customers

Heartland Payment Systems recently exceeded its 100,000th active customer. Heartland has experienced rapid growth in the restaurant industry over the past several years, as well as achieving significant penetration in the hotel and retail markets. Restaurant merchants now account for 33% of its customer base. Heartland Payment Systems is a multiple product transaction processor of low-risk businesses across all 50 states and a portfolio in excess of $30 billion in annual bank card processing volume.

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CARD PULSE

Credit card delinquency in Canada has increased to 5.3% this year, compared to a 4.6% ratio for late 2004. The modest upturn is expected to produce a similar increase in gross charge-offs in the next several months. A new report from CIBC World Markets also shows that the
growth in credit card portfolios has leveled off to about 10% and that the rates of growth of “Standard” and “Premier” cards have converged.
The research found that during the first quarter, overall household debt rose by 2.2% while personal disposable income rose by only 0.3%. Therefore, the debt-to-income ratio, has grown from 113% to 115%. CIBC believes the debt ratio will continue to rise. At the same time, the debt service ratio, as measured by debt interest payments as a share of disposable income, has risen a bit in the first quarter, but at 7.6% it is still extremely low. CIBC also noted in its report that personal bankruptcies in Canada are on the decline with the cumulative number personal bankruptcies during the year ending April 2005 falling by 1.5%.

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BofA to Buy 9% of China Construction Bank

Bank of America announced a definitive agreement to buy approximately 9% of the stock of China Construction Bank for $3 billion, with the option of increasing its stake in future years. CCB, the second largest commercial bank in China, has RMB 3,910 billion ($472 billion) in assets and RMB 3,491 billion ($422 billion) in deposits and 136 million active retail deposit account relationships. The bank is currently majority owned by China SAFE Investments Limited, an entity of the government of China. Bank of America is one of the world’s largest financial institutions, serving 33 million consumer relationships.

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