Universal Gift Cards Come Under Attack

A major debate over how universal gift cards are regulated will be coming to a head after three Attorneys General filed suit yesterday against Simon Malls. The debate is whether the “Simon Malls VISA Gift Card” is considered a “mall-issued card” or a “bank-issued card.” The card is provided to Simon Malls by Bank of America, and is one of the largest universal gift cards programs in the market today. Attorneys General from Massachusetts, New Hampshire, and Connecticut filed lawsuits yesterday claiming the card program violates consumer protection laws. Like most universal gift cards, the Simon Malls card charges service fees, dormancy fees, and has an expiration date. Massachusetts “Gift Certificate law” requires that gift cards be redeemable at full face value for seven years. New Hampshire’s “Consumer Protection Act” states that gift certificates may not expire, and that such service charges, dormancy fees, or other administrative charges that reduce the value of the gift certificate are forbidden. Connecticut says the Simon Card violates its “Truth in Advertising” for poor disclosure of the costs associated with card program.

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Navy FCU Sharechek VISA Makes the Top 10

Navy Federal Credit Union announced it is now one of VISA USA’s top ten check card issuers. The milestone for the Navy FCU “VISA Sharechek Card” was achieved in less than six years. During second quarter, Navy Federal’s VISA check card sales/purchase volume increased 35% over the same period last year, with nearly 87 million transactions for $3.5 billion in sales/purchase volume, year-to-date. The credit union’s check card penetration is 83% of its active checking account base; 62% of the check cards in circulation are active. Navy says its members’ average card usage is 15 POS transactions per month, which is above the industry average of 11.9 monthly transactions per user. Navy FCU is the world’s largest credit union, with more than $22 billion in assets and over 2.4 million members worldwide.

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HSBC Possibly Eyeing FDS Card Portfolios

Widely published reports suggest that HSBC is eyeing a purchase of the credit card portfolios of Federated Department Stores. At mid-year Federated had $2.1 billion in private label outstandings and $900 million in bank credit card outstandings. Federated recently indicated it is exploring options with regard to its card portfolio. Federated operates more than 450 stores in 34 states, under the names of Macy’s, Bloomingdale’s, Bon-Macy’s, Burdines-Macy’s, Goldsmith’s-Macy’s, Lazarus-Macy’s and Rich’s-Macy’s. Earlier this month, HSBC acquired Marks & Spencer Retail Financial Services Holdings Ltd for $1.4 billion. (CF Library 11/12/03)

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Versatile’s Art Director Draws Top Honors

Versatile Card Technology announced that its art director, Jorge Ojeda, received four American Graphic Design Awards in the plastic card category. Mr. Ojeda has worked for the plastic card industry for 13 years. Before his career at VCT, Ojeda worked for plastic printing companies located in Brazil and Venezuela. In addition to card design, Ojeda is responsible for VCT’s Corporate Identity as well as their Web site. He also designs government identification cards for countries around the world. Along with the America Graphic Design Awards, Ojeda’s badge design was chosen by the International Card Manufacturer Association at its international conference in Prague, Czech Republic, this past October. VCT is the world’s largest plastic card manufacturer.

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SiVault Systems Implementing Hypercom HBNet

SiVault Systems is implementing Hypercom’s advanced “HBNet” information delivery service to provide high performance transaction processing speed, convenience, and security to the medical, financial, and retail communities. Hypercom terminals combined with HBNet data communications network deliver increasing authorization and processing speed to customers who conduct dial or IP transactions at the point-of-interaction in retail point-of-sale, financial, government, healthcare, and other markets. SiVault Systems, Inc. is a leading provider of secure storage and retrieval of signed documents and biometric signature-based authentication for online transaction processing. Hypercom delivers solutions that assist merchants and financial institutions in generating revenues and increasing profits.

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Fortis Selects Diebold to Modernize its ATM Network

Fortis has signed an agreement with Diebold to manage a deposit automation project in Belgium and The Netherlands using ATM bundled-cash deposit technology. Diebold’s system allows bulk-cash deposits to be credited in real-time. In The Netherlands, Diebold installed its new family of “Opteva” ATMs. The installation included more than 160 “Opteva” cash dispensers and advanced-function ATMs. Half of these systems include modules for deposit automation. In Belgium, Diebold’s solution involves a pilot installation of Diebold “Cumulus” units, a Diebold “Custom Built Solution.”

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OTI Completes Acquisition of ASEC

On Track Innovations completed its acquisition of ASEC. The acquisition was conditioned upon ASEC’s receiving an order to supply 1,000 units of contactless reader solutions for micropayments. The order, which has been received, is for a Polish mass transit system.
In this application, commuters will be able to load funds onto
their commuter cards using a contactless reader integrated into Verifone’s “Omni 3750” terminals located at one of the largest kiosk chains across Poland. With this new system, customers will be able to pay for their mass transit tickets and other small ticket-items. The value of this order exceeds $500,000. Poland, with a population of about 40 million, recently joined the European Union. There are about 80,000 POS terminals and 7,200 ATM machines located across the country.

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CTFS 3Q/04

Canadian Tire Financial Services reported that its net managed credit card receivables, for the third quarter, increased 25% year-over-year to $2.7 billion, driven by a 26% increase in “Options MasterCard” average balances to $1,483. Pre-tax earnings rose 38% to $36.7 million. However, the average number of accounts with a balance declined slightly during the quarter primarily due to the sale of the commercial and PartSource credit card portfolios, a short-fall in in-store applications and adjustments to account approval standards over the first six months of the year. During the quarter, Financial Services tested a new personal (term) loan product targeted to existing credit card customers which added approximately $70 million in receivables at the end of the quarter. In addition, in the third quarter CTFS partnered with BMO Bank of Montreal to launch the new “Canadian Tire Commercial Link MasterCard” to replace the existing commercial card. Active commercial accounts are held by more than 50,000 Canadian Tire business customers. For complete details on Canadian Tire Financial Services’ third quarter performance visit CardData (www.carddata.com).

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Top Ten Issuers Hold 85% of the U.S. Market

Bank credit card outstandings rose 1.7% sequentially during the third quarter to $688.3 billion. The Top 10 issuers now control slightly more than 85% of the total U.S. general purpose credit card market. The merger of Chase and Bank One has produced a market leader with more than 19% of the market. However, the partnership between American Express and MBNA translates into two issuers with a combined market share of more than 21% of the U.S. market. The top five issuers now represent 64.5% of the market. The top ten currently have a collective market share of 85.2%, based on outstandings. At the end of the third quarter, VISA had $289.6 billion in credit card outstandings while MasterCard had $287.7 billion. For complete details on the industry’s third quarter performance visit CardData ([www.carddata.com][1]).

TOP TEN U.S. BANK CREDIT CARD ISSUERS – 3Q/04
(VISA, MasterCard, Discover, American Express)
[$ billions]

Rank/Issuer Outstandings Market Share
1. JPM Chase $131.5 19.1%
2. Citigroup 112.0 16.3%
3. MBNA 81.5 11.8%
4. Amer. Exp.* 63.9 9.3%
5. Bank of Amer. 55.4 8.0%
6. Discover** 47.1 7.2%
7. Capital One 46.1 6.8%
8. HSBC 20.1 2.9%
9. Providian 17.9 2.6%
10.Wells Fargo 8.2 1.2%
TOTAL $583.7 85.2%

* includes $25.2 billion in non-revolving outstandings
** as of 8/31/04
Source: CardWeb.com(R) CardData(R)

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

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Cap One’s CEO Exercises Options; Sells Stock

Richard Fairbank, Chairman and CEO of Capital One Financial is exercising 3.6 million stock options, unloading 2.6 million shares from the options, leaving a balance of 9.4 million options. Mr. Fairbank has adopted the pre-arranged stock trading plan in order to exercise options to buy Capital One common stock and sell part of those shares to cover expenses associated with transactions as well as to diversify his financial assets. The plan indicates that the transactions will occur between February 1, 2005 and September 14, 2005. Capital One is a Fortune 500 company and one of the largest providers of MasterCard and Visa credit cards in the world.

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Transoft’s eATM Certified by 12 Networks

NC-based Transoft reports its “eATM” solution has been certified by Concord EFT/STAR, Fiserv EFT, CSI, Fifth Third Processing Solutions, Metavante, Jack Henry & Associates, Fiserv Bowling Green, Genpass, Intrieve, Shazam ITS, Elan and Intercept. The eATM provides an open, hardware independent platform that can provide increased functionality and flexibility, enabling banks to be independent of vendors when purchasing ATMs. Through browser-based technology, the eATM also provides a strong multi-media capability. Transoft International, Inc. is the world’s largest provider of currency supply chain management and cost optimization solutions designed for the banking industry. It is a privately held company that manages cash for roughly 100,000 ATMs and bank branches with customers on six continents.

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SPRON Ekort Card Goes OneSMART MasterCard Retail

MasterCard is expecting its first roll-out of the new “OneSMART MasterCard Retail package, using Welcome Real-time’s “XLS” software on a “MULTOS” chip platform. The roll-out by Reykjavik Saving Bank (SPRON) will be based on their successful multi co-brand program called “Ekort.” Launched in February, with nearly 200 retailers, SPRON and its partners are looking to leverage their EMV investment. For the launch, SPRON will be working with leading retailer Hager, with 58 stores across the country. “OneSMART MasterCard Retail” is a powerful chip package that
combines payment, loyalty, and cardholder preferences management in a single point of sale transaction using MODS (MasterCard Open Data Storage(TM)) features. This single system application allows cardholders to receive on-the-spot loyalty bonuses and customized offers from participating retailers, based on preferences the consumer opts in to, which are stored on his or her payment card.

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