Philippine Regulators Attack Card Practices

The Monetary Board of Bangko Sentral ng Pilipinas has approved new rules to stop what it calls “excessive practices” by credit card issuers. The new rules will also extend to affiliates that are not currently regulated by the BSP in the Philippines. The “excessive practices” include abusive treatment by collection agents, poor disclosure of foreign transactions fees, and deceptive marketing of lower interest rates. The BSP reports that credit card outstandings were P57.7 billion as of March 31st, a 20% increase over the year ago period.

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RBS Becomes the 3rd Largest Merchant Acquirer

The Royal Bank of Scotland has become the third largest merchant acquirer in the world after completing its acquisition of Atlanta-based Lynk Systems for $525 million. RBS’ interests also includes Citizens Bank, one of the 10 largest commercial holding banks in the USA. Lynk is considered the 6th largest non-bank acquirer and the 9th largest merchant acquirer in the U.S. market. In addition, Lynk is the 3rd largest processor of ATMs in the USA.

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GlobeTel & Largest Philippines VISA Issuer Team

Miami-based GlobeTel Communications has inked a MOU with the largest VISA credit and debit card issuer in the Philippines. GTEL will interface with Equitable Cards Network’s systems to issue prepaid cards to remittance recipients and issue prepaid “VISA Electron” debit cards to its cardholders. The card, the “ECN E-card XP,” will allow free withdrawals from 400 Equitable ATMs, and access to 5,000 Megalink and BancNet local ATMs. ECN is also the only issuer of American Express credit cards in the Philippines.

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Bobcards to Introduce Tiered Interest Rates

Bank of Baroda’s Bobcards subsidiary is gearing up to introduce tiered interest rates on their credit cards. The move is in retaliation to recent rate reductions by ICICI Bank and Standard Chartered Bank. The new rates charged will be adjusted by the age of the card purchases. The lowest rate would apply to purchases up to 90 days old. The next higher rate will apply to the 90-120 day period, and the highest rate would apply to purchases over 120 days old. Bobcards’ current interest rate is 2.25% per month. Bobcards indicated the new tiered rates would be less than the current flat rate. Standard Chartered Bank recently cut its credit card interest rate to 1.99% per month. ICICI Bank also lowered its interest rate to 0.99% per month for its secured credit card.

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EMVCO Releases CCD and Set to Release CPA in 2005

The EMV standards organization has released a set of common data definitions and processes, which standardizes common data element content and format for sending chip information between an EMV card and the issuer via the acquirer. When “CCD” is incorporated into a card specification, issuers of multiple branded cards can achieve benefits of a common issuer support system. But, EMVCo says that “CCD” is not a complete card application specification. EMVCo is working to further simplify and streamline chip migration by creating an EMV “Common Payment Application”. “CPA” will be a complete “CCD”-compliant application specification and is scheduled for completion by the first quarter 2005. “CPA” significantly adds to the benefits of “CCD” by completely defining the card risk management controls, all data elements and logic used by the card application, as well as support for EMV “CPS” card personalization as an issuer option. The result is one common “CCD”-compliant payment application that can be personalized to support multiple payment brands. This will allow issuers to support multiple payment brands or utilize the benefits of multiple vendors for their chip cards without impacting their card management systems, their risk management controls and personalization systems. The end result is significant cost and time saving for multiple brand issuers. Both MasterCard International and VISA International have committed to endorse and accept the CPA specification as implemented in future chip card applications.

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Turkey Wants to Rein In Credit Card Issuers

The Banking Regulation and Supervision Agency of Turkey is considering new regulations for the credit card industry. Under the new rules credit card issuers would be required to base credit limits on the consumer’s financial circumstances. The rules are driven by a sharp rise in credit card borrowing and rising defaults. According to the Central Bank, credit card loans recently hit 233.2 million euros. The number of credit card holders has climbed to 23.2 million. The central Bank reports that credit card volume hit 5.6 billion euros in August.

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Welcome XLS and Aconite EMV Solutions Combined

Welcome has partnered with international smart card solutions provider, Aconite, to deliver value added payment solutions to banks, financial institutions and merchants by combining Welcome’s “XLS” and Aconite’s EMV solutions. Welcome’s “XLS” software enhances the EMV payment function with customer-centric features, such as instant delivery of surprise offers and welcome gifts, immediate calculation of points or cash back, and easy redemption of rewards at the point of sale. Aconite’s EMV transaction authorization and dynamic risk management solutions are designed to be integrated into a bank’s existing card management and transaction processing systems, at a much lower cost and faster time to market than traditional solutions.

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GE Gears Up to Issue Consumer Credit Cards

General Electric Consumer Finance expects to enter the consumer credit business in China within the next year. The company reportedly is currently in talks with several banks to provide consumer financing for retailers. Bloomberg news service says GE Consumer Finance CEO David Nissen believes the Chinese consumer is becoming far more comfortable with credit, in a country dominated by debit cards. Meanwhile, GECF is in the process of acquiring Moscow-based DeltaBank, a VISA issuer with more than 103,000 credit cards in-force. GECF also recently acquired the assets of U.S.-based Dillard National Bank and Mervyn’s credit card portfolio from U.S.-based Target. Over the past year, GECF’s assets have grown more than 20%, from $97.1 billion to $116.9 billion. During the second quarter, GECF produced net income $600 million on revenues of $3.8 billion.

GECF ASSET GROWTH
1Q/02: $62.4 billion
2Q/02: $69.0 billion
3Q/02: $72.7 billion
4Q/02: $77.0 billion
1Q/03: $77.9 billion
2Q/03: $97.1 billion
3Q/03: $96.6 billion
4Q/03: $106.5 billion
1Q/04: $107.4 billion
2Q/04: $116.9 billion
Source: CardData (www.carddata.com)

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