GE Buys Dilliard’s Store Card Portfolio

Dillard’s is unloading its private label credit card issuing bank for approximately $1.25 billion after it came under scrutiny in November by the OCC over liquidity issues. GE Consumer Finance is purchasing substantially all of the assets of Dillard National Bank, which includes about $1.3 billion in credit card outstandings and more than 20 million cards. The deal includes the assumption of $400 million of securitization liabilities, the purchase of owned accounts receivable, and an undisclosed premium. As part of the agreement, the two companies also signed a 10-year agreement and long-term marketing and servicing alliance that will provide credit marketing and analytic support, credit servicing and customer care for Dillard’s 5.5 million active proprietary retail cardholders. GE will also absorb approximately 500 employees of Dillard National Bank. Dillard’s operates 329 stores in 29 states, primarily in the Southwest, Southeast and Midwest. Its private-label program is the sixth-largest in-house card program in the nation. The acquisition is expected to be completed before the end of the year.

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MBNA OTTAWA

MBNA Canada Bank has expanded its operations in the Ottawa-Gatineau area with the purchase of the 122,000-square-foot, former Gloucester City Hall building. The eight-story facility is adjacent to MBNA Canada’s existing headquarters building. Ottawa city council approved the sale of the building to MBNA Canada in late 2003.
MBNA Canada, a schedule II chartered bank, started business in
Canada in 1997.

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UK Online Card Payments Grow Five-Fold

A new British survey has found that 22 million Internet users either purchase or bank online, with half of them doing both. The average number of purchases per year, per online shopper, has grown sharply, from 6.5 in 2000 to 7.8 in 2001, 9.4 in 2002, and 11.2 last year. According to the London-based Association for Payment Clearing Services, the number of credit card payments made online has increased five-fold since 1999, with 10% of all credit card payments now taking place online compared to just 2% five years ago. More than six million or 20% of all credit card holders viewed their statements online during the second half of 2003. The new APACS data also shows Britons’ rising dependence on the Internet for more than just information with almost 13 million customers using Internet banking in 2003.

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iPayment Sued Over Initial Stock Values

A lawsuit has been filed on behalf of a U.S. Bankruptcy Court Trustee against iPayment and its top executives, seeking $151 million in damages. The Pratter & Young law firm says the company was formed by a conspiracy between the named defendants to mislead and defraud the public in the evaluation of the company in its inception in order to gain a much more significant share of the initial founders’ stock. Further, the company’s original attorneys and accountants have been joined in the suit along with their successors, Morgan Lewis and Ernst & Young. Pratter & Young says all these advisors are accused of furthering and participating in the conspiracy to assert a lower market cap to investors based upon an unrealistically low evaluation, enabling insiders to gain a larger share of the company after going public. The suit alleges that just two months prior to evaluating the company at $.37 per share, Auerbach & Co. made an offer for the company for $7.00 per share which the Defendants, these officers and directors of iPayment, turned down. Commenting on the lawsuit, iPayment said Friday that it believes that this complaint and the underlying allegations are without merit and intends to vigorously defend against them.

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Roloson Receives a MBNA/MasterCard Award

RBS & LYNKRoyal Bank of Scotland is buying privately-held, Atlanta-based Lynk Systems, through its US-based Citizens Financial Group, for $525 million in cash. Lynk, a top merchant processor and acquirer, handles $18 billion in charge volume and 400 million transactions annually. The Company services approximately 100,000 merchants. Lynk also provides processing services for 25,000 ATM’s located throughout the USA representing $6 billion dispensed and 120 million transactions annually. The Company was founded in 1991 and has more than 950 employees. Financial Technology Partners and FTP Securities exclusively represented Lynk Systems in the pending sale to RBS. Lynk was a customer of Citizens Financial. Atlanta-based Arnall Golden & Gregory served as Lynk’s legal advisor.

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AA Offers Short-Haul Redemptions for AAdvantage

American Airlines has added a new short-haul award to its “AAdvantage” program, enabling members to obtain free economy seats for 15,000 miles instead of the current 25,000 miles normally required for free domestic travel. The new “MileSAAver” awards, for non-stop routes under 750 miles, also offers first or business class round-trip awards for 30,000 miles. Short-haul “MileSAAver” awards are available for travel from Sept. 1st through Feb 28th, 2005. United Airlines does not offer a similar option.

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SCOTIACARD & RAPIDMONEY

RapidMoney Corporation announced it will now make money transfers directly to a Mexican stored value card. Issued by Scotiabank Inverlat, the “ScotiaCard Mi Pago” enables recipients of RapidMoney
transfers to withdraw funds from all the ATMs in Mexico and to make
purchases without service charges at over 100,000 Mexican stores and restaurants. Senders of “RapidMoney” transfers in the USA request the
“Scotiacard Mi Pago,” which is then delivered to the designated recipient in Mexico. Subsequent transfers automatically load the card and provide the transfer recipient continued access to Mexican ATMs, stores and restaurants.

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VISA Launches a Small Business Reporting Tool

VISA USA has launched a new small business reporting solution that tracks both small business signature-debit and credit transactions. Additionally, enrolled “VISA Business Check Card” users will be able to track and view all PIN-based Interlink transactions. The new service, called “Visa Information Source Select,” will first be piloted to small business cardholders with accounts at Wachovia and U.S. Bank. Wachovia is piloting “VIS” for its debit card small business customers, and U.S. Bank is testing “VIS” for its credit card small business customers. The new “VIS Select” option is part of a larger umbrella program, called “Visa Information Source,” which was made available to VISA commercial customers in 2002. Reports offered through “VIS Select” represent a subset of the “Visa Information Source” reports most applicable to the needs of small business debit and credit cardholders. These reports provide summary and detail level information of spending by cardholder, by company and by specific merchant categories.

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ASK Contactless Cards to be Used by the TLS

Thales has selected ASK to supply the contactless cards and tickets for the Dutch public transports. The Netherlands will be one of the first countries in the world to have a full contactless AFC system on their whole public transportation network. The Deutsh e-ticketing project under the supervision of “Trans Link System” project involves a consortium of the 5 largest transit operators in the Netherlands and should be starting in Rotterdam in fall 2004 to spread to the
other cities by 2006. Over 2 million passengers daily should be thus
traveling by train, metro, bus, boat or tramway.

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Quebec’s Moving Day Drives Spending

Moneris Solutions recently analyzed the credit card and debit card transaction volumes of Quebec merchants during the province-wide “Moving Day” period, around July 1st. As expected, related businesses such as moving vans, paint and wallpaper stores, and even hotels enjoyed a healthy spending increase during this year’s moving period. Other findings include: debit and credit card spending at motor freight carriers jumped 24%; video tape rental stores sales also increased by 24%; car rentals rose 13%; household appliance sales were up 13%; hotels were up by 10%; and glass, paint and wallpaper sales increased by 5%.
While there is no definitive explanation for the July 1st moving
custom, an old Scottish tradition might help explain it. Every 1st of May, residents were allowed to terminate their lease in order to find better housing. Scottish immigrants brought this tradition to Quebec and the day was moved to the 1st of July, in order to avoid conflicting with the school year.

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