Cap One Becomes a Bank Holding Company

The Federal Reserve Board announced its approval of the application filed by Capital One Financial Corporation, McLean, Virginia, to become a bank holding company after the amendment of the charter of its subsidiary, Capital One Bank, Glen Allen, Virginia, from a limited-purpose, credit-card bank charter to a full-service bank charter.

Attached is the Board’s Order relating to these actions.

[Click here to view the full PDF][1]

[1]: /cardflash/secure/oldstatic/2004/july/capitalone.pdf

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GZS Posts a Slight Profit While Making an Extensive Investment

GZS Gesellschaft für Zahlungssysteme mbH reports it was able to close its 2003 accounts slightly in the black at EUR 0.2 million. Last year, GZS successfully completed the most extensive investment
program in its history, with the resultant processing platforms
providing its customers with much greater flexibility for designing
their card businesses. GZS’s card-processing offering now covers a
broadened spectrum of services ranging from traditional card business
support with extensive integration into banks’ and saving banks’ retail
businesses to the design of sophisticated, non-standard product portfolios. Transaction counts rose in all business areas, resulting in a net increase of 4.3% compared with 2003. The smallest gain was in
issuing processing, with a rise of 2.8 million from 134 million to 136.8
million. At the other end of the scale was cross-border debit
processing, chalking up a gain of 18.3% (51.7 million transactions). Acquiring-processing transactions rose 7.6% (115.5 million) and terminal/network operations, 5.1%. Network operations, however, recorded an absolute growth of 30 million transactions. The total volume of 616 million transactions is unmistakable evidence of the importance which debit business has come to enjoy in Germany.

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Alacris Joins the Smart Card Alliance

Alacris has joined the Smart Card Alliance. The Alacris “idNexus 2.0” for Microsoft “Windows Server 2003” simplifies digital certificate and smart card deployment in the enterprise environment. It delivers enterprise class management functionality that maximizes customers’ investment in Microsoft Technologies including Windows 2003 Certificate Services, Active Directory, Internet Information Services and smart card life-cycle support. “idNexus” for Microsoft provides full interoperability and digital life-cycle management support for a growing
number of leading smart card technology providers including Axalto and
Gemplus.

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NOVA Engages VISION to Assist in Europe

NOVA Information Systems has signed VISION Consulting to assist in the integration of its recently acquired merchant services businesses in Europe. This program of work follows VISION’s earlier engagements with NOVA both in Ireland and the U.S. The first occurred when euroConex engaged VISION in 2000 to programme manage the development of a comprehensive payments processing system for the European market. VISION Consulting, with 300 employees worldwide, provides Technology and Systems Integration, Strategic Change and Business Performance Enhancement services to leading financial services, manufacturing and media organizations. NOVA Information Systems, a leader in the payment processing industry, is a wholly owned subsidiary of U.S. Bancorp.

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Fees Claim Bigger Slice of the Revenue Pie

Issuer revenues derived from cardholder fees and merchant/interchange fees now comprise more than one-third of the total revenue stream, excluding fees from securitizations. The significant rise in late payment fees, over-limit fees, and cash advance fees, coupled with new fees such as balance transfer fees, foreign currency exchange surcharges, and expedited payment fees have driven the overall increase. Total revenues last year topped $120 billion with more than $40 billion flowing from cardholder and merchant fees. In 1994, fee income represented slightly more than 17% of total revenue even though many consumers were still paying annual fees. Since 1996, fee income, as a component of total revenue has doubled on a percentage basis. During this period average late payment fees increased from $13.30 to $32.01. Average over-limit fees increased from $13.21 to $29.94 between 1996 and 2004. CA-based R.K. Hammer investment bankers estimated penalty fee income of $11.7 billion, cash advance fee income of $5.6 billion, annual fees income of $3.4 billion, and fee income from enhancements of $860 million for 2003.

FEE INCOME AS A PERCENTAGE OF TOTAL REVENUE
1994: 17.3%
1995: 16.4%
1996: 16.1%
1997: 21.8%
1998: 24.5%
1999: 26.2%
2000: 27.9%
2001: 29.3%
2002: 32.8%
2003: 33.4%

Fee income includes merchant and cardholders fees but does not include fees from securitization. Ratio is calculated by dividing credit card fee income for the industry by the sum of the credit card interest income for the industry and the total credit card fee income.

Source: CardData ([www.carddata.com][1])

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

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The Clearing House Merges it Businesses

The Clearing House Payments Company has merged its affiliated payments businesses into a single payments company. The Clearing House, Small Value Payments Company , Clearing House Interbank Payments System, Electronic Payments Network, Electronic Clearing Services, and National Check Exchange will now make up The Clearing House Payments Company. The Clearing House Payments Company is owned by ABN AMRO Bank, Bank of America, The Bank of New York, Bank of Tokyo-Mitsubishi/Union Bank of California, BB&T, Citibank, Citizens Bank, Comerica Bank, Deutsche Bank, HSBC Bank, JPMorgan Chase Bank, KeyBank, M&T Bank, National City Bank, PNC Bank, SunTrust Bank, U.S. Bank, Wachovia Bank, Wells Fargo Bank. The Clearing House is a private-sector, global payment systems infrastructure that clears and settles more than $1.5 trillion per day. It serves more than 1,600 U.S. financial institutions and hundreds of international participants.

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Frontier Airlines Joins The Points Exchange

Canada’s Points International has signed an exclusive five-year agreement with Frontier Airlines to increase the potential of “EarlyReturns,” the carrier’s loyalty program. Beginning in late August, “EarlyReturns” will join “The Points Exchange” as a tradable loyalty currency on points.com. Both “Points” and “EarlyReturns” members can partake in the partnership by exchanging miles and points with over 3,600 exchange options, from more than 42 partners listed, on “The Points Exchange” and earning instant rewards from their preferred loyalty programs. Frontier frequent fliers can earn bonus “EarlyReturns” miles by purchasing a “pointsplus” membership and extra-bonus “EarlyReturns” by using their “Frontier MasterCard.” A “pointsplus” membership is $19.95 per year and offers unlimited exchanges on points.com. Frontier will also begin using the “Points Suite” of online loyalty management solutions to support the airline’s loyalty program.

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California is Now 100% EBT for Food Stamps

All of California’s 58 counties have now implemented the EBT debit card system for their entire food stamp coupon program. In 51 of the 58 counties recipients also receive cash aid via the EBT card. For those receiving cash aid, the EBT card can be used in a number of department stores including Wal-Mart and Target, and, in some counties, including Alameda, Los Angeles and Sacramento, at farmers markets. Furthermore, the United States Postal Service is now accepting the EBT card statewide, allowing cash aid recipients to purchase money orders, stamps and other postal products. The state has approximately 700,000 households receiving food stamps. About 16,400 retailers and 25,000 ATMs participate in the EBT system statewide.

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MGM MIRAGE VISA Cashs-In Next Month

MGM MIRAGE and Bank One/Chase this morning confirmed plans to roll-out a new co-branded VISA card in August that enables cardholders to earn rewards that can be used at any of the seven participating MGM MIRAGE resorts and casinos. Under the program, similar to the “Trump Rewards VISA” launched three months ago, cardholders earn two points for every dollar spent on card purchases at MGM MIRAGE properties and one point for every dollar spent elsewhere. Every time cardholder accumulate 2,500 points, they will earn a $25 “Reward Certificate” that can be redeemed at participating MGM MIRAGE resorts and casinos for items such as hotel accommodations, dining experiences and show tickets. The rewards cannot be used for gaming. Consumers who pre-register will also receive 1,500 rewards points after their first card purchase. In April, Donald Trump’s enterprise inked a deal with Bank One for a co-branded VISA card. The new “Trump Rewards VISA” offers a 1% rebate on all purchases, and a 2% rebate on purchases at Trump casinos. Every time cardholders accumulate 2,500 points, they will automatically receive a $25 “Reward Certificate” that can be used for either purchases at Trump property owned restaurants, gift shops or toward hotel stays. In December, Caesars Entertainment launched a co-branded credit card that offers “comp dollars” as a cardholder reward. The new “Caesars Entertainment MasterCard,” issued by Juniper Bank, offers cardholders a one percent “comp dollar” credit for all purchase transactions, plus 10 bonus “comp dollars” the first time they use the card. The “comp dollars” earned with the new card can be used to pay for hotel rooms, dining, show tickets, spa services, golf tee times and other amenities at 15 domestic casino resorts. Participating resorts and casinos in the MGM MIRAGE program include the Bellagio, MGM Grand Las Vegas, The Mirage, Treasure Island, New York ‘ New York, Beau Rivage in Biloxi, Miss. and MGM Grand Detroit. (CF Library 12/9/03; 4/2/04)

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Checkmate Installs Qxpress Terminals

UT-based Q Comm International announced that Checkmate has installed its “Qxpress” terminals in all of their retail locations in seven states. Checkmate customers now have the ability to purchase prepaid wireless minutes, prepaid long distance, dial tone, Internet, MasterCard and other prepaid services quickly and easily at any location. Q Comm International provides proprietary prepaid transaction processing and information management systems that facilitate electronic recharge or distribution of prepaid products from service providers or their distributors to retail points of sale. Checkmate provides financial services to allow customers to receive immediate cash for unexpected bills, car repairs, vacations, medical emergencies, or other situations where financial obligations need to be met between paydays.

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UAL’s Loyalty Card Offers Free Fine Wine

United Airlines new “Ameniti” high-end loyalty card is giving away a $77 bottle of fine wine or three bottles of rare beer valued at $62 to cardholders via a new partnership with The Exclusive Clubs of Beverage Bistro. The selections in these elite clubs are all carefully chosen by esteemed experts in their fields, and you won’t find any of the featured items in your local store. The Ameniti luxury travel program is owned and operated by UAL Loyalty Services, Inc., a wholly-owned subsidiary of UAL Corp. United, its subsidiaries, affiliates and agents are not responsible for any products and services of other participating companies or partners.

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