PayPal First Quarter Volume Up 65%

eBay reported this week that its PayPal business handled $4.3 billion of gross payment volume during the first quarter, a 65% increase over 1Q/03. PayPal produced $158.2 million in transaction fees for 1Q/04, a 68% jump over the year-ago quarter. At the end of the first quarter, PayPal had 45.6 million accounts, compared to 27.2 million one year ago. During the first quarter, PayPal handled 79.2 million payments, a 57% increase over 1Q/03. PayPal captured 54% of eBay’s total $8.0 billion in total sales volume during the quarter. In the fourth quarter, PayPal accounted for 52% of eBay’s gross merchandise sales. PayPal’s transaction revenue rate was 3.60%, compared to 3.51% one-year ago. The processing expenses rate for the first quarter was 1.25%, compared to 1.27% for 1Q/03. PayPal’s transaction loss rate came in at 27 basis points compared to 34 basis points one-year ago. For complete details on eBay/PayPal’s first quarter performance visit CardData ([www.carddata.com][1])

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

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Vesdia Buys the Stockback Loyalty Program

Vesdia Corporation has signed a definitive agreement to acquire the Stockback loyalty program from New York-based Stockback Holdings in an all stock acquisition. Vesdia expects to record a one-time charge in the second quarter of 2004 relating to acquisition expenses. Financial terms of the all-stock transaction were not disclosed. Vesdia is widely recognized as the global leader in the field of microinvesting technology. Stockback enables people to build personal savings through their everyday purchasing activities.

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Asia Pay Inks a Processing Contract with e-Lux’s e-Charge

Asia Payment Systems has inked a credit card processing services agreement with e-Charge Processing Services Corporation. e-Charge’s card sales volume is in excess of US$3 million per month. Asia Pay is in the process of developing a network to provide credit card clearing services to merchants and financial institutions in China. Even though Asia Pay does not have adequate capital to begin the operation, its mission is to become a leading provider in China of third-party processing services to bankcard accepting merchants, issuers of bank credit cards, of petroleum station retail cards, and to issuers of merchandise and other retail cards. e-Charge Processing Services Corporation is a partially owned subsidiary of e-Lux Corporation of Japan.

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AmEx Extends Costco Partnership

Costco has signed a multi-year renewal with American Express to continue accepting AmEx Cards at all its U.S. warehouse locations, continue its two co-branded AmEx cards, and to offer other AmEx financial products. Over the past few years, the partnership has evolved and expanded. Today, Costco also offers to its members auto and homeowners insurance from American Express Property Casualty Company, installment loans and lines of credit from OPEN: The Small Business Network(SM), and financial planning services from American Express Financial Advisors. American Express Company is a world leader in charge and credit cards, Travelers Cheques, travel, financial planning, business services, insurance and international banking.

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Moneris Upgrades Merchant Direct with Peer Reporting

Moneris Solutions has enhanced its online sales reporting tool to give business owners the ability to gauge both their monthly and annual sales growth against the national average for their industry. Moneris’ Internet-based reporting application, “Merchant Direct,” now includes the “Peer Reporting” comparison report. “Merchant Direct” allows merchants to view their company’s daily card transaction activity by 7:00 am
the next morning. Business owners can view dollar amounts and a breakdown of credit card versus debit card sales, plus thirteen-month historical data that can be used for forecasting and trend analysis purposes.
The “Peer Reporting” comparison report takes this a step further by giving merchants a monthly snapshot comparing their sales growth to that of the average for their industry. “Peer Reporting” appears on customer online monthly statements in a simple, easy-to-understand format.

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Capital One Q1 US Cards Profits Up 26%

Capital One reported that its first quarter U.S. card profits increased 26% year-over-year, and 20% sequentially. The issuer also experienced sharply lower delinquency and charge-offs as domestic card loans increased more than 17%, compared to 1Q/03. For the first quarter, COF posted net income for US cards of $386.8 million, compared to $322.7 million in the fourth quarter, and $308.1 million one-year ago. The managed delinquency rate (30+ days) for U.S. credit cards was 3.99% for the first quarter, compared to 4.60% at the end of the previous quarter, and 5.55% for the first quarter of 2003. The net charge-off rate for U.S. credit cards was 5.41% for the first quarter, compared to 6.16% for the fourth quarter, and 7.72% one-year ago. Capital One also reported its overall, managed revenue margin declined to 13.38% in the first quarter from 13.89% in the previous quarter, and 15.70% in the first quarter of 2003. The issuer says it is continuing to shift its product mix upmarket and expects little to no growth in the sub-prime portion of the its credit card portfolio. At the end of the first quarter Capital One had $45.3 billion in U.S. card loans, and a global managed loan portfolio of $71.8 billion. For complete details on Capital One’s first quarter performance visit CardData ([www.carddata.com][1]).

COF U.S. CARD NET INCOME
1Q/03: $308.1 million
2Q/03: $274.2 million
3Q/03: $276.2 million
4Q/03: $322.7 million
1Q/04: $386.8 million
Source: CardData (www.carddata.com)

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

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STMicroelectronics Becomes the First Smart Card Chip Manufacturer to Win MasterCard Card Quality Management Approval

STMicroelectronics has been certified by MasterCard’s “Card Quality Management” program as an approved supplier of secure microcontrollers for its chip-based debit and credit cards. STM is the world’s first silicon manufacturer to receive the approval. The certificate applies to specific members of ST’s “ST19” microcontroller family, which is dedicated to smart card applications, and to their production processes at the company’s Rousset site in southern France. “CQM” is a quality program applied to all stages of MasterCard-branded card production, from chip manufacture to card personalization, and each of the
suppliers in the manufacturing chain must be CQM Certified before a card issuer — typically a bank or other financial institution — can issue cards to its customers under MasterCard’s “M/Chip 4” program.

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Precidia and Vital Launch POSLynx

Precidia Technologies has introduced “POSLynx”, with distribution partner Vital Processing Services, to connect up to four existing POS terminals to the Internet for payment processing. POSLynx can connect up to four POS terminals to the Internet for payment processing. POSLynx is a cost-effective IP solution that is easy to implement, offers full transaction processing security and requires little support or maintenance. Vital Processing Services® is a leader in technology-based commerce enabling services. Precidia Technologies Inc. is a global leader in the design and manufacture of IP access devices for a wide range of industries, including retail payments and building automation.

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First Combination of CI-CAM with an Embedded Smart Card Chip Introduced

SCM Microsystems and Royal Philips Electronics have teamed with Irdeto Access to introduce the “Irdeto Chip On Board” module for TV set top box payments. The module combines SCM’s conditional access module with Philips’ high-security smart card chip. The new ICOB module is one of the first devices on the market to combine the unique features and security functions of a standard common-interface
conditional access module (CI-CAM) with an embedded smart card chip. By integrating an auto-expiring Irdeto Access smart card with the ICOB module, content providers gain the opportunity to cost-effectively distribute auto-expiring “teaser” promotional subscriptions with every CI-CAM purchased. Once the promotional subscription has expired, consumers can upgrade easily to a normal subscription (either billed monthly
or pre-paid) through the addition of a new smart card. This all-in-one solution operates in any DVB-compliant set top box that features a CI-CAM slot, enabling pay TV operators – or even free-to-air operators – to take
advantage of the large existing installed base of STBs to offer their premium content. Irdeto Access is a subsidiary of multinational media group Naspers.

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Tower Settles with FTC Over a Security Flaw

Tower Records has agreed to settle FTC charges that a security flaw in the its Web site exposed customers’ personal information to other Internet users in violation of federal law and has agreed to have audits of its Web site security every two years by a qualified third-party security professional for ten years. The settlement will bar misrepresentations in the future, require Tower to implement an appropriate security program, and require audits of its Web site security every two years by a qualified third-party security professional for ten years. The Commission vote to accept the proposed consent agreement was 5-0. The FTC will publish an announcement regarding the agreement in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through May 21, 2004, after which the Commission will decide whether to make it final.

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Sears Reports Big Loss Post Card Sale

Sears, which sold its card business to Citigroup in the fourth quarter, reported an $859 million loss in the first quarter, primarily due an $839 million charge for an accounting change. The prior year quarterly results include the results of the domestic Credit and Financial Products and National Tire & Battery businesses divested in the fourth quarter of 2003. Net loss after the effect of the cumulative effect of this accounting change was $859 million, or $3.90 per share for the first quarter of 2004. Sears, Roebuck and Co. is a leading broadline retailer providing merchandise and related services.

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