NACHA Names E-Check Manager

NACHA has named Daniel Miner as Senior Director of Electronic Check and Risk Management Services. Miner will have responsibility for managing NACHA’s Electronic Check Council and leading NACHA’s risk mitigation services. NACHA is the leading organization in developing electronic solutions to improve the payments system. NACHA represents more than 12,000 financial institutions through direct memberships and a network of regional payments associations, and 650 organizations through its industry councils.

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FRAUD 2003

Fraud committed on payment cards declined 5% last year to £402.4 million, the first decline in eight years. Counterfeit card fraud saw the largest reduction, down by 28% to £106.7 million in
2003. Fraud on lost and stolen cards also dropped, by 2%, to £106.1 million, due primarily to neural fraud intelligence systems. Cardholder-not-present fraud is now the biggest fraud type. However, it only
increased by 6% last year rising to £116.4 million according to the Association for Payment Clearing Services. The largest percentage increase in fraudulent activity was in identity theft which grew by 45% to reach £29.7 million, while fraud at UK cash machines grew by 34% to £39 million. Together, fraud on lost and stolen cards and counterfeit fraud accounted for more than half of all plastic card fraud. They remain a critical issue in the UK. However, the introduction of chip and PIN, the system which replaces signatures with PINs for verifying payments, will directly tackle these fraud categories. The UK chip and PIN rollout is currently underway.

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ICBA’s TCM Bank Acquires Five Portfolios

ICBA’s TCM Bank has acquired the credit card portfolios of Classic Bank of Ashland, KY; Concordia Bank of Concordia, MO; First Security State Bank of Caruthersville, MO; Keokuk Bank of Keokuk, IA; and Western Bank of Lordsburg, NM. Three of the five banks will earn a share of the ongoing interchange income from their portfolios as a result of becoming agents of TCM Bank. ICBA Bancard is a wholly owned subsidiary of the Independent Community Bankers of America, “The Nation’s Leading Voice for Community Banks.” Since 1985, ICBA Bancard has provided more than 2,000 community banks with equitable access to payment system products and services.

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People’s Wraps Up Card Sale to RBS

CT-based People’s Bank completed the sale Friday of its $2.3 billion credit card business, including transfer of its related Bridgeport credit card operations and staff, to The Royal Bank of Scotland Group for a 15.5% premium. People’s (peoples.com) is a diversified financial services company providing commercial, consumer, insurance and investment services. Founded in 1842, People’s has 154 branches and more than 230 ATMs.

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Versatile Card Technology Hires Fenimore

Versatile Card Technology has hired Jack Fenimore to its sales team. Fenimore has more than 25 years in the plastics and plastic card industries including Sillcocks Plastics International. VCT produces cards from manufacturing plants are located in Turkey, Germany, Mexico, Singapore, South America and India. The VCT Qualteq Division specializes in secure bank cards and the patented “Foil Card.” VCT is a certified manufacturer of Visa and MasterCard and produces a wide variety of products including, loyalty, membership, gift cards, smart cards, access control and contact-less cards.

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Revolving Credit Posts Strong Growth

The pace of growth in revolving credit remains robust as Americans added $5.4 billion in revolving credit during January, compared to $3.1 billion for January 2002. Bank credit card debt (excluding store and gas credit cards) at the end of the fourth quarter was $672.3 billion, or roughly 90% of total revolving credit. At the end of January, consumers racked up $750.0 billion in revolving credit according to figures released Friday by the Federal Reserve. Revised figures showed that December was not as strong as previously reported. December’s revised annual growth rate is +1.4%, compared to +2.6% reported last month. However, November was significantly better than previously reported. November’s revised annual growth rate is 4.9%, compared to the revised 0.6%% reported one month ago. At the end of January, Americans were $2016.1 billion in debt, excluding home mortgages.

REVOLVING CREDIT HISTORICAL ($billions)
Jan04 Dec03 Nov03 Oct03 Sep03 Aug03 Jul03
GRWTH: 8.6% 1.4 4.9 5.2 6.8 3.4 1.4
$OWED: $750.0 744.6 743.8 740.5 737.3 729.1 726.8

Jun03 May03 Apr03 Mar03 Feb03 Jan03 Dec02
GRWTH: -2.4% 7.7 3.4 4.1 5.9 5.2 -6.7
$OWED: $725.9 727.9 722.8 720.7 718.6 715.5 712.4

Source: Federal Reserve; revised figures as of 3/05/04;
For complete historical data visit CardData (www.carddata.com)

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Ahold Unloads Brazil’s Hipercard

The Netherlands-based Ahold sold its Brazilian credit card operation Hipercard to Unibanco S.A. in Brazil for $217 million. Hipercard is the leading credit card in Northeastern Brazil with more than 2 million cardholders. Unibanco, the third largest private-sector Brazilian financial group, focuses on retail and wholesale banking, and insurance and pensions and wealth management. Ahold also sold its Brazilian retail chain Bompreço to Wal-Mart Stores last week. Bompreço and Hipercard employ more than 20,000 people, according to CardFlash International ([www.cardflashinternational.com][1]).

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

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Spirit of America Card Offends New Yorkers

MBNA has reportedly withdrawn a new affinity card issued with NYC-based The Bravest Fund. The “Spirit of America” MasterCard card uses a photo showing three New York firefighters hoisting an American flag at “Ground Zero.” The New York Daily News ran a front-page story on Friday about the card with the headline “Profits of Doom.” The story produced a outrage by 9/11 victims’ families. MBNA says it issued less than 500 cards to-date and is pulling the plug. The newspaper also raised questions about the charity fund. The Bravest Fund was apparently operating without the proper registrations. The fund reportedly raised $750,000 to-date and distributed about $72,000 to-date to families in need. MBNA says it has contributed more than $5 million to 9/11 causes.

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Viad and Certegy Conclude GFC Deal

Viad’s Travelers Express Company completed the sale Friday of Game Financial Corporation to a subsidiary of Certegy for $43 million in cash. As a result of the sale, Viad Corp expects to record an after-tax gain of approximately $11 million ($0.13 per diluted share) in the first quarter of 2004. In addition, Viad may record future gains of up to $4 million, after-tax, based on contingencies in the contract. Viad is a $1.6 billion revenue S&P MidCap 400 company. Major subsidiaries include Travelers Express/MoneyGram of Minneapolis, GES Exposition Services of Las Vegas, Exhibitgroup/Giltspur of Chicago, Brewster Transport Company Limited of Banff, Alberta, Canada, and Glacier Park, Inc. of Phoenix.

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Firm Seeks to Patent Debit Card Bill Payment

San Antonio-based Payment Data Systems has filed for patent protection for a system that enables a cardholder to use their stored-value debit or ATM card to pay local, national, or international bills with the card from their electronic balance. Because it does not require linkage to a traditional checking or savings account, this new debit technology is unique in that it allows for use by ‘unbanked’ consumers. Payment Data Systems, Inc., is an Integrated Payments Solution Provider delivering comprehensive, cost-effective solutions to billers and retailers for the processing and management of electronic payments via the Internet, point of sale, or payments taken by Customer Service Representatives or an Interactive Voice Response. Secure Cash Network, Inc. is a Consumer Products and Financial Services company specializing in Stored-Value Debit/ATM products for unbanked consumers.

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Late Fees Slow After a Growth Decade

The increase in late payment fees slowed last year to its lowest level in more than a decade. During 2003, the average late payment fee of $31.44 was up 4.7% over 2002. Over the past five years, late payment fees have risen 23%, compared to a 104% increase between 1994 and 1999. The largest single year gain in late fees occurred during 1997, when average fees rose from $14.21 to $19.24, a 35.4% increase, according to CardData ([www.carddata.com][1]). During 2003, the most common late fee among major issuers was $35. Some issuers have pushed the fee to $39, with some experimentation at the $49 level, according to CardWatch ([www.cardwatch.com][2]).

LATE FEE HISTORICAL
Year Average Y/Y CNHG
1994: $12.55 +4.8%
1995: $13.25 +5.6%
1996: $14.21 +7.2%
1997: $19.24 +35.4%
1998: $22.10 +14.9%
1999: $25.61 +15.9%
2000: $27.10 + 5.8%
2001: $28.29 + 8.1%
2002: $30.04 + 6.2%
2003: $31.44 + 4.6%
Source: CardData (www.carddata.com)

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

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VeriFone Installs Payment Solution Across an Oil Retail Network

VeriFone announced the roll-out of a project for a major oil industry leader in France, Italy, UK, Ireland, Austria and Belgium. The solution is based on VeriFone’s “Omni 3740” terminal and “SC 5000” EMV programmable smart card PINpad. Over 1500 units of each product will be shipped to the oil company’s retail sites in total throughout the countries planning to implement the solution, which will include fleet card transactions and credit and debit payments. The “Omni 3740” is equipped with the option of different “plug-and-play” communications modules – including high-speed modem, ISDN and ethernet. In the UK, the “Omni 3740” will allow the oil company to communicate over its VSAT satellite network. The “SC 5000 PINpad” is PED compliant and supports multiple value-added applications including EMV smart card, enabling
VeriFone’s customer to be ready for Europe-wide migration to EMV compliance and the move from signature-based authorization to PIN verification.

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