ECHO Revenues Up 28% and Posts a Profit

Electronic Clearing House reported yesterday that revenue for the quarter ending September 30th was up more than 28% to $11 million. The processor also reported net income of $518,000 for the quarter, compared to a net loss one-year ago. Bankcard processing and transaction revenue increased 21% to $8.5 million. The increase was primarily due to its merchants’ strong organic growth in bankcard processing volume. Check-related revenues increased 62% to $2.5 million, primarily due to strong growth in the ACH and check conversion services and the revenue generated from the “VISA POS” program. ECHO says a national retail merchant fully implemented the new VISA program in June. ECHO also noted that gross margins from processing and transaction services jumped to 38% in the quarter from 28% in the year-ago quarter. For complete details on ECHO’s latest performance visit CardData ([www.carddata.com][1]).

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

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CheckFree Acquires a Walk-In Payment Network

CheckFree confirmed this morning it is acquiring American Payment Systems for $110 million. CT-based APS provides walk-in bill payment services through a network of more than 8,000 retail and agent locations, which reaches 70% of consumers in the top 75 U.S. metropolitan areas. APS says it enables 7 million households to pay for services in-person. This year, APS expects to process nearly 120 million payments. As part of the deal, CheckFree also is picking up APS’ prepaid stored value MasterCard business. However, CheckFree is not acquiring APS’ prepaid telephony business, which is managed via a joint venture and is not aligned strategically with CheckFree’s goals for the acquisition. The lines of business that CheckFree is acquiring have combined annual revenue, net of certain agent commissions, of more than $40 million per year. The deal is expected to close before June 30, 2004.

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Cash is No Longer King in the USA

A new study has found that cash and checks now account for 47% of consumers’ in-store purchases, as compared to 57% in 1999 and 51% in 2001. Four years ago, debit represented only 21% of in-store transactions, but now nearly one out of three in-store purchases are made with a debit card. This is the first time that electronic payments have surpassed cash and checks as consumers’ preferred payment method for in-store purchases. The study by the American Bankers Association and Boston-based strategy consulting firm Dove Consulting also found that cash remains the single most frequently used payment method in stores, but its share of the transaction mix has fallen from 39% in 1999 to 32% in 2003. Checks also play a diminishing role at the point-of-sale, accounting for just 15% of purchases. Comparatively, consumer use of credit cards for in-store purchases has remained relatively constant at 21%. At 2%, the “other” payments category is made up of prepaid cards.

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MULTOS Releases an On-Card and Off-Card Specification

The “MULTOS Step/One” specifications are now ready for implementation. The specifications consist of two parts; an on-card specification defining application establishment, the API and security targets; an off-card element defining key generation and management processes, load and delete protocols and certificate formats. “MULTOS Step/One” exploits much of the security, flexibility and software interoperability of the original MULTOS platform, and affords issuers better choice and control by allowing them to individually manage vendors across the supply chain Ð from operating system implementers to card personalization bureau. First silicon is expected in the first half of 2004.

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Sears Canada Receives Government Approval for its New Bank Subsidiary

The Office of the Superintendent of Financial Institutions has approved the opening of Sears Canada Bank. Current “Sears Card” and “Sears MasterCard” holders will receive an information package regarding their new issuer during the first quarter. Sears Canada has been ranked as the most trusted company in Canada. Sears Canada submit its application to the OSFI for a federally regulated bank in July. The company says the establishment of a bank will, among other things, facilitate the offering of a wide variety of innovative MasterCard products to customers. The Sears Card represents the single largest credit card franchise in Canada. Last year, the company introduced the “Sears MasterCard.” First rolled out in Ontario, the card has been introduced in British Columbia and Alberta. Sears Canada says a bank will bring greater regulatory certainty and harmonization across Sears Canada’s national financial services operations.

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MasterCard Deploys Changepoint for IT

MasterCard has signed an agreement to deploy “Changepoint,” an IT management solution, to approximately 3,000 users. MasterCard’s Global Technology and Operations group supports the global payments solutions company with information technology services and solutions worldwide. To facilitate the organization’s IT governance mandate, GTO’s management required real-time visibility into the performance of the IT investments and operations. MasterCard International is a leading global payments solutions company that provides a broad variety of innovative services in support of our global members’ credit, deposit access, electronic cash, business-to-business and related payment programs. Changepoint Corporation provides global services organizations and corporate IT departments with business process automation software to improve efficiency and provide total visibility into operations, enabling the proactive management of operational and employee performance.

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Shift4 Adds the Processing of Canadian Debit PIN Pad Transactions

Integrated debit at the point of sale in Canada has become a reality. Shift4 Corporation has added the processing of Canadian debit PIN pad transactions into its “$$$ ON THE NET” Web-based e-payment gateway solution. Shift4, in conjunction with its partner Retail Technologies International, has already installed its new Canadian PIN pad debit solution in some Canadian retail outlets, including Niagara Parks Commission and Build-A-Bear Workshop. “$$$ ON THE NET” also includes a comprehensive accounting application that provides the ability to report, review and correct transactions before settlement, as well
as archive and retrieve them to assist with charge back requests.

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ACE and Goleta Settlement Approved

The U. S. District Court in Dallas has approved the settlement agreement in the class-action lawsuit brought against ACE Cash Express and Goleta National Bank. The settlement agreement provides for the release of substantially all of the claims that were asserted or could have been asserted in the Purdie lawsuit and/or in other pending lawsuits against ACE regarding the former offering of Goleta National Bank short-term loans at ACE stores. ACE Cash Express, Inc. is headquartered in Irving, Texas and is the largest owner, operator and franchiser of check-cashing stores in the United States. Founded in 1968, the Company had a total network of 1,174 stores, consisting of 968 company-owned stores and 206 franchised stores in 36 states and the District of Columbia as of September 30, 2003.

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Experian Buys an Internet Loyalty Marketing Concern

Experian Consumer Direct has acquired a performance-based Internet loyalty marketing company. MetaReward is a developer of tools and technologies that enable Web publishers to offer performance-based marketing offers. The company has more than four years experience building technology platforms and developing marketing relationships. The MetaReward network is visited by more than four million consumers each month. MetaReward properties include NetFlip, FreeGiftCentral, MovieTicketSource and MisterPoints reward programs as well as the ExpertsOnCredit credit advice site. Third party Web publishers include both large, highly trafficked Internet properties and small to medium-sized Web sites and services. Experian did not disclose the terms of the purchase.

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MasterCard Complete Debit Processing Includes eFunds

MasterCard and eFunds this morning announced the formation of a debit processing alliance. MasterCard will now market eFunds’ EFT processing services under the MasterCard “Complete Debit Processing” brand and as an integrated component of the “MasterCard Debit” program. Traditionally, “MasterCard Debit” included the global point of sale and ATM brands, a worldwide merchant acceptance network, consumer, business and premium debit programs, deposit account consulting expertise, and offline/online debit transaction switching. With the introduction of “MasterCard CDP,” MasterCard will add a flexible, end-to-end debit transaction processing solution to the package of services and products already available under the “MasterCard Debit” umbrella. “MasterCard CDP” provides a single platform for processing both cardholder transactions and managing card issuance; facilitates card activation and plastic production; improves overall management of an ATM business; enables gateway routing for transaction authorization, settlement, multi-level reporting, as well as exception item processing and reconciliation tools; and, supports financial institutions, merchant acquirers, and merchants by providing direct connections to all regional, national and international networks for ATM, POS, EBT and other funds or debit transaction movement.

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