Consumers Face New Confusion and Fees Using Debit Cards

While Wal-Mart’s decision to deny consumers use of their MasterCard debit cards next year provided fodder for the news media, it clearly demonstrates how consumers will be affected by the retailers’ debit card lawsuit for years to come. Forcing consumers to remember their PINs, whip out their checkbook, or dig in their wallets for cash at the check-out because they have the wrong debit card, will create nothing but confusion in the marketplace, unraveling an established and highly efficient payments system in the USA. On top of the acceptance confusion issue, consumers will also face more fees from banks for the way they use their debit cards. As reported in yesterday’s CardFlash, more banks are phasing in per transaction fees for PIN POS debit card transactions as some banks now penalize consumers for not making at least one off-line POS debit card transaction each month. MasterCard said yesterday that Wal-Mart is putting its hand into its customers’ wallets, and telling them which form of payment they must use. MasterCard says there are more than 50 million Americans who hold MasterCard signature debit cards and use them because they receive rewards from their bank, or perhaps because they are uncomfortable entering their PIN into a terminal in a public place. MasterCard says it is surprising in today’s environment for any merchant to make a conscious decision that will result in dissatisfied customers and lost sales.

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GlobalPlatform Names Officers and Board

GlobalPlatform has named its new Chair, Vice Chair and Secretary/Treasurer following the elections in mid-November. Bob Beer, VP of Datacard Group and new Board Member of GlobalPlatform, has been named as Chair. Jim Lee, SVP Emerging Technologies at VISA International, retains his position as Vice Chair for a third term. Shoji Miyamoto, Deputy General Manager, Smart Card Solutions at Hitachi, takes on the role of Secretary/Treasurer. In October, the fifth GlobalPlatform Board was named. Five of the eleven Board seats were open for re-election and three of those went to incumbents: Gilles Michel of Gemplus, Richard Fletcher of MasterCard International and Yves Moulart of STMicroelectronics.

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Cubic Transportation Systems Revenues Up 10%

Cubic Corporation reported Tuesday that sales for its Transportation Systems segment, for the fiscal year ending September 30th, were up nearly 10% to $253 million. The revenues were driven by higher sales in North America as well as work on the “Prestige” contract in London. Operating income for the segment increased 5% to $24.4 million, compared to the same period in 2002.Cubic noted the increase came even though it incurred legal costs related to a dispute with a subcontractor on the “Prestige” contract and a legal settlement in Australia. Cubic’s end-of-year backlog was $762 million, compared to $672 million at the close of last year. Transportation backlog increased in 2003 primarily because of a contract for nearly $95 million awarded by the city of Brisbane, Australia for a fare collection system and 10 years of operations and maintenance. After the 2003 fiscal year closed, Cubic inked a $72.5 million deal with the Metropolitan Atlanta Rapid Transit Authority for a smart card-only multi-modal fare collection and revenue management system. Under terms of the contract, Cubic will replace MARTA’s existing magnetic ticketing and token-based system with the company’s open architecture smart card ticketing technology that will enable commuters to use one card to pay for rail, bus, paratransit fares and park-and-ride fees.The contract could be worth up to $104 million if all options are exercised. For complete details on Cubic’s latest results visit CardData ([www.carddata.com][1]). (CF Library 11/3/03)

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

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LML and Verus Financial Management Come to Terms

LML Payment Systems has granted a personal, non-exclusive license for its patented processing of electronic check transactions Tennessee-based Verus Financial Management.
Under terms of the deal, Verus paid LML a fee on closing for a release regarding potential past infringements of the patent and will pay a running royalty fee based upon each electronic check transaction processed under the license. Verus offers a wide range of payment processing services including electronic payment processing for associations, retail, mail order/telephone order and Internet based merchants. LML provides check processing solutions including electronic check authorization, electronic check conversion and primary and secondary check collection including electronic check re-presentment to national, regional and local retailers.

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Canadians Put 75% of Holiday Spending on Cards

Canadians are expected to spend an average of $1,500 this year buying gifts, decorations, food and other holiday-related goods. A survey for Moneris Solutions by Ipsos-Reid shows that Canadians will spend an average of $761 on gifts and an average of $724 on other holiday-related spending such as clothing, travel and decorations. Almost three quarters of the survey’s respondents selected debit or credit card as the payment form they will use most often when shopping this season. Three in ten Canadians prefer using credit card and 26% prefer cash. Almost half of all women say debit cards are their first choice for holiday shopping payment options, compared to 38% of men, while almost one-third of men prefer credit cards, compared to only 28% of women. Other survey findings: 58% say “they don’t set a budget and spend as they go”; and 38% of Canadians say they are last-minute shoppers.

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Mobile Sense to Deploy the Linux-Based Sanchez Profile

Mobile Sense Ltd., a new, wireless payment provider has licensed “Sanchez Profile.” The “Sanchez/Mobile Sense” solution expects to begin accepting mobile top-up transactions early in 2004. The solution will use “Sanchez Profile” as the core transaction processing and customer system operating on a Linux platform. When implemented, the solution will be the second iteration of “Sanchez Profile” running on Linux. Sanchez provides the world’s only core bank processing solution to operate in the Linux environment. Mobile Sense will enter the market as a top-up merchant, and will differentiate its role by eliminating the need to make a cash purchase at a merchant store or bank ATM.

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Diebold Opens a Sales and Service Operation in Lima

Diebold has formed a sales and service operation in Peru. Following the acquisition of certain assets from Olivetti Peru, Diebold has established a direct, in-country presence to provide retail ATM sales and service operations. Diebold will now have a sales, administration and service headquarters, along with a separate warehousing facility based in Peru’s capital of Lima.
Diebold say Peru represents a new, practically untapped market.

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Shipowitz to Head ACE Cash Express Next Summer

Dallas-based ACE Cash Express announced that president/COO Jay Shipowitz will become the new CEO on June 30th. Jay is an innovator and an executive who can consistently deliver outstanding results and under his leadership the management team will achieve continued success. Mr. Shipowitz has served as the President and Chief Operating Officer and as a Director of the Company since January 2000 and as the Company’s Senior Vice President and Chief Financial Officer from May 1997 to January 2000. Mr. Shipowitz is a Director and member of the Executive Committee of Financial Service Centers of America, the industry trade association. ACE Cash Express, Inc. is the largest owner, operator and franchiser of check-cashing stores in the United States.

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American Express Says “Swipe It” Not “Deb-It”

American Express has launched a new campaign to pit its charge cards against debit cards. The strategy hits as the industry cuts merchant fees and adds cardholder fees to debit card products. The AmEx “Swipe It” campaign encourages consumers to charge everyday expenses to help stay on budget and to avoid debit card fees and potential interest charges. AmEx also promotes its online access and detailed monthly statements as expense-control tools. The new campaign comes on the heels of an extensive re-pricing in the debit card market. VISA and MasterCard have been forced to reduce off-line debit card interchange by more than 30%. The card associations are also, reportedly, in the midst of negotiating further cuts in debit card fees with individual major merchants. As of January 1st, merchants have the right to stop accepting VISA and MasterCard off-line debit cards. Consumers have also been drawn in the debit card restructuring. Some banks have already begun charging fees for PIN POS debit card transactions. As of December 1st, MD-based Mercantile Bankshares Corporation is charging a 30 cents per PIN POS debit card transaction. NC-based BB&T is charging its customers a $2 per month inactivity fee if they do not make at least one off-line POS debit card transaction each month.

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[1]: /images/a/americanexpress/swipeit_.jpg

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Tesoro Drops Gas Card, Offers Juniper MasterCard

Juniper Bank’s co-branding efforts have moved from airlines to hotels and now, to gasoline stations. Tesoro Petroleum is dropping its proprietary gas card at the end of this year, switching to a MasterCard issued by Juniper. The new “Tesoro Platinum MasterCard” rewards cardholders with a Tesoro gift card each time they accumulate $20 in rebates. Under the program, cardholders earn a 3% rebate on purchases at Tesoro branded locations, and a 1% rebate on all other purchases. During the first two months after an account is opened, cardholders will earn double rebates for every purchase. The no-fee card also features a 0% introductory rate on balance transfers for 6 months and a 12.99% variable go-to APR. Juniper has already started issuing the new MasterCard to current, creditworthy, gas cardholders and will now accept applications from the general public. Tesoro’ has 560 branded retail stations, of which over 220 are company operated under the Tesoro and Mirastar brands. In August, Juniper inked a co-branded credit card deal with Best Western. In May, Juniper Bank launched the co-branded “Frontier Airlines MasterCard.” Juniper also issues the “AirTran A-Plus Platinum VISA” and the “Midwest Express Airlines MasterCard.” (CF Library 5/22/03; 8/5/03)

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BancorpSouth Utilizes PULSE Access for Gift Card

BancorpSouth has selected “PULSE Access” to enable its customers to choose from a selection of personalized messages and designs to emboss on the bottom of the new “BancorpSouth MasterCard Gift Cards”. The card can be used anywhere MasterCard debit cards are accepted, and card balance and transaction history are easily tracked by accessing BancorpSouth’s Web site at or by calling the InfoLine at 888-797-7711. BancorpSouth, Inc. is a bank holding company headquartered in Tupelo, Mississippi, with an estimated $10.2 billion in assets. BancorpSouth operates approximately 250 commercial banking, insurance, trust and broker/dealer locations in Alabama, Arkansas, Louisiana, Mississippi, Tennessee and Texas. PULSE is the nation’s leading independent financial industry-owned and controlled electronic funds transfer network, currently serving more than 4,300 bank, credit union and savings institution members across the country.

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A Strong Year for Credit Union Portfolio Sales

Approximately $268 million in credit union credit card portfolios have changed hands so far this year. Through the third quarter, 43 credit unions with portfolio of over $1 million in outstanding balances have sold their credit card portfolios, with six of them being greater than $10 million in outstanding balances. According to Peterborough, NH-based Brookwood Capital, the number of portfolios sold has already surpassed last year’s figures, where 41 portfolios of over $1 million in outstanding balances were sold. Last year, total balances sold were approximately $285 million with the largest being approximately $30 million. The largest credit union portfolio sold so far this year had balances of slightly more than $30 million. On average, the size of the portfolio sold has decreased slightly from this last year to this year (from approximately $6.9 million to $6.2 million). Brookwood Capital specializes in assisting credit unions in the financial analysis and strategic review of their credit card portfolios.

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