NOVA Buys NCF’s Merchant Portfolio

Memphis-based National Commerce Financial Corporation has sold its merchant payment processing portfolio to NOVA Information Systems. NCF’s has nearly 10,000 active merchants in its portfolio that includes credit and debit card processing, electronic check services, and other value-added services. NCF’s merchant annual sales volume is about $1 billion annually. Under the terms of the agreement, merchant processing will be offered by NOVA to existing customers of NCF, and NCF will jointly market merchant processing with NOVA to prospective merchants. The NCF merchant processing business operates through NCF bank brands National Bank of Commerce and Central Carolina Bank. NOVA Information Systems is a subsidiary of U.S. Bancorp and provides processing services to more than 650,000 merchant locations in the USA and Europe.

Details

DIONE & VISA PED

Dione’s “Xtreme” PIN pad and “IC-Xpress” swipe & park card reader have passed “VISA’s PIN Entry Device Offline” security requirements. Significantly the terminals have been successfully tested both for “Enciphered” PIN and “Plaintext” PIN, a mandatory requirement in the UK. Cards issued in the UK operate with “Plaintext” PIN as opposed to “Enciphered” PIN, so gaining VISA “PED Offline” approval does not necessarily protect the merchant if the terminal has only been assessed for “Enciphered” PIN. The Dione terminals are capable of dealing with both, offering complete “Chip & PIN” capability.

Details

VISA’s Interlink Transactions Soar as PLUS Transactions Sink

While the number of transactions on VISA’s “PLUS” ATM network in the USA dropped 21% in the second quarter, VISA’s “Interlink” PIN POS network transaction dollar volume has soared by 32%. VISA processed more than 240 million “Interlink” transactions in 2Q/03, a 29% jump over year-ago levels, driven by a solid increase in the number of merchant acceptance locations. “PLUS” transactions declined 21% to 127 million for the second quarter. Approximate dollar volume for “Interlink” POS transactions during the second quarter was $8.4 billion, a 32% increase over 2Q/02. The number of “Interlink” merchant locations now exceeds one million, a 27% expansion over 2Q/02. At mid-year the number of cards carrying the “Interlink” brand was up 13% to 70 million. The number of “PLUS” ATMs was up a mere 3% to 364,000. For complete details on VISA’s second quarter performance visit CardData (www.carddata.com).

Details

Credit Card Account Gap Widens Between VISA and MasterCard

In terms of cards issued, VISA has picked up the lead again in the U.S. credit card horse race, after falling behind MasterCard for three consecutive quarters. However, based on the number of domestic credit card accounts, MasterCard has widened its lead to 15 million accounts after first surpassing VISA in 3Q/02. At the end of 2Q/03, VISA had 270.5 million domestic credit cards-in-force, compared to MasterCard’s 269.1 million. In the third quarter of 2002, MasterCard pulled ahead of VISA with 264.2 million cards versus VISA’s 259.0 million cards, according to CardData ([www.carddata.com][1]). MasterCard maintained its lead by 8.5 million cards in the fourth quarter of last year, and by 1.6 million in the first quarter of this year. Based on the number of U.S. credit card accounts, MasterCard now has 211.8 million compared to VISA’s 196.8 million. In 3Q/02, MasterCard pulled past VISA by 5.1 million accounts. The gap widened by 8.6 million accounts in the fourth quarter. In the first quarter of this year, MasterCard had 208.4 million accounts compared to VISA’s 200.9 million. VISA has steadily been losing credit card accounts for the past 18 months. However, VISA has always dominated MasterCard in credit card volume. For example, VISA’s second quarter volume was $158.8 billion compared to MasterCard’s $125.8 billion. For complete details on VISA’s and MasterCard’s second quarter performance visit CardData ([www.carddata.com][2]).

Quarterly V/M Credit Card Accounts (millions)
2Q/03 1Q/03 4Q/02 3Q/02 2Q/02 1Q/02
VISA: 196.8 200.9 201.4 203.3 204.4 206.6
MasterCard: 211.8 208.4 210.0 208.4 198.9 190.5
TOTAL: 408.6 409.3 411.4 411.7 403.3 397.1
Source: CardData (www.carddata.com)

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

Details

Consumers Need to Apply for Foreign Exchange Fee Refunds

Alameda County California Superior Court Judge Ronald Sabraw issued a tentative decision yesterday that requires consumers to file a claim to receive refunds of credit card foreign exchange fees charged by VISA and MasterCard. The judge ordered the card associations to enlist their 30 largest member banks to include bill stuffers in regular monthly billing for three consecutive months. The plan to shift the burden of reimbursement to consumers was proposed by the two card associations. However, VISA and MasterCard are confident that Sabraw’s April ruling that they violated California’s unfair competition law, will be overturned on appeal. In April Sabraw ordered VISA, which is headquartered in California, to refund the one percent currency conversion fees to all cardholders in the USA who paid the fees from February 15, 1996 to the present. MasterCard, which is headquartered in New York, was ordered to refund the currency conversion fees to all its California consumers who paid the fees during the same period. (CF Library 4/9/03; 9/11/03)

Details

Card ABS Solid Despite Sub-Prime Early Amortizations

The early amortizations in the sub-prime segment has tarnished the image of credit card asset-backed securities. However, Fitch Ratings says the ABS segment remains strong. Fitch says issuance for credit card ABS remains solid totaling $44.8 billion in the first half of this year, compared to $44.9 billion during the same period in 2002. Top tier issuers continue to enjoy uninterrupted market access at good execution levels, but less frequent issuers and those with portfolios concentrated in the higher-risk, sub-prime segment face much greater challenges, in many cases forced to execute more expensive transactions with more restrictive terms. Fitch’s outlook on the prime credit card ABS segment remains stable and future negative rating activity is expected to be very limited. Despite continued pressure on industry yields and weakening credit quality metrics, excess spread for this segment remains strong. Fitch’s rating outlook on the sub-prime ABS segment remains negative. According to Fitch’s “Sub-Prime Index,” sub-prime charge-offs totaled 18.01% for the June 2003 collection period, compared with 15.13% a year ago and 12.01% in 2001. Positively, late-stage delinquencies (60 days or more) appear to have leveled off in recent months, albeit at high levels.

Details