COF Cut-Backs

Capital One yesterday announced plans to close its Fredericksburg, Virginia operations center to reduce operating expenses. The closure, scheduled for December 1st, will affect approximately 650 employees. Cap One says all of the employees will be offered positions at other Virginia locations, primarily in the Richmond area. The card issuer said it will honor its existing community commitments. In the first quarter, Cap One reported profits of $309 million driven by a $112 million decline in marketing expenses, according to CardData ([www.carddata.com][1]).

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

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AHP Verification

Electracash and TouchCredit Financial Services have developed an online check processing system that employs biometric verification. Merchants using Electracash will now be able to have real-time “Account Holder-Present” verification. By using existing hardware devices, such as keyboards, consumers verify their presence during a transaction based upon their unique keystroke rhythm. Standard microphones can also be used for voice verification, or finger scanners can be used for finger print verification. The new feature is available immediately to over 500 of Electracash’s existing merchant customers who service several thousand web sites; it is also included in the Electracash “Basic ACH” payment service for new merchants.

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VBV CASH

The first marriage between VISA’s “Verified by Visa” authentication process and online cash advances is up and running. Taishin Bank says that due to the recent SARS outbreak, its existing online cash advance service has experienced a surge in usage. The addition of the “VbV” program will now provide users with a higher level of safety and security when conducting such transactions online. VISA Asia Pacific says that in April and May, the fear of SARS has caused an increase in online banking and online shopping in Asia Pacific by 20% to 30% percent. In April alone, some VISA bank members have reported a surge in Internet cash advance transactions by as much as 50%. Also in Taiwan, Chinatrust Commercial Bank and Union Bank of Taiwan have already completed the “Verified by Visa” implementation, and are rolling out the service to cardholders and merchants later this month. There are 8.7 million Internet users in Taiwan as of end of March.

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Mileage Plus 1Q/03

A new study has found that interest in the “United Airlines/Bank One Mileage Plus VISA” card has dropped sharply from its August 2002 peak, as the airline struggles financially. The research revealed that credit card applications for the co-branded frequent flyer card declined 19% in the first quarter and, on a monthly basis, application volume in March was less than half its August 2002 peak. Boston-based Compete Inc. says the introduction of the “More Miles” program in January temporarily rejuvenated interest among credit card consumers. However, the volume of interested credit card consumers was short-lived, and continued to slide in February and March down to about 40% of its August 2002 level. By contrast, the number of prospects for Citibank’s “AAdvantage” card rose 24% from August 2002 through March 2003. Compete uses predictive analytics to monitor 10 million online consumers daily. During the first quarter, Bank One opened 1,037,000 new accounts, compared to 1.3 million in the fourth quarter. (CF Library 4/15/03) However, Bank One says the number of new “Mileage Plus” credit card accounts generated through the Internet are actually higher than ever. The issuer also says the United portfolio is healthy in both dollar and transaction volume.

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BOCC ATMS

Beijing-based Bank of Communications has ordered US$8.5 million worth of ATMs and bulk cash recycling machines from Diebold. Bank of Communications has already deployed more than 140 newly purchased “ix Series” ATMs within its national self-service network. The bank also recently purchased more than 130 of Diebold’s BCRMs for placement in July and August. The unit’s modular design accepts 100 notes of bulk cash per transaction without an envelope. It also protects the financial institution’s investment by “recycling” deposited cash to ATM users making withdrawals.

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BioPay Record

VA-based BioPay reported it recently hit three significant milestones with its biometric technology that is used for initiating and processing financial transactions. The company says it has verified more than $1 billion in financial transactions; processed more than three million financial transactions; and is enrolling more than 500,000 consumers in its “Paycheck Secure”and “bCheck” biometric systems. BioPay’s electronic biometric identification systems are used by merchants in 31 states. “Paycheck Secure” uses biometric technology to capture a customer’s finger image, store a template of the image, and then record check transactions associated with that person. Merchants can obtain real-time, negative check transaction information from BioPay’s database. “bCheck” gives consumers the convenience of paying for purchases by the touch of a finger; cash, checks, credit and debit cards, and ID are not required.

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LML & MEDCOM

Vancouver-based LML Payment Systems announced that licensee Global eTelecom will provide MedCom USA with an integrated, complete check solution program to service the health care industry. MedCom’s healthcare business unit include MedCard which offers a service package for physicians, clinics and hospitals. MedCard services include: patient eligibility, paperless claims processing, electronic referrals, patient easy pay, credit/debit cards and check guarantee. Global eTelecom provides it’s proprietary, fully customizable XML based electronic check processing services to a nationwide network of banks, independent sales agents and associations, credit card processors, insurance companies, and retail merchants.

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Fraud Referral Decisions

Fair Isaac this morning announced a new solution to reduce the number of ‘false positives,’ or transactions incorrectly flagged for investigation, at the point of sale. The new “Strategy Science for Fraud Referral” will enable lenders to simulate various fraud referral strategies and test their financial impact before deploying them in real time. Experiments in realigning referral strategies to reduce fraud losses or false positives can be conducted in a measured, controlled environment to provide the lender with a snapshot of how each strategy will affect overall profitability. Fair Isaac says the decision to refer a transaction at the point of sale for further cardholder verification or investigation based on the score and other metrics has until now been made on a judgmental basis or with the aid of ad-hoc data analysis. The new “Strategy Science” solution represents a much more holistic approach to portfolio fraud management. Fair Isaac says this new empirical approach to developing fraud referral strategies will bring a dramatic increase in profitability to issuers who are seeking the right balance between creating positive customer experiences and containing fraud losses.

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CHARGE-OFFS

Bad credit card debt continues to soar in Singapore as charge-offs reached a record $15.6 million in April. In March card issuers lost $13.60 million, in February $13.70 million, and during January $12.10 million. According to the Monetary Authority of Singapore, the credit card loss rates for this year are running 70% over 2002 figures. However, card volume for the first four months of this year has fluctuated between $2.4 billion and $2.5 billion. The total number of cards in the country at the end of April was 3.3 million, which included 2,283,126 primary cards and 979,846 supplementary cards.

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Cap One May Data

Capital One reported yesterday that charge-offs for May increased to 6.40% compared to 6.36% in April, and that its delinquency rate (30+days) declined from 4.86% in April to 4.82% in May. The Company’s ‘managed’ consolidated financial statements reflect adjustments made related to effects of securitization transactions qualifying as sales under GAAP. The Company generates earnings from its ‘managed’ loan portfolio which includes both the on-balance sheet loans and off-balance sheet loans for which the Company has retained significant risk and rewards.

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Business ExtrAA

American Airlines and American Express have teamed to issue a co-branded corporate card for mid-sized companies this fall. The “American Express Business ExtrAA Corporate Card” will offer a quarterly cash rebate on airline tickets and a points program for all AA-related card purchases. Companies will be able to earn up to a 10% quarterly cash rebate on first, business, or full coach American Airlines tickets charged to the card. Discounted leisure fares do not qualify. Companies will also be enrolled automatically as members in American’s “Business ExtrAA” program and earn points for total spending with American on the Card. Points can be redeemed for free tickets, upgrades, and “Admirals Club” memberships. AmEx and AA said a typical mid-sized company that charges $100,000 of travel on American to the new card can save as much as $10,000 annually, plus earn as many as 12 free tickets per year. American Airlines has a long-standing co-branded credit/debit bank card relationship with Citibank.

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