FRB Consumer Council

The Federal Reserve Board announced Wednesday it is seeking nominations for three-year appointments to its Consumer Advisory Council and that the Council will June 26th to discuss, among other items, the unsolicited issuance of activated debit and credit cards to current cardholders. The group meets in Washington, D.C., three times a year. Nine new members will be appointed to serve three-year terms beginning in January 2004.

Details

Vavricka Now ICGC COO

Philadelphia-based ICG Commerce has named Christopher Vavricka, formerly VP/President of Operations for Interlink/Executive Director of Interlink/Debit Cards for VISA and former EVP of Global Business Development and Technology at Citicorp Diners Club, as its new COO. Mr. Vavricka has extensive operational experience, utilizing information and technology to create customer value and building large-scale transaction processing and payment systems. He has held senior positions for global Fortune 500 companies as well as entrepreneurial ventures in both the U.S. and Europe.

Details

VISA 1Q/03 Accounts

While the number of VISA debit card accounts rose 13.4% in the first quarter to 100.9 million accounts, the number of VISA credit card accounts continues to shrink, in the USA. At the end of 1Q/03, VISA had 200.9 million domestic credit card accounts, a 2.8% decline over the 206.6 million it had one year ago. In terms of cards, VISA’s total credit cards in-force is up 1.5%, from 259.3 million for 1Q/02 to 263.1 million at the end of the first quarter of this year. In the debit card segment the number of cards rose 11.2% to 132.6 million. During the first quarter of this year, off-line debit cards made up 41% of VISA’s total volume of $245.4 billion. For complete details on VISA’s 1Q/03 performance visit CardData ([www.carddata.com][1]).

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

Details

AmEx vs Associations

American Express’ Chairman/CEO yesterday repeated that taking private legal action against VISA and MasterCard because of their bylaws, which prevent banks from working with AmEx, is a “viable option.” Kenneth Chenault said the profits lost by AmEx, as a result of being prevented from working with U.S. banks, have been significant. AmEx said it clearly has a strategic and financial interest in the outcome of the DOJ lawsuit against the card associations. Chenault accused VISA and MasterCard of taking actions that are not always in the interest of their full membership. He said the substantial co-brand subsidies the associations make to a few of their large players to support sports leagues and other co-brand partners, produce no direct benefit to the majority of association members. Chenault also said VISA and MasterCard have failed to provide their members with competitive flexibility. He said they respond by looking out for their own interests first, and they do this by restricting the ability of their members to openly compete across all fronts. Chenault also commented on the recent debit card settlement. He said the large settlement checks VISA and Mastercard have agreed to write, get drawn on their members and that some members are already raising a flag on how these costs will get apportioned. He said all bankcard issuers will ultimately pay for the restrictive practices and pricing policies of the associations, even though most members have no direct management control.

Details

Experian & PromiseMark

Experian Consumer Direct has acquired VA-based PromiseMark, a developer of Internet-based consumer protection and recovery services for consumers who have been victimized by identity theft, viruses, data loss or hacking. PromiseMark offers its customers a suite of unique identity theft solutions. Its fraud resolution agents are trained to quickly handle identity-theft issues that would normally take a victim two years and 200 hours to resolve on their own. PromiseMark also affords coverage to victims for their financial losses up to $50,000 in the event it cannot remedy all of the damage and recover all of the customer’s losses.

Details

MasterCard USA 1Q/03

MasterCard yesterday reported first quarter gross dollar volume of $146.7 billion in the USA, a 10.3% gain over 1Q/02. Credit card volume was up 10.4% to $117.2 billion, while off-line debit card volume grew 10.1% to $29.4 billion. The GDV increase was driven by a solid 12.3% gain in credit card purchase volume, and a 20.7% gain in debit card purchase volume. The number of cash transactions on both credit and debit cards declined 5.3% and 1.1%, respectively. The number of MasterCard credit cards issued in the USA was up 10.6% to 264.7 million, and outstanding balances reached $278 billion, a 13.2% increase over the same period in 2002. The number of debit MasterCard cards issued rose 15% to 50.5 million. For complete details on MasterCard’s 1Q/03 performance visit CardData ([www.carddata.com][1]).

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

Details

OPEN-LIMIT & T-SYSTEMS

OPENLiMiT Holding AG and T-Systems International GmbH have signed an agreement, making OPENLiMiT a global value-added reseller for products and services of T-Systems in the area of “E4NetKey Smartcards” operated with the OPENLiMiT software. As part of the agreement, T-Systems will also be providing PKI services to OPENLiMiT and its customers. T-Systems is a German based company and a division of Deutsche Telekom. OPENLiMiT, a Swiss based company, is a wholly owned subsidiary of Jure Holdings.

Details

HP FRONT OFFICE

HP has launched the “Next Generation Front Office” initiative, which enables banks to act as sales organizations to their customers and increase performance and revenue streams, while reducing costs by up to 50%. HP also announced that Luottokunta, Finland’s leading credit institution, needed to renew its current hardware and software infrastructure to diversify its services, to enhance its service levels and to be prepared for the introduction of EMV (Europay, MasterCard, Visa) smart cards by the year 2005. HP was chosen to supply a Unix-based high-availability “Superdome” server environment, to replace its current mainframe architecture. The IT infrastructure, which requires very high availability, includes “Oracle9i” database and Oracle’s “Real Application Cluster” solution.

Details

Patriot Act

The US Department of Treasury has issued the final rules implementing “Section 326” of the USA Patriot Act. Under “Section 326,” banks, insurance companies, credit card companies, money service businesses, mutual funds, broker dealers, casinos, must take steps to verify the identity of account holders and to eliminate financial transactions and flows of money to terrorist organizations. The new regulations call for these institutions to compare the names of new account applicants against lists of known terrorists and/or terrorist organizations, verify and confirm the identity of the account holder and maintain related records. Failure to comply with the law carries the threat of daily penalties as well as potential jail time. Boards of directors must approve and monitor such compliance programs, and bank examiners must audit such programs. The Treasury Department has issued final regulations for the Patriot Act now in effect, but they have given a grace period until October 1, 2003, to allow financial institutions to amend internal processes to meet the new mandates.

Details

AMEX AEROPLAN

American Express Bank of Canada has been selected as the winning bidder to partner with Air Canada to offer “Aeroplan” frequent flyer points to its holders. Under the terms of the deal, “Aeroplan” will become a partner in American Express’ “Membership Rewards” program and the two companies will work together to develop a range of co-branded charge cards for consumers and corporations. The deal is subject to definitive agreements and approval of the court overseeing Air Canada’s restructuring. CIBC has been the exclusive credit card partner of Air Canada in Canada. Last month, Air Canada and CIBC agreed to extend their “Aeroplan” air miles contract from 2009 to 2013. Under terms of the deal, CIBC agreed to boost its prepayment to Air Canada for air miles from $200 million to $350 million, and agreed to pay Air Canada a 19% more per “Aeroplan” mile. CIBC also agreed to share the program with another credit card issuer.

Details

Skypay

WA-based Intermec Technologies has introduced new wireless credit card authorization software. “Skypay” combines turnkey payment processing and settlement services with application software and mobile equipment, including ‘Intermec 700 Series” mobile computers and “782” work board printers with integrated magnetic stripe readers. The software also supports payment by cash or check. Fifth Third Bank Processing Solutions is providing “Skypay’s” credit card authorization and settlement services. Fifth Third is is providing settlement on all “Skypay” transactions within 72 hours. Intermec Technologies Corp. is a unit of UNOVA Inc.

Details