Korean Fallout

South Korea’s LG Electronics has confirmed it unloaded all of its shares in LG Card Co. this week because it does not want to participate in LG Card’s upcoming rights offering or subordinated bonds issue. LG Card plans to raise KRW500 billion in a rights offer by June 30th, and another KRW500 billion via a subordinated bond issue in the third quarter. The capital raising action is in response to orders from the Financial Supervisory Service for all card issuers to raise cash to offset mounting losses in South Korea. The FSS recently reported that card payments, 30+ days overdue, increased 23% to $6.3 billion in January from $5.1 billion in December. The FSS wants credit card issuers in South Korea to raise $8 billion to cover the losses. LG Electronics held a 0.5% stake in credit card affiliate LG Card Co. (CF Library 3/14/03; 4/8/03)

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GE 1Q/03

GE reported that its credit card profits dropped 13% in the first quarter to $181 million, compared to $209 million one year ago. Revenues for GE’s credit card business were also down, slightly, from $903 million for 1Q/02 to $893 million for 1Q/03. However, GE’s global consumer finance business more than offset the decline in the credit card business. GE’s Consumer Finance division had total revenues of $2.8 billion and profits of $546 million for the first quarter. Revenues were up 16% and profits increased 10% over last year. During the first quarter GE inked a deal to buy Conseco’s retail sales finance business and launched a new private-label credit card program with Meijer Stores. For complete details on GE’s first quarter performance visit CardData ([www.carddata.com][1]).

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

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Paystar ATM Partnership

PayStar Corporation this week announced the signing of a shared-revenue agreement with a major branded player in ATM machine management under for the installation, placement and operation of ATMs in PayStar marketed hospitality locations nationwide.  PayStar marketed hospitality and retail clients will enjoy the convenience of having a recognized ATM on the premises, while increasing revenues through increased traffic and transaction fees.

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AmEx Fees

Emboldened by a court victory this week over foreign exchange fees charged on VISA and MasterCards, attorneys representing the plaintiffs have now filed suit against American Express. The class action against AmEx was filed in the Alameda County Superior Court for the State of California. The suit asserts violation of certain sections of California’s “Unfair Competition Law” and the California “Consumer Legal Remedies Act.” AmEx says it will vigorously defend the action. On Tuesday of this week, a California Superior Court judge ordered VISA and MasterCard to refund more than $800 million in foreign currency conversion fees to cardholders. The court also ordered the card associations to amend their operating rules to require their issuing members to make effective disclosure of the currency conversion fees charged to consumers. VISA was ordered to refund the one percent currency conversion fees to all cardholders in the USA while MasterCard was ordered to refund the currency conversion fees to all its California consumers. Both VISA and MasterCard plan to appeal. (CF Library 4/9/03).

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Smart Switch

Switch announced this morning it will launch a smart card pilot in Northampton, UK that will eventually reach 30 million “Switch” and “Solo” cardholders. Meanwhile, the migration of “Switch” cards to “Maestro” cards continues in the UK as more cards now display the “Maestro” symbol on the front of the card rather than on the back. MasterCard and Switch reached an agreement in August 2002 to migrate the “Switch” debit card brand to the “Maestro” brand in the UK. The migration will be completed by mid-2007. Switch process 1.3 billion transactions a year and an annual spend of over £45 billion. The “Maestro” brand mark now appears on over 505 million cards worldwide and is accepted for purchases at over seven million merchant terminals in 93 countries and territories.

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Spiegel Sales

The Spiegel Group reported yesterday that its retail sales declined during March as a result of its decision to stop accepting the Eddie Bauer, Newport News and Spiegel Catalog credit cards. Spiegel says net sales of $157.8 million for the five weeks ended March 29th, were off by 28% compared to one year ago. In early March Spiegel ceased honoring the private-label credit cards issued by First Consumers National Bank to customers of its merchant companies (Eddie Bauer, Newport News and Spiegel Catalog). Spiegel says it is actively seeking a third-party credit provider to finance and service receivables generated from these new cards. The Spiegel Group filed for a “Chapter 11 Reorganization” on March 17th. (CF Library 3/11/03; 3/12/03; 3/18/03)

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MASTERCARD E-P3

MasterCard this week launched the first electronic payment and information management service fully integrated with the its “Corporate Purchasing Card” product. The new “e-P3” service, which runs on the Xign platform, automatically links electronic purchase orders, invoices, receipt of goods, and other transaction documents with purchasing card transactions. “e-P3” enables “Level III” data to be exchanged electronically between buyers and suppliers with every single transaction by leveraging the MasterCard “Global Data Repository.” Online reporting of transaction data is available through MasterCard “Smart Data OnLine.” For suppliers, enrollment in MasterCard “e-P3” can be completed over the Internet with any Web browser. The first “e-P3” adopters include Memorial Sloan-Kettering Cancer Center with its “JPMorgan Chase MasterCard Corporate Purchasing Card” and Pantellos with its “Citibank MasterCard Corporate Purchasing Card” programs.

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Hypercom Award

Frost & Sullivan awarded Hypercom Corporation the prestigious 2003 Market Engineering Company of the Year Award – for the second year running. Despite last year’s uncertain global economy, Hypercom outpaced all competitors with its strong and unmatched combination of industry leading technology and focus, dedication and commitment to top-line growth and customer satisfaction.

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