Starbucks Vespa Card

Starbucks Coffee Company, which recently signed a co-branded VISA deal with Bank One, has teamed with Piaggio USA, manufacturer of the “Vespa” motor scooter, to launch a sweepstakes for holders of its stored value cards to win loaded Italian vacations and prizes. Starbucks Card holders can enter to win prizes in the “Starbucks Stirs You, Vespa Moves You” Sweepstakes by making purchases or reloads on their registered Starbucks Cards from February 26 through April 22, 2003. Each registered Card transaction will automatically enter customers in weekly drawings for loaded Starbucks Cards and for the overall drawing to win Starbucks Cards, Vespa motorscooters and Vespa-themed prizes.

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TELECASH ACQUISITION

Bonn-based T-Systems International GmbH, a division of Deutsche Telekom
AG, has signed a deal for First Data to acquire its TeleCash
Kommunikations-Service GmbH subsidiary. TeleCash is an electronic payment
network operator that enables merchants to accept debit, credit and charge
card payments through a network of 166,000 POS terminals. The company, with
340 employees and based in Stuttgart, also has offices in Frankfurt am
Main, Berlin, Hamburg, Dusseldorf and Munich. First Data has operated in
Germany from its Nurnberg base since 1997.

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US Air Dilemma

Bankrupt US Airways Group admitted this week that it may be forced to shut down at the end of March because it will lose its credit card processor. The US Airways CEO informed the bankruptcy court earlier this week that its credit card processor, National Processing, has given it a March 31st deadline to emerge from reorganization or face termination. US Airways is concerned that negotiations over pilot pensions could drag out past the NAP deadline. However, the shutdown of US Airways’ processing contract could have an impact on National Processing. NAP could face a significant charge-back liability over tickets already issued by the bankrupt airline. In a 10K filing last week, the company reported the dollar value of tickets purchased, but as yet unused, was approximately $1.0 billion. At year-end 2002, NCBK held $139.5 million in merchant deposits and withheld settlement funds for certain airline merchants. The merchant deposits collateralize only individual airline merchants and some airline merchants have no deposits. Of the total merchant deposits, $125.0 million was related to a single airline merchant. NAP management said it believes liquidations are unlikely for any of the Company’s six airline customers. Airline customers represented approximately 8% of the Company’s consolidated revenue (5% from Merchant Card Services and 3% from Payment Services) for the 2002, according to CardData ([www.carddata.com][1]). In May 2002, NAP announced its decision to discontinue processing debit and credit card transactions for the airline industry. The Company will honor its existing contractual obligations to the airlines it currently serves but does not intend to renew such contracts when their current terms expire. The contracts currently in effect have various expiration dates extending through November 2005. (CF Library 5/30/02)

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

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Qantas Fees

The decision this week by Qantas Airlines to begin imposing a 1.0% surcharge for all credit card transactions within the new few weeks in Australia, may cost it a valuable co-branding relationship, according to today’s issue of The RAM Report ([www.ramreport.com][1]). ANZ Bank is tinkering with its “Qantas VISA” and “VISA Gold” program. ANZ is reportedly considering raising annual fees for the basic “Qantas VISA” from A$40 to A$120, and increasing annual fees for the “Qantas VISA Gold” from A$95 to A$285. ANZ also charges a “rewards” annual fee of A$55 for each card. ANZ is looking into changing the mileage earning structure on the card, from one mile for each A$1 charged, to one mile for each A$2 charged. An annual cap of 50,000 miles is also being considered. ANZ hinted it may drop the annual fee and assess a 1% monthly fee on card volume. ANZ raised annual fees on all its credit cards by nearly 150% in December, just ahead of the credit card reforms that took effect January 1st. Last year, the Reserve Bank of Australia issued new credit card rules permitting merchants to recover from cardholders the costs of accepting credit cards. Most smaller merchants are charging customers between 2.5% and 4.5% for VISA, MasterCard, American Express, and Diners Club credit card transactions. However, most of the 4000 or so members of the Australian Retailers Association have not introduced the surcharge. VISA and MasterCard filed a lawsuit in October with The Federal Court of Australia over the new RBA credit card laws. The Court has set a trial date of May 5th. (CF Library 1/14/03)

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

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Metris Bonds

Fitch Ratings has lowered the senior and bank credit facility ratings of Metris Companies to ‘CCC’ from ‘B-‘. In addition, the long-term deposit rating of Direct Merchants Credit Card Bank, N.A. (DMCCB) has been lowered to ‘B’ from ‘B+’. Approximately $350 million of holding company debt is affected by this rating action. Fitch says its action reflects heightened execution risk as Metris attempts to address liquidity concerns with its various credit providers. Furthermore, Fitch remains concerned with low excess spread levels in the Metris Master Trust. Under the company’s current bank credit agreement, Metris must maintain at least 1% excess spread in the MMT. Moreover, if trust level excess spread becomes negative, on a three month rolling average, an early amortization of the MMT would occur. If an early amortization of the trust were to take place, Fitch does not believe that Metris would have sufficient liquidity to withstand such an occurrence.

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HBOS PROCESSING

HBOS PLC has signed a deal for First Data to take over merchant
processing. HBOS confirmed the signing of a long-term “Revenue Sharing
Alliance” agreement with FDC. Under the terms of the contract, FDC will
provide full merchant processing for HBOS’ 14,000 merchant outlets. The
transactions will be processed via First Data’s “MerchantStar
International” platform in the UK and will include VISA, MasterCard and
Switch payment cards. In 2001, the Bank of Scotland merged with Halifax to
create HBOS PLC. Servicing major banks and financial institutions in the
United Kingdom, Germany, Spain, The Netherlands and the Middle East, First
Data has been active in the UK for more than 10 years.

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Card Scam

Insurance giant Nationwide issued a credit card warning to consumers this morning. The company says a firm doing business as Nationwide Credit Corp., Nationwide Information Services Group and/or Skyrise Marketing, has been contacting individuals and offering secured credit cards for a fee. According to customer complaints received by Nationwide, as well as more than 100 complaints received by the Better Business Bureau, the company contacts individuals by phone and offers a secured credit card in exchange for a $219 fee. However, the individuals did not receive the credit card and have been unable to collect a refund. The company claims to be based in Corning, N.Y. but has given contact information in Toronto, Canada. The Federal Trade Commission has been on the trail on many cross-border credit card scams. In January, the FTC opened a new Web site devoted to fighting cross-border fraud which includes advance-fee loan scams and unnecessary credit card loss protection offers. (CF Library 1/9/03)

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Cardtronics ATMs

TX-based Cardtronics has acquired the ATMs and related processing contract covering 938 Winn-Dixie stores in the southeastern U.S. from XtraCash ATM. Founded in 1989 and headquartered in Houston, Texas, Cardtronics is the nation’s largest independent owner/operator of ATMs. With a network of more than 10,000 locations in every major U.S. market, Cardtronics is one of the largest and fastest-growing ATM deployers in the U.S.

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MasterCard 4Q/02

MasterCard International reported Wednesday that fourth quarter U.S. credit card outstandings rose 16%, and U.S. credit card gross dollar volume increased 12%, over 4Q/01. MasterCard’s fourth quarter U.S. debit card volume of $31.1 billion was up 13.3% over 2001. Overall, MasterCard’s U.S. 4Q/02 gross dollar volume of $162.7 billion was up 12.2% over 4Q/01. At year-end 2002, MasterCard had 266.9 million credit cards, and 47.1 million off-line debit cards in-force, in the USA. MasterCard reported a total of 250.7 million credit card and debit card accounts at the end of the fourth quarter 2002, a 14.3% increase over the year-ago period. MasterCard-branded cards were used for nearly 6.9 billion transactions last year in the USA, generating $602.2 billion in GDV, a 16.2% increase over 2001. Both strong purchase volume growth of 15.9% and strong cash volume growth of 17.0% drove this high growth rate in the USA. MasterCard’s acceptance locations in the USA were up slightly to 4.3 million at EOY 2002. For complete details on MasterCard’s 4Q/02 results visit CardData ([www.carddata.com][1]).

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

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MASTERCARD 2002

MasterCard reported that all its regions reported double-digit
gains in gross dollar volume last year as 2002 GDV exceeded US$1.14
trillion. In Europe, MasterCard GDV rose nearly 15.0% to US$242.6 billion
as card issuance increased 11.5%. The Asia/Pacific region reported GDV
growth of 10.6% in 2002, to US$223.2 billion, and the number of cards
issued in the region rose 11.0% to 112.5 million. This was driven by strong
GDV growth in Korea (up 23.0%), Australia (up 14.9%) and Japan (up 10.0%).
Latin America volume was up 26.2%, as the number of cards issued in the
region increased 11.6%. In South Asia, Middle East/Africa, GDV grew 23.0%.
In Canada, GDV rose 18.0% for the full year. MasterCard-branded
transactions in Canada remained strong in 2002, up 16.6% over the same
period in 2001. At the end of the year, Canadian banks had increased the
number of MasterCard cards issued by 19.9%. In the USA, which accounts for
more than half of total MasterCard GDV, MasterCard-branded cards were used
for nearly 6.9 billion transactions in 2002, generating US$602.2 billion in
GDV, a 16.2% increase over 2001.

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Trintech 4Q/02

Trintech Group today reported revenue for the quarter ending January 31st of $10.5 million, compared with $15.5 million for the same period on year ago, a decrease of 32%. Revenue for the fiscal year was $42.9 million, down 37% from $68.3 million in the prior fiscal year. Fourth quarter software license revenue remained flat at $5.7 million compared to the third quarter of fiscal 2003, and decreased 5% from license revenue of $6 million for the corresponding quarter last year. Fourth quarter product revenue was $2.7 million, a decrease of 61% from product revenues of $6.9 million for the corresponding quarter last year. Fourth quarter service revenue decreased by 19% from $2.6 million for the fourth quarter last year to $2.1 million for the fourth quarter ended January 31, 2003. The company says it has adjusted its cost base as pro forma operating expenses declined sequentially by 10% this quarter. Trintech says it is on track for pro forma profitability in the near term. For complete details on Trintech’s latest results visit CardData ([www.carddata.com][1]).

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

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