CyberNet has unveiled its lost-cost smart card terminal for VISA members as part of VISA’s new “Smart Breakthrough Acceptance Device” program. The new “JADEBreakthrough” terminal will cost slightly over $200. “JADEBreakthrough” is powered by a 32 bit processor, the CyberSoft operating system, and supported by a JAVA development toolkit. Globally provided with a thermal printer, for some Asian markets “JADEBreakthrough” is offered with a multiple ply impact sprocket printer. VISA initially announced the new low-cost terminals last month. VISA’s says Intellect will also release a $200 EMV terminal in the first quarter. VISA also led the effort to cut the actual cost a multi-application smart card from more than $5.00 two years ago to $2.60. Five years ago, the price of a smart card hovered at $8 a piece. There are more than 21 million smart cards now in-use in the USA and VISA accounts for nearly 60% of the total. (CF Library 6/25/02; 10/28/02; 12/13/02)Details
While scores of small merchants have begun charging customers for using
credit cards for purchases, major Australian companies have yet to impose
the new surcharges. However, there are several published reports indicating
that Qantas airline and Caltex petroleum have already decided to begin
levying the fees by the end of January. Last year, the Reserve Bank of
Australia issued new reforms on the credit card business permitting
merchants to recover from cardholders the costs of accepting credit cards.
The new standard went into effect January 1st. Also under the new RBA
rules, interchange fees will decrease from around 95 basis points to
approximately 55-60 basis points by July 1st. Australian newspapers are
reporting that Qantas has decided to charge customers a flat fee for each
credit card transaction and that Caltex will pass along its actual costs
for each transaction at its company-owned service stations. Most smaller
merchants are charging customers between 2.5% and 4.5% for VISA,
MasterCard, American Express, and Diners Club credit card transactions.
There are also indications that a significant percentage of smaller
merchants began charging the new fees before the new reforms took effect.
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. The card associations argue that the Reserve Bank of Australia
hasn’t complied with its obligations under the Payment Systems Act, and
that the proposed changes don’t meet the public-interest test required
under the act.
A lawsuit, seeking class action status, has been filed against certain of the officers and directors of The Credit Store, Inc. for violations of the federal securities laws. The lawsuit alleges that the Credit Store created and used, inter alia, wholly owned satellite companies that served as devices to provide inaccurate financial accounting and disguise the deteriorating financial condition of the Company. In mid-August, Credit Store filed a voluntary petition under Chapter 11. The lawsuit was filed by San Diego-based Finkelstein & Krinsk. The Credit Store acquired portfolios of non-performing consumer receivables and offered a new credit card to those consumers who agree to pay all or a portion of the outstanding amount due on their debt. The new card was issued with an initial balance and credit line equal to the agreed repayment amount. After appropriate seasoning, the Company seeks to sell or securitize these credit card receivables. (CF Library 7/9/02; 8/5/02; 8/16/02)Details
Bank Of Scotland (Ireland) Ltd has signed a deal with Bottomline
Technologies to use BT’s “Financial Resource Management” software to
provide enterprise wide payment functionality to its operation in Ireland.
Bank Of Scotland says its finance department generates cheques for 5
different businesses, 3 different currencies and across multiple bank
accounts. The BT solution will provide a single platform to remove the need
for the use of a number of disparate systems. Bottomline maintains its
corporate headquarters in Portsmouth, NH and international headquarters in
First Data has incorporated Finali Corporation’s “netSage Virtual Agent” and live customer service agents into its Web-based stored value offering. The netSage Virtual Agent is a virtual online representative that creates a personalized experience on the Web. It keeps Web users involved with a moving image of a human being that answers each customer’s questions naturally and conversationally.Details
eFunds Corporation has hired Rahul Gupta, former VP at Network/ASP Services, SVP/Division Executive responsible for eFunds’ Risk Management Division. Before joining eFunds, Gupta was Vice President, Network/ASP Services at i2 Technologies Incorporated in Dallas, Texas. Prior to i2, Gupta served as CEO of Financial Settlement Matrix (FSMx), a joint venture between i2 Technologies, Citicorp, Wells Fargo and S1 Technologies. Prior to FSMx, he served as President and Chief Operating Officer for Summit Marketing Group, a large database, promotions and targeted marketing service company.Details
Credit card profits for 2002 hit their highest level in more than a decade due to lower cost-of-funds, higher penalty fees, and higher punitive interest rates. The average pre-tax, return-on-assets for credit card portfolios last year is projected to reach 4.2%, compared 4.0% for 2001, and 2.5% for 1998. CA-based R.K. Hammer Investment Bankers says its data also show that charge-offs will hit a ten year high during 2002 but the impact has been reduced by the higher income yield.
U.S. Bank Credit Card Profitability Historical
(VISA, MasterCard, and Discover)
YEAR INC OX CO COF ROA
1989 21.3% 5.5% 3.8% 7.9% 4.1%
1990 20.9% 5.1% 4.3% 7.8% 3.7%
1991 20.5% 4.8% 4.7% 7.6% 3.4%
1992 19.4% 4.9% 4.9% 6.5% 3.1%
1993 18.6% 4.7% 4.6% 6.0% 3.3%
1994 18.5% 4.5% 4.4% 5.7% 3.9%
1995 18.0% 4.2% 4.1% 6.1% 3.6%
1996 17.9% 4.3% 4.2% 6.1% 3.3%
1997 17.4% 4.3% 4.6% 5.9% 2.6%
1998 17.3% 4.4% 4.7% 5.7% 2.5%
1999 17.9% 4.5% 4.4% 5.9% 3.1%
2000 18.4% 4.5% 4.3% 6.0% 3.6%
2001 18.8% 4.7% 5.1% 5.0% 4.0%
2002 18.5% 4.9% 5.4% 4.0% 4.2%
INC-total income; OX-operating expense; CO-charge-offs;
COF-cost-of-funds; ROA-net pre-tax return-on-assets
Source: R.K. Hammer Investment Bankers
Canada Safeway has signed a multi-year agreement to renew as a “Sponsor” in the “AIR MILES Reward Program.” he AIR MILES Reward Program is Canada’s premier coalition loyalty program. More than 60 percent of Canadian households — representing more than 12.5 million Canadians — actively collect AIR MILES reward miles at more than 100 leading brand-name Sponsors representing over 12,000 retail and service locations across Canada.Details
The Smart Card Alliance mid-winter conference will take place February 12-13, 2003 at the Hilton Salt Lake City Center. Panels will examine the specific roles in which individuals use their identities. There will be pre-conference educational courses on Tuesday February 11th. Visit www.smartcardalliance.org for more information.Details
VISA International reported that debit card transaction volume in Latin
America and the Caribbean hit 339 million transactions in the twelve month
period ending September 30th, for a 66% year-over-year increase.
Debit card purchase volume also increased to $8.6 billion, a 43% increase.
In Brazil debit purchase volume grew 48% to $3 billion. In Mexico debit
purchase volume hit $3.4 billion, a 27% increase.
Bank of America launched an affinity “VISA Gold” card featuring the work of baby photographer Anne Geddes. A portion of the merchant fees generated by the card will donated to the Geddes Philanthropic Trust, which supports the prevention of child abuse and neglect. BofA is offering the card in four designs. The no annual fee card carries a fixed 1.9% intro rate for the first six billing cycles, according to CardWatch ([www.cardwatch.com]). The go-to interest rate is a variable rate between prime +2.99% and prime +9.99%, depending on credit risk. Cardholders who miss two consecutive minimum payments, or within a twelve month period miss three minimum payments, or are three times overlimit, will be subject to an APR of prime +14.99%, with a 21.99% minimum. Anne and Kel Geddes established the Geddes Philanthropic Trust in 1999.
Experian says its cooperative database for catalogers has expanded to 750 participants and now covers more than 100 million households. “Z-24” was launched in 1990 with six participants covering 8 million households. With “Z-24,” marketers can leverage transactional data to identify new customers and target households based on buying behavior. Experian publishes a list of Z-24 participants on a regular basis.Details