CMS & FTC Settle

The FTC announced a final settlement with TX-based Certified Merchant Services which requires the firm to stop their deceptive practices and provide consumer redress for defrauded merchants to whom CMS sold credit card processing services. The settlement requires the firm to sell its assets to provide money for consumer redress. The FTC complaint alleged that CMS violated the FTC Act by unfairly and deceptively: 1) modifying customer contracts; 2) debiting their accounts without authorization; 3) making misrepresentations regarding various goods or services offered; and 4) failing to disclose various charges or fees. The complaint alleged that in many instances, after merchants had signed applications (and without their knowledge), CMS altered contract terms, including fee and expense information. CMS allegedly then used these changes to justify debits made from the merchants’ deposit accounts without notification to the merchants. CMS then tried to disguise these debits, listing “H-Semi” and “H-Can,” instead of CMS, as the company that withdrew the fees. Finally, the complaint alleged that in many instances CMS deceptively failed to disclose, clearly and conspicuously, that they would charge merchants certain fees, including a minimum of $25 if the merchants did not achieve a certain level of card sales; a semi-annual fee of between $33 and $50; and a cancellation fee of between $300 and $400 for cancelling within three years of signing a service contract.

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Online Transactions

Trust levels among Internet users for online transactions have improved from a year ago (fourth quarter 2001). Now, more than 33% express trust that their online financial transactions are safe, up from 27.5% a year ago. According to the “The Consumer Internet Barometer”, produced jointly by NFO WorldGroup, Forrester Research and The Conference Board, overall Internet usage increased in the fourth quarter. Now, nearly 61% of consumers go online at least once a month. This is up from 58.7% a year ago. The “Consumer Internet Barometer” also finds the primary reason for using the Internet is personal communication (37.9%), followed by work-related activities (17.8%) and research (17.3%). Currently, 37.4% of users go online daily, up from 33.7% a year ago.

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GlobalPlatform Names Officers and Board

Monday, December 23 turned out to be the single busiest day for shopping
this year, according to the transaction data of Moneris Solutions. Moneris’
payment system handled 8.4 million transactions; a record
number for the organization and a 16% increase from 2001’s peak shopping
day. Last year, Friday, December 21 was the busiest day with Moneris
handling more than 7.2 million transactions. In 2000, Saturday, December 23
was the busiest day for Moneris with 6.7 million transactions moving
through the system.

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Concord Board

Concord EFS announced that Ronald Congemi, Concord SVP and president of Network Services, has resigned from the board and that Dr. Shirley Raines and Arthur Seessel have been elected to its Board of Directors. Raines is the 11th president of The University of Memphis and is the first woman to hold that office. Seessel began his consultancy in 1996. Previously, he was president and CEO of Seessel’s Supermarkets, a leading grocery chain in the Southeast and a retail icon in the Memphis area. Concord is a leading vertically integrated electronic transaction processor, providing transaction authorization, data capture, settlement and funds transfer services to financial institutions, supermarkets, petroleum retailers, convenience stores, restaurants, and other independent retailers.

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InterCept Payment Solutions

Atlanta-based InterCept announced yesterday its merchant transaction processing subsidiary, Electronic Payment Exchange, Inc. has changed its name to InterCept Payment Solutions, Inc. InterCept Payment Solutions, a wholly owned subsidiary of InterCept specializes in enabling businesses to accept credit card, debit card and electronic check payments. InterCept is a single-source provider of a broad range of technologies, products and services that work together to meet the technological and operating needs of financial institutions and merchants.

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Holiday Cards

Six out of ten Americans said they used their credit cards less this holiday season compared to last year, while 16% indicated they used credit cards more. The pull-back in holiday credit card use is reflected in the puny growth of retail sales, verifying the continued malaise of the U.S. economy. According to a CardWeb.com homepage poll of nearly 1,000 consumers, only 22% of consumers kept their credit card usage the same as last year. The one bright spot in this year’s holiday spending and credit card usage is online retail sales. Since November 1st, online shoppers have spent between $8 billion and $11 billion. According to com-Score Networks, online sales are up 19% this year. BizRate says online sales have climbed 40%. Meanwhile overall holiday sales are only expected to be 1% to 2% higher this year. Credit card volume has been growing between 13% and 14% this year, driven somewhat by strong balance transfer activity.

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JCB Payments

JCB has revised its credit card payment program to enable its cardholders to choose the amount of money to pay on their credit card each month. Under the new “Maximum Monthly Payment Option” the card balance may be cleared in one month, or if purchases and other amounts due exceed the maximum, the remainder is rolled into the card’s revolving balance. More importantly, with existing cards any unpaid amount is subject to finance charges from the closing date, but under the new option no charges apply until after the date of the first monthly payment. The maximum monthly payment amount may be set in increments of 5,000 yen (approximately USD40.00), which can be registered and changed via telephone or Internet as well. The Japanese banking settlement system is unique in that it relies on automatic transfers rather than personal checks for credit card payments,utilities, loans, and other payments.

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OBERTHUR OUTLOOK

Smart card specialist Oberthur Card Systems says it expects second
half revenue to be in the range of 218 million Euros, which brings the full
year figure to approximately 435 million Euros. Second half EBITDA
(earnings before interest, tax, depreciation and amortization) is estimated
to be above 22 million Euros, to be added to the 7.9 million Euros EBITDA
of the first half. Oberthur says this enables the company to post positive
EBITDA for the full year.

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Greedy Issuers

A new study has found that 70% of Americans believe credit card companies are “too greedy.” Two-thirds said that “the government lets credit card companies get away with murder,” and over half felt that credit card companies try to manipulate both current and new customers. The findings come from a study released this month by Buzzback, an online research firm, and Wharton Strategic Services, a marketing consulting firm. The survey revealed other problems with the credit card industry. Seventy-nine percent of respondents said they get too much junk mail from credit card companies, and 77% feel issuers are too aggressive in their sales tactics. Of the more than 1,000 consumers surveyed, 32% of all consumers and 41% of young adults admitted they don’t know the interest rates on any of their credit cards. In addition, 81% felt the credit card companies should do a better job of educating customers.

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InterCept Appointment

Atlanta based Intercept announced today the addition of John M. Perry to its executive team. Perry, a former executive at NOVA Corporation, will focus on InterCept’s merchant services business. Prior to joining InterCept, Perry served as the Chairman and CEO of Spectrum EBP, LLC, a company specializing in electronic bill presentment and payment that was acquired by Metavante in August 2002. InterCept’s products and services include core data processing, check processing and imaging, credit and debit card processing, electronic funds transfer, data communications management, and related products and services.

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Holiday Spending

A survey by debit card “Switch” projects holiday spending to hit £862 this year, an increase of £36 over 2001. In November 2001 like-for-like sales were already up 5.8% on the previous year. With figures up only 2% as at November this year, “Switch” projects a spending spree in the final days leading up to Christmas. The survey found that presents will be the biggest expense. Indeed, over a third of those surveyed (34%) said they will spend £500 or more on gifts alone, buying for between 8 and 20 of their family and friends. The study found that 56% will fund their Christmas expenditure from normal savings, although almost a quarter (23%) ignore advice and fail to budget for Christmas at all. While cash is still top choice on the high street, “Switch” and “Solo” debit cards are the next most popular way to pay (one in five opting for Switch/Solo).

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