Dividend Miles VISA

Bank of America’s “US Airways Dividend Miles VISA” will begin awarding bonus miles on purchases at select retailers next year. Toronto-based Advantex Marketing International has inked a deal with BofA to to integrate the “Advantex Benefit” into all “US Airways Dividend Miles VISA” credit cards by Spring 2003. The “Advantex Benefit” program will enable “Dividend Miles” credit card holders to automatically earn bonus “Dividend Miles” on their purchases at a wide range of participating merchants including retail, golf, hospitality, and more. Advantex clients include Bank of America, US Airways, United Mileage Plus, Air Canada Aeroplan, The Canadian Imperial Bank of Commerce, The New York Times, and other major North American corporations, as well as an extensive list of retailers, restaurants, golf courses, and resorts.

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NextCard Bankruptcy

NextCard has filed for a Chapter 11 bankruptcy following the end of its service contract with FDIC which concluded on October 31st. NextCard is down to 19 employees and has assets of about $18 million. Among its creditors is the FDIC with a debt of $140 million. Since its exit from the credit card business in July, the company has been trying to re-invent itself as a consultantcy to other financial services firms. The FDIC says it will waive NextCard’s obligation in exchange for a stake in its new business or if the company is liquidated. NextCard is also facing a $10.5 million claim from Amazon.com as a result of an alleged breach of contract. Amazon, which owns a small part of NextCard, had been involved in a rewards program with “NextCard VISA.” Unable to find a buyer and facing an early amortization of NextCard’s securitized credit card assets, the FDIC decided in July to shut down about 800,000 NextCard credit card accounts. NextBank has previously sold its non-securitized credit card accounts to CardWorks and Merrick Bank. The FDIC estimated that the cost to the Bank Insurance Fund for the failure of NextBank will run between $300 and $400 million. The OCC closed NextBank on Feb. 7th and the FDIC was appointed the receiver. (CF Library 2/8/02; 2/11/02; 3/14/02; 6/10/02; 7/3/02; 7/11/02)

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Payment Antenna

UK-based Optical Antenna Solutions has developed an optical device that can provide credit card-free ‘point and pay’ technology. The antenna, inserted in the mobile phone to read as part of the infrared port, will be pointed towards the payment register where a similar infrared port can be found. A personal security code is then entered into the phone on the nine digit key pad at which point the OAS antenna captures a light signal, which carries the data required to authorize the transaction and exchanges it with the register. The live trials of the antenna in a range of ‘point and pay’ applications are currently under way in Korea. Further trials are planned for Japan, the USA and Cambridge in the UK.

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CIBC E-BANKING

Canadian Imperial Bank of Commerce confirmed it is closing its U.S.
electronic banking operations, CIBC National Bank and Amicus FSB. CIBC has
been losing money in both operations. Customer deposits with a balance of
$1,000 or more on the date of closing will be transferred to E*TRADE Bank.
CIBC National Bank provides financial services under the “Marketplace Bank”
brand, and Amicus FSB provides financial services under the Safeway “SELECT
Bank” brand.

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CANADIAN TIRE 3Q/02

Canadian Tire Financial Services reported its third quarter accounts
receivable were up 40.0% to $1.69 billion, compared to $1.20 billion in
2001, driven by its strategy to convert retail credit accounts to the
“Options MasterCard.” Gross operating revenue in CTFS for the third quarter
was $98.9 million, a 10.5% improvement from $89.5 million in 2001. Earnings
before taxes were $25.7 million for the quarter, down 19.0% from the $31.7
million recorded in 2001 due primarily to timing impacts from CTFS’s
securitization program. Excluding the impact of the securitization program,
CTFS’s earnings before income taxes for the quarter were $26.8 million, a
61.3% increase compared to the same period last year due to receivables
growth and continued expense management. Canadian Tire also announced its
decision to apply to establish a bank for CTFS to ensure that CTFS’s card
operations operate under a common regulatory framework with other issuers
in the bank card market. Canadian Tire also noted that establishing a bank
will result in a significant reduction in the complexity and costs
associated with the multi-jurisdictional regulations that CTFS’s card
operations currently operate under.

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MC GLOBAL 3Q/02

MasterCard International reported that third quarter purchase and cash
transactions worldwide reached 3.50 billion, generating gross dollar volume
of $296 billion, a 16.5% gain over 3Q/01. There were double-digit gains in
the first nine months of 2002 in all of MasterCard’s regions: Europe rose
13.6%; Asia/Pacific, 12.7%; Latin America, 26.3%; South Asia, Middle
East/Africa, 23.1%; Canada, 19.8%; and, the U.S. rose 17.8%. At the end of
the third quarter, MasterCard’s 25,000 member financial institutions had
issued nearly 578.8 million MasterCard-branded cards, a 15.6 % increase
over 3Q/01.

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LML 3Q/02

Vancouver-based LML Payment Systems reported that EBITDA for the quarter
ending September 30th was a loss of approximately $162,000, compared to an
EBITDA loss of approximately $1.2 million for the same quarter one year
ago. Revenues for the quarter were approximately $2.0 million, compared to
approximately $2.3 million for the year ago quarter, a decrease of
approximately 13%. The decrease was a result of a reduction in overall
returned check volume processed which was partially attributable to one of
its largest customers, which moved its primary check collections in-house,
and partially a result of softer consumer spending trends resulting in
lower check volumes. LML also provides selective routing of debit, credit
and EBT transactions to third party processors and banks for authorization
and settlement.

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DRFS ISO

Los Angeles-based Direct Response Financial Services has reached a three year agreement for Hughes & Kaye Products and Services to serve as its ISO. Under the terms of the agreement Hughes & Kaye will act as an independent sales organization to Direct Card Services and plans to deliver merchant card processing of approximately $150M in its first year to Direct Card Services.

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Experian Traffic

Experian Consumer Direct said this week that its family of Web sites continues to be one of the top resources for consumer credit information. Experian also says it now has 1.2 million subscribers to its premier credit monitoring service. According to comScore Media Metrix tracking, Experian attracted more than 9.7 million unique visitors in September compared to 922,000 for Equifax and 523,000 for TransUnion. Experian Consumer Direct was created this year when Experian combined CreditExpert, its consumer credit management group, with ConsumerInfo.com, the largest provider of online credit reports and other credit-related information to consumers. Experian Consumer Direct’s Internet properties include ConsumerInfo.com, CreditMatters.com, FreeCreditReport.com, QSpace.com and CreditExpert.com.

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