Providian Sale

Providian confirmed Tuesday it has completed the structured sale of its higher risk portfolio in a transaction developed in conjunction with two limited liability companies formed by affiliates of Goldman, Sachs, Salomon Smith Barney, Cardworks, and CompuCredit. Credit card receivables in the portfolio totaled approximately $2.4 billion at the time of sale, down from $2.6 billion at the end of the first quarter, when the sale was first announced. The transaction involved approximately 1.3 million accounts. Under the completed structure, Providian will hold about $185 million in notes issued in conjunction with the securitization of the portfolio. Total cash proceeds to Providian National Bank were approximately $1.2 billion. Providian recognized a $240 million after-tax loss on the portfolio in the first quarter and expects to recognize an estimated $6 million after-tax loss in the second quarter. Providian will act as interim subservicer for the portfolio for up to twelve months and will continue to serve as the owner of the related credit card accounts for up to eighteen months. Since undertaking a balance sheet restructuring effort last fall, Providian has sold close to $12 billion in managed receivables.

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FastFunds

CO-based Equitex has formed a new subsidiary to develop and market prepaid re-loadable stored value card programs.The new “FastFunds” stored value card will be targeted at various immigrant populations that utilize international funds remittance services. The stored value card can be purchased without intrusive personal information and will enable customers to place funds on the card in varying amounts at any time that can be accessed at ATMs or through POS transactions wherever debit cards are accepted. Equitex was formerly involved with FL-based Net First National Bank which issued the sub-prime “Net 1st MasterCard,” a credit card program which charged consumers a one-time reservation fee of $500, which fully utilized the credit limit. The bank was taken over by the OCC with the FDIC named as receiver in early March. (CF Library 3/4/02)

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Burlington BEETLE Deployment

Wincor Nixdorf has expanded its relationship with Burlington Coat Factory Warehouse to install 1,400 BEETLE POS appliances to support the new, fall store openings and to continue the POS hardware upgrade program it launched last fiscal year. By the end of this fiscal year, approximately half of Burlington Coat Factory’s POS registers will be BEETLE/S systems; Burlington plans to continue upgrading the rest of its 300-plus stores in 2003. In addition to the BEETLE/S systems, Wincor Nixdorf is supplying a full set of peripheral devices including printers, displays, signature capture devices, cash drawers, keyboards, and scanners. Wincor Nixdorf is also performing staging, integration, installation, and maintenance services.

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MBNA CEO & COO

MBNA’s board has named Bruce Hammonds as CEO, and John Cochran, as COO. During Hammonds’ career at MBNA, his responsibilities have included all of MBNA’s lending activities, technology and international operations. He was chairman and currently is a director of the Delaware State Chamber of Commerce and is also a director of the Delaware Business Roundtable. Cochran developed the endorsed marketing concept that has led to MBNA signing thousands of membership groups and financial institutions. During his career at MBNA his responsibilities have included all Business Development, Customer Satisfaction, and Personnel.

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Trim Client POS

Fujitsu Transaction Solutions introduced the TeamPoS 2000 Trim Client device which is expected to be priced from $2,425 and includes the industry’s only three-year manufacturer’s warranty on the processor unit. Fujitsu provides POS hardware and software, handheld devices, Web-enabled ATMs and services. Formed in 1992, the company has 1,000 employees and 25 offices in the U.S., Canada, and the Caribbean.

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Connexus Payment Client

MA-based Caradas has launched the industry’s first chip-based implementations of MasterCard’s Universal Cardholder Authentication Field for Internet-based authentication of MasterCard cardholders. This enables accountholder authentication data to be passed from the consumer all the way back to the issuer, leveraging the existing merchant and acquirer infrastructure, verifying that a legitimate cardholder has authorized an online payment transaction.

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INTERCUENTA EXPRESS

Bancomer has agreed to be the new receiving bank for Wells Fargo’s InterCuenta Express Mexican wire transfer service. Bancomer has more than 1,600 branches and 3,700 ATMs in Mexico. Customers can deposit funds in their InterCuenta Express account at Wells Fargo by visiting their nearest branch or by telephone, ATM or online transfer. The transfer requires the beneficiary to have a debit card account
at Bancomer to receive the transfer. The money is available to the beneficiary in Mexican pesos the following business day at any of Bancomer’s branches or at any ATM in Mexico. InterCuenta Express account requires an annual fee of $10. Customers who open an account with Wells Fargo in the United States can send up to $1,000 daily directly to their beneficiary’s bank account at Bancomer for $10.

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Debit Card Trial

Following the U.S. Supreme Court’s decision this month not to review the Second Circuit Court of Appeal’s decision upholding a grant of class certification in the debit card antitrust lawsuit, a trial date was set yesterday. U.S. District Court Judge John Gleeson has set April 28, 2003 as the trial date in Brooklyn, New York, for the VISA Check Card/MasterCard MasterMoney antitrust litigation. Judge Gleeson also yesterday ordered that documents currently under seal will be made public on July 12th. The class-action lawsuit, filed in October 1996, by Wal-Mart, The Limited, Sears Roebuck, Safeway, Circuit City, the National Retail Federation, the International Mass Retail Association, and the Food Marketing Institute, and 13 other large and small retailers, charges VISA and MasterCard with violating U.S. antitrust law by attempting to monopolize the debit transaction market and forcing merchants to accept offline debit transactions. About 4 million merchants are covered under the class action status of the litigation. Constantine & Partners, lead counsel for the merchants, says the trial is stacked against the card associations since many of the key legal issues were decided last October in the U.S. Government’s antitrust litigation against VISA and MasterCard. If the merchants prevail, VISA and MasterCard will face significant class damages of approximately $13-$15 billion, which could be tripled under antitrust laws. VISA and MasterCard insist the class action status of the lawsuit is an abuse of the system and may unfairly force them to seek a settlement. (CF Library 6/6/02; 6/11/02)

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ABA Delinquency

Credit card delinquency is running about 30% above last year levels, but has stabilized in the first three months of this year according to data gathered by the American Bankers Association. Based on the number of credit card accounts past due during the first quarter, delinquency remained at 3.88%, the same as 4Q/01, but significantly higher than the 2.99% rate for the first quarter of 2001. Based on dollars past due, the ABA found a 17 bps decline, from 4.67% for 4Q/01 to 4.50% for 1Q/02. Over the past 12 months, delinquency based on past due dollars has risen from 4.13% to 4.50%.

1Q CREDIT CARD DELINQUENCY HISTORY (based on total dollars outstanding)
2002: 4.50% 1998: 5.42% 1994: 3.51% 1990: 3.29% 1986: 4.92% 1982: 3.33%
2001: 4.13% 1997: 5.43% 1993: 3.98% 1989: 3.39% 1985: 3.10% 1981: 3.16%
2000: 3.94% 1996: 4.62% 1992: 4.31% 1988: 3.71% 1984: 2.84% 1980: 3.00%
1999: 4.44% 1995: 3.50% 1991: 4.55% 1987: 3.71% 1983: 3.06%
Source: American Bankers Association Delinquency Bulletin

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GLOBALCash President

PayStar Corporation has named William Sousa, one of the founders of Dallas-based SousaFone, to President of PayStar’s GLOBALCash Division. Mr. Sousa will be based out of PayStar’s corporate facility in Lodi, CA. Earlier this year, PayStar’s switch division partnered with SousaFone to roll out a new online PIN-based prepaid “flat-rate” long distance service administered completely via the Internet.

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Humboldt EVP/CCO

Humboldt Bancorp has named Mark Wardlow, formerly of Bank of America, as EVP/Chief Credit Officer to replace the retiring Ron Barkley. Mr. Wardlow brings 23 years of lending experience to the organization. He most recently served as Senior Vice President/Market Manager for Bank of America’s North Central Valley Regional Commercial Banking Office, located in Modesto, California. Additionally, he was Market President for Bank of America in a seven county Central California area, coordinating community relations and local interests.

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DATACARD ACQUISITION

Datacard Group confirmed it will acquire the assets of Gilles Leroux S.A., a manufacturer of plastic card production, control and personalization systems and supplier of solutions to the GSM smart card market. Datacard intends to continue manufacturing the Gilles Leroux product line at the Orleans, France production facility. The company will also receive Gilles Leroux card counting and card testing systems as part of the acquisition. Datacard was awarded the right to purchase the Gilles Leroux assets by the Commercial Court of Orleans, France, which has been overseeing Gilles Leroux S.A. since it filed for bankruptcy protection last year. Datacard expects to complete the transaction within 30 days.

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