PayPal Processor

As reported in last week’s CardFlash, PayPal is switching from InterCept to Wells Fargo for its U.S. credit card processing following a May 1st agreement between Wells and PayPal. Yesterday it became official, as Wells confirmed it has become the payment provider to PayPal. PayPal’s business consists primarily of transactions between businesses and consumers via online shopping (e-commerce sites) and online auction sites. Using e-mail, senders simply notify recipients of a payment via e-mail. PayPal estimates that its total payment volume for the three months ending June 30, 2002 could range from $1.61 billion to $1.63 billion. Wells Fargo processes nearly $4 billion in credit card sales annually for 20,000 online merchants. (CF Library 6/13/02)

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Card Stocks Sink

Like the rest of the stock market, the stocks of credit card specialists have been getting hammered this week as more companies point to lower profits and a much slower economic recovery. Metris and Providian were especially hard hit yesterday, losing more than 17%, as Metris closed at a new low of $7.40 per share and Providian closed at $5.43 per share. Metris says it is unaware of any reason specific for the price movement, but it was downgraded by one analyst yesterday. U.S. Bancorp Piper Jaffray said Thursday that current credit trends for Metris remain challenging with no evidence of improvement at this point. Piper Jaffray said that given the uncertainty of Providian’s new strategy to move into the highly competitive prime credit segment,and continued overall credit weakness, it believes it will be difficult for Providian’s stock to outperform the market this year. Among other losers in Thursday’s trading: MBNA and Capital One down 2.8%; CompuCredit down 2.6%; American Express down 1.5%; Household down 3.4% and Citigroup down 3.7%. Since the first of this year, the CardWeb.com 100 Index has fallen 15.6% from 1713.15 to 1482.21. The CardWeb.com 100 stock index, launched January 1st, tracks the stocks of 100 highly focused credit card companies, card processors, card manufacturers, and other card-related businesses. The index is available through the CardData financial surveillance service. (CF Library 2/6/02)

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Certegy Card Consulting

Certegy has formed an alliance with JLS Associates, a management consulting firm, which specializes in the payment card industry, to provide a range of consulting services to Certegy clients including profitability and operational reviews. The profitability review will focus on a client’s products, pricing, and disclosures to ensure the client is positioned to compete with other local and national issuers.The operational review focuses on the client’s utilization of the Certegy processing system to ensure the client is making full use of the features and functionality inherent in the system.

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Card Marketing

While current go-to interest rates on credit card direct mail solicitations predominately fall between 10.00% to 13.99%, there has been an increase in offers in the 8.00% to 9.99% range and a slight increase in offers between 5.00% and 7.99%. Chicago-based Mintel Comperemedia says that in January 2001, the average interest rate was 15.87%, compared to an average of 12.46% in January 2002. The market tracking service says the overall average has remained high due to the number of sub-prime offers being sent out by the large mailers and the offers for co-branded cards, such as the airline partner cards, which also tend to have higher interest rates. The number of offers with an introductory rate declined in the first quarter of 2002, compared to the fourth quarter of 2001. In October, November, and December of 2001, almost 80% of all offers had an introductory rate included. By March 2002, less than 60% of the offers included an introductory rate. If an introductory rate is offered, however, it is most likely to be 0%. Comperemedia estimates that 965 million credit card acquisition pieces were mailed in the USA for credit card offers during the first quarter, compared to 883 million sent in the first quarter of 2001.

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EUROPAY MERGER

MasterCard International’s principal members have approved the conversion to a private share corporation in connection with MasterCard’s upcoming merger with Europay International. Upon completion of the transaction, MasterCard’s principal members and Europay shareholders will receive shares in MasterCard Incorporated, the new holding company, and a membership interest in MasterCard International, which will continue as MasterCard Incorporated’s principal operating subsidiary. MasterCard International has had a long-standing alliance with Europay, and currently owns a 12.25% share of Europay, and a 15% interest in EPSS, Europay’s processing subsidiary. In addition, MasterCard and Europay each own 50% of Maestro, the world’s leading global online debit program. Following completion, Europay will become the European region of MasterCard, and will continue to be based in Waterloo, Belgium. Peter Hoch, currently CEO of Europay, will retain his leadership role for the region and will report to Mr. Selander.

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Delta.com Takes UATP

Delta Airlines has agreed to accept UATP as a form of payment on its public Web site. Also, UATP is now accepted on Delta’s Online Agency Service Center for use by travel agents on behalf of their corporate clients worldwide. UATP is owned and operated by each card-issuing airline and accepted by more than 180 airlines worldwide. Today, 95% of the available seat kilometers in the industry can be purchased using a UATP account.

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VISA CIO

VISA International has promoted Inder Singh to global Chief Information Officer. VISA says Singh will play a leading role in improving the flexibility and capacity of VisaNet by helping retool key systems, IT resources, and the underlying system architecture. Singh previously developed Bank of America’s overall delivery strategy for expansion in Asia and established the global retail business/technology and payment strategies for the bank. Singh founded and headed Exlservice.com, a business subsequently acquired by Conseco that offered outsourcing services for customer care and backroom operations support. He also served as COO for Card Capture Services, now part of E-Trade.

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InterCept Acquisition

Atlanta-based InterCept has signed an agreement to acquire item and remittance processing and statement rendering assets from Affiliated Computer Services for $7.5 million. This deal adds two additional item processing locations, bringing the Company’s nationwide total to 27 item processing centers. ACS is selling its Woodbury and Utica, New York, locations, which currently serve more than 120 customers in the northeast to InterCept. Intercept believes this transaction will contribute revenues of $6.0 million for the remainder of 2002 and $14.0 million in 2003. Last month, InterCept signed a definitive agreement to acquire DE-based Electronic Payment Exchange in a stock-for-stock deal. Earlier this year InterCept also agreed to purchase FL-based Internet Billing Company, Ltd. InterCept reported first quarter net revenues of $37.7 million, a 39.6% increase compared to the three months ended Mar 31, 2001. (CF Library 5/6/02; 5/24/02)

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ONLINE GAMBLING

Last week’s decision by Citibank to block online gambling transactions with its credit cards in the USA has been deemed “politically motivated” by the head of the largest online gambling firm. Sportingbet.com Plc’s CEO says Citibank’s decision is linked to New York’s plans to build a new gambling center closer to home. Last month, Sportingbet Plc launched a major campaign in the USA to promote government regulation of the online gambling industry. The firm has nearly 400,000 customers in the USA and estimates it could generate US$11 million per year in new tax revenue if online gaming was legalized. Sportingbet.com says 30% of its American customers use credit cards to place bets on its Web site. To further its plans in the USA, the firm has taken out full page advertisements in The Washington Post and The Washington Times, hired D.C. lobbyist Greenberg Traurig, and, has scheduled meetings with various Congressmen. Under the agreement reached last week with the New York Attorney General, Citibank says it will block transactions that are identified by transaction code as casinos and Web sites as online gambling. Bank of America, Fleet, Direct Merchants Bank, MBNA, and Chase Manhattan Bank have already begun blocking such transactions.

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ADS Signs Restoration Hardware

Alliance Data Systems has signed a six-year agreement with Restoration Hardware to provide turnkey private label credit card services for more than 100 Restoration Hardware stores nationwide, as well as for the retailer’s catalog and online store. The full-service private label credit card program that Alliance Data will provide includes account acquisition and activation; database marketing services; receivables funding; card authorization; private label credit card issuance; statement generation; remittance processing; and customer service functions.

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ALL ASIA PASS

MasterCard, Travelocity.ca, and Cathay Pacific have teamed to offer Canadian travellers a special discount on travel to Asia this summer. The All Asia Pass, which includes roundtrip Economy Class airfare between Toronto or Vancouver to Hong Kong and up to 21 consecutive days air travel to 16 Asian cities, is priced at CD$1,599 for Vancouver departures and CD$1,699 for Toronto departures. Travelocity.ca members using a MasterCard card to purchase The All Asia Pass will save an additional $200. The All Asia Pass is available for travel from July 22 to December 4.

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OPC Signs AZ County

Official Payments Corporation announced today that Maricopa County, Arizona plans to offer the company’s electronic payment options to citizens who owe property taxes. When the systems go live in August, Maricopa County residents will be able to pay these taxes with their Visa, American Express, MasterCard and Discover cards, via Internet or telephone. Maricopa County, which is the largest county in Arizona, collected over $2.5 billion in property taxes last year.

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