First Data is in the process of buying Atlanta-based PaySys International for approximately $60 million in cash. Intelligent Systems Corporation confirmed that along with other major shareholders, it entered into a definitive agreement this past Saturday to sell all of the outstanding stock of PaySys to FDC. Intelligent says it will receive between $17 million and $19 million in cash for its share and will retain its ownership share of two PaySys development stage companies. Under terms of the deal, PaySys will spin off, immediately prior to the sale transaction, two early stage companies that will continue to design, develop and market the proprietary ‘dBB’ operating platform and application software that is under development by PaySys. Saturday’s agreement calls for the transaction to close as soon as possible but no later than April 30. PaySys was founded in 1981, has more than 500 employees, and offices in England, Ireland, Singapore, China, Costa Rica and Australia. Company products include ‘VisionPLUS’, ‘CardPac’, ‘VISION21’, and its ‘Commercial Payment System’. PaySys systems process more than 180 million accounts in over 35 countries and on 6 continents.Details
Banks across the country reset their prime lending rates last night in response to yesterday’s Fed action to lower short term interest rates. Coming just ahead of the start of a new month and a new fiscal quarter, the impact of the rate cut will be widespread among issuers of variable rate credit cards. However the migration to fixed credit card rates over the past three years will dampen the overall effect among the card industry. Three years ago 80% of total cards-in-force carried variable interest rates. Today the figure has dropped to 50%, according to CardData (www.carddata.com). Nevertheless, Tuesday’s rate cut will slice $1.2 billion from interest revenues over the next twelve months. At year-end 2000, American consumers owed $546 billion on bank credit cards of which $438 billion subsequently accrued interest charges. Approximately $240 billion of the interest accruing balances are subject to variable interest rates. The decision yesterday by the Federal Open Market Committee to lower its target for the federal funds rate to 5%, and its decision to reduce the discount rate to 4.5%, has pushed the prime rate to 8%, its lowest rate in about two years. The 150 bps drop in the prime since early January may also force a re-pricing among fixed rate card programs to stay competitive. However, if losses continue to edge up, it is more likely that variable rate issuers will adjust their spreads rather than fixed rate issuers reducing their rates.Details
While most consumers appear cautious about their discretionary spending this year, credit card use will remain strong. The ‘2001 American Express Retail Index’, released yesterday, found that 44% of consumers will use their credit cards about the same today compared to two years ago, and 22% report using plastic more than they did two years ago. The research also found that the number of consumers who will use credit cards to pay at least one monthly bill doubled in 2001 to 14%, compared to 7% last year. Among consumers who pay bills with plastic, nearly eight in ten will charge the same amount or more compared to last year. The household bills most commonly paid with a charge or credit card include Internet and online services (19%), magazine or newspaper subscriptions (10%), doctor or hospital visits (10%), local and long distance telephone services (6%), and membership dues (5%). The AmEx survey also found that consumers cite various reasons for using plastic to pay bills. Thirty-seven percent said using plastic to pay bills gives them more time to pay; 28% said they prefer writing fewer checks; 26% said it enables them to consolidate their expense and better manage their finances; 21% said they like to accrue as many points or miles for their rewards programs and 10% said they prefer the convenience of paying by phone or online.Details
MasterCard predicted this week a very strong year for tax payments via credit cards. Last year, 42% of such payments were made on a MasterCard with the remainder split between American Express and Discover. This is the second year of the Internal Revenue Service electronic payment initiative. Two companies are now authorized by the IRS to accept credit card payments, including Official Payments Corporation and PhoneCharge, Inc. Last season, Americans charged more than $536 million in federal taxes on their payment cards, with MasterCard registering a 245% increase in dollar volume over the previous tax-filing season. Additionally, MasterCard’s number of transactions for the program was up more than 280% with more than 78,000 transactions during the 2000 tax-filing season.Details
Providian Financial Corporation announced that effective April 2, 2001, David J. Petrini has been promoted to vice chairman from his previous position as chief financial officer. Joining Ellen Richey as vice chairman, Petrini will be responsible for overseeing finance, technology and administration.
Petrini, who joined Providian in 1986, was instrumental in spearheading the Company’s financial management initiatives significantly contributing to Providian’s strong track record of growth and profitability.
Jim Rowe, previously president, global e-commerce, has been promoted to chief financial officer, reporting to Petrini. Rowe, who was most recently responsible for building Providian’s online financial businesses, also played a key role in the spin-off of Providian Financial in 1997.
The Company also announced today that Lauri Kober, CEO of GetSmart.com, a Providian subsidiary that is one of the country’s leading online financial marketplaces, will be responsible for the Providian’s e-commerce initiatives reporting to chairman and CEO, Shailesh Mehta.
San Francisco-based Providian Financial ([www.providian.com]) is a leading provider of lending and deposit products to customers throughout the U.S. and the UK and offers credit cards in Argentina. Providian Financial has been named one of America’s Most Admired Companies by Fortune magazine, one of the nation’s top financial institutions by U.S. Banker magazine, and one of the most technologically innovative companies by InformationWeek magazine. The Company has more than $31 billion in assets under management and over 16 million customers.
Global Payments Inc. announced that it has closed a transaction with Canadian Imperial Bank of Commerce, originally announced on November 9, 2000. Global has acquired certain net assets of the merchant acquiring business of CIBC and has formed a ten-year marketing alliance with CIBC to offer VISA credit and debit card payment products and services to merchants in Canada. The acquisition and the related marketing alliance significantly broaden Global’s scope and presence in North America and provide customers served by CIBC’s merchant acquiring business with an array of additional payment solutions. The combined operations of Global and CIBC’s Canadian business include processing 2.4 billion transactions annually from approximately 915,000 merchant locations in North America. Annual revenue from CIBC’s Canadian business was $92.0 million for the year ended October 31, 2000.
Under the terms of the purchase agreement, Global has issued 9,764,623 shares of common stock to CIBC, providing CIBC with a 26.25% ownership position in Global Payments.
“The commencement of this partnership is an exciting milestone for Global Payments,” said President and CEO Paul R. Garcia. “We enthusiastically anticipate the opportunities this relationship affords all of our constituencies,” he said.
David Marshall, Vice Chairman of CIBC, said, “We are very pleased to be working with Global Payments, and we are convinced that our alliance will yield numerous benefits for our North American customer base.”
Global Payments Inc. is a leading provider of electronic transaction processing services to merchants, Independent Sales Organizations (ISOs), financial institutions, government agencies and multi-national corporations. Global Payments offers a comprehensive line of payment solutions, including credit and debit cards, business-to-business purchasing cards, gift cards, check guarantee, check verification and recovery, terminal management and funds transfer services.Details
The Smart Card Alliance, a multi-industry association working to accelerate the widespread acceptance and application of smart card technology, announced its new Chairman. Donna Farmer, President and CEO of the Smart Card Alliance, congratulates William Randle, Executive Vice President e-Huntington, The Huntington National Bank as the new Smart Card Alliance Chairman of the Board of Directors.
“Bill has been a leader in our industry for a number of years,” said Allen Gilstrap, General Manager of American Express’ GNS Smart Chip Services and former Chairman of the Alliance, “His vision and experience are an extraordinary asset to the Alliance. I look forward to our industry’s next chapter under his leadership.”
“Mr. Randle is a highly respected and experienced individual in the banking industry today,” said Donna Farmer, President & CEO of the Smart Card Alliance, “I look forward to working closely with him during this important time in the mission of the Alliance as we focus on fulfilling our goals in achieving widespread smart card usage in the US.”
“This is a very exciting time for the smart card industry,” said William Randle, Executive Vice President e-Huntington, The Huntington National Bank, “I look forward to working with Donna Farmer and the Board of Directors in leading the Smart Card Alliance as we carry forward the strong dedication in promoting smart card technology in the United States.”
About The Smart Card Alliance
The Smart Card Alliance is a not-for-profit, multi-industry association of over 175 members working to accelerate the widespread acceptance of multiple application smart card technology by bringing together, in an open forum, leading users and technologists from both the public and private sectors. The Smart Card Alliance is the leading organization for education and awareness of topical issues associated with the use and adoption of smart card systems. For more information about The Smart Card Alliance, log on to the organization’s Web site at [http://www.smartcardalliance.org].
Mag-Tek, Inc. yesterday unveiled a full-size port-powered ‘Swipe Reader’. The new ‘RS-232’ is approximately 50% larger than Mag-Tek’s smaller version of the same reader. The reader does not require an external power source, and it is ideal for applications where a reader cannot be conveniently installed on a flat surface. The new reader also provides a plug-and-play solution for customers needing a full-size, self-contained RS-232 swipe reader with no external power adaptor.Details
TSYS announced a five-year agreement with Amicus FSB, a subsidiary of Canadian Imperial Bank of Commerce and a part of the Amicus division of CIBC, to process a new Visa consumer credit card it will issue. This agreement broadens a relationship TSYS and CIBC have shared since 1994 when TSYS began processing CIBC’s commercial credit cards. Furthermore, the agreement supports TSYS’ three-year strategic plan to extend its core processing business.
Amicus partners with leading brand retailers to provide electronic financial services, including Marketplace Bank, Safeway SELECT Bank and Yahoo! PayDirect in the U.S. and President’s Choice Financial in Canada. Amicus has 547,000 e-banking customers and is acquiring approximately 30,000 more each month.
Under the agreement, TSYS will provide a complete range of services to include processing on its TS2 platform; various elements of customer contact; and remittance processing through Synovus Financial Corp.(R)
“TSYS offers the full range of services needed to help us aggressively enter new markets,” said Amicus spokesperson, Robert Almeida. “The retail market requires a tremendous amount of flexibility for changes and promotions to be offered on demand. TS2 allows us the freedom to adapt our products to this market. The partnership with TSYS will allow us to deliver the value and convenience of one-stop shopping to our customers that has become so important in their busy lives.”
“TSYS has a strong track record of helping financial institutions and retailers prosper. The expertise we bring to Amicus will enable them to pursue new retail relationships and launch new credit card programs quickly,” said TSYS President, Philip W. Tomlinson.
About Amicus FSB
Amicus FSB is a wholly owned subsidiary of CIBC and is part of the Amicus division of CIBC. Amicus FSB is headquartered in Cicero, Ill., with branch offices in Fairfield, Calif., and Maitland, Fla. CIBC is a leading North American financial institution offering more than eight million personal banking and business customers a full range of products and services through its comprehensive electronic banking network, branches and offices across Canada, in the United States and around the world. CIBC is a leader in electronic banking, with more than three million e-banking customers accessing telephone and Internet banking, and brings extensive e-banking experience and capability to the U.S. market.
TSYS brings integrity and innovation to the world of electronic payments. TSYS serves as the integral link between buyers and sellers in the rapidly evolving universe of electronic payments. With nearly 200 million accounts on file, TSYS makes it possible for millions of consumers to use their credit, debit, stored value, commercial, chip and retail cards anytime, anywhere through any medium or portal. TSYS and its family of companies offer a full range of acquiring and issuing services from accepting electronic payments for goods and services, to credit applications and collections. Based in Columbus, Ga., TSYS () processes for clients in 21 countries, in 11 currencies, in three languages and maintains operations in Canada, Mexico, Japan and the United Kingdom. TSYS is an 80.8 percent-owned subsidiary of Synovus Financial Corp. (NYSE: SNV) ([http://www.synovus.com]), No. 8 on FORTUNE magazine’s list of “The 100 Best Companies To Work For” in 2001. For more information, contact email@example.com .
Charge-offs dropped 100 bps in January, among credit card-backed securities, however delinquencies are heading north. Meanwhile, across the industry, both chargeoffs and delinquencies increased during February, according to CardData ([www.carddata.com]). Among the $345 billion in publicly rated credit card-backed securities tracked by Standard & Poor’s, the monthly charge-off rate decreased to 5.5% in January, returning to levels more in line with year 2000 averages. However, S&P notes that with a slowing economy and a further reported drop in consumer confidence, the delinquency rate increased 20 bps to 4.9%. Standard & Poor’s expects that as the economy further slows, consumer loan portfolios will start to show signs of deterioration. The loss rate in a slowing economy may be mitigated somewhat if the ‘Bankruptcy Reform Bill’ is enacted. S&P also found that payment-rate trends show no signs of deterioration. Obligors continue to pay off their cards at a robust rate. In January, the payment rate increased 140bps.
WebMiles Corporation, the first loyalty company to offer an unrestricted, mileage reward program to help businesses attract and retain customers, today announced a new partnership with Ralphs Supermarkets in California. Ralphs is a division of the Kroger Co., one of the nation’s largest food retailers. This partnership builds on an existing relationship between WebMiles and Ralphs in San Diego, and WebMiles and Smith’s in Las Vegas, also a division of Kroger. Beginning immediately, more than 300 store locations throughout Southern California will offer Ralphs Club Card members WebMiles rewards (which are airline miles that can be used on any airline of choice without frequent flier restrictions) for their grocery purchases. By enrolling in the WebMiles program before June 7, 2001, Ralphs Club Card members will earn double miles for the first 30 days when shopping at participating stores. After the introductory period, members earn one WebMiles reward for every dollar they spend at Ralphs stores.
The WebMiles program allows Members to redeem WebMiles rewards for travel on any airline and any flight without the common restrictions and frustrations found in traditional frequent flyer programs such as blackout dates, limited seating for frequent flyers and required Saturday night stays. Redemption begins with as few as 8,000 WebMiles rewards, which entitles the consumer to $100 off the price of any airline ticket.
“We were extremely pleased with the results from our pilot program, when we launched WebMiles as a reward for our Ralphs Club Card members in San Diego last summer,” said Chuck Ackerman, senior vice president of sales and marketing for Ralphs Supermarkets. “Our partnership with WebMiles has allowed us to differentiate our service offering by providing our loyal customers with miles that are flexible and easy to use. WebMiles has helped to get our existing Club Card members in San Diego more engaged in our program, while attracting new customers. We are excited to expand this program throughout our Southern California store locations, bringing added value to more of our Club Card members.”
The WebMiles program gives Members the best of ‘free and discounted travel.’ When Members redeem WebMiles rewards, they travel as if they are any other paying customers. With WebMiles rewards, Members no longer have to worry about earning miles that are subject to frequent flier program restrictions or limitations.
WebMiles President and CEO Bill Meade said, “More and more companies like Ralphs are recognizing the power of joining like-minded companies in a networked loyalty program that offers a highly valued, sought-after reward — free travel — in a unique program designed to strengthen customer relationships and increase bottom line profitability. Ralphs’ expansion of the WebMiles program throughout California affirms our ability to successfully build loyalty for our partners. Last month, we also announced a partnership with Smith’s in Las Vegas. We will continue to add key partners to ensure that our members have the ability to rapidly earn free travel rewards when making everyday purchases, including groceries stores, gas stations, phone service, restaurants, hotels, rental cars and many other offline and online retailers.”
Earning WebMiles Rewards
Members in the WebMiles program have multiple ways to earn the unrestricted airline miles, including initial enrollment in the program, referral of friends and family, shopping with online and offline partners and finally, by using the WebMiles MasterCard. If the credit card is used with partners, multiple miles can be earned at once. In the case of Ralphs, members using the Card can earn triple miles in the first 30 days of enrollment and double miles thereafter.
The WebMiles Partner Network
WebMiles is building a solid network of partners from a wide variety of industries. The company’s strategy is to be selective and limit the number of partners within any given industry to ensure companies can differentiate themselves in an increasingly competitive marketplace and gain a strategic advantage. The WebMiles program is flexible and can be implemented by partners according to their own specifications and business objectives.
About WebMiles Corporation
WebMiles Corporation is a leading customer loyalty company featuring free travel rewards without the common restrictions of traditional frequent flyer programs. The patent-pending WebMiles program gives both online and offline businesses the means to reward customers with a proven tool for inspiring repeat business — free and discounted travel. WebMiles rewards can be redeemed for free travel on any airline and any flight, without blackout dates, seating limitations, 21-day advance notice, required Saturday night stays, mileage caps, cost caps or expiration of miles (with minimum account activity). Consumers earn WebMiles rewards for shopping within the partner network as well as for using the optional WebMiles MasterCard. Launched in January 2000, the WebMiles program features approximately 100 network Partners. By offering a compelling, low-cost and customizable customer loyalty solution, WebMiles Partners have the ability to differentiate themselves in a highly competitive market. WebMiles is a trademark of WebMiles Corporation, which is based in Salt Lake City, Utah. The web site url is [http://www.webmiles.com]. For more information on how to become a strategic partner with WebMiles, please visit or call 877-WebMiles.
About Ralphs Supermarkets
Ralphs Supermarkets currently operates 345 stores under the Ralphs (325) and Cala/Bell (20) banners in California from its headquarters in Los Angeles. The company is a division of The Kroger Co., one of the nation’s largest food retailers based in Cincinnati (NYSE: KR).
London-based Abbey National confirmed yesterday that it is selling its credit card business to MBNA Europe for slightly more than $400 million. Under a five-year deal, Abbey will become an agent of MBNA in the UK market. Reportedly MBNA paid an 18% premium for the Abbey card portfolio. Abbey currently has about 550,000 cardholders or about a 1.3% market share in the UK according to RAM Research Group ([www.ramresearch.com]). MBNA and Abbey will launch a new series of agent VISA cards in about 90 days which will include cashback and platinum cards. MBNA launched its card products in the UK in 1993 and has built a portfolio representing about 7% of the UK market. Abbey, a mortgage bank, is facing an unwanted takeover bid from rival Lloyds TSB according to Reuters.