US lawmakers drop plans for interchange reforms in
US lawmakers have postponed plans
to reform credit card interchange legislation until after 2010. In
a meeting of the Credit Union National Association, House Financial
Services Committee Chairman Barney Frank announced his committee
would not take up interchange legislation this year.
The decision follows the
publication in November 2009 of a US Government Accountability
Office report which said that the imposition of new regulations on
credit card interchange fees would be difficult to implement and
unlikely to benefit consumers.
Bank of America to combine
global card services and deposits
of America (BofA) is combining the leadership of its global card
services and deposits units under Susan Faulkner, who has been
appointed deposits and card product executive. The combined
business will report to Joe Price, president of BofA consumer,
small business and card banking.
“This enhancement strengthens our operating model and organises
it around our customer segments, how we deliver our capabilities to
customers, the service we provide them, and the products we develop
for them,” Price said.
Strategy and trends
US credit card charge-offs surge to record
According to the latest credit card
index results from global credit ratings agency Fitch, US credit
card charge-offs have surged to near-record levels. Fitch’s prime
credit card charge-off index jumped 112 basis points (11%) to
11.37%. The results, which cover the January collection period,
pushed the index to its highest level since September 2009’s record
11.52% and 54% above year-earlier levels. Fitch said the increase
was largely driven by a payment holiday for Chase credit
cardholders, which pushed more charge-offs into the current
According to Fitch, 60-plus day delinquencies fell slightly in
March 2010, down four basis points to 4.5%, while the 30-day rate
declined six basis points to 5.72%. Consistent with seasonal
patterns, the 60-plus day delinquency index is off its 4.54% record
high set in December 2009 and is essentially flat versus year
earlier levels, but is still 11% higher than in the February 2009
Contactless mobile sticker trial planned in
EnStream, a joint venture company
set up by Canadian telecom operators, has outlined plans to pilot
contactless payment stickers attached to mobile phones. In 2009,
EnStream launched Zoompass, a mobile money
transfer and payment service, and it is now broadening the service
with a three-month trial of the Giesecke &
Devrient-manufactured Zoompass tags which can be attached to mobile
Users tap their phone against
contactless payments readers at the point of sale at participating
retailers, such as Tim Hortons, McDonalds and Petro Canada, to make
low-value purchases, with the funds automatically drawn from the
user’s Zoompass stored-value account.
The Zoompass Tag and application
let users monitor transactions on their phone in real time.
Financial information is stored on secure servers, not on the
handset, securing the Zoompass account if the phone is lost or
In 2009, Bank of Montreal, MasterCard and technology specialist
Research in Motion (RIM), the makers of BlackBerry mobile devices,
teamed up on their own sticker-based contactless payments trial.
The four-month pilot saw participants use PayPass Mobile
Berrys to make purchases at any of the 8,500 merchant locations in
Canada that accept MasterCard’s contactless technology.
Level Four and Galitt team on EMV ATM testing in
Level Four, a global provider of
automated ATM software testing solutions, is extending its
partnership with Galitt, a provider of advanced test solutions for
transactional systems and EMV cards, into the Canadian market. The
partnership combines Level Four’s ATM test solution, BRIDGE:test,
with Gallitt’s KaNest-ICC EMV card simulator to provide a testing
solution for EMV-compliant ATM networks.
Ian Kerr, CEO of Level Four, said: “EMV migration significantly
increases the scope of testing required at the ATM. Our partnership
with Gallitt brings in a specialist EMV simulation solution to
complement the functionality of BRIDGE:test and will help us to
provide best in class testing solutions to new and existing clients
that are migrating to EMV in Canada.”
First Data expands TransArmor pilot
Global payment processor First Data
has announced the expansion of a merchant pilot of the
First Data TransArmor solution. More than 400 US merchants of
all sizes will assess the data security solution over the next four
months. The TransArmor solution (previously called First Data
Secure Transaction Management) was developed in close partnership
with EMC Corporation.
The TransArmor secure payments
service addresses the root cause of merchant data security issues
by removing payment card data from the merchant environment as part
of processing the transaction, significantly reducing risk and the
scope of payment card Industry compliance efforts.
According to the 2009 US Cost
of a Data Breach Study by the Ponemon Institute, the average
cost for merchants coping with a data breach in 2009 rose to $6.7m
with the cost per customer record breached estimated at $204. With
the TransArmor solution, customer card information is retained only
at the processor and protects merchants from the dangers of
malicious attacks designed to steal payment card data in transit or
in storage from merchant databases.
TSYS enters merchant acquiring
business with stake in FNMS
Global payment processor TSYS is to
spend $150.5m to acquire a controlling interest in First National
Merchant Solutions (FNMS), which it will run in a joint venture
partnership with First National Bank of Omaha. Under terms of the
agreement, TSYS will acquire 51% ownership of FNMS for
approximately $150.5m, while FNBO will control the remaining 49%.
The transaction is expected to close on 1 April 2010.
Ranked as the 10th-largest merchant
acquirer in US by dollar volume, FNMS has a 57-year history in the
acquiring industry with more than 300,000 merchant outlets in its
portfolio. The company reported net revenue of $93m in 2009.
Announcing the deal, Philip Tomlinson, chairman of the board and
CEO of TSYS, said: “After years of providing acquiring solutions to
our clients, this joint venture positions TSYS as a full-service
merchant acquirer for the first time in our company’s history.”