The Green Sheet Online Edition
April 4, 2007 • 07:04:01
Industry Update
NEWS
Discover details IPO
When Discover Financial Services LLC spins off from Morgan Stanley in the third quarter of 2007, it will be listed on the New York Stock Exchange under the symbol DFS, according to a March 23 filing with the Securities and Exchange Commission. The spinoff will enable the company to make acquisitions.
The prospectus did not disclose how much capital the initial public offering is expected to raise. The brand currently has 50 million card members, but only 18.4 million are classified as active accounts.
The company's revenues have increased by $600 million over the past three years, to $5.1 billion. Some of that increase is attributable to its 2006 acquisition of the U.K.-based Goldfish credit card business.
Discover had a cardholder attrition rate of 4.5% in 2006, half of the 9.1% industry average cited by the filing. The company plans to expand through its recent launch of a small business card, a planned relaunch of the Miles by Discover Card and promotion of its prepaid products. The brand will also expand its cash rewards programs.
While Discover is attempting to grow both merchant acceptance and bank issuance of its cards, it does not have the market clout that has enabled Visa U.S.A. and MasterCard Worldwide to increase transaction fees charged to merchants in recent years. "Increasing the transaction fees charged to merchants in order to increase the interchange fees payable to credit card issuers could adversely affect our effort to increase merchant acceptance" and may cause merchant acceptance to decline, Discover stated.
Visa partners with NFIB
The National Federation of Independent Business and Visa announced a partnership to help the nation's small businesses develop stronger security practices. The results of a new survey show that many such companies use a common-sense approach to protecting customer and employee information.
Among businesses with up to 250 employees, 83% said protecting personal data is very or extremely important to their customers. At least 84% indicated they protect customer information through encryption or passwords.
Certain data-storage practices may increase small businesses' vulnerability to data theft. Specifically:
- 37% of card-accepting businesses store customer card numbers.
- 24% store customer Social Security numbers.
- 28% store customer bank account numbers or copies of checks.
- 52% keep at least one these sensitive pieces of information.
In some situations, business owners may not be fully aware their systems are storing highly sensitive information. Few small businesses have data-security processes, the survey shows.
Many (39%) said they rely on common sense to keep data safe. Most small businesses (61%) have never sought out information about how to properly handle and store customer information.
"Today, consumers are increasingly demanding that the companies they do business with take action to protect their personal information," said Dan Danner, Executive Vice President for the NFIB. "Today's small businesses need to understand their data practices and make their systems more secure."
"The entrepreneurial, go-it-alone spirit that drives many small businesses may actually work against them on important issues like security," said Rosetta Jones, Vice President, Visa. To reach as many small businesses as possible, NFIB and Visa will launch a comprehensive data security education program later this year.
"Small business shares a responsibility to protect customer information and prevent fraud beyond what the credit card companies are already doing," Danner said.
ANNOUNCEMENTS
Gateway combines services for e-commerce
BSG Clearing Solutions launched its Advanced Payment Gateway, a combination of three integrated services: credit card processing, Bill2Phone alternative payments and integrated risk management services. The APG suite of services provides e-commerce and telco merchants a single point of integration across multiple card acquiring relationships and over 1,400 network operators.
Motiva incents cardholders to pay on time
Discover launched a card that gives consumers cash rewards for good credit management. The Motiva card is intended for consumers who carry a balance. Each time cardholders make on-time monthly payments six times in a row, they receive their next month's interest back as a bonus. The bonus is in addition to the cash-back rewards cardholders earn on purchases.
New EMG site to add live chat
Eliot Management Group launched a customer service Web site, www.emgservice.com. The site includes contact information for multiple departments and services, in-depth equipment support and documentation, fraud prevention tips, an index of EMG's cost-saving newsletters, and supply ordering details. A live-chat feature will be released later this year.
PARTNERSHIPS
Apriva certifies MTT 1556
Apriva certified WAY Systems' Mobile Transaction Terminal 1556 credit/debit on the Apriva Intelligent Gateway, offering comprehensive PIN-based debit card support. WAY Systems' MTT reportedly exceeds Payment Card Industry standards for credit and PIN-based debit card transactions.
Amtrak takes plastic via ExaDigm
ExaDigm Inc. will provide Amtrak with mobile wireless payment terminals for real-time, onboard processing of card-based payments for food and beverage services. Following trials on passenger trains in Amtrak's Northeast Corridor, the XD2000 wireless solution will now be deployed on all Amtrak trains throughout the United States offering food and beverage service.
First Data works with Georgia restaurants
First Data Corp. partnered with the Georgia Restaurant Association and the National Restaurant Association to launch the TakeCharge payment program in Georgia. TakeCharge provides enhanced payment options and exclusive rates for credit card processing to small and mid-size merchants, as well as national chains.
First Data and CoCard team up
First Data Commercial Services and CoCard Marketing Group LLC established an acquiring merchant processing relationship. The partnership provides merchant processing solutions to CoCard's more than 60 sales offices.
Litle & Co. adopts Planet software
Litle & Co. has integrated Planet Financial Services' Acquire360 Interchange Compliance module with Litle's proprietary back office and customer support systems. Tim Litle, Chairman, also acquired a minority interest in Planet.
Merchant Warehouse teams with RFC
Merchant Warehouse and Resource Finance Co. partnered, allowing Merchant Warehouse agents to leverage the value of their residuals. Agents lacking working capital to grow their businesses can get funding from RFC.
Mosley becomes 1st Federal ISO
Nelce Mosley became an ISO of 1st Federal Financial Inc., providing 1st Federal a national presence. Mosley is expected to add at least 30 merchant accounts to 1st Federal's portfolio by April 2007 and an additional 30 or more merchant accounts per month thereafter.
EBank Systems to resell Pay By Touch services
Biometric payment provider Pay By Touch partnered with eBank Systems Inc. The agreement enables eBank to market and resell the Paycheck Secure service - a finger-scan check-cashing system - to its customer base of 30 financial institutions.
Shift4 and UniteU partner
Shift4 Corp. and UniteU, an e-commerce provider, partnered. Utilizing Shift4's $$$ On The Net, UniteU strengthened its Connected Commerce Solutions eStores with fast authorization and settlement for credit, debit and gift card transactions.
More merchants take Visa Contactless
Four additional merchant brands now accept Visa Contactless cards: Taco Bell Corp., Braum's Ice Cream and Dairy Stores, Clearview Cinemas and Wakefern Food Corp., the distribution arm of ShopRite supermarkets. Visa Contactless eliminates the signature requirement for most payments under $25, providing greater convenience to customers making small-ticket purchases.
European processor partners for U.S. prepaid market entry
3PEA International Inc. will provide card processing and services to Ukash/Smart Voucher Ltd. for the U.S. market. Ukash currently processes transactions across Europe. 3PEA will provide account maintenance, customer service, transaction processing and settlement for prepaid debit card programs. 3PEA will enhance Ukash's Smart Voucher platform to enable its use here.
ACQUISITIONS
Blackstone buys iPrepay
Blackstone Calling Card Inc. acquired iPrepay Inc., a reseller of prepaid products and services. The agreement calls for Blackstone to service all iPrepay locations, which will add all Blackstone patented technologies to its offerings.
APPOINTMENTS
Ehli named CEO of EZPay
PayByCheck founder Ronald Ehli joined EZPay Financial Services Inc. as Chief Executive Officer. In 1995, Ehli developed i-Check, a technology that allowed businesses to accept checks over the Internet.
Erickson appointed President, Nimble Merchant Group
Pure Vanilla eXchange Inc., following its acquisition of Nimble Group Inc., appointed Stephen A. Erickson President of Nimble Merchant Group. The group will oversee the NimBill and BreezeOne brands and expand acquiring of merchant processing accounts. Erickson was formerly the Chief Financial Officer of EVO Merchant Services.
Higgins joins TransFirst
TransFirst named Michael Higgins President of Direct Sales. He is responsible for sales initiatives supporting independent sales partners. Previously, Higgins served as Senior Vice President _ Sales and Portfolio Management for NOVA Information Systems.
Heartland names General Counsel
Heartland Payment Systems Inc. named Charles Kallenbach General Counsel and Chief Legal Officer. Most recently, he was Senior Vice President, Legal and Regulatory, for SunCom Wireless Holdings Inc.
Sturdivant named VP
Payment-management software provider ISD Corp. appointed Al Sturdivant Vice President of Professional Services. Previously, Sturdivant held senior leadership positions at S2 Systems, VeriFone and Gemplus.
Swiderski to lead sales for Network Merchants
Network Merchants Inc. named Richard J. Swiderski to lead business development and sales for its Gateway Processing Division. He will work with existing ISO and MSP partners. Previously, Swiderski developed strategic alliances with national retailers, integrating POS hardware and systems.
#h3BOTTOM LINES
- Link2Gov Corp., a Metavante company, reported a 63% increase, year over year, in dollars processed for federal tax payments during tax season 2007. Its PAY1040.com service provides electronic payment processing for the Internal Revenue Service. In 2006, the IRS received approximately 2.1 million card payments, or 35% more than in 2005.
- Three-quarters of small business owners say the U.S. tax code's complexity distracts them from focusing on their business needs, according to the March Small Business Watch survey by Discover Financial Services LLC. Seventy-three percent will hire an accountant to do their taxes.
- Market research firm Packaged Facts projects that the commercial card market - including purchasing and corporate cards - will grow by 144% from 2004 to 2010. Payroll card use is expected to grow to $27.1 billion by 2009.
Whether you want to upgrade your POS offerings, find a payment gateway partner, bone up on fintech regs or PCI requirements, find an upcoming trade show, read about faster payments, or discover the latest innovations in merchant acquiring, The Green Sheet is the resource for you. Since 1983, we've helped empower and connect payments professionals, starting with the merchant level salespeople who bring tailored payment acceptance and digital commerce tools, along with a host of other business services to merchants across the globe. The Green Sheet Inc. is also a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals.
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