Headlines:
Visa Reports Record Volume on Network ID Theft Recovery Service from Numerica TSYS Stock Drops After a Downgrade
Visa Reports Record Volume on Network
Last-minute holiday shoppers drove up volume on Visa U.S.A.'s payment network to a record 179 million transactions Dec. 23.
The San Francisco card association said Tuesday that shoppers made 22% more purchases that day than they did on the peak day of 2004, Christmas Eve, and that VisaNet handles 100 million credit and debit card purchases on an average day.
The number of transaction messages it processed in an average second during the busiest hour of Dec. 23 rose 14% from the peak hour of Christmas Eve of 2004, to 6,363. The holiday season is traditionally the busiest time of the year for merchants, and for Visa's payment network.
Purchase volume on the network has increased by about 20% a year since 1992, Visa said.
"As consumers continue to choose to pay with Visa instead of cash or checks, our technology has to keep with the incredible demand, and with expectations that every Visa transaction will be processed quickly, reliably, and securely," Keith Hunter, the executive vice president of global processing services at Visa's technology subsidiary Innovant, said in a press release.
ID Theft Recovery Service from Numerica
Numerica Credit Union of Spokane is offering a free identity theft recovery service from Identity Theft 911 LLC of Scottsdale, Ariz., to members with checking accounts or credit cards.
The credit union, which announced the program Tuesday, says on its Web site some of its members have lost money to fraudsters who contacted them though job search Web sites, though the scams did not lead to identity theft. Numerica was also affected by CardSystems Solutions Inc.'s data security breach last year.
Identity Theft 911 is providing customer service representatives to help identity theft victims repair their credit by collecting reports and notifying creditors about the fraud, the credit union said.
Victims of identity theft often end up with negative information on their credit histories when they do not repay charges made by criminals using their names.
Also, Identity Theft 911 is offering educational materials through Numerica's Web site to help consumers protect their personal information.
"Education and prevention are keys to keeping our members safe from identity theft and fraud," Dennis Cutter, Numerica's chief executive, said in a press release.
TSYS Stock Drops After a Downgrade
Total System Services Inc.'s stock fell Tuesday after a downgrade by JMP Securities of San Francisco.
In a research note, JMP analyst David M. Scharf downgraded the Columbus, Ga., transaction processor from "market perform" to "market underperform," partly because of the loss of its contract to process Bank of America Corp.'s consumer cards. TSYS' shares were trading at $19.41 late Tuesday afternoon, 1.92% below Friday's close. Mr. Scharf set a 12-month price target of $18 for TSYS' shares, about 9% below current levels.
B of A bought MBNA Corp. on Sunday for $35 billion. On Dec. 21 it said it would use MBNA's technology for consumer card processing instead of outsourcing the job to TSYS. The announcement was not a surprise.
TSYS' chief executive, Philip W. Tomlinson, said Oct. 19 that the pending acquisition made continuation of the consumer contract "far from a done deal."
The price plunge that followed his statement prompted another analyst, Craig Maurer, to raise his rating on Nov. 25 to "neutral," from the "sell" he had given the stock June 27. Mr. Maurer, of Fulcrum Global Partners LLC, said the price finally reflected the risks TSYS faced.
In a note published Tuesday, Mr. Scharf wrote that the loss of the B of A job "could eliminate as much as 20% of TSYS' annualized earnings." Per transaction, he wrote, "B of A purchases more [consumer card] services from TSYS than the typical issuer," so the loss hits particularly hard.
Furthermore, Mr. Scharf wrote, TSYS' decision to license its processing platform to large card issuers will cloud its "internal growth prospects after 2006."
Mr. Scharf said that TSYS' ongoing efforts to expand abroad are likely to pay off in the long run, but will require significant investment in the near future, and "we have to wonder about the outlook for investment spending" now.
