Credit

The U.S. House Financial Services Committee yesterday approved the Credit Cardholders' Bill of Rights by a vote of 39-27, moving the bill closer to a vote in the House. The legislation would end credit card practices some lawmakers deem abusive. Amendments to the bill aligned it more closely with federal regulators' proposed new rules for the card industry and include a "sense of Congress" that the legislation should not prevent regulators from finalizing their new rules before the end of the year. Observers say the bill may not have enough time to come to votes in the full House and Senate this year, but its sponsor, Rep. Carolyn Maloney, D-N.Y., yesterday vowed to work to bring the bill up for a full House vote during this session. Maloney's bill would prohibit many of the practices the Federal Reserve Board, the Office of Thrift Supervision and the National Credit Union Administration seek to eliminate, including "any time, any reason" repricing of credit card interest rates and a host of other practices, such as billing cardholders for interest accrued during previous billing periods, otherwise known as double-cycle billing. The comment period for the proposed rules, which have generated more than 42,000 letters, closes Monday. "This landmark legislation will help level the playing field between cardholders and card companies, and give consumers the tools they need to responsibly manage their own credit," Maloney said yesterday in a statement. Edward L. Yingling, American Bankers Association president and CEO, said in a statement that the association is disappointed with yesterday's vote. "In its current form this bill seeks to lock into law restrictions on fundamental risk-management activities, the way interest is calculated and other responsible business practices. The result will be higher costs for consumers, reduced access to credit for those with an imperfect or limited credit history, and less access to low credit options," he said.

The 15 largest debt buyers last year purchased a combined face value estimated between $25.1 billion and $37.7 billion in delinquent credit card accounts, or 60% to 90% of total debt purchases of $41.9 billion, according to a survey by CardLine sister publication Collections & Credit Risk. The survey revealed the total face value of all types of accounts purchased by the top-ranked buyers–including such noncard accounts as utility debt, auto deficiencies, home equity lines of credit and more exotic assets such as health club membership dues–increased 32.2% from nearly $31.7 billion in purchases made during 2006. The credit card debt purchased included Visa, MasterCard, Discover and private-label credit cards. The debt purchasers did not estimate the total spent to purchase the accounts. Credit card charge-offs not yet placed with a collection agency are being sold for approximately 7 cents to 9 cents on the dollar. The amount can fall to as low as fractions of a cent on the dollar for delinquent accounts previously worked by several collection agencies. The top five U.S. debt purchasers by face value, as ranked by Collections & Credit Risk, are Sherman Financial Group, New York; Unifund, Cincinnati; Asset Acceptance Capital Corp., Warren, Mich.; Encore Capital Group, San Diego; and Portfolio Recovery Associates, Norfolk, Va.

Some financial institutions are seeking to reclaim acquiring revenue from independent sales organizations by providing merchant services bundled with financial products, according to a Mercator Advisory Group report. By offering merchant services and business-banking services together, financial institutions potentially can remove ISOs from their merchant relationships, according to the report "Merchant Acquiring in the United States 2008: Birth of the Perfect Storm?" Acquiring banks that processed bankcards typically saw an increase in deposits from their merchant clients into their demand-deposit accounts. However, some acquiring banks lost the deposits when ISOs, which entered the relationship to grow card acceptance, began allowing merchants to have demand-deposit accounts at financial institutions other than the acquiring bank, according to the report. "The threat from banks seeking to 'reclaim' their acquiring revenue streams by disintermediating their ISO competitors (and partners) and 're-intermediating' themselves seems to be imminent," states the report. ISOs can retain their relevance with merchants by providing increased expertise and value, says David Fish, senior analyst at Maynard, Mass-based Mercator Advisory Group Inc. and author of the report. "It's not really about price anymore. It's all about value," he says. The merchant-level salesperson is "someone that the merchant is contracting with to serve as an expert" in payment systems.

Deluxe Corp. yesterday reported net income of $32.6 million in the second quarter ended June 30, down 9% from $36 million during the same quarter last year. The St. Paul, Minn.-based company, best known for custom printing of business and personal checks, attributed much of the dip in net income to declining check use, difficult economic conditions for small businesses and delayed orders in Canada because of new check-format rules there. Revenue for the quarter was $367.7 million, down 8% from $399.9 million the same period last year. Deluxe has been trimming expenses in recent years in response to declining check use, and last quarter it cut selling, general and administrative expenses by 12%, to $166.6 million from $189.6 million a year earlier. Deluxe employed 7,482 workers as of June 30, down 7% from 8,064 a year earlier. As part of the company's strategy to add more noncheck services, Deluxe announced Wednesday it had closed on a $100 million net acquisition of Hostopia.com. The a Mississauga, Ontario-based company provides e-commerce and Web development and hosting services to small and medium-sized businesses. During a conference call with analysts, Richard Greene, Deluxe senior vice president and chief financial officer, warned that he expects economic conditions will continue to adversely effect the company's small-business services division in the near future. He said a planned price increase for checks early in the fourth quarter should partially offset an expected dip in financial-services revenues as check writing declines another 4% to 5% this year.

Simon Property Group Inc. has begun to offer Visa-branded Olympic-themed gift cards at 185 of its malls around the country, the shopping center management company announced yesterday. Simon is selling the cards in denominations of $20 to $500 at guest service centers at the malls, the company says. Consumers pay a $3 handling fee per card, $1 of which goes to support the U.S. Olympic Committee, Cathi Weiner, Simon senior vice president for business development, tells CardLine. Simon plans to sell 100,000 cards, and each one includes a Coca-Cola-branded compact disc with custom content and links to Internet sites that have music, ring tones, and coupons from Coca Cola Co., Panasonic and Sega Games, the company says. Minneapolis-based U.S. Bank issues the cards, Weiner says. The cards will be on sale through August, Weiner says.

Leawood, Kan.-based processor Euronet Worldwide Inc., which operates in 42 countries, is attributing its increased revenue for the second quarter to the expansion of its ATM network. Its electronic funds transfer processing segment ended June with 10,160 ATMs, up from 9,858 ATMs at the end of the second quarter last year. Overall revenues topped $264.5 million, up 31% from $233.4 million. Overall transactions for the second quarter increased 10%, to 342.4 million from 310.9 million. Its EFT-processing segment handled 168.6 million transactions during the quarter, a 15% increase from 146.9 million a year earlier. The prepaid-processing segment had 169.5 million transactions, a 58% increase from 160.2 million. The company's money transfer segment had 4.3 million transactions, up 13% from 3.8 million in the second quarter of 2007.

Electronic Payment Exchange has appointed John Coleman director of bank alliances.

Visa Inc. said late Wednesday that its earnings for its fiscal third quarter, which ended June 30 - its first full quarter as a publicly traded company - rose 41% from a year earlier, to $422 million, or 51 cents a share.

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Merchant acquirers will have to report their retailers' credit and debit card transactions to the Internal Revenue Service under the Housing and Economic Recovery Act of 2008, which President Bush signed into law Wednesday.

Singapore-based OCBC Bank says it will work with the country's contactless transit card scheme EZ-Link to launch a mobile-phone top-up service for commuters. Consumers in Singapore use EZ-Link cards for trains, buses and retail purchases. The mobile top-up service would require customers to use credit or debit cards to add value to EZ-Link accounts. Customers would use their mobile phones to access OCBC's mobile banking or the EZ-Link Web sites, the bank says in a statement. Customers would receive the added value when tapping their transit cards at an "EZ-Online" station, Patrick Chew, the bank's head of group delivery, tells CardLine Global. EZ-Link has installed the stations at five "high-traffic" train stations, Chew says. Ten schools also "have agreed to provide a dedicated [computer] with an EZ-Link card reader attached to allow their students to update the increased value in their cards for immediate use," Chew adds. EZ-Link customers make more than 4 million transactions each day, the bank says.

German consumers buying goods and services online will pay with something other than a credit card for about 66% of such purchases, according to a report released Wednesday by Germany-based acquirer and payment-services firm Pago eTransaction Services GmbH. By contrast, consumers from other regions around the world use credit cards for 90% of online purchases. Pago based the report on analyses of some 30 million purchases the company processed between October 2006 and September 2007. The report also shows how much better British online merchants are than their counterparts in other countries in attracting international customers. British online merchants attract about 55% of their customers from outside the United Kingdom. One-third of those non-British consumers come from outside Europe, Pago says. By contrast, German online merchants see fewer than 5% of online purchases from customers outside Germany. Of those international customers, 0.8% come from outside Europe. "This could be a result of the language barrier," Pago says in a news release, noting that English is "understood by a majority of e-commerce consumers." Consumers in Germany and the UK show the most enthusiasm for online shopping, followed by those in France and Ireland, the report says.

Global Payments Inc., a United States-based payments processor, said Wednesday it will provide processing services to merchants in the Philippines under an expansion of the its joint venture with United Kingdom-based financial institution HSBC The deal calls for HSBC to refer "new merchant customers exclusively to the joint venture for payment-processing services," Global Payments says in a statement. HSBC has a merchant-acquiring business in the Philippines valued at about US$20 million (12.8 million euros), Global Payments says.

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Universal Air Travel Plan Inc., an airline-owned payments network, has agreed to link its systems to the one operated by Bill Me Later Inc.

General Electric Co.'s GE Money said Tuesday that it has renewed its card programs with Retail Brand Alliance Inc.'s Brooks Brothers stores.

ERIC KONIGSBERG and SEWELL CHAN; C. J. Hughes contributed reporting. New York Times

BRAD STONE New York Times

BEIJING, July 30 (Xinhua) -- On her second trip to Beijing after a decade, Jenny White, a U.S. book cover designer, found she could use her credit card more easily and was less reliant on the wads of cash required for shopping in the city.