Credit

Mitsubishi UFJ Nicos, the credit card subsidiary of Japan's Mitsubishi UFJ Financial Group, will enable cardholders to earn more rewards through links with the group's other companies. The card firm will work with Bank of Mitsubishi UFJ, Mitsubishi UFJ Trust and Banking Corp. and Mitsubishi UFJ Securities to restructure and boost card points, according to Japan's Corporate News. Group spokespeople offered no immediate comment to CardLine Global.

The Reserve Bank of India, the country's central bank, has told financial institutions to put mobile-banking services on hold so financial authorities can create and issue guidelines for mobile transactions, a Reserve Bank spokesperson tells CardLine Global. "The guidelines on mobile banking are likely to be announced soon, and we have advised banks to put on hold their plans till then," the spokesperson says without specifying when authorities would finish the guidelines . "This is to ensure that mobile banking takes off in a sound and robust manner to benefit both the banks and their customers." The spokesperson declines to discuss any mobile-banking related complaints financial authorities may have received. Also unclear is whether the directive applies to mobile payments-transactions that go beyond simple banking services. Clear guidelines from the Reserve Bank could help spark interest in mobile banking and payment services, Prathima Rajan, an India-based analyst with United States-based research firm Celent LLC, tells CardLine Global. She adds that while some private Indian banks, along with some foreign banks operating in the country, have launched mobile banking for debit or credit alerts and balance checks, mobile payments has a smaller foothold. "Mobile payment is still in a nascent stage in India, but the fact that India constitutes around 261 million mobile subscribers makes it a potential market for such transactions in the future," Rajan says.

The southeast section of London represents the capital for card fraud in the United Kingdom, according to a joint study from two UK-based security firms. The firms based the study results on their analysis of more than 30 million "good," or nonfraudulent, and "bad" card transactions between 1 Jan. and 30 June, according to a joint statement from The 3rd Man Group PLC and 192business.com. Other card-fraud hotspots include Coventry, Dartford, Manchester, Nottingham and Romford. Wales and Northern Ireland experienced the least fraud, according to the study. The companies claim card fraud occurs more frequently than official figures suggest because victims do not report all fraud attempts. Earlier this month, Cifas, a UK-based fraud-prevention service, named London the top hotspot for overall fraud, including credit cards, loans, mortgages and bank accounts (CardLine Global, 16 July). 3rd Man says Liverpool and Kilmarnock have reduced card-fraud because "local policing activity has targeted these criminals, and it's having a clear effect," Andrew Goodwill, director of 3rd Man, says in a release.

Standard Chartered expects to win approval from the China Banking Regulatory Commission to issue yuan-dominated credit cards in the country, a spokesperson for the United Kingdom-based bank tells CardLine Global. The spokesperson declines to say when the bank expects to receive approval. The bank late last year applied to issue yuan-based debit and credit cards in China. Standard Chartered received permission to issue debit cards in China and this month said it had begun to issue them (CardLine Global, 28 July).

BMO Spend & Payment Solutions, a division of Canada-based BMO Financial Group, on Tuesday announced deals to enable corporate card customers to service their accounts in more countries. BMO announced agreements with Singapore-based United Overseas Bank and BCC Corporate NV, a credit card company in which four Belgium banks-Fortis, Dexia, KBC and ING-hold shares. The deals "further expand BMO's international footprint and enable North American companies to conduct business more efficiently worldwide," the Canadian company says in a statement. Card services BMO offers include reporting, analysis and management.

The U.S. House Financial Services Committee begins a markup session tomorrow on the Credit Cardholders' Bill of Rights, with the 70-member committee likely to cast votes on the legislation after considering amendments. Observers say the bill, which Rep. Carolyn Maloney, D-N.Y., introduced earlier this year (CardLine, 2/7), stands a good chance of passing because it closely resembles provisions of proposed federal regulations that would prevent many of the credit card practices some lawmakers deem abusive. The Federal Reserve Board, the Office of Thrift Supervision and the National Credit Union Administration proposed new rules in May that would prohibit "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 already generated more than 41,000 letters, closes Aug. 4. Maloney today released a report suggesting that inadequate regulation of the credit card industry poses serious risks to the U.S. economy. The 16-page report "Forever in Debt: Anti-Competitive Credit Card Practices and their Impact on the Economy" contends that policies that drive up interest rates and fees may help increase personal bankruptcy rates and may dampen consumer spending as more families divert their incomes to servicing debt. The report also suggests that the longstanding practice of securitizing credit card debt in secondary markets represents a substantial risk to the financial system.

The South Korean parent of ATM maker Nautilus Hyosung America Inc. this morning announced it has signed an agreement to purchase ATM manufacturer Triton Systems of Delaware Inc. for an undisclosed price. Dover Corp., Triton's owner, and Nautilus Hyosung Inc. expect to close the deal in the third quarter, according to Sam Hong, a manager in Nautilus Hyosung's marketing division. Nautilus Hyosung Inc. is a subsidiary of Hyosung Corp., a $7 billion diversified manufacturing company. Once the deal is complete, Nautilus Hyosung and Triton would control 70% of the $100 million of annual sales in the U.S. off-premise ATM-manufacturing market, says Leon Majors, president of Salisbury, Md.-based Phoenix ESP Payments Research Group. Triton notified employees of the pending purchase this morning during a company meeting, Alicia Blanda, Triton marketing projects manager, tells CardLine sister publication ATM&Debit News. The company employs 400 workers, including 300 at its manufacturing and administrative facility in Long Beach, Miss. "We think it's a good thing," Blanda says. "[Nautilus officials] said they would not make any changes." Nautilus Hyosung executives did not attend the meeting but have visited the plant several times. In a statement, Bill Johnson, Triton president and CEO, said, "We are very excited about Triton's future with Nautilus Hyosung." Pill Koo Ryou, president of Nautilus Hyosung Inc., said, "Triton is an ideal fit with Nautilus Hyosung as we expand our global footprint." Nautilus Hyosung America has a facility in Coppell, Texas.

President Bush this morning signed into law the Housing and Economic Recovery Act of 2008, which contains a provision mandating merchant acquirers to report their retailers' credit and debit card transactions to the Internal Revenue Service. Acquirers will have to submit annual reports listing the name, address, taxpayer identification number, and the gross amount of credit and debit card transactions for each of their merchant customers, according to the new law (CardLine, 7/28). The annual requirement will apply to merchant card transactions made after Dec. 31, 2010. Mandatory reporting of merchant credit and debit card transactions to the IRS could prove time-consuming and costly for acquirers and the independent sales organizations that work with them, according to Paul Martaus, president of the Mountain Home, Ark.-based consulting firm Martaus & Associates Inc. Acquirers and ISOs may have to absorb the costs of collecting and securely storing merchants' information, he says (CardLine, 7/29).

Fiserv Inc. yesterday reported net income of $99 million for the second quarter ended June 30, down 8.3% from $108 million for the same period last year. The Brookfield, Wis.-based transaction processor says revenue rose 38.4%, to $1.3 billion from $939 million. Expenses rose 41.3%, to $1.07 billion from $757 million. Fiserv attributed part of the decline in net income to repricing in its electronic bill payment contract with Bank of America Corp. Costs related to Fiserv's December 2007 acquisition of CheckFree Corp., an online banking and recurring electronic-payments processor, also nicked Fiserv's bottom line, Fiserv disclosed in its earnings report. Fiserv did not disclose specific CheckFree earnings or expenses but explained that lower interest rates cut the revenue from consumer bill payment funds resting in CheckFree accounts for a couple of days before moving on to billers. But CheckFree also added payments-related revenue during the quarter, Jeffery Yabuki, Fiserv president and CEO, told analysts in a conference call yesterday. "We are now seeing a revenue uplift by providing integrated products into the larger [financial] institutions, which were traditionally served by CheckFree," Yabuki said. Thomas Hirsh, Fiserv executive vice president, chief financial officer and treasurer, told analysts that CheckFree generated 311 million bill-payment transactions during the quarter, up 13% from the same period last year.

Portfolio Recovery Associates Inc., a debt purchaser that mostly buys and collects delinquent credit card portfolios, recovered a company record of $85 million in cash collections during the second quarter ended June 30, up 31.6% from $64.6 million during the same period a year ago. The Norfolk, Va.-based company acquired 58 portfolios from 21 different sellers during the quarter, spending $71.1 million. About 95% of the quarter's purchase volume, in terms of dollars invested, included a combination of Visa, MasterCard and private-label credit card asset classes, Steven Fredrickson, Portfolio Recovery president and CEO, said yesterday during a conference call with analysts. The remainder came from pools of medical, utility and installment-loan accounts. Total revenue during the quarter increased 16.1%, to $63.6 million from $54.8 million in the second quarter of 2007. The company reported net income of $11.4 million, down 12.3% from $13 million. "Our intent is to continue to aggressively pursue charged-off debt in what we view as an attractive, albeit complicated, market. We have significant cash flow and available financing to accomplish this," said Fredrickson, adding that the company has no desire to lead the market in terms of pricing. "Our bid-success rate remains low and in historical ranges, which tells us we have plenty of rational and healthy competitors since pricing appears to be at more-reasonable levels than we have seen in some time." Anecdotal evidence from debt brokers and buyers suggests prices for credit card charge-offs are down to an estimated 7 cents to 9 cents on the dollar from highs of 12 cents and above seen during much of 2005 through 2007. "We spend a great deal of time modeling various buying and capital scenarios to be ready for whatever attractive buying opportunities may come our way," Fredrickson said. "The bad-debt sale and purchase market is dynamic and is driven by a number of variables that are extremely difficult to predict, including seller strategies, capital needs and charge-off volumes. On these topics, we do not have a clearer crystal ball than the next guy."

The Chicago Police Department announced this week that residents of the city turned in more than 6,800 guns on Saturday in exchange for MasterCard prepaid gift cards. Chicago offered residents $100 gift cards in exchange for turning in guns and $10 prepaid MasterCards for turning in gun replicas, BB guns and air rifles (CardLine, 7/24). The city exchanged the cards for guns at 25 churches as part of its fourth campaign to collect firearms since 2006. Chicago collected 6,700 guns during a similar initiative last summer.

Givex Corp., a Toronto-based gift card and customer-loyalty company, has signed an agreement with Tree Canada, a nonprofit organization that encourages Canadians to plant and care for trees. Under the agreement, Givex will plant trees to counter the carbon dioxide created when cards are made. Givex paid for the planting of 2,500 trees Sept. 13, Jim McCready, registered professional forester and program forester for Tree Canada, tells CardLine. Members of the Sagamok Anishnawbek First Nation, a Native American tribe. will plant the trees near Espanola, Ontario, the company says. McCready says First Nation has a registered professional forester on staff, so Tree Canada decided to work with the organization. Tree Canada is based in Ottawa, Ontario.

Hypercom Corp. announced today the Saudi Arabian Money Agency has given Saudi Payments Network certification for the vendor's Optimum T4210 payment terminal.

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Small-business owners' confidence in the economy rebounded this month after hitting a record low last month, according to Discover Financial Services.

SEWELL CHAN; Andy Newman and Mathew R. Warren contributed reporting. New York Times

While operators of transit fare-collection systems in London, New York, Washington, D.C., and a few other places consider enabling riders to pay fares with contactless cards issued by banks, no similar push to accept open-loop payment cards exists at the pioneering Octopus Cards Ltd. scheme in Hong Kong, according to one executive. Octopus, one of the largest fare-collection systems in the world, has been building its system and brand since 1997, and more cardholders are using the cards to make retail purchases, says Brian Chambers, head of Octopus Knowledge, the consulting arm of the holding company that owns the Hong Kong transit card scheme. "What's the effect of losing your brand, losing your customer relationship?" Chambers tells CardLine Global sister publication Cards&Payments. Octopus and Citibank earlier this month announced the planned launch of the first co-branded credit card that carries the Octopus application. But that application is separate from the Citi credit feature. Octopus estimates it has 17 million cards in circulation that cardholders use more than 10 million times each day. The transactions total more than HK$85 million (US$10.9 million euros or 6.9 million euros) per day. While estimates vary on the share retail and other nontransit transactions make up, Chambers places it at 30% of the total value cardholders spend with the prepaid Octopus cards. He says about 2,500 merchant locations accept Octopus. Those are part of roughly 50,000 terminals where users can tap their cards to pay, most of them on buses and at gates of subways, ferries and other modes of transport throughout Hong Kong. All of these terminals would have to be modified to accept payment from contactless debit, credit and prepaid cards from Visa Inc. or MasterCard Worldwide. "The cost of retrofitting would be enormous," Chambers says. The transit system or its banking partners also would have to update their back-end systems to calculate the variety of fares and discounts that transit operators offer customers who use bankcards. Chambers says he does not believe banks are interested in capturing the "micropayments" that transit fare collection represents.

India's Life Insurance Corp. reportedly has dropped its proposed credit card joint venture with GE Money. Neither company would give immediate comment to CardLine Global about the report, which appeared in the India-based Business Standard newspaper. The news outlet reported that Life Insurance decided to quit the venture after GE faced problems with another joint venture, SBI Cards. In May, the State Bank of India and GE decided to split SBI Cards into two ventures. SBI recently reported its first annual loss. The troubles with SBI Cards are "definitely the main reason for the lapse ... between [Life Insurance Corp.] and GE," Prathima Rajan, an India-based analyst with Celent LLC, tells CardLine Global. She anticipates that Life Insurance Corp. either will form a card venture with another company or enter the market on its own.