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December 19, 2008

Holiday Cheer from Glenbrook!

We're beginning to wind down for the holidays! We'll still be scanning for payments-related stories over the next two weeks - but expect the activity here will be much lighter than normal.

This is that special time of year to spend with family and friends! Best wishes for a wonderful holiday season from your friends at Glenbrook!

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FDIC Announces $114 Million Settlement With CompuCredit

The Federal Deposit Insurance Corporation (FDIC) has announced a settlement with CompuCredit Corporation, Atlanta, Georgia (CompuCredit), "a company charged with deceptive marketing of subprime credit cards with three FDIC-supervised banks in violation of the Federal Trade Commission Act (FTC Act). Two of the banks previously settled with the FDIC."

Mint for the iPhone

Mint.com has just released a free application for the iPhone and iPod Touch. Here's the link to the app in the iTunes App Store. Kevin Purdy also reviews the new Mint app on Lifehacker.

Speaking of the iPhone, Stanford has made available the course materials from its CS193P iPhone Application Programming course - free. READ MORE »

A Brazen Holiday Gift to the Banks?

That's what Ed Mierzwinski, consumer program director for the U.S. Public Interest Research Group, says about the implementation schedule (July 1, 2010 - 18 months away) allowed for the banks to adopt the new credit card rules adopted yesterday by the Fed, OTS, and NCUA.

The Finovate 2009 Conference Series

Jim Bruene has announced the Finovate 2009 Conference Series - with Finovate Startup planned for San Francisco on April 28, 2009 and Finovate 2009 planned for New York City on September 29, 2009.

"About 700 of the most innovative execs in banking, finance and technology attended a Finovate event in 2008. The events are fast-paced, just a single day, and allow you to network with the presenting execs along with the decision makers in the audience. Both attendees and presenters love the format."

At Glenbrook, we're big fans of what Jim and Eric do at these conferences. If you plan to attend, signup now for early discounts. If you're an innovator and want to present, get in touch early and tell your story!

Headline News - December 19, 2008

Note: Throughout the day, as Payments News happens, this post is updated. For job opportunities available for payments professionals, visit PaymentsJobs.com. Employers looking to hire payments professionals can post their job openings there as well.

December 18, 2008

MasterCard Adds First Global Prepaid Customer to IPS Platform

MasterCard Worldwide has announced that Swiss Bankers Prepaid Services Ltd. will become the first financial institution to use the global prepaid transaction processing capabilities of MasterCard Integrated Processing Solutions (IPS), the debit and prepaid processing platform introduced earlier this year. READ MORE »

Fed Proposes Rules Regarding Overdraft Fees

The Federal Reserve Board also announced today that it is separately proposing rules to protect consumers that use overdraft services offered by their bank. The rule solicits public comment on proposed amendments to Regulation E (Electronic Fund Transfers) intended to provide consumers a choice regarding their institution's payment of overdrafts for automated teller machine withdrawals and one-time debit card transactions. The Board is proposing two alternative approaches to providing consumer choice, including a proposed requirement that would require institutions to obtain consumers' affirmative consent (or opt-in) before any overdraft fees or charges may be imposed on consumers' accounts. The comment period for the Regulation E proposal ends 60 days after publication in the Federal Register.

In a related move, the Board is adopting final amendments to Regulation DD (Truth in Savings) to address depository institutions' disclosure practices related to overdraft services. The effective date for the final rules adopted under Regulation DD is January 1, 2010.

Fed Approves New Credit Card Rules

As expected, the Federal Reserve Board on Thursday approved final rules that it said "would better protect credit card users by prohibiting certain unfair acts or practices and improving the disclosures consumers receive in connection with credit card accounts and other revolving credit plans."

"The revised rules represent the most comprehensive and sweeping reforms ever adopted by the Board for credit card accounts," said Federal Reserve Chairman Ben S. Bernanke. "These protections will allow consumers to access credit on terms that are fair and more easily understood."

"Our intent is to increase transparency and fairness in how credit card and deposit accounts operate, thereby enhancing competition and empowering consumers to better manage their accounts and avoid unnecessary costs," said Federal Reserve Governor Randall S. Kroszner. "The rules represent a significant step forward in consumer protection. By ensuring fairness and making credit terms easier to understand, these safeguards should allow more consumers to benefit from using credit."

FTC Issues Report on Social Security Numbers, Identity Theft

The Federal Trade Commission has issued a report titled "Security in Numbers - SSNs and ID Theft" icon_PDF_small.gif recommending five measures to help prevent Social Security numbers from being used for identity theft. Principal among the report’s recommendations is that Congress consider taking action to strengthen the procedures that private-sector organizations use to authenticate their customers’ identities. READ MORE »

Canadian Restaurant Industry Supports Credit/Debit Card Fee Caps

The Canadian Restaurant and Foodservices Association (CRFA) has announced that it "strongly supports Alberta Premier Ed Stelmach's recommendation to the Prime Minister to limit credit and debit processing fees. The recommendation was part of the Premier's suggested measures for inclusion in the 2009 federal budget." READ MORE »

US Regulators Take Action Against Unfair Credit Card Practices

The Office of Thrift Supervision is the first of the three US financial regulatory bodies to adopt new rules prohibiting certain unfair credit card practices. The Federal Reserve Board and the National Credit Union Administration are expected to approve the same changes.

"The rule bans practices often cited as unfair to consumers, such as raising the interest rate on an existing credit card balance when the consumer is paying the credit card bill on time. ... The rule requires that consumers receive a reasonable amount of time to make their credit card payments, prohibits payment allocation methods that unfairly maximize interest charges and, in the subprime credit card market, limits fees that reduce the credit available to consumers."

The rule takes effect July 1, 2010, - although the OTS says it "encourages institutions under its supervision to make their best efforts to conform as soon as practical, particularly to the provisions related to high-fee cards."

A summary of the rule icon_PDF_small.gif and the full text of the rule icon_PDF_small.gif are available online.

Musings About a Retailer-Driven Payment System?

On the Digital Money Forum blog, Dave Birch writes about "Movers and Shakers" - asking just who is going to be the game changer with respect to retail payments innovation. He notes that banks are pretty preoccupied at the moment with higher priority issues. [Editor's note: You can find more posts from other payments and banking-related blogs on this page.]

eCommLink, Rechargeplus Announce Global Alliance

eCommLink, and Rechargeplus Global have announced a "global alliance that combines the companies’ prepaid debit platforms with mobile and merchant applications to serve the needs of the growing international money transfer market. Hundreds of billions of dollars are sent home each year by migrant workers, often to places with little or no banking and technology infrastructure. Providing a means for the recipient to access and utilize these funds can be a challenge, especially when there may not be a local bank or money transfer store for hundreds of miles." READ MORE »

A Look at Latin American Immigrants' Financial Behaviors

The Federal Reserve Bank of Chicago's latest Profitwise News and Views addresses the subject of immigrant participation in mainstream (retail) financial service markets. "Immigrants tend to be less "banked" (i.e., use alternative and more costly financial service providers, such as check cashers and payday lenders) than the native population across income levels, though transaction account use correlates positively with higher income. The 2000 Survey of Income Program Participation reveals that 53 percent of Mexican immigrants and 37 percent of other Latin American immigrants remain unbanked, compared to about 9 percent of the total U.S. population." The article was written by Katy Jacob and Carrie Jankowski.

Discover Reports Financial Results for 4Q2008

Discover Financial Services has reported financial results for its fourth quarter 2008 ending November 30. Discover card sales volume declined 2% to $22 billion during the quarter as compared to 4Q2007. The net chargeoff rate increased to 5.48%, up from 3.85% in the same quarter last year. The company said it expects chargeoffs to increase to over 6% in the first quarter 2009.

[Update: Seeking Alpha has made available a transcript of today's Discover conference call.]

2008 - What a Year for the US Credit Card Industry!

In an article titled "Recession, New Rules Trim Cards' Mass Appeal", Maria Aspan writes for the American Banker (subs. reqd.) about the changes made by US credit card issuers in 2008 - as they raised interest rates, lowered credit limits and pulled back on marketing as credit chargeoffs mounted.

Aspan writes: "[Credit card] issuers' baseline standards have changed, and they will be marketing to a much smaller pool of consumers for the foreseeable future. This shift, combined with consumers' newfound economic caution, is expected to magnify the long-running trend for debit card growth to outpace that of credit."

The New (STARBUCKS)RED Card

Starbucks Coffee Company has announced that beginning January 3, customers will have the opportunity to make their purchase at Starbucks stores (RED) when they use the new (STARBUCKS)RED Card, a stored value Card that can be given as a gift or purchased for personal use at participating stores in the U.S. and Canada. Starting January 3 and continuing through December 31, 2009, every time a customer uses this Card to make a purchase at Starbucks, five cents will go directly to the Global Fund to help save lives in Africa. READ MORE »

Minimum Payment Amounts May Do More Harm Than Good

The Economist reports on research by Warwick University psychologist Neil Stewart finding that the suggestion of a minimum payment amount on credit card bills resulted in cardholders paying less than they otherwise might have - resulting in them paying even more interest charges overall.

Frustrations with 'Rate Jacking' by Credit Card Issuers

In a story titled "Credit card holders livid about 'rate-jacking'", CNN looks at cardholder reactions to changes in the interest rates on credit card accounts - in particular by Citibank. "Citigroup seems to be the target of most bloggers' venom -- partly because Citigroup issues so many credit cards and partly because Citi began sending the notices at about the same time it was getting a $20 billion, taxpayer-financed government bailout."

See alto this story on Bloomberg.com: Credit-Card Users Feel Pain as Banks Reap Gain From U.S. Cash and Michelle Singletary's column in the Washington Post: Overcharged and Over a Barrel.

December 17, 2008

New Rules for US Credit Card Issuers

In an article titled "New Limits Imposed on Credit Card Companies", Nancy Trejos and Binyamin Appelbaum write for the Washington Post about new rules expected on Thursday from the Federal Reserve, the Office of Thrift Supervision and the National Credit Union Administration with respect to credit card issuer practices.

The SEC and Its Attitude Toward Peer-to-Peer Lending

In a Netbanker post titled "Open Letter to SEC: Leave Peer-to-Peer Lending Alone", Jim Bruene writes an open letter to SEC Chairman Chris Cox about his disappointment with the way the SEC has dealt with US peer-to-peer lending companies while not paying enough attention to major issues such as the Madoff affair (see today's New York Times story "S.E.C. Says It Missed Signals on Madoff Fraud Case").

Bruene writes: "Your agency came to the surprising conclusion that loans made between individuals in a regulated peer-to-peer market, are securities and needed SEC oversight. ... Had these companies been left alone, journalists would be writing stories about how P2P companies were stepping into the lending void left by the turmoil in the banking sector."

Jim's bottom line: "Leave the P2P lenders alone; their open approach is an order of magnitude better than the broken regulatory model employed on Wall St."

Lightspeed Finds Card Issuers Making Changes to Credit Terms

According to Lightspeed Research, "card issuers have sharpened their focus on moving accounts to variable-rate pricing, increasing variable-rate margins, while pulling back on credit card rewards earn rates." READ MORE »

LifeLock Enters Into Agreement With TransUnion

LifeLock has announced that it has entered into "an agreement that will leverage TransUnion's secure, automated processes to expedite and enhance the delivery of identity theft services that LifeLock currently provides to its members." READ MORE »

Payments Habits in the UK

In the UK, APACS has created an online, interactive map to demonstrate the varied payment attitudes, preferences and behaviours that can be seen in the different regions of the UK. READ MORE »

ClairMail Launches iPhone Mobile Banking Web Solution

ClairMail has announced the latest release of its ClairMail mobile banking system that includes a mobile web solution optimized for the Apple iPhone. The iPhone solution includes the mobile banking and payments functionality found in ClairMail's traditional mobile web offering -- account management, fund transfers, bill payments, ATM/branch locators and more -- presented on the iPhone's rich user interface. READ MORE »

December 16, 2008

Fed Cuts Discount Rate by 75 Basis Points to 0.5%

The Federal Reserve Board has announced that the Board of Governors has unanimously approved a 75-basis-point decrease in the discount rate to 1/2 percent. Also, the Federal Open Market Committee decided today to establish a target range for the federal funds rate of 0 to 1/4 percent.

The Impacts of Credit Card Rate Increases on Revolvers

In an article titled "Changing credit card terms squeeze consumers", Kathy Chu writes for USA Today about the obvious impacts that credit card rate increases by card issuers have on the financial life of those who have revolving balances on their credit cards. Chu writes that "credit cards, by encouraging a society of spenders rather than savers, have played a significant role in loading up consumers with unaffordable debt whose rates and terms can change at any time."

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