Industry News

   Intuit, Inc. has agreed to acquire Innovative Merchant Solutions, a Calabas, Ca-based provider of credit and debit card processing services for small businesses.
   Intuit officials said the acquisition continues Intuit's execution of its "right for my business" strategy to drive growth in its small business area.
   In a business line that started only three years ago, Intuit has attracted 40,000 customers and created a $9 million business. IMS will enable Intuit to provide merchants with an enhanced offering, including PIN debit card processing and swipe terminals. Additionally, the service integrates with QuickBooks, the company's business accounting package.
   Member banks that sought to leave Visa after the settlement of the Wal-Mart suit are finding that a very expensive proposition.
   TCF Bank, Minneapolis, Minn., is one of the banks that looked to disassociate itself from Visa, but learned it would cost some $20 million to make such a change. TCF does more than $800 million in debit card business each year.
   The $20 million fee is apparently the result of changes Visa made to its bylaws in the summer. According to a letter Visa sent to TCF, banks have to pay a fee to leave the association, the amount of which is determined by the member's share of Visa's debit card issuance.
   PayPal recently started its Merchant Referral Bonus program. Under the program, any account member can earn up to $100 for every merchant that he/she refers to the PayPal Website Payments suite of non-auction payment tools. There is no limit to how many merchants can be referred by an individual account member.
   Bonuses are paid out based on the referred merchant use of PayPal. Ten dollars is received when the referred merchant uses PayPal to receive $1000 in sales via Web site payments. After the initial usage payout, a percentage of the referred merchant's revenue is received weekly - up to $100 for the first 6 months the referred merchant uses PayPal.
   Kinko's, Inc. recently selected Mosaic Software's Postilion EFT software solution for authorization of credit and signature debit card transactions initiated in its stores.
   Additionally, Postilion will be used as the corporate payments gateway solution for routing and switching transactions directly to the networks and card issuers. It will also provide stand-in authorizations at both store and corporate levels.
   The Illinois Office of the Secretary of State recently signed a multi-year renewal agreement for payment processing solutions with Moneris Solutions.
   Under the agreement, Moneris Solutions will continue its 10-year relationship with the State of Illinois, providing payment processing solutions that allow Illinois residents to use their credit cards for a variety of business services, including driver's license renewals and new license plate orders. The original partnership with Moneris Solutions in 1992 enabled the state to accept credit card payments for the very first time.
   U.S. Bank recently expanded its "Checking That Pays" program by offering more types of incentives for its signature-based debit cards. However, the bank also cut its cash rebate program from 1% to .25% for purchases.
   Now, depending on the type of card they carry, users can earn gift certificates to be used at many different retailers, a chance to win a Harley-Davidson motorcycle as well as other incentives.
   CardinalCommerce Corp. and First Horizon Merchant Services, Inc. have formed an alliance under which FHMS will offer CardinalCommerce's payment authentication software, Cardinal Centinel, to their online merchant customers.
   Cardinal Centinel is designed for acquiring banks, merchant service providers and their merchants. The software reduces the level of online fraudulent transactions and guarantees payment to online merchants who use it, while protecting the accounts of cardholders.
   First Data and CyberSource have entered a strategic partnership to provide enhanced payment options for CyberSource merchants. Beginning with an Internet check solution from TeleCheck, a subsidiary of First Data, the partnership will enable CyberSource merchants to take advantage of the First Data integrated payment solutions platform.
   The TeleCheck Internet Check Acceptance service from First Data is now a preferred Internet check solution for CyberSource merchants. The ICA service, which can be tailored to meet the different needs of different Internet merchants, enables these business owners with access to customers who prefer to pay by check.
   Simon Property Group, Inc. recently introduced the country's first university affinity gift card at the University of Texas-Austin.
   The new card will allow Texas Longhorn fans to support the university while enjoying card benefits.
   The use of gift cards is on the rise, with estimated sales of approximately $300 billion annually. Last year, Americans purchased an average of 4.6 gift cards per person, compared to 4.1 the previous year, according to Simon Property Group.
   ViVOtech recently launched ViVOpay Dine, believed to be the first product that allows restaurants to accept radio-frequency (RF) enabled contactless credit and debit cards and RF as well as infrared enabled mobile phone payments directly at the customer's table.
   This provides a faster, safer and more convenient way to make payments, according to ViVOtech officials. ViVOpay Dine also can validate electronic promotions to help build customer loyalty and boost revenue.
   According to the National Restaurant Association's 2003 forecast, among the major eating-place segments, the full service sector is projected to lead the way with a sales growth of 4.8 percent. Full service restaurant sales are expected to reach $153.2 billion in 2003, which represents a $7 billion increase above their 2002 level.
   Ezic recently released its updated version of Direct Mode, which is a direct interface to the Ezic payment processing platform.
   Direct Mode 3.0 supports all of the same functions as the Ezic Web-based interface, including ACH payments, credit card payments, subscription management, recurring billing and high performance batch processing. It gives software developers and system access to payment processing operations from within their own applications.
   First Atlantic Commerce Ltd. recently released cGate VT WEB, which, along with the company's Web Reporter technology, allows merchants to leverage a POS processing and reporting solution via the Internet without the need to purchase or lease POS terminal hardware, provision additional phone lines or sift through paper receipts or terminal journals to reconcile settled transactions.
   CardSystems, an independent electronic payment processor, and Mtrex, a provider of multi-currency payment services, have entered into a partnership to provide dynamic currency conversion to the U.S. credit card payment industry. This service will enable acquirers, ISOs and merchants to participate in a revenue source estimated at over $2 billion annually in the U.S. alone.
   The partnership will integrate CardSystem's processing systems with Mtrex' currency management platform. The result will be an end-to-end offering that incorporates dynamic currency conversion into all aspects of payment processing, from authorizations through clearing and settlement to chargeback processing.
   MasterCard International recently unveiled its SideCard, a new payment card that features a modified design small enough to fit on a key ring.
   Company officials expect that the increased convenience of the card will make it popular among customers.
   Cignify is beta testing TimeCap, a value-added application that enables a merchant to process their labor information (time and attendance) and feed it to payroll from any number of multi-app terminals.
   Cignify has forged alliances with VeriFone, Ingenico, Hypercom and Lipman to sell the application. Cignify has developed unique pricing models whereby the hardware provider, the ISO (bank, processor, acquirer) and Cignify all share in an activation fee and recurring monthly revenues.
   According to First Annapolis Consulting, the stored-value card market has grown at a 45 percent rate since 1996, and now has reached $40 million in card value.
   First Annapolis points to four important trends:
  • Growth across retail segments.
  • Growth of business programs.
  • Growth in international markets.
  • Increased functionality.
   The U.S. Court of Appeals for the Second Circuit in mid-September upheld an earlier ruling that MasterCard International, Inc., Visa U.S.A., Inc. and Visa International, Inc. violated Section 1 of the Sherman Antitrust Act and imposing an injunction.
   The U.S. Department of Justice brought this action challenging the organizational structure of two of the nation's four major payment card systems. The complaint charged that MasterCard and Visa U.S.A., which are organized as joint ventures owned by their member banking institutions, conspired to restrain trade in two ways:
   By enacting rules permitting a member-owner of one to function as a director of the other (an arrangement the government described as "dual governance") and, By enacting and enforcing "exclusionary rules," which prohibit their member banks from issuing American Express or Discover cards.
   The government did not appeal this ruling.
   After a 34-day trial, the court, ruled in the defendants' favor as to dual governance (Count I), held that Visa U.S.A. and MasterCard violated the Act by enforcing their respective versions of the exclusionary rule, barring their member banks from issuing Amex or Discover cards.
   The court further held that Visa International, which owns the Visa brand, licenses it to Visa U.S.A., and exercises certain governance powers over Visa U.S.A., was liable for participating in Visa U.S.A.'s violation. The court ordered the exclusionary rules revoked and permanently enjoined all three defendants from promulgating similar rules in the future.
   Unlike MasterCard and Visa, which are owned by banks, American Express and Discover are not joint venture membership associations. Rather, each is a vertically integrated entity, acting for profit, which combines issuing, acquiring, and network functions. Amex and Discover deal directly with consumers (by issuing cards), and with merchants (by acquiring and processing transactions).
   Since at least 1995, American Express has sought, unsuccessfully, to change its structure by soliciting banks to issue American Express cards. Because of Visa U.S.A.'s and MasterCard's exclusionary rules, any bank that undertook to issue Amex-branded cards would be forced to give up issuing both Visa and MasterCard cards � a move no U.S. bank has been willing to make.
   In September, Vital Processing Services (VitalR), announced the availability of the first phase of its Stored Value Card offering with the launch of a solution focused on Gift Card applications and targeted to small and mid-sized merchants.
   To provide a proven Stored Value Card product, Vital has partnered with Valutec Card Solutions, a premier Gift Card system provider, to deliver a turnkey solution to Vital's acquiring clients. Valutec has a strong presence in the small to mid-sized merchant market.