Lipman Electronic Engineering, Ltd. in January priced an initial public offering in the United States of 3 million of its ordinary shares at a price of $41.60 per share.
Of the 3 million shares, Lipman offered 2.25 million shares and certain selling shareholders of Lipman offered 750,000 shares. In addition, Lipman granted the underwriters a 30-day option to purchase up to 450,000 additional ordinary shares to cover over-allotments.
NYCE Corp. (NYCE) recently filed a lawsuit against Concord EFS, Inc. alleging breach of an agreement between NYCE and current and predecessor operating entities of Concord, including Electronic Payment Services, Inc. (EPS) and Money Access Service Inc. (MAC). The complaint was filed in Superior Court of the State of New Jersey.
In the complaint, NYCE charges that Concord has violated a 1993 agreement and engaged in other unlawful conduct as a result of certain operating rules it has adopted and is attempting to enforce. Those rules generally require that point-of-sale (POS) transactions conducted with cards branded with NYCE and STAR at similarly branded POS terminals, be routed to Concord's STAR-branded network, even if the card issuer has designated that the transaction be routed to the NYCE network.
The 1993 agreement obligates NYCE and the Concord entities to permit financial institutions that participate in both EFT networks to direct how POS transactions using their cards are routed. The agreement established a precedent for issuer designation and honoring of network priority routing.
In 1993, NYCE's predecessor, the New York Switch Corporation, and EPS and MAC settled unfair competition litigation by agreeing to create and thereafter maintain an open and flexible business environment between their respective EFT networks by instituting "issuer choice" rules for routing POS transactions.
The settlement was designed to guarantee that the routing choice of issuers participating in both networks would be honored by the networks. To ensure that this choice remained with the financial institutions - and not the networks - each network agreed that the card issuer would have the authority to determine the primary EFT network that its customers' debit transactions would use. The settlement agreement also prohibits Concord, NYCE and their respective affiliates from adopting and imposing any operating rule that would unilaterally prevent the routing of POS debit transactions to the other network, thereby depriving their member financial institutions of the power to choose.
According to the complaint, in early 2003, Concord began sending letters to issuing financial institutions and merchant processors that also have contractual relationships with NYCE, advising them about the STAR rule and threatening to assess fines against entities that did not comply with that rule.
In mid- January, Diebold, Incorporated and Hypercom Corporation announced that they have joined together in a strategic partnership wherein Diebold will distribute Hypercom's smart, fast and easy-use outdoor card payment technology to drive-up pharmacies in the US and Canada.
The rugged, high security HFT 505 outdoor card payment terminal, conveniently mounts near the retail transaction drawer, or the pneumatic prescription delivery terminal at pharmacy drive-up locations.
"Hypercom's card payment terminal is a custom application that will add convenience for pharmacy drive-up patient/customers paying with credit and/or debit cards," said Jack Finefrock, Vice President of Diebold's Retail Solutions Group. "It also increases revenues, productivity and profits for pharmacies, and provides faster through-put at the point-of-sale."
Two of the nation's largest banks showed declining debit card revenue, according to their 2003 fourth quarter financial statements. The lower revenues are attributable to the settlement of the so-called Wal-Mart suit, which reduced fees for signature-based debit transactions by about one third.
U.S. Bancorp, one of the nation's largest issuers of signature debit cards, said that the change resulted in $12.6 million in lost debit card revenue.
Charter One Financial, a smaller card issuer, saw its revenue from signature debit fall nearly $4 million for the quarter, much of the $6 million decline for the full year, according to the information contained in its fourth quarter financial report.
While U.S. Bancorp and Charter One were licking their wounds over the court decision and the lost interchange fees, MBNA took advantage of the decision to announce that it would issue American Express cards.
Additionally, MBNA and American Express unveiled plans for MBNA to issue American Express-branded credit cards in Canada, Spain, and the United Kingdom. The cards will carry the American Express logo and will be accepted on the American Express global merchant network. MBNA will own the loans and will manage and service the accounts on its own systems.
Financial terms of the transaction were not disclosed.
The agreement is the first of its kind in the United States between American Express and a major U.S. financial institution. MBNA plans to begin issuing the credit cards later this year, at which time product details will be available.
However, Visa and MasterCard are expected to continue to fight MBNA's plans.
Last year a federal appeals court struck down a rule by Visa and MasterCard that prohibited its card-issuing banks from issuing other branded cards, such as American Express or Morgan Stanley's Discover.
Visa and MasterCard asked the full Second U.S. Circuit of Appeals not to put the ruling into effect while they plan an appeal to the U.S. Supreme Court. However, the court rejected the request without comment.
In addition to the legal battles, Visa and MasterCard are also trying to do something about the ruling by readjusting interchange fees in April.
Visa, which said it would "review interchange rates and work with merchants to ensure we remain the payment card of choice," is expected to follow MasterCard's lead to raise interchange again. (See enclosed flier for new VISA Interchange Rates.) MasterCard's Merit III rate will go up to 1.54 percent plus 10 cents per transaction, an increase from the previous 1.43 percent plus 10 cents.
MasterCard interchange rates for supermarket and warehouse club purchases will also rise, from 1.25 percent to 1.36 percent. However, the rate for online transactions is staying unchanged.
National Processing Company, LLC a wholly owned subsidiary of National Processing, Inc. recently renewed its multi-year processing agreement with Kwik Trip Inc., one of the nation's largest convenience store operators.
Under the terms of the renewal, NPC will continue to provide credit card authorization and settlement services for all Kwik Trip VISA and MasterCard transactions.
Kwik Trip is one of the nation's leading regional convenience store chains, operating over 350 stores in three states.
Financial terms of the agreement were not disclosed.
Burger King recently launched a program to rapidly expand the number of restaurants that accept credit card and signature-based debit card payments nationwide.
Burger King Corporation selected Chase Merchant Services, L.L.C., a joint venture between JPMorgan Chase Bank and First Data Corp., as the processor for the card acceptance program. Currently, card payments are accepted in more than 2,100 Burger King restaurants nationwide, a number the company expects to increase considerably by providing this program to its U.S franchisees.
According to a consumer survey completed by First Data in 2002, 63 percent of respondents said they would frequent a Quick Service Restaurant (QSR) that accepts credit/debit card payments more often than a traditional cash-only QSR, and 36 percent said they would spend more money if debit and/or credit card payment options were available.
"Sales in the QSR industry have historically been by cash, but the launch of Burger King Corporation's program is a significant step in the continuing growth of electronic payments into new markets," said Charlie Fote, Chief Executive Officer of First Data.
Wells Fargo & Company recorded a company record of $12 billion in Internet merchant payments in 2003, doubling the amount of 2002.
According to the Department of Commerce, Wells Fargo's e-commerce processing accounts for 15% of the nation's total online shopping volume. Wells Fargo continues to grow more rapidly than the overall online commerce industry.
Wells Fargo was the first financial services company to process a secure credit card transaction on the Internet. Today, Wells Fargo provides e-payments solutions to major brands, including Goodguys.com, Cooking.com and Overstock, helping them save management time as well as simplify reporting and system integration.
Wells Fargo was first to provide person-to-person payment services through eBay in March 2000, and today processes payments for 95 to 99% of the domestic Web auction market. In June 2002, Wells Fargo became the payment provider for PayPal (now owned by eBay), and subsequently began to provide its international currency service.
Today Wells Fargo processes payments for over 60,000 online merchants and has 415,000 active online small business banking customers, up 40% from a year ago. In February, Wells Fargo will also sign up its fifth million active consumer Internet customer, a milestone that testifies to Wells Fargo's leadership in successfully integrating online services with other distribution channels such as stores.
NetBank, Inc., parent company of the country's first commercially successful Internet bank, NetBankR (www.netbank.com), announced in mid January that its wholly owned subsidiary, Financial Technologies, Inc., has changed its name to NetBank Payment Systems, Inc.
The company also announced that NetBank Payment Systems has reached a definitive agreement to acquire select assets of Southern California-based Electronic Cash Systems Inc. Pending regulatory approval, the transaction is expected to close during the first quarter.
"The deal with ECS enhances our focus on merchant processing," said Tommy Glenn, President, NetBank Payment Systems, Inc. "It will allow us to add more than 1,000 ATMs, and POS and merchant processing customers, dramatically expanding our service capabilities on the West Coast." With the addition of the ECS assets, NetBank Payment Systems will have more than 5,000 ATMs deployed across the country processing more than 1.5 million or $72 million worth of transactions per month.
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