NEWSVeriFone, whose inventory accounting errors led to an overstatement of 2007 earnings reports, conceded it needs more time to complete the restatement of its 2007 annual report to the U.S. Securities and Exchange Commission.
In early December 2007, the San Jose, Calif.-based POS terminal maker said it would file its restatement in January 2008. However, later that month, VeriFone filed an extension with the commission to extend the due date for filing the restatement to March 2008. VeriFone also acknowledged that it may need even more time.
VeriFone indicated its accounting errors occurred when it was forced to manually enter inventory to make up for shortcomings in its automated accounting system. Double-booking of inventory hence occurred, causing the company to believe its inventory was larger and costs were lower than was actually the case. Based on this incorrect information, VeriFone believed its profit margins were higher than they were.
VeriFone's audit committee has hired independent counsel Simpson Thacher & Bartlett LLC and a forensic accounting team from Navigant Consulting Inc. to investigate the cause of the accounting errors. On news of the delay in VeriFone's earnings restatement, VeriFone's stock tumbled 15%.
An online survey by Gartner Inc. found that $3.2 billion was lost in 2007 from phishing attacks, affecting 3.6 million U.S. adults. The study revealed the amount of stolen debit card and other bank account credentials is increasing because of weak security.
Criminals have advanced their methods of attaining debit card and bank account information, the study stated. Gartner urges companies and individuals to subscribe to anti-malware services to detect and prevent phishing attacks.
NACHA - The Electronic Payments Association has developed Mobile Banking Work Group to cultivate an automated clearing house (ACH) payment strategy for mobile banking. The group's participants will include representatives recruited from NACHA's council.
Mobile Banking will focus on objectives such as assessing the NACHA Operating Rules and accommodating mobile banking and payments, identifying authorization and authentication, identifying security characteristics and requirements, and assessing systemic barriers in the ACH network. NACHA deemed Regions Financial Corp. a direct financial institution member. The association now has 45 direct members. They consist of 26 financial institutions and 19 regional payment associations representing more than 11,000 depository financial institutions across the United States.
TJX Companies Inc. entered a settlement agreement with six of the seven banks and bankers associations that filed suit in regard to a card data security breach in 2007. The six banks - Massachusetts Bankers Association, Maine Association of Community Banks, Eagle Bank, Connecticut Bankers Association, Saugusbank and Collinsville Savings Society - will dismiss all claims under this agreement.
This comes after the data breach lawsuit filed against TJX was transferred to a Massachusetts State Court by a federal judge.
ANNOUNCEMENTSCapital One Financial Corp. and NetSpend Holdings Inc., a leading retail marketer of prepaid debit cards, have mutually agreed to terminate their previously announced acquisition agreement. Instead, they've decided to expand their existing strategy. Capital One plans to acquire interest in NetSpend, and together, they will jointly pursue the distribution of prepaid card products through various mainstream retailers.
"We believe that Capital One's termination of its agreement to acquire NetSpend was prompted by the loss of a major NetSpend distributor, accounting for close to 50% of its transaction volume by our own estimates," said Gwenn Bezard, Research Director for Aite Group LLC. "We view this termination as a blow to NetSpend and good news for its direct competitor, Green Dot.
"NetSpend's troubles are a powerful reminder of how dependent upon retail distributors prepaid card marketers have become. It should serve as a reminder to prepaid marketers of the imperative necessity of developing a multitude of distribution channels, including focusing more on reaching out directly to customers through mail and the Internet."
Discover Financial Services launched its redesigned Web site, www.discover.com, which now offers customers a simplified experience in selecting Discover Card products and services. The Web site's self-service design is intended to motivate engagement and enhance the customers' online experience. New tools, such as the "Help Me Choose" function, help consumers select cards that are appropriate for their needs.
The Business Examiner's recent award ceremony recognized Fast Transact Inc., a credit card processing service and Internet protocol solutions company, as the second fastest growing company of 2007 for Washington State's South Sound area businesses.
The Eastern Technology Council's Technology Company CEO of the Year award was given to Bob Carr, Heartland Payment Systems Inc.'s Chairman and Chief Executive Officer. The association supports expansion of entrepreneurial companies located in the Greater Philadelphia region.
In addition, Selling Power magazine's 2007 Sales Excellence Awards named Irina Haydon, an Executive Director of Sales and Service for Heartland, the Sales Director of the Year. Haydon was honored for her contribution to the company's continued growth and management of its sales force in 10 states. She competed against five other finalists from organizations across the United States. Also, Heartland was named the Financial Services Sales Organization of the Year in the Best Run Sales Organization category by Selling Power.
According to MasterCard Advisors LLC's SpendingPulse report, retail sales between the day after Thanksgiving and Dec. 24, 2007, rose by a seasonally adjusted 3.6% over the same period in 2006. The report focused on four categories: electronics, specialty apparel, e-commerce and luxury items.
E-commerce had a growth of approximately 30% on Black Friday and provided a solid start to the season, finishing with an overall year over year growth rate of 22.4%. SpendingPulse data indicated higher gas prices, coupled with severe weather in certain regions, could have helped to push e-commerce sales this year.
PARTNERSHIPSACI Worldwide Inc. signed a definitive agreement with IBM for a new strategic alliance. Pending on agreement, ACI will execute a new generation of ACI software integrated on IBM's System Z platform for the security of global financial clients. IBM will assist ACI with the software and offer sales incentives on IBM products and services.
"We are delighted to launch this transformational alliance with IBM," said Philip G. Heasley, CEO for ACI. "The partnership provides ACI with an opportunity to extend our reach among the world's top 2,000 banks, where System Z is the leading platform, and helps IBM expand their footprint in the payments arena."
American Express Co. and First Data Corp. signed an agreement in which First Data will offer AmEx Card acceptance as part of a solution for merchants. New merchants who sign up for the program will receive the all-in-one solution with the convenience of a single source for statements, settlement and customer service for all major card brands. Merchants new to AmEx's card acceptance will be offered it in the second quarter of 2008.
Heartland entered an exclusive agreement with Encore LLC, a private lending company. The partnership will offer Heartland customers alternative working capital loans with guaranteed annual percentage rates not to exceed 30%. Encore will be Heartland's preferred provider of loans and will offer its products exclusively to qualified Heartland customers - many of which are small and mid-sized businesses. Heartland will not be compensated when its customers purchase these loan products.
NCR Corp. and ViVOtech Inc. have introduced a suite of contactless POS terminals. These solutions are designed to enable mobile and contactless payment at a variety of customer touch points, including restaurant drive-thru, diner's table and retail checkout. The terminals will be demonstrated at the National Retail Federation's Annual Convention & Expo, Jan. 13 to 16, in New York.
ACQUISITIONSElectronic Payments Inc. completed a series of transactions to acquire Web site names such as procharge.com and electronicpayments.com from their owners. "The acquisition of these domains will contribute to the strengthening of our branding efforts for EPI and will further solidify the brand of Electronic Payments in the marketplace," said Michael Nardy, Founder and CEO of Electronic Payments. ProCharge, EPI's processing plugin for Quickbooks, will continue to market through the use of the procharge.com domain name. EPI had previously used elecpayments.com, as its domain for Web site and e-mail. EPI will now begin using www.electronicpayments.com as its domain.
Pipeline Data Inc. signed a letter of intent to acquire Innovative Resource Alliance and Merchant Services Network in exchange for up to 25.7 million shares of Pipeline's common stock. In addition to its 5,000 merchants, IRA has issued letters of intent to purchase approximately 15,000 more. Once merged, Pipeline Data/IRA will acquire COCARD Marketing Group LLC, which services over 25,000 merchants, primarily small and medium-sized retail accounts. The merger agreement to acquire COCARD, for approximately $101 million in cash, was entered into on Oct. 22, 2007.
APPOINTMENTSPaymentsNation, formerly National Clearing House/Payment Resource One, named five payments professionals to serve on its board of directors for the 2008 to 2009 term. The new members include: Robert Coyan, Senior Vice President, Corporate One Federal Credit Union; Margaret d'Emery, Executive Vice President, Guaranty Bank & Trust Co.; Karen Marshall, Senior Vice President, Operations Division, Sterling Bancshares Inc.; Pete Pritts, President and CEO, First Corporate Credit Union; and Connie Rose, Senior Vice President of National City Corp. Newly elected board officers include Andrew Wied, Kade Peterson, Tracy Haynes and Jody Beck. The executive committee consists of James Lansing, Mike Litzau and Jennifer Sittler.
Nancy Drexler has moved from New York to Dallas to become Vice President of Marketing for SignaPay, an ISO founded by Drexler's former boss John Martillo.
Most recently Drexler was President of Marketing Moguls. Previously, she worked with Martillo when she was Marketing Director for Cynergy Data, a company Martillo co-founded and served as President.
PayPal hired four industry veterans to help drive the company's continued global growth.
The new members of the executive leadership team include Mary Anne Gillespie, Vice President of Sales; Barry Herstein, Chief Marketing Officer; Robert Mansell, Vice President of Product Development, and Jack Stephenson, Senior Vice President of Strategy and New Ventures.
Merchant e-Solutions Inc. appointed Kevin Gallagher as General Manager of its e-commerce business. Gallagher has more than 14 years' payment processing experience, most recently as a Senior Vice President at Chase Paymentech Solutions. He is now charged with developing and growing the MeS e-Commerce business through direct merchant sales and channel partnerships.
Rich Greene joined Vesta Corp., a payment solutions company, as Chief Technology Officer. Greene will direct Vesta's engineering, quality assurance, information technology, program management and information security.
Fast Transact Inc. appointed Paul W. Noblett to its board of directors. Noblett has been in the transaction services industry for more than 30 years. Previously General Manager of MasterCard's operations, Noblett is the sixth addition to Fast Transact's board.
CO-OP Financial Services designated Kim Swift as National Relationship Manager. Swift will oversee CO-OP's Western U.S. client relations with existing members as well as identify growth opportunities.
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