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Industry Update


Retailers' Lawyers Want $550 Million in Fees

Lawyers who represented Wal-Mart and millions of other retailers in the settled class-action lawsuit against Visa and MasterCard over debit card fees have asked for more than $550 million (or about 18% of the settlements) plus expenses for their services - some of the highest class-action legal fees in history.

The New York law firm of Constantine & Partners represented the retailers and worked (without pay) with 29 other firms throughout the seven-year case. The firm filed its request in U.S. District Court in Brooklyn, and Judge John Gleeson will preside over a hearing on the issue on September 25, 2003.

e-Commerce Sales Climb in Q2

The U.S. Department of Commerce reported that Q2 2003 retail e-commerce sales (not adjusted for seasonal, holiday and trading-day differences) totaled $12.5 billion, an increase of nearly 28% from the same period last year and an increase of 4.6% from the previous quarter. Online retail sales accounted for 1.5% of total retail sales in Q2 2003. Overall retail sales totaled $858.8 billion, an increase of 4.9% from the same period a year ago and an 11.9% increase from the first quarter of 2003. The department began tracking e-commerce sales in 1999.

FDC and Bank One Butt Heads

First Data Corp. (FDC) and Bank One Corp. have not been able to agree on the final terms of their partnership and are going into arbitration to settle the matter. Their dispute is over processing fees and whether FDC will charge Bank One the current rate for processing after their contract expires in June 2004. In March 2003, Bank One announced plans to move its credit card processing business in-house and said it would not renew its contract with First Data. While Bank One transitions to its own system, First Data had offered to continue processing through September 2005 unless given six months notice. The agreement was never finalized.

U.S. Navy Credit Cards Compromised

Hackers broke into U.S. Department of Defense systems in July and downloaded billing records containing credit card numbers, the Washington Post reported. As a result, the Navy canceled 13,000 credit cards used for government expenses.

Citibank was the issuer of the credit cards and said no unusual activity has occurred on the card accounts. The break-in was discovered on July 30, 2003, when an unusual amount of traffic was detected on a server at a logistics center at Wright-Patterson Air Force Base in Dayton, Ohio.

High School Benefits From ATM Fees

After receiving one too many bounced checks from students and parents, Grossmont High School in San Diego adopted a cash-only policy for payments and installed an ATM on campus, the Associated Press reported. Users of the ATM are charged $1.50 per transaction; the owner/operator of the machine collects 25 cents, and the remainder of the fee goes to school activities. On the first day of registration, the machine dispensed more than $4,000.

Study on What Drives Salespeople

What motivates you to sell? A recent study conducted by two researchers at Baylor University asked 40,996 salespeople in eight countries this question. Here are some of the results:

  • 33% of U.S. salespeople, 36% of salespeople in the U.K. and 19.4% of salespeople in Singapore work primarily to earn big incomes.

  • In Australia, only 12.3% said money motivates them because "opportunities to use abilities" (28%) and "freedom from routine" (22.5%) are considered more important.

  • Only 11% of New Zealand salespeople said they sell primarily to make money; 26% said they are motivated by novelty, stimulation and change; and 27.3% seek opportunities to express their talents and abilities.

  • U.S. salespeople were the most service-minded of the group; 14% of American salespeople said their primary motivation is "being of service to others."

The countries polled were the U.S., Australia, Canada, New Zealand, Norway, United Kingdom, Sweden and Singapore. A full copy of the research is available online at


Catuity Receives U.S. Patent

Catuity, Inc., a provider of software for point-of-sale loyalty programs, received a U.S. patent for its technology that allows the memory space on smart cards (and other data-carrying devices) to store data for multiple applications and systems that manage applications, devices and terminals.

Comstar Receives Patents for CHARGE ANYwhere

The U.S. Patent and Trademark Office awarded Comstar Interactive Corp. U.S. Patent 6,543,689 for the device that transfers power and data between a pager and attached magnetic stripe card reader of the CHARGE ANYwhere wireless credit card processing solution. This is the second patent awarded to Comstar for CHARGE ANYwhere in the last seven months.

Hypercom Announces Stock Repurchase Plan

Hypercom Corp. announced a stock repurchase program of up to $10 million in common stock. A stock repurchase plan allows a company to buy back shares of its own stock, which reduces the number of outstanding shares in the marketplace, thus increasing share value because of less supply. This is often an indicator that a company thinks its stock is undervalued and that it has strength in cash flow. As of June 30, 2003, Hypercom had unrestricted cash of $47.1 million, up from $13.9 million for the same period last year.

Lynk Certifies Omni 3750

Payment processor Lynk Systems, Inc. certified VeriFone, Inc.'s Omni 3750 point-of-sale terminal, which runs on VeriFone's Verix architecture. The Omni 3750 supports payment and value-added applications, including loyalty programs, gift cards and age verification.

TPI Server Gets Thumbs-Up from Microsoft

TPI Software, LLC's product, SmartPayments for Mobile Devices Server, has earned a Microsoft Windows Mobile Software logo. TPI develops payment-processing software for retail and online merchants. The logo certification indicates that the software meets technical standards established for reliability and security on Microsoft's Windows Mobile platform.

Visa Going after Chargebacks

Visa U.S.A. is making an effort to improve its process for resolving cardholder disputes, or chargebacks. The credit card association's initiative has been dubbed Re-Engineering Disputes (RED) and will target technology used at its member banks, such as replacing paper documents with electronic transmissions.

Visa's goal is to have most disputes resolved within one billing cycle.


Alliance Data Renews with Limited Too

Alliance Data Systems Corp. extended its contract with Limited Too, Inc. through 2010 and will continue to provide private-label credit card services.

The companies also signed a new multiyear agreement whereby Alliance Data will provide bankcard authorization services, including check verification and gift card authorization, for Limited Too's 537 stores in the U.S and Puerto Rico. Limited Too is a retailer for girls and young women.

BPS Agents Can Charge ANYwhere

ISO Business Payment Systems (BPS) will offer Comstar Interactive Corp.'s wireless CHARGE ANYwhere credit card processing solution through its network of sales representatives. BPS also will offer customers using Lipman USA's wireless Nurit 3010 and Nurit 8000 terminals the option to route transactions through Comstar's payment gateway using Cingular Wireless' Mobitex network or the Motient network, which then connect to National Processing Co.

EXS to Use Ezic for Digital Processing

Electronic Exchange Systems (EXS) selected Ezic, Inc. to be its exclusive provider of digital payment processing services. With Ezic's technology, EXS customers can accept credit card and electronic check payments over the Internet directly from a Web site or by using an Internet-enabled PC.

Two New Customers for Fifth Third

Fifth Third Bank Processing Solutions will process Visa, MasterCard, American Express and Discover credit card transactions at more than 150 of Moran Industries, Inc. franchise locations. Fifth Third also will process debit cards for National Commerce Financial Corp.

FDC Wins First Outsourced Bankcard Contract

First Data Corp. signed a multiyear agreement with China Everbright Bank to provide the bank with credit card, merchant processing and business consulting services, including authorizations, account management and backroom services. First Data's VisionPLUS software will be used as the processing platform. China Everbright is China's first shareholder-owned commercial bank and has assets of more than US$39.8 billion. The full-outsourcing deal between the two companies is the first of this type of agreement in China.

Hypercom Partners with South African Bank

First National Bank, South Africa (FNB), a division of FirstRand Bank Ltd, plans to use Hypercom Corp.'s advanced networking technology and up to 5,000 of its EMV-certified ICE card payment terminals. In addition, Hypercom's EMV Specialist Consultancy Team and partner Grintek Telecom will help FNB develop a solution to migrate to EMV technology.

Intellect Makes First U.S. Deal

Melbourne, Australia-based Intellect International N.V. will provide St. Louis-based General Credit Forms, Inc. (GCF) with 3,000 of its EMV-compliant PRESTO 210p point-of-sale products over the next 12 months. GCF is a manufacturer and distributor of POS products to merchants and the money order and petroleum industries in more than 150 countries on six continents.

NPC Signs 3 New Customers

Retail nursery Armstrong Garden Centers, Inc. selected National Processing Co. (NPC) to handle authorization and settlement for all of its MasterCard, Visa and online (PIN-based) debit transactions and to support its gift card program. Electronic Network Systems, Inc. (ENS) will use NPC's HealthePay payment platform for ACH payment processing, payment consolidation and electronic remittance advice reporting for health-care payers and providers.

And NPC will authorize and settle Visa and MasterCard transactions in the U.S. for LensCrafters, Sunglass Hut, Watch Station and Watch World (all Luxottica Group retail stores).

UK Grocery Chain Picks VeriFone

In its effort to convert to PIN-based debit and to support EMV smart card transactions, the United Kingdom's SPAR Supermarkets chain will deploy VeriFone, Inc.'s SC 5000 PIN pads in 1,200 of its convenience stores. Approximately 2,800 units will be installed beginning September 2003.


Cardtronics Acquires More ATMs

Cardtronics acquired 1,704 ATMs from American Express Co. With this transaction, Cardtronics said it owns and/or manages more than 12,500 ATMs. In the past year, Cardtronics has acquired approximately 5,000 ATMs and related contracts.

GCS Acquired by Processor

Credit card processor First Horizon Merchant Services purchased the existing stock of Orlando, Fla.-based Global Card Services, Inc. (GCS), a provider of products and services that process transaction data for hospitality merchants. GCS will operate as a wholly owned subsidiary of First Horizon Merchant Services, Inc., a member of the First Tennessee National Corp. Terms of the transaction were not disclosed.


New Member to Join eFunds Board

Richard J. Almeida will join eFunds Corp.'s Board of Directors in October 2003. Almeida has more than 35 years' experience in financial services. He is a retired Chairman and CEO of Heller Financial, Inc. Before his 14-year tenure at Heller Financial, Almeida held a variety of management and banking positions with Citicorp and with Citibank. He currently serves on several boards, including Corn Products International, CARE USA, The Chicago Public Education Fund, The Old Masters Society of The Art Institute of Chicago, and High Jump.


  • The Conference Board's Consumer Confidence Index increased nearly five points in August to 81.3 (out of 100), recovering from a July drop to 77. The Index is based on a survey of 5,000 U.S. households.
  • Circuit City Stores, Inc. plans to sell its bankcard operations (including approximately $1.5 billion in receivables) because, the company said, it is not key to its long-term growth plans.
  • Convenience stores are popping up in all types of strange locations. To increase its customer base, international retailer Lawson is opening stores in Tokyo subway stations, post offices and, most recently, inside the main Tokyo branch of Hokuriku Bank, which will operate 24 hours, the National Association of Convenience Stores reported.
  • The Pantry, Inc., a convenience store operator, plans to acquire 138 Golden Gallon convenience stores from Ahold USA.
  • Mexico's National Association of Supermarkets and Department Stores (ANTAD) reported that its members' total sales increased 4.3% in July 2003 compared with a year ago.
  • U.S. retailer Bonus Stores, Inc. will sell or close 214 Dollar Stores and Bonus Stores located in Alabama, Arkansas, Florida, Georgia, Kansas, Louisiana, Mississippi, Oklahoma, South Carolina, Tennessee and Texas.
Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.
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