Top Ten U.S. Issuers of Commercial Cards Ranked by ... · from 4.1 million active merchant outlets in Latin America in 2011. Purchase volume (spending at merchants) was $524.22 billion

Credit Cards $278.90Debit Cards $79.87

ChaseBofAU.S. BankWellsCitigroupCapOnePNCComericaComdataBMO Harris

©2012 The Nilson Report

Top Ten U.S. Issuersof Commercial Cards

Ranked by Purchase Volume (Bil.)

$74

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U.S. commercial bank cardSIssuers of MasterCard and Visa commercial cards are ranked based on purchase volume for 2011 on page 9. There are also separate rankings for each category: small business debit cards, small business credit cards, purchasing cards, corporate travel and entertainment cards, fleet cards, and prepaid cards (payroll, benefits, incentives, rewards, etc.) on pages 10 and 11.

Among the seven issuers with at least $10.00 billion in commercial card purchase volume, Bank of America had the highest increase, up

latin america’S top acqUirerSThe 35 merchant acquirers listed on page 6 processed 10.69 billion Visa and MasterCard credit, debit, and prepaid card transactions from 4.1 million active merchant outlets in Latin America in 2011. Purchase volume (spending at merchants) was $524.22 billion.

merchant litigation Settlement propoSedLitigation in federal court in Brooklyn, New York, charging Visa, MasterCard, and 12 U.S. card-issuing banks with conspiracy to set default interchange pricing appears to have been settled before trial. Interchange fees are paid by merchants to banks that acquire

chirpify paymentS on twitterThe online social network Twitter facilitates text message communication of up to 140 characters between senders and receivers. Chirpify ties this format to PayPal APIs to facilitate payments between senders of tweets and sellers of goods (printer

deUtSche telekom SelectS maStercard’S paypaSSDeutsche Telekom, owner of T-Mobile, Europe’s second largest mobile network operator, plans to offer a mobile wallet as well as payment card products to its customers in 10 countries. Excluded will be the U.K. where T-Mobile operates Everything Everywhere

mobile prepaid accoUnt proceSSing The account processing platform operated by Carta Worldwide is the first to receive certification for MasterCard’s Mobile Over-the-Air Provisioning Service (Motaps), designed to deliver payment

INSIDE: Fast Facts P 2-4 | pocket-sized mobile printer P 8

CHARTS: largest merchant acquirers in latin america P 6,7 | visa & mastercard commercial card issuers in the u.s. P 9 issuers oF Fleet, purchasing, prepaid, corporate, and small business cards P 10,11 | states prohibiting surcharges P 12

american expreSS, diScover, and emvAll four payment card networks in the U.S. — Visa, MasterCard, American Express, and Discover — have recently issued guidelines to merchant acquirers and issuers to facilitate the migration to EMV-compliant chip card technology. Unlike the rollout of EMV

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AMERICAN EXPRESS OPEN, which manages Amex's card issu-ing and acceptance with small businesses in the U.S., has made en-hancements to the Plum Card it markets to those companies. When cardholders pay at least 10% of their balance within 10 days of the statement closing date, they will receive a discount on the portion they have paid. When they pay at least 10% of the balance, they can take up to 60 days from the statement closing date to pay the remaining balance without penalties or interest charges. Federico Acuna is VP of Charge Cards at American Express OPEN, (212) 640-6468, [email protected], www.open.com.

PLACECAST, a provider of location-based marketing services, now also offers The ShopAlerts Mobile Wallet. Built in HTML5, the wallet works on all smartphone platforms. There is no app for marketers to build and no app for consumers to download. Placecast will white label the product to credit card companies, mobile operators, and retailers. Alistair Goodman is CEO at Placecast, (415) 814-1027, [email protected], www.placecast.net.

SOVEREIGN BANK is offering its MasterCard debit cardhold-ers rewards for purchases made in the LevelUp mobile payments network of 2,500 merchants. Users download the free LevelUp app onto their iPhone or Android smartphone then scan their LevelUp code at a business to pay. Eduardo Tobon is CEO, U.S. Cards and Pay-ments at Sovereign, (617) 757-5588, [email protected], www.sovereignbank.com. John Valentine is VP Sales at LevelUp, (401) 316-5271, [email protected], www.thelevelup.com.

PAYDIANT, provider of a white-label mobile payment and rewards platform for banks and retailers, has received $12 million in Series B funding led by Stage 1 Ventures. Chris Gardner is Co-Founder at Paydiant, (781) 591-3300, [email protected], www.paydiant.com.

PSCU, a credit union service organization with 1,500 customers, will provide prepaid EMV-compliant cards to more than a dozen credit unions this fall. Michael Kelly is CEO at PSCU, (727) 571-4656, [email protected], www.pscu.com.

CASHSTAR, a top provider of digital prepaid cards and incentives to retailers, has raised $5 million in funding from investors including Intel Capital, Passport Ventures, FTV Capital, and company management. David Stone is CEO at CashStar, (207) 699-5613, [email protected], www.cashstar.com. David Flanagan is Managing Director at Intel Capital, (408) 765-8080, [email protected], www.intelcapital.com.

INTELISPEND PREPAID SOLUTIONS, an independent entity within Maritz Holdings, is an issuer and reseller of American Express and Discover prepaid products, as well as a program manager for MasterCard and Visa prepaid cards. The company will develop wellness performance and safety incentive programs for employers and health plans in partnership with gBehavior (Global Behavioral Solutions, LLC). Darryl Hutson is CEO at InteliSpend, (636) 226-2000, [email protected], www.intelispend.com.

CHASE PAYMENTECH, the third largest U.S. acquirer, will offer its merchants Ingenico's Telium iCT250 POS terminal, which can handle EVM chip cards, NFC-enabled mobile phones, contactless cards, and magnetic stripe cards. Mike Duffy is President at Chase Paymentech, (214) 849-2132, [email protected], www.chasepaymentech.com. Thierry Denis is President at Ingenico, North America, (678) 456-1200, [email protected], www.ingenico.com.

WESPAY PAYMENTS SYMPOSIUM 2012

Two-Day ConferenceSeptember 17-18, 2012The Hard Rock Hotel, San Diego, California

Subscribers to The Nilson Report will receive a 20% discount.

Topics include: emerging payments technology such as mobile payments, utilizing multiple payment channels, where the industry is headed, creating a business case for offering the new technology, how recent regulatory changes will affect your organization, and best practices in risk management. Cost is $715.50 for an AAP WesPay member, $795 for a WesPay member, and $1,200 for a nonmember. Contact Shannon Cooper, Symposium Manager, (812) 339-6374, [email protected]. Register at www.wespay.org/symposium.

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Two-Day ConferenceAugust 15-16, 2012The Frei Caneca Convention Center, São Paulo, Brazil

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Topics include: retail, acquiring, mobile payment, prepaid, credit management, e-commerce, financial products/services to low-income individuals, financial products/services to high-income individuals. Speakers represent: Serasa Experian, Santander, Citibank, BMW Financial Services, Visa, MasterCard, Banco do Brasil, Cielo, TSYS, TOTVS, Edenred, OI, and more. Cost is $1,650 (BRL 3,300). Special Session: Cards & Payments Latin America 2012: Topics include: financial inclusion and financial education, big picture of Latin American market for payment methods, development of innovative financial products, mobile payment growth in Latin America, acceptance of cards and new technologies in Latin American market. Speakers represent: Scotiabank, Itaú-Unibanco, Ripley, HSBC, Euromonitor, MasterCard, Redeban Multicolor, and more. Cost is $2,195 (BRL 4,521). Contact Rafael Rinaldi at Latin Next Group, 55 (11) 4193-4841, [email protected]. Register at www.congressoc4.com.br.

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Fast Facts > > > > > > > > >

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> > > > > > > > > Fast Facts

"DISSECTING OPERATION HIGH ROLLER" is a white paper produced by Guardian Analytics and McAfee that details an international fraud ring that stole millions of dollars from commercial and consumer bank accounts in Europe, Asia, Latin America, and North America. Download at www.mcafee.com/us/resources/reports/rp-operation-high-roller.pdf.

GLOBAL eTELECOM, which provides ACH-based "eCheck" transaction processing services to 55,000 merchants, will deploy NorseCorp's eCommerce Fraud Prevention service. Chris Brundage is COO at Global eTelecom, (850) 344-4500, [email protected], www.globaletelecom.com. Skip Foss is COO at NorseCorp, (314) 880-2980, [email protected], www.norse-corp.com.

G2 WEB SERVICES, a provider of merchant compliance monitor-ing and e-commerce risk management services, has opened an office in Shanghai. Sophia Chen is Regional Director-Asia Pacific, 86 (21) 2890-9081, [email protected], www.g2webservices.com.

MANAGEMENT > CHANGESPaul Stoddart, formerly with Barclaycard, has been appointed Managing Director of Strategy & Business Development at Vocalink, 44 (870) 165-0019, [email protected]. Tracy Metzger has been appointed Chief Information Officer at North American Bancard, (248) 269-6000 x1004, [email protected]. David Gebhardt has been appointed Managing Director at Ingenico France, 33 (1) 5801-8787, [email protected]. Jean-Marc Landry has been appointed VP, Sales and Marketing, North America at Cubic Transportation, (858) 598-1119, [email protected]. Mette Kamsvåg has been appointed CEO at Nets, (45) 4489-2050, [email protected]. Peter Kalen has been appointed Executive VP at Sears Financial and Home Services and Transformation, (416) 941-2504, [email protected].

SKRILL (formerly known as Moneybookers), a top online payment brand in Europe, has purchased paysafecard.com Wertkarten, an Austria-based provider of prepaid vouchers that consumers use to shop online. Vouchers are sold over the counter at 450,000 retail outlets. Wouter Sleijiffers is Head of Marketing at Skrill, 44 (207) 608-4222, [email protected], www.skrill.com. Michael Mueller is CEO at paysafecard.com Wertkarten, 43 (1) 720-8380 x11, [email protected], www.paysafecardgroup.com.

SEARS CANADA FINANCIAL SERVICES will no longer assess foreign currency transaction charges on cross-border purchases made with its over 2+ million MasterCard credit cards issued in Canada. Peter Kalen is EVP, (416) 941-2504, [email protected], www.searsfinancial.ca.

NETS, the biggest third-party processor in North Europe, will offer its merchant customers China UnionPay card acceptance. So far 65,000 merchants in Denmark have signed up to accept UnionPay cards. Susanne Bronnum is EVP at Nets, 45 (44) 684-468, [email protected], www.nets.eu.

ACCERTIFY, a wholly owned subsidiary of American Express, has added British Airways as a customer of its e-commerce fraud prevention technology. Michael Long is VP for Europe, Middle East, and Africa at Accertify, 44 (12) 7321-8832, [email protected], www.accertify.com.

CITIBANK, owner of the Diners Club franchise in Australia, now issues a dual charge card product with a Diners Club card and a MasterCard card. Richard Wilde is Head of Diners Club in Australia, 61 (2) 8225-1000, [email protected], www.citi.com.

JCB INTERNATIONAL has opened a subsidiary in Sãn Paulo, Brazil. The new company aims to expand JCB card issuing and merchant acquiring businesses in 12 countries in Latin America. Naotaka Yazawa is Director Presidente, 55 (11) 3443-6463, [email protected], www.jcbcorporate.com.

Payment Card

Issuers

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Acquirers

A 2012 Nilson Report PublicationWorldwide

Largest

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Asia/Pacific, Canada, Europe, Latin America, United States, and Middle East/Africa Top 300 Issuers

Top 150 Credit Issuers Top 150 Debit Issuers

Top 150 Merchant Acquirers Worldwide

Also lists the Largest Acquirers in Europe, the U.S., Asia/Pacific,

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www.mcafee.com/us/resources/reports/rp-operation-high-roller.pdf

www.mcafee.com/us/resources/reports/rp-operation-high-roller.pdf

> > > > > > > > Fast FactsGlobal Payments now offers its merchants in Canada a

dynamic currency conversion service through Planet Payment. HomeCurrencyPay gives cardholders the option of paying for their purchases in their own currency at the point of sale. Revenue from the service is shared with the merchant. Jeff McGuire is VP, Product Delivery and Technology at Global Payments' Canadian Operations, (416) 847-4597, [email protected], www.globalpaymentsinc.com.

exPerian cerved information services is a new consumer credit information business in Italy. The company is a joint venture of Experian and Cerved Group and has assets of about $14 mil (€10 mil). Experian is the majority owner. Angelo Padovani is the Managing Director at ECIS, 39 (02) 3661-9890, [email protected], www.experianplc.com.

selectcore, provider of financial services to underbanked and underserved consumers, has signed a 3-year distribution deal with Gift Card Stop, provider of closed loop (private label) prepaid card products from 200 U.S. and 70 Canadian merchants. SelectCore’s platform for mobile top up, remittance, and other products is deployed at Canadian and U.S. retailers. Derek Robertson is VP Operations at SelectCore, (519) 351-8647, [email protected], www.selectcore.com. David Rambaran is Director of Business Development at Gift Card Stop, (647) 317-3567 x2009, [email protected], www.icardsystems.com.

ACI WorlDWIDe will use technology from Spectrum Message Services to offer financial institutions that use its fraud protection systems the opportunity to send cardholders SMS messages containing details of card transactions in near real-time. Craig Saks is VP Global Product Business Operations at ACI, 27 (21) 525-5050, [email protected], www.aciworldwide.com. Gerard Vos is Managing Director at Spectrum, 61 (2) 8968-9307, [email protected], www.spectrummessage.com.au.

clear2Pay and fime, companies with several years of experi-ence delivering secure and interoperable payment testing products, services, and EMV certification assistance in Europe and other re-gions, will work together to do the same in the U.S. Ian Kerr is Gen-eral Manager at Clear2Pay Open Test Solutions, 44 (1383) 720-118, [email protected], www.clear2pay.com. Pascal Le Ray is CEO at FIME, 33 (1) 6453-3680, [email protected], www.fime.com.

BouByAn BAnk in Kuwait will use FICO's Debt Manager product to handle collections for its credit and personal loan portfolios. Abdulla Al Najran Al Tuwaijri is General Manager, Consumer Banking, 96 (5) 2232-5353, [email protected], www.bankboubyan.com. Robin Findlay Heads FICO opera-tions in the Middle East and Africa, 44 (790) 880-4855, [email protected], www.fico.com.

deUtsche card services and AcceptEmail have signed an agreement that will enable German merchants and their customers to complete e-commerce payment transactions from e-bill present-ment to actual payment without having to change the transaction channel. Merchants use AcceptEmail's electronic bill presentiment and payment to invoice their customers by way of e-mail or text messaging. Consumers click on the bill to initiate payment. Mark Spangenberg is Head of Product & Risk Management at Deutsche Card Services, 49 (221) 995-770, [email protected], www.deucs.com. Peter Kwakernaak is CEO at AcceptEmail, 31 (20) 747-0123, [email protected], www.acceptemail.com.

Getin noble bank in Poland has renewed its card account management, authorization, and transaction settlement services contract with First Data. The new agreement adds Proactive Risk Manager, a fraud discovery and notification system. Pawel Wawier-nia is Director of the Card Department at Getin Noble Bank, 48 (22) 522-8346, [email protected], www.getinbank.pl. Grzegorz Dlugosz is a Board Member at First Data's business in Poland, 48 (22) 515-3068, [email protected], www.firstdata.com.

- 3 - THe nIlSon rePorT

The PrePaid Press exPo 2012: August 6-8, 2012. The Paris Hotel, Las Vegas, Nevada. Estimated attendance: 1,600. Cost for the three-day conference is $525 through August 3 ($600 onsite). Exhibit Hall passes are $49 through August 3 ($75 onsite).Contact Robin Tobias at The Prepaid Press Expo,(305) 421-7209, [email protected]. Register at www.prepaidpressexpo.com.

5Th Mobile ConTaCTless PayMenT innovaTions 2012: October 2-3, 2012. The Westin Michigan Avenue, Chicago, Illinois. Estimated attendance: 400. Cost for the two-day conference is $1,295, merchant rate $650. (Early Bird Registration through September 7, 2012.) Subscribers to The Nilson Report will receive a $350 discount. (Use code NILSON02) Contact Kathleen Daffner at Strategic Solutions Network, (203) 209-0520, [email protected]. Register at www.paymentinnovations.net.

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PrePaid Card CoMPlianCe 2012: October 11-12, 2012. The Westin San Francisco Market Street, San Francisco, California. Estimated attendance: 140. Cost for the two-day conference ranges from $1,995 to $2,295. Subscribers to The Nilson Report will receive a $300 discount. (Use code NR300.) Contact John Stoops at ACI, (212) 352-3220, [email protected]. Register at www.americanconference.com.

2nd annual PayMenT innovaTion (China) ConvenTion 2012: October 17-19, 2012. The Renaissance Yangtze Hotel, Shanghai, China. Estimated attendance: 300. Cost for the three-day conference is $2,885. Subscribers to The Nilson Report will receive a 20% discount. Contact Elim Weng at CDMC, 86 (21) 6840-7631 x8025, [email protected]. Register at www.cdmc.org.cn/picc2012.

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cartridges and energy bars), political candidates (House and Senate), musicians and music companies (for downloading of MP3 files or payment for concert tickets), and recipients of money transfers (mostly among friends).

Chirpify, which has been live for only five months, charges companies including HP and Nestle a monthly fee for payments. Individuals pay 4% of the value of their payment or funds transfer.

Chirpify is building the capacity to

charge purchases and transfers to an individual user’s credit or debit card or to their checking account.

It expects to announce a partnership with an acquirer by the end of the third quarter. Chirpify has received $1.4 million in Series A venture funding in a round led by Voyager Capital. The company’s seed money came from Upstart Labs. Chris Teso

is CEO at Chirpify in Portland, Oregon, (503) 208-3068, [email protected], www.chirpify.com. Prior issues: 994, 989

card credentials to Near Field Communication (NFC)-enabled mobile phones.

The Carta platform, which can manage credit, debit, and prepaid card products, merchant acquiring, and ATM processing, was designed to operate at the intersection of the Internet, chip technology, and mobile devices.

Carta customers in Europe

include Transact Network, a prepaid card issuer. That company uses Carta to process MasterCard prepaid cards it provides to customers of Lycamobile, a U.K.-based mobile virtual network operator (MVNO), which will become the first Motaps user. IDT Finance has recently signed to become Carta’s primary BIN sponsor.

In the U.A.E., Mint Global Processing, a joint venture between Carta and Mint Technology, uses Carta’s

platform to provide corporate payroll products aimed at the Middle East region’s unbanked population.

In Canada, Peoples Trust has signed a contract to issue EMV prepaid MasterCard cards for Carta clients who will launch

NFC-enabled mobile products later this year. Brian Semkiw is CEO at Carta Worldwide in Oakville, Canada, (416) 840-5611 x125, bsemkiw@

cartasolutions.com, www.cartaworldwide.com.

as a joint venture with France Telecom.

The wallet, which Deutsche Telekom is still developing, will be open to bank-branded payment products that operate

on the MasterCard, Visa, American Express, and Diners Club networks. There will also be T-Mobile brand payment products in the wallet. In some markets T-Mobile prepaid MasterCard PayPass cards will

also be offered.

T-Mobile prepaid MasterCard digital and plastic card products will be issued by Deutsche Telekom’s ClickandBuy

... haS raiSed $1.4 million in SerieS a ventUre fUnding.

idt finance iS itS primary bin SponSor in eUrope.

... turn to page 6

Mobile PrePaid account Processing (from page 1)...

chirPify PayMents on twitter (from page 1)...

deutsche telekoM selects Mastercard’s PayPass(from page 1)...



http://www.chirpify.com

http://www.cartaworldwide.com

Brazil-based Cielo and Redecard topped the acquiring market in Latin America. Cielo, the region’s largest acquirer, was seventh largest in the world. Redecard ranked second largest in Latin America and ninth worldwide.

Seven of the region’s largest acquirers are in Mexico, more than in any other country. Also on the list are acquirers from Argentina, Brazil, Chile, Colombia, Costa Rica, the Dominican Republic, Ecuador, Netherlands Antilles, Panama, Paraguay, Peru, Puerto Rico, and Venezuela.

subsidiary. ClickandBuy, a payment services provider to Web merchants, has a Europe-wide electronic money license.

The first wallet deployment will take place in Poland later this quarter. No T-Mobile branded

payment products will be issued there. German consumers will be offered wallets and prepaid MasterCard cards in the first

half of next year. The wallet service will be open to credit and debit card-issuing banks and others.

Poland is the fourth largest market in Europe for MasterCard PayPass card acceptance locations. Germany, however, has very few merchants supporting PayPass. Deutsche Telekom will market PayPass-enabled POS terminals to merchants in Germany. Mung Ki Woo is Group Executive, Mobile at MasterCard Worldwide in Purchase, New York, (914) 249-2191, [email protected], www.mastercard.com.

Bank Cards (Visa & MasterCard) Rank Transactions Volume Merchant POS ‘11 ‘10 Company, Headquarters (mil.) Chg. (mil.) Chg. Outlets Terminals 1 1 Cielo Brazil 3,786.6 –7% $185,980.9 21% 1,199,000 1,484,934 2 2 Redecard Brazil 2,818.1 22% $132,539.0 26% 955,056 1,065,710 3 3 Visa Argentina Argentina 946.5 4% $36,327.8 7% 310,000 343,300 4 4 BBVA Bancomer Mexico 592.6 32% $21,305.4 8% 118,167 158,358 5 5 Transbank Chile (1) 314.4 33% $17,518.6 23% 100,536 97,190 6 8 Banesco Banco Univ. Venezuela 275.8 77% $17,754.1 102% 28,411 50,747 7 6 Banco Nacional Mexico 253.9 13% $16,715.8 17% 93,112 68,272 8 7 First Data Argentina (2) 224.3 19% $11,307.0 41% 392,918 331,721 9 9 Mercantil Banco Univ. Venez. 196.7 66% $12,245.7 82% 27,285 46,118 10 23 Banco Santander Brazil 138.3 420% $6,331.9 453% 203,577 224,234 11 12 BBVA Banco Provincial Venez. 136.3 75% $6,816.5 100% 30,604 46,868 12 14 Banco de Venezuela Venezuela 105.2 64% $6,563.0 80% 21,405 33,871 13 13 Evertec Puerto Rico (3) 100.8 33% $4,010.2 17% 44,946 56,183 14 10 Santander Mexico (4) 98.7 1% $6,660.7 8% 40,427 84,028 15 11 Banorte Mexico 98.4 11% $4,952.7 14% 59,230 75,884 16 15 Grupo Bancolombia Colombia 82.5 30% $5,813.1 24% 41,292 (5)

17 16 CardNET Dominican Republic 69.7 12% $3,490.0 13% 19,879 34,945 18 17 HSBC Mexico 68.7 20% $3,191.1 14% 29,975 50,566 19 18 VisaNet Peru 48.4 11% $2,181.8 20% 37,567 51,540 20 21 Bancaribe Venezuela 40.0 41% $2,609.7 71% 7,375 8,604 21 20 Banco Nacional Costa Rica 37.1 8% $1,600.0 18% 27,628 24,976 22 22 Banco Davivienda Colombia 32.9 17% $2,653.1 26% 41,985 (5)

23 24 Banco de Occidente Colombia 28.5 7% $1,871.4 28% 8,895 (5)

24 19 Banco de Costa Rica Costa Rica 26.2 –35% $1,014.7 –27% 13,555 10,038 25 35 IXE Banco Mexico 24.5 151% $1,253.4 122% 12,472 14,765 26 26 Procesos de Medios de Pago Peru 21.5 29% $1,035.0 33% 34,469 50,045 27 25 Banco de Bogota Colombia 20.3 7% $2,069.3 25% 25,624 (5)

28 27 Bancard Paraguay 18.1 21% $1,024.2 17% 14,630 13,914 29 30 VisaNet Dominican Republic 15.0 16% $750.3 19% 3,559 6,194 30 31 Scotiabank Mexico (6) 14.9 19% $980.2 5% 21,536 19,760 31 29 PacifiCard Ecuador 14.9 12% $1,043.7 –4% 30,882 18,259 32 33 Maduro & Curiel’s Neth. Antilles 12.3 14% $1,288.1 10% 7,704 7,716 33 28 BBVA Colombia 10.3 –24% $752.8 –22% 5,875 (5)

34 34 Banco General Panama 10.1 — $897.9 — 857 9,432 35 36 Scotiabank Puerto Rico 9.4 39% $1,668.5 33% 7,370 9,490

Figures are net (gross minus chargebacks). Bank Cards = Visa and MasterCard cards including Electron and Maestro. Change in volume is based on local currency. Some figures have been restated. (1) 21 banks in Chile. (2) All MasterCard transactions. (3) Includes Costa Rica, U.S. Virgin Islands, and British Virgin Islands. (4) Joint venture with Elavon. (5) POS terminals are owned by Credibanco and Redeban. (6) Joint venture with First Data. © 2012 The Nilson Report

Largest Merchant Acquirers in Latin America 2011

latin aMerica’s toP acquirers(from page 1)

deutsche telekoM selects Mastercard’s PayPass(from page 5)...



http://www.mastercard.com

Not shown on this chart are 49.8 million transactions generated by domestic-only credit cards as well as by American Express, Diners Club, and Discover cards valued at $4.89 billion. Also not shown

are 336.1 million domestic debit transactions from brands including Redcompra, Infonet, ATH, Clave, Sodexo, BN, and Debito Popular, which generated $13.11 billion. Prior issues: 972, 955, 931, 916

in Canada, where the networks were out of sync with their mandates and timeframes for implementing the technology, U.S. issuers have released guidelines that are concurrent.

Visa and MasterCard EMV migration was discussed in issue 987.

By April 2013 merchant acquiring processors must be able to support American Express EMV chip-based contact and contactless cards as well as mobile device-initiated transactions. In October 2013 merchants will be eligible for relief from PCI Data Security Standard reporting requirements if card acceptance locations where 75% of their transactions occur can process American Express EMV payments.

Effective October 2015 the American Express network will

implement policies that transfer liability for certain types of fraud away from the party that has the most secure EMV technology deployment. Fuel sellers will have an additional two years to upgrade their automated dispensers.

American Express issued its first EMV card in 1997. Today American Express brand EMV cards are issued in 51 countries. Chip & PIN or chip & signature is the choice of Amex’s card-issuing partners. Suzan Kereere is Senior VP and General Manager, Global Network Business at American Express in New York, (212) 640-6943, [email protected], www.americanexpress.com.

Discover released D-PAS, its EMV-compliant (chip & PIN and chip & signature) payment specification, three years ago. D-PAS supports Multos, Java, and GlobalPlatform operating systems.

So far nearly 2 million cards issued by BC Card member banks in Korea have been deployed using D-PAS. BC Card and Discover have a reciprocal network acceptance partnership.

Another five banks outside the U.S., franchisees of Discover-owned Diners Club, have also been D-PAS certified, and more than 90 issuing and acquiring projects involving

Diners Club are in progress. By year-end a majority of the 5.9 million Diners Club cards worldwide will be EMV compliant.

Discover is implementing a 2013 EMV mandate for acquirers and direct-connect merchants in the U.S., Canada, and Mexico. Discover

cards are only issued in the U.S. and Ecuador, but card acceptance agreements exist in Canada and Mexico. In a few months the company is expected to announce a 2015 timeframe for fraud liability shift. Troy Bernard is Global Head of Chip Payment Technology at

Discover in Riverwoods, Illinois, (224) 405-2127, [email protected], www.discovernetwork.com.

amex emv cardS are iSSUed in 51 coUntrieS.

Top Acquirers Ranked by Total Transactions

TransactionsCompany (mil.)*

Cielo (Brazil) 3,789.8

Redecard (Brazil) 2,834.9

Visa Argentina (Argentina) 946.5

BBVA Bancomer (Mexico) 592.6

Transbank (Chile) 365.1

Evertec (Puerto Rico) 325.4

* in 2011. Includes Visa, MasterCard, Amex, Diners, Discover, domestic-only general purpose cards, and government benefits cards. © 2012 The Nilson Report

aMerican exPress, discover, and eMv (from page 1)...



http://www.americanexpress.com

http://www.discovernetwork.com

credit, debit, and prepaid card payments.

Under the proposed agreement, the defendants will pay $6.05

billion in cash to a class of merchants created by the consolidation of approximately 50 lawsuits filed since 2005. More than seven million merchants could receive payments from the settlement fund.

Another $525 million in cash will be paid to a group of merchants that filed individual actions outside of the class action. These include Safeway, Kroger, Walgreens, Publix Super Markets, and Rite Aid. Only the class settlement amount, along

with other provisions, needs to be approved by the judge overseeing the case.

Some merchants in the class won’t accept the settlement including the National Association of Convenience Stores (NACS), which has already hired a law firm to pursue its options. That firm, Constantine Cannon, won a $3.00 billion out-of-court settlement against Visa and MasterCard in 2003 in litigation commonly referred to as “the Walmart case.” NACS opted out in its position as a merchant that accepts member dues payments by credit card. Its members, who own 148,000 convenience stores, would have to opt-out individually.

A provision in the settlement

reduces the $6.05 billion total based on the payment card purchase volume of any merchants who opt-out of the class settlement. If the number of merchants who opt-out exceeds 25% of payment card volume, Visa and MasterCard have the option of walking away.

Of the $6.58 billion total, Visa is liable for 67% or $4.40

billion. MasterCard’s share is 12% or $790.0 million, and the banks’ share is 21% or $1.39 billion.

All 12 issuing banks have agreed to the terms

of the class settlement. They are Chase, Bank of America, Citi, Wells Fargo, Capital One, Barclays, Fifth Third, First National of Omaha, HSBC, PNC, SunTrust, and Texas Independent Bancshares.

Merchant litigation settleMent ProPosed (from page 1)...

The Blue Bamboo PocketPOS P200 mobile printer is designed

for use by mobile sales and service merchants

who accept card payments away from a store or office. The

P200 is the first PCI PED and EMV chip and PIN

mobile payment printer. It pairs with most mobile

devices via cable or Bluetooth and supports magnetic stripe cards,

chip and PIN cards, and contactless Near Field Communication (NFC) payments from

mobile devices. Connectivity is PSS Bluetooth v2.1 +EDR, although the P200 is backwards compatible with smartphones using PSS Bluetooth 2.0 such

as Android, BlackBerry, Windows, and J2ME phones. IPhones, iPads, and iPods are supported through Apple MFi certification.

The P200 can link to a merchant’s installed mobile payment application. It supports multiple languages and Unicode character printing, graphic printing, and barcode printing. It is

powered by a 32-bit highly secure CPU.

The Blue Bamboo PocketPOS P200 is available worldwide. Trent Peterson is CEO at Blue Bamboo in Shanghai, China, 86 (21) 5219-0333, [email protected], www.bluebamboo.com.

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$9.23 billion, compared to an increase of $7.29 billion for Wells Fargo, $5.74 billion for JPMorgan Chase, $3.45 billion for U.S. Bank, $2.10 billion for Citigroup, $2.08 billion for PNC, and $1.80 billion for Capital One.

Based on credit card purchase volume (excluding debit and prepaid cards), JPMorgan Chase ranked first with $73.71 billion, up 7.3%. However, second place Bank of America increased 12.9% to

$51.09 billion. U.S. Bank’s credit card purchase volume grew 8.3% to $42.17 billion.

Citigroup credit increased 5.2% to $35.75 billion, Wells Fargo increased 17.8% to $26.43 billion, and Capital One increased 8.4% to $21.97 billion.

Based on debit card purchase volume (debit and prepaid cards combined), Bank of America was first with $19.36 billion, up 21.4%. Second

Others include VyStar CU ($55.9 mil.), Hancock Bank ($50.4 mil.), Members 1st FCU ($47.9 mil.), Suncoast Schools FCU ($26.8 mil.), Wash. State Empl. CU ($5.8 mil.), Michigan State Univ. FCU ($2.7 mil.), United FCU ($2.5 mil.), PSECU ($2.0 mil.), AA CU ($2.0 mil.), Univ. of Kentucky FCU ($1.1 mil.), Hudson Valley FCU ($0.4 mil.). © 2012 The Nilson Report

Purchase Volume Trans. Cards Rank/Issuer/Brand (mil.) Chg. (mil.) (000) 1. JPMorgan Chase V/M $90,642.7 7% 617.4 17,900 2. Bank of America V/M $70,445.8 15% 451.9 11,525 3. U.S. Bank V/M $48,249.2 8% 305.8 9,114 4. Wells Fargo V/M $44,902.9 19% 443.3 8,058 5. Citigroup V/M $41,415.5 5% 338.4 33,094 6. Capital One V/M $22,909.0 9% 145.9 2,688 7. PNC Bank V $12,376.4 20% 80.0 2,514 8. Comerica V/M $9,387.2 15% 278.8 7,259 9. Comdata M $9,116.0 57% 83.5 5,149 10. BMO Harris (incl. M&I) V/M $8,727.9 10% 49.2 666 11. SunTrust V/M $8,336.1 23% 61.1 1,410 12. Wright Express M $7,759.5 76% 40.0 3,365 13. The Bancorp Bank V/M $7,461.7 128% 118.0 8,392 14. MetaBank V/M $6,317.1 3% 173.7 24,967 15. BB&T V $5,065.7 18% 46.7 840 16. Fifth Third V/M $4,980.3 26% 41.7 724 17. Commerce Bank V/M $4,495.5 31% 11.5 215 18. Regions Bank V/M $3,783.9 24% 32.5 822 19. First Nat’l Nebraska V/M $3,500.7 12% 27.6 309 20. TD Bank V $3,111.5 28% 28.8 438 21. RBS Citizens V/M $2,804.8 15% 23.7 387 22. Bank of the West V/M $2,126.2 21% 14.6 194 23. BBVA Compass V $1,568.7 14% 14.5 201 24. M&T Bank V $1,501.1 21% 10.2 155 25. HSBC M $1,433.9 15% 9.3 209 26. Zions Bancorporation V $1,339.3 23% 10.2 167 27. TIB V/M $1,166.5 19% 8.9 437 28. UMB Bank V $1,141.9 27% 6.7 163 29. FleetCor M $1,134.0 73% 7.7 345 30. KeyBank M $1,005.2 17% 10.5 155 31. Columbus B&T/Syn. V/M $939.3 12% 7.9 101 32. First Hawaiian V/M $911.5 15% 3.3 55

Purchase Volume Trans. Cards Rank/Issuer/Brand (mil.) Chg. (mil.) (000) 33. Union Bank M $774.5 22% 9.1 98 34. First Horizon V $718.0 24% 4.5 83 35. First Citizens (N.C.) V/M $701.0 7% 5.8 95 36. Arvest Bank V $663.4 23% 6.7 80 37. Sovereign Bank V/M $602.8 15% 6.7 150 38. Barclaycard US V/M $577.0 0% 3.6 90 39. TCF Bank V $565.4 7% 6.3 134 40. Huntington Bancshares M $503.8 10% 5.5 75 41. RBC Bank V $463.8 20% 4.3 65 42. City Nat’l (Calif.) V $359.7 26% 2.3 20 43. FirstBank (Colo.) V $354.3 7% 3.9 48 44. BankAtlantic M $340.7 –5% 4.3 27 45. BancorpSouth M $336.0 15% 3.5 32 46. T-Chek M $307.8 48% 2.4 35 47. State Farm Bank V $304.4 11% 3.1 57 48. People’s United M $291.9 62% 3.4 57 49. Whitney Nat’l V $286.2 25% 2.5 33 50. The Bank of N.Y. Mellon M $267.3 3% 1.2 23 51. BOK Financial V $255.0 15% 2.8 29 52. FirstMerit Bank V/M $251.3 25% 2.4 33 53. Associated Bank M $224.3 20% 2.7 45 54. Navy FCU V/M $168.0 83% 2.0 132 55. Sterling Savings V $167.4 24% 1.5 25 56. NCMIC Finance M $133.5 –18% 1.2 11 57. Nordstrom V $126.0 30% 0.5 10 58. Trustmark Nat’l V/M $125.5 6% 1.2 25 59. Intrust Bank V/M $124.0 13% 1.2 19 60. American Savings V $116.0 14% 0.9 15 61. WesCorp V $96.5 –29% 0.1 3 62. America First CU V $77.8 14% 0.8 16 63. First Bank (Mo.) M $77.4 5% 0.9 12 64. Northwest Savings V $60.7 19% 0.6 16

U.S. Visa & MasterCard Commercial Card Issuers 2011

bank of america had the larg-eSt increaSe in credit card pUrchaSe vol.

u.s. coMMercial bank cards(from page 1)...

... turn to page 10



place Wells Fargo increased 21.7% to $18.47 billion. JPMorgan Chase’s debit card purchase volume grew 4.5% to $16.93 billion.

Comerica debit increased 14.2% to $7.96 billion, The Bancorp Bank increased 127.7% to $7.37 billion, and MetaBank increased 2.9% to $6.32 billion. Prior issues: 974, 951, 933, 931, 928, 904, 884

Purchase Volume Purch. Trans. Cards Issuer (mil.) Chg. (mil.) (000) 1. JPMorgan Chase $3,613.5 15% 36.6 371 2. FleetCor $1,134.0 73% 7.7 345 3. Wells Fargo $979.1 31% 8.2 56 4. Comerica $313.4 47% 2.5 36 5. First Horizon $189.4 61% 0.8 15 6. BMO Harris $131.1 9% 0.6 8 7. Commerce Bank $83.3 14% 0.4 6 8. State Farm Bank $44.0 21% 0.7 17

Some figures are included with purchasing cards. Others include Columbus B&T/Synovus ($17.9 mil.), Citigroup ($12.9 mil.), BankAtlantic ($6.3 mil.), and Bank of America ($4.6 mil.). Excludes cards not branded V/MC, such as Voyager from U.S. Bank ($4,299.2 mil. from 1,373,942 cards). © 2012 The Nilson Report

Fleet Cards

Purchase Volume Purch. Trans. Cards Issuer (mil.) Chg. (mil.) (000) 1. JPMorgan Chase $37,505.0 9% 231.1 4,300 2. Bank of America $22,722.7 6% 141.5 2,302 3. Capital One $21,900.0 8% 135.4 2,500 4. Citigroup $14,536.3 –1% 98.1 4,602 5. Wells Fargo (1) $13,614.2 8% 84.4 1,524 6. U.S. Bank $11,621.8 17% 75.5 1,117 7. First Nat’l of Nebraska $2,834.2 6% 23.2 254 8. BB&T $1,877.8 12% 14.2 293 9. PNC $1,821.4 14% 12.8 295 10. TIB $1,000.2 4% 7.6 331 11. SunTrust $906.7 3% 7.5 233 12. Fifth Third $818.2 4% 8.2 249 13. Barclaycard US $577.0 0% 3.6 90 14. Zions Bancorporation $568.4 18% 3.5 47 15. RBS Citizens $508.5 23% 3.4 67 16. First Citizens (N.C.) $474.8 4% 3.3 49 17. HSBC $370.5 10% 2.4 39 18. First Hawaiian $321.9 11% 1.1 15 19. BBVA Compass $297.6 13% 2.2 49 20. TD Bank $250.8 27% 3.2 35 21. State Farm Bank $208.6 12% 2.0 36 22. City Nat’l (Calif.) $201.8 22% 1.1 9 23. RBC Bank $200.9 20% 1.3 16 24. Regions Bank $198.8 1,326% 1.6 63 25. Commerce Bank $198.0 19% 1.6 37 26. UMB Bank $186.0 23% 1.4 30 27. Whitney Nat’l $175.2 24% 1.2 12 28. Bank of the West $147.7 17% 1.1 18 29. NCMIC Finance $133.5 –18% 1.2 11 30. BancorpSouth $115.0 13% 1.0 12

Others include FirstMerit ($85.2 mil.), The Bancorp Bank ($72.7 mil.), Trustmark Nat’l ($63.1 mil.), Columbus B&T/Synovus ($39.7 mil.), FirstBank Colo. ($31.3 mil.), American Savings ($30.1 mil.), Navy FCU ($24.7 mil.), Sterling Savings ($21.9 mil.), Members First FCU ($15.7 mil.), America First CU ($11.7 mil.), First Horizon ($11.5 mil.), VyStar CU ($4.0 mil.), Mich. State Univ. FCU ($2.7 mil.), Suncoast Schools FCU ($1.7 mil.), Hudson Valley FCU ($0.4 mil.), AA CU (<$0.1 mil.). (1) Estimate. © 2012 The Nilson Report

Small Business Credit Cards

Purchase Volume Purch. Trans. Cards Issuer (mil.) Chg. (mil.) (000) 1. JPMorgan Chase (1) $27,149.3 5% 60.6 5,026 2. U.S. Bank (2,3) $24,724.5 5% 47.1 940 3. Bank of America $22,337.6 20% 43.8 662 4. Citigroup $9,697.5 16% 25.7 481 5. Comdata (3) $8,759.6 56% 70.8 3,518 6. Wells Fargo (3) $8,179.2 35% 19.5 331 7. Wright Express (4) $7,649.1 77% 39.4 3,364 8. PNC $6,476.9 21% 14.1 216 9. Commerce Bank $3,721.8 35% 4.3 74 10. SunTrust $3,166.4 1% 4.5 74 11. Fifth Third (3) $2,354.4 29% 9.7 107 12. Regions Bank $1,530.4 26% 4.7 61 13. BMO Harris $1,297.8 –2% 4.0 61 14. UMB Bank $854.7 29% 4.1 110 15. Comerica (3) $820.1 23% 2.8 33 16. BB&T $551.4 10% 1.4 17 17. M&T Bank $438.3 26% 1.0 13 18. HSBC $399.7 23% 1.7 23 19. First Hawaiian (3) $384.6 20% 0.9 13 20. RBS Citizens $348.3 19% 0.6 6 21. The Bank of N.Y. Mellon (3) $267.3 3% 1.2 23 22. Columbus B&T/Synovus $216.3 71% 0.3 5 23. First Horizon $184.6 21% 0.6 11 24. BBVA Compass $182.4 27% 0.6 11 25. Arvest Bank $146.6 53% 0.9 14 26. Nordstrom $126.0 30% 0.5 10 27. First Nat’l of Nebraska $102.9 11% 0.4 5

Others include WesCorp ($96.5 mil.), Navy FCU ($21.0 mil.), Zions ($16.1 mil.), Intrust ($11.1 mil.), FirstMerit ($7.8 mil.), The Bancorp Bank ($7.5 mil.), State Farm Bank ($5.0 mil.), Sterling Savings ($0.6 mil.). (1) Accounts and cards include single-use. (2) Includes One Card cards, but not Voyager proprietary fleet cards. (3) Includes MasterCard Multi Card. (4) Includes fleet cards. © 2012 The Nilson Report

Purchasing Cards

NOTE: Rankings this year are based on purchase volume. In prior years they were based on total volume.

u.s. coMMercial bank cards(from page 9)...



Purchase Volume Purch. Trans. Cards Issuer (mil.) Chg. (mil.) (000) 1. Citigroup $11,505.4 6% 65.2 2,396 2. BMO Harris $6,701.2 7% 37.9 404 3. Bank of America $6,023.7 16% 34.1 508 4. U.S. Bank $5,826.8 6% 34.2 894 5. JPMorgan Chase $5,440.0 5% 31.0 962 6. Wells Fargo $3,658.7 21% 20.5 582 7. Bank of the West $669.7 37% 2.0 90 8. SunTrust $629.0 33% 3.3 55 9. PNC $570.8 47% 4.2 72 10. First Nat’l of Nebraska $452.0 70% 2.6 35 11. M&T Bank $413.0 20% 2.2 29 12. TD Bank $351.6 95% 1.7 24 13. T-Chek $307.8 48% 2.4 35 14. Columbus B&T/Synovus $302.5 –16% 3.2 55 15. Comerica $290.5 –4% 2.0 74 16. RBS Citizens $283.1 18% 1.4 24 17. Arvest Bank $236.0 9% 1.9 30 18. Commerce Bank $204.6 0% 1.1 48 19. HSBC $150.1 2% 0.8 19 20. BB&T $135.4 20% 0.8 10 21. First Horizon $131.5 11% 1.0 17 22. Zions Bancorporation $128.1 81% 0.5 7 23. Wright Express $110.4 11% 0.6 1 24. Intrust Bank $71.6 8% 0.6 7 25. Capital One $70.6 7% 0.6 7 26. State Farm Bank $45.6 –5% 0.3 4

Others include UMB Bank ($39.4 mil.), FirstMerit Bank ($32.1 mil.), The Bancorp Bank ($10.3 mil.), Sterling Savings ($9.2 mil.), AA CU ($1.2 mil.), Navy FCU ($0.3 mil.), First Hawaiian Bank (<$0.1 mil.).

© 2012 The Nilson Report

Corporate Cards

Purchase Volume Purch. Trans. Cards Issuer (mil.) Chg. (mil.) (000) 1. JPMorgan Chase $7,955.0 –8% 171.6 5,188 2. Comerica $7,558.8 14% 268.0 7,041 3. The Bancorp Bank $7,282.9 125% 116.3 8,342 4. MetaBank $5,846.6 6% 168.3 24,967 5. Citigroup $3,197.1 –3% 128.2 25,356 6. U.S. Bank $2,686.4 –9% 111.1 5,535 7. Bank of America $2,353.6 109% 71.0 5,162 8. Wells Fargo $2,159.4 39% 93.6 2,159 9. PNC $564.7 2% 19.6 1,479 10. Comdata $356.4 80% 12.7 1,631 11. SunTrust $209.9 98% 8.8 579 12. TIB $160.1 1,270% 1.3 102 13. BB&T $120.9 26% 3.2 181 14. Regions Bank $110.1 –28% 6.0 348

Others include Commerce Bank ($24.3 mil.), BMO Harris ($15.6 mil.), BBVA Compass ($8.2 mil.), Zions Bancorporation ($7.0 mil.), Hancock Bank ($4.4 mil.), Intrust Bank ($4.0 mil.), TD Bank ($0.6 mil.), and Arvest Bank ($0.5 mil.).

© 2012 The Nilson Report

Prepaid Commercial Cards Purchase Volume Purch. Trans. Cards Issuer (mil.) Chg. (mil.) (000) 1. Bank of America $17,003.6 15% 161.3 2,890 2. Wells Fargo $16,312.2 20% 217.1 3,406 3. JPMorgan Chase $8,979.9 18% 86.3 2,053 4. SunTrust $3,424.1 55% 37.1 470 5. U.S. Bank $3,389.8 17% 37.8 629 6. PNC $2,942.6 23% 29.3 452 7. TD Bank $2,508.5 22% 23.9 377 8. Citigroup $2,466.4 21% 20.9 254 9. BB&T $2,380.2 24% 27.2 339 10. Regions Bank $1,944.7 17% 20.2 351 11. Fifth Third $1,807.7 33% 23.9 368 12. RBS Citizens $1,664.9 11% 18.3 291 13. Bank of the West $1,308.8 15% 11.6 86 14. BBVA Compass $1,080.5 12% 11.4 131 15. KeyBank $1,005.2 17% 10.5 155 16. Capital One $938.4 11% 9.9 181 17. Union Bank $774.5 22% 9.1 98 18. M&T Bank $649.8 18% 7.0 112 19. Zions Bancorporation $619.7 22% 5.9 103 20. Sovereign Bank $602.8 15% 6.7 150 21. BMO Harris $582.2 149% 6.1 50 22. TCF Bank $565.4 7% 6.3 134 23. HSBC $513.6 16% 4.3 129 24. Huntington $503.8 10% 5.5 75 25. MetaBank (1) $470.5 –27% 5.4 0 26. Comerica Bank $404.4 13% 3.6 74 27. Columbus B&T/Synovus $363.0 20% 3.8 34 28. BankAtlantic $334.5 –4% 4.3 27 29. FirstBank (Colo.) $323.0 7% 3.6 43 30. People’s United Bank $291.9 62% 3.4 57 31. Arvest Bank $280.3 22% 3.9 31 32. Commerce Bank $263.3 18% 3.3 21 33. RBC Bank $262.8 20% 3.0 50 34. BOK Financial $255.0 15% 2.8 29 35. First Citizens (N.C.) $226.2 14% 2.5 46 36. Associated Bank $224.3 20% 2.7 45 37. BancorpSouth $221.1 16% 2.6 21 38. First Hawaiian $205.0 13% 1.3 26 39. First Horizon $201.1 12% 2.1 36 40. City Nat’l (Calif.) $157.9 30% 1.2 11 41. Sterling Savings $135.7 28% 1.2 21 42. FirstMerit Bank $126.2 36% 1.4 14 43. Navy FCU $122.1 33% 1.7 106 44. First Nat’l of Nebraska $111.5 23% 1.5 15 45. Whitney Nat’l $111.0 27% 1.3 21 46. The Bancorp Bank $88.3 2,595% 1.0 37 47. American Savings $85.9 20% 0.7 12 48. First Bank (Mo.) $77.4 5% 0.9 12 49. America First CU $66.1 14% 0.7 12

Others include Trustmark ($62.4 mil.), UMB ($61.9 mil.), Northwest Svgs.($60.7 mil.), VyStar CU ($51.9 mil.), Hancock ($46.0 mil.), Intrust ($37.4 mil.), Members 1st FCU ($32.2 mil.), Suncoast Schools FCU ($25.1 mil.), TIB ($6.2 mil.), WA State Empl. CU ($5.8 mil.), United FCU ($2.5 mil.), PSECU ($2.0), UofK FCU ($1.1 mil.), State Farm Bank ($1.1 mil.), AA CU ($0.8 mil.). (1) Portfolio transferred out at end of 3rd qtr. © 2012 The Nilson Report

Small Business Debit Cards



MasterCard’s payment will be from cash on its balance sheet. Visa addressed the need for funds to settle litigation when it structured its 2008 initial public offering (IPO) of common stock by creating an escrow account funded by the value of the Class

B shares in Visa Inc. owned by its U.S. bank customers. Originally funded with $3.00 billion at the time of the IPO, the escrow account has since been used to make payments to American Express (2007) and Discover (2008). There was $4.30 billion in the account as of March 31, 2012.

Visa will take a $4.10 billion pretax charge for the quarter ended June 30, 2012. MasterCard took a $770 million charge in the fourth quarter of 2011, and will take an additional $20 million pretax charge in its upcoming quarter. Share prices for both rose on news that a settlement had been reached.

Unlike the Walmart settlement, this proposal is designed to release Visa and MasterCard from any future litigation related to the setting of interchange fees, past practices, and network rules.

Visa and MasterCard have also agreed to a 10-basis-point reduction in credit card interchange fees for an eight-

month period, a provision estimated at $1.20 billion. The period will begin after merchants opt-out of the class settlement, likely in mid-2013.

When eight months of credit card interchange relief is added to the $6.58 billion payout, the resulting $7.78 billion in compensation to merchants would make this proposal the largest antitrust settlement in U.S. history.

Additionally, merchants will be able to add surcharges on Visa and MasterCard credit card transactions where permitted by state law. Credit card surcharges are outlawed in 10 states — California, Texas, New York, Florida, Massachusetts, Colorado, Connecticut, Kansas, Maine, and Oklahoma. Collectively they account for 40% of the U.S. population. Surcharges will be capped at the merchant’s discount rate.

Before adding surcharges, merchants must register 30 days in advance with Visa and MasterCard as well as with their acquirer. They then must post signs at checkout advising consumers that a surcharge will be applied and that it is the merchant rather than any network or any card issuer who is applying them. Similar verbiage, as well as the amount of the surcharge, must also appear on the merchant’s receipt. Merchants must also apply surcharges to any transaction made on a network that charges more expensive fees. This would apply to American Express but not Discover.

American Express does not prohibit surcharges as long as every other card brand accepted by a merchant is also subject. This applies to Visa, MasterCard, and Discover, which does not prohibit surcharging.

The final stipulation in the agreement gives merchants the

ability to reduce their network and interchange fees by creating groups of businesses in the same merchant categories. In return, MasterCard and Visa could request preferred

provider status, participation in promotions, and deployment of greater security technologies from those groups. Prior issues: 983, 851, 836

Merchant litigation settleMent ProPosed (from page 8)

if finalized, it will be the largeSt anti-trUSt Settle-ment in U.S. hiStory.

States ProhibitingSurcharges

Population Share ofState (mil.) Total*

California 37.7 12.1%Texas 25.7 8.2%New York 19.5 6.2%Florida 19.1 6.1%Massachusetts 6.6 2.1%Colorado 5.1 1.6%Oklahoma 3.8 1.2%Connecticut 3.6 1.1%Kansas 2.9 0.9%Maine 1.3 0.4%TOTAL 125.2 40.2%

*all 50 states plus District of Columbia © 2012 The Nilson Report

Visa 67%

12 IssuingBanks 21%

MasterCard 12%

$6.58 bil.

©2012 The Nilson Report

Shares of MerchantSettlement



David Robertson, Publisher JulY 18, 2012

Documents

Top Ten U.S. Issuers of Commercial Cards Ranked by ... · from 4.1 million active merchant outlets in Latin America in 2011. Purchase volume (spending at merchants) was $524.22 billion