Credit Cards Online Information

he credit card market Tis highly competitive with some very good deals available. But store cards are a notorious rip-off, unless you clear your balance each month. Most have annual percentage rates (APRs) above 25, which is some 8 to 10 per cent higher than the most expensive credit cards.

To make matters worse, the store-card trap is getting bigger. Debenhams last week wrote to account holders informing them that they can now use their cards to withdraw money from cashpoints, as well as to purchase goods from its own stores.

Sounds good, in theory. But those who make use of this offer will soon realise what a rip-off it is. Every time you withdraw cash using your Debenhams card, you will be charged pounds 1.50, which results in an APR of 32 (30 if you pay by direct debit). And cash withdrawals have no interest- free period, so even if you do clear your balance every month you will still accrue interest.

"Store cards are just a total rip-off," says Mike Naylor, senior researcher at Which?, the consumer magazine. "By all means play them at their own game by paying off your balance every month [and taking advantage of special offers]. But you shouldn't use them to borrow money on, and don't even think about taking cash out on them. There can't be any justification for having [interest] rates four or five times [higher than] the base rate."

Taking out a store card may seem attractive when you're offered 10 per cent off your first purchase and then get extra reductions during sales periods and discount vouchers. However, on closer scrutiny, the appeal of such offers declines. Quite often customers find their vouchers aren't used because, in order to get the 15 per cent discount, you have to spend at least pounds 100. Or the day when you can get an extra 15 per cent off is a Thursday, when you might not be able to get to the shops because you're working. When these factors, along with high APRs, are taken into account, one wonders why store cards are so popular.

A survey carried out by market researcher Mintel has revealed that there are 20 million store cards in existence in the UK - up from eight million in 1992. Of those people surveyed, 18 per cent - which represents a store- card-owning population of nearly nine million adults - had a store card. More worrying is that fewer than four in 10 people clear their balances every month. So even though only 31 per cent of store-card holders know what the APR on their card is, many of them are paying high amounts of interest.

This apathy is just what retailers want. Often customers don't even realise that rates may have been increased. Debenhams' letter to its account holders made no mention of the charges for withdrawing money with an account card; these details were confined to the accompanying leaflet and, chances are, a lot of people won't bother reading it.

Withdrawing money on any credit card, not just a store card, should be avoided unless it's an emergency. The APR is always higher when you're borrowing than when you're making a purchase, and you start accruing interest from the moment the cash is withdrawn. For example, Egg, which has an introductory offer of 0 per cent on balance transfers and a standard APR of 11.9, charges customers 14.2 per cent for cash withdrawals.

Research from People's Bank reveals that interest payments on outstanding store-card balances are costing UK consumers over pounds 400m more than if they were to switch to a credit card with a low APR. (See table below.)

"The 32 per cent [charged by Debenhams to customers who use their card to withdraw cash] is another prime example of why not to borrow money on a store card," says Shakila Ahmed at People's Bank. "Store cards look very attractive ... [but] consumers should check what the APR rates are, and if they cannot afford to pay the balance off in full, they should shop around for a low-rate credit card."

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Despite increasing public awareness, credit card fraud is rising at a shocking rate. According to the Association of Payment Clearing Services (Apacs), it increased by 55 per cent last year.

Most of us would probably assume that the internet is to blame for the majority of fraudulent transactions. Mintel, the market researcher, reports that consumers are still concerned about online security. Over 80 per cent of people are reluctant to purchase financial products via the internet because of fears about disclosing credit card details.

But figures from Apacs show counterfeit cards to be the biggest problem. They cost the banking and retail industry pounds 102.8m in 2000 - a rise of 104 per cent on the previous year.

"We're not surprised by the increase," says Colin Grannell, managing director of Visa UK. "There's a huge amount of work to do [to combat credit card fraud], but even though we've known about the problems, making changes is hard."

The Apacs figures identified three main areas of concern: counterfeit cards, lost and stolen cards, and purchases made when the card is not present. These same issues are causing problems across Europe, but Mr Grannell says that Britain suffers more from credit card fraud than other countries. "The UK is a more mature market in terms of the number of people with credit cards. There are 63 million Visa cards in Britain and 177 million in Europe, so it's no surprise the problem is bigger here."

Measures to tackle the problem of fraud are in the pipeline with the first coming into effect next month. From April, a procedure known as SET (secure electronic transaction) will mean that when you use your credit card to pay for something over the phone, via the internet or using your WAP (wireless application protocol) phone, you will have to give more than just the card number and expiry date.

Customers must provide their address and the card verification value (CVV). The CVV is the extra three digits printed on the back of the card at the end of the number. These are not raised numbers, so they're not printed on receipts. This means you must have the card with you when you make a purchase.

In a bid to tackle the problem of counterfeit cards, chip cards are being introduced. The most common way cards are replicated is through a method known as "skimming". The fraudsters swipe the card through a machine, which downloads all the account details from the magnetic strip. These can then be used to make another card - and the cardholder is often unaware this has happened until the statement arrives.

This type of fraud is commonly associated with restaurants, where your card is often out of sight while your bill is being settled.

Chip cards will combat this problem. Rather than account details stored in the magnetic strip on the back of the card, they are put in a chip on the front. The information in the chip is much harder to copy than that on a magnetic strip.

Some card providers have started issuing cards with chips: both Visa and Mastercard are committed to this procedure. Visa EU has announced it will be investing 168m euros (pounds 107m) to accelerate the use of chip cards across Europe. Visa EU hopes the adoption of these cards will reduce fraud by 700m euros.

The problem of lost and stolen cards is harder for card issuers to tackle, although the UK banking and retail industry is discussing how it could be managed. Of the three main fraud problems, this is the only one where the cardholder can reduce the chances of a fraudulent transaction occurring. "People need to understand that this piece of plastic is valuable," Mr Grannell says.

Here are some ways you can protect your credit and debit card details:

n Don't throw receipts away or leave them around - fraudsters can get your card number.

n Always make sure you know where your card is.

n Check your credit card and bank statements. If you find a discrepancy, report it to the card issuer immediately.

# posted by Medical Information : 3:21 AM  1 Comments

After years of vicious price wars in the credit card market, lenders are becoming increasingly nervous as the cost of special offers rises and bad debts mount up. Barclaycard, the country's biggest lender, this week revealed a 19 per cent drop in its annual profits.

However, while there can be no doubt that an increasing number of credit card providers are desperate to boost their revenues, don't expect them to publicly admit to charging higher prices or raising their interest rates.

Instead, borrowers need to look out for the sneaky tricks that more and more companies are using to extract extra cash from their customers.

WHICH RATE ARE YOU REALLY BEING CHARGED?

The credit cards with the lowest interest rates are the cheapest, right? Think again - the true amount of interest you will pay on credit card debt depends on factors such as when your provider starts and stops charging interest and how longyour purchases remain interest-free.

Most lenders offer an interest-free period on all purchases, but this can vary from a few days to almost two months. A short interest- free period means you're more likely to get caught out and end up paying interest on balances you were hoping to pay off in full. In fact, due to the different ways lenders calculate interest, it is possible for a card with a headline rate of 22 per cent to be cheaper than a card that charges only 12 per cent.

ORDER OF REPAYMENTS

Another trick that will ratchet up your interest charges is the order in which your lender allocates your repayments to your card balance. HSBC and Nationwide Building Society ensure any payments are used to clear the highest interest-bearing debt on your card, but most providers do the opposite. So, for example, if your lender offers 0 per cent interest on balances transferred from another card, but charges interest on new spending, your repayments will go towards reducing the latter first.

MINIMUM REPAYMENTS

Many lenders now allow customers to make minimum repayments of just 2 per cent of their balance each month. If you pay the minimum, however, you will barely pay down any more than the interest charges each month. A borrower making the minimum repayments each month, will take 32 years to repay the average credit card debt.

PENALTY FEES

There's nothing lenders like more than customers busting their credit limits or forgetting to make a payment on time. Penalties can be as high as pounds 35, and the nastiest providers will charge once when you bust your limit, and then again for each transaction once you have passed it. Appeal if you feel hard done by, as lenders can often be persuaded to withdraw charges if you kick up a fuss.

BALANCE TRANSFERS

Interest-free balance transfers have been popular in the credit card market over the past five years, with the best offers promising as long as 18-months interest-free. But over the past year, lenders have begun charging fees of up to 3 per cent on such deals, typically capped at around pounds 35 or pounds 50. There are still a few fee-free deals left, such as the current offer from the Post Office, but these are quickly evaporating.

TOUGHER TERMS

People who pay of f their balances in full every month

are credit card companies' worst nightmares - the lenders never make money out of them. Some lenders scrutinise their prudent customers all the more closely, in the hope of earning at least some revenue.

OVERSEAS CHARGES

All providers, with the exception of Nationwide, levy a charge each time you use your card abroad - often as much as 2.75 per cent of the value of each transaction. Some providers also give their customers unfavourable exchange rates on their purchases.

CASH WITHDRAWALS

Charges for drawing cash on your credit card are typically 2 per cent, with a minimum fee of pounds 2 a go. You may also be charged a higher interest rate on cash withdrawals.

CREDIT CARD CHEQUES

Although consumer groups such as the National Consumer Council have been calling for a ban on unsolicited credit card cheques, some lenders still send them to their customers. The penalty for using these so-called "convenience cheques" is that they usually come with a higher rate of interest attached than normal card spending, a shorter interest-free period, as well as lesser levels of consumer protection.

PAYMENT INSURANCE

Once you're signed up with a credit card provider, you're sure to receive a call from one of their salesmen, keen to scare you into buying payment protection insurance. PPI policies are meant to cover your credit card repayments in the event that you fall ill or lose your job, but often come with an onerous set of terms and conditions.

Consumer groups warn that many PPI policies are not worth the paper they're written on when policy-holders try to claim.

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Montgomery Ward credit card customers are finding a surprise in their mailboxes: a Wal-Mart credit card to replace their Wards card.

Wal-Mart Stores Inc. last week began mailing new credit cards to 5 million of soon-to-be-defunct Wards' 8 million credit card customers, in an ambitious effort to gain new customers. The mailings will continue through April, said Wal-Mart spokesman Tom Williams.

"We reviewed the customer demographics, the geographics and product overlaps of the retailers as well as the spending behavior of our Ward cardholders and found that a huge majority of them were already Wal-Mart shoppers," said Marcy Brucellaria, a spokeswoman for Stamford, Conn.-based GE Capital, which owns both the Wards and Wal- Mart credit card portfolios. "Wal-Mart was the best fit."

Wal-Mart will appeal to many Wards customers, who are typically middle- to lower-income, said Neil Stern, partner with McMillan & Doolittle, a Chicago retailing consulting firm.

"Wal-Mart's bread and butter is middle America," he said. As for Wal-Mart stepping in, "this is the buzzard swooping down and picking up the remains."

One former Wards shopper is not happy.

"I've never been to a Wal-Mart store and never plan on going to a Wal-Mart store," said Kathy Posner, president of a Chicago public relations and advertising firm. "I didn't ask for it and now I have to go through the trouble of canceling the card and make sure it's not on my credit report."

General Electric Corp.-owned Montgomery Ward shocked shoppers and investors alike when, on Dec. 28, the 128-year-old retailer announced it was closing forever, laying off 37,000 workers and filing for bankruptcy. Its last remaining stores will close at month's end. Competitors such as Target and Kohl's have already announced intentions to buy some of Wards' store locations.

For Wal-Mart, the move is another way to grow the nation's largest retailer's market share.

"We like customers," Williams said. "We're always enticing people to our stores."

Swapping one card for another isn't totally unusual, said Robert McKinley, chief executive officer of CardWeb.com Inc., a research firm. But "it is unusual for a company to issue cards to the cardholders of another bankrupt company. However, given the high cost of generating new accounts, this may be a smart move."

Customers who receive Wal-Mart cards simply must sign the backs of the cards to use them. Wal-Mart is even offering a teaser to lure new customers: a $10 account credit to new customers who buy something at Wal-Mart before April 30.

Also, the new Wal-Mart customers will be able to use their cards at Thrifty Rent-A-Car, which previously accepted Wards cards. Customers with balances on Wards cards will see those carried over onto their Wal-Mart cards.

For customers who don't want the Wal-Mart card, they can simply cancel their accounts and cut up the cards, a spokesman said.

Because GE Capital owns both the Ward and Wal-Mart credit card portfolios, there was no sale of assets, Brucellaria said.

Typically credit card issuers cannot send an unsolicited credit card to a potential card customer, only invitations to apply or "pre- approved" applications. The Wal-Mart deal is different, Brucellaria said, because the Wal-Mart card is "considered a replacement card" for the Wards card.

# posted by Medical Information : 4:20 AM  0 Comments

THE first indication that consumers are tightening their belts emerged today in the shape of figures showing that credit card borrowing slumped last month.

Shoppers spent only 101 million using plastic in June, according to figures from the British Bankers' Association, down sharply from 249 million the previous month and lower than the recent monthly average of 150 million.

"There may be signs in these figures of personal borrowing easing," said BBA chief executive Ian Mullen. "Consumer credit was weaker than in the previous two months and, within that, credit card borrowing was very subdued." Overall consumer credit was 820 million compared with 920 million in May.

Mullen speculated that mortgage borrowing may also have peaked, paving the way for a slowdown in the housing market.

Mortgage lending by the big High Street banks rose by 3.1 billion, almost identical to May's figure.

"We may have reached a (nevertheless high) plateau on that front," Mullen said.

Separate figures from the Building Societies Association suggested demand for home loans is still growing, mortgage borrowing rising for the third month in a row. Advances totalled 2.3 billion, and the same value was earmarked for future release. The consumer has been the bedrock of the economy, shrugging off fears of recession while manufacturing floundered.

The Bank of England, under Sir Edward George, will scrutinise today's figures for clues about whether the economic slowdown is spreading to the High Street.

Most City economists are betting that interest rates will remain at 5.25% for months, but a collapse in consumer sentiment could force the Bank to cut them again.

There was mixed news on Britain's trade position. Government figures showed the global trade in goods deficit narrowed to 2.4 billion in May from 2.8 billion in April.

More up-to-date figures for trade with non-European Union countries showed the shortfall widened to 3.1 billion in June from 2.5 billion in May.

Exporters hit by a global downturn and strong pound drove the deficit in the first quarter to a record. Sterling was half a cent weaker today at $1.4175.

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Kohl's Corp. has agreed to sell its credit card accounts to JP Morgan Chase for about $1.5 billion. But the Menomonee Falls department store chain said Monday that it will continue to run the program and will not eliminate any jobs at its headquarters.

Kohl's plans to use the proceeds from the sale to repurchase shares. The company's board of directors has approved a $2 billion share buyback program that is to run two to three years.

It will be the first buyback of shares in company history.

Kohl's also raised its earnings guidance for the year, to a range of $2.74 to $2.87 a share, up from a projection of $2.72 to $2.85. The average estimate of analysts had been $2.80.

After the announcement, Kohl's shares closed up $1.73, or 3.55%, at $50.53.

Under the agreement, Chase will purchase the debt outstanding on Kohl's charge cards in a transaction expected to close within 90 days. But Kohl's will continue to administer the program and to keep its call center and related credit card operations at its headquarters.

The company would not say how many people work in the credit operation.

"We do not disclose head count by department," said Vicki Shamion, vice president of public relations. "What is important is we expect to maintain our current structure and we expect to grow as we grow that business."

Chairman Larry Montgomery said the transaction would strengthen the balance sheet and allow Kohl's to maintain contact with its credit card customers.

The Kohl's decision to sell the credit card receivables follows a recent trend among retailers. Sears Roebuck & Co., Federated Department Stores Inc., Bon-Ton Stores Inc. and Saks Inc. are among the chains that have sold their credit card businesses to financial companies.

"It allows them to free up cash on their balance sheets," said Keri Spanbauer, a senior equity analyst with Thrivent Investment Management in Appleton.

In a conference call with analysts, Montgomery said the anticipated increase in profits will result from a savings of $250 million to $300 million that Kohl's has been spending to fund the receivables.

David Cumberland, an analyst with Robert W. Baird & Co., said: "The market likes both announcements. For non-finance companies, such as retailers, the market tends to place a low valuation on the credit parts of their business."

Investors' concerns about the risks of running a credit card business tend to outweigh the benefits of the profits, although there wasn't much worry about the credit card portfolio at Kohl's, Cumberland said.

Customers will see no change as a result of the deal with Chase. About 40% of all sales at Kohl's stores are made with a Kohl's charge card.

Chief Operating Officer Arlene Meier said analysts have been asking Kohl's to sell the credit card business for about two years.

"We've been looking at transactions that other retailers have done," Meier said. "We wanted a partner who would allow us control with customers."

Meier said the agreement with Chase will enable Kohl's to benefit from the bank's data mining capabilities and design marketing initiatives.

# posted by Medical Information : 4:18 AM  0 Comments

Debit and credit card fraud fell by almost a quarter during 2005, the first full year of the new chip and PIN technology introduced by plastic providers. Apacs, the UK payments association, revealed yesterday the total amount of fraud committed on plastic fell to pounds 439m last year, down 24 per cent from pounds 505m in 2004.

Apacs said the launch of cards that require the holder to authorise transactions using a personal identification number (PIN), rather than by signing a receipt, had produced dramatic results.

Cards with built-in computer chips are harder for conmen to fake and criminals usually need a correct PIN to use plastic fraudulently. As a consequence, the amount of fraud committed on counterfeit cards fell 25 per cent to pounds 97m last year while losses from stolen or lost cards were down 22 per cent to pounds 89m.

Fraud committed by criminals intercepting cards sent in the post also fell sharply, partly because such plastic is harder to use without a PIN.

Sandra Quinn, of Apacs, said: "These figures show chip-and-PIN is doing its job. We would expect to see further reductions in fraud in the years head."

However, Apacs said card-not-present crime, where conmen use stolen account information to buy goods and services fraudulently over the telephone or on the internet, rose 21 per cent to pounds 183m last year.

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If Mari Frank could become a victim of credit-card skimming at a restaurant, then no one is immune to the crime.

An expert on identity theft, a lawyer and former California assistant district attorney, the outraged Frank, whose own credit-card identity was stolen in 1996, was prompted to launch a Web site devoted to helping victims of the crime she calls "financial rape."

A frequent guest on network television talk shows, Frank even had visited the White House when President Clinton proposed the Consumer Protection and Financial Privacy Act. She appeared in a photo with the former president and Hillary Rodham Clinton, showing off one of the two books she had written on the subject of identity theft.

So imagine her surprise when, following a business trip to New York last summer -- where she had come to demonstrate credit-card skimming before a group of Chase Manhattan Bank officials -- she received an $11,000 American Express bill for fancy truck accessories that she never had purchased.

Frank, who lives in Laguna Beach, Calif., believes her credit card was skimmed in a restaurant while she was in New York demonstrating the very crime she fell victim to. If she's right, then she joins thousands of other restaurantgoers who make up the vast majority of credit-card skimming victims.

Law enforcement authorities and bank investigators believe that as much as 70 percent of all cases of credit-card skimming or cloning stem from rip-offs in restaurants. Gas stations, which are the next most active retail sector for skimming, register a distant second, with 14 percent of all reported cases occurring there.

While credit-card company officials claim that instances of skimming are declining because of the development of new programs to deter it, they say that operators still must be wary of the crime, which undermines the consumer trust that operators work so hard to build.

"When I returned home from New York, I had my AmEx Platinum in my wallet," Frank says. "But I opened my billing statement and found $11,000 worth of fraud that was made in the desert of California for truck accessories, like tires and fancy wheels, while I was in New York with my card.

"AmEx was very good about it and sent me a new card, but I knew I had been skimmed."

Experts say that skimming may be costing the major credit-card companies as much as $300 million a year collectively.

Credit-card skimming occurs when the data on the magnetic strip on the back of the card is captured by swiping a customer's card through a skimming device that resembles, in most cases, a beeper.

The information from the magnetic strip then is stored in the skimmer until its memory fills up or until it is downloaded to a computer or transferred to produced cloned cards.

Because the device is small enough to fit unseen in an adult's hand, an unscrupulous waiter, bartender or cashier could swipe the card without being seen, says Buddy Tinnell, director of fraud control for Visa USA.

The restaurant industry is particularly vulnerable, Tinnell says, because it is one of the few retail sectors where, for a few moments, customers are separated from their credit cards and often can't see their servers processing payment authorizations.

The criminals who specialize in the crime prey on restaurant staffers who consider themselves underpaid, knowing they will be tempted by perswipe bounties of $20 to $50. At the end of a shift, servers turn the boxes over to their "handlers," who make counterfeit cards or Internet purchases before the unknowing victims receive their next billing statements.

Tinnel reports that credit-card skimming first materialized in the mid-1990s when e-commerce and other types of electronic transactions started to become popular.

"Any technology that has a legitimate purpose can easily be abused without fail by a criminal," Tinnel says. "It's an enabler."

"Young people who fall for this think that they are doing nothing wrong, that it's not hurting their employers," he adds. "But this is a form of counterfeiting, which brings in the Secret Service and a range of bank investigators. And when these young people are caught, they are as guilty as the person who uses the card fraudulently."

Credit-card skimming appears to be declining as a result of numerous educational programs -- such as posters alerting employees to the crime and seminars by credit-card companies and state restaurant associations. Still, cloned credit cards cost Visa about $60 million a year, Tinnel estimates.

Tinnel says Visa offers $1,000 for information leading to the apprehension of people involved in skimming.

Christine Elliott, a spokeswoman for American Express, says she could not disclose how much the crime costs the company, but she says her company has a very active program to alert its restaurant clients to the perils of skimming.

"We have a number of pamphlets and programs to help owners identify the crime, but it involves some fairly sophisticated technology that could be re-engineered against us if we discussed it in public," she says. "But we are constantly talking to law enforcement and others about it."

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PARTYGAMING was one of yesterday's big losers as worries about US regulations refused to die down. The influential US House of Representatives financial committee has passed the Leach Bill, which seeks to block payment mechanisms including credit cards on online gaming websites.

This could in effect ban online gambling - with serious consequences for all the operators. So 888 Holdings was also weaker, despite unveiling record annual earnings and a confident outlook.

But ABN Amro takes a more optimistic view of the American situation. "We believe the debate will intensify through 2006, but ultimately the US legislators will shift the debate to how to regulate - not prohibit - internet gaming." At 115p, ABN Amro is a fan of PartyGaming, way down from its 2006 high of 154p.

PartyGaming is currently trading at a 2006 pricetoearnings ratio of 13 times brokers' estimates, a big discount to peers.

Sportingbet is trading at 17 times 2006 estimates.

Some serious stakebuilding is going on in housebuilder Persimmon. In the last couple of days Cater Allen, the private bank owned by Abbey National, has upped its stake to 7.25% from 4%. While the housebuilding sector has long been tipped for further consolidation, Persimmon, with a market capitalisation of just under Pounds 4 billion, has thus far seen itself as a bidder rather than a target.

Soon after swallowing Westbury for Pounds 643 million, Persimmon was snacking on Pounds 25 million Carlisle specialist Senator Homes. Cater Allen's interest pushed Persimmon into the top handful of FTSE risers yesterday, although it is some way off this year's high of 1428p.

A barely-there bounceback in February's retail figures failed to create any enthusiasm for the UK's leading retailers, with heavy falls noted across the board. BQ owner Kingfisher was worst hit, followed by middle-ofthe-road fashion chain Next.

The retail statistics also halted Marks Spencer's recent rebound.

While the stats suggest the consumer uplift noted in January has run out of steam, Marks' next trading update is expected to be positive. According to Numis retail analyst Steve Davies, MS chief executive Stuart Rose was in an "ebullient" mood. In a note to clients, he reported: "While he was not giving away any details, he is clearly looking forward to the next trading update."

Drugs giant GlaxoSmithKline saw its shares slump as heavyweight broker JPMorgan downgraded the stock to underweight from neutral.

JPMorgan reckons Glaxo "faces insurmountable-odds in trying to replace the sales we expect it to lose".

SkyePharma was also out of favour after Evolution downgraded the drugs group to reduce from add and told clients to sell on the basis of worries about its pipeline and cash position.

New York stocks climbed overnight, with investors cheered by benign inflation and housing numbers. The Dow ended 43.47 higher at 11,253.24. In Tokyo, the Bank of Japan helped soothe fears about rising interest rates, and the Nikkei Average closed up 243.52 to 11,253.24. Hong Kong's Hang Seng index rose 64.03 to 15,793.07.

# posted by Medical Information : 3:52 AM  0 Comments

MILLIONS of holidaymakers will get the same legal protection when they use their credit cards abroad as in Britain under a key ruling today.

The Appeal Court overturned an earlier High Court decision that card users' legal "money back" rights did not apply overseas.

Three card companies - Lloyds TSB, Tesco Personal Finance (part of the Royal Bank of Scotland group) and American Express Services Europe - argued that they could not be held responsible for 29 million shops, restaurants, hotels and other suppliers all over the world.

Credit card lenders are legally obliged to return money to customers when they buy faulty goods.

Today three Appeal Court judges backed an appeal from the Office of Fair Trading and ruled there was nothing in the legislation to suggest a distinction between UK and foreign transactions.

# posted by Medical Information : 4:14 AM  0 Comments

USA Technologies, Inc. ("USX) is riding the wave of the cashless revolution with its patented TransAct technology for unattended credit card operated equipment, including personal computers, copying machines, printers and fax machines.

Consumers are embracing the technology that gives them unprecedented access to goods, services and information with their preferred method of payment-credit cards. The cornerstone of this technology is a proprietary network consisting of a centralized processing system for the control of remote, unattended, card activated billing and control devices that can be attached to a wide variety of host equipment including personal computers, copying machines, debit or smart card purchase/revalue stations, facsimile machines, and printers. USAs integrated system was designed to offer turnkey credit card processing, freeing locations from the costs of setting up banking relationships, processing credit card transactions, and account management.

USAs unattended credit card technology is based mainly on the consumers continued preference for using a credit card for purchasing retailed products and services. This merger of electronic technology and ultimate convenience has attracted USA customers including university and public libraries, retail locations, and major hotel chains such as Marriott, Best Western, Doubletree, Sheraton, and Westin.

Consumers using USAs credit card activated equipment have the freedom of purchasing products and services without cash. No longer constrained by the need to have cash to purchase goods and services in an unattended manner - means that USAs credit card control systems will ultimately satisfy the need for which most self service equipment was originally designed-- consumer convenience.

USAs technology applications continue to grow as they forge ahead into the original equipment manufacturers market. While the initial use of the copier was primarily focused on business applications, over the last twenty years, copiers have become an indispensable part of our everyday lives. The ability of a limited use customer to pay for copies on an "as needed" basis, rather than actually purchasing, renting or leasing the equipment, eventually gave birth to a new sub-market within the copying industry. Until now, a customer wishing to use a "pay-per-copy" machine has been forced to either use a prepaid, stored value card or to have sufficient cash in order to make their copies. Unfortunately, in most instances, this places a burden on employees of the facility to provide a number of services unrelated to their primary jobs, such as: providing change, coin collecting, coin counting and coin reloading. With TransAct, there is no longer a need for operators to interact with cash based customers, as the location's primary responsibility is limited to restocking supplies in the copier.

Every copy machine equipped with TransAct will eliminate all the problems associated with coins. The device also provides location operators with a payment system that will allow them to sell higher priced imaging products, such as color or digital output. Additionally the TransAct system will enable copier operators to network their locations into a single management information system.

With an estimated 400,000 "pay-per-copy" machines already located in the US and an average of 20% of the market turning over each year, USA has a tremendous base from which to penetrate the market. TransAct has the ability to retrofit any operator's existing copier or after the terminal as part of a new copier installation. The TransAct device will enable each location to offer the highest possible level of service and convenience to its customers. The equipment allows them to establish one or more additional profit centers with an overall reduction in manpower.

By utilizing the latest technology available and incorporating it into an attractive, secure, easily attached housing, TransAct has been designed to eliminate any concerns the location may have regarding reliability and user acceptability. From the user's perspective, the equipment offers a convenient, dependable, easy-to-use means of meeting their copying needs.

With trends over the last twenty years indicating an ever increasing customer reliance on the use of credit cards as a method of payment, USA believes the future of purchasing retail products and services is in credit cards rather than cash. Consumers are constantly searching for ways to purchase quality products and services in the most convenient manner. Examples of this trend include the increasing use of unattended Automated Teller Machines (ATM's) and the use of unattended, self-service gasoline pumps with credit and debit card payment capabilities. Consumers are becoming more accustomed to using credit cards in an ever-increasing number of retail and service settings. They use mail order, telephone and the Internet to order goods and services and use credit cards to pay for them. With over a billion credit cards in the United States, USA's products reflect this overall trend-all of which are based upon our core technology-TransAct.

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Researchers examined cognitions relevant to credit card decision making in college-aged participants (M = 19.9, n = 304). Measures of beliefs, attitudes, and behavioral alternatives (e.g., cash, checks, debit card) toward acquiring a credit card were assessed. Analyses of models predicting behavioral tendencies and attitudes toward the acquisition ofa new credit card using LISREL VIII (Joreskog & Sorbom 1993) identified a multivariate model predicting college student financial development of the attitudes and behavioral tendencies of acquiring a new card.

During the past decade, consumer debt has grown rapidly, especially among the young adult population (Davies & Lea, 1995; Koretz, 1995). The "buy now, pay later" philosophy has substantially affected the American way of life (Feinberg, 1986). At their inception, credit cards basically facilitated commerce; today however, they are an essential component of business, banking, and personal money management (Clark, 1975).

College students are increasingly becoming the focus of credit card companies' tactics to gain new customers (Himmelfarb, 1992; Kara, Kaynak, & Kucukemiroglu, 1994). Major credit card issuers are actively targeting college students by offering pre-approved credit cards to students through a variety of strategies including advertising, direct mail promotions, and on-campus recruitment (O'Connell, 1994; Susswein, 1995). Efforts such as these have been extremely successful in persuading students to acquire new credit cards (Santrock & Halonen, 1999). For example, students who acquired their cards through on-campus recruiting tables possessed a higher average balance ($1,039) than those who did not ($854) ("Student Credit Card Debt," 1998). Often, students who apply for these new credit cards do not fully understand the financial implications of having such resources. Estimates indicate that some college students are heavily in debt: 14% have balances of $3,000 to $7,000 on their credit cards alone, and 10% owe amounts exceeding $7,000 (Vickers, 1999). The number of college students using credit cards has increased by 20% in the last 2 years (Rose, 1998), indicating that this problem has yet to be solved. Although these usage estimates do not necessarily represent a problem (e.g., credit cards enabling affordability of college tuition and living expenses while in college), research has indicated that the mere possession of credit cards can elicit increased spending (Feinberg, 1986). As a result, students may over-spend and/or overconsume (Heath & Soll). Additionally, increased spending has been associated with subsequent financial debt (Faber & O'Guinn, 1988). Current estimates indicate that the average college student graduates with $10,000 to $18,000 in debt (Santrock & Halonen). With the ease in which these credit cards can be obtained, young adults, especially college students, are increasingly at risk of unfavorable financial situations due to the use and abuse of credit cards (Brobeck, 1992; Davies & Lea, 1995; Himmelfarb; Murphy & Archer, 1996). Thus, empirical development of a better understanding of college student decision making and development of personal finances would seem prudent.

Research in the area of credit cards has traditionally centered on understanding what brings about the purchase of a product and the significant influence of credit cards on behavior (e.g., Hirschman 1979). For example, Munro and Hirt (1998) found evidence of a time variable that influenced credit card behavior. The indication was that the longer a student has possession of a credit card, the more likely the student will incur financial debt. Although these studies indicate relationships between credit cards and debt, they do not address the importance of the psychological decision-making variables as they relate to college student tendencies toward acquiring a new credit card and the subsequent consequences of credit card use. We suggest that if students are aware of the consequences of credit card use and financial debt, they will reevaluate whether or not they acquire a new credit card. Thus, this study fills a needed gap in the college student development literature by applying a psychological decision theoretic design to the examination of college-aged adults' tendencies to acquire new credit cards.

Our approach was based on a theoretic framework of behavioral decision making that has evolved over the past 18 years in numerous contexts (e.g., career choice, drunk driving, family planning, parenting; see Jaccard, 1981; Jaccard & Becker, 1985; Jaccard & Wan, 1986; Turrisi & Jaccard, 1991, 1992; Turrisi, Jaccard, Kelly, & O'Malley, 1994). The decision to take on a new credit card can be analyzed from the perspective of psychological theories of choice behavior. Jaccard conceptualized behavioral decisions as a choice between alternative courses of action. The behavioral tendency or decision to perform a specific behavior (e.g., take on a new credit card) is a function of both the attitude the individual has towards the behavior and the attitude towards other behavioral alternatives (e.g., using cash, checks, debit cards, etc.). Studies have indicated that individuals will generally perform the behavior toward which the most positive attitude is held (Jaccard; Jaccard & Becker; Turrisi & Jaccard, 1992). Thus, from the standpoint of understanding the behavioral tendencies of acquiring a new credit card, researchers should examine not only the attitude of individuals toward the tendencies to take on a new credit card, but also the attitude toward each of the other behavioral alternatives and the cognitive factors that directly influence these attitudes. These cognitive factors-or beliefs, as they are sometimes referred to-are derived from one's personal experiences, observations, and information from other sources (Fishbein & Ajzen, 1975). Of course, the attitudes are influenced by variables other than just cognitive variables (e.g., personality, situations, demographics, and background). However, studies have revealed that these other variables are generally the least amenable to change in shortterm educational campaigns (e.g., freshman orientation, awareness weeks, etc.; see Turrisi, Jaccard, & McDonnell, 1997; Wilson, Jaccard, Endias, & Minkoff, 1993). Thus, our research focus was on the examination of cognitive variables and their relationship to behavioral tendencies.

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A little self-discipline with your credit cards can put hundreds, if not thousands of dollars, in your pocket. But a lack of discipline can cost you dearly.

Georgina and I made our discipline pay off last month when we split a major purchase of furniture for our new home among three credit cards. We stayed within each card's credit limit and took full advantage of their rewards program.

As a result, we will be getting $100 in free gasoline, a $150 credit on our telephone bill and a $41 cash rebate to use any way we want -- all for buying the furniture we planned to get anyway.

By using the cards, we also delayed parting with our money for up to five weeks. After taxes, we will make an extra $100 in interest before the credit card bills arrive. When they do, we will pay them in full, of course.

Over the years, we figure we've made or saved more than $5,000 by using credit cards this way -- exclusively for convenience, for perks and to squeeze a little more interest from our savings while we stay debt-free.

Unfortunately, that's not the way the average American handles credit. According to the Federal Reserve, the typical household owes one dollar for every $7 dollar of disposable income, which basically is the money we have left after taxes.

The good news is that thanks to the most recent interest rate cut by the Fed, a half percentage point on March 20, users of variable- rate credit cards can expect to save at least $1.2 billion in interest over the next year. That's the estimate from CardWeb.com, Inc., an offspring of RAM Research Group in Frederick, Md.

The bad news is that with the economy slowing, more Americans are having trouble paying their bills, including a staggering $664 billion in credit card debt. Overdue credit card payments are up, as are the number of mortgage and other consumer loan payments at least 30 days late. Some delinquency rates have reached levels not seen since the recession 10 years ago.

What's a consumer to do? If you're already in debt or lack the discipline to handle credit effectively, your course of action will be much different from what I would recommend otherwise.

For example, Elizabeth Jetton, a certified financial planner in Atlanta, suggests that you eliminate credit cards for everyday use. Studies have repeatedly shown that consumers spend more when they're paying with plastic than with cash.

Yet, disciplined consumers who use credit cards make money simply by getting the interest-free use of the amount of the purchase until the bills arrive. That's why Georgina and I use cards for everything, from groceries to gasoline.

Most certified financial planners also recommend you try to pay off as quickly as possible any loans -- and loans include credit card balances -- that charge an interest rate of 10% or more.

Pay as soon as the credit card bill arrives. When you have a balance, the longer you delay paying, the more interest you owe.

Some cards -- the best example I've found is the Discover card -- help you manage your money online. Discover will send you an e-mail reminder if your payment has not been received within six to seven days of the due date, or if you're getting too close to your credit limit. You can arrange to have your bank account automatically debit each month for the full balance amount or the minimum payment due.

Once you get rid of credit card debt, you can follow these steps to make money with your card. These are the rules in the Cruz household:

-- We use credit cards only for the things we planned to buy anyway and that we know we can afford.

-- If we don't have the cash to pay for something, we also refuse to buy it with a credit card.

-- The minute we use a credit card, we subtract the charge from the balance of the account we will use to pay the card bill. The money, in effect, has been spent.

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Shoppers who buy faulty goods overseas with their credit cards wil now be given the same protection they receive in the UK.

At the moment, under section 75 of the Consumer Credit Act, card firms must pick up the bill for unsatisfactory goods bought here (if they are faulty, say, and the money can't be refunded) costing between pounds 100 and pounds 30,000.

However, most lenders have argued that the guarantee doesn't extend outside the UK, and only a few have considered claims as a gesture of goodwil.

But last Wednesday, the Court of Appeal backed the stance taken by the Office of Fair Trading, which had challenged an earlier verdict in favour of the banks, and ruled that foreign credit card transactions are also covered by the Consumer Credit Act.

The move was welcomed by Which?. The consumer body called it a "landmark decision" that gave consumers much fuler protection.

Some lenders now fear that they wil, in effect, become "insurers" to faulty goods, and exposed to expensive claims without being able to assess the ful facts. An appeal against the ruling is being considered.

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Four major UK banking groups are to share details of their customers' income with the CallCredit agency as part of attempts to tackle the problem of debt-ridden consumers.

HSBC, HBOS (Halifax and Bank of Scotland), Lloyds TSB and Royal Bank of Scotland (including NatWest) have all agreed to send the agency details of current accounts.

In turn, the agency will conduct an "affordability" check on each customer to monitor the heavily indebted - those people managing to repay only the minimum on, say, seven credit cards - and measure their debts in relation to income. In theory, the process should mean that these people are not in future lent inappropriate sums.

CallCredit will provide the banks with its debt-monitoring reports, but no bank will be allowed to see income information on a rival's customers.

As bad debt write-offs continue to rise, and amid fears of encouraging a consumer credit bubble, most lenders now share "negative" data. This may include how often customers miss payments, as well as some "positive" or behavioural information, such as how much is spent on a card each month.

Barclaycard, Britain's biggest credit card provider, is not taking part in the CallCredit scheme. It will instead conduct its own review of customers' spending behaviour, a spokesman said.

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Credit and debit card operators face legal action within weeks, the European Commission said yesterday, after issuing a warning that "outrageous" profit margins are costing households several hundred euros a year.

Neelie Kroes, the European competition commissioner, said she was "fed up" with the behaviour of key players in the massive markets for credit and debit cards, promising "action from our side". The firms have a 10-week consultation period in which to come up with ways to avoid lawsuits for abusing their dominant market position or operating cartels.

"The more they do to bring profits from card payments down to acceptable levels, the less likely they are to face action under EU antitrust rules," Ms Kroes said.

A report based on an investigation into payment cards said customers are paying too much because the industry is conducted along national lines and technical barriers prevent new card providers entering the market.

The sector is highly lucrative, with 23 billion transactions in Europe in 2004 worth about EUR1,350bn (pounds 934bn) in payments. Because banks deal jointly with retailers instead of competing directly for their business, there is little choice of payment networks for many firms.

Ms Kroes said she wants a European car payment system to compete with Visa and Mastercard which have a powerful grip on the market. She said: "Banks charge up to 2.5 per cent on every retail purchase with a payment card, the equivalent of a tax on consumption. Moreover, the fees paid by small firms such as retailers for accepting payment cards in one country can be six times more expensive than in another.

"Consumers also pay more in one part of the European Union than in another. The holder of the same international card may pay 12 times more in one country than in another country." She described the margins under discussion as "outrageous".

A spokesman for Visa Europe said: "Over the past four decades the European payment card system has developed to provide consumers, banks and merchants with universally accepted products. Competition has ensured the costs to all are balanced in a way that has allowed the system to flourish, providing the world's 1.3 billion Visa cardholders with acceptance at over 24 million merchants."

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