Saturday, April 12, 2008

HomeATM Blog "Week in Review"

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"HomeATM" - 5 new articles

  1. Airlines Can Have 100% of Their Credit Card Transactions Withheld!
  2. Frontier Airlines Blames Credit Card Processor for Bankruptcy Filing
  3. PCI Standards Again Questioned in Wake of New Breach
  4. HomeATM Officially Invites ATMDirect to a "PIN Off"
  5. Study Reveals PIN Debit Provides Lowest Fraud Rate
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Airlines Can Have 100% of Their Credit Card Transactions Withheld!

The credit card processor cited in Frontier Airlines' decision to file for Chapter 11 bankruptcy, on Friday issued a statement defending its actions. "We regret that the current economic conditions have led to today's bankruptcy filing by Frontier Airlines," Greenwood Village-based First Data said in the statement.

First Data informed Frontier that it would withhold 100 percent of the Denver-based carrier's credit card transactions beginning May 1, said Joe Hodas, spokesman for Frontier. "There was no advance warning," Hodas said. "This has all transpired in the last three days.

Previously, First Data held back 45 percent of the low-cost carriers credit card sales receipts.

The feeling is that Chapter 11 is going allow us the ability to straighten out these financial issues under the protection of the bankruptcy court so that we can emerge a stronger and more long-term viable airline."
But First Data downplayed its role in the situation. "First Data, with our bank partners, processes transactions for a variety of businesses around the world," First Data officials said in a statement. "We continually monitor and manage the credit risks associated with processing transactions in industries where we provide services.

Editor's Note: Here's the scary part for the Airline Industry. Withholding 100% of credit card transaction revenue is apparently considered "standard practice".
The terms of our agreement with Frontier Airlines are not unique; they are considered standard industry practice and terms originally agreed upon by Frontier.
Frontier Airlines is the second-largest airline operating out of Denver International Airport. In 2007, Frontier carried roughly 22.7 percent of passenger enplanements at DIA. The airline will continue operating as it works through Chapter 11, a fact that pleases DIA officials.

"We are pleased that Frontier expects to continue normal operations and will provide full flight schedules for its passengers at Denver International Airport," said DIA's new aviation manager, Kim Day. "Based on conversations I've had with Frontier, I anticipate no immediate impact to the airport's revenues or financial position. Frontier Airlines is our hometown carrier, and it has been a valued partner at DIA since the airport opened. We have full confidence in Frontier's leadership, and we believe it will emerge from this restructuring process in a strong financial position and will remain one of Denver's premier businesses."

Frontier Airlines currently owes DIA $1.7 million, due on April 20. DIA owes Frontier $7 million in net revenue credit and $3.74 in fuel tax credit.

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