Wednesday, July 16, 2008

Interchanging as H.R 5546 Passes 19-16





NEW YORK (Associated Press)

House lawmakers are moving to mandate that credit card companies negotiate the fees they charge merchants for electronic transactions, escalating an intense battle between the credit card industry and retailers.

A bill passed Wednesday by the House Judiciary Committee on a 19-16 vote is backed by retailers, who accuse Visa Inc. and MasterCard Inc. of levying excessive fees. Card company executives counter that the legislation would simply push more of the cost onto consumers. (Editor's Note: Agreed!)

The so-called interchange fee, which Visa says averages about 1.6 percent, differs depending on the merchant and type of card.

The fees are set by Visa and MasterCard but are collected by the merchant's bank as part of a larger charge for processing the transaction. The credit card companies say they don't receive revenue from the fees.

Retailers complain the fees are set collectively by the credit card companies and large banks and are presented to merchants as a "take it or leave it" offer. Visa- and MasterCard-branded cards account for 80 percent of the credit card market.

Steve Pfister, senior vice president for government relations at the National Retail Federation, called the bill "a sensible solution to an escalating problem that's costing consumers more every day."

But Josh Floum, Visa's general counsel, said in a prepared statement that the bill "would mandate unnecessary regulatory intervention into a fiercely competitive industry that is benefiting consumers, merchants and financial institutions."

Edward L. Yingling, chief executive of the American Bankers Association, agreed and said the bill "is simply an effort by the merchant community to have government step in to reduce their cost of doing business."

The Merchants Payments Coalition (MPC) issued the following statement in response to the House Judiciary Committee passing the Credit Card Fair Fee Act, H.R. 5546, today. The Committee voted 19 to 16 in favor of the Act.

“We applaud the House Judiciary Committee’s leadership with the passage of the Credit Card Fair Fee Act of 2008, H.R. 5546. Today’s victory is a landmark decision that reaches far across party lines in reining in Visa and MasterCard’s stranglehold over merchants and consumers alike.

The Committee issued a loud, bipartisan wake-up call to credit card and financial services industry with the reporting of H.R. 5546, which they boasted would never see the light of day.

The Committee not only reported the bill with 10 Democrats and 9 Republicans voting to report it, but defeated every poison pill amendment by similar bipartisan margins." H.R. 5546 would end the anticompetitive practices of hidden credit card interchange fees, which cost Americans $42 billion last year.

We are encouraged by this momentum and effort by lawmakers to create transparency in the credit card marketplace and bring disclosure to everyone. We look forward to the Senate joining the House soon and to a strong floor vote on behalf of America's merchants and consumers.”

The Merchants Payments Coalition (MPC), UnfairCreditCardFees.com, is a group of retailers, supermarkets, drug stores, convenience stores, fuel stations, on-line merchants and other businesses who are fighting against unfair credit card fees and fighting for a more competitive and transparent card system that works better for consumers and merchants alike. The coalition’s member associations collectively represent about 2.7 million stores with approximately 50 million employees. For further information, please visit


http://www.unfaircreditcardfees.com





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Update on H.R. 5546

The HomeATM PIN Debit Blog continues to track legislation (H.R. 5546) designed to give business owners leverage in negotiating fees associated with credit card transactions. The House Judiciary Committee is in session to mark up the bill today, July 16.

Each time a consumer uses a credit or debit card to purchase something, the merchant is charged a fee on the sale. The money goes to the merchant’s bank, the consumer’s bank, and the credit company. H.R. 5546 would give merchants a seat at the table in determining those fees, which supporters of the bill say are too high.

If costs are reduced for merchants, as the proposal anticipates, it is unclear how lawmakers can ensure merchants’ benefits will be passed on to consumers. Some lawmakers are asking “how do we know that an oil company will not pocket any cost savings without reducing the price at the pump?” Further, lawmakers are also concerned that disrupting the existing system of default “interchange rates” under which payments are made by a merchant’s bank to a consumer’s bank, will provide disastrous for small banks and credit unions.

The legislation would create a limited antitrust immunity for merchants to negotiate fee agreements. If talks result in a stalemate, both sides would have to enter binding arbitration overseen by a panel of judges appointed by the Justice Department and the Federal Trade Commission.

The percentage is currently set by credit card providers, generally Visa or MasterCard, and averages 1.75 percent of a purchase. In 2006, it has been reported interchange fees amounted to $36 billion, up 117 percent since 2001. Last year, the fees amounted to $42 billion and are passed on to consumers in the form of higher prices for goods and services. Visa lowered interchange fees on gasoline sales last month after MasterCard capped its fees for gas purchases of more than $50. No word on what action American Express may have taken.
Critics of the legislation, such as MasterCard, contend it would set price controls. MasterCard officials told the House Judiciary Committee’s antitrust task force at a hearing in May the existing system is an efficient one and the bill would create price controls that would harm card services offered to consumers. It appears now that the Justice Department, the Federal Trade Commission, the Pentagon Federal Credit Union, and others have now come out and criticized the legislation.

I have learned a manager’s amendment is underway that would replace the panel of judges with Justice Department oversight, but would maintain the antitrust exemption for retailers. It is unclear where this legislation is headed, and the HATM Blog will continue to provide updates as information becomes available.


If you'd like to watch the hearing, click the link below: (requires Real Player)







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Interchange, Duopoly's and Politics...Oh My!

As the House Judiciary Committee meets today to consider a mark up of H.R. 5546, the "Credit Card Fair Fee Act of 2008," many credible organizations and regulatory bodies have voiced significant concerns about this legislation.



The Department of Justice (DOJ), in a letter to U.S. Rep. Lamar Smith (R-TX), wrote that the establishment of the three-judge electronic payments panel raises constitutional concerns, that it would harm competition and consumers, and "cannot replicate the flexibility that is found in the free market." Editor's Note: Agreed!



In a letter to U.S. Rep. John Conyers (D-MI), the Pentagon Federal Credit Union shared its concern over the legislation, which it believes would increase costs and decrease card awards programs for its members, while merchants pocket the savings. Further, the letter underscores that "government controls involving the establishment of a very complex pricing regime would in our estimation more advantageously be informed by America's free market system."



I agree, as my take on the subject is simple. Alternative Payments exist for a reason. For example...online retailers can lower their interchange fees by up to 100 basis points by simply switching to an alternative payments system, such as the one offered by HomeATM. The only reason I see for involving a governmental body is when unfair competitive practices preclude a free-market system.



I know the free market is already "riddled" with bullets of regulation, but, nontheless, riddle me this?
As long as payment options such as HomeATM are on the table, why on earth would anyone want our free market system crippled with government regulation?



Nordstrom's Executive VP, Kevin Knight may have said it best when he told the Judiciary Committee in a letter that Nordstrom believes that interchange fees represent "a fair price for the services we receive," adding that "we prefer market competition to regulation."



Editors Note: Call me a PIN Head by I consider Mr. Knight to be a Patriot! (and a man who doesn't go crying to Mommy everytime things don't work out...as it seems the NACS and NRF are doing).
Here's a great(and juicy) story from POLITICO on the subject of today's hearing:




On credit card fees, blame game begins

By: Chris Frates July 15, 2008 04:47 PM EST




The nation’s retailers have found some fresh, sympathetic faces to help them lobby Congress to rein in credit card fees: gas station owners. The small-business people have descended on Capitol Hill to explain how credit card fees tied to skyrocketing gas prices are crushing their profit margins. And while the politically poignant pitch might grab headlines, it’s got one big problem: It’s not true, (according to the financial services industry).



More than a year ago, MasterCard capped its fees and charged only on the first $50 of gas pumped; anything over that was fee-free.



But those savings were not passed along to gas stations or their customers, leaving lobbyists to accuse oil companies of pocketing the difference.



Big Oil has been picking the pockets of their franchisees, blaming Visa and MasterCard for the theft and encouraging their aggrieved small-business owners to visit Capitol Hill with the message that it is the banks, and not Big Oil, that have wronged them,” said a Republican financial services lobbyist.



The American Petroleum Institute said it was not privy to the details of business arrangements among card companies, retailers and suppliers. But the charge did not sit well with merchants. “This has nothing to do with Big Oil. They’re (Visa/MasterCard) trying to deflect the criticism from them to someone they perceive has as bad a public image as they do.



This is about Main Street vs. Wall Street,” said Lyle Beckwith, chief lobbyist for the National Association of Convenience Stores. Gas stations have not seen a cap on the fees, which has prompted Beckwith’s organization to question whether MasterCard even implemented its cap.



In fact, about 40 percent of the nation’s gas stations couldn’t have been cheated by the oil companies, as the financial industry claims, because they aren’t branded franchises. It’s a fight that has both sides blaming industries that everybody loves to hate. The merchants have tried to paint the fees as gouging by greedy credit card companies, which, in turn, have charged oil companies with skimming money from their retailers. It’s a classic Washington story: two major industries fighting over the bottom line.



One thing both sides agree on is that the battle is over far more than the fees paid by gas stations. The charges, called interchange fees, are paid by all retailers each time a customer swipes a Visa card or MasterCard. Merchants are upset because they have no say in how the fees are determined, even though it makes up the bulk of the card processing fees charged by their banks. MasterCard and Visa set the interchange rate to reimburse the customer’s bank for sending payment to the merchant’s bank.



The fee helps cover some of the risk that the customer won’t repay the bank. Neither MasterCard nor Visa profits from the fee, industry officials said. (say again?)



The merchants complain that MasterCard and Visa have a virtual duopoly. To inject competition into the market, retailers are pushing legislation to grant them an antitrust exemption to directly negotiate the interchange rate with the credit card companies. If an agreement is not reached, the parties would submit rules and rates to a three-judge panel to choose the plan that best reflects a competitive market. The financial services industry opposes the move because it would give the nation’s 9 million retailers the power to collude and dictate the interchange fee. Besides, industry lobbyists argue that competition already exists in the market. If the companies set the rate too high, merchants won’t accept their cards. If the rate is set too low, banks won’t offer the cards to their customers. The two constituencies together are a built-in equalizer.



The debate has sparked a huge lobbying campaign marked by Capitol Hill visits and briefings, coalitions and ad campaigns.“You essentially have the entire financial services industry working against these bills,” said Scott Talbott, chief lobbyist for the Financial Services Roundtable, which represents 100 of the nation’s leading financial services firms. Last month, the Roundtable held a briefing for about 50 congressional staffers and flew in executives from banks and credit unions for 33 office visits. When Congress held a hearing on the bill in May, the Roundtable spent about $75,000 on print advertising. The financial services industry argues that the legislation doesn’t require retailers to pass any negotiated savings to consumers.“They want all the wonderful things that come with a vibrant electronic payment system and the millions of customers who see the value in using credit and debit cards, they just don’t want to pay for it,” said Jason Kratovil, a lobbyist for the Independent Community Bankers of America.



A balanced interchange fee is what allows a $100 million community bank to offer the same cards as a behemoth like the $1.7 trillion Bank of America, Kratovil said. If the government steps in to help merchants depress that rate, smaller banks will no longer be able to cover the cost of offering the cards, which means fewer choices for consumers.



But the merchants argue that they’re not asking the government to set prices but to allow them to negotiate. National Retail Federation Senior Vice President Mallory Duncan, chairman of the Merchants Payments Coalition, argued that giving retailers the ability to negotiate a lower fee would allow them to pass along the savings to consumers through lower prices.



The allegation that merchants would pocket the difference is untrue, he said, because retail is “the most competitive industry in America,” with an average after-tax profit margin of 2 percent. Visa and MasterCard “have, for years, had thousands of banks acting as a cartel to set this system up,” Duncan went on. “For them to have to face mano a mano competition sounds like they doth protest too much.”



In fact, by capping their fees on gasoline purchases, Visa and MasterCard have “implicitly acknowledged that their interchange fees are driving up the cost of gas,” he said.“What they haven’t said is that it’s driving up the cost of food, the cost of clothing, the cost of vacation travel, everything else that consumers purchase is being driven up by the cost of these exorbitant credit card fees.”



That argument is wrongheaded, according to Visa spokeswoman Randa Ghnaim. There’s a cost to accepting credit cards just as there is for accepting cash and checks, she said. Industry officials said Visa and MasterCard capped gasoline fees because the companies understand that station owners make only about a dime on each gallon of gas, no matter how much a gallon costs. They hoped the savings from reduced fees would be passed on to consumers. Still, when gas prices rise, so does the amount of risk banks are taking when they loan their customers the money to pay at the pump, said Peter Madigan, executive director of the Electronic Payments Coalition.



© 2008 Capitol News Company, LLC

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Groundbreaking Joint Effort or Careful What You Wish For?

Service Employees International UnionImage via Wikipedia
In a groundbreaking joint effort by the nations fastest growing union and trade associations representing merchants, the Service Employees International Union (SEIU), Food Marketing Institute (FMI), National Association of Convenience Stores (NACS), and the National Grocers Association (N.G.A.) sent a letter to every Member of the House of Representatives today calling on Congress to stop the nations biggest banks and credit card companies from continuing abusive practices which harm American consumers and businesses.

The groups jointly urged Congressional action to pass the Credit Cardholders Bill of Rights Act of 2008 (H.R. 5244), the Credit Card Fair Fee Act (H.R. 5546 and S. 3086), and the Credit Card Interchange Fees Act of 2008 (H.R. 6248).

I know the free market is already riddled with regulation, so riddle me this...As long as options such as HomeATM are on the table, why on earth would anyone want our free market system crippled with government regulation? Nordstrom's Executive VP, Kevin Knight may have said it best when he told the Judiciary Committee in a letter that Nordstrom believes that interchange fees represent "a fair price for the services we receive," adding that "we prefer market competition to
regulation."
John B. Frank, HomeATM PIN Debit Blog, Jul 2008

The biggest banks have put working families and the economy on a rollercoaster -- but regulators arent paying enough attention to make sure it doesnt go off the track, said Stephen Lerner, Director of the SEIU Private Equity Project. Lawmakers and regulators have to act before the fees and bad practices hurting consumers derail the economy altogether.

The abuse of American consumers and businesses by credit card companies and big banks needs to end, said John Motley, Senior Vice President, Government and Public Affairs of FMI. It is time for Congress to Act.

By combining the market power of all of the big banks, the credit card companies have the ability to dictate their terms to everyone, said Lyle Beckwith, Senior Vice President,Government Relations of NACS. They abuse businesses -- large and small -- in just the same ways they abuse individual cardholders. The ever-changing credit card terms and mystery fees hit everyone.

Credit card abuse is incredibly frustrating for our members, said Tom Wenning, Senior Vice President and General Counsel of N.G.A. They see how much money is taken out of their businesses in credit card fees and then they see the high rates and fees they get hit with as individual consumers. The credit card companies hit all of us twice -- and many people dont even know it.

Last year alone, banks made $42 billion in interchange fees. The top 10 banks issued 88 percent of the credit cards and made the vast majority of those fees. The biggest banks in the country have recently come under fire for abusive banking practices such as increasing credit card interest rates, high overdraft and late fees and rising costs of consumer products.

Members of Congress introduced bills that will help protect consumers and retailers from the banks and credit card companies continued abuses. Rep.
Carolyn B. Maloney (D-NY), introduced The Credit Cardholders Bill of Rightson February 7, 2008; Rep. John Conyers (D-MI) and Rep. Chris Cannon (R-UT) introduced the Credit Card Fair Fee Acton March 6, 2008; Sen. Richard Durbin (D-IL) and Sen. Christopher Bond (R-MO) introduced the Senate companion to the Credit Card Fair Fee Acton June 5, 2008; and Rep. Peter Welch introduced the Credit Card Interchange Fees Act of 2008on June 11, 2008.

The text of the letter sent to the House of Representatives follows:

The biggest banks and credit card companies have used the power they wield in the marketplace to push unfair business practices that are costing our members -- retailers and working families -- tens of billions of dollars each year.

The credit card industry has moved steadily over the last several years to impose more burdensome penalties and fees on cardholders -- ratcheting up interest rates as high as 30 percent. At the same time, the industry has dramatically increased credit card interchange fee revenues. All banks charge the same schedule of fees which drives up the costs of nearly everything consumers buy, including necessities such as gasoline and food, and removes the competitive pressure to reduce the fees.

Each year, these banks flood our mailboxes with 9 billion pieces of junk mail promising cheap, easy credit. The banks then make all of us pay for these billions of offers -- without us even knowing it -- by using part of the more than $40 billion they collect annually in interchange fees. These fees are nominally paid between banks but are actually passed on to merchants and, ultimately, to consumers. These fees are tremendously regressive because credit card industry rules make sure they are hidden in the prices of goods and services so that cash shoppers have to pay for them just like premium rewards credit cardholders.

The federal agencies that are responsible for protecting American consumers from the credit card industrys worst abuses have failed to use their authority to stop the anticompetitive and deceptive and unfair practices that have become standard in the industry. It is now time for Congress to step in and begin to restore fairness in the financial marketplace for working families and merchants.

With that in mind, we urge you to support three pieces of legislation that would begin to reform this industry. These are: -- The Credit Cardholders Bill of Rights Act of 2008, H.R. 5244, sponsored by Rep. Carolyn Maloney (D-NY); -- The Credit Card Fair Fee Act of 2008, H.R. 5546, sponsored by Reps. John Conyers (D-MI) and Chris Cannon (R-UT) and S. 3086 sponsored by Senators Durbin (D-IL) and Bond (R-MO); and - The Credit Card Interchange Fees Act of 2008, H.R. 6248, sponsored by Rep. Peter Welch (D-VT).

These pieces of legislation are important steps forward in ending the abusive credit card practices that drain billions of dollars from working families and retailers each year. We urge you to support these bills and quickly pass them.

About the Organizations

SEIU
The Service Employees International Union (SEIU) is the fastest- growing labor union in North America, with 1.9 million members. Together with consumer advocacy organizations nationwide, were working to hold big banks accountable to working families and our communities.

FMI
Food Marketing Institute (FMI) conducts programs in public affairs, food safety, research, education and industry relations on behalf of its 1,500 member companies -- food retailers and wholesalers -- in the United States and around the world. FMI's U.S. members operate approximately 26,000 retail food stores and 14,000 pharmacies. Their combined annual sales volume of $680 billion represents three-quarters of all retail food store sales in the United States. FMI's retail membership is composed of large multi- store chains, regional firms and independent supermarkets. Its international membership includes 200 companies from more than 50 countries. FMI's associate members include the supplier partners of its retail and wholesale members.

NACS
NACS, the association for convenience and petroleum retailing, is an international trade association representing more than 2,200 retail and 1,800 supplier member companies. The U.S. convenience store industry, with over 146,000 stores across the country, posted $577.4 billion in total sales in 2007, with $408.9 billion in motor fuels sales.

N.G.A.
N.G.A. is the national trade association representing the retail and wholesale grocers that comprise the independent sector of the food distribution industry. An independent retailer is a privately owned or controlled food retail company operating a variety of formats. Most independent operators are serviced by wholesale distributors, while others may be partially or fully self- distributing. Some are publicly traded but with controlling shares held by the family and others are employee owned. Independents are the true entrepreneurs of the grocery industry and dedicated to their customers, associates, and communities. N.G.A. members include retail and wholesale grocers, state grocers associations, as well as manufacturers and service suppliers.








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More on "O (nline) Canada"







More than 22 million Canadians will access the Internet regularly in 2008—over two-thirds of the nation's total population. eMarketer estimates that over the next four years user numbers will rise by about 1.5 million annually, passing 25 million in 2012, when penetration will reach almost 73%.

For years, Canada has scored high in many measures of technology and Internet use. For example, the Organization for Economic Cooperation and Development (OECD) placed Canada among the top 12 countries in household PC ownership in 2007, with 76.9% penetration.
Canada also ranked among the top 15 nations in the "networked readiness" of its economy, said the
World Economic Forum and the respected business school INSEAD in 2007. The country scored 5.3 out of a maximum 7.0 (the highest was Denmark, with 5.78).

In early 2008, at least 7.8 million Canadians were going online every day, according to the
Universal McCann Social Media Tracker.

"It is no surprise that Internet use is widespread in Canada," says Karin von Abrams, senior analyst at eMarketer and author of the new report,
Canada Internet: Users and Usage. "The combination of a relatively small population and the country's large size may encourage Canadians to make the most of online communications."

But what about the fact that Canadian online growth rates are slipping? "Overall growth is slowing for Canada's Internet population only because most residents are already online," says Ms. von Abrams.

One aspect of the Canadian online picture is growing faster—much faster.

"Broadband is more prevalent in Canada than in many other countries, including the US," says Ms. von Abrams. "Broadband penetration is also growing more quickly than the online population." About two-thirds of households have broadband in 2008, but three-quarters of Canadian households will benefit from high-speed connections by 2012.

See what the country's maturing online demographics and usage patterns mean for your business, download the new eMarketer report,
Canada Internet: Users and Usage, today.

NRF Has It's Say to House Judiciary Committee

An example of street markets accepting credit ...Image via Wikipedia
WASHINGTON, Jul 16, 2008 (BUSINESS WIRE) -- The National Retail Federation urged the House Judiciary Committee to approve legislation scheduled for a vote today that would require Visa and MasterCard to negotiate over a hidden credit card fee that costs the average family more than $400 a year.

"At a time when Americans are struggling to pay for groceries and to fill the gas tank, doing something about a hidden fee that drives up the cost of basic necessities should be one of Congress' top priorities," NRF Senior Vice President for Government Relations Steve Pfister said. "This legislation is a sensible solution to an escalating problem that's costing consumers more every day."

"In a functional market, one would expect that the cost of accepting credit cards would decrease over time as transaction volumes increase, fraud risks go down and technology improves, but interchange fees continue to skyrocket," Pfister said. "Credit card companies continue to impose these fees on retailers and consumers on a take-it-or-leave-it basis while pretending that they're no different than any other cost of doing business. If they really aren't any different, then they should be subject to fair and open negotiation like any other cost."

The Judiciary Committee is scheduled to consider H.R. 5546, the Credit Card Fair Fee Act of 2008, during a voting session this morning. Sponsored by Chairman John Conyers, D-Mich., and committee member Representative Chris Cannon, R-Utah, the bill would require credit card systems possessing "substantial market power" to negotiate with merchants to reach a voluntary agreement on credit card terms and conditions. If an agreement could not be reached, both sides would be required to submit their final offers to binding arbitration by a panel of antitrust experts appointed by the Department of Justice and Federal Trade Commission.

At issue is credit card "interchange," a non-negotiable fee averaging close to 2 percent that Visa and MasterCard banks charge merchants every time a credit card or signature debit card is used to pay for a transaction. Visa and MasterCard effectively force merchants to pass the fees on to consumers by requiring them to be included in the advertised price of items and making cash discounts difficult. But interchange is largely unknown to most consumers because Visa and MasterCard keep merchants from disclosing it on receipts and don't disclose the fee on monthly statements.

Unlike other vendors who provide services to retailers, Visa and MasterCard refuse to negotiate over the fees regardless of the size of the merchant. NRF has argued that interchange practices violate antitrust law because banks issuing the cards agree to charge the same rates.

According to NRF estimates, the average U.S. family will pay $427 in hidden credit card interchange fees in 2008, up from $378 in 2007.

The amount has nearly tripled from the $159 paid in 2001, the year NRF began tracking interchange.

Total interchange collections are projected at $48 billion this year, up from $42 billion last year and $16.6 billion in 2001.

The National Retail Federation is the world's largest retail trade association, with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet, independent stores, chain restaurants, drug stores and grocery stores as well as the industry's key trading partners of retail goods and services. NRF represents an industry with more than 1.6 million U.S. retail companies, more than 25 million employees - about one in five American workers - and 2007 sales of $4.5 trillion. As the industry umbrella group, NRF also represents over 100 state, national and international retail associations.
www.nrf.com

SOURCE: National Retail Federation National Retail Federation

J. Craig Shearman, 202-626-8134
shearmanc@nrf.com



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Airlines Choose Boarding Pass System from Sojern

Editor's Note: I am posting this release because it relates to the airlines industry, whom HomeATM is working with via Universal Air Travel Plan (UATP) and others. The boarding pass with destination content and offers (see graphic below/right) looks great, but before someone gets a boarding pass, they've got to pay for their ticket.

By reducing Interchange Fees by up to 100 basis points with our proprietary Internet PIN Debit / Credit platform, HomeATM can save individual airlines millions annually. For more information, feel free to send your request to: info@homeatm.net


Here's the press release on the announcement from BusinessWire.


Six Major Airlines Announce Plans to Launch Exciting Free Service to Enhance Passenger Experience

NEW YORK--(BUSINESS WIRE)--The six major network carriers (American Airlines, Continental Airlines, Delta Air Lines, Northwest Airlines, United Airlines and US Airways) today announced their participation in a new, independently-owned company that will provide exciting new destination content and offers to their passengers via the online and printed boarding passes obtained from the airline’s online check-in process.

The new company, Sojern, Inc., will be the first to provide valuable information to airline passengers who utilize the airline’s existing and convenient web check-in to get their boarding passes.

The launch of the new service will begin on July 15, 2008 with Delta Air Lines, and the first passengers to receive the content will be those booked on flights to Las Vegas. Shortly after the initial launch, Delta will provide the service to all domestic destinations. “With millions of our passengers checking in online at delta.com each year, the boarding pass becomes an increasingly valuable tool for sharing relevant, timely offers and destination-specific content with our customers before they travel," said Marc Ferguson, general manager of Global Partnerships for Delta. “At Delta, we are always looking for innovative, new opportunities to provide added benefits to our customers, and this customized data from Sojern does exactly that."

The other airline partners will roll-out the service to their domestic passengers later this year with specific timing reflective of their internal project priorities. However, all of the partners are very enthusiastic about the new offering.

“Our focus group research has continually shown that passengers love the concept and praise the airlines for providing this innovative offering,” said Gordon Whitten, the founder of Sojern and former Ernst and Young Midwest Technology Entrepreneur of the Year. “And, since the airlines connect to millions of high income travelers about to embark on a trip, advertisers are also clamoring to get involved. It is truly a win for passengers, a win for advertisers, and a win for airlines.”

“We always focus on providing greater convenience and value to our customers, and this is a natural extension of that effort,” said Bella Goren, Senior Vice President of Customer Relationship Marketing and Reservations at American Airlines. “The capabilities of Sojern will enhance our customers’ travel experiences, and we are very pleased to pursue this opportunity.”

The airlines will continue to operate and develop their respective websites independently, including online check-in. Additional quality content will be provided directly on the boarding passes by Sojern using its patent-pending proprietary technology. "Continental is pleased to be working with Sojern to provide valuable content and offers to our customers via our online boarding passes. This relationship will provide our customers with a new product they will appreciate and value, and will generate ancillary revenue for Continental," said Mark Bergsrud, Continental's senior vice president marketing programs and distribution. "The Sojern team has a great deal of expertise in the advertising space and is the right partner for our industry-leading online check-in products."

Sojern will be the exclusive third-party provider of content on the airline’s online boarding passes. "With nearly 40% of our customers using nwa.com to check-in, Northwest is pleased to extend customized offers and deals tailored to customers depending on their destination and other characteristics," said Al Lenza, VP, Distribution and E-commerce. "We are excited to work with Sojern on this multi-airline venture."

The custom tailored content will help passengers plan for the unpredictable and the delectable by providing weather forecasts for the duration of their trip and by helping them locate cuisine choices that fit their budget and lifestyle. In addition, Sojern will provide timely content about events that are happening in destination cities across the nation and customized offers to passengers by working with a wide variety of advertisers who aspire to reach the quality demographics represented by airline passengers. “At US Airways we are always seeking solutions that provide both unique customer benefits as well as new revenue opportunities,” said Travis Christ, US Airways’ Vice President, Sales and Marketing. “Sojern has found the right formula and we’re looking forward to adding another great feature to usairways.com.”

The airlines have been very successful attracting partners for their frequent flyer mileage programs and they expect to be able to attract more quality relationships, in the markets they serve, with local companies who wish to provide offers to the airline passengers. “This agreement is consistent with the work that we are doing to offer our customers a more customized travel experience, and we look forward to this exciting opportunity with Sojern,” said Dennis Cary, senior vice president, Marketing, United Airlines.

Sojern is funded by two leading Silicon Valley venture capital firms, Norwest Venture Partners and Trident Capital, both with a history of successful travel and advertising technology investments. Their first round investment in Sojern was $16M. Additionally, Sojern has assembled a board of directors comprised of industry experts, including Jeffrey Katz, Founding CEO and former Chairman of Orbitz. “Airlines have again come together to provide a convenient service to their customers,” said Katz. “It’s similar to how Orbitz and Hotwire were formed, only this time the company will be in the heart of the booming online advertising industry.” In addition to their participation, each airline will own an equity stake in Sojern.

Advertisers are enthused about gaining unparalleled access to a highly sought after travel audience. Crocs, Inc., well-known for the lightweight and comfortable shoes that many travelers have come to enjoy, has signed up as a charter advertiser with Sojern. “We are excited to be one of the first advertisers to leverage this new medium,” said Edward Wunsch, Director of Marketing at Crocs, Inc. “We are confident that the passenger experience will be remarkable and will reflect positively on our brand to millions of people in our ideal demographic.”

For a more detailed demo of the new boarding pass, please visit:
www.sojern.com/demo.

About Sojern, Inc.
Sojern, Inc. is an Omaha-based organization that is partnering with the airline and advertising industries to enhance the travel experience by providing destination specific information and offers via the boarding passes that travelers obtain through the airline’s web check-in process. Since its founding in September 2007, Sojern has secured partnerships with leading U.S. airlines including American Airlines, Continental Airlines, Delta Air Lines, Northwest Airlines, United Airlines and US Airways. The company is funded by Norwest Venture Partners and Trident Capital. Sojern’s patents are currently pending. For more information please visit
www.sojern.com.

About Norwest Venture Partners
Norwest Venture Partners (NVP) is a global venture capital firm that has actively partnered with entrepreneurs to build great businesses for more than 45 years. NVP focuses on investments in information technology including: software, services, enterprise and communications systems, semiconductor/components and Internet, media and consumer. The firm currently manages more than $2.5 billion in venture capital out of its office in Palo Alto, California. Managing Partner Promod Haque has been ranked as a top dealmaker on the annual Forbes Midas List for the past six years. In 2004, Forbes named him as the #1 venture capitalist worldwide based on performance over the last decade. For more information, visit the firm’s website at
www.nvp.com.

About Trident Capital
Trident Capital is a leading venture capital and private equity firm with over $1.5 billion of capital under management, including $400 million raised in its most recent fund, Trident Capital Fund VI. Trident focuses on investments in the business services, information services, software sectors, Internet and Cleantech across a variety of industries. Within its sector focus, Trident invests across multiple stages, including traditional venture capital investing as well as investments in micro-cap public companies, buyouts and consolidation platforms. The firm has made over 120 investments since inception. Trident has investment offices in Palo Alto, Calif. and Westport, Conn. For more information, visit the firm’s website at
www.tridentcap.com.

Contacts
Sojern, Inc. Susan Booth, 402-996-2027
Susan.booth@sojern.com

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