Thursday, December 17, 2009

Heartland Pays Amex $3.6 Million Over 2008 Data Breach

By Robert McMillan, IDG News Service

PC World is reporting that AMEX is the first card brand to settle with Heartland over "last years" breach announced earlier "this year..."

Heartland Payment Systems will pay American Express $3.6 million to settle charges relating to the 2008 hacking of its payment system network.

This is the first settlement Heartland has reached with a card brand
since disclosing the incident in January of this year.

Continue Reading at PC World

ATM Fraud and Security Digest - November 2009

Written by Douglas Russell, DFR Risk Management   

Card Trapping / Card Theft / Distraction / Card Swapping

Lebanese Loops and other card trapping devices were reported in November, particularly in the UK. Distraction techniques also continued to be reported globally. Iincidents often included teams of two perpetrators with one pointing to a low-value bank note (£5 in UK incidents) on the ground and indicating to the victim that they had dropped it, the second perpetrator removing the card from the ATM while the victim was distracted,the PIN observed previously while being entered. In The Philippines, a P500 note was typically used and the card was swapped, as opposed to simply being stolen.

ATM Skimming / Skimming / Data Compromise

ATM skimming continued to be significant globally in November. Police in Nigeria arrested a group who claimed they purchased the skimming equipment from Malaysia. One of the suspects apparently boasted that their crime was intellectually superior to using firearms and merely robbing victims. Some of the more sophisticated skimming devices recovered in November included those which incorporated Bluetooth transmitters. An apparent payment terminal compromise at a car park in New Zealand was reported in November with an indication that there were around 100,000 potential victims - cards were blocked and re-issued in many cases following the discovery. Other incidents of significant card re-issuing included activity by Lebanese banks in November. Co-operation between law-enforcement organizations in the US and Europe included raids executed by Romanian police and the seizure of equipment used in card fraud and, in particular, ATM skimming. Charges in the USA were made against suspects in last year's sophisticated data compromise at the major US processing centre, RBS WorldPay.

Transaction Reversal Fraud / Manipulation / Denomination Fraud / LTL

Transaction Reversal Fraud (TRF) was detected in the UK during November. Various incidents of denomination fraud were detected globally, including one in which the perpetrator forgot to reset the value of currency in the ATM and honest consumers reported they were being charged only £1 for every £10 dispensed. Leaving Transaction Live (LTL) fraud was reported in India during November - the suspect targeted those who seemed unsure on how to use an ATM and tricked them into leaving the ATM while the transaction was still live and uncompleted.

Vishing / Phishing / Smsishing / Advanced Fee / Funds Transfer Fraud

Many incidents of Phishing related crime persisted during November. While vishing attacks continued, one potential victim in the USA decided, wisely, not to follow instructions to go to an ATM in the middle of the night, hanging up the phone instead.

Cheque Fraud (Check Fraud) / Fake Deposit

A teenager in IL (USA) was accused in November of opening accounts with false names, depositing cheques knowing they would not be honoured, and withdrawing funds via an ATM before the cheques could be fully cleared.

Ram Raid Attacks / Theft of ATM / Smash-and-Grab

Ram raid attacks were reported in many countries throughout November. A significant number failed for various reasons which included chains breaking, parts of the vehicle coming loose, and a general failure to overcome strong anchoring. Police in Eire and Northern Ireland increased co-operation following a number of attacks on both sides of the border. ATM thefts that succeeded included incidents where the ATM was removed manually, with little more effort than the use of a crowbar.

Safe Cutting / Safe Breaking / Frontal Attacks / Theft from ATM

Cutting tools were used to both open ATM security enclosures and facilitate the theft of complete ATMs in November. In India, an estimated Rs2.8 million was stolen after the ATM was cut from its anchoring using a blowtorch. In The Netherlands, British suspects were killed when their vehicle crashed. They were suspects in a cutting attack. In the UK,13 gang members were sentenced to a total of 78 years imprisonment following a large number of attacks which included the use of oxyacetylene cutting equipment.

Explosive Attacks

Explosive attacks were reported in The Netherlands, South Africa, Thailand and Australia in November. In Australia, arrests included that of a 15-year-old youth, along with a 43 year old man, accused of using explosive devices to attack ATMs.

Legislation / Law

New laws to be introduced in Queensland, Australia, will strengthen existing legislation that makes it an offence to skim card data and will criminalize the possession of various devices for the purpose of obtaining or dealing with identification information. In Canada, a successful prosecution against the owners and operators of a company supplying equipment that could be used to compromise cards was brought under criminal organization legislation.

The above digest is provided by DFR Risk Management, who provide consultancy services advising ATM and self-service terminal deployers and manufacturers, as well as law-enforcement agencies, on how to manage ATM and self-service terminal fraud and security threats.

Early Bird on American Banker Symposium Expires Tomorrow

15th Annual Best Practices in Retail Financial Services Symposium

The 15th Annual Best Practices in Retail Financial Services Symposium!

The 15th Annual Best Practices in Retail Financial Services Symposium will meet on March 21-23, 2010 in Orlando FL. You can't afford to miss this critical industry gathering.

Register now
with a special limited-time offer: use PROMO CODE: SAVE100 and save an additional $100 off the lowest conference rate! This offer will expire tomorrow, December 18th.

The conference agenda is now available on our website.


  • Presentations from more than 25 executives who run Retail Banking operations at their institutions

  • 5 female executives who were honored as U.S. Banker's 2009 25 Most Powerful Women in Banking and 25 Women to Watch

  • 8+ hours of networking time with speakers, fellow attendees and solution providers

  • 3 tracks dedicated to in-depth discussion of the most pressing topics

View agenda online and then register with the special offer that will save you an additional $100. Don't delay – offer expires tomorrow, December 18th.  Look forward to seeing you in Orlando.

Best regards,

Michele Davidson

Senior Program Manager


ATM Fraud, Security Issues Take Centerstage at Diebold Conference


The rising threat of automated teller machine (ATM) fraud, and the innovative technology solutions that financial institutions could adopt to address security challenges, dominated discussion at a conference held in Beirut today to address the significant changes that are transforming the role of the ATM.

The conference was attended by more than 100 representatives from leading financial institutions in the region and senior executives from major IT companies in the banking and financial services market, including Dave Wetzel, vice president and managing director for Europe, the Middle East and Africa (EMEA), Diebold, Incorporated (NYSE:DBD); Samer Kandalaft, general manager of Quantech, Lebanon; Pierre Abi Jaoude, CEO of CBM, Lebanon; Ahmad Al-Mukhtar, CEO of MESSC, Iraq; Emad Suwan, CEO of JBS, Jordan; and Emad Al Saffar, division manager of Axis-Solutions, Kuwait.

Held at the Habtoor Grand Hotel in Beirut, the conference addressed emerging trends in retail banking and the financial self-service marketplace, covering the important themes of branch transformation, deposit automation, next-generation software solutions, integrated services, with a special emphasis on ATM security.

Addressing his company's key strategic initiatives in the region, Wetzel emphasized the pressing need for financial institutions to ensure increased ATM security.

"In a climate of increased ATM fraud and threats, financial institutions can no longer afford to take a reactive approach to detecting and preventing fraud attempts and attacks on their ATMs. For emerging markets such as the Middle East, which has been witnessing a massive rise in ATM fraud over the past few years and where financial self-service activities are set to increase exponentially, ensuring protection against security threats is critical, as the extent of market growth will be closely linked to the level of transaction security offered to customers."

Wetzel said.

ATM security remained the dominant theme of the day with experts from Diebold, Incorporated - the leading global provider of automated teller machines which organized the conference - and keynote speakers from major IT players in the region analyzing the current landscape, regulatory compliance, card skimming and PIN interception.

"Providing a secure environment for ATM users is essential to maintain consumer confidence in this important channel," Wetzel said. "To address the security requirements of financial institutions, Diebold has taken a leading role in ATM security and the prevention of ATM frauds and attacks. By integrating leading-edge security features directly into the design of our Opteva family of ATMs, we have engineered what just might be the most sophisticated, most advanced ATM security solution in the business."

Wetzel also discussed Diebold's innovations, inspired thinking and collaborative approach during its 150 years in business, and highlighted the comprehensive portfolio of security solutions the company offers financial institutions worldwide.

One of the highlights of the conference was a roundtable discussion on the challenges facing the financial services market in 2010. Participants in the discussion included some of the leading names from the regional financial services and Information Technology industry.

At the conference, Diebold showcased several of its next-generation solutions at a specially designated demonstration area, including its range of deposit automation technologies for cash optimization with recycling capability, the latest cash dispensers, teller recycling solutions and other non-cash terminals which complement today's branch automation requirements.

Diebold has established itself as a dominant player in the ATM market in the Middle East, and enjoys around 75% market share in Lebanon, where its customer base includes most of the major banks in the country. With the Lebanon ATM market having grown at an impressive rate of around 10% in the past two years despite political and security instabilities, and given the significant improvement in the political and economic climate in the country since, Diebold expects growth to pick up considerably in 2010.

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mPayy Launches Free Android Mobile Payment App

Meets Growing Demand for an Alternative Mobile Payment Solution

CHICAGO--(BUSINESS WIRE)--mPayy, an emerging leader in mobile and online alternative payments, today announced the availability of its secure mobile payments application in the Android marketplace for all phones that run the Android operating system. mPayy enables free person-to-person payments between members, and low cost merchant processing through its new Android application. Images and screen-by-screen descriptions of the application are available at

“We are incredibly bullish on the mass market appeal and flexibility of Android’s open source, java-centric operating system,” stated Conrad Sheehan, CEO of mPayy. “mPayy’s payment services enable convenient, secure transactions on the go and is ready to plug into advanced mobile commerce experiences for any merchant. We realize we’re a little ahead of the curve, but that puts us in a good spot as merchants and billers of all sizes work to build out mobile commerce offerings and pursue alternative payments that don’t rely on card networks.”

All mPayy Personal and Business accounts may use the Android application to make and receive person-to-person payments, track activity, and withdraw funds from their mPayy accounts to linked bank accounts. Small business account holders are also able to issue refunds for any sale through the application, even if it occurred on their website.

Once members open Small Business accounts, they will be able to generate their own API key to unlock mPayy’s payment services, and add secure debit payments to their online or mobile websites and applications. API keys may be used to authorize one-time or recurring billing subscription payments. Merchants can receive mPayy members’ shipping information to fulfill orders conducted through its online & mobile payments service.

mPayy members without bank accounts can receive funds into free, no fee, Stored Value accounts. These funds can be easily budgeted and used to make purchases at e-commerce merchants where mPayy is accepted, or transferred for free to account holders that have bank accounts where the funds can be withdrawn quickly for free.

mPayy’s Android application is free to download from the Android Market. The mPayy application runs on all Android devices – from the Sprint HTC Hero and T-Mobile Motorola CLIQ running Android 1.5 to the newly released Verizon Motorola Droid running Android 2.0.

About mPayy, Inc.

mPayy is a secure online and mobile payment platform that enables merchant and bill payment processing for any sized business, plus quick and simple payment for buyers. The company’s highly scalable platform improves margins by eliminating fraud and reducing transaction costs. mPayy has created an efficient and ubiquitous payment service that enables profitable micro-payments; easy, yet secure purchases of digital content and physical goods; flexible recurring and subscription payments and free person-to-person payments. For more information, please visit or follow mPayy on Twitter @mpayy.

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Hypercom and The McDonnell Group to Create Data Communications Venture

http://www.hypercom.comPhoenix Managed Networks Will Deliver Alternative High Speed Transaction Transport Services

SCOTTSDALE, Ariz. & MCLEAN, Va.--(BUSINESS WIRE)--Hypercom Corporation (NYSE: HYC) and The McDonnell Group today announced they have signed a Letter of Intent to form a joint venture that will equip payment processors, banks and retailers worldwide with highly reliable and cost-effective data communications services for transaction-based applications. The joint venture will be called Phoenix Managed Networks LLC, and will acquire and operate Hypercom’s HBNet secure transaction transport business. Industry veteran John (Jack) McDonnell, Jr. will serve as CEO of Phoenix Managed Networks.

“We believe that the combination of Hypercom’s HBNet business and Jack McDonnell’s in-depth knowledge and expertise in data communications will significantly enhance our ability to expand market share and deliver strong returns for Hypercom’s shareholders and business partners. Jack McDonnell is an expert and seasoned operator in the payments industry, and I am confident that Jack and his team will be great partners,” said Philippe Tartavull, Chief Executive Officer and President, Hypercom Corporation.

“Phoenix Managed Networks is expected to bring state-of-the art, reliable and cost-effective transaction communications services to the payments industry and aggressively expand the global business Hypercom established with HBNet,” said Jack McDonnell, Managing Member of The McDonnell Group. Mr. McDonnell is the founder and former Chairman and CEO of Transaction Network Services, Inc. (NYSE:TNS). “I am also delighted to announce that former TNS executives Matthew Mudd and Trevor Fall will be joining the management team for this venture. At TNS, Trevor was SVP of sales for the POS division and Matt was EVP, with expertise in network operations, engineering and product development.”

Phoenix Managed Networks will utilize Hypercom’s HBNet network to speed the authorization and processing of electronic transactions for retail point-of-sale, financial, government, health care and other customers in dial, wireless and IP POS markets. In addition, the company will utilize Hypercom’s SmartPay gateway technology to support wireless and IP-initiated transactions.

HBNet is powered by robust, ultra high-density Hypercom technology strategically positioned within the North American Public Switching Telephone Network (PSTN) and at processor data centers. It supports all POS terminal protocols, provides uninterrupted service with no single point of failure, seamless load balancing, state-of-the-art Web-based reporting, and simple all-inclusive pricing.

About The McDonnell Group

The McDonnell Group LLC is a technology-focused investment fund managed by Jack McDonnell. Companies financed by The McDonnell Group include Transaction Network Services (NYSE:TNS); PaylinX, acquired by CyberSource (Nasdaq: CYBS); ExaDigm; Ecutel Systems, acquired by Smith Micro Software (Nasdaq:SMSI); webMethods (Nasdaq:WEBM), acquired by Software AG (FSE:SOW); LifeLinkMD, acquired by Medtronic (NYSE:MDT); Core Communications, acquired by Swisscom (NYSE:SCM); and BizTelOne, acquired by NeuStar (NYSE:NSR).

About Hypercom (

Global payment technology leader Hypercom Corporation delivers a full suite of high security, end-to-end electronic payment products and services. The Company's solutions address the high security electronic transaction needs of banks and other financial institutions, processors, large scale retailers, smaller merchants, quick service restaurants, and users in the transportation, petroleum, healthcare, prepaid, unattended and many other markets. Hypercom solutions enable businesses in more than 100 countries to securely expand their revenues and profits. Hypercom is a founding member of the Secure POS Vendor Alliance (SPVA) and is the second largest provider of electronic payment solutions and services in Western Europe and third largest provider globally.

Pennsylvania State Employees Credit Union Selects Firethorn for Mobile Banking Services

Firethorn has added PSECU to its customer roster and will provide the credit union’s customers with its mobile banking app and SMS services. This will allow the more than 365,000 PSECU customers to check account balances, transfer funds, pay bills and see account histories. More info is below in the release...

Mobile Banking Application and SMS Service Will Provide Additional Member Touch Points for PSECU

ATLANTA — December 16, 2009 — Firethorn Holdings, LLC, a Qualcomm company (Nasdaq: QCOM), today announced that Pennsylvania State Employees Credit Union (PSECU) has selected Firethorn’s mobile banking services for its more than 365,000 members. PSECU has more than $3 billion in credit union assets.

“PSECU maintains a branchless business model so expanding into the mobile environment gives PSECU a new avenue to provide innovative and convenient services,” said Dave Vigil, senior vice president of Firethorn. “We look forward to helping PSECU grow and evolve its mobile strategy to better serve its members.”

In 2010, PSECU will offer Firethorn’s mobile banking application and SMS service to its members. Using the Firethorn mobile banking service, as well as the PSECU-branded iPhone® application, members will be able to check their balances, pay their bills, transfer funds and see account histories, all from their mobile device. In addition to the mobile banking application, Firethorn’s solution will provide PSECU members with SMS capabilities, giving them access to their financial account information through balance and transaction history requests.

“PSECU has provided superior service and valuable tools to its members for more than 75 years,” said Greg Smith, president of PSECU. “Our philosophy is not about having branches on every corner; it’s about giving members account access where it’s most convenient for them. We’ve found that our members like the added convenience of handling their finances online, and we know that Firethorn’s mobile banking solutions will keep our members coming back to PSECU from their mobile devices.”

Firethorn’s mobile banking application gives financial institutions a suite of mobile banking capabilities, enabling end-users to view account balances, check credit card balances, transfer funds among their bank accounts, and view and pay bills. The application also provides access to services such as loyalty programs, targeted offers and peer-to-peer payments.

About Firethorn

Firethorn Holdings, LLC, a Qualcomm company (Nasdaq: QCOM), is providing an important link in the emerging mobile commerce ecosystem. As a pioneer in mobile banking, Firethorn is transforming the traditional wallet into a streamlined, efficient and protected mobile revenue channel that will bridge relationships among financial institutions, retailers, wireless operators and consumers. Firethorn’s innovative technology creates easily accessible, branded and personalized mobile commerce channels that give consumers access to their accounts, offers and transactions while on the go. For more information about Firethorn, please visit


Firethorn is a registered trademark of Firethorn Holdings, LLC. Qualcomm is a registered trademark of Qualcomm Incorporated. iPhone is a registered trademark of Apple Inc. All other trademarks are the property of their respective owners.

Western Union Launches Online Money Transfer Service from Belgium, Portugal

http://westernunion.comCompany Now Offers Online Money Transfer from 18 Countries Worldwide

ENGLEWOOD, Colo.--(BUSINESS WIRE)--The Western Union Company (NYSE: WU), a leader in global payment services, today announced the launch of transactional websites in Belgium and Portugal that allow consumers in both countries to send money online using just a credit or debit card.

With the launch of these sites, in Belgium and in Portugal, consumers in those countries will be able to send money quickly and easily anytime, anywhere for payout at more than 400,000 Western Union Agent locations in over 200 countries and territories.

“The Western Union® dot-com business is a high-growth and profitable channel,” said Gail Galuppo, executive vice president and chief marketing officer, Western Union. “Our international sites posted 40 percent transaction growth in the third quarter of 2009. Sending money online is an option our consumers need and want, and we are pleased with our expansion into so many international markets.”

The announcement is the latest step in the company’s expansion of new and existing channels for sending and receiving money. Western Union continues to grow its core business – moving money – through a variety of channels, including sending and receiving money with a cell phone or sending money online directly to or from a bank account.

In total, Western Union offers online money transfers from 18 countries, including the top five European send markets: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, United Kingdom and the United States.

Each of the websites for these 18 countries is available in English or the native language. Customer service is offered in the languages spoken in each country.

Both Belgium and Portugal have a large percentage of Internet users. According to Western Union consumer data, 67 percent of the total population in Belgium uses the Internet and in Portugal, nearly 40% regularly go online to shop or surf the Web.

About Western Union

First National Bank Selects Jack Henry Banking(TM) to Provide Enterprise-Wide Automation

$274 Million Bank to Implement CIF 20/20(R) through Jack Henry Banking's Outsourced Offering -

MONETT, Mo., Dec. 17 /PRNewswire-FirstCall/ -- Jack Henry & Associates, Inc. (Nasdaq: JKHY), a leading provider of integrated technology solutions and data processing services for financial institutions, today announced that Hope, Arkansas-based First National Bank has selected Jack Henry Banking's CIF 20/20 core processing system to provide enterprise-wide automation. This bank, which has more than $274 million in assets, will implement CIF 20/20 through Jack Henry Banking's outsourced offering.

According to Carol Smith, senior vice president of operations for First National Bank, "Our bank was at a crossroads. We were facing a renewal with the provider of our long-time in-house system, and our aggressive growth and market expansion plans require a top tier technology platform. Vendor and release management had become a nightmare since our bank is dependent on numerous vendors and disparate products and services that lack the integration we want and need. And we were very interested in evaluating the cost and operational benefits of in-house vs. outsourced processing. So we initiated the process of finding a technology partner that could serve our bank as a single source provider and an integrated technology platform that could meet our near- and long-term information and transaction processing requirements. Jack Henry Banking clearly demonstrated that CIF 20/20 is a functionally robust core system, that it provides the vast majority of the fully integrated complementary solutions we need, and that it has a distinct commitment to customer support and service. We are confident that Jack Henry Banking provides the technology we need to better serve our customers, expand our product offering, compete more aggressively, and increase our operating efficiency."

Monica Minter, CFO of First National Bank, added, "We elected to move from in-house processing to outsourcing based on several strategic advantages we expect to realize. Outsourcing will let us leverage Jack Henry Banking's extensive infrastructure and processing environment which will eliminate the capital expenditures required for in-house systems, the need for resident resources to operate and manage our in-house data center, and long-term capacity planning. Outsourcing will also provide our bank with the ability to focus on our core competencies with ongoing access to advancing technology, regulatory compliance, and Jack Henry Banking's technology and security experts."

Fred Wren, president and CEO, concluded, "We justified converting to a new technology platform, which is a significant undertaking for any bank, by identifying material benefits we expect to realize by moving to Jack Henry Banking and CIF 20/20. Replacing multiple vendors with a consolidated technology partnership with Jack Henry Banking will streamline and simplify our business. Replacing our silos of technology with an integrated platform that provides enterprise-wide automation will generate significant operational and cost efficiencies. And after contacting numerous banks automated by Jack Henry Banking's solutions, we are confident we will benefit from doing business with a company that delivers outstanding service."

CIF 20/20 is automating approximately 800 banks, making it the most widely used IBM® Power(TM) System-based core processing system in the community bank sector. CIF 20/20 supports growth-focused, service-oriented banks - ranging from start-up de novo institutions to banks with more than a billion dollars in assets - by integrating parameter-driven core functionality with more than 70 complementary products and services. CIF 20/20's browser user interface, open architecture and relational database technology, ability to support both in-house and outsourced operating environments, and scalable hardware platform maximize operating flexibility and seamlessly support diverse banks' technology requirements.

Stan Viner, general manager of sales for Jack Henry & Associates, said, "A fundamental tenet of our success is the ability to provide the business tools banks need to serve their existing customers and attract prospective customers in today's highly competitive business environment, to continually improve bank performance, and to successfully respond to the dynamic trends that shape the financial services industry. We are confident that we provide the core functionality and complementary solutions First National Bank expects to gain with a new technology platform, and we welcome the addition of this bank to our client roster."

In addition to CIF 20/20, First National Bank will initially implement an array of Jack Henry Banking's complementary solutions including StreamLine Platform Automation® - Deposits, StreamLine Platform Automation® - Loans, Vertex Teller Automation System(TM), NetTeller Online Banking(TM), NetTeller Cash Management(TM), the NetTeller Bill Pay electronic bill payment solution, Electronic Statements, the InTouch Voice Response® telephone banking solution, the BIG Rewards customer rewards and loyalty solution, Remote Deposit Capture, 4|sight(TM) Item Imaging, components of the modular Synergy(TM) Enterprise Content Management (ECM) solution, the jhaPassPort ATM and debit card solutions, and the TimeTrack Payroll System(TM).

About First National Bank

First National Bank (Texarkana First Bank in Texas) is a true community bank, owned and managed by people in the communities it serves. Local people. People who believe in old-fashioned banking service while delivering modern products and services. Additional information is available at

About Jack Henry Banking

Jack Henry Banking, a division of Jack Henry & Associates, Inc., is a leading provider of integrated computer systems for banks ranging from de novo to mid-tier institutions. Jack Henry Banking currently serves more than 1,500 banks as a single source for integrated, enterprise-wide automation; and as a single point of contact and support. Additional information is available at

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Fifth Third Bank Renews TSYS Processing Agreement

 TSYSCOLUMBUS, Ga.--(BUSINESS WIRE)--TSYS announced today that Fifth Third Bank has extended its payments services agreement through a multi-year contract renewal. The renewal includes the processing of Fifth Third Bank’s consumer and commercial credit card portfolios.

“TSYS has been a valued partner of Fifth Third for more than a decade,” said Jon Groch, Fifth Third Bank director of Bankcard Services. “The company’s TS2 platform has enabled us to consistently deliver the broad range of products with increased flexibility and superior service that our customers have grown to expect from Fifth Third Bank.”

“It is exciting for us to work with an institution such as Fifth Third, whose spirit of innovation contributes to its highly-regarded reputation in the payments industry,” said M. Troy Woods, president and chief operating officer of TSYS. “It understands the power of our solutions and the extent of our team’s dedication to helping them deliver card programs designed to meet their customers’ needs.”  Terms of the multi-year agreement were not released.

About Fifth Third

Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. The Company has $111 billion in assets, operates 16 affiliates with 1,309 full-service Banking Centers, including 103 Bank Mart® locations open seven days a week inside select grocery stores and 2,357 ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Pennsylvania, Missouri, Georgia and North Carolina. Fifth Third operates four main businesses: Commercial Banking, Branch Banking, Consumer Lending, and Investment Advisors. Fifth Third also has a 49% interest in Fifth Third Processing Solutions, LLC. Fifth Third is among the largest money managers in the Midwest and, as of September 30, 2009, has $184 billion in assets under care, of which it managed $25 billion for individuals, corporations and not-for-profit organizations. Investor information and press releases can be viewed at Fifth Third's common stock is traded on the NASDAQ® National Global Select Market under the symbol "FITB." Member FDIC.

About TSYS

TSYS (NYSE: TSS) is one of the world’s largest companies for outsourced payment services, offering a broad range of issuer- and acquirer-processing technologies that support consumer-finance, credit, debit, healthcare, loyalty and prepaid services for financial institutions and retail companies in the Americas, EMEA and Asia-Pacific regions. For more information contact or log on to TSYS routinely posts all important information on its website.

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Discover Reports $371 Million Net Income 4th Quarter Discover Financial Services Reports Fourth Quarter Results: Net Income of $371 Million and Earnings Per Share of $0.63

RIVERWOODS, Ill.--(BUSINESS WIRE)--Discover Financial Services (NYSE: DFS) today reported income for the quarter and year ended Nov. 30, 2009 as follows:







Earnings     Diluted EPS


Earnings     Diluted EPS


























Fourth quarter income from continuing operations was $371 million, down 16% from the fourth quarter of 2008. After-tax income related to the Visa/MasterCard antitrust litigation settlement included in continuing after-tax earnings was approximately $285 million and $535 million in the fourth quarter of 2009 and 2008, respectively.

Full year income from continuing operations was $1.3 billion, up 22% from last year. Income from continuing operations for full year 2009 and 2008 included $1.2 billion and $535 million (after-tax), respectively, related to the litigation settlement.

Fourth Quarter Highlights

  • Managed1 loans remained at approximately $51 billion. The student loan portfolio grew $513 million in the quarter while credit card loans decreased $670 million.

  • The fourth-quarter managed net charge-off rate rose to 8.43% and the over 30 days delinquency rate rose to 5.31%.

  • Discover Card sales volume declined 1% from the prior year to $22 billion.

  • Third-Party Payments segment volume was $33 billion, a 2% decrease from the prior year.

  • Deposit balances originated through direct-to-consumer and affinity relationships were $12.6 billion, an increase of $2.4 billion from the prior quarter.

  • Discover Bank issued $700 million of subordinated notes, increasing the company’s total regulatory capital.

“Discover's results this quarter reflect stronger than expected credit performance and our on-going investments to strengthen the Discover franchise,” said David Nelms, Discover’s chairman and chief executive officer. “We were very pleased with the stability of our sales volume, our expanded merchant acceptance and the continued growth of our direct-to-consumer banking business. For the full year we were profitable even excluding the antitrust settlement proceeds, and are closing out 2009 with strong capital levels and a strong foundation that positions us well for future growth.”

Segment Results (Managed Basis):

U.S. Card

Pretax income was $575 million in the fourth quarter of 2009 as compared to $646 million for the fourth quarter of 2008.

Managed loans ended the quarter at $51 billion, essentially flat compared to the prior year, as lower cardmember payments and growth in both student and personal loans were largely offset by lower balance transfer activity and sales volume. Sales volume declined 1% compared to the prior year, reflecting lower gas prices and a general decline in consumer spending. Balance transfer volume declined 66% from the prior year as the company reduced its marketing of promotional rate balance transfer offers.

Net yield on loan receivables was 9.37%, an increase of 82 basis points from the prior year and a decrease of 53 basis points from the prior quarter. The net yield increased from the prior year as the rate on credit card balances declined less than the cost of funds, primarily due to higher interest rates on standard balances and a reduction in promotional rate balances. The net yield decreased from the prior quarter reflecting the impact of a decline in higher rate balances related to the implementation of the CARD Act, an increase in lower rate student loan balances and an increase in the liquidity reserve.

The managed net charge-off rate increased to 8.43% for the fourth quarter of 2009, up 295 basis points and 4 basis points from the prior year and the prior quarter, respectively. The over 30 days delinquency rate on managed loans was 5.31%, up 75 basis points from the prior year and 21 basis points from the prior quarter. The increase in both the net charge-off rate and delinquency rate was due to higher levels of consumer bankruptcies and unemployment partially offset by a higher mix of student loans. The managed net charge-off rate for the first quarter of 2010 is expected to be between 8.4% and 8.9%.

Provision for loan losses decreased $117 million, or 11%, from the prior year due to a lower reserve build, partially offset by higher net charge-offs. The allowance for loan losses increased $383 million from the prior year, but decreased $75 million from the prior quarter. The increase from the prior year reflects a 199 basis point increase in the reserve rate, partially offset by a $1.6 billion decrease in on-balance sheet loans primarily related to securitization activity. The decrease from the prior quarter reflects a $1.9 billion decline in the level of on-balance sheet loans in the quarter as a result of securitization activities partially offset by a 25 basis point increase in the reserve rate.

Other income includes $472 million and $864 million in litigation settlement proceeds in the fourth quarter of 2009 and 2008, respectively. Excluding the settlement proceeds, other income increased $82 million from the prior year, primarily due to the revaluation of the interest-only strip receivable. The fourth quarter 2009 includes a $38 million unfavorable revaluation of the interest-only strip receivable compared to a $116 million unfavorable revaluation in the fourth quarter 2008.

Expenses were down $18 million, or 3% from the prior year, reflecting the impact of cost containment initiatives, partially offset by costs associated with the global expansion initiative of $13 million and a $9 million charge related to a facility closure. The fourth quarter of 2008 included a $39 million benefit due to curtailment of the company’s pension plan.

Third-Party Payments

Pretax income of $24 million in the quarter was up $3 million from the prior year. Revenues were up $6 million reflecting an increase in transactions on the PULSE network, lower incentive payments and higher fee revenues. Expenses were up $2 million including a higher level of international marketing investments, partially offset by the impact of cost containment initiatives.

Third-Party Payments dollar volume for the fourth quarter of $33 billion was down 2% from the prior year. However, the number of transactions on the PULSE network increased 5% to 677 million, due to increased transactions from new and existing clients, partially offset by the loss of volume from one large financial institution.

Capital Markets Activity

During the quarter, the company’s wholly-owned subsidiary, Discover Bank, raised approximately $700 million through a subordinated debt issuance, increasing tier 2 regulatory capital. In addition, the company’s securitization trust issued $1.3 billion of asset-backed securities through the TALF program.


The company’s board declared a cash dividend of $0.02 per share of common stock, payable on Jan. 21, 2010, to stockholders of record at the close of business on Dec. 31, 2009.

Adoption of Statement of Financial Accounting Standards No. 166 and 167

The company adopted Statement of Financial Accounting Standards No. 166 and 167 on Dec. 1, 2009, which requires the consolidation of its credit card securitization trusts. At adoption, the company added approximately $21.1 billion of assets, including a $2.1 billion addition to loan loss reserves, and approximately $22.4 billion of liabilities to its balance sheet. The net impact of the new accounting is a reduction to stockholders’ equity of $1.3 billion. The company estimates its pro-forma total and tier 1 regulatory capital ratios after adoption would be 16.0% and 13.3%, respectively.

Conference Call and Webcast Information

The company will host a conference call to discuss its fourth quarter results on Thursday, Dec. 17, 2009, at 10 a.m. Central time. Interested parties can listen to the conference call via a live audio webcast at

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