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August 17, 2010

Subprime lending ‘business as usual’

As Canadian card issuer Home Trust resumes its normal lending practice since the economic crisis began, the migration to EMV (Chip and PIN) with a view to combating fraud is its new focus.

By Verdict Staff

Subprime lending is back to business as usual according to Martin Reid, president of Canadian specialist lender Home Trust.

He said the business scaled back lending in 2008 and 2009, but is now originating loans at a similar rate to before the crisis.

“We lend out to people in a very conservative way and have a low loan-to-value rate,” Reid told Cards International.

“We coped excellently during the financial crisis. When the downturn started we become a lot more conservative and defensive and started to reduce our loans. But by the end of 2009 and the beginning of this year we became a lot more comfortable and resumed normal practice. I would say we are back to how we were pre-crisis.”

Home Trust, founded in in 1987, has continued to focus on consumers who typically do not meet all the lending criteria of traditional financial institutions.

The three main areas of client base Home Trust target are those with a blemished credit history, new immigrants into Canada and self employed individuals.

The business is the latest of a number of Canadian credit card issuers shifting to to EMV (chip and PIN), teaming up with digital security specialist Gemalto. Home Trust is currently in the process of issuing 20,000 new credit cards complete with the EMV technology.

Its EMV pilot scheme was in operation for nearly two years and tested internally through its expense cards. Raymond St Aubin, director of Visa Operations for Home Trust, added cross border transactions have also been tested.

St Aubin said Canadians are already chip and PIN friendly as a result of the national payment network Interac’s debit cards, which migrated to the electronic payment technology in 2008.

“The feedback from our customers has been positive,” he said.

“People will feel a lot more comfortable having their high value credit cards protected by a PIN rather than a signature. We are sure it will be a seamless transition into EMV.”

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