STRATEGY
Santander plans Brazilian IPO

The Brazilian division of Banco
Santander, Spain’s largest bank, plans to sell as much as $200
million of stock in an initial public offering (IPO).

In July, Santander said it would sell about 15
percent of its Brazilian unit through a new share issue, suggesting
the IPO would be worth around $5.6 billion, based on Banco
Santander’s current market value of around $37 billion.

According to a recent regulatory filing, the
lender plans to use the proceeds of the share offering for
expansion of its infrastructure and to increase its capital
base.

Santander is the third-biggest non-state
lender in Brazil and said last year it was targeting two-thirds
growth in profit in the country by 2010. This deal would make it
one of the top IPOs of 2009 worldwide, and one of the largest since
the $19.6 billion offering by payment network Visa in March
2008.

REMITTANCES
Western Union extends Cuban allowances

Western Union, the US money transfer
specialist, is to implement new rules on sending money to Cuba.

The new rules mean that US citizens will be
able to send money to “close relatives” in Cuba, which includes
aunts, uncles, cousins and second cousins who are Cuban nationals,
and remove the limits on the total amounts and frequency of money
sent back to Cuba.

The company said in April it planned to expand
its network in Cuba, following a government announcement that
restrictions would be lifted on travel and money transfers to Cuba,
a country it has helped provide money transfer services to since
1999.

The new guidelines, issued by the US
Department of Treasury Office of Foreign Assets Control (OFAC),
became effective on 3 September, but do not change the political
status of Cuba, a communist-run country that is still heavily
embargoed by the US.

MOBILE PAYMENTS
Digitel unveils two new applications in Venezuela

Digitel, the Venezuelan mobile
operator, has launched two new mobile payment applications via its
i-móvil online contents portal.

Mercantil Movil Internet, the first of the two
applications, offers access to mobile payment services, developed
in partnership with financial services provider Mercantil Banco
Universal.

Mercantil debit cardholders can use the
m-payment application to perform balance enquiries, mobile payments
for utilities, credit card bill payments and transfers between
their own accounts or to third-party bank accounts.

The second application, Panísimas, provides a
social networking portal developed expressly for mobile devices,
enabling users to share pictures, audio and video files with
friends connected to the same network.

Digitel also reportedly changed hands
recently, when the owner Oswaldo Cisneros sold it for $800 million
to an as-yet unnamed buyer.

STRATEGY
Banco do Brasil increases credit lines, looks to
expand

Banco do Brazil (BB) recently
announced it is to increase credit limits for 1.2 million retail
clients and 240,000 small and medium-size enterprises by BRL36.7
billion ($19.5 billion) – the third such move this year.

The bank has seen its overall loan portfolio
rise 32.8 percent in the 12 months to the end of June 2009, ending
the first half of this year at BRL252 billion, aided greatly by
particularly well-publicised merger and acquisition activities.

Despite its increased lending, BB’s 90-day
non-performing loan ratio has stayed at better levels than the
wider market, ending June at 3.3 percent, compared to 4.4 percent
for the overall financial system. These figures stood at 2.5
percent and 2.9 percent, respectively, in June 2008.

BB also mentioned in a securities filing that,
while it is examining purchases as part of its international
expansion plan, it has no negotiations currently in progress.

The bank has been announcing its ambitions to
extend throughout Latin America, China and Africa, after recently
opening a remittance operator and seeking approval for a retail
unit in the US.

SECURITY
First
Atlantic joins forces with MITec to fight online fraud

First Atlantic Commerce (FAC), a
multi-currency payment gateway and risk management solutions
provider, and Mercadotecnia Ideas y Tecnología (MITec), a
transactional gateway in Mexico, have announced their collaboration
to fight online credit card fraud in Mexico.

FAC will provide MITec with an online risk
management solution as well as address verification services (AVS),
which allow merchants to automatically verify cardholder identities
by comparing the online billing address to the billing address
attached to the cardholder’s credit card, and process
transactions in real-time.

MITec is also using FAC’s 3-D Secure service,
which is an authentication solution for Verified by Visa and
MasterCard SecureCode designed to protect international online
merchants from fraudulent transactions.

FAC provides consumer authentication-only risk
services to merchants, acquiring banks and processors across the
Latin American Caribbean area, as well as a range of other online
risk services including North American AVS services, CVV2/CVC2/CID
validation and consumer credit card verification services.

FAC’s online payment and risk mitigation
solutions are compliant and PCI-certified, and also available to
banks and processors in other regions including Europe, CEMEA and
Asia. 

STRATEGY
Mexico’s Wal-Mart to
relaunch bank unit

US retail giant Wal-Mart’s Mexican
unit is planning to relaunch its bank operation in the country, two
years after it first unveiled plans to break into Mexico’s banking
industry.

Wal-Mart de Mexico plans to use front-line
cashiers to offer savings accounts, take deposits and offer credit
cards to the 3 million customers who visit the retailer every day,
two-thirds of whom currently have no relationship with the
bank.

By the end of the year, Wal-Mart de Mexico is
aiming to have almost 20,000 cashiers in place along with nearly
150 branches and installation of ATMs.

It is also planning to open 270 stores in
Mexico by the end of 2009, 18 more than previously forecast.

Wal-Mart’s efforts to break into the Mexican
banking industry have been welcomed by banking regulators, citing a
lack of competition in the marketplace, in stark contrast to
Wal-Mart’s thwarted efforts to move into the US banking
industry.

NORTH AMERICA

MERGERS AND
ACQUISITIONS
Citi sells managed card assets worth $1.3bn

Citigroup, the third-largest US bank
by assets, has sold three credit card portfolios, representing $1.3
billion in managed assets. The bank has sold the portfolios as part
of a plan to unload weak businesses and troubled assets that have
caused it huge losses, although it has said it will continue to
service the portfolios through the first half of 2010.

The cards portfolios were part of Citi
Holdings, a division that includes assets the company is looking to
shed or close over time, one of the two segments resulting from the
company’s restructuring which took place in January.

The US government injected $45 billion in
Citigroup and is the bank’s largest shareholder, with roughly a 34
percent stake. The terms of the deal and the name of the acquirer
of the portfolios have not been revealed.

CARD USAGE TRENDS
Debit card transactions volume overtakes credit card spending in
the US

TowerGroup, the US payment research
group, has published a new report which shows debit cards are far
more resilient in the current recessionary economy than credit
cards.

According to the report, in less than 15
years, debit card transactions in the United States grew from 1
percent of non-cash transactions to more than 50 percent.
TowerGroup predicts that debit card transaction volume and card
spend will continue to grow to 2015, through the current recession
and ensuing economic recovery.

“The debit card market showed steady growth
since its inception, but it is now the ‘top-of-wallet’ card for
American consumers as a result of tightened credit lines and
consumer frugality in the face of an uncertain economic future,”
said Brian Riley, research director for bank cards at TowerGroup.
“With direct deposit of payroll and government benefit payments now
common, the debit card is even more important to consumers.” (see
page 18)

FRAUD AND SECURITY
RBS WorldPay, VeriFone team up for payment card data
encryption

US point of sale (POS) terminal
manufacturer VeriFone has teamed up with payment processor RBS
WorldPay to market VeriFone’s VeriShield Protect end-to-end
solution for encrypting payment card data.

The software works by encrypting the card
number on swipe, at the POS, reducing risk for both the merchant
and the customer. VeriFone’s VeriShield Protect eliminates usable
cardholder data from the merchant’s POS applications, networks and
servers, using Advanced Encryption Standard-level encryption that
preserves existing card track data formats so it works
transparently with retailers’ existing payment infrastructure.

In addition to encrypting card data,
VeriShield Protect monitors all systems in real time at the device
level via VeriShield Secure Device Management Service (VSDMS), so
if a breach occurred the retailer would be immediately alerted. In
addition, data encryption keys can be managed remotely as part of
the device management service.

MERGERS AND ACQUISITIONS
Elavon acquires merchant processing portfolio of MB
Financial

Elavon, a subsidiary of US Bancorp
and a merchant acquirer, has acquired the merchant processing
portfolio of MB Financial Bank, the Illinois-local operating unit
of US financial group MB Financial.

Elavon will provide its payment processing
solutions, customer service and support operations to MB Financial
Bank’s merchant customers. In addition, new merchant services
referrals to Elavon will be marketed through the bank’s 70 branches
across the greater Chicago metropolitan area.

The transition of merchant services to Elavon
will not affect MB Financial Bank clients’ banking relationships;
however, merchants will be now able to use credit card processing,
a PCI compliance programme, point of sale devices and software,
e-commerce products, gift card solutions, electronic cheque
services, and enhanced reporting and customer service.

“Our alliance with Elavon delivers the kind of
dependable service and value that our middle-market commercial and
small business clients are accustomed to,” said Mitchell Feiger,
president and CEO of MB Financial.

PREPAID CARDS
Wal-Mart, MasterCard and First Data team up for prepaid
payroll

US retail giant Wal-Mart has teamed
up with MasterCard and payment processor First Data to replace the
retailer’s paper-based payroll programme with prepaid cards and
electronic pay stubs. The new electronic payroll programme will be
rolled out to all US employees in September this year. MasterCard
will be the exclusive brand for the card, which can be used
anywhere debit MasterCard is accepted, including ATMs.

First Data will provide the processing and
reload network for the programme as part of First Data’s Money
Network payroll distribution service.

Wal-Mart is planning to deploy Money Network
MasterCard-branded Paycards and electronic pay stubs to cut down on
paper consumption and give employees easier access to their
wages.

Wal-Mart employees may receive their pay
either by direct deposit or through the First Data Money Network
programme and may access their wages through the Money Network
MasterCard Paycard or Money Network cheques. Employees will also be
able to receive their cash fee-free at any Wal-Mart outlet or Sam’s
Club register.

“We have worked closely with Wal-Mart and
First Data to develop a customised programme that will simplify the
payroll process and support environmental sustainability,” said
Chris McWilton, president of US markets at MasterCard Worldwide.
“We are excited that we are able to support Wal-Mart’s vision for
truly responsible and sustainable business operations by providing
Wal-Mart and Sam’s Club associates with the benefits of immediacy,
security, simplicity and efficiency offered by paperless
wages.”

FRAUD AND SECURITY
Heartland Payment Systems hacker charged

A Miami man has been charged in the
US with hacking into the computer networks of payment processors
and retailers and stealing the details of 130 million credit and
debit cards. Albert Gonzalez, 28, from Miami, has been charged –
along with two unnamed co-conspirators – of stealing the data from
payment processor Heartland Payment Systems, and merchants 7-Eleven
and Hannaford Brothers.

Gonzalez is already in jail after being
charged last May for his alleged role in the hacking of a computer
network run by a national restaurant chain. The trial on those
charges is scheduled to begin in New York in September.

Since then he has also been hit with another
series of indictments for hacks affecting eight major retailers –
including TJX – and involving the theft of data related to 40
million credit cards. If convicted, Gonzalez faces up to 20 years
in prison on the wire fraud conspiracy charge and an additional
five years on the conspiracy charge, as well as a fine of $250,000
for each.