The Frontier Times Canada's Payments Journal is the all Canadian independent publication dedicated to serving electronic transactions and payments businesses in Canada. The FT is the principal source of Canadian information on the credit card, debit card, merchant account, merchant acquiring, ISOs, EFT, ACH, loyalty card, gift card, ATM/ABM, e-wallet and related businesses.
Wednesday, April 29, 2009
"Cash please?" - White Label ATM Cash Dispersal in Canada - Issue 10 - December, 2005
"Cash please?" - White Label ATM Cash Dispersal in Canada
Canadian White Label ATM operators are complaining that there have been great difficulties in obtaining cash for ATM refill purposes. According to various sources, cash withdrawals made directly from banktellers, have become increasingly problematic for those collecting cash bundles for reloading (vault cash loading). White Label ATM machines called "White Label" in common parlance, are independently owned and operated ATMs that do not operate under any specific bank branch. White Label ATM operators are wholly dependant on banks for the regular cash withdrawals required for their day to day business operations. As banks are the only means of obtaining the quantities of cash bundles required for the ATMs, White Label operators do not take long to feel a pinch in their business operations.
According to certain ATM operators, when picking up bundles, the cost per cash bundle fee can change erratically. For example, the stated cost per bundle is 45 cents per bundle (1 bundle = 100 bills) but, this amount is reported to be inconsistent. As one ATM operator states, "the bank refuses to make sense." In order to comply and understand bank policy on such matters, appeals for more direct guidelines were made. However, any kind of request from White Label operators for an actual written ''policy'' regarding cash bundle pick ups, has been refused or ignored on numerous occasions at a number of banks. When the FT also requested such a policy document or series of guidelines, none of the banks contacted responded. There were promises that such a "policy" would be looked for and delivered to the FT, but there was none forthcoming. In this case, the general response by the banks was that each situation was handled individually on a client-by-client basis and contracts would be developed accordingly. As such, it appears there has been no clear policy developed for the needs of White Label ATM operators, and the rules and guidelines seem to change without notice. This has resulted in reported situations where the amount of money accessible to a White Label operator has been reduced or cut off without notice. At least one operator has been troubled enough to cut the number of ATM machines he holds. A number of operators have claimed the same kind of treatment and are afraid to "expand or grow business". The situation apparently, has become almost intolerable.
Does the cost of doing business with the banks, the only cash source option open to ATM operators, add up? There "is a cost entail led in bank fees on each electronic transaction made at an independent ATM which amounts to about 1$ per transaction" states one ATM operator, "this is the back-end fee each financial institution charges as an add-on to the existing terminal fee we charge. The other fee is usually 1.50. I know some goes to Interac and some to interchange." There is an armored car service, (for yet another fee) which has now been deferred as "the pick up option for cash bundles" at several banks. Additionally, according to one source, these are not a "secure" method because the armoured vehicles do not drop off at site. One operator explained that he ''picked up at a warehouse in the middle of nowhere" at an armored car company location. He says, "it would be much safer picking up 3, 5, 10 bundles at a bank at normal working hours". As well, there is a cost on each order of cash, and according to ATM White Label operators, "this appears to be on a sliding scale" at the whim of the banks.
There have been numerous complaints of problems over the last several years. According to certain White Label ATM operators there have been "verbal" statements from bank officials such as, "we have no money for you, the money is for our customers". "You are the competition; therefore we cannot deal with you." As well, there have been complaints of outright "refusals to supply cash", and, unofficial insinuations that ''the bank was not to deal with White Label ATMs", and, that ''the fees for receiving cash bundles of 100 bills are not for $20 dollar bills, but for $5 and $10s." One white label operator felt "stressed out, very unwelcome and (treated) like a criminal."
As for possible criminal activity associated with White Label ATMs, what are the real risks for a bank that the White Label operators may not be complying with, for example, anti-money regulations? When this issue was posed, FINTRAC, Financial Transactions and Reports Centre of Canada, spokesperson Peter Lamey said that said he was “surprised that this would be a problem (for the banks) because the criminals wouldn't go to get more $20 bills. The disposing and depositing of cash is the problem for the criminal – The concern is with the introduction of cash into the system-not the withdrawal.” Mr. Lamey went on to say that, “There is of course always a concern for large amounts of cash moving, but there is an official internal policy (which the banks individually create) that exists for this purpose.”
Additionally, the FT posed a number of questions to several financial institutions. Two of the banks contacted with questions on this matter responded quickly and directly. These banks are RBC and BMO. Others abstained from follow-up or simply declined to make any comments.
FT: What is the policy regarding the giving of cash to White Label clients?
According to Michael Edmonds, spokesperson for BMO, "A commercial client works with the bank by agreement or contract agreement which is negotiated on a client-by-client basis." "If the client has arranged in advance for money to be delivered, then it would be available to the customer." As far as the policy regarding the dispersal of cash "that is easy to answer, (you can have your cash) whenever you want it.", said Mr. Edmonds. Via written response, RBC stated, "We assess each client's needs on a one-on-one basis and look for the best solution from a security and economical standpoint for both the client and the bank." No official written policy was forthcoming from any financial institution.
FT: What are the fees/costs per cash request or bundle?
RBC states, "The standard fee for cash parcels is $0.45 per bundle (100 notes) plus GST, but typically pricing is negotiated for business clients along with other services provided. To manage the cash inventory in branches, and because of the increased safety risk to both our employees and clients, we may limit the number of parcels that our branches provide to any retailers that require cash supplies. We also look for more efficient alternatives to supplying cash, such as utilizing armored cars that deliver cash directly from our Cash Operations Centers."
FT: There have been complaints that clients have been refused access to the cash bundles from several Banks on the basis of being White Label ATM operators. Why?
RBC states, "We handle all retailers that require cash supplies in the same manner. As mentioned, we assess each client's needs on a one-on-one basis and look for the best solution from a security and economical standpoint." BMO had a very similar response.
FT: The waiting period for the access to have client bundles delivered appears excessively long - the process takes at least 3 days. What are the reasons for this?
According to RBC, "Standard banking practice is a 3 day turnaround for all cash orders including those for branches, ATMs and other retailers. We manage our cash holdings to ensure we do not have excess cash on hand and there are logistical requirements if we need to order additional cash from the Bank of Canada to complete our orders. Day 1 - RBC assesses our cash needs and places any additional cash orders with Bank of Canada. We receive the cash by Day 2. We prepare and release the cash parcels to the Armored Courier by early afternoon. Standard delivery by the Armored Courier occurs on Day 3. However, clients always have the option to negotiate with their Armored Courier to have earlier delivery.”
FT: If the access to the withdrawal of available cash is limited to customers on a client by client basis, why is the Royal Bank specifically limiting access to this money to White Label ATM operators?
RBC said that it "handles cash requests from all clients and retailers in the same manner." BMO ''works with clients on a caseby-case basis, and a contract is designed according to the relationship between the bank and the individual customer."
FT: Is the Bank competing with White Label ATMS?
RBC explained that "ATMs are used for a full range of banking services in addition to cash. In most cases RBC ATMs locations are distinct from areas/locations used by the White Label ATMs and are used by different clients. We support the need for a variety of ATM providers so that more locations are available to conveniently provide cash to all Canadians."
BMO stated, "The White Label locations and the market is very different from the bank, and therefore are not (an issue)." Based on the information presented in this article, and that gained through direct experience in the marketplace, the FT leaves readers to decide for themselves whether "independent ATM operators" are enjoying appropriate treatment in the Canadian Marketplace.
We are particularly proud of the investigative journalism done for this issue. Our article on access to cash for white label ATM operators is precisely the kind of article you will not read in any other publication. Not all banks we interviewed were willing to go on record on this subject. In fact, one bank went so far as to have their lawyers send us a letter forbidding us to even mention their name in this publication. This dark moment in the young history of our publication bespeaks the extent to which Canadian banks seek to not only monopolize payments markets in Canada, but also muzzle the press that dares to write about them. Don’t worry folks, the FT is alive and well, and we are not impressed by bullying, even if it is by a large Canadian bank and their lawyers. The FT advocates for freedom and good old capitalism. We will not be deterred in this effort by old Soviet-style Canadian bank censorship.
Thank you for all the recent feedback, most of which is very positive, and for the impressive collection of new entries on the Frontier Directory.
The whole FT Team wishes all our readers a most excellent Canadian holiday season.
Canada's Electronic Transactions Journal is Canada's payment processing and merchant acquiring industry publication. The Frontier Times enjoys a print and online readership of 3000 payment professionals active in payment services in Canada. Any copying or reproduction of any part or all of this publication is strictly prohibited without prior express written consent from The Frontier Times.
To subscribe, advertise or contribute to The Frontier Times, please visit www.ftontiertimes.ca.
@ The Frontier Times:
Canada's Electronic Transactions Journal, 2005.
ISSN: 1710-4505 The Frontier Times: Canada's Electronic Transactions Journal (Print)
ISSN: 1710-4513 The Frontier Times: Canada's Electronic Transactions Journal (Online)
NEWS
Canadian Chip Conversion – Interac Association Sets Deadlines
Toronto, October 24 05- Interac Association (Canada) has announced the approval by its Board of Directors of the final deadlines for the conversion of all Interac Shared Services, Shared Cash Dispensing and Interac Direct Payment to chip technology. This latest step demonstrates Interac Association's commitment to ensure a smooth and timely transition to chip technology. This decision builds on the Association's commitment made earlier this year, to have the necessary infrastructure in place for its Members to begin offering the Interac Shared Services using chip cards in time for the first chip transaction to take place in 2007. With these deadlines, magnetic stripe transactions will not be permitted in the Shared Cash Dispensing Service for debit card cash withdrawals from Automated Banking Machines after December 31, 2012 and magnetic stripe transactions will not be permitted in the Interac Direct Payment Service at point -of-sale devices after December 31, 2015.
Chip cards will continue to carry the magnetic stripe which currently facilitates transactions. This will not only facilitate the transition to chip, but will also allow cardholders to use their debit cards in other markets not planning to introduce chip in the near future, such as the United States. Interac Association is responsible for the development of the Canadian national network for two shared electronic financial services: Interac Direct Payment, Canada's national debit card service and Interac Shared Cash Dispensing Service for cash withdrawals at Automated Banking Machines.
700 identities stolen from National Bank of Canada
Montreal, October 20 05 - FT - The National Bank of Canada bank has urged 700 clients to close accounts and cancel credit cards after an employee's laptop computer was stolen. Montreal-based National Bank of Canada said the employee's Laval, Quebec, residence was broken into Sept. 9, and the laptop containing personal information on customers was "the only item taken", leaving some questions about the intentions of the theft. The computer was supplied to an employee who was a specialist working on-site with clients. Personal data stored on the laptop included names, addresses, banking and credit information, as well as the Social Insurance numbers of customers. All 700 customers were contacted, asked to come to the bank to change to new account numbers, new credit card numbers, and to change internet access information.
Montreal, October 26 05 - Everlink Payment Services Inc. (Everlink Services), a leading Canadian electronic transaction switching service provider, and CGI Group Inc. (CGI) (TSX: GIB.SV.A; NYSE: GIB), one of the largest independent information technology and business process service firms in the world, announced today that they have signed an asset purchase agreement under which Everlink Services will acquire CGl's electronic switching assets for CDN$28 million. The transaction is expected to close by the end of the year; the closing is conditional upon certain usual conditions.
DirectCash Income Fund announces cash distribution TSX: DCI.UN
Calgary, October 19 05 - CNW - DirectCash Income Fund (the "Fund") today announced a cash distribution of $0.09 per Unit for the month of October, 2005. The cash distribution will be paid on November 30, 2005, to Unit holders of record on October 31, 2005. The ex-distribution date is October 27, 2005. The Fund's policy is to pay cash distributions on or about the last day of each month to Unit holders of record on the last business day of the preceding month. The Fund is the largest branded ATM provider in Canada, operating under the trade name DirectCash ATM, and, is one of the leading providers of branded non-financial institution debit terminals and prepaid cash cards. Additional information about the Fund is available at www.directcash.net.
Sears Canada's credit card acquisitions
October 01 05 - Sears Canada credit card division is to be acquired by JP Morgan Chase & Co totalling a package of $2.5 billion CDN in outstanding loans and 10 million in accounts. JP Morgan Chase, (No 3 US bank), said the deal will expand its credit card business and boost its per-share earnings for 2006. Sears Canada shareholders stand to gain in the sale a net of $2.2 billion CDN, most of which will be distributed to investors. Sears Canada expects to book an after-tax gain of about $650 million once the deal closes at year-end. It has signed a 10-year marketing deal with JP Morgan Chase in which Sears Canada expects to receive more than $100 million in annual performance payments. JP Morgan shares rose 31 cents to $33.89 on the New York Stock Exchange. Also, Shares of Sears Canada rose CDN$5.85, or 24%, to close at $30 on the Toronto Stock Exchange. However, following on the heels of the Sears Canada Inc. credit card division sale, there is speculation that the Sears total third-quarter loss may indicate more changes to come, and perhaps costs are being trimmed at the Canadian division to prepare for an eventual sale. Sears Canada's shares have almost doubled since the announcement of the credit division sale.
Snowbird Gets a Caisse
Montreal, October 14 05 - CNW Telbec - Desjardins Bank, a subsidiary of Desjardins Group in the United States, has announced it will soon open its third service centre in Florida. As of January 2006, Desjardins Bank will have a foothold in Lauderhill, at 7329 West Oakland Park Blvd. "After Hallandale Beach and Pompano Beach, we opted to set up this new service centre in Lauderhill because many Canadians spend the winter there," explained Jean-Guy Langelier, Chairman of Desjardins Bank's Board of Directors. "This is also a rapidly developing location, where in residential construction is expanding. This city also offers substantial opportunity in the commercial market," concluded Mr. Langelier. Effective immediately, Desjardins members can contact their caisse or credit union to open an account at this new service centre. They will then be able to make transactions while on a winter stay in Florida.
Laurentian Launches New Dare Card
Montreal, September 27 05 - Laurentian Bank has launched its new DARE client card. The new bank card reflects the Bank's new image. It is colourful and sports a vibrant photo. After conducting an in-depth review of its market positioning, Laurentian Bank developed a completely new brand strategy; launching a new corporate signature and logo, and unveiling a bold advertising approach within the banking sector. Its new financial services boutiques, Espresso Bank-Cafes, and signage will soon be visible everywhere in its network. With 157 branches, the Bank offers the third largest network of branches in Quebec.
Canadian Tire Adopts New POS System
October 01 05: Canadian Tire, Canada's largest retailer with 460 stores and 5,000 checkout lanes is spending 40 million USD on replacing its legacy cash registers with a modem POS system. The Fujitsu POS units should be activated by mid-November in time for the holiday season. The Canadian Tire new POS platform implementation includes plans to network CRM, loyalty programs, self-checkout and contactless payments to equip its stores, gas stations, car washes, and emergency roadside services. Canadian Tire has an early history of innovation in the payments industry; holding a division that creates credit cards as well as selling insurance and warranties. And, as most all Canadians know, Canadian Tire has the unique and long standing familiar tradition of printing Canadian Tire dollars for use as currency in the stores.
Smart Chip Technologies Announces New Chairman and CEO
Las Vegas and Toronto, August 19 05 - Smart Chip Technologies (OTC: SCTN) has announced that Airos Group President Moo Radivojsa has agreed to join Smart Chip Technologies as its new Chairman and CEO. Mr. Radivojsa and the Airos Group were developers of the EMV pilot in Barrie, Canada, representing the world's first multi-application smart card implementation. As President of the Company's development partner Airos, Mr. Radivojsa has been operating as Smart Chip Technologies' Product Development Manager for nearly three years. Mr. Radivojsa has built a profitable and growing software development company and brings more than 16 years of business and technical leadership experience in banking, payments, chip, telecommunications, and embedded development. He has led the development and deployment of more than 100 successful software projects for a broad range of banking and payment applications including EMV, VISA/CASH, Mondex, Proton, other smart card and POS applications, in addition to the construction of Smart Chip Technologies' end-to-end loyalty, pre-paid stored value, and gift card product suite.
Open Solutions Canada Upgrades POSH Switching Services
Glastonbury, October 05 05 - Open Solutions Canada, a strategic business unit of Open Solutions Inc. (NASDAQ: OPEN), has announced a major upgrade to the provision of ATM and other financial transaction switching services for Canadian financial institutions, an existing legacy switch that provides processing for Western Canadian credit unions has been transitioned to the POSH switching application. Created and supported by the Payment Solutions Group at Open Solutions Canada, the POSH suite of switching products is sold internationally and also operates a large transaction switching operation in Canada. Open Solutions is a provider of integrated enabling technologies for community banks and credit unions across North America. "We believe that moving to this enhanced POSH system will offer our clients new optional functions and services such as IP and wireless connectivity and point-of-sale (POS) acquiring, including our new merchant credit services, while continuing to support all existing functionality and business processes such as ethnic language screen displays, mini statement printing and integrated bill payment at the ATM." says Payment Solutions Group General Manager Mike Kelso.
Google Works on E-Commerce “Things”
Montreal, October 18 05-There are various rumours about "Google Wallet" and "Sierra" as an electronic payments offering by Google. When asked about payment products and features, Google's (via representative Steve Langdon) response is, "We do not intend to offer a person-to-person stored-value payments system. We believe that e-commerce can be improved and we are working on ways to improve the user experience. We are working on things in ecommerce. The payment services we are working on are a natural evolution of Google's existing online products and advertising programs which today connect millions of consumers and advertisers. We are building products in the area to solve new problems in ecommerce." What are theses "e-things" and what will this mean to the Canadian market? We will have to wait to find out.
Commission Works with Toronto and Alberta Strategic Partnerships to Fight Advance-Fee Schemes
November 03 05- The Federal Trade Commission (USA) has announced court action against two groups of Canadian based defendants, each allegedly engaged in widespread cross-border fraud schemes. In the first complaint, FTC v. Centurion Financial Benefits, the Commission alleges the defendants placed unsolicited outbound telemarketing calls to U.S. consumers, falsely offering them preapproved MasterCard and Visa credit cards for an advance fee of $249. The second complaint, FTC v. Pacific Liberty Benefits, alleges the defendants engaged in the same type of fraud, with the company's telemarketers promising credit cards, as well as an array of "complimentary" gifts, for $319. The FTC alleges that in neither case did consumers actually receive the credit cards or other goods that they were promised, and in each case U.S. consumers lost millions of dollars.
New Coast Capital Business Deposit ATMs
B.C., November 03 05- Coast Capital Savings is partnering with NCR Corporation to send business depository boxes the way of the dinosaur with the roll-out of new, state-of-the-art ATMs that for the first time bring the convenience and access of self-service banking to business owners. The first batch of "business depository-enabled ATMs" have been installed at 12 Coast Capital Savings branches and are a first from a Canadian credit union. They provide business customers with a "virtual" business depository box that does not reside at any particular branch, which means that a business owner can make deposits at any location that has the new technology.
Unlike conventional business depository boxes, the new business friendly ATMs, designed by NCR Canada, provide instant credit to business customers, including a printed ATM receipt confirming the date, time, and amount of the deposit. Customers making overnight deposits no longer have to wait until the next business day when their branch opens to have their accounts credited.
The new technology also allows small business owners to make large deposits - including coins using a secure business deposit card. The deposit-only card allows business account holders to have other individuals safely make deposits on their behalf since it does not provide access to funds or account information.
New RFID Centre opens in Canada
Markham, Ontario, September 21 05 - CNW - The Canadian RFID Centre will be unique in Canada -created by industry, for industry, to help understand RFID, its benefits and implications. Initially, this Markham, Ontario facility will allow producers, manufacturers, distributors and retailers to experience how RFID will enable food traceability but plans call for the inclusion of other products and processes in the near future. The founding partner organizations that have joined forces to develop the Canadian RFID Centre include: Canadian Council of Grocery Distributors, Canadian Federation of Independent Grocers, Canadian Produce Marketing Association, EPC global Canada (GSI Canada), Food and Consumer Products of Canada, IBM Canada Ltd., Intermec Technologies Corporation, Symbol Technologies Inc., and Agriculture and Agri-Food Canada. "IBM has created other RFID briefing centers and labs around the globe, and this facility is truly a first for Canada," said Shai Verma, RFID practice leader, IBM Canada Ltd. "We have joined forces with key industry organizations and technology partners, and collectively, we have created a capability that will help companies better understand RFID's business process impacts and how it will work in some very challenging physical situations, ensuring they can reap the benefits of the technology quickly and with low risk." Additionally, this Centre is boasting to be the first in North America to demonstrate the use of Generation 2 technology which increases its applicability and stability to operate in many different industries and environments. Built as a permanent facility, the Centre will endeavor to act as a focal point for Canadian industry RFID discussions. The Centre is intended to become known as the industry RFID resource centre in Canada and to eventually provide not only an educational capability but a product testing facility.
Deloitte Canadian Technology Fast 50
November 03 05-Each year the Deloitte Canadian Technology Fast 50 awards the leadership excellence and sustainability of technology organizations with a bright future. Now in its eighth year, founded in 1998, the Fast 50 has been a prestigious annual award honouring technology companies. The program recognizes excellence, innovation and the fastest growing tech companies in Canada. Rankings are based on percentage of growth in fiscal year revenues over the last five years.
Bioscrypt Inc. (TSX: BYT)
November 03 05-"Making Deloitte's Technology Fast 50 is a testament to a company's vision. Bioscrypt's leadership team has “the right stuff” for growth, and Deloitte salutes their accomplishments." said Garry Foster, National Director, Technology, Media & Telecommunications, and Deloitte. Ranked as Canada's fifth fastest growing company in the Fast 50, Bioscrypt has developed identity verification technology to enhance the security of buildings and computers.
Having a 4,724 percent revenue growth over the past five year period, Bioscrypt attributes this high level of growth to "strong organic development and strategic acquisitions culminating in a range of offerings to address the biometric physical access, control and time and attendance markets while also providing identity verification technology to mitigate threats to data security". In the arena of electronic payments, most recently, Bioscypt combined forces with Axalto, the world's leading provider of microprocessor cards thus combining the security of smart cards with the advanced authentication technology of fingerprint biometrics.
Questrade, Canadian Discount Broker Introduces CyberTrader Pro 6.5.
Toronto, September 22 05 -- Questrade, a leading Canadian discount broker, has released today that the latest version of the CyberTrader Pro trading platform and is now available to Questrade clients. Questrade provides on-site trading as well as innovative proprietary trading opportunities for professional traders. Version 6.5 introduces the Strategy Centre; CyberTrader's suite of technical analysis tools. With the Strategy Centre, active traders can both back-test customized trading strategies and simultaneously scan the market for stocks meeting those strategies. Strategy Centre reportedly locates which of the more than 8,000 listed securities, indices and futures, are meeting specific trading criteria at that moment. As part of its complete technical analysis suite, the StrategyCenter also has a charting package whereby users can visualize and analyze the performance of their strategies graphically.
Axalto opens advanced payment card personalization center in Canada
Toronto, September 22 05 - Aiming to help Canadian banks better protect their payment card customers and introduce new services, Axalto has announced the opening of its new advanced payment card personalization center. Canadians will soon start seeing something new on their credit and debit cards--a gold contact with a smart chip underneath. Canada's payment infrastructure is going through a major upgrade to smart cards following the EMV smart card standard mandated by EuroPay, MasterCard, Visa and most recently, Interac. Axalto is opening an advanced payment card personalization center in Burlington, Ontario to provide personalized cards for Canadian issuers. The facility, which enables the addition of smart card technology to credit and debit cards, will start supplying immediately to Canada's financial institutions. Additional opportunities launched with the adoption of EMV bring new services like reward programs and more secure Internet payment to banking customers. This mass customization is to include loading appropriate cardholder data, and then packaging and sending the cards to banks or directly to cardholders. This offering extends Axalto's large presence in Canada, where it has been providing secure smart cards to major wireless operators for over a decade.
News Compiled by Angela Read, Managing Editor, info@frontiertimes.ca
Cheque Imaging in Canada
October 25 05 - Customers of the Royal Bank of Canada can now view scanned images of their cheques online. Online digital imaging as part of online banking is a service developed by The Royal Bank of Canada that allows Royal Bank customers to view and print digital copies of cheques processed in Canada, within the last 90 days. Royal Bank clients will be offered the possibility of either continuing to receive their cheques in the mail attached to their monthly account statements or they can convert to the new on-line digital imaging service. Clients, who opt to continue using RBC's cheque mailing service and wish to view their cheques on-line will be charged a $1.50/ per cheque viewed on-line. Upon interviewing other banks, The Frontier Times found that The Royal Bank of Canada is currently the only Canadian Bank to offer this convenient service to their consumers.
Kimberley Craig,
Contributing Writer and Director of Marketing
FEATURES
GE Bank - GE Money grows in Canada:
Montreal, November 02 05 - Although GE Money Canada might be perceived as a new kid on the block in Canada's financial services industry, in actual fact, the company has been operating in Canada since 1986. With the introduction of several new products in 2005, and new initiatives underway, this perception regarding GE Money Canada is likely to change.
No small contender in the payments industry, GE Money Consumer Finance, the consumer lending unit of General Electric Company (NYSE: GE), is GE's second largest business and is already a sizeable force in consumer financial services with operations in 47 countries. It reportedly has more than US$150-billion in assets and 100 million customers. GE's financial services unit earned more than US$2.5-billion in 2004. GE is the ninth-largest company in the world by revenue. And, by comparison, the Big Six banks have the collective assets of approximately $1.7-trillion and earned about $13-billion in 2004. Based in Toronto, GE Money Canada is part of GE Consumer Finance - Americas, General Electric's consumer lending organization in Canada.
GE Bank in Canada:
GE Money has plans to establish a Canadian bank and has applied for a banking licence with the Canadian Minister of Finance. Called GE Money Bank of Canada (Banque GE Money du Canada), the aim of the proposed bank is to better offer payment options for consumer and business services.
TroyUnderhill, a spokesman for GE, said a key reason for the application to the Minister of Finance is "to join Canada's Payments Association so the company can clear cheques as a payments option and provide the opportunity to give our customers more choices." Eligibility for CPA membership is defined in the Canadian Payments Act and the related federal regulations. The Bank of Canada and all banks operating in Canada are required to be members. The ability to clear cheques would permit GE to issue balance transfer cheques for new credit card customers.
Could GE provide a healthy alternative by way of increased competition for Canada's Big Six Banks? Other foreign institutions like ING Direct and HSBC Bank Canada, credit unions, and insurance companies with banking products are putting on increased competitive pressure. However, the large retail banking networks of the major banks and their overarching market share have always preserved the Big Six's strong position in Canada.
Interestingly, GE Money Canada has clearly taken steps in a number of areas to create product services, rounding out offerings for consumers. Currently, GE's consumer finance division in Canada offers private label and MasterCard credit card programs including a new credit card for businesses, and is just recently a provider of alternative residential mortgages. Additionally, GE Canada has specialized lending and leasing products.
In the 19 years since its Canadian inception, GE Money Canada has grown steadily, with the pace having recently quickened. Each new product, service and client/vendor relationship has meant additional staff and additional awareness in the Canadian marketplace about GE and GE Money's plans for its future in Canada. "Since GE Consumer Finance unveiled its global growth strategy, the pace of growth has increased considerably for GE Money in Canada," says Stephen Motta, President and CEO of GE Money Canada. "This is an exciting time."
In 2005, GE Money added numerous new products, including home mortgages in Ontario (offered via mortgage brokers), the new GE Money business MasterCard (aimed at small and medium enterprises), as well as the Readers Rewards MasterCard, in partnership with Doubleday Canada Limited for points collection use by book club members.
Credit Cards
As stated, part of GE s growth strategy for Canada has included the recent introduction of GE Money
Canada s business MasterCard and as well as several other vendor financing and private-label credit card partnerships, to complement its existing relationships with several of Canada's premier retailers.
GE Money Canada has also made a significant move into Canada's dealer-based financing business, developing partnerships with organizations such as Kawasaki in power sports, and others in the home
products and apparel industries.
As well, the new products and services have also been integrated in conjunction with the private-label credit cards that the company manages. These include several of Canada's premier retailers, including Wal-Mart and Sam's Club Canada. GE Money Canada works with these partners to develop new opportunities. "We are focused on helping our partners grow their businesses," states Motta. The recent launch of the GE Money Business MasterCard TM is new, offering GE Money Canada's first direct to consumer MasterCard.
Furthermore, the GE Money Business MasterCard features cash rewards of up to 2.0 percent on qualifying purchases, APRs as low as 13.9 percent and no annual fee. With the GE Money Business MasterCard, owners of small and medium enterprises are able to request multiple cards for their employees and control spending through individual credit limits on each card. All transactions are itemized on a single monthly statement.
GE Money's Edmonton Business Centre has also experienced significant growth, the result of both a growing customer base in Canada, and the routing of additional call traffic from customers in the United States. The centre currently employs approximately 600 employees, but is targeting a total of 900 by early 2006. To accommodate this growth, the company recently completed a $10 million renovation to the facility. These and other accomplishments by GE, may soon change the current perception from that of industry rookie to a business force to be reckoned with.
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