Charge-Off Momentum Does Not Slow in Oct

Charge-offs continued their march upward in October hitting 6.27%, compared to 6.19% in the prior month and 4.89% one-year ago. A consensus is building that charge-offs may exceed the 8% ratio in 2009. This week Capital One reported that charge-offs for its U.S. Card business jumped for the third consecutive month in October, rising 20 basis points from the prior month. Charge-offs for October were 6.54%, compared to 6.34% in September, and up 12 basis points from the prior 2008 peak set in July. Among credit card-backed securities “prime” charge-offs in September increased 11 basis points month-to-month to 6.57%. This is an 182 basis points increase from one year ago. BofA posted third quarter charge-offs of 6.40%, compared to 5.96% in the prior quarter and 4.67% one-year ago. Citi reported 3Q/08 charge-offs of 6.10%, compared to 5.72% in the prior quarter and 3.86% one-year ago for its Visa and MasterCard domestic programs. Chase, the nation’s largest issuer, posted third quarter charge-offs of 5.00%, compared to 4.98% in the prior quarter and 3.64% one-year ago For more details on October portfolio performance visit CardData ([www.carddata.com](http://www.carddata.com))

CHARGE-OFFS 2008
Jan 08: 5.55%
Feb 08: 5.51%
Mar 08: 5.61%
Apr 08: 5.82%
May 08: 5.93%
Jun 08: 6.04%
Jul 08: 5.88%
Aug 08: 6.14%
Sep 08: 6.19%
Oct 08: 6.27%
Source: CardData (www.carddata.com)

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CB SEPTEMBER

The Conference Board reported that the
leading index for Germany declined 1.1% and the coincident index
decreased 0.4% in September. The leading index declined for the eleventh
consecutive month, led by large negative contributions from new orders
in investment goods industries, stock prices, and the yield spread. Over
the past six months, the leading index has declined by 4.8% (about a
-9.3% annual rate), well below its 2.7% decline between September 2007
and March 2008 (about a -5.4% annual rate). In addition, the weaknesses
among the leading indicators remain very widespread. Two of the seven
components in the leading index increased in September. The positive
contributors to the leading index are inventory change series, and gross
enterprises and properties income*. Negative contributors are new orders
in investment goods industries,
stock prices, yield spread and new residential construction orders.The
coincident index, a measure of current economic activity, declined in
September, its fourth decline in the last seven months, as a result of a
large fall in industrial production and a smaller decrease in retail
sales. Consumer confidence remained unchanged in September.

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Mobile Wallets to Top 1.4 Billion by 2015

MasterCard reports that its “Mobile Partner Program,” launched last
year, now has more than 30 companies in the program. Last month,
MasterCard introduced the “Over-the-Air Provisioning Service” which
enables issuers to perform over-the-air personalization of their
cardholders’ mobile devices. Also this year MasterCard inked an
agreement with Obopay for an on-demand P2P mobile payment service in the
USA and MasterCard announced a four month “PayPass” trial in Canada on
Bell Mobility’s wireless network. Additionally, in 2008 MasterCard,
Garanti Bank and Turkcell announced a pilot in Turkey and in January
U.S. Bank, MasterCard and Nokia announced the introduction of
a mobile payments pilot program in Spokane, Washington. Among mobile
financial services providers participating in the “Mobile Partner
Program”: Affinity Global Services, Firethorn, Obopay and ViVOtech.
More than 600 million mobile wallets are expected to be in use by 2011
and that number is expected to rise to 1.4 billion by 2015, or a CAGR of
about 19%, according to Edgar, Dunn and Company.

M-WALLET FORECAST
2011: 600 million
2012: 714 million
2013: 850 million
2014: 1010 million
2015: 1400 million
Source: Edgar, Dunn and Company

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XOOM LATIN AMERICA

Xoom.com has launched its “Bank Deposit” service to Banco
Cuscatlan, Banco Uno, now Citibank, in El Salvador, Guatemala, Honduras,
Nicaragua, Panama and Costa Rica. With “Bank Deposit” service, money
sent directly to a bank account in El
Salvador, Guatemala, Honduras, Nicaragua, Panama or Costa Rica during
business hours usually arrives in 15 minutes. In addition to Bank
Deposit, Xoom customers can send money to their
beneficiary for Cash Pickup at more than 1,800 locations throughout
Central America starting at just $2.99 and can choose
from a variety of ways to fund the transaction online, including a U.S.
checking account, a credit card or with a PayPal account. Xoom offers
money transfers to 17 countries in Latin America, including
Argentina,Bolivia, Brazil, Chile, Colombia, the Dominican Republic,
Ecuador, Mexico, Peru, Paraguay, Uruguay and Jamaica.

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Merit’s Megatouch Adds USA Tech’s ePort

USA Technologies and Merit Entertainment announced an agreement
to install USA Technologies’ “ePort” software in thousands of Merits
new Megatouch touchscreen entertainment systems. Merit will install the
“ePort” cashless transaction software in all new
domestic Megatouch products manufactured over the next three years. USA
Technologies will act as the exclusive provider to Merit of card
processing and credit-debit card data services. USA Technologies’
“ePort Connect” is a cashless payment solution available for unattended
point-of-sale terminals, kiosks and vending machines.

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MERCHANT SOLUTIONS

Merchant Solutions first anniversary on November 19 with tens of
thousands of merchants signed with Standard Chartered across nine Asian
markets. During the past year, Merchant Solutions has rolled out a
stream of products and services to help businesses capture more card
payments such as a range of terminals from VeriFone, Spectra and
Hypercom, and an Internet payment solution developed by Direct Payment
Solutions (DPS) that can turn any Internet-ready computer into a POS
device. The merchant acquiring products let merchants add payment
gateways to their Web sites; simplify recurring
billing using a batch processing tool; and a Dynamic Currency Conversion
function that enables merchants to accept foreign currency payments.
Merchant Solutions offers MICROS Payment Gateway, developed
by MICROS Systems, an integrated property management system for
diversified operations like hotels. Despite high penetration of
financial cards, the bigger story for Hong Kong businesses is China: as
cross-border economic integration brings more mainland visitors carrying
China Union Pay cards, businesses equipped with Standard Chartered’s CUP
acceptance facility will be especially well positioned to capture sales.

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Verient to Pilot NYCE’s SafeDebit

NYCE Payment Network has signed a contract with CA-based Verient to
conduct a pilot of NYCE’s “SafeDebit”, to enable online shoppers to make
purchases without sharing their PIN or account information. Consumers
who want to use the SafeDebit option when
making purchases online will choose “NYCE SafeDebit” on the merchant’s
Web site during the checkout process. The system redirects them
to their financial institution’s online banking site, where they log on
as usual through that site’s existing security protocols. The SafeDebit
system then generates virtual debit card information for one-time use
and automatically populates the merchant’s checkout screen with this
information, with no additional keystrokes required from the consumer.
The consumer’s actual debit card number is never
disclosed to the merchant, and a PIN is not required for these transactions.

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SEPT PULSE

The Conference Board reports that the leading index for France declined
0.6%, its eleventh consecutive decline, mainly due to substantial
negative contributions from building permits, industrial new orders and
stock prices. Since October 2007, the leading index has been falling
with consistently widespread weaknesses among its components; the
largest decline in the leading index since mid-2001 has also intensified
in recent months. Two of the seven components of the leading index
increased in September. The positive contributors to the index are
production expectations and the yield spread. The negative contributors
to the index are building permits (residential), industrial new orders,
the stock price index, the inverted new unemployment claims and the
ratio of the deflator of manufacturing value added to unit labor cost
for manufacturing. The coincident index, a measure of current economic
activity, remained unchanged in September. But, between March and
September, the index declined by 0.2% (about a -0.5% annual rate), well
below the 0.5% rate of growth (about a 1.0% annual rate) that prevailed
during the previous six months.

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All Generations to Reduce Holiday Spending

New research reveals that U.S. shoppers plan an average total spend of
$546 this year, which is a 14% decline compared to last year.
Also, the average “Black Friday” shopper plans to spend 45% of their
total holiday budget the day after Thanksgiving. St. Louis-based
Maritz found that “Gen X” shoppers say they will spend the most this
year ($607), and the “Silent Generation” shoppers anticipate spending
the least ($489). Based on the poll findings, all generations plan to
spend less than last year, except for “Gen Y” shoppers, who say they
will spend the same as last year ($550). According to respondents, those
with an income between $75,000 and $100,000 will average a 41% decrease
in spending this year. Maritz found that 55% of respondents still
plan to purchase gift cards this year, compared to 56% last year. The
number of gift cards purchased will also remain the same as last year
with a median of four cards. The average spend on gift cards dropped to
$161 from $273 in 2007. Based on the projected overall spend this
holiday season, approximately 29% of gift giving will involve gift
cards, compared to 43% last year.

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HANMI & NCR

NCR Corporation has partnered its “APTRA Mobile Banking and Mobile
Business Banking” with Hanmi Bank to rebuild its online
banking to be a mobile banking experience for both
consumers and businesses. The “NCR APTRA Mobile Banking” portfolio is
available as a Software as a Service
(SaaS) model, hosted by NCR, including different technology choices for
interacting with customers in the way that best suits them, including
SMS text messaging, browser-based mobile banking, and downloadable
applications. APTRA Mobile Banking –
Browser/SMS refactors a bank’s online site and is designed to create an
optimum user experience, transferring and repositioning online content
on the mobile browser page to fit the handset screen.

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maurices Deploys Columbitech VPN

VPN security provider Columbitech announced that specialty retailer
maurices has deployed Columbitech’s mobile VPN in over 650 retail
stores. Utilizing Columbitech’s mobile VPN
solution, maurices has enhanced its overall security with secure access
to its wireless network, added protection and authentication features to
its existing Fujitsu iPAD handheld computers and meets PCI compliance
requirements. Store managers use Fujitsu iPADs for real-time data to
complete store transfers as well as manage pricing updates.
Columbitech’s mobile VPN provides authentication and secure access and
allows the store managers to focus on productivity with Single Sign
On (SSO) functionality, providing uninterrupted connectivity and session
persistence, avoiding the purchase of new hardware and replacement of
current equipment while providing uninterrupted customer data integrity.

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DISNEY JCB

JCB has introduced a suite of six new co-branded Disney credit cards. The new “Disney-JCB Card” rewards 1 point for every 200 yen charged to a standard card and 1 point for every 100 yen spent using the
gold card version. Points can be shared by family members. Once a cardholder earns 500 points they can exchange 1 point for 1 yen when
using your card for shopping at Disney facilities, or for Disney
merchandise, services, and other special offers. Starting in February, points can be redeemed directly from the card at Disney Stores nationwide. Beginning in summer 2009, points will also be redeemable directly from the card at selected shops and restaurants at Tokyo Disneyland and Tokyo DisneySea. Other card benefits include a chance to win a private “Meet and Greet” with Disney characters. JCB is charging an annual fee 2,100 yen for the standard card and per year 13,650 yen for the gold card. There is also a “Disney Kids Point Card” for a one-time processing fee of 1,050 yen. The card is not credit card and is intended for children aged 6
– 12. Walt Disney Japan and JCB are also staging various campaigns in which non-cardmembers can join, or cardholders can win a discount voucher for Disney Stores and One Day Passports at Tokyo Disneyland and Tokyo DisneySea.

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