CARDS 2Q/08

During the second quarter there were 1.8 billion plastic card purchases made in the U.K. totalling GBP 92.6 billion. The number of purchases was 7.8% higher than 2Q/07, and spending was 7.5% higher. Debit cards accounted for 73.4% of all plastic card purchases compared with 71.6% in 2Q/07. Bank of England figures show that gross credit card lending to individuals in the second quarter amounted to GBP 32.8
billion. The sum of all monthly repayments to U.K. banks amounted to GBP 30.7 billion. During the 12 months to the end of June outstanding credit card balances have increased by GBP 1.8 billion. Bacs volumes and values grew by 3.3% and 7.9% respectively over the 12 months to June. Over the same period, the volume of CHAPS payments fell by 4.0% with a 4.2% fall in values. The “U.K. Faster Payments Service” was launched in May and by the end of June, 4.5 million payments had been processed for a value of GBP 2.5 billion. However, cheque and credit clearing volumes declined
by 10.6%, total values declined by 4.0%.

Details

Council Reveals PCI DSS v1.2 Details

The PCI Security Standards Council announced the summary of forthcoming
changes to “PCI DSS” as it moves from version 1.1 to the previously
announced version 1.2 in October. An overview of the summary of changes
as well as frequently asked questions an be found on the Council’s Web
site. Changes to the “PCI DSS” include clarifications and explanations
to the requirements, with these clarifications offering improved
flexibility to address today’s security challenges in the payment card
transaction environment. The new summary document on these changes
highlights the key clarifications by requirement. These clarifications
will also eliminate existing redundant sub-requirements while improving
scoping and reporting requirements. When version 1.2 is released,
incorporating existing best practices, supporting documents will also be
updated and consolidated. Most importantly, version 1.2 does not
introduce any new major requirements to the existing 12 in place since
the Council’s inception.

Details

Credit Card ABS Performance Remains Okay

Overall U.S. credit card ABS performance continues to exhibit
resistance to both a weakened consumer and increasing charge-off rates.
Fitch Ratings says that year-over-year charge-offs have climbed almost
200 basis points and are increasing at a brisk pace, delinquency rates
and bankruptcy filings, the leading indicators for near-term future
chargeoffs, show signs of deceleration. In addition, excess spread
remains healthy and is still approximately 50 basis points above its
long term average. The Fitch prime charge-off index for July is 6.4%, a
level not seen since the middle of 2004, excluding the temporary spike
associated with the “Bankruptcy Reform Act of 2005.” July’s gross yield
of 17.4% is 144 bps lower than the average for 2007. However, both the
retail pricing benchmark (U.S. Prime Rate) and the funding benchmarks
(LIBOR) have decreased by about 300 and 250 basis points respectively
over the same period. On a relative basis, yield is actually higher,
which is partially offsetting the effect of the growing charge-off rates
and helping to preserve the excess spread within the ABS transactions.

Details

Credit Card Mail Drops 8% Sequentially

Credit card solicitations fell nearly 8% from the first quarter to the
second quarter of this year. The mail volume for the second quarter is
about 17% off the third quarter of 2007 high of more than two billion
pieces. According to Chicago-based Mintel Comperemedia, the second
quarter card mail volume dipped to 1.54 billion from 1.67
billion in the prior quarter. Discover and Citibank both cut credit card
mail by 18% and 31%, respectively. Bank of America held steady on credit
card mailings and boosted its mortgage and loan promotions by 26%.
However, Capital One and Chase maintained credit card mail volume, but
each cut lending offers (by 26% and 33%, respectively) while
increasing banking direct mail (by 80% and 60%). HSBC reduced credit
card, banking and loan mail volume across the board, sending 52% less
offers overall. Mintel says record losses from the sub-prime fallout and
rising delinquencies have squeezed issuers’ credit so tight,
they’re tapping out.

Details

CARDS AFRICA 2009

Johannesburg marks the spot for the Cards Africa 2009 expo to be held
March 17-20 2009 at the Sandton Convention Centre. Globalisation of
payment and card loyalty mechanisms as well as increased customer
sophistication has resulted in the need to provide stronger card
programmes. Cards Africa 2009 is designed to facilitate continuous
development of African card business processes. This year, the conference
takes place from This is your chance to implement industry best practice
and evolve with the times, from increased legislative procedures to
customer buy-in and ease of card-use.

Details

Target’s Q2 Credit Card Performance Okay

Target reported that its credit card profits plunged 65% to $74 million
for 2Q/08, as a result of a decline in overall portfolio yield and its
deal with Chase to take over the portfolio. The average receivables
directly funded by Target in the second quarter also
declined 19.8% to $3.6 billion from $4.5 billion a year ago. Revenues
for the quarter ending August 2nd increased more than 10% to $501
million. Finance charge revenue topped $600 million for the second
quarter, a 16% gain over last year. Late fees and other fee revenues
rose more than 10% to $121 million. During the quarter, Target and Chase
announced a deal under which Target would sell an undivided interest
in its credit card receivables to Chase for cash proceeds of
approximately $3.6 billion. This interest would represent approximately
47% of the principal amount of Target’s outstanding receivables. Under
terms of the deal, Target will continue to control all aspects of
creating and implementing its financial services strategy, provided that
future portfolio performance remains sufficiently strong. Alternatively,
in the event that substantial unanticipated portfolio deterioration were
to occur in the future, Chase would gain certain rights to direct
Target’s credit card team to implement alternative underwriting and risk
management practices, until portfolio performance improved. For complete
details on Target’s latest performance, visit CardData([www.carddata.com](http://www.carddata.com)). (CF Library 5/6/08)

TARGET CARD LOAN HISTORICAL
2Q/07: $6.906 billion
3Q/07: $7.652 billion
4Q/07: $8.624 billion
1Q/08: $8.420 billion
2Q/08: $10.22 billion
Source: CardData (www.carddata.com)

Details

myPHOTOcard

Customers at US-based Zions First National Bank who switched to customized
cards have been making 15% to 20% more transactions. Zions Bank, which
launched its “myPHOTOcard” card customization program is using technology
provided by card customization specialist, Serverside Group. Since the
end of May launch, approximately 88% of the photo
cards issued have been debit cards, the rest credit cards.
The popular new service, also being marketed in Spanish, is available to
both individual customers and business clients. Serverside Group is a
provider of digital card design.

Details

MO-CALL

Virtual International Mobile network operator Morodo has teamed up with
convenience store Circle K to offer electronic POS payments to customers
of the popular MO-Call service. MO-Call enables low-cost international
calling direct from a mobile phone, without the need to change mobile number, SIM or network. Offering seamless connection of low-cost calls from a mobile phone, MO-Call provides savings of up to 90% over existing Mobile Network International Tariffs. The service works through a plug-in software application that can be installed on most mobile phones. Morodo is giving customers a free MO-Call account top-up card that can be used at any Circle K store in Hong Kong and is also offering a free MO-Call credit bonus of HK$25 with each newMO-Call account top-up card.

Details

Intel’s vPro and Wave’s EMBASSY Integrate

Enterprise data system provider Wave Systems has rolled out a
demonstration with Intel’s
“vPro” technology and Wave’s EMBASSY software.to illustrate how
enterprises can reduce expenses relating to tokens, smart cards or
complex authentication schemes by deploying PC platforms. Working
in tandem, Intel® vPro™ platform and EMBASSY® software are designed to
enable enterprises to significantly improve wireless and VPN security
and reduce overhead expenses by using these secure credentials to
strengthen access control at both the local and network level. Similar
to tokens and smart cards, the built-in TPM protects digital
certificates by securing the user’s private cryptographic keys within
the chipset hardware. This functionality is designed to be used in place
of external tokens or smart cards and can improve the user access
control process.

Details

ECONOMICS JUNE

The France leading index decreased by .2% while the coincident index
held steady for the month of June 2008, according to the Conference
Board. The leading index’ decline is consistent with a 1.8% decline
since December and is a direct result of declines in the stock market
and industrial new orders components. Meanwhile, the coincident index
results are inconsistent with a .2% decline throughout 1H/08 and is
mostly due to low volatility among wages and salaries. Founded in 1916,
The Conference Board is a business membership and research network to
help executives build professional relationships, expand business
knowledge and find solutions to business challenges.

Details

Most Hispanics are Unbanked or Underbanked

The results of market research
firm Encuesta and microlender ACCION USA “Americanos Poll” indicates
that 53% percent of Hispanics are unbanked or underbanked and rely on
less sophisticated methods for everyday transactions
such as check-cashing. Other results reveal that 15% turn to credit
cards for cash advances and that only 36% are “very” familiar with
how to build or manage credit, compared to 46% of non-Hispanics.
Familiarity with various financial products and services among
low-to-moderate income individuals is limited. Fewer than half indicate
awareness of educational savings accounts, 39% of credit/debt counseling
services, and 43% aware of common loan products such as equity credit lines.

Details