Monthly Payment Rates Sink in March

Monthly payment rates, the amount that cardholders pay on their credit card debt, abruptly headed south in March. After hovering between 19% for most of the past twelve months and peaking in February, the MPR dropped 185 basis points in March, compared to the prior month. Among credit card-backed securities, the MPR declined to 18.61% in March after rising to 20.46% in February. However, according to FitchRatings, the gross yield increased in March to 18.50% from 18.00% in February and is up 29 bps above year-ago levels. Fitch also noted that although charge-offs and delinquencies are nearing three-year highs, U.S. credit card ABS continues to generate robust levels of excess spread.

ABS METRICS
YIELD MPR
Mar 07: 18.21% 18.76%
Apr 07: 19.23% 21.09%
May 07: 18.23% 19.58%
Jun 07: 18.94% 20.17%
Jul 07: 18.46% 20.46%
Aug 07: 19.27% 20.88%
Sep 07: 19.61% 20.99%
Oct 07: 18.83% 19.09%
Nov 07: 19.44% 20.31%
Dec 07: 19.92% 19.09%
Jan 08: 19.11% 17.64%
Feb 08: 20.46% 18.00%
Mar 08: 18.61% 18.50%
Source: FitchRatings

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JPMorgan Wins DOC Charge Card Program

The Department of Commerce has selected JPMorgan MasterCards as part of the GSA SmartPay 2 program. The DOC awarded JPMorgan a four-year task order to provide purchase, travel and fleet card services. The annual volume of the card program is expected to exceed $220 million with over 23,000 MasterCard-branded cards serviced. Additionally, The U.S. Office of Personnel Management and the Smithsonian Institution will use JPMorgan’s purchase, travel and fleet card programs; the Appalachian Regional Commission, Library of Congress and the U.S. Holocaust Memorial Museum, which will use purchase and travel card programs; and the U.S. Social Security Administration will use JPMorgan’s fleet card program. JPMorgan has been a GSA SmartPay card provider for over 20 years.

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Rewards to Fade Away as Fees Return

Experts have concluded the consumer payments world is in transition and the current euphoric era for many issuers is expected to change drastically over the next three years. High-cost programs such as free rewards options will be the first to go, replaced with fee-based systems aligning cost with benefits, followed by the introduction of an alternative network by a large payments company, to rival that of major issuers (Mastercard, VISA) and issuers diversifying payments mix to focus on debit payment options/programs. To provide issuers with advice on surviving this change, MA-based Celent has released its “Disruption in the Payments World” report disclosing such advice on taking measures to counteract these “disruptions”. These measures include diversifying payments mix, scrutiny of rewards funding and reevaluating debit card-DDA relationships.

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Consumer Expectations Rebound in May

A monthly survey has found a surprising reversal in consumer confidence in May after six consecutive months of erosion. While consumers are beginning to look beyond the current economic downturn they still worried about job security. The latest “RBC CASH Index” stands at 39.0 for May, up from its previous all-time low of 29.5 in April. The “RBC Expectations Index” increased more than 24 points. The “RBC Current Conditions Index,” at 57.4, showed a slight increase. The RBC Jobs Index dropped to the lowest level since the index began in January 2002.

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FTC/FRB Want Risk-Based Pricing Disclosure

The Federal Trade Commission and the Federal Reserve Board have proposed legislation requiring creditor to inform consumers about “risk based pricing” for credit granting. Risk-based pricing refers to the practice of using a consumer’s credit report, which reflects his or her risk of nonpayment, in setting or adjusting the price and other terms of credit offered or extended to a particular consumer. The proposed rules would apply, with certain exceptions, to all creditors that engage in risk-based pricing. Under these rules, a risk-based pricing notice would generally be provided to the consumer after the terms of credit have been set, but before the consumer becomes contractually obligated on the credit transaction.

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Cardtronics’ Q1 Revenues Leap by 62%

ATM operator Cardtronics posted first quarter revenues of $120.6 million, representing a 62% increase over 1Q/07. The year-over-year increase was primarily attributable to the 7-Eleven ATM Transaction, which resulted in $37.2 million of incremental revenues. The GAAP net loss for the first quarter totaled $4.6 million. During the quarter Cardtronics announced that Circle K Stores signed a deal for Cardtronics to be the transaction processor for domestic Circle K owned and operated ATMs across the Midwest and Great Lakes regions. Also, the Company signed an eight-year agreement with Safeway to provide 650 Safeway locations with comprehensive ATM services. Additionally, Washington Mutual announced it will place its brand on over 425 Cardtronics-owned ATMs in CVS pharmacy drugstores throughout AZ and CA. The Company expects 2008 revenues of $480.0 million to $505.0 million. For complete details on Cardtronic’s latest performance visit CardData ([www.carddata.com][1]).

[1]: http://www.carddata.com

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Elite Shares Club VISA is Unveiled

Luxury amenities provider Elite Shares Club has issued a VISA debit card with Bank of America that gives members access to jet charters, luxury residences, and exotic automobiles. The Elite Shares Club provides high-net worth individuals and corporate executives with unlimited access to a portfolio of destination properties, private jet charters and exotic automobiles under a single membership. An Elite Shares Club membership provides total access to luxury amenities and more through strategic partnerships with the top vendors in the luxury fractional industry. Annual membership fees are $12,000.

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MULTI CURRENCY

FreeStar Technology Corp subsidiary, Rahaxi Processing Oy, has launched
its Multi-Currency IP Solution in Denmark providing clients with
convenient cross border payments. The new IP solution will be made
available to such companies as Copenhagen Souvenirs, B&O and Gullachsen,
is being met with good reception in Spain, Iceland and Denmark and is
part of FreeStar’s expansion/ investment strategy. Contributing to this
strategy is Rahaxi’s Denmark partner, CTcoin, providing additional
revenue potential in the respective market. FreeStar Technology Corp.
provides financial industry solutions to merchants and acquirers around
the world in over 20 countries while CTcoin supplies cash handling
products through its 70 employees and distributors in more than 40
countries.

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HVB MUNICH CARDS

HypoVereinsbank has introduced ten “Maestro” smart payment cards
in honor of Munich’s 850th anniversary. The cards feature motifs related to Munich. More than 7500 HVB customers have already ordered one of the ten picture cards in this first month of the special offer. Munich-based Giesecke & Devrient is producing the cards for HVB. The special picture cards can be ordered for a one-time fee of five euros by customers who already possess an HVB “Maestro” EC card. The new card also is included in the HVB “WillkommensKonto”, a charge-free salary account offered by the bank.

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GiftCards.com Offers $25 Rebate

PA-based GiftCards.com is offering shoppers who spend $100 for VISA gift cards to receive a $25 rebate from eBillme. Offering $25 off of gift cards will certainly increase the continued adoption rate of eBillme on GiftCards.com. GiftCards.com began offering eBillme as a checkout option in November 2007. eBillme offer a secure, credit card free payment option for purchasing gift cards and allows GiftCards.com to offer the extremely popular “VirtualGift”, a gift card that can be sent via e-mail.

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ASIA PACIFIC PCI DSS

As a means of improving industry efforts to improve transaction data
protection, VISA has released its regional list of PCI DSS vendors,
disclosing 84 payment service providers in Asia Pacific process, store
or transmit VISA account information using the security standard. This
figure reflects 53 more payment providers have implemented PCI DSS since
2007 to ensure bank/merchant cardholder and transaction data is
protected under stringent industry security standards. This list is
update twice annually after a series of rigorous vendor
self-assessments, quarterly scans and regular audits by security
assessors including service providers of all sizes, even those
conducting fewer than 600,000 annual transactions. VISA provides its
services in over 170 countries.

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Brand Keys Index Ranks Discover #1

Discover Card has been ranked number 1 in customer loyalty according to the latest Brand Keys Customer Loyalty Engagement Index. Discover Card has won the credit card category in the index 11 years in a row. They ranked ahead of Capital One, VISA, American Express and MasterCard. Brand Keys identifies the four most important drivers of brand loyalty in the credit card category as Rewards and Services; Fees and Flexibility; Ease and Speed of Interactions; and Protection and Precision.

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