Smartphone Market to Produce Phenomenal Growth

As the payment card industry gears up to tap into the mobile phone market a new report has found that smartphones and wireless data cards will show phenomenal growth rates in terms of both revenues and units shipped. Frost & Sullivan says its new report reveals that the market earned revenues of $127.8 billion in 2006 and estimates this to reach $152.5 billion in 2012. Besides the uptake of smartphones, replacement and upgrade sales in more developed markets and expansion of new subscriber base in developing mobile markets will drive global market growth. F&S says although smartphones accounted for less than 10% of total units shipped worldwide, they constituted nearly 15% of the total revenues. This was possible because smartphone’s average selling prices have become more than double that of feature phones. Vendors should produce more smartphones and also cultivate end-user capabilities with smartphones and their applications to increase revenues.

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Cap One to Cut 2,000 Jobs to Save $700MM

Capital One Financial is reducing operating expenses and cutting about 2,000 current jobs across the company. Approximately half of these planned job eliminations have already occurred in the company’s US Card, Mortgage Banking, and UK businesses. Cap One expects to achieve additional savings from attrition and the elimination of selected positions that are currently vacant. The company also expects to realize savings from reduced spending on suppliers and vendors, and reduced facilities costs. The initiative is expected to reduce the operating expense structure of the company by approximately $700 million pre-tax, with approximately $400 million realized in 2008, and an additional $300 million realized in 2009. The company will record one-time charges of approximately $300 million pre-tax over the course of the cost restructuring initiative. Approximately $150 million of these charges are related to severance benefits, while the remaining charges are associated with items such as contract and lease terminations and consolidation of facilities and infrastructure.

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VISA Lands Extensive FIFA Sponsorship Rights

VISA International and the Federation Internationale de Football Association confirmed their deal wherein VISA will have global rights to 2010 and 2014 “FIFA World Cups” and the “FIFA Women’s World Cups.” Last week MasterCard announced that FIFA agreed to pay $90 million to MasterCard to settle a dispute over sponsorship of the major soccer events. MasterCard had sponsored the tournament since 1990. Both parties also agreed to terminate legal proceedings in the U.S. and Switzerland and the MasterCard/FIFA lawsuit was dismissed on June 21st by the U.S. District Court, Southern District of New York. VISA’s rights in FIFA’s Payment Services product category begin with this year’s FIFA “Under-20 World Cup” in Canada and will run through the 2014 “FIFA World Cup.” As a “FIFA Partner,” VISA says it will have a higher level of association with these and other properties than previous category sponsors have had in the past. VISA will have rights to a broad range of activities including exclusive marketing assets, competitions, special events and development programs. Meanwhile, FIFA re-hired Jerome Valcke as their new general secretary after firing him last year as marketing director over the VISA-MasterCard sponsorship negotiations. (CF Library 4/24/06; CF International Library 6/22/07)

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Columbia Card Systems Hires a Top Pop Singer

Smart SMS has signed an agreement with contemporary recording star Yolanda Adams to be a spokesperson for Columbia Card Systems International to appear in a series of ads for the VISA mobile debit card. Ms. Adams will also brand her own debit card through a deal with CCSI. Columbia Card Visa has mobile banking functions that allow cardholders to send or receive money via cell phone, PC or landline anywhere in the world, in real time for under two dollars. Columbia Card also has a subordinate card program that allows families and businesses to create master accounts and disperse money as needed. Yolanda Adams is a five-time Grammy winning contemporary artist who has sold millions of records worldwide. Smart SMS Corporation is a mobile entertainment marketing and distribution company that specializes in market branding via text and MMS.

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50% of Retailers Will Not Meet PCI Deadline

New research shows that less than half of all affected businesses will be able to meet that PCI DSS deadline set for June 30th. The Payment Card Industry Security Vendor Alliance says fines of up to $500,000 and loss of the ability to accept credit cards — apparently haven’t been enough to get affected businesses to take security seriously. All organizations that store, process or transmit credit card payments are required to demonstrate compliance with the Payment Card Industry Data Security Standard by this weekend. PCI SVA noted that card companies have recently indicated that they’ll be willing to accept risk mitigation plans in lieu of full compliance, since so many businesses will fail to meet the deadline.

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Voluntary Attrition Rates Edge Up in 2007

U.S. VISA and MasterCard issuers are continuing to do a good job in retaining customers and migrating them to better suited card products within their portfolios. However, there has been a slight uptick this year as reward cards have crowded the market at all levels and lower balance transfer interest rates now come with higher fees. According to CardData, voluntary attrition rates edged up to 9.10% compared to 8.99% one year ago and 9.89% six years ago. Voluntary attrition is determined by dividing cardholder-initiated account closings by the gross number of accounts and then annualizing.

MAY ATTRITION
(Excludes Discover and AmEx)
2002: 9.89%
2003: 9.71%
2004: 8.88%
2005: 9.35%
2006: 8.99%
2007: 9.10%
Source: CardData (www.carddata.com)

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AAA Promotes Former Advanta and MBNA Exec

AAA has named Douglas Bower, formerly with Advanta and MBNA, as VP/Travel and Financial Services. Prior to coming to AAA, Bower worked at the Auto Club Group (an affiliated club of AAA) from 1999 to 2006, serving most recently as its President and Chief Operating Officer. Bower will be responsible for providing the vision, leadership and strategic direction needed to develop and implement products and services that will positively differentiate AAA’s offerings in Travel and Financial Services. His responsibilities include anticipating changes that will occur in the marketplace, overseeing the negotiations of national supplier agreements, managing supplier relations, serving AAA’s affiliated clubs and ensuring effective use of distribution channels. AAA provides more than 50 million members with travel, insurance, financial and automotive-related services.

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Givex Gift Cards on Merchant Link’s Gateway

Givex and Merchant Link have integrated Givex gift card programs with Merchant Link’s gift card gateway. Retailers and other merchants using Merchant Link’s gift card gateway will benefit from the enhanced customer support services offered by the two organizations, including around-the-clock technical support, online reporting, program administration, card marketing and card production. Givex is a provider of card management systems. Merchant Link provides comprehensive, secure solutions to the integrated point-of-sale industry and handles more than one billion transactions annually.

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Experian Buys a Major Stake in Brazilian Firm

From a consortium of Brazilian banks, Experian has acquired a 65% stake in Serasa Credit Bureau for 1.2 billion USD. Serasa sales have grown at a rate of over 20% per annum for the past two years, has a database of 161 million Brazilian consumer records and 5 million Brazilian company records. The Brazilian credit bureau has a 60% market share and will consolidate Experian’s position in Credit Services, who will control three of the top five credit bureaus worldwide with this development.

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JCB CEO

JCB has named Tamio Takakura, Deputy President since 2002, as its new President and CEO. Takakura succeeds Hiroya Nobuhara who had served as JCB’s President and CEO for the past 4 years. JCB International also announced management changes as Takakura will succeed Nobuhara as Chairman and CEO of JCBI. Kenji Seto, formerly Senior Deputy President, has become President and COO. Kunio Yoshizawa, who held the position of President and COO of JCBI for the past 4 years, is retiring after 13 years. JCB’s merchant network includes 13.5 million merchants and spans 190 countries and territories. JCB cards are now issued in 20 countries and territories, with more than 55.75 million cardholders.

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Barclays Adds a Frontier Airlines Biz Card

Denver-based Frontier Airlines has expanded its consumer credit card relationship with Barclays to now include a “MasterCard BusinessCard” for small businesses. The new card offers 12,500 bonus miles upon activation, plus one mile for every dollar spent on regular purchases and two miles for every dollar spent on Frontier Airlines purchases. The annual fee is $49. Credit lines of up to $50,000 are also offered. Frontier’s new “BusinessCard” features a “Wolf” design. Cardholders who make more than $60,000 in purchases within 12 credit card statement cycles will automatically be upgraded to “Ascent” status, an elite level in Frontier’s “EarlyReturns” program. Frontier Airlines offers routes linking its Denver hub to 58 destinations including 48 U.S. cities in 30 states spanning the nation from coast to coast, eight cities in Mexico and two cities in Canada. In 2003 Juniper Bank, now Barclays, launched the first co-branded “Frontier Airlines MasterCard.” Barclays acquired Juniper Financial and its $1.4 billion credit card portfolio from CIBC for $293 million in cash in August 2004. (CF Library 5/22/03; 8/19/04)

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ACG RESEARCH REPORT

Auriemma Consulting Group (ACG) research has revealed that slightly
over 1/3 of consumers, rather than making uninformed decisions on
credit card offers, actively seek offers that fit their criteria. This means
that the remaining 65% of the British population acquire cards through
mail solicitations and pre-approved notifications. Cardbeat, publisher
of ACG findings, surveyed 505 British and 400 American credit card
users in January 2007 and found that 26% of the of consumers in the UK
acquired cards through “take-one” applications at bank branches and
only 15% followed up on a pre-approved offer they received by post.
In the US, however, 42% of consumers obtain new credit cards by
applying through pre-approved mail offers versus 17% filling out
“take-ones” in bank branches and 12% seeking out offers.

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