Reward Credit Cards Issuance Rises 23%

There has been a 23% increase over the past five years in the number of credit cardholders who use cards that accumulate points for merchandise and/or airline tickets. The new study also shows that debit card usage has decreased from 55% in 2003 to 44% in 2007. The research by Maryland-based Vertis found that the use of general-purpose credit cards containing no benefits has decreased from 38% to 31% since 2003. Other findings: credit cards issuing “cash back” incentives were among the most commonly used in 2007 by 30% of all credit card holders; store or gas credit cards are used by 25% of all credit card holders; only 11% use charge cards that require a balance paid in full each month; and specially endorsed cards from a university or other organization are only appealing to a mere 7% of all credit card holders. Vertis also noted that 16% of total adults use three or more credit cards each month, compared to 10% of total adults surveyed in 2003.

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Mass Bank Launches a Debit Rewards Program

MA-based Salem Five Bank has introduced “Cash-Back Debit Rewards” program offering 0.25% back for PIN debit transactions and 0.50% back for signature debit transactions. For each debit card transaction, Salem awards customers a percentage of their monthly debit card purchases. The percentage paid is doubled for signature-based transactions when the customer chooses “credit” at the point of sale. The cash rewards appear automatically on customers’ monthly statements. The “Salem Five Cash-Back Debit Rewards” program requires either a Star Checking or Gold Star Checking account. New accounts and existing Star Checking and Gold Star Checking customers are automatically enrolled. The Bank has also enhanced its ATM Reimbursement offering. Through the Bank’s new Unlimited ATM Reimbursement program, customers can use any ATM in the world and Salem Five will reimburse the fees charged by the bank that owns the ATM. There is no limit to the amount or the number of ATM reimbursements. Salem Five operates 17 branches in Massachusetts with $2.4 billion in assets.

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World of Warcraft VISA Cards Introduced

Irvine, CA-based Blizzard Entertainment and First National Bank Omaha have teamed to launch a series of VISA credit cards for the very popular “World of Warcraft” online game. The thirteen cards will be marketed to the more than 8.5 million players worldwide including 2 million players in North America. The “World of Warcraft VISA” cards each feature a different character from the game. Cardholders earn a 1% credit on each $1 in spend volume towards the monthly $15 subscription fee. New cardholders receive 1500 bonus points, enough to redeem for one month of gametime. There is no limit to the amount of points cardholders can earn and points expire five years from the date on which they were posted to the account. First National is offering a 0% intro APR on all purchases and balance transfers for the first twelve billing cycles and variable rates thereafter starting at 9.99%. Blizzard Entertainment is a division of Vivendi Games. “World of Warcraft” debuted in November 2004 and has become the most popular MMORPG around the world. In addition to North America, there are more than 1.5 million players in Europe, and more than 3.5 million players in China.

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TNB Signs Three More CUs for Processing

Dallas-based TNB has signed Service First FCU of South Dakota, First Alliance CU of Minnesota, and Employees CU of Texas as processing clients. Service First Federal Credit Union has 17,800 members and assets of $127 million. First Alliance Credit Union has 11,444 members and assets of $84.5 million. Employees Credit Union has 8,247 members and assets of $50 million. TNB Card Services provides electronic payments processing, as well as an agent issuing solution to more 475 financial institutions and manages more than 1.6 million cards.

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Coinstar First Quarter Revenues Rise by 4.8%

WA-based Coinstar reported that first quarter revenues increased by 4.8% to $132.3 million. However, net income dropped 38% compared to 1Q/06 to $2.6 million. At the end of the first quarter, Coinstar had approximately $61.6 million in cumulative net operating loss carryforwards. The Company reported that its coin-to-card, e-payment or e-certificate-enabled base expanded to 8,500 from 6,100 one-year ago. However, POSA terminals dropped from 19,500 for 1Q/06 to 14,000 for the first quarter of 2007. During the first quarter, Coinstar repurchased 120,800 shares of common stock at an average price of $28.94 per share. Management estimates that revenue for the second quarter will range from $130 million to $140 million. For complete details on Coinstar’s first quarter performance visit CardData ([www.carddata.com][1])

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

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MasterCard PayPass Pilot Logs 40K Transactions

The first two trials of contactless payments, which began in June 2006, has racked-up more than 40,000 transactions to-date and is gearing-up for a national launch in the fourth quarter. The Royal Bank of Scotland Group and MasterCard launched the pilots at RBS’s
headquarters in Edinburgh and at the staff restaurant at one of its
London offices. The RBS headquarter test involves 11 retailers located in the Bank’s flagship site including coffee shops, pharmacy, florist and a hairdressers. The second trial includes some 1,500 staff who
volunteered use their “Maestro/PayPass” debit and “MasterCard/PayPass” credit cards. Feedback from RBS employees has been extremely positive thus far. RBS is now working with MasterCard and the UK card payments industry towards the first phase of the public roll-out in London in the autumn. RBS, NatWest, MINT and Ulster Bank will issue several hundred thousand contactless payment cards, both debit and credit, during the London launch of the roll-out to those customers who live in the roll-out zone. These cards will retain the existing chip and pin and magnetic stripe functionality.

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MasterCard to Launch a Travel Dashboard

MasterCard has teamed with TRX to develop a Web-based business intelligence tool that will enable companies to evaluate, analyze and optimize travel programs. The new “MasterCard Travel Dashboard” will leverage detailed information from MasterCard’s corporate card program and TRX’s advanced travel data reporting tools to provide greater visibility into the performance and compliance of travel programs. The new proprietary tool will enable travel managers to review performance and trends; drill-down on reports to analyze major travel spend categories, including spend-to-vendor agreement reporting; compare spend data with corporate policy to highlight out-of-compliance departments and travelers and benchmark the performance of their programs.

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Payment Rates Sink But Yield Remains Stable

Monthly payment rates, the amount that cardholders pay on their credit card debt, collapsed in March to its lowest level in nearly eighteen months. While the dip historically has been seasonal, it appears that many borrowers are increasingly pressured by current economic factors. Among credit card-backed securities, payment rates reached nearly 22% last year driven by increased minimum payments and a robust economy. According to FitchRatings, the gross yield on credit card ABS increased 51 basis points in March to 18.21%, and is 30 basis points above year-ago levels. Fitch expects gross yield to remain stable as payment rates decline.

ABS METRICS
YIELD MPR
Apr 06: 18.81% 21.74%
May 06: 17.61% 19.14%
Jun 06: 17.97% 21.00%
Jul 06: 17.63% 20.71%
Aug 06: 17.86% 20.24%
Sep 06: 17.96% 21.06%
Oct 06: 17.58% 19.30%
Nov 06: 17.96% 19.82%
Dec 06: 17.78% 19.32%
Jan 07: 18.28% 19.27%
Feb 07: 17.70% 20.80%
Mar 07: 18.21% 18.76%
Source: FitchRatings

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Encore Capital Names a New Board Chairman

Encore Capital Group has appointed Carl C. Gregory, III, previously Vice Chairman, as Chairman of the Board. Gregory has served as a director of Encore Capital since May 2000 and served as Vice Chairman from October 2004 to May 2006. From October 2004 until September 2005, Mr. Gregory also served as Vice Chairman and Chief Executive Officer and previously served as President and Chief Executive Officer from May 2000 to October 2004. Encore Capital Group is a purchaser and manager of charged-off consumer receivables portfolios.

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FRB Begins its 2007 Consumer Finance Study

The Federal Reserve Board has begun a statistical study of household finances called “The Survey of Consumer Finances” to provide insight into the economic conditions of American families. The survey, undertaken every three years since 1983, will provide data that offers a representative picture of what Americans own–from houses and cars to stocks and bonds–how and how much they borrow and how they bank. Past study results have been important in policy discussions regarding pension and social security reform, tax policy, deposit insurance reform, consumer debt and a broad range of other issues. Participants in the study are chosen at random from seventy-nine areas, including metropolitan areas and rural counties across the United States, using a scientific sampling procedure. Summary results for the 2007 study will be published in early 2009 after all data from the survey have been assessed and analyzed. A letter from FRB Chairman Bernanke was mailed to approximately 10,000 households urging their participation in the study.

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GE Money Renews The Anderson Credit Card

Ohio-based The Andersons retail stores and GE Money have signed an agreement to extend its 10 year relationship with The Andersons Credit Card consumer financing program. The Andersons Credit Card offers consumers an option to earn 2 percent reward certificates on every purchase, 90-day, 6-month and 12-month deferred payment and deferred interest on specified levels of purchase, no annual fee, and a 25-day grace period on all new purchases. A Contractors Card also is available. The Andersons has six large retail stores that offer extensive traditional home center merchandise along with a broad array of products including lawn and garden, house wares and work wear. The stores also feature a unique offering of high-quality fresh foods including produce, deli, bakery, specialty gourmet foods, frozen and fresh meats and one of the largest selections of fine wines in the Midwest. Total revenues in 2006 were $1.5 billion. GE Money, a unit of General Electric Company, is a provider of credit services to consumers, retailers and auto dealers in more than 54 countries around the world with more than $190 billion in assets.

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PAI Acquires NetBank Payment Systems Assets

KY-based Payment Alliance International announced that it has acquired the principal operating assets of NetBank Payment Systems and will add over 8,500 ATMs to PAI’s base. The company will maintain the 20,000 sq ft facility in Jackson, Mississippi and expects to retain NPS’ 60 employees. PAI now has 315 employees and serves over 40,000 retailers and community banks across the country. The Tremont Capital Group of Boston, MA and Inverness Management of New York City, NY served as transaction advisors to PAI. Payment Alliance International offers credit card, check, ATM network management, cash management and business information services.

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