U.S. Bancorp Merchant Acquiring Volume Up 28%

U.S. Bancorp reported that its fourth quarter merchant acquiring volume grew more than 28% over 4Q/05 to $56 billion, produced from 841,587 merchants. Credit and debit card revenue and corporate payment products revenue were both higher in the fourth quarter than 4Q/05 by $13 million and $15 million, or 6.6% and 11.9%, respectively. The strong growth in credit and debit card revenue was primarily driven by higher customer transaction volumes. Retail Payment Solutions volume for the quarter was $9.9 billion, up 7.6% over 4Q/05. Corporate Payment Services volume was $9.5 billion, compared to $7.1 billion for the year-ago quarter. For the quarter, U.S. Bancorp’s Payment Services net income was up 39% to $237 million, but, down from $252 million in the prior quarter. For complete details on U.S. Bancorp’s 4Q/06 performance, visit CardData ([www.carddata.com][1]).

MERCHANT ACQUIRING VOLUME HISTORICAL
4Q/04: $39,891,000,000
1Q/05: $39,477,000,000
2Q/05: $43,231,000,000
3Q/05: $44,600,000,000
4Q/05: $43,640,000,000
1Q/06: $49,222,000,000
2Q/06: $56,056,000,000
3Q/06: $56,411,000,000
4Q/06: $56,007,000,000
Source: CardData (www.carddata.com)

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

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JPM Chase Q4 Outstandings Rise 7% to $153B

J.P. Morgan Chase reported this morning that fourth quarter credit card profits rose to $711 million, compared to $711 million in the prior quarter and $417 million in the year ago quarter. Managed card loans were up 7% to $152.8 billion year-on-year and up 6% sequentially. Compared with the prior year, both average managed and end-of-period managed loans continued to be affected negatively by higher customer payment rates due to the new minimum payment rules and a higher proportion of customers in rewards-based programs. The managed net charge-off rate for the quarter was 3.45%, down from 6.39% in the prior year and 3.58% in the prior quarter. The 30-day managed delinquency rate was 3.13%, up from 2.79% in the prior year, but down slightly from 3.17% in the prior quarter. During the fourth quarter, the net accounts opened were 14.4 million, including 9 million from the acquisitions of the BP and Pier 1 Imports, Inc. private label portfolios. Charge volume of $93.4 billion increased by $13.8 billion, or 17%, from the prior year. Merchant processing volume of $177.9 billion increased by $24.5 billion, or 16%, and total transactions of 5.0 billion increased by 653 million, or 15%, from the prior year. For complete details on Chase’s fourth quarter performance, visit CardData ([www.carddata.com][1]).

JPM CHASE HISTORICAL ($billions)
4Q/05 1Q/06 2Q/06 3Q/06 4Q/06
EOP Outstandings: $142.3 134.3 139.3 143.8 152.8
Charge Volume: $ 79.6 74.3 84.4 87.5 93.4
Source: CardData (www.carddata.com)

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

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30% of Cardholders Respond to Cross-Selling

A research report has found that 30% of consumers have purchased at least one of the items extended by their credit card issuers. According to Auriemma Consulting Group, consumer purchases range from ID theft insurance and credit monitoring service to financial products to goods with no financial relevance. Credit protection was the dominant additional service purchased with 15% of solicited respondents enrolled. Merchandise like magazines and pen sets claimed the second biggest group of buyers with 13% of respondents who recalled being solicited for these items actually purchased one. ACG says most card companies focus their efforts on the account statement, either with stand-alone inserts or messages printed directly on the statement. One venue that may be under-utilized is the card company’s Web site, which could provide cardholders with custom offers.

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Hypercom Names its New President

Hypercom has appointed Philippe Tartavull as President, effective February 6th, 2007. For the past nine years, Tartavull served as President of Oberthur Card Systems USA, the Americas subsidiary of the global smart card leader headquartered in France . He has more than 20 years of experience in the electronic payment, smart card and system integration and information technology industries in the U.S. and abroad. Tartavull’s previous positions included VP/ Sales and Marketing for Syseca SA, Europe and North America and managerial positions with Compagnie Internationale Des Services Informatiques, Baker International and European Management Oil & Gas Investment. Last year, Hypercom named Tartavull to its Board of Directors. (CF Library 4/5/06)

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Oberthur Names a New Top Exec for North America

Oberthur Card Systems has appointed Martin Ferenczi as Managing Director of the North American region. Martin joined the Francois-Charles Oberthur Group 16 years ago as President and CEO of Banknote Corporation of America. In March 2005, he became chief financial officer of the Francois-Charles Oberthur Group. Ferenczi replaces Philippe Tartavull who has decided to leave the company to pursue other business opportunities.

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MRC to Hold Merchant Risk Conference in March

The Merchant Risk Council (MRC),will hold its 5th annual conference March 12 – 15, 2007 at the Wynn Las Vegas. The theme of this year’s conference is “Partners for Change: Strengthening Risk Management.” Credit card representatives, merchants, vendors, analysts and consultants will present breakout sessions for beginners to advanced risk management and payment professionals in these three tracks: global issues, security and authentication and tools and solutions. The Merchant Risk Council consists of over 7,800 merchants, vendors, financial institutions and law enforcement agencies.

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Debit Cards Capture 36% of U.S. PDV

The growth in U.S. sales volume for signature debit cards continues to widely outpace the growth for credit cards. During 2006 debit card purchase dollar volume for VISA and MasterCard rose more than 15% compared to nearly 8% for credit cards. For the third quarter Americans charged $321.9 billion in purchases to credit cards versus $179.5 billion for off-line debit cards. Therefore, debit sales currently make up about 36% of total U.S. PDV, according to CardData ([www.carddata.com][1]). One-year ago consumers used credit cards for $298.6 billion in purchases versus $139.6 billion for debit cards.

U.S. Sales Volume
(VISA & MASTERCARD ONLY)
$ billions
Credit Debit
3Q/05: 298.6 139.6*
4Q/05: 315.6 149.1*
1Q/06: 285.2 149.6*
2Q/06: 319.2 177.1
3Q/06: 321.9 179.5
Source: CardData (www.carddata.com)
NOTE: Effective 2Q/06 MasterCard includes all PIN debit data and
online debit in its reporting of U.S. debit card statistics.

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

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BAC & GE Acquire Banco

BAC, a credomatic holding co, and GE Money will jointly acquire 99.9 %
of Banco Mercantile (BAMER), a privately owned bank out of Hondurus.
The predicted result is a wider range of services for customers. BAMER
is also expected to grow rapidly as a result of the strong, newly acquired
backing. With more than $ 163 billion in assets, GE Money, a unit of
General Electric Co, is a leading provider of credit services to consumers,
retailers and auto dealers in 50 countries around the world. BAC was
founded in 1952 and, through its’ joint venture with ge money, has about
4 billion in assets, 2.7 billion in deposits, and 10,000 employees.

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Variable APRs Rise 102 bps in 06

The gap between variable rate credit cards and fixed rate credit cards has widened to 188 basis points. Variable (go-to) rate cards have also saturated the market, now making up 86% of all cards-in-force. Less than five years ago, the number of fixed rate cards outnumbered variable rate cards, according to CardTrak ([www.cardtrak.com][1]). Today, variable rate cards carry an average go-to interest rate of 16.55% versus 14.67% for the average fixed rate cards. In January, the average go-to variable interest rate was 15.53% versus 14.08% for fixed rate cards. (The averages do not include introductory or punitive interest rates.) During 2006 the prime rate increased 75 basis points.

CREDIT CARD INTEREST RATES
Month Prime Fixed Variable
Jan 06 7.50% 14.08% 15.53%
Feb 06 7.50% 14.11% 15.75%
Mar 06 7.75% 14.15% 15.81%
Apr 06 7.75% 14.19% 15.99%
May 06 8.00% 14.23% 16.02%
Jun 06 8.00% 14.32% 16.10%
Jul 06 8.25% 14.42% 16.27%
Aug 06 8.25% 14.55% 16.34%
Sep 06: 8.25% 14.58% 16.40%
Oct 06: 8.25% 14.63% 16.46%
Nov 06: 8.25% 14.66% 16.51%
Dec 06: 8.25% 14.67% 16.55%
Source: CardData (www.carddata.com)

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

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Wooha Launches Commerce Site

Wooha, the online marketing place offering a wide range of consumer
products, has been implemented for the first time in China with ATG
(Art Technology Group) technology. ATG will allow consumers multiple
avenues of payment options on the site. This is important because,
although e-commerce growth has huge potential in China, only 1/3 of
online purchases are made using a credit card in the country.
ATG powers more of the top 300 Internet retailers than any other vendor.

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