Federated Department Stores has completed the sale of its credit card receivables that it repurchased from GE to Citigroup. Today’s transaction yielded a pre-tax gain of approximately $179 million ($112 million after tax). These proceeds will be used to repay short-term debt associated with Federated’s acquisition of May Company. Under the terms of an agreement announced in June 2005, Citigroup will purchase all Federated and May Company credit receivables in several separate transactions at a premium of approximately 11.5 percent. In total, these transactions are expected to produce after-tax proceeds of approximately $4.6 billion.Details
The “Combined Credit Manager’s Index” fell a modest 0.6% for the month of April on a seasonally adjusted basis. The decline was comprised of a 1.8% fall in the service sector index and an offsetting rise of 0.5% in the manufacturing sector index. The CMI, a monthly survey of the business economy from the standpoint of commercial credit and collections, was launched in January 2003 to provide financial analysts with another strong economic indicator. The CMI survey asks credit managers to rate favorable and unfavorable factors in their monthly business cycle.Details
Monthly payment rates, the amount that cardholders pay on their credit card debt, retreated in March after topping an industry record in the prior month. Driven by higher minimum payments, the monthly payment rate during the first quarter has averaged a record 19.97%. Rising interest rates have also played a role in driving the MPR north. Among credit card-backed bonds, the monthly payment rate was 19.10% in March, compared to 20.85% in the prior month and 16.32% one-year ago. According to FitchRatings, the payment rate averaged 18.60% during 2005. Five years ago the monthly payment rate hovered around 15%. FitchRatings also says a growing dependence on short-term teaser rates and low-rate balance transfer offers may also be contributing to the higher MPR.
Monthly Payment Rate
Oct 05: 18.65%
Nov 05: 18.78%
Dec 05: 18.90%
Jan 06: 19.97%
Feb 06: 20.85%
Mar 06: 19.10%
Virginia-based Intersections reported first quarter revenue of $45.7 million and net income of $3.4 million. Intersections Inc. announced financial results for the quarter ended March 31, 2006. Revenue for first quarter of 2006 was $45.7 million, an increase of 18.4 percent over the same period last year. Net income for the quarter ended March 31, 2006 was $3.4 million, compared to $1.8 million for the quarter ended March 31, 2005, an increase of over 90 percent. Pre-tax income for the first quarter of 2005 included a software impairment charge of $1.5 million. Diluted earnings per share were $0.20 for the first quarter of 2006, compared to $0.10 for the first quarter of 2005.Details
Contactless credit card payments picked up another boost as Atlanta-based QSR Arby’s will expand acceptance of “PayPass,” “ExpressPay” and “VISA Contactless” at more than 1,000 company-owned restaurants in the U.S. Over the past year, the number of merchant locations that accept contactless payments has soared from less than 1,000 to more than 30,000. Arby’s plans to install contactless card readers inside its restaurants and drive-thru windows during the third quarter. Major merchants currently accepting contactless payments include McDonald’s, 7-Eleven, CVS, Duane Reade, Meijer and Regal Entertainment Group. PA-based Sheetz was the first U.S. merchant to deploy contactless in all 320 of its locations.
CONTACTLESS U.S. MERCHANT LOCATIONS
Source: CardFlash Library
The Utah Transit Authority is gearing up to allow passengers during the next ski season to use their contactless credit and debit cards to pay for transit fares on 41 Salt Lake City Ski Service buses. The contract, awarded to ERG Group, will also employ micropayment technology from Peppercoin. The “Peppercoin Small Payments Suite Version 3.0” enables transit operators to accept credit and debit cards. The Peppercoin platform uses predictive modeling to automatically assess consumers’ buying behavior and make decisions about the best way to process their credit and debit card payments.Details
WA-based Coinstar reported $126 million in first quarter revenue, a 19.3% increase over the year-ago quarter. However, net income for 1Q/06 declined from $4.7 million one-year ago to $4.2 million. About $1.9 million in special charges were made during the quarter. At the end of the quarter, the Company had an installed self-service coin counting base of 13,000 units compared to 12,200 one-year ago. More than 6,000 of the machines are coin-to-card or e-certificate enabled. Coinstar also offers electronic payment solutions, entertainment services and self-service DVD rental. The Company estimates that revenue for the second quarter will range from $125 million to $135 million. Coinstar also announced it has received two more patents, bringing the total number to 67 U.S. and foreign patents. The two latest patents relate to Coinstar’s fundamental innovation of putting voucher-issuing coin counting machines in retail environments and the ability of the machines to remotely communicate information. The company’s other patents relate to various aspects of its technology, including fraud-deterrent vouchers and coin cleaning designs. For complete details on Coinstar’s latest results, visit CardData ([www.carddata.com]).
MasterCard has named a new president for its Americas region which includes the U.S., Canada, Latin America and the Caribbean. Walter Macnee, who served as president of MasterCard Canada between 2001 to 2004, will take over the reins from Ruth Ann Marshall on May 15th. Marshall, who joined MasterCard in 1999, is taking early retirement but has agreed to stay through June to help with the transition. MasterCard is currently in the process of launching an IPO. Before returning to MasterCard, Macnee was EVP of CIBC in charge of its bank’s credit card business and national collections. He also served as Chairman of VISA Canada and Director of VISA International. The Americas region generates more than half of the MasterCard’s worldwide volume.Details
The American Airlines “AAdvantage” program, which turns 25 this month, is launching a giveaway of up to 42 million miles during May. The program is also kicking off a special promotion offering reduced redemption levels for members during May. The “Celebration Flights” sweepstakes, which is sponsored by MasterCard, will give up to 1,700 passengers, 25,000 miles each, enough for a free economy round-trip ticket. Passengers will be notified through a surprise announcement in the gate area approximately 30 minutes prior to departure. The “25 Deals in 25 Days” promotion offers reduced mile offers and a sweepstakes. Under the promotion a free domestic round-trip ticket is reduced from 25,000 miles to 18,750 miles. The “AAdvantage” has more than 50 million members.Details
MasterCard has launched its 2006 “Get Wired” sweepstakes which is a component of a global campaign that launched in August. The sweepstakes provides all “MasterCard BusinessCard” and “Debit MasterCard BusinessCard” cardholders with a chance to win one of two $50,000 technology makeovers. The sweepstakes will run from May 1st until June 30th. The last sweepstakes ran between September 1st and November 30th. Last year, MasterCard unveiled new “Priceless” commercials to support the U.S. “Get Wired” campaign. Business cardholders also have access to special technology-related offers via the online “MasterCard Offers for Business” program. (CF Library 8/31/05)Details
Charge-offs among “prime” credit card-backed securities hit their lowest level in more than ten years during March. “Sub-prime” charge-offs also sank to single digits for the first time in more than six years. Both figures follow a huge spike in charge-offs during the fourth quarter and January due to the fall bankruptcy surge. For March, charge-offs in the “prime” asset-backed credit card securities market dropped to 3.10%. “Sub-prime” charge-offs declined to 8.04%. One-year ago, “prime” charge-offs were 5.97% and “sub-prime” charge-offs stood at 15.06%. According to the latest “Fitch Credit Card Index,” “prime” delinquency (60+ days) increased 15 basis points to 2.34% in March. “Sub-prime” delinquency (60+days) for March slipped 70 basis points to 5.18%, and continues to hover at the lowest level in four years. Fitch reported “prime” charge-offs averaged 4.42% for the first quarter. “Sub-prime” delinquencies averaged 10.74% in 1Q/06.
ABS CHARGE-OFF HISTORICAL
Month Prime Sub-Prime
Mar 04: 6.75% 17.27%
Mar 05: 5.97% 15.06%
Mar 06: 3.10% 8.04%
Source: Fitch Ratings
United Airlines and Chase have changed the “Mileage Plus VISA” program by switching from awarding miles for card usage to earning a new form of currency called “Choices.” Under the new program cardholders have five new awards, including: flights booked on united.com with no capacity restrictions or blackout dates; hotel stays booked on united.com; car rentals booked on united.com; an annual subscription for access to United’s “Economy Plus” seating; and credit towards Elite status. When purchasing free air tickets the amount of “Choices” needed is based on the price of the ticket rather than the traditional set redemption amounts. Cardholders purchase their air tickets, hotel stay or card rentals and then receive a statement credit using “Choices.” In addition to “Choices,” cardholders can now use redeemable miles to receive a credit for their “Mileage Plus VISA” annual fee or redeem for products from the “Mileage Plus” online rewards catalog. The United “Mileage Plus” program was launched 25 years ago and has nearly 48 million enrolled members.Details