Internet/Phone Payments to Get Faster

The Payment Systems Task Force has asked British banks to create an infrastructure to speed up Internet payments, phone payments and standing order payments by 2007. The Payment Systems Task Force expects to set up a working group to examine issues relating to cheques starting in October. In response, APACS has established an Implementation Group to ensure the technology is suitably robust, secure and efficient with the capacity to meet longer-term requirements, and to seek agreement with the participating banks, who inevitably will need to undertake significant work to make their own systems compatible. Internet payments, phone payments and standing order payments currently make up 7% of all automated payments.

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NOVA Buys Certegy’s Acquiring Biz

Certegy’s search for buyer for its merchant acquiring business is officially over as U.S. Bancorp’s NOVA Information Systems inks an agreement to purchase the 14,000 merchant locations portfolio. The credit and debit card processing volume from the Certegy portfolio is expected to generate approximately $3.0 billion in additional volume annually. As part of the joint marketing agreement, NOVA will sell Certegy’s regional check products through its merchant sales force and Certegy will provide NOVA with new merchant referrals through its domestic sales representatives. Certegy serves 6,500 financial institutions and 100,000 retailers. NOVA serves more than 850,000 merchant locations in the USA, Canada and Europe. Merchant conversions are expected to be completed by the end of 2005.

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Atlanta is the First to Get Blinked

Chase this morning announced that Atlanta will be the first market to receive its new “blink” contactless credit cards. Next month the issuer will deliver nearly one million to cardholders in Atlanta. Chase says there is an initial base of more than 400 metro Atlanta merchant locations capable of accepting the new RFID cards. Chase first announced the new “blink VISA/MasterCards” last week. The card will phased-in market-by-market in tandem with merchant acceptance. In Atlanta, Chase plans to run print, broadcast and billboard advertising in June to support the “blink” launch. (CF Library 5/19/05)

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VISA Incentive Network is Set to Roll

VISA is set to launch its new “Incentive Network” next month, that will effectively emulate the merchant benefits of a closed-loop network. Under the program, VISA will offer merchants details on “VISA Signature” and reward cardholders. VISA began requiring issuers of these cards on April 1st to provide data on the cardholder’s spending habits. The new VISA program could put pressure on the merchant value offered by American Express and potentially by Discover. Howard Mason, an analyst at Sanford Bernstein, noted in a report issued last week, that the “VISA Signature” program, with an AmEx competitive interchange rate of 1.99%, generates twice the average annual spend/card as AmEx and has volumes of over $100 billion. Mason says AmEx will face increasing pressure to reduce merchant fees if it is to continue to build its everyday-spend merchant network.

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Cathay Pacific and Air China Partner

Air China and Cathay Pacific Airways have formed a partnership to enable members of their frequent flyer programs to accrue and redeem miles on flights operated by both carriers. The Air China “Companion” program has more than 2.4 million members. It also offers a co-branded Air China “Companion” credit card with a number of banks. Cathay Pacific’s “Asia Miles” frequent flyer program has more than 230 partners in 15 categories. U.S. passengers on qualifying Cathay Pacific flights have the option of earning frequent flyer miles in either the “Asia Miles” or American Airlines “AAdvantage” program.

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AmEx Consumer Travel Network Adds Rewards

American Express has beefed-up its “Consumer Travel Network,” now offering double points in “Membership Rewards” for cardholders and other new services and benefits. The site has been redesigned for easier navigation and offers a private label version of the easy-to-use booking tool developed by Travelocity, along with its low fares and rates. It also offers customized booking tools for cruises and packages, last minute bargains and special promotional offers. American Express Company is a diversified worldwide travel, financial and network services company founded in 1850.

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National City Introduces Identity Protect

Ohio-based National City has introduced “Identity Protect,” a new product providing customers with unlimited access to their credit report from all three credit bureaus, weekly credit monitoring, quarterly credit alerts, identity theft insurance coverage and identity theft resolution services. National City is a founding member of the Identity Theft Assistance Corporation and maintains a dedicated Identity Theft Unit to help victims. National City Corporation core businesses include commercial and retail banking, mortgage financing and servicing, consumer finance and asset management.

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TD Canada Reaches 2MM Active Online Customers

TD Canada Trust reached two million active online banking customers on March 1st. Ten customers from across Canada who activated their “EasyWeb” online banking accounts on that day were randomly selected for a free laptop personal computer. “EasyWeb” has been recognized as Canada’s leading online banking Web site, with Global Finance Magazine hailing it as the “World’s Best Consumer Integrated Site” (October 2004) and “Best Consumer Internet Bank in Canada and
Best Consumer Integrated site in North America” (July 2004). “EasyWeb” also ranked first among the five major Canadian banks in the categories of online banking satisfaction and online usage in a Canadian Interactive Reid Report and ranked first in Canada and sixth
in the Western Hemisphere, according to Speer & Associates.

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CU Portfolio Sales Hit $147MM in Q1

Through the first quarter, 22 credit unions with card portfolios of over $1 million in outstanding balances sold their credit card portfolios, for total balances sold year-to-date of about $147 million. According to NH-based Brookwood Capital, four of the portfolios had balances exceeding $10 million. On average, the size of the portfolios sold this year has decreased slightly from last year’s average of $6.9 million to this year’s average of $6.7 million. Brookwood says the dollar value of the 1Q/05 sales, and the number of transactions to-date, are set to out pace last year’s 67 portfolios sold with $459 million in associated outstandings.

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Online Sales Rise 24% in 2004

Online sales rose nearly 24% last year reaching $141 billion and are expected to rise about 22% this year to $172 billion. Based on total retail sales, online sales captured 6.5% of the market last year and may capture as much as 7.9% in 2005. The findings come from the National Retail Federation’s Shop.org annual online sales study conducted by Forrester Research. The research predicts that the Internet will be used for 48% of computer hardware and software sales, 28% of ticket sales, and 26% of travel sales this year. Retailers reported that search engine marketing is delivering 43% of overall customers to their sites. The study also found that 45% of retailers allowed consumers to purchase and redeem gift cards online and in stores, up from 30% in 2003.

ONLINE RETAIL SALES
2002 2003 2004 2005
Volume: $75.0b $114.0b $141.4b $172.4b
Share: 3.6% 5.4% 6.5% 7.9%
Source: Shop.org/Forrester Research

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CU Card Q1 Penetration Slips 30 BPS

The percentage of credit union members that have credit union credit cards has tumbled to 18.1% from 18.4% in December, and 18.8% one-year ago. Four years ago the figure stood at 20.8%. Total card assets for portfolios over $1 million also continued their decline as a percentage of assets, falling to 3.96% from 4.22% in December. According to Portland, OR-based AssetExchange, total card assets for portfolios over $1 million increased by less than 1% in inflation-adjusted dollars. AssetExchange also found that the percentage of portfolios that grew more than the rate of inflation during the previous 12 months fell from 46% in March 2004 to 44% in March 2005. AssetExchange’s study is based 2,100 credit unions with credit card portfolios of $1 million and larger.

CU CARD PENETRATION
1Q/01: 20.8%
1Q/02: 19.9%
1Q/03: 19.3%
1Q/04: 18.8%
1Q/05: 18.1%
Source: AssetExchange

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