VeriFone, Inc. has introduced IPCharge, a Web-based hosted payment processing solution that merchants can use to process payments quickly, securely and cost-effectively. IPCharge processes card-present, mail-order/telephone-order (MOTO), Web and ecommerce transactions and can be used by any merchant with Internet access. VeriFone, Inc.,is a global leader in secure electronic payment technologies.Details
Morgan Stanley reported this morning that its Credit Services division, including the “Discover Card,” posted $380 million in pre-tax profits for the quarter ending February 28th, compared to $365 million for the year-ago quarter. Managed outstandings rose slightly from year ago levels, transaction volume increased nearly 7%, and delinquency and charge-offs continue to fall sharply compared to one year ago. Merchant and cardholder fees declined 8% to $479 million, due to lower over-limit and late payment fees. Managed credit card loans of $47.7 billion at quarter end were up $400 million from one year ago. International card loans were $2.6 billion for the first quarter. Total transaction volume increased to $25.9 billion, the second highest quarterly volume ever. The account base declined during the first quarter by 200,000 accounts. International card accounts rose to 1.4 million. Active accounts declined 4% from 1Q/04 to 19.5 million. The credit card net charge-off rate was 5.11%, 120 basis points lower than a year ago, and down 34 basis points from the prior quarter. The charge-off ratio was the lowest in three years. The over-30-day delinquency rate also declined 156 basis points from 1Q/04 to 4.24%, and the over-90-day-delinquency rate declined 81 basis points over the same period to 2.05%. For complete details on Discover’s first quarter performance visit CardData ([www.carddata.com]).
DISCOVER CARD PORTFOLIO SNAPSHOT
1Q/04* 2Q/04* 3Q/04* 4Q/04* 1Q/05 Y/Y CHNG
Outstandings: $47.3b $46.8b $47.1b $48.3b $47.7b +0.8%
Volume: $24.2b $24.4b $25.4b $25.7b $25.9b +7.0%
Accounts: 45.9m 46.0m 46.0m 46.2m 46.0m +0.2%
Actives: 20.3m 19.9m 19.6m 19.7m 19.5m -3.9%
Chargeoffs: 6.31% 6.48% 5.76% 5.45% 5.11% -120bps
Delinquency: 5.80% 4.88% 4.81% 4.55% 4.24% -156bps
Yield: 12.20% 11.88% 11.69% 11.59% 11.23% -97bps
Notes: * 1Q/04 ended 2/29/04; 2Q/04 ended 5/31/04; 3Q/04 ended 8/31/04;
4Q/04 ended 11/30/04. Source: CardData (www.carddata.com)
MBNA’s credit card loan fees have increased 78% over the past five years, topping $500 million last year. However, the pace slowed in 2004 as cardholder fees increased a modest 10%, compared to a 32% spurt in 2003 and a 20% jump in 2002. During 2004, MBNA’s credit card loan fees increased $48.7 million to $515.9 million, compared to an increase of $114.1 million to $467.2 million for 2003. Cardholder fees for 2002 were $353.1 million. However, excluding the change in the estimated value of accrued interest and fees in 2002, credit card fees would have increased $99.7 million or 27.1% for 2003. MBNA says the increase in credit card fees last year was primarily the result of the growth in receivables, accounts and a change in the timing of fee assessments. The increase in credit card fees for 2004 was also a result of higher late and over-limit fees implemented in 2003. During 2004, MBNA eliminated charging over-limit fees for accounts that have been over-limit for consecutive periods and holding the minimum payment constant, thereby shifting payment dollars to principal, thus accelerating the rate at which outstanding balances on these over-limit accounts are reduced below the credit limit. The estimated effect of these changes reduced total other operating income by approximately $30 million for 2004. In 2005, MBNA modified its over-limit fee to charge for exceeding the credit line any time during the billing cycle.
MBNA CARDHOLDER FEE HISTORICAL
2000: $289.5 million
2001: $295.1 million
2002: $353.1 million
2003: $467.2 million
2004: $515.9 million
Source: CardData (www.carddata.com)
CardinalCommerce and Massachusettes- based CommercialWare have announced an agreement through which CommercialWare will recommend the Cardinal Centinel payer authentication software to its customers who want to participate in the 3-D Secure programs, Verified by Visa and MasterCard SecureCodeTM. CardinalCommerce currently provides authentication services through its patent-pending Cardinal Centinel 3-D Secure MPI to over 18,000 online merchants. CommercialWare, Inc. develops software solutions that offer cross-channel functionality to retailers and direct marketers.Details
Higher One announced that McLennan Community College in Waco, TX, will implement a new custom electronic funds disbursement and banking services program with the Highlander OneCard, enabling students to receive financial aid disbursements, get cash from ATMs, make purchases on and off campus, transfer money and monitor accounts online through a new college-branded web site. Higher One currently serves 21 public and private university and college clients and has helped them disburse over half a billion dollars through more than 340,000 individual payments since September 2002.Details
University of Wisconsin-Stevens Point has partnered with U.S. Bank to provide the banking function for the school’s multi-use identification card, the PointCard, and will also operate two ATMs on campus. The services, which include no minimum balance and no monthly maintenance fee, are optional to UWSP students and employees beginning in the fall of 2005. U.S. Bancorp with assets of $195 billion, is the 6th largest financial holding company in the United States.Details
While consumers over 50 tend to love rewards and avoid interest charges on credit cards, it is a hot group for other cross-sell financial services. A report from Scarborough Research shows that while the 50+ are 33% less likely than all consumers to pay their bills online, they are 51% more likely to use a full service stockbroker and 23% more likely to use a financial planner. Sixty percent of consumers who have CDs in their household are 50+. Approximately half of persons with IRAs and Money Market accounts in their households are in this age group as well. To reach this group, Scarborough found that 64% read a daily newspaper and 58% are avid television viewers.Details
Ottawa-based Precidia Technologies’ “POSLynx400” retail router has been certified for the First Data Merchant Services CARDnet/North and Telecheck hosts. This is a significant milestone for “POSLynx,” a series of devices that provide IP conversion via four dial or two dial/two serial ports for legacy POS equipment. Precidia designs and
manufacture IP access devices for a wide range of industries,
including retail payments and building automation and has customers in
over 75 countries.
Since it is very likely that new bankruptcy laws will go into effect by the end of the year, there is a consensus that a short-term spike in personal filings will occur over the next six months. However, the long-term impact on credit card-backed bonds will be “moderately positive.” Fitch Ratings says the results will be lower chargeoffs and higher recoveries, but there is also a possibility of lower payment rates. Fitch notes that the bill materially reduces the limitations for the non-dischargeability of charges and cash advances for luxury goods. This provision helps prevent consumers from ‘loading up’ on luxury items or cash advances prior to declaring bankruptcy. Fitch says that since charge-offs have improved approximately 13% from recessionary peaks and excess spread remains healthy, no rating actions are anticipated, though it will monitor this area closely.Details
More than 31 million MasterCard branded smart cards are now in use in Asia/Pacific, compared 17.5 million in 2003. Since 2000, the number of MasterCard smart cards in the region has grown ten fold. MasterCard says over 90% of its current smart cards are EMV-compliant.
More than 67 card issuers and acquirers adopted MasterCard’s smart
card programs last year, a 30% increase over the prior year. During 2004, MasterCard launched Taiwan’s first chip combo card with Land Bank and Taiwan Cooperative Bank in January 2004. Since then Anshin Card Service, Bank of Overseas Chinese, Cathay United Bank, Chin Fon Bank, Far Easter International Bank, International Commercial Bank of China, International Bank of Taipei, Taiwan Bank, Taiwan Business Bank have joined the program. More than one million cards have been issued to-date. MasterCard also launched two “PayPass” pilot programs with the Orient Corporation for Japan and BPI for the Philippines.
Smart Transaction Systems has announced its gift and loyalty programs are now compatible with the latest technology in smart cards. The cards can access both a cash value and a loyalty/reward point balance at the same time. STS’ open-systems approach supports contactless readers from multiple manufacturers and customers may choose between the new contactless cards or traditional magnetic-strip cards. Smart Transaction Systems provides card-based payment systems, customer loyalty and customer relationship management (CRM) programs to a wide variety of companies throughout the US.Details
The Financial Supervisory Service is notifying card issuers to prevent their cardholders from using credit cards for gambling in overseas casinos. The new orders, which go into effect next week, is targeted to slow the movement of capital out of the country. The order also applies to online gambling. South Koreans has always been banned from using credit cards in the country’s only casino. According to the Korean Times, the total amount of money spent on gambling last year was 7.1 billion won, or US$7.1 million. Shinhan Card says it posted 580 million won or US$577,000 in overseas credit card use for gambling last year. Some Korean issuers currently limit casino use of credit cards to $300 to $1,000, while other issuers have no restrictions.Details