Card Penetration at CUs Dips Below 19% in 04

Penetration, or the percentage of credit union members that have credit union credit cards, continued to decline last year, falling from 19.0% in December 2003 to 18.4% in December 2004. Four years ago the figure stood at 21.0%. Total card assets for portfolios over $1 million continued their decline as a percentage of assets, falling from 4.29% in December 2003 to 4.22% in December 2004. The statistics come from a comprehensive study conducted by Oregon-based AssetExchange. The research also found that 54% of card portfolios shrunk in inflation-adjusted dollars between December 2003 and December 2004. Approximately 65 credit unions sold their credit card portfolios last year, accounting for about $475 million in total volume.

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Citi Launches a Teen Card in the UAE

Citibank has launched a credit card for 13-19 year olds in The United Arab Emirates offering a credit limit up to AED 500 (US$136). The new “Citibank Teen Card MasterCard” requires no application form since it is issued as a supplementary card to existing credit card holders. The new card also offers shopping discounts at a wide range of UAE merchants. Citibank currently dominates UAE’s credit card market and is a major provider of consumer credit services including personal and auto loans. Last year, Citibank won the regional “Credit Card of the Year Award” from the GCC Banking Awards 2004 program run by Banker Middle East Magazine.

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Precidia’s POSLynx Router Gets GPN Gateway Access

Precidia Technologies announced “Class B” certification of its “POSLynx” retail router with Global Payments “GlobalNet @dvantage SSL” gateway. Global Payments Inc. is a leading provider of electronic transaction processing services to consumers, merchants, Independent Sales Organizations (ISOs), financial institutions, government agencies and multi-national corporations. Precidia Technologies Inc. is a global leader in the design and manufacture of IP access devices for a wide range of industries, including retail payments and building automation.

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ADS Renews PacSun Private Label Card Contract

Dallas-based Alliance Data Systems has inked a multi-year renewal agreement to provide private label credit card services for clothing retailer Pacific Sun, which generates more than $1 billion in annual sales. Alliance Data Systems is a leading provider of transaction, credit and marketing services, managing approximately 95 million consumer relationships. Pacific Sunwear is a leading specialty retailer of everyday casual apparel, accessories and footwear designed to meet the needs of active teens and young adults.

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IP Network for Prepaid Calling Cards is Launched

Brooktrout Technology and BayPackets have jointly developed a highly scalable IP-based network prepaid calling card solution for service providers. California-based BayPackets’ applications enable wireless, wireline and cable operators to rapidly bundle and deliver enhanced voice and data services tailored to the needs of their business and consumer customers. Brooktrout Technology is a leading supplier of media processing, network interface, call control and signal processing products that enable the development of applications, systems and services based in Massachusetts.

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First Data to Expand its Stock Buyback

First Data announced that its share repurchase program is being increased by $2 billion. Added to the company’s existing authorization, the additional authorization now enables First Data to repurchase approximately $2.32 billion of its stock. Thus far in the first quarter, First Data has repurchased 14.4 million shares for $584 million at an average price of $40.67. The company raised its quarterly dividend to $0.06 per common share, triple the previous level of $0.02 per share.

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Australia Takes on EFTPOS and Debit Interchange

The Reserve Bank of Asutralia’s Payments System Board is recommending that interchange fees for the EFTPOS and “VISA Debit” payment systems be slashed by approximately 70%. The bank says the current levels of these fees are not conducive to the efficiency of the Australian payments system. If the proposed standards are implemented, the maximum interchange fee in the EFTPOS system is likely to be around 5 cents paid to the merchant’s bank. This compares with the current average fee of around 20 cents. In the “Visa Debit” system, the interchange fee paid to the cardholder’s bank would fall from an average of around 40 cents, to a maximum of around 15 cents. The combined effect of these proposed changes would be to reduce the gap between the two interchange fees from around 60 cents at present to a maximum of around 20 cents. The EFTPOS standard would also further reduce the gap between the interchange fees in the EFTPOS and credit card systems. The Payments System Board also proposed the removal of the current requirement that merchants accepting VISA credit cards also have to accept “VISA Debit” cards.

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Chase Outlines Aggressive Card Goals for 05

Chase has set a target to achieve a return on outstandings of 3.5% compared to its current 2.2%. The nation’s largest issuer says it plans to cut expenses, invest in marketing, raise revenues, and maintain credit to meet its goal. Chase indicated it will also consider a portfolio acquisition in the range of $2 billion to $7 billion. Chase hopes to raise revenue through cobrand partnerships, growth in outstandings, risk-based pricing and universe expansion, better management of credit lines, improved cross-sell effectiveness/retention, and, improved collections efficiency. Expense reduction will come from a lower headcount, vendor management, site consolidation, waste management, more effective leveraging of fixed expenses, and adoption of the most efficient operational processes. Chase said it intends to reinvest in marketing through brand building. The issuer said it will also expand its judgmental credit by reaching into the “near prime” segment. Chase also noted yesterday it will raise minimum payments in the second half of this year to comply with FFIEC rules.

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Euronet’s Annual Profits Jump 56%

Euronet Worldwide reported that consolidated revenue for the fourth quarter jumped 61% to $113.1 million, compared to one-year ago. Net income for the year increased 56% to $18.4 million. The EFT Processing Segment reported annual revenues for 2004 of $77.6 million, up 47% over 2003. The EFT segment completed the year with 5,742 ATMs owned or operated, compared to 3,350 ATMs at the end of 2003 and to 5,404 ATMs at the end of the third quarter 2004. The segment processed 232 million transactions for the full year 2004 and 73.4 million transactions in the fourth quarter 2004, compared to 115 million and 33.2 million transactions for the same periods last year, respectively. The Prepaid Processing Segment reported annual revenues for 2004 of $289.8 million, compared to $136.2 million reported for 2003. Total transactions processed by the Prepaid Processing Segment increased to 65.8 million for the fourth quarter 2004, compared to third quarter 2004 transactions of 59.8 million and to fourth quarter 2003 transactions of 39.8 million. Total transactions processed during 2004 increased to 229 million, compared to 101 million for 2003. The Prepaid Processing Segment processes electronic point-of-sale prepaid transactions at more than 175,000 point-of-sale terminals across more than 85,000 retailer locations in Europe, Asia Pacific and the U.S. For complete details on Euronet’s latest results, visit CardData ([www.carddata.com][1]).

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

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ScanSoft and Diebold Team for Talking ATMs

Massachusetts-based ScanSoft and Diebold have teamed to provide speech-enabled ATMs across the USA. ScanSoft(R) RealSpeak(TM) helps visually impaired users navigate transactions from simple requests such as account balance information to deposits and cash withdrawals and provides alerts to any errors that may have occurred during the transaction in an easy-to-understand, natural-sounding voice, enabling quickly completed transactions with increased ease. ScanSoft, Inc.,is a global leader of speech and imaging solutions that are used to automate a wide range of manual processes. Ohio-based Diebold, Inc. is a global leader in providing integrated self-service delivery systems, security and services.

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Australia Card Balances Increase 14%+

Total credit card balances exceeded A$30 billion for first time during December in Australia. In addition, gross dollar volume for purchases on credit card and charge cards in December soared by more than 17% from the prior month, according to CardFlash International. Over the past twelve months, credit card balances have increased more than 14%. Based on historical data from the Reserve Bank of Australia, revolving balances topped $A20 billion for the first time during December. The latest data show that revolving balances increased to A$20,224,000,000 during December, up 12% from one-year ago. During December, Australians charged A$15.1 billion in purchases on credit/charge cards compared to A$13.7 billion one-year ago. At the end of December, consumers owed A$30.2 billion on credit cards versus A$26.5 billion for December 2003. Card credit limits reached A$78.0 billion at the end of December, compared to A$69.4 billion for December 2003. There are 11.6 million credit card and charge card accounts in Australia, compared to 10.9 million one-year ago.

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Record Number of CUs Unload Portfolios

Sales of credit union credit card portfolios with at least $1 million in assets rose 9.5% last year to $459 million. Over the past three years, more than $1.1 billion has changed hands with an ever increasing number of credit unions deciding that an agent partnership was the best way to meet member needs and free up resources for other core products. According to New Hampshire-based Brookwood Capital, 67 credit unions with credit card portfolios of over $1 million in outstanding balances sold their portfolios in 2004. The fourth quarter was particularly active, with 19 portfolio sales closed. On average, the size of the portfolios sold in 2004 was $6.9 million, down from $7.1 million in 2003.

Total Average
Year Portfolios Sold Outstandings Size
2002 41 $285 million $7.0 million
2003 59 $419 million $7.1 million
2004 67 $459 million $6.9 million
Source: Brookwood Capital

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