MIDDLE MARKET

About 1.4 million “Middle Market” companies, with revenue between $1 million and $1 billion, represent a $287 billion annual spend opportunity for commercial cards. American Express says its “Corporate Card” spend is 1.4 times greater than its overall average spend, but, “Middle Market” cards produce an average spend 1.2 times its “Corporate Card” average spend. AmEx has found that “Middle Market” annual card spending ranges from $15,000 to $10 million. Last year only about one quarter of “Middle Market” companies were on corporate plastic. AmEx says unlike large corporations, which have had corporate card programs for decades, mid-sized companies have been slower to adopt corporate plastic as a form of payment. AmEx estimates that “Middle Market” card spending grew by 16% last year and anticipates it will grow 13% per year. AmEx says the “Middle Market” has been extremely lucrative since it has low capital requirements. Second, AmEx is able to charge card fees, whereas card fees are usually waived for larger corporations. Third, AmEx does not typically pay incentives to mid-sized companies as it does with larger corporations; and finally, there is higher spending per card.

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Bank of Moscow to Deploy Opteva ATMs

Bank of Moscow has purchased 200 “Opteva” ATMs from Diebold. The bank has more than 2 million individual and corporate customers, and 500 locations. Bank of Moscow’s purchase includes two of Diebold’s “Opteva” models, a lobby cash dispenser and a through-the-wall cash dispenser. Russia’s Laboratory of New Information Technologies acted as the
distributor for the sale. LANIT is a Russian third-party distributor for Diebold products and is Diebold’s leading supplier in its EMEA region.
The first “Opteva” sale in Russia took place in April 2003.

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PayByCheck Provider Hires a Software Expert

WA-based HIMC Corporation, developer of the “PayByCheck” services, has hired software expert Mark Schueler for its product development department. Mr. Schueler comes to the Company after serving for six years as Senior Software Engineer with AT&T Wireless. He brings to HIMC over 15 years of experience in business applications development with an emphasis on structured design and programming with strong customer focus. HIMC Corporation (“HIMC”) through its wholly owned subsidiary ITI Internet Services Inc. (“ITI”), is a leading provider of Payment Services to over 25,000 customers.

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FSV Rolls-Out FlexFUNDS for FSA Cards

Houston-based FSV Payment Systems has rolled out “FlexFUNDS,” a stored-value card solution designed for flexible spending programs. FlexFUNDS is a MarketReady(TM) prepaid benefit card with a configurable platform designed from the ground up. It features velocity tools associated with each purse, as well as backend administrative tools for third-party administrators. FSV Payment Systems offers a robust suite of unique, host-based payroll debit card solutions and other MarketReady(TM) stored-value ePayments solutions direct to large employers and to financial institutions through an exclusive agreement with Fiserv, Inc.

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Chase Combines AARP Membership & Discounts

The AARP VISA will now become a membership card as well as a card offering automatic discounts. The AARP, Avis and Chase have teamed to combine the benefits of the AARP membership card with the “AARP VISA” card. The combined credit/membership card will also provide automatic discounts at the point of sale with Avis for AARP members. Avis is the first merchant to join the program and offer the technology, but additional partners will be forthcoming. The “AARP Platinum VISA” also offers a full one percent back on all card purchases.

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Equifax’s Direct Consumer Sales Climb 25%

Atlanta-based Equifax reported that its “Personal Solutions” business increased 25% in the fourth quarter to $23 million, and is up 38% for the year to $96 million. However, “Marketing Services” revenues in North America declined 11% last year to $236.1 million. “Information Services” in North America inched up by 4% to $707.1 million. Overall, for the fourth quarter, Equifax posted record revenue of $328 million, an increase of 12% from the same period last year. For the full year, revenues increased 5% to a record $1.27 billion. For complete details on Equifax’s fourth quarter performance visit CardData ([www.carddata.com][1]).

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

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Redskins Revise Card Policy to Take All MCs

After requiring season ticket holders to only use its co-branded credit card, the Washington Redskins backpedaled yesterday after a phone call from MasterCard. MasterCard reminded the merchant that the card’s acceptance is not designed to be that restrictive. The NFL team will now honor all MasterCards but will not accept VISA, American Express, or Discover as a payment option for season tickets. Last year, the team accepted all payment card brands. In a letter to season ticket holders last week the Washington Redskins said that to streamline the ticketing process it was now requiring fans to only use the MBNA-issued “Redskins Extra Points MasterCard.” According to the Washington Post, the Washington Redskins under the ownership of Dan Snyder has become on the most profitable NFL teams despite its lousy game winning record.

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ADS 04 Income Up 52%, as Revenues Rise 20%

Dallas-based Alliance Data Systems reported a 16% increase in revenues for the fourth quarter, ending the year with a 20% gain over 2003. Marketing Services revenues climbed 30% in 2004, while Credit Services and Transaction Services revenues increased 19% and 11%, respectively. Net income for the full year was up 52%, but declined 19% in 4Q/04 due to a stock compensation charge. Total fourth quarter revenue was $346.8 million, compared to $297.9 million 4Q/03. For the year, revenue increased to $1.26 billion compared to $1.05 billion for 2003. Net income for 2004 was $102.4 million, compared to $67.3 million the previous year. Net income for 4Q/04 was $16.0 million, compared to $19.8 million for 4Q/03. Transaction Services revenue increased to $681.7 million compared to $614.5 million for the year ended December 31, 2003. Credit Services revenue increased to $514.0 million, compared to $433.6 million for the prior. Marketing Services revenue increased to $375.6 million, compared to $289.8 million for 2003. For complete details on ADS’ fourth quarter performance visit CardData ([www.carddata.com][1]).

ADS HISTORICAL REVENUES
1999: $583 million
2000: $678 million
2001: $774 million
2002: $867 million
2003: $1049 million
2004: $1257 million
Source: CardData (www.carddata.com)

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

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ABS Monthly Payment Rate Hits a New Record

Monthly payment rates, among card-backed bonds, soared to the highest level ever in December, breaking through the 18% level. The strong consumer behavior is accompanied by a significant decline in both delinquencies and charge-offs. According to Standard & Poor’s “U.S. Bank Credit Card Quality Index,” December’s 18.2% monthly payment rate represents the 10th consecutive month that the payment rate has exceeded 17%, averaging 17.5% during this 10-month period. Citibank posted a 19.0% payment rate for December, the highest among the ABS followed by S&P. During December, the 30-day delinquency rate was 4.3% compared to 4.5% in November, and 5.0% one-year ago. After increasing over the course of the previous two months by 60 bps, charge-offs in December decreased by 20 bps to 6.3%. One-year ago charge-offs stood at 7.0%. Yield, which primarily consists of cardholder finance charges, decreased by 20 bps to 17.7% from a revised 17.9% in November. On a comparative basis, the 17.5% average yield for 2004 was 10 bps lower than the 2003 average of 17.6%.

Credit Card Quality Index
Performance Month Dec02 Dec 03 Oct04 Nov04 Dec04
Yield 18.2% 17.6% 18.0% 17.9% 17.7%
Payment rate 15.8% 16.7% 17.1% 17.4% 18.2%
Charge offs 7.5% 7.0% 6.4% 6.5% 6.3%
Delinquencies 5.4% 5.0% 4.5% 4.5% 4.3%
Source: Standard & Poor’s

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BB&T to Participate in FDC’s STAR CHEK Direct

BB&T has signed a deal to participate in First Data’s “STAR CHEK Direct,” a direct check debit and verification service. BB&T will use STAR CHEK Direct to help reduce its check fraud losses and processing costs, streamline check processing administration and generate income. First Data Corp. (NYSE: FDC), with global headquarters in Denver, helps power the global economy. BB&T Corporation is the nation’s 11th largest financial holding company with more than $97 billion in assets.

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Advanta Gets $64 Million Returned from BofA

Advanta is receiving $64 million from Bank of America after the IRS approved the settlement in regard to Advanta’s card portfolio sale to FleetBoston. Consistent with the terms of the settlement, all outstanding litigation between the two companies is being dismissed. The settlement results in a net after-tax gain of approximately $61 million and an increase in book value of approximately $2.45 per share, as previously outlined. Advanta focuses on the small business market and related community, providing funding and support to the nation’s small businesses through innovative products and services.

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