Late Payment Fees Hit Consumer Tolerance in 2004

Fees for making a late payment on a bank credit card are hitting the wall, peaking at $39 last year. During 2004, the increase in late payment fees slowed to its lowest level in more than a decade. Last year, the average late payment fee was $32.61, up 3.7% over 2003. Four of the nation’s top ten issuers charge a $39 late fee, while the other six charge $35. Citigroup, MBNA, Bank of America, and Providian assess the highest late payment fees of $39. Over the past five years, late payment fees have risen 20%, compared to a 104% increase between 1995 and 2000. The largest single year gain in late fees occurred during 1997, when average fees rose from $14.21 to $19.24, a 35.4% increase, according to CardData ([www.carddata.com][1]). During 2004, the most common late fee among major issuers was $35.

LATE FEE HISTORICAL
Year Average Y/Y CNHG
1994: $12.55 + 4.8%
1995: $13.25 + 5.6%
1996: $14.21 + 7.2%
1997: $19.24 +35.4%
1998: $22.10 +14.9%
1999: $25.61 +15.9%
2000: $27.10 + 5.8%
2001: $28.29 + 8.1%
2002: $30.04 + 6.2%
2003: $31.44 + 4.6%
2004: $32.61 + 3.7%
Source: CardData (www.carddata.com)

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

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MBNA’s Super Bowl Spot is Weak; MasterCard’s – #1

MBNA’s debut TV spot was ranked among the lowest tier of “Super Bowl XXXIX” advertisements by students of the Kellogg School of Management. The panel had significant concerns about MBNA’s advertising efforts. They thought MBNA was poorly branded. Meanwhile, the Kellogg School Review panel awarded a grade of “A” to MasterCard’s TV “Icons” spot. VISA’s ad ranked between the best and the worst. MBNA debut its first national TV commercial in the “Super Bowl.” The 30-second spot communicated the MBNA brand by emphasizing the wide range of affinity credit card products the issuer offers. The “Super Bowl” commercial kicked-off a national branding campaign, which will include print, television, radio, online, outdoor and direct marketing. The commercial and the overall brand campaign is being developed by The Helm Agency, New York. (CF Library 1/6/05)

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Indonesia to Lead Retail Sales Growth in 05

MasterCard’s “MasterIndex of Retail” for Asia/Pacific shows robust potential growth in retail sales during the first half of 2005. All 12 Asia/Pacific markets included in the forecast are predicted to see positive expansion, with Indonesia taking the lead with an anticipated 16.9% year-on-year growth in the first six months of this year. Double-digit growth is also expected from China (12.75%) and Thailand (12.3%), followed by Malaysia (8.9%), Hong Kong (8.7%) and the
Philippines (8.5%). Other Asia/Pacific markets, while less bullish, indicate positive year-on-year growth. These include Taiwan (4.8%), Australia (4%), Japan (2.3%) and Korea (1.78%).

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US Dataworks’ Fourth Quarter Revenue Rises 25%

Houston-based US Dataworks reported fourth calendar quarter revenues of $518,000 compared with revenues of $416,000 for the same period a year ago. US Dataworks is a developer of payment processing solutions, focused on the Financial Services market, Federal, State and local governments, billers and retailers. Software developed by US Dataworks is designed to enable organizations to transition from traditional paper-based payment and billing processes to electronic solutions that automate end-to-end processes for accepting and clearing checks.

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Fiserv Signs 12-Year Cheque Processing Deal

Commonwealth Bank of Australia, National Australia Bank, and Westpac Banking have signed a 12-year deal for Fiserv to provide “Day One” cheque processing and image archive services. The three banks will manage the relationship with Fiserv through a utility called Vipro Pty Ltd. Fiserv expects to begin managing operations in six Australian cities in the second quarter for Commonwealth and National, and will begin processing for Westpac in the second half of 2005 as Fiserv consolidates into common operating centers and a common technology platform in each Australian state. The three banks currently process approximately 800 million prime pass items a year. Based on estimated volumes, the agreement will generate projected revenue of US$460 million for Fiserv.

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Electracash Launches Two eCheck Fraud Fighters

CA-based Electracash has launched “User Authentication” and “Age Verification” to reduce fraud associated with accepting checks on the Internet. Both services are private and non-intrusive, enacted when a buyer chooses to use their checking account over the Internet to pay bills or make purchases. The services employ birth date and partial Social Security number data, validated in real-time along with other personal information required at online storefronts. Electracash, Inc. is a leading provider of Internet payment processing services, offering businesses the ability to accept eChecks and make Direct Deposits in the US and Canada, and to initiate wire transfers around the globe, for both business and consumer transactions.

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MasterCard Takes Grocery Icons to Dinner

MasterCard has assembled an all-star cast of 10 iconic characters from leading grocery brands to promote its “Debit MasterCard” this weekend. The 30-second spot, which airs in the fourth quarter of “Super Bowl XXXIX,” will show 10 characters seated at a dinner table passing various dishes to each other, having a “Priceless” family dinner. Included in the commercial are: “Count Chocula,” “Chef Boyardee,” “Mr. Peanut,”, the “Pillsbury Doughboy,” “Charlie the Tuna,”, the “Jolly Green Giant,” the “Morton Salt Girl,” “Mr. Clean,”, “Gorton’s Fisherman,” and, the “Vlasic Stork.” The spot was produced by McCann-Erickson/New York. Last year, MasterCard aired a spot featuring characters from TV’s “The Simpsons” during “Super Bowl XXXVIII.” (CF Library 1-30-04)

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Northwest Airlines Offers an AirPlus Account

Northwest Airlines has launched an “AirPlus Company Account” providing corporate travel managers with a central payment tool for air travel, individual corporate credit cards for travelers, and access to aggregated data through Internet-based travel expense reporting and electronic invoicing. The Northwest Airlines AirPlus Company Account will be accepted as a form of payment at travel agencies, the airline’s nwa.com Web site, Northwest Airlines reservations and merchants that accept the Universal Air Travel Plan (UATP) charge card. The program will be available to the airline’s corporate customers through the Northwest Airlines sales team. Northwest Airlines is the world’s fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo, and Amsterdam, and approximately 1,500 daily departures.

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MASTERCARD 4Q/04

For the first time, MasterCard International has topped $400 billion in gross dollar volume and four billion purchase transactions in a single quarter. The world’s second largest payment card network, by GDV, also neared the $1.5 trillion gross volume and 15 billion purchase transactions milestones for a full-year. MasterCard posted $401.2 billion in worldwide gross dollar volume in 4Q/04, a 12.5% increase over 4Q/03. Purchase transactions for the fourth quarter hit 4.034 billion compared to 3.597 billion one-year ago. For the full year of 2004, MasterCard GDV was $1.455 trillion, a 10.6% gain over 2003. Purchase transactions for the year totaled 14.715 billion compared to 13.202 billion for the prior year. Globally, MasterCard has 679.5 million cards-in-force linked to 576.0 million accounts. The number of acceptance locations worldwide at year-end 2004 was 24.6 million compared to 21.9 million one-year ago. For complete details on MasterCard’s fourth quarter results visit CardData (www.carddata.com).

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Hypercom to Restate 2004 Due to UK Leases

Hypercom announced this morning it will restate its financial results for the first three quarters of last year due to a lease accounting issue with its U.K. subsidiary. Approximately 3,200 leases, originated by Hypercom EMEA, were incorrectly accounted for as sales-type leases, resulting in an overstatement of net revenue for the first three quarters of 2004. Hypercom estimates that net revenue for the first nine months of 2004 will decrease by up to $4.0 million, and that the operating profit for the same period will decrease by approximately 65 to 75% of the amount of the net revenue reduction. The Company says it is devoting appropriate resources to reviewing its internal controls surrounding accounting for lease contracts and related contract review policies and procedures to prevent this type of accounting error from occurring in the future.

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