AmEx Sues Top Issuers; Excludes MBNA & Citi

American Express provided more details on its lawsuit against VISA and MasterCard after the release of yesterday’s CardFlash. Included in the lawsuit are eight major banks who were board members of VISA and/or MasterCard during the time that VISA’s “By-law 210(e)” and MasterCard’s “Competitive Programs Policy” were in place. MBNA, which recently began issuing AmEx cards, was not named as a defendant. AmEx says it will not seek damages from MBNA and will reimburse its new partner for certain costs which may be imposed by MasterCard or VISA as a result of this lawsuit. AmEx also did not name Citigroup as a defendant, and when asked in a news conference about the exclusion of Citi, the lead attorney responded vaguely. The banks sued include J.P. Morgan Chase, Bank of America, Capital One, U.S. Bancorp, Household Bank, Wells Fargo, Providian National Bank and USAA Federal Savings Bank. In 1996, MasterCard’s “CPP” was enacted. VISA enacted “By-law 210(e)” in 1991. (CF Library 10/5/04; 11/15/04)

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Providian’s Charge-Offs Down 525 bps in 04

Losses for Providian’s credit card ABS dropped 34 basis points in October, however, delinquency edged up 18 basis points. Since the start of this year, delinquency has collapsed by 300 basis points, and charge-offs have declined 525 basis points for the sub-prime specialist. Charge-offs dropped to 12.11% in October, compared to 12.45% during September. One-year ago, Providian’s securitized charge-off ratio stood at 17.19%. Delinquency ticked up to 8.48% during October compared to 8.30% during September. One-year ago, Providian’s securitized delinquency ratio stood at 12.38%. Providian’s managed charge-offs for October was 9.95%, and delinquency stood at 6.41%. For complete details on Providian’s latest performance, visit CardData ([www.carddata.com][1]).

PROVIDIAN MONTHLY ABS METRICS
Month Charge-Offs Delinquency
Jan 04 17.36% 11.48%
Feb 04 16.08% 11.07%
Mar 04 17.17% 9.56%
Apr 04 15.84% 9.09%
May 04 14.82% 8.68%
Jun 04 14.44% 8.40%
Jul 04 13.17% 8.42%
Aug 04 12.39% 8.37%
Sep 04 12.45% 8.30%
Oct 04 12.11% 8.48%
Source: CardData(R) (www.carddata.com)

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

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VISA & MC Say AmEx has an Uphill Battle

MasterCard says it will be an uphill battle for American Express to prevail in a private lawsuit. MasterCard says to prove that it was injured and suffered damages as a result of MasterCard’s policy will be a difficult hurdle considering the success of AmEx in the U.S. during the 1990s. Furthermore, MasterCard says the real world evidence of the failed AmEx partnerships with banks in foreign markets, along with the competing interests American Express will face between its proprietary business and its network business, will undermine any attempt by American Express to establish that it was damaged by MasterCard’s policy. Meanwhile, VISA says AmEx chose to walk away from working with banks in the 1980s, and instead only competed against them. VISA says AmEx is now suing the very same banks with whom it claims it wants to partner. VISA also noted that AmEx blew its 18-year head start on VISA by ignoring mainstream consumers and wrongly choosing to focus only on the wealthy, and now has a serious product problem.

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eFunds Offers ATM Remote Graphics Distribution

eFunds has introduced a remote graphics distribution solution for Diebold TCP/IP-based ATM machines running “Windows” and “OS/2”. The remote graphics distribution will enable EFT customers to control and self-author ATM content and advertising for their complete ATM portfolio from a Web browser. Customers can have complete control over the messages appearing to their customers and costs associated with on-site graphics loading are reduced. TEKchand’s ATMRewards™ technology is utilized to distribute graphics to ATMs. TEKchand LLC, based in Chicago, is a provider of ATM software and solutions. eFunds Corporation is an industry leader in electronic payments and risk management.

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Secret History of the Credit Card to Air

PBS’ “FRONTLINE” program and The New York Times have produced a 60-minute documentary entitled the “Secret History of the Credit Card,” that is set to air next week. The investigative report was conducted over a six-month time frame. The production suggests that the profitability of credit cards began twenty-five years ago, when the banking industry successfully eliminated the limit on the interest rate a lender can charge a borrower. Deregulation, coupled with a revolution in technology that enables the almost real-time tracking of personal financial information and the emergence of nationwide banking, has facilitated the widening availability of credit cards across the economic spectrum. But, for some, FRONTLINE found that the cost of credit is often far greater than it appears. The thoroughly researched documentary interviewed many top experts and is hosted by Lowell Bergman. The show airs nationally at 9 P.M. on November 23rd.

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Pre-Holiday Sales Volume Up Sharply Over 03

VISA reported that sales volume on its payment cards during for the week ending November 14th totaled more than $22.5 billion, a 17.5% increase over the same period last year. For the week, consumer spending on VISA-branded credit cards grew 9.1%, surpassing $11.3 billion according to the “VISA USA Holiday SpendTrak.” Transactions conducted on VISA’s consumer debit products (including Interlink and check card purchases) experienced a 28.1% growth to reach more than $9 billion. VISA found that the increase in sales volume for the week was largely driven by a 22.5% increase in discount, mass apparel and drug store purchases, and a 17.7% growth in home and garden purchases.

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FTC Shuts Down a Debt Negotiation Company

The FTC has shutdown MA-based Better Budget Financial Services for operating a bogus debt negotiation company. Better Budget Financial Services and its principals were charged for defrauding consumers out of hundreds or thousands of dollars, causing a lot of them to be sued by creditors and forcing some into bankruptcy. The FTC requested the court to award consumer redress to the victims of the scam The court entered a temporary restraining order ceasing the defendants’ illegal practices, freezing their assets, and appointing a temporary receiver while waiting for a preliminary injunction hearing.

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U.S. Bank Brings Prepaid Top-Up to its ATMs

U.S. Bank has partnered with Boston Communications Group to provide the “bcgi Wireless Wallet” to enable prepaid top-up at U.S. Bank’s 4,000 ATMs in 24 states. bcgi Wireless Wallet subscribers can use their debit card to obtain funds. All they have to do is provide the mobile number needed to identify the prepaid account to be recharged and to choose the amount they want on their card. Subscribers can obtain receipts from ATMs to keep a record of their transactions. The union between U.S. Bank and bcgi Wireless Wallet enables all parties to offer better services in order to boost customer relationships, increase the usage of ATMs, and encourage more wireless top-up purchases. U.S. Bancorp is the 6th largest financial services holding company in the U.S. with $193 billion in assets. Boston Communications Group, Inc. is a leading provider of transaction processing solutions designed for real-time wireless subscriber management, payment services, billing, and customer care.

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OFT Attacks MasterCard Interchange

The Office of Fair Trading says MasterCard’s multilateral interchange fees applicable to UK domestic transactions have infringed competition law. The OFT believes that the agreement leads to
an unduly high fee being paid to card issuing banks on every such
transaction with the cost passed on to retailers and ultimately to consumers. MasterCard originally notified the UK Domestic Rules to the OFT for consideration as to whether they infringed the Competition Act and, if so, whether an individual exemption could be granted. As of
1 May 2004, as a result of changes to the Competition Act, the notification has lapsed. The investigation, however, continues as
the OFT believes the agreement has an anti-competitive effect. The OFT has also launched an investigation into the agreement on the
multilateral interchange fees applicable to UK transactions using VISA
cards.

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FDC Names a Petroleum Industry Group Head

First Data has promoted Michele Hanson-Emerson to SVP of its petroleum industry group. Ms. Hanson-Emerson will be responsible for guiding market development, client development, and helping to lead enterprise sales initiatives that will strengthen First Data and its bank alliances and partners’ ability to provide services and solutions to merchants in the petroleum and convenience store industry. First Data Corp is an electronic commerce and payment services leader that makes the purchase of goods and services using multiple forms of payment fast, easy, and secure for people and businesses around the world.

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BRIDGET’S FINANCES

A new survey has found that single British women spend approximately a third of their income on socializing in the country’s wine bars. The research, commissioned by Egg, also found that 30-plus single females have, on average, GBP 4,567 in credit card debt and GBP 0 in savings. The poll, released as the new Bridget Jones movie is released, found that more than three quarters of those quizzed drink Bridget’s favorite tipple, white wine. However chardonnay, drunk by the bucket load by the fictitious heroine, is drunk by less than half of our real life Miss Jones’s. Furthermore just under a third admit to smoking and this applies equally across the six cities surveyed. The average income of the Bridgets was GBP 25,000 per annum across the cities, with Londoners having a higher mean salary of GBP 29,000 compared to the others. On average less than half surveyed have a regular saving plan and whilst a large proportion is spending money on going out without considering it to be a problem, 1 in 10 admit they are in financial strife.

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