AmEx/Costco Launch a New T&E Card – Traveling & Eating

American Express and Costco have rolled-out a new set of co-branded credit cards that offer bonus rewards for eating out and traveling. The new “TrueEarnings Card” and the “TrueEarnings Business Card” features a unique rewards structure, earning 3% cashback for eating out; 2% cashback for traveling; and, 1% cashback on all other purchases. Cardholders receive an annual rebate as a coupon that can be redeemed for cash or used for purchases at Costco warehouses. Both cards carry no annual fee and offer a 0% intro rate for the first 90 days on purchases. The on-going APR is prime +8.99%. The American Express-Costco relationship began in 1999 with the launch of the “American Express Costco Cash Rebate Credit Card” and the “American Express Costco Business Charge Card.” Costco currently operates 321 warehouses in the USA. (CF Library 11/18/99)

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MasterCard Advisors Finds a New President

MasterCard has hired Keith Stock as its new president to replace the retiring Henry Mundt. Stock previously worked for Capgemini, f/k/a Cap Gemini Ernst & Young, as managing director of the banking group. He also served as head of the Financial Institutions group at A.T. Kearney and spent nearly ten years at McKinsey & Company serving international financial institutions. He also founded First Financial Investors and served as Chairman and CEO of Treasury Bank. MasterCard Advisors provides access to experts across payments strategy, information solutions, cardholder services, customer relationship management, information technology, marketing, operations, research, rewards programs and risk management.

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Sub-Prime Portfolios Shrink 25% Since Mid-Year 2002

Regulatory tightening, economic weakness, and vigorous litigation have taken a toll over the past two years on the pure sub-prime market. Excluding major players with sub-prime segments, the nation’s top five sub-prime specialists have experienced, on average, a 25% decline in outstanding balances, and an 18% erosion in their account bases over the past two years. Bucking the trend is SD-based First Premier Bank, which peaked in the fourth quarter of 2002, but managed to post a 10.5% gain in outstandings, and a 22% increase in accounts since 2Q/02. While First Premier’s growth has been organic, UT-based Merrick Bank posted a whopping 65%+ gain in its portfolio, thanks largely to its acquisition of Providian and NextCard accounts in 2002. Among the losers is DE-based Cross Country Bank, which has seen its portfolio cut in half over the past two years. CCCB has been embroiled in litigation over its business practices. Major players with significant sub-prime segments include Capital One, Providian, Household, and Metris/Direct Merchants. For 2Q/04 details on U.S. card issuers visit CardData ([www.carddata.com][1]).

PURE SUB-PRIME PLAYERS
(2Q/04)
Rank/Issuer RECV 2YR CHNG ACCTS 2YR CHNG
1. CompuCredit $1.96B -13.3% 2.2MM -4.3%
2. Cross Country $1.21B -48.8% 1.8MM -51.4%
3. First Premier $673MM +10.5% 3.3MM +22.2%
4. Bankfirst $522MM -46.7% 853K -46.7%
5. Merrick Bank $513MM +68.7% 567K +66.3%
TOTAL $4.88B -24.8% 8.72MM -17.7%
Source: CardData (www.carddata.com)

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

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Bills.com Doubles its Subscriber Base

San Antonio-based Payment Data Systems says its Bills.com subsidiary has more than doubled its subscriber base over the past year with revenues growing at double-digit rates. Bill.com is currently providing a new version of its consumer online bill presentment and payment service. The service enables consumers to pay anyone possessing an email address transfer money between multiple accounts, view and pay eBills, and receive eBill summaries in their email. Consumers can now track, manage, and archive their bills, payments, and accounts. Bills.com, a wholly owned subsidiary of Payment Data Systems, Inc., provides a convenient source of online bill payment. Payment Data Systems delivers cost-effective solutions to billers and retailers who process and manage electronic payments using the Internet, point-of-sale, customer service representatives, or an Interactive Voice Response.

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[1]: http://www.cardweb.com/images/b/bills/billshomepage.jpg

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Penthouse Flips iBill for a $22MM Paper Profit

Adult entertainment specialist, Penthouse International, has closed a deal to sell its iBill payment processing subsidiary less than six months after acquiring the business from Atlanta-based InterCept. Penthouse’s Media Billing subsidiary acquired iBill in March in a transaction valued at approximately $33 million. Yesterday, Penthouse sold iBill to FL-based Care Concepts I, Inc. for $55 million in stock. As a result of the transaction, Penthouse will initially own 19.9% of the outstanding common stock of Care Concepts. iBill was established in 1996 and serviced primarily the adult entertainment market. According to Penthouse, more than 27 million online consumers have used iBill to make purchases online. In 2003, iBill averaged 1.2 million transactions per month and completed approximately $330 million in online purchases, producing fee income of approximately $45.1 million. Care Concepts says it will use iBill to grow its iBidUSA.com auction business. (CF Library 3/17/04; 3/23/04; 5/25/04; 8/2/04)

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VISA ATHENS 2004

The average transaction value of VISA card purchases at “Olympic” venues during the 17 day event period was up 44% to US$103.50, compared to the “Sydney 2000 Olympic Games.” ALPHA Bank says that the number of VISA transactions it handled in August were up 55% compared to one-year ago. More than 50,000 withdrawals were made from the 17 ATM machines especially installed by VISA and ALPHA Bank, a 41% jump over Sydney 2000 volume. The increased activity was driven by VISA “Olympic” marketing programs by VISA members in 56 countries. In Europe, there were 17 national promotions, and a further 70 members participating in “Olympic” activity. This resulted in over 43 million pieces of “Olympic” marketing material being distributed to cardholders. During the “Games” more than 58,000 merchants in the Attica area, together with the five other “Olympic” venue cities embraced the “Games” by displaying 300,000 pieces of VISA point of sale material. About 5,000 “VISA Money Olympic Games Prepaid” chip cards were issued to the “Olympic” family by VISA and a further 5,000 prepaid cards were issued by ALPHA Bank directly to consumers.

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Catalina Marketing Gets Credit and Building

St. Petersburg, FL-based Catalina Marketing has landed a revolving credit facility up to $175 million and has purchased its corporate headquarters facility. The revolving credit facility can be used to refinance debt, and share repurchases and capital expenditures. J.P. Morgan Securities, Inc. is the leading arranger for the facility, with Bank One, NA and Bank of America N.A. as administrative and syndication agents. The company’s $30 million U.S. revolving credit facility, which was set to expire on August 31, 2004 was replaced by the refinancing. The new facility is also replacing Catalina Marketing Japan K.K.’s 3.5 billion yen Japanese credit facility. Catalina Marketing combines insight into consumer behavior and consumer access, enabling marketers to execute behavior-based marketing programs.

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ATA and U.S. Bank Launch Two Co-Branded VISAs

After 31 years, the nation’s 10th largest passenger airline is taking off with a co-branded bank credit card. Discount carrier ATA Airlines has linked up with U.S. Bank to launch the “ATA Platinum VISA” card and the “ATA Business VISA” card. Cardholders earn one point for every $3 in purchases without any cap. ATA offers a free roundtrip ticket for 6,000 points or a free companion ticket for 3,000 points. Cardholders are awarded 3,300 points with their first purchase. The “ATA Platinum VISA” carries a $55 annual fee and the “ATA Business VISA” carries a $75 annual fee. The interest rate for both cards is prime +9.99%, adjusted monthly. ATA operates scheduled service from Chicago-Midway, Hawaii, Indianapolis, New York, and San Francisco to over 40 destinations.

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CardSystems Picks Up New Funding

Atlanta-based CardSystems has secured $9.3 million in a private placement. The funds will be used to improve and expand CardSystems’ full-service processing and merchant acquiring services to support its Independent Sales Organization and bank clients. The company’s technologies feature an expert system, neural network, and service offerings for the card processing industry. Payment transactions for over 110,000 merchant locations are processed by CardSystems.

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U.S. Bank Completes the First Phase-In of MoneyGram

Since inking a deal in June, U.S. Bank has made MoneyGram money transfer services available at 185 locations in Chicago, Milwaukee, Madison, Los Angeles, and San Diego as part of the first phase installation, which will ultimately include all 2,344 U.S. Bank offices by mid-2005. MoneyGram enables consumers to transfer money to associates and loved ones all over the world through U.S. Bank. The price of a transfer depends on the amount being transferred and where it is being transferred to. U.S. Bancorp, the parent company of U.S. Bank, is the 6th largest financial services holding company in the U.S. with $190 billion in assets.

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FTC Takes its First Swipe at DNC Violators

The FTC reported yesterday it is seeking civil penalties against a Nevada-based telemarketing group who allegedly made more than 300,000 calls to consumers who registered their phone numbers on the “National Do Not Call Registry.” The FTC says Braglia Marketing also made more than 10,000 calls to various phone numbers without first paying the required annual fee to access the registered numbers in those area codes. BMG calls consumers on behalf of its clients, including Flagship Resort Development Corporation and Atlantic Palace Development, which sell timeshare resort properties in Atlantic City, New Jersey. The maximum fine is up to $11,000 per illegal call. This is the first time the agency has sought civil penalties for violations of the “Registry.”

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