California Drops Car Card Fees

The California Department of Motor Vehicles yesterday announced it is dropping its $4 credit card fee to encourage Internet renewals for vehicle registrations, effective today. When the DMV first launched Internet renewals four years ago, the department absorbed the merchant fee. But, after the first few months, the Legislature insisted the DMV begin passing the $4 fee along to customers. With the fee, roughly 4.5% of registration renewals (about 1 million transactions per year) have been handled by the Internet. However, the DMW says it has became clear that the fee was discouraging significant numbers of customers. DMV officials hope the elimination of the fee may increase Web renewals by more than 50%. The move is in response to Governor Arnold Schwarzenegger’s directive to reduce lines and wait times at DMV field offices as quickly as possible.

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American Express Rolls-Out a Discount Program for 11 Countries

American Express has added a new benefit for cardholders in eleven countries that offers nearly 1,000 special discounts worldwide. The new “American Express Selects” program is available to cardholders in the USA, UK, Canada, Mexico, Argentina, Australia, Malaysia, France, Italy, Singapore and Greece. In the coming months, AmEx expects to make the service available to a wider range of merchants in an increasing number of locations. The Company also noted that it has adopted a strict criteria for the new program to ensure that all offers on “Selects” meet its standards for value and duration of the offer. Samples of U.S. savings include 25% car rental discounts and up to 20% off rates from national hotel chains.

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BofA Takes Over DaimlerChrysler Cards

Bank of America has purchased DaimlerChrysler Services North America’s “Chrysler,” “Jeep,” “Dodge,” and “Mercedes-Benz” consumer credit card portfolios. The portfolios contain 160,000 accounts total. The portfolio was previously issued through Columbus Bank & Trust. In November 2001, DaimlerChrysler announced the launch of the Chrysler, Jeep and Dodge co-branded VISA credit cards. The Mercedes-Benz was released in 2002. Under the rewards program, cardholders earn one point for every dollar charged and five points for each dollar spent on purchases charged at participating dealers. Cardholders also earned three points per dollar at Exxon and Mobil service stations. (CF Library 7/26/01; 10/29/01)

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US Bank Wins DOT P-Card Contract

U.S. Bank has signed a deal to provide purchasing card services to the U.S. Department of Transportation, effective November 30th. The DOT expects annual charge volume of approximately $150 million dollars, making it one of the twenty largest purchasing programs in the federal government. This is the second major federal government contract won by U.S. Bank in less than a year. In 2003, U.S. Bank was selected by the Department of Homeland Security to provide similar services in the first major award under the government’s “SmartPay” program since 1998. “SmartPay” was instituted to help government agencies minimize the issuance of purchase orders and the receipt of invoices, reduce administrative costs, improve cash management by eliminating the need for advance funds, third party drafts and cash on hand and consolidate purchases from many suppliers to a single invoice. The GSA estimates that its “SmartPay” purchasing card programs saved government agencies more than $1 billion dollars in 2003.

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Card Rewards Dominate Direct Mail

Credit cards offers with a reward program continue to dominate the U.S. market. Of 325 million direct mail solicitations in April, 55% were for cards that have a reward program, compared to 45% in 2003, and 30% in 2002. According to MINTEL’s Comperemedia, one reason for the continued success of reward cards is that a growing number of investment firms are offering reward cards. The research firm also says reward programs are becoming more sophisticated by offering longer term rewards such as “life experience rewards”, “immediate gratification rewards,” and points toward account management. The overall mail volume figures for April of 325 million was lower than the previously reported data of 347 million for January.

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Chase Issues the Volt Payroll Card

NY-based Volt Information Sciences has launched a MasterCard payroll card for its 37,000 employees. The new “Volt MasterCard Payroll Debit Card” is being issued through JPMorgan Chase Bank. Volt employees can access a record of their transactions through the Chase E-funds web site or through the automated Chase E-funds Voice Response Unit. Volt is a national provider of staffing services, telecommunications, and information dolutions for its “Fortune 100” customer base.

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OPC Introduces E-Check Payments

CT-based Official Payments has introduced a new electronic check payment option. First launched in December, OPC has already brought 34 government agencies live on this new service. OPC currently provides electronic payment alternatives including electronic checks, Internet and telephone-based credit and debit card payment processing services. OPC provides electronic payment services for the Internal Revenue Service, 22 states, the District of Columbia and more than 1,500 local government clients nationwide.

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Delinquency Turns South in Q1

Based on total dollars past-due, credit card delinquency declined in the first quarter compared to the level set in the previous quarter, but remains above last year’s ratio and well above historical figures. The decline is significant due to the “denominator effect” in the first quarter, wherein consumers typically pay-off their holiday charges, thus reducing the total amount owed on credit cards by 2% to 3%, compared to the previous quarter. According to data gathered by the American Bankers Association, based on the number of accounts past-due, delinquency was 4.21% in the first quarter, compared to an all-time high of 4.43% reached in the fourth quarter. Based on total dollars outstanding, bank card delinquencies decreased to 4.65% in the first quarter, from 4.92% in the previous quarter. The composite ratio of closed-end installment loans 30 days or more past due decreased slightly to 1.86% from 1.89% of all accounts. The ABA composite ratio tracks eight closed-end con sumer installment loans, including personal, auto and home equity.

1Q CREDIT CARD DELINQUENCY HISTORY (based on total dollars outstanding)
2004: 4.65% 2002: 4.50% 1998: 5.42% 1994: 3.51% 1990: 3.29% 1986: 4.92% 1982: 3.33%
2003: 4.51% 2001: 4.13% 1997: 5.43% 1993: 3.98% 1989: 3.39% 1985: 3.10% 1981: 3.16%
2000: 3.94% 1996: 4.62% 1992: 4.31% 1988: 3.71% 1984: 2.84% 1980: 3.00%
1999: 4.44% 1995: 3.50% 1991: 4.55% 1987: 3.71% 1983: 3.06%
Source: American Bankers Association Delinquency Bulletin

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