The current Australian consumer credit reporting system is antiquated, and replacing it with a model that captures more comprehensive consumer credit histories could drive down credit defaults by 25% to 63%. A new research report found that the current system, which restricts lenders to accessing only the negative credit history of the potential borrower, unnecessarily allows some Australians to spiral into debt, while denying basic forms of credit to others who do not have a defined credit history. The ACIL Tasman Report, commissioned by MasterCard, found that a comprehensive system would generate a one-off increase in capital productivity of up to 0.1%, which would translate into economic benefits to the Australian economy of up to $5.3 billion, in net present value terms, over the next ten years. Baycorp Advantage, which operates Australia’s largest consumer credit bureau, noted that a comprehensive approach would enable more accurate credit decisions, reduce the level of risk, and, at the same time, apply the same standards of data integrity and privacy protection currently in place. According to the Australian Bureau of Statistics the annual consumer credit market in Australia is valued at around $202 billion and over the past decade the overall rate of growth in consumer credit has averaged more than 14% per annum. ACIL Tasman says Australia stands at odds with the rest of the world by maintaining its current credit reporting regime. The sharing of comprehensive credit information now extends to more than 40 countries, including most countries in the OECD and the Asia-Pacific region. Earlier this year India became the most recent economy to transition to a more comprehensive credit reporting system, joining countries like the USA, UK, Singapore, Hong Kong and Canada.Details
The U.S. Supreme Court yesterday unanimously ruled that credit card over-limit fees are not finance charges. The decision overturned a U.S. appeals court ruling that card issuers must disclose over-limit fees as part of the finance charges. The case involved a class action lawsuit brought against Household Bank and MBNA which claimed that over-limit fees violated the Truth in Lending Act. The litigation did not consider whether over-limit fees were legitimate if the issuer authorized the excessive charges, or charged an over-limit fee when monthly finance charges push the account into an over-limit situation. Washington, DC-based Consumers for Responsible Credit Solutions responded that Congress should now pursue new regulations on creditor practices, examining whether credit card fee policies are abusive.Details
Texas Instruments has introduced the “S4100 Multi-Function Reader Module” which accepts all “ISO/IEC 14443” and “ISO/IEC 15693” standards-compliant 13.56 MHz RFID transponders, while providing an easy migration path to support current tags not fully compliant to these standards. Texas Instruments, a leading integrated manufacturer of RFID technology, has responded to this end-user need with its S4100 Multi-Function Reader (MFR) Module. TI’s Multi-Function Reader Module is easy to integrate into existing infrastructures and supports multi-applications such as payment, loyalty and many smart label applications. Texas Instruments is an industry leader in radio frequency identification (RFID) technology and the world’s largest integrated manufacturer of RFID tags, smart labels and reader systems.Details
IL-based APAC Customer Services, a major credit card telemarketing firm, reported a net loss of $1.7 million on revenue of $71.4 million for the first quarter. One-year the firm reported net income of $2.1 million on revenue of $86.2 million. APAC says the decline in revenue from the first quarter of 2003 resulted from a cutback in consumer marketing by several financial services clients, partly in response to the roll out of the national do-not-call registry last October. APAC also announced that it has been awarded a “Gold MVP (Marketing Via Phone) Quality Award” from Customer Inter@ction Solutions magazine. This is APAC’s second consecutive gold MVP and seventh MVP quality award ranking since the inception of the award eleven years ago. APAC employs approximately 10,200 people and maintains 27 customer interaction centers. For complete details on APAC’s first quarter performance visit CardData ([www.carddata.com]).
VA-based BioPay reported this week that more than one million consumers have now enrolled in its electronic biometric identification systems to pay for purchases and cash payroll checks. To-date BioPay has completed nearly 7.5 million transactions worth $3 billion dollars. Under the program, consumers simply needs to put their finger on the electronic scanner to verify their identity, make a payment, or confirm their check cashing history. Using “Paycheck Secure,” merchants can easily confirm a person’s check cashing history before a transaction is completed. If negative information is noted, the transaction can be cancelled. BioPay’s biometric payment service costs about $0.15 per transaction. BioPay began shipping “Paycheck Secure” in June 2000. BioPay began offering its biometric payment service in September 2003.Details
First Data reported this morning that first quarter revenue increased 14% to $2.3 billion, and net income from continuing operations zoomed by 65% to $480 million. Payment Services and Merchant Services revenues grew by double digits, but all three units posted solid double digit gains in operating profits. First Data reports that Payment Services grew revenue 14% and operating profits 17%; Merchant Services grew revenue 28% and operating profits 25%; and, Card Issuing Services grew revenue 4% and operating profits 31%. Payment Services delivered first quarter revenue of $958 million and operating profits of $329 million. Merchant Services produced first quarter revenue of $744 million and operating profits of $154 million. Card Issuing Services posted first quarter revenue of $558 million, and operating profits of $98 million. As a result of its recent acquisition, Concord’s former “Network Services” businesses — primarily “STAR” network access and processing services — have been split between the Merchant Services segment (when revenues are driven by acquiring activities) and the Card Issuing Services segment (when revenues are driven by issuer activities). Concord’s revenue for 35 days was $128 million. It added revenue of $92 million to Merchant Services, $30 million to Card Issuing Services and $6 million to Payment Services. For complete details on First Data’s first quarter performance visit CardData ([www.carddata.com]).
FDC NET INCOME (Continuing Operations)
1Q/03: $290.8 million
2Q/03: $353.8 million
3Q/03: $380.8 million
4Q/03: $397.7 million
1Q/04: $479.9 million
Source: CardData (www.carddata.com)
Alliance Data Systems reported that first quarter revenue increased 30% to $312.4 million and that net income increased 163% to $32.3 million. The Company’s performance significantly exceeded expectations due to over-performances in all three of its major businesses. Transaction Services revenue increased 20% in the first quarter compared to 1Q/03, to $171.6 million. Credit Services revenue increased 30% in the quarter to $142.2 million. ADS says both private label credit sales and portfolio growth grew at a rate in the mid to high teens as the significant number of signings in the last two years continued to ramp up. Marketing Services revenue increased 35% to $80.4 million compared to first quarter 2003. “AIR MILES” reward miles issued increased 9%, and “AIR MILES” reward miles redeemed increased 27% during the quarter. The Company expects cash earnings per share for the second quarter to be $0.31 – $0.32, or approximately 30% to 33% growth over 2Q/03. For complete details on ADS’ first quarter performance visit CardData ([www.carddata.com]).
Delinquency (60+ days), among card-backed securities, dropped to 3.35% in March, and continues to remain stable. However, prime charge-offs jumped 30 basis points from February to 6.75%. After three consecutive months of improved performance, sub-prime charge-offs reversed ground, climbing 64 bps to 17.27%. However, sub-prime charge-offs were 163 bps below the level a year ago, according to the “Fitch Credit Card Index.” Yield, after reaching an all-time low last month, climbed 124 bps for March to 17.10%, its highest level since April 2003. Excess spread rose 36 bps to 6.41%, also 36 bps above the year-ago level. The monthly payment rate fell for the first time since December, sliding 64 bps to 15.95%. Bankruptcy filings reported for the month of March totaled 152,567. Year-to-date bankruptcy filings were 392,023, down 1.2% from the same time last year.Details
J.P. Morgan Chase this morning reported that operating earnings for its card business increased 11% in the first quarter, volume gained 6%, and credit card outstandings were relatively flat compared to one-year ago. Charge-offs edged upward, but delinquency declined, compared to the previous quarter. Operating revenues on a managed basis were $1.6 billion, up 7%, driven by 15% growth in purchase volume. Expenses of $605 million for the quarter were up 12%, reflecting higher marketing and severance and related costs. Operating earnings for the first quarter were $162 million, compared to $146 million one-year ago. Charge-offs came in at 5.80%, compared to 5.76% in the previous quarter, and 5.95% one-year ago. Delinquency (30+ days) declined 25 basis points over the fourth quarter to 4.43%. Delinquency for 1Q/03 was 4.59%. Charge volume for 1Q/04, which includes total customer purchases, cash advances and balance transfers, was $22.0 billion, compared to $20.7 billion for 1Q/03. Chase reported that it signed up about one million new accounts in the first quarter. The issuer ended the quarter with 30.8 million gross card accounts and 16.5 million active card accounts. For complete details on Chase’s first quarter performance visit CardData ([www.carddata.com]).
Fiserv EFT/CNS and Credit Union Service Corporation have inked a contract that enables Fiserv to become the initial third-party processor to certify and be granted access to the CUSC “Next Generation Network” switch. With the agreement, Fiserv and CUSC are implementing a business plan that provides significant benefits to the credit union market by combining extensive technology resources and nationwide service reach. CUSC Credit Union Service Corporation is the credit union movement’s largest shared-branching network, representing 55 percent of all national locations and 68 percent of credit unions participating in shared branching. Fiserv, Inc. provides information management systems and services to the financial industry, including transaction processing, business process outsourcing and software and systems solutions.Details
Certegy this morning reported that first quarter revenues grew nearly 10% to $263.4 million as net income increased $8.5 million to $20.7 million. Card Services generated revenue of $162.7 million in the first quarter, an increase of 3.5% above the 2003 quarter. Merchant processing revenue increased by 7.4% and international card issuing revenue declined 17.8% during the quarter. Check Services generated revenue of $100.7 million in the first quarter of 2004, an increase of 21.3% over the 2003 quarter. Certegy’s global card base was 46.8 million at quarter-end. A 16.4% increase in debit transactions contributed to overall domestic card transaction growth of 9.6%. During the quarter, Certegy acquired Crittson Financial and Game Financial Corporation. The Company also revised its outlook upward, with revenue expected to grow by 13% to 15% in 2004, compared with prior year. For complete details on Certegy’s first quarter performance visit CardData ([www.carddata.com]).