Advanta Pays Fleet $63MM to Close Card Dispute

Advanta is paying FleetBoston $63.7 million in regard to disputes pertaining to Fleet’s acquisition of Advanta’s credit card portfolio in 1997. Delaware State Court Judge William B. Chandler III awarded Fleet $119.3 million and Advanta $75.8 million. The court added $20.2 million in interest to the Advanta deficit of $43.5 million. In its lawsuit, Fleet alleged that Advanta “breached its fiduciary duty” and sought an “accounting for conversion of funds”. Fleet said Advanta failed to disclose interest rate coding problems on accounts and understated some liabilities. Advanta filed a counterclaim alleging that Fleet was stealing its customers. Advanta signed an agreement in October 1997 to sell the bulk of its $10.5 billion credit card portfolio to Fleet for $532 million. (CF Library 10/29/97; 1/25/99)

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MasterCard Adds 5MM US Accounts as Volume Slows

MasterCard International yesterday reported that its U.S. gross dollar volume for the fourth quarter increased 4.1% over last year to $169.2 billion, compared to a 4.9% annual growth rate for the prior quarter. During the fourth quarter MasterCard added nearly three million credit card accounts, and two million debit card accounts. Credit card volume was up 4.8% to $137.8 billion, and debit card volume increased 1.1% to $31.4 billion. Combined purchase volume for U.S. credit and debit cards in the fourth quarter increased 8.2% to $132.6 billion, compared to one-year ago. At the end of the fourth quarter MasterCard had 215.7 million credit card accounts representing 272.6 million cards. Debit card accounts stood at 47.5 million representing 53.4 million cards. During the quarter MasterCard processed 1.3 billion credit card transactions and more than 500 million debit card transactions in the USA. For complete details on MasterCard’s 4Q/03 results visit CardData ([www.carddata.com][1]).

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

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Capital One’s International Portfolio Profits Dive in Q4

Capital One posted another profitable quarter for its international credit card portfolio and global financial services in the fourth quarter. However, profits nose-dived from $21.0 million in the third quarter to $3.3 million for 4Q/03. One-year ago Cap One reported a $58.8 million profit for its international activities, according to this week’s issue of CardFlash International ([www.cardflashinternational.com][1]). Since the fourth quarter of 2002, Capital One’s international portfolio outstandings have grown 39%, from $11.9 billion to $16.5 billion. Charge-offs for the fourth quarter of this year was 3.69%, compared to 3.78% in the third quarter, and 3.79% one year ago. International delinquency for the fourth quarter of this year was 2.70%, compared to 2.87% in the third quarter, and 3.08% one year ago. Capital One has operations in the United Kingdom, Canada, South Africa and France.

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

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Card Profits for Top Issuers Up 17% in the Fourth Quarter

Credit card profits among the nation’s largest issuers grew an average of 17% in the fourth quarter. MBNA led the pack with a 30% surge in profits, followed by Chase with a 25% increase in card operating income. Citigroup posted its first billion dollar profit quarter in 4Q/03 thanks to its acquisition of the Sears card portfolio in November. The nation’s top three issuers, ranked by card loans, raked in $2.2 billion in fourth quarter profits, while seven top issuers collectively produced $3.6 billion in 4Q/03 profits. On the other end of the scale, Bank of America’s card profits were up 3%, and Bank One produced an 8% gain in net income. In the middle, but below the group average, is Capital One with an 11% increase, and American Express with a 10% gain over 4Q/02. For complete details on 4Q/03 portfolio performance visit CardData ([www.carddata.com][1]).

PROFIT SNAPSHOT
ISSUER 4Q/03 4Q/02 CHNG
Citigroup $1140 $931 +22%
MBNA $704 $540 +30%
AmEx $606 $550 +10%
Bank One $347 $321 + 8%
BofA $323 $313 + 3%
Cap One $266 $240 +11%
Chase $171 $137 +25%
TOTAL: $3557 $3032 +17%
$millions Source: CardData (www.carddata.com)

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

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Three Major Hotel Chains Offer Enhanced MasterCard Data

Carlson Hotels Worldwide, Choice Hotels International, and Hilton Hotels will deploy MasterCard’s suite of enhanced data management solutions to provide detailed transaction information to MasterCard corporate card accountholders. Corporations whose business travelers use MasterCard corporate payment cards while staying at one of more than 6,000 participating properties, including Carlson, Choice, Hilton, and select other properties, can now have enhanced hotel expense data, including itemized expenses incurred during the hotel stay, electronically-delivered to their expense management systems. MasterCard International is a leading global payments solutions company that provides a broad variety of innovative services in support of our global members’ credit, deposit access, electronic cash, business-to-business and related payment programs.

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Lower ABS Delinquency Points to Lower Charge-Offs

Prime charge-offs, among card-backed securities, rose for the first time in four months during the November collection period. However, delinquency edged downward for the second straight month, alleviating some of the pressure on charge-offs. According to the “Fitch Credit Card Index,” charge-offs increased 41 bps to 6.67%, 39 bps above year-ago levels. Fitch’s 60+ day delinquency index decreased five bps to 3.40%. Additionally, delinquencies moved 14 bps below year-ago levels. Bankruptcy filings reported for the month of December totaled 113,383. Year-to-date bankruptcy filings for 2003 registered 1,615,967, up 5.50% from 2002. Fitch also reported that its yield and payment rate indexes moved lower for the November collection period as a result of day count mechanics. Yield slid 16 bps to 16.47% and remains 29 bps below year-ago levels. After reaching the highest level since April 2000, the monthly payment rate retreated 173 bps to 15.27% for the November collection period yet remains 60 bps above year-ago levels.

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FTC Settles with An Operation Protection Deception Defendant

The FTC fined First Capital Consumers Group $250,000 for TSR violations in the telemarketing of advance-fee credit cards. The FTC has approved a stipulated final consent order in settlement of charges filed against Leslie Anderson through “Operation Protection Deception” in 2000. The FTC’s complaint against Anderson and several other defendants, collectively referred to as First Capital Consumers Group, alleged the defendants violated Section 5 of the Federal Trade Commission Act and the Telemarketing Sales Rule while telemarketing advance-fee credit cards to U.S. consumers.

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7-Eleven Distributes AT&T RealRhapsody Card

7-Eleven announced the roll-out of the “RealRhapsody Card,” which uses the AT&T “PrePaid Web Cents” technology to provide access to an Internet jukebox service. The RealRhapsody card, available at participating 7-Eleven stores for $14.95, will provide consumers with one month of access to RealRhapsody’s enormous music library and the ability to build a personal collection of tunes by being able to burn 15 songs. RealRhapsody ( ) is the number one Internet jukebox service, offering unlimited access to a vast library of more than 35,000 albums for a monthly fee.

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Bank One Offers Easiest Online Card Application

Bank One, Juniper, and Providian ranked as the top three credit card Web sites with the easiest online application process. The ranking, by NY-based Change Sciences Group, compared the filling out of personal and financial information, the checking of card terms and conditions, and making balance transfers. The most common barriers to ease of use were awkward attempts at cross-selling, forcing customers to navigate complex legalese and banking jargon, adding extra steps, and too much data entry. Change Sciences says over nine million customers have applied for credit cards online last year. The nation’s top issuers ranked poorly in the survey. Citibank was ranked #14, MBNA ranked #12, American Express #11, and Chase #13.

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AFFN Renews ATM/POS Gateway Contract with Fiserv

The Armed Forces Financial Network has renewed its network switching services contract with Fiserv EFT/CNS through 2008, for 53,000 ATMs and POS terminals located at U.S. military commissaries. Under the agreement, Fiserv EFT/CNS will continue to provide comprehensive automated teller machine and point-of-sale gateway services for AFFN. AFFN is a global electronic funds transfer system formed to provide all U.S. military personnel — active, reserve, dependents and retired — with ready access to their funds through ATM and POS terminals located at or near U.S. military bases worldwide. Fiserv, Inc. provides industry leading information management systems and services to the financial industry, including transaction processing, outsourcing, business process outsourcing and software and systems solutions.

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NPC Signs a Card Processing Contract with Mimi’s Cafe

National Processing Company has inked a multi-year credit card processing agreement with CA-based, privately-owned Mimi’s Cafe and its 82 bistro-like dining establishments across the country. Each restaurant features American dishes, made-from-scratch, in a vibrant New Orleans inspired atmosphere. National Processing, Inc. through its wholly owned operating subsidiary, National Processing Company, LLC is a leading provider of merchant credit and debit card processing.

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GlobalPlatform Schedules Two Smart Card Seminars in Asia Next Month

GlobalPlatform, a smart card infrastructure organization has scheduled two educational seminars in Asia during February. The aim of the seminars is to provide leading Asian smart card players with detailed information on GlobalPlatform implementations within the finance, government, mobile telecom, public healthcare, and transit industries and to drive adoption of GlobalPlatform technology in this geographical region. The seminars are scheduled for Tokyo on February 10th, and for Taipei on February 12th. This will be the third year that GlobalPlatform has held a seminar in Japan and already over 200 delegates have registered for the event. The inaugural Taiwanese seminar will be held at the Sheraton Taipei Hotel. Currently, there are over 20 GlobalPlatform-based smart card implementations world-wide and approximately 50 million GlobalPlatform cards are in global circulation. The group has more than 50 cross-industry member organizations.

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