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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COF INTL 4Q/03

Capital One posted another profitable quarter for its international credit card portfolio and global financial services on December 31st. 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. 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.

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RBS USA

Britain’s second-largest bank, The Royal Bank of Scotland Group, is expanding its presence in the USA with the purchase this week of the entire credit card business of Connecticut-based People’s Bank. RBS currently owns Rhode Island-based Citizens Bank, which has about 800,000 debit cards, a small business card portfolio, and 1,700 ATMs. Under terms of the People’s deal, RBS will pay a 15.5% premium for the $2.3 billion credit card portfolio. People’s has about 1.1 million credit card customers. People’s began rebuilding its card business four years ago. It posted two consecutive, profitable quarters in the second half of 2003. The portfolio peaked in 4Q/99 with $3.9 billion in card outstandings, and dipped to $1.94 billion in 1Q/03. RBS says it will maintain People’s credit card business employment base in Bridgeport of about 540 people. People’s says it wants to focus on its core retail and commercial banking businesses. The transaction is expected to close this quarter. Average managed card loans for People’s, during the fourth quarter, increased 12% over 4Q/02. Net charge-offs for 4Q/03 were 3.47%, compared to 5.26% for 4Q/02. Delinquencies, as a percentage of quarter-end managed loans, were 2.18%, compared to 3.41% for 4Q/02. The yield on average managed credit card receivables was 7.43% for 4Q/03, compared to 10.55% for 4Q/02.

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VISA’s RED Program Saves Nearly $500MM To-Date

VISA says its “Re-Engineering Disputes” program was the single largest factor in the 38% decline in dispute rates since 2001, resulting in approximately $448 million in fewer losses for merchants and a significant savings for issuing banks. The new “RED” program expedites disputes by increasing automation and communication, streamlining rules and procedures, and using electronic transmission in place of paper documents and the mailbox. Under the program most customer service representatives will be able to assist cardholders within one billing cycle. Eventually, some issuers will be able to offer their consumers access to their dispute resolution information online as well. VISA previously eliminated the requirement for formal written disputes and copies of credit receipts. VISA also reduced dispute categories to 24. (CF Library 8/13/03)

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Citi’s International Card Profits Drop 24% Sequentially

Citigroup’s credit card loans for the EMEA region increased by $600 million during the fourth quarter to $5.2 billion, a 37% gain over one-year ago, partially driven by the acquisition of Diners Europe. However, Citigroup’s overall international credit card profits dropped to $126 million for 4Q/03, a 24% decline from the previous quarter, primarily due to a significant increase in the issuer’s provision for credit losses and costs associated with its expansion into Russia and China. Net charge-offs were 3.84% for 4Q/03 compared to 4.21% one-year ago, according to last week’s issue of CardFlash International ([www.cardflashinternational.com][1]). The 90-day delinquency rate was 1.76%, compared to 1.78% for 4Q/02. Total revenues, for credit cards issued outside North America, came in at $746 million, a 25% increase over 4Q/02. But, the provision for losses increased 47% year-over-year to $423 million, a $94 million increase from the previous quarter. At the end of the year, Citigroup had 15.8 million card accounts, representing $14.7 billion of card loans, in its international card portfolio. Total card volume for the fourth quarter was $11.7 billion, a 29% increase over one-year ago. Latin America card loans increased 25% to $500 million, while Asia (except Japan) increased 17%. Japan posted a 9% increase to $1.2 billion, a two-year high.

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

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Cyota and TSYS Power Providian’s VbV and MSC

Providian is using TSYS and Cyota to provide secure online identification technology for its 10 million cardholders. Providian’s “Verified by Visa” and “MasterCard SecureCode” are available immediately. The anti-fraud service is delivered by TSYS and powered by Cyota’s “SecureSuite.” TSYS implemented Cyota “SecureSuite” in 2001, and has since delivered “Verified by Visa” and “MasterCard SecureCode” services to many of its global clients. “SecureSuite” powered the first “Verified by Visa” program in December 2001, as well as the first “MasterCard SecureCode” program. “SecureSuite” is currently used by eight of the top 12 issuers in the USA and UK.

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