Cap One’s December Charge-Offs Hit Lowest 03 Level

Capital One reported that its delinquency rate leveled off in December after a six month decline. Charge-offs also declined during December to their lowest level for 2003. With $71.2 billion in managed loans, and approximately $46 billion in U.S. credit card loans, the issuer reported that charge-offs dropped to 5.10% in December, compared to 5.57% in November, and 5.30% in October. Delinquency stayed at 4.46% in December and remains at a 2003 low. Delinquency for October was 4.52%. At the end of fourth quarter, Cap One had 46.7 million accounts, including domestic and international credit cards and auto loans. For complete details on Capital One’s 4Q/03 performance visit CardData (www.carddata.com).

Capital One 2003
Month Charge-offs Delinquency
Apr 03 6.36% 4.86%
May 03 6.40% 4.82%
Jun 03 6.20% 4.95%
Jul 03 5.75% 4.92%
Aug 03 5.34% 4.74%
Sep 03 5.24% 4.65%
Oct 03 5.30% 4.52%
Nov 03 5.57% 4.46%
Dec 03 5.10% 4.46%
Source: CardData (www.carddata.com)

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Credit Card Solicitations Fall 17% Last Year

Direct mail credit card solicitations declined 17% last year. MINTEL’s Comperemedia says consumers received almost 750 million fewer credit card offers in 2003 compared to 2002. This is despite the fact that credit card estimated mail volume increased by 4% in November compared to October. During November, Comperemedia found that the amount of time the introductory rate was applicable decreased compared to previous months and is more likely to be for six to seven months, compared to 12+ months as seen earlier in the year. Balance transfer offers continue to be prevalent as well, and some offers have rates that are applicable until the customer pays off the entire transferred balance. The interest rates on these balance transfers are higher, with the majority falling between 2.99 and 3.99%. Rates on life of balance offers have been lower over the past two months, falling to as low as 2.99, from up to 7.99%. Late fees increased over the past few months; 64% of all offers tracked in November had a late fee of $35 and 17% had a late fee of $39.

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Third-Party ACH Processors Bound by NACHA Rules

NACHA has approved an amendment to its “Operating Rules,” effective December 10th, which requires third-party processors to be bound by its rules. The new rule will require agreements that specifically bind third-parties to the NACHA Operating Rules when a third-party’s customer does not have such an agreement with the originating financial institution (ODFI). The rule becomes effective December 10, 2004. NACHA is the leading organization in developing electronic solutions to improve the payments system.

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NYCE Sues Concord EFS Over Routing Rules

NYCE has filed a lawsuit against Concord EFS for breach of routing agreement. NYCE charges that Concord violated a 1993 agreement and engaged in other unlawful conduct as a result of certain operating rules it has adopted and is attempting to enforce. Those rules generally require that POS transactions conducted with cards branded with NYCE and STAR at similarly branded POS terminals, be routed to Concord’s STAR-branded network, even if the card issuer has designated that the transaction be routed to the NYCE network. According to NYCE, the 1993 agreement obligates NYCE and the Concord entities to permit financial institutions that participate in both EFT networks to direct how POS transactions using their cards are routed. The agreement established a precedent for issuer designation and honoring of network priority routing. The complaint was filed in Superior Court of the State of New Jersey.

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Global Axcess Attracts New Funding

FL-based Global Axcess has completed a private placement of $2.4 million, instead of the $2.0 million it was originally seeking. The investor group was comprised of approximately 50% institutional and 50% accredited investors. The terms of the private placement provided for the sale of 4,800,000 units at a price of $.50 per unit. All common shares associated with this private placement are restricted in accordance with Rule 144 of the Securities Act of 1933, requiring a minimum holding period of 12 months. Global Axcess Corp. was founded in 2001 with a mission to emerge as one of the nation’s leading network-based electronic commerce and transaction processing companies.

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Government Loosens Credit Card Rules Next Month

The Monetary Authority of Singapore is implementing three modifications to its credit card rules for financial institutions. The new rules will go into effect on February 19th. Card issuers will be permitted to mail out
unsolicited upgraded credit cards in the mail to existing customers. The MAS is also ending its limit on the number of supplementary cards that can be linked to one account. The current limit is two supplementary cards. In the third new modification, young Singaporeans who are under the age of 21 and studying overseas will be able to use a supplementary credit card. The total number of cards in the country at mid-year was 3.3 million, which included 2,295,027 primary cards and 992,555 supplementary cards.

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Strategy Science Empowers the New Marks & Spencer Money MasterCard

The new “Marks & Spencer Money &more Credit Card” has successfully applied Fair Isaac’s new “Strategy Science” methodology. Marks & Spencer Money utilized “Strategy Science” to develop optimal customer treatment strategies while migrating more than two million charge card holders to its newly launched credit card. The new Fair Isaac technology improved the customer acquisition process by allowing the issuer to prioritize thousands of combinations of marketing ideas quickly and efficiently, determine the best offer for each customer, assign the optimal initial credit lines and meet overall business objectives. Marks & Spencer Money has also signed an agreement to utilize the “Strategy Science Pre-Configured Application” for ongoing credit line management on their portfolio. “Strategy Science” is currently in use in more than 50 projects at 30 financial institutions throughout the world. Fair Isaac says that to date, six of the top 10 North American credit card issuers and three of the top five United Kingdom banks have already achieved significant bottom-line benefits through the use of “Strategy Science.”

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FIRSTBANK & MBNA

FirstBank Puerto Rico sold its $175 million bank credit card portfolio to MBNA and entered into a long-term agent contract. There are approximately 1.8 million credit card users in the country which has a total population of 3.9 million. The average annual charge volume per account in Puerto Rico is $1,600. Cardholders in the country owe nearly $4 billion on their card accounts, with the average balance of about $2,200. FirstBank will become the only Puerto Rico-based financial institution whose credit cards will be issued by MBNA. FirstBank, operates 96 financial services facilities throughout the country, and is the second largest bank in Puerto Rico, with assets of more than $12 billion. MBNA also issues credit cards in the United Kingdom, Ireland, Canada, and Spain.

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BCGI Releases Version 10 of Prepaid Wireless

Boston Communications Group has released “Prepaid Wireless v10” which now provides enhanced support for the creation of flexible payment profiles, allowing carriers to configure the payment options available to subscribers, including support for cash, debit, and credit card payments, and manage all customer payment profile information within a single solution. With these enhancements, Prepaid Wireless version 10 gives carriers and resellers/MVNOs the ability to deliver multiple differentiated, high-value offerings within a single market and target new customer segments. bcgi Prepaid Wireless provides industry-leading support for prepaid services through real-time network control of voice and data sessions and events, and real-time transaction-based subscriber management capability. Boston Communications Group, Inc. is a leader in transaction processing solutions for real-time wireless subscriber management, payment services, billing and customer care.

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Pilot Launched for Contactless Credit Card Payments via Mobile Phones

For the first time, a credit card payment service has been made available for mobile phones with a contactless chip in Japan. JCB is offering a trial service for “Mobile Offica,” a contactless chip and mobile solution that offers corporations cashless payment and office access control functions through NTT DoCoMo’s “i-mode FeliCa Preview Service” for mobile phones. Built around Sony’s widely-used “FeliCa” contactless IC chip technology, “Offica” offers a diverse menu of functions including office access control, employee attendance tracking and network authentication as well as a cashless purchasing function that is more advanced than older prepaid card systems. The “Offica” solution also offers postpayment capabilities, linking the employee’s spending at the office to his or her own credit card account. This allows employees to earn loyalty points on office-related purchases, and eliminates the burden on companies of administering cash and equipment to load value onto cards.

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Travelocity and MasterCard Renew Cruise Promotion

Travelocity and MasterCard have renewed their winter promotion offering up to $400 cash-back in the form of a “Prepaid MasterCard Gift Card” for cruises booked through February 26th. From the sandy beaches in Mexico, to the snow-capped mountains of Alaska to the romantic coastal locales of Europe, Travelocity’s fifth annual Cruise Super Sale has affordable cruise vacations for all cruisers — from rookies riding the high seas for the first time to the seasoned cruising pro looking for a new adventure. Travelocity pioneered the online travel space and continues to be the most popular travel service on the Web, giving consumers access to hundreds of airlines, thousands of hotels and cruise, last-minute and vacations packages, and best-in-class car rental companies, all backed by 1,000 customer service representatives staffed to provide 24- hour assistance. 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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Diebold Gets New President/COO Next Week

Diebold has named Eric Evans, formerly of Emerson, as president/COO, effective January 26th. As president and COO, Evans will be responsible for the company’s global operations in financial self-service and security, including all related functions in sales, service, and manufacturing. Evans spent 16 years at Emerson, most recently leading a $1.2 billion business group at Copeland in Emerson’s Climate Technologies business. Diebold, Incorporated is a global leader in providing integrated self- service delivery systems, security solutions and services. Diebold employs more than 13,000 associates with representation in more than 88 countries worldwide and is headquartered in North Canton, Ohio, USA.

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