Card Delinquency Still Climbing, But Slowly

Credit card delinquencies, based on total dollars outstanding, edged up slightly to 4.51% during the second quarter, and remain well above last year’s second quarter delinquencies of 4.08%. However, the number of past-due credit card accounts fell slightly to 4.04%, compared to a record high of 4.07% in the first quarter. The data are based on statistics gathered by the American Bankers Association for its quarterly “Consumer Credit Delinquency Bulletin.” The composite ratio of closed-end installment loans 30 days or more past due rose to 2.18% of all accounts from 2.12%, the highest since the fourth quarter of 2001. Home equity loan delinquencies rose to 2.48% from 2.02%, based on the number of accounts. Personal loan delinquencies rose to 3.17% in the second quarter from 3.13% in the previous quarter.

2Q CREDIT CARD DELINQUENCY HISTORY (based on total dollars outstanding)
2002: 4.08% 1998: 4.57% 1994: 3.06% 1990: 3.46% 1986: 3.83% 1982: 3.03%
2001: 4.13% 1997: 5.24% 1993: 3.86% 1989: 3.06% 1985: 2.88% 1981: 2.86%
2000: 3.54% 1996: 4.61% 1992: 4.19% 1988: 3.44% 1984: 2.80% 1980: 3.25%
1999: 4.10% 1995: 3.58% 1991: 4.48% 1987: 3.28% 1983: 2.81%
Source: American Bankers Association Delinquency Bulletin

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Desjardins Group Selects Elix for Voice System Services

Desjardins Group has selected Elix for the implementation of its “AccesD” and VISA Desjardins voice system services. Desjardins will use the “Elix IVS VoiceXML for Windows 2000” interactive voice response platform. Elix’s expertise is used by VISA, Duke Power, ABN-AMRO, IKEA, and Air Canada. The platform also allows the integration of an automated speech recognition system that will facilitate telephone banking transactions for Desjardins’ members.

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Credit Card-Backed Bond Charge-Offs Head North

Credit card asset-backed securities posted charge-offs of 6.78% for the July collection period. This is the first time that charge-offs increased in three months. However, delinquency (60+ day) declined for the fifth consecutive month, falling four bps to 3.40%. But, the delinquency index remains 21 bps above the level one year prior. The stats come from Fitch’s monthly report on card bond performance. Fitch says performance metrics are expected to remain under pressure through year end as consumer credit quality deterioration will continue. Fitch noted that key factors contributing to the deterioration of consumer credit quality are rising unemployment and mounting bankruptcy trends. On the positive side, lingering effects of mortgage refinancings and tax rebates and the persistent low interest rate environment, should help maintain robust consumer spending patterns in the near term.

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Hong Kong and Shanghai Banking Corporation Licensed for International Cards

The State Bank of Viet Nam this week gave permission to the Hong Kong and Shanghai Banking Corporation to issue international credit cards and payment cards in the country. Three months ago, Eximbank and Asia Commercial Bank, for the first time, began issuing credit cards denominated in Vietnamese dongs. International payments cards are also issued by East Asian Bank, the Sai Gon Commercial Bank, and Vietincombank.

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Hypercom Provides Nuts and Bolts of the New BioPay Program

Hypercom said yesterday it is supplying the hardware for the new “bCheck” biometric payment service launched this week in the suburban Washington, DC area. Hypercom is supplying its “ICE” card payment terminals and “BioPIN” finger-scanning pads. VA-based BioPay is using its “bCheck” system, which enables consumers to use their finger image to authorize a debit from a checking account. An initial roll out to nearly two dozen retail locations has just been completed. BioPay says “bCheck” transaction costs are 75% less than the costs of credit card and off-line debit transactions. (CF Library 9/23/03)

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Euronet Acquires AIM to Expand PaySpot in the USA

Euronet Worldwide has acquired the assets of Austin International Marketing and Investments, to expand its U.S. prepaid “PaySpot” program. Kansas City-based AIM currently delivers prepaid card and wireless products through a network of more than 140 independent sales agents representing over 3,500 retail locations. Of those, more than 1,700 locations have electronic distribution of prepaid services via a POS terminal. The assets of AIM were purchased on an “earn-out” basis, with $1.9 million of the purchase price being paid at closing in cash and Euronet stock and the remainder being paid over two years based upon defined financial results of the network purchased. “PaySpot” was launched in 2002 with support from a number of ATM industry partners including Concord EFS, Genpass Technologies and a number of ATM manufacturers including Triton, Tidel, Nextran and WRG. PaySpot has since signed more than 25 independent sales organizations with over 25,000 supported ATMs to market the “PaySpot” program.

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SINSYS

Banksys (Belgium), Interpay (the Netherlands) and SSB (Società per i Servizi Bancari – Italy) have joined forces to create the first pan-European initiative in international card processing. The new Brussels-based SiNSYS joint venture will handle annual volumes amount to 800 million transactions for 18 million cards and 500,000 merchants. Banksys and Interpay each hold a 24.5% interest, SSB holds 51%. SiNSYS services will be opened to other interbank organizations at a later stage. The three companies said the introduction of the euro has facilitated the development of a European market for payment processing. Many national and international processors are now looking beyond their borders for greater cost-efficiencies. The previously local payment systems are converging in their search for (international) IT standardization, economies of scale and stronger commercial relationships with clients.

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Outsourcing to India Among USA financial Services to Grow 20% in 4Q/03

Outsourcing activity among US financial services companies to offshore areas, such as India, will grow by as much as 20% in the 4th quarter according to a new survey. ICICI OneSource and A.T. Kearney estimated that US banks, brokerage firms, insurance companies, mutual funds and other financial services firms will relocate offshore eight percent of their workforce, representing more than 500,000 jobs, over the next five years. These relocations are expected to reduce annual operating costs by more than $30 billion. ICICI OneSource is one of the largest third-party BPO services companies in India, with offshore facilities in Mumbai and Bangalore and international business development offices in New York and London.

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