Israel’s OTI Posts Higher Profits, Lower Losses in 2Q/03

The Israeli firm On Track Innovations reported that revenues for the second quarter were $5.0 million, compared to $4.7 million for the prior quarter, and $5.5 million for the second quarter of 2002. Gross profit for the second quarter was $2.9 million up from $2.4 million in the prior quarter and $2.3 million in the second quarter last year. However, for first half of 2003 gross profit was up 24% to $5.3 million, and operating losses declined 46% to $1.1 million. OTI says that during the first half of 2003, OTI made strong progress in petroleum payment management, mass transit, ID security/access control, and micro-payments. During the second quarter, the Company announced that ABSA, the largest commercial bank in South Africa, with the largest fuel card customer base in the country, has joined OTI’s “FuelMaster Express” program that is geared towards private motorists. OTI is also providing integrated point-of-sale solutions to Loews Cineplex as part of MasterCard’s “PayPass” trial in Orlando, Florida. For complete details on OTI’s second quarter performance visit CardData ([www.carddata.com][1]).

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

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BLACKOUT VOLUME

The August 15th blackout in Canada deeply impacted credit card activity across Ontario. Province-wide, total dollar volumes were down 29% on Friday, August 15 compared to the previous Friday. Most of the sectors that make up the retail category experienced an average 40% decline in dollar volume. However, within the retail category, gas stations and convenience stores increased 30%. Moneris Solutions Corporation also found that the services sector, which includes the health, financial, insurance and utilities industries experienced a 41% decline in total dollar volumes processed. Moneris estimates that spending across Ontario on Friday, August 15 was down $100.4 million compared to the
Friday previous.

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Delinquency Declines for Nine of the Top Ten Issuers

In a sign that credit quality is slowly improving in the card industry, delinquency for the second quarter, among the top VISA and MasterCard issuers, declined 26 basis points over the first quarter to 6.18%. However, compared to one-year ago, delinquency rates (30+ days) have climbed 32 bps, from 5.86%. All but one top issuer reported a decline in delinquency rates during the second quarter. FleetBoston reported that its delinquency rate edged up by 6 bps to 3.89%, compared to the first quarter. The largest declines were experienced by Providian and Sears National Bank. Meanwhile, American Express reported that its 2Q/03 delinquency rate fell to 2.7% from 3.1% in the first quarter, and 3.1% in 2Q/02. Discover reported its over-30-day delinquency rate increased 58 basis points to 6.21%, and the over-90-day delinquency rate increased 36 basis points to 3.01%, compared to the second quarter of 2002. For more historical information on delinquency rates visit CardData (www.carddata.com).

TOP TEN VISA/MASTERCARD ISSUERS –
QUARTERLY DELINQUENCY

DAYS 2Q/03 1Q/03 CHNG
1. Citigroup: 90+ 1.86% 1.91% – 5 bps
2. MBNA: 30+ 4.46% 4.74% -28 bps
3. Bank One: 30+ 3.95% 4.08% -13 bps
4. Chase: 30+ 4.40% 4.59% -19 bps
5. Cap One: 30+ 4.83% 4.97% -14 bps
6. Providian: 30+ 9.72% 10.31% -59 bps
7. BofA: 30+ 5.79% 6.09% -30 bps
8. Fleet: 30+ 3.89% 3.83% + 6 bps
9. Sears Natl 30+ 7.41% 7.87% -46 bps
10. Dir Merch: 30+ 11.20% 11.50% -30 bps
30+ DAY AVG*: 6.18% 6.44% -26 bps
NR- not reported * 90+ day is not meaningful
* does not include Household which is now part of HSBC
SOURCE: CardData (www.carddata.com)

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CIBC 2Q/03

CIBC reports that its card revenues dropped slightly from C$324 million in the first quarter to C$311 million. However, year-over-year, CIBC’s card revenues increased slightly from C$308 million. Canada’s #1 credit card issuer says that while volume dipped, card balances were up. CIBC also reported that its provision for credit losses for the quarter was $425 million, up from $248 million in the prior quarter. Credit card losses represented 69% of the $126 million in the consumer provision for credit losses for the quarter and 68% of the year-to-date consumer provision for credit losses of $396 million.

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NCR Gets Gulf Coast Distribution Deal

Houston-based Texas P.O.S. has inked a deal, through ScanSource, to resell NCR “RealPOS” workstations and peripherals to the restaurant market. Texas P.O.S. has been providing point-of-sale solutions for ten years throughout the Gulf Coast area and in other parts of the United States. The company delivers a turnkey installation that includes software integration, wiring, programming, training, equipment installation and live standby coverage.

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QANTAS AMEX CARD

Qantas Airways has teamed with American Express to launch the first corporate card offering cash rebates on air travel charges. Under the new Qantas/AmEx corporate card program, companies receive an annual cash payment of between 2% and 5% of qualifying air spend on Qantas domestic tickets charged to the card, provided the company spends more than AUD$20,000 annually with Qantas. The new “AmEx Qantas Corporate Card” is targeted at Australian-based small and mid-sized companies with 25 to 1000 employees that spend a minimum of AUD$50,000 on annual travel, entertainment and business-related expenses. Qantas has also introduced a new “Qantas Club Business” membership rate. When four or more employees become members, they will receive substantial discounts on annual fees. Annual fees are based on a sliding scale.

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VISA Launches Ad Campaign for Small Businesses

VISA is launching a TV and print ad campaign this morning to show VISA’s commitment to supporting small-businesses. The new ads features the two owners of C&C California Clothing, Claire and Cheyann. The ad will show how “VISA Business” provides cash flow management and expense tracking to small businesses. The TV ad was created by BBDO West in San Francisco. The TV ad will break on ABC, CBS, CNN and FOX today. The campaign also includes three print ads that display VISA small business resources.

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MENATAP VBV

St. Petersburg-based Bank Menatep is planning to offer the “Verified by
Visa” payment authentication service to its online merchants.
The Menatap “VbV” program is the result of a deal between the bank and
Belgium-based OpenWay Group and Texas-based iBIZ Software.
OpenWay and iBIZ have jointly developed the “Way4CommerSafe” payment
authentication service for both issuers and acquirers. Menatap is their
first customer. “Way4CommerSafe MPI” is an integrated product suite for
Internet payment acquirers. “Way4CommerSafe ACS” is an integrated product
suite that allows issuing banks and processors offer secure, real-time
authentication of cardholder transactions while they are online with
Internet merchants. Bank Menatap is one of the 20 largest banks in Russia
and is a “Principal Member” of VISA & MasterCard.

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AmEx and Qantas Launch Corporate Card

Qantas Airways and American Express have launched the first corporate card in Australia offering cash rebates on air travel charges. Under the new Qantas/AmEx corporate card program, companies receive an annual cash payment of between 2% and 5% of qualifying air spend on Qantas domestic tickets charged to the card, provided the company spends more than AUD$20,000 annually with Qantas. The new “AmEx Qantas Corporate Card” is targeted at Australian-based small and mid-sized companies with 25 to 1000 employees that spend a minimum of AUD$50,000 on annual travel, entertainment and business-related expenses, according to CardFlash International. Qantas has also introduced a new “Qantas Club Business” membership rate. When four or more employees become members, they will receive substantial discounts on annual fees. Annual fees are based on a sliding scale.

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Moody’s Says Delinquency and Charge-Offs Rise in June

Moody’s Investors Service reported yesterday that June’s credit card delinquency rate, among credit card-backed securities, increase to 5.12% compared to 4.93% one year ago. The charge-off rate for June also increased to 6.87% compared to 6.46% one year ago. On a quarterly basis Moody’s reports that the delinquency rate for the second quarter increased was 5.20% and the charge-off rate was 6.97%. However, payment rates rose in June to 15.20%, compared to 14.31% for June 2002. For 2Q/03, the payment rate increased to 15.02%, up from 14.86% percent for 2Q/02.

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VISA’s Movie-Related Volume Climbs 49% in July

VISA reported that nationwide sales at movie theatres reached $114 million in June, up 36% over the same period last year. In July, VISA movie-related volume was up 49% to $128 million. The huge increases come at a time when movie sales have been soft. According to box office tracker Exhibitor Relations, 2003 summer movie ticket sales have fallen by 3.3% over last summer. VISA says the volume is being driven by a number of factors including services such as Fandango and Movietickets.com that enable consumers to purchase movie tickets in advance.

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Oasis Powers Sears Canada Card Processing

Toronto-based Oasis Technology has successfully implemented its “IST/Switch” software for Sears Canada’s gift card and credit card payment processing services. Sears Canada has implemented Oasis IST/Switch software to provide switching and transaction authorization capabilities for Sears gift cards and Sears branded credit cards. IST/Switch is an open platform transaction processing solution that allows Sears Canada to route in-store, telephone and online card payments to third party payment processors for transaction authorization. Sears Canada operates 122 department stores and a wide range of specialty stores across the country, including 43 Sears Home stores, 143 locally owned dealer stores and 15 outlet stores.

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