Retailer Card Fees May Change Australian Consumer Behavior

Citibank released a survey this morning in Australia that shows 80% of consumers would go to another retailer if a store imposed a surcharge. The research bolsters an earlier study released by AC Nielsen for VISA, which found that 39% of credit card holders would prefer to pay by cash if a fee for credit cards is assessed. The “Citibank Credit Monitor” research, released today, also found that more than 30% of credit card holders would stop using their cards if the surcharge practice becomes common. The Citibank study, which involved 300 non-Citibank customers in Melbourne and Sydney, also found that 75% of Australians would switch to cash instead of a credit card, and that 45% would confine their credit cards to major purchases. The VISA/AC Nielsen study for VISA, released in February, found retailers in Australia will lose nearly 30% of the business if they charge a fee for credit or debit card payments. Effective January 1st of this year, merchants in Australia have the right to charge a fee to customers for using a credit and debit card under new rules adopted by Reserve Bank of Australia.

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Fiserv Nails a Deal to Buy the EDS Credit Union Industry Group

Less than one month after negotiations began, Fiserv announced Friday it has inked a definitive agreement under which it will acquire the EDS Credit Union Industry Group for $218 million in cash. The Credit Union Industry Group specializes in core processing and provides a variety of other products and services, including debit card and transaction processing, electronic banking and lending, and online bill payment and presentment services. The business supports about 1,000 credit unions and generates approximately $115 million in annualized processing and services revenues. CUIG employs 450 people. EDS said the sale of CUIG is part of its effort, announced last year, to divest certain non-core, non-strategic assets. Scott Butler, President of CUIG, will continue as President of the unit as part of Fiserv. Fiserv says that if the transaction is approved and completed, it would expect to provide core processing services for about 34% of the credit union segment within the financial services data processing market. In December, Fiserv acquired EDS’ consumer network services business, which provided ATM and transaction processing services, for about $320 million in cash. (CF Library 6/18/03)

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BofA Card Profits Up 77% Over 2Q/02

Bank of America’s pre-tax second quarter credit card profit soared 77% over the year-ago period, and year-to-date is up more than 52% over 2002. BofA says the higher profits were driven by a 9% increase in purchase volume and a 14% increase in outstandings. For 2Q/03 BofA reported pre-tax credit card income of $291 million, compared to $281 million in the prior quarter, and $164 million one year ago. Card outstandings at the end of the second quarter were $30.8 billion, compared to $27.1 billion for 2Q/02. Net managed charge-offs, as a percentage of average managed receivables, was 5.74% for the second quarter, compared to 5.25% for 1Q/03, and 5.59% one year ago. BofA says the increase reflects the growth and seasoning of the portfolio, as well as the impact of the economy. However, delinquency declined in the second quarter. The managed 30+ days delinquency rate was 3.99% for the second quarter, compared to 4.18% in the prior quarter, and 3.78% for 2Q/02. The managed 90+ days delinquency rate was 1.80% for 2Q/03, compared to 1.91% in the first quarter, and 1.76% one year ago. BofA also noted this morning that debit card purchase volume was up 19% for the quarter. For complete details on BofA’s second quarter performance visit CardData ([www.carddata.com][1]).

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

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Eye-D-Signature Launches Facial Recognition Software

Eye-D-Signature has launched facial recognition software for use in the fight against credit card fraud both on the Internet and retail level. Biometric technology, which recognizes an individual’s unique facial features, offers a much higher level of security, as it checks for the presence of an authorized user rather than just checking for a valid ID. Also, using this technology eliminates the need for lost or stolen cards, which reduces fraudulent activity. Eye-D-Signature’s “Certificate for Fraud Detection” is available at 600 e-commerce Web sites that are hosted by Digital Rivers in Eden Prairie, Minnesota.

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Bank One’s Card Business Earns a Rating Upgrade

The overhaul of Bank One’s credit card business is paying off as the card issuer has received an upgrade in its individual rating. Fitch Ratings announced Friday it is moving the individual rating of Bank One, Delaware, NA “B/C” to “B”. Fitch says Bank One’s credit card business has been reinvigorated by new management and the firm has shown its strategic commitment to the business through investment of additional capital for acquisitions and growth, as well as through the more symbolic gesture of aligning the unit’s name with that of its parent. Fitch Ratings downgraded Bank One to “B/C” in January 2000, when the credit card business was struggling and it appeared uncertain that Bank One was committed to the business. Fitch says Bank One’s credit card business is now performing at a considerably higher level and is one of the most important sources of profitability to Bank One Corporation. Bank One is expected to release its second quarter earnings report this week. Bank One reported first quarter net income of $248 million for its Card Services unit, a 4% gain over 1Q/02. (CF Library 4/15/03)

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TRAVEL MASTER-INDEX

The Pacific Asia Travel Association and MasterCard International have launched an outbound travel forecast tool for the Asia/Pacific region. The “MasterIndex of Travel in Asia/Pacific” will provide six-month outbound forecasts for 12 key Asia/Pacific markets: Australia, China, Hong Kong, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan and Thailand. The forecasts will be built on three pillars: 1) the MasterIndex of Consumer Confidence 2) MasterCard’s Asian Lifestyles twice-early report designed to monitor business and personal travel trends across the Asia/Pacific region, and 3) PATA’s database of outbound travel statistics. PATA provides leadership to the collective efforts of nearly 100 government, state and city tourism bodies, over 55 airlines and cruise lines, and hundreds of travel industry companies. In addition, thousands of travel professionals belong to more than 70 PATA Chapters worldwide.

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Prime Hospitality Joins Mileage Plus

AmeriSuites, Prime Hotels & Resorts, and Wellesley Inns & Suites have joined the “United Mileage Plus” program. Members who are also part of United Mileage Plus program will earn one mile per dollar spent in addition to Prime Rewards points on all qualifying stays. In addition, Prime Rewards will be awarding double miles to all Mileage Plus members that stay at any of Prime’s properties through July 31, 2003. All members also receive free local calls, express reservations and check-in, and other hotel-level benefits as well as a newsletter and special promotional offers.

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SWIPE & PARK

Dione plc is supplying its “Swipe & Park” terminals to the Early Learning Centre as part of a roll out of new EPoS and management system across the chain’s 215 retail stores. The “ELC” initiative, which uses the “Power EpoS” from Anker Systems with “Chip & PIN” implementation, is part of a wide scale modernization project. A 10-week roll out will also include new stores in out-of-town developments that will cover over 500 points of sale. The “Power EpoS” from Anker Systems incorporates a Dione “Swipe & Park IC-Xpress” terminal, which has been integrated within specially designed access keyboards. The “IC-Xpress” is also designed to accept a separate PIN entry device from Dione (the Xtreme ) when the customer chooses to adopt PIN.

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AmEx Hands-Out Financial Education Grants

The American Express Foundation awarded $503,773 in grants from its “Economic Independence Fund” to 19 community organizations involved in teaching money management skills, with each grant ranging from $15,000 to $30,000. A diverse range of people from throughout the country will benefit from these financial programs, including refugees learning how to use banking services for the first time, low-income woman building skills to better utilize their household income, teens with English as their second language gaining basic financial skills, and disabled adults establishing a checking or savings account. Since the Economic Independence Fund was established in 2000, American Express has awarded grants to 65 community organizations totaling more than $1.6 million.

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SUMMER TRANSACTIONS

Canadians are staying closer to home this year, heading for campgrounds and amusement parks, but shying away from air travel and eating out. Based on debit and credit dollar spending volumes from the last week of school (on average across Canada), June 21-27, against dollar volume spending from the first week of summer vacation, June 28 to July 4, it appears that more Canadians are heading outdoors this year. Spending at trailer parks and campsites jumped 59% while boat rentals were up 6%. The data also showed that amusement parks were up 48%; aquariums were up 46%; tourist attractions were up 13% and golf courses were up 9%. Based on the data gathered by Moneris Solutions Corporation, the categories that have not yet benefited from the start of summer vacation include restaurants (flat), transportation (down 3%), travel (down 9%) and apparel (down 9%).

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Card Mail Down in 1Q/03 But Response Rates Soar

The latest estimate on credit card direct mail solicitations shows that total volume for the first quarter was down 2% over last year. According to Synovate, 1.19 billion credit card offers were probably mailed in the first three months of this year, compared to about 1.21 billion one year ago. Other tracking firms estimate that only 1.06 billion offers were mailed last year in the first quarter, and that this year was most likely about the same or slightly less. Synovate also estimates that response rate climbed to an incredible rate of 0.9%, compared to 0.5% in the first quarter of last year. Presumably, the increased response was driven by the proliferation of 0% APR offers.

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