Mileage Plus 1Q/03

A new study has found that interest in the “United Airlines/Bank One Mileage Plus VISA” card has dropped sharply from its August 2002 peak, as the airline struggles financially. The research revealed that credit card applications for the co-branded frequent flyer card declined 19% in the first quarter and, on a monthly basis, application volume in March was less than half its August 2002 peak. Boston-based Compete Inc. says the introduction of the “More Miles” program in January temporarily rejuvenated interest among credit card consumers. However, the volume of interested credit card consumers was short-lived, and continued to slide in February and March down to about 40% of its August 2002 level. By contrast, the number of prospects for Citibank’s “AAdvantage” card rose 24% from August 2002 through March 2003. Compete uses predictive analytics to monitor 10 million online consumers daily. During the first quarter, Bank One opened 1,037,000 new accounts, compared to 1.3 million in the fourth quarter. (CF Library 4/15/03) However, Bank One says the number of new “Mileage Plus” credit card accounts generated through the Internet are actually higher than ever. The issuer also says the United portfolio is healthy in both dollar and transaction volume.

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BOCC ATMS

Beijing-based Bank of Communications has ordered US$8.5 million worth of ATMs and bulk cash recycling machines from Diebold. Bank of Communications has already deployed more than 140 newly purchased “ix Series” ATMs within its national self-service network. The bank also recently purchased more than 130 of Diebold’s BCRMs for placement in July and August. The unit’s modular design accepts 100 notes of bulk cash per transaction without an envelope. It also protects the financial institution’s investment by “recycling” deposited cash to ATM users making withdrawals.

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BioPay Record

VA-based BioPay reported it recently hit three significant milestones with its biometric technology that is used for initiating and processing financial transactions. The company says it has verified more than $1 billion in financial transactions; processed more than three million financial transactions; and is enrolling more than 500,000 consumers in its “Paycheck Secure”and “bCheck” biometric systems. BioPay’s electronic biometric identification systems are used by merchants in 31 states. “Paycheck Secure” uses biometric technology to capture a customer’s finger image, store a template of the image, and then record check transactions associated with that person. Merchants can obtain real-time, negative check transaction information from BioPay’s database. “bCheck” gives consumers the convenience of paying for purchases by the touch of a finger; cash, checks, credit and debit cards, and ID are not required.

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LML & MEDCOM

Vancouver-based LML Payment Systems announced that licensee Global eTelecom will provide MedCom USA with an integrated, complete check solution program to service the health care industry. MedCom’s healthcare business unit include MedCard which offers a service package for physicians, clinics and hospitals. MedCard services include: patient eligibility, paperless claims processing, electronic referrals, patient easy pay, credit/debit cards and check guarantee. Global eTelecom provides it’s proprietary, fully customizable XML based electronic check processing services to a nationwide network of banks, independent sales agents and associations, credit card processors, insurance companies, and retail merchants.

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Fraud Referral Decisions

Fair Isaac this morning announced a new solution to reduce the number of ‘false positives,’ or transactions incorrectly flagged for investigation, at the point of sale. The new “Strategy Science for Fraud Referral” will enable lenders to simulate various fraud referral strategies and test their financial impact before deploying them in real time. Experiments in realigning referral strategies to reduce fraud losses or false positives can be conducted in a measured, controlled environment to provide the lender with a snapshot of how each strategy will affect overall profitability. Fair Isaac says the decision to refer a transaction at the point of sale for further cardholder verification or investigation based on the score and other metrics has until now been made on a judgmental basis or with the aid of ad-hoc data analysis. The new “Strategy Science” solution represents a much more holistic approach to portfolio fraud management. Fair Isaac says this new empirical approach to developing fraud referral strategies will bring a dramatic increase in profitability to issuers who are seeking the right balance between creating positive customer experiences and containing fraud losses.

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CHARGE-OFFS

Bad credit card debt continues to soar in Singapore as charge-offs reached a record $15.6 million in April. In March card issuers lost $13.60 million, in February $13.70 million, and during January $12.10 million. According to the Monetary Authority of Singapore, the credit card loss rates for this year are running 70% over 2002 figures. However, card volume for the first four months of this year has fluctuated between $2.4 billion and $2.5 billion. The total number of cards in the country at the end of April was 3.3 million, which included 2,283,126 primary cards and 979,846 supplementary cards.

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Cap One May Data

Capital One reported yesterday that charge-offs for May increased to 6.40% compared to 6.36% in April, and that its delinquency rate (30+days) declined from 4.86% in April to 4.82% in May. The Company’s ‘managed’ consolidated financial statements reflect adjustments made related to effects of securitization transactions qualifying as sales under GAAP. The Company generates earnings from its ‘managed’ loan portfolio which includes both the on-balance sheet loans and off-balance sheet loans for which the Company has retained significant risk and rewards.

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Business ExtrAA

American Airlines and American Express have teamed to issue a co-branded corporate card for mid-sized companies this fall. The “American Express Business ExtrAA Corporate Card” will offer a quarterly cash rebate on airline tickets and a points program for all AA-related card purchases. Companies will be able to earn up to a 10% quarterly cash rebate on first, business, or full coach American Airlines tickets charged to the card. Discounted leisure fares do not qualify. Companies will also be enrolled automatically as members in American’s “Business ExtrAA” program and earn points for total spending with American on the Card. Points can be redeemed for free tickets, upgrades, and “Admirals Club” memberships. AmEx and AA said a typical mid-sized company that charges $100,000 of travel on American to the new card can save as much as $10,000 annually, plus earn as many as 12 free tickets per year. American Airlines has a long-standing co-branded credit/debit bank card relationship with Citibank.

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PATH & MetroCard

San Diego-based Cubic Corp. has received a $37.1 million contract to provide a new high-tech automatic fare collection system for the PATH rapid-transit rail system that will ultimately allow rail commuters to pay for their PATH rides with the soon-to-be-available smart New York City Transit “MetroCard”. Under the terms of the contract, Cubic will be providing new “open system” Smart Card technology that will be integrated with New York City Transit’s (NYCT) MetroCard system.

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Papa John’s & BEETLE

Papa John’s International has selected Wincor Nixdorf’s “BEETLE/NetPOS” POS terminals as its next generation hardware platform for its 2,794 restaurants. The BEETLE /NetPOS configuration includes the Linux operating system for a lower total cost of ownership and maximum performance, and a Wincor Nixdorf touch screen for operator ease of use. Papa John’s selected Wincor Nixdorf because of the company’s proven expertise with Linux and its ability to assist Papa John’s in migrating its text-based application to a GUI-based, touch-screen version designed to increase user efficiency and reduce training time.

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Processor for Nonprofits

Chicago-based Moneris Solutions has been selected as the Association Forum’s exclusive provider for credit card processing and related financial services for its 1,600 nonprofit organizations throughout the USA. The organizations contribute more than $11 billion to the local and national economy. Under the terms of the agreement, Moneris will deliver advanced payment processing through point-of-sale hardware, software, e-commerce solutions and web-based financial reporting. Moneris will also offer gift cards and card-based customer loyalty programs.

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