Chinese Card Usage

A new analysis conducted for MasterCard International has found only 18% of debit cards issued in China are active compared to 63% of credit cards. Of the 413 million debit cards issued to-date, only 74 million can be considered as active cards, with 82% non-active. By comparison, only 36% of secured credit cards and 38.6% of credit cards are considered non-active. “Non-active” is defined as being used less than once a month. Chinese banks issued debit cards aggressively in order to have more savings accounts as they began to compete for market shares in the mid-1990s. A debit card requires a savings account in good standing in order for it to be functional, hence each debit card issued entails a new savings account. A related contributing factor is that the banks also issued debit cards to their existing savings account holders as “pre-approved” customers. This added massively to the number of debit cards issued in the late 1990s. A third factor is a legacy of the past practice of “group applications”. This refers to a department head or manager of a business unit applying for debit cards on behalf of all the workers in that unit, often without prior consultation with the workers, frequently for the purposes of facilitating payroll management. MasterCard projects the credit card industry will explode in China over the next decade to 160 million cardholders. Currently there are one million credit cardholders and 24 million secured credit cardholders in China. MasterCard says there are already 50 million people in China who can be characterized as “cardable.”

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KIWIBANK MASTERCARD

Kiwibank, the totally New Zealand-owned bank, launched an aggressively-priced MasterCard targeted at the country’s 1.5 million credit cardholders. The bank, which started operations one year ago, has 135,000 customers. The “Kiwibank MasterCard” carries a 12.9% interest rate and a $38 annual fee. However, there is no annual fee if a customer has a home loan or deposits with the bank of more than $50,000. The card also provides up to 55 interest free days on purchases. The new MasterCard also offers a no-fee balance transfer feature. The average credit card interest rate in New Zealand is about 20%. Kiwibank was established by the Government last year after larger banks closed branches in rural communities.

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Fiserv Board

WI-based Fiserv has named Thomas Wertheimer, a retired Senior Audit Partner for PricewaterhouseCoopers, to its Board. He was lead audit partner for several other public companies, including Bank One, Kroger, Limited Brands and Wendy’s. As a member of the Fiserv Board of Directors, Wertheimer, who also will be a member of the Audit Committee. Fiserv reported $2.3 billion in processing and services revenues for 2002.

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CIBC 1Q/03

CIBC said this week that the increased rewards costs and attrition within its “Aerogold VISA” program will force the issuer to introduce new products with broader loyalty programs. On May 14th, CIBC entered into a new contract with Air Canada’s “Aeroplan” whereby CIBC will pay an extra 24% for each “Aeroplan” mile purchased. CIBC noted this week that the “Aeroplan” contact will cost up to 10 cents per share per annum, which is 2-3% of expected earnings. CIBC also acknowledged it is losing cardholders in the wake of Air Canada’s financial woes. The issuer said it has added less than 5,000 new “Aerogold VISA” cardholders so far this year compared 8,000 in the same period last year. CIBC credit card outstandings have also decline from $9.9 billion for 1Q/02 to $9.5 billion for 1Q/03. Additionally, CIBC faces new competition with American Express in the awarding of “Aeroplan” miles. Last week, CIBC agreed to share “Aeroplan” miles with AmEx. (CF Library 5/15/03).

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DECU & AXIS

Delta Employees Credit Union has extended its contract with Digital Insight for the entire suite of “AXIS Lender Solutions.” The suite includes “AnyTimeLender,” “DeskTopLender,” “ContactCenterLender,” and “Branch Services.” DECU was an early adopter of online lending, initially using Digital Insight’s “ContactCenterLender” in 1997. DECU is the largest credit union in Georgia and the 18th largest in the country.

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Canadian Tire & Moneris

One of the Canada’s largest retailers has inked a seven-year agreement with Canada’s largest debit and credit card payment processor. Canadian Tire made a decision to consolidate all of its processing with one partner, and in so doing, selected Moneris Solutions. The agreement with Canadian Tire Financial Services includes 1,000 retail stores, gas bars and car washes, as well as Canadian Tire Direct online and catalogue ordering channels. Canadian Tire has $7.2-billion in annual retail sales. Moneris provides payment card acceptance and POS technology for more than 350,000 merchant locations across North America and processed approximately 1.7 billion card transactions last year.

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Ceridian Board

Minneapolis-based Ceridian Corporation has elected Alan White, Senior Associate Dean of the Sloan School of Management at the Massachusetts Institute of Technology to its Board. Mr. White began his career at MIT in 1973 and has had responsibility for MIT programs in Asia, Europe and Latin America. He is currently responsible for a major assignment in China where MIT is working with three universities to develop international MBA programs.T hrough its Comdata subsidiary, Ceridian is a major payment processor and issuer of credit cards, debit cards and stored value cards, primarily for the trucking and retail industries in the USA.

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PegaHEALTH Service Manager

MA-based Pegasystems has launched “PegaHEALTH Service Manager,” a new suite of solutions for healthcare payers that is being initially deployed by Blue Cross Blue Shield of Rhode Island. The suite consists of “PegaHEALTH Member Services” v3.2 and “PegaHEALTH Provider Services” v2.0. “PegaHEALTH Service Manager” provides the tools to create a universal service representative which helps to eliminate the need for separate, disparate contact centers and allows for phone line consolidation to help improve service delivery, create process-driven staffing models, and create cross-constituent interactions to improve consistency.

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Recurring Payments

VISA reported this week that its “automatic bill payments” or “recurring payments” card volume increased 26% last year to $39.9 billion, compared to $31.6 billion in 2001, and $25.1 billion in 2000. Automatic payments for phone services led the segment with $13.3 billion in annual volume in 2002, a 44% increase. Payments for PayTV service increased 50% last year to $3.8 billion. Recurring payments for insurance services was up 44%, to $5.7 billion. Research conducted by VISA in March revealed that the primary reasons consumers choose automatic bill payments are to save time, ensure on-time payment, and avoid the hassles associated with writing checks, buying stamps, and mailing. VISA says another factor in the growth of automatic bill payments with payment cards is the ever-increasing popularity of debit cards.

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Credit Card Analyzer

Microsoft announced this morning it is expanding its “CNBC on MSN Money” personal finance service on June 20th to include a “Credit Card Analyzer” feature. Microsoft also announced that CNBC on MSN Money attracted the largest audience among financial news and information Web sites in March and April, surpassing competitors such as Yahoo! Finance and AOL Personal Finance, according to Nielsen//NetRatings. Microsoft also announced other new tools to enable consumers to monitor investment and market changes. For example, “GainsKeeper” which helps investors optimize investment transactions, minimize tax implications and automatically generate a ready-to-file Schedule D. Additionally, there are new “Candlestick Charts” which show investors open/close/high/low prices for one or more stocks providing at-a-glance insights into the bullish or bearish trends underlying daily stock trading activity.

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SPS 2003

San Diego-based Secure Payment Systems has inked a deal with credit card processor US Merchant Services to offer SPS check guarantee services including the SPS “PayDay” 90-day “same-as-cash” loan program. SPS also reported this week a record 48% increase in volume for the first four months of this year as compared to the same period in 2002. SPS offers an integrated check conversion and gift card program and other check services. The company was founded in 1996 by Lin Fellerman, former 20 year employee and 10 year President of the Telecredit/Equifax Check Services subsidiaries.

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