A new study suggests that the losses in debit card revenue due to the elimination of the “honor all cards” policy may be more than recouped by savvy debit card issuers that reposition and promote the use of debit cards for recurring bill payments and online transactions. Dove Consulting says only 3% to 5% of the more than $36 billion in recurring bill payments are made with a card-based instrument. Dove also says the re-pricing of signature debit will also provide a more attractive alternative to ACH items for enrolling consumers for Internet Bill Presentment and Payment. Dove estimates that as many as 150,000 consumers enroll with billers each day for IBPP, and they prefer to use their debit cards when registering for electronic payment. Up until now, billers that wanted to accept only debit were also forced to accept credit because of the “honor all cards” rule. Dove concludes that in the end, the unbundling of credit and debit will actually increase card issuer and bank revenues just as it did in other industries including computer software and telecommunications.Details
Atlanta-based InterCept reported first quarter net revenues of $65.2 million, a 62% increase over 1Q/02. Net income for 1Q/03, excluding special items, totaled $2.4 million versus $4.7 million one year ago. Total revenues from Financial Institution Services grew to $43.5 million from $37.0 million, total revenues from Merchant Services grew to $17.4 million from $0.5 million. Revenue from Financial Institution Services increased due to the acquisition of item processing centers in July 2002 and internal growth. Revenue from Merchant Services was higher as a result of the acquisitions of iBill and EPX during the second quarter of 2002, partially offset by customer attrition in InterCept’s merchant base. InterCept expects the internal growth percentage to be negative for Merchant Services during the second quarter due to a lower number of merchant customers in late 2002 and 2003. For complete details on InterCept’s 1Q/03 results visit CardData ([www.carddata.com]).
Equitex, Inc. announced that its wholly owned subsidiary, Chex Services, Inc., has launched the marketing of its stored value card products: the FastFunds stored value card and the PowerCash payroll stored value card. The FastFunds card is a re-loadable cash card on which customers can load funds and use to withdraw their cash at virtually any ATM in the world.Details
Eighty four percent (84%) of Americans say that the recently-concluded war with Iraq had no impact on their willingness to use credit cards or take on other types of debt, according to the Cambridge Consumer Credit Index. 13% of those surveyed said they decreased their use of credit during the war, while 3% increased their use of debt.
PULSE EFT Association, the nation’s largest financial institution-owned EFT network, completed an agreement with Collocation Solutions, a leading carrier-neutral, and build-to-suit data center infrastructure service provider. Collocation Solutions will provide data center infrastructure for a secondary production switch platform.Details
Delinquency rates among the top ten U.S. issuers edged up during the first quarter, thanks largely to the Metris/Direct Merchants portfolio. All three of the nation’s top issuers report declines of about 20 basis points over the first quarter of 2002. Providian, which has been dogged by soaring delinquencies over the past two years, reported a modest uptick in first quarter delinquency. Fleet and Sears National Bank reported significant increases in first quarter delinquency. For more historical information on delinquency rates visit CardData ([www.carddata.com]).
TOP TEN VISA/MASTERCARD ISSUERS –
DAYS 1Q/03 1Q/02 Y/Y CHG
1. Citigroup: 90+ 1.91% 2.13% -22 bps
2. MBNA: 30+ 4.74% 4.97% -23 bps
3. Bank One: 30+ 4.08% 4.27% -19 bps
4. Chase: 30+ 4.59% 4.58% +1 bps
5. Cap One: 30+ 4.97% 4.80% +17 bps
6. Providian: 30+ 10.31% 10.22% + 9 bps
7. BofA: 30+ 6.09% 6.11% – 2 bps
8. Fleet: 30+ 4.37% 3.97% +40 bps
9. Sears Natl 30+ 7.87% 7.37% +50 bps
10. Dir Merch: 30+ 11.50% 9.80% +170 bps
30+ DAY AVG*: 6.50% 6.23% +22 bps
NR- not reported * 90+ day is not meaningful
* does not include Household which is now part of HSBC
SOURCE: CardData (www.carddata.com)
The Financial Supervisory Service reported this week that credit card
volume dropped nearly 14% in the first quarter. The FSS says the lower
volume was driven by the lowering of credit limits in the wake of spiraling
delinquencies. Cardholders charged 116.3 trillion won on credit cards in
the first quarter, including credit purchases and cash advances, down 13.7%
from the fourth quarter. Card usage at LG Card declined 8.5% in the first
quarter, while Samsung Card dropped 9.2%. Shinhan Card saw a drop of 36.2%
in 1Q/03 while Kookmin Credit Card volume declined 21.7%.
Air Canada has been ordered by a bankruptcy court judge to seek competing
bids for the right to buy and distribute frequent flier-miles in Canada to
credit-card customers. Canadian Imperial Bank of Commerce currently runs
the program, but MBNA, Royal Bank of Canada, and Bank of Nova Scotia have
reportedly expressed an interest in taking over the program. Air Canada and
Canadian Imperial renegotiated their agreement after the airline received
bankruptcy protection from creditors April 1. The bank agreed to pay 19%
more for reward miles and advance C$350 million to the airline. Bids must
be submitted by May 10 for consideration in the bankruptcy court on May 14th.
Air Canada has been ordered by a bankruptcy court judge to seek competing bids for the right to buy and distribute frequent flier-miles in Canada to credit-card customers, according to The RAM Report ([www.ramreport.com]). Canadian Imperial Bank of Commerce currently runs the program, but MBNA, Royal Bank of Canada, and Bank of Nova Scotia have reportedly expressed an interest in taking over the program. Air Canada and Canadian Imperial renegotiated their agreement after the airline received bankruptcy protection from creditors April 1. The bank agreed to pay 19% more for reward miles and advance C$350 million to the airline. Bids must be submitted by May 10 for consideration in the bankruptcy court on May 14th.
The Industrial and Commercial Bank of China has selected Hypercom as its
preferred provider for card payment terminals and technology for 2003, the
second year running. China UnionPay also recently selected Hypercom
networking technology to enable cross-city and cross-bank transactions in
40 cities and, by 2005, enable more than 400 million bank cardholders in
100 cities to use their cards at any payment terminal in
China. Additionally, Hypercom has also recently created and installed
customized networks for the Taiwan Lottery, the Western Canada Lottery
Corporation, and is also providing support to the Moscow Lottery and Fubon
Bank, one of Asia’s leading financial conglomerates.