Revolving Credit

Consumer revolving credit continues to expand at a faster pace than last year. In March consumer revolving credit expanded by 3.9%, as Americans added $2.3 billion in debt. Last March, consumer revolving debt expanded 2.2%. Bank credit card debt at the end of the fourth quarter was $660.9 billion or roughly 93% of total revolving credit, according to CardData ([www.carddata.com][1]). Preliminary first quarter figures indicate credit card debt declined to about $640 billion on March 31st. According to the government figures released Wednesday, American consumers were $1.742 trillion in debt, exclusive of home mortgages during March.

REVOLVING CREDIT HISTORICAL ($billions)
Mar 03 Feb 03 Jan 03 Dec 02 Nov 02 Oct 02 Sep 02
GRWTH: 3.9% 5.9 5.2 -6.7 -1.4% 1.6 3.0
$OWED: $721.4 719.1 715.5 712.4 716.8 717.9 721.3

Aug 02 Jul 02 Jun 02 May 02 Apr02 Mar 02 Feb 02
GRWTH: 6.2% 6.0 4.1 8.0 4.8 2.2 1.8
$OWED: $719.5 715.6 712.1 708.7 705.4 705.0 702.4

Source: Federal Reserve; revised figures as of 05/07/03; For
complete historical data visit CardData (www.carddata.com).

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

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DIEBOLD HMA

Diebold has signed an agreement to acquire the remaining equity of a
joint venture formed in 1987 with HMA Data Systems. Diebold HMA Private Ltd
will now be headquartered in Chennai. Diebold has also secured a major
order for advanced function ATMs from Punjab National Bank, which has
signed with Diebold to supply ATMs for its onsite and offsite ATM centers
for 2003. The bank intends to increase its ATM network strength from an
existing 250 units to at least 1,000 ATMs by March 2004. In the first
quarter, Diebold also captured a significant order from UTI Bank in Mumbai
and additional contracts from several other Indian banks which total more
than 900 units.

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Bluefish MasterCard

The first credit card from a concierge firm has been launched, offering credit lines up to $100,000 and $1 million in common carrier travel accident insurance. Bluefish Concierge, a global firm that organizes white glove access to exclusive events and travel experiences on behalf of corporate executives, celebrities, professional athletes, and other high net-worth individuals, has teamed with MBNA to issue the new card. The “Bluefish Concierge MasterCard” carries no annual fee and typical MBNA pricing. Bluefish Concierge opened U.S. offices in South Florida this year and has a worldwide network of over 150 representatives. Established since 1994, the firm also issues a monthly insider’s newsletter to 50,000 clients.

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50 MILLION CARDABLES

A new study shows that the middle class will drive payment card
growth in the China as its expands from 60 million to 160 million people by
2010. The report also says that there are already more than 50 million
people in China who can be characterized as “cardable.” The MasterCard
report says there are only one million credit cardholders in China today,
but there are about 24 million secured credit cardholders, and virtually
all of them will become credit cardholders tomorrow. MasterCard has about
16 million secured credit cards in-force in China. MasterCard also
anticipates significant growth over the next few years in the international
credit card business in China, based in part on the estimated increase in
the size of China’s middle class over the rest of this decade as well as
the increasing acceptance of such cards by merchants and financial
institutions, driven increasingly by raising international visitor
arrivals. This year the number of ATMs that accept international payment
cards will rise to 1,300 in Beijing and more than 8,000 ATMs nationwide.
Currently in Beijing city, international payment cards are accepted at
around 16,000 point of sale terminals. The city government of Beijing plans
to increase this in three years time to 80,000.

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South Korea Card Limits

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 $96 billion 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%.

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ATB & FDC

Edmonton-based ATB Financial has signed a seven-year agreement with First
Data for card processing services for ATB’s MasterCard credit card
accounts. First Data has provided card processing services in Canada since
2000 and currently processes accounts on behalf of four card issuers. The
company is also a leading merchant acquirer of MasterCard transactions in
Canada working with a wide range of merchants representing nearly 90,000
outlets. ATB serves over 240 communities through a network of 145
branches, 132 agencies, and 225 automated banking machines and electronic
banking services.

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Biz Rewards MasterCard

Fifth Third Bank has expanded its rewards program to business cards. The new “Business Travel Rewards MasterCard” enables the primary cardholder to earn up to 100,000 points annually. Business cardholders earn one point for each $1 in net purchases. Points can be redeemed for free airline tickets, discounted hotel rooms, or cash-back. Redemption opportunities starting at 10,000 points. The cash-back feature offers a $100.00 check for 10,000 points. The introductory interest rate for purchases on the new MasterCard is fixed at zero percent for the first four billing cycles, then goes to Prime + 7.99%. The card also carries a $50 annual fee. Fifth Third launched reward programs for its credit card and debit cards in 2002. Under the debit card rewards program, cardholders earn one point for every $2 in purchases. (CF Library 3/18/03)

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Debit Opportunities

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.

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InterCept 1Q/03

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][1]).

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

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