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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Iraq Effect

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.

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[1]: http://www.cardweb.com/images/c/cambridgeconsumerindex/may03chart.jpg

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Top 10 Delinquency

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][1]).

TOP TEN VISA/MASTERCARD ISSUERS –
QUARTERLY DELINQUENCY

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)

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

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