CSP Bill-Paying

A new study has been released on the behavior of consumers who paid electronic bills at consumer service provider sites that offer “pay anyone” services, such as banks, credit unions, brokerage firms and portals. The research from CheckFree Research Services found that CSPs, whose subscribers have activated electronic bills, experienced higher customer retention, product usage and payment volume rates, and enjoyed significantly lower customer care support costs associated with electronic billing and payment transactions. EBP customers who activate an e-bill are 86% more active than subscribers who simply make bill payments online. Customers who use e-bills make 37% more payments than their online bill payment counterparts. E-bill subscribers have a cancellation rate that is 38% lower than other electronic bill pay customers. Payments associated with e-bills are processed at a higher electronic rate than non-e-bill payments. This is a primary contributor to e-bill payments generating 43% fewer claims than non-e-bill payments.

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GE and Lowe’s

GE Consumer Finance inked a seven-year extension to its private label credit card agreement with Lowe’s Companies. GE and Lowe’s have partnered for 23 years. Lowe’s Companies serves approximately nine million customers a week at more than 850 home improvement stores in 45 states. During the first quarter, GE inked a deal to buy Conseco’s retail sales finance business and launched a new private-label credit card program with Meijer Stores. GE reported earlier this month that its credit card profits dropped 13% in the first quarter to $181 million, compared to $209 million one year ago. Revenues for GE’s credit card business were also down, slightly, from $903 million for 1Q/02 to $893 million for 1Q/03. (CF Library 4/11/03)

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AEROPLAN CONTRACT

Air Canada and CIBC have extended their “Aeroplan” air miles contract from
2009 to 2013. Under terms of the deal,
CIBC agreed to boost its prepayment to Air Canada for air miles from $200
million to $350 million, and agreed to pay Air Canada a higher price per
“Aeroplan” mile. CIBC purchases “Aeroplan” miles to issue to CIBC “Aerogold
VISA” credit card customers. As at March 31st, CIBC carried the payment at
$181 million on its balance sheet. Meanwhile, Air Canada announced that it
will begin charging “Aeroplan” members a $25 fee to book a reward flight
and a fuel surcharge fee up to $50 for each ticket. The new fees will take
effect April 30th. However the booking fee will be waived till January 2004
for members who book flights online.

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Sears 1Q/03

Sears, Roebuck and Co. reported last week that its Credit Division posted a 10.8% decline in operating income while its financial product revenues increased by 1% in 1Q/03, compared to 1Q/02. Over the past twelve months Sears’ credit card outstandings have grown 9.3% to $29.5 billion. The MasterCard segment has doubled, and the private label card segment has declined 17%, during this same period. The “Sears Gold MasterCard” now holds $12.4 billion in outstandings while the “Sears Card” currently holds slightly less than $17.2 billion in outstandings. Sears noted that its $395 million in first quarter operating income for the Credit Division declined due to an increase in the provision for uncollectible accounts. In the first quarter, net charge-offs rose to 6.11% compared to 5.43% one year ago. Delinquency also increased from 7.31% for 1Q/02 to 7.87% for the first quarter of this year. Sears also reported that its net interest margin dropped from 14.69% to 13.75% and that its yield on all credit cards declined from 18.64% for 1Q/02, to 16.94% for 1Q/03. Sears also noted that it is continuing to evaluate the possible sale of all or a portion of its credit card segment with a goal of taking action in the second half of 2003. For complete details on Sears first quarter performance visit CardData ([www.carddata.com][1]).

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

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GPN K26

Global Payments has introduced a new retail and T&E processing
solution to small and midsize Canadian merchants. The “Retail dvantage K26”
and the “Travel and Entertainment dvantage K26” applications run on the
Keycorp “K26” POS terminal. The “K26” platform combines a high speed
thermal printer and powerful processing capability with multiple
applications such as “Central Balancing” for multi-lane merchants, general
retail and loyalty functionality.
For multi-lane retail merchants, the “Retail dvantage K26” enables a
merchant to simply close all of their devices and generate reports and
reconciliation for their transactions from one central store controller.
The “Travel and Entertainment dvantage K26” offers added customized market
features including “Menu Shortcuts” for standard T & E transactions with
a backlit PIN Pad, which includes debit tipping, and tip reporting.

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FOREIGN EXCHANGE FEES

A New Democrats legislator has asked Canada’s deputy prime minister to
investigate foreign exchange fees charged to Canadian credit cardholders by
VISA, MasterCard, American Express, and their respective member-issuers.
The request follows on the heels of an April 8th decision by a California
Superior Court judge who ordered VISA and MasterCard to refund more than
$800 million in foreign currency conversion fees to U.S. cardholders.
According to the Toronto Star, NDP finance critic Lorne Nystrom estimates
Canadians could be owed up to $100 million in foreign exchange fees.
Nystrom said in the House of Commons that the foreign surcharge ranges
between 1.5% and 1.8% in Canada. The California court also ordered VISA and
MasterCard to amend their operating rules to require their issuing members
to make effective disclosure of the currency conversion fees charged to
consumers. VISA was ordered to refund the one percent currency conversion
fees to all cardholders in the USA while MasterCard was ordered to refund
the currency conversion fees to all its California consumers. Both VISA and
MasterCard plan to appeal. American Express was just served with the lawsuit.

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E-FRESH SYSTEMS

Wireless Products Marketing Inc. has launched VendTek Systems’
“e-Fresh System” into service and has purchased an additional 100 “e-Fresh”
client licenses. “e-Fresh” is an electronic distribution software for
prepaid telecommunication and financial services. WPM has launched more
than 20 terminals since the system was installed in mid-March. Now WPM has
placed an additional order for more licenses to expand its network and
allow greater electronic distribution using the “e-Fresh” technology.

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March Charge-Offs

Charge-offs among sub-prime credit card-backed securities soared to a record 18.9% in March, a 102 basis points jump from the prior month. Charge-offs among all credit card-backed bonds increased 25 bps from February and 70 bps since March 2002. According to the Fitch Credit Card Index, credit card charge-offs for all securitizations hit 6.55% in March. Serious delinquency (60+ days) posted a seven-basis-point rise to 3.71%, its highest level since February 1998. Among sub-prime issuers, Providian reported last week that its charge-off rate among its securitizations increased to 19.89% for March, compared to 18.23% for February, and compared to 19.38% for January. Metris/Direct Merchants Credit Card Bank also reported last week that its managed net charge-off rate for the first quarter was 17.9%, compared to 18.2% for the fourth quarter, and 13.0% for 1Q/02.

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