Card Debt 2002

American consumers ended 2002 with $660.9 billion in bank credit card debt, an 8.8% increase over the previous year. The growth was driven by MasterCard’s 14.5% gain in credit card outstandings last year, as the country’s second largest payment card network overtook VISA as the largest provider of bank credit cards. At the end of 2002, MasterCard had 266.9 million credit cards in-force compared to VISA’s 258.4 million. It is expected that MasterCard will surpass VISA in outstandings this quarter. However, VISA maintains a much larger share of credit card volume, 42%, versus MasterCard’s 34%. VISA also dominates the off-line debit card market. The overall growth in bank credit card outstandings last year was an improvement over 2001’s paltry 6.9% gain, but well below 2000’s 16% gain in outstandings. Since 84 million U.S. households have at least one credit card, the average bank credit card debt per household now stands at $7,868. Retail credit card debt is expected to fall between $95 billion and $98 billion for 2002, according to CardData ([www.carddata.com][1]).

U.S. Bank Credit Card Loans 2002
Brand EOY02 Chng Share
VISA $289.7 billion +4.7% 43.8%
MC $285.8 billion +14.5% 43.2%
DIS*: $ 51.1 billion +3.7% 7.7%
AX**: $ 34.3 billion +7.2% 5.2%
TOTAL $ 660.9 billion +8.8% NA

* Discover’s year ended 11/30/02;
** American Express does not include charge card outstandings

Source: CardData ([www.carddata.com][2])

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

Details

DUAL-PLUS CARD

JCB, Sony, and Toppan Printing, have developed the world’s first smart
card combining “FeliCa” contactless interface and EMV contact interface
capability in a single smart card chip. The new “DualPlus” card
will be issued to JCB employees in May when the company headquarters move
to a new location. Contactless functions will include building and floor
access control as well as cafeteria and vending machine post-payment, while
contact applications will support employee benefits. Some cards will also
be equipped with the contact interface EMV-standard credit application
“J/Smart.” Sony says the linkage function of “DualPlus” enables further
potential benefits such as the inclusion of contactless payments in the
cardholder’s loyalty point program through a home card-reader. Also, in the
future the addition of type B communication capacity, coming into wider use
in government applications, promises even greater flexibility.

Details

FCNB Cards

While Spiegel’s First Consumers National Bank is pulling the plug on more than 700,000 VISA and MasterCard accounts today, the move will not affect its $2.3 billion retail credit card portfolio which includes the Eddie Bauer, Spiegel Catalog, and Newport News cards. FCNB was notified February 14th by the OCC to liquidate its bank credit card portfolio. The OCC required FCNB to stop accepting new credit card applications and stop granting credit line increases to any of its existing credit card accounts; and to notify its existing cardholders that FCNB will not accept any new charges on their accounts after April 1st. Meanwhile, Standard & Poor’s Ratings Services lowered its ratings on all classes of First Consumers Master Trusts. However, the closing of the underlying bank card accounts may have some short-term positive impact on the portfolio payment rate if higher quality obligors pay off their accounts in full or complete balance transfers. In the longer term, S&P believes it will most likely have a negative effect, resulting in adverse selection from reduced payment collections and fewer creditworthy obligors remaining in the pool. In addition, eliminating the cardholder’s ability to use the card for purchases and cash advances may also reduce the incentive to repay the loan to keep the credit line open and may lead to higher charge-offs. A slowdown in obligor repayments will likely extend the ultimate repayment period of the ABS transactions and increase the loan loss exposure period. First Consumers is the 28th largest bank credit card issuer in the USA, according to CardData ([www.carddata.com][1]), with 1,439,479 accounts and $1,059,783,754 in outstandings as of 12/31/02. (CF Library 2/22/02; 4/23/02; 8/23/02; 3/5/03)

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

Details

VISA THAILAND

The number of VISA credit cards issued in Thailand jumped 46% last year
to 2.8 million cards. VISA credit cards now makeup 80% of the total credit
card market in the country. VISA has also issued 4.5 million debit cards in
Thailand. MasterCard has a total of 1.46 million debit and credit cards
in-force. VISA says overall credit card volume increased 30% to THB187
billion. VISA also noted that delinquency plunged from 7.7% in 2001 to 4.8%
last year. Banking regulators passed new rules in 2002 limiting punitive
interest rates and late payment fees.

Details

VISA Truncation

VISA unveiled a new account truncation program yesterday that requires merchants to eliminate all the digits of a cardholder’s account, except the last four, from store receipts. The new policy also requires merchants to drop the card’s expiration date from receipts. The policy will go into effect July 1st, and in its first phase, affect all new payment card terminals. VISA says the move is an effort to fight identity theft and is already in practice by most major merchants. The move is also linked to bill sponsored by Senator Dianne Feinstein (D-CA) which would require merchants to drop the all the digits of a cardholder’s account, except the last four. Senator Feinstein attended VISA’s press conference yesterday in Washington. MasterCard has already adopted a truncation policy which goes into effect in two years. VISA also reported yesterday that , fraud within the VISA system has fallen to an all-time low of 7 cents per $100 transacted.

Details

Bank One & UAL

Bank One acknowledged yesterday that if United Airlines is liquidated it will have a significant impact on its credit card business. Bank One says the loss of its co-branding relationship with United Airlines could be as high as several hundred million dollars. Bank One says net income for its credit card would be negatively impacted by the dissolution of the marketing agreement, loss of fee and interest income and increased marketing expense to encourage customers to continue card usage. Bank One previously indicated that the United Program accounts for less than 10% of its total card business. In a 10-K filing yesterday, Bank One also disclosed that it opened 4.9 million new accounts during 2002 compared to 3.9 million in 2001. For complete details on Bank One’s 4Q/02 and 2002 performance visit CardData ([www.carddata.com][1]).

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

Details

Dual-Plus Card

JCB, Sony, and Toppan Printing, have developed the world’s first smart card combining “FeliCa” contactless interface and EMV contact interface capability in a single smart card chip. The new “DualPlus” card will be issued to JCB employees in May when the company headquarters move to a new location. Contactless functions will include building and floor access control as well as cafeteria and vending machine post-payment, while contact applications will support employee benefits. Some cards will also be equipped with the contact interface EMV-standard credit application “J/Smart.” Sony says the linkage function of “DualPlus” enables further potential benefits such as the inclusion of contactless payments in the cardholder’s loyalty point program through a home card-reader. Also, in the future the addition of type B communication capacity, coming into wider use in government applications, promises even greater flexibility.

Details

MasterCard Europe

MasterCard’s gross dollar volume for Europe increased more than 16% during the fourth quarter to $68.8 billion while GDV for all of 2002 rose almost 15.0% to US$242.6 billion. For 4Q/02 MasterCard processed 852 million purchase transactions and 177 million cash advance transactions, up 16% and 9% over 4Q/01, respectively. At the end of the year, MasterCard had 77.2 million accounts representing 87 million cardholders, according to The RAM Report ([www.ramreport.com][1]). Europe is the largest cardholder base for MasterCard’s PIN-based debit, “Maestro,” with 226.1 million cards. Merchant acceptance in the European region was flat during 2002 at 5.9 million merchants. MasterCard noted that a key milestone last year was the completion of the merger with Europay International to form a unified, shareholder-owned, global payments company. Europay is now MasterCard’s Europe region. In connection with the merger, MasterCard launched two “Centers of Excellence” in Waterloo, Belgium, one for debit and one for chip and mobile commerce.

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

Details