Card Mail Soars

Despite a heavily saturated credit card market and rising consumer sensitivity to debt, direct mail volume for credit card offers increased 10% last year, by nearly 300 million pieces. Balance transfers were part of the package in approximately 60% of all acquisition offers last year. There was a growing trend to offer the balance transfer rate for 12 or more months. According to Mintel’s Comperemedia, toward the end of 2002, over 70% of the balance transfer offers were for 12 or more months, compared to 30% to 40% in the beginning of the year. The marketing research firm says that to-date, 37% of the offers tracked were at an 8.00% to 9.99% APR, compared to only 19% in 2001. In 2002, only 22% of the offers were over a 14% APR compared to 51% in 2001. While the majority of the cards offered have no annual fee, late fees have steadily risen. In the beginning of 2002, late fees were predominantly between $11 and $20 says Comperemedia. Now the majority are between $31 and $40 and many issuers tier their late fees based on the outstanding balance.

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Wincor Nixdorf 2002

Wincor Nixdorf reported this morning that profits for last year hit $94.1 million on revenues of $1.41 billion. The company says 2002 was a particularly strong year in the U.S. market. Worldwide sales of POS terminals grew 14% last year. In Taiwan, Wincor Nixdorf installed 1,550 ATMS in 7-Eleven, as part of an IT modernization project in conjunction with two large domestic banks. Wincor Nixdorf has been ranked the third largest provider of POS systems and ATMs worldwide. Wincor is also ranked first in Germany and ranked second in Europe in POS systems and ATMs.

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Coinstar CFO

WA-based Coinstar announced that its CFO, Diane Renihan, will be leaving the Company in early February. Coinstar Inc. owns and operates the only network of supermarket-based machines that offer coin counting and other electronic services. The company has more than 10,000 machines linked by a sophisticated interactive network throughout the United States, as well as in Canada and the United Kingdom.

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Funds Transfer 2.0

Digital Insight has released “Funds Transfer 2.0” which now supports both risk and good funds models, includes an enhanced administrative tool to control application settings, and keeps records of transfer and payment activity. “Funds Transfer 2.0” enables customers or members to transfer money between accounts at their host institution and other institutions via the ACH network. It also enables those customers or members to send money to friends and family via the ACH network; in which case, the payment recipient receives an email notifying them to collect their payment once the funds have cleared. “Funds Transfer 2.0” integrates directly with “AXIS Internet Banking” for secure single sign-on, ensuring an easy experience for the end user.

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LML and Verus Financial Management Come to Terms

VISA Canada reported that it processed more than 2 million credit card
transactions totalling approximately $232 million in sales volume on the
day after Christmas. During the busiest hour on “Boxing Day” VISA processed
267,000 transactions valued at $29.8 million. In early December, VISA
projected that Canadians will spend a total of $809 on holiday season gifts
this year versus $816 the previous year,
basically representing flat year-over-year spending. In total, Canadians
were expected to spend an estimated $18 billion on holiday season gifts
this year.

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Card Profits

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Credit card profits among monolines, banks, and credit unions rose across the board in 2002. Interestingly, profits among monolines remained below card profits by banks, presumably by the collapse of the sub-prime market. According to data compiled by R.K. Hammer Investment Bankers, pre-tax card profits at monolines last year came in at 3.83% compared to 4.28% for banks. Credit Unions delivered a pre-tax ROA of 1.10%, compared to 1.00% for 2001. In 2001, monolines pre-tax ROA was 3.23% and banks were 4.00%.

CREDIT CARD PRE-TAX ROA (%)
1998 1999 2000 2001 2002
Monolines: 4.61 5.59 4.56 3.23 3.83
Banks: 2.50 3.16 3.65 4.00 4.28
Credit Unions: 0.90 0.95 1.10 1.00 1.10
Source: R.K. Hammer Investment Bankers

[1]: /graphic/rkhammer/cardprofits.jpg

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TouchCredit & Isaacson

CA-based TouchCredit Financial Services has named Bond Isaacson, currently Concord EFS President of Financial Services, to its board of advisors. Prior to joining Concord EFS, Isaacson was a payments executive for Bank of America Corporation, where he was charged with positioning Bank of America as a payments leader. In addition to profit and loss responsibility for the integrated payment services unit, his responsibilities included creating new payment products and revenue streams by leveraging the opportunities among merchant services, debit cards, stored value products, and ATMs.

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OPC Expands NY Acceptance

Official Payments has expanded its existing relationship with the state of New York to enable New York State taxpayers who are eligible to participate in the state’s tax amnesty program to make credit card payments for a variety of personal and business taxes. The New York State Amnesty Eligible Assessments program allows eligible taxpayers to pay a variety of amnesty eligible assessments without penalty and reduced interest. The program covers taxes such as personal income, corporate income, sales and use, estate and various Article 9 corporation and utility taxes for taxpayers with outstanding liabilities through Dec. 31, 2000.

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Mobile Sense to Deploy the Linux-Based Sanchez Profile

The UK’s fourth largest online retailer, Comet, reported that online sales
over the Christmas period have doubled compared to this time last year as
nearly half a million pounds were spent online on the busiest day. The
Comet survey shows that 57% of online shoppers spent over £100 this
Christmas, compared to just 33% in 2001. Items purchased over the Christmas
period include over 4,000 DVD players, over 2,000 wide-screen TVs, over
2,500 washing machines and 1,000 dishwashers. Customers are even splashing
out on top-of-the-range items such as plasma TVs which retail at around
£2,500 each. According to the Comet survey, 4 in 10 shoppers said that they
were doing at least half of their shopping online this year because they
found it easier, more comfortable and more convenient.

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Online Bill Payments

Bank of America said this week it expects more than 1.8 million consumers to pay their bills online this month, compared to about 900,000 customers during January 2002. Last year, BofA customers paid about 5.6 million bills online. In January 2003, customers are expected to pay about 11 million bills online. In January 2002, the amount of the bills that customers paid totaled $1.7 billion. In January 2003, the amount is expected to be about $3 billion. BofA has more than 4.6 million active subscribers to its online banking services, the most in the industry.

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Music Players Card

NJ-based Shoppers Charge Accounts Co. has signed an agreement to develop and administer a private label credit card program for WI-based Cascio Interstate Music. The company acquires retailers’ receivables or will develop private label credit card programs for merchants who currently don’t offer a house charge. In both situations, SCA assumes responsibility for generating customers’ billing statements; managing credit, collection, and lockbox functions; and creating customized marketing programs.

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