Providian 2Q/02

Providian reported 2Q/02 net income of $153.9 million compared to net income of $232.4 million for the second quarter of 2001. Providian also announced Tuesday the closure of its Sacramento operations facility, effective immediately, and plans to close facilities in Fairfield, California and Salt Lake City, Utah by the end of this year. Approximately 300 employees will be affected by the closing of the Sacramento facility and an additional 1,000 employees will be affected at the Fairfield and Salt Lake City facilities. Since October, Providian has cut its workforce by 47% after the collapse of the sub-prime credit card market. The Company ended the second quarter with $19.6 billion in total managed credit card loans and 12.9 million accounts, down from $22.1 billion in managed credit card loans and 15.0 million accounts at the end of the first quarter 2002. During 2Q/02, Providian originated approximately 350,000 new customer accounts with a balanced distribution in the middle and prime market segments of approximately 65% and 35%, respectively. The managed net credit loss rate and the managed 30+ day delinquency rate for the second quarter of 2002 were 17.53% and 10.16%, respectively. The quarter ended with a managed charge-offs for the month of June 2002 of 17.22%, down from the managed net credit loss rate for the month of March 2002 of 17.64%. Providian says it spent $104.2 million in solicitation and advertising during the second quarter. For complete details on Providian’s 2Q/02 results visit CardData ([www.carddata.com][1]).

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

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Cardtronics Offers PayPort

Cardtronics, an ISO, has signed a distribution agreement to offer CashWork’s “PayPort,” a proprietary POS countertop terminal, to approve checks and use an existing ATM to dispense cash. Cardtronics is the largest ISO thus far to distribute the CashWorks solution, with a network of more than 7,500 ATMs from coast to coast, handling approximately 150,000 transactions per day. Using the CashWorks PayPort, Cardtronics customers can offer check-cashing services in their stores with a minimal investment.

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CITIBANK MONEY CARD

Citibank has introduced the Citibank Money Card Account to remit money from the U.S. to Mexico. The Money Card is linked to a distinct U.S. Citibank bank account featuring an ATM card for the recipient in Mexico. Account fees for the Citibank Money Card Account include a $5.00 monthly maintenance fee and a $7.95 fee for each withdrawal of funds transaction in Mexico. These fees are assessed to the U.S. account and are not deducted from the recipient’s cash withdrawal. Citibank Money Card Account holders in the U.S. may deposit or transfer funds into their U.S. account and the Money Card holder in Mexico may withdraw the funds at any of the approximately 20,000 ATMs in the country, including over 4,400 Banamex ATMs. Both Citibank and Banamex are member companies of Citigroup. The Citibank Money Card, currently in a pilot stage, is available through 26 Citibank Financial Centers in New York, Chicago and Los Angeles.

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TSAI 2Q/02

Transaction Systems Architects reported 2Q/02 revenue of $65.0 million and net income of $1.3 million. The Company completed the quarter with $179.1 million in backlog, up from $169.7 million at the end of the previous quarter, a 5.5% sequential increase. TSAI says it added another top-100 U.S. retailer during the quarter, bringing its total to 25 of the top 100; and the company has now shipped the latest release of our BASE24 e-payments product to over 100 customers. In addition, TSAI secured a new long-term commitment from Bank of America for the newest version of its “Money Transfer System” product. Transaction Systems Architects’ solutions are used on more than 1,750 product systems in 71 countries on six continents. For complete details on TSAI’s 2Q/02 results visit CardData ([www.carddata.com][1]).

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

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ECHO 2Q/02

Electronic Clearing House reported second calendar revenue of $8.4 million, an increase of 8.5% over the same quarter in 2001 and a net loss for the quarter of $168,000, compared to net income of $282,000 for the same period last year. The loss reflects a reduction in gross margin, as well as the Company’s investment to develop infrastructure and staff to support the Visa POS check processing platform. Research and development expense increased to $466,000 in the third fiscal quarter, from $307,000 in the same period last year. The Company’s total processing and transaction revenue increased 10.6% to $8.3 million for the quarter, up from $7.5 million in the same quarter in 2001. Bankcard processing and transaction revenue increased 6.3% to $6.9 million for the quarter, compared to $6.5 million in the same quarter of 2001. Check-related revenues increased over 23% to $1.48 million, as compared to $1.20 million in the prior year quarter. For complete details on ECHO’s 2Q/02 results visit CardData ([www.carddata.com][1]).

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

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FDC & OMNIPAY

First Data confirmed Tuesday it has become the majority interest holder in OMNIPAY, an international payment processor based in Dublin, Ireland. The majority interest includes a new equity investment First Data has made in OMNIPAY in addition to a prior, indirect investment through FEXCO, a financial services provider which previously served as the majority stakeholder. Last year, First Data announced partnerships with OMNIPAY and FEXCO to develop a multi-currency end-to-end transaction and settlement infrastructure that allows acquirers and merchants to authorize, settle and receive funding for transactions in any of the major world currencies. OMNIPAY was established by Brian Connolly and Hubert O’Donoghue in 2000. Specific terms of the new equity investment agreement were not disclosed.

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Cubic 2Q/02

Transit payment card provider, Cubic Corporation, reported a 34% increase in earnings for the second calendar quarter, and a 16% increase in sales from the same period last year. Operating profits from Cubic’s defense and transportation segments are up a combined 40% for the past nine months. The transportation segment sales increase in the current year is due to higher work volume on contracts for Bay Area Rapid Transit, Vancouver’s B.C. Rapid Transit and the extension of the Washington Metropolitan Area Transportation Authority smart card ticketing service for buses in Maryland and Virginia. Another factor was increased activity on the Prestige contract in London, where installation of the system is nearly completed and smart cards are being phased in. The company sees potential smart card security applications opportunities in both military and civilian markets at the Federal, state and local levels. Management expects that over the next two to three years, the company will be involved in customer-funded trials that could lead to new Homeland Security/Defense business as these emerging markets take shape. For complete details on Cubic’s 2Q/02 results visit CardData ([www.carddata.com][1]).

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

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Federated & @pos

@pos has been awarded a contract to provide approximately 5,800 price checker units to Federated Department Stores. This comprehensive rollout calls for the installation of @pos’ price checker solution in a majority of Federated store locations including Macy’s, Bloomingdale’s, The Bon Marche, Burdines, Rich’s, Lazarus, and Goldsmith’s. The first installation of the price checker is intended to be completed prior to the beginning of the holiday season.

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CardinalCommerce Signs More

CardinalCommerce has signed agreements with Transactional Technologies and Digital Courier Technologies to resell “Cardinal Centinel,” an easy-to-install software authentication platform that supports credit card industry initiatives to reduce the incidence of online fraudulent transactions. Cardinal Centinel makes it easy for merchants to participate in these programs and to integrate them into their electronic shopping sites.

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CARD BONDS

South Korea’s structured finance market is benefiting from a vibrant nonbank consumer finance industry that has taken root in the years after the government initiated an aggressive campaign to increase credit card usage. Unlike traditional banks, nonbank finance companies do not take deposits and therefore have a voracious appetite for cheap funding, according to Standara & Poor’s. This need for cheap funding has been the chief driver for cross-border securitizations in South Korea. There are as many as six credit card securitizations expected in the second half of 2002. South Korea began encouraging increased credit card use in 1999 to improve tax collections and bolster domestic growth and consumption, which would lessen the country’s dependence on exports. Since then, according to the Financial Supervisory Commission (FSC), every eligible adult has an average of four credit cards, with the credit card transaction volume at the end of 2001 increasing five times from that of the end of 1999. As a result, the nonbank consumer finance industry is nearing saturation. As of June 30, total household borrowings (including loans from financial institutions and credit card payables) reached 216.1 trillion won (roughly US$185 billion) up from 35.8 trillion won at the end of 2001. The delinquency ratio of these borrowings, according to the FSC, is only 1.24%, while the delinquency ratio on credit card receivables (all amounts over 30 days) is 9.42%, a 2.04 percentage point increase over the end of 2001.

Business Editors
(Editor’s Note: This article, originally published July 30, 2002,
misstated the names of two Korean card companies, Kookmin Card and
Woori Credit Card. A corrected version follows.)

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