Web Traffic Drops

Nielsen//NetRatings, the Internet measurement service of Nielsen Media Research and NetRatings, Inc. announced that its Holiday E-Commerce Index declined 3.8 percent for the week ending December 19, suggesting that cybershoppers have finished making their purchases online almost a week before Christmas Day.

According to the index, December 12 was the busiest holiday shopping day to date.

“From the standpoint of timing, the Web holiday shopping season this year is tracking a few weeks earlier than the offline retail world,” said Peggy O’Neill, director and principal analyst at NetRatings, Inc. “Fearful of delivery logistics, surfers caused a noticeable drop in traffic the week before Christmas. Cybershoppers in 1999 tend not to be huge procrastinators.”

According to Nielsen//NetRatings, audience traffic to holiday e-commerce sites spiked immediately after Halloween, continued to grow quickly in November, and peaked in the week ending December 12. (See PowerPoint presentation.) Traffic then fell off in a number of key categories.

Gifts, Toys and Cybermalls Reveal Drops in Traffic

Last week, the categories of gifts, toys and online malls declined the most in audience traffic. While these sites still showed steady activity, they were lower from the week before (see Table 1).

“Enterprising sites are trying to combat the decrease in traffic by posting reassuring notices about their ability to deliver packages at the last minute or promoting online gift certificates instead,” said O’Neill.

Table 1 Nielsen//NetRatings Holiday E-Commerce Index Percent Change in Unique Audience as Compared to the Prior Week

Category % Change for Week Ending % Change for Week Ending
Dec. 12 Dec. 19

GIFTS 32.5% -20.9%
TOYS -0.8% -14.0%
MALLS 15.7% -12.2%
APPAREL -9.2% -8.5%
SOFTWARE -6.3% -4.4%
ELECTRONICS 10.5% 0.1%
AUCTIONS -5.1% 1.3%
COMPARISON 11.1% 4.0%
TOTAL 3.4% -3.8%

Note: This index is comprised of five representative sites for each
category, and acts as a barometer for gauging the level of interest at
commerce sites during the holiday season. Source: Nielsen//NetRatings,
December 1999

Computer Hardware, Auctions and Comparison Sites Show Gains

The number of visitors to computer hardware sites showed an increase (9.1%), but O’Neill notes that not all of that traffic should be attributed to shoppers. “Some of it is no doubt folks looking for Y2K information,” she said.

Auctions, which aren’t seasonal by nature, enjoyed a slight bump (1.3%) from the week before, while comparison sites showed a significant increase (4.0%). Shown to be popular with men, comparison sites last week drew 62 percent of their traffic from males.

“As retailers get better at reassuring cybershoppers of their fulfillment and delivery infrastructure, we expect to see traffic sustained at higher levels past December 12,” said O’Neill. “Online gift certificates and other last-minute solutions, which were more prominent this year, are expected to blossom next year as word gets out about them, and the Web will be more successful at drawing procrastinators.”

About Nielsen//NetRatings

Nielsen//NetRatings, the audience measurement service from Nielsen Media Research and NetRatings, Inc., collects data from more than 38,000 panelists as they use the Internet at home. The Nielsen//NetRatings panel is the largest media research sample of at-home Internet users currently being measured in real time. Nielsen//NetRatings uses unique technology capable of measuring both Internet use and advertising to provide the most timely, accurate and comprehensive Internet usage data and advertising information in the industry. For more information, please visit [www.nielsen-netratings.com][1].

[1]: http://www.nielsen-netratings.com/



While this year started out with concerns of a continued rise in delinquencies, chargeoffs, and personal bankruptcies coupled with predictions of an economic pullback, 1999 turned out to be a year of transition for most card issuers. The transition included the realization that double digit growth in outstandings is no longer cost effective, especially in the main stream market and that rising convenience use of credit cards among consumers is here to stay. Some issuers responded to the market changes by compensating with aggressive cardholder pricing, particularly with fees. That strategy backfired for the nation’s second largest issuer, Bank One/First USA. With most market segments highly competitive, the sub-prime sector churned out impressive results for some issuers such as Providian and Metris and attracted serious, new competition from Household and Associates. Regional issuers continued to exit the national marketplace this year, focusing on building relationships with core marketing area cardholders. As a result, the top ten issuers gathered more market power this year, now controlling 76% of the market. As the year ends it appears that late stage delinquencies may produce higher chargeoffs in the first quarter of 2000. However bankruptcy, as a percentage of chargeoffs, continues to decline. Yields continue to inch up slowly but surely as promotional rates expire and should continue to rise through early 2000 as issuers retreat from irrational pricing.


Jan* Dec* Jan* Dec*
Delinquency: 5.00% 4.75% Vol Attrition: 8.27% 8.45%
ChargeOffs 5.46% 4.98% Inv Attrition: 5.40% 5.21%
Bankruptcy: 38.4% 36.8% Mo Paymnt: 15.82% 16.99%
Fraud 0.09% 0.09% Yields: 13.63% 14.16%

*based on previous month’s experience for explanation of
terminology/methodology visit CardData (www.carddata.com); access fee required


Partners First Unloaded

Wachovia is picking up nearly $2 billion in card receivables for next year from the pending acquisition of the Partners First portfolio. Yesterday Harris Bank and Bank of Montreal announced an agreement to sell substantially all of the assets of Partners First to Wachovia. The sale includes a bank credit card portfolio of more than 1.2 million accounts and $1,985,000,000 in card outstandings. Wachovia is paying an 8.3% premium for the portfolio. The purchase agreement includes a 5-year agent relationship between Wachovia and Harris Bank. The cash transaction includes $1.416 billion in securitized loans and will be accounted for as a purchase. Wachovia will therefore assume most of the assets and liabilities of Partners First. Employees of Partners First, located in Baltimore and Boston, and will join Wachovia following the transaction closing. Bank of Montreal says the deal will produce a pre-tax gain of US$75 million. Wachovia said yesterday the Partners First acquisition fits the bank’s strategy of aligning with regional brands to enhance its credit card business. Partners First was formed in Jan. 1998 by Bank of Montreal, Bank Boston and First Annapolis Consulting. About 50% of initial bank credit card portfolio came from former BankBoston accounts. Bankmont Financial, the U.S. holding company of Bank of Montreal, is the majority owner of Partners First. First Annapolis Consulting is the minority shareholder.


Jan 98: $2.40 billion Dec 98: $2.21 billion
Mar 98: $2.34 billion Jun 99: $2.13 billion
Jun 98: $2.48 billion* Sep 99: $1.99 billion

* includes acquisition of $190 million from Comerica
Source: CardData (www.carddata.com)


Mann to BioSpace

BioSpace.com ([http://biospace.com][1]) Wednesday announced the appointment of Les Mann to Executive Vice President of Sales and Marketing, reporting directly to Timothy Fredel, CEO of BioSpace.com. Mann, 48, is currently Senior Vice President of Merchant Sales and Integrated Solutions at Visa U.S.A., and will officially begin his new position at BioSpace.com on January 3, 2000.

“Les Mann represents a key hire for BioSpace.com because his major responsibility will be to expand our e-commerce services to life science industry enterprises and end-users,” said Timothy Fredel, CEO of BioSpace.com. “His experience at Visa and in supply chain management will also be a tremendous asset in our efforts to serve our customers, including our newest and biggest customer, the National Institutes of Health.”

Prior to working nine years at Visa, Mann’s experience included a decade at American Hospital Supply. He is well respected in the industry and brings a valuable skill set to BioSpace.com during the critical period of the company’s growth into e-commerce.

“BioSpace.com is not the first Internet company to enter the life sciences e-commerce competition, but it has the best business model to support a healthy buyer-seller relationship for both the enterprise and the end-user,” said Les Mann. “This, combined with their website’s breadth of content and services supporting the life sciences community will enable BioSpace.com to become the preferred value-added resource within the industry.”

Mann’s hiring is the latest in a series of key hires made by BioSpace.com. The most recent other key hire was Scott Clarke, now COO of BioSpace.com, who was recruited from Incyte Pharmaceuticals where he had served as Chief Information Officer.

BioSpace.com is the leading global hubsite for the life sciences industry. Launched in March, 1995, BioSpace.com is the most heavily trafficked business-to-business (B2B) life sciences portal on the Internet, attracting 1.2 million page views per month from over 200,000 unique visitors to industry news, company profiles, stock information, jobs, events, regional hotbed communities and an ever-expanding e-commerce marketplace. The company was founded by Jennifer King in 1985, and has been dedicated to serving the life sciences industry for over a decade. The combination of content, community and commerce make BioSpace.com the most comprehensive life sciences resource on the Web.

[1]: http://biospace.com/


Amoco Online Access

Associates First Capital became the first company to offer an entire gasoline credit card portfolio the option of receiving monthly statements and making payments online. Associates owns and manages Amoco’s private label oil and bank credit card portfolios, comprised of 3.5 million cardholders. The Associates E-bill program was developed and implemented in conjunction with CheckFree.


Metris Online Deal

Prodigy Communications has signed a co-branded credit card and fee-based services contract with Metris Companies. The five-year deal, which is valued at $58 million, if specific thresholds are achieved, will offer to Prodigy’s two million customers a ‘Prodigy MasterCard’ and a wide range of Metris fee-based products including a credit monitoring service, a travel club, a card registration service and a purchase protection program. The ‘Prodigy MasterCard’ will be offered as both a secured and unsecured product. The credit card program will also offer online access to account information and a digital wallet.


TMEX’s Hot Start

TMEX USA Inc. Wednesday provided information indicating that its new debit card service, announced six weeks ago, has had an impressive beginning.

Early results suggest that the revenue that will be produced from this debit card product will exceed previous estimates.

Final tests of the debit card platform were successfully completed early in December. Concurrently, TMEX entered into an agreement with a major customer to reserve telephone service for slightly more than one million debit cards. Last week, the first week of actual consumer service through the TMEX debit switch, over 50,000 debit cards were activated and in use. TMEX operations reports that telephone traffic flowed smoothly across the switch throughout its initial week of service.

TMEX will derive significant immediate revenue from its new debit card service. Activation of the full suite of over one million debit cards and pins called for in the agreement between TMEX and its largest debit service customer in early December will yield approximately $10 million in revenue for TMEX. Initial revenue for December is in excess of $300,000.

TMEX, a telecommunications company with headquarters in Newport Beach, supplies international wholesale telephone, video, data, private networks, and Internet services via high technology laser communication links.


Card Vol Up 24%

VISA International reports this morning that global transaction volume for the period between Nov. 25 and Dec. 20 hit $58.5 billion, a 24% increase over the same period last year. Last Saturday, Dec. 18, set a new world record as VISA processed 3,782 transactions per second compared to a typical daily average of 2,530 transactions per second. VISA’s U.S.-based processing centers also handled a peak of 3,255 transactions per second last Saturday, representing a 22% increase over the same Saturday in 1998. Dec. 24 is traditionally the busiest shopping day of the holiday season and VISA said it anticipates processing between 3,800 and 4,200 transaction per second tomorrow. Last year the VISANet system sustained, for the first time, more than 3,000 transactions per second for nearly fourteen continuous hours of the holiday season. About 25% of VISA’s annual transaction volume occurs between Nov 20 and Jan 3.


TSYS Holiday Volume

The Holiday Season ushers in the busiest time of the year for point-of-sale authorizations and transactions at Total System Services, Inc. During this season, which began the weekend following Thanksgiving, TSYS’ monetary transaction volume increased by 61 percent over the same period last year. To date, TSYS’ busiest hour peaked at 326 authorizations per second , an increase of 32 percent over the corresponding day in 1998.

“It appears that TSYS will have another phenomenal holiday season, and we are excited about the increase in authorization and transaction volumes,” said TSYS President Philip W. Tomlinson. “TSYS’ increases in authorization and transaction volume can be attributed to the significant account growth in 1999 as well as increased card usage.”

“TSYS is committed to providing our customers with the highest levels of technology. Our superior processing systems were developed to handle large transaction volumes, allowing TSYS customers to gain the competitive edge needed in today’s domineering market,” Tomlinson continued.

TSYS is one of the world’s leading information technology processors of data and transactions for domestic and international issuers of credit, debit, commercial and private-label cards. TSYS’ sophisticated systems offer online accounting, data processing, electronic commerce services, portfolio management, account acquisition, credit evaluation, risk management and customer service. Through its family of companies, TSYS services the entire lifecycle of card accounts, and processes millions and millions of accounts, making it possible for consumers to use their cards any time, anywhere. Headquartered in Columbus, Ga., TSYS ([http://www.totalsystem.com][1]) is an 80.8 percent owned subsidiary of Synovus Financial Corp. (NYSE: SNV) ([http://www.synovus.com][2]) named the Best Company to Work for in America by FORTUNE magazine.

[1]: http://www.totalsystem.com/
[2]: http://www.synovus.com/


CheckFree Acquisition

CheckFree announced Tuesday it will acquire BlueGill Technologies in a stock deal valued at $250 million. BlueGill’s management team, base of about 100 employees, and locations in Ann Arbor, MI and Toronto will remain with the company. The unit’s financial results will be reported within CheckFree’s software business segment. Founded in 1996, BlueGill pioneered Internet bill and statement presentment, evolving into an international software development company. BlueGill software provides a platform for electronic billing and payment by transforming legacy systems into interactive Web applications for managing customer relationships. BlueGill’s client list includes CitiBank, Chase, U.S. Bank, ABN AMRO, EDS, Cable & Wireless, Guardian Insurance, Capital One, Detroit Edison, Billserv.com, IBM and Xerox. CheckFree said yesterday that it chose BlueGill because it offers an infrastructure that has proven scalability, and a technology vision that supports interoperability.


Top Sacrifice

The trouble within Bank One’s First USA credit card unit percolated to the top yesterday with the resignation (abrupt retirement) of Bank One’s chairman and CEO, John McCoy. The news came yesterday around noon as Bank One’s stock was sinking to a new low of $29.75 per share. The news of yet another “head on the platter” produced an afternoon rally sending Bank One’s stock to nearly $34 per share. Since mid-May, Bank One’s stock has declined from $63 per share to $30 per share. The stock’s slide was accelerated in August when Bank One disclosed that First USA was struggling with growth, attrition and profitability issues and that the credit card problems would cause Bank One to miss analysts’ earnings estimates. The stock continued to slide after a second warning last month. Since late summer there has been widespread speculation that Bank One would sell off the card unit, the second largest portfolio in the country with $70 billion in receivables. However, McCoy, who made the acquisition of First USA in 1997, indicated last month that First USA would not be sold. With McCoy out of the way, the question is no longer will First USA be sold or Bank One taken over, but when. Once considered an unstoppable credit card powerhouse First USA’s troubles this year cost Richard Vague his job as First USA’s chairman and CEO in mid-October, and Randy Christofferson his position as president of First USA Bank in mid-May. There has also been an exodus of other top talent at First USA. Bank One announced Tuesday that John Hall retired chairman and CEO of Ashland, Inc. will serve as non-executive chairman of the board of Bank One. Verne Istock president of Bank One, was elected acting CEO. William Boardman senior executive vice president, was elected vice chairman and a director and will continue his responsibilities as head of the credit card business and be based in Wilmington. (See CF 5/19/99 & 10/20/99)


Flexible Smart Card Reader

Cubic Transportation Systems announced this morning it has designed the first smart card reader capable of processing three types of contactless smart cards. Using the latest in digital signal processing technology, the ‘Tri-Reader’ processes the ISO ‘14443 Type A’, ISO ‘14443 Type B’, and the Cubic ‘GO CARD’ contactless smart cards. The universal feature gives transit authorities the flexibility to systematically build the infrastructure necessary to support a smart card-based fare collection system without having to be locked into a particular card type. That selection can be made as user requirements are subsequently refined based on transaction speed and memory capabilities of the different card types. The ‘Tri-Reader’ also supports multiple ‘Security Application Modules’ which will allow transit fare payment equipment to support other applications beyond transit, such as electronic purse. Cubic is the world’s leading specialist in automated fare collection systems for mass transit. Cubic has built fare collection systems in London, New York, Chicago, Washington, Sydney, Shanghai, Hong Kong and Singapore.