FUSA Preview Deal

Preview Travel, Inc. announced this morning a multi-year, multi-million dollar marketing agreement that includes a co-branded credit card program with First USA. The Preview Travel co-branded MasterCard will be launched online this summer. Preview Travel has more than 7 million registered members. According to the terms of the deal, Preview Travel could realize millions of dollars in revenue, of which a portion is guaranteed.

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VISA NFL

VISA says its fifth NFL campaign will be the most extensive ever. The integrated marketing program for the NFL 1999-2000 season will include national advertising and consumer promotions, direct mail, public relations, retail and online marketing, a national fan search and league support. The theme will be: “VISA. It’s Everywhere NFL Fans Want To Be”. VISA will create two commercials spotlighting NFL fans with the spots scheduled to break in August. This year VISA will offer nine “Once-in-a-Lifetime NFL Fantasies” which includes watching playoff games with NFL players and eating lunch with an NFL quarterback. To encourage merchant participation in the “Fantasy” promotion, VISA is offering three trips to the Pro Bowl in Hawaii as prizes in a sweepstakes that rewards merchants who display point-of-sale promotional signage. VISA will also conduct the “VISA Hall of Fans” program, a season-long fan search that culminates with 31 fans being honored in the VISA-branded exhibit at the Pro Football Hall of Fame.

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Easypay Europe

Philips Semiconductors and Shell Nederland BV yesterday launched the contactless ‘Easypay’ program in Europe. The introduction of ‘Easypay’ is the first large scale application of contactless gas payment in Europe. The system is based on Philips Semiconductors’ ‘MIFARE’ chip and eliminates the need for debit or credit cards. Initially the system will be introduced in 100 specially selected large Shell outlets throughout The Netherlands. Following that trial the system may be introduced in the other 650 outlets in the Netherlands and then internationally.

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Euro Mondex

The first Euro denominated Mondex cards will be issued in France by the largest acquiring bank and second largest card issuer in France, Credit Mutuel. The bank says it will issue 50,000 cards in France by year end and several million in the second half of 2000. Hitachi will supply a Mondex transaction handling server and two sets of related application programs to Credit Mutuel. The “One Box Solution for Mondex” will be linked to the bank system’s host computer and will make it possible to transfer Mondex value between the bank and cardholders via ATMs, POS terminals, telephones and mobile GSM, and to check and update account balances.

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Fast Platform

Mag-Tek announced Wednesday a new smart card platform that can deliver the shortest transaction time possible for smart cards capable of supporting a transfer rate of 115K bits per second. The new platform supports read write for all ISO 7816 T=0 and T=1 microprocessor cards as well as most widely used memory cards. It also provides an on board interface for up to seven Secure Access Modules. EMV certification is underway. Mag-Tek is integrating this new platform into manual insertion as well as motorized card readers, PIN selection and verification systems, and instant card issuing systems.

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VISA ’98 Stats

VISA U.S.A. reported yesterday it captured 52.8% of USA general purpose card volume last year and is set to surpass $1 trillion in USA card volume by the year 2002. For calendar year 1998, VISA captured $610.3 billion in consumer/commercial card volume with a total of 322.5 million cards-in-force in the USA market. VISA also reported that it captured 10.5% of USA personal consumption expenditures in 1998, up from 9.6% the prior year. VISA says the PCE share increase represented $52.3 billion in new VISA spending. CardData (www.carddata.com) will release USA general purpose card stats, by brand, for 1998, this coming Monday.

VISA USA 1998 SNAPSHOT

CARDS VOLUME TRANSACTIONS CARDS
Credit 443.8b (+8%) 4.8b (+6.8%) 241.0m (+3%)
Debit 134.7b (+43%) 3.0b (+46%) 73.8m (+26%)
Commercial 31.7b (+41.7%) 190.8m (+43.9%) 7.7m (+85.8%)
Total 610.3b (+16%) 8.0b (+21%) 322.5m (+8%)

b-billions; m-millions; percentage indicate change from 1997; volume
total does not add due to rounding

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Citi – Mellon

Citibank, a unit of Citigroup, said Wednesday that it has completed its previously announced acquisition of Mellon Bank’s credit card business. Terms of the transaction, which has received necessary regulatory approvals, were not disclosed.

Under the agreement announced March 23, 1999, Citibank agreed to acquire $1.9 billion in credit card receivables, establish an agent bank relationship with Mellon to market credit cards under the Mellon and Dreyfus brands and to acquire the credit card operations center in Pike Creek, Delaware. This acquisition is in keeping with Citibank’s overall strategy to focus on the core strengths of its consumer business.

On Jan. 15, 1999, Mellon announced its plans to sell its credit card business, as well as its mortgage business and network services transaction processing unit as part of an initiative to sharpen its strategic focus on businesses with the highest growth and potential for return to its shareholders.

Citibank is part of Citigroup, the world’s most global financial services organization. Citigroup’s consumer businesses cover a broad range of financial services in 57 countries – retail and private banking, credit and charge cards, mortgage lending, consumer lending, personal financial planning, personal insurance and investment brokerage and counseling. These services are marketed through Citibank, Commercial Credit, Primerica, Travelers Life & Annuity and Travelers Property Casualty. Today, Citigroup serves more than 100 million customers – including consumers, businesses, governments and financial institutions – in 100 countries and territories.

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NDC eCommerce

National Data Corporation has launched a new line of business called NDC eCommerce. NDC eCommerce will consolidate under common management the functions performed by the Integrated Payment Systems and Global Payment Systems and will be phased in by June 1. Thomas Dunn, the head of IPS will serve as COO while Robert Yellowlees will serve as CEO. David Hunt, who headed GPS, will be leaving NDC shortly. The new unit will have a parallel structure to NDC Health Information Services.

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Smallest Reader

Brea, CA-based ID TECH unveiled the smallest swipe reader available for reading credit card mag stripes yesterday. ‘MiniMag’ is 90mm long, about the length of a standard credit card. It reads up to three tracks of magnetic stripe information with a single swipe in either direction. It has both beeper and LED indicators to signal a successful read, as well as extensive data formatting and editing capabilities. The ‘MiniMag’ is available in TTL, RS-232, and keyboard wedge configurations.

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Bankruptcy Decline

A projected five to ten percent decline in the number of consumer bankruptcies in 1999 will help drive earnings growth at some consumer finance companies. As a result U.S. Bancorp Piper Jaffray yesterday raised earnings estimates for MBNA, Capital One, Providian, American Express and Metris Companies. Piper Jaffray says installment credit and credit card issuance act as leading indicators for changes in the number of consumer bankruptcy filings. PJ says that a drop in bankruptcies in 1993 and 1994 was preceded by slowing growth in consumer installment credit from 1990 to 1992. Therefore the slowdown in the growth of consumer credit in 1996 and 1997, due to a concern over deteriorating credit quality, should lead to a decline in bankruptcies beginning with first quarter 1999. Therefore PJ projects that declining bankruptcies will have a significant impact on lender profitability, adding from 5% to 25% more earnings power in 1999. The firm also predicts Capital One will overtake MBNA as the industry leader for the lowest net losses.

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