04/21/2004 • CardFlash® - Payment Card Industry News

ABS Charge-Offs Spike in March as Delinquency Stabilizes

5, Country, Priority, UNITED STATESBy Robert McKinley 04/21/2004

Delinquency (60+ days), among card-backed securities, dropped to 3.35% in March, and continues to remain stable. However, prime charge-offs jumped 30 basis points from February to 6.75%. After three consecutive months of improved performance, sub-prime charge-offs reversed ground, climbing 64 bps to 17.27%. However, sub-prime charge-offs were 163 bps below the level a year ago, according to the “Fitch Credit Card Index.” Yield, after reaching an all-time low last month, climbed 124 bps for March to 17.10%, its highest level since April 2003. Excess spread rose 36 bps to 6.41%, also 36 bps above the year-ago level. The monthly payment rate fell for the first time since December, sliding 64 bps to 15.95%. Bankruptcy filings reported for the month of March totaled 152,567. Year-to-date bankruptcy filings were 392,023, down 1.2% from the same time last year.

Chase Credit Card Profits Up 11%, Volume Climbs 6%

5, Country, Priority, UNITED STATESBy Robert McKinley 04/21/2004

J.P. Morgan Chase this morning reported that operating earnings for its card business increased 11% in the first quarter, volume gained 6%, and credit card outstandings were relatively flat compared to one-year ago. Charge-offs edged upward, but delinquency declined, compared to the previous quarter. Operating revenues on a managed basis were $1.6 billion, up 7%, driven by 15% growth in purchase volume. Expenses of $605 million for the quarter were up 12%, reflecting higher marketing and severance and related costs. Operating earnings for the first quarter were $162 million, compared to $146 million one-year ago. Charge-offs came in at 5.80%, compared to 5.76% in the previous quarter, and 5.95% one-year ago. Delinquency (30+ days) declined 25 basis points over the fourth quarter to 4.43%. Delinquency for 1Q/03 was 4.59%. Charge volume for 1Q/04, which includes total customer purchases, cash advances and balance transfers, was $22.0 billion, compared to $20.7 billion for 1Q/03. Chase reported that it signed up about one million new accounts in the first quarter. The issuer ended the quarter with 30.8 million gross card accounts and 16.5 million active card accounts. For complete details on Chase’s first quarter performance visit CardData ([www.carddata.com][1]).

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

Fiserv to be First Processor to Certify with CUSC’s NGN

5, Country, Priority, UNITED STATESBy Robert McKinley 04/21/2004

Fiserv EFT/CNS and Credit Union Service Corporation have inked a contract that enables Fiserv to become the initial third-party processor to certify and be granted access to the CUSC “Next Generation Network” switch. With the agreement, Fiserv and CUSC are implementing a business plan that provides significant benefits to the credit union market by combining extensive technology resources and nationwide service reach. CUSC Credit Union Service Corporation is the credit union movement’s largest shared-branching network, representing 55 percent of all national locations and 68 percent of credit unions participating in shared branching. Fiserv, Inc. provides information management systems and services to the financial industry, including transaction processing, business process outsourcing and software and systems solutions.

Certegy’s Revenues Grow 10% in the First Quarter

5, Country, Priority, UNITED STATESBy Robert McKinley 04/21/2004

Certegy this morning reported that first quarter revenues grew nearly 10% to $263.4 million as net income increased $8.5 million to $20.7 million. Card Services generated revenue of $162.7 million in the first quarter, an increase of 3.5% above the 2003 quarter. Merchant processing revenue increased by 7.4% and international card issuing revenue declined 17.8% during the quarter. Check Services generated revenue of $100.7 million in the first quarter of 2004, an increase of 21.3% over the 2003 quarter. Certegy’s global card base was 46.8 million at quarter-end. A 16.4% increase in debit transactions contributed to overall domestic card transaction growth of 9.6%. During the quarter, Certegy acquired Crittson Financial and Game Financial Corporation. The Company also revised its outlook upward, with revenue expected to grow by 13% to 15% in 2004, compared with prior year. For complete details on Certegy’s first quarter performance visit CardData ([www.carddata.com][1]).

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

ChockBox and ICE 5500 Team for QSRs

5, Country, Priority, UNITED STATESBy Robert McKinley 04/21/2004

OR-based Chockstone has released its “ChockBox” application suite on the Hypercom “ICE 5500” card payment terminal for the QSR industry. The payment solution will combine Chockstone’s stored value application with Hypercom’s smart, fast and easy-use payment technology to support credit/debit, electronic gift, loyalty and promotions marketing transactions at the point-of-transaction for the QSR industry. Chockstone is the Technology Behind Stored Value(TM). As the leading stored value card processor, Chockstone focuses on gift, loyalty, and marketing card programs for multi-unit QSR and retail organizations. Hypercom Corporation is a leading global provider of electronic payment solutions that add value at the point-of-transaction for consumers, merchants and acquirers, and yield increased profitability for its customers.

TranSending v2.0 to be Released in June

5, Country, Priority, UNITED STATESBy Robert McKinley 04/21/2004

Infonox is beefing-up its “TranSending System” by upgrading the commissions module, transactional reporting, merchant boarding, underwriting, and CISP compliance. TranSending is an integrated environment that enables merchantacquirers to easily manage their merchants, agents, ISOs and transactions over their entire lifecycle. Several new and enhanced features extend its position asa comprehensive tool to manage merchant portfolios. Infonox provides infrastructure solutions for businesses to deploy, aggregate and manage transaction services.

PULSE Transactions Up 35% in 1Q/04

5, Country, Priority, UNITED STATESBy Robert McKinley 04/21/2004

The volume of electronic transactions processed by PULSE EFT Association increased 35% in the first quarter compared to a 27% gain in the prior year. During the first quarter, PIN debit transactions at the point of sale increased 44% compared to the same period last year. ATM transactions increased 24% during the quarter compared to 1Q/03. PULSE also added more than 110 new member financial institutions during the quarter. The network links an estimated 90 million cardholders with more than 200,000 ATMs and 3.2 million POS terminals at retail locations nationwide.

MAG-IC X1000

5, Country, FRANCE, PriorityBy Robert McKinley 04/21/2004

Schlumberger’s Axalto subsidiary is planning to launch a new, code division multiple access portable point-of-sale terminal this summer, that provides a long-range wireless payment solution. Axalto is also set to bump-up the frequency used for its digital enhanced cordless telecommunication, portable POS terminal for short-range PIN-based transactions, from 1.9GHz to 2.4GHz, enabling it to operate in more countries worldwide. The “MagIC X1000 CDMA” terminal uses “1XRTT,” the leading-edge CDMA data wireless technology, which enables greater coverage at an affordable cost and always-on capability. The terminal is EMV approved, and compliant with the latest PIN entry security standards. Axalto’s “MagIC X1000 DECT” will be on the market before summer. The “DECT” terminal has a range of up to 300m and can support a network of four handsets and two bases. The new worldwide version of the “MagIC X1000 DECT” is EMV and PED approved, and is also compliant with the latest global PIN entry security standards.

Encore Merchant Services Offers TeleCheck Eclipse

5, Country, Priority, UNITED STATESBy Robert McKinley 04/21/2004

Encore Merchant Services has announced the “TeleCheck Eclipse” all-in-one payment terminal, which combines an integrated inkjet printer, check reader, and credit and debit card processing. This digital process allows merchants to accept checks as quickly, safely and easily as credit cards while improving the cash flow of their business. Primax Payment Systems currently has over 5,000 merchants located in 48 states. EncoreÂ® Merchant Services targets new business through credit unions to offer full service credit and debit card acceptance services to credit union member businesses nationwide.

Credit Unions to Offer a MasterCard BusinessCard

5, Country, Priority, UNITED STATESBy Robert McKinley 04/21/2004

Dallas-based TNB Card Services has introduced a “MasterCard BusinessCard” for credit unions that offers an optional “Member Miles Rewards Program” or a cash-back rebate program. The card gives small business owners better money management tools to track business expenses and employee spending. TNB Card Services, owned and directed by credit unions since 1976, provides full-service credit and debit card processing, as well as an agent issuing solution for credit unions nationwide. MasterCard International is a leading global payments solutions company that provides a broad variety of innovative services in support of our global members’ credit, deposit access, electronic cash, business-to-business and related payment programs.

Hypercom Introduces an IP Gateway Device

5, Country, Priority, UNITED STATESBy Robert McKinley 04/21/2004

Hypercom Corporation has rolled-out a compact, high speed, low cost Internet Protocol gateway device that converts existing Hypercom terminals into faster, IP-enabled card payment terminals. The new “Hypercom IN-tact 1101” allows the retailer with as few as one or as many as 16 Hypercom terminals to quickly and easily connect to the Internet. The device uses “3DES” and “SSL” session security to encrypt and transmit transactions virtually instantaneously. Hypercom says the “IN-tact 1101” gives ISOs the ability to deliver an array of time saving and/or revenue-generating, profit-building services to the merchant countertop. For example, the “IN-tact” continually monitors and alerts an ISO to any interruption in services. Secure remote management options allow a help desk to proactively troubleshoot issues right down to the terminal level, perhaps even before the merchant has realized that a problem exists.

PayPass and ExpressPay Shave Check-Out Times

5, Country, Priority, UNITED STATESBy Robert McKinley 04/21/2004

A new white paper reports that MasterCard’s “PayPass” cardholder transaction volumes increased 12% from the prior year at the PayPass trial merchants, and that the American Express “ExpressPay” pilot results showed that customer average transaction size increased 20% to 30% compared to cash spending at participating merchants. The new study by the Smart Card Alliance, also says that in addition to an increase in transaction volume at “PayPass” merchants, “PayPass” also moved customers through checkout lanes more quickly. The most significant time savings recognized was in the drive-thru environment, where MasterCard’s “PayPass” shaved between 12 to 18 seconds off the purchase time as compared to cash. A time-motion study revealed that, on average, “ExpressPay” transactions are 53% faster than paying with payment cards with no signature, and 63% faster than cash.

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