Oberthur Card Systems is set to supply one million smart IDs for the U.S. Department of Defense. U.S. Bancorp (NYSE:USB), with assets of $213 billion, is the 6th largest financial holding company in the United States. The company operates 2,434 banking offices and 4,966 ATMs, and provides a comprehensive line of banking, brokerage, insurance, investment, mortgage, trust and payment services products to consumers, businesses and institutions. Oberthur Card Systems is one of the world’s leading providers of card-based solutions, software and applications, including SIM and multi-application smart cards, as well as services ranging from consulting to personalization.
A new report has found that rewards programs have become an essential aspect of bank card business strategy and help increase card usage, customer retention and margins, but, they come with a cost to the institution in terms of overall profitability. The research also found that an overall decline in bank cards is signaling the need for banks to evolve their rewards strategies. The study by TowerGroup says general-purpose cards produced 75% of the bank card industry’s sales volume. Yet even with a greater number of solicitations mailed by bank card issuers in 2005, only 0.3% of target consumers responded – yielding the industry’s lowest historic response rate. This downward trend in response rates has increased the cost to acquire new customers. TowerGroup expects that within five years, 90% of consumers holding GPC will have some form of rewards. Yet these rewards undoubtedly place increased financial burdens on the profitability of bank card programs. TowerGroup believes that 2006 marks a transition year for banks in terms of moving from using rewards programs as a tool simply to attract and retain customers, to being more careful in evaluating the effect of rewards on the bottom line as well as how rewards are delivered.
Stein Mart and GE Retail Consumer Finance have inked a multi-year agreement to launch a Stein Mart co-brand credit program. The new “Stein Mart Platinum Rewards MasterCard” will offer its cardholders a points-based rewards program plus the benefits of the “Stein Mart Preferred Customer Program.” Shoppers can apply for the new card four ways, including instant credit in-store or online. Under the new agreement, Stein Mart will integrate and promote the new Stein Mart credit card in its internal and external marketing activities. GE Retail Consumer Finance will be responsible for managing the Stein Mart card program, providing customer service, billing, database management and analytics support, and credit management.
RI-based Citizens Financial Group, a unit of Royal Bank of Scotland Group, has promoted Joseph Hoffman to president and chief executive of its credit card-issuing subsidiary, RBS National Bank. Before joining RBS National Bank, he had held various marketing positions at Metris, Advanta, and Citibank.
Equifax has appointed Lee Adrean as CFO, replacing Donald Heroman who has announced plans to retire. Adrean brings 30 years of commensurately senior positions in financial management, business leadership, and international strategy consulting to Equifax. Most recently, he served as Executive Vice President and Chief Financial Officer for NDCHealth Corporation. Adrean holds a Masters in Business Administration from Harvard University, and a Bachelor of Science in Accounting from Bucknell University. Equifax Inc. is a global leader in information technology that enables and secures global commerce with consumers and businesses.
i2c has signed a processing agreement with Terminal Velocity Processing which specializes in payment processing solutions and management, predominantly in the “Card Not Present” market. The i2c application interface and back office engine gives TVP a fast, reliable, and scalable entry point into the rapidly growing pre-paid debit card industry. Terminal Velocity Processing, incorporated in 2003, specializes in payment processing for the Card Not Present merchant: mail order/telephone order (MO/TO) and internet. i2c is a leading, global technology provider of electronic payment processing solutions.
PA-based Ecount has teamed with the Advertising Checking Bureau which services more than 200 of the top manufacturers with an extended suite of Web-based offerings, providing a total solution from planning, payment and reporting for their client’s channel partner needs. ACB’s partnership with Ecount enhances their product offerings by expanding their services to include Visa debit card solutions, extending beyond cash and premium alternatives. Ecount provides customized prepaid programs for corporations looking for a simple and convenient way to deliver electronic payments. ACB remains uniquely qualified to support the Spiff, Rebate, Incentive, and Trade Promotion Marketing needs of manufacturers.
LINK announced it has separated its ATM network from its infrastructure. LINK’s plans were endorsed in an OFT-chaired Working Group earlier this year and the reforms deliver on recommendations made by the OFT Payment Systems Task Force. Over the past decade LINK’s activities have diversified to include: the provision through mobile phones of banking services; mobile phone top-ups at cash machines;
providing solutions for payments processing, ATM acquiring and card
issuing through its outsourcing division, Avantra; and enabling free-of-charge cash withdrawals over Post Office counters. The LINK program has 49 members, while the infrastructure company has
22 owners. LINK enables cardholders to withdraw cash and obtain
balance information from all but a handful of the 59,000 ATMs in the
U.S. Bank debit card customers enrolled in the “Checking That Pays Cash Bonus Check Card” reward program will now earn an even bigger cash reward automatically at select retailers, up to a 25% cash reward or more when they make non-PIN purchases using their card at more than 120 select national retailers. The new reward is on top of the quarter-percent cash reward currently earned on all signature transactions. All earned “Premium Rewards” are automatically credited to the customer’s “Cash Bonus” reward account by the first of each month. Customers can redeem their cash reward on demand after $5 has been accrued. “Premium Rewards” is an enhancement to the “Cash Bonus Check Card” reward program and is available to both consumer and business customers.
Experian reports that its annual conference has been booked to capacity. The third annual “Vision 2006 Conference” will include guest speakers and industry experts on subjects including scoring technology, risk management, fraud prevention, collections, portfolio management, database management and legislative issues. More than 40 breakout sessions on topics ranging from risk management to strategy optimization also will be offered. General sessions this year will feature best-selling business author Malcolm Gladwell; the president of Radnor International Consulting, and Lawrence Chimerine; and management expert and best-selling author Marcus Buckingham.
American Express has launched a nationwide promotion that will boost “Delta SkyMiles” and “SkyPoints” credit cardholders with 25% more miles or points on virtually all purchases made from October 1st through November 30th. Cardholders must enroll online or via telephone. Year round, “Delta SkyMiles Credit” cardholders earn two miles and “SkyPoints Credit” cardholders earn two points for every eligible dollar charged to the card for purchases at stand-alone supermarkets, gas stations, drugstores, the U.S. Postal Service, wireless phone bills and Delta Air Lines. During non-promotional periods, cardholders earn one mile or one point for every eligible dollar charged for other purchases.
Rising interest rates and narrowing margins are not the only issues facing credit card providers in 2006. Operating expense, driven by increased competition, is still running 160 basis points over year ago levels, but may finally be abating. After peaking at 6.04% in February, operating expenses have nudged down by four basis points in September. Operating expense is determined by dividing monthly gross operating expenses by the average managed card outstandings and then annualizing. Operating expense includes such items as credit processing, call center servicing, billing, collections, fraud management, and card issuance. According to CardData ([www.carddata.com]), operating expenses stood at 5.24% for September 2005 and settled at 6.00% for September 2006.
OPERATING EXPENSE HISTORICAL
Jan 06: 6.00%
Feb 06: 6.04%
Mar 06: 6.02%
Apr 06: 5.99%
May 06: 5.90%
Jun 06: 5.90%
Jul 06: 5.76%
Aug 06: 5.87%
Sep 06: 6.00%
Source: CardData (www.carddata.com)