TX-based Wincor Nixdorf has named Brad Waugh, formerly with Watch Hill Partners and MasterCard Advisors, as its new U.S. CEO. Waugh previously served as founder, President/CEO of Watch Hill Partners (WHP), a venture-backed CRM (Customer Relationship Management) consulting that specialized in the optimization and mobilization of sales force and service level automation of financial services companies. Prior to his executive roles at Watch Hill Partners and MasterCard Advisors, Waugh was President at an infrastructure management services company, and executive vice president for a consulting and technology services company. Wincor Nixdorf is one of the world’s leading suppliers of IT solutions to the retail and banking industries.
British Columbia-based DataWave Systems is being acquired by Atlanta-based InComm Holdings for $36 million in cash. DataWave is a provider of prepaid and stored-value delivery systems in Canada with operations in the U.S. InComm plans to integrate DataWave’s 10,000 retail locations and 6,000-plus POSA terminals located in Canada and the U.S. into its network of more than 145,000 retail locations. DataWave will become a wholly-owned subsidiary of InComm. Josh Emanuel, DataWave chairman and CEO, will remain as president of the InComm subsidiary. InComm offers financial debit cards, gift cards, music downloads, ring tones, games, long-distance cards, online games, broadband, digital television as well as bill payment solutions. The deal is expected to close in the fourth quarter.
Even though gas prices are falling and consumer optimism is rising it appears the Fed will hold the lid on short-term interest rates tomorrow. Regardless, credit card interest rates continue to climb with punitive rates among the top issuers hovering at an unprecedented 32.24% this month. The rising rate climate has also largely driven fixed interest rate credit cards from the market with the exception of short-term promotional rates. According to CardTrak (www.cardtrak.com), the average fixed interest rate is now 14.55% versus an average variable interest rate of 16.34%. Since the Fed started tightening rates in July 2004, the average variable credit card interest rate has soared 476 basis points. More than 86% of credit card accounts now carry variable interest rate structures. Most of the top issuers charge at least nine points over the prime rate for standard accounts which means a return to 17%-18% APRs.
CREDIT CARD INTEREST RATES
Month Prime Fixed Variable
Aug 04 4.50% 12.85% 11.89%
Sep 04 4.75% 12.88% 12.11%
Oct 04 4.75% 13.00% 12.19%
Nov 04 5.00% 13.04% 12.37%
Dec 04 5.25% 13.09% 12.49%
Jan 05 5.25% 13.22% 12.67%
Feb 05 5.50% 13.25% 12.84%
Mar 05 5.75% 13.32% 13.08%
Apr 05 5.75% 13.39% 13.17%
May 05 6.00% 13.48% 13.45%
Jun 05 6.00% 13.59% 13.61%
Jul 05 6.25% 13.64% 13.84%
Aug 05 6.50% 13.76% 14.24%
Sep 05 6.75% 13.80% 14.49%
Oct 05 6.75% 13.87% 14.64%
Nov 05 7.00% 13.91% 14.89%
Dec 05 7.25% 13.93% 15.20%
Jan 06 7.50% 14.08% 15.53%
Feb 06 7.50% 14.11% 15.75%
Mar 06 7.75% 14.15% 15.81%
Apr 06 7.75% 14.19% 15.99%
May 06 8.00% 14.23% 16.02%
Jun 06 8.00% 14.32% 16.10%
Jul 06 8.25% 14.42% 16.27%
Aug 06 8.25% 14.55% 16.34%
Source: CardTrak (www.cardtrak.com)
Charge-offs for credit card-backed bonds in the U.K. continued to deteriorate during the second quarter, hitting a record 7.0%, compared to 4.5% one-year ago and 6.6% for the prior quarter. Delinquencies also edged upward during 2Q/06 to 3.8% compared to 3.7% in the first quarter. According to FitchRatings, increases in bankruptcies and individual voluntary arrangements continued to strongly influence the rising charge-off numbers. To tackle the issue of bankruptcies and
IVAs, some originators are considering reviewing their underwriting policies, enhancing their predictive scoring and managing their various delinquent portfolios in an attempt to reduce losses. Meanwhile, the monthly payment rate on credit card ABS declined in the second quarter to 17.2%, compared to 18.9% for the first quarter. The Fitch “Yield Index” also declined to 19.9% at the end of 2Q/06, from 20.7% at the end of March.
IL-based EFMARK-Bantek, a provider of maintenance and cash services for ATMs and terminals, has landed Wayne Robinson, formerly with KKR, GE and Boston Consulting Group, as CEO. Robinson, a seasoned business veteran with deep operational and financial experience, will oversee the implementation of EFMARK-Bantek’s strategic plan across all divisions in its 43-state footprint. His appointment as CEO opens a new phase of development for the recently-merged company, which includes plans for a new company name, a broadening service portfolio, and entry into complementary market segments. EFMARK-Bantek is the nation’s largest independent ATM service company.
Wal-Mart is phasing out its layaway program and will promote its payment card programs instead. For the first time, customers who apply for a new “Discover” or “Wal-Mart Credit Card” will receive $20 cash back when they apply at the register and purchase at least $100 on their card the same day. The giant retailer says declining use and increasing costs forced the decision. Customers will have until November 19 to place items in layaway for this Christmas season and merchandise must be picked up by December 8.
Chase is rolling-out a new rewards credit card that enables cardholders to seamlessly change between cash back and points. The new no annual fee “Chase Freedom” card offers rewards for all purchases, triple rewards on certain everyday purchases and no loss of cash or points when changing between rewards. The new card is also “blink”-enabled for contactless payments at more than 30,000 U.S. merchant locations. The card offers 1% cash-back on all purchases or one point for each $1 spent on the card. The card carries interest rates ranging from prime +5.99% to prime +14.99%, with a 0% APR on purchases for the first year. Chase is launching an integrated marketing and advertising campaign to support the new card featuring a remix of The Rolling Stones’ “I’m Free.” Earlier this year Chase and United Airlines launched the “Choices” program for its “Mileage Plus VISA” cardholders. The unique program offers enhanced redemption opportunities that goes beyond simple mileage redemption. (CF Library 5/1/06)
Top executives of Western Union are hitting the road today to make presentations to the equity investment community in advance of its spin-off from First Data on September 29th. The Company said its expects 2006 revenue to be 11% to 12% above the prior year possibly hitting $4.5 billion. Excluding expenses related to its spin-off, operating income should fall between $1.32 billion and $1.34 billion. For 2007, Western Union expects revenue growth in the range of 10% to 12%, excluding acquisitions. In addition, the company expects operating income growth of 6% to 9%, excluding spin-off costs. The Company also noted that for the third quarter through September 14, the company’s overall consumer-to-consumer transactions grew 15% on a year-over-year basis. International transactions grew 23% for the same period.
Troy, MI-based North American Bancard is deploying 3,000 MasterCard “PayPass” acceptance devices to all NAB merchants, free of charge. The Vivotech devices are in stock and ready for national deployment to all new and existing customers. NAB calls it contactless devices “Tap-Here” devices. There are approximately 10 million “PayPass” cards and devices in the market and approximately 32,000 merchant locations around the world that accept “PayPass.” NAB is a registered MSP/ISO of HSBC Bank and has more than 50,000 clients.
At the final stop of a joint, 12-city data security tour VISA USA and the U.S. Chamber of Commerce indentified five major causes of data breaches. The five leading causes of card-related data breaches include storage of magnetic stripe data; missing or outdated security patches; use of vendor supplied default settings and passwords; SQL injection; and unnecessary and vulnerable services on servers. The Chamber is currently distributing the VISA security alert to its full membership of small and mid-sized businesses nationwide. VISA and the Chamber of Commerce began the 12-city nationwide town hall tour titled, “Securing Our Businesses, Protecting Our Customers” on June 26th. (CF Library 6/26/06)
OR-based TRM announced that its president/CEO, Jeffrey Brotman, will become chairman; also Richard Stern has been hired as EVP/Corporate Operations and Ashley Dean has been promoted to EVP/ATM Business Operations The Company also announced that Tony C. Banks has been elected to serve on the board of directors. Mr. Banks is a Vice President of FirstEnergy Corporation, where he has been since 2004. TRM Corporation is a consumer services company that provides convenience ATM and photocopying services in high-traffic consumer environments.
China Construction Bank and Bank of America have indicated they plan issue a credit card in 2007. BofA took a $3 billion stake in CCB last year and recently agreed to sell its 16 branches in Hong Kong to CCB. BofA reportedly was pushing to launch a credit card in China this year but is still working out the details of its relationship with CCB.
CCB is one of the four biggest banks in China, with operations covering over 18,000 ATMs and almost 1,000 self-service branches.