Dallas-based TNB Card Services has purchased the credit card portfolios of three of its card processing clients. Selling their portfolios were Rio Grande Credit Union in Albuquerque, NM; 1st Community Federal Credit Union of San Angelo, TX; and, Corps of Engineers Federal Credit Union of Fort Worth, TX. Rio Grande CU has 11,000 members, 1st Community FCU has 25,000 members, and Corps of Engineers FCU has 3,200 members. All three clients have signed agent issuer deals with TNB. TNB Card Services serves more than 400 credit unions and manages more than 1.5 million payment cards.
Global Payments has acquired a group of European electronic money transfer firms that operate collectively under the name Europhil. Based in Madrid, the group operates 26 retail branches in Spain, Belgium and the United Kingdom. Europhil’s settlement network includes approximately 1,000 locations in over 20 countries. More than 80% of its money transfers are sent to Latin American countries, including Ecuador, Columbia, Bolivia and Brazil. For calendar year 2004, Europhil anticipates approximately $12 million in revenue. Europhil was one of the first money transfer firms established in Spain.
VeriFone has pledged $100,000 to the Southeast Asia disaster and its Chairman/CEO pledged a matching donation of $100,000. The significant support from VeriFone and Doug and Sandra Bergeron will go a long way towards saving lives and relieving suffering for hundreds of thousands of families in need in Southeast Asia. Mercy Corps relief workers are on the ground in India, Sri Lanka and Indonesia doing everything they can to help those in need. VeriFone, Inc., a global leader in secure electronic payment technologies, provides expertise, solutions and services for today with a migration strategy for tomorrow.
GE is donating $1 million to the Red Cross International Response Fund for the Southeast Asia disaster. In addition, GE employees worldwide are being offered an opportunity to support Red Cross emergency response efforts through an employee giving campaign that the GE Foundation will match 100-percent. In just three days, employees have given over $700,000, and donations continue to be given. The GE Foundation the philanthropic organization of the General Electric Company, works to strengthen educational access, equity, and quality for disadvantaged youth globally; and supports GE employee and retiree giving and involvement in GE communities around the world.
First Data has signed a five-year renewal agreement to provide electronic payment processing products and services for Sovereign Bank’s merchant customers in the New England and Mid-Atlantic markets. First Data provides merchant payment processing services on behalf of Sovereign Bank in Connecticut, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania and Rhode Island. In the past year, Sovereign Merchant Services had more than 27,185 merchant outlets, 73 million merchant transactions and $5.3 billion in merchant sales. Sovereign Bancorp, Inc., is the parent company of Sovereign Bank, pro forma, a $60 billion financial institution. First Data Corp. with global headquarters in Denver, helps power the global economy.
NY-based Universal Cash Express is expanding its gift card distribution network with PRE Solutions, which currently serves more than 55,000 retailers nationwide. PRE Solutions Inc. (www.presolutions.com) is a leading provider of prepaid transaction processing solutions designed to offer retailers powerful revenue opportunities in prepaid products and other services. PRE Solutions currently serves more than 55,000 retailers throughout the United States and Caribbean, including Amerada Hess, The Pantry, Pilot Travel Centers, Circuit City, Food Lion, Family Dollar, Dollar General and many other leading chains. Universal Express, Inc. owns and operates several subsidiaries including Universal Express Capital Corp.
MasterCard’s contactless payment system is gaining more momentum with the signing of a large PA-based convenience store chain. Sheetz plans to deploy “MasterCard PayPass” system-wide by March 1st. In August, McDonald’s inked a deal to accept MasterCard “PayPass.” McDonald’s restaurants in Dallas and the New York metropolitan area were the first to implement “PayPass”, with additional locations to be added this year. McDonald’s will eventually accept “PayPass” nationwide. “MasterCard PayPass” cardholders pay for purchases by simply tapping their “PayPass”-enabled payment card on a RF equipped terminal. “MasterCard PayPass” also eliminates the need for customers to sign their payment card receipts for all sales under $25. Currently, more than 80% of c-store transactions are under that threshold. Sheetz has 305 locations in Pennsylvania, West Virginia, Maryland, Virginia, Ohio and North Carolina.
Axalto has introduced its GPRS portable point-of-sale terminal to the Italian market. The new “MagIC X1000 GPRS” is currently under pilot with the Societa’Centrale Monetica Interbancaria, CIM Italia SPA with an installed base of 200,000 terminals across the country. Axalto’s “MagIC X1000 GPRS” terminal hosts the Italian “HGePOS” application and can be used anywhere in Italy. It is EMV Level 1 and Level 2 approved, runs the ABI EMV application, and can handle 250 transactions without recharging.
Ascom is going to outfit the Toulouse public transport network with a new information and ticketing system. The current equipment will be replaced by new machines from Ascom that can read the existing tickets and communicate with the present system until the contactless ticketing system is introduced in September 2006. The contract is worth 24 million euros. The development of the information, control and management system, as well as of the equipment software, accounts for one quarter of this 24 million euro project. Toulouse is installing a ticket validation system that will be able to collect high-quality data. The central management system will analyze more than 700,000 daily trips. In September 2006, the city will switch to a contactless
solution on the whole network.
Citigroup is providing $3 million and is matching employee donations to support relief efforts for the South Asia tsunami disaster. American Express and First Data donated $1 million each for disaster relief. AmEx is also matching employee donations. First Data says its donation is the single largest donation made by its Foundation since its inception in 2000. MasterCard International says it has contributed $250,000 to the Singapore Red Cross Society and initiated a relief program in which personal donations made by employees will be double matched by the organization. The December 26th earthquake triggered a series of tsunami waves which claimed an estimated 139,000 lives.
R.K. Hammer released its “2004 YEAR-END REPORT”:
At 4.50% pre-tax ROA for 2004, the credit card industry enjoyed the highest earnings period since 1988 (also at 4.50% that year).
The Hammer model estimated the following metrics:
Total Income Yield: down 10 basis points in the last year, principally due to intense marketing competition, to 17.5%. This is for all interest and fees.
Operating Expense: down 10 basis points in the last year, due to seasoning of earlier technology investments, to 4.9%. This should continue to improve.
Net Charge Offs: down 20 basis points, as consumer bankruptcies softened during the year, to 5.6%. Unemployment rates also continue to soften, down 10% from last year.
“Blended” Cost of Funds: upward during the year by 10 basis points, to 2.5%.
Net pre-tax Income: up 10 basis points, reflecting all of the above factors, to 4.50%.
The range of ROA for various issuers was from less than 1% to over 12%, a new high.
Continued intense competition for new booked accounts, as leading issuers seek to sustain sequential account and earnings growth in the 18-20% range.
“Flight to quality” remains a key strategy, as it has since 2Q00, to boost profits from lower-risk, higher FICO scored applicants.
Focus on repricing by many, especially for higher-risk accounts; late/overlimit fees will continue to rise and be charged earlier in the billing cycle/due date, plus using “universal default” to trigger higher penalty APR’s, in order to raise the income components.
Customer Service “FTE Ratios” will rise, by design; meaning a planned fewer full time equivalent employees handing any given function. Reduces operating expense ratios.
Portfolio consolidation will continue: we expect 75 -100 larger transactions this year, and 100 – 150 “mini” deals less than $10MM (mostly credit unions).
Funds Cost will continue to trickle upward, in measured 25 basis point increments.