Credit Card Issuers Face a Perfect Storm

As Target indicated yesterday it is tightening its credit card terms
and may become even more stringent if credit conditions keep
deteriorating. Mercator Advisory Group released a new report that says
the weak economy and turmoil in the financial industry are making it
harder for issuers to deal with the soaring costs of their reward
programs. Plus, issuers face consumer demands for more incentives while
merchants want more regulation on interchange fees. Mercator says the
credit card industry needs to think about rewards programs in a new way.
The report also noted that data analytics offer a new level of targeted
marketing and promotions but their full potential will not be realized
until combined with merchants’ involvement, likely in the format of a
merchant-funded discount network. Additionally, new innovative rewards
programs such as non-transactional rewards and programs combined with
non-traditional rewards components are emerging.


Gift card solution provider Givex has partnered with
Allcard to establish a recycling program for old gift cards.
Most gift cards are made of non-biodegradable plastics such as PVC and
end up in landfills when their value is depleted. Givex and Allcard will be
diverting these cards from the dumpster and grinding them down to
manufacture brand new gift cards that contain up to 50% recycled PVC.
Clients can show their support by arranging
for the recycling of their depleted cards and/or ordering cards made from
up to 50% recycled PVC.

Oberthur Card Systems’ Q3 Sales Jump 29%

Los Angeles and Paris-based Oberthur Technologies reported third
quarter sales of $287.7 million, a 24% increase over 3Q/07. The Card
Systems business, which became a completely separate division at the
start of the quarter, posted a sharp 29% increase of $229.2 million in
sales, compared to the year-ago quarter, driven by the integration of
XPonCard. Payment card sales gained 18% in the third quarter to $46.8
million. Oberthur says the EMEA region and in particular Europe,
suffered the joint effect of a drop in volumes, especially in the UK, and in
the average sales price, with stability in the personalization services
segment activity. In the USA, the magnetic stripe card market is
depressed, affected by both the deterioration in economic conditions in
the banking sector and price pressure. For complete details on
Oberthur’s third quarter results visit CardData ([](

(at current exchange rates)
3Q/07: $231.7 million
4Q/07: $256.1 million
1Q/08: $235.4 million
2Q/08: $277.4 million
3Q/08: $287.7 million
Source: CardData (

Wells Fargo Educates One Million Students

Wells Fargo & Company’s “Practical Money Skills for Life” has educated more than 1 million college
students over the last five years. Wells Fargo invites every new College Credit Card customer to take the
10-minute online Practical Money Skills for Life lessons at and provides college student customers “The Student Guide to Good Credit brochure”;
“The Wells Fargo Student Credit Education website”; “The What You Need to Know brochure is included with every credit
card Welcome Kit to reinforce using credit responsibly.
Additionally, all new College Credit Card customers receive the first statement
regardless of whether or not the account has a balance. This provides an
opportunity to deliver two key messages via the Statement Ad Page:
Things to Know About Your Statement – highlighting major sections of their statement; and
Managing Your Credit – tips on how to start a good credit record and every monthly statement
includes a “College Credit Card Tip of the
Month” that is relevant for that time of year. Wells Fargo College Credit Card customers receive a Credit Education
Newsletter every quarter that features topics such as “Budgeting Basics”,
“Saving Money During the Holidays” and “Avoiding Fees”.

U.S. Bank’s Payment Plus Poised for Growth

U.S. Bank’s B2B payment network “Access Online Payment Plus”, continues
fuel growth for U.S. Bank. Payment Plus automates procure-to-pay
processes by enabling
organizations to submit payment instructions electronically, in batches
or on-demand. The buyer
determines the timing of the disbursement while maintaining visibility
and control from
beginning to end. Clients find the increased control and visibility to
spend across all
departments to be a critical benefit as a result of implementing Payment
During the first year Payment Plus was available, U.S. Bank saw B2B
payment growth of approximately 15%.


MasterCard Worldwide has released the “Worldwide Centers of Commerce: Emerging Markets Index”.
The Index evaluates 65 cities on eight dimensions related to their
business climate, political environment, economic growth, quality of life, and knowledge creation,
and explores the compelling global and regional economic trends that distinguish these
cities as future development hubs.
With four cities amongst the top 15, Europe holds a strong position
within the Emerging Markets Index and presents a host of interesting findings:
Budapest’s commercial heritage helped propel it to the #3 spot. The number
one city in the Index for dimensions covering quality of life and risk and security,
Budapest also scores among the top ten for its economic and commercial environment and its
business climate; Warsaw is ranked # 8 within the Index benefits from being
the capital of the largest national economy amongst the new admissions to the European
Union. Its particular strengths are the quality of life, and low levels of risk
coupled with high security, an area in which it ranks second among the cities on the Index;
Moscow, which placed #14 in the Index overall and first among Russian
cities, ranked among the top five cities in dimensions related to air passenger,
cargo volume and other measures of connectivity, as well as financial market volumes and Istanbul ranked
among the top ten in commercial connectivity, befitting a growing nation
with easy geographic access to many other growing markets, high rankings for its financial markets and quality of life.

Loyalty Services Drives ADS Q3 Performance

Dallas-based Alliance Data Systems reported that third quarter revenue increased 4% to $511.2 million. The Canadian “AIR MILES” reward program was the key driver, achieving organic growth rates of 25% in revenue. The third quarter performance in its Epsilon Marketing Services business was driven by new deals with Commerce Bank, Beech-Nut Nutrition and others. But, Private Label’s results continue to be affected by
the loss of the Lane Bryant portfolio. Loyalty Services’ third quarter revenue was $187.7 million, up 25% from 3Q/07. Epsilon Marketing Services’ revenue performance grew 6% in the third quarter versus 5% in the second quarter. Private Label Services posted third quarter revenue of $94.7 million, a 2% gain over the year ago quarter. Private Label Credit revenue declined by 12% to $182.4 million for the third quarter, compared to the prior year. For complete details on ADS’ third quarter performance visit CardData ([](

3Q/07: $575.5 million*
4Q/07: $602.7 million
1Q/08: $499.3 million
2Q/08: $507.2 million
3Q/08: $511.2 million
* as originally reported; now adjusted to $492.0 MM

CoreTrace Joins the PCI Security Council

Application whitelister CoreTrace has joined the PCI Security Standards Council as a new
participating organization. CoreTrace will now have access to the
latest payment card security standards from the council, be able to
provide feedback on the standards, and become part of a growing
community that now includes more than 500 organizations. In an era of
increasingly sophisticated attacks on systems, adhering to the PCI DSS
represents an entity’s best protection against data criminals. By
joining as a participating organization, CoreTrace is adding its voice
to the process. CoreTrace’s BOUNCER technology with “Trusted Change” capability
enables IT professionals to predefine multiple
sources from which users can safely install applications and have them
automatically added to the whitelist without any further IT
involvement required.

Big Phish Hits BofA and AmEx in October

On October 16th, MessageLabs reports it intercepted 7,000 phishing
attacks exploiting Bank of America, in a large, short-lived spike
spanning two hours. The next day, the same phishing emails more than
doubled to 15,000 and continued through the weekend reaching 125,000
total emails. Then on Monday, October 20th a large American Express
phish run started at 5am and reached 35,000 emails for the day.
MessageLabs analysis of IP data determined that the Cutwail botnet,
currently the largest botnet controlling more than one million active
bots, is responsible for both scams. MessageLabs notes that as change
prevails in the global banking system, scammers are taking advantage of
the frenzy surrounding the mergers and bailouts by targeting Bank of
America, Wachovia, Chase Manhattan and Washington Mutual and large UK
banks like Lloyds, TSB and RBS.


Smart card developer Giesecke & Devrient has introduced the “GDC4000”
display card
capable of being manufactured on a high-volume industrial
scale. The six-digit display is incorporated in the card during the
normal hot-lamination process, thereby augmenting its resistance to
mechanical wear. G&D’s can be used to display
one-time passwords (OTPs) for secure authentication during access to IT
networks, or transaction numbers (TANs) for online banking. The use of
a dynamically generated one-time password in conjunction with
static customer data such as account number, user password and personal
identification number (PIN) significantly enhances the security of
online authentication. The display card makes it possible to add a
supplementary, bi-directional identity check that protects users and
providers of online banking services against the theft and fraudulent
misuse of passwords and TANs.

Q-Card Expands its Lab Testing Capabilities

PA-based Q-Card Laboratories’ has expanded its
capabilities to accommodate the third-party testing needs of its
customers, including the testing of green substrates and other new
industry innovations. The lab provides a comprehensive plastic card and paper ticket
testing facility to leading card manufacturers around the world. Through
the use of its Mag3 magnetic stripe analyzer, a programmable optical
card measurement system called Smart Scope, and a host of ISO-specified
testing equipment and procedures, Q-Card Laboratories provides physical
card testing, product test cards as well as consulting services onsite
and offsite at company facilities.

AmEx International Card Profits Drop 52%

American Express reports that net income for its International Card
Services business plummeted 52% for the third quarter of this year
compared to the same quarter in 2007. The decline was primarily
attributed to revenues net of interest expense increasing 11% due to
spending and loan growth. Total expenses rose by 13% reflecting higher
volumes and business-building investments and provisions for losses
increased 60%, primarily driven by higher lending reserve levels in
Mexico. Marketing, promotion, rewards and cardholders services expenses
increased 10% reflecting greater marketing and promotion expenses and
higher volume related rewards costs. Both revenue and expense growth
rates were also inflated by the translation of foreign currency.
American Express had 16.4 million cards-in-force at the end of the
quarter, up 4% from 3Q/07. Card billed business for the quarter
increased 11% to $27.5 billion. For complete details on AmEx’s
International card performance visit CardData ([](