Charge-offs continue to drift to record lows in the second quarter. For example, Bank of America reported credit card charge-off ratio for the second quarter was 3.11%, a 99 bps decline from one-year ago. RAM Research predicts bank credit card charge-offs, among the “Big Four,” will decline four bps for the third quarter to 3.20%.
Top Visa and MasterCard issuers continue to realize the rewards of lower delinquency as ratios drop significantly in the second quarter to new bottoms. Chase, the nation’s top issuer. posted a 20 basis points (bps) sequential decline and a 28 bps annual decline in 30+ day bank credit card delinquency in the second quarter.
Discover bests the four top Visa and MasterCard issuers with solid growth in outstandings. However, Discover’s gross dollar volume (GDV) rose 6% to $31.7 billion, compared to $28.1 billion in Q1/14 and $29.7 billion in Q2/13. Volume growth was lackluster compared to the Big 4 Visa and MasterCard issuers.
BofA lowers costs for low-value cross-currency payments. The new CashPro Payments service allows companies to make recurring low-value cross-currency payments that are either business-to-business or business-to-consumer.
All of the top Visa and MasterCard issuers posted significant gains in purchase dollar volume in the second quarter, with Chase and Capital One leading the pack with double digit gains. However, as reported last week bank credit card outstandings were weak in Q2 and losing momentum as there is a discernible change in recent cardholder behavior.
All of the top Visa and MasterCard issuers posted significant gains in purchase dollar volume in the second quarter, with Chase and Capital One leading the pack with double digit gains. However, as reported last week bank credit card outstandings were weak in Q2 and losing momentum as there is a discernible change in recent cardholder behavior.
Among the Big 4 Visa and MasterCard issuers for the second quarter, Chase posted the strongest gain of 1.4% Y/Y and Capital One came in second place with a 1.0% Y/Y gain. Bank of America and Citibank posted Y/Y declines of 1.7% and 2.9%, respectively. The reason for the sluggish growth is simply more Americans see bank credit cards as bank payments cards. This trend is also confirmed by a recent ABA study which found the share of cardholders who are transactor increased from 28.6% to 29.0% this year, the highest share on record.
BofA reported a decline of 1.8% in Year-on-Year (Y/Y) average U.S. bank credit card outstandings of $88.1 billion. Meanwhile, PDV for BofA’s U.S. bank credit cards jumped 3.9% Y/Y and 9.6% Q/Q to $53.6 billion. BofA noted its U.S. debit card PDV also increased 2.7% Y/Y and 5.5% Q/Q to $69.5 billion. Also, BofA benefited greatly in Q2/14 from record low delinquency and charge-offs in its U.S. bank credit card portfolio.
Bank of America Merchant Services, the No. 1-rated electronic payments processor in the United States1, announced today the creation of the company’s new Canadian merchant services operation. Based in Toronto, the organization will provide a full suite of products and services – ranging from payments and commerce to security and advice — to both existing domestic U.S. customers currently doing business in Canada, and new Canadian market customers. The new Canadian subsidiary already has relationships with all major Canadian credit and debit card processing networks.
Vantiv, Inc. announced an agreement to acquire Mercury Payment Systems, LLC for an aggregate price of $1.65 billion. Mercury is a payment technology and service leader whose solutions are embedded into point-of-sale software applications and brought to market through their dealer and developer partners. Mercury is currently majority-owned by Silver Lake, a global leader in technology investing.
Credit quality for VISA and MasterCards (V/M) issued by the top four U.S. bank credit card issuers continues to improve. The 30+ day delinquency rate in the first quarter declined 16 basis points from the prior quarter and 52 basis points from one-year ago. According to CardData, the average 30+ delinquency rate among the top U.S. issuers for the first quarter stood at 2.64%, compared to 3.16% for Q1/2013 and 2.80% for the final quarter of 2013.
U.S. bank credit card profits for the top U.S. Visa and MasterCard (V/M) issuers declined 3.5% year-on-year (Y/Y) and 5.4% quarter-on-quarter (Q/Q) in the first quarter (Q1). According to CardData, Q1 revenue dropped 12.1% Y/Y and 8.9% Q/Q.