Bank of America has chosen Oberthur Card Systems to provide contactless payment fobs as part of a trial to test radio frequency contactless payment companion devices. The Bank of America user acceptance trial program will distribute Oberthur’s VersaFOBs with MasterCard PayPass as companion devices to its traditional credit cards. VersaFOB is a contactless payment sub-card that snaps out of a full-size payment card and is inserted in a key-chain casing. Oberthur will supply the cards and fob casings, while Bank of America will handle personalization and fulfillment in-house. MasterCard has certified the Bank of America VersaFOB trial program. 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.
Bank of America reported long-term extensions of affinity agreements that will enable it to continue marketing to the alumni, fans, faculty and staff of more than 70 schools, including Penn State, University of Texas, UCLA, University of Southern California, Auburn University, University of Colorado at Boulder, the University of Iowa, and Georgetown University. BofA (merged with MBNA) has more than 800 collegiate endorsements. The University of Texas was the first affinity credit card program signed in 1992 by MBNA, now BofA.
According to a new survey conducted by Braun Research and Bank of America, consumers spend an average of four hours and 35 minutes shopping at retail stores during the holiday season. Nearly one-third of that time is reportedly spent waiting in checkout lines. The research also found that more than 80% of Americans report shopping online, but, only 65% bank online. Despite their best efforts, many people experience a “financial hangover” once the holiday season is over. Over a third of respondents admit to going over budget when it comes to holiday purchases, yet 39% claim they always budget for the holidays, and 35% claim they sometimes do. Women spend 50% more time budgeting for the holidays than men. To promote online shopping and banking BofA has hired Robyn Spizman, well known in the Atlanta area, as a gift-giving and how-to expert.
Bank of America and Aetna have teamed to launch a new credit card that promotes healthy living. The new “Aetna Healthy Living Platinum Plus VISA” offers bonus rewards and redemption discounts on certain health-related purchases with rewards deposited to a “Health Savings Account” if desired. The credit card is currently available to Aetna’s “Small Group” customers and will be expanded to other customer groups in 2007. Cardholders earn 3 points for every $1 spent hospital treatments, doctor and dentist charges, sporting goods stores, fitness and weight loss centers, vitamin stores and and 1 point on all other purchases. Cardholders also an exclusive 10% point redemption discount on gym equipment, spa set, bicycles, blood pressure monitors and other health-related items from the “WorldPoints” catalog.
Bank of America has taken the affinity credit card model, largely pioneered by MBNA, to a new level with the introduction affinity banking. BofA, which acquired MBNA 10 months ago, says it intends to build a new consumer credit and deposit continuum and further fuel customer preference and loyalty. BofA says the expanded affinity model will further support the organizations for which customers are most passionate through their lines of credit and everyday checking and debit card transactions. The new deposit products will be marketed to participating organization members and supporters online beginning November 20th. The first batch of organizations to join the program represent 10 million members. Among the first to join BofA’s affinity banking program are: New York State Bar Association, National Wildlife Federation, American Quarter Horse Association, Habitat for Humanity International, Brown Alumni Association, and nine other associations.
Bank of America has chosen USA Technologies’ “e-Port” cashless vending services for their program to evaluate RFID cashless payment devices. The bank’s evaluation follows the deployment earlier this year of 1,000 cashless Coca-Cola vending machines in Philadelphia equipped with the e-Port G6 to accept MasterCard’s “PayPass” contactless card payment system. The Philadelphia deployment was the first mass installation of the e-Port G6 in a major market. Bank of America, one of the world’s largest financial institutions and card issuing companies, is the first bank to target the $40 billion vending market for credit card and other cashless payment transactions. USA Technologies is a leader in the networking of wireless non-cash transactions, associated financial/network services and energy management.
TN-based Caremark Rx and Bank of America have partnered to launch a credit card program offering cardholders incentives for managing their prescription drug costs. The new “Caremark VISA” will offer “WorldPoints” to cardholders for all retail purchases plus bonus points for choosing generic and preferred drugs. Points also will be awarded to cardholders who refill existing prescription orders using Caremark’s Web site or automated phone system. In addition, cardholders will receive reward points for registering online or updating an existing profile on Caremark.com with their credit card account number. The new, no-annual-fee credit card will be available to all individuals covered by a Caremark administered prescription drug plan or enrolled in one of Caremark’s discount card programs. The card will launch in the fourth quarter.
Bank of America reported that Card Services had revenue of $5.33 billion, an increase of 137% compared to the third quarter of last year and net income more than tripled to $1.48 billion. Managed card loans at the end of the third quarter increased 7% year-on-year to $194.9 billion. Third quarter credit card services charge-offs were 4.11%, compared to 3.59% in the prior quarter and 4.76% one year ago. The managed 30+ day delinquency rose to 4.90%, compared to 4.56% in the second quarter and 4.49% for 3Q/05. BofA also reported that its merchant acquiring business handled $97.0 billion in processing volume during the third quarter from total transactions of 2.1 billion. (BofA now includes consumer finance, international card operations and merchant services in reporting Card Services.) Debit card income increased 24% from the same quarter last year to $502 million and purchase volume grew 19% to a record $42.86 billion. For complete details on Bank of America’s 3Q/06 performance, visit CardData ([www.carddata.com]).
BOFA/MBNA EOP CARD LOAN HISTORICAL
3Q/05: $182.6 billion
4Q/05: $189.3 billion
1Q/06: $184.9 billion
2Q/06: $190.1 billion
3Q/06: $194.9 billion
Source: CardData (www.carddata.com)
Bank of America and VISA USA have signed a six-year partnership agreement that runs through 2011. Bank of America is currently the largest issuer of VISA-branded payment cards. The agreement will be retroactive to January 1st, 2006. BofA has had a 30-year card issuance relationship with VISA. BofA has about 116 million cardholders and 90 million credit card accounts. Debit card purchase volume topped a record $42 billion in the second quarter, an increase of 22% from the second quarter of last year. For complete details on Bank of America’s 2Q/06 performance, visit CardData ([www.carddata.com]). (CF Library 7/19/06)
The nation’s “Big 3” bank credit card issuers, who control slightly less than half the U.S. market, are seeing a rebound in charge-offs. BofA, Chase and Citi reported in the second quarter that charge-offs rose 43 basis points on average compared to the first quarter. Based on performance in the ABS sector its appears that overall charge-offs will be posting still higher for the third quarter. The “U.S. Credit Card Quality Index” published by Standard & Poor’s Ratings Services reported earlier this month that charge-offs increased to 4.0% in July from 3.5% the prior month. However, compared to one-year ago charge-offs among the “Big 3” are down 170 basis points, according to CardData ([www.carddata.com]). Charge-offs peaked in the fourth quarter with BofA, Chase and Citi showing an average charge-off ratio of 6.70% as they digested record personal bankruptcies driven by the new bankruptcy reform laws. The “Big 3” have approximately $350 billion in bank credit card outstandings. (CF Library 9/13/06)
BIG 3 MANAGED CHARGE-OFFS
2Q/05 3Q/05 4Q/05 1Q/06 2Q/06
BofA 5.20% 4.81% 7.10% 2.89% 3.59%
Chase 4.87% 4.70% 6.39% 2.99% 3.28%
Citi 5.69% 5.57% 6.61% 3.49% 3.78%
AVERAGE 5.25% 5.03% 6.70% 3.12% 3.55%
Source: CardData (www.carddata.com)
Credit card network executives testified last week in a Congressional hearing that they are very much into the battle to end card use for the Internet child pornography business. However, card executives testified that they cannot do it alone and need the support of financial services industry and law enforcement authorities. VISA, MasterCard, American Express, Discover, PayPal, BofA, Chase, Citi, First Data, First National Bank of Omaha, North American Bancard, First PREMIER Bank and Wells Fargo Bank were among 18 financial institutions that joined, in March, with the International Centre for Missing & Exploited Children and its sister organization, the National Center for Missing & Exploited Children, in the fight against Internet child pornography. The members have set a goal to eradicate commercial child pornography by 2008. (CF Library 3/16/06)
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.