Bankruptcy Slows

Even though Congress continues to reconcile differences in the bankruptcy reform legislation recently passed by the House and Senate, the bankruptcy landscape is changing. According to CardData ([][1]), the percentage of gross credit chargeoffs associated with bankruptcy has been steadily declining for the past eight months, from a high of 42.3% in June to 38.9% in February. The latest government figures also show the number of bankruptcy filings declined last year to 1.3 million compared to 1.44 million in 1998. Of the 1.3 million bankruptcy petitions filed last year, 1.28 million were consumer bankruptcies. In 1998, consumers filed 1.4 million personal bankruptcy petitions, according to the Administrative Office of the U.S. Courts. The compromised bankruptcy reform bill is expected to be hammered out within the next several months with a vote on the final version expected by year’s end. The White House supports the softer, Senate version of the legislation.


No Fireworks

Baltimore-based Creditrust failed to impress investors yesterday with its delayed fourth quarter earnings report. In heavy trading Creditrust’s stock price fell about $2.00 per share to close at $8 per share. Last week the company said it would release its earnings report and report a favorable material corporate development. The news sent the stock from $7 to $10 per share. In July the stock peaked at $34 per share. For the fourth quarter, net earnings, prior to special charges, were $4.7 million versus net earnings of $6.3 million for the third quarter. Creditrust, a credit card collection firm, incurred three non-recurring special charges in the fourth quarter including $1,300,000 payable to a seller in connection with a reduction in a forward flow; $436,000 for legal and accounting costs associated with our financing activities; and $322,000 for legal and accounting fees related to the Form 8K investigation. In October a former management employee misdirected $500,000 in corporate funds by submitting an unauthorized check request and then seeking to redirect those funds through Creditrust’s collection payment stream. Creditrust also announced Monday it has entered into final negotiations, based upon an agreed upon term sheet, for $55 million in additional secured debt. The company says it has terminated all forward flow agreements or allowed them to expire and does not believe that there are any remaining purchase commitments. Creditrust says it anticipates purchasing opportunistically in the open market as the pricing has been more advantageous recently. For complete 4Q/99 and full-year 1999 financials visit CardData ([][1]).


Bankruptcy Decline

Since peaking last June, bankruptcy as a percentage of chargeoffs has been slowly, but surely, declining according to CardData ([][1].

Jul 99: 38.8% Nov 99: 37.1%
Aug 99: 38.4% Dec 99: 36.8%
Sep 99: 37.9% Jan 00: 36.4%
Oct 99: 37.4%
Source: CardData (


NBS 4Q/99

Toronto-based NBS Technologies reported a net loss of $124,000 for the fourth quarter compared to a loss of $552,000 for 4Q/98. However the firm is strongly positioned for growth in smart card issuance this year. NBS recently completed development of the ‘NBS Freedom I’, a wireless credit card system currently being piloted in the U.S. with GTE and the ‘NBS Freedom II’, a fully integrated wireless debit/credit card system, currently being piloted with Toronto Dominion Bank. The Solutions Group is currently developing a new line of cost effective products to support VISA smart cards that streamlines the entire issuance process. During the fourth quarter the company won a major contract from a supplier to the US government for the purchase of a ‘Horizon’ card issuance system. This system will be used for the issuance of high security identification cards using a variety of technologies. For more 4Q/99 details on NBS visit CardData ([][1]).


VISA Fraud

VISA U.S.A. reported this morning that overall card fraud losses have dropped to an all-time low of six basis points of total transaction volume. VISA says that compares to 7bps in 1998 and 18bps in 1992. VISA credits neural networks for the decline. VISA also said this morning that its U.S. board has approved a new operating regulation regarding fraud that goes into effect in April. The new operating regulation replaces a VISA policy adopted in 1997, under which cardholders could be held liable for up to $50 if their VISA credit or debit cards were used fraudulently on the VISA system. The previous policy mandated zero liability, but only if the fraud, theft or unauthorized card use was reported within two business days of cardholders discovering such activity. The new rule covers the use of all VISA consumer card products including transactions made online, and eliminates the two-day stipulation.

1990: $151b 190m 13bps
1991: $163b 277m 17bps
1992: $181b 326m 18bps
1993: $215b 383m 18bps
1994: $273b 410m 15bps
1995: $341b 414m 12bps
1996: $393b 452m 12bps
1997: $432b 389m 9bps
1998: $475b 355m 7bps
1999**: $560b 336m 6bps

*volume excludes cash advances **projected
Source: CardData (

Euronet 4Q/99

KS-based Euronet Services reported revenues of $41.5 million for 1999, an increase of 249% over 1998 revenues of $11.9 million. The operating loss was $26.8 million for 1999, up from a $22.6 million loss for 1998, while the net loss for 1999 was $30.9 million compared with a net loss of $28.4 million for 1998. The losses were in line with management’s expectations to build its European ATM network. As of Dec. 31, Euronet owned or operated a total of 2,283 ATMs, compared with 1,271 ATMs at the year-end 1998. Of the 2,283 ATMs, 69% are owned by Euronet as part of its proprietary network, and 31% are customer-owned and operated by Euronet under outsourcing agreements. Euronet owns or operates ATMs in Hungary, Poland, Germany, Croatia, the Czech Republic, France, the U.K., and the U.S.

Equifax 4Q/99

Equifax reported this morning that Payment Services, which operates through Card Solutions and Check Solutions, increased revenue 10.1% to $190.8 million in the fourth quarter. The revenue increase in Payment Services was driven primarily by merchant and card processing in U.S. Card Solutions and the new card processing operations in the United Kingdom. Operating income for Payment Services of $41.5 million increased 7.6% due to the continued strong performance of both Card Solutions and Check Solutions. Growth was tempered by the investment in the start-up card processing operation in the United Kingdom and a reduction in software license sales between quarters. Equifax says it is de-emphasizing card software sales as it grows its global card processing operations which can utilize this proprietary software and generate a recurring stream of revenue. For more details on Equifax’s 4Q/99 results visit CardData ([][1]).


Concord 4Q/99

Concord EFS reported Thursday that fourth quarter 1999 revenue was $250.0 million, up 41% over the fourth quarter of 1998. Net income for the fourth quarter 1999 was $40.5 million. For the full year 1999, company revenue was $830.1 million compared to $634.5 million in 1998, a 31% increase. Net income in 1999 was $129.4 million. For more details on Concord’s 4Q/99 visit CardData ([][1]).

[1]: Hemorrhage, which operates the Web site and publishes Bank Rate Monitor, continues to hemorrhage cash. Yesterday the North Palm Beach, FL-based firm announced that it posted a $13 million loss in the fourth quarter to bring its total 1999 losses to nearly $34 million. The company went public last May and raised about $40 million in cash. As of year end 1999, had cash or cash equivalents of $22 million on hand.’s stock price is trading around $4 per share compared to its IPO price of $13 per share. Last year the firm spent $17 million to drive traffic to its Web sites. According to the company,’s Web sites attract about one million visitors per month. For 4Q/99 details on visit CardData ([][1]).


Top Ten 99

The ten largest issuers of general purpose credit cards now control more than 77% of the market according to year-end 1999 statistics gathered by CardData ([][1]). Last year was a particularly strong year for sub-prime specialists. Providian watched receivables grow more than 60%, while Capital One experienced a 15% increase. Meanwhile American Express card loans soared by 40% to end the year at $23.4 billion versus $16.7 billion for 4Q/98. MBNA continued its steady course, posting a 17.5% increase in outstandings.

Rank/Issuer Card Loans Gross Accts YTD Volume
1. Citibank $74.2 billion 40.6 million $162.3 billion
2. Bank One/First USA $69.4 billion 43.1 million $142.7 billion
3. MBNA $63.1 billion 28.9 million $102.8 billion
4. Discover $38.0 billion 38.5 million $ 70.6 billion
5. Chase Manhattan $33.6 billion 20.5 million $ 53.8 billion
6. American Express $23.4 billion 23.5 million $186.4 billion
7. Bank of America $20.9 billion 21.0 million $ 50.3 billion
8. Providian $18.7 billion 15.2 million $ 20.3 billion
9. Capital One $16.4 billion 22.0 million $ 32.6 billion
10. Fleet $14.3 billion 8.5 million $ 17.0 billion
Totals: $372.0 billion 261.8 million $838.8 billion

Source: CardData (