Card Mail

Direct mail solicitations for credit cards declined last year after topping five billion in 2001, in the wake of the collapse of the sub-prime market. Response rates have also declined to a record 0.5% as the number of credit card solicitations per credit worthy household averages five per month. According to Synovate’s Financial Services Practice, credit card mail volume declined to 4.89 billion offers for 2002. The research firm says only 20% of the offers during the fourth quarter were received by households with annual incomes of less than $35,000, compared to 32% of offers targeting those same types of household during the fourth quarter of 2001. Synovate also found that the average APR dropped to 11.48% during the fourth quarter of 2002, compared to 13.77% the same time the year before, and over half of all offers were promoting APRs that were actually lower than 11%. Fifty-nine percent of all offers promoted a 0% introductory rate for balance transfers in the fourth quarter, up from 45% in the same period of 2001; and 45% of all offers featured a 0% introductory rate for purchases, which was up from 31% during the same time the year before. According to Mintel Comperemedia, first quarter credit card solicitations hit 915 million, compared to 965 million for 1Q/02, and 883 million for 1Q/01. (CF Library 5/28/03)

Discover Network

Discover Financial Services and Metavante have teamed to enable issuers, other than Discover Bank, to issue card products and use the Discover/NOVUS Network. The first products to be issued under the partnership will be stored value/gift cards. The companies said the key benefits of their program include neutral branding, real-time authorization, and a zero floor limit. The Discover/NOVUS Network currently has more than 4 million merchant and cash access locations. Discover is also accepted in some travel related merchants in Canada, the Caribbean and Mexico. Metavante is wholly owned by Marshall & Ilsley Corporation.

KOOKMIN CARDS

Kookmin Bank announced it is merging its in-house credit card unit with
its affiliate Kookmin Credit Card Co in an effort to cut costs.
In April, Kookmin Credit Card announced a 20% reduction in its work force
in the wake of rising credit card losses throughout the country.
Kookmin Bank, which owns nearly 75% of Kookmin Credit Card Co, says it
expects to close the merger by the end of the third quarter. Two months
ago, the Financial Supervisory Service reported that major companies and
banks agreed to raise approximately $3.6 billion to fend off potential
bankruptcy in their credit card subsidiaries. Also, government-run Korea
Asset Management is buying between $4 billion and $5 billion worth of bad
credit card loans. The Korean credit card industry has been hit hard by an
economic crisis. The FSS recently reported that card payments, 30+ days
overdue, increased 23% to $6.3 billion in January from $5.1 billion in
December. Credit card issuers lost a total of $207 million in 2002. In
January, credit card losses topped $326 million.

GCA Clients

Global Cash Access has signed 16 gaming properties for its ATM cash access services to bring its total customer base to approximately 1,000 gaming properties. GCA offers an array of products and services, ranging from the latest ATM technology to guest development marketing services that help casinos better understand their customers and increase traffic to the gaming floor and special events.

Chordiant & DWL

CA-based Chordiant Software and Atlanta-based DWL have teamed to integrate their products to enable retail banks and card issuers to improve customer service and employee productivity by creating a unified single view of the customer across the enterprise. Chordiant and DWL believe that an effective customer-focused sales and service strategy depends upon a single operational view of the customer that is accurate, complete and current. DWL and Chordiant are able to offer the industry’s most robust enterprise business process system and enterprise customer hub for unified customer knowledge and end-to-end business process to all channels, whether assisted or through self-service.

First Hawaiian Cardinal Centinel

BancWest’s First Hawaiian Bank has signed a deal to offer CardinalCommerce’s “Cardinal Centinel” payment authentication software. sudden, recent death of Wes Vance. First Hawaiian Bank is a principal subsidiary of BancWest Corporation, the largest Hawaii-based company, with total assets of $34.9 billion. BancWest is a wholly owned subsidiary of BNP Paribas. CardinalCommerce is the leading provider of online merchant payment authentication for securing online transactions.

Custom Cards

London-based Serverside Graphics has developed the ultimate in card personalization, enabling cardholders to fully design the front of their payment cards. Under the unique system, images are uploaded to a Web site and then manipulated with overlays to create a highly personalized card. The cardholder’s image is then resized, flipped, and rotated and then overlaid with branded frames. The company says the system will promote card usage through personal affinity as well as give issuers a brand opportunity. The software runs in an Internet browser through an issuer’s Web site and typically will run in-line with current production processes. The privately-held company U.K. company was founded by Tom & Adam Elgar, both technologists.

Plan 529 Card

Boston-based State Street Corporation and its Schoolhouse Capital division have launched “The Education Plan 529 Advantage” credit card. While “The Education Plan 529 Advantage Rewards” program itself is new, the technology and infrastructure behind it are not. The program is offered by Vesdia Corporation, creators of the “BabyMint” retail network, in partnership with MBNA. In addition to earning up to 20% in “529 Advantage Rewards” through purchases made with participating retailers, participants will earn rebates at the rate of 1%, based on all new retail purchases made with “The Education Plan 529 Advantage” credit card.

ACI & Sun

ACI Worldwide is teaming up with Sun Microsystems to provide Sun’s Java-based e-payment solutions for the finance industry. Currently, more than 520 customers are using ACI’s e-payment solutions, including dozens of the world’s top banks, retailers and e-payment processors.

SARS IMPACT

American Express is launching an ad campaign and special incentives to encourage Singaporeans to get out of their homes and start spending again following the SARS epidemic. Meanwhile, HSBC Bank Malaysia reported this week that its credit card volume plunged 20% since the outbreak in mid-March. Most credit card issuers serving the Singapore market have reported a 25% decline in credit card volume during April, however, there are indications that volume rebounded by about half in May, to bring the year-over-year decline to about 15%. American Express announced earlier this week it will launch a $15 million “Step Out and Spend” advertising campaign, to be spread out over the summer months. AmEx also announced a dining promotion to award triple points between June 2nd and September 30th on top of previously announced dining discounts. A few weeks ago AmEx began offering discounts of up to 50% off at many restaurants in Singapore. The Singapore Tourism Board also is launching a major advertising campaign as well as special discounts to visitors. There are currently four million VISA and MasterCard payment cardholders and 400,000 American Express cardholders in Singapore.

Fiserv Tops 10M

Fiserv Credit Processing Services, a unit of Fiserv Inc., announced two major achievements: surpassing more than 10 million customer accounts on file, and a major capital investment in state-of-the-art IBM disk storage technology. “We’re not just excited that we’ve passed the 10 million account mark,” said Steve Baker, Senior Vice President and Chief Technology Officer. “We’re excited because these 10 million accounts represent a significant growth rate in the last 12 months. And, what’s even more encouraging, these aren’t simple mono-line accounts. They’re made up of a variety of portfolio types, including traditional bankcard, private label, commercial and installment loans.”

Fiserv Credit Processing Services manages accounts receivable processing for major credit issuers, including John Deere Credit and Shoppers Charge Accounts.

The announcement is particularly noteworthy because all 10 million accounts are processed on a single software platform – VisionPlus®, which Fiserv Credit Processing Services uses as the core component of The PLUS(TM) System solution, Baker said. In addition, he said Fiserv Credit Processing Services has made a significant investment in IBM technology in an effort to effectively manage continued growth opportunities.

Baker credited the growth of Fiserv Credit Processing Services during the last 12 months to the organization’s emphasis on providing an end-to-end credit management solution to the financial services industry. Features of the Fiserv Credit Processing Services offering include target marketing, credit decisioning, account acquisition, account processing, fulfillment, risk management and management information for decision support across the entire value chain.

“Our sole focus is on how we can improve services to our large and diverse client base,” he said. “That is why the investments we made with IBM were so critical in supporting Fiserv Credit Processing Services to successfully pass the 10 million account mark. It gives us the ability to manage any type of credit solution or size portfolio a client wishes to issue.” After careful analysis of available technology, Fiserv Credit Processing Services chose the IBM TotalStorage(TM) Enterprise Storage Server (codenamed Shark) to support The PLUS System(TM). Using redundant hardware with scalability to 27.9 terabytes of physical capacity, it is designed to provide ultra high availability. The technology also allows for non-disruptive upgrades and has a “snap-in” design to easily add performance, capacity and connectivity upgrades, while maintaining 24/7 productivity. ESS also increases performance, decreases response times, and provides for greater throughput.

“With more than 10 million customer accounts and growing, Fiserv Credit Processing Services understands the need for an integrated storage computing infrastructure that can help it respond flexibly to expanding customer demands,” said Tom Simonson, Vice President of Storage Sales for the IBM Systems Group. “IBM is providing this infrastructure that can help Fiserv Credit Processing Services improve customer service by dynamically meeting new demands and easing overall data management.”

Fiserv Credit Processing Services also installed the IBM TotalStorage Enterprise Tape Library and Virtual Tape Server technologies designed with the flexibility to allow incremental growth.

“This combination of technology, along with our industry-leading attention to customer service, gives us a tremendous competitive advantage in providing solutions that are flexible, reliable and delivery-focused,” Baker said. “We’re looking at supporting a very diverse product suite of portfolios and extremely large numbers of accounts on the same operating platform.”

Fiserv, Inc. (Nasdaq: FISV) provides industry leading information management systems and services to the financial industry, including transaction processing, outsourcing, business process outsourcing and software and systems solutions. The company serves more than 13,000 clients worldwide, including banks, broker-dealers, credit unions, financial planners/investment advisers, insurance companies and agents, self-insured employers, lenders and savings institutions. Headquartered in Brookfield, Wisconsin, Fiserv reported $2.3 billion in processing and services revenues for 2002. Fiserv can be found on the Internet at [www.fiserv.com][1].

[1]: http://www.fiserv.com

Cirrus SFA

As the recent off-line or signature debit card lawsuit settlement winds its way toward approval, the new online or PIN debit card war has begun. MasterCard announced this morning it will now permit a waiver of ATM surcharges on its 350,000 ATM “Cirrus” network in the USA, thus becoming the first national ATM network to facilitate formation of a national surcharge-free ATM alliance. MasterCard says its research indicates that SFAs are attractive to financial institutions as a means to expand DDA accessibility for ATM/Debit cardholders beyond the localized boundaries of a singular proprietary ATM network. Today’s news comes on the heels of other MasterCard debit enhancements, recently announced. Stand-in processing for “Maestro” PIN-based POS transactions goes into effect October 1, 2003. Maestro acquirers can also now designate non-member entities such as merchants to connect directly to the “MasterCard Debit Switch.” Additionally, issuers and acquirers now have the option of specifying “Maestro” and “Cirrus” as the network of choice for transaction routing. Earlier this year, MasterCard’s U.S. Board approved an increase to the “Maestro” interchange rate structure which will go into effect July 1st. The rate will apply to domestic transactions. MasterCard has added four new rate categories within the “Maestro” structure: a supermarket/warehouse rate; a convenience rate category (for small ticket transactions such as those in convenience stores, gas stations, fast food restaurants and movie theaters), a category for all other merchants, and a cash back rate. Globally, “Maestro” is accepted for purchases at more than 7.3 million merchant terminals in 93 countries and territories, at 821,766 MasterCard/Maestro/Cirrus ATMs around the world and has 505 million cardholders worldwide. (CF Library 4/3/03)