London-based Powa Technologies has inked a 10-year strategic alliance with China UnionPay to create a ubiquitous new standard in mobile commerce for CUP’s 1.3 billion credit and debit card users.
U.S. bank credit card rates edged down slightly in February, 15 basis points (bps) from the prior month of 13.68%, however the stage is set for substantial rate hikes this year due to anticipated rate hikes by the FOMC in the second half. RAM Research forecasts U.S. bank credit card rates for accounts assessed interest will hit 13.77% at mid-year, then climb to 14.24% by end-of-year (EOY) 2015.
The average yield for U.S. Visa and MasterCard-branded credit cards, issued by the top four issuers, will likely decline by eight basis points (bps) for the first quarter, and down 30 bps from mid-year 2014. Forecaster RAM Research projects an average yield for the Big 4 of 11.30% in the first quarter, compared to 11.59% one-year ago.
If the Federal Open Market Committee (FOMC) moves interest rates upward then bank credit card interest rates are set to move into the 30%+ territory among the nation’s top issuers. Over the past year, with no movement in the Prime Rate, overall rates have been climbing.
CardWeb.com’s CardData financial database projects U.S. Visa and MasterCard credit card Gross Dollar Volume (GDV) will grow 10.2% in the third quarter to $486 billion. Visa announced this week it will release its latest quarterly results on October 29th after the market close. MasterCard will report on October 30th before the market opening.
Western Union announced the inking of an agreement to provide, for the first time, money transfer services to consumers in Angola. The deal, with the Angola Post Office, will be facilitating connectivity across the country, keeping its services relevant for years to come.
Discover leads the nation’s top credit card issuers in credit card outstandings growth, followed by American Express. Visa and MasterCard issuers flounder as U.S. consumers become more transactional.
At mid-year, Visa remains the U.S. giant with a 57.9% market share, compared to 26.2% for MasterCard, 13.4% for American Express and 2.5% for Discover, according to CardData.
Visa outpaces MasterCard in Gross Dollar Volume in the second quarter. Overall, Gross Dollar Volume growth was up significantly for both networks.
The net interest margin (NIM) for major U.S. credit card portfolios has been edging down since mid-year 2013, according to CardData. Capital One, the NIM leader among major U.S. issuers, posted a 35 basis point decline in NIM for the first quarter. Capital One’s U.S. NIM for 2013 was 13.1%. Citibank’s NIM declined 31 basis points in the first quarter for its domestic card portfolio. Citibank’s NIM for 2013 was 9.7%. The Chase NIM for U.S. cards dropped 12 basis points in the first quarter. Chase’s NIM for last year was 9.7%. Meanwhile, American Express’ U.S. NIM was flat in the first three months of this year. For 2013 the AmEx U.S. NIM was 8.9%. The Discover NIM for 2013 was 10.1%, the second highest among the top issuers. Discover will be releasing its first quarter report next week.
While credit card charge-offs among the top U.S. issuers have fallen to seven year lows in 2013, there are some scattered clouds on the horizon as early stage delinquency (30+ days) headed north in the second half of 2013 by six basis points. However, late stage delinquency (90+ days) was down three basis points from 2Q/2013 but up three basis points sequentially in Q4/2013. Historically, delinquency rates are slightly depressed in the fourth quarter due to the higher level of outstandings, driven by holiday spending.
Japan’s economy is picking up real steam. The OECD Composite Leading Indicator (CLI) has moved from 0.7% in January to 1.9% at mid-year and now hitting 2.6% at year-end. RAM Research projects the CLI will hit 2.8% at year-end. The world’s third biggest economy has been dogged by deflation for almost 20 years but is…