VISA has named Byron Pollitt, formerly a top executive at Gap and Walt Disney, as CFO designate of Visa Inc. VISA also announced that the VISA Inc. Board will include 10 independent directors and seven directors drawn from each of its geographic operating regions. Joseph Saunders will continue as Chairman and CEO of Visa Inc. VISA plans to form VISA Inc. through a series of mergers involving VISA Canada, VISA USA and VISA International. VISA Europe will retain its member- owned association structure and will become a licensee of VISA Inc.
VISA has named Byron Pollitt, formerly a top executive at Gap and Walt Disney, as CFO designate of Visa Inc. VISA also announced that Visa Inc. Board will include 10 independent directors and seven directors drawn from each of its geographic operating regions. Joseph Saunders will continue as Chairman and CEO of Visa Inc. VISA plans to form VISA Inc. through a series of mergers involving VISA Canada, VISA USA and VISA International. VISA Europe will retain its member- owned association structure and will become a licensee of VISA Inc. (CF Library 5/15/07)
A new report has calculated that rewards payment cards accounted for 77% of credit card volume in 2005, compared to just 40% in 2001. The research found that credit card spend on rewards card is growing at a CAGR of 31%, compared to 12% for non-reward cards. The white paper by FischerJordan says that basic rewards offerings are becoming a market necessity; no longer a competitive advantage, but instead a commodity. The form says it is clear that program cost containment coupled with commoditization will spur a change in program substance and management. Reengineering will give way to a revision of traditional program economics, including a change in program structure and management. Coalition programs, white labeling, and association rewards will provide the models of industry externalization. The external result of these changes will be that the largest loyalty programs will emerge bigger, permeating multiple industries; while internally, program value will be unlocked, turning a cost center into a profit generating activity.
The Federal Reserve Board announced the consolidation of two internal advisory committees on payments system matters with the duties of the “Payments System Policy Advisory Committee” being expanded to encompass the responsibilities and activities of the “Payments System Development Committee.” In particular, the committee will advise the Board on The Federal Reserve’s Policy on Payments System Risk with a focus on these systems’ risk management policies and processes and the relationship between payment and settlement systems and financial markets, including financial stability issues.
The Federal Open Market Committee raised its target for the federal funds rate by 25 basis points to 2.25% yesterday. The FOMC says output appears to be growing at a moderate pace despite the earlier rise in energy prices, and labor market conditions continue to improve gradually. This is the fifth rate increase since the summer. Banks began raising the prime rate to 5.25% late yesterday. Of the $662 billion currently owed on bank credit cards, approximately $600 billion accrues interest. Of the $600 billion in revolving balances, about 55% is subject to variable interest rates. Therefore, $330 billion in credit card balances are directly affected by the rate hike.
The Federal Reserve Banks announced last week it is reducing its check-processing costs by streamlining their check management structure, reducing staff, decreasing the number of check-processing locations, and increasing processing capacity in other locations. With the changes announced last week, FRB check processing will be performed at 32 sites, down from 45. Additionally, the Reserve Banks will streamline their check-adjustment functions, now being handled in 43 locations, to 12 of their current locations nationwide. Of the 13 offices that will no longer process checks, the five regional sites that only process checks will close. The volume from these 13 offices will be handled by nine offices. Check payments make up only 60% of all noncash retail payments today compared to 85% in 1979. Recent Federal Reserve studies suggest that roughly 40 billion checks were written in the USA in 2002, down from about 50 billion in 1995. The Reserve Banks handle about 17 billion of these checks annually, and this volume is expected to decline as well.
NACHA reported this morning that Jamie Dimon, Chairman of the Board and CEO of Bank One will deliver the opening keynote at ‘Payments 2002’. The annual conference on electronic payments and e-business, will be held in Dallas in mid April. An ‘eStrategy Forum’ will analyze the Federal Reserve’s landmark research on checks and electronic payments, and identify the decisions that payment service providers and users face as a result of the findings. The conference will include 100 sessions and about 140 exhibits.
According to a new study commissioned by the Federal Reserve, checkwriting has declined from approximately 85% of non-cash payments over the past 20 years to about 60% today. American consumers and businesses make 78.6 billion retail payments annually, with 49.1 billion by check and 29.5 billion by electronic instruments, such as credit cards, debit cards ACH, EFT and EBT. The 49.1 billion checks written annually in the USA total $47.4 trillion in payments. The 29.5 billion retail electronic payments originated in United States have an annual value of $7.3 trillion. Annual credit card transactions represent about half of electronic payments (15 billion, worth $1.23 trillion). Debit cards remain the second most dominant electronic instrument with 8.3 billion transactions worth $348 billion. The ACH is the third most commonly used electronic payment method for retail transactions with 5.6 billion items worth $5.67 trillion. The Reserve Banks hired Boston-based strategy firm Dove Consulting to conduct the electronic payment study and Global Concepts and Westat to execute the two check studies.