The latest “Experian-Gallup Personal Credit Index” shows that consumer feelings about credit are stabilizing as they take a wait and see outlook with regard to changes in the economy. Two months ago, the Personal Credit Index stood at 100, but it dropped sharply last month to 82 and has moved slightly upward this month to 86. The Experian-Gallup Personal Credit Index measures four key areas related to credit: level of debt, monthly payment burden, credit rating, and debt extension capability. The Gallup Organization has studied human nature and behavior for more than 70 years.
The International Currency Exchange and MasterCard Europe have teamed to launch a PIN secured, pre-paid “Maestro” debit card to replace paper travelers cheques. The new “Cash2Go” card can be loaded with sterling, US dollars or euros. The minimum load value is GBP50, US$50 or 50 euros and the maximum is GBP2,500, US$2,500 or 2,500 Euros. The card is currently being piloted at ICE exchange bureaux in the UK, including those at Heathrow Airport, and selected branches of Travelcare, a UK travel agent. Full roll-out is scheduled to take place in the UK over the next three months.
Montreal-based Optimal Group announced that revenues for the first quarter were $37.4 million, compared to $10.3 million for 1Q/04.
Underlying earnings from continuing operations before income taxes for
the first quarter were $4.6 million, compared to a loss of $3.4 million in the first quarter of 2004. Compared to the quarter ended December 31, 2004, underlying earnings increased by 10% from $4.2 million. For the second quarter, Optimal anticipates underlying earnings from continuing operations before income taxes to be approximately $5.4 million. Optimal Payments processes credit card payments for Internet businesses, mail-order/telephone-order and retail point-of-sale merchants, as well as processing checks and direct debits online and by phone. For complete details on Optimal’s first quarter performance, visit CardData (www.carddata.com).
Experian is acquiring LowerMyBills.com for $330 million, plus up to a $50 million on performance-related earn-out over the next two years. LowerMyBills.com offers savings through relationships with more than 400 service providers across 17 service categories including home loans, credit cards, long-distance and wireless services, and auto and health insurance. Experian provides global information solutions to more than 50,000 clients. Annual sales exceed $2.5 billion.
Optimal Group announced that it intends to sell a minority
interest in a new subsidiary based in Dublin and incorporated in the
Republic of Ireland, to be named FireOne Group, through a flotation
on AIM, the London Stock Exchange’s global market for growing companies,
and has engaged Numis Securities Limited in connection with the
flotation. Numis Securities is part of the investment banking and
stockbroking group Numis Corporation. Following the completion of the
flotation, Optimal Group will remain the majority shareholder of FireOne. FireOne and its subsidiaries will carry on the activities that relate to the processing of on-line gaming transactions through the use of credit and debit cards, electronic debit and through FirePay, a leading stored-value, electronic wallet.
HSBC has launched its “Take 3 Months Off” promotion to both new and existing cardholders who transfer their credit card balance
from other banks to a credit card from HSBC. HSBC is charging a 0% interest on balance transfers for three months. In addition, the card will be fee free for the first year, with cardholders receiving “Air Miles” on the transferred balance. HSBC Bank Middle East Limited has 29 branches throughout the United Arab Emirates, Oman, Bahrain, Qatar, Jordan, Lebanon and the Palestinian Autonomous Area, including an offshore banking unit in Bahrain.
Household Financial Corporation Limited has changed its
name to HSBC Financial Corporation Limited. HSBC Financial Corporation Limited, with over 1,000 employees and 114 branches in ten provinces across Canada, provides secured and unsecured lines of credit, closed-end loans, real estate loans and insurance products. Through HSBC Retail Services, it also offers private label credit cards and services.
HSBC Holdings plc acquired Household International, Inc. (now named HSBC Finance Corporation), parent company of Household Financial Corporation Limited, in March 2003.
Consumers have become less positive about their credit situation since last month. The latest “Experian-Gallup Personal Credit Index” is now at 82, compared to last month’s benchmark score of 100. The index measures consumers’ perceptions of their credit status including four key areas related to credit: level of debt, monthly payment burden, credit rating and debt extension capability. The drop in the index suggests that rising interest rates are creating some concerns among consumers about their ability to continue borrowing money at good terms in the future. The Experian-Gallup survey also shows that the largest decline occurred among the youngest consumers.
The cumulative total stockholder return value of MasterCard’s stock has soared by 63% since March 2003, compared to a 47% gain for the “S&P Financial Index” and a 43% gain by the “S&P 500 Index.” In light of the performance, MasterCard paid its top executive nearly $9.3 million in total compensation last year. CEO Robert Selander receives a base pay of $800,000 annually but earned a $2.5 million bonus for 2004 compared to $1.9 million for 2003. Noah Hanft, General Counsel and Corporate Secretary, earned $1.9 million in 2004, compared to $1.45 million in 2003. Christopher Thom, Chief Risk Officer, received about $5 million compared to $4.3 million in 2003. However, two top executives received lower total pay last year. Alan Heuer, COO, received total compensation of about $5.3 million in 2004, down 31% from 2003. Jerry McElhatton, President of Global Technology and Operations, earned $4.0 million last year, a 37% drop from the prior year. McElhatton is in the process of retiring from MasterCard. MasterCard reported a profit for full-year 2004 of $238 million, compared to a net loss of $386 million for 2003. For complete details on MasterCard’s latest results, visit CardData ([www.carddata.com]). (CF Library 9/23/04; 2/7/05)
Response rates to direct mail credit card offers slipped to a new low last year as the volume of solicitations climbed to a new high. For 2004, Americans received 5.23 billion credit offers in the mail as the response rate hit 0.4%. The percentage of U.S. households receiving an offer each month in 2004 remained relatively flat at 71% compared to 69% in 2003. According to Synovate’s “Mail Monitor,” household penetration peaked at 79% in 2001 when issuers extended their offerings to less credit-worthy or sub-prime households. The research firm says the high level of clutter has caused response rates to drop to the all-time low from 0.6% in 2003.
CARD MAIL HISTORICAL
YEAR OFFERS RESPONSE
1998: 3.44b 1.2%
1999: 2.54b 1.0%
2000: 3.54b 0.6%
2001: 5.01b 0.6%
2002: 4.89b 0.5%
2003: 4.29b 0.6%
2004: 5.23b 0.4%
Source: Synovate’s Mail Monitor
A Nevada-based firm is planning to launch its 724Pay.com payment
gateway in China to capture gambling volume via debit cards. The Company says the major advantages of fund transfers through debit cards for
Chimera licensees will be the elimination of credit card charge-backs,
thereby further minimizing risks to licensees. Chimera says 80% of the Chinese population possesses some form of debit card issued by local banks and that many Chinese gamble.
Retail Decisions announced that Seattle-based PEMCO Technology Services, has implemented PRISM neural technology solutions to detect and prevent ATM, credit and debit card fraud. The Retail Decisions Group is an international electronic payment transaction services business that provides fraud prevention, payment processing and transaction and consulting services to the retail, finance, telecommunications and e-commerce sectors. PEMCO Technology Services supports more than 230 US financial institutions and processes 330,000 transactions daily for more than 2 million cardholder accounts.