The number of small business owners who see conditions for their own businesses getting better in the next six months increased for the first time since August. However, small business owners are entering 2010 on a cautious note. The Discover “Small Business Watch” index rose slightly from 76.5 in November to 77.0 in December. The number of small business owners who think the economy is getting worse was down to 49% from 53% in November; while 24% of small business owners see the economy staying the same, up from 16% in November; 25% see the economy getting better, down from 28% in November; and 2% are not sure. Slightly more than half of owners have experienced cash flow issues in the past 90 days, down 1 percentage point from last month; 45% of owners have not experienced cash flow issues, and 4% arenât sure. Additionally, 18% of owners say they will increase spending on business development activities such as advertising, inventories and capital expenditures in the next six months, 26% will make no changes, 51% plan to decrease spending, and 5% are not sure.Details
The Conference Board “Leading Economic Index” (LEI) for The Euro Area
increased 0.7% while The Conference Board “Coincident Economic Index”
(CEI) decreased 0.1% in November. With the 0.7% increase, the Conference
Board LEI for the Euro Area now stands at 101.7 (2004 = 100), which
increased 0.6% in October and increased 0.9% in September. Meanwhile,
the CEI results for the month were preceded by a 0.2% decrease in both
October and September and now stands at 100.4(2004=100). LEI results for
the month were attributed to performance in eight components, including
Economic Sentiment Index; Index of Residential Building Permits Granted;
Index of Capital Goods New Orders; Dow Jones EURO STOXX Index; Money
Supply; Interest Rate Spread; Eurozone Manufacturing Purchasing
Managers’ Index; and Eurozone Service Sector Future Business Activity
Accor and MasterCard Worldwide have partnered to offer MasterCard
cardholders rewards through a joint promotion offering exclusive year
end hotel deals and a lucky draw. Cardholders who book a consecutive
three night stay at any of the 188 participating Accor Hotels in
Asia/Pacific from now until 31 January 2010 using their MasterCard cards
will be rewarded with one free night while those who extend their stay
will receive a 30% saving on the best unrestricted nightly rate. The
lucky draw will make them eligible for a three night stay at the award
winning five- star Pullman Sanya Yalong Bay resort located in Sanya,
China. The draw will send 10 lucky winners to the resort where they will
be treated to a private villa with a king-sized bed, private swimming
pool, massage area, jacuzzi, a spacious private garden and a separate
Credit card profits last year dipped to the lowest return-on-assets percentage level in 26 years, driven down by soaring charge-offs and higher operational expenses. The net pre-tax ROA for credit card portfolios for 2009 is projected to be 1.50%, compared 4.24% for 2008, and 1.10% for 1983. CA-based R.K. Hammer says its data show
total income rose slightly from 2008 to 18.30% (up from 18.10%), while operating expense rose to 5.10% (up 25 bps), charge-offs jumped to 9.80% (up from 5.99%), and blended cost of fund declined to 1.90% (down from 3.02%), bringing pre-tax net income to 1.50% ROA (down dramatically from 4.24% ROA in 2008). Hammer also notes that regulatory and Congressional approval of new credit card industry rules brought further earnings pressure on the card business and is expected to continue in future years. It is estimated in the Hammer model that the three main new rules just passed will lower card issuer industry profit by as much as $5.5 billion in 2010 (reflecting the last half of the year following new rules implementation) and up to $11 billion lower in 2011 and every year thereafter.
U.S. Bank Credit Card Profitability Historical
(VISA, MasterCard, and Discover)
ROA-net pre-tax return-on-assets
Source: R.K. Hammer
Acacia Research’s Financial Systems Innovation subsidiary has entered into a settlement agreement covering a patent that applies to credit card fraud protection technology with Lone Star Steakhouse, Inc. The expired patent asserted in this litigation generally relates to a computerized system for protecting retailers and consumers engaged in credit card, check card, and debit transactions. The system includes an electronic card reader, and the generation and use of a transaction number, which specifically identifies each transaction processed within the system. Acacia Researchâs subsidiaries develop, acquire, and license patented technologies.Details
Transactional Cash Engine Software provider Com-Guard has released “Pay-Guard” software in the secure marketplace for transaction processing.
The Company will establish a sales and marketing program to target five growth
opportunities that include: Secure Transactions-The
Pay-Guard software will allow transactions to be secure and the buyer’s information will be hidden and protected; Loyalty Card Programs – The “Transactional Cash Engine Software” technology will allow merchants to combine their loyalty programs with a combined payment technology. The retailer will save transaction fees and the consumer will be rewarded with savings and gifts as decided by the merchant and Online Payments, Pay Day Advance and Money Transfers and Specialty Payment Programs.
A new card product, “The HomeCard”, designed to help home buyers save for a down payment, is set to debut in 2010.
With the HomeCard, consumers can earn up to 25% cash-back on everyday
purchases which can be deposited into an interest bearing FDIC insured
savings account to help speed savings for down payments or to fund home
repairs. The HomeCard will be available early in 2010 to consumers
from all income brackets and credit scores at rates lower than what some
banks are charging and will be either a MasterCard or
Visa card, and will be offered as a debit card, a secured credit card,
or as a standard credit card depending on consumers’ preferences and
credit score. The cash-back rewards from HomeCard range from 1% to 25% for online and
in-store spending as well as access to thousands in special savings on
mortgages, insurance, real estate services, moving services, phone
services, cable and Internet and can be linked to FDIC-protected savings accounts.
The Conference Board Consumer Confidence Index for the U.S.
increased 2.3 basis points to 52.9 (1985=100) while the Expectations
Index increased 5.3 basis points in November. With these increases came
those claiming business conditions are “bad” increasing to 46.6% from
44.5% while those claiming conditions are “good” decreased to 7.0% from
8.1%. Additionally, those claiming jobs are “hard to get” decreased to
48.6% from 49.2% while those claiming jobs are “plentiful” decreased to
2.9% from 3.1 percent. Those anticipating business conditions will
improve over the next six months increased to 21.3% from 19.7% and those
expecting conditions will worsen decreased to 11.9% from 14.6%.
A new survey from Mintel reveals an increased concern of identity theft as the economy worsens.
The survey results indicate that 46% of respondents
say theyâre more worried about someone stealing funds from their bank accounts or stealing their identities. Identity theft protection is very important to consumers, especially when choosing which banks to do business with. Nine in 10 people told Mintel that protection against identity theft and illegal account access was very or somewhat important to them when selecting a bank. Among small business owners, 42% rank identity theft protection as one of the top three factors theyâd consider when obtaining a new business credit or debit card.
Chase Disney Rewards Visa Cards has added the “Disney Rewards” Visa
Debit Card to its portfolio, giving Chase checking account customers
access to valuable Disney perks and rewards through the control and
accountability of a debit card for an annual fee of $25. With the new
card, cardmember save on Disney merchandise when they use the card and
enjoy such Theme Park perks as “A Character Meet âNâ Greet Photo
Opportunity” at Walt Disney World and Disneyland Resorts with a
complimentary 5×7 photo and 10% off select merchandise purchases of $50
or more at Disney Store locations and resorts. Cardmembers earn points
on qualifying debit card purchases they can redeem for Disney Theme Park
passes, hotel stays, meals, movies, toys, music, books and much more.
INSIDE Contactless and TazTag have partnered to develop and bring to
market secured multi-application contactless solutions based on NFC
technology. INSIDE’s third-generation “MicroRead” NFC solution has been
integrated into TazTag’s “TazCard” NFC e-Wallet and open application
platform and the “TazKiosk” interactive NFC urban advertising kiosk.
Essentially a special purpose, Java-based tablet computer about the size
of a credit card, the “TazCard” is capable of supporting a variety of
identity, healthcare, transportation, loyalty, ticketing, payments and
other secure NFC-based applications. With a 3.5-inch color touch screen,
biometric authentication, audio output, data storage and a
tamper-resistant secure element, the “TazCard” offers USB and 6lowPAN
communications in addition to the NFC provided by the MicroRead chip.
Innovative Card Technologies announced that former American Express CEO John Ward will continue to serve on ICT’s Board of Directors.
Wardâs 34-year executive career in the financial services industry
includes serving as Chairman of the Board and Chief Executive Officer of
American Express Bank; Executive Vice President of The Chase Manhattan
Bank, and Chief Executive Officer of ChaseBankCard Services. During his
career, he has turned around and grown a diverse set of companies
providing financial services such as credit cards, travelersâ cheques,
private banking, correspondent banking, third-party funds distribution,
corporate banking, and trade and export finance. He will be serving alongside President, CEO, and Director Rich
Nathan; and Directors Scott V. Ogilvie; W. Robert Ramsdell; Harry L.
Tredennick, III; and Joe Zelayeta.