AMEX SHAKE-UP

American Express’ President has resigned and will leave the company early next year to explore a CEO opportunity elsewhere. With the departure of Alfred Kelly the Company announced several senior leadership and organizational changes. The company’s global consumer, small business and network businesses will report to Edward Gilligan, vice chairman. Mr. Gilligan had previously led the global B2B Group.
A new “Global Services” organization that includes company-wide customer service, technologies, operations, business processing and information management will report to Stephen Squeri, who has been promoted to group president. A new “Enterprise Growth” organization is being created to leverage existing assets, generate incremental fee revenue and drive the company’s entry into new payment areas and related businesses. A senior level executive from outside American Express is being recruited to head this organization. Judson Linville continues as president and CEO, U.S. Consumer Services, reporting to Mr. Gilligan. He is responsible for the consumer card, “Membership Rewards” and consumer travel businesses in the company’s largest market and for the prepaid card and travelers cheque businesses globally.

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Pre-Teens Taking Up Savings Programs

A new survey by U.S. Bank reveals that customers between 5-12 years old are focused on savings. U.S. Bank surveyed 1,500 of its customers between ages 5 to 12 who indicated that 30% are saving for college, and 15% saving for a car. The young savers are setting goals and socking away windfalls from birthdays and earnings from babysitting or other duties. About 100 of those U.S. Bank savers will be on their way to achieving their goal, as each will receive $100 from U.S. Bank by participating in its “What are Kids Savings For?” contest which ends at the end of October. U.S. Bank launched the program to make a lasting impression on its youngest customers, and has been featuring some of their responses on the bank’s website.

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WU & MAXIS

Western Union and Maxis Communications Berhad, Malaysia’s leading mobile
communications service provider, are launching a service by 2010 to
allow Maxis subscribers to send cross-border remittances directly from
their mobile phones. This would allow 11 million Maxis subscribers
across the Country to send funds from their mobile phones. Recipients
are allowed to pick up the funds in cash at more than 345,000 Western
Union Agent locations in 200 countries. The joint service will mark the
first time Western Union has enabled mobile money transfer transactions
from a mobile phone outside the United States. In 2008, more than US$6.4
billion (RM22.3 billion) in remittances was sent out of Malaysia, much
of which sent by an estimated 1.9 million foreign workers living in
Malaysia.

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Consumer Bankruptcy Filings Rising Quickly

The year-on-year growth in the number of U.S. consumer bankruptcy
filings picked up speed in September and represented the fourth highest
month since the 2005 reform laws. In September, filings rose at a 41%
annual clip, compared to a 24% annual pace in the prior month and 34% in
August. According to the American Bankruptcy Institute and the National
Bankruptcy Research, consumer filings totaled 124,790 in September,
compared to 119,874 in August and 88,663 in September 2008. Chapter 13
filings constituted 28% of all consumer cases in September, the same as
August. According to the Administrative Office of the U.S. Courts, total
filings in the second quarter of this year hit 381,073, compared to
330,477 for the first quarter and 276,510 one-year ago. Bankruptcy
filings for the 12-month period ending June 30th, were up 35% over
bankruptcy filings for the 12-month period ending June 30th, 2008.
Consumer filings for the 12-month period ending June 30th, totaled
1,251,294, up 34% from the same period one-year ago. (CF Library 8/27/09)

BANKRUPTCY FILINGS
Sep 08: 88,663
Oct 08: 106,266
Nov 08: 99,925
Dec 08: 84,926
Jan 09: 88,773
Feb 09: 98,344
Mar 09: 121,413
Apr 09: 125,618
May 09: 124,838
Jun 09: 116,345
Jul 09: 126,434
Aug 09: 119,874
Sep 09: 124,790
Source: ABI/NBKRC; CardData.com

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VOUCHERSEEKER

Research shows 60% of consumers surveyed feel immediate purchasing
rewards are the most important aspect of a promotion, while 39% would be
interested in a price discount and 87% would switch from their usual to
receive a price discount promotion. Consumers are increasingly turning
to voucher code sites, such as VoucherSeeker.co.uk, as a way of saving
money, tapping discount codes, vouchers and promotional codes for money
off products instantly. This acts as an alternative to credit card
reward schemes. Cash back programs rose in popularity from 57% in 2007
and 61% in 2008 while the cash back reward was the most popular type of
rewards program across all age and affluence ranges, according to
research conducted by the TNS Consumer Credit Card Program Study and
Granby Marketing Services. Additional findings show, among those who do
not claim rewards on their credit and loyalty cards, 17% disclosed the
financial value of the rewards was too small, 7% simply could not be
bothered, 3% cited the length of the redemption process and 4% said it
was too difficult to redeem rewards earned.

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CREDIT MARKET

Among midmarket businesses, 55% still find the credit process difficult
and delayed. While finance is expected to become more readily available
from a core group of lenders, 46% of borrowers have no confidence that
the cost will improve over the next 12 months. Despite calls for banks
to improve lending, research disclosed in the BDO accountants and business
advisors’ latest survey of senior financial decision-makers responsible
for banking relationships within the UK shows 67% of companies disclosed
a deteriorating opinion of banks over the past 12 months. Additional
survey findings show 85% have experienced no change in their own banking
relationship; 62% believe their bank understands the changing needs of
their business; 53% reflected the importance of financial function and
54% of senior management see the finance function as delivering better
value for the business through better cost management.

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Amazon Payments to Expand 1-Click Checkout

Amazon Payments has released its “Amazon Mobile Payments Service to enhance Amazon’s 1-Click checkout experience for customers. Amazon MPS is built on the same flexible, reliable, and secure Amazon
Payments infrastructure that many developers and businesses are using
today for their PC based checkout experience. The Amazon Mobile Payments
Service optimizes the check out experience for mobile devices and
provides tens of millions of Amazon.com customers the peace of mind and
convenience of shopping on mobile third party sites using information
from their Amazon.com account. Amazon Mobile Payments Service provides developers and merchants with a
payment option for their customers that is as easy and familiar as the
checkout experience on Amazon.com – including the convenience of
Amazon’s 1-Click checkout. After signing in from an Amazon MPS enabled
device or mobile application, customers are automatically able to make
future purchases from their mobile devices using 1-Click functionality.
Through a simple set of API’s and an optimized mobile browser
experience, developers and merchants can easily extend single or
multi-use payment options to their customers. Developers and merchants
who already offer Amazon Payments on their website can easily add the
new mobile payment option for their customers without any additional
backend technology development.

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More Prepaid Card Issuers Roll-Back Fees

Prepaid Card Holdings is offering a no monthly fee plan for some of its
cash loading customers. Prepaid Card Holdings will waive its monthly
fee when customers deposit either $350 a month or more by direct deposit
or $700 or more in cash each month. For consumers that don’t meet the
monthly deposit minimum, Prepaid Card Holdings charges only $5.95 per
month. Prepaid Card Holdings is a publicly traded holding company whose
current holdings consist of a 100% interest in Merchant Processing
International Inc. DBA Bank Freedom and the Berman Marketing Group, a
multi-channel direct market firm.

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AmEx President Alfred Kelly Decides to Exit

American Express’ President has resigned and will leave the company early next year to explore a CEO opportunity elsewhere. With the departure of Alfred Kelly, the Company announced several senior leadership and organizational changes. The company’s global consumer, small business and network businesses will report to Edward Gilligan, vice chairman. Mr. Gilligan had previously led the global B2B Group.
A new “Global Services” organization that includes company-wide customer service, technologies, operations, business processing and information management will report to Stephen Squeri, who has been promoted to group president. A new “Enterprise Growth” organization is being created to leverage existing assets, generate incremental fee revenue and drive the company’s entry into new payment areas and related businesses. A senior level executive from outside American Express is being recruited to head this organization. Judson Linville continues as president and CEO, U.S. Consumer Services, reporting to Mr. Gilligan. He is responsible for the consumer card, “Membership Rewards” and consumer travel businesses in the company’s largest market and for the prepaid card and travelers cheque businesses globally.

Details

Holiday Retail Sales to Dip for a 2nd Year

Holiday retail sales this year will likely decline 1.0% from the year-ago period, which saw a -2.8% Y/Y decline, representing the first back-to-back decline in holiday retail sales in the last four decades. Availability of personal credit is a significant factor in these findings, with credit card companies down on raising rates/fees and even canceling cards in reaction to recent credit card legislation. Consumer credit fell by a record $21.6 billion in July to $2.5 trillion. Other major factors impacting 2009 holiday retail performance, according to Archstone Consulting management strategy and operations consultancy, include the savings rate, which dipped slightly to 4.2% from 4.5% in June, but it is still high compared to a Y/Y 2.6% savings rate; the US unemployment rate, which was at 9.7% in August having dropped from 61.9% in September 2008; and real wages having plummeted 4.1% in August Y/Y.
Archstone notes that with 7 million fewer people employed in the U.S this holiday season compared to 2008, many consumers will remain under considerable financial stress and will stay frugal.

RETAIL SALES FORECAST
2005: +4.0%
2006: +2.5%
2007: +3.0%
2008: -2.8%
2009: -1.0%
Source: Archstone Consulting

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