DEC DEBT

Credit card debt climbed again in December setting a new record of A$42.7 billion. Credit card volume also set a new high of A$19.2 billion after hitting a record in October. Year-on-year credit card debt has increased 9.5%, compared to December 2006. Card volume is up 12.3% compared to one-year ago. Credit card limits also reached a new high at A$114.4 billion, marking the 16th consecutive month of A$100+ billion. According to the Reserve Bank of Australia there are currently 13.9 million credit card and charge card accounts in Australia, compared to 13.2 million one-year ago.

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TRM Expands its Board of Directors

ATM provider TRM announced that Ethan S. Buyon, currently Managing Director at Citi Markets and Banking, will serve on the Company’s Board of Directors. Buyon has also been the interim Chief Operating Officer for Citi Residential Lending since September 2007. Before joining Citi Markets and Banking, Mr. Buyon served as a Managing Director of CRP Partners and its processor firm The Recovery Group from October 2003 to February 2008.

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BankAtlantic Renews Barclays Card Deal

FL-based BankAtlantic has extending its co-branded credit card agreement with Barclaycard US. As part of the agent bank agreement, Barclaycard will continue to provide BankAtlantic customers with a broad range of consumer, small business and student credit cards — branded under the BankAtlantic name. In addition, BankAtlantic checking account customers will be able to link an overdraft protection line to their BankAtlantic credit card.

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Business Lending to Pick Up in 2008

A new report says that global commercial and small business lending balances increased dramatically last year. TowerGroup says it expects to see continued growth this year for business lending, driven most notably by emerging economies and by lenders targeting small and medium enterprises or middle-market firms. Business lending sectors that have been hit hardest by the consumer credit crunch include construction, land development, and commercial real estate, with a marked slow-down in growth. Growth in commercial real estate and construction loans declined more than 60% in the first nine months of 2007. For 2008, TowerGroup expects that some businesses will face a tougher time refinancing existing short-term debt because of uncertainty over cash flows in a weakening economy. As a result, financial institutions will see increased use of pre-existing commercial lines of credit.

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Wells Intros Foreign Exchange Online Service

Wells Fargo is now servicing small businesses with its “Foreign Exchange Online Service” designed to send and receive international currency via the Internet. The service allows businesses to send and receive foreign currency wires in more than 90 currencies. A number of other international Wells Fargo business services are available, including the ability to order foreign currency online, insights from a new international “Money Tips Database” that includes currency information and travel tips for 60 countries and access to a new “Foreign Trade Glossary” to help small business owners understand commonly used international trading terms. Wells Fargo & Company is a diversified financial services company with $575 billion in assets.

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Paymetric Releases XiPayNet

Houston-based Paymetric has released “XiPayNet,” an on-demand web-based service for accepting, managing and integrating credit card transactions in enterprise resource planning systems, such as SAP. “XiPayNet” provides a single, on-demand platform for aggregating credit card payments across multiple payment origination systems, such as SAP, order-entry systems, CRM applications, and Web stores, enabling companies to dramatically reduce the cost of card acceptance. “XiPayNet” also enables secure payments to flow directly from an organization’s on-premise enterprise system, through the secure “XiPayNet” service at Paymetric’s PCI-certified data center, to a multitude of card processors or banks.

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ABS Payment Rates Head South in December

Monthly payment rates, the amount that cardholders pay on their credit card debt, abruptly headed south in December. After hovering between 20% and 21% for most of this year, the MPR dropped 122 basis points between November and December. Among credit card-backed securities, the MPR declined to 19.09% in December after rising to 20.99% in September and 20.31% in November. The MPR has remained fairly stable in the first three quarters of 2007 and remains consistent with historical levels since the new FFIEC minimum payment rules went into effect in 2005. According to FitchRatings, the gross yield increased in December to 19.92% from 19.44% in November and was up 196 bps above year-ago levels. Fitch says gross yield in 2007 is significantly higher than 2006.

ABS METRICS
YIELD MPR
Dec 06: 17.78% 19.32%
Jan 07: 18.28% 19.27%
Feb 07: 17.70% 20.80%
Mar 07: 18.21% 18.76%
Apr 07: 19.23% 21.09%
May 07: 18.23% 19.58%
Jun 07: 18.94% 20.17%
Jul 07: 18.46% 20.46%
Aug 07: 19.27% 20.88%
Sep 07: 19.61% 20.99%
Oct 07: 18.83% 19.09%
Nov 07: 19.44% 20.31%
Dec 07: 19.92% 19.09%
Source: FitchRatings

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Businessowner Confidence Picks Up in Feb

Economic confidence among small business owners improved in February for the first time since July of last year. Forty-one percent of owners said current economic conditions have forced them to reduce business spending, and 67% report having to curtail personal spending. Another 55% have been forced to reduce the amount of money they take out of their businesses, according to the “Discover Small Business Watch” index. The index rose in February to 90.9, a 4.6-point increase over January’s 86.3. About 34% of small business owners said they see economic conditions for their businesses getting better over the next six months, up from 31% who felt the same in January. One-third said they planned to increase spending on business development activities over the next six months, an increase over 28% in January who planned to do the same. Two-thirds of small business owners feel that economic conditions in the U.S. are getting worse, a decrease from 74% who felt this way in January. More than 40% said they have experienced cash flow issues over the last 90 days, a slight decrease from 44% in January, but consistent with the past several months.

Discover Small Business Watch
Feb 07: 113.4
Mar 07: 117.7
Apr 07: 110.3
May 07: 110.0
Jun 07: 102.5
Jul 07: 107.3
Aug 07: 102.4
Sep 07: 99.2
Oct 07: 96.8
Nov 07: 93.2
Dec 07: 92.7
Jan 08: 86.3
Feb 08: 90.9
Source: Discover Business Card

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Merchant Acquiring Net Spread Increases

A new report reveals that while there is an undeniable margin squeeze on the discount rate charged by ISOs and acquirers, the net spread in merchant acquiring has been rising steadily. This not only contradicts the industry belief of margin compression, but highlights how successful ISOs and acquirers have been in increasing their revenues, which are expected to grow from $70.5 billion in 2008 to $95.9 billion in 2012. According to Aite Group, the acquiring model started by Discover and emulated by American Express will allow ISOs and acquirers to move from a reseller agreement to an acquiring agreement. This model will offer ISOs and acquirers new revenue opportunities.

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Compass Bank Names a Big VISA Winner

AL-based Compass Bank has awarded $1 million to the winner of the “VISA Your Life, More Wonderful” Sweepstakes. Jeff Dubuisson won with a $5.98 purchase of a chicken sandwich at a Birmingham-area Wendy’s restaurant. The 2007 VISA “Your Life, More Wonderful” Sweepstakes, took place between Nov. 15 and Dec. 31, 2007, and involved not just Compass Bank VISA clients, but customers of other financial institutions within the VISA network. Entries in the sweepstakes were made by making a VISA card purchase, bill payment with a VISA card or without purchase by a mail-in method. Compass Bank is a subsidiary of Compass Bancshares, a wholly owned subsidiary of BBVA, a financial services group with approximately $700 billion in total assets.

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Travelex’s VISA TravelMoney Draws an Award

Travelex’s “VISA TravelMoney” card has been named as a finalist as “Best Consumer Card Program” awards to be given at the Prepaid Card Expo in Las Vegas next month. The Travelex Visa TravelMoney card is used extensively by leisure travelers and has begun to be adopted by businesses as a tool to fund overseas staff expenses. More than 160,000 Travelex cards were purchased last year totaling more than $150 million USD. Travelex is a foreign exchange and business payments specialist, operating through subsidiaries and branches in the Americas, United Kingdom; Europe, Asia Pacific; and Middle East and Africa.

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World’s Foremost Bank Grows Card Loans 26%

The World’s Foremost Bank, a subsidiary of Cabela’s, the “World’s Foremost Outfitter,” reported that its average VISA credit card loans increased 26% in the fourth quarter compared to one-year ago. With an estimated 1.8 million cardholders for its “Club VISA,” WFB posted managed card loans of $1.864 billion for 4Q/07. For the fourth quarter, the nation’s 23rd largest issuer also reported interest income of $50.3 million, interchange income of $15.4 million and other credit card fee income of $7.7 million. Over the past year Cabela’s has introduced a loyalty card and a debit card with rewards. Last year, U.S. Bank and Cabela’s introduced the “Cabela’s VISA Check Card,” offering reward points for signature purchases. The “Club VISA” offers 2% back on all Cabela purchases and 1% on other purchases. The U.S. bank-issued “VISA Check Card” offers one point for every $2 spent at Cabela’s stores and one point for every $3 spent at other merchant locations. For complete details on Cabela’s/World’s Foremost Bank latest performance, visit CardData ([www.carddata.com][1]).

WFB AVG CARD LOANS
4Q/06: $1484 million
1Q/07: $1584 million
2Q/07: $1607 million
3Q/07: $1731 million
4Q/07: $1864 million
Source: CardData (www.carddata.com)

[1]: http://www.carddata.com

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