Fee Income Maintains Profitability in 07


For 2007, P/L revenue and expense streams for the credit card industry calculated by investment banker R.K. HAMMER:

2007 Revenue Streams: $160.1 Billion total for ’07 vs. $145.3 Billion in ’06 18.30% ROA Yield

Interest Income: $97.1 Billion for ’07 (representing 61% of total revenue), up from $90.1 Billion in ’06

Fee Income: $63.0 Billion for ’07 (representing 39% of total revenue), up from $55.2 Billion in ’06

2007 Expense Streams: $119.4 Billion total for ’07 vs. $106.7 Billion in ’06 13.65% ROA Yield

Operating Expense: $40.7 Billion (34.1% of total expense), up from $39.5 Billion in ’06

Blended Cost of Funds: $37.6 Billion (31.4% of total expense), up from $33.6 Billion in ’06

Net Charge offs: $41.1 Billion (34.5% of total expense), up from $33.6 Billion in ’06

2007 Net Pretax Profit: $40.7 Billion, vs. $38.6 Billion in ’06 4.65% ROA Yield


This was the highest ROA % year for the card industry since 1987.

2007 ROA percentages based upon our model’s denominator calculation of $875 Billion in card loans for national brand and private label/retail credit card segments.

R.K. Hammer has been tracking card profitability and credit card portfolio sale prices since 1983, and is a leading independent broker of bank card portfolios in the U.S. and in 50 countries abroad.



Heathrow’s second largest airline has teamed with MBNA Europe to launch two new American Express cards. The “bmi American Express” card offers 1.5 destinations miles for every GBP 1 spent on the card, while the “bmi plus American Express” card offers 2.0 destinations miles for every GBP 1 spent on the card. The standard card also offers 20,000 bonus destinations miles when cardholders spend GBP 250 on their card within 90 days of account opening and the premium card offers 24,000
bonus destinations miles when they spend GBP 250 on their card within 90
days of account opening. The “bmi American Express” card has no annual fee, but the “bmi plus American Express” card carries a GBP 60 annual fee. The standard card interest rate is a variable 15.9% and the premium card carries a 17.9% variable APR. Additionally, if cardholders use the card to book flights through flybmi.com they will receive double destinations miles for every GBP 1 spent and the credit card booking fee will be waived by bmi. bmi operates 1,800 flights a week in Europe.


PowerTech Group Joins PCI DSS Council

WA-based The PowerTech Group has joined the “PCI Security Standards Council” as a new “Participating Organization.” As a Participating Organization, PowerTech will now have access to the latest payment card security standards from the Council, be able to provide feedback on the standards and become part of a growing community that now includes more than 350 organizations. PowerTech provides data privacy and compliance solutions that help organizations using the System to comply with a wide range of standards, including PCI.



Motorola Ventures and HID Global have joined INSIDE Contactless’
list of investors in support of NFC mobile commerce. With investment from
Motorola Ventures and HID Global, INSIDE Contactless can focus on the
development of NFC product lines and product line roll-out. Other
companies with vested interest in the INSIDE project include Sofinnova
Partners, Vertex Management, Vertex Ventures, Siparex, GIMV, EuroUS
Venture, Granite Global Ventures, Visa Ventures and Nokia Ventures.
INSIDE Contactless provides NFC solutions under more than 55 patents,
35 million MicroPass intelligent payment platforms(awarded the 2007
Sesames “Best Hardware”) with the help of more than 25 partners.
Motorola had sales of $42.8 billion in 2006 while HID Global operates
international offices supporting secure identity solutions in over 100


Synthetic Identity Theft Gains Traction

A new analysis has found that 1 of every 16 American adults has two or more SSNs due to synthetic identity theft, wherein the identity thief uses one person’s SSN and another person’s mailing address. MA-based IdentityTruth says its analysis also shows that children are among the highest at risk for identity theft or compromises to their SSN since the theft is often not discovered until years later. While sometimes theft related to a SSN is a single-time occurrence, it is more often much more serious. IdentityTruth has found cases where the SSN is tied to an address where half of the residents at that address also have a shared SSN, a sign of an organized effort to perpetrate identity theft. These identity theft rings are growing in numbers. The Company also noted that the use of an alternate SSN is not something that can be easily detected through a credit report.



MasterCard Europe and Europay France will be integrating operations in
France, forming a new and separate company to support bank provisions
of competitive payment services. Slated for completion by April 1, 2008,
the agreement will provide the banks with a direct relationship to
MasterCard Europe for payment services and will be overseen by the
newly appointed GM, Emmanuel Petit. Petit joined MasterCard in 2002
and will be responsible for the integration process of the new
He is also the current Senior VP and GM of the Citibank account for
APMEA and Europe. Having spent 10 years, prior to this, with VISA as
Senior VP and time as VP for International Debit products, Petit has
extensive experience in this role. His advanced education includes a
diploma from the Institut Superieur de Gestion in Paris and a degree in
Business Law from the University of Paris-II Assas. MasterCard Europe
provides customers with payment services while MasterCard processes over
16 billion transactions annually, providing analysis to financial
institutions and
merchants. Europay France manages the development and adoption by
French banks of MasterCard’s products and manages the performance of
the payments networks for all card payment operators in France.



Alipay China, 3rd party electronic payment provider, is reflecting
lacking performance in its Taiwan operations. Falling well short of its
goal of attracting 100 online store operators by the end of 2007, and
short of the overall user quota, Alipay suspects customers throughout
the region are unaware of the availability of Internet merchandise.
This, paired with the fact that many Taiwan websites are blocked from
access in China, is what experts speculate has resulted in the service
provider’s lackluster performance.


Firethorn and Verizon Expand M-Banking

Banking and payments provider Firethorn Holdings and Verizon Wireless have joined forces to enable customers of customers of major financial institutions, including Wachovia, SunTrust, FirstBank, and BancorpSouth mobile access to their accounts. The Firethorn application is currently available on several phones from Verizon Wireless, including the Chocolate and enV by LG, LG VX8700, LG VX8600, LG VX9400, and the Samsung SCH-a950. The companies expect to make the application available on additional devices in the coming months. Verizon Wireless customers can find the Firethorn application in the “Get Going”or “Tools” on the Go virtual shopping aisle of the “Get It Now” virtual store by clicking on “Get New App” and then “Business/Tools.” The mobile banking application is free, but application download, usage or megabyte charges may apply.



Debit cards continue to dominate western Europe, accounting for 63% of transactions despite comprising 52% of cards. A new report has also found that there are 787 million payment cards in issue in western Europe with six countries accounting for more than 80% of cards in the region. The U.K. remains the largest market with 161 million cards and Germany second with 127 million. According to the new study by London-based Retail Banking Research, private label cards are increasingly being converted to bank cards and card usage is growing faster than cardholding in western Europe. RBR notes that many western European countries lag behind in EMV-compliance including Greece, Italy, the Netherlands, Portugal and Spain for payment cards; Finland, Germany, Italy, the Netherlands and Sweden for POS terminals; and Greece and Italy for ATMs. Additionally, the total number of POS terminals in western Europe increased by 19% to 7.1 million in the two years to the end of 2006.


Global Payments Revenue Rises 18% in Q4

Atlanta-based Global Payments reported that revenues for the quarter ended November 30th increased 18% to $308.8 million, compared to one-year ago. Net income for the quarter rose 13% year-on-year to $38.3 million. GPN says the revenue gain was driven by growth in its merchant services segment, a strong Canadian currency exchange rate and its Asia-Pacific JV with HSBC. Sequentially, revenues declined $2.2 million and net income slipped $5.3 million. During the quarter, GPN completed the integration of Discover Network card transaction processing and support services for the majority of its merchants; activated the first of its ISOs relationships to acquire Discover Network merchants; announced an agreement to provide its “VIP LightSpeed” suite of cash access products and services to the Mount Airy Casino Resort in Paradise Township, Pennsylvania as well the Mystic Lake Casino Hotel and Little Six Casino in Minneapolis/St. Paul, Minnesota; and licensed Hypercom’s “SmartPayments Server and Client” software products as key technology components of its host electronic transaction processing platform. GPN updated its annual fiscal 2008 revenue guidance to range between $1,231 million and $1,257 million, reflecting a 16% to 18% growth versus fiscal 2007. For complete details on Global Payments latest results, visit CardData ([www.carddata.com][1]). (CF Library 9/14/07; 10/18/07; 10/30/07; 11/20/07; 11/27/07)

4Q/06: $260.7mm $34.0mm
1Q/07: $260.4mm $34.3mm
2Q/07: $280.1mm $33.2mm
3Q/07: $311.0mm $43.6mm
4Q/07: $308.8mm $38.3mm
Source: CardData (www.carddata.com)

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



The International Association of Money Transfer Networks(IAMTN) and
the Prepaid International Forum(PIF) have signed collaborative agreements.
Citing the fast rate of growth recently seen in the prepaid industry, IAMTN
sees this development as an opportunity to expand its operations and the
payments market worldwide. In collaborating with PIF, the two organizations
can co-ordinated information, support developments in the prepaid
market and consider common issues to result in mutual benefit.