Fee Income Contributes 39% of Total Revenues


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.


Consumer Bankruptcy Filings Top 800K in 07

The number of new consumer bankruptcy filings soared by 40% in 2007. According to the American Bankruptcy Institute, relying on data from the National Bankruptcy Research Center, overall consumer filings for the 2007 calendar year reached 801,840 compared to the 573,203 filings recorded during the similar period in 2006. However, NBKRC’s data also showed that the 66,389 consumer filings recorded in December represented a 7.5% decrease from the 71,799 filings in November. Chapter 13 filings constituted 38% of all consumer cases in December, a slight decrease from November. According to the Office of the U.S. Courts bankruptcy filings peaked at more than two million in 2005 as new bankruptcy laws went into effect that greatly reduced eligibility to make a Chapter 7 filing. CardTrak.com says that many homeowners are upside down on their mortgages and maxed out on their credit cards, setting the stage for higher figures in 2008.


Online Xmas Sales Post a Respectable 19% Gain

The final figures are in that show online holiday sales rose 19% to a record $29.2 billion between November 1st and December 31st. Monday, December 10th was 2007’s “Cyber Monday,” posting more than $880 million in sales. VA-based comScore reports that the softness in the growth of online retail sales during the first ten days of November was a drag on the final figures, but the period between Thanksgiving and Christmas experienced a strong 21% growth rate. comScore previously reported $24.6 billion in 2006 holiday sales and $21.3 billion for the 2005 season. The other top online shopping days for 2007 were Tuesday, December 11th with $819 million and Thursday, December 6th with $803 million in sales. The heaviest spending week during the 2007 holiday season was the week ending December 16th, with $4.7 billion in online sales, edging out the week ending December 9th, which saw $4.6 billion.


Solutran Captures 34% of NACHA BOC in Q3

Solutran reports a 34% market share of industry Back Office Conversion volume for the quarter ending September 30, 2007. Most of Solutran’s share can be attributed to its patent-pending BOC solution, Solutran’s POS and Imaging Network, or “SPIN”. Check depository information is captured in the merchant’s current POS system and checks are then forwarded to Solutran’s centralized processing center for imaging, archiving, and destruction. NACHA recently released BOC’s national processing volumes for the third quarter at 840,743 transactions.


Vesdia Names a Board Member as CEO

Loyalty marketer Vesdia has named James Douglass, previously with Swingvote, as CEO. As President of Swingvote, Douglass led the company’s strategy for electronic delivery of shareholder communication services to the top 50 banks and brokerage firms. Douglass previously served as CEO of Visionary Systems where he developed and implemented successful business initiatives for delivering decision software to the top 100 financial institutions. He earlier held positions as CFO and Executive Vice President of Corporate Development at CheckFree. Douglass began his career in financial services at KPMG Peat Marwick. He holds a Bachelor of Business Administration in Finance and Accounting from Georgia State University.


MC Inks PayPass, Easy Savings and QSR Deals

Airport concessionaire The Paradies Shops has agreed to accept MasterCard “PayPass” and Burger King has launched a post-holiday MasterCard sweepstakes. Also, Microsoft and Monster have joined the “MasterCard Easy Savings” program. The Paradies Shops will offer “PayPass” at its more than 500 retail store locations throughout the U.S. and Canada by late 2008. Paradies operates in over 60 airports and hotels in North America. The new BurgerKing/MasterCard promotion gets underway today through March 2nd. MasterCard cardholders in the U.S. are automatically entered to win each time they make a purchase at a participating Burger King restaurant. Prizes include $500 “MasterCard Gift Cards,” $250 “MasterCard Gift Cards” and $50 “BK Crown Cards.” Grand Prizes includes a $5,000 travel award. The MasterCard/Burger King promotion is being supported through in-restaurant POP as well as advertising in InTouch, US Weekly, Star and People Magazine. Under the Microsoft and Monster deals, MasterCard “BusinessCard” credit and signature debit cardholders enrolled in the program will receive a 3% discount on online search marketing and related advertising services from Microsoft, as well as a 5% discount on online recruitment services from Monster. The “MasterCard Easy Savings” program was launched in September and provides savings from business-relevant merchants across key purchasing categories and includes over 25 participating issuing banks.



The News of the World Sunday Newspaper and Tuxedo Money
Solutions has launched a prepaid MasterCard to appeal to the paper’s
9 million readers. Using its online “eccount” account feature, all
are given the ability to transfer funds to the card as needed for money
management through text message, phone or Internet. The “eccount” product
was introduced for customer security, allowing for the “blocking” and
“unblocking” of card use, in response to research showing that over 10%
of UK Internet users were victims of fraud in 2007. These findings, experts
say, prevent 56% of the UK consumers from buying online. Additionally,
this card offers customers the versatility of use with online purchases,
transactions and cash withdrawal at ATMs.


Monthly Payment Rates Head South in Nov

Monthly payment rates, the amount that cardholders pay on their credit card debt, took a turn south in November. After topping 20% one-year ago, the MPR dropped 32 basis points between October and November. Among managed credit card outstandings, the MPR declined to 18.89% in November after rising to 19.21% in October. The MPR has remained fairly stable in the first three quarters of this year and remains consistent with historical levels since the new FFIEC minimum payment rules went in effect in 2005. According to CardData, the yield also decreased in November to 14.80% from 14.82% in October, but was up 27 bps above year-ago levels.

Nov 06: 14.53% 20.01%
Dec 06: 14.63% 19.70%
Jan 07: 14.77% 19.88%
Feb 07: 14.75% 19.81%
Mar 07: 15.01% 18.12%
Apr 07: 14.99% 18.04%
May 07: 14.87% 19.01%
Jun 07: 14.93% 18.40%
Jul 07: 14.77% 18.30%
Aug 07: 14.80% 18.99%
Sep 07: 14.71% 18.86%
Oct 07: 14.82% 19.21%
Nov 07: 14.80% 18.89%
Source: CardData (www.carddata.com)



CPS Technologies, a subsidiary of ABnote, and Cryptomathic have partnered
to offer its clients two factor authentication services with the
Authenticator”. With this partnership, CPS Technologies French clients can
protect their Internet banking from fraud through the use of
verification, token distribution and SMS technology. Cryptomathic
protects against e-financial attacks, is certified by MasterCard
Worldwide and is
compliant to Visa International’s Dynamic Passcode Authentication (DPA).



Throughout the London borough of Southwark, the Bankside, the Borough
and the London Bridge parking zones are launching an 18 month pilot to
test mobile phone versatility for parking dues. With this pilot, drivers
will be
able to pay for parking using their existing accounts over the phone when
parked in one of the 3 controlled parking zones. For registration, the
driver is
required to provide a 4-digit pin number for account security, automobile
details, parking location number and for how long they wish to park. If the
duration for how long they wish to park changes, the user is sent a text
reminder when time is nearing expiration and given the option to renew.
A 20p service charge applies to each parking transaction while reminder
texts are charged at 10p per text. Ultimately, with this pilot program,
are no longer required to physically return to their cars to renew their



Credit card outstandings rose during November by GBP 343 million to GBP 54.5 billion. This is the third consecutive month of growth following six straight monthly declines, and has tied the record for 2007 Set in February. Year-on-year credit card outstandings (not seasonally adjusted) are now running about 2% lower than one-year ago. According to the The Bank of England, the increase in net consumer credit in November was GBP 1.1 billion below the prior month but in line with the previous six-month average. Net other loans and advances rose by GBP 800 million, lower than the October increase. The annual and three-month annualized growth rates of consumer credit were the same as in October at 5.7% and 7.0%, respectively.

NOTE: Chart does not include about GBP10 billion from
specialist lenders, retailers, and insurance companies.
SOURCE: Bank of England


Green Dot Names a New Technology Chief

Pre-paid card provider Green Dot Corporation has promoted Mark Goldin, who joined Green Dot’s IT Division in 2005. He was previously CTO with Thomson Elite as its Chief Operations and Technology Officer. Goldin is responsible for the company’s operational infrastructure including the voice and data networks, retail distribution and supply chain, worldwide call centers and IT application development functions. He has worked in Information Technology for over 20 years and has an extensive background in software development and relational databases. Green Dot Corporation is a provider of retail-based financial services for America’s underserved community.