MPR Heads South as Card Balances Grow

Monthly payment rates, the amount that cardholders pay on their credit card debt, headed south to 19.32% in December, and are expected to head downward this year as consumers migrate from home equity loans to revolving credit. Payment rates reached nearly 22% during 2006 driven by increased minimum payments and a strong economy. Consumer revolving credit hit a record of nearly $873 billion in November, growing at an annual rate of 11.9%. According to FitchRatings, the gross yield slipped 18 basis points in December to 17.78%, but is 52 basis points above year-ago levels. Both measurements are for credit card backed-securities. (CF Library 1/9/07)

ABS METRICS
YIELD MPR
Jul 06: 17.63% 20.71%
Aug 06: 17.86% 20.24%
Sep 06: 17.96% 21.06%
Oct 06: 17.58% 19.30%
Nov 06: 17.96% 19.82%
Dec 06: 17.78% 19.32%
Source: FitchRatings

Details

Card Debt Inches Up for the Third Month

Credit card outstandings grew during December by GBP 300 million.
However, the GBP 55.9 billion figure remains well below last December’s
peak of GBP 59.0 billion. Year-on-year credit card outstandings (not
seasonally adjusted) are running about 5% lower than one-year ago.
According to the The Bank of England, the increase in total net lending
to individuals in December was higher than the increase in November and
the previous six-month average. The twelve-month growth rate is now
10.6% and the three-month annualized growth is 11.3%. While net consumer
credit including credit cards and other loans and advances rose in
December it was at a slower pace than November. The annual growth rate
of consumer credit fell to 6.2% in December and the three-month
annualized growth rate fell to 6.5%.

Details

Fargo Electronics Names a New President

Fargo Electronics has named David M. Sullivan as president. Previously, he was managing director for the Europe, Middle East and Africa with ASSA ABLOY’s HID Global Corporation. Fargo Electronics, a division of HID Global, provides secure technologies for identity card issuance systems, including secure card printer/encoders, materials and software. The company has sold more than 120,000 systems in the US and over 80 other countries worldwide.

Details

XiPay 2.9 Validated for VISA PABP

Paymetric has announced that its “XiPay 2.9” payment processing software has achieved validation for VISA’s “Payment Applications Best Practices” (PABP) under the “Cardholder Information Security Program.” The PABP certification process mandates a rigorous and stringent third-party assessment of payment application security standards. It defines industry best practices for the storage and encryption of cardholder data by payment software applications. The validation was determined after a review of the application by independent auditor K3DES LLC, a PCI qualified security assessor.

Details

CardWizard Drives DCS’ 06 Revenue Growth

Dynamic Card Solutions, developer of CardWizard, has announced its 2006 financial results, which includes a 45% increase in revenue over 2005, due greatly to the 77 new financial institutions that selected the “CardWizard” instant issue technology. Additionally, numerous existing customers expanded their deployments of “CardWizard” by increasing the number of branches in which they offer instant issue and PIN selection. In 2006, the DCS customer base grew to more than 300 financial institutions with installations at thousands of branches. DCS’ “CardWizard” software provides a method to instantly issue and PIN plastic debit and credit cards.

Details

Mid-Size Issuers Post a 19% Gain in 06

U.S. issuers with bank credit card portfolios between $200 million and $400 million in outstandings grew by an average of 19% last year, compared to 6.5% for the nation’s largest issuers. Over the past five years this peer group has soared by nearly 58%. Among the sample group releasing portfolio statistics thus far: SunTrust posted a 36% gain in 2006 and Boeing Employees Credit Union reported a 29% increase in outstandings last year. UT-based BMW Bank, not included in peer group as it does not have a five-year operating period, posted a 4% gain in 2006 outstandings to $228 million, compared to the prior year. The peer group was selected from CardData’s quarterly portfolio survey. For the latest fourth quarter portfolio figures, visit CardData ([www.carddata.com][1])

PEER GROUP: $200-$400 Million
YEAR-END OUTSTANDINGS ($ millions)
ISSUER (STATE) 2002 2003 2004 2005 2006 CHNG*
Boeing Employees CU (WA) $248 $248 $268 $297 $384 +29%
SunTrust (FL) $110 $135 $171 $250 $340 +36%
First Citizen’s (VA) $243 $248 $257 $272 $285 + 5%
PA State Employees CU (PA) $211 $218 $232 $261 $284 + 9%
America First CU (UT) $141 $139 $159 $178 $209 +17%
TOTAL $953 $988 $1087 $1258 $1502 +19%
* Change from 2005 to 2006
Source: CardData (www.carddata.com)

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

Details

Zebra Technologies Buys a RFID Concern

Zebra Technologies has completed the acquisition of WhereNet for $126 million in cash. WhereNet is a provider of active radio frequency identification (RFID) based wireless solutions. Zebra Technologies is a provider of thermal bar codes, passive RFID printer/encoders, wireless mobile solutions, and active RFID systems, as well as ZebraDesigner label formatting software, ZebraLink connectivity solutions, Genuine Zebra supplies and ZebraCare services and support.

Details

TJX Data Breach Lawsuit Bandwagon Cranks-Up

Two law firms have filed a class action suit on behalf of all U.S. consumers who had personal and financial data stolen from the computer network of TJX Companies. Philadelphia-based Berger & Montague and Boston-based Stern Shapiro Weissberg & Garin filed the suits this week in the U.S. District Court for the District of Massachusetts. The lawsuit claims says that although TJX discovered the data breach in mid-December, it did not publicly announce the intrusion until one month later when it issued a press release on January 17th. The suit alleges the delay harmed class members in that it prevented them from taking appropriate measures to protect their accounts. However, TJX in the same press release stated that the delay was necessary for, and at the request of, law enforcement. Last week, the Massachusetts Bankers Association said that several banks across the State have reported incidents of fraud due to the TJX data breach. The December intrusion involved the portion of TJX’s computer network that handles credit card, debit card, check, and merchandise return transactions for customers of its 826 T.J. Maxx, 751 Marshalls, 271 HomeGoods and 162 A.J. Wright stores in the U.S. and Puerto Rico, and its 184 Winners and 68 HomeSense stores in Canada, and may involve customers of its 212 T.K. Maxx stores in the U.K. and Ireland. The intrusion could also extend to TJX’s 36 Bob’s Stores in the U.S. (CF Library 1/19/07; 1/25/07)

Details

DOJ Ends its VantageScore Informal Inquiry

The U.S. Department of Justice Antitrust Division has closed its inquiry into “VantageScore” without action. “VantageScore” was introduced last March by the three national credit reporting companies. It is the credit reporting industry’s first credit score developed jointly by Experian, Equifax and Trans Union. The group says the new credit scoring is more consistent and objective than current products in the market and will provide greater access to credit for underserved consumers. “VantageScore” uses score ranges from 501 to 990. The DOJ issued an informal request for information nine months ago on “VantageScore.” In October, Fair Isaac sued all three national credit reporting agencies over “VantageScore” alleging that Equifax, Experian, Trans Union and VantageScore Solutions are jointly engaging in unfair and anti-competitive practices that harm the “FICO” credit score brand and goodwill that Fair Isaac spent 50 years creating. In November, Fair Isaac’s CEO, Thomas Grudnowski, resigned. (CF Library 10/13/06; 11/3/06)

Details

Obopay Enters the Social Money Market

Obopay has acquired BillMonk, a “social money” service. The Company says “social money” includes shared consumer experiences, such as splitting the check at dinner, sharing expenses while on a road trip or funding teenagers and college students. BillMonk allows users to keep track of payments and debts via their mobile phone or the Web and BillMonk automatically calculates the running balance. In October, ViVOtech teamed with Obopay to expand NFC mobile phone payment options. In March, the firm closed a $10 million deal for its first round of funding. Obopay was founded in 2005. Obopay has a management team comprised of former executives from VISA, Microsoft, Yahoo, Expedia, AT&T Wireless, Western Union, First Data, Norwest Bank and Chordiant Software. (CF Library 3/9/06; 10/10/06)

Details

63% of US Households to Pay Online by 2011

A new report says the number of households that paid bills online will increase to 63% by 2011 or 59 million households. The research found that “Gen Yers” and “Gen Xers” will lead the migration. Although “Gen Yers” will represent just 26% of U.S. households, they account for 36% of all online bill payers. Forrester Research predicts the number of “Gen X” EBPP users will increase by 42% during the next five years. EBPP adoption by “Boomers” will grow by 39% during the next five years. In 2001, “Boomers” represented 42% of all online bill payers, but by 2011 this segment will diminish and make up just 28% of EBPP adopters. Forrester’s EBPP forecast for 2005 to 2010 projected a continued decline in the annual adoption growth rate. But surprisingly, 2005 ended up with a 34% annual growth rate in the number of EBPP users. Forrester says one driving fact for the reversal was more banks abolishing the fee for online bill payment.

Details

Rapid7 Unveils a PCI Compliance Portal

Boston-based Rapid7 has launched its PCI (Payment Card Industry) Compliance Portal, a remote security scanning solution that enables merchants, online retailers and credit card service providers to achieve compliance with the PCI Data Security Standard and is designed to meet the security requirements of all credit card companies. The PCI Compliance Portal locates website and database vulnerabilities that hackers commonly exploit to capture credit card data. SQL injection attacks, which are frequently performed by hackers on exposed Web applications, are identified by VISA International as one of the top five credit card risks.

Details