U.K. Late Fee Limit Drives Margins to New Lows

A new study has concluded that the U.K.’s Office of Fair Trading’s decision to limit default charges at about $23 is already affecting credit card margins. The research predicts the new rule could cost lenders $1.9 billion a year, or about $67 per year per cardholder. The PricewaterhouseCoopers report found that credit card margins have hit new lows. After allowing for bad debts, net yield on balances fell from 6.5% to just under 5% in the year to June 2006. Although APRs have risen by about 1 percentage point on average, margins have fallen as bad debt has risen faster, from just 4% in December 2004 to 7% by June 2006. The research also revealed that U.K. consumers have overtaken the U.S. in terms of debt penetration. The total debt of the UK population (secured and unsecured) now represents 104% of gross domestic product (GDP) compared to 92% in the US. At the same time, outstanding levels of consumer credit hit 18% of GDP in the UK, compared with 17% in the US.

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S1 Opening an Office in Dubai for Postilion

S1 Corporation has opened a new office in Dubai for the local delivery and support of “Postilion” software. “Postilion” drives payments, including advanced financial transactions such as prepay and
self-service, through ATMs, POS terminals, phones, and Internet access
points for customers in the financial services, retail, mobile, and
processing markets. “Postilion” is used by more than 250 customers in over 50 countries. Totally, the Company has more than 3,000 customers using its software solutions for financial and payment services.

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Supermarkets Now Distribute the Jack Ca$h Card

San Diego-based Jack in the Box expanded its reloadable “Jack Ca$h” card program last month which is now being distributed by Safeway, Albertsons, Randalls and Tom Thumb stores. Jack in the Box Inc. (NYSE: JBX), based in San Diego, is a restaurant company that operates and franchises Jack in the Box restaurants, one of the nation’s largest hamburger chains, with more than 2,000 restaurants in 17 states. The company also operates a proprietary chain of convenience stores called Quick Stuff, with more than 50 locations, each built adjacent to a full-size Jack in the Box restaurant and including a major-brand fuel station.

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Debit Cards to Capture 26% of Holiday Card Sales

Debit cards will capture 26% of retail sales volume on payment cards between Thanksgiving Day and Christmas Day this year, compared to 23% last year, as credit cards continue to sputter in the USA. The busiest full week is expected to be between December 11th and 17th when Americans are expected to rack-up more than $34 billion on credit, debit and store payment cards. During the 31-day shopping period, Americans are expected to charge $85.6 billion on general-purpose credit/charge cards, $35.3 billion on signature debit cards and $13.9 billion on limited-purpose store credit cards. The figures exclude groceries, gasoline, and travel related charges. The “Black Friday” weekend (Nov 24-26) should produce carded retail sales of $13.9 billion on VISA, MasterCard, American Express and Discover credit cards, $5.6 billion on VISA and MasterCard debit cards and $2.2 billion on store credit cards.

2006 Holiday Retail Sales on Payment Cards
Shopping Period TOTAL
($ billions)
Nov 24-26: $ 21.7
Nov 27-Dec 3: $ 27.2
Dec 4-10: $ 31.4
Dec 11-17: $ 34.2
Dec 18-24: $ 20.3
TOTAL: $134.8
Source: CardData (www.carddata.com)

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MasterCard Outpaces Rival Networks in the U.S.

Based on third quarter reports, MasterCard is now the fastest growing payment card in the U.S. with a 17.3% jump in gross dollar volume, compared to VISA’s 11.6% gain, American Express’ 14.3% increase and Discover’s 13.1% rise over 3Q/05. Over the past four quarters the four major payment card networks have racked-up nearly $3.0 trillion in U.S. gross dollar volume on credit and debit cards. CardData ([www.carddata.com][1]) reports that VISA’s U.S. share is now 54.7%, compared to MasterCard’s 29.2% share. Based on the four quarters through September 30th, VISA has a 57.7% share compared to MasterCard’s 26.4%. During the third quarter VISA posted U.S. gross dollar volume on all products of $446.2 billion compared to MasterCard’s $238.0 billion. Over the past four quarters, VISA GDV has climbed to $1717.6 billion compared to MasterCard’s $785.9 billion, American Express’ $390.1 billion and Discover’s $111.6 billion. MasterCard’s recent surge is linked to its strong performance in debit cards which grew more than 50% in the third quarter.

3Q/06 U.S. GROSS DOLLAR VOLUME
VISA: $446.2 billion
MasterCard: $238.0 billion
American Express: $101.7 billion
Discover: $ 30.2 billion
TOTAL: $816.1 billion
Source: CardData (www.carddata.com)

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

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58% of College Students Pay Cards Off Each Month

A new survey has found that 72% of college students have at least one credit card, but, 58% report they are managing their debt wisely and 13% receive parental help for paying balances. The study, by Boston-based Experience also found that 23% of college students select a credit card based on interest rates; 22% look first at fees associated with the use of the card; 15% focus on the terms of the credit card; 11% select a credit card based on bank or creditor’s reputation; and 8% are interested first in the free gift or incentive for applying. The research determined that 38% of college students have only one credit card; 34% have two or more cards; 23% do not have any credit cards; and 5% use a parent’s card. Additionally, 58% of college students pay their credit card balance in full each month; 24% pay some of the balance each month; 13% have their parents pay the balance each month; and 5% only pay the minimum balance each month. The poll involved more than 4,800 students from colleges and universities nationwide.

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Euronet Inks a $500 Million Deal for RIA Envia

KS-based Euronet Worldwide has acquired Los Angeles-based RIA Envia, the third-largest global consumer-to-consumer remittance company. The deal involved $380 million in cash, $110 million in Euronet stock and certain contingent value and stock appreciation rights. Ria originates transactions through a network of over 10,000 sending agents and 98 company-owned stores located throughout 13 countries in North America, the Caribbean, Europe and Asia and terminates transactions through a payer network of over 32,000 locations across 82 countries. Ria processed $4.5 billion in money transfers last year. Euronet has processing centers located in the U.S., Europe and Asia, and processes electronic top-up transactions at more than 265,000 point-of-sale terminals across approximately 157,000 retailers in Europe, Asia Pacific, Africa and the U.S. The deal is expected to close during the first or second quarter of 2007.

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Men Outspend Women During the Holidays

A recent survey shows that men spend more on gifts and entertaining over the holiday season than women. The VISA survey of credit and debit cardholders reveals that men spend an average of $1,288 for the holidays, which is over a hundred dollars more than women who report spending $1,186. Additional results from the survey found that 58% of cardholders who were surveyed say they spend $1,000 or less during the December holiday season. Over a quarter of those surveyed spend between $1,000 and $2,500. Two percent typically spend over $5,000 on gifts and entertaining while an equal number plan on spending nothing. Cardholders age 50 and over report spending an average of $1,130 for the holidays, $202 less than those ages 18- 49 who say they spend an average of $1,332. Not surprisingly, college graduates report spending more on average for the holidays ($1,380) than those who do not have a college degree ($1,115), the survey results found.

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Moneris Offers Card Processing for Microsoft POS Software

Moneris Solutions has launched debit and credit card payment processing for the Microsoft “Retail Management System.” Moneris is the country’s largest provider of payment services to more than
350,000 merchant locations, with more than one third representing small to midsized retailers. Moneris says with the explosion of broadband IP networks, retailers are increasingly turning to applications that are integrated and provide economies of scale across multiple checkouts and store locations; the “Microsoft Retail Management System” is
a powerful answer to this demand. Moneris processes more than two billion card transactions annually.

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Chase Closes on the Pier 1 Store Card Deal

TX-based Pier 1 Imports has completed the sale of its $140 million private-label credit card portfolio to Chase. In addition, the two companies entered into a long-term agreement in which Chase will provide credit and customer service benefits to Pier 1 cardholders and will offer special financing terms to Pier 1 customers. Pier 1 will receive future ongoing payments based on credit card sales, new account generation and other credit and account related activities. Pier 1 and Chase will work together on various marketing initiatives designed to increase Pier 1’s sales and further enhance credit growth and profitability. Pier 1 Imports, Inc. is North America’s largest specialty retailer of imported decorative home furnishings and gifts with Pier 1 Imports stores in 49 states, Puerto Rico, Canada, and Mexico and Pier 1 kids stores in the United States.

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