U.S. Bancorp Q4 Debit Card Volume Up 20%

U.S. Bancorp reported that its fourth quarter merchant acquiring volume grew more than 9% over 4Q/04 to $43.6 billion, produced from more than 712,000 merchants. Debit card volume surged by 20% and corporate credit card volume increased 21% during 4Q/05, compared to one-year ago. Debit card volume was $6.661 billion for the fourth quarter compared to $5.548 billion for 4Q/04. Consumer credit card volume for the quarter was $9.207 billion, up 5.3% over 4Q/04. Corporate credit card volume was $7.102 billion, compared to $5.871 billion for the year-ago quarter. For the quarter, U.S. Bancorp’s Payment Services net income was down about 8% to $166 million due to increased bankruptcy filings. For complete details on US Bancorp’s 4Q/05 performance, visit CardData ([www.carddata.com][1]).

MERCHANT ACQUIRING VOLUME HISTORICAL
4Q/03: $27,447,000,000
1Q/04: $27,335,000,000
2Q/04: $33,646,000,000
3Q/04: $39,385,000,000
4Q/04: $39,891,000,000
1Q/05: $39,477,000,000
2Q/05: $43,231,000,000
3Q/05: $44,600,000,000
4Q/05: $43,600,000,000
Source: CardData (www.carddata.com)

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

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Hypercom Extends the Optimum Terminal Line

Hypercom introduced two new multi-lane “Optimum” payment terminals, the “L4200” and higher-resolution “L4250” with signature capture capabilities. The new Optimum L4200 multi-lane “Optimum” payment terminals, the “L4200” and higher-resolution “L4250” with signature capture capabilities offer lower-cost alternatives to the full-color Optimum L4100 released last year. The new models provide an out-of-the-box, plug-and-play capability that meets PCI PED and Interac security requirements without add-on components, simplifying deployment and ensuring compliance with the industry’s new security requirements.

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Parkeon Powers the NYC Muni-Meter Pilot

Parkeon, f/k/a Schlumberger e-City, says the New York City Department of Transportation is using 260 Parkeon pay and display parking meters equipped to accept payment cards for a six-month pilot. Each “Muni-Meter” in the study area has been upgraded with the installation of a wireless data network modem and software that connects the meters to Parkeon’s “EPSUM Payment Server” that processes and authorizes credit card payments in real-time. They have also been outfitted with instructional decals and fliers are being distributed to educate the public about the new payment alternative. Parkeon says in the past 18 months, a number of other major U.S. cities have installed pay and display machines with credit card payment facilities and have seen parking revenues increase by up to 40%, on a like-for-like basis. In some cases, up to 60% of all transactions are being completed with credit cards. The NYC pilot launched November 21st. Last year the City introduced 1,100 single space parking meters in Brooklyn, Manhattan and Queens with the capability to accept payments made with the NYC “Pre-Paid Parking Card.” (CF Library 11/18/05)

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BIG & DDM to Offer Prestige Payroll Cards

Florida-based Morgan Beaumont, Bostrom International Group and Diversified Data Management have finalized an agreement to offer Morgan Beaumont “Prestige Payroll Cards to all of DDM’s clients’ 35,000 employees. Morgan Beaumont’s Prestige Payroll Card is a PIN-based and signature Visa branded prepaid debit card that can be loaded with funds via employer payroll direct deposit. The card can be used to access those funds at ATM machines worldwide and anywhere Visa debit cards are accepted. BIG is an insurance and business consultancy offering innovative enterprise solutions including health benefits programs and employer payroll cards. DDM Payroll Systems is a payroll preparation service designed to meet the needs of small to medium sized businesses.

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Card Profits Get the Seven-Year Itch

Credit card profits slipped during 2005 for the first time in seven years, driven down by fierce competition, soaring charge-offs and escalating cost of funds. The average pre-tax, return-on-assets for credit card portfolios last year is projected to decline to 4.3%, compared 4.5% for 2004, and 4.4% for 2003. CA-based R.K. Hammer Investment Bankers says its data show that charge-offs rose 10 basis points last year due to cardholder reaction to new bankruptcy legislation. Operating expense decreased 20 basis points in 2005 to 4.7%, due to the seasoning of earlier technology investments. However, the maturity blended cost-of-funds moved upward during 2005 by 20 basis points to 2.7%. Hammer says some major issuers increased dollar profits even though ROA percentages declined by growing their receivables much faster than the impact of a declining ROA percentage factor.

U.S. Bank Credit Card Profitability Historical
(VISA, MasterCard, and Discover)
YEAR INC OX CO COF ROA
1989 21.3% 5.5% 3.8% 7.9% 4.1%
1990 20.9% 5.1% 4.3% 7.8% 3.7%
1991 20.5% 4.8% 4.7% 7.6% 3.4%
1992 19.4% 4.9% 4.9% 6.5% 3.1%
1993 18.6% 4.7% 4.6% 6.0% 3.3%
1994 18.5% 4.5% 4.4% 5.7% 3.9%
1995 18.0% 4.2% 4.1% 6.1% 3.6%
1996 17.9% 4.3% 4.2% 6.1% 3.3%
1997 17.4% 4.3% 4.6% 5.9% 2.6%
1998 17.3% 4.4% 4.7% 5.7% 2.5%
1999 17.9% 4.5% 4.4% 5.9% 3.1%
2000 18.4% 4.5% 4.3% 6.0% 3.6%
2001 18.8% 4.7% 5.1% 5.0% 4.0%
2002 18.5% 4.9% 5.4% 4.0% 4.2%
2003 17.6% 5.0% 5.8% 2.4% 4.4%
2004 17.5% 4.9% 5.6% 2.5% 4.5%
2005 17.4% 4.7% 5.7% 2.7% 4.3%
INC-total income; OX-operating expense; CO-charge-offs;
COF-cost-of-funds; ROA-net pre-tax return-on-assets
Source: R.K. Hammer Investment Bankers

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CHIP & PIN 4Q/05

At year-end, more than 127 million “chip and PIN” cards have been issued
in the UK including 64 million debit cards and 63 million credit cards.
Over 80% of tills in the UK or 770,000 have upgraded to “chip and PIN”
acceptance. During 2005 more than 2.85 billion PIN verified transactions
were made in the UK. In fact, during December 98% of all “chip and PIN”
debit card transactions and 92% of “chip and PIN” credit card
transactions were made using a PIN. According to APACS, 99% of
cardholders in the UK or 41.5 million had at least one “chip and PIN”
card in their wallet. After February 14th all “chip and PIN” cardholders
must use their PIN to be sure they can pay with their “chip and PIN” card.

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Reward Cards Hit Saturation in the US

A new report concludes that the loyalty market is nearly saturated in the U.S. credit card industry. More than 80% of the credit cards marketed online by the U.S. top 50 credit card issuers offer some type of reward for the users. The study by Mercator Advisory Group also found that there is very little or no differentiation among reward programs, and “giving more” seems to be the only way to compete. Mercator says introducing successful loyalty programs that help differentiate credit cards from the competition has become very challenging given the market conditions. However, change can be created by focusing on segmentation, targeting, communications, and reward redemption process.

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GCA Wins the Hooters Casino Hotel Contract

The soon-to-open Hooters Casino Hotel has signed a multi-year agreement to use the products and services of Global Cash Access. The Casino Hotel will use a variety of GCA products and services, including Casino Cash Plus(R) 3-in-1 ATM, QuikCash(TM) cash advance terminals, QuikCash Plus(TM) (QCP) Web, 3-in-1 Enabled QuickJack Plus(TM), Central Credit and Central Credit check warranty service. Hooters Casino Hotel features 696 rooms and suites. It is located one block from the famous Las Vegas Strip. Global Cash Access, Inc. is a provider of cash access products and related services to approximately 960 gaming properties and other clients in the United States, the United Kingdom, Switzerland, Canada and the Caribbean.

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