CHIP & PIN 2Q/05

At mid-year more than 107 million “chip and PIN” cards have been issued in the UK. In total, 58.7 million debit cards and 48.5 million credit cards “chip
and PIN” have now been issued by UK banks, building societies and other
card issuers. By the end of June, 39.9 million cardholders – nine out of
ten – had at least one chip and PIN debit or credit card in their
wallets, according to APACS. During June a total of 221 million “chip
and PIN” transactions took place, up from around 120 million during
December 2004. It is also estimated that 84% of UK retailers and other
businesses are now using the new, more secure technology for card payments.

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Bankruptcy Surge Momentum Slows in July

Personal bankruptcy petitions in July declined nearly 7% from June and were only up 2% over year-ago levels. The surprise softening was the first since February when it became evident that bankruptcy reform legislation was going to pass Congress. However, year-to-date filings will exceed the one million mark this month. The July year-over-year increase was less than 3,000 filings. Slightly more than 136,000 filings were made during July, compared to 133,390 for July 2004 and 145,946 in the prior month. New bankruptcy laws take effective October 17th. In the first seven months of this year, there have been 963,686 personal bankruptcy filings.

Monthly Filings Historical
Jul 04: 133,390
Aug 04: 125,783
Sep 04: 127,664
Oct 04: 133,404
Nov 04: 116,952
Dec 04: 113,957
Jan 05: 99,705
Feb 05: 103,457
Mar 05: 165,459
Apr 05: 170,130
May 05: 142,915
Jun 05: 145,946
Jul 05: 136,074
Source: CardData (www.carddata.com)

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Ameriprise Financial Spin-Off Set for 9/30

The American Express Board has approved the spin-off of its financial advisors business to shareholders on September 30th. The distribution of Ameriprise Financial, Inc. (formerly, American Express Financial Corporation) shares will be made on September 30, 2005 to American Express shareholders of record as of the close of business on September 19, 2005. American Express will distribute one share of Ameriprise common stock for every five shares of American Express common stock outstanding as of the record date. American Express Company (founded is a global travel, financial and network services provider.

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European Delinquencies Rise in 2Q/05

Delinquency, among $47.7 billion in European credit card-backed securities, hit a record 4.96% in the second quarter. However, the charge-off rate in the second quarter stabilized at 4.66%, after marching upward since the end of 2003. According to Standard & Poor’s latest “Credit Card Index Report for European ABS,” there was not one particular driver for the increase in the delinquency rate, as most issuers experienced the up tick. S&P says there was a marked rise in the charge-off rate for Capital One, which increased from 5.0% in November 2004 to 6.9% in June 2005. But, Barclaycard and MBNA, which make up 63% of the index, had small movements in the second quarter compared with the first quarter, resulting in the index remaining flat. Yield and payment rates increased slightly in the second quarter, to 18.14% and 16.87%, respectively.

EUROPEAN CREDIT CARD INDEX
Dec03 Jun04 Dec04 Jun05
Yield (%) 18.36 18.26 17.36 18.14
Charge-offs (%) 4.02 4.25 3.93 4.66
Delinquencies (%) 4.01 4.18 4.36 4.96
Payment rate (%) 18.91 18.91 16.60 16.87
Source: Standard & Poor’s

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ABS 2Q/05

Delinquency, among GBP26.5 billion in European credit card-backed securities, hit a record 4.96% in the second quarter.
However, the charge-off rate in the second quarter stabilized at 4.66%, after marching upward since the end of 2003. According to Standard & Poor’s latest “Credit Card Index Report for European ABS,” there was not one particular driver for the increase in the delinquency rate, as most issuers experienced the up tick. S&P says there was a marked rise in the charge-off rate for Capital One, which increased from 5.0% in November 2004 to 6.9% in June 2005. But, Barclaycard and MBNA, which make up 63% of the index, had small movements in the second quarter compared with the first quarter, resulting in the index remaining flat. Yield and payment rates increased slightly in the second quarter, to 18.14% and 16.87%, respectively.

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MasterCard Intros Core Benefit Bundles

MasterCard is launching seven core benefits bundles for issuers to to offer on their “Gold” and “Platinum” MasterCard credit and debit cards. Issuers will be able to choose from bundles of retail, travel, and combination benefits that become effective on September 1st. Retail bundles include combinations of extended warranty, purchase assurance, and satisfaction guarantee. Travel bundles include collision damage waiver, roadside assistance and coverage against hotel/motel burglary and lost luggage. Issuers will be able to make their benefit choices on an annual basis, with an option to purchase additional benefits to complement the bundles they offer. The benefits only apply to cards with credit lines or total relationship balances of $2,000 or more.

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Citibank Enters Contactless Payments

Citibank has made its entry in the emerging contactless payment arena by introducing the “MasterCard PayPass” key chain fob for its debit card customers. As it launches the debit fob this fall, Citi will begin to pilot “PayPass” for its credit card customers. Following the initial launch in the New York market, Citibank plans to roll out 2.5 million “PayPass” debit devices nationwide. The new “Citibank MasterCard PayPass” will limit daily purchases to $150. The program will continue to offer “ThankYou Points” on all debit transactions. Earlier this month Cleveland-based KeyBank become the first bank in the USA to launch “MasterCard PayPass” debit cards. However, the KeyBank “PayPass” is not a fob like Citibank. (CF Library 8/4/05)

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RBA Extends Access Regime to VISA Debit

The Payments System Board has decided to impose an “Access Regime” on the VISA Debit System. The Board says this was done to ensure that Specialist Credit Card Institutions are eligible to join the VISA system to provide services to merchants accepting both VISA credit and debit cards. The regime will override VISA’s Australian rules which might otherwise have prevented some SCCIs from joining the VISA system. The “Access Regime,” which VISA supports, is largely the same as that imposed on the VISA credit card system in February 2004.

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Absa Extends its BASE24 License

Absa has renewed its license for ACI Worldwide’s “BASE24” software to run its entire ATM and POS networks. The license runs for five years and marks a ten year business partnership with ACI. The bank has also signed a new five year “BASE24” extension with plans to migrate to “BASE24-es,” ACI’s next generation platform for payments processing.
Absa’s network has grown from 1,600 ATMs in 1996 to over 5,233 ATMs today. Since then, ATM traffic has more than doubled and now stands at a peak rate of 37 million transactions per month. POS volumes have grown from less than half a million transactions per month in 1996 to around 11.7 million per month today. Barclays recently acquired a majority stake in Absa.

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Equifax Hires a GE Executive as CEO

Equifax has named Richard Smith, former senior executive at GE, as CEO and Chairman-elect, succeeding Thomas Chapman, who is retiring at the end of the year. Mr. Smith, 45, joins the company after 22 years with General Electric Co. Most recently, he was Chief Operating Officer of GE Insurance Solutions, GE’s global insurance group with $10 billion in revenue and $50 billion in assets in 2004. Mr. Smith led all business units for GE Insurance Solutions, including property and casualty reinsurance, commercial lines insurance, and life and health reinsurance. Equifax provides credit analysis to businesses and assists consumers with effective credit management.

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VISA to Open a Karachi Office Next Year

VISA has expanded its business operations in Pakistan with the
commitment to open an office in Karachi early next year. VISA has
already launched several initiatives with local members over the past six
months. Over the last 12 months, annual retail sales volume in Pakistan
was a record US$430 million, an increase of more than 60%. Today, there
are more than 845,000 VISA cards in circulation in the country – an
annual growth rate of more than 100%. There are currently 238 million
VISA-branded cards in the Asia-Pacific region.

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