Yield Running Well Ahead of Last Year

Yield among credit card-backed bonds has risen sharply this year and is now running between 84 and 92 basis points above last year. Yield is primarily finance charges and fees, collected during the month as an annualized percentage of the total loan balance. Moody’s Investor Services reported that yield hit 17.75% in June from 16.98% a year ago. Moody’s also noted that second quarter yield was up, to 17.75% from 16.91% a year earlier. FitchRatings reported that its yield index for June increased 79 bps to 17.69%, compared to 16.64% one-year ago.

ABS YIELD
Jan 05: 16.64%
Feb 05: 16.27%
Mar 05: 17.71%
Apr 05: 17.27%
May 05: 16.90%
Jun 05: 17.69%
Source: FitchRatings

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MasterCard Earns Best IT Workplace Award

For the third year in a row, MasterCard has earned a place on the IDG Computerworld’s “Best Places to Work in IT”. The “Best Places to Work in IT” feature has ranked the top 100 work environments for technology professionals, based on a comprehensive questionnaire regarding company offerings in categories such as benefits, diversity, career development, training and retention. Computerworld is a business unit of International Data Group (IDG), the world’s leading technology media, research and events company. MasterCard International manages a family of well-known, widely accepted payment cards brands including MasterCard, Maestro and Cirrus and serves financial institutions, consumers and businesses in over 210 countries and territories.

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Charge-Offs Steady Despite Bankruptcies

Charge-offs among three top monoline issuers, who collectively held $142.2 billion in bank credit card outstandings at mid-year, have been relatively steady despite the surge in bankruptcies. Providian, which posted a spike in March, has continued to manage charge-offs down by more than 100 basis points this year. Providian, a near-prime specialist, was down by 81 basis in July over its year-to-date average, according to CardData. MBNA’s July figures were up 3 basis points over its year-to-date average. Capital One’s July data were 9 basis points lower than the year-to-date average.

2005 Managed Charge-Offs Historical
Prov MBNA Cap One
Jan 8.54% 4.46% 4.19%
Feb 8.12% 4.27% 3.96%
Mar 8.62% 4.29% 4.35%
Apr 8.49% 4.43% 4.22%
May 8.47% 4.77% 4.10%
Jun 7.97% 4.50% 3.96%
Jul 7.42% 4.49% 4.02%
AVG 8.23% 4.46% 4.11%
Source: CardData (www.carddata.com)

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Barclays and SB End S.African JV

Due to Barclays Bank recent acquisition of a majority stake in ABSA Group, the credit card joint venture with The Standard Bank of South Africa has been terminated. Both sides said last week that the decision was amicable. Under terms of the decision, Standard Bank will increase its stake to 100% and SB will re-issue the existing Barclaycard customers with a Standard Bank branded card. Barclays will also be precluded from using the Barclays or Barclaycard brands on any credit card products in South Africa until February 2007.

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Cardtronics Adds ATM Manager Pro Modules

Houston-based Cardtronics is deploying additional modules of e-ClassicSystems'”ATM Manager Pro” including the “Advanced Cash Management,” “Interchange Fee Calculations,” and “Branding Program Analysis” modules. Cardtronics is the world’s largest owner/operator of ATMs and has used ATM Manager Pro to manage its network that has grown to more than 25,000 ATMs. e-ClassicSystems provides a suite of integrated financial software systems and is a subsidiary of Jack Henry & Associates, a provider of integrated computer systems and processor of ATM/debit card/ACH transactions for banks and credit unions.

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Phishing Declines as Crimeware Rises

A new report for July shows a decline in conventional phishing attacks but a strong increase in malicious software designed to steal identity information for financial crime. The Anti-Phishing Working Group says it found a marked increase in “screenscraper” technology by phishers, used to counter the graphical keyboard systems that some financial services firms are using to avoid the hazards of keylogging Trojans that phishers use to mine the usernames and passwords directly from the keyboard entry of alphanumerics and symbols. When the user mouseclicks a character on the graphical keyboard, the screenscraper takes a snapshot of the screen and sends it to the phishers’ server. The APWG reported that it received some 14,135 unique phishing reports in July, down from 15,050 in June. Financial institutions made up 86% of all phishing targets.

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Citi to Rejigger its Global Consumer Group

Charles Prince, Citigroup’s CEO, yesterday announced that Marjorie Magner, Chairman and CEO of the company’s Global Consumer Group, will be leaving the company by October 1st. Prince then named Steven Freiberg, Chairman and CEO of Citi Cards and Ajay Banga, President of Retail Banking North America, as co-heads of the Global Consumer Group. Freiberg will lead the North American business (U.S. and Canada) and Banga will lead the International operations. Prince said the new structure will enable the company to better focus on customer’s needs in an integrated fashion across all product lines and more effectively respond to the specific opportunities in markets at different stages in their development. Last month, Citigroup announced that its President, COO and Board member Robert Willumstad will be leaving next month after he was reportedly disappointed with not receiving the CEO position to succeed Sanford Weill. Citigroup recently reported that second quarter profits for its credit card business in North America inched up by a mere 1% to $861 million. Credit card outstandings for North America also grew a modest 1% over 2Q/04 to $139.8 billion. Citi’s account base at the end of the second quarter declined by 1.6 million accounts from the prior quarter and was down 2% from one-year ago. (CF Library 7/15/05; 7/18/05)

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Three Retailers License Card Fraud Patent

Coldwater Creek, The Dress Barn and Whitehall Jewellers have signed non-exclusive licenses with Acacia Research’s Financial Systems Innovation to cover a patent that applies to credit card fraud protection technology. The patented technology includes an electronic card reader, and the generation and use of a transaction number, which specifically identifies each transaction processed within the system. As a result, the retailer does not necessarily have to print detailed information concerning the cardholder’s identity or account number on the customer’s receipt. Acacia controls 31 patent portfolios, which include over 120 U.S. patents, and certain foreign counterparts, covering technologies used in a wide variety of industries.

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Paypro and Major Payment Systems Team

Fort Worth, TX-based Paypro and Dallas-based Major Payment Systems have partnered to develop and implement various programs including: payroll, money transfer and multi-wallet card products. Paypro’s stored value debit cards are sold under the brand names CHEXCARD and MYBANKCARD to businesses, governmental agencies and individuals. Major Payment Systems, LLC. is a privately held subsidiary of software engineering and communications firm Major Financial Services, Inc.

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Card Debt Sets New Record but Volume Slows

Credit card balances hit a record $A31.4 billion in June, a 13.4% gain
over year-ago levels. Gross dollar volume on credit cards was flat
sequentially and up 6.0% year-over-year. Credit card volume has been
largely sluggish over the past year, impacted by new rules that give
merchants the right to pass on their card fees directly to consumers. In
May, credit card volume was up 10.6%. Credit card balances at the end of
May were A$30.8 billion, compared to A$30.6 billion in April and A$27.7
billion for June 2004. Gross dollar volume on credit card and charge
cards in June was A$14.2 billion. Based on data from the Reserve Bank of
Australia, consumers charged A$13.2 billion in purchases on
credit/charge cards during June, compared to A$12.4 billion one-year
ago. Card credit limits reached A$86.4 billion at the end of June,
compared to A$76.6 billion for June 2004. There are currently 12.1
million credit card and charge card accounts in Australia, compared to
11.3 million one-year ago.

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Sears Settles a 2003 FCRA Lawsuit

Sears Holdings has agreed to settle a lawsuit for allegedly violating the “Fair Credit Reporting Act.” The settlement, made public last week via the U.S. District Court – Central District of California, could involve as much as $34.5 million. The class-action lawsuit, filed in 2003, charged that Sears illegally accessed the credit files of customers after their accounts were sold to collection agencies. The time period covered ran from October 2002 through May 2003. Reportedly, as many as 2.3 million customers may be entitled to discount coupons ranging from $10 to $15, under terms of the August 16th settlement. Sears did not admit any wrongdoing in the settlement.

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Micro Payments Conference is Scheduled

Massachusettes-based Peppercoin has scheduled its “Third Annual Micro and Small Payments Conference” in New York City on December 6th. This year’s conference theme is “Building the World of Small Payments” and will focus on the growing small payments and micropayments opportunities in the physical, digital and mobile marketplaces. Peppercoin’s small payment products help merchants, banks, and other payments companies build market adoption quickly.

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