Rewards Network Revenues Fall 19% in Q2

Chicago-based Rewards Network posted second quarter sales of $73.0 million, a 19.4% decrease from the prior year’s second quarter, due primarily to a lower restaurant merchant count and a decline in the number of transactions and the average dining transaction amount. Net income for the quarter was $1.4 million compared with net income of $4.4 million for 2Q/04. As of June 30th, Rewards Network had 3.6 million active member accounts and 10,376 restaurants in its rewards programs. Rewards Network recently added three new tiers for its airline programs offering up to 10 miles per dollar, depending on loyalty and dining frequency. For complete details on Reward Network’s second quarter performance, visit CardData ([www.carddata.com][1]). (CF Library 7/21/05)

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

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Valutec Card Solutions Switches to HBNet

Valutec Card Solutions, a loyalty card provider to thousands of U.S. retailers, has switched to Hypercom’s HBNet for high-speed transaction transport services. HBNet will enable Valutec to speed up the checkout process for both dial and IP transactions at thousands of U.S. retailers who use Valutec’s electronic gift programs to offer their own store-branded cards. Valutec Card Solutions provides gift and loyalty card systems to the small and mid-market retail, restaurant and hospitality industries. Hypercom delivers complete card payment terminal, network access device, server and transaction networking solutions to merchants and financial institutions.

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e-Smart/Mybi Super Smart Card Launched

The Mybi Company and e-Smart Technologies have launched the “e-Smart/Mybi Super Smart Card.” It is the first multi-application e-currency biometric smart card to be used in Pusan as a digital city, e-government ID card, payment card for mass transportation, banking, point of sale, Internet and other diverse financial payment card
transactions. The Mybi Company is the largest e-Currency infrastructure
provider in Korea for public transportation and micro payments. e-Smart is the exclusive provider of the “Biometric Verification Security
System,” featuring the “Super Smart Card” for Asia and the USA. The “e-Smart-Mybi Payment Card Project” integrates Mybi’s e-Currency product into e-Smart’s “Super Smart Card.”

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Pcion Rejoins VCT to Head Card Manufacturing

Versatile Card Technology/QualTeq has re-hired Matt Pcion as the newest member of its senior management team wherein he will be responsible for the entire card manufacturing operation. Pcion has more than 16 years in the card industry, with a very strong printing background. His expertise in the printing industry brought him to Versatile Card Technology as Pressroom Manager. He continued to work at VCT until 2000 when he opted for a new challenge in the plastic card industry. He returned to VCT in 2001 as Plant Manager at VCT’s new Visa/MasterCard manufacturing plant and was appointed as Plant Manager at VCT/QualTeq Division in 2004.

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iPayment Rejects CEO’s Bid; Explores Options

Nashville-based iPayment has rejected a bid by its CEO to acquire the Company at $38 per share. Gregory Daily announced his buy-out proposal on May 13th. The Special Committee of the Board said last week that the offer undervalues the long-term prospects of the Company and it will explore alternatives that will enhance stockholder value, including, without limitation, the sale of the Company with potentially interested purchasers and a recapitalization transaction, as well as remaining independent and not undertaking any such transactions. The Committee also rejected Daily’s request for waivers to permit him to engage in discussions with certain members of management who also are stockholders of the Company. iPayment’s stock is currently trading around $37 per share this morning. It hit a 52-week high of $51.50 on December 28.

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MasterCard Extends $0 Liability Limit to A/P

MasterCard’s Asia/Pacific region has adopted a cardholder
liability limit of US$0(zero) for unauthorized use of any Asia/Pacific
issued, consumer MasterCard-branded cards. To qualify for the
protection, cardholders must meet certain conditions including having
exercised vigilant care in safeguarding their cards and immediately
notifying their issuing bank of the loss, theft and/or unauthorized use
of their cards. The accounts of such cardholders must also in be good
standing and cardholders must be in compliance with the terms and
conditions of their cardholder agreements with their issuing banks.

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ADS Takes Over the Gander Mountain MasterCard

Minnesota-based Gander Mountain Company, a specialty retailer for outdoor enthusiasts, is switching its cobranded MasterCard credit card program from MBNA to Alliance Data Systems. Alliance will provide account acquisition and activation, receivables funding, card authorization, card issuance, statement generation, loyalty marketing and database services, remittance processing and customer service functions. Gander Mountain Company offers competitively priced outdoor equipment, technical apparel and footwear in 91 stores in 15 states. Alliance Data Systems provides transaction services, credit services and marketing services and manages over 105 million consumer relationships.

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AmEx TRS Profits Up 10% Y/Y but Flat Q/Q

American Express Travel Related Services reported second quarter net income of $808 million, up 10% from 2Q/04 but essentially flat with the first quarter’s $801 million in profits. Marketing, promotion, rewards and cardholder services expenses increased 18%, reflecting both higher marketing and promotion expenses and greater rewards costs. In the prior quarter these expenses rose 29% over the prior year. Card volume in the USA increased 16.9% to $88.5 billion. The total number of domestic cards-in-force grew by 3.5 million to 41 million cards. Worldwide total card loans grew by 8% to $48.8 billion, compared to 2Q/04. Global delinquency declined from 2.5% to 2.3% over the past twelve months. Net charge-offs, as a percentage of worldwide loans, declined from 4.5% to 4.1% between 2Q/04 and 2Q/05. AmEx also noted that charge card interest expense increased 20% during the second quarter as a result of higher average receivable balances and increased funding costs. Professional services expense increased 10%, primarily due to increased technology costs that were driven by higher business and service-related volumes. For complete details on American Express’ second quarter results, visit CardData ([www.carddata.com][1]).

American Express U.S. Card Portfolio Snapshot
2Q/05 1Q/05 4Q/04 3Q/04 2Q/04 Ann Chng
Volume $88.5b 79.6 83.4 75.6b 75.7b +16.9%
Cards 41.0m 40.3 39.9 38.0 37.5 + 9.3%
Source: CardData (www.carddata.com)

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

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I.C.E. Signs Two ISOs for its ISO Rep Program

International Card Establishment has signed two additional ISO’s to its ISO Rep program by entering into an agreement to handle all of the credit card processing for Priority Merchant Services and American Merchant Processing Solutions. I.C.E. establishes merchant accounts for businesses to enable them to accept credit cards, debit cards and other forms of electronic payments.

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DBS Bank Signs Processing Deal with First Data

DBS Bank has inked a deal for First Data to provide credit card management and merchant processing services. Under the multi-year deal, DBS will use FDC’s “VisionPLUS” platform. The DBS portfolio includes
more than 13,000 merchants and two million credit card accounts in the South Asia region. The Bank has card operations in Singapore, Hong Kong
and joint venture in Thailand. The agreement with DBS is the first major contract in South Asia for First Data, which already has a strong presence in more than 70 countries, serving 4.1 million merchant locations, 1,400 card issuers and millions of consumers.

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Advanta Card Profits Up 25%; Volume Up 23%

Advanta posted a 25% increase in net income for its business cards during the second quarter to $13.6 million, compared to the year-ago period. Managed outstandings ended the quarter at approximately $3.51 billion, a 12.5% gain over June 30, 2004. During the second quarter Advanta opened more than 70,000 business card accounts and ended the quarter with 822,773 gross accounts. About 72% of the accounts were active. Volume was up 23% to $2.45 billion. The results for the quarter reflect a 152 basis point decline in net principal charge-offs on average managed receivables to 5.47% on an annualized basis as compared to 6.99% for second quarter 2004. Over 30 day delinquencies on ending managed receivables declined 120 basis points to 3.60% and over 90 day delinquencies on ending managed receivables declined 72 basis points to 1.78%, each as compared to second quarter 2004. For complete details on Advanta’s second quarter performance, visit CardData ([www.carddata.com][1]).

ADVANTA’S CARD PORTFOLIO SNAPSHOT
Period Card Loans
2Q/04: $3.12 billion
3Q/04: $3.22 billion
4Q/04: $3.29 billion
1Q/05: $3.35 billion
2Q/05: $3.51 billion
Source: CardData (www.carddata.com)

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

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