RBC Issues a Canadian Starbucks Duetto VISA

A Canadian version of the “Starbucks Duetto VISA” has been introduced by RBC Royal Bank. The card, a first in Canada, combines the re-loadable “Starbucks Card” with a general purpose credit card. When cardholders use the VISA account of their “Duetto Card,” they earn one per cent of their purchase back in “Duetto Dollars” which are loaded into a “Duetto Dollars” account at the end of each billing cycle. New cardholders also receive a one-time pre-load of $10 to their “Starbucks Card” account after their first “Duetto Card VISA” purchase. Starbucks will also contribute five dollars to Frontier College for adult and youth literacy after the first VISA purchase made on each new “Starbucks Duetto VISA.” Bank One introduced a U.S. version of the card in October 2003. (CF Library 10-14-03)

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U.S. Cards-in-Force Grew 5% Last Year

The number of credit and debit cards-in-force in the USA, grew by 43.9 million last year, or at a 5.2% annual growth rate. American Express posted the strongest growth, adding 3.5 million cards for a 9.6% gain over 2003. VISA, the largest U.S. network, added 28.7 million cardholders for a 6.7% gain, while MasterCard and Discover posted gains of 3.6% and 0.2%, respectively. At the end of 2004, there were 886.5 million credit and debit cards in use in the USA, compared to 842.4 million one-year ago.

CREDIT/DEBIT CARDS-IN-FORCE
(millions)
NETWORK 2003 2004 CHNG
VISA 429.3 458.0 +6.7%
MasterCard 326.0 337.8 +3.6%
American Express 36.4 39.9 +9.6%
Discover 50.7 50.8 +0.2%
TOTAL 842.4 886.5 +5.2%
Source: CardData (www.carddata.com)

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Wright Express Raises $720MM in its IPO

Wright Express yesterday announced that the IPO of 40 million shares of its common stock was priced at $18.00 per share. The Company’s common stock has been approved for listing on the New York Stock Exchange under the ticker symbol “WXS.” As previously announced, JPMorgan, Credit Suisse First Boston and Merrill Lynch & Co. are the joint book-running managers of the offering. Wright Express is a leading provider of payment processing and information management services to the U.S. commercial and government vehicle fleet industry.

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Provident Financial Goes Bottom Fishing

A new sub-prime VISA card has been introduced by Provident Financial PLC, offering an interest rate as high as 69.5%. Provident’s Vanquis Bank division will now offer the credit card to credit-challenged U.K. families with rates averaging 49.9% per annum with a maximum credit limit of GBP 150 (US$285). Applicants have to have annual incomes of at least GBP 5,000 (US$9,464) to qualify. The new “Vanquis Bank VISA” has outraged consumer advocates and led some British politicians to label the issuer as a “vulture” and “rogue.” The current Bank of England base rate is 4.75%.

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MBNA’s January Metrics March Upward

The seasonal denominator effect pushed MBNA’s metrics upward in January. The nation’s third largest issuer posted managed credit card outstandings in January of $98.6 billion, about $3.3 billion lower than December. The managed consumer credit card delinquency ratio jumped up by 14 basis points, as charge-offs climbed 34 basis points during January. Delinquency for consumer credit cards increased to 4.34% during January, compared to 4.20% during December, and compared to a 2004 high of 4.49% in February. Charge-offs slipped upward to 4.46% in January, compared to 4.12% for December. In May, MBNA’s charge-off rate was 4.88%, the high for the year. MBNA recently reported that domestic credit card loans declined 4.6% from one-year ago to $80.2 billion. For complete details on MBNA’s fourth quarter results and monthly metrics, visit CardData ([www.carddata.com][1]).

MBNA CONSUMER CREDIT CARD SNAPSHOT
Month Outstandings Charge-offs Delinquency
Jan 04 $103.1b 4.77% 4.34%
Feb 04 $ 99.6b 4.71% 4.49%
Mar 04 $ 99.1b 4.79% 4.27%
Apr 04 $ 98.0b 4.70% 4.21%
May 04 $ 98.5b 4.88% 4.15%
Jun 04 $ 99.4b 4.64% 4.10%
Jul 04 $ 99.5b 4.52% 4.00%
Aug 04 $ 99.7b 4.52% 4.01%
Sep 04 $ 98.8b 4.22% 4.15%
Oct 04 $ 98.5b 4.36% 4.18%
Nov 04 $ 99.9b 4.33% 4.21%
Dec 04 $101.9b 4.12% 4.20%
Jan 05 $ 98.6b 4.46% 4.34%
Source: CardData (www.carddata.com)

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

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Pay By Touch Sues BioPay Over Patents

San Francisco-based Pay By Touch has filed a patent infringement suit against BioPay over Pay By Touch’s ‘042 patent covering tokenless biometric transactions and Pay By Touch’s ‘397 patent covering biometric check-cashing services. The suit was filed in federal district court in Wilmington, DE, in partial response to BioPay’s recent request to the court for a declaration that Pay By Touch’s patents are not being infringed. Pay By Touch is a free consumer payment service that allows shoppers to pay for purchases and cash checks using a finger scan linked to their financial accounts and loyalty programs.

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TEEN CARD

Citibank has launched a credit card for 13-19 year olds offering a credit limit up to AED 500 (US$136). The new “Citibank Teen Card MasterCard” requires no application form since it is issued as a supplementary card to existing credit card holders. The new card also offers shopping discounts at a wide range of UAE merchants. Citibank currently dominates UAE’s credit card market and is a major provider of consumer credit services including personal and auto loans. Last year, Citibank won the regional “Credit Card of the Year Award” from the GCC Banking Awards 2004 program run by Banker Middle East Magazine.

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Anti-Phishing Network Launched by Major Players

Microsoft, eBay, PayPal and VISA have teamed with Texas-based WholeSecurity to launch the “Phish Report Network.” The network allows any company being victimized by phishing attacks to immediately and securely report fraudulent Web sites to a central database operated by WholeSecurity. Other companies subscribing to the “Phish Report Network” can then access the database or receive real-time notifications of known phishing sites, enabling them to more effectively protect consumers by blocking these sites in their user-facing security applications.

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OPC and the IRS May Expand Prior Year Tax Acceptance

Official Payments Corp, which enables the payment of federal taxes and tax obligations in 25 states and the District of Columbia, is working with the IRS to expand acceptance of payments for prior year taxes. All taxpayers can take advantage of the convenience, rewards and cash management benefits of OPC’s service, including paper filers, electronic filers, those who use tax-preparation software and those whose returns are prepared by accountants. Rewards programs vary depending on credit card companies’ rules and consumers should check with their card issuer for details. Official Payments Corp is a wholly owned subsidiary of Tier Technologies, Inc., a leading provider of transaction processing and packaged software and systems integration services for public sector clients.

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CO-OP Network Names a New Network Services SVP

The CO-OP Network has named Kimberly Phillips Hester, formerly VP/COO of Texas-based Community CU, as SVP of Network Services. Hester, a Cal Poly Pomona graduate, began her executive career at LAPCU in 1988, where she ultimately became CEO. In 1995, she moved to CCU and in 2001 received her Masters of Business Administration from the University of Texas. CO-OP Network (www.co-opnetwork.org), established in 1981 and located in Ontario, Calif., is wholly-owned by its credit union shareholders and provides volume discounts on products and services that include risk management as well as debit and deposit access.

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Volume Rises 11% Among Top Issuers; Nears $1.2T

Gross dollar volume among the top five U.S. issuers grew 11.1% last year to nearly $1.2 trillion. American Express led the pack with a 16%+ gain, while Discover squeezed-out a paltry 1.7% increase in purchase and cash advance volume. MBNA, which posted a decline in domestic outstandings in 2004, posted an 11.9% increase in global gross dollar volume. Citi and Chase posted GDV gains of 9.5% and 10.5%, respectively. For complete details on gross dollar volume by the top U.S. issuers visit CardData ([www.carddata.com][1]).

TOP FIVE GROSS DOLLAR VOLUME HISTORICAL

RANK/ISSUER YTD 2004 YTD 2003 CHANGE
1. AmEx $ 304.8 billion $ 262.1 billion +16.3%
2. Citi $ 301.9 billion $ 275.7 billion + 9.5%
3. Chase $ 283.8 billion $ 256.8 billion +10.5%
4. MBNA $ 206.2 billion $ 184.3 billion +11.9%
5. Discover $ 99.6 billion $ 97.9 billion + 1.7%
TOTAL: $1196.3 billion $1076.8 billion +11.1%
Notes: AmEx is U.S. billed business only; Citi includes
some non-US cards in North America; Chase is recast with Bank
One data; MBNA includes international volume; Discover includes
a small portion of international data. Source: CardData
(www.carddata.com)

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

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Bankruptcy Reform in Play for the 11th Time

A streamlined bankruptcy reform bill, “S.256,” is likely to pass the Senate Judiciary Committee very soon. The Committee will mark-up the bill on February 17th. Last week was the 11th Senate hearing since 1998 on the bill and the Committee has taken no action on it since 2001. A recent study showed that roughly half of all bankruptcies are related to unpaid medical bills. The study has prompted three U.S. senators to call for changes in the bill.

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