Card Debt Spirals Upward in September

The roller coaster trend in revolving credit resumed in September as revolving credit soared at an annual rate of 10% after declining more than 3% in August. During September, consumers piled on more than $6 billion in revolving credit, mostly credit card debt. One-year ago, consumers added $1.6 billion in revolving credit during September. According to figures released Friday by the Federal Reserve, at the end of September 2004 Americans owed $748.3 billion in revolving credit, compared to $742.1 billion for August. One-year ago revolving credit stood at $730.7 billion. Bank credit card debt (excluding store and gas credit cards) at the end of the second quarter was $672.1 billion, or roughly 90% of total revolving credit, according to CardData ([www.carddata.com][1]). At the end of September, Americans were $2053.3 billion in debt, excluding home mortgages.

REVOLVING CREDIT HISTORICAL ($billions)
Sep 04 Aug 04 Jul 04 Jun 04 May 04 Apr 04 Mar 04
GRWTH: 10.0% -3.3 8.9 -0.1 -1.0 -5.3 5.5
$OWED: $748.3 742.1 744.2 738.7 738.6 740.9 744.2

Feb 04 Jan 04 Dec 03 Nov 03 Oct 03 Sep 03 Aug 03
GRWTH: -0.6% 13.0 3.3 4.9 4.1 6.8 3.4
$OWED: $750.4 753.0 734.1 743.8 740.5 730.7 729.1
Source: Federal Reserve; revised figures as of 11/05/04;
For complete historical data visit CardData (www.carddata.com)

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

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Bankruptcy Filings Pause in September

While bankruptcy filings are down more than 3% this year, the number of filings in September nearly matched the number filed in September 2003. During September, 127,664 filings were made compared to 127,079 for September 2003. Year-to-date bankruptcy filings were 1.19 million. The total number of bankruptcies filed in the 12-month period ending June 30th, was 1,635,725, down 0.9% from a year ago. For the second quarter of this year total filings were down 0.4% to 421,100. The decline for the first half of this year is the first drop in consumer bankruptcy filings since 2000.

Monthly Filings Historical
Sep 03: 127,079
Oct 03: 148,044
Nov 03: 131,921
Dec 03: 113,383
Jan 04: 114,737
Feb 04: 124,719
Mar 04: 152,567
Apr 04: 145,543
May 04: 136,509
Jun 04: 127,742
Jul 04: 133,390
Aug 04: 125,783
Sep 04: 127,664
Source: CardData (www.carddata.com)

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Smart Card Market to Approach $1.2B by 08

A new study from Frost & Sullivan projects that annual revenues for the smart card market will reach $1196.3 million by 2008. Smart card technology offers enhanced security that can help eliminate high rates of fraud that are often associated with magnetic stripe cards. However, the lack of knowledge, bank internal expertise, and availability of equipment to support such technology has slowed the speed of its implementation. Legacy infrastructure has also affected the acceptance of smart card technology. Frost & Sullivan is an international growth consultancy company that covers a broad range of industries. The company’s portfolio of advisory competencies include custom strategic consulting, market intelligence, and management training.

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InfoNow 3Q/04 Revenues Slip Slightly

Denver-based InfoNow Corporation posted third quarter revenue of $2.65 million, compared to revenue of $2.84 million in the third quarter a year ago. The company also reported a net loss of $355,000 ($0.04) per share, operating cash use of $189,000, total cash use of $272,000, and a cash balance of $3.9 million as of September 30, 2004. InfoNow offers Channel Visibility and Channel Management software and services to companies that use complex channel partner networks in order to sell. The company recently signed new Channel Insight agreements, expanded services for existing Channel Insight clients, renewed or extended Channel Management agreements with 30% of existing clients, extended its Channel Insight solution to mid-market companies, added new international capabilities to extend the Channel Insight solution, and began to offer a Channel Insight Data Warehouse.

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Citibank Boosts Control of Credicard

The joint venture ownership of The Credicard Group, Brazil’s top credit card company, is being restructured. Under the new arrangement, Citibank Brazil and Banco Itau will each increase their ownership to 50% by acquiring all of Unibanco’s interest in Credicard. Formerly, Banco Itau, Citibank Brazil, and Unibanco each owned equal shares of Credicard. Banco Itau also announced it will increase its ownership in Orbitall, the card processing and servicing business, to 100% by acquiring all of Citibank’s and Unibanco’s shares. Redecard, the merchant acquiring business, will maintain its current ownership structure, with Citibank, Itau and Unibanco each owning 32%, and MasterCard owning 4%. The Credicard Group has grown to serve more than 5 million clients, issuing 7 million credit cards, processing more than 13 million accounts, and maintaining important commercial relationships with 750,000 merchants, according to CardFlash International.

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MasterCard Offers Jewel Card Cases

MasterCard International has taken its international platinum cards to a new level with the introduction of a series of “Jewel Cards.” The new “MasterCard Jewel Cards” are sleekly designed card cases encrusted with a variety of glittering precious and semi-precious stones in different settings. Each “Jewel Card” case comes with a unique clip mechanism allowing cardholders to insert their MasterCard cards into the case of their choice. There are a total of 13 designs, two of which are designed for men. The new card cases were unveiled in Bangkok last week, according to CardFlash International.

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HSBC Takes Over the Kmart Store Card

Kmart has switched its private label credit card program to HSBC. The new “Kmart Rewards” credit card offers $10 off the first card purchase of $50 or more and a $10 reward for every $250 in account purchases thereafter. Customers will also be offered 90 days, same-as-cash financing on any purchase over $100 during the 2004 holiday season. Kmart says it will also develop numerous promotional offers for its cardholders tailored to their individual customer purchasing habits. The card will be marketed through in-store promotion, print and online advertising beginning this week.

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Asset Acceptance Adds 2 Board Members

MI-based Asset Acceptance Capital has added William Pickard and William Jacobs to its board of directors. Dr. Pickard has gained experience as a corporate executive and is an expert on public policy. Mr. Jacobs has 30 years of experience in areas of administration including finance, corporate development, strategy, and other areas. Pickard and Jacobs will both join the audit committee. Pickard will also be joining the compensation committee and Jacobs will be joining the corporate governance and nominating committee. Asset Acceptance is a provider of alternatives in recovering defaulted consumer debt. The company has served credit originators for over 40 years.

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Corillian Corporate Banking Announced

OR-based Corillian is releasing “Corillian Corporate Banking” built on the Corillian “Voyager” platform. Corillian Corporate Banking addresses the need to deliver integrated, real-time corporate banking services that are user-friendly, a need that is often unmet at financial institutions. Important features of Corillian Corporate Banking include information reporting, deposit/loan management, domestic payments, global trade services, enterprise administration and notifications, and customer care. Corillian is the No. 1 provider of online banking solutions designed for top financial institutions.

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ONESMART PAYPASS

MasterCard has launched a new product that combines a contact chip and a contactless interface based on its “M/Chip 4,” an EMV-based smart card application for credit and debit cards. The new “OneSMART PayPass” will enable the “PayPass” program to expand beyond the U.S. into regions where EMV smart cards predominate, particularly Europe. With the product, payment details are captured by the terminal, then processed through the MasterCard acceptance network in the same way as a contact chip payment. The transaction is authorized either online by the issuer host or offline by the card. The card’s on-chip risk management capabilities can also accomplish “Card Authentication” offline. To further speed up a “PayPass” transaction, CVM requirements, such as signature or PIN, may be waived for low-risk, low-value purchases. ACI Worldwide and MasterCard have partnered for the first live issuance of EMV-compliant MasterCard “OneSMART PayPass” contactless cards. Ingenico, Oberthur, and Sagem Monetel have also teamed with MasterCard to support “OneSMART PayPass.”

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Hypercom Lands a Contract in Ireland

US Bancorp/NOVA’s euroConex unit has awarded Hypercom a $4 million contract for the migration to “chip and PIN” in Ireland. Hypercom’s “ICE 5500” and “HFT 106” terminal technology will be used in the migration. The first “Chip and PIN” transaction in Ireland using Hypercom’s “ICE” card transaction technology occurred in Naas/Newbridge. That transaction used a UK “Switch” card taken as “International Maestro” on Hypercom’s “ICE 5500” card payment terminal and “HFT 106” PIN pad. euroConex provides an integrated payments processing service to banks and merchants in Ireland, the UK, France, Sweden, the Netherlands, Spain and Poland using a multi-currency platform.

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