Citi Card Profits Soar as Charge-Offs Dive

Citigroup reported this morning that third quarter profits for its credit card business in North America topped $1 billion, soaring 25% sequentially, and 31% year-over-year, to a record $1067 million. Credit card outstandings for North America increased 24% over 3Q/03 to $146.0 billion, which includes $28.8 billion in private label card outstandings. Charge volume increased 24%, from $62.3 billion to $77.3 billion, year-on-year. Citi’s account base at the end of third quarter was 120.2 million accounts, a 33% gain over 3Q/03, but a decline of 900,000 accounts from the previous quarter. Citi’s charge-offs dropped from 6.61% in the second quarter, to 5.66% for 3Q/04. Charge-offs for bank credit cards declined to 5.34%, compared to 6.15% in the second quarter, and 5.75% one-year ago. Charge-offs for private label credit cards also declined, from 8.61% in the second quarter to 7.08% for 3Q/04. However, charge-offs for private label cards remain above year ago levels. Delinquency (90+ days) declined slightly from 1.85% for 2Q/04 to 1.84% for the third quarter 2004. Delinquency for bank credit cards dropped 3 basis points, and increased 9 basis points for private label cards, quarter-to-quarter. For complete details on Citigroup’s 3Q/04 performance visit CardData ([www.carddata.com][1]).

CITIGROUP
North American Credit Card Net Revenues
3Q/03: $815 million
4Q/03: $1010 million
1Q/04: $832 million
2Q/04: $850 million
3Q/04: $1067 million
Source: CardData (www.carddata.com)

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

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Circle K Stores Selects NCR’s RealPOS 70

Alimentation Couche-Tard, through its subsidiary Circle K Stores, has selected the NCR “RealPOS 70” POS workstation for approximately 1,000 of its convenience stores in the USA. The workstation enables components to be easily swapped, offering a stable POS platform that is easy to upgrade and service. Alimentation Couche-Tard is also installing the NCR RealScan(TM) 92, which allows for fast presentation and pass-by scanning. It can read similar bar codes using its built-in single-line mode for pin-point accuracy. Alimentation Couche-Tard, Inc. is a leading Canadian convenience store industry with a network of 4,898 convenience stores in operation. NCR Corporation is a global technology leader that helps businesses create strong ties to their customers through their ATMs, retail systems, Teradata(R) data warehouses, and IT services.

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Motorola Pilots a PayPass-Enabled Mobile Phone

Motorola is planning to conduct a field trial of mobile phones enabled with MasterCard’s “PayPass” by year’s end. The Motorola phones will be equipped with NFC technology, which enables the device to run multiple proximity applications as well as payment. In the future, these may include applications such as contactless ticketing for mass transit or events. In addition, the phone can function as a contactless reader, paving the way for a variety of marketing and promotional applications. Applications can also be loaded into the secure area of the phone over the air. In August, McDonald’s announced it inked a deal to accept MasterCard “PayPass.” (CF Library 8/18/04)

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78% of Small Business Owners Use Cards for Biz

Nearly three quarters of business owners foresee growth opportunities for their companies in the next six months. However, small business owners are keeping hiring plans in check. The “2004 Small Business Monitor” by OPEN from American Express also found that 78% of small business owners say they use charge or credit cards to pay for business expenses, up from 73% in October 2003, and 74% in 2002. Among them, 31% will purchase computer equipment. The most common purchase using business credit or charge cards is travel (56%), followed by office supplies and entertainment (tied at 47%), wholesale purchases (42%), and business professional services (22%).

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TSYS Finalizes the Chase Card Services Contract

TSYS announced it has finalized a definitive agreement with JPMorgan Chase to service the combined card portfolios of Chase Card Services and to upgrade its card-processing technology. The agreement extends a relationship that started with TSYS and the former Bank One in March 2003. Under the revised agreement, the first phase of the project was executed successfully and Bank One’s remaining accounts are expected to be converted to the “TS2” processing platform later this year. Chase is expected to convert its consumer and commercial accounts to “TS2” in the second half of 2005, after which TSYS expects to maintain the card-processing functions of Chase Card Services for at least two years. Chase Card Services then has the option to migrate the portfolio in-house, under a perpetual license of “TS2” with a six-year payment term. In August, Bank of America selected TSYS to provide credit card processing for its recently acquired FleetBoston card portfolio. (CF Library 8/19/04)

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FDC Revenues Up 21% Driven by Western Union

First Data reported this morning that third quarter revenue increased 21% to $2.5 billion, and net income jumped 28% to $461 million. FDC says the growth was driven by point-of-sale activity for Western Union money transfers and merchant transactions. Revenue for the Payment Services segment grew 10% to $1.0 billion, producing an operating profit of $332 million. The Western Union money transfer business, part of Payment Services, posted revenue growth of 13% to $861 million, with profits up 16% to $296 million. FDC notes that Western Union opened its 200,000th money transfer location during the quarter. Meanwhile, the Merchant Services segment realized a 65% growth rate in transactions. Revenue was $983 million, up 47%, and operating profit of $248 million grew 37%. Card Issuing Services’ revenue and operating profit were $620 million and $154 million, respectively. FDC says the total new accounts converted for the year has reached 51 million and the total pipeline stands at approximately 50 million accounts. For complete details on First Data’s third quarter performance visit CardData ([www.carddata.com][1]).

FDC NET INCOME
3Q/03: $360.9 million
4Q/03: $401.6 million
1Q/04: $483.5 million
2Q/04: $466.0 million
2Q/04: $460.6 million
Source: CardData (www.carddata.com)

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

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Atlanta Consultant Launches Your Fantastic Plastic

Atlanta-based consultancy Gilpatrick Marketing Group has launched the “Your Fantastic Plastic” service to help companies leverage gift cards more effectively. The service will provide retailers, shopping malls, financial institutions, and other businesses with cutting-edge gift card solutions and turn-key program management services. Recognized for professional achievement and innovative strategies, Gilpatrick Marketing Group has clients representing a broad range of industries including shopping centers and non-profit and consumer products. The company provides Your Fantastic Plastic to help companies leverage gift cards and gain incremental business.

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Discover Ramps Up with NCR’s Teradata

Discover Financial Services has selected NCR’s “Teradata” data warehouse to support its reporting and analysis needs with a multi-terabyte computer system. Discover has purchased Teradata software and consulting services and will move its data warehouse to Teradata-based technology as part of the agreement. Discover’s third-party tools and partners will be integrated into the services. Discover Financial Services, Inc. operates the Discover(R) Card and the Discover(R) Network for its 50 million plus Cardmembers. Teradata is a division of NCR Corporation and is a world leader in enterprise data warehousing, analytic applications, and data warehousing services. NCR Corporation helps businesses build strong customer relationships through their ATMs, retail systems, Teradata(R) data warehouses, and IT services.

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GlobalPlatform Names New Board of Directors

GlobalPlatform has named its new Board of Directors for fiscal year 2005, following annual elections for six of the eleven Board seats that took place at the end of September. One new Board Member was elected, Didier Begay, of France Telecom.

The incumbent Board Directors who were re-appointed were:

Christian Juttner of Giesecke & Devrient

Toshiaki Kuzuki of JCB Co. Ltd.

Shoichi Senda of NTT Corporation

Carmen Carnero-Silvo of SERMEPA

Jim Lee of Visa International

The six newly elected Board Members were nominated by their individual companies and have been appointed to serve a two year term on the Board by GlobalPlatform’s Full Members. GlobalPlatform’s new Board Officers – Chair, Vice Chair and Treasurer / Secretary – for FY2005 will be announced following Cartes 2004 in early November.

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ADS Acquires Epsilon Data Management for $300MM

Dallas-based Alliance Data Systems is acquiring Epsilon Data Management for approximately $300 million. ADS will use the acquisition to fuel the growth of its “AIR MILES” reward program in North America as well as to enter new verticals such as healthcare, financial/insurance, and travel/consumer goods. Epislon is a provider of integrated direct marketing solutions that combine value-added marketing, transaction, technology, and analytical services. The purchase price is about 2.5 times Epsilon’s expected core revenues. Epsilon’s clients include global brands such as Hilton Hotels, Principal Financial Group, Pfizer, Nestle Purina PetCare Company, AstraZeneca, and Midas. Mike Iaccarino, president and CEO of Epsilon, will continue in his current role. Epilson has 700 employees located in Boston, Dallas, St. Louis, and Washington, D.C. Epsilon is being acquired from Relizon Holdings.

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Big Fat Gift Card Posts a Six-Fold Increase in Sales

Fatburger Restaurants reported a 662% increase in gift card sales at company-owned locations since converting from paper certificates to plastic cards last year. The “Big Fat Gift Card” was launched last year with Paymentech. Fatburger sells Paymentech’s proprietary gift card product, called “FlexCache,” and attributes the success of the program to creative marketing and the convenience that comes from paying with plastic. “Plastic,” the Big Fat Gift Card reads, “never tasted so good.” Paymentech processes an estimated $8.1 million in annual card volume for the stores.

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