MBNA’s Metrics Remarkably Stable This Summer

MBNA’s managed consumer credit card charge-off ratio has clearly plateaued as delinquency remains stable this summer. The nation’s third largest issuer also posted its third consecutive month of growth in credit card outstandings, hitting $99.7 billion during August. After declining for four consecutive months, and hitting a new low for the year during July, MBNA’s charge-off remained solid at 4.52% in August. In January, MBNA’s charge-off rate was 4.77%. Delinquency for consumer credit cards edged up to 4.01% during August, compared to 4.00% during July, and compared to 4.34% in January. Consumer credit card outstandings increased $200 million during August, compared to a $100 million gain in the prior month. MBNA’s consumer credit card outstandings peaked in December. MBNA previously reported that domestic credit card loans for the second quarter were $83.5 billion. For complete details on MBNA’s second quarter results 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%
Source: CardData (www.carddata.com)

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

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NFC PAYMENTS

Eindhoven-based Royal Philips Electronics and California-based ViVOtech have joined hands to advance “Near Field Communication” technology-based contactless payment and promotion solutions in
physical merchant environments for the first time. The alliance will marry the “ViVOpay 3000” reader and an “NFC”-enabled mobile phone.
Philips’ “NFC” is a combination of contactless identification and
interconnection technologies that enables convenient short-range RF communication between personal electronic devices. ViVOtech provides software technology and reader infrastructure that allows consumers to make contactless payments with an NFC-enabled mobile phone at existing POS systems. NFC can also enable ViVOtech’s “ViVOwallet” software, which includes the ability to pay and to use loyalty cards, gift cards, SMS/MMS promotions, and e-coupons.

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First Data and BofA Look to Expand Relationship

First Data and Bank of America have signed a letter of intent to expand their relationship. Under the agreement, the “STAR Network” will begin to process PIN-debit transactions for a portion of BofA’s portfolio. In addition, a majority of BofA ATMs will continue to participate in the “STAR Network.” Additionally, FDC will provide plastics personalization for BofA credit and debit card portfolios, including former Fleet credit and debit cards. FDC’s REMITCO unit will also provide remittance processing services for BofA credit card payments. BofA has also agreed to extend its contract with First Data Voice Services for IVR and live agent card activation services for its credit and debit card portfolios. FDC’s TASQ Technology will supply POS equipment and supplies for BofA’s merchant acquiring business. Finally, BofA intends to extend its current contract with FDC’S Primary Payment Systems for risk management services.

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AirPlus Company Account Launched

AirPlus International has launched its “AirPlus Company Account” in Canada. The “AirPlus Company Account” is a Universal Air Travel Plan- based product enhanced with sophisticated information management systems. The account combines all agency service fees and air transactions on a single, detailed invoice for reconciliation and it is fully compatible with online reservation tools. AirPlus International also intends to introduce its product in Mexico.

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Providian’s Charge-Offs Down Nearly 500bps

Providian’s credit card ABS performance continues to improve as delinquency drops more than 300 basis points, and charge-offs decline nearly 500 basis points since January. Charge-offs continued to march south for the fifth consecutive month, dropping to 12.39% during August. After a one-month uptick, delinquency edged down 5 basis points during August. For August, Providian’s securitized delinquency ratio was 8.37%, compared to 8.42% in July. One-year ago Providian’s securitized delinquency ratio stood at 12.12%. Charge-offs edged down from 13.17% in July, and to 14.44% in June. One-year ago Providian’s securitized charge-off ratio stood at 17.04%. Providian’s managed charge-offs for August were 10.09%, and its managed delinquency ratio was 6.24%. For complete details on Providian’s latest performance visit CardData ([www.carddata.com][1]).

PROVIDIAN MONTHLY ABS METRICS
Month Charge-Offs Delinquency
Jan 04 17.36% 11.48%
Feb 04 16.08% 11.07%
Mar 04 17.17% 9.56%
Apr 04 15.84% 9.09%
May 04 14.82% 8.68%
Jun 04 14.44% 8.40%
Jul 04 13.17% 8.42%
Aug 04 12.39% 8.37%
Source: CardData (www.carddata.com)

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

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Experian Beefs-Up Credit-Based Prospecting

Experian is rolling-out a new credit-based prospecting and account management system. New capabilities include: improved bottom line results by transforming the way lenders gain, analyze and act on consumer intelligence; more efficient data integration and processing to maximize campaign performance; the ability to make better informed decisions with the freshest, most accurate data; and, flexibility to provide customized, easily integrated, innovative solutions. The first phase of the project was launched in April to a select group of clients that use Experian prescreen services. Experian will begin to transition all remaining prescreen and account management clients to the new system in early 2005.

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EMVCO Releases CCD and Set to Release CPA in 2005

The EMV standards organization has released a set of common data definitions and processes, which standardizes common data element content and format for sending chip information between an EMV card and the issuer via the acquirer. When “CCD” is incorporated into a card specification, issuers of multiple branded cards can achieve benefits of a common issuer support system. But, EMVCo says that “CCD” is not a complete card application specification. EMVCo is working to further simplify and streamline chip migration by creating an EMV “Common Payment Application”. “CPA” will be a complete “CCD”-compliant application specification and is scheduled for completion by the first quarter 2005. “CPA” significantly adds to the benefits of “CCD” by completely defining the card risk management controls, all data elements and logic used by the card application, as well as support for EMV “CPS” card personalization as an issuer option. The result is one common “CCD”-compliant payment application that can be personalized to support multiple payment brands. This will allow issuers to support multiple payment brands or utilize the benefits of multiple vendors for their chip cards without impacting their card management systems, their risk management controls and personalization systems. The end result is significant cost and time saving for multiple brand issuers. Both MasterCard International and VISA International have committed to endorse and accept the CPA specification as implemented in future chip card applications.

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