CU Exit Continues Due to Weak ROAs

Though credit unions represent the majority of all credit card issuers in the USA today, they manage less than $22 billion in revolving credit, about a tenth of that managed by banks. A new study has also found that credit unions produced a 3.8% annual growth rate last year compared to 14%+ for banks, much of that from credit card portfolio purchases. Furthermore, credit unions cards earned an average 1.05% ROA last year, while general bank cards earned 4.53% ROA pre-tax. Thousand Oaks, CA-based R.K. Hammer Investment Bankers say the analysis explains why credit unions are continuing to exit the card business. Over the past three years credit unions have left the card issuing business at a rate of 133 per year, with banks representing virtually all the buyers. Over 140 more credit unions are expected to exit the card business again this year. But, nine out of every ten of these have ongoing relationships with the portfolio buyers, providing CU members with card products and CU’s with fee income.com)

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Canada’s AccesRail Goes UATP

Canada’s AccesRail, a general sales agent for rail carriers based in Quebec, has begun accepting UATP as a form of payment for rail fare. AccesRail enables UATP account holders to have a convenient means of payment for rail tickets. The UATP program has increased in Europe after the launch of the SAS Corporate Card and the introduction of UATP electronic billing in important European markets. UATP is a worldwide travel payment network. 15 member airlines issue UATP accounts and over 200 airlines accept UATP as a form of payment for corporate business travel.

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Viad Spins-Off Travelers Express

Viad has spun-off its Travelers Express payment services unit. Under the new corporate name of MoneyGram International, Inc., the stock began trading under the “MGI” NYSE ticker this morning. Phil Milne, who has been president and CEO of Travelers Express Company since 1996, said both Travelers Express and its MoneyGram Payment Systems businesses will operate as subsidiaries of MGI. MGI, based in Minneapolis, has 68,000 agents reaching into more than 160 countries. Shares of MoneyGram common stock were distributed, effective 11:59 p.m. ET, on June 30th, to holders of Viad common stock

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California Drops Car Card Fees

The California Department of Motor Vehicles yesterday announced it is dropping its $4 credit card fee to encourage Internet renewals for vehicle registrations, effective today. When the DMV first launched Internet renewals four years ago, the department absorbed the merchant fee. But, after the first few months, the Legislature insisted the DMV begin passing the $4 fee along to customers. With the fee, roughly 4.5% of registration renewals (about 1 million transactions per year) have been handled by the Internet. However, the DMW says it has became clear that the fee was discouraging significant numbers of customers. DMV officials hope the elimination of the fee may increase Web renewals by more than 50%. The move is in response to Governor Arnold Schwarzenegger’s directive to reduce lines and wait times at DMV field offices as quickly as possible.

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American Express Rolls-Out a Discount Program for 11 Countries

American Express has added a new benefit for cardholders in eleven countries that offers nearly 1,000 special discounts worldwide. The new “American Express Selects” program is available to cardholders in the USA, UK, Canada, Mexico, Argentina, Australia, Malaysia, France, Italy, Singapore and Greece. In the coming months, AmEx expects to make the service available to a wider range of merchants in an increasing number of locations. The Company also noted that it has adopted a strict criteria for the new program to ensure that all offers on “Selects” meet its standards for value and duration of the offer. Samples of U.S. savings include 25% car rental discounts and up to 20% off rates from national hotel chains.

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BofA Takes Over DaimlerChrysler Cards

Bank of America has purchased DaimlerChrysler Services North America’s “Chrysler,” “Jeep,” “Dodge,” and “Mercedes-Benz” consumer credit card portfolios. The portfolios contain 160,000 accounts total. The portfolio was previously issued through Columbus Bank & Trust. In November 2001, DaimlerChrysler announced the launch of the Chrysler, Jeep and Dodge co-branded VISA credit cards. The Mercedes-Benz was released in 2002. Under the rewards program, cardholders earn one point for every dollar charged and five points for each dollar spent on purchases charged at participating dealers. Cardholders also earned three points per dollar at Exxon and Mobil service stations. (CF Library 7/26/01; 10/29/01)

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US Bank Wins DOT P-Card Contract

U.S. Bank has signed a deal to provide purchasing card services to the U.S. Department of Transportation, effective November 30th. The DOT expects annual charge volume of approximately $150 million dollars, making it one of the twenty largest purchasing programs in the federal government. This is the second major federal government contract won by U.S. Bank in less than a year. In 2003, U.S. Bank was selected by the Department of Homeland Security to provide similar services in the first major award under the government’s “SmartPay” program since 1998. “SmartPay” was instituted to help government agencies minimize the issuance of purchase orders and the receipt of invoices, reduce administrative costs, improve cash management by eliminating the need for advance funds, third party drafts and cash on hand and consolidate purchases from many suppliers to a single invoice. The GSA estimates that its “SmartPay” purchasing card programs saved government agencies more than $1 billion dollars in 2003.

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Card Rewards Dominate Direct Mail

Credit cards offers with a reward program continue to dominate the U.S. market. Of 325 million direct mail solicitations in April, 55% were for cards that have a reward program, compared to 45% in 2003, and 30% in 2002. According to MINTEL’s Comperemedia, one reason for the continued success of reward cards is that a growing number of investment firms are offering reward cards. The research firm also says reward programs are becoming more sophisticated by offering longer term rewards such as “life experience rewards”, “immediate gratification rewards,” and points toward account management. The overall mail volume figures for April of 325 million was lower than the previously reported data of 347 million for January.

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Chase Issues the Volt Payroll Card

NY-based Volt Information Sciences has launched a MasterCard payroll card for its 37,000 employees. The new “Volt MasterCard Payroll Debit Card” is being issued through JPMorgan Chase Bank. Volt employees can access a record of their transactions through the Chase E-funds web site or through the automated Chase E-funds Voice Response Unit. Volt is a national provider of staffing services, telecommunications, and information dolutions for its “Fortune 100” customer base.

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