Mid-Size Issuers Post 17% Gain in First Quarter Volume

Medium size issuers, with $100 million to $600 million in outstandings, posted an average 7.5% increase in year-over-year outstandings, and a strong 17.2% boost in first quarter volume, compared to the first quarter of last year. The gain in credit card volume is nearly twice the level of growth for smaller issuers, with $15 million to $100 million in outstandings, but less than the 19% first quarter increase reported by Citigroup last week. However, the Citigroup figure was fueled by its Sears card portfolio acquisition. The major issuers will be reporting first quarter data this week. Among the strongest gainers in credit card loans for the middle level peer group is FL-based SunTrust, posting an an impressive 18.7% increase in first quarter outstandings. Among volume gainers are Columbus Bank & Trust with a 33% gain, Redstone Credit Union with a 28.9% increase, and Golden 1 Credit Union with a 28.3% gain. For complete details on first quarter portfolio results, posted daily, visit CardData ([www.carddata.com][1]).

$100 Million to $600 Million Peer Group – 1Q/04
ISSUER Outstandings Y/Y Volume Y/Y
1. Commerce Bancshares $545.5 million (+8.4%) $386.3 million (+10.2%)
2. Columbus B&T $220.0 million (+4.3%) $162.6 million (+33.1%)
3. Penna State Emply CU $210.2 million (+7.4%) $91.2 million (+5.6%)
4. Golden 1 CU $149.2 million (+5.4%) $118.8 million (+28.3%)
5. SunTrust $143.6 million (+18.7%) $257.6 million (+21.9%)
6. Security Srvc CU $127.7 million (+9.4%) $32.8 million (+6.1%)
7. Redstone FCU $113.2 million (+8.8%) $62.4 million (+28.9%)
8. Delta Emply CU $100.6 million (-2.4%) $56.8 million (+4.0%)

TOTAL $1610.0 million ( +7.6%) $1168.5 million ( +17.2%)
Source: CardData (www.carddata.com)

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

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MBNA Eyes Up the Chinese Credit Card Market for 07

MBNA announced it is probing the Chinese market following the recent opening of an office in Shanghai. The affinity credit card king currently holds more than $21 billion in total managed loans in the U.K., Canada and Spain. MBNA says the new office in China will be used to conduct market research, to further develop relationships with Chinese regulators and the banking community in China, and to design long-term strategies for entering China’s credit card market. At the end of 2003, MBNA had approximately 1,400 total international affinity contracts in place. In Europe, total managed loans reached $17.2 billion last year. In Canada, total managed loans for 2003 reached $3.6 billion. In February, Shanghai Pudong Development Bank and Citibank officially launched their first international credit card in China that can be settled both in renminbi and US dollars. Last month, American Express and the Industrial and Commercial Bank of China inked a deal to issue American Express branded credit cards in China that are also dual denominated. (CF Library 2/5/04; 3/30/04).

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No-Risk Multi-Currency e-Commerce Service Launched

E4X and ECNext have teamed to integrate E4X’s online multi-currency services with ECNext’s hosted e-commerce solutions. By incorporating E4X’s solution in it’s Web commerce platform, ECNext can provide clients with a multi-currency e-commerce service which will enable them to sell in local currencies without currency risks. E4X, Inc. provides currency management and conversion services for merchants who sell online internationally. ECNext builds and manages online channels, enabling leading financial analysts, market research firms and business publishers to grow their business by selling high-value information via the Web.

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Capture Resource Completes Loyalty Card Acquisition

Philadelphia-based Capture Resource has completed its acquisition of the loyalty card services business from FL-based Catalina Marketing Corporation. This acquisition strengthens Capture Resource’s position as a leading provider of image and data capture, transaction processing and business process outsourcing solutions. In addition, it enables Capture Resource to offer a complete, reward processing outsourcing solution to clients seeking to capitalize on this growing trend in consumer marketing. Catalina Marketing Corporation was founded 20 years ago based on the premise that targeting communications based on actual purchase behavior would generate more effective consumer response. Capture Resource is a leading provider of innovative input management solutions including high-volume mail processing, high-speed forms and document scanning, automated data capture, and domestic and offshore manual data capture.

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AIR-ASIA MASTERCARD

Discount airlines, AirAsia, has partnered with DBS Bank to launch a co-branded MasterCard for Malaysia, Thailand, Indonesia, and Singapore. The new “AirAsia AA$ MasterCard” enables cardholders to earn free travel for charging S$24,000 instead of the typical S$40,000 required on most frequent flyer bank credit cards. Cardholders can actually earn free travel with as little as S$480 in charges, depending on the amount of cash rebates granted by the different participating merchants. The “AirAsia AA$” program rewards members with rebates in the form of “AA$.” The rebates of up to 25% of the dollar value spent are given out by more than 100 merchant outlets in diverse businesses. In addition, DBS will award bonus “AA$” to card members based on the outstanding balance in their accounts at the end of each month. With the accumulated “AA$,” cardholders will be able to redeem free flights to any of AirAsia’s 13 destinations in the region. The “AA$” is as good as real money with one “AA$” equivalent to S$1. They can also be used to offset purchases at participating merchants. As part of the launch promotion, successful applicants will also enjoy a two-year waiver of annual fees. DBS Bank is a leading credit card issuer in Singapore and Hong Kong with a more than 1.5 million cards issued.

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Hedge Fund Seeks Control of Intercept; Lawsuit Filed

Atlanta-based InterCept has filed a lawsuit to eliminate confusion created by JANA Partners that four Board seats are up for election at InterCept’s upcoming 2004 Annual Meeting. Early last week, JANA Partners, which owns 8% of InterCept’s common stock, notified InterCept by letter that it intends to nominate and solicit votes for its handpicked candidates at InterCept’s Annual Meeting. The hedge fund indicated that upon taking control it would immediately hire an investment banking firm to possibly sell the company. InterCept says it has a six-member classified Board of Directors and is seeking a declaratory judgment confirming that, under Georgia law and InterCept’s governing documents, only the two Class III Directors whose terms expire at the 2004 Annual Meeting are up for election. JANA contends that the Class I Board seat held by Mark Hawn and the Class II Board seat held by Dr. James Verbrugge are also up for election at the 2004 Annual Meeting, even though the terms of the Class I and Class II Directors do not expire until the InterCept Annual Meetings in 2005 and 2006, respectively. JANA asserts that the terms of Mr. Hawn and Dr. Verbrugge expire at the 2004 Annual Meeting because they were elected in February 2004 to fill vacancies in those board seats resulting from the resignations of two former directors. JANA contends that directors elected to fill vacancies in existing Board seats only serve until the next election of directors.

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MSI Deploys Always-On IP Terminal

NJ-based Merchant Services has deployed a VeriFone “Omni 3750” IP payment terminal connected to an existing DSL for a client, and says it shaves three or four seconds off a transaction due to the always-on approach. The VeriFone Omni 3750 IP is an all-in-one payment terminal featuring a built-in jam-proof printer and a PIN pad for debit card acceptance as well as both Ethernet and dial-up communications capability. MSI offers gift cards, prepaid phone cards, electronic check processing and other services to enhance the value of the Omni 3750 to its merchant customers. MSI offers end-to-end transaction processing solutions for Visa, MasterCard, American Express, Discover and private label card acceptance.

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Tribal Gaming Casinos Targeted for Smart Cards

Dallas-based NACAHA has launched a marketing campaign featuring British Columbia-based QI Systems’ smart card systems and is targeting tribal gaming casinos in the USA. Native American gaming corporations within the United States have annual revenues exceeding $8 billion dollars. NACAHA, Inc. will market smart card solutions that are developed, designed, manufactured and serviced exclusively by QI Systems, Inc. QI Systems Inc. designs hardware and software for the smart card industry, supplying top-to-bottom applications for a wide variety of industries. QI Systems has a high level of expertise in delivering stored value solutions for specialized needs.

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Newtek Gets Endorsement from CUBS

NYC-based Newtek Merchant Solutions has been endorsed by Credit Union Business Services, managed by the Alabama Credit Union League, to provide electronic merchant payment processing solutions to CUBS’s 176 credit unions. CUBS provides credit unions with services such as SBA lending, merchant processing, core deposits, payroll processing, group insurance products, and many more value-added services, all of which represent substantial opportunities for credit unions. The objective of CUBS is to help credit unions strengthen existing financial relations with members who own or are employed by small business, through the delivery of convenient, high-touch, competitively priced small business services, and to create long-term deposit resources, increase loan volume and fee income while increasing new members through small business employee groups. Newtek Business Services, Inc. is a premier provider of business services and financial products to the small to medium-sized business market

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MBNA SCOUTING

MBNA is probing the Chinese market following the opening of an office in Shanghai. The affinity credit card king currently holds more than $21 billion in total managed loans in the U.K., Canada and Spain. MBNA says the new office in China will be used to conduct market research, to further develop relationships with Chinese regulators and the banking community in China, and to design long-term strategies for entering China’s credit card market. At the end of 2003, MBNA had approximately 1,400 total international affinity contracts in place. In Europe, total managed loans reached $17.2 billion last year. In Canada, total managed loans for 2003 reached $3.6 billion.

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