Top 10 Grew 6.5% Last Year; Hold 77% of the Market

In terms of organic growth, Bank of America, Capital One, and American Express led the U.S. credit card industry with double digit gains in receivables and profits last year. The nation’s top ten bank credit card issuers grew an average of 6.5% during 2003, holding aggregate card loans of $538.9 billion, approximately 77% of the total U.S. market. Citigroup, the nation’s #1 ranked issuer would have slipped to second place had it not been for the acquisition of the Sears MasterCard portfolio in November. Citigroup card loans increased $7.4 billion during 2003 as it added $13 billion in Sears MasterCard card loans during the fourth quarter. Indeed, Citigroup’s organic growth was negative in every quarter of 2003. Bank of America led the top issuers with a 24% gain in outstandings. BofA also led with a 25% in card profits, according to CardData ([www.carddata.com][1]). Discover was the only issuer to post a portfolio contraction. However, Discover data does not reflect the impact of the December holiday season. (CF Library 2/4/04)

Top 10 U.S. Issuers by Card Loans
RANK/ISSUER 4Q/03 4Q/02 Y/Y
1. Citigroup $119.8b $112.4b + 6.6%
2. MBNA $ 85.8b $ 79.5b + 7.9%
3. Bank One $ 76.3b $ 74.0b + 3.1%
4. JPM Chase $ 52.3b $ 51.1b + 2.3%
5. Discover* $ 48.4b $ 51.1b – 5.3%
6. Capital One $ 46.3b $ 40.9b +13.2%
7. AmEx $ 38.5b $ 34.3b +12.2%
8. BofA $ 36.6b $ 29.5b +24.1%
9. Household $ 17.9b $ 17.0b + 5.3%
10. Fleet $ 17.0b $ 16.2b + 4.9%
TOTAL $ 538.9b $506.0b + 6.5%
*Discover data as of 11/30/03, all others as of 12/31/03.
Source: CardData (www.carddata.com)

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

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Aradyme Integrates Vital’s Gateway into Database Software

UT-based Aradyme has fully integrated Vital Processing’s payment gateway into all its database software. All applications developed on the “Next Generation” database platform from Aradyme will be enabled to bypass third party gateway services by going directly to Vital Processing Systems, that processes one in every four electronic payment transactions in North America. This integrated functionality means companies running Aradyme applications can eliminate the third party processing service that costs as much as $.30 per transaction, plus 2.39% of the payment amount. Vital is a leader in technology-based commerce enabling services; Vital Processing Services(R) is the commerce connection between acquirers and merchants, processing one out of every four authorized payment transactions in North America.

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Bank One to Replace 550 Chicago ATMs

Bank One plans to replace 550 ATMs in Chicago this year, and add about 50 new off-site ATMs in the area over the next two years to bring the total number of Bank One ATMs in the Chicago market to 1,250. Most of the new branches will be storefront locations, which provide convenient bank access in areas with high levels of foot traffic. The 50 new off-site ATMs will be located inside Walgreens drug stores and in other venues, and the ATM replacements will include 200 machines inside Bank One branches and about 350 inside Walgreens. Bank One Corporation ( ) is the nation’s sixth-largest bank holding company, with assets of $326 billion.

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FDC’s Western Union Under a Civil Antitrust Probe

First Data confirmed this morning that its Western Union Financial Services subsidiary received a “Civil Investigative Demand” from the U.S. Department of Justice on Wednesday of this week. FDC says the CID is focused on its contractual relationships between the company and its money transfer agents. Western Union also has been informed that certain states are aware of this CID and may join in the investigation or conduct separate inquiries concerning competitive aspects of its money transfer business. First Data notes that during the 2000-2001 period, the Federal Trade Commission and one state conducted preliminary investigations of similar issues. First Data says its contractual practices reflect common industry norms and it does not expect this civil investigation of the money transfer business will impact its ability to complete its merger with Concord EFS. Earlier this week, First Data reported its fourth quarter results which showed that its Payment Services unit, comprised primarily of Western Union, produced quarterly operating profits of $323 million, a 13% increase compared with the fourth quarter of 2002. For the full year, Western Union and ValueLink, combined, handled more than one billion transactions, up 26%. (CF Library 2/3/04)

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Paymentech Signs The Container Store

Paymentech has signed a processing agreement with Dallas-based The Container Store, that will switch the 30 location firm from dial-up processing to frame relay, and will add a PIN-based debit option at the point of sale. In addition, Paymentech’s direct connection to debit networks played a key role in The Container Store’s decision. Paymentech utilizes an alternate and dynamic routing system that routes debit transactions through the least expensive network — which can save merchants thousands of dollars each year. Paymentech, L.P. processes more payment transactions than any other company in North America — and more than half of all Internet transactions — for retailers accepting U.S. and international payments via traditional point of sale, Internet, catalog and recurring payments.

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Rewards Network Names Aron to its Board

Chicago-based Rewards Network has named Adam Aron, CEO of Vail Resorts and former senior executive at United Airlines and Hyatt, to its Board of Directors. Prior to joining Vail Resorts, Mr. Aron served as President and Chief Executive Officer of Norwegian Cruise Line Ltd. He previously was the Senior Vice President of Marketing for United Airlines and prior to that he served as Senior Vice President of Marketing for the Hyatt Hotels Corporation. Rewards Network provides loyalty and rewards programs for restaurants and hotels via its registered credit card platform. Incentives are offered through the Rewards Network branded program, airline frequent flyer dining programs, club memberships and other affinity organizations.

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FSA/HRA Debit MasterCard Explodes in 2003

MA-based MBI says its “Flex Convenience MasterCard,” which provides access to employee flexible spending accounts and health reimbursement arrangements, has topped 800,000 cards. In the last 18 months the number of employers offering MBI debit cards has jumped over 400% from 1,600 to 8,900. Some participating employers include Staples, British Airways, Toshiba, Dow Jones, The PGA Tour, Krispy Kreme, eBay and the State of Texas. MBI says it will introduce major enhancements and new product offerings this year designed to simplify substantiation for MBI’s “Third Party Administrator” and health plan partners. The key features of the new system include: a health identification card that provides both health plan member information and debit card functionality onto one simple card; credit line features attached to the FSA and HRA accounts; HSA capabilities, including fund investment management; and, a new pharmacy authorization system that reliably substantiates both prescription and over-the-counter drug purchases.

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Capital One Officially Names U.S. Card Chief

Capital One has officially made Catherine West, EVP and President of its $46.3 billion U.S. Card business. West served in the position on an interim basis in April of last year, as Capital One’s former President/COO Nigel Morris announced his stepping down on May 1st, and planned departure on April 30th of this year. West joined Cap One in March, 2000 as EVP/U.S. Consumer Operations. She previously worked as a senior executive at First USA and as VP of Credit Card Operations Servicing for Chevy Chase FSB. West currently serves on VISA’s Risk Control Advisors Committee. During the fourth quarter, Capital One grew its managed loan portfolio by $4.0 billion, and its domestic card loans by nearly $2.0 billion, compared to the previous quarter. Year-over-year, Capital One’s managed loans have increased 19.3%, and U.S. card loans have risen 13.2%, according to CardData ([www.carddata.com][1]). At year-end, Cap One had a managed loan portfolio of $71.2 billion and 46.7 million accounts worldwide. (CF Library 4/22/03)

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

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Prestige International Launches Concierge Service to Employers

Prestige International, a provider of concierge services to MasterCard and other card issuers, has launched its concierge service to the corporate sector as an employee benefit and retention tool. Concierge as an employee loyalty tool is an extension of Prestige’s existing business model, to provide concierge as a customer loyalty tool to banks and credit card companies. Prestige International offers value-added call center and enhancement services to almost 100 multinational corporations.

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Kookmin Bank Losses Up 13% in the Fourth Quarter

Another creditor of LG Card is grappling with greater credit card losses than anticipated. Kookmin Bank reported a net loss of 229.7 billion won for the fourth quarter, compared to 202.6 billion won one-year ago.
It was widely expected that Kookmin losses would have declined by at least 30% for the fourth quarter. Kookmin has a 40% share of the country’s household loan market. Next to the state-run Korea Development Bank, Kookmin and the National Agricultural Cooperative Federation are the biggest contributors in LG Card’s debt-for-equity plan, taking a 16% and 14% stake respectively. LG Card has been kept afloat
under a 3.78 trillion won bailout package.

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ID Analytics Targets European ID Fraud Problem

San Diego-based ID Analytics is entering European market. The company has already begun work on its “United Kingdom National Study on Identity Fraud” in conjunction with ten U.K.-based companies.
The U.K. government estimates that identity fraud costs the U.K. at least GBP1.3 billion per year. In collaboration with 13 U.S. companies representing over half the credit and retail card market in the U.S., as well as leading wireless and online consumer finance companies, ID Analytics spent a year reviewing more than 200 million records, including valid and fraudulent consumer applications for credit, debit and new accounts, together with the largest collection of cross industry known frauds to date. ID Analytics has named Ken Morton as VP/GM for Europe. Morton was GM for Europe for Covigo (now Symbol Technologies). ID
Analytics is backed by top-tier venture firms Canaan Partners and Trinity Ventures.

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