Direct Mail Solicitations Pick Up as Telemarketing Wanes

A Chicago-based market research firm reports that credit card mail volume increased in September by 6% compared to August’s mail volume. Mintel’s Comperemedia says the recent increase in estimated credit card mail volume comes after historical lows in May, June, and July. This year, direct mail card volume has been dropping after response rates plunged below 0.5% during the first and second quarter, according to CardWatch ([www.cardwatch.com][1]) and RAM Research Group’s BankCard Monitor ([www.ramresearch.com][2]). However, the recent implementation of the “Do Not Call” registry has been driving a recovery in the direct mail industry. Unlike other major issuers, Capital One, the issuer sending the largest volume of direct mail credit card solicitations, has not wavered in 2003. Earlier this year, Capital One reached an agreement with the U.S. Postal Service to receive volume discounts between 3 cents and 6 cents per piece. Capital One is the largest producer of First-Class mail in the USA and the USPS’ fourth-biggest customer. Capital One mails out more than 1.2 billion pieces of mail annually, and, prior to the new discounts, was paying 29 cents for First-Class mail. Industry wide, credit card issuers mailed out 4.5 billion solicitations last year in the USA. The projected credit card solicitation mail volume for 2003 is about 3.8 billion pieces, according to CardWatch and BankCard Monitor. (CF Library 6/3/03)

[1]: http://www.cardwatch.com
[2]: http://www.ramresearch.com

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Card Bond Delinquency and Charge-Offs Plateau

Charge-offs, among credit card-backed securities, remained level in October compared to September and last October. Delinquency also stayed the course during October compared to the previous month, and were 30 basis points lower than one year ago. According to Standard & Poor’s “Credit Card Quality Index,” which tracked $412.7 billion in securitized credit card loans for October, says the data are generally positive. S&P says that during October, 56% of the trusts captured by the index experienced a decrease in charge-offs. With few exceptions, the top 10 trusts, for the most part, continue to manage charge-offs better than the overall index, as 70% of them report a three-month average charge-off rate of less than 6.5%. Although 50% of the trusts included in the index reported varying degrees of deterioration in October, on average, 30-plus delinquencies remained relatively unchanged from the prior month at 5.2%. The overall trend continues to be relatively stable in the 5% to 5.5% range and 30-plus delinquencies continue to be at their lowest levels since July 2002. S&P says that after peaking at 21.1% in March 2001, yield has declined to its current range of 17%. The payment rate for October gained 60 bps from the prior month, ending a two-month decline. Aside from July 2003, the October payment rate of 16.9% is the highest payment rate reported by the index since January 2002.

CARD ABS PERFORMANCE
Oct02 Aug03 Sept03 Oct03
Yield (%) 18.7% 17.9% 17.6% 17.6%
Payment rate (%) 16.3% 16.4% 16.3% 16.9%
Charge offs (%) 6.9% 7.2% 6.9% 6.9%
Delinquencies (% 5.5% 5.2% 5.2% 5.2%
Source: Standard & Poor’s Credit Card Quality Index

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Terra Payments Shareholders Okay ebs Merger Adjustment

Montreal-based Terra Payments, formerly SureFire Commerce, announced Friday that its shareholders overwhelmingly approved its “Merger Adjustment Agreement” with Germany’s ebs Holding AG and ebs Electronic Billing Systems AG. The issuance of equity securities in one or more private placements during a twelve month period, commencing from the date of the meeting, with the resulting number of securities not to exceed 45 per cent of the total number of outstanding shares of the Company as at October 31, 2003. Terra Payments Inc. is an international leader in the payment processing industry. The Corporation provides technology and services that businesses require to accept credit card, electronic cheque and direct debit payments.

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70% of US Wendy’s Will Have Card Acceptance by Year’s End

Wendy’s reported Thursday that all of its 1,225 Company-owned restaurants and more than 1,800 franchised QSRs now accept credit cards. The world’s third largest quick-service hamburger restaurant chain says that by year-end, more than 70% of the its U.S. system will be on board to accept payment cards. Wendy’s began a phased national roll-out of credit card acceptance in July. The company is using satellite technology for its payment system. Wendy’s has a total of 6,355 restaurants in the USA, Canada and international markets. Americans are expected to charge more than $10 billion worth of fast food this year, compared to $6 billion in 2002, $3.7 billion in 2001, and $1.7 billion in 2000, according to CardData. (CF Library 4/2/03)

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Average Personal Card Debt Down to $2,294

A new survey by a MD-based credit counseling service has found that the average American is now carrying $2,294 in credit card debt, compared to $3,250 in 2002. Myvesta.org also says Americans now carrying an average of 2.3 credit cards, down from 2.5 in 2002. The organization did not explain it methodology but says people aged 18-24 have an average of $1,208 of credit card debt while those in the 25-34 age bracket average $2,245; people 35-44 average $3,846; people 45-54 average $2,655; people 55-64 average $1,612 and those aged 65 and older have an average of $1,214 of credit card debt. Myvesta says people in the Northeast carry the largest credit card balances with an average of $3,527 each. Those in the Midwest have the smallest average balances with $1,712. Individuals in the South have an average of $1,929 on their cards and those in the West carry an average balance of $2,524.

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DUALi Introduces DualEye-ABML Chip for Smart Cards

Seoul-based chip manufacturer, DUALi Inc., has launched “DualEye-ABML,” which supports the “ISO14443 type A/B” in one module and can easily be used in various applications, such as banking systems, e-payment systems, m-payment systems and auto fare collection systems. A few companies offer products to support the “ISO14443 Type B,” however DUALi’s “DualEye-ABML” supports Type A /B simultaneously in one module and fully supports the card communication speed 424Kbyte (Samsung chip card), as opposed to the standard 212Kbytes.

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Disneyland Paris Employee Lifts Card Numbers of VIPs

A former employee of Disneyland Paris has been arrested for credit card fraud. The employee reportedly had access to the personal credit card information of VIPs visiting the popular park. French police alleged that Jean-Pierre Sallet used a hundred American Express card numbers as well as dozens of VISA and Diners Club numbers in the scam. He allegedly used the stolen credit card information to purchase more than $100,000 in goods and services. American Express, which lost $50,000, first discovered the problem two years ago after several French celebrity cardholders began noticing unauthorized charges on their accounts. Police say that Sallet avoid detection for more than two years by make small transactions in an erratic pattern.

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All Inter-Bank Switch Volume on MasterCard’s Platform

MasterCard Europe reported this week that all inter-bank “Switch” volume is now being processed by MasterCard’s global processing platform. Last year, the owners of “Switch” decided to change the brand to “Maestro” and to migrate the processing to MasterCard. MasterCard Europe currently serves 42 countries with core transaction processing services (connectivity, authorization, clearing and settlement), enriched with a large range of value-added and supporting services. It also handles domestic transactions in over 20 different countries across Europe. The migration of “Switch” processing to MasterCard will mean at least 250 million new transactions for the remainder of this year.

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Safeway Offers Multiple Gift Cards as Comerica Jumps In

Safeway.com and Vons.com are now offering gift cards from 21 major retailers. Meanwhile, Detroit-based Comerica Bank has launched a “VISA Gift Card.” Safeway.com and Vons.com are charging a $2.50 service charge for each gift card shipping address. Participating retailers include: AMC Theatres; Bed, Bath & Beyond; Blockbuster; Borders; Checker; Schuck’s; Kragen; Chili’s Grill & Bar; Circuit City; CompUSA; Foot Locker; KB Toys; Marriott; Nordstrom; Old Navy; Olive Garden; Red Lobster; Sears; Shell Oil; Starbucks; Stuart Anderson’s Black Angus Restaurants; The Children’s Place; and, the Wherehouse. Customers can also purchase Safeway gift cards for $20, $50 or $100, redeemable inside Safeway, Vons, Pavilions, Randalls, Tom Thumb, Dominick’s, Genuardi’s and Carrs stores. The “Comerica VISA Gift Card” carries a $5.95 fee and is available in denominations of $25, $50, $100, $250, $500 and $1,000.

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MAYBANK & AMEX

Maybank and American Express this week launched the “Maybank American Express Credit Card.” Maybank says it expects to issue about 60,000 of the new cards within the first twelve months. The new card is offering a waiver of annual fees for the first year; a special introductory interest rate; an attractive tiered balance transfer plan offering 0% interest for three months with minimum amount of RM1,000; and 0.5% interest for 6 months with minimum amount of RM3,000. New cardholders who use their cards through March 31st at restaurants and hotels will receive double bonus points under Maybank’s “GiftPoints Rewards Program.” Maybank is also holding a contest through March 31st, offering a weekly Grand Prize for fifteen winners including: a choice of adventure and lifestyle holidays to exotic travel destinations such as Egypt, New Zealand, Seychelles or South Africa; the exciting experience of watching F1 live in Monaco; or relaxing in Ibiza, Spain. Also included in the offers are high-tech electronics equipment, plasma screen televisions and jewelry items. Maybank currently has four million cards in circulation of which 800,000 were credit cards while the remaining 3.2 million were debit cards.

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CheckFree and BofA Tweak Contract

CheckFree and Bank of America have fine tuned their contract in the face of the rapid growth of BofA’s in online users. The terms of the agreement are intended to expand the relationship for the duration of the original ten-year contract, which runs through 2010. Among other items, there are adjustments to long-term service pricing. CheckFree says the new transaction-based pricing allows CheckFree and the bank to take advantage of economies of scale. However, CheckFree noted that, despite the contract changes, BoA’s minimum annual revenue commitments remain in place at $50 million per year. In the third quarter, more than 11 million consumers initiated online payments through services offered by CheckFree’s e-commerce division. EBPP is available through more than a thousand financial services organizations. About 300 billers participate. CheckFree delivers nearly 15 million e-bills each quarter.

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2004 Global Premium MasterCard Collection Released

MasterCard International is now distributing to members the new and expanded “2004 Global Premium MasterCard Collection,” a portfolio of high-value offers from travel providers valid for all of next year. The Global Premium MasterCard Collection, which is currently being offered to customer financial institutions at no additional expense, features unique travel offers with global appeal for today s discerning traveler, including: The Leading Hotels of the World, Relais & Châteaux and Radisson Seven Seas Cruises. The Collection can be used by customer financial institutions to compliment regional premium offerings targeting local spending habits and can be tailored to appeal to any premium cardholder segment, including Gold MasterCard, Platinum MasterCard, World MasterCard and World Signia MasterCard cardholders. asterCard International is a leading global payments solutions company that provides a broad variety of innovative services in support of our global members credit, deposit access, electronic cash, business-to-business and related payment programs.

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