MBNA Cardholder Fees Up 23% in 2Q/03

MBNA reported yesterday that its second quarter cardholder fee income increased 23.1% to $121.1 million and that its advertising expense for 2Q/03 increased 24.3% to $103.6 million. The issuer says the increase in credit card fees, which does not include securitized loans, was primarily the result of the growth in the portfolio, and an increase in the average fees assessed related to the implementation of a modified fee structure in the first quarter of 2002, which included higher late and over-limit fees. Credit card fees include annual, late, over-limit, returned check, cash advance, express payment, and other miscellaneous fees on credit card loans. MBNA also says the increases in advertising for the second quarter is the result of its efforts to increase the activity on newly established accounts. MBNA also reported that interchange income, excluding securitized loans, increased 15.3% to $101.0 million for the second quarter. For complete details on MBNA’s 2Q/03 performance visit CardData (www.carddata.com).

Details

Holland Resigns as Chairman of Datakey’s Board

Minneapolis-based Datakey said this week that Gary Holland had resigned from his position as board chairman citing a potential conflict of interest with his other business activities, and has been replaced by current board member Gene Courtney. The board now stands at five members with three outside directors. Datakey Inc. focuses on delivering complete smart card-based solutions that simplify access throughout the enterprise.

Details

Perfect Plastic Printing Introduces WYSIWYG Service

IL-based Perfect Plastic Printing has introduced a new service enabling clients to see exactly how their finished cards will look. The “Proofs-for-Color” is the first WYSIWYG service in the industry. PPP is also the pioneer of clear or translucent cards, holding two patents for transparent card technology. PPP and ORGA Card Systems also jointly issue smart cards.

Details

Memphis-based ISO Goes Public

Memphis-based ISO American Merchant Data Services, Inc. began trading on the OTC pink sheets this week, trading at 65 cents per share. AMDS is now positioned to begin acquisitions and capture a minority interest in the $200 Billion credit card and check processing industry. American Merchant Data Service (AMDS) is a “value added” independent sales organization engaged in the commercial electronic processing industry. AMDS manages their client’s electronic transactions, including debit, credit, check verification, and electronic benefits transactions.

Details

DOLEX ACQUIRED

Texas-based Latin America Money Services and its operating subsidiary, DolEx Dollar Express is being acquired by Atlanta-based Global Payments Inc. Under terms of the deal, GPN will pay $190 million, plus a potential earn-out of up to $10 million, for DolEx. Through a network of 550 retail branches in 15 states, DolEx serves predominately Latino customers who send money to beneficiaries primarily in Mexico, as well as other Latin American countries. Beneficiaries collect these funds in their local currency at approximately 8,500 bank, exchange house, and retail settlement locations in Latin America. Last year, DolEx processed 4.6 million electronic money transfer transactions, producing $69.9 million in revenue. The Company has approximately 1,300 employees in the U.S. and Mexico. The current DolEx management team, who founded the company in 1996, will continue to operate the business from its headquarters in Arlington, TX. The transaction is expected to close before the end of 4Q/03.

Details

ADS Expands Limited Too Contract to Bankcards

Dallas-based Alliance Data Systems has signed a multi-year agreement to provide private label credit card services through 2010 for the Limited Too, and, under a separate multi-year agreement, will now provide bankcard authorization services for Limited Too’s 537 stores. The private label credit card services Alliance Data will continue providing include account acquisition and activation; receivables funding; card authorization; marketing services; private label credit card issuance; statement generation; remittance processing; and customer service functions. Alliance Data will now also provide Limited Too’s bankcard, check verification and gift card authorization services.

Details

RETAIL SALES 2H/03

Retail sales growth in most Asia/Pacific markets is poised to recover from the devastating impact of SARS. According to the inaugural “MasterIndex of Retail” forecast released by MasterCard International, China is poised to lead in year-on-year percentage growth, with healthy growth expected from Thailand, Indonesia, the Philippines, Australia and New Zealand. Marginal growth is anticipated in the remaining markets with the exception of Korea and Singapore, which can expect to see retail sales shrinking over the next six months. The forecast for the second half of the year revealed that China tops the region for retail sales growth with forecasted 6.8% year-on-year growth. Taiwan shows healthy signs of recovery from the outbreak with an expected 4.8% growth. Even in Hong Kong, marginal growth of 0.8% is predicted over the same period last year. South East Asia shows a positive outlook, with retail sales in Thailand, Indonesia and Philippines forecasted to expand by 5.5% year-on-year, and Malaysia expected to grow by 0.5%. Singapore, whose consumers are still pessimistic, is the only market in this sub-region that is anticipated to decline by 1.5%. Korean consumers deepening pessimism manifests itself in the expected 2.5% retail sales contraction over the second half of last year. Japan is forecast to grow by 0.3% year-on-year. The Australia and New Zealand retail sectors are looking reasonably strong with anticipated 3.3% and 2.5% year-on-year growth respectively.

Details

Circuit City Exits Bankcard Business

Circuit City Stores confirmed this morning it is exiting the bank credit card business and will take an after-tax charge of up to $200 million during the current quarter, which ends this month. The electronic retailer projects it will generate $190 million from the sale, reflecting the credit quality of the portfolio. Circuit City said getting out of the bankcards business would enable the company to avoid the large cyclical profit swings that are inherent in finance operations serving primarily non-prime accounts, which have been recently been brutal. The company has engaged Banc of America Securities to assist with the disposal of the bankcard operation. Circuit City’s finance operation manages approximately $1.5 billion in bankcard receivables and $1.5 billion in private-label and co-branded VISA credit card outstandings. In mid-June, the Board of Directors gave the green light to management to unload the credit card portfolio after its First North American National Bank produced a pretax loss of $22.1 million for the first quarter. The retailer says the loss was the result of higher costs associated with two securitizations, a $500 million deal for private-label credit card receivables, including receivables related to the co-branded VISA credit card it launched last year; and, a separate securitization of $550 million in bankcard receivables. In June 2002, the company launched the co-branded “Circuit City Plus VISA” card to replace its private-label credit card program. (CF Library 6/18/03)

Details

EVERBRIGHT BANK & FDC

China’s first full bankcard outsourcing agreement has been signed between China Everbright Bank and First Data. China
Everbright Bank already has issued more than 10 million debit cards and has total assets of more than $39.8 billion. The bank plans to launch a credit card product later this year. The bank has a branch network in 23 of China’s provinces and 36 cities, including Shanghai, where First Data opened an operations center for north Asia last October. Under terms of the multi-year agreement, First Data will provide business consulting and transaction processing services, including authorizations, account management, backroom services, and merchant account processing. First Data’s “VisionPLUS” software will be used as the processing platform.

Details

Rates to Remain Unchanged for a Considerable Period

The Federal Open Market Committee decided yesterday not to change the federal funds rate, and indicated it may not change rates rate for a “considerable period,” citing deflation as a major concern. The evidence accumulated over the intermeeting period shows that spending is firming, although labor market indicators are mixed. Business pricing power and increases in core consumer prices remain muted. The Committee perceives that the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal. In contrast, the probability, though minor, of an unwelcome fall in inflation exceeds that of a rise in inflation from its already low level.

Details

BANORTE & ELIX IVR

Banco Mercantil del Norte has selected Montreal-based Elix as its preferred interactive voice response platform for telephone banking services. The IVR platform will help Banorte to handle the more than 20 million calls its contact center receives per year; 80% of these calls, on average, are now handled automatically. Part of Banorte’s strategy is to promote the use of this channel to their customers by offering more self-service options such as payment of utility and credit card bills, transfers between accounts, product sales, and loyalty programs. Banorte has 1,069 branches and 2,508 ATMs. Elix’s IVR expertise is used by VISA, ABN-AMRO, and Air Canada.

Details

ABNH Revenues Slip as MasterCard Orders Decline

Citing a decline in MasterCard orders, American Bank Note Holographics reported that second quarter revenues were $4.3 million, compared with $4.8 million for the second quarter of last year, however, profits remained flat at $100,000. The results for the first six months of 2003 were impacted by a significant temporary decline in orders from MasterCard. Sales to MasterCard in the first six months of 2003 were $1.9 million less than the comparable period of 2002. Sales to all customers other than MasterCard increased from $6.0 million in the first six months of 2002 to $7.2 million in the first six months of 2003.

Details