Morris to Unload COF Stock, Leaves in April

Capital One confirmed yesterday that Nigel Morris is departing Capital One in April. Morris also announced Wednesday his intentions of dumping 3 million shares of Cap One common stock within the next year. The option exercises and sales are Morris’ first since May 2001. The options he is exercising will expire in July 2004, three months after Morris leaves the company. After completion of the stock sales, he will own approximately 3.3 million options to purchase shares of COF common stock. Four months ago Cap One announced that Morris was stepping down as President and COO to become Vice Chairman of the Board of Directors, effective May 1st. His role in executive management will conclude at the end of this year. Morris recently entered into an employment agreement with the company outlining his responsibilities prior to his planned departure in April 2004. Morris, who has four young children, says he wants to spend more time with his family and to pursue personal interests. Morris built Cap One with long-time business partner and CEO Richard Fairbank. (CF Library 4/22/03)


iPayment 2Q/03 Revenues Double

Nashville-based iPayment, a recent IPO, reported second quarter revenues of $54.3 million compared to $21.5 million for 2Q/02. The company also announced it has closed on the acquisition of Card Payment Solutions for $16 million, which included $12 million cash, approximately $3 million in stock and the assumption of approximately $1 million of debt, plus a contingent payment based upon performance up to a maximum $3 million. CPS is an ISO with a portfolio of over 4,000 small merchants and annual charge volume of approximately $400 million. iPayment provides credit and debit card-based payment processing services to 66,000 small merchants. For fiscal 2003, the Company is expecting annual revenues of $205 million to $215 million, including the CPS acquisition, and an operating margin of approximately 11.5% to 12.5%. iPayment IPO in May raised $46.1 million in net proceeds. For complete details on iPayment’s 2Q/03 performance visit CardData ( (CF Library 5/13/03)


Charge-offs in Singapore Hit 12-Year High

Bank credit card issuers in Singapore reported the highest monthly level of charge-offs in twelve years, according to this week’s issue of CardFlash International, to be released today. During June card issuers lost $17.5 million, bringing total charge-offs for the first half of this year to $86.5 million. The rising losses were driven in the second quarter by the outbreak of SARS. The government recently reported that Singapore’s economy contracted by 11.8% in the second quarter, the worst-ever. According to the Monetary Authority of Singapore, bank credit card issuers lost $14.0 million in May, $15.6 million in April, $13.6 million in March, $13.7 million in February, and $12.1 million in January. Card volume for the first six months of this year has fluctuated between $2.4 billion and $2.5 billion. The total number of cards in the country at mid-year was 3.3 million, which included 2,295,027 primary cards and 992,555 supplementary cards.


NACHA Launches an E-Bill Pilot

NACHA – The Electronic Payments Association said yesterday it will conduct a pilot program in which companies will deliver billing information electronically using the ACH network. Under the EBIDS model, a billing company would originate a zero-dollar ACH transaction that contains a summary of a consumer’s billing information in an attached addenda record, and enter the transaction into the ACH Network through its corporate bank. The consumer’s financial institution would receive the transaction via the ACH Network, and present the billing information at its Internet banking web site. The consumer would enter the Internet banking web site, using the financial institution’s existing logon procedure, and view the bill and authorize payment. The consumer’s financial institution would then send an ACH credit back to the biller’s bank, along with remittance information.


Providian and Accenture Expand IT Relationship

Providian’s Enterprise Technology group has inked a deal to expand its relationship with Accenture for technology application development and maintenance services. The arrangement calls for the two organizations to work together to increase the service levels and performance of Providian’s IT operations. The agreement also builds on Providian’s existing relationship with Accenture, which has previously assisted Providian in upgrading its credit card technology platform, among other initiatives. Providian plans to administer the relationship through its Enterprise Technology group.


Magner Becomes CEO of Citigroup’s Global Consumer Group

Citigroup has promoted Marjorie Magner, who joined Commercial Credit, a predecessor company to Citigroup, in 1987, as Chairman/CEO of the company’s Global Consumer Group. The Global Consumer Group has delivered core income growth in excess of 20% annually since the creation of Citigroup in 1998. Ms. Magner will report to Robert B. Willumstad, President and Chief Operating Officer-designate of Citigroup. She will remain on Citigroup’s Management Committee. Magner will lead all of Citigroup’s efforts to serve consumers through retail banking, cards and consumer finance and provide them a full range of innovative and comprehensive products and services.


Stock Market Gains May Spur New Credit Card Borrowing

A new survey by Cambridge Consumer Credit Counseling shows that 28% of Americans are more willing to take on more credit card debt because the value of their stock portfolios has risen recently. Conversely, almost three quarters (72%) say stock market gains have not impacted their willingness to take on more debt. In August 2002, a period in which the stock market had been declining sharply, 43% of Americans said they were less willing to take on additional debt and 57% said they were unaffected by the declining value of their stock portfolios.


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The International Card Manufacturers Association’s “Annual EXPO”
will be held in Cancun, November 9-12, at the Fiesta Americana Grand Coral
Beach. Enrique Iturbe German, security director of the BBVA Bancomer
Financial Group, is scheduled to present a keynote address. Iturbe will
present “Plastic Card Fraud: Its Anatomy and Diagnosis.” He will discuss a
global overview of the problems of plastic card fraud, how to trace it and
how to remedy it. ICMA is a non-profit association of plastic card
manufacturers, personalizers and related industry participants. With more
than 200 members globally, the ICMA acts as a clearinghouse for industry
issues, including the production, technology, application, security and
environmental issues of plastic cards.


Bank One and United Airlines Launch Million Mile Giveaway

Cardholders of the “United Mileage Plus VISA” will automatically be entered into the “Million Mile Giveaway” for purchases made between August 16th and September 30th. Bank One and United Airlines,announced yesterday, they have teamed to award a daily prize of 25,000 miles to 50 winners during the contest period. The daily prize of 25,000 is enough for a free round-trip ticket within the continental U.S. or Canada. A total of 1.25 million miles will be awarded as part of the “More Miles” program. As part of the “More Miles” program, cardholders can continue to earn additional miles by upgrading their existing “United Mileage Plus VISA” cards to higher-level cards such as the “Gold Class VISA” card; by referring a friend to apply for the card; or by choosing Sprint for their residential long-distance service.


COF 2Q/03

Capital One posted its second straight profitable quarter for its international credit card portfolio on June 30th. The issuer posted 2Q/03 net income of $13.6 million, compared to an $18.1 million profit in the first quarter, and a $19.8 million loss in the second quarter of last year. Since the second quarter of 2002, Capital One’s international portfolio outstandings have grown 22%, from $5.0 billion to $6.1 billion. Charge-offs for the second quarter of this year was 4.48%, compared to 4.28% in the first quarter, and 3.91% one year ago. International delinquency for the second quarter of this year was 3.92%, compared to 4.22% in the first quarter, and 3.78% one year ago. Capital One previously reported that its UK operations became profitable for the first time in 2002. At the end of 2002, the U.K. Bank had 2.8 million accounts and $3.9 billion in credit card, revolving loan, and installment loan assets.The UK Bank has been operating independently in France since 2000. Besides the UK, the issuer also has operations and activities in Canada, South Africa and France.


TowerGroup Predicts an Impending Debit Card War

This past June, MasterCard and Visa signed a historic settlement of a class action lawsuit brought on by Wal-Mart and five million other merchants. Under the terms of the settlement, Visa and MasterCard agreed to:

1) Reduce interchange fees for signature debit;

2) Compensate retailers for $3.05 billion for additional fees charged for signature debit programs;

3) Provide distinct branding on all card products;

4) Eliminate the “Honor All Cards” rule for retailers.

While the resolution is not “catastrophic” to the credit card companies or their banks, TowerGroup believes that it will have a considerable impact on all stakeholders and the future of debit cards in the US.

In this research, TowerGroup closely examines the future of debit for all parties: the credit card companies, their member banks and their customers, the merchants and the electronic funds transfer (EFT) networks. The research also looks at the potential impact of the pending acquisition of STAR (the largest EFT network) and its parent company, Concord Group, by First Data Corporation–making it a major player in the overall debit market.

The research note is titled: “After the Wal-Mart Settlement: The Future of Debit in the US.”