Acquisition Costs

The average cost to acquire a credit card account in the USA is now $78, with a range between $10 per account and $230 per account. With response rates for direct mail credit card solicitations dipping as a low as 0.3%, the cost can reach as high as $115 per account. By contrast, Internet marketing with response rates for credit card applications exceeding 2.0%, the costs range between $10 per account and $45 per account. The findings come from a research report released yesterday by CA-based RK Hammer Investment Bankers. Hammer found that accounts acquired through portfolio acquisitions are the most expensive while accounts picked up through agent banks are the least expensive.

(costs include marketing, bureau expense, credit processing,
and card issuance)
Per Acct Response
Portfolio Acquisition $40-$230 NA
Direct Mail $95-$115 0.3%-0.7%
Pre-Approved $70-$90 0.6%-1.8%
Telemarketing $60-$70 3.0%-6.0%
Pre-App + Tele $50-$60 4.0%-5.0%
Internet Applicatio n $10-$45 0.6%-2.1%
Agent Banks $10-$40 1.2%-2.6%

Source: RK Hammer Investment Bankers


PCCharge AmEx PIP

GO Software, Inc., a subsidiary of Return On Investment Corporation, announced the immediate availability of American Express Plural Interface Processing in its award-winning payment processing software, PCCharge Pro. The availability of American Express PIP in PCCharge Pro saves merchants money by allowing direct settlement of credit card transactions to American Express, avoiding fees charged by third party processors for routing these transactions.



A new pilot to test an infrared credit card payment service in Tokyo using DoCoMo mobile phones with IrDA ports is being launched in June. VISA International, Nippon Shinpan, OMC Card, AEON Credit, and, NTT DoCoMo have teamed for the project. The pilot will have two phases. In the first phase, Nippon Shinpan and DoCoMo will focus on technical evaluations of the service, including communication formats, payment methods and user operability. Nippon Shinpan will select 3,000 VISA cardholders and provide infrared-payment terminals to about 500 merchants. In the second phase, which begins this autumn, OMC Card and AEON Credit Service will join the pilot program to recruit more users and expand the range of participating merchants, bringing the pilot program closer to full commercialization. The pilot leverages a DoCoMo “i-áppli” application for payments based on the “VISA Proximity Payments Messaging Specification”. Credit card data is downloaded and then stored in the DoCoMo “504i” and “504iS” mobile phones. There are about eight million owners of DoCoMo “504i” and “504iS” mobile phones which are standard-equipped with an IrDA port to exchange information with other IrDA-equipped devices via an infrared signal.


Card Rescue

The Financial Supervisory Service of South Korea says major companies and banks have agreed to raise approximately $3.6 billion to fend off potential bankruptcy in their credit card subsidiaries. Also, government-run Korea Asset Management plans to buy between $4 billion and $5 billion worth of bad credit card loans. The card problems were first reported on March 18 by The RAM Report ([][1]). The Korean credit card industry has been hit hard by an economic crisis as well as an accounting scandal at SK Global. SK allegedly inflated its 2002 earnings by $1.2 billion. The FSS reported that card payments, 30+ days overdue, increased 23% to $6.3 billion in January from $5.1 billion in December. Credit card issuers lost a total of $207 million in 2002. In January, credit card losses topped $326 million. The Ministry of Finance and Economy, the Financial Supervisory Service, and the Bank of Korea said it will also require credit card companies to reduce operating expenses and boost capital. Some card issuers have indicated they will reduce grace periods from 40 days to 25 days, and drop zero percent interest rate offers. Kookmin Credit Card announced a 20% reduction in its workforce. Korean Exchange Bank Credit Services also plans to cut 20% of its workforce. Samsung Card and Hyundai Card said they will gradually reduce their number of employees.




Warsaw-based Bank Amerykanski w Polsce has licensed the “Sanchez Profile” integrated banking platform through ComputerLand. “Sanchez Profile” is an online, multi-currency core processing system that supports real-time interfaces to third-party lending and payment systems and legacy system components. Each bank branch will be networked to the bank’s operations facility, using “Sanchez Profile for Windows” as the front-end customer-
servicing platform; “Sanchez FMS” for general ledger, financial reporting, and other financial management activities; and “Sanchez CRM” for real-time, single-view customer relationship management.



HBOS Card Services has selected Cyota to provide “MasterCard SecureCode”
and “Verified by Visa” security services to its five million cardholders.
HBOS is the first issuer in the UK to announce a commercial service of this
kind. HBOS Card Services will host its service at Cyota’s local facility in
London. Currently six of the world’s top ten issuers are already initiating
“3D Secure” programs, five of which have selected Cyota as their provider.
Cyota services multiple clients in North America, Europe and Asia-Pacific
with systems currently available to over 300 million cardholders.


February Rebound

Consumer revolving credit continued its rebound in February, growing at an annual rate of 9.0% compared to 2.2% one year ago. Americans added $5.4 billion to revolving credit in February, compared to $2.6 billion in February 2001. In January revolving credit increased at an annual rate of 5.5%, compared to 1.8% one year ago. The unusual surge in consumer revolving credit for the first two months of 2003 was preceded by a 1.4% drop in November and a 6.7% decline in December. Bank credit card debt at the end of the fourth quarter was $660.9 billion or roughly 93% of total revolving credit, according to CardData ( According to the government figures released Monday, American consumers were $1.740 trillion in debt, exclusive of home mortgages during February. Overall, consumer credit increased 1.0% in February.

Feb 03 Jan 03 Dec 02 Nov 02 Oct 02 Sep 02 Aug 02
GRWTH: 9.0% 5.5 -6.7 -1.4% 1.6 3.0 6.2
$OWED: $721.1 715.7 712.4 716.8 717.9 721.3 719.5

Jul 02 Jun 02 May 02 Apr02 Mar 02 Feb 02 Jan 02
GRWTH: 8.9% 6.0 4.1 8.0 4.8 2.2 1.8
$OWED: $717.4 715.6 712.1 708.7 705.4 705.0 702.4

Source: Federal Reserve; revised figures as of 04/07/03;

For complete historical data visit CardData (