Delinquency 4Q/02

Credit card delinquency, based on the number of accounts 30+ days past due, hit an all-time high of 4.07% in the fourth quarter. Based on total dollars outstanding, bank card delinquencies rose to 4.63%, compared to the previous quarter’s 4.45%, but slightly lower than the fourth quarter of 2001. According to the American Bankers Association’s latest “Consumer Credit Delinquency Bulletin,” delinquencies, based on outstandings, last reached 4.63% in the third quarter of 1998, and hit a record 5.45% in the fourth quarter of 1996. The ABA blames anemic job growth for the current rise in delinquency. CardData ([www.carddata.com][1]) says that discounting the delinquency rates of sub-prime specialists Capital One, Providian, Household, and Metris, the average delinquency rate among the nation’s top issuers, based on outstandings, would have declined 20 basis points during 2002, from 5.23% to 5.03%. On average, the top 10 issuer delinquency rate for 4Q/02 is 6.62%, compared to 6.44% in the prior quarter, and 6.17% one year ago.

4Q CREDIT CARD DELINQUENCY HISTORY
(based on total dollars outstanding)
2003: NA 1999: 4.28% 1995: 4.45% 1991: 4.61% 1987: 3.65% 1983: 2.74%
2002: 4.63% 1998: 4.62% 1994: 3.20% 1990: 4.46% 1986: 4.80% 1982: 3.57%
2001: 4.67% 1997: 5.38% 1993: 3.64% 1989: 3.22% 1985: 3.88% 1981: 2.26%
2000: 4.25% 1996: 5.45% 1992: 4.11% 1988: 3.40% 1984: 2.85% 1980: 3.00%

Source: American Bankers Association Delinquency Bulletin

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

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VISA QSR

VISA reported this week that quick service restaurant volume grew by 65% during 2002, to $3.2 billion. The figure is significant considering that slightly less than 15% of QSRs currently accept cards. VISA released a study of 100,000 QSR transactions that showed the average transaction for credit customers was 20% to 30% higher than for cash customers. VISA also reported this week that overall performance in new and emerging categories increased by 23% to $95.8 billion in 2002 volume. Recurring payments volume topped $39.9 billion, an increase of 26% and the e-commerce category grew nearly 60% to $42.5 billion in volume. VISA says significant gains were also made in the movie theater, toll and bridge fee, and charitable organization segments. In 2002, the number of VISA-branded credit, debit, commercial, prepaid and smart cards in the USA rose to 386 million. In addition, VISA processed more than 14.4 billion transactions, a 9.1% increase over 2001.

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Credit Card Test

The utility of a payment card has been expanded as Mercedes-Benz credit has come up with a novel use. The company upgraded its Web site this week and add a new function that enables lease customers to evaluate the difference between normal wear and tear and actual damage. Mercedes-Benz says if the exterior or interior damage can be hidden with a credit card, it passes the test and is not chargeable damage. The company is offering a online demo. DaimlerChrysler offers a “Mercedes-Benz VISA” card in the USA through Columbus Bank and Trust Company.

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Card Protest

The petroleum station members of the Figisc/Anisa, Faib/Aisa, and Fegica unions in Italy will refuse to accept credit cards and debit cards for several days this month in a protest action. According to today’s edition of the weekly The RAM Report (www.ramreport.com), the stations will refuse to take cards between April 9-11 and again between April 16-22. The members are protesting a new 25 cents surcharge being imposed by Cogeban on each ATM transaction payment. The gas station members also say that credit card fees of 1.2% of the transaction plus a flat fee of 83 cents is wiping out their profits. The group is threatening to cancel their payment card merchant agreements if the fees are not reduced.

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MBNA SMART CARDS

MBNA Ireland is rolling-out a smart card, becoming the first chip card in Ireland. MBNA is issuing the card to new customers as well as card replacements for existing customers. MBNA’s international businesses in the United Kingdom, Ireland, and Canada have more than 7.5 million Customers with $11 billion in loans. MBNA has a 13% market share of credit card loans in the U.K. and Ireland and a 7% market share in Canada.

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Smart Label USA

ASK S.A. has entered the contactless paper-based smart label products business. The first RFID product, “C.label,” is based on the high speed “ISO 14443” for contactless technology, it is the only smart label that permits the management of 100 items a second and anti-theft protection ranging as far as one meter. ASK says that since February, the city of Marseilles, France has used the ASK smart label solution in all of their 17 libraries for managing and tracking their entire inventory including CDs, books and cassettes.

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CARD PROTEST

The petroleum station members of the Figisc/Anisa, Faib/Aisa, and Fegica
unions will refuse to accept credit cards and debit cards between April
9-11and 16-22. The members are protesting a new 0.23 euro surcharge being
imposed by Cogeban on each ATM transaction payment. The gas station members
also say that credit card fees of 1.2% of the transaction plus a flat fee
of 0.775 euro is wiping out their profits. The group is threatening to
cancel their payment card merchant agreements if the fees are not reduced.

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