The Federal Open Market Committee decided today to keep its target for the federal funds rate unchanged at 1.25% citing oil prices and a possible war as factors causing restraint on spending and hiring by businesses. The Committee believes that as those risks lift, as most analysts expect, the accommodative stance of monetary policy, coupled with ongoing growth in productivity, will provide support to an improving economic climate over time.Details
Coles Myer Ltd., a major retailer in Australia, is still mauling its decision on which brand to select for its upcoming co-branded bank credit card. According to tomorrow’s edition of The RAM Report ([www.ramreport.com]), the retailer already has a private label credit card but has been exploring for the past six months the possibility of expanding to a general purpose card. According to the Australian Financial Review, Coles is leaning towards issuing a MasterCard through GE Capital. Woolworths and Commonwealth Bank recently introduced “Ezy Banking,” which includes a bank-issued credit card.
American Express reported that its cardbase outside the USA grew
nearly 8.0% in 2002 to 22.2 million cards-in-force. Gross dollar volume for
cards issued outside the USA grew 5.2% from $73.5 billion to $77.3 billion.
During the fourth quarter, AmEx logged $21.2 billion in volume for
international cards, a 13.7% increase. The spending per basic card during
the fourth quarter was $1,426 compared to $1,469 one year ago. AmEx also
reported it now has 700,000 non-AmEx branded cards in its portfolio which
produce $1 billion in quarterly charge volume. The non-AmEx branded cards
are VISA and Eurocards issued in connection with joint ventures. During the
fourth quarter, AmEx signed a network partnership agreement with the Bank
of New Zealand to begin offering classic and gold BNZ American Express
cards, and “GlobalPlus American Express” classic and gold credit cards.
AmEx also appointed Lotte Card, Ltd. as its new card-issuing and
merchant-acquiring partner in Korea. During the fourth quarter AmEx added
600,000 cards outside the USA.
Washington, DC-based Universal Air Travel Plan said Tuesday it is working with a limited number of corporate travel agencies to expand direct acceptance of UATP cards by travel agencies for service fees and net fare tickets following a successful pilot with a Canadian travel agency. Universal Air Travel Plan Inc. is the global air travel management control and cost savings program. Formerly known as Air Travel Card(r), UATP is the world’s first corporate travel payment system. Founded in 1936, UATP is owned and operated by each card-issuing airline and accepted by over 190 airlines worldwide. Today, ninety-five percent (95%) of the available seat kilometers (ASKs) in the industry can be purchased using a UATP account.Details
A new report found that check conversion in the USA at the POS will continue to expand faster than smart cards and will not necessarily lead to increased debit card use, even by customers who realize that the two processes are virtually identical. SRI Consulting Business Intelligence’s Scan Program says writing checks will remain the preferred payment method for a great many U.S. consumers for years to come. Personal checks provide a running account balance, allow payers some payment leeway, and continue to be valued culturally because many people still see having a check accepted as payment as a measure of personal worth. Retailers should thus not hesitate to invest in check-conversion capabilities at their points of service. SRI also concluded that until smart-card readers are incorporated into home-computer keyboards, consumers will continue to resist readers as too much trouble and move toward server-based online security systems for online payments such as “Verified by Visa.” However, once built-in card readers reach critical mass on home PCs, Web users, including those who have not been Web shoppers, may very well take to them as the preferred authentication method because the card-and-PIN setup will be similar to the typical POS experience.Details
NJ-based Shoppers Charge Accounts Co. has acquired the private label credit card portfolio of Farmingdale, NY-based Colorado Prime Foods, and will manage all facets of the card program on an ongoing basis. SCA services brick-and-mortar and catalog retailers throughout the U.S. The company acquires retailers’ receivables or will develop private label credit card programs for merchants who currently don’t offer a house charge. In both situations, SCA assumes responsibility for generating customers’ billing statements; managing credit, collection, and lockbox functions; and creating customized marketing programs.Details
Coles Myer Ltd. is still mauling its decision on which brand to
select for its upcoming co-branded bank credit card. The retailer already
has a private label credit card but has been exploring for the past six
months the possibility of expanding to a general purpose card. According to
the Australian Financial Review, Coles is leaning towards issuing a
MasterCard through GE Capital. Woolworths and Commonwealth Bank recently
introduced “Ezy Banking,” which includes a bank-issued credit card.
A new study on Bank of America’s unprecedented decision last year to eliminate its $5.95 per month online bill payment fee has produced a significant spike in bill pay penetration within BofA’s online banking customer base and has attracted a new customer group to the service. The research by Compete reveals that the new pricing had the greatest appeal to a new demographic segment: customers who signed up since free service began tended to be younger (7% higher composition of 18-to-34 year-olds), and had a lower income (5% higher concentration in the under $60,000 annual income category) than prior OBP customers. Furthermore, the free service also attracted consumers with a markedly different banking profile: new BofA online bill pay customers were more interested in credit card products and less interested in investing and lending products than existing OBP customers. They also showed a higher propensity to research service offerings on competitive bank sites compared to existing OBP customers. The free service also stimulated online bill pay penetration, but not overall online banking customer growth: BofA averaged just 6% monthly online banking customer growth from April to December (following the May elimination of fees) versus 8% growth from January to April.Details
After six months of seeking a partner to continue growth in the North American plastic card industry, NJ-based Qualteq is being acquired by IL-based Versatile Card Technology. Terms of the deal were not disclosed. VCT says Qualteq’s customer base and unique patented products including the “Foil Card” and “Life Guard Card,” as well as its location were key factors in its decision. QualTeq’s parent company, AmaTech AG of Pfronton, Germany, filed for insolvency last summer. However, QualTeq is a separate Delaware incorporated entity and is independently financed in the USA. The firm operated as a separate business from AmaTech. QualTeq has a capacity to produce more than 100 million secure transaction cards per year. VCT has the card capacity to produce over one billion cards per year. Qualteq will join the VCT group of Companies which include: Creative Automation, Unique Embossing Services, Unique Mailing Services, Unique Data Services, Automated Presort, Global Card Services and Fulfillment Xcellence Inc. (CF library 7/22/02)Details
The remake of Sears’ top management continues as its general counsel resigned yesterday and its SVP of public relations is set to depart next month. Meanwhile, the abrupt October 2002 firing of Sears’ top credit executive late last year, which turned into a personal lawsuit, will be heard in court on March 6. Kevin Keleghan, the former president of Sears credit division, filed a lawsuit in mid-November alleging that Sears has failed to pay him severance benefits, and that CEO Alan Lacy scurrilously attacked his character and credibility. Lacy said last year he had lost confidence in Keleghan after the company uncovered serious problems in its credit card portfolio. Sears has asked the court to dismiss the lawsuit alleging that Keleghan fraudulently induced Sears to sign a severance agreement after Keleghan realized he would inevitably face termination over Sears’ credit problems. Sears also believes Lacy’s personal comments were protected expressions of opinion. Meanwhile, Anastasia Kelly resigned as general counsel yesterday after four years. She will be replaced by Steve Cook, VP/deputy general counsel. Ronald Culp, Sears SVP/public relations is retiring at the end of February. (CF Library 10/7/02)Details
Dublin-based FreeStar Technologies has signed a $7.5 million equity
funding agreement with a U.S. investment fund. FreeStar enables ATM and
debit card transactions on the Internet and credit card processing through
a its Northern European processor, Rahaxi Processing Oy. The company’s
“Enhanced Transactional Secure Software” is a proprietary software package
that empowers consumers to consummate e-commerce transactions on the
Internet with a high level of security using credit, debit, ATM (with PIN)
or smart cards. It sends an authorization number to the e-commerce
merchant, rather than the consumer’s credit card information, to provide a
high level of security.
Metris Companies/Direct Merchants Credit Card Bank reported this morning an eye-popping fourth quarter net loss of $48.5 million, topping its previous loss of $36.4 million in 2Q/02. The sub-prime issuer also reported its EOY 2002 credit card outstandings dropped by $270 million as the company has taken deliberate actions to slow account growth, utilize tighter underwriting standards, and implement more stringent credit line management strategies. Last month, Metris sold off $72.5 million worth of revoked and 2-cycle plus delinquent accounts. The managed net charge-off rate for the fourth quarter was 18.2%, compared to 16.5% in the third quarter, and 11.8% one year ago. Excluding the asset sales, the managed net charge-off rate would have been 16.1% in the fourth quarter, compared to 15.1% in the third quarter. The Company says the higher charge-offs are the result of the weak economic environment, higher bankruptcies, a declining receivable base, and the 2001 credit line increase program. The managed delinquency rate was 11.1% for the fourth quarter, compared to 10.8% percent in 3Q/02, and 9.4% in 4Q/01. Excluding the asset sales, the managed delinquency rate would have been 11.7% at EOY 2002, compared with 11.1% for the third quarter. As of December 31st Metris had $11,319,109,000 in credit card loans and 3,425,000 active accounts. Over the past twelve months Metris has shed nearly 500,000 accounts. Last week the Company announced it would take a $4.9 million charge in the first quarter for a workforce reduction. For complete details on Metris 4Q/02 results and past results visit CardData ([www.carddata.com]). (CF Library 1/23/02)