VISA 2Q/02

VISA International reported that in the credit card market, it has
experienced a 12% increase globally with total sales volume of US$1.24
trillion for the year ending June 30th. Worldwide debit sales volume
surpassed $1 trillion for the same period, an increase of 22% on the
previous year. Regionally, the strongest growth continues to be in emerging
markets. VISA Asia Pacific saw a 42% increase in overall sales volume while
in Central and Eastern Europe, Middle East and Africa VISA saw a 37%
increase. Worldwide, there are currently over 1.2 billion VISA payment
cards accepted at more than 29 million physical locations including 800,000
ATMs. VISA says the contributing factors in the global sales volume growth
was an increase in the number of merchant outlets; new co-branded cards,
such as the “Payback VISA” card in Germany and the “Target VISA” card in
the U.S; launch of new payroll programs in the U.S. and Eastern Europe;
and, usage promotions surrounding VISA’s sponsorship of the “2002 Winter
Olympic Games.”

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Rebound Continues

American use of consumer credit continues to gather steam as data for August shows a remarkable increase in the rate of growth compared to one year ago. During August of this year, consumers added nearly $4 billion to revolving credit compared to a pay-down of more than $4.5 billion during August 2001. According to figures released Monday afternoon by the Federal Reserve, revolving credit is growing at an annual rate 6.5% compared to -2.2% one year ago. Since the first of this year consumer revolving credit has grown by $33.5 billion. Bank credit card debt at mid-year was $611.4 billion according to CardData (www.carddata.com). Bank credit card outstandings at mid-year were growing at an annual rate of 7.8% while overall revolving credit was growing at an annual rate of 2.9% in August. According to the government figures released yesterday, American consumers were $1.730 trillion in debt, exclusive of home mortgages during August. The FRB also reported that average interest rates for all credit card accounts now stands at 13.37% and 13.26% for accounts assessed interest. Rates for 48-month new car loans stands at 5.95% while rates for a 24-month personal loan average 11.28%.

REVOLVING CREDIT HISTORICAL
($billions)
Aug 02 Jul 02 Jun 02 May 02 Apr 02 Mar 02 Feb 02
GRWTH: 6.5% 10.6 6.0 4.1 8.0 4.8 2.2
$OWED: $725.9 722.0 715.6 712.1 708.7 705.4 705.0

Jan 02 Dec 01 Nov 01 Oct 01 Sep 01 Aug 01 Jul 01
GRWTH: 1.8% -9.7 12.7 -7.1 0.6 -2.2 -3.7
$OWED: $702.4 692.4 698.0 686.4 692.7 693.5 698.1

Source: Federal Reserve; revised figures as of 10/07/02; For complete
historical data visit CardData (www.carddata.com).

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American Re-Financing

A monthly consumer survey by the Cambridge Consumer Credit Counseling found that nearly a third of American homeowners who have refinanced their mortgage in the last two years are using the funds to boost savings while 15% plan to pay off credit card debt. In conjunction with the Index, the Cambridge Credit Counseling Corporation is releasing its monthly survey of people who have called in for credit counseling services over the past month.

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Sears Earnings Projections

After forcing out the head of its Credit and Financial Products late last week, Sears announced preliminary third quarter earnings yesterday in the range of $0.80 to $0.82, versus earnings per share of $0.80 in the same quarter last year, and a full-year 2002 projection of $5.15 per share, a 22% increase. The company now expects comparable earnings increases in the low- to mid-thirty percent range in its retail and related services segment and in the mid-single digit percent range in its credit and financial products segment.

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Small Biz QuickBooks

Wells Fargo has enabled its small business customers to access “QuickBooks” financial software which now allows customers to accept credit card payments, manage payroll and organize financial data without needing to manually enter information from banking sessions. Using online banking and Bill Pay through QuickBooks allows small business customers to do the following: — Automatically categorize transactions to accounts previously set up. — Automatically create an accounting double-entry, eliminating the need to go into the software and code manually.

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Canadian Fraudsters Settle

Two Canadian citizens and the five corporations they operated have agreed to pay $436,000 to settle Federal Trade Commission charges that they tricked consumers into paying as much as $299 for one of two worthless credit card protection packages and laundered credit card purchases for other sellers for products including lottery tickets, British bonds, and consumer benefits packages. The stipulated final order bans the defendants from telemarketing credit card loss-protection packages and from credit card laundering. The order also bars them from making misrepresentations similar to those alleged in the complaint and from disclosing their consumer lists to anyone besides the FTC or other enforcement agencies.

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Air2Web India

India’s ICICI Bank has inked a deal with Air2Web India to use their mobile Internet platform to provide ICICI Bank customers with wireless access to their banking and credit card accounts. Initially, ICICI Bank customers will be able to receive alerts via Air2Web’s “2Notify” technology on their “Short Message Service” phones, which will give them their checking account and credit card balances. The second phase of the project will allow ICICI Bank customers to access their checking account balance, receive a statement of their account, order check books, and access customer service agents. With credit card accounts, they will be able to pull up available credit, payment details, payment status, and request a mini statement, as well as access customer service representatives. ICICI launched its credit card programs in January 2000 with three offerings including the “Solid Gold,” “Sterling Silver,” and “True Blue.” The cards are now available in 36 cities across India and ICICI now has a cardbase of more than 6.5 million.

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VISA & PCE

VISA International reported yesterday that retail sales using a VISA card now account for 7% of global personal consumer expenditure. Today global PCE is at US$19 trillion and is comprised primarily of cash and check payments. VISA has seen an average annual increase in its share of global PCE of 12% over the past five years. In selected domestic economies, VISA’s share of PCE is particularly high. For example, including retail sales and cash withdrawals, 68% of PCE in Iceland is on VISA cards, in South Korea the figure is 57%, and in the UK it is 27%. Personal consumer expenditure represents the market value of all goods and services purchased by households and non-profit institutions, excluding house purchases. VISA also reported yesterday that its global sales volume has surpassed US$2.3 trillion for the year ending June 30th which includes more than $1 trillion in debit sales volume.

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FDC & CUETS

Saskatchewan-based CU Electronic Transaction Services and First Data have entered into several agreements in which the companies will work together to provide advanced card issuing, merchant processing, and acquiring services to the Canadian financial services market. Under terms of the deal, FDC will provide credit and off-line debit card processing services for CUETS’ 500 credit union and other card issuing clients throughout Canada. FDC has also acquired equity interests in CUETS’ merchant acquiring and merchant processing businesses and agreed to form an alliance which will assume responsibility for management, operations, risk and sales activities for the acquiring business. FDC will provide processing services to CUETS clients and the alliance, including authorizations, merchant support, settlement and disputes.

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Humboldt Deal Unravels

Humboldt Bancorp confirmed Monday that its deal to sell its proprietary merchant bankcard operations to Nashville-based iPayment Holdings has been terminated. Last week, the parties signed an amendment to the purchase agreement that provided for, among other things, the payment of $1 million to Humboldt as a non-refundable deposit toward the purchase price. Humboldt announced on September 13 that the transaction had not closed as scheduled on August 30 and that both parties were continuing efforts to complete the transaction. Following collapse of the proposed deal, Humboldt says it has received other expressions of interest. Humboldt’s proprietary merchant bankcard division provides services to over 10,000 merchants. For the six months ended June 30th, Humboldt recognized approximately $7.6 million in non-interest revenue from its proprietary merchant bankcard operation and incurred net fraud losses of $140,000.

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Rates Oct 02

Credit card interest rates have slowly but surely been nudging up this year despite the stable rate environment. APRs bottomed out in December of last year at 14.32% but have increased in 14.71% since then. The rate increase is driven largely by the punitive rate policies of many of the nation’s top issuers, including MBNA which now charges rates as high as 24.98%. Average rate for variable-rate cards now stands at 14.89% versus 14.57% for fixed-rate cards, according to CardTrak ([www.cardtrak.com][1]).

AVERAGE CREDIT CARD INTEREST RATES
Dec 00: 16.57%
Jan 01: 16.49%
Feb 01: 16.31%
Mar 01: 16.16%
Apr 01: 15.91%
May 01: 15.83%
Jun 01: 15.43%
Jul 01: 15.02%
Aug 01: 14.98%
Sep 01: 14.81%
Oct 01: 14.48%
Nov 01: 14.41%
Dec 01: 14.32%
Jan 02: 14.33%
Feb 02: 14.38%
Mar 02: 14.42%
Apr 02: 14.54%
May 02: 14.60%
Jun 02: 14.62%
Jul 02: 14.65%
Aug 02: 14.70%
Sep 02: 14.71%

Source: CardData ([www.carddata.com][2])

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

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AMEX OPS

American Express has added 300 employees to its new Indian back-office operations on the outskirts of Delhi. The new operations center has 137,000-square-feet and offers financial processing and risk management services to AmEx. The firm also outsources back-office services from independent service providers in Delhi, the commercial hub of Bombay and the tech capital Bangalore. AmEx has operated from India since 1995. India offers a staff of lower paid individuals and excellent English skills.

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