Charge-offs Dip

Bank credit card charge-off rates declined in May 2002 among both credit card bonds and issuer-owned receivables. April charge-offs for receivables held in trusts of rated credit card-backed securities declined to 7.40% from 7.60%, while the figure for non-securitized receivables dropped from 6.63% to 6.59%. According to Standard & Poor’s, the decrease in the index loss rate among credit card bonds was attributable to a marked decline in MBNA Master Card Trust II’s loss numbers. MBNA’s loss numbers declined by 150 bps to 5.5% from 6.9% in March. MBNA’s March loss number was artificially high as a result of the company’s policy to waive delinquency status following the events of September 11th. The loss trends for the other trusts in the indexes were mixed. One-half of the trusts reported increases. The delinquency rates dropped 15 bps in April compared with March. Three quarters of the trusts reported an improvement in the 30-plus and 60-plus day delinquency buckets. For the 90-plus day delinquencies, over 85% reported a relative decline compared with a month ago.

CREDIT CARD-BACKED SECURITIES PERFORMANCE
Performance month Apr 00 Apr 01 Feb 02 Mar 02 Apr 02
Yield (%) 18.9 19.8 18.4 19.5 18.3
Charge-offs (%) 5.6 6.6 6.7 7.6 7.4
Delinquencies (%) 4.2 4.9 5.5 5.3 5.2
Payment rate (%) 15.4 15.5 14.9 16.2 15.6
SOURCE: Standard & Poor’s

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SAP & MC ERP

Walldorf-based SAP Integration and Certification Centre has certified MasterCard’s ERP Integration Program as an interface software to SAP software solutions. The Program is a software solution that integrates transaction data from MasterCard commercial cards into an organization’s SAP solution-based environment. Through MasterCard’s ERP Integration Program, an organization can obtain full details of a transaction for review within 48 to 72 hours after the purchase has been made, anywhere in the world, so that irregularities can be immediately picked up. One of the first sites worldwide to install MasterCard’s ERP Integration Program is the Fancourt Hotel and Country Club Estate in George, South Africa. Staff at the resort currently use MasterCard Corporate Purchasing Card cards issued by BOE Bank and leverage the MasterCard’s ERP Integration Program solution. In the USA, the ERP Integration Program is called SmartLink.

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MCS Ownership

The 1998 marriage between GE and Bank One that produced Monogram Credit Services has ended. The firms announced Thursday that their joint venture in their $3.8 billion private-label credit card business has ended as GE Capital has purchased Bank One’s stake. Bank One indicated it wants to focus on its bank credit card business. Formed as a 50/50 joint venture in December 1998, Monogram Credit Services, based in Kettering, Ohio, provides private label financing programs. Monogram targets national and regional retailers in six key industries: automotive/recreational vehicles, consumer electronics and appliances, furniture, floor covering, jewelry and health care. MCS is operated by GE Card Services. Currently, MCS supports a diversified portfolio of more than 60 clients with merchants in over 60,000 locations, including: Ford, Sony, PC Richard & Son, Tweeter, Ultimate Electronics, Suzuki, Ethan Allen, Brandsmart USA, H.H. Gregg Electronics, Whitehall Jewelers, Shaw Industries and Mohawk Industries. GE Capital has assets of $425 billion and Bank One has assets of more than $260 billion. Bank One, which owns the First USA portfolio, is currently phasing out its use of the First USA to strengthen the Bank One brand.

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ATM SALES

The Central Bank of the Russian Federation reveals that there are currently only 40 ATMs per million people in Russia compared to 1,200 ATMs per million people in the USA and 553 ATMs per million people in Western Europe. Several banks have recently expanded their ATM networks including: Bank Vozrozdenie, Industrial and Construction Bank, Bank Baltyisky, Alfa-Bank, and Bank of Moscow. Bank Vozrozdenie has extended its long-standing relationship with NCR by ordering 70 NCR Personas ATMs. In St. Petersburg and the northwestern region, Industrial and Construction Bank and Bank Baltyisky have signed contracts for 45 and 50 ATMs, respectively. NCR will supply Alfa-Bank with 150 ATMs. At the end of 2001, Bank of Moscow awarded NCR a contract for the delivery of 400 ATMs over a two-year period.

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E-Billing Pays

A new study has found that, on average, B2B billers save approximately $7.25 per invoice viewed and paid over the Internet, while B2C billers save about 55 cents per invoice via e-billing. According to CT-based Gartner, the average large U.S.-based company sending invoices to businesses over the Internet can save at least $5.7 million per year, while the average large company sending invoices to consumers via e-billing can save at least $13.1 million per year. B2B payers can save at least 1% of payables because of faster payments on direct purchases. Gartner says in the B2B world, ROI can be achieved when just 2.3% of bills are viewed and paid over the Internet. B2C billers are able to achieve ROI with as little as a 9% adoption rate.

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Discover Driving Promotion

Discover Financial Services has launched the Great American Drive promotion which offers cardholders a free Mobil Travel Guide Road Atlas along with discount coupons for hotels, restaurants, and amusement parks. The coupons are valid from now until October 31 (unless stated otherwise) and can be downloaded online that so Cardmembers will always have an ample supply at their fingertips.

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TRM CEO

OR-based TRM Corporation has named its chairman Kenneth Tepper as President & CEO following the resignation of President Dan Spalding. Tepper first joined TRM in 1998 as a member of the Board of Directors. He has spent much of his professional career in the banking industry and served most recently as President & CEO of USABancShares. Currently, Tepper serves on the Board of Directors of the Pennsylvania Industrial Development Authority, and is former Finance Chairman of the Pennsylvania Republican Committee during the Ridge Gubernatorial Campaign.

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Networks & TNS

Lincoln, NE-based NetWorks, a non-profit, member-owned organization that provides a full range of electronic funds transfer services, has signed an agreement to use TNS Connect as a dedicated connection for its ATM customers. TNS Connect is a dedicated, private, IP-based network that transports ATM transactions to the required processor hosts, while adhering to the highest security standards. By providing a dedicated ATM connection, TNS Connect allows NetWorks to monitor transactions on a real time basis and to have the redundant coverage and necessary back-up for each transaction.

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CampusMate

Providence, RI-based Johnson and Wales University has joined Bank Rhode Island’s CampusMate Program, which includes an online bank account with MasterCard Debit Card access. CampusMate Program ties electronic funding mechanisms directly into the school’s financial systems. The school gets fast, automatic deposits, electronic tracking, and automated reports that can be sorted by account, parent, student, or transaction. Add to that the companion online student banking account, complete with a MasterCard Debit Card, with ATM access and check writing ability, and parents can take care of all a student’s financial needs through automatic bank transfers or by credit card.

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ATM Card Usage

PULSE EFT Association said a recent poll it commissioned found that 64% of consumers currently have an ATM card, and they used their card 1.65 times at an ATM and 3.12 time to make POS purchases over a two-week period. PULSE serves more than 3,600 banks, credit unions, and savings and loans across a 22-state primary service area stretching from the Canadian border to the Gulf of Mexico. The network includes 92,000 ATMs and more than 430,000 PULSE PAY point-of-sale merchant locations in all 50 states, and expects to process more than one billion transactions in 2002.

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Transactors Drop

The number of American cardholders paying off credit card balances in full each month, often sarcastically referred to as “deadbeats,” continues to decline after a steady increase in each of the past 20 years. The reversal in the “transactor” trend began to take place in July 2001 as the effects of the recession took hold. In June 2001, 44.6% of consumer cardholders were clearing balances each month according to CardData (www.carddata.com). The following month the number declined to 44.1% and continued to decline to 42.1% by year-end 2001. Since the first of this year, the percentage of transactors has dipped to 40.3%.

BANK CREDIT CARD CONVENIENCE USAGE
(percentage of cardholders that consistently pay-off balances in-full each month)
1990: 28.6% 1997: 40.2%
1991: 29.2% 1998: 42.0%
1992: 31.3% 1999: 43.4%
1993: 33.7% 2000: 44.4%
1994: 35.1% 2001: 42.1%
1995: 37.9% 2002*: 40.3%
1996: 38.5%
* as of April 30, 2002
SOURCE: CardData (www.carddata.com)

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NPC Renews NSRA

National Processing Company has renewed a multi-year agreement with the National Shoe Retailers Association to provide NSRA members with discounted merchant processing solutions for both credit and debit card transactions accepted at their stores. The NSRA is a trade organization that provides independent shoe retailers with solid, practical workplace benefits that enable them to operate their business more profitably and successfully.

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