NPC – Heartland

National Processing announced this morning it has purchased a merchant processing portfolio, consisting of 15,000 regional accounts, from Heartland Payment Systems LLC. The purchase represents approximately one-third of Heartland’s total portfolio. NPC will provide point-of-sale credit card and on-line debit card transaction processing for the accounts, which represent more than $2 billion in annual transactions conducted with local and regional merchants. NPC estimates the new accounts will generate about $15 million in additional annual revenues.

Details

Korean Card Venture

The international law firm of Coudert Brothers last week announced the closing of a credit card joint venture between Korean Exchange Bank Credit Services and Olympus Capital Holdings Asia. Coudert represented Olympus in this transaction.

Olympus is a U.S. investment company established to make direct investments in companies throughout Asia. It manages funds guaranteed by the U.S. Overseas Private Investment Corporation as well as funds from Ziff Brothers Investments.

Timothy O’Brien, a partner with Coudert Brothers’ Hong Kong office and the supervising lawyer on the project, commented on the significance of this transaction noting, “The transaction brings to a major Korean financial services group financing and technical expertise in credit card business development and management. As Korea continues to develop to a mature economy, credit card use will grow dramatically, providing significant opportunities to KEBCS and its financial partners.”

At the closing, the Board of Directors of Olympus Capital Korean Exchange Bank (KEB) announced its approval of a capital investment for a joint venture agreement between KEBCS, a subsidiary of KEB, and Olympus. As structured, the agreement requires Olympus to undertake the issuance of new shares by KEBCS. Olympus will pay 100 billion Korean Won (KRW) this year, KRW 38 billion of which will be used to increase the capital of KEBCS over the next two years. The agreement will also expand the equity of KEBCS shareholders from KRW 129 billion to KRW 267 billion and enable KEBCS to strengthen its competitive position as well as benefit from advanced financial know how and foreign expertise. Olympus will be introducing an expatriate chief operating officer and creating other new positions in the areas of marketing, finance and risk management in an effort to improve the management of KEBCS.

KEB is one of the largest commercial banks in South Korea. It is anticipated that this joint venture will enable KEB to construct stronger consumer finance abilities and more stabilized profit base.

Founded in 1853 and headquartered in New York City, Coudert Brothers is a single, integrated global law firm with offices in 15 countries. It employs over 525 lawyers worldwide in seven U.S. and eighteen overseas offices and provides legal support to its global clients for investment, finance, international trade, market access, patent and intellectual property, regulatory compliance and dispute resolution. In addition to its Hong Kong office, Coudert Brothers has offices in New York, Washington, D.C., Moscow, St. Petersburg, London, Paris, Brussels, Singapore, San Francisco, Beijing, Sydney, Los Angeles, San Jose, Tokyo, Bangkok, Jakarta, Ho Chi Minh City, Hanoi, Berlin, Denver, Montreal, Almaty, Palo Alto and Frankfurt, as well as formal affiliations with local law firms in Mexico City and Budapest.

Details

Discover Millionaire

Discover Financial Services announced Friday that Samuel Mundy of Accokeek, MD was the recipient of the $1 million grand prize in the ‘Discover Card Cashback Bonus Countdown Sweepstakes’ amid thousands of cheering New Year’s Eve revelers in New York’s Times Square. Mundy’s name was revealed on the Discover Card sign atop One Times Square Friday morning. Five finalists were selected from a pool of 2,000 qualifiers in the sweepstakes. Each finalist and a guest received a trip to Times Square for New Year’s Eve to be present for the announcement of the winner. In addition to the trip to New York, the remaining four finalists each won $25,000. Discover Card began announcing 2,000 qualifiers on Sat, Oct. 9, at 5 p.m. EST, one for each hour remaining in 1999. These 2,000 qualifiers each won a special $100 ‘Cashback Bonus’ award and were announced on the Discover Card sign in Times Square as well as on Discover’s website. Discover Card’s 55’x55′ electronic billboard is directly below the spot where the famous New Year’s Eve ball descends. The sign is seen by 1.5 million people every day and 30 million tourists a year.

Details

Owens to Associates

James A. Owens has been promoted to senior vice president of Portfolio Management for Credit Card Operations at Associates First Capital Corporation. In this position, Owens will oversee credit card portfolio risk management activities for the U.S. bankcard and private label divisions.

Prior to joining The Associates, Owens spent three years with U.S. Bancorp where he was responsible for credit card portfolio risk management. He has a degree in engineering from the University of Missouri at Rolla and a Masters at Business Administration from St. Louis University.

Associates Credit Card Operations issues Visa and MasterCard credit cards as well as a number of private label credit cards on behalf of such leading retailers as Gateway Computers, Helzberg Diamonds, Office Depot, Radio Shack, Staples and Value America. The Associates is also the largest issuer of private label oil cards in the nation, with its BP Amoco, Shell and Texaco programs, and is one of the largest independent sources of financing for personal computers and related products.

Associates First Capital Corporation, established in 1918, is a leading diversified finance company providing consumer and commercial finance, leasing, insurance and related services worldwide. The Associates has operations in the United States and 13 international markets. Headquartered in Dallas, it is the largest publicly traded finance company in the United States, based on total market capitalization. For more information, visit The Associates Web site at [www.theassociates.com][1]

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

Details

American Floral Card Deal

NDC eCommerce announced yesterday a three- year agreement with American Floral Services, Inc. to provide the association’s member florists with credit card, debit card and check processing services.

The agreement calls for NDC to provide American Floral Services’ member florists the ability to accept credit and debit cards at the point of sale, as well as via the Internet. Check guarantee, verification and recovery services, as well as deployment of equipment and supplies will also be provided by NDC eCommerce in this comprehensive payment solution. In addition, extensive transaction reporting capabilities through NDC eCommerce’s proprietary InSight Payment Intelligence(TM) and Customer Access System (CAS) products are also part of the agreement.

American Floral Services, Inc. is one of the three largest floral wire services providing ordering and delivery services through its members and affiliates throughout 200 countries. Based in Oklahoma City, it has 24,000 members worldwide, with 4,700 merchants processing credit cards.

“NDC understands this market and what our members need to grow their businesses and continue to improve the delivery of high quality customer service,” said Guy Lookabaugh, manager of credit card services at American Floral Services. “This partnership gives us the complete solution for our payment services needs.”

Paul R. Garcia, chief executive officer of NDC eCommerce, said, “We’re delighted to have established this relationship. Our end-to-end payment solutions allow American Floral Services to offer more services and value to their members while streamlining setup and support procedures through one provider, NDC eCommerce.”

National Data Corporation (NYSE: NDC) is a leading provider of electronic commerce solutions and health information services that add value to its customers’ operations.

Details

Cap One – Top Workplace

For the second year in a row, Capital One Financial Corporation ranked in Fortune’s listing of the “100 Best Companies to Work for in America.” Capital One ranked 60.

“We created Capital One with the vision of being a great place to work — a place that challenges people to develop and use their talents, and gives them the training, tools, and work environment they need to do their best. By every measure, it’s working,” said Richard D. Fairbank, Chairman and Chief Executive Officer. “Our business continues to grow at a rapid rate by adding innovative products and services that are welcomed by consumers around the world.”

Nigel Morris, President and Chief Operating Officer, added, “We have a culture in which we listen to our associates and respond by implementing the programs they need. We remain committed to building upon this success and committed to building an environment that fosters teamwork, open communication and entrepreneurship.”

Fortune collaborated with best-selling authors Robert Levering and Milton Moskowitz to compile the list. Levering and Moskowitz, who have been tracking the best companies since 1981, searched their database of more than 1,000 companies and selected 236 companies as the most viable candidates for this list. Then, employees from each company were surveyed. Capital One associates completed the Great Place to Work Index, which is designed to evaluate trust in management, pride in work and camaraderie, along with the Hewitt People Practices Inventory, a questionnaire developed by Hewitt Associates, a management consultant firm.

Capital One presently employs more than 15,000 associates worldwide. The company hired more than 4,600 associates (net) in 1999 alone. Among the programs that differentiate the company from other employers are the associate selection process; a number of ongoing training and development courses; outstanding benefits, including three weeks vacation; and entrepreneurial compensation.

Senior Vice President for Human Resources Dennis Liberson said, “We have developed methods to not only attract and select the best and brightest people to work at Capital One, but more importantly to keep them. We are dedicated to helping associates develop in their careers — with innovative assimilation programs, ongoing performance feedback, training and tuition reimbursement. Our attrition rates are considerably lower than industry averages, which allows us to grow more efficiently — enabling us to enjoy much success.”

Capital One has operations in Richmond, Fredericksburg and Falls Church, Virginia; Dallas, Fort Worth and Plano, Texas; Tampa, Florida; Federal Way, Washington; Boise, Idaho; and Boston, Massachusetts; as well as London and Nottingham, United Kingdom.

Headquartered in Falls Church, Virginia, Capital One Financial Corporation ([http://www.CapitalOne.com][1]) is a holding company whose principal subsidiaries, Capital One Bank and Capital One, F.S.B., offer consumer lending and deposit products. Capital One’s subsidiaries collectively had 20.8 million customers and $18.5 billion in managed loans outstanding as of September 30, 1999, and are among the largest providers of MasterCard and Visa credit cards in the world. Capital One trades on the New York Stock Exchange under the symbol “COF” and is included in the S&P 500 Index.

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

Details

Y2K Unconcern

As bankers pack their bags to spend the New Year’s weekend in the office the concern among consumers over potential Y2K problems continues to dwindle. A New Orleans bank said a survey of its customers found that only 7% were “very concerned” about Y2K. At the same time, 16% of consumer and 22% of commercial clients reported being “somewhat concerned.” Within this concerned group, overreaction by the public and availability of food and necessities, was most frequently named as a potential problem in the Hibernia National Bank survey. Only 11% of consumer and 8% of commercial customers surveyed plan to withdraw extra cash, and 15% of consumer and 16% of commercial customers plan to save bank statements. A mere 1% said they planned to stop direct deposit. The findings mirror a recent Gallup Poll which showed that consumer confidence in Y2K preparations by the banking industry has reached an all-time high of 90%, up from 76% last March. This week, the FDIC and the Federal Reserve said they are satisfied that 100% of the more than 10,200 banks and thrifts they regulate are ready for year 2000.

Details

Web Traffic Drops

Nielsen//NetRatings, the Internet measurement service of Nielsen Media Research and NetRatings, Inc. announced that its Holiday E-Commerce Index declined 3.8 percent for the week ending December 19, suggesting that cybershoppers have finished making their purchases online almost a week before Christmas Day.

According to the index, December 12 was the busiest holiday shopping day to date.

“From the standpoint of timing, the Web holiday shopping season this year is tracking a few weeks earlier than the offline retail world,” said Peggy O’Neill, director and principal analyst at NetRatings, Inc. “Fearful of delivery logistics, surfers caused a noticeable drop in traffic the week before Christmas. Cybershoppers in 1999 tend not to be huge procrastinators.”

According to Nielsen//NetRatings, audience traffic to holiday e-commerce sites spiked immediately after Halloween, continued to grow quickly in November, and peaked in the week ending December 12. (See PowerPoint presentation.) Traffic then fell off in a number of key categories.

Gifts, Toys and Cybermalls Reveal Drops in Traffic

Last week, the categories of gifts, toys and online malls declined the most in audience traffic. While these sites still showed steady activity, they were lower from the week before (see Table 1).

“Enterprising sites are trying to combat the decrease in traffic by posting reassuring notices about their ability to deliver packages at the last minute or promoting online gift certificates instead,” said O’Neill.

Table 1 Nielsen//NetRatings Holiday E-Commerce Index Percent Change in Unique Audience as Compared to the Prior Week

Category % Change for Week Ending % Change for Week Ending
Dec. 12 Dec. 19

GIFTS 32.5% -20.9%
TOYS -0.8% -14.0%
MALLS 15.7% -12.2%
APPAREL -9.2% -8.5%
SOFTWARE -6.3% -4.4%
BOOKS/MUSIC/VIDEO 12.0% -3.4%
ELECTRONICS 10.5% 0.1%
AUCTIONS -5.1% 1.3%
COMPARISON 11.1% 4.0%
COMPUTER HARDWARE 0.1% 9.1%
TOTAL 3.4% -3.8%

Note: This index is comprised of five representative sites for each
category, and acts as a barometer for gauging the level of interest at
commerce sites during the holiday season. Source: Nielsen//NetRatings,
December 1999

Computer Hardware, Auctions and Comparison Sites Show Gains

The number of visitors to computer hardware sites showed an increase (9.1%), but O’Neill notes that not all of that traffic should be attributed to shoppers. “Some of it is no doubt folks looking for Y2K information,” she said.

Auctions, which aren’t seasonal by nature, enjoyed a slight bump (1.3%) from the week before, while comparison sites showed a significant increase (4.0%). Shown to be popular with men, comparison sites last week drew 62 percent of their traffic from males.

“As retailers get better at reassuring cybershoppers of their fulfillment and delivery infrastructure, we expect to see traffic sustained at higher levels past December 12,” said O’Neill. “Online gift certificates and other last-minute solutions, which were more prominent this year, are expected to blossom next year as word gets out about them, and the Web will be more successful at drawing procrastinators.”

About Nielsen//NetRatings

Nielsen//NetRatings, the audience measurement service from Nielsen Media Research and NetRatings, Inc., collects data from more than 38,000 panelists as they use the Internet at home. The Nielsen//NetRatings panel is the largest media research sample of at-home Internet users currently being measured in real time. Nielsen//NetRatings uses unique technology capable of measuring both Internet use and advertising to provide the most timely, accurate and comprehensive Internet usage data and advertising information in the industry. For more information, please visit [www.nielsen-netratings.com][1].

[1]: http://www.nielsen-netratings.com/

Details

Year-in-Review

While this year started out with concerns of a continued rise in delinquencies, chargeoffs, and personal bankruptcies coupled with predictions of an economic pullback, 1999 turned out to be a year of transition for most card issuers. The transition included the realization that double digit growth in outstandings is no longer cost effective, especially in the main stream market and that rising convenience use of credit cards among consumers is here to stay. Some issuers responded to the market changes by compensating with aggressive cardholder pricing, particularly with fees. That strategy backfired for the nation’s second largest issuer, Bank One/First USA. With most market segments highly competitive, the sub-prime sector churned out impressive results for some issuers such as Providian and Metris and attracted serious, new competition from Household and Associates. Regional issuers continued to exit the national marketplace this year, focusing on building relationships with core marketing area cardholders. As a result, the top ten issuers gathered more market power this year, now controlling 76% of the market. As the year ends it appears that late stage delinquencies may produce higher chargeoffs in the first quarter of 2000. However bankruptcy, as a percentage of chargeoffs, continues to decline. Yields continue to inch up slowly but surely as promotional rates expire and should continue to rise through early 2000 as issuers retreat from irrational pricing.

1999 PERFORMANCE DATA

Jan* Dec* Jan* Dec*
Delinquency: 5.00% 4.75% Vol Attrition: 8.27% 8.45%
ChargeOffs 5.46% 4.98% Inv Attrition: 5.40% 5.21%
Bankruptcy: 38.4% 36.8% Mo Paymnt: 15.82% 16.99%
Fraud 0.09% 0.09% Yields: 13.63% 14.16%

*based on previous month’s experience for explanation of
terminology/methodology visit CardData (www.carddata.com); access fee required

Details

Partners First Unloaded

Wachovia is picking up nearly $2 billion in card receivables for next year from the pending acquisition of the Partners First portfolio. Yesterday Harris Bank and Bank of Montreal announced an agreement to sell substantially all of the assets of Partners First to Wachovia. The sale includes a bank credit card portfolio of more than 1.2 million accounts and $1,985,000,000 in card outstandings. Wachovia is paying an 8.3% premium for the portfolio. The purchase agreement includes a 5-year agent relationship between Wachovia and Harris Bank. The cash transaction includes $1.416 billion in securitized loans and will be accounted for as a purchase. Wachovia will therefore assume most of the assets and liabilities of Partners First. Employees of Partners First, located in Baltimore and Boston, and will join Wachovia following the transaction closing. Bank of Montreal says the deal will produce a pre-tax gain of US$75 million. Wachovia said yesterday the Partners First acquisition fits the bank’s strategy of aligning with regional brands to enhance its credit card business. Partners First was formed in Jan. 1998 by Bank of Montreal, Bank Boston and First Annapolis Consulting. About 50% of initial bank credit card portfolio came from former BankBoston accounts. Bankmont Financial, the U.S. holding company of Bank of Montreal, is the majority owner of Partners First. First Annapolis Consulting is the minority shareholder.

PARTNERS FIRST PORTFOLIO OUTSTANDINGS

Jan 98: $2.40 billion Dec 98: $2.21 billion
Mar 98: $2.34 billion Jun 99: $2.13 billion
Jun 98: $2.48 billion* Sep 99: $1.99 billion

* includes acquisition of $190 million from Comerica
Source: CardData (www.carddata.com)

Details