Providian’s Record Earnings

The nation’s largest secured card  and sub-prime issuer posted second quarter net income of $62.9 million, a 38% increase over net income of $45.7 million for the second quarter of 1997. Providian Financial said rapid growth in the company marketing to unbanked customers is driving profits. During the second quarter Providian signed-up 1.3 million new customer relationships and now has over six million total accounts, representing a 50% increase over the same period in 1997.  The company has $11.5 billion in total managed loans as of June 30, a 24% increase over the second quarter of 1997.The total managed net credit loss rate and the managed 31+ day delinquency rate, including the acquired portfolios, were better than expected at 7.56% and 4.90%, respectively. Providian’s 2Q/98 full earnings report is available via [www.carddata.com][1].

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

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First Data Slips

First Data Corp.’s total revenues fell 1% for the first half of 98 to $2.5 billion compared to the first half of 97. The company said the decline is due to FDC’s significant divestiture activity. FDC also posted an after-tax charge of $120.8 million resulting from delays in the conversion of Hong Kong-based credit card accounts and the general outlook for Asia. Meanwhile, second quarter merchant card volume increased 14% to $61 billion and transactions processed were up 12% to 1.1 billion. Merchant card revenues were up 1% for the quarter after being down 3% in the first quarter. Total domestic card accounts on file increased 23% to 174 million. International card services revenues were up 13% for the quarter to $70 million.  International accounts on file grew 32% from the prior year to 25 million. Payment instruments revenues were up 20% to $409 million. FDC’s 2Q/98 full earnings report is available via [www.carddata.com][1].

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

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Internet Casino V/MC Debit

It was bound to happen. Internet gaming has gone mainstream. An innovative company, licensed in the Dominican Republic, has become the first Internet gaming operation to issue VISA and MasterCard debit cards. Gamblers may establish an account by applying for a card on the company’s Web sites or by phone, and if approved, must deposit a minimum of $1,250 to back that debit card. Winnings will be deposited in the account. Players may not spend beyond the limits of their debit card deposits and their winnings. The cards are being issued by Internet Casino Sports Gaming (I.C.S.G.).

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PaySys’ Australia Success

PaySys International, Inc. announced Thursday that, in the first quarter of 1998, four of the six major banks in Australia and New Zealand have licensed VisionPLUS, PaySys’ standard-setting card management system. Some of the largest card-issuing banks, including National Australia Bank, ANZ Bank, Colonial State Bank, and, most recently, WestpacTrust (NZ) have all selected VisionPLUS as the system of choice for their credit card issuing, acquiring, and processing operations. PaySys has more than 20 credit card industry specialists working with its clients in Australia and New Zealand. PaySys International Pty Ltd, based in a newly developed business park near Melbourne, also works closely with PaySys sales and support groups in Singapore and Orlando, Florida.

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Atlanta Prefers VISA

Visa U.S.A. and the Atlanta Convention and Visitors Bureau (ACVB) today annonced the lauch of a marketing alliance that supports Atlanta as a premier leisure and business travel destination. This multi-year partnership will continue Visa’a marketing relationship with Atlanta, which began in 1993. Under the terms of the partnership, Visa will enhance its marketing and promotional support as a signature sponsor of ACVB asvertising and marketing programs. Visa’s present marketing campaign and designation as the “Official Card of Atlanta” will evolve to “Atlanta Prefers Visa.”

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ARKSYS Drives Euronet

Euronet Services, Inc.’s network processes approximately one million transactions per month with a growth rate of 15 percent per month. Powered by ARKSYS’ Gold-Net product, Euronet’s network at June 24, 1998, consisted of 942 ATMs in 5 countries, with 371 in Hungary; 349 in Poland; 145 in Germany; 61 in Croatia; and 16 in the Czech Republic, including 45 ATMs owned by a bank in Hungary. Euronet currently owns five IBM AS/400s, two model 53s, one S30, one 310 and a 300. To further promote card growth throughout the region, Euronet has partnered with ARKSYS and IBM to offer a comprehensive card management and authorization system named Blue Diamond. Blue Diamond software assists banks in managing cardholder databases and gives the ability to offer the additional services and conveniences of sophisticated electronic banking via debit cards. Blue Diamond not only provides comprehensive card management functions, it also delivers a built-in, on-line interface to Euronet’s host system.

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Sears Card Stumble

Second quarter operating profit for Sears, Roebuck and Co.’s credit card portfolio dropped 13.6% compared to 2Q/97.  Meanwhile, the percentage of Sears goods and services charged to the ‘Sears Card’ has declined to 52% from 55% one year ago. However, managed credit card receivable balances grew 3.3% from the second quarter of 1997, while decreasing 4.2% from 1997 year-end levels. Since 40% of Sears’ profits flow from its credit card operations, Wall Street reacted to yesterday’s earnings report by pushing Sears shares down by 9.5% to close at $51.31. The decline in the ‘Sears Card’ is driven primarily by the intense pricing competition in the bank credit card business whereby offered interest rates have plummeted to their lowest level ever. Sears says the decrease in card receivables is due to the seasonal nature of Sears retail business while growth over the comparable prior-year quarter has been driven by balance growth in existing accounts. For 2Q/98 managed credit card receivables logged $27.7 billion compared to $28.9 billion at EOY 97. Credit card chargeoffs declined to 7.37% from 8.12% for the first quarter. Sears’ 2Q/98 full earnings report is available via [www.carddata.com][1].

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

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Paymentech Up 27%

Paymentech, Inc. reported Thursday that net income for the fourth quarter ending June 30, was $5.0 million, a 27% increase year-over-year.  This compares with earnings of $3.9 million for the fourth quarter ended June 30, 1997. During the June 1998 quarter Paymentech processed approximately $12.7 billion in sales volume and approximately 519 million bankcard and third-party authorization and capture transactions.  For the fiscal year 1998, sales volume processed increased by 19% to $49.3 billion from the previous fiscal year.  Total transactions processed increased 41% to 1.9 billion.

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ATM Fever

A study released this morning by Mentis Corp. reveals that banks continue to aggressively pursue the deployment of ATMs in their retail delivery strategies.  In 1997, the number of installed ATMs owned by banks increased to just over 125,000; up from just over 105,000 in 1996.  Mentis research indicates that this increase has been driven by rising off-premise placements which in turn has been driven by potential surcharging revenues. Nevertheless, while surcharging is a major driver for ATM deployment, Mentis research shows that banks are attempting to accomplish other goals through ATM deployment.  Large banks see ATMs as a way to increase their contact with existing customers, enhancing opportunities for cross-selling and improving customer service.  Small banks, on the other hand, see ATM deployment as a defensive strategy. Mentis also studied the deployment of limited-function cash dispensers. Since 1995, the installed base of cash dispensers more than doubled; from just over 18,000 to more than 37,000 in 1997, representing 30% of the total installed base. Although the actual number of ATMs acquired by large banks in 1997 is larger than that of 1996, ATMs owned by large banks represented 60% of all bank-owned ATMs in 1997, compared to 64% in 1996. Mentis concludes this decline may be the first sign that the installed base of ATMs among these banks is beginning to reach saturation.

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GlobeSet in Turkey

GlobeSet Inc.  announced a new partnership agreement with Info Otomasyon & Entegrasyon A.S. of Turkey to license the GlobeSet Payment System. The GlobeSet Payment System is a SET software solution that allows consumers, merchants and financial institutions to conduct secure payment card transactions over the Internet. Info, the latest OEM channel partner to sign an agreement with GlobeSet Inc., provides the company with an entry into the Turkish IT, financial and retail markets. Since 1981 Info has been a leading systems integrator in the Turkish IT marketplace, completing large-scale electronic commerce and banking projects for customers in the finance, telecommunications and public sectors. A full SET e-commerce implementation with Yapi ve Kredi Bank has already been completed. Info will integrate GlobeSet products into their customer’s existing payment infrastructure.

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