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« December 15, 2002 - December 21, 2002 | Main | December 29, 2002 - January 4, 2003 »

December 28, 2002

Glenbrook Research Note: Bill Me Later - I4 Commerce

Glenbrook research clients can now access a just published research note on Bill Me Later, a new consumer credit offering from I4 Commerce.

Tampa Tribune: Gift card shopping jam irks holders

Apparently American Express' processing system bogged down handling the high volume of Westfield Shoppingtown's gift card requests.
On Thursday and Friday of last week, the credit card processing system for American Express - which handles the Westfield gift cards - got so overloaded that processings were delayed, Putman said. The Westfield cards are valid at any Westfield mall store that accepts American Express. The system should work better in the coming days, he said.
Separately, here's another gift card story from the Cincinnati Enquirer.

December 27, 2002's Results announced that it sold more than 56 million items worldwide from November 1 to December 23, 2002.
The largest sales day occurred on Monday, December 9, with 1.7 million units ordered, or 20 items per second worldwide. The second largest sales day, with 1.6 million units ordered, occurred on Wednesday, December 11, just a day before the holiday ordering deadline for Free Super Saver Shipping on Thursday, December 12.

New York Times: Growth in sales for holiday period weakest in years

Constance Hays reports on the weak holiday shopping season this year.
The idea that even Wal-Mart, the biggest success story in retailing in recent years, was struggling was taken as a sign of wider problems. "This confirms our previous thoughts that holiday sales could be the worst in a decade," Deborah Weinswig, a retail analyst for Salomon Smith Barney, wrote in a note to investors after the Wal-Mart announcement.
Separately, a study released today by ForeSee Results shows that although more than half of online holiday shoppers were highly satisfied with their online experience this year, the still nascent e-retail industry earned an overall score of 69 out of a possible 100 points (or a grade of "C"), a strong message from consumers that retailers need to do more to keep them coming back.

December 26, 2002

Richmond (VA) Times Dispatch: Shoppers to reap rewards in credit vs. debit debate

Carol Hazard reports on the battle between online and offline debit cards at the point of sale.
Banks make four times as much money with signature-based credit purchases, according to some reports. Retailers prefer the debit PIN purchases because they are less costly for them. In essence, merchants pay as much as 3 percent of the total transaction amount on a signature-based purchase, while they are charged no more than 25 cents for a PIN-based transaction regardless of the amount.

Washington Post: Pocketful of plastic a hot holiday item

Dina ElBoghdady reports on retailers' interest in gift cards.
"Retailers are itching to see what happens with all the gift certificates out there," said C. Britt Beemer, chairman of consumer research firm America's Research Group. "There are literally billions of dollars at stake." Just how many billions is unclear. Many retailers declined to discuss numbers. But consulting firm Bain & Co. estimates that sales of gift cards could hit a record $38 billion for the year, up 15 to 20 percent from 2001.

December 25, 2002

Times of India: MasterCard has a breakthrough in the battle against fraud

MasterCard says it has made a major breakthrough in the battle against counterfeting of credit cards. Its new technology ˜ dubbed Magneprint ˜ will help tackle global losses of $4 billion annually thanks to counterfeit credit cards.

December 24, 2002

Crain's Chicago Business: Househould and HSBC - a good fit?

Part 1 of an interview with Douglas Flint, group finance director of HSBC, about the merger with Household.

Sacramento Bee: California credit card law ruled invalid

Denny Walsh reports on U.S. District Judge Frank C. Damrell Jr's decision yesterday permanently barring enforcement of a new California law forcing credit card companies to warn their customers how long it will take and how much more it will cost to pay their bills with minimum payments. The court ruled that federal laws governing the operation of financial institutions pre-empt state laws in this area.
The Legislature passed the law last year, and it was scheduled to take effect on July 1. Led by the American Bankers Association and the National Association of Federal Credit Unions, card issuers sued on May 24. In an order on June 28, Damrell temporarily put enforcement on hold. The statute required two messages be displayed on the first page of a cardholder's statement, unless the issuer required a minimum payment of at least 10 percent of the balance or did not impose finance charges. The first message would have warned that minimum payments increase interest and the time it takes to retire a debt. There were two options for a second message. One would have provided examples for three balance amounts at the interest rate and minimum payment applicable to the account. Additionally, a toll-free number would have been listed for cardholders wanting more personalized information. The second option was to provide the cardholder with written, "customized" information regarding interest and duration of debt. Along with that would have been a referral to a credit counseling service or the number for the National Foundation for Credit Counseling. Clash of the Titans

Beth Cox writes about the Clash of the Titans, Visa vs. MasterCard.
Florida and Florida State play out their rivalry on the football field. Ford and General Motors compete for buyers both online and in showrooms across the country. And MasterCard-Visa? Their B vs. B tussle is being played out on the cutting edge of high-tech.

Independent Online: Credit card crash hits Cape stores

Even in South Africa, merchants can become very dependent upon credit cards! When the systems don't work, people get very upset.
"The problem started a couple of weeks ago, but we've been suffering of late due to the increase in customer volumes," said a visibly annoyed Grant Murie who manages the Santa Ana Spur at the V&A Waterfront. "At peak trading times, the Standard Bank system can't process any transactions. Bank officials said a statement on the matter would be issued later on Tuesday.

December 23, 2002

Alaska Journal of Commerce: Alaskans take to online bill paying services

Christina Sessions reports on Alaskans rapid adoption of online bill paying services.
Alaskans appear to be ahead of the curve when it comes to using online bill payment. Debbie Sakamoto, public relations officer for Key Bank in Portland, Ore., said Alaskans led the national average for bill pay usage by 22 percent.
Brrr. Who wants to walk to the mailbox when it's so cold outside?

eOne Global acquires BillingZone

eOne Global announced this morning that it is acquiring BillingZone from PNC Bank and Perot Systems.
According to Raj Kushwaha, managing director and CTO of eONE Global, "The planned combination of BillingZone's services and First Data's existing paper document and check handling capabilities would create the most comprehensive offering available to large companies for automating both paper and electronic financial supply chain transactions. First Data is a leader in e-commerce and payment services - its existing infrastructure routes and settles billions of transactions every year." "The BillingZone acquisition brings together the market leading customers and channels of BillingZone with the scale and processing infrastructure of our parent company, First Data," Kushwaha added.

Washington Mutual: Pushes check image capture out to branches

Washington Mutual announced late last week that it had entered into an agreement with Unisys to capture check images in its financial center stores (branches).
Making this move now positions Washington Mutual to confront such industry issues as:
  • escalating unit costs of processing paper checks;
  • the shift to electronic transactions such as electronic bill presentation and payment;
  • and the impact of the Check Clearing for the 21st Century Act, pending legislation to enhance the efficiency of the check system by allowing digital images in truncation, which can eliminate the need for a paper trail in check processing.
Speaking of WAMU, they're saving the day for Seattle landlords as they've become the biggest corporate user of office space in Seattle.

FDIC: Economic Outlook

The FDIC released its latest economic outlook. Included is a look at the risks of deflation.
Clearly, deflation would have significant adverse effects on the banking industry, depending on its severity and duration. Past episodes of asset and goods price deflation often coincided with banking crises, particularly when the banking sector was already in a weakened financial position. Given the current income and balance sheet strength of the U.S. banking industry, short and mild deflation is likely to have a limited adverse impact. However, prolonged deflation would present more serious challenges to the industry by eroding the collateral value of assets and increasing the real debt burden of borrowers. Deflation could also lead to a decline in nominal income for households and businesses, reducing their ability to repay outstanding debts. In combination, these developments likely would lead to significant credit quality deterioration, while an increase in real interest rates would weaken loan demand. Despite these dangers, there are good reasons to think that serious deflation is unlikely to occur in the United States. One reason is a well-capitalized banking sector with relatively low levels of nonperforming loans. Another is the fact that policymakers appear to be alert to the dangers of deflation and determined to take steps to prevent it from taking hold. Finally, it appears that modern financial instruments and risk management tools contribute to the financial flexibility of households and businesses, reducing the potential for a widespread liquidity crisis. One example is the use of credit derivatives by commercial lenders to off-load credit risk. Another is the benefits of loan prepayment options that allow households and businesses to reduce their interest expenses by refinancing at lower interest rates. Together, these factors limit the possibility of a prolonged deflation that could seriously harm the banking industry.

Clarion Ledger: Personalized credit cards losing punch

A report on how its becoming difficult to find new concepts for affinity and co-branded credit cards.
Last year, card issuers mailed out 5.1 billion offers, but consumers responded to only 0.6 percent of the letters. Competition for new customers has intensified as the industry has consolidated; the top five banks hold more than half of the $635 billion in outstanding loans. The competition and lower interest rates also pressure issuers' profit margins, and banks are battling higher credit losses from record bankruptcies. That's where affinity and co-branded credit cards have helped. Such cards are designed to give consumers an incentive beyond low interest rates and fees to get and use new cards. Banks like such programs because consumers who use an affinity or co-branded card spend at least 30 percent more on it than on a regular classic, gold or platinum card. They are also more likely to pay off their bills.

Delaware Online: Fast-food chains put plastic on the menu

A report on the increasing acceptance of credit and debit cards by quick service restaurants.
The quick-service industry, which includes restaurants that sell hamburgers, chicken, sandwiches, pizza, doughnuts, ice cream, yogurt, tacos and other prepared food items, reported sales of $113.5 billion in 2001, according to Morgan Keegan & Co, an investment firm in Memphis, Tenn. But only 2.8 percent to 3 percent of quick-service businesses report any card-based transactions, according to a Visa study released last month. That compares with 35 percent to 40 percent card use by consumers in other industries. Credit-card issuers and transaction service operators are pushing fast-food chains to accept plastic because doing so is expected to boost sales to higher levels. Fast-food chains also would have less cash to manage and keep on site, thereby reducing the chance for error and theft, experts said. The Visa study found that consumers spend 30 percent to 50 percent more when they use credit cards rather than cash.

December 22, 2002

New York Times: Online sales up for the holidays - but how much?

Bob Tedeschi reports on the growth in online sales this holiday season. Turns out the various pundits who track these numbers don't agree.
Whatever the final numbers show, no one disagrees that people are now doing significant amounts of holiday shopping online. Mr. Schehr estimated that of the $800 the average Web shopper would spend on holiday purchases this holiday season, $235 would be spent online.

Seattle Times: InfoSpace names new CEO

The company announced last night that telecom veteran Jim Voelker will immediately become its new chief executive officer, chairman and president.

Seattle Times: Online banking starts to click

Bradley Meacham reports on the growth of online banking.

Boston Globe: Online holiday shopping

Hiawatha Bray interviews comScore Networks' Dan Hess on the increased level of online shopping this year.
Q. How's business for Internet retailers? A. It's shaping up to be a very strong season for online retail. Back before the season began, we predicted approximately $14 billion in nontravel sales for the fourth quarter, which would give us growth in the order of 30 percent over last season, and we're on a path to hit that.


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