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« December 22, 2002 - December 28, 2002 | Main | January 5, 2003 - January 11, 2003 »

January 03, 2003

Mintel's Comperemedia: 10% Increase in Credit Card Direct Mail Over 2001

Comperemedia reports that direct mail card solicitation pieces increased about 10 per cent in 2002 over 2001, about 300 million more pieces over the year.
Balance transfers are part of the package in approximately 60% of all acquisition offers. In 2002, there was a growing trend to offer the balance transfer rate for 12 or more months. Toward the end of 2002, over 70% of the balance transfer offers were for 12 or more months, compared to 30 - 40% in the beginning of the year. This could be a growing trend in 2003, and issuers may begin placing more conditions on their offers. For example, in November, Discover offered a 0% APR for life on transferred balances, but only if the cardholder makes at least two purchases or cash transactions each billing period. If the required transactions are not made, then the APR reverts to the regular interest rate of 12.99%.
The report also noted an increase in late fee charges.
In the beginning of 2002, late fees were predominantly between $11 and $20. Now the majority are between $31 and $40.

Visa's Inovant seeking Chief Technology Officer/Chief Architect

Korn/Ferry lists an opportunity based in Foster City, CA for CTO/Chief Architect of Inovant, Visa's technology solutions provider.

Indianapolis Star: Identity theft to hit legislature's agenda

Paul Bird and John Fritze report that "the Indiana General Assembly is poised to strengthen the laws that protect consumers against fraud." Separately, Robert Hanley reports in the New York Times on an identity theft case involving a former manager of an H&R Block office in White Plains, New York.

January 02, 2003

Memphis Business Journal: Congemi resigns from Concord EFS board

Concord EFS announced today that Ronald V. Congemi has resigned from the board. Two new board members were announced: Dr. Shirley C. Raines, president of the University of Memphis and Arthur N. Seessel III Raines, a management consultant to the supermarket industry.

Conference Board: Trust grows in online transactions

The Conference Board reported today an increase in trust by consumers when conducting financial transactions online.
Trust levels among Internet users for online transactions have improved from a year ago (fourth quarter 2001). Now, more than 33 percent express trust that their online financial transactions are safe, up from 27.5 percent a year ago. Consumers also expressed a greater degree of trust when purchasing products online. One-fourth trust that their personal information will be safe when purchasing products online, up from 21.9 percent a year ago.
Some other interesting findings from the report:
  • Only 33.6 percent of U.S. consumers have never been online, down from 34.7 percent.
  • Currently, 37.4 percent of users go online daily, up from 33.7 percent a year ago.
  • Of those who go online daily, 60.5 percent have made an online purchase in the last three months, down from 62.3 percent a year ago.
If we do some quick math (based upon 210 million consumers in the US 18 years or age or older) with a few other assumptions from the data, approximately 57 million consumers have made an online purchase in the last three months. (See: Census Data) The full report is available for purchase.

Atlanta Journal-Constitution: CyberStarts sells Sunaro

CyberStarts, backed by major financial services companies such as First Data, Wachovia, Fortis, Marsh Capital and NCO Group Inc., has announced the sale of Sunaro Inc., a provider of employee benefits software and services, to London insurance broker Willis Group Holdings.

Glasgow Evening News: Loyalty cards a let-down

A report on a survey of 2,000 Scottish consumers regarding their interest in store cards and reward schemes.

NineMSN: Visa tries to clear credit reform confusion

Visa responds to yesterday's press coverage reporting that Qantas and Caltex intended to adopt surcharges on credit card use in Australia.
Visa vice president Asia Pacific Gordon Wheaton said the credit card operator had always argued that rather than pass on price reduction, merchants who applied the surcharge would use it to increase their revenue. "On just the second day of these regulations being in place, we see a major oil company openly admitting that they would use the RBA's changes to their advantage and not the consumers," Mr Wheaton said. "Major retailers and oil companies have been at the forefront of arguing for these changes for the past two years. It is time they clearly stated if they intend to surcharge, at what level and what price reductions they are going to deliver to their customers."
Separately, Kirsty Needham reports in the Sydney Morning Herald on more merchants considering imposing surcharges on credit card use.
The Service Station Association said it was keen to see retailers recover some of the costs imposed on them by the banks, and was aware of some operators considering a surcharge. But the association's president, Richard Halstead, said "no one wants to be the first to introduce it".

January 01, 2003

The Australian: Qantas leads charge on credit cards

Jennifer Sexton reports on Qantas plans to impose credit card surcharges in Australia. A gasoline retailer, Caltex, is making similar plans.
Qantas is understood to be planning to charge customers a flat fee but it is unclear whether the airline has settled on an amount and whether Qantas-branded cards will be exempt. Qantas dominates the air travel market and its business is heavily geared towards credit card payment.

December 31, 2002

Washington Post: As paper checks disappear, so may some Fed jobs

John Berry reports that the Federal Reserve has warned employees of its twelve regional banks that some jobs may be cut in coming months due to the decline in check volume cleared by the Fed.
In a typical letter sent this month to Fed employees, Robert D. McTeer Jr., president of the Dallas Federal Reserve Bank, said: "The Federal Reserve's national check business has experienced significant losses in volume and revenue over a period of many months. This volume loss is attributable to a number of factors including consolidations in the financial services industry and greater use of electronic payments."

WSJ: Prepaid cards find a niche

Michelle Higgins reports on the growth in prepaid cards.
The new cards are the latest indication that competition among card issuers has never been more brutal. Americans who carry plastic already have an average of nearly eight cards in their wallet. To win new customers, card companies have been competing fiercely with new offers of 0% cash advances and other deals. But with the credit-card market so saturated, they are under pressure to find new sources of growth. "They're segmenting the market into finer and finer niches in order to capture more market share and define more payment uses," says card consultant Rob Markey, of Bain & Co. in New York. What's more, prepaid cards -- which describes all the new cards except for American Express's -- are a "very low loss-rate product," he says. That's because customers must cough up the money in advance. That is an important consideration these days with credit-card companies writing off record amounts of bad debts.

Wired: I/T staffing crisis looms in India

Ashutosh Sinha reports from New Delhi on the shortage of middle and senior managers to help run India's growth as the "back office of the world."
According to consulting firm McKinsey, revenue of Indian companies in the two industries could reach $21 billion to 24 billion by 2008 -- a 1,500 percent spike from $1.4 billion in revenue this year. These segments are forecast to employ over 2 million people. But to achieve that kind of growth, Indian companies need experienced managers who can sell the country's advantages to global companies. The shortage of employees with management experience doesn't bode well.
Feels sorta like another gold rush, doesn't it? It's not just about services either. See this report about India's growing supercomputing hardware business.
The Pune-based Centre for Development of Advanced Computing (C-DAC) will be targeting some of the countries, which have already bought its earlier PARAM 10000 version with a computing power of 100 gigaflops. C-DAC has already sold about 7 PARAM 10000 supercomputers with 100-gigaflop memory to eight countries so far, including Russia, Canada, Singapore and Germany. It has so far sold over 53 supercomputers, since it started developing it in the Eighties following a technology denial regime against the country by the developed world. C-DAC will be targeting both domestic and international customers for marketing the Padma supercomputer, which can be scaled up to 16-teraflops.

December 30, 2002

New York Times: A bank for Mexico's working families

Lucy Conger writes about Elektra, a downscale household goods retailer in Mexico that is opening Banco Azteca, the first bank to aim at Mexico's middle and working classes.
Starting next year, Banco Azteca plans to introduce a range of products, including used-car and personal loans, debit cards, checking accounts and mortgages. Elektra's database of the credit payment histories of four million current and former customers will help the bank make credit decisions and cross-sell its products, analysts say.

Chicago Fed: Tapping the potential of the unbanked (PDF)

A report by Doug Tillet and Liz Handlin of the Chicago Federal Reserve Bank on the market potential for serving the over 10 million unbanked individuals on the US.

JPMorgan Chase signs with IBM for IT Infrastructure Services

IBM and JP Morgan Chase have announced a seven-year outsourcing agreement.
The agreement will enable JPMorgan Chase to transform its technology infrastructure through absolute costs savings, increased cost variability, access to the best research and innovation, and improved service levels. By moving from a traditional fixed-cost approach to one with increased capacity and cost variability, JPMorgan Chase will be able to respond more quickly to changing market conditions. JPMorgan Chase will outsource a significant portion of its data processing technology infrastructure, including data centers, help desks, distributed computing, data networks and voice networks. The agreement includes the transfer of approximately 4,000 JPMorgan Chase employees and contractors as well as selected resources and systems to IBM in the first half of 2003. Application delivery and development, desktop support and other core competencies will largely be retained inside JPMorgan Chase.

Herald Sun: Australian retailers won't surcharge credit cards - for now

Susie O'Brien reports that major retailers in Australia are not planning to impose surcharges on credit card usage -- at least not right away.
Until now, the cost of processing credit card transactions has been met by retailers and businesses, but from tomorrow this cost can be passed directly to the consumer. Many businesses were adamant yesterday that they would not take this step unless forced to do so by spiralling costs. Others said they would investigate the move if it became a norm in their industry. The Australian Retailers Association said services such as gyms, doctors and dentists, tradespeople and professional groups were the most likely to introduce the charge. Association executive officer Brian Donegan said the pressure was also great on small retailers who paid banks up to 3 per cent of their turnover on credit charges.

Bernama.com: MasterCard Malaysia determined to tackle credit card fraud

Nor Faridah Rashid reports from Kuala Lumpur on MasterCard's plans to fight counterfeiting of cards by magnetic stripe skimming from deploying Magneprint, a technology developed by MasterCard International and MagTek.
Magneprint is the first technology that proactively helps prevent card skimming by using the "intrinsic" physical properties or a magnetic stripe (which are unique to every card) to differentiate between an original and a cloned card.

New YorkTimes: Strong sales for online merchants

Bob Tedeshi reports on results from the holiday season for online merchants and, in particular, the very strong sales of gift cards.
As online merchants began tallying the results of a stronger-than-expected holiday season, they were further buoyed last week by another bit of good news: gift certificates, a favored scrip among post-holiday bargain hunters, enjoyed their best season ever online. By Dec. 20, holiday sales of gift cards and e-mail gift certificates had soared 64 percent over last year, pushing the 2002 total toward the $250 million mark, according to comScore Networks, an Internet research firm.

Boston Globe: Help yourself - customer self-service

D.C. Denison profiles SpeechWorks and edocs, two Boston-area companies providing technologies to enable customer self-service.
"Speaker verification," for example, is rapidly emerging as an important capability, allowing the system to identify a caller by his voice patterns. Verification is important not only for security, but also for enhanced convenience. "If the system recognizes you, it can immediately shift to your preferences," said Chambers. "It enables customers and companies to significantly streamline their interactions." Get ready for this: "Oh, hello Mr. Smith. Are you traveling to New York again?"

December 29, 2002

The Age: Credit cards are very popular in Australia

Sharon Kemp reports from Melbourne on the rapid growth in consumer debt in Australia.
Credit card companies such as Visa and MasterCard are as confident as ever. Visa says consumers have never been so debt-educated or diligent in clearing their card debt. Moreover, the global giant says fears of a Christmas blow-out in card debt were unfounded, based on RBA data that showed that for every $100 spent in December in three consecutive years to the end of 2001, $91 was repaid in January. "Although Australians are using their cards more, they continue to use them carefully," says Visa International executive vice president (Australia and New Zealand) Gordon Wheaton.
Separately, Bruce McDougall reports in the Herald Sun on the change taking place January 1st in Australia where retailers will be permitted to surcharge credit card transactions at the point of sale. In a similar article in the Weekend Australian, Jennifer Sexton reports:
Ms Wolthuizen said consumers were most likely to incur a credit card surcharge on airline ticketing because of the industry structure ˆ big business with low competition. Market dominator Qantas has reportedly said it wants to charge extra for credit cards that do not carry the Qantas name, but an airline spokeswoman yesterday could not confirm the domestic and international carrier's intention.

San Jose Mercury News: Law of supply and demand turned on its head

Cecil Johnson reviews Rick Kash's book The New Law of Demand and Supply.
Sears Credit supplies Kash with an example of how knowing the wishes and needs of your most profitable demand segment pays off. The author tells of the panic that hit Sears Credit when the corporation decided to begin accepting MasterCard and Visa. Thought was first given to reducing the percentage rate on the Sears Card to compete. But that approach was discarded after research revealed that the percentage rate didn't matter that much to Sears' most profitable demand group. Those customers just wanted low minimum monthly payments and Sears' commitment to stand by its products. The Sears customers in the researchers' target group said they would continue to use their Sears cards in order to leave room on their other cards, which could be used at other stores. "If they maxed out those cards and the refrigerator broke down, only the Sears card stood between them and no refrigerator," Kash writes. The Sears Credit team used its findings, Kash writes, to enable Sears Credit to give up its monopoly and still increase business performance. "It raised the Sears share of credit card transactions in its stores, and its margins actually went up," he writes. "Over three years, its profits on the card rose by 44 percent."
Looks like a most interesting book (published last September) -- it gets great reviews on Amazon -- will have to check it out! His firm's web site also has an interview with Rick Kash.

Detroit News: Gift cards gain in popularity

Chris O'Malley reports on the growth in gift cards.
Buying a gift card from a bank is more involved than merely pulling a card off a rack at the home improvement store. Both Key and National City require purchasers to fill out name, address, phone number and Social Security number. At one National City branch, an employee also asked for date of birth and even collected the buyer's driver's license, disappearing with it into a back office.

New York Times: For a banker, roots and reach

John Tagliabue profiles René Carron, new chairman of Crédit Agricole.
Most French bankers enjoy their cheese. René Carron goes one better. He owns a herd of 60 cows, producing milk for tomme de Savoie, the cheese of his native Savoy. But then Mr. Carron, 60, the new chairman of Crédit Agricole, the big French bank, is no ordinary banker. The latest proof of the difference came two weeks ago, when, in a deft negotiating strike, he reached an agreement to acquire control of Crédit Lyonnais for $16 billion, in a deal that would create France's biggest bank, second only to Deutsche Bank as the largest in Europe.

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