Internet stocks are taking a big fall and for a very good reason. There is no way in God's green earth that some of these companies will ever make a dime. Online consumer lending is a good example.

  Marketing credit cards over the Internet is producing efficient results, driving down acquisition costs to $43 per account versus $69 per account via mail solicitation. However, when it comes to applying for other types of loans online, consumers are less likely to respond.  According to recent research conducted by PSI Global, only 23% of consumers who researched mortgage loans applied online, and even fewer, just 16%, of those who shopped for auto loans or leases, applied online. By contrast, 61% of those looking online for a new credit card account filed applications via the Internet. Consumers told PSI researchers that mortgage loans and auto loans required too much confidential information. Also there were concerns about the security of personal information online. More than a third of Web users said they would prefer to speak to a lending specialist during the online process.

While a credit card represents a form of a consumer loan, American consumers continue to view credit cards very differently than other lending products. This has been true for the past decade and will probably be true for at least the first decade of the new economy.

The big question is, will consumers warm to up to online mortgages and auto loans before online loan services run out of operating cash. At this point the future looks pretty bleak for online loan providers. However Internet credit card marketing remains alive and well.

VISA  RULES

Based on credit card charge volume, VISA and Discover gained market share last year in the USA. According to CardWeb.com's CardData service, VISA added 20 basis points to its share while Discover moved ahead by 40 basis points. The gains came at the expense of MasterCard. (The market share data excludes debit card volume.) American Express held its own during 1999 with $186.4 billion in charge volume. MasterCard, with $303.6 billion in 1999 credit card volume, lost 60 basis points in share. VISA's credit card volume hit a record $537.3 billion while Discover logged $70.6 billion in charge volume last year. American consumers charged a total of $1.1 trillion dollars to credit cards and charge cards issued by the top four brands in the USA.

                       

U.S. Market Share Based on Credit Card Charge Volume
(excludes debit cards)
	VISA	MC	AMEX	DISC
1997	48.8%	27.8%	17.0%	6.4%
1998	48.7%	28.3%	17.0%	6.0%
1999	48.9%	27.7%	17.0%	6.4%
Source: CardData (www.carddata.com)

TOP  TEN

Citibank regained its #1 slot from Bank One/First USA during 1999. Providian is the fastest growing top ten issuer next to MBNA. As a group, the top ten now represent 74% of the bank credit card industry based on card loans.

1999 TOP TEN U.S. ISSUERS
(as of December 31, 1999)
Rank/Issuer	Card Loans	Sales Volume	Accounts
1. Citibank	$74.2b	$162.3b	40.6m
2. Bank One/First USA	$69.4b	$129.0b	43.1m
3. MBNA	$65.2b	$101.3b	28.9m
4. Discover	$38.0b	$70.6b	38.5m
5. Chase Manhattan	$33.6b	$53.8b	20.5m
6. Bank of America	$20.9b	$51.1b	21.0m
7. Providian	$18.7b	$20.0b	15.2m
8. Capital One	$16.4b	$32.6b	22.0m
9. Fleet	$14.3b	$18.0b	8.5m
10. Household Bank	$13.3b	$28.4b	15.0m
Total	$364.0b	$667.1b	253.3m
b-billions m-millions;      Source: CardWeb.com, Inc. (www.cardweb.com)

DEBIT  CARDS  SOAR

Debit card usage soared by 37% last year. Nearly 20% of what Americans charge to plastic is now done on debit cards.

U.S. Debit Card Statistics
(off-line or signature-based debit cards)
as of December 31, 1999
Dollar Volume	99	98	97
VISA	$183.8b	$134.7b	$ 93.7b
MasterCard	$ 35.0b	$ 25.0b	$ 16.8b
	$218.8b	$159.7b	$ 110.5b
Number of Cards Issued	99	98	97
VISA	84.5m	73.8m	58.0m
MasterCard	30.5m	26.6m	22.1m
	115.0m	100.4m	80.1m
b-billion		m-million
Source: CardWeb.com, Inc. (www.cardweb.com)

GM  CARD  DOWNSHIFTS

Nearly eight years ago a new MasterCard appeared that revolutionized the credit card industry. Like other credit cards offering rewards, the trend setting General Motors MasterCard issued by Household Bank, has downshifted. After revising the pricing structure of the GM MasterCard last year, General Motors and Household Bank have now revised the reward structure. GM announced last month it has lifted the annual $500 earnings cap on both the standard and gold GM MasterCards. However GM is limiting the amount of the rebate earnings that can be applied to purchases, by the type of automobile. For example, cardholders can only use $1,000 toward the purchase of a new Corvette, $1,500 towards the purchase of a Cavalier, $2,000 towards the purchase of a Cadillac Catera, and $3,500 towards the purchase of a Cadillac Escalade. GM cardholders may also redeem earnings for other rewards including travel awards from GM Vacations, American Airlines, Marriott, Ritz-Carlton, National CarRental and Alamo. The revised pricing introduced last year included a $29 annual fee for closed accounts with outstanding balances, a $15 minimum cash advance fee, and a Prime +15.4% punitive interest rate. For more information visit www.gmcard.com.

ROCKETCASH

Another payment system for teenagers has been unleashed. CA-based RocketCash this month introduced the RocketCash Currency Exchange. The new service allows consumers to aggregate various forms of currencies including online incentive dollars, points, gift certificates, money orders, personal checks and U.S.  dollars. The new Currency Exchange involves three partners: beenz.com, Cybergold, and InfoPost. RocketCash customers will be able to deposit beenz, Cybergold and InfoPost dollars into their accounts and use these currencies to shop at all of RocketCash's 80 online merchant partner sites. 200 beenz will be worth one dollar of RocketCash and each dollar from InfoPost and Cybergold will translate into one dollar of 'RocketCash'. The new system follows two other recently launched payment systems for teens: Cybermoola and PocketCard. For more information visit www.rocketcash.com.