The future of credit cards may soon be in the palm of your hand. Wireless handheld devices represent the most significant emerging segment of the payment card industry aside from smart cards. Analysts predict the worldwide handheld market will grow from 12.9 million units in 2000 to over 63.4 million by 2004. It is expected that 2001 will be the year when mobile access devices hit their stride.

By next year you will be able to do all kinds of banking activities with a wireless handheld device including managing your credit card account. Major credit card issuers such as Providian, and up and coming issuers such as Juniper Bank, have launched major initiatives to give their cardholders wireless access to their personal credit card accounts. VISA and NextCard are also experimenting with delivering credit card solicitations via handheld devices.

Palm remains the clear leader in this new technology. This month, Palm unveiled a new series of expandable handhelds. Two new models, the Palm m500 monochrome handheld and the Palm m505 color handheld, offer both plug-and-play expansion and mobile Internet access capability. Palm has more than 145,000 registered developers and solution providers, developing solutions based on the Palm OS platform. Competitors include Microsoft and Research in Motion.

ONLINE CARDS

As the wireless market prepares to take off, the Internet remains the most powerful new way to market credit cards. Consumer response rates to direct mail credit card solicitations continues to drop as response to online cards offers soar. About 5% of consumers now use the Internet to shop for a new credit card compared to 2% in 1999. BAIGlobal says only one out of every 200 direct mail credit card offers produces a response. Last year more than three billion card offers were dumped in mailboxes across the US. Another new consumer survey shows that Internet marketing of credit cards produced four million new accounts last year. Atlanta-based Brittain Associates says more than 13 million new card accounts have been opened since 1996 as a direct result of online marketing. Brittain found that 57.2 million U.S. adults accessed the Internet at least once every two weeks or more during 1998 compared to 87.6 million during 2000. The latest report from Nielsen//NetRatings shows that Internet penetration has reached 60% in the USA, with more than 168 million people having Web access from either the home or the workplace in January. However overall response rates to banner ads are hovering around 0.50%. CardWeb.com's consumer channels, which attract between 300,000 and 400,000 visitors per month, produced a click-through-rate between 3% and 5%.

CARD COMFORT

A new survey shows that for the first time U.S. online consumers are more comfortable providing credit card numbers and other personal information over the Internet than over the telephone. The Market Facts Interactive survey found that 56.9% of respondents say they are "comfortable" or "somewhat comfortable" providing credit card information over the Internet, versus 43.5% by telephone. The results for providing other personal information (health, family history and income) are comparable, with 40.1% of respondents "comfortable" or "somewhat comfortable" providing such information online, versus 32.7% for telephone. Among other findings: 74.5% are concerned about the information they provide online being shared in unauthorized ways, and 71.1% are concerned about their Internet use being monitored. About 60% of respondents agree that the existence of a Web site privacy statement/ policy makes them feel more confident that personal information will not be shared in unauthorized ways.

$TRILLION CLUB

Chances are you do not realize how big the credit card business is worldwide. VISA released preliminary data this month indicating it is approaching the $2 trillion level in overall sales volume. VISA worldwide card dollar volume edged past the US$1.8 trillion mark, a 21% increase over 1999. Transaction volume grew an estimated 19%. VISA says it saw the most dramatic growth in its CEMEA (Central Europe-Middle East-Africa), Asia-Pacific, and Latin America & Caribbean regions with year-to-year growth rates of 51%, 45%, and 31% respectively. VISA also reports it now has over one billion payment cards in circulation globally. The VISA acceptance network now includes over 21 million merchants and 652,000 ATMs. MasterCard is roughly half the size of VISA worldwide.

$BILLION CLUB

In the U.S., the top issuers generated almost $1 trillion in sales collectively, last year.

      TOP  TEN  ISSUERS  2000
     (amount charged to cards)
1. American Express    $221.6 billion
2. Citigroup           $188.0 billion
3. Bank One/First USA  $142.5 billion
4. MBNA America        $105.4 billion
5. Discover            $ 90.1 billion
6. Chase Manhattan     $ 60.8 billion
7. Bank of America     $ 54.5 billion
8. Capital One         $ 37.5 billion
9. U.S. Bancorp        $ 34.1 billion
10. Household          $ 33.0 billion
  Source: CardData (www.carddata.com)                   

CARD DEBT SOFTENS

After a very sluggish December, American consumers have continued to show restraint with credit card debt. During January, consumers added $6.7 billion compared to $9.2 billion for January 2000. According to preliminary figures released this month by the Federal Reserve, revolving debt grew 12.1% annually for Jan 2001 compared to an 18.5% rate for Jan 2000. Last year American consumers added $67 billion to total revolving credit. Overall, consumer credit is growing at a 12.6% rate. At the end of January, American consumers were $1.550 trillion in debt, exclusive of home mortgages. The latest FRB data shows the average annual interest rate charged on credit card accounts that revolve is 15.23%.

ARBITRATION WAIVED

The Maryland Court of Appeals ruled this month that credit card customers of Chevy Chase Bank can proceed with a lawsuit regardless of the bank's notice that all disputes have to be resolved through arbitration. Chevy Chase, which sold its credit card portfolio to First USA in 1999, notified cardholders in early 1996 of the arbitration requirement. The arbitration clause was added at the same time the firm relocated its credit card division to Virginia to avoid Maryland's 24% interest rate cap on credit cards. Chevy Chase was among the first card issuers in the USA to introduce punitive interest rates on high risk cardholders. At the time, Chevy Chase imposed rates as high as 28% on some cardholders. The Maryland court said that the federal arbitration law does not preempt Maryland law. The class action suit claims Chevy Chase breached its promise not to exceeded Maryland's usury laws.