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MasterCard found that consumers want to store a variety of information on their smart card, including "ship to/bill to" addresses, phone numbers, passwords or log-ins, frequently used membership numbers, store discounts, receipts, clothing sizes, warranty information, and more. Therefore, MasterCard is set to publish specifications for an application programming interface that enables cardholders to personalize their MasterCard smart cards. The MasterCard Open Data Storage or "MODS" specification provides application developers with an interface that allows them to implement interoperable solutions across multiple channels, such as PC, mobile phones, and PDAs, using varying platforms. To take advantage of the MODS capability, cardholders may voluntarily fill out a profile of themselves with the personal information they wish to have stored on the chip. This data will be accessible to them at their PC, mobile phone, PDA, set-top-box, an interactive kiosk or a POS device in a retail setting. With the information stored on the chip, consumers will be able to optimize their shopping experience by receiving personalized, opt-in notifications that alert them to relevant sales and other targeted offerings. Consumers will have the convenience of not having to remember details such as clothing sizes, warranty information, passwords, and frequent flier numbers, etc. Consumers can also decide whether to secure specific information with a password, and confidential data can be further protected by using the chip's advanced security features. MODS will enable card issuers to expand the utility of their payment cards to the consumer and segment card offerings based on consumers' needs. Merchants will be able to offer customized services based on customer history and have the ability to link online and offline retail locations.

In an effort to enable airline smart card applications to co-exist comfortably with payment and other related applications, the International Air Transport Association and VISA International announced they will partner to promote the development of a global interoperable smart card standard for the airline industry. VISA, in partnership with smart card vendors, Oberthur Card Systems and Philips Semiconductors, has already started running educational courses in chip technology for IATA staff and representatives from airline organizations. The group will develop a global smart card specification that will take into account new requirements in commercial aviation for the sharing of data between airline applications, such as electronic ticketing and biometrics. Key drivers for smart card growth within the airline industry include the need to support new security and identification requirements as well as the need to create common e-ticketing standards. Opportunities also exist for airlines to take greater advantage of e-commerce applications, such as online ticket purchases.

VISA also inked a deal with two competitive rewards-software developers to create interoperable solutions for smart card-based rewards or incentive services in the USA. Under terms of the deal with Detroit-based Catuity and the French firm Welcome Real-time, the companies will create the middleware to support a wide range of rewards and electronic-marketing solutions for smart cards and terminals offered by other companies. Toward that end, VISA designated Welcome to define and implement a common approach for supporting multiple card technologies at a single rewards-enabled POS device. The solution will initially focus on products and services by Catuity and Welcome but will support solutions from other firms. VISA says a similar approach will be applied for back-end customer-service functions. VISA also announced a shared-system initiative to accelerate the adoption of rewards services on multi-application smart cards.

VISA, Sun Microsystem, and smart VISA issuers Providian, First USA, and Fleet announced in April the winners selected in the "smart VISA Challenge." The contest challenged individual developers to use Java Card technology and tools to create applications for the smart VISA card. The two grand-prize winners will each receive the $75,000 Grand Prize. A second-year computer science student at Harvard University developed an application that complements POS transactions. A Virginia man developed an application which uses the smart Rewards application to present targeted incentives to consumers. Providian also presented a cash prize of $25,000, a Handspring Visor, and royalty rights to a New York man for his development of a philanthropic smart card application. First USA awarded $20,000 to one of the VISA winners for his application that networks with interactive television. Fleet chose an application related to transaction segmentation, awarding a $20,000 prize to a California man.

TSYS, Gemplus and IBM have teamed to create an integrated system that is capable of maintaining critical smart card programs like loyalty and rewards; credit, debit or other payments; security; identification; and access on a single, highly secure card with an embedded microchip. Under terms of the partnership, TSYS will provide this multi-application system for smart cards by joining its TS2 global card-processing platform with IBM's CMS-e chip management system that integrates an application management system from Gemplus. The companies say the alliance removes many of the hurdles that have blocked the evolution of smart card programs, offering a smart-card system that is flexible, delivers real-time consumer data at the point of contact and encompasses the full spectrum of smart-card lifecycle management.

Finally, London-based GlobalPlatform announced it will begin delivery this month of a Card Compliance Test Kit which provides the processes and tools necessary to verify a smart card's functional compliance to aspects of the GlobalPlatform Card Specification v2.1. The new program, which took one year to develop, will reduce the need for proprietary testing of new smart card products, and will lead to cost and time reductions for card manufacturers, issuers, and other parties thus faster development of smart cards worldwide. The GlobalPlatform Card Spec v2.1 has emerged as the standard for an open smart card infrastructure. VISA International previously transferred its Open Platform specifications to GlobalPlatform. VISA, American Express, JCB, and MasterCard, support GlobalPlatform as well as more than 50 other major companies. GlobalPlatform implementations include the Citi.You and Citi Smart MasterCard; the ANZ First Smart VISA; the Swedish Banking Consortium's CASH Smart Card; and the U.S. Department of Defense Common Access Card.

MasterCard reported that its gross dollar volume for worldwide credit programs grew 15.9% last year to $827 billion, and GDV for off-line debit programs rose 27.8% to $159 billion. Strong GDV growth was reported for all MasterCard's regions: the U.S. rose 19.8%; Europe, 11%; Asia/Pacific, 18.2%; Latin America, 26.4%; Middle East/Africa, 18.9%; and, Canada, 15.3%. Global growth was generated by both strong purchase volume, up 13.7%, and cash volume, up 28.6%. At year-end, MasterCard's had nearly 520 million MasterCard-branded cards, an 18.8% increase over 2000 and more than 24 million acceptance locations, a 16.4% increase over year-end 2000. In the United States, which accounts for more than half of total GDV, MasterCard-branded products were used to process 5.9 billion transactions in 2001, generating $518 billion in GDV, a 19.8% GDV increase over 2000. Both strong purchase volume growth of 16.8% and strong cash volume growth of 29.5% drove this high growth rate. United States GDV growth for fourth quarter was 20.4%. Fourth quarter 2001 purchase volume growth rate of 17.3% versus the same period in 2000 demonstrated a strong recovery from the lower third quarter rate of 14.3% growth primarily caused by the events of September 11th. By the end of 2001, the number of MasterCard cards issued in the United States had jumped 16.7% to almost 275 million.

VISA continues to maintain overwhelming leadership in the U.S. off-line debit card market with a commanding 77% share. VISA Check Cards now represent 35.3% of VISA's total U.S. card volume compared to 17% just five years ago, and VISA is now processing more debit transactions than credit transactions in the USA. Since 1996, VISA's off-line debit card volume has more than tripled even though its market share has declined somewhat, from 84% to 77%. During 2001, VISA processed $323,989,969,000 in Check Card volume, a 26.8% increase over the previous year. Of the $324 billion in gross debit card dollar volume posted last year, $205.3 billion was in purchases and $118.7 billion was in cash advances. The number of VISA Check Cards in the market jumped 14.5% during 2001, compared to a 1.7% increase in the number of credit cards. VISA now has 117 million Check Cards and 260 million credit cards in the USA. In terms of transactions, VISA processed 6.9 billion debit card transactions during 2001 compared to 6.2 billion credit card transactions. VISA also reported an 11% increase in the number of merchant locations last year, from 4.4 million to more than 4.9 million.

When it comes to profits, Capital One was up, American Express was down, and Citibank was in-between.

Capital One first quarter profits rose by 31% and revenues soared by 38%, compared to 1Q/01. However, charge-offs and delinquency increased despite a 54% increase in managed loans over the past twelve months. Earnings for the first quarter of 2002 were $188.0 million on revenues of $2.1 billion. For the first quarter, Cap One's managed net charge-off rate hit 4.00% compared to 3.75% one year ago. The managed delinquency rate (30+ days) also rose to 4.80% compared to 4.72% one year ago. The increase in the charge-off and delinquency rate comes in the face of remarkable growth in managed loan balances. During the first three months of this year, Capital One added $3.3 billion in loan balances to end the quarter at $48.6 billion. One year ago, Capital One had $31.5 billion in total managed consumer loan balances. But the growth in loan balances comes at a very steep marketing expense. During the first quarter, Capital One spent 53% more than it did in the first quarter of 2001. Capital One shelled out $353.5 million in marketing expense during 1Q/02 compared to $231.2 million in the comparable period of the prior year. Capital One noted that it added 2.8 million net new accounts, bringing total accounts to 46.6 million. Based on the first quarter marketing expense, Cap One's per account acquisition (net new accounts) cost has now hit $126. The company also noted that its managed net interest margin increased to 8.87% in the first quarter of 2002 from 8.68% in the fourth quarter of 2001.

American Express Company reported first quarter net income for Travel Related Services of $467 million, down 11% from a year ago as charge volume slipped 2.3%. Charge-offs were up 27% and delinquency increased nearly 16% from 1Q/01. However, net finance charge revenues increased 29%, due to wider net-interest yields and loan balance growth. This increase was offset primarily by declines in travel commissions and fees, discount revenue, and other revenue, reflecting weaker economic conditions compared to a year ago. The decline in discount revenue reflected lower corporate card spending in the travel and entertainment sector, which was partially offset by higher consumer spending in the retail and everyday categories.As anticipated, the provision for losses grew, reflecting the seasoning of the lending portfolio, higher lending volumes, and weaker economic conditions compared to a year ago. Charge card interest expense decreased due to lower receivable balances and lower funding costs.

Finally, Citibank reported that its credit card profits for North America rose 10% while profits for international credit cards jumped 14% between 1Q/01 and 1Q/02. However, growth in outstandings and new accounts was soft, as the delinquency rate and charge-off rate continued to spiral upward. Charge volume was up less than 1% since last year. Citibank reported that its North America credit card portfolio produced net income of $520 million on revenues of $3.4 billion. Internationally, Citibank's profits were $144 million. Charge-offs soared to 6.41%, compared to 4.84% one year ago. Delinquency (90+ days) was up from 1.84% for 1Q/01 to 2.17% for 1Q/02. Return on assets dropped 21 bps over the past year, from 2.13% for the first quarter of 2001 to 1.92% for 1Q/02. However, Citibank says pricing and funding initiatives led to a 190 bps improvement in the net interest margin.