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For consumers with credit scores of at least 750 the increased competition has filled the market place with unprecedented offers of 0% interest rates and generous rewards programs.

However, things may be changing. This month, MBNA and Providian worked out a deal to jointly issue the new "eBay MasterCard." MBNA will issue the card to consumers in the prime to super-prime markets while Providian will issue the card to consumers in the near-prime to prime segments.

Perhaps the market collision will turn into market collusion.

Meanwhile, other smaller sub-prime issuers continue to be stuck in the mud. In a move to satisfy regulators, Metris announced this month it will sell $550 million in federally insured deposits at Direct Merchants Credit Card Bank. The issuer also announced it will cut 25% of its senior management team. Sioux Falls, SD-based First Premier Bank is now under severe restrictions from regulators. The bank signed an agreement this month that restricts its growth and could lead to a portfolio sale. Reportedly, First Premier has been working with regulators for the past six months.

VISA says MasterCard's complaint has no merit and that MasterCard is simply trying to steal some of VISA's debit card business by inferring to VISA members they can avoid their share of VISA's legal obligation to the settlement fund. VISA says it expects to be able to fund its obligations under the settlement agreement out of its future revenues. Given the fact that the Wal-Mart settlement relates to money that VISA members have received as a benefit of their past debit transactions, VISA says it expects those members to bear a fair proportion of the settlement liability. VISA insists it would be grossly unfair for large debit issuers to seek to avoid the burdens of this settlement, leaving other members to foot the bill for the Wal-Mart case settlement. VISA says this is the reason behind its "Settlement Service Fee" bylaw. VISA says "MasterCard appears interested not in competition on the merits for debit issuance, but in taking opportunistic advantage of the Wal-Mart settlement to encourage VISA members to avoid their responsibility for participating in a system that was challenged, and then settled in a manner that insulates the VISA members from the danger of a potentially larger liability."

American Express said this month it expects to have its first U.S. bank agreements signed no later than the second half of 2004. Chairman and CEO, Kenneth Chenault, said VISA's and MasterCard's appeal to a recent ruling by the appellate court is nothing more than a delaying tactic. He said he expects VISA's and MasterCard's efforts to be exhausted no later than mid-2004. A three-judge panel of the Second Circuit Court of Appeals affirmed the 2001 court decision on September 17th, which required VISA to drop its "bylaw '210(e)" and MasterCard to end its "Competitive Programs Policy." VISA and MasterCard said they are seeking further appellate review, including requesting a hearing en banc before the Second Circuit Court of Appeals.

VISA's top executive warned American Express, that if its "210e" bylaw is banned, which prohibits members from issuing AmEx and Discover cards, VISA will aggressively take on American Express in the commercial products market at a new level of competition. CEO Carl Pascarella also said that MasterCard's recent court motion to stop VISA's "Settlement Service Fee" policy, in regard to the recent Wal-Mart debit card settlement, has absolutely no merit and is purely an "opportunistic" move by MasterCard to recover from its missteps in the off-line debit card market over the past decade. VISA said MasterCard was "asleep at the switch," failed to see the coming explosion in off-line debit, focusing instead on building its "Maestro" PIN-debit program.

VISA International reports that small business nearly outpaced corporate and government usage of VISA products over the past year. Usage growth by small businesses is up 26.4% for the year ending June 30th, to more than $79.3 billion, which includes transactions using "VISA Business" credit and debit cards, as well as small business inventory payments using "VISA Distribution." Transactions by medium-to-large business and government clients grew 21.3% to just under $79.5 billion per year, including volume on "VISA Corporate" and "VISA Purchasing" credit and debit cards. The commercial sector was up 11.8%. Annual growth rates in VISA's commercial debit products are 27.6%, and volume amounted to more than $29 billion per year at the end of June.

A processor reports that credit and debit bankcard sales at full-service restaurants increased nearly 20% in a year-over-year comparison between August 2002 and August 2003. Dallas-based Paymentech also reports that the average bankcard ticket price for its restaurant merchants in August was $39, compared with $40 one year ago. The National Restaurant Association's "Restaurant Industry Forecast" that overall sales (with all forms of payment) at full-service restaurants would only increase by 4.8% this year. Paymentech says it data show consumers are definitely using plastic more to pay for discretionary expenses.

A new survey has found that the percentage of consumers paying at least one of their bills online has increased from 17% in 2000 to 57% this year. The report says the most common method for paying bills online is through a credit card provider's Web site (58%), followed by their primary banking institution's site (52%). The research comes from CT-based InsightExpress which also found the most common online activities include accessing bank statements (72%), reviewing account transactions (57%), and transferring funds between accounts (53%). However, among those not paying bills online, more than three out of four (76%) cite security concerns. Additional barriers include an unwillingness to pay associated fees (62%), the requirement to install or configure software (42%), and lack of recourse for any errors committed while paying bills online (42%).

Internet usage for financial transaction has surged during the past two years, with nearly half of Internet users now conducting financial transactions online. More than two-thirds of this group log on daily to conduct financial transactions, with credit card accounts leading the way. The findings come from the latest issue of "The Consumer Internet Barometer," which also found that the proportion of consumers logging on primarily to conduct financial transactions has also grown from 3% to 5%. The report found that more than half of Internet users have made a purchase over the past three months, with 30% having spent more than $250. The percentage of consumers expressing satisfaction with their online experience has held steady at around 40% for the past two years, while their overall level of trust has hovered around 26%. "The Consumer Internet Barometer" is produced by NFO WorldGroup, Forrester Research and The Conference Board.

A new research study shows that online banking usage has doubled in the micro market and grows by 26% in the small business market. Micro market companies are defined as businesses with annual revenue between $50K and $1 million, while the small business market is defined as those with annual revenue between $1 million and $20 million. The study by Informa Research Services also found that 44% of companies in the small business market now use online banking. As recently as 12 months ago, only 12% of all businesses with less than $1 million in annual revenue used the online channel for routine banking. That figure is now 24%. Informa says what makes this trend even more significant is that adoption increased during a downturn in technology spending.

The number of individuals conducting banking transactions online has increased 79% over a two-year period, from nearly 13 million to 23.2 million individuals. On a year-over-year comparison, from the fall of 2001 to the fall of 2002, online banking grew 32% from 12.9 million to 17.1 million. Comparing the fall of 2002 to fall of 2003, the trend continued as the audience level for online banking grew 36%. The research comes from Nielsen//NetRatings, who also found that Sacramento and Salt Lake City surfers have the highest propensity for using online banking of any major markets in the country. Surfers in both markets are 54% more likely to have used online banking in the last six months than the average Internet user. Seattle and Austin followed as the second and third highest ranked major markets. San Diego rounded out the top five regions where online banking occurs.

Toyota Motor Sales USA this month launched a promotion which offers American Express gift cards as prizes. The "Get This Feeling" promotion offers consumers the opportunity to win one of 12 $10,000 AmEx-branded gift cards, or one of 1,000 AmEx-branded gift cards worth $100. The promotion is to drive parts and service sales. The promotion will run till October 31st.

Marriott Rewards launched a double points promotion through January 31st, for members who pay for their hotel stay with a VISA card. Members must register for double points and obtain full terms and conditions of the offer by visiting marriottrewards.com or calling (888) MARRIOTT. The points are awarded after the second stay at a Marriott hotel that is paid with a VISA card, and members can continue to earn double points on all subsequent VISA-paid Marriott hotel stays.

MasterCard and Travelocity have launched a promotion offering consumers who book two nights of "Goodbuy" hotel stays and flight/hotel reservations with their MasterCard, between now and October 10th, $100 back in the form of a MasterCard gift card and a Travelocity "Last Minute Deal" coupon. Qualifying travel must be completed by November 30th, 2003. With 40 million members, Travelocity is the seventh largest travel agency in the USA.