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From the September 2003 Issue of CardTrak |
The upcoming enforcement of the national "Do-Not-Call Registry" means the end of cold calling for credit card offers. However, as telemarketing becomes crimped by the new registry, email continues to gain strength, delivering strong results as a marketing tool. Click-through rates from email increased from 7.5% in 2Q/02 to 8.3% for the second quarter of this year. The findings come from DoubleClick's latest research which also shows that those who clicked on email links clicked an average of 1.6 times per email. The Financial Services emails had the highest category open rates at 48.1% while their click-through rates were the lowest among the categories measured (5.8%), which could reflect increased consumer interest in investments but the highly considered nature of financial services offerings. The second quarter data is based on over 2 billion permission-based emails from hundreds of clients.
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| MINI CARDS |
More than 15 million "VISA Mini Cards" have been produced and issued by IL-based Versatile Card Technology since the launch of the card in October 2002. Bank of America's "Mini VISA" is about half the size of a regular credit or debit card that can be attached to a key chain. The card can only be used with swipe terminals, not ATMs. BofA has exclusive rights to issuing the mini card for a one-year period. Following the first year, under a license from Bank of America, VISA member banks will be permitted to issue VISA-branded mini cards, for which Bank of America will receive royalty payments. The "Mini VISA" is a response to the successful launch in March 2002 of the Discover "2GO Card," a small, oval shaped credit card, in a protective case, that attaches to a key chain, belt, or money clip.
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| WAL-MART WINDFALL |
The recent $3 billion Wal-Mart debit card settlement with VISA and MasterCard may produce a windfall for the plaintiff's attorneys. Constantine & Partners and 29 other law firms have submitted a bill for nearly $600 million. If Judge John Gleeson approves the request, the legal fees would be the largest in the history of class-action antitrust settlements. A fairness hearing is scheduled before the court on September 25th. According to published reports, the attorneys are seeking to be compensated for conducting 400 depositions, processing five million documents, and handling more than 50 expert reports. The lawsuit took seven years. Constantine & Partners is expected to receive up to $300 million of the total fee.
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| MOVIE VOLUME |
VISA reported this month that nationwide sales at movie theatres reached $114 million in June, up 36% over the same period last year. In July, VISA movie-related volume was up 49% to $128 million. The huge increases come at a time when movie sales have been soft. According to box office tracker Exhibitor Relations, 2003 summer movie ticket sales have fallen by 3.3% over last summer. VISA says the volume is being driven by a number of factors including services such as Fandango and Movietickets.com that enable consumers to purchase movie tickets in advance.
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| OPTIONS MASTERCARD |
Canadian Tire Corporation has expanded its "Options MasterCard" portfolio during the second quarter, with net credit charge receivables up 29.3% to $2.02 billion compared to $1.56 billion at the end of the second quarter of 2002. During the quarter, Financial Services converted more than 25,000 retail card accounts to MasterCard accounts, bringing the year-to-date total to more than 46,000. Almost 2 million retail accounts have been converted to "Options MasterCard" accounts since the program's launch. More than 192,000 new accounts were generated during the second quarter through the in-store card acquisition program.
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| MASTERCARD 2Q/03 |
MasterCard International reported that its second quarter net income dropped 11.2% even though 2Q/03 revenues climbed 23.7% to $556.9 million, compared to one year ago. The nation' second largest card network said that $79 million of the $107 million increase in second revenues was due to its acquisition one year ago of MasterCard Europe. The decline in net income was impacted by a 29% rise in general and administrative expenses to $281.0 million, and a 22% increase in advertising and market development expenses to $195.4 million.
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| TARGET 2Q/03 |
Target reported that its credit card operations produced 20% of its total pre-tax profit of $793 million for the second quarter ending August 2nd. The retailer's "smart VISA" portfolio posted 2Q/03 outstandings of $3.89 billion, a 3.7% increase over the first quarter, and a 54% increase over 2Q/02. Meanwhile, Target's private label "Guest Card" credit card posted another drop as it migrates its best customers to the "smart VISA" program. At the end of the second quarter, Target's private label outstandings were $733 million, compared to $734 million in the previous quarter, and $865 million one year ago. Target's pre-tax profits from its credit card operations was $160 million compared to $151 million in 1Q/03, and well above the $129 million recorded one year ago.
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| MBNA FEES |
MBNA reported that its second quarter cardholder fee income increased 23.1% to $121.1 million and that its advertising expense for 2Q/03 increased 24.3% to $103.6 million. The issuer says the increase in credit card fees, which does not include securitized loans, was primarily the result of the growth in the portfolio, and an increase in the average fees assessed related to the implementation of a modified fee structure in the first quarter of 2002, which included higher late and over-limit fees. Credit card fees include annual, late, over-limit, returned check, cash advance, express payment, and other miscellaneous fees on credit card loans.
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| CITI-SEARS DEAL |
The Federal Trade Commission has provided antitrust clearance to Citigroup for its acquisition of the of Sears credit card portfolio. Sears announced last month that it reached a definitive agreement to sell its domestic private-label and bank credit card portfolio to Citigroup for more than $3 billion, or approximately 10% over the total outstandings. Other terms of the deal include payment for approximately $3 billion of Sears' net invested capital, related to loan loss reserves. Sears also expects to receive approximately $200 million in annual performance payments from Citigroup based on items such as new account and credit sales generation activities.
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| WALL STREET IMPACT |
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A new survey by Cambridge Consumer Credit Counseling shows that 28% of Americans are more willing to take on more credit card debt because the value of their stock portfolios has risen recently. Conversely, almost three quarters (72%) say stock market gains have not impacted their willingness to take on more debt. In August 2002, a period in which the stock market had been declining sharply, 43% of Americans said they were less willing to take on additional debt and 57% said they were unaffected by the declining value of their stock portfolios.
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| P-CARD POTENTIAL |
A new study has found that annual purchasing card spend doubled from $40 billion to $80 billion in the two-year period between January 2001 and January 2003. The research also found that purchasing cards have provided a 74% reduction in procurement cycle time; a 57% reduction in the number of petty cash accounts; and a 42% reduction in the number of suppliers in the maintenance, repair and operations supplier base. The "2003 Purchasing Card Benchmark Survey" conducted by Richard Palmer and Mahendra Gupta, revealed the importance of self-management tools and their significance to card performance. They found that businesses want transaction data that can be self-managed in real-time and provide a clear and comprehensive view of their payment cycles and also that organizations will increase overall transaction activity and the amount spent per transaction when their satisfaction with data transmission and data integration is high.
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| RE-LO CARD |
Prudential Relocation services released a survey this month showing that most corporations believe that "Lump Sum" relocation programs should be blended into the overall mobility strategy as a cost containment element. Prudential and U.S. Bank have teamed to issue the "Relo VISA Card," a pre-funded card for relocating employees. Survey respondents were asked how they track "Lump Sum" spending: 53% said they don't track how the money is spent and only 6% are using a summary report or "Relo Card" to track spending.
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| LONGHORN CARD |
The first-ever university affinity gift card is being launched by the largest "VISA Gift Card" program in the country. Simon Property Group and the University of Texas-Austin have teamed to launch the new "Longhorn Simon VISA Giftcard." The card, available in denominations ranging from $20 to $500, has a $2.50 handling fee, a portion of which will support activities at UT-Austin. The "Simon Giftcard" was piloted in August 2001 and was rolled out to nearly 160 Simon Malls this year. Simon currently operates 16 malls in the Texas area that sell "Simon Giftcards." The "Longhorn Giftcards" will also be available for purchase online by October.
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| BLACK CARD |
The U.K.'s Lloyds TSB has launched a customized credit card for affluent consumers. The new "Black Premier MasterCard" enables cardholders to change their individual card features, free of charge up to three times a year. Cardholders choose their own interest rate, cashback rewards and annual fee. Cardholders can also choose from a menu of six card options including a full concierge service, access to 400 VIP airports lounges, travel insurance, home assistant services, comprehensive health screening, and, rebates on healthcare costs. Interest rates start at 11.9% APR with an introductory offer of 0% for six months on balance transfers. There is a $25 monthly fee which can be waived.
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| TOY CARDS |
Showtime Networks has teamed up with Toys "R" Us and their well-known mascot "Geoffrey the Giraffe," to offer consumers a $50 gift card good at Toys "R" Us with a new subscription to SHOWTIME. The campaign began September 1st and will run through December 31st. Showtime Networks is also launching a national sweepstakes offering hundreds of prizes, including $5,000 VISA Gift Cards and Vespa Scooters to call centers who promote the subscriptions.
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| VISA CALCULATOR |
VISA USA has added a"Back-to-School Budget Calculator" to its "Practical Money Skills" Web site. The "Back-to-School Budget Calculator" is designed to help families create a financial plan for back-to-school shopping. This free resource uses an interactive worksheet to help students of all ages plan for what school supplies they will need before they head back to class this fall. The calculator equips families with a smart budget by reminding families to consider all of their back-to-school expenses, and allows for any needed adjustments.
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| WORK SAVINGS |
American Express has signed Starwood Hotels, Avis, and Budget as travel suppliers for its new "Savings at Work" program. Under the program, AmEx "Corporate Card" users at mid-size companies, those with annual revenues between $10 million and $1 billion, receive significant discounts for a wide range of business needs, including computers, wireless telephone services, office supplies, overnight shipping, hotel stays, and car rentals. Starwood will offer an average of 20% off standard corporate rates at line of hotels including Westins and Sheratons. Avis and Budget are both offering exclusive rates that are 25% off standard rates. Other "Savings at Work" participants include Staples, FedEx, Dell, Conference Plus, and AT&T Wireless Services.
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| US OPEN |
American Express has teamed with the owners of Rockefeller Center and the USTA to re-create the Flushing Meadows "US Open" in the middle of Manhattan. The area between 50th and 51st street will be transformed into center court complete with stadium seating, a Jumbotron screen, and concessions. The event will run between Saturday, August 30th and Sunday, September 7th. AmEx cardholders will have access to a number of benefits during the tournament including a reserved-seating section, "Pose with the Pros" photo booth, "Green Screen" photo opportunity for tennis fans to obtain a souvenir photo, and access to a silent auction of Andre Agassi memorabilia.
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| HACK ATTACK |
The U.S. Defense Department has confirmed that hackers broke into a Navy database during July and made off with information on 13,000 Citibank government credit card accounts. According to Federal Computer News, the attack took place between July 10 and July 24. Prompt action by the Navy and Citibank apparently thwarted any fraudulent transactions as no unusual activity in the card accounts took place. Last week, Citibank completed the replacement process for the 13,000 cards that were compromised. Reportedly, the Navy has also asked Citibank to replace 9,000 other cards in the program that may not have been compromised. The DoD's Purchase Card Program Management Office is investigating the incident.
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