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MasterCard Worldwide will fight to keep Washington Mutual's debit card portfolio under its brand, Richard G. Lyons, executive vice president and global product group executive, debit and prepaid, told attendees yesterday at SourceMedia's ATM, Debit & Prepaid Forum in Chandler, Ariz. "We have great relations with Washington Mutual," said Lyons in response to a question from CardLine sister publication ATM&Debit News during his keynote address. Lyons said WaMu's debit card portfolio is a strong performer. "My hope is that wisdom will prevail, [and the portfolio will stay with MasterCard's brand]." Referring to the potential changes in debit card branding stemming from bank mergers announced the past few weeks, Lyons added a bit of levity, saying "I'm almost afraid to go to sleep at night." New York-based JPMorgan Chase & Co. nearly two weeks ago purchased Seattle-based WaMu, which had filed for bankruptcy protection (CardLine, 9/26). Analysts have speculated that Chase, a Visa issuer, may convert WaMu's debit MasterCard portfolio to the Visa brand. If Chase converts the portfolio to Visa, it could be a major blow to MasterCard's U.S. debit card market share. WaMu, the largest issuer of debit MasterCards, earlier agreed to convert 11 million to 15 million of it debit cards to MasterCard's contactless PayPass brand, which competes with Chase's blink contactless brand. Chase has not disclosed its plans regarding WaMu's debit card portfolio, one of the national five largest.

Bank of America Corp. says trouble may be ahead for its credit card portfolio. "Largely due to increased unemployment and increased bankruptcies, this portfolio is also experiencing rising delinquencies and losses," Kenneth D. Lewis, chairman, CEO and president, told analysts during a conference call yesterday. BofA charged off nearly $3 billion in managed credit card receivables during the third quarter ended Sept. 30, up 50% from $2 billion during the same quarter last year. Charge-offs during the quarter represented 6.4% of BofA's card receivables, up 173 basis points from 4.67% last year. BofA is focusing much of its loss-mitigation efforts, including tighter account management and increased collections, on California and Florida, where losses to home values also have created higher losses in credit card receivables, Lewis said. Average outstanding card loans during the quarter totaled $186.4 billion, up 8% from $172 billion last year. BofA reported interest income on domestic credit cards of nearly $1.7 billion during the quarter, down 6% from nearly $1.8 billion a year earlier. On cards issued outside the United States, BofA reported $535 million in interest income, up 44% from $371 million a year ago. BofA reported noninterest card income of $3.1 billion for the quarter, down nearly 14% from $3.6 billion last year. Purchase volume on credit cards was $62.7 billion, down 1% from $63.5 billion. BofA did not include detailed profit-and-loss statements for individual lines of business as part of its early earnings announcement yesterday. BofA says it will release that information later this month.

Alternative-payment providers such as PayPal Inc. and Amazon Payments continue to pose a threat to traditional payment methods, according to a study by Boston-based financial research and consulting firm Celent LLC. Though payment cards dominate the $170 billion e-commerce market, buyers use alternative-payment methods for approximately 15% of that volume, according to the report. Card issuers will continue to lose interchange revenue, as alternative payments show no signs of losing market momentum. Celent estimates card brands and issuers stand to forgo $345 million in volume in 2010 and about $1.7 billion in 2015. Alternative-payment methods offer consumers and merchants some advantages over payments cards, according to the report. Personal data security, online-shopping convenience and merchant pricing are significant improvements over payment cards, according to the report. "Consumers share information with far fewer players (when using alternative payments)," report author and Celent senior analyst Red Gillen tells CardLine. "You share your potential information with PayPal and not all the merchants you shop with." Besides these advantages, companies that support alternative-payment methods are giving consumers reasons to want to use their services. For example, they alert consumers they can use PayPal or Google Checkout as their preferred choice to purchase a product. Alternative-payments companies also offer discounts on purchases. And Bill Me Later, which eBay Inc. purchased on Monday (CardLine, 10/6), offers financing terms for certain items. Card brands and card issuers can slow the closing of gap between themselves and alternative-payment methods by working with the companies that accept payment cards as the source of funds, such as Google Checkout, Gillen says. PayPal accepts cards as the source of funds, but it also enables consumers to debit a purchase from a bank account.

Clairmail Inc. is testing a "snooze alarm" for bill payments initiated from mobile phones. The Novato, Calif.-based mobile banking and payment processor offers a mobile bill-payment service it markets as Mobile Lockbox to financial institutions and billers. A key function of Clairmail's service is what it calls "actionable alerts," meaning mobile-phone users whose banks offer the service may respond to alerts with commands to pay bills or just ignore them until later. Clairmail's new service, now in pilot phase, sends mobile-banking and bill-payment users an initial alert about 20 days before a bill's due date, Reetika Grewal, Clairmail director of product marketing, tells CardLine sister publication Cards&Payments. If the customer opts not to pay the bill right away, the service will send another notice a week or two later. This time, it will charge a convenience fee of 25 cents to 50 cents, as set by the financial institution, for settlement that is slightly faster than standard bill payment times. If a customer opts to wait longer, he will receive a final payment alert shortly before the bill is due, with the option of paying a convenience fee, usually between $5 and $10, as set by the financial institution, to expedite payment of the bill. The current pilot is testing the service only for automated clearinghouse payments, but Clairmail hopes eventually to expand the service to debit and credit card payments, Grewal says. Grewal would not disclose an estimated launch date for the service or the fees Clairmail will charge banks.