Credit

China's Shenzhen Ping An Bank says its credit cardholders have paid more than 400 million yuan (US$57.9 million or 37.6 million euros) worth of credit card bills at convenience stores in Shanghai since the bank's service began in November. In the past month, credit cardholders paid back 160 million yuan at participating convenience stores. Cardholders can pay bills at some 2,000 convenience stores in Shanghai, a bank spokesperson tells CardLine Global. "We are a middle-sized bank and have only four branches in Shanghai, [so] the service ... at convenience stores makes up for the insufficient number of outlets in the city," the spokesperson says. The bank has issued at least 700,000 credit cards. "Multiple-channel card repayments is a new trend in the credit card market," Fei Cao, an analyst with Beijing-based research company Analysys International, tells CardLine Global. "Banks want to attract more credit card customers, and the facilitation of repayments is one of the factors that can help them." China Merchants Bank, Shanghai Pudong Development Bank and Shangzhen Development bank also provide the same service at convenience stores in Shanghai and Beijing, in association with payment network China UnionPay.

Australian authorities have told online auction company eBay Inc. to delay plans to mandate PayPal, eBay's payment service, as the only online-payment option on the company's Australian site. The Australian Competition and Consumer Commission is investigating whether the rule is anticompetitive. EBay has said that buyers and sellers are less likely to dispute transactions routed through PayPal than transactions routed through bank accounts. The commission says it will wait for a response from eBay and other interested parties before making a final decision. EBay did not return a CardLine Global request for comment. EBay has created a two-step process to enable Australian sellers to ready themselves to accept either PayPal or cash on pickup, the commission says in a statement. As of 21 May, all sellers were required to offer PayPal as one of their accepted payment methods. The second step, scheduled to start Tuesday, would require that all transactions on eBay be paid either through PayPal or cash on pickup. The regulation bans direct deposits, money orders and personal checks as payment. The new policy "will substantially reduce competition to supply online-payment services to users of online marketplaces more generally," Commission Chairman Graeme Samuel says in a statement. Last month, the commission told CardLine Global that authorities also are concerned that eBay's mandate will result in higher PayPal sellers' fees (CardLine Global, 15 May).

Malaysia-based CIMB Bank says it expects to see more customers using online banking as increasing fuel costs discourage consumers from driving to bank branches. The bank's customers made about 1 million online transactions last year, the bank says in a statement. The bank did not say how many new online customers it hopes to attract. The bank recently introduced a service with Malaysian-based mobile operator Maxis Communications that enables the bank's online customers to add value to their prepaid phones by transferring funds from bank accounts. CIMB is a subsidiary of CIMB Group, which has 366 branches, 1,252 ATMs and more than 4.5 million customers in the country, the statement says.

United Overseas Bank Malaysia would double its debit and credit card base to 1.2 million under a projection bank officials released this week. The bank, a subsidiary of Singapore-based United Overseas Bank, plans to offer new card products and expand its payment networks in Malaysia to achieve that goal, according to a statement from the bank. The bank this week began issuing MasterCard- and Visa-branded platinum cards. The Singapore-based bank has issued more than 2.5 million credit cards in Asian countries.

United Kingdom-based InterContinental Hotels Group PLC says customers now can use China-issued bankcards to make online reservations and payments. The hotel company has signed a deal with ChinaPay E-Payment Service Co. Ltd., a subsidiary of China UnionPay, to provide the service. InterContinental says it is the "only international hotel group in China" to offer this service, according to a statement. Previously, InterContinental accepted only internationally branded credit cards for online reservations, and guests had to make all payments during checkout. The new service "allows [the group] to reach out to nearly 1.5 billion holders of locally issued bankcards across China," the statement says.

CVS Caremark Corp., Rite Aid Corp. and Walgreen Co. this week filed a lawsuit against American Express Co. in U.S. District Court for the Eastern District of New York. The suit alleges that the contracts AmEx requires merchants to sign to accept its cards prevent them from steering customers to competing products. While Visa and MasterCard set the interchange rates as part of the fees retailers ultimately pay issuers to accept their cards, AmEx and Discover Financial Services negotiate their card fees directly with retailers. AmEx has said its credit cards attract "premium customers," so it sets the transaction fees it charges retailers higher than other brands charge. Attempts to reach attorneys for the retailers were unsuccessful. An AmEx spokesperson tells CardLine that, "based on our preliminary read, we do not believe there is any merit to their argument. We intend to vigorously defend our position."

Capital One Financial Corp.'s chief financial officer links delinquencies in the bank's credit card portfolio to the cardholders' job situations. Gary L. Perlin, CFO and executive vice president, told investors at the Keefe, Bruyette & Woods Diversified Financial Services conference last week that the bank went back 20 years to study the cycles in delinquencies. "Employment is the critical variable for understanding how any unsecured loan book is going to play out over time, since we are talking about people's ability to pay," Perlin says. The bank underwrites unsecured card loans entirely on ability to pay, he notes, adding that credit card delinquencies have been a leading indicator of challenges in the employment market. "I can't say where we are in the employment cycle, so I can't tell you that we have finished with the increase in card delinquencies," Perlin says. "There are lots of good reasons not to assume that." Looking at past trends, Perlin calls credit card delinquencies a leading indicator that the job market may remain weak for some time. On the other side of the cycle, he said, "we should see credit card delinquencies curing faster, or at least ahead of the actual trend in employment." Cap One says that occurs because cardholders "sense what's going on" in the marketplace and with their employers "and start to change their behavior before the actual changes take place around them." The bank has built allowances to cover 12 months of loan losses and expects loss rates to reflect economic, employment and other negative trends, says Perlin.

The latest Moody's Investors Services report on the performance of credit card debt provides a roundup of gloomy spring news. In April, card-loan performance deteriorated in four of the five categories Moody's Credit Card Indices track. The indices cover more than $445 billion in U.S. bank credit card loans that back the securities Moody's rates. Annualized credit card charge-off rates in April were 6.27% of outstanding loans, up 150 basis points from 4.77% in April 2007 and the highest charge-off rate since December 2005 when charge-offs spiked before changes in personal bankruptcy laws. The delinquency rate in April was 4.5%, up 80 basis points from 3.7% the same time last year. Cardholders paid back 17.49% of their card debts in April, about 114 basis points less than the 18.63% of balances they repaid the same time last year. The yield on card loans (the annualized percentage of income, mostly finance charges and fees, collected during the month as a percent of total loans) fell in April to 18.14% from 18.64% a year earlier.

Nine million U.S. mobile-phone subscribers say they used their mobile devices to pay for goods or services in the first quarter ended March 31, according to a report by the Nielsen Co. Nielsen surveys 30,000 wireless subscribers monthly. Some 6.5 million consumers used text messaging to make purchases as of the end of April, according to the report. About 5 million used mobile shopping and auction sites in April, up 72.4% from 2.9 million in April 2007, the report says. "As more mobile-commerce services become available and consumers develop a greater trust for phone-based transactions, we expect commerce to be an increasingly important part of the mobile experience next year and beyond," Nic Covey, director of insights at Nielsen Mobile, told attendees Thursday at the Internet Retailer Conference and Exhibition in Chicago. Security remains the primary concern among mobile-phone users who do not participate in mobile commerce, the study says. "U.S. consumers need proof that mobile transactions will be a safe, affordable and efficient complement to other modes of shopping," Covey says.

Prepaid Card Holdings Inc. announced this week it has hired John W. Weber Jr. as vice president of finance and principal financial officer..

First Data Corp. has extended an agreement to provide merchant processing services for customers of Webster Financial Corp. of Waterbury, Conn.

Softening of consumer lending demand has persisted over the past eight weeks and delinquencies on consumer loans has increased in some areas, according to the Beige Book, the Federal Reserve Board's summary of economic activity reports from all 12 central bank districts, which was released Wednesday.

Anticipating that Discover Financial Services will report very little change in charge-offs and delinquency rates for its credit card loan book during May, Stifel Nicolaus analyst Christopher Brendler on Wednesday suggested that the economic stimulus checks will have a scant impact on cardholder payments.

Continental Airlines will receive a $413 million initial payment from an updated co-brand credit card deal with Chase Bank USA, the airline disclosed today in a filing with the U.S. Securities and Exchange Commission. Continental's agreement with Chase extends its co-branded credit card deal through the end of 2016. Of Chase's initial payment to Continental, $235 million relates to Chase's advance purchase of frequent-flyer mileage credits, and the two parties consider part of that advance purchase a loan to Continental, according to the SEC filing. Houston-based Continental will report the loan in its financial filings as a long-term debt, a debt that will begin decreasing in 2016 based on mileage credits flyers redeem. Continental says in the filing it expects to have access to between $3.2 billion and $3.3 billion at the end of the second quarter in the form of unrestricted cash and short-term investment balances. The extra cash could come in handy for severance pay and other restructuring costs. Continental in July plans to cut 6.5% of its employees and 11% of its domestic flight capacity.

Americans' adverse financial health has a significant negative impact on their physical health, the results of a recent survey suggest. Seventy percent of the respondents to the Associated Press-AOL Health Poll, whose results were released Monday, were cardholders. Sixty-two percent of the cardholders pay off their card balances in full; 9% failed to make the minimum payment on at least one card over the past six months; 32% had balances of at least $3,000; and 10% said they had reached their credit limit on one or more cards. For the group of cardholders who carry debt, 10% said they worry about their overall debt "all of the time," and 14% said they worried "most of the time." Consumers also were quizzed on the relationship between their debt load and stress levels. Nine percent of respondents reported "a great deal of stress," and 12% said they felt "quite a bit of stress" over their total debts. Ten percent of respondents said the total debt they have taken on will be "an extreme" or "large" problem over the next five years. Fifteen percent of respondents said they were "very" or "quite" concerned that they would never be able to pay off their debts. Respondents with higher stress over debt had an average 18 percentage-point increase in combined health problems compared with respondents with lower debt-related stress. Among the health problems cited were increased rates of insomnia, migraines, severe anxiety, depression, high blood pressure, heart ailments and ulcers. Abt SRBI Inc conducted the AP/AOL phone interviews with 1,002 adults, including 778 who have credit cards, from March 24 through April 3.

Alternative payment methods are more likely to displace credit card transactions than debit card volume, according to Aric Morrison, author of a Packaged Facts report on alternative payment systems and owner of New York-based Cogitamus Consulting Inc. Alternative payment forms, such as PayPal, are electronic payments that circumvent traditional payment forms, such as cash, check, credit or debit cards, says Morrison. Debit card payments and most alternative payments are similar because, unlike credit, the funds exist and are drawn from users' accounts, he says. Additionally, most alternative payment growth is occurring in online transactions, where most purchasers historically have used credit cards, says Morrison. "The threat is really more against credit than anything," he says, adding that the threat is small now but appears likely to grow as more consumers use alternative payment methods.

More than 90% of Nautilus Hyosung America Inc.'s customers buy ATMs through a Web-ordering system, Chan Park, company president and CEO, told CardLine sister publication ATM&Debit News at the company's second annual Users' Conference in Grapevine, Texas. The Coppell, Texas-based company began accepting orders online in June 2007. "Web-site ordering is more convenient, replacing faxes and e-mail, and Web-site ordering builds the company's customer database," Park says. "We have a record of customers. We see their history. We know how many machines they are ordering." The company provides distributors and ISOs with an account and PIN to place orders. The site also has photographs and specifications of each model Nautilus Hyosung manufactures. The company would like all of its distributors and ISOs to order through the Web site, but Park says companies that buy one or two machines probably will continue to fax orders or send them by e-mail.

Wells Fargo & Co. earlier this week added two functions to its browser-based commercial mobile-banking service. The service, CEO Mobile, now features wire-transfer services and image positive pay, which enables users to view check images. The San Francisco-based bank added the services because customers requested them, says Megan Minich, a senior vice president who leads the CEO Channel team for the Wholesale Internet and Treasury Solutions group. CEO Mobile, which the company launched in April 2007, supports account-activity and balance monitoring. Wells plans to offer additional services, Minich says. "We continue to look at services on our [online] CEO platform that we think would be valuable to a mobile worker," she says.

RapidAdvance LLC, a Bethesda, Md.-based merchant cash-advance company, has acquired Merchant Cash Express Ltd. The United Kingdom-based cash-advance company will operate as a subsidiary of RapidAdvance, according to the companies, which did not disclose terms of the deal. "The UK market has many similarities to the U.S. market," says a RapidAdvance spokesperson on why the company is expanding overseas. "Small businesses need more financing options, and bank lending is tightening in the UK as well. Therefore, we believe the UK is a logical next step for our growth," the spokesperson tells CardLine sister publication ISO&Agent Weekly. In a cash advance, merchants take a lump sum against their future credit card receivables to finance improvements at their businesses. The merchants pay back a share of the advance to RapidAdvance until the entire amount is paid back, including a fee the merchant cash-advance company charges the merchants. RapidAdvance's expansion into the UK follows its foray into Canada less than four months ago in a deal to offer its services to Canadian merchants through Advantex Marketing International Inc., a Toronto-based merchant-services company (CardLine 2/22). RapidAdvance has no plans to expand outside the United States, Canada and the UK, the spokesperson says.

NetSpend Corp. announced Tuesday it has promoted James DeVoglaer to senior vice president of information technology, Paige Ellis to vice president of human resources, Lisa Henken to vice president of partner services, Andrew Byala to software development manager and Todd Ginsbert to application architect.