All articles by Verdict Staff
Verdict Staff
GE Money moves operations to London
In a decision that underscores the increasingly global nature of its operations, US-based GE Money the consumer finance arm of multinational technology conglomerate General Electric (GE) has announced that it will be moving its headquarters to London. It is currently the worlds largest provider of private-label credit cards, with around $200 billion in assets.The announcement of the move coincided with the news that David Nissen, the head of GE Money for the past 15 years, will be replaced by William Cary, who currently leads the divisions European, Middle Eastern and African operations.
Virtual spend turns into real money
Its a modern kind of alchemy, and it represents a big opportunity for prepaid cards. Online gaming is drawing huge numbers of players ready to spend real money on virtual goods and services, with prepaid cards as the payment mechanism. Charles Davis reports. Its like another world, literally and figuratively. Unbeknownst to most of us, a teeming mass of gamers across the world is spending more and more time and money in virtual worlds made possible through the latest in video games. Theyre called massively multiplayer online games (MMOGs) and they are a hot and virtually unexplored segment of the payments market. The MMOG is a global phenomenon that can support hundreds or thousands of players simultaneously. The games are played on the web and feature at least one virtual world in which players can interact globally. Its no surprise to those with children that gaming is a huge phenomenon. What is surprising is that gaming crosses generational gaps with ease. In fact, online gaming is actually the opiate of the middle-aged middle class, with average household income hovering between $35,000 and $75,000, according to Nielsen Interactive Entertainments third annual Active Gamer Benchmark Study. Nielsens extensive survey of demographic, age and gender trends in the video game space found that as of August, about 117 million people in the US qualified as active gamers, meaning they spend at least one hour per week on a gaming device, up from 112 million last year. Of the active gamers, 56 percent play games online, and 64 percent of those online players are women, according to the study.
Region round-up
Hong Kong credit card transactions reached a record high of HK$73.76 billion ($9.47 billion) in 2007… Mumbais railway operator Central Railways will issue tickets on smart cards for its suburban service… According to a recent presentation from South Africas Standard Bank, credit card fraud in the country for 2007 reached the ZAR350 million ($45 million)… US banks have failed to persuade their customers to use contactless cards and signature-based debit cards instead of PIN debit…
No clear path for Asia mobile payments
Mobile payments have had a mixed reception in Asia. Japan and Korea were early adopters but Thailand, Malaysia and Vietnam are considerably more guarded. In these countries, lack of a common platform and the investment required means the business case is not compelling. Titien Ahmad reports. Mobile payments are considered to be the killer application of mobile banking, with industry estimates putting worldwide payment volume by mobile phone at $22 billion by 2011. It seems to be a straightforward proposition mobile networks cover more than 80 percent of the worlds population, creating an instant market that cannot yet be reached through expensive ATM and branch set-ups. But mobile banking and payments have not really taken off in many markets as expected. For example, a survey by technology consultancy Forrester Research found that only about 4 percent of US online consumers with a mobile phone used any mobile banking applications. In Asia, mobile payments have had a mixed report card. Trials have been carried out in selected markets but, apart from Korea and Japan, there are very few successful, wide-scale implementations of mobile payment services.
Credit crunch? What credit crunch?
Sav Credit operates in the near-prime credit sector and has made a number of high-profile acquisitions recently. Despite the credit crunch, the company is optimistic about market conditions and is on the lookout for more acquisitions as it looks to scale up.
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Private-label cards near mainstream
Private-label and store cards occupy an increasingly important space within the field of card payments, and despite retailers concerns over economic and consumer conditions, many still regard private-label offerings as fundamental to their overall growth strategy. Victoria Conroy reports. Private-label and store cards are now a central business strategy component for many retailers and remain a major focus for some of the worlds largest payment card players, including GE Money, HSBC and others. Not only do they provide an additional revenue and fee stream for the retailer (and issuer), they also act as a loyalty-strengthening tool by ensuring increased sales and footfall. Typically, they also charge higher rates of interest than standard credit cards, although regulators in the UK in particular have heavily scrutinised pricing practices and are taking a much harder line than before. Despite significant turbulence in economies worldwide, 2007 saw further consolidation of private-label operations, following on from previous mega-deals such as Citis acquisition of the Sears card portfolio. However, the uncertain economic outlook may yet impact on private-label and store card operations over 2008 due to weakening consumer confidence and a diminishing well of credit from which to fund acquisitions.
Barclaycard stood firm in 2007
Despite the writedown of $3.1 billion on the value of uncertain assets, Barclays has been able to report relatively healthy figures in line with the expectations of analysts, despite the global financial woes currently shaking up the markets.
Hong Kong still has room for growth
Although the Hong Kong credit card market is close to saturation, issuers are still keen to get a slice of the islands increasing affluence and consumer confidence. With customer retention the name of the game, innovative product offerings to boost loyalty are on offer. Truong Mellor reports. Consumer spending is once again on the rise in Hong Kong, one of Asia-Pacifics strongest economies, fuelled by improvements in the labour market such as significant wage rises in 2006 and positive growth in employment rates. Wage growth has been focused within the upper and upper-middle classes in recent years, largely due to more foreign workers entering the economy as well as wage pressure from China on the countrys low value-added industry sectors. The Hong Kong market remained an island of financial calm during the consumer lending default crises seen by Taiwan and South Korea several years back, which subsequently saw major card issuers ramp up their investment in the country. Retail sales across the entire Asia-Pacific region are expected to show continued growth on the back of a strong consumer confidence sentiment for the first half of 2008. According to the latest MasterCard Worldwide Index of Retail, Hong Kong is predicted to see a huge 10.5 percent rise up from 3.2 percent for the first half of 2007 driven by rising household incomes and a robust stock market.
Visa IPO is largest in US history
Visa Inc has defied difficult conditions in the financial markets by unveiling details of an initial public offering (IPO) that will be the biggest in US history. In its statement to the US Securities and Exchange Commission (SEC), the agency that administers the countrys securities laws, Visa says the flotation could be worth $18.8 billion. The offering calls for Visa to sell 406 million Class A shares at $37 to $42 each, for proceeds of $15 billion to $17.1 billion. Visa said it might sell another 40.6 million shares to meet demand. Even if the shares trade at the lower end of expectations, the IPO will be the USs biggest, ahead of AT&T Wireless Services $10.6 billion offering in April 2000. The IPO would also be the second-biggest ever, behind Industrial and Commercial Bank of Chinas $21.9 billion flotation in 2006. The timetable for the IPO has yet to be confirmed by Visa, but is widely expected to take place in the second half of March. The timing issue may also be critical. Planned IPOs worth more than $21bn have been pulled from the global market in the first two months of 2008 according to Thomson Financial, underlining the degree to which the credit market turmoil is hurting investor appetite.
Hungarian regulators set sights on MasterCard’s interchange fees
At a time when card issuer fees are coming under increased inspection across the globe, MasterCard has recently announced that financial regulators in Hungary have begun a formal investigation into the matter of its interchange fees within Europe. The company said this probe by the Hungarian Competition Authority follows an informal investigation it had been conducting of MasterCards interchange fees since the middle of 2007. MasterCard is the card brand accepted by the largest number of merchants in Hungary. The probe by the Hungarian Competition Authority is only the most recent regulatory query into the issue of MasterCards interchange fees. In a recent regulatory filing with the US Securities and Exchange Commission (SEC), MasterCard said that regulatory authorities and central banks in numerous countries including Brazil, Colombia, Mexico, South Africa, Portugal, Singapore and Switzerland are currently reviewing MasterCards interchange fees and may seek to regulate them. The European Commission has already firmly reprimanded MasterCard, telling the company late last year to cut its interchange fees within six months or face heavy fines (see CI 393); European Commissioner for Competition Neelie Kroes ruled that the fees paid by the retailer to a card issuer were illegal and a tax on consumption. As card payments have become more crucial to the functioning of a local economy, the level of interchange fees between issuing banks and the retailer has come under increased scrutiny. There have been rulings against MasterCard in relation to the level of these fees in Poland where they were judged to be unlawful under Polish competition law as well as in New Zealand, where its Competition Commission filed a lawsuit seeking penalties, and was subsequently joined in this by several of the countrys largest merchants. MasterCard are currently appealing the Polish decision.