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News Scan Feb 2012

Credit Card News, Economy News, Banking Industry News - Feb 2012
Feb 2012
  • The survey of more than 1,000 American retail banking executives from more than 200 institutions found that only 2% use text messaging as one of their top vehicles to communicate with customers even though more than 53% of consumers say they prefer to receive text notifications.
  • Also, only 4% say they use smartphone apps as a top communications method. Banks are really in the Stone Age when it comes to using mobile devices to communicate with customers.
  • The survey found that nearly half of all banks still use agents to manually call customers (in the case of mobile phones, consumers are getting verbal phone calls instead of SMS messages); and more than half still use direct mail to reach customers, despite direct mail having a response rate in the low single digits.
Feb 2012

Visa to Move to New Acquiring Fee Structure

Source: Paymentsnews Category: Credit Card News
  • While vague on specifics, Visa has announced to investors that it is changing its acquiring side fee structure in April.
  • First, Visa will lower variable acquirer processing fees for all Visa-branded products and across all merchant segments, including small merchants.
  • Second, we are expanding acquirer and merchant incentives to further lower merchants’ processing costs.
  • Third, Visa is implementing a new Fixed Acquirer Network Fee that will be assessed to acquirers based on both the merchant’s size and its number of locations.
Feb 2012
  • Big-cap companies have been hit with a number of high-profile earnings disappointments.
  • Small-caps", meanwhile, are beating estimates at a rate comparable to recent quarters, and profit margins are on the rise. It's a sign that U.S. economic recovery continues to gain momentum as domestic rather than export growth helps the smaller names.
  • Companies in the technology and industrial sectors have a bigger representation in the smaller capitalization indexes.
  • Earnings for smaller-caps reflect stronger growth trends so far. Earnings growth for the small-cap S&P 600 is expected to rise 12.1 percent in first quarter, similar to growth so far for the fourth quarter.
Feb 2012
  • 1.6 million Children living in high-poverty neighborhoods, according to one study that shows nearly 8 million children residing in poor areas in 2010.
  • The growth - a 25 percent increase - reverses the trend just a decade ago that saw fewer children living in communities with high poverty rates.
Feb 2012
  • American Express Co. will release an updated version of its digital wallet Serve that will include all of its prepaid products, as well as incorporate deals and loyalty rewards.
  • When Serve is updated, all Amex prepaid card users will use the Serve platform.
  • Amex will also allow users to make purchases from a mobile ecommerce site using a PIN in place of a longer card number.
Feb 2012

Obama Doubles Proposed Cost of Bank Tax

Source: Americanbanker Category: Debit Card News
  • American Express Co. will release an updated version of its digital wallet Serve that will include all of its prepaid products, as well as incorporate deals and loyalty rewards.
  • When Serve is updated, all Amex prepaid card users will use the Serve platform.
  • Amex will also allow users to make purchases from a mobile ecommerce site using a PIN in place of a longer card number.
Feb 2012

Visa 1Q Profit Rises 16.4% as Transactions Jump

Source: Wsj Category: Credit Card News
  • Visa Inc. posted a 16.4% increase in fiscal first-quarter profit as the credit-card processor continued to benefit from consumers' increased use of plastic while grappling with new federal rules that affect debit-card purchases.
  • Company said cardholders ratcheted up their use of Visa's credit and debit cards, driving up the volume of transactions it processed 8% to 13.6 billion.
  • Visa posted net income of $1.03 billion, or $1.49 per share, up from $884 million, or $1.23 per share, a year ago. Revenue rose 13.8% to $2.55 billion.
Feb 2012

Government assistance expands

Source: Cnn Category: Economy News
  • More than one in three Americans lived in households that received Medicaid, food stamps or other means-based government assistance in mid-2010.
  • And when Social Security, Medicare and unemployment benefits are included, nearly half of the nation lived in a household that received a government check, that’s more than 148 million Americans.
  • Some 26% of Americans lived in households where someone received Medicaid, while the figure was 15% for food stamps. Those programs were by far the largest of the safety net.
  • Meanwhile, 16% of people lived in households collecting Social Security and 15% receiving Medicare benefits. These entitlements have been expanding as the Baby Boom generation retires.
  • The rapid growth of the nation's government assistance programs has concerned many on both sides of the political aisle.
Feb 2012
  • The budget deficit shrank by nearly half in January compared to a year earlier as tax collections from individuals rose and outlays fell, the Congressional Budget Office said.
  • The January budget gap will bring the total deficit for the first four months of fiscal 2012 to $349 billion, a decrease of about $70 billion from the same period of fiscal 2011.
  • Outlays were $13 billion, or 5 percent, lower in January 2012 than they were a year earlier. But because of the New Year's holiday, some benefit payments were shifted into December, reducing outlays during the month.
Feb 2012

Bank Software Group Takes Aim at Cybercriminals

Source: Americanbanker Category: Banking Industry News
  • The latest frontier in banks' efforts to defend their mobile and online banking software from phishers, hackers and other types of cybercriminals is to build security into the development and testing of the applications themselves.
  • A group of bank technologists at BITS, the technology division of the Financial Services Roundtable, has created a Software Assurance Framework that provides guidance to developers on how to write more secure code.
  • In the past, this group has focused its security work on operations and network-based defenses against intrusions by hackers and malware.
  • Members come from many financial services companies including Bank of America, BNY Mellon, Capital One, JPMorgan Chase, PNC, Key Bank, PayPal and SunTrust as well as Microsoft.
Feb 2012
  • Although banks are pleased with the agency's position, the industry is concerned that until the law is changed, plaintiffs could argue that the bank waived its attorney-client privileges when it turned the information to the CFPB.
  • In such cases, a bank could be subpoenaed to provide confidential data that might be used against them in a lawsuit.
  • While banks agree publicly with the bureau's analysis that sharing information is not a waiver of privilege, privately some have doubts that the argument would protect them in court.
  • If they have to rely on the bureau's legal argument as a defense against subpoenas, the last thing banks want is a Congressional record suggesting there are holes in that argument.
  • The CFPB has argued that banks have nothing to worry about.
Feb 2012
  • Health care and social assistance jobs will be the fastest-growing sectors, accounting for one quarter of the 20.2 million new jobs the economy is expected to generate by 2020.
  • Retiring baby boomers will help open up an additional 33.8 million positions for total vacancies of 54 million, the Labor Department said in its report for job growth between 2010 and 2020.
  • Hispanics, meanwhile, are joining the workforce at a fast pace. They will represent 18.6 percent of overall employment by decade's end, up from 14.8 percent today.
  • In contrast, Asians and African-Americans will see their share in the labor force rise by 1 percentage point or less to 5.7 percent and 12 percent, respectively.