Payment Card Notes

• Despite rising chargeoffs and bankruptcies, second-quarter earnings for the seven largest U.S. credit card issuers rose an average of 21 percent from a year earlier. Capital One had its 16th consecutive quarter of record earnings. MBNA earnings rose 26.5 percent from a year earlier. Analysts attribute the growth in earnings to lower funding costs as a result of the Federal Reserve's campaign to stimulate the economy through interest rate cuts. Some analysts also credit the major issuers for honing their underwriting methods and pricing according to risk. John McDonald, a senior specialty finance analyst for UBS Warburg wrote that "the independent credit card issuers have weathered difficult times before and, in our view, will continue to grab a disproportionate share of the industry's growth and profitability—regardless of the operating environment." The coming months should provide a good test of this analysis.

• Plagued by credit card fraud, many retailers and restaurants in the San Francisco area are now asking customers seeking to pay with debit or credit cards to provide their driver's license as well as their cards. According to the San Francisco Chamber of Commerce, the practice is not widespread, but an effort by those retailers plagued with fraud losses to avoid future losses.

• The most recent EFT Data Book reports that its March survey showed 884.2 million EFT transactions, up 13 percent from March 2000. The same survey shows that the market share of all PIN-based debit card transactions of the top five networks rose to 78 percent, up from 52 percent in March, 2000.

• In contrast, NACHA Electronic Payments Association reports that the Federal Reserve System processed fewer checks during 2000 than in the previous year-the first time that this has occurred in six years. Check processing volume dropped 5.9 percent, from about 17.98 billion 16.99 billion. CardLine provided these data.