COMPUTER SERVICES EXPENDITURES
• Users (primarily retailers) will spend well over $650 million in 1985 to utilize consumer credit card authorization and check verification/guarantee information services, as shown in Exhibit III-2. These expenditures are considered a normal cost of doing business and a consumer convenience to secure revenues and hopefully, profitability (by eliminating bad debt).
• Retailers spend a great deal more on credit card operations, including transaction processing and clearance, than is spent on check verification/guarantee. However, expenditures for credit card authorization are about equal to expenditures for check verification/guarantee.
Credit card authorization transaction volume of 1.5 billion in 1985 vastly exceeds check verification/guarantee volume of over 150 million.
Expenditures for underwriting credit card losses are bundled with transaction processing and clearance and settlement expenditures, and are distributed among participating financial institutions.
User expenditures for check guarantee include direct underwriting fees by the services vendor based on, among other parameters, the check amount.
• The volume of credit card transactions is growing less than 5% annually. Fraud is exploding, however. The growth of credit card authorization volume (at least 14% annually) results from a proliferation of electronic authorizations from POS and ECR terminals in the retail environment. Increasing the number of terminals in turn increases the portion of total credit card transactions which are authorized.
VALUE-ADDED NETWORK (VAN) VENDORS
• The Visa and MasterCard authorization networks are a major source of VAN services revenues from credit authorization interchange. TYMNET is involved with VAN services for the MasterCard Automated Point-of-Sale Program (MAPP).
• VAN services utilized by all marketplace participants, whether “in-house” or through computer services, are considered as information services in the expenditure forecast presented in this report.
• Industry data indicates that approximately two-thirds of bank credit card authorization transactions are currently interchanged between market participants.
• Retailers include supermarkets, department stores, small merchants, restaurants, gas stations, and other retail establishments. There are over one-quarter million retail establishments.
• Major retailers offer their own credit card and credit authorization services. Such services are considered “in-house.” Expenditures for such services are not considered part of the credit card authorization expenditures for information services forecast in this report
• Large retailers such as Sears and J. C. Penney are beginning to offer credit card services, including authorization and clearance to commercial companies (and, indeed, other retailers).
CREDIT CARD AUTHORIZATION VENDORS
Less than 20 credit card associations and commercial vendors operate as third-party processors in the current marketplace. Credit card authorization vendors accomplish credit authorization on behalf of financial institutions and commercial vendors.
Vendors interface with retailers directly, and (indirectly) through value-added network (VAN) vendors and financial institutions.
Credit card authorization vendors at times utilize the networks of check verification/guarantee vendors to deliver credit card authorization services.
CHECK VERIFICATION/GUARANTEE VENDORS
There are two national (and less than 20 regional and local) check verification/guarantee vendors. These vendors offer check verification/guarantee services either directly to retailers or through financial institutions.
Check verification/guarantee vendors also use VAN vendors and credit card authorization vendor networks to deliver authorization/guarantee services.
It will be of interest for you to know that this year the United States League has received many more insertions of its publicity releases in the nation’s newspapers than in any previous year. Of special significance in this connection is the fact that such news material about our business is appearing more and more in the financial rather than the real estate pages of publications. Our efforts to build up the thrift side of our business are beginning to bear fruit. At long last, we are being recognized as primarily savings and not merely as lending institutions. A great help in our better public relations is the some 4,000 circulation of our recently inaugurated Quarterly Letter among newspaper and magazine writers as well as professors of finance and economics. Today as never before, there is a far better knowledge of our savings associations among the by line writers due, in part, to the prominent part our business and our League played in its forthright and courageous fight against the delusion, the mockery, and the snare commonly entitled the federal political housing bill.
Our regular publication services of the League, such as Savings and Loans News, The Directors Digest, The Legal Bulletin, The Confidential Bulletin, and the Special Management Bulletin, continued in an ever-improving fashion to keep us informed as to the wants and as to the unrealized possibilities of usefulness of our savings institutions. In a succinct and homey fashion, The Directors Digest continued to bring to the many thousands of directors a wealth of information to aid each of us in that capacity in policy determination. Three Special Management Bulletins were issued during the year which were of inestimable value to our senior executives in handling certain important details of day-to-day .functions. One covered the Amended Veterans Administration Regulations, concerning lending under the Servicemen’s Readjustment Act of 1944; another, a project of the Management Committee, was a complete study of the Application of the Federal Wage and Hour Law to our savings associations; and the last gave the new Rules and Regulations for Federal Institutions as well as newly adopted Charter N. In addition, there were 12 other special publications or membership service activities either distributed to or made available to all members upon request. Under preparation at the present time and soon to be released are: A timely and extensive booklet on Collection Policies and Procedures; a complete memorandum covering School Savings Programs and their importance to our business; and a New Office Quarters Brochure with an emphasis designed to be of special help to our smaller institutions.
Time does not permit of a complete enumeration of the manifold activities of your League the past 12 months. Your numerous committees under their able chairmen and vice chairmen have been active throughout the year and each has ministered to the requirements of our business. As formerly, all our committees have and will be meeting during this convention. Nine of our top-drawer groups have held interim meetings during the year. The Federal Section Committee under its able chairman, Roy W. Larsen, has had an especially active year with the revision of the regulations for the Federal Savings and Loan System and the preparation of the new Charter N for federal associations.
To you, Morton, goes the gratitude of each of us for your broad -vision- ed thinking and for your persevering in a determination to strengthen further and to enlarge the sphere of influence of our savings institutions — a business that has meant and does mean so much to the stability and to the fulfillment of the sound needs of the commonweal. The past months, the two of us have shared much. We have had our moments of exaltation as well as those of disappointment. Our judgment may not always have been right. When it has not, my hope is that we shall be remembered for any good performances rather than for the less adequate ones. Understanding is so much appreciated. As you only too well know, to be able to think through the current-day problems is no easy task. At close range, we have together observed our great segment of this country’s financial structure struggling in the midst of economic and social turmoil with all the accompanying impacts and implications; fighting to continue and to increase its over-a-century-old bequests to the sound development of this nation; concerned over how to lend strength to this United States in its hour of travail and peril. We have time and again been privileged to see man after man answer and rise to the responsibilities entrusted to him by the necessities of his business and those of his national organization, placing the needs of all above his own. As usual, the past year has been one of great sacrifice by you. You have given much of yourself. From the people and the savings associations of this nation, thankfulness is due you. Down through the generations, there shall, time and again, be need in the guiding of the League’s destinies of the wisdom and of the devotion which are yours. May they ever be present in the men and in the women who will then be carrying the day’s burdens. For your sharing in and for your believing in my dreams as to the still greater future of our business (like company PaydayLoans@ that offer services from list of payday lenders with instant approval) in its responsibility and service to the welfare of the public and for aiding me in the carrying of my responsibilities, I do thank you.
To express adequately gratitude for the sacrifice and the largess made and bestowed by so many folks in our business over so many generations is indeed difficult* One may try and, in failing, point up the immensity of the task. To each of our thousands of savings institutions constituting our strong and vital membership and to the men and to the women composing the directorates and the executive staffs of such organizations goes the prime and major credit for the great and lasting benefactions which through 57 years have been made by your United States Savings and Loan League to the business it serves on a nationwide basis. To Vice President- Bub; to the folks composing the Executive Committee, the Board of Directors, and the many committees of the League flows an appreciation for assuming and performing its responsibilities; and to those constituting the full-time staff of our League is due a deep acknowledgment from each of us. To single out any one of the latter would not be giving a deserved laudation to each and to all. It would be my wish that each of you could have shared with me this past year the heartwarming opportunity to observe these sincere staff friends of ours in their constant fidelity to their tasks — a devotion beyond the point of obligation. As to certain of them, you may not be aware of their efforts. Nevertheless, they are ever there with their desire to perform adequately their tasks in the interest of our business. While you are here in Chicago, you will see many of the staff at the convention and at the League offices. Take a moment to express your appreciation. As it would to you, it will mean much to each of them.
Having these past months visited with a considerable number of you from York Harber, Maine to Dallas, Texas, and from Savannah, Georgia, to Butte, Montana, and San Diego, California, and thus sharing in your many kindnesses and savoring of your abundant hospitality, my desire this evening is to express the gratitude of Mrs. Murphy and me for your ever-present friendship. The year just passed has been an inspiring as well as a humbling one for me; inspiring because as never before one was made to realize the great and the unselfish contributions to this nation’s welfare being given by the men and by the women engaged in our llS-year-olc savings institutional business; humbling because one comes to appreciate the great responsibilities which are ours in the perpetuation and in the advancement of two of the basic ingredients necessary to the achievement of every American’s dream — ^home ownership and the only sound financial security, that which is achieved through individual toil and the application of the age-old and proven concept of thrift.
IN THE SAVINGS ASSOCIATION and co-operative bank business the year 1949 was a period of great progress and, at the same time, of setback for the principle of debt-free home ownership accomplished through individual thrift.
Evidence of the progress is seen in the fact that the growth shown in the Statistical Report for 1948 (p. 109) was exceeded in 1949 to bring total assets to the unprecedented level of $14^4 billion for an increase during the year ended December 31, 1949, of $1,430,000,000. It is further apparent that the volume of loans to Americans for the acquisition of homes continued close to the 1948 level of $3,600,000,000.
It is heartening to note from the tone of the addresses and committee reports reproduced in this volume covering the proceedings of the 57th Annual Convention of the United States Savings and Loan League that the leaders of the business are equally concerned with the affairs of the nation as well as with the progress of their own business. The passage of the Housing Act which took this nation and particularly the savings association business a long step down the road toward a totalitarian state was one such concern. In spite of this blow, there is evident, a determination on the part of the leadership of the savings association business to continue fostering the virtues of thrift and home ownership among the people of this nation as one of the most effective means of halting the drift toward socialism as well as the growth and development of the savings association business and its contribution to the general welfare of a democratic nation.
This 20th volume in the current series of The Annals will look the same as its predecessors when you add it to your savings association bookshelf, but its format has been modernized in accordance with recent typographical progress and the tenets of good book-making. These changes, it is hoped, will encourage your perusal and use of its thought provoking and forward-looking materials.
M. K. M. Murphy