YNOT EUROPE – Israel Credit Cards-Cal Ltd. saw revenues and net profit plunge by 20 percent in 2010, largely as a result of the non-bank credit card issuer’s decision to stop processing transactions for pornography and online gambling websites.

The decision followed disciplinary action by both MasterCard Worldwide Inc. and Visa Europe during the final quarter of 2009 and the first quarter of 2010. In October 2009, Visa Europe levied a 9 million euro fine against the company after determining ICC-Cal cleared suspicious online transactions for nutritional supplements and unauthorized pharmaceuticals, including Viagra. In February 2010, MasterCard Worldwide fined ICC-Cal $8 million for “problematic clearing” of online transactions in the porn and gambling realms.

The company’s reported 2009 net profit of NIS 249 million slid to NIS 215 million for 2010. ICC-Cal’s online transaction activity fell by 72 percent after it dropped high-risk porn and gaming clients, the company reported.

Company officials attributed much of the online revenue slip to a decrease in international clients, which in 2009 accounted for NIS 43 million in profits. In 2010, the company reported an NIS 13 million loss on international business. Across the board, ICC-Cal’s total revenues fell by 5 percent to NIS 1.1 billion.

Fourth-quarter overall profits fell 17 percent over the previous quarter’s levels, representing the fifth consecutive quarterly loss.

ICC-Cal Chief Executive Officer Israel David attributed the losses primarily to the global economic slowdown, which first affected the company’s balance sheet in 2008. According to financial reports, 2010 was the company’s worst year so far.

The company also fell in the rankings among competitors in the non-bank credit cards issuer market. Although the sector experienced double-digit growth in 2010, ICC-Cal’s share fell 0.6 percent to NIS 2.1 billion from NIS 2.11 billion in 2009. The fastest-growing company of its kind until 2009, ICC-Cal now ranks third in number of new cards issued: 431,000 at the end of 2010, compared to 421,000 one year earlier. At the end of 2010, the company reported an active cardholder base of 1.37 million, up 4.2 percent over 2009 numbers.

Transactions with ICC cards rose by 7.8 percent, to NIS 46.3 billion, in 2010 from NIS 42.94 billion 2009.

ICC-Cal is owned in partnership by Israel Discount Bank (71.8 percent of shares) and First International Bank of Israel (28.2 percent of shares). The company’s non-bank cards continue to be the most expensive for consumers, who in 2010 paid ICC NIS 10.40 monthly in fees, or 2.5 times the fees charged by the least-expensive competitor. ICC-Cal’s interest rates rose in 2010, to settle at 11.9 percent, versus 11.6 percent in 2009.