JSC & AMEX

JSC Bank of Georgia has signed an agreement to become exclusive
partner of American Express for Credit Card Acquiring and Issuing
business in Georgia. With this agreement, the Bank
expects to strengthen its position as the leading retail bank in Georgia
by expanding its current range of retail products and further increasing
its penetration into mass affluent retail market. Bank of Georgia is the largest bank by assets, loans, deposits and
equity in Georgia, with 33% market share by total assets with 140
branches and over 904,000 retail and more than 133,000 corporate current
accounts.

Business Outpaces Consumer Credit Card Growth

A new report finds that the compound annual growth rate for business credit card volume, since 2001, is 20.6%, while the corporate card CAGR is 12.0% and the purchasing card CAGR is 13.7% during the same period. The study also suggests that from a top line perspective, corporations are offered incentives by issuers through rebate programs based on a combination of factors including a company’s travel volume, spend per card, payment terms, average transaction size, and credit losses. However, Boston-based Mercator Advisory Group notes that the commercial card market has some very fundamental differences from a risk perspective. Issuers have a particular gap or blind spot in creating a comprehensive view of exposure to a corporation, encompassing both commercial loan and card relationships. Also, solutions providers are just beginning to develop segment specific scoring models and analytics to properly manage the corporate card segment in the context of the broader corporate lending relationships.

Smaller Average Tickets for Online Shoppers

In the 17-day period ending November 28th, online transactions were up 24% while sales dollar value was up 8.4%, resulting in the average ticket declining 12.8%. Online transactions for “Black Friday,” increased 34% with sales volume increasing 18% versus last year. The “Cyber Holiday Pulse Index” from Chase Paymentech also reports that sales volume for “Cyber Monday” increased less than half a percent from last year, but the transaction count was ahead of 2007 by 14.5%. This resulted in the average ticket size, or average dollar spent per transaction, decreasing 12% below last year. For the entire holiday season, transaction count has increased 25%, while sales volume has increased 11%. The average ticket is 12% below last year. The “Cyber Holiday Pulse Index” monitors the daily activity of 25 of the largest 150 Internet retailers.

Consumer Reports Kicks-Offs a Card Campaign

Consumer Reports has released the third installment of its credit
education campaign to provide guidance for holiday spending. A recent
survey from the Consumer Reports National Research Center found
that 12 million Americans are still in debt from last year’s holiday
season with 38% of Americans who plan to use credit cards this
holiday season compared to 35% who used credit last year. Consumer
Reports will run a series of
online ads across highly trafficked or influential personal finance and
consumer blogs including Consumerist.com, Yahoo Shopping, and
Bargainist.com. The online ads will highlight the Consumer Reports
“Tightwad Tod” blog.

Credit Karma Offers Free TransUnion Reports

CA-based consumer credit advisor Credit Karma has partnered with
TrueCredit.com to offer free TransUnion credit reports to
provide consumers with the tools and information to better understand
how lenders are evaluating them. A recent Federal Reserve Board survey
showed tightening lending
standards across every major loan category, including mortgage and
credit card interest rates.
Moreover, financial experts suggest that to qualify for the best
mortgage rates in today’s market, consumers need a much higher credit
score; some suggest it will
need to be as high as 750 to qualify for the most favorable rates.

M&T Bank Renews its Visa Card Partnership

M&T Bank and Visa have renewed their brand
partnership agreement that provides M&T customers with branded
consumer and small business debit, commercial credit, and prepaid cards.
M&T Bank is one of the top 20 largest U.S. commercial
bank holding companies, with approximately $66 billion in assets and
operates more than 680 offices and 1600 ATMs in New York,
Pennsylvania, Maryland, Virginia, West Virginia, Delaware, New Jersey
and the District of Columbia.

OTI ASEC

Contactless provider On Track Innovations’ subsidiary, ASEC S.A. was awarded
a contract to become an e-ticketing operator of Warsaw City Card for the Transport
Department of the City of Warsaw to provide a sales network system, infrastructure,
distribution service and maintenance for loading of transportation
electronic cards around the city.Under the agreement ASEC will install in the city 100 automated vending
machines and 300 terminals for loading of Warsaw City Card which will be located
at subway, and train stations, buses and tramway transfer hubs and at areas
frequently visited by tourists. Direct revenues will be generated from
transaction fees and are expected to aggregate more than $10 million over the next 5 years.

Aite Analyzes Small Business Mobile Banking

A new report from Aite focuses on the growth of mobile banking for small
businesses. More than 60% of small
businesses currently bank online, and are showing a greater demand for
multichannel banking, including mobile banking services, and
approximately one-third of those interviewed expressed a likelihood that
they will use mobile banking; nearly 10 times the likelihood expressed
by credit and debit cardholders in a similar Aite Group survey. Unlike
retail banking customers that have
been universally provided with free mobile banking, small businesses can
and do pay for a number of banking services. Mobile banking for small
businesses could be a revenue generator for banks.

Visa Launches a Processing Joint Venture in Asia

Visa has teamed with India’s Yalamanchili Software Exports to create a
joint venture to extend Visa’s processing capabilities outside the USA
and Europe. Singapore-based Visa Processing Service Pte. Ltd. began
operations this week. Visa says VPS complements Visa’s “Debit Processing
Service.” Initially, the JV will focus on providing financial
institutions, processors and other payment companies with prepaid and
debit processing solutions. Like Visa, VPS will also have capabilities
to provide credit, ATM, money transfer and private label processing, as
well as a range of payments services, including risk and fraud
management, mobile applications, loyalty and cardholder support.
Yalamanchili will provide its suite of “NARADA” software products – a
multi-currency, multi-language platform for debit, prepaid and credit
payment transactions; gateway services for international and domestic
networks; and acquiring applications, including ATM terminal driving.

Reduced Credit Lines – Another Nail in the Coffin

Some industry analysts project that U.S. credit card issuers will trim overall credit limits by nearly one-third by mid-year 2010. With more than $5.5 trillion in currently available payment card credit lines, the impact on U.S. consumer spending could be a significant factor in driving the economy further into the ground. Over the weekend an Oppenheimer & Co. analyst suggested U.S. credit card issuers could pull as much as $2 trillion in credit card credit lines over the next 18 months. Indeed U.S. credit card issuers are facing a perfect storm as funding has dried up, losses are building and the good credits are hiding. New credit card-backed securities have ground to a halt since October. Interest rate spreads on AAA-rated tranches of ABS soared to levels well outside the range of historical experience, producing unusually high risk premiums. Last week, the Federal Reserve Board announced the creation of the “Term Asset-Backed Securities Loan Facility,” a facility that will support the issuance of ABS collateralized by student loans, auto loans, credit card loans, and loans guaranteed by the SBA. Credit card charge-offs have climbed to 6.27% in October, compared to 6.19% in the prior month and 4.89% one-year ago, according to CardData (www.carddata.com). Some ratings firms predict that charge-offs may exceed the 8% ratio in 2009. Last month Capital One reported that charge-offs for its U.S. Card business jumped for the third consecutive month in October, rising 20 basis points from the prior month. According to Chicago-based Mintel Comperemedia total estimated volume for credit card acquisition offers dipped to 1.34 billion in 3Q/08, compared to 1.54 billion in the prior quarter and 1.86 billion during 3Q/07. There is a consensus that credit card approval rates have tightened by as much as one-third during the third quarter.

U.S. CREDIT CARD CREDIT LIMITS
(includes general purpose and proprietary cards)
1999: $2.6 trillion
2000: $3.0 trillion
2001: $3.3 trillion
2002: $3.5 trillion
2003: $3.7 trillion
2004: $4.0 trillion
2005: $4.5 trillion
2006: $5.0 trillion
2007: $5.3 trillion
2008: $5.6 trillion
Source: CardData (www.carddata.com)

UEPS & IRAQ

Alternative payment provider Net1 UEPS will produce an
additional 800,000 smart cards to be issued to war victim beneficiaries and pension payment
recipients. This additional order follows the recent order of 200,000
smart cards received during October 2008. The total cards ordered from
Net1 to date amount to 1.1 million. In August 2008, Net1’s UEPS system was implemented in Iraq and is used
for the distribution and payment of government grants to war victims and
martyrdom beneficiaries, as well as salary and wage distribution and
payment to employees of the two state banks. Net1 provides its universal electronic payment system (“UEPS”), as an
alternative payment system for the unbanked and under-banked populations
of developing economies. The pilot system was
successful and for the first time in history the two state banks are
opening their doors to the public seven days a week to cater for the
flood of beneficiaries wanting to register for their smart cards.

NEOVIA & IDT

NEOVIA Financial Plc will acquire IDT Corporation’s European
Prepaid Payment Services Division for total cash consideration of US$ 15.05 million to be paid to IDT
Corporation on completion – this includes US$ 10 million of banking regulatory capital.
The agreement includes the purchase the entire issued share capital of IDT
Financial Services Holdings Limited and certain other assets which together provide prepaid MasterCard® products
in the UK market under the IDT “Prime Card” brand. Also included is the key strategic acquisition for
NEOVIA, adding new product lines and distribution based on the IDT Prime Card, accelerating the development
of NEOVIA’s prepaid Net+ card business and rapidly increasing the Company’s active
NETELLER e-wallet customer base. In combination with NEOVIA’s Net+ card services, the acquisition creates one of
Europe’s largest independent prepaid debit card businesses.