First American Payment Acquires IATS Processing

First American Payment Systems merchant credit card processing acquirers
has acquired Vancouver-based IATS (International Automated Transaction
Service) payment processing company, a division of Ticketmaster Canada
and leading provider of integrated end-to-end donation processing
solutions for nonprofit organizations. This makes First American one of
the industry leaders in the nonprofit payment processing sector,
well-positioned to penetrate the nonprofit industry with electronic
processing solutions. The acquisition will also accelerate development
of new products and donation processing services, as IATS
currently provides payment processing solutions to more than 9,000
nonprofit organizations in the United States, Canada, United Kingdom,
Europe, Australia, Hong Kong and New Zealand designed to help nonprofit
organizations save time and money on fundraising solutions.

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Visa Contest Offers Olympic Games for Life

From Jan. 1 – Feb. 28, 2010, Visa cardholders in the United States will
automatically be entered for a chance to win a trip to the Olympic
Winter Games for the rest of their lives when they use their Visa card.
The Visa Olympic Winter Games Trip for Life Sweepstakes is part of the
company’s comprehensive Olympic-themed marketing campaign for the
Vancouver 2010 Olympic and Paralympic Winter Games. The global campaign
also includes “Go World” Olympic-themed advertising, using promotions
and host market merchant activation programs that enable Visa to connect
with cardholders and Olympic and Paralympic Games fans to drive
preference for and usage of Visa products worldwide. Every four years
beginning with the Sochi 2014 Olympic Winter Games, one grand prize
winner of the Visa Olympic Winter Games Trip for Life Sweepstakes and
one guest will receive round-trip airfare and accommodations for two,
round-trip event transportation, and tickets to Olympic events. Visa has
been a worldwide Olympic Games sponsor since 1986.

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End to Economic Stimuli Sees Modest Recovery in 2010

The economy is projected to gradually improve as the recovery will
continue into 2010 while the Federal Reserve is expected to keep
interest rates at an historic low for the first half of the year.
Continuation of the expansion will hinge on increased job growth and
business investment, as government stimulus fades and spending and
hiring grow. Employment gains will average 70,700 jobs per month in the
first six months of 2010, accelerating to 135,300 jobs per month in the
second half as the unemployment rate will hover around 10% throughout
the year, averaging 10.2% in the first half and 9.9% in the second half.
Inflation is expected to remain tame, especially core inflation, as the
central bank’s emergency lending programs will end. Global output is
expected to grow just over 3% in 2010, following the worst
worldwide downturn in decades, while Europe and Japan will lag the U.S.
recovery and Asia will remain the strongest region.

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WORLDVEST BRAZIL FINANCE

WorldVest global merchant bank is set to launch “WorldVest Brasil
Finance FIDC” as its initial investment vehicle to enter the highly
lucrative yet underserved Brazilian consumer finance market. WVB Finance
FIDC will be structured as a Fundo de Investimento em Direitos
Creditórios (FIDC), which is a Brazilian securitized finance fund
consisting of senior and subordinated shares and which will be rated by
Standard and Poors based on the strength of the collateral within its
credit portfolio. The WVB Finance FIDC will initially invest in credits
generated within the retail sector such as Consumer Direct Credits (CDC)
and Credit Cards (CC), but ultimately aims to grow into other lucrative
areas of the growing Brazilian financial markets. Brazilian consumers’
use of payment cards increased to 21.4% of all purchase in 2008 from
8.7% in 2000.

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Small Business Owners to be Cautious in 2010

The number of small business owners who see conditions for their own businesses getting better in the next six months increased for the first time since August. However, small business owners are entering 2010 on a cautious note. The Discover “Small Business Watch” index rose slightly from 76.5 in November to 77.0 in December. The number of small business owners who think the economy is getting worse was down to 49% from 53% in November; while 24% of small business owners see the economy staying the same, up from 16% in November; 25% see the economy getting better, down from 28% in November; and 2% are not sure. Slightly more than half of owners have experienced cash flow issues in the past 90 days, down 1 percentage point from last month; 45% of owners have not experienced cash flow issues, and 4% aren’t sure. Additionally, 18% of owners say they will increase spending on business development activities such as advertising, inventories and capital expenditures in the next six months, 26% will make no changes, 51% plan to decrease spending, and 5% are not sure.

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EURO NOV LEI

The Conference Board “Leading Economic Index” (LEI) for The Euro Area
increased 0.7% while The Conference Board “Coincident Economic Index”
(CEI) decreased 0.1% in November. With the 0.7% increase, the Conference
Board LEI for the Euro Area now stands at 101.7 (2004 = 100), which
increased 0.6% in October and increased 0.9% in September. Meanwhile,
the CEI results for the month were preceded by a 0.2% decrease in both
October and September and now stands at 100.4(2004=100). LEI results for
the month were attributed to performance in eight components, including
Economic Sentiment Index; Index of Residential Building Permits Granted;
Index of Capital Goods New Orders; Dow Jones EURO STOXX Index; Money
Supply; Interest Rate Spread; Eurozone Manufacturing Purchasing
Managers’ Index; and Eurozone Service Sector Future Business Activity
Expectations Index.

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FREE NIGHT

Accor and MasterCard Worldwide have partnered to offer MasterCard
cardholders rewards through a joint promotion offering exclusive year
end hotel deals and a lucky draw. Cardholders who book a consecutive
three night stay at any of the 188 participating Accor Hotels in
Asia/Pacific from now until 31 January 2010 using their MasterCard cards
will be rewarded with one free night while those who extend their stay
will receive a 30% saving on the best unrestricted nightly rate. The
lucky draw will make them eligible for a three night stay at the award
winning five- star Pullman Sanya Yalong Bay resort located in Sanya,
China. The draw will send 10 lucky winners to the resort where they will
be treated to a private villa with a king-sized bed, private swimming
pool, massage area, jacuzzi, a spacious private garden and a separate
living room.

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2009 Credit Card Profits Hit a 26-Year Low

Credit card profits last year dipped to the lowest return-on-assets percentage level in 26 years, driven down by soaring charge-offs and higher operational expenses. The net pre-tax ROA for credit card portfolios for 2009 is projected to be 1.50%, compared 4.24% for 2008, and 1.10% for 1983. CA-based R.K. Hammer says its data show
total income rose slightly from 2008 to 18.30% (up from 18.10%), while operating expense rose to 5.10% (up 25 bps), charge-offs jumped to 9.80% (up from 5.99%), and blended cost of fund declined to 1.90% (down from 3.02%), bringing pre-tax net income to 1.50% ROA (down dramatically from 4.24% ROA in 2008). Hammer also notes that regulatory and Congressional approval of new credit card industry rules brought further earnings pressure on the card business and is expected to continue in future years. It is estimated in the Hammer model that the three main new rules just passed will lower card issuer industry profit by as much as $5.5 billion in 2010 (reflecting the last half of the year following new rules implementation) and up to $11 billion lower in 2011 and every year thereafter.

U.S. Bank Credit Card Profitability Historical
(VISA, MasterCard, and Discover)
ROA
1989 4.10%
1990 3.70%
1991 3.40%
1992 3.10%
1993 3.30%
1994 3.90%
1995 3.60%
1996 3.30%
1997 2.60%
1998 2.50%
1999 3.10%
2000 3.60%
2001 4.00%
2002 4.20%
2003 4.40%
2004 4.50%
2005 4.30%
2006 4.60%
2007 4.65%
2008: 4.24%
2009: 1.50%
ROA-net pre-tax return-on-assets
Source: R.K. Hammer

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Acacia Inks Card Fraud Patent Settlement

Acacia Research’s Financial Systems Innovation subsidiary has entered into a settlement agreement covering a patent that applies to credit card fraud protection technology with Lone Star Steakhouse, Inc. The expired patent asserted in this litigation generally relates to a computerized system for protecting retailers and consumers engaged in credit card, check card, and debit transactions. The system includes an electronic card reader, and the generation and use of a transaction number, which specifically identifies each transaction processed within the system. Acacia Research’s subsidiaries develop, acquire, and license patented technologies.

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Com-Guard Releases Pay-Guard Security

Transactional Cash Engine Software provider Com-Guard has released “Pay-Guard” software in the secure marketplace for transaction processing.
The Company will establish a sales and marketing program to target five growth
opportunities that include: Secure Transactions-The
Pay-Guard software will allow transactions to be secure and the buyer’s information will be hidden and protected; Loyalty Card Programs – The “Transactional Cash Engine Software” technology will allow merchants to combine their loyalty programs with a combined payment technology. The retailer will save transaction fees and the consumer will be rewarded with savings and gifts as decided by the merchant and Online Payments, Pay Day Advance and Money Transfers and Specialty Payment Programs.

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HomeCard Set to Help Home Buyers’ Down-payment

A new card product, “The HomeCard”, designed to help home buyers save for a down payment, is set to debut in 2010.
With the HomeCard, consumers can earn up to 25% cash-back on everyday
purchases which can be deposited into an interest bearing FDIC insured
savings account to help speed savings for down payments or to fund home
repairs. The HomeCard will be available early in 2010 to consumers
from all income brackets and credit scores at rates lower than what some
banks are charging and will be either a MasterCard or
Visa card, and will be offered as a debit card, a secured credit card,
or as a standard credit card depending on consumers’ preferences and
credit score. The cash-back rewards from HomeCard range from 1% to 25% for online and
in-store spending as well as access to thousands in special savings on
mortgages, insurance, real estate services, moving services, phone
services, cable and Internet and can be linked to FDIC-protected savings accounts.

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Consumer Confidence Shows Signs of Life

The Conference Board Consumer Confidence Index for the U.S.
increased 2.3 basis points to 52.9 (1985=100) while the Expectations
Index increased 5.3 basis points in November. With these increases came
those claiming business conditions are “bad” increasing to 46.6% from
44.5% while those claiming conditions are “good” decreased to 7.0% from
8.1%. Additionally, those claiming jobs are “hard to get” decreased to
48.6% from 49.2% while those claiming jobs are “plentiful” decreased to
2.9% from 3.1 percent. Those anticipating business conditions will
improve over the next six months increased to 21.3% from 19.7% and those
expecting conditions will worsen decreased to 11.9% from 14.6%.

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