Discover’s Q4 U.S. Card Profits Fall 11%

Discover reported fourth quarter pretax income for its U.S. card business of $575.5 million, an 11% decline. The results were impacted by rising charge-offs and delinquency coupled with lower volume and balance transfer activity. Managed loans of $51 billion were essentially flat compared to the prior year. Sales volume declined 1% compared to the prior year and balance transfer volume declined 66% from 4Q/08. Discover says it reduced its marketing of promotional rate balance transfer offers. The managed net charge-off rate increased to 8.43% for the fourth quarter, up 295 basis points and four basis points from the prior year and the prior quarter, respectively. The over 30 days delinquency rate on managed loans was 5.31%, up 75 basis points from the prior year and 21 basis points from the prior quarter. However, the net yield on loan receivables was 9.37%, an increase of 82 basis points from the prior year and a decrease of 53 basis points from the prior quarter. The net yield increased from the prior year as the rate on credit card balances declined less than the cost of funds, primarily due to higher interest rates on standard balances and a reduction in promotional rate balances. The net yield decreased from the prior quarter reflecting the impact of a decline in higher rate balances related to the implementation of the “CARD Act,” an increase in lower rate student loan balances and an increase in the liquidity reserve. For complete details on Discover’s latest performance visit CardData (www.carddata.com).

U.S. CARD PRE-TAX PROFITS
4Q/08: $646.4 million
1Q/09: $167.0 million
2Q/09: $387.9 million
3Q/09: $912.8 million
4Q/09: $575.5 million
Source: CardData (www.carddata.com)

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STARWOOD & AMEX

Starwood Hotels & Resorts Worldwide and American Express Canada have
partnered to issue the Starwood “Preferred Guest” Credit Card from
American Express and the Starwood “Preferred Guest Business Card,” also
from American Express. Slated for introduction in 1Q/10, the cards will
provide members in Canada the fastest way to earn Starpoints toward free
hotel nights and flights. Offering an accelerated points earning feature
the Starwood cards will allow cardmembers to earn 1 Starpoint for every
$1 charged to the card and to earn a bonus of 10,000 Starpoints for up
to three free award nights. Starwood has nearly 1,000 properties that
span 100 countries and nine distinct brands including St. Regis, W,
Westin, Sheraton, Four Points by Sheraton and Le Méridien.

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FIS Next Gen Bill Payment is Unveiled

Payment technology provider FIS has rolled out a new next generation bill payment solution.
The new bill pay interface from FIS uses task-oriented, configurable
modules that answer consumers’ hot button bill pay questions, all at the
landing page. The solution features a product tour and setup assistant
designed to ease “new user” apprehension and drive increased bill pay
usage The Customizable Modules of FIS Bill Pay include The “Bill Rack” which organizes all bills based on due date,
enabling a consumer to know at a glance “what to pay right now”; The landing page has a central location that facilitates
payments to existing and new payees and allows consumers to expedite payments. The consumer can see the impact of all current and
pending payments in the “Balance Worksheet,” to track his/her
balance and avoid overdrafts. Consumers seeking historical context around a payment can
quickly review all scheduled and completed payments through the
“Payment Activity” module. The availability of a completely redesigned FIS bill pay user interface
marks the culmination of an exhaustive research and usability testing
project conducted by FIS. After observing bill payer habits in the
real-world, FIS engineered the new interface in-line with consumers’
wants, needs, habits and preferences when paying bills at their
financial institution’s Web site. Closing the loop on its full-circle
research project, FIS conducted a final usability study with the same
consumers to ensure the new interface aligned with real user feedback.

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Global Vision Group Adds a New Consultant

CA-based e-payment consultants Global Vision Group has hired Dawn Greiner Kasten, previously with Bella Pictures,
as Senior Consultant and Marketing Practice Leader.
Kasten is a widely respected business leader with over 20 years of
experience in all facets of marketing in financial services, electronic
payments and internet businesses. For the 4 years prior to joining
GVGroup, she served as Vice President of sales and then Product/Channel
Development at Bella Pictures, a VC-funded startup that delivered
wedding photography nationally via leads generated through the internet.
From 1995-2003, Dawn was with Providian Financial (later WAMU/JP Morgan
Chase) where she rose to Executive Vice President, Head of Marketing.
She began her career at American Express as Senior Director of
Marketing responsible for retention, loyalty, segmentation and product
cross selling for the charge card customer base and holds an MBA from
Harvard Business School and a BA, summa cum laude, in Economics from the
University of Pennsylvania.

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Maverick Network Intros a Newark Gift Card

DE-based The Downtown Newark Partnership and Maverick Network Solutions have launched a new easy to use gift card program. The gift card can be used to pay for parking in the city’s municipal parking lots and at the more than 70 participating merchants in the downtown district. Since its inception in 2003, the Downtown Newark Partnership gift certificate program has been a success, but no longer limits buyers to denominations of $25.00 on paper vouchers. Merchants are also redeemed through the gift card program sooner than with the previous paper certificate program. The Downtown Newark Partnership (DNP) is a coalition of the City of Newark, the University of Delaware, downtown businesses and property owners, and Newark residents working together to promote and preserve Newark’s unique downtown as a shopping, dining and business center in the heart of the City of Newark.

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SCA to Offer an EMV Webinar for the U.S.

The Smart Card Alliance is hosting a free educational webinar, “Top 10
Reasons for Considering EMV in the U.S,” on Tuesday, January 26, 2010.
Industry expert speakers are Nick Holland of Aite Group, Dave Metcalfe
of Bank of Nova Scotia, Deborah Baxley of KeyPoint Consulting, and Simon
Hurry of Visa Inc. Speakers will discuss the current rate of EMV/chip
deployment internationally, the benefits of the technology in fighting
payment fraud, and implementation options for U.S. card issuers. The
webinar will include a case study of EMV/chip implementation in Canada,
and an analysis of how U.S. cardholders who travel abroad with
non-EMV/chip cards alter their purchase behavior, resulting in lost card
business and customer goodwill. Further Alliance resources on chip card technology in the U.S. payments
industry include the position paper, “End-to-End Encryption and Chip
Cards in the U.S. Payment Industry,” and the white paper, “Fraud in the
U.S. Payments Industry: Fraud Mitigation and Prevention Measures in Use
and Chip Card Technology Impact on Fraud.” The Smart Card Alliance is holding the 3rd Annual Payments Summit
Conference on February 23 – 25, 2010 in Salt Lake City. The Summit will
include industry experts from banking, retail, transportation and mobile
payments markets discussing convergence opportunities for chip technology.

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Hypercom and McDonnell JV for a Network

Hypercom and The McDonnell Group have signed a LOI to form “Phoenix
Managed Networks,” a joint venture to equip payment processors, banks
and retailers with highly reliable and cost-effective data
communications services for transaction-based applications. “Phoenix
Managed Networks” will acquire and operate Hypercom’s “HBNet” secure
transaction transport business to support wireless/ IP-initiated
transactions and to speed the authorization and processing of electronic
transactions for retail POS, financial, government, health care and
other customers in dial, wireless and IP POS markets. HBNet is powered
ultra high-density Hypercom technology strategically positioned within
the North American Public Switching Telephone Network (PSTN) and at
processor data centers.

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InsurCard Visa Prepaid Card is Launched

The Bancorp Bank Payment Solutions Group has joined with the New Jersey Insurance Underwriting Association
to offer the “InsurCard Visa Prepaid Card”
to make payment claims. “The InsurCard Visa Prepaid Card” is loaded when emergency payments are
required, eliminating the challenges associated with check issuance. In any designated catastrophe,
representatives of NJIUA and/or field
adjusters will have access to an inventory of preprinted cards. These
cards remain inactive and have no value until authorized by NJIUA. After
the catastrophe, adjusters will contact policyholders who have
experienced losses and make an initial claim evaluation. Based on this
evaluation, the cards will be distributed and activated by NJIUA either
by phone or via an internet connection with an amount to be paid for
immediate needs. Once activated, the InsurCard provides the policyholder
with the necessary funds to meet critical needs such as food, shelter,
and emergency repairs. As the recovery process continues, the card can
be reloaded to pay for permanent repairs and additional living expenses. The
InsurCard can be used to make purchases wherever Visa debit cards are
accepted and cardholders have access to cash through ATMs located
nationwide. Policyholders can obtain account balance and transaction
information 24-hours a day.

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Holiday Gift Card Total Dollar Value Slips

The total dollar value of specialty store gift cards has grown 12.3% while the dollar value of all gift cards increased only 1.1% for the week of December 13th when compared to the year ago figure. The total dollar value of gift cards activated has grown 1.7% over the same period. The dollar value of specialty cards activated increased 5.2% since the same time last year, suggesting more cards are being activated in smaller denominations. Also when compared with the week of December 13, 2008, the total dollar value of all gift cards activated decreased 1.6%, the number of gift cards activated decreased 2.7%, gift card redemptions grew 5.1% and average gift card amounts were up $0.33 to $30.86. The First Data “Holiday Gift Card Performance Report” are based on aggregate transaction data across First Data’s gift card processing business.

GIFT CARD $ AMOUNTS 08/09 % -/+
ALL CARDS: 30.53/30.86 +1.1
BF WEEK: 36.83/39.50 +5.7
SPECIALTY: 43.83/40.97 -6.5
RESTAURANT: 18.02/$18.12 +0.6
Source: First Data

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Fifth Third and TSYS Extend Their Contract

TSYS has extended its payment services agreement with Fifth Third
Bank through a multi-year contract renewal. The renewal includes the processing of Fifth Third
Bank’s consumer and commercial credit card portfolios.
Fifth Third Bancorp is a diversified financial services company
headquartered in Cincinnati, Ohio. The Company has $111 billion in
assets, operates 16 affiliates with 1,309 full-service Banking Centers.
TSYS is one of the world’s largest companies for outsourced
payment services, offering a broad range of issuer- and
acquirer-processing technologies that support consumer-finance, credit,
debit, healthcare, loyalty and prepaid services for financial
institutions and retail companies in the Americas, EMEA and Asia-Pacific
regions.

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BBVA Compass Launches a CARD Act Visa

Sunbelt-based BBVA Compass has risen to the tightened demands presented
in the “CARD Act” and introduced the “BBVA Compass ClearPoints” credit
card that features clear, simple and transparent terms and conditions,
as well as pricing terms that will never change. The “BBVA Compass
ClearPoints” card is the first in a comprehensive suite of credit card
products that will be rolled out by BBVA Compass in the coming months.
The suite of three credit cards will cover every level of
creditworthiness and includes our secured credit card, called the “BBVA
Compass Optmizer” credit card, which was launched on November 16, 2009.
By keeping the suite of products limited, consumers are able to more
easily understand which card is most appropriate for their credit needs.
Features of the new “BBVA Compass ClearPoints” credit card include
pricing terms that are tied to a Prime Rate index that will not change
for the life of the card, no default pricing, no annual fee, no
unexpected or hidden fees and offers rewards for good payment behavior,
free credit bureau monitoring, free identity theft coverage and the
“CompassPoints” rewards program. BBVA Compass credit card products are
currently available in Texas, Alabama, Arizona, Florida, New Mexico and
Colorado.

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Heartland Payment Systems & 7-Eleven Renew

C-store chain 7-Eleven has extended its credit and debit card processing
contract with Heartland Payment Systems. Under the
seven-year extension to the current contract, Heartland will continue
authorizing
and settling credit and debit card transactions for more than 5,800
7-Eleven-branded convenience stores nationwide. Heartland Payment
Systems is the 5th largest payments
processor in the United States, delivers credit/debit/prepaid card
processing, payroll, check management and payments solutions to more
than 250,000 business locations nationwide.

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