Dow Jones ESI Points to an Economic Recovery

The Dow Jones “Economic Sentiment Indicator” increased for the sixth
consecutive month to 35.5 in August. This continued improvement
indicates the U.S. economy may be advancing into a period of recovery.
The Dow Jones “ESI” predicts U.S. economic health by analyzing the
coverage of 15 major daily newspapers in the U.S., using a numerical
scale from 0 to 100 to express the balance of sentiment in articles
about the economy. A drop below 50 marks the point at which there is a
clear risk of a slowdown and a jump of three points or more usually
indicates a sign of significant improvement. The ESI implements
comprehensive and far-reaching examinations of media coverage as an
economic indicator, using a proven formula used to predict recessions of
the early 90’s and 00’s.

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Direct Mail for Mobile Banking Expands in 2009

New research reveals mobile banking promotion is on the rise in direct marketing. In the first six months of 2009, the phrase “mobile banking” appeared in banking direct mail offers more than twice as often as in the first half of 2008. Significantly more email offers also now mention “mobile banking”, according to Mintel Comperemedia’s analysis of email advertising from banks. Mintel has also tracked emails promoting
iPhone Apps from banks like Wells Fargo. Other top institutions
continue to create new mobile applications, like USAA allowing customers
to deposit checks by phone or Citibank’s “Obopay” letting people send
money via text messages. The research firm noted that USAA, Bank of America and Wells Fargo to local credit unions all promote mobile banking in direct marketing.

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U.S. EMV

Shifting from magnetic stripe to EMV chip cards in the U.S. has potential to mitigate $16.6 billion in existing card fraud thanks to its multi-functional, security-adding chip as a repository. Of the $22 billion in existing card fraud, 43% is found to have been due to lost or stolen cards; 22% was accessed while making a purchase; and 11% was accessed by someone known to the victim. All of these factors are immediately eliminated thanks to the presence of the cardholder’s PIN embedded in the chip, which must match the entry on the pin pad at the POS. These findings, according to Javelin research, also estimate costs of POS terminal deployment at $3.75 billion; card issuance to cost around $1.4 billion; and ATM retrofitting is estimated to cost $400 million, all totaling $5.5 billion. This translates to $11.1 billion in potential fraud loss savings. Because of the legacy of the magnetic stripe infrastructure in the U.S., the status quo in the U.S. does not favor EMV and starting over is proving problematic. This is in part because losses attributed to PIN use at POS terminals are not as much of a problem in the U.S. as they have been elsewhere.

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Business Owners Gearing Up for the Recovery

Economic confidence among small business owners rebounded in August to
its highest level in 18 months. It is the fourth consecutive monthly
climb and indicates small business owners may be ready to start trying
to grow their businesses again. The latest “Discover Small Business
Watch” index rose to 89.8, up 7.7 points from last month. The survey
also discovered the number of small business owners who think the
economy is getting worse dropped to 43% in August, the lowest reading
since the survey began three years ago. About 27% of small business
owners say they plan to increase spending on business development, such
as advertising, inventory and capital expenditures, which is up from 23%
in July. Additionally, 51% of owners say they have experienced cash flow
issues in the past 90 days, down from 53% in July.

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MASTERCARD 2Q/09

Citibank, under contracted partnership with AIG Europe Hungarian Branch
Office, is allowing credit card customers to now apply for its
Individual and Family “Cancer Insurance Plans.” “Cancer Insurance Plans”
offers substantial coverage through a single payment, monthly income
payment of up to 12 months and a single surgery payment with fees
ranging from HUF800-16,700, depending on the customer’s age, selected
option and plan. The Family Plan grants spouse and children living in
the same household coverage benefits while upgrades available, depending
on payment options, provide income payments of 50 thousand or 100
thousand forints per month. The surgery payment can be 200 thousand or
400 thousand forint. All Citibank credit card holders aged 18 to 55 are
eligible to apply.

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LUOTTOKUNTA & ACCENTURE

Accenture and Finland-based Luottokunta card payment services have
signed five-year application outsourcing contracts. The agreement will
increase Luottokunta cost efficiencies and improve customer service by
consolidating application development and maintenance. Supporting
Luottokunta’s services, Accenture will also develop, implement and
maintain its business and Web applications, focused on making overall
operations more flexible and scalable Accenture global management
consulting, technology services and outsourcing company. Accenture
employs 177,000 people serving clients in more than 120 countries and
generated net revenues of US$23.39 billion for the fiscal year ended
Aug. 31, 2008. Luottokunta card payment company manages more than 60
different card schemes, and acquiring and payment transaction processing
services and generated 2008 Mastercard and Visa card sales of EUR15.3
billion.

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Credit Unions Fail to Tap Into Gen Y

As large commercial financial institutions continue to restructure and
stabilize their business models, unique challenges in the credit union
industry pose threats as well as untapped opportunities for growth. Key
to improving their presence is tapping into the younger, “Gen Y”
customer to build a thriving member base. An impact study by Aite and
the Credit Union Executive Society reveals that while more than 85% of
credit unions enjoyed an increase in deposits and 70% have lured new
members away from the larger commercial banks, 70% have indicated they
were “challenged” by loan charge offs and delinquencies. Mergers and
acquisitions have provided a life line for credit unions, with 69%
including M&A as part of their strategic plan. However, it is in
developing awareness to younger customers that will be the most
challenging opportunity to the future growth of credit unions, with 55%
of respondents finding significant challenges in growing the member base
and a graying of its current customers. Currently, 50% of credit union
members are seniors and “Baby Boomers” with 18% of “Gen Y” not knowing
what a credit union is.

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G&D America Hires a New President

Giesecke & Devrient has named Scott Marquardt, previously VP of Sales at
SVTC Technologies, as its new president of Giesecke & Devrient America.
Marquardt will play a key role as G&D
looks to grow its business in banknote processing and security solutions
for the mobile world. Marquardt joins G&D from SVTC Technologies, a
spin-out from Cypress Semiconductor, where he was the Vice President of
Sales, Marketing & Strategic Business Development. He was previously
with NXP Semiconductors, Royal Philips Electronics and Apple Computer,
Inc.
G&D is a global market leader and pioneering innovator in banknote and
banknote paper production and processing, smart card
solutions for telecommunications and electronic payment, and security
documents and identification systems.

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Survey Identifies Value Hunter Shift

The results of a new study reveal that the numbers of online shoppers,
known as “value hunters” has increased in the past year. The evolution
from “recession shopper” to “value hunter” means that consumers who were
previously defined as “more likely to buy” online are now looking for
value to determine what, and where, they will make their online
purchase. Specifically, the research found that: 72% of “value hunters”
look for the best value regardless of brand, 51% look for incentives
when making online purchases and 63%) have purchased something online
they wouldn’t have normally because of a special offer. In addition,68%
of online shoppers search for value in the form coupons and special
promotions, 45% of “value hunters” purchase something online
once a week or more with 47% of those shoppers preferring to shopping
online to shopping
in-store and 22% of shoppers plan to make more purchases online this
year compared to last year.The study was conducted by Penn, Schoen &
Berland Associates, Inc in partnership by marketing network provider
LinkShare and gsi interactive.

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VISA 2Q/09

Canadians gearing up for the 2009 school year are planning to spend an
average of $310 on their pre-schooler-12th grader. Throughout the year,
they are also planning to spend an additional $406 on school-related
incidentals, for which 71% reportedly have not budgeted for, while 64%
plan to use debit and/or cash as their method of payment. The Scotiabank
Study, which was conducted through 1,000 online surveys among a random
sample parents with children 17 and under, demonstrates this is a
reliable time of year for retailers. This is especially true in Quebec
where parents plan to spend an average of $399 on back-to-school
shopping, whereas in Ontario they anticipate on spending only $266. In
Alberta, however, parents anticipate spending $471 on incidentals
throughout the year, the highest in any of the provinces.

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V/MC Debit Card Accounts Gain 16% in 2Q/09

While the number of U.S. credit card accounts for Visa and MasterCard continues to erode, the number of debit card accounts has soared by nearly 16% over the past twelve months. CardData reports 366 million debit card accounts for the second quarter, compared to 358 million in the first quarter and 316 million for 2Q/08. Visa added 14 million debit card accounts in the first quarter and is expected to gain about nine million in the second quarter. (Visa will release official Q2 figures in late October.) At the end of the first quarter Visa had 241 million debit card accounts. MasterCard debit card accounts declined by one million in the second quarter after peaking at 117 million in both the fourth and first quarter. For complete details on Visa and MasterCard performance visit CardData (www.carddata.com).

U.S. DEBIT ACCOUNTS
(Visa and MasterCard)
2Q/08: 316 million
3Q/08: 326 million
4Q/08: 344 million
1Q/09: 358 million
2Q/09: 366 million (projected)
Source: CardData (www.carddata.com)

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Tim Hortons Accepting MC PayPass

QSR Tim Hortons is now accepting MasterCard PayPass at more than 400 U.S.
locations. Tim
Hortons now enables its U.S. customers to make their purchases by simply tapping their
MasterCard PayPass card or device at checkout, for faster transactions,
greater payment flexibility and less time spent waiting in line, in addition to accepting traditional magnetic-stripe cards.MasterCard
PayPass also does not require customers to sign receipts for purchases
under $25, further speeding up the transaction.
Tim Hortons first began
accepting MasterCard PayPass in many of its 3,000 stores in Canada in 2007. Tim
Hortons has
3,475 systemwide restaurants, including 2,939 in Canada and 536 in the
United
States.

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