AmEx and Omni Launch a Summer Promotion

American Express is offering summer family value packages for stays with
Omni Hotels. The exclusive summer weekend family package offers parents a
25% discount off regular rates and children receive an
“Omni Sensational Kids” activity bag upon arrival and milk and cookies
delivered to their guest room on the first night. The offer is available
on weekends from June 4th to September 6th and prices
range from approximately $119 to $259 per night, valid only when the
purchase is made with an American Express Card.

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PAYMENTS COUNCIL

Addressing difficulty some users experience when making payments using
non-standard account numbers, as promised in its “National Payments
Plan”, the Payments Council held consultation with stakeholders to
establish certain guidelines. These guidelines address the necessity to
reduce the impact of non-standardized account numbers on users and are
recommended for all financial institutions. They include adopting the
standard format when they upgrade their systems and masking non-standard
numbers so customers can use new account numbers for non-standard format
recognition. When these cannot be applied, the Payments Council
recommends banks create a standard format account number from a
customer’s internal reference number to form a 6 digit sort code and 8
digit account number; ensure non-standard account numbers can be checked
using a modulus checker; and to allocate a reference number for
delinquent accounts while providing the sort code and account number.
The complete guidelines are available to download from
www.paymentscouncil.org.uk.

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Credit Card ABS Delinquency Down a Skosh in April

While average charge-offs among credit card-backed securities approach
double-digits for the first time, the 60-day delinquency ratio eased a
bit in April. However, excluding the effect of the bankruptcy spike in
2005, the three month average excess spread dropped to its lowest level
since early 2001. According to the latest “Credit Card Index” results
from Fitch Ratings, delinquency declined seven basis points to 4.37% in
April, but is up 40% over the year ago period.
Charge-offs climbed 77 bps to reach 9.66%, the third consecutive record
result and 51% above year earlier levels. Monthly payments rates have
exhibited some fairly typical seasonal volatility early this year, but
are now hovering around 17%. Over the last 24 months, the prime rate has
dropped 500 bps to 3.25%, while gross yield has declined by only 122
bps. Fitch says this resiliency is partially attributable to the
significance of fee income relative to interest income in recent years,
however, it also reflects the effectiveness of the pricing actions that
many card issuers have taken in advance of regulatory and legislative
changes. But, the incremental yield generation, while robust, is not
substantial enough to completely offset the increase in charge-offs.

CREDIT CARD ABS PERFORMANCE
YIELD MPR
Apr 08: 18.50% 18.61%
May 08: 17.27% 18.65%
Jun 08: 17.42% 19.54%
Jul 08: 17.05% 19.54%
Aug 08: 17.40% 19.21%
Sep 08: 17.13% 18.57%
Oct 08: 17.05% 18.42%
Nov 08: 17.01% 15.96%
Dec 08: 17.21% 17.27%
Jan 09: 16.00% 17.15%
Feb 09: 16.83% 15.78%
Mar 09: 17.66% 16.48%
Apr 09: 18.01% 16.98%
Source: Fitch Ratings

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Interchange Fee Legislation is Re-Introduced

House Judiciary Committee Chairman John Conyers, (D-MI), has
introduced “H.R. 2695,” the “Credit Card Fair Fee Act of 2009.” The
measure is similar to the version of the bill that was approved by the
committee in July 2008 and would require Visa and MasterCard banks to
negotiate with merchants on interchange fees. U.S. Rep. John Conyers and
Rep Chris Cannon introduced the “Credit Card Fair Fee Act of 2008” or
“H.R. 5546” in March 2008. The National Retail Federation, which
welcomed the proposed legislation, says between the momentum built up
since this bill passed the Judiciary Committee last year, the intense
scrutiny of the financial services industry seen during the current
economic crisis and the credit card reform law signed last month, the
NRF thinks the perfect storm exists for Congress to do something about
these unjustified hidden fees. Meanwhile, the American Bankers
Association strongly opposes the interchange legislation introduced by
Rep. John Conyers. The ABA says the new bill represents an effort by the
merchant community to have the government interfere with the payment
system so that they can reduce their cost of doing business. It’s clear
that giant retailers want to pocket interchange revenue and continue to
receive the added convenience and protection payment cards provide.

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LML Files More E-Check Patent Lawsuits

LML Payment Systems’ indirect subsidiary LML Patent Corp. has again filed
suit for patent infringement in the U.S. District Court for the Eastern
District of Texas. The suit names National Bank
of Daingerfield, PlainsCapital Bank, Southside Bank, First Bank, The
American National Bank of Texas and American Bank of Texas alleging that
the defendants have infringed LML’s U.S. Patent No. RE40220 which
relates to electronic check processing methods and systems. In November,
LML filed suit in the U.S. District Court for the Eastern
District of Texas seeking damages, injunctive and other relief for the
alleged infringement of their patents against JP Morgan Chase, Wells
Fargo, Wachovia, Citigroup, Bank of New York Mellon, HSBC,
Capital One, ABN AMRO, Northern Trust, Regions Financial, National City,
Fifth Third Bank, Citizens Financial,, M&T Bank, UnionBanCal, First
National of Nebraska, Deutsche Bank Trust Company Americas and PayPal.

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Latin America M-Payments Webinar Planned

Kabira Technologies memory-based transactional computing is sponsoring a
webinar entitled “Emerging Opportunities for Mobile Services in Latin
America: The Consumer Push for the Here and Now”. Hosted by Bill
Sequeira, Ph.D, discussed will be the evolving Latin American mobile
landscape, the infrastructure required, the expectations of consumers in
the future, social media and how mobile payment providers have grown the
industry to facilitate this change. Dr. Sequeira is a digital media
expert with 20 years of experience, having worked with such companies as
Sony, AT&T Bell Laboratories and Verizon, and is expressly well versed
in mobility issues such as micro-payments and mobile transactions.
Meanwhile, Kabira Technologies offers “extreme transaction processing”
software, installed at over 100 customers in more than 40 countries over
the past 10 years.

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Merchant Warehouse Explodes in April

Processing solution provider Merchant Warehouse reports a record April for
sales. Highlights include: April 2009 was most successful in company
history for new customer acquisition; Agent and VAR Channel saw growth of
100 percent over previous six-months and customer retention rates
currently 100% longer than industry average. Other successes include
technology advances for “BINsmart” embedded in point
of sale (POS) systems and exclusive IP or dial-up terminals, the
development and release of MerchantWARE Mobile, a point-of-sale
application that provides merchants with the ability to run credit card
transactions in real-time on their iPhone, iTouch or Blackberry and
accolades from peers and industry groups.

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Chase Introduces a Flagship Card Rewards Program

The impact of regulatory, legislative and economic changes are beginning to have an effect as one of the nation’s top three issuers consolidates some of its rewards programs into a new program with fees and lower redemption value. The new Chase “Ultimate Rewards” program will initially be available to cardholders of the “Chase Freedom” and the new “Chase Sapphire” cards. The new “Chase Sapphire Preferred” card, to be introduced nationally this summer, carries a $95 annual fee. “Chase Freedom” cardholders who opt to earn a fixed 3% bonus for spending in grocery, gas and fast-food categories, will soon pay a $30 annual fee. Redemption levels generally have a maximum value of 1%, lower on merchandise purchases. Key features of the new “Ultimate Rewards” program include: one-to-one points earning; no points caps or points expiration dates; double points on airline travel if booked and paid through Chase; and up to 10 bonus points per dollar of spend when shopping with a Chase card online at more than 300 retailers who participate in the “Ultimate Rewards Bonus Mall”; redemption on three million merchandise items available through Amazon.com; and redemption for gift cards and cash-back. The new Chase “Ultimate Rewards” is expected to become Chase’s flagship credit card rewards program similar to American Express’s “Membership Rewards” and Citi’s “ThankYou Network” program.

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ID Fraud Protection Report is Released

Javelin financial research has released its research report entitled
“2009 Consumer Identity Protection Services Scorecard”. Offering updated
information on the latest trends in fraud, including identity
protection, new accounts fraud and consumer perceptions of protection
products, the new research addresses consumer satisfaction levels and
the effectiveness ratings of security services (credit monitoring, fraud
alerts, personal information monitoring and credit freezes). Javalin
also expands on its comprehensive industry research report released in
December 2007 when ID fraud was growing fast and institutions held an
increasingly vested interest in consumer security. Companies evaluated
include Affinion Security Center, Debix, Experian, EZShield, FraudStop,
Identity Force, Identity
Guard, Identity Secure, Identity Sweep, IdentityTruth, IDWatchDog,
Intelius, Intersections, LifeLock, TrustedID and Truston, among others.
Javelin quantitative and qualitative research focuses on research in
financial services using statistical methodologies.

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Next on the Radar – Mandatory Arbitration Ban?

A new report suggests that mandatory arbitration by credit card issuers and financial institutions is unfair to consumers. The Center for Responsible Lending says that aside from the high frequency of hidden clauses requiring consumers use arbitration rather than courts for complaints, the “Stacked Deck” report also discloses factors such as favoritism/incentive among arbitrators to favor the firms providing repeat business over the consumer, companies in favorable rulings in arbitration over consumers and companies frequently involved in arbitration cases receive more favorable rulings against consumers than those involved in fewer cases. CRL recommends that borrowers try to opt-out of arbitration clauses and remember that such clauses may not always be enforceable.

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