Credit Card ACT Produces a Strong Reaction

The passage of the “Credit Card Act” brought swift reaction from
industry and consumer groups. The American Bankers Association said
the while the legislation is tough, but workable, it also,
unfortunately, contains some provisions that will undermine the
availability of credit. The ABA says it is concerned that the Senate
bill will have a dramatic impact on the ability of consumers, students,
and small businesses to obtain and use credit cards. The Center for
Responsible Lending said H.R. 627 includes provisions that would go a
long way toward restoring fairness and responsibility to the credit card
market. The Senate version provides even stronger protections than a
similar bill the House passed in April and than rules adopted by the
Federal Reserve in December. DNC Chairman Tim Kaine said the legislation
stops unfair practices that for too long have preyed on American credit
card holders while requiring fairness and transparency.

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Target’s Q1 Credit Card Profits Slip by 78%

Target reported that pre-tax profit for its credit card segment declined 78% in the
first quarter to $39 million. Charge-offs soared to 11.9% in the first quarter, compared
to 11.1% in the prior quarter and 6.6% one-year ago. Quarter-end receivables increased
$37 million to $8.5 billion, or 0.4%, from the same period a year ago. Total revenues
declined 0.6% to $472 million for 1Q/09. Delinquency (60 day) held steady at 6.1% in the
first quarter compared to the fourth quarter but is way up from 4.2% one-year ago.
Delinquency (90 day) edged up to 4.4% from 4.3% in 4Q/08 and compared to 2.9% for 1Q/08.
For complete details on Target’s latest performance, visit CardData (www.carddata.com).

TARGET CARD LOAN HISTORICAL
1Q/08: $8.420 billion
2Q/08: $10.22 billion
3Q/08: $8.745 billion
4Q/08: $8.764 billion
1Q/09: $8.457 billion
Source: CardData (www.carddata.com)

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ExaDigm Names a New Head of Sales

Wireless payment provider ExaDigm has hired Trevor Fall, previously with
TNS, as SVP of Sales. Fall will have primary
responsibility for ExaDigm’s field sales initiatives across the
Processor, ISO/MSP and Banking channels throughout North America.
Previously, Fall served as SVP of North
American Sales at TNS with responsibility for sales and account
management for the POS,FusionPoint, and ATMLink products. Prior to TNS,
he served as National Account Sales Manager with EDS Corporation’s
Consumer Network Services Division(now FiServ). ExaDigm’s current SVP
of Sales and Marketing, Scott Holt, is
taking on a new expanded role within the company as SVP of Business
Development.

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U.S. Senate Votes to Shackle Card Issuers

The U.S. Senate yesterday voted 90 to 5 to change the rules under which
the U.S. credit card industry operates. The new terms and conditions
that will likely be imposed on the credit card business will handcuff
issuers forcing them to limit credit lines and lower approval rates
based on risk, and will surely resurrect annual fees and other
maintenance fees that disappeared in the early 1990s. But, the new
restrictions will bring much needed relief to cardholders struggling
with debt in the “Great Recession” and those who have been tortured with
interest rates of 30% or more plus the nuisance of late fees and
over-limit fees. Under H.R. 627 practices such as “universal default,”
fees for delayed posting of payments, early-morning deadlines for
credit-card payments are banned. Card issuers will be prohibited from
charging over-limit fees unless the cardholder agrees to permit
over-limit transactions. Interest rates cannot be raised in the first
year and promotional rates must last at least six billing cycles. Card
issuers will also be required to apply payments over the minimum to the
portion of the balance that carries the higher interest rate. The
legislation also requires consumers under 21 to have a co-signer.
Additionally, statements must be mailed 21 days before the bill is due
and a 45 day notice is required for any fee, rate, or penalty increases.
President Obama has indicated he wants to sign the “Credit Card
Accountability, Responsibility and Disclosure Act” by Memorial Day. To
view the complete bill visit CardFlash Online (www.cardflash.com).

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NCO Group Q1 Revenues Up 10%; Loss Narrows

Debt collector NCO Group reported first quarter revenues of $402.1
million, a 10% increase from the year ago quarter. Also, the net loss
narrowed from $9.2 million for 1Q/08 to $2.1 million for 1Q/09.
The loss for the first quarter of 2008 included a non-cash allowance for
impairment of purchased accounts receivable of $6.2 million and $5.5
million of restructuring and other nonrecurring charges primarily
related to the acquisition of OSI and Systems & Services Technologies.
NCO noted that during the quarter the Accounts Receivable Management
division operated above its revenue target and principally at its
profitability target, driven by a rising delinquency environment. The
Customer Relationship Management division operated above its revenue and
profitability targets primarily as a result of better than expected
volumes from existing clients, as well as increased workforce
efficiencies. The Portfolio Management division operated below revenue
target and slightly above its profitability target, due to less than
expected purchases during the first quarter. For complete details on
NCO’s first quarter performance visit CardData (www.carddata.com).

NCO GROUP REVENUES
1Q/08: $364.6 million
2Q/08: $405.0 million
3Q/08: $381.1 million
4Q/08: $362.5 million
1Q/09: $402.1 million
Source: CardData (www.carddata.com)

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Advanta ABS Problems Freezes Biz Cards

Advanta shed more light on the deterioration of its business credit card portfolio and its decision to shut down all credit card accounts for future use on June 10th. The Company’s securitization trust will go into early amortization on June 10th based on May’s performance.
Advanta is also going to use up to $1.4 billion to buy the “Class A” senior notes at a discount of 25% to 35% of their face value in a modified “Dutch Auction.” In filings with the SEC, the “Advanta Business Card Master Trust” had a receivables balance of $4.5 billion as of April 30th. The default rate for April was 20.15%, compared to 17.31% for March. The aggregate outstanding balance of the accounts which were delinquent 90 days or greater as of the end of April was 5.97% of total Receivables as compared to 5.96% as of the end of March. The aggregate outstanding balance of the accounts which were delinquent 30 days or greater as of the end of April was 11.54% of total receivables, as compared to 11.92% as of the end of March. Overall, Advanta reported a first quarter net loss of $75.9 million, a 62% sequential increase. Managed charge-offs soared to 16% from 12% in the prior quarter and compared to 6% one-year ago. For complete details on Advanta’s latest performance visit CardData ([www.carddata.com](http://www.carddata.com)).

MANAGED CHARGE-OFFS
1Q/08: 6%
2Q/08: 8%
3Q/08: 10%
4Q/08: 12%
1Q/09: 16%
2Q/09: 20%
Source: CardData (www.carddata.com)

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DEBT AVERSION

A new study reveals that British consumers are less likely to have credit card debt than they were before the credit crunch. By the end of 2008, consumers users were 21% less likely to be burdened by credit card
debt than they were at the beginning of the year. According to Auriemma Consulting Group 63% of British consumers carried balances in the first quarter of 2008 on their credit cards. By the end of
2008, the incidence of revolving debt on credit cards fell to just 50%.
As interest rates increased during 2008, consumers began taking steps to
reduce their debt exposure. In addition to a reduction in the number of
credit card users carrying a balance, the balances also decreased. In Q1
2008, the average balance held by consumers with credit card debt was
GBP 1,651, nearly GBP 200 more than the amount reported in Q4 2008.
During the same period, average interest rates on credit cards increased
10% to an all-time high of 15.7%.

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EnXnet Beefs-Up MultiMedia Gift Cards

Card producer EnXnet has purchased down stream manufacturing equipment
and is set to increase production of its “MultiMedia” giftcards. At
full capacity, the equipment is rated to handle
around 5,000,000 MultiMedia Gift Cards per month. EXNT’s partners will
now have the ability to accept larger orders. This will allow EnXnet’s manufacturing partners to simplify production by
combining the down stream process which includes
printing, mag stripe, encoding the mag stripe, bar coding, serialization
and scratch offs into one location and manufacturing line.

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TNB Lands Communication FCU Processing

TNB Card Services has become the card processing partner for OK-based
Communication Federal Credit Union. Among Communication’s plans are
consolidation of its card products into gold and
platinum offerings only, with risk-based pricing and rewards for
platinum cardholders, increased promotions, and use of TNB’s management
tools, particularly
“VIP CardStation” and “VIP Portfolio Pro”. Communication FCU has 49,000
members and $574 million in total assets.

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NFC Forum Releases New Specifications

The NFC Forum has released two specifications that further the integration, implementation and standards interpretation of NFC technology. The new “NFC Digital Protocol” and the “NFC Logical Link Control Protocol” specifications are available for free download. The “NFC Digital Protocol” defines the common feature set that can be used consistently and without further modification for major NFC applications in areas such as financial services and public transport. More specifically, the specification covers the digital interface and the half-duplex transmission protocol of the NFC-enabled device in its four roles as Initiator, Target, Reader/Writer and Card Emulator. The “NFC Logical Link Control Protocol” defines an OSI layer-2 protocol to support peer-to-peer communication between two NFC-enabled devices. The “LLCP” defines two service types, connectionless and connection-oriented, organized into three link service classes: connectionless service only; connection-oriented service only; and both connectionless and connection-oriented service.

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PLANET PAYMENT & JCB

Multi-currency processor Planet Payment will provide processing
support to global payment brand JCB International, the wholly owned subsidiary of JCB Co.
The agreement expands the relationship between Planet
Payment and JCB International, which involves Planet Payment providing
processing support to several JCB acquirers in Hong Kong. As part of the
solution announced today, Planet Payment will now be providing back-end
settlement and clearing processing for all merchants acquired directly
by JCB in Hong Kong. Planet Payment expects the solution to be live on
or before June 1, 2009. Planet Payment enables processors, acquiring banks and their merchants
to accept process and reconcile credit card transactions in multiple
currencies, allowing cardholders to view prices and settle transactions
in their native currency.

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TSYS Expands TransCash Visa Cards Abroad

TSYS and Tustin, CA-based TransCash have teamed to offer a prepaid international money transfer card. The first cards will be issued in France through Midi France Telecom this summer. The initial target markets include Morocco, Algeria and Tunisia. The Visa-branded card will be distributed in dual card packs through supermarkets, initially with the Auchan supermarket chain. The first card is loaded with value while the second card can be sent to relatives abroad. The TSYS platform will also be used for launching similar products across Europe and beyond. To coincide with the agreement, TSYS has opened a new office in Paris to support the company’s expansion into France. Midi France Telecom provides telephone call charge cards through retailers such as Auchan, Casino, Leclerc, Carrefour, Boulanger and several department Stores. Charles Cohen is the CEO of TransCash.

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