Contractor Management Teams with TransCard

Prepaid card provider TransCard has partnered with Contractor Management
Services to offer payroll cards. Contractor Management Service is the
nation’s leading Third Party Administrator and will offer the benefits
of prepaid cards to their
independent contractor members. By implementing prepaid cards, CMS will
eliminate the need for paper checks and distribute all payments
electronically.

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Study Finds Penalty APR Cure Period Vital

A new study has found that 82% of credit cards allow penalty interest
rate hikes that could last indefinitely. The Pew Charitable Trusts’
“Safe Credit Cards Project” is calling on Congress to add a
a “cure period” to curb penalty interest charges. The median allowable
penalty rate was 28% about double the average non-penalty rate. Pew says
Americans are on track to pay credit card penalty interest charges of
more than $7 billion annually. The Senate bill contains a “cure period”
that will ensure that cardholders have the opportunity to return to
their original interest rate after six months of on-time payments.
The Pew “Safe Credit Cards Project” studied all credit cards offered
online by the largest 12 issuers and included more than 400 credit cards.

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Gap in PDV Widens Between Debit and Credit

The gap between debit card and credit usage continues to widen in the
USA. In the fourth quarter purchase dollar volume for credit cards was
down 8% while PDV for debit cards was up 6%. Sequentially, the PDV for
credit cards declined 5% while debit card PDV edged down by 1%.
According to CardData, purchase dollar volume for Visa and MasterCard
credit cards for the fourth quarter was $336 billion, compared to $354
billion in 3Q/08 and $365 billion one-year ago. Debit card PDV came in
at $283 billion for 4Q/08 versus $286 billion in the third quarter and
$266 billion for 4Q/07. For the full year Visa and MasterCard debit card
gross dollar volume rose 11.6% to $1514 billion. While Visa will not
release first quarter data until the third quarter, MasterCard reported
that U.S. purchase dollar volume for credit cards in the first quarter
was down 13.9% while debit card PDV rose 4.9%. For complete details on
Visa and MasterCard performance visit CardData (www.carddata.com).

U.S. PURCHASE DOLLAR VOLUME
($ billions)
Credit Debit
1Q/07: $305 $229
2Q/07: $341 $250
3Q/07: $345 $248
4Q/07: $365 $266
1Q/08: $326 $268
2Q/08: $355 $289
3Q/08: $354 $286
4Q/08: $336 $283
Source: CardData (www.carddata.com)

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KIOSKS/ATM FORECAST

ABI’s NextGen Research forecasts global markets for financial kiosks and enhanced ATMs will grow at a compound annual rate of 9% and will include more than 186,000 financial kiosks and nearly 2.5 million ATMs by 2013. The report “Next Generation Financial Kiosks: No Bank, No Card, No Envelope Required” provides detail on the market and its outlook, including market drivers and inhibitors; detailed descriptions of self-service financial services applications and services; an examination of the regulatory and business challenges within this market and profiles of leading- and cutting-edge financial kiosk manufacturers and deployers. NextGen Research is the emerging technology arm of ABI Research.

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CardWizard Perso-to-Go Platform Unveiled

A new contactless personalization platform has been introduced that
enables financial institutions to instantly personalize mobile devices,
fobs and contactless stickers at the branch level for NFC payments.
CO-based Dynamic Card Solutions has unveiled the “CardWizard
“Perso-to-Go” platform. Utilizing the DCS “Perso-to-Go” platform, branch
personnel can personalize any contactless form factor — whether it is
an embedded NFC chip on a mobile device or provided as a contactless
sticker from manufacturers such as First Data’s “GO-Tag” solution or
Oberthur Technologies’ “FlyBuy” sticker, that can be attached to a
mobile phone, MP3 Player, PDA or key ring. No over-the-air
personalization is required, and because “Perso-to-Go” also supports
instant activation, the personalized device can be immediately used for
contactless POS purchases. Current “CardWizard” customers can now
upgrade their existing card issuance system to support “Perso-to-Go.”

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Obama Set to Sign New Credit CARD Act

Congress yesterday passed the “Credit Cardholders’ Bill of Rights Act of 2009” and it is on its way to President Obama for his signature by Memorial Day. The U.S. House voted 361 to 64 to send Obama
the stronger Senate version of the legislation. The U.S. Senate voted 90 to 5 on Tuesday to pass “H.R. 627.” Once Obama signs the bill, it will take nine months to go into effect. Speaker Nancy Pelosi said the “Credit Cardholders’ Bill of Rights” is historic legislation that protects American consumers against sky-high interest rates, excessive fees and other unfair practices of some credit card companies. U.S. Senator Mary Landrieu (D-LA) says that unfortunately, the “Credit CARD Act” does not apply protections to small business owners who have fallen victim to predatory credit card practices. The California-based Consumer Education Foundation noted that the legislation will not protect consumers against outrageous interest rates or other egregious practices and represents an astounding victory for the banking and credit card industry. The CEF says that under the Senate bill: There is no cap on credit card interest rates; companies can raise interest rates on future purchases at any time; issuers can unilaterally changes the terms of the credit card contract; and can still use fine print “arbitration” clauses to prevent consumers from suing them in court. To view the complete bill visit CardFlash Online (www.cardflash.com). (CF Library 5/20/09)

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Secure M-Payments Require Collaboration Model

A new white paper looks at security for mobile phone transactions. The
paper, “Security of Proximity Mobile Payments,” focuses on a
“collaboration model,” where financial institutions, MNOs, trusted third
parties and other stakeholders in the mobile payments ecosystem
cooperate in the management and deployment of mobile applications. The
Smart Card Alliance white paper introduces the players, their roles, and
their responsibilities in assuring the security of sensitive data. It
explains how the payment application, consumer credentials, and consumer
account information (such as a credit card number) are securely
delivered to, loaded on, and stored in a mobile device. It also
identifies risks present during the lifecycle of the payment information
stored on the mobile device and suggests appropriate countermeasures.
Participants involved in the development of the report included: Booz
Allen Hamilton, Collis America, Cubic, Discover, Giesecke & Devrient,
IBM, IfD Consulting, Infineon Technologies, Keypoint Consulting,
MasterCard, VeriFone, Visa, and ViVOtech.

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WW Card Transactions Growth Sets a New Low

Transactions processed worldwide on the Visa and MasterCard networks
during the first quarter grew at the slowest pace in the history of the
payment card industry. Both networks had a year-on-year increase of only
6% in the number of transactions processed globally. The increase in the
number of transactions processed has been generally declining since the
start of the recession in the fourth quarter of 2007. MasterCard’s
annual transaction growth rate was 19.4% in the first quarter of 2007,
declining to 15.6% in the first quarter of 2008 and then collapsing to
5.8% in the first quarter of 2009. Visa’s annual transaction growth rate
was 12% in the first quarter of 2007, rising to 15% in the first quarter
of 2008 and then sliding to 6% in the first quarter of 2009. Visa
processed 9.3 billion transactions in 1Q/09 for Visa, Visa Electron,
Interlink and PLUS cards. MasterCard processed 5.1 billion transactions
in the first quarter for MasterCard, Maestro and Cirrus cards. For
complete details on Visa and MasterCard first quarter and prior
performance visit CardData (www.carddata.com).

GLOBAL TRANSACTION GROWTH
MasterCard Visa
1Q/07: 19.4% 12.0%
2Q/07: 15.2% 13.0%
3Q/07: 13.3% 12.0%
4Q/07: 17.2% 13.0%
1Q/08: 15.6% 15.0%
2Q/08: 13.6% 13.0%
3Q/08: 13.0% 11.0%
4Q/08: 6.0% 8.0%
1Q/09: 5.8% 6.0%
Source: CardData (www.carddata.com)

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LML DIRECTOR

Payment processor LML Payment Systems has appointed David C. Cooke to
the Board of Directors. Cooke served as the Executive Director of the
newly-created Resolution Trust
Corporation (“RTC”) from 1989 to 1992, where he was responsible for the
RTC’s organization, staffing and operation. While with the RTC, Cooke
oversaw the takeover of nearly 700 failing institutions and the
development of innovative sales
initiatives for managing and disposing of their assets. After leaving
the RTC in 1992, Cooke spent eleven years as a
senior-level consultant in the private sector, where he managed groups
advising banks on emerging capital market developments and foreign
governments and multi-lateral
financial institutions on financial sector issues. In 2003, he was
recruited by the FDIC to serve as its first Chief Learning Officer in
charge of its new Corporate University. Cooke retired from the FDIC in
2006 and works part time as a consultant and teaches graduate level finance.

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Mobile Transaction Initiatives Examined

Aite Group releases a new report that examines mobile transaction
initiatives. The impact report is based on quantitative and qualitative
research of 69 mobile transaction initiatives internationally and
explores the current range of services in development and the
underlying technologies powering each initiative. Following an initial
growth spurt at the turn of the century, developers are once again
active in bringing mobile transaction services to
market. The technological evolution of the mobile device and mobile
networks,coupled with increased end-user savvy, has led to an increase
in mobile transaction initiatives over the past five years. By
understanding the various initiatives
around the globe, and what failed and what succeeded, financial
institutions and other players can better tailor their own solutions.

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MAR DEBT

Growth in credit card debt moderated in March, dipping slightly by A$300 million. However, credit card volume remained robust, rising 9.3% over year ago figures to A$18.7 billion. Year-on-year credit card debt growth has slowed to 4.4%, compared to 4.8% in the prior month and 7.8% one-year ago. According to the Reserve Bank of Australia credit card balances hit A$44.4 billion in March versus A$42.5 billion one-year ago. The RBA also revised the figures for credit card balances for the past twelve months. Most of the revisions lowered previously reported figures by about A$600 million. Credit limits now stand at A$123.6 billion, compared to A$116.4 billion in March 2008. According to the Reserve Bank of Australia there are currently 14.2 million credit card and charge card accounts in Australia, compared to 13.8 million one-year ago.

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