BREATHING SPACE

Credit card issuers have agreed to give their troubled cardholders “breathing space” to establish a debt repayment plan with a debt advice agency. Customers will have a minimum of 30 days to set-up a repayment plan, during which time the credit card issuer will suspend collection activity. If discussions remain ongoing after 30 days, there is an option of extending this by an extra 30 days. Card issuers have also agreed to increase transparency for risk-based repricing. Under the new practice customers will be notified when their interest rate is being changed as a result of risk-based repricing, and if their interest rate goes up they will be given sufficient time to close their account or be offered an alternative product. Credit card issuers have also agreed that they will not increase the interest rate on a card on the basis of risk during its first twelve months, or more often than six monthly thereafter. APACS says the two changes will likely be built into “The Banking Code.”

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WAL-MART CARDS

Wal-Mart Canada has seen both customer sales and selection of gift cards
grow significantly this year. Sales of gift cards have seen recent
double-digit growth over last year,
making them one of Wal-Mart Canada’s most-improved gift items this year.
Based on past years, Wal-Mart anticipates that the majority of holiday
gift cards will be spent within 10 days of Christmas, and almost all by
the end of January. Past sales data indicates that
post-holiday gift card use at Wal-Mart generally focuses first on
electronics like iPods and video games, followed closely by food
products. The company has added 17 new varieties of card designs and
now offers more than 50 different styles, including holograms, hockey
cards, and a scratch n’ sniff gingerbread house but a kitten in a gift
box is edging out Santa as the favourite gift-card image.

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ATM REFORMS

The Reserve Bank of Australia is implementing a package of ATM reforms in March that will improve fee transparency and may lower customer costs. Under the new rules bilateral interchange fees paid by financial institutions to ATM owners for the provision of ATM services will be abolished; ATM owners will have the ability to directly charge cardholders for ATM withdrawals, as long as it is clearly shown before the customer proceeds with the withdrawal; and an “Access Code” will be established to set out the conditions that new entrants are required to meet, the rights of new entrants, and the requirements on current participants in dealing with new entrants. Given changes, the RBA no longer sees a case for financial institutions to charge “foreign” fees when their cardholders use an ATM owned by another institution, particularly given that most financial institutions now provide
transaction accounts which offer unlimited electronic transactions for a monthly fee. The Payments System Board is also proposing to use an “Access Regime” to set bilateral interchange fees to zero and to cap the fee that existing institutions can charge new entrants for establishing the necessary direct connections.

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SEARS ICARDS

Sears Canada announced the
introduction of instant point redemption of Sears Club Points for gift
cards with no redemption fee, from their Sears Card or Sears MasterCard
for a gift card. Customers can simply visit the Catalogue Desk in their
nearest store location: department, home, dealer or outlet store, and
within minutes redeem their Sears Club Points from their Sears Card or
Sears MasterCard. For example, 500 points can be redeemed for a $5 gift
card for a Sears card up to a 20,000 points from a Sears MasterCard
redeemable for a $200 gift card.

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BANCO SANTANDER & GEMALTO

Digital security provider Gemalto has rolled out Banco Santander’s new multi-functional smart card with EMV payment and contactless access control. Unicamp was first to join in the Santander University program with cards for the EMV payment functionality. Anhanguera will be first to use the new multi-functional card. Santander University Division has already started distributing the cards to Anhanguera Campus, in Valinhos. The bank expects that more than 100,000 students will have Gemalto´s cards by the end of 2008. At Anhanguera University, the contactless card enables more secure access to buildings such as libraries and labs, where it will replace the barcode system and magnetic stripe. Students can use a single card to check out books from the library and to pay at their cafeteria, for photocopy and for other student expenses.

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CARD SECURITY

Visa says it will engage the Australian financial and merchant communities to assist in providing greater protection against fraud for
cardholders, merchants and financial institutions. The five-year Visa agenda includes seven key security initiatives: 1.) ensuring all merchant terminals in Australia are chip-capable and operational; 2.) moving to 100% chip card issuance earlier than planned; 3.) introducing a broad rollout of PIN verification for all domestic transactions with the aim of ending the use of signature; 4.) enrolling all cardholders in “Verified by Visa”; 5.) requiring all online merchants in Australia to check the CVV2 code on the back of the card; 6.0 ensuring higher levels of data security protection at “Level Four” eCommerce merchants and, 7.) ensuring all ATMs are chip-enabled and activated. In early 2009, Visa will convene meetings with financial institutions and merchants to develop an appropriate timetable for the implementation of these
initiatives.

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U.S. Companies Rapidly Reign In Travel Expenses

A new quarterly poll has found that 88% of travel managers surveyed
have seen a marked increase in stringent policies and tighter
requirements for pre-trip approvals. The research by Rearden Commerce
shows that 82% say price has now taken precedence over comfort and
convenience and 68% say compliance is the top priority for businesses in
order to drive cost-savings. As a result, 71% of travel managers are
seeing a significant decline in the number of business trips overall.
The respondents included travel account managers at some of the largest
travel management companies in the USA, including Best Travel, Cain
Travel, Travison, and World Travel. Rearden Commerce offers a range of
online cost management services to about 2200 companies. Last week
American Express Business Travel introduced a complimentary travel
program assessment to identify cost savings. The assessment will use a
proprietary solution to analyze key performance indicators such as
online booking adoption, nonrefundable ticket usage and compliance to
preferred vendors and travel policies. (CF Library 12/04/08)

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ONLINE SECURITY

Results of a recent survey conducted by Capital One Canada reveal that 69% of Canadians are concerned about the safety of personal information online. Those surveyed indicated that on average they have nine online accounts, with at least two accounts in an inactive status. Canadians appear to be neglecting these inactive accounts primarily due to a lack of awareness or carelessness. For example, 28% of online Canadians did not know it was necessary to close an inactive account, 23% forgot about their account all together, and 15% forgot their password. The survey also found that 73% of Canadians are concerned about becoming a victim of identity theft, but many are not taking simple steps to protect themselves, with 20% of Canadians rarely/never look to see if a website is secure before purchasing an item online; 72% of Canadians rarely/never review their credit bureau report; 33% always/sometimes throw debit or credit card receipts in the recycling bin and 12% of Canadians rarely/never check their credit card statements for unexpected or incorrect charges.

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Online eCommerce Fraud Losses Rise 11% in 08

An annual survey of online merchants shows that losses due to fraud
will likely hit a record $4.0 billion in 2008, compared to $3.6 billion
last year and about $2.4 billion five years ago. About 50% of this fraud
is reported via credit card chargeback, with the remainder coming
directly through their customer support functions. However, the
fraud loss ratio has held constant for the past three years at 1.4% of
revenue. The tenth annual “CyberSource eCommerce Fraud Survey” also
found that order rejection rates due to suspicion of fraud, which have
been consistent for several years at around 4% of incoming orders,
showed a significant drop this year, falling from last year’s 4.2% to
2.9%. When compared with larger merchants (online sales of $25M+), the
mid-sized eCommerce merchants show higher order rejection rates (4.3%
versus 2.4%), higher manual review rates (34% of orders, versus 15%) and
higher fraud loss rates (1.6% of revenue versus 1.2%). Additionally,
data from this year’s survey shows that merchants currently fight only
about 50% of the fraud chargebacks they receive. A third of merchants
challenge less than 10%. But merchants that do elect to challenge
chargebacks recover, on average, 28% of their fraud chargebacks.

ONLINE FRAUD
2004: $2.6 billion
2005: $2.8 billion
2006: $3.0 billion
2007: $3.6 billion
2008: $4.0 billion
Source: CyberSource

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TRAVEL MANAGEMENT

Business travel payment solution provider AirPlus International has
released the “Travel Management Study” which reflects overall concerns
for the rising cost of travel. The 2008 study includes six new
countries, in three different markets. The results overall reveal that
of the 68% of the travel managers interviewed, there is concern about
the rising cost of travel and 75% expect to pay
more for air travel in the future. Thus, the reduction of costs emerges
as the top focus for both American travel managers and those worldwide.
With the use of a data analysis tool, such as the AirPlus Information
Manager, travel managers are more likely to uncover their savings
potential and build compliance to their travel program.

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FTC Settles a 2nd Operation Tele-PHONEY Claim

The FTC reports it has settled the second of 13 complaints
brought as part of the multi-agency law enforcement sweep in May 2008
against deceptive telemarketers and the companies they operated
throughout the USA. The “Operation Tele-PHONEY” sweep encompassed more
than 180 cases that included both civil and criminal actions
in the U.S. and Canada. The first “Tele-PHONEY” settlement came in
September, when the agency secured a court order requiring another
advance-fee telemarketer to turn over $1 million for consumer
redress. In the latest settlement Florida-based Integrity Financial
Enterprises and National Benefit Exchange allegedly deceptively marketed
advance-fee credit cards to consumers nationwide. The defendants charged
consumers who accepted the cards an up-front fee of between $200 and
$300, and promised them they would receive a credit card with a credit
limit of $2,500 to $7,500, as well as a $1,000 cash advance limit.
A court order imposed a monetary judgment of more than $2.4 million
against the two firms in the second “Tele-PHONEY” settlement.

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M2 GLOBAL & IKOBO

Online transaction processor M2 Global has relaunched the “iKobo Money
Transfer Service”. iKobo uses a Visa Prepaid card that enables users to
access funds at 1.2 million ATMs globally. M2 will be adding to the
iKobo service its patented mobile SMS account management and fraud prevention technology, making it
the most secure debit card available anywhere, which will be a big
advantage in attracting new customers. The iKobo brand and its worldwide
remittance business add to M2’s range of financial products and will
help solidify its strategy to be the leader in financial services
transaction and payment products.

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