Prime Credit Card ABS Can Withstand 2009

A new analysis indicates credit card ABS ratings can likely withstand the impact of a severe recession in 2009. As part of its deterministic stress testing analysis, Fitch factored in a 50% increase in charge-offs, a 15% decline in yield and a drop in monthly payment rates by 20% over the next 12 months. Results of the analysis reveal that ‘AAA’ ratings would be unaffected while certain subordinate bond ratings could drop by up to three notches. Fitch says the results confirm the robust nature of typical credit card ABS structures. Even through intense and prolonged periods of stress, the likelihood of downgrades at the AAA level is fairly limited. Fitch recently reported that September “prime” charge-offs for credit card ABS was 6.57% and delinquency (60+ day) was 3.13%. Gross yield stood at 17.13%. The monthly payment rate for September was 18.57% and excess spread was 6.10%. (CF Library 10/31/08)

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Fiserv to Acquire i_Tech Corp for $40MM

WI-based Fiserv has agreed to acquire MT-based i_Tech Corporation for $40 million in a deal expected to close this month. i_Tech provides outsourced account processing services as a licensee and reseller of the Fiserv “ITI Premier” core banking system to financial institutions located primarily in the northern Midwest and West. In addition to account processing services, i_Tech provides its 158 financial institution clients with complementary services including EFT processing and check processing. First Interstate, the owner of i_Tech, has had a relationship with Fiserv for 30 years. i_Tech also provides service for more than 750 ATMs in 10 states.

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CreditReport.com Offers 3-Bureau Monitoring

CreditReport.com has launched its new monitoring service that offers
consumers a one-stop review of credit report data from Equifax, Experian
and TransUnion.
The three bureaus are independent of each other and do not share
information. Personal and financial information that is contained in one
file may or may not be the same in another. The three-bureau credit
report helps consumers see how lenders see them and ensures the accuracy
of consumer credit records. In addition, each of the three bureaus each
contains certain geographic
coverage, so monitoring all three ensures the best response time to
possible ID theft that may have occurred in a specific location.
CreditReport.com specializes in the research, development and
implementation of consumer-based services to
be delivered to consumers via the Internet.

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PAPERLESS SCOTIABANK

Scotiabank has signed up its one millionth paperless customer. The
Bank embarked on its paperless banking campaign in 2006 and Scotiabank’s
paperless banking option provides customers with Scotia
OnLine transaction histories of up to 18 months, as well as free
electronic images of cheques cleared within 90 days. Scotia Online
customers can sign up anytime by selecting the “Change Recordkeeping
Option,” or by calling 1-800-4-SCOTIA . Earlier in 2008, Scotiabank
introduced a new Environmental Paper Policy,
detailing the Bank’s commitment to further integrating environmental
considerations into its purchasing decisions, setting a reduction target
for paper use and expanding recycling programs in its international
operations. The new paper policy expands Scotiabank’s conversion to the
use of products certified by the Forestry Stewardship Council.

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eProcessing Network Products PABP Certified

Payment gateway provider eProcessing Network’s “ePNJPOS”, “ePNPlugIn”
and “ePNMobile” has been certified as PABP by Visa. eProcessing
Network’s payment gateway solutions have been evaluated and determined
to comply with PABP. Compliance with
the PABP is determined based upon data and information developed by an
evaluation of the application by a Qualified Payment Application
Security Company. “ePNJPOS” offers secure processing at the point of sale
with multiple devices allowing magstripe read transactions, paperless
processing and
even checks processing and also allows for a simplified user
interface with multiple users in
card-not-present (call center) environments. “ePNPlugIn” allows merchants
to accept and process credit card payments for invoices created within
QuickBooks. “ePNMobile” enables mobile card-present processing via cell
phone in single user and fleet environments.

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SQUIDCARD AWARD

eMoney provider sQuidcard has been awarded for end-to-end eMoney
service, encompassing contactless cards, retailer terminal application,
and online customer experience by Gemalto ePayments Terminals. The
sQuid service is based around a smartcard used for contactless payment.
Anyone can have a free card, which the customer tops-up, using it at
enabled retailers. sQuid launched in the summer in Bolton and is
expanding into Scotland this year. sQuid is currently available on the
magIC3 range of Gemalto payment
terminals, which provides an integrated platform for both bank schemes
and independent schemes.sQuid has a multi-purse capability and is
compatible with ITSO (transit)schemes.

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General Purpose Reload Faces Challenges

A new report concludes that the reload networks as they operate today, in a fragmented manner with pricing that does not support low dollar
loads, may be prompting churn and as a result challenging the growth of
general purpose reload products. Mercator Advisory Group
estimates that close to 50% of the current prepaid market would enable
reload at retail locations. Specifically, the research shows that the
dollar value opportunity for reloads at retail is roughly $100.5
billion. Of this total opportunity, open-loop solutions represent less
than 10% at $9.7 billion. The opportunity for
closed-loop reloading is $90.8 billion which dwarfs that of open-loop
reloads ten times. Mercator notes that Green Dot for years has and
continues to hold a commanding lead as the dominant, and for some time
the only broadly recognized, retail reload network for open-loop
solutions. MasterCard and Visa within the last two years have entered
the market with their own reload networks, in some cases riding on top
of existing POSA/reload networks, and there are a handful of other
reload enables and networks at work in this market. It is clear that the
industry views reloading in the retail environment as an important
aspect to the future growth of open-loop solutions although it is less
clear how the industry can develop the ubiquitous reload solution that
is generally understood to be the base requirement for broad consumer
adoption.

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YOUTH INVEST

The MasterCard Foundation and Mennonite
Economic Development Associates (MEDA) have established “Youth Invest”,
a $5 million program to create
inclusive financial services and education for youth in Morocco and
Egypt. The five-year program will enable microfinance
institutions to develop and test innovative products, reaching
approximately 50,000 people between
the ages of 15 and 24, especially those living in rural areas. MEDA
will partner with leading microfinance institutions in both
countries to study the needs of employed as well as unemployed youth,
and to design appropriate
financial products, such as savings for education or loans to start a
small business. The program will also provide youth-specific services,
including financial and business-related training to develop youth
entrepreneurship skills.

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Two Tuesdays Dominate Online Holiday Sales

Tuesday continues to rule as the top holiday shopping day for online
sales. Tuesday, December 9th produced the largest single day ever for
transaction count while Tuesday, December 2nd remains the largest single
day for sales dollars. The “Cyber Holiday Pulse Index” from Chase
Paymentech says the difference between the two peak days was a lower
average ticket. On December 9th, tickets averaged $54.94, while December
2nd enjoyed some of the highest ticket prices of the season, averaging
$58.91. Despite the peak sales day on December 2nd, the three-day period
from December 2nd through December 4th was narrowly surpassed — in both
transactions and sales — by the three-day period of December 9th
through December 11th. For the full season, the Chase Paymentech “Index”
shows transaction count is up 28%, sales have increased a comparatively
modest 15%, and average ticket prices remain down 11%. Chase Paymentech
monitors the daily activity of 25 of the largest 150 Internet retailers.

E-TRANSACTIONS*
Dec 1: 2.46 million
Dec 2: 3.72 million
Dec 3: 3.43 million
Dec 4: 3.01 million
Dec 5: 2.94 million
Dec 6: 2.50 million
Dec 7: 2.18 million
Dec 8: 2.57 million
Dec 9: 3.92 million
Dec 10: 3.44 million
Dec 11: 3.57 million
Source: Chase Paymentech
*daily activity of 25 of the largest 150 Internet retailers

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CARD USAGE

A new report finds that despite relatively healthy growth in credit card activity over the past five years, there is still a long way to go in terms of it becoming Japanese consumer’s preferred payment method at POS. Japanese residents on average have 6.2 credit or debit cards per person, higher than their peers in most card markets around the world including the USA. However, the report by Mercator Advisory Group finds that the average Japanese resident spent just about US$30 on their credit and debit cards in 2007 while the number was close to $180 in the US. As a result, Japan remains a cash-centric society and the payment market opportunities remain largely un-tapped by electronic payments. Mercator also says that the emergence of electronic money, namely payment cards and devices powered by a contactless chip, could bring a fundamental change to the way Japanese consumers make payments. Backed by prepaid card accounts as well as credit card accounts, e-Money services, have quickly become the most popular payment method at POS (besides cash of course, at least for now).

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Arkansas Inmates Get Funded via Cards

The Arkansas Department of Correction has teamed up with the Information
Network of Arkansas to enhance the online inmate deposit service to
include pre-pay phone deposits. Deposits may be made online through a
secure payment system which is available on the state’s official Web
site or made by phone using an Interactive Voice Response
System. Friends and family can make secure deposits to an inmate’s
prepaid phone
account using Visa, MasterCard, or Discover credit cards. Payments are
processed immediately through Arkansas.gov and are available within 2
business days for use. Credit card transactions are verified
instantly to provide inmates with quick and easy access to funds and
pre-pay phone deposits.

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