The Buckle Renews ADS Private Label Deal

Loyalty marketing Alliance Data Systems has signed a multi-year contract
renewal with NE-based fashion retailer The Buckle, with more than 380
retail stores in 39 states and sales of approximately $620 million to
continue providing private label credit card services. Under terms of
the renewal agreement, Alliance Data will continue providing private
label credit card services including account acquisition and activation;
receivables funding; card authorization; private label credit card issuance;
statement generation; remittance processing; customer service functions; and
marketing services to Buckle. The private label card solution also
includes support of Buckle’s
points-based rewards program, called B-Rewards, where cardholders earn
one point for
every dollar spent, and receive dollars-off certificates redeemable at
Buckle.

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First Data Q3 Revenues Inch Up by 4.6%

First Data reported third quarter revenue of $2.164 billion, an increase of 4.6% over the year ago quarter. However, the net loss for the quarter was $164.4 million, compared to a net profit of $28.0 million for 3Q/07. The loss included $270 million of incremental interest expense and $124 million of incremental depreciation and amortization primarily attributable to the KKR transaction. Merchant Services produced revenues of $1.026 billion, up 9% from 3Q/07. Even though Merchant Services had 9% growth in transactions it was offset by the slowing U.S. economy, which reduced transaction growth for smaller merchants and shifted transactions to some nationwide discounters and wholesalers. Financial Services generated third quarter revenue of $699.8 million, down 5% from the year ago quarter. There was modest growth in the card issuing business offset by lost business and check volume declines in the TeleCheck business. International posted 3Q/08 revenue of $487.0 million, up 19% from 3Q/07. Revenue benefited from 21% transaction growth which was in part driven by acquisitions in prior quarters. During the quarter, First Data named Robert DeRodes as its CTO; mutually agreed to terminate its plans to merge InComm into First Data; and successfully terminated its joint venture, Chase Paymentech Solutions, with JPMorgan Chase. For complete details on First Data’s third quarter performance visit CardData ([www.carddata.com](http://www.carddata.com)).

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VIVOTECH & SESAMES

ViVOtech announced that its ViVOnfc mobile
application “ViVOnfc” was named as a finalist for its advanced mobile
marketing features, some of which are already in use in pilot programs all over the globe in the best loyalty category for the prestigious SESAMES Award to be presented at CARTES 2008. Last month ViVOtech announced the deployment of the first
real-time coupon redemption system along with SingTel and NETS that
allows consumers to receive a coupon on their NFC-enabled phones and
flash it onto “ViVOpay” contactless readers for automatic redemption.
Earlier this month, ViVOtech revealed the successful results from the
transit and retail NFC mobile payment trial in San Francisco with BART,
Jack in the Box and First Data Corporation. “ViVOnfc” lets card issuers
and retailers personalize their services and
deliver consumers location-based coupons, offers, promotions and rewards
programs through a SPAM-free and fully authenticated mobile network.
Consumers control the content and opt-in to receive promotions and other
contents from trusted sources by just waving their NFC phone on smart
posters and kiosks, or by just pressing a button on their phones.

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INFINEON & SESAMES

Infineon Technologies AG’s 16-bit security microcontroller family “SLE 78” is the winner of the 2008
Sesames Award in the category of “Best Hardware.
Infineon’s “SLE 78” family of security microcontrollers integrate
self-checking security mechanisms
called “Integrity Guard” specifically developed for chip card and security
applications. “Integrity Guard” offers security microcontrollers
equipped with full on-chip encryption and full error-detection
capabilities over the core architecture with a dual CPU approach that
uses hardware-encrypted
calculation with different secret keys allows detecting whether a
calculation was performed without errors. This is the fifth time
Infineon has received a Sesame Award for Best Hardware Innovation; and
this year, two out of the three Best Hardware finalists were Infineon
products. The other Infineon nominated product is the “SLM 76” security
microcontroller family targeted at the growing market of
machine-to-machine (M2M) communication.

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RETAIL SHRINK

A new study shows that global retail theft or retail shrink will top $104 billion this year amounting to a cost of nearly $230 per household in the 36 countries surveyed. The second annual “Global Retail Theft Barometer” from Checkpoint Systems also found that stolen merchandise accounted for 38% of internal fraud, while 24% of internal losses were in the form of stolen cash, coupons, vouchers or gift cards. Employee theft is the largest source of shrinkage for retailers in North America and Latin America (46% and 42% respectively), while customer theft is the leader in the Asia-Pacific region and Europe (54% and 47% respectively). North America reported the highest average dollar amount stolen by customers, at $747 per incident. The high average in North America is thought to reflect the impact of organized retail crime. Refund frauds and false markdowns rose substantially, comprising 20% of internal fraud, an increase of 34% since last year. Collusion represented 10% of losses. Large financial frauds, also on the rise, accounted for 8% of internal fraud.

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HSBC REWARDS

Until the end of next year HSBC Bank Canada is offering a rewards program that will enable cardholders to apply up to 2% of their credit card spending towards their existing HSBC mortgage, after which they can continue to apply their reward points to their mortgage account at a rate of 1%. Under the “HSBC MasterCard Mortgage Account Contribution Reward” the first $200 contribution will take effect once cardholders reach the 10,000 reward points level. Additional contributions will be paid at a rate of $100 for every subsequent 5,000 points they accumulate. HSBC says a customer with a $250,000 mortgage who spends $20,000 per year ($1,666 per month) on their HSBC MasterCard would reduce the mortgage balance by $5,000, saving $8,144 in interest charges, and pay off the mortgage seven months earlier.

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ATOS AWARD

Atos Worldline has won the 2008 Sesames Award for Best e-transactions Application for
its innovative “Fast Booking on ATM” solution, allowing
users to book and purchase event tickets on an ATM and also gives banks
a quick and simple way to turn their ATMs into a key sales channel.
Atos Worldline’s solution also gives banks a way to develop their ATM
base, which was primarily designed for banking transactions, and
provides ticket bookers with a new distribution tool that makes their
services even more accessible. Lastly, users benefit from the
convenience of 24/7 availability. Atos Worldline specialises in end-to-end
payment services including issuing, acquiring and developing payment
technology solutions; card processing; CRM & eServices (internet, voice
and mobile services with annual revenues of EUR 654 million.

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GEMALTO AWARDS

Gemalto has won the “Best Software” Sesames award at this year’s Cartes
& IDentification tradeshow and is demonstrating “Smart Card Web Mashups” at its booth. “Smart Card Web Mashups”
is the first implementation of the Java Card 3.0 specifications through
a technological solution that combines content
and applications from various Web server. One of the servers is embedded
in a USB device and provides personal data and services to the USB key
holder, such as a contact book, notes, passwords, videos or images. The
information is directly managed in a Web browser via applications like
YouTube or a Personal Information Manager (PIM) portal embedded in the
USB key. The mashup technology allows enriching the services stored in
the device with online content, or personalizing Web applications with
personal data.

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G&D AWARD

Giesecke & Devrient’s “Touch&Travel” ProxSIM NFC-enabled SIM card
project was a winner of this year’s Sesames Awards. A joint program with Deutsche Bahn, Vodafone and
T-Mobile, the Touch&Travel project enables travelers to use their mobile
phone in place of a conventional ticket for public transportation.
Before boarding, users register for their trip by passing their
NFC-enabled cellphone in front of a reader integrated in a so-called
Touchpoint. The end of the trip is registered in the same way. A
background processor calculates the price of the journey on the basis of
the registration data, and displays it on the cellphone. Touch&Travel has been
operating successfully as a pilot project since February 2008. The
operators intend to recruit up to 2,500 test customers for the second
stage of the pilot project.

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CARDS 3Q/08

Payment card volume in the U.K. increased 8% year-on-year in the third
quarter hitting GBP 93.7 billion with a total of 1.9 billion
transactions. Debit cards accounted for 73.8% of all plastic card
purchases compared with 72.0% in 3Q/07. According to data collected by
APACS, credit card outstandings at the end of the third quarter were GBP
54.1 billion, compared to GBP 55.9 billion at the end of the third
quarter 2007. This is a 3.3% year-on-year increase. Bacs volumes and
values grew by 3.2% and 7.4% respectively over the 12 months through
September. Over the same period, the volume of total CHAPS payments fell
by 11.7% with a 22.6% fall in values, primarily due to the closure of
CHAPS Euro in May. CHAPS sterling volumes remained stable and values
rose by 10% over the year. The UK “Faster Payments Service” was launched
on May 27th. During September, 11.7 million payments had been processed
for a value of GBP 4.9 billion. Cheque and credit clearing volumes
declined by 10.6%, total values declined by 6.3%.

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RYANAIR CARD

Ryanair, Europe’s largest airline, has teamed with M-Cube to mass market a multi-branded prepaid card across the U.K. and Ireland.
The new “Ryanair MasterCard Prepaid Card” offers cash-back, rewards, discounts, sweepstakes, free air tickets and is denominated in GBP or euros. The new card offers up to 20% cash-back on all money spent on the card from purchases from brands including Miss Selfridge, SKY Digital, PC World, Laura Ashley and Dixons. Extra savings can be made from discounted shopping such as up to 50% off tickets with TicketMaster when shopping via the member’s portal as well as earning monetary rewards from every purchase made. Also, with every purchase made or ATM transaction on the cardholder earns 10 points. Once users reach their first 1000 points, a reward of GBP 10 will be credited to the card.
The GBO 60 annual card membership fee also entitles cardholders to four free flights on Ryanair.

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SEPT PULSE

The Conference Board announced that the leading index for Korea declined
0.7% and the coincident index declined 0.4% in September.
The leading index fell again in September, its fourth decline
in the past five months. The value of machinery orders, private
construction orders, the stock price index, and the yield of government
public bonds contributed negatively to the index this month, more than
offsetting the large increase in the letters of credit arrivals component. Since
March, the leading index has declined by 4.6% (about a -9.1% annual growth rate), well below the 0.1%
increase between September 2007 and March 2008. The leading index continued its downward trend after a brief
increase in July. It has declined by almost 7 percent from its most recent
high in October 2007, the largest decrease since the 1997-98 decline. However, three of the seven components that make up the
leading index increased in September. The positive contributors – from the
largest positive contributor to the smallest – were letter of credit
arrivals, the (inverted) index of inventories to shipments, and real
exports FOB. Negative contributors – from the largest negative contributor
to the smallest – were value of machinery orders, private construction
orders, stock prices, and the (inverted) yield of government public bonds.
The coincident index has also fallen slightly since the beginning of this year. The decline and widespread
weakness in the leading index over the past six months suggest that economic
activity is likely to remain sluggish in the near term, and the
risks for further economic weakness remain elevated.

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