Size and Location Affect Overdraft Fees

New research has found large disparities in checking overdraft fees
across the country. The study by Chicago-based Moebs Services
found that financial institutions in Miami charge an average fee of
$30.26 per OD, while the average fee per overdrawn check in Washington
D.C. is $28.15, and in Denver is $28.02. Banks and credit unions with
less than $100 million in assets charged an average of $24.28 per
overdrawn check; those with $100 million to $1 billion charged $26.74;
financial institutions with more than $1 billion charged an average of
$27.93; and banks with more than $20 billion in assets charged $33.43.
Moebs also found that debit-card overdrafts are allowed by an average of
47.8% of banks and 57.9% of credit unions. The national average for
debit card overdrafts is 52.7%. ATM overdrafts are allowed by an average
of 33.5% of banks and 40.5% of credit unions. The national average for
ATM overdrafts is 36.9%.

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ICICI/BA AMEX

ICICI Bank and British Airways have partnered to launch American Express credit cards for Indian international travelers. The new “ICICI Bank British Airways American Express” credit cards offer up to 9 miles for every Rs. 100 spent on the card and a 5% discount on select flights charged to the card. The new co-branded card also offers a 25,000 mile bonus for cardholders who book and fly on British airways from India to the UK within the first three months of membership. There is also a bonus of up to 8,000 miles when the card is first used. The new program offers a “Classic” card for an annual fee of Rs. 3,500 or a “Premium” card for an annual fee of Rs. 7,000.

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FDC’s REMITCO and WFS Expand Services

WAUSAU Financial Systems and First Data subsidiary REMITCO have entered
into a new agreement that expands WFS’ proprietary software solutions
into a full service offering for remittance processing. Under the
agreement, WFS will provide multiple levels of service that
allow organizations to choose end-to-end remittance processing or a more
limited solution that can grow over time. The expanded solution can be
used by a number of industries, including financial services, utilities
and insurance companies. First Data will
host the software environment, manage the service facilities, and
provide the labor necessary to process the transactions. The agreement
also calls for First Data to beta test new WFS product development and
new releases and upgrades to the software. The WFS remittance solution
supports nearly 4 billion transactions annually. REMITCO has used the
WAUSAU Financial Systems software within its lockbox network for nearly
five years.

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PayPal’s Total Volume Rise 28% in 3Q/08

eBay reported that PayPal posted $597 million in net revenue for the
third quarter, an increase of 27% year-over-year, but flat sequentially.
Net total payment volume for the quarter was $14.8 billion, an increase
of 28% year-over-year. Global active registered accounts increased to
65.3 million, representing 19% year-over-year growth. During the third
quarter, PayPal handled 214.5 million payments, a 2% increase over the
prior quarter, and up 28% from 3Q/07. PayPal’s 3Q/08 transaction revenue
rate remained at 3.89% from the prior quarter and 3.87% in the year ago
quarter. The processing expense rate for the third quarter was 1.20%,
compared to 1.23% from the prior quarter and 1.21% for 3Q/07. PayPal’s
transaction loss rate inched up two basis points to 0.29%. For complete
details on eBay/PayPal’s third quarter performance, visit CardData
([www.carddata.com](http://www.carddata.com)).

PAYPAL HISTORICAL
$VOLUME #ACCOUNTS
3Q/07: $11.6 billion 54.8 million
4Q/07: $14.0 billion 57.3 million
1Q/08: $14.4 billion 60.2 million
2Q/08: $14.9 billion 62.6 million
3Q/08: $14.8 billion 65.3 million
SOURCE: CardData (www.carddata.com)

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Capital One U.S. Card Profits Down 45%

Capital One’s third quarter U.S. credit card profits of $340.4 million
were down 45% year-on-year, but up slightly more than 1% from the second
quarter. COF’s revenue margin rose 46 basis points year-on-year to
15.42%. Purchase volume in the U.S. declined slightly to $26.5 billion
for 3Q/08, compared to $26.6 billion one-year ago and $26.7 billion for
the prior quarter. Additionally, the number of U.S. card accounts
declined by 500,000 since the prior quarter to 37.9 million, and are
down three million, compared to one-year ago. U.S. managed card
outstandings were $69.4 billion for 3Q/08 compared to $68.1 billion in
the previous quarter and $66.7 billion for 3Q/07. The managed
delinquency rate (30+ days) for U.S. credit cards was 4.20% for the
third quarter, compared to 3.85% for 2Q/08 and 3.80% for the third
quarter of 2007. The net charge-off rate for U.S. credit cards was 6.13%
for the third quarter, compared to 6.26% for the second quarter and
3.85% one-year ago. Cap One says its U.S. Card business remains cautious
on loan growth and continues to focus its marketing and originations on
the parts of the U.S. Card market that the company believes provide the
best combination of risk-adjusted returns and losses. For complete
details on Capital One’s third quarter performance, visit CardData
([www.carddata.com](http://www.carddata.com)).

COF U.S. CARD NET INCOME
3Q/07: $626.8 million
4Q/07: $498.7 million
1Q/08: $491.2 million
2Q/08: $340.4 million
3Q/08: $345.0 million
Source: CardData (www.carddata.com)

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PAYPAL PAYMENTS PRO

PayPal Canada has launched “PayPal Website Payments Pro” product suite that allows e-commerce
merchants to offer shoppers the ability to pay with their PayPal
account using their credit cards, or by phone, fax or mail.
“Website Payments Pro” features three new functions: Express
Checkout, Direct Payment API and Virtual Terminal.
Website Payments Pro has no set up fee, no cancellation fee, and until
the end of the year no monthly fee, after which it is $35 a month.
“Express Checkout helps buyers with PayPal accounts
pay for items in just three clicks on a merchant’s website. “Direct Payment” enables
buyers who don’t have PayPal accounts to let merchants accept credit card transactions just as they
would with traditional Internet merchant accounts and “Virtual Terminal”,
a new feature that supports phone, fax and mail orders by
providing merchants with an online interface to manually enter
credit card transactions through the PayPal system.

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SCA Issues White Paper on Security

A new paper from The Smart Card Alliance, “What Makes a Smart Card
Secure?” gives an overview of the security features built into smart
cards. The white paper describes security considerations for
organizations that are intending to deploy smart card technology for
payment, security or identity applications. It answers the following
questions: What is a secure integrated circuit (IC), and what types of
secure ICs are used in smart cards; what security features are designed
into secure memory ICs and secure microcontrollers that protect data and
thwart attempted attacks; what is the impact of contact and contactless
interfaces on security; what types of cryptographic technologies are
implemented with smart cards and how are they used to protect
information and transactions; how do smart cards fit into overall system
security and how is the financial industry using smart cards to improve
the security of credit and debit payments; what industry certifications
and evaluations are available that
organizations can use to gain confidence in the security implemented in
various smart card products and in the interoperability of the
technology among various component suppliers? Smart Card Alliance
Contactless and Mobile Payment Council members
involved in the development of this report include Discover Financial
Services, First Data Corporation, Giesecke & Devrient, IBM, IfD
Consulting, Infineon Technologies, INSIDE Contactless, JCB
International, NBS Technologies, NXP Semiconductors, Texas Instruments,
Thales, Unisys, Venyon and ViVOtech.

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Check2Card Program Debuts at PriceRite

Metropolitan National Bank (New York)
and its wholly-owned subsidiary CashZone are pleased to announce the
launch of the CashZone Prepaid Visa Card “Check2Card” Program in three
PriceRite stores located in Connecticut and Rhode Island. CashZone
Check2Card is a program that allows CashZone members to
convert paychecks and most government-issued checks into
instantly available funds on a CashZone Prepaid Visa Card fee-free.
CashZone Check2Card lets unbanked and under-banked
consumers avoid the hassle of getting, carrying, and paying with cash,
while potentially saving hundreds of dollars a year in check cashing
fees. CashZone is a retail financial services company, serving over
110,000 members annually. In addition to the three PriceRite locations,
CashZone operates 13 full-service financial centers in New York City.
CashZone is a wholly-owned subsidiary of Metropolitan National Bank (New
York), a nationally-chartered FDIC member institution with assets of
over $550 million and four full-service banking centers in New York City.

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Wallets Tighten for the Holiday Season

A new survey has found that U.S. consumers plan to spend an average of
$832.36 on holiday-related shopping, up 1.9% from last year.
NRF/BIGresearch says this represents the lowest increase in planned
consumer spending since the survey began in 2002. Also, for the first
time in the survey’s history, people say they plan to spend less on
gifts for family members ($466.13 in 2008 vs. $469.14 last year).
Spending is expected to be particularly weak among young adults, as
18-24 year-olds plan to spend $50 less on gifts than one year ago.
According to the survey, 40% of shoppers say that sales or promotions is
the largest factor when determining where to shop, while another 12.6%
state that everyday low prices are most important. According to the NRF
survey, the Internet will influence 33.6% of holiday purchases, up from
30.2% last year and 28.9% in 2006. The NRF expects $470.4 billion in
holiday sales.

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PAYEASE PCI-DSS

Beijing-based loyalty marketer PayEase has achieved compliance validation with
the Payment Card Industry Data Security Standard (PCI DSS).
To validate compliance with the PCI DSS, PayEase engaged Trustwave to
demonstrate compliance with 12 very stringent security requirements of
the credit card brands, submitting to a rigorous review of its IT
environment and information security policies and procedures. As a Level
1 processor, PayEase also enrolled in Trustwave’s “TrustKeeper”– an
on-demand compliance management tool that supports on-going compliance
including the required quarterly network vulnerability scans.
Trustwave is a provider of on-demand data security and payment card
industry compliance management solutions.

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Further Card ABS Deterioration Likely

Moody’s is predicting that the charge-off rate index for credit card
loans backing securities will likely rise to 8.5% in the fourth quarter,
well above the 7.1% post-recessionary peak in May 2003. The rating firm
say it continues to have a negative outlook on the credit card ABS
sector and believes that deterioration will continue into
and throughout 2009. Moody’s also notes that the sustained credit crunch
has constrained some issuers’ access to funding. Therefore, balance
sheet strength and liquidity will become an increasingly important
dimension to credit analysis, especially for those issuers with limited
alternative funding resources. Additionally, Moody’s notes that a
significant and sudden drop in excess spread comes at an exceptionally
challenging time for credit card trusts. For virtually all issuers,
excess spread has been steadily falling since January 2008 due mainly to
rising charge-offs and falling yield. The excess spread index, which at
6.12% in August, is still above the long-term mean of 5.8%.
Nevertheless, with the expectation of rising charge-off rates throughout
the coming year, excess spread will likely erode further.

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