Payment Rates and Yield Retrench in May

Monthly payment rates, the amount that cardholders pay on their credit card debt, took another turn south in May. After topping 20% in 2006, the MPR dropped 49 basis points between April and May. Among managed credit card outstandings, the MPR declined to 17.54% in May, compared to 18.03% in the prior month and 19.01% one-year ago. The May MPR figure is the lowest in four years. According to CardData ([www.carddata.com][1]), the yield also declined in May to 13.85% from 13.89% in April, but was down 102 bps, compared to year-ago levels.

U.S. PORTFOLIO METRICS
YIELD MPR
May 07: 14.87% 19.01%
Jun 07: 14.93% 18.40%
Jul 07: 14.77% 18.30%
Aug 07: 14.80% 18.99%
Sep 07: 14.71% 18.86%
Oct 07: 14.82% 19.21%
Nov 07: 14.80% 18.89%
Dec 07: 14.63% 18.41%
Jan 08: 13.53% 18.11%
Feb 08: 13.33% 19.10%
Mar 08: 13.68% 18.33%
Apr 08: 13.89% 18.03%
May 08: 13.85% 17.54%
Source: CardData (www.carddata.com)

[1]: http://www.carddata.com

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Consumer Online Security Concerns Grow

A new survey reveals that 65% of adults are more concerned about online security now than they were five years ago. Over a quarter of respondents to Mintel Comperemedia’s survey say they are “significantly” more concerned. Despite their fears, 71% of adults report managing at least one financial services account online. The average American manages three financial services accounts via email and the web. Mintel believes the incidence of identity theft is actually on the decline. According to the DOJ, the number of American identity theft victims fell 12% from 2003 to 2006. Additionally, in 2006 only 8.3% of identity theft cases were the result of online behavior such as computer viruses, hackers or phishing. The majority of actual identity thefts resulted from simple theft such as a stolen checkbook or a dishonest friend. Recent data from Mintel Comperemedia’s email panel confirm the lower-than-imagined threat of phishing. In 2007, less than 1% of emails tracked by the firm were phishing scams.

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ECONOMICS MAY

The United Kingdom leading index decreased .6% while the coincident
index increased .2% for the month of May 2008 according to the
Conference Board. The leading index’ decline for the seventh consecutive
month is consistent with a 2.6% decline over the past 6 months.
Meanwhile, the coincident index increases for the month were driven
primarily by increases in retail sales while it has grown a total of .5%
over the previous 6 months. Founded in 1916, The Conference Board is a
business membership and research network to help executives build
professional relationships, expand business knowledge and find solutions
to business challenges.

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PINSENTRY

Gemalto has announced over one million UK Barclays customers now bank
online using the Barclay “PINsentry” solution. Using chip-enabled bank
cards with the Gemalto cryptographic smart card reader, Barclays
customers can implement “PINsentry” for stronger authentication when
online banking using One-Time-Passwords for signature and
authentication. Moreover, the portable Gemalto devices can be used to
perform secure online transactions from any personal computer.
Subsequently, the “PINsentry” solution offers a higher level of security
than just authentication using static credentials from wherever the user
pleases. Barclays consumers are limited to conduct personal online
transactions of a maximum amount from an initial GBP1,000 to GBP10,000.

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COMMERCE INDEX

Carlson Wagonlit Travel and American Express Global Commercial Card have
partnered under the terms of a multi-year, preferred supplier agreement.
The agreements stipulate CWT will promote and distribute AmEx’ “Business
Travel Account,” “Corporate Card and Corporate,” and “Meeting Card” to
clients in 21 countries. These CWT clients will also be allowed to
consolidate their card program across countries with flexible solutions
adapted to clients of all sizes in all market segments. CWT and American
Express will be able to provide greater value to mutual clients by
delivering enhanced data and reporting consolidated on a local, regional
and/or global basis. CWT provides numerous companies across various
sectors with travel program solutions for a sales volume, wholly owned
operations and joint ventures total of US$25.5 billion.

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PayPal and Google Team to Fight Phishing

eBay , PayPal and Gmail have partnered to offer protections from fraudulent e-mails to lower a consumers’ risk of being victimized by phishing attacks. Those with Gmail accounts can now count on fewer fake e-mails claiming to be sent by eBay and PayPal thanks to DomainKeys and its “DomainKeys Identified Mail” (DKIM) e-mail authentication technology. DKIM prevents delivery of the fraudulent messages with another layer to spam and phishing protection by allowing ISPs to determine if messages are real or not. eBay Inc. provides hundreds of millions of users platforms for global commerce, payments and communication while its PayPal’s secure transaction service offers active accounts in 190 markets to 60 million consumers.

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LINK EXPANSION

LINK Financial has opened a new operational facility in Dublin to
increase the company’s number of workstations to over 900 across 5
European countries. This is in conjunction with a long-term
portfolio acquisition from an Irish company while the already
established workstations at existing European offices are in London,
Madrid, Rome, Cologne and Wales. LINK Financial has acquired rights to
US$8.25billion of receivables and has operations in over 20 countries.

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Oberthur Card Systems of America Renamed

Oberthur Card Systems of America is now Oberthur Technologies of America, serving North, Central and South America in the payment, mobile and identity segments. The name change is the result of a recent reorganization of its France-based parent company Francois-Charles Oberthur Fiduciaire (FCOF). At the end of 2007, FCOF had transferred all of its operations to Oberthur Card Systems which was renamed Oberthur Technologies s.a.Oberthur Technologies of America Corp. is the largest manufacturer of contactless payment cards in the U.S. and the principal provider of ID security solutions to U.S. Federal agencies.

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ECONOMIC PULSE

The Japan leading index decreased 1.2% and the coincident index
decreased 0.3% for the month of April 2008 according to the Conference
Board. The leading index remained unchanged over the past two months
and, since October 2007, fell at about a -1.1% rate. Meanwhile, the
coincident index increased in April with large downward revisions to
current economic conditions from October, having since fell at about a
-0.7% rate thanks to declining manufacturing sales. Overall, the leading
index has declined for eight of the last twelve months and now stands
5.2% below its December 2006 level while real GDP growth picked up to a
3.3% annual rate in the 1Q08, up from the 1.9% average annual rate in
2H/07.

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Consumers Reluctant to Talk About Card Debt

New research shows that Americans are more comfortable talking about sex, weight, age, religious views and health problems over credit card debt. The latest poll for Creditcards.com by Roper Public Affairs finds 82% are reluctant to discuss their own credit card debts with someone they just met, 78% felt the same way in regards to the topic of their love life, 77% felt this way about their salary, 69% about monthly mortgage/rent, 58% about health problems, 49% about the death of someone close, 47% regarded weight as a hot topic, 37% felt religious views were taboo while 36% were not comfortable discussing political views and 26% were not comfortable discussing age. The reasons behind the topic of credit debt being a touchy one with Americans is easy to understand considering 35% disclosed they carry a balance, only 10% do not have credit cards, a mere 20% of those who do not carry a card balance would openly discuss the topic, 44% of those with household income of $50k+ carry a balance and 30% of those with incomes of $50k- do the same.

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CLICK4CREDIT.COM.AU

A recent survey of 500 consumers conducted by Click4Credit.com.au has
concluded 69.2% of Australians feel ANZ, Commonwealth, NAB and Westpac
banks are not providing the best credit card offers. Conducted through
Click4Credit’s credit card comparison website,
http://www.click4credit.com.au, the survey is reflective of high average
annual fees and higher interest rates paid by Australian credit
consumers compared to other national markets and the subsequent lower
interest rates/ reduced service fees on credit card products
increasingly available though smaller issuing organizations.
Click4credit.com.au specializes in the Australian credit card market and
is based in Brisbane, Queensland.

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