Discover Offers a Military Bonus

Discover Financial Services will be giving “Double Cashback Bonus” or “Double Miles” to all Discover Cardmembers who make purchases at U.S. military bases from July 4th through Labor Day. The program will include more than 175 military bases nationwide and includes everyday purchases like gas, groceries, lodging, telecommunications and other categories of merchants found on-base. Discover is also proud to welcome “Operation Homefront” as a Cashback Bonus Partner from July 13 through Labor Day. Operation Homefront is a non-profit organization that provides emergency assistance and morale to our troops, their families and to wounded warriors when they return home, and has provided critical assistance to more than 45,000 military families in need. Discover will provide an additional 20% match to the Cashback Bonus donated by cardmembers to Operation Homefront.

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PAYEZ MOBILE

The Pegasus group has renewed its service contract with Gemalto for its mobile NFC ecosystem. Five banks currently use Gemalto’s “Allynis” service offer as part of the “Payez Mobile” trial for contactless mobile payments. The banks include: the BNP Paribas, Crédit
Agricole-LCL, Crédit Mutuel-CIC, Caisse d’Epargne and La Banque Postale
Groups. The Pegasus group, which consists of seven major banks and four
mobile operators in France, launched the program in November 2007 with
1,000 user clients and 200 merchants in Caen and Strasbourg.

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Q1 Delinquency Hits a Four-Year High

Credit card delinquencies, based on total dollars outstanding, rose to its highest level in four years for a first quarter. Sequentially, delinquent dollars increased nine basis points and based on the number of past-due credit card accounts rose 13 basis points According to the American Bankers Association’s “Consumer Credit Delinquency Bulletin,” delinquencies based on total dollars outstanding for 1Q/08 were 4.59%, compared to 4.50% in the fourth quarter and 3.46% for 1Q/07. Based on the number of accounts past-due, the figures were 4.51% for 1Q/08, 4.38% for 4Q/07, and 4.41% one-year ago. The ABA also reported that the percentage of HELOC accounts that were more than 30 days past due rose 14 basis points to 1.10% during the first quarter (seasonally adjusted). This was the highest recorded rate for this category since 1997.

1Q CREDIT CARD DELINQUENCY HISTORY
(based on total dollars outstanding)
2000: 3.94%
2001: 4.13%
2002: 4.50%
2003: 4.51%
2004: 4.65%
2005: 3.76%
2006: 3.44%
2007: 3.46%
2008: 4.59%
Source: ABA Delinquency Bulletin

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DISCOVER & DINERS

Discover Financial Services has completed its acquisition of Diners Club
International from Citi for $165 million. Included in the acquisition
are the Diners Club brand and trademarks, employees and agreements with
44 network licensees who issue Diners Club cards. Diners Club
International handles over $30 billion in transactions per annum outside
of North America with an acceptance network in 185 countries around the
world while Discover Financial Services credit card issuer/electronic
payment services company for acceptance at millions of merchant and cash
access locations.

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Visa Contactless 2.0 Spec is Unveiled

Visa announced it is currently migrating to an enhanced global specification, “Visa Contactless 2.0” which is based on the international EMV chip standards. The new framework for “Visa payWave” is compatible with existing Visa contactless card programs in the market and in development. The specification also supports all payment platforms – credit, debit and prepaid, and can also be embedded in mobile devices. Visa first published a contactless specification in 2002, primarily to focus on local market implementations and requirements. In the United States: US Bank launched a “Visa payWave” debit program to cardholders in CA, CO, MO and UT. In the greater Washington DC region, National Capital FCU is adding the “Visa payWave” feature to its current portfolio of Visa credit cards. In the Los Angeles and San Francisco metropolitan regions, Visa and Coca-Cola are working together to install “Visa payWave” enabled vending machines. “Visa payWave” roll-outs and trials have been announced in Australia, Canada, China, Brazil, France, Guatemala, Hong Kong, Indonesia, Italy, Korea, Malaysia, Poland, Singapore, Spain, Switzerland, Taiwan, Thailand, Turkey, and the United Kingdom.

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Camden National Bank Joins PULSE

Summary ME-based Camden National Bank has joined the PULSE ATM/debit network. PULSE is one of the nation’s leading ATM/debit networks, currently serving more than 4,500 banks, credit unions and savings institutions across the country. PULSE is owned by Discover Financial Services. The network links cardholders with more than 265,000 ATMs, as well as POS terminals at retail locations nationwide. PULSE has experienced continued growth in network participation in 2008. For the fiscal year to date (December 2007 through May 2008), the network has added more than 100 new financial institution participants.

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CARD VOLUME

The total value of plastic card payments received by British merchants, retailers and service providers increased slightly more than 10% last year to GBP 345 billion. Debit cards accounted for 62% or GBP 221 billion of total spend. Credit card spend reached GBP 133 billion during 2007. According to UK payments association APACS, debit card spending was up 13% in 2007 while credit card spending rose 6%. This is the second year in a row that plastic spending topped cash spending. APACS noted that credit card spending up until the end of May increased by only 1.2% – below the rate of inflation, and the average value of a credit card purchase in a supermarket has actually fallen by GBP 1 to GBP 34.33. Last year total cash spending was GBP 265 billion. The trade group also noted that check payments last year totaled GBP 194 billion.

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UMB Goes Green with the Eco Rewards Visa

Another U.S. credit card issuer is going “green.” Kansas City-based UMB Financial has introduced the “Eco Rewards Visa.” The new card offers one point for every dollar in purchases; two points for every dollar of interest billed; and additional points for “green” purchases. Cardholders who apply before August 31st earn double points on every purchase for the first 90 days the account is open. Qualified “green” purchases include everything from energy-efficient light bulbs to ENERGY STAR appliances. Cardholders need to complete a basic online redemption process to claim these double points. Points may be redeemed for cash, merchandise, gift cards or travel; however, points may now also be allocated as a donation to a variety of local and national environmental organizations. ENERGY STAR, Green Seal and the Forest Stewardship Council have officially endorsed the “Eco Rewards Visa. UMB also notes that all applications and statements will be produced electronically, plus any required print materials will be produced with recycled paper. Other issuers offering “green” cards include: GE Money’s “Earth Rewards Platinum MasterCard”; Bank of America’s “Brighter Planet VISA”; MetaBank’s “GreenPay MasterCard”; and MBNA Canada Bank’s “Eco-Logique MasterCard.”

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GPN and HSBC Joint Venture Begins Ops

E-payment platform provider Global Payments has created a joint venture with HSBC Bank to provide payment processing services and merchant acquiring services to over 135,000 merchant outlets.Global Payments paid HSBC $439 million in cash to acquire a 51% ownership in the joint venture with HSBC to control the remaining 49% and contributed its existing merchant acquiring business in the United Kingdom to the joint venture. In addition, HSBC and Global Payments have entered into a ten-year marketing alliance in which the bank will refer its customers to the joint venture for merchant payment processing services. In 2007 HSBC’s merchant acquiring business in the United Kingdom generated revenue of approximately $229 million (114 million pounds Sterling). Global Payments expects this transaction will be accretive to diluted earnings per share in the first year.

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