CARD INDICES

Moody’s Investors Service’s UK credit card indices have begun showing
signs of deterioration with the aggregate index delinquency rate up for
a third consecutive month while projections include an increase in
charge-off rates over the coming months. Factors contributing to this
deterioration include a combination of increased living costs, a suspect
rise in unemployment and decreased credit. A degree of
uncertainty in near-future trends remains, however, thanks to historical
figures showing card originators often curb potential effects through
collections or further risk base pricing.

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SEG AWARD

Gemalto’s Smart Enterprise Guardian (SEG) has been awarded the 2008
“Tomorrow’s Technology Today” Award by Info Security Products Guide.
Having received the recognition in the Personal Portable Security
Devices (PPSD) category, the SEG multi-function USB device was jointly
developed by Gemalto digital security and Lexar semiconductor solutions
provider. Gemalto digital security had 2007 annual revenues of over
EUR1.6 billion, has over 85 offices in 40 countries and about 10,000
employees.

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Small Business Embraces Electronic Payments

A new survey commissioned by PaySimple with Market Platform Dynamics reveals that over the next two years 70% of small businesses will be accepting electronic payments. Currently less than 50% of those surveyed accept some form of electronic payments but believe that within the next two years 50% of their payments will be via electronic methods. When asked about what drives adoption, most companies surveyed concurred that cost is not a deciding factor, and rather cited the motivating factors to be convenience, cash flow and sales lift. Overall, roughly 78% of companies sampled prefer paper cash and checks today, and for 66%, paper checks are the primary method of payment. Roughly one quarter favor cash and 28% choose electronic payments, with the exception being retail and travel where electronic is overwhelmingly preferred. Most of those surveyed do business directly with customers transacting with them on a monthly basis and 55% report a typical transaction size of more than $500.

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Trustwave Helps Certify Kount for PCI

Idaho-based fraud prevention provider Kount has been fully PCI certified with the assistance of Trustwave. This is an important distinction because it confirms that Kount meets the criteria put forth by the credit card industry’s PCI Security Standards Council, an open global forum for the ongoing development, enhancement, storage, dissemination and implementation of security standards for account data protection. Kount engaged Trustwave, a third-party company recognized as a Qualified Security Assessor by the PCI Security Standards Council, to perform the PCI compliance audit. After a thorough assessment of Kount, Trustwave confirmed that the online fraud control technology employs the highest security standards, therefore ensuring the safety of cardholder data. Kount is an online fraud prevention tool that guards against online organized crime directed at F100 retailers and money transfer agents.

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Credit Card Delinquency Nears 5.5% in Apr

General purpose credit card delinquency rose six basis points in April from the prior month to 5.49%. One-year ago 30+ day delinquency was 4.72%, according to CardData ([www.carddata.com][1]). The latest figures show that 30+ day delinquency rose to 2.48% in April, compared to 2.46% in March and 2.02% for April 2007. Sixty-day delinquency rose to 1.29% for April 2008, compared to 1.26% in March and 1.07% for the year ago period. Delinquency past 90 days inched up from 0.76% in March to 0.79% in April.

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

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Credit Card Solicitations Drop 5% in 2007

The number of credit card solicitations dropped 5% in 2007 to 5.6 billion, compared to 5.9 billion in 2006 and 3.5 billion in 2000. According to CardWatch (www.cardwatch.com), the response rate of mailed credit card offers has dipped to 0.4%. According to Mintel Comperemedia, credit card direct mail volume has fallen steadily since October 2007. From December to January, credit card issuers reduced the number of mailings sent to current cardholders by 30%. Meanwhile, they increased direct mail offers to non-customers by 7%. Of 2007’s top 10 mailers, six increased their direct mailings to non-customers after the holidays. According to Synovate’s “Mail Monitor,” response rates were expected to edge up slightly to 0.6% in 2007, but have since sank. Synovate says the 2007 dip is a continuation from 2006, and mainly due to the Bank of America/MBNA merger and a decrease in direct mail by Chase and Capital One. (CF Library 10/15/07; 2/15/08; 4/3/08)

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Money Movers/Chase Launches Process Pink

Chase Paymentech’s ISO partner Money Movers of America (MMOA) has launched “Process Pink” as part of its merchant payment processing business to make substantial monthly financial contributions to the National Breast Cancer Foundation. Every time a consumer makes a credit card purchase at a “Process Pink” participating merchant, a portion of MMOA’s revenue from the credit card processing fees is donated to the NBCF. “Process Pink” grew out of a desire on the part of MMOA’s principals to leverage the core business of merchant processing for the advancement of significant challenges such as finding a cure for breast cancer. As part of this arrangement, MMOA and its customers will be permitted to advertise their support for the NBCF.

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Consumer Spending Index Sinks to 2001 Lows

The Deloitte Research “Leading Index of Consumer Spending” reports that it has reached its lowest level since 2001. The “Index” attempts to track consumer cash flow as an indicator of future consumer spending. The “Index,” comprising four components: tax burden, initial unemployment claims, real wages and real home prices, fell to 1.3%, from a revised gain of 1.51% a month ago. The tax burden is expected to continue to fall with slowing income growth. This remains the only positive factor supporting consumer spending in the months ahead. Unemployment claims increased 16.1% in March, compared with last year. Real wage growth was negative. The decrease was marginally lower compared to the previous month. This comes at a time when personal income increased 4.4% in the first quarter of 2008 compared to a year ago. Rising food and energy prices continue to be a concern for consumer spending. The fall in house prices intensified further with house prices falling nearly 12% compared with a year ago. The home market shows no sign of bottoming out with residential spending falling 26.7% in the first quarter of 2008. vs. the first quarter of 2007.

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Credit Card Debt Impacts Summer Vacations

A new survey conducted by TransUnion’s TrueCredit reveals that 33% of respondents will not go on vacation this summer while 28% who do will spend less than last year. The cost of fuel for 72% of respondents was cited as a reason while 35% are concerned about credit card debt. Additionally, Americans are taking a long-term view of their finances. Nearly half (49%)say the statement, “I’m a long hauler. I devise and adhere to long-term plans for my money” best represents their personal financial philosophy, while 25% agree with the statement, “I’m a baby stepper. I set short-term plans and stick to them.” Zogby International was commissioned by TransUnion’s TrueCredit.com to conduct an online survey of 8,683 adults.

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NRF Welcomes Card Protection for Retailers

The National Retail Federation and National Council of Chain Restaurants applaud the Senate passage of legislation that would protect retailers and restaurants from frivolous lawsuits over credit card expiration dates printed on customers’ receipts. At issue is a provision in the Fair and Accurate Credit Transactions Act (FACTA) intended to prevent credit card fraud. Under FACTA, merchants were told they could no longer print more than the last five digits of a credit or debit card number “or” the card’s expiration date on receipts after December 4, 2006. Many merchants interpreted the law as meaning they could either truncate the card number or leave off the expiration date, but that they were not required to do both. Most truncated the card number but some continued printing the expiration date, reasoning that the expiration date was of no value without the full card number. Merchants have been hit with more than 300 class acts lawsuits contending that FACTA required them to take both steps, and seeking fines as high as $1,000 per incident, the maximum allowed under the 2003 law. FACTA does not allow individuals to sue, instead giving enforcement authority to the Federal Trade Commission, but the lawsuits were brought under state laws citing FACTA. The legislation would protect merchants from lawsuits for expiration dates printed between the time the FACTA rule went into effect and the time the measure is signed into law. But merchants would still be required to both truncate card numbers and leave off expiration dates going forward.

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