J.C. Penney Computer Tape Goes Missing

Reportedly a computer tape containing information on approximately 650,000 customers of J.C. Penney and up to 100 other retailers has been lost. The Associated Press reports that the tape from GE Money was lost by Iron Mountain. The backup computer tape was discovered missing last October. The missing information includes Social Security numbers for about 150,000 people. According to the AP, GE Money is paying for 12 months of credit-monitoring service for customers whose SSNs were on the tape. Iron Mountain has more than 100,000 corporate clients throughout North America, Europe, Latin America and the Pacific Rim. Neither J.C. Penney or GE Money have issued statements on the breach.

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CardFlash Looks Back to September 2007

Chevron selects GE Money Bank to own and operate its Chevron and Texaco branded consumer credit cards and FleetCor Technologies Operating Company to own and operate its branded commercial credit cards. VISA has named Byron Pollitt, formerly a top executive at Gap and Walt Disney, as CFO designate of Visa Inc. New York City taxi drivers go on strike over new rules that require then to install credit card readers and GPS technology in their cabs by October 1st. MasterCard rolls-out two new spots in the NFL season opener that features tongue-in-cheek vignettes by Colts quarterback Peyton Manning. JCB and Union Bank of Taiwan launch the first card with “J/Speedy” in the world. Ceridian and hedge fund Pershing Square Capital Management reached an agreement over a proxy fight. Houston-based Cardtronics files a registration for an IPO to raise up to $300 million. Target announces it is reviewing potential ownership alternatives for its $7 billion credit card portfolio. American Express inks a deal to sell its American Express Bank Ltd to Standard Chartered PLC for $1.1 billion. A six-month “Visa payWave” pilot is launched in Taiwan. Barclay’s introduces the “DIRECTV Rewards VISA.” Discover Network signs an integration deal with Chase Paymentech. Discover Financial Services signs an agreement with Wells Fargo Merchant Services to offer full-service processing for all Discover transactions through WFMS. MasterCard introduces a new savings program for “MasterCard BusinessCard” credit and signature debit cardholders. VISA expands its contactless program with a key fob payment device embedded with “VISA payWave.”

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CPI Acquires Didier Printing Company

CO-based CPI Card Group has acquired IN-based Didier Printing Company. This will allow CPI Card Group to expand the services offered to its customers with highly flexible and responsive customer card solutions. The combined business will have three state-of-the-art manufacturing sites (Colorado, Nevada and Indiana), and has the largest smart card production capacity in the industry. The executive management team from Didier — Jim Galliher, Gary Smythe, Bill Lynch and Andy Sappenfield — will remain with the company. CPI offers a single source for plastic cards.

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WaMu’s Q4 Credit Card Profits Slip 35%

Seattle-based Washington Mutual reported that fourth quarter net income for its Card Services unit decreased 35% from the year-ago quarter to $92 million. However, managed card outstandings were $27.2 billion as of December 31st, compared to $23.5 billion one-year ago. Net interest income continued to grow slightly to $694 million with the increase in managed receivable balances, but it was partially offset by a decline in yields that reflected the lower Prime rate and higher proportion of better credit quality, but lower-yielding retail accounts. WaMu also reported that Card Services opened 653,000 new credit card accounts, or 292,000 less than in the third quarter, reflecting the selective reduction in marketing activities as the company places more emphasis on its retail channel. WaMu’s Retail Bank customers accounted for 37% of the quarter’s credit card account production, compared with 32% in the third quarter and 28% a year ago. The issuer is also dealing with worsening credit trends as the 30+ day managed delinquency rate climbed to 6.47% for 4Q/07, compared to 5.73% in the prior quarter and 5.25% one-year ago. Net credit losses of 6.90% during the quarter were up from 3Q/07’s 6.37% and 4Q/06’s 5.84%. For complete details on WaMu’s latest performance, visit CardData ([www.carddata.com][1]).

WaMu Net Income Track Record
4Q/06: $142.0 million
1Q/07: $256.0 million
2Q/07: $141.0 million
3Q/07: $ 66.0 million
4Q/07: $ 92.0 million
Source: CardData (www.carddata.com)

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

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MC’s Roy Dunbar to Lead Network Solutions

Network Solutions has hired Roy Dunbar, current President of Global Technology and Operations for MasterCard, as its new CEO. Dunbar joined MasterCard Incorporated in September 2004 and led a significant number of employees driving technology that processed approximately 16 billion transactions, clearing $2 trillion per year and representing 73% of the company’s annual revenue in 2006. Previously, Dunbar was with Eli Lilly and Company for 14 years, serving as President, Intercontinental Region, and as CIO. Mr. Dunbar currently serves as a director of EDS Corporation Network Solutions provides Web hosting, web design, e-commerce software, search engine marketing, SSL certificates, e-mail services and domain name registration.

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FLYBE MASTERCARD

Flybe has reported that applications for its new “Spend & Fly” chip
and PIN credit card have shown impressive volumes, given the card’s
customer benefits. Among these benefits, customers are afforded the
‘spend once, fly free’ program, various offers on retail purchases and,
upon their first transaction, are awarded a free return flight through the
card’s “Rewards4all” frequent flyer program. Moreover, for every
GBP250 spent on the card, the card member is rewarded 1 point
toward their free flight, which requires a total of 16 points.

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CITI INTL 4Q/07

Citigroup reported that fourth quarter net income for its international card business rose nearly 5% sequentially to a record $678 million. Revenues of $2.62 billion jumped 59% year-on-year, but declined more than $200 million since the third quarter. Revenue growth was primarily driven by higher purchase sales and average loans, up 37% and 53%, respectively, and a $448 million pre-tax gain on Visa Inc. shares.
Credit costs increased 9%, as a decline in net credit losses was offset by an increase in loan loss reserves. Net credit losses declined as higher losses in Mexico and portfolio growth were offset by the impact of recent acquisitions. A charge of $149 million pre-tax to increase loan loss reserves primarily reflected portfolio growth. Credit card outstandings as of December 31st were $46.5 billion, up 50% year-on-year. The account base grew 21% year-on-year to 37.3 million compared to one-year ago. Purchase volume for the fourth quarter was $31.6 billion, a 37% increase year-on-year. Delinquency (90+ days) increased slightly to 2.24% from 2.22% in 3Q/07. Charge-offs were 3.39% compared to 5.62% in the prior quarter and 5.39% for the year ago quarter. For complete detail’s on Citigroup’s international cards performance, visit CardData (www.carddata.com).

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CHEMMART CARD

Chemmart pharmacy group has deployed Visible Results’ loyalty reward
solution to find overwhelming customer response. Available in 160
Chemmart pharmacies throughout Australia, the new solution allows
members to earn reward points on every non-prescription purchase equal
to 5% of the value of the sale and, within the first month of the product
introduction, the organization acquired over 30,000 members. Furthermore,
given its reasonable price tag, a merchant need increase annual sales by 2%
for the system to pay for itself. Visible Results develops loyalty programs
for merchants and retailers across Australia, New Zealand, the US, the UK,
Asia and the Middle East.

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Card Issuers Face a Year of Adversity

New research indicates that bankers are worried about unseen threats that may not yet have surfaced in their credit portfolios and how they can compete rationally during the volatile days ahead. MA-based TowerGroup says that despite the concerns banks will continue their efforts around the reengineering of payments processing – offering new product and pricing packages to targeted customers, and developing a more flexible payments IT environment. Also, as electronic payments volume continues to increase and banks introduce new delivery channels, they will no longer be able to afford operational silos for each type of payment. This pressure will help drive a continued focus on streamlining payments processing. Additionally, heightened consumer awareness of Internet fraud and identity theft will motivate banks to develop new offerings that combine conventional products with identity theft and fraud protection services.

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4Q/07 Charge-Offs Rise Across the Board

The credit card industry is bracing for more bad news as BofA is set to release its fourth quarter report next week. So far, Chase, Citi and AmEx have reported sharply higher charge-offs for the fourth quarter while Cap One also showed a significant uptick in its November charge-offs. Cap One reported that charge-offs hit 5.74% in November, compared to 5.11% in the prior month and 3.79% one-year ago. Cap One will release its fourth quarter report next week. Citi’s charge-offs for bankcard and private label cards rose to 5.11% for 4Q/07, compared to 4.53% in the prior quarter and 4.35% one-year ago. Bankcard charge-offs for Citi rose to 4.65% in 4Q/07 from 4.15% in the prior quarter and 4.05% one-year ago. Chase posted a managed net charge-off rate for the fourth quarter of 3.89%, up from 3.45% in the prior year and 3.64% in the prior quarter. American Express had a charge-off rate for 4Q/07 of 4.3% compared to 3.7% in the prior quarter and 3.5% for 4Q/06.

BANK CREDIT CARD CHARGE-OFFS
4Q/06 1Q/07 2Q/07 3Q/07 4Q/07
Chase 3.45% 3.57% 3.62% 3.64% 3.89%
Citi 4.05% 4.27% 4.25% 4.15% 4.65%
AmEx 3.50% 3.70% 3.70% 3.70% 4.30%
Source: CardData (www.carddata.com)

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Cash Systems Loses a Board Member

Ingenico has hired Lisa Shipley, previously with Hypercom North America, as SVP for Sales and Marketing at Ingenico North America. Shipley will focus on growing Ingenico North America’s banking channel and multi-lane retail business to maximize on opportunities in both the USA and Canada. Prior to serving as SVP of National Sales at Hypercom, Shipley spent 10 years with NationsBank, in both card issuing and merchant acquiring groups. As President of Terminal Management Services, Inc. (TMS), a wholly owned subsidiary of NationsBank, she was responsible for all facets of terminal management sales, support, leasing, and product deployment.

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FreeQuickWire Processing Solution Launched

Las Vegas-based prepaid specialist 3PEA International has acquired control of Wow Technologies. As a result of the acquisition, 3PEA has integrated a PCI DSS certified Prepaid Stored-Value MasterCard/ATM Card Issuer Processing Platform into its payment solutions. Additionally, 3PEA has acquired proprietary intellectual properties and internally developed technology capable of supporting 3PEA’s growth in the prepaid card market. With this, 3PEA has also acquired a number of patents and patents pending all pertaining to the prepaid industry in the US and other countries.

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