October Payment Rates Drop 190 Basis Points

Monthly payment rates, the amount that cardholders pay on their credit card debt, nosedived to its lowest level in seven months. After hovering between 20% and 21% for most of this year, the MPR dropped 190 basis points between September and October. Among credit card-backed securities, the MPR declined to 19.09% in October after rising to 20.99% in September. The MPR has remained fairly stable in the first three quarters of this year and remains consistent with historical levels since the new FFIEC minimum payment rules went in effect in 2005. According to FitchRatings, the gross yield also decreased in October to 18.83% from 19.61% in September and was up 125 bps above year-ago levels. Fitch says gross yield in 2007 is significantly higher than 2006. The difference between the first-quarter average gross yield in 2006 and the first-quarter average in 2007 was 25 bps, compared to 73 bps between the second-quarter averages of 2006 and 2007 and 1.30 bps between the third-quarter averages.

ABS METRICS
YIELD MPR
Oct 06: 17.58% 19.30%
Nov 06: 17.96% 19.82%
Dec 06: 17.78% 19.32%
Jan 07: 18.28% 19.27%
Feb 07: 17.70% 20.80%
Mar 07: 18.21% 18.76%
Apr 07: 19.23% 21.09%
May 07: 18.23% 19.58%
Jun 07: 18.94% 20.17%
Jul 07: 18.46% 20.46%
Aug 07: 19.27% 20.88%
Sep 07: 19.61% 20.99%
Oct 07: 18.83% 19.09%
Source: FitchRatings

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MADE Secures mWallet, mTransfer and mPayments

Dallas-based Affinity Mobile has announced the commercial availability of the “Mobile Application Delivery Enablement” platform. The “MADE” platform delivers true mWallet, mTransfer and mPayments capabilities to mobile network operators, retail merchants and financial institutions. The Company says that most mobile banking services provide only closed, intra-bank transactions, while its new platform takes the next step and enables secure mobile money transfers, mobile bill payments and mobile wallet accounts. Affinity’s “MADE” applications run on a wide variety of mobile devices from entry mobile phones to high-end smart phones. The applications are developed, tested and certified with carriers by Affinity Mobile and supported across Java, Brew, Symbian and other messaging technologies. Trumpet Mobile is the first to embrace “MADE,” providing prepaid mobile services targeted towards the U.S. Hispanic market and other consumers who are underbanked. Trumpet Mobile is distributed via RadioShack.

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2008 May Develop as Year of the Smart Card

Oberthur Card Systems is predicting that for 2008 the popularity of smart cards in the USA will be explosive. Americans have been true laggards in the adoption of smart card technology due to the huge investment in its magnetic stripe infrastructure. Oberthur notes that the first large-scale adoption of smart cards was for French pay phones in 1983. Then in Europe in the early ’90s, MasterCard, VISA, and Europay agreed to develop specifications for the use of smart cards in payment cards. The Company also says that currently 17 of its top 20 customers, as well as the federal government, have embraced microprocessor chip cards. But, Oberthur says this summer it had two key concerns: whether banks with pilot projects would adopt contactless cards and if banks already using contactless cards would re-issue. The Company says both of these things are happening — pointing to a robust smart card next year. JupiterResearch predicts that microprocessor chip cards are likely to be in more than 75 million American wallets or cell phones before the end of 2008 and more than 128 million will be in circulation by 2009.

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Apple’s Wozniak to Speak at CO-OP’s Think 2008

CO-OP Financial Services has slated its “Think 2008” conference for April 14-16 in Rancho Mirage, California. Speakers addressing “The Best of Ideas, Insights and Innovations” conference theme include Steve Wozniak, co-founder of Apple Computer (now Apple Inc.); Barry Gibbons, former CEO of Burger King Corporation; John Moore, Director of National Marketing for Whole Foods Market and former Retail Marketing Manager of Starbucks; and Howard Putnam, former CEO of Southwest Airlines and Braniff International. Wozniak, who’ll discuss the importance innovation plays in a business model, will draw from his experience shaping the computing industry with his design of Apple’s first line of products. Gibbons will tell the “David and Goliath” story of how he turned Burger King from a failing corporation into a direct competitor with McDonald’s. Moore, a brand marketing expert, will share advice on how to become the next Starbucks. And Putnam will talk about how he created Southwest’s service culture, helping it become the only airline to remain profitable every year for more than three decades. Additional speakers will be announced at a later date.

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Gender Divide in Impulse Buying is Revealed

PA-based GSI Commerce has released an online survey showing that a gender divide exists when determining the factors that influence impulse buys (comparing male and female adults ages 18+). Results indicate that 55% of women, ages 45-54, are more likely than men of the same age to make an impulse buy online based on a limited time offer, whether it’s a sale, rebate, or offer of free shipping. Free returns are less likely to sway men, ages 45-54, than 51 % women in their age group to make an impulse buy online. While 59% of both men and women are somewhat or very likely to impulsively buy something online that is “perfect” for someone they know, 65% of women are more likely to do so. Additionally, 34% of men and 34% of women consider a well-known site/brand to be a very important and 46% of women versus 47% of men indicate a professional site design is an important or very important feature.

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Cognizant Wins a Pegasystems Partner Award

NJ-based business process outsourcing specialist Cognizant has been selected to receive Pegasystems’ “Systems Integrator of the Year” award for the second consecutive year. This award recognizes the system integrator for outstanding work in deploying process related solutions using “Pegasystems SmartBPM” Suite to deliver on customers’ business objectives. Cognizant is a leading provider of information technology, consulting and business process outsourcing services.

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Credit Card ABS Delinquency Hits a 07 High

Credit card delinquency, among “prime” credit card-backed securities, rose for the fourth consecutive month, hitting a new high for 2007. However, charge-offs headed down in October for the third straight month, largely due to fewer collection days. Delinquency (60+ days), which is an indicator of future charge-offs, rose by 14 basis points in October. Charge-offs declined 25 basis points, but remain 72 points higher than one-year ago. According to FitchRatings, “prime” charge-offs for October were 4.50% compared to 4.75% in the prior month and 3.78% for October 2006. The “prime” 60-plus day delinquency index for October was 2.74%, compared to 2.60% in September and 2.40% one-year ago.

CREDIT CARD ABS METRICS
CHARGE-OFFS DELINQUENCY*
Jan 07: 4.31% 2.57%
Feb 07: 4.13% 2.66%
Mar 07: 4.36% 2.69%
Apr 07: 4.51% 2.64%
May 07: 4.63% 2.61%
Apr 07: 4.51% 2.64%
May 07: 4.63% 2.61%
Jun 07: 4.60% 2.57%
Jul 07: 4.52% 2.51%
Aug 07: 4.88% 2.57%
Sep 07: 4.75% 2.60%
Oct 07: 4.50% 2.74%
* 60+ day
Source: Fitch Ratings

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NCO Group to Acquire Outsourcing Solutions

PA-based NCO Group has inked a definitive agreement to acquire Outsourcing Solutions for $325.0 million in cash. OSI is a provider of business process outsourcing services, specializing primarily in accounts receivable management services. OSI produced about $441.5 million in annual revenue in fiscal 2006. The acquisition is currently expected to be accretive to NCO’s earnings in 2008 and beyond. NCO Group recently reported that third quarter revenue was up about 2% to $307.2 million. After the completion of the acquisition, the combined company will have over 29,000 employees operating in 10 countries. NCO is a portfolio company of One Equity Partners, a private equity investment fund. (CF Library 11/15/07)

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RBS Lynk to Power an E-Philanthropy Card

Software developer edatanetworks USA has signed a multi-year agreement with RBS Lynk to develop and launch a VISA gift-card program that will operate within the “Automated Cause Marketing” technology. The first implementation of the gift-card program will be at St. Joseph’s Hospital and Medical Center in Phoenix, AZ, where edatanetworks recently launched its ACM technology branded St. Joseph’s “allRewards”. The “allRewards gift card” will be marketed to hospital staff, friends and supporters. In addition, the gift card will be available for purchase at the hospital and selected events by consumers who care and recognize that their everyday spending can support life-saving programs at St. Joseph’s. When consumers use their new VISA gift card at Joseph’s allRewards Merchant Partners, additional donations will be generated to the St. Joseph’s Hospital & Medical Center; visit www.stjosephsallrewards.com for more details. RBS Lynk is a leading, single-source provider of electronic payment processing services.

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IRS Extends OPC E-Payment Tax Contract

The Internal Revenue Service has extended its electronic tax payment processing contract with VA-based Official Payments through November 2008. To date, the company has processed over $7 billion in federal taxes. Through this service, individual taxpayers can make secure tax payments for a variety of federal tax types including Balance Due, Estimated, Extension, Installment Agreement, Prior Year, Advance Payment of a Determined Deficiency and Trust Fund Recovery Penalty for both Prior Tax Periods and Installment Agreements. In addition, businesses can make credit card payments for business returns on Form 940 (Employer’s Annual Federal Unemployment Tax Return) for the Current Tax Year, for Prior Tax Years and for Installment Agreements, Form 941 (Employer’s Quarterly Federal Tax Return) for the Current Tax Year, for Prior Tax Years and for Installment Agreements and Form 944 (Employer?s Annual Federal Tax Return). Official Payments charges a convenience fee for the service, however taxpayers using credit or debit cards with bonus rewards programs may, depending on their card’s program, earn reward points, airline frequent flyer miles or cash back for paying their taxes. Official Payments Corp., a wholly owned subsidiary of Tier Technologies, is a provider of electronic payment processing services to governments, businesses and consumers throughout the United States.

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Consumer Spending Index Falls Sharply

Falling home prices continues to dampen consumer spending. The Deloitte “Leading Index of Consumer Spending” fell sharply in December to 2.64%, from an upwardly revised loss of 3.47% a month ago. The “index” tracks tax burden, initial unemployment claims, real wages and real home prices. Real home prices saw their largest fall this month in 2007 and the news from housing continues to remain grim. Existing home sales, an indicator of housing demand, fell 1.2% over September and were down 20.7% as compared to the same month last year. Meanwhile, the “Credit Manager’s Index” fell for the third consecutive month in November as all four components of the “Index” declined for the first time in five years, also indicating a contraction.

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U.S. Bank Provides SmartPay 2 P-Cards

The U.S. Department of Transportation has selected U.S. Bank to provide purchasing cards under the new GSA “SmartPay 2” contract. Under the GSA contract, each government agency issues a task order to solicit proposals from the four card issuers who qualified for a contract under GSA SmartPay 2. U.S. Bank has served federal agencies since the inception of the purchase card program in 1986, making it the single most experienced payment provider to the federal government. It was the sole provider of purchase cards during the International Merchant Purchase Authorization Card (I.M.P.A.C.) program from 1988 to 1998, and is one of several providers participating in the current GSA SmartPay program, which ends in 2008. U.S. Bank is the first issuer to be awarded a tailored task order from a federal agency under GSA SmartPay 2, which was issued in June and takes effect November 30, 2008. U.S. Bancorp holds $228 billion in assets.

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