McLuskie Leaves the MasterCard Board

MasterCard announced that Norman McLuskie, Class M Director and former Chairman, Retail Direct of The Royal Bank of Scotland Group, has concluded his service as a member of the Board of Directors. McLuskie served as a MasterCard director since 2000. Class A stockholders also reelected Class A Directors Nancy Karch, Director Emeritus, McKinsey & Company, and Edward Suning Tian, Chairman, China Broadband Capital Partners. Stockholders also approved the conversion of up to 13.4 million shares of Class B common stock into Class A common stock, and repurchase of up to $500 million of Class A common stock in open-market transactions. MasterCard’s Board of Directors also declared a cash dividend of $0.15 per share, payable on August 10th, to holders of record of its Class A common stock and Class B common stock as of July 3rd.

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Consumer Confidence Weakens in June

After a one-month rebound consumer confidence slumped in June as respondents expressed less confidence about their current situation and are only mildly optimistic about their future prospects. Rising mortgage rates, $3+ gasoline prices and weakening equity prices are contributing factors. The “RBC CASH Index” plummeted to 81.4 for June, well below May’s 87.1 level. Americans’ ratings of their current personal finances dropped in June, with 23% saying their personal finances are “strong,” down from 31% in May. By comparison, 27% of consumers rate their personal finances as “weak.” In addition, consumers said they were less comfortable making major purchases, such as a home or a car. The “RBC CASH Index” is a monthly national survey of consumer attitudes on the current and future state of local economies, personal finance situations, savings and confidence to make large investments. The “Index” is composed of four sub-indices: “RBC Current Conditions Index;” “RBC Expectations Index;” “RBC Investment Index;” and “RBC Jobs Index.”

RBC INDEX HISTORICAL
Jun 06: 84.1
Jul 06: 80.1
Aug 06: 74.8
Sep 06: 93.7
Oct 06: 83.1
Nov 06: 92.4
Dec 06: 86.9
Jan 07: 95.3
Feb 07: 103.0
Mar 07: 92.3
Apr 07: 85.4
May 07: 87.1
Jun 07: 81.4
Source: RBC Financial Group

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Record Monthly Check Image Items in May

SVPCO – Electronic Clearing Services reports that the monthly average check items and dollar value reached all-time highs in May.217.9 million in total monthly items, a 328% increase compared to a year ago, $392.7 billion in total monthly dollar value, a 158% increase compared to a year ago; 9.9 million in daily average items, an increase of 7.2% from April 2007. The Federal Reserve’s volume increased 22.9% to 39.5 million images from April 2007; The Bank of New York connected to the SVPCO Image Payments Network. In May 2006, daily average items were 2.3 million, total monthly items were 50.8 million and monthly dollar volume was $151.8 billion. Through May, participating institutions in the SVPCO Image Payments Network were Bank of America, The Bank of New York, BB&T, Comerica Bank, Fifth Third Bank, First Citizens Bank, HSBC Bank, Huntington National Bank, JPMorgan Chase Bank, KeyBank, LaSalle Bank, M&T Bank, National City Bank, PNC Bank, Sterling National Bank, Union Bank of California, U.S. Bank, Wachovia Bank, and Wells Fargo Bank. Through its relationship with the Federal Reserve and Endpoint Exchange, the Image Payments Network can reach more than 10,000 endpoints and help financial institutions of all sizes take advantage of image exchange.

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GSA SmartPay 2 Selects Participants

U.S. Bank Government Services has become one of four issuers selected to participate in the GSA “SmartPay 2” program for commercial charge cards and related payment services. U.S. Bank has served federal agencies since the inception of the purchase card program in 1986. It was the sole provider of purchase cards during the “I.M.P.A.C.” program from 1988 to 1998, and is one of several providers participating in the first “GSA SmartPay” program, which ends in 2008. U.S. Bank says it will offer travel, purchasing, fleet, and integrated payment products, as well as technologies such as its “Access Online” program management tool and “PowerTrack,” an electronic invoice payment and presentment tool used by the DoD and other government agencies.

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Cellular South WirelessWallet Launches

Cellular South has launched the first-ever multi-city consumer trial of its “WirelessWallet” service in Memphis and Jackson, MS is also the first mobile wallet trial in the country to engage multiple retailers within a community. More than 75 Cellular South customer participants will test the technology at nearly 50 retail locations. The technology uses a handset from Kyocera Wireless. ViVOtech is providing the payment software that resides on the handset. Mpact is providing trial development and management services, reader deployment and NFC content and delivery services. USA Technologies is developing a contactless wireless reader designed for vending machines and other self-service point of sales applications. The wireless device acts as a digital credit card that allows Cellular South customers to make payments and purchases by simply tapping it against a NFC-enabled wireless reader. The company plans to complete the trial by August, with an anticipated widespread consumer roll-out in early 2008.

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Most Consumers Would Chuck Credit Cards

A new survey has found that 62% of consumers would give up their credit cards, as long as they could retain their debit card. The Greenfield Online poll as found that 14% of respondents indicated they have five or more credit cards. In addition, 18% of those who own five or more credit cards earn less than $25,000 per year. About 22% indicated they have two credit cards. A total of 27% of respondents either don’t have a credit at all or only possess a debit card. The survey involved about 1,000 consumers.

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FiSCA Signs-Up 63K for NetSpend Card

Financial Services Centers of America reports that more than 63,000 of its customers have opened savings accounts and deposited more than $35 million through the “NetSpend National Saving Program” which offers an interest-bearing, federally-insured savings account linked to a NetSpend prepaid VISA/MasterCard debit card. Through the National Savings Program, people can easily transfer money back and forth between their debit card and their savings account – at no cost. The savings account is FDIC-insured, and pays 3% interest – significantly higher than most banks or credit unions are offering today. There is no minimum balance requirement and no cost to open or maintain the savings account. The NetSpend National Savings Program is available to consumers exclusively through FiSCA-member locations where a wide array of other financial services are also available, such as check cashing, money transfers, money wiring and bill payment. FiSCA, founded in 1987, is the national trade association for more than 6,500 individual financial service centers across the United States. NetSpend Corporation is a provider of innovative, accessible prepaid debit cards that enable financial freedom and growth for self-banked consumers.

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HSBC to Pilot a CVS/Tempo Loyalty Card

HSBC Finance is gearing-up to pilot in Indianapolis the new “CVS ExtraCare Plus” loyalty rewards payment card that will also offer payment at more than 200,000 Tempo Payment Network merchant locations in the USA . The CVS ExtraCare® Plus card will provide CVS/pharmacy customers with a convenient and secure multipurpose rewards and payment solution that links the cardholder’s existing checking account to their existing ExtraCare account. The new CVS ExtraCare Plus card is the first card product offered under HSBC’s OptiPaysm loyalty rewards PIN-payment program. Through the Tempo Payment Network, HSBC’s OptiPaysm program offers retailers reduced checkout costs without having to make any point-of-sale changes; and offers consumers a greater choice of merchant-branded, affinity-based, PIN-secured payment options. HSBC card and retail services issues merchant-branded payment cards for premier retailers and manufacturers, and is among the largest issuers of credit cards in the United States. Tempo operates the Tempo Payment Network, a PIN-based bank-independent payment network.

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Charge-Offs Continue to Head North

Charge-offs continued to slide north, hitting 4.60% in April, the highest rate since February 2006. It is also the seventh consecutive monthly increase according to CardData ([www.carddata.com][1]). During the first quarter Chase reported a managed net charge-off rate of 3.57%, up from 2.99% in the prior year and 3.45% in the prior quarter. Citi’s charge-offs for bankcard and private label cards rose to 4.63% for 1Q/07 compared to 4.35% in the prior quarter and 3.90% one-year ago. BofA reported first quarter Card Services charge-offs of 4.81%, compared to 4.57% in the prior quarter and 3.07% one year ago. (CF Library 4/16/07; 4/18/07; 4/19/07)

CHARGE-OFFS
Nov 06: 4.19%
Dec 06: 4.24%
Jan 07: 4.33%
Feb 07: 4.39%
Mar 07: 4.44%
Apr 07: 4.60%
Source: CardData (www.carddata.com)

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

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UK Debit Cards to Overtake Cash by 2011

Since Barclays introduced the debit card in 1987, APACS reports that there are 41 million debit card holders in the U.K. today compared with 27.8 million in 1996. Also, there are 68 million debit cards currently in circulation, compared with just 19 million debit cards in 1990, and Britons made 4.5 billion purchases in 2006 and spent GBP 194.9 billion on their debit cards. Furthermore, in 2006, each debit card holder used it 166 times on average and by 2016, spending on debit cards will have doubled to over GBP400 billion. APACS also predicts that by 2011 personal spending on debit cards will have overtaken cash.

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