Fair Isaac to Post Lower Q1 Results

Fair Isaac expects to report second quarter revenues in the range of $200 to $202 million in second quarter of fiscal 2007 versus $208.2 million reported in the prior year period. This is lower than the second quarter revenue guidance of $215 million provided by the company last quarter. Net income for the second quarter of fiscal 2007 is expected to total in the range of $20 to $22 million, or $0.35 to $0.37 per diluted share, versus $27.0 million, or $0.40 per diluted share, reported in the prior year period. This is lower than the second quarter GAAP earnings per diluted share guidance of $0.48 provided last quarter.

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Americans Pessimistic About Personal Finances

A new survey found that Americans are more pessimistic about their personal level of financial security. The “COUNTRY Financial Security Index” fell to 69.4 in April, down from 70.2 in February. Rasmussen Reports says the decline was tied to greater concerns about finances and debt and to a drop in confidence in the ability to protect assets. However, it was somewhat offset by stability around retirement and education savings. Those who indicated they are not confident in their ability to pay all their debts as they come due increased two points to 18%. The Index is sponsored by COUNTRY Insurance & Financial Services.

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Chase Profits Rise for the 3rd Straight Quarter

J.P. Morgan Chase reported this morning that first quarter credit card profits declined 15% year-on-year to $765 million, compared to $719 million in the prior quarter and $901 million in the year-ago quarter. The year-ago quarter was artificially boosted by the change in bankruptcy laws which took effect in the fourth quarter of 2005. Managed card loans were up 9% to $146.6 billion year-on-year but down 4% sequentially, impacted by seasonally higher payment activity. During the quarter, Chase inked several new partner relationships, including Amtrak and several partner relationships were renewed, including Buy.com and Speedway SuperAmerica. The managed net charge-off rate for the quarter was 3.57%, up from 2.99% in the prior year and 3.45% in the prior quarter. The 30-day managed delinquency rate was 3.07%, down from 3.10% in the prior year and 3.13% in the prior quarter. During the first quarter, the net accounts opened were 3.4 million. Charge volume of $81.3 billion increased by $7.0 billion, or 9%, from the prior year. Merchant processing volume of $163.6 billion increased by $15.9 billion, or 11%, and total transactions of 4.7 billion increased by 335 million, or 8%, from the prior year. For complete details on Chase’s first quarter performance, visit CardData ([www.carddata.com][1]).

JPM CHASE HISTORICAL ($billions)
1Q/06 2Q/06 3Q/06 4Q/06 1Q/07
EOP Outstandings: $134.3 139.3 143.8 152.8 146.6
Charge Volume: $ 74.3 84.4 87.5 93.4 81.3
Source: CardData (www.carddata.com)

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

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New Ingenico Hardware is Class A Certified

Chase Paymentech Solutions has awarded “Class A” certification on Ingenico’s “i7780,” “i5100” and “3010” PIN Pad. The Ingenico i7780 is a secure, short-range portable transaction terminal that allows credit, PIN debit, stored value and EBT payment to be brought to the customer. The i5100 is an IP-enabled countertop transaction terminal capable of operating in either dial or IP communication modes. To make PIN entry more convenient and private, the 3010 PIN Pad can be easily attached to the i5100 or other terminal products. The certified application was custom developed for Chase Paymentech by Ingenico and includes a host of features that enable wireless payments for a wide range of industries including retail, restaurant, and convenience stores. Ingenico is a supplier of electronic acceptance technology. Chase Paymentech Solutions is a merchant acquirer accepting payments at the point of sale, hospitality, internet, retail, catalogue and recurring billing.

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RapidAdvance Names a New General Counsel

MD-based RapidAdvance, a provider of merchant cash advance services, announced that Joseph Looney, formerly of Hudson Cook, has joined the company as General Counsel. At Hudson Cook, Looney assisted national and state banks, credit unions, consumer finance companies, credit card issuers and others in complying with the various state and federal laws that apply to financial services firms. Additionally, he has assisted a number of investment banks in purchasing financial services businesses and loan portfolios. Looney has worked with RapidAdvance since the third quarter of 2006, assisting the company with a wide variety of legal and compliance issues. Looney graduated with honors from the University of Maryland’s School of Law. RapidAdvance provides working capital to small and medium-sized merchants.

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WaMu Card Q1 Profits Rise 24% Year-on-Year

Seattle-based Washington Mutual reported that first quarter net income for its Card Services unit increased 24% from the year-ago quarter and up 72% sequentially. The prior quarter results included an increase to the loan loss provision of $95 million. Managed card outstandings were $23.6 billion as of March 31st, compared to $20.1 billion one-year ago. The 30+ day delinquency rate dropped 10 basis points to 5.15%, compared to 5.25% for the fourth quarter and down from 1Q/06’s 5.18%. However, charge-offs increased from 5.84% in the fourth quarter to 6.31%. The charge-off figure reflects an increase in contractual losses due to the 2006 change in minimum payment policy. WaMu also reports that it opened 782,000 new credit card accounts in the first quarter, compared to 839,000 in the fourth quarter. The issuer noted that more than a third of the new accounts came through the company’s retail channel. For complete details on WaMu’s latest performance, visit CardData ([www.carddata.com][1]).

WaMu Net Income Track Record
1Q/06: $207.0 million
2Q/06: $183.2 million
3Q/06: $207.0 million
4Q/06: $149.0 million
1Q/07: $256.0 million
Source: CardData (www.carddata.com)

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

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I.C.E. Fourth Quarter Revenues Decline 2%

CA-based International Card Establishment reported net revenues of $3.1 million for the fourth quarter, a 2% decrease over the comparable year ago period. The company reported quarterly net income of $ 28,956 as compared to quarterly net loss of $(1,751,570) in 2005. Net income would have been significantly higher absent a large charge related to a defaulted merchant account that generated approximately $198,000 in losses. EBITDA also rose sharply to $526,125 or 25% for the quarter, as compared to $422,076 for the same period in 2005. For the year ended December 31, 2006, I.C.E.’s net revenues rose 91% to $10,765,826 from $5,644,079 the previous year. I.C.E. is a provider of diversified products and services to the electronic transaction processing industry.

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Hypercom Supports Planet Payment Product

Hypercom will now support Planet Payment’s multi-currency processing product as an available application for Hypercom’s “Optimum T4100” terminals. Planet Payment’s Dynamic Currency Conversion (DCC) and Multi-Currency Pricing (MCP) services, provide merchants with pricing localization tools that can drive additional sales from international customers and improve customer service. With DCC, merchants continue to price their goods in United States dollars. After a MasterCard or VISA card issued in one of the supported foreign currencies is swiped on an Optimum terminal, the device will automatically display the transaction amount in both US Dollars and the customer’s currency. The customer can then select which currency he wants to use to complete the purchase, while the merchant still receives the settlement in US dollars. Planet Payment is a multi-currency payment and data processor.

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Hypercom Introduces SmartPayments Client

Hypercom has introduced the first electronic payment processing solution that easily integrates into PC-based POS systems without special hardware. “SmartPayments Client,” enables merchants who use Windows-based POS systems to accept credit cards and other forms of electronic payment on their PCs with all the benefits of integrated solutions, offering key advantages for small and midsized retailers as well as the ISOs, VARs and system integrators who service them. “SmartPayments Client” has also been optimized for use with select customer-facing Hypercom PIN entry, signature capture devices and card readers, providing a complete solution with package pricing and single-supplier accountability. The solution captures electronic payment information either from a keyboard entry or a hardware peripheral, passes it to the integrated POS system, and routes transactions to the payment processor.

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Consumer Groups Object to Gift Card Settlements

Three consumer groups are objecting to a recently proposed FTC settlement with the Kmart over its gift card practices. The Consumer Federation of America, Consumers Union and U.S. PIRG, charged that the settlement unjustly enriches Kmart by allowing it to keep its ill-gotten gains. The groups say the Kmart card had hidden fees that reduced its value by more than $50 in less than two years of inactivity. Last month, Kmart agreed to settle FTC charges by implementing a refund program. According to the FTC’s complaint, Kmart promoted the card as equivalent to cash but failed to disclose that fees are assessed after two years of non-use and misrepresented that the card would never expire. Kmart has agreed to disclose the fees prominently in future advertising and on the front of the gift card. As of May 1, 2006, Kmart stopped charging a dormancy fee on all Kmart gift cards. This was the FTC’s first law enforcement action involving gift cards. Earlier this month, Darden, which owns restaurant chains Olive Garden, Red Lobster, Smokey Bones, and Bahama Breeze, agreed to restore fees that were deducted from consumers’ gift cards and disclose fees or expiration dates in future gift card sales after FTC action. (CF Library 3/13/07; 4/4/07)

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All Major Credit Card ABS Metrics Head South

For the first time since mid-2003, all five key performance metrics for credit card-backed securities showed deterioration. According to “Moody’s Credit Card Credit Indices,” the February charge-off rate of 4.51% was nearly 35% higher compared to a year ago. The delinquency rate rose for the fourth consecutive month from its year-earlier level, to 3.89% in February, however it has remained relatively flat sequentially. The payment rate fell slightly to 17.72% in February, after posting a record-setting forty-two months of consecutive year-over-year improvement. Yield dropped to 18.33% in February from 18.93% a year ago. The one-month excess spread, a proxy for the profitability of securitized credit card portfolios, fell to 7.42% from its year-earlier margin of 9.20%.

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SONYCARD VISA

Malayan Banking and Sony have partnered to launch the first co-branded VISA credit card in South-East Asia that offers entertainment rewards. The
new “SonyCard” also includes “VISA Wave” technology that enables
contactless payment at the point-of-sale. The new card offers a one-year
annual fee waiver, double reward points, zero interest installment plans
of up to 36 months for Sony products at designated outlets and exclusive
invitations to Sony events. Maybank says the card should attract about
40,000 users from among Sony’s existing 53,000 loyalty card members by
end of this year. Maybank currently has 1.4 million credit card and
charge card users.

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