Credit Card Limits Top a Record A$100 Billion

A new study has concluded that the OFT’s decision to limit default charges at GBP12 is already affecting credit card margins. The research the new rule could cost lenders GBP one billion a year, or about $35 per year per cardholder. The PricewaterhouseCoopers found that credit card margins have hit new lows. After allowing for bad debts, net
yield on balances fell from 6.5% to just under 5% in the year to June
2006. Although APRs have risen by about 1 percentage point on average,
margins have fallen as bad debt has risen faster, from just 4% in
December 2004 to 7% by June 2006. The research also revealed that U.K. consumers have overtaken the U.S. in terms of debt penetration. The total debt of the UK population (secured and unsecured) now represents 104% of gross domestic product (GDP) compared to 92% in the US. At the same time, outstanding levels of consumer credit hit 18% of GDP in the UK, compared with 17% in the US.

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MasterCard Offers Total Banking Rewards Program

MasterCard has launched a program to expand rewards beyond payment card products to the entire banking relationship including retail banking, insurance and investment products. The core of this new framework is MasterCard’s data processing platform and technology which gives banks the ability to customize their programs to meet specific customer interests and lifecycle events while seamlessly scoring, tracking and fulfilling rewards-based activities. The new program can also help cross-sell retail bank and credit products more effectively. Rewards can be earned on deposit or investment balances, the number of products held, transactional elements such as card purchases, online bill payment, direct deposit, as well as one-time promotional events such as a mortgage or HELOC application/approval. Additionally, rewards from personal and small business products can be commingled. MasterCard will offer relationship rewards programs beginning in early next year.

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iPayment 3Q/06 Revenues Up 7%; Loss Shrinks

Nashville-based iPayment reported that revenues increased 7% to $187.0 million for the third quarter. However, the Company posted a net loss of $0.7 million for the third quarter, compared to net income of $8.1 million for 3Q/05. The loss was attributable to interest costs associated with the buyout of iPayment by a group led by Greg Daily, iPayment’s Chairman and CEO, Carl Grimstad, iPayment’s President, which occurred in May. The group, Payment Holdings, paid $800 million for the purchase of the outstanding shares of iPayment’s common stock, $70 million to pay down the entire outstanding balance of iPayment’s previous revolving credit facility, and $20 million to pay transaction costs at closing. iPayment provides credit and debit card-based payment processing services to over 140,000 small merchants nationwide. For complete details on iPayments’s latest results visit CardData ([www.carddata.com][1]).

REVENUE HISTORICAL
3Q/05: $175.2 million
4Q/05: $183.0 million
1Q/06: $170.9 million
2Q/06: $189.2 million
3Q/06: $187.0 million
Source: CardData (www.carddata.com)

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

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PayPass Enters Taxicabs; Tops 36K Merchants

MasterCard reports that global acceptance for its contactless “PayPass” program has topped 36,000 merchants, compared to 25,000 in February. Today, the nation’s second largest payment card network announced a “PayPass” expansion into taxicabs. MasterCard and VeriFone have teamed with the Philadelphia Parking Authority to deploy “Tap & Go” payments into all of its taxis. The “PayPass” roll-out is part of a PPA project contracted with VeriFone Transportation Systems, a joint venture of VeriFone and Taxitronic. To system uses a contactless reader attached to a VeriFone “Omni 7000” terminal located in the back seat of the taxi. The customer-facing payment system is networked to another VeriFone system, the “MX870,” a multimedia device located in the driver cab that provides routing, navigation and other information. When using “PayPass” on the VeriFone “Omni 7000” system, passengers also have the option to enter the tip amount, as well as sign electronically for transactions over $25.

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RBS Lynk Names a Former Home Depot Exec as COO

Atlanta-based RBS Lynk has named Spencer Allen, former Director of Credit Services at The Home Depot, as its COO. Allen’s duties will include managing the daily activities and operations of RBS Lynk’s call center operations, project management, deployment, contracts processing and sales support divisions. RBS Lynk is a leading, single-source provider of electronic payment processing services – including credit, debit, EBT, checks, gift cards, e-commerce, customer loyalty cards, fleet cards, prepaid cards, ATM processing and cash management services.

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Pemco CU Clients to Offer CardEx Cards

CardEx and Pemco Technologies announced that eight of Pemco’s credit union customers have signed agreements to offer CardEx’s instant issue gift cards to their members. These credit unions will offer their members customized, prepaid debit cards that are usable wherever Visa debit cards are accepted. Together these credit unions serve over 348,000 members at more than 86 branch locations. Card Express, Inc. (CardEx) is a leading processor of prepaid debit card products and services utilizing the Visa and MasterCard networks. Pemco Technologies provides innovative payment solutions to the financial industry including credit signature processing, debit signature processing, PIN-based processing, ATM acquiring and switching, cardholder award programs, fraud management/detection/prevention, and gift card programs.

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AmEx Intros Intelligent Online Marketplace

American Express Business Travel and Rearden Commerce have launched an “Intelligent Online Marketplace”. Rearden Commerce, Inc., the new Web-based marketplace for services brings together inventory from more than 135,000 suppliers to provide a one-stop-shop where employees can find, purchase and manage both traditional travel (flights, hotel stays and car rentals) and a growing list of other services, such as airport parking, dining, ground transportation, event tickets, package shipping and audio/web conferencing. American Express Business Travel, a division of the American Express Company, is dedicated to helping its clients realize the greatest possible value from their investment in travel through increased cost savings, outstanding customer service and greater spend control.

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Discover Launches an Online Shopping Portal

Discover has launched a new online shopping portal, “ShopDiscover,” offering its cardholders a 5% to 20% “Cashback Bonus” year round on purchases. Cardmembers simply need to log into the Account Center at www.discovercard.com, link to a retailer’s site through ShopDiscover and make their purchase. There is no spending limit, and the additional Cashback Bonus will be applied automatically to their Cashback Bonus account. Discover Financial Services LLC, a business unit of Morgan Stanley (NYSE:MS), operates the Discover Card with more than 50 million Cardmembers, and the Discover Network with more than 4 million merchant and cash access locations.

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AmEx Launches a High-End Rewards Program

American Express has launched a boutique-style rewards program exclusively for its “Platinum” and “Centurion” cardholders. The special “Membership Rewards” program offers 50 high end rewards in four categories: lifestyle, jewelry, watches and travel. “First Collection” rewards range from 20,500 points to 93 million points. Examples of rewards include a Steinway grand piano for 7 million points; Mikimoto pearl and sapphire necklace for 13 million points; and Chopard “Ice Cube Collection” 18K white gold and diamond watch for 93.2 million points. Initial partners include: Baccarat, Chopard, Davidoff, Eos Airlines, IWC, Lamborghini, Mikimoto, Monarch Billiards, Oberoi Hotels & Resorts, Piaget and Steinway & Sons.

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MasterCard Beefs-Up Holiday Home Giveaway

MasterCard is giving away two homes and has added a “Daily Instant Win Game” to its annual “A Home for the Holidays” sweepstakes. Each day, consumers can tour the “Room of the Day” and play for a chance to instantly win featured Best Buy prizes to fill their homes. More information on the promotion can be found at priceless.com. MasterCard Worldwide advances global commerce by providing a critical economic link among financial institutions, businesses, cardholders and merchants worldwide.

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USA Technologies’ Revenue Increase 47%

PA-based USA Technologies reported that its third calendar quarter revenue rose 47% as profits nearly doubled. The results were largely due to accelerating sales of the Company’s “e-Port” cashless payment product. For the third quarter revenue totaled $2.0 million compared to $1.4 million for 3Q/05. Gross profit was $615,536, an increase of 95% over gross profit of $314,927 for the three months ended September 30, 2005. The Company recently launched “e-Port Generation Six” which integrates contactless card capability with mag-swipe card technology. The first 1,000 vending machines equipped with the “G6” were jointly deployed in Philadelphia by MasterCard, Coca-Cola of Philadelphia, and USA Technologies. The Company also added three more patents during the quarter, two for cashless vending and one for energy management for a total of 65 patents issued. For complete details on USAT’s latest performance, visit CardData ([www.carddata.com][1]).

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

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Target’s Q3 Card Profits Rise 63%

Target reported that its pre-tax credit card profits for the quarter ending October 28th increased 63% over the year-ago quarter. Credit card outstandings for the quarter increased 11% year-on-year, remaining above $6.0 billion. Target’s third calendar quarter pre-tax credit card profits were $176 million, compared to $168 million in the prior quarter and $108 million one-year ago. Target reported that its total credit card receivables, which include its VISA and “Guest” cards, were $6.148 billion as of October 28th, compared to $5.544 billion one-year ago. Delinquency (90 days+) for 3Q/06 increased to 3.9%, compared to 3.4% in the prior quarter and 3.2% one-year ago. Charge-offs rose 5.5% for 3Q/06 compared to 4.6% in the prior quarter and 8.1% one-year ago. Target’s credit card unit had revenues of $279 million in 3Q/06, a 20% increase over 3Q/05. For complete details on Target’s latest performance, visit CardData ([www.carddata.com][1]).

TARGET CARD LOAN HISTORICAL
(Excludes Mervyn’s & Marshall Field’s)
3Q/05: $5.544 billion
4Q/05: $6.177 billion
1Q/06: $5.844 billion
2Q/06: $6.041 billion
3Q/06: $6.148 billion
Source: CardData (www.carddata.com)

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

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