Firstrand to Issue kulula Airlines VISA Card

kulula.com has launched a co-branded VISA credit card built around an
innovative rewards program. This is the first time that an airline in
South Africa has offered its own credit card linked to a rewards
program. The card issued under License of Firstrand Bank Limited and managed by FNB a division of FirstRand Bank Limited, will offer cash back for every rand spent which will be used for flights
on kulula.com. kulula, which has been operating for nearly five years, is already South Africa’s biggest online retailer with internet sales of some R3.5 million per day.

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OFT & INTERCHANGE

The Office of Fair Trading says it will continue its campaign to contest the lawfulness of current interchange fee practices by both VISA and MasterCard. The OFT issued the statement shortly after the Competition Appeal Tribunal this week annulled a 2005 decision by the OFT which claimed that MasterCard’s pre-November 2004 UK credit card interchange fees violated EU and UK competition law. The OFT pursued
MasterCard for six years over its prior UK interchange fees, finally
ruling last September that the fees were illegal. Since then, the OFT began abandoning significant parts of its decision, even acknowledging that it is necessary for a four-party payment system operating with an “honor all cards” rule to establish default terms of reference between card issuers and merchant acquirers. The OFT says the CAT ruling leaves it free to devote resources to carrying out simultaneous investigations and reaching decisions in respect of MasterCard’s and VISA’s current arrangements, rather than continuing action on historic arrangements.
MasterCard says the OFT’s unprecedented action of abandoning a case after having issued a negative decision is testament to the strength of MasterCard’s and the industry’s position.

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PPI & SouthWare Innovations Team

Payment Processing and SouthWare Innovations have teamed to deliver integrated credit card processing for the business application market. The partnership enables SouthWare customers to leverage a single resource for credit card processing – including processing support, installation and configuration- for both payment software and transaction issues. Payment Processing provides integrated payment processing solutions. SouthWare is the provider of an integrated family of financial, management information and business improvement software tools

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Experian Americas Gets a New CFO

Experian has hired Scott Wheeler, formerly with Avery Dennison and GE, as CFO of Experian Americas. Prior to joining Experian, Wheeler served as vice president, Finance and Information Systems for Avery Dennison. Wheeler was responsible for developing and implementing global strategic initiatives focused on growth, technology, capital investments and productivity. Previous experience also includes an executive role at GE as CFO and board member of a European joint venture.

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UATP Signs UK’s Eastern Airways

Eastern Airways, which operates 40,000 flights a year to 18 airports in the UK and Europe, has joined the UATP network as a new UATP merchant. Eastern Airways now accepts all UATP corporate cards and is a part of the UATP global corporate travel payment network. Eastern Airways will settle all UATP transactions through UATP Settlement Services (USS), a low-cost, weekly settlement system that matches fees and air tickets electronically, allowing for easy reconciliation of accounts for UATP transactions for customers with non-clearinghouse transactions.

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Online Travel Activity Declines

New research shows that the number of U.S. consumers making travel plans online has declined over the past two years. Only 28% of all men and 25% of surveyed women plan to research airline rates and availability online over the next three months, compared to 41% of all men and 25% of women in 2004. The study by The Conference Board and TNS found that higher gas prices, rising travel costs and an increasingly uncertain economic outlook are to blame for the decline. Nevertheless, more than 95% were “extremely” or “somewhat” satisfied with their ability to get general destination information online; more than 94% were “extremely” or “somewhat” satisfied with their ability to make flight arrangements online; and about 90% express those same levels of satisfaction about making lodging arrangements, renting a car online or making entertainment arrangements online.

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Discover Card Q2 Profits Double Y/Y

Morgan Stanley reported this morning that its Discover unit posted another record quarter as pre-tax profits hit $541 million for 2Q/06, more than double the level one-year ago. Significantly lower bankruptcy charge-offs, improved credit quality, increased cardholder usage and the addition of the U.K. Goldfish portfolio drove the record results. Discover also posted record gross dollar volume of $28.5 billion, a 12% gain over the prior year quarter. Purchase dollar volume rose 14% over 2Q/05. Managed merchant, cardholder and other fees were $541 million for 2Q/06, up 12% from a year ago. Managed outstandings of $48.5 billion increased 4% over year-ago levels, however, U.S. managed outstandings declined from $44.3 billion one-year ago to $44.1 billion. Compared to the prior quarter, U.S. managed outstandings increased $400 million. The second quarter also reflected the performance of the $1.5 billion Goldfish portfolio. The managed credit card net charge-off rate for the second quarter was 3.30%, an eye-popping 164 basis points decline over 2Q/05. The managed credit card over-30-day delinquency rate was 3.29%, a decrease of 61 basis points from the second quarter of 2005 and the managed credit card over-90-day delinquency rate was 1.53%, 30 basis points lower than one-year ago. The account base declined slightly during the second quarter by approximately 200,000 accounts from the first quarter but includes the addition of 1.1 million Goldfish accounts. Active accounts rose slightly from 2Q/05 to 19.6 million. For complete details on Discover’s second quarter performance, visit CardData ([www.carddata.com][1]).

DISCOVER CARD PORTFOLIO SNAPSHOT
($ billions; accounts/actives millions)
2Q/05* 3Q/05* 4Q/05* 1Q/06* 2Q/06* Y/Y CHNG
Outstandings: $46.8 $47.1 $46.9 $47.8 $48.5 +4%
Volume: $25.4 $26.7 $26.1 $26.8 $28.5 +12%
Accounts: 45.9 45.6 45.5 46.1 45.9 NC
Actives: 19.3 19.2 19.2 19.6 19.6 +2%
Chargeoffs: 4.94% 5.12% 5.76% 5.06% 3.30% -164bps
Delinquency**: 3.90% 3.91% 3.98% 3.45% 3.29% -61bps
Yield: 11.69% 12.04% 11.94% 12.13% 12.69% +100bps
Notes: * 2Q/05 ended 5/31/05; 3Q/05 ended 8/31/05; 4Q/05 ended 11/30/05.
1Q/06 ended 2/28/06; 2Q/06 ended 5/31/06 ** delinquency is 30-90 days
and excludes 90+ days. Includes both domestic and international cards.
Source: CardData (www.carddata.com)

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

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Diebold’s Hillock to Retire

Michael J. Hillock, president of Diebold’s international operations, has
elected to retire after serving the company for nearly 30 years.
Hillock began his tenure at Diebold in 1979 as an account manager in the
Chicago office, where he held a variety of sales and management
positions. He left Chicago for Hong Kong, where he served as the
managing director of Diebold’s Asia-Pacific operation. In 1988, he
returned to the United States when he was named a division vice
president based in Somerset, N.J. After another international assignment
in London as vice president and general manager of sales and service for
Diebold’s EMEA region, he served as senior vice president of
international sales and service. He was tapped for his current post in
2001.

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Rahaxi Processing & Oy Wike Ab Agentur Sign

FreeStar Technology announced that Rahaxi Processing Oy has signed a sales and referral agreement with Oy Wike Ab Agentur, one of
Finland’s largest independent providers of POS and Electronic Cash Register software and hardware. Under the terms of the agreement, Oy Wike Ab Agentur will market Rahaxi Processing Oy’s wide variety of international standard payments processing products and services, including the EMV-compliant Hypercom “Optimum” POS product family to its more than 4,500 merchant clients in Finland and Estonia. Rahaxi currently processes in excess of 1.35 million card payments per
month. Oy Wike Ab Agentur is one of the largest independent ECR and POS vendors and distributors in Finland with an established customer base of more than 4,500 merchants.

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SEPA Deadlines are a Significant Challenge for Banks

First Data International has announced findings
from a study of bankers’ attitudes and opinions on the Single Euro
Payments Area (SEPA). The study reveals that the SEPA deadlines of 2008
and 2010 are a significant challenge for the industry. The First Data
study includes banks operating both within and outside
the euro-zone and reveals that 70% of banks believe that a combination
of self-regulation and market forces should be sufficient to drive banks
to deliver the SEPA initiative. However, because of concerns over
whether the industry as a whole will get behind the program, 73%
expect that the EC will eventually legislate to ensure compliance.
Several believe that a formal SEPA certification process will be
necessary to ensure a level playing field. Respondents also feel there
has been inadequate communication of SEPA requirements in detail and
inconsistent bank implementation efforts, among the key findings.

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Commerciant Wireless Lands a Truck Fleet

Houston-based Commerciant reports that VA-based HVAC specialist Cropp-Metcalfe has started deploying its wireless payment “Mobilescape 3000” system on its entire truck fleet. Mobilescape 3000 is the most complete wireless credit card processing solution available, providing hardware, software, integration services, wireless service, transaction processing, and 24×7 customer support and maintenance. Commerciant, LP provides wireless, handheld payment processing technology.

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CARD FRAUD

Payment card fraud committed abroad on UK cards fell to GBP82.8 million in 2005, a six-year low. About 40% of card fraud abroad took place in three countries including the USA (14%), France (14%) and Spain (12%). APACS, the industry association representing plastic card issuers in Great Britain, says UK-issued cardholders used their cards to spend GBP20.8 billion abroad last year. APACS also released a new consumer guide about using credit and debit cards abroad offering simple advice on avoiding problems. The decline in fraud is mainly attributable to improved fraud detection systems that enable card companies to spot unusual spending patterns most often associated with the fraudulent use of cards. Foreign fraud peaked in 2001 when it hit GBP138.4 million.

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