Monthly Payment Rates Soar in January

Monthly payment rates, the amount that cardholders pay on their credit card debt, soared in January to a record level, approaching 20%. The big increase was primarily driven by higher minimum payments and to a lesser extent by rising interest rates. Among credit card-backed bonds, the monthly payment rate hit 19.97% in January, compared to 18.90% in the prior month and 17.70% one-year ago. According to FitchRatings, the payment rate averaged 18.6% during 2005. Five years ago the monthly payment rate hovered around 15%. FitchRatings also says a growing dependence on short-term teaser rates and low-rate balance transfer offers may also be contributing to the higher MPR.

Monthly Payment Rate
Jan 05: 17.70%
Apr 05: 18.52%
Jul 05: 18.47%
Oct 05: 18.65%
Jan 06: 19.97%
Source: FitchRatings

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Financial Data Security a Top Consumer Concern

A VISA Canada survey of consumer attitudes reveals that security of
personal or financial information is a top concern. The results
reveal that security of one’s personal information (59%) comes second
only to concerns about the environment (61%). However, while the safety
of personal information is a concern, the survey also
reveals that Canadians see the protection of personal information as a
shared responsibility. Canadians believe responsibility is
shared between banks that issue debit or credit cards (25 %), the
consumers themselves (18 %), the government (12 %), and payment
card companies (12 %). Compared to the global average (13 %),
Canadians are more likely to cite personal responsibility in protecting
their personal information. To help address some of those concerns,
VISA has joined with the Competition Bureau of Canada, law enforcement,
and other private sector organizations in naming March Fraud Prevention
Month.

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Esso and RBC Offer Speedpass with Debit

Customers of Esso and RBC Royal Bank now have “Speedpass” with debit capability to instantly pay for purchases at Esso retail outlets. They point the key tag at the pump or in the store, select the account and enter their PIN and the amount is automatically debited from their
chosen RBC account. Most “SpeedPass” customers link to a payment card. Different colored key tags help customers distinguish between
credit and debit – black for credit and blue for the new “Speedpass” linked to RBC client cards. Speedpass can be used at all participating
Esso-branded retail stations and On the Run stores across Canada.

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Hypercom Revenues Up 2% Sequentially

The gap between variable rate credit cards and fixed rate credit cards has widened to 164 basis points. Variable (go-to) rate cards have also saturated the market, now making up 82% of all cards-in-force. Less than five years ago, the number of fixed rate cards outnumbered variable rate cards, according to CardTrak (www.cardtrak.com). Today, variable rate cards carry an average go-to interest rate of 15.25% versus 14.11% for the average fixed rate cards. In February 2005, the average go-to variable interest rate was 12.84% versus 13.25% for fixed rate cards. (The averages do not include introductory or punitive interest rates.)

CREDIT CARD INTEREST RATES
Month Prime Fixed Variable
Feb 05 5.50% 13.25% 12.84%
Mar 05 5.75% 13.32% 13.08%
Apr 05 5.75% 13.39% 13.17%
May 05 6.00% 13.48% 13.45%
Jun 05 6.00% 13.59% 13.61%
Jul 05 6.25% 13.64% 13.84%
Aug 05 6.50% 13.76% 14.24%
Sep 05 6.75% 13.80% 14.49%
Oct 05 6.75% 13.87% 14.64%
Nov 05 7.00% 13.91% 14.89%
Dec 05 7.25% 13.93% 15.20%
Jan 06 7.50% 14.08% 15.53%
Feb 06 7.50% 14.11% 15.75%
Source: CardData (www.carddata.com) .

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VISA & TORINO

VISA International reports it handled US$9.4 million in POS transaction
volume at the “Torino 2006 Olympic Winter Games” venues, including
ticket sales and “Olympic Superstore” purchases. The average
purchase transaction during the seventeen day event was $107, about 40%
higher than that of the previous winter games in Salt Lake City. VISA
says 18% of all purchases were chip transactions and of these,
two-thirds utilized “chip and PIN.” VISA also says international
visitors to the “Games” accounted for 68% of purchases. Additionally,
VISA entered a multi-year global alliance with Turismo Torino to promote
the region as a key travel destination, creating unique programs to
benefit the city’s travel industry and a 7,000-strong merchant community.
At the 2000 Olympic Games in Sydney, VISA posted sales volumes of
US$14.2 million. (CF Library 10/10/00)

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NCR Inks First Citizens Bank

North Carolina-based First Citizens Bank has signed a five-year agreement with NCR for exclusive ATM upgrades, replacements and services. The agreement also establishes NCR’s APTRA Edge multivendor software as the platform of choice across the entire First Citizens network. First Citizens Bank operates 339 branches in North Carolina, Virginia, West Virginia, Maryland and Tennessee. Its parent company, First Citizens BancShares, has $14.6 billion in assets.

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HSBC North America Promotes Hammersley

HSBC North America Holdings has named Bruce Hammersley to managing director, business development for retail services. Hammersley began his career with the company in 1990 as manager, acquisitions and systems, for the former Household International’s mortgage services operation. He has also served as chief financial officer for Household’s Canada business. Hammersley, a certified public accountant, received a bachelor’s degree in accounting from Miami University of Ohio and a master’s degree in finance, marketing and management strategy from Northwestern University’s Kellogg School of Management.

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Juniper and Spirit Airlines Cobrand

Barclays’ Juniper Bank has launched a cobranded MasterCard with Fort Lauderdale-based Spirit Airlines. The airline launched its first frequent flyer program yesterday. The “Free Spirit MasterCard” offers one mile for every $1 in purchases. All purchases count towards “Free Spirit” account status plus cardholders receive 5,000 bonus miles for signing up. Miles do not expire as long as there is at least one purchase per month on the card. Domestic awards start at 15,000 miles and Caribbean awards start at 20,000 miles. Cardholders are also upgraded automatically to “Elite” member status if at least one purchase per month is made on the card. Spirit Airlines is a low fare carrier to the Caribbean with hubs in Detroit and in Fort Lauderdale and service to 29 cities in the U.S., Bahamas, and the Caribbean.

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Net.Finance 2006 Slated for April

More than 200 marketing executives will gather in Phoenix in mid-April to learn and share marketing and e-commerce best practices specific to the financial services industry. The “Net.Finance 2006” three-day event will discuss synchronizing the multi-channel experience, security and authentication, effective e-commerce strategies and optimizing the online marketing mix. The Net.Finance 2006 agenda also includes the “Customer Acquisition” and “Cross-Selling Summit, dedicated solely to strategies for acquiring qualified leads and increasing the share of wallet, featuring case studies from Wells Fargo, Progressive Direct, Citi Cards, Countrywide Financial, Allstate and Sharebuilder. Lead program sponsors include eStara, Google, Leadfusion, MSN, Passmark Security, TeaLeaf and Yahoo! Search Marketing.

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U.K. Card Charge-Offs Hit a New High

Charge-offs among credit card-backed bonds in the U.K. continued to deteriorate during the fourth quarter, hitting a record 5.8%, compared to 4.5% one-year ago and 5.3% for the prior quarter. Delinquencies remained at 3.4% for the fourth quarter. According to FitchRatings, several trusts experienced an unusually large spike in charge-offs in December, higher than any normal seasonal trend. The rating firm also noted that delinquencies on a monthly basis posted a slight recovery in October followed by a deterioration in November and to a lesser extent in December. Meanwhile, the monthly payment rate on credit card ABS fell significantly in the fourth quarter to 15.9%, compared to 16.9% for the third quarter. This is the lowest level since December 2004. FitchRatings says the MPR appears to have been affected by much reduced balance transfer activity. The Fitch yield index stood at 19.3% at the end of December, down from 19.6% at the end of September.

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