Card Outstandings Post Worst Gain in 05

Last year turned out to be the worst year for growth in credit card outstandings in the industry’s history. The top five issuers, who control more than $400 billion in outstandings, posted a paltry 1% year-on-year gain, with Citigroup and Discover posting losses of about 3%. Chase assumed the number one position in 2005 after its merger with Bank One, posting a 5% annual gain. Bank of America also posted a respectable 3.8% gain, not including the results of its recent merger with MBNA. The overall sluggish performance of the Top 5 is attributed to debt consolidation via lower-rate home equity loans, debit card usage, and the backlash over aggressive pricing including high punitive APRs and associated fees.

Top 5 U.S. Issuers Managed Outstandings
Rank/Issuer 4Q/04 4Q/05 Chng
1. Chase $135.4b $142.3b +5.1%
2. Citi $118.1b $113.7b -3.7%
3. BofA $ 58.6b $ 60.8b +3.8%
4. Disc $ 48.3b $ 46.9b -2.9%
5. Cap One $ 48.6b $ 49.5b +1.9%
TOTAL: $409.0b $413.2b +1.0%
Source: CardData (www.carddata.com)

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Citibank Expands Texas ATM Network

Citibank has added approximately 150 ATMs to its distribution network in Texas bringing its total to 500 ATMs with free access for its customers. Citibank customers now have free access to over 500 ATMs in the Texas including ATMs at Citibank locations, Murphy USA Stations located in Wal-Mart Super Center and Neighborhood Market parking lots, Minyard Food Stores, and MoneyPass ATMs. Citibank has approximately 10,000 proprietary ATMs around the world including 2700 in the U.S.

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American Express Launches RED to Fight AIDS

American Express has teamed with U2’s Bono and Bobby Shriver, Chairman of DATA (Debt, AIDS, Trade, Africa), to produce money to help fight AIDS in Africa. The new “American Express RED3” card will be available March 1st according to last week’s CardFlash International. For every pound spent on the card, American Express will donate a minimum of 1% to the Global Fund. Spending above GBP 5,000 per year will generate an increase of 1.25% on all spending above that amount and an extra GBP 5 will be given to the Global Fund if cardholders make their first purchase on the card within the first month. “RED” is a global initiative whose primary objective is to engage the private sector in the fight against AIDS in Africa by channeling funds from the sale of “RED” products directly to the Global Fund To Fight AIDS, Tuberculosis and Malaria.

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Shift4 Processes $15B in 05 Transactions

Shift4 reported it processed nearly $15 billion in payments, representing over 92 million transactions for more than 11,000 merchants in 2005, double that of 2004. Contributing to the growth was the signing of new customers, including Choice Hotel’s International, Puma North America and Gucci, who selected $$$ ON THE NET to process their credit, debit, gift card and check transactions. A key factor in Shift4’s growth was the national exposure of its inaugural Transaction Security Summit and the leadership role it has commandeered in the payment processing industry. Shift4 provides web-based enterprise payment solutions for the hospitality, retail, foodservices and e-commerce markets.

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MasterCard & Citi Take NYC Contactless

MasterCard and Citi have agreed to work with the Metropolitan Transportation Authority and MTA New York City Transit to conduct a trial of contactless payments in select New York City subway stations with pre-selected Citi customers. During the trial, participating customers will have the pay-per-ride option, including the 20% bonus, available to them. No passes or transfers to buses will be available. The trial will take place at select Lexington Avenue Line 4 5 6 stations. The trial is scheduled to begin in the Spring and is expected to last approximately six months.

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Euronet Worldwide Enters the Chinese Market

Euronet Worldwide has entered the Chinese market with an ATM outsourcing agreement with Postal Savings and Remittance Bureau (PSRB), the fifth largest financial institution in China. Under the outsourcing agreement, Euronet China will initially deploy a total of 90 ATMs for PSRB in Beijing, Shanghai and the Guangdong province in a pilot project and provide all of the day-to-day outsourcing services. Following success of the pilot project, the agreement provides that Euronet China will, at the bank’s request, take over existing ATMs and install new ATMs. The company has already set up a state-of-the-art data processing center in Beijing from which it will drive PSRB’s ATMs. PSRB is part of the China State Postal Bureau and provides basic deposit and remittance services, serving 270 million customers through 30,000 branches, over 6,000 ATMs and has Yuan deposits in excess of US $121 billion.

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Redbox Kiosks to Invade Ahold Stores

Redbox has inked a deal with Ahold to offer fully automated DVD rental kiosks in Stop & Shop supermarkets and Giant Food stores throughout the Northeast United States. Each fully-automated redbox DVD rental kiosk holds more than 500 DVDs. Consumers use a touch screen to select their favorite movies, swipe a valid credit or debit card and go. For added convenience, customers can keep the DVD for as long as they’d like for $1 per night plus tax, and return their DVD to any redbox kiosk nationwide. Redbox Automated Retail, LLC is a renter of DVDs through automated kiosks. Stop & Shop/Giant Food operates 563 stores in New England and the Mid-Atlantic region.

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Hypercom Optimum Compatible with IBM ACE

Hypercom reports that its 32-bit “Optimum” multi-lane payment terminals have been tested for compatibility with IBM “SurePOS Application Client Server Environment Version 5.0.” Therefore, Hypercom’s “Optimum L4100” full-color terminals are now compatible with all IBM “ACE” cash register systems shipped with or upgraded to the new “ACE v5.0” of IBM’s software. Hypercom’s new PCI PED approved “L4200” and “L4250” multi-lane terminals are currently undergoing compatibility testing on ACE Version 5.0. Last week, Hypercom confirmed that its multi-lane “Optimum L4200” and “Optimum L4250” are officially PCI PED approved. (CF Library 1/24/06)

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MoneyGram Rides the Hot Transfer Business

MoneyGram International posted fourth quarter 2005 income from continuing operations of $29.6 million, compared to $22.0 million in the fourth quarter of 2004. For the Global Funds Transfer segment, which consists of money transfer (including urgent bill payment) and retail money orders, revenue increased nearly 21% to $175.2 million and operating income increased 3% to $30.3 million in the fourth quarter of 2005 compared to the fourth quarter 2004. The Payment Systems segment, which includes PrimeLink/Official Check outsourcing services, financial money orders and controlled disbursement processing services, gained 10% to $81.7 million in the fourth quarter. MoneyGram projects net revenue to be in the range of $535 million to $560 million for 2006. For complete details on MoneyGram’s latest performance, visit CardData ([www.carddata.com][1]).

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

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ICBC Signs Deal with Goldman Sachs, Allianz and AmEx

The Industrial and Commercial Bank of China Limited has signed
definitive agreements with Goldman Sachs, the Allianz Group
and American Express. The deal involves US$3.78 billion. The strategic
investments will be made through the subscription to newly issued
ordinary shares in ICBC. Under the agreements, each of the strategic
investors will cooperate with ICBC across a range of business and
management areas. Goldman Sachs will assist ICBC to develop further the
bank’s corporate governance, risk management and internal controls, as
well as provide expertise to enhance ICBC’s capabilities in treasury,
asset management, corporate and investment banking, non-performing loans
disposal and product innovation. Allianz Group will cooperate with ICBC
to provide leading bank assurance products and services to the Bank’s
clients, while American Express and ICBC will continue to develop their
existing strategic cooperation in the bank card business. ICBC is the
largest wholesale and retail bank in China with approximately 18,000
outlets across China and total assets of RMB 6.4 trillion at the end of
2005.

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NCR ATM Revenues to Stay Flat Until Late 06

NCR reported that fourth quarter revenue of $446 million for its ATM business was relatively flat. Operating income for financial self-service was down slightly to $84 million due to competitive pricing pressure and lower revenue. The Retail Store Automation unit generated $258 million of revenue, a 4% decline over 4Q/04. Overall, NCR reported fourth quarter net income of $150 million, compared to $129 million for the year ago period. During the fourth quarter, NCR acquired self-service kiosk provider Galvanon. Also, San Francisco-based Pay By Touch teamed with NCR to take biometric-enabled POS transactions worldwide. In November, 7-Eleven signed a five-year agreement with NCR to add 1,200 units to its advanced-function financial services kiosk program and replace other in-store ATMs in the U.S. NCR anticipates 2006 earnings expansion will be more prevalent later in the year due to increased investment for future growth opportunities, particularly in its enterprise analytics and self-service technologies and lower ATM revenues earlier in the year. For complete details on NCR’s current and past performance, visit CardData ([www.carddata.com][1]) (CF Library 11/22/05; 12/09/05; 12/20/05)

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

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