Allegiant Group Leads Loyalty Solutions

A new loyalty management and marketing company has been created by several industry veterans. Cincinnati-based The Allegiant Group is a coalition of nine specialty companies organized under a common brand and business philosophy. Partner companies include Shift Global, Loyalty Research Center, Customer Asset Consulting Group, 121 Marketer, Bullseye Marketing Group, FiSite Research, Profitable Projects, Hendricks Consulting, and Top Gun Sales Performance System. Stephen Drees, president and founder, developed affinity and co-brand loyalty card products for MasterCard and served as President and CEO of Quantum Loyalty Systems.

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Micropayments Poised for an Explosion

A new report predicts that micropayments in the USA will reach $11.5 billion by 2009, with nearly $5 billion of that amount transacted via mobile phones. The global mobile commerce market is also expected to rise to as high as $75 billion by 2009, with global micropayments generating about $40 billion in revenue. The new report by TowerGroup says that by 2015, a substantial share of consumer payments globally will have moved from cash to other payment mechanisms. TowerGroup notes that financial institutions dismissing evolving payments models as quirky or meaningless to their current business strategies risk being supplanted by more nimble and far-sighted competitors. They must also consider the impact of non-traditional payments players, such as telecommunications companies looking to grow their share of the nascent mobile payments space.

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AmEx Q4 U.S Card Profits Rise 13% Y/Y

American Express reported that its U.S. Card Services division posted fourth quarter net income of $411 million, up 13% year-over-year, but down sequentially due to higher bankruptcies. AmEx says the bankruptcy impact was cushioned by higher spending by affluent consumers, small businesses and corporate cardholders. Total revenues for the fourth quarter increased 14% to $3.5 billion for U.S. Card Services. Card volume in the U.S. increased 11.5% to $93.0 billion. The total number of domestic cards-in-force grew by 1.0 million from the prior quarter to 43 million cards. Marketing, promotion, rewards and cardholder services expenses increased 12%, reflecting greater rewards costs and higher marketing and promotion expenses. For complete details on American Express’ fourth quarter results, visit CardData ([www.carddata.com][1]).

American Express U.S. Card Portfolio Snapshot
4Q/05 3Q/05 2Q/05 1Q/05 4Q/04 Ann Chng
Volume $93.0b 89.0 88.5 79.6 83.4 +11.5%
Cards 43.0m 42.0 41.0 40.3 39.9 + 7.8%
Source: CardData (www.carddata.com)

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

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NOV 05 DEBT

Credit card debt passed the A$33 billion milestone in November while charge volume took off as energy prices settled down. During the past twelve months, credit card debt has increased 15.7% while credit card volume has risen 9.3%. One-year ago credit card debt stood at A$28.7 billion. Gross dollar volume on credit card and charge cards in November was A$15.3 billion, the same as August. Credit card volume peaked in December 2004 at A$16.2 billion. Based on data from the Reserve Bank of Australia, consumers charged A$14.3 billion in purchases on credit/charge cards during November, compared to A$13.1 billion one-year ago. Card credit limits reached A$90.5 billion at the end of November, compared to A$80.6 billion for November 2004. There are currently 12.4 million credit card and charge card accounts in Australia, compared to 11.5 million one-year ago.

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BofA Q4 Charge-Offs Top 9% Due to Bankruptcies

Bank of America’s credit card loans grew 4% year-on-year in the fourth quarter with $60.8 billion in balances, but, charge-offs ballooned to 9.49%. The issuer says the impact of the change in bankruptcy laws and changes in its practices for overdraft charge-offs and over-limit credit card fees reduced pre-tax results by about $320 million. BofA completed its merger with MBNA on January 1st. The issuer reported that debit card revenue increased 32% due to a 29% increase in purchase volume. BofA says more than 1.1 million customers signed up for the “Keep the Change” program, which provides a free savings feature tied to a debit card. Fourth quarter credit card charge-offs were 9.49%, compared to 5.74% in the prior quarter, and 5.90% one year ago. The managed 30+ day delinquency was 4.17%, compared to 4.59% in the third quarter and 4.37% for 4Q/04. BofA also reported that its merchant acquiring business handled $101.6 billion in processing volume during the fourth quarter from total transactions of 2.3 billion. For complete details on Bank of America’s 4Q/05 performance, visit CardData ([www.carddata.com][1]).

BOFA EOP CARD LOAN HISTORICAL
4Q/03: $36.6 billion
1Q/04: $37.3 billion
2Q/04: $52.0 billion
3Q/04: $55.4 billion
4Q/04: $58.6 billion
1Q/05: $57.9 billion
2Q/05: $59.3 billion
3Q/05: $59.7 billion
4Q/05: $60.8 billion
Source: CardData (www.carddata.com)

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

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Minacs Worldwide Names Croucher to the Board

Toronto-based Minacs Worldwide has named Christine Croucher, formerly with CIBC and Canadian Tire Acceptance, to its Board and audit committee. Croucher has had an outstanding 26-year career, during which time she has taken charge of initiatives such as high-growth strategies, financial planning and management, as well as sales management and has also served as a Board member of Visa Canada, Visa International, Juniper (a US credit card company) and Interac Association. Minacs provides customized business process outsourcing (BPO) solutions focused on three core areas of capability: contact center solutions, integrated marketing services, and back office administration.

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GECF Forms a Major Taiwan Alliance

GE Consumer Finance has agreed to make a strategic investment in Cosmos Bank, a major banking and consumer finance player in Taiwan, forming a strategic alliance. Under the agreement, GE Consumer Finance will acquire a 10% stake in Cosmos through a share subscription of 197 million common shares, at an aggregate price of $86 million. GE Consumer Finance will retain rights to increase its total stake in Cosmos to 24.9% at a later point through a convertible bond structure. Cosmos has assets of approximately US$7.9 billion.

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EFTA Names its Prepaid Card Association

The Electronic Funds Transfer Association announced that the “Network Branded Prepaid Card Association” is now the official name of the trade organization recently formed to represent the common interests of the many participants in the new and emerging branded prepaid card industry, replacing the “Branded Prepaid Card Association” The consultation came in the form of a series of meetings held in October 2005, during which almost 100 prepaid industry leaders, ranging from incentive marketing firms to healthcare providers to financial institutions, shared their perspectives on a wide range of issues. The Electronic Funds Transfer Association is a professional association of organizations dedicated to the advancement of electronic payment systems and commerce.

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