Consumer Spending to Rise 3.1% in 2006

A new forecast suggests that the Fed will increase the funds rate to 4.75% by March and will hold that rate steady throughout the rest of 2006. Despite a housing price slowdown, higher oil prices and Fed rate increases, Wells Fargo’s senior economists forecast steady economic growth next year. However, the main risk for the economy next year is the extent to which the housing market downturn could dampen consumer spending, credit quality and job creation. Nevertheless, Wells Fargo forecasts a 3.1% growth rate in consumer spending next year, down from 3.6% in 2005.

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DHL Inks the Encore Payment Systems Contract

DHL has inked a deal to handle all transportation services for Encore Payment Systems’ hand-held credit card payment scanners, including shipments to retail customer locations, deliveries to Encore’s corporate office and distribution facility in Addison, Texas and repair and return shipping. DHL is also providing e-commerce consulting services to assess Encore’s technology requirements, and identify the automation system solutions to best enable shipment processing and tracking. For Encore, DHL’s e-commerce consultants arranged to connect Encore’s CRM system to DHL’s ODBC (Open Database Connectivity) for automatic processing of credit card payment system orders. Leveraging DHL’s scanning capabilities, both companies’ systems will be automatically updated to keep track of inventory, providing greater visibility into the status of orders.

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Credit Card Up 15% and Tops the A$32B Mark

Credit card debt passed the A$32 billion milestone in October as
charge volume plateaued in the face of higher energy prices and
cardholder fees at the POS. Australians also are expected to submit
875,000 applications for credit cards during the fourth quarter, an increase of 11% from one-year ago.
During the past twelve months, credit card debt has increased 14.9%
while credit card volume has risen 13.3%. One-year ago credit card debt
stood at A$28.1 billion. Gross dollar volume on credit card and charge
cards in October was A$14.5 billion, the same as September. Credit card
volume peaked in December 2004 at A$16.2 billion. Based on data from the
Reserve Bank of Australia, consumers charged A$13.5 billion in purchases
on credit/charge cards during October, compared to A$11.9 billion
one-year ago. Card credit limits reached A$89.5 billion at the end of
October, compared to A$79.3 billion for October 2004. There are
currently 12.4 million credit card and charge card accounts in
Australia, compared to 11.5 million one-year ago. Meanwhile, Baycorp
Advantage says 90,000 more Australians will file applications for credit
cards in the fourth quarter, compared to one-year ago.

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BofA Becomes the 4th AmEx U.S. Issuer

Bank of America, the largest VISA issuer in the U.S., has agreed to become the fourth U.S. issuer of American Express cards. In return, AmEx has agreed to dismiss BofA from its antitrust lawsuit against VISA, MasterCard and other U.S. banks. The deal also means that the card-issuing partnership between MBNA and AmEx will continue after BofA and MBNA merge. The merger, which is expected to close January 1st, will create the largest U.S. credit card issuer based on card loans, the country’s largest debit card issuer and the world’s largest affinity card issuer. In January 2004, MBNA became the first U.S. financial institution to sign a network partnership with AmEx. MBNA has been issuing AmEx cards for slightly more than one year. BofA plans to start issuing the cards later next year. BofA has more than 5,800 banking centers nationwide. Totally, AmEx has established 93 card-issuing partnerships in more than 100 countries. Yesterday, Citibank announced the launch of five U.S. credit cards on the American Express network after inking a deal last December. USAA FSB, which signed a deal in May, expects to launch AmEx cards in the second quarter of 2006. (CF Library 1/30/04; 12/14/04; 6/1/05; 12/16/05; 12/20/05)

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SVS to Issue Hyatt Hotels Gift Cards

Comdata’s Louisville-based Stored Value Systems has launched an electronic gift card program for Hyatt Hotels. The new cards can be purchased at any participating Hyatt Hotel, online and select retail outlets, including Staples and Kroger stores nationwide, in denominations up to $500. Louisville-based Stored Value Systems also began issuing the Panda Express gift card and the Schlotzsky’s restaurant chain gift card in September. In August SVS began issuing gift cards for the Atlanta Falcons. (CF Library 8/24/05; 9/30/05)

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TRANSFIRST ISS Names a New Western Exec

Dallas-based TRANSFIRST has named Jaime Gonzalez as the western region VP of business development for the Independent Sales Services division In this role, Gonzalez will help lead the company’s business growth and development with independent sales organizations and agents in the country’s western region. His primary responsibilities will be to develop new business relationships, increase market share for TRANSFIRST’s products and services and assist independent sales organizations and sales contractors in customizing merchant processing programs. TRANSFIRST is a provider of transaction processing services and payment enabling technologies.

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TRX and MasterCard Expand the DATATRAX Deal

Atlanta-based TRX has extended and expanded its “DATATRAX” data integration contract with MasterCard. The new agreement expands TRX’s data integration responsibilities to manage content from global travel management companies (TMCs). By providing access to consolidated TMC information, MasterCard helps its issuing banks increase their value to their corporate clients. DATATRAX supports data consolidation, enhancement, warehousing, file delivery, and business intelligence and reporting services on behalf of global travel and financial services leaders. TRX is a leading, independent provider of transaction processing and data integration services to the global travel industry.

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TSYS Loses BofA Consumer Card Processing

Bank of America, pending its acquisition of MBNA, has notified TSYS of its intent to bring the processing of its consumer card portfolio in-house next October. The BofA decision will reduce TSYS annual revenues by approximately 14.9%. However, TSYS expects to continue providing commercial and small business card processing for BofA and MBNA as well as merchant processing for BofA. BofA will pay a termination fee related to the deconversion of the consumer portfolio. TSYS says all relationships with BofA and MBNA are expected to generate a combined total of $376.9 million in revenues for 2005, or 23.5% of total revenues. TSYS projects an annualized loss of approximately $239 million in revenues upon deconversion of the consumer card portfolio that BofA plans to move in-house.

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E-Shoppers Seek Jewelry & Luxury Goods

While many online retail subcategories saw significant growth at the start of the holiday shopping season, a new report has found that jewelry and luxury goods led the list of top gaining categories in November with 39% growth over October. The latest monthly analysis from comScore Media Metrix also found that retailers featuring a presence online and offline reached 62.1 million visitors in November. The category was carried by Wal-Mart.com which received 32.1 million unique visitors in November, up 54% from October. comScore Networks earlier this week said it expects consumer spending at U.S. Internet sites to exceed $19.5 billion for the holiday season, a 24% jump over 2004. Online spending topped $3 billion for the week ending December 11th, the highest for the season. VISA reported that e-commerce spending grew by 33.2% the week of December 5-11, compared to the same period in 2004.

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ABA Forms a Health Savings Account Council

The American Bankers Association and the American Bankers Insurance Association jointly announced the formation of The HSA Council, an organization of banks, insurers and technology leaders committed to increasing the distribution of health savings accounts through banks The HSA Council will identify public policy hurdles and propose solutions to decision-makers in Congress and the administration in hopes of increasing the adoption velocity of health savings accounts in the health insurance market. ABIA is a separately chartered affiliate of the American Bankers Association.

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Asia Pay Signs Alliance Agreement with InterPay

Shenzhen-based Asia Payment Systems has signed an alliance agreement
with Singapore-based InterPay International. The two
companies will cooperate in markets across Asia with a special emphasis
on developing business in China. Asia Pay and InterPay have formed a
joint project team to develop and implement an action plan. One
opportunity already identified is the provision of processing systems
and technical support to second tier Chinese banks which is expected to
facilitate future partnership opportunities with Chinese financial
institutions. Asia Pay is developing a credit card processing network
that provides clearing services to merchants and financial
institutions in China, Japan, and other markets in Asia. InterPay
International is the holding company for a group of companies
offering payment and loyalty card and online re-charge products and
services throughout Asia.

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