BofA’s Debit Card Volume Rises 28% in Q3

Bank of America’s credit card loans grew 8% in the third quarter ending with $59.7 billion. The issuer opened a record 1.5 million new credit card accounts during the quarter while purchase volume on debit cards soared 28% year-over-year. Debit card revenue increased 29% to $421 million. Pre-tax income was up slightly year-over-year to $734 million but up significantly from 2Q/05’s $414 million. Third quarter credit card charge-offs were 5.74%, compared to 6.23% in the prior quarter, and 5.48% one year ago. The managed 30+ day delinquency was 4.59%, compared to 4.25% in the second quarter and 4.30% for 3Q/04. Managed 90+ day delinquency was 2.17%, compared to 1.96% in the second quarter and 1.98% for 3Q/04. BofA also reported that its merchant acquiring business handled $91.3 billion in processing volume during the third quarter from total transactions of 1.9 billion. For complete details on Bank of America’s 3Q/05 performance, visit CardData ([www.carddata.com][1]).

BOFA EOP CARD LOAN HISTORICAL
3Q/03: $33.6 billion
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
Source: CardData (www.carddata.com)

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

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MBNA Q3 Volume Up 16%; Sets a New Record

MBNA’s profits slipped slightly in the third quarter to $717.9 million, however, the issuer posted its highest quarterly volume and increased managed loans by more than $5 billion. Total volume in the quarter rose to $61.3 billion, an increase of 15.6% over the third quarter of 2004. Total volume includes sales volume of $38.1 billion, which increased by 7.9% over the third quarter of 2004, and cash advance volume of $23.2 billion, which increased by 31.0% from 3Q/05. U.S. card loans grew from $75.0 billion in 2Q/05 to $78.5 billion in 3Q/05 but remain 1.5% lower than one-year ago. Total managed loans as of September 30th were $122.5 billion, compared to $117.4 billion in 2Q/05. Managed charge-offs continued to improve, declining to 4.29%. One-year ago managed charge-offs stood at 4.61%. Delinquency on managed loans was 3.99%, flat sequentially. For 3Q/04, delinquency stood at 4.11%. For complete details on MBNA’s third quarter results, visit CardData ([www.carddata.com][1]).

MBNA TRACK RECORD
Profits Loans
3Q/04: $728.3 MM $117.8 B
4Q/04: $768.9 MM $121.6 B
1Q/05: $ 31.7 MM $116.6 B
2Q/05: $632.1 MM $117.4 B
3Q/05: $717.9 MM $117.8 B
Source: CardData (www.carddata.com)

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

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Lexcel Suit Against MasterCard Fizzles

A U.S. District Court has granted summary judgment in favor of MasterCard on all claims asserted by AZ-based Lexcel Solutions, ruling that the firm failed to produce enough evidence to support the allegations and justify a trial. Lexcel filed a civil lawsuit against MasterCard in July 2003, shortly after MasterCard gave notice that it was switching to another vendor to supply simulation software. Lexcel accused MasterCard of breach of contract, copyright infringement, misappropriation of trade secrets, breach of fiduciary duty and unfair competition. MasterCard has filed a motion seeking an award for attorneys’ fees in the case. Also, MasterCard has separately filed an action seeking a declaratory judgment that certain Lexcel patents are invalid. That suit, including a counterclaim of infringement by Lexcel, continues to be litigated.

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Smart Card Alliance Elects Executive Committee

The Smart Card Alliance elected Greg Garback, executive officer, department of finance for the Washington Metropolitan Area Transit Authority in Washington, DC, as its new chair of the Executive Committee overseeing Alliance activities. Garback has represented WMATA at Alliance meetings and events since 1999 and has served on the board of directors since 2002. The Smart Card Alliance is a not-for-profit, multi-industry association working to stimulate the understanding, adoption, use and widespread application of smart card technology.

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U.S. Bank Q3 Corp Card Volume Up 24%

U.S. Bancorp reported that its third quarter merchant acquiring volume grew nearly 13% over 3Q/04 to $44.6 billion, produced from more than 744,000 merchants. Debit card volume surged by 23.0% and corporate credit card volume increased 24.5% during 3Q/05, compared to one-year ago. Debit card volume was $6.164 billion for the third quarter compared to $5.006 billion for 3Q/04. Consumer credit card volume for the quarter was $8.917 billion, up 8.6% over 3Q/04. Corporate credit card volume was $7.626 billion, compared to $6.124 billion for the year-ago quarter. For the quarter, U.S. Bancorp’s Payment Services net income was up about 25% to $207 million. For complete details on US Bancorp’s 3Q/05 performance, visit CardData ([www.carddata.com][1]).

MERCHANT ACQUIRING VOLUME HISTORICAL
2Q/03: $26,432,000,000
3Q/03: $27,995,000,000
4Q/03: $27,447,000,000
1Q/04: $27,335,000,000
2Q/04: $33,646,000,000
3Q/04: $39,385,000,000
4Q/04: $39,891,000,000
1Q/05: $39,477,000,000
2Q/05: $43,231,000,000
3Q/05: $44,600,000,000
Source: CardData (www.carddata.com)

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

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BofA Acquires Corp Card Technology Firm

Bank of America has acquired the commercial card technology and related business of Austin-based Works. The Company provides solutions to give organizations the control, spending visibility and automated workflow needed to seamlessly integrate cards into their procurement and accounts payable processes and make commercial cards their payment method of choice. The acquisition enables BofA to consolidate multiple card payment platforms and rapidly expand both its product capabilities and commercial card market share.

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PayPath Signs Another University Client

KS-based TouchNet has signed Eastern Michigan for its “PayPath” service. The service enables colleges and universities to accept MasterCard, American Express and Discover credit cards without paying merchant fees. “PayPath” charges the payer an administrative and technology fee of 2.75%. “PayPath” also connects to the campus student information system in real-time to update student accounts. EMU says it expects to save nearly $1 million this year in transaction fees. The university paid about $30,000 for the software to integrate with “PayPath.” Over 3,000 students have signed up for the service this year. The University of the Pacific started using TouchNet services this past summer. Other clients include: Baylor University, Georgia Institute of Technology, and the University of Wisconsin – Stout.

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EMV Supporters to Reduce Costs

According to Frost & Sullivan, smart card shipments for the world banking markets totaled 311.6 million in 2004 and by 2010 unit shipments are expected to reach 1123.8 million. While most banks or card issuers and retailers have considered the adoption of
Europay-MasterCard-Visa (EMV) or migration to smart cards a lengthy and
costly process. However, industry efforts coupled with support from the
major card associations or payment organizations are poised to reduce
the cost of migration. Application in areas such as
telecommunication and transportation have provided added impetus to the
acceptance of smart cards in banking (financial and loyalty) based
operations coupled with the growing realization of its multiple
benefits- enhanced security features, large memory size and type of
interface have added to the appeal of smart cards in the banking sector.
However, multi-purpose smart cards have not yet taken hold. Many
currently available smart card projects in both banking and non-banking
applications are considered to be very dedicated cards with simple
applications.

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Authentify FraudChaser Targets Phishers

California-based Authentify has launched “FraudChaser” to detect fraudulent accounts created by phishers and spammers by creating a legally binding audit trail to the individual that opens an ISP account. In order to activate an account with an ISP protected by FraudChaser, online users must accept an automated phone call and complete an integrated voice/Web authentication process that requires they use their telephone and computer at the same time. FraudChaser adds less than 60 seconds to a typical online registration. Authentify, Inc. is an ASP providing automated authentication services that enable organizations to quickly and cost-effectively perform real-time user authentication during an Internet session.

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Austin Ventures Prowls for Processing Firms

Texas-based Austin Ventures, with $3 billion in assets, has teamed with Ty Miller, former President/CEO of Bank One Global Treasury Services and former director of Paymentech and VISA, to pursue investments in the transaction and payment processing sectors. Miller’s industry experience includes 28 years at Bank One, where he served as President and CEO of Bank One Global Treasury Services (GTS) until the business merged with JPMorgan Chase in the summer of 2004. Prior to GTS, he was Chairman and CEO of Bank One, Texas NA. Miller served as a director of Paymentech and was on the Executive Committee of The Clearing House, New York. Austin Ventures has provided startup and growth capital to emerging companies for over twenty years.

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Hypercom Asia-Pacific Exec to Target China

Hypercom has re-hired TK Cheung, previously with the Company for seven years and formerly with American Express, as SVP/GM Asia-Pacific. Mr. Cheung has 26 years of experience in the telecommunications and electronic payment industries. He has held a number of international and US-based posts for Hypercom. Hypercom has refocused its operations in the People’s Republic of China and will retain and build channel sales and technical personnel in the cities of Beijing, Shanghai, Guangzhou and Shenzhen. Hypercom provides card payment terminals, network and server solutions in more than 100 countries.

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