Charge Volume Tops GBP 400 Billion in 2004

The combined value of transactions made on charge, credit and
debit and private label cards was up over 11% over 2003 levels. In 2004,
the value of transactions made on plastic cards accounted for 60% of the
value of total household expenditure, up from 44% in 2000 and just 26%
per cent in 1995. According to Datamonitor, the average standard
purchase APR in the UK credit card market declined from 18.6% to 16%
over the period June 1999 to March 2005. This is a significant change,
and is mirrored by the rapid fall in introductory rate APRs. Over what
is close to a five-year period, the average introductory balance
transfer rate on those products offering such a promotion fell from
12.2% in June 1999 to 3.2% in March 2005. Introductory purchase rates
have also fallen over the same period, from 9.7% to 0.3 %.

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OTI 2Q/05

On Track Innovations posted revenues for the first six months of
$14.5 million, a 45% jump over the same period of last year. Revenues
for the second were up to $7.8 million from $4.6 million in 2Q/04. The
increase in revenues represents the rapid advancements in the
contactless market around the world and in particular, the contactless
payments market in the U.S. Net loss for the period decreased by 21% to
$4.7 million. OTI designs, develops and markets secure contactless
microprocessor-based smart card technology to address the needs of a
wide variety of markets. For complete details on OTI’s second quarter
performance, visit CardData (www.carddata.com).

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Student Card Debt Avgs $2400; Females Lead

A new survey has found that about half of college students max out their credit cards some or most of the time. The research also revealed that nearly six out of ten students never pay balances in full or pay in full less than half of the time. The OppenheimerFunds study, conducted by Smith College, determined that the average credit card debt among the respondents was $2,400 with 14% owing more than $5,000. Female students are more likely to have credit card debt (67% female vs. 59% male) and a larger credit card debt burden. Nearly 11% of women surveyed report credit card debt of $3,001-$5,000 compared to 7% of men; the same percentages hold true for debt of $5,001-$10,000. Sixty-eight percent of women use more than one credit card compared to 59% of men and college women are 50% more likely to carry five or more cards than men. The survey also found that most college students use their credit cards to pay for day-to-day living expenses instead of long-term needs.

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Private Consumption to Drive Economic Growth

MasterCard has released a report that shows that despite the rise of oil prices, the stagnant growth of European economies and the
adjustment of the exchange rate, the growth of domestic consumption will
be the backbone of the Chinese economy’s expansion in the next 10 years.
According to the report, the real growth rate in private consumption per
year reached 12% in the last few years supported by the rapid
development of the Chinese economy. The real growth rate in private
consumption of those below than 40 years old, who are the main driving
force of consumption, will reach 18% in the next 10 years, with a 24%
increase per year for those earning 5,000 USD per year or more. The
consumption/GDP ratio could reach 50% in 2014, up from the 46% level
today. Higher income, higher returns on savings and the wealth effects
of the real estate market all play important roles in the release of the
potential boost in the power of consumption.

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MERCHANT FEES

The average merchant service fee charged by Bankcard, MasterCard
and VISA in the second quarter was 92 basis points, down from 99 basis points a year ago, and from 140 basis points immediately prior to the interchange reforms. Since the reforms came into effect, the average merchant service fee charged by American Express has fallen by around 15 to 20 basis points to 2.36%, while the average fee charged by Diners Club has fallen by around five basis points to 2.31%. The Reserve Bank of Australia has released its first quarterly report on average merchant service fees and market shares. The RBA says the smaller declines by American Express and Diners Club has raised the premium that merchants pay to accept these cards. The RBA’s liaison with merchants suggests that while some merchants have been able to negotiate reductions in the fees charged by American Express and Diners Club, many others have not been able to do so. In some cases, merchants have indicated that they have little choice but to accept these cards, and find it difficult to surcharge. Some have also indicated that they would like to be able to steer customers to cheaper forms of payment but were prevented from doing so by clauses in their contracts with American Express. Over the past year, the RBA discussed this issue with American Express and, as a result, American Express has recently written to all its merchants informing them of the removal of the “anti-steering” clauses from its contracts.

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HSBC Takes Over the Green Stamps Co-Brand

HSBC Card Services is launching a loyalty rewards MasterCard in partnership with S&H Solutions, the provider of “Green Stamps.” The co-branded card was formerly issued by Fleet beginning in March 2000. The new “S&H Greenpoints MasterCard” will enable members to earn additional “Greenpoints” on all credit card purchases. S&H first launched the “Green Stamps” program in 1896. In 1999, the S&H introduced “Greenpoints” a digital currency version of the program. S&H “Greenpoints” currently has more than 8 million household members. (CF Library 3/8/00)

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SCA Schedules its 13th Annual Conference

The Smart Card Alliance has scheduled its 13th annual conference in Miami, October 11-14, titled “Smart Cards: The Issuer and User Experience.” The agenda will address contactless payments in retail and transportation, government ID cards and e-passports, physical and logical access security, healthcare, mobile telecom and payments initiatives, all from the perspective of industry stakeholders. 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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45% of CU Portfolios Shrink Since 2Q/04

The percentage of credit union members that have credit union credit cards has edged up to 18.2% from 18.1% in March, but remains well below June 2004’s 19.1%. Seventeen credit unions larger than $1 million sold their credit card portfolios during the second quarter, with a combined volume of about $105 million. According to Portland, OR-based AssetExchange, total card assets for portfolios over $1 million increased from $20.3 billion one-year ago to $21.5 billion in June 2005. The percentage of portfolios that grew more than the rate of inflation during the previous 12 months increased from 40% in June 2004 to 55% in June 2005. Thus, 45% of portfolios shrunk in real dollar terms during the 12 months ending in June 2005. AssetExchange’s study is based on 2,100 credit unions with credit card portfolios of $1 million and larger.

CU CARD PENETRATION
2Q/01: 20.6%
2Q/02: 19.9%
2Q/03: 20.3%
2Q/04: 19.1%
2Q/05: 18.2%
Source: AssetExchange

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JCB to Offer Axalto’s DDA-enabled Smart Cards

JCB has signed a deal to offer Axalto’s “Dynamic Data Authentication”-enabled smart cards to JCB customers in Japan.
The EMV DDA native product can manage a variety of applications and advanced security features. The “Shinflex-J DDA”-enabled product
ensures that data is changed for every transaction, thereby minimizing fraud and lowering the cost of fraud management for the issuing bank.
Axalto has delivered three billion smart cards to date. JCB cards are
now issued in 19 countries and territories, with 55.14 million card
members.

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Fair Isaac Releases a New Payment Optimizer

Fair Isaac has released “Payment Optimizer 2.5” for healthcare payers. Version 2.5 adds pharmacy data and analysis to help detect suspicious activity and billing and policy errors in pharmacy claims at the point of sale, prior to payment or immediately after payment, curbing instances of waste and fraud. Fair Isaac Corporation provides predictive modeling, decision analysis, intelligence management, decision management systems and consulting services power billions of mission-critical customer decisions a year.

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United Bank Card Hires a Natl Sales Trainer

New Jersey-based United Bank Card has hired Lincoln Kokaram, formerly with First Data, Heartland Payment Systems and Retriever Payment Systems, to train UBC’s national sales force of independent agents. Kokaram has over 10 years of experience in the credit card processing industry and brings 20 years of experience in sales training to United Bank Card’s rapidly growing ISO program. United Bank Card, Inc. is a payment and transaction processor for merchant accounts at over 30,000 locations and processes in excess of 2 billion dollars annually.

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