Top Ten Delinquency Drops 111 BPS Year-Over-Year

With the exception of Household International, all top ten bank credit card issuers posted year-over-year declines in delinquency ratios at mid-year. As a group, the average rate for 30+day delinquency plunged from 6.14% in 2Q/03 to 5.03% for the just ended quarter. As expected, issuers with significant exposure in the sub-prime segment reported the largest improvements. Providian’s delinquency declined 328 basis points, as Metris dropped 170 basis points, and Capital One decreased 147 basis points. Household, which only reports 60+ day delinquency, reported a mere 2 basis points increase over one-year ago levels. Compared to the first quarter, average 30+ day delinquency dropped 44 basis points for 2Q/04. For the fourth quarter of 2003, the average rate was 5.97%, compared to 6.07% in 3Q/03. For complete detail on delinquency for U.S. issuers please visit CardData ([www.cardddata.com][1]).

TOP TEN ISSUERS DELINQUENCY (managed basis)
DAYS 2Q/04 1Q/04 2Q/03 Y/Y CHNG
1. Citigroup: 90 1.61% 1.83% 1.79% -18 bps
2. MBNA: 30 4.10% 4.27% 4.36% -26 bps
3. Bank One: 30 3.37% 3.75% 3.95% -58 bps
4. BofA: 30 3.86% 3.75% 3.99% -13 bps
5. Chase: 30 4.27% 4.43% 4.40% -13 bps
6. Discover: 30 4.88% 5.80% 6.21% -133 bps
7. Cap One: 30 3.95% 3.99% 5.42% -147 bps
8. Household: 60 4.21% 4.35% 4.19% + 2 bps
9. Providian: 30 6.44% 7.36% 9.72% -328 bps
10. Metris/DM: 30 9.40% 10.40% 11.10% -170 bps
AVERAGE (30day): 5.03% 5.47% 6.14% -111 bps
Note: excludes American Express
Source: CardData ( www.cardddata.com).

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

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N.E.W. Attracts a Major Investment

TH Lee Putnam Ventures, Freeman Spogli, along with company management, have taken a major equity interest into VA-based N.E.W. Customer Service Companies, provider of VISA USA’s credit card enhancement programs. NEW creates and administers warranty and extended service programs that retailers can offer to consumers. This acquisition will mean an enterprise value of approximately $370 Million.

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The Detroit Lions Opt for PowerPay in Ford Field

NYC-based Smart System Technologies has signed a deal with the Detroit Lions to deploy its “PowerPay” payment and reward system at Ford Field. Lions fans will benefit from the wireless, cashless payment system at permanent as well as portable concession and merchandise stands. PowerPay will decrease the time to conduct transactions, allowing fans to spend less time away from the action of the game.

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TSYS Lands the FleetBoston Credit Card Portfolio

Bank of America yesterday confirmed it has selected TSYS to provide credit card processing for its recently acquired FleetBoston card portfolio. BofA is a long-term client of TSYS. TSYS processes BofA’s consumer, commercial and government services accounts on TS2. TSYS also processes BofA’s merchant accounts through Vital Processing Services, its joint venture company with VISA. Discussions for a definitive agreement is underway. Last month J.P. Morgan Chase delivered official notification to TSYS to continue providing processing for the combined Chase and Bank One card portfolio. (CF Library 7/8/04)

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McDonald’s to Pilot MasterCard’s PayPass in NY & TX

After experimenting with ExxonMobil’s “SpeedPass,” the nation’s largest fast food outlet, has opted to roll-out MasterCard’s contactless RFID payment system. McDonald’s announced this morning it has inked a deal to accept MasterCard “PayPass.” The fast food chain will have Verifone “Omni 7000” card-readers installed to accept the new MasterCard “PayPass” card. Participating McDonald’s restaurants in Dallas and the New York metropolitan area will implement “PayPass” later this year, with additional locations to be added in 2005. McDonald’s currently accepts cashless payment options at more than 4,500 restaurants in the USA and expects to hit 8,000 by the end of this year. McDonald’s has more than 13,500 restaurants in the USA. McDonald’s piloted the ExxonMobil “SpeedPass” system in the Chicago area last year. (CF Library 3/11/04).

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PayPal Opens its Sixth International Market

PayPal headed into France with a fully localized Web site. The launch of PayPal France follows the recent introduction of the
service on eBay sites in Austria, Belgium, Germany, the Netherlands and Switzerland. The migration now enables payments in five currencies: the U.S. dollar, the Canadian dollar, the yen, the euro and the British pound. PayPal France is provided by PayPal (Europe) Limited, a UK regulated entity authorized by the Financial Services Authority as an electronic money institution. During the second quarter of this year, PayPal handled $4.35 billion of gross payment volume, a 53% increase over 2Q/03. PayPal produced $161.5 million in transaction fees for 2Q/04, a 59% jump over the year-ago quarter, but only a 0.2% increase over the first quarter of 2004. At the end of the second quarter, PayPal had 50.4 million accounts, compared to 31.1 million one year ago. During the second quarter, PayPal handled 77.2 million payments, a 2% decline over the prior quarter, but up 45% from 2Q/03. For complete details on eBay/PayPal’s Second quarter performance visit CardData (www.carddata.com)

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DynTek is MasterCard SDP Approved

DynTek has successfully completed the MasterCard “Site Data Protection” compliance testing process. DynTek has achieved compliance status by proving their ability to detect, identify and report vulnerabilities common to flawed web site architectures and configurations. These vulnerabilities, if not patched in actual merchant web sites, could potentially lead to an unauthorized intrusion. By proactively identifying and providing the opportunity to remedy such vulnerabilities, SDP-compliant products offer a means for reducing risk of intrusion and data compromise. Vendor scanning requirements are detailed in the MasterCard Security Standard Applicable to Vendors which is available on the MasterCard SDP web site, The SDP Compliance Testing program is an expansion of MasterCard’s Site Data Protection Program(TM), a comprehensive, proactive and cost-effective set of global e-commerce and financial security services designed to help protect the web sites of its member financial institutions, online merchants and other payment processors holding MasterCard account information.

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Catuity Feels the Target Loss in the Second Quarter

Detroit and Australia-based Catuity reported second quarter revenue of $135,000 compared to $1.7 million for 2Q/03. The second quarter net loss was $1.1 million, compared to a net loss of $15,000 for 2Q/03. The decline in revenue was anticipated and was principally due to Target’s decision to discontinue deployment of smart chip technology. Catuity recently said it would no longer pursue the stalled U.S. smart card market and would focus on the real time loyalty opportunity with merchants that have fully integrated systems and on existing point of sale business service requirements for which retailers, merchant services companies and financial institutions have existing budgets. For complete details on Catuity’s second quarter performance visit CardData (www.carddata.com).

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Uno Chicago Grill to use Netifice’s VPN

Uno Chicago Grill has implemented Netifice “Retail Connect VPN” for credit card processing at its 125 restaurants throughout the USA. Uno Chicago Grill has deployed Netifice Retail Connect VPN to work in conjunction with its Point-of-Sale systems so that credit card and gift card transactions are reliable and securely directed to the appropriate processing centers via the Netifice MPLS network. Prior to Netifice, Uno Chicago Grill used dial up to support all of its transactions. By moving to broadband access, Uno Chicago Grill’s credit card processor no longer has to use costly dial-up infrastructure to support the company’s credit card transactions. As a result, the credit card processor extended Uno Chicago Grill a 30% reduction in its cost per credit card transaction. This savings was complemented by a decrease in transaction times from over 15 seconds with dial-up to only 3 seconds with broadband. Netifice’s nationwide broadband VPN offers Uno Chicago Grill seamless access to all of its credit card and gift card processors. For Uno’s gift cards, Netifice simply forwards Uno’s SSL encrypted transaction data directly to the processor over the Internet. For credit cards, Netifice has partnered with IP Merchant Solutions to manage the delivery of credit card data to Uno Chicago Grill’s processor.

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