Yields Deteriorate as Payments Set a Record

The yield on securitized credit card portfolios has fallen in thirty-one of the last thirty-two consecutive months as the consumer payment rate rises to the highest on record. For the March performance period, yields fell to 17.41% from last year’s rate of 17.78%, while cardholders paid back, on average, 16.60% of their credit card debts, well above the rate of 15.36% in March of last year. The drop in the yield (the annualized percentage of income, primarily finance charges and fees, collected during the month as a percent of the total loans) has been attributed to the low interest rate environment as well as issuers’ aggressive promotional and low, fixed rate offers. Moody’s also says the payment rate typically rises this time of year coincident with tax refund season but this year consumers have stepped up repayment of their credit card debts. Meanwhile, the charge-off rate fell to 6.73%, down from 6.97% a year ago. The March 2004 delinquency rate also fell to 4.74% from 5.43% a year ago. Moody’s says given the well-entrenched trend of improvement in performance of the delinquency rate, it is likely that the charge-off rate will also continue to improve in the near term.

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Small Businesses Poised to Spend More this Year

Fifty-six percent of respondents in a new poll believe changes in the U.S. economy will have a positive impact on their business in the next 12 months while 12% of small businesses expect that changes in the U.S. economy will have a negative impact on business in the coming year. One third of those surveyed believe economic growth has had a positive impact on business while 53% of respondents said that recent growth in the U.S. economy has had no noticeable impact on their business. The findings come from MasterCard International’s “Small Business Economic and Spend Outlook Survey” which polled U.S. businesses with annual revenue between $100,000 and $10,000,000. The study found that managing expenses/finances was cited by more than 27% of respondents as the number one concern facing small businesses. Almost three quarters of small businesses note that T&E spending has either increased or remained the same in the last six months with only 26% reporting decreases in T&E spending. MasterCard also found that 40% report using business payment cards (rather than personal payment cards) to make business purchases. More than half of small businesses surveyed receive rewards for business purchases. The majority of small businesses surveyed (54%) leverage rewards for personal use, such as vacations and cash back while about a third of small businesses are using rewards earned to purchase supplies for their company.

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Fifth Third Processing Nails Ninth VISA QPA

For the ninth consecutive year, Fifth Third Processing Solutions has received VISA’s “Service Quality Performance Award” for the highest copy request fulfillment rate among credit card processors. Visa established the Service Quality Awards Program in 1992 to recognize exceptional card operations performance by card issuers and acquiring members. The awards acknowledge consistent, superior performance and emphasize continued service and quality improvement. Visa recognizes its card issuing, card acquiring and processing members who achieve and exceed the highest performance standards in operational areas affecting cardholders and merchants. Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. The Company has $94 billion in assets, operates 17 affiliate banks with 978 full-service Banking Centers.

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MasterCard Study Shows Visitor to Rise 8% through 2011 for Major Asian Destinations

A new study shows that more than two-thirds of the growth of tourist volume in recent years in Asia/Pacific is generated from within the region, and that the lifestyle trends of Asian tourists with shopping as a main theme will become an increasingly important factor in how they choose travel destinations. Commissioned by MasterCard, and conducted by the independent research team of Sree Kumar Siddique, the research found that Bangkok, Hong Kong, Singapore and Seoul will experience an 8% per annum increase in shopping-dollar-spend as more tourists stream in from China. The shopping-dollar-spend in the four cities is expected to increase from US$14 billion in 2006 to US$20 billion in 2011. Hong Kong will maintain its lead in shopping, with a projected US$11 billion in 2011, followed by Bangkok at US$3.5 billion, Seoul at US$3.1 billion and Singapore with US$2.9 billion.
The study found that accessibility and cost are two important factors that affect visitors’ arrivals. The report showed that traveling time of five hours is the maximum that shoppers would be willing to fly for a shopping experience.

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TSYS Wins Two VISA Performance Awards

TSYS has been awarded two VISA “Service Quality Performance Awards” for the lowest assured transaction rate and lowest transaction response time. Visa Service Quality Performance Award Programs recognize members and processors for exceptional operating performance and focus on service quality improvement. Within each tier, members and processors are recognized for outstanding operating performance in key operation areas directly affecting their customers. TSYS brings integrity and innovation to the world of electronic payment services as the integral link between buyers and sellers in this rapidly evolving universe.

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VISA Trashes Trump to Promote Debit Benefits

VISA USA this week launched a national TV ad to promote the security protections of its “Check Card.” The new, thirty-second spot shows billionaire Donald Trump digging through a dumpster, looking for his lost card, only to learn it was not necessary. The humorous spot highlights the comprehensive security features associated with VISA’s signature debit cards, including “Zero Liability” and provisional funds policies. The ad, called “Rooftop,” was created by BBDO New York, directed by David Cornell, and filmed at Trump Tower in New York City. Since launching its “VISA Check Card” campaign in 1996, VISA has featured eight other celebrities including from Bob Dole, Kevin Bacon, Tony Bennett, Yao Ming, Charlie Sheen, Martin Sheen, Tiki Barber and Ronde Barber. VISA has worked with BBDO New York since 1985.

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Mudengu Resources and BSI2000 Launch a Rural Banking System

Johannesburg-based Mudengu Resources Holdings has signed an agreement with US-based BSI2000 for “MicroBanker 2000” transaction terminals, optical bank cards, and specialized software, and services. The new joint venture plans to work closely with the two million-member United African Apostolic Church. BSI2000 launched a demonstration program last September in a remote area of South Africa to store several megabytes of data including a four-color high resolution digital photo, images of multiple fingerprints and basic name and address information as well as bank account balances, security, authorization and an audit trail on optical cards for each account holder. Service to rural South Africans is expected to begin with basic savings and cash debit services that ultimately could include loans.

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VeriFone Introduces a New PINpad in the USA

VeriFone has introduced its palm-sized and programmable “SC 5000 PINpad” to the North American market for multi-lane retailers. It is ideal for multi-lane retailers that want to support basic credit, debit, electronic benefits transfer, loyalty and stored value transactions with a PINpad. Among others, the SC 5000 has earned Interac certification for use in Canada. It is PED-compliant and offers a range of security protections including tamper-detection circuitry, VeriShield file authentication, sophisticated encryption including 3DES and AES, and the flexibility to develop virtually any key-management scheme through the use of VeriShield Security Scripts. VeriFone, Inc., (http://www.verifone.com) recognized worldwide as the trusted leader in secure electronic payment technologies, provides expertise, solutions and services for today with a smart migration strategy for tomorrow.

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Seceti to Deploy NCR’s APTRA Across its Entire ATM Network

Seceti has adopted the new NCR “APTRA Cash” software product for its 5,000 ATMs, distributed among more than 40 banks. “APTRA” enables new functions for the ATM network. These include integration into customer relationship management systems, intelligent deposit/payment, bill remittance and the sale of bank products aimed at customers’ needs. Seceti is owned by Istituto Centrale delle Banche Popolari.

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GEMPLUS HERNE & CFO

After carving out a slight profit in the first quarter, Gemplus is striving for more efficiency by closing its German manufacturing facility in Herne. The smart card provider also announced a new CFO/EVP to replace Yves Guillaumot. Gemplus posted a 300,000 euro profit in the first quarter after racking up net losses of 477.2 million euros over the past two years. Gemplus plans to transfer of all Herne’s PVC activities to Havant; and its local activities, including the personalization of German bank and Healthcare cards, to Filderstadt. The action will give Gemplus one specialist PVC site in Europe, at Havant, England, and enable the Company to concentrate its personalization activities for Germany on one site, in Filderstadt. The proposed plan for Herne could result in the loss of 180 jobs. Gemplus currently employs some 350 employees in Germany. A plan for the transfer of some employees within the group will be offered and supported. The Company noted that the salesforce, technical consultants and the R&D team at Ismaning, Germany, are unaffected by the plans. Meanwhile, Gemplus named Frans Spaargaren as the new Chief Financial Officer and Executive Vice President, effective June 1st, replacing Guillaumot. Frans Spaargaren, of Dutch nationality, was formerly Executive Vice President of Philips International, with responsibility for it’s joint venture operations.

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CIBC Unloads Global Payment Stock and Makes a Derivative Transaction

CIBC Investments Limited has completed the sale of a total of 2.3 million shares of Global Payments common stock. In addition, CIBC announced that it entered into a derivative transaction with an affiliate of Citigroup Global Markets consisting of 6 million shares of Global Payments common stock, involving a series of 5 equal
sized collars of 1.2 million shares each, maturing between March 2006 and April 2007. To hedge its exposure under the derivative transaction, the affiliate of Citigroup Global Markets borrowed and sold 5,600,000 shares of Global Payments common stock in an underwritten public offering. CIBC acquired its stake in Global Payments in 2001 as consideration for the sale of CIBC’s merchant acquiring business.

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Lloyd’s Asks Cyota to Add MasterCard SecureCode with VISA’s VbV as it Prepares a National Roll-Out

Lloyds TSB announced that following a successful six-month “Verified by Visa” pilot, it has selected Cyota to add “MasterCard SecureCode” to the service and roll it out in a phased basis to Lloyds TSB’s 15 million credit, debit and charge card holders. The service is managed from Cyota’s local facility in London. Cyota currently powers systems for 3 of the top UK issuers, 7 of the top 10 issuers in the US, and 4 of the top 10 issuers in Japan, as well as multiple small to mid-size issuers, supporting over 350 million cardholders worldwide. Lloyds is the third largest UK credit card issuer by cards-in-force.

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