FEE LITIGATION

The battle between VISA/MasterCard and the Reserve Bank of Australia over credit card reforms ended today in Federal Court. Justice Brian Tamberlin indicated he may issue a ruling within the next two months. Last year, the RBA issued new reforms on the credit card business permitting merchants to recover from cardholders the costs of accepting credit cards. The new standard went into effect January 1st. Also under the new RBA rules, interchange fees will decrease from around 95 basis points to approximately 55-60 basis points by October 1st. The new interchange rates will cost bank credit card issuers an estimated US$300 million per year. VISA and MasterCard argued before Federal Court that they are not a “designated payments system” and therefore not subject to RBA regulatory power. The card associations also argued that the RBA reforms will make it difficult for banks, card associations and specialist payments business to grow earnings in credit cards and will make the country less attractive for new entrants.

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The VISA and MasterCard Australian Battle Awaits Justice’s Ruling

The battle between VISA/MasterCard and the Reserve Bank of Australia over credit card reforms ended today in Federal Court. Justice Brian Tamberlin indicated he may issue a ruling within the next two months. Last year, the RBA issued new reforms on the credit card business permitting merchants to recover from cardholders the costs of accepting credit cards. The new standard went into effect January 1st. Also under the new RBA rules, interchange fees will decrease from around 95 basis points to approximately 55-60 basis points by October 1st. The new interchange rates will cost bank credit card issuers an estimated US$300 million per year. VISA and MasterCard argued before Federal Court that they are not a “designated payments system” and therefore not subject to RBA regulatory power. The card associations also argued that the RBA reforms will make it difficult for banks, card associations and specialist payments business to grow earnings in credit cards and will make the country less attractive for new entrants.

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Paymentech Offers NIADA Members Lower Fees

The National Independent Automobile Dealers Association has signed Dallas-based Paymentech to offer the association’s 17,000 members a better price structure on credit card processing fees. Paymentech’s arrangement with NIADA means that dealers can avoid hefty application and conversion fees and they will have no monthly service charges. Since Paymentech specializes in payment processing for the automotive industry its solutions are especially tailored to meet the needs of auto dealers. NIADA members will benefit from the relationship with competitive pricing, having a single provider, no statement or terminal fees and more.

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50 Million Accounts Now on TS2 with TRIAD 7.0

Fair Isaac and TSYS reported Thursday they have successfully completed the conversion of more than 20 portfolios totaling 50 million credit card accounts on TSYS’ “TS2” processing platform to “TRIAD 7.0”. TRIAD has been providing quality account management solutions to the United States, Canada and Europe for more than a decade. Its flagship product TS2 is a state-of-the art card processing system which houses transaction and customer histories, scoring, account and custom information and incorporates that information into card issuers’ account processing and billing functions.

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Triton ATMs Go Live with PaySpot

MS-based Triton confirmed that its ATMs have begun offering Euronet’s U.S. based prepaid phone recharge program. Euronet’s “PaySpot” is the latest service to go live in the Triton “Waves” program completing the first bundle of “Waves,” which includes “CashWorks” check cashing and Western Union “@ATM” money transfers. Core Data is the first processor to certify “Triton Waves.” Triton’s “9100” and “9700” lines began shipping with “Triton Waves” software in March. “Waves” enabling kits are also available for Triton’s “9600” series ATMs. “Waves” is an acronym for “with added value enabled services.” Triton has more than 83,000 ATM and ATM management software installations in 17 countries worldwide.

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AmEx’s Flatow Heads to Sara Lee

Sara Lee Corporation has hired Michael Flatow, former VP of marketing for American Express Company’s Travel Products division, as VP and chief customer officer for Sara Lee Branded Apparel North America. Flatow joined Sara Lee more than 15 years ago as director of marketing for the L’eggs brand. Prior to joining Sara Lee, Flatow was vice president of marketing for American Express Company’s Travel Products division and a group brand manager for Clairol Inc. Flatow earned a bachelor’s degree in psychology from Queens College, City University of New York, and a master’s degree in business administration from Columbia University.

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M.D. On-Line Selects NPC’s HealthePay Solution

M.D. On-Line, Inc. has inked a deal with National Processing Company to utilize NPC’s global payment platform “HealthePay” to expand their existing service offering so that they can provide automated ACH payment capabilities, payment consolidation and electronic remittance advice reporting to their payers and providers. Founded in 1995, M.D. On-Line is a healthcare technology company that is characterized as both a developer and supplier of software and browser-based utilities that enhances the efficient exchange of information between payers and providers. Also, M.D. On-Line eases the burden of information management by executing and delivering the technical capability necessary to quickly enable provider offices with Electronic Data Interchange capabilities.

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ABA Says Card Delinquency Steady as Other Delinquency Rises

Based on total dollars past-due, credit card delinquency is holding steady compared to year-ago levels and has declined since the end of 2002. However, based on the number of accounts past-due, delinquency is up from 3.88% one year ago to 4.07%. In 2001, the first quarter delinquency rate, based on accounts past-due, was 2.99%. According to data gathered by the American Bankers Association, 1Q/03 credit card delinquency was 4.51%, compared to 4.63% for the last quarter of 2002, and 4.50% for 1Q/02. The ABA also reported yesterday that personal loan delinquencies rose to 3.13% in 1Q/03 from 3.04% in the previous quarter. Mobile home loan delinquencies rose from 5.52% in the fourth quarter 2002 to 6.16% in the first quarter. Late payments on home equity loans, based on the number of accounts, rose to 2.02% from 1.64%.

1Q CREDIT CARD DELINQUENCY HISTORY (based on total dollars outstanding)

2002: 4.50% 1998: 5.42% 1994: 3.51% 1990: 3.29% 1986: 4.92% 1982: 3.33%
2001: 4.13% 1997: 5.43% 1993: 3.98% 1989: 3.39% 1985: 3.10% 1981: 3.16%
2000: 3.94% 1996: 4.62% 1992: 4.31% 1988: 3.71% 1984: 2.84% 1980: 3.00%
1999: 4.44% 1995: 3.50% 1991: 4.55% 1987: 3.71% 1983: 3.06%

Source: American Bankers Association Delinquency Bulletin

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Payment Option Solutions Offers Fast Check Debit Processing

Cost-effective, real-time check debit processing has been taken to new level by Westbury, NY-based Payment Option Solutions. POS inked a deal this month to use Ingenico’s “eN-Check 3000” reader with its “Paid on Signing” product. The combined solution enables merchants to scan their customer’s check through the Ingenico check reader and within 9 seconds the system verifies that there are sufficient funds in the account. Guaranteed funds are then deposited into the merchant’s account within 48 hours. Also in June, Lipman USA certified its “2085,” “3000,” “3010,” and “3020” point-of-sale terminals for check debit processing through Payment Option Solutions. The certification enables retailers to utilize most MICR check readers on NURIT terminals to take advantage of POS’ “Paid on Signing” product. Payment Option Solutions uses SafeCHECK for real-time check verification and check debit processing. SafeCHECK uses the ATM networks to access real-time account information that virtually eliminates all risks normally associated with accepting checks. Funds can also be debited immediately, in which case, the customer gets back a cancelled check at the time of the transaction.

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SCA Acquires Card Portfolio of a High-End Women’s Apparel Retailer

NJ-based Shoppers Charge Accounts Co. has acquired the private label credit card receivables of Coplon’s, a seven-store, high-end women’s apparel retailer, and will now manage all facets of the private label program on an ongoing basis. Under terms of the agreement, SCA acquired the receivables in the Naples, Fla.-based chain’s portfolio and will manage all facets of the private label program on an ongoing basis. Coplon’s card currently accounts for in excess of 30% of total sales. SCA is a division of Hudson United Bank is ranked among the nation’s largest private label credit card companies.

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