JULY DEBT

The recovery that appeared to be underway in June fizzled in July as credit card gross dollar volume rose a mere 105 basis points and credit card outstandings edged up by only 159 basis points, compared to one-year ago. Despite setting a new high in June, credit card loan growth has been sluggish in 2009. Annual growth in June was 2.0%, compared to May at 2.1%, 2.3% for April and 4.4% for March. According to the Reserve Bank of Australia credit card balances posted at A$44.6 billion for July versus A$43.9 billion one-year ago. Credit card volume came in at A$19.2 billion, compared to A$19.4 billion in June and and A$19.0 billion for July 2008. Credit limits now stand at A$124.8 billion, compared to A$102.0 billion in July 2008. According to the RBA there are currently 14.3 million credit card and charge card accounts in Australia, compared to 14.0 million one-year ago.

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Higher APRs Drive Discover Q3 U.S. Card Profits

Discover’s U.S. Card unit reported that pretax income for the quarter ending August 31st nearly quadrupled, compared to one-year ago, and more than doubled from the prior quarter, due largely to income from its antitrust settlement with Visa and MasterCard. However, U.S. credit card sales volume declined 7% year-on-year, but rose 6% sequentially. Managed card loans also declined 1% from 3Q/08 and were flat, compared to the prior quarter. The managed net charge-off rate increased to 8.39% for the quarter, up 319 basis points and 60 basis points from the prior year and the prior quarter, respectively. The over 30 days delinquency rate on managed loans was 5.10%, up 125 basis points and up two basis points from the prior quarter. Discover expects the managed net U.S. credit card charge-off rate for the fourth quarter to be between 8.5% and 9.0%. Proceeds from the Visa and MasterCard settlement were $472 million pretax for the quarter. Managed loans ended the quarter at $50.9 billion, as lower cardholder payments and growth in both student and personal loans were largely offset by lower balance transfer activity and sales volume. Sales volume declined to $22.8 billion, reflecting lower gas prices and a general decline in consumer spending, but increased 6% from the prior quarter, primarily as a result of seasonal growth. Balance transfer volume declined 84% and 76% from the prior year and prior quarter. Net yield on loan receivables rose to 9.90%, an increase of 95 basis points from the prior year and 64 basis points from the prior quarter. The Third-Party Payments segment transaction volume of $36 billion was up 2% from the prior year. For complete details on Discover’s latest performance visit CardData (www.carddata.com).

U.S. CARD PRE-TAX PROFITS
3Q/08: $245.2 million
4Q/08: $646.4 million
1Q/09: $167.0 million
2Q/09: $387.9 million
3Q/09: $912.8 million
Source: CardData (www.carddata.com)

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Mocapay Picks Up $3MM in New Funding

Denver-based loyalty marketer Mocapay has closed $3.0 million
in funding from Spartan Mobile, Lacuna and other investors.
Texas-based Spartan Mobile is an investment fund that has invested
in the mobile space since 2005, specializing in mobile marketing,
information and promotions.The Lacuna Venture Fund is a pioneer in the
concept of Gap Capital,
which helps early-stage companies negotiate the gap between product
innovation and marketplace adoption. Proceeds from the funding will go
towards supporting new customer
implementations, expanding business development efforts, and developing
additional enhancements to the mobile commerce platform, for both
payments and marketing services.

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MC PP EXECS

MasterCard Europe has appointed Phil Davies to its Product Management
teamand Claire Dudley-Hodson Business Leader in Sales for the Prepaid
Europe division. Supporting continued growth in prepaid across the UK
and Europe, Davies will focus on the continued development of MasterCard
Europe’s prepaid product portfolio for consumers, corporates, government
and public sector agencies. He has
been responsible for developing European client relationships across
MasterCard’s credit, debit and prepaid product lines since 2002 and is
an expert in e-money and prepaid cards issues. Mrs. Dudley-Hodson will
become the primary business support for issuing retail and commercial
banks with an interest in prepaid. She brings to the role extensive
retail card services, loyalty and prepaid experience from earlier roles
with Alliance & Leicester, Tuxedo, First Data and ID Data.

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BofA Goes Back to Basics with a New Card

The impact of the new credit card rules became clear today as Bank of
America announced plans to launch a new credit card next month with a
core interest rate of prime +14%, compared to the prime +9.9% APR that
dominated the market for the past decade. The new “BankAmericard Basic
Visa” is being promoted as a card with simplified rates and terms.
Indeed the APR is the same for purchases, balance transfers and cash
advances. BofA’s current cards charge an APR as high as 24.44% for cash
advances. The over-limit fee is gone and the late payment fee is $39,
regardless of the amount past due. BofA says the new card will also
feature an easy-to-understand, single-page disclosure. The new “Basic”
card is one of four new cards in a simplified suite of cards offered
under the BankAmericard brand. Other cards in the suite include:
“BankAmericard Power Rewards Visa”; “BankAmericard Cash Rewards Visa”;
and “BankAmericard Visa.” All four cards will also offer up to 20%
cash back on purchases through the “Add It Up” program. The new card
will be available in October.

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WU EXPANSION

The Western Union Company is intent on signing long-term agreements with
Lagardère Services, Ortel Finance and PayUp. Providing Western Union
global money transfer services in France, The Netherlands, Germany,
Belgium, Spain, Portugal, Switzerland, Romania and Poland, these
agreements will significantly expand Western Union’s presence across the
Continent. Inking with Lagardère Services, PayUp and Ortel Finance as
Agents represents a major milestone in Western Union’s strategy to
capitalize on the opportunities offered by the implementation of the
EU’s Payment Services Directive, which seeks to increase pan-European
competition, innovation and participation in the payments industry. The
directive also enables retailers and other non-bank organizations to
offer a portfolio of worldwide payment services, previously only offered
by financial institutions in the EU.

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AmEx Adds More Juice to Membership Rewards

As the credit card industry embarks on value building in its reward
programs, American Express has beefed up its “Membership Rewards” with
two new features, one enabling cardholders to redeem points for
“everyday” type charges and the other for “special,” frequently changing
redemptions. The “everyday” redemptions start at 1,000 points and may be
used for groceries, gas, electric, phone, bills, office supplies,
transit, mailing/shipping bills, etc. Cardholders can redeem by clicking
on the “Use Points for Everyday Charges” link on their online statement.
The new “Membership Rewards Specials” program offers limited time or
limited supplies great deals. For example, 50% more transferred points
to Starpoints through September 22nd and 40% when they redeem for a
Garmin “nuvi 550,” while supplies last. AmEx also added new program
partners to the “Membership Rewards” including Zappos.com, Chili’s Grill
& Bar, Maggiano’s Little Italy and Bonefish Grill.

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GEMALTO & MASTERCARD

Gemalto digital security has received certification from MasterCard for
its TSM (Trusted Services Management). Demonstrating Gemalto’s readiness
for supporting commercial launches of mobile contactless payment
programs, according to MasterCard’s security requirements, the
certification applies to Gemalto’s Taiwan-based data center. This
enables the company to support financial institutions in the deployment
of their NFC services on mobile phones for the secure deployment and
management of contactless mobile payment and establishes that MasterCard
recognizes and endorses the company’s ability to manage personal user
information for banking transactions.

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CardinalCommerce Integrates SafetyPay

Alternative payment provider SafetyPay has teamed with CardinalCommerce
to add
SafetyPay to the “Cardinal Centinel” platform. SafetyPay specifically
targets
shoppers who are afraid to purchase online due to identity theft or
fraud, international shoppers who cannot purchase because their credit
cards are not accepted, and global online banking customers without a
credit card but the financial means to shop online.
Cardinal and SafetyPay partnered to aid U.S. eCommerce business
expansion in untapped domestic and International markets. Now, over 50
million International e-shoppers who desire to purchase from US
merchants will have a secure, viable alternative payment solution with
SafetyPay. International expansion is the new movement in the eCommerce
world and overseas eCommerce represents one of the few compelling growth
opportunities in this challenging retail environment; with bank
partnerships in Latin America and Europe, SafetyPay is a turnkey
solution to enter such markets.

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SCL3711

SCM Microsystems has introduced its “SCL3711” contactless smart card
reader. Capable of supporting multiple contactless applications,
including mobile payments, transportation, access control and
e-government, the “SCL3711” is available on a high-performance, fully
interoperable, multi-protocol portable USB reader. It supports all major
13.56 MHz contactless technologies, including ISO
14443 type A & B, FeliCa, MIFARE and DESFire, and can enable devices
with NFC connectivity by inserting it into a free USB port or
integrating it directly into the respective device. SCM’s “SCL3711” can
be used at home or on the road and is small enough to be clipped on a
key ring to facilitate contactless applications such as purchasing
tickets, logging on to a computer or network, downloading loyalty
coupons and using eGovernment applications.

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CO-OP Offers an ATM Upgrade Program

CA-based CO-OP Financial Services has rolled out a support program for a series
of ATM upgrades to enhance member profitability. The first option, “Diebold Superload” ATM branding option gives credit unions the
ability to place custom marketing messages and graphics on Diebold Opteva ATMs. The new
graphical screens replace the old “green screen” look typical of most ATM
transaction screens to offer a credit union’s ATM channel to be a
consistent branded experience. The “NCR Aptra Edge 3.0 Phase II” will offer members
software for NCR PersonaS and SelfServ ATMs that includes mini-statement
continuation; multi-dispense; bulk check deposits; multi-check deposits and check and cash payments. CO-OP will also offer
Additionally, CO-OP Network now supports the Triton Systems RL1600 ATM;
WRG Services Apollo Series ATMs and Genesis Series ATMs; Wincor-Nixdorf Procash ATM
CCDM (Check and Cash Deposit Module), and Wincor-Nixdorf Procash FLEX 2.0 software.

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Microsoft to Take BankAnywhere Everywhere

Microsoft and Atlanta-based M-Com have introduced their “BankAnywhere” mobile payments solution. “BankAnywhere” provides a complete end-to-end and best-practice security and risk management capabilities. It is also available across multiple mobile devices; offers cost elimination by moving customers to lower-cost, self-service channels; and provides differentiation and control over the bank’s mobile channel and the user experience they provide to customers. Open loop payment mechanisms, choice of payment execution models, and interoperability across devices are essential to delivering the optimal customers experience, available through m-banking. A Microsoft “Gold Certified Solution Developer”, M-Com supports “BankAnywhere” across
the globe. Bangkok Bank and KeyBank both recently selected a mobile
financial services solution that leverages the M-Com “BankAnywhere” platform. The institutions chose “Mobile Money” from Fiserv, which was launched in conjunction with M-Com in September 2008.

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