Balance Transfer Approval Rate Drop

CT-based Credit Card Depot reports that approval rates for consumers seeking balance transfers has declined by 20% since July and an astounding 55% since May. Much of the decline in
approval rates can be attributed to increased approval requirements
imposed by major credit card companies. However, both credit limit
decreases as well as account closures may be playing a large role in the
declining approval trend, as consumers who may have qualified before a
substantial change in their credit history, such as an account closure,
are now failing to meet enhanced application requirements. As credit card companies rushed
to increase interest rates before the August 20th implementation of the
first new credit card regulations, many also increased application
criteria for consumers seeking 0% balance transfers. Additionally, many
credit card companies continued to increase minimum monthly payments by
as much as 250% for some consumers, creating a large group of consumers
who seek, but are unable to obtain low rate balance transfer deals.

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JUNE LEI

The Conference Board Leading Economic Index (LEI) for Mexico increased
for the fourth consecutive month by 2.3% while the Conference Board
Coincident Economic Index (CEI) decreased 0.2% in June. With the 2.3%
increase for the month, The Conference Board LEI for Australia now
stands at 104.5 (2004=100), which decreased 0.9% in May, decreased 0.2%
in April and decreased 4.3% since December, while the CEI now stands at
at 104.5 (2004=100), which decreased 0.9% in May, decreased 0.2% in
April and decreased 4.3% since December. LEI results for the month were
attributed to positive gains in US refiners’ acquisition cost of crude
oil, the industrial production construction component, net insufficient
inventories, the (inverted) federal funds rate, and stock prices while
the inverted real exchange rate decreased in June.

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SCA Offers LEAP Members CSCIP Info

The Smart Card Alliance has released new training materials for its LEAP members to
prepare for Certified Smart Card Industry Professional certification.
CSCIP is a standardized certification program that recognizes
professionals that have advanced levels of smart card industry knowledge
and experience, and have passed a multi-part exam developed by leading
smart card industry experts. The Smart Card Alliance’s new CSCIP Smart
Card Technology and Applications Training Course Modules include more
than 300 pages of text, charts, and graphics, assembled to serve as the
primary review materials for the CSCIP certification exam. The Leadership, Education and Advancement Program
(LEAP) is a new individual membership option offered by the Smart Card
Alliance open to all individual professionals working in the smart card
industry in the United States and worldwide, regardless of whether their
organization is a current member of the Smart Card Alliance.

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The Mayo Selects PAR SMS’ POS System

OK-based The Mayo Hotel has selected PAR’s SMS|Host Hospitality
Management System”. The SMS|Host Hospitality Management System offers
The Mayo the ability to manage both the hotel and residences from one integrated system. The SMS|Host product suite, including more
than 20 seamlessly integrated, guest-centric application modules,
provides hotel/resort staff with the tools they need to personalize
service, exceed guest expectations, and increase revenue.
Using the SMS|Multi-Property Management module, guest and other property charges
can be directly posted to a resident’s account. PAR’s EverServe 6000, the newest POS hardware platform from PAR, has
been chosen for the retail and food and beverage outlets.
Fully-integrated into the SMS|Host hospitality management system, the
Mayo will utilize SMS|Touch Fine Dining and SMS|Retail Point-of-Sale in
these outlets.

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Credit Card Charge-Off Pressures Remain

A credit card ABS rating firm says it needs to see some measurable
improvement in the delinquency and personal bankruptcy figures and the
employment situation overall before charge-offs revert to more
historical norms. Fitch Ratings says that despite the one-month
improvement in July, most credit card ABS trusts remain pressured from a
charge-off perspective. Charge-offs had risen 45% from February through
July and they still remain 63% above year earlier levels. Late stage
delinquencies, or receivables more than 60 days past due, have held
relatively stable albeit near record highs during the same period
following a rapid increase over the prior six months that forewarned the
charge-off run-up. Fitch’s “Prime Credit Card Charge-off Index” declined
24 basis points to 10.55% for the July collection period. Despite the
elevated level, Fitch expects current ratings of senior tranches to
remain stable given available credit enhancement and structural
protections afforded investors.

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Citi/AIG Pilot Cancer Insurance in Hungary

CardFlash International reports that Citibank has teamed up with AIG to offer a cancer insurance benefit to its credit cardholders in Hungary. A basic and an upgraded option are available, and depending on the selected option the single payment can be approximately US$5,000 or US$10,000, the income substitute payment can be about US$265 or US$525
per month during 12 months, while the surgery payment can be US$1000 or US$2000 in case of diagnosed cancer. In case of the diagnosis of another type of malignant tumor, the single payment is US$1000 or US$2000. All Citibank credit card holder customers aged 18 to 55 are eligible to apply for this product. The monthly insurance fee varies from about $4 to $88 depending on the customer’s age, selected option and plan. The new product part of Citibank’s “Positive Care Plan” in Hungary.

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Travel Spend Down Y-Y But Rises Q-Q

New research shows that the average international airfares paid
decreased 19% year-on-year as average domestic airfares paid declined
18%, average international booked hotel rates dropped 12%, average
domestic booked hotel rates remained flat and car rental rates slipped
3% over the same period. The survey found that widespread discounting
and trading down contributed the soft performance. However, the American
Express second quarter “North America Business Travel Monitor” found a
slight uptick in spending and a leveling in pricing sequentially. The
AmEx “BTM” is a key deliverable of American Express Business Travel
Global Advisory Services’ Research practice and is a valued component of
“eXpert Insights” which was recently launched. It benchmarks the average
prices for air, hotel, and car rental service by major cities and
classes of service through aggregate analysis of the AmEx global
database of purchase information.

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FIRST DATA & AKBANK

First Data electronic commerce and payment processing has renewed
contracts with Akbank for its global issuing and consumer finance.
Akbank has been using First Data’s issuing and consumer finance platform
for the management of its loyalty card brands such as Axess, Wings and
Fish since 2001. With this development, the bank will continue to use
the First Data solution to grow its credit card customer base. First
Data opened Turkey offices in 2007 and plans to open a printing center
to provide specialized print and electronic mail solutions to meet the
growing needs of local banks, financial institutions and retailer
clients in the region. Turkey-based Akbank has over 870 branches and
employs 15,000 across the region.

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Cafe Rio Mexican Grill Deploys Radiant

UT-based restaurant chain Cafe Rio Mexican Grill will deploy GA-based
POS technology provider Radiant Systems’ Aloha Enterprise solution in
over 50 corporate locations. Cafe Rio will deploy “Aloha POS” and back office software applications on
“Radiant P1220” hardware terminals with the goal of improving operations,
labor and inventory reporting and marketing capabilities. Cafe Rio
expects to achieve operational improvements through “Aloha Quick Service
POS”, “Kitchen Display System” and “Aloha Takeout”, one of the newest
applications that helps streamline curb-side and take-away operations.
The back-of-house solution includes “MenuLink Labor” and “MenuLink
Inventory” which will help to better manage and control costs. Finally,
with the addition of “Aloha Stored Value”, a gift card application, and
“Aloha Loyalty”, a frequent customer program, the fast-growing Mexican
chain hopes to drive incremental traffic and stimulate repeat business.

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VISA EXEC

Visa has hired a new Global Head of Strategy and Corporate Development. Oliver Jenkyn, from McKinsey & Company’s San Francisco office will succeed Rupert Keeley, who has become the Group President of Visa’s Asia Pacific and CEMEA regions. Jenkyn will develop and manage the company’s corporate strategy across the 170 countries. At McKinsey he was a leader in the firm’s North American Payments and Retail Banking practices. Jenkyn developed a specialty in payments including all aspects of the card business (issuing, acquiring, processing), ACH, check processing and cash management. Prior to McKinsey, Jenkyn worked with Bain & Company’s private equity group. He will report to Joe Saunders, Chairman and CEO, and will be a member of the company’s Operating Committee.

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CUs Have Solid Not Robust Business Model

A new report reveals that credit unions tend to shy away from new
products and services that carry limited risk and are not
capital-intensive when introduced using the right vendor partners. The
current financial crisis has proven to be a boon to credit unions to
grow their market share and broaden their member base. According to the
Aite report, credit unions, over the past year, have been able to
attract new members away from larger banks and even grow deposits. Even
so, credit unions must do more to maintain positive market momentum and
ensure that the credit union model continues to thrive. This week,
Portland, OR-based AssetExchange says its latest analysis reveals that
outstanding balances for credit union credit cards grew 6.3%
year-on-year in the second quarter to $32 billion, slightly above 5.9%
growth rate in the first quarter. Card accounts grew 2.2% over the same
period to 12.3 million. Cards as a percentage of total assets declined
to 4.57% in the second quarter of 2009, down from 4.80% in 2Q/08. (CF
Library 8/26/09)

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Australia Continues Interchange Regulation

The Reserve Bank of Australia’s Payments System Board has ruled to keep
regulating interchange fees on credit card and EFTPOS transactions. The
Board says there is still not enough competition or assurances that
future interchange fees would not rise. According to CardFlash
International, the Board indicated in September it would be prepared to
step back from interchange regulation if industry participants took
sufficient steps to reduce the risk that interchange fees would rise in
the absence of regulation. If sufficient progress was not made by
August, interchange regulation would be retained, with the Board
proposing that the benchmark for credit card interchange fees be reduced
to 30 basis points. The Board has now concluded that, although progress
has been made in both these areas, it is not yet sufficient to warrant a
decision to step back from interchange regulation. While the Board noted
the establishment of EFTPOS Payments Australia and the renewed
commitment to develop an online payments system (the “MAMBO” project),
it does not believe that these initiatives have yet reached the point
where they will exert significant competitive pressure on interchange
fees, though such a position may well be reached over time.

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