Card Industry Braces for June/ Q2 Metrics

The magnitude of record setting charge-offs in the second quarter will
be realized next week as Capital One and American Express release June
performance metrics and other issuers begin to report Q2 statistics.
Based on figures through May, charge-offs are up 16% among credit
card-based ABS and up 10% industry wide since March 31st. For credit
card backed securities in May, S&P reports a 10.00% charge-off ratio
while Moody’s reports a 10.62% rate and Fitch a 10.44% ratio. The three
rating firms include Discover and American Express performance. CardData
(www.carddata.com), which excludes Discover and American Express,
reports an industry wide revised managed ratio of 9.51% for May.
American Express reported its charge-off ratio edged down from a peak of
10.1% in April to 10.0% for May, thanks to the sale of some cardholder
loans that had been previously written-off. Capital One reported that
its charge-off ratio rose from 8.56% in April to 9.41% for May, however
the figure was about 50 basis points lower due to a change in the
issuer’s bankruptcy policy. Discover reported a managed net charge-off
rate for the quarter ending May 31st of 7.79%, up 131 basis points and
280 basis points from the prior quarter and the prior year,
respectively. (CF Library 6/18/09)

2009 GENERAL PURPOSE CREDIT CARD LOSSES
Fitch Moody’s CardData*
Jan 7.40% 7.74% 6.95%
Feb 8.41% 8.24% 7.11%
Mar 8.89% 9.30% 8.67%
Apr 9.66% 9.97% 8.78%
May 10.44% 10.62% 9.51%
*excludes American Express and Discover

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AmEx Adds New Tools to Lower Hotel Spend

A new analysis finds that U.S. businesses overspend on hotel expenses
by at least $500 million annually. The report from American Express
Advisory Services found that an average of 22% of travel bookings are
non-compliant with corporate policy and nearly 40% of air bookings with
an overnight trip do not include a hotel booking. Also,
mid-sized companies can save 10% to 15% off best available rates through
a preferred supplier program. In response to the recent findings AmEx
introduced the “Complete Suite by Preferred Extras” program and “Hotel
eXpert.” “Complete Suite” offers discounted rates on more than 7,000
properties in North America and exclusive international locations with
negotiated discounts of up to 15% off the best available rate. Also,
participating hotels award up to 1,000 bonus points for each stay or
automatic upgrades to gold or elite program status. “Hotel eXpert” is
aimed at uncovering savings opportunities for companies with significant
hotel spend. The new program allows companies the freedom of not having
to manage the RFP sourcing and administration of a hotel program.

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U.S. Credit Card Rate Scam Fined $7.8MM

The FTC has imposed a telemarketing ban on an Ontario firm that made false claims that it could reduce credit card interest rates for U.S. consumers. According to the FTC’s complaint, the telemarketing operation defrauded about 12,000 consumers out of more than $7.8 million between 2005 and 2007 by falsely claiming that it could substantially reduce consumers’ existing credit card interest rates and save them thousands of dollars in interest and finance charges. The defendants stated or implied–falsely–that they were affiliated with consumers’ credit card companies. For $675 plus $20 for shipping and handling, the complaint alleges, the defendants sent consumers promotional materials with promises to substantially reduce their interest rates, and a “financial profile form” for them to complete and mail back. The complaint alleged that the defendants promised to reduce the interest charged on credit cards to rates between 4.75% and 9.00%. The court ordered the defendants to pay more than $7.8 million.

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Virgin America Joins the UATP Network

Travel payment network UATP has added Virgin America as a new merchant.
UATP will enhance Virgin America’s strategic plan through UATP’s
mission of helping airlines lower distribution costs with low merchant
service fees and a global network available to all corporate travelers. Ticket
purchases are available to the UATP Network through traditional channels and Virgin
America will continue to enhance availability for all UATP cardholders.
UATP accounts are accepted as a form of payment for corporate business
travel by Amtrak, airlines and travel agencies worldwide.

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Barnes and Noble Deploys Epicor’s Sales Audit

Retailer Barnes and Noble has selected CA-based Epicor’s “Sales Audit”
software.
Barnes & Noble College Booksellers chose Epicor Retail Sales Audit, an
award-winning audit solution, as the central repository for all sales
transactions. The all-in-one data validation tool bridges the gap
between the enterprise and sales channels, helping to improve store
operations and auditing productivity. Sales Audit is part of the Epicor
Retail Audit and Operations Management suite, designed to help
multi-channel retailers manage transaction data verification and
investigation. The solution accepts transaction data from across
channels ? Point-of-Sale (POS), kiosk, Web or catalog ? checks for
anomalies, and then feeds the clean and accurate data to downstream
systems. Additional modules within the suite include Loss Prevention,
Employee Productivity and Commissions, Credit Settlement Interface, and
Voucher Management (Gift Cards).

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Card University Slates Three July Webinars

Card University is set to present a three part webinar focused on card
transactions, exception processing and emerging applications in the card
industry on July 16th, 23rd and 30th. “Processing, Participants and Terminology” gives
participants
an overview of the card processing industry, with a focus on how a card
transaction starts out and its downstream processing. “Exception Handling
(chargebacks) and Regulations” session will review the major points of
these rules and what you need to know to effectively support a card
program and “Advanced Topics and Competitive Strategies” covers emerging
applications in the card industry, from debit card rewards to ACH cards to
the Capital One recent announcement of a de-linked debit card.

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PP LATIN AMERICA

Forecasts show Latin American regional prepaid general-purpose
reloadable mobile and utilities cards will account for a potential
market of nearly US$160 billion annually by 2015. Between 80% and 90% of
Latin Americans are already on prepaid plans, representing major
potential for service providers and a value-added proposition for users
currently relying on single-use, scratch-off cards. These findings
from the NovoPayment prepaid card service is part of a regional study of
prepaid cards across Latin American countries such as Argentina, Brazil,
Chile, Colombia, Costa Rica, Dominican Republic, Guatemala, Ecuador, El
Salvador, Honduras, Nicaragua, Panama, Peru, Mexico and Venezuela.
NovoPayment prepaid programs provide over 200,000 mobile and utility
consumers services payments on-demand or via scheduled debits from their
Maestro, MasterCard or Visa branded prepaid cards.

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Chase Survey Finds Robust Vacation Spending

Americans are still spending summertime-honored pursuits with barbecue
grilling, pool memberships, Little League, golf clubs, summer camps, and
regular summer vacations, despite economic downturn. Specifically, 64%
still plan to spend on summer novelty purchases, 70% will not cut back
on summer activities and 59% will not skip summer vacations or outings
lasting a weekend or longer. This,
according to a Chase Card Services survey, is not without consequence
given many Americans plan to reduce spending in other areas with 72%
surveyed disclosing they will maintain their own yard instead of hiring
someone else, up from 54% during the year ago period; 65% will monitor
more closely utilities usage, a 40% increase from the year ago period;
and 83% of will handle their own home repairs and spring cleaning.
Additional research shows 82% of dads will maintain their own yards this
summer, an increase of 21% over the year-ago period; 66% of those aged
18-24 will bike and walk to save on gas and 57% of baby-boomers will
continue regular barbeque activities and/or pool memberships this
summer. The phone survey was fielded by Braun Research of 1,004 American
adults from April 28 to May 3, 2009.

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RBS WorldPay Certifies Hypercom’s Optimum

Payment processor RBS WorldPay has Class A certified Hypercom?s
Optimum T4210 and T4220 PCI PED-approved card payment terminals. RBS
WorldPay is the U.S.-based payment processing division of the Royal
Bank of Scotland Group plc and is a single-source provider of electronic
payment processing services ? including credit, debit, EBT, checks, gift
cards, e-commerce, customer loyalty cards, fleet cards, ATM processing
and cash management services.

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VERRUS M-PAY

Drivers no longer need to stand in line for a parking meter in a busy
lot thanks to Verrus Mobile Technologies’ “Pay by Phone” parking
service. The mobile payment solutions has launched the new meter payment
solution in Sacramento, CA, Ann Arbor, MI and at Texas Tech University,
making it easier, more convenient and energy efficient to park.
Eliminating the need to search for coins, “Pay by Phone” parking lots
decrease the number of tickets drivers receive and lot owners’ reliance
solely on parking meters for revenue collection. Vancouver-based Verrus
Mobile Technologies mobile payments delivers frictionless solutions that
allow consumers and merchants to enjoy the convenience and power of
mobile payment in over 100 cities across North America.

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CC & PPI

Outlined in a January 2009 publication, The Competition Commission
(CC) concluded businesses offering Payment Protection Insurance (PPI)
alongside credit face little competition when selling PPI to their
credit customers. In response, the CC has published a draft order for
consultation establishing measures of introducing competition to the PPI
market. These measures include prohibiting the sale of PPI during the
sale of the credit product for seven days afterwards; prohibiting
single-premium policies; and personal PPI quotes, annual reviews and
other measures to furnish improved information for consumers to compare
and search for products. Facing an appeal hearing September 7-10 of
2009, the CC measures encourage retail PPI distributors offering an
insurance package containing PPI and merchandise cover to offer PPI
cover alone.

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