CoreCard White Paper Analyzes Prepaid Card Risks

A new white paper says it is a mistaken belief that prepaid cards carry
less risk than credit cards because the card requires a deposit before
funds can be withdrawn. Many transactions are not authorized by the
merchant or authorized for an amount less than the actual transaction
amount (gasoline stations and restaurants are good examples). CoreCard
Software says even though the card issuer does have the right to charge
back the transaction for insufficient funds in such cases, the cost of
handling a charge back is not trivial. Merchant fraud may also increase
the risk of loss to the card issuer. However, velocity limits are
available and used to reduce the likelihood of fraudulent transactions.
Single,daily and monthly (count and amount) purchase and cash advance
limits are also available at the product level. CoreCard also notes that
it is also possible to assign an account a “shadow credit limit”, which
can be used to determine the amount of overdraft available to an
individual customer. The customer does not know the
amount of the shadow credit limit and may be charged an overdraft fee if
the transactions posted exceeds the account available balance.

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Bad Economy Creates Bad Personal Health Issues

A recent poll reveals that 40% of Americans’ finances have kept them
from achieving the things they want in life, while another 50% say they
have recently spent less time or money on enjoyable activities because
of money concerns. However, 61% are maintaining an optimistic outlook.
The “Solid Index” survey from SunTrust found that 48% of Americans have
scaled back their summer travel plans because of finances; 42% are
considering not leaving home for vacation this summer; 25% of Americans
have no system in place for budgeting; and nearly 60% have either tried
to sleep off financial concerns, made poor food choices, made
unnecessary purchases, have skipped work or consumed alcohol to deal
with financial pressures. Nevertheless, SunTrust also found that 46% of
people are looking for more financial education resources for their
families and themselves.

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CLEAR2PAY BEIJING

Clear2Pay next generation payment solutions is opening its “Clear2Pay
Beijing” office through its 100% share acquisition of ETH Tech Limited.
The second of offices opened in China to its Shenzhen office, “Clear2Pay
Beijing” will dispatch assistance from the former to develop, integrate
and implement payments solutions within Chinese financial institutions
and will employ around 20 staff. Internationally Clear2Pay operates out
of 11 offices and employs over 450 staff in total to offer payments
origination, reporting, linking with back-office processing systems,
clearing, netting and settlement functions for such institutions as ING,
Banco Santander, Crédit Agricole, VISA, MasterCard, ABN AMRO, Nordea,
Abbey National, Fortis Bank, ANZ and Commonwealth Bank while ETH Tech
Limited was founded in 2004 to provide Business Intelligence (BI) for
banks, financial institutions, government agencies and large corporates.

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Consumers Shun Credit Cards, Loans and Spending

A survey, conducted in mid-May, has found that 33% of consumers are
using their credit card less often than before. About 41% of those
earning $75,000 or more have used their credit cards less. The finding
come from the results of The Harris Poll which also found that 45% of
40-49 year olds and 41% of 50-64 year olds say they have used their
credit cards less in the past six months. Almost two-thirds of Americans
saying they are spending less overall and 64% saying they are less
likely to take out a loan. Harris noted that in spite of this fiscal
restraint, many Americans have no cushion to weather a downturn, now or
in their retirement years. Almost one-quarter of Americans say they have
no personal savings and 30% have no retirement savings.

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Consumer Confidence Remains Stuck-in-the-Mud

New research shows that Americans have cut spending by an average of 4%
each quarter between 1Q/08 and 1Q/09. Specifically, consumers have cut
back in shopping by 40%; entertainment by 24%; bills/utilities by 16%;
spending on gifts/donations by 1%; and automotive spending by 24%. Only
food & dining spending increased in Q109 by 2%. The findings come from a
survey conducted by online personal finance service provider, Mint.com,
among its one million users. Mint noted that the most dramatic decrease
is in shopping, where user spending has dropped by more than 40%, which
is significant savings in aggregate, but was accomplished by a steady,
gradual 3-5% cut each month in a discretionary category where that type
of control is possible.

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Top Debt Collection Employers to be Ranked

insideARM.com account receivable management (ARM) website is set to
honor the top places to work in debt collection for its second-annual
“Best Places to Work in Collections” program this December, in
conjunction with the Best Companies Group. Based on workplace policies,
practices, philosophy, systems, demographics and an anonymous employee
survey, scores are combined to determine a company’s ranking. The
program is open to debt collection agencies, debt buyers, collection law
firms, and the recovery departments of creditor organizations which
employ at least 15 people in at least 1 U.S. facility and have been in
business for at least a year. Best Companies Group works with partners
around the country to establish and manage the “Best Places to Work,”
“Best Companies,” and “Best Employers” programs.

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CITI MOBILE BANKING

Mobile Money Ventures next generation mobile financial services has
teamed with Citibank to offer “Citi Mobile Banking” to Philippine
customers. Allowing users to access account information from their
mobile handsets, “Citi Mobile Banking” implements MMV’s mobile solution
utilizes with two-factor authentication to ensure security and does not
store financial information on the mobile device. Mobile Money Ventures
(MMV) next generation mobile financial services applications was
designed by Citi and SK Telecom to offer a comprehensive, customizable
and secure platform. Citi has approximately 200 million customer
accounts and does business in more than 140 countries.

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Is There a Silver Lining in CARD Act Compliance?

A analysis of compliance with the new “CARD Act” suggests that instead
of just spending to meet new legal requirements, issuers should view the
new rules as an opportunity to sustain profitability. Diamond Management
& Technology Consultants says that improving customer segmentation and
other analytical capabilities can uncover as much as 20% of new revenue
from an issuer’s existing customer base, without increasing customer
churn. The firm notes that the annual revenue that card issuers earn
from interest revenue and penalties could decline as much as 15% in 2010
and beyond. Some card issuers will cope by blindly cutting costs, which
means that some reward programs will be abandoned, and cash-back
programs will be reconsidered. Among Diamond’s suggestions: Couple
deadline-driven compliance with a longer-term view toward a better
business design for competing within the constraints of the new
regulations and increase market agility by developing the ability to
test new products, monitor consumer attitudes, and roll out promising
new products quickly.

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CVS Offers Online Customizable Gift Cards

RI-based drug retailer CVS is offering interactive, customizable online
gift cards that can be created and purchased at CVS.com. Visitors to
CVS.com are able to personalize the look and feel of a
virtual gift card by selecting color schemes, messages and fonts. After
choosing the
preferred decorative layout, shoppers may then select the dollar amount
to assign
to the card and set the date, time and destination of email delivery.
Upon receiving a virtual gift card, recipients simply print out their
customized email and bring them any of the more than 6,900 CVS/pharmacy
and Longs Drugs locations nationwide. Shoppers can get a head start and
set up virtual gift cards in advance, to be
delivered to family and friends on upcoming birthdays, holidays and
special occasions.

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Heartland Campus Solutions & Aurora Interface

Heartland Payment Systems’ Campus Solutions has integrated its POS system
with Aurora Information’s FoodPro to strengthen its back-end menu management and
customer purchasing data. Heartland’s suite of campus products which includes
the multi-functional Campus OneCard, enables colleges and universities to increase
convenience for their communities by providing a quick, flexible payment
method for dining and other key services, as well as access control and
more. The campus solutions offering, complete with Heartland’s card
processing, online payments and check management solutions helps
schools streamline operations, significantly reduce operating expenses
and generate additional revenue by capitalizing on everyday purchases.

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CHECK SCHEME

Based on data demonstrating guaranteed check use has plummeted by a
third in the last year and 70% over the past five, the Payments Council
has set a 2 year timescale in which the scheme will be closed. Although
consumers will still be able to write checks and businesses can continue
to accept them after the Scheme’s withdrawal, the Payments Council is
implementing the gradual scale back to ensure remaining users and
acceptors find payment alternatives by 2011. Additional information
supporting the Council’s decision to do away with the scheme shows over
99% of the 59.9 million cheque guarantee cards still in issue are also
either debit or credit cards; in 2008, losses totalling GBP3 million
were reported as a result of cheque guarantee card misuse; most major
high street retailers no longer accept cheques as a form of payment; the
average transaction value of a personal cheque is GBP267 while the
maximum guarantee limit is GBP250; and only 25% of all businesses have
received a guaranteed check in the previous six months.

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Gemalto Pioneers German Optical Online Access

Among the most secure online banking solutions in the world is the
optical authentication system used in Germany. Gemalto has unveiled
“Ezio Optical TAN,” whereby users simply present the device in front of
their computer screen and optical sensors capture the data they would
normally enter from the reader keypad to carry out and sign online
transactions. No software needs to be installed to use the device. The
size of a credit card, the new Gemalto reader is compliant with the
latest German “HHD” standard and leverages the security of “SECCOS”
banking cards. Gemalto has already delivered “Ezio” authentication
solutions to leading banks in Asia, Europe and the Americas. Germany has
the largest number of online banking customers in Europe, about 30 million.

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