Americans’ Economic Enthusiasm is Short-Lived

While several monthly barometers are pointing to glimmers of optimism
among U.S. consumers, one poll has discovered that Americans’ economic
enthusiasm has faded over the past month. The reversal is being
attributed to a 26-year high in unemployment, gas pump prices climbing
almost daily to about $3 per gallon and the waning of the initial fervor
for the government’s economic remedies. The “RBC CASH Index” for June
was 34.3, an 8.7 point decline from May’s 43.0 reading, but nearly 33
points above the all-time low of 1.6 observed in February 2009. Despite
current financial woes, the RBC report found that increasing numbers of
Americans are starting to believe the worst is behind them. Expectations
regarding personal economic security have held steady since May and
consumer pessimism also remains fairly low with only 14% of Americans
saying they expect their personal financial situation to weaken over the
next six months. The “Index” is composed of four sub-indices: “RBC
Current Conditions Index”; “RBC Expectations Index”; “RBC Investment
Index”; and the “RBC Jobs Index.”

RBC CASH INDEX
Jun 08: 22.5
Jul 08: 14.6
Aug 08: 33.8
Sep 08: 69.2
Oct 08: 37.0
Nov 08: 34.7
Dec 08: 15.3
Jan 09: 13.3
Feb 09: 1.6
Mar 09: 8.2
Apr 09: 38.3
May 09: 43.0
Jun 09: 34.3
Source: RBC CASH

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CPP & CNP

Given card-not-present(CNP) fraud has risen since the introduction of
Chip and PIN by 13% between 2007 and 2008, CPP and The 3rd Man have
partnered to introduce “Card Fraud Alert” proactive online transaction
monitoring to help fight CNP fraud. Totalling over GBP328million,
accounting for over 50% of all reported card fraud, CNP fraud in 2008
accounted for 700,000 online transactions which the new card monitoring
solution hopes to combat with continuous scans of approximately 20,000
of the most popular consumer transaction fraud websites. Available for
GBP29.99, customers are allowed to register as many payment cards as
they wish and will receive an initial SMS and welcome pack upon
registration. Additional support to its subscribers includes SMS alerts
in the event of potential account fraud, a 24-hour fraud expert helpline
and instant issuer notification to offer the customer the option of
cancelling their card. Analyzing data not always available to banks,
“Card Fraud Alert” uses the IP address through which the transaction was
conducted to identify where purchases have been made to locate the
criminals.

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Accor Expands its Global Rewards to the USA

With intentions of providing U.S.-based incentive agencies and their
corporate clients a cost effective, localized incentive with employee
recognition programs, Accor Services North America has introduced its
latest program to the U.S. market.
The newly launched “Global Rewards” program takes on the challenge of globally
expanding U.S.-based corporations’ need to provide worldwide coverage
integrated into a single solution using local expertise in sourcing and
fulfillment. Through the convenience of centralized, U.S.-based account
management, the new program dispatches orders and information across its
global network, consolidates payables into a single invoice and provides
reward fulfillment services in 46 countries around the globe. Sourcing
and fulfilling orders locally and managing them centrally, Accor
Services relies on local experts in each country for reward sourcing and
offering customers a wide range of reward solutions such as retailer
gift vouchers, retailer gift cards, open loop gift cards, merchandise,
and more.

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WiredBenefits to Market InComm Cards

To offer prepaid healthcare payment methods through InComm’s network of
145,000 retail stores, the processing and POS distribution provider has
inked agreements with WiredBenefits healthcare to develop and market
prepaid healthcare cards. WiredBenefits’ reloadable prepaid cards
provide access to low-cost proprietary healthcare products and services
and can now offer healthcare spending options. WiredBenefits provides
processing technology and prepaid cards to deliver new platforms for
individualized care through end-to-end card issuance. GA-based InComm
was established in 1992 and had nearly $8 billion in retail sales
transactions processed in 2007.

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NIST MBGC & SAGEM

The National Institute of Standards and Technologies (NIST) has
published its Portal Challenge tests results from its Multiple Biometric
Grand Challenge (MBGC) showing Sagem Securite (SAFRAN Group) is at the
top of the biometric technology list. Mostly used for border control and
identity management, Sagem Securite identity solutions ranked No.1 in
face recognition, iris recognition and the combination of both. The NIST Portal Challenge report evaluated 7 companies and 5 universities and is
projected to bolster Sagem’s leadership role in personal, security, data
security and technological advances in the field. SAFRAN USA subsidiary,
MorphoTrak employs over 450 to provide biometric and identity management
solutions across the U.S. and Canada.

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Dodd Presses Fed to Adopt Opt-In for Overdrafts

Senator Chris Dodd (D-CT), Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, has asked the Federal Reserve to finalize a proposed rule that implement an “opt-in” approach to overdraft bank fees, rather than an “opt-out”. In a letter to Ben Bernanke, Chairman of the Board of Governors of the Federal Reserve System, Dodd praised the Fed for limiting the ability of financial institutions to assess overdraft fees for ATM withdrawals and debit card transactions. However, he said he was concerned that some financial institutions may be increasing overdraft fees or creating new ones, which often take consumers by surprise and may bear little relation to the actual amount of overdraft. Dodd said the “opt-in” approach provides far greater consumer protection because the default then would be no overdraft service and no overdraft fees unless the consumers affirmatively consent, whereas the “opt-out” approach essentially represents a continuation of the status quo.

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TOURISM OUTLOOK USA

Visa Inc.’s latest report, “Tourism Outlook: USA”, concludes U.S.
tourism is running strong with $53 billion Visa tourism dollars
generated by international visitors. Data shows U.S. Visa cardholders
who visited Canada contributed $5.5 billion to tourism revenues in 2008,
up 2% from the year prior, having spent an average of US$113.80 per
person. Canadian travelers to the U.S., however, spent $15.3 billion on
their Visa cards in 2008, up 19% from the year prior, as the number one
contributors to inbound tourism revenue. Canadian revenue contribution
to U.S. tourism was followed by visitors from United Kingdom with $4.7
billion, Japan with $3.1 million and Mexico with $2.5 billion.
Additional findings show only 25% of those surveyed are less willing to
travel because of the socio-economic climate and 23% are more likely to
travel internationally. However, 83% may adjust international travel
plans with 52% opting to travel during off-peak seasons while 33% are
choosing destinations with lower cost. The most popular forms of payment
while traveling, in order, are credit cards (55%) and cash (20%), either
chosen for convenience (69%), security (53%) and ease of access to funds
(46%). The Visa international tourism survey of 5,539 adult consumers
was conducted online while the Visa Inc retail electronic payments
network is present in more than 170 countries.

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Q1 U.S. Credit Card Ad Expenditures Down 41%

Measured advertising expenditures in the first quarter for the overall
financial services industry declined 18% year-on-year. Within the
segment ad spending declined 68% for loan products, 41% for credit cards
and nearly 21% for retail banking. Overall, financial services shed more
than $400 million of spending and finished the quarter at $1,968.4
million. The data from TNS Media Intelligence determined that
total measured advertising expenditures in 1Q/09 plunged 14% versus a
year ago, to $30.18 billion. This follows a 9.2% decline in 4Q/08.
According to Synovate’s “Mail Monitor,” direct mail credit card offers
declined 67% year-on-year during the first quarter. The Q1 sharp drop
follows a 55% decrease in the fourth quarter and a 20% decline in the
third quarter. For the full year of 2008 there were 3.8 billion
solicitations mailed, compared to 5.2 billion in 2007. (CF Library
5/6/09)

Q1 FINANCIAL SERVICES
Advertising Expenditures
Loan Products -68%
Credit Cards -41%
Retail Banking -21%
Overall -18%
Source: TNS Media Intelligence

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FINNKINO OY & RAHAXI

Rahaxi international card payments processor wholly owned subsidiary,
Rahaxi Processing Oy, has deployed its EMV chip and pin solution to
offer EMV certified, end-to-end payment processing at Finnkino Oy movie
theatre locations. Satisfying the high demand for Rahaxi international
standard payments processing products and services across the Finnish
market, the EMV chip and pin service provides users secure convenience.
Finnkino Oy Finnish Movie Theatre Chain had 2008 sales of EUR94.3
Million and currently operates 16 cinemas in eleven cities across the
country with a total of 94 screens. Rahaxi provides merchants and
acquirers its financial industry solutions worldwide through its Rahaxi
Processing Oy, Finland, FreeStar Technologies Ireland, and FreeStar
Dominicana S.A. Dominican Republic subsidiaries.

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Rising Card Delinquency Begins to Lose Steam

The rising pace of credit card delinquency, a precursor of charge-offs,
appears to have lost some of its steam in the first quarter and may
soften further in the second quarter. The sequential increase in
quarterly delinquency (30+ day) among the nation’s top issuers was 15%
in the first quarter, compared to an 18% surge in the fourth quarter.
Among the nation’s top issuers with at least $50 billion in
outstandings, the average delinquency ratio for 1Q/09 was 5.92%,
compared to 5.16% in the fourth quarter and 4.09% for 1Q/08, according
to CardData (www.carddata.com). American Express reported that 30+ day
managed U.S. delinquency edged down to 4.9% in April from 5.1% in March
and 5.3% in February. Capital One reported that 30+ day managed U.S.
delinquency declined to 5.04% in April from 5.08% in March and 5.10% in
February. According to Moody’s “Credit Card Index” the delinquency rate
for all credit card ABS was 6.34% for April compared to 6.40% for March.
According to the latest “Credit Card Index” results from Fitch Ratings
delinquency (60+ days) for “prime” credit card ABS dropped to 4.37% in
April, compared to 4.44% in March. (CF Library 5/15/09; 5/18/09;
5/28/09; 5/29/09;)

Top U.S. Issuers
30+ DAY DELINQUENCY
(minimum $50 billion in outstandings)
1Q/08: 4.09%
2Q/08: 4.00%
3Q/08: 4.36%
4Q/08: 5.16%
1Q/09: 5.92%
Source: CardData (www.carddata.com)

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EUROCOMMERCE EXEC

Effective July 1st, 2009, Dr Rainhardt Freiherr von Leoprechting has
been appointed EuroCommerce President. Dr von Leoprechting comes to the
new position from the German-based Metro Group retailer/wholesaler where
he has been since 1999 and as head of corporate relations since 2004.
Duties in his new role, first and foremost, include strengthening the
understanding commerce plays in society, to correct false impressions
anti-competitive trading practices are king, promote competitiveness of
European companies, meet current sustainable development challenges and
participate in establishing the definition of new strategies on consumer
protection through label use.

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2009 – The Worst Card Sale Market Since the 80s

The run rate for card portfolio sales this year is on pace to be the worst since the 1980’s. Only $4.37 billion in six larger transactions have been done to-date this year. Last year, 35 deals were done during the year, for $55.3 billion. Card industry analyst/investment banker R.K. Hammer reports that the average premium paid for deals has also dropped significantly, to 12.74% this year, compared to 16.57% last year, and 21.40% the year before. The business model upon which most card portfolio buyers based their proforma purchase P/L’s has been decimated. Hammer noted that the dismal results are also driven, in part, by savvy buyers looking at only the best accounts, with some even triaging against buying accounts in certain weaker states. Also, some buyers are focusing inward on retrenching, rebuilding capital, cutting losses, rather than growing their assets.
Additionally, Hammer says uncertainty for the future is the big bogie.

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