MAR DEBT

Credit card outstandings leveled off again in March. However, year-on-year growth for credit card outstandings has been slowing, from an from 7.5% for January and 7.0% for February to 6.0% for March. According to the The Bank of England, net credit card was GBP 52.7 billion in March. The increase in total net lending to individuals in March (GBP 0.9 billion) was lower than the February increase and below the previous six-month average. The twelve-month growth rate continued to fall, by 0.4 percentage points to 2.2%, and the three-month annualized growth rate fell by 0.3 percentage points to 1.0%. Consumer credit increased by a net GBP 0.1 billion, unchanged from revised February figures and below the previous six-month average. Net credit card lending increased by GBP 0.3 billion and net other loans and advances fell by GBP 0.1 billion. The annual growth rate of consumer credit continued to fall, to 3.2%; the three-month annualized growth rate fell by 0.4 percentage points to 0.6%.

NOTE: Chart does not include about GBP10 billion from specialist lenders, retailers, and insurance companies. SOURCE: Bank of England

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Falcon Fraud Manager 6.0 is Introduced

Predictive analytics provider FICO has launched the “Falcon Fraud
Manager 6.0.”It is the first payment card fraud management solution to
incorporate
adaptive analytics, an innovation that accelerates financial
institutions’ ability to spot new fraud patterns and prevent them from
causing extensive damage. Early response to this innovation has been
enthusiastic, with multiple projects already underway, including an
installation at a major, U.S.-based credit card issuer. Besides
incorporating adaptive analytics technology, FICO Falcon 6.0
expands FICO’s patented fraud detection and profiling techniques by
introducing global intelligent profiles to monitor high-risk ATMs,
merchants, risky geographic regions and other relevant entities. Falcon
6.0 also includes new detection and case management capabilities
relevant to retail banking lines of business such as demand
deposit/current accounts. Extensive testing with client data has shown
these innovations yield up to 44 percent improvement in detection model
performance, translating to increased fraud detection with fewer
false-positives.

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NXP and G&D Launch Fast Pay Devices

NXP and Giesecke & Devrient have introduced a new “Fast Pay”
contactless security chip and a new line of G&D contactless payment
devices based on this IC. “Fast Pay”-based devices have been
specifically designed to provide consumers in the U.S. and Canada with a
convenient and swift contactless payment solution. The EMVCo approved
chip offers best in class contactless performance and its “Data
Encryption Standard” hardware co-processor provides strong security and
fast transaction times, all packaged within a small footprint. “Fast
Pay” is “ISO 14443 Type A” certified and supports the latest MasterCard
and Visa contactless payment specifications.

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MasterCard Revenues Decline 2.2% in Q1

MasterCard’s first-quarter net revenue declined 2.2%, to $1.2 billion
but gross dollar volume and purchase volume rose 0.3%.
Worldwide purchase volume during the quarter was also up 0.3% on a local
currency basis versus 1Q/08, to $411 billion. The number of processed
transactions increased 5.8% compared to the same period in 2008, to 5.1
billion. As of March 31st, the company’s financial institution customers
had issued 967 million MasterCard cards, an increase of 4.0% over the
cards issued at March 31, 2008. Total operating expenses decreased
10.8%, to $595 million, during the first quarter of 2009 compared to the
same period in 2008. For complete details on MasterCard’s performance
visit CardData ([www.carddata.com](http://www.carddata.com)).

MASTERCARD TRANSACTIONS (millions)
(purchases + cash)
TRANSACTIONS GROWTH
Mar 31, 2009 6,475 0.3%
Dec 31, 2008 7,768 6%
Sep 30, 2008 7,638 12%
Jun 30, 2008 7,462 12%
Mar 31, 2008 6,972 13%
Dec 31, 2007 7,306 14%
Sep 30, 2007 6,842 13%
Jun 30, 2007 6,657 15%
Mar 31, 2007 6,162 20%
Dec 31, 2006 6,395 20%

Note: All MasterCard Credit, Charge and Debit Programs processed on MasterCard’s networks. Source: CardData ([www.carddata.com](http://www.carddata.com))

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DELAGO & SEVEN PRINCIPLES

Canadian provider Delego Software and Germany-based Seven Principles have teamed to create global electronic payments solution for companies running SAP Software. The Delego solution has long been an international leader for electronic payments in the SAP market and the addition of key functionality enhancements from the GMAPay solution makes Delego the best global choice for automating credit card transactions.

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Fujitsu America Unveils TeamPoS 3600

Fujitsu America unveiled its “TeamPoS 3600” family of POS systems. Retailers can select from a wide range of Intel processor and memory options, as well as various input/output modules. The “TeamPoS 3600” family includes four basic models: “TeamPoS 3604” – Intel “Celeron” 440 2.0 GHz/533 MHz processor; “TeamPoS 3625” – Intel “Dual Core” E5300 2.6 GHz/800 MHz processor; “TeamPoS 3627” – Intel “Core 2 Duo” E7400 2.8 GHz/1066 MHz processor; and the “TeamPoS 3628” – Intel “Core 2 Duo” E8400 3 GHz/1333 MHz processor. Also, Intel “vPro” technology which provides enhanced security, remote manageability and industry-leading performance. In addition, Intel AMT technology (part of Intel’s “vPro”) helps retailers better discover, heal, and protect networked computing assets.

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Safe Credit Cards Project Details Released

The Pew Safe Credit Cards Project has released an evaluation of the 12
top card issuers. Based on its research, Pew developed a set
of Safe Credit Card Standards and is recommending immediate legislative
action from Congress. Findings from the research include: 100% of cards
contained features that the Federal Reserve has
determined cause substantial harm to consumers, with 93% of cards
allowed the issuer to raise any interest rate at
any time by changing the account agreement and 87% of cards allowed the
issuer to impose automatic penalty interest rate
increases on all balances, even if the account is not 30 days or more
past due. The median allowable penalty interest rate was 27.99% per year.

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MasterCard and Fifth Third Extend Deal

MasterCard Worldwide signed a multi-year contract extension with
OH-based Fifth Third Bank. Under the agreement, Fifth Third Bank will
continue its partnership with MasterCard, issuing credit and debit
MasterCard cards for both consumers and corporations. Fifth Third holds
$119 billion in assets, and operating 16 affiliates
with 1,311 full-service banking centers in the U.S., has been issuing
MasterCard products since 1980.

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Material Deterioration Seen in Losses

U.S. credit card asset quality metrics surpassed historical peaks in the first quarter of 2009 as the unemployment rate surged 130 basis points, according to Fitch Ratings. Fitch believes end-of-quarter delinquency levels, combined with low recovery prospects, signal material deterioration in card losses in the second quarter. Higher portfolio losses combined with lower spend volume and smaller loan portfolios are expected to challenge card segment profitability in 2009 and 2010. Purchase volume dropped an average of 5% sequentially at the top six card issuers in the fourth quarter of 2008, and fell another 14.2% in the first quarter of 2009. These spending trends are expected to continue over the balance of the year. Fitch expects issuers with less dependence on interest spread income, like American Express Company, will fare relatively better from an earnings standpoint.

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VERISMART VISA

Auriemma Consulting Group has released the 2nd annual “Issuer Brand Index report”, which measures
consumer perception of top credit card issuers in the UK. This year’s
report found that Barclaycard retained its spot as the strongest credit
card brand in the UK. This position was partially supported by the
lender’s large market share of credit cards and a high level of brand
awareness, Barclaycard also earned the top ranking among respondents who
do not hold Barclaycard-branded cards. Capital One retained the #2 position in the IBI this year, driven
primarily by high perceived brand quality and awareness. Additionally,
card usage among Capital One cardholders was high enough to earn the
lender the #2 spot in that category. The lender with the highest card
usage rate was NatWest, which was the primary reason that they rose to
the #3 spot from #5 in last year’s study.

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KingsIsle Takes Gift Cards to 7-Eleven

Online entertainment company KingsIsle Entertainment has announced that
$10 prepaid “Wizard101” gift cards are now available in
7-Eleven stores nationwide. Each card offers a limited edition
collectible pet available upon redemption from one of four special sets:
“Protectors”, “Assistants”, “Adventurers”, and “Heroes”. Pets from these
sets will give players better powers such as increased accuracy,
defense, damage, and a special spell card that can be used during duels.
The gift card pets will be available in colors, patterns, and clothing
that cannot be found anywhere else in the game. Wizard101 is a
family-friendly virtual world of wizardry in which magic comes to life
in a quest that involves a massive cast of good, evil and frequently
silly characters.

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