U.S. Credit Card ABS Market Gears Up for TALF 1.0

Moody’s says the U.S. economy currently suffers from two serious
drawbacks: a severe lack of aggregate supply of credit; and the knock-on
effect on demand of a slumping job market, where 3.6 million jobs have
been lost in just over a year. We are currently witnessing a
synchronized deleveraging of key economic actors (financial
institutions, corporations and households) — a necessary step to bring
back balance sheets to an equilibrium, but a phenomenon that undermines
investors’ and consumers’ confidence and further tightens wholesale and
retail credit conditions, even as the Federal Reserve has cut down the
policy interest rate close to zero. However, the credit card ABS market
should also be a beneficiary of TALF 1.0. About $80 billion of credit
card ABS is scheduled to mature in 2009, thus forming the largest single
asset class that is currently eligible under TALF. As such, TALF 1.0
could have positive credit implications for credit card originators. One
element that may moderate participation is that some issuers of credit
card ABS have access to other sources of funding that may be more
advantageous. For instance, issuers that are associated with
deposit-taking institutions may access other government funding
programs, such as the FDIC debt guarantee program.

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NRF Claims PCI Standards are an Elaborate Patch

The National Retail Federation now claims that security standards
imposed on merchants by the credit card industry are only “an elaborate
patch.” In testimony before a congressional panel the NRF said
the ultimate solution is to stop requiring merchants to store card data
in the first place. The hearing was held by the House Homeland Security
Committee’s Subcommittee on Emerging Threats, Cybersecurity, and Science
and Technology. The NRF says the PCI standards include more than 200
requirements intended to protect consumers against credit card fraud
committed by criminals who hack into computer systems. But, the
guidelines are “onerous, confusing and constantly changing” and have
required retailers to replace previous security programs with new
programs that are different but not necessarily better.

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Cap One and Consumer Action Expand MoneyWi$e

Capital One Financial Corporation and Consumer Action
will award 18 stipends through their joint MoneyWi$e financial literacy
program totaling $53,000. Recipient groups have attended MoneyWi$e
trainings which offer multilingual financial education materials,
curricula and teaching aids with regional meetings and roundtables to
train community-based organization staff so that consumers at all income
levels and walks of life can be reached. Community based organizations
teaching financial education in
California, Louisiana, Massachusetts and Texas will receive stipends for
programs designed to make an impact on the financial health of their
communities. The groups will utilize the
MoneyWi$e curriculum to educate local consumers on personal finance
basics like avoiding trouble with credit and becoming successful
homeowners, among other topics.

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MATICA FINANCIALS

Card personalizer Matica has announced its unaudited preliminary results
for the year ended 31 December 2008. Revenues for the 12 months to
December 2008 increased by 12% to EURO14.6m compared to 2007 results of
EURO13.0m. Profit after tax were EURO427,000 compared to its 2007 loss
after tax of EURO1,789,000. Credit and debit card use continues to
increase particularly in emerging markets, this, together with the
growing trend for banks to produce cards from regional rather than
central bases is driving demand for applications for the issuance of
financial cards. Technical innovations are also key to increased demand
such as the global migration from magnetic strips to smart cards further
helped by continued concerns over security and safety. As a result
volumes of plastic cards for ID, security, banking and loyalty program
applications remained high throughout 2008 and the Company generated
good sales growth across most of its markets, particularly in the
Americas and the Middle East. Trading conditions in Europe were
adversely affected, which was mainly due to the economic slow-down in
the region. However, this was offset by the strong performance delivered
in other markets.

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HotSchedules and Digital Dining Partner

TX-based HotSchedules has partnered with Digital Dining to integrate POS
platforms with labor management solutions. Digital Dining provides
restaurant POS software and handheld
POS solutions for all types of hospitality verticals with a flexible
XML-based POS software interface and non-proprietary hardware platform.
HotSchedules’ secure and cost-effective on-demand restaurant scheduling
solution interface includes tools to easily create schedules, print
reports and evaluate
staff availability and integrates with most major POS
solutions as well as time and attendance systems to allow for robust
reporting and advanced forecasting for substantial labor cost savings.

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MasterCard Reaches a Deal with European Commission

MasterCard Europe has reached an understanding with the European
Commission on interim interchange fees for cross-border consumer
payments within the European Economic Area. Effective July 1st
MasterCard Europe will establish intra-EEA cross-border default
interchange rates for consumer card transactions that, on average, will
not exceed 30 basis points for credit cards and 20 basis points for
debit cards. These interim rates will apply only to cross-border
transactions, which account for less than five percent of MasterCard
Europe’s total volume. Also on July 1st MasterCard Europe also will
publish on its website the new interchange rates and the rates that
MasterCard Europe itself establishes in the EEA, both for cross-border
and domestic transactions. In addition, MasterCard Europe announced a
new rule for its acquirers that will provide merchants with specific
information about the cost of accepting MasterCard consumer, MasterCard
commercial and Maestro cards.

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MC & EEA

MasterCard Europe has reached an understanding with the European Commission on interim interchange fees for cross-border consumer payments within the European Economic Area. Effective July 1st MasterCard Europe will establish intra-EEA cross-border default interchange rates for consumer card transactions that, on average, will not exceed 30 basis points for credit cards and 20 basis points for debit cards. These interim rates will apply only to cross-border transactions, which account for less than five percent of MasterCard Europe’s total volume. Also on July 1st MasterCard Europe also will publish on its website the new interchange rates and the rates that MasterCard Europe itself establishes in the EEA, both for cross-border and domestic transactions. In addition, MasterCard Europe announced a new rule for its acquirers that will provide merchants with specific information about the cost of accepting MasterCard consumer, MasterCard commercial and Maestro cards.

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MARCH PMI

The Bloomberg Euro-Zone Retail
Purchasing Managers’ Index rose from 42.3 in
February to 44.1 in March, signaling the smallest monthly drop in the
value of sales in five months. The first quarter has seen an average
monthly decline that was less steep than the record drop seen during Q4
of last year. The March decline remained strong by the survey’s
historical standards, and sales have now fallen for ten consecutive months.
The March survey also showed that euro area retail sales remained well
below a year ago on a like-for-like basis. The year-on-year sales index
edged up from 35.5 in February to 36.4, remaining below the 50.0
no-change level to register the fourth-steepest annual decline since the
survey began in January 2004. Expectations for beating targets in the coming month rose to a six-month
high in March. The respective index rose from 50.1 to 55.8. Confidence
has improved in France – where forecasts for sales are the highest for
eleven months – and Germany, while Italian retailers’ expectations are
neutral. Retailers of food & drink and autos & fuel are again the most
confident about hitting targets, while household goods is the only
category for which targets are expected to be missed.

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CREDIT CARD CONTROLS

The results of a recent survey conducted by the Environics Research
Group reveal that 82% of Canadians want tighter rules imposed on the
credit card industry. Of those, 51% of respondents said they
strongly support tighter rules for the credit card companies in terms of
how they treat both card-holders and merchants and 31% are somewhat
supportive while 6% are strongly opposed and 8%
somewhat opposed to the idea.

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Pew Releases its Safe Credit Cards Project

The Pew Charitable Trusts’ Safe Credit Cards Project has released a set
of standards designed to prevent deceptive credit card practices and
enact legislation. Pew’s research identified a number of unsafe and
deceptive practices that are widespread and in need of immediate reform.
The standards seek to ensure that cardholders are charged only the
interest rates they agreed to pay; fees are imposed responsibly and in a
transparent fashion;cardholders have sufficient time to review and pay
their bills; and interest is not charged on balances cardholders have
already paid. The Pew Safe Credit Cards Project develops and
promotes standards for consumer-friendly credit cards to help ensure the
financial security of all Americans and developed the Standards in
partnership with the Sandler Foundation.

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JCBI COO

JCB International has named Koremitsu Sannomiya as President and Chief Operating Officer. Sannomiya succeeds Kenji Seto, who has served in the position since June 2007. Sannomiya had held a number of key positions, including Executive Vice President since 2000, providing visionary leadership in key areas and vital issues: corporate planning, supervising JCB’s Next Generation System migration project, and developing emerging markets such as small value and utility payment. Prior to his appointment as President and Chief Operating Officer at JCBI, he served as Board Member, Executive Officer, and Head of Strategic Market Development Headquarters Division at JCB, where he helped to substantially expand the horizon of the credit card payment market in Japan by marketing new solutions and services, including widening the small value market with the QUICPay(TM) contactless smart card payment solution, and undertaking Eco-Action-Point program platform operations on behalf of Japan’s Ministry of the Environment.

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E-ID & NIC

Digital security provider Gemalto will deliver electronic ID cards to Saudi Arabia’s Ministry of Interior
National Information Center. Gemalto will provide NIC with e-ID cards for the next three years,
as well as support and maintenance for the centralized personalization
center in Riyadh. The Saudi Arabia national ID card is a wallet-sized card that embeds a
microprocessor containing the cardholder’s digital information such as
demographics, facial image and fingerprints. It also features a bar code
and an optical stripe to ensure enhanced security to citizens. The
national ID card can be used as a travel document that facilitates
legitimate travel within all GCC countries. In addition, the e-ID card
offers strong authentication to enable citizens to prove their identity.
Digital signature is also available through a Public Key Infrastructure
application. The national ID card is mandatory for all citizens
above 15 and valid for ten years.

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