Despite Economy Prepaid Market is Robust

Nearly 70% of industry executives believe that 2009 growth in the general purpose reloadable card market will equal or exceed growth
levels in 2008. The Center for Financial Services Innovation says 80% of prepaid industry executives see underbanked consumers as important or very important to the future growth of the prepaid industry. The paper is the first in a series of CFSI research efforts to further understand how underbanked consumers use the product to meet their financial services needs. In early April, CFSI will release its next
prepaid paper, which features in-depth one-on-one interviews with
underbanked consumers to better understand the impact that these new
products and services are having on consumers’ money management
practices and long-term financial well-being.

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NBPCA White Paper Addresses Prepaid Cards

The Network Branded Prepaid
Card Association has released a white paper entitled “Abandoned Property Laws
and Network Branded Prepaid Cards: Questions and Concerns Raised When
Trying to Fit Cards into the Existing Abandoned Property Legal
Framework”. While the legal framework for these products has also undergone change and development, state abandoned
property laws have not kept up.
The paper outlines the following points:
The background and history of abandoned property law; the current state of escheat law; the challenges applying
abandoned property laws to prepaid cards; current laws do not contemplate prepaid cards;
current laws do not distinguish between network branded prepaid cash
accessible cards, network branded cards usable for goods/services, and
closed loop, retailer issued cards; the difficulty in deciding which state and how much to pay;
the difficulty in knowing when property is truly abandoned; anticompetitive consequences of abandoned property laws;
the special issues raised by reward and incentive cards; problems raised by the Third Priority Rule and “deemed address”
provisions and the penalties and risks of non-compliance.
The Network Branded Prepaid Card Association (NBPCA) is a nonprofit,
inter-industry trade association that supports the growth and success of
network branded prepaid cards. The
NBPCA’s members include financial institutions, card organizations,
processors, program managers, marketing and incentive companies, card
distributors and law firms.

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Credit Crunch Affects the Good Credits

A new study has found that consumers considered safe lending risks a year ago are finding it more difficult to borrow now, despite their qualifying credit scores. CareOne Services found that a 15% increase in overall inquiries from a year ago; a nearly 7% jump in the number of consumers with credit scores in the 650 to 750 range calling for financial help or to start structured repayment plans; and a small but significant 2% increase in inquiries from consumers with annual incomes of more than $50,000. In January, CareOne handled nearly 65,000 inquiries from consumers who are seeking advice and assistance to get a better handle on their finances. This is a 15% increase from a year ago, and the volume of inquiries is not projected to decrease.

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AMCORE Bank and NYCE Network Ink a Deal

IL-based AMCORE Bank has selected Metevante’s NYCE Network its
exclusive provider of both PIN debit and ATM card access.
AMCORE Bank has $5 billion in assets, with 74 locations across Illinois
and Wisconsin. It contributes nearly 100,000 cards and 83 bank-owned
ATMs to the NYCE Network. The bank is also a member of NYCE’s SUM
selective ATM surcharging program. The NYCE Network provides consumers with
secure, real-time access to their money, offering hundreds of thousands
of ATM locations and millions of point-of-sale locations nationwide. The
NYCE Direct Bill Payment service offers cardholders a convenient way to
pay bills online in real-time via their bank accounts. NYCE Balance
Transfer services drive asset growth for consumer credit issuers through
automated balance transfer/consolidation payment services.

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Overall Credit Delinquency Inches Northward

TransUnion reports that average bankcard borrower debt inched upward
nationally 33 basis points to $5,729 from the previous quarter’s $5,710,
and 1.96% compared to the fourth quarter of 2007. The highest state
average bankcard debt was in Alaska at $7,466, followed by Nevada at
$6,638 and Tennessee at $6,560. The lowest average bankcard debt was
found in Iowa ($4,267), followed by North Dakota ($4,414) and West
Virginia ($4,555). Nationally, the bankcard delinquency rate increased
to 1.21% in the fourth quarter of 2008, up 11% over the previous
quarter. Incidence of delinquency was highest in Nevada (2.04%),
followed closely by Florida (1.71%) and Arizona (1.54%). The lowest bank
card delinquency incidence rates were found in Alaska (0.57%, North
Dakota (0.70%) and Vermont (0.75%).

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VENTURE INFOTEK & WELCOME

Loyalty solution provider Welcome and Venture Infotek have partnered to
launch a loyalty program that will
allow cards payment businesses and retailers to deliver personalized
offers and redemption alternatives at the point of sale. This exclusive
real-time targeted marketing capability provided by Welcome Real-time is
expected to increase cards and retailer brand loyalty and billings,
while significantly lowering the cost of customer acquisition and
retention. The Venture Infotek and Welcome Real-time solution now
offers banks,
retailers and payment networks the following advantages: targeted
rewards that customers prefer: Card issuers and
retailers will be able to track and analyze customer buying behaviors
and other information to deliver more intelligent, targeted
rewards in real time at point of sale. Intelligent rewards eliminate
promotional
waste by delivering the right offer to the right customer at the
right time, ultimately driving higher levels of customer satisfaction
and increased purchases; lowered marketing costs: Delivering targeted,
personalized promotions at the point of sale via merchants reduces
operational costs and achieves greater results as compared to more
traditional
methods of marketing promotions to a broad audience via direct mail or other
mass advertising; simplicity in participation: Customers can now select any
payment card to automatically enroll in and participate in a
promotion or loyalty program. Customers may also opt to use a particular
issuer’s card that is offering additional differentiated benefits.
Retailer’s
perception of the value brought by card issuers and acquirers to such
payment transactions is increased and loyalty enhanced.

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JAN ABS

Delinquency among credit card-backed securities hit an all-time high in January. However, charge-offs pulled-back from an all-time high set in December. The Fitch “Charge-off Index” decreased in January by 40 basis points to 6.8%. In January, the Fitch 60 to 180 days “Delinquency Index” increased for the fifth month in a row, moving to 4.5% from 4.3% in December. Fitch also reports that its “Monthly Payment Rate Index” was 16.4% in January, an increase of 20 basis points from December. The Fitch “Yield Index” fell 110 basis points to 19.5% in January. Having increased for each quarter of 2008, the outstanding amount of credit card debt held by U.K. borrowers rose to GBP 53.0 billion in January from GBP 52.8 billion in December.

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JANUARY CB

The Conference Board Leading Economic Index decreased 4.7% and The
Conference Board Coincident Economic Index decreased 1.2% in
January. The LEI registered its largest monthly
decline since the index began in 1965. Three of the ten components that
make up TCB’s LEI
increased in January. The positive contributors to the index include
the (inverted) business failures, real money supply, and interest rate
spread. The negative contributors – in order from the largest negative
contributor to the smallest – include the index of overtime worked, the
six month growth rate of labor productivity, the Tankan business
conditions survey, the new orders for machinery and construction
component*, stock prices, dwelling units started, and real operating
profits. The six-month growth rate for TCB’s LEI for Japan has fallen
to 16.3% (about a
-29.9% annual rate) from July 2008 to January 2009, also the
largest decline in this growth rate since the index began. Moreover, the
weaknesses among the leading indicators continued to be very widespread.
The CEI also declined sharply in January. Industrial
production again registered a record fall this month. The six-month
growth rate of the CEI fell to -5.4% (a -10.4% annual
rate). However, the weaknesses
and strengths among the CEI components were balanced in recent months.
At the same time, real GDP contracted at a 12.7 percent annual rate, the
largest drop in 35 years. The growth of real GDP for Japan in 2008
averaged at a -4.5 percent annual rate. The LEI for Japan now stands at
81.3 (2004=100).

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Delinquency in the U.K. Hits a New Record

Delinquency among credit card-backed securities hit an all-time high in January. However, charge-offs pulled-back from an all-time high set in December. The Fitch “Charge-off Index” decreased in January by 40 basis points to 6.8%. In January, the Fitch 60 to 180 days “Delinquency Index” increased for the fifth month in a row, moving to 4.5% from 4.3% in December. Fitch also reports that its “Monthly Payment Rate Index” was 16.4% in January, an increase of 20 basis points from December. The Fitch “Yield Index” fell 110 basis points to 19.5% in January. Having increased for each quarter of 2008, the outstanding amount of credit card debt held by U.K. borrowers rose to GBP 53.0 billion in January from GBP 52.8 billion in December.

U.K. CREDIT CARD ABS
Delinquency Charge-Offs
Jan 08: 3.4% 6.2%
Feb 08: 3.5% 5.6%
Mar 08: 3.6% 6.6%
Apr 08: 3.6% 6.5%
May 08: 3.7% 6.4%
Jun 08: 3.7% 6.9%
Jul 08: 3.7% 6.5%
Aug 08: 3.7% 6.3%
Sep 08: 3.8% 6.6%
Oct 08: 3.9% 6.6%
Nov 08: 4.1% 6.4%
Dec 08: 4.3% 7.2%
Jan 09: 4.5% 6.8%
Source: FitchRatings

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ICONGO 8.0

E-commerce solution provider iCongo has introduced “iCongo 8.0, an enhanced retail e-commerce and cross-channel system.
Version 8.0 enhancements and features include:Dynamic Catalog Creation, Life Cycle Work Flow and Audit;
Enhanced Dynamic Merchandising and Personalization Tools;
Improved Shopping Experience, Web 2.0, Social Media, and
Integration Adapters to 3rd Party Servicers; Superior Promotions Engine;
Vendor Management and Drop-Ship;
Cross Channel In-Store Upgrades; New E-Mail Marketing Features and
Third Party Retail Sales Channel, Marketing Channels and Shopping
Portals.
iCongo is recognized by Forrester
Research as a Strong Performer in their evaluation of the top 10
enterprise class B2C e–commerce platform vendors in the world.

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NXP & GEMALTO

Digital security provider Gemalto has entered into an agreement with NXP
to transfer NXP mobile services to Gemalto. The related unit based in
Sophia Antipolis, France will continue to develop and market software
and service solutions compliant with the” MIFARE4Mobile” interface
specifications which manage MIFARE-based applications in Near Field
Communication (NFC) mobile devices. MIFARE is the leading contactless
technology globally, predominantly used within transportation networks,
ticketing and access management applications. This strategic move by the
two industry leaders aims to accelerate the global adoption of NFC
technology in existing contactless infrastructures and further promotes
the deployment of MIFARE. Adding this MIFARE4Mobile software further
strengthens Gemalto’s Trusted Service Manager (TSM) platform offer
linking transport operators, banks and mobile phone operators enabling
the mobile phone to be used with existing payment and contactless
ticketing infrastructure. The TSM notably makes the entire process of
downloading tickets and subscriptions onto the cell phone more efficient
and secure.

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PHT’s A-Claim Deploys Visa’s AuthorizeFirst

Preferred Health Technology and Visa have teamed to make Visa the preferred payment brand for PHT’s “A-Claim” medical payment solution. A key component of “A-Claim’s” system is Visa’s “AuthorizeFirst” payment process, which allows patients and providers to agree to pre-authorize a payment with a Visa card at the time of service, based on an estimated amount of the patient’s responsibility.
The “A-Claim” technology system enables health care providers to simply and securely verify insurance eligibility, adjudicate claims, and accept credit, debit or prepaid cards for payment at the time of service, or at a later date once the amount of the patient’s responsibility
has been determined by his insurer. “A-Claim” supports Medicare, Medicaid, TRICARE, the Federal Employee Program and Medicare Advantage health plans, as well as other private health plans.

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