Citi Launches a Thank-You Promotion

Citi is offering members of its “ThankYou Rewards Network” the chance to put their creativity into wallets around the world with the launch of the “ThankYou Gift Card Design Contest.” Between May 1st and May 30th, consumers will be invited to vote for their favorite design. The first-prize winning design, along with the second- and third-place designs, who will win 50,000 and 25,000 points, respectively, will be announced on ThankYou.com after June 18th. The winning design will become the face of a “ThankYou Gift Card” redeemable by millions of “ThankYou Members” nationwide. The winner will join the company of internationally renowned artist and designer Karim Rashid, who designs the current “ThankYou Network” gift cards which will continue to be available in the rewards collection. In addition to having his or her design on a gift card, the top winner of the contest also will receive 100,000 “ThankYou Points.”

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CASH USE

A survey commissioned for Visa Europe by Cards International indicates a
19.9% increase in the volume of cash withdrawals in 2008 compared to 2007.
These figures suggest consumers are more dependent on cash as a payment
method in an economic downturn and challenge the assertions from card
companies that we are soon to be a cashless society.
In an economic climate where anxious consumers are cutting back on
credit card usage, it was anticipated that debit cards would enjoy
increasing volumes (if at a slower rate than before), and this has been
proved by figures from the payment networks and industry bodies
worldwide. But one consequence of the rise in debit card usage is that
levels of cash usage and ATM withdrawals have grown sharply over recent
months – which will undoubtedly be viewed as a setback for banks and
payment networks.

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GSMA Selects Visa for Mobile Money Transfer

GSMA has selected Visa as a provider for mobile money transfer solutions globally, and is working to execute an agreement to formalize participation terms. Visa is already a leading provider of money transfer solutions with active programs in 14 countries in Europe, the Middle East and Asia. A key aspect of the collaboration between Visa and GSMA will be the creation of standards for mobile money transfer, mobile payments and related services. This collaboration will allow carriers and financial institutions to deploy mobile payments more rapidly and limit market fragmentation. Standardization also benefits consumers by promoting interoperability among carriers and institutions, ensuring a consistent and reliable experience and promoting faster adoption of the technology. Recently, as part of the GSMA “Pay-Buy-Mobile” initiative, Visa and several GSM mobile network operators launched mobile payment trials in Canada, Switzerland, France and the UK, and completed successful trials in Australia, Malaysia and Taiwan, which are all designed to advance the development of mobile payments at the point of sale. Importantly, many of these trials embed the Visa payment application into the SIM card enabling Visa account holders to easily switch the application from one handset to another.

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DEC DEBT

Growth in credit card debt flattened in December, rising less than A$60
million sequentially. However, credit card volume remained solid, rising
more than 12% to A$21.5 billion. Year-on-year credit card debt growth
has slowed to 6%, compared to 8% in the prior month and 10% one-year
ago. According to the Reserve Bank of Australia credit card balances hit
A$45.3 billion in December versus A$42.7 billion one-year ago. Credit
limits now stand at A$123.0 billion, compared to A$114.4 billion in
December 2007. According to the Reserve Bank of Australia there are
currently 14.3 million credit card and charge card accounts in
Australia, compared to 13.9 million one-year ago.

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Rare Method Wins an Award for ProPay

UT-based card processor ProPay has contracted Rare Method to design an interactive marketing website.
Rare Method and ProPay will focus primarily on
building the ProPay brand, and raising awareness of ProPay and its
products by developing and implementing an integrated, online marketing campaign.
ProPay leads the market in providing simple, secure and affordable credit card processing
and electronic payment services for businesses ranging from the small,
home-based entrepreneur to multi-billion-dollar enterprises as well as the payment market
in the development of end-to-end data security solutions
and alternative payment options that can significantly reduce risks and
operating costs. ProPay was recently added as the alternative payment system for eBay.

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Asta Funding Settles Financial Issues

Asset recovery manager Asta Funding has reached an agreement with its
lenders and amended terms of their banking arrangements and will close
its PA-based call center. The Company expects to file its Annual Report
on Form 10-K for the fiscal year ended September 30, 2008 on February
20, 2009,
with the Report on Form 10-Q for the quarter ended December 31, 2008 to
follow shortly thereafter. Upon filing the Report on Form 10-Q the
Company will be up to date with its filing requirements with the
Securities & Exchange Commission. Total debt levels as of February 18,
2009 were approximately $170
million consisting of approximately $54 million due to its consortium of
banks under its revolving line of credit, and
approximately $116 million due to the Bank of Montreal for its facility
to finance Palisades XVI. This compares to debt at September 30, 2008 of
$213 million consisting of $84 million due on the Credit Agreement and
$129 million due to the Bank of Montreal. Total debt on December 31,
2007 was approximately $325 million. With the impending call center
closing, Asta has begun the process of moving
all accounts to its headquarters in New Jersey and could realize an
annual savings of approximately $1.5 million. The Company will recognize
a one-time charge of approximately $250,000 in the fiscal second quarter
relating to this closure. In addition, we anticipate, impairments of
approximately $21.4 million offsetting income in the first quarter of
fiscal year 2009.

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Payroll Taxes Loom Large in Advances

FL-based Business Cash Advance is providing merchants the needed cash to
pay business and payroll taxes.
Business Cash Advance.com pays directly to the IRS on behalf of
businesses and creates an automated system to retain a small percentage
of credit card receivables until the advance is fully reimbursed. The
company offers quick approvals, fast funding and no up-front fees or
closing costs to businesses that qualify based on simple criteria, which
includes that the business must be at least one-year old, accepts credit
cards and processes a minimum of $4,000/month. Business cash advances
are particularly useful for locations with high
transaction volumes focusing on products/services that are rendered on
site at the time of the charge. Restaurants, liquor stores, fast-food
outlets, parts companies, retail shops, dentists, florists, salons,
veterinarians and warehouse/storage companies among many other
industries are among the clients of Business Cash Advance.com.

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Winn-Dixie Offers NetSpend Cards

Prepaid card provider Netspend will offer a reloadable prepaid debit
card through FL-based Winn-Dixie grocery retailer.
Winn-Dixie will be a
distributor of general purpose prepaid reloadable debit cards developed,
marketed and processed by NetSpend as an agent of TX-based Inter
National Bank, the issuer of the cards.
NetSpend launched its prepaid reloadable debit card purchase and card
reload services in 54 Winn-Dixie stores on November 11, 2008, and will
be expanding to all of its 520 stores during the first half of 2009.

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U.S. Card ROA Sinks in the First Quarter

The return on credit card average assets plunged below 1.00% in January. This marks the fourth consecutive month of decline, according to CardData (www.carddata.com). Pre-tax profit for the U.S. credit card industry declined 2.7% in 2008 to $39.6 billion driven by rising expense streams, especially charge-offs. During 2008 estimated industry revenues increased 5.6% to $169.0 billion while estimated expenses rose 8.4% to $129.4 billion. According to R.K. Hammer, 2008 expense streams include $45.3 billion for operating expense, $28.2 billion for blended cost of funds and $55.9 billion in net charge-offs. Charge-offs rose 36% in 2008 and represent 43% of the expense stream. On the revenue side, interest income rose 4.4% to $101.4 billion and fee income increased 7.3% to $67.6 billion. Hammer notes there have been eight recessions, eight panics, and three depressions in the U.S. since 1797. The recessions averaged 1.4 years in length. The Hammer econometric model indicates the current economic downturn began late in 4Q/07 and is not expected to run its course until at least mid-3Q09, placing further pressure on card issuer/bank revenues and profits for the next 9 months or longer.

U.S. ROA
Jul 08: 2.00%
Aug 08: 1.48%
Sep 08: 1.11%
Oct 08: 1.04%
Nov 08: 0.95%
Dec 08: 0.88%
Jan 09: 0.86%
Source: CardData (www.carddata.com)

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VPS/RedFin Network To Power Blackstone

Secured Financial Network has signed an agreement with FL-based
Blackstone Merchant Services to power Secured’s payment portal through
the branding of the “RedFin”
proprietary Internet Payment Gateway network. Secured Financial Network
offers a full spectrum of secure and
reliable processing for e-commerce, mobile and traditional business
transactions. Through its wholly owned subsidiary Virtual Payment
Solutions, it provides
reliable and robust solutions to e-Commerce and mobile commerce using a
proprietary Internet Payment Gateway known as the “RedFin Network,”
Blackstone provides solutions to local, national and
international companies seeking to maximize their full potential – from
calling cards, POS terminals, merchant processing, vending machines to
Touch-n-Buy prepaid kiosks.

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