MC REGIONS

MasterCard announced it is combining its global customer accounts, including products and solutions, with the regions where they are headquartered. In the U.S., MasterCard is expanding its business unit to include U.S.-based global accounts along with its U.S. Region. The new U.S. Markets unit will headed by Chris McWilton who was previously President/Global Accounts. Walt Macnee, previous President/Global Markets will become President/International Markets. Wendy Murdock, former Chief Product Officer, will now lead both Payment System Integrity and Franchise Development. Gary Flood will continue to be President/Global Products & Solutions but will be adding two new teams. Tim Murphy, former President/U.S. Region will head the new Core Products team. Joshua Peirez, former Chief Payment System Integrity Officer, will head the Innovative Platforms team.

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Ingenico On-Guard Solution is Unveiled

Ingenico is implementing a new open architecture security enhancement
that will encrypt cardholder data from the transaction terminal to the
merchant host. The new Ingenico “On-Guard” solution which incorporates
“MagneSafe,” a state-of-the-art security technology from MagTek, is
available for both large and small merchants. The software is remotely
downloaded into the transaction terminal without the need to swap the
PIN pad for key injection. The new solution secures the primary account
number and personal information on the magnetic stripe card by
encrypting selected information from point of entry (card swipe) to the
merchants host and or the processor directly. The new solution will be
available on the Ingenico terminals sold in North America.

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PERMATA & HYPERCOM

Milan-based Banco Santander has acquired former GE Money businesses in Germany, Austria, Finland, its credit card and auto businesses in the UK, and its credit card business in Ireland. In return
Banco Santander sold its corporate bank Interbanca to GE Capital. Interbanca has about 6 billion euros in assets, over 300 employees, 11 branches throughout Italy, and has 3,000 corporate clients. The deal represents the second largest acquisition made by GE in Italy after Nuovo Pignone. In the third quarter GE Money’s income declined 16% to $791 million while revenues rose 6% to $6.54 billion. During the third quarter GE Money concluded the $5.4 billion sale of its Japanese consumer finance business to Shinsei Bank and proposed a 30% stake in a credit card venture with Life Insurance Corporation. GE’s fourth quarter report is due out on January 23rd. For complete details on GE’s latest results visit CardData (www.carddata.com).

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Hilton Card Doubles Base Points

Hilton HHonors is now offering members
the ability to earn twice the number of “Base” points for stays at more
than 2,400 participating Hilton Family hotels around the world. HHonors members staying at
participating hotels during the promotional period will be able to earn
double Base points no matter which earnings style they choose. HHonors members choosing the Points & Points earnings
will earn 10 Base points and 20 bonus points
for every eligible dollar spent during the promotional period. Outside
of the promotional period, on an ongoing basis, members earning Points &
Points receive 10 Base points and 5 bonus points for every eligible
dollar spent. HHonors members earning Points & Miles during the promotional
period will earn 10 Base points and 10 bonus points for every eligible
dollar spent plus miles. Outside of the promotional period, on an
ongoing basis, members earning Points & Miles earn 10 Base points in
addition to their mileage earnings. To earn double “Base” points, HHonors members register at
www.HiltonHHonors.com/globaldoublepoints and then book and stay at any
participating Hilton Family hotel between January 6 and April 6, 2009.

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Starwood Card Offers 10K StarPoints

Starwood Preferred Guest has launched a tenth anniversary promotion, “Night After Night”, that rewards members
with 10,000 bonus Starpoints for every 10 nights stayed.
In addition to hotel stays, everyone can earn Starpoints by using the
Starwood Preferred Guest credit card by American Express which gives new
members 10,000 Starpoints with the first purchase and has no annual fee
for the first year. SPG Starpoints can be redeemed for free nights at more than 890
participating hotels and resorts worldwide and Award Flights on hundreds
of domestic and international airlines – all with no blackouts. Free
Night Awards begin at just 2,000 Starpoints, which means after 10 nights
under the “Night After Night” promotion, guests will have earned five
Free Weekend Nights. Starpoints can also be redeemed for gift certificates from SPG’s retail
partners and up to 20,000 Starpoints per calendar year can
be purchased by going to www.spg.com and there is no Starpoints
expiration date for active members.

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Bankruptcy Filing Surge Moderates in Dec

Monthly U.S. consumer bankruptcy filings rose 9% year-over-year in December, but down 15% sequentially. However, for the full calendar year bankruptcy filings were up 32% to 1,064,927. In December, filings hit 84,926 compared to 99,925 in November and 78,181 in December 2007. According to the American Bankruptcy Institute and the National Bankruptcy Research Center bankruptcy filings peaked during 2008 in October at 106,266. “Chapter 13” filings constituted 32% of all consumer cases in December, a slight decrease from November. According to the Administrative Office of the U.S. Courts bankruptcy filings jumped 34% in the third quarter compared to the year ago period, and increased 5% sequentially. The number of filings is the highest in more than two years and topped one million for the twelve month period ending September 30th, representing a 30% annual growth rate. During the third quarter total filings hit 292,291 compared to 276,510 for the second quarter and 218,909 one-year ago. (CF Library 12/16/08)

BANKRUPTCY FILINGS
Jan 08: 66,050
Feb 08: 76,120
Mar 08: 86,165
Apr 08: 92,291
May 08: 91,214
Jun 08: 82,770
Jul 08: 94,124
Aug 08: 96,413
Sep 08: 88,663
Oct 08: 106,266
Nov 08: 99,925
Dec 08: 84,926
TOTAL: 1,064,927
Source: ABI/NBKRC

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Credit Card ROA Sinks to a Six-Year Low

Credit card profits last year dipped to the lowest return-on-assets
percentage level since 2002, driven down by rising charge-offs and
higher operational expenses. The net pre-tax ROA for credit card
portfolios for 2008 is projected to be 4.24%, compared 4.65% for 2007,
and 4.60% for 2006. CA-based R.K. Hammer says its data shows that
charge-offs rose to 5.99% last year, compared to 4.70% for 2007 and
4.00% two years ago. Operating expense rose to 4.85% in 2008, from 4.65%
in the prior year and 4.70% in 2006. Total income yield declined 20
basis points to 18.10% and the cost of funds declined 128 basis points
to 3.02%. Hammer says the credit crunch, recent liquidity crisis, and
lower consumer confidence during the current recession have brought
enormous financial pressure on the banking/credit card industry; this
pressure is expected to continue for several years, further dampening
card earnings going forward. R.K. Hammer, a global card advisory firm,
has 17 of the top 20 U.S. issuers as clients, plus bank card issuers in
50 countries.

U.S. Bank Credit Card Profitability Historical
(VISA, MasterCard, and Discover)
ROA
1989 4.10%
1990 3.70%
1991 3.40%
1992 3.10%
1993 3.30%
1994 3.90%
1995 3.60%
1996 3.30%
1997 2.60%
1998 2.50%
1999 3.10%
2000 3.60%
2001 4.00%
2002 4.20%
2003 4.40%
2004 4.50%
2005 4.30%
2006 4.60%
2007 4.65%
2008: 4.24%
ROA-net pre-tax return-on-assets
Source: R.K. Hammer

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Citi & Cap One Execs Join the FRB Council

The Federal Reserve Board named ten new members to its “Consumer Advisory Council.” Among the ten new members: John Carey EVP/Chief Administrative Officer for Citi Cards and Andy Navarrete, SVP/Chief Counsel for National Lending and Regulatory matters for Capital One.
Edna Sawady, an economic inclusion consultant based in NYC was designated Chair and Michael Calhoun, President of the Center for Responsible Lending, was designated Vice Chair. The Council advises the Board on the exercise of its responsibilities under the Consumer Credit Protection Act and on other matters in the area of consumer financial services. The Council meets three times a year in Washington, D.C. The new members will serve three-year terms.

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CPI Card Group Names Quality Manager

CO-based card manufacturer CPI has hired Julie Hermanson as its new Quality Manager.
Hermanson has worked in the card industry since 1996 and brings extensive
experience to CPI. Her previous positions with other card manufacturers include Director of
Continuous Improvement, Director of Quality and Director of Quality &
Education. Hermanson was the first woman to receive the ICMA’s prestigious ACE
certification in 2007. This accreditation validates industry expertise
and distinguishes employees as experts in card manufacturing processes. She holds an associates
degree in commercial design and certificates in both Facilitation and
Lean Manufacturing Processes.

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Branded Marketing Hires an MC Exec

Prepaid MasterCard provider Branded Marketing has hired Sandro F. Oré,
previously with MasterCard, as Chief Marketing Officer.
Ore’s chief responsibilities will be to establish the
firm’s marketing function, develop strategic partnerships, expand the
company’s product portfolio and play a critical role in business
development. Branded Marketing prepaid card programs for
the U.S. Latino market include the “Pr1macard” family of
prepaid cards which is integrated into its “Pay-per-Spot” free international calling technology.
Branded Marketing’s family of stored-value products and services provide a
solution for reloadable, general spending that can be used by
the unbanked and under-banked for various financial reasons including:
payroll, commission, rebates or gift cards. The “Pr1macard Prepaid MasterCard” is issued by Palm Desert National Bank.

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HyperSafe Remote Key System is Unveiled

Hypercom has unveiled the industry’s first standards-based remote key
injection product that allows retailers to initiate on-site, in store
payment terminal key injection at the POS. The new “HyperSafe Remote Key
System” eliminates the need for off-site secure room key injections by
incorporating “PKI” to securely distribute symmetric “3DES” keys. The
system incorporates a Futurex “Excrypt KMS9000” key management server
with specific functionality developed for Hypercom.
The system is “X509,” “FIPS 140-2 Level 3” and “PCI DSS” compliant and
meets “ANSI x9.24” and Visa “PIN Security Guidelines” for remote key
management. Hypercom’s “HRKS” is available now with the “Optimum L4150”
and “L4250” multi-lane terminals as well as later versions of the
“Optimum L4100.”

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