Visa Launches a Processing Joint Venture in Asia

Visa has teamed with India’s Yalamanchili Software Exports to create a
joint venture to extend Visa’s processing capabilities outside the USA
and Europe. Singapore-based Visa Processing Service Pte. Ltd. began
operations this week. Visa says VPS complements Visa’s “Debit Processing
Service.” Initially, the JV will focus on providing financial
institutions, processors and other payment companies with prepaid and
debit processing solutions. Like Visa, VPS will also have capabilities
to provide credit, ATM, money transfer and private label processing, as
well as a range of payments services, including risk and fraud
management, mobile applications, loyalty and cardholder support.
Yalamanchili will provide its suite of “NARADA” software products – a
multi-currency, multi-language platform for debit, prepaid and credit
payment transactions; gateway services for international and domestic
networks; and acquiring applications, including ATM terminal driving.

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Reduced Credit Lines – Another Nail in the Coffin

Some industry analysts project that U.S. credit card issuers will trim overall credit limits by nearly one-third by mid-year 2010. With more than $5.5 trillion in currently available payment card credit lines, the impact on U.S. consumer spending could be a significant factor in driving the economy further into the ground. Over the weekend an Oppenheimer & Co. analyst suggested U.S. credit card issuers could pull as much as $2 trillion in credit card credit lines over the next 18 months. Indeed U.S. credit card issuers are facing a perfect storm as funding has dried up, losses are building and the good credits are hiding. New credit card-backed securities have ground to a halt since October. Interest rate spreads on AAA-rated tranches of ABS soared to levels well outside the range of historical experience, producing unusually high risk premiums. Last week, the Federal Reserve Board announced the creation of the “Term Asset-Backed Securities Loan Facility,” a facility that will support the issuance of ABS collateralized by student loans, auto loans, credit card loans, and loans guaranteed by the SBA. Credit card charge-offs have climbed to 6.27% in October, compared to 6.19% in the prior month and 4.89% one-year ago, according to CardData (www.carddata.com). Some ratings firms predict that charge-offs may exceed the 8% ratio in 2009. Last month Capital One reported that charge-offs for its U.S. Card business jumped for the third consecutive month in October, rising 20 basis points from the prior month. According to Chicago-based Mintel Comperemedia total estimated volume for credit card acquisition offers dipped to 1.34 billion in 3Q/08, compared to 1.54 billion in the prior quarter and 1.86 billion during 3Q/07. There is a consensus that credit card approval rates have tightened by as much as one-third during the third quarter.

U.S. CREDIT CARD CREDIT LIMITS
(includes general purpose and proprietary cards)
1999: $2.6 trillion
2000: $3.0 trillion
2001: $3.3 trillion
2002: $3.5 trillion
2003: $3.7 trillion
2004: $4.0 trillion
2005: $4.5 trillion
2006: $5.0 trillion
2007: $5.3 trillion
2008: $5.6 trillion
Source: CardData (www.carddata.com)

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NEOVIA & IDT

NEOVIA Financial Plc will acquire IDT Corporation’s European
Prepaid Payment Services Division for total cash consideration of US$ 15.05 million to be paid to IDT
Corporation on completion – this includes US$ 10 million of banking regulatory capital.
The agreement includes the purchase the entire issued share capital of IDT
Financial Services Holdings Limited and certain other assets which together provide prepaid MasterCard® products
in the UK market under the IDT “Prime Card” brand. Also included is the key strategic acquisition for
NEOVIA, adding new product lines and distribution based on the IDT Prime Card, accelerating the development
of NEOVIA’s prepaid Net+ card business and rapidly increasing the Company’s active
NETELLER e-wallet customer base. In combination with NEOVIA’s Net+ card services, the acquisition creates one of
Europe’s largest independent prepaid debit card businesses.

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New Do Not Call Amendments Take Effect

Under “Do Not Call” amendments adopted in August, effective this week, any permitted prerecorded message must provide the called consumer with an interactive means to opt out of receiving future calls from the seller or fundraiser using the prerecorded message. Moreover, the consumer must be able to opt out at any time while the message is playing by pressing a particular number or speaking a particular word. Once the consumer has opted out, his or her phone number must be automatically added to the in-house “Do Not Call” list of the calling seller or fundraiser. Then the call immediately must be disconnected so that the consumer’s line is cleared. The automated opt-out requirement is the first of two measures provided by the recent TSR amendment to protect consumers’ privacy at home. The second measure prohibits telemarketing calls that deliver prerecorded messages to anyone who has not agreed in advance to receive such calls. But until September 1, 2009, sellers may continue to use prerecorded messages in calling consumers with whom they have an established business relationship. After that date, sellers may use prerecorded messages only in calls to consumers who have expressly agreed in advance to receive them.

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VPS

Visa has teamed with India’s Yalamanchili Software Exports to create a joint venture to extend Visa’s processing capabilities outside the USA and Europe. Singapore-based Visa Processing Service Pte. Ltd. began operations this week. Visa says VPS complements Visa’s “Debit Processing Service.” Initially, the JV will focus on providing financial institutions, processors and other payment companies with prepaid and debit processing solutions. Like Visa, VPS will also have capabilities to provide credit, ATM, money transfer and private label processing, as well as a range of payments services, including risk and fraud management, mobile applications, loyalty and cardholder support. Yalamanchili will provide its suite of “NARADA” software products -a multi-currency, multi-language platform for debit, prepaid and credit payment transactions; gateway services for international and domestic networks; and acquiring applications, including ATM terminal driving.

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CREDIT CRUNCH

The slashing of credit card credit limits in the United States will inevitably lead to a curtailment in available credit in other countries. Over the past five years credit card credit limits in Australia have soared by more than 50% and in the United Kingdom by 15%. In the U.K. debit cards account for about 74% of all purchases on payment cards, according to APACS. British cardholders owe about US$50 billion on credit cards but have access to about US$237 billion in credit limits as of third quarter 2008. In Australia, credit cardholders owe about US$30 billion but have access to US$78 billion in credit card credit limits. In Australia credit cards account for more than 53% of all purchases on payment cards, according to the Reserve Bank of Australia. While the U.K. is debit driven, the reduction of credit limits could emerge as a major factor in the faltering Australian economy once repricing peters out. Research conducted for Australia’s The Daily Telegraph revealed at least five card providers increased their interest rates in the past three months, even though the RBA has slashed the cash rate by 2% since September. Not a single credit card provider passed on the entire two percentage points of official cash-rate cuts announced since September.

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OCT DEBT

Credit card outstandings rose in October for the third consecutive quarter by GBP 400 million. Year-on-year credit card outstandings (not seasonally adjusted) were up about 3.6%. According to the The Bank of England, net credit card lending rose to GBP 56.1 billion in October from GBP 55.7 billion in the prior month. The increase of GBP 1.3 billion in total net lending to individuals in October was below the increase in September and the previous six-month average. The twelve-month growth rate slowed to 4.7%, and the three-month annualized growth rate fell by 80 basis points to 1.2%. The increase of GBP 800 million in net consumer credit in October was higher than that in September, but below the previous six-month average. Net other loans and advances rose slightly in October. The annual growth rate of consumer credit slowed by 50 basis points, to 5.5%; the three-month annualized growth rate fell by 10 basis points to 4.0%.

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

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NuVision Teams for Discover Campus Cards

NuVision Networks has entered into a strategic alliance
with The Discover Network, Sutton Bank and Metavante to become the only
provider of Discover debit cards embedded within student body ID cards
at colleges and universities. NuVision Networks has entered into a
strategic alliance
with The Discover Network, Sutton Bank and Metavante to become the only
provider of Discover debit cards embedded within student body ID cards
at participating colleges and universities. The ID cards can
act as a “Good Funds” debit card, which is a card that will not affect
credit reporting status, will not incur fees, and can never be
overdrawn. They can monitor their account deposits; whether from
student payroll or parents, as well as their expenditures online and in
real-time, all without the need of bank or credit accounts. For every
deposit made by the institution; for refunds or student
payroll, the student will have access to one withdrawal at any ATM
without charge. The college or university can control how the card may
be used by placing restrictions on the card.

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CUP & CHINA POSTAL

China UnionPay Data Services has signed a credit card processing
agreement with China
Postal Savings Bank . CUP Data is China’s largest third-party processor
of bankcard accounts,
providing transaction processing, disaster recovery, data migration,
system integration and other value-added services for issuing banks in
China and has more than 50 signed
credit- and debit-processing client banks. China Postal Savings Bank
holds more than US$200 billion in deposits and
has more than 36,000 branches throughout every city in China. TSYS owns
a 44.5% equity stake in CUP Data, a subsidiary of China
UnionPay (CUP). CUP is the only payments network sanctioned by the
People’s Bank of China, China’s central bank, and has become one of the
world’s largest and fastest-growing payments networks.

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FNDS & MASTERCARD

Prepaid card issuer FNDS3000 has completed the certification
process with MasterCard in Africa with the launch of a MasterCard branded payroll card.
FNDS3000 has begun to serve the lucrative salary card market in
South Africa where an estimated 12 million employees remain unbanked, or
under banked with an aim issue approximately 1.2 million prepaid debit cards before the
end of 2009 in this market. FNDS3000 is a
financial transaction processing company providing prepaid debit card
and merchant processing solutions, gift cards, bill pay, prepaid cellular and other prepaid products.

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SI SERVIZI & TNS

Issuing and acquiring specialist Si Servizi has signed an agreement with Transaction Network Services for network
connectivity and payment transaction processing services.
The organization will use TNS’ services for dial up connectivity to
process payment transactions over the Public Switched Telephone Network.
Si Servizi will also utilize a special function of the TNSOnline
solution to allow its customers to monitor transaction activity through
terminal identification numbers rather than phone numbers.
The TNSOnline solution is a web based network management portal which
allows Si Servizi to monitor network devices, view transaction activity
in near real time, and provide problem management status.
Si Servizi is part of CartaSi Group, the leading card issuer and
acquirer in the Italian market. It provides companies, banks, and
financial institutions with electronic payment systems services and
solutions that support both front and back office activities.

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Consumer Debt Index Q3 Increases 30% Y/Y

The “Consumer Debt Index” for the third quarter of this year stood at 13.55, up more than 6.5% since the end of the second quarter and nearly 30% since the third quarter last year. Debt Settlement USA
reports that the increase in its “Index” was largely driven by the mortgage delinquency rate, which is up 16% over the past quarter, and nearly 87% in the past year. Additionally, the rate of consumer loans more than thirty days past due was up nearly 3.1% in the third quarter and increased by more than 16% since a year ago. The third quarter also saw a tightening of the consumer credit market, as consumer credit outstandings only grew by $8.1 billion, or about a third of a percent since the second quarter of this year. The “Index” is comprised of the Consumer Price Index, consumer credit outstandings, the mortgage delinquency rate, and the consumer loan delinquency rate.

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