OneCause & Chase Unveil National PTA Visa

The nation’s largest child advocacy organization has assembled a
general purpose credit card program that generates contributions to
local parent teacher associations. The National PTA, OneCause and
Chase Card Services this week will introduce the “PTA Visa Platinum”
credit card. Under the program the first time every new card is used,
PTAs will earn a one-time $20 contribution. After that, 1% of all Visa
purchases will be contributed to PTAs. There are more than 25,000 PTAs
across the country and more than five million members. Boston-based
OneCause integrates supporters, nonprofits and merchants to increase
contributions by blending social networking with social shopping and
contributions from everyday shopping. OneCause programs have contributed
more than $200 million dollars to thousands of nonprofit causes and
schools since 1999. In addition to the new “PTA Visa” credit card,
OneCause helps PTA supporters earn contributions when they shop at
participating merchants wherein contributions up to 20% per sales is
contributed back to the PTA.

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PCI SSC Offers QA for QSAs and ASVs

The PCI Security Standards Council has launched a QA program for
Qualified Security Assessors and Approved Scanning Vendors. The new
program was designed to provide QSAs
and ASVs with a set of requirements that helps ensure they provide
consistent, quality validation and assessment services to merchants and
service providers. Through the program, the Council and assessor
community will uphold the best interest of the assessor client; adhere
to validation requirements among the assessor company; adhere to
validation requirements among the assessor employee; maintain consistent
assessor procedures and reporting; interpret the PCI standards
appropriately as applicable to the client’s systems & environment;
remain current with industry trends and PCI SSC updates in the
assessor community; report all opinions as factual, documented and
defendable, and; maintain a positive relationship between the assessor
and PCI SSC. Participation in the program will be required for the
Council’s registered QSAs and ASVs, in order for them to retain the
ability to conduct PCI assessments.

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PreCash Names a New Operations/CFO Exec

TX-based repaid card and e-payment provider PreCash for the underbanked
community has named Steve Taylor, previously SVP, as
EVP of Operations/CFO. Taylor has been with PreCash since August of
2002, most recently serving as the
senior vice president of operations. Prior to that role he served as VP
of finance for three years. Taylor also served
as CFO for Assembletech, vice president of finance at TeleCheck Service,
audit manager with KPMG, and manager of planning, analysis and
international accounting at Vinson Elkins. Taylor is a CPA with a
Bachelor of Science in Accounting from Northern Arizona University.

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2008 Holiday Gift Card Sales to Slip 6%

An annual holiday season survey reveals that gift
card sales will decline about 6% this year to about $25 billion.
Obviously the economy is a factor as the research also showed that the
number of consumers who plan to purchase a gift card this holiday season
compared to last year has dropped to 53.5% compared to 56.6% for 2007. Gift card shoppers will be spending less overall on the cards: $147.33 for 2008 versus $156.24 one-year ago. The sixth annual National Retail
Federation’s “Gift Card Survey,” conducted by BIGresearch, also found
that the main reason shoppers plan to buy fewer gift cards this holiday
season was because they feel the cards are impersonal (23%), that they
would rather stretch their dollar by buying merchandise on sale (11%),
and because they do not want to buy a card with expiration dates or
added fees (10%). Other shoppers say they simply do not know which gift
card a person would want (8%), while a small number of people say that
they are worried the gift recipient will lose it (4%) or that the
retailer will go out of business (3%).

GIFT CARD SALES
2003: $17.24 billion
2004: $17.34 billion
2005: $18.48 billion
2006: $24.81 billion
2007: $26.25 billion
2008: $24.92 billion
Source: National Retail Federation

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Gift Cards Fees – a Labyrinth to Navigate

A new study has found significant variance among network-branded gift cards and retailer-branded gift cards. Bankrate discovered that gift cards from American Express cards don’t expire, but there is a $2 monthly service fee after 12 months; Visa cards expire after one year; MasterCard gift cards expire after 24 months, and Discover cards charge a $2.50 monthly maintenance fee if the card has not had any activity in more than 12 months and totally expires after 24 months, whether it has been used or not. To purchase network-branded gift card American Express and Discover gift cards cost $3.95 per card and MasterCard and Visa gift cards will cost around $4.95. Discover, Visa and MasterCard offer free First Class USPS shipping, but AmEx charges a $5.95 fee for the same service. Bankrate noted that the majority of retailers now allow consumers to redeem the gift cards in the store and online, a change from years past. In the latest survey, only CVS, Walgreens, Home Depot, Marshalls and TJ Maxx don’t allow cards to be spent online.

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NFCC Calls for Card Issuer Concessions

Even though the OCC last week shot down a proposal by The Financial
Services Roundtable and the Consumer Federation of America for a pilot
project that permits major credit card issuers to forgive up to 40% of
the amount consumers owe and allow borrowers to pay back the remainder
over time, the National Foundation for Credit Counseling is not giving
up in seeking concessions from top issuers. The NFCC is asking all
creditors to: set consumers’ monthly payments at 2% of their existing
balance, except in cases of extreme hardship where the payment rate
would be further reduced to 1.75% of the balance; waive late and over
limit fees; and trim interest rates to a level that would liquidate the
entire debt in 60 months or less. The NFCC says its counselors have
discovered that many consumers are simply not eligible for debt
repayment plans, sometimes short of eligibility by less than $100 per
month. Plus, over the last several years, plan concessions, including
payment amount, interest rate and program term, have been pulled back by
many creditors. The end result is consumers are left with no other
option but to walk away from their debt or file for bankruptcy. Last
week the OCC said that while it strongly encourages national banks to
work with distressed borrowers, the agency cannot approve a plan that
defers the timely recognition of losses, since that would compromise the
transparency and integrity of a bank’s financial reports and could lead
to a loss of public confidence in the banking system.

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Credit/Debit Rewards Face Restructuring

The weak economy, which is driving down spending and driving up losses,
coupled with potential regulation on interchange fees will likely
pressure a complete revamping of credit card and debit card rewards
programs. Rewards are the key driver of card acquisition, usage, and
retention and are largely funded by interchange fees. New research from
Boston-based Mercator Advisory Group suggests that credit card issuers
need to adjust to the new market by including merchant-funded rewards
programs; seeking out premium merchants; using data analytics for better
targeted marketing; and reviewing non-transactional rewards and programs
combined with non-traditional rewards components. Mercator also found
that forty of the “Top 50” banks currently have at least one debit card
reward program in place, and nearly half of these banks offer multiple
loyalty programs to debit cardholders. Most only reward signature-based
transactions. However, the overall effectiveness of debit card reward
programs in fostering customer loyalty is less clear.
Mercator says it is questionable how much weight customers put on a
debit reward program when choosing a new checking account. Nevertheless,
banks should continue to develop more innovative reward programs to
attract loyal customers and set programs apart from their competitors.
Sometimes, the most attractive reward is not necessarily redeemable by
points or cash back, but rather an efficient and pleasant customer
service experience.

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TMG Financial Services Names a New CEO

Card issuer TMG Financial Services has elected new board members and
named Jeff Russell President and CEO. Russell, formerly Executive Vice
President for TMGFS is accountable for the overall strategic direction,
and ultimately responsible for the
portfolio performance and the growth of the company overseeing
marketing, portfolio management, finance and business development. TMGFS
also expanded its board to include Bob Hoefer, CEO of Dupaco
Community Credit Union; Paul Lensmeyer, President/CEO of Ascentra Credit
Union; T.J. Marcsisak, CEO of Nishna Valley Credit Union; Warren
Mueller, CEO of MEMBERS1st Community Credit Union; and
Patrick S.Jury, President/CEO of the Iowa Credit Union League.
TMGFS manages 13 credit card portfolio
partnerships, serving nearly 9,000 accounts and $10 million in receivables.

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Arthur Blank Realigns Management Execs

MA-based Arthur Blank & Company announced that Stuart and Eric Blank
will join its parent American Banknote to focus on Strategic Planning
and Corporate Development, resulting in key changes to the organization.
Keith Goldstein, recently SVP of Operations was promoted to
President/COO. Jake Jacobs, previously SVP of
Sales and Business Development, was promoted to EVP of Sales and
Marketing, Paul Fournier was promoted to EVP/CFO, and Bob McCormick was
promoted to VP, Secure Card Operations and was also
named a member of Arthur Blank’s Executive Management Team.

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CARD DUALITY

The Commissioner of Competition reports that duality of credit card
issuing and acquiring in Canada is competitively appropriate.
Previously, the Competition Bureau had favored non-duality, which did
not allow financial institutions to issue or acquire competing card
brands. MasterCard applauded the finding. It has experienced the highest
increase in purchase volume, card growth, and number of transactions in
Canada, in a field that includes Interac, American Express, and Visa
over the past three years. A dual market will allow MasterCard to build
on this trend by providing greater opportunities through access to new
issuers and cardholders. The move to duality will allow improved
competition and innovation in Canadian payments for consumers,
businesses, and merchants as more financial institutions and their
customers gain access to leading-edge technology from MasterCard, such
as contactless payments, mobile payments, Multi Card corporate payments,
enhanced e-commerce payments, and an industry-leading global technology
platform.

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Black Friday & Cyber Monday 08 Not So Hot

New projections shows that overall sales for “Black Friday” (Nov 28th)
will only grow 1.2% this holiday season, while online sales for “Cyber
Monday” (Dec 1st) will increase 2.4% this year. BDO Seidman syrvey of
chief marketing officers at top retailers also found that CMOs are
projecting Internet sales to grow 8% and gift card sales to grow 5% this
holiday season. More than one-third of retailers expect gift card sales
to increase this holiday season over the 2007 holiday season, while half
expect gift card sales will be flat and 13% think sales will decrease.
CMOs expect 1that gift cards will account for 12% of overall holiday
sales. About 44% of retailers say that in-store purchases will be the
biggest driver of gift card sales this holiday season, while 34% cite
online purchases and 21% think third-party vendors (such as kiosks and
grocery stores) will drive the most gift card sales. However, CMOs
expect that comparable store sales will decrease this year by 2.7% and
overall sales will decrease by 2.8%.

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STUDENT DEBT

According to the recent “TD Canada Trust Young Adult Money Poll”, 42% of
Canadian students and recent graduates would
invest or save some of a hypothetical $10,000 windfall and 37% would use
it to pay off debt. Living with debt is a fact of life for many
students and recent graduates, with 22% of those surveyed have more than
$15,000 in debt, 18% have between $6,000 and $15,000 in debt and 23%
have less than $5,000 in debt with 37% of current Canadian students and
recent graduates having no debt. The current level of debt affects the
amount of money people are saving with 64% of those without debt
currently saving, versus 38% of those with $15,000 or more debt setting
aside funds. On a daily basis, 45% of students and recent graduates are
spending the bulk of their money on groceries. Entertainment and car
follow at 15% and 12% of money spent respectively. Those with less than
$5,000 in debt or no debt at all, are more likely to spend money on
entertainment.

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