JULY DEBT

Credit card debt flattened in July, dipping slightly to A$44.4 billion, after hitting a record A$44.5 billion in the prior month. However, credit card volume rebounded strongly in July hitting A$19.0 billion, a 4% sequential gain. Year-on-year credit card debt growth has slowed to 8%, compared to 10% in June. Card volume is up 9% year-on-year. However, credit card volume has been slowing over the past year due to merchant surcharges imposed on consumer card transactions. Three months ago credit card volume was up 16% year-on-year. Credit card limits reached a new high at A$120.7 billion, marking the 23rd consecutive month of A$100+ billion. According to the Reserve Bank of Australia there are currently 14.2 million credit card and charge card accounts in Australia, compared to 13.7 million one-year ago.

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Expedited Payments Will Drive Bank Fees

A new research report projects that financial institutions must
incorporate expedited payments now or risk losing $5 billion in fees to
third party billers. Last year 38% of U.S. consumers went online and 32% used the phone to make rush payments, compared to 17% for in-person payments and 8% for overnight delivered payments. Javelin Strategy & Research found that nearly 32 million consumers are active users of
online banking bill payment in the U.S., and the volume of expedited
bill payments will reach as high as 400 million transactions by 2013.
The report also highlights the implications for mobile expedited
payments, citing that currently 45% of existing mobile bankers use
expedited payments at least once a month and certain age groups are
poised to drive mobile channel growth. Javelin notes that nearly one-third of all consumers have engaged in expedited payments
activity within the past year, a substantial portion of the consumer
population and a solid base from which to build transaction volume for service providers.

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Elan Acquires Columbia River Bank Portfolio

Elan Financial Services has acquired the credit card portfolio of OR-based Columbia River Bank with balances
totaling $7.0 million. Under the terms of its agreement with Elan, Columbia River Bank will
continue to sell and support credit card products and services and the
credit cards will continue to be issued under Columbia River Bank’s name to expand its
overall credit card customer base by offering a more competitive product
line to both existing and new markets. The enhanced product menu will
include both a cash-back rewards program and cards specifically designed
for the bank’s business clients. The agreement also includes strong
marketing support from Elan. The sale component of the transaction is expected to result in a 2008
pre-tax gain of approximately $770,000.

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FDC Deploys STAR Kiosks at the Nevada’s DMV

First Data has installed STAR Networks self-service kiosks at the Nevada Department of Motor Vehicles. Payment through the STAR Network is now featured on the DMV’s self-service kiosks as well as at DMV counters. There are a total of 26 kiosks, 19 kiosks in 13 DMV offices and seven at partnership locations for drivers who use their debit cards to pay registration fees, driver history records and other fees. DMV customers also can use their debit cards at the counter to pay since PIN pads have been added at more than 300 DMV payment windows across the state. The Nevada DMV and FDC’s STAR ATM and Debit Network
have been working together on a pilot program since 2006 when the
acceptance of debit card payments was introduced for Nevada DMV payments via the Internet.

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Economic Indicator Index Slips in August

The Conference Board reported that the “Composite Index of Leading
Economic Indicators” declined 50 basis points in August, following a 70
basis points decline in July and a 10 basis points increase in June. CB
says the good news on lower gas prices is more than offset by renewed,
even intensified, financial market turmoil. The economy right now is so
slow that it doesn’t have much cushion for shocks like the bailouts and
bankruptcies. The economy is struggling to find a bottom and eventually
begin to gather momentum for a recovery. Financial market turmoil
complicates the process, limiting access to credit. The indicators show
little reason to expect better economic conditions over the next few
months. There may not be any signs of improvement until well into the
second half of 2009. Until then, a very slow economy is the most
positive expectation.

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Merrill Lynch to Boost BofA Debit Business

Bank of America’s newly announced acquisition of Merrill Lynch will
further boost the bank’s debit card dominance in the USA. At mid-year
BofA’s debit card volume leaped nearly 15% to $54.3 billion.
New research from TowerGroup finds that the BofA/Merrill deal also gives
the bank a special edge in the high-net-worth card business. Merrill
Lynch’s card rewards program targets customers with at least $500,000 in
assets, raising the cardholder’s standing based on cumulative purchase
thresholds. TowerGroup says that in the face of this week’s move by
BofA, large card issuers with top-tier global private banking groups –
including Citi, JPMorgan Chase, and Wells Fargo – will need to reassess
their offerings to ensure relevance. But it is ultimately American
Express, which currently partners with Bank of America on its high-end
“Accolades” card, that is likely to feel the most pressure.

BOFA DEBIT CARD VOLUME
(purchase dollar volume)
2Q/07: $47.4 billion
3Q/07: $47.3 billion
4Q/07: $51.1 billion
1Q/08: $50.1 billion
2Q/08: $54.3 billion
Source: CardData (www.carddata.com)

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Bill Me Later Tops 1K in Merchant Deals

MD-based alternative payment provider Bill Me Later has hit the mark of
1000 partners within its merchant network.
Retailers select Bill Me Later to simplify the payment experience to
capture lost sales, increase customer loyalty and maximize profits by
driving incremental sales and higher order values. Furthermore, the Bill
Me Later customer is online, educated and affluent, making them the most
sought
after demographic in the nation. Bill Me Later has engineered a
next-generation payment technology to
augment the rapid innovation in ecommerce, offering a convenient and
secure way to buy online, in call centers and via automated phone
service without credit cards. Bill Me Later works closely with retail
and travel merchants to provide flexible financing and cost-saving
offers available exclusively to Bill Me Later customers.

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Chase Helps United Airlines’ Cash Crunch

Chase and United Airlines have renewed their co-branded credit card program. UAL and Chase also inked their credit card processing agreement with Chase/Paymentech. The deal will boost United’s liquidity by approximately $1.2 billion, including $1.0 billion in the short term and an additional $200 million over the next two years. Under the terms of the deal, United has received an additional $600 million from Chase in consideration for the advance purchase of frequent flyer miles and for extending the agreement. As part of the transaction, United has granted a security interest in various assets, including specified intangible “Mileage Plus” assets. Additionally, with its amended credit card processing agreement, United realizes a return of more than $350 million of restricted cash back to the company compared to its prior reserve requirement.

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Former Chase Executive Joins iovation Board

OR-based device reputation provider iovation
has selected Harry DiSimone,previously with JPMorgan Chase, to join the Board of Directors.
During his 30-year tenure at JPMorgan
Chase, DiSimone held various senior level positions including COO of
Chase’s credit card business, International Consumer business executive,
Retail Bank CMO, and Personal Financial Services business executive. At
the time of his retirement from the bank in February 2008, Harry led
Chase’s Retail/Private Label Business operating card and loyalty
programs for some of the largest retailers in the U.S. and Canada, while
also representing Chase’s interests in Chase Paymentech, LLC, the
world’s largest merchant acquirer. DiSimone has served as a board member, chairman, and director for
several key financial industry institutions and committees including
Chase Paymentech, the Direct Marketing Association, NYCE Corporation,
the MasterCard U.S. Business Committee, Visa Global Advisors, and the
New York Clearing House Strategy Committee. He is currently the founder
and CEO of Commerce Advisors, Inc., a consulting and advisory services
firm focused on the Retail Financial Services and Payment Industries. iovation performs more
than 3 million daily fraud checks for its customers and will process
over a billion reputation queries in 2008.

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AmeriDebt and DebtWorks Settle with the FTC

The FTC and former MD-based AmeriDebt have signed a settlement that returns $12.7 million to consumers nationwide. Andris Pukke and his companies, AmeriDebt and DebtWorks, also agreed to return an additional $7 million to consumers as a result of class-action settlements with the defendants and related credit counseling agencies. About 287,000 AmeriDebt consumers have been mailed redress checks. Consumers who qualified for redress, a total of about 460,000 consumers, obtained a DMP from one of 11 credit counseling agencies serviced by DebtWorks between January 31, 1998 and October 7, 2004.

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eBillme Raises $12MM in New Funding

DE-based alternative online payment platform eBillme has
raised $12 million in a recently completed round of financing.
The financing was led by the global venture capital
firm Canaan Partners, as well as existing investor Celtic House Venture
Partners, investors in software and Internet services companies. Maha
Ibrahim, General Partner at Canaan Partners, and Pierre-André Meunier,
P.Eng., Partner at Celtic House, will join eBillme’s Board of Directors.
eBillme transactions occur securely, bank to bank, with no personal or
financial information required or transmitted over the Internet. Because
shoppers pay directly from their online bank account, they don’t release
any financial information online.

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