e-Retailers Remain Optimistic Despite Bad Economy

An annual survey has found that the majority of online retailers
continue to be “cautiously optimistic” about how their businesses will
perform in 2008. About 35% of online retailers surveyed said they expect
their online business to perform better than expected in the next 12
months, while 33% anticipate their online business will perform the same
as expected. The 11th annual Shop.org online retail study, conducted by
Forrester Research, also found that 81% of online retailers reported
that their eCommerce business was profitable in 2007, and 75% were also
more profitable last year than in 2006. The Shop.org report notes that
online retailers are still challenged in creating cohesive customer
experiences among multiple sales channels. While many web teams continue
to operate in silos, apart from store and catalog teams, multichannel
retailers report that half of online customers also shop in the
company’s stores or through its catalogs, exemplifying why online
employees should have a vested interest in stores’ performance
and vice versa.

ONLINE SALES HISTORICAL
2004: $ 93 billion
2005: $114 billion
2006: $146 billion
2007: $175 billion
2008: $204 billion
Source: shop.org and carddata.com

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Heartland Payment and Union Bankshares Team

Heartland Payment Systems has partnered with VA-based Union Bankshares
Corporation to offer expanded services to business
customers of both companies. Heartland will offer credit/debit/prepaid
card processing and payroll solutions to UBSH’s clients and, in turn,
recommend UBSH’s business banking solutions to its customers. UBSH is
a $2.3 billion bank holding company. Heartland Payment Systems delivers
credit,debit, prepaid card processing, payroll, check
management and payments solutions to more than 250,000 businesses
nationwide.

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FTC Challenges the Reed Elsevier ChoicePoint Deal

The FTC is challenging Reed Elsevier’s proposed acquisition of ChoicePoint. The FTC says the $4.1 billion deal would be anticompetitive and in violation of the antitrust laws, as it would combine the two largest providers of electronic public record services to U.S. law enforcement customers. Through its LexisNexis division, Reed Elsevier provides electronic public records services to law enforcement customers in direct competition with ChoicePoint’s “AutoTrackXP” and “CLEAR.” Together, the two firms account for over 80% of the approximately $60
million U.S. market for the sale of electronic public records services
to law enforcement customers. To eliminate the anticompetitive effects of the proposed acquisition, the FTC said it wants Reed Elsevier to divest assets related to ChoicePoint’s “AutoTrackXP” and “CLEAR” electronic public records services to Thomson Reuters Legal within 15 days after the proposed acquisition is consummated.

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Bad Times Have Little Impact on Credit Card Offerings

The Federal Open Market Committee decided to keep its target for the federal funds rate at 2 percent.

Strains in financial markets have increased significantly and labor markets have weakened further. Economic growth appears to have slowed recently, partly reflecting a softening of household spending. Tight credit conditions, the ongoing housing contraction, and some slowing in export growth are likely to weigh on economic growth over the next few quarters. Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth.

Inflation has been high, spurred by the earlier increases in the prices of energy and some other commodities. The Committee expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain.

The downside risks to growth and the upside risks to inflation are both of significant concern to the Committee. The Committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Christine M. Cumming; Elizabeth A. Duke; Richard W. Fisher; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh. Ms. Cumming voted as the alternate for Timothy F. Geithner.

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Card Marketing and Social Responsibility Mix

Market research firm Research and Markets reports that 75%
of executives in the card space believe that “Social
Responsibility” will improve business performance in the long run.
The report, titled “Social Responsibility in Card Marketing and
Operations” revealed that 82% of card executive respondents believe that
companies themselves, not through regulation, will
embrace social responsibility as a core strategy over the next 5 years.
In Europe and the US, SR makes a
greater contribution to corporate reputations than brand image. In
developing countries, SR accounts for 49% of company image compared with
35% for brand image and only 10% for financial management.

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Discover Board Adds a Former Citi Executive

Discover Financial Services has named Thomas G. Maheras, previous with
Citi, to the Board of Directors and has declared a quarterly cash
dividend of $.06 per share, payable on Oct. 22, 2008, to stockholders of
record at the close of business on Oct. 1, 2008. Maheras was with Citi
for 23 years and has extensive banking and capital
markets experience. Prior to leaving Citi, he was chairman and co-CEO of
Citi markets and banking. Maheras was formerly chairman of the U.S.
Treasury Department Borrowing
Advisory Committee and a director of the Securities Industry and
Financial Markets Association.

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9% of U.S. Cardholders Now Have Contactless Options

A new report shows that nine percent of the U.S. population now have a contactless credit or debit card. Last year the number of open network contactless cards in circulation reached 35 million in 2007, nearly doubling from 19 million in 2006. The study commissioned by the Smart Card Alliance also showed that 92% of contactless users thought it was both fast and easy. Users had positive experiences at merchants too, reporting that 85% of cashiers knew how to accept contactless, and 84% saw contactless acceptance marks at the POS. Additionally, contactless users are paying with their contactless cards or fobs frequently, with over 22% using contactless payment more than six times per month.
An estimated 75,000 U.S. merchant location are now accepting contactless payment, including taxi cabs and transit operators.

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EZCORP to Acquire Value Financial Services

Cash lender EZCORP has entered into a new merger agreement to
acquire 100% of the equity ownership of Value Financial Services.
In the merger agreement, EZCORP agrees to exchange three-quarters of a
share of EZCORP’s Class A Non-voting Common Stock for each of the
approximate 6,646,000 shares of Value’s common stock and agrees to
pay cash consideration of $11.00 per share in lieu of EZPW shares for up
to 20% of the outstanding Value shares.The purchase price will be
approximately $115.9 million plus potential contingent payments. This
purchase price is comprised of $79.8 million paid to Value shareholders,
assumption of estimated debt of $35.3 million and estimated transaction
costs of $0.8 million. Assuming 20% of Value shares are acquired for
cash, the consideration paid to Value Financial Services shareholders
will be comprised of $14.6 million cash and the issuance of
approximately 3,988,000 shares of EZPW, depending on the closing market
price of EZPW on the day prior to closing plus any subsequent contingent
payments as described in the Merger Agreement. Value currently
operates 67 pawnshops: 60 in Florida, four in Tennessee and three in
Georgia. The transaction is expected to close by December 31, 2008.

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UNIVERSAL ID CHECK

Experian has unveiled a multi-channel authentication system that
will enable organizations to verify the identities of residents from 24
countries around the world. The new “Universal ID Check” is a single, hosted solution requiring only one installation into an organization in order to facilitate the identity checking of residents with which it has face-to-face, online, call centre or postal interactions across the countries covered. Countries covered by Universal ID Check are: Andorra, Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Luxembourg, Monaco, Netherlands, Norway, Portugal, Slovakia, Spain, Sweden, Switzerland, United Kingdom and USA.

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OK-Q8 & EDB

Petrol retailer OK-Q8 and EDB have signed a five-year agreement representing total
contract value over this period of around SEK 80 million for services related to card issuance and internet card
banking services. In addition, EDB and OK-Q8 have agreed to investigate
opportunities to expand the scope of the contract into other areas
during the five-year period. The contract provides for EDB to to issue all cards for OK-Q8
Finance’s customer portfolio in the Swedish
market. The cards currently issued to these customers can only be used
for payments at OK-Q8 and its partners, totalling 900 locations. In
addition, OK-Q8 will begin to issue a new OK-Q8 VISA card, which will
allow its customers to use their cards throughout the Visa network. EDB
has developed a new state-of-the-art card services platform to provide
the basis for its products and services in this area, and OK-Q8 will be
the first of EDB’s customers to start using the new platform.
OK-Q8 is one of the largest payment card issuers in Sweden, with 1.3
million customers and 1.6 million cards in use.

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VOCALINK & SQUID

Transaction service provider VocaLink has teamed with sQuid eMoney to
develop a contactless prepaid smart card alternative to the debit and credit card networks
for sub GBP 10 tap and go transactions. Deploying existing modular technologies, the simple and proven
tap-and-go between card and reader delivers a significantly faster
transaction than chip & pin. sQuid has a multi-purse capability and is compatible with ITSO (transit)
standards. sQuid operates enhanced security between the card terminal
and payments engine, and allows additional functions to be delivered to
the card holder and the retailer. This enables a sQuidcard to be used
not only for low value purchases such as a newspaper, cup of coffee and
a sandwich etc. but also as a pre-pay transit card.
Security is enhanced because stored value
is retained within the payments engine, not the card.

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