Cap One’s U.S. Card Profits Slide 43% in Q2

Capital One’s second quarter U.S. credit card profits decreased 43% year-on-year to $340.4 million. However, COF’s revenue margin rose 29
basis points year-on-year to 14.96%. Purchase volume in the U.S.
declined slightly to $26.7 billion, compared to $26.9 billion one-year
ago. Additionally, the number of U.S. card accounts declined by more
than one million since the prior quarter to 38.4 million. U.S. managed
card outstandings were $68.1 billion for 2Q/08 compared to $67.4 billion
in the previous quarter and $66.5 billion for 2Q/07. The managed
delinquency rate (30+ days) for U.S. credit cards was 3.85% for the
second quarter, compared to 4.04% for 1Q/08 and 2.98% for the second
quarter of 2007. The net charge-off rate for U.S. credit cards was 6.26%
for the second quarter, compared to 5.85% for the first quarter and
3.56% one-year ago. Cap One says its U.S. Card business remains cautious
on loan growth and continues to focus its marketing and originations on
the parts of the U.S. Card market that the company believes provide the
best combination of risk-adjusted returns and losses. For complete
details on Capital One’s second quarter performance, visit CardData
([www.carddata.com](http://www.carddata.com)).

COF U.S. CARD NET INCOME
2Q/07: $592.9 million
3Q/07: $626.8 million
4Q/07: $498.7 million
1Q/08: $491.2 million
2Q/08: $340.4 million
Source: CardData (www.carddata.com)

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PROMISEC & VIGITRUST

Promisec server security and compliance provider has partnered with the
provider of PCI DSS security assessment and consulting services,
VigiTrust, to provide “Initial Security Assessment of the Payment Card
Industry Data Security Standard (PCI DSS).” In doing so, the “Initial
Security Assessment of the PCI DSS” combines the assessment and
enterprise asset discovery resources of the partnership organizations to
ultimately help merchants and payment service providers engage in PCI
DSS compliance strategies. Moreover, this development provides maximum
security investment to increase employee productivity and reduce
security breaches. VigiTrust provides security assessments and solutions
to government departments and agencies in North America and Europe while
Promisec, Inc offers internal network security solutions for a layered
approach to corporate network security for organizations around the world.

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PEONY PARKSON VISA

ICBC has launched its “Peony Parkson” Visa EMV “payWave” credit card
with a customer loyalty offering from Giesecke & Devrient (G&D) China.
Offering both contactless and contact-based payment functionality, the
new card is being issued by the Parkson retail group of China to provide
cardholders with loyalty points features and uses a chip-embedded in the
card to comply with the EMV standard. G&D will issue the credit card to
several tens of thousands of bank and retail customers this year, is
based in Munich, Germany and generated a 2007 annual revenue of over
EUR1.5 billion.

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MATICA AMERICAS

Card issuance machine designer and manufacturer, Matica, has formed
Matica Americas as a 50-50 joint venture between the organization
and its U.S. partner, scheduled to open this month. In doing so, Matica
will provide sales, service, parts, supplies and customer support from
its new Minnesota location and, along with its venture partner, has
committed to capital contributions of up to $1,500,000 payable in
monthly installments over three years. In 2007, of the 19.4 billion
cards manufactured globally, the U.S.represents 47% of the total card
personalization industry and, as far as Matica is concerned, is
subsequently a critical market in which to establish a physical
presence. Matica provides its card personalization and card mailing
systems in approximately 100 countries for numerous types of cards and
is based in Milan, Italy.

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Chase Credit Card Profits Sink 67% in 2Q/08

J.P. Morgan Chase reported that second quarter credit card profits
declined 67% year-on-year to $250 million, and collapsed by 59% from the
prior quarter. End-of-period managed loans of $155 billion increased by
5% year-on-year, but declined 3% from the first quarter. Charge volume
of $93.6 billion increased by 6% from 2Q/07. Net accounts opened during
the quarter were more than 3.6 million. Merchant processing volume of
$199.3 billion increased 11% compared to the year-ago quarter. Managed
net revenue was $3.8 billion, an increase of 2% from the prior year but
down 3% from 1Q/08. Net interest income was $3.0 billion, up 2% from
2Q/07. Chase says the increase in net interest income was driven by
higher average managed loan balances, an increased level of fees and
wider loan spreads. However, these benefits were offset largely by the
effect of higher revenue reversals associated with higher charge-offs.
The managed net charge-off rate for the quarter was 4.98%, up from 3.62%
in the prior year and 4.37% in the prior quarter. The 30-day managed
delinquency rate was 3.46%, up from 3.00% in the prior year and down
from 3.66% in the prior quarter, reflecting seasonal patterning. For
complete details on Chase’s second quarter performance, visit CardData
([www.carddata.com](http://www.carddata.com)).

JPM CHASE HISTORICAL ($billions)
2Q/07 3Q/07 4Q/07 1Q/08 2Q/08
EOP Outstandings: $148.0 149.1 157.1 150.9 155.4
Charge Volume: $ 88.0 89.8 95.5 85.4 93.6

Source: CardData ([www.carddata.com](http://www.carddata.com))

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CONTACTLESS RECEPTION

Despite having cost millions in development and marketing, contactless
payment solutions are not being met with warm reception by the majority
of consumers. According to the latest market research report
conducted by Auriemma Consulting Group, consumers need
additional encouragement to acquire a new card with only 3% of the
population being familiar with contactless technology and 23% of
consumers not showing comfort with contactless cards due to the risk of
identity theft. Additional findings show consumers were 7 times more
likely to want a contactless card after having read the product
description while 63% of consumers more likely to use it because of its
“cool new technology” and 67% more likely to use it because of its “ease
of use.” These findings were compiled by ACG Research through data
generated from a survey of 508 credit card users in 1Q/08.

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Alliance Data Systems Q2 Revenues Rise 5%

Dallas-based Alliance Data Systems reported that second quarter revenue
increased 5% to $507.2 million and income from continuing operations
increased 20% to $61.9 million for the second quarter. Loyalty Services
achieved the strongest quarter in its history, delivering $53.5 million
in adjusted EBITDA, an increase of 66% from the prior year period.
Driving this performance was a 31% increase in revenue to $200.0 million
in the second quarter due to strong double-digit growth in both “AIR
MILES” reward miles issued and “AIR MILES” reward miles redeemed. For
the second quarter, Epsilon
Marketing Services posted year-over-year adjusted EBITDA growth to
$26.4 million, highlighted by a continued double-digit organic growth
rate. Revenue grew by just over 5% for the second quarter to $115.4
million. For the second quarter, Private Label Services revenue
increased year-over-year approximately 5% to $95.8 million. For the
second quarter, Private Label Credit revenue declined year-over-year 9%
to $187.6 million due exclusively to the loss of Lane Bryant. For
complete details on ADS’ latest performance visit CardData ([www.carddata.com](http://www.carddata.com)).

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EQUENS SE

Equens payment processor has been converted to a Societas Europaea and
is now designated “Equens SE,” a direct result of the mergers of Equens
Nederland B.V. and the German Equens Deutschland AG, reflecting the
organization’s European payments market ambitions. With the SE title, a
legal form under the laws of the European Union, Equens is permitted as
an internationally operating company to transform into a European public
limited-liability company governed by a uniform European body of law
based on the EU directive. As the first significant operational SE in
the Netherlands, Equens is to establish an SE Works Council to implement
a stable, future-orientated international co-determination regime which
will lead to cost savings at the operative level. Equens payment
processor oversees an annual volume of 7.3 billion payments and 2.1
billion POS and ATM transactions for more than a 15% euro zone market share.

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Mercury Payment Systems Receives Awards

Mercury Payment Systems’ reseller partner Delaware Business Systems has
received the first annual Innovative Solution Award by Retail Solutions
Providers Association and Vertical Systems Reseller magazine.
Bill Fultz, Operations Manager of DBS, received the honor in the
credit/processing category for his
application of “MercuryAlerts” e-notification technology.
After just one week of using “MercuryAlerts”, Fultz corrected 10
merchant payment processing issues, saved merchants thousands in
processing fees, and deposited over $70,000 in unclaimed funds. Fultz
also followed a trail of unusual activity flagged early on by
“MercuryAlerts” to uncover two fraud cases of managers abusing their POS
system access to issue credits to their personal debit cards.

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JUNIPER NFC

Forecasts concerning NFC mobile payments project the gross transaction
value of payments made using the contactless technology will exceed
$75billion globally by 2013, according to Juniper Research. The
organization also found global annual gross transaction value will grow
over 5 times between 2011 and 2013, concluded 2009 will see limited
numbers of NFC devices shipped, 20% of cell phones will have NFC
capability by 2013 and the combination of the Far East, North America
and W. Europe markets will represent nearly 90% of the $75billion p.a.
market. The research analyzed six year regional forecasts of NFC mobile
payments using data on device shipments, subscriber take-up, transaction
sizes and case studies within the markets while Juniper Research
provides research and analytical services to the global hi-tech
communications sector.

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HealthTransaction Network Picks Hypercom

Hypercom’s “HBNet” transaction transport service and its “Optimum T4220”
card payment terminals have been selected by NY-based healthcare
service HealthTransaction Network. HealthTransaction Network connects
providers and consumers via HBNet’s electronic transaction transport
service that quickly, securely and efficiently processes transactions
between the parties. The Network uses a shared processing
infrastructure, stored value cards and Hypercom’s “Optimum T4220
Ethernet and Dial” back-up card payment terminals.

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MAY DEBT

Credit card debt continued its rebound in May, hitting a record A$44.2 billion, after stagnating for most of this year. Credit card volume also gained momentum again in May increasing to A$18.3 billion. Year-on-year credit card debt has increased 10%, compared to May 2007, while card volume is up 6% year-on-year. However, credit card volume has been slowing over the past year due to merchant surcharges imposed on consumer card transactions. Last month credit card volume was up 16% year-on-year. Credit card limits reached a new high at A$118.8 billion, marking the 21st 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 13.5 million one-year ago.

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