Creditcards.com Pulls the Plug on its IPO

Austin, TX-based Creditcards.com has pulled the plug on its proposed $100 million+ IPO filed in August, citing current public market conditions. Besides a tough IPO market in general, the online service has been facing increasing costs and lower response rates due to the tightening in the U.S. consumer credit markets. Last year, the Company generated $63.3 million in revenues, largely derived from running targeted Google ads, spent $31.1 million for sales and marketing but only produced a $3.5 million profit. In 2006, Creditcards.com posted $42.9 million in revenues, spent $19.8 million for sales and marketing, and produced an $18.4 million profit. According to comScore, the Company attracted an average of approximately 976,000 unique visitors per month to its Website during 2007. The Austin Ventures company was headed by Elisabeth DeMarse, former CEO of Bankrate.

CREDITCARDS.COM
Revenues Profit
2004: $11.5 million $ 5.8 million
2005: $21.9 million $ 9.8 million
2006: $42.9 million $18.4 million
2007: $63.3 million $ 3.5 million
Source: CardData (www.carddata.com)

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Heartland Payment Completes ADS Network Deal

Card processor Heartland Payment Systems has completed the acquisition of the Network Services business of Alliance Data Systems Corporation for $77.5 million in cash. Heartland believes the acquisition will be non-dilutive to earnings in 2008 and accretive thereafter. SunTrust Robinson Humphrey served as financial advisor, and Womble Carlyle Sandridge & Rice served as legal advisor for Heartland in connection with this transaction.

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Veracity Payment Names Lambert as a New VP

Atlanta-based Veracity Payment Solutions has appointed Robin Ann Lambert, previously with Union Bank, as VP, Community Bank Business Development, West Region. Lambert started her career with First Interstate Bank in 1975, holding various leadership roles and moving up the ranks as Senior Vice President of Credit and Risk Management, until the bank was acquired by Wells Fargo in 1996. Lambert’s successes also include the implementation of private-label programs and the launch of First Interstate Bank’s first Agent Bank programs for issuing and acquiring businesses. After the acquisition, she joined Union Bank of California as Senior Vice President, where she was responsible for business development, portfolio acquisition management and consumer loan services.

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BARCLAYCARD PROMO

Citing the “Barclaycard anniversary promotion,” Barclaycard will be
providing its approved applicants a complimentary du Monthly Plan SIM
card with free talk time and up to a 3 month waiver of monthly fees on
the du SIM card to mark its first successful year in the UAE. This is
available to Priority, Prestige and Barclays Premier League branded
MasterCard applicants and is being marketed to new residents of the UAE,
frequent business travelers and existing UAE customers. The promotion is
available to UAE residents from from June 1st, 2008 to August 31st, 2008.

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APRIL DEBT

Credit card outstandings rose in April by a mere GBP 74 million
slipping to a total of GBP 54.9 billion. This is the first downturn in
four months after peaking at GBP 55.1 billion in March. Year-on-year
credit card outstandings (not seasonally adjusted) were up less than 2%.
According to the The Bank of England, the increase in total net lending
to individuals in April (GBP 7.3 billion) was below the increase in
March and the previous six-month average. The twelve-month growth rate
slowed to 8.4%, and the three-month annualized growth rate slowed by 0.3
percentage points to 7.1%. The increase in net consumer credit in April
(GBP 0.9 billion) was below that in March and below the previous
six-month average. Net other loans and advances increased by GBP 0.9
billion, higher than the March increase. The annual growth rate of
consumer credit rose by 0.1 percentage points to 6.5%; the three-month
annualized growth rate rose by 0.2 percentage points to 7.7%.

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MOBILE MONEY

In response to the smart card market seeing massive returns in
Asia-Pacific, Frost & Sullivan’s “Smart Card” and “Auto ID Practice” in
Asia Pacific are to host an analyst briefing on “Smart Card Mass Transit
and Payment Application” for the region. The briefing will examine the
possibility of converging the common platforms on various form factors,
such as a card or mobile phone, and the possible issues/challenges the
project may encounter. This briefing is to interest smart card vendors,
transit operators, financial card issuers, mobile operators and system
integrators, will provide updates of upcoming research and an
opportunity for a question and answer session.

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CSCU to Distribute a Visa IPO Dividend

Card Services for Credit Unions will distribute a “special mid-year Visa IPO patronage dividend distribution” of $28.9 million to approximately 2600 member credit unions from across the country. This distribution represents 100% of what CSCU received from the Visa IPO. CSCU’s interest in Visa was based on fees paid on volume from the inception of Visa in 1975 through December 2005. Accordingly, CSCU will base its distributions on volume from the inception of CSCU in 1989 through December 2005. CSCU is the nation’s largest credit and debit card processing association exclusively for credit unions with more than 3,300 member credit unions representing more than 13 million Visa and MasterCard accounts.

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GE MONEY & SANTANDER

GE Money and Commercial Finance have signed definitive agreements with
Banco Santander for a combined transaction volume of EUR1 billion. These
agreements stipulate Banco Santander will acquire GE Money’s businesses
in Germany, Finland and Austria, Ireland and its card and auto
businesses in the UK while GE Commercial Finance will acquire Interbanca
Italian commercial bank from Santander. These developments are subject
to the receipt of certain regulatory approvals and anticipated to close
early in 4Q/08.

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Serverside Group Targets Smaller Issuers

A London-based specialist in online card design is now targeting credit unions and smaller issuers for card customization programs. Serverside Group says its flagship “AllAboutMe” online card designer is very cost-effective. The entry-level online card designer, which blends seamlessly with a credit union’s website, is the culmination of Serverside’s understanding of best practices and five years’ experience in the card customization sector. To date, Serverside has launched more than 350 card programs globally through over 65 clients and 74 issuers. Serverside’s credit union clients include Wescom and America First. The Company also has a strategic alliance with Datacard Group.

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U.S. Delinquency Up 76 BPS from 1Q/07

Credit card delinquency among U.S. issuers climbed 41 basis points in the first quarter and is now up 76 basis points from the year ago quarter. According to CardData, delinquency reached 5.42% in the first quarter, compared to 5.01% in the fourth quarter and 4.66% for the one-year ago. Chase reported its 30-day managed delinquency rate was 3.66% for the first quarter, up from 3.07% in the prior year and 3.48% in the prior quarter. BofA also reported its managed 30+ day delinquency rose to 5.93%, compared to 5.70% in the fourth quarter and 5.45% for 1Q/07. Additionally, Capital One posted a managed delinquency rate (30+ days) for U.S. credit cards of 4.04% for the first quarter, compared to 4.28% for 4Q/07 and 3.06% for the first quarter of 2007. (CF Library 4/16/08; 4/18/08; 4/21/08)

U.S. Card Delinquency
1Q/07: 4.66%
2Q/07: 4.62%
3Q/07: 4.74%
4Q/07: 5.01%
1Q/08: 5.42%
Source: CardData (www.carddata.com)

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U.K. Charge-Offs Hits 6.6% in 1Q/08

Charge-offs among credit card-backed bonds in the U.K. headed north during the first quarter hitting 6.6%, compared 6.3% in fourth quarter and delinquency increased 20 basis points from the prior quarter, reaching 3.6% in March, its highest recorded value for the last nine months. However, the monthly payment rate and yield increased to provide mixed results for the first three months of this year. According to FitchRatings, the yield and the MPR both increased from Q4/07, to 20.5% and 17.3%, from 19.1% and 16.6% respectively. Excess spread also improved across all the series included in the Fitch Excess Spread Index , with only three series trapping excess spread in March 2008; the Fitch ESI values at the end of each quarter increased to 6% from 5.3%.

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Bankrate Analyzes Credit Card Rewards

Bankrate released its first annual analysis of credit card rewards compiled using the latest research into the cash-back reward offers on 30 credit cards to determine the values of each cash-back rewards offerings and to help consumers decide on the best card. The analysis concludes those who spend around $1000 or more per month on the card are best suited for tiered rewards cards, those who spend less should use a flat percentage reward card, all consumers should be wary of high-interest transaction incentive rewards and understanding personal shopping habits to avoid restrictions. It is also important for consumers to look for cards with no cap on how much cash you can earn back with $500 or greater being a fair figure, should look out for fees high enough to minimize/negate the cash-back rewards, stay within budget and, most importantly, read the fine print.

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