Secure Vault Payment Pilot Gets Underway

NACHA Electronic Payments Association has deployed Secure Vault Payments’ Automated Clearing House (ACH)-based Internet payments pilot program network to test online consumer purchases and bill payments. Secure Vault Payment allows consumers to conduct e-commerce and bill payment transactions without sharing personal account information by operating on partner organizations’ existing financial institution platforms to provide real-time payment authorization. NACHA Electronic Payments Association is a not-for-profit association overseeing the Automated Clearing House (ACH) Network, exchanged 18 billion payments in 2007 and represents over 11,000 financial institutions through direct membership.

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UKASH & SHELL

Ukash has teamed with Shell to offer its vouchers through 200 terminals
located in Shell shops across South Africa to consumers wishing to make
online payments without a payment card. With values of between $6.50 and
$197, the voucher discloses a unique 19-digit code allowing the consumer
to conduct payment transactions online. The payment solution has proved
a success in Europe, with 226 million users, and is designed to tap the
market of 5 million South Africa Internet users with the
first-of-its-kind online payment product.

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Microfinance Report Calls for Interoperable Platforms

Global microfinancier CGAP has released a report, “The Early Experience with Branchless Banking”, which calls for the development of interoperable payment platforms to reach unbanked and underbanked people around the world. Payments and funds transfers dominate mobile financial services for many reasons, the report finds. Mobile operators in particular prefer to market payments services as this is more aligned with traditional revenue models. These services are also less likely to cause operators to run afoul of banking regulation. The report finds that in cases where market conditions are not driving broader banking services such as credit and savings, there may be a role to play for policymakers and those who advocate for increased financial access. CGAP (The Consultative Group to Assist the Poor) is the world’s leading resource for the advancement of microfinance.

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FRB Releases an Unfair Practices Report

As a means of protecting consumers from unexpected increases in rates charged on pre-existing credit card balances, legislation is being introduced to forbid banks from imposing interest charges using the “two-cycle” billing method. Additional terms of the legislation would require consumers are allowed a reasonable amount of time to make credit card payments, prohibit the use of payment allocation methods unfairly maximizing interest charges and protect consumers that use overdraft services offered through their bank. The Federal Reserve Board is proposing the revisions to the policies required under the Federal Trade Commission Act (FTC Act) to ensure card issuers fairly treat their customers.

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HPY Q1 Processing Volume Rises 18%

Heartland Payment Systems card processing has reported its 1Q earnings reflecting a share growth of 35%. Moreover, processing volume has grown over 18%, operating income grew 36% and net income grew 31% since the year prior while payroll/payment services netted income of $9.0 million. Since 1Q07, transaction processing volume was up 18.3%, net revenue was up 19.9%, total merchant clients was up 15.1%, operating margin on net revenue improved 210 basis points, same store sales growth was 0.6% and the restaurant segment declined by 0.4% while total revenue was $340 million. For 2008, experts project net revenue to grow by 16% – 18%, operating income to grow 20% – 21% and an earnings per share of $1.13 – $1.17. Heartland Payment Systems provides payment card processing, payroll, check management and payment solutions to more than 165,000 businesses nationwide. For complete details on Heartland’s first quarter results visit CardData ([www.carddata.com][1]).

[1]: http://www.carddata.com

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Card Issuers Concerned w/Liquidity Problems

A recent survey examines perspectives of executives in the banking and credit card industries on liquidity problems, 33% of whom were found to consider this as a systemic threat/severe challenge to their respective institutions while 50% regard recent increases in credit delinquencies/fraud among fundamental catalysts. Additional survey findings show 55% of respondents regard the current credit crisis as a manageable setback, nearly 50% of respondents have a fraud solution in place and 80% expressed interest in applying detection to credit risk rather than fraud or collections. This survey was conducted by TowerGroup on behalf of Fair Isaac Corporation, targeting 108 senior risk management and credit executives at U.S. banks and card issuers, 39% of who represent consumer banks, 23% of who represent credit card issuers and 38% of who represent other lending institutions.

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ABA responds to Senator Dodd’s Initiatives

ABA STATEMENT Edward L. Yingling, president and CEO of the American Bankers Association, has released a statement reflecting the intentions of credit card industry corporations. These corporations, accordingly, are committed to promoting consumer protection, responsible business practices and support Senator Dodd’s initiatives for consumer protection in the banking area. Yingling also disclosed legislation supporting these initiatives, however, could be met with consequences such as unfairly raising the cost of credit for consumers by hurting credit access as a result of federal government intervention. Representatives of the ABA will continue to work with Senator Dodd and his colleagues to address these concerns. The American Bankers Association provides a forum for banks of all sizes to enhance competitiveness and the economy, the majority of which are banks with less than $125 million in assets representing over 95% of American banks.

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38% Do Not Trust Online Payments

With 68% of credit card users unaware of liability limits in the event of a lost/stolen card, research on consumer trends demonstrate increasing concern in regards to data security. Additional information shows 38% of Americans do not trust online payments, 42% said friends and family provide the best security advice and only 27% expressed trust in specialized digital security companies. Subsequently, retailers are pursuing more ways to protect consumer data found on payment cards data and are increasingly making efforts to meet PCI compliance. NRF has released the second part of its “SmartBrief Special Report: Data Security” providing contemporary insight on POS Technology, Consumer Trends and Regulatory Compliance.

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ASIANA AIRLINES CREDIT CARD

Bank of America and American Express have teamed with Asiana Airlines to
launch the “Asiana Airlines Credit Card”. With the new product,
cardholders are rewarded 2wo miles for every $1 spent 3 miles for every
$1 spent at select grocery stores, 5,000 miles with the first purchase,
an annual airfare rebate of $100 on Asiana tickets purchased with the
card, 2 annual Asiana lounge invitations and an annual 10,000 bonus
miles certificate. Bank of America serves 59 million consumers in more
than 150 countries , 25 million of whom use the company’s online
banking, has 6,100 retail banking offices and 18,500 ATMs while American
Express has over 115 card-issuing partnership arrangements in 125
markets around the world.

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ECG Q1 Gross Collections Rise 15%

Encore Capital Group consumer debt management company has released its 1Q08 financials reflecting a 15% increase in gross collections since 1Q07 of $104.4 million, investments in receivables of $47.9 million and revenues from receivables up 3% since 1Q07 to $64.1 million. Additional figures show, since the same period of the year prior, a 3% increase in total operating expense of $51.1 million, adjusted EBITDA up 28% to $58.5 million, total interest expense down from $6.2 million to $3.9 million and net income up from $5.7 million to $7.5 million. With this report, the company also demonstrated a net impairment provision of $5.3 million, an aggregate total remaining collections for portfolios of $67.3 million, an increase in revenue of $0.1 million and net income of $1.9 million. For complete details on Encore Capital’s first quarter results visit CardData ([www.carddata.com][1]).

[1]: http://www.carddata.com

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MIX MARKET 2.0

The MasterCard Foundation has awarded $740,000 to Microfinance
Information eXchange (MIX) to launch the “MIX Market 2.0” web platform,
contributing to its efforts to increase transparency in the microfinance
sector. This support to “MIX Market 2.0” demonstrates the importance of
building capacity of microfinance and providing financial services to
low-income populations for MasterCard, which will improve speed,
accuracy and usability to 25,000 monthly visitors with its investment.
This web platform provides annual financial and operating information on
more than 1,150 microfinance institutions, profiling 100 funders
investing in microfinance.

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Credit Manager’s Index Rises Slightly

The Credit Manager’s Index rose slightly to 50.1 for the month of April, .1 point above the economic expansion indication. The increase of 0.2% since March was a result of the manufacturing sector falling 0.8%, 5 of the 10 combined index components fell, six of which below 50, and 8 components fell in the manufacturing sector, 6 of which were below 50. These figures in the manufacturing sector are a culmination of inflationary pressures, rising fuel prices and a 30% increase in raw material cost(s) from last year. The service sector, however, rebounded 1.2% with 7 of 10 components having increased. Over the past 12 months, weakness is very clear with manufacturing down 5.3% and services down 5.4%, according to the MD-based National Association of Credit Management(NACM). The NACM supports over 22,000 business credit and financial professionals worldwide with its services, tools and information.

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