U.S. Consumer Confidence Plummets in January

A monthly barometer has found that consumer sentiment plummeted in January driven by rising food prices and fuel costs coupled with declining housing values. The decline in the overall “Index” has pushed the index to its lowest level since data collection began in 2002. The composite “RBC CASH Index” for January 2008 stands at 56.3, compared to 65.9 in December and 95.3 one-year ago. The “RBC Expectations Index” for January dropped more than eight points after rebounding in December. The “RBC Current Conditions Index” slipped again this month reaching 78.9, down 6 points from December’s level, and down 22 points from October’s high. The “RBC Jobs Index” also dipped to 106.9, compared to 113.9 in December. The “RBC Investment Index” was down another three points to 76.3, compared to 79.7 last month. RBC Financial Group says its research shows no slowing of current economic headwinds and that consumers could pull back further on spending, increasing the risk of a recession.

RBC INDEX HISTORICAL
Jan 07: 95.3
Feb 07: 103.0
Mar 07: 92.3
Apr 07: 85.4
May 07: 87.1
Jun 07: 81.4
Jul 07: 76.1
Aug 07: 89.3
Sep 07: 71.1
Oct 07: 80.6
Nov 07: 64.0
Dec 07: 65.9
Jan 08: 56.3
Source: RBC Financial Group

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AmEx Q4 Charge-Offs Rise 80bps Over 4Q/06

Credit card-related stocks took a hit yesterday after American Express reported that delinquencies and charge-offs rose during December as cardholder spending slowed. Earlier in the day Capital One reported that November showed a strong uptick in delinquencies and charge-offs. AmEx reported that delinquencies in its managed U.S. lending portfolio increased to approximately 3.2% in the fourth quarter from 2.9% in the third quarter, and that the charge-off rate in this portfolio increased to 4.3% from 3.7% for the same periods. Charge-offs for AmEx one-year ago stood at 3.5% according to CardData ([www.carddata.com][1]). Cardholder spending rose about 16% for the fourth quarter but the growth trailed off to 13% in December with particular weakness in U.S. billings. As a result, AmEx will take a pre-tax charge of approximately $440 million for the fourth quarter. This charge will raise worldwide lending reserves to one hundred percent of past-due loans and increase reserves related to the charge card portfolio. AmEx also is projecting worldwide billed business growth of approximately 8% to 10% for 2008. Charge-off levels in the managed U.S. lending portfolio are projected to average 5.1% to 5.3% for the full year. Capital One reported that its charge-off ratio for U.S. Cards climbed to its highest level in more than four years during November. Delinquency (30+ days) for its U.S. Cards also increased to its highest point since June 2003. (CF Library 1/10/08)

AMEX U.S. CHARGE-OFFS
4Q/06: 3.5%
1Q/07: 3.7%
2Q/07: 3.7%
3Q/07: 3.7%
4Q/07: 4.3%
Source: CardData (www.carddata.com)

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

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Rent-A-Center to Deploy NCR ECRs

Rent-A-Center has partnered with Diebold to install seven “Diebold Express Cash Recyclers” as part of an agreement by which Rent-A-Center will purchase 500 units through the next two and a half years. The cash recyclers automatically count, authenticate and securely safeguard cash deposited by clients. That same cash is later dispensed for customer cash withdrawals. Diebold teamed with Arcatech Systems, a supplier of transaction automation components, to design and manufacture ECRs to penetrate the teller market with an automated recycling solution specifically designed for North America.

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CardFlash Looks Back to April 2007

First Data signs a deal to be acquired by an affiliate of Kohlberg Kravis Roberts for about $29 billion. MasterCard launches a “MasterCard Nearby” service trial that allows MasterCard cardholders to use their mobile phones to access information on ATM and merchant locations, driving directions, rewards, special offers, etc. Discover renames the “Discover Platinum Card” as the “Discover More Card” and the “Discover Gas Card” as the “Discover Open Road Card.” Marshall & Ilsley confirm plans to split Marshall & Ilsley and Metavante into independent public companies. Wells Fargo launches the “Wells Fargo Home Rebate VISA.” AL-based Coca-Cola Bottling Company United begins equipping its vending machines with USA Technologies’ “e-Port G6” to accept “MasterCard PayPass” contactless payments as well as traditional magnetic stripe credit card payments. Affinion Group acquires CA-based CardCops, a specialist in ID theft protection, data monitoring and analysis technology solutions. VISA USA publishes its new interchange rates online that are effective April 14th. OR-based Chockstone has acquired MA-based Peppercoin, a small payments technology company providing card-based merchant loyalty programs and related consulting and analytical services. First Data confirms plans to acquire FundsXpress, a provider of online banking and bill payment services for consumers and small businesses. Wells Fargo becomes the first U.S. financial institution to make clean, renewable energy reward options available to its cardholders. Discover Network announces plans to roll-out “Discover ZIP,” its contactless payment solution. The U.S. House Financial Services Committee holds a hearing on “Credit Card Practices: Current Consumer and Regulatory Issues.”

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Education & Retirement Reward Cards Enhanced

Four new credit cards have been enhanced that help consumers to meet education and retirement goals through everyday spending. The Bankers Bank, Vesdia and MXT Card Services have introduced the four upgraded “Platinum VISA” cards that offer a 1% rebate on all card purchases and up to a 26% rebate on purchases made within its merchant network. The four enhanced credit card programs include “BabyMint,” “NestEggz,” “Stockback” and “FundraiserRewards.” “BabyMint” allows the cardholder, family and friends to earn unlimited contributions into any college savings plan as well as earning matching tuition credits valid at hundreds of colleges and universities. “NestEggz” produces rebates towards retirement and hundreds of merchants offer savings which are deposited into almost any tax-advantaged retirement account. “Stockback” generates deposits into virtually any mutual fund, brokerage and banking account, and adds cash rewards from various merchants. “FundraiserRewards” generates donations via purchases made through participating online, catalog, and brick & mortar merchants and service providers. The rewards are automatically donated to the charitable organization of the member’s choice.

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CardFlash Looks Back to May 2007

Dallas-based Alliance Data Systems announces pans to go private following a deal to be acquired by Blackstone Capital Partners for about $7.8 billion in cash and debt assumption. VISA officially names Joe Saunders as Chairman and CEO of VISA Inc. NJ-based American Banknote acquires Boston-based Arthur Blank & Company. Blizzard Entertainment and First National Bank Omaha partner to launch a series of VISA credit cards for the “World of Warcraft” online game. The New York City Taxi and Limousine Commission authorizes the installation of “Credit Card Acceptance Capability” payment systems in taxi cabs. GTCR has signed a deal to sell TransFirst to Welsh, Carson, Anderson & Stowe for $683 million. NY-based Debt Resolve has signed a deal to acquire Buffalo-based Creditors Interchange for $64 million. VeriSign and Innovative Card Technologies team to launch a smarter payment card that features built-in identity authentication. First Data makes a strategic investment in ViVOtech. Heartland Bank becomes an issuer of “Discover Network Cards.” MasterCard has teamed with TRX to develop the “MasterCard Travel Dashboard,” a Web-based business intelligence tool that will enable companies to evaluate, analyze and optimize travel programs. NY-based National Envelope Corporation unveils card sleeves and mailing envelopes to help shield contactless payment cards in transit. Ceridian terminates Gary Krow, EVP of Ceridian and President of Comdata for violations of Ceridian’s “Code of Conduct.” American Express set-ups a partnership with American Home Mortgage Corp. to enable prime mortgage customers to charge their mortgage payments to an AmEx card.

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Roady’s Truck Network Taps TransFund$

TN-based TransFund$ has signed a deal to be offered as a fuel card processor for Roady’s merchant chain, and offer the Roady’s private label card running on the TransFund$ processing system. The one-card solution manages fuel, cash and checks, and can be utilized as a payroll card. Through this partnership, fleets of all sizes will also be eligible to earn rebates on their fuel purchases in the Roady’s truck stop network. TransCard offers electronic funds transfer services including direct-to-card payroll technology, electronic fuel processing, transaction processing, global money remittance and payment services. Also, the comapny processes over $960 million in electronic transactions annually.

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Trustwave Acquires Creduware

IL-based compliance and security management provider Trustwave has acquired Creduware, an enterprise application security infrastructure management company. Creduware’s “Credential Management Platform” will be integrated into Trustwave’s suite of identity management security solutions as the “Trustwave Certificate Lifecycle Manager” to automate digital certificate renewal, installation, the Trustwave Application Password Manager (APM) and implement policy-based application monitoring.

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Worklife Rewards VISA Signature Launched

Chase Card Services and FL-based Office Depot have rolled out the “Office Depot Worklife Rewards VISA Signature Card” that offers 5% rebate rewards to business owners and consumers. The rebates are automatically applied as a statement credit to cardmembers’ accounts each month, as long as an Office Depot purchase is made that month. If an Office Depot purchase is not made that month, the rebates continue to accrue until the next Office Depot purchase is made and gives a 1%back in rebates everywhere else Visa credit cards are accepted. The card has contactless payment functionality and easy-to-use reporting tools for better cash flow management.

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TXT2GO

Travelers with Go North East can now purchase tickets with the new
“txt2go” solution. The new solution affords travelers a mobile
phone digital ticket almost immediately after purchase,
eliminating the need for customers to carry cash. Furthermore, with
“txt2go”, tickets can be ordered anytime and anywhere by sending the
appropriate text to a specified number. The initial step for establishing
an account requires customers to establish an on-line account at Go
North East’s website to allow funds to be added using a debit or credit
card. This will generate a funds pool for the purchasing of tickets. The new
solution is made possible thanks to the partnership with international IT
services, Atos Origin and Swiftpass.

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