Yahoo! Merchants Solutions Melts Down

Heavy holiday traffic on “Cyber Monday” resulted in outages for merchants using Yahoo!’s payment system. The Company says it was aware of the issue and is currently investigating the matter. The outages started around 5:30 a.m. EST yesterday. Some Yahoo! merchants reported that shoppers were receiving an error message indicating ‘system unavailable’ during the checkout process. Reportedly, merchants found that Yahoo! was not forthcoming about the matter and some have indicated they will find a more reliable provider after the holidays. Yahoo’s Merchant Solutions powers more than 40,000 small Web businesses. The Company’s shares tumbled 3.5% in Nasdaq trading yesterday. Online spending for “Cyber Monday” is projected to top $700 million with 72 million consumers shopping online.

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Alliant CU Joins Credit Union 24 EFT Net

Chicago-based Alliant Credit Union is the newest member-owner of the Credit Union 24 EFT network. Alliant CU’s more than 200,000 members will now have surcharge-free access at more than 12,000 Credit Union 24 CU HERE ATMs across the country. Alliant Credit Union is a not-for-profit financial cooperative headquartered in Chicago, Ill. Organized in 1935, Alliant ranks as the eighth largest credit union in the nation and serves more than 207,000 members worldwide with approximately $4.5 billion in assets. Credit Union 24 is a flexible, member-owned, full-service, deposit-taking ATM and POS network with multiple processor links, hundreds of thousands of POS locations and more than 100,000 ATM terminals across the country.

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Credit Card Charge-Offs Ramp Up in Oct

Charge-offs headed north again, hitting 4.89% in October, setting a new record for this year. This is the fifth consecutive month that credit card charge-offs have increased. There have been growing concerns that the mortgage meltdown is spilling over into the general consumer finance market. As a result, most major issuers have beefed-up loss reserves in anticipation of higher future defaults. During the third quarter Chase reported a managed net charge-off rate for credit cards of 3.64%, up from 3.58% in the prior year and 3.62% in the prior quarter. Capital One reported that the net charge-off rate for U.S. credit cards was 4.13% for the third quarter, compared to 3.73% for the second quarter and 3.39% one-year ago. However, Citi reported that charge-offs for bankcard and private label cards declined to 4.41%, compared to 4.55% in the prior quarter and 4.26% one-year ago. BofA also posted a decline in the third quarter charge-off rate of 4.86%, compared to 5.20% in the prior quarter and 4.18% one-year ago. According to the American Bankers Association, credit card delinquency, based on total dollars past-due, rose in the second quarter to its highest level for a second quarter since 2004. The ABA says consumers’ priorities can shift, especially for borrowers who face a one-two punch: higher interest payments on their adjustable rate mortgages and declining equity as their home prices fall. According to CardData, charge-offs have increased 56 basis points since January. (CF Library 9/26/07; 10/15/07; 10/17/07; 10/18/07; 10/19/07)

CHARGE-OFFS
Jan 07: 4.33%
Feb 07: 4.39%
Mar 07: 4.44%
Apr 07: 4.60%
May 07: 4.65%
Jun 07: 4.60%
Jul 07: 4.62%
Aug 07: 4.77%
Sep 07: 4.81%
Oct 07: 4.89%
Source: CardData (www.carddata.com)

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E-Retailers Sweeten the Pot for Shoppers

A recent survey by eBay’s shopping.com has found that 33% of online merchants plan to offer free shipping this holiday season, but 69% indicated they are offering some type of holiday shopping incentives, whether it’s discounted merchandise, free gift cards, in-store pickup or other offers. Meanwhile, some e-retailers are reporting that traffic is running three times higher than traffic on “Cyber Monday” last year. Shopping.com also found that 86% of shoppers want free shipping incentives this holiday and more than half believe all merchants should offer this as a standard policy year-round. Holiday discounts are next on shoppers’ wish lists after free shipping, with 71% of respondents hoping to clamor for deals this season. A survey by NRF’s shop.org determined that 72 million consumers will shop online this holiday season with men more likely to shop from work than women (57.3% vs. 51.7%) and young adults 18-24 years old are more likely to shop there than any other age group (72.9%). Nearly 29% of retailers offered one-day sales and about 25% offered free shipping on all purchases for “Cyber Monday.” Shop.org also found that more than 72% of online retailers are planning a special promotion for Cyber Monday, up from 43% just two years ago.

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TNB Card Services Expands 2 Texas CU Deals

AMOCO Federal Credit Union and San Jacinto Area Credit Union have selected TNB Card Services to manage all their credit and debit card processing. The $438 million AMOCO Federal CU has been a TNB credit card and signature debit processing client for more than 30 years. Its PIN debit conversion, which will be completed in early 2008, will streamline AMOCO’s card processing, allowing the credit union to better manage the performance of its card program. The $60 million San Jacinto Area CU is consolidating all of its credit and debit card processing with TNB means improved cardholder relations and program efficiency.

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Consumers & Businesses Embrace Gift Cards

Surveys by two industry leaders shows that consumers and business owners have overwhelmingly embraced gift cards this holiday season. A pre-holiday survey by First Data reveals that 77% of consumers are “extremely likely,” “very likely” or “somewhat likely” to buy gift cards for family and friends this holiday season. American Express found that of companies choosing to give individual employee gifts at year-end, gift cards are at the top of the list (42%), followed by spot cash bonuses (37%), company products (35%), food/food baskets (26%), merchandise (25%), and time off (24%). FDC discovered that 66% of consumers plan to buy the same number of gift cards again this holiday season with 19% planning to purchase more. The mean number of gift cards consumers plan to purchase is five. Also, discount stores (42%) and specialty retail stores (33%) are the top locations where gift cards purchases are planned for this holiday season. The AmEx poll found that from the employee perspective, gift cards rival a day off as a desirable gift, and are bested only by cash and time off. In fact, a gift card is twice as exciting as company-wide recognition, and nine times more exciting than dinner with the boss, according to AmEx survey respondents. In order of importance, employees most want cash (44%) as their year-end gift, followed by time off (17%) and gift cards (15%).

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ePayments Corp Expands e-Check Collection

Payment processor ePayments Corp has acquired GA-based Check Collection and Recovery. The acquisition adds a substantial number of check recovery and credit card processing clients to ePayments Corp.’s electronic check collection business. Under terms of the acquisition, CCR will maintain its offices in theSt. Simons Island area and staffing levels are expected to increase. ePayments helps businesses, schools, non- profits and government organizations who receive non-cash payment transactions to reduce their risk while increasing cash flow.

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University of Cincinnati Intros M-Payments

Mocapay and Cincinnati Bell have launched a mobile payment program for The University of Cincinnati Mobile student clients. The program allows students to pay for goods and services with their mobile phone on and around the UC campus at dozens of local retailers. In addition, the Queen City Centre and University Plaza Kroger locations will begin accepting mobile payments in early 2008. The service expands UC Mobile’s cutting edge wireless services to students, including on-demand class updates, shuttle schedules and more, all directly on students’ mobile phones. Mocapay is a mobile payment and marketing company that lets consumers pay for goods and services at the register and online with their mobile phones.

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Capital One Card Lab Empowers Consumers

Capital One Financial Corporation has launched “The Capital One Card Lab”, a convenient online tool designed to help consumers select from a menu of terms and options to build their own credit card. “The Capital One Card Lab” web site provides a series of interactive choices, where consumers can click to select the options they want and need in their credit card, including key account terms and the image printed on their card. Once the consumer has made his or her choices, they complete an online application. If approved, their customized card will be mailed to them.

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ABS 3Q/07

Charge-offs amongst credit card-backed bonds in the U.K. retreated for the second consecutive quarter, after peaking in the first quarter. For the third quarter charge-offs dropped 70 basis points to 6.6%, representing a 16-month low. Charge-offs for the first quarter hit 7.8% before dropping to 7.3% in the second quarter. Delinquencies, among asset-backed credit card securities, also improved dropping 50 basis points to 3.3% for the third quarter, compared to the June level. According to FitchRatings, its “Yield Index” ended the quarter at 18.8%, which represented a decrease of 120 basis points versus June 2007. The quarter also witnessed a decline in the “Monthly Payment Rate” which declined to 16.2% in 3Q/07 from 17.2% in the prior quarter. Fitch noted that this is a possible indicator of the increasing financial stress of U.K. credit card borrowers following the recent interest rate rises by the Bank of England which pushed short-term rates to 5.75%.

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Acquirers & ISOs Face Margin Compression

A new report from Aite Group titled “The State of the Merchant Acquiring Industry” looks at the impact of discount rates and interchange in the merchant acquiring space, reviews vendors, samples acquirers’ portfolios and PCI DSS compliance. The report also considers the future of acquiring revealing that margin compression is the most important challenge facing merchant acquirers and ISOs today, being a leading concern for 73% of those surveyed. As the industry enters a commoditization phase, more and more acquirers and ISOs feel that they have to engage in a price war in order to acquire potential customers or retain current ones. Further, the change will force acquirers and ISOs to focus on other revenue-generating factors, such as products and administrative fees. Aite Group is an independent research and advisory firm focused on business, technology and regulatory issues and their impact on the financial services industry.

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DIGIPASS 270

VASCO Data Security has introduced its “Digipass 270” client
authentication device for the banking and e-commerce sectors. The
device implements AES-algorithm for the calculation of e-signatures,
hosts authentication codes and generates one-time passwords. In
addition, the “Digipass 270” is compact enough to fit in a wallet, is PIN-protected and is compatible with VASCO’s “VACMAN” authentication.
VASCO provides authentication and e-signature solutions to its
customer base of nearly 6,000 companies throughout over 100 countries.

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