CARDTRENDS

Citibank has released a report reflecting the cultural differences in
credit card trends and habits. Findings show that India and China
favor the use of credit cards as ID, Malaysians and Australians
oppose using cards as ID, 3.5% of Australians use cards over 20
times per week, and 81% of South Koreans pay off credit card in
full every month. Other findings reflect that Australians have 2.1 cards
each, Malaysians have an average of 3.26 cards, Australians use their
cards an average of 5.4 times per week, 60% of those in India and
Indonesia use their card once or twice per week, and 65% of South
Koreans use their credit card more often than cash/debit reflecting a
41% increase in credit card usage. Citi has nearly 200 million customer
accounts and does business in more than 100 countries.

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MELLON GROUP

For 2006, the Mellon Group has announced a 50% increase in
consolidated revenue of 50 million euro and consolidated earnings of 1.3
million euro. This is in conjunction with Mellon Groups’ parent company,
Mellon Technologies, reporting a 48% revenue growth to 20 million euro
and profit tripling that of 2005. This company growth is due in large part to the company’s expansion outside the Balkans to Poland and into Egypt. Also contributing to this growth is the group’s acquisition of OCCO. Composed of 15 different companies and employing nearly 2000,
Mellon processes transactions for many different organizations throughout Europe.

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Fortunoff and ADS to Launch a Co-Brand Card

Dallas-based Alliance Data Systems Corporation has signed a multi-year expansion and renewal agreement with Fortunoff,to launch a co-brand credit card program. The new co-brand credit card program will complement Fortunoff’s existing private label credit card program, providing select customer segments with an alternate card choice for making purchases. Co-brand cardholders will receive five percent back on all purchases made at any Fortunoff store, online or through the catalog, and points-based rewards for all other purchases made on the co-brand card outside the Fortunoff brand. Private label cardholders earn points for every dollar spent on the card, redeemable for dollars-off on future purchases. Alliance Data will continue to provide Fortunoff with integrated credit and marketing services, including account acquisition and activation, receivables funding, credit authorization, card issuance, statement generation, direct mail and email marketing services, electronic bill presentment services, remittance processing, marketing and customer service functions. Alliance Data is a provider of marketing, loyalty and transaction services.

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Citi’s Furjanic Heads to Apollo Enterprise

Apollo Enterprise Solutions announced that John Furjanic, former EVP of CitiGroup’s Credit Policy and Risk Management group has joined the company as EVP, Analytics & Decision Strategy. Under his leadership at CitiGroup, credit loss rates were reduced for managed portfolios valued at $2 billion by more than 50% and $25 million per year and successfully managed credit process and policy system conversion for the Diners Club/MasterCard alliance in North America that increased sales by 50% within six months while maintaining credit loss performance within plan. Furjanic championed and managed a new product launch in January 2006 that achieved the entire year’s sales goal of $100 million by end of the first quarter. Furjanic holds a B.S. in Civil Engineering and an M.S. in Industrial Administration from Carnegie-Mellon University. Apollo Enterprise Solutions provides enterprise-class web-hosted solutions for receivables management and debt collections.

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Smartphone Market to Produce Phenomenal Growth

As the payment card industry gears up to tap into the mobile phone market a new report has found that smartphones and wireless data cards will show phenomenal growth rates in terms of both revenues and units shipped. Frost & Sullivan says its new report reveals that the market earned revenues of $127.8 billion in 2006 and estimates this to reach $152.5 billion in 2012. Besides the uptake of smartphones, replacement and upgrade sales in more developed markets and expansion of new subscriber base in developing mobile markets will drive global market growth. F&S says although smartphones accounted for less than 10% of total units shipped worldwide, they constituted nearly 15% of the total revenues. This was possible because smartphone’s average selling prices have become more than double that of feature phones. Vendors should produce more smartphones and also cultivate end-user capabilities with smartphones and their applications to increase revenues.

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Cap One to Cut 2,000 Jobs to Save $700MM

Capital One Financial is reducing operating expenses and cutting about 2,000 current jobs across the company. Approximately half of these planned job eliminations have already occurred in the company’s US Card, Mortgage Banking, and UK businesses. Cap One expects to achieve additional savings from attrition and the elimination of selected positions that are currently vacant. The company also expects to realize savings from reduced spending on suppliers and vendors, and reduced facilities costs. The initiative is expected to reduce the operating expense structure of the company by approximately $700 million pre-tax, with approximately $400 million realized in 2008, and an additional $300 million realized in 2009. The company will record one-time charges of approximately $300 million pre-tax over the course of the cost restructuring initiative. Approximately $150 million of these charges are related to severance benefits, while the remaining charges are associated with items such as contract and lease terminations and consolidation of facilities and infrastructure.

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VISA Lands Extensive FIFA Sponsorship Rights

VISA International and the Federation Internationale de Football Association confirmed their deal wherein VISA will have global rights to 2010 and 2014 “FIFA World Cups” and the “FIFA Women’s World Cups.” Last week MasterCard announced that FIFA agreed to pay $90 million to MasterCard to settle a dispute over sponsorship of the major soccer events. MasterCard had sponsored the tournament since 1990. Both parties also agreed to terminate legal proceedings in the U.S. and Switzerland and the MasterCard/FIFA lawsuit was dismissed on June 21st by the U.S. District Court, Southern District of New York. VISA’s rights in FIFA’s Payment Services product category begin with this year’s FIFA “Under-20 World Cup” in Canada and will run through the 2014 “FIFA World Cup.” As a “FIFA Partner,” VISA says it will have a higher level of association with these and other properties than previous category sponsors have had in the past. VISA will have rights to a broad range of activities including exclusive marketing assets, competitions, special events and development programs. Meanwhile, FIFA re-hired Jerome Valcke as their new general secretary after firing him last year as marketing director over the VISA-MasterCard sponsorship negotiations. (CF Library 4/24/06; CF International Library 6/22/07)

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Columbia Card Systems Hires a Top Pop Singer

Smart SMS has signed an agreement with contemporary recording star Yolanda Adams to be a spokesperson for Columbia Card Systems International to appear in a series of ads for the VISA mobile debit card. Ms. Adams will also brand her own debit card through a deal with CCSI. Columbia Card Visa has mobile banking functions that allow cardholders to send or receive money via cell phone, PC or landline anywhere in the world, in real time for under two dollars. Columbia Card also has a subordinate card program that allows families and businesses to create master accounts and disperse money as needed. Yolanda Adams is a five-time Grammy winning contemporary artist who has sold millions of records worldwide. Smart SMS Corporation is a mobile entertainment marketing and distribution company that specializes in market branding via text and MMS.

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50% of Retailers Will Not Meet PCI Deadline

New research shows that less than half of all affected businesses will be able to meet that PCI DSS deadline set for June 30th. The Payment Card Industry Security Vendor Alliance says fines of up to $500,000 and loss of the ability to accept credit cards — apparently haven’t been enough to get affected businesses to take security seriously. All organizations that store, process or transmit credit card payments are required to demonstrate compliance with the Payment Card Industry Data Security Standard by this weekend. PCI SVA noted that card companies have recently indicated that they’ll be willing to accept risk mitigation plans in lieu of full compliance, since so many businesses will fail to meet the deadline.

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Voluntary Attrition Rates Edge Up in 2007

U.S. VISA and MasterCard issuers are continuing to do a good job in retaining customers and migrating them to better suited card products within their portfolios. However, there has been a slight uptick this year as reward cards have crowded the market at all levels and lower balance transfer interest rates now come with higher fees. According to CardData, voluntary attrition rates edged up to 9.10% compared to 8.99% one year ago and 9.89% six years ago. Voluntary attrition is determined by dividing cardholder-initiated account closings by the gross number of accounts and then annualizing.

MAY ATTRITION
(Excludes Discover and AmEx)
2002: 9.89%
2003: 9.71%
2004: 8.88%
2005: 9.35%
2006: 8.99%
2007: 9.10%
Source: CardData (www.carddata.com)

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