Independent Truck Stops Challenge Comdata

Two antitrust lawsuits seeking class action status have been filed against Comdata alleging the company has harmed competition by using its market dominance to impair the ability of rival card issuers to challenge Comdata’s monopoly. The lawsuits were filed by two independent truck stops who want to represent all independent truck stops. The suit alleges that in the mid-1990s Comdata acquired its chief truck stop card rival (NTS) and the monopoly point of sale system (Trendar). After becoming a monopolist in the truck stop card and point of sale system markets, Comdata changed its pricing system and significantly increased card fees paid by independent truck stops relative to fees charged to the chain truck stops. The suit says chain truck stops typically pay about 50 cents a transaction, whereas independent truck stops pay a percentage of the value of the transactions, typically over 2%. The Plaintiffs are represented by Washington, DC-based David Balto; Philadelphia-based Berger & Montague; and San Francisco-based Lieff, Cabraser, Heimann & Bernstein.

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33% of Credit Card Defaults Linked to Gen Y

Of all 2006 defaults on credit obligations, one-third was the
responsibility of people under the age of 27. Also, of the 3.7 million
credit cards applicants, 1/3 were among this demographic reflecting a
7.3% growth since 2005 and an 8% growth since 2006 in the demand for
credit. Experts say that because this generation has not experienced a
major economic downturn, it can be easy to brush off credit obligations
and be more comfortable with credit card debt. Veda suggests a number of
helpful tips to secure one’s credit history.

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TJX Credit Card Breach Shows-Up in Florida

Six Miami-area residents were arrested last week for using stolen credit card information that came from the TJX security breach which was disclosed to the public earlier this year. The Florida residents allegedly purchased about $8 million in gift cards and electronic goods using the fraudulent data. Police indicated the fraudulent data may have been obtained a month before the December discovery time frame previously disclosed by TJX. Meanwhile, a major shareholder of TJX has filed a lawsuit to obtain records showing how the retailer handled computer problems that exposed customer information to hackers. Arkansas Carpenters Pension Fund said TJX rebuffed its request to see if the board was doing its job properly.

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Ministry of Commerce Releases Online Transactions Guide

China’s first “Guide for Online Transactions” has been released by the
Country’s Ministry of Commerce and requires transaction service
providers be a legal entity. In doing so, these services must provide
standard transaction services, disclose all rules and information, and
abide by other regulations imposed by the commission. Concrete contact
information must also be available to the consumer including phone
numbers and addresses.

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DreamPlay Files for Card Receipt Ad Patent

NJ-based DreamPlay, a processor of graphic ads on credit and debit card receipts, has filed its initial patent application for their commercial product offering known as “Pay per Print” ads. DreamPlay Ventures is selecting both merchant provider and advertising partners who best match their long term strategic goals to enable every retail merchant with the ability to offer credit and debit cards as payment for products and services worldwide. DreamPlay is an “idea incubator” designed to bring new ideas to market.

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Cash Back Rewards Undergoing a Renaissance

Boston-based Mercator Group has released a new report on credit card rewards programs which found that cash back is undergoing a renaissance in rewards programs, with new earning and disbursement features and that high-value targeted discount programs are increasingly linked to rewards. The report covers developments in traditional rewards programs such as miles and cash/rebates, examines discounts, which are undergoing some critical development separate from cash/rebates and highlights new options in rewards delivery.

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Commercial Cards to Grow by 30% Thru 2010

A new report says that despite the massive efforts of VISA, MasterCard and American Express, card issuers have captured only 2% of the $16.2 trillion commercial consumption expenditure market or about $324 billion in 2005. However, the research projects that the commercial credit card business will experience a 30% CAGR, with spending topping $1.2 trillion in 2010. The Packaged Facts study also projects that payroll cards will grow to $27.1 billion in spending by 2009. “Baby Boomers,” aged 45 to 54, are now the top commercial card users. Also, brand preference trends show commercial card use is hard-wired to educational achievement and individual income, with race and professional affiliation also playing significant roles. Packaged Facts noted that healthcare cards, withdrawing funds from employee healthcare accounts, have experienced triple-digit growth since 2005, a trend which is expected to continue through 2009.

COMMERCIAL CARD VOLUME
2005: $324 billion
2006: $421 billion
2007: $547 billion
2008: $711 billion
2009: $924 billion
2010: $1200 billion
Source: Packaged Facts

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Cellular South to Pilot a Wireless Wallet

Cellular South and Kyocera Wireless have launched a multi-city consumer trial for its new “Wireless Wallet” technology starting mid-May 2007 in Memphis. The Wireless Wallet trial allows participants the opportunity to use the technology at multiple retail locations in the multiple trial cities. Participants will be equipped with a Wireless Wallet-enabled Kyocera cell phone – giving them a new, high-tech kind of purchasing power. The phone acts as a digital credit card that allows Cellular South customers to make payments and purchases by tapping it against a NFC-enabled wireless reader. The company plans to complete the trial by August 2007, with an anticipated widespread consumer roll-out of “Wireless Wallet” in Q4 2007. Cellular South is the largest privately held wireless provider in the U.S. Kyocera Wireless is a supplier of CDMA wireless devices and accessories for customers worldwide. In 2006, Kyocera Corporation’s consolidated net sales totaled approximately US$10 billion.

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WAY Systems 15xx Products Apriva Certified

Apriva has completed certification of WAY Systems’ “Mobile Transaction Terminal 1556” credit/debit on the Apriva Intelligent Gateway and Apriva has now certified the entire WAY Systems “15xx” product line. WAY Systems’ “Mobile Transaction Terminals” combined with Apriva’s “Intelligent Gateway” services now offers comprehensive PIN-based debit card support for credit and debit card transactions as well as the latest transmission and end-to-end security required by the payment industry. MTT products are available in models for processing credit-only, credit and debit and smart cards. Apriva is a wireless solutions provider integrating the hardware, software and network infrastructure in the Point of Sale (POS) and Secure Mobile Messaging markets. WAY Systems is a global service provider of mobile phone based Point of Sale solutions designed for millions of unwired merchants worldwide.

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AmEx & VISA Gain U.S. Credit Card Share

VISA and American Express continued to gain market share in the credit card arena during 2006 at the expense of MasterCard and Discover. American Express added 100 basis points to its share after producing over $400 billion in annual credit/charge card volume. AmEx now has a 20% share of U.S. credit card volume, its highest share since 1992. VISA, which has not released fourth quarter results, added an estimated 50 basis points to its share of the credit card segment to end with a 44.5% share. U.S. credit card volume last year was $2039.6 billion compared to $1837.7 billion in 2005, according to CardData ([www.carddata.com][1]).

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

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MS 1Q/07

Morgan Stanley reported that credit card outstandings for its British
MasterCards during the quarter ended February 28th declined by 1% from
the prior quarter to $4.58 billion. Morgan Stanley also reported that
its Discover unit posted overall pre-tax profits of $372 million for
1Q/07, a 22% decline over the year ago quarter, but nearly double
sequentially. Additionally, Morgan Stanley says it is on track to
spin-off Discover by the third quarter of this year. In the U.K. the
number of accounts for its “Classic,” “Gold,” “Platinum,” “buy & fly!”
and “Goldfish” credit cards remained flat at 3.0 million from the prior
quarter but is up by 400,000 or 15% since the acquisition last year of
1 million “Goldfish” credit card accounts. International managed card
loans were up 9% year-on-year. MS introduced its first credit card in
the U.K. in 1999. For complete details on Morgan Stanley’s latest
performance, visit CardData (www.carddata.com).

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