SmartPay & Lu Hai Kong Launch Mobile Payment Solution

SmartPay has announced partnership with The Lu Hai Kong travel agency in
launching a mobile phone and telephone payment solution for airline
tickets. With the new service, customers who register use interactive
voice response and short messaging service, eliminating the
inconvenience of cash transactions and any need for paper tickets.
SmartPay provides remote payment services in China under the brand name
“Jieyin.”

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Credit Card Annual GDV Passes $2 Trillion

General purpose U.S. credit card gross dollar volume crossed the $2 trillion milestone last year. During 2006, GDV grew nearly 11% from $1.8 trillion for 2005. According to CardData, VISA led the charge with more than $900 billion in volume. MasterCard reported $609 billion in year-to-date volume, while American Express posted about $407 billion and Discover handled $115 billion during 2006. Last year’s pace was slightly better than the prior year’s, when credit card GDV expanded by 10%.

Credit Card GDV
2002: $1426.5 billion
2003: $1524.6 billion
2004: $1673.3 billion
2005: $1837.7 billion
2006: $2039.6 billion
Source: CardData (www.carddata.com)

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PayPal Opens Nearly 35MM Accounts in Europe

Paypal has announced that it has reached the milestone of 35 million
accounts in Europe. Further demonstrating the services’ growing
popularity, 23% of European online consumers use the company’s protected
payment service. Without ever having to retype their financial
information or share it with the merchant, in 2006 Paypal users spent
$8.4 billion in Europe. The service has a presence in 15 countries,
supports payments from 103 markets using 17 global currencies, and has
more than 133 million accounts.

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First Data to License PrivaSys Technology

First Data has signed a long-term licensing agreement with PrivaSys, a provider of patented software and card technology. The deal will enhance First Data’s capability to process contactless and other emerging payments for its financial institution and merchant clients. The PrivaSys solution leverages patented software and card technology to generate a transaction-specific “Dynamic Authentication Code.” The “DAC” generates a unique set of trailing data in the discretionary data fields of the legacy magnetic stripe data packet for each transaction. The trailing data is decrypted to authenticate the cardholder. PrivaSys’ solution for card security enables issuers to preclude card skimming/cloning because each “DAC” is used for only one transaction. The PrivaSys solution is available in various form factors: conventional plastic cards as well as other devices such as cell phones, PDAs or electronic key fobs.

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GratisCard Seeks a Piece of the Card Pie

A PIN-based anonymous payment card with only a bar code and an account number encoded on its mag stripe is set to debut nationally next month after being tested at some sports arenas. The new “GratisCard” is part of a revolutionary new payment network being established by several seasoned industry veterans with the financial backing of AOL’s founder. The Florida-based Company says the card system essentially eliminates interchange fees, thereby producing cost savings of 2% to 7% in sales, resulting in gross profit increases of 10% to 70%. GratisCard Inc. will charge 50 basis points on each transaction. The card will be targeted at merchants that process low-value payments. GratisCard says the card requires no incremental investment by merchants since its software works with magnetic stripe and barcode scanners, or simple numeric keypads. The Company also noted its system will reduce transaction time with average processing speed of 30 milliseconds. As a credit card or prepaid card the initial market will be consumers with poor to medium credit. For consumers, GratisCard says the new card can aggregate prepaid and credit cards, as well as other loyalty cards so there is only one card to manage. The system can also store other information such as health insurance, auto insurance, medical records and emergency contact information. Also, it can restrict access to sensitive information. Steve Case, founder of AOL, is backing the new company via his investment company, Revolution Inc. Other key executives include: Jason Hogg, President and CEO, founder of MBNA Canada; Dax Cummings, COO, formerly with MBNA; Patrick Graf, CTO, formerly SVP at QI Solutions; and Darren Thompson, CFO, former President and CEO of Avenue Mortgage Corp. Russell Hogg, former CEO of MasterCard, is also on the board.

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Global Debt Registry Names a President

Dennis Hammond has joined the the Global Debt Registry as President. Hammond was the founder of the Debt Buyer’s Association. Global Debt Registry is a registration system designed to maintain and establish accurate ownership of delinquent receivable accounts. Not only can the registry identify the true owner of an account, but it can also validate account level attributes, such as charge-off date and balance, to provide a clear title at the account level for a debt portfolio.

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AEON Credit Service Launches an ATM Network

The first non-financial institution, Aeon Credit Service, has
established an ATM network in Malaysia. The service will be available to
AEON “Express” and credit card members, collectively known as “AEON
Cash” customers. These customers will be able to withdraw cash upon
approval of their applications. This development is projected to
generate up to a 100% sales growth.

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Hong Leong Bank Aims To Expand Retail Banking

With the introduction of “Smartlink”, Hong Leong Bank’s all-in-one
account, the bank hopes its retail banking customer base will expand.
“Smartlink” was designed to link to programs and services within the
bank and offers attractive interest rates calculated daily and credited
quarterly. This additional convenience and increase in spending power is
what Hong Leong hopes will attract new customers. The bank has 186
branches nationwide and 1.6 million customers.

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BluePhoenix Solutions Lower Volvofinans Credit Card TCO

Volvofinans Group will use Bluephoenix to modernize its credit system.
This credit system is used by 70 dealers in Sweden and interfaces with
over 100 vendors. With this partnership, Volvofinans will be able to
deliver new applications for customers, respond to changing business
requirements and expects to lower the credit card system’s “Total Cost of Ownership” (TCO) by 40% annually. The Group has assets of more than $3.4
billion and chose the BluePhoenix Solutions tool because of its ability
to migrate IDMS/ADSO applications to a relative database environment
without compromise.

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MoneyPass ATM Network Expands in Minnesota

MN-based Snyders Drug Stores has selected the “MoneyPass ATM” network to provide surcharge free ATM access in its 50+ stores. MoneyPass, a national surcharge-free ATM network with nearly 10,000 ATMs, offers flexible and open participation to both ATM owners and ATM card issuers. Through a unique mix of financial institution and retail ATMs, MoneyPass provides convenient and accessible locations to eligible cardholders across the United States and is a network of Elan Financial Services, a provider of complete outsourced solutions with a focus on payments and ATM and debit card processing for financial institutions.

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Discover Profits Slip 22% in First Quarter

Morgan Stanley reported this morning that its Discover unit posted pre-tax profits of $372 million for 1Q/07, a 22% decline over the year ago quarter. However, sequentially, profits nearly doubled from $199 million. Discover also reported that net revenues dipped 6% from a year ago to $1025 million. Net sales volume rose to $30.3 billion, a 13% increase from 1Q/06. Managed credit card loans increased by $400 million from the prior quarter to $50.73 billion and up 6% from a year ago. Managed merchant, cardholder and other fees were $552 million for 1Q/07, up 6% from a year ago. The number of accounts continued to shrink from 46.1 million in 1Q/06 and 45.3 million in 4Q/06 to 44.9 million for the first quarter, a 3% year-on-year decline. The managed credit card net charge-off rate was 4.05%, 101 basis points lower than last year’s first quarter, and 10 basis points lower than the fourth quarter. The managed credit card over-30-day delinquency rate was 3.45%, unchanged from 1Q/06 and 6 basis points lower than the fourth quarter of 2006. The over-90-day delinquency rate increased 8 basis points over the same period to 1.69% and was four basis points higher than the prior quarter. For complete details on Discover’s first quarter performance, visit CardData ([www.carddata.com][1]).

DISCOVER CARD PORTFOLIO SNAPSHOT
($ billions; accounts/actives millions)
1Q/06* 2Q/06* 3Q/06* 4Q/06* 1Q/07* Y/Y CHNG
Outstandings: $47.8 $48.5 $49.6 $50.3 $50.7 +6%
Volume: $26.8 $28.5 $30.2 $29.1 $30.3 +13%
Accounts: 46.1 45.9 45.6 45.3 44.9 -3%
Actives: 19.6 19.6 19.6 19.8 19.7 +1%
Chargeoffs: 5.06% 3.30% 3.81% 4.15% 4.05% -111bps
Delinquency**: 3.45% 3.29% 3.41% 3.51% 3.45% NC
Yield: 12.13% 12.69% 12.38 12.23 12.27% +14bps
Notes: 1Q/06 ended 2/28/06; 2Q/06 ended 5/31/06; 3Q/06 ended 8/31/06;
4Q/06 ended 11/30/06; 1Q/07 ended 2/28/07. ** delinquency is 30-90 days
and excludes 90+ days. Includes both domestic and international cards.
Source: CardData (www.carddata.com)

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

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Credit Card 06 Ad Spending Falls $137MM

Advertising spending for credit card services fell $136.6 million or 6.9% last year. According to preliminary figures released by Nielsen Monitor-Plus, overall advertising last year increased 4.6%. No surprise that Internet advertising led the charge with a robust 35% gain while network radio and local newspapers declined. Spot TV in the Top 100 markets and Spanish language national TV were the leaders in traditional advertising, growing 9% and 8%, respectively. The top advertising product was pharmaceuticals rising $718.9 million or 14.9% last year.

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