CTFS Card Balances Rise 8% to $1837

Canadian Tire’s Financial Services division has increased loans
receivable by 7% between 4Q 2005 and 4Q 2006. 4Q 2005 reflected a
$3.4 billion portfolio whereas 4Q 2006 reflected a $3.6 billion
portfolio. This increase is due, in part, to the growth in the number of
accounts carrying a balance and an 8.2 percent increase in the average
account balance to $1,837 at the end of 2006. Financial Services’ pre-tax earnings for the
fourth quarter were $53.7 million, a 3.7% decrease from the $55.8
million recorded in the fourth quarter of 2005. The fourth quarter
adjusted earnings before income taxes increased 20.1% to $51.4
million from $42.8 million for the same period last year. These gains
helped offset lower year-over-year gains and the $6.1 million it cost
the company in its’ retail banking initiative. Canadian Tire operates
more than 1,100 stores, gas bars and car washes in an inter-related
network of businesses engaged in retail, financial services and petroleum.

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Credit Card Solicitations Climb 30% in 06

U.S. consumers received nearly 8.0 billion direct mail credit card solicitations last year, a 30% increase over the prior year. The gain was about double the growth rate of 2005 even though response rates are hovering at 0.3%, according to CardWatch(R) ([www.cardwatch.com][1]). Response rates have declined from 2.8% fifteen years ago to 1.2% ten years ago to 0.6% five years ago. American Express and Capital One led all other issuers in 2006 followed by Chase and Citibank.

U.S. CARD SOLICITATIONS
(billions)
1998: 3.44
1999: 2.54
2000: 3.54
2001: 5.01
2002: 4.89
2003: 4.29
2004: 5.23
2005: 6.06
2006: 7.90
Source: CardWatch (www.cardwatch.com)

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

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Arthur Blank Introduces Scented Cards

A major U.S. card manufacturer this week unveiled a new enhancement adding the sense of smell to its products. The new “Scratch ‘N’ Sniff Card” can be applied to loyalty, rewards, membership or gift card programs. Boston-based Arthur Blank & Co. is offering 120 enticing scents including hazelnut, cappuccino, cinnamon crunch, spearmint and orange spice. AB also says it is offering custom scents and targeting direct mail and promotional programs for the new product. The “Scratch ‘N’ Sniff Card” is available in all of AB’s standard products. Other recently launched AB products include the “MirrorCard,” the “AB RecycledCard,” “CornCard USA,” “DualKard,” and the “Dura7 Card.” AB has the capacity to print up to 1.4 billion cards per year.

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Cap One UK Caught in FSA PPI Crackdown

The U.K.’s Financial Services Authority fined Capital One Bank (Europe) about $350,000 for alleged unfairness and misrepresentation in marketing “Payment Protection Insurance” to its credit cardholders. The issuer has undertaken a full remedial program at a cost of around $6 million. The FSA’s investigation focused purely on credit card PPI sales. During 2005 Capital One sold approximately 335,000 U.K. credit card PPI policies. The FSA says Capital One failed to send a policy document to more than 50,000 PPI customers between January 2005 and April 2006, although they did receive a policy summary. Also, two out of four script options used by its sales associates did not ask the customer for consent explicitly to receive only limited information over the telephone; the scripts did not ensure adequate disclosure in enough cases of policy features and benefits and policy exclusions and limitations; failure to provide customers who purchased PPI other than by telephone with the policy document prior to the conclusion of the contract; and compliance monitoring of telephone sales of PPI was not sufficiently effective. The FSA is currently investigating over 200 PPI firms in the U.K.

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APACS Issues Update On Chip & Pin Progress

APACS’ progress report on chip & PIN technology reflects success a year
after the national change over to the new system. Reports show that over
99.9% of all transactions are now PIN verified, transactions
using the new system have gone up by 60 transactions per second over the
past year (to 185), and UK’s banks and credit cards have issued over 138
million chip and PIN cards. On a national scale, this represents 97% of
the UK’s total cards. Reports regarding the chip & PIN
technology also reflect that 98% of retailers, approximately
900,000 merchants, have upgraded equipment to be compatible with the new
technology, card fraud losses have been on a downward spiral and
transactions have been quicker. APACS plans to introduced even more
advanced security technology in 2007. APACS is the trade body for
payments that gives banks, building societies and card issuers a forum
where they can work together on non-competitive issues.

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Delta Joins AmEx’s Intl Airline Program

American Express has added Delta Air Lines as its 18th partner to its International Airline Program (IAP), available exclusively to Platinum Card and Centurion Card members. The International Airline Program is available when booking through Platinum Travel Services and Centurion Travel Services. It enables Card members to receive a complimentary companion ticket on qualifying international flights with the purchase of a first or business class ticket, depending on the carrier. The addition of Delta brings new non-stop destinations to the program including Istanbul, Kiev, Budapest, Bucharest and certain destinations within the Caribbean and Mexico. U.S. Cardmembers may use IAP as often as they like and enjoy the flexibility of a refundable ticket with no blackout dates.

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Consumers Plot & Plan Online in January

Consumers typically use January as a planning time and this year Web traffic shows a big uptick in visitation to tax, travel, careers and real estate Web sites. comScore Media Metrix reports that IRS.gov had 13.3 million visitors, a 205% increase over December, making it the top gaining property for the month. The Hotels/Resorts category experienced a 29% boost in visitation, led by Walt Disney Parks & Resorts Online with 6 million visitors. The top “Career Services” site in January was CareerBuilder with 21.1 million visitors. In the Real Estate category Move Network led with 8.5 million visitors. Overall, Advertising.com retained the number one position for the 33rd consecutive month, reaching 85% of the U.S. online population. Within the top ten, Google moved up two positions to number seven, reaching 61% of Americans online.

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GE Money to Issue the KIOTI Credit Card

Tractor manufacturer Daedong-USA has selected GE Money’s Sales Finance unit as its new consumer finance partner for the KIOTI tractor brand. Under the five-year agreement, GE Money will support the new KIOTI Finance program through more than 300 dealers nationwide. Approved customers can finance a new KIOTI tractor using the KIOTI private label credit card or with an installment loan backed by GE Money. Daedong-USA is the North American subsidiary of Daedong Industrial Company, Ltd., based in Daegu, South Korea. Daedong Industrial Company has been manufacturing tractors and equipment for 50 years. GE Money is a provider of credit services with $163 billion in assets.

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China Unicom & Smartpay Introduce Payment Service

In conjunction with SmartPay Jieyin, China Unicom has introduced a
new mobile phone payment service called “China Unicom Mobile Wallet”.
Registration for this product allows consumers access of mobile top-up,
payment of utility bills, insurance and highlights the ability to
purchase lottery tickets. SmartPay has established an extensive network
of banks for mobile, telephone and Internet based payments, including 8
headquarters and over 35 branches of China’s key banks.

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Trycera Intros an OEM Prepaid Card Program

Trycera Financial has launched a new OEM private label card program. The OEM program provides a cost effective, turnkey solution from end-to-end, avoids costly contract alternatives and guaranteed minimums required by processor, bank and association agreements. A company can tailor the look and feel of a branded card product to meet the needs of their targeted customer base. Prices for the new OEM private label card program range from $25K – $75K per OEM program depending on the complexity underlying the platform selected. The first OEM customer for the new Trycera OEM card platform is ?So You Want to be a Model?? contest administrators ESB Productions and CosmoGIRL Magazine via the Model Prepaid MasterCard. Other OEM customers will be announced in the coming weeks and months ahead as they are individually launched. Trycera Financial specializes in the delivery of prepaid card programs, prepaid card program management and private label catalog shopping cards.

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GSMA Launches a Pay-Buy Mobile Initiative

GSM Association (GSMA), the global trade organization for mobile
operators, has announced a pay-by-phone initiative by combining payment
card technology with Near-Field-Communication(NFC) in a cell phone.
Participating in the initiative are fourteen mobile operators with the
collective intention of facilitating payments through cell phones and
offering secure, transparent mobile payments for both customers and
financial institutions. These payments are to be made using a SIM
Universal Integrated Circuit Card (UICC) card in mobile phones plus
contactless/NFC technology.

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Capital One UK Caught in FSA PPI Crackdown

The Financial Services Authority fined Capital One Bank (Europe) about $350,000 for alleged unfairness and misrepresentation in marketing “Payment Protection Insurance” to its credit cardholders. The issuer has undertaken a full remedial program at a cost of around $6 million. The FSA’s investigation focused purely on credit card PPI sales. During 2005 Capital One sold approximately 335,000 U.K. credit card PPI policies. The FSA says Capital One failed to send a policy document to more than 50,000 PPI customers between January 2005 and April 2006, although they did receive a policy summary. Also, two out of four script options used by its sales associates did not ask the customer for consent explicitly to receive only limited information over the telephone; the scripts did not ensure adequate disclosure in enough cases of policy features and benefits and policy exclusions and limitations; failure to provide customers who purchased PPI other than by telephone with the policy document prior to the conclusion of the contract; and compliance monitoring of telephone sales of PPI was not sufficiently effective. The FSA is currently investigating over 200 PPI firms.

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