More V/MC Issuers Drop the Two-Cycle Method

More VISA and MasterCard issuers are backing away from using the two-cycle method of calculating finance charges. Chase announced last week it will switch to the average daily balance method of calculating finance charges on all of its cards. Many card programs established by predecessor First USA employed the two-cycle method of calculating finance charges, which recaptures interest from the previous billing cycle if the current balance due is not paid-in-full by the due date. The controversial method can add up to four months of extra interest charges per year under the worst case scenario for a cardholder. HSBC recently dropped the two-cycle method of calculating finance charges on its popular General Motors co-branded credit card program, switching to the average daily balance method. Discover, which launched in 1986, pioneered the two-cycle method and continues to use the method on its 50 million cardholders today.

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Credit Card Solutions Launches More Cards

Credit Card Solutions has introduced three additional pre-paid
debit card programs. This development has made the company the largest program
manager of international debit card programs. CCS
is signed
to more than 400,000 debit cards in several major payment networks. CCS
cards
can be used at more than 1.2 million ATM’s worldwide and millions of
merchant
locations, as well as for bill payments and online purchases. CCS first launched its prepaid program in 2005.

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VantageScore Hires a Top Product Manager

CT-based VantageScore Solutions has announced the hiring of Sarah Davies as a SVP to oversee the company’s analytics and product management. Previously, she oversaw analytics at IntelliRisk Management Corporation, a customer care and accounts receivable outsourcing company and served as EVP of marketing services at Bank One’s card products. Davies earned a MS in operations research and statistics from Iowa State University. VantageScore Solutions is an independently managed joint venture of Equifax, Experian and TransUnion, established to develop a universal, highly predictive and consistent credit scoring system for the consumer credit markets.

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GCA Inks Navegante Casinos for Cash Machines

Global Cash Access has signed an agreement with The Navegante Group to provide GCA’s full suite of products and services to Navegante’s seven gaming establishments. The Navegante Group will utilize GCA’s “QuikCash Plus Web” (QCP Web), “QuikCash” cash advance terminals, “3-in-1 Enabled QuickJack Plus” and “EDITH,” a kiosk placed at the end of a row of slot machines to enable casino patrons to purchase slot, or ticket-in ticket-out(TITO) vouchers with their debit card.

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NetSpend to Use NetEconomy Fraud Solution

Prepaid card issuer NetSpend has selected Netherlands-based NetEconomy’s “ERASE Compliance Manager” solution to detect and report potential money laundering and fraudulent activities. ERASE will monitor upwards of four million transactions monthly in order to detect and report suspicious debit-card activity. NetSpend processes over $4 billion in card payments annually. NetEconomy is a provider of financial crime management and compliance solutions with over 110 implementations across 48 countries.

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3M Library System Offers Card Options

3M has introduced the “3M Library System”, an automated checkout and fine and fee payments solution, at the American Library Association’s annual Mid-Winter Meeting. 3M Library Systems will offer a basic fines and fees self-pay option that allows for payment with credit or debit card and a flexible option, an automated payment machine that accepts paper currency and change. “3M SelfCheck Systems,” introduced in 1992, pioneered the field of automated library collection management and circulation functions. “3M SelfCheck Systems” employ radio frequency identification technology and/or bar codes to process the checkout and return of collection items. “3M Library Systems” provides security, productivity and information management solutions.

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Chase Nails Up a Contractor’s VISA Card

Chase has introduced an affinity business card for small contractors. The new “Chase Contractor Cash Rewards VISA Signature Business Card” offers a 60-day interest free, same-as-cash financing for construction material purchases of $1,000 or more. The new card also offers rewards, which provide 2% cash back on all construction material purchases up to $20,000 per month and 1% cash back on all other purchases. Chase says the new card also includes financial reporting features designed with contractors in mind to assist them with expense reporting, customer invoicing, customer service and financial management. The card carries a $50 annual fee, but is waived the first year. The APR is prime +4.99%.

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COF Card Profits Up 42% Y/Y; Slip Sequentially

Capital One’s fourth quarter U.S. credit card profits soared by 42% year-over-year but fell 27% sequentially to $337.2 million. Purchase volume in the U.S. was up 7.5% while U.S. managed card outstandings increased 8.3% from the year-ago quarter. The number of U.S. card accounts rose by about 150,000 during the quarter compared to about 300,000 in the prior quarter and total accounts remained flat year-on-year. U.S. card net income was $337.2 million, compared to $461.6 million in the prior quarter and $237.0 million for 4Q/05. U.S. managed card outstandings were $53.6 billion for 4Q/06 compared to $49.5 billion one-year ago and $51.1 billion in the previous quarter. Purchase volume hit $22.8 billion for 4Q/06, compared to $21.5 billion for 3Q/06 and $21.2 billion for 4Q/05. Capital One had 37.6 million accounts as of December 31st, compared to 37.5 million in the prior quarter and 37.6 million one-year ago. The managed delinquency rate (30+ days) for U.S. credit cards was 3.74% for the fourth quarter, compared to 3.53% for 3Q/06 and 3.44% for the fourth quarter of 2005. The net charge-off rate for U.S. credit cards was 3.82% for the fourth quarter, compared to 3.39% for the third quarter and 5.70% one-year ago. For complete details on Capital One’s fourth quarter performance, visit CardData ([www.carddata.com][1]).

COF U.S. CARD NET INCOME
4Q/05: $237.0 million
1Q/06: $602.8 million
2Q/06: $421.8 million
3Q/06: $461.6 million
4Q/06: $337.2 million
Source: CardData (www.carddata.com)

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

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GE MONEY 4Q/06

GE reported that profit for its Consumer Finance unit, now known as GE Money, climbed 13.6% in the fourth quarter to $875 million as revenues rose 18.9% $5.8 billion, compared to one-year ago. During the fourth quarter GE Money entered the agent bank market for general purpose credit cards as Hancock Bank will issue a “Platinum VISA” credit card product through GE Money to its customers in Mississippi, Louisiana, Florida, and Alabama. Also, GE Consumer Finance’s Retail Sales Finance unit changed its name to GE Money – Sales Finance and
Houston-based Finger Furniture Company renewed its agreement with GE Money for consumer financing services including the “Finger Five-Star Card.” For complete details on GE’s fourth quarter performance, visit CardData (www.carddata.com). (CF Library 10/17/06; 11/9/06; 11/27/06)

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PNC Financial Settles Over Katz IVR Patents

PA-based PNC Financial Services and CA-based Ronald A. Katz Technology Licensing have reached a settlement of patent litigation. PNC has agreed to pay an undisclosed sum for a nonexclusive license under a comprehensive portfolio of patents that Katz owns relating to interactive voice applications. Mr. Katz is the named inventor on a large number of patents primarily in the fields of telecommunications and computing and was aawarded a patent as co-inventor of Telecredit, Inc., an on-line real time credit and check cashing authorization system.

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TJX Breach to Affect More than 40MM Sig Cards

The recent security breach at TJX Companies may affect more than 40 million signature-based general purpose credit and debit cardholders worldwide. The latest hack took place between mid-May and December of last year but, was not publicly disclosed, at the request of law enforcement, until this week. However, the Company acknowledges a similar hack in 2003 that may have accessed credit and debit card sales transactions in TJX’s stores in the U.S., Canada, and Puerto Rico. The latest intrusion involves the portion of TJX’s computer network that handles credit card, debit card, check, and merchandise return transactions for customers of its 826 T.J. Maxx, 751 Marshalls, 271 HomeGoods and 162 A.J. Wright stores in the U.S. and Puerto Rico, and its 184 Winners and 68 HomeSense stores in Canada, and may involve customers of its 212 T.K. Maxx stores in the U.K. and Ireland. The intrusion could also extend to TJX’s 36 Bob’s Stores in the U.S. The Company has engaged General Dynamics and IBM to handle the problem.

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