Merchants Want Operating Rules Transparency

The Merchants Payments Coalition says the VISA and MasterCard recent decisions to publish interchange fees brings to light the need for further transparency. The MPC says the information shows a bewildering array of rates for different cards, merchants and types of transactions, which emphasizes the opacity of interchange. But, without the operating rules that govern how these fees are applied, the information is useless. The MPC also noted that VISA’s announcement last week inaccurately stated that merchants “do not pay interchange” but pay a merchant discount fee instead. The MPC says that in fact, interchange is a non-negotiable fee paid as part of the merchant discount fee, accounting for approximately 80% of the total merchant discount fee. VISA and MasterCard do offer merchants access to some of their operating rules.

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Struggling S1 Corp Searches for a New CEO

Atlanta-based SI Corporation announced this morning that its Chairman, Director, and CEO, James Mahan has retired. The announcement came as a Special Committee of its Board of Directors completed a review of strategic alternatives for the struggling firm. With Mahan’s departure the Company announced that Director John Spiegel has been elected Chairman and that a search for a new CEO is underway. Mahan was named CEO in July 2005. He had originally served as CEO from 1995 to 2000 as the founder. The Company also announced that it is planning a “Dutch Auction” tender offer to purchase approximately 15% of its outstanding common stock to raise about $55 million.

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5/3 Signs Three Processing Contracts

Fifth Third Processing Solutions has signed contracts for merchant processing services with Green Mountain Energy Company, Little Caesar Enterprise, and Western Michigan University. Green Mountain Energy Company is one of the nation’s leading retail providers of cleaner electricity products, offering residential, business, institutional and governmental customers the choice to support cleaner electricity generated from sources. Little Caesar Enterprise, Inc was started in 1959, and is the world’s largest carryout pizza chain and one of the top four international pizza chains with restaurant locations on five continents. Western Michigan University, located in Kalamazoo, was founded in 1903 and is a nationally recognized research university with an enrollment of more than 26,000. Fifth Third Bank Processing Solutions processes over 17 billion ATM and POS transactions per year for more than 1,500 financial institutions and over 147,000 retail locations worldwide, including the Armed Forces Financial Network (AFFN), First Niagara Financial Group, Sovereign Bank, The Kroger Co., AutoZone, Abercrombie & Fitch, Nordstrom, Inc. and The Finish Line.

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PayPal Payment Volume Up 37%; Tops $9B

eBay reported that PayPal had 122.5 million total accounts at the end of the third quarter, a 41% increase from one-year ago. Total payment volume rose 37% to a record $9.1 billion which includes payments initiated through the PayPal system but excludes its payment gateway business. The number of active accounts hit 30.9 million as of September 30th, its highest level to-date. During the third quarter, PayPal handled 146.2 million payments, a 2% increase over the prior quarter but, up 25% from 2Q/05. PayPal’s 3Q/06 transaction revenue rate was flat at 3.73%, but, up 13 basis points from one-year ago. The processing expense rate for the third quarter was 1.07%, compared to 1.11% for 3Q/05. PayPal’s transaction loss rate came in at 35 basis points, up 11 basis point from one-year ago. PayPal Merchant Services posted a record $3.3 billion in global TPV in the third quarter, representing a 59% increase from the $2.1 billion reported in the year ago quarter. During the third quarter, PayPal settled with 28 U.S. Attorneys General to simplify its user agreement and communicate more details on its fraud protection program plus pay $3.5 million in costs. For complete details on eBay/PayPal’s third quarter performance, visit CardData ([www.carddata.com][1]). (CF Library 9/29/06)

PAYPAL HISTORICAL
$VOLUME #ACCOUNTS
3Q/05 $6.7 billion 86.6 million
4Q/05: $8.1 billion 96.2 million
1Q/06: $8.8 billion 105.0 million
2Q/06: $8.9 billion 113.7 million
3Q/06: $9.1 billion 122.5 million
SOURCE: CardData (www.carddata.com)

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

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VISA Launches an Online Business Resource

VISA USA has launched an experiential online resource via MSN for small business owners. The new “Business Breakthrough, Presented by VISA” offers advice from small business experts, video case studies profiling five small business owners, a contest for small business owners to win their own expert consultation, as well as articles and tips that will help small businesses operate more efficiently. VISA recently reported that small business sales volume on “VISA Business” cards in the U.S. has now surpassed $100 billion over a 12-month period.

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Natl City Builds a Top Prepaid Portfolio

Cleveland-based National City reports it has topped one million VISA gift cards since it introduced the prepaid product in 2002. Approximately 60% of gift cards were sold this year through National City branches and 38% were purchased in bulk by business customers, either online or by phone. The average load on individual gift cards sold year-to-date is $129, representing an increase of 26% over last year for individual cards, and a 25% annual increase on the average load for bulk gift card sales to businesses. National City offers the “VISA Gift Card,” “Diamond Edition VISA Gift Card,” “VISA Buxx Teen Card” and “VISA TravelMoney.”

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Aussie Credit Card Debt Hits a New High

Credit card debt in Australia soared to a new record, slightly topping A$37.0 billion in August. Credit card volume hit its second high for the year after declining for two consecutive months according to this week’s CardFlash International. Card volume hit A$16.5 billion during August, compared to A$15.4 billion in July. During the past twelve months, credit card debt has increased 16% in Australia. Year-on-year credit card volume has increased 8% in Australia. Card credit limits reached A$99.8 billion at the end of August, compared to A$88.4 billion for August 2005. There are currently 13.1 million credit card and charge card accounts in Australia, compared to 12.2 million one-year ago.

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FDC Healthcare TX to Process on Discover Net

First Data has been certified by Discover Financial Services to process general acceptance healthcare transactions on the Discover Network. By providing certification to First Data Healthcare Services, Discover Network expects to broaden the agreement for future testing and certification of additional processing functionality, which will further enhance the consumer’s experience when using a Discover Network employee benefit card to access qualified tax advantaged healthcare, dependant care, and transit accounts. First Data Healthcare Services offers a multi-purpose card that provides access to HSA, HRA, and FSA accounts and line of credit, along with eligibility, benefit, and claims data, through a powerful point-of-care network. Discover Financial Services LLC, a business unit of Morgan Stanley (NYSE:MS), operates the Discover Card with more than 50 million Cardmembers, and the Discover Network with more than 4 million merchant and cash access locations.

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Ingenico Revenues Rise 15% in 3Q/06

Terminal manufacturer Ingenico reported third quarter sales of $151.3 million compared to $131.2 million for 3Q/05. The Company says sales was driven by strong sales in North America, as well as in Southern Europe, the Middle East and Africa. Historically, the third quarter is a slower period for the company. However, year-to-date sales are running more than 20% over 2005. During the third quarter Ingenico implemented the SNMP protocol in its TCP/IP payment terminals and received “Class B” certification on the “i7780,” “i5100” and “3010” PIN Pad from Chase Paymentech Solutions. The Company also recently teamed with Gilbarco Veeder-Root to develop and deliver comprehensive integrated indoor and outdoor payment technologies that automate petroleum retail sites. Ingenico is currently in the process of mergering with MoneyLine. For complete details on Ingenico’s latest results visit CardData ([www.carddata.com][1]). (CFI Library 8/28/06; 10/2/06; 10/10/06)

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

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EPX Signs a U.S. Transactions Deal with TNS

Transaction Network Services has signed a three-year deal to provide network services for Electronic Payment Exchange’s U.S. merchant transactions. Straight Through Processing from EPX solves the problems created by multiple vendor payment processing and provides efficiencies for merchants. With an end-to-end solution, EPX not only reduces merchants’ costs by eliminating third-party gateway fees, but also increases speed and efficiency. Transaction Network Services is one of the leading providers of business-critical, cost-effective data communications services for transaction-oriented applications. Electronic Payment Exchange is a full-service payment processing company that specializes in enabling businesses to accept credit card, debit card and electronic check payments.

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WaMu Card Outstandings Rise 14% in Q3

Seattle-based Washington Mutual reported that it opened 815,000 new credit card accounts during the third quarter and that card outstandings rose 14%, compared to one-year ago. Net income for the quarter of $210 million matched its first quarter record and was up an estimated 12% over 3Q/05. Managed card receivables were $21.9 billion as of September 30th, compared to $19.3 billion one-year ago. The 30+ day delinquency rate rose 30 basis points to 5.53% compared to 5.23% for the second quarter. However, charge-offs declined from 5.99% in the second quarter to 5.68%. WaMu notes that without the impact of the planned sale of $403 million of higher risk accounts, managed receivables at the end of the third quarter would have been approximately $22.3 billion and the delinquency rate would have been 5.99%. During the quarter WaMu teamed with ESPN to launch a co-branded sports credit card, the “ESPN Total Access VISA.” For complete details on WaMu’s latest performance, visit CardData ([www.carddata.com][1]). (CF Library 9/14/06)

WaMu/Providian Net Income Track Record
3Q/05: $188.1 million*
4Q/05: $166.0 million
1Q/06: $210.0 million
2Q/06: $183.2 million
3Q/06: $210.0 million
* not publicly disclosed
Source: CardData (www.carddata.com)

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

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INGENICO 3Q/06

Terminal manufacturer Ingenico reported third quarter sales of 120 million euros compared to 104.0 million euros for 3Q/05. The Company says revenues were driven by strong sales in North America, as well as in Southern Europe, the Middle East and Africa. Historically, the third quarter is a slower period for the company. However, year-to-date sales are running more than 20% over 2005. During the third quarter Ingenico implemented the SNMP protocol in its TCP/IP payment terminals and received “Class B” certification on the “i7780,” “i5100” and “3010” PIN Pad from Chase Paymentech Solutions. The Company also recently teamed with Gilbarco Veeder-Root to develop and deliver comprehensive integrated indoor and outdoor payment technologies that automate petroleum retail sites. Ingenico is currently in the process of mergering with MoneyLine. For complete details on Ingenico’s latest results visit CardData (www.carddata.com). (CFI Library 8/28/06; 10/2/06; 10/10/06)

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