Chase Card Profits Up 61%; Loans Flat

J.P. Morgan Chase reported this morning that second quarter credit card profits rose 61% from one-year ago to $875 million, however net income eased down from the first quarter’s record of $901 million. The high level of profits is driven by continued low bankruptcy losses. End-of-period managed credit card loans were flat at $139.3 billion due to higher customer payment rates. Chase notes that contributing to the higher payment rates are the new minimum payment rules and a higher proportion of customers in rewards-based programs. Second quarter charge volume was $84.4 billion, up 12% from the prior year. Net accounts opened during the second quarter were 24.6 million, including 21 million accounts from the Kohl’s acquisition. Chase also reported that branch sales of credit cards increased by 119% from the prior year and 60% from the prior quarter. Chase had 136.7 million cards issued at the end of the quarter. Merchant processing volume was up 18% to $166.3 billion, compared to 2Q/05. The managed net charge-off rate for the quarter decreased to 3.28%, down from 4.87% in the prior year and up from 2.99% in the prior quarter. The 30-day managed delinquency rate was 3.14%, down from 3.34% in the prior year and up from 3.10% in the prior quarter. For complete details on Chase’s second quarter performance, visit CardData ([www.carddata.com][1]).

JPM CHASE HISTORICAL ($billions)
2Q/05 3Q/05 4Q/05 1Q/06 2Q/06
EOP Outstandings: $137.3 137.6 142.3 134.3 139.3
Charge Volume: $ 75.6 76.4 79.6 74.3 84.4
Source: CardData (www.carddata.com)

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

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Social Assistance Prepaid Cards are Introduced

Mint Technology and FP Financial have teamed to provide the first prepaid financial services product in Canada used to remit recurring social assistance benefits to Canada’s First Nations communities. The “FirstPeoples Prepaid Benefits Card” program will allow
administrators and benefit recipients to take advantage of direct financial savings, convenience and the added safety and security that a traditional credit card offers. Under the program, social assistance
benefits can be remitted monthly onto personalized prepaid cards and
recipients will then be able to have immediate access to funds; withdrawing funds from ATMs and making purchases everywhere traditional credit cards are accepted.

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VendTek’s Now Prepay Enters Agreement

VendTek Systems’ subsidiary Now Prepay Corp. has entered into an agreement
with a marketing company for the sale and distribution of third party gift
cards in Now Prepay’s customers’ national and regional chain retail
locations throughout Canada. Now Prepay’s technology allows the
company’s portfolio of 3rd party gift cards, also know as a gift card
mall, to be activated at Now Prepay retailers. Now Prepay will begin the
roll-out of the gift card mall in August and expects to have close to
1,000 retailers participating by Christmas.

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4Access Orion Terminal is Certified

OMEGA Processing Solutions has Class A certified and launched the “Orion” all-in-one check reader, imager and card solution from 4Access Communications Company. The “Orion” from 4Access Communications is a comprehensive, stand-alone solution for reading and processing checks, credit cards, debit cards, loyalty cards, EBT cards and gift cards. Other services provided by 4Access Communications include the Web-based “Archive and Retrieval System” and the “Terminal Configuration Server.”

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Senate Hearing Draws Heated Testimony

The U.S. Senate Judiciary Committee’s hearing on “Credit Card Interchange Rates: Antitrust Concerns?” drew strong testimony from industry leaders and merchant representatives. MasterCard said any attempt to regulate the electronic payment system would ultimately cost consumers. MasterCard noted that it is a fundamental principle of antitrust law that the free market, not the government, should set prices. The Merchants Payments Coalition said the collective setting of interchange fees represents on-going antitrust violations by the VISA and MasterCard and amounts to a hidden tax on consumers. The The National Retail Federation said Americans pay some of the highest credit card interchange fees in the world, but most consumers don’t even know these fees exist because VISA and MasterCard make it virtually impossible for merchants to tell them.

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Carlson Intros the GoldPoints Plus VISA

Carlson Hotels Worldwide and Bank of America have teamed to launch a co-branded rewards card. The new “goldpoints plus VISA” offers three points for every $1 U.S. spent on purchases. Cardholders will also earn 2,000 bonus points with each qualifying hotel stay at Carlson hotels. Members who book online can also receive 1,000 bonus points. Cardholders who make their first purchase with the card before July 31st will earn 20,000 points, while cardholders making their first purchase anytime after August 1st will earn 10,000 points. Free night stays begin at 15,000 points. Carlson has 900 hotels including Radisson Hotels, Park Plaza Hotels, Country Inns & Suites By Carlson and Park Inn.

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Lipman’s NURIT & Dione POS Receive Certifications

Lipman Electronic Engineering announced that it has received ETSL
and ANZ security approvals in New Zealand for a wide range of the
company’s payment solutions. The approved products include the “NURIT
8100 Secure Multifunction Solution,” “NURIT 8210 Handover Payment
Terminal,” “Dione Secura PIN Pad,” “Dione Secura Integration Modules” and “Dione Xplorer Portable Payment Terminal.” These certifications come from the two major payment processors in New Zealand, and along with prior certifications from APCA, the Australian Payment Clearing Association, enable Lipman to market these payment systems to nearly all banks, processors and acquirers in New Zealand and Australia.

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Fiserv Names a New Corp Controller

WI-based Fiserv has promoted Joseph Gibson to the position of SVP and corporate controller effective August 1st. Gibson replaces Thomas Hirsch, who was promoted to executive vice president and chief financial officer of Fiserv effective July 1, 2006. Gibson joined the corporate finance department of Fiserv in 1999 as manager of financial reporting. Fiserv, Inc., a Fortune 500 company, provides information management systems and services to the financial and health benefits industries.

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Rahaxi is Approved to Sell Hypercom Terminals

Rahaxi Processing Oy. has received the Finnish EMV
certification required to sell Hypercom’s “Optimum T2100” card payment
terminal in Finland, and is commencing product sales immediately.
Rahaxi Processing will be the first distributor of the “T2100” in
Finland. EMV is the standard created by Europay, MasterCard and VISA
International to ensure that all Europay, MasterCard, and VISA branded
smart cards and all smart card reading terminals work together to
deliver global interoperability and enhanced security. Chip and PIN
technology is being implemented in Finland to increase security by using
smart cards in tandem with Personal Identification Numbers (PINs).

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Dollar Tree to Accept Discover Cards

Dollar Tree Stores has inked a deal wherein Discover Network cards will be the only credit cards accepted for payment at its more than 2,100 locations nationwide. Dollar Tree Stores is the nation’s largest $1.00 discount variety store chain. Dollar Tree Stores, a leader in this retail market with reported sales of nearly $3.4 billion for 2005, also reported an increase of 14 percent in sales for the first quarter of 2006. Discover Financial Services, a business unit of Morgan Stanley (NYSE:MS), operates the Discover Card with more than 50 million Cardmembers, and the Discover Network, which is the largest proprietary credit card network in the U.S. with more than 4 million merchant and cash access locations.

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BPSL Completes the Voca Installation

BACS Payment Schemes Limited (BPSL) and its 13 member banks have completely replaced the automated payments system. The Voca
“Payments Engine” was developed and implemented in a massive IT program
coordinated between Voca and the UK banking industry. The system is part of the “Critical National Infrastructure” and underpins the
UK economy, processing over 90% of the country’s salaries, 70% of
household bill payments and the majority of state benefits. The system handles about GBP 3 trillion in automated payments. “Voca Payments
Engine” can process the equivalent of the entire daily automated payment
volumes of the European Union in four hours.

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Hawaiian Air Launches an Activities Card

Hawaiian Airlines has introduced a pre-paid “Activities Card” for the island of Oahu which offers unlimited access to participating attractions and activities on the island as well as discounts on admissions. Hawaiian also offers pre-paid activity cards for Los Angeles, San Francisco, San Diego, and Seattle, and is planning to expand the Hawaii program to other islands. The airline is offering a 1-day, 2-day, 3-day, 5-day and 7-day activity card. The card is activated only for the day it is used for admission and need not be used on consecutive days. Hawaiian is the second largest provider of passenger air service between Hawaii and the U.S. mainland.

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