Monthly Payment Rates Collapse in May

Monthly payment rates, the amount that cardholders pay on their credit card debt, nose-dived in May after setting a new industry record in April. The monthly payment rate declined 260 basis points over the prior month in May. Among credit card-backed bonds, the monthly payment rate was 19.14% in May, compared to 21.74% in the prior month. According to FitchRatings, the payment rate averaged 19.97% during the first quarter and averaged 18.60% for 2005. Five years ago the monthly payment rate hovered around 15%.

Monthly Payment Rate
Dec 05: 18.90%
Jan 06: 19.97%
Feb 06: 20.85%
Mar 06: 19.10%
Apr 06: 21.74%
May 06: 19.14%
Source: FitchRatings

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TNB Payments Conference Lands a Top Author

TNB Card Services’ mid-October “2006 Payments Conference” will feature best selling author, Renee Mauborgne, co-author of “Blue Ocean Strategy”. Mauborgne, a recognized expert on business strategy, innovation, and wealth, will discuss the principles and tools for identifying the strategic moves credit unions can make to capture their own “blue oceans” of untapped market space. TNB Card Services, owned and directed by credit unions since 1976, provides electronic payments processing, as well as an agent issuing solution for credit unions nationwide.

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Chase Launches an ATM U.S. Open Ticket Giveaway

Chase is turning its 1,789 NYC metro-area ATMs into instant-win machines that will dispense receipts good for free tickets to this week’s “U.S. Open”. Anyone using a participating Chase ATM should check the back of their ATM receipt to see if they’ve won. Winning receipts will have a blue tennis ball with the words “Winner!: You’ve Won!” on the back. Chase has 112 million credit cards issued and serves consumers and small businesses through more than 2,600 bank branches, 7,400 ATMs and 280 mortgage offices as well as through relationships with 15,600 auto dealerships and 2,500 schools and universities.

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Bluetooth Technology Raises Security Concerns

Bluetooth technology is raising the risks to financial services institutions. A new report from TowerGroup says the next wave of attacks will focus on corporate LANs and will come through networked devices that leverage a Bluetooth network interface. The implementation of Bluetooth as both an embedded and peripheral capability in a host of consumer and enterprise-class devices has increased at a CAGR of 172% since 2002. Unlike Wi-Fi, Bluetooth presents security risks that have not been considered by most financial institutions. This overall lack of awareness makes institutions vulnerable to possible threats to security associated with the adoption of Bluetooth’s networking capability and availability.

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UK Post Office Expands its ATM Deployment

The U.K.’s Post Office plans to install an extra 500 ATMs in its branches this year. The P.O. has already committed to roll out 1,000 within the next five years under a deal with the Bank of Ireland. The P.O. recently installed a free-to-use ATM service at the Speke branch in Liverpool, replacing a fee-charging ATM. Since installing the free ATM service, use of the cash machine has already increased seven-fold. As a result, the Post Office also confirmed its intention to withdraw from its involvement with third party fee-charging ATM suppliers.

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ATB BUSINESSCARD

Alberta-based ATB Financial has introduced two new business
MasterCard products that offer a rewards program. The “Alberta Gold Rewards BusinessCard MasterCard” and the “Alberta Gold Ag-Rewards BusinessCard MasterCard” offers 1.5 points for every $1 spent on the card. Points may be redeemed for rewards such as a Honda ATV, an Oregon Scientific Weather Station, and QuikAir flight coupons. ATB Financial is the largest Alberta-based financial institution in Canada with more than 600,000 customers.

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WAY Systems Names a New VP/Global Services

Boston-based WAY Systems has hired Bruce Shirey, formerly with First Data/CardService International, as VP/Global Services. Shirey is a pioneer in the Internet Payments Industry where he created an Applications and Software development team that built one of the first and most successful secure payment gateways while at CardService International. WAY Systems is a leading global service provider of mobile phone based Point of Sale solutions designed for millions of unwired merchants worldwide. WAY Systems has gained recognition for its award-winning end-to-end payment solution for acquirers, payment processors and POS resellers that work out-of-the-box, virtually anywhere.

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AmEx Names a New Corporate Treasurer

American Express has named David Yowan, who joined the Company in 1999, as SVP/Corporate Treasurer. As corporate treasurer, Mr. Yowan will be responsible for management of capital resources at American Express, the management of short- and long-term funding, asset securitization, market risk and overall cash management. Prior to joining American Express, Mr. Yowan was senior vice president, portfolio and risk management, for the global consumer banking business of Citigroup. American Express Company (www.americanexpress.com) is a leading global payments, network and travel company founded in 1850.

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VISA and FDC Settle Their Transaction Dispute

VISA USA and First Data confirmed that they have agreed to settle a four-year legal dispute over the processing of VISA payment card transactions. The two companies also agreed to work together to build a stronger business relationship. The two giants say that new leadership recognized a mutual interest in resolving legal differences. VISA agreed to provide financial support to pursue mutual business opportunities and cost cutting initiatives that are expected to drive new innovation, reliability, security and new merchant acceptance. First Data agreed to transition existing private arrangements between itself and VISA member financial institutions onto “VisaNet.” Specific terms of the settlement are confidential.

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Late Stage Delinquency Begins to Build Again

Delinquency is slowly but surely returning as the economy faces new hurdles. The latest figures for “prime” credit card-backed securities shows delinquency (60+ day) has been climbing for the past three months. According to the latest “Fitch Credit Card Index,” “prime” delinquency increased to 2.41% in May, compared to 2.37% for April and 2.34% for March. Fitch says it expects a slowdown in consumer spending, although credit card usage may increase as they are used to purchase gas and consumers revolve more frequently.

ABS HISTORICAL
Month Delinquency
Dec 05: 2.54%
Jan 06: 2.26%
Feb 06: 2.09%
Mar 06: 2.34%
Apr 06: 2.37%
May 06: 2.41%
Source: Fitch Ratings

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Metavante Acquires a Payment Software Concern

Milwaukee-based Metavante Corporation has inked a deal to acquire CA-based VICOR a provider of corporate payment processing software. VICOR will provide Metavante with the opportunity for future growth in other markets that require complex payments and receivable processing, such as healthcare and government payments, and the brokerage industry, where Metavante also offers a suite of other payment-related products. VICOR, Inc. is the leading provider of solutions that optimize the processing of complex payments for businesses and financial institutions. Metavante Corporation delivers banking and payments technologies to financial services firms and businesses worldwide.

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