Portfolio Returns Hit an Artificial High

The return on average credit card assets has rebounded to record levels after the industry digested the fall explosion in personal bankruptcies. After dipping below 100 basis points in November the ROAA has steadily surged, reaching 246 basis points for March 2006. The ROAA is determined by dividing the after-tax return by the average managed card outstandings and then annualizing. The figures do not include the impact of American Express and Discover performance. While returns have been pumped up by a sharp fall-off in charge-offs, issuers are reporting that delinquency is rising again. Rising interest rates, higher minimum payments and increasing energy costs appear to be pushing delinquency upward. Therefore, the record ROAA for March may simply be an aberration.

RETURN ON AVERAGE ASSETS
Mar 05: 1.24%
Apr 05: 1.20%
May 05: 1.17%
Jun 05: 1.19%
Jul 05: 1.28%
Aug 05: 1.39%
Sep 05: 1.46%
Oct 05: 1.40%
Nov 05: 0.84%
Dec 05: 0.81%
Jan 06: 1.11%
Feb 06: 1.98%
Mar 06: 2.46%
Source: CardData (www.carddata.com)

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TSAI Acquires Germany’s eps for $36 Million

Transaction Systems Architects and Electronic Payment Systems AG announced they have entered into an agreement for TSA to acquire the outstanding common shares of eps for an aggregate purchase price of 28.2 million euros. Frankfurt-based eps has operations in Germany, the United Kingdom, Romania and Switzerland and is a major provider of electronic payment systems in Germany and Switzerland. Key customers for eps include ATOS Worldline Processing, CardProcess, Citibank, Commerzbank, Citibank Card Acceptance Germany, BNP Paribas, Credit Suisse, Deutsche Bank, Pluscard, UBS and VISA International. The deal is expected to fully close on October 31st. Germany is the third largest electronic payments market in the world.

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TSAI Acquires Germany’s eps for $36 Million

Omaha-based Transaction Systems Architects has sealed a deal to acquire Germany’s Electronic Payment Systems AG for $36.4 million in cash and stock. Frankfurt-based eps has operations in Germany, the United Kingdom, Romania and Switzerland and is a major provider of electronic payment systems in Germany and Switzerland. Key customers for eps include ATOS Worldline Processing, CardProcess, Citibank, Commerzbank, Citibank Card Acceptance Germany, BNP Paribas, Credit Suisse, Deutsche Bank, Pluscard, UBS and VISA International. The deal is expected to fully close on October 31st. Germany is the third largest electronic payments market in the world.

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Attorneys Fight the New Bankruptcy Law

The Connecticut Bar Association and the National Association of Consumer Bankruptcy Attorneys have filed suit in the federal court challenging several key provisions of the “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.” The CBA says the new law creates requirements for “debt relief agencies” that prohibit lawful legal advice. The U.S. Justice Department has taken the position that attorneys are “debt relief agencies.” The CBA asserts that these provisions impair the constitutional rights of attorneys and their clients under the First and Fifth Amendments to the Constitution. The Attorneys’ Group says some attorneys are being deterred from representing any individuals in bankruptcy, even pro bono, because they are afraid of being classified as “debt relief agencies.” In other cases, attorneys will not even talk to clients on the telephone for fear of violating these provisions or feel they are restricted in giving legal advice.

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CO-OP Network Distributes Record Patronage

Ontario, CA-based CO-OP Network announced a patronage distribution of $10.4 million for 2005, as transaction volumes topped 1.1 billion last year. All CO-OP Network member-shareholders receive a portion of the patronage distribution. The payout represents nearly one-cent per ATM and point-of-sale transaction. The distribution to member-shareholders establishes a new CO-OP Network standard for the tenth straight year.

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48% of Consumers Do Not Check Credit Reports

A new research report has found that 48% of consumers never check their credit reports and 19% say they check their reports less than once a year. The study by Roper Public Affairs for Trans Union’s “TrueCredit” service also found that those with household incomes of $50,000 or greater are more than twice as likely to know their credit score as those who make less (34% vs. 15%). Additionally, 69% of those making less than $20,000 never check their credit reports, compared to 33% of those making $50,000 or more per year.

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GPN Inks Diversified Acquiring Solutions

Global Payments has inked a deal with NY-based Diversified Acquiring Solutions Sales Corp. to provide end-to-end processing services and an integrated gateway solution for Diversified’s retail and restaurant merchants. Diversified Acquiring Solutions specializes in providing customized marketing and payment solutions for community banks and merchants across the country and process nearly $1 billion in transaction volume.

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MACATFO Adds the OPC Payment Card Option

The Minnesota Association of County Auditors, Treasurers and Finance Officers has launched a new, centralized online portal where Minnesotans in 19 counties may make secure electronic property tax payments via Official Payments Corp. The portal is being offered by MACATFO to all of Minnesota’s 87 county governments as an easy, fast and cost effective way to begin accepting electronic property tax payments. Through this unique new portal, counties may create their own customized home pages with county-specific tax collection and payment information. The system accepts all real estate and mobile home tax payments.

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Q Comm Intl Delays First Quarter Results

Utah-based Q Comm International has delayed its first quarter report due to a recent upgrade of its accounting infrastructure and software. The Company will file a notice with the SEC under Rule 12b-25 to extend this deadline to file this Form 10-Q on or before May 22, 2006. At a later date, the Company will also announce a conference call to discuss its first quarter financial results. Q Comm International is a prepaid transaction processor.

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Sovereign & Cardtronics Deal Expands in NY

Sovereign Bank and Cardtronics have expanded their existing branding agreement to include an additional 484 ATMs in CVS/pharmacy locations in the New York tri-state area. As with the original agreement, all Sovereign branded ATMs in CVS/pharmacy stores will be surcharge-free to Sovereign Bank customers. Sovereign Bancorp is the parent company of Sovereign Bank, a pro forma $83 billion financial institution.

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Diebold Promotes Two Executives

Diebold has promoted Sandra Edwards to the newly created position of general business manager for the Hawaii region and Vincent Gannon to account manager in Diebold’s strategic accounts group. Edwards is responsible for sales, professional services and all support activities, including service and installation. She joined Diebold in 1997 as a service sales specialist in Memphis, Tenn. She served as a regional sales manager in the Denver, Colo. area for four years. Gannon will oversee sales in Southern California. Gannon joined Diebold in 1999 as a key account executive in Honolulu, where he served as a sales manager in the Hawaii region from 1999 to 2006.

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FTC Tackles ID Theft Prevention Again

The Federal Trade Commission this week launched a nationwide education program to help consumers minimize their risk of becoming a victim of identity theft. The “AvoID Theft: Deter, Detect, Defend” campaign will send education kits to 4,500 victim advocates across the country. Also, the U.S. Social Security Administration will involve its field offices. Other partners include the National Association of Realtors, the American College Personnel Association – College Student Educators International, the National Association of Student Personnel Administrators, the National Crime Prevention Council, the National Apartment Association, and America’s Community Bankers. To-date, the FTC has distributed more than 22 million publications on identity theft.

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