Target Card Profits Soar as Metrics Improve

Target reported that its pre-tax credit card profits for the quarter ending January 28th increased 43% over the year-ago quarter and 22% sequentially. Credit card outstandings increased 13%, topping $6 billion compared to 4Q/04. Target’s fourth quarter pre-tax credit card profits were $192 million, compared to $158 million in the prior quarter and $134 million one-year ago. Target reported that its total credit card receivables, which include its VISA and “Guest” cards, were $6.18 billion as of January 28th, compared to $5.46 billion one-year ago. Delinquency (90 days+) for 4Q/05 declined to 2.8%, compared to 3.2% in the prior quarter and 3.5% one-year ago. Charge-offs were 6.5% for 4Q/05 compared to 8.1% in the prior quarter and 7.6% one-year ago. Target’s credit card unit had revenues of $342 million in 4Q/05, a 19% increase over 4Q/04. For complete details on Target’s latest performance, visit CardData ([www.carddata.com][1]).

TARGET CARD LOAN HISTORICAL
(Excludes Mervyn’s & Marshall Field’s)
4Q/04: $5.456 billion
1Q/05: $5.251 billion
2Q/05: $5.421 billion
3Q/05: $5.544 billion
4Q/05: $6.177 billion
Source: CardData (www.carddata.com)

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

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Hypercom to Incorporate CIC’s SignatureOne

Hypercom and Communications Intelligence Corp. have partnered to integrate CIC’s “SignatureOne” suite of biometric and electronic signature products with Hypercom’s 32-bit “Optimum L4100” and “Optimum 4250” signature capture card payment devices. Under the terms of the agreement, CIC will license its complete SignatureOne(TM) suite of biometric and electronic signature products to Hypercom, initially for incorporation into Hypercom’s 32-bit Optimum L4100 and L4250 signature capture card payment devices and for resale. The companies are jointly pursuing additional opportunities in the financial services, retail and health care markets. Communications Intelligence is a supplier of electronic signature capture solutions for business process automation in the financial industry and the recognized leader in biometric signature verification.

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Heartland Payment Systems Profits Rise 143%

NJ-based Heartland Payment Systems posted fourth quarter revenues of $227 million, a 35% gain over the fourth quarter of 2004. Net income for the quarter was $5.5 million compared to net income of $2.3 million for 4Q/04. The Company says over 69% of new merchants installed and 58% of total transactions this quarter were on HPS Exchange, helping reduce processing and servicing expense in the quarter to 10.0% of revenues from 12.1% a year ago. Processing volume for the three months ended December 31st increased 32% to $9.1 billion. HPS’ active merchants count rose to 110,500 at year-end, a 24% increase over the past twelve months. For complete details on Heartland Payment Systems’ fourth quarter performance, visit CardData ([www.carddata.com][1]).

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

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Relay Capital Acquires the Bux Cash Card

Arizona-based Relay Capital Corp. has acquired Canada’s Bux Cash Card. The First Cash Card debit card can be used at over 5 million ATM machines and over 1 million Point of Sale (POS) terminals worldwide. Its principle growth has been in the check cashing industry where employees can obtain a First Cash Card at no charge. First Cash Cards allows $2,500 in ATM daily withdrawals and $2,500 in POS transactions. Relay Capital Corporation is a developer and marketer of prepaid financial services. First Cash Card provides debit cards to the unbanked and underbanked in Canada.

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Pay By Touch Adds Two Credit Executives

San Francisco-based Pay By Touch has hired Drew Hyatt as SVP and Elizabeth Yata as VP/Group Product Manager to lead its banking and credit authorization services. Hyatt was president of HNC Software’s Financial Solutions Group and SVP and corporate officer of Digital Insight. Yata was formerly with Bank of America, holding numerous product management positions including VP and group product manager for both retail and wholesale banking services. Prior to BofA, Yata spent nine years in various roles at VISA USA, including SVP of service management. In January the firm closed more than $60 million in new financing, raising more than $190 million during the past three months. (CF Library 1/27/06)

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Bankruptcies Drive CompuCredit Profits Down

Atlanta-based sub-prime specialist CompuCredit reported that profits collapsed in the fourth quarter due to the recent surge in bankruptcies. Net income declined from $26.9 million one-year ago to $3.0 million for 4Q/05. Net charge-offs, based on average credit card loans, rose to 13.4% from 10.4% in 3Q/05 and 12.0% in the fourth quarter of last year. Delinquency (60+ days) declined to 9.3%, compared to 9.6% in the prior quarter. One-year ago delinquency stood at 10.4%. Total managed receivables for the fourth quarter were $2,493,244,000, a 14% increase compared to one-year ago. As of December 31st, CompuCredit had 3,588,000 accounts, compared to 2,963,000 at the end of 2004. The issuer added a record 477,000 accounts in the fourth quarter. The net interest margin was 22.4% in the fourth quarter, as compared to 23.2% for the third quarter and 20.2% one-year ago. For complete details on CompuCredit’s fourth quarter performance, visit CardData ([www.carddata.com][1]).

COMPUCREDIT NET INCOME SNAPSHOT
4Q/04: $26.9 million
1Q/05: $49.2 million
2Q/05: $66.5 million
3Q/05: $52.7 million
4Q/05: $ 3.0 million
Source: CardData (www.carddata.com)

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

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An Islamic Sharia Compliant Card Launched

United Arab Emirate’s Dubai Islamic Bank has teamed with London-based Card Tech Limited to launch its first credit card that is fully compliant with Islamic Sharia’a principles. The new “DIB Alislami VISA” is available as a “Classic,” “Gold,” “Gold Executive” or “Platinum” card. Dubai Islamic Bank was established in 1975 and is the first Islamic bank to have incorporated the principles of Islam in all its practices according to this week’s issue of CardFlash International. DIB has been a client of CTL since 1991 when it selected CTL’s “CARDMAN” issuer system to manage its credit card portfolio. The bank migrated to CTL’s “PRIME” and “ONLINE” platform in 1999, and has since used it to issue over 25,000 VISA charge cards and approximately 300,000 “VISA Electron” Cards. More than 190 banks from 70 countries use CTL solutions.

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VERO and Fremont Target Self-Service Checking

Portland, Oregon-based VERO and Fremont, California-based Tranax Technologies, have teamed to deliver a new self-service check cashing solution. VERO and Tranax provide services to the retail self-service financial solutions market. VERO offers a fraud engine that powers a check cashing kiosk that cashes more checks with a lower degree of risk for fraud. Tranax offers a hardware platform for delivering ATM transactions.

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Interchange Under Attack on Capital Hill

Credit card interchange fees will come under more attack this morning as the U.S. House Energy and Commerce Committee’s Subcommittee on Commerce, Trade and Consumer Protection holds a hearing on “The Law and Economics of Interchange Fees.” The Merchants Payments Coalition says the hearings will finally open the lid on the secret fees, totaling nearly $40 billion annually, that credit card companies charge to merchants. The National Association of Convenience Stores says today’s hearing is an important step toward informing Congress and the public about the impact that high interchange rates have on U.S. consumers. The Federal Reserve held a conference on the subject last May and the House passed legislation last fall — still pending in the Senate — that would have required a FTC investigation into interchange’s role in rising gasoline prices. Nearly 50 lawsuits have been filed in federal court claiming that interchange practices violate federal antitrust law. A 2005 Morgan Stanley study determined that VISA and MasterCard interchange dollar volume grew to $17.4 billion last year, compared to $9.4 billion six years ago. (CF Library 6/23/05; 7/27/05; 8/4/05; 9/27/05)

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