Monthly Payment Rate Turns North Again

After slipping for three months, monthly payment rates returned to historical highs during December. Among credit card-backed securities, December represented the 11th month over the past year in which the payment rate exceeded 18%. The payment rate has averaged 18.6% over the past year. According to FitchRatings, the payment rate increased 12 bps to 18.9% in December. The December payment rate is 181 bps higher than it was during the comparable period in 2004. Five years ago the monthly payment rates hovered around 15%.

December Monthly Payment Rate
2001: 15.1%
2002: 14.4%
2003: 15.3%
2004: 17.1%
2005: 18.9%
Source: FitchRatings

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Card Bonds Charge-Offs Retreat in December

Charge-offs among credit card-backed securities retreated during December but remain at elevated levels. For December, charge-offs in the “prime” asset-backed credit card securities market decreased 49 basis points to 7.03%. “Sub-prime” charge-offs declined by 59 basis points to 11.75%. One-year ago, “prime” charge-offs were 6.29% and “sub-prime” charge-offs stood at 14.46%. According to the latest “Fitch Credit Card Index,” “prime” delinquency (60+ days) declined to 2.28% in December. “Sub-prime” delinquency (60+days) for October slipped 34 basis points to 6.42%, but continues to hover at the lowest level in four years. Fitch notes that personal bankruptcy filings remain at subnormal levels after spiking in mid-October. In January, weekly filings were about 5,500, whereas prior to the reform and spike, weekly median filings were about 30,000 in 2005.

ABS CHARGE-OFF HISTORICAL
Month Prime Sub-Prime
Dec 04: 6.29% 14.46%
Nov 05: 7.52% 12.34%
Dec 05: 7.03% 11.75%
Source: Fitch Ratings

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Valutec Certifies SLIM CD Software

Florida-based SLIM CD, a software developer and service provider, announces certification of its software on the Valutec gift and loyalty platform. The SLIM CD application suite provides desktop software, industry-specific virtual terminals, fraud detection services and a shopping cart. Transactions sent to SLIM CD’s data center are processed through SLIM CD’s high-speed connection in 3-5 seconds, without requiring merchants to have high-speed Internet. Low-cost card-swipe, PIN pad, MICR readers, check imagers and signature capture devices are supported. An Enterprise Edition is available for recurring billing. The SLIM CD software product is distributed through banks, financial institutions, and ISOs for distribution to merchants. Valutec Card Solutions is a provider of turnkey gift and loyalty card services.

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Fifth Third Processing Signs 19

Fifth Third Processing Solutions reports that 19 merchants nationwide have recently signed contracts for merchant processing services. New merchant processing clients include: Cross Town Traders (d/b/a Figi’s, Old Pueblo Traders, Bedford Fair, Willow Ridge, Lew Magram, Regalia, Intimate Apparel, Brownstone Studio and Coward Shoe), Harmon’s Grocery, Ryan’s Restaurants, Johnny Rockets, Penske Automotive, Medline Industries, Spartan Stores, Caribou Coffee, Parasole Restaurant Holdings (d/b/a Manny’s Steakhouse, Chino Latino, Figlio, Good Earth, Muffuletta and Salut), The Coffee Bean and Tea Leaf, Wilson Farms Convenience Stores, Sugar Creek Convenience Stores, Proquest, Luby’s, Lear Corp., Carrow’s, Coco’s Bakery Restaurants, Talbots, and CDW. In addition, Fifth Third Processing Solutions has extended relationships with: Meijer, The Kroger Company, AutoZone, and Claire’s. Fifth Third Bank Processing Solutions processes over 12 billion ATM and POS transactions per year for more than 1,350 financial institutions and over 135,000 retail locations worldwide and processes $110 billion in credit card sales.

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Transaction Systems Architects Up 8% Q/Q

Omaha-based Transaction Systems Architects reported that revenue was $85.1 million in the quarter ending December 31st, a 6% increase year-over-year and an 8% increase sequentially. During the quarter, the Company added seven new customers and sold 32 new applications to existing customers. In addition, 15 customers licensed capacity upgrades. Activity during the quarter included licensing “BASE24-es” to a top bank in Pakistan, “BASE24” to a top Mexican retailer and capacity upgrades by several top 500 world banks. The Company’s electronic payment solutions are used on more than 1,980 product systems in 83 countries on six continents. For complete details on Transaction Systems Architects fourth quarter performance, visit CardData ([www.carddata.com][1]).

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

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Vigilar Offers On-Site PCI Audits

Atlanta-based Vigilar has been qualified by VISA and MasterCard to perform on-site PCI audits for merchants and processors who accept and process payment cards. The PCI Data Security Standard (DSS) is a compliance initiative agreed upon by the payment card industry that requires best-practice security standards for merchants and service providers that handle payment card information. The auditor qualification process looks at both the company itself and the employees who conduct the audit. For the company assessment, the qualification process includes a review of the company’s financials and quality assurance policies and procedures for client engagements. For the employee assessment, the qualification process requires that those who perform and/or manage on-site client assessments participate in Visa’s on-site training class and pass Visa’s PCI certification test. Vigilar is an information security consulting firm.

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Catuity Signs Nexus Payment Systems

Detroit-based Catuity has signed a four-year agreement to be the exclusive provider of gift card programs to the chain retailer and merchant clients of Nexus Payment Systems and its 1,800 terminals. Nexus expects to deploy the gift card program on the Nurit 8320 made by Lipman Inc. The multi-application terminals are popular with merchants because they balance economy with the ability to put value-added programs on the terminal. Catuity has recently completed integration to the 32-bit platforms of Lipman and Verifone Inc. Nexus provides credit and debit processing solutions. Catuity powers loyalty and gift card programs.

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Axalto Shareholders Approve Gemplus Merger

Axalto shareholders this week approved the merger with Gemplus previously announced on December 7th. No vote was cast against the merger but 51 votes abstained. The $1.1 billion transaction will create a company with annual revenues of $2.1 billion and 11,000 employees. The company will be called Gemalto. Alex Mandl, the President & CEO of Gemplus, will assume the position of Executive Chairman and Olivier Piou, CEO of Axalto, will be the CEO of Gemalto. (CFI Library 12/8/05)

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Project Credit Despair Nets 20 Scams

The FTC, U.S. Postal Inspection Service, and eight state law enforcement agencies have taken action against on 20 credit repair operations nationwide. The FTC began coordinating “Project Credit Despair” last year in response to thousands of consumer complaints. The cases involved companies throughout the nation, many of which promised to remove accurate and timely information from consumers’ credit reports, and typically charged hundreds of dollars in advance for the service. The FTC advises that only time, a conscious effort and a personal debt repayment plan can improve your credit report.

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Equifax Personal Solutions Income Quadruples

Atlanta-based Equifax reported that fourth quarter operating income for its Personal Solutions business in North America nearly quadrupled compared to one-year ago. The growth was driven by the free credit reports mandated by Congress in “The Fair and Accurate Credit Transactions Act of 2003.” The offering of free reports took effect September 1st. Equifax reported that Personal Solutions increased its revenue 15% to $26.8 million and that operating income for Personal Solutions hit $3.7 million compared to $1.0 million for 4Q/04. Equifax noted that the FACT Act-related regulatory recovery fee revenue contributed $9 million to North America’s overall revenue growth. This fee was instituted in the beginning of December 2004 to mitigate compliance costs related to the FACT Act. Meanwhile, North America Information Services reported revenue of $197 million was up 9% in Q4. Marketing Services revenue in North America also grew 9% to $67 million. For complete details on Equifax’s fourth quarter performance, visit CardData ([www.carddata.com][1]).

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

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