Small Business Spending Remains Strong

Consumer and business spending through November indicates that small business growth remains strong nationwide. The latest joint research by the National Federation of Independent Business and VISA USA shows that 42% of respondents reported that sales are “good,” while 57% cited their sales prospects for the next three months as a reason for being optimistic when looking ahead. VISA says spending on VISA cards was $758 billion for the period from Jan. 1st to Oct. 31st, a 12.7% increase over the same period last year. Discretionary spending such as the travel and entertainment sector rose by 14.4% for the period from Aug. 8th to Nov. 13th. The joint report also says that non-payroll spending by U.S. business and government agencies will continue a pattern of solid growth, increasing an estimated 6% this year to $16.2 trillion.

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Rewards Network Names a New CFO

Chicago-based Rewards Network has promoted Christopher Locke to SVP/CFO, replacing Kenneth Posner, who has resigned. Locke joined Rewards Network in May 2005 as Senior Vice President, Business Planning, Analysis and Assurance. Prior to joining the Company, he served as Chief Financial Officer of WS Telecom Acquisition Corporation / Wan Technologies beginning in December 2003. From 2000 to 2003, Locke was an independent consultant primarily serving private equity firms and privately held companies in an interim Chief Financial Officer capacity. Rewards Network is a provider of loyalty and rewards programs to the restaurant industry. As of September 30, 2005, Rewards Network had 3.5 million active member accounts and 10,259 restaurants in its programs.

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ADP Lightspeed Tests New NXT DMS

ADP Lightspeed has begun BETA testing for their new release of the “NXT Dealer Management System” for automotive, motorcycle, marine and RV dealerships that will process all payment methods at the point of sale including credit card, debit card and gift card. The new system enables all PC’s in a dealership to become full point-of-sale registers. Detailed reporting has been enhanced to simplify the “end of day” cash drawer routines. In addition, fully customized dealership gift cards can be issued and settled in the same way a dealer swipes a normal credit card. DP Dealer Services Group is the third largest business unit of ADP with approximately $7 billion in revenues and more than 500,000 clients.

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Charge-Offs Spike in Q3; Delinquency Trends Up

Charge-offs for credit card-backed bonds in the U.K. continued to
deteriorate during the third quarter, hitting a record 5.4% compared to
4.1% one-year ago. Considering that delinquencies are still trending
higher, reaching 3.4% in 3Q/05, it is unlikely that charge-offs will
stabilize until mid-2006. According to FitchRatings, the rise in
charge-offs during the third quarter was led by the Pillar, Affinity,
and Arran trusts. However, rising charge-offs are beginning to slow in
some of the trusts. Meanwhile, the monthly payment rate on credit card
ABS appears to have stalled in the third quarter to 16.9%. FitchRatings
says the MPR appears to have been affected by much reduced balance
transfer activity. The Fitch yield index stood at 19.6% at the end of
September, up from 19.4% in June and reflecting the increases in yield
seen in four of the seven trusts.

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Four Issuers to Share Cardholder Data

Barclaycard, Co-operative Bank, Egg and Abbey are joining hands to share cardholder data to help stem rising losses. The move will also help the banks minimize the impact of “rate tarts” or cardholders regularly switching balances to take advantage of promotional interest rates. The four issuers plan to begin the data sharing program in the first quarter. APACS is now seeking other issuers to join the program.
While issuers have access to consumer information such as account payment history, balances and credit limits, the new program will offer issuers access to monthly spend, monthly payments, cash advances, recent credit limit increases and bounced payment checks.

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GPN Signs a Major San Diego Casino

Global Payments has inked an agreement to provide San Diego’s Barona Valley Ranch Resort & Casino with its “VIP LightSpeed” suite of cash access products and services which includes the “PlayerCash @dvantage” credit and debit card cash advance service and the “ATM Cash @dvantage” product. VIP LightSpeed is an Internet-accessible, PC-based platform that provides cash access services for traditional and electronic check cashing, ATM check cashing, credit and debit card cash advances, player histories and credit reports. In addition, VIP LightSpeed provides a full spectrum of management reporting tools that speed the processing of transactions and reduce the risk associated with check-cashing and cash advance services. Global Payments is a provider of electronic transaction processing services.

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BioPay Deploys in OH/WV C-Stores

Virginia-based BioPay has launched its biometric payment technology in Duke and Duchess Shoppes in Ohio. The service is the first of its kind in a convenience store in Ohio. Duke and Duchess Shoppes, a chain of 100 stores across Ohio and West Virginia, will implement BioPay’s payment system with an initial launch of 10 of its convenience stores to give their customers faster checkouts and greater convenience when making a purchase. BioPay’s payment service, a processing solution that allows customers to make purchases with a simple, secure placement of the finger, offers merchants a low-cost form of payment, while reducing incidents of fraud. Duke and Duchess Shoppes will be offering a free cup of coffee or soft drink at enrollment and receive a buy one get one free coupon after the consumer’s first BioPay purchase. BioPay is a Biometric Transaction Company, processing today more than 17 million transactions in excess of $7 billion.

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U.S. Bank Issues Bull Riders Cards

U.S. Bank has launched four VISA cards for Professional Bull Riders, Inc. The PBR has over 600 athletes competing in more than 100 PBR sanctioned competitions and ranks among the most prolific sports on air, with over 500 hours of prime time programming annually and more than 100 million viewers who tune in each year to the PBR on NBC, the Outdoor Life Network and internationally. PBR also attracts over one million attendees to live events each year.

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Card ABS Braces for a Q4 Charge-Off Spike

Despite the recent surge in bankruptcies, charge-offs among credit card-backed securities rose slightly during the September collection period for both prime and sub-prime portfolios. However, 60+ day delinquency for prime portfolios rose 10 basis points in September, as card issuers brace for a spike in losses for the fourth quarter. For September, charge-offs in the “prime” asset-backed credit card securities market increased two basis point to 5.72%. “Sub-prime” charge-offs fell by 43 basis points to 10.73%. One-year ago, “prime” charge-offs were 5.73% and “sub-prime” charge-offs stood at 15.13%. According to the latest “Fitch Credit Card Index,” “prime” delinquency (60+ days) rose to 2.58% in September. “Sub-prime” delinquency (60+days) for September fell slightly to 6.53%, but continues to hover at the lowest level in four years. Capital One recently reported that its managed delinquency ratio increased to nearly 8% in October, almost double its year-ago level and up more than 300 basis over September. (CF Library 11/10/05)

ABS CHARGE-OFF HISTORICAL
Month Prime Sub-Prime
Sep 04: 5.73% 15.13%
Aug 05: 5.70% 11.16%
Sep 05: 5.72% 10.73%
Source: Fitch Ratings

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FDC’s Duques Gets Options on 850,000 Shares

First Data’s returning CEO, Ric Duques, will receive an annual base salary of $250,000 plus a stock option for 850,000 shares vested over five years. One half of the stock grant will be immediately vested and exercisable and the other half will vest and become exercisable in November 2007, unless Duques leaves. Duques also will be eligible to receive an annual bonus in 2006 and beyond, based on performance. The target annual bonus for 2006 will be $1.4 million. Charlie Fote resigned on November 26th as CEO but will serve on the Board until May 10th. Fote will be paid as a consultant at an annual rate of $1.1 million through June 30th, 2007. Fote joined the company that is now First Data in 1975, and was named President and COO in late 1998. He was made CEO in 2002 and Chairman in 2003. (CF Library 11/28/05)

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