Cash Beats Credit Cards for Holiday Purchases

A new poll suggests that cash has replaced credit cards as the second most-popular payment method during the winter holidays. However, debit cards remain the solid front-runner at 34%, the same as one-year ago. The survey conducted by BIGresearch for the National Retail Federation found that fewer consumers will be relying on credit cards when purchasing holiday merchandise this year (28.2% vs. 29.5% in 2004). The survey also found that cash has regained popularity, rising from 26% last year to 29% this year. The NRF says debt-conscious consumers will prefer to pay out-of-pocket for gifts this year and are making a conscious decision to reduce their reliance on credit cards. The NRF projects that U.S. holiday sales will increase 5.0% this year to $435.3 billion.

PAYMENT METHOD 2002 2003 2004 2005
Cash 34% 28% 26% 29%
Check 13% 12% 10% 9%
Credit 27% 30% 29% 28%
Debit 27% 30% 34% 34%
Source: NRF/BIGresearch

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Infineon to Spin-Off its Memory Products Business

Infineon has announced a proposal to create two focused and independent companies, one for logic and one for memory products. The Memory Products business will be carved out as a legally independent entity by July 1, 2006. As a next step, Infineon will consider an IPO of the Memory Products Company as the preferred option. Infineon, as the parent company, will focus on the Logic business, comprised of the business groups Automotive, Industrial Electronics and Multimarket and Communications. The realignment reflects fundamental shifts in Infineon’s target markets, characterized by changing market conditions and business processes. Infineon Technologies AG offers semiconductor and system solutions for automotive, industrial and multi market sectors, for applications in communication, as well as memory products.

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First Data Closes KMPS Acquisition

First Data has completed the acquisition of approximately
80% interest in Korea Mobile Payment Services, a provider
of value-added network services, an authorization switcher that
provides a network between merchants and issuers. The acquisition marks
First Data’s first official footprint in the Korean payment services
market. Korea Mobile Payment Services is a provider of credit card and
payment services. First Data serves 4.1 million merchant locations and 1,500 card issuers.

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Diebold Launches its S.A.F.E. Initiative

Diebold has launched the “Secure Anti-Fraud Enhancements” (S.A.F.E.) ATM security initiative which integrates video and sensor intelligence, among other emerging technologies, to fight ATM fraud. Diebold has implemented new, leading-edge technology that integrates video intelligence directly into the ATM and transforms the way fraudulent devices are detected and communicated to the financial institution. Any sustained alteration to the ATM fascia will trigger an alert. Other new technology includes integrated sensor intelligence built directly into the card readers of the Opteva ATMs that detect skimmers and can be configured to automatically take terminals out of service if an unfamiliar device is identified. An integrated PIN-pad shield blocks shoulder surfing and a spy camera’s ability to record PIN entry.

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UAL/Chase Offers 2006 Elite Status Miles

United Airlines and Chase have launched a holiday promotion awarding “Mileage Plus VISA” cardholders the opportunity to earn up to 10,000 miles toward their 2006 elite membership status in the “Mileage Plus” program for a one-time $50 fee. When customers earn 25,000 Elite Qualifying Miles (EQM) and 30 Elite Qualifying Segments (EQS) on United in a calendar year, they attain Premier status in the United Mileage Plus program. If they earn 50,000 EQM and 60 EQS, they attain Premier Executive(R) status; and if they earn 100,000 EQM and 100 EQS, they attain 1K(R) status in the Mileage Plus program. The United Mileage Plus program has over 45 million enrolled members.

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First Data Launches Singapore Regional Office

First Data has launched its regional office in Singapore. The
establishment of the office follows the successful signing of a
multi-year agreement to manage DBS’ credit card
and merchant processing services announced in July 2005. Under the terms
of the contract, First Data will manage one of Singapore’s largest bank
portfolios of more than 2 million credit cards and 13,000 merchant
accounts in the region. The agreement with DBS solidified the company’s
decision for Singapore as the clear choice to extend its worldwide
network of regional offices. First Data International’s new Singapore
office extends the company’s presence to 71 countries. First Data is a
provider of electronic commerce and payment solutions, serving 4.1
million merchant locations, 1,500 card issuers and millions of consumers.

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First Data Opens a Singapore Office

First Data has established a South and South East Asian regional hub with the opening of its regional office in Singapore. The establishment of the office follows the successful signing of a multi-year agreement to manage DBS’ credit card and merchant processing services announced in July 2005. Under the terms of the contract, First Data will manage one of Singapore’s largest bank portfolios of more than 2 million credit cards and 13,000 merchant accounts in the region. First Data International’s new Singapore office extends the company’s presence to 71 countries.

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Wachovia Names its New Credit Card Leader

Wachovia has named Steven Boehm as president of Wachovia Card Services. This decision follows an announcement earlier this month that Wachovia is terminating its existing joint marketing agreement with MBNA and re-entering the credit card business as a direct issuer beginning in January 2006. In addition to his new post, Boehm will continue to serve as Head of Merger Integration. Boehm, an executive vice president, has 17 years of experience in the credit card and payment systems industry, serving in banking, affinity and association leadership roles. For the past 10 years, he has led Wachovia’s contact center organization. During this time, the organization has become one of the company’s largest in distribution, producing more than $600 million in revenue in 2005. Boehm holds a bachelor’s in business administration from James Madison University and a master’s in business administration from George Mason University. Wachovia Corporation had assets of $532.4 billion, market capitalization of $73.9 billion and stockholders’ equity of $46.8 billion at September 30, 2005.

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Prepaid Card Expo Adds More Workshops

New Hampshire-based Prepaid Media has added four workshops to the upcoming “Prepaid Card Expo” to be held Feb 15th to 17th in Orlando. The workshops will focus on: Emerging Card Technologies; Money Laundering and the U.S. Bank Secrecy Act; Prepaid Card Processing Technology; and Servicing the Latino Market. The Prepaid Card Expo is the first conference dedicated exclusively to the network branded prepaid card industry and will feature over 100 industry-leading speakers and experts on the use of prepaid cards in healthcare, government, unbanked/underserved, and corporate and consumer applications. Prepaid Media, a division of Prepaid Services Group, LLC, provides media services to the network branded prepaid card industry.

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OCT DEBT

A slight upturn in retail sales produced a small increase in credit card borrowing last month, following several sluggish months. Brits added GBP 243 million during October, compared to GBP 108 million in September and GBP 226 million for October 2004. Over the past six months credit card borrowing has grown, on average, GBP 98 million per month. This year credit card borrowing fell in three separate months, dropping a record GBP 146 million in August. The British Bankers Association says consumers’ demand for credit continues to be cautious, while deposit growth was weaker than of late. Meanwhile, The BBA found that total sterling lending to the UK private sector showed a net underlying increase of GBP 8.7 billion (+0.8%) to GBP 1.1 billion. This was stronger than the previous month’s underlying rise of GBP 6.4 billion but slightly lower than the average of GBP +8.8 billion over the previous six months. The BBA collects data from Abbey National, Alliance & Leicester, Barclays, Bradford & Bingley, HBOS, HSBC Bank, Lloyds TSB, Northern Rock and The Royal Bank of Scotland.

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