Men are More Debt Aware & Card Savvy

A September poll has found that 27% of Americans have used a credit card to track spending, with 31% of men and 24% of women using a credit card for that purpose. The MasterCard survey also found 22% of males say they precisely know their own debt situation to the penny, while 16% of females make that claim. Sixteen percent of Americans surveyed say they have sought professional advice at some point in their lives to pay off debt. In response to the findings, MasterCard launched a consumer education campaign how to manage personal debt. The “Debt Know How” program includes an interactive section on the MasterCard Web site and a curriculum as well as training sessions for educators and personal finance coaches.

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Smart Card Alliance Membership Up 45%

New Jersey-based Smart Card Alliance reports it has grown by over 45% in the last year, with 54 new organizations becoming members. Fast growing categories of new members include organizations involved in computer hardware and software, card technology, security products and services, healthcare, financial services and transportation. Organizations such as Viisage, LEGIC Identsystems, Digimarc Corporation, Identification Technology Partners, Inc., HIRSCH Electronics, Tyco Software House, GE Security, CoreStreet, and Lenel Systems have joined with other security market leaders to work together in SCA industry councils. The Smart Card Alliance is a not-for-profit, multi-industry association working to stimulate the understanding, adoption, use and widespread application of smart card technology.

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Optimal Group Reports $11MM in 3Q Earnings

Optimal Group reported revenues for the third
quarter of $44.8 million compared to $28.3
million in the quarter ended September 30, 2004. Underlying earnings
from continuing operations before income taxes and non-controlling
interest were $10.77 million. Optimal’s
financial results for the third quarter period do not reflect any financial impact of the recently announced acquisition
of U.S. merchant processing contracts and associated sales channel
contracts from Moneris Solutions, Inc. Optimal also announced a stock buyback program which authorizes the company to purchase up
to 1,100,000 shares. Optimal has operations throughout North America, the United Kingdom and Ireland.

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Abanco Intl Lands Stone for Sales

Illinois-based Abanco International has hired Harvey Stone, formerly with Pay by Touch, CES, First Data, CPS and Concord, as VP/Sales. In this newly created position, Stone will be responsible for driving the company’s strategic sales direction, worldwide payment processing sales and independent sales organization (ISO) operations. Stone holds a B.S. from New York University. Abanco is a provider of payments and data-transaction technology.

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Lipman Gets $6MM Follow on Orders from India

Lipman Electronic Engineering has received follow on orders totaling
more than $6 million from two leading banks in the Indian market. These
orders for Lipman’s “NURIT 8320” landline POS terminals
are expected to be supplied during the fourth quarter. Lipman says that as the nation’s infrastructure continues to develop, a greater emphasis will be placed on card-based transactions, creating a significant growth opportunity for POS terminals in the market. Lipman is a provider of electronic payment systems.

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3Q Growth Comes at the Expense of Margin

Although down from a year ago, margins for credit card issuers rebounded in the third quarter from second quarter levels, reflecting slightly better pricing trends in certain segments. UBS Investment Research says that nonetheless, most issuers characterized the environment as highly competitive. With the exception of American Express, portfolio growth apparently came at the expense of margin. UBS also noted that operating expenses as a percentage of managed loans trended lower across the industry, largely as an offset to margins that remain under pressure. UBS expects this trend to continue as the recent consolidation in the industry should result in greater economies of scale and present an opportunity to reduce costs.

Net Interest Margins, by Company
3Q04 3Q05
American Express 8.60% 9.20%
JPM/Bank One 8.90% 8.55%
MBNA 7.82% 7.37%
Capital One 7.86% 7.99%
Citigroup 10.19% 10.15%
Discover 8.83% 7.95%
Providian 10.43% 10.10%
Median 8.95% 8.76%
Source: Company Reports & UBS

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Credit Card Penetration Reaches 79% of Adults

Canadian credit card ownership is widespread with 79% of adults owning a
card, according to research for MasterCard Canada. Sixty-two percent of
cardholders say they would feel constrained in their choices as a consumer
if they did not have access to their credit card and 72% consider it an
important financial tool. A significant minority (16%) have actually left
a merchant without making a purchase because the merchant did not accept
credit cards. Twenty-eight percent have tried to put as many of their
purchases as possible on their card in order to better track and manage
finances.

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HID Contactless ISO Certified Again

Irvine, CA-based HID has received “ISO9001:2000” certification for its contactless cards and readers. HID first received ISO9000 certification on June 1, 1999, ISO 9001:2000 certification on June 1, 2002 and has been continuously certified while they maintain focus on continuous process improvements for the company’s entire iCLASS 13.56 MHz, Prox 125 kHz, and Wiegand card and reader technology design, manufacture and distribution processes. HID is a global supplier of contactless access control cards and readers for the security industry.

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CEE CARDS

The number of payment cards in central and eastern Europe has tripled to 109 million over the last four years. While three
countries in the region now have more payment cards than adults, the
average across the region is just under half a card per adult. There are almost two payment cards per adult in Slovenia. The study by London-based Retail Banking Research also found there were a total of 450,000 terminals deployed in the CEE region last year. The debit card is by far the most widely held type of payment card in the CEE region, representing 88% of all cards in issue ⓠthis contrasts strongly with western Europe where the equivalent figure is only 51%. Credit cards with 8% and charge cards with 4% make up the remainder. RBR says Estonia leads the region in terms of EMV cards issued, with 35% of its
cards in compliance by the end of 2004.

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New Revenue Stream Offered to ISOs

Redding, California, MyBackgroundCheck.com is targeting ISOs to offer its applicant-paid pre-employment screening service. Under the MBC Agent Program, ISO operators provide their clients with applications and/or directions to a Web site offering a discounted rate for background screening. Business owners are then provided an access code that allows them to view the results over the Internet, offering a cost-free option that helps to protect businesses from the potentially devastating effects of a poor hiring decision. MyBackgroundCheck.com and its sister company, Pre-employ.com, are Web-based investigation companies that conduct 6,000 to 8,000 background checks a day.

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Pointsec Joins Smart Card Alliance

Pointsec Mobile Technologies has joined the Smart Card Alliance as
a general member. Pointsec will participate in Alliance education
programs and conferences, industry councils and market research and
joins more than 140 others members representing leading companies in the
financial services, computer, telecommunications, healthcare, and retail
industries, as well as federal government agencies. The organizations
work in an open forum to address the opportunities and challenges that
face the smart card industry. Pointsec provides mobile device
security through automatic data encryption.

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First Data Considers Card Issuing Exit

First Data is now considering the jettison of its U.S. credit card issuing business as the unit has dampened the growth rates of the entire company. FDC has engaged Morgan Stanley to help explore options. During the third quarter, Card Issuing Services reported revenue of $594 million and operating profit of $116 million, down 4% and 25% respectively. The processor says Card Issuing Services may drag on the consolidated growth rate through the middle of next year. First Data also updated its projection for the fourth quarter and now anticipates earnings per share to be in the range of $2.14 to $2.16. The final quarter of 2005 will be affected by delays in closing previously announced acquisitions and by consumer spending during the holiday season. For the third quarter, First Data reported that net income dropped by 8% even though total revenues increased 6% to nearly $2.7 billion, compared to one-year ago. (CF Library 10/14/05)

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