Monthly Payment Rates Hover at 18%+

The amount Americans are paying each month on their credit card bills continues to hover at record levels. For the past three months the average monthly payment rate is 18.38% of the outstanding balance. For August the figure was 18.39% or eight basis points below July. One-year ago the monthly payment rate was 17.33%. Approximately 42% of consumers pay-off credit card balances in-full each month, while 33% pay more than the minimum, according to a recent American Bankers Association survey. As a result of the steep rise in payments, the bank credit card industry has experienced sluggish growth in card loans. Most large issuers are posting growth around 3% to 4% per year in total credit card balances. The increase in the monthly payment rate has largely been attributed to debt consolidation via home equity loans. However, a significant portion is driven by cardholder behavioral changes due to penalty interest rates, universal default policies, rising fees and credit score gaming.

MONTHLY PAYMENT RATES
(Prime Credit Card-Backed Securities)
Aug 04: 17.33%
Jan 05: 17.70%
Feb 05: 17.64%
Mar 05: 16.32%
Apr 05: 18.52%
May 05: 17.18%
Jun 05: 18.29%
Jul 05: 18.47%
Aug 05: 18.39%
Source: FitchRatings

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Experian Acquires Expert Credit Bureau from UCS

Experian has signed an agreement to acquire Expert
Credit Bureau (ExCB) from UCS Romania. ExCB serves clients from the
banking and non-banking industries in Romania. ExCB currently holds
mostly negative data but plans to move into both positive and negative
data processing shortly. Experian has implemented a global strategy
of acquiring complementary businesses that provide new products, new
data or entry into new vertical or regional markets, while leveraging
the core assets of the company. Experian provides information,
analytics, decision-making solutions and processing services. UCS Group
is a group of companies in Romania, providing services for
communications and the financial services industry.

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Katrina Impacts Small Biz Cash Flow

About one-fourth of business owners say they are more likely to delay purchases since Hurrican Katrina, compared to 16% before the hurricane. Post-Katrina, 26% will use personal or private funds to manage cash flow than before Katrina (33% this year versus 28% in 2004). The percentage planning to use a charge or credit card to manage cash flow remains steady at 13% before and after the hurricane (versus 15% a year ago), according to the OPEN from American Express “2005 Semi-Annual Small Business Monitor.” Overall, despite Hurricane Katrina, the percentage of small businesses expecting business growth over the next six months remains steady at 50%.

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Comchek eCash Card Joins Allpoint Network

Comdata/Ceridian has agreed to join the 32,000 ATM Allpoint Network to offer a surcharge-free network option to its “Comchek eCash” pay card customers. Comdata’s Comchek eCash pay cardholders can access their funds by using the card as a debit card at any Maestro accepting merchant, by writing a paper Comchek bank draft, by transferring funds via a toll-free number to their bank account, or by using an ATM machine. By offering the Allpoint alternative, users can save dramatically on ATM fees associated with their pay card use whe using an ATM that is not in their bank network. Comdata ia a business-to-business issuer and processor of payment cards. Ceridian is a human resources outsourcing company. Allpoint is a surcharge-free ATM network

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Heartland Deploys StreetSmarts for Sales

New Jersey-based Heartland Payment Systems has chosen Phoenix-based Involve’s “StreetSmarts” software to help its 900-strong sales force to share sales-related best practices, expertise and information. After a successful 60-day, 150-person pilot program, Heartland Payment Systems signed an annual subscription for 1,000 seats of Involve Technology’s software and will access StreetSmarts through a hosted “software-as-a-service” (SaaS) model. StreetSmarts is a Web-based sales knowledge automation technology that works through e-mail to locate, manage and deliver information for sales teams. Heartland Payment Systems Inc.provides credit/debit card processing and payroll solutions to over 100,000 small to medium-sized merchants throughout the United States. Involve Technology is the market leader in software-as-a-service (SaaS) sales knowledge automation solutions which enable companies to sell more effectively while reducing sales support time and costs.

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POST OFFICE MASTERCARD

The U.K. Post Office and the Bank of Ireland have launched a MasterCard offering two interest rates. The new “two in one” “Post Office Credit Card” offers standard credit card functionality but also offers a installment loan-like facility with a discounted interest rate for larger purchases. Cardholders can transfer large purchases between GBP 500 and GBP 2000 into the special line with an interest rate of 6.8%. (The credit card feature generally carries a 14.9% interest rate.) The purchases transferred to the special line can be repaid over a period of 12 months. Cardholders can use the facility for up to two purchases at any one time subject to an aggregate limit of GBP 2,000 and have one month to transfer the purchase to the loan-like facility of the card. The U.K. Post Office has 14,600 branches across the country.

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HSBC Renews Gardner-White Furniture Card

HSBC has renewed Detroit-based Gardner-White Furniture for a private label credit card program. The new agreement extends HSBC Retail Services’ six-year relationship with Gardner-White. Since 1999, the Gardner-White credit card has provided its customers with long-term financing opportunities when purchasing furniture and exclusive benefits such as deferred financing, low monthly payments and advance notice of sales and in-store events. HSBC Retail Services is an issuer of private label (merchant branded) credit cards in the United States. HSBC – North America businesses serve more than 60 million customers.

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Cingular Prepaid VISA is Launched by NEC

Los Angeles-based Next Estate Communications has partnered with Cingular Wireless to offer a prepaid general purpose card. The new “Cingular Prepaid VISA” is powered by the Green Dot Financial Network. Cingular customers who choose the “Go-Phone Pick Your Plan” wireless account will be able to reload their prepaid VISA cards by purchasing a “Green Dot MoneyPak Universal Reload” available Rite Aid, CVS, Radio Shack, Walgreens, and many others. Next Estate has more than 45,000 purchase locations nationwide.

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Aussies and Kiwis Smart Card Laggards

The smart cards market in Australia and New Zealand has been lagging
behind other neighboring Asian countries. Frost & Sullivan says the high cost of smart cards
when compared to other automatic identification data capture
technologies combined with lack of standards and the interoperability
across both systems and state boundaries have contributed
to the slow uptake of smart cards. However, the smart cards market in
Australia and New Zealand is likely to experience growth driven by the
migration of banks toward becoming EMV compliant by 2006. The establishment of multi-application smart cards
and the associated sharing of costs among market participants are
projected to lead to the uptake of smart cards in the future. Smart card
adoption is gaining speed as governments and corporate entities are
currently deploying a wealth of projects ranging from national identity
to telecommunications, banking, e-commerce and health care. Card
transactions are progressively displacing cash and checks as the
preferred payment methods in Australia and New Zealand. Frost & Sullivan has set up an analyst meeting for October 13th.

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QSR Card Volume May Top $36B This Year

Americans are on track to charge more than $36.0 billion worth of fast food to their credit and debit cards this year, compared to $22.5 billion one-year ago. VISA reported that quick service restaurant sales for August are running 67.3% ahead of one-year ago. The figures reflect growing consumer and merchant acceptance of carding small ticket purchases. VISA says QSR merchants are experiencing tremendous growth in terms of revenue and efficiency as a result of accepting plastic. The average QSR credit card ticket is $11.70. Americans spend about $140 billion per year in quick service restaurants.

QSR ON PLASTIC HISTORICAL
2000: $ 1.7 billion
2001: $ 3.7 billion
2002: $ 6.1 billion
2003: $12.9 billion
2004: $22.5 billion
2005: $36.0 billion
Source: CardData (www.carddata.com)

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Hypercom Restructures its Latin American Ops

Hypercom has restructured its Latin American operations with the
establishment of two new regional headquarters in Mexico City and
Brazil. The two offices replace Hypercom’s former Latin American
regional headquarters in Florida. The Mexico City headquarters will
serve not only Mexico but Central America and the Andean countries of
South America (Colombia, Venezuela, Ecuador, Peru, Bolivia, and Guyana),
The Brazil headquarters will cover the South Cone region of South
America, which includes Brazil, Chile, Argentina, Paraguay and Uruguay.
The Association of Mexican Banks recently announced plans to spend up
to $300 million over the next three years on the expansion of the
point-of-sale network to encourage the use of debit and credit cards in
Mexico. Card payments today account for only 2% of Mexican purchases.
Hypercom provides complete card payment terminal, network access device,
server and transaction networking solutions.

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