Senators Want G-Card Credit Limits Lowered

A bill has been introduced in the U.S. Senate to repeal or retract the change that was made in federal procurement with respect to government credit cards when the emergency supplemental was passed dealing with the hurricanes. In the aftermath of the Katrina disaster, the government raised the limit on its credit cards from $2,500 to $250,000. Sens. Byron Dorgan of North Dakota and Ron Wyden of Oregon, both Democrats, say the change was wholly inappropriate. The proposed legislation would reset the limit to $2,500 for a single, non-emergency purchase, $15,000 for emergency domestic purchases and $25,000 for emergency purchases overseas. Last month, Charles Grassley, the Senate Finance Committee Chairman and a Republican, sought to lower the limit to $50,000, unless approved by a supervisor.

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U.S. Bank Rolls-Out BSU Alumni VISA Cards

U.S. Bank has launched three affinity cards for the 35,000 alumni of Minnesota-based Bemidji State University. Cardholders will have access to three different U.S. Bank credit card products, including a card that earns reward points that can be redeemed for gift certificates, merchandise and travel rewards, and another that provides rewards designed especially for college students. Bemidji State University is a public university founded in 1919, with a current enrollment of more than 4,600 students from 37 states and 41 foreign countries. U.S. Bancorp has $204 billion in assets and is the 6th largest financial holding company in the United States.

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UK PO CARD

The U.K. Post Office and the Bank of Ireland this morning 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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CVS Licenses Acacia’s Card Fraud Patent

CVS Pharmacy has licensed Acacia Technologies patented credit card fraud protection technology. The patented technology generally relates to a computerized system for protecting retailers and consumers engaged in credit card, check card and debit transactions. The system includes an electronic card reader, and the generation and use of a transaction number, which specifically identifies each transaction processed within the system. As a result, the retailer does not necessarily have to print detailed information concerning the cardholder’s identity or account number on the customer’s receipt. The Acacia Technologies group develops, acquires, and licenses patented technologies.

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Charge-Offs Dip Slightly but Set to Rise

Charge-offs among credit card-backed securities again headed south during August for both prime and sub-prime portfolios. However, the improving ratio may be short-lived as a second wave of increased personal bankruptcy filings this year is under way. Personal bankruptcy petitions in August soared by nearly 24% from last year and were up about 15% from the prior month. For August, charge-offs in the “prime” asset-backed credit card securities market slipped one basis point to 5.97%. “Sub-prime” charge-offs fell by 61 basis points to 12.03%. One-year ago, “prime” charge-offs were 6.01% and “sub-prime” charge-offs stood at 15.58%. According to the “Fitch Credit Card Index,” “prime” delinquency (60+ days) rose to 2.61% in August, a very slight increase and well below monthly levels of the past ten years. “Sub-prime” delinquency (60+days) for August also increased slightly to 6.42%, but continues to hover at the lowest level in four years.

ABS CHARGE-OFF HISTORICAL
Month Prime Sub-Prime
Aug 04: 6.01% 15.58%
Jul 05: 5.98% 12.64%
Aug 05: 5.97% 12.03%
Source: Fitch Ratings

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Dexit Launches RFID Readers in Ottawa

Dexit announced it has begun a controlled launch of “Dexit
RFID” tag readers and terminals at four locations at Place Bell in
downtown Ottawa. Dexit has supplied approximately 1,500 RFID tags for
distribution to the more than 5,000 people who work in the Place Bell
office tower. Dexit launched its service in September 2003, initially in downtown Toronto. More than 50,000 consumers have registered for the Dexit service, which is currently available in more than 500 merchant locations.

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Agent Card Performance Varies by Support

Even though 90% of all portfolio sale deals last year included an agent credit card program going forward, the performance of the agent relationship is dependent on how intelligent and aggressive the agents are. As a result, accurately predicting the application and booked account flow through their agents’ branches has become a challenge. Seasoned agent bank/credit union specialist, R.K. Hammer, says their experience with over 700 agent banks and credit unions over 25 years shows that if you directly reward the branch and the branch personnel for card sales, the results will be far greater than if the agent simply takes the reward flow into corporate income and not share it with the retail team. Hammer found that a “weak-performing” agent relationship with little intelligent marketing or branch training and support, will produce some 24-36 new booked accounts per branch per year. A “medium-performing” agent with some marketing to the branch customers and some mild support in the branches by the retail sales staff will generate 48-60 new accounts per branch per year. A “high-performing” agent with very smart consistent marketing by the issuer and very aggressive sales efforts by the agent’s branch staff will produce as many as 72-84 new accounts per branch per year.

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AUG 05 DEBT

Credit card outstandings picked up some steam in August rebounding to GBP 56.2 billion during August, but remain below year-ago levels by GBP 200 million. Meanwhile, the Bank of England is likely to keep its benchmark interest rate unchanged for a second month at 4.5% when it meets this week. The BOE’s Monetary Policy Committee met August 4th to reduce the Bank’s repo rate by 0.25 percentage points to 4.5%. The next
two-day meeting is scheduled for October 4th. The increase in total net
lending to individuals in August (GBP 8.9 billion) was larger than in
July and broadly in line with the previous six month average. Within the
total, the increase in net lending secured on dwellings (GBP 7.6
billion) was stronger than the increase in July and stronger than the
previous six month average. The twelve-month growth rate fell to 10.3%
in August from 10.4% in July. The increase in consumer credit (GBP 1.3
billion) was slightly higher than July’s outturn. Within this, net
credit card lending was stronger than in July but in line with the
previous six month average, while net other loans and advances were
weaker than July’s outturn and the previous six month average.

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Alpha Card Services Signs with GPN

Atlanta-based Global Payments has sealed a deal with Philadelphia-based Alpha Card Services to provide a comprehensive suite of merchant card processing solutions, including authorization, capture, settlement and BIN sponsorship. Alpha Card Services is a payment solutions provider offering clients a full suite of products and services including credit, debit, EBT, check conversion and guarantee, ATM, gift and loyalty cards and online payment gateway solutions. Global Payments offers processing solutions for credit and debit cards, business-to-business purchasing cards, gift cards, electronic check conversion and check guarantee, check verification and recovery, as well as point-of-sale equipment services.

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UK Post Office Launches a Unique MasterCard

The U.K. Post Office and the Bank of Ireland this morning 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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