SCA Creates a New Latin American Chapter

The Smart Card Alliance has formed a new Latin American chapter to bring together smart card suppliers, partners and customers. The Alliance plans to use specific projects such as bi-lingual education programs, market research, advocacy, industry relations and open forums to keep Latin American chapter organization members connected to industry leaders and innovative thought. 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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Smart Card Alliance Targets Latin America

A not-for-profit, multi-industry association working to stimulate the understanding, adoption, use and widespread application of smart card technology has now targeted Latin America. The Smart Card
Alliance has announced the formation of a new Latin American chapter.
The Alliance plans to use specific projects such as bi-lingual education
programs, market research, advocacy, industry relations and open forums
to keep Latin American chapter organization members connected to
industry leaders and innovative thought. The SCA is making ten “Foundation Memberships” available on a first come, first served basis until October 1, 2005.

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Fraudulent Debt Negotiators Settle with FTC

The FTC this week settled charges made against a group of fraudulent debt negotiators who caused nearly $10 million in losses to consumers. The FTC’s complaint charged that the defendants did not negotiate with consumers’ creditors to reduce or eliminate consumers’ debts as advertised and that consumers who stopped communicating with their creditors found themselves deeper in debt, sometimes forced to pay additional charges and incurred further damage to their credit ratings. The defendants are barred from advertising or participating in any debt negotiation business in the future.

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Chase Card Profits Up 33%; ROO Hits 2.56%

J.P. Morgan Chase reported this morning that credit card profits for the second quarter rose 32.5% to $542 million while revenues increased less than 3% to $3.89 billion, compared to one-year ago. Managed card loans of $137.3 billion were up 6.6% year-on-year and up 2.9% sequentially. Pre-tax income to average managed loans (ROO) was 2.56% for 2Q/05, compared to 2.52% in 1Q/05 and 2.07% for 2Q/04. During the second quarter, Chase opened 2.79 million net new credit card accounts, ending the quarter with 95.5 million cards in-force. Charge volume for 2Q/05 was $75.6 billion, compared to $70.6 billion one-year ago. The managed net charge-off ratio for the quarter increased to 4.87%, from 4.83% in 1Q/05 and 5.56% one-year ago. The 30-day managed delinquency ratio declined to 3.34%, down from 3.54% in the prior quarter. The 90-day managed delinquency ratio was 1.54%, down sharply from 1.71% in the first quarter. Bank card volume for Chase’s merchant acquiring business was $141.2 billion with 4.7 billion transactions. Chase also reported that it ended the quarter with 8,834,000 debit cards. For complete details on Chase’s second quarter performance, visit CardData ([www.carddata.com][1]).

JPM CHASE HISTORICAL ($billions)
2Q/04 3Q/04 4Q/04 1Q/05 2Q/05
EOP Outstandings: $128.8 131.5 135.4 133.4 137.3
Charge Volume: $ 70.6 73.3 75.3 70.3 75.6
Source: CardData (www.carddata.com)

[1]: http://www.carddata.com

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Pipeline to Acquire Charge.com for $17MM

Massachusetts-based Pipeline Data has executed a merger agreement to acquire Florida-based merchant acquirer, Charge.com, for $17 million. The merger will result in the servicing of 25,000 accounts for Pipeline and is expected to generate in excess of 1,000 new merchant applications monthly by year-end. Pipeline Data Inc. provides integrated transaction processing services for all major credit cards.

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MC Projects $573 in Back-to-School Spending

MasterCard released its second annual “Back to School Spending Index” survey which shows that parents of U.S. students college age and younger plan to spend $573 this year on back-to-school items, with 27% using a credit card and 26% using a debit card. MasterCard commissioned the Ipsos-Insight study as a part of an ongoing effort to better understand consumer attitudes and behaviors with regard to school spending and money management. Ipsos is a leading global survey-based market research company, owned and managed by research professionals. MasterCard International manages a family of well-known, widely accepted payment cards brands including MasterCard, Maestro and Cirrus.

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SLC Airport Renews CO-OP/CU ATM Contract

Salt Lake City International Airport has renewed a five-year agreement with The CO-OP Network and four credit unions to operate ATMs on its premises. In addition to the CO-OP Network, American Airlines EFCU with $3.98 billion in assets, Delta ECU with $2.7 billion, Western FCU with $2.482 billion and Utah’s Mountain America CU with 36 in-state branches and $1.43 billion in assets share the ATM concessions at the airport. CO-OP Network is wholly-owned by its credit union shareholders with 1,793 credit union members, 20,000 surcharge-free ATMs, 92 million-plus monthly transactions and 23 million cardholders.

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TSYS Q2 Revenues and Profits Soar 41%+

TSYS reported that second quarter profits rose 41%, topping $50 million. Revenues hit $410 million, a nearly 42% rise over 2Q/04. Accounts on file increased to 388.6 million as of June 30th, up 35% from one-year ago. TSYS also reports that stored value accounts rose by 600,000 accounts from the prior quarter, ending at 13.2 million. During the second quarter, TSYS reached an agreement in principle with Capital One to provide processing services for its North American portfolio of consumer and small business credit card accounts. Fifth Third Bancorp converted its consumer bank credit card portfolio to TS2 during 2Q/05. TSYS also renewed its agreement with Navy FCU, to continue processing more than 1 million credit card accounts for an additional five years. The Company revised its forecast for 2005 and now expects its net income growth to be in the range of 25%-28% and for total revenues to increase 31%-33%. For complete details on TSYS second quarter performance, visit CardData ([www.carddata.com][1]).

TSYS REVENUE HISTORICAL
2Q/04: $289.6 million
3Q/04: $305.0 million
4Q/04: $307.2 million
1Q/05: $350.0 million
2Q/05: $410.2 million
Source: CardData (www.carddata.com)

[1]: http://www.carddata.com

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VISA & AmEx Terminate CardSystems; MC Warns

VISA and American Express announced they are pulling the plug on their relationship with CardSystems Solutions by October 31st, while MasterCard has given the processor until August 31st to clean up its act. VISA says that after an internal and forensics review of CardSystems processing practices it concluded the processor did not have the appropriate controls in place to protect cardholder information and is therefore terminating the relationship. VISA said it cannot overlook the significant harm caused to members and merchants as well as the widespread consumer concerns it has created. American Express said it has contacted merchants and is offering to help process transactions directly or will assist merchants in migrating to a third party processor. MasterCard says it is requiring CardSystems Solutions to develop a detailed plan to bring its systems into compliance with MasterCard security requirements and is holding weekly meetings with the processor to monitor progress. However, MasterCard warned that if CardSystems cannot demonstrate that they are in compliance by August 31st, they may pull the plug as well. Meanwhile, VISA and the U.S. Chamber of Commerce are holding a press conference this afternoon to kick off a nationwide data security campaign to encourage a more coordinated effort between the payments industry and merchants in the fight to protect customer data and reduce fraud.

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CITI INTL 2Q/05

Citigroup reported that its international card business produced second quarter net income of $206 million, a 27% increase over year ago levels, driven by strong organic growth in Australia, India, Korea
Taiwan, Russia, Greece and Brazil. During the second quarter of 2005, Citi posted a 16% gain in card loans and a 17% increase in sales volume. The account base increased by 500,000 accounts compared to the previous quarter, but up 3% compared to 2Q/04. International credit card loans at the end of 2Q/05 stood at $18.2 billion, compared to $15.7 billion one-year ago. Charge purchase and cash advance volume for the second quarter was $14.6 billion, compared to $12.5 billion for 2Q/04. In Japan, average credit card loans were up 8% year-over-year. In the rest of Asia, credit card loans grew 21% to $9.9 billion. Citigroup holds $6.3 billion in card loans for the EMEA region and $700 million in Latin America, which grew 15% and 40%, respectively. During the quarter, Citi launched new co-brands in Spain, Japan, and Czech Republic. Charge-offs and delinquency dropped during the second quarter, compared to the previous quarter. Delinquency (90+ days) inched down to 1.45% for 2Q/05 from 1.54% in the prior quarter. Charge-offs decreased from 3.08% in 1Q/05 to 2.84% for the second quarter. For complete detail’s on Citigroup’s international cards performance, visit CardData (www.carddata.com).

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AmbironTrustWave Provides FDC PABP Audits

Chicago-based AmbironTrustWave is offering “Payment Application Best Practice” compliance validation services to all third-party POS software vendor products certified or planning to certify to any First Data platforms, in response to a recent FDC letter mandating that all affected parties complete a “PABP” audit within 90 days. Visa PABP is a compilation of components aimed at assessing and maintaining the integrity of payment-based applications. AmbironTrustWave provides information security and compliance management solutions to Fortune 2000 businesses and the public sector. First Data Corp. provides electronic commerce and payment solutions to 4.1 million merchant locations, 1,400 card issuers and millions of consumers worldwide.

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