BofA Buys 9% Stake in China Construction Bank

Bank of America has signed a definitive agreement to buy approximately 9% of the stock of China Construction Bank for $3 billion,
with the option of increasing its stake in future years. CCB, the second largest commercial bank in China, has $472 billion in assets and $422 billion in deposits. It has 136 million active retail deposit account relationships, a national network of 14,500 branches concentrated in the more economically developed areas and a relationship with 92 of the top 100 enterprises in China. It is China’s second largest mortgage lender and has leading positions in credit cards and infrastructure loans. The bank is currently majority owned by China SAFE Investments Limited, an entity of the government of China. Bank of America currently operates a bank in Hong Kong with 16 offices offering an array of consumer banking products. It also has corporate banking offices in Beijing, Shanghai and Guangzhou.

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Remote Deposits Introduced for SMBs

Zion’s Nevada State Bank has rolled-out a new service for small businesses to make deposits from remote locations. “Remote Deposits,” powered by software from Net Deposit, enables businesses to scan checks from their place of business and create an electronic image which is transmitted to a central processing center and converted into a substitute check. The substitute checks are then presented for payment at the appropriate paying institution. The new service is the result of “Check 21” which allows banks and other financial institutions to exchange digital images of original checks, known as substitute checks, instead of physically transporting the original checks to the paying entity.

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Discover Profits Fall 18.8% in 2Q/05

Morgan Stanley reported this morning that its Credit Services division, including the “Discover Card,” posted $242 million in pre-tax profits for the quarter ending May 31st, compared to $298 million for the year-ago quarter. Managed outstandings were essentially flat compared to year-ago levels, but transaction dollar volume increased more than 4% year-over-year, while delinquency and charge-offs continue to fall compared to prior quarters. Merchant and cardholder fees rose 4% to $486 million, due to higher merchant discount fees. Managed credit card loans of $46.8 billion at quarter-end declined by $925 million from the first quarter and nearly $500 million below one-year ago. International card loans were $2.5 billion for the second quarter. Total transaction volume increased to $25.4 billion, compared to $24.2 billion for 2Q/04. The account base declined during the second quarter by 100,000 accounts. International card accounts stayed at 1.4 million. Domestic active accounts declined 3% from 2Q/04 to 19.3 million. The credit card net charge-off rate was 4.94%, 154 basis points lower than a year ago and down 17 basis points from the prior quarter. The charge-off ratio was the lowest in three years. The over-30-day delinquency rate declined 98 basis points from 2Q/04 to 3.90% and the over-90-day-delinquency rate declined 103 basis points over the same period to 1.83%. For complete details on Discover’s second quarter performance, visit CardData ([www.carddata.com][1]).

DISCOVER CARD PORTFOLIO SNAPSHOT
2Q/04* 3Q/04* 4Q/04* 1Q/05* 2Q/05* Y/Y CHNG
Outstandings: $46.8b $47.1b $48.3b $47.8b $46.8b -0.1%
Volume: $24.4b $25.4b $25.7b $25.9b $25.4b +4.1%
Accounts: 46.0m 46.0m 46.2m 46.0m 45.9m -0.2%
Actives: 19.9m 19.6m 19.7m 19.5m 19.3m -3.0%
Chargeoffs: 6.48% 5.76% 5.45% 5.11% 4.94% -154bps
Delinquency**: 4.88% 4.81% 4.55% 4.24% 3.90% – 98bps
Yield: 11.88% 11.69% 11.59% 11.23% 11.69% – 19bps
Notes: * 2Q/04 ended 5/31/04; 3Q/04 ended 8/31/04; 4Q/04 ended 11/30/04;
1Q/05 ended 2/28/05; 2Q/05 ended 5/31/05. ** delinquency is 30-90 days
and excludes 90+ days. Source: CardData (www.carddata.com)

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

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Intersections Advances ID Fraud Detection

Virginia-based Intersections has teamed with Cyveillance to offer consumers a way to continuously monitor the Internet for stolen identity information that is being offered for sale or trade by criminals. The partnership also gives Intersections the exclusive right to offer Cyveillance’s services directly to consumers to help them detect and protect against identity theft. Intersections Inc. provides consumer credit management and identity theft prevention solutions to more than 3 million subscribers. Cyveillance provides online risk monitoring and management solutions to Global 2000 organizations.

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MasterCard Q1 European Volume Rises 12%

MasterCard International reports that its gross dollar volume in Europe rose 12% in the first quarter to $105 billion. First quarter volume in Romania soared by 67%, while volume soared in the Russian Federation by 57% and by 50% in Turkey. Within the European region, the number of MasterCards also increased 12% to 114.2 million cards. The number of 1Q/05 transactions increased 13% to 1.2 billion. Other countries with strong first quarter GDV growth include Slovakia (+46%) and Lithuania (+41%). In the Russian Federation the number of cards nearly doubled to 870,000. In the Ukraine the number of cards increased 84% to 430,000. In Slovakia the number of cards increased 68% to 370,000. In Poland the number of cards increased 63% to 920,000 and in Lithuania the number of cards also increased 63% to 90,000.

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PayPal Platform Adds More Tools to its SDK

PayPal has introduced a new software development kit to assist developers to integrate with its platform. The new kit includes seven new APIs required to integrate PayPal’s new product for small to medium sized businesses, “Website Payments Pro.” The seven new APIs support integration of: “SetExpressCheckout,” “GetExpressCheckoutDetails,” “DoExpressCheckoutPayment,” “DoDirectPayment,” “DoReauthorization,” “DoVoid,” and “DoCapture.” PayPal Web Services are based on open standards, supporting “Simple Object Access Protocol” and “Web Services Description Language.” The PayPal Developer Network has more than 300,000 members. (CF Library 6/20/05)

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SUBWAY Moves to a Plastic Gift/Loyalty Card

The largest restaurant system in North America and the second largest fast-food chain in the world is launching a loyalty and gift card. SUBWAY, which recently announced it is ditching its paper “Sub Club” stamp loyalty card, has inked Chockstone to be its partner for prepaid and loyalty card services for all of its locations in the U.S. and Canada. Independent Purchasing Cooperative, the purchasing organization for SUBWAY, signed the Chockstone deal. Chockstone’s platform is already enabling SUBWAY franchisees in seven states to offer their customers an integrated gift and loyalty card program with real-time promotions tailored to the individual cardholder. Under the program, consumers can load amounts between $5 and $100. Cardholders earn one “Subway Point” for every dollar spent at SUBWAY locations. Redemptions detail vary by location. OR-based Chockstone offers the “Single Swipe” gift card program which combines gift card usage, customer loyalty programs and targeted marketing campaigns for retailers. The SUBWAY restaurant system has more than 22,800 locations in 81 countries. The SUBWAY brand has been ranked the number one franchise opportunity in Entrepreneur magazine for 13 of the past 17 years.

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Tonguette to Head ACAP National Marketing

Payments and network veteran Del Tonguette, former CEO of ATM network GulfNet, has joined ACAP Security as SVP of national marketing. ACAP Security will roll out a wide range of highly secure PIN-based payment and financial service industry solutions to the problems of identity theft and on-line ecommerce security based upon the patent-pending ppn Technology and proprietary access control and authentication technology.

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Security Concerns Dampens Online Bill Paying

A new survey has found that concerns about the security of personal financial information is the key inhibitor of online bill payment adoption. While non-users remain skittish over the security of their financial data, for the second consecutive year MasterCard RPPS survey results show that increasing numbers of Americans are relying on their financial institution’s website for a secure, convenient place to handle their bill paying. Forty-seven percent of the respondents who pay bills online through their financial institution’s Web site said they do so because they believe it is more secure, citing confidence in the security measures their financial institution takes for personal financial protection. Nearly half of survey respondents cited that they feel their personal financial information is most vulnerable while they are online. Making online purchases (24%) and phishing (18%) were the top-rated scenarios where they feel most at risk.

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Ostrich Products Buys Pay Pro Card

Texas-based Ostrich Products of America has acquired Pay Pro Card which has debit card operations in six countries including its domestic operations and offers cards under the brand names “CHEXCARD” and “MYBANKCARD” to businesses, governmental agencies and individuals. Pay Pro will operate as a wholly-owned subsidiary of OPA. Pay Pro offers The MyBankCard and CHEXCARD-Visa and MasterCard bank cards with no interest to pay, no payments to make and no approval requirements.

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