Discover Spin-Off May Spin-Out Next Week

The announced departure this week of Morgan Stanley’s Chairman and CEO may give the investment bank reason to reconsider its planned spin-off of Discover. Analysts are also pointing out that Discover may drain more capital than expected from its parent in order for it to operate as a stand-alone entity. The proposed spin-off will be reported on and evaluated by the MS board on Tuesday. MS will report second quarter earnings on Wednesday. (The Company expects its second quarter earnings to be approximately 15% to 20% below 2Q/04.) The Wall Street Journal this morning reports that since April, MS has been meeting with credit-rating companies to determine how best to structure and capitalize Discover but hasn’t provided significant details as how the unit will do that. Earlier this week, Chairman and CEO Philip Purcell announced he will retire no later than March of next year, citing continuing personal attacks and the level of negative attention that the Company has drawn as reasons for leaving. On April 4th, after extraordinary shareholder pressure, the MS board gave management the green light to the pursuit of a spin-off of Discover Financial Services. Discover’s market value has been estimated between $10 billion and $15 billion. (CF Library 4/5/05; 6/13/05)

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PSCU Plans 4 Card Meetings for Members

PSCU Financial Services announced four regional meetings to help its member-owners focus on building successful credit and debit card programs with the first scheduled for Honolulu on August 5th. The meetings will discuss “how to” tactics for segment marketing, activation and growth strategies, ways to combat fraud and new technologies that provide enhanced cardholder service. These meetings will be free to member-owners. PSCU Financial Services is the nation’s largest Credit Union Service Organization (CUSO). As a non-profit cooperative, the company is owned by more than 500 member credit unions nationwide.

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First Data and Fidelity Team for HELOC Cards

First Data and Fidelity Information Services have struck an alliance to integrate FDC’s credit card processing capabilities with HELOCs serviced on Fidelity’s “Mortgage Servicing Package” software. The joint credit card offering will support data exchanges between MSP and FDC’s system for the purpose of setting up, maintaining, enabling transaction flow and posting and reporting on credit card-enabled HELOCs. PHH Mortgage has become the first client of the credit card processing option for HELOCs serviced on MSP. The standard HELOC subsystem to MSP, including the optional credit card processing component, is targeted for completion in the second half of 2005.

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Kreditkort Selects webMethods Fabric for Cards

Kreditkort has chosen webMethods “Fabric” to integrate its
various credit card management systems and to provide the
foundation of a “Service-Oriented Architecture.” webMethods provides
business integration software to integrate, assemble and optimize
available IT assets to drive business process productivity. Kreditkort
is a principal member of MasterCard in Iceland and is owned by the
Icelandic banking community. Kreditkort acquires MasterCard, Maestro,
American Express, Diners and JCB card transactions from domestic and
international merchants.

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CO-OP Network’s New CEO Takes Over from Rose

The CO-OP Network has named Stanley Hollen, former president/CEO of Liberty Enterprises in Minnesota and long-time CEO of The Golden 1 Credit Union in Sacramento, as its new CEO. Hollen’s entire professional career has been spent in the credit union arena, first serving on a credit union board at age 19. When he became Golden 1 CEO in 1984, the credit union had $295 million in assets; upon his departure in 2002, the organization boasted an asset base of nearly $4 billion — and 13 executives from his management team had become credit union CEOs. Most recently at Liberty, Hollen led a company-wide diversification of its product lines to be more attuned with technology. 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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APR CARD DEBT

Credit card balances edged higher in April to a record A$30.6 billion,
a 13.6% gain over year-ago levels. However, gross dollar volume on
credit cards remained sluggish, up 8.3% compared to April 2004 and well
below last April’s year-over-year growth rate of 13.2%. Credit card
volume has been impacted by new rules that give merchants the right to
charge their merchant fees to consumers. Credit card balances at the end
of March were A$30.3 billion, compared to A$30.3 billion in February,
and A$26.7 billion for March 2004. Gross dollar volume on credit card
and charge cards in April of A$13.0 billion was A$800 million less than
the prior month, but up more than A$900 million from one-year ago.
Based on data from the Reserve Bank of Australia, consumers charged
A$12.1 billion in purchases on credit/charge cards during April,
compared to A$11.1 billion one-year ago. Card credit limits reached
A$84.6 billion at the end of April, compared to A$74.7 billion for April
2004. There are currently 11.9 million credit card and charge card
accounts in Australia, compared to 11.2 million one-year ago.

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AssetExchange Announces 3 CU Portfolio Sales

Oregon-based AssetExchange has brokered three credit card portfolio sales including:Pan Am Horizons FCU (FL) to InfiCorp; SourceOne FCU (MN) to TNB Card Services; and Mokelumne CU (CA) to Elan. Pan Am Horizons FCU portfolio is valued at $4.6 million, SourceOne FCUs at $950,000 and Mokelumne CU at $930,000. AssetExchange is a leading credit card advisory and brokerage firm for financial institutions.

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HSBC Online Deploys VASCO’s Digipass GO3

HSBC in Hong Kong will provide all its online customers additional security for Internet banking through VASCO’s “Digipass
GO3.” HSBC is the first bank in the Greater China area to offer
“Digipass” to all its retail Internet customers. HSBS has 870,000 Internet banking customers in Hong Kong. HSBC also has plans to roll out VASCO’s Digipass to all online@hsbc customers in Asia. More than 15 million Digipass products have been sold and delivered to-date.

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Charlotte Merchants Adopt BioPay System

VA-based BioPay has signed 27 Charlotte area national and local retailers to offer its biometric payment technology. The BioPay system uses a person’s unique finger image and their chosen BioPay number (usually a phone number) to authorize a secured direct debit from their checking account. The Company says it has 1.8 million registered consumers and that more than 1,000 merchants use one or more of its smart, secure methods for processing financial and other transactions requiring identification such as payroll check cashing, loyalty programs, age verification and stored value programs. BioPay and its primary competitor, San Francisco-based Pay By Touch, have filed patent infringement lawsuits against each other. (CF 1/25/05; 2/16/05)

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iBill and gkard Drive Q1 Revenues for IBDI

Florida-based Interactive Brand Development says its “gkard” product and recently acquired iBill business drove revenues in the first quarter to more than $14 million. Interactive Brand Development, Inc. is a new media company that owns interests in online and offline media properties. Through its wholly owned operating subsidiary, Internet Billing Company, the company processes online credit card payments for more than 26 million users and manages consumer databases primarily of individuals purchasing services and/or goods over the internet.

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Providian Metrics Continue to Improve in May

Providian’s managed delinquency ratio has declined for the seventh consecutive month as managed charge-offs fell for the third straight month. The securitized charge-off rate plunged 56 basis points and ABS delinquency dropped 46 basis points during May. On a managed basis, Providian’s charge-off rate declined from 8.49% in April to 8.47% in May. In March the rate was 8.62%. Managed delinquency dropped from 4.96% in April to 4.86% in May. In March the rate was 5.16%. For securitized receivables, Providian’s charge-off rate decreased to 10.28% from 10.84% in April. One-year ago ABS charge-offs were 14.82%. Delinquency, on a securitized basis, dropped to 6.49% in May from 6.95% in the prior month, and 8.68% for May 2004. Providian recently announced plans to merge with Seattle-based Washington Mutual for $6.45 billion. For complete details on Providian’s latest performance, visit CardData ([www.carddata.com][1]). (CF Library 6/6/05)

PROVIDIAN MONTHLY ABS METRICS
Month Charge-Offs Delinquency
May 04 14.82% 8.68%
Jun 04 14.44% 8.40%
Jul 04 13.17% 8.42%
Aug 04 12.39% 8.37%
Sep 04 12.45% 8.30%
Oct 04 12.11% 8.48%
Nov 04 12.14% 8.27%
Dec 04 11.73% 8.06%
Jan 05 11.75% 8.01%
Feb 05 11.03% 7.75%
Mar 05 11.18% 7.23%
Apr 05 10.84% 6.95%
May 05 10.28% 6.49%
Source: CardData(R) (www.carddata.com)

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

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InterContinental Deploys GCS Solution

InterContinental Hotels Group has selected “realtimemerchant” from Global Card Services as its newest payment processing solution to facilitate credit and debit card processing at its properties. The “realtimemerchant” solution is a payment-processing gateway that controls credit card processing through a single Web interface. InterContinental Hotels Group owns, manages, leases or franchises more than 3,500 hotels in nearly 100 countries and territories around the world. Global Card Services is part of First Horizon National Corp and provides merchant credit card processing services.

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