Legislation & Greed May Hinder Prepaid

Government, globalization, and greed are the three major issues facing the prepaid debit card industry. The head of CA-based Card Express, a/k/a CardEx, says the U.S. government is a potential obstacle to the industry, because of legislation, including money transmittal laws and escheatment laws. President/CEO Alan Safahi says the global expansion of prepaid cards will offer tremendous opportunities for financial institutions and processors especially in Third World countries. Safahi cautions that the industry must avoid any perception of gouging customers as it pertains to products like general purpose cards offered to the unbanked or underbanked. CardEx’s technology platform supports nearly 40 prepaid debit card applications.

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V/MC Credit Card Account Gap Widens in Q1

While VISA leads in credit card gross dollar volume and cards-in-force, MasterCard now holds a nearly ten million account advantage over its rival. After unseating VISA in total credit card accounts in the third quarter of 2002, the gap with MasterCard has widened to 226.6 million accounts versus 216.8 million. According to CardData ([www.carddata.com][1]), VISA posted a 9.4% gain in first quarter gross dollar volume for credit cards of $178.2 billion. MasterCard reported $131.6 billion in credit card GDV, a 3.8% gain over 1Q/04. VISA holds a 20 million credit card advantage over MasterCard. As of March 31st, MasterCard had 277.8 million credit cards, compared to VISA’s 297.9 million. However, MasterCard’s credit card base is growing by 5.9% compared to VISA’s 4.7%.

FIRST QUARTER HISTORICAL
Credit Card Accounts
(millions)
VISA MASTERCARD
2002 206.6 190.5
2003 200.9 208.4
2004 205.8 211.1
2005 216.8 226.6
Source: CardData (www.carddata.com)

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

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MasterCard Offers a Rules Manual for MSPs

In an effort to provide increased levels of transparency, MasterCard is now offering its rules to all interested parties at no charge. Member Service Providers previously only had access to abridged rules through their sponsoring acquirers, at a cost to the acquirer. The distribution of the rules to MSPs follows MasterCard’s decision last year to enhance its merchant Web site, and make the rules pertaining to merchant acceptance available to the merchant community. The new “Member Service Provider Rules Manual” covers the MSP’s use of the “MasterCard,” “Maestro” and “Cirrus” marks, security requirements, acceptance procedures, and affinity/co-brand program rules. MSPs provide critical services supporting member issuing and acquiring programs, including transaction processing, authorization routing, cardholder and merchant solicitation and statement preparation, and chargeback processing.

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Juniper’s Switch to Falcon Pays-Off

Juniper Bank’s switch to Fair Isaac’s “Falcon Fraud Manager” has begun to pay-off. During a 13-week analysis period, Juniper used “Falcon Fraud Manager” and experienced reduced false positive ratios by an additional 39.4%; cut the number of cases sent to investigators by an additional 39.9%, reduced FTE rates by 1.5, and increased its detection of fraudulent transactions by 30.8%. Fair Isaac’s “Falcon Fraud Manager” protects more than 450 million active payment card accounts across six continents from fraud. Twenty of the top 25 financial institutions worldwide use Fair Isaac’s fraud detection solutions. Juniper Bank has $1.5 billion in assets and more than 750,000 accounts.

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VISA’s Off-Line Debit Share Slips in Q1

VISA’s share of the U.S. signature debit market has slipped from 79% one-year ago to 77% in the first quarter of this year. The shift is the result of MasterCard’s push into off-line debit as its gross dollar volume is now growing by 29% compared to 16% for VISA. According to CardData ([www.carddata.com][1]), the two card networks produced total U.S. gross dollar volume on signature debit cards of $186.9 billion, compared to $157.4 billion for 1Q/04, an 18.7% gain. VISA posted 1Q/05 off-line debit card GDV of $144.0 billion, while MasterCard reported $42.9 billion. During 2004, VISA racked up $542 billion in signature debit card GDV, giving the network a solid 79% share of the U.S. market.

FIRST QUARTER HISTORICAL
Signature Debit Volume
2002: $112.3 billion
2003: $129.6 billion
2004: $157.4 billion
2005: $186.9 billion
Source: CardData (www.carddata.com)

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

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MasterCard Tops 132MM EMV Cards Worldwide

MasterCard reports that there are now over 132 million MasterCard-branded cards that are EMV compliant, representing a 169% increase since the beginning of 2004. There are also 2.4 million EMV POS
terminals which accept MasterCard branded chip cards, a 205% growth
since the beginning of last year. MasterCard is holding a “Global Vendor Information Forum” next week in Brussels. Up to 170 vendors are
scheduled to attend. MasterCard will showcase its “OneSMART” family of added-value products and solutions, which is designed to help banks leverage the EMV infrastructure and bring vendors up to date with new advances. The “MasterCard Vendor Program” is a global program designed to enhance the business relationship between MasterCard and vendors who are supplying solutions to MasterCard customers around the world.

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MBNA to Offer Cardholders Infone Services

Portland, Oregon-based Infone has signed an agreement with MBNA to make its services available to MBNA cardholders offering access to directory assistance, contacts, appointment calendars, hotel reservations, restaurant reservations, driving directions, movie times, event locations, stock quotes and horoscopes. Long-term plans call for Infone to provide support for over-the-phone shopping and other services for MBNA cardholders. Infone is a high-quality, telephonic personal assistant service that offers, on a 24/7 basis, access over any phone to live operators. MBNA is the largest independent credit card lender in the world and a recognized leader in affinity marketing.

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