College Students Still Need Credit-ED

A new survey shows a significant disconnect between what students “THINK” they know about credit and what they actually know. According to the second annual survey by Citibank’s “Credit-ED” financial education program, 80% of students feel knowledgeable enough to manage their finances after graduation, yet almost half of those who feel knowledgeable still make significant credit mistakes. The survey also found that three out of five juniors and seniors today expect to have no credit card debt upon graduation or a year after graduation. The survey, conducted by Harris Interactive, reveals that 42% of today’s college upperclassmen expect to be financially secure within three years after graduation, compared to 35% a year ago.

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Contactless May Drive Smart Card Acceptance

The failure of true smart cards in the USA to take hold, such as the “Target smart VISA” launched in 2001 and the five-year old American Express “Blue Card”, has given way to another approach, namely contactless payments. Yesterday’s announcement that Chase will issue RFID cards along with the recent 7-Eleven and McDonalds endorsement of contactless payments has produced a watershed event for the U.S. payment card industry. The notion that consumers can control the use of their card by contactless technology to prevent skimming or ID theft is perhaps the killer application that smart cards have been in search of. If the Chase push is successful, then the pressure will be on restaurants to provide payment at the table, other issuers to offer next generation cards and all merchants to make their payment terminals “smart.” Yesterday, Chase, the nation’s #1 credit card issuer, became the first issuer to make a national roll-out of contactless general purchase consumer payment cards with the new “blink” VISA and MasterCards. VISA’s contactless payment platform became operationally ready for the U.S. market in February. MasterCard launched its “PayPass” pilot in Orlando during January 2003. American Express first piloted its “ExpressPay” program in early 2003 in Phoenix.

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ADS Acquires a POS Technology Specialist

Dallas-based Alliance Data Systems has acquired Dallas-based Atrana Solutions. Atrana specializes in the design and development of comprehensive transaction-oriented technology solutions for retailers, financial processors, POS hardware manufacturers, telecommunications providers, and other transaction-based businesses. Atrana’s transaction services include support for prepaid wireless top-up, long distance cards, third party gift cards, and prepaid bankcard products. Atrana has 30 employees with all to be transferred to ADS.

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VISA and AmEx Both Gain Share in 1Q/05

VISA and American Express continued to gain market share in the first quarter with VISA picking up 30 basis points and American Express adding 20 basis points. Based on credit card and signature debit card gross dollar volume, American Express racked up a 13.6% year-over-year gain, while VISA grew 12.2% over the same period. As a group, the four U.S. networks handled $602.1 billion in first quarter gross dollar volume, an 11.5% increase over 1Q/04, according to CardData ([www.carddata.com][1]). The market share data excludes VISA’s “Interlink” and MasterCard’s “Maestro” online debit products.

NETWORK QUARTERLY SNAPSHOT
Network 1Q/05 GDV Y/Y CHNG SHARE
VISA $322.1 billion +12.2% 53.5%
MasterCard $174.5 billion +10.2% 29.0%
American Express $ 79.6 billion +13.6% 13.2%
Discover $ 25.9 billion + 7.0% 4.3%
TOTAL $602.1 billion +11.5% 100.0%
Note: excludes online debit products
Source: CardData (www.carddata.com)

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

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AirPlus Snags Two AmEx Executives for Sales

AirPlus International has hired Colleen Ecker and Aaron Kelling, both formerly with American Express, to lead its West coast sales activities and corporate sales in the North East region, respectively. Previously, Ecker led a team of 11 American Express sales people based throughout North America. She brings to AirPlus a well rounded knowledge of corporate payment systems. Kelling was both the Director of Business development and as top producing regional sales manager in corporate meeting solutions. AirPlus International is a global provider of business travel payment solutions.

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FDC Renews MidAmerica BankCard Association

First Data has signed a multi-year contract extension with MidAmerica BankCard Association, FDC’s first bankcard processing client, for credit card transaction processing and other card portfolio management services. MABA is a non-profit bankcard processing cooperative with 3.5 million accounts. Its members are 1st Financial Bank USA, Franklin Templeton Bank & Trust F.S.B., InfiCorp, INTRUST Bank and Zions Bancorporation. First Data Corp. provides electronic commerce and payment solutions for 4.1 million merchant locations, 1,400 card issuers and millions of consumers worldwide.

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I.C.E. Picks FDMS and Fleet National Bank

California-based International Card Establishment has selected First Data Merchant Services for processing and accounting functions relating to the clearing and settlement of credit card transactions and Fleet National Bank for the processing of merchant credit card transactions as an acquiring bank. This processing agreement establishes I.C.E. as a direct credit card processor and not simply an ISO selling credit card services. I.C.E. now has the ability to ultimately sell and transfer its merchant account portfolio to a third party. I.C.E.provides diversified products and services to the electronic transaction processing industry.

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SVM Selects EPS for Prepaid Debit Reload

Stored Value Marketing has signed an agreement with Express Payment Solutions to deploy the EPS cash deposit services to load funds onto its numerous prepaid debit card programs. Under this agreement, SVM will utilize the EPS proprietary depository network consisting of 12,000 nationwide bank branches representing four leading North American banks. Worldwide Financial Services, Inc., dba Express Payment Solutions was developed to provide a cash payment solution and electronic service access to underserved and subsidized housing individuals. SVM provides money transfer services to single convenience store owners, payroll providers, Internet entities and large companies.

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Non-White Households Hold More Card Debt

A new study reveals that African-American and Hispanic households are more likely to be in credit card debt than their white counterparts. The Demos report shows that the percent of cardholders carrying a balance stood at 84% for African-Americans, 75% for Hispanics, and 50% for whites. Between 1998 and 2001, Latino households saw a 19% growth in credit card balances, African Americans stood at 10% and white households saw an 11% decrease. Demos says that Hispanic and African-American families held lower credit card balances than that of white families throughout the 1990s but the growth of their credit card balances far outpaced that of white families in the latter half of the decade. Demos concludes that any meaningful attempt to explain the widening debt gap between Latino and African-American families and their white counterparts must take into account the larger social, cultural and economic forces driving credit card debt.

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Elan Inks Pacific Coast Bankers’ Bank Deal

Elan Financial Services has entered into an agreement with Pacific Coast Bankers’ Bank to provide ATM, debit, prepaid card and merchant processing services to the bank’s financial institution clients. Elan also provides the Fastbank ATM network and its surcharge-free option Fastbank Free, which has over 3,700 locations in 38 states. Pacific Coast Bankers’ Bank has over 114 shareholder banks and has relationships with over 70% of the community banks located in the western United States. Elan Financial Services supports more than 7,700 ATMs, 15 million ATM/POS cards, and 2 million credit cardholders.

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BPO Zenta Acquired by H-Cube

Mumbai-based Zenta, the sixth largest business process outsourcing company in the country, has been acquired by Dallas-based H-Cube. Zenta’s current services include credit card servicing. H-Cube was formed in January by GTCR Golder Rauner in partnership with Henry Hortenstine, the former EVP Affiliated Computer Services. GTCR plans to invest up to $100 million in equity capital in H-Cube’s expansion. Zenta, with 2,600 employees in Pennsylvania and India, is H-Cube’s first acquisition. Priya Hiranandani, the founder of Zenta, will continue to serve as CEO. GTCR also has investments in TNS, VeriFone, Syniverse, TransFirst and Retriever Payment Systems.

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MasterCard Expands its Debit Team

MasterCard has named three SVPs to lead its global debit and prepaid programs. Nik Banerjee, formerly with Charles Schwab, has been named SVP for Debit in the Americas. Scott Galit, formerly with First Data, has been named SVP Global Prepaid Programs. Laura Kelly, formerly with Southwest Business Corporation, has been named SVP for Debit Product Management and Administration. MasterCard’s signature debit card business jumped 29% in the first quarter, compared to 1Q/04, according to CardData ([www.carddata.com][1]). (CF Library 5/3/05)

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

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