DEBIT INTERCHANGE

The Reserve Bank’s Payments System Board is recommending that
interchange fees for the EFTPOS and “VISA Debit” payment systems be
slashed by approximately 70%. The bank says the current levels of these
fees are not conducive to the efficiency of the Australian payments
system. If the proposed standards are implemented, the maximum
interchange fee in the EFTPOS system is likely to be around 5 cents paid
to the merchant’s bank. This compares with the current average fee of
around 20 cents. In the “Visa Debit” system, the interchange fee paid to
the cardholder’s bank would fall from an average of around 40 cents, to
a maximum of around 15 cents. The combined effect of these proposed
changes would be to reduce the gap between the two interchange fees from
around 60 cents at present to a maximum of around 20 cents. The EFTPOS
standard would also further reduce the gap between the interchange fees
in the EFTPOS and credit card systems. The Payments System Board also
proposed the removal of the current requirement that merchants accepting
VISA credit cards also have to accept “VISA Debit” cards.

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Australia Exempts AmEx & Diners from Regulation

The Reserve Bank of Australia’s Payments System Board has decided not to regulate American Express and Diners Club, following the issuing of AmEx cards by two banks and the establishment of a partnership between another bank and Diners Club. The RBA said regulation of these payments would have relatively little effect on merchant charges since such charges are largely determined independently of the payment to the partner banks. The RBA also decided not to regulate the totality of payments, including marketing payments, between AmEx and Diners Club and their bank partners. Such regulation would then also be required in the Bankcard, MasterCard and VISA programs. The Bank’s view is that at the current time this form of extensive regulation is not in the public interest. However, AmEx and Diners Club have agreed to reword clauses in their merchant agreements that currently prohibit merchants from encouraging cardholders to use another card and publish their average merchant service fee in Australia on a quarterly basis.

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Intelli-Check Lands a Major Licensing Contract

Integrated Solutions International has purchased more than 1,300 software licenses of Intelli-Check’s proprietary ID-CHECK technology. Intelli-Check, Inc. is the acknowledged leader in technology that assures the authenticity of driver licenses, state issued non-driver and military identification cards used as proof of identity. North Carolina-based Integrated Solutions International, LLC is a leading provider of mobile business solutions.

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Card Penetration at CUs Dips Below 19% in 04

Penetration, or the percentage of credit union members that have credit union credit cards, continued to decline last year, falling from 19.0% in December 2003 to 18.4% in December 2004. Four years ago the figure stood at 21.0%. Total card assets for portfolios over $1 million continued their decline as a percentage of assets, falling from 4.29% in December 2003 to 4.22% in December 2004. The statistics come from a comprehensive study conducted by Oregon-based AssetExchange. The research also found that 54% of card portfolios shrunk in inflation-adjusted dollars between December 2003 and December 2004. Approximately 65 credit unions sold their credit card portfolios last year, accounting for about $475 million in total volume.

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Citi Launches a Teen Card in the UAE

Citibank has launched a credit card for 13-19 year olds in The United Arab Emirates offering a credit limit up to AED 500 (US$136). The new “Citibank Teen Card MasterCard” requires no application form since it is issued as a supplementary card to existing credit card holders. The new card also offers shopping discounts at a wide range of UAE merchants. Citibank currently dominates UAE’s credit card market and is a major provider of consumer credit services including personal and auto loans. Last year, Citibank won the regional “Credit Card of the Year Award” from the GCC Banking Awards 2004 program run by Banker Middle East Magazine.

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Precidia’s POSLynx Router Gets GPN Gateway Access

Precidia Technologies announced “Class B” certification of its “POSLynx” retail router with Global Payments “GlobalNet @dvantage SSL” gateway. Global Payments Inc. is a leading provider of electronic transaction processing services to consumers, merchants, Independent Sales Organizations (ISOs), financial institutions, government agencies and multi-national corporations. Precidia Technologies Inc. is a global leader in the design and manufacture of IP access devices for a wide range of industries, including retail payments and building automation.

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ADS Renews PacSun Private Label Card Contract

Dallas-based Alliance Data Systems has inked a multi-year renewal agreement to provide private label credit card services for clothing retailer Pacific Sun, which generates more than $1 billion in annual sales. Alliance Data Systems is a leading provider of transaction, credit and marketing services, managing approximately 95 million consumer relationships. Pacific Sunwear is a leading specialty retailer of everyday casual apparel, accessories and footwear designed to meet the needs of active teens and young adults.

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IP Network for Prepaid Calling Cards is Launched

Brooktrout Technology and BayPackets have jointly developed a highly scalable IP-based network prepaid calling card solution for service providers. California-based BayPackets’ applications enable wireless, wireline and cable operators to rapidly bundle and deliver enhanced voice and data services tailored to the needs of their business and consumer customers. Brooktrout Technology is a leading supplier of media processing, network interface, call control and signal processing products that enable the development of applications, systems and services based in Massachusetts.

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First Data to Expand its Stock Buyback

First Data announced that its share repurchase program is being increased by $2 billion. Added to the company’s existing authorization, the additional authorization now enables First Data to repurchase approximately $2.32 billion of its stock. Thus far in the first quarter, First Data has repurchased 14.4 million shares for $584 million at an average price of $40.67. The company raised its quarterly dividend to $0.06 per common share, triple the previous level of $0.02 per share.

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Australia Takes on EFTPOS and Debit Interchange

The Reserve Bank of Asutralia’s Payments System Board is recommending that interchange fees for the EFTPOS and “VISA Debit” payment systems be slashed by approximately 70%. The bank says the current levels of these fees are not conducive to the efficiency of the Australian payments system. If the proposed standards are implemented, the maximum interchange fee in the EFTPOS system is likely to be around 5 cents paid to the merchant’s bank. This compares with the current average fee of around 20 cents. In the “Visa Debit” system, the interchange fee paid to the cardholder’s bank would fall from an average of around 40 cents, to a maximum of around 15 cents. The combined effect of these proposed changes would be to reduce the gap between the two interchange fees from around 60 cents at present to a maximum of around 20 cents. The EFTPOS standard would also further reduce the gap between the interchange fees in the EFTPOS and credit card systems. The Payments System Board also proposed the removal of the current requirement that merchants accepting VISA credit cards also have to accept “VISA Debit” cards.

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Chase Outlines Aggressive Card Goals for 05

Chase has set a target to achieve a return on outstandings of 3.5% compared to its current 2.2%. The nation’s largest issuer says it plans to cut expenses, invest in marketing, raise revenues, and maintain credit to meet its goal. Chase indicated it will also consider a portfolio acquisition in the range of $2 billion to $7 billion. Chase hopes to raise revenue through cobrand partnerships, growth in outstandings, risk-based pricing and universe expansion, better management of credit lines, improved cross-sell effectiveness/retention, and, improved collections efficiency. Expense reduction will come from a lower headcount, vendor management, site consolidation, waste management, more effective leveraging of fixed expenses, and adoption of the most efficient operational processes. Chase said it intends to reinvest in marketing through brand building. The issuer said it will also expand its judgmental credit by reaching into the “near prime” segment. Chase also noted yesterday it will raise minimum payments in the second half of this year to comply with FFIEC rules.

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Euronet’s Annual Profits Jump 56%

Euronet Worldwide reported that consolidated revenue for the fourth quarter jumped 61% to $113.1 million, compared to one-year ago. Net income for the year increased 56% to $18.4 million. The EFT Processing Segment reported annual revenues for 2004 of $77.6 million, up 47% over 2003. The EFT segment completed the year with 5,742 ATMs owned or operated, compared to 3,350 ATMs at the end of 2003 and to 5,404 ATMs at the end of the third quarter 2004. The segment processed 232 million transactions for the full year 2004 and 73.4 million transactions in the fourth quarter 2004, compared to 115 million and 33.2 million transactions for the same periods last year, respectively. The Prepaid Processing Segment reported annual revenues for 2004 of $289.8 million, compared to $136.2 million reported for 2003. Total transactions processed by the Prepaid Processing Segment increased to 65.8 million for the fourth quarter 2004, compared to third quarter 2004 transactions of 59.8 million and to fourth quarter 2003 transactions of 39.8 million. Total transactions processed during 2004 increased to 229 million, compared to 101 million for 2003. The Prepaid Processing Segment processes electronic point-of-sale prepaid transactions at more than 175,000 point-of-sale terminals across more than 85,000 retailer locations in Europe, Asia Pacific and the U.S. For complete details on Euronet’s latest results, visit CardData ([www.carddata.com][1]).

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

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