Ascom Wins a Fare Collection Contract for Toulouse

Ascom is going to outfit the Toulouse public transport network with a new information and ticketing system. The current equipment will be replaced by new machines from Ascom that can read the existing tickets and communicate with the present system until the contactless ticketing system is introduced in September 2006. The contract is worth 24 million euros. The development of the information, control and management system, as well as of the equipment software, accounts for one quarter of this 24 million euro project. Toulouse is installing a ticket validation system that will be able to collect high-quality data. The central management system will analyze more than 700,000 daily trips. In September 2006, the city will switch to a contactless
solution on the whole network.

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Citi, AmEx, First Data Lead Tsunami Relief

Citigroup is providing $3 million and is matching employee donations to support relief efforts for the South Asia tsunami disaster. American Express and First Data donated $1 million each for disaster relief. AmEx is also matching employee donations. First Data says its donation is the single largest donation made by its Foundation since its inception in 2000. MasterCard International says it has contributed $250,000 to the Singapore Red Cross Society and initiated a relief program in which personal donations made by employees will be double matched by the organization. The December 26th earthquake triggered a series of tsunami waves which claimed an estimated 139,000 lives.

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Pre-Tax Card Profits Hit 16-Year High

R.K. Hammer released its “2004 YEAR-END REPORT”:

At 4.50% pre-tax ROA for 2004, the credit card industry enjoyed the highest earnings period since 1988 (also at 4.50% that year).

The Hammer model estimated the following metrics:

Total Income Yield: down 10 basis points in the last year, principally due to intense marketing competition, to 17.5%. This is for all interest and fees.

Operating Expense: down 10 basis points in the last year, due to seasoning of earlier technology investments, to 4.9%. This should continue to improve.

Net Charge Offs: down 20 basis points, as consumer bankruptcies softened during the year, to 5.6%. Unemployment rates also continue to soften, down 10% from last year.

“Blended” Cost of Funds: upward during the year by 10 basis points, to 2.5%.

Net pre-tax Income: up 10 basis points, reflecting all of the above factors, to 4.50%.

The range of ROA for various issuers was from less than 1% to over 12%, a new high.

2005 Expectations

Continued intense competition for new booked accounts, as leading issuers seek to sustain sequential account and earnings growth in the 18-20% range.

“Flight to quality” remains a key strategy, as it has since 2Q00, to boost profits from lower-risk, higher FICO scored applicants.

Focus on repricing by many, especially for higher-risk accounts; late/overlimit fees will continue to rise and be charged earlier in the billing cycle/due date, plus using “universal default” to trigger higher penalty APR’s, in order to raise the income components.

Customer Service “FTE Ratios” will rise, by design; meaning a planned fewer full time equivalent employees handing any given function. Reduces operating expense ratios.

Portfolio consolidation will continue: we expect 75 -100 larger transactions this year, and 100 – 150 “mini” deals less than $10MM (mostly credit unions).

Funds Cost will continue to trickle upward, in measured 25 basis point increments.

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Incentive Solutions Licenses SCTN’s Solution

Incentive Solutions Canada has licensed Smart Chip Technologies’ loyalty, stored value and gift card program. GiftCards.ca will offer new SCTN functionality to their existing “SuperCard” merchant clients including Winners, HomeSense, Napster and Amazon.ca. Smart Chip Technologies’ turnkey customer retention solution, including
loyalty, pre-paid stored value and gift cards, was co-developed with the
Airos Group and IBM. GiftCards.ca recently signed on Josee Chouinard, Olympic star and Canada’s figure skating champion, in a three-year deal as part of their marketing campaign.

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Global Links Picks Up 100K MasterCard Order

Global Links Card Services has received a 106,000 card order from AZ-based Sharing Way for its debit MasterCard program issued via SD-based BankFirst. Sharing Way (www.sharingway.com) provides churches and charities a means of obtaining additional financial support by issuing a prepaid MasterCard to their members and supporters that, when used, will generate royalties to these charities. PTS in November, 2004, acquired Glove Box, Inc. Glove Box, Inc. owns the rights to the patented, revolutionary Glove Box(TM), the only product that offers contamination reduction through automated glove dispensing.

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Indala Posts Two Consecutive Banner Years

San Jose-based Indala Corporation says it has achieved record growth in 2004 for the second consecutive year. Joe Grillo, chief executive officer of Indala parent company, Identification Technology Group (ITG), and Marc Freundlich, Indala president, made the announcement during a “town-hall” employee meeting at the Company’s San Jose headquarters. Indala Corporation is a leading security technology company that develops and manufactures 125 kHz proximity; 13.56 MHz contactless and contact smart cards; and associated readers for physical and network access-control applications.

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Cap One Picks Monte the Grizzly as Top Mascot

The University of Montana’s “Monte the Grizzly” has been named Capital One “Mascot of the Year” for a second time. Monte proved himself the fittest, surviving competition from 11 deeply talented (and oddly-proportioned) dogs, birds, turtles and gophers and working tirelessly to bring glory to the University of Montana. The break-dancin’, back-flippin’, never-hibernatin’ bear, who won the crown in 2002, again received ferocious support from the school’s administration, alumni and passionate fans. Capital One Financial Corporation (http://www.capitalone.com) is a bank holding company whose principal subsidiaries, Capital One Bank and Capital One FSB, offer consumer lending products.

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MASTERCARD HOLIDAY

MasterCard International reported an 18% increase in global holiday transaction volume, processing 774.9 million total authorizations between the day after Thanksgiving and Christmas Eve. More than $60 billion in card transactions were processed over its network during the holiday period, a 13% increase over 2003. MasterCard says that December 23rd was the highest volume day of 2004 with 36.9 million transactions moving across its network. “Black Friday” (the day after Thanksgiving) was actually the 6th busiest day of the holiday shopping season based on MasterCard data.

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NACM’s December CMI Shows a Growing Economy

The National Association of Credit Management “Credit Manager’s Index” for December shows that although there continues to be a slight erosion in month-over-month growth, the economy continues to grow. The CMI, a monthly survey of the business economy from the standpoint of commercial credit and collections, was launched in January 2003 to provide financial analysts with another strong economic indicator. The National Association of Credit Management (NACM), headquartered in Columbia, Maryland supports more than 25,000 business credit and financial professionals worldwide with premier industry services, tools and information.

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Cap One’s Credit Limit Policy Draws Attention

Capital One’s policy of not reporting limits on credit card accounts picked up national publicity last week. Capital One considers the information proprietary, but credit experts say the practice is resulting in skewed FICO scores, knocking as much as 50 to 70 points off. According to the Washington Post, mortgage experts say the difference is significant, costing borrowers thousands of extra dollars.

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Cap One’s Fixed Rate Promotion Draws a Lawsuit

Capital One’s high profile “No Hassle” advertising campaign has produced a lawsuit by the Minnesota Attorney General. The suit, filed last week, alleges that Cap One’s description of its “fixed” interest rates are false, deceptive and misleading. The lawsuit says that consumers inquiring about a “fixed” rate are told that “Unlike most credit card companies, Capital One’s fixed rate is not variable and will not go up and down as interest rates change.” Only if a consumer “probes” does Capital One concede that it cannot guarantee that its rates will stay the same forever. The suit also offered examples of TV ads and direct mail offers promoting “fixed” interest rates. The suit seeks injunctive relief prohibiting Cap One’s alleged false, deceptive and misleading conduct and civil penalties.

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Tidal Wave of Money Collected Online Last Week

An estimated $350 million has already been donated online since the devastating tsunamis struck South Asia on December 26th. San Diego-based Kintera says its nonprofit clients have raised over $50 million online in the past week for disaster relief efforts. The Company says the phenomenal amount of money donated online is evidence that the Internet is now the accepted way to contribute to a cause. Donating online offers consumers the definitive giving experience, combining immediacy, convenience and confidence. A benefit of online donations for nonprofits during a time of crisis is that organizations can see their funds in real-time, and can allocate money quickly for relief efforts.

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