Payment Rates and Yields Invert for the First Time

For the first time, monthly payment rates have exceeded the monthly portfolio yield rate. The news comes at a time when consumer debt has resumed at a brisk pace, and indicates that both revolvers and convenience users are in a very healthy situation for the first time since the start of the recession in 2001. For the month of October, the monthly payment rate hit 18.01% of outstanding balances while the monthly yield rate settled in at 16.77%. Payment rate is one of the most important performance variables for credit card-backed securities. Yield levels are affected by cardholder agreement terms and the annual percentage rate charged by the issuer, the percentage of convenience users in the portfolio, and the level of charge-offs and delinquencies in the portfolio. The yield has declined due to the low interest rate environment coupled with fairly high levels of charge-offs and delinquencies. However, charge-offs and delinquencies have shown recent signs of declining. Last week, the Federal Reserve reported that during October, Americans added $2.2 billion to revolving credit at an annual growth rate of 3.6%, more than twice the rate of growth one-year ago. For complete details on October’s portfolio performance statistics visit CardData ([www.carddata.com][1]).

PORTFOLIO PERFORMANCE
(as of the month of October each year)
Year Payment Rate Yield
2000 14.80% 18.20%
2001 14.89% 18.30%
2002 16.19% 17.60%
2003 18.01% 16.77%
Source: CardData (www.carddata.com)

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

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ACG ATM-Remarketers Mourns Loss of Top Sales Guy

Atlanta-based ACG ATM-Remarketers sadly reported last week the death of Michael Owen Ham, its 15-year VP/Sales. During his more than 15 years with ACG, he was instrumental in the company’s success, including the expansion of the employee base by 500 percent. Ham is survived by William and Patricia Ham of Columbus, Ga., Ida and Henry Becker of Bradenton, Fla., and Mark and Pat Becker of Palmetto, Fla. ACG ATM-Remarketers is a provider of custom refurbished ATMs and kiosks at a cost 30 to 60 percent lower than that of comparable new equipment, as well as parts, maintenance and training for community financial institutions and independent store operators.

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MasterCard Incents American Airlines AAdvantage Members

American Airlines and MasterCard have launched a December promotion that awards “AAdvantage” members 2,500 bonus miles for using a MasterCard, plus 1,500 bonus miles for using a “Citi/AAdvantage MasterCard”, and another 1,000 bonus miles if a round-trip ticket is purchased online at AA.com using a MasterCard. Now through Dec. 31, 2003, American Airlines is offering AAdvantage members a holiday gift of up to 5,000 bonus AAdvantage miles when they purchase round-trip tickets at AA.com using a valid MasterCard card. MasterCard International is a leading global payments solutions company that provides a broad variety of innovative services in support of our global members’ credit, deposit access, electronic cash, business-to-business and related payment programs. American Airlines is the world’s largest carrier. American, American Eagle and the AmericanConnection regional carriers serve more than 250 cities in over 40 countries with more than 3,900 daily flights.

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TSYS Nabs a Card Expert for its European Operations

TSYS Europe has named a managing director. Kelley Knutson, formerly CEO of Clear Money Ltd., will join the Company on January 5th. Knutson also previously served as an executive with GE
Capital and VISA International. Mr. Knutson is a resident of London who has worked in Europe the past 14 years. TSYS established its European offices in 1999. TSYS Europe is currently engaged in
a number of critical initiatives: building a new data center in Europe; modifying the TS2 payments system to meet requirements of specific European markets; and introducing new technologies like debit, e-commerce,
store cards, gift cards and “TSYS ProphIT,” a workflow management system that connects disparate technologies across an enterprise.

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Intercept Privatization Deal is Off, for Now

Atlanta-based InterCept confirmed Friday that its CEO has pulled the plug on his proposed offer to take the Company private. John Collins says he was unable to put together a deal with possible financing sources that would be in the best interest of the shareholders. Last week, InterCept said it will not provide earnings guidance for next year while it considers the CEO’s proposal to take the Company private. Last month, InterCept announced that a special committee of its board of directors had been formed in response to the offer offer. InterCept reported third quarter revenues of $64.1 million, a 3.4% decrease compared with 3Q/02. Net Income for the quarter totaled $18,000, compared with net income of $2.8 million, for the three months ended September 30, 2002. (CF Library 11/12/03; 11/14/03; 12/4/03)

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California 529 Plan Offers Free Target Gift Cards as a Bonus

California’s ScholarShare, a state-sponsored 529 plan, is now giving away a $50 “Target Gift Card” to anyone who establishes an account worth $50 or more online through December 31st. This special offer will allow people to give two gifts for the price of one to loved ones this holiday season. ScholarShare allows account holders to save for a child’s college education with five different investment options with the added benefit of the money saved being state and federally tax-free. The Program’s Guaranteed Option guarantees both principal and a minimum annual rate of return. Funds from ScholarShare can be used at nearly all colleges and universities in the United States, many accredited professional and trade schools, and some schools overseas.

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Your Money Access Beefs-Up Transaction Reporting System

Orlando-based Your Money Access says it has upgraded its customer reporting functions to show larger volume merchants their transactions in real-time and now settles merchants’ payments transactions within 7 days. YMA is a payments processor for businesses all across North America, providing its merchants with additional flexibility in securing payments from the end-customer consumer. The YMA team represents over 40 years of banking experience. The YMA senior management team includes former Federal Reserve officials.

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FDC/Concord-DOJ Trial Gets Underway

Unless a settlement with the U.S. Justice Department is reached by this morning, First Data and Concord EFS will face off with the government today in federal court over their proposed merger. The talks between the parties reportedly came to a stalemate last week after First Data refused to completely divest itself of its interests in the NYCE network. FDC offered to sell part of its interest in NYCE to reach a settlement. Today’s trial is set for a fast track with both sides scheduled to conclude their cases by December 23rd. The proposed $7 billion merger between the two payments powerhouses has a January 31st deadline. If the merger falls through First Data will be required to pay Concord EFS $25 million. On April 2nd, FDC and Concord announced a definitive agreement to merge. Shareholders of both companies voted to approve the transaction on October 28th. The DOJ says the merger would substantially reduce competition among PIN debit networks, and could result in consumers paying higher prices for goods and services from merchants that offer debit transactions. The potential combination of the NYCE network with Concord’s “STAR,” “MAC” and “Cash Station” network could give First Data nearly as much control over PIN debit that VISA USA has over signature debit. (CF Library 10/24/03; 10/03/03)

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GZS Launches eMAXS Acquiring-Processing Platform

Frankfurt-based GZS Gesellschaft fŸr Zahlungssysteme has introduced the next generation acquiring-processing platform. The new “eMAXS” offers features such as customer intervention, multi-brand and multi-currency processing, as well as a multi-lingual user interface and multi-lingual merchant correspondence and is optimally positioned for the international market. A wide range of evaluation options (such as access to statistics on changes in sales volumes in specific sectors etc.) enables contractual relationships with individual trading partners to be adjusted, optimized and tuned to improve profits at any time. Customized payment and statement points can also be used in the modelling of acquiring clients’ sale and organizational structures. GZS is the guarantor for the professional processing of cashless and card-based payments for 2,200 banks. It also services about 350,000 acquiring-processing merchants.

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OSI Emerges Bankruptcy with New Credit Line

St. Louis-based Outsourcing Solutions has emerged from Chapter 11 with long-term debt of approximately $175 million, compared with $600 million in debt at the time of the Chapter 11 filing in May, and has landed a new multi-year, $90 million credit facility from Merrill Lynch for the purchase of portfolios of charged-off receivables. OSI’s secured creditors now will receive approximately 69 percent of the reorganized company’s fully diluted common stock. The company’s former Senior Subordinated Noteholders and certain other unsecured creditors will receive approximately 5 percent of the reorganized company’s common stock, and 7.5 percent of the common stock of the reorganized company will be held by the company’s management. OSI is a leading business process outsourcing firm providing receivables management services, which link a company’s cash flow objectives with credit management policies from beginning to end of the credit-to-cash cycle.

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Fingerprint Cards Receives European Patent for its Swipe Sensor System

Fingerprint Cards has received an European patent for its swipe sensor system. The patent describes a system based on a sensor that reads partial images from a moving fingerprint, and where the sensor surface is considerably smaller than the fingerprint area itself. When the fingertip is moved over the sensor surface unique information is read from each partial image of the fingerprint for later verification of the user’s identity. When the information extraction from each partial image is completed then the memory unit is cleared before the next one is read and dealt with similarly. This method makes it possible to extract information, and from that to store the individual’s biometric identity without having to build up an actual picture of the fingerprint. The procedure to extract information from partial images minimizes the need for processor memory making the system less costly for product implementation. As information is captured on the move the verification process is completed when the finger leaves the sensor surface, making the total verification process extremely fast and user friendly. The Company is filing for patents in Japan and the USA.

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