DNC – Congress Giveth and a Another Federal Judge Taketh

Whether or not the new “National Do Not Call Registry” will go into effect next week is still uncertain. Yesterday, Congress passed legislation giving the FTC the authority to establish the registry while another U.S. District Court ruled the registry was unconstitutional. Earlier this week, a U.S. District Court Judge in Oklahoma City ruled that the FTC wasn’t authorized by Congress to establish the registry. Yesterday, the House ratified the bill by a vote of 412 to 8. The U.S. Senate passed the bill by a 95-0 vote. The President is expected to sign the bill into law this morning. Also yesterday, a U.S. District Court Judge in Denver ruled the registry violates the First Amendment since it favors charitable speech over commercial speech.

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Eufora MasterCard Launches Major Sweepstakes

AZ-based Eufora, LLC is offering new cars to “Eufora MasterCard” cardholders in a monthly sweepstakes. Eufora said this morning it has already awarded cars for August and September. Under the program, cardholders receive one automatic entry into the sweepstakes for every $100 they spend in a month. The winner is randomly drawn on or around the 15th of each month from all entries received during the previous month. Winners have a choice of one of twenty-five $30,000 vehicles. The “Eufora MasterCard,” launched in 2002, offers cardholders a cash bounty for each referral cardholder. Cardholders can earn up to $900, for every ten referrals, each year. The “Eufora MasterCard” is issued by InfiBank and currently has less than 100,000 cardholders.

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Three European Banks Form International Card Processor

Banksys (Belgium), Interpay (the Netherlands) and SSB (Società per i Servizi Bancari – Italy) have joined forces to create the first pan-European initiative in international card processing. The new Brussels-based SiNSYS joint venture will handle annual volumes amount to 800 million transactions for 18 million cards and 500,000 merchants. Banksys and Interpay each hold a 24.5% interest, SSB holds 51%. SiNSYS services will be opened to other interbank organizations at a later stage. The three companies said the introduction of the euro has facilitated the development of a European market for payment processing. They said many national and international processors are now looking beyond their borders for greater cost-efficiencies.

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Providian Gets Ratings Upgrade and a Positive Outlook

The senior unsecured rating of Providian Financial was upgraded this morning by Fitch Ratings to “B+.” The “Rating Outlook” for Providian was also revised to “Positive” from “Stable.” Fitch says Providian has implemented more conservative underwriting and servicing practices and sold non-core assets, which have improved credit quality and liquidity. The “Positive Outlook” reflects Fitch’s view that if Providian can sustain improvements in credit quality and profitability, and resolve all regulatory issues, ratings could be raised further from their current levels. The company’s stock was trading around $11.30 per share this morning.

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Raiffeisen Bank Signs Outsourcing Agreement with Euronet

Raiffeisen Bank has signed a multi-year agreement with Euronet Worldwide for end-to-end ATM, EFT POS and transaction gateway outsourcing services. Raiffeisen Bank, the third largest retail bank in the country, has approximately 600 ATMs and 2,700 EFT POS terminals. The bank plans to deploy an additional 300 ATMs and 3,300 EFT POS terminals in the first 24 months of this partnership. Raiffeisen Bank has used Euronet’s Integrated Transaction Management software for their debit card, ATM, POS and merchant management systems since November of 1999.

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Card Delinquency Still Climbing, But Slowly

Credit card delinquencies, based on total dollars outstanding, edged up slightly to 4.51% during the second quarter, and remain well above last year’s second quarter delinquencies of 4.08%. However, the number of past-due credit card accounts fell slightly to 4.04%, compared to a record high of 4.07% in the first quarter. The data are based on statistics gathered by the American Bankers Association for its quarterly “Consumer Credit Delinquency Bulletin.” The composite ratio of closed-end installment loans 30 days or more past due rose to 2.18% of all accounts from 2.12%, the highest since the fourth quarter of 2001. Home equity loan delinquencies rose to 2.48% from 2.02%, based on the number of accounts. Personal loan delinquencies rose to 3.17% in the second quarter from 3.13% in the previous quarter.

2Q CREDIT CARD DELINQUENCY HISTORY (based on total dollars outstanding)
2002: 4.08% 1998: 4.57% 1994: 3.06% 1990: 3.46% 1986: 3.83% 1982: 3.03%
2001: 4.13% 1997: 5.24% 1993: 3.86% 1989: 3.06% 1985: 2.88% 1981: 2.86%
2000: 3.54% 1996: 4.61% 1992: 4.19% 1988: 3.44% 1984: 2.80% 1980: 3.25%
1999: 4.10% 1995: 3.58% 1991: 4.48% 1987: 3.28% 1983: 2.81%
Source: American Bankers Association Delinquency Bulletin

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