INTERCHANGE FEES

The Reserve Bank of Australia released its final reforms on credit card programs which include dropping average interchange fees by 40% and lifting the restriction imposed by credit card programs which prevent merchants from recovering from cardholders the costs of accepting credit cards. Interchange fees will decrease from around 95 basis points to approximately 55-60 basis points by July 1, 2003. The Reserve Bank’s standard on merchant pricing will come into force on January 1, 2003. The RBA also announced an end to restrictions imposed by credit card networks which limit the entry of new competitors. Specialist credit card institutions authorized and supervised by the Australian Prudential Regulation Authority will now be eligible to apply to participate in credit card programs. All the reform measures will apply to the credit card networks operated in Australia by Bankcard, MasterCard and VISA, which were formally designated by the Reserve Bank as payment systems subject to its regulation under the Payment Systems (Regulation) Act 1998. American Express and Diners Club have each indicated to the Reserve Bank that they will remove their restrictions on merchant pricing. Interchange fees in Australia currently averages about US$500 million per year.

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Australian Fees

The Reserve Bank of Australia yesterday released its final reforms on credit card programs which include dropping average interchange fees by 40% and lifting the restriction imposed by credit card programs which prevent merchants from recovering from cardholders the costs of accepting credit cards. Under the new RBA rules, interchange fees will decrease from around 95 basis points to approximately 55-60 basis points by July 1, 2003. The Reserve Bank’s standard on merchant pricing will come into force on January 1, 2003. The RBA also announced an end to restrictions imposed by credit card networks which limit the entry of new competitors. Specialist credit card institutions authorized and supervised by the Australian Prudential Regulation Authority will now be eligible to apply to participate in credit card programs. All the reform measures will apply to the credit card networks operated in Australia by Bankcard, MasterCard and VISA, which were formally designated by the Reserve Bank as payment systems subject to its regulation under the Payment Systems (Regulation) Act 1998. American Express and Diners Club have each indicated to the Reserve Bank that they will remove their restrictions on merchant pricing. Interchange fees in Australia currently averages about US$500 million per year, according to The RAM Report ([www.ramreport.com][1]).

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

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VISA A/P 2Q/02

VISA International reported that card retail sales volume in Asia Pacific for the first half of this year hit US$113.5 billion, a 30% increase over the same period last year. With 76% growth and US$34 billion in retail sales volume, Korea has become VISA Asia Pacific’s number one market during the half year. Japan reported retail sales of US$32 billion, up 20%, and Australia reported US$20 billion, up 17%. Including cash withdrawals, total card sales volume for the same six-month period ended June 30th topped US$312 billion, a growth of 43% in constant dollars, compared to the first half of calendar year 2001. Strong performances in card sales volume were recorded by Korea (US$94 billion, up 69%), Australia (US$29 billion, up 32%) and Japan (US$42 billion, up 18%). The number of VISA cards in Asia Pacific reached almost 256 million, a growth of 26% over a year ago. In Japan, almost 70 million Visa cards are in circulation.

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Envelopeless ATMs

NCR unveiled a new enhancement that allows for multiple notes (currency) to be inserted directly into the ATM at one time, without an envelope. The bunch note acceptance feature is being added to the “Personas 86 Drive-up” ATM. The “Personas 86 Drive-up” joins the previously released “Personas 86 Walk-up” model, forming the industry’s only branch through-the-wall ATM family that can be upgraded to a no-envelope deposit solution. PFF Bank & Trust, of Pomona, CA. is the controlled U.S. deployment site for the new drive-up ATM. Over 90% of the drive-up ATMs sold in the USA are equipped with envelope depositories.

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DoD Tests CAC Biometrics

Identix and Northrop Grumman have teamed to test the addition of fingerprint technology to the DoD’s department-wide “Common Access Card”. The DoD’s “Common Access Card” (CAC) is intended to be the standard identification card for all active-duty military personnel, Selected Reserve and National Guard, as well as the Department’s civilian employees and eligible contractors.

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VISA Asia-Pacific

VISA International this morning reported that card retail sales volume in Asia Pacific for the first half of this year hit US$113.5 billion, a 30% increase over the same period last year. With 76% growth and US$34 billion in retail sales volume, Korea has become VISA Asia Pacific’s number one market during the half year. Japan reported retail sales of US$32 billion, up 20%, and Australia reported US$20 billion, up 17%. Including cash withdrawals, total card sales volume for the same six-month period ended June 30th topped US$312 billion, a growth of 43% in constant dollars, compared to the first half of calendar year 2001. Strong performances in card sales volume were recorded by Korea (US$94 billion, up 69%), Australia (US$29 billion, up 32%) and Japan (US$42 billion, up 18%). The number of VISA cards in Asia Pacific reached almost 256 million, a growth of 26% over a year ago. In Japan, almost 70 million Visa cards are in circulation.

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SuperScrip Card

The National Scrip Center, Inc., a nonprofit fund-raising organization based in Santa Rosa, Calif., has teamed with American Express Incentive Services to launch the first multi-merchant stored-value card to assist nonprofit organizations raise money. The “SuperScrip Card,” will sell in denominations of $25, $50 and $100 to nonprofits at a 5% discount per card. Nonprofits then can sell NSC SuperScrip Cards at face value to their supporters, who can give the card as a gift or use it to purchase items online or in stores at almost 200 brand-name establishments nationwide. The card can also be branded with a nonprofit’s logo. NSC expects to sell 458,000 SuperScrip Cards resulting in $800,000 in charitable contributions the first year.

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Ad Spending 2002

U.S. issuers spent $442.7 million on ads to promote credit card products during the first half of this year. VISA led the pack, shelling out $145 million while Capital One plunked down nearly $95 million over the first six months of 2002. VISA spent $93 million promoting consumer credit cards and $49 million advertising debit cards, according to CMR. MasterCard spent $73 million on consumer credit card advertising and about $4.6 million for debit card ads. MasterCard also spent $24 million promoting its Web site, “Exclusives” program, and its business cards. Meanwhile, American Express shelled out approximately $28 million on consumer credit card ads in addition to $3.5 million to promote the “Delta SkyMiles” card and $2.1 million on the “Blue” smart credit card, during the first half of 2002. Discover spent $21.5 million on credit card ads in the first and second quarter of this year. CMR said yesterday that overall advertising spending for all media was down 0.2% for the first half of 2002 compared to first-half revenues in 2001.

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Major Off-Premise ATM Deal

Valero Energy Corporation, which owns Diamond Shamrock Corner Stores, Stop N Go, Ultramar, Valero, Beacon and Total retail outlets, announced yesterday it will install Wincor Nixdorf’s “ProCash 1500” cash dispensers in 1,200 company-owned gasoline and convenience store retail locations. he ATM machines will provide customers with conveniently accessed > electronic coupons and short, full-motion video programs about the store’s promotions.

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Point Psychology

Loyalty programs reveal a wide range of egos and attitudes among participating consumers. A first-of-its-kind member study of the “Priority Club Rewards” program has identified six distinct behavior patterns of people playing the loyalty game including, “Swinger,” “Shepherd,” “Stasher,” “Snob,” “Sherlock,” and “Slacker.” The “Point Psychology” defined a “Swinger” as someone who plays both sides – points and miles – to the best advantage. A “Shepherd” funnels everything – hotel, rental car, credit card miles – to fuel a free flight fixation. A “Stasher” matches every point and mile on statements against hotel receipts and boarding passes. A “Snob” piles and saves points for perks so as to be treated like royalty. A “Sherlock” seeks the biggest bang for the buck. A “Slacker” likes immediate perks such as a free in-room movie or weekday newspaper and doesn’t count points. The “Point Psychology” study was conducted for Six Continents Hotels which owns the Inter-Continental, Crowne Plaza, Holiday Inn, Staybridge Suites brands.

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