MasterCard U.S. Credit

MasterCard’s U.S. credit card business, based on gross dollar volume, continues to grow at a 16% annual pace, down somewhat from the 19% growth rate for the fourth quarter but up slightly from the 15% pace for 1Q/02. During the second quarter, MasterCard added 11.9 million (net) new cards to bring its U.S. credit card portfolio to 252.1 million. On an account basis, MasterCard added 8.4 million net new accounts for a total of 198.9 million at mid-year. Outstandings for MasterCard credit cards, at mid-year, were $258.8 billion, according to CardData (www.carddata.com). MasterCard noted that charge-offs were up 33% on an annual basis.

MasterCard 2Q/02 Snap Shot
(U.S. credit card only; Y/Y Change)
Purchase Volume: $93.0 billion +15% Accounts: 198.9 million +15%
Cash Volume: $28.9 billion +20% Cards: 252.1 million +16%
Purchase Trans: 1.1 billion +15% Outstandings: $258.8 billion +16%
Cash Transactions: 24 million +4% Charge-offs: $4.6 billion +33%
Source: CardData (www.carddata.com)

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Choice Hotels & Mileage Plus

Choice Hotels International and its 3,300 domestic Choice brand hotels have joined the United Airlines Mileage Plus frequent flyer program. Guests at all Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion and MainStay Suites brand hotels in the U.S. and Caribbean earn 250 miles per eligible stay, and guests at all Econo Lodge and Rodeway Inn brand hotels in the U.S. earn 150 miles per eligible stay.

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WESTPAC & EURONET

Westpac Banking Corporation has inked a deal for Euronet Worldwide to provide Euronet ATM, debit card, and POS/merchant/telephone banking software solutions to the bank’s Pacific operations. The technology will be implemented in several new sites, including Vanuatu, Tonga, the Cook Islands, Samoa and the Solomon Islands. The agreement also includes the relicensing of the same software in the existing Fiji and Papua New Guinea sites. The project will standardize Westpac Pacific Banking’s IT and operational infrastructure across the region, and will service Westpac’s more than 500,000 customers over the seven Pacific island locations through a central contact point in Sydney, Australia.

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HUDSON

Toronto-based Hudson’s Bay Company reported that as of July 31, there were 2.9 million active customer accounts in the combined credit card portfolios for the Bay and Zellers, 1.4 million Bay
cardholders and 1.5 million Zellers cardholders. Hudson’s credit card receivables totalled $388.6 million or 15% above the same quarter one year ago. Excluding the accounting adjustment to recognize the
securitization of credit card receivables, the receivable balance at July 31 was $335.8 million or about 3% above the July 31, 2001 level and 24% below the 2001 year-end level. Delinquency (30+ days) hit 5.4% at the end of the quarter, compared to 4.9% for the second quarter of 2001. As of July 31, the average balance per active account was $418, an increase of 6.4% from last year. The average volume per active account for the quarter was $342, a 6.5% increase over 2Q/01.

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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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