December 11, 2006


                                                                       VIA EDGAR
Mr. Mark P. Shuman
Ms. Maryese Mills-Apenteng
Mr. Daniel Lee
United States Securities and Exchange Commission
Division of Corporation Finance
450 Fifth Street, N.W.
Washington, DC 20549

Re:      Catuity, Inc.
         Preliminary Proxy Statement on Schedule 14A
         Filed December 1, 2006
         File No. 0-30045

Dear Mr. Shuman, Ms. Kalin and Mr. Lee:

         On behalf of Catuity, Inc., a Delaware corporation (the "Company"),
this letter sets forth the Company's responses to the comments of the Staff of
the Division of Corporation Finance (the "Staff") contained in your letter dated
December 8, 2006 to Mr. John H. Lowry, Chief Financial Officer and Secretary of
the Company. For reference, each Staff comment is reprinted below, followed by
the corresponding response of the Company. For your convenience, a copy of each
of the changed pages of the proxy statement containing the additional or changed
disclosure in response to comments is included with this letter.


         1. We note your disclosure that you may use the proceeds from the
financing for acquisitions. Please disclose whether you have any plans,
proposals or arrangements to use the proceeds for any acquisitions. If so,
please disclose by including materially complete descriptions of the future
acquisitions. If not, please state that you have no such plans, proposals, or
arrangements, written or otherwise, at this time to use the proceeds for any
acquisitions.

         RESPONSE: The Company currently has no definite or firm plans,
proposals or arrangements to use the proceeds for any specific acquisition(s).
The Company has added disclosure to this effect to the discussion of use of
proceeds of the 2006 Financing.

         2. Please discuss the consequences to the company and your financing
transaction if stockholder approval is not obtained for your proposal. Explain
the legal consequences of obtaining or not obtaining stockholder approval. We
note your disclosure that proceeds from the financing have been used and that
payments have been made under the senior notes.

         RESPONSE: The Company has clarified in the discussion of the 2006
Financing, that lack of stockholder approval will not affect the financing
itself. The securities will remain outstanding with no change in terms, and the
Company will retain the proceeds. The sole consequence of a failure of approval
will be that the number of shares issuable on conversion or exercise will remain
subject to the limits imposed by applicable trading-market listing rules.

         3. Please confirm that all material terms of the financing transaction
and securities issued in the transaction have been disclosed. In particular, we
note your reference to full ratchet protection. Please elaborate on this
protection and clarify whether such provision equates to a "best-price"
provision. Please explain how such a provision may affect current stockholders.
Please revise as appropriate.

         RESPONSE: The Company confirms that in its view, all material terms of
the financing transaction and securities issued in the transaction have been
disclosed. As suggested by the staff, the Company has added disclosure of the
description and effects of the "full ratchet" antidilution provisions of the
securities. The Company has also added a specific reference to the documents
themselves, together with an offer to provide copies of the underlying documents
on request.

                                      * * *

         The Company acknowledges that:

         (a) the Company is responsible for the adequacy and accuracy
of the disclosure in the filing;

         (b) staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action with respect to
the filing; and

         (c) the Company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the federal
securities laws of the United States.

         If you have any questions or require additional information, please
feel free to contact David D. Warner with Jaffe, Raitt, Heuer, & Weiss, the
Company's legal counsel at (248) 727-1463.


                                   Sincerely,

                                   CATUITY, INC.


                                   /s/ John H. Lowry


cc:      Alfred H. (John) Racine, III