NEWS

Hypercom Lowers Q3 Revenue

Hypercom Corp. says it is lowering its third-quarter 2002 revenue forecast by $10.4 million and its operating profit by $5.1 million because of a delay in the release of its T7Plus POS terminal. The company previously had projected revenues for this quarter to be $80-82 million. Hypercom says it expects a $2 million third-quarter operating profit and a $36.9 million net loss, or 77 cents per share.

Hypercom announced plans to improve its profits by restructuring operation of its POS Terminals and Network Systems Group, reducing its presence in Latin America and eliminating any unprofitable operations. The company expects these actions to result in charges totaling $16.1 million in Q3 2002 but says the actions have potential to increase annual operating profit by $6 million.

Smart Card Shipments Doubled

The Smart Card Alliance, a not-for-profit, multi-industry association working to further the acceptance of smart card technology, released the results of its study conducted by KPMG: Smart card shipments to the U.S. and Canada for the first half of 2002 doubled from the same period last year. Smart card shipments totaled 31.2 million cards, a 111% increase from the first half of 2001. Eighty-one percent of cards shipped were microprocessor cards, and 19% were memory card shipments.

Visa Sales Grow 17 Percent

Visa International announced a 17 percent increase in its global sales volume over last year, reporting more than US$2.3 trillion for the fiscal year ending June 30, 2002. Visa attributes its growth to increases in:

• The number of merchants accepting Visa for payment, such as in quick service restaurants, which have grown 60 percent.
• New co-branded cards, such as the Target Visa card in the U.S.
• New payroll programs in the U.S. and Europe.
• Promotions for using the Visa card such as Visa's sponsorship of the 2002 Winter Olympics.

Visa says retail payments with a Visa card account for 7% of the global personal consumer expenditure (PCE), which represents the market value of all goods and services purchased (excluding homes) by households and non-profits. Visa also said it hopes to achieve a 12% share of the PCE by 2010. The current global PCE is US$19 trillion and is driven by cash and check payments.

ANNOUNCEMENTS

Survey Finds Debit PIN Popular

Results from a recent survey released by Paymentech polling 800 adults reported 50 percent of Americans with debit cards prefer using a PIN versus signing a sales receipt. The survey respondents said the main reason for this preference is that PIN debit transactions are faster than signature debit transactions; security was cited as the second most popular reason for paying with a PIN. In addition, more than a third of the respondents said they would be more likely to shop at a store where PIN debit card payments are honored.

Smart Cards in Demand

A U.S. government Homeland Security agency has placed an order for 6,500 cryptographic smart cards with Datakey Inc., developer of smart card solutions for securing e-business. The smart cards will be used to protect sensitive data stored on employee laptops. To gain access to the laptops and encrypted data on the hard drive, employees of the agency will use a Datakey smart card containing unique digital identification information and a password.

PARTNERSHIPS

SPS Wins First Hawaiian's Business

First Hawaiian Bank, Hawaii's oldest financial institution, has selected Secure Payment Systems, Inc. (SPS) to provide all authorization, terminal management, ACH settlement and risk-management services to its entire portfolio of electronic check conversion merchant customers as well as check and gift card processing solutions. First Hawaiian Bank, founded in 1858, is a subsidiary of BancWest Corp.

Wireless Payment Service from Vital

Vital Processing Services and U.S. Wireless Data, Inc. (USWD) have signed a reseller agreement whereby Vital will provide wireless coverage for processing transaction services by offering USWD's Synapse Adaptor technology, which converts a merchant's terminal into a wireless workstation. Vital's offering will support credit and offline and online debit transactions over the Lipman Nurit 3010 and the Thales Artema POS wireless terminals. Vital's payment services are available across 90% of the wireless coverage areas in the United States. With this partnership, Vital is positioned to penetrate the mobile merchant market.

TSYS Renews Processing Contract

TSYS has renewed a 10-year service agreement with 5Star Bank to process its MasterCard and Visa credit cards. TSYS is a provider of electronic payment services. Under the terms of the five-year agreement, TSYS will continue to provide consumer and commercial card account processing for 5Star's 200,000 cards. 5Star provides financial services to members of the U.S. armed forces, including its parent company, the Armed Forces Benefit Association (AFBA).

Terminal Leasing Made Easier

Hypercom Corp.'s Golden Eagle Leasing, Inc. and Creditdiscovery have joined forces to simplify and expedite the process for ISOs and merchant service providers and acquirers to apply for merchant credit card processing and POS lease financing via the Internet. Golden Eagle Leasing will integrate its microticket (less than $5,000) leasing programs with Creditdiscovery's ISOExpress products to accept online credit applications around the clock, authenticate identity, obtain a credit report, approve or deny a application and obtain a legally binding electronic signature.

Joining of Two at the POS

San Diego-based SalePoint, Inc. will be a reseller of Ingenico's eN-Touch 1000 touch-screen and signature-capture terminal. The terminal will be integrated with SalePoint's Trovato, a point-of-sale solution. SalePoint and Ingenico have integrated the products to provide electronic signature capture and online debit PIN entry at the point-of-sale.

Check Processing Comes to Sunoco

TeleCheck Services, Inc., a check-acceptance provider and subsidiary of First Data Corp., announced plans to bring check transactions to 110 Sunoco, Inc. convenience stores. TeleCheck will provide the stores with electronic check acceptance (ECA) service and Eclipse payment terminals. The ECA service converts a paper check to an electronic image at the point-of-sale and delivers funds to a merchant's account in two business days. Eclipse terminals are all-in-one payment terminals that provide merchants with check, credit and debit authorization and processing.

TeleCheck, VeriFone Integrate for Conversion

TeleCheck announced plans to integrate its electronic check acceptance (ECA) service with VeriFone's SoftPay and Verix software solutions. Combining the solutions will help merchants convert checks to electronic transactions at the point-of-sale. With this agreement, First Data channel partners will be able to extend the ECA service to their existing merchant base. By using VeriFone's advanced Verix multi-application architecture, terminals can support ECA transactions, regardless of the processing host or payment application. The companies expect the integration to be completed in Q4 2002.

U.S. Merchant Services Goes Digital

U.S. Merchant Services, provider of credit card processing, electronic checks, gift cards, prepaid gifts and payroll management services, announced it will provide Florida Digital Network of Orlando (FDN) with the ability to accept credit cards. As part of U.S. Merchant Services' "It Pays to Switch" program, customers of FDN can receive up to $500 to transfer their credit card merchant account to U.S. Merchant Services and will be able to purchase processing equipment at wholesale prices directly from the company.

New Merchant Referral Program

Mechanics Savings Bank and Diversified Acquiring Solutions (DAS) have entered into a merchant referral program whereby Mechanics Savings Bank will refer both new merchant business and non-traditional merchant business to DAS. DAS will manage the sale, set-up and servicing of the bank's processing relationships; in return, Mechanics Savings Bank will receive a referral fee and monthly income on all processed volume.

Comstar, Concord Go Wireless

Comstar Interactive Corp. announced that Concord EFS, Inc. has certified Comstar's CHARGE ANYwhere wireless credit card processing solution for merchants using Concord's electronic transaction processing services. Concord EFS also will distribute CHARGE ANYwhere to mobile merchants through its direct and ISO sales channels.

Prepaid Services for Sale in ATMs

Financial Technologies, Inc. (FTI), provider of ATMs and financial services, and ATM manufacturers Tidel Technologies, Inc. and Triton Systems, Inc. announced they have partnered to provide a suite of prepaid wireless services, prepaid long-distance calling plans, Western Union money transfers and cash payroll services to consumers for purchase from the Tidel 2000 and Triton 9100, 9600 and 9700 series ATMs.

APPOINTMENTS

Knutson Takes Over as TransFirst President

TransFirst has appointed Marla Knutson to President of Agent Bank Services. Knutson, who has more than 20 years' experience in the banking and financial services industry, joined TransFirst in 1999 as Vice President of Agent Bank Services. Before TransFirst, Knutson served as National Sales Manager and Vice President for Agent Banks in the Merchant Services Division of Chicago-based Harris Trust and Savings Bank. Her background also includes the position of Merchant Product Specialist for Norwest Card Services.

Industry Veteran Is New CashWorks VP

CashWorks Inc., provider of check-cashing technology solutions, has appointed Dennis P. Kraft to Senior Vice President of Sales and Marketing. Kraft is a veteran in sales and marketing, with more than 20 years' experience in payment processing-related technology solutions for retailers and financial institutions. Kraft previously served as Vice President of Sales and Business Development for @POS, Inc., which recently was acquired by Symbol Technologies. Kraft also has held senior sales and marketing positions with InfoSpace, First USA Paymentech and Moneymaker EFT.

ACQUISITIONS

TransFirst Increases Market Share to 20%

Dallas-based TransFirst, a transaction processing services provider, has acquired BA Merchant Services, Inc.'s agent bank merchant acquiring portfolio. The merger will add 10 percent in market share - $3 billion in annual sales volume - to TransFirst's Agent Bank Services division, giving it a total market share of more than 20 percent. This is the latest of three acquisitions for TransFirst. The TransFirst Agent Bank division will now service more than 520 banks with $6 billion in annual sales volume.

Cardtronics Adds to ATM Network

Cardtronics has acquired 1,200 ATMs and placement agreements from Diebold, Inc., including several new corporate accounts such as Barnes & Noble College Bookstores, ExxonMobil, Rite Aid and Uni-Mart. Cardtronics' ATM network now includes more than 9,000 owned and/or managed ATMs nationwide, including 1,100 ATMs from its acquisition of McLane Financial Services Plus last October.

First American Picks Up ATM Contracts

First American Payment Systems, L.P., a merchant bankcard and ATM processing acquirer, has acquired FirstCard Financial Services, Inc. with 636 ATM-processing contracts. FirstCard Financial Services now operates as FirstCard ATM, Inc. and has signed a long-term agreement with First American to provide ATM, credit and debit processing services.