NEWS

Vital's Network Flatlines for Three Hours

Part of Vital Processing Services' authorization system was shut down for 3 1/2 hours on June 3, 2003. According to a statement issued by Vital, the network supporting merchant dial terminals and Internet payments was disrupted, but authorizations from VisaNet Access Point and Vital SARATOGA connections were not impacted. The vast majority of Visa transactions were not interrupted and the VisaNet system was not directly affected, according to Vital.

Vital estimates that about 10% of its total authorization volume was affected, based on normal expectations for the first Tuesday of the month for dial and Internet authorizations. A source close to Vital said it was a previously undetected flaw in Vital Processing's core system that caused the failure across the main and all redundant systems and sites following a routine daily process. The software's design flaw did not become apparent until the June 3 failure occurred. It took several hours before the problem was identified, diagnosed and resolved, the source said.

In its statement, Vital said its acquiring clients were notified of the interruption in authorizations as soon as it occurred. The company continued to update its clients through e-mails and phone calls. Vital's Merchant Help Desk notified merchants of the situation and advised them accordingly. This is the first disruption of Vital's dial authorization network in 10 years, according to the company. Vital said it is taking corrective measures to prevent a repeat of the event.

Concord Acquisition Review Extended

U.S. antitrust regulators will extend their investigation into First Data Corp.'s acquisition of rival Concord EFS, Inc. The U.S. Department of Justice and 10 state attorneys general, including New York's and California's, are closely reviewing the terms of the deal and have asked for more information from the companies. The combination of FDC and Concord, including FDC's NYCE ATM network and Concord's STAR, MAC and Cash Station networks, would give it control over about 70% of PIN-based debit card transactions. First Data has argued that the merger would allow it to better compete with Visa and MasterCard's signature-based debit card networks (First Data has only a quarter of signature-based debit market share). Analysts have speculated that FDC will have to purge its NYCE network in order for the deal to go through.

Computer Worm Targets Banks

The U.S. government issued a warning to banks regarding a computer virus called BugBear.B whose goal is to steal corporate passwords from the computers of employees who work at financial institutions. The worm targets all consumers' computers but is written to look for domain names of at least 1,200 banks around the world, including J.P. Morgan Chase & Co., American Express Co., Wachovia Corp., Bank of America Corp. and Citibank N.A. If one of these names is found on the computer, the worm steals passwords and other sensitive data and e-mails it out on the Internet. The FBI is investigating the attack, which had spread to tens of thousands of consumer computers the week of June 2, 2003 and to about 164 countries in its first 24 hours.

Visa Hits $1 Trillion Milestone

Visa said U.S. consumers used Visa-branded payment cards for more than $1 trillion in transactions during a 12-month period for the first time. One trillion is a hard number to comprehend, so Visa offered some different ways of thinking about it:

• $1 trillion could buy 162,000 Harley-Davidson motorcycles every day for a year.
• $1 trillion is greater than the combined volume of all other U.S. payment organizations, including MasterCard, American Express and Discover.
• $1 trillion means an average of $32,000 went through Visa's system every second of every day over the 12-month period ending March 31, 2003.
• $1 trillion means $12 of every $100 that consumers spend in the U.S. is spent using a Visa card.
• $1 trillion is 10 percent of the 2002 GDP in the U.S.

ANNOUNCEMENTS

BioPay Hits 3 Milestones

BioPay, LLC announced it has surpassed three major milestones with its biometric technology. BioPay has verified more than $1 billion in financial transactions, processed more than three million financial transactions and enrolled more than 500,000 consumers in its Paycheck Secure and bCheck biometric systems.

Blackstone Adds ERC

Blackstone now offers electronic receipt capture (ERC) hosting services for merchants. With ERC, Blackstone stores digital signatures and receipts captured at the point-of-sale; if there are any issues with the transaction, Blackstone will forward the data electronically to the processor for resolution. Merchants also can access copies of their receipts through Blackstone's Web site.

Ezic Fights Fraud with Visa

Ezic announced it has added Verified by Visa to its fraud protection solution. Verified by Visa is a cardholder authentication process for card-not-present transactions. Merchants who use this service are protected from liability for fraudulent uses of Visa cards.

Wallner Receives Technology Leader Award

Hypercom Corp. awarded founder George Wallner its 2003 Payment Industry Luminary award at its Global Partners conference in New Orleans. Wallner founded Hypercom 25 years ago in Australia and relocated the company headquarters to the U.S. in 1989. Many in the industry regard him as a visionary behind the development of many of today's electronic transaction technologies. Previous recipients of the award include Henry C. Duques (2002) and Hatim Tyabji (2001).

Ingenico Terminal Milestone

Ingenico announced it has shipped its 200,000th eN-Touch 1000 touch screen and signature capture multilane terminal to retailers in the U.S. such as Wal-Mart, Home Depot, Toys "R" Us, 7-Eleven, Safeway, Eckerd Drug, SAM's, Orchard Supply, Kmart, Sports Authority, Office Depot, Cingular Wireless, NCR, Kyrus and The Wiz. The eN-Touch 1000 enables merchants to accept credit, debit and electronic benefits payments.

PayPal Wins Webby

eBay's online payment service PayPal won a Webby award in the Finance category for its Web site. The nominees for the Finance category included ClearStation, E-LOAN, Quicken.com and Yahoo! Finance.

Oregon DMVs to get ATMs

Portland, Ore.-based Peregrin Technologies is installing ATMs at Driver and Motor Vehicle Services (DMV) offices across Oregon so residents can easily access cash to pay for their licenses, vehicle registration and other DMV fees. Peregrin will place NexTran's ComNet 2000 ATMs at 49 DMV offices by the end of June 2003 and also will furnish the ATMs with cash and supply an armored car service.

ISO Name Change

Franklin, Tenn.-based ISO Bancard Solutions changed its name to Solveras Payment Systems. The company said the new name better reflects its expanding payment services offerings, which include equipment, software and processing support for MasterCard, Visa, American Express and Discover Card transactions, debit card processing, Internet-based virtual terminal systems, electronic check services and electronic gift cards.

New Web site for Sales Reps

Total Merchant Services unveiled a new Web site, www.upfrontandresiduals.com, to support its "Upfront and Residuals" pay plan. The site provides information on Total Merchant Services' upfront bonus program, residual income pay plan options, free services, underwriting guidelines and documentation requirements, the leasing program and the equipment vendor programs. Sales partners also can register online or submit a request to have someone contact them.

WesPay Pubs on Sale

Selected Western Payments Alliance (WesPay) publications are on sale through June 30, 2003, with savings up to 75% off the member discounted price and discounts for nonmembers as well. Choose from more than 25 titles. Some of the titles on sale include:

• 2003 ACH Rules & Guidelines, member price $33, on sale for $25
• Uniform Commercial Code Article 4A and the ACH System, member price $60, on sale for $45
• Guide to Collecting Lost/Destroyed Checks Through the ACH, member price $18, on sale for $5

For more information, contact WesPay at 415-433-1230.

PARTNERSHIPS

Cynergy Data Selects Gateway

Cynergy Data selected Plug 'n Pay Technologies, Inc.'s FraudTrak 2 and RiskTrak products to provide Internet gateway services and fraud protection to its customers. Cynergy Data offers customers payment services such as credit, debit and EBT card processing; check conversion and guarantee; electronic gift card processing; and equipment leasing and sales.

First Hawaiian Helps Merchants Fight Fraud

First Hawaiian Bank will offer Mentor, Ohio-based CardinalCommerce Corp.'s payment authentication software, Cardinal Centinel, to its online merchant customers. First Hawaiian Bank is a subsidiary of BancWest Corp. Cardinal Centinel helps reduce fraudulent online transactions and guarantees payment to online merchants.

The software is targeted for acquiring banks, merchant service providers and their merchant customers.

McDonald's Picks eMac's POS Software

McDonald's Corp. selected eMac Digital to develop its point-of-sale software system. McDonald's previously owned a partial stake in eMac, but with the recent purchase of McDonald's share of the company by Accel-KKR, a private equity firm and eMac co-founder, eMac is now an independent copany.

Keycorp Terminals at Toys "R" Us

Toys "R" Us (Canada) Ltd. has selected Keycorp Canada Inc.'s K23 payment terminals for all of its stores in Canada. Keycorp said this is the first use of its terminals in a multilane retail environment and also the first time the terminals will be integrated with existing POS systems at a major retailer. More than 650 of the terminals will be installed at the Canada Toys "R" Us locations.

MedCom Picks Global eTelecom

LML Payment Systems Inc. announced that its licensee Global eTelecom, Inc. will provide MedCom USA, Inc. with integrated check processing services for the health care industry. MedCom's health care unit, called MedCard, provides services to physicians, clinics and hospitals such as patient eligibility, paperless claims processing, electronic referrals, patient easy pay, credit/debit cards and check guarantee.

Moneris, Devon Bank Continue Alliance

In an extended multiyear renewal agreement, Moneris Solutions will continue to provide Chicago-based Devon Bank's business customers with credit card processing services. Moneris and Devon Bank (formerly Harris Bank Merchant Services) first partnered in 1982 when Devon had only about 30 merchant customers. The bank now has more than 225 merchants.

Mac's Hires Paymentech, eFunds

Paymentech will provide payment-processing services for Columbus, Ind.-based Mac's Convenience Store's brands, which include 625 locations of Mac's, Big Foot, Dairy Mart, and Handy Andy locations. The transactions will be processed through VeriFone, Inc.'s Ruby system. Mac's also selected eFunds Corp. to be its primary ATM provider. Mac's bought 379 frame-relay ATMs from eFunds to place in its convenience stores so customers can make faster transactions.

Visa Pushes Contactless Payments

Visa International and Netherlands-based Royal Philips Electronics have joined forces to develop and promote the use of contactless chip technology for payment transactions around the world. The two organizations plan to explore partnerships with handset and electronic device manufacturers and service providers in areas such as gaming, ticketing, music, mass transit and home shopping.

Two More Sites Use Yaga

InfoSpace's Authorize.Net has partnered with Yaga, Inc. to combine its credit card processing services with Yaga's digital content services to offer Authorize.Net's reseller and merchant customers a variety of ways to create new revenue streams from selling digital content. Ziff Davis Media's PCMag.com also is using Yaga's Digital Content Payment Solution in its Digital Library. Yaga's software enables PCMag.com users to purchase, access and download content from the site's Digital Library.

ACQUISITIONS

Cardtronics ATM Network at 11,000

Houston, Texas-based Cardtronics acquired 1,100 ATM locations and the related merchant contracts from National Bank Equipment Corp. (NBEC), an ISO based in Buffalo, N.Y. Cardtronics said the acquisition expands its ATM network to more than 11,000 locations.

Diebold Acquires QSI Security

In order to expand its security products offering, Diebold, Inc. announced plans to acquire Londonderry, N.H.-based QSI Security, Inc. QSI specializes in the installation and integration of security equipment such as closed circuit televisions cameras, digital video and access control systems for financial institutions.

APPOINTMENTS

BAI Appoints PR Manager

Barcode Automation, Inc. (BAI) appointed Wendy Anderson Public Relations Manager. Anderson served as Public Relations and Creative Services Coordinator at Planet Hollywood International for the last seven years and has been involved with events benefiting organizations such as The Orlando Ballet, The Fairygodmother Foundation, Make-A-Wish Foundation, Give Kids the World and The Coalition for the Homeless.

PRE Hires Senior VP of Sales

Les Cowie is now Senior Vice President of Sales at PRE Solutions, Inc. Cowie has an extensive background selling POS solutions and terminals to large retailers and experience in building "feet-on-the-street" sales forces in acquirer/Independent Sales Organization (ISO) environments. At PRE Solutions, he will further develop and expand the company's sales channels.

Elasri Joins Cynergy Data

Cynergy Data hired Ruth Elasri as Vice President of Operations. Elasri has more than 15 years of experience in the bankcard industry. She previously served as Director of Merchant Services for Concord Payment Systems (formerly Card Payment Systems).

BOTTOM LINES

• U.S retailers reported only modest gains in same-store sales in May 2003, citing poor weather in the Northeast and a weak job market overall (the unemployment rate rose to 6.1% in May). The Goldman Sachs composite index of same-store sales rose 1.5% in May, compared with a 2.4% gain in April.
• Mexico's retail sales rose 3.2% in March 2003, fueled largely by consumer spending, reported the government's statistics institute.
• Best Buy Co. Inc. plans to open 24 more stores spread throughout 17 states by March 2004, with stores in new cities Twin Falls, Idaho; Rapid City, S.D.; and Charlottesville, Va. Best Buy currently has 550 stores in 48 states.
• Sears, Roebuck and Co. is looking to sell its National Tire & Battery and Orchard Supply Hardware chains. Sears plans to use the money from the sale to build freestanding stores called Sears Grand, which will compete with faster-growing rivals Wal-Mart Stores, Kohl's Corp. and Target Corp.
• Department stores are thinking small to accommodate how time-pressed and cash-strapped adults shop, Reuters reported. For instance, in addition to Sears, Roebuck and Co.'s plans to open Sears Grand stores, May Department Stores Co. is opening some smaller stores in strip malls. Developers now build fewer malls and, by contrast, build more shopping centers of less than 100,000 square feet