NEWS FLASH

Dec. 12, 2003-Rumor has it that Verus Financial Management acquired Global eTelecom, Inc. (GETI). The acquisition has been confirmed by phone with Ron Williams, Chief Operating Officer for GETI, who will be staying onboard. The Green Sheet wonders if "acquirers" that currently sell for GETI will continue to sell for a perceived bankcard competitor (Verus) or will prefer to sell for companies, such as CrossCheck, Inc., that are not their competitor. Please send your comments to paul@greensheet.com

NEWS

Judge Denies MasterCard Injunction

A federal judge rejected MasterCard International's motion seeking an injunction to prohibit Visa USA's rules that impose heavy fees on member banks terminating their Visa membership. U.S. District Court Judge Barbara Jones ruled that she could not grant an injunction while Visa and MasterCard were still appealing a related antitrust lawsuit.

Following Visa and MasterCard's April 2003 combined $3 billion settlement with Wal-Mart and other retailers over debit card fees, Visa implemented new bylaws that would penalize its top 100 debit card issuers with fees if they left the Visa network. Visa is concerned that if top issuers leave, then the smaller remaining member banks would be unfairly burdened with the settlement costs. MasterCard argued that Visa's policy is anti-competitive.

In the pending antitrust suit cited by the judge, a federal appeals court three-judge panel ruled in October 2003 that credit card giants Visa and MasterCard must eliminate their exclusionary policies that prevent member banks from also issuing American Express, Discover or other brands of credit cards. This panel agreed with a lower court's 2001 ruling that this requirement hurts competition.

"Even though Judge Jones chose not to issue the injunction at this time, it is clear that Visa's clearly anticompetitive rule is nothing more than a heavy-handed effort to block financial institutions from deciding to switch to MasterCard debit," said MasterCard General Counsel Noah Hanft.

FCRA Signed Into Law

President Bush signed the Fair Credit Reporting Act (FCRA) legislation into law on Dec. 4, 2003. The law includes amendments to help consumers protect themselves from identity theft, but also extends the FCRA's controversial provision on credit reporting (which was going to expire Dec. 31.), which preempts state law even if the state law offers more protection to consumers. Consumer advocates had urged Congress to drop the provision so states could adopt tougher laws.

e-Commerce Sales Climb in Q3

The Census Bureau of the U.S. Department of Commerce reported that Q3 2003 retail e-commerce sales (not adjusted for seasonal, holiday and trading-day differences) totaled $13.3 billion, an increase of 27% from the same period last year and an increase of 6.6% from the previous quarter. Online retail sales accounted for 1.5% of total retail sales in Q3 2003. Overall retail sales totaled $872.5 billion, an increase of 6.1% from the same period a year ago and an increase of 1.6% from the second quarter of 2003. The department began tracking e-commerce sales in 1999.

Wendy's Accepting Plastic

Wendy's International Inc. said it will accept credit cards (MasterCard, Visa, American Express and Discover) at 70% of its restaurants by the end of 2003, Reuters reported, and there is no minimum purchase requirement to use a card. More than 3,000 of Wendy's 5,670 U.S. restaurants already accept credit cards, including all 1,225 company-owned stores. About 3,000 U.S. McDonald's Corp. restaurants also accept credit or debit cards.

ANNOUNCEMENTS

Blackstone Gets Patent for PIN Delivery

Blackstone, a provider of electronic prepaid products and services, has been awarded a patent (US 6,651,885) for its Real Time Electronic PIN Delivery System. The patent covers PIN delivery for prepaid products and "top-up," loyalty, gift card and point-of-sale activations and real time reporting and thermal card printing.

eFunds Moving to NYSE

eFunds Corp. said it will transfer its common stock listing from the NASDAQ to the New York Stock Exchange (NYSE), the world's largest equities market with nearly 2,800 listed companies and a $12.3 trillion total global market capitalization. eFunds expects its shares to begin trading on the NYSE on January 2, 2004 under the symbol "EFD."

eFunds' common stock will continue to trade on the NASDAQ National Market under the ticker symbol "EFDS" until that date. Ninety percent of U.S. stocks eligible for an NYSE listing have listed on the NYSE, and although the systems are very different, economic literature has shown that NYSE stocks tend to trade with less volatility when compared with the NASDAQ, according to Investopedia.com.

Four Top Chinese Banks Pick Hypercom

Hypercom Corp. announced that it has been selected as the preferred card payment technology provider for software, hardware and related technology by four of the largest banks in China: Industrial & Commercial Bank of China (ICBC), Bank of China (BOC), China Construction Bank (CCB) and the Agricultural Bank of China (ABC). Hypercom was also selected as a preferred provider by China's domestic payment network, China UnionPay (CUP).

Concord EFS Selects Ingenico Terminal

Ingenico announced that Concord EFS, Inc. selected the Ingenico eN-Touch 3100 to deploy as an IP-based terminal solution at retailers, restaurants and quick service restaurants (QSR). The eN-Touch 3100 connects directly to the Internet via a broadband cable connection to authorize transactions. It has features including an integrated 33.6 kbps modem supporting dial backup; it enables retailers using the eN-Touch 3100 to securely process credit, debit, EBT, gift card and Purchasing Level II card transactions via the Internet.

LML Grants Patent License to Verus

LML Payment Systems Inc. announced that its subsidiary, LML Patent Corp., granted a personal, non-exclusive license to Verus Financial Management, Inc. under LML's Patent Estate regarding the processing of electronic check transactions. The specific terms of the license agreement were not disclosed, but LML did report that Verus paid LML a fee on closing for a release regarding potential past infringements of the Patent Estate and will pay a running royalty fee based upon each electronic check transaction processed under the license.

Payment Companies on Inc. 500

A number of payment companies announced they made it to Inc. Magazine's 500 list for 2003-a ranking of the fastest-growing private companies in the United States. Electronic Cash Systems, Inc. (#55), Heartland Payment Systems, Inc. and Western Reserve Group (WRG) were also named to the list. To be eligible for this year's ranking, companies had to be independent and privately held through their fiscal year 2002, have had at least $200,000 in sales in the base year of 1998, and their 2002 sales had to exceed 2001 sales.

TenderCard Certifies Hypercom

TenderCard certified its stored value applications such as its gift, reward and loyalty programs on Hypercom's T7Plus, ICE 5500Plus and ICE 5700Plus card payment terminals. TenderCard sells its private label products and services to merchants through a distribution channel of more than 300 resellers across the United States.

VeriFone Launches Web Portal

VeriFone, Inc. has a new Web portal called VeriFone ZONE (www.verifonezone.com), for its ISO partners and merchant sales representatives. The portal provides content such as an ISO's specific terminal download files, a certification matrix and value-added application information; VeriFone product specification sheets, online training and certification; detailed information on value added applications and providers; market specific solutions, and a list of local VeriFone sales representatives and resellers.

PARTNERSHIPS

Two Use CardinalCommerce Platform

Alliance Data Systems will sell, support and host CardinalCommerce Corp.'s Payment Authentication Platform-to be used by issuing banks; it will also offer and support Cardinal Centinel-to be used by online merchants. Both products help fight fraudulent online transactions. The two companies signed a five-year agreement. Under the terms of the agreement, Alliance Data will provide multi-lingual call center support for CardinalCommerce's clients in North America and Latin America; and will provide authentication capabilities as part of its suite of transaction processing services. CardinalCommerce' s products provide a platform for authenticating and securing online transactions for the MasterCard SecureCode and Verified by Visa programs. Authorize.Net, which is offered by InfoSpace, Inc., selected CardinalCommerce to integrate these programs into its payment gateway.

Certegy and VeriFone Team Up

Certegy Inc. and VeriFone, Inc. have joined forces to offer merchants a new Verix solution, an all-in-one stackable point-of-sale product that combines the VeriFone Omni 3750 terminal and CR1000i check reader. The stackable terminal occupies less counter space, and the terminal check reader components can be separated as needed. The Verix solution allows merchants to process paper checks, electronic checks and credit and debit Cards, among other types of transactions.

FDC and NEBA Renew Agreement

First Data Corp. extended its processing agreement with New England Bankcard Association (NEBA) for five more years. First Data will provide card processing and other portfolio management services for NEBA's nearly one-half million credit, debit and commercial card accounts and merchant processing services for NEBA's merchant acquiring members. First Data has provided processing services to NEBA since 1981.

ACH Commerce, Payment Data Systems Partner

Integrated payment solution provider Payment Data Systems, Inc. signed several multi-year agreements with ACH Commerce, LLC, a private company engaged in ACH processing and clearing throughout the ACH networks. By partnering with Payment Data Systems, ACH Commerce will be able to offer Payment Data's credit card products and services to their own bank, biller and retail merchant customers.

Paymentech Wins Domino's Again

Domino's Pizza selected Paymentech, L.P. to provide payment processing services at its more than 570 company-owned locations. There are more than 2,700 Domino's Pizza franchise locations already processing with Paymentech. Domino's takes in an estimated $50 million in bankcard volume annually from its company-owned stores. Domino's will use its own point-of-sale system, as well as a wide variety of terminals. Founded in 1960, Domino's Pizza operates a network of 7,332 Company-owned and franchised stores in the United States and more than 50 countries.

UBC Offering CHARGE ANYwhere

ISO/MSP United Bank Card, Inc. is offering Comstar Interactive Corp.'s CHARGE ANYwhere wireless credit card processing solution to merchants in the United States through its network of sales representatives. United Bank Card is also offering customers who are using Lipman USA's Nurit 3010 and Nurit 8000 Portable Payment Solutions the option of routing credit card and other wireless transactions through the Comstar Gateway via either Cingular Wireless' Mobitex network or the Motient network.

ACQUISITIONS

Metavante Acquires Printing For Systems

Metavante Corp., subsidiary of Marshall & Ilsley Corp., acquired Printing For Systems, Inc. (PSI). PSI serves as an application service provider to the insurance industry, various Fortune 500 companies and progressive marketing organizations. The company also provides ID cards to the healthcare industry. PSI will operate as a Metavante subsidiary within the Metavante Electronic Funds Group. Metavante plans to expand its expertise in producing debit, prepaid debit and credit cards for financial institutions and ID cards and passes for transportation agencies to the healthcare insurance industry. Financial terms of the transaction were not disclosed.

APPOINTMENTS

ICBA Bancard Elects Board Members

ICBA Bancard, the payments services subsidiary of the Independent Community Bankers of America, elected a new Chairman and Board of Directors at the end of November 2003:

• Chairman, David E. Hayes, President and CEO of Security Bank
• Director of the Central region, Stephen L. Stenehjem, Chairman of First International Bank and Trust
• Director of the Southwest region, Kerby E. Crowell, Executive VP of The Stillwater National Bank And Trust Company
• Director of the Western region, Ken F. Parsons Sr., Chairman of Venture Bank
• Director of the Midwest region, Charles L. Saeman, President and COO of State Bank of Cross Plains
• Director of the Northeast region, Ronald F. Miller, Chairman, President and CEO of Shenandoah Valley National Bank
• Director of the Southeast region, C.R. "Rusty" Cloutier, President and CEO of MidSouth Bank, N.A.

TransAKT Corp. appointed Stephen Miller to serve on its Board of Directors. Miller will also develop sales and distribution throughout the United States on behalf of the company. He currently serves as a principal with Convergence Management, a wireless strategy, planning and management consulting firm. Prior to joining Convergence Management, Miller was the Vice President and General Manager for Nextel Communications. Before joining Nextel, he served as Vice President for Metrocall, Inc.

PPI Hires Director of Emerging Technologies

Robert Renzulli joined Payment Processing, Inc. (PPI) as Director of Emerging Technologies. Renzulli previously served as Vice President of Solutions Development at First National Merchant Solutions, a First National Bank of Omaha subsidiary. Prior to First National, he was Manager of Global Alliance Sales Engineers at Clear Commerce Corp. Renzulli has also held technical positions at ICVERIFY and Cybercash; and he served seven years in the U.S Army Electronic Warfare program.

Tom Veasey Joins VeriFone

VeriFone, Inc. hired Tom Veasey to join VeriFone's North America sales team. Veasey is the former Senior Vice President of Sales at Hypercom Corp., where he worked for 11 years.

BOTTOM LINES

• On Nov. 28, 2003, the day after Thanksgiving, holiday shoppers spent $7.2 billion-an increase of 5% from last year, according to ShopperTrak.

• In the two days following Thanksgiving, Visa USA said that the U.S. spending on Visa-branded debit and credit cards reached $6.5 billion, climbing 12% from the previous year.

• Wal-Mart reported record sales of -$1.5 billion at its U.S. stores on the day after Thanksgiving. Last year's sales on the same day were $1.4 billion.

• During the month of November 2003, U.S. consumers went online and spent $8.5 billion, 55% more than they did in November 2002.