NEWS

Transaction Fees Instead of Federal Taxes?

U.S. Rep. Chaka Fattah (D-Pa.) introduced Bill H. R. 3759, "Transform America Transaction Fee of 2004." This legislation calls on the Department of Treasury to study a proposal to eliminate all Federal taxes on individuals and corporations (including payroll, capital gains, corporate profits and income tax) by charging a small fee on the trillions of cash and electronic transactions conducted by consumers. The taxes would be replaced with a revenue generating system based on transaction fees.

The proposed transaction-fee based system would generate revenues equivalent to current collections from all federal taxes, while conceivably supplying additional income. Under the proposal, the fee would apply to all cash and non-cash transactions (including checks, credit cards, transfers of stocks, bonds and other financial instruments) and to cash withdrawals from financial institutions. The fee would not apply to cash transactions of less than $500 or salaries and wages by employers to employees. For more information about the proposed legislation visit www.house.gov/fattah

10 Billion ACH Payments Made in 2003

In 2004, NACHA - The Electronic Payments Association celebrates its 30th anniversary. In 1974 NACHA was formed by the California ACH Association (now WesPay), the Georgia ACH Association, the New England ACH Association and the Upper Midwest ACH Association. The purpose was to establish a set of national, uniform operating rules for exchanging automated clearing house (ACH) payments among local ACH associations. Fourteen years later, ACH payments exceeded 1 billion annually. By 2001 the volume of ACH payments grew by more than 1 billion in a single year.

And NACHA recently announced that more than 10 billion automated clearing house (ACH) payments were made in 2003, valued at $27.4 trillion. These numbers represent increases of 12% and 12.3%, respectively, over 2002. The number of ACH payments originated by commercial financial institutions increased to 9.09 billion in 2003, up 12.9% from 2002. These payments were valued at $24.6 trillion. The Federal government originated a total of 924 million ACH payments in 2003, up 3.5% and valued at $2.8 trillion. ACH payments include direct deposit of payroll, social security benefits and tax refunds, direct payment of consumer bills, e-checks, business-to-business payments and Federal tax payments. For a more detailed look at 2003 ACH payment statistics, visit www.nacha.org .

ANNOUNCEMENTS

3Delta Compliant With Association Security Programs

3Delta Systems, Inc. is now a certified payment gateway under Visa's Cardholder Information Security Program (CISP) and MasterCard's Site Data Protection Service (SDP). It is also in compliance with American Express' Data Security Standard.

Fed Offers Check 21 Resource Guide

The Federal Reserve, various banks and industry trade groups have put together a 20-page Check 21 Resource Document including an overview of the Check 21 Law, common terms and definitions, substitute checks and industry resources. The document can be downloaded at www.frbservices.org/Retail/Check21.html .

Another Bank Joins NACHA

Fort Knox National Bank, a subsidiary of Fort Knox National Co., joined NACHA - The Electronic Payments Association. It is NACHA's 18th financial institution member. NACHA has 37 members: 19 payments associations and 18 financial institutions, which are ABN AMRO, American Express Centurion Bank, Bank of America/FleetBoston Financial, Bank One, BB&T Corp., Capital One, Citibank, Commerce Bank, Discover Bank, J.P. Morgan Chase, Mellon, National City, PNC Bank, U.S. Bank, Wachovia and Wells Fargo. NACHA said financial institution members originated more than 66% of commercial ACH transactions in 2002.

Global Payments Certifies SLIM CD

SLIM CD, Inc. received certification with Global Payments Inc. for its SLIM CD software. The certification allows retail, restaurant, hotel, auto rental, direct marketing and e-commerce merchants to use the SLIMCD software on Global Payments' platform.

InterCept CFO Resigns

InterCept, Inc. announced that Scott R. Meyerhoff, the company's Chief Financial Officer, is leaving the company at the end of March 2004 to serve as CFO at Agilisys Inc. InterCept is using an executive search firm to find his replacement. Carole M. Collins, InterCept's Treasurer and Vice President of Corporate Governance/Risk, will assume interim responsibility for financial matters.

NCHA to Adopt Rules for Paper Check Exchange

The Board of Directors for The National Clearing House (NCHA) approved adoption of the industry-proposed "Uniform Rules for Paper Check Exchange," which are intended to help facilitate the move from a paper to an electronic image check exchange system. The Rules are also meant to help form partnerships with industry service providers for bringing multiple service options to the membership so they can exchange checks and check images with financial institutions of all types and sizes throughout the country. Smart Card Alliance Contactless Payments Paper in Progress The Smart Card Alliance said its Terminal and eTransaction Infrastructure Task Force is working on a new white paper that describes the benefits of contactless payments. The white paper will discuss consumer and merchant benefits and will include input from interviews with organizations implementing contactless payment programs.

STS Certified with Hypercom

Smart Transaction Systems (STS) certified Hypercom Corp.'s T7Plus and ICE card payment terminals for gift and loyalty programs running on Hypercom's HyperWare 08A transaction software. STS is a provider of gift card, customer loyalty and customer relationship management solutions.

TNS Now a Public Company

TNS, Inc., doing business as Transaction Network Services, announced an initial public offering (IPO) of 4,420,000 shares of common stock at a price of $18.00 per share on March 16, 2004. TNS' stock is now trading on the NYSE under the symbol TNS.

TPI Software Recognized By Microsoft

Microsoft recognized TPI Software, LLC for ISV/Software Solutions Competency. The Microsoft ISV/Software Solutions Competency is designed to provide additional benefits and support to Microsoft Certified Partners and Gold Certified Partners that develop and market packaged software solutions based on Microsoft technologies. TPI Software is a Microsoft Gold Certified Partner for software products.

Visa to Incite Check Card Purchases With Sweepstakes

Visa U.S.A. will bring back its 'Pick Up Your Pen Sweepstakes' this summer for the third year in a row. The sweepstakes is designed to provide Visa's member financial institutions with a way to increase check card volume. Cardholders are automatically entered to win the sweepstakes-a chance to win back their purchase amount-when they use their Visa check card and sign for their purchases from July 1 through Aug. 31, 2004.

Visa reported that:

• 82% of cardholders showed significant interest in the contest
• 59% of cardholders were more likely to use their Visa check card more often because of this promotion
• 53% of cardholders claimed they were more likely to sign for their purchases after being exposed to the promotion

PARTNERSHIPS

Plug & Pay Integrates with Alliance Payment

Internet gateway Plug & Pay Technologies, Inc. completed the integration of its secure e-commerce gateway with Alliance Payment Technologies, Inc.'s AllianceACH system in order to provide customers with the option of offering payment via check. The AllianceACH system allows merchants to accept electronic checks through their e-commerce Web sites by converting paper checks into electronic transaction items.

U.S. Central Using eFunds' ACHPS

Member-owned cooperative U.S. Central will use eFunds Corp.'s Automated Clearing House Processing System (ACHPS) with its back-office operations to support growth in payment volumes from its member corporate credit unions.

Exigent and Blackstone Partner

Exigent Technology, Inc. signed a service agreement with Blackstone. The Blackstone POS and Blackstone Prepaid Stop will be integrated into Exigent's wholly owned subsidiary Pin Serve, LLC's PIN Serve platform.

TSYS Extends Relationship with BB&T

TSYS, Branch Banking and Trust Company, and BB&T Bankcard Corp. extended their card processing relationship. The companies are wholly owned subsidiaries of BB&T Corp. They will use TSYS' credit, debit and commercial platforms, and TSYS' subsidiary ProCard, which will provide technology support and services for BB&T's commercial card accounts. TSYS has been processing for BB&T since 1997.

ACQUISITIONS

Coinstar Acquires CellCards

Coinstar, Inc. acquired CellCards of Illinois, LLC CellCards is a distributor of prepaid products; it is formerly a majority owned subsidiary of American Payment Systems. With this purchase, Coinstar expands its distribution locations in North America to about 25,000. CellCards offers wireless, long distance and MasterCard card prepaid products. It also offers bill payment capabilities for utilities and other common services. The company has multi-year agreements with national drug store retailers CVS, Eckerd Drug Stores and Walgreens.

InterCept Sells Merchant Services Division

InterCept, Inc. completed the sale of the entirety of its merchant services division, InterCept Payment Solutions (IPS), in two separate transactions-one for the sale of Internet Billing Company, LLC (iBill) and the other for the sale of the remainder of the IPS business. InterCept said it sold the division in order to focus on its financial institutions business.

Media Billing, LLC, a 99%-owned subsidiary of Penthouse International, Inc., bought InterCept's iBill for $0.7 million in cash, a $0.8 million short-term note and assumption of a $22.0 million working capital deficit. Pay By Touch, provider of biometric authentication and payment solutions, purchased the remainder of the IPS business, including InterCept's wholly-owned subsidiary, InterCept Payment Solutions, Inc., and InterCept's Tennessee-based merchant portfolio management business for $30.5 million The total sale price for both transactions was $53.5 million.

ICE to acquire Neos Merchant Solutions

International Card Establishment, Inc. (I.C.E.) announced plans to acquire Neos Merchant Solutions, Inc. in exchange for the issuance of I.C.E. common stock and warrants to purchase I.C.E. common stock valued at $5,000,000. Neos provides gift and loyalty card processing, electronic payment and POS equipment integration and all non-cash payment transactions, including credit and debit card and checks at POS terminals. The acquisition is scheduled to close by the end of June 2004.

APPOINTMENTS

Humboldt Merchant Services Hires Pat Ford

Pat Ford was hired as Senior Vice President, Direct Sales for Humboldt Merchant Services (HMS). In this position, he will direct the Merchant Card Processing activities of the branch based sales force in Arizona and Nevada for First National Bank Holding Company, the parent organization of HMS. Ford has more than 20 years' experience in the financial services industry.

MasterCard's Two New Appointments

MasterCard International promoted Alan J. Heuer to the newly created position of Chief Operating Officer (COO). Heuer joined MasterCard in 1995. He most recently served as Senior Executive Vice President, Customer Group, and a member of MasterCard's Executive Management Group. As COO, Heuer will continue to be responsible for MasterCard's Customer Group.

MasterCard also named Alexander Labak to serve as President of MasterCard Europe, beginning May 1, 2004. Labak currently serves as Chief Marketing Officer for Deutsche Bank AG. Prior to joining Deutsche Bank, he held senior management positions at various leading global organizations, including Johnson & Johnson, in Germany, Canada, Italy, Austria and the United States. Labak succeeds Peter Hoch at MasterCard, who is retiring in July.

Daniel Miner Appointed at NACHA

NACHA - The Electronic Payments Association appointed Daniel Miner to the position of Senior Director of Electronic Check and Risk Management Services.

Miner has been involved with NACHA as a member of the Electronic Check Council and, since 2000, as the Chairman of NACHA's Check Conversion Applications Rules Work Group. Prior to joining NACHA, Miner served as Group Manager, Product Management for Paymentech. He also worked 12 years at The Northern Trust Company, a treasury management bank based in Chicago. He is a Certified Treasury Professional (CTP).

BOTTOM LINES

• The Conference Board's Consumer Confidence Index showed little fluctuation in March 2004. The index declined sharply in February to 88.5, but stands at 88.3 in March.
• Tampa-based Kash n' Karry is using the services of DJM Asset Management to close and dispose of 38 supermarket store locations throughout central, eastern and northern Florida.
• San Jose businessman Jim LaBrie has signed a deal to make him the Master Developer of Taco Del Mar QSR franchises for San Mateo, Santa Clara and Santa Cruz Counties in California. LaBrie will be operating under the name TDM Bay Area Management Corp.
• More than 760,000 franchised businesses generate a total economic output of more than $1.53 trillion, or nearly 10% of the U.S. private-sector economy, according to a study "The Economic Impact of Franchised Businesses" conducted by PricewaterhouseCoopers. For more information, visit www.franchise.org .
• The House of Representatives passed banking regulatory relief bill H.R. 1375 on March 18, 2004 that could prevent commercial enterprises such as Wal-Mart and Target from operating their own banks, the National Association of Convenience Stores reported.