NEWS

Celent Publishes Report on Future of Debit Cards

Global research and consulting firm Celent recently examined banks' key opportunities and challenges for a new report, The Future of Debit Cards: A Global Perspective. The report is based on interviews with over 40 banks, networks and regulators across 20 countries.

The study finds that there is room for growth for regular debit and pre-paid debit card products. It also discusses the challenges faced by banks, including the need to end subsidizing debit cards, to drive customers away from the ATM, and to resist merchants' and regulators' assaults against interchange fees.

Celent expects further consolidation among regional and domestic debit networks and anticipates more merchants supporting the development of their own debit networks. The report also predicts a migration of fraud at the POS from EMV-compliant countries to magnetic-stripe, signature-based debit card markets such as the United States.

LML Patent Corp. FilesPatent Infringement Suit

LML Patent Corp. (LML), a subsidiary of LML Payment Systems Inc., filed suit in the U.S. District Court for the District of Delaware against four companies. LML provides check-processing solutions and holds U.S. Patents No. 6,354,491; No. 6,283,366; No. 6,164,528; and No. 5,484,988, which relate to electronic check processing methods and systems.

In the suit, LML alleges that Telecheck Services Inc., Electronic Clearing House, Inc. (ECHO), Xpresschex, Inc. and NOVA Information Systems Inc. infringe on Patent Nos. 5,484,988, 6,164,528 and 6,283,366. LML seeks damages, injunctive and other relief for the alleged willful infringement of these patents. In response to the suit, ECHO stated it intends to defend itself and to protect its right to lawfully compete in the marketplace and will work with the other defendants to defend the action.

MasterCard Reports First Quarter Growth in Online Debit

MasterCard International's online debit activity, which includes online debit program Maestro and ATM-only brand Cirrus, continued to show growth for the three-month period ending March 31, 2004. As of March 31, the Maestro brand appeared on more than 524 million cards worldwide, a 12.5% increase over the same date in 2003, and was accepted for purchases at over 10 million merchant terminals in 93 countries and territories. Additionally, there were more than 900,000 MasterCard, Maestro and Cirrus ATMs worldwide at the end of the first quarter in 2004.

Visa Processing Systems Prepared for Holidays

VisaNet passed its annual stress test to assure that Visa can sustain a peak of more than 6,000 transaction messages per second this holiday season. The test assumes a 20% increase in transaction volume. The 20% increase is based on Visa's volume projections and the results of a survey conducted by Visa USA. The survey data, gathered from interviews with retail store managers, showed 82% of merchants are optimistic about the 2004 holiday shopping season and 72% expect an average increase of 22% in holiday sales volume. Additionally, 45% believe the percentage of credit and debit transactions will increase during the holiday shopping period.

Visa USA CEO to Retire in 2005

Carl F. Pascarella, President and CEO of Visa USA, will retire when his contract expires in September 2005. Pascarella was named President and CEO in August 1993 and previously served as President of Visa International's Asia-Pacific region.

Some of Visa's milestones during Pascarella's tenure include reinvigorating the Visa brand following a market share slide in the early 1990s, establishing debit cards as mainstream payment products and expanding Visa's commercial card business.

G. Patrick Phillips, President of Card Services for Bank of America and Chairman of the Visa USA Board of Directors, will lead the search process with participation from Pascarella and the search committee. The committee will consider both internal and external candidates.

ANNOUNCEMENTS

Carr Honored as Entrepreneur of the Year

Robert O. Carr, Chairman, CEO and founder of Heartland Payment Systems, Inc. (HPS), was awarded the Ernst & Young New Jersey Entrepreneur of the Year Award in the category of Financial Services for 2004. Carr was selected from among 31 finalists nominated in 8 different industry categories across New Jersey. Carr founded HPS, a credit and debit card processing company, in 1997; it now has more than 1,100 employees and a portfolio of $22.5 billion in annual card processing volume. Carr is now eligible for consideration for the National Entrepreneur of the Year 2004 award, which will be announced in November.

Hypercom Receives Customer Value Enhancement Award

Frost & Sullivan awarded Hypercom Corp. the 2004 Customer Value Enhancement Award in recognition of its delivery of enhanced value to its customers. Frost & Sullivan research indicated that Hypercom works hand-in-hand with its customers to create a market for their solutions and that Hypercom has been able to sustain enhanced profitability for its customers and itself.

Pipeline Data Expands in NY

Pipeline Data Inc. will establish its U.S. call center operations in St. Lawrence County, NY. Pipeline provides integrated transaction processing services and recently received board approval to expand its U.S. call center operations. Northern Merchant Services, a Pipeline subsidiary that currently employs 24 people, plans to build or purchase a facility that will have an initial capacity of 40 people. The company expects full implementation by 2005.

Industry Pricing Benchmark Study Underway

Strategic Management Partners (SMP), a consulting firm focused exclusively on the merchant acquiring industry, will release the 2004 edition of its Pricing Benchmark Study in September. The study, which first premiered in 2003, reveals the cost of individual pricing elements for different sized portfolios in the U.S. merchant acquiring industry.

The 2003 study provided comparisons of individual line-item costs as well the overall cost per transaction for both front-end and back-end settlement services. Participants included ISOs and processing associations, acquirers with varying sized portfolios and financial institutions. SMP is currently accepting subscribers to the study and is gathering initial study data for the 2004 edition. To subscribe to the study contact Kurt Strawhecker at kurt@smpbiz.com or 1-800-886-4465.

UBC Launches Residual Program and ISO Web Site

United Bank Card, Inc. (UBC) launched a new American Express (Amex) and Discover residual-sharing program. Under the program, UBC splits residuals from both Amex and Discover with its ISOs and agents on a 50/50 basis. The program applies to new and existing ISOs, and includes their entire portfolio of existing accounts.

Additionally, UBC recently launched ISOProgram.com, a Web site that provides information for ISOs interested in joining UBC. The site offers details about the different revenue streams available to ISOs and agents and the ability to send a pre-application to UBC for immediate responses and approvals. For more information visit www.ISOProgram.com .

Urban Most Influential ATMIA Member

Mike Urban, an inventor of Card Alert Services, won the ATM Industry Association's Most Influential Member Award for 2004. Mike Urban was honored for his work in supplying members worldwide with regular fraud alerts. The aim of the award is to recognize those who influence both the association and the industry in positive ways.

Urban is a founding director of Card Alert Services, Inc., now owned by Fair Isaac Corp., a national U.S. risk management service specializing in counterfeit card fraud detection and control. He introduced fraud alerts to ATMIA and played a decisive role in the early stages of the formation of the Global ATM Security Alliance.

PARTNERSHIPS

CyberSource, I4 Commerce Bill Faster

CyberSource Corp., provider of electronic payment and risk management solutions, and I4 Commerce joined forces to make I4 Commerce's Bill Me Later online payment service more readily available to merchants. The new package is called Bill Me Later SmartConnect.

Bill Me Later is a credit-based payment solution designed for multi-channel retailers. Customers can make purchases online using an instant line of credit, without entering a credit card number. Instead, they provide their date of birth and the last four digits of their social security number. On the basis of this information, Bill Me Later makes credit decisions and informs customers within three to five seconds, and customers receive bills in the mail within 15 days. Bill Me Later SmartConnect is a turnkey implementation of Bill Me Later. It installs Bill Me Later via a standard Internet connection and is easier and faster than coding a custom connection to payment processors or switching processing relationships.

MP2 and Samsung Partner on Mobile POS

Samsung Telecommunications America and MP2 Solutions, a provider of enterprise mobility solutions, collaborated on the first POS solution for a Windows mobile device, the SPH-i700 Pocket PC Phone.

The device enables secure credit card transactions, digital signature capture and receipt printing, all in the field. The application platform also offers asset tracking, field surveys, inventory management and delivery confirmation. Additionally, MP2 aggregates handheld transaction information and combines it with existing back office system data to produce end-to-end company reports.

Moneris Renews with Midwest Bank

After posting 27% growth in its merchant processing portfolio in 12 months, Midwest Bank and Trust Co. renewed its credit card processing contract with Moneris Solutions.

Under the agreement, Midwest Bank will continue to offer Moneris' credit card processing services to its business customers. The two also partnered to launch a joint sales and marketing campaign to communicate the benefits of merchant acquiring to current and potential business customers.

VeriFone Wins Placement in Burger King

Burger King Corp. is installing VeriFone, Inc.'s Omni 3750 payment terminals in all company-owned Burger King restaurants nationwide. The company also supports a program that offers the solution to Burger King franchisees. The systems have been rolled out to more than 2,000 company-owned and franchise restaurants in the past four months.

PRE Solutions Inc. and Food Lion Implement Prepaid Service

PRE Solutions Inc. and Food Lion, LLC implemented a prepaid services program that enables the grocery chain to sell prepaid products in its 1,200 locations throughout the Southeast and Mid-Atlantic states. PRE Solutions, the largest company of its kind in the United States, delivers the prepaid products through an integrated solution involving Food Lion's existing POS system and a third-party payment gateway. The rollout began with 11 test stores before the full rollout of the remaining stores, for a total of 1,200 locations.

STS and GO Software Establish XML Interface

GO Software, Inc.'s PCCharge payment processing software is now integrated with Smart Transaction Systems' (STS) gift and loyalty card transaction processing system. The integration is one of the first certifications between a payment processing application and a gift card/customer loyalty application using eXtensible Markup Language (XML) to translate data. XML is an internationally accepted method of exchanging information, allowing differing software applications to communicate with one another. GO Software's PCCharge uses XML to format gift and loyalty program transaction data so it can transmit data to the merchant's bank processor.

ACQUISITIONS

Certegy to Purchase CariCard

Certegy Inc. will acquire the assets of Caribbean processor CariCard Services, Inc. for approximately $7 million in cash. CariCard offers financial institutions, retailers and petroleum marketers in 16 countries services such as fraud monitoring, call center support, merchant acquiring and ATM/POS terminal driving. Certegy expects the acquisition to add approximately $3 - $4 million in annual revenue.

First Data Completes Acquisition of Payment Processing Unit

First Data Corp. completed the acquisition of Delta Singular Outsourcing Services S.A. (Delta) from Delta Singular S.A., a technology company in Greece. Delta provides payment-processing services in Greece, the Middle East and the Balkans and manages more than 12 million POS transactions annually.

Simultaneously, Delta entered a 10-year agreement to provide payment processing and related services to its largest client, Alpha Bank. Alpha Bank, Greece's second largest commercial bank, issues MasterCard cards, is the largest issuer of Visa cards and the only issuer of American Express cards in Greece.

PaySpot Acquires TeleBuck$

Prepaid services provider PaySpot, Inc., a subsidiary of Euronet Worldwide, Inc., acquired all the shares of Call Processing, Inc. (CPI), a Texas corporation that sells prepaid services under the brand name TeleBuck$. With this acquisition, PaySpot and its affiliates obtained rights under CPI's licenses to U.S. Patents 5,511,114; 5,577,109; 5,721,768 and 6,502,745 for the provision of POS activation and recharge of stored value cards and accounts.

CPI provides prepaid processing services for 30 convenience store chains in 21 states and distributes prepaid services through a network of approximately 1,500 retail locations that have electronic distribution of prepaid services via POS terminals. PaySpot will pay for the CPI shares through the issuance of Euronet stock.

TransAKT to Purchase IP Mental Inc.

TransAKT Corp. will purchase Taiwan-based IP Mental Inc. IP Mental is a global voice-over Internet protocol ("VoIP") hardware and network provider. The company's products enable home and business users to circumvent the Internet and place calls from anywhere in the world with local rates. The proprietary U&Me network handles more than 23,000 calls daily with over 38,000 subscribers.

TransAKT is incorporating a new Taiwan-based subsidiary, TransAKT Taiwan Co Ltd., which will hold the assets of IP Mental. TransAKT expects the purchase to close by October. In the interim, TransAKT was granted the worldwide marketing rights for IP Mental's products and will generate revenue from hardware sales and global calling phone plans.

APPOINTMENTS

ISD Names Clark Vice President of Sales

ISD Corp., a provider of transaction management software, appointed Ken Clark to the position of Vice President of Sales. Clark brings nearly 20 years of sales experience in the software industry to ISD and enjoyed consistent success with Amdahl Corp., Computer Associates and Business Objects. Clark served as Vice President of Sales for two successful Silicon Valley venture-backed companies and most recently was the sales leader for an IT services firm.

ECHO Appoints Field to ECHO Board

Richard Field was appointed to the Board of Directors for Electronic Clearing House, Inc. (ECHO). Field has more than 35 years of experience in the financial services industry and served as an executive for The Bank of New York (BONY), Chase and Citigroup. At BONY, Field worked his way up over 19 years to Executive Vice President in charge of Retail Banking, subsequently joining BONY's Management Committee as Senior Executive Vice President. Since retiring in 1997, Field was a founding director of LendingTree and joined the boards of Providian Financial Corp. and HSPC.

Hoch Selected VP Sales for Pipeline Data

Debbie Hoch was named Vice President of East Coast Sales for Pipeline Data's wholesale merchant processing division. Hoch has more than 10 years' experience in the credit card industry. Prior to joining Pipeline, she spent several years at Mellon Bank as Credit Underwriter for the merchant processing division. Her most recent position was Southeast Regional Director of Concord EFS, Inc. Hoch also served on the Membership Committee for the Electronic Transactions Association.

GO DIRECT Hires Kingsley

GO DIRECT Merchant Services, an agent of Cornerstone Payment Systems, recently hired Rhonda Kingsley. Kingsley, an industry veteran since 1988, previously worked at POS Systems Inc., Banc One Payment Services and Hypercom. She has experience with new merchant signings, upgrading portfolios and selling new equipment. While at POS Systems, Kingsley upgraded more than 300 merchants. She also sold more than 1,500 terminals while at POS Systems and Banc One Payment Services.

Bottom Lines

• U.S. Consumer Confidence surged to a two-year high in July 2004, climbing for the fourth straight month as the job market continues to recover, The Conference Board reported.
• The gift card market in the United States soared to more than $45 billion in 2003, according to Tower Group. And according to ValueLink, 45% of Americans purchased a gift card in 2003, up from 23% in 2002.
• The McDonald's Happy Meal celebrated its 25th anniversary in July.
• 7-Eleven, Inc. celebrated its 77th birthday on July 9, 2004 and gave out free Slurpees to customers.