NEWS

Vote for Inc. Magazine's Entrepreneur Award Finalists

Cynergy Data's CEO, Marcelo Paladini, and President, John Martillo, are in the final round of Inc. magazine's Entrepreneur of the Year competition. Their employees entered them in the contest. You can read about Paladini and Martillo at: www.inc.com/entrepreneur/profile/index.php?paladini48.

You can also help them in the competition. Visitors to Inc.com have until Aug. 31, 2004 to read, rate and comment on the Entrepreneur of the Year entries. Throughout the month of September, Inc. editors will rate candidates based on comments submitted. Inc. will announce its Entrepreneur of the Year in the January 2005 issue and post the winner on its Web site.

American Express Reports Record Earnings

American Express Co. reported record net income of $876 million for the second quarter, up 15% from $762 million a year ago. Revenues totaled $7.3 billion, up 14% from $6.4 billion a year ago. This growth reflects record card member spending on American Express Cards, stronger financial advisor sales, higher client asset levels and increased travel sales.

Federal Reserve Banks Transfer Check Services

Over the next year, the Federal Reserve Banks will discontinue check-processing operations at nine sites, and will shift the volumes from these sites to other Federal Reserve locations. However, the Reserve Banks will continue providing check services to customers nationwide.

The Reserve Banks previously announced trimming their check operations from 45 to 32 sites by the end of 2004. This new restructuring, which will close check operations in Boston; Columbus, Ohio; Birmingham, Ala.; Nashville, Tenn.; Detroit; Oklahoma City; Houston; Portland, Ore.; and Salt Lake City, will reduce that number to 23 by early 2006.

As a result of these changes, the Reserve Banks will reduce its overall check staff by approximately 6%. This will affect about 640 positions overall in the offices where check processing will be eliminated. However, the Banks will add about 370 total positions at the offices that will continue processing checks.

MasterCard Reports Continued Growth For Q2

MasterCard International announced strong performance results for the first half of 2004. Total purchases on MasterCard credit and offline debit cards rose 11.7% in the second quarter compared to the same period in 2003, and the number of MasterCard-branded cards issued globally grew to 638.3 million.

Cardholders worldwide used MasterCard-branded cards for almost 4.1 billion transactions in Q2 2004. In the first six months of 2004, transactions reached 7.8 billion. MasterCard's financial institutions around the world issued more than 638.3 million MasterCard-branded cards, a 6.4% increase over the same six-month period in 2003. The value of purchases on MasterCard-branded cards rose 11.7%, to $257.1 billion for the second quarter of 2004.

ANNOUNCEMENTS

Axalto Named Leader in Microprocessor Card Market

Research and analysis firm Gartner, Inc. recently released its Market Share: Chip Card and Semiconductor Vendors Worldwide, 2003 report. According to the report, Axalto is first in market share in the microprocessor-based card market segment for the third consecutive year. Axalto shipped 262 million microprocessor cards last year, accounting for more than 26% of the world's total 2003 shipments of such cards.

CardSystems Certifies Elite 710

CardSystems Solutions Class-A certified Ingenico's Elite 710 multi-app-ready terminal for credit and debit card acceptance. The Elite 710 is part of the Elite product family of payment terminals that leverage the UNICAPT multi-application architecture. In addition to payment, value-added services such as gift, labor management, loyalty, prepaid and age verification can be added to the terminal. The i3010 PIN pad was also certified.

EMG Opens Office in Tucson

Eliot Management Group (EMG) opened its fourteenth branch office in Tucson, Ariz. This location will continue EMG's Arizona-territory expansion, providing Tucson and the surrounding area with sales, service and support for EMG's credit card and electronic payment processing services. The office expansion is part of EMG's continuing "on-market" service plan that began in August 1999. The goal of the program is to secure office space in all EMG markets.

Q Comm International Completes Placement of Stock

Q Comm International, Inc., a provider of prepaid transaction processing, completed a private placement of 600,000 newly issued shares of its common stock. The shares were sold for $4 each to four existing shareholders in a private placement generating gross proceeds of approximately $2.4 million.

Shift4 Corp. Reports 99.99% Availability

Shift4 Corp.'s $$$ ON THE NET Web-based e-payment gateway solution reported over 99.99% system availability in the first and second quarter of 2004. The only system downtime that occurred in 2004 was a pre-scheduled three-hour window during which Shift4 brought its new data center live.

The company will bring a second data center, with an even larger load capacity, online later this year, though no downtime will be associated with that "go-live" date. The redundant data centers will bring Shift4's system availability close to its ultimate goal of 99.999% availability, or less than five and a half minutes of downtime per year.

Alliance Accepting Nominations for Smart Card Achievement

The Smart Card Alliance is accepting nominations for its Outstanding Smart Card Achievement (OSCA) awards. The Alliance will present three awards recognizing those who have significantly impacted and influenced the market for smart cards in North America. The awards will be presented at the Smart Card Alliance Fall Annual Conference in October. This will be the first year that the smart card industry will present an OSCA award to an individual for leadership and accomplishments; it will present the other two awards to organizations. Submissions are due by Sept. 17, 2004. You can find information on submitting nominations for the awards at www.smartcardalliance.org.

PARTNERSHIPS

Hostopia.com Partners with Kurant

Hostopia.com, a wholesale provider of Web, e-mail and e-commerce hosting solutions, is reselling Kurant Corp.'s StoreSense e-business solution to its worldwide network of ISPs and Web-service providers. StoreSense is a suite of e-business tools designed to help small businesses get started selling online quickly and easily. Businesses pay a monthly recurring fee and have a choice of four progressively scalable license types.

Industrial Bank and MasterCard Launch Dual-currency Credit Card

MasterCard International will launch a dual-currency international credit card through China UnionPay, called Industrial Card. Industrial Card, issued by Industrial Bank provides real credit for Chinese consumers in that it does not require a deposit.

The Industrial Bank MasterCard-branded card is MasterCard's second collaboration with China UnionPay. Earlier this year, Ningbo Commercial Bank issued the Huitong Card, the first international dual-currency MasterCard credit card through China UnionPay.

Keycorp Technology in Hong Kong ID Cards

Keycorp Limited secured a contract to supply 4.7 million smart card chips for the Hong Kong Government. Keycorp already supplied more than 2 million chips for the Smart Identity Card System (SMARTICS).

The multi-function smart ID cards contain the photograph, basic identity details and fingerprint biometric of each cardholder. The government also made available a public library card application and might add a driver's license application in the future. The cards can also contain an electronic certificate for e-transactions.

NFIB Partners With Solveras

The National Federation of Independent Business (NFIB) and Solveras Payment Systems created an e-commerce program for the 600,000 small business members of NFIB. The NFIB E-Commerce Complete provides everything small businesses need to create professional Web stores and securely process payment transactions online.

The solution uses StoreSense by Kurant Corp. Solveras provides program enrollment and merchant account processing and Solveras' strategic partner, Paradata Systems, Inc., provides technical services and support.

TransAKT Enters Agreement with BPS; Secures Order From London Drugs

Business Payment Systems (BPS) of New York entered into a distribution agreement with TransAKT Corp. for its TransAKT brand of wireless POS payment terminals. The initial launch of TransAKT's products through BPS took place at the annual BPS sales conference in early August 2004.

In other company news, TransAKT received its first order for Voice-over Internet protocol (VoIP) equipment from a major retail chain. Canadian-based London Drugs ordered the Taichi 3 Plus USB VoIP handset.

ACQUISITIONS

First Data Acquires Delta Singular Outsourcing Services S.A.

First Data Corp. completed the acquisition of Delta Singular Outsourcing Services S.A. from Delta Singular S.A., a leading technology company in Greece. Delta Singular Outsourcing Services provides payment processing services in Greece, the Middle East and the Balkans.

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

Delta Singular Outsourcing Services processes more than 1.5 million debit cards and 2 million credit cards, drives more than 1,200 ATMs and manages more than 12 million POS transactions annually.

GE Consumer Finance to Purchase Dillard National Bank

GE Consumer Finance agreed to purchase substantially all of the assets of Dillard National Bank, the private label credit card issuing bank of Dillard's Inc., for approximately $1.25 billion. Dillard's operates 329 apparel and home furnishing stores in 29 states, primarily in the Southwest, Southeast and Midwest.

Its private-label program is the sixth-largest in-house card program in the United States.

The two companies also signed a 10-year agreement that will provide credit marketing, credit servicing and customer care for Dillard's 5.5 million active proprietary retail cardholders. The acquisition also includes approximately 500 employees of Dillard National Bank, who will join GE following the close of the transaction. The companies expect the acquisition to be completed before the end of the year.

TSYS Acquires Clarity Payment Solutions

TSYS acquired Clarity Payment Solutions, Inc. for $53 million in cash. Clarity provides prepaid card solutions. TSYS will combine its prepaid products with Clarity's to offer a comprehensive prepaid platform. Anil D. Aggarwal will remain the CEO of the new entity, which will be named TSYS Prepaid, Inc.

APPOINTMENTS

ISD Appoints VP of Engineering

ISD Corp., provider of payment management software, appointed Todd Cinnamon Vice President of Engineering. Cinnamon is a 17-year veteran of the software development industry. He started his career with Tandy Corp. where he helped build Radio Shack's first POS/electronic payment system, delivered to over 6,000 retail stores nationwide.

In 1990, Cinnamon joined the SABRE Group, where he managed the development of airline reservation systems. He also led development teams in bringing enterprise software products to market across multiple technology platforms.

EXS Hires Marketing Director

Electronic Exchange Systems (EXS) hired AnnJo Huwer as Director of Marketing. Huwer has more than 10 years' experience in the bankcard processing industry. Most recently she served as Marketing Manager for NOVA Information Systems and was responsible for implementing corporate marketing and business development strategies.

Koontz Promoted to SVP, Affiliate Sales

Electronic transaction processor Moneris Solutions recently promoted Deb Koontz to Senior Vice President, Affiliate Sales. In this role, Koontz is responsible for building and maintaining the company's affiliate sales program. Koontz will focus on devel-oping long-term sales strategies with Moneris sales channel partners. Koontz has more than 15 years of transaction processing industry experience. She started her career as a business development officer at Water Tower Bank and held a variety of sales positions during her 10-year tenure with Harris Trust & Savings Bank. Koontz has held a variety of senior level sales and finance positions at Moneris Solutions including Business Advisory Manager, Vice President of Payment Services and Vice President of the Direct Merchant Group.

First Annapolis Names Two Partners

Jim Leroux and Bob Lime were promoted to Partners at management consulting and advisory firm First Annapolis.

Leroux works with First Annapolis clients on corporate strategy with emphasis on mergers and acquisitions, strategic relationships and outsourcing transactions. He routinely helps clients develop and execute corporate strategies, often through the identification and completion of strategic transactions. He joined the First Annapolis team in 1998.

Lime focuses on the firm's card issuing practice with emphasis on the retailer services sector where he advises retailers and third party providers of retail credit programs on a range of customer financing and payment strategies. Most recently, Lime advised Circuit City Stores, Inc. in the sale of its credit card business to and partnership with Bank One. Lime joined First Annapolis in 1997.

Metavante Names Rathgaber President

Metavante Corp., the financial technology subsidiary of Marshall & Ilsley Corp., completed its acquisition of NYCE Corp. Steven A. Rathgaber, NYCE's Executive Vice President and Chief Operating Officer, will become President in addition to his COO position. Dennis F. Lynch, NYCE President and CEO since 1996, will leave the company.

Rathgaber has been Executive Vice President and COO of NYCE Corporation since 1997, responsible for managing the daily operations and ensuring that the company met its business plan and key performance objectives. He also manages sales, business development and the EFT business. Rathgaber joined NYCE in 1991 as Vice President of Operations and oversaw the creation of the NYCE Data Center. Rathgaber is also Chairman of the Board of Everlink Services, Inc., a Canadian-based joint venture between NYCE and Celero Solutions.

Rohrer and Reeves Fill Key Positions at CardSystems

CardSystems Solutions, Inc. appointed Cabot Rohrer to Senior Vice President, Operations and William Reeves to Vice President, Marketing.

Rohrer brings more than 18 years of payment processing experience to CardSystems. Prior to joining CardSystems, Rohrer was General Manager of First Data's Caribbean Operations. Rohrer has also held leadership positions with Citibank and Card Establishment Services.

Reeves most recently served as the Vice President, Product Management with FleetCor Technologies. Prior to joining CardSystems, he held management positions with NOVA Information Systems, Delta Air Lines and Federal Express.

Siembieda Appointed to ETA Advisory Council

J. David Siembieda was appointed to the Advisory Council for Electronic Transactions Association (ETA). In this role, Siembieda will work closely with the Board of Directors to set policies and objectives for ETA. Siembieda is the President and CEO of CrossCheck, Inc., and has also held the positions of Executive Vice President of Sales and Marketing and Vice President of Consumer Relations and Legal Affairs. He is a member of the Infrared Data Association and NACHA's Electronic Check Council.

Bottom Lines

• Payless ShoeSource Inc. announced plans to divest its 181 Parade stores at the end of the current fiscal year ending February 2005. Parade sells mid-priced women's footwear.
• About 60 grocery stores in North Carolina are for Women-Infant-Children (WIC)-recipients only, the Charlotte Observer and National Association of Convenience Stores (NACS) reported. The stores accept government vouches for payment instead of cash.
• U.S. revolving consumer credit (outstanding), which includes credit and charge card usage, increased by $1.5 billion in June 2004, following a $1.1 billion rise in May, the Federal Reserve reported.