NEWS

report from Chain Store Guide finds that Hispanic buying power is expected to reach $926.1 billion by 2007. This represents 9.4% of America's total buying power. "Top 50 Hispanic Markets Report: Your Retail & Foodservice Guide to Hispanic Marketing" reports that among retailers, Wal-Mart and Walgreens are the leaders in serving the Hispanic community.

Wal-Mart's average market share is 37.3% among discount stores while Walgreens' average is 40.3% among drugstores. You can purchase the report by calling 800-927-9292 or visiting www.csgis.com .

Web Sites Moving to Subscription-based Models

A study from the Online Publishers Association "guesstimates" that approximately 1,700 Web sites charge their users for content. The study revealed that consumers spent $675 million for online contents in 2001, which is almost double what they spent in 2000. During the first quarter of 2002, Web users spent more than $300 million for online contents, a 155% increase over the same quarter in 2000.

The trend indicates that many of the portals want to increase their subscription-based revenue, as advertising becomes a less dependable source of revenue. About 12.4 million U.S. consumers paid for online content in the first quarter of 2002, 5.3 million more than the same period of the year 2001. Also, the average spending per person increased 46% in the first quarter of 2002 compared to the same period in 2001.

Smart Card Security Report Released

Smart card technology can provide organizations with strong authentication and enhanced user convenience for logical access security, according to a new report from The Smart Card Alliance. The Alliance is a not-for-profit, multi-industry association working to accelerate the acceptance of smart card technology,

The report, "Logical Access Security: The Role of Smart Cards in Strong Authentication," provides a review of issues surrounding secure information systems access, alternate approaches for authentication and business considerations for investing in and implementing technology for strong authentication. The report also includes profiles of several organizations currently using smart ID cards for information systems access.

Lead contributors to the white paper included representatives from Axalto, CardLogix, Datakey, IBM, Identix, Sun Microsystems and VeriSign. The report is available at www.smartcardalliance.org .

ANNOUNCEMENTS

BankServ Honored for Rapid Growth

Three national and regional business publications recognized BankServ as one of the fastest-growing corporations in America. As a result of its growth between 1999 and 2003, BankServ earned its second appearance in "Inc." magazine's Inc. 500, a list of the 500 fastest-growing private businesses in the United States. With a 218% annual growth rate, the company ranked 144.

BankServ was also named to the Deloitte Technology Fast 500, which ranks the growth of all publicly and privately held technology firms in North America over a five-year period. Posting 1,090% growth since 1999, BankServ placed 195th on the list.

BankServ was also awarded the 58th spot on the "San Francisco Business Times" Fast 100, a list of the 100 fastest growing private companies in Northern California.

First Data Reports Quarter Results

First Data Corp. reported that revenue for the third quarter 2004 grew 21% to $2.5 billion. POS activity for Western Union money transfers and merchant transactions were major contributors to the company's performance.

Merchant services' results were driven by 65% transaction growth. Revenue was $983 million, up 47%. Card issuing services' revenue and operating profits were $620 million and $154 million, respectively. A total of 51 million new accounts were converted during the year.

ATM Security Best Practices Published

The Global ATM Security Alliance (GASA) published its international "Best Practices for ATM Transactional Security" manual, which features guidelines for information security and data integrity for ATM networks. The new manual is available from GASA at www.globalasa.com .

Lease & Finance Consulting LLC Creates Consulting Practice

Lease & Finance Consulting LLC created a consulting advisory practice focused on servicing the financial services industry. The management team, headed by Lisa Lersner, former President of Golden Eagle Leasing Inc., is comprised of leasing and electronic transaction industry veterans.

The company provides services including securing of financing, business plan development, due diligence reviews, lease administration and collection servicing.

MasterCard VP Named World Standards Day Honorary Chairman

Simon Pugh, Vice President, e-Business Infrastructure and Standards for MasterCard International, was named honorary Chairman of the U.S. Celebration of World Standards Day 2004. Pugh was presented with the Ronald Brown Standards Leadership Award. The award recognizes leadership in promoting the role of standardization in eliminating global barriers to trade.

World Standards Day began as a celebration of the birth of the International Organization for Standardization (ISO), which held its first meeting on Oct. 14, 1946.

From an initial roster of 25 countries, ISO now has 123 member nations and has evolved into the global clearinghouse for all standards activities.

NAB Signs Agreement with Global Payments

North American Bancard (NAB) signed a five-year renewal agreement to sell Global Payments Inc.'s credit card processing services. Global will provide to NAB a payment card processing solution including authorization, capture, settlement and BIN sponsorship.

Under a separate one-year agreement, Global will also give NAB the capability to provide electronic check conversion and check guarantee services to its merchants.

Smart Card Alliance Presents Awards; Receives Funding

The Smart Card Alliance recently presented its Outstanding Smart Card Achievement Awards (OSCA) for outstanding individual and organization achievement in the smart card industry for North America.

The recipient of the Outstanding Individual OSCA award was Dan Cunningham, co-founder and CEO of Raak Technologies. Cunningham was a founding member and director of the Smart Card Alliance, Smart Card Industry Association, and the WLAN Smart Card Consortium.

The Outstanding End User Organization award was presented to the Defense Manpower Data Center (DMDC) for creating and implementing the Department of Defense Common Access Card program. The Outstanding Supplier Organization award went to Axalto. Axalto is a major supplier to the DMDC as well as other federal government and commercial card programs in North America.

In other Smart Card Alliance news, The U.S. Department of Commerce's International Trade Administration (ITA) awarded $288,000 to the Alliance. The Alliance plans to increase awareness in Latin American markets about the benefits of smart card technology.

Visa Reaches $200 Billion in Commercial Volume; Updates Global Payment Network

The dollar value of all purchases and cash withdrawals made with Visa commercial payment solutions globally reached $200 billion for the four quarters ended June 30, 2004, an increase of 26% over the same period last year.

Additionally, Visa recently updated the VisaNet system. Changes include enhancements to Visa's dispute resolution process, streamlining of currency conversions for transactions, enhancements to Visa Extras loyalty points program and a new consumer credit rewards program.

PARTNERSHIPS

Apple Bank Selects Postilion

Apple Bank selected Mosaic Software's Postilion software to provide ATM driving, transaction switching and routing, as well as card management for its network of ATMs.

Operating since 1863, Apple Bank is the fifth largest savings bank in New York. Apple will install the Postilion system to handle all aspects of ATM transaction processing and debit card management.

BB&T Connects to CHIPS

BB&T added CHIPS to its payment processing capabilities to execute real-time, large dollar payments in the United States. CHIPS is a real time, final payments system used by financial institutions around the world to clear U.S dollar payments totaling $1.3 trillion each day.

Certegy Extends Agreement with Dillard's

Global payment services provider Certegy Inc. signed a multi-year agreement to provide expanded check warranty services to Dillard's stores nationwide. A Certegy customer since 1994, Dillard's ranks among the nation's largest fashion apparel and home furnishings retailers with 329 stores in 29 states.

MBNA to Issue Charles Schwab Bank Visa Card

Charles Schwab selected MBNA to issue the Charles Schwab Bank Visa credit card. The card is designed to appeal to the institution's more than three million brokerage clients. The Charles Schwab Bank Visa credit card offers the WorldPoints Rewards program with enhanced benefits.

Additional benefits designed to appeal to investors include the ability to accelerate the earnings of points when the Schwab Bank Visa credit card is used for qualifying Schwab brokerage charges, and the option to redeem reward points for Schwab equity trades.

Neos Merchant Solutions Partners with Fifth Third Bank Processing Solutions

Neos Merchant Solutions Inc. partnered with Fifth Third Bank Processing Solutions to rollout its smart card based loyalty program to Fifth Third's merchant customers nationwide. Since it began working with Fifth Third earlier this year, Neos has been training Fifth Third Bank Processing Solutions' sales and relationship management teams on how the Neos program provides a loyalty solution to merchants.

iBIZ Signs Deal with eSecurity Japan

iBIZ Software entered into an exclusive deal for the sale and implementation of its CommerSafe and PhishSafe product lines in Japan. eSecurity Japan, a spin-off of the parent company

Open Source Japan (OSJ), will offer online authentication and anti-phishing solutions to banks that provide online services, card issuers and acquirers, payment processors and Internet merchants. eSecurity Japan also actively promotes iBIZ Software's solutions for anti-phishing to its key customers.

KeyCorp Secures WesBanco Agreement

WesBanco Bank Inc. is the first financial institution in the state of West Virginia to sign an agreement with KeyCorp to provide its customers with surcharge-free access to Key's network of more than 550 ATMs in Michigan, Indiana and Ohio. WesBanco is a $3.9 billion multi-state bank holding company headquartered in Wheeling.

Dental Association Chooses Lynk

Kansas Dental Association joined Lynk Systems Inc.'s LynkPartner program. Lynk is a member of The Royal Bank of Scotland Group; LynkPartner is a relationship program for banks and associations to offer value-added payment processing services to their business members. The Kansas Dental Association is a volunteer nonprofit organization comprised of 1,168 members.

MasterCard Converts Loyalty Points Into School Donations

MasterCard International formed an agreement with Nietech Corp. that gives MasterCard cardholders the ability to convert reward points into cash donations for the nonprofits and schools of their choice. COMMUNITYcash is available to all MasterCard credit card and debit card issuers in the United States.

Cardholders earn points when making purchases with enrolled cards and can redeem the accumulated points as cash rewards directed to up to three nonprofits or schools of their choice.

Optimal Payments and Intuit Renew Agreement

Optimal Payments Inc. extended its agreement to provide credit card and direct deposit payroll processing to Intuit Canada's QuickBooks customers. Optimal Payments has provided credit card transaction processing services to Intuit Canada's QuickBooks customers since it was first introduced in December 2000. Intuit initially launched the QuickBooks Direct Deposit service in 2002. Optimal Payments currently provides these services to more than 2,000 QuickBooks customers.

NCHA Expands National Settlement Services

The National Clearing House (NCHA) announced an agreement with the Twin Cities Clearing House Association of Minneapolis and St. Paul for NCHA to provide automated net settlement services for their 11-member financial institutions. Terms of the agreement will reduce the members' overall settlement fees by almost 25% annually and provide the settlement efficiencies from a Web-based national settlement platform.

ACQUISITIONS

Bank of America Closes National Processing Acquisition

Bank of America (BofA) closed its $1.4 billion acquisition of National Processing Inc., creating the nation's second largest bankcard merchant acquirer, representing approximately one of every five Visa and MasterCard transactions processed nationally. National Processing, a public company, was 83% owned by National City Corp.

The newly named company, BA Merchant Services LLC, with nearly $250 billion in annual processing volume, will continue to be headquartered in Louisville, KY. BofA is the nation's largest check processor and debit card issuer and the fourth largest credit card issuer.

Fiserv Acquires CheckAGAIN

Fiserv, Inc. acquired CheckAGAIN, LLC, a provider of electronic check re-presentment services, in a move to expand its abilities in electronic check processing. CheckAGAIN uses automated clearing house transactions to electronically re-present returned checks, primarily for major retailers.

Fiserv is the nation's largest third-party processor of checks. With the added capabilities from CheckAGAIN, Fiserv will expand its services into a complementary market and cross-sell the service to its financial institution clients.

Key Equipment Finance to Acquire AmEx Business Finance

Key Equipment Finance, an affiliate of KeyCorp, signed an agreement to acquire American Express Business Finance Corp. (AEBF), the equipment leasing unit of American Express' (AmEx) small business division. With a portfolio of approximately $1.5 billion, AEBF lease solutions include commercial vehicles, medical equipment, telecommunications hardware and POS equipment.

Key Equipment Finance is the nation's third largest bank-based equipment financing company, managing a portfolio of approximately $10 billion. The combination will increase KEF's office network for small-ticket lease solutions to more than 70 markets across the country.

Lynk Acquisition Finalized

The Royal Bank of Scotland (RBS) completed its acquisition of Lynk Systems Inc. for $525 million. The RBS Group has become the third largest merchant acquirer in the world. Lynk is a leader in the U.S. market for merchant processing and RBS' Streamline is the market leader in the United Kingdom and throughout Europe.

Metavante to Acquire VECTORsgi

Metavante Corp. signed an agreement to acquire all the outstanding stock of VECTORsgi, a portfolio company of Thoma Cressey Equity Partners. The company will continue to operate under the name of VECTORsgi and will become a wholly owned subsidiary of Metavante with existing management continuing in their positions.

APPOINTMENTS

Allutto Named Chair of Committee to Streamline Check Processing

SVPCO-Check Services, the national check processing business of The Clearing House Payments Company, has named Peter Allutto Chairman of the newly created National Business Committee. Allutto is a Senior Vice President with The Bank of New York. The 26-member National Business Committee is an advisory group to SVPCO-Check Services and is designed to identify opportunities to increase the efficiency of check processing, reduce costs and provide strategic direction and leadership as the industry continues to consolidate to electronic payments. The Committee will meet at least twice a year.

MBNA Board Appoints Murdough Director

Thomas G. Murdough, Jr., Chairman and Chief Executive Officer of the Step2 Company, has been elected to MBNA Corp.'s Board of Directors. With the appointment of Murdough, eight of MBNA's 10 directors are independent. Murdough will serve on two committees of the board, the Audit Committee and the Compensation Committee.

Melton Joins WAY Systems Board

VeriFone Inc. founder Bill Melton joined the Board of Directors of mobile phone POS solutions provider WAY Systems Inc. WAY Systems also secured funding from GIV Venture Partners Fund, owned and managed by Melton. WAY Systems' Mobile Transaction Terminal is the industry's first 'out-of-the-box' solution, enabling ISOs, POS resellers and acquirers to provide merchants with a wireless data service that is ready for transaction processing upon delivery.

Bottom Lines

• The Conference Board's Consumer Confidence Index declined again in October 2004. The Index, which also declined in September, now stands at 92.8 down from 96.7 the previous month.
• Toy retailer KB Toys plans to close as many as 238 stores by the end of January 2005.
• E.W. James & Sons, a Tennessee-based chain, bought Winn-Dixie stores in Kentucky for an undisclosed amount and plans to convert the stores by year's end, the Associated Press reported.