NEWS

Attempted Check Fraud Increases to $5.5 Billion

Attempted check fraud at U.S. banks rose to $5.5 billion in 2003, according to the latest American Bankers Association (ABA) "Deposit Account Fraud Survey Report." While attempted check fraud continued to increase, actual dollar losses remained stable at $677 million, down from the $698 million that banks lost in 2001, the last year of ABA's biennial survey.

Regardless of bank size, the most common type of check fraud was forgery, with about one third of fraud losses attributed to forged signatures and endorsements. Non-sufficient funds (NSFs) ranked second (17%), and counterfeit checks ranked third (15%). To purchase the report call 1-800-BANKERS or visit: www.aba.com/Surveys+and+Statistics//gs_archive.php?emagazineIssueNumber=041201 .

Security Concerns to Affect Online Holiday Shopping

According to a new survey, 58% of consumers might reduce their online shopping during the holiday season, due to identity theft and privacy concerns. This is an increase from 49% last year. Half of the 1,071 people surveyed for the 2004 Holiday Shopping/Online Privacy Study conducted by TNS and TRUSTe plan to limit their holiday online shopping to some extent. Eight percent are so concerned that they do not plan to shop online at all, up 2% from last year.

According to a recent survey on identity theft released by American Express Co., this holiday season, 28% of those shopping online will head for retailer sites they know, 14% will go to manufacturer's sites and 11% will go to sites where they can sell, buy and barter directly with other consumers.

Capital One to Outsource Production Services, Cut 750 Jobs

Capital One Financial Corp. plans to transition the majority of its production operations to First Data Corp. As a result, approximately 750 positions will be eliminated. Capital One will maintain a production services department of approximately 230 associates. As part of the company's agreement, First Data will provide job opportunities and transition assistance to qualified Capital One associates at one of several First Data locations across the country. First Data also signed an agreement to provide production services functions to Capital One. The services include statement services, plastics personalization and remittance processing and will be supported by First Data's Card Issuing Services and REMITCO business units.

MasterCard Predicts Busiest Shopping Times

The busiest shopping day of the year most likely will occur on Dec. 23, 2004, and the busiest hour most likely will be from 2 p.m. to 3 p.m. CDT on Christmas Eve, according to MasterCard International. These patterns are based on analysis of MasterCard's transaction data from the past several holiday seasons.

Shoppers Cite Value, Customer Service as Key Drivers

A survey of shopping preferences conducted for Sears, Roebuck and Co. found that more than three quarters of consumers surveyed cite good value and friendly, helpful staffs as the two most important factors in determining where they will shop this holiday season. The survey also found that two-thirds of moms are most likely to be the main gift buyer in their families.

U.S. Businesses Plan to Reduce Check Use

Findings from Visa U.S.A.'s second annual cash management survey indicate that 51% of financial executives plan to reduce their organization's reliance on checks as a form of commercial payment and 40% plan to increase their use of commercial payment cards.

ANNOUNCEMENTS

Atlantic Synergy Completes Name Change

Atlantic Synergy Inc. changed its name to Acies Corp.; its new ticker symbol is ACIE, which became effective Nov. 18, 2004. Acies' name reflects a shift in business focus, which the company announced in July 2004. Acies provides payment processing and online banking services to small, medium and large merchants across the United States. Acies also offers POS terminals. Its banking services offer customers traditional banking services, the ability to apply for an online bank account and to pay bills electronically.

MBNA Issues American Express-branded Cards

MBNA and American Express Co. (AmEx) launched the first MBNA Affinity Rewards AmEx-branded credit cards to members of more than 1,000 affinity groups. MBNA has issued more than 300,000 AmEx-branded cards. MBNA is offering the new cards to members of a broad range of organizations, including alumni associations, professional groups, and recreational and philanthropic organizations.

Lightbridge's Payment Gateway Certified on Lynk's Processing Platform

Authorize.Net certified Lightbridge Inc.'s Internet protocol payment gateway on Lynk Systems' processing platform. As a result of the certification and integration, Authorize.Net is now available to Lynk's merchant customers, financial institutions and ISOs.

Payment Data Systems Fulfills Order for 50,000 Debit Cards

Credit Payment Services Inc., a provider of consumer-oriented loans, selected Payment Data Systems Inc. (PDS) to provide and support stored value cards as a supplement to traditional automated clearing house (ACH) credits. The agreement is expected to create approximately $1 million in gross revenue for PDS. The functionality of the offering will provide an immediate funding of the loan rather than the customary delays associated with the ACH credit process.

EMG, Q Comm Honored as Fast Growing Companies in Utah

Q Comm International Inc. was recently named the 12th fastest growing company in Utah at the annual MountainWest Venture Group's Utah 100 awards. Eliot Management Group (EMG) was named the 15th fastest growing company in the state. Rankings are based on sales growth demonstrated over the last five years. EMG won in the "Emerging Elite" category in 2002.

Ingenico's IngeCab Solution Honored

Ingenico's IngeCab solution won the Sesames Award for the most innovative transport application at the Cartes 2004 trade show held in Paris in November. IngeCab, Ingenico's solution for the taxi industry, is a first for that industry in that it combines all "in-car" functions, payment, metering, dispatch and communications into a single system.

MasterCard OneSMART Debuts in Iceland

MasterCard International released its new OneSMART MasterCard retail package to cardholders in Iceland. The solution is a chip package that combines payment, loyalty and cardholder preferences management in a single POS transaction using MODS (MasterCard Open Data Storage) features.

This single system application allows cardholders to receive on-the-spot loyalty bonuses and customized offers from participating retailers. The package will be rolled out by SPRON, the largest savings bank in Iceland, and will be based on its multi co-brand program "Ekort."

NACHA Requests Nominations for Awards

NACHA - The Electronic Payments Association is accepting nominations for the 2005 George Mitchell Payments System Excellence Award and the 2005 Kevin O'Brien ACH Quality Award until Jan. 21, 2005. NACHA presents the George Mitchell Award to an individual, company or other organization that has demonstrated superior leadership in the development, implementation or advancement of electronic payments. The Kevin O'Brien Award recognizes best practices in ACH. NACHA will recognize winners at its Payments 2005 conference to be held in San Antonio, April 10 - 13. For more information visit NACHA's Web site at www.nacha.org/ACHNetworkACH_Quality/ach_quality.htm.

POS World Ranks #169 on Inc. 500

POS and bar coding reseller POS World was ranked #169 on "Inc." magazine's annual Inc. 500 ranking of the fastest-growing private companies in the country. The company had a five-year average annual sales growth of 201.6%. The Inc. 500 ranks privately held companies according to averaged year-over-year sales growth over the past four years.

TransFirst Adds Employees, Moves Headquarters; Announces New Partner

TransFirst, the nation's largest privately held credit and debit card transaction processor, moved into a new 73,000-square-foot facility in Louisville, Colo. As a result of the move, TransFirst has hired 100 people to work in the new facility. In other news, FundsXpress, a provider of Internet-based financial products, partnered with TransFirst. The partnership will provide financial institutions access to a single-source suite of merchant processing and personal banking products to offer commercial customers. This partnership allows FundsXpress to integrate its online financial offerings including cash management, online checking management and online bill payment with TransFirst's transaction processing services, merchant acquiring and proprietary reporting product, TransLink.

Visa U.S.A. Works to Expand Card Acceptance at Utilities

Visa U.S.A. will launch a campaign to expand card acceptance at residential utilities companies. A key component of the effort is the creation of a new fee structure that provides incentives for utilities to accept payment cards. Effective April 2, 2005, a lower interchange reimbursement fee program for consumer card transactions will be adopted for the acquirers of utility merchants that do not charge convenience fees to consumers paying with Visa cards.

Wincor Nixdorf Announces New Partners

Wincor Nixdorf selected A2iA CheckReader software for use in its check/cash deposit module (CCDM). The Wincor Nixdorf CCDM allows up to 50 checks or bank notes to be scanned and deposited through a single opening. A2iA CheckReader automatically locates and reads all of the information on a check and performs validity and usability tests on the check image.

AmeriChoice Federal Credit Union installed the Wincor Nixdorf ProCash 2250xe ATM for its main office in Mechanicsburg, Pa. AmeriChoice plans to install additional ProCash 2250xe ATMs by the beginning of 2005. Designed for drive-up ATM banking, the ProCash 2250xe is an ATM that fits any standard drive-up installation in the United States.

PARTNERSHIPS

Alliance Data Systems Signs Agreement With Trek Bicycle Corp.

Alliance Data Systems Corp. signed a five-year agreement with Trek Bicycle Corp. Alliance Data will provide a turnkey private label credit card solution to Trek's dealer base of 2,300 merchants nationwide. Trek and its dealers will also benefit from a proprietary Alliance product, Universal Web Solution, that facilitates the processing of credit applications within 30 seconds.

Alogent Forms Agreement With Siebel Systems

Alogent Corp. formed a development agreement with Siebel Systems to deliver deposit automation capabilities in Siebel Branch Teller, Siebel's solution for banks. Alogent's Sierra Xpedite, extensible deposit automation technology will be used by Siebel Branch Teller to automate the image capture of checks and paper deposit documents at the teller.

BankServ Partners With The Bancorp Bank

The Bancorp Bank partnered with BankServ to provide a set of banking, ACH processing and originating depository financial institution (ODFI) services. The platform allows the use of various technologies to process transactions, providing improved access to the Federal Reserve and faster movement and clearing of funds. ACH processing enables the electronic transfer of funds through Bancorp's network; as an ODFI, Bancorp is able to originate commercial ACH transactions via the Federal Reserve Banks' Fedline system.

Debit Card Acceptance, ATM Access Expanded for Military

The Armed Forces Financial Network (AFFN) and MasterCard International formed an alliance giving AFFN-branded cards access to Maestro merchant and Cirrus ATM terminals worldwide. AFFN is an electronic funds transfer network that supports chartered military banks and defense credit unions providing financial services to U.S. armed forces and civilian personnel. AFFN serves more than 335 financial institutions and 89 million cardholders. The agreement does not require production of new card stock or include new branding or membership standards. Effective Q1 2005, cards carrying the AFFN-brand mark will be accepted for purchases and/or cash withdrawals at Maestro merchant and Maestro/Cirrus ATM locations.

Hypercom's HBNet Signs SiVault Systems

Hypercom Corp.'s HBNet Inc. subsidiary formed an agreement with SiVault Systems. The companies will implement Hypercom's advanced HBNet information delivery service to provide transaction processing to the medical, financial and retail communities.

Kurant Announces Partnership With ECX

Kurant Corp. announced a partnership with E-Commerce Exchange (ECX) to integrate ECX's virtual merchant application into Kurant's StoreSense solution. Under the agreement, ECX's virtual merchant application is integrated into the store setup wizard and administrative areas of StoreSense, allowing merchants to apply for and obtain a merchant account and payment gateway. ECX will provide all service, support and merchant account and gateway billing directly to the merchant.

DCI Joins Lynk's Alliance of Aloha Resellers

Lynk Systems Inc. formed a strategic alliance with Michigan-based POS dealer DCI Food Equipment Inc. (DCI). DCI is a reseller of Radiant Systems' Hospitality Division Aloha POS solutions. Combined with Lynk's electronic payment processing, Aloha POS software provides transaction processing and eliminates the expense of separate restaurant management equipment and payment terminals.

Tobacco Dealers Choose US Merchant Services

US Merchant Services LLC formed a partnership with the Retail Tobacco Dealers of America (RTDA). The RTDA is the leading organization for retail tobacco shops across the United States. The RTDA will market US Merchant Services suite of products to their membership base consisting of credit card processing, check conversion, gift cards and payroll management.

VeriFone and McAfee Join to Battle Viruses

VeriFone Inc. and McAfee Inc. are jointly developing the POS payment terminal industry's first virus protection solution. The companies will develop software for real-time monitoring and attack pattern update services using McAfee VirusScan for VeriFone IP-enabled payment devices, including those already installed. VeriFone will work with credit card processors and ISOs to activate and support the anti-virus protection solution at the merchant level. The companies expect to make the solution available in North America early in 2005.

ACQUISITIONS

Harland Acquires Fair Isaac's Software Business

Harland Financial Solutions Inc. acquired Fair Isaac Corp.'s core processing business based in Heathrow, Fla. The acquisition includes the Phoenix System, an integrated core banking solution. Also included in the transaction are the Phoenix Internet Banking System, also known as IBANK, and the TradeWind international trade finance management system.

Merrick Acquires Credit Card Portfolio From Provident

Merrick Bank, a subsidiary of CardWorks and an issuer of MasterCard and Visa credit cards, acquired a portion of Provident Bank's Visa and MasterCard ISO sponsorship merchant business. Through this acquisition, 22 of Provident Bank's ISOs, merchants, and their associated transaction volume will now be administered by Merrick Bank. CardSystems Inc. acted as the data processor for the Visa and MasterCard merchants in this portfolio and will continue to process for them in the Merrick relationship.

APPOINTMENTS

Paradata Appoints New Board Members

Paradata Systems Inc. appointed Steve Elefant as Executive Chairman of the Board and Jeff Marcous as Director. Elefant is the former Chairman, President, Chief Executive Officer and co-founder of ICVerify Inc. Throughout his career, he has raised more than $45 million in venture capital equity financing and completed a $75 million merger with CyberCash Inc. where he then became Vice-Chairman. Elefant served as Executive Vice President and Co-founder of PriceRadar Inc., and was the former President and Chief Operating Officer of Yaga Inc., an application service provider (ASP) for Internet publishers and merchants.

Marcous, a 13-year veteran of the merchant bankcard industry, is President of Dynamic Payment Solutions and Senior Vice President of its sister company, Mtrex Inc. Marcous was the driving force behind the payment gateway, Authorize.Net. He served as the Northwest Regional Manager of Cardservice International and held sales and management positions at First Data Merchant Services, Card Establishment Services and Harbridge Merchant Services.

ATM Alliance Corp. Hires National Sales Director

Ty Hoffer joined ATM Alliance Corp. as the company's first National Sales Director. Hoffer brings 10 years' experience in sales and marketing with him. Prior to joining ATM Alliance he launched an Internet marketing company specializing in financial newsletters. His experience also includes working as a National Sales Trainer for a direct sales company for six years.

Pflaumer Joins the New Wholesale Payment Solutions

Wholesale Processing Consultants, an ISO based in Riverside Calif., has changed its name to Wholesale Payment Solutions. Chief Executive Officer Jody Wallace appointed Adam Pflaumer to serve as President. Pflaumer joins Wholesale Payment Solutions with 10 years' experience in the payments industry.

ECHO Hires Chief Information Officer

Steven Smith joined Electronic Clearing House Inc. (ECHO), as CIO. Smith brings more than 22 years of IT and business transformation experience to ECHO. Previously he was Vice President of Engineering for Digital Insight. Smith was also a partner with Ernst & Young/CAP Gemini.

Teer Joins Cynergy Data

Wendy Teer joined Cynergy Data as Director of Client Services. Teer has an extensive background in the credit card processing, electronic payment and POS industries. Most recently she was Vice President of Product Management at U.S. Wireless Data. Teer's previous experience includes nine years with MasterCard International and Global Payment Systems.

Equifax Names Chief Technology Officer

Robert J. Webb will join Equifax Inc. as CTO. Webb will be responsible for managing Equifax's global information technology infrastructure, including software development, research, technology relationships and intellectual property.

Most recently, Webb served as Managing Director of Canadian Vendor Financing for General Electric (GE). During his career with GE, he held the position of CIO for several GE divisions including GE Capital's Mid-Market Finance, Global Consumer Finance group in Japan and GE Power Systems. Before joining GE, Webb was a consultant in Asia with Electronic Data Systems and Andersen Consulting.

Payment Data Systems Expands Sales Force

Integrated electronic payments solutions provider Payment Data Systems Inc. (PDS) added two people to its sales team.

John M. Welsh joins PDS as the Vice President of Sales. Most recently Welsh served as VP of Sales for NetNearU Corp. And prior, Welsh served as VP of Sales for Qwest. Welsh will be located in the company's corporate offices in San Antonio.

Connie Allen joined PDS as a Sales Manager. Allen has more than 16 years in direct retail and merchant sales. She most recently served as a Regional Territory Manager for Global Payments Inc. Allen will work out of the company's new sales office in Ooltewah, Tenn.

Visa U.S.A. Names Chief Financial Officer

Visa U.S.A. appointed R. Neil Williams to Executive Vice President and CFO. Williams succeeds Vic Dahir who becomes EVP of Finance and Operations for Visa.

Williams will be accountable to Visa's CEO and Board of Directors for the financial management and operations of the company, including responsibility for financial and business planning, budgeting and financial monitoring.

Williams began his banking career in 1978 with Deposit Guaranty National Bank as Senior Vice President and Controller. He has held senior positions at First Commerce Corp. and Premier Bancorp. Following the acquisition of Premier Bancorp by Bank One Corp., Williams was named EVP and Group Manager of National Enterprise Operations within Bank One. In 2001 Visa named him EVP of Finance.

Bottom Lines

• Kmart announced on Nov. 17, 2004 that it will buy Sears, Roebuck & Co. for $11 billion. The merger will create the third largest retailer in the country. The new company will be known as Sears Holdings.
• The Conference Board's Consumer Confidence Index declined in November 2004 for the fourth straight month. The Index fell to 90.5 from a revised 92.9 in October.
• More than 133 million people shopped over the Thanksgiving holiday, according to the National Retail Federation. The average shopper spent $265.15 and total spending over the weekend reached $22.8 billion.