NEWS

NACHA Reports ARC Is Highest-Quality Consumer ACH Debit

New statistical information from NACHA - The Electronic Payments Association, shows that the accounts receivable check conversion (ARC) application is the highest-quality consumer-oriented automated clearing house (ACH) debit application. The ARC application allows checks delivered to remittance and lockbox locations to be converted into ACH debits. NACHA recently reported that there were 266.2 million ARC payments in Q3 2004, compared with 5.3 million in Q3 2002. With an estimated total of 1.25 billion ARC payments in 2004, ARC will have surpassed 1 billion payments annually faster than any other ACH payment application. At the same time, the rate at which ARC payments are returned has fallen from 2.34% in Q3 2002 to 0.54% in Q3 2004, an improvement of 76.9%.

In other news, 553 payments industry professionals received accreditation or were re-accredited in 2004 by NACHA under the accredited ACH professional (AAP) program, bringing the current number of AAPs nationwide to an all-time high of 2,554. NACHA created the AAP designation in 1993 to recognize professionals for their understanding and knowledge of the ACH network and the payments industry.

ANNOUNCEMENTS

Deluxe CEO to Retire in 2005

Check and business form printer Deluxe Corp. announced that Lawrence J. Mosner plans to retire in 2005, both as the company's Chief Executive Officer (CEO) and Chairman of the Board of Directors. Mosner has held a number of key leadership positions since joining Deluxe in 1995.

He assumed his current role of Chairman and CEO in 2000. Before joining Deluxe, Mosner previously served as Executive Vice President and Chief Operating Officer at Hanover Direct and prior to that he spent more than 28 years with Sears, Roebuck & Co.

First National Extends ECHO Contract

First National Merchant Solutions renewed Electronic Clearing House Inc.'s (ECHO) processing contract under the Visa POS Check program. The contract is renewed until December 2005. First National provides check processing for national as well as regional retail merchants including the largest retailer currently on the Visa POS Check service. First National first contracted with ECHO to process Visa POS Check activity in December of 2002.

GiftCertificates.com Adds 22 Partners

GiftCertificates.com announced the addition of 22 national merchants to its gift certificate product offering. The new merchants include Bennigan's, Famous Footwear, Reebok, Motherhood Maternity, Talbots, Budget Car Rental, and others.

Lynk Deploys Triple DES; Achieves Visa/MasterCard

Compliance Lynk Systems Inc. completed triple data encryption standard (DES) certification for VeriFone Inc.'s Omni 3750 and PIN pad 1000SE payment solutions. Visa and MasterCard mandate triple DES, a security feature, for all PIN-entry devices.

Lynk has shipped triple DES-enabled terminals since mid-2003, and as of mid-October 2004 it began deploying triple DES encrypted solutions for all new, exchanged and replacement VeriFone Omni 3750 and PP1000SE orders.

In other news, Lynk achieved compliance with Visa U.S.A.'s Cardholder Information Security Program (CISP) and MasterCard's Site Data Protection (SDP) programs.

United Bank Card Launches Online Application

United Bank Card Inc. (UBC) launched its online application and instant approval program. With the new program, ISOs and merchant level salespeople (MLSs) can complete and submit merchant applications to UBC electronically from any computer with an Internet connection.

UBC's system immediately issues a merchant number, and it instantly activates the merchant account on UBC's processing network. The application allows UBC to set predetermined pricing for ISO/MLS partners. This feature allows UBC's partners to offer the benefits of the instant approval online application directly from their proprietary Web sites.

PARTNERSHIPS

CVS Offers AmEx's ExpressPay

CVS agreed to become the first national merchant partner to accept ExpressPay from American Express Co. (AmEx). CVS has ExpressPay-enabled POS terminals in 485 stores and plans a full roll out to its entire fleet of more than 5,300 stores by mid-2005.

ExpressPay is a payment product that operates by radio frequency. It's available as a fob that hangs on a key chain and can also be embedded in a traditional AmEx card. Users simply hold ExpressPay next to a reader at checkout to make purchases; payment is authorized in seconds, and no signature is required to complete a transaction.

CheckFree and Netonomy Sign Agreement

CheckFree Corp., provider of financial electronic commerce products, and Netonomy, provider of customer self-service and bill analysis solutions, formed a partnership in which CheckFree will integrate and resell Netonomy's customer self-service technology as part of its CheckFree i-Series suite of electronic billing software.

With CheckFree i-Series, organizations can send electronic invoices, bills and/or statements to customers from a single, integrated platform. Through the partnership, billers will allow customers to manage their accounts and buy new products and services through a single user interface at the biller's own Web site.

Business customers can order new products in bulk, activate accounts, automatically separate personal billing transactions from business transactions, and report and resolve problems online.

ERAS Offers Compliance Solution

Banking software and solutions development company ERAS released FAST314(a), enabling financial institutions to create an electronic record of non-bank customers' transactions, as well as non-traditional transactions for bank customers, such as Visa gift cards, traveler's checks, cashiers check and money orders.

ERAS developed this addition to its suite of compliance products as a response to the USA PATRIOT Act. Under the act, banks receive bi-weekly reports listing names of individuals suspected of engaging in money laundering and have 14 days to search and submit information for any matches found. FAST314(a) enables banks to maintain, track and query the transactions of both account and non-account holders.

Exante and MasterCard Deliver Health Benefit Debit Cards

Exante Financial Services now offers its suite of MasterCard-branded health benefit cards to medical benefit providers and insurers nationwide. Exante's programs include applications for flexible spending accounts and health reimbursement accounts and also enable verification of health benefit eligibility.

A new health savings account (HSA) prepaid MasterCard card gives consumers the ability to access funds stored in tax-deferred HSAs when paying for eligible medical expenses.

Moneris Signs Two New Partners

Moneris Solutions will provide Lambs Farm with payment processing solutions. Lambs Farm is a nonprofit organization for adults with developmental disabilities, providing residential, vocational and social support services.

The organization welcomes more than 300,000 visitors each year to shop in its businesses and offers a corporate gift catalog of customized gifts and gourmet foods that are made, packaged and shipped by the men and women it serves.

Moneris will now be Lambs Farm's supplier of hardware, proprietary software, and service/support to accept credit and debit cards.

In other news, Moneris now offers CrossCheck Inc.'s check approval and guarantee services.

NetSuite Provides Multi-currency Credit Card Processing

NetSuite Inc. announced the availability of multi-currency credit card processing for NetSuite e-commerce customers worldwide. NetSuite e-commerce customers can now accept credit card payments in 120 currencies and receive settlement in any of 14 currencies.

NYCE Forms Agreement With MCBS

Michigan Community Bankers Service Co. (MCBS), a wholly owned subsidiary of the Michigan Association of Community Bankers (MACB), signed an exclusive agreement with NYCE Corp.

With the agreement, NYCE will provide banks participating in MACB with data processing services through Metavante Corp., including card authorization services, ATM terminal driving, signature debit services and links to other networks. In addition, NYCE will provide fraud and loss prevention services for both PIN and signature debit card programs.

Open Payment Technologies Solutions Available on Elite Terminals

Ingenico integrated Open Payment Technologies' Opticard gift card platform on the Ingenico Elite terminal platform. ISOs and acquirers will sell and activate Opticard gift cards in real-time using Ingenico Elite 710, 510 and 712 terminals. The solution also supports real-time redemptions, point accumulation, voids and balance inquires.

POS Technologies Joins OneLynk Program

POS Technologies Inc. joined the OneLynk Alliance, Lynk Systems' value-added reseller program. POS Technologies is a reseller of Radiant Systems' Hospitality Division Aloha POS solutions for the restaurant and hospitality industry.

Q Comm Services Offered to McLane's Account Base

Q Comm International Inc. signed a referral agreement with distribution service provider the McLane Co. McLane delivers food and non-food products to more than 50,000 customer locations around the world, including the convenience store, drug store, mass merchandise, wholesale club, quick service restaurant and movie theater industries.

CampMinder Partners With United Bank Card

United Bank Card reached an agreement to provide its services to CampMinder, a Web-based management system used by camps. CampMinder provides an integrated database management system for camper and staff recruitment, alumni management, scheduling, transportation, mass e-mailing and other services.

The alliance will enable camps to process credit cards securely over the Internet and automatically record payments into family accounts.

Smart Card Parking System Uses Omni 3750

Parcxmart Technologies Inc. signed an agreement with the City of New Haven to launch a payment system for municipal parking and retail purchases.

The parking payment system combines a smart card for use in parking meters while providing a revenue stream for merchants.

The consumer purchases a Parcxmart card for a fee from a participating merchant, loads up to $100 onto the card using a VeriFone Omni 3750 POS terminal, and uses the smart card for payment at meters, parking garages, and participating merchants. Merchants benefit from commissions generated by selling and reloading dollar value on the cards. Banknorth manages all funds management.

White Castle to Use Geac's Card Payment System

White Castle Restaurants have begun a chain-wide installation of Geac's integrated credit card system. White Castle has issued purchase orders to install the Geac systems at more than 300 of its restaurants.

Geac's credit card solution is fully integrated to the quick service POS system allowing transactions to process over high-speed connections. Customers can swipe as they order, keeping their cards securely in hand.

At a time specified by the restaurant, the Geac software automatically performs settlements. Management involvement is not required and real time reports are available to confirm POS payment activity and settlement.

ACQUISITIONS

Global Payments Acquires Europhil

Global Payments Inc. acquired a group of European electronic money transfer firms from individual investors. The firms operate collectively under the name Europhil.

Founded in 1989, Europhil was one of the first money transfer firms established in Spain. Based in Madrid, the group operates 26 retail branches in Spain, Belgium and the United Kingdom. For calendar year 2004, Europhil anticipates approximately $12 million in revenue.

JCB Acquires One-third Ownership of EMVCo

JCB acquired one-third ownership in EMVCo LLC. MasterCard International and Visa International own the other two-thirds. JCB will appoint representatives to the EMVCo board of managers and the executive committee as well as its working groups.

Since December 2001, JCB has deployed an EMV-compliant infrastructure. JCB has also issued new and renewal JCB smart cards. By April 2005, JCB anticipates that half of its JCB-branded cards will be EMV compliant smart cards.

Optimal Payments to Acquire Merchant Card Acceptance

Optimal Payments Inc. will acquire the operating assets from Merchant Card Acceptance Corp. and its affiliated companies, Precision Management Consulting Inc., and Merchant Card Interactive Corp. (collectively "MCA") for approximately $4.6 million. MCA is an ISO providing Canadian-based merchants with credit card and PIN-based debit card acceptance. Its operating assets consist primarily of agreements with merchants, employees and suppliers.

Robert Morgan, the President and sole shareholder of MCA, will join Optimal Payments and continue to build MCA's merchant portfolio under the Optimal brand.

APPOINTMENTS

First Annapolis Promotes Grill to Partner

First Annapolis promoted Paul Grill to Partner. Grill joined First Annapolis in 1997 and has supported the growth of the firm's card issuing and merchant acquiring practice areas through his involvement in partnership formations and strategy development. Grill will continue to lead the firm's emerging payments practice and advise clients on payments industry matters.

Joseph Named Vice Chair at U.S. Bancorp

The Board of Directors of U.S. Bancorp elected Pamela A. Joseph to the position of Vice Chairman. Joseph serves as Chairman, President and CEO of NOVA Information Systems Inc., a wholly owned subsidiary of U.S. Bancorp.

As Vice Chairman, Joseph will also continue to serve as Chairman, President and CEO of NOVA. She is also responsible for managing all operations of the organization's transaction services and EuroConex.

Joseph, with more than 20 years of financial services experience, joined NOVA in 1994. The company named her to her current position in November 2004.

ID Analytics Promotes Morton, Appoints Williams

ID Analytics Inc. promoted Ken Morton to Vice President of Global Sales. In this new role Morton oversees and directs worldwide sales efforts for the company's identity risk management solutions. Prior to joining ID Analytics, Morton spent 20 years establishing operations and driving the expansion of software companies in Europe. Companies he previously worked with included Covigo, E.piphany and Octane Software.

Simon Williams joined the company as General Manager of Europe, Middle East and Africa for ID Analytics Ltd., the UK subsidiary of ID Analytics Inc.

Williams has nearly 20 years of experience working with software solutions for the financial services and telecommunications industries. He previously served as the Managing Director for NIB Europe and also worked as Sales Director for AT&T Easylink Services.

Richmond Fed Appoints Advisory Council Member

G. Kennedy Thompson, Chairman, President and CEO of Wachovia Corp., was appointed as the Fifth Federal Reserve District's representative on the Federal Advisory Council for 2005.

The Federal Advisory Council, composed of a representative from each of the 12 Federal Reserve Districts, confers with the Board of Governors of the Federal Reserve System on business conditions and issues related to the banking industry. It also makes recommendations regarding system policies.

Bottom Lines

• MasterCard International reported a 17.9% increase in transaction volume for the 2004 holiday season, and processed more holiday transactions than any time in its history.
• U.S. online shoppers spent $16.7 billion during the first six weeks of the 2004 holiday season, according to the Goldman, Sachs & Co., Harris Interactive and Nielsen//NetRatings' Holiday eSpending Report. This amount was 28% more than the same period in 2003.
• The Conference Board's Consumer Confidence Index, increased eight points in December 2004. The index had declined since August 2004.
• Blockbuster is considering a hostile takeover bid for Hollywood Video if the chain refuses to negotiate a deal. Blockbuster offered $700 million plus assumption of the company's debt in November 2004.
• The Wet Seal said it will lay off 2,000 workers and close 150 stores. The women's clothing retailer reported a loss of $24.6 million in Q3 2004.