SMART CARD ROLL-OUT

The country’s national debit network is gearing for the countrywide roll-out of smart cards and chip-enabled terminals. INTERAC has set transition requirements to have the new technology in place by 2010. Magnetic stripe transactions will no longer be accepted at ABMs after 2012 and at store terminals after 2015. Meanwhile, INTERAC, MasterCard Canada, Visa Canada and their respective card issuers and payment processors released a survey that shows the Kitchener-Waterloo trial of chip card technology was a success. According to the research, 88% of consumer respondents indicated that chip cards are as easy to use as existing magnetic stripe cards, and 85% of respondents indicated that the information received from their financial institution about
their new chip card was easy to understand. Kitchener-Waterloo merchants also had a positive experience transitioning to chip-enabled store terminals, with 75% of front line employees indicating that processing chip card transactions is as easy or easier than processing magnetic stripe transactions.

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New York & Company to Accept MC PayPass

Women’s clothing retailer New York & Company is now accepting MasterCard
“PayPass” at 600 locations. According to MasterCard research, consumer
preference and satisfaction is driving PayPass growth and usage
globally. A 2007 MasterCard PayPass
Benchmark Study found that about 90 percent of PayPass-using respondents
were satisfied with their experience, and 71 percent of PayPass
consumers said they use PayPass as their primary card for everyday
purchases. New York and Company becomes the first
national apparel merchant to accept MasterCard PayPass.

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MAESTRO ACCEPTANCE

MasterCard has unveiled a new program to boost the speed and online acceptance of its “Maestro” debit card. The “Maestro Advance Registration Program” enables merchants to enroll the customer in the “SecureCode” authentication during the first transaction. Subsequent purchases the same customer makes at the merchant’s Web site using the same Maestro account can then be processed without additional “SecureCode” authentication. MasterCard notes that about 40% of Internet transactions in the UK are on debit cards. In many countries, there is limited or no access to online purchases using debit cards.

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AmEx OPEN Launches Economy Forum for Biz

American Express OPEN announced the launch of “OPEN Forum’s Economy” section, a new platform for small business owners to connect virtually to discuss the current state of the economy and how it affects
their businesses. The “Economy” section of “OPEN Forum” features blog and news commentary, expert tips and advice for surviving the downturn, personal experiences from business owners across the country about how they are managing in times of the downturn and polls about what the state of the economy means for small business. Also part of “OPEN Forum’s” enhanced content, “OPEN” has unveiled new video segments
from “Inside the Entrepreneurial Mind,” an interview series featuring
roundtable discussions with celebrity business owners in key vertical industries. Also featured on “OPEN Forum” is mainstream media coverage from best-in class small business news providers such as CNNMoney.com, Entrepreneur, Fortune Small Business, Inc, iVillage, Slate and WIRED.

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Hypercom Intros Entry-Level Optimum Terminal

Hypercom has introduced the “PCI PED”-approved, 32-bit “Optimum T4205”
card payment terminal. The “T4205” shares the same platform and compact
form factor inherent in Hypercom’s “T4200” products but will be offered
as an entry-level terminal for smaller merchants. A consortium,
consisting of The Phoenix Group, TASQ Technology and POS Portal, will
have exclusive indirect distributorship rights to sell the terminal
through 2009. Chase Paymentech, Elavon, National Processing Company and
TSYS Acquiring Solutions have indicated their intent to “Class A”
certify the device during the first quarter. First Data also has agreed
to support the “T4205” on its “Omaha” platform during the first quarter.

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Visa/MC Settle Discover Litigation for $2.75B

Peace reigns in the U.S. payment card industry as Visa and MasterCard
agreed to settle with Discover for $2.75 billion following a $4.0
billion deal with American Express. Since 2004, Visa and MasterCard have
agreed to cough up nearly $10 billion in major settlements with AmEx,
Discover and merchants accepting V/M debit cards. The 2004 lawsuit was
seeking damages for practices that suppressed third-party issuing on the
Discover Network and the acceptance of its cards. Under terms of the
Discover settlement Visa will pay $1.89 billion, which includes $1.7
billion from the escrow created under Visa’s retrospective
responsibility plan, $80 million from Visa to obtain releases from
MasterCard, and an additional $65 million which will be refunded by
Morgan Stanley under a separate agreement related to the settlement.
MasterCard agreed to pay $862.5 million, which includes $35 million
which will be refunded by Morgan Stanley. As a result, MasterCard will
take a net after-tax charge of $515.5 million in the third quarter.
Discover says it will receive approximately $862 million of the
settlement in the current fiscal quarter and up to approximately $472
million per quarter in 2009.

Visa & MasterCard Major Settlements
Discover Debit Merchants American Express
Visa: $1.89b $2.03b $2.25b
MasterCard: $0.86b $1.03b $1.80b
TOTAL: $2.75b $3.06b $4.05b
Source: CardFlash Library (www.cardflash.com)

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IC MIFARE PLUS

NXP Semiconductors is set to launch the “IC MIFARE Plus” microcontroller
smart card. Security, performance, privacy and ease of use are at the
heart of “MIFARE Plus”. It is the only smart card IC of its class to
offer strong AES encryption for authentication, integrity and
confidentiality. Introduction of “MIFARE Plus’s” AES security avoids any
performance degradation to current infrastructure service levels. MIFARE
Plus chips comprise a number of additional security features
which, when used optimally in the infrastructure, provide a system that
prevents individuals from being identified and tracked by others.
Finally, migration planning is made easier as MIFARE Plus supports the
pre-issuance of new cards; co-existence of current and new cards; and
software based infrastructure upgrades.

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More Green Payment Cards Enter the Market

U.S. Bank has introduced biodegradable PVC payment card, Arthur Blank &
Co. has added another new green card to its “GreenLine” product suite
and the ICMA plans to discuss a new green initiative at its November
task force meeting. U.S. Bank has teamed with CPI Card Group to offer a
“bioPVC” card to “Voyager” commercial fleet card customers. The first
cards are rolling out this month. The 99% PVC product biodegrades in
nine months to five years in soil, water, compost, or wherever
microorganisms are present. Voyager Fleet Systems provides a universal
fleet fueling and maintenance card for over 1.6 million vehicles. Arthur
Blank is introducing the “AB HybridCard” that is part recycled and part
virgin PVC. The .030″ thick material is comprised of a recycled plastic
core sandwiched between two layers of traditional bright white PVC
resulting in a 50% recycled plastic and 50% traditional PVC product.
The new AB “GreenLine” card also contains post-consumer material in
addition to the pre-consumer content coming from Arthur Blank’s program
for reutilization of factory scrap. Meanwhile, ICMA members will gather
on November 18th as part of ICMA’s “Green Task Force” to help develop an
environmentally responsible standard for card manufacturing.

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Credit/Debit Patents to be Auctioned

Ocean Tomo Auctions will offer a portfolio of e-commerce,
credit/debit card transaction patents, owned by Net MoneyIN, Inc.
at private auction with final bids due on or before December 15,
2008. This portfolio of patents was developed in response to concerns
surrounding the inadequacies of safeguards for consumer online purchases
and consumer purchases effected through telephone operators. The claims
disclose a safe and efficient method of accepting and processing
payments over distributed computer networks through the utilization of a
separate payment processing server and a credit card processing server.
While there are several links made through the processing operation, it
is seamless to the consumer, protects against unauthorized transactions
and ensures that the online merchant gets paid.

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More than 90% Worry About the Economy

Employee assistance program provider ComPsych reports that the current
financial climate is making 92% of employees lose sleep.
Employees were asked: Do financial worries keep you up at night? If so,
what is your biggest concern? The responses include:30% said the cost
of living, 29% said credit card debt, 14% said mortgage payment, 13%
said retirement account, 3% said kids’ tuition, 3% said health care
costs and 8% said they are not worried.

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TNS to Power Worsley POS Connectivity

NC-based C-store chain Worsley Operating has signed a new deal with
Transaction Network Services and will extend
its broadband network. In 2006, its stores changed
from dial-up to IP communications for their ATM and POS terminals by
utilizing the TNS FusionPoint solution. Worsley uses FusionPoint to
simplify its communications infrastructure
for debit and credit card transactions, fuel tank monitoring and a
variety of back office applications. TNS
also provides all necessary network components and communications
hardware essential for this application.

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