Western Union Profit Tops $1B in 04 for FDC

First Data reported this morning that fourth quarter revenue increased 20% to $2.7 billion, and net income rose 17% to $465 million. FDC says the growth was driven by strong activity in its Western Union money transfer business which delivered $1.1 billion in operating profit last year. However, the operating profit for its Payment Services segment fell 6% to $303 million during the fourth quarter on revenues that grew 10% to $1.06 billion. Western Union, part of Payment Services, posted a 15% gain in revenue for the fourth quarter to $908 million. Revenue for the Merchant Services segment was up 50% to $1.12 billion with operating profit of $350 million, a 55% gain over the year ago quarter. The growth in Merchant Services was attributed to nine new bank relationships, which expanded the sales force by 18% in 2004, generating 458,000 new merchants last year. During the quarter, First Data sold a merchant portfolio to iPayment for $130 million in cash. Card Issuing Services’ revenue was $609 million and operating profit was $122 million, a 14% and 41% gain, respectively. The profit gain was due primarily to the acquisition of Concord. As of December 31st, accounts on file were 406 million. There were 135 million cards carrying the “STAR” logo at year-end. For complete details on FDC’s fourth quarter performance visit CardData ([www.carddata.com][1]).

FDC NET INCOME
4Q/03: $401.6 million
1Q/04: $483.5 million
2Q/04: $466.0 million
3Q/04: $460.6 million
4Q/04: $465.1 million
Source: CardData (www.carddata.com)

[1]: http://www.carddata.com

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Internet-Related Fraud Not Widespread

A new report has found that identity theft and fraud are more frequently committed offline than online. The research says that Internet-related fraud problems are actually less severe, less costly and not as widespread as previously thought. The “2005 Identity Fraud Survey Report from the Better Business Bureau and Javelin Strategy & Research, concludes that those who access accounts online can provide earlier detection of crime than those who rely only upon mailed monthly paper statements. (Average $551 in losses when detected online vs. average $4,543 when detected from paper statements). The most frequently reported source of information used to commit fraud was a lost or stolen wallet or checkbook. Computer crimes accounted for just 11.6% of all known-cause identity fraud in 2004; and half of these digitally-driven crimes stem from spyware. The annual dollar volume of identity fraud is now $52.6 billion annually. The number of identity fraud victims dropped from 10.1 million to 9.3 million in 2004 versus 2003.

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Genpass to Process MBI’s Employer Cards

Genpass has inked a long-term agreement to process debit card transactions for MBI’s FSAs, HRAs, HSAs, DCAs, Transit/Parking Accounts, and related products. MBI’s solutions enable employees to electronically access funds in their FSA, HRA, HSA, Transit/Parking Accounts and Dependent Care Accounts with a single, nationally accepted debit card. Through MBI’s clients, including leading third party administrators (TPAs) and health plans, MBI serves more than 16,000 employers and their employees. Genpass, Inc., manager and operator of the MoneyPass(R), EFT network through its Irving, Texas-based subsidiary Genpass Technologies(R), LLC, is also a leading provider of PayCards.

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Equifax Personal Solutions Gets a Head

Equifax has promoted Vincent Corica to group executive for Equifax’s Personal Solutions business which now has 7.8 million members. Corica was previously senior vice president, U.S. Sales for Equifax, where he had overall responsibility for revenue growth and customer relationships for Equifax’s U.S.-based accounts. Prior to joining Equifax in 2002, Corica served as Senior Vice President of the Americas for MCI. Earlier, he had been with GE Consulting and AT&T Communications. He served in the United States Army from 1969 until 1978, attained the rank of Captain and was decorated for heroism in Vietnam. Equifax Inc. is a global leader in turning information into intelligence.

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Edgar Dunn Names a San Fran Director

Edgar, Dunn & Company, has promoted Pascal Burg to director in its San Francisco office. Mr. Burg has worked in EDC’s London, Sydney and San Francisco offices and has over eight years of consulting experience in business strategy for financial services clients in multiple European, Asian and North American countries with over four years of line management experience within the UK financial services industry. Mr. Burg received his MBA from Lancaster University in the United Kingdom and his Business Degree from Ecole Superieure de Commerce de Lyon in France. Edgar, Dunn & Company (EDC) is an independent global financial services and payments consultancy.

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The Smart Payment Alliance is Formed

Four smart card manufacturers have teamed to form a non-profit association dedicated to fostering and facilitating the usage of smart cards to make payments. The Smart Payment Alliance was created by Axalto, Gemplus, Giesecke & Devrient, and Oberthur Card Systems. The strategy of SPA is to position itself as a partner of EMVCo and to bolster VISA and MasterCard actions on EMV specifications and their implementation. The SPA will also devise joint industry specifications for value-added applications, which is not covered by the payment associations. The four manufacturers also encouraged card vendors, terminal vendors, and payment associations to join the association.

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Fair Isaac’s Revenue Up 15%+ in Q4

Fair Isaac reported revenues of $195.5 million for the quarter ending December 31st, a 15.5% gain over 4Q/03. However, net income for the quarter totaled $27.9 million, compared with net income of $28.8 million for the year ago quarter. The slightly reduced earnings were due to expenses related to the acquisition of London Bridge Software. Strategy Machine Solutions revenues increased 14% to $117.8 million, primarily due to revenues generated by its collections and recovery solutions and mortgage banking solutions associated with the acquisition of London Bridge, and increased revenues from its fraud solutions products. Scoring Solutions revenues increased 12% to $39.4 million, primarily due to an increase in revenues derived from risk scoring services at the credit reporting agencies. Professional Services revenues increased 31% to $29.5 million, due to the acquisition of London Bridge and Braun Consulting. Analytic Software Tools revenues increased 7% to $8.8 million, due to revenues generated by sales from the Enterprise Decision Management suite of products. For complete details on Fair Isaac’s latest results visit CardData ([www.carddata.com][1])

[1]: http://www.carddata.com

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VISA Develops the Global CCE Index

VISA International announced the first standardized metric to track business and government spending globally, the “Commercial Consumption Expenditure”. Last year, VISA developed the U.S.-specific CCE index which draws upon government data in methods similar to the Personal Consumption Expenditure index. Global CCE is estimated using four key data elements: the amount of business-to-business purchases to acquire goods and services used in production; wholesale and retail purchases of final goods; some business capital expenditures; and government spending on goods and services. Using CCE, VISA International estimates that total business and government spending in 2004 amounted to US$54.8 trillion, compared to US$41.5 trillion five years ago, a 32% increase. For 2005, global CCE is predicted to be US$58.5 trillion, a 6.7% increase over 2004. VISA will provide an updated global CCE forecast annually.

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Lynk Partners with New Edge Networks

Vancouver-based New Edge Networks has signed an agreement with Lynk Systems to provide national broadband DSL access for multi-location networks. New Edge Networks will provide direct high-speed connections to all Lynk processing centers for redundant access by its merchant customers. New Edge Networks is the first national carrier to
receive compliance statements that broadband networks it builds for
business customers are compliant with credit card data security
requirements of American Express, Discover Card, and MasterCard. The
company is awaiting validation of compliance from VISA USA.

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TSAI’s Net Income Rises 29% in Q4

NE-based Transaction Systems Architects reported revenue for the quarter ending December 31st of $80.6 million, an 8.9% increase from the same quarter last year. During the quarter, the Company added ten new customers while maintaining a worldwide presence in 76 countries. ACI Worldwide, the Company’s largest business unit, added four new customers during the quarter. Transaction Systems Architect’s software facilitates electronic payments by providing consumers and companies access to their money. Its products are used to process transactions involving credit cards, debit cards, secure electronic commerce, mobile commerce, smart cards, secure electronic document delivery and payment, checks, high-value money transfers, bulk payment clearing and settlement, and enterprise e-infrastructure.

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Axalto Financial Cards Revenues Up 22%

Axalto, formerly Schlumberger Smart Cards, reported that fourth quarter revenue for financial cards rose 22% to $51.7 million. Microprocessor card sales were also up 22% to 18.6 million cards for 4Q/04. Overall revenues for the quarter were $291.5 million, a 30% increase over the year ago quarter. POS terminal revenues for 4Q/04 rose 43% to $22.4 million, but down 15% from the prior quarter. Axalto says the terminal growth is driven by strong sales in the EMEA region, derived from a growing number of EMV-related supply contracts. For the full year, POS terminal sales were up 66% in the EMEA region. For complete details on Axalto’s fourth quarter performance, visit CardData ([www.carddata.com][1]).

Financial Cards Revenue
4Q/03: $42.3 million
1Q/04: $49.4 million
2Q/04: $48.0 million
3Q/04: $47.1 million
4Q/04: $51.7 million
Source: CardData (www.carddata.com)

[1]: http://www.carddata.com

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Prepaid Cards Lack Accurate Definitions

Lumping retailer-issued gift cards with bank-issued prepaid cards will likely have negative consequences for consumers and businesses. TowerGroup has released new research that suggests the one-size-fits-all approach to prepaid regulation could stifle the growth of certain payment products, particularly bank-issued prepaid cards that include gift cards, payroll cards, and prepaid cards linked to healthcare flexible spending accounts. TowerGroup says regulators and legislators lack accurate definitions and have failed to develop a harmonious regulatory framework around the valid consumer benefits of such products. TowerGroup notes that more than 100 stored value bills were introduced at the U.S. state level in the first half of 2004.

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