SCM,OMNIKEY, Kobil Team for PINpad Standards

SCM Microsystems, OMNIKEY, and Kobil Systems have agreed on a joint standard for developing smart card readers with integrated PINpads. Using smart cards with PINs (Class 2 readers) increases the security of transactions. The companies are working under TeleTrusT, a company who aims to promote trustworthy information and communication technology. Class 2 PINpad readers protect smart cards, preventing unauthorized copying or use of information that is stored on the card. SCM Microsystems develops, markets, and sells smart card reader technology, OMINKEY is a world leading manufacturer of smart card readers, and Kobil Systems specializes in developing and marketing smart card based IT and multifunctional smart card terminals.

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CompuCredit Profits Rise Sequentially; COs Drop

Atlanta-based sub-prime specialist, CompuCredit, reported a second quarter profit of $37.9 million, a sharp increase over the prior quarter, but well below 3Q/03’s $56.6 million. Delinquency has dropped significantly to 13.0% in the third quarter from 14.8% in the prior quarter and 15.5% one-year ago. However, the 60-plus day delinquency rate rose to 10.7% from 9.6% for the second quarter, and compared to 10.9% at the end of 3Q/03. Total managed receivables for the third quarter were $1,958,735,000, flat compared to the second quarter, and $2.5 billion one-year ago. As of September 30th, CompuCredit had 2,388,000 accounts compared to 2,222,000 at the end of 2Q/04. The net interest margin was 21.2% in the third quarter, as compared to 22.4% for the third quarter of 2003. For complete details on CompuCredit’s third quarter performance, visit CardData ([www.carddata.com][1]).

COMPUCREDIT NET INCOME SNAPSHOT
3Q/03: $56.5 million
4Q/03: $10.8 million
1Q/04: $17.7 million
2Q/04: $13.8 million
3Q/04: $37.9 million
Source: CardData (www.carddata.com)

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

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MasterCard Tops 200 Million Smart Card

MasterCard International says it has issued more than 200 million “MasterCard,” “Maestro,” and “Cirrus” smart cards globally. Of the 200 million smart cards, 40% of them carry an EMV chip. “The MasterCard M/Chip 4” is a highly flexible smart card application for credit and debit cards and is at the cornerstone of MasterCards’s payment and added value programs. The MasterCard M/Chip 4 can be leveraged by MasterCard’s customers to deliver a range of value-added applications including OneSMART MasterCard Pre-Authorized, OneSMART MasterCard Authentication Program, and OneSMART MasterCard PayPass(TM). The OneSMART MasterCard program includes a range of pre-configured smart card packages including OneSMART MasterCard Payment, OneSMART MasterCard Authentication, OneSMART MasterCard Web, and OneSMART MasterCard Retail. MasterCard International is a leading global payments solutions company that provides a wide range of services that support their global member’s credit, deposit access, electronic cash, business-to-business, and other related payment programs.

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Metavante Signs Chesapeake Bank

VA-based Chesapeake Bank has migrated to Metavante for merchant processing and related services. Services include settlement and accounting solutions, fraud detection, and online resources to assist Chesapeake’s merchants to better manage their businesses and handle its merchant portfolio. Chesapeake Bank, a Virginia State-Chartered Bank as well as a Federal Reserve and FDIC member bank, provides personal services to individuals and business in the state of Virginia. Metavante is a chief provider of electronic funds transfer and card solutions to more than 2,200 financial institutions, transportation agencies, and health insurance companies in the U.S.

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U.K. Launches a National Study on ID Fraud

The U.K. “National Study on Identity Fraud” is officially underway. ID Analytics Limited will lead and conduct the research in partnership with five of the six largest banks, three of the four largest mobile operators, five of the seven largest credit card issuers, and two of the largest online and offline retail consumer finance companies in the U.K. A team of industry leaders from ID Analytics comprising analytic scientists, software, and security resources is now beginning to analyze key identity elements from the UK ID Network. In its research, the team is identifying patterns, practices, and activities indicative of identity fraud. Based on its findings, the team will build new solutions for fraud prevention that will be customized to the needs of the U.K. market. In 2003, ID Analytics, the U.S. parent of ID Analytics Limited, led a similar research effort in the U.S. which helped form the basis of the ID Network, the United States’ first and only real-time national system developed exclusively to manage identity risk.

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Advantex Marketing Annual Revenues Slip

Toronto-based Advantex Marketing International posted that revenue for fiscal 2004, ending June 30th, was $82.4 million, compared with $96.0 million in fiscal 2003. The decline in revenue can be attributed to the Company’s Canadian credit card loyalty business. The downturn in the full-service restaurant industry in Toronto resulting from SARS and other factors also impacted revenue. In addition, Air Canada’s filing for bankruptcy protection and restructuring process under the Canadian Companies’ Creditors Act also influenced revenue. However, factors that adversely impacted the Company’s CIBC Aerogold ADVANTEX Benefit program have been just about eliminated. Advantex Marketing International is a chief developer of syndicated loyalty marketing programs, which strengthen relationships between organizations and customers as well as build new relationships between customers and networks of merchants, service providers, and packaged goods manufacturers.

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MasterCard Rolls-Out a Chip-Based PayPass Card

MasterCard has launched a new product that combines a contact chip and a contactless interface based on its “M/Chip 4,” an EMV-based smart card application for credit and debit cards. The new “OneSMART PayPass” will enable the “PayPass” program to expand beyond the U.S. into regions where EMV smart cards predominate, particularly Europe. With the product, payment details are captured by the terminal, then processed through the MasterCard acceptance network in the same way as a contact chip payment. The transaction is authorized either online by the issuer host or offline by the card. The card’s on-chip risk management capabilities can also accomplish “Card Authentication” offline. To further speed up a “PayPass” transaction, CVM requirements, such as signature or PIN, may be waived for low-risk, low-value purchases. ACI Worldwide and MasterCard have partnered for the first live issuance of EMV-compliant MasterCard “OneSMART PayPass” contactless cards. Ingenico, Oberthur, and Sagem Monetel have also teamed with MasterCard to support “OneSMART PayPass.”

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Payment Rate Increase Dampens Card Loan Growth

The average amount that consumers pay each month on their credit cards has been steadily rising, hitting a record high in September. The increasing payment rates have slowed the growth of total revolving credit card debt to about 4% per year, a record low. At mid-year, bank credit card debt, exclusive of store/gas credit, stood at $672 billion compared to $646 billion one-year ago. Based on reports thus far, bank credit card debt may have reached $680 billion in the quarter ending September 30th. At year-end 2001, Americans owed $608 billion on bank credit cards. Therefore, bank credit card debt has grown by 12% over the past three years, the slowest rate of growth in the industry’s history. The average amount that consumers pay each month on their current balance reached 18.04% in September, compared to 17.73% one-year ago, 16.16% in September 2002, and 14.89% in September 2001. The 2001 figure was an aberration due to the 9/11 attack, but all of 2001 was well below the current payment rates. The monthly payment rate reflects the average amount paid back by all cardholders including those who pay-off their entire balance each month. There are approximately 185 million bank credit cardholders in the USA. Of these about 70 million pay-off in full each month, 71 million make more than the minimum required payment, and 44 million make minimum required payments.

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CO-OP Network CEO to Retire in 2005

The CO-OP Network’s CEO, Robert Rose, announced that he is retiring in June 2005 after serving as CEO since October 1990. Mr. Rose has been in the credit union industry for 36 years. At his arrival in 1990, CO-OP was the 24th largest ATM/EFT network in the U.S. It is now the largest network in the country and ranks No. 3 for overall ATM network. The CO-OP Network umbrella includes 1 billion transactions per year, almost 20,000 ATMs, and 1,800 credit unions spanning 50 states and 11 countries.

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FreeStar Technology Annual Revenues Double

FreeStar Technology Corporation reported that revenues, for the year ending June 30th, were $1.3 million, an increase of 136% from the prior year. According to Paul Egan, CEO of FreeStar, the Company completed an upgrade of their processing capabilities and feels that it is ready to continue the roll-out of their product offering along with the adoption of the Europay/Mastercard/Visa processing standard throughout Europe. FreeStar Board Member and CEO of European Operations, Carl Hessel, commented on FreeStar’s effort to make progress toward providing secure transaction capabilities to financial institutions. Angel Pacheco, FreeStar’s CTO, discussed the expansion of communication and operational networks to facilitate the interchange of data between FreeStar’s processing partners and merchant network. The Company is also writing EMV POS software that will enable the Rahaxi platform to process transactions from a broad range of terminals and POS devices. (Rahaxi is FreeStar’s operating subsidiary). FreeStar Technology is a payment processing and technology company that processes roughly 1 million card payments each month.

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Collis’ EMV PVT Covers Testing of JCB J/Smart Cards

Collis and JCB have developed a new EMV PVT tool that covers all tests specified by JCB for cards that are personalized according to “J/Smart 1.2” and “J/Smart 2.0” specifications. “J/Smart” is JCB’s
credit application for smart cards. It is compliant with the EMV standard for smart card credit and debit transactions. Collis’ EMV PVT thoroughly tests payment cards on all the aspects of personalization. Compliance is checked with the strict rules from the EMV specification, as well as with specific requirements of credit card scheme operators. The EMV PVT immediately shows whether a card is personalized correctly or not with a green checkmark or a red cross. It also generates a Word report that pinpoints any magstripe-chip inconsistency, (tag) error
or rule violation in detail. The tool can be used in development of the
personalization and for sampling during production.

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AmSouth Sells Portfolio; Becomes a MBNA Agent

AL-based AmSouth has signed an agreement to sell its credit card portfolio to MBNA and to enter into an agent bank agreement. The AmSouth portfolio has approximately 390,000 accounts and total receivables of approximately $550 million. AmSouth says its credit card business is non-core, lacks meaningful scale, and is unable to compete in the increasingly competitive credit card environment. AmSouth expects a pre-tax net gain of approximately $170 million from the credit card sale. Goldman, Sachs & Co. served as AmSouth Bancorporation’s adviser on the credit card portfolio transaction. AmSouth has 670 bank locations.

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