InterCept Adds New Directors

As expected InterCept’s annual shareholders meeting was convened and then immediately adjourned yesterday until September 14th as it explores strategic alternatives including a possible sale. InterCept also announced the addition of three new directors to its board yesterday as a result of its settlement with JANA Partners. Additionally, InterCept recently agreed with Sprout Group to modify the terms of the $10 million preferred stock purchased by Sprout and its affiliates in September 2003. Meanwhile, Third Point Management Company said yesterday it is increasing its stake in InterCept to 1,750,000 shares, 8.6% of the outstanding common stock valued at approximately $29 million. In a poison pen letter, Third Point yesterday said it believes InterCept is worth substantially more with the “imminent involuntary extraction” of its current CEO.

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MOBILE OFFICA

JCB is set to launch its wireless corporate solution in the fall of this year. Built around Sony’s “FeliCa” contactless IC chip technology, “Mobile Offica” includes a suite of functions including employee identification, office and network access, and cashless payment. “Mobile Offica” marks the first time that mobile phones incorporating a contactless chip enabling credit card payment will be available in Japan. Advanced postpay functionality is provided by linking to the employee’s own credit card account. “Mobile Offica” also enables users with i-mode capable phones to monitor outstanding credit card balances and view detailed transaction histories, and users may be able to request increases in their credit limits on-line. NTT DoCoMo will be releasing i-mode “FeliCa” Service for mobile wallet applications, including train pass and e-money, on four i-mode smart-card handset models, in early July.

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Delinquency to Improve through Year-End

Delinquency, the forerunner of charge-offs, continues to point downward for the rest of this year. Since the beginning of this year, average delinquency among prime portfolios, on a managed basis, has declined 42 basis points. For April and May the average 30+ day delinquency rate has remained below 4.00%. MBNA recently reported that its credit card delinquency rate dropped for the fourth consecutive month. MBNA’s delinquency declined to 4.13% during May, compared to 4.19% during April, and compared to 5.04% one-year ago. Capital One reported eleven consecutive months of declining delinquency. However, Capital One’s slipped upwards by 4 basis points in May. Capital One’s delinquency edged up to 3.73% during May, compared to 3.69% for April, and 4.39% for January. Delinquency peaked last year in June when it hit 4.95%. In May 2003, Cap One’s managed delinquency ratio stood at 4.82%. According to Fitch’s latest credit card index, the 60-or-more-day delinquency ratio for prime portfolios fell 12 bps to 3.08% in May, its lowest level since July 2002, and 46 bps below the year-ago level. The lower delinquency levels, coupled with a 3% decline in bankruptcy filings, may help to off-set the impact of increases in the cost of funds.

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UK Mobile Operators Seek an Open Mobile Terminal Platform

Mobile operators announced plans to define widely accepted requirements for an
open mobile terminal platform. The founding members of this initiative are mmO2, NTT DoCoMo, Orange, SMART Communications, Telefonica
Moviles, TIM (Telecom Italia Mobile), T-Mobile and Vodafone. These members have created a new organization based in London called: OMTP Limited.
The OMTP group aims to define those platform requirements necessary for
mobile devices to deliver openly available standardized application interfaces
that will provide customers with a more consistent and improved user
experience across different devices, whilst also enabling individual operators
and manufacturers to customize and differentiate their offering. As a technology neutral organization, all technology vendors will be free
to contribute to and support OMTP requirements and to provide OMTP compliant
products.

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Euronet to Provide ATM/POS Switch for Four Banks

Euronet Worldwide announced a software agreement that will create a national switch in Suriname, enabling four of the largest banks of the country to share ATMs and POS devices. The four banks — DE SURINAAMSCHE BANK N.V. (DSB BANK); HAKRINBANK N.V.; RBTT BANK (SURINAME) N.V.; and SURINAAMSE POSTSPAARBANK — are partnering to start the BANKING NETWORK SURINAME N.V. (BNETS). Euronet will facilitate the switching of inter-bank ATM and POS transactions from the banks’ existing devices. Two of the banks, DSB BANK and HAKRINBANK, are currently Euronet software customers. The national switch is the first of its kind in Suriname and will allow the four banks to establish a shared network to offer customers added convenience with its transactions. It is the second national switch in just one month to be built on Euronet software. Euronet recently announced a similar project in India.

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Fincentric Introduces Wealthview Leadbuilder

Fincentric introduced “Wealthview Leadbuilder”, a software application that enables banks and credit unions to engage their frontline service representatives in lead generation activities. For the first time, banks and credit unions can
utilize their tellers, call center or other frontline service
representatives to deliver highly targeted marketing campaign offers to
customers during service interactions-resulting in increased lead
generation, sales effectiveness and revenue opportunities for the financial
institution. “Wealthview Leadbuilder” leverages a bank’s back-office customer analytics
system such as a “Marketing Customer Information File” and directs
MCIF-generated marketing campaigns to the desktops of frontline staff.
Wealthview Leadbuilder matches customer data with the bank’s core banking
system and lead management system, ensuring all marketing offers are
appropriate and valid. During a customer service interaction, Wealthview
Leadbuilder automatically presents a banner with a targeted marketing
campaign offer for the specific customer. With a single key stroke, the
customer’s response is recorded and Wealthview Leadbuilder interfaces with
the lead management system, instantly passing the referral to an appropriate
sales representative for follow-up. The bank’s marketing group can generate
timely campaign reports, instantly measure results and modify campaigns to
improve customer response rates. Washington Trust Bank, the largest privately owned commercial bank in the Pacific Northwest, is currently beta-testing Fincentric’s “Wealthview
Leadbuilder.”

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Command Technology and SVC Financial Form a Strategic Alliance

Command Technology and SVC Financial Services have signed a strategic marketing alliance. The SVC-Command partnership offers European financial services, entertainment and media companies scalable rich media application generator software, SVC Payment Services, robust Digital Rights Management and a powerful mobile commerce application solution. Command Technology sells ICT products and services in the marketing services, CRM, digital rights management and data extract, transform and load sectors to help its clients create and manage successful online real time enterprises. SVC Financial Services is a provider of an integrated suite of secure electronic payment, web application development, digital rights management and multimedia authoring solutions with a focus on the online retailing and entertainment industries as well as the companies that serve them.

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Card APRs May Rise 100 bps by Spring 06

If the Feds raise short-term interest rates by 25 basis points next week and continue with subsequent hikes, then credit cards interest rates are likely to rise 19 basis points within two months, and perhaps increase by 96 basis points within nine months, based on historical patterns. In April 1994, the prime rate moved to 6.25% after sitting at 6.00% for 21 months. By June credit card APRs increased 20 basis points, and nine months after the rate increases began, credit card interest rates were 106 basis points higher. In April 1997, the prime rate moved to 8.50% after sitting at 8.25% for 14 months. By June credit card APRs increased 18 basis points, and nine months after the rate increases began, credit card interest rates were 87 basis points higher. The current prime rate has been sitting at 4.00% for 11 months. In 1994, less than half of bank credit cards in the USA were variable rates. By 1997, variable rates represented more than 75% of the market. Today, the market is split between variable and fixed rates. More than 95% of current variable rate cards are holding at their floor rate. Therefore, the expected rate hikes will promptly impact issuers’ bottom line, given the typical 45 day pass-through period for cardholders.

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