Gemplus Loses Gilles Michel and Two Board Members

Smart card specialist, Gemplus International, confirmed this morning that EVP Gilles Michel will be leaving. Michel’s duties in the Financial and Security Services Business Unit will now be jointly handled by Philippe Combes, EVP of Operations, and Jacques Seneca, EVP of the Business Development Group. Combes will focus on volume products including Banking, Retail & Transport and Conventional Cards. Seneca will focus on emerging markets including ID & Security and Smart Card Interfaces. The Board of Gemplus also announced the appointment of Werner Karl Koepf and Geoffrey Fink as Directors. They replaced Kheng Nam Lee and Abel Halpern who have resigned. Mr. Koepf currently holds various senior management positions at Marconi Corporation plc London, UK and Mr. Fink is a London-based Principal in Texas Pacific Group’s operating group. In October, Gemplus reported third revenues for its Financial and Security Services segment of $67 million, a 20% gain over the last quarter, as gross profits soared nearly 59% to $17 million during the same period. (CF Library 10/31/03)

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SEC Expands Investigation into Metris’ Securitizations

Metris Companies confirmed Friday that it recently received notice from the SEC indicating that the scope of its investigation has been expanded to include issues related to the valuation of Metris’ retained interests in securitized loans. The Company previously reported that it was the subject of a formal, nonpublic investigation by the SEC. The recent notice was dated December 10th. Last month, Metris announced that its outside auditors, KPMG, issued a letter to the Audit Committee noting a material weakness involving internal control relating to the Company’s policies and procedures for valuing its retained interests in loans securitized by the Company. Last week, Metris said it has modified its original operating agreement formed in mid-March with the OCC. Under the modified agreement, the Metris board is required to submit to the OCC a written strategic plan by December 31st, covering at least a three year period. The strategic plan will establish objectives for the Bank’s overall risk profile, earnings performance, growth, balance sheet mix, off-balance sheet activities, operational limitations, liability structure, capital adequacy, product line development and marketing segments. Metris is also required to maintain liquid assets of no less than $35 million. For the third quarter, Metris Companies reported a record net loss of $120.3 million, due to the impacts from the sale of its membership club and warranty business, a portfolio sale of approximately $590 million, a workforce reduction, the sale of certificates of deposit, and the portfolio sale of approximately $500 million during the fourth quarter. The Company’s stock was trading around $4.36 per share this morning. (CF Library 11/17/03; 12/15/03)

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iPayment Adds 18,000 Merchants from FDMS

Nashville-based iPayment has purchased 18,000 small merchant accounts from First Data’s Merchant Services subsidiary for $55 million in cash. iPayment launched its IPO in May producing about $50 million in net proceeds, and recently expanded its revolving credit facility from $30 million to $65 million from Bank of America to finance the FDMS purchase. The 18,000 small merchant accounts produce about $4 billion in annual bankcard volume. Under terms of the deal, iPayment will continue to add new merchant accounts generated by approximately 170 small agent banks of FDMS. iPayment is currently a customer of First Data for merchant processing services, and as part of the deal, will continue to utilize processing services from FDC for the acquired portfolio. iPayment was advised by Merrill Lynch. First Data engaged First Annapolis Capital to assist in the sale. The acquisition has been completed but will become effective on December 31st. Last month, iPayment reported third quarter revenues of $59.8 million, a 105% increase over one-year ago. Net income for the third quarter increased to $5.1 million from $820,000 for the third quarter last year. Charge volume for the quarter was $1.7 billion compared to $736 million in 3Q/02. At the end of the third quarter, iPayment processed for more than 70,000 small U.S. merchants. At the end of October, the firm purchased a merchant portfolio of approximately 1,500 retail merchants with annualized charge volume of over $300 million. (CF Library 5/13/03; 11/12/03)

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Payment and Back Office Service Provider, Netgiro, Meets VISA AIS Standards

Stockholm-based Netgiro announced its compliance with the “VISA AIS Program.” In response to the surge in IT attacks on financial service providers, VISA International launched the globally
mandated “Account Information Security Program,” also called “CISP” in the USA. Through the program, over 100 different security and policy requirements must be addressed including access to data, firewall integrity, encryption of stored data, physical security and a wide range of business, human resources and policy issues. The program consists of three components: a self-assessment of the service provider’s compliance with VISA’s best practice standards; remote vulnerability scanning to check for weaknesses in a provider’s systems; and a site inspection confirmation of the self-assessment by a VISA-approved independent third party security assessor. Netgiro is a payment and back office service provider.

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Eight Out of Ten Americans Hate Spam

A new survey shows that 83% of Americans are either “extremely likely” or “very likely” to register for a proposed “Do-Not-Spam” list. Synovate says Americans get a 155 unsolicited emails in their personal or work email accounts each week with 20% receiving 200 or more. The weekly inbox of unsolicited mail includes an average of 23 offers for new credit or charge cards. The research also found that 88% of females are extremely or very likely to register compared to 78% of males despite the fact that males receive more spam than females. Synovate says not all spam is bad as 11% responded to an offer in the past year.

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Retailers Cheer Signature Debit Interchange Battle

Attorneys for the retailer plaintiffs in the Wal-Mart debit card lawsuit, said Friday that the recent interchange rate announcements for VISA and MasterCard signature debit are additional evidence of a growing rivalry and competition between the associations. VISA’s new signature debit interchange rates are scheduled to go into effect on January 31st. MasterCard’s new rates for its signature debit product are scheduled to go into effect on April 2nd. However, some larger merchants have reportedly been offered special lower rates and other monetary incentives to continue accepting signature debit cards. NYC-based Constantine & Partners says the new VISA rates, on average, are down 11% from pre-settlement levels, but up 26% from temporary interim rates agreed to under the settlement terms, which must remain in effect until merchants are free to reject signature debit transactions. The VISA interim rates will expire on January 30st. The new MasterCard rates, on average, are down 32% from pre-settlement levels, but roughly the same on average as the interim rates which will remain in effect until April 1st. Federal Judge John Gleeson is currently considering a request for final approval of the $3 billion settlement.

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Presidion to Offer Payroll Passport Cards

iWire has signed MI-based Presidion Corporation, which has 2,600 client companies and management of 34,000 worksite employees, to offer its “Payroll Passport” ATM cards. Use of the Payroll Passport ATM card offers the flexibility of a direct deposit program; Presidion’s client companies load the cards with the worksite employees’ net pay, which is immediately accessible with a secure PIN at more than 900,000 ATM locations on the Cirrus(R) network, the largest single ATM network in the world, and at over 25,000 surcharge-free ATMs on the Allpoint(R) Network. Presidion provides human resources, regulatory compliance and employee benefits management services to approximately 34,000 worksite employees. iWire, Inc. is the parent company to Payroll Passport. With offices in Miami Lakes, FL; Atlanta, GA; and New York, and with a world-class data center in Orlando, FL, iWire provides all of the transaction processing infrastructure that powers the Payroll Passport Card.

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STV TurboCard Launched for Corporate Market

CA-based Victory Capital Holdings, and its Global Card subsidiary, have launched a stored value card product aimed at the corporate affinity card market. TurboCard (www.turbocard.com) is a multifunctional stored value card with the same features as a credit or debit card, combined with the convenience of prepaid long distance, prepaid Internet, prepaid wireless, and a loyalty points program — all in one. Victory Capital Holdings Corporation is designed to leverage the assets of existing, proven technologies and to infuse those assets with marketing, management and financial support to become the recognized leader in its space.

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ATM Installed Base in Europe is Up 6%

A new research report has found that the installed base of ATMs in Europe grew 6% last year to 283,590 machines, and that Germany, Spain, UK, France and Italy now account for 77% of the region’s ATMs. Also, the UK has become the fastest-growing ATM market in western Europe with nearly 41,000 machines, and as a result, the UK overtook France last year as the region’s third-largest ATM market. Germany, the region’s largest ATM market, has 50,487 machines, and second place Spain has 49,925 installations. The study by Retail Banking Research found that during 2002 there were 10.8 billion cash withdrawals at western Europe’s ATMs, an increase of 2% over 2001. Since the installed base grew faster than the number of cash withdrawals, the average usage level fell to 3,173 withdrawals. The total value of withdrawals, however, increased by 9% to EUR1,215billion in 2002. The average value of a cash withdrawal in 2002 climbed to EUR113. Italy has the lowest number of cash withdrawals per machine, but the average withdrawal value is high; Italians visit ATMs infrequently but withdraw large sums of cash at a time. RBR also found that the average ATM in Sweden is used 11,300 times per month and that the average value of a cash withdrawal is highest in Switzerland, with EUR248. Retail Banking Research has published the annual “ATMs and Cash Dispensers Europe 2003” report since 1983.

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USA 1 Rate Migrates to Qxpress 200 Terminals

UT-based Q Comm International has inked a deal for Y202/USA 1 Rate to convert its 600 third-party retailers from scratch prepaid phone cards to electronic top up via Q Comm’s “Qxpress 200” POSA terminals. USA 1 Rate is a prepaid wireless service provider based in Farmington Hill, Michigan that was formed by its chief executive officer, Sam Konja, in 2000. The company private-labels and resells the wireless service products of Verizon Wireless and AT&T Wireless. With the Q Comm electronic distribution system, USA 1 Rate will save the costs of printing, managing physical inventory, and shipping or delivering hard cards that contain the service-activating PINs.

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TNB Card Services Buys Three CU Portfolios

Dallas-based TNB Card Services has purchased the card portfolios and signed agent issuing agreements with three credit unions including: TX-based Tyler City Employees CU, TX-based Cherokee Teachers FCU, and OH-based Vantage FCU. Tyler City Employees Credit Union and Cherokee Teachers Federal Credit Union are current TNB clients that have chosen TNB as their agent issuer partner. Cherokee County Teachers Federal Credit Union has been serving those who live and work in Cherokee and Rusk Counties since 1955. This $12 million credit union serves 2,500 members. Vantage Federal Credit Union is located in Brook Park, Ohio and serves over 10,000 members. This $60 million credit union will convert their 2,700 credit card accounts to TNB in March.

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ADS Gets Top Ranking in Call Center Benchmark Study

Alliance Data Systems, which provides customer service operations for more than 55 retailers’ private label credit card programs, has received “Best in Class” certification for the centers and placed among the top 10% of all call centers evaluated by Purdue University’s “BenchmarkPortal,” customer service benchmarking survey. BenchmarkPortal monitored 28 industry segments, including financial services and retail, measuring call centers for excellence in customer service against the world’s largest database of call center best practices. Alliance Data Systems (NYSE: ADS) is a leading provider of transaction services, credit services and marketing services. The company assists retail, petroleum, utility and financial services clients in managing the critical interactions between them and their customers.

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