Metris Delays 3Q/03 10Q After Securitization Problem

Metris Companies announced this morning it will delay the filing of its 10-Q for the third quarter after 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. The Company will complete its analysis for this and prior periods and file its report for the quarter ended September 30, 2003, as soon as possible. Results for the quarter ended September 30, 2003, were previously reported on October 23, 2003. Metris Companies Inc., based in Minnetonka, Minn., is one of the largest bankcard issuers in the United States.

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JCB SMART CARDS

Tokyo-based JCB has selected Gemplus International to supply multi-application smart cards equipped with JCB’s “J/Smart” EMV application. Gemplus is to design a special microprocessor native “Dynamic Data Authentication/ Combined DDA” card. This solution is equipped with multiple applications developed by Gemplus which will enable JCB to offer EMV compliant applications with “DDA/CDA” functions and loyalty applications. Toppan Printing, a strategic alliance partner of Gemplus in Japan, will take the order from JCB. Gemplus will supply the microprocessor modules to Toppan and Toppan will provide the personalization services associated with the issuance of the card. The new “EMV 2000” compliant cards, equipped with “J/Smart,” are expected to reach the market next year.

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DRFS Adds New Benefits to its STV Cards

Los Angeles-based Direct Response Financial Services has added customized Web support services, legal estate planning benefits, accountant-assisted tax services, and a credit repair program to its “Business Advantage Card Program” and its “Personal Advantage Card Program.” Direct Response Financial Services, Inc. (OTCBB: DRFL; Berlin: DFS) makes it easier, faster and more secure for people and businesses to buy goods and services, using virtually any form of payment: credit, debit, smart card, stored-value card, electronic check at the point-of-sale, or over the Internet.

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Dione and NCR Team Up for MasterCard’s M-TIP Program

The new Dione” Xtreme Integrated terminal” and NCR have developed a turnkey solution for MasterCard’s “Maestro Terminal Implementation Program.” MasterCard International is currently rolling-out its “M-TIP” worldwide. Dione’s entire “Xtreme” terminal range has been developed and proven in the UK retail market and has recently been released for worldwide distribution. The “Xtreme Integrated,” chosen by Mastercard, is a new compact countertop EMV level 1 and 2 payment terminal, that allows either the cardholder or the cashier to insert the card. It can read magstripe and chip cards and is fully PIN enabled. India, where the use of payment cards is increasing fast, is the first market for Dione and NCR who will offer their solution to the banks and third-party processors.

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Canadian Tire’s Options MasterCard Tops 3MM Accounts

Canadian Tire Financial Services reported a significant expansion of its “Options MasterCard” portfolio during the third quarter. Card receivables were up 27.5% to $2.15 billion. During the quarter, Canadian Tire Bank converted 247,000 retail card accounts to “Options MasterCard” accounts, bringing the year-to-date total of conversions to more than 293,000. An additional 151,000 new accounts were secured and Financial Services now has more than 3.1 million “Options MasterCard” accounts, an increase of 49% year-over-year. Earnings before income taxes for the third quarter were up 3.8% to $26.6 million compared to last year. For complete details on Canadian Tire Financial Services’ third quarter results visit CardData ([www.carddata.com][1]).

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

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Hitachi and Diebold Tackle Advanced Cash Recycling

Tokyo-based Hitachi and Diebold have partnered to develop new and advanced cash recycling technology for the financial industry to conform to global disability standards. The effort will incorporate a level of sophistication that integrates deposit automation, automatic sorting and banknote recycling tasks. Diebold plans to incorporate the technology into its new “Opteva” ATMs.
The companies said the alliance will result in a sophisticated combination of integrated, advanced technology from Diebold and Hitachi designed to handle a wide range of self-service functions other than dispensing cash.

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Top 3 Issuers Have 40% Share; Top 10 Hold 80%

The nation’s top three issuers now control more than 41% of the bank credit card market, based on second quarter outstandings. Based on charge volume, Citigroup, MBNA, and Bank One, now hold a 39.8% share of the market. During the third quarter, Capital One gained market share while Providian gave up some share. (Third quarter industry data is currently being finalized.) As a group, the top ten issuers control more than 80% of the domestic bank credit card market. Based on second quarter charge volume, the top ten hold 81.6% of the U.S. market. With the exception of American Express, all of the top ten issuers have a larger market share based on outstandings than charge volume. For the second quarter the industry’s total receivables were $646.2 billion, and charge volume for the quarter was $373.2 billion. For complete details on second and third quarter portfolio results plus historical quarterly data since 1994, visit CardData ([www.carddata.com][1]).

Top Ten Market Share (2Q/03)
RANK/ISSUER OUTSTANDINGS VOLUME
(ranked by $ billions of bank credit card loans for 3Q/03)
1. Citigroup 17.5% 16.7%
2. MBNA 12.5% 12.2%
3. Bank One 11.3% 10.9%
4. Cap One 7.3% 5.0%
5. Chase 7.9% 5.9%
6. Discover 7.9% 6.4%
7. AmEx 5.6% 17.3%
8. BofA 4.8% 3.6%
9. Household 2.6% 2.5%
10. Providian 2.8% 1.1%

All data represent U.S. card loans except Citigroup which includes other North American cards.
Discover data as of 8/31/03, all others as of 9/30/03.
Q/Q: % change from second quarter 2003; Y/Y: % change from third quarter 2002
Source: CardData (www.carddata.com)

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

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Three Firms Team to Create a Digital Security Solution for eGovernment Transactions

Ismaning-based SCM Microsystems, TC TrustCenter, and cv cryptovision announced a new digital security solution that brings a significantly higher level of security, trust and non-repudiation to online transactions between the public and their government institutions in Germany. The new solution, “PublicOnline Box,” combines smart cards, PC-connected secure readers with PIN pads and public key-based digital signatures to enable the confidential exchange of certified identities and binding transaction information via the Internet. “PublicOnline Box” was developed in accordance with the requirements of administrative processes and the specifications of the German Federal Office for Information Security. The role of the new “PublicOnline Box” solution is to extend that trust to online transactions and provide a way to use those identities and security keys from standard PCs. The public keys and digital signatures ensure the integrity of identities and transactions. An electronic signature can prove the author’s identity just as reliably as a physical signature. It confirms online transactions and proves that e-mails and attachments were actually sent and were not subsequently altered.

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InterCept Engages Financial Advisors & Legal Counsel

Atlanta-based InterCept this week announced it has engaged Morgan Keegan and Raymond James as financial advisors, and Alston & Bird, as outside legal counsel, to assist its special committee. InterCept, Inc. is a single-source provider of a broad range of technologies, products and services that work together to meet the technology and operating needs of financial institutions and merchants.

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U.S. Wireless Data 3Q Revenues Up 59%

U.S. Wireless Data reported that its third quarter revenues increased 59% over the prior year $1.2 million. Service revenues, derived primarily from the growing base of active wireless sites that use USWD’s proprietary “Synapse” service to process transactions, were up 72%. Active sites have grown to approximately 32,500, an increase of 15,400 or 90% from the same date of the prior year. However, product sales decreased to $16,000, from $66,000 in last year’s corresponding quarter. Product sales are expected to gradually increase as the company moves to the commercialization of its “Synapse Enabler for Vending” through Pepsi, its bottlers and licensees, and “Synapse Enabler” for multi-lane Point-of-Sale. Pepsi has made a commitment to purchase a minimum of 10,000 “SEVs” from the company. Net loss for the quarter totaled $1.33 million, compared to a net loss of $1.76 million, for the corresponding quarter of the prior year. For complete details on U.S. Wireless Data’s third quarter results visit CardData ([www.carddata.com][1]).

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

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VISA Buys Into iS3 and Forms Global Alliance

CA-based iS3 has received an equity investment from VISA International, and has signed a multi-year global strategic alliance with VISA to explore opportunities to use iS3 security management solutions to deliver business advantage and strategic benefits to VISA members and merchants. Visa International has also made an equity investment in iS3, as part of its Series B equity funding round, which raised a total of $9.1 million. The round was led by Menlo Ventures and also included participation from some of Silicon Valley’s premier venture capital firms, including BV Capital, Asset Management, and existing investors. iS3 develops and markets advanced security management solutions for the global financial industry. Visa is the world’s leading payment brand generating US$2.7 trillion in annual card sales volume.

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