Holiday Sales Up 5.2% This Year

The Ernst & Young Retail and Consumer Products Group yesterday projected that the 2003 retail holiday sales increase for November and December will be 5.2%, compared to a 3.4% increase for the same period last year. According to Jay McIntosh, Americas Director of the Retail and Consumer Products Group for Ernst & Young, “The economy has been bolstered by increases in disposable income and housing starts combined with federal income tax rate reductions and low prime interest rates. Jay McIntosh is the Americas Director of the Retail and Consumer Products Group for Ernst & Young. He is responsible for the group’s strategy, sales, marketing, and thought leadership efforts as well as developing and overseeing relationships with many of the largest and best-known retail and consumer product companies throughout the Americas.

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VISA Modifies Settlement Service Fee Policy

To appease the U.S. Department of Justice, VISA announced yesterday it will waive its newly adopted “Settlement Service Fee” bylaw for members switching to American Express or Discover. The new bylaw was adopted to discourage VISA members from switching their off-line debit card business to MasterCard, in order to escape the settlement payment in the Wal-Mart debt card lawsuit. In September, MasterCard decided to take VISA to federal court after VISA declined to act on its “cease and desist” letter. MasterCard asked VISA to rescind its new bylaw, which imposes huge fines on the top 100 VISA issuers if they switch to MasterCard and/or reduce their VISA debit volume. The “Settlement Service Fee” bylaw requires VISA top off-line debit card members, who switch to MasterCard’s off-line debit card, to pay a $20 million fine for each percentage point of lost VISA off-line debit volume. Following the recent settlement of the Wal-Mart litigation, VISA told its top 100 debit issuers that for the next 10 years, they would face significant fines, based on a share of VISA’s $2 billion settlement with the merchants, if they reduced their VISA debit volume from September 30, 2002 levels.

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U.S. Bank Deploys Cyota’s Secure Suite

U.S. Bank has added Cyota’s “SecureSuite” to boost enrollment to its “Internet Banking” service via “Verified by Visa.” The integration of the systems creates an extremely user-friendly experience, while not interrupting the cardholder’s shopping experience. Following an enrollment to Verified by Visa, U.S. Bank sends an email to each new Verified by Visa participant thanking them for joining the service and prompting them to click on a link and activate the Internet Banking service as well. U.S. Bancorp, with assets of $189 billion, is the 8th largest financial services holding company in the United States. Cyota is the leading payment security provider for financial institutions.

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JCB Enters Peru

Lima-based Visanet del Peru S.A. has inked a deal with JCB International wherein the Peruvian company will represent the JCB brand in the acquiring and processing business in Peru. This is the first acquiring agreement for JCB in Peru, according to this week’s CardFlash International (www.cardflashinternational.com). Visanet Peru will also introduce the JCB card into the credit card market of Peru for the first time. Visanet del Peru provides acquiring services to 15,500 merchants, which covers almost all of credit card retailers in Peru. JCB’s merchant network includes 11 million merchants. JCB cards are now issued in 18 countries and territories, with 48.4 million cardholders.

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eFunds Closes $30 MM Oasis Deal

eFunds has completed its acquisition of the assets of Oasis Technology for $30 million. eFunds intends to leverage the strength and reliability of its current CONNEX(TM) software and Oasis’ open platform suite of products to provide domestic and international customers an optional migratory path to a flexible solution that offers lower total cost of ownership. This will enable current CONNEX and Oasis customers to choose the path that best allows them to minimize risk and prepare for future electronic payment technologies. Headquartered in Scottsdale, Ariz., eFunds Corporation is an industry leader with nearly 30 years of experience and expertise in electronic payments.

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Target Card 3Q Profits Up 23%, Slows from 2Q

Target reported this morning that its credit card operations produced 34% of its total pre-tax profit of $481 million for the third quarter ending November 1st. The retailer’s “smart VISA” portfolio posted 3Q/03 outstandings of $3.81 billion, a 23% increase over 3Q/02. Meanwhile, Target’s private label “Guest Card” credit card posted another drop as it migrates its best customers to the “smart VISA” program. At the end of the third quarter, Target’s private label outstandings were $721 million, compared to $733 million for the second quarter, and $779 million one year ago. Target’s net charge-off rate for its VISA program was 9.7%, compared to 9.3% in the second quarter, and, compared to 6.9% one year ago. Net write-offs for its store credit card program were flat at 8.0% for the third and second quarter, compared to 7.9% for 3Q/02. The 90-day+ delinquency rate for “smart VISA” was 3.8% for 3Q/03, compared to 3.5% for the second quarter, and, 3.0% for 3Q/02. For its “Guest Card” program the figure was also flat at 5.2% for 3Q/03 and 2Q/03, and down from 5.6% one-year ago. Target’s pre-tax profits from its credit card operations were $162 million, compared $160 million for the second quarter, and well above the $138 million recorded one year ago. For complete details on Target’s 3Q/03 performance visit CardData (www.carddata.com).

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PreCash Card Nails 7-Eleven Deal

7-Eleven has signed an agreement to offer the “PreCash Card” to enable customers to fund their monthly wireless service via Sprint PCS. 7-Eleven stores provide more convenience to millions of Sprint PCS customers who use the PreCash card to pay for their monthly wireless service for a small convenience fee. Instead of a traditional prepaid program, in which a disposable prepaid phone card with a specified number of minutes is purchased and loaded onto a wireless phone, PreCash offers Sprint PCS consumers an electronic payment service using the PreCash card. 7-Eleven Inc. is the premier name and largest chain in the convenience retailing industry. PreCash offers a payment system that allows customers to quickly and easily transform cash into electronic payments at more than 22,000 convenient retail locations nationwide, such as RadioShack and Wal-Mart.

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MasterCard SecureCode Signs 2,500 Issuers

MasterCard’s “SecureCode” program has signed up 2,511 card issuers and 123 acquirers worldwide to-date. More than 9,000 merchants worldwide are now participating in the program. Additionally, MasterCard has signed “SecureCode” agreements with 115 technology vendors to license the specification for integration with pre-existing security solutions or for standalone applications. MasterCard has also deployed the MasterCard SecureCode Hosted Service as a fully customizable “on behalf of” service. The service is ideal for those issuers who choose not to implement an authentication solution of their own. MasterCard introduced “SecureCode” in September 2002 to tackle fraudulent Internet transactions. “SecureCode” uses MasterCard’s “UCAF” to provide an enhanced payment guarantee to online merchants by presenting, collecting and passing cardholder authentication information. Using hidden fields and a merchant plug-in application that is integrated with merchant Web pages, along with authentication information generated by issuing financial institutions, the new service provides explicit evidence of the cardholder’s involvement in a transaction.

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Merchant Debit Card Advisory Planned for 2004

NYC-based Constantine & Partners announced Wednesday it is releasing an advisory to merchants with information to help them decide whether they want to accept or reject VISA and/or MasterCard signature debit transactions while continuing to accept the associations’ credit cards next year. The advisory also contains information on the procedures and forms merchants can use if they choose to exercise rights obtained in the settlements. These include obtaining new merchant signage, obtaining debit card BINs and blocking or steering away from unwanted VISA and MasterCard signature debit transactions. As of January 1st, merchants will be free to accept credit cards without being forced to also accept the debit cards. Merchants will also be allowed to reject credit cards and accept debit cards.

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EASY-FUEL DEPLOYMENT

T@nque Lleno has teamed with On Track Innovations to install the “EasyFuel” wireless petroleum payment solution in Mexico. The first commercial implementation is planned for 57
CORPOGAS gas stations in 5 states in the center and south of Mexico, with the majority of stations in Mexico City. The system is expected to expand to the commercial fleets in the retail and government markets. T@nque Lleno is a Mexican company that provides intelligent administration systems to commercial fleets in Mexico. The “EasyFuel” wireless solution represents the next generation of OTI’s gasoline management system geared toward the North American and European markets. The system, developed over the past four years is based on OTI’s patented technology that allows RFID smart tags to work in both short and long-range situations. Several major oil companies, such as BP and Repsol, as well as commercial fleet companies, have adopted OTI’s solution for petroleum payment and fleet management in Africa, South America, and Europe.

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Staples Signs Long-Term Renewal with Citi Cards

Boston-based Staples has signed a long-term renewal agreement with Citi Cards to provide processing services for all of Staples’ private label credit card programs. In conjunction with Citi Cards, Staples offers three private label credit programs: “The Staples Business Credit Account with Revolving Terms,” “The Staples Business Account with Net Pay Terms,” and “The Staples Personal Credit Account.” Both companies also have designed, developed, and implemented a new, instant credit process. Staples has 1,500 office superstores and annual sales of more than $12 billion.

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NCCC Signs Five-Year Extension to its Contract with EDS

The National Credit Card Center of Taiwan has signed a five-year renewal to its contract with EDS. Under terms of the agreement, EDS will help manage NCCC credit card system with technology support and applications development services. NCCC’s EDS-designed credit card system is an end-to-end card processing solution that includes cardholders/merchant management, online authorization, settlement management, a front-end switching solution, and report processing. NCCC was formed in 1983 by the Ministry of Finance and is the country’s largest card processing center.

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