DOJ Files Lawsuit to Block First Data’s Acquisition of Concord EFS

The Department of Justice yesterday filed a civil antitrust lawsuit to block the proposed $7 billion acquisition of Concord EFS by First Data. The DOJ says the merger would substantially reduce competition among PIN debit networks, and could result in consumers paying higher prices for goods and services from merchants that offer debit transactions. According to the complaint, PIN debit networks provide an increasingly important method of payment for consumers and retailers because PIN debit is the least expensive, most efficient, and most secure form of card payment. In 2002, consumers used PIN debit networks to purchase more than $150 billion in goods and services. The DOJ says that if allowed to proceed, this merger of two of the three largest PIN debit networks will lead to higher prices to merchants, forcing them to pass on those price increases to many consumers throughout the USA. Meanwhile, First Data said last night the complaint filed by the DOJ is inaccurate and ill-advised. FDC says the DOJ appears to have focused its opposition to the transaction on the combination of the NYCE network, which is majority owned by First Data, and the STAR network, owned by Concord. While those networks carry PIN debit transactions at both the POS and ATMs, the DOJ’s complaint is limited to the alleged market for PIN debit services at the POS. FDC says it is ironic that the DOJ is acting against a transaction where the combined company would handle less than 45% of PIN debit transactions, when only two years ago, the DOJ approved Concord’s acquisition of STAR, which resulted in Concord handling approximately 60% of exactly the same transactions. First Data and Concord said they are prepared to proceed quickly with the case and will ask the Court to rule on the Justice Department’s request to enjoin the deal well in advance of the January 31, 2004 termination date in the First Data and Concord merger agreement.

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Vital Processing Services Launches the Vital Integration Partners

Vital Processing Services has launched the “Vital Integration Partners” program. The new Vital “VIP Program” will help both Vital’s acquiring clients as well as system integrators and software developers to leverage business opportunities in the merchant marketplace. Vital processes for 300 acquiring clients, including the top 25 acquirers in the industry, representing more than one million merchants in the USA. Through Vital’s new “VIP” program, Vital’s client base will have access to the tremendous expertise and value-add technology solutions that “Vital Integration Partners” bring to merchants. To become a member of the new “VIP Program,” developers and system integrators are requested to register for approval to process on the Vital platform.

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GE Extends Contract with American Eagle Outfitters

GE Consumer Finance has signed a two-year extension of its agreement with American Eagle Outfitters, to continue to provide private label credit card services for “The AE Card” until Jan. 1st, 2008. The credit program, marketed as “The AE Card” has been in place since 1996 and was originally scheduled to run through 2006. American Eagle Outfitters currently operates 731 American Eagle stores in North America, 62 AE stores in Canada, and 111 Bluenotes/Thriftys retail outlets in Canada. Benefits of “The AE Card” include 15% off first purchase, 20% off for birthday purchases, special savings days of 15% throughout the year, and on-line account access through [www.ae.com][1]. GE Consumer Finance, a unit of General Electric Company, with $95 billion in assets, is a leading provider of credit services to consumers, retailers and auto dealers in 36 countries around the world.

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

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Sallie Mae Deploys Net.Pay

Sallie Mae has deployed “Net.Pay,” as its comprehensive suite of billing and payment transaction solutions, at 29 more colleges and universities across the USA. The Net.Pay suite includes the Tuition Payment Plan that allows students and their families to schedule payments by semester or annually, on-line or through traditional methods, and receive counseling on payment options. Net.Pay also helps make university administration more effective, efficient and flexible by offering students, alumni and others fast, efficient and secure payment transactions on- or off-line. SLM Corporation, commonly known as Sallie Mae, is the nation’s leading provider of education funding, managing more than $85 billion in student loans for more than seven million borrowers.

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Digital Insight Profits Up 180% for 3Q/03

Digital Insight reported third quarter revenues of $39.4 million, a 16% increase over last year, and net income of $4.6 million, an 180% increase compared to net income of $1.7 million for the third quarter of 2002. Revenues for the third quarter ended September 30, 2003 increased 16% to $39.4 million from $33.9 million for the quarter ended September 30, 2002. Under Generally Accepted Accounting Principles, the Company reported net income of $4.6 million, or $0.14 per diluted share, in the third quarter, a 180% increase compared to net income of $1.7 million, or $0.05 per share, for the third quarter of 2002. Digital Insight Corporation is a leading Internet banking provider for visionary financial institutions. Through its comprehensive portfolio of outsourced, Internet-based financial products and services built upon the company’s unique architecture, Digital Insight enables banks and credit unions to become the trusted transaction hub for their retail and commercial customers.

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Democratic National Committee and Providian Partner for a Card

Providian Financial confirmed Thursday that the Democratic National Committee has selected it to market and issue an affinity credit card to supporters of the Democratic Party. Individuals will have the option of designating their earned rebates as donations to the DNC, or they can earn accelerated rewards for making a donation to the Committee. The new “DNC” card will begin marketing in late October. Cardholders will also be able to choose from a number of attractive, patriotic card designs, including: an American flag with a superimposed DNC logo, the Democratic Party donkey mascot, and an image of the U.S. Constitution. Providian received approval for the program concept in an Advisory Opinion issued by the Federal Election Commission on August 14, 2003.

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Lipman NURIT 3020 Cleared by Vital

Vital Processing Services has “Class A” approved the Lipman “NURIT 3020” to process on its network. The NURIT¨ 3020 is one of our most exciting products,said Mony Zenou, President and CEO of Lipman USA. It is small, its affordable and its highly customizable. Lipman ([www.lipmanusa.com][1]) is a wholly owned subsidiary of Lipman Electronic Engineering, Ltd. Operating worldwide, Lipman ranks among today’s premiere providers of robust, flexible, and highly customizable electronic payment solutions. The worlds recognized leader in technology-based commerce enabling services, Vital Processing Services¨ (Vital¨) brings the power of pure commerce to more than 300 Acquirers and one million Merchants.

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

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CITIGROUP 3Q/03

Citigroup reported that its international cards business produced third quarter income of $166 million, an increase of 37% over the year-ago quarter. During the quarter the issuer added 1.6 million accounts net to its open account base, outside North America. Charge volume for international credit cards was up 18%, to $10.3 billion for the third quarter. Total outstandings for international cards were $13.6 billion as of September 30th, a 25% gain over one year ago. In Japan, credit card loans were flat, while in the rest of Asia, credit card loans grew 12% to $6.6 billion. Citigroup holds $4.6 billion in card loans for the EMEA region and $400 million in Latin America. Delinquency and charge-offs both decreased during the third quarter for international cards. Delinquency (90+ days) declined from 2.04% in 2Q/03 to 1.88% for 3Q/03. Charge-offs declined from 4.60% in 2Q/03 to 4.27% for the third quarter.
The provision for credit losses decreased due to improvements in Hong Kong and Taiwan, and the release of loan loss reserves in Argentina, partially offset by deterioration in the UK and Korea.

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Cap One Profits Fall for Third Straight Quarter

Capital One reported that its profits have declined for the third consecutive quarter, however, compared to 3Q/02 the issuer’s profits are up 6.8%. For the third quarter, Capital One posted net income of $276.3 million, compared to $286.8 million in the second quarter, and $309.1 million in the first quarter of this year. The issuer says its growth in superprime loans has reduced margins. Also, marketing expenses for the third quarter increased $45.4 million since the second quarter to $316.0 million. One year ago, Capital One spent $185.8 million in marketing expenses. The increased third quarter marketing produced 621,000 net new accounts. The issuer ended the quarter with 46.4 million accounts. During the third quarter, Capital One grew its managed loan portfolio by $6.5 billion to $67.3 billion. The managed charge-off rate declined to 5.44% in the third quarter, from 6.32% in the previous quarter. One year ago charge-offs stood at 4.96%. The managed delinquency rate (30+ days) declined to 4.65% from 4.95% at the end of the previous quarter. One year ago delinquency was 5.31%. For complete details on Capital One’s third quarter performance visit CardData ([www.carddata.com][1]).

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

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Lipman Targets Canadian Market with NURIT Products

POS terminal provider, Lipman, has opened a Canadian office in Mississauga, Ontario. Lipman Canada will be responsible for the sale and distribution of Lipmans full line of transaction solution products marketed under the “NURIT” brand name. Lipman says its wireless and wire-line products are well suited to support the various POS programs currently available to Interac Association Acquiring Members. Lipman’s “2085” and “3020” products have been deployed from coast-to-coast and very shortly additional EMV compliant and smart card ready devices will be rolled out. The “NURIT 8320” (both with and without internal secure PINpad), the “292SC PINpad” and soon to be released “8010” wireless handheld devices are also headed Canada’s way.

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NACHA Forms Corporate Payments Council

NACHA has formed a new industry program, the “Corporate Payments Council,” with the first meeting scheduled for November 13th and 14th. The Corporate Payments Council goal is to bring together stakeholders in the wholesale payments arena to develop solutions and best practices that will result in greater use of electronic B2B payments. The total number of business-to-business payments over the ACH Network grew by a respectable 12.4 percent in 2002 to 1.6 billion, and comprised 17.4 percent of all ACH payments. The dollar value of these B2B payments was $18.4 trillion, an average of $11,481 per payment, and 75 percent of all ACH dollars. NACHA is the leading organization in developing electronic solutions to improve the payments system. NACHA represents more than 11,000 financial institutions through direct memberships and a network of regional payments associations, and 650 organizations through its industry councils.

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American Travelers to Spend 37% More in 2004

American Express released a survey yesterday that shows American travelers expect to spend $2,962 in 2004 compared to $2,163 for this year. American travelers say they plan to dig deeper into their wallets in 2004, spending more for longer vacations, motivated by an enhanced desire to unwind, according to the American Express Leisure Travel Index. The number of travelers planning to spend more than $5,000 will nearly double. American Express Company is a diversified worldwide travel and financial services company founded in 1850. It is a leader in charge and credit cards, Travelers Cheques, travel, investment products, insurance and international and online banking.

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