FREESTAR MERGER

FreeStar Technology Corporation which operates a Northern European “BASE24” credit card processing platform out of Helsinki, announced it has terminated negotiations with FreeStar Acquisition Corp. and Hans Thulin, its principal, for a cash merger. However, the Company is on track to do a deal with TransAxis, which is expected to close later this summer. FreeStar Technology currently processes approximately 1.0 million card payments each month for an established client base that includes companies such as Finnair, Ikea and Stockman.

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Pegasystems 2Q/03 Revenues Flat

MA-based Pegasystems reported 2Q/03 revenues of $25.5 million compared to $26.7 million one year ago. During the quarter the Company sold its “PegaCHECK Smart Adjust” product to a Midwest banking organization and extended a relationship with a user of its “PegaCARD” solution. For complete details on Pegasystems’ 2Q/03 performance visit CardData ([www.carddata.com][1]).

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

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GLOBAL PAYMENTS & AIR CANADA

Global Payments Canada efforts to get a security deposit out of Air Canada for credit card processing services have been denied. The Court of Appeal for Ontario issued a decision this week unanimously dismissing an appeal by Global Payments Canada Inc. relating to security deposit arrangements for the processing of credit card payments. Mr. Justice James Farley’s order of May 7,2003, rejecting that request was upheld by the Court of Appeal.

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Providian Continues to Regain Profitability

Providian reported 2Q/03 net income of $39.0 million, compared to net income of $4.7 million in the first quarter of this year, and $153.9 million for the second quarter of last year. The issuer added approximately 484,000 gross new accounts in the second quarter and ended the quarter with approximately 10.2 million customer accounts. During the quarter Providian launched the “Real Rewards VISA,” a new rewards card program that followed test marketing of several programs over the past nine months. Managed loans for the second quarter were $17.8 billion. Providian Bank is in the process of unloading $859 million in credit card loans. Charge-offs for 2Q/03 were 16.84% compared to 17.61% in the previous quarter. Providian’s 30+ day delinquency rate at the end of the second quarter was 9.72%, compared to 10.31% at the end of the first quarter. The reported and managed net interest margins on loans in the second quarter were 10.16% and 15.09%, compared to 11.50% and 15.41% in the first quarter of 2003, respectively. For complete details on Providian’s 2Q/03 performance visit CardData ([www.carddata.com][1]).

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

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TOWER-GROUP MEMBERSHIP PROGRAM

TowerGroup has launched a “Membership Program” to offer financial services institutions greater flexibility in accessing research reports. The Program allows the institutions the to choose the research they need from all of TowerGroup’s research categories, as well as direct access to all of TowerGroup’s industry-leading analysts. The TowerGroup Membership Program is designed to address the unique needs of financial institutions as they look to compete in an increasingly converged and competitive marketplace.

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Concord 2Q/03 Profits Up 36%

Concord EFS reported second quarter revenue growth of 17%, with net income up 36%. The Company says transaction volume grew 19% in the first half of this year. Network Services revenue increased 6% to $164.1 million on transaction volume growth of 7% in the second quarter. Transaction volume increased 11% for the first half of 2003, including 19% growth in STAR PIN-debit transactions. Payment Services revenue was $405.9 million in the second quarter, up 22% on transaction volume growth of 29%. Payment Services transactions for the first half of this year were up 30%, with continued growth across all payment types: acquired credit and signature debit, up 27%; acquired PIN-debit, up 31%; and electronic benefits transfer transactions, up 31%. Payment Services revenue includes interchange fees of $266.4 million in second quarter 2003 as compared to $200.5 million in second quarter 2002. Payment Services currently provides payment processing services for approximately 433,000 merchant locations, including 17,600 quick service restaurant locations. There are approximately 125.7 million debit cards that display the STAR brand and that may be used at approximately 1,251,100 ATM and point of sale locations for financial transactions and purchases coast-to-coast. Concord currently provides processing for 19.7 million debit cards and approximately 95,600 ATMs. For complete details on Concord’s 2Q/03 performance visit CardData ([www.carddata.com][1]).

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

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HVB & EURONET AND G&D

Munich-based Bayerische Hypo- und Vereinsbank AG has expanded its cash management outsourcing agreement with Euronet Worldwide and Giesecke and Devrient. HVB will increase the number of participating ATMs from 24 to 200. HVB is the second-largest private bank in Germany. The agreement includes services for 115 branches and approximately 200 ATMs. HVB Group has more than 4 million retail customers and 760 ATMs in Germany, and 8.5 million customers throughout Europe. Euronet is responsible for ATM cash management services that include forecasting cash usage and managing cash logistics. A pilot program, which started in September 2002, included 24 HVB ATMs.

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BB&T Licenses BASE24-es

BB&T Corporation has licensed ACI Worldwide’s “BASE24-es” ATM software to drive some 1,900 ATMs and process ATM and debit card authorizations. BASE24-es is an integrated software solution to acquire, authenticate, route, switch and authorize transactions across multiple channels. BB&T will leverage the advanced scripting capabilities of BASE24-es to better react to market demands.

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AmEx TRS Profits Up 12%

American Express Travel Related Services reported net income of $634 million for the second quarter, up 12% from a year ago. Cash rebate card and other new rewards cards continued to drive the U.S. portfolio expansion, adding 300,000 net new cards during the second quarter. AmEx’s U.S. gross dollar volume increased more than 10% and managed card loans increased by nearly 14% during the second quarter. Credit quality improved as delinquency and charge-offs fell from the previous quarter and the year-ago quarter. For 2Q/03, AmEx delinquency (30+ days) fell to 2.7%, while charge-offs declined to 5.4%. AmEx’s net interest yield declined sharply to 8.9%. Marketing and promotion expenses rose 18% from year-ago levels, primarily reflecting the continued expansion of card-acquisition programs. This is in addition to a 17% increase in marketing and promotion in the year-ago period. For complete details on AmEx’s second quarter performance as well as prior quarters visit CardData ([www.carddata.com][1]).

American Express U.S. Card Portfolio Snapshot
2Q/03 1Q/03 4Q/02 3Q/02 2Q/02 Ann Chng
Volume $64.6b 58.9b 62.9b 58.2b 58.7b +10.1%
Loans $36.0b 34.6b 34.3b 32.2b 31.6b +13.9%
Cards 35.7m 35.4m 35.1m 34.8m 34.8m +2.6%
Delinq* 2.7% 3.1% 3.1% 3.2% 3.1% -40 bps
Losses 5.4% 5.5% 5.5% 5.6% 6.2% -80 bps
Yield** 8.9% 9.4% 9.8% 9.7% 9.8% -90 bps
* 30+ days past due; ** net interest yield
Source: CardData (www.carddata.com)

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

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LA MTA Deploys New Cubic Ticketing Machines

The Los Angeles County MTA has gone live with Cubic’s new self-service, multi-language ticket vending machines on the new Metro Gold Line rail service, which opened over the weekend to serve commuters traveling between Los Angeles and Pasadena. The new Cubic vendors are part of the $84 million contract awarded by the MTA to the company last year for a new smart card-based automated fare collection system that will be operational throughout the city in 2005. The Universal Fare System equipment will link to a single smart card nearly all of Los Angeles County’s transportation services, including MTA subway, light rail, bus and bus rapid transit, as well as municipal bus operators, including Long Beach, Norwalk, Culver City, Torrance, Antelope Valley, Norwalk, Santa Clarita, Montebello and Foothill Transit, plus Metrolink, the county’s commuter rail operator.

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Charge-Offs Decline but Outlook Remains Challenged

Charge-offs, among credit card-backed securities, declined six basis points to 6.79% in June but remained 63 bps above the level of a year ago. Fitch says that despite the drop-off in charge-offs, consumers remain under pressure due to the economic landscape, performance is therefore expected to remain challenged over the near term and worsen later in the second half. Delinquencies declined five basis points in June to 3.49%, its third monthly decline. Bankruptcy filings fell 12.2% month over month in June to 130,242 declining for the third consecutive month. However, year-to-date bankruptcy filings are up 8.6% from the same period last year.

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