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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Do Not Call Registry Approaches 30 Million

The FTC reported that a total of 28.7 million telephone numbers have been registered in the National Do Not Call Registry as of yesterday morning. Eighty percent of those registrations have been made on the Internet, and 5.7 million or 20 percent via the telephone. Registrants should experience less telemarketing calls starting October 1, 2003, with the exception of calls from political fundraisers, charitable solicitations and survey calls which are exempted from the Registry.

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eFunds Hires Outsourcing Execs

eFunds has hired Atul Kunwar, former COO of Syntel, as managing director and also hired Tom Klein, former CEO of SalesFirst Outsourcing, as VP of sales. Prior to Syntel, Mr. Kunwar served as CEO of Bharti BT Internet, and previously held senior executive positions at 3Com India and HCL. Mr. Kunwar will be based in Mumbai, India, where eFunds operates two call center facilities, and will be responsible for managing the day-to-day activities of all worldwide outsourcing operations. At SalesFirst Outsourcing Co., Mr. Klein founded and built a web based sales management software system for optimizing sales performance. Mr. Klein will serve as vice president of sales, Global Outsourcing Solutions division at eFunds with responsibility for all global outsourcing sales initiatives.

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Fair Isaac Buys NAREX for $10MM

Fair Isaac is acquiring CO-based NAREX, a specialist in analytic solutions for collections and recovery, for $10 million cash. Fair Isaac says NAREX’s solutions and expertise will give the Company the added ability to drive businesses’ late-stage collection and recovery strategies. The NAREX operation will continue to operate from its Golden, CO, location under the Fair Isaac name, operating within Fair Isaac’s Global Account Management Solutions division. Using artificial intelligence-based, proprietary technologies, NAREX builds custom and non-custom scoring solutions, optimization models, debt evaluation services, and other offerings to improve collections and recovery results. In 2002, NAREX introduced “UniScore,” a complete Web-based score package that prioritizes accounts for optimum recovery performance.

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Bankrate Profits Up 152%

Bankrate reported that net income increased 152% in the second quarter to $2.5 million on revenues of $9.6 million. This is the seventh consecutive profitable quarter as a result of increased advertiser demand and positive traffic patterns. Net income for the first six months of 2003 increased 168% to a record $4.5 million. Total revenue for the six months ended June 30, 2003 rose 53% to $18.1 million from $11.8 million in the same period in 2002.

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CRESERC

Hitachi, Mitsubishi Electric, and NTT have launched a new encryption technology for secure and efficient implementation of an elliptic curve cryptosystem. The new encryption called “CRESERC” is the world’s first case of well-established leaders in the field of cryptography collaborating in the development of implementation technology by integrating their advanced skills and technologies. In March, the EU approved “NESSIE 5,” a project to select the next-generation cryptographic algorithms. They selected “Camellia” 6 jointly developed by Mitsubishi Electric and NTT, “MISTY1” 7 by Mitsubishi Electric, and “PSEC-KEM” 8 by NTT as recommended algorithms. Meanwhile, the ISO has been promoting the standardization of encryption goals by the Spring of 2004 at the earliest. In their deliberations, they have nominated not only “Camellia”, “MISTY1”, “PSEC-KEM” but also “MULTI-S01” 9 and “MUGI” 10 by Hitachi for international encryption standards. In addition, they have also been selected as recommended cryptographic algorithms by CRYPTREC: the cryptography evaluation project for e-governance by MPHPT (Ministry of Public Management, Home Affairs, Posts and Telecommunications) and METI (Ministry of Economy, Trade and Industry).

FULL STORY:

Hitachi, Ltd., Mitsubishi Electric Corporation, and Nippon Telegraph and
Telephone Corporation hereafter, Hitachi, Mitsubishi Electric
and NTT, respectively, announced their success in mutually researching and
developing an implementation technology of an elliptic curve cryptosystem
(ECDSA signature) 1. They named the technology “CRESERC”. To establish
this technology, Hitachi, Mitsubishi Electric and NTT founded a project
team to research and develop a secure and efficient implementation for
elliptic curve cryptosystem (ECDSA signature). This is the world’s first
case of well-established leaders in the field of cryptography
collaborating in the development of implementation technology by
integrating their advanced skills and technologies.

Background to the Joint R&D

To realize e-governance 2 and the ubiquitous 3 environment listed in
“e-Japan Priority Policy Program”, there is a pressing need to establish a
fundamental technology to realize a truly secure communication
environment, and to support the advanced information sharing society.
Encryption and electronic authentication 4 are central to this technology.

“Secure and efficient implementation technology” is a vital R&D goal for
achieving practical use. However, R&D has been faced with a trade-off
between “security” and “efficiency”. Therefore, Hitachi, Mitsubishi
Electric and NTT launched the joint project and now they have succeeded in
developing an implementation technology with the world™fs strongest
security level while matching the efficiency of the existing products in
the market.

In March 2003, EU (European Union) approved NESSIE 5, a project to select
the next-generation cryptographic algorithms. They selected “Camellia” 6
jointly developed by Mitsubishi Electric and NTT, “MISTY1” 7 by Mitsubishi
Electric, and “PSEC-KEM” 8 by NTT as recommended algorithms. Meanwhile,
ISO (International Organization for Standardization) has been promoting
the standardization of encryption goals by the Spring of 2004 at the
earliest. In their deliberations, they have nominated not only
“Camellia”, “MISTY1”, “PSEC-KEM” but also “MULTI-S01” 9 and “MUGI” 10 by
Hitachi for international encryption standards. In addition, they have
also been selected as recommended cryptographic algorithms by CRYPTREC:
the cryptography evaluation project for e-governance by MPHPT (Ministry of
Public Management, Home Affairs, Posts and Telecommunications) and METI
(Ministry of Economy, Trade and Industry).

Since the late 1990’s, the U.S. and Japanese governments, EU and ISO, have
actively promoted these encryption algorithm validation, selection, and
standardization activities. They are now being almost completed, and the
cryptographic algorithms that will be widely used in the first half of the
21st century are being listed up. The above Japanese cryptographic
algorithm’s excellent efficiency and their high commercial viability (LSI
implementation) are highly regarded throughout these activities and it is
likely that one or more of these Japanese company’s algorithms will be
widely used. Currently, ISO and CRYPTREC recognize that they need to
emphasize “secure implementation”, and they plan to establish the
corresponding validation criteria and validation standards.

As concern over “secure implementation of cryptosystems” increases,
“CRESERC” is expected to be set into various application areas that
require information security (for example, e-governance and ubiquitous
communication systems) as the world’s leading implementation technology in
the field.

Roles of the 3 Companies

Hitachi, Mitsubishi Electric and NTT mutually carried out this joint R&D
by sharing their preeminent technology on the basis of their shared
advantage: the mathematical theory of elliptic curve cryptosystems. Their
roles are as follows:

Hitachi: secure implementation technology of elliptic curve
operations
Mitsubishi Electric: efficient implementation technology of elliptic curve
operations
NTT: efficient and secure implementation technology of basic
arithmetic

Future Plan

These three companies plan to launch products incorporating each company’s
preeminent technology in e-governance system and ubiquitous-related
security products based on their joint R&D results, namely “CRESERC”.

Terminology

1. Elliptic curve cryptosystem: Public key cryptosystems utilizing the
mathematical operations over elliptic curves. They can encrypt the data
using short key lengths at high efficiency while maintaining the high
level of security, thus it is receiving attention as the new generation
public key cryptosystems that can replace RSA schemes. ECDSA (Elliptic
Curve Digital Signature Algorithm) is a digital signature algorithm based
on elliptic curve cryptosystems; it has been selected by NESSIE and
CRYPTREC as one of the recommended signature schemes.

2. e-governance: A governance support tool that allow various tasks
including administration to be executed electrically by utilizing computer
systems and Internet technology.

3. Ubiquitous: Derived from Latin meaning “exists everywhere”. It means
the environment where user can access information network like the
Internet at any time from everywhere.

4. Electronic authentication: A technology to realize seals and seal
certificates in the electronic world by utilizing electronic signatures
and public key certificates (electronic certificates).

5. NESSIE (New European Schemes for Signatures, Integrity, and Encryption)
EU approved project to select the next-generation cryptographic schemes
started in 2000 and completed in the beginning of this year.

6. Camellia: 128 bit block encryption algorithm jointly developed by
Mitsubishi Electric and NTT. Specifications are already disclosed and
published.

7. MISTY1: 64 bit block encryption algorithm developed by Mitsubishi
Electric. Specifications are already disclosed and published.

8. PSEC-KEM: A public key encryption algorithm developed by NTT.
Specifications are already disclosed and published.

9. MULTI-S01: 256 bit key length stream encryption algorithm developed by
Hitachi. Specifications are already disclosed and published.

10. MUGI: 128 bit key length stream encryption algorithm developed by
Hitachi. Specifications are already disclosed and published.

About Mitsubishi Electric Corporation

With over 80 years of experience in providing reliable, high-quality
products to both corporate clients and general consumers all over the
world, Mitsubishi Electric Corporation (TSE: 6503) is a recognized world
leader in the manufacture, marketing and sales of electrical and
electronic equipment used in information processing and communications,
space development and satellite communications, consumer electronics,
industrial technology, energy, transportation and building equipment. The
company has operations in 35 countries and recorded consolidated group
sales of 3,639 billion yen (US$30.3 billion) in the year ended March 31,
2003.

About Hitachi, Ltd.

Hitachi, Ltd. (TSE: 6501 / NYSE: HIT) headquartered in Tokyo, Japan, is a
leading global electronics company, with approximately 320,000 employees
worldwide. Fiscal 2001 (ended March 31, 2002) consolidated sales totaled
7,994 billion yen ($60.1 billion). The company offers a wide range of
systems, products and services in market sectors, including information
systems, electronic devices, power and industrial systems, consumer
products, materials and financial services.

About NTT

NTT (TSE: 6472)is a holding company of the Global Information Sharing
Enterprise Group and NTT group, which consists more than 430 companies.
One of the important missions of NTT group is to contribute the
achievement of a Ubiquitous Broadband society. NTT group concentrates on
integrating the group on expanding Broadband Service on Photonic Access,
Third Generation Cellular Phone, Wireless LAN, are provided for Access
means, promoting the structure of distributing the contents of Movies and
music, and enhance the providing contents.In November 2002, the
Vision for a new optical generation is announced.

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