Smart Switch

Switch announced this morning it will launch a smart card pilot in Northampton, UK that will eventually reach 30 million “Switch” and “Solo” cardholders. Meanwhile, the migration of “Switch” cards to “Maestro” cards continues in the UK as more cards now display the “Maestro” symbol on the front of the card rather than on the back. MasterCard and Switch reached an agreement in August 2002 to migrate the “Switch” debit card brand to the “Maestro” brand in the UK. The migration will be completed by mid-2007. Switch process 1.3 billion transactions a year and an annual spend of over £45 billion. The “Maestro” brand mark now appears on over 505 million cards worldwide and is accepted for purchases at over seven million merchant terminals in 93 countries and territories.

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Spiegel Sales

The Spiegel Group reported yesterday that its retail sales declined during March as a result of its decision to stop accepting the Eddie Bauer, Newport News and Spiegel Catalog credit cards. Spiegel says net sales of $157.8 million for the five weeks ended March 29th, were off by 28% compared to one year ago. In early March Spiegel ceased honoring the private-label credit cards issued by First Consumers National Bank to customers of its merchant companies (Eddie Bauer, Newport News and Spiegel Catalog). Spiegel says it is actively seeking a third-party credit provider to finance and service receivables generated from these new cards. The Spiegel Group filed for a “Chapter 11 Reorganization” on March 17th. (CF Library 3/11/03; 3/12/03; 3/18/03)

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MASTERCARD E-P3

MasterCard this week launched the first electronic payment and information management service fully integrated with the its “Corporate Purchasing Card” product. The new “e-P3” service, which runs on the Xign platform, automatically links electronic purchase orders, invoices, receipt of goods, and other transaction documents with purchasing card transactions. “e-P3” enables “Level III” data to be exchanged electronically between buyers and suppliers with every single transaction by leveraging the MasterCard “Global Data Repository.” Online reporting of transaction data is available through MasterCard “Smart Data OnLine.” For suppliers, enrollment in MasterCard “e-P3” can be completed over the Internet with any Web browser. The first “e-P3” adopters include Memorial Sloan-Kettering Cancer Center with its “JPMorgan Chase MasterCard Corporate Purchasing Card” and Pantellos with its “Citibank MasterCard Corporate Purchasing Card” programs.

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Hypercom Award

Frost & Sullivan awarded Hypercom Corporation the prestigious 2003 Market Engineering Company of the Year Award – for the second year running. Despite last year’s uncertain global economy, Hypercom outpaced all competitors with its strong and unmatched combination of industry leading technology and focus, dedication and commitment to top-line growth and customer satisfaction.

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EUROPEAN PLATFORM

PayStar, a prepaid card specialist, announced that its “SHS’ View 1.4 Advantage” proprietary server platform has now been adapted for Europe. The new software enables SHS’ European customers to use their standard E1s on both the spans that they are using for traffic and for the VRUs spans. By not having to use E1’s for traffic and T1’s for VRUs, the Excel switch now has the capacity for 80 spans instead of limited to only 64. The “SHS View 1.4 Advantage” platform has the intelligence to identify calls that are originating from payphones or cell phones, which have different cost structures.

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FDC 1Q/03

First Data this morning reported 15% revenue growth in the first quarter to $2.0 billion and a 20% increase in net income to $293 million. The Card Issuing Services division posted a 16% increase in revenues to $524 million, however, operating profits were off 10% to $76 million as a result of the decline in the sub-prime segment. The Merchant Services unit grew revenue 12% for the first quarter to $697 million. Operating profits rose 8% to $154 million. Merchant processing transactions grew 23%. The Payment Services business, comprised largely of Western Union, achieved first quarter revenue growth of 19% to $853 million. Profit margins improved to 33% from 32% a year ago, and operating profits were $281 million, a 22% increase over first quarter 2002. Prepaid services transactions grew 43%. For complete details on FDC’s 1Q/03 peformance visit CardData ([www.carddata.com][1]).

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

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FREESTAR DEAL

Helsinki-based FreeStar Processing Oy has inked a merchant processing agreement with The Online Ticket Shop.com Limited. The UK provider of corporate hospitality and ticketing will process between US$1 million and US$4 million in online credit card transactions of its UK operation through FreeStar. The Online Ticket Shop.com will be able to settle in Dollars, Euros and Pounds Sterling. The deal is effective April 15th.

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CardData 1Q/03

Early results for the first quarter continue to show a mixed bag. In reports filed this week, SunTrust posted a solid gain while others reported little if any change from one year ago.

Outstandings Survey Sampler
ISSUER 1Q/03 1Q/02 Change
Penna State Employees CU $195.7 m $195.6 m NC
SunTrust Bankcard $121.0 m $ 93.6 m +29.3%
Zions Bancorporation $115.7 m $114.4 m +1.1%
Travis FCU $ 75.0 m $ 76.8 m -2.3%
m-million Source: CardData (www.carddata.com)

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IST/CLEARING

Toronto-based Oasis Technology has released “IST/Clearing” to enable
processors to manage transaction clearing through payment networks and private
member agreements. “IST/Clearing” gives processors the ability to qualify
transactions for the lowest available interchange rates, helping to increase
settlement values and reduce financial loss due to incorrect transaction
qualification. The new Oasis software also captures full transaction details to help
reduce the cost and frequency of chargebacks. In addition to IST/Clearing,
Oasis recently added an integrated case management system to increase the
efficiency of the entire exceptions management process.

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ACE Loses CFO

ACE Cash Express, Inc., the nation’s largest check-cashing chain and a significant provider of related retail financial services, announced that Joe W. Conner, Senior Vice President and Chief Financial Officer, has resigned, effective April 18, 2003, to become the Chief Operating Officer of Silverleaf Resorts, a public company headquartered in Dallas, Texas, that specializes in vacation and country club membership in quality resorts.

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Issuers & DMPS

A new report released yesterday found that the business practices of credit card issuers are contributing to a crisis in the credit counseling industry. The report by The National Consumer Law Center and Consumer Federation of America says that most creditors are becoming increasingly unwilling to reduce interest rates for consumers who enter debt management programs, waive fees, or re-age accounts. In the last four years, five of 13 major credit card issuers have increased the interest rate they offer to consumers in DMPs (Bank One/First USA, Discover, Chase Manhattan, Fleet and Wells Fargo). Only two creditors, Providian and Capital One, have lowered rates during the same period, however, Capital One’s interest rate remains relatively high at 15.9%. Sears, which generally charges interest rates above 20%, continues to refuse to negotiate any discount. Bank of America, on the other hand, will completely eliminate interest for consumers in a DMP. The NCLC/CFA also found other differences among credit card issuers and DMPs. For example, American Express refuses to re-age accounts under any circumstances and Capital One will not waive or reduce late fees or over-limit fees under a DMP.

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