INFRARED PAYMENTS

A new pilot to test an infrared credit card payment service in Tokyo using DoCoMo mobile phones with IrDA ports is being launched in June. VISA International, Nippon Shinpan, OMC Card, AEON Credit, and, NTT DoCoMo have teamed for the project. The pilot will have two phases. In the first phase, Nippon Shinpan and DoCoMo will focus on technical evaluations of the service, including communication formats, payment methods and user operability. Nippon Shinpan will select 3,000 VISA cardholders and provide infrared-payment terminals to about 500 merchants. In the second phase, which begins this autumn, OMC Card and AEON Credit Service will join the pilot program to recruit more users and expand the range of participating merchants, bringing the pilot program closer to full commercialization. The pilot leverages a DoCoMo “i-áppli” application for payments based on the “VISA Proximity Payments Messaging Specification”. Credit card data is downloaded and then stored in the DoCoMo “504i” and “504iS” mobile phones. There are about eight million owners of DoCoMo “504i” and “504iS” mobile phones which are standard-equipped with an IrDA port to exchange information with other IrDA-equipped devices via an infrared signal.

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Card Rescue

The Financial Supervisory Service of South Korea says major companies and banks have agreed to raise approximately $3.6 billion to fend off potential bankruptcy in their credit card subsidiaries. Also, government-run Korea Asset Management plans to buy between $4 billion and $5 billion worth of bad credit card loans. The card problems were first reported on March 18 by The RAM Report ([www.ramreport.com][1]). The Korean credit card industry has been hit hard by an economic crisis as well as an accounting scandal at SK Global. SK allegedly inflated its 2002 earnings by $1.2 billion. The FSS reported that card payments, 30+ days overdue, increased 23% to $6.3 billion in January from $5.1 billion in December. Credit card issuers lost a total of $207 million in 2002. In January, credit card losses topped $326 million. The Ministry of Finance and Economy, the Financial Supervisory Service, and the Bank of Korea said it will also require credit card companies to reduce operating expenses and boost capital. Some card issuers have indicated they will reduce grace periods from 40 days to 25 days, and drop zero percent interest rate offers. Kookmin Credit Card announced a 20% reduction in its workforce. Korean Exchange Bank Credit Services also plans to cut 20% of its workforce. Samsung Card and Hyundai Card said they will gradually reduce their number of employees.

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

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AMERBANK & SANCHEZ

Warsaw-based Bank Amerykanski w Polsce has licensed the “Sanchez Profile” integrated banking platform through ComputerLand. “Sanchez Profile” is an online, multi-currency core processing system that supports real-time interfaces to third-party lending and payment systems and legacy system components. Each bank branch will be networked to the bank’s operations facility, using “Sanchez Profile for Windows” as the front-end customer-
servicing platform; “Sanchez FMS” for general ledger, financial reporting, and other financial management activities; and “Sanchez CRM” for real-time, single-view customer relationship management.

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CYOTA & HBOS

HBOS Card Services has selected Cyota to provide “MasterCard SecureCode”
and “Verified by Visa” security services to its five million cardholders.
HBOS is the first issuer in the UK to announce a commercial service of this
kind. HBOS Card Services will host its service at Cyota’s local facility in
London. Currently six of the world’s top ten issuers are already initiating
“3D Secure” programs, five of which have selected Cyota as their provider.
Cyota services multiple clients in North America, Europe and Asia-Pacific
with systems currently available to over 300 million cardholders.

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February Rebound

Consumer revolving credit continued its rebound in February, growing at an annual rate of 9.0% compared to 2.2% one year ago. Americans added $5.4 billion to revolving credit in February, compared to $2.6 billion in February 2001. In January revolving credit increased at an annual rate of 5.5%, compared to 1.8% one year ago. The unusual surge in consumer revolving credit for the first two months of 2003 was preceded by a 1.4% drop in November and a 6.7% decline in December. Bank credit card debt at the end of the fourth quarter was $660.9 billion or roughly 93% of total revolving credit, according to CardData (www.carddata.com). According to the government figures released Monday, American consumers were $1.740 trillion in debt, exclusive of home mortgages during February. Overall, consumer credit increased 1.0% in February.

REVOLVING CREDIT HISTORICAL
($billions)
Feb 03 Jan 03 Dec 02 Nov 02 Oct 02 Sep 02 Aug 02
GRWTH: 9.0% 5.5 -6.7 -1.4% 1.6 3.0 6.2
$OWED: $721.1 715.7 712.4 716.8 717.9 721.3 719.5

Jul 02 Jun 02 May 02 Apr02 Mar 02 Feb 02 Jan 02
GRWTH: 8.9% 6.0 4.1 8.0 4.8 2.2 1.8
$OWED: $717.4 715.6 712.1 708.7 705.4 705.0 702.4

Source: Federal Reserve; revised figures as of 04/07/03;

For complete historical data visit CardData (www.carddata.com).

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MAGIC DEAL

Desjardins has inked a deal with Schlumberger Smart Cards and Terminals
for a multi-million dollar project for POS terminals incorporating the
“MagIC 9000” product family. The multi-application “MagIC 9000” terminal
can serve as a stand-alone payment terminal and be integrated with third
party software. It can also house gift certificate and loyalty applications
for the service provider. The common platform allows for portability of
applications throughout different products and services, and the wireless
application increases the speed of time to-market for the customers’
businesses. Desjardins will target the terminals at retail stores,
restaurants, theaters, gas stations and transit operators.

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Taking Stock

Alliance Data Systems and Limited Brands announced they intend to sell 2 million and 7 million shares, respectively, of Alliance Data stock. The net proceeds to Alliance Data plus other available funds will be used to repay $52 million of 10% subordinated notes to an affiliate of Welsh, Carson, Anderson & Stowe, Alliance Data’s largest stockholder.Alliance Data manages over 72 million consumer relationships. (CF Library 1/30/03)

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Alliance AuthExpress

Patrick Townsend & Associates has released Alliance AuthExpress, a new IBM AS/400 and iSeries application that provides an affordable, scalable, and manageable platform for the authorization of credit and debit cards, gift and stored value cards, and for the verification of checks. AuthExpress allows your organization to start out with a small volume of transactions and grow to a large volume without changing your authorization software.

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Infrared Pilot

A new pilot to test an infrared credit card payment service in Tokyo using DoCoMo mobile phones with IrDA ports is being launched in June. VISA International, Nippon Shinpan, OMC Card, AEON Credit, and, NTT DoCoMo have teamed for the project. In the first phase, Nippon Shinpan will select 3,000 VISA cardholders and provide infrared-payment terminals to about 500 merchants. In the second phase, which begins this autumn, OMC Card and AEON Credit Service will join the pilot program to recruit more users and expand the range of participating merchants, bringing the pilot program closer to full commercialization. The pilot leverages a DoCoMo i-áppli application for payments based on the VISA Proximity Payments Messaging Specification. Credit card data is downloaded and then stored in the DoCoMo “504i” and “504iS” mobile phones. There are about eight million owners of DoCoMo “504i” and “504iS” mobile phones which are standard-equipped with an IrDA port to exchange information with other IrDA-equipped devices via an infrared signal.

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GM 4-Play

The pioneer of co-branded rewards-based bank credit cards continues to deliver solid results more than 11 years after its launch. General Motors and Household Bank announced yesterday the “GM MasterCard” recently passed the 4 million mark in new GM vehicle redemptions. GM says the “GM MasterCard” is used in about 12% to 14% of GMs retail transactions, and that in 2002 card redemptions delivered the equivalent of more than 2.5 points of market share for the auto manufacturer. As of January 2003, there were 6.9 million GM cardholders. To celebrate the 4 million redemption mark, GM announced that it awarded $4,000 in bonus GM Card Earnings to four cardholders on April 4th. The “GM MasterCard” was launched in September 1992 and offers five percent earnings on every credit card purchase that can be used to purchase or lease new GM cars, trucks and SUVs. The card was the most successful credit card product launch ever, producing three million cardholders and $2 billion in balances in its first three months.

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