OBERTHUR 2002

Oberthur Card Systems returned to profitability in the second half of last
year. Oberthur says it cut debt by 40% last year, and is now positioned for
increased profitability in 2003. In 2002, all smart card segments kept on
growing in volumes, with 689 million units delivered versus 599 million the
previous year, showing a 15% increase. On a full year basis, Oberthur
delivered 99.1 million smart cards in 2002, an increase of 8.4% over 2001.
However the average selling price dropped by 16.7% in 2002. The payment
market accounted for 54% of Oberthur sales in 2002 (versus 52% in 2001) due
to its strong positions in both the United Kingdom and Benelux smart card
migration programs and in the French banking card renewal program.

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OMNI 3600

The project launched earlier this year between VeriFone, Visanet, and JV Telesp Celular Particpipações/ Telefônica Celular, which placed terminals at restaurants and shopping malls in and around São Paulo is scoring success. VeriFone Brazil has now announced that the “Omni 3600” terminal used in the project has become the first wireless terminal in the world to support cellular technology utilizing Qualcomm’s “CDMA2000 1X.”This new capability allows traditional transactions to be completed in less than 3 seconds, considerably faster than the 20 plus seconds for a regular debit or credit transaction. This solution expands the reach of payments to taxis, delivery companies, mobile kiosks, table payments, and traditional retails outlets. The terminal can communicate to WAP-enabled Internet home pages, consult on inventory position, electronically transmit order information and perform a host of other functions not typical of traditional POS terminals.

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Airline Problems

While U.S. Airways is expected today to emerge from the bankruptcy it filed seven months ago, American Airlines may begin its Chapter 11 bankruptcy process this week. In other bad news, United Airlines is being de-listed this week from the NYSE as the possibility of a liquidation rises. The Iraq war coupled with growing concerns about the spread of SARS via airline cabins is having a devastating effect on the airline industry. Frequent flyers who accumulate air miles via co-branded credit cards or loyalty cards, may find their air miles saved in bankruptcy but difficult to redeem on a shrinking number of flights. The U.S. government advised travelers last week to avoid Asian destinations, even passing through places such as Singapore and Hong Kong due to SARS.

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AmEx Cards

American Express reported Friday that new products it launched last year attracted nearly 500,000 new cards issued. The September introduction of the “Rewards Green” and the “Rewards Gold” charge cards along with the earlier introduction of “Cash Rebate Card” fueled the growth. AmEx says that rewards-based products have very favorable economics in terms of cardholder attrition, credit and payment performance. The new “Rewards Green” and “Rewards Gold” cards offer automatic enrollment in the “Membership Rewards” program and double points for purchases at supermarkets, gas stations, drugstores, and home improvement stores. The cards carry annual fees ranging from $65 to $130. The “Cash Rebate Card” for U.S. consumers carries no annual fee and offers up to five percent cash back, based on the cardholder’s annual spending and payment activity. AmEx currently has 35.1 million cardholders in the USA, according to CardData ([www.carddata.com][1]).

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

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VISA EU

Europeans generated 8.2 billion VISA POS transactions last year with volume of $538 billion, an increase of 13.3% and 14.3%, respectively. Including cash withdrawals, VISA’s 2002 gross volume in Europe hit $844 billion in 11.2 billion transactions, a 14.8% increase. Retail sales using a VISA card now account for almost 9% of personal consumer expenditure in Europe. The number of VISA cards issued in Europe increased 8.8% to 211.7 million, including 34.7 million EMV smart cards. Debit transactions at POS grew to euro 304.8 billion, a 13.8% increase. VISA also noted that e-Commerce sales in the last quarter of 2002 were up over 100% compared to the previous year-end.

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Intelli-Check Funding

Intelli-Check, Inc. announced that it has completed a $3 million private placement consisting of 30,000 shares of 8% Convertible Preferred Stock at $100 per share to Gryphon Master Fund LP of Dallas, Texas. Frank Mandelbaum, Chairman and CEO of Intelli-Check, said the financing was completed on favorable terms for the Company and its shareholders, with total potential dilution of approximately 6%.

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MBNA Fees

MBNA reported Friday that its customers paid 30% more in credit card fees, and that its interchange or merchant fee income increased 19% last year. MBNA also said it will increase the required minimum monthly payment amounts for its credit card accounts in the USA during the fourth quarter. Credit card fees collected by the nation’s second largest issuer, topped $385 million, compared to $295 million for 2001, and $290 million for 2000. MBNA says the increase in cardholder fees would have been nearly 36% if the change in the estimated value of accrued interest and fees is excluded. Credit card fees include annual, late, over-limit, returned check, cash advance, express payment, and other miscellaneous fees. Meanwhile, interchange income increased $56.5 million to $357.4 million in 2002 from 2001. Interchange income increased $14.8 million to $301.0 million in 2001 from 2000. Interchange is a fee paid by a merchant bank to the card-issuing bank through the VISA and MasterCard interchange network as compensation for risk, grace period, and other operating costs. MBNA says the increase in interchange income was directly related to the increase in credit card volume. MBNA’s volume increased from $142 billion to $160 billion in 2002, or 12.7%, according to CardData ([www.carddata.com][1]).

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

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