SMART GOLF CARD

Toronto-based KESM Transaction Solutions is launching a smart card loyalty program for golf
using a Catuity loyalty application and Banksys POS terminals. The program also allows
accumulated “yards” to be redeemed for merchandise, refreshments, supplies or facility use.
Additionally, members receive a weekly email with Divot Deals, offers like “double yards” at
specific courses or invitations to local tournaments, as two examples. Members can access
their program details for each of the 18 courses at a secure link on the Fore! Honors web
site.

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Card Shame

San Francisco-based Consumer Action said this morning it has uncovered a sinkhole of anti-consumer practices by credit card issuers, including tiny minimum monthly payments, outrageous late fees, and significantly higher penalty rates. The non-profit consumer group, which surveyed 143 credit cards, says the most egregious credit card practice is raising existing cardholders rates because of their poor credit record with other creditors, even if the cardholder has made no late payments or other missteps with the card in question. Consumer Action says it believes this practice violates the spirit of the Truth-in-Lending Act’s notice requirements. The consumer group says it calls on regulators and lawmakers to look into credit card punitive pricing policies. Consumer Action also found that one-fifth of surveyed issuers have shifted to tiered late payment fees, and that more than one-third of surveyed institutions will not provide a firm APR until they have screened the applicants credit history. The Consumer Action data shows the average APR on all cards was 12.19% and the average annual fee was $35.67.

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FINREAD KIT

Versailles-based Trusted Logic and US-based Wave Systems have developed a “FINREAD”
specification software application development kit. “FINREAD” (Financial Transactional IC Card
Reader), led by Groupement des Cartes Bancaires (France), along with SIZ (Germany), Banksys
(Belgium), Interpay (The Netherlands), Europay, VISA and others, establishes standards and
specifications for smart card readers and advanced e-commerce terminals used in home banking,
shopping and other services for the deployment of interoperable, secure smart card terminals
for European Union countries. Wave and Trusted Logic are demonstrating an application
development environment for the secure execution of finlets, the secure executables that are
based on FINREAD specifications. Wave’s hardware-based, open, programmable EMBASSY technology
embeds trust and security in user devices, enabling strong authentication, and reliable,
secure digital exchange and commerce. EMBASSY technology is ideally suited to applications
such as FINREAD where secure tamper resistant execution, tight integration with smart cards,
and secure input and output services are required.

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ONLINE PURCHASES

The eighth annual ACNielsen study of Canadians and the Internet found
that 41% of Internet users made an online purchase in 2002 – up from 37% in
2001. However, the study also found that more than four of every five Internet
users (81%) expressed some concern over making credit card payments online,
with 51% saying they are “very concerned” – up from 44% in 2001. Sixty-eight percent of
Canadians used the Internet in 2002 – up from 67%
in 2001. Men were more likely to have made an online purchase than women (45%
vs. 38%). However, when comparing last year’s results with 2001, women are
closing the gap with a faster growth rate than men.
While Internet usage grew among all age groups, the fastest-growing
Internet user age segments were people 20-24 (up 10% vs. 2001) and people 65
and older (up 9% vs. 2001).

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Card Sectors

After outpacing the rest of the industry for the past five years, the sub-prime segment has become the worst performing credit card market segment. Meanwhile, the co-branding sector has recaptured its luster, and credit unions continue to turn in solid numbers. Based on EOY 2002 data gathered by CardData (www.carddata.com), the co-branding sector grew 9% last year with an average balance of $2,704 and year-to-date volume of $5,262 per active account. The average balance per active account for the sub-prime segment was $1,886 with annual volume of $1,824 per active account. Sub-prime balances decline 1% last year, on average. Credit Unions delivered an average balance of $2,811 and an annual charge volume of $5,678 per active account. For example, cardholders at Boeing Employees Credit Union charged an average of $7,806 last year, compared to Capital One’s $2,636.

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FIFA UEFA CONMEBOL

MasterCard International has renewed its sponsorship of international
soccer’s five most prestigious events. The events include the “2006 FIFA
World Cup” in Germany, “2004 UEFA European Football Championship” in
Portugal, “UEFA Champions League” (through 2006), “2004 CONMEBOL Copa
America,” and “2003 Copa Toyota Libertadores.” As an official sponsor of
these five major properties, MasterCard’s exclusivity as the official
payment system includes all real and/or virtual payment and/or account
access systems (including credit cards, charge cards, ATM cards and
networks, and travelers cheques). In addition to the high-profile
properties, MasterCard has also enjoyed a long-standing relationship with
soccer great Pele. Pele has made over 150 appearances worldwide in six
regions on behalf of the company, helping spur the issuance of more than 2
million FIFA World Cup-themed affinity cards bearing his
likeness. Furthermore, MasterCard and its member financial institutions
have utilized Pele in over 20 million cardholder inserts, mailings and
promotional collateral materials.

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MC SMS

MasterCard International has launched a service to help its members take advantage of short message service text messaging. MasterCard says it worked with a number of European members last year on marketing campaigns that experienced response rates approaching 10%, thanks to SMS. The new “MasterCard SMS” program also includes “code-of-practice” which provides guidelines and protection for the consumer, focusing on such key areas as obtaining permission from cardholders, agreeing message delivery times and types of text-messages, e.g. alerts/information/coupons. The first SMS based marketing campaign linked to MasterCard took place in Poland, where despite only 30% mobile penetration in the country, 360 million SMS messages are sent on average every month. Last Spring, eleven banks linked up with MasterCard Poland to organize a competition for Champion League football prizes. To compete, Maestro and MasterCard cardholders had to send an SMS with contact details following a purchase. More than 25,000 cardholders participated. So successful was the campaign that a similar version was run in November and December, linked to the MasterCard Priceless campaign with holiday prizes. The holiday promotion attracted 55,000 cardholders. MasterCard says future SMS messages might include getting a discount in a store just by showing the message on your mobile phone to the sales clerk.

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Fiserv EFT/CNS

WI-based Fiserv has combined the operations of Fiserv EFT and Consumer Network Services to become the second largest third-party processor of EFT transactions nationwide. The new Fiserv EFT/CNS unit will continue to operate two main offices in Oregon New Jersey. Grant Christenson, formerly President of Fiserv EFT, is CEO of the new unit, and Tony Catalfano, formerly Director of CNS, is President and COO. The new organization will have 4,000 clients (direct and indirect). The new unti will drive 17,500 ATMs, proces approximately 320 million transactions monthly.

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Direct Payments

The Federal Reserve and the Electronic Payments Network will collaborate, for the first time, on a national advertising campaign to promote the benefits of direct deposit and direct payment to consumers. The advertising, to be launched in May, will feature a people doing things they enjoy with their families and friends rather than waiting in line to deposit paychecks or sitting at home paying bills. A print campaign will run in national magazines, Sunday newspaper magazines, metropolitan city magazines, and newspapers. A national radio advertising campaign will also be launched. The campaign is being administered by NACHA.

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IDT 4Q/02

NJ-based IDT Corporation reported this week that revenues for the quarter ending January 31st were $450.8 million, a 20.5% increase over the prior year quarter. The net loss for the quarter narrowed from $17.2 million last year to $12.5 million. Calling card revenues amounted to $268.6 million for the quarter, 8.4% more than the year-ago quarter. Gross margins for calling cards were 20.7% in the quarter, versus 21.6% one year ago. In the middle of the quarter, IDT entered into an agreement with Walgreen to become the exclusive provider of Walgreen’s prepaid calling cards. The cards were rolled out to the retail chain’s 4,000 stores during December and January. For complete details on IDT’s latest performance visit CardData (www.carddata.com).

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