SOSPITA E-GATE

Mandal-based Sospita has signed an agreement with SchlumbergerSema to
jointly provide the software industry with a high security smart card
license protection solution.The combined solution will employ the Sospita
security hardware license protection solution along with the new
“SchlumbergerSema e-gate” token to decrypt parts of the digital content in
real-time, allowing a level of security far above anything that exists
today. The secret keys protecting the content will be held within the
tamper-proof e-gate device and not on the hard disk, making the task of
hacking the software extremely difficult. Industry analysts say that 37% of
software is pirated on average worldwide each year. In China the piracy
rate is over 90%. The software protection market in China is currently
doubling annually and growth rates are high in Asia and other emerging
countries where piracy is a serious problem.

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Top Ten Charge-Offs

Charge-offs among the top ten U.S. VISA/MasterCard issuers rose 55 basis points during the fourth quarter, ending the year at a level 129 basis points above the EOY 2001. However, discounting the impact of the sub-prime portfolios of Metris and Providian, the charge-off rate among the nation’s top issuers is only up a modest 23 bps. Furthermore discounting the impact of Capital One, which has between a 35% and 40% exposure to sub-prime, would make the charge-off rate among the top issuers flat since 4Q/01. The rapid deterioration in the sub-prime portfolios of Metris and Providian has been nothing less than stunning. Metris losses are up 640 bps over last year and Providian’s loss rate has climbed 464 bps. Capital One experienced a 179 bps rise in charge-offs since 4Q/01. Meanwhile, Citigroup, Bank One, and Fleet reported declines in their credit card loss rates. For 4Q/02, Discover reported a charge-off rate of 5.96%, compared to 6.02% in the previous quarter, and 5.85% one year ago. For American Express, losses slowed from 5.6% in 3Q/02 to 5.50% in the fourth quarter. During 4Q/01, American Express experienced a charge-off rate of 5.90%. For historical data on charge-offs visit CardData ([www.carddata.com][1]).

TOP TEN VISA/MC ISSUER CHARGE-OFFS
4Q/02 3Q/02 2Q/02 1Q/02 4Q/01 ANN CHNG
1. Citigroup: 5.85% 5.86% 6.50% 6.41% 5.91% – 6 bps
2. MBNA: 5.04% 4.84% 5.09% 5.00% 4.86% + 18 bps
3. Bank One: 5.13% 5.00% 5.62% 5.69% 5.59% – 46 bps
4. Chase: 5.75% 5.59% 6.41% 5.82% 5.56% + 19 bps
5. Cap One: 6.21% 4.96% 4.98% 4.70% 4.42% + 179 bps
6. Providian: 17.34% 16.71% 17.53% 15.05% 12.70% + 464 bps
7. BofA: 4.99% 5.13% 5.59% 5.43% 4.90% + 9 bps
8. Household: 6.98% 6.81% 7.54% 7.17% 6.69% + 29 bps
9. Fleet: 5.16% 5.25% 5.81% 5.42% 5.38% – 22 bps
10. Metris: 18.20% 15.10% 15.00% 13.00% 11.80% + 640 bps
AVERAGE: 8.07% 7.52% 8.01% 7.37% 6.78% + 129 bps
Source: CardData (www.carddata.com)

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

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FDC & ClearCommerce

First Data says it will offer ClearCommerce’s online payment and risk management platform to its alliance channels, building on an agreement to use ClearCommerce’s software to power its “LinkPoint Secure Payment Gateway”. The new agreement will extend that offering as the LinkPoint gateway is rolled out to First Data’s channel partners and clients that use First Data’s transaction processing services.

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BIOMETRIC PURCHASES

Sao Paulo-based CTF Technologies do Brasil Ltda. has introduced a
fingerprint biometric reader to control the authorization for refueling at
CTF-enabled highway refueling depots. The new process will eliminate the
need for cash advances, cheques, credit cards or any other freight card to
be issued to contract drivers by fleet owners subscribing to the CTF –
FRETE system. CTF Technologies owns and operates the CTF refueling system,
which is an advanced computerized management system for the transportation
industry that controls refueling and credit authorization through two of
Brazil’s largest private banks, Banco Bradesco
and Unibanco. Initially, only stations operated by Cia. Ipiranga de
Petroleo will participate in this program. CTF has exclusive agreements
with both Ipiranga and Petrobras Distribuidora, Brazil’s largest fuel
distributor,
which together deliver over 50% of the total fuel sold in Brazil.

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Humboldt Deal

Humboldt Bank has entered into a definitive agreement for the sale of its proprietary merchant processing operations to an affiliate of First National Bank Holding Company. Under the terms of the agreement, Humboldt Bank will receive $32 million in cash, and expects to recognize an after-tax gain on sale during the first quarter of approximately $18 million. The transaction is expected to be completed by March 15th. Humboldt will continue to provide card sponsorship processing for two ISOs. However, these agreements mature over the next 13 months and the bank does not expect to renew these agreements or to enter into any new ISO processing agreements. In October, Humboldt Bancorp terminated a deal to sell its proprietary merchant bankcard operations to Nashville-based iPayment Holdings. (CF Library 10/8/02)

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Credit Bureau Lawsuit

TransUnion and Equifax have agreed to reach a settlement in a class-action lawsuit involving bankruptcy notations made in consumer credit files. Experian has already finalized a settlement. The lawsuit grew from South Carolina case wherein a consumer was unable to get a car loan because of a bankruptcy notation in his credit file. The man had co-signed a loan for his son-in-law, who later filed for bankruptcy. The case was heard on January 17th, at which time Experian offered its settlement. U.S. District Judge Margaret Seymour has set a preliminary settlement conference for next Tuesday.

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Choice Hotels Promotion

Choice Hotels International is launching a triple miles promotion for Feb 15th thru Apr 30th for members of American Airlines “AAdvantage,” Delta Air Lines “SkyMiles,” Northwest Airlines “WorldPerks,” United “Mileage Plus,” US Airways “Dividend Miles,” and, Southwest Airlines “Rapid Rewards.” The triple miles/credit promotion is supported by a multi-million dollar advertising campaign to air on cable networks and throughout the NCAA “March Madness” tournament, airing March 15 through April 5 on CBS. Print advertisements are slated to run in national publications such as USA TODAY.

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Desert Schools FCU & Voyager 3.0

AZ-based Desert Schools Federal Credit Union has expanded its relationship with Corillian by licensing the latest version of Corillian’s “Voyager” Internet banking platform, “Corillian Voyager 3.0”. Corillian Voyager 3.0 will provide Desert Schools’ more than 225,000 members with enhanced Internet banking, bill payment capabilities and a new look and feel to Desert Schools’ “ePAL” online banking service at https://epal.desertschools.org/. Desert Schools also licensed the Corillian Business Finance Suite to provide innovative Internet banking services to its small business banking members.

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Algonquin Travel & UATP

Universal Air Travel Plan confimed the successful launch of its
pilot program which allows direct acceptance of UATP accounts by travel
agencies. Ottawa-based Algonquin Travel is the pilot program’s first
participant. Algonquin began accepting and processing UATP transactions
in December. UATP is working with a limited number of corporate agencies
around the world to launch the program and plans aggressive expansion
throughout 2003. Universal Air Travel Plan, formerly known as “Air Travel Card,” is the
world’s first corporate travel payment system. The plan has more than US$7
billion in annual billings.

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eFunds Executives

AZ-based eFunds has hired Kevin Reager, formerly with Bank of America, as SVP/Division Executive, eFunds ATM Solutions; Mike Feliciano, formerly with NYCE, as SVP/Division Executive, eFunds EFT Solutions; and, Tommy Andrews, formerly with FleetCor, SVP, eFunds Corporate Development. These appointments complete eFunds’ reorganization to a business division model around eFunds’ four core lines of business, EFT Solutions, ATM Solutions, Risk Management Solutions and Outsourcing Solutions, which began in December 2002.

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Fifth Third Bank Free Bill Pay

MI-based Fifth Third Bank has upgraded its on-line banking product to provide free Internet bill payment. Fifth Third’s new internet banking portal allows customers to create, customize and store a payee list by choosing from a roster of common payees, like the local phone, utility and water companies as well as personal payees, such as credit cards, loan accounts and more.

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ADS & 7-Eleven

7-Eleven and Alliance Data Systems have teamed to launch two stored-value programs. ADS will provide stored value and loyalty marketing services for 7-Eleven’s “Vcom” card and the “7-Eleven Convenience Card.” Vcom is 7-Eleven stores’ proprietary, self-service machine that offers ATM capabilities, enabling customers to conduct ATM transactions, purchase money orders and money transfers, and, cash checks. 7-Eleven plans to install Vcom kiosks in 1,000 of its stores by the end of May and, based upon the kiosks’ performance, the company could deploy an additional 2,500 kiosks in its stores starting in late 2003. Under a six-year agreement, ADS will support the prepaid “Vcom” card which allows customers to use the stored value for most purchases within the store and at the gasoline pump. In a separate three-year agreement, ADS will provide stored-value services for the new “7-Eleven Convenience Card” for sale beginning this month at participating 7-Eleven stores around the country. The “Convenience Card” is re-loadable and includes a corresponding key-chain card.

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