Bank One 4Q/02

Bank One reported that fourth quarter credit card net income declined 2% to $321 million, due primarily to margin compression produced by the highly competitive pricing environment where no annual fee and 0% APR offers continue to flood the market. Total revenue for 4Q/02 was $2.0 billion, a 2% increase, but net interest income declined 5% to $1.5 billion. EOY 2002 outstandings hit $74.0 billion, an increase of $5.8 billion, or 9% over year-ago levels. Bank One opened 1.3 million new accounts during the quarter. Charge volume was $43.5 billion, an increase of $5.2 billion, or 14%, over the prior year and $4.0 billion, or 10%, over the prior quarter. Net charge-offs, as a percentage of average managed loans, were 5.13% for the fourth quarter, down from 5.59% in 4Q/01. The 30-day delinquency ratio was 4.02%, down from 4.46% in the prior year and 4.05% in the prior quarter. Paymentech, the Company’s merchant card processor, also experienced strong growth as total revenues increased 18%, driven by a 19% increase in bank card volume and a 21% increase in total transactions. Bank One also reported a 2% increase in debit cards issued from 4,565,000 one year ago to 4,647,000 for 4Q/02. For complete details on Bank One’s 4Q/02 performance visit CardData ([www.carddata.com][1]).

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

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Canadian Tire Petroleum Deploys Now Prepay Phone Card Terminals

SchlumbergerSema has been selected by ZETES to provide the operating
system and secure modules for the upcoming “Belgian Personal Identity
Card.” The BelPIC is the first large-scale deployment of electronic
identity cards in Europe. Approximately 11 million cards will be produced
and distributed to Belgian citizens over the next five years, with an
initial phase covering 11 municipalities spread throughout the country, due
to begin in the 2nd quarter of 2003.

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OwnerTel Debit Card

Tampa-based OwnerTel has launched its “OwnerTel Debit Card,” a stored value card that also serves as a pre-paid calling card with a unique company stock ownership awards program. The OwnerTel Debit Card can be used for purchases at millions of retail locations worldwide. In addition, consumers have instant availability of their money through the largest ATM Networks in the world. Consumers can make card-to-card cash transfers online which eliminates the need to wire money. Funds available through these transfers are automatically converted into the local currency.

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Experian Stickman

Experian Consumer Direct has rolled out a new “Stickman” TV commercial, created by The Response Shop and produced by Auster Productions, to promote its FreeCreditReport.com service. This winter, viewers will see Stickman get married, be surprised by a visit from the family stork, and learn how good credit can help protect his new, rather large family. The spot will begin airing on network and cable television stations in January.

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Super Bowl XXXVII

Fair Issac is buying its first Super Bowl commercial this year to promote its credit score service to consumers. The 30-second commercial, which is reportedly scheduled for the fourth quarter, will cost more than $2.2 million. The TV spot which will promote myfico.com is being produced by MN-based Space 150. ABC says it has sold more than 90% of the Super Bowl slots as of today. Meanwhile VISA, a prime NFL sponsor, has scheduled two commercials for next week’s Super Bowl XXXVII. American Express is also expected to air some commercials before or during the Super Bowl. MasterCard and Discover, however, like last year’s event, have not committed to running ads in this year’s event.

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Sears Canada Receives Government Approval for its New Bank Subsidiary

California-based ACCPAC International, a subsidiary of Computer Associates
International, has acquired all the assets of Toronto-based AGS Software,
including the POS software developed by AGS. The POS application offers
extensive storefront automation, an intuitive web-based interface and
support for multi-site operations. An addition to ACCPAC’s suite of
end-to-end business management applications, the
product is fully integrated with ACCPAC “Advantage Series” accounting
software. The product will be marketed as ACCPAC “ePOS.”

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Card Bonds 2003

U.S. credit card asset-backed securities issuance should grow about 5% and exceed $70 billion this year. Standard & Poor’s said this morning that growth partially reflects the large quantity of refinancings associated with maturing securitizations. S&P projects that refinancings of receivable portfolios backing maturing securities should total roughly $54.2 billion compared to $51.6 billion in 2002. Last year, there were no new players entering the ABS credit card market and very few subprime issuers participated. With many households focused on balancing their budget and consumer spending projected to grow 2.5%, expectations are that, in 2003, receivables growth will be slow as well. During 2002, both Bank One and CapitalOne adopted the new de-linked master trust technology. They now join Citibank and MBNA as the large frequent issuers who use this new structure as their primary issuance vehicle. The new structure improves issuers’ flexibility and ability to respond to potential investors’ reverse inquiries, and allows these banks to issue larger blocks of subordinated triple-‘B’ ERISA-eligible notes without having to sell senior classes at the same time.

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Sears 4Q/02

Sears, Roebuck and Co. reported this morning that fourth quarter domestic credit revenues increased 4.4% from a year ago, to $1.4 billion due to higher average receivable balances. The “Sears Gold MasterCard” segment hit $12.3 billion in outstandings, compared to $5.3 billion one year ago. Revenues for credit services was $1.5 billion for 4Q/02, a 4.1% increase over 4Q/01. Overall credit card outstandings at EOY 2002 hit $30.8 billion, an 11.5% increase. The overall net charge-off rate for the fourth quarter increased to 5.40% from 5.23% last year primarily due to increased customer bankruptcy filings over last year. Delinquencies for the quarter increased to 7.69% compared to 7.58% last year. The domestic provision for uncollectible accounts increased by $160 million or 40.9% over last year’s period due to higher charge-offs and a $150 million increase to the allowance for uncollectible accounts. The allowance increase reflects the growth in “Sears Gold MasterCard” receivables, as well as increases in the net charge-off rate and delinquencies. The charge-off rate for the “Gold MasterCard” segment was 6.36% for 4Q/02 compared to 5.77% one year ago. For complete details on Sears’ 4Q/02 performance visit CardData ([www.carddata.com][1]).

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

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VIP Preferred Card

Global Payments reported yesterday that more than 85 gaming establishments and 500,000 cardholders currently use its “VIP Preferred Card” cash access products. The VIP Preferred Card offers gaming establishments the ability to reduce the risk associated with cashing checks, as well as improve the potential for increased revenue. Global Payments’ VIP Preferred proprietary software provides the gaming industry with the ability to quickly establish consumer revolving check-cashing limits, while reducing the risk associated with the cashing of checks. The service also allows consumers the convenience of gaining fast access to cash.

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Shift4 Adds the Processing of Canadian Debit PIN Pad Transactions

Ireland-based FreeStar Technologies has acquired Helsinki-based Rahaxi
Processing Oy. Under terms of the agreement, provides for FreeStar to make
incremental cash payments of $4.3 million to the Rahaxi’s owners over the
course of 13 months. In addition, Rahaxi’s owners are entitled to receive
10% of the net profits generated by Rahaxi for the next year.

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National City 4Q/02

National City reported a 4.7% increase in credit card outstandings for the fourth quarter, from $2,203,055,593 for 4Q/01 to $2,307,403,461. Charge-offs, on a managed basis, edged up from the previous quarter, due to seasonal increase in losses, but remained below year-ago levels. National City reported a 4Q/02 charge-off rate of 5.69%, compared to 5.12% in the previous quarter, and 5.22% for 4Q/01. Charge volume was up 7.5%, from $1.2 billion for 4Q/01 to $1.3 billion for the latest quarter. After three quarters of declining growth in its account base, National City added 18,544 net new accounts for 4Q/02 for total accounts of 1,692,356. The issuer’s active account rate is running at 63.9% of total accounts. At the end of 2002, National City had 1,363,917 cards-in-force. For complete details on National City’s 4Q/02 performance visit CardData ([www.carddata.com][1]).

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

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CIBC Launches Verified by Visa via Cyota and TSYS to Entire Portfolio

Groupement des Cartes Bancaires CB has selected Sagem to develop a new
generation of bank cards: “CB/EMV/DDA.” Besides an EMV application, the new
bankcard will also allow for other applications such as loyalty, electronic
signature and electronic purse. The new smart card will also contain a
cryptoprocessor, which uses “Dynamic Data Authentication” to make every
transaction unique. Currently there are in excess of 45 million CB cards in
circulation, and the CB banking community plans to issue the new CB/EMV/DDA
card as of 2004.

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