LML 3Q/02

Vancouver-based LML Payment Systems reported that EBITDA for the quarter
ending September 30th was a loss of approximately $162,000, compared to an
EBITDA loss of approximately $1.2 million for the same quarter one year
ago. Revenues for the quarter were approximately $2.0 million, compared to
approximately $2.3 million for the year ago quarter, a decrease of
approximately 13%. The decrease was a result of a reduction in overall
returned check volume processed which was partially attributable to one of
its largest customers, which moved its primary check collections in-house,
and partially a result of softer consumer spending trends resulting in
lower check volumes. LML also provides selective routing of debit, credit
and EBT transactions to third party processors and banks for authorization
and settlement.

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DRFS ISO

Los Angeles-based Direct Response Financial Services has reached a three year agreement for Hughes & Kaye Products and Services to serve as its ISO. Under the terms of the agreement Hughes & Kaye will act as an independent sales organization to Direct Card Services and plans to deliver merchant card processing of approximately $150M in its first year to Direct Card Services.

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Experian Traffic

Experian Consumer Direct said this week that its family of Web sites continues to be one of the top resources for consumer credit information. Experian also says it now has 1.2 million subscribers to its premier credit monitoring service. According to comScore Media Metrix tracking, Experian attracted more than 9.7 million unique visitors in September compared to 922,000 for Equifax and 523,000 for TransUnion. Experian Consumer Direct was created this year when Experian combined CreditExpert, its consumer credit management group, with ConsumerInfo.com, the largest provider of online credit reports and other credit-related information to consumers. Experian Consumer Direct’s Internet properties include ConsumerInfo.com, CreditMatters.com, FreeCreditReport.com, QSpace.com and CreditExpert.com.

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USWD 3Q/02

U.S. Wireless Data reported an 83% increase in third quarter service revenue, with an overall 8% total revenue rise, and a 45% reduction in operating expenses compared to the same quarter last year. Net cash used in operating activities declined by 73% and the net loss declined by 61% compared to the same quarter last year. Revenue for the three months ended September 30th was $783,000, as compared to $722,000 for the same period in the prior year. Service revenue was derived primarily from the growing base of active sites that use the company’s proprietary Synapse service to process transactions. Net loss for the quarter totaled $1.76 million, compared to a net loss of $4.56 million for the corresponding quarter of the prior fiscal year. Wireless transactions processed for the third quarter were approximately 1,741,000, an increase of over 746,000, or 75%, from last year’s quarter. For complete details on USWD’s third quarter performance visit CardData ([www.carddata.com][1]).

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

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V/MC Respond

VISA said Thursday that Wal-Mart and the retailers in the debit card lawsuit are using the enormously costly and time-consuming mechanism of class action litigation and antitrust to solve a problem that does not exist and to prevent consumers from choosing how to pay at the checkout counter. MasterCard added that the documents released by the Court this week reflect that MasterCard has been a steadfast supporter of PIN-debit for the last decade and thus has contributed to the enormous growth of both PIN-debit transaction volume and the PIN-debit networks that process these transactions. VISA noted that Wal-Mart’s own studies at Sam’s Club, studies released for the first time in this case, shows that VISA generated significantly more income than cost, substantially increased traffic to the stores, increased membership renewals, and resulted in a recommendation that VISA be accepted by all Sam’s Club stores. VISA says signature debit actually is less expensive to the merchant than many other well-known payment cards, such as American Express, and only 25% of U.S. merchants in the class action actually accept PIN-based debit. MasterCard says the plaintiffs claim that MasterCard and VISA tried to prevent merchants from distinguishing between credit cards and debit cards, and they have therefore been unable to prompt consumers to use their PIN when paying with a debit card. However MasterCard says during the same week that Wal-Mart authorized their counsel to file a complaint making that allegation, Wal-Mart was training its cashiers, instructing them via a video that they can readily distinguish credit from debit, and prompt for PIN. MasterCard added that continuing Wal-Mart’s well-known history of discovery abuses, Wal-Mart initially claimed to have ‘lost’ this video. MasterCard also noted that an internal Payless document confirms that debit cards and credit cards are easy for merchants to distinguish, and testimony of a Sears executive admits that these cards are readily distinguishable. Both VISA and MasterCard agree the debit card lawsuit is more about lawyer fees, than merchant fees.

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Bankruptcy Reform

In a week of high-wire drama, the bankruptcy reform legislation looked dead-in-water yesterday afternoon but may get a second chance after House Republican leaders this morning dropped a controversial provision, and quickly passed it. The revised bill, which deletes the abortion clinic provision, now goes to the Senate. Yesterday, the House rejected the rule on the conference report to H.R. 333 by a vote of 172-243. The margin was provided by more than 90 House Republicans and pro-life Democrats opposed to the abortion clinic amendment. Also yesterday, the United States Conference of Catholic Bishops sent a letter to members of Congress, expressing concern that the abortion clinic language attacks the rights of peaceful pro-life protesters. The group stated that “the language will be used to take away the savings, homes and other property of low- and middle-income peaceful protesters to pay fines and the attorneys’ fees of their opponents.” Republicans have insisted the Democrats are to blame for the roller coaster ride over the legislations since they introduced the controversial abortion-related provision into the bankruptcy reform bill.

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V/MC Documents

Even though a trial date is five months away, the court of public opinion was in full session yesterday as attorneys representing VISA, MasterCard, and retailers tried to put the best spin on the release of thousands of sealed documents in the VISA and MasterCard debit card antitrust litigation. The lawsuit, filed in October 1996, by Sears Roebuck, Safeway, Circuit City, Wal-Mart, The Limited, three trade associations — the National Retail Federation, the International Mass Retail Association and the Food Marketing Institute — and 13 other large and small retailers, charges VISA and MasterCard with attempting to monopolize the debit transaction market and forcing merchants to accept offline debit transactions. Lloyd Constantine of Constantine & Partners, lead counsel for the merchants, said yesterday that the only substantial dispute now is what relief the court is likely to ultimately award against VISA and MasterCard. Constantine is confident merchants will prevail in light of the key legal issues already been decided against VISA and MasterCard in another antitrust case, which was partially won by the U.S. Government in October of 2001. In that case, the U.S. received all documents, depositions and the analysis of VISA and MasterCard’s conduct compiled by the merchants in their case, which was filed two years before the U.S. case. Steve Berman of Hagens Berman, another attorney leading the retailer’s debit card lawsuit, said they intend to prove that VISA and MasterCard conspired to create confusion among consumers about the difference between credit cards and debit cards, all intended to drive business through their “jack-legged system.” The documents were released in United States District Court in Brooklyn, New York. A trial is set for April 2003 before Judge John Gleeson.

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CALYPSO EUROPE

Transaction Network Services and Triton have teamed to form Calypso
EUROPE, a new Triton division that will enable ISOs to arrange an
end-to-end ATM management solution through just one point of contact.
Calypso and TNS have selected the Postilion software by Mosaic for their
EFT platform. Calypso was first created in 1999 as Canada’s first ATM
processor to deliver an ATM management and processing solution specifically
engineered for the Triton family of ATMs. Calypso EUROPE will offer a
turnkey package which incorporates processing, authorization, back-office
operations and settlement for many terminal types, including traditional
leased-line ATMs and dial-up off-premise ATMs.

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