E-Billing Projections

Consumer adoption of Internet-based billing and payment applications continues to increase, as 22% of the U.S. adult population will be using these applications by the end of 2002, up from 16% percent in 2001. The research, conducted by Gartner, also projects that by the end of 2005, the number of consumers using online account management and e-billing applications will have grown to 45% of the U.S. adult population. Gartner says credit-card issuers are the most savvy of marketers and the most advanced in customer service. Applications in which consumers interact directly with billers have earned at least 20 times the adoption of the recent bill-consolidator model that requires consumers to change normal interaction patterns. Gartner analysts said that consumers prefer viewing and paying their e-bills directly at biller Web sites rather than registering for a consolidated model at their bank’s (or other service provider’s) Web site, where they can only receive two or three of their major bills. Credit card issuers and telecommunications companies have been the most aggressive in developing e-billing Web sites and developing customer service functionality around them.

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CMS Signs The North West Company

San Francisco-based Credit Management Services has signed The North West Company, which operates 176 food and general merchandise stores in northern Canada and Alaska, as a client to use CMS’ credit card application solution to support its private label credit card business. CMS provides a powerful application solution that helps credit card providers (retailers, banks, financial institutions, private label and co-branded credit providers) become more competitive. CMS’ proven solution offers strategic advantages to corporate credit programs.

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Travel Holdouts

The economic uncertainty continues to impact consumer travel. Nearly 80% of respondents to a Hotwire survey said they have yet to book December holiday travel, with 61% planning to put off the task until at least November. Additionally, 23% plan to wait until the last minute, saying they won’t book December travel until after Thanksgiving. At the same time, 57% of those planning to purchase December holiday travel say they want to be careful about how much they spend on holiday travel this year, citing concerns about the economy as the reason they plan to spend less. Hotwire says U.S. flying capacity is down at least 10% from last year. This means airlines are flying with fewer open seats and charging higher fares.

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TSYS & 5Star Bank

5Star Bank has signed a 5-year renewal agreement with TSYS for consumer and commercial card account processing for 5Star’s 200,000 card portfolio. 5Star Bank, with $215 million in assets and $100 million of credit card loans under management, is a niche provider of depository and credit card services to its customer base, including members of its parent company, Armed Forces Benefit Association (AFBA).

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TeleCheck Jamaican Deal

Grace, Kennedy Remittance Services has agreed to market TeleCheck check acceptance services to its affiliate companies and other merchants in Jamaica. It will further enable the cross-selling of Western Union and TeleCheck services to a broad range of merchants in Jamaica through GKRS’s extensive network of subsidiaries, affiliates and other merchant contacts. By using TeleCheck’s industry leading database of check-writer information, GKRS affiliate and merchant clients will be able to reduce check fraud when accepting payment at the point of sale or providing check cashing services on U.S. drawn checks.

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PROJECT VENLO

The NSW Commercial Crime Unit this week shutdown payment card acceptance
at five petrol stations in Sydney due to card skimming. The action is part
of “Project Venlo” which launched in July. According to the NSW Police, the
petrol stations where swiping cards through a card skimmer and then
transferring the magnetic stripe data to another card. The latest group
also set up cameras to watch customers enter PINs. The five petrol stations
netted approximately A$100,000. Since Project Venlo was launched more than
a dozen merchants in Sydney’s western suburbs and inner west have lost
their EFT/POS and credit card terminals.

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Total Security Protection

Bank of America launched a “Total Security Protection” package for its credit cards and debit cards. BofA says the new cardholder package is one of its most significant consumer brand initiatives for this year, supported by a $26 million national advertising campaign as well as a consumer education promotion including free educational materials. The “Total Security Protection” package features six cardholder benefits including a new “Guaranteed Credit” feature. If a customer’s card is lost or stolen, the bank guarantees credit to the cardholder’s account by the end of the next business day in the event of unauthorized card transactions. Other features of the “Total Security Protection” package include: zero liability for any unauthorized card transactions reported within 60 days from statement date; fraud monitoring based on transaction patterns; “Photo Security” which puts the cardholder’s picture and signature on the front of the card; “Verified by Visa” for online protection; and the “Bank of America Privacy Policy for Consumers.” BofA will kick off the advertising campaign featuring television commercials nationwide beginning on Oct. 14. Other marketing initiatives include radio, outdoor boards, mall advertising, point-of-purchase and direct mail. Additionally, an advertising campaign targeting Hispanic consumers will kick off on Oct. 16.

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PRISM CONTRACT

ENIAC announced a sales and distribution agreement for Retail Decisions’
“PRISM” risk management products. Under the terms of the revenue-sharing
agreement, ENIAC will sell, install and support the full
suite of PRISM card fraud and merchant fraud detection solutions to its
financial services clients in Venezuela, Colombia and Puerto Rico. “PRISM”
uses self-learning neural network fraud detection models and
bank-specific rules-based technology to help card issuers and retailers
detect fraudulent transactions in real-time. The system compares each
transaction with historical account patterns and confirmed fraud
activity. When the transaction is deemed to be suspicious by the neural
network, or if the transaction matches one of the bank’s pre-defined fraud
detection criteria, it is routed to a fraud analyst for review.
In 2001, ReD processed more than 1 billion card transactions, stopping an
estimated $396 million in fraudulent purchases.

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CardData 3Q/02

As more results trickle in for the third quarter there is a noticeable contraction in outstandings while volume growth remains strong. The early results add some evidence that consumer credit card behaviors are tilting towards long-term debt moderation. It is expected that many of the nation’s top issuers will report a sluggish third quarter due to continued deterioration in consumer credit quality amidst debt aversion by consumers representing good credit risks. For real-time third quarter results visit CardData ([www.carddata.com][1]).

3Q/02 SNAPSHOT
(change versus 3Q/01)
ISSUER OUTSTANDINGS VOLUME
Boeing Employees CU $241,219,121 +0.6% $193,608,014 +11.0%
Golden 1 CU $152,471,875 -6.3% $101,763,837 +14.9%
Farm Bureau Bank $ 97,457,776 -0.6% $ 82,573,613 +59.7%
Broward Schools CU $ 51,644,270 -8.0% $ 5,303,790 + 3.9%
Anheuser Busch Emp CU $ 34,200,034 -1.2% $ 24,432,470 + 7.0%

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

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