Humboldt Deal

Humboldt Bancorp announced that the sale of its proprietary merchant bankcard operations to iPayment Holdings, Inc., which was expected to take place at the end of August, has not yet closed. iPayment has declined to sign an amendment to extend the August 30 termination date of the agreement. However, iPayment and Humboldt are continuing efforts to close this transaction. Humboldt, at this point in time, can make no assurance that the transaction will close.

Humboldt’s proprietary merchant bankcard operations continue to provide a consistent and significant source of non-interest revenue, with minimal fraud losses. For the six months ended June 30, 2002, Humboldt recognized approximately $7.6 million in non-interest revenue from its proprietary merchant bankcard operation and incurred net fraud losses of $140,000.

Humboldt Bancorp, with total assets of $984 million, is headquartered in Roseville, California. Through its principal operating subsidiary, Humboldt Bank, it offers business and consumer banking services through 23 banking centers, principally in Northern California, including its Tehama Bank and Capitol Valley Bank divisions.

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Credit Scoring

The use of credit scores in determining home and auto insurance premiums is drawing some heat as the Michigan Attorney General demands a formal examination into its legality. The Attorney General says it is absolutely outrageous to think that Michigan consumers may be paying higher insurance premiums because they purchase a new home, switch balances on a credit card to save money, or even because of a careless mistake by a credit rating company. The use of credit scoring is not expressly permitted in Michigan’s Essential Insurance Act; however, insurers use section 2110a of the Act to use credit scores to determine insurance premiums through discount plans. Currently, 11 of the 15 largest auto insurance companies and 8 of the 21 largest homeowners insurance companies doing business in Michigan use credit scoring to help determine premiums. The Attorney General says insurers frequently obtain credit scores from third-party companies that are not regulated by either federal or state law and whose formulas for determining scores are secret. Currently, the Attorney General is prohibited from taking legal action to protect consumers from credit scoring under the Michigan Consumer Protection Act due to the Smith v Globe Life decision.

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SmartPIN UK

Wilkinson, the U.K.’s leading home and garden improvement chain has announced plans to implement Trintech’s “PayWare SmartPIN” as part of a 2003 Northampton pilot and later as the backbone of a national smart card roll-out. Trintech is supplying PIN Pad terminals capable of reading international standard EMV chip cards and allow customers to authorize a transaction using a PIN number rather than a signature.

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Experian Expansion

Experian confirmed Thursday its acquisition of three affiliate credit bureaus, the first in a series of acquisitions to be completed over the next two to three years. The affiliate credit bureaus acquired by Experian include MA-based AQM Information Solutions; GA-based Credit Bureau of Dalton; and TN-based Credit Bureau of Kingsport. Experian’s network of 38 affiliate credit bureaus provide clients in specific geographic areas with a variety of services utilizing consumer credit, business, automotive and marketing information from Experian. The company says one of the benefits of this acquisition program is that once the affiliate is integrated, its business clients will have access to all Experian products and services including portfolio management, collections, scoring and a complete suite of fraud prevention solutions.

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SCM AWARD

Ismaning-based SCM Microsystems has been ranked 68th among Europe’s Top 500 emerging companies. The annual survey by GrowthPlus says SCM successfully met the award’s criteria for the fourth consecutive year based on corporate revenue growth and employment figures within Europe. The high-tech company received the elite award September 11, 2002. SCM’s advanced silicon, hardware and software solutions enable secure exchange of electronic information for digital applications from e-commerce to broadband content delivery by providing controlled access points to platforms such as PCs and digital television set-top boxes. Known as a premier supplier to OEM companies around the world, SCM also serves the retail market through its “Dazzle” brand.

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Diebold Postilion

Diebold and Mosaic Software inked a significant agreement whereby Diebold will market and sell Mosaic’s advanced ATM transaction processing software. The “Postilion” product will be licensed by Diebold for resale to provide an enhanced EFT solution to its North American customer base. The “Postilion” solution will handle ATM driving, switching, network management, settlement and reconciliation. The system also has a highly reliable, scalable and open architecture that permits easy implementation of new products and services at the customer’s ATMs, kiosks and other self-service devices. Mosaic says the strategic relationship with Diebold is “quite a vote of confidence” in Mosaic Software. Mosaic is held by strategic partners GE Equity, Comparex Holdings, and Mosaic management. Mosaic clients include 7-Eleven, E*Trade, Retail Decisions (UK), Transaction Network Services (UK), and NBS (SA).

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Vegas Deal

ERG Group has been awarded the contract to install a smart card based fare collection system for the Las Vegas Monorail Project. The Las Vegas monorail system is scheduled to be opened to the public in early 2004 and is expected to carry 19 million passengers in its first year of operation. The monorail will service 60,000 hotel rooms and the world’s largest convention centre. There will be seven new stations built in the first phase of the project and a further five stations will be included in an extension to be built in the near future. The system will cater for contactless smart cards as well as magnetic tickets for single journeys. In conjunction with the ticketing system, ERG has been contracted to install its central computer processing system. The total system will be capable of expansion into multiple applications for smart cards including electronic purse for casinos, security access and loyalty schemes. The monorail smart card scheme will also be able to be integrated with other transport modes such as the city’s bus network at a future date. The contract was awarded by Bombardier Transportation.

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Debit Class Action

The lead counsel of the plaintiffs in the “Wal-Mart Debit Card Lawsuit” announced yesterday it is mailing 7,657,888 notices to the merchants who are class members in the multi-billion dollar antitrust suit. New York City-based Constantine & Partners say the certified class consists of all persons and business entities that have accepted VISA and/or MasterCard credit cards and therefore have been required to accept Visa and/or MasterCard offline signature debit transactions from October 25, 1992 to the present. The law firm says it is seeking damages to compensate merchants for being forced to accept more than $1 trillion in “slow, fraud-prone, inferior offline signature debit transactions at anticompetitively high and fixed prices during the last decade.” An average of 760,000 notices are being mailed daily between September 9 and September 19, and class notice also will appear in major national publications September 12 through October 14. The lawsuit, filed six years ago by retailers, challenges VISA and MasterCard’s enforcement of their “Honor All Cards” rule. If the merchants prevail, VISA and MasterCard will face significant class damages of approximately $13-$15 billion, which could be tripled under antitrust laws. The trial is scheduled to begin April 28, 2003, in U.S. District Court for the Eastern District of New York before Judge John Gleeson. (CF Library 4/402; 6/6/02; 6/11/02; 6/26/02)

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PIN or Sign

Americans appear to be equally divided on their preferences when using a VISA or MasterCard-branded debit card to make purchases. About 52% of consumers say they prefer to sign for debit card purchases instead of using a PIN, according to an informal poll conducted this month on CardWeb.com. However in an earlier poll, 52% of Americans said merchants should not have the right to require you to use a PIN when making purchases with your VISA or MasterCard debit card. Interestingly, more than 56% of consumers indicated they do not know if the cost to the merchant for accepting VISA and MasterCard debit cards is the same whether you use your PIN or your signature. Approximately 1,000 consumers participated in the current and previous polls conducted on CardWeb.com’s homepage.

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