MASTERCARD MID-YEAR

MasterCard reported that its cardholders produced more than 6.3 billion transactions in the first six months of 2002, generating gross dollar volume of $534.7 billion, an increase of 15.7% over the same period in 2001. Latin America was the fastest growing region with a 26.4% increase, while Europe posted the weakest growth of 11.9%. Growth in other MasterCard regions: the U.S. rose 16.8%; Asia/Pacific, 14.9%; South Asia, Middle East/Africa, 22.1%; and, Canada, 19%. GDV in Europe for the first six months of 2002 was $107.8 billion. The Asia Pacific region reported MasterCard GDV of $108.5 billion. The AP regional results were driven by strong MasterCard GDV growth in Korea (up 34.7%), Australia (up 13.8%) and Japan (up 13.7%) between the periods. In Canada, MasterCard GDV hit $14.9 billion. Latin America reported MasterCard GDV of $16.2 billion. In South Asia, Middle East/Africa, MasterCard GDV hit $3.5 billion, a 22.1% increase over last year. Strong purchase volume growth of almost 23%, strong cash volume growth rates
and a very strong GDV growth rate in South Africa fueled the region’s growth in the second quarter of 2002 compared to 2001.

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MasterCard Globally

Latin America was the fastest growing MasterCard region for the first half of this year, with a 26.4% increase, while Europe posted the weakest growth of 11.9%. Growth in other MasterCard regions include: Asia/Pacific, up 14.9%; South Asia, Middle East/Africa, up 22.1%; and, Canada, up 19%. Gross Dollar Volume in Europe for the first six months of 2002 was $107.8 billion. The Asia Pacific region reported MasterCard GDV of $108.5 billion. The AP regional results were driven by strong MasterCard GDV growth in Korea (up 34.7%), Australia (up 13.8%) and Japan (up 13.7%). In Canada, MasterCard GDV hit $14.9 billion. Latin America reported MasterCard GDV of $16.2 billion. In South Asia, Middle East/Africa, MasterCard GDV hit $3.5 billion, a 22.1% increase over last year. Globally, MasterCard produced GDV of $534.7 billion, an increase of 15.7% over the same period in 2001, excluding Cirrus and Maestro on-line debit activity.

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USIM SMART CARDS

SchlumbergerSema has signed a contract with Hutchison 3G UK Limited to supply USIM smart cards and provide training and support. The contract calls for SchlumbergerSema to deliver its “Usimera” cards to Hutchison 3G UK, as well as Hutchison Whampoa’s other 3G operations around the world. In May, Hutchison 3G awarded SchlumbergerSema a separate contract to provide consulting and project management expertise for the deployment of Hutchison 3G’s security platform. The 3G standard (agreed throughout Europe, Japan, China, and the rest of Asia) is formally known as UMTS (Universal Mobile Telecommunications System). It represents a global standard for third generation communication systems and is at the heart of the Hutchison 3G initiative. Hutchison Whampoa Limited holds a 65% stake in Hutchison 3G, the other major shareholders are NTT DoCoMo (20%) KPN Mobile (15%).

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Net Rewards

The battle to incent consumers to sign for debit card purchases instead of using a PIN, is picking up more steam. Yesterday PULSE EFT Association and MasterCard rolled-out the “Signature Points” program after a full year of development. The program will enable banks of all types and sizes the opportunity to offer their cardholders rewards for using their signature debit cards when making purchases. “Signature Points” can be redeemed for a variety of goods and services, including airline tickets, hotel rooms, rental cars, merchandise and gift certificates at popular retailers. Rollout of the program to PULSE member financial institutions is expected in the third quarter 2002. The PULSE program is only for MasterCard debit cardholders but will be released to “VISA Check Card” holders early next year. PULSE processed more than 84 million signature-based debit transactions, totaling 10% of PULSE’s volume.

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Australia Fee Battle

The attack on interchange fees in Australia continues to unfold. Next week the Payments System Board is expected to release its report on The Reserve Bank of Australia’s final proposal for credit and debit card reform. The Australian Financial Review says it is likely that the PSB will recommend a 30% reduction in interchange fees on transactions, the abolishment of restrictions on retailers surcharging for card payments and easy access to the card business for new competitors. The RBA credit card proposal involves changes to what are known as four-party payment systems such as MasterCard, Bankcard and VISA. Three-party payment systems such as American Express and Diner’s Club, which typically carry higher fees than four-party systems, are excluded from the proposal. Under the terms of the proposals unveiled on December 14, 2001, the RBA would regulate three key areas of four-party credit card systems: the setting of interchange fees, surcharging, and who can join the system. VISA and MasterCard say the proposal would significantly reduce interchange fees with the result that credit card issuers would be forced either to raise fees or reduce services to cardholders.

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@pos & Sport Chalet

Sport Chalet’s 26 retail stores throughout southern California and Nevada will deploy the @pos “iPOS 3100” terminals and “Crossvue” receipt retrieval services starting by the end of this year. Sport Chalet customers will be able to swipe their card through the iPOS 3100 and enter their PIN for debit payments, sign their name for credit transactions and see items being purchased.

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Tidel 2Q/02

Houston-based Tidel Technologies reported 2Q/02 revenues of $6.2 million, an increase of 30%, over 2Q/01. An increase in the shipment of ATM units accounted for the majority of the increase in revenues. A total of 1,004 ATM units were shipped in the quarter, representing a 53% increase over the 657 units shipped in the first quarter, and an increase of 51% over the 666 units shipped in the comparable quarter of the prior year. The increase was largely due to business with new customers, including some customers outside the USA. However, Tidel incurred a net loss of $1.0 million for the quarter, compared to a net loss of $16.4 million in the same quarter of 2001. Last year Tidel had to deal with the bankruptcy of PA-based Credit Card Center, its largest client at the time. For complete details on Tidel’s 2Q/02 performance visit CardData ([www.carddata.com][1]).

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

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Chinese ATM Deal

Beijing-based Bank of China has signed a US$20 million deal with NCR Corporation for ATMs. Under the agreement, NCR will provide Bank of China with Personas 86, Personas 84, Personas 74 and Personas 75 ATMs with enhanced self-service functions. BOC already has over 6,000 ATMs, and the intention is to add multiple units to its 13,000 points of service. NCR helped Bank of China install China’s very first online ATM in 1988 at the bank’s Shenzhen branch. Last month, China Construction Bank inked a US$14.4 million hardware and software deal with NCR. CCB will deploy NCR’s “Personas 84” and “Personas 86” ATMs across China. CCB currently has 8,000 ATMs deployed across China. NCR and CCB have a 12 year relationship. There are 50,000 ATMs total in China, according to The RAM Report ([www.ramreport.com][1])

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

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