Circle K Phone Cards

Circle K now offers convenience store customers a complete array of communication products just in time for the holiday gift-giving season.

In response to customer needs, Circle K now offers three pay-in-advance communications choices: prepaid long distance, prepaid wireless, and prepaid Internet.

The United States is seeing an explosion in prepaid, or pay-in-advance, communications. According to a Yankee Group 2000 study, the number of prepaid communications minutes purchased will explode from 3 billion per year in 1997 to over 40 billion in 2004.

The main reasons for this growth are: with prepaid communications, there is no credit check, contract, deposit, or age restriction; prepaid customers only pay for the time they use; and users know exactly what they’re going to spend — there’s no surprising bill at the end of the month. “Recently, we have seen an enormous jump in wireless phone usage by customers young and old, and the prepaid option is really taking hold. In fact, within the next three years, one out of every two wireless phone customers are expected to be prepaid,” said Keith Brand, senior category manager, telecommunications and electronic services, Phillips 66 Co., the owner of Circle K.

Circle K has led the way with a new wave of prepaid communication choices being made available across the country. For example, prepaid long distance cards give customers the added sense of security and the ability to manage their budget to the dime since they’re paying in advance rather than receiving a monthly bill. This is true for the prepaid wireless and prepaid Internet products as well.

“Circle K customers have really responded to our prepaid communications products, seeing Circle K as the headquarters for their pay-in-advance telecommunication needs,” added Brand. “And regardless of where our customers originally bought their Prepaid Wireless phones, they’re now coming to us for their refill time — simply because we’re more convenient.” Circle K features prepaid communication product lines available from reputable brand names including MCI, Cricket, AT&T Wireless, Verizon, Tracfone, Cingular, Alltel and Slingshot. And this December, just in time for the holidays, Circle K is offering a free $10 MCI Prepaid Long Distance card with any $20 Card purchase.

Customers can use the free phone card as a gift or keep it for themselves. Circle K is also offering $20 off on prepaid wireless phones from Cingular and AT&T.

Circle K is a registered trademark of Phillips 66 Co., a division of Phillips Petroleum Co. (NYSE:P) or its subsidiaries. Phillips is an integrated petroleum company with interests around the world.

Founded in Bartlesville, Okla., in 1917, the company had annual revenues of $21.2 billion for 2000. Phillips markets gasoline and convenience store products in the United States through a network of over 12,000 retail sites under the Phillips 66, Union 76, Circle K, Exxon, Mobil and Coastal brands.

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Euronet Sale

Euronet Worldwide confirmed Friday the sale of ‘DASH’ EFT network to ALLTEL Information Services. Under the terms of the agreement, Euronet may also continue to provide EFT processing services in the US. In a separate agreement, Euronet granted ALLTEL extensive license rights to Euronet’s ‘Integrated Transaction Management’ software system. ALLTEL previously worked with Euronet’s solutions through mutual clients and has developed interfaces to its retail delivery and back office systems for Euronet’s ‘ITM’ software engine for mutual clients.

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Olympic Vending

Kodak is deploying a total of 40 vending machines during the Salt Lake Games. The Olympic-themed devices are climate-controlled to ensure the film remains in optimum condition and will only accept debit or credit cards. Kodak is partnering with Maytag’s Dixie-Narco vending machine division and PA-based Stitch Networks to enable the vending machines to accept debit and credit cards. The devices are connected to the Internet and process transactions through network servers. Kodak began the vending machine program 18 months ago in selected test markets.

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ID CARD PROJECT

NEC has won a 1.6 billion yen (US$12.15 million) contract to build a
processing system for digitizing data on the 12 million smart ID cards issued
to-date by the government of Hong Kong. Under terms of the contract, the NEC
project for the Immigration Department is to be completed by the end of 2003.
The Hong Kong government plans to issue smart cards to all its citizens during
2003. The cards will initially be used for identification, customs, and tax
payments processes.

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SMART BUS CARDS

Beijing is gearing up to introduce smart cards on more than 100 bus routes by
June of this year. Since June 2001, Beijing Bus has deployed automatic
ticket machines for smart cards on more than 500 buses on 20 routes. The
contactless smart cards will eventually be used to pay for road tolls, taxis,
and subway transit. There are three providers of bus service in Beijing
including the state-owned Beijing Public Transport Corp, publicly listed
Beijing Bus Shareholding Co and Beijing Yuntong, a collective-ownership
company. The government is seeking to replace buses and deploy smart cards
well
ahead of the 2008 Olympics.

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ECHO Settlement

ECHO and First Preferred Bank reached a settlement with First Charter Bank last week in the Superior Court of the County of Los Angeles. The ‘Mutual Release and Settlement’ releases ECHO and First Preferred Bank from any other liability in connection with the merchant marketing and processing agreement with First Charter Bank entered into on June 25, 1994. ECHO terminated its processing agreement with First Charter Bank and filed a lawsuit on October 11, 2000 due to First Charter Bank’s failure to honor the terms of the agreement.

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mCash

NEXAGE, Inc. ([http://www.nexage.com][1]), an e-Business software and services company, announced the launch of mCash, a mobile and virtual payment card solution for Wireless Carriers, Banks and Merchants. Wireless customers can use their phones and mobile devices to pay online and offline (brick & mortar) merchants, vending and ticketing machines, and to other phone users. NEXAGE mCash micro payment system is highly secure, convenient and cost effective compared to other online payment systems currently available.

mCash is a high-volume secure virtual payment solution for traditional commerce, e-commerce and m-commerce transactions. It allows for one touch mobile payments over the Internet, in Retail Stores or at the Vending machines. It is a perfect solution for micro payments traditionally paid by cash. Wireless Carriers can offer mCash as a mobile payment solution to their customers. Grocery and convenience stores can use mCash system to issue virtual payment cards. This would allow them to reduce the time customers spend in line at the store and offer an alternate form of payment that is very cost effective. Banks can offer mCash service linked to customers’ bank accounts. This allows customers to use their mobile device to make payments anytime, anywhere and paves the way for new sources of income for service providers. mCash system operator would allow customers to open a deposit account. Customers will then access these accounts from their mobile phones and pay for various services in the same way they would use a regular payment card to pay with money withdrawn from their bank or credit card accounts. mCash platform allows the operator to facilitate, collect, process and clear payments and transactions between customers and merchants.

“NEXAGE is a technology innovator and payment expert and aims to re-engineer the electronic payment infrastructure to meet the changing requirements of the virtual world,” said Devkumar Gandhi, CEO of NEXAGE. “We expect Operators, Merchants and Customers to find the mCash payment option easy to use, convenient and highly cost effective,” he continued.

Service Scenarios

1. User walks to the ticketing booth at an event to purchase tickets. User scans the event price bar code using a bar code reader attached to the phone; mCash system verifies the account, the merchant and the amount, and issues credit after confirming with the user. On receiving the credit the Merchant system requests the ticketing machine to issue the tickets.

2. European traveler could make mCash payments to merchants in local currencies and keep replenishing their account in native currency. This allows cross border currency payments.

NEXAGE, Inc.

NEXAGE is an e-Business software and services company, focusing on developing and implementing Wireless, Internet, and E-commerce technologies and services for the Wireless Telecom, Finance and Healthcare industries. NEXAGE mCash is a mobile payment service network that consists of mCash network infrastructure and services provided to Merchants, Wireless Carriers, Businesses and Consumers.

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

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Jack Henry CRM

Jack Henry & Associates announced it has completed its purchase of Transcend Systems Group, Inc., a provider of customer relationship management software to community financial institutions. The transaction was a combination of cash and common stock and is expected to be immediately accretive to earnings.

Transcend Systems will continue to operate from its Sioux Falls, South Dakota offices as a subsidiary of Jack Henry & Associates, offering its affordable CRM solution, Relationship Explorer, to community financial institutions. Relationship Explorer is available to JKHY customers immediately. Separately, Jack Henry is developing a comprehensive and fully integrated CRM solution through a partnership with privately held ARGO Data Resource Corporation. This product is slated for release at the end of calendar 2002.

“One of the fastest growing technology applications in today’s market, CRM solutions provide data and tools for cross-selling customer tracking, sales management, incentive compensation, profitability analysis and customer satisfaction improvement processes,” said Terry W. Thompson, President. “The Transcend acquisition, coupled with our alliance with ARGO, will provide a full complement of CRM tools for all our customers. We believe CRM products will begin to contribute significantly to our revenues and profits next year (fiscal 2003), and expect they have the potential to contribute $100 million or more to our revenues in the next five to six years.”

Jack Henry & Associates, Inc. provides integrated computer systems and processes ATM and debit card transactions for banks and credit unions. Jack Henry markets and supports its systems throughout the United States and has over 2,800 customers nationwide. For additional information on Jack Henry, visit the company’s web site at [http://www.jackhenry.com][1].

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

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Datakey Gov Contract

Datakey Inc. announced a $1 million order from a U.S. government agency for Datakey smart cards, card readers and CIP client software. The initial order is expected to ship by the end of the first quarter of 2002 and is approximately 50 percent of the total expected order from the agency, with rollout to be completed during the next six months. Agency employees, contractors and other approved personnel will use Datakey smart card technology for secure facility and network access.

About Datakey Inc.

Datakey Inc. ( [http://www.datakey.com][1]) is a pioneer in developing smart card-based solutions for information security applications. Datakey smart card technology secures business-to-business e-commerce by:

— Safeguarding a user’s digital identity.

— Authenticating and controlling user access to enterprise networks, applications and resources.

— Protecting the integrity and privacy of data shared over corporate networks and the Internet.

Datakey solutions focus on the ease of deployment, use and management of smart cards in an enterprise for a wide range of logical and physical security applications — including password management, host authentication, Windows 2000 log-on, VPN access, web authorization, desktop security, corporate badge and building access, biometric integration, public key encryption, digital certificates and digital signatures.

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

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EZ Pay

IGT capped a year of demand for its EZ Pay Ticket System-equipped gaming machines with the first installations at casinos in Atlantic City, Colorado and Indiana. Additional installations of EZ Pay machines at casinos in Southern Nevada and Manitoba, Canada, brought the total installed base of the ticket-in ticket-out machines to more than 34,000 units in 58 locations worldwide.

Bally’s in Atlantic City became the first casino there to offer EZ Pay technology. Bally’s offers 54 of the machines, all video nickel games, and said it intends to convert up to 4,200 slots to the EZ Pay system, after the machines pass a 60- to 270-day test period by the Casino Control Commission. Park Place Entertainment, which owns Bally’s, plans to expand EZ Pay installations to its other Atlantic City casinos — Caesars, Claridge and Hilton — by the end of March.

“We’re very pleased with the progress EZ Pay technology is making in every gaming venue where it’s been introduced,” said Rich Pennington, IGT’s Senior Vice President of Product Management. “The response to ticket-in ticket-out technology has been positive from customers and casino operators, which include Park Place Entertainment properties and a host of others.”

Other December EZ Pay installations included:

— The new Green Valley Ranch casino in Henderson, Nev. — 2,000 machines connected to the EZ Pay System; — Forty machines at the Avi Casino in Laughlin, Nev., and 43 machines at Buffalo Bill’s in Primm, south of Las Vegas; — Sunset Station in Las Vegas — 361 machines; — Blue Chip casino in Indiana — 127 machines; — Isle of Capri in Colorado — 38 machines; — Two casino properties in Manitoba, each with 140 machines.

EZ Pay technology combines ticket printers with traditional machine hopper pays to improve the cashout function on a gaming machine. Casino operators can program a machine to pay a portion of its payout in coins and the rest as a ticket. That ticket can be redeemed or played in a variety of ways. It can be reinserted in other EZ Play machines, exchanged for cash at a casino cashier, cashed by casino floor attendants with wireless validation units, or even held by the player for use at a later time. The system can also be programmed to pay out tickets only, with the hopper as a backup.

IGT is a world leader in the design, development and manufacture of microprocessor-based gaming products and software systems in all jurisdictions where gaming is legal. For more information on International Game Technology, visit the company web site at [http://www.igt.com[.][1]][2]

[1]:
[2]: http://www.igt.com/

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Card Chart

The California Department of Financial Institutions announced this week it is offering a informational chart about minimum payments on credit cards on its Web Site. The ‘AB 865’ (Chapter 711, Statutes of 2001) requires a credit card issuer to provide cardholders information regarding the length of time it will take to pay off the balance due on an open-end credit card account. As part of ‘AB 865’, DFI was required to establish a detailed chart illustrating the approximate number of months, in addition to the approximate total cost, to repay an outstanding balance if the cardholder pays only the required minimum monthly payments.

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Portfolio Sales Dip

Less than 20 million bank credit card accounts changed ownership last year as the result of portfolio sales, compared to about 25 million accounts that changed hands in 2000. The average premiums paid for the portfolios sold during 2001 averaged 18.1%, down slightly from 18.5% for 2000, but still significantly higher than the 13.1% average premium paid in 1998. According to data complied by Thousand Oaks, CA-based R.K. Hammer, at least six proposed credit card deals were pulled from the market last year mostly for low-ball bids averaging about 10%. Hammer notes that regulators have declined to approve sales of sub-prime or secured portfolios, even those between well capitalized, willing buyers and sellers with signed definitive agreements. Portfolio credit quality will continue to impede portfolio sales during 2002. Hammer specializes in card portfolio valuations, fairness opinions and buy/sell/hold decisions.

PERFORMING PORTFOLIOS SALES
1986 1990 1995 1996 1997 1998 1999 2000 2001
Avg Weighted Premium: 20.4% 18.7% 20.7% 17.7% 13.2% 13.1% 16.4% 18.5% 18.1%
Minimum Premium Paid: 14.3% 7.0% 5.0% 0.0% N/A (30.0%) 3.0% 2.0% 3.0%
Maximum Premium Paid: 29.6% 27.0% 27.5% 23.0% 24.5% 25.2% 23.9% 27.8% 29.8%
Source: RK Hammer Investment Bankers (Thousand Oaks, CA)

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