OTI PLANT

OTI, announced
yesterday the opening of its new facilities covering an area of 4,000 square
meters at an investment of US$3.5 million on its existing site in Rosh Pina,
Israel. Mr. Ariel Sharon, Israel’s Prime Minister, was in attendance at the
opening ceremony held the evening of December 11 at the new building site.
The new building will support research and development, testing, and
manufacture of the company’s contactless microprocessor-based smart card
products, while the existing building will house the company’s global
management offices. OTI’s advanced security system, based on its patented
contactless microprocessor technology, was implemented in the new building.

The
system allows highly secure access control management including biometrics
authentication and was developed for a large variety of secured uses such as
airports terminals, governmental institutions, financial institutions and
other
secured buildings. The system was presented to and used by Prime Minister,
Mr.
Ariel Sharon during his visit at OTI’s new facilities. Located in Israel’s
Z.H.R Galilee Industrial Park, an industrial zone in the north of Israel, all
of OTI’s facilities have been ISO 9001 certified.

The company was honored to welcome Prime Minister Ariel Sharon, who attended
the opening to recognize OTI’s success in Israel and around the world. ”OTI
is
a significant contribution to the Israeli industry and represents Israel’s
human capital strength. It is encouraging to hear that 98% of OTI’s sales are
outside of Israel. May there be many more companies such as OTI in the
Israeli
industry” said Prime Minister of Israel, Mr. Ariel Sharon.

“The new facilities are a major expansion for the company,” said Oded Bashan,
President and CEO of OTI. “We now have the flexibility to adapt faster to the
needs of our customers and the market by designing and delivering the
high-quality products for which OTI is known worldwide”.

In the past year OTI has developed a series of innovative products, including
the Saturn Reader, capable of operating all ISO-standard contact and
contactless smart cards, and a SmartID sticker utilizing the EasyPark
system to
manage vehicle registration and parking permits already launched by the Tel
Aviv Municipality. The company expects to deliver new and innovative products
from the new facility in 2002.

About OTI

Established in 1990, OTI (On Track Innovations) designs and develops
contactless microprocessor-based smart card technology to address the needs
of
a wide variety of markets. Applications developed by OTI include product
solutions for mass transit, parking, gas management systems, loyalty schemes,
ID and secure campuses. OTI has regional offices in the US, Europe, Asia
Pacific, and Africa to market and support its products. The company was
awarded
the prestigious ESCAT Award for smart card innovation in both 1998 and 2000.

Details

SCA Jewelers Card

Pavilion Jewelers has selected Shoppers Charge Accounts Co., a division of Hudson United Bank of Mahwah, N.J., to develop and administer its private label credit card program.

The Carrolton, Tex.-based Pavilion Jewelers operates three stores in the Dallas area.

SCA services brick-and-mortar and catalog retailers throughout the U.S. The company acquires retailers’ receivables or will develop private label credit programs for merchants who currently don’t offer a house charge. In both situations, SCA assumes responsibility for generating customers’ billing statements; managing credit, collection and lockbox functions; and creating customized marketing programs.

Ranked among the nation’s largest private label credit card companies, SCA is a division of Hudson United Bank, a subsidiary of Hudson United Bancorp (NYSE: HU).

Hudson United Bancorp is a $6.7 billion asset company with over 200 branch offices in New Jersey, Connecticut, New York and Pennsylvania. Hudson United Bancorp’s subsidiaries offer a full array of innovative products and services to commercial and retail accounts, including imaged checking accounts, 24-hour telephone and Internet banking, loans by phone, alternative investment products, insurance products, private label credit programs and a wide variety of commercial loans and services including asset based loans, SBA loans, international services and cash management services. Wealth management services are also provided to individuals and businesses. Public sector products and services are provided to local and state governments, municipalities, educational institutions, civic and not-for-profit organizations.

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DUCATO PROJECT

The partners in the Ducato project (Banksys, Groupement des Cartes Bancaires,
Europay International, Interpay Nederland NV, Proton World, Sermepa,
Sistema 4B
and Visa International) announced today the completion of project Ducato – the
first implementation of CEPS demonstrating international interoperability of
different CEPS-based e-purse technologies.
After the successful introduction of a 1st generation of ‘domestic’ e-purses,
interoperability and therefore standardisation agreements were required to
achieve international growth and deployment of smart card systems. For this
reason a group of leading smart card industry players developed and published
CEPS in 1999. CEPS standardises the underlying technology for an interoperable
electronic purse system and therefore reduces infrastructure costs. CEPS
leverages existing investments by making use of the banks’ current payments
infrastructure, rather than inventing a whole new system.

Today’s announcement of Ducato completion demonstrates that CEPS are robust,
reliable and ready for implementation by issuers and acquirers on an
international and an inter-technology basis, thus marking the “coming-of-age”
of CEPS.

Following publication of CEPS, a number of tasks, such as the establishment of
type approval procedures and the upgrading of international networks, network
simulators, terminal and host specifications and issuing systems needed to be
completed to enable the implementation of CEPS-based systems. Card and
terminal
manufacturers also needed to develop CEPS-based components that are
retro-compatible with existing e-purse technologies, to facilitate
migration to
CEPS-based systems.

Project Ducato was launched in September 2000. The project aimed to validate
CEPS-related technologies in a truly international environment with banking
organisations in various countries using international payments schemes,
demonstrating that all the participants have completed their share of the
tasks
above.

The two CEPS-compatible smart card technologies used in the Ducato project are
Sermepa’s Advantis (applied by Sermepa and Groupement des Cartes Bancaires
“CB”) and Proton World’s Proton Prisma (applied by Banksys and Interpay).
Banksys and Interpay used C-ZAM/Smash terminals from Banksys for CEPS load and
payment transactions.
The Advantis multi-application technology from Sermepa enables EMV
Debit/Credit
and CEPS functionality in the same card. Those applications have been
officially validated by Visa International and Europay International.
Proton Prisma can be implemented on mono-application cards or
multiple-application cards (combining EMV credit/debit, e-purse, PKI-based
identification, contactless transport ticketing etc) Proton-based CEPS cards
can be branded Visa Cash or Clip.

Visa International is ready to process Visa Cash through VisaNet and Europay
International is ready to process Clip transactions through EPSNet.
The successful completion of Ducato means that CEPS is a mature standard that
is ready for implementation. Currently, CEPS is supported by organisations
from
over 30 countries, representing more than 90% of the world’s electronic purse
cards. Existing purse schemes can now look into CEPS migration.

Quotes

Hervé Kergoat, Head of Prepaid products, Europay international:

“The DUCATO project is a crucial demonstration that standardisation has once
again proven its efficiency: CEPS allows for interoperability whatever the
technology supplier, the Brand or the network used in a domestic and
cross-border environment. CEPS is good as it stands and this is a key result.
Clip is thus fully ready for implementation as a perfect add-on to our Maestro
and MasterCard products.”
Yves Randoux, CEO of Groupement des Cartes Bancaires “CB” said: “By
participating in Ducato project, the aim of Groupement des Cartes Bancaires
was
to validate CEPS Specifications and technology, and to test interoperability
between countries and technologies: this has been successfully achieved.
Sharing a concrete experience with our partners has demonstrated that CEPS
provides the appropriate level of interoperability in order to be ready for
the
French E-purse migration as soon as French Banking Community takes the
decision”.

Armand Linkens, Managing Director and CEO of Proton World, said “Proton World
has been from day one a committed supporter of the Ducato initiative. We are
very happy to demonstrate today that our purse technology is ready for
international interoperability and together with our partners in the project,
we can underwrite that CEPS is now an international standard ready to go live.
Our customers that choose to migrate to the CALC-based multi-application
platform Proton Prisma give their card holders access to a state-of-the-art
internationally interoperable purse application that may carry the brands Clip
or Visa Cash.

José Gabeiras, SERMEPA´s CEO said: “Ducato has demonstrated that CEPS is the
standard that will make possible the interoperability among different
electronic purse technologies, regardless of the brand. SERMEPA is
delighted to
offer to their owners and other card Issuers their proprietary technology
“Advantis”, which has been successfully validated all along the Ducato
project.

The “Advantis” technology provides worldwide interoperability for all payment
applications, including EMV and CEPS. The “Advantis” technology also enables
complete freedom to use any combination of the payment applications both among
them and in combination with non-financial applications”.

Alfonso de la Viuda, Managing Director and CEO of Sistema 4B said: “The
contribution of experiences reached in the development of domestic electronic
purse from several entities, has permitted the achievement of the standard
CEPS. DUCATO as implementation project of the specifications, demonstrates
their viability and international interoperability inside the current
infrastructures of payment and on multiple several technological platforms.
DUCATO has allowed to have available the international channels (Europay
International and VISAInternational ) and open the settings to other entities
and provider’s solutions to implement it. Everything confirm CEPS as the
international electronic purse standard application on chip cards”
Jon Prideaux, Executive Vice President Visa EU said:
“Ducato is also an important milestone for Visa, it demonstrates that Visa’s
infrastructure is ready for Visa Cash CEPS roll-out. CEPS is part of Visa’s
EU’s €168M chip incentive program, so we have to meet the demand from our
Members who wish to introduce a Visa Cash application to their debit and
credit
cards when migrating to EMV. This will enable Visa cardholders to use their
cards on all five continents where Visa Cash is present.”

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CUNA e-gate

CUNA Network Services has become the first technology partner to offer the SchlumbergerSema ‘e-gate’ smart card to member credit unions. The alliance will target smart cards to 10,000 credit unions nationwide. The key component of the ‘e-gate’ smart card is a specially designed chip that incorporates the standard smart card ISO and USB interface. The ‘e-gate’ smart card plugs directly into the standard USB port on a PC, eliminating the need for a separate card reader, power supply and driver software. Used with an e-wallet, the ‘e-gate’ card enables credit unions to offer members a secure, convenient solution for conducting commerce online through a credit union portal.

[![][1]][2][![][3]][4][![][5]][6]
** **VIDEO CLIP** Choose your format to view a 30 sec clip of the e-gate’ smart card being demonstrated. **

[1]: http://www.cardweb.com/graphic/players/quicktime_sm200.gif
[2]: http://www.cardweb.com/cardwatch/movies/qt/egate_dc.mov
[3]: http://www.cardweb.com/graphic/players/windowsmedia_sm200.gif
[4]: http://www.cardweb.com/cardwatch/movies/wm/egate_dc.wmv
[5]: http://www.cardweb.com/graphic/players/real_sm200.gif
[6]: http://www.cardweb.com:8080/movies/cardflash/egate_dc.rm

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S1 and Corillian Suit

S1 Corporation and Corillian Corp announced that they have reached an agreement to settle the patent infringement lawsuit brought by S1 against Corillian in March 2000.

Under the terms of the settlement, Corillian will obtain a license from S1 to United States Patent No. 6,023,684 (“the ‘684 patent”), and the lawsuit will be dismissed. The ‘684 patent relates to a three-tier financial transaction system for supporting communications between financial institution customers and financial institution back end processing systems. The financial and license terms of the settlement are confidential.

About S1

S1 (Nasdaq: SONE) is a leading global provider to more than 2,600 banks, credit unions, insurance providers, and investment firms of enterprise software solutions that turn customer interactions into profits. S1’s Enterprise eFinance solutions deliver a transactionable, customer-centric view across all delivery channels, resulting in a more compelling experience for the customers and a more profitable relationship for the financial institution. S1 is the only eFinance provider with the proven experience, breadth of products, and financial strength to empower financial services companies’ Enterprise eFinance strategy. Additional information about S1 is available at .

About Corillian Corporation

Based in Oregon, and with international offices in Europe and Asia, Corillian Corporation is an award-winning provider of eFinance-enabling software for the financial services industry. Built on the Microsoft Windows 2000 platform, Corillian applications support Internet banking, bill delivery and payment, brokerage, customer relationship management, enhanced data aggregation, and small business transactions. Voyager can be deployed on-site at the financial firm or at a secure data center. Corillian technology also enables Open Financial Exchange (OFX) access by finance management software packages such as Quicken®, QuickBooks® and Microsoft® Money. For more information about Corillian Corporation, visit the company’s Web site at .

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Golf Card

The PGA TOUR has moved its credit card sponsorship to MBNA from Bank One/First USA. MBNA confirmed yesterday it has signed a long-term agreement to issue the ‘PGA TOUR MasterCard’ and ‘SENIOR PGA TOUR MasterCard’, effective January 1. MBNA has been involved in golf through its financial support of ‘The First Tee’, a World Golf Foundation initiative dedicated to introducing golf and its values to young people.The tax-exempt membership PGA TOUR organization will produce more than 125 events on three tours next year. First USA rolled out the first ‘PGA TOUR MasterCard’ and ‘Senior PGA TOUR MasterCard’ in early 1997. MasterCard is the “official card” of the ‘PGA TOUR’ and ‘SENIOR PGA TOUR’, making it the preferred method of payment at ‘PGA TOUR’ shops, Tournament Players Clubs and other locations. American Express launched its first golf card in 1996. The ‘American Express Golf Card’ offers a points reward program and advance tee time reservations at selected courses. In Canada, Bank of Montreal issues the ‘Canadian PGA MasterCard’ which offers discounts on greens fees and lessons. (CF Library 7/16/96; 1/31/97)

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HouseCharge Server

Datacap Systems, Inc., a leading provider of integrated payment systems, announces availability of HouseCharge Server, a simple, complete charge system for merchants of all types and sizes. HouseCharge Server is easily implemented on a headquarters PC to handle payment authorization requests locally via direct connection and remotely via phone lines. Retailers, schools, hospitals, country clubs and other businesses can quickly implement their own credit authorization system, speeding up authorizations, eliminating credit service charges and improving customer service. After installation, all DataTran-ready system users can initiate use of HouseCharge Server simply by issuing private cards or account numbers to their repeat customers and setting credit parameters. Datacap payment solutions automatically handle all payment types by sending bank credit/debit cards and check requests to traditional payment authorization services, while identifying private card/acccount numbers and forwarding those requests to HouseCharge Server. Datacap integrated payment solutions are used by hundreds of system, register and POS providers at hundreds of thousands of paypoints. Users of those systems can send requests to HouseCharge Server immediately by simply downloading new parameters to their DataTran. Most DataTran-ready POS terminals require no changes to their software. A complete reporting package, including customer statements and aging reports, ensures control and accountability – with or without integration to other accounting systems. Private charge systems have become popular in schools, hospitals, country clubs and other “closed” sales environments. Now HouseCharge Server makes it easy and inexpensive for any merchant to implement a private charge system. Call or email for more information. The Company Datacap Systems has successfully designed, manufactured and marketed integrated credit/debit/check verification systems for over 18 years. Datacap’s payment verification interfaces allow virtually any system, regardless of operating system or hardware platform, to get easy access to payment processing networks for credit, debit, check, EBT, house charge, gift card and loyalty program processing. Datacap products are typically used in retail, mail/telephone order, hospitality, quick service, retail petroleum, parking, auto rental, convenience, medical and government applications.

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Chargeoffs Spiral

Further confirmation of a sharp rise in chargeoffs since the end of third quarter comes from the performance of receivables held in trusts of rated credit card-backed securities. According to the latest performance figures, the monthly charge-off rate rose 30 bps, to 6.8% in October from 6.5% in September. The increase represents a 135 bps increase in charge-off levels compared with a year ago. According to data collected by CardData and RAM Research’s ‘Bankcard Barometer’, chargeoff rates industry wide for October hit 6.33%, the highest level in nearly 11 years. According to Standard & Poor’s ‘Credit Card Quality Index’, the average increase in losses in October for “prime” issuers was relatively modest, less than 40 bps. The “subprime” section averaged an increase in defaults of 165 bps. S&P also reports delinquencies averaged 5.3% in October, a 20 bps increase from September and a 70 bps increase from a year ago. Seventy-five percent of the trusts tracked by the index reported an increase in 30-plus day delinquencies during October, and almost 80% of the trusts reported an uptick in delinquencies in the 90-plus days bucket. Other than delinquencies and charge-offs, performance trends for the other variables rebounded. The gains in yield and the lower cost of funds helped excess spread levels. Average excess spread levels ballooned significantly, increasing by 190 bps to 8.5%, the highest point since the S&P index was created.

STANDARD & POOR’S CREDIT CARD QUALITY INDEXES
Performance month Oct 99 Oct 00 Aug 01 Sept 01 Oct 01
Outstandings (Bil. $) 300.3 332.0 366.6 366.1 373.2
Yield (%) 20.0 20.3 20.0 18.9 20.0
Charge-offs (%) 5.5 5.4 6.5 6.5 6.8
Weighted base rate (%) 7.5 8.4 6.0 5.8 4.7
Excess spread (%) 6.9 6.5 7.5 6.7 8.5
Delinquencies (%) 4.8 4.6 5.1 5.1 5.3
Payment rate (%) 16.2 16.5 16.7 14.8 16.2
SOURCE Standard & Poor’s

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Privacy Guidelines

The staff of several federal agencies that supervise banks, thrifts, and credit unions issued guidance yesterday to help financial institutions comply with these agencies’ consumer privacy regulations. The staff guidance issued Wednesday is a series of “Frequently Asked Questions”, or ‘FAQs’, covering various aspects of the privacy rules. For example: “I own and operate several ATMs. Many consumers who use them are not my customers. I disclose to nonaffiliated third parties nonpublic personal information about those consumers other than as permitted by certain exceptions, so I must provide them with the required notices when they use my ATMs. But ATM screens are very small. Am I required to purchase machines with screens large enough to hold my privacy policy? Must I make consumers click through dozens of tiny screens of information?” The FAQ answers: “Neither new machines nor multiple screens are necessary. You must provide an opt out notice. This notice must state that you disclose nonpublic personal information about the consumer to nonaffiliated third parties, state that the consumer has a right to opt out of that disclosure, and provide a reasonable opportunity for the consumer to opt out (such as by requiring the consumer to decide whether to opt out as a necessary part of the transaction). In addition to the opt out notice, you must provide an initial privacy notice. For consumers who are not your customers, you may provide a short-form initial notice with an opt out notice. This short-form notice must state that your privacy policy is available upon request and it must describe a reasonable means for the consumer to get your privacy notice. As with any privacy notice, the opt out notice and the short-form initial notice must be clear, conspicuous, and accurate. These notices must be delivered in a manner so that the consumer can agree to receive the notices electronically, such as by acknowledging receipt of the notices as a necessary step to completing the transaction at the ATM. The complete FAQ is available on CardFlash Online’s navigation bar ([www.cardflash.com][1]).

[1]: /cardflash/secure/oldstatic/2001/december/prifaq.html

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Horizon Platform

Cardservicer, a leading provider of credit card processing solutions, announced the launch of its revolutionary new technology platform with a promotional “cost-based” offer for qualifying U.S.-based MasterCard and Visa Card issuers. The promotion will run through March 2002.

Cardservicer’s credit card processing platform, called Horizon, is a web-based architecture that will provide credit card issuers increased scalability and flexibility and will reduce cost of operations over current mainframe based systems. It is operational in 17 credit card issuer banks outside the United States.

The Horizon platform evolves in part from Credit origination and Collections software developed by Cardservicer’s associate company Instant-Bank. Instant-Bank’s enterprise loan/leasing software is currently operational in 17 installations, and its clients includeGE Capital, National Westminster Bank, Bank One, The Associates, and Affiliated Computer Services, among other clients.

The Horizon technology platform is built on a series of modern technology components that have been highly integrated. The system has been developed over the past three years at an investment of more than $10 million and is delivered as a complete end-to-end enterprise-wide hosted solution.

“Credit card issuing banks across the United States can now more efficiently and cost effectively manage their credit card portfolios, with the benefits of easy to use functions, and work management features enhancing productivity” said Chris Sullivan, President of Cardservicer. “They will no longer be limited to mainframe inflexibility.”

The introductory promotional offer for the Horizon platform applies to credit card issuing institutions with a minimum of 25,000 accounts. The cost-based offer applies for the first five years, one-third of cost for periods thereafter, plus cost-based enhancements and implementation/conversion.

About Cardservicer

Cardservicer and its sister company Instant-Bank, is a privately held, New York-based company, that develops enterprise wide technology infrastructure platforms for loan and lease processing management. Cardservicer’s flagship product is the Horizon credit card processing software that helps credit card issuers more cost-effectively service their credit card portfolios. Horizon is a hosted Web-based solution that wholly replaces legacy mainframe systems. Horizon originates, services, collects, and accounts for credit cards using technology 30 years ahead of other systems. For more information, visit [www.Cardservicer.com][1].

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

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Advanced Deposits

NCR and Star Systems announced this morning an arrangement to bring advanced deposit technology to STAR participants throughout the US. This new deposit solution enables a customer to deposit cash or checks directly into an ATM without an envelope. The advanced deposit technology utilizes NCR’s ‘APTRA’ software suite and will be marketed jointly by NCR and STAR. The architecture enables the core application to run on ATMs, providing the capability of accepting and counting cash and checks. The deposit amount is verified on screen, displaying the check or cash amount visually. NCR’s patented ability to print check images on receipts will also be utilized.

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