Emergent CFO

Emergent Financial Group, a company specializing in fee-based transaction data processing for non-bank consumer financial services, has announced that Max Lucas has joined the board of directors and has been appointed chief financial officer. Mr. Lucas was formerly chief financial officer and a director of Citibank Credit Services. Prior to his eight years at Citibank, Mr. Lucas was controller and senior vice president at First Chicago, now a part of Bank One (NYSE:ONE), where he worked for twenty-two years.

“Emergent is fortunate to welcome Mr. Lucas to both our board and as our CFO,” said Jason Galanis, chairman and chief executive officer. “His extensive financial services experience in banking and transaction processing is perfectly suited to our Point-of-Sale operations.”

In addition to accounting, financial forecasting and operational responsibilities in connection with his prior positions, Mr. Lucas has also implemented three decades of executive level compliance functions, including risk management, policies and procedures and other regulatory and compliance matters. Mr. Lucas will oversee the subsidiaries of Emergent from the new 11,500 square foot Service and Data Center opened in Boulder, Colo., which includes a 5,000 square foot expansion currently underway.

“I am looking forward to contributing to the growth of Emergent as the company deploys its technology solutions,” said Mr. Lucas. “Banking over the past decades has undergone many changes as a result of new technologies and I believe that Emergent possesses innovative, ground breaking point-of-sale systems.”

About Emergent Financial Group

Emergent ([www.emergentgroup.com][1]) is a financial services holding company, which owns and invests in transaction processing companies that provide non-traditional financial services, including services distributed through Point-of-Sale technologies. The Company is principally engaged in building a distribution network for non-bank financial services delivered through counter-top point-of-sale technologies in retail locations throughout the country and in selected overseas locations. A principal objective of Emergent is to establish and expand a ubiquitous delivery platform capable of generating multiple revenue streams from each retail location. Emergent’s subsidiaries generate recurring fee-based revenue by charging consumers service fees for financial services transactions, such as non-bank wire transfer services. The Company is developing other technologies that may be synergistic and can generate additional revenue through existing installed terminals such as card-based technologies and services like niche credit card, debit card, chip-embedded (or “smart”) card, other stored-value cards and various point-of-sale technologies.

About KeyCom

KeyCom, a wholly owned operating subsidiary of Emergent, has developed proprietary transaction processing software and related systems branded as XTRAN(TM) that permit the collection and subsequent instantaneous remittance of cash to remote locations throughout the world. The XTRAN technology provides the same full range of services as traditional cash remittance companies at significantly reduced costs. In addition, XTRAN is fully Web-enabled and its software is downloadable to credit card merchant terminals. The core of the system is the Automated Bank Capture and Settlement Software (A-B-C’ss), which is able to record cash-based transactions at point-of-sale in a globally distributed geographic network utilizing industry standard credit card merchant terminals. It then transmits the digitized transaction information to any other destination in the world using the Internet, thereby allowing immediate disbursement of the funds to a third party upon presentation of proper identification. The expatriate community in the United States is estimated to account for the majority of the $40 Billion in international cash transmissions originating from the US in 2000, a market growing at 15% annually. The Company derives its revenues from transaction processing fees, net of commissions paid to certain selling agents.

More Information on KeyCom and XRAN is available at [www.xtrancash.com][2].

More information is available from Emergent Financial Group, Inc., Boulder.

[1]: http://www.emergentgroup.com/
[2]: http://www.xtrancash.com/

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October Contraction

The contraction in revolving debt was more significant than previously indicated by the monthly figures released by the Federal Reserve. During October Americans cut $3.7 billion off revolving credit, translating into a annual growth rate of -6.4%. The revised figures, released Friday afternoon, show that American consumers have been cutting credit card since June when total revolving credit topped $700 billion. Since then consumers have trimmed revolving credit, mostly credit card debt, by $11.3 billion. The decline may be attributed to the steady migration of credit card debt to home equity loans, which now carry interest rates that average half of the current 14.48% credit card APR. However the effect of the September 11th events undoubtedly played a significant role in the card debt contraction as consumers adjust lifestyles. According to the Federal Reserve, revolving debt stood at $689.0 billion during October. At the end of October, American consumers were $1.628 trillion in debt, exclusive of home mortgages.

REVOLVING CREDIT HISTORICAL
($billions)

Oct01 Sep01 Aug01 Jul01 Jun01 May01 Apr01

%GRWTH: -6.4% -1.3 -2.2 -3.7 2.1 4.5 14.2

$OWED: $689.0 692.7 693.5 698.1 700.3 699.0 697.6

Mar01 Feb01 Jan01 Dec00 Nov00 Oct00 Sep00
%GRWTH: 11.9% 20.8 11.6 5.0 10.9 4.7 7.8
$OWED: $688.2 681.4 670.3 663.4 660.6 654.8 649.3

Source: Federal Reserve; revised figures as of 12/07/01; For complete historical data visit [www.carddata.com][1].

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

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Wireless Partnership

Smart card specialist SchlumbergerSema will announce today a partnership with Televigation, a pioneer in wireless motion-based technology. SchlumbergerSema and Televigation will provide location-based services to mobile communications operators in North America. Users will be able access information via voice, WAP or SIM card applet on the mobile handset. Services include travel assistance, business finder, driving directions and traffic reports.

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Citi Smart Card

Citibank and MasterCard have officially entered the smart card market in the USA with the launch of the ‘Citi Smart Card’. The new card is now available with instant online approval, a 9-month 0% APR for balance transfers, free smart card reader and a free electronic wallet. Initial functionality is limited to storing Web sites, user names and passwords plus automatic completion of online shopping forms via the electronic wallet feature. The Citi smart card package also enables cardholders to use digital signatures. Citibank says it plans to expand the functionality of the chip to enable cardholders to consolidate information from other accounts onto the ‘Citi Smart Card’ to give customers easy access to several credit cards at one time. Citi also plans to enable cardholders to download loyalty programs, special discount offers, and coupons from their favorite merchants and to store e-tickets for express check-in at select airports, or VIP entry to concerts, sporting events, and theatre performances. The standard MasterCard carries no annual fee and a prime +12.99% APR. The smart card readers are free through May 31, and will be $25 afterwards. During November, Citi launched a pilot of customized smart card called the ‘citi.you card’ with a rewards program and annual fees as high as $85.

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Irato Honored

Al Irato, who helped build Hypercom Corporation into the leading global provider of electronic payment solutions, has been named the recipient of the 2001 Robert A. Mooney Achievement Award.

The award will be presented Dec. 13 at the Sun Theater in Anaheim, California. The award, presented annually, recognizes the recipient’s body of contributions to the electronic payments industry, explained H. Kurt Helwig, executive director of EFTA.

Currently Vice Chairman of Hypercom, Irato presided over the company’s initial public offering in 1997 and has with top management propelled Hypercom to the industry leadership position.

Prior to joining Hypercom, Irato was a senior vice president for American Express. He was responsible for providing end-to-end services to more than 2.2 million merchants, as well as the company’s worldwide transaction authorization system. Irato also introduced Plural Interface Processing (PIP), the standalone countertop terminal system that for the first time enabled tens of thousands of merchants to direct transactions to a variety of payment service providers.

Irato is also a former chairman of the Electronic Funds Transfer Association. In announcing the award, EFTA Chairman Walter C. Patterson said, “Al Irato’s contributions to our industry are many and legendary. From his pioneer work with Express Cash to Hypercom’s new generation of secure terminals and value-added information services platforms, he has been a force for change and evolution.”

The Mooney Award commemorates the accomplishments of the late Robert A. Mooney, a founder and former chairman of EFTA. Previous winners have included Robert P.

Barone, former vice-chairman of Diebold, Inc., D. Dale Browning, a founder of the PLUS ATM system, and Alex “Pete” Hart, chief executive officer of Advanta Corp.

About the Electronic Funds Transfer Association ([www.efta.org][1])

Founded in 1979, the Electronic Funds Transfer Association is an inter-industry trade association dedicated to the advancement of electronic payment systems and commerce. Its members include bankcard associations, financial institutions, manufacturers, technology companies, ATM networks, and government agencies.

About Hypercom Corporation ([www.hypercom.com][2])

Hypercom Corporation (NYSE: HYC) is the leading global provider of electronic payment solutions that add value at the point-of-sale for consumers, merchants and acquirers.

Hypercom’s products include secure web-enabled information and transaction terminals that work seamlessly with its networking equipment and software applications for e-commerce, m-commerce, smart cards and traditional payment applications. Hypercom maintains an installed base of more than 4 million terminals in over 100 countries, which conduct over 10 billion transactions annually.

[1]: http://www.efta.org/
[2]: http://www.hypercom.com/

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TNS 2001

Less than nine months after freeing itself from PSINet, Transaction Network Services has gathered momentum and is now set to expand its global presence. Today, TNS’ proprietary network carries more than seven billion transactions per year from credit, debit, lottery, EBT, check verification, and health care terminals, as well as ATMs. In addition, the TNS network carries FIX transactions for the securities industry and hundreds of millions of Signaling System 7, C7, and LIDB validation queries for the telephone industry. Strapped for cash earlier this year, PSINet signed an agreement to sell its Transaction Solutions unit for $285 million to GTCR Golder Rauner, in partnership with an executive team led by Jack McDonnell the acquired company’s founder. McDonnell sold the company to PSINet in 1999 for $720 million. The company has reverted to its former name, Transaction Network Services, and installed the original TNS management team. (CF Library 3/14/01)

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NPC Signs HAMP

National Processing Company, a leading provider of merchant credit card processing and a wholly owned subsidiary of National Processing, Inc., announced the signing of a multi-year agreement with Health Alliance Medical Plans, Inc. to provide electronic payment settlement and remittance.

For over 20 years, Health Alliance has offered quality health coverage. Founded by physicians in 1980, Health Alliance is the largest managed care organization based in downstate Illinois. Health Alliance underwrites and administers a full range of managed care products on a fully insured or self- funded basis.

Health Alliance will utilize NPC’s global payment platform, AcceleratedPay, for electronic settlement of provider payments. AcceleratedPay will act as a settlement clearinghouse and a payment aggregator for ‘Health Alliance’s electronic payments to physicians, hospitals and other healthcare providers. AcceleratedPay will not only enable Health Alliance to offer its healthcare providers an electronic-based system for payment settlement, but additionally, will facilitate a move to Internet reporting tools and solutions. The resulting transition, from paper-based to electronic settlement and remittance, will result in significant savings for both Health Alliance and its providers.

“NPC’s industry experience, commitment to customer excellence and innovative payment solutions made them an obvious choice,” stated Gordon Salm, chief financial officer for Health Alliance Medical Plans, Inc. “AcceleratedPay delivers a state-of-the-art solution for efficient and cost- effective electronic settlement of provider payments.”

Senior Vice President John T. McRae II, of NPC’s Payment Services division said “NPC is delighted that Health Alliance has entrusted its settlement and remittance business to us. We look forward to a long and productive relationship with Health Alliance. NPC is dedicated to providing a superior solution and service.”

About Health Alliance Medical Plans, Inc.

For over 20 years, Health Alliance has offered quality health coverage. Founded by physicians in 1980, Health Alliance is the largest managed care organization based in downstate Illinois. Health Alliance underwrites and administers a full range of managed care products on a fully insured or self- funded basis. More information regarding Health Alliance Medical Plans, Inc. is available via the Internet at [http://www.healthalliance.org][1].

About National Processing, Inc.

National Processing, Inc. through its wholly owned operating subsidiary, National Processing Company (NPC(R)) is a leading provider of merchant credit card processing. National Processing is 86 percent owned by National City Corporation (NYSE: NCC) ( [http://www.nationalcity.com][2]), a Cleveland based $96 billion financial holding company. NPC supports over 600,000 merchant locations, representing nearly one out of every five Visa(R) and MasterCard(R) transactions processed nationally. NPC’s card processing solutions offer superior levels of service and performance and assist merchants in lowering their total cost of card acceptance through our world-class people, technology and service. Additional information regarding National Processing can be obtained at [http://www.npc.net][3].

[1]: http://www.healthalliance.org/
[2]: http://www.nationalcity.com/
[3]: http://www.npc.net/

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Economy Steady

An index, released this morning, indicates that U.S. economic activity held steady in November, after bouncing back during October from the lows triggered by the September 11 terrorist attacks. The ‘Decision Analyst U.S. Economic Index’ for November, fell four points in September to 109, but rebounded to 112 in late October, and held at 112 through late November. U.S. consumers remain confident about the security of their jobs, and are reasonably confident about the state of the job market. Consumers are optimistic that stock market prices will rise in coming months, and their reported plans to buy high-ticket products within the next six months are trending up. Numbers on the inflation front are positive as well. These favorable signs, combined with low interest rates and low energy costs, continue to signal that the U.S. economy will begin to grow again by the first quarter of 2002.

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Fujitsu 8030

Dallas-based Fujitsu Transaction Solutions will debut this week its new through-the-wall and kiosk, drive-up ATM designed for small spaces and next-generation functionality. The ‘Fujitsu 8030’ ATM is a high-capacity unit with Microsoft ‘Windows’-based and Web-enabled capabilities.The unit is designed to integrate seamlessly into existing ‘912’-compatible networks. The drive-through features include a sun-viewable, high-resolution, color LCD monitor; a tactile keyboard and intuitive ATM interface. The new ATM also offers compliance with the new ‘Triple DES’ security deadlines. Like other models in the ‘Series 8000’, the ‘8030’ can dispense non-traditional media such as stamps, coupons, phone cards or event tickets. Baltimore-based Allfirst is currently in beta test with the 8030. The unit will be generally available in March.

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Phone Card Rates

With average rates of 75 cents per minute five years ago, pre-paid phone cards have now plunged to as low as 1.9 cents per minute. 7-Eleven stores introduced this week the ‘7-Eleven SuperSaver Value+’ card offering the lowest per-minute rate ever offered by the national convenience retailer. However the 1.9 cents per minute card includes a first-minute surcharge of 79 cents per domestic call, and a weekly service fee of 12 cents. The ‘SuperSaver Value+ card’ is available in prepaid denominations of $5, $10 or $20. 7-Eleven also introduced the ‘Flat Rate Phone Card’ in 15, 30, 60, 120 and 300-minute increments. The ‘Flat Rate’ branded cards offer U.S. domestic per-minute rates ranging from 7.9 cents with the 300-minute card to 23.3 cents with the 15-minute card, and no first-minute surcharges or service fees. 7-Eleven first introduced prepaid long-distance phone cards to its customers in 1994.

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Holiday Credit Card Use

66% of Americans plan to use either less credit than a year ago or no credit as they buy holiday gifts, according to the initial release of the Cambridge Consumer Credit Index. The Index is sponsored by the Debt Relief Clearinghouse, America’s premier-debt-management referral service. In a nationwide poll of 1000 adults done by ICR/International Communications in the past week, 30% of Americans plan to use less credit than they did a year ago and 36% will not use any credit card debt at all when buying gifts. In contrast, 31% plan to use about the same amount of credit card debt as last year and only 4% expect to use more credit card debt. Jordan Goodman, spokesperson for the Index, says: “Clearly consumers are approaching this holiday season in an extremely cautious mood, with most unwilling to take on additional debt for gifts.”

The Index also asked consumers who are going to use credit cards for gifts whether or not they expect to pay these bills off when they arrive in January. Fully 55% expect to pay their credit card bills off in full next month, while 39% expect to carry a balance and pay interest for at least a month after January. Only 6% thought they would pay off some, but not all of what they spend when the bills come in January.

The initial reading for the Cambridge Consumer Credit Index is 60. This means that on average 40% more Americans are paying off debt than are adding debt. That number is a composite of the three questions asked of respondents:

— In the past month, have you taken on more debt or paid off debt? In December, 31% of consumers say they have taken on more debt, with 23% taking on a little and 8% taking on a lot more debt. Conversely, 69% of Americans have paid off debt, with 49% paying off a little and 20% paying off a lot. The index reads 62 on this question.

— In the next month, do you anticipate taking on more debt or paying off debt? In December, 26% plan to take on more debt, with 6% planning to take on a lot and 20% planning to add a little debt. Conversely, 74% expect to pay off debt, with 58% paying off a little and 17% paying off a lot. The index reads 52 on this question.

— In the next six months, do you expect to take on debt because you are thinking of making a major purchase such as a car, education, appliance, medical procedure furniture or carpeting? 33% of Americans plan to take on more debt to make such purchases, with 10% taking on a lot of debt and 23% taking a on a little debt. In contrast 67%of Americans plan to pay off debt in the next six months, with 46% expecting to pay off a little and 21% expecting to pay off a lot. The index reads 66 on this question.

— “While two-thirds of Americans are or are planning to pay off more consumer debt, it is surprising that about one-third of Americans are or are expecting to go further into debt,” says Index spokesperson Jordan Goodman. “At a time of rising layoffs and uncertain job security, it is dangerous for so many Americans to be adding to their already formidable debt burden.”

The Index survey is conducted by ICR (International Communications Research) of Media, Pa., over five days in the week before the index is released. 1000+ households throughout the country are polled with a margin error of plus or minus three percentage points. The Index is released on the fifth business day of every month to coincide with the Federal Reserve Board’s G19 release of consumer credit outstanding data.

The Debt Relief Clearinghouse, which sponsors the index, refers consumers to the debt-management agency best able to handle their problem. To date thousands of clients with excessive credit-card debt have been referred to Cambridge Credit Counseling Corporation, based in Agawam, Massachusetts and the Brighton Credit Management Corporation, headquartered in Palm Beach Gardens, Florida. Cambridge and Brighton help thousands of Americans in financial distress by educating them on how to use credit wisely while in turn negotiating lower interest rates, waiving late and/or over limit fees with creditors to help consumers repay their unsecured debt obligations. Unlike other debt management firms, Cambridge and Brighton offer programs that pay a rebate to qualified clients of half the “Fair Share” contribution received from creditors for every six months that the client pays their bill on time. These programs, known as the Good Payer Program at Cambridge and the Bonus Payment Program at Brighton, have helped thousands of Americans repay their debt load while rewarding them for their commitment to reduce their debt.

For more information about the Cambridge Consumer Credit Index, contact Paramjit Mahli at pmahli@cambridge-credit.org or 800-804-0575, or economist Allen Grommet, who provides an economic analysis of Index results, at agrommet@cambridge-credit.org or 800-804-0575, or the Cambridge website at [http://www.cambridgecredit.org][1]. Consumers wishing to find out more about Debt Relief Clearinghouse’s referral services should call 1-888-4DEBTHELP or visit [www.debtreliefonline.com][2].

[1]: http://www.cambridgecredit.org/
[2]: http://www.debtreliefonline.com/

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ECHO 3Q/01

Electronic Clearing House reported a loss of $37,000 for the quarter ending Sept 30th, compared to net income of $208,000 for the same quarter one year ago. Revenue for the latest quarter was $7.8 million, an increase of 3.8% over the comparable period last year. The net loss includes approximately $300,000 of legal and consulting fees in the quarter related to ongoing litigation. For the fiscal 2001 year ECHO reported net income of $434,000, an increase of 49.1% compared to net income of $291,000 for the same period last year. Revenue for fiscal year 2001 was $29.9 million, an increase of 5.7% over revenue of $28.3 million for the same period last year. Total processing and transaction revenues increased 13.3% from $25.7 million in fiscal year 2000 to $29.1 million in fiscal year 2001. This included a 126.3% increase in check-related revenue and a 4.7% increase in bank card and transaction revenue. For complete details on ECHO’s current and previous performance visit CardData ([www.carddata.com][1])

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

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