TSAI Restructuring

Transaction Systems Architects confirmed Monday it will incur one-time charges in the third quarter of fiscal 2001 of approximately $22 million as a result of its ongoing operational restructuring plan. The Company has scheduled a news conference for this morning. TSAI also announced that it has transferred its 70% ownership in Hospital Health Plan Corporation to HHPC’s minority shareholder. The Company has also closed or significantly reduced the size of certain product development organizations and geographic sales offices. TSAI expects revenue for the third quarter to be between $72 million and $74 million.

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Certegy Spinoff

Equifax Inc. announced it has completed the spin-off of Certegy Inc. with the distribution of its approximately 68.6 million shares of Certegy common stock.

On July 7, 2001, Equifax shareholders of record as of June 27, 2001, were issued one share of Certegy common stock for every two shares of Equifax stock owned. Shareholders will receive a cash payment in lieu of fractional shares.

The Equifax share price initially will reflect the distribution of Certegy to Equifax shareholders. Shareholders should add the dollar value of their Equifax holdings to that of their Certegy shares to ascertain the total value of their investment.

Equifax enables and secures global commerce through its information management, consumer credit, marketing services, business information, authentication and e-commerce businesses. As the leader in information services, Equifax adds value wherever customers do business, including the financial services, retail, telecommunications/utilities, information technology, brokerage, insurance and business lending industries and government. Equifax also enlightens, enables and empowers consumers to manage and protect their financial health with services offered at . The company ranked in the top five in return on equity among Business Week’s Best Performers for 2001. Equifax employs 6,600 in 13 countries and has $1.1 billion in revenue.

Certegy provides credit and debit card processing, e-banking services, check risk management, check cashing and merchant card processing services to financial institutions and merchants. Headquartered in Alpharetta, Georgia, Certegy maintains a strong global presence with operations in the United States, Canada, the U.K., Ireland, France, Chile, Brazil, Australia and New Zealand. As a proven global payment services provider, Certegy enables transaction certainty, brings commerce and customers together, and provides business results through leading technology. Certegy’s two main business units — Card Services and Check Services — are organized to enable targeted services and systems that address diverse customer needs. Certegy employs 5,700 employees in 9 countries and has $779 million in revenues.

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New GetSmart Services

Providian’s online credit card subsidiary, GetSmart, this morning announced the launch of two new services for auto insurance and brokerage services. The ‘GetSmart Brokerage Search’ tool allows consumers to specify their online brokerage requirements and search for companies in the GetSmart network that best meet their needs. Using GetSmart tools, consumers can research, profile and make side-by-side comparisons to quickly review a brokerage firm’s capabilities. Additionally, consumers can research commissions charged on different products, such as stocks, options, and mutual funds. ‘GetSmart’s Auto Insurance’ service enables consumers to obtain online quotes from top national and regional auto insurance companies. Answer Financial is providing this service for GetSmart in a co-branded environment.

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ELVA SHUFFLE

Elva Inc. has completed a consolidation of shares at a ratio of 1 for 10 and the stock is now trading under the symbol “EVAI” on the OTC Bulletin Board. ELVA International, Inc., is a leader in the self-powered acoustic smart card industry. ELVA’s patented VocaliD smart cards supply secure online access and transactions from any phone set, cellular or computer without requiring card readers. VocaliD transmits pseudo random audio sequences in order to guarantee highly secure authentication during each use. ELVA owns six smart card technology registered patents in Europe, USA, Canada and Japan. A VocaliD smart card transmits pseudo random audio sequences in order to guarantee highly secure authentication at each use, from any place in the world. VocaliD is also a standard format card that meets any mag stripe based payment and loyalty infrastructure requirements while being compliant with major traditional chip card based technologies.

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Offline Incentives

MO-based Commerce Bank has re-launched a promotion to encourage debit cardholders to sign for purchases instead of using a PIN. The “Skip the PIN – and Win!” contest automatically enters the bank’s debit cardholders in a $1,000 weekly drawing and a $25,000 grand-prize drawing each time they use their ‘Commerce VISA Check Card’ and sign for their purchase rather than entering their PIN. Last year Commerce awarded approximately $86,000 to more than 60 winners and realized a substantial boost in off-line debit card usage. In addition to the current weekly $1,000 prizes and the final $25,000 grand prize, Commerce will award $1,000 daily prizes during the 2001 holiday season. he contest will run through the end of this year. Commerce is using the promotion to educate cardholders about the benefits of skipping the PIN, which include extended warranty, price and purchase protections, special consumer protection rules and back-up authorization limits.

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MDS – CMS

Merchant Data Systems has executed an agreement with Chase Manhattan Bank and Chase Merchant Services to process through First Data’s alliance platform. MDS also announced that Newtek Capital has an investment via a portfolio purchase through Newtek’s Florida-based certified capital company. Recently, MDS signed a contract with another Newtek partner company, Universal Processing Services, to offer its transaction processing to all of Universal. MDS offers merchants an array of services including credit and debit card processing, electronic benefits transfers, equipment sales, leasing and rental programs, 24-7 customer service, supplies and technical support. MDS intends to convert most of its current merchants to the Chase-First Data Platform, enabling merchants to process transactions all over the U.S.

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SMART ID CARDS

Residents of Sabah will be required to register for a new smart ID card next March. The new cards will enable the government to fight identity card forgery problem. The computerization of the 25 district NRD offices in Sabah will help to put the cards online with the State and Federal NRD headquarters and would speed up the issuance of the smart cards. A thorough screening by the NRD, police and the FSTF would be conducted during the registration exercise to ensure that only those who applied for the smart card were eligible. A stringent check is crucial as ineligible people may attempt to register for the smart card using forged documents. Some village chiefs had deliberately assisted foreigners to obtain ID by certifying forged documents used to apply for ID. The government warned that stern action would be taken against village chiefs and NRD officers found to be involved in assisting foreigners to obtain birth certificates and ID.

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CardData 2Q/01

While the seasonal uptick in receivables for the second quarter is showing up in smaller issuer there appears to some stagnation in the number of active accounts during 2Q/01. According to figures collected by CardData, three credit unions reported no change in the number of active accounts between 1Q and 2Q

2Q/01 vs 1Q/01 Portfolio Stats
ISSUER RECV CHG ACTIVES CHG
University of Colorado FCU $48,424,759 +8.7% 13,170 NC
Aberdeen Proving FCU $47,593,674 +0.6% 16,242 NC
Technology CU $36,214,425 +4.6% 17,364 +7.4%
Whitney Natl Bnk $27,366,935 +7.4% 19,468 -1.8%
La Capital FCU $18,286,022 NC 6,083 NC
Source: CardData (www.carddata.com)

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FAN SMART CARD

OTI, P-Card System and Mega-Access announced the launch of the Michael Jackson Fan Card, the first card in a series of cards based on OTI, P-Card and Mega-Access’s smart card solution for identification, payment and loyalty.

OTI, a global provider of microprocessor-based contactless smart card technology and product solutions, P-Card System, a provider of smart card-based payment systems and Mega-Access, a provider of on-line identification, loyalty and ticketing solutions, will deliver the first shipment of 250,000 cards from the end of July.

Members of the Michael Jackson Fan Club, run by MJ Entertainment AG, can order the contactless multi-application smart card, which also serves as the club’s membership card, from the official website. With the ability to download new applications to the card from the website as they become available, cardholders will be able to use the card for shopping and loyalty programs both online and in retail stores.

“P-Card Systems is proud to announce the fan club for a worldwide celebrity – Michael Jackson – as the first customer to launch our flexible payment solution,” said Angelika Wegner of P-Card. “Our program offers the highest level of security and flexibility for our customers. We expect to make new announcements in the near future regarding new participants in the program.”

“I am happy we could win a well-recognized name like Michael Jackson to prove that our concept to bridge the gap from the virtual to the real world will fill in the missing link in e-commerce today” said Klaus Landefeld of Mega-Access. “The MJ Card will show that by using a combination of both worlds every aspect, from flexibility to cost, will be taken care of.”

“The combined P-Card and Mega-Access solution is a perfect concept for our technology,” said Oded Bashan, Chairman, President & CEO of OTI. “This is yet another example of our strategy of providing a platform for initial applications with the capability to add additional functionality over time in an economical way.”

The partnership brings together OTI’s patented contactless smart card solutions, P-Card’s patented system of marketing programs for its issuer and acquirer base and Mega-Access’s unique on-line capabilities in identification, application and accounting services. Each issuer can customize its own multi-application smart card from a selection of identification, payment and loyalty applications, and then issue their own branded cards to its venue customers. OTI, P-Card and Mega-Access began their collaboration earlier this year, and have been developing their joint solution since that time. In addition to revenues received from product sales, OTI will earn ongoing revenues by participating in the success of the programs through transaction fees and revenues from technical support.

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. Visit OTI on the Internet at www.oti.co.il.

About P-Card System GmbH

P-Card System was established in 1999 after having developed the P-CARD System with EBS Electronic Banking System GmbH (established in 1989 and today a 100% subsidiary of P-CARD System). The P-CARD System is a customer loyalty and payment smart card application based on state-of-the-art technology, designed not to compete with existing programs but leverage their synergies, and permits individual development and rules for the participation in the revenues. Visit P-CARD System on the Internet at www.p-cardsystem.com

About Mega-Access GmbH

Mega Access was established in 2001 to provide a framework for a number of on-line solution providers and provide a single point of contact for the customer. Mega-Access provides card based on-line identification, application, accounting and customer service solutions, designed for an international market. Additional services include call-center solutions, internet access services and marketing concepts. Mega-Access has regional subsidiaries in Europe, the Americas and Asia. Visit Mega-Access on the Internet at www.mega-access.com

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MJ Smart Card

More than 250,000 smart cards for the Michael Jackson Fan Club are being readied for shipment this month. With the ability to download new applications to the card from the fan club website as they become available, cardholders will be able to use the card for shopping and loyalty programs both online and in retail stores. Members of the Michael Jackson Fan Club, run by MJ Entertainment AG, can order the contactless multi-application smart card, which also serves as the club’s membership card, from the official website. Israel-based OTI, German-based P-Card System and Mega-Access teamed to produce the ‘Michael Jackson Fan Card’, the first card in a series of cards based on OTI, P-Card and Mega-Access’s smart card solution for identification, payment and loyalty. OTI is a provider of microprocessor-based contactless smart card technology and product solutions, P-Card System is a provider of smart card-based payment systems, and Mega-Access is a provider of on-line identification, loyalty and ticketing solutions. The initial smart card contract is valued at US$1 million.

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BANACCI ACQUISITION

Citigroup and Grupo Financiero Banamex-Accival announced that Citicorp, a wholly-owned subsidiary of Citigroup, today commenced its previously announced offer to

— purchase all of the outstanding Banacci ordinary shares for an aggregate of US$12.5 billion in cash, or US$2.6544, for each share that is validly tendered prior to the expiration date, and simultaneously;

— sell to each Banacci shareholder who validly tenders Banacci ordinary shares in the offer prior to the expiration date 0.0269 share of Citigroup common stock per Banacci ordinary share tendered at a price of US$1.3272 per 0.0269 Citigroup share (equivalent to $49.26 per Citigroup share).

The simultaneous offer to purchase and offer to sell form a single offer and can only be accepted together. The total net consideration resulting from the simultaneous offer for each Banacci ordinary share validly tendered will be US$1.3272 and 0.0269 share of Citigroup common stock.

Banacci’s board of directors has unanimously determined that the offer is fair to, and in the best interests of, Banacci’s shareholders and recommends that Banacci’s shareholders accept the offer and tender their shares. The simultaneous offer will expire at 445 p.m., New York City time (345 p.m. Mexico City time), on Thursday, August 2, 2001, unless extended.

Completion of the offer is subject to the satisfaction of certain conditions, including the granting of required approvals by regulators in the United States and abroad. In Mexico, the registration of Citigroup shares and the offer have been approved by the securities regulators and the acquisition of Banacci by Citicorp has been approved by the Ministry of Finance, the Competition Commission and the Commission on Foreign Investment (“CFI”). With respect to Banacci’s telecommunications companies, Avantel S.A. and certain affiliates, CFI has set a time period for them to establish their compliance with applicable foreign investment laws.

In connection with the proposed transaction, Citigroup has filed a registration statement on Form S-4 with the Securities and Exchange Commission. Investors and security holders are advised to read the registration statement (as amended) because it contains important information. Investors and security holders may obtain a free copy of the registration statement and other documents filed by Citigroup with the SEC at the SEC’s web site at (http//www.sec.gov). Free copies of the registration statement and other documents filed by Citigroup with the SEC may also be obtained from Georgeson Shareholder, our information agent, by directing a request to Georgeson Shareholder, 17 State Street, 10th Floor, New York, New York 10004, banks and brokers call collect (212) 440-9800, all others call toll free (800) 223-2064.

Citigroup (NYSEC), the preeminent global financial services company, provides some 120 million consumers, corporations, governments and institutions in more than 100 countries with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, insurance, securities brokerage and asset management. Major brand names under Citigroup’s trademark umbrella are Citibank, CitiFinancial, Primerica, Salomon Smith Barney, and Travelers.

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Acquirer Fees 2001

A new study of fees, that acquirers charge regional or small merchants, found strong evidence of price convergence toward the median ranges of key merchant fees. The research also found that unbundled pricing strategies have emerged as a dominant strategy among various classes of acquirers. The study, conducted by MD-based First Annapolis, included 38 acquirers and ISOs, 19 of which are ranked among the Top 50 U.S. acquirers. The study was previously conducted in 1999. First Annapolis says the median range of the American Express transaction fee, VISA/MasterCard transaction fee, statement fee, annual fee, and chargeback fee has not changed over the past two years but acquirers have gravitated to the same price points on these key fee items.

ACQUIRER LIST PRICES
FEE TYPE MEDIAN RANGE
Chargeback Fee $10 to $20
V/MC Transaction Fee 10 cents to 25 cents
AmEx Transaction Fee 10 cents to 25 cents
Authorization Fee None
Other Card Type Fee Greater than 10 cents
PIN Debit Transaction Fee Greater than 10 cents
Voice Authorization Fee 25 cents to $1.00
Application Fee Greater than $50
Monthly Minimum $10 to $20
Statement Fee $5 to $10
Annual Fee None
Interchange Downgrade Fee Greater than 50 bps
Termination Fee Greater than $100
Source: First Annapolis

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