ECHO Delisting

Electronic Clearing House Inc. Tuesday announced, as required by applicable Nasdaq regulation, that it received a Nasdaq Staff Determination on April 10, 2001, indicating that the company fails to comply with the minimum bid price requirement for continued listing on the Nasdaq SmallCap Market, as set forth in Market Place Rule 4310 (c)(4), and that its securities are, therefore, subject to delisting.

The company has requested a hearing before a Nasdaq Listing Qualifications Panel to review the Nasdaq Staff Determination which stays any delisting action. The hearing is expected to occur within the next 45 days.

The company stock’s closing bid price maintained a price of $1.00 or more for 10 consecutive trading days between the period March 23, 2001, to April 5, 2001, which the company believes satisfied Nasdaq Market Place Rule 4310 (c)(4) for continued listing. The company’s stock bid price closed slightly below the $1.00 level for three days following the April 5 date and the staff of Nasdaq subsequently advised the company of its intent to initiate a delisting action. The company disagrees with the position taken by the Nasdaq staff and has appealed the staff determination to the Hearing Panel but there can be no assurance the panel will grant the company’s request for continued listing. “We feel the company complied with the 10-day minimum bid price requirement and do not feel the staff’s subsequent notice is appropriate,” stated Joel M. Barry, chairman and chief executive officer of ECHO, “but, ignoring this point, we feel confident that ECHO will resolve the minimum bid price issue as well and will remain listed on the Nasdaq SmallCap Market.” In case there are questions, shareholders are encouraged to call the company at 800/262-3246, ext. 3033.

Electronic Clearing House, with headquarters in Agoura Hills, provides debit and credit card processing, check guarantee, check verification, check conversion, check re-presentment, check collection and inventory tracking to more than 58,000 retail merchants and U-Haul dealers across the nation.

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1Q/01 Results

As more results trickle into CardData’s first quarter portfolio survey, the seasonal contraction appears to be less severe for issuers with $100+ million in receivables. BB&T posted a slight gain while UT-based Zions took a solid hit in 1Q/01 outstandings. The historical first quarter contraction ranges between 1% and 3%.

Q-Q PERFORMANCE
ISSUER 1Q/01 RECV 4Q/00 RECV CHANGE
BB&T $669.3m $666.0m +0.5%
First Premier $373.3m $380.0m -1.8%
FirstMerit $117.4m $119.9m -2.1%
Amer Frst CU $108.1m $111.2m -2.8%
Zions $104.2m $113.0m -7.8%
Total $1372.3m $1390.1m -1.3%
m-millions Source: CardData (www.carddata.com)

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Equifax 1Q/01

Equifax reported this morning that its Payment Services division increased to $194.6 million, a 9.7% increase, and increased operating income 10.6% to $28.7 million during the first quarter. Card Solutions generated revenue of $130.9 million in the first quarter, a 9.8% increase, driven by merchant and card processing in the USA, which grew 12.2%, and growth in the international card processing operations in Brazil and United Kingdom. Check Solutions reported first quarter revenue of $63.7 million, a 9.3% increase over 2000, as this business continues to grow both domestically and internationally. The U.S. check operation experienced 12.3% revenue growth in the quarter. In the U.K., revenue grew 9.7% in local currency; however, unfavorable exchange rates resulted in a 0.5% decline in U.S. dollars. For more details on Equifax’s 1Q/01 results visit CardData ([www.carddata.com][1]).

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

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OTI PKI Card

OTI announced that it will provide the first contactless smart card supporting public-key infrastructure encryption, used for digital certificates in such secure environments as Internet transactions and in government agencies, under a reseller agreement with Algorithmic Research, a subsidiary of Cylink Corporation. OTI, a global provider of contactless smart card technology and product solutions, thus becomes the first company to offer a complete security solution utilizing contactless technology in both the physical and virtual worlds.

“By offering the first contactless PKI solution, OTI has strengthened the link between the virtual and physical world, offering all levels of security to meet customer requirements,” said Oded Bashan, President and CEO of OTI. “Providing Algorithmic Research’s PKI technology on OTI’s field-tested contactless smart cards further enhances our strategy to provide complete, reliable, secure solutions.”

Most digital certificates are stored on a computer hard drive, vulnerable to attack by unauthorized users. Incorporating Algorithmic Research’s PKI technology onto OTI’s EYECON product platform of contactless smart cards provides a secure, portable solution, as the user’s private key will reside on the smart card. Users can then encrypt and sign data from any location — crucial in shared-computer environments.

Encryption technology provided by Algorithmic Research adheres to PKCS#11 and CAPI standards, enabling users to secure standard Microsoft applications such as Outlook and Explorer, as well as work with standard PKCS-11 certificate vendors including VeriSign and Entrust. OTI’s patented contactless system uses 3DES and RSA encryption to communicate between card and reader, thus maintaining security levels throughout the encryption and transmission process.

“We are excited about working with OTI. Contactless smart card technology opens up a whole new set of applications for AR’s PKI technology. PKI is the one technology that offers a truly distributed security solution for the physical, as well as the virtual worlds,” said Nir Naaman, CISSP, V.P. Product Strategy of Algorithm Research.

PKI combines software and encryption technology to protect the security of communication and transactions across public networks, private intranet and extranet sites, and the Internet. Digital certificates issued to individual users in a PKI system are used to encrypt information to protect it from interception during transmission and to verify the sender’s identity to the recipient.

Since the Electronic Signatures in Global & National Commerce Act went into effect in the United States in October 2000, digital signatures are now accepted as legally binding and have been implemented by the US Government.

About Algorithm Research

Algorithmic Research Ltd., a wholly-owned subsidiary of Cylink Corporation (Nasdaq: CYLK), is a leading global supplier of cryptographic data security solutions for financial, commercial, industrial and government applications. AR specializes in implementing advanced PKI security solutions in large distributed computing environments and open networks like the Internet, allowing transparent integration of smart cards, readers and cryptographic processors that ensure high-level security for the most demanding and highly sensitive mission critical applications. AR products feature a Java applet client, security enhancements and support for SSL and WAP, implementation of highly secure digital signatures, user ID/password, RADIUS authentication, and more. For further information about the company, products and latest announcements, please visit the AR website at

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 .

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Tax Payments

The convenience fee paid by taxpayers charging income taxes to credit cards is not tax deductible. A newly released IRS memorandum states that such fees should be considered as a nondeductible personal expense. Last year Americans paid approximately $13 million in convenience fees to charge federal income taxes. The figure may be double this year. Two companies are now authorized by the IRS to accept credit card payments for income taxes, including Official Payments Corporation and PhoneCharge, Inc. The service charge averages between 2.00% to 2.50%. Discover is offering a special, low, processing fee of 1.85% +$1.00 under a special deal with Quicken. Taxes may be charged to MasterCards, American Express cards, and Discover cards. (CF Library 2/13/01; 3/20/01)

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Citibank Credit-ED

Citibank, the largest issuer of credit cards to college students, joins the Jump$tart Coalition and its partners to honor Fincial Literacy for Youth Month, April 2001, with an initiative that will advance responsible money management to young adults.

Teaming with EdVenture Partners, Citibank is taking its Credit-ED program into college classrooms across the nation, where 125 marketing students from schools around the country will promote responsible credit card use to their fellow students on campus. This innovative industry-education Citibank Credit-ED course provides students with the rare opportunity to apply classroom teachings to real-world business practices. Students at each of the participating schools form a “marketing agency” to design and implement an on-campus marketing campaign aimed at educating college students about the importance of fiscal responsibility.

The schools participating in the Citibank Credit-ED pilot program are: Northeastern University; Boston University; Arizona State University, University of California, Berkely; and the State University of New York, Binghamton.

“The earlier young people learn the value of money and how to manage it, the better,” says Gina Doynow, Citibank’s Vice President of College Marketing. “We are pround to be part of an effort to draw national attention to the need for young adults — in particular college students — to acquire such personal finance basics as money management and proper use of credit. These are essential life skills that young people must learn before entering the workplace.”

In addition to individual activities planned by its partners, the Jump$tart Coalition launched its Financial Literacy for Youth month with an awards luncheon recognizing students, educators and others who have made outstanding contributions to personal finance education.

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First USA 1Q/01

First USA reported this morning first quarter net income of $148 million, up 10% from the fourth quarter. First quarter results represented a 1.46% pretax return on outstandings, up from 0.63% in the year-ago and 1.28% in the 2000 fourth quarter. Net interest income was $1.391 billion, down $134 million, or 9%, from the year-ago quarter, reflecting lower fee revenue, a decline in average outstandings and a narrower spread. While attrition improved, customer card usage and related balances have declined, reflecting current economic conditions. End-of-period managed loans declined to $64.0 billion, compared to $67.0 billion for 4Q/00 and $66.5 billion for 1Q/00. Charge volume was $32.5 billion compared to $37.1 billion for the prior quarter and $34.0 billion one year ago. Chargeoffs edged up while delinquency edged down during the first quarter. Chargeoffs were 5.81% compared to 5.41% for 4Q/00 and 5.78% for 1Q/00. Delinquency (30+ days) stood at 4.33% for 1Q/01 compared to 4.51% for the fourth quarter and 4.08% for the first quarter of 2000. First USA opened 775,000 new accounts during the quarter, and had 50.6 million cards issued at quarter end. For complete details on Bank One/First USA’s 1Q/01 results visit CardData ([www.carddata.com][1]).

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

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Household HP Card

Household International, Inc.’s private label credit card unit has signed an agreement with Hewlett-Packard Company’s award-winning direct-to-consumer e-commerce subsidiary, hpshopping.com. Household will manage hpshopping.com’s private label credit card program — referred to as “hpshopping efinance” on the Web site — to hpshopping.com’s U.S. customer base.

“We are proud to work with hpshopping.com on this customized financing program,” said Sandy Derickson, managing director and CEO, Household Retail Services. “HPshopping.com joins a number of smart, innovative e-retailers that have selected Household to manage their private label credit cards.”

“HPshopping.com is committed to providing its customers with a world-class online shopping experience,” said Mike Bridge, chief marketing officer, hpshopping.com. “With Household’s private label solution, we can offer our customers online credit approval, flexible payment plans and access to attractive financing promotions.”

![][1] Household offers private label credit cards and sales finance products for several other online retailers in addition to hpshopping.com, as well as other national and regional merchants in industries such as furniture, department stores, specialty discount and apparel. Household also provides financing for dealers in motorcycles, ATVs, personal watercrafts and snowmobiles.

Launched in May 1998, hpshopping.com is a leading e-tailer of personal digital solutions, featuring a complete selection of trusted HP home and home office products. HPshopping.com is a key element of HP’s goal to reach U.S. customers anytime, anywhere with personalized product features, end-to-end purchase convenience and excellent customer service. HPshopping.com is headquartered in Santa Clara, Calif., and is a wholly owned subsidiary of HP.

Founded in 1878, Household’s businesses are leading providers of consumer finance, credit cards, non-prime auto finance and credit insurance products in the United States, United Kingdom and Canada. In the United States, Household’s largest business operates under the two oldest and most widely recognized names in consumer finance — HFC and Beneficial. Household is also one of the nation’s largest issuers of private-label and general purpose credit cards, including the GM Card and the AFL-CIO’s Union Privilege card. For more information, visit the company’s website at [http://www.household.com][2].

[1]: /graphic/hewlettpackard/hewlett.gif
[2]: http://www.household.com/

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Citibank 1Q/01

Citigroup’s ‘Global Cards’ business grew to over 104 million card accounts in 46 countries, generating income of $598 million in the first quarter, up 25%. The ‘North American Cards’ business produced first quarter income of $469 million, up 23%, driven by an expansion in the net interest margin of 77 basis points from the prior quarter, and receivables growth of 17% over the prior year. However, Citi’s North American delinquency and chargeoffs figures were up sharply for 1Q/01. Delinquency (90+ days) jumped from 1.54% for 4Q/00 and 1.65% for 1Q/00 to 2.00% for 1Q/01. Chargeoffs for the first quarter hit 4.84% compared to 4.22% for the prior quarter and 4.65% on year ago. First quarter volume was $51.2 billion for North American cards with EOP receivables of $100.5 billion. On an annual basis, volume was up 6% and receivables up 17%. For complete details on Citi’s 1Q/01 results visit CardData ([www.carddata.com][1]).

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

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PULSE Board

PULSE EFT Association, the nation’s leading financial industry-owned electronic funds transfer network, has named five new members to its Board of Directors. Elected to serve are:

— Barry L. Boerstler, Executive Vice President Fifth Third Bank, Cincinnati, Ohio

— Raymond Halackna, Vice President Mellon Bank, N.A., Pittsburgh, Pa.

— Joanne Middendorf, Vice President Huntington National Bank, Columbus, Ohio

— Jeffrey Morrow, Executive Vice President Dollar Bank, Pittsburgh, Pa.

— Robin P. Nenninger, Executive Vice President U.S. Bank, Cincinnati, Ohio

All were former board members of the Cincinnati-based Money Station network, which merged with PULSE earlier this year. In addition to their responsibilities as board members, Boerstler and Morrow will serve on the PULSE Executive Committee.

PULSE President and CEO Stan Paur noted the depth of experience represented by the new board members. “With their knowledge of EFT networks and the needs of the financial industry, these individuals will complement and strengthen the PULSE Board,” he said. “They will be valuable resources as we continue to carry out an aggressive growth program throughout PULSE’s expanded service area.” The addition of 12 primary states served by Money Station — Illinois, Indiana, Iowa, Kentucky, Michigan, Minnesota, Missouri, Ohio, Pennsylvania, Tennessee, West Virginia and Wisconsin — has more than doubled PULSE’s geographic footprint. PULSE links an estimated 60 million cardholders with more than 76,500 ATMs and 300,000 point-of-sale merchant locations throughout the United States. PULSE is a financial industry-owned, not-for-profit shared electronic funds transfer network. Its members include more than 2,500 banks, credit unions and savings and loans in a 22-state primary service area blanketing the central, south, midwest and southwest regions of the United States. PULSE has become well known in recent years as a recognized resource for consumer research related to EFT services, and an effective national public policy voice on issues of importance to the financial industry. Visit PULSE online at www.pulse-eft.com.

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Consumer Fears

A new poll, released yesterday, found that Americans who use the Internet are most fearful of Social Security and credit card numbers being stolen by criminals and believe the Internet is where their personal information is most vulnerable, followed by dishonest phone order agents. According to the survey results, 41% of the 2,951 U.S. respondents were most concerned about Social Security numbers falling into the wrong hands, followed by credit card information at 29%. These results bolster the findings of a report issued earlier this month by the Pew Internet and American Life Project, which showed that 87% of Americans surveyed were “concerned” or “very concerned” about the online theft of personal information. The results remained essentially the same across most educational and income levels, although those with a high school degree or less and those whose household income was $35,000 or lower were the least likely to trust the Internet. The poll was commissioned by Sanctum and conducted by Harris Interactive.

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PSCU & COOP

St. Petersburg, Florida-based Payment Systems for Credit Unions, Inc., and Ontario, California-based COOPNetwork struck an alliance to deliver ATM, point-of-sale, offline debit and credit related products and services to current member-owners and prospective credit union clients.

COOPNetwork, the nation’s largest credit union EFT network, and PSCU, the nation’s largest credit union service organization (CUSO), are using their combined scale and respective expertise to form a nationwide card processing solution and EFT network of and by credit unions.

‘We have many member-owners who could really benefit from the strong ATM and POS network coverage that COOPNetwork provides,’ states Dave Serlo, PSCU President. Serlo continues, ‘A network with over 4,800 surcharge free ATM’s across the country, with the majority of those taking deposits, is very attractive to us and to our member-owners.’

‘We have clients that would love to combine debit and credit processing in order to attain more competitive pricing and achieve operational efficiencies,’ says Robert Rose, President and CEO of COOPNetwork. ‘PSCU’s product offerings complement our suite of services, and their commitment to quality service matches ours. We believe this partnership will create opportunity, provide strong options for our clients, and will increase the value that we collectively bring to the industry.’ The immediate benefactors of this strategic alliance are COOPNetwork and PSCU’s combined 1,200+ credit union member-owners. ‘Our existing credit unions and prospective credit unions deserve the access and convenience that our alliance offers,’ states Paul Steger, Debit Services Manager for PSCU.

Unique to the PSCU and COOPNetwork alliance is the distinctive ownership structure of each company. Both are not-for-profit organizations owned and controlled by credit unions. Serlo added, ‘Where else in the card services industry do you have the potential to receive dividends and distributions from your credit, debit, and EFT transactions”

‘We are celebrating our 20th year of service,’ reflects Rose, ‘and PSCU is celebrating their 25th. Our experience and our commitment to this industry provide a firm foundation for the success of this alliance. We believe it also provides a launching pad for product development and service expansion for credit unions into the future.’

COOPNetwork (www.co-opnetwork.org), established in 1981 and located in Ontario, CA, is currently the country’s number one credit union EFT network with over 4,800 ATMs. The Network also provides volume discounts on products and services that include debit, online banking, risk management, remote access bill payment and deposit access to over 700 credit union clients and 9 million cardholders.

PSCU, Inc. ([www.pscu.net][1]) established in 1977 and located St. Petersburg, FL, is the nations largest credit union service organization (CUSO). PSCU provides a vast array of credit, debit, and Internet-based processing solutions to its 500+ credit unions and their 6.4 million cardholder accounts.

[1]: http://www.pscu.net/

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