INSIDE MICROPASS

INSIDE Contactless has maintained its expansion in the Canadian smart
card market thanks to recent EMV migration driving demand for
“MicroPass” contactless payment platform. In doing so, INSIDE has
partnered with Advanced Card Technologies (ACT) Canada to allow its
technological contribution in the convergence with advanced payment
applications. Having already delivered over 5 million “MicroPass”
contactless payment chips for MasterCard “PayPass” over the past six
months, INISIDE has allowed access to the payment platform with nearly
50 million “MicroPass”-powered bank cards. Additionally, ACT Canada
projects chip and pin payment cards will be deployed in significant
numbers over the next five years as credit and debit cards are converted
to the EMV standards across many sectors.

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FREESTAR 1Q/08

For the 3-month and 9-month periods ended March 31, 2008, Freestar
Technology Corporation reported record revenues of $1,629,150, compared
to $1,125,634 for the three months ended March 31, 2007, and of
$4,432,358, compared to $2,399,396 for the nine months ended March 31,
2007, respectively. Of the revenue for 1Q/08, $575,002 was generated
from processing and related revenue, a 19% increase over the year prior,
having processed 4,047,161 transactions. Processing revenue, however,
contributed a volume of $1,575,507 for the 9 months ending March 31st,
compared to that of $1,443,763 for the corresponding period in the prior
year, for a total of 14,233,019 transactions. Also a significant
contributor was the 272% increase in hardware sales over the 9-month
period posting a revenue of $806,893, compared to $589,709 for the
9-month period ending March 31, 2007. With Freestar having launched its
IP Solution in Denmark, introducing its palm-sized mobile payments in
Finland and a stand alone DCC Solution across Europe, the developments
have all collectively contributed to the organization’s success over the
past 9 months.

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RBC HABITS POLL

Given the state of the Canadian economy, a mere 22% of Canadian
consumers are saving more than they did before, discloses RBC bank with
the findings of its “Account Habits” poll. Additional findings of the
poll show 43% are maintaining current spending habits, 20% are spending
more, 83% are concerned with a lack of savings, 86% would like to save
more while 49% have a rainy day account set up for an emergency, 55% of
whom have only enough to cover one-month’s expenses while 24% can cover
3 months. Moreover, 65% depend on lines of credit/credit cards as a
fall-back, 34% spend their entire paycheck on living expenses with
nothing left over while 33% put their entire salary into savings. The
RBC online poll was conducted by Ipsos Reid between March 13 and March
18, 2008 of 2,020 adult
Canadian bank account holders.

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SMART CARD PROGRESS

With magnetic stripe credit card skimming on the rise and shifts in
fraud liability, the migration of Latin American Banks to smart card
deployment is becoming increasingly rapid with Banco Real ABN Amro, for
example, having issued 2 million smart bankcards and projections of 4
million issued in 2008. Additionally, the bank protects over 3,000
clients monthly with its magnetic card fraud protection service,
which generates U.S. $12.5 million annually, and 28% of Brazilian POS
terminals now have chip readers. Meanwhile, Banorte de Mexico has issued
0.7 million EMV credit cards out of a total of 1.3 million, has equipped
30,400 of its 33,700 merchant terminals with chip technology and
estimates include 6 million of the 16 million credit card accounts have
been chip-upgraded. This growth in fraud protection was due greatly to
skimming and cloned card fraud having grown at a 43.5% CAGR between 2004
and 2006 in Brazil alone, as disclosed at the Smart Card Alliance/CTST
Conference.

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U.K. Faces Credit Card Deterioration Too

Moody’s Investors Service’s UK credit card indices have begun showing signs of deterioration with the aggregate index delinquency rate up for a third consecutive month while projections include an increase in charge-off rates over the coming months. Factors contributing to this deterioration include a combination of increased living costs, a suspect rise in unemployment and decreased credit. Meanwhile, credit card outstandings rose in March by GBP 400 million to a record GBP 55.1 billion, according to CardFlash International. This is the third consecutive month of growth following several monthly declines in 2007. Year-on-year credit card outstandings (not seasonally adjusted) were only up 2%. According to the Bank of England, the increase in net consumer credit in March (GBP 1.2 billion) was below that in February and below the previous six-month average.

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BARCLAYCARD EXEC

Barclays PLC has named Kevin Sullivan as Managing Director,
Communications for Barclaycard US. Prior to joining Barclaycard US in
2005, Sullivan spent eight years at Chase in a variety of senior
relationship, sales and marketing roles in the Card Services unit. Prior
to that, he helped to build new categories of credit card acceptance in
the U.S. Merchant group of MasterCard. From 1989 through 1992, he worked
in travelers cheque marketing at American Express. Barclays recently
acquired the $4 billion “Goldfish” credit card business from Discover.
Barclaycard provides credit cards in the U.K., Germany, Spain, Italy,
Portugal, Africa, India and the UAE. In South Africa, Barclaycard
operates through ABSA and in the Nordic region, it operates through
Entercard, a joint venture with Swedbank.(CF Library 2/7/08)

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EURONET EXEC

Euronet Worldwide has appointed Gareth Gumbley as managing director of
its Prepaid Processing Segment to oversee strategic planning, operations
and management of Euronet’s prepaid subsidiaries on a global basis.
Gareth has demonstrated strong growth through leadership roles with an
extensive international presence in the payments processing business as
a managing director of Euronet’s prepaid businesses in Australia-New
Zealand since November 2004, most recently effective in expanding the
company’s prepaid business into India. Prior to his joining Euronet,
Gumbley was the CEO of Dialect Solutions Group online payments business
while Euronet’s global payment network includes 11,917 ATMs,
approximately 51,000 EFT POS terminals, a prepaid processing network of
394,000 point-of-sale terminals across approximately 193,000 retailer
locations in 14 countries and a consumer-to-consumer money transfer
network of more than 68,000 locations in 100 countries.

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CARD FRAUD

Computer fraud committed with the contribution of 38 individuals in the
U.S. and Romania has led to the indictment of 33 of the suspects. Having
charged the 33 individuals before federal grand jury in Los Angeles and
7 in a District of Connecticut Court(2 of whom were charged in both
states) with a 65-count indictment on international Internet
racketeering to which thousands of individual victims and hundreds of
financial institutions fell victim to. The scheme was run by the Romania
perpetrators who obtained thousands of account numbers by phishing
through SPAM emails. After directing the victim to the site, they were
prompted to enter access device/personal information allowing
“suppliers” to collect information and send to the U.S.-based “cashiers”
through instant message. The scheme, holds the city of Los Angeles,
violates the RICO Act, constitutes as conspiracy in connection with
access devices, the production/use/trafficking in counterfeit access
devices, bank fraud, aggravated identity theft, unauthorized access to a
protected computer, possession of device making equipment and
forfeiture. Additionally, U.S. law enforcement authorities are executing
9 arrest warrants in the Los Angeles area and Romanian law enforcement
authorities are executing search warrants in Romania in connection with
the indictment.

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MyECheck Signs Symmetry Direct for E-Check

CA-based alternative payment provider MyECheck has signed online retailer Symmetry Direct as a client and will provide check processing services. This agreement will allow Symmetry customers to use their checking accounts as an additional form of online payment. MyECheck’ software debits U.S. checking accounts, even accounts that ACH cannot debit and provides faster clearing and funds availability, substantially reduces charge-backs and risk and improves cash-flow, all at a much lower cost than credit or debit cards. eChecks processed on the MyECheck system are typically accepted in 1 to 3 seconds with check guarantee approval rates averaging over 90%, with many merchants exceeding over 95%.

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CAPB CYBER CRIME REPORT

A Deloitte survey, commissioned by the Canadian Association of Police
Boards (CAPB), has demonstrated cyber crime is a fast growing crime in
Canada. The survey consisted of an Ipsos Reid market research survey of
587 Canadians, interviews of 63 contacts throughout law enforcement,
prosecutions, government, academia and industry and an analysis of open
source survey data. Findings of the report conclude 49% of respondents
have been a victim of cyber crime, 70% of victims of cyber crime have
not reported the crime, 86% are concerned with cyber crime, 95% believe
they are being targeted for cyber crime and 89% encourage government to
address these issues. Other research shows Canada ranks ninth as for
cyber crime, 700,000 malicious code threats were detected in 2007, up
from 125,000 in 2006, identity theft cost consumers, banks, credit card
firms and stores $2 billion in 2006 while costing banks $220 million in
Rock phishing. CAPB subsequently recommends implementation of
legislation regarding lawful access provisions of the criminal code, a
Canada Evidence Act amendment to improve Mutual Legal Assistance
treaty’s ability to enable the admission of documents held in the normal
course of business in another country and increased cyber crime
awareness/prevention programs introduced into school curriculums.

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CARD INDICES

Moody’s Investors Service’s UK credit card indices have begun showing
signs of deterioration with the aggregate index delinquency rate up for
a third consecutive month while projections include an increase in
charge-off rates over the coming months. Factors contributing to this
deterioration include a combination of increased living costs, a suspect
rise in unemployment and decreased credit. A degree of
uncertainty in near-future trends remains, however, thanks to historical
figures showing card originators often curb potential effects through
collections or further risk base pricing.

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SEG AWARD

Gemalto’s Smart Enterprise Guardian (SEG) has been awarded the 2008
“Tomorrow’s Technology Today” Award by Info Security Products Guide.
Having received the recognition in the Personal Portable Security
Devices (PPSD) category, the SEG multi-function USB device was jointly
developed by Gemalto digital security and Lexar semiconductor solutions
provider. Gemalto digital security had 2007 annual revenues of over
EUR1.6 billion, has over 85 offices in 40 countries and about 10,000
employees.

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