SCM Microsystems’ Revenue Up 7% in Q4

SCM Microsystems reports fourth quarter revenue of $14.4 million, up 7% compared to the fourth quarter of 2004. Gross margin in the fourth quarter benefited from a net release of reserves for inventory previously written down of approximately $0.7 million, offset by $0.3 million in severance costs related to the outsourcing of manufacturing operations at the company’s Singapore facility. Operating expenses, as reported in accordance with GAAP, were $7.5 million in the fourth quarter of 2005, including net charges for amortization of intangibles, restructuring and other items of $0.3 million. This compares with operating expenses, as reported in accordance with GAAP, of $7.7 million in the fourth quarter of 2004, which included $0.6 million of net charges for amortization and impairment of intangibles, restructuring and other items. Operating loss for the quarter, as reported in accordance with GAAP, was ($2.1) million, as reported in accordance with GAAP, compared with operating loss of ($3.0) million in the year ago quarter.

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Online Debit to Surpass Credit by 2007

JupiterResearch has released a report titled “US Online Payments Forecast, 2005 to 2010” which projects that debit transaction volumes on the Internet will surpass credit by 2007. The following questions are addressed within the report: How will the mix of online transactions shift between credit and debit by 2010? What factors are driving the Internet purchasing shift from credit to debit, and how should the online payments value chain respond? In what online purchasing categories will alternative payment systems be most prevalent in 2010, and what types of alternate payments will predominate?

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Automated Collections Solution is Upgraded

Atlanta-based Premiere Global Services has upgraded its “Collections Accelerator” solution to provide an automated method of payment capture for ACH/debit card users. The Collections Accelerator solution uses innovative communication technologies to make it easier for enterprises to contact their past-due customers and collect payments through a simple voice interface, helping to reduce days sales outstanding (DSO) by improving payment rates. Collections Accelerator, Powered by Premiere, reduces costs associated with the printing and mailing of statements and past due notices and enables enterprise customers to reduce the amount of receivables they assign to higher-cost third-party collections companies.

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SCA Transportation Council Moves Forward

The Smart Card Alliance Transportation Council announced upcoming project plans and new officers, including its new Chair Paul Korczak from MTA New York City Transit. First year Council participation exceeded expectations, including ten top tier U.S. transit agencies. In addition to transit agencies, the Council’s 43 members represent a cross-section of the industry, including chip and card suppliers, transportation system suppliers, systems integrators and financial services providers. The Council’s first major accomplishment was publishing the white paper, Smart Cards and Parking, available at www.smartcardalliance.org. Council priorities for 2006 include exploring linkages between transit payment and new contactless financial payment approaches, collaborating with the APTA Universal Transit Farecard Standards Taskforce to examine the need for a security specification for the UTFS standard for transportation electronic payment systems, expanding on parking activities of the past year to engage with organizations deploying parking payment solutions and to discuss linkages between existing transit payment approaches and parking payment systems developing a white paper describing multi-use vs. multi-application cards for transit payment.

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Cash Systems’ Q4 Revenues Climb 28%

Las Vegas-based Cash Systems posted a 28% increase in revenue for the fourth quarter to $16.4 million, compared to 4Q/05. However, the casino cash access specialist posted a net loss of $2.5 million for the quarter compared to net income of $705,000 in the fourth quarter of 2004. Cash Systems cited expenses related to Sarbanes-Oxley, Triple DES upgrades, and stock option expenses as the factors. Revenue for the year was up 30.5% to $63.2 million. The Company expects revenue of approximately $82 million this year. For complete details on Cash System’s latest results, visit CardData ([www.carddata.com][1]).

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

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Counter-Phishing Blueprint is Released

The National Consumers League and Anti-Phishing Group this week released a counter-phishing blueprint that represents a statement of first-principals for the containment and roll-back of email phishing and more technically sophisticated forms of electronic consumer fraud. The report sets out seven fundamental imperatives for organizing a comprehensive counter-phishing strategy. They include support for greater and more coordinated consumer education, creation of electronic consumer experiences that are ‘secure by design’, improved user and website authentication, better tools for e-crime forensics and law enforcement, adoption of strategies to disrupt phishing lifecycle, coordinated of “white lists” by isps and domain-name owners and augmented “black lists” to recall phishing emails.

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Canada EMV Migration Gears Up for 07

Interac, MasterCard and VISA, plus many card issuers and acquirers, this week announced a firm commitment to a broad industry migration to EMV smart cards in Canada. The migration will generally begin in early 2007 and be completed within three years. However, each organization has its own individual timelines for migration. The adoption of the international EMV standard ensures that participants in the Canadian payments system will utilize established technology, which has been tested and proven in other countries that have already migrated to chip. VISA has 26 million cards in Canada while MasterCard has more than 31 million, according to CardFlash International.

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MasterCard Posts a Fourth Quarter Loss

Citing a number of seasonal and exceptional factors MasterCard posted a fourth quarter loss of $53 million. Heavy advertising, promotions and incentives as well as currency fluctuations impacted earnings and revenue. Merchant promotions and tiered pricing arrangements were also negative factors along with a boost in litigation reserves. However, MasterCard’s Q4 gross dollar volume increased 11.9% on a local currency basis to $445.8 billion. General and administrative expenses rose 11% in 4Q/05 while advertising and market development increased 17%, compared to one-year ago. As of December 31st, MasterCard’s customer banks issued 749.3 million MasterCard cards. For complete details on MasterCard’s fourth quarter performance, visit CardData ([www.carddata.com][1]).

MASTERCARD HISTORICAL ($ millions)
4Q/04 1Q/05 2Q/05 3Q/05 4Q/05
G&A: $338.7 $306.6 $319.2 $350.1 $376.1
A&M: $329.5 $171.7 $231.6 $219.2 $385.5
Net Income: $ 1.3 $ 93.3 $120.2 $106.1 ($ 53.0)
Note: G&A: General & Administrative Expenses; A&M:
Advertising & Market Development Expenses.
Source: CardData (www.carddata.com)

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

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VISA Introduces a Mini Contactless Card

VISA took contactless card payments in the U.S. to a smaller level today with the introduction of the “Contactless Mini Card.” VISA says its research showed that the mini card is the second most preferred form factor after the standard-sized card, with the majority of consumers stating that they would be interested in adding contactless functionality to a mini card. The launch of the new card was made possible through the expansion of the “VISA Smart Breakthrough” program. In addition to mini cards, the new contactless solution has the flexibility to support other form factors, including 3D key fobs, mobile phones and other handheld devices. VISA says issuers can offer both standard-sized and mini contactless cards to their cardholders in full, large-scale deployment. Last month VISA reported that it surpassed 20,000 “VISA Contactless” acceptance locations in the U.S. More than 15 million “Mini VISA” cards have been issued in the USA, primarily by Bank of America. Bank of America, the patent holder, introduced the mini card program in April 2002. VISA recently reported more than 4 million VISA-branded contactless payment cards have been issued worldwide. (CF Library 10/2/02; 6/1/04; 2/2/06)

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Alliance & Leicester Selects PassMark

Alliance & Leicester announced it has
will now provide a greater level of security and protection against
fraud and identity theft for its nearly five million customers using the
PassMark Security “Two-Factor Two-Way Authentication” system. The PassMark
system combines several counter measures against online
threats in a single security solution. Online customers log on to their
accounts with secure, mutual authentication and get additional layers of
risk-based transaction security that prevent phishing, key logging and
man-in-the-middle attacks. Alliance & Leicester is the first bank in
the UK to provide its customers with this added level of security.

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Encore Capital Q4 Profits Rise 37%

San Diego-based Encore Capital Group reported fourth quarter revenues of $58.4 million, a 27% increase over the same period of the prior year. Net income was $7.8 million, a 37% increase over 4Q/04. The Company says it generated the highest level of collections, revenues and profits in its history during the quarter. During the fourth quarter Encore spent $39.9 million to purchase $1.3 billion in face value of debt. The Company noted the deal flow was very strong in the fourth quarter due to the increased supply in the credit card market resulting from bankruptcy reform. Encore expects future increases in supply during 2006 as consumer debt levels increase and creditors across different asset classes explore debt sales to monetize their charged-off receivables. For complete details on Encore’s latest performance, visit CardData ([www.carddata.com][1]).

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

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OTS Gives H&R Block Bank its Blessing

Kansas City-based H&R Block has been granted a federal savings bank charter by the OTS allowing it to provide banking products and services through H&R Block Bank. The bank will offer traditional banking products including checking, savings, certificate of deposit accounts and IRAs, as well as a full range of services including direct deposit, debit card and stored-value card services. The bank also plans to offer prime loan products such as fixed-rate and adjustable-rate mortgage loans. H&R Block received approval from the FDIC last year. In early 1999, H&R Block sold its “WebCard VISA” portfolio, with credit card account balances of approximately $181 million, to Providian Financial.(CF Library 1/26/99)

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