National Data Protection Bill Passes

The U.S. House Financial Services Committee yesterday passed the “Financial Data Protection Act of 2005.” “H.R. 3997” was passed by a 48-16 vote. Consumer advocates passionately oppose the legislation since the bill preempts state laws and enables companies to decide how to handle the disclosure of breaches involving the compromise of sensitive data. The bill also does not regulate the activities of data aggregators. It will also limit consumers ability to put a security freeze on their credit reports. Meanwhile, bank industry advocates say the bill strikes the right balance between securing personal financial data and preserving an efficient marketplace. The ABA notes that banks already have a regulatory system to handle response and notification of security breaches and the bill passed yesterday will merely extend these type of standards to all businesses.

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VISA to Use UFJ NICOS Smartplus

Mitsubishi UFJ NICOS Co. has agreed to cooperate with VISA
International for the expansion of contactless payment using the
contactless IC credit payment scheme “Smartplus” developed by UFJ NICOS.
Low-value payments using contactless IC as a payment method are
getting popular particularly in public transportation. Furthermore,
users of “Osaifu-keitai”- mobile handsets with contactless IC embedded
with optional functions of electronic money payment or credit card
payment – are expanding as mobile phone operators market these models as
their main product. Multiple contactless payment (“Keitai credit”)
services are under operation to expand the credit usage in the cash
market. “Smartplus” can be provided on a plastic
card, and corresponds to all the “Osaifu Keitai” released from each
mobile phone operator. UFJ NICOS will start providing “Smartplus” which
corresponds to VISA contactless payment specifications by May 2006, and
DC by August, 2006. The number of “Smartplus” members is estimated to
expand to 2 million by 2008.

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Internet Gambling Bill Rises Again

The U.S. House Financial Services Committee this week again approved a bill that would ban payment card use for Internet gambling. Checks, wire transfers and EFT will also be prohibited for illegal Internet gambling transactions. The proposed law would essentially make Internet gambling illegal for all U.S. consumers within the U.S. However, some online betting for fantasy sports and horse races would be permitted. This is the third time the Committee has passed this legislation, first in October 2002 and again in June 2003. Both bills stalled in the Senate. The Committee estimated that Americans spend about $6 billion in offshore Internet gambling each year.

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AmEx Offers Incentives for Tax Payments

American Express is offering double rewards through April 17th for tax payments via its “Delta SkyMiles Card” and the “Starwood Preferred Guest Card”. Now through April 17, 2006, Delta SkyMiles Credit Cardmembers can earn double SkyMiles and can also earn one mile for every eligible dollar spent when paying their state income taxes on the Card. Starwood Preferred Guest Cardmembers can also earn double Starpoints on the first $5,000 of their 2005 personal federal income tax payments when paying with the Card and can earn one Starpoint for every eligible dollar spent when paying state income taxes. This year marks the first time the IRS has allowed businesses to pay their balance due on their federal business taxes (Form 940 and Form 941) using an American Express Card. This is in addition to paying the balance due on state and local business taxes.

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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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