OBERTHUR 2Q/05

Oberthur Card Systems reported its best second quarter ever as
revenues climbed 14% to e121.1 million, driven by a 35% increase in the
shipment of smart cards. Sales of payment smart cards were e35.8 million
in 2Q/05, a nearly 27% increase over the year ago quarter. During the
quarter Obethur shipped 45 million smart cards. Sales of “Other Cards,”
including magnetic stripe cards, scratch cards and memory cards, were
very dynamic in spite of expected decline due to EMV migration. With a
strong level of activity in the USA, sales were up 10.8% reaching e18.5
million. Microprocessor or smart cards account for nearly two thirds of
Oberthur’s total revenues. The EMEA region contributed about 73% of the
card manufacturer’s total sales during the second quarter. Oberthur says
the payment market, which represents 56.4% of sales as of mid-year,
should remain the major engine for growth for the company in the years
to come as a result of the EMV migration. After a better than expected
first half, the company will continue its penetration in Italy, Benelux
and Turkey and will remain focused on the deployment of
multi-application cards in countries located in South America, Europe
and Asia. For complete details on Oberthur’s second quarter performance,
visit CardData (www.carddata.com).

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Alliance Data Systems Up 24% in Q2

Alliance Data Systems posted a 24% increase in second quarter revenue of $371 million while net income rose 23% to $34.4 million. The growth in revenue was led by marketing services and its Epsilon business unit. Transaction services revenue decreased by 1% to $168.6 million due to a grow-over issue related to a utility services client that declared bankruptcy. Credit Services revenue increased 8% to $130.8 million driven by an acceleration in credit sales growth, improving credit quality and stable funding costs. Marketing services revenue increased 73% to $145.7 million thanks to Epsilon, as well as the “AIR MILES Reward Program.” As a result, ADS increased its 2005 cash earnings per share estimate to $1.92-$1.95, versus the $1.87-$1.90 stated previously. For complete details on Alliance Data Systems’ second quarter performance, visit CardData ([www.carddata.com][1]).

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

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Asia Pay Board Adds an International Banker

Asia Payment Systems has named Michael Oliver to its board of
directors. Oliver is a senior banker with extensive Asian and
international experience. He recently served as Regional Board
Member of Commerzbank in Singapore. In this position he was responsible
for Commerzbank’s merchant banking subsidiaries operating in the
Asia-Pacific region, its commercial banking activities and branches in
Hong Kong, Shanghai, Singapore and Tokyo, as well as providing regional
oversight and corporate governance. Asia Pay is developing a credit card
processing network that provides clearing services to merchants, oil
companies and financial institutions in China, Japan and other markets
of interest in Asia.

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RBA Proposes to Publish an Interchange Benchmark

The Payments System Board is proposing to establish and publish a
common benchmark for interchange fees for the Bankcard, MasterCard and
VISA credit card programs. The proposal replaces an earlier proposal to
publish program-specific benchmarks. The standard proposes that the
common benchmark be based on a weighted average of the eligible costs of
issuers in the Bankcard, MasterCard and VISA programs. The new common
benchmark would become effective on November 1, 2006. Meanwhile, BPAY
has now agreed to publish its interchange fees and will be
available on its Web site after September 1st. BPAY was unwilling to
publish its fees after a request was made in June.

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Credit Card ABS Issuance Down 16% Mid-Year

A new report suggests that U.S. credit card asset-backed securities issuance could be headed to a six-year low with total volume of $50 billion in 2005. Standard & Poor’s had earlier predicted $69 billion for this year but now says the market is running 16% lower at mid-year. S&P says the growth rate for the card industry has been fairly flat, the explosive growth in home equity lines of credit and the continuation of cash-out mortgage refinancing has provided additional liquidity for homeowners to pay down their credit card debt; and the industry is consolidating. Despite the changing landscape, S&P says ABS performance is expected to remain stable.

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MBNA INTL 2Q/05

MBNA’s international loans increased 16% in the second quarter to $25.5 billion, compared to one-year ago, but, declined slightly from the prior quarter due to the rising value of the U.S. dollar. In Europe, total managed loans grew 16.4% to $21.6 billion. Sequentially, managed loans dropped $400 million, impacted by a $1.1 billion rise in the U.S. dollar. In Canada, total managed loans were $3.8 billion for 2Q/05, a 13.3% gain over one-year ago. During the second quarter, MBNA Canada was selected by the newly-formed Alterna Savings to issue two MasterCards. MBNA Canada is the second largest MasterCard issuer in the country with nearly 500 agents or partners. For complete detail on MBNA’s latest results visit CardData (www.carddata.com).

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FDIC Proposes a New Rule on STV Cards

The FDIC proposed a new rule on the insurability of funds subject to transfer or withdrawal through the use of stored value cards and other nontraditional access devices, such as computers. Under the new proposed rule, the party who places the funds at the bank would be treated as the insured depositor unless (1) the records of the insured depository institution indicate that the first party is not the owner of the funds and (2) records maintained by the depository institution or the first party reflect the identities of the cardholders and the amount payable to each cardholder. If both of these requirements are satisfied, the funds held by the depository institution would be insured on a “pass-through” basis to the cardholders. The FDIC is opening the proposed rule for comment.

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Rahaxi to Process for Neocard

Rahaxi Processing Oy has signed an agreement with Neocard Oy
to provide electronic payment processing for Neocard’s credit and
loyalty cards. The “Neocard” was introduced to the Finnish youth
market in fall 2004 and offers loyalty benefits to their cardholders in
nightclubs, restaurants, movie theaters across Finland. Rahaxi is a
robust Northern European “BASE24” credit card processing platform. It currently processes in excess of 1 million card payments per month.

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Wal-Mart Seeks an IB to Process Transactions

Wal-Mart has filed an application to operate an Industrial Bank in Utah. The retailing giant says it wants to be its own credit and debit card processor to lower its costs. Wal-Mart says it receives more than 140 million credit, debit and electronic check payments per month. The retailer says the bank will accept limited deposits from non-profit and charitable organizations, but has no plans to operate branch banks or to engage in lending of any type. Wal-Mart noted it has independent banks in more than 1,000 of its stores and is actively seeking new financial institutions as tenants.

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VISA Canada Selects DynTek as a QISA for AIS

California-based DynTek has been selected as a “Qualified
Independent Security Assessor” for the VISA Canada “Account Information
Security” program. DynTek is one of only six firms to obtain the “QISA” certification in Canada. DynTek provides review and assessment services to any entity that processes or stores VISA account data, including merchants, processors and service providers, to determine if they
meet mandated security requirements. DynTek is also a qualified network security scanning vendor, which enables the company to help entities meet PCI program requirements to scan their Web sites for security vulnerabilities.

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First Data Signs 1,500 Major Supermarkets

First Data has signed a contract to process credit, debit and EBT transactions for the more than 1,500 combined locations of Food Lion, Hannaford Supermarkets, Sweetbay/Kash n’ Karry Supermarkets and Harveys First Data Corp. provides electronic commerce and payment solutions for 4.1 million merchant locations, 1,400 card issuers and millions of consumers worldwide. Delhaize America is a leading supermarket operator in the United States with over 1,500 stores in 16 states in the eastern United States.

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CoopDesarrollo Selects Fiserv for a Core Processing

The country’s sixth largest credit union, CoopDesarrollo, has selected Fiserv CBS Worldwide for a core processing agreement. The move that will make the credit union one of the first to comply with new Mexican government regulations. CoopDesarrollo has 100,000 members and 24 branches in Guanajuato and Jalisco. The credit union will operate under the regulations known as Ley de Ahorro y Credito Popular and will be supervised by the Comision Nacional Bancaria y de Valores and by the Confederacion de Cooperativas Financieras de la Republica Mexicana.
Fiserv CBS Worldwide enables more than 280 financial institutions
to deliver integrated solutions for managing the entire customer
lifecycle from core banking to multi-channel customer contact and data
warehousing.

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