Providian Fundamentals Point to a Strong 2004

Providian reported net income for the second quarter of $69.7 million, a sharp decline from last quarter’s $102 million profit, but up 79% compared to 2Q/03. During the quarter, the issuer signed up more than 500,000 new accounts but lost just as many, ending the quarter at approximately 10.3 million accounts. The Company’s managed 30+ day delinquency rate at the end of the second quarter decreased to 6.44% from 7.36% at the end of the first quarter, and down significantly from last year’s 9.72%. Managed net credit losses in the second quarter were $525.4 million, resulting in a managed net credit loss rate of 12.53%, compared to 13.88% in the first quarter, and 16.84% for 2Q/03. The net interest margin on average managed loans in the second quarter was 13.75%, compared to 14.12% in 1Q/04, and compared to 15.09% for 2Q/03. Managed loans receivable as of June 30th, increased to $17.3 billion compared to $16.7 billion at the end of the prior quarter and $17.8 billion one-year ago. For complete details on Providian’s second quarter performance as well as prior quarters visit CardData ([www.carddata.com][1]).

Providian Net Income Track Record
2Q/03: $39.0 million
3Q/03 $85.3 million
4Q/03: $67.1 million
1Q/04: $101.7 million
2Q/04: $69.7 million
Source: CardData (www.carddata.com)

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

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Marsh Supermarkets to Offer Jeanie POS Service

IN-based Marsh Supermarkets has signed a new five-year contract with Fifth Third Bank Processing Solutions to offer “Jeanie” POS services at its 110 stores. Marsh operates 67 Marsh(R) supermarkets, 37 LoBill(R) Foods stores, nine O’Malia(R) Food Markets, 164 Village Pantry(R) convenience stores and one Savin(SM) store in Indiana and western Ohio. Fifth Third Bank Processing Solutions processes over nine billion ATM and POS transactions per year for more than 207,000 retail locations and 1,350 financial institutions worldwide, including The Kroger Co., AutoZone, Abercrombie & Fitch, Nordstrom, Inc. and The Finish Line. Annually, Fifth Third processes $97 billion in credit card sales.

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Newtek Signs More Credit Union Leagues

NY-based Newtek Business Services has secured the endorsement of 11 state credit union leagues to provide electronic payment processing services, representing a total of 1,540 credit unions nationwide, in addition to CUNA’s 9,600 credit unions. Ten of the state credit union leagues have endorsed Newtek Business Services for both SBA lending and electronic payment processing. Newtek Business Services, Inc. is a premier provider of business services and financial products to the small to medium-sized business market.

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FPK Adds a Credit Card Expert to its Staff

NYC-based Fox-Pitt, Kelton has hired credit card expert, Edwin Groshans, as VP and Senior Analyst heading coverage of the specialty finance sector. Mr. Groshans, most recently of Moors & Cabot, Inc., where he was Director of Financial Institutional Research and Senior Analyst, began his equity research career with Credit Suisse First Boston and later moved to Prudential Securities where his focus was on Specialty and Mortgage Finance. FPK is the only global investment banking operation specializing in financial services worldwide. FPK has offices in New York, London, Hartford and Hong Kong.

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ATO Guns for Revenue from High Reward Earners

The Australian Tax Office is going after cardholders who earn more than 250,000 reward points or frequent-flyer miles per year. The ATO
announced last week it will audit all highly rewarded cardholders and
those channeling business purchases through their reward credit cards
for no commercial reason. The ATO is reportedly preparing to ask credit
card companies to release data on cardholders accruing more than 250,000
points or miles per year. Under the new “ATO Practice Statement,” the
government wants to tax excessive rewards as a fringe benefit. The
Australian press is reporting that card issuers say the measure could
kill their credit card reward programs.

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Asia-Pacific Smart MasterCards Up 600% Since 2001

At mid-year the number of MasterCard smart cards in Asia-Pacific hit 23 million, compared to 14.5 million at the end of June 2003. Since 2001, the number of smart MasterCards in the region has grown nearly six-fold, according to CardFlash International ([www.cardflashinternational.com][1]). About 90% of the cards are EMV-compliant. MasterCard says the rapid growth is driven by a combination of strong global smart card programs such as “OneSMART MasterCard,” lower costs of multi-application cards, and the development of new applications such as “MasterCard Open Data Storage.” With “OneSMART MasterCard,” all of MasterCard’s global smart card solutions, technical expertise, and marketing support are consolidated under a single banner.

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

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Delta Singular Processing Unit Sold, Signs Alpha

The acquisition of Delta Singular Outsourcing Services by First Data from Delta Singular, has been completed. Simultaneously, Delta Singular Outsourcing Services entered a 10-year agreement to provide payment processing and related services to its largest client, Alpha Bank. As the second largest commercial bank in Greece, Alpha Bank issues MasterCard cards, is the largest issuer of VISA cards, and the only issuer of American Express cards in Greece. Delta Singular Outsourcing Services provides payment processing services in Greece, the Middle East and the Balkans.

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Web Builder Tool Adds PayPal Capabilities

San Jose-based XO Communications has inked a deal to incorporate e-commerce capabilities provided by PayPal into its “Web Builder” tool. As part of the co-marketing agreement, PayPal will feature the services of Concentric, the XO small and medium-sized business hosting services brand, on its partner page and in the company’s newsletter. XO Communications is a leading provider of national and local telecommunications services to businesses, large enterprises and telecommunications companies. XO offers a complete portfolio of services, including local and long distance voice, dedicated Internet access, private networking, data transport, and Web hosting services as well as bundled voice and Internet solutions.

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Chip-Enabled ATMs & Prepaid Smart VISAs Debut

The first EMV chip-enabled mobile ATM in Europe will circulate in the Olympic venues around Athens during the Olympic Games due to the partnership between VISA International and Alpha Bank. Also, the first smart prepaid card, the “VISA Money Olympic Games” card, will also be offered. A network of 16 new EMV chip-enabled ATMs will be installed that will support four languages -English, Greek, French and German and two types of transactions: balance inquiry and cash withdrawal. Almost 1,000 terminals will be installed by the two sponsors in the Olympic venues, that will operate through the GSM mobile telephony network, mainly operated by the food & beverage sector.

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Wincor Nixdorf Promotes Evans

TX-based Wincor Nixdorf has promoted Doug Evans to VP of retail for Wincor Nixdorf USA. Evans, formerly director of retail solutions for Wincor Nixdorf, will now manage the company’s U.S. retail business. He will work closely with engineering, sales, marketing, project management, and channel marketing teams to help assure continued growth for Wincor Nixdorf’s retail business in the U.S. Wincor Nixdorf, Inc. is one of the fastest growing providers of IT products and solutions for the retail and banking industries.

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EGG 2Q/04

After racking up nearly GBP100 million on losses for its “la Carte Egg VISA” in the last five quarters, Prudential’s Egg is
withdrawing from the French market. For the second quarter, Egg produced an operating profit for its British “Egg VISA” card of GBP19.4 million versus an operating loss of GBP16.5 million for its French “Egg VISA.” Overall, the Egg plc Group made a profit of GBP1 million in the second quarter leading to an overall loss before tax for the first half of 2004 of GBP4 million, down from a loss of GBP23 million in the same period last year. The Group has been trying to sell-off both credit card portfolios but no deal has been announced to-date. During the quarter, Egg added 171,000 new credit cardholders to bring its total portfolio to 2,944,969 cardholders. Total Egg credit card outstandings were GBP3,091 million at the end of June.

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Fiserv EFT/CNS Transactions Up 18% in the 1H

Fiserv EFT/CNS reported that its overall transaction volume for the first half of this year is running 18% over last year, handling slightly more than two billion transactions. The Fiserv-owned “ACCEL/Exchange Network” also reported record volume through mid-year. Six-month transaction totals increased 25% to 127 million. Among individual delivery channels, ATM transactions climbed 62% to 21 million , and POS transaction activity increased by 19% to 106 million. “ACCEL/Exchange” transactions are currently enabled at 55,000 ATMs and approximately 1.5 million POS devices nationwide. In addition to “ACCEL/Exchange,” Fiserv drives the AFFN, Tallahassee, FL-based Credit Union 24 and the surcharge-free Allpoint Network, and processes EBT transactions. Transaction volume for these segments was 798 million through midyear 2004, a 26% increase over the first six months of 2003. PIN-based point-of-sale volume by 28% to 639 million.

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