BONUS CARD

Garanti’s “Bonus Card” MasterCard smart card program has topped 3.5 million cardholders, signed over 45,000 sales points where bonus can be earned/redeemed, and has processed more than 49 million euros worth of bonus redemptions since its launch four years ago. Since adding two new cards, “Bonus Plus” and “Bonus Premium,” one-year ago, the issuer has upgraded 343,000 cardholders based on the number of bonuses the cardholder accumulated. Garanti says rewarding the most loyal cardholders with upgraded cards has produced solid activity rates.
Whereas the “Bonus Card” activity rate is at an average of 76%, the “Bonus Plus” activity rate is at 88%, and “Bonus Premium” at 92%. The issuer says that the number of “Bonus Plus” and “Bonus Premium” cardholders only represent 12% of total “Bonus Card” users, but they produce 32% of the program’s total volume. The “Bonus Card” program also offers its merchant partners access to CRM data based on card transactions. Garanti offers online access to all kinds of marketing activities, from consumption habits to demographic structures, from income levels to general profiles of its cardholders, in an easily understandable and measurable/comparable format. All data is aggregate, and if partner merchants wish to make a special communication to a certain customer group, it has to be done through Garanti Payment Systems.

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ECHO Puts Field on the Board

Electronic Clearing House has named Richard Field, former executive for The Bank of New York, Chase and Citigroup, to its Board. Mr. Field brings to ECHO more than 35 years of experience in the financial services industry as an executive for The Bank of New York, Chase and Citigroup. Since retiring, Mr. Field was a founding director of LendingTree, an innovative and successful lending and realty services exchange, which allows consumers to receive competitive loan offers over the Internet. Electronic Clearing House, Inc. provides a complete solution to the payment processing needs of merchants, banks and collection agencies.

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BellSouth and Bank One Launch Reward Cards

Atlanta-based BellSouth and Bank One have teamed to launch a co-branded MasterCard that offers double points to BellSouth customers who elect to have their BellSouth bill paid automatically with the card. The companies are also offering a “Platinum MasterCard” for business customers that includes a reward program offering 3% cash back on purchases made at restaurants, office supply stores, gas stations, building supply stores, and hardware/home improvement centers, plus 1% on all other purchases. There is a $20,000 annual cap on business purchases qualifying for the 3% rebate. The consumer card rewards cardholders with one point for each dollar charged. Each point has a redemption value of approximately one cent. As a special promotion through mid-September, new consumer cardholders will receive a $30 credit on their card when they make their first purchase. Both cards carry a 0% intro rate on purchases and balance transfers, followed by a variable 10.99% to 16.99% depending on credit score.

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LML Payment Systems Files E-Check Patent Suits

Vancouver-based LML Payment Systems has retained the powerhouse law firm of Kirkland & Ellis to take on four companies who allegedly infringed on its three e-check patents. Yesterday, lawsuits were filed in the U.S. District Court for Delaware against Telecheck Services, Electronic Clearing House, Xpresschex and Nova Information Systems. During the past year LML awarded a non-exclusive license to Verus Financial Management, a competitor providing electronic check conversion services at the point of sale. LML Payment Systems reported first calandar quarter revenues of $2.7 million. The Company provides check processing solutions including ECC and RCK.

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MBI Puts Former Concord EVP on its Board

MBI, the originator of a healthcare-benefit debit card and provider of real-time payment software for employee benefit programs, has elected Miles Kilburn, former EVP and chief strategy officer for Concord EFS, to its Board. Kilburn has over 15 years of experience providing strategic merger and acquisition and legal counsel to leading financial institutions. Most recently, he served as executive vice president and chief strategy officer for Concord EFS, Inc., which provides technology and network systems for electronic payments and other financial transactions. MBI offers the #1 employee benefits card — electronically accessing Flexible Spending Accounts, Health Reimbursement Arrangements, Health Savings Accounts, Transit/Parking Accounts and Dependent Care Accounts all on one card.

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Global Axcess Net Income Expected to be Up 50%

FL-based Global Axcess said it expects to report approximately $300,000 in net income on revenues of between $3.1 million and $3.2 million for the second quarter. This will represent a sizable jump over the prior year’s performance for the comparable three month period, which resulted in revenue of $2.6 million and net income of $197,350. Actual results for the current three and six-month periods, ended June 30, 2004, are scheduled for release on or before August 16, 2004. Global Axcess Corp. was founded in 2001 with a mission to emerge as one of the nation’s leading network-based electronic commerce and transaction processing companies.

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Vegas Monorail Uses an ERG Payment System

Australia’s ERG Group successfully installed the fare collection system for the new Las Vegas Monorail which opens today to the general public. ERG was awarded the contract by Bombardier Transportation to implement the fare collection system in September 2002. ERG installed 50 fare gates and 38 ticket vending machines at the seven stations and hotels. The system will use the same hardware and backend software to process both contactless smart cards and magnetic tickets for single and multiple journeys, daily and weekly passes. ERG is providing fare media utilizing magnetic tickets in the initial stages of the project with smart cards added in the future. All tickets can be purchased with cash, credit card or debit card payment with change provided when cash is used. The total system is capable of expansion into multiple applications for smart cards including electronic purse for casinos, security access and customer loyalty programs. ERG estimates it will handle more than 100,000 transactions daily.

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GE to Launch a Private-Label Card for Kirkland’s

GE Consumer Finance is launching a private-label credit card for Kirkland’s, a U.S. retailer of home decor. The nationwide program features a 10% off promotion on a customer’s first purchase using the card, special shopping days, and exclusive previews of new merchandise. A customer loyalty program will reward shoppers with a “bounce-back” $10 certificate for every $150 spent on the card. The new card will be offered at the chain’s 282 stores in 36 states.

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Two Casinos Pony Up for FCRA Violations

Two casinos, who denied consumers jobs based on their credit reports, agreed to pay $325,000 in civil penalties for failing to inform the job applicants of their FCRA rights. According to the FTC’s complaint, Las Vegas-based Imperial Palace, Inc. and Biloxi-based Imperial Palace of Mississippi, Inc., ask job applicants to sign a release form authorizing the defendants to obtain the applicants’ credit reports, then review each credit report and use a “Background Form” to rate the applicant as either “Poor,” “Fair,” or “Good.” The FCRA requires that before taking adverse action against a current employee or job applicant based on information in the individual’s credit report, the employer must give that individual a copy of the report and a written description of his or her FCRA rights.

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Equifax Jacks Up Fees to Recover FACT Act Costs

Equifax announced that effective October 1st, it will assess a regulatory recovery fee of 11 cents for its business-to-business products to offset the costs required to implement the provisions of the federal FACT Act. The law mandates that the three nationwide credit reporting agencies build and maintain a centralized source that will enable a free annual consumer credit file disclosure to consumers upon their request beginning December 1, 2004. Equifax Inc. is a global leader in turning information into intelligence.

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Citi Card Revenues Decline; Performance Improves

Citigroup reported this morning that second quarter profits for its credit card business in North America increased 2% sequentially, and 31% year-over-year, to $850 million. Revenues for the second quarter declined nearly 4.5%, compared to the first quarter, but were up 37% from 2Q/03 due to its major acquisition of the Sears portfolio in 4Q/03. Credit card outstandings for North America increased 27% over 2Q/03 to $143.6 billion, which includes $28.6 billion in private label card outstandings. However, Citi only added $1.3 billion in total outstandings during the quarter, less than 1% since March 31st. Charge volume increased 24%, from $59.7 billion to $74.3 billion, year-on-year. Citi’s account base at the end of second quarter was 125.8 million accounts, a 48% gain over 2Q/03, but only 200,000 more than the previous quarter. Citi’s charge-offs dropped from 6.99% in the first quarter, to 6.61% for 2Q/04. Charge-offs for bank credit cards declined to 6.15%, compared to 6.60% in the first quarter, but up from 5.95% one-year ago. Charge-offs for private label credit cards also declined, from 8.70% in the first quarter and 10.77% for 2Q/03, to 8.61% for 2Q/04. Delinquency (90+ days) also declined from 2.10% for 1Q/04 to 1.85% for the second quarter 2004. Delinquency for bank credit cards dropped 22 basis points and 45 basis points for private label cards, quarter-to-quarter. For complete details on Citigroup’s 2Q/04 performance visit CardData ([www.carddata.com][1]).

CITIGROUP
North American Credit Card Net Revenues
2Q/03: $649 million
3Q/03: $815 million
4Q/03: $1010 million
1Q/04: $832 million
2Q/04: $850 million
Source: CardData (www.carddata.com)

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

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ACE Cash Adds 39 Stories in Four Acquisitions

Dallas-based ACE Cash Express has acquired 39 stores in four transactions for $8.1 million. ACE acquired 21 stores in Memphis, 10 stores in western Arkansas, 5 stores in Louisiana, and 3 stores in Louisville. ACE Cash Express, Inc. is a leading retailer of financial services, including check cashing, short-term consumer loan and bill payment services, and the largest owner, operator and franchisor of check cashing stores in the United States.

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