Senator Clinton Joins VISA Computer Lab Ceremony

U.S. Senator Hillary Rodham Clinton joined VISA USA last week to deliver a new computer lab to Batavia High School in New York state to help students and teachers gain access to VISA’s “Practical Money Skills for Life”. The free educational resource provides teachers with lesson plans (kindergarten-college) mapped to their state education requirements, as well as teacher guides, overheads, instructional videos and CD-ROM’s. The Practical Money Skills for Life curriculum is teacher tested and teacher approved. Visa is the world’s leading payment brand and largest consumer payment system, enabling banks to provide their consumer and merchant customers with a wide variety of payment alternatives.

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Over-Limit Fees Outpace Late Payment Fees

The average over-limit fee increased 4.8% last year, compared to 4.6% for late payment fees, ending the year with an average fee of $29.23. Between 1994 and 1999, over-limit fees grew 96%, from $12.75 to $24.96, according to CardTrak ([www.cardtrak.com][1]). After a huge run-up in 1997 and 1998, over-limit fees quickly downshifted, increasing just 17% over the past five years. During 2003, the most common over-limit fee among major issuers was $35, although some issuers charge $39 for accounts with higher balances.

OVER-LIMIT FEE HISTORICAL
Year Average Y/Y CNHG
1994: $12.75 +2.6%
1995: $13.20 +3.5%
1996: $13.94 +5.6%
1997: $18.44 +32.3%
1998: $21.14 +14.4%
1999: $24.96 +18.1%
2000: $25.99 + 4.1%
2001: $26.88 + 3.4%
2002: $27.89 + 3.8%
2003: $29.23 + 4.8%
Source: CardData (www.carddata.com)

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

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Metris ABS Notes Lose Rating Watch Negative

In more good news for Metris, Fitch Ratings removed its “Rating Watch Negative” for its Master Trust notes. Fitch says Metris key trust performance metrics are still at elevated levels, but trust vintage defaults rates appear to be stabilizing and, delinquency trends have begun to post modest improvements in recent months. Trust gross defaults have averaged approximately 19.25% over the past three months, compared to about 21.50% for the same prior year period. Likewise, late stage delinquencies have also declined and stood at 10.91% for the February collection period compared to 11.92% last year. Fitch expects that further improvement in trust credit quality metrics will remain challenged by the denominator effect caused by high portfolio attrition and limited new account growth as well as the residual effects of older, weaker, performing vintages, which continue to represent a significant proportion of the trust receivable base. Positively, trust reported gross yield and monthly payment rates have been relatively stable and in-line with historical performance, averaging 26.84% and 6.83%, respectively, over the past 12-months.

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CARD ABS 4Q/03

Canadian payment rates, among card-backed bonds, continue to be roughly double the levels in the USA, hitting 34.85% in the fourth quarter. Also during the fourth quarter, the delinquency rate reversed two quarters of increases and fell to a new quarterly low, as charge-offs marked the third consecutive quarter of year-over-year increases. According to Moody’s Investors Service, the charge-off rate was 2.94% in the fourth quarter, up from 2.62% a year ago, but below the second quarter peak of 3.15%. The delinquency rate in the fourth quarter was 2.27%, down slightly from 2.29% in the same period a year earlier. The Moody’s Canadian Index balance covers $38.3 billion in outstanding balances. The Canadian Banker’s Association reported outstanding receivables balance for all VISA and MasterCard issuers was $49.8 billion as of October 31st.

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VASCO Honors MasterCard, DG VERLAG, SRC and Otto for EMV Contributions

VASCO Data Security International has honored MasterCard Germany, DG VERLAG, SRC and Otto for their outstanding contribution to opening the German market for EMV-based strong user authentication.
DG VERLAG is the financial service provider for the German Volks- & Raiffeisen Banks. DG VERLAG provides surveys, logistics, financial products and payment cards/solutions. Security Research & Consulting
is a research organization for the German financial sector. Otto Versand is one of Germany’s top mail order companies. VASCO’s “Digipass 800” is an official and proven strong authentication partner product for the new EMV generation of credit cards.

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Fortis Bank Signs a Deal to Purchase Diebold Opteva ATMs

Fortis Bank Netherlands has become the 25th financial institution in the EMEA region to purchase Diebold’s new “Opteva” family of ATMs. More than 1,500 units have now been sold to banks across the EMEA region. Some of the “Opteva” security features include customer awareness mirrors, cameras and recessed keypads, and displays. “Opteva” ATMs are also equipped with fraud-resistant dispensers and card readers, as well as a “Triple DES”-compliant encrypted PIN pad. Other EMEA “Opteva” clients include Credit Agricole, National Bank of Greece, Banque et Caisse d’Epargne de l’Etat, Raiffeisenbank, Kazcommertsbank, Standard Bank, and Alrajhi and National Commercial Bank.

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FreeStar Technology Loss Declines 75% in the Fourth Quarter

Helsinki-based FreeStar Technology reported that its net loss for the fourth quarter decreased to $1.3 million, an improvement of 75% over the same year-ago period. Revenues for 4Q/03 were $361,431. The net loss for the final six months of 2003 decreased by 35% to $3.7 million. Revenues for the same period rose to $661,374, up from $8,700 for the comparable six months in 2002. Freestar acquired Rahaxi Processing Oy during 2003 and recently completed the acquisition of TransAxis. FreeStar currently processes approximately 1 million card payments per month for an established client base that comprises companies such as Finnair, Ikea and Stockman.

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Auchan-Gruppo Rinascente has Inked a $6MM Deal with NCR to Replace its POS System

Hypermarket specialist, Auchan-Gruppo Rinascente, has signed an agreement worth over US$6 million with NCR to replace the point-of-sale hardware and software currently installed throughout the chain’s 38 stores. Auchan-Gruppo Rinascente will also install four to eight NCR “FastLane” self-checkout lanes in all stores. The new front-end solution includes NCR “RealPOS 80c” terminals, NCR :RealScan 72″ bioptic scanners, and new electronic funds transfer PIN pads. NCR is also providing POS software for Auchan.

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Nokia, Royal Philips, and Sony Create the Near Field Communication Forum

Nokia, Philips, and Sony have teamed to establish the “Near Field Communication Forum” to promote the use of touch-based interactions for payment purposes. The new forum will promote implementation and standardization of NFC technology to ensure interoperability between devices and services. NFC technology evolved from a combination of contactless identification and interconnection technologies. NFC operates in the 13.56 MHz frequency range, over a distance of typically a few centimeters. NFC technology is standardized in “ISO 18092,” “ECMA 340,” and “ETSI TS 102 190.” NFC is also compatible to the broadly established contactless smart card infrastructure based on “ISO 14443 A”, i.e. Philips “MIFARE” technology, as well as Sony’s “FeliCa” card. Further information is available at nfc-forum.com.

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MBNA Freezes Executive Pay Post Cawley

MBNA reported this week that it plans to freeze salaries for senior executives, reduce annual bonus amounts, reduce total equity awards by not granting stock options in 2004, and limiting restricted stock awards. In November, MBNA hired an independent compensation consultant to review senior executive compensation. On December 12th, MBNA entered into an amended agreement with Charles Cawley, founder, CEO and President, who retired on December 30th. Cawley will serve as a Senior Advisor until August 15, 2005 and has agreed never to compete with the Corporation. He will receive $2.5 million annually for his services. MBNA will also provide Cawley with office and administrative support, use of corporate aircraft up to $250,000 per year, and medical benefits. Last year, Cawley received a $3.0 million salary, a $4.5 million bonus, and $0.5 million in miscellaneous compensation. He also received $27 million in restricted stock shares and stock options worth about $10 million.

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STORE CARD REPORT

Following a six-month probe into the store credit card industry, the Office of Fair Trading yesterday referred its investigation to the Competition Commission. The OFT store cards study concluded that there are features of the sector, both in the supply of store card credit to consumers and in the supply of store card services to retailers, that appear to prevent, restrict or distort competition. The OFT says there is a lack of transparency for consumers in the way store cards are offered and used. Most store cards have an APR of around 10 percentage points above those available with credit cards, and there are questions whether these rates are disciplined by competitive pressure. In addition to the problems connected with the supply of store cards to consumers, the OFT also has concerns with the ability of new store card providers to enter the market or of existing providers to expand market share. The OFT suspects the reasons to be significant costs for retailers wishing to switch to another provider; duration of existing contracts ­ some of which are over 10 years; and, widespread use of exclusivity terms. The OFT store cards study was launched in response to questions raised by the Treasury Select Committee last year.

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REMITCO Joins Wausau Financial Systems User Base

FDC’s REMITCO has joined Wausau Financial Systems by way of a recent strategic alliance with Wachovia Bank. The REMTICO and Wachovia alliance now places WFS as the processing platform provider for four of the top six commercial retail lockbox processors in the nation. This alliance positions those involved to take full advantage of the latest remittance processing initiatives, including accounts receivable conversion and preparation for Check 21. Wausau Financial Systems is the recognized leader in the development and implementation of knowledge-based products for the payment and transaction processing industry.

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