4Q/03 Produces Mixed Bag Thus Far

Early returns in the fourth quarter portfolio survey continue to show mixed results. Mid-sized player, Columbus B&T, posted a 4%+ gain in year-over-year outstandings. However, MS-based TrustMark reported a 4% drop in receivables over the past year. AL-based Max Federal Credit Union reported a strong 18%+ gain in outstandings according to CardData ([www.carddata.com][1]).

ISSUER 4Q/03 RECV Y/Y CHANGE
Columbus Bank & Trust $225,113,234 +4.3%
Travis FCU 79,073,426 -0.9%
TrustMark Natl Bank: 55,039,556 -4.0%
Max FCU 34,432,351 +18.6%
Source: CardData (www.carddata.com)

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

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EVO MASTERCARD

RHB Bank Berhad is deploying Welcome Real-time’s “XLS” enhanced payment software to add value to its EMV-compliant “EVO MasterCard.” The new card offers a “Smart Shopping” experience with free gifts, instant rewards and double reward points at the POS. RHB Bank says that applications for the new card make up about one third of the total incoming applications. At about 300,000 cards in circulation, with EVO contributing to the steady flow of active cards and half a million in receivables, RHB says it has close to 10% of market share in terms of principal cardholders. The “EVO MasterCard” is RHB Bank’s first chip card. Welcome’s payment software is designed to boost card provider revenues with services such as instantly awarded loyalty points, coupons, punch cards, vouchers, tickets and cash back, all integrated within a single convenient payment process.

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Wincor Nixdorf Introduces VersaLane

Wincor Nixdorf has introduced “VersaLane,” a mobile, battery-powered POS solution. VersaLane gives retailers the flexibility to configure checkout lanes whenever and wherever they’re needed, allowing them to deploy temporary checkout lanes for seasonal or weekend traffic, garden centers, sidewalk sales, new store openings and other applications. With VersaLane, retailers can make the most of their valuable floor space, decreasing the amount of space dedicated to fixed POS displays and freeing up more room for promotional campaigns, seasonal merchandise and impulse purchases. Wincor Nixdorf’s BEETLE(R) family is the most prolific open POS platform in the world. 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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November ABS Performance Generally Downbeat

Charge-offs, among credit card-backed securities, inched up in November compared to October, but were down slightly from November 2002. Delinquency stayed the course during November compared to the previous month, but were 30 basis points lower than one year ago. According to Standard & Poor’s “Credit Card Quality Index,” which tracked $416.4 billion in securitized credit card loans for November, the data are generally downbeat. Charge-offs are still relatively high compared to historical averages. The overall trend for 30-plus delinquencies continues to be relatively stable. Yield, which primarily consists of cardholder finance charges, has declined to 17.0%, after peaking at 21.1% in March 2001. The payment rate for November dropped 140 bps to 15.5% from the prior month. Aside from July 2003, the October payment rate of 16.9% was the highest payment rate reported by the S&P index since January 2002. The base rate, which remains at historical lows, remained unchanged (3.6%) during November, with two-thirds of the trusts either reporting a decreased or unchanged base rate during the month. The excess spread rate, which decreased by 70 bps to 6.4% during November, is currently at its lowest level since May 2003 (6.3%), after remaining stable (7.0%) for the past four months.

Credit Card Quality Index
Nov01 Nov02 Sep03 Oct03 Nov03
Yield (%) 19.0 17.7 17.6 17.6 17.0
Payment rate (%) 15.4 14.7 16.3 16.9 15.5
Charge offs (%) 6.6 7.2 6.9 6.9 7.0
Delinquencies (%) 5.3 5.5 5.2 5.2 5.2
Weighted base rate (%) 4.7 4.0 3.7 3.6 3.6
Excess spread (%) 7.8 6.5 7.0 7.1 6.4
Source: Standard and Poor’s

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ECHO Upgrades Web Site

Electronic Clearing House has launched an upgraded corporate Web site. ECHO’s website has been re-designed in order to improve navigation, to provide better presentation of the Company’s products and services, to maximize the site’s appeal to visitors of diverse interests and needs, and to enhance the Investor Relations section of the website. ECHO’s enhanced Investor Relations page links to information critical to investors, such as Annual Reports, SEC Filings, Stock Quotes and Charts, Analyst Coverage and Frequently Asked Questions. ECHO ([www.echo-inc.com][1]) provides a complete solution to the payment processing needs of merchants, banks and collection agencies.

[1]: http://www.echo-inc.com

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Stage Stores Sells Peebles’ Portfolio and Inks Long-Term Deal with ADS

Stage Stores has signed a deal to sell its recently acquired 180,000 account Peebles’ private label credit card portfolio to Alliance Data Systems, and entered into a relationship agreement with ADS through September 2013. Alliance also provides private label credit card services for Stage Stores’ other retail brands, including Bealls, Palais Royal and Stage. Stage Stores, Inc. brings nationally recognized brand name apparel, accessories, cosmetics and footwear for the entire family to small and mid-size towns and communities through 522 stores located in 27 states. Alliance Data Systems is a leading provider of transaction services, credit services and marketing services.

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Fee Income Rises 7%, Tops $43 Billion in 2003

U.S. credit card issuers produced an estimated $43.1 billion in fee income last year, a 7% increase over 2002. Penalty fee income is expected to hit $11.7 billion, while the largest category of fee income, interchange income, should come in around $21.6 billion. According to R.K. Hammer Investment Bankers, other fee income for 2003 will include cash advance fee income of $5.6 billion, annual fees income of $3.4 billion, and fee income from enhancements of $860 million. Hammer estimates interest income for 2003 to be $80.1 billion. He says that total income (including interest and all fees) will produce a 17.60% ROA in 2003, or $123.2 billion for the year, before expenses. Roughly one-third of that is fee income based; and approximately two-thirds of the total revenue stream is for interest income on balances that revolve and incur finance charges.

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Family Dollar Deploys New Terminals with Expanded Services

Family Dollar has installed 10,000 VeriFone “Omni 3750” terminals in less than eight weeks and is now offering value-added services such as EBT and pre-paid telco services. Family Dollar is one of the fastest growing discount store chains in the United States, operating 5,051 outlets in 43 states from Maine to Arizona. VeriFone, Inc. provides expertise, solutions and services for today with a smart migration strategy for tomorrow. VeriFone is leading the industry in the delivery of solutions that add value to the point of sale, resulting in improved merchant retention and the generation of new sources of revenue for its partners and customers.

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Web-Enabled VISA Information Management Unveiled

VISA USA unveiled the Web-based “VISA Information Management” service to enable financial institutions to offer sophisticated Web-service technology that makes it easier for their business customers to integrate VISA reporting tools into existing organizational processes and improve their procurement and payment procedures. The service, which can be used either on its own or in conjunction with custom developed solutions from Visa’s leading financial institutions, helps businesses and government agencies achieve greater efficiency and lower their administrative overheads. 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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First Contactless Gift Card Introduced This Week

ViVOtech has launched the industry’s first contactless gift card solution. The new “ViVOgiftcard” solution enables retailers to differentiate their gift card product, enhance loyalty programs, and provide a means to measure these programs. ViVOtech also announced a contactless gift card called “ViVOcard,” a key element of the solution that allows rolling gift cards from complementary retailers into one single gift card that can be used at various locations of multiple retailers. The “ViVOpay” reader, “ViVOplatform” and “ViVOcard” integrate seamlessly with existing systems and POS infrastructure to allow usage of this gift card at complementary retailers.

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JCB Emergency Assist 24 Launched

JCB will launch a new, enhanced global support service for lost and stolen cards on January 10th. The new “JCB Emergency Assist 24” service will offer cash advances, translation support when reporting
to local police, help in contacting family and friends, as well as assistance in applying for passport reissue. The new service can be used to arrange for a cash advance, with no card required, of up to US$700 that
can be picked up at more than 150,000 locations in 187 countries and territories. “JCB Emergency Assist 24” will be available only for JCB cards issued by JCB or JCB franchisee companies within Japan, although JCB is reviewing the possibility of extending the system to cards issued in other countries. Service will be provided by Travelex Global and Financial Services, Ltd., based in Peterborough, UK, which offers high-quality
traveler assistance in 25 languages. JCB has 48.4 million cardholders.

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