TSYS Promotes Jardina in Sales

TSYS has promoted Matt Jardina, a 13-year TSYS veteran, to group executive of Sales. Jardina joined TSYS in 1990 in the Client Relations division serving as an account representative for various TSYS clients. He later joined TSYS Sales in 1993 as a regional sales manager and has since held numerous leadership positions in the sales division, including director and senior director. TSYS brings integrity and innovation to the world of electronic payment services as the integral link between buyers and sellers in is rapidly evolving universe.

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Axalto Goes Wi-Fi and Powers JCB’s New Smart Cards

Axalto, formerly Schlumberger Smart Cards and Terminals, is expanding its “MagIC X1000” with a Wi-Fi-enabled wireless POS terminal. The Company also announced this week at “Cartes 2003” that it has landed a contract to provide a “Dynamic Data Authentication” native operating system for JCB smart cards. The new Wi-Fi terminal will accept both off-line and on-line remote payments transactions up to 300 meters, from the docking station. Axalto says the new terminal is also faster than ones employing CDMA, GPRS, or GSM. The new terminals will be available in 2004. With its partnership with JCB, Axalto’s DDA native OS product will give JCB the next generation security in smart cards, especially for off-line transactions. Axalto says the DDA product also paves the way towards EMV migration.

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FTC Shuts Down Tampa Credit Card Marketer

A federal district court has shut-down Tampa-based Peoples Credit First, a/k/a Consumer Preferred and Consumer First, for offering VISA and MasterCards in exchange for a $45 advance fee payment. The Federal Trade Commission filed charges against the defendants citing that they violated the FTC Act by representing expressly or by implication that consumers were likely to receive unsecured, a major credit card, like a Visa or MasterCard, in exchange for an advance fee payment. The FTC obtained a temporary restraining order with an asset freeze and other equitable relief. The court appointed Mark Bernet as the receiver.

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Credit Card Issuers Blamed for the Crisis in the CCA Industry

The FTC yesterday testified before the House Subcommittee on Oversight of the Committee on Ways and Means that the credit counseling industry has changed from small, community-based non-profit organizations to large, high-tech organizations that generate lucrative fees and provide little, if any, personalized credit counseling. In response, the credit counseling industry says the changes are the result of rigid creditor policies, new state regulations, and the control exerted over them by credit card companies. This week, the FTC filed a lawsuit against AmeriDebt/DebtWorks over its business practices. The FTC says the modern day credit counseling firm pushes all their clients into a “debt management plan” without consideration of their particular financial situation. In testimony yesterday, the FTC explained that “DMPs” generate revenue for CCAs in two ways: voluntary rebates from creditors to CCAs; and “contributions” or “donations” solicited by some CCAs from “DMP” enrollees, usually an up-front or monthly fee. The FTC accuses the credit counseling industry of abusing its non-profit status by convincing consumers to enroll in their “DMPs” and pay fees or make donations, claiming that the “donations” will be used to defray the CCA’s expenses, when instead the money may enable the CCA to make a substantial profit. MD-based Myvesta says credit card companies dictate the way all credit counseling organizations function. The CCA says card issuers have silently forced the counseling agencies to perform like paid collection agents. Some even offer collection bounties for certain types of payments. Counseling agencies, in an effort to maintain funding and provide assistance, have been left with no choice other than to comply with the wishes of credit card companies collection departments. Myvesta says credit card companies have gained this control because the current system does not require any funding or cooperation from other major creditors. In response to the FTC lawsuit filed this week, AmeriDebt/DebtWorks says consumers need help from independent organizations that are not an extension of the very credit card companies that have encouraged consumers to bury themselves under mountains of debt.

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Home Equity Lines & Loans Up 26% and 44%, Respectively

The average size of new home equity line commitments is running about $70,000, a 26% increase over last year’s average size according to statistics released at the “BAI Retail Delivery Conference”. The average size of new home equity loan commitments is approximately $58,000, a 44% increase over last year. The data are from the Consumer Bankers Association’s “2003 Home Equity Lending Study” showing statistics through mid-year 2003. The CBA says banks cut back significantly on lending to sub-prime line of credit borrowers. While 96% of study participants reported they had loans to customers with credit scores lower than 630, they reported those loans were 7% of line accounts, compared to 13% a year earlier. They were 16% of loan accounts, compared to 18% in 2002. Average credit scores have remained stable, at 729 for lines and 718 for loans, compared to 730 and 724 a year earlier. The CBA also noted that payments more than 30 days late have dropped for three years on lines, but risen on loans. The 2003 rate for lines is 0.61%, compared to 0.94% a year earlier and 1.02% in 2001. They rose to 1.55% on loans, from 1.00%.

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PRE Solutions Launches Miller Mart Gift Card

Atlanta-based PRE Solutions has rolled-out its first gift card launch in association with Valutec. The gift cards, branded with the Miller Mart logo, increase customer retention, create return traffic and give Miller Mart a competitive edge over other retail locations. The cards will be offered in $10, $25, $50 and $100 denominations as well as a reload option of the later denomination or an amount the customer chooses.

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Circuit City and FleetBoston Close Portfolio Sale

Circuit City Stores completed the sale of its $1.5 billion bank credit card portfolio to FleetBoston for $1.3 billion on November 18th, that will produce an after-tax loss of $89 million and net after-tax cash proceeds of $282 million. The company expects that it will incur closing adjustments following the completion date of the sale. The bankcard business will be classified as a discontinued operation beginning with the third fiscal quarter ending November 30, 2003. The sale agreement includes a transition services arrangement under which employees of Circuit City’s finance operation will continue to service the bankcard accounts until final conversion, which is expected to occur in the company’s first fiscal quarter ending May 31, 2004. Circuit City Stores, Inc. puts the customer first with high-quality service and more than 5,000 consumer electronics products available in its stores and online at .

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BabyMint Adds Miles/Points Transfer Program

Atlanta-based Vesdia says it is adding a new option to its “BabyMint” college savings accelerator program that will enable members to convert the value of their miles or points in multiple airline, hotel, and retailer rewards programs into the their “529” college savings plan or “Coverdell” educational savings account. The “BabyMint” program currently limits members to earning rebates via a network of more than 500 merchants. Vesdia also has a co-branded “BabyMint” credit card with MBNA that provides additional rebates. The new option for miles/points is the result of a deal with Toronto-based Points International. Through the new partnership “BabyMint” participants will have the ability to redeem miles and points from America West Airlines, Midwest Airlines, Alaska Airlines, Cathay Pacific and InterContinental Hotels into their “BabyMint” rebate point account. Vesdia also expects to provide the points conversion enhancement to participants in its “NestEggz” retirement savings program.

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SM@RT-TAN CARD READER

Ismaning-based SCM Microsystems has introduced a new smart card reader that generates a single-use “TransAction Number” automatically, eliminating the need to keep a manual “TAN” list. The new “Sm@rtTAN Card Reader” can also read cash balances on the German “GeldKarte” cash card. The pocket-sized card reader operates independently from a computer platform and needs no additional power supply. The reader operates with smart cards carrying an “EMV” chip based on the “SECCOS” software platform. The “SECCOS” platform combines “GeldKarte” functions with PKI technology to enable a wide spectrum of secure applications, including international debit transactions, Internet cash download and online banking. “GeldKarte” is carried by 60 million consumers in Germany.

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AmEx, Fleet, Discover Web Sites Rank Best Overall

A California research firm has ranked the Web sites of American Express, Fleet, and Discover Card as the top three in providing the best overall online consumer experience. Vividence says Fleet, MBNA and American Express performed the best in terms of potential to acquire new customers through their Web sites. However, Chase, Fleet, and Discover Card did the best job of driving online usage. Vividence says it monitored 2,000 prospective customers as they interacted with credit card Web sites and performed tasks such as applying for credit cards and exploring services offered online. Besides an aggregate of site performance across hundreds of metrics, the Company’s indices also ranked the credit card sites in terms of customer satisfaction, customer acquisition, online adoption and brand impact. Vividence also found that 50% of consumers who have two or more credit cards, are eager to use online credit card services to check account balances, receive billing statements and perform self-service tasks. More than 75% of users in the study reported accessing a credit card account online, and almost 50% use one of their credit card’s sites at least once a week. Vividence also noted that credit card sites consistently posed more frequent problems than their banking site counterparts. On average, consumers experienced a problem every 2 minutes on credit card sites.

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MasterCard OneSMART Adds M/Chip Deployment Program and Pre-Configured Packages

MasterCard International is now working on twice as many smart card projects as one-year ago. Of the more than 400 individual MasterCard smart card implementations underway around the world, half involve issuers in Europe. However, the strongest activity is in Asia-Pacific where the number of EMV smart cards has hit 14.5 million, double last year’s figure. The worldwide smart card migration is driven by decisions made by MasterCard’s regional boards in Asia/Pacific, Europe, Latin America/Caribbean, and South Asia and Middle East Africa. All of these boards have recently enacted intra-regional liability shift policies calling for the full-scale adoption of smart cards and chip terminals in the 2005 and 2006 time period. Last year, MasterCard announced “OneSMART MasterCard,” a comprehensive, global support program covering every aspect necessary to successfully launch smart cards. Expanding on this, MasterCard this week unveiled a subset of the “OneSMART MasterCard,” called the “M/Chip Deployment Program,” which provides a complete solution for MasterCard’s customers who are migrating their payment cards from the magnetic stripe platform to chip. Companies supporting the “M/Chip 4” program include: Ingenico, Austria Card, Gemplus, Giesecke & Devrient and Setec. The “OneSMART MasterCard” program was also recently expanded with a range of pre-configured smart card packages including: “OneSMART MasterCard Payment” which provides an enhanced payment application; “OneSMART MasterCard Authentication” which ensures a higher level of security for online shopping and remote banking; and “OneSMART MasterCard Web” that allows cardholders to securely store and manage a wide range of personal data (such as names, addresses, URLs, log-on passwords) on the smart card chip.

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Metris Gets Negative Rating After 10Q Delay

Metris Companies has been placed on Fitch Ratings’ “Rating Watch Negative” list following Metris announcement this week that its external auditor has cited material weakness surrounding internal controls around the valuation of the company’s retained interest in securitized assets, and Metris’ delay in filing its quarterly 10-Q. Fitch’s Rating Watch reflects the uncertainty around this recently identified issue, and the ultimate impact on Metris’ financial condition and liquidity.

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