FDC Hires Regulatory Compliance Executive

First Data has hired Christine Carnavos, formerly with FinCEN of the U.S. Department of the Treasury, as SVP of Global Compliance for the company’s Payment Services businesses, including Western Union. Ms. Carnavos brings more than 25 years of compliance, legal and government experience to her new role, which was established to support First Data’s commitment to regulatory compliance. She will be focusing on ensuring the company remains compliant with anti-money laundering initiatives, Bank Secrecy Act, USA Patriot Act and related global regulatory requirements. FDC is the leader in electronic commerce and payment services, First Data serves approximately 3 million merchant locations, 1,400 card issuers and millions of consumers, making it easy, fast and secure for people and businesses to buy goods and services using virtually any form of payment.

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SPAR EMV

Independent supermarket chain SPAR is deploying “VeriFone SC 5000” PINpads across 1,200 of its convenience retail stores in the UK.
Approximately 2,800 units will be deployed beginning in September, transitioning SPARÕs payment systems in readiness to meet the January 2005 deadline set for EMV migration. In addition, later this month SPAR will be installing units at selected retailers in Northampton, as part of the UK town trial of Chip and PIN. VeriFone has been involved in the trial since its launch in May this year, and is currently working with leading sports retailers all:sports and JJB Sports, and pet superstore retailer Pets at Home. The “SC 5000” features an integrated smart card reader with support for 0, 2, or 4 “Security Access Module” slots to enable support for a broad range of smart card-based loyalty and electronic purse schemes. It also offers an optional built-in magnetic-stripe card reader. The “SC 5000” is PED-compliant and offers a range of security protections including tamper-detection circuitry, “VeriShield” file authentication, and the flexibility to develop and support virtually any key-management scheme.

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Cap One’s Morris to Receive $750,000 Annually

Capital One shed more light on the employment agreement with the departing co-founder and top executive, Nigel Morris. Under terms of his deal, Morris will receive $750,000 annually, beginning January 1, 2004, and benefits including an automobile, an allowance for personal financial services, home security protection, executive assistance and home office support. He will also be prohibited from working for or advising any company that is engaged in a consumer lending business that competes with the Corporation’s business in any country where the Corporation does business, through 2008. If Morris violates the employment agreement at any time he will lose annual pay, benefits, and will be liable for a lump sum payment to Capital One of $25 million, as well as to sue for actual and punitive damages and injunctive relief. Morris will officially leave the company on April 30, 2004.

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FDC & EPOSS

Cambridge, UK-based Eposs Limited has formed an alliance with First Data. Under terms of the deal, FDC’s Western Union Financial Services unit has purchased a majority stake in the UK electronic payment solutions provider. FDC says the prepaid cellular, or top-up, is one of the fastest-growing segments of the payment services category. Eposs’ electronic products are sold in-store through integration with retailers’ existing point of sale systems and through advanced multimedia vending machines. Other market-leading companies in the Eposs Group include Omega Logic Limited, which supplies integrated software systems that connect retailers to
mobile network operators and other service providers, and Ringtones Online Limited, which provides business-to-business mobile applications and entertainment content, including mobile telephone ringtones and games. FDC notes that the Eposs relationship complements the Western Union Prepaid Service in the U.S., which provides real-time payments for large mobile carriers through
the Western Union Agent network.

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Global Payments Buys DolEx Dollar Express

Atlanta-based Global Payments confirmed this morning it is acquiring TX-based Latin America Money Services and its operating subsidiary, DolEx Dollar Express. Under terms of the deal, GPN will pay $190 million, plus a potential earn-out of up to $10 million, for DolEx. Through a network of 550 retail branches in 15 states, DolEx serves predominately Latino customers who send money to beneficiaries primarily in Mexico, as well as other Latin American countries. Beneficiaries collect these funds in their local currency at approximately 8,500 bank, exchange house, and retail settlement locations in Latin America. Last year, DolEx processed 4.6 million electronic money transfer transactions, producing $69.9 million in revenue. The Company has approximately 1,300 employees in the U.S. and Mexico. The current DolEx management team, who founded the company in 1996, will continue to operate the business from its headquarters in Arlington, TX. The transaction is expected to close before the end of 4Q/03.

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Choice Hotels Deploys VISA Folio-Data Service

Choice Hotels International has deployed VISA’s enhanced folio-data service at more than 2,000 hotel properties nationwide. During stays at hotels franchised by Choice Hotels, folio data which includes room rates, taxes, in-room telephone fees and room-service charges and other common expenses will be electronically recorded when eligible Visa Corporate, Visa Commercial or Visa Purchasing cards are used for payment. Following checkout, the accrued folio data is enclosed in secure electronic files and sent through the VisaNet processing system to the appropriate card-issuing financial institutions, which then feed the data into their corporate customers systems. Business travelers can use the enhanced data to automatically pre-populate expense report software, thus eliminating the need to enter Choice Hotels-related expenses by hand.

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Barclaycards Come to South Africa

South Africa’s Standard Bank has partnered with Barclays to form a new division to issue “Barclaycards.” The “Manchester United Barclaycard” is the first of four new credit card products to be introduced within the next six months, according to CardFlash International. The initial launch of the “Manchester United Barclaycard” will target the 3.8 million registered Manchester United supporters in South Africa, which also offers the “RedRewards” loyalty program. Under terms of the deal, Barclays has also granted Standard Bank preferential price access to Barclays ATM network for all Standard Bank and Stanbic cards issued in Africa under the VISA brand, as well as undertaking to issue cards on behalf of Standard Bank and Stanbic Bank in Botswana and Kenya. The new Barclaycard division will be run by a locally based eight-person Barclaycard Executive Management Committee. The new joint venture will be equally owned by Standard Bank and Barclays. Credit card balances currently account for just 7% of unsecured lending in South Africa.

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SCI’s Archstone Hooks Up with Mosaic

ArchStone, the on-line transaction-processing subsidiary of TX-based SCI Group, has formed a partnership with Mosaic Software to provide custom interfaces between Mosaic’s “Postilion” system and legacy payment processing software. ArchStone provides tools, products, development and support for customers moving to platform independent systems in the financial, retail, and health care industries, as well as those with Web-based high transaction needs. Mosaic Software develops next-generation payment processing software solutions for the delivery of advanced financial transactions, various pre-pay products and other self-service products and services, through ATMs, POS terminals, phones, and Internet access points.

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Card ABS Downgrades Begin to Slow

With credit concerns still prominent in the market, rating actions on outstanding credit card ABS remained active into second-quarter 2003. According to a new report by Standard & Poor’s Ratings Services, credit card ABS experienced 49 downgrades for the year ended 2002 versus 21 downgrades through the first six months of this year. S&P says the pace and breadth of the ratings actions were moderate. Additionally, the trend in loss data for prime issuers suggests that losses may be close to peaking during the first half of 2003 despite the fact that the unemployment rate continued to rise. Losses, however, for nonprime issuers continue to rise although the pace of increase appears to have slowed. Despite the increase in losses, the sharp drop in funding costs that have been driven by the record-low interest rate environment has been a major contributor to maintaining excess spread levels for most issuers.

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More Linux-Based E-Commerce Software

Ann Arbor, MI-based Cybernet Systems has launched Linux-based “NetMAX Professional E-Commerce Suite” and “NetMAX E-Commerce Powerpack”. Designed specifically for the small- to mid-size enterprise, both products enable users to easily establish, operate and maintain an efficient and secure online retail sales program. With their minimal installation and configuration requirements, NetMAX Professional E-Commerce Powerpack and E-Commerce Suite give small businesses an economical method for creating an online store in just a few hours. Both products leverage the power of Cybernet’s NetMAX Professional 4.03 Internet appliance software, which fulfills the needs of a broad customer base, including Windows(R) 2000, Macintosh AppleShare and Linux users, as well as support for 802.11b (WiFi) standards.

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FTC Settles with Major Credit Repair Firm

One of the country’s largest credit-repair operations, which sold services to more than 183,000 consumers, taking in more than $53 million, has agreed to pay more than $1.15 million in consumer redress to settle FTC charges that it violated federal law. The settlement resolves charges leveled by the FTC against six Michigan-based defendants in a federal court complaint that was filed simultaneously with the settlement. The Commission’s complaint alleges that the defendants, who sell credit-repair services through a multilevel marketing organization, falsely claimed that they could remove derogatory information from consumers’ credit reports, even if that information was accurate and not obsolete. The defendants purported to do this through the use of a “one-of-a-kind” computer disk that they claimed could search and identify errors in the process used by the credit reporting agencies to enter negative items onto consumers’ credit reports.

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Capital One’s July Charge-Offs Decline Sharply

Capital One reported Monday that charge-offs declined sharply during July as delinquency edged down slightly. With $62.4 billion in managed loans, and approximately $42.1 billion in U.S. credit card loans, the issuer reported that charge-offs dropped to 5.75% in July compared to 6.20% for June, and 6.40% in May. Delinquency declined to 4.92% in July, from 4.95% for June. At the end of second quarter, Cap One had 45.8 million accounts, including domestic and international credit cards and auto loans. For complete details on Capital One’s 2Q/03 performance visit CardData (www.carddata.com).

Capital One 2003
Month Charge-offs Delinquency
Apr 03 6.36% 4.86%
May 03 6.40% 4.82%
Jun 03 6.20% 4.95%
Jul 03 5.75% 4.92%
Source: CardData (www.carddata.com)

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