VASCO 2Q/03

VASCO reported that revenues for the second quarter are expected to be in the range of $6.3 million to $6.5 million, compared with $5.6 million for the first quarter of 2003 and $4.2 million for the second quarter of 2002. The Company indicated that its backlog at June 30th for firm orders to be delivered in the third quarter of 2003, was approximately $5.0 million, which was comparable to the backlog of orders on hand at the beginning of the second quarter for delivery in the second quarter of 2003. VASCO’s identity authentication software is delivered via its “Digipass” security products, small calculator hardware devices carried by an end user, or in a software format on mobile phones, other portable devices, and PCs.

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Internet Mileage Firm Abrupty Shuts Down

A firm offering Web surfers free air miles for visiting or shopping at a participating merchant or for transferring low-balance air miles from carrier-based frequent flyer programs is shutting down. Houston-based MileSpree notified members last night that accounts with less than 25,000 miles will have no redemption value. The firm, also well known for sending spam, is also limiting the number or miles earned from merchant clicks. Customers will be limited to using no more than 7,500 “Click Miles” towards a free airline ticket which requires 25,000 miles. Customers with valid miles have until August 7th to make redemptions.

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FREESTAR & TRANSAXIS

FreeStar Technology has executed a revised letter of intent regarding the potential acquisition by FreeStar of a minimum of 70% of the outstanding common stock of TransAxis. Through the acquisition of TransAxis, FreeStar would own a full spectrum of integrated processing services. In addition, this acquisition provides to the “ePaypad” product full back-end merchant administration capacities for online purchases or traditional point of sale transactions. FreeStar Technology is an international payment processing and technology company operating a robust Northern European “BASE24” credit card processing platform based in Helsinki, Finland, which currently processes approximately 1 million card payments per month. TransAxis, formerly Digital Courier Technologies, provides advanced authentication, validation, fraud screening, payment authorization, settlement, and real-time reporting.

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Bankrate.com Gains Credibility on Wall Street

Rate tracker Bankrate has been added to the “Russell 3000 Index” and the “Russell 2000 Index.” The Russell 3000 Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market. The widely used Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000.

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MOSAIK MASTERCARD & EPOST

Bank of Montreal is now offering its 3 million “Mosaik MasterCard” cardholders the option of receiving and paying their monthly statements online through Canada’s epost. BMO joins a list of more than 65 Mailers sending mail through the epost service, including national retailers such as Canadian Tire, Hbc, Sears and Future Shop. Additional Mailers also available through epost include: TELUS; Hydro-Québec; ENMAX; Union Gas; City of Ottawa; City of Toronto; City of Winnipeg, and City of Richmond. More than 330,000 Canadians have registered for their free epost mailbox to-date.

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CellCharge Receives V/MC Blessing

VISA and MasterCard have approved a California firm to offer credit card processing service via cellular or touchtone phones. Westlake Village-based CellCharge of California says it will target the new service to sub-contractors, handymen, electricians, plumbers, carpet and pool cleaner, taxis, entrepreneurs, swap meet vendors, in-home party consultants, delivery services, fundraisers for schools and churches as well as professionals in the health and beauty industry. CellCharge is charging no transaction fees, no monthly minimum fees, no annual renewal fees, and does not require a contract. Settlement fees vary by contract. CellCharge says it deposits transaction into the merchant’s checking account within 24-48 hours.

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ACTIVCARD 2Q/03

ActivCard announced that based on preliminary financial results, its second quarter revenue is expected to range from $9 million to $10 million. Unaudited net loss in accordance with U.S. GAAP for the quarte is expected to range from $0.15 to $0.25 per diluted share, compared to a net loss of $0.11 per diluted share in the second quarter of last year. Revenues were primarily affected by a small number of government opportunities which did not close within the reporting period. ActivCard provides software for secure remote access, secure sign-on and digital identity card solutions.

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Spiegel Continues to Feel Card Impact

The Spiegel Group reported that net sales for June were down 19% compared to one-year ago as it continues to rebuild its credit card sales. The company says it believes that direct sales continue to be negatively impacted by the company’s decision in early March to cease honoring the private-label credit cards issued by First Consumer National Bank to customers of its merchant companies (Eddie Bauer, Newport News and Spiegel Catalog). In early May, the company launched new credit card programs using Alliance Data Systems. Prior to the shut-down of its FCNB cards, nearly 75% of Spiegel Catalog sales were made on its private label card, while 60% of Newport News sales and 20% of Eddie Bauer sales are made on their respective cards.

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MANULIFE & EXCHANGE

Ontario-based Manulife Bank accountholders can now use more than 1,350 ABMs across Canada through “THE EXCHANGE” network. The bank recently joined “FICANEX,” a limited partnership of member financial institutions that use “THE EXCHANGE” network in Canada. Member companies include six banks, sixty-two credit unions, and one co-op. The network also includes 26,000 ABMs in the continental United States for withdrawals, and offers no convenience fees for Ficanex member-company access cardholders in Canada.

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Catuity and Maritz Ink Licensing Deal

Catuity has signed a three-year licensing agreement for Maritz to operate the Catuity loyalty software through Maritz Loyalty Marketing. Under the agreement, Maritz will have the ability to license and install Catuity’s software application as a real-time redemption management system that can help to optimize valued customer relationships by providing real-time recognition and rewards at all points of interaction. Catuity, Inc. is a leading provider of application software that allows merchants, transaction processors and payment card issuers to establish and administer customer incentive and loyalty programs integrated to the payment system at the point of sale.

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HSBC STRATEGY SCIENCE

HSBC Bank plc has signed as the first client to implement Fair Isaac’s new “Strategy Science for Fraud Referral.” Fair Isaac says the new strategy development solution will provide HSBC with unprecedented fraud control for its credit card portfolio while increasing approved transactions and improving cardholder experience. Until now, strategies used to decide when to refer a transaction at the point of sale for further cardholder verification or investigation have been developed on a largely judgmental basis or with the aid of ad-hoc data analysis. Transactions that have been flagged incorrectly for further investigation result in higher operational costs, inconvenienced customers, and lost opportunities for
legitimate sales. “Strategy Science for Fraud Referral” is the company’s third fraud management solution that complements its “Falcon” fraud
detection software, joining “Fraud Predictor with Merchant Profiles” and Fair Isaac “Fraud Consulting” services.

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May Charge-Offs Resume Climb

While credit card delinquency edged down slightly in May, charge-offs continued to climb as consumer bankruptcies grew 10% from year-ago levels. Among $380 billion of credit card-backed securitizations, the average delinquency rate (30+ days past due) for May was 5.20% in May, compared to 5.25% last month and 4.86% one year ago. The data are from Moody’s Investors Service which tracks a portion of the total credit card ABS among domestic credit card issuers. Bank credit card debt (excluding store and gas credit cards) at the end of the first quarter was $645.6 billion. Moody’s also reported that charge-offs for May hit 7.05%, compared to 7.00% last month and 6.46% one year ago.

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