VeriSign Fraud Protection Service

VeriSign has launched “VeriSign Fraud Protection Services” which has already been deployed by some of VeriSign’s 89,000 customers using VeriSign’s online payment services. Customers of VeriSign’s Fraud Protection services include the Dallas Cowboys Pro Shops and Webstore and Loews Cineplex theatres. The VeriSign Fraud Protection Services is compatible with well-known authentication programs, such as MasterCard SecureCode and empowers businesses to quickly and effectively identify and take decisive action against suspicious shopping patterns associated with virtual shoplifting and the use of stolen credit cards.

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CYBERFLEX LEVEL 3

Schlumberger Smart Cards and Terminals announced a landmark “FIPS 140-2 Level 3” validation for its “Cyberflex Access 64K” smart card, an open platform smart card with advanced public key cryptography that is programmable using the Java card technology. This is the first time the extremely stringent requirements of “Level 3” validation have been met by a smart card. Its predecessor, the Schlumberger “Cyberflex Access 32K” smart card was the first card of its kind to obtain “FIPS 140-1 Level 2” validation in September 2001 by the NIST in the USA and the CSE in Canada.

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UMS & Global eTelecom

FL-based Global eTelecom has renewed its electronic check conversion contract with United Merchant Services. The colaboration allows merchants to accept and process paper checks electronically, similar to a credit card transaction, adding increased value and efficiencies. Global eTelecom provides it’s proprietary, fully customizable XML based electronic check processing services to a nationwide network of banks, independent sales agents and associations, credit card processors, insurance companies, and retail merchants, ranging in size from small “Mom & Pop” stores to national retail chains. United Merchant Services is full bankcard services and support provider for merchants and sales offices nationwide, offering a comprehensive range of products, including United Merchant Services’ own newly developed gift & loyalty program.

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CGI & FUJITSU

Montreal-based CGI Group has certified Fujitsu Transaction Solutions’ “Series 8000” ATM to operate its “CyberGateway” ATM management platform. CGI manages one of Canada’s largest portfolios of ATMs. This is Fujitsu’s first Canadian network certification for its “Series 8000” ATMs. In addition to currency transactions, the “Series 8000” ATMs can offer such services as coupon and stamp dispensing, ticket purchases, phone cards and lottery tickets, bill payments, loan applications and personalized information. CGI serves more than 2,300 credit unions and banks and manages more than 5,000 ATMs across North America.

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FCRA Debate

The potential expiration of the federal “Fair Credit Reporting Act” preemption could cause 14 million Americans to lose access to credit. A new study released this week also says that more than 88% of consumers’ credit scores would be affected if a patchwork of state laws were allowed to replace the current national consumer credit system. The NYC-based Information Policy Institute report finds that in the absence of the federal FCRA provisions, under various scenarios the cost of credit could rise $40 to $270 per year for the average American family. The report noted that prior to automated underwriting, enabled in part by the federal credit system, approving a mortgage loan took nearly three weeks on average. In 2002, more than 75 percent of all loan applications received approval in two to three minutes. The IPI says this saved consumers $54 billion between 1983 and 2001. Key provisions of the “FCRA” are set to expire later this year unless re-authorized by Congress.

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Discover 2Q/03

Morgan Stanley reported this morning that its Credit Services division, including the “Discover Card,” posted lower net income for the second quarter compared to 2Q/02. Net income of $194 million was $2 million lower than one year ago, but up 7% over the first quarter’s net income of $182 million. Charge-offs and delinquency were up for the quarter thanks to high levels of unemployment and bankruptcy filings. Managed credit card loans at quarter end rose 3% from a year ago to $50.9 billion, while credit card volume was up 2.1% to $24.0 billion compared to 2Q/02. The credit card net charge-off rate increased to 6.50%, a 15 basis points jump above a year ago and 33 basis points over the prior quarter. The over-30-day delinquency rate increased 58 basis points to 6.21%, and the over-90-day delinquency rate increased 36 basis points to 3.01% from the second quarter of 2002. Merchant and cardholder fees rose 2% to $524 million as a result of higher merchant discount fees from increased transaction volume. The number of active accounts dropped nearly 7% from one-year ago. For complete details on Discover’s second quarter performance visit CardData ([www.carddata.com][1]).

DISCOVER CARD PORTFOLIO SNAPSHOT
2Q/02* 3Q/02* 4Q/02* 1Q/03* 2Q/03* Y/Y CHNG
Outstandings: $49.4b $49.7b $51.1b $51.8b $50.9b +3.0%
Volume: $23.5b $24.3b $25.3b $26.1b $24.0b +2.1%
Accounts: 46.2m 46.2m 46.5m 46.5m 46.4m +0.4%
Actives: 23.4m 22.8m 22.6m 22.3m 21.8m -6.8%
Chargeoffs: 6.30% 6.27% 5.96% 6.17% 6.50% +3.1%
Delinquency: 5.63% 5.72% 5.96% 6.33% 6.21% +10.3%
Yield: 12.64% 12.71% 12.45% 11.78% 11.97% -5.3%

2Q/02 ended 5/31/02; 3Q/02 ended 8/31/02; 4Q/02 ended 11/30/02; 1Q/03 ended 2/28/03; 2Q/03 ended 5/31/03.

Source: CardData ([www.carddata.com][2])

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

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7-Eleven Bill Pay

7-Eleven has signed a seven-year exclusive alliance to offer in-person bill payment services with e-Money Systems, through 7-Eleven’s “Vcom” electronic kiosks. Under the agreement, e-Money Systems will use its “ChoicePay” solution to enable 7-Eleven customers to pay their utility and other bills using cash, automated clearing house checking accounts, credit, ATM debit and, in the future, with 7-Eleven’s stored-value “Convenience Card.” Currently, 7-Eleven customers can conduct ATM transactions (American Express is the primary provider of ATM transactions on “Vcom”), purchase Western Union money orders and money transfers, cash checks through Certegy Check Services, review and pay their Verizon residential phone bills and order additional services. The “ChoicePay” bill payment service is expected to be available on “Vcom” this fall. Approximately 1,000 7-Eleven stores in 13 states and Washington D.C. are equipped with the “Vcom” kiosk.

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EMMA Processing

Los Angeles-based Cash Technologies reported yesterday that after a one-year pilot, its “E-commerce Message Management Architecture” (EMMA) can electronically identify a check and the person cashing it, and do a fraud analysis, in under 15 seconds. The result is the ability to do new things such as advanced financial transactions on ATMs, point-of-sale (POS) devices and even cellular phones that are otherwise impossible today. If desired, instead of receiving cash, the person could also pay a bill, wire transfer money to a distant relative, get a movie ticket and many other things. We know of nothing else in the market today with these capabilities.

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$$$ ON THE NET

Las Vegas-based Shift4 has signed ten more VARS for its “$$$ ON THE NET” credit/debit/private label card processing software. The product suite includes high speed processing of Credit, Debit, and Gift/Loyalty cards, including such functionality as Dynamic Currency Conversion, International Processing, Fraud Sentry, Direct to American Express, and much more. Some of the new members of the Shift4 Reseller team include: Retail Technologies Inc., InnQuest Software, and NewEra Tickets.

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Circuit City Sale

The Board of Directors of VA-based Circuit City Stores has given the green light to management to unload its $2.9 billion credit card portfolio. Circuit City reported yesterday that its First North American National Bank produced a pretax loss of $22.1 million for the quarter ending May 31st. The retailer says the loss was the result of higher costs associated with two securitizations, a $500 million deal for private-label credit card receivables, including receivables related to the co-branded VISA credit card it launched last year; and, a separate securitization of $550 million in bankcard receivables. Circuit City has $2.9 billion in managed credit card loans with approximately $1.4 billion in bank credit card outstandings, according to CardData. In June 2002, the company launched the co-branded “Circuit City Plus VISA” card to replace its private-label credit card program. The company also issues VISA and MasterCards under the First North American National Bank name. For complete details on Circuit City’s latest performance visit CardData ([www.carddata.com][1]).

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

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