FREESTAR TRANSFER

FreeStar Technology Corporation, a processor of ATM and debit card transactions via the Internet, with corporate headquarters in Santo Domingo, and offices in Dublin, Ireland and Helsinki, Finland, is being acquired by FreeStar Acquisition Corporation. The deal is valued at $75 million in cash or US$0.49 per share. Consummation of the merger is expected to occur during the third quarter.

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Credit Counseling & Bowling

Cambridge Credit Counseling Corp., a nationwide nonprofit credit counseling agency, announced that it is partnering with College Bowling USA, to design a series of debt management seminars for students at over 450 colleges and universities. Under this agreement, Cambridge Credit will also sponsor numerous CBUSA events and offer a variety of free educational debt management “tools” to participating college students.

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AMEX INTL 1Q/03

While card growth has been relatively flat in the USA, American Express’ international payment card business has expanded significantly over the past year, and overseas charge volume is now growing at nearly double the AmEx domestic pace. At the end of the first quarter, American Express had 22.4 million cards-in-force outside the USA, a 7.8% increase over 1Q/02. International charge volume for 1Q/03 hit $19.9 billion, a 15% surge over the same period one year ago. In the USA, during the same period, American Express cards were up 1.7%, and volume increased 8.4%. During the first quarter AmEx launched the “Gold Credit Card” in Indonesia, and began issuing the “Centurion Card” in Japan. The company also signed a network partnership agreement with Vietcombank to issue the “Green Credit Card” and “Gold Credit Card” in Vietnam. Earlier this year, AmEx partnered with TD Bank Financial Group in Canada to become the exclusive provider of corporate cards to TD’s commercial and corporate banking customers. The company also opened a Shanghai business travel center in China.

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NCR 1Q/03

NCR reported that its ATM business generated first-quarter revenue of $226 million, a 10% gain over 1Q/02, helped by foreign currency fluctuations. First-quarter operating income in the ATM unit, or Financial Self Service segment, was $9 million, compared to break-even operating performance in the first quarter of last year. NCR’s Retail Store Automation business recorded revenue of $149 million, up 18% from the first quarter of 2002. Retail Store Automation improved its operating performance by $7 million from the $30 million operating loss recorded in 1Q/02. NCR’s Customer Services division, which provides hardware and software maintenance, deployment and management services around the world for NCR’s Financial Self Service, Retail Store Automation and Payment and Imaging customers as well as for third-party technology providers, produced first-quarter revenues of $448 million, up 4% from the first quarter of last year. Operating income for the Customer Services division declined from $11 million to $3 million due to adverse changes in revenue mix and continued price erosion. For complete details on NCR’s 1Q/03 results visit CardData ([www.carddata.com][1]).

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

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DIEBOLD 1Q/03

Diebold reported that total Asia-Pacific revenue for the first quarter increased 27%, compared 5.3% for the Americas on a fixed exchange rate basis. The company also says ATM orders for Asia-Pacific increased in the high double-digit range, while Europe, the Middle East and Africa orders decreased in the high single-digit range. Significant orders for the quarter included: five significant self-service orders totaling more than $24 million from large financial institutions in Europe. Orders for 700 new ATMs from two banks in India. Orders valued at more than $8 million from three financial institutions in Brazil and a self-service order for nearly $5 million from a large bank in China.

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Hypercom 1Q/03

Although Hypercom reported a larger loss in 1Q/03 than 1Q/02, the company continued to strengthen its balance sheet as cash balances increased to $42.9 million at the end of the first quarter, compared to $29.8 million at year-end 2002. The payment card terminal manufacturer says a significant reduction in working capital requirements plus current quarter operating results helped strengthen its cash position. Hypercom’s 1Q/03 loss, before discontinued operations, was $1.1 million compared to a loss of $900,000 in the same quarter last year. First quarter net revenues were $55.7 million compared to $70.8 million in 1Q/02. Hypercom says seasonal fluctuations, the soft global economy, and the ongoing conflict in Iraq contributed to lower first quarter revenues. The company says its projection for 2003, excluding the impact of discontinued operations, is net revenues between $265.0 million and $273.0 million, and income from continuing operations between $19.7 million and $24.0 million. For complete details on Hypercom’s 1Q/03 results visit CardData ([www.carddata.com][1]).

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

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ACH 2002

The number of ACH payments originated by financial institutions hit 8 billion last year, up 13.6% from 2001. The electronic payments handled by the ACH payments were valued at $21.7 trillion. The number of Direct Payments last year totaled 2.8 billion, a 10% increase over the previous year. The value of these payments was $2.0 trillion. E-Checks nearly tripled in 2002 with more than 490 million e-check payments made. Last year there were 233 million e-checks initiated via the Internet, up 213%. The number of e-checks at the POS was 167 million, up 89%. Over the telephone, there were 68 million e-check payments, up 680%. More than 24 million checks sent to remittance locations were converted to e-checks in 2002, the first year this application was available.

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Weblinking

Four financial services regulatory agencies last week issued guidance to assist financial institutions in identifying and managing the potential risks involved in the use of weblinks. Regulators says the primary source of risk is that financial institution customers may be confused about the role and responsibility of the institution with respect to products or services available from third parties through the weblink. For example the use of frame technology may give the impression to consumers that the bank and the third party are affiliated. Regulators also said the use of pop ups may raise disclosure issues. The guidance encourages financial institutions to use clear and conspicuous disclosures to explain their limited roles with respect to products and services offered by third parties. The regulatory agencies also encourage financial institutions to conduct appropriate due diligence of potential weblinking parties and monitor the activities of linked third parties.

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CardData 1Q/03

Mid-level bank credit card issuers posted solid gains in both outstandings and volume during the first quarter. Indeed, South Dakota sub-prime specialist First Premier Bank continues to defy gravity, posting a 29% increase in first quarter outstandings and a 30% surge in 1Q volume compared to the same period one year ago. First Premier offers low credit limit cards with high maintenance fees. First Premier’s average balance per account is $229 and average first quarter volume per account was $77, well below industry averages. But the sub-prime formula continues to deliver as the issuer now has more than three million accounts, 24% more than 1Q/02. As a group, a sampling of five mid-level issuers by CardData shows an average annual growth rate of 16% in first quarter outstandings. The peer group also delivered a 15% increase in 1Q/03 volume compared to 1Q/02. For the latest first quarter statistics on the nation’s top issuers visit CardData ([www.carddata.com][1]).

Issuer OUTSTANDINGS VOLUME
BB&T Bankcard $869MM (+13%) $468MM (+16%)
Associated Card $808MM (+26%) $165MM (+14%)
First Premier Bank $729MM (+29%) $246MM (+30%)
Commerce Bancshares $503MM ( +5%) $350MM (+14%)
SouthTrust Bank $336MM (NC) $151MM ( +3%)
TOTAL: $3.245B(+16%) $1.380B(+15%)

MM- million; B- billion;

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

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

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D-Day

A major antitrust lawsuit filed in 1996 against VISA and MasterCard over debit cards finally gets its day in court this week. However in a stunning decision this morning, the presiding judge ruled that MasterCard is no longer a part of the trial. MasterCard, which has a 23% share of the off-line debit card market, asked the court on March 14th to sever the plaintiffs’ claims against MasterCard saying it would be prejudicial and could cause substantial jury confusion. Following jury selection this morning, the trial got underway in U.S. District Court for the Eastern District of New York in Brooklyn before Judge John Gleeson. The class action lawsuit, representing five million merchants in the USA, was filed by Wal-Mart, The Limited, Sears Roebuck, Safeway, Circuit City, and three trade associations. The lawsuit charges the card associations with violating U.S. antitrust law by monopolistic and uncompetitive business practices concerning debit cards. The merchants also claim that VISA and MasterCard and their member banks have forced merchants to accept their off-line signature debit card transactions under their “Honor All Cards” rule at rates five to ten times higher than on-line PIN debit card transactions. VISA and MasterCard say that despite several favorable rulings for the plaintiffs in Judge Gleeson’s April 1st Summary Judgment proceeding, the merchants have yet to prove there was any harm to competition and consumers from the “Honor All Cards” rule. The card associations point to the fact that PIN debit card transactions are growing faster than off-line debit and that their competitors control more than two-thirds of the PIN-based debit market. VISA and MasterCard also say that if the merchants prevail, the benefits of universal acceptance will be undermined and consumers will suffer by being denied their right to choose their preferred method of payment. MasterCard noted that its online debit mark, “Maestro,” is currently the least expensive online debit alternative. The trial is expected to conclude by August 1st.

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