METACARD

Fiserv CBS Worldwide has introduced a software solution that manages all facets of a credit card program through issuer and acquirer functions, fraud alert, loyalty programs and authorizations. The new “MetaCard” solution, announced this week in Amsterdam, is available as fully integrated or modular software for multi-bank and multi-product processing. It also offers private-label processing, major purchase plans, transaction-based pricing and full card issuance. “MetaCard” also allows multiple loyalty programs to work with both the issuer and acquirer modules. The fraud alert and authorizations modules are rules-based systems. In 2001, Fiserv CBS Worldwide strategically entered the credit card industry by purchasing the assets of Columbian-based Compania Latinoamericana de Software. The assets included “FACT 400” credit card solution used extensively in Latin America.

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Verifone Upgrades

VeriFone this week introduced a smaller footprint version of its “Omni 3200” terminal, which was originally introduced in 1999. The new “Omni 3200SE” offers 1MB of memory, increased performance, and a clam-shell printer design. The Omni “3210SE” variant includes an integrated PINpad supporting 3DES. The payment card terminal manufacturer also enhanced its “Omni 3750” countertop terminal and its “Omni 3600” wireless terminal to support advanced IP technology. This new capability allows transactions to be completed in about three seconds, considerably faster than traditional dial methods. Verifone also released this week its “VeriCentre LE Download Management System” which provides small to mid-size ISO organizations with increased productivity at the lowest cost per download through a single, highly efficient terminal management solution. VeriFone says it has shipped over ten million electronic-payment systems to-date.

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EBS & SUREFIRE

Munich-based ebs Electronic Billing Systems AG has completed the first phase of its merger with SureFire Commerce. Upon closing of the merger, SureFire Commerce issued 2,795,249 Common Shares of the Company to ebs’ shareholders, in exchange for 51% of the outstanding shares of ebs. SureFire Commerce’s shares are expected to begin trading on a consolidated basis this week.

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OPC Deals

Official Payments Corporation has signed the state of Nebraska as its 22nd state client. Nebraska will now offer its taxpayers the option of making credit card payments for a variety of personal income and business taxes. OPC also announced this week a joint marketing agreement with Bank One. Under the Bank One deal, Bank One cardholders can make tax payments online or through OPC.

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AUTO RENTAL APPLICATION

Toronto-based BNA Smart Payment Systems announced that its “Global East
Auto Rental” application is now certified for use on the Global Payments
Atlanta platform. The application runs on the Banksys “C-ZAM” terminal. The
most important feature of the application is that it minimizes the
possibility of an interchange downgrade for auto rental transactions. The
application also lessens the number of key entries, required to complete
these types of transactions.

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Exchange Fees

A California Superior Court judge yesterday ordered VISA and MasterCard to refund more than $800 million in foreign currency conversion fees to cardholders. The court also ordered the card associations to amend their operating rules to require their issuing members to make effective disclosure of the currency conversion fees charged to consumers. Judge Ronald Sabraw found that VISA and MasterCard violated California’s unfair competition law by failing to adequately disclose the currency conversion fees they have charged to U.S. cardholders. However Judge Sabraw also found that VISA and MasterCards currency conversion process does not violate Truth-In-Lending regulations, nor is it in any way unconscionable. Nevertheless, VISA, which is headquartered in California, was ordered to refund the one percent currency conversion fees to all cardholders in the USA who paid the fees from February 15, 1996 to the present. MasterCard, which is headquartered in New York, was ordered to refund the currency conversion fees to all its California consumers who paid the fees during the same period. The court ordered the card associations to devise a plan of restitution by April 28th. VISA and MasterCard quickly responded last night saying they will appeal the decision. VISA said it was disappointed by the court’s decision particularly since the judge himself acknowledged that the process is “uniquely beneficial” to consumers as cardholders receive currency conversion rates that are favorable to their other conversion options. MasterCard said the judge’s decision sends a chilling message to the business community that if you do business in California, you cant rely on existing laws, and you could be subject to sanction based on previously unknown notions of commerce and jurisprudence. MasterCard also said that mandating how its members disclose the currency conversion process to their customers is usurping authority that properly resides with federal authorities, who regulate financial disclosure.

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TSYS Fraud Fighter

TSYS has teamed with PAR3 Communications to offer automated notification technology for possible fraudulent credit/debit card activity. The new “TSYS Notification” service will notify the consumer by telephone, e-mail or any wireless device at the first signs of fraud. After TSYS gauges a transactions veracity with its “CardGuard” fraud detection system, “TSYS Notification” immediately sends a detailed, automated phone message that requests the customer to verify the transaction. It then offers the customer several sophisticated response options: the customer could confirm the purchase, forward the information to other users on the account or connect to a CSR to discuss the transaction in more detail. The customers responses are immediately updated in the processing system. Email capability will be added later. “TSYS Notification” is also available in Spanish and Canadian French.

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Acquisition Costs

The average cost to acquire a credit card account in the USA is now $78, with a range between $10 per account and $230 per account. With response rates for direct mail credit card solicitations dipping as a low as 0.3%, the cost can reach as high as $115 per account. By contrast, Internet marketing with response rates for credit card applications exceeding 2.0%, the costs range between $10 per account and $45 per account. The findings come from a research report released yesterday by CA-based RK Hammer Investment Bankers. Hammer found that accounts acquired through portfolio acquisitions are the most expensive while accounts picked up through agent banks are the least expensive.

CREDIT CARD ACCOUNT ACQUISITION COSTS
(costs include marketing, bureau expense, credit processing,
and card issuance)
Per Acct Response
Portfolio Acquisition $40-$230 NA
Direct Mail $95-$115 0.3%-0.7%
Pre-Approved $70-$90 0.6%-1.8%
Telemarketing $60-$70 3.0%-6.0%
Pre-App + Tele $50-$60 4.0%-5.0%
Internet Applicatio n $10-$45 0.6%-2.1%
Agent Banks $10-$40 1.2%-2.6%

Source: RK Hammer Investment Bankers

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