Outsourcing 2003

Two-thirds of U.S. retail and commercial banks with assets of at least $3 billion outsource one or more business functions, according to an Accenture survey of bank executives released this week. Of the banks that outsource, 75% reported outsourcing credit card processing. Eighty-five percent of the banks that outsource reported that they are either “satisfied” or “very satisfied” with their outsourcing partners, with the average satisfaction rating of all banks surveyed being 4.4 on a five-point scale, where “5” is “very satisfied.” Two-thirds of executives who reported that their banks outsource said they expect outsourcing activity at their companies to remain at current levels over the next 12 months, while 20% said they expect to increase the level of outsourcing during that time. Of the 33% of banks surveyed that reported not outsourcing any internal or external functions, half said they don’t outsource because they have sufficient staff to manage all functions internally, and 40% said they don’t outsource because they don’t believe it will be cost-effective. Thirty percent of the banks that reported not outsourcing also said they fear a loss of control over key business functions.

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CITIBANK PAYWARE

Citibank Card Acceptance has deployed Trintech’s “PayWare Resolve” to
manage charge-backs from all its merchant accounts in Europe. Trintech’s
acquirer charge-back system automates the exception management process from
end-to-end. “PayWare Resolve” combines a powerful decision-support
environment with compliant dispute regulations to enable optimum management
of the entire charge-back process using an easily understood graphical user
interface. The essential difference between “PayWare Resolve” and other
exception management systems is its built-in knowledge of national and
international
charge-back regulations. The charge-back regulations for VISA and
MasterCard/Europay have been encoded into the application so that the
system can recommend the appropriate action and charge-back reason codes
for each case, replacing the need to navigate a series of intricate paper
trails and complex and changing regulations.

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ABNH Board Member

American Bank Note Holographics has named Mark Bonney, formerly with Axsys Technologies, to its Board of Directors. From 1993 through 1999, Mr. Bonney was a senior executive of Zygo Corporation (NASDAQ: ZIGO), serving as both Chief Financial Officer and VP Operations. Zygo manufactures measurement systems and leading edge optical products. Mr. Bonney earned an MBA in Finance from the University of Hartford in 1979.

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Proximity Payments

Texas Instruments RFid Systems has developed a highly flexible and secure “ISO/IEC 14443 Type B” technology platform for proximity payment transactions. The “14443” standard, endorsed by American Express, MasterCard and VISA for contactless payments, allows for increased security due to a faster rate of data exchange. TI is currently sampling a low-cost standards-based “Proximity Coupling Device” reader module to key customers and is developing “Proximity Integrated Circuit Card” chips, which will be fully compliant with “14443”. The chip features include a flexible and configurable memory architecture and file system that support multiple applications, and dynamic encryption capability using NIST-approved “Triple DES” and “SHA-1” crypto algorithms. Samples of the new chips will be available in early by Summer.

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LiveProcessor 4.0

NJ-based Retail Decisions has released “LiveProcessor 4.0,” which combines a significant number of new payment and billing capabilities to its electronic payment processing solution. With over 100 installations in the US, LiveProcessor customers complete an estimated 13 million card-not-present transactions in 23 currencies on a monthly basis. Designed to run within the retailer’s data center, LiveProcessor eliminates gateway transaction fees and provides a secure payment processing application that supports Visa CVV2, MasterCard CVC2 and Amex CID security codes, procurement level 2 and 3 cards, electronic check processing, foreign currency settlement support and multiple bank interfaces in a single product.

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ICMA WORKSHOP

The International Card Manufacturers Association Educational
Institute will host a workshop at The Intercontinental Zurich on May 27-28.
The chairmen for the workshop is Gordon Kramer, president of Continental
Plastic Card and ICMA President; and Frank Dorner, managing director of
Digicard and ICMA Board member. The topics are based on feedback from
previous workshops and will cover a range of subjects pertinent to each
region including new materials, technologies and trends in traditional and
smart cards, smart labels, contactless cards, techniques, personalization,
and new industry initiatives and standards. The workshop is suitable for
all card manufacturing and personalization production managers,
supervisors, executives and line workers.

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Interoperable M-Payments

The new London-based New Mobile Payment Services Association announced plans today to create an open, interoperable, commonly branded solution for payments by mobile phone after inking an agreement with Orange, Telefonica Moviles, T-Mobile and Vodafone. In addition to the four founding members, 3, debitel, KPN Mobile group, O2 and TMN have expressed interest in joining the MPSA. The MPSA will be managed by a newly appointed CEO, Tim Jones, according to tomorrow’s edition of The RAM Report ([www.ramreport.com][1]). He has held a number of senior executive positions, including that of Chief Executive, Retail Banking at National Westminster Bank Plc in the UK. He also co-founded and headed the Mondex electronic cash initiative within National Westminster Bank.

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

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Accesspoint Check Services

Los Angeles-based Accesspoint/Processing Source International have expanded their services to deliver check services including, verification, electronic conversion, guarantee, and collection; and expects to provide loyalty and ATM/debit card services this Spring. Additionally, the Company will be offering its merchants a new version of its payment processing software, which now incorporates a card swipe capability.

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INTEROPERABLE M-PAYMENTS

The London-based New Mobile Payment Services Association announced plans
to create an open, interoperable, commonly branded solution for payments by
mobile phone after inking an agreement with
Orange, Telefonica Moviles, T-Mobile and Vodafone. In addition to the four
founding members, 3, debitel, KPN Mobile group, O2 and TMN have expressed
interest in joining the MPSA. The MPSA will be managed by a newly appointed
CEO, Tim Jones. He has held a number of senior executive positions,
including that of Chief Executive, Retail Banking at National Westminster
Bank Plc in the UK. He also co-founded and headed the Mondex electronic
cash initiative within National Westminster Bank.

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FDC & HBOS

First Data has expanded its UK and European acquiring presence with the signing of a new agreement this morning. HBOS PLC confirmed the signing of a long-term “Revenue Sharing Alliance” agreement with FDC. Under the terms of the contract, FDC will provide full merchant processing for HBOS’ 14,000 merchant outlets. The transactions will be processed via First Data’s “MerchantStar International” platform in the UK and will include VISA, MasterCard and Switch payment cards. In 2001, the Bank of Scotland merged with Halifax to create HBOS PLC.

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Sears MC 2003

Sears admitted Tuesday that going outside its extensive customer base for credit card customers has not been profitable. In a meeting with investors yesterday, the retailer said that 15% of the “Gold MasterCard” balances it acquired last year, through direct mail, have proven to be low quality with higher than average loss rates. Sears introduced the “Gold MasterCard” in 2000, converting 12 million of its 60 million retail cardholders to the “Sears Gold MasterCard” within the first twelve months. Sears National Bank initially targeted inactive and non-revolving cardholders of its store credit card for the MasterCard product. However, the migration from private label to bank card began to slow last year as Sears topped 24 million bank MasterCard accounts. Launching a direct mail campaign to non-Sears store cardholders in 2002, the company regained growth, ending 2002 with more than 31 million cardholders. In January, Sears reported “Gold MasterCard” outstandings of $12.3 billion, compared to $5.3 billion one year ago. Revenues for credit services was $1.5 billion for 4Q/02, a 4.1% increase over 4Q/01. Overall credit card outstandings at EOY 2002 hit $30.8 billion, an 11.5% increase. However, the overall net charge-off rate for the fourth quarter increased to 5.40% from 5.23%. The charge-off rate for the “Gold MasterCard” segment was 6.36% for 4Q/02, compared to 5.77% one year ago. Sears said Tuesday it expects MasterCard charge-offs to average between 6.5% and 7.0% in 2003. For complete details on Sears’ 4Q/02 performance visit CardData ([www.carddata.com][1]). (CF Library 5/7/01; 1/16/03).

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

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Pitney Bowes & TSYS

TSYS and Pitney Bowes have signed a seven-year agreement to process Pitney Bowes’ 1.5 million postage payment and credit accounts in the USA, the UK and Canada. TSYS can process in multiple languages and currencies on one platform. TSYS also provides corporate customers with a consolidated invoice for multiple products and services. With an 86 percent share of the U.S. Visa and MasterCard commercial card market, TSYS processes more corporate and commercial cards than any other processor.

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