Target 4Q/02

Fourth quarter profits from Target’s credit card operations increased nearly 42% to $150 million, compared to one year ago. Target, now the nation’s 18th largest issuer of bank credit cards, reported Thursday that outstandings for its “smart VISA” program have topped $3.7 billion, a 140% increase over 4Q/01. Over the same period, Target’s “Guest Card” store credit card program outstandings declined from $1,063,000,000 to $827,000,000, a 22% drop. Target also announced yesterday it will disclose more details on its card program going forward. For 4Q/02, which ended 2/1/03, Target’s net charge-off rate for its VISA program was 7.3%, compared to 6.9% in the prior quarter. Net write-offs for its store credit card program were 8.4% for 4Q/02, compared to 7.9% in 3Q/02. The 90-day+ delinquency rate for “smart VISA” was 3.1% and for its “Guest Card” program the figure was 5.1%. For complete details on Target’s bank credit card performance visit CardData ([www.carddata.com][1]).

TARGET SMART VISA SNAPSHOT
4Q/01 1Q/02 2Q/02 3Q/02 4Q/02
Outstandings $1.6b $2.0b $2.5b $3.2b $3.8b
Cards-in-Force 3.0m 6.0m 7.1m 8.0m 8.9m
Source: CardData (www.carddata.com)

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

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WLAN SPECS

The WLAN Smart Card Consortium was launched this week to define
specifications for world-wide access to wireless LAN networks with smart
card security. A total of 19 companies and institutions have joined the
consortium as Founding Members, including major infrastructure providers,
card and chip manufacturers, start-ups, and academic institutions. The
participating firms include VISA, Gemplus, Oberthur, SchlumbergerSema, and
Infineon Technologies. The first challenge of the WLAN smart card
consortium is in specifying the use of the card in order to facilitate
smart card adoption. Liaison contacts have been established for 3GPP, IEEE,
the Wi-Fi Alliance, and smart card organizations such as the Java Card Forum.

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CVS & TeleCheck

Denver-based First Data has signed an agreement to provide the TeleCheck database service for check verification to CVS/pharmacy. CVS will utilize the industry-leading database to authorize customer’s paper checks at the point-of-sale (POS). TeleCheck has the nation’s largest and most comprehensive database of check writer information. The database contains information from TeleCheck’s over 340,000 subscriber locations. Under terms of the agreement, TeleCheck will provide CVS with database updates daily, allowing the merchant to access the most accurate, up-to-date information available.

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Free AT&T Cards

As part of a recent settlement of a lawsuit filed in San Francisco over payphone fee disclosure, AT&T will begin distributing $50,000 worth pre-paid calling cards to the city’s low-income and homeless persons, tourist bureaus, and foster children. The pay phone surcharge is a fee approved by the Federal Communications Commission that long distance carriers must reimburse pay phone owners for pay phones calls where no coin deposit is made. The price of the pay phone surcharge is also a crucial factor in consumers’ choice of which calling card to buy.

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Euronet 4Q

Euronet Worldwide reported this week that annual consolidated revenues of $71.0 million for 2002, an increase of 16.5% over 2001 revenues of $61.0 million. Consolidated revenue for the fourth quarter was $18.6 million, an increase of 10.4% over fourth quarter 2001 revenues of $16.8 million, according the The RAM Report ([www.ramreport.com][1]). The Processing Services Segment reported annual revenues for 2002 of $53.9 million, an increase of 17.4% over 2001 revenues of $45.9 million. Fourth quarter 2002 revenues were $15.1 million, up 10.5% over fourth quarter 2001 revenues of $13.6 million, and up 9.6% over third quarter revenues of $13.8 million. As of December 31st, Euronet owned and/or operated a total of 3,005 ATMs compared to 2,951 ATMs in the prior quarter. Quarterly transactions on the network reached 22.7 million in the fourth quarter 2002, a 45% increase over 15.6 million in the fourth quarter 2001. Fourth quarter transactions improved by 400,000 compared to the prior quarter. Euronet owns and/or operates ATMs in Hungary, Poland, Germany, Croatia, the Czech Republic, the UK, Greece and Egypt.

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

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RDM & FDC

First Data has “Class A” certified Ontario-based RDM’s imaging family of
peripherals. The RDM imagers will be integrated with the First Data
“TeleCheck ECA service. The RDM suite of MICR imaging peripherals provide
multiple MICR read capability, significantly reducing replacement errors
and have one of the highest available single pass read rates. With RDM
imaging peripherals, merchants using Hypercom, VeriFone and Lipman payment
terminals can easily accept and image electronic checks on their existing
terminal platform. The RDM imaging peripherals will be sold through all
First Data channels.

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Cardtronics ATMs

Houston-based Cardtronics has acquired the ATMs and related transaction processing contracts for 22 locations in 10 shopping malls across the country from San Diego-based CenterCourt Cash. For Cardtronics, the deal expands the company’s presence outside of its core customer base of retail petroleum and other convenience store locations. Of the 22 CenterCourt Cash locations included in the deal, 19 are located in California. The remaining three ATM locations are located in Seattle and Baltimore.

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TNS NETWORK

Toronto-based TNS Smart Network reported this week that is has reached a
milestone of 5,000 ATMs in Canada, double the number of one year ago. TNS
is the largest private Service Bureau for third party ATMs in Canada. The
company says its strategy is to maintain an edge by consistently adding
several new features to its real-time ATM tool kit, ‘”WebMon,” which
currently includes: “Configurable Cash Management Thresholds,” “Terminal
Audit” page, and expansions on its graphical analysis tools.

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DPI Hack

The recent theft of between five and eight million credit card accounts was due to a breach at Omaha-based Data Processors International, a/k/a DPI Merchant Services. DPI specializes in the establishment of credit card merchant accounts for retail, Internet, direct response, catalog, multi-level, home based, and other direct marketing merchants. The hack attack on the database of the third-party payment card processor reportedly was discovered February 3rd. The hacked accounts include 3.4 million VISA cards and 2.2 million MasterCards. An undetermined number of American Express and Discover cards were involved. However, approximately eight million accounts were reportedly involved. The card associations indicated there is no evidence of widespread fraud and affected cardholders have been notified. The FBI and the Secret Service are continuing their investigation. DPI Merchant Services was acquired by TransFirst in March 2002. DPI reported $850 million in processing volume in 2001. (CF Library 3/15/02; 2/19/03)

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Intelli-Check & CardCom

Intelli-Check has filed a patent infringement suit against CardCom Technology. The suit maintains that CardCom infringes on Intelli-Check’s patent for its “ID-CHECK” technology relating to its authentication system for document identification. The suit also maintains that CardCom, the manufacturer of the “ViAge” age verification system and related products, committed other acts of infringement. The Intelli-Check Complaint also includes a claim that CardCom induced other parties to infringe the Intelli-Check patent by its sales and marketing activities. Intelli-Check currently holds four patents with three others pending for the validation of information encoded on all currently issued driver licenses and state-issued and military ID cards that conform to the uniform standards established by the American Association of Motor Vehicle Administrators, the American National Standards Institute and the International Standards Organization.

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Starbucks VISA

For the first time in the USA, a re-loadable stored value card is being combined with a bank credit card. Starbucks announced this morning it has teamed with Bank One and VISA to launch the “Starbucks VISA Card.” The new VISA card will be launched later this year. More than 11 million original Starbucks Cards have been activated to-date. The original re-loadable stored value “Starbucks Card” was launched in November 2001. In conjunction with the launch of this new product, Starbucks will also introduce its first formal customer appreciation program to provide Starbucks-related benefits and rewards to customers. This program will deliver value-added services and frequent rewards to participants that are relevant and unique to Starbucks. Furthermore, Starbucks plans to use a significant portion of the proceeds from the new card to support its long-standing financial commitment to social and environmental causes around the world. In September, VISA and Starbucks partnered to launch the “Get an Extra Shot from VISA” contest. (CF Library 1/25/02; 4/18/02; 7/10/02; 9/18/02)

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Future EBT

More than 90% of Food Stamp benefits are now delivered electronically, according to the Food and Nutrition Service, and the remainder will be in the near future. EBT programs are running in 48 states, the District of Columbia, the Virgin Islands and Puerto Rico. In light of the impending expansion of EBT services, NACHA’s former EBT Council has adopted the new name “Electronic Benefits and Services Council.” The Council’s new mission will assure that EBT standards and operating rules remain relevant and that they accommodate a variety of governmental payments and services using existing and emerging technologies. The Council will serve as a forum for the exchange of information concerning the application of technologies for delivering electronic government payments and services. The Council will continue to maintain and update the “Quest Operating Rules,” as well as promote the “Quest” service mark. Currently, 35 states, the District of Columbia and Puerto Rico follow the “Quest Rules.”

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