THIN LOYALTY CARDS

Black Sun and MORI have released a report on loyalty cards that shows 57%
of the U.K. population have one or more of the 39 million loyalty cards in
circulation; yet 25% of cardholders never redeem their points; only 40% say
that having the card makes them shop at the store; 69% say they are not
swayed by having a card; and 85% of card holders regard lower prices as
preferable to loyalty points. Speaking this week at “Cards Europe 2003,”
Black Sun`s Knowledge Management Director explained that the key reason for
this is that the current loyalty programs are strong on volume and weak on
value. Black Sun says the current loyalty programs are little more than
thinly disguised discount programs. Not only is the discount “thin”, its
usually 1%, but also the fact that it is simply a discount scheme is only
slightly disguised by the issuing of points for earnings and redemption.
Black Sun cited the “Nectar” loyalty card as an example.

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iPIN Joins MPF

Belmont, CA-based iPIN has joined the “Mobile Payment Forum,” founded by American Express, JCB, MasterCard, and VISA. ith extensive experience developing and implementing multi-carrier payment networks, iPIN looks forward to collaborating with the members of the Mobile Payment Forum and believes that its insights on payments and interoperability will be valuable to the ongoing development of global mobile payment standards. Since its inception, iPIN dedicated significant time and resources to ensure that its product suite remained open and flexible.

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SEARS MASTERCARD

Sears Canada confirmed yesterday it plans to expand its “Sears
MasterCard” program across the country this year. The company launched the
MasterCard in September in Ontario only, and at year-end 2002, had
activated 125,000 accounts with $150 million in outstandings. Sears Canada
has nine million retail cardholders, the largest store credit card program
in Canada. At year-end 2002, the Sears Canada card had $2,753,000,000 in
card outstandings. Sears Canada is a multi-channel retailer with a network
of 123 department stores, 40 furniture and appliances stores, over 2,100
catalogue pick-up locations, 140 dealer stores, 17 outlet stores, 45 floor
covering centers, 52 auto centers and 111 Sears Travel offices. In the
U.S., Sears has $12.3 billion in outstandings in the “Sears Gold
MasterCard” program, compared to $5.3 billion on year ago.
U.S.-based Sears has $18.5 billion in store card outstandings.

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Corp E-Checks

The Association for Financial Professionals said this morning that the majority of its members oppose having their corporate checks converted to ACH debits. In a January survey, 79% of corporate treasury and finance professionals stated that their companies would not permit its checks to be converted to ACH debits. The members say that conversion of corporate checks to ACH debits disrupts corporate cash management practices and controls, and increases exposure to fraud. Under proposed NACHA rules, payees would be able to convert payments to ACH debits and paying companies would be able to prevent conversion if they use an auxiliary on-us field in the MICR line of their checks. The AFP survey revealed widespread uncertainty about the auxiliary on-us field and how it would work as a barrier against check conversion. AFP recommends a delay in implementation until March 2004.

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Kroger & Western Union

First Data’s Western Union Financial Services has renewed an agreement to provide money transfer and money order services to The Kroger Co. that also extends Western Union’s existing agreement and includes the addition of 500 Kroger locations, in Texas, California and Indiana for money transfer services and the addition of 1,000 Kroger-owned for money order services. Western Union and its subsidiary, Orlandi Valuta, together make up one of the world’s largest money transfer networks with a total of approximately 151,000 Agent locations in more than 195 countries and territories.

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Slammer & ATMs

PA-based Genpass says its ATMs were unaffected by the recent “slammer” virus because they use an architecture based on the newest Compaq/Tandem fault tolerant and Compaq server-based technology. Thousands of ATMs went down last month as the computer virus infiltrated ATM systems that relied on Microsoft’s open systems architecture. Genpass says reports show that Bank of America, Canadian Imperial Bank, and EDS experienced system disruptions. The company says its systems are designed specifically to secure Internet and other remote financial transactions. Genpass says networks which allow non-financial transactions to be performed on the same system platforms as financial ones are wide open to such an attack. Non-financial transactions may include information gathering, via the Internet, for marketing follow-up or for routine enrollments or customer requests such as statements or downloads. Closed systems, those protected by built-in firewalls and encryption, are, generally, safe from such attacks. Genpass owns the “MoneyMaker” and “MONEY BELT” networks, drives approximately 24,000 ATMs, and processes over 360 million transactions annually.

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Adams Leaves FDC

First Data announced this morning that Eula Adams, president of Card Issuing Services, will leave the company effective March 1. As a leader in electronic commerce and payment services, First Data serves approximately 3 million merchant locations, 1,400 card issuers and millions of consumers, making it easy, fast and secure for people and businesses to buy goods and services using virtually any form of payment.

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E*TRADE ATMs

E*TRADE Access said Tuesday it has acquired a portfolio of more than 4,000 ATMs from CIBC’s “XtraCash” ATM network. The deal brings E*TRADE Financial’s ATM network to more than 15,000 ATMs, the second largest ATM network in the USA. The newly acquired ATMs will expand the company’s reach in California and the western United States. During the third quarter, CIBC announced its plans close its U.S. electronic banking operations, including the Amicus FSB and CIBC National Bank. As part of the shutdown, CIBC transferred customer deposits with a balance of $1,000 or more to E*TRADE Bank. E*TRADE Access is a wholly owned subsidiary of E*TRADE Group and was founded in 1993 as an off-premise ATM network. In May 2000, E*TRADE completed the acquisition of Card Capture Services to bring its network to 8,800 machines. In October of 2001, E*TRADE Bank signed a deal to issue VISA cards. The card was introduced last year. E*TRADE says it wanted to provide a single card that can be used by all its customers for access to E*TRADE Bank and E*TRADE Securities. Customers using selected E*TRADE ATMs have the ability to make withdrawals, request balance inquiries and transfer funds from and between E*TRADE Bank and E*TRADE Securities accounts. In 1998, E*TRADE and First USA launched two co-branded VISA cards. (CF Library 6/29/98; 5/9/00; 10/11/01; 11/15/02; 12/2/02)

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CARD FEES

A new survey predicts that retailers in Australia will lose nearly 30% of
the business if they charge a fee for credit or debit card payments. The AC
Nielsen survey found that 39% of credit card holders would prefer to pay by
cash if a fee for credit is assessed. Only 3% of the 1400 respondents to
the survey say they have been charged a fee since January 1. Meanwhile VISA
has launched a campaign to warn 250,000 retailers about the impact of
charging fees for card payments. VISA is also reminding retailers they must
inform customers of the policy before they make a purchase. Effective
January 1st, merchants in Australia have the right to charge a fee to
customers for using a credit and debit card.

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Oberthur 4Q/02

After a sluggish first half in 2002, Oberthur Card Systems reported that revenues for the fourth quarter were up 15.5% over the third quarter, to $130.2 million. Smart banking card sales hit 11.0 million cards in the fourth quarter, up 3.7% over the previous quarter, driven by migration programs in the United Kingdom, France and Benelux. However, full year 2002 revenues declined by 9.1% to $480.4 million, due to a broad internal reorganization. After posting a first half loss, Oberthur says that EBITDA has more than tripled compared with the first half. Over the course of 2002, Oberthur was able to achieve lower purchasing prices of components, reduce its staff more than 10%, and cut net debt from 142 million euros on EOY 2001, to less than 90 million euros as of EOY 2002.

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CO-OP Nertwork 2002

The CO-OP Network reported yesterday that its transaction volume rose 34% during 2002 to 640 million transactions as it added 370 credit unions, more than 7,000 ATMs, and two million cardholders in 2002. The company’s previous one-year record for transaction volume was established in 2001 with 477 million annual transactions. With 1,165 member credit unions, 15,000 surcharge-free ATMs, an average of 53 million monthly transactions and 12 million cardholders, CO-OP Network is the No. 1 credit union EFT network in North America.

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