ACE & Ithaca Printers

ACE America’s Cash Express has selected TransAct’s “Ithaca” brand POSjet 1500 two-color inkjet printer for use at the POS in ACE Cash Express’ network of nearly 1,200 stores. ACE Cash Express cashes and validates more than 1.3 million checks per month. The Company has operations in freestanding buildings, shopping centers, kiosks, retailers, and supermarkets. Its business includes check cashing, money orders, money transfers, lottery tickets, bill payments; all of which require mission critical receipt printing.

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Card Profits 2003

Credit card profit margins should be stable for most of 2003 as it appears unlikely the Fed will raise rates until late 2003. Bankruptcy filings should be more modest in 2003, further lessening the expense load on card issuers’ P/Ls. The predictions come from California-based investment banker R. K. Hammer who also expects tax cuts to pass Congress by July, and subsequently boost spending power thus driving higher merchant fee income and higher consumer balances. Hammer predicts the Feds will raise the Fed Funds Rate from 1.25% to 2.00% or 2.25% by the end of 2003. Therefore, Hammer says he projects gross card revenues to be up by 8% for the year, and pre-tax OROA profits to be up by 5%. Income from fees should top 35% of total revenue, as penalty fees and nuisance fees increase. Overall, companies whose earnings and reserves were not weakened by sub-prime lending can expect a good boost to profits for the year.

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SBSC Weighs In

As summary judgment arguments were being heard Friday in the Wal-Mart debit card lawsuit, the Small Business Survival Committee released a statement saying that small businesses will be harmed if merchants prevail in shaking up the current payment system. The SBSC says that card companies help smaller merchants compete with larger retailers and it is important for small merchants that consumers have as many options to pay as possible to encourage sales, convenience and to guarantee payment. The SBC says antitrust cases should be about what’s best for consumers and competition, not big companies. Allowing consumers the freedom to choose their preferred method of payment has been very good for all businesses, says the group. The statement concludes saying that this is not a system in need of remedy. The Small Business Survival Committee, founded in 1994, has more than 70,000 members nationwide.

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MC Back-Up Center

MasterCard announced Friday it chosen Kansas City, MO, to locate its back-up data center, which is expected to become operational this year. The cost of the site is estimated at as much as $50 million and will be staffed by approximately 30 technical employees.The new site will replace MasterCard’s current backup site located in a New York City suburb. The Kansas City facility was chosen over 18 other sites, partly due to its proximity to St. Louis, where MasterCard runs its worldwide transaction processing facility. The Kansas City site will serve a unique co-processing role, meaning that processing will be balanced between two systems, which allows for immediate redirection should either system experience problems.

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CardData 4Q/02

Among billion dollar portfolios reporting end-of-year data thus far, National City posted modest gains in outstandings and volume, while sub-prime specialist First Consumers National Bank experienced a sharp decline in all metrics, as its number of active accounts dropped more than 25%. According to CardData’s 4Q/02 portfolio survey, National City’s outstandings increased 4.7% during 2002, while First Consumers’ outstandings fell 16.5%. Among mid-level issuers with at least $100 million in outstandings, California Commerce Bank posted a 32%+ gain in outstandings as the its number of active accounts surged by more than 67%. FL-based SunTrust also posted above average gains in all categories with a 24% jump in annual volume and a nearly 27% gain in active accounts. VA-based First Citizens also produced above average gains in outstandings and volume even though its account base remained flat. For complete details on the latest 4Q/02 and EOY 2002 portfolio data visit CardData ([www.carddata.com][1]).

EOY 2002
ISSUER OUTSTANDINGS (CHNG) VOLUME (CHNG) ACTIVES (CHNG)
National City $2,307,403,461 (+4.7%) $ 4,632,151,100 (+3.3%) 1,053,272 (-0.7%)
First Consumers $1,059,783,758 (-16.5%) $1,218,832,258 (-24.9%) 812,843 (-25.2%)
First Citizens $ 242,571,808 (+7.3%) $ 802,667,857 (+11.8%) 106,363 (NC)
Calif Commerce $ 112,055,715 (+32.7%) $ 185,812,903 (+19.6%) 40,265 (+67.4%)
SunTrust $ 110,036,026 (+17.7%) $ 787,470,895 (+24.3%) 20,855 (+26.8%)
Source: CardData (www.carddata.com)

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

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Catuity Patents

Detroit-based Catuity has received a “Notice of Allowance” from the U.S. Patent Office for 26 claims on its application for a patent for a “Data Carrying Device and Systems for Use Therewith” which covers the efficient use of memory space on smart cards to store data for multiple applications and the systems to manage applications, devices and terminals. This new U.S. patent discloses the use of dynamic memory allocation and memory re-use on smart cards via the use of a static area, program index and an application area.

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CS-Link 1500

UniComp announced the commercial availability of its “CS-Link 1500 Micro Kiosk,” the newest addition to its family of interactive customer service terminals. The CS-Link 1500 with a compact footprint (smaller than an 8″x10″ picture frame) has been designed to be mounted almost anywhere that will enhance a customer’s shopping experience. The attractive multi media micro kiosk provides a compact six-inch screen to address a wide range of customer needs from product location, advertisements and couponing to product information and bill paying.

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InterCept Forecast

Atlanta-based InterCept said Thursday it is lowering its financial outlook after watching iBill revenues drop in its merchant area. iBill experienced a large loss of merchant customers following the implementation of a new credit card association rule in mid-November pertaining to high-risk merchants. A number of iBill’s Web merchants declined to pay a registration fee mandated by the new rule. InterCept says it will continue to examine iBill’s customer base for merchants who are not complying with credit card association rules or its underwriting standards, and may, therefore, experience further customer attrition. InterCept previously announced that it expected its 2002 earnings per share to be in the range of $1.11 to 1.15. InterCept now expects that those earnings will be in the range of $0.92 to $0.98 per share, and it is withdrawing previously issued earnings guidance for 2003. Yesterday’s announcement drove InterCept shares down 50% to their lowest price in more than three years. The stock closed at $9.50. This morning the stock has moved lower to around $8.00 per share.

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ONLINE BANKING

Online banks reached more than 30% of the active Internet audience in five
major global markets in November. According to Nielsen//NetRatings, between
October 2001 and October 2002, the number of European surfers visiting
financial services sites grew from 15 to 25 million, while the percentage
of European Internet users who regularly visit a financial services site
steadily rose to 37%. On a country-by-country basis, online bank domains in
Sweden attracted the highest percentage of active users in November, with
more than half that country’s surfers visiting a bank or credit union site
and spending an average of more than an hour on those sites during the
month. Australia came in second with a market reach of 39.6% and France
came in third with a market reach of 38.7%

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Sears Downgrade

Fitch Ratings has lowered its ratings of the senior unsecured notes of Sears to ‘BBB+’ from ‘A-.’ Fitch says the downgrade considers heightened competitive pressures facing the company’s retail operation, challenges in executing a new full-line store strategy, concerns surrounding the overall retail environment and Fitch’s revised internal capital allocations for the credit business. Sears’ credit business has a tangible equity to managed assets ratio on a stand-alone basis which Fitch views as more indicative of the current rating level, particularly as Fitch’s assessment of the credit operation’s risk profile has increased recently. The change in risk profile has occurred as the company has substituted a portion of its declining private label card base with MasterCard accounts, which has exhibited a mixed performance to date. However, profitability of the credit card operation remains strong, although performance in 2002 has been negatively impacted by higher provisions for losses. Increased provisions were due to higher loss levels and the company moving to a more conservative reserve methodology which effectively began assigning reserves more broadly to include current accounts and other fees in addition to delinquent borrowers and finance charges. Future provisioning will mirror net write-offs, although levels will be influenced by the company’s historically longer charge-off period (write-off loans at 240 days delinquent compared to 180 days for banks) and its historic re-age policy, which effectively cures accounts that are currently delinquent. Fitch says its expects reported net chargeoffs to rise moderately during 2003.

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PULSE 2002

TX-based PULSE EFT Association reported this morning that its transaction volume for last year totaled more than 955 million, an increase of 34%. PULSE also posted a gain of 775 total new member financial institutions, including nearly 500 financial institutions that joined as a result of completion of a merger agreement with TYME. During 2002, the network processed more than 336 million ATM transactions, an increase of 22.5%, and PIN debit transactions jumped to 431.7 million, a rise of 28%. Other significant categories accounted for 187.8 million transactions, more than 87% greater than the previous year. PULSE EFT Association serves more than 3,700 banks, credit unions and savings institutions and its network includes more than 700,000 ATM and retail locations nationwide.

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Cards Mid-East

Terrapinn Ltd announced that MasterCard International has agreed to host the “4th Annual Cards Middle East” conference and exhibition in Dubai. he Middle East’s payments and transactions summit is now firmly established as the region’s meeting place for banks, telcos, retailers and other organisations profiting form card solutions. This is where the payments and transactions industry does business.

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