TSYS 3Q/02

TSYS reported third quarter net income increased 27.1% to $32.3 million, up from $25.5 million in the same period last year. Revenue for the quarter was $178.6 million, an increase of 10.8%, compared to one year ago. TSYS also announced the signing of a LOI with Bank of Ireland to process its consumer and commercial accounts. Bank of Ireland will convert its accounts from its in-house system in the first half of 2003. After the conversion, TSYS will process more than 90% of the card accounts in Ireland and will service an estimated 14.2 million card accounts in Europe. TSYS announced it has set a goal of growing net income by 12-15% in 2003. For complete details on TSYS’ performance during 3Q/02 visit CardData ([www.carddata.com][1]).

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

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TransLink Extension

All six of the San Francisco Bay Area transit operators participating in the “Phase I” demonstration of the “TransLink” regional fare payment system have agreed to extend the pilot program while their respective boards decide whether to proceed with “Phase II”, which would involve implementation of the “TransLink” smart card system throughout the operators’ route and station networks. During the original six-month demonstration period that ended July 31, some 3,000 passengers tested the “TransLink” system on portions of the Bay Area’s rail, light-rail, bus and ferry network The six operators participating in the “TransLink” pilot program include AC Transit, BART, Caltrain, Golden Gate Transit, San Francisco Muni and the Santa Clara Valley Transportation Authority.

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BIOMETRIC ENTRY

Drexler Technology Corporation has received an order for 24 of its
new LaserCard biometric identity verification systems and related software
and biometric analysis tools for use in a test program at Los Angeles and
Atlanta airports and at four Mexican border crossing points in Arizona,
California, and Texas, for biometric ID border crossing/tracking. These
LaserCard identity verification systems are designed to function with the
more than 5 million Drexler-manufactured “Laser Visa” Border Crossing Cards
issued by the U.S. Immigration and Naturalization Service (INS) and U.S.
Department of State since 1998. The Space and Naval Warfare Systems Center,
San Diego, will conduct the tests.

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Citigroup 3Q/02

Citigroup reported this morning that its North American card business produced $659 million in third quarter profits, an 18% increase over 3Q/02, as loss rates improved 62 basis points from the second quarter. North American card outstandings, including Diners Club, were up 4%, from $109 billion in 3Q/01 to $113 billion. US and Canadian outstandings grew 5% to $110.8 billion. Volume on North American cards hit $58.3 billion, a 6% gain over last year. However total, end-of-period open accounts for North America, declined 6% to 84.2 million. Citi’s charge-off rate came in at 6.14%, compared to 6.76% in the previous quarter, and 5.96% one year ago. Delinquency (90+ days) was up slightly since 2Q/02, from 1.84% to 1.88%. Globally, Citigroup made $849 million in card profits, a 21% gain. Citigroup also added $206 million to the loan loss reserve established in accordance with FFIEC guidance related to past due interest and late fees on the on-balance sheet credit card receivables offset by net gains recognized due to changes in estimates in the timing of revenue recognition on securitizations. For complete details on Citigroup’s 3Q/02 performance visit CardData ([www.carddata.com][1]).

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

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Online Bills

Jupiter Research predicts that by 2006, more than 50 million households will view bills online and 52 million households will pay at least one bill online. This represents a CAGR of 23% over 2001’s figure of 18 million U.S. households who viewed at least one bill online. Jupiter Research reports that while direct biller sites today account for 83% of bills viewed online, this will fall to 60% by 2006, with 40% of bills viewed at consolidators’ sites in 2006. Consumers who are interested in viewing and paying their bills in a single venue say they would prefer to do so at their primary banking provider’s site. This tendency increases among more experienced online users: 32% of users who have five or more years of online experience prefer a bank site compared with 23% of users who have been online for a year or less.

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Household Response

Fitch Ratings has placed Household on “Rating Watch Negative” following its proposed settlement over bad sub-prime lending practices. The first charge, which could amount up to a sizeable $484 million pre-tax, is related to a proposed settlement between Household and state attorneys general and state banking regulatory agencies. This represents a nationwide resolution of issues related to Household’s real estate lending practices and the Household Finance Corp. and Beneficial Finance Corp.’s branch businesses. The second charge, expected to be taken in the fourth quarter of 2002, is related to the anticipated disposition of the assets and liabilities of Household’s thrift, Household Bank, FSB. The cost to Household for divesting the assets and liabilities could total between $250 million and $300 million after-tax.

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TRANSAKT CERTIFICATION

Calgary-based Wildcard Wireless Solutions has received Vital Processing
Services’ “Class B” platform certification for both its restaurant and
retail software applications in the USA.. The software applications, which
run seamlessly on Wildcard’s “TransAKT” wireless POS terminals, will allow
the Company to immediately begin marketing its flagship product in the
American marketplace. Wildcard is currently in negotiations with several of
these U.S. merchant acquirers who are interested in marketing and
distributing the company’s “TransAKT” POS terminals.

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Netflix Goes ReD

Netflix, the largest online DVD rental service has signed a deal to utilize Retail Decisions’ “LiveProcessor” electronic payment software for its 742,000 U.S. customers. “LiveProcessor” combines online, call center, retail and IVR transactions into a single system, and integrates real-time authorization, batch processing and settlement functionality with existing order processing, subscription and electronic commerce systems. The payment processing application also supports Visa CVV2 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. With over 100 installations of LiveProcessor in the US, LiveProcessor customers complete an estimated 13 million card-not-present transactions in 23 currencies on a monthly basis. Clients of the company include Hotwire, Nextel Communications, Research In Motion, ShopNBC, Tupperware and Unicity.

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NWC CARD DEAL

The North West Company, the oldest retailer in North America is
implementing Credit Management Services’ credit card application solution
to support its growing private label credit card business.
The North West Company operates 176 food and general merchandise stores,
with the majority located throughout northern Canada and Alaska. The CMS
application is fully scaleable operating in UNIX and OS/390
supporting department to enterprise level systems. CMS is headquartered in
San Francisco.

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HK SMART CARD DEAL

Keycorp Limited has signed a subcontracting agreement with PCCW Business
eSolutions for the provision of 1.2 million smart cards for Hong Kong ‘s
planned “Smart Identity Card System.” The current deal is expected to
generate more than A$5 million for Keycorp. Business eSolutions, a business
unit of PCCW, will utilise Keycorp’s MULTOS operating system to keep
personal data stored by the Immigration Department of the Government of the
HKSAR private and secure when “SMARTICS” replaces the laminated plastic
photo ID card system in use since 1987. The PCCW-led consortium was awarded
the project in February by the Hong Kong government after a competitive
bidding process. Keycorp will join other key technology partners in the
deal, including ACI Worldwide, Cogent Systems, SecureNet Asia, Mondex
International and Trüb AG.

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