COMPETITIVE ADVANTAGE

The University of Ulster has found that banks throughout Europe had anticipated significant cost savings through a migration to Internet banking, but costs have actually risen, because customers choose to adopt all available delivery platforms rather than choosing the Internet over others. Early indications from the ongoing Ulster research conducted with bank customers in Northern Ireland shows that it is younger customers who will adopt the Internet most readily for their banking. As age and the complexity of financial needs increase, there is a decline in the adoption levels of Internet banking and an increase in the need for face to face interaction. Customers feel that the branch will remain as the most important interface in the foreseeable future.

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SMART PARTNER

Dublin-based CardBASE Technologies has been selected for the VISA EU “Smart Partner Program.” CardBASE is offering its “MASCOT” multi-application smart card management solution to VISA’s EU members. CardBASE is discounting the product for the first five members who choose “MASCOT” under the VISA program. CardBASE is targeting card issuing banks who have yet to complete EMV
migration by the 2005 deadline. CardBASE has to date established over 45 Smart Card solutions around the world.

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Gateway Fees

American Express has begun notifying its merchants that it will begin passing through the gateway access fees charged by VISA and MasterCard. Beginning April 1, merchants who route more than 50% of their AmEx card authorizations through VISA/MasterCard gateways will be charged the fees levied by VISA and MasterCard. AmEx says over the past year VISA and MasterCard started charging AmEx transaction fees for any and all AmEx card authorizations that either the merchant or its third-party processor route through the VISA or MasterCard processing gateways to AmEx for authorization. AmEx says it will no longer subsidize these fees after April 1st. AmEx is suggesting to merchants to route authorizations directly or switch processors. AmEx says the gateway access fee will not be assessed on transactions that flow through third-party processors that do not utilize the VISA/MasterCard Gateways to route AmEx authorizations. AmEx is offering merchants a list of more than 50 such third-party processors.

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SUREFIRE MERGER

Montreal-based SureFire Commerce has signed a merger agreement with privately-held Munich, Germany-based Electronic Billing Systems AG. Initially, SureFire will acquire 51% of EBS in exchange for approximately 28 million newly issued shares of SureFire, representing approximately 21% of SureFire. It is contemplated that upon completion of the transaction, SureFire will acquire 100% of EBS in exchange for common shares of SureFire representing approximately 63% of the common shares of SureFire Commerce on a fully diluted basis. Based on current run rates, SureFire expects the combined entity will generate approximately $90 million dollars in revenue, with operating profi before minority interests of more than $15 million dollars in the first year. The deal is expected to close in early January.

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Gen X PIN

Paymentech says the debit survey it conducted last month shows that Americans within the 25-34 age group are quickly adopting debit as a form of payment, preferring to use PINs when making debit card purchases. The number one benefit cited by respondents preferring PIN debit is that PIN debit transactions are faster than signature debit transactions. The same group rated security as the second most important reason to use PIN debit transactions. Additionally, more than a third of this group said they would be more likely to shop at a store honoring PIN debit cards as a form of payment. Paymentech processed approximately 3.7 billion total transactions and $114 billion in bankcard sales volume in 2001.

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SMART CARD TESTER

Lille-based MICROPROSS has created terminal emulator to test electrical and protocol parameters for smart cards. The new “MICROPROSS 3290” is part of the company’s “STAR” range, launched in 1997. Compliant with the standards (ISO 7816, EMV, 3GPP TS11.11), it may be adapted to non-standard smart cards. Perturbations can be added to check the card against unaccustomed conditions (forced parity errors, change of any signal at any moment, allowing glitches on clock for example, all timings from the standard can be modified, ETU width adjustable, protocol level perturbations). For smart card validation, test scenarios require reproducibility, which is one of the main features of this tester, included 1.8v smart cards. The test functions include open / short test, dynamic ICC measurement, current and voltage measurement on any contact and many more.

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Privacy vs Piracy

Chicago-based Stealth MediaLabs has developed a Microsoft-compatible plug-in that can be used to stealthily embed credit card numbers into a digital audio signal to protect against music piracy. In most cases, data hidden in the StealthChannel can be embedded without increasing filesize. Patent applications have been filed leveraging a breakthrough in the obscure science of steganography.

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PayPals

eBay officially completed its acquisition of PayPal yesterday in a deal valued at $1.5 billion. The transaction was approved Thursday by the holders of approximately 65% of the outstanding shares of PayPal common stock. PayPal will continue to operate as an independent brand. eBay’s current payment service, eBay Payments by Billpoint, will complete the phase-out of its operations in the first half of 2003. PayPal’s gaming business will be phased out by the end of 2002. Following the completion of the merger, PayPal’s CEO Peter Thiel resigned and Matt Bannick was named eBay’s SVP of global online payments, assuming all of Thiel’s responsibilities. For the full year 2003, eBay currently expects that net revenues for the new Payments segment, which includes PayPal, will be approximately $300 to $310 million. As of October 1, PayPal had 20 million member accounts, including 3.7 million business accounts. For complete details on PayPal’s prior performance visit CardData ([www.carddata.com][1]).

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

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Sunoco & TeleCheck

Sunoco has deployed TeleCheck Services’ “Electronic Check Acceptance” service and “Eclipse” payment terminals in 110 Sunoco APlus convenience stores with the plan to expand to more of its nearly 1,000 convenience stores. The ECA service converts a customer’s paper check into an electronic item at the point of sale and delivers funds directly to the merchant’s account in about two business days.

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Web ACTION Payments

NACHA announced yesterday it is moving into its next phase of a project to build and test a bank-centric Internet payment system developed by participating members of “Project ACTION.” A key feature of “ACTION” is that a consumer or a business would initiate a payment on the Internet via its own financial institution, instead of providing financial information to a merchant or biller and authorizing a debit to its account. This is also known as a “credit-push” payment model. Account numbers would not be provided to Internet merchants or billers, but instead would remain with their financial institutions. Internet merchants and billers would benefit by receiving real-time payment guarantees and receiving payment by an irrevocable ACH credit. The group estimates the Web payment system could produce new banking industry revenue of $1 billion in its 5th year of operation from Internet payment and authentication products and services. In the new phase underway, NACHA plans to form a limited liability corporation, recruit financial institution owners of the corporation, issue a request for proposals, build the “ACTION” infrastructure, and conduct live transactions.

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Hyatt & MasterCard

Hyatt Corporation has re-launched its “Faster Free Nights” promotion in partnership with MasterCard offering “Hyatt Gold Passport” unlimited free nights between now and February 28, whenever guests pay for their stay with a MasterCard. There is no limit to the number of free nights that members can earn. Free nights can be redeemed easily at any participating Hyatt worldwide. Awards are available electronically (on-line) and are paperless.

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