Humboldt Deal Unravels

Humboldt Bancorp confirmed Monday that its deal to sell its proprietary merchant bankcard operations to Nashville-based iPayment Holdings has been terminated. Last week, the parties signed an amendment to the purchase agreement that provided for, among other things, the payment of $1 million to Humboldt as a non-refundable deposit toward the purchase price. Humboldt announced on September 13 that the transaction had not closed as scheduled on August 30 and that both parties were continuing efforts to complete the transaction. Following collapse of the proposed deal, Humboldt says it has received other expressions of interest. Humboldt’s proprietary merchant bankcard division provides services to over 10,000 merchants. For the six months ended June 30th, Humboldt recognized approximately $7.6 million in non-interest revenue from its proprietary merchant bankcard operation and incurred net fraud losses of $140,000.

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Rates Oct 02

Credit card interest rates have slowly but surely been nudging up this year despite the stable rate environment. APRs bottomed out in December of last year at 14.32% but have increased in 14.71% since then. The rate increase is driven largely by the punitive rate policies of many of the nation’s top issuers, including MBNA which now charges rates as high as 24.98%. Average rate for variable-rate cards now stands at 14.89% versus 14.57% for fixed-rate cards, according to CardTrak ([www.cardtrak.com][1]).

AVERAGE CREDIT CARD INTEREST RATES
Dec 00: 16.57%
Jan 01: 16.49%
Feb 01: 16.31%
Mar 01: 16.16%
Apr 01: 15.91%
May 01: 15.83%
Jun 01: 15.43%
Jul 01: 15.02%
Aug 01: 14.98%
Sep 01: 14.81%
Oct 01: 14.48%
Nov 01: 14.41%
Dec 01: 14.32%
Jan 02: 14.33%
Feb 02: 14.38%
Mar 02: 14.42%
Apr 02: 14.54%
May 02: 14.60%
Jun 02: 14.62%
Jul 02: 14.65%
Aug 02: 14.70%
Sep 02: 14.71%

Source: CardData ([www.carddata.com][2])

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

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AMEX OPS

American Express has added 300 employees to its new Indian back-office operations on the outskirts of Delhi. The new operations center has 137,000-square-feet and offers financial processing and risk management services to AmEx. The firm also outsources back-office services from independent service providers in Delhi, the commercial hub of Bombay and the tech capital Bangalore. AmEx has operated from India since 1995. India offers a staff of lower paid individuals and excellent English skills.

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M/CHIP 4

MasterCard unveiled a new version of its “M/Chip” payment application which is based closely on the global EMV specifications for smart cards. “M/Chip 4” implements a new EMV defined session key algorithm, benefiting card issuers that want a single authorization process regardless of application provider, while providing additional protection from differential power analysis attacks. “M/Chip 4” also has the ability to store the last ten transactions, including information such as: transaction amount, transaction currency, transaction date, the card’s cumulative transaction counter and whether the transaction was approved, declined or went online for authorization. It can also be used to decline off line transactions at specific merchants. “M/Chip 4” is available in two programs, “MasterCard M/Chip Lite” and “MasterCard M/Chip Select.” The M/Chip payment application was first introduced in 1998, and to-date more than 200 MasterCard members have either issued or are implementing chip based credit or debit cards in Japan, the United Kingdom, France, Germany, Italy, Korea, Taiwan, Brazil, Mexico and South Africa.

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AEROPLAN STATUS

Destina.ca launched an “Aeroplan Status Mileage” offer that allows Aeroplan members to reach their “Aeroplan” top-tier status for 2003 faster than ever. Beginning today until December 12, by booking on Destina.ca, “Aeroplan” members will earn one “Aeroplan Status Mile” for every $1 online purchase on Air Canada, Air Canada Jazz, Tango by Air Canada and ZIP flights. This offer only applies to tickets booked through Destina.ca. The miles earned during the promotion are in addition to “Aeroplan Miles” awarded for using credit cards affiliated with “Aeroplan” for purchases, and for using “Aeroplan” partners for air travel, car rentals and hotel stays.

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Intelli-Check & ICTS 1994

Intelli-Check and ICTS 1994 (USA) have signed a one-year joint collaboration agreement to co-market the products and services of both companies in the USA. ICTS is currently in a trial phase of its IP@SS system at Newark airport, on certain Continental Airlines flights. The Newark pilot of the IP@SS project follows the IP@SS pilot being operated by ICTS since January 2002 at Gatwick airport in the UK, and is based on the same core know how and expertise of ICTS.

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INGENICO & CONCORD

Ingenico has signed an agreement with Concord EFS to manufacture the “Lavinna L100”, a proprietary compact hand-held terminal used for Concord’s “IDLogix” identification and age verification service. Under terms of the deal, Ingenico will supply 25,000 “Lavinna L100” terminals to Concord during the next twelve months. The “Lavinna L100,” with integrated magnetic stripe reader and optional bar code reader module, reads and logs all information from ID or driver license, saving up to 64,000 records in its memory.

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Sears Credit Execs

Sears has named Paul Liska EVP/President, Credit and Financial Products to succeed Kevin Keleghan, who resigned, and Glenn Richter, to SVP/CFO succeeding Liska. Liska was executive vice president and chief financial officer for The St. Paul Companies, Inc. from 1997 – 2000. Richter was senior vice president and chief financial officer for Dade Behring International from 1998 – 1999, where he had earlier served as senior vice president and corporate controller.

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Smart Cards 2002

Smart card shipments to the U.S. and Canada from January through June were 31.2 million cards, more than double the same period last year. This represents a 111% increase from the same period in 2001, during which 14,770,000 cards were shipped. Of the total, microprocessor cards accounted for 24,950,000 in 2002, up 87% from 13,310,000 a year earlier. Memory card shipments in 2002 jumped to 6,240,000 compared to 1,460,000 in the same period last year, more than a threefold increase, according to new research announced this morning at the “Smart Card Alliance 10th Annual Conference.” The study, which is updated twice yearly, was conducted by KPMG LLP, the accounting and tax firm, for the Smart Card Alliance, a not-for-profit cross-sector association that includes government and private industry users, card issuers, manufacturers and systems providers.

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WMATA Contract

Competition for the Washington (DC) Metropolitan Area Transit Authority smart card project is heating up. ERG Transit Systems and Northrop Grumman Information Technology have teamed to pursue transit opportunities throughout the USA. The two companies are currently bidding together on the contract for the WMATA Regional Customer Service Center. The WMATA project calls for the establishment and operation of a smart card customer service center and the clearing and settling of smart card transactions across all transit agencies in the Northern Virginia, Maryland and Washington DC areas. The WMATA project will start a new era of integrated transit in the greater Washington D.C. area, allowing passengers to use a single smart card to pay fares across every major transit system in the region. ERG built Hong Kong’s well-known “Octopus” system. “Octopus” is the largest smart card payment system for mass transit in the world, with some 8.6 million smart cards issued to date and over 7.2 million transactions processed each day. ERG is also engaged in the largest smart card contract in the United States to design, build, operate and maintain the “TransLink” fare payment system in the San Francisco Bay Area.

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