Mid-Year Volume

While bank credit card outstandings, among the nation’s top issuers, are growing at an 8% annual, charge volume is only growing about half as much. Charge volume handled by the twelve largest issuers, for the first two quarters of 2002, hit $549.2 billion compared to $529.0 billion for same period one year ago, for an annual growth rate of 3.8%. American Express and Discover reported slight declines in charge volume for the first half of this year. Among VISA and MasterCard issuers, sub-prime specialists Providian and Metris posted lower charge activity this year. The biggest gainer is Capital One, posting a 42% rise in volume for 2002 versus 2001. For complete details on 2Q/02 performance on the nation’s top 250 issuers visit CardData ([www.carddata.com][1]).

Top Bank Credit Card Issuers in the U.S.
(based on outstandings but ranked by YTD volume)
ISSUER 2Q/02 2Q/01 CHNG
1. AmEx $113.0b $114.4b – 1.2%
2. Citibank* $108.5b $ 106.8 + 1.6%
3. MBNA $ 74.4b $ 67.1b +10.9%
4. Bank One $ 68.4b $66.9b +2.2%
5. Discover $ 47.6b $47.9b – 0.6%
6. Chase $ 39.7b $33.8b +17.5%
7. Cap One* $ 32.5b $22.8b +42.5%
8. BofA $ 23.4b $23.4b NC
9. Household $ 17.1b $16.7b +2.4%
10. Fleet $ 11.4b $ 9.8b +16.3%
11. Providian $ 8.9b $14.9b -40.3%
12. Metris $ 4.3b $ 4.5b -4.4%
TOTAL: $549.2b $529.0b +3.8%

*Citibank includes Canada and Mexico as the company no longer discloses
its domestic portfolio; Cap One may include some international accounts
as the company no longer discloses its domestic portfolio
Source: CardData (www.carddata.com)

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

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GCOM & VisaNet Project

Savoy, IL-based GCOM said it has recently completed a three-year project for VISA International to develop platform-independent technology to legacy access points for VisaNet in Asia Pacific, Canada, the European Union, Central Europe, the Middle East, Africa, Latin America and the Caribbean. Bringing platform- independent technology to legacy access points outside of the United States, GCOM technology played a central role in improving hardware flexibility, technical support, and problem resolution for member connectivity to VisaNet.

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Gemplus CEO

Gemplus International has hired Alex Mandl as Chief Executive Officer. Mandl was the former Chairman/CEO of Teligent between 1996 and 2001, following a four stint at AT&T, where worked his way up to President/COO. Gemplus said Mandl will take over as its top executive on September 9th. Reportedly there was some controversy between Gemplus board members over the selection of Mandl. The debate centered on Mandl’s previous ties with the Central Intelligence Agency. Mandl belonged to the board of trustees of In-Q-Tel, a nonprofit organization set up by the CIA in late 1999. In-Q-Tel’s purpose was to keep track of Internet technology on behalf of the CIA. Some board members were concerned that Mandl’s CIA ties could affect its ability to sell its product and services to some countries. Mandl currently serves as a director on a number of corporate and not-for-profit boards, including those of Dell Computers and Pfizer. In December, according the The RAM Report ([www.ramreport.com][1]), CEO Antonio Perez decided to resign his posts as Chief Executive Officer and director to pursue other interests. Marc Lassus, founder and one of the largest shareholders of Gemplus, also agreed in December to cease his office as chairman. Earlier this month, Gemplus announced that its interim CEO, Ron Mackintosh, has decided to step down as of August 15th.

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

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Scotiabank 2Q/02

Scotiabank reported this week, as of July 31, its total assets were $300 billion, up $29 billion from last year, thanks in part to its retail loan portfolio. The Canadian “ScotiaLine VISA” and mortgage products were the primary drivers. The Scotiabank “Classic VISA” card now offers up to 1% cash back on purchases, effective August 1. Earlier this year, the Bank launched the “No-Fee Value VISA”, the only no-fee, low-rate credit card in Canada. During the quarter, Scotiabank joined CertaPay and three other Canadian banks to launch the a person-to-person e-mail money transfer service. Scotiabank was the first of the major banks to introduce P2P e-mail money transfers in a pilot in April. Scotiabank is also managing an innovative pilot service that allows customers to order and pay for their favorite McDonald’s food and beverages in advance, using the phone or the Internet. Customers open a secure “McQuick” account, then use a credit card to automatically deposit money into it. The amount of the purchase is deducted from the account when an order is placed. In addition to managing the pilot, the Bank is providing credit card transaction processing. For complete details on Scotiabank’s latest results visit CardData ([www.carddata.com][1]).

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

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IRS Probe

The Internal Revenue Service yesterday asked seven U.S. District Courts to permit it to serve “John Doe” summonses on airlines, hotels and other business for details on MasterCard credit card transactions that may involve tax evaders. The IRS has been investigating the use of payment cards issued through offshore banks by U.S. residents seeking to evade taxes or launder money. The “John Doe” summonses requested yesterday involve more than 40 companies in San Francisco, Atlanta, Chicago, Seattle, Dallas, Newark, and Alexandria, VA. The IRS hopes to match an address or name with data it has already received from MasterCard. The IRS estimates as many as 2 million U.S. citizens may have used payments cards issued through banks in tax haven countries while less than 200,000 Americans file annual reports on foreign bank account activity. Earlier this year, following an IRS suit filed in Miami, MasterCard agreed to produce more than 1.7 million records, involving over 230,000 accounts, in response to a “John Doe” summons. In April, a federal court in San Francisco issued an order authorizing the IRS to serve a summons on VISA International for offshore credit card records. American Express also agreed to turn over records relating to people who may be subject to United States income taxes and who have credit card accounts with addresses in Antigua and Barbuda, the Bahamas or the Cayman Islands. (CF Library 4/2/02)

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BabyMint Scholarships

BabyMint announced Wednesday it will give away up to $10 million in scholarship credits during September to celebrate “National College Savings Month.” A $100 scholarship will be made available to every family that joins the company’s savings program during the month of September. The “Tuition Rewards” scholarships are redeemable at nearly 150 colleges and universities nationwide. The BabyMint program enables consumers to receive up to a 20% rebate on every-day purchases made through the company’s network of more than 700 retailers. Retailer and product rebates are automatically tracked and deposited in the consumer’s college savings plan. The “BabyMint MasterCard,” issued by MBNA, was launched in May. (CF Library 5/2/02)

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Trintech 2Q/02

Ireland-based Trintech reported that revenues for the quarter ending July 31 fell 41% from $18.4 million for last year to $10.9 million. However the company reported its sixth consecutive quarter of declining pro forma operating expenses, which fell strongly by 44% in 2Q/02, compared to the corresponding period last year. Trintech is seeking to reach pro forma break-even by the end of its fiscal year in early 2003. Second quarter product revenue decreased 72% to $1.8 million for the quarter. Product revenue shortfall for the first half and second quarter can be attributed to an ongoing general weakness in the Company’s POS business line, due mainly to a fall off in new IT investment at retail level in the German market. Second quarter service revenue fell 8% from $3.5 million for the second quarter last year to $3.2 million for the second quarter ended July 31, 2002. For complete details on Trintech’s latest results visit CardData ([www.carddata.com][1]).

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

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Top 12 2Q/02

The nation’s top twelve issuers, based on outstandings, now comprise 81% of the U.S. bank credit card business and as a group grew 8% over the past twelve months. Capital One remains the fastest growing top issuer, driven by a $1 billion annual marketing budget and a focus on sub-prime prospects, which now make up at least 40% of its portfolio. Among issuers with less than $10 billion in outstandings, Target’s “smart VISA” and Sears National Bank’s “Gold MasterCard” have exploded over the past year signing up more than 16 million (net) new cardholders. Chase racked up a 32% growth rate at mid-year, primarily due to its acquisition of part of the Providian portfolio. Meanwhile, Providian declined 33% as it overhauls its business. MBNA, once a growth machine that rivaled Cap One, has slowed to a 7.5% annual growth rate. MBNA has distanced itself from the sub-prime market but continues to deliver solid profits. MBNA reported 2Q/02 profits of $457.8 million, a 21% increase over 2Q/01. Capital One’s profits were up 37% over the same period to $213.1 million. For complete details on 2Q/02 performance on the nation’s top 250 issuers visit CardData ([www.carddata.com][1]).

Top Bank Credit Card Issuers in the U.S.
(ranked by outstandings)
ISSUER 2Q/02 2Q/01 CHNG
1. Citibank* $108.2b $103.9 +4.1%
2. MBNA $ 75.8b $ 70.5b +7.5%
3. Bank One $ 66.8b $60.3b +10.8%
4. Chase $ 49.5b $37.4b +32.4%
5. Discover $ 49.4b $50.2b – 1.6%
6. Cap One* $ 45.1b $29.9b +50.8%
7. AmEx $ 31.6b $31.2b + 1.3%
8. BofA $ 27.1b $24.9b + 8.8%
9. Providian $19.9b $29.8b -33.2%
10. Household $15.4b $14.9b +3.4%
11. Fleet $14.7b $14.5b +1.4%
12. Metris $11.7b $10.1b +15.8%
TOTAL: $515.2b $477.6b +7.9%

*Citibank includes Canada and Mexico as the company no longer discloses
its domestic portfolio; Cap One may include some international accounts
as the company no longer discloses its domestic portfolio
Source: CardData (www.carddata.com)

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

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