Connexus Payment Client

MA-based Caradas has launched the industry’s first chip-based implementations of MasterCard’s Universal Cardholder Authentication Field for Internet-based authentication of MasterCard cardholders. This enables accountholder authentication data to be passed from the consumer all the way back to the issuer, leveraging the existing merchant and acquirer infrastructure, verifying that a legitimate cardholder has authorized an online payment transaction.

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INTERCUENTA EXPRESS

Bancomer has agreed to be the new receiving bank for Wells Fargo’s InterCuenta Express Mexican wire transfer service. Bancomer has more than 1,600 branches and 3,700 ATMs in Mexico. Customers can deposit funds in their InterCuenta Express account at Wells Fargo by visiting their nearest branch or by telephone, ATM or online transfer. The transfer requires the beneficiary to have a debit card account
at Bancomer to receive the transfer. The money is available to the beneficiary in Mexican pesos the following business day at any of Bancomer’s branches or at any ATM in Mexico. InterCuenta Express account requires an annual fee of $10. Customers who open an account with Wells Fargo in the United States can send up to $1,000 daily directly to their beneficiary’s bank account at Bancomer for $10.

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Debit Card Trial

Following the U.S. Supreme Court’s decision this month not to review the Second Circuit Court of Appeal’s decision upholding a grant of class certification in the debit card antitrust lawsuit, a trial date was set yesterday. U.S. District Court Judge John Gleeson has set April 28, 2003 as the trial date in Brooklyn, New York, for the VISA Check Card/MasterCard MasterMoney antitrust litigation. Judge Gleeson also yesterday ordered that documents currently under seal will be made public on July 12th. The class-action lawsuit, filed in October 1996, by Wal-Mart, The Limited, Sears Roebuck, Safeway, Circuit City, the National Retail Federation, the International Mass Retail Association, and the Food Marketing Institute, and 13 other large and small retailers, charges VISA and MasterCard with violating U.S. antitrust law by attempting to monopolize the debit transaction market and forcing merchants to accept offline debit transactions. About 4 million merchants are covered under the class action status of the litigation. Constantine & Partners, lead counsel for the merchants, says the trial is stacked against the card associations since many of the key legal issues were decided last October in the U.S. Government’s antitrust litigation against VISA and MasterCard. If the merchants prevail, VISA and MasterCard will face significant class damages of approximately $13-$15 billion, which could be tripled under antitrust laws. VISA and MasterCard insist the class action status of the lawsuit is an abuse of the system and may unfairly force them to seek a settlement. (CF Library 6/6/02; 6/11/02)

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ABA Delinquency

Credit card delinquency is running about 30% above last year levels, but has stabilized in the first three months of this year according to data gathered by the American Bankers Association. Based on the number of credit card accounts past due during the first quarter, delinquency remained at 3.88%, the same as 4Q/01, but significantly higher than the 2.99% rate for the first quarter of 2001. Based on dollars past due, the ABA found a 17 bps decline, from 4.67% for 4Q/01 to 4.50% for 1Q/02. Over the past 12 months, delinquency based on past due dollars has risen from 4.13% to 4.50%.

1Q CREDIT CARD DELINQUENCY HISTORY (based on total dollars outstanding)
2002: 4.50% 1998: 5.42% 1994: 3.51% 1990: 3.29% 1986: 4.92% 1982: 3.33%
2001: 4.13% 1997: 5.43% 1993: 3.98% 1989: 3.39% 1985: 3.10% 1981: 3.16%
2000: 3.94% 1996: 4.62% 1992: 4.31% 1988: 3.71% 1984: 2.84% 1980: 3.00%
1999: 4.44% 1995: 3.50% 1991: 4.55% 1987: 3.71% 1983: 3.06%
Source: American Bankers Association Delinquency Bulletin

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GLOBALCash President

PayStar Corporation has named William Sousa, one of the founders of Dallas-based SousaFone, to President of PayStar’s GLOBALCash Division. Mr. Sousa will be based out of PayStar’s corporate facility in Lodi, CA. Earlier this year, PayStar’s switch division partnered with SousaFone to roll out a new online PIN-based prepaid “flat-rate” long distance service administered completely via the Internet.

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Humboldt EVP/CCO

Humboldt Bancorp has named Mark Wardlow, formerly of Bank of America, as EVP/Chief Credit Officer to replace the retiring Ron Barkley. Mr. Wardlow brings 23 years of lending experience to the organization. He most recently served as Senior Vice President/Market Manager for Bank of America’s North Central Valley Regional Commercial Banking Office, located in Modesto, California. Additionally, he was Market President for Bank of America in a seven county Central California area, coordinating community relations and local interests.

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DATACARD ACQUISITION

Datacard Group confirmed it will acquire the assets of Gilles Leroux S.A., a manufacturer of plastic card production, control and personalization systems and supplier of solutions to the GSM smart card market. Datacard intends to continue manufacturing the Gilles Leroux product line at the Orleans, France production facility. The company will also receive Gilles Leroux card counting and card testing systems as part of the acquisition. Datacard was awarded the right to purchase the Gilles Leroux assets by the Commercial Court of Orleans, France, which has been overseeing Gilles Leroux S.A. since it filed for bankruptcy protection last year. Datacard expects to complete the transaction within 30 days.

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CardWorks Expansion

Plainview, NY-based Cardholder Management Services will see its card servicing portfolio soar from 1.2 million to about 2.5 million next month, and will be moving to larger facilities later this year. CMS is picking up the new accounts as part of a deal between Providian and CardWorks, the parent of CMS. In April, Providian announced a plan to unload $2.6 billion in sub-prime credit card receivables. Goldman Sachs, Salomon Smith Barney, CompuCredit, and CardWorks formed two limited liability companies to buy the high risk assets held in 1.7 million credit card accounts. CardWorks and CompuCredit split the $2.6 billion portfolio. The purchasers plan to finance the acquisition through a securitization. Under terms of the deal, Providian will hold an interest in the securitized assets valued at approximately $155 million, and will preserve an option to purchase up to 15% of the equity in the limited liability companies. Providian expects to take an after-tax loss of approximately $240 million due to the sale. (CF Library 4/16/02)

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RESTAURANT RECON-NET

Dublin-based Trintech Group says Consolidated Restaurant Operations has selected ReconNET 6.1 to manage all its reconciliation and deposit verification requirements. The Dallas-based company owns, operates, and franchises more than 140 restaurants around the U.S., with annual sales of $200 million. With ReconNET, CRO can completely automate the reconciliation process to manage its cash, check, and credit card transactions. ReconNET 6.1 features improvements include support for Microsoft SQL 2000, Windows XP Professional, and Crystal 8.5, extensive usability enhancements, and a web-enabled application for access to ReconNET via the Internet.

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IT Budgets

Nearly forty-five percent of retail IT budgets will increase in 2002 thanks to consumer interest in payment technologies. A Cap Gemini Ernst & Young Retail IT Research report found that consumers are generally interested in technology applications that provide greater convenience, speed, and cost savings. For example, nearly 80% of consumers used, plan to use, or would use an automated payment facility at gas pumps. Consumers also use automated teller machines (75%) and debit/credit self-operated keypad machines at checkout (66%). Technology that is least likely to be used by consumers includes Internet access in stores (25%), automated meal planners/budgeters (12%) and promotions/specials that can automatically be sent to wireless devices (11%). Approximately 80% of survey respondents indicated that their current IT objectives are largely geared toward reducing costs.

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SMART LABELS

Rudolstadt-based ExypnoTech GmbH has signed a deal to supply smart labels to Munich-based Schreiner LogiData GmbH. Schreiner and NanoPierce, the parent of ExypnoTech GmbH, have been collaborating since November 2000 to evaluate and test NanoPierce’s Connection System technology for the production of smart labels. RFID labels are increasingly being used in a wide range of applications, such as express mail services, baggage tracking, article monitoring, product authentication, inventory management and library administration. They are viewed as the next generation of technology to replace barcode labels.

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VISA ATM Locator

VISA and InfoNow have teamed to offer VISA member banks the option to add a co-branded referral and locator service to their Web sites that will supply multi-lingual data and information on VISA’s 400,000 ATM locations in 130 countries worldwide. Using InfoNow’s technology, Visa member banks can follow a simple wizard to build their own locator within minutes. Click-down menus within the wizard allow the member bank to choose specific fonts and colors to create a customized look and feel. Users are then able to browse their bank’s Web site or the Visa site to find ATMs or locations where they can use their credit or debit card.

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