Updated Outlook

eFunds said Tuesday that revenue and earnings for its second quarter will be below the Company’s previous expectations. Revenue for the second quarter is now expected to be in the range of $130 million to $134 million. The Company says a combination of longer than expected sales cycles, economic and political uncertainties, delayed buying decisions and product cancellations, have contributed to the decline. The company also announced that CFO Paul Bristow will be leaving on June 30. The Company also announced that, in anticipation of CEO Gus Blanchard’s previously disclosed retirement plans, it has hired Korn/Ferry International to assist in finding a successor. For details on eFunds latest performance visit CardData ([www.carddata.com][1]).

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

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Negative Outlook

Economic uncertainties, increased unemployment, elevated levels of household debt service requirements, and expectations of future increases in interest rates, continue to be major concerns for the credit card industry. Standard & Poor’s said yesterday its long-term outlook for the sector remains negative despite profitability and seemingly manageable charge-off levels at most lenders. Most card companies continue to benefit from the low interest rate environment and remain profitable. The exceptions are certain subprime monoline lenders whose problems stem from too-rapid growth and weak lending standards. Most credit card companies have predicted that charge-offs will continue to rise and peak in 2002. S&P says card companies are seeing early signs of relief as delinquency roll rates indicate future improvement, hopefully meaning that the worst is over. However S&P notes that continued increases in unemployment rates, rising interest rates, and the leveling out of growth (and subsequent seasoning of portfolios) at the more aggressive companies each has the potential to create greater problems for the industry.

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2GO Card Ads

Discover said yesterday it will begin to air a new television ad highlighting the new Discover 2GO Card in late June. Discover also started airing new Cashback Bonus award spots this week in a new advertising campaign, created by San Francisco-based Goodby, Silverstein & Partners. Discover says it recently redesigned its Cashback Bonus program to give cardholders more options over how they use their award. Cardholders can now redeem their award in $20 increments at any time, once they’ve accrued $20 or more. They can also build their award over time, and can double their award with participating merchants. The new advertising campaign plays off the”It Pays to Discover” tagline. The ads will continue to air on the NBA finals on NBC, Primetime, Early Morning News, Cable Networks and Syndication for the balance of 2002. In addition to its new television advertising, Discover Card’s magazine print campaign, which now features more than 30 merchants, now promotes the Cashback Bonus award program. The print campaign now carries the “It Pays to Discover” tagline and is featuring merchant partners where cardholders can double their Cashback Bonus award. (CF Library 3/21/02)

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** Advertiser: Discover Title: Discover “Four Boys”**

[1]: http://www.cardweb.com/graphic/players/quicktime_sm200.gif
[2]: /cardwatch/movies/qt/fourboys_dc.mov
[3]: http://www.cardweb.com/graphic/players/windowsmedia_sm200.gif
[4]: /cardwatch/movies/wm/fourboys_dc.wmv
[5]: http://www.cardweb.com/graphic/players/real_sm200.gif
[6]: http://www.cardweb.com:8080/movies/fourboys_dc.rm
[7]: http://www.cardweb.com/graphic/players/quicktime_sm400.gif
[8]: /cardwatch/movies/qt/fourboys_t1.mov
[9]: http://www.cardweb.com/graphic/players/windowsmedia_sm400.gif
[10]: /cardwatch/movies/wm/fourboys_t1.wmv
[11]: http://www.cardweb.com/graphic/players/real_sm400.gif
[12]: http://www.cardweb.com:8080/movies/fourboys_t1.rm

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Future Outlook

MasterCard said yesterday that even though acceptance grew 149% in the fast food segment last year, consumers overwhelmingly prefer cash for a quick meal. It believes the key to developing this emerging market is transponder technology, which is no longer limited to gas and tolls. MasterCard also sees huge potential in online bill payment. Ruth Ann Marshall, president, North America, MasterCard International says that U.S. consumers receive 18 billion statements every year and billers must lay out more than $1.00 per invoice. When paid electronically, the cost drops to $.40, saving processors approximately $8 billion. MasterCard says another emerging payment market is the payroll card which is targeted at the “unbanked” customer. Increasingly, these consumers are finding it difficult to afford the fees associated with maintaining checking/savings account balances or in check-cashing establishments.

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Genpass Nabs Davidson

Genpass Inc. has named Peter Davidson, formerly president of Speer & Associates, as president of Genpass Card Solutions. Davidson has more than 30 years of experience in the EFT and banking industry. At S&A, he managed consulting services that encompassed all phases of consumer e-commerce, including credit card issuing and acquiring, debit card issuing and acquiring, ATM / POS, card and ATM management. Prior to his joining S&A, Davidson held senior and executive-level positions with major U.S. and international banking organizations including HSBC, CoreStates Financial, and Beneficial Finance Co.

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TELMEX Phone Cards

San Diego-based TELMEX USA issued a warning this week to the Mexican-American community to avoid prepaid telephone cards which carry the TELMEX logo and issued by Atlanta-based Mactel Communications Corporation. The calling card purports to permit telephone calls to be made from the United States to Mexico using a telecommunications carrier that is variously identified on the cards as either “Televia Communications” or “Televiva.” However, TELMEX USA never licensed Mactel or anyone else to create prepaid calling cards for calling from the United States to Mexico. The company does offer a prepaid card only valid for calls from Mexico to the US and has agreements with Norte Direct and Planet Telecom.

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CardReady Signs NARTS

Single Source Financial Services and its affiliate, CardReady International, has become the official debit and credit card processor for the National Association of Resale & Thrift Shops member stores. NARTS, with more than 1,000 members, is the resale industry’s only trade association. NARTS serves thrift, resale, and consignment shops of all types ranging from multi-outlet chains to single stores. The company expects in excess of $12,000,000 in annual processing volume from these retail locations within the next year.

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ATM RECHARGE

MobiFon (Connex) and Banca Comerciala Romana have signed agreements for Euronet Worldwide’s ATM Recharge Services. The deal will cover Romania’s Connex prepaid airtime subscribers via the ATM network owned and operated by BCR. Customers of Connex’s prepay service are the first users in Romania to have an electronic method for adding airtime minutes to their mobile phone accounts. Euronet ATM Recharge enables Connex to distribute airtime at any one of 483 BCR-branded ATMs across Romania. Connex is the country’s largest mobile operator, with more than 2.1 million subscribers, and BCR is its largest bank, with 275 branches across the country and 3 million customers. BCR already enables Connex subscribers to access their bank accounts and receive financial messages via Euronet Mobile Banking.

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MAESTRO

Hitachi Capital and Japan’s largest travel agency, JTB, have joined with MasterCard International to introduce the Maestro global debit card program to Japan this week. The cards can be used at over 2,300 JTB-affiliated hotels and inns that have CREX debit/credit card terminals installed. The service was made possible by integrating the global debit networks of Hitachi Capital and MasterCard International. According to Hitachi Capital, which supplies the terminals, the number of facilities that offer the service will be increased to 18,000 in two years. The Maestro brand mark now appears on over 433 million cards worldwide and is accepted for purchases at over 5.7 million merchant terminals in 83 countries and territories and at more than 760,000 MasterCard/Maestro/Cirrus ATMs worldwide.

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