FUSA 3Q/01

First USA reported this morning third quarter net income of $279 million an increase of 58% over the year-ago quarter. Pre-tax return on outstandings soared to 2.64% compared to 1.97% for 2Q/01. First USA says the leap was produced by higher net interest income, lower credit costs, reduced expenses on the legacy First USA portfolio, and the addition of the Wachovia credit card business. End of period managed loans logged in at $66.8 billion. Charge volume increased 1.7% over the past 12 months, from $34.6 billion for 3Q/00 to $35.2 billion for 3Q/01. During 3Q/01, First USA opened over 1.1 million new accounts and ended the quarter with 58.4 million cards-in-force. Bank One/First USA also has 4.3 million debit cards-in-force. The managed charge-off rate increased to 5.89% from 5.03% a year ago, reflecting lower average loans on the First USA portfolio and higher losses, but decreased from 6.09% in the second quarter. The managed 30-day and 90-day delinquency rates were 4.25% and 1.80%, respectively, up from 4.14% and 1.79% in the year-ago quarter and 4.10% and 1.78% in the second quarter. For complete details on Bank One/First USA’s 3Q/01 performance as well as historical data visit CardData ([www.carddata.com][1]).

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



ID Data plc, the UK’s largest supplier of secure transaction systems and smart
services, announces the Company has entered into a £2.2 million supply
contract with Vodafone UK to deliver support services to Vodafone’s innovative

pre-pay platform.

In the initial contract ID Data will supply Vodafone UK with support services
for the
Pay as you Talk market. The supply of these solutions illustrates the
adaptability of
ID Data, by fulfilling the demands for greater flexibility in both product
offerings and
pre-paid solutions.

This is the first contract between Vodafone and ID Data and it is expected to
establish an ongoing relationship between the two companies. Vodafone UK will
have the opportunity to access the latest card solutions and technology from ID

Peter Cox, CEO of ID Data commented: “This partnership with Vodafone UK has
reaffirmed the capabilities of ID Data to supply tailored solutions to clients
in the
timespan requested. We look forward to a long and fruitful association with

About ID Data plc

ID Data plc is the UK’s largest supplier of secure transaction systems and
to the international telephony, banking, retail and secure access sectors.
Company strategy has moved from commodity products into value-added services
and solutions, which has created a solid platform on which to build further
Clients include BT and C & W, Barclays Bank, Tesco, and Exxon Mobil. ID Data
formed agreements with major global corporations to ensure rapid market
development as shown by their partnerships with Toshiba & Toppan, and Total
Systems Inc. of the United States of America. ID Data has now delivered in
of 60 million chip cards for the telephony sector. The Company was founded in
and was listed on the AIM in October 2000.



Official Payments Corporation announced a new business award with the State of New Jersey Division of Motor Vehicles. Under the agreement, Official Payments will provide a service enabling businesses to pay by credit card for commercial International Regulatory Plan fleet vehicle registration renewal over the Internet.

The new payment system is scheduled to launch on the state’s Web site before the end of the year.

“Each vehicle within an IRP fleet, such as trucks or buses, must be renewed annually. Prior to this system, fleet owners had to make multiple visits to the Division of Motor Vehicles as each vehicle came up for renewal,” said Tom Iannotti, Manager – Motor Carriers, New Jersey Division of Motor Vehicles. “Our new electronic filing and payment systems eliminate the trip to the DMV, making the process easier for business owners, and helping to streamline our state operations,” he added.

“We are pleased with this important business development for two reasons,” said Thomas R. Evans, Chairman & CEO of Official Payments. “First, the new business in New Jersey is our first DMV file-and-pay client, a new incremental market for us. Second, the data interface and registration aspect of this contract is a technology we think we can apply for opportunities with other clients,” Mr. Evans added.

Annually, the New Jersey Division of Motor Vehicles collects approximately $75 million in fleet renewal fees on over 60,000 vehicles in over 14,000 separate accounts. On the state’s Internet site, owners will be able to enter an identification number for a fleet vehicle, file and pay for the fleet vehicle’s registration renewal electronically, and receive the vehicle renewal stickers via mail.

Official Payments will charge fleet owners a convenience fee for processing these credit card transactions. For example, an owner who made a renewal payment of $1,000 would find a total of $1,025 on their credit card statement: $1,000 for the renewal fee and $25 for the convenience fee. American Express, Discover Card, and MasterCard are the credit cards accepted by the program. Owners using credit cards with bonus rewards programs can, depending on their card’s program, earn rewards, points, and cash-back or airline frequent flyer miles for paying their taxes.

Ada County To Offer Real Estate Tax Payments Via Internet & Telephone

Official Payments Corporation -[http://www.officialpayments.com][1]- (Nasdaq: OPAY) also announced Tuesday that Ada County, ID has signed a service agreement with the company. This agreement will enable citizens to pay real estate tax obligations over the Internet by visiting [http://www.officialpayments.com][2], or via telephone by calling toll-free 1-800-2PAY-TAX. The programs will commence at the end of November. Official Payments has similar agreements with over 900 government entities within 49 states across the country. The company has contacts with the Internal Revenue Service, 18 state governments, and the District of Columbia to collect taxes, fees, and fines by credit card over the Internet and telephone. Ada County, home to the capital city of Boise, is the largest of 44 counties in the state of Idaho. The county’s population has increased nearly 50% in the past ten years to over 300,000 people. Last year, Ada County collected over $255 million in real estate taxes. Real estate bills will be mailed to taxpayers at the end of November and are due in two installments. The first installment is due December 20, 2001 and the second installment is due June 20, 2002.

“Ada County is an important win for us within the state of Idaho. We have 39 other city and county clients within the state, and we believe that the satisfaction of those clients and the taxpayers they serve helped us secure this account,” stated Thomas R. Evans, Chairman & CEO of Official Payments. “Our goal is to provide taxpayers with convenient new ways to satisfy their tax obligations – over Internet or telephone. We believe that credit card payment will be an attractive option for many taxpayers,” said Ada County Treasurer Lynda Fischer.

Official Payments charges taxpayers a convenience fee for processing these credit card transactions. The fee schedule can be found on the Internet at [http://www.officialpayments.com][3]. For example, a taxpayer who owed $2,000 in real estate taxes and charged their taxes would find a total of $2,068 on their credit card statement: $2,000 for the tax bill and $68 for the convenience fee. Depending on their credit card program, taxpayers using credit cards with bonus rewards programs may be eligible to earn rewards points, cash-back or airline frequent flyer miles in return for paying their taxes.

About Official Payments Corporation

Official Payments Corporation (Nasdaq: OPAY) is the leading provider of electronic payment options to government entities. The company’s principal business is enabling consumers to pay their government taxes, fees, fines, and utility bills by credit card, via Internet and telephone. The company is unequaled in market penetration and national footprint. Official Payments has agreements to collect and process credit card payments with the Internal Revenue Service, 18 state governments, the District of Columbia, and over 900 county and municipal governments in 49 states across the United States. In 2000, Official Payments collected and processed over $925 million in federal, state and local government payments.

Official Payments was founded in the San Francisco Bay area in 1996. Thomas R. Evans, the former President & CEO of the Internet company GeoCities, became Chairman & CEO of Official Payments in the summer of 1999. Mr. Evans brought Official Payments public in November of 1999, raising $80 million in its IPO on the NASDAQ national market. The company’s success in new client acquisition, increasing business with its existing clients and in building consumer awareness can be attributed to the combination of an enormous market opportunity with a highly skilled and experienced management and staff, aggressive sales and marketing, and a core competency in developing and implementing leading-edge technical systems.

[1]: http://www.officialpayments.com/
[2]: http://www.officialpayments.com/
[3]: http://www.officialpayments.com/


MagTek USB Reader

MagTek, Inc. has introduced a new USB swipe reader that transmits data via keyboard scan codes. The reader is designed to work with all keyboard application software, and it is fully compliant with USB standards. ‘We are responding to the needs of our nearly half million Wedge Reader customers who now want USB capability, but need a plug and play solution to work with their existing software applications developed around our original Keyboard Wedge Reader,’ explains MagTek Vice President, Kiran Gandhi. ‘As our large base of existing Keyboard Wedge customers migrate to newer computers with USB capabilities we expect many will upgrade to the USB Keyboard Emulation reader. Users of MagTek’s original full-size wedge readers have the option of staying with the same size footprint, or downsizing to the space-saving ‘Mini’ version which requires 50% less space,’ Gandhi adds. Complete information on this product may be found on the MagTek website, [http://www.magtek.com][1], or by contacting your local MagTek sales representative.

About MagTek

MagTek, Inc. is the world’s leader in innovative technologies for magnetic stripe card reading applications. It is also a leading provider of check readers with check imaging capability, hybrid card readers used for magnetic stripe and smart card applications, and a variety of PIN selection products. Mag-Tek technology is used to automate transactions at point-of-sale (POS), restaurants, hotels, kiosks and financial institutions worldwide. Since 1972 Mag-Tek’s headquarters have been in Carson, CA with sales office throughout the U.S., Europe and Asia, and distributors in over 40 countries.

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


ICMA Canceled

The International Card Manufacturers Association has pulled the plug on the ’11th Annual Card Manufacturing EXPO 2001′ that was scheduled to take place next month in Athens, Greece. This is the first time the association has canceled an event. ICMA officials said the decision to cancel the ‘EXPO’ came after careful consideration of the interests of the association and its members due to the current political climate. ICMA considered several elements before coming to a decision, including reluctance by members to travel at this time, and also recognized that many travel limits have been imposed on employees of member companies. ICMA said it believes that decreased attendance at the ‘EXPO’ would greatly affect the investments made by the exhibitors as well as decrease the value of the event due to lack of industry representation. Jeffrey Barnhart, ICMA Co-Founder and Executive Director, says the association is now redirecting its energy into making next year’s EXPO in Vancouver even better.


Drexler 3Q/01

Drexler Technology Corporation, the manufacturer of digital LaserCard optical memory cards used for U.S.-Mexico border crossing “Laser Visa” ID cards, U.S. immigrant “Green Cards,” and other multi-biometric identification card applications, today reported financial results for its fiscal 2002 second quarter ended September 30, 2001.

For the three months ended September 30, 2001, net income was $1,180,000, or 12 cents per share diluted, versus $1,654,000, or 16 cents per share diluted, for the three months ended September 30, 2000. Revenues for the second quarter of fiscal 2002 were $5,148,000 compared with $5,531,000 for last year’s second quarter.

For the six months ended September 30, 2001, net income was $1,808,000, or 18 cents per share diluted, versus $3,094,000, or 30 cents per share diluted, for the six months ended September 30, 2000. Revenues for the first six months of fiscal 2002 were $9,103,000 versus $10,702,000 for last year’s first six months.

The six-month revenues declined because read/write drive revenues decreased by about $2,480,000 for the first six months of fiscal 2002 as compared with the fiscal 2001 first six months.

For the first six months of fiscal 2002, research and engineering expenses to develop new or improved products rose to $1,359,000, or 15% of revenues, compared with $1,035,000, or 10% of revenues, for the first six months of fiscal 2001.

Net income for the quarter ended September 30, 2001 included an income tax benefit of $133,000 compared with an income tax benefit of $461,000 for the quarter ended September 30, 2000. Net income for the first six months of fiscal 2002 included an income tax benefit of $642,000 compared with $1,089,000 for last year’s first six months. These amounts were recorded under Statement of Financial Accounting Standards No. 109 (SFAS 109), “Accounting for Income Taxes.”

LaserCard orders during the fiscal 2001 second quarter included the following:

— September 20, 2001 — The U.S. government placed a $4.8 million order for LaserCard(R) Triple-Image(TM) ID cards for an ongoing U.S. border-crossing ID card called the “Laser Visa.” The Company expects deliveries to average about 200,000 optical memory ID cards per month from September 2001 through March 2002. With the receipt of this order, the Company expects record shipments of more than 5 million optical cards for its fiscal year ending March 31, 2002. The total number of U.S.-government issued LaserCard ID cards in North America (“Laser Visas” and “Green Cards”) is expected to reach about 11 million by the end of February 2002.

— August 20, 2001 — The Company received its second purchase order for 100,000 “chip ready” Smart/Optical(TM) LaserCard optical memory cards for the Government of Italy’s Italian Electronic Identity Card (IEIC) national ID card/social services card program. Shipments under this order began in October.

— July 31, 2001 — The Company announced a $754,000 U.S. government order for optical memory cards, which are expected to be delivered during a five-month period that started in August 2001.

— July 10, 2001 — The U.S. government placed a $3.87 million order for optical memory cards, which are expected to be delivered during a period extending from October 2001 through February 2002. The order was for U.S. Immigration and Naturalization Service (INS) “Green Cards” and Department of State (DOS) “Laser Visa” border-crossing cards.

The September 20 and July 10 card orders are part of an $81 million government procurement program for INS “Green Cards” and DOS “Laser Visas.” Under the five-year U.S. government subcontract, awarded to the Company in June 2000 for up to 24 million LaserCard optical memory cards, approximately 5,800,000 cards have been ordered thus far.

On August 13, 2001, Dolby Laboratories, Inc. made the full payment required by the definitive settlement agreement for dismissal of Drexler Technology’s patent-infringement lawsuit against Dolby related to motion picture digital sound. The Company recognized resulting license revenue in the net amount of $765,000 in the quarter ended September 30, 2001. Drexler does not manufacture or market products for the motion picture industry.

The Company’s cash, cash equivalents, and short-term investments were $11,573,000 at September 30, 2001, compared with $11,608,000 at March 31, 2001. The Company has no debt. As of September 30, 2001, there were 9,830,258 shares of Drexler Technology Corporation common stock outstanding compared with 9,941,051 shares outstanding as of September 30, 2000.

Headquartered in Mountain View, Drexler Technology Corporation ([http://www.lasercard.com][1]) develops and manufactures optical data storage products and systems, including LaserCard optical memory cards and “chip ready” optical memories for smart cards. The Company holds more than 50 United States patents and about 70 foreign-counterpart patents in a dozen countries, related to optical data storage media and laser recording technology. Drexler’s wholly owned subsidiary, LaserCard Systems Corporation, makes optical card read/write drives, develops optical card system software, and markets card-related data systems and peripherals.

LaserCard(R) optical memory cards, with a data storage capacity of up to 2.8 megabytes, are used for “digital governance” applications such as immigration, visas, cargo manifests, motor vehicles, import-duty collection, pay-per-use systems, and ID/access; and for healthcare and other digital read/write wallet-card applications.

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


Non-Cash Purchases

Electronic payments will soon overtake cash and checks as the preferred method of payment according to a new nationwide consumer payment preferences study by the American Bankers Association and Boston-based Dove Consulting.

The study found that one out of every two in-store purchases are made with electronic payment instruments, such as debit cards, credit cards, prepaid cards and direct payment. In addition, 51% of consumers are now paying bills online or through direct payment methods.

Yet, paper-based payments will not go away anytime soon. “Entrenched consumer habits, pricing mechanisms, trial experiences and service features will continue to fuel a complex adoption cycle for payment options,” explained Beth Costa, a director at Dove Consulting and author of the study.

How Consumers Pay Today

At physical points-of-purchase, cash is still the most frequently used payment method, accounting for 33% of respondent self-reported transactions. Combined debit (PIN and signature) accounts for 26% of the transaction mix. Perceived comfort with and speed of every in store payment method increased from 1999 to 2001. Although the majority of Internet purchases are made with credit cards, nearly half have used checks/money orders to pay for Internet purchases. P2P was used by one-quarter of shoppers.

For bill payment, two-thirds of consumers now pay at least one bill using an electronic payment vehicle — whether credit card, debit card, direct payment, or online banking. The most significant gains in bill payment occurred for debit options. Consumers are now nearly as comfortable using debit to pay bills as they are using credit cards and checks.

Future vs. Present Usage of Payment Methods

Over the next two years, electronic forms of in-store payment are expected to see significant increases. A whopping 22-27% of respondents in the ABA- Dove 2001 Consumer Payments Preferences Study expect to increase their usage of debit cards. At the same time, only six percent expect to decrease usage of debit.

Bill Payment Online Will Increase, Checks Decrease

Online bill payment will see significant growth as one-third of respondents expect to begin using or increase usage of this option by 2003. In contrast, use of paper-based payments is expected to decrease.

Nearly 21% of survey respondents report that they expect to reduce their use of checks for paying bills over the next two years. There will be a dramatic change in the customer base for cash and credit cards, but overall usage will remain on par with today’s usage levels over the next two years (net change is near zero).


Anthrax Impact

The fear of anthrax infested mail will inevitably slow up cardholder correspondence and may affect credit card payment processing. Last Friday Providian received two Seattle-postmarked envelopes with a yellowish, grainy substance that had leaked from one of the envelopes and partially coated the other. Ten Providian employees were decontaminated and treated at an Oakland hospital with a preventative course of antibiotics. Local authorities have ruled out anthrax as the unknown substance sent to Providian but they have not ruled out other biological agents.



Datacard Group announced it
shipped the 800th smart card personalization module for its flagship card
issuance systems early this month.

The module, which can be integrated with Datacard(R) 9000 or 7000 Series
Systems, provides card issuers with secure, reliable, high-speed smart card
personalization capabilities. It’s used worldwide for a variety of
applications, including financial, healthcare, transit, loyalty,
telecommunications, identity and e-commerce programs.

“We’ve seen strong sales in Asia, Europe, Latin America and the United States.
Clearly, the smart card issuance infrastructure is rapidly expanding on a
global basis as card issuers move quickly to capitalize on new market
opportunities,” said Bob Beer, Datacard’s vice president of smart card

“Personalization systems are only part of Datacard’s complete portfolio of
smart card offerings,” Beer said. “The company also offers smart card operating
systems, life cycle management systems, smart card personalization managers and
a variety of consultative services.”

“Datacard offers everything you need to launch a successful smart card
program,” Beer said. “We’re also the only solutions provider with a complete
infrastructure for multi-application smart card issuance and life cycle

Other inline capabilities for Datacard 9000 and 7000 Series Systems include
full-color photo printing, magnetic stripe encoding, high-speed embossing,
color topping, thermal printing of logos, text and bar codes, laser engraving,
topcoat application and card delivery.

Datacard Group provides financial institutions, corporations, consumer
marketers, governments, schools, healthcare providers, service bureaus and
other enterprises with the software, systems and professional services they
need to build successful card programs. The company’s portfolio includes the
world’s best-selling smart card solutions and card issuance systems, as well as
a complete line of digital identity systems. Consultative services include a
smart card security laboratory that serves the world’s leading smart card
issuers. DataCard Corporation, doing business as Datacard Group, is privately
held and based in Minnetonka, Minn. Datacard Group serves customers in more
than 200 countries. (www.datacard.com.)



Americans value their ATM cards more than they do their newspaper and cable television services. According to a new national consumer study commissioned by PULSE EFT, the debit card ranks second only to the home telephone as a coveted asset. The study, conducted by Houston-based Analytica, found that on a scale of 1-to-10, with 10 representing “extremely important,” cardholders placed an average value of 7.58 on their ATM/debit card. In contrast, the same group rated cable television at 5.73, Internet access at 5.67 and the newspaper at 4.75. The survey also shows nearly 68% of cardholders had used their cards to pay for merchandise, and 45% had gotten cash back when making a purchase with their card. At the same time, the survey revealed that ATM cardholders typically used their card 4.78 times during a two-week period, approximately 3.12 times to make a purchase and 1.65 times at an ATM.


3Q/01 Credit Unions

Mid-sized credit unions reported an average growth rate of 4.9% for the third quarter. Among top performers is Anheuser-Busch Employees Credit Union which racked up an impressive 24% increase in card loans between 3Q/00 and 3Q/01. The University of Colorado Federal Credit Union also scored an above average growth rate in receivables during the same period, according to early portfolio reports to CardData ([www.carddata.com][1]).

1. Pa State Employees $ 203,932,323 $ 190,154,987 +7.2%
2. Patelco $ 101,340,810 $ 107,000,000 -5.6%
3. Delta Employees $ 98,647,000 $ 90,069,000 +9.5%
4. Randolph Brooks $ 83,191,434 $ 75,710,827 +9.8%
5. Alaska USA $ 58,371,500 $ 58,842,200 -0.8%
6. Univ of Colorado $ 50,383,919 $ 44,092,216 +14.2%
7. CU of Texas $ 44,495,931 $ 42,239,723 +5.3%
8. Northwest $ 44,157,677 $ 44,963,637 -1.7%
9. Provident Central $ 37,213,718 $ 39,362,937 -5.5%
10. Anheuser-Busch $ 34,576,250 $ 27,942,820 +23.7%
Peer Group Totals: $ 756,319,562 $720,378,347 + 4.9%
Source: CardData (www.carddata.com)

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