Smart Card Survey

2001 The Smart Card Alliance today announced that it will undertake a survey to measure the usage of smart cards in the United States and Canada. The research will be conducted by KPMG.

‘As a strong voice for smart card adoption, the Alliance is proud to sponsor this original research that will provide the first concrete data on our industry in the 21st century. What we’re doing is establishing a benchmark,’ said Bill Randle, Chairman of the Smart Card Alliance.

The survey will ask the top ten smart card manufacturers supplying the US and Canadian markets to report on shipments according to ten specific industry categories, such as wireless, financial and retail. The initial survey will cover shipments made in 1999, 2000 and the first half of 2001. A follow-up survey covering the last half of 2001 will be made in the first quarter of 2002.

‘The US and Canadian smart card markets have experienced significant growth over the past several years’, said Dan A. Cunningham, Chairman of the Alliance’s Market Research Committee. ‘The purpose of the survey is to quantify this growth by industry, and distribute the results to our members and interested third parties.’

The survey is one of many initiatives of the Smart Card Alliance, a not-for-profit association formed earlier this year by the joining of forces of the Smart Card Forum and the Smart Card Industry Association. The goal of the Alliance is to promote the usage of smart card technology and related applications. The newly combined organization brings together all the players in the industry including leading banks and card issuers, technology firms as well as industrial and retail companies and government organizations interested in smart card development.

President and CEO of the Smart Card Alliance, Donna Farmer stated, ‘the combined resources and leadership of our new organization allow us to undertake projects like this survey, that neither predecessor organization could have done on its own.’

The results of the initial phase of the survey will be presented at the Alliance’s Annual Meeting in October 9-12th. The Alliance plans to continue the survey in 2002 and beyond to establish a well-defined trend line of smart card growth.

‘We’re excited about the opportunity to assist the Smart Card Alliance in this endeavor,’ stated Tim Harrison, a Principal in KPMG’s Information Risk Management group. ‘This survey will allow us to create a better understanding of the growth and use of smart card technology within the US and Canada over the past few years, ‘ he added.

About the Smart Card Alliance

The Smart Card Alliance is a not-for profit, multi-industry association of over 185 member firms working to accelerate the widespread acceptance of multiple application smart card technology. Through specific projects such as education programs, market research, advocacy, industry relations, and open forums the Alliance keeps its members connected to industry leaders and innovative thought. The Alliance also is the single industry voice for smart cards, leading industry discussion on the impact and value of smart cards in the U.S. More information about the Alliance is available at .

About KPMG

KPMG LLP is the accounting and tax firm that understands the needs of business in the global economy. We help our clients by devising results-oriented business strategies, providing insights that help them stay ahead of the competition and achieve market-leading results. KPMG LLP is the U.S. member firm of KPMG International. KPMG International’s member firms have more than 108,000 professionals, including 7,000 partners, in 159 countries. KPMG’s Web site is

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RPPS Partners

Citibank and Paytrust announced Monday they will join MasterCard’s ‘Remote Payment and Presentment Service’. Under this arrangement, Citibank will have access to MasterCard’s bill payment and presentment hub. With access to the MasterCard ‘RPPS’ hub, Citibank’s EBPP service, ‘Citibank Bill Manager’, which is provided through Paytrust, will be able to receive a greater number of bills electronically for presentation to its customers. RPPS provides participating financial institutions with flexibility and convenience to connect at one interface to reach multiple ‘Customer Service Providers’ and ‘Biller Service Providers’ to receive and pay bills.

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Lynk Award

Lynk Systems, Inc., a leading provider of electronic transaction processing services, has received Visa’s Service Quality Performance Award. On the heels of its 10th anniversary, Lynk has been recognized as one of Visa’s top performing processors. Lynk was selected among companies who have processed between $2 billion to $5 billion in annual Visa sales from January 2000 through December 2000.

The Visa award honors processors in three categories: lowest duplicate transaction rate, lowest assured transaction response rate and lowest authorization response time. Being recognized as the processor with the lowest duplicate transaction rate means that Lynk will minimize double charges and subsequent merchant credit and chargeback expenses, resulting in direct savings to the merchant’s bottom line.

“Visa cardholders and merchants can count on Lynk’s high level of service,” said Chuck Mann, senior vice president of Transaction Processing. “Lynk contributes to more efficient, cost-effective, and profitable card operations each time a Visa card is used at the point of sale. Lynk has always excelled on the authorization side of credit card processing, and this award is proof that our efforts to bring settlement processes in-house have been equally successful.”

The quality of service delivered to Visa cardholders and merchants is often the deciding factor in customer retention, brand loyalty and customer loyalty. The Visa Service Quality Performance Award not only acknowledges consistent, superior performance, it also emphasizes continued service quality improvement.

About Lynk.

Lynk is a proven leader in electronic payment, cash dispensing and e-commerce services. The company processes transactions initiated by credit and debit cards, checks, and other access cards from merchant point-of-sale terminals, ATMs and web sites. Lynk also provides related services such as the issuance of stored value cards that facilitate electronic funds distribution.

Lynk controls the entire processing sequence, including sales, merchant payment equipment, design and hosting of Internet store fronts, transaction authorization, capture, settlement and customer service. This “in-sourced” model facilitates a truly integrated single-source service that gives Lynk customers one-call support for all their processing needs. Lynk’s proprietary technology and comprehensive network connectivity offer customers of all sizes unsurpassed processing performance.

Founded in 1991, Lynk is located in Atlanta, Georgia and has earned recognition as one of the fastest-growing companies in America by Deloitte & Touche and Inc. magazine. For more information, please visit the company’s web site at .

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CompuCredit Card Bonds

CompuCredit Corporation announced that it has issued $500,000,000 of three-year credit card asset-backed securities.

The securitization from the CompuCredit Credit Card Master Note Business Trust features four classes of Asset Backed Notes.

The transaction, Series 2001-One, includes $305,000,000 of Class A floating rate asset backed notes rated Aaa by Moody’s and AAA by Standard & Poor’s; $70,000,000 of Class B floating rate asset backed notes rated A2 by Moody’s and A by Standard & Poor’s; $57,500,000 of Class C floating rate asset backed notes rated Baa2 by Moody’s and BBB by Standard & Poor’s; and $67,500,000 of Class D asset backed notes.

The Class A Notes, the Class B Notes and the Class C Notes were privately placed under Rule 144A and Regulation S and are priced at a spread of 39 basis points, 148 basis points, and 250 basis points, respectively, above the one-month London Interbank Offered Rate (“LIBOR”). The Class D notes are subordinate in payment to the Class A Notes, the Class B Notes, and the Class C Notes and will be retained by an affiliate of CompuCredit.

The Notes have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

CompuCredit Corporation is a credit card company that uses analytical techniques, including sophisticated computer models, to identify consumers who it believes are credit-worthy and are overlooked by more traditional consumer credit providers. CompuCredit markets unsecured general purpose credit cards through direct mail, telemarketing and the Internet. In July 1999, CompuCredit launched its consumer web site, www.aspirecard.com, through its Internet marketing services subsidiary AspireCard.com, Inc. Consumers can apply online and receive a credit decision within seconds. CompuCredit also markets credit life insurance, card registration, buying club memberships and travel services to its cardholders. Credit cards marketed by CompuCredit are issued by Columbus Bank and Trust Company under an agreement with CompuCredit. CompuCredit completed its initial public offering in April of 1999 and was included in the Russell 2000(R) Index in July 1999 and the NASDAQ FIN-100 Index in May 2000.

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Pay As You Go Card

Equitex, Inc. announced it has completed its acquisitions of Key Financial Systems, Inc. and Nova Financial Systems, Inc. of Clearwater, Florida. Key Financial Systems and Nova Financial Systems design, market and service credit card products designed for those who need to build or rebuild credit, offering an innovative credit card product to customers called the Pay As You Go credit card. The companies market through direct mail, telemarketing for financial institutions and the Internet through alliances with a number of popular Internet web sites.

On Friday, August 3, 2001, the Company completed the distribution of its assets and liabilities to Equitex 2000, Inc. Final distribution of the Equitex 2000 common stock to the Equitex stockholders, originally anticipated to occur on August 3, 2001, is now anticipated to occur upon the effectiveness of Equitex 2000’s Form 10 registration statement which is anticipated to occur on approximately August 21, 2001. Each stockholder of record at the close of business on Friday, July 20, 2001, will receive one share of Equitex 2000 common stock for each share of Equitex common stock owned.

Equitex, Inc. is a holding company operating through its wholly owned subsidiaries Nova Financial Systems, Inc. and Key Financial Systems, Inc. of Clearwater, Florida. Nova and Key design and service credit card products for those who need to build or rebuild credit marketed through direct mail, telemarketing for financial institutions and the Internet through alliances with a number of popular Internet web sites.

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ANZ ATM/POS NET

S2 Systems, Inc., a global provider of transaction processing, authorization and integrated solutions for the banking
and financial services market, today announced an agreement with Australia and New Zealand Banking Group
Limited (ANZ) to revolutionize its ATM and EFTPOS network. The joint initiative to replace ANZ’s existing
proprietary system and begin large-scale deployment of S2’s high-performance OpeN/2 application for
Windows(R) 2000 is expected to accelerate broader market transition away from traditional proprietary
implementations. ANZ is one of Australia’s leading banking and financial services organizations.
System performance, high support and maintenance costs in the existing proprietary system, coupled with a need
to enhance development lead times, compelled ANZ to seek a more advanced replacement solution. S2’s OpeN/2
transaction switching and payment authorization application enables financial institutions to handle extremely high
volumes of transactions with far greater speed, reliability, scalability and economy. The adoption of OpeN/2 for
Windows(R) by ANZ will speed the embrace of open platform replacement solutions in the banking and financial
services industry.

“Our strategic initiative with ANZ solidifies S2’s presence in Australia and signals a dramatic shift in the
competitive market landscape,” said Stephen Clark, president and CEO of S2 Systems. “This key implementation of
OpeN/2 in the Windows(R) environment will ensure its broader adoption as a proven solution within the region, as
well as the Americas and Europe, to facilitate expanded service delivery, improved customer service, and
significant reduction in the cost and complexity of transaction processing services. Most importantly, S2’s track
record assures institutions that migration to cost-effective platforms can be enabled by next generation
applications from a trusted industry leader.”

ANZ’s shift from proprietary systems to S2’s OpeN/2 marks an evolutionary milestone. The large-scale deployment
of OpeN/2 on the enterprise-class Windows(R) 2000 operating system leverages existing IT infrastructure in a
mission-critical environment and paves the way for integration with wireless and other evolving technologies.
ATMs, Point of Sale and other emerging devices provide expanded customer service flexibility at significantly lower
cost, which results in significant competitive advantage for banks.
“We are pleased with the functionality and scalability that S2’s solution provides,” stated David Boyles, ANZ’s CIO.
“The performance capabilities of OpeN/2 running in Windows(R) 2000 on SQL represent a new benchmark for the
banking and financial services industry. With this open architecture project, expected outcomes include lower
costs, improved customer service, quicker time-to-market, and positioning ANZ to integrate with an expanded
array of consumer-direct technologies.”

S2’s OpeN/2 transaction-processing engine is designed to meet the peak performance and scalability demands
required in today’s banking environment. The company’s robust payment switching solution is capable of driving
multiple applications for ATM and EFTPOS processing, and check management. Integration modules enable
seamless interoperability with disparate systems — and interfaces provide a customer link via ATMs, EFTPOS
terminals, card readers, Web browsers, mobile phones, PDAs, and other devices.

About ANZ

Australia and New Zealand Banking Group Limited (ANZ) is one of Australia’s leading banking and financial
services groups. ANZ offers a full range of financial products and services in Australia and New Zealand and has
overseas representation predominantly in greater Asia. With total assets of AUD 180+ billion, ANZ is one of
Australia’s Top Four banks. Visit their Web site at www.anz.com.

About S2 Systems

S2 Systems, Inc. is a leading global provider of e-business solutions for the banking, financial services, retail and
travel & hospitality industries. For more than 18 years, some of the world’s largest organizations have relied on S2
products to drive their high-volume e-commerce transactions. Today, our leading-edge technology enables
businesses worldwide to implement Web-based initiatives that improve operational efficiency, enhance customer
service and generate new revenue streams. S2 Systems is headquartered in Dallas, Texas and has offices in
Atlanta, London, Paris, Maarssen, Stockholm, Dubai, Riyadh, Hong Kong, Beijing, Melbourne, and Sydney. For more
information about S2 Systems, visit its Web site at www.s2systems.com

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Reform Committee

The House last week named the primary conferees to serve on the House-Senate conference committee working to wrap up the bankruptcy reform legislation. The joint panel will meet in September to work out of the final details of the new bankruptcy laws which will limit the availability of Chapter 7 filings to consumers with good income. The House-named members include James Sensenbrenner (R-WI), John Conyers (D-MI), Bob Barr (R-GA), Melvin Watt (D-NC), Henry Hyde (R-IL), George Gekas (R-PA), Lamar Smith (R-TX), Steve Chabot (R-OH), Rick Boucher (D-VA) and Jerrold Nadler (D-NY). All of the conferees serve on the House Judiciary Committee. The House also named nine members from other committees to consult as conferees on limited sections of the bill. Last month, the U.S. Senate named Patrick Leahy (D-VT), Orrin Hatch (R-UT), Joseph Biden (D-DE), Edward Kennedy (D-MA), Herb Kohl (D-WI), Russell Feingold (D-WI), Charles Schumer, (D-NY), Richard Durbin (D-IL), Charles Grassley (R-IA), Jon Kyl (R-AZ), Mike DeWine (R-OH), Jeff Sessions (R-AL), and Mitch McConnell (R-KY) to serve on the House-Senate conference committee. The Senate also unanimously agreed to substitute the language of a pending House bankruptcy reform bill (H.R. 333) with that of the Senate-passed version (S.420). (CF Library 6/12/01; 7/3/01; 7/19/01)

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Top Billserv Exec Resigns

Billserv, Inc., the leading electronic bill presentment and payment Outsourced Solution Provider delivering electronic billing, online customer care, Internet direct marketing and communications, Friday announced the resignation of David S. Jones, Executive Vice President and Director of Billserv, Inc. and President of bills.com.

“David has reached a point in his life and within Billserv that his tremendous creative abilities and needs are no longer being satisfied. Both Billserv and David have reached a level of mutual maturity that the needs of each are no longer aligned,” said Michael Long, Chairman and CEO. Long continued, “As a founder of Billserv, David provided vast amounts of thought leadership in the early formation of our company. Our separation is highly cordial and David has earned the respect and admiration of all of us at Billserv and within the industry. We wish David and his family great success in all of his life pursuits.”

David added, “I’m not leaving Billserv because I don’t believe in the company but rather the opposite. I feel the company has reached a point of stability and focus that no longer requires my role as an executive and given the appropriate burn rate reduction goals, I believe this is the most effective and significant contribution I can make. I will continue to support Billserv in every way possible as I look into the future at other business ventures.”

About Billserv, Inc.

Billserv, Inc. is the leading electronic bill presentment and payment Outsourced Solution Provider, delivering comprehensive, cost-effective solutions for presenting and servicing consumer bills for payment via the Internet. As part of an integrated EBPP solution, the company also provides market-leading Internet customer care and direct marketing applications. Billserv consolidates customer billing information and then securely delivers it to distribution end points and to the client’s own presentment and payment site, hosted by Billserv. The company has relationships with all major EBPP distribution channels, including CheckFree, Spectrum, MasterCard RPPS, Paytrust, Metavante and BillingZone, giving companies and customers the widest array of Web sites from which to deliver, view, pay and manage bills. For additional information, visit or call (210) 402-5000.

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E-Disclosure Lifted

The Federal Reserve Board on Friday announced the lifting of the October 1, 2001 mandatory compliance date for interim rules governing the electronic delivery of certain consumer disclosures, including credit card disclosures. The Fed says the postponement was primarily due to operational issues raised by a number of institutions which indicated the time frame was not realistic. During March of this year, the Board published interim final rules on electronic disclosures and invited public comment. The rules established uniform standards for the electronic delivery of federally mandated disclosures under five consumer protection regulations including: ‘Reg E’ (Electronic Fund Transfers) and ‘Reg Z’ (Truth in Lending). Financial institutions may deliver disclosures electronically if they obtain consumers’ consent in accordance with the requirements of the ‘Electronic Signatures in Global and National Commerce Act’, enacted in June 2000. The Board says it is considering adjustments to the rules to provide additional flexibility.

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Persona C11

Fargo Electronics unveiled this morning the new ‘Persona C11’ desktop plastic card printer with of MSRP of $2,095. The ‘C11’ is a full color dye-sublimation printer and produces high-quality, continuous-tone photo ID cards edge-to-edge on standard ‘CR-80 PVC’ cards. The printer, in a ice blue casing, has a one-touch top cover release which opens widely for convenient access and ease of use within small spaces. The ‘C11’ is also available in a monochrome-only version, the ‘M11’ for $1,695. Options for both the ‘C11’ and ‘M11’ include built-in ISO magnetic stripe encoding (Hi-Co/Lo-Co); USB-to-Parallel interface cable; Ethernet interface adapter, and printer cleaning kit.

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Cardless Cashtown

NJ-based Champion Mortgage says last week’s ‘Great American Credit Card Swipeout’ was a success as 553 residents of Cashtown, Pennsylvania agreed not use credit cards for four days. The publicity event was center stage for a national effort by Champion to educate consumers about smart borrowing and strong personal financial habits. Last Tuesday the ‘Swipeout’ was kicked off when its residents were asked to sign a pledge to use only cash for all their consumer needs for 100 hours beginning at a kickoff event at the local school. Cashtown also served as the site for the unveiling of the Champion Mortgage ‘Best Financial Practices Index’, a national survey of more than 2,300 respondents who were asked about their practices and knowledge of aspects of personal finances. Champion says it chose Cashtown because the tiny community was named in 1797 after the local innkeeper demanded cash payment for all food and lodging. Champion says the residents are typical of much of small-town America.

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Updated Brand Stats

Driven by a significant increase in cards issued, MasterCard’s overall growth in U.S. card volume is outpacing VISA’s, as MasterCard racked up a 16.8% annual growth rate in the first quarter compared to VISA’s 13.0% rate. However both card associations reported substantially stronger growth than American Express (+9.9%) and Discover (+3.8%). VISA’s growth in cash volume slightly outpaced MasterCard’s, as VISA reported $44.1 billion in first quarter cash volume (+18%) versus MasterCard’s $26.0 billion (+17%). As of March 31, VISA’s market share, based on gross dollar volume and cards-in-force, was 51.9% and 51.2% respectively. At the end of 1Q/01, VISA had 251.4 million credit cards and 103.4 million debit cards in-force. MasterCard had 212.4 million credit cards and 37.9 million debit cards in-force as of March 31. (For complete details on 1Q/01 U.S. brand statistics visit CardData (www.carddata.com); for international 1Q/01 brand figures visit The RAM Report (www.ramreport.com). NOTE: This story corrects an earlier version which appear in last week’s CF, Thursday, August 2, 2001).

1Q/01 U.S. BRAND STATS
(includes credit and off-line debit)
VOLUME CHANGE CARDS CHANGE
VISA $204.6b +13.0% 354.8m +5.5%
MasterCard $109.6b +16.8% 250.3m +19.3%
American Express $ 55.6b + 9.9% 34.2m +8.9%
Discover $ 24.4b + 3.8% 53.2m +8.6%
TOTAL: $394.2b +13.0% 692.5m +10.5%
Source: CardData (www.carddata.com)

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