VA Pilot Second Phase

The U.S. Department of the Treasury’s Financial Management Service and the U.S. Department of Veteran’s Affairs began the second phase of its smart card pilot Monday in Florida. The James A. Hayley Veteran’s Medical Center in Tampa will become another test site in the VA pilot with NationsBank incorporating ‘VISA Cash’ cards. The Tampa project will involve 23,000 cards and will feature a special purpose card to be distributed by veteran’s organizations for special events hosted at the medical center. NationsBank and the VA recently launched a pilot with the Bronx VA Medical Center.

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TSYS Signs Canadian Tire

Total System Services signed a long term agreement yesterday with Canadian Tire Acceptance to process six million private label cards and MasterCards. Under terms of the agreement all ‘Canadian Tire Credit Card’ and ‘Options MasterCard’ accounts will be converted to the TSYS ‘TS2 Cardholder System’. CTAL is the fifth largest MasterCard issuer in Canada with 431 stores nationwide.

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Recharging

CA-based Killen & Associates announced this morning it will release a smart card study next month that predicts smart cards worldwide will be recharged 27 billion times annually by the year 2005. The report, “Transferring Value to Phone and Bank Cards: Opportunities for Telephone Companies and Financial Service Providers”, predicts a behavioral change by consumers as they elect to charge their smart cards at public phones, gas stations, other high-traffic merchants and via personal ATM services. Killen also forecasts a showdown between banks and telcos over smart cards.

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GPS Joins NYC Pilot

Global Payment Systems today announced its participation in a smart card program jointly sponsored by Citibank, Chase, MasterCard and Visa. The program involves approximately 700 merchant locations in New York City’s Upper West Side.

Global is deploying smart card point-of-sale terminals at merchant locations accepting both Chase Mondex and Citibank/Visa Cash Smart Cards. It also provides merchant support help desk services.

“We are delighted to participate in this important project,” said David K. Hunt, president and CEO of Global Payment Systems. “This demonstrates Global’s full-service capabilities and our reputation as a major service provider in the expanding Smart Card transaction environment. We will continue to explore additional electronic payment card opportunities in this marketplace.”

The Upper West Side was selected for the program because of the diversity of its consumer and merchant population. It targets individual consumer purchases of under $20. To date, merchants such as McDonald’s, Burger King and the retail drugstore chain Duane Reade have signed up for the program. During the program, consumers will use smart cards instead of cash to pay for their purchases. A computer chip embedded in a smart card holds a monetary, or “stored” value. The consumer inserts the smart card into a specially designed point of sale terminal, which deducts the cash amount from the card and adds it to the merchant’s cash total.

The smart card terminal deployment, chip management and 24-hour, 7-day- week merchant support help-desk services are being provided by Global’s Winston-Salem, N.C. facility.

Global Payment Systems is a major provider of transaction processing products and services for financial and corporate organizations worldwide. Global provides services to more than 1.2 million merchants in North America and processes in excess of 2.7 billion transactions annually. While well- known for its card services, Global also serves more than 700 financial institutions and 12,000 corporations in 44 countries through its cash management and financial EDI services.

National Data Corporation (NYSE: NDC) is a leading provider of information services for the payment systems and health care markets.

When used in this report, press releases and elsewhere by management or the Company from time to time, the words “believes,” “anticipates,” “expects” and similar expressions are intended to identify forward-looking statements concerning the Company’s operations, economic performance and financial condition, including in particular, the likelihood of the Company’s success in developing and expanding its business. These statements are based on a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the Company, and reflect future business decisions which are subject to change. A variety of factors could cause actual results to differ materially from those anticipated in the Company’s forward-looking statements, some of which include competition in the market for the Company’s services, continued expansion of the Company’s processing and payment systems markets, successfully completing and integrating acquisitions in existing and new markets and other risk factors that are discussed from time to time in the Company’s Securities and Exchange Commission (“SEC”) reports and other filings. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligations to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof, or thereof, as the case may be, or to reflect the occurrence of unanticipated events.

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15% of Consumers Late Payers

Two-thirds of consumers haven’t made a spending plan for the holidays, according to an American Bankers Association telephone survey, Nov. 14-16, of 1,000 consumers. Only 56 percent of the consumers did not have a budget last year.

The survey also found that 59 percent of consumers said they would spend $500 or less during the holiday season. However, past studies have shown that consumers spend nearly $100 more than they think during the holidays.

“Those who don’t have budgets may spend more and will take longer than anticipated to pay off their holiday bills,” said James Chessen, ABA’s chief economist. “If you want to avoid financial frostbite in January when the bills arrive, develop a spending plan and stick to it. Write down the gifts you plan to buy and how much you can afford to spend. Add up what you charge each week so your January bill doesn’t bring you any surprises.” Chessen added.

The survey also showed that 15 percent of consumers were late with their credit card payments in the last 12 months. Of those who were late, 44 percent earned more than $50,000 a year, compared to 4 percent who earned under $15,000.

When asked how long it would take to pay off their holiday charges, 45 percent of respondents said it would take two months or less, 23 percent said three months or longer, and 30 percent said they don’t use credit cards. In fact, it takes an average of six months to pay off holiday credit card purchases.

Chessen advises consumers to contact their creditors as soon as they think a payment will be missed. Delaying only makes matters worse. In severe cases, most lenders will consider making arrangements to extend payment periods, consolidate loans or refinance.

The ABA is offering a free brochure that helps consumers cope with holiday bills. Copies are available by writing to: Holiday Debt, American Bankers Association, 1120 Connecticut Ave., NW, Washington, D.C. 20036.

The ABA brings together all categories of banking institutions to best represent the interests of this rapidly changing industry. Its membership — which includes community, regional and money center banks and holding companies, as well as savings associations, trust companies and savings banks — makes ABA the largest banking trade association in the country.

American Bankers Association Holiday Survey
Nov. 14-16, 1997
Telephone Survey of 1,000 people

1. How much do you plan to spend during the holiday season?

6% — $100
9% — $100-$200
24% — $200-$400
20% — $400-$500
11% — $500-$600
6% — $600-$700
24% — more than $700

59% say they will spend $500 or less/41% say they will spend $500 or more
Average historical spending during the holidays: $575

2. Have you made a budget for holiday purchases?

35% Yes
65% No

When broken out by gender, 72% of males and 57% of females haven’t made a
budget.

71% of households with annual income of $25,000-$40,000 haven’t made a
budget.

47% of families with at least one child have made a budget.

3. Have you been late with your credit card payments in the last 12
months?

85% No
14% Yes
1% Refused to answer

Of the 14 percent who missed a credit card payment in the last 12 months,
44 percent earned more than $50,000 a year, compared to 4 percent who
earned under $15,000. Of those who were late, 13 percent were 18-24 years
old, 27% were 25-34 years old, 29% were 35-44 years old, 17 percent were
45-54 years old, 7 percent were 55-64 years old and 7 percent were over
65.

4. How long do you think it will take to pay off your holiday charges?
45% — 2 months or less
23% — 3 months or longer
30% — don’t use credit cards
In reality, the typical pay-off time for holiday debt: 6 months

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VISA Gift Wrap Underway

Santa’s not the only big attraction in malls this holiday season. Visa U.S.A.’s Free Gift Wrap campaign is drawing crowds for its third consecutive year – and drawing millions of dollars into participating malls.

This year, Visa and its mall partner, Chicago-based General Growth Properties, Inc. (GGP), expect to exceed the results of last year’s program, which helped generate $23 million in sales at shopping centers across the United States. In fact, when surveyed last year, one-third of gift wrap customers said the Visa Free Gift Wrap promotion had been “very important” in determining where they did their holiday shopping.

From now until December 24, 1997, shoppers in more than 100 participating GGP malls across the country can have as many as three Visa card purchases per day gift-wrapped on site for free by volunteers from local non-profit groups. In exchange, these groups will receive donations from the shopping centers. This cause-related component helped the promotion garner a Merit Award for Excellence from the International Council of Shopping Centers in 1996.

Last holiday season, volunteers from more than 150 groups wrapped 585,000 gifts and earned a combined $512,000 for their nonprofit organizations, which ranged from high school clubs to community service associations to local branches of national charities.

“The program really delivers when and where it’s needed most,” said Tom Edwards, senior vice president, market development and acceptance, Visa U.S.A. “Shopping centers see increased traffic during the most crucial time of year; merchants enjoy higher sales volume; and card transaction volume rises for Visa’s member banks. And, of course, busy shoppers get a helping hand, and nonprofit groups benefit from much-needed donations.”

This year’s free gift wrap program will be promoted through local television, radio and print advertising, as well as in mall and point-of-sale signage.

General Growth Properties is one of the oldest, largest and most experienced shopping center owners, developers and managers in the United States. It currently has ownership interests in, or management responsibilities for, 119 shopping malls in 38 states, encompassing approximately 92 million square feet. This includes a mall recently opened in Waterbury, Conn., and another scheduled to open in July 1998 in Coralville, Iowa. For more information, visit the company’s Web site at .

Visa is the preffered payment brand and the largest consumer payment system worldwide. It plays a pivotal role in advancing new payment products and technologies to benefit its 21,000 memeber financial institutions, their cardholders, and the global economy. Visa is the only consumer payment system to facilitate $1 trillion worth of purchases of goods and services in a fiscal year. Visa’s nearly 600 million cards are accepted at more than 14 million worldwide locations, including 380,000 ATMs in the Visa/PLUS Global ATM Network. Visa’s Internet address is [www.visa.com][1].

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

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NDC Signs Sterling Vision

National Data Corporation announced today that it has signed a contract with Sterling Vision, Inc. to provide a variety of electronic payment services for the optometric chain.

Under the agreement, more than 100 of Sterling Vision’s corporate and franchise locations will begin using NDC’s check guarantee services. The chain also renewed an agreement to use NDC for credit card processing.

“An increasing number of health care providers are turning to National Data for our full complement of payment services,” said Tom Dunn, NDC’s general manager of Integrated Payment Services. “We are pleased to expand our partnership with Sterling Vision by providing different payment options for their patients.”

Sterling Vision, based in Long Island, is one of the fastest-growing retail eyewear and optometric chains in the country.

National Data Corporation is a leading provider of information services for the payment systems and health care markets.

When used in this report, press releases and elsewhere by management or the Company from time to time, the words “believes,” “anticipates,” “expects” and similar expressions are intended to identify forward-looking statements concerning the Company’s operations, economic performance and financial condition, including in particular, the likelihood of the Company’s success in developing and expanding its business. These statements are based on a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the Company, and reflect future business decisions which are subject to change. A variety of factors could cause actual results to differ materially from those anticipated in the Company’s forward-looking statements, some of which include competition in the market for the Company’s services, continued expansion of the Company’s processing and payment systems markets, successfully completing and integrating acquisitions in existing and new markets and other risk factors that are discussed from time to time in the Company’s Securities and Exchange Commission (“SEC”) reports and other filings. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligations to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof, or thereof, as the case may be, or to reflect the occurrence of unanticipated events.

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S&P Predicts Good Retail Season

Better economic and business fundamentals and profitable third quarters indicate that most U.S. retail companies are well-positioned for the holiday selling season, Standard & Poor’s reports this week.

“Blockbuster Christmas seasons for retailers may be a historical curiosity,” says analyst Jerry Hirschberg. Consumers are buying more gifts and apparel during the year, which is more preferable to retailers. Retailers are trying to mitigate the inventory and margin risk associated with past fourth quarter holiday shopping surges by generating more significant sales during the year. “Although a lot of progress has been made, there is still a long way to go, and the fourth quarter remains the most critical,” Mr. Hirschberg adds.

According to the special report featured in this week’s edition of Standard & Poor’s CreditWeek, 1997 proved to be a good year for retail sector credit quality. Credit quality is expected to remain stable in 1998 with over 60 percent of retail credit ratings currently carrying a stable outlook. “A general improvement in credit quality has occurred, partly the result of better business practices and low interest rates, which have helped companies refinance much of their high-cost debt,” adds Mr. Hirschberg. The result is better protection for bondholders. Credit quality over the past few years has also been helped by the tremendous equity market, say analysts. Retail companies have been able to sell stock to improve their balance sheets and acquire other companies for stock.

“The one negative that some have highlighted is high consumer debt levels,” adds analyst Ron Buck. However, despite high debt, consumers are still spending and unemployment is at its lowest in 24 years.

Credit quality has been generally good for retail as an industry; however, certain sectors are still struggling. “We are seeing a number of specialty retailers struggle this year,” says analyst Mary Lou Burde. Specialty apparel retailers, for example, are losing consumers to large department stores, which have been doing quite well. The footwear sector has also had some difficulties recently with Woolworth’s Footlocker reporting a poor third quarter.

Analysts are also anticipating the effects recent market turmoil may have on the retail industry. “The turmoil in the U.S. markets has not had an effect on what consumers are buying so far,” says Mr. Hirschberg. However, analysts cite a couple of possible effects the market turmoil may have on spending. One, is the “wealth factor,” which assumes consumer spending is affected by shrinking stock portfolios. In the past, economists have found the impact of shrinking portfolios on consumer spending to be relatively small. Market turmoil can also affect the consumer psyche which, according to Mr. Buck, is a more significant factor. “This is a bigger risk to retailers in the short run in terms of a potential pullback in consumer spending,” adds Mr. Buck. Considering that a large percentage of individuals hold stocks directly or in pension retirement holdings, the wealth impact is less of a factor than the psychological impact.

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PMT Finalizes American Heritage Deal

Richardson M. Roberts, Chairman and Cheif Executive Officer of PMT Services, Inc., today announced the consummation of the previously announced acquisition of American Heritage Bankcard.

An independent service organization, American Heritage produces annual revenues of approximately $26 million. In addition to its own merchant account portfolio with annualized charge volume of approximately $800 million, American Heritage services an account portfolio for others that generates annualized charge volume of approximately $1.8 billion. American Heritage also brings an experienced sales force to PMT, which currently produces approximately 700 new merchant accounts per month. The transaction will be accounted for as a pooling of interests. ![][1]

With the consummation of this transaction, PMT has completed three acquisitions thus far in fiscal 1998 that will be expected to contribute more than $80 million in annual revenues. The aggregate portfolio gained from these acquisitions generates approximately $3.3 billion annualized charge volume, excluding the $1.8 billion of annualized charge volume from the portfolio American Heritage services. In addition, these three acquisitions provide a combined sales force of more than 100 seasoned sales people, currently producing approximately 1,000 new merchant accounts monthly.

Investors are cautioned that this release contains forward-looking statements, such as those relating to annual revenue expectations for the three fiscal 1998 acquisitions, that are based upon current expectations and involve a number of risks and uncertainties. Actual operations and results may differ materially from those expressed in the forward-looking statements made by the Company. The factors that could cause actual results to vary include PMT’s ability to retain the field sales forces of these companies and the ongoing performance of the field sales forces; the Company’s ability to integrate the acquisitions successfully with its processing systems and products; the attrition of merchants from acquired portfolios; and other trends or uncertainties as noted in PMT’s periodic filings with the SEC.

PMT Services, Inc. is an independent service organization which markets and services electronic credit card authorization and payment systems to small retail and professional businesses located throughout the United States. PMT’s account portfolio has grown through the internal development of accounts using telemarketing and a field sales force as well as through the purchase of account portfolios. PMT is one of the largest independent service organizations in the country.

[1]: /graphic/pmt/roberts.gif

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Charge-Offs Stabilize

Charge-offs among credit card-backed securities declined five basis points to 6.61% for October based on performance data released last week. According to Standard & Poor’s ‘Credit Quality Index’, charge-offs ratios have been stable for the last three months however they remain significantly higher than October 1996’s ratio of 5.6%. Among major trusts with the largest declines: Capital One down 90 basis points and Household down 70 basis points. Card bonds with the largest increases include First Deposit and Banc One. First USA and Citibank were unchanged.

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Xmas Card Volume

U.S. consumers will charge about $3.5 billion per day during the 27 Christmas shopping days between the day after Thanksgiving and Christmas Day this year. According to the December issue of CardTrak, to be released this morning, consumers will rack up $95.3 billion of charges on general purpose bank credit cards/charge cards and private label store cards. CardTrak predicts consumers will charge $71.1 billion on VISA, MasterCard, and Discover credit cards and all American Express cards. About $8.0 billion will be transacted on ‘VISA Check Cards’ and ‘MasterMoney’ cards. Store card volume should be $16.2 billion for the 1997 Christmas shopping season. Card volume among retail merchants will make of $78.7 billion of the total volume. A number of recent polls suggests overall consumer spending will rise between 3% and 5% this year.

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