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Industry Update


TNS CEO Lauded

Transaction Network Services Inc. Chairman and Chief Executive Officer John J. "Jack" McDonnell Jr. received the Robert A. Mooney award for lifetime achievement from the Electronic Funds Transfer Association (EFTA). The association presents the award annually to an individual who has shown outstanding leadership and service to the advancement of the EFT industry and its issues.

McDonnell is also a founder of EFTA, having served as a Director for the National Commission on EFT. He also serves as an EFTA Director and is a past Chairman of the organization.

Credit Card Competition Heats Up Online

The competition to acquire credit card customers online has heated up, according to a study by Keynote Systems Inc. The company bases its Keynote Customer Experience (CE) Rankings for the credit card industry on research with 2,000 prospective customers as they evaluated and interacted with leading credit card Web sites.

Discover Financial Services and American Express Co. provide the best online experience for consumers, as measured by the overall Keynote CE Rankings. In addition, JPMorgan Chase & Co.'s Bank One, and Citigroup's Citibank have made gains in their effectiveness in acquiring customers online, joining MBNA Corp. atop the Keynote Acquisition Impact Index.

The index gauges the overall likelihood of visitors to apply for a credit card based on their online experience at a specific card site.

Pay By Touch Files Suit Against BioPay

Pay By Touch filed a patent infringement suit against BioPay, alleging that BioPay infringes on Pay By Touch's '042 patent covering tokenless biometric transactions and Pay By Touch's '397 patent covering biometric check-cashing services. Pay By Touch seeks damages and costs of suit.

In other news, Pay By Touch acquired a new patent portfolio including U.S.-issued patents for biometric authentication for check cashing services. The acquired portfolio adds to the company's more than 24 U.S. patents.

Acquiring Processing Prices Hold Stable, Study Finds

The overall cost per transaction of processing pricing did not decrease in 2004, according to a study by Strategic Management Partners Inc. (SMP). In its annual Benchmark Study, SMP surveyed more than 20 of the largest acquirers. The study focused on the direct costs financial institutions and ISOs pay to third-party processing companies.

From a front-end authorization perspective, the study found that large portfolio players have as much as an 85% cost advantage per front-end transaction. From a back-end settlement perspective, large players had a 60% cost advantage versus small acquirers.

It also found that mega processors tend to unbundle pricing while smaller processors tend to bundle their costs. To subscribe to the study, or receive additional information, e-mail or call 888-859-5637.

FIs to Spend Almost $118 Billion on IT in 2005

According to research from TowerGroup, the U.S. financial services industry will spend more on information technology than any other country in the world this year. Financial institutions (FIs) in the United States will invest $117.8 billion in information technology, representing growth of approximately $5 billion over 2004.

The report, "2005 IT Spending Crossroads in the U.S. Financial Services Industry: Plotting Roadmaps for Growth," finds that U.S. institutions make both organic growth and operational efficiency top management priorities, with IT serving as a critical link between the two.

The study found that many U.S. FIs abandon pure IT cost-cutting tactics to drive short-term operational efficiency. Instead, they look to opportunities for sustainable operational efficiency. Additionally, TowerGroup expects that U.S. FIs will be less interested in simply driving down IT costs, as they emphasize investing more effectively in IT as a vital driver for growth. To purchase the report, e-mail .


Bartlett Upgrades Hypercom Certification

Bartlett Info Tech Services LLC upgraded its certification as an authorized repair facility for Hypercom Corp.'s T7 family of payment terminals to include the T7Plus. Hypercom designated Bartlett Info Tech Services as an authorized repair facility in 2001.

Bartlett Info Tech Services earned this recognition by meeting Hypercom's technical proficiency and electrostatic discharge requirements.

Precidia Class-B Certified With Global

Precidia Technologies Inc. announced Class-B certification of its POSLynx retail router with Global Payments Inc.'s GlobalNet @dvantage SSL gateway. The gateway provides a direct Internet connection to Global's East Host card authorization center.

The POSLynx offers secure payment transaction processing over the Internet for dial terminals. The POSLynx connects as many as four terminals to affordable public networks using SSL encryption.

Visa Ready With Contactless Platform

Visa U.S.A. completed the development of its contactless payment platform. The card Association said it will begin deployment of this new payment feature on Visa cards in the U.S. market.

In a Visa contactless transaction, cardholders hold their cards near a secure reader at checkout instead of swiping them. Visa said that all other aspects of the transaction are handled in the same way as a traditional Visa transaction.

Visa wants the industry to adopt a brand-neutral contactless indicator to identify contactless cards, key fobs and devices to simplify the point of sale for merchants and allow financial institutions to brand their contactless programs as needed.

Western Union Adds Locations

First Data Corp.'s subsidiary Western Union Financial Services Inc. and its subsidiary Orlandi Valuta added approximately 37,000 agent locations in 2004. This brings the total number of agent locations to more than 220,000 in more than 195 counties and territories.

New Report on Check Processing Standards

The Accredited Standards Committee (ASC) X9 Inc. published Technical Report (TR) 2, "Understanding, Designing and Producing Checks." The report includes references to standards covering the payment process that involves paper checks. The report also discusses all the core X9 standards involved in the production, including the printing and issuing of paper checks and related transactions.

X9 has published 15 check-related standards and four TRs on the use of checks. Individual copies of TR 2 cost $100, and are available through the X9 Web site at .

X9 is the only industry-wide forum that brings together bankers, securities professionals, manufacturers, regulators, associations, consultants and others in the financial services industry to address technical issues, find the best solutions and codify them as nationally accepted standards.


AnyDATA and Precidia Offer Wireless ATM Solution

AnyDATA Corp., developer of code division multiple access (CDMA) modems, and Precidia Technologies, developer for POS Internet protocol (IP)-based access devices, partnered to offer a low-cost wireless connectivity option for dial-based ATMs.

AnyDATA modems enable users to transmit data over wireless networks. Precidia's CellDial converts dial ATM transactions to IP and provides the necessary link to the modem via a simple cable connection. The solution does not require any change to existing ATM equipment or systems.

Certegy to Provide Check Services

Global payment services provider Certegy Inc. expanded its check risk management agreement with Federated Department Stores to include full warranty services. Federated has more than 450 stores in 34 states, Guam and Puerto Rico operating under the names of Macy's; Bloomingdale's; Bon-Macy's; Burdines-Macy's; Goldsmith's-Macy's; Lazarus-Macy's; and Rich's-Macy's.

enCards Inc. and Evisions Partner

Card processing provider enCards Inc. signed an agreement with software provider Evisions. enCards will co-locate its U.S. headquarters with the Evisions office in Irvine, Calif.

MasterCard and MBNA Play Contactless Football

MasterCard International partnered with MBNA, the Seattle Seahawks and the Baltimore Ravens football clubs to incorporate MasterCard's PayPass contactless payment technology into the MBNA Seahawks and MBNA Ravens Extra Points credit card programs. Both Qwest Field and M&T Bank Stadium will accept MasterCard PayPass cards at the POS beginning in the 2005 football season.

Six Universities Select Moneris

Moneris Solutions has gone back to school. The transaction processor recently signed deals to provide credit card processing services with the following six universities: Gonzaga University; Regis University; Temple University; University of Pittsburgh; University of San Diego; and University of St. Thomas.

These institutions will use Moneris' infiNET service charge program to allow students and third-party payers to pay tuition and fees with their credit cards. Under the agreements, Moneris will provide credit card processing services through infiNET's QuikPAY service, a fully integrated automated billing, payment and commerce solution for the higher education market.

Pay By Touch Partners With MTXEPS

Pay By Touch entered into a strategic partnership with software provider MTXEPS Inc., creator of the WinEPS payment engine. The alliance enables retailers to deploy the most recent release of WinEPS and Pay By Touch. Through this partnership, MTXEPS and Pay By Touch will jointly sell, market and support the integrated solution.

Payment Data Systems Enters Insurance Industry

Payment Data Systems Inc. (PDS) signed a multi-year agreement with Online Insurance Services Inc. to provide payment services for its insurance clients. This marks the first entry of PDS into the insurance industry. The company anticipates the transactional value of the agreement will produce approximately $3 million annually.

CES Joins OneLynk Alliance

Payment processor RBS Lynk signed Cutting Edge Systems (CES) as the newest member of OneLynk Alliance, RBS Lynk's value-added reseller program. As part of the program, CES will offer RBS Lynk's payment processing services to its customers. CES provides Aloha restaurant systems for the Mid-Atlantic region; it also provides POS solutions to a growing list of regional restaurant clients including Aunt Sarah's Pancake House, Cinema Cafe, Kelly's Tavern, River City Diner and Starrhill Brewery.

Semtek Partners With Noblett & Associates

Mobile card-reading technology developer Semtek Innovative Solutions Corp. and payments industry consultancy Noblett & Associates formed an alliance to channel Semtek's products through ISOs. The goal of the alliance is to provide small- and medium-sized businesses with the ability to accept electronic payments via mobile/wireless devices in the most secure environment possible.

Semtek's card readers connect through wireless handheld devices, such as PDAs and mobile phones, and support industries requiring mobile commerce applications, on-site lead retrieval, and immediate identity verification. Noblett & Associates will recommend Semtek's card swipe products to ISOs that specialize in payment technologies.

SunTrust and Mashboxx Choose Peppercoin

SunTrust Merchant Services, a joint venture between SunTrust Banks Inc. and First Data, selected micropayment software provider Peppercoin Inc.'s Small Transaction Suite to deliver a small payment processing system to its merchants. Reino Parking Systems is one SunTrust customer that will deploy the solution to process credit card transactions at Reino's multi-space parking meters in various U.S. locations.

In addition, Mashboxx, the first peer-to-peer (P2P) file-sharing network authorized by major record labels, selected Peppercoin's software to enable Mashboxx to sell licensed music profitably.

Mashboxx enables P2P consumers to purchase legal digital downloads for $0.99. The company intends to capitalize on the 2.2 billion music files that consumers trade monthly through P2P networks.


Fifth Third Completes First National Bank of Florida Conversion

Fifth Third Bancorp completed its conversion associated with the acquisition of First National Bank of Florida. Fifth Third Bank (Fla.) has nearly 90 full-service locations. Kevin Hale, former First National Bankshares of Florida Inc. President and CEO, assumed leadership of the Florida affiliate.

Ingenico Acquires Stake in XA

In a move to enter the Swiss payment terminal market, Ingenico Corp. acquired a 51% stake in XA, a spin-off of Aufirex SA. XA was the first company in Switzerland to gain full control over the payment terminal field. Switzerland is moving to adopt the new Europay/ MasterCard/Visa (EMV) standard, which will require the replacement of approximately 80,000 payment terminals in the next few years.

NOVA Acquires SouthTrust Bank Merchant Portfolio

NOVA Information Systems acquired SouthTrust Bank's existing payment processing portfolio from Wachovia Bank and has simultaneously renewed and extended a long-term marketing alliance agreement for Wachovia Bank's merchant referral business.

NOVA acquired SouthTrust's merchant processing accounts and will provide processing services, customer service and support operations to SouthTrust's existing 16,000 merchants.

The company will market new merchant services referrals through Wachovia Bank's 3,100 branches. NOVA expects the credit and debit card processing volume from the existing SouthTrust portfolio to generate an additional $2.3 billion annually.

Pipeline Data Acquires 1,500 Accounts

Transaction processor Pipeline Data Inc. plans to acquire two merchant portfolios totaling 1,500 accounts from two ISOs. The accounts represent $142 million in annual consumer charge volume.

As a result of the acquisition, Pipeline Data said it anticipates its operating income to be approximately $70,000 monthly.

TNB Adds Three Agent Clients

TNB Card Services purchased the credit card portfolios of three more credit unions and will operate the programs under its agent-issuer program. TNB has acquired more than 50 portfolios since it began its agent-issuer program in late 2002.

Mizzou Credit Union in Missouri, Sentry Federal Credit Union in Pennsylvania and Marshfield Medical Center Credit Union in Wisconsin sold their portfolios. TNB Card Services is currently converting the portfolios.

TSYS Closes Acquisition of Vital

TSYS completed its acquisition of Vital Processing Services LLC by purchasing the 50% equity stake that Visa U.S.A. formerly held. The transaction closed March 1, 2005. Vital Processing Services now operates as a wholly owned subsidiary of TSYS.

US Bank to Buy Multi Service's Aviation Business

US Bancorp subsidiary US Bank plans to purchase the aviation business of Multi Service Corp., a Kansas-based provider of aviation and trucking credit card services.

Approximately 100 Multi Service staff members will become employees of US Bank as part of the acquisition. The companies did not disclose financial terms of the agreement. Multi Service was established in 1978 to provide specialized credit card services to the trucking industry; it expanded to the aviation industry in 1980.

GO Software Now Part of VeriFone

VeriFone Inc. completed the acquisition of the assets of GO Software from Return On Investment Corp. VeriFone will integrate GO Software products and employees into its business; the company said this will enable it to market payment processing software to operate on almost any platform, including Windows, Unix, Linux, AIX, OS/390, OS/400 and Sun Solaris.


Pipeline Data Hires Beene

Pipeline Data Processing, the wholesale division and wholly owned subsidiary of Pipeline Data Inc. appointed Jeffry A. Beene to Chief Compliance Officer. Beene will oversee all operational risk management functions including security, collection and credit underwriting. He has 15 years of security experience in the transaction processing industry.

He previously served as Senior Vice President of Risk Management for Bridgeview Payment Solutions; he has also worked at Genpass Technologies. Beene is currently the Vice Chairman of the Electronic Transactions Association's (ETA) Risk and Fraud Management Committee and is a founding member of ETA's Merchant Acquirers Committee.

Peoples Bancorp Names CEO

Robert E. Evans will retire as CEO of Peoples Bancorp Inc. and its banking subsidiary, Peoples Bank, National Association. Evans will continue as Chairman of the Board and a Director of both Peoples Bancorp and Peoples Bank. Current President and Chief Operating Officer Mark F. Bradley will succeed Evans as CEO. Bradley joined Peoples Bancorp in 1991, served as Controller of both Peoples Bancorp and Peoples Bank from 1997 to 2001, and also served as an Executive Vice President of Peoples Bancorp.

DuoCash Names VP, Technology Services

DuoCash Inc. appointed John Earle Vice President of Technology Services. The DuoCash Online Cash Network allows online and phone-order merchants to receive online payments from consumers who pay with credit or debit cards or electronic checking online by using DuoCash prepaid shopping cards. Earle has been with DuoCash for more than a year.

Sullivan Appointed Optimal Services Group President

Optimal Services Group Inc. appointed Brian J. Sullivan President. Sullivan has many years of experience within the global technology and service industries, including having held senior positions with NCR Canada Ltd. and AT&T GIS Canada Inc. Most recently, Sullivan served as President and CEO of NCR Canada.


  • The Gap Inc. plans to close 135 unprofitable Gap stores this year and will open up to 175 Old Navy and outlet stores instead.
  • Federated Department Stores, which owns the Bloomingdale's and Macy's chains, announced on Feb. 28, 2005 plans to buy May Department Stores, which operates chains such as Famous-Barr and Lord & Taylor, for about $11 billion. Federated also said it would expand the Macy's brand.
  • As part of a billion-dollar deal, 7-Eleven Inc. (U.S. 7-Eleven) will become a subsidiary of 7-Eleven Japan. Ito-Yokado controls 7-Eleven Japan, but the company plans to sell its 37.6% stake in the U.S. 7-Eleven to 7-Eleven Japan. The deal gives 7-Eleven Japan a 73.8% stake in the U.S. 7-Eleven company.
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