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Industry Update

NEWS

Consumers Prefer to Earn Cash Rewards With Debit Cards

A recent survey of consumers interested in loyalty and rewards programs found that 67% of respondents prefer to receive cash rewards rather than merchandise. Marketing services provider CoolSavings Inc. found that 26% of consumers prefer to accumulate rewards as points redeemable for merchandise, while 6% prefer to accumulate miles for travel. The survey also found that consumers want flexibility when redeeming points, with 57% selecting a debit card as the "best way to redeem rewards that have been accumulated." This compares with 28% who prefer a gift certificate, and another 15% who prefer a voucher for free groceries.

Some Consumers Switch Banks Due to Identity Theft, Research Finds

A report by research and advisory firm Financial Insights analyzed the impact identity theft has on consumers and their banking and online behaviors. Close to 60% of U.S. consumers expressed concern about identity theft, and close to 6% admitted switching banks to reduce their risk of becoming victims. For more information visit www.financial-insights.com .

MasterCard and Visa Agree to a Common Contactless Communications Protocol

MasterCard International and Visa International reached an agreement to share a common communications protocol and associated testing requirements for radio frequency-based contactless payments at the point of sale. Cards and terminals supporting MasterCard and Visa contactless payment applications will now conform to the same communications protocol and undergo equivalent testing.

RelyData Offers Free Services to ChoicePoint Data Breach Victims

In an effort to combat identity theft, RelyData LLC will provide, for free, its identity theft resolution service to all affected by the recent ChoicePoint data breach. ChoicePoint has provided victims of the breach with credit reports and credit monitoring. RelyData will provide people who discover that they have become victims of identity theft with its resolution service.

Visa Gets a New Look

Visa International plans to change its brand identity, including a new look for the Visa logo and changes to card design features. Visa will move the dove hologram on the front of the card to the back and will integrate it with the magnetic stripe, allowing a larger part of the front to be used for issuer designs. Visa is planning a gradual transition, with card changes taking place over the next three years. Visa will provide new brand guidelines to member banks and card manufacturers in June. Starting in late 2005, banks can begin issuing new cards with the updated design and format, while merchants can replace Visa signage.

ANNOUNCEMENTS

AIRCHARGE Meets CISP Compliance

AIRCHARGE J2ME software is now in compliance with Visa U.S.A.'s Cardholder Information Security Program (CISP) Payment Application Best Practices requirements. AIRCHARGE developed the first software for wireless payment applications that is in full compliance with Visa's CISP.

Astoria Federal Savings Signs Extension With Metavante

Astoria Federal Savings signed a long-term contract extension with Metavante Corp. to continue as its financial technology services provider. In addition, Astoria renewed its contract with NYCE Corp., a Metavante company, for data processing and electronic funds transfer marketing services. Advanced Financial Solutions, a Metavante company, is providing image capture and check payment processing capabilities.

Authorize.Net Validates Compliance Certification

Authorize.Net Corp. recently completed a Multi-Card Compliance Program certification audit. As a result, Authorize.Net has re-validated its compliance with Visa's CISP and validated its compliance with MasterCard's Site Data Protection, Discover's Information Security and Compliance, and Visa Canada Account Information Security.

Global Payments Certifies Datawire's VXN

Datawire received certification for its VXN with Global Payments Inc. The VXN is a transaction delivery network for moving real-time data such as financial transactions over the public Internet.

EMG Opens Spokane Office

Eliot Management Group's (EMG) 16th branch office is open in Spokane, Wash. This location will continue EMG's northwest territory expansion. The company's goal is to secure office space in all EMG markets where EMG personnel can provide local sales and service. The company also launched a new corporate Web site as part of a re-branding effort.

ETA's Vendor of the Year Nominations

The Electronic Transactions Association (ETA) announced nominations for Vendor of the Year. ETA presents this award to a member company that has demonstrated overwhelming support of ETA throughout the past year, based on company wide involvement, volunteer support and financial commitment to furthering the association's goals and objectives. The nominees include Ambiron LLC; AmericaOne Payment Systems Inc.; CrossCheck Inc.; First Data Corp.; Hypercom Corp.; National Processing Co.; Retriever Payment Systems; and VeriFone Inc.

First Data Processing for Burger King Canada

First Data now processes card payments at 123 corporate-owned Burger King restaurants throughout Canada. Burger King Canada is the largest merchant in Canada to incorporate the MasterCard Quick Payment Service program.

Hypercom Receives $6 Million+ Order

New Zealand distributor Provenco Group Limited will purchase thousands of EMV-compliant Hypercom card payment devices for more than $6.7 million over the next two years. The agreement celebrates the companies' 20-year relationship.

Ingenico Achieves DataWave and Locus Certifications

DataWave Systems Inc. certified Ingenico Corp.'s Elite 710 terminal with DataWave's prepaid long distance, cellular PIN and other prepaid products. Locus Telecommunications certified the Elite 710 for its POS distribution system, LOPEDS.

Keycorp Contactless Technology Selected for Taiwan

Keycorp Limited's MULTOS contactless smartcard product was selected for a new multifunction card project for banking and transit in Taiwan. The TaiwanMoney Card will be used for a transportation system serving residents in seven cities. The all-in-one payment card will combine MasterCard credit, debit, Mondex stored-value features, access to the Cirrus global ATM network and the MasterCard PayPass contactless functions.

OneLynk Alliance Grows

RBS Lynk signed Midwest POS Solutions to the OneLynk Alliance, RBS Lynk's value-added reseller program. As part of the OneLynk Alliance, Midwest POS will offer RBS Lynk's payment processing services to its customers.

Precidia POSLynx Receives Certification

Precidia Technologies announced certification of its POSLynx400 retail router for First Data Merchant Services' CARDnet/North and TeleCheck hosts. The POSLynx connects dial-based terminals to the Internet through DSL or other broadband networks.

Mobile Phone POS Earns Certification

Visa awarded WAY Systems Inc. PIN entry-device (PED) certification for its MTT1500Debit phone-based POS terminal. The MTT1500D is the only mobile phone-based POS terminal certified to process PIN debit transactions.

PARTNERSHIPS

Boise Clearing House Chooses NCHA

The Boise Clearing House Association selected The National Clearing House (NCHA) to provide automated net settlement services that will bring its check exchange members operational efficiencies and reduced settlement risk. This move also positions Boise members to take advantage of NCHA Check 21 solutions, including image exchange settlement and image replacement document printing, which the association provides to all NCHA members and settlement services customers.

CommercialWare Partners With CardinalCommerce

CardinalCommerce Corp. and CommercialWare Inc. formed an agreement through which CommercialWare will recommend the Cardinal Centinel payer authentication software to its customers who participate in the 3-D Secure programs, Verified by Visa and MasterCard SecureCode. CardinalCommerce currently provides authentication services through its patent-pending Cardinal Centinel 3-D Secure MPI, to more than 18,000 online merchants.

Ruesch Int'l. and CardSystems Partner

Ruesch International Inc. entered into an agreement with CardSystems Solutions Inc. Ruesch International clients will be able to leverage a single source provider for all credit card payment processing needs by using CardSystems' credit card processing technologies.

Ernex, Moneris and Siva Form Alliance

SIVA Corp. will integrate Ernex's loyalty and gift card functionality and Moneris USA's credit and debit interface into SIVA's POS application. The companies will then co-market the turnkey solution to the restaurant industry.

Ingenico Partners With Q Comm

Q Comm International Inc. is developing its prepaid application to run on Ingenico's multi-application terminals. Ingenico is offering Q Comm's suite of prepaid products as part of its Preferred Partner Program.

TeleCash Chooses Ingrian Networks

TeleCash selected Ingrian Networks' IDataSecure Platforms as an additional layer of security for the privacy and protection of credit card data. With Ingrian, TeleCash adds capabilities for intelligently encrypting and securing critical data in applications and databases, and ensuring that data remain protected from internal and external threats.

IRN Forms Alliance With WAY Systems

IRN Payment Systems formed a strategic alliance with WAY Systems to offer a mobile phone-based POS solution to merchants seeking a secure, online mobile payment solution. WAY Systems MTT terminals target mobile merchants who cannot process secure real-time transactions because of the lack or high cost of telephone line infrastructure, as well as the insufficient global wireless coverage.

Q Comm Secures Leap Contract

Q Comm International announced a contract with Leap Wireless International Inc. to install the q xpress 200 POS terminal in more than 1,000 Cricket-owned stores and third-party authorized dealers nationwide. Cricket Communications Inc., provider of unlimited local and long distance wireless services, is Leap's operating subsidiary.

New Edge Networks Establishes Direct Connection to Paymentech

New Edge Networks established an interconnection agreement with Paymentech LP. New Edge Networks will create and maintain redundant high-speed connections directly to Paymentech for secure card transactions over a private network. Previously, merchants needed to establish their own direct connections to the payment processor through an intermediate host location, a payment gateway or over the public Internet.

TeacherBuilder.com and Payment Data Systems Form Agreement

Payment Data Systems Inc. and TeacherBuilder.com signed a multi-year payment processing agreement. TeacherBuilder.com helps Texas school districts and educators achieve compliance with the No Child Left Behind Act by providing continuing education via the Web.

Retriever Uses VeriFone at Reliant Park

Retriever Payment Systems is deploying the new VeriFone Vx 610 wireless payment solution at the Reliant Park events complex. Retriever implemented the deployment with VeriFone Connect. The Vx 610 with VeriFone Connect CDMA Service bundles everything necessary to begin selling wireless POS, including account set up, activation, deployment, monthly Verizon wireless service, help desk support and terminal management and billing.

Velocita Wireless Preferred by AAA

Velocita Wireless LP entered into a preferred supplier agreement with the American Automobile Association (AAA). Velocita Wireless will market its wireless data communications services, in conjunction with AAA, to local AAA clubs using computer-aided dispatching systems.

MERGERS & ACQUISITIONS

Ambiron and TrustWave Merge

Ambiron LLC and TrustWave Corp. merged. The combined company provides data security and compliance services to more than 25,000 businesses. Robert J. McCullen, co-founder and managing partner of Ambiron, becomes Chief Executive Officer. Joseph Patanella, founder of TrustWave and most recently its President and Chief Operating Officer, becomes President of the combined company. Ambiron's Vital Signs and TrustWave's Trustkeeper will continue operations with no immediate service change.

The combined company will operate under the Ambiron name in the payments industry; the company will continue to use the TrustWave name in the financial services, government and health care markets. Chicago will serve as the company's headquarters. The TrustWave Annapolis, Md. office will serve as the company's East Coast headquarters and product development division.

Pipeline Data to Acquire Charge.com

Pipeline Data Inc. recently signed a letter of intent to acquire e-commerce merchant acquirer Charge.com for $7.5 million in cash, $3.5 million in the form of a promissory note, 5 million shares of Pipeline common stock, and an additional 1 million shares of Pipeline common stock based on Charge.com fulfilling certain performance requirements. With the acquisition, Pipeline will service more than 25,000 accounts. The company expects the combined entity to generate more than 1,000 new merchant accounts monthly.

HIMC Acquires Fast Transact

HIMC Corp. will acquire Fast Transact Inc. Founded in 2002, Fast Transact provides integrated electronic payment technologies for accepting, authorizing, securing and processing credit card, check and gift card payments for retail and Internet merchants.

TNB Buys Four Portfolios

TNB Card Services purchased the credit card portfolios of four credit unions and will operate the card programs through its agent issuer organization. Best of Iowa Credit Union, Advantage Plus Federal Credit Union, Bluebonnet Federal Credit Union and Texas Federal Credit Union sold their portfolios. TNB has purchased more than 55 portfolios since it began the agent issuer program in 2002.

APPOINTMENTS

Banks Elected to ETA Board of Directors

Roy Banks, President of Authorize.Net Corp., a service of Lightbridge Inc., was elected to ETA's Board of Directors. Banks joined Authorize.Net in 1999 as Vice President of Business Development. The company promoted him to Vice President and General Manager in January 2000 and to President in October 2004.

Alliance Digital Media Names Senior VP

Alliance Digital Media Group named Eric Bauman Senior Vice President of Sales in North America. Bauman, a veteran of the international sales and telecommunications industry, has already installed a national sales force including an eastern regional Vice President of Sales and five regional Directors.

Ceto and Associates Appoints Callahan Senior VP

Consulting firm Ceto and Associates appointed Terry Callahan Senior Vice President. In this position, Callahan is responsible for creating and developing client relationships. Callahan has 25 years of banking and consulting experience. Prior to joining Ceto and Associates, he held strategy and consulting positions at BNK Advisory Group and Midwest Area. Additionally, Callahan served as Senior Chief of the Dallas Federal Deposit Insurance Corp. (FDIC) and also as Vice President of Frost City Bank.

WAY Systems Welcomes Lewis, Festa

WAY Systems appointed Gregory Lewis to President and COO of the WAY North American Group. Lewis began his 30-year payments industry career with Texaco Credit Card Division as Operations Manager, and later as Vice President of Credit Card Services for National Data Corp. (NDC). Lewis also played a role in the payment terminals market for NDC; he created the National Electronic Transaction System (NETS), the nation's first retail POS system. As a founding executive with VeriFone, Lewis served in a number of positions during the company's startup phase. VeriFone eventually appointed him Senior Vice President and General Manager for North America. Lewis also served as President and CEO of Checkmate Inc.

Connie Festa is the new Director of Sales, Strategic Accounts, for WAY Systems. Festa joins WAY Systems with more than 25 years of global sales and management experience in the high technology and payments industries. She has directed the operations of numerous sales and customer service organizations in the financial services and retail industries. Festa has served on ETA's Planning Committee for six years, and helped found ETA's Technology Committee in 1999.

Phillips Named President of Independent Sales Services

TransFirst Holdings Inc. named Andrew Phillips Senior Vice President and President of TransFirst's Independent Sales Services Division. Previously, Phillips served as President of TransFirst's Payment Resources Division. In his new role, he will focus on marketing and sales strategies for TransFirst's Independent Sales Division. Phillips founded Payment Resources International Inc., which TransFirst acquired in 2004.

He also owned and operated several payment processing related companies including CheckRite and Integrated Transaction Services.

BOTTOM LINES

  • Drive-thru patrons at select McDonald's Restaurants in the Pacific Northwest will now have their orders taken by a company in North Dakota, who will relay the information back to the local establishment. The idea is to cut down on mistakes at the drive-thru window.
  • Toys "R" Us Inc. will be acquired for $6.6 billion by an investment group.
  • Shareholders of Kmart Holdings agreed to a $12.3 billion acquisition of Sears Roebuck and Co., which clears the way for the merger.
  • Disney Store North America is expanding into the retail outlet arena. The first store opened in New York at the end of March 2005, and the company has plans for stores in California, Arizona, Illinois, Tennessee and Ontario, Canada by the end of the year.
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