Innovative Aggregation Solution by Cardis International Addresses the Challenges of Durbin Amendment

By Cardis International, PRNE
Sunday, February 13, 2011

AMSTERDAM, February 14, 2011 - The Durbin Amendment in the US is putting the card payments business
model under significant pressure. With major revenue loss, especially on
higher value card transactions, it will be even more difficult for the banks
to provide attractive merchant fees for the huge number of low value payments
- everyday small purchases below $20, typically made in cash.

Processing costs for low value payments are prohibitive - Durbin could
make this worse The primary weakness of the current business model in
processing low value payments stems from the processing costs, which are
independent of the transaction amount, and incurred by the banks for each
individual transaction. These costs result in a transactional charge
associated with every payment that is prohibitively high for smaller
transaction amounts, making it unacceptable to the merchants. Maximum fees
under the new legislation are likely to become de facto fees for all
transactions, making low value payments even more expensive than today, and
having negative impact on merchant acceptance. The consumers may also be
negatively impacted as indicated by Mr. Dimon, the CEO of JPMorgan Chase
during the earnings call on January 14, 2011. Due to the significant revenue
loss the banks may increase charges for debit cards. Another adverse
consequence would be making 5% of current bank clients unbanked because the
banks will not be able to profitably serve them.

This creates a negative spiral with revenue loss driving reduced bank
investment in payment systems, thereby stifling innovation, unattractive
merchant and consumer fees reversing the current cash replacement trend, and
a larger part of the population being forced out of the financial system.
This negative spiral can be averted only by removing a significant portion of
the processing costs from the payment system, making low value payments
economically viable for all stakeholders. The existing model has reached the
limit where economies of scale and tweaks to the existing processes cannot
deliver the required results.

Cardis' aggregation solution makes low value payments economically viable
Cardis' innovative aggregation solution for low value payments reduces the
processing costs of the existing payment system by approximately 10 times and
enables a new business model which the industry needs to address the above
critical challenges. It supports all form factors including EMV cards,
contactless cards, mobile NFC phones, and uniquely supports both physical
retail and m/e-commerce payments.

"This fundamental rethink of the existing model is a great example of
effective innovation in the payments sector", said Nebo Djurdjevic, the CEO
of Cardis. "Like all good innovations the Cardis solution builds on the
current infrastructure and delivers significant improvement to the
performance of current payment products, allowing them to service very low
value payment transactions at a cost proportional to their value. It can
provide a stimulus for new growth, new channels, new merchants, and
complement advanced technologies including EMV, contactless, and mobile NFC."

Cardis is moving forward globally in a post Durbin environment

"The US is not an exception", continued Djurdjevic. "Regulatory
intervention impacting electronic payments profitability is a global
phenomenon, while, paradoxically, at the same time nearly all governments are
keen to see the demise of cash and paper transactions which still dominate
Low Value Payments. Cardis is the catalyst to make low value payments
economically viable in a post Durbin environment. In 2010 significant
interest in the Cardis solution was shown amongst banks, telcos and others in
Europe and North America, and there are already plans for at least one pilot
starting in 2011."

About Cardis:

Cardis provides a unique solution for low value payments with transaction
economics an order of magnitude better than the existing payment products.
The Cardis solution supports multiple implementation and business models that
provide true economic advantage to banks, payment schemes, payment processors
and mobile operators in the different eco-systems. It is a proven,
ready-to-market solution that can capture the cash replacement opportunity
for low value payments in POS, e-commerce and mobile environments. Cardis
Enterprises International BV is based in the Netherlands.

For more information, please visit

Contact Nebo Djurdjevic, +1-905-339-2665, nebo.d at

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