U.S. Bancorp Piper Jaffray Predicts Strong Growth in Payment Services Sector

Business Wire, Sept 28, 2000

Business Editors

NOTE TO EDITORS: The following is an investment opinion issued by

U.S. Bancorp Piper Jaffray

MINNEAPOLIS--(BUSINESS WIRE)--Sept. 28, 2000

U.S. Bancorp Piper Jaffray Vice President and Senior Financial Business Services Analyst Bradley A. Berning, today delivered insight into the emerging payment services payments sector in an 80 page industry report. In his report, Berning projects that the payment services market will grow significantly, from 22 percent of Personal Consumption Expenditures (PCE) in 1999 to 32 percent in 2003 and to 50.4 percent in 2010.

"In our view, we are on the verge of major changes in the electronic payments market, as electronic-payment systems displace legacy paper systems," said Berning. "Growth of electronic transactions will drive the number of payment transactions that have to be authorized, processed and settled. We expect many opportunities for payment services companies that provide these vital services. We believe companies that position themselves to either introduce or support the growth in electronic payment systems should post stronger earnings growth than the overall economy, providing compelling long-term investment opportunities. In addition, we believe that companies in this sector are attractive investment candidates due to their enviable business model, scalable infrastructures and predictable repeat-revenue streams."

Berning believes the fastest growing payment systems are electronic benefit transfers, debit cards and specialty systems. "We believe the segments best positioned in the near-term for continued conversion to electronic payment systems: grocery stores, convenience stores/gas stations and toll ways/ mass transit," said Berning. "These segments have historically relied heavily on paper-based payment methods and are now rapidly converting to electronic payment methods."

"In the payment services sector our top picks are Concord EFS (NASDAQ: CEFT - $34.50, a), First Data Corporation (NYSE: FDC - $39.94, a), American Express (NYSE: AXP - $59.56, a) and Equifax (NYSE: EFX, $25.25 a)," said Berning. "We believe each hold sustainable-competitive advantages over their competitors and dominate their respective target markets."

Berning's current research coverage includes both payment-services companies, as well as Credit Card companies including: MBNA Corporation (NYSE: KRB - $38.94, a) Capital One Financial Corporation (NYSE: COF - $66.84, a) Providian Financial Corp. (NYSE: PVN - $127.41, a) and Metris Companies (NYSE: MXT - $41.06, a)

For more information, please go to www.gotoanalysts.com.

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