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A n n u a l R e p or t o n B C A A c t i v i t i e s a s p e r 3 0 N o v e m b e r 2 0 0 4 www.bankovnikarty.cz 2004 BCA - Bank Card Association (CR), Vodičkova 28, 110 00 Praha 1, phone: 224 162 433, fax: 224 162 434, www.bankovnikarty.cz Strana 1

Sdružení pro bankovní karty ČR (hereinafter referred to as the Bank Card Association (CR) or the BCA ) is an interest group of banks and other legal entities interested in development of payment cards in the Czech Republic and co-ordination of related activities. In the interest of its members, the BCA negotiates and cooperates with both domestic and international payment card organisations. The Bank Card Association (CR) was registered pursuant to Section 201i (2) of Act No. 47/92 Coll. under Ref. No. 22/92, at the Prague 1 District Office on September 14, 1992. Brief history The Czechoslovak banking business was liberalised in 1990. The Czechoslovak State Bank (SBČS) was relieved of tasks unrelated to the role of the central issuing house, and the tasks were transferred to newly established banks, i.e. Komerční Banka and Všeobecná Úverová Banka. In addition to the two banks, and having already existed Česká Spořitelna, Slovenská Sporitelna, Živnostenská Banka, and ČSOB, dozens of new financial institutions started providing their financial services to private and corporate clients. These principal changes also reflected in the banks' interest to provide their clients with modern financial services, including payment cards. However, as the country had been governed by planned economy for over 50 years, there was a lack of experience and information in the sector. For that reason, banks joined their efforts in order to establish a modern payment card system on the basis of foreign experience. For the technological processes to operate effectively, it was necessary to set up relevant infrastructure for payment cards. A proposal raised by Komerční Banka to establish a common infrastructure was accepted by Všeobecná Úverová Banka, Investiční Banka, Československá obchodní banka, Agrobanka, and Tatra Banka. A dedicated company, MUZO, was appointed to establish a card authorisation centre and to arrange tenders for delivery of ATMs, and subsequently payment terminals. Concentration of experts, capital resources, and technology in a single body has paid off. A modern and efficient system of payment cards was set up within less than 12 months' time at lower cost than there would have been incurred if the banks had built their systems individually. On February 4, 1991, the Interbank Payment Card Association was founded to co-ordinate the banks' activities. In February 1993, after the break-up of the Czech And Slovak Federative Republic, the Association was divided into Sdružení pro bankovní karty (ČR) (Bank Card Association (CR). BCA ) and Združenie pre bankové karty SR (Bank Card Association (SR), ZBK ), which continue to maintain very good mutual contacts. Organisational Structure and Members According to its Statutes, the Bank Card Association (CR) has two membership types. The full membership is only available to financial institutions, while other entities can be granted a status of Observers (such membership type can be also applied for by financial institutions not intending to take an active part in the entire range of the BCA activities). New members are admitted by the Association College meeting twice a year, which consists of representatives of all the full members. The voting rights are only granted to full members whose vote numbers are based on their market shares as of the end of the previous year. The College elects 7 members of the Executive Committee for a two-year term. The Executive Committee elects Chairman and Vice-Chairman among its members. The BCA's administrative body is the Office managed by Executive Director. The BCA establishes Working Groups for specific activities. At present, there are two Working Groups. i.e. Security Committee and a Statistics Group. 2004 BCA - Bank Card Association (CR), Vodičkova 28, 110 00 Praha 1, phone: 224 162 433, fax: 224 162 434, www.bankovnikarty.cz Strana 2

Executive Committee The Executive Committee ( EC ) manages activities of the Bank Card Association in the time between the College meetings. The Executive Committee usually meets on a monthly basis, and minutes taken at the meetings are distributed to all members. The present members of the EC are, according to the election of November 19, 2002, and additional election of a representative of Živnostenská Banka after termination of Union Banka's membership in 2003, representatives of the following banks: Česká spořitelna, a.s. Československá obchodní banka, a. s. ebanka, a.s. GE Capital Bank, a.s. HVB Bank Czech Republic, a.s. Komerční banka, a.s. Živnostenská banka, a.s. BCA Office The BCA Office is located at Vodičkova 28, Prague 1. The office hours are from 8:00 a.m. to 5:00 p.m. on Tuesday, Wednesday, and Thursday, and as agreed or needed 2004 BCA - Bank Card Association (CR), Vodičkova 28, 110 00 Praha 1, phone: 224 162 433, fax: 224 162 434, www.bankovnikarty.cz Strana 3

Bank Card Association (CR) Members and Contact Persons ABN AMRO Bank N.V. Lazarská 3 111 21 Praha 1 BAWAG Bank CZ a.s. Václavské nám. 40 110 00 Praha 1 BAW AG Internat ional Bank CZ a.s. Vítězná 126 150 21 Praha 5 CITIBANK, a.s. Evropská 178 166 40 Praha 6 COMMERZBANK Aktiengesellschaft Jugoslávská 1 120 21 PRAHA 2 Česká spořitelna, a.s. Bubenská 1 170 00 Praha 7 Československá obchodní banka, a. s. Na Příkopě 14, 115 20 Praha 1 Office: Revoluční 11, 110 00 Praha 1 Deutsche bank AG, pobočka Praha Jungmannova 34 P.O.Box 829, 111 21 Praha 1 ebanka, a.s. Na Příkopě 19 117 19 Praha 1 GE Capital Bank, a.s. Vyskočilova 1422/1a, 140 28 Praha 4 - Michle HVB Bank Czech Republic a.s. Václavské nám. 33, 110 05 Praha 1 ING Bank N.V. Nádražní 25, 150 00 Praha 5 J&T Banka a.s. Pobřežní 14 186 00 Praha 8 Komerční banka, a.s. P.O.Box 839 114 07 Praha 1 Oberbank AG, the Czech Republic Branch nám. P. Otakara II. 6/3 370 01 České Budějovice Raiffeisenbank, a.s. Olbrachtova 2006/9 140 21 Praha 4 Raiffeisenbank im Stift land eg Cheb, o.z., branch Kubelíkova 4, 350 11 Cheb Volksbank CZ, a.s. Payment Card Dpt. Lazarská 8/13 120 00 Praha 2 Živnostenská banka a.s. Na Příkopě 20 113 80 Praha 1 Michaela Stulíková tel.: 244 052 462, fax: 244 052 881 michaela.stulikova@cz.abnamro.com Ing. Zbyšek Troch tel.: 224 406 257, fax: 224 406 345 zbysek.troch@bawag.cz Veronika Bejšovcová tel.: 257 006 255, fax: 257 006 205 veronika.bejsovcova@bawag-bank.cz Ing. Milan Řezníček milan.rezn icek@cit icorp.com Monika Václavíková tel.: 221 193 322, fax: 221 193 329 monika.vaclavikova@commerzbank.cz Ing. Petr Forman tel.: 724 273 423, fax: 266 703 838 pforman@csas.cz Ing. Roman Kot lán tel.: 261 354 518, fax: 224 218 957 rkotlan@csob.cz Andrea Klímová tel.: 221 191 412, fax: 221 191 425 andrea.klimova@db.com Ondřej Moravec tel.: 222 115 612, fax: 222 115 585 omoravec@ebanka.cz Ing. Petr Psutka tel.: 224 444 008, fax: 224 441 764 petr.psutka@ge.com Ing. Štěpánka Lencová tel.: 221 118 800, fax: 221 118 835 stepanka.lencova@cz.hvb-cee.com Jana Matějíčková tel.: 221 866 293, fax: 221 866 179 Jana.Matejickova@ing.cz Ondřej Lakomý tel.: 221 710 255, fax: 221 710 211 lakomy@jtbank.cz Ing. Petr Skok tel.: 222 433 050, fax: 224 248 116 petr_skok@kb.cz Josef Kantor tel.: 386 710 252, fax: 386 356 747 josef.kantor@oberbank.at Ing. Pav la Kubová tel.: 221 141 864, fax: 221 142 864 pavla.kubova@rb.cz Ing. Zdeněk Sýkora tel.: 354 524 564, fax: 354 524 519 sykora@rbcheb.com Ivana Doškářová tel.: 221 969 927, fax: 221 969 950 doskarova.ivana@volksbank.cz Leoš Pokorný tel.: 224 125 301, fax: 224 127 474 pokornyl@ziba.cz 2004 BCA - Bank Card Association (CR), Vodičkova 28, 110 00 Praha 1, phone: 224 162 433, fax: 224 162 434, www.bankovnikarty.cz Strana 4

Observers Beneficial Finance Nádražní 23/344 151 34 Praha 5 CCS Česká společnost pro platební karty, a.s. Chlumčanského 5 180 21 Praha 8 CETELEM ČR, a.s. Letenská 2 118 00 Praha 1 Česká národní banka Payments Section Na Příkopě 28 115 03 Praha 1 Diners Club Czech, s.r.o. Široká 5/36 110 01 Praha 1 Euronet Services, spol. s r.o. IBC Pobřežní 3 186 00 Praha 8 Home Credit Finance a.s. Moravské nám. 8, 602 00 Brno Ovocný trh 1096/8, 117 19 Praha 1 MUZO, a.s. V Olšinách 626/80 100 00 Praha 10 Ing. Vlasta Beutlová tel.: 251 118 135, fax: 251 118 999 vlasta.beutlova@beneficial.cz Ing. Patrik Ďaďa tel.: 266 108 303, fax: 266 108 380 dada@ccs.cz Jan Pangerl tel.: 257 080 182, fax: 257 080 128 jan.pangerl@cetelem.cz JUDr. Michaela Žlebková tel.: 224 413 463, fax: 224 413 351 zlebkova@cnb.cz minovsky@cnb.cz Ing. Eva Kárníková tel.: 221 779 922, fax: 222 316 806 eva.karnikova@dinersclub.cz Ing. Zdeněk Přibyl tel.: 224 832 255, fax: 223 239 540 zpribyl@euronetworldwide.com Jan Pospíšil tel.: 222 115 271, fax: 222 115 585 pospisil@homecredit.cz Ing. Vlastimil Genčur tel.: 267 197 500, fax: 267 197 590 vgencur@muzo.com PVT, a.s., Kovanecká 30/2124 190 00 Praha 9 Ing. Zdeněk Janda tel.: 283 106 509, fax: 283 106 391 zdenek.janda@pvt.cz 2004 BCA - Bank Card Association (CR), Vodičkova 28, 110 00 Praha 1, phone: 224 162 433, fax: 224 162 434, www.bankovnikarty.cz Strana 5

BCA Activities The BCA activities cover the following five fields: Technology, Infrastructure, Fee Policy The Bank Card Association prepares and stipulates basic rules for operation of the technological infrastructure (particularly for banks co-operating with MUZO). On the BCA platform, a multilateral Agreement on Domestic Clearing of Payment Card Transactions has been concluded that ensures processing of non-accounting data on transactions made through MasterCard payment cards in the Czech Republic and their transmission to the CNB Processing Centre for purposes of the interbank clearing. In May 2003, the BCA College approved an Agreement on Rules for Issuance and Acceptance of Bank Hybrid Chipcards in the Czech Republic stipulating that a PIN Code will be obligatory for using those cards in domestic operations and that a back up use of a magnetic strip will not be permitted. Security Since its establishment, the BCA has been paying much attention to ensuring payment card security in the Czech Republic. The BCA regularly organises basic educational activities concerning prevention of payment card fraud, as well expert meetings on the topic in co-operation with international MasterCard, VISA, American Express, and Diners Club payment card schemes, the Czech Police, and the Slovak Bank Card Association. Based on the Security Committee's proposal, an Agreement on the Banks' Joint Procedure for Payment Card Acceptance at Business Partners has been agreed and signed, which stipulates basic rules for reduction of the risk of fraud upon payments made through the cards. The BCA is an important partner of the Czech Police and Security Departments of payment systems. For this purpose, the BCA has established the BCA Security Committee" significantly contributing to professional education, reduction of risk, and actual financial losses from fraud, as well as completion of evidence materials for the Police investigation and proceedings at court. The BCA Security Committee's activities also contributed significantly to maintaining control over the risk development in the mid nineties, and a radical reduction of payment card fraud in the Czech Republic since 2000. Co-Operation in the CR and EU Payment Legislation and Standardisation The BCA is a respected partner of the Czech National Bank and Czech Banking Association (Česká bankovní asociace) in creation of and commenting on legal standard drafts such as the Banking Act, the Payments Act, for the field of payment cards and electronic payment tools. The BCA is also addressed by other state institutions such as the Office for Protection of Competition seeking expertise in the field of payment cards. The BCA participates, through the Czech Banking Association, in co-operation with the EU bodies, particularly the European Payments Council and the European Committee for Banking Standards. Statistical Indicators Besides the payment card systems, the BCA is the only organisation in the Czech Republic collecting detailed statistical data concerning payment cards on the Czech market. The data summarised on a quarterly basis is an important background for market analyses prepared by member banks. In this field, the BCA also collaborates with relevant units of the CNB in their processing of statistics and preparing analyses and backgrounds for the EU bodies, BIS, etc. The details are also handed over to participating member banks, and summaries are available to the public and media inter alia through the BCA website. Educational and Social Activities The BCA arranges semiannually its expert seminars concerning current domestic and international issues related to payment cards for its members and invited partners. Speakers are experts from member banks, payment systems, and other organisations. They allow attendees to get the latest information needed for their activities, information on new products under preparation, and technological changes, if any, in the field of payment cards. The BCA also participates in organisation of special trainings prepared by the payment systems for their member banks in individual countries, as well as social and sporting activities. The traditional multi-competition Card Open organised on the two-year basis became a popular opportunity for card teams from banks and other institutions to compete also outside the field of business. 2004 BCA - Bank Card Association (CR), Vodičkova 28, 110 00 Praha 1, phone: 224 162 433, fax: 224 162 434, www.bankovnikarty.cz Strana 6

BCA Activity Results in Particular Fields in 2004 2004 BCA - Bank Card Association (CR), Vodičkova 28, 110 00 Praha 1, phone: 224 162 433, fax: 224 162 434, www.bankovnikarty.cz Strana 7

Technology, Infrastructure, Fee Policy - In connection with the forthcoming transfer of Czech VISA banks from the CEMEA to the EU region, the CA participated in preparation and registration of an agreement on keeping amounts of domestic interchange fees unchanged. - The BCA representatives participate regularly in VISA presentations for member banks on preparation of forthcoming changes in financing of Brand Marketing, and introduction of new products. In 2004, it was particularly a discussion on the new Cash Back product, which allows cardholders to ask for a limited cash amount upon their payment for goods. - In connection with previous discussions between the BCA Executive Committee and the Integrated Organisation of Blind and Weak-Sighted Persons (Sjednocená organizace nevidomých a slabozrakých) and with a current initiative of ČSOB, KB, and ČS, the Executive Committee negotiates potential installation of ATMs with communication equipment for blind persons. Such ATMs with an installed voice output (through a receiver) will allow the blind cardholders a more comfortable and safer use of banking services. The special ATMs will be installed, one by one, at places selected in agreement with the Integrated Organisation of Blind and Weak-Sighted Persons. - The BCA Executive Committee discussed, based on a MasterCard's decision to cancel the obligation to return any retained MC card to the Issuer, proposals for modification of domestic rules. As for Maestro cards, the Committee declared validity of the BCA College resolution of May 22, 2002, emphasising the following: From June 1, 2002, the Maestro cards issued by Czech member banks and retained in ATMs or at merchants of the Czech member banks shall not be returned to the issuing bank. The relevant processing bank, in the equipment of which the card was retained, will ensure the card liquidation in a standard way, and in the case of suspicion of any card alteration, will, if so decides, check the card parameters or data, and notify the Issuer. From June 1, 2002, the manipulation fee of CZK 50.00 will not be charged between the Czech member banks, and no premium will be paid for such card retention." As for the MC embossed cards, where there is a higher probability of more significant complaints, the MC Boards s resolution allows the following options: a) Not to return the card to the Issuer and have it shredded by the Acquirer; b) Keep the existing practice of returning the card to the Issuer, and charge a Collection Fee of CZK 50.00; c) Return the card to the Issuer without any fee (the fee is of low economic importance in comparison with the time consumption); d) According to a proposal of ČS and KB to keep the card for a specific period of time and then shred it unless the Issuer asks for it After discussions variants b) or c) were chosen from the economy and risk viewpoints, which will be submitted by the Executive Committee to the College for decision. 2004 BCA - Bank Card Association (CR), Vodičkova 28, 110 00 Praha 1, phone: 224 162 433, fax: 224 162 434, www.bankovnikarty.cz Strana 8

Safety and Security, Fraud Prevention Broad co-operation in the extremely important field of card transaction protection against fraudulent manipulation is the responsibility of the BCA Security Committee whose members are representatives of organisations taking part in card operations in the CR. The Security Committee co-operates with workers of the respective departments of particular payment card issuers and card transaction operators, with the security departments of international card associations such as MasterCard, Visa, American Express and Diners Club and the Czech Police. The plenum of the Security Committee regularly meets once a month; to provide solution to actual frauds in the field of payment cards it establishes Task Forces for specified purposes. The Security Committee monitors the situation from the viewpoint of the payment card security in the CR and subsequently prepares, recommends and co-ordinates effective activities in order to prevent and fight against fraud. It closely co-operates with a similar committee of the Slovak Association for Bank Cards. The Committees organise together, once in the CR and the next year in the SR, Security Seminars which are attended by representatives of the respective departments of MasterCard, Visa and Police of the Czech and Slovak Republics. In 2004, the Security Seminar took place in Lednice in the period from April 28 to April 30 (80 participants). SC representatives also gave lectures at two seminars organised by the Czech Police (SKPV OHK Západočeský and Severočeský regions) and a seminar organised by the Police Presidium (IMZ) and gave lectures to the students of the Police University; in August together with VISA Security they arranged a Briefing for the Czech Police (ÚOOZ and Praha město). This year, Security Committee activities were awarded by the VISA association: Summary characteristics of payment card security in the CR in the period from 2001 to 2003 Year 2000 2001 2002 2003 Basis Points 0.15 0.073 0.057 0.064 Notes: The Basis Point is a value showing the amount of fraudu lent transactions reg istered by acquiring or issu ing banks related to the respective total registered amount of transactions made by payment cards. In the case given it concerns transactions of type payment by card" (Sales/Purchase) made in the respective year at commercial outlets in the Czech Republic by cards of both domestic and foreign issuers. Thus it does not include fraudulent cash withdrawals from ATMs, or at bank counters. The calculation was made on the basis of official statistics of VISA and MasterCard associations and the BCA. 2004 BCA - Bank Card Association (CR), Vodičkova 28, 110 00 Praha 1, phone: 224 162 433, fax: 224 162 434, www.bankovnikarty.cz Strana 9

Co-Operation in the Field of Legislation and Standardisation of Payments in the CR and EU In accordance with a written agreement on co-operation between the BCA and the Czech Banking Association (CBA) the representative of the BCA the BCA Executive Director is a standing guest of the Committee for Payments (CP) and the Expert Group for Payment Card Security of the Committee for CBA Security. In accordance with the same agreement the BCA representative also represents the Czech Banking Association and the BCA in the Technical Steering Committee (TSC) of the European Committee for Banking Standards (ECBS). M. Zátka regularly attends meetings of the Committee for Payments of the Czech Banking Association and of the Expert Group for Payment Card Security of the Committee for CBA Security. The Committee for Payments of the Czech Banking Association covers participation of the Czech banking community in activities of the European Payments Council, which is the controlling and executive body for implementation of the SEPA (Single European Payments Area), unified environment for payments in the Euro area. Presently there are intensive negotiations among the ECBS, EPC and the ECB (European Central Bank) about changes, or integration of organisational structures of the EPC and the ECBS in order to support and speed up the establishment of the SEPA to maximum. The ECB as regulator of European banking is the main initiator of the SEPA who is intensively pushing for the fastest implementation. The field of payment cards is, in addition to cash, financial transfers and direct debit, one of the main topics on which the activities of the EPC and the ECBS Working Groups are focused. Besides Working Groups (WG) there are also Service Groups (SG) such as SG Legal and SG OITS Organisation, Infrastructure, Technology, Standards. According to the latest decision of the EPC all EU member countries are entitled to nominate their representatives to these groups in order to participate pro-actively in their work. Via the Committee for Payments of the Czech Banking Association the Czech Republic nominated its representatives to the WG Cash, WG Direct Debit and Credit Transfer, and is weighing nomination to the SG OITS while the Czech Banking Association is considering nomination to the SG Legal. The request for nomination of a representative to the WG Cards was submitted by the Committee for Payments of the Czech Banking Association to the BCA. The proposal for nomination submitted to BCA members has not brought any result. Statements of particular banks are different: from representation via the BCA, which would require an increase in budget and thus the contribution for operation, to giving up their representation presently. On May 11 and September 16 negotiations of the TSC of the ECBS in Brussels took place, from which concrete suggestions, questions and requirements for statements for the Czech Republic arise, which are consulted in the Executive Committee of the BCA and the Committee for Payments of the Czech Banking Assotiation. Detailed information about activities of this body was prepared and distributed as Attachments to minutes of the Executive Committee. Furthermore, the BCA in co-operation with the Czech Banking Association participated in a debate on a CNB Decree on Making Payments and a CNB proposal for Interpretation of the Law on Payments (in Section 3 Electronic Means of Payment). The BCA also co-operates in the field of legislation with the Financial Arbitrator of the CR, issuer of the ASPI legal database and the legal association Central European Advisory Group. BCA Statistics Statistical data in an aggregated format is regularly published on the BCA website www.bankovnikarty.cz Detailed data is pursuant to the BCA Statutes (Para. 6.1.1) intended only for internal needs of contributing members. BCA members shall not publish information about other banks. Thus in this connection a question arises whether such confidentiality continues to be justified with regard to the fact that particular issuers usually make their information public. The Executive Committee continues to hold negotiations about completion of statistics by data of non-banking issuers credit organisations. On the basis of negotiations with the Finance Director of GE Multiservis the basic structure of this data was proposed and preliminary approved by non-banking issuers. However, detailed format and contents of particular items have not been approved, the negotiations continue. In ČS a.s. which provides for technical preparation of statistics there were some changes in their staff in 2004, presently statistical files are prepared by Mr. David Lacyk. 2004 BCA - Bank Card Association (CR), Vodičkova 28, 110 00 Praha 1, phone: 224 162 433, fax: 224 162 434, www.bankovnikarty.cz Strana 10

BCA Aggregated statistics for the 3rd Quarter 2004 - part 1 2004 BCA - Bank Card Association (CR), Vodičkova 28, 110 00 Praha 1, phone: 224 162 433, fax: 224 162 434, www.bankovnikarty.cz Strana 11

BCA Aggregated statistics for the 3rd Quarter 2004 - part 2 2004 BCA - Bank Card Association (CR), Vodičkova 28, 110 00 Praha 1, phone: 224 162 433, fax: 224 162 434, www.bankovnikarty.cz Strana 12

Training, Promotion, Education The main activities supported by significant participation of members consist of spring and autumn working seminars focused on specified topics, which are organised every year. In the last few years the Seminars as set out below took place: 23. - 24.05.2000 Špindlerův Mlýn, Hromovka 21. - 22.11.2000 Špindlerův Mlýn, Harmony Club 15. - 16.05.2001 Hluboká Štekl 23. - 24.10.2001 Teplá u Mariánských Lázní Klášter Premonstrátů 21. - 22.05.2002 Zvole nad Pernštejnem Šiklův Mlýn 19. - 20.11.2002 Hrubá Skála Zámek Hrubá Skála 06. - 07.05.2003 Měřín VLRZ Měřín 02. - 03.12.2003 Znojmo Prestige 18. - 19.05.2004 Hradec Králové Černigov 07. - 08.12.2004 Mariánské Lázně Monty In addition to these own activities the BCA takes part in organising other seminars and social actions and participates with its representatives in expert conferences. In 2004, there were in particular the following activities: - 03.02.04 Fair Wincor Nixdorf in Paderborn (Germany) - 24.03.04 Presentation of the European Banking Association in Prague - 04.04 VISA Forum in Prague - 19.-20.04.04 Co-operation in the field of marketing in the preparation of the "Banking on Cards 2004" conference (Marcus Evans) - 02.11.04 VISA Forum in Prague - 02. 03.12.2004 Co-operation in the field of marketing in the preparation "Consumer Finance in CESEE" conference The BCA Office provides information about the market and structure of payment cards in the CR to a number of world analytical organisations which prepare studies about Central and Eastern Europe. Recently information has been given to the institutions set out below: - University of California (Credit Cards in Central and Eastern Europe) - Snapshots London (CR Cards Research 2004) - Mars & Co, Paris - European Privatization and Investments Corp. - CPP Group, Plc, London. The BCA also participates in activities to popularise the Association. In 2004, there were radio interviews (Regina, Čro 1 Radiožurnál, ), information for the Czech Press Agency, HN, Bankovnictví, participation in TV news (ČT 1) and Breakfast with Nova. 2004 BCA - Bank Card Association (CR), Vodičkova 28, 110 00 Praha 1, phone: 224 162 433, fax: 224 162 434, www.bankovnikarty.cz Strana 13

An important information tool is the website of the Association: www.bankovnikarty.cz and magazine CardMag www.cardmag.cz. In 2004, the administration of domains was transferred from the original administrator Tesco SW, where dificulties were due to long updating and correction terms, to a new administrator, P.F.K. Service Praha, which provides for operative management of the form and contents of pages. Both new graphical appearance and technical execution of sites was established, websites are continuously updated. Rate of Visits as of November 28, 2004: www.bankovnikarty.cz Established on: 25.07.2004 02:05:19 Latest access: 28.11.2004 15:28:38 www.cardmag.cz Established on: 25.07.2004 02:05:19 Latest access: 28.11.2004 15:35:02 Total contacts to access: 5,044 Total sessions: 2,500 Total contacts to access: 850 Total sessions: 436 It is statistics after a new system of registration of access to the web sites of both presentations has been installed. Total number of contacts to access www.bankovnikarty.cz from the date of operation in 2003 in version 1 (Tesco SW) as of November 29, 2004 is some 14,800. Registered contacts to the site upon the new version implementation are as the following: Month 08/2004 09/2004 10/2004 11/2004 (til 28.11.04) Number of access 1,258 1,083 1,156 1,169 Internet magazine of the BCA, "Card Mag" is issued quarterly. It summarises info from Internet and hard copy publications and other resources concerning payment cards and related branches. 2004 BCA - Bank Card Association (CR), Vodičkova 28, 110 00 Praha 1, phone: 224 162 433, fax: 224 162 434, www.bankovnikarty.cz Strana 14

Phare Training Programme In connection to activities in the Committee for Payments of the Czech Banking Association, the BCA also participated in the preparation of Phare training programme "Implementation of EU Payment Systems Standards which focused on payment cards. The management and implementation of the training programme (mostly financed from PHARE resources) intended for Czech banking specialists in the field of payments is the responsibility of a three member consortium: - IFB Instituto de Formacao Bancaria (The Portugese Bank Training Institute), - BBA Belgian Bankers Academy / Belgian Bankers' Association - KPMG Česká Republika, s.r.o. The contents of the training prepared by the Consortium was discussed on March 3, 2004 in the so-called Focus Group consisting of members of the CBA representatives, Czech banks members of the Committee for Payments (with participation of the BCA representative, M. Zátka), representatives of the IFB and KPMG. The training was organised for two groups of audience: - Top Managers and Payment System Specialists, - Transfer Officers The training focused on the following topics: - EU payment System Legislation - Czech Payment Systems Legislation and Realities - EU Standards and Trends in Credit Transfers and Direct Debits - EU Standards and Trends in Electronic and Mobile Channels - EU Standards and Trends in Payment Cards. The group of lecturers consisting mainly of IFB and BBA employees were completed by Czech representatives, inter alia, current or active representatives of the BCA such as Pavel Juřík, František Tomášek, and Milan Zátka. The training of the Phare programme took place in the period from September to November 2004; employees of nine banks, the Ministry of Finance, the Czech National Bank, and the Financial Arbitrator were registered. 2004 BCA - Bank Card Association (CR), Vodičkova 28, 110 00 Praha 1, phone: 224 162 433, fax: 224 162 434, www.bankovnikarty.cz Strana 15

Vision of Further BCA Activities: Continue and extend activities in standard fields of common and non-competitive interest of banking and non-banking organisations operating in the industry of payment cards: - continue and develop co-operation with MC and VISA associations, providers of technical services and operators of acceptance networks of ATMs and EFT POS, - in co-operation with the Czech Banking Association participate in activities of the Committee for Payments, Committee for Security and Representation of the CR in the ESBC Technical Steering Committee, - participate in the preparation of potential agreements on domestic interbank fees and rules, - harmonise BCA statistics with those of card associations and the EPC EU, and complete data about nonbanking credit cards, - co-operate with the Czech Banking Association and CNB in implementation and interpretation of EU legislative standards applicable to the field of payment cards, - monitor and participate in the development of converence of banking services and services of mobile operators, - further emphasize the activities and position of the BCA in the Czech market of payment cards and payments both in relation to expert institutions and the general public. In 2005, a basic part of the plan of activities shall be the arrangement of the spring and autumn seminars. Other activities will be carried out operationally according to topics, in particular in connection to EU membership and representation in EPC and ECBS bodies (new legislation of payments within the SEPA - New Legal Framework, European payment card). In 2005, another year of traditional sport multi-discipline "Card Open" will be arranged. Furthermore, the administration and format of the website, www.bankovnikarty.cz, will be improved with respect to expeditious updating of data and the use of website to receive fees for advertising. The separate website of the Executive Committee of the BCA focused on the security of using payment cards is being prepared. The payment card magazine of the BCA, CardMag, will continue to be issued on a quarterly basis. 2004 BCA - Bank Card Association (CR), Vodičkova 28, 110 00 Praha 1, phone: 224 162 433, fax: 224 162 434, www.bankovnikarty.cz Strana 16

Preliminary Income Statement Summary Bank Card Association 2004 and Outlook for 2005 2004 BCA - Bank Card Association (CR), Vodičkova 28, 110 00 Praha 1, phone: 224 162 433, fax: 224 162 434, www.bankovnikarty.cz Strana 17

Assumed Financial Results of 2004 Balance (cash and current account) as of January 1, 2004 47,986.34 I N C O M E Income from membership and participation fees Annual service fees 1,155,000.00 Entry fee 50,000.00 Participation fee for BCA seminars 276,245.36 Total 1,481,245.36 Income from advertising BCA seminar 20,000.00 Total 20,000.00 Financial income Interest income (bank - current account) 448.98 Total 448.98 T O T A L I N C O M E 1,549,680.68 E X P E N S E S Investments Hardware 66,224.05 Total 66,224.05 Operating expenses Rent of office incl. el. energy and cleaning 180,000.00 Telecommunication fees 38,000.00 Office material 20,000.00 Services (SW maintenance, graphics, internet presentation) 220,000.00 Traveller s costs 53,000.00 Advertising and promotion items 130,000.00 Other operating expenses (postage, refreshment, etc.) 20,000.00 Total 661,000.00 Wages Wages 212,000.00 Premium 100,000.00 Meal vouchers 7,000.00 Total 319,000.00 BCA, EC seminars BCA seminar spring 187,033.60 BCA SC seminar 37,122.50 BCA seminar autumn 150,000.00 Total 374,156.10 Financial costs Interest expense (bank current account) 1,586.00 Total 1,586.00 TOTAL COSTS 1,421,966.15 Balance 2004 - Assumed 127,714.53 2004 BCA - Bank Card Association (CR), Vodičkova 28, 110 00 Praha 1, phone: 224 162 433, fax: 224 162 434, www.bankovnikarty.cz Strana 18

Assumed Financial Results of 2005 Balance (cash and current account) as of January 1, 2005 127,714.53 I N C O M E Income from membership and participation fees Annual service fees 1,404,000.00 Entry fee 0.00 Participation fee for BCA seminars 350,000.00 Total 1,754,000.00 Income from advertising BCA web 60,000.00 Total 60,000.00 Financial income Interest income (bank - current account) 448.98 Total 448.98 T O T A L I N C O M E 1,942,163.51 E X P E N S E S Investments Hardware 50,000.00 Furniture 20,000.00 Total 70,000.00 Operating expenses Rent of office incl. el. energy and cleaning 200,000.00 Telecommunication fees 40,000.00 Office material 20,000.00 Services (SW maintenance, graphics, internet presentation) 350,000.00 Traveller s costs 75,000.00 Advertising and promotion items 50,000.00 Other operating expenses (postage, refreshment, etc.) 20,000.00 Total 755,000.00 Wages Wages 424,000.00 Premium 200,000.00 Meal vouchers 14,000.00 Total 638,000.00 BCA, EC seminars BCA seminar spring 150,000.00 BCA SC seminar 50,000.00 BCA seminar autumn 150,000.00 Card Open 50,000.00 Total 400,000.00 Financial costs Interest expense (bank current account) 1,586.00 Total 1,586.00 TOTAL COSTS 1,864,586.00 Balance 2005 - Assumed 77,577.51 2004 BCA - Bank Card Association (CR), Vodičkova 28, 110 00 Praha 1, phone: 224 162 433, fax: 224 162 434, www.bankovnikarty.cz Strana 19

Bank Card Association (CR) - 2004 Annual Report Editorial Board: Publisher: Published by: Roman Kotlán - rkotlan@csob.cz Milan Zátka - milan.zatka@bankovnikarty.cz Pavel Kryka - pfk@pfk.cz Sdružení pro bankovní karty ČR Sdružení pro bankovní karty ČR Date: November 30, 2004 2004 BCA - Bank Card Association (CR), Vodičkova 28, 110 00 Praha 1, phone: 224 162 433, fax: 224 162 434, www.bankovnikarty.cz Strana 20