Catuity CEO Predicts "Lifestyle" Credit Cards Trend of Future.

Business Editors

NEW YORK--(BUSINESS WIRE)--Jan. 14, 2002

New Loyalty Software advantages are discussed at Gridley & Company LLC 

Customer Relationship Management (CRM) Growth Conference in NYC 

Michael V. Howe, President and Chief Executive Officer of Catuity, Inc. (NASDAQ: CTTY; ASX: CAT) predicted that lifestyle credit and debit cards could become the credit cards of the future as banks and other card issuers seek ways to establish closer, more valued and profitable relationships between themselves, merchants and cardholders.

Howe's comments came during his presentation before participants at the Gridley & Company CRM/Needham Company Growth Conference, held at the Palace Hotel in New York recently.

During Howe's presentation (which can be accessed on the Internet at http://www.twst.com/econf/mm/needham/ctty.html or at www.catuity.com via a special link) he noted that credit card issuers currently market to customers on a mass basis and use interest rates as a differentiating tool. "This has become an increasingly costly and ineffective way to capture a small number of potential customers in today's economic environment. We believe that with the advent of software systems such as Catuity's, card issuers can provide targeted cards with loyalty and incentive programs pre-loaded on the cards geared specifically for a high value customer." Catuity has developed a software system that delivers loyalty rewards and incentives that can be accumulated and provided to the customer at the point of sale in real time by using either magnetic stripe or smart cards as the entry point or key to the system at the merchant POS.

"For example, a lifestyle card can be issued to a first-time homebuyer by the bank with whom that buyer has his or her mortgage. The card issuer, upon targeting the new homeowner market, can then go to merchants who wish to also serve this attractive segment of the market because of the lifestage they are entering as well as the buying power they represent, and work with those merchants to provide certain incentives and/or rewards for the user of that card." Howe said that Catuity believes that as smart cards expand in the U.S. this type of marketing will become more and more prevalent. "Consumers will like it because instead of carrying five to 10 loyalty cards for different merchants in their wallets, these same programs can be stored on one card for ease of use. Providing offers to valued cardholders that are both relevant and highly motivating is one of the most exciting and powerful methods available to issuers and their merchant partners."

Howe told participants at the conference that the benefits of these types of integrated programs, using software such as Catuity's, can impact the key measures of customer loyalty programs; improve customer retention rates; increase average spend; increase frequency of visit; secure new customers via referral. Bank issuers and their merchant partners can then effectively leverage their relationships through an integrated brand strategy across all channels (physical stores, Internet, telesales, catalog); differentiated targeted programs; timely data analysis; and easy entry at a low cost.

Catuity led off a number of presentations by CRM public companies, including Harte-Hanks, Inc., Acxiom Corporation, Alliance Data Systems, West Corporation, Digitas, Inc., Mosaic Group Inc. and Source Interlink Companies at the Gridley & Company CRM/Needham & Company Growth Conference.

Gridley & Company LLC is an affiliate of Needham & Company, Inc., a registered broker-dealer and NASD member. Gridley & Company is committed to delivering high quality, knowledge-based investment banking and strategic consulting services in targeted industry sectors that include Advertising and Marketing Services; IT and Business Process Outsourcing Services; Database/Information Services; and Internet Services. They are among the first investment bankers to focus on MA and other strategies around the themes of information based marketing and Customer Relationship Management (CRM).

Needham & Company is a full-service investment bank and institutional brokerage firm with offices in New York City, Boston, Menlo Park, California, and Portland, Oregon. In fulfilling the financial needs of growth-oriented domestic and international institutional money managers as well as corporate clients, Needham & Company has established itself as one of the premier specialty investment banking firms.

Catuity, Inc. is a leading provider of loyalty software systems. The Catuity software includes an integrated suite of applications that provide real-time loyalty, ticketing, access control and membership. The Catuity Loyalty System is ubiquitous in that it can operate on any device, any card program and with any payment process, including stored value, smart cards and wireless applications. Catuity unites the brick-and-mortar retailer with the Internet to enable cross-sell capabilities with consistent brand imaging across all channels. The Catuity loyalty system is currently the only loyalty software approved by Visa U.S.A. for use by its member banks that issue smart cards with loyalty applications.

In conjunction with the provisions of the "Safe Harbor" section of the Private Securities Litigation Reform Act of 1995, this release may contain forward-looking statements pertaining to future anticipated projected plans, performance and developments, as well as other statements relating to future operations. All such forward-looking statements are necessarily only estimates of future results and there can be no assurance that actual results will not materially differ from expectations. Further information on potential factors that could affect Catuity, Inc. is included in the Company's Form 10-K, which is filed with the U.S. Securities & Exchange Commission.