Catuity Receives Notice of Allowance on Major U.S. Patent; Third in Patent Stream from Innovative Loyalty Software Solutions Company.

Business Editors

DETROIT--(BUSINESS WIRE)--Jan. 13, 2003

Catuity, Inc., (NASDAQ: CTTY; ASX: CAT), a leading loyalty software solutions company that provides both technical and marketing expertise to credit and gift card issuers, merchants, and processors, announced today it has received a "Notice of Allowance" from the U.S. Patent Office for 26 claims on its application for a patent for a Data Carrying Device and Systems for Use Therewith.

The patent is expected to be issued by the end of the first quarter and represents the third for Catuity's growing patent stream.

This patent is the foundation of the Catuity patent portfolio. It broadly covers the efficient use of memory space on smart cards (and other data carrying devices) to store data for multiple applications and the systems to manage applications, devices and terminals.

"Catuity is recognized as a major facilitator of the growth of the instant loyalty market segment of the CRM industry, and as such, are developing an extensive portfolio of intellectual property for the many innovations we initiate," stated Michael V. Howe, president and chief executive officer of Catuity. "Our strategy is to provide our customers the technology, service and expertise that can enable them to easily and effectively reach their consumers for the best possible return on investment."

According to Howe, this new U.S. patent discloses the use of dynamic memory allocation and memory re-use on smart cards via the use of a static area, program index and an application area. The use of an index to address application data within a smart card provides much of the core flexibility of the Catuity system. Rather than pre-allocating limited memory space on the smart card for each application prior to use, the innovative Catuity design allows program specific data to be added and removed from the card post-issue, as determined by the behavior of the card holder. "This is a key benefit of Catuity's program - it allows the user of our software to specifically target a customer's behavior and reward that behavior in ways that can benefit both the consumer and provider of that incentive, whether it be the credit card issuer, the merchant or the product manufacturer," said Howe.

He added that the patent also protects the design of the Catuity system for the offline management of multiple applications on smart cards (and other data carrying devices). "The patent discloses the use of a central host communicating regularly to multiple remote terminals to send parameter files and receive transaction files. The remote terminals are loaded with functionally identical software that responds to the received parameter files to control and manage smart card based applications such as loyalty programs and electronic tickets. "By encapsulating all the potential program elements in parameter files, licensees of the Catuity system can deploy new programs and change existing ones without the need to load new software into the remote terminals," Howe stated.

Since Catuity developers have been at the forefront of development of software products for use by the many stakeholders in the loyalty segment of the CRM market, "we have a number of patents pending in the U.S. and many other countries that together provide strong protection for our products. These patents build on this patent and we expect them to be granted and added to our portfolio in the near future. Our teams in Arlington and Sydney continue to develop innovative solutions for our loyalty programs, which can be managed by transaction processors, credit and gift card issuers, retailers, or product manufacturers."

About Catuity, Inc.

Catuity, Inc. is a leading provider of application software that allows merchants, transaction processors and payment card issuers to establish and administer customer incentive and loyalty programs integrated to the payment system at the point of sale. The Catuity system can be utilized via mag stripe, smart card, RFID or contactless tokens and to date Catuity's software applet has been included on millions of chip-based credit cards. Catuity Loyalty Software can be used by a broad range of sellers of goods and services, particularly those who sell both through store locations and over the Internet. In addition to its innovative software products, Catuity also provides marketing expertise and service to its clients so that with Catuity's loyalty solution, merchants can offer their customers valuable benefits, thereby attracting and retaining customers as well as encouraging increased purchases. More information on Catuity is available at its website: http://www.catuity.com.

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 its Form 10-K, filed with the U.S. Securities & Exchange Commission.