SANTA CLARA, Calif. And DENVER–(BUSINESS WIRE)–Jan. 6, 2003– Arcot Systems, Inc., a leading provider of solutions for securing electronic identity and First Data, a leader in electronic commerce and payment services , today announced an agreement whereby First Data Merchant Services(R) will provide Arcot’s TransFort(TM) for Merchants solution, the most widely adopted solution for payment authentication, to online merchants. Under the terms of this multi-year, global agreement, First Data will offer the TransFort Merchant Software as a hosted service for merchants and will also license and resell the solution to merchants for in-house use. With this agreement, Arcot can enable several hundreds of thousands of First Data merchants, including those acquired directly, through alliance partners and through processing customers.

TransFort provides cardholder authentication for all participants in online payment transactions in the Verified By Visa and MasterCard SecureCode programs to reduce online fraud. With the Arcot TransFort for Merchants product, the merchant is able to authenticate and verify the cardholder at the time of purchase. At online checkout, the cardholder is asked to confirm their identity to the card-issuing bank with a password. Upon verification, the issuing bank provides a confirmation response to the merchant using the Arcot software. The result is protection from fraud losses for the merchant and added confidence and protection for the online shopper. In conjunction with Arcot’s previous agreement with First Data to provide authentication services for Issuers, now, First Data and Arcot can offer solutions that cover the key participants in an electronic commerce transaction: the Issuers, Merchants and Consumers.

“We selected Arcot’s TransFort solution because it is a premier solution for authenticating online payments,” said Steven L. VanFleet, senior vice president of Product Development for First Data. “With Arcot’s solution, our worldwide merchants benefit from increased customer confidence in the online shopping experience and reduced incidence of fraud. Providing authentication of online payments is a key component in our efforts to provide a suite of alternative payments and secure protocols over the coming months.”

Ram Varadarajan, chief executive officer and president of Arcot Systems, said, “We are excited to combine Arcot’s online payment authentication expertise with First Data Merchant Service’s leadership as the unsurpassed electronic payment solutions provider. The broad reach of First Data will help ensure that end-to-end solutions exist and are available so that Issuers, Merchants and Consumers can conduct e-commerce transactions with an unprecedented level of security and confidence."