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ECHO
Press Releases 2006
FOR IMMEDIATE RELEASE
Electronic
Clearing House, Inc. (ECHO)
Announces Impact on Future
Results of
Operations Following U.S. Legislative Action
Camarillo, Calif., Oct 11,
2006 -
Electronic Clearing House, Inc. (Nasdaq: ECHO), a leading provider of
electronic payment and transaction processing
services, announced today a portion of
its business and future results of operations will be impacted by
the recently passed Unlawful Internet Gambling Enforcement Act of
2006 ("the Act").
The Act is expected to become law on
or around October 13, 2006. Upon becoming law, the Act will prohibit
gambling businesses from accepting any financial instrument in
connection with inappropriate Internet gambling. The Act directs the
United States Federal Reserve, the Department of the Treasury and
the Department of Justice to develop regulations, within 270 days of
the Act becoming law, which would direct financial transaction
providers, including payment processors, to identify and block
certain types of financial transactions connected with this type of
Internet gambling. The text of the Unlawful Internet Gambling
Enforcement Act of 2006, included as Title VIII of the Safe Port
Act, may be found by doing a search at the Library of Congress'
legislative information website,
http://thomas.loc.gov.
ECHO provides back-end payment
processing services to merchants across many industries. Several of
these merchants are "Internet wallet" providers that, among other
matters, permit consumers to use funds in those "Internet wallets"
to participate in gaming activities over the Internet. Since the
passing of the Act, ECHO's management has been working to
identify the impact on its "Internet wallet" merchants, as well as
on its business and future results of operations. As of the date of
this release, management has found that, as soon as the Act becomes
law, several of its "Internet wallet" merchants will no longer
permit U.S. consumers to use funds in their respective "Internet
wallets" to participate in gaming activities (to the extent it was
previously permitted). In addition, some merchants will gradually
phase in those restrictions before the expiration of the 270-day
regulatory determination period, and some may seek to comply with
the new regulatory rules.
Regardless of the actions taken by ECHO's "Internet wallet"
merchants, the Company has decided to phase out any services related
to check processing activities for Internet gaming before the
270-day regulatory determination period expires. The portion of
"Internet wallet" services accounts for less than 10% of ECHO's
total revenues. Accordingly, the loss of revenues, and net income,
arising from these services will have a significant negative effect
on the Company's business and results of operations in fiscal 2007.
ECHO expects to more fully describe this effect in its
forthcoming Annual Report on Form 10-K for the fiscal year ended
September 30, 2006.
Joel M. Barry, the Chairman and Chief Executive Officer of the
Company, stated, "We were aware that this legislative action, if
passed, could affect our 'Internet wallet' merchants and have
previously identified this as a risk to our check processing
business. However, with the continuing growth of our credit card
processing volume and our sales focus on building other channels for
new check processing revenue, we anticipate being able to recover
the lost check revenue from the 'Internet wallets' in the coming
year."
About Electronic Clearing House, Inc.
(ECHO)
ECHO (www.echo-inc.com)
provides a complete solution to the payment processing needs of
merchants, banks and collection agencies. ECHO's services
include debit and credit card processing, check guarantee, check
verification, check conversion, check re-presentment, and check
collection.
Contact:
Electronic Clearing House, Inc.
Donna Rehman, 805-419-8533
corp@ECHO-inc.com
http://www.echo-inc.com
or
Financial Relations Board
Erin Cox, 310-854-8319
ecox@frbir.com
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