<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                For the quarterly period ended September 30, 2001

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                   For the transition period from ____ to ____
                         Commission File Number 0-30791

                               eFunds Corporation
             (Exact name of registrant as specified in its charter)

           Delaware                                      39-1506286
(State or other jurisdiction of             (IRS Employer Identification Number)
 incorporation or organization)

       Gainey Center II, Suite 300
       8501 North Scottsdale Road
          Scottsdale, Arizona                              85253
(Address of principal executive offices)                 (Zip Code)

        Registrant's telephone number, including area code: 480-629-7700

                          7272 East Indian School Road
                              Scottsdale, AZ 85251
          (Former name or former address, if changed since last report)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  Yes X   No

The number of shares outstanding of the registrant's common stock, par value
$.01 per share, at October 31, 2001 was 46,372,207.
<PAGE>
                          PART I. FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

                       eFunds CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                September 30,
                                                                                    2001           December 31,
                                                                                 (unaudited)          2000
                                                                                  ---------         ---------
<S>                                                                             <C>                <C>
 (dollars in thousands)
Current Assets
  Cash and cash equivalents ..............................................        $  85,865         $  78,731
  Time deposit subject to compensating balance arrangement ...............            1,500            10,000
  Restricted cash ........................................................           22,288             3,787
  Accounts receivable - net ..............................................          100,873            57,825
  Deferred income taxes ..................................................           12,589            12,589
  Prepaid expenses and other current assets ..............................            8,505             7,111
                                                                                  ---------         ---------
    Total current assets .................................................          231,620           170,043
                                                                                  ---------         ---------
Property and equipment - net .............................................           71,733            77,355
Long-term investments ....................................................           18,104            18,500
Restricted cash ..........................................................               --            27,734
Intangibles
  Goodwill - net .........................................................           40,089            43,019
  Software - net .........................................................           35,368            33,150
  Other intangible assets - net ..........................................           13,323            15,004
                                                                                  ---------         ---------
    Total intangibles - net ..............................................           88,780            91,173
                                                                                  ---------         ---------
Other non-current assets .................................................            8,023             3,302
                                                                                  ---------         ---------
        Total non-current assets .........................................          186,640           218,064
                                                                                  ---------         ---------
         Total assets ....................................................        $ 418,260         $ 388,107
                                                                                  =========         =========
Current Liabilities

  Accounts payable .......................................................        $  25,119         $  29,163
  Accrued liabilities
    Accrued compensation and employee benefits ...........................           18,070            18,703
    Accrued contract losses ..............................................           15,546            22,247
    Other ................................................................           32,927            20,953
  Borrowings on line of credit ...........................................               --             5,303
  Long-term debt due within one year .....................................            2,164             2,100
                                                                                  ---------         ---------
    Total current liabilities ............................................           93,826            98,469
Long-term debt ...........................................................              520             2,244
Other long-term liabilities ..............................................               30                74
Commitments and contingencies (Notes 4, 5, 7 and 11)
Stockholders' equity
  Preferred stock $.01 par value; 100,000,000 shares authorized; no shares
    issued and outstanding ...............................................               --                --
  Common stock $.01 par value (authorized: 250,000,000 shares; issued and
    outstanding: 46,322,554 shares at September 30, 2001 and 45,500,000 at
     December 31, 2000) ..................................................              463               455
  Additional paid-in capital .............................................          402,661           391,699
  Accumulated deficit ....................................................          (77,184)         (103,233)
  Accumulated other comprehensive loss ...................................           (2,056)           (1,601)
                                                                                  ---------         ---------
    Stockholders' equity .................................................          323,884           287,320
                                                                                  ---------         ---------
      Total liabilities and stockholders' equity .........................        $ 418,260         $ 388,107
                                                                                  =========         =========
</TABLE>
See Notes to Unaudited Consolidated Financial Statements



                                       2
<PAGE>
                       eFunds CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                     Quarter Ended                     Nine Months Ended
                                                                      September 30,                       September 30,
                                                              ---------------------------         ---------------------------
(dollars and shares in thousands,
  except per share amounts)                                      2001             2000               2001              2000
                                                              ---------         ---------         ---------         ---------
<S>                                                           <C>               <C>               <C>               <C>
Net Revenue ..........................................        $ 135,353         $ 104,003         $ 388,050         $ 305,228
                                                              ---------         ---------         ---------         ---------
  Cost of revenue, excluding loss contract and
    asset impairment charges .........................           79,746            63,475           236,928           181,672
  Loss contract and asset impairment charges/(credits)           (2,500)               --            (2,500)            9,700
                                                                                ---------         ---------         ---------
    Total cost of revenue ............................           77,246            63,475           234,428           191,372
                                                              ---------         ---------         ---------         ---------
Gross Margin .........................................           58,107            40,528           153,622           113,856
                                                              ---------         ---------         ---------         ---------
  Selling, general and administrative expense ........           37,630            34,149           113,440           110,342
                                                              ---------         ---------         ---------         ---------
  Income from operations .............................           20,477             6,379            40,182             3,514
 Other Income (Expense)

  Interest expense ...................................              (99)             (465)             (598)           (2,260)
  Interest and other income ..........................                2               960               799               985
                                                              ---------         ---------         ---------         ---------
Income before income taxes ...........................           20,380             6,874            40,383             2,239
Provision for income taxes ...........................           (7,133)           (2,987)          (14,334)           (1,702)
                                                              ---------         ---------         ---------         ---------
Net income ...........................................        $  13,247         $   3,887         $  26,049         $     537
                                                              =========         =========         =========         =========
  Weighted average shares outstanding ................           46,248            45,500            45,850            41,847
                                                              =========         =========         =========         =========
  Weighted average shares and potential dilutive
    shares outstanding ...............................           48,030            45,500            47,525            41,847
                                                              =========         =========         =========         =========
Net income per share - basic .........................        $    0.29         $    0.09         $    0.57         $    0.01
                                                              =========         =========         =========         =========
Net income per share - diluted .......................        $    0.28         $    0.09         $    0.55         $    0.01
                                                              =========         =========         =========         =========
</TABLE>

See Notes to Unaudited Consolidated Financial Statements



                                        3
<PAGE>
                       eFUNDS CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                 Nine Months Ended
                                                                                   September 30,
                                                                             ---------------------------
                                                                               2001               2000
                                                                             --------           --------
<S>                                                                          <C>                <C>
(dollars in thousands)
Cash Flows from Operating Activities
  Net income ......................................................          $ 26,049           $    537
  Adjustments to reconcile net income to net cash provided by
    operating activities
      Depreciation ................................................            13,979              8,910
      Amortization of intangibles .................................            16,361             12,242
      Loss on disposals of property and equipment .................               268                 91
      Equity in loss of investee ..................................               525                 --
      Deferred income taxes .......................................               (44)            (3,347)
      Changes in assets and liabilities
            Restricted cash .......................................             9,233               (382)
            Accounts receivable ...................................           (43,048)           (13,243)
            Accounts payable ......................................            (4,046)            12,682
            Income taxes receivable/payable .......................            10,774             12,436
            Accrued contract losses ...............................            (6,702)             5,859
            Other assets and liabilities ..........................            (4,078)            (3,943)
                                                                             --------           --------
                    Net cash provided by operating activities .....            19,271             31,842
                                                                             --------           --------
Cash Flows from Investing Activities

  Capital expenditures ............................................           (22,327)           (27,935)
  Cash paid for investments .......................................            (1,129)           (20,000)
  Investment in time deposit to establish loan guarantee collateral             8,500            (10,000)
  Other ...........................................................                --                674
                                                                                                --------
                Net cash used in investing activities .............           (14,956)           (57,261)
                                                                             --------           --------
Cash Flows from Financing Activities

  Net borrowings (repayments) on line of credit ...................            (5,303)             9,491
  Payments on long-term debt ......................................            (1,658)            (1,511)
  Proceeds from exercise of stock options .........................             9,780                 --
  Proceeds from initial public offering ...........................                --             64,459
  Capital contributions by Deluxe .................................                --             23,905
  Dividends paid to Deluxe ........................................                --            (13,800)
  Other ...........................................................                --                  4
                Net cash provided by financing activities .........             2,819             82,548
                                                                             --------           --------
Adjustment for lag in financial reporting (Note 9) ................                --             (4,127)

Net increase in cash and cash equivalents .........................             7,134             53,002
Cash and cash equivalents at beginning of period ..................            78,731             35,849
                                                                             --------           --------
Cash and cash equivalents at end of period ........................          $ 85,865           $ 88,851
                                                                             ========           ========
</TABLE>

See Notes to Unaudited Consolidated Financial Statements



                                       4
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.   The consolidated balance sheet as of September 30, 2001, the consolidated
     statements of operations for the quarters and nine month periods ended
     September 30, 2001 and 2000 and the consolidated statements of cash flows
     for the nine month periods ended September 30, 2001 and 2000 are unaudited.
     In the opinion of management, all adjustments necessary for a fair
     presentation of such financial statements are included. Other than those
     discussed in the notes below, such adjustments consist only of normal
     recurring items. Interim results are not necessarily indicative of results
     for a full year. The consolidated financial statements and notes are
     presented in accordance with instructions for Form 10-Q and do not contain
     certain information included in the Company's annual consolidated financial
     statements and notes. The consolidated financial statements and notes
     appearing in this report should be read in conjunction with the Company's
     audited consolidated financial statements and related notes included in the
     Company's Annual Report on Form 10-K for the year ended December 31, 2000.

2.   The Company was incorporated in Delaware in December 1984 and changed its
     name from Deluxe Electronic Payment Systems, Inc. to eFunds Corporation in
     September 1999. The Company was formerly a wholly owned subsidiary of
     Deluxe Corporation (Deluxe). In January 2000, Deluxe announced that its
     board of directors had approved a plan to combine its electronic payments,
     risk management, professional services and government services businesses
     under the Company and to undertake a series of transactions designed to
     establish the Company as an independent, publicly traded company.

     The Company issued 5.5 million shares of common stock to the public in June
     2000 (the IPO). Proceeds from the offering, based on the offering price of
     $13.00 per share, totaled $71.5 million ($64.5 million, net of offering
     expenses). Subsequent to the IPO, Deluxe continued to own 40 million shares
     of the Company's common stock, representing 87.9% of the Company's total
     outstanding common shares.

     In October 2000, Deluxe announced that it planned to distribute all of the
     shares of the Company's common stock owned by it to its shareholders
     through a Spin-Off transaction (the Spin-Off). In November 2000, Deluxe
     declared a dividend of all the 40,000,000 common shares of the Company held
     by it. This dividend was distributed on December 29, 2000 in the amount of
     approximately 0.5514 of an eFunds share for each Deluxe share. Deluxe
     received a ruling from the Internal Revenue Service that the distribution
     qualified as tax-free to Deluxe and its shareholders for U.S. federal
     income tax purposes, except to the extent that cash was received in lieu of
     fractional shares.

     In connection with the IPO and the Spin-Off, the Company and Deluxe entered
     into various agreements that addressed the allocation of assets and
     liabilities between them and that defined their relationship after the
     separation. The agreements related to matters such as consummation of the
     IPO and the distribution of the Company's stock, registration rights for
     Deluxe, intercompany loans, information technology consulting, business
     process management services, indemnification, data sharing, real estate
     matters, tax sharing and transition services. For transition services, the
     Company and Deluxe compensated each other for providing services. The
     transition period varied depending on the agreement, but most transition
     services terminated following the Spin-Off.

     Deluxe has been, and is expected to continue to be, a significant client of
     the Company. Beginning in 2000, the Company's services to Deluxe were
     formalized into a five-year software development and business process
     outsourcing agreement. If Deluxe fails to spend a minimum of $43 million
     for software development services under this agreement in any year, it will
     be obligated to make payments for a portion of the Company's fees based on
     estimates of the Company's lost profits. This agreement also calls for the
     Company to provide business process management services, including accounts
     receivable, accounts payable and other general accounting and data entry
     services to Deluxe. Deluxe's annual minimum spending target for



                                       5
<PAGE>
     business process management services ranges from $8.1 million in 2000 to
     $4.2 million in 2004. The provision of services by the Company under this
     agreement is non-exclusive, and Deluxe may contract with any third party
     for the provision of professional services. Revenue from Deluxe for
     software development and business process outsourcing services was $9.3
     million and $13.6 million for the third quarters of 2001 and 2000,
     respectively, and $35.8 million and $44.1 million for the nine-month
     periods ended September 30, 2001 and 2000, respectively.

     Deluxe contributed the ownership of various subsidiaries and certain assets
     and liabilities of business operations (the Transferred Businesses) to the
     Company on March 31, 2000. As the Company and the Transferred Businesses
     were under common control the accompanying consolidated financial
     statements have been retroactively restated to reflect the historical
     consolidated results of operations and cash flows through March 31, 2000 as
     if the contribution of the Transferred Businesses described above had
     occurred and the Company and the Transferred Businesses had been operating
     as a stand-alone business throughout the periods presented on an
     "as-if-pooled" basis.

     The historical financial information the Company has included in the
     consolidated financial statements may not be reflective of what the results
     of operations, financial condition and cash flows would have been had the
     Company been a separate, stand-alone entity during all periods presented.
     As a result, historical financial information through the date of the
     Spin-Off may not necessarily be indicative of what the Company's results of
     operations, financial condition and cash flows will be in the future.

3.   The Company's total comprehensive income for the quarters ended September
     30, 2001 and 2000 was $13.1 million and $3.6 million, respectively. Total
     comprehensive income (loss) for the nine months ended September 30, 2001
     and 2000 was $25.6 million and $(0.5), million respectively. The Company's
     total comprehensive income consists of net income and foreign currency
     translation adjustments.

4.   In March 2000, the Company paid cash of $20.0 million for an approximate
     24% interest in Access Cash International, L.L.C. (ACI). ACI provides
     automated teller machine (ATM) deployment and management services. This
     investment is being accounted for under the equity method of accounting and
     is included in long-term investments in the Company's consolidated balance
     sheet. The difference of $20 million between the carrying value of the
     investment and the underlying equity in the net assets of ACI is being
     accounted for in the same manner as goodwill and is being amortized over 15
     years and is included in the Company's consolidated financial statements in
     interest and other income (expense) along with the Company's share of ACI's
     losses. The carrying value of this investment is $17.0 million at September
     30, 2001.

     The Company has agreed to make up to $35 million of cash available for
     supplying ATMs managed by ACI and had supplied $20.5 million of cash for
     this purpose as of September 30, 2001. This cash is classified as
     short-term restricted cash in the accompanying balance sheet. The Company
     has agreed to guarantee up to $3.0 million (Canadian) face value of
     equipment leases for ACI's Canadian customers and through September 30,
     2001, the Company has guaranteed lease payments amounting to $1.2 million.
     Through September 30, 2001, the Company has not been required to make any
     payments pursuant to these guarantees.

     In September 2000, the Company entered into an ATM deployment and
     management agreement with ACI under which the Company receives fees paid by
     customers utilizing ATMs deployed by it and interchange fees from their
     banks. ACI manages this network of ATMs in exchange for a management fee
     determined by reference to the number of ATMs deployed.



                                        6
<PAGE>
     In June 2001, the Company and ACI amended the ATM deployment and management
     agreement to provide that the Company will manage ACI's sales of ATM
     devices and customer maintenance and will receive the ongoing revenues from
     these activities. In return, the Company will pay ACI a fixed monthly fee
     to support these services. ACI also paid a one-time fee to the Company as
     part of a settlement of certain disputes that had arisen under the
     deployment agreement. The deployment and management agreement, as amended,
     was also extended until at least March 31, 2002.

     On September 24, 2001 the Company announced that it reached an agreement to
     acquire the remaining equity interests in ACI for a purchase price of
     approximately $43.9 million. The acquisition closed on October 10, 2001 at
     which time $39.6 million of the purchase price was paid in cash. Payment of
     the balance of the purchase price of $4.3 million is subject to the
     satisfaction of certain post-closing conditions. ACI became a wholly owned
     subsidiary of the Company on the closing date and the ATM Deployment and
     Management Agreement was of no further effect.

5.   The Company has incurred significant losses relating to its government
     services business in prior periods. A roll-forward of the Company's loss
     reserve for government services contracts is as follows:

<TABLE>
<CAPTION>
                                                          2001               2000
                                                        --------           --------
<S>                                                     <C>                <C>
     (dollars in thousands):
     Balance, beginning of year ..............          $ 22,247           $ 20,599
     Provision for contract losses ...........                --                 --
     Reversal of provision for contract losses                --                 --
     Charges to reserve ......................              (785)            (1,057)
                                                        --------           --------
     Balance at March 31 .....................          $ 21,462           $ 19,542
     Provision for contract losses ...........                --             12,200
     Reversal of provision for contract losses                --             (2,500)
     Charges to reserve ......................            (1,634)            (1,508)
                                                        --------           --------
     Balance at June 30 ......................          $ 19,828           $ 27,734
     Provision for contract losses ...........             1,295                 --
     Reversal of provision for contract losses            (3,795)                --
     Charges to reserve ......................            (1,782)            (1,275)
                                                        --------           --------
     Balance at September 30 .................          $ 15,546           $ 26,459
                                                        ========           ========
</TABLE>

     Deluxe has agreed to indemnify the Company for certain future losses
     arising from litigation based on the conduct of the government services
     business prior to the IPO as well as incremental future losses on contracts
     of the government services segment which were in a loss position at April
     30, 2000 to the extent such losses exceed the estimates underlying the
     $29.2 million loss reserve at April 30, 2000. The Company plans to record
     any amounts received from Deluxe under the indemnification agreement as a
     reduction of expense when, and if, any additional contract or litigation
     losses are recognized. Deluxe's total indemnification obligations to the
     Company are limited to $14.6 million. No such indemnification obligations
     have arisen through September 30, 2001.

6.   The Company's consolidated balance sheets reflect restructuring accruals of
     $2.9 million and $0.4 million as of September 30, 2001 and December 31,
     2000, respectively, for employee severance and other costs. During the
     first quarter of 2001, restructuring accruals of $3.2 million were recorded
     relating to the planned closure of the Company's operations in Bothell,
     Washington. These new restructuring charges are reflected in selling,
     general and administrative (SG&A) expenses in the consolidated statement of
     operations.



                                       7
<PAGE>
     The following table summarizes the change in the Company's restructuring
     accruals for the nine months ended September 30, 2001:

<TABLE>
<CAPTION>
                                             Number
                                          of employees
                                            affected           Amount
                                            -------           -------
<S>                                       <C>                 <C>
     (dollars in thousands):
     Balance, December 31, 2000 ..                9           $   378
     Severance paid ..............               (7)             (177)
     Adjustments .................               --               (40)
     Provision for restructuring .              224             3,200
                                            -------           -------
     Balance, March 31, 2001 .....              226           $ 3,361
                                            -------           -------
     Severance paid ..............               (2)             (144)
     Adjustments .................               (1)             (100)
     Provision for restructuring .               --                --
                                            -------           -------
     Balance, June 30, 2001 ......              223           $ 3,117
                                            -------           -------
     Severance paid ..............              (12)             (177)
     Adjustments .................               --                --
     Provisions for restructuring                --                --
                                            -------           -------
     Balance at September 30, 2001              211           $ 2,940
                                            =======           =======
</TABLE>

7.   On December 29, 2000, the Company secured a $15.0 million revolving credit
     facility with a term of nine months. Although the Company did not borrow
     any funds under this facility through its expiration in September 2001, it
     had posted an irrevocable standby letter of credit in the amount of $4.0
     million to guarantee its performance under a government services contract
     with the state of New York. In September 2001, the Company obtained a
     replacement revolving credit facility in the amount of $20.0 million with a
     new lender. The new lender reissued the letter of credit in favor of the
     state of New York and, accordingly, the Company's borrowing capacity under
     the new facility was reduced to $16.0 million. Loans under the new facility
     will bear interest at either the applicable prime rate or the LIBOR rate
     plus a margin with such margin determined by reference to the Company's
     leverage ratio as defined in the loan documents. The facility is guaranteed
     by certain of the Company's subsidiaries and requires the Company to comply
     with certain financial and non-financial covenants. The Company is
     currently in compliance with all of these requirements. This facility has a
     term of one year.

     The Company's India operations had a $10.0 million credit facility,
     denominated in Indian rupees, available at the lender's prime interest
     rate. Borrowings under this facility are due on demand. In March 2001, the
     Company repaid the outstanding balance of this facility and $8.5 million of
     a $10.0 million time deposit account maintained by the Company to support
     its guaranty was returned to the Company. The Company subsequently
     requested that the amount available for borrowing under the facility be
     reduced to $1.5 million. The Company now uses the facility primarily for
     the purpose of issuing letters of credit in the ordinary course of
     business. At September 30, 2001 the aggregate value of outstanding letters
     of credit amounted to $1.0 million. These letters of credit are
     collateralized by the remaining $1.5 million time deposit account
     maintained with the issuer. This facility matures on September 30, 2002.
     The average amount drawn on this credit facility during the first quarter
     of 2001 was $5.3 million at a weighted average interest rate of 15.5%. The
     Company did not borrow against this credit facility during the third
     quarter of 2001. The average amount drawn on this line during 2000 was $4.5
     million at a weighted average interest rate of 15.4%.


                                       8
<PAGE>
8.   The Company has organized its business units into two operating segments
     based on the nature of the customers served by each segment. These segments
     are payment systems and services and government services. The payment
     systems and services segment provides the financial services and retail
     industries with a comprehensive suite of payment management and decision
     support products as well as related information technology consulting,
     software development and business process outsourcing services and ATM
     deployment and management services. The government services segment
     provides online electronic benefit transfer (EBT) services under
     entitlement programs on behalf of state and local governments and Medicaid
     eligibility verification services. The Company previously organized its
     business units into three segments. Prior periods have been restated to
     conform to the current period presentation.

     The Company's segments operate primarily in the United States. The payment
     systems and services segment also has international operations. No single
     customer of the Company accounted for more than 10% of total net revenue
     for the three and nine-month periods ended September 30, 2001. No single
     customer of the Company other than Deluxe accounted for more than 10% of
     total net revenues for the three and nine months ended September 30, 2000.
     Deluxe accounted for 13.1 and 14.5%, respectively, of the Company's total
     net revenue in these periods.

     The accounting policies of the segments are the same as those described in
     Note 2 to the Company's audited consolidated financial statements included
     in the Company's Annual Report on Form 10-K. In evaluating segment
     performance, management focuses on income from operations. The income from
     operations measurement utilized by management excludes special charges and
     credits (e.g., restructuring charges, asset impairment charges, certain
     one-time charges that management believes are not reflective of on-going
     operations, etc.). Special credits in the third quarter of 2001 resulted
     from a $2.5 million net reduction in the Company's reserve for future
     losses on certain EBT contracts. Special charges in the first quarter of
     2001 consisted of $3.2 million related to the closure of the Company's
     operations in Bothell, Washington. Special charges in the second quarter of
     2000 consisted of $9.7 million for losses on certain EBT contracts and $2.9
     million for costs related to the Company's separation from Deluxe. Special
     charges in the third quarter of 2000 consisted of $1.3 million related to
     the Company's separation from Deluxe. The charges and credits on the EBT
     contracts were recorded in cost of revenue in the government services
     segment. The costs related to the closure of the Bothell operations and the
     separation from Deluxe were charged to selling general and administrative
     expenses in the payment systems and services segment.




                                       9
<PAGE>
<TABLE>
<CAPTION>
                                                          Quarter Ended September 30, 2001
                                                          --------------------------------
                                                     Payment
                                                   systems and        Government           Total
                                                     services          services        Consolidated
                                                     --------          --------        ------------
<S>                                                <C>                <C>              <C>
 (dollars in thousands)
 Total net revenues .......................          $124,193          $ 11,160          $135,353
 Gross margin excluding special credits ...            50,461             5,146            55,607
 Operating income excluding special credits            13,596             4,381            17,977
 Net special credits ......................                --             2,500             2,500
 Gross margin including special credits ...            50,461             7,646            58,107
 Operating income including special credits            13,596             6,881            20,477
 Depreciation and amortization expense ....            10,266                --            10,266
 Segment assets ...........................           398,196            20,064           418,260
 Capital purchases ........................             8,019                --             8,019
</TABLE>

<TABLE>
<CAPTION>
                                                                 Quarter Ended September 30, 2000
                                                                 --------------------------------
                                                             Payment
                                                           systems and          Government            Total
                                                             services            services         Consolidated
                                                             --------            --------         ------------
<S>                                                        <C>                <C>               <C>
(dollars in thousands)
 Total net revenues ..............................         $  92,760          $  11,243         $ 104,003
 Gross margin excluding special charges ..........            37,133              3,395            40,528
 Operating income excluding special charges ......             5,370              2,347             7,717
 Special charges .................................            (1,338)                --            (1,338)
 Gross margin including special charges ..........            37,133              3,395            40,528
 Operating income (loss) including special charges             4,032              2,347             6,379
 Depreciation and amortization expense ...........             7,719                 --             7,719
 Segment assets ..................................           376,927             29,626           406,553
 Capital purchases ...............................            11,912                 --            11,912
</TABLE>


<TABLE>
<CAPTION>
                                                             Nine Months Ended September 30, 2001
                                                             ------------------------------------
                                                      Payment
                                                    systems and          Government            Total
                                                      services            services         Consolidated
                                                      --------            --------         ------------
<S>                                                 <C>                  <C>               <C>
(dollars in thousands)
Total net revenues .........................          $ 355,078           $  32,972          $ 388,050
Gross margin excluding net special items ...            138,224              12,898            151,122
Operating income excluding net special items             30,482              10,400             40,882
Net special items ..........................             (3,200)              2,500               (700)
Gross margin including net special items ...            138,224              15,398            153,622
Operating income including net special items             27,282              12,900             40,182
Depreciation and amortization expense ......             30,340                  --             30,340
Capital purchases ..........................             22,327                  --             22,327
</TABLE>


<TABLE>
<CAPTION>
                                                                  Nine Months Ended September 30, 2000
                                                                  ------------------------------------
                                                            Payment
                                                          systems and         Government             Total
                                                            services           services          Consolidated
                                                            --------           --------          ------------
<S>                                                       <C>                 <C>               <C>
(dollars in thousands)
Total net revenues ..............................          $ 271,207           $  34,021           $ 305,228
Gross margin excluding special charges ..........            113,400              10,156             123,556
Operating income excluding special charges ......             11,215               6,211              17,426
Special charges .................................             (4,212)             (9,700)            (13,912)
Gross margin including special charges ..........            113,400                 456             113,856
Operating income (loss) including special charges              7,003              (3,489)              3,514
Depreciation and amortization expense ...........             21,152                  --              21,152
Capital purchases ...............................             27,935                  --              27,935
</TABLE>




                                       10
<PAGE>
Revenues are attributed to geographic areas based on the location of the assets
and employees producing the revenues. The Company's operations by geographic
area are as follows (in thousands):

<TABLE>
<CAPTION>
                            Total Net Sales to External Customers                Property and Equipment
                    -----------------------------------------------------       -----------------------
                         Quarter Ended                Nine Months Ended
                         September 30,                  September 30,                September 30,
                    -----------------------       -----------------------       -----------------------
                      2001           2000           2001           2000           2001           2000
                    --------       --------       --------       --------       --------       --------
<S>                 <C>            <C>            <C>            <C>            <C>            <C>
United
  States ....       $126,219       $ 97,398       $358,311       $285,922       $ 61,640       $ 65,633
United
  Kingdom ...          3,393          4,254         12,736         12,650          1,777          1,965
India .......          5,741          2,351         17,003          6,656          8,288          4,850
Other foreign
  countries .             --             --             --             --             28             37
                    --------       --------       --------       --------       --------       --------
Total .......       $135,353       $104,003       $388,050       $305,228       $ 71,733       $ 72,485
                    ========       ========       ========       ========       ========       ========
</TABLE>

9.   Effective January 1, 2000, the Company's Indian operations, which had
     previously reported their results of operations and financial position on a
     one-month lag, changed their reporting dates to coincide with the rest of
     the Company's subsidiaries. This change, which was made in conjunction with
     the implementation of the Company's central accounting and financial
     reporting system, reflects the financial results of those operations on a
     more timely basis and improves operating and planning efficiencies. The
     results of these Indian operations for the month of December 1999, which
     amounted to a net loss of $1.1 million, were excluded from the Company's
     consolidated statements of operations and were reflected as an adjustment
     to accumulated deficit during the first quarter of 2000.

10.  In June 1998, the Financial Accounting Standards Board (FASB) issued
     Statement of Financial Accounting Standards No. 133 Accounting for
     Derivative Instruments and Hedging Activities, which provides guidance on
     accounting for derivatives and hedge transactions. The statement was
     effective for the Company on January 1, 2001. The effects of this
     pronouncement did not have a material effect on reported operating results
     or financial position of the Company.

     In July 2001, the FASB issued Statement of Financial Accounting Standards
     No. 141, Business Combinations, which establishes new standards for
     accounting and reporting requirements for business combinations and will
     require that the purchase method of accounting be used for all business
     combinations initiated after June 30, 2001. Use of the pooling-of-interests
     method is prohibited. The Company does not believe that SFAS No. 141 will
     have a material impact on the Company's consolidated financial statements.

     In July 2001, the FASB issued Statement of Financial Accounting Standards
     No. 142, Goodwill and Other Intangible Assets that will become effective
     for the Company on January 1, 2002. SFAS 142 requires, among other things,
     the cessation of the amortization of goodwill. In addition, the standard
     includes provisions for the reassessment of the useful lives of existing
     recognized intangibles, reclassification of certain intangibles out of
     previously reported goodwill and the identification of reporting units for
     purposes of assessing potential future impairments of goodwill. SFAS 142
     also requires the Company to complete a transitional goodwill impairment
     test six months from the date of adoption. The Company is assessing the
     total impact the foregoing requirements will have on its consolidated
     balance sheet and statement of operations. Goodwill amortization for the
     third quarter of 2001 and the first nine months of 2001 amounted to
     approximately $1.0 million and $3.0 million, respectively.

     In October 2001, the FASB issued FAS 144, Accounting for the Impairment or
     Disposal of Long-Lived Assets. Statement 144 requires that long-lived
     assets be measured at the lower of carrying amount or fair value less cost
     to sell, whether reported in continuing operations or in discontinued
     operations. The standard is effective for 2002 and generally is to be
     applied prospectively. The implementation of this standard is not expected
     to have a material impact on the Company's financial position or results of
     operations.


                                       11
<PAGE>
11.  In connection with the Company's EBT and collection activities, the Company
     posts surety bonds with state agencies guaranteeing its performance of
     certain obligations related to contracts or state requirements. The
     aggregate amount of bonds outstanding for this purpose at September 30,
     2001 was $9.6 million.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
     OF OPERATIONS:

OVERVIEW: We provide transaction processing and ATM outsourcing services,
decision support and risk management products as well as related information
technology consulting and business process management services to financial
institutions, retailers, electronic funds transfer networks, e-commerce
providers and government agencies. Our payment system and services segment
offers all of our products and services to all of our customers other than
government agencies. Our government services segment provides online electronic
transfer of benefits (EBT) under entitlement programs on behalf of state and
local governments and Medicaid eligibility verification services. We operate
primarily in the United States, although our payment systems and services
segment has international operations. We previously organized our business into
three segments. Prior period segment data have been restated to conform to the
current period presentation.

Our consolidated financial statements have been prepared using the historical
results of operations and historical bases of the assets and liabilities of the
former Deluxe businesses that comprise our Company. The consolidated financial
statements for the first and second quarters of 2000 also include allocations to
us of certain liabilities and expenses, including profit sharing and other
employee benefits; information technology services; facility costs; and other
Deluxe administrative services costs. The expense allocations were determined on
bases that both Deluxe and we considered to be a reasonable reflection of the
utilization of the services provided to us or the benefit received by us. The
expense allocation methods were based on number of employees, transaction
processing costs, square footage and relative sales.

The financial information presented in this report may not necessarily reflect
what our financial position, results of operations or cash flows would have been
had we been a separate, stand-alone entity for all periods presented, nor is it
indicative of our future financial position, results of operations or cash
flows.



                                       12
<PAGE>
RESULTS OF OPERATIONS - QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2001
COMPARED TO QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2000.

The following table presents, for the periods indicated, the relative
composition of net revenues and selected statements of operations data as a
percentage of net revenues:

<TABLE>
<CAPTION>
                                                                      Quarter Ended             Nine Months Ended
                                                                      September 30,               September 30,
                                                                   -------------------         -------------------
                                                                   2001          2000          2001           2000
                                                                   -----         -----         -----         -----
<S>                                                                <C>           <C>           <C>           <C>
Net revenue
  Payment systems and services .............................        91.8%         89.2%         91.5%         88.9%
  Government services ......................................         8.2          10.8           8.5          11.1
                                                                   -----         -----         -----         -----
    Total net revenues .....................................       100.0         100.0         100.0         100.0
                                                                   -----         -----         -----         -----

Cost of revenue
  Payment systems and services .............................        54.5          53.5          55.9          51.7
  Government services
   Cost of revenue excluding loss contract charges/(credits)         4.4           7.5           5.1           7.8
    Loss contract and asset impairment charges/(credits) ...        (1.8)           --          (0.6)          3.2
                                                                   -----         -----         -----         -----
      Total cost of revenue ................................        57.1          61.0          60.4          62.7
                                                                   -----         -----         -----         -----

Gross margin ...............................................        42.9          39.0          39.6          37.3
                                                                   -----         -----         -----         -----

Selling, general and administrative expense ................        27.8          32.9          29.2          36.1
                                                                   -----         -----         -----         -----

Income from operations .....................................        15.1           6.1          10.4           1.2
                                                                   -----         -----         -----         -----

Other income (expense)
  Interest expense .........................................        (0.1)         (0.4)         (0.2)         (0.7)
  Interest and other income (expense) ......................         0.0           0.9           0.2           0.3
                                                                   -----         -----         -----         -----

Income before income taxes .................................        15.0           6.6          10.4           0.8

Provision for income taxes .................................        (5.2)         (2.9)         (3.7)         (0.6)
                                                                   -----         -----         -----         -----

Net income .................................................         9.8%          3.7%          6.7%          0.2%
                                                                   =====         =====         =====         =====
</TABLE>

NET REVENUE - Net revenue increased $31.4 million, or 30.2%, to $135.4 million
in the third quarter of 2001 from $104.0 million in the third quarter of 2000.
Net revenue increased $82.9 million, or 27.2%, to $388.1 million for the first
nine months of 2001 from $305.2 million in the first nine months of 2000.

Payment systems and services net revenue increased $31.4 million, or 33.8%, to
$124.2 million in the third quarter of 2001 from $92.8 million in the third
quarter of 2000. Net revenue of this segment increased $83.9 million, or 30.9%,
to $355.1 million for the first nine months of 2001 from $271.2 million in the
first nine months of 2000.

The primary drivers of our revenue growth for the third quarter of 2001 were the
licensing of our EFT software to Concord EFS, which represents our largest
software licensing transaction to date, the ATM management and deployment
agreement with ACI that we entered into in September 2000 and the contract with
West Corporation under which we commenced operations in the fourth quarter of
2000. These factors, as well as, to a lesser degree, increased transaction
processing volumes from existing customers, increased sales of products and
services based on our DebitBureau(R) database as well as increased usage of our
debit account opening products also contributed to our revenue growth over the
comparable nine month period in 2000. The revenue increases for the quarter and
the nine months ended September 30, 2001 were somewhat offset by a decrease in
revenue from the Company's check authorization business over the comparable
periods in the prior year resulting from customer losses through industry
consolidation, bankruptcies and pricing concessions associated with the
execution of longer term contracts and a decrease in revenue earned from Deluxe.



                                       13
<PAGE>
Concord EFS has notified us that it intends to terminate its processing
agreement with us for the STAR debit network and to perform this processing at
its own data centers. As part of the transition of this activity, Concord EFS
licensed our EFT software and contracted for the long-term maintenance thereof
and for professional services support to assist in the migration effort. This
transition is currently scheduled to be completed by the fourth quarter of 2002.
Concord EFS will pay us fixed monthly fees for the processing we perform for the
STAR network during the transition period and we expect to see the revenues from
this relationship decline from historical levels in future periods.

Deluxe has been, and is expected to continue to be, one of our most significant
customers. During the third quarter of 2001, total net revenue from Deluxe was
$9.3 million, or 6.9% of our total net revenue, compared to $13.6 million, or
13.1% of our total net revenues in the third quarter of 2000. For the first
three quarters of 2001, total net revenue from Deluxe was $35.8 million, or 9.2%
of our total net revenue, compared to $44.1 million, or 14.5% of our total net
revenue, in the first three quarters of 2000. Of the $35.8 million of revenue
earned from Deluxe so far this year, $30.7 million was for software development,
$4.9 million was for business process outsourcing and the remainder was for
payment processing. At present, we believe Deluxe will spend approximately $41
million for software development services with us for all of 2001. This amount
is $2.0 million less than the $43 million annual minimum-spending target for
such services specified in our software development and outsourcing agreement
with Deluxe. If Deluxe fails to meet the minimum spending target, we will be
entitled to receive a payment from Deluxe for the estimated profits on the
revenue shortfall as set forth in the agreement. Such shortfall payment, if any
is required, is not expected to be material to the results of our operations. We
expect Deluxe to spend between $7 - $8 million with us in 2001 for business
process outsourcing services. Based on recent communications with Deluxe, we
believe that Deluxe presently plans to purchase a sufficient amount of software
development services from us in 2002 to achieve or slightly exceed the $43
million annual minimum spending target in 2002.

In June 2001, our ATM management and deployment agreement with ACI was amended
so that we managed the sale of ATM devices and customer maintenance and received
the revenue related to these activities. In return, we paid ACI a fixed monthly
fee to support these activities. We also received a one-time fee from ACI in
June 2001 as a settlement of certain disputes that had arisen under the
deployment agreement. These developments also contributed to the increase in our
revenue for the quarter and nine months ended September 30, 2001.

Effective October 1, 2001 we acquired (the Acquisition) the remaining equity
interests in ACI for a purchase price of approximately $43.9 million, of which
approximately $39.6 million was paid in cash. Payment of the balance of the
purchase price of $4.3 million is subject to the satisfaction of certain
post-closing conditions. As a result of the acquisition, ACI has become a
wholly-owned subsidiary and its balance sheets and statements of operations will
now be consolidated with ours. In addition, the ATM management and deployment
agreement will be of no further effect. We do not expect that the Acquisition
will have a material impact on our reported revenue this year due to the effect
of the previous ATM management and deployment agreement with ACI, nor do we
expect the Acquisition to have a material impact on our publicly-stated
expectations regarding our fourth quarter results of operations.

ACI had been operating at a loss in prior periods. A major objective of the
Acquisition is to improve its financial performance in 2002 and beyond. We
expect improvement in the ACI business to come from four major sources: (i)
reduced operating costs through the integration of sales, marketing, operations
and facilities, (ii) the elimination of processing fees for more than 5,000 of
ACI's ATMs that are currently paid by ACI to Concord EFS, USPI and Metavante by
processing these transactions at our data centers, (iii) the redeployment of
under-performing or idle ATMs and (iv) higher branding revenues from existing
and new branding customers. We currently expect that the Acquisition will be
accretive in 2002.

The Acquisition is also part of a strategy to increase our core transaction
processing revenue base through the acquisition and control of ATM transactions
at the point of origination. We may pursue the acquisition of the ATM portfolios
of other independent ATM deployment and management companies.



                                       14
<PAGE>
Government services net revenue was approximately $11.2 million in both the
third quarter of 2001 and 2000. Net revenue decreased $1.0 million, or 2.9%, to
$33.0 million for the first nine months of 2001 from $34.0 million in the first
nine months of 2000. The decrease in revenue for the first nine months of 2001
compared to the first nine months of 2000 was primarily due to the expiration of
an electronic benefit-switching contract in the third quarter of 2000. This
decline was partially offset by increased revenues from Medicaid eligibility
verification services coupled with an increase in the number of cases processed.
Although we continue to pursue EBT contracts where we can obtain them on a
profitable basis, we expect to see a decline in the revenues of the government
services segment in 2002 if our Medicaid eligibility verification contract with
the state of New York expires. This contract has historically provided us
approximately $11.0 million in annual revenue was previously scheduled to expire
at the end of October 2001. New York has extended this agreement through April
2002, with a possibility of further extensions.

COST OF REVENUE - Cost of revenue increased $13.7 million, or 21.6%, to $77.2
million in the third quarter of 2001 from $63.5 million in third quarter of
2000. Cost of revenue increased $43.0 million, or 22.5%, to $234.4 million in
the first nine months of 2001 from $191.4 million in the first nine months of
2000. As a percentage of revenue, cost of revenue was 57.1% for the third
quarter of 2001 compared to 61.0% for the third quarter of 2000. For the first
nine months of 2001, cost of revenue, as a percentage of revenue, was 60.4%
compared to 62.7% for the first nine months of 2000. Excluding a net credit of
$2.5 million and charge of $9.7 million to our reserve for future losses on
certain government EBT contracts recorded in the third quarter of 2001 and the
second quarter of 2000, respectively, cost of revenue as a percentage of revenue
was 61.1% for the first nine months of 2001 and 59.5% for the first nine months
of 2000.

Payment systems and services cost of revenue increased by $18.1 million, or
32.5%, to $73.7 million in the third quarter of 2001 from $55.6 million in the
third quarter of 2000. Cost of revenue increased by $59.1 million, or 37.4%, to
$216.9 million in the first nine months of 2001 from $157.8 million in the first
nine months of 2000. As a percentage of segment revenue, cost of revenue was
59.4% for the third quarter of 2001 compared to 59.9% for the third quarter of
2000. For the first nine months of 2001, cost of revenue as a percentage of
segment revenue was 61.1% compared to 58.2% for the first nine months of 2000.

The increase in cost of revenue in both dollar and percentage terms was driven
primarily by the ATM management and deployment agreement which was entered into
in September 2000 and for which the cost of revenue approximated the associated
net revenue. Costs associated with the opening of the new call center in Mumbai,
India also contributed to the increase in cost of revenue over both the third
quarter and first nine months of last year. Additionally, cost of revenue in the
payment systems and services segment has increased as a result of costs
associated with the introduction of newer products and services.

Government services cost of revenue decreased $4.3 million, or 55.1%, to $3.5
million in the third quarter of 2001 from $7.8 million in the third quarter of
2000. Cost of revenue decreased $16.0 million, or 47.6%, to $17.6 million in the
first nine months of 2001 from $33.6 million in the first nine months of 2000.
As a percentage of segment revenue, cost of revenue was 31.3% for the third
quarter of 2001 compared to 69.6% for the third quarter of 2000. For the first
nine months of 2001, cost of revenue as a percentage of segment revenue was
53.3% compared to 98.9% for the first nine months of 2000.

Excluding a net credit of $2.5 million recognized in the third quarter of 2001
related to a reduction in our estimate of future losses on certain government
EBT contracts, cost of revenue decreased $1.8 million or 23.1% in the third
quarter of 2001 from the third quarter of 2000. Excluding this net credit, cost
of revenue was 53.9% of segment revenue in the third quarter of 2001. Excluding
both this net credit and a net charge of $9.7 million for future losses on
certain government EBT contracts recognized in the second quarter of 2000, cost
of revenue as a percentage of revenue was 60.9% for the first nine months of
2001 compared to 70.2% for the first nine months of 2000.

The reduction in cost of revenue exclusive of net special charges and credits
for both the quarter and nine months ended September 30, 2001 compared to the
same periods in the prior year is a reflection of continuing efforts to reduce
the cost of supporting this business and a reduction in costs due to the
expiration of an electronic benefit switching contract in the third quarter of
2000.


                                       15
<PAGE>
GROSS MARGIN - Gross margin increased by $17.6 million, or 43.5%, to $58.1
million in the third quarter of 2001 from $40.5 million in the third quarter of
2000. Gross margin increased by $39.7 million, or 34.9%, to $153.6 million in
the first nine months of 2001 from $113.9 million in the first nine months of
2000. As a percentage of revenue, gross margin was 42.9% for the third quarter
of 2001 compared to 39.0% for the third quarter of 2000. Excluding a net credit
of $2.5 million related to our estimates of future losses on certain government
EBT contracts, gross margin in the third quarter of 2001 was 41.1%. Excluding
net credits of $2.5 million and net charges of $9.7 million related to revisions
of our estimates of future losses on certain government EBT contracts recorded
in the third quarter of 2001 and the second quarter of 2000, respectively, gross
margin as a percentage of revenue was 38.9% for the first nine months of 2001
compared with 40.5% for the first nine months of 2000.

The increase in gross margin as a percentage of net revenue in the third quarter
of 2001 over the third quarter of 2000 is primarily due to increased software
sales as software is among our highest margin product lines. Historically,
software sales have accounted for between 8% and 12%, of revenue and we expect a
similar contribution for 2001. The new call center operation in Mumbai, India
also had a positive effect on gross margins in the third quarter of 2001
compared to the third quarter of 2000. The ATM management and deployment
agreement also made a slightly positive contribution to gross margin in the
third quarter of 2001.

The decrease in gross margin when comparing the nine months ended September 30,
2001 to the nine months ended 2000 reflects the negative impact of the ATM
management and deployment agreement which is included in our results for the
full nine months of 2001 compared with only one month in 2000. The introduction
of new products and services that have not yet generated sufficient revenue to
contribute positively to gross margin and the underutilization of personnel
allocated to our software development and business process outsourcing agreement
with Deluxe also contributed to the decrease in gross margin.

SELLING, GENERAL AND ADMINISTRATIVE (SG&A) EXPENSES - SG&A expense increased by
$3.5 million, or 10.2%, to $37.6 million in the third quarter of 2001 from $34.1
million in the third quarter of 2000. SG&A expense increased by $3.1 million, or
2.8%, to $113.4 million in the first nine months of 2001 from $110.3 million in
the first nine months of 2000. As a percentage of revenue, SG&A expense was
27.8% for the third quarter of 2001 compared to 32.8% for the third quarter of
2000. For the first nine months of 2001, SG&A expense as a percentage of revenue
was 29.2% compared to 36.2% for the first nine months of 2000.

Excluding a charge of $1.3 million for costs related to our separation from
Deluxe, SG&A expense as a percentage of revenue was 31.6% in the third quarter
of 2000. Excluding a charge of $3.2 million taken in the first quarter of 2001
primarily for severance costs related to the closure of our operations in
Bothell, Washington and charges of $4.2 million taken in the second and third
quarters of 2000 related to separation costs from Deluxe, SG&A expense as a
percentage of revenue was 28.4% for the first nine months of 2001 compared to
34.8% for the first nine months of 2000.

The absolute increase in SG&A expense in both the third quarter and nine month
periods over the comparable periods last year is primarily related to our
growth, increased hosting costs associated with our DebitBureau database and
costs to support the demands associated with becoming a public company. These
increases were offset somewhat by lower levels of spending in 2001 for promotion
and advertising.

OTHER INCOME (EXPENSE) - Other expense was $0.1 million during the third quarter
of 2001 compared to other income of $0.5 million for the third quarter of 2000.
For the first nine months of 2001, other income was $0.2 million compared to
other expense of $1.3 million for the first nine months of 2000. Other income in
2001 includes the interest earned on cash and cash equivalents, offset by
goodwill amortization related to our investment in ACI, our share of ACI's
losses and interest on our India line of credit (which was repaid in March of
2001). Other expense in 2000 includes interest expense related to our
intercompany balance payable to Deluxe (which was settled at the Spin-Off) and
interest expense on borrowings under our India line of credit, offset by
interest earned on cash and cash equivalents. The


                                       16
<PAGE>
primary driver of the decrease in other expense is the absence of interest due
to Deluxe on intercompany balances in 2001.

PROVISION FOR INCOME TAXES - The provision for income taxes was $7.1 million in
the third quarter of 2001 compared to $3.0 million in the third quarter of 2000
resulting in effective tax rates of 35.0% and 43.4%, respectively. The effective
tax rate for the first nine months of 2001 was 35.5% compared to 75.9% for the
first nine months of 2000. During the third quarter of 2001, the effective tax
rate for 2001 was reduced from 36.0% to 35.5%. This rate reduction was obtained
as a result of recognizing the income tax benefit of certain federal net
operating losses. The income tax benefit of these losses was not previously
recognized. Our Indian software development and business process management
operations qualify for tax incentives associated with businesses that operate
within designated geographic locations. Such incentives generally provide us
with exemptions from Indian tax on certain business income generated from these
operations. These incentives phase out through March 2009.

LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL CONDITION - At September 30, 2001,
cash and cash equivalents were $85.9 million. We had $1.7 million of restricted
cash that we temporarily hold in custodial accounts on behalf of clients and had
supplied $20.5 million in restricted cash to ATMs deployed by us and managed by
ACI. We have agreed to make up to $35 million available for this purpose as of
September 30, 2001. We had also agreed to guarantee up to $3.0 million
(Canadian) face value of equipment leases for Canadian customers of ACI and
through September 30, 2001 we guaranteed lease payments amounting to $1.2
million. No payments were made by us pursuant to this guarantee.

Our India operations had a $10.0 million credit facility, denominated in Indian
rupees, available at the lender's prime interest rate. Borrowings under this
facility are due on demand. We repaid the outstanding balance of the facility in
March 2001 and $8.5 million of a $10.0 million time deposit account maintained
to support our guaranty of this facility was returned to us. We subsequently
requested that the amount available for borrowing under the facility be reduced
to $1.5 million. We now use the facility primarily for the purpose of issuing
letters of credit in the ordinary course of business. At September 30, 2001 the
aggregate value of outstanding letters of credit amounted to approximately $1.0
million. These letters of credit are collateralized by the remaining $1.5
million time deposit account maintained with the issuer. This facility matures
on September 30, 2002. The average amount drawn on this credit facility during
the first quarter of 2001 was $5.3 million at a weighted average interest rate
of 15.5%. The average amount drawn on this line during 2000 was $4.5 million at
a weighted average interest rate of 15.4%. We did not draw on this facility
during the third quarter of 2001, although we issue letters of credit in the
ordinary course of business under this facility.

We obtained a $15.0 million revolving credit facility on December 29, 2000. This
facility had a term of nine months and expired in September 2001. Although we
did not borrow any funds under this facility through its expiration, we did post
an irrevocable standby letter of credit in the amount of $4.0 million to
guarantee our performance under a government services contract with the state of
New York. In September 2001, we obtained a replacement revolving credit facility
in the amount of $20.0 million with a new lender. The new lender reissued the
letter of credit in favor of the state of New York and, accordingly, our
borrowing capacity under the new facility was reduced to $16.0 million. Loans
under the new facility will bear interest at either the applicable prime rate or
the LIBOR rate plus a margin, with such margin determined by reference to our
leverage ratio as defined in the loan documents. The facility is guaranteed by
certain of our subsidiaries and requires us to comply with certain financial and
non-financial covenants. We are in compliance with these covenants. This
facility has a term of one year.

In connection with our EBT and collection activities, we post surety bonds with
state agencies guaranteeing our performance of certain obligations related to
contracts or state requirements. The aggregate amount of such bonds outstanding
at September 30, 2001 was $9.6 million.



                                       17
<PAGE>
The following table sets forth a summary of our cash flow activity and should be
read in conjunction with our unaudited consolidated statements of cash flows:

<TABLE>
<CAPTION>
                                                     Summary of Cash Flows
                                                        Nine Months Ended
                                                          September 30,
                                                   ---------------------------
                                                     2001               2000
                                                   --------           --------
<S>                                                <C>                <C>
(dollars in thousands)
Cash provided by operating activities ...          $ 19,271           $ 31,842
Cash used in investing activities .......           (14,956)           (57,261)
Cash provided by financing activities ...             2,819             82,548
Adjustment for lag in financial reporting                --             (4,127)
                                                   --------           --------
Net increase in cash and cash equivalents          $  7,134           $ 53,002
                                                   ========           ========
</TABLE>


Cash flows from operating activities were $19.3 million and $31.8 million for
the nine months ended September 30, 2001 and 2000, respectively. The decrease in
operating cash flow is primarily the result of an increase in accounts
receivable to $100.8 million at September 30, 2001 from $57.8 million at
December 31, 2000. This increase is reflective of our revenue growth, a change
in the way we process our billings to and from Deluxe Corporation and the
software sale to Concord EFS near the end of the third quarter. Prior to the
Spin-Off, all billing activity with Deluxe Corporation was settled through a
single inter-company account. Subsequent to the Spin-Off, we send Deluxe
invoices which are recorded as receivables. Excluding the Concord EFS software
transaction and the effect of our change in billing methods with Deluxe, days
sales in accounts receivable is comparable to where it stood at September 30,
2000.

Cash used in investing activities was $15.0 million for the nine months ended
September 30, 2001. The investments primarily relate to purchases of fixed
assets and expenditures for software partially offset by the return of $8.5
million of the $10.0 million that we had placed in a time deposit account as
collateral to support our guarantee of our Indian credit facility. The remaining
$1.5 million remains in deposit with the lender as collateral for letters of
credit issued under this facility. Cash used in investing activities was $57.3
million for the nine months ended September 30, 2000 and primarily relates to
the investment of $20.0 million to purchase a 24% interest in ACI, a $10.0
million investment in a time deposit to secure our India credit facility and
purchases of capital assets and software investments of $27.9 million.

Cash provided from financing activities was $11.3 million for the nine months
ended September 30, 2001. We used cash to repay debt of $6.9 million, including
the repayment of $5.3 million outstanding under our Indian credit facility. In
addition, proceeds from the exercise of stock options and shares purchased
through our employee stock purchase plan provided cash of $9.8 million. Cash
provided from financing activities was $82.5 million for the nine months ended
September 30, 2000. We completed our IPO in June 2000, generating proceeds of
$64.5 million. In addition, Deluxe provided $10.1 million to increase the
capitalization of the Company in preparation for the Spin-Off and we had net
borrowings of approximately $8.0 million.

The adjustment for the lag in financial reporting during December 1999
represents the net cash flows of our Indian operations. Previously, this
business reported its results of operations and financial position on a
one-month lag. In January 2000, this business changed its reporting period to
coincide with the rest of our Company.

In October 2001, we used $39.6 million from our existing cash reserves to fund
our acquisition of the remaining equity interests in ACI. We believe that cash
generated from operations, borrowings under available credit facilities and the
remaining net proceeds from our IPO will provide sufficient funds for our
operations for the foreseeable future.



                                       18
<PAGE>
FORWARD LOOKING STATEMENTS - The Company has confirmed the Street consensus view
for fourth quarter:

     -    Fourth quarter basic and diluted earnings per share are projected to
          be approximately $0.30 and $0.29, respectively;

     -    Fourth quarter revenue is expected to approximate $140 - $145 million.

The Company's previously announced outlook for the balance of 2001 and 2002 is
as follows:

     -    In light of the unprecedented uncertainty of current political and
          economic conditions, the Company has indicated that it expects revenue
          growth in the range of 15 to 20 percent for 2002. The Company remains
          confident with revenue growth in the 20 percent range longer term, but
          will continue to evaluate the circumstances and provide more specific
          guidance for 2002 in a few months.

     -    Operating income is expected to be approximately 13 to 15 percent of
          revenue (excluding special items).

     -    The effective tax rate is expected to be 35 percent.

     -    Net income is expected to increase at least 45 percent year over year
          (excluding special items, but including the beneficial impact of
          adopting SFAS 142).

     -    Capital spending is targeted at $40 to $50 million, reflecting product
          development and enhancement costs, customer service improvements and
          data center consolidation initiatives, as well as infrastructure needs
          to support continued growth and expansion of our ATM network.

     -    The Company expects to enter 2002 with more than 86% of its 2001
          revenues under long-term contracts. - Regarding the Company's revenue
          mix by product group, the Company expects the following mix for this
          year: transaction processing, 43%; risk management and decision
          support, 30%; and professional services, which includes all software
          sales, 27%. Actual performance through three quarters, including the
          EFT software sale to Concord EFS, is as follows: transaction
          processing, 44.7%; risk management & decision support 28.5%;
          professional services, 26.8%.

     -    EFT software sales have historically accounted for 8 to 12% of total
          revenues. Software revenues, including the recent sale to Concord EFS,
          are expected to remain in the same range in 2001 and 2002.

     -    The Company's projected 45% net income growth for 2002 includes
          approximately $4 million of benefit from SFAS 142, which is estimated
          to add $.08 to $.09 per share to EPS for the year. Without the SFAS
          benefit, net income is expected to grow approximately 33%. The
          currently projected 45% growth in net income is based on achieving the
          low end of the targeted 15-20% range of revenue growth year-over-year.
          The Company expects additional improvement in net income if revenues
          approach the higher end of this targeted revenue range.

RECENTLY ISSUED ACCOUNTING STANDARDS - In June 1998, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 133,
Accounting for Derivative Instruments and Hedging Activities, which provides
guidance on accounting for derivatives and hedge transactions. The statement was
effective for us on January 1, 2001. This pronouncement has not had a material
impact on our reported operating results or financial position.

In July 2001, the FASB issued Statement of Financial Accounting Standards No.
141, Business Combinations, which establishes new standards for accounting and
reporting requirements for business combinations and will require that the
purchase method of accounting be used for all business combinations initiated
after June 30, 2001. Use of the pooling-of-interests method is prohibited. We do
not believe that SFAS No. 141 will have a material impact on our consolidated
financial statements.

In July 2001, the FASB issued Statement of Financial Accounting Standards No.
142, Goodwill and Other Intangible Assets that will become effective for us on
January 1, 2002. SFAS 142 requires, among other things, the cessation of the
amortization of goodwill. In addition, the standard includes provisions for the
reassessment of the useful lives of existing recognized intangibles,
reclassification of certain intangibles out of previously reported goodwill and
the identification of reporting units for purposes of assessing potential future
impairments of goodwill. SFAS 142 also requires us to complete a transitional
goodwill impairment test six months from the date of adoption. We are assessing
the total impact the foregoing requirements will have on our consolidated
balance sheet and statement of operations. Goodwill



                                       19
<PAGE>
amortization for the third quarter of 2001 and the first nine months of 2001
amounted to approximately $1.0 million and $3.0 million, respectively.

In October 2001, the FASB issued FAS 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. Statement 144 requires that long-lived assets be
measured at the lower of carrying amount or fair value less cost to sell,
whether reported in continuing operations or in discontinued operations. The
standard is effective for 2002 and generally is to be applied prospectively. The
implementation of this standard is not expected to have a material impact on the
company's financial position or results of operations.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We operate internationally, and so are subject to potentially adverse movements
in foreign currency rate changes. We have not entered into foreign exchange
forward contracts to reduce our exposure to foreign currency rate changes on
inter-company foreign currency denominated balance sheet positions.

We are exposed to foreign exchange risk to the extent of adverse fluctuations in
the Indian rupee and the British pound. We do not believe that a change in the
Indian rupee and British pound exchange rates of 10% would result in a material
effect on our future earnings, financial position or cash flows. As our
international operations continue to grow and the related foreign exchange risks
increase, we may seek to enter into transactions that qualify for hedge
accounting treatment under SFAS No. 133 to reduce our exposure to foreign
currency rate changes.



                                       20
<PAGE>
                           PART II - OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

The Registration Statement on Form S-1 (Registration No. 333-33992) related to
our initial public offering of shares of our common stock (together with certain
associated preferred stock purchase rights) was declared effective on June 26,
2000, and the related offering commenced on June 27, 2000. We sold 5,500,000
shares at a price of $13.00 per share on June 30, 2000 for an aggregate public
offering price of $71,500,000.

The net offering proceedings to the Company after deducting the total expenses
associated with the offering was estimated to be $64,459,370. The following
table summarizes the amount of these net-offering proceeds that were used during
the period from the effective date of the offering through September 30, 2001
for the purposes shown:

<TABLE>
<S>                                                                                          <C>
Infrastructure and cost savings initiatives .......................................          $18,500,000*
Product development expenditures
                                                                                              11,200,000*

Construction of plants, buildings and facilities ..................................            7,400,000*
Purchase and installation of machinery and equipment ..............................            8,600,000*
Purchases of real estate ..........................................................                    0
Acquisition of other businesses ...................................................                    0
Repayment of indebtedness .........................................................            5,303,000
Working capital ...................................................................                    0
Temporary investments (money market funds and commercial paper having a maturity of
  two weeks or less)
                                                                                              13,456,370
                                                                                             -----------
    Total .........................................................................          $64,459,370
                                                                                             ===========
</TABLE>

*Estimated


                                       21
<PAGE>
ITEM 5.  OTHER INFORMATION

RISK FACTORS AND CAUTIONARY STATEMENTS.

When used in this Quarterly Report on Form 10-Q and in future filings by the
Company with the Securities and Exchange Commission (the "Commission"), in the
Company's press releases, letters and reports to stockholders and in oral
statements made by the Company's representatives, the words or phrases "should
result," "are expected to," "targeted," "will continue," "will approximate," "is
anticipated," "estimate," "project" or similar expressions are intended to
identify "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are necessarily
subject to certain risks and uncertainties, including those discussed below that
could cause actual results to differ materially from the Company's historical
experience and its present expectations or projections. Caution should be taken
not to place undue reliance on any such forward-looking statements, which speak
only as of the date made. The factors listed below could affect the Company's
financial performance and could cause the Company's actual results for future
periods to differ from any opinions or statements expressed with respect
thereto. Such differences could be material and adverse. The Company will not
undertake and specifically declines any obligation to publicly release the
result of any revisions that may be made to any forward-looking statements to
reflect events or circumstances occurring after the date of such statements or
to reflect the occurrence of anticipated or unanticipated events.

ESTIMATES OF FUTURE FINANCIAL RESULTS ARE INHERENTLY UNRELIABLE.

From time to time, representatives of the Company make public predictions or
forecasts regarding the Company's future results, including estimates regarding
future revenues, expense levels, earnings or earnings from operations. Any
forecast regarding the Company's future performance reflects various
assumptions. These assumptions are subject to significant uncertainties, and, as
a matter of course, many of them will prove to be incorrect. Further, the
achievement of any forecast depends on numerous factors (including those
described in this discussion), many of which are beyond the Company's control.
As a result, there can be no assurance that the Company's performance will be
consistent with any management forecasts or that the variation from such
forecasts will not be material and adverse. Investors are cautioned not to base
their entire analysis of the Company's business and prospects upon isolated
predictions, but instead are encouraged to utilize the entire available mix of
historical and forward-looking information made available by the Company, and
other information relating to the Company and its products, when evaluating the
Company's prospective results of operations.

In addition, representatives of the Company may occasionally comment publicly on
the perceived reasonableness of published reports by independent analysts
regarding the Company's projected future performance. Such comments should not
be interpreted as an endorsement or adoption of any given estimate or range of
estimates or the assumptions and methodologies upon which such estimates are
based. Undue reliance should not be placed on any comments regarding the
conformity, or lack thereof, of any independent estimates with the Company's own
present expectations regarding its future results of operations. The
methodologies employed by the Company in arriving at its own internal
projections and the approaches taken by independent analysts in making their
estimates are likely different in many significant respects. Although the
Company may presently perceive a given estimate to be reasonable, changes in the
Company's business, market conditions or the general economic climate may have
varying effects on the results obtained through the use of differing analyses
and assumptions. The Company expressly disclaims any continuing responsibility
to advise analysts or the public markets of its view regarding the current
accuracy of the published estimates of outside analysts. Persons relying on such
estimates should pursue their own independent investigation and analysis of
their accuracy and the reasonableness of the assumptions on which they are
based.



                                       22
<PAGE>
CONSOLIDATION IN THE INDUSTRIES WE SERVE MAY ADVERSELY AFFECT OUR ABILITY TO
SELL OUR PRODUCTS AND SERVICES.

Mergers, acquisitions and personnel changes at financial institutions and
electronic funds transfer networks may adversely affect our business, financial
condition and results of operations. Currently, the banking and EFT industries
are consolidating, causing the number of financial institutions and ATM networks
to decline. This consolidation could cause us to lose:

          -    current and potential customers;

          -    market share if the combined entity determines that it is more
               efficient to develop in-house products and services similar to
               ours or use our competitors' product and services; and

          -    revenue if the combined institution is able to negotiate a
               greater volume discount for, or discontinue the use of, our
               products and services.

For example, one of the larger customers of our electronic transaction
processing business, the STAR network, has been purchased by one of our
competitors, Concord EFS. Although we will likely continue processing for STAR
through the third quarter of 2002, we expect that the revenues we receive from
this relationship will decline as the migration proceeds.

OUR ACQUISITION OF ACI MAY NOT BE SUCCESSFUL.

In October 2001, we acquired the remaining equity interests in Access Cash
International, L.L.C. ("ACI"), a limited liability company in which we
previously held a 24% interest. ACI is the second largest independent ATM
service provider in the United States, with over 8,400 owned or managed ATMs.
ACI provides turnkey ATM deployment solutions, including ATM sales and
management as well as branding and advertising services. ACI's revenues are
received from the fees paid by consumers utilizing the deployed ATM machines and
interchange fees paid by their banks and from the sale of ATMs.

In recent years, ACI has operated at a loss. Continued improvement in the future
will depend upon our ability to effectively integrate ACI's operations into our
organization, to efficiently manage the deployment of the ATMs and to generate
additional revenues from the installed ATM base and the sale of new machines. No
assurance can be given that we will be successful in these efforts. If we are
not successful in our effort to improve the revenues and profitability of ACI,
our future results of operations will be adversely affected. In addition, the
expansion of the installed base of ATMs may require the application of increased
amounts of cash to keep the machines appropriately supplied with cash for
withdrawal by consumers. In addition, regulations are currently being considered
regarding the application of the Americans with Disabilities Act to ATM
networks. Although any regulations could result in increased opportunities for
ATM sales by us, they could also require us to retire or retrofit portions of
the ATM base we own. It is also possible that existing ATM networks will be
exempted from any future regulations. As a result, we are unable at this time to
determine whether, and to what extent, any final regulations will impact our
business.


                                       23
<PAGE>
WE FACE INTENSE COMPETITION IN ALL AREAS OF OUR BUSINESS, AND IF WE DO NOT
COMPETE EFFECTIVELY, OUR BUSINESS WILL BE HARMED.

We face intense competition from a number of companies. Further, we expect that
competition will intensify as the movement towards increasing consolidation
within the financial services industry continues. Many of our competitors have
significantly greater financial, technical and marketing resources, greater name
recognition and a larger installed customer base than we do.

In the electronic payment management market, our principal competitors include:

     -    third party network and credit card processors, including First Data,
          Equifax, Total System Services, Electronic Data Systems, Concord EFS
          and Alliance Data Systems;

     -    financial institutions that have developed internal processing
          capabilities or services similar to ours, including Bank of America, M
          & I Data and Fifth Third National Bank;

     -    electronic data interchange and cash management providers, including
          Fiserv, CheckFree, Metavante, EDS and Fundtech;

     -    electronic bill payment providers, including CheckFree, EDS,
          MasterCard, Spectrum and Visa;

     -    electronic funds transfer software providers, including Transaction
          Systems Architects, SLMsoft, Oasis, Mosaic and PaySys; and

     -    national information database companies and other content providers,
          including Equifax, Experian and Trans Union.

In the market for electronic transaction processing, the principal factors on
which we compete are price and service levels. The future growth of our revenues
in this market is dependent upon securing an increasing volume of transactions.
If we cannot control our transaction processing expenses, we may not remain
price competitive and our revenues will be adversely affected.

Competition for our decision support and risk management products is based
primarily on the quantity and quality of the data available to us for this
purpose and, to a somewhat lesser degree, price. Our competitive position in
these markets could be harmed if our competitors were able to compile different
data sources and analytical capabilities that proved to be more effective than
our products. In addition, competitive pressure on our check verification
business is increasing and may require us to make significant investments to
maintain our customer base and acquire new customers.

In addition to our current competitors, we expect substantial competition from
established and new companies. We cannot assure you that we will be able to
compete effectively against current and future competitors. Increased
competition could result in price reductions, reduced gross margins or loss of
market share.

IF WE FAIL TO DEVELOP AND INTRODUCE NEW AND ENHANCED PRODUCTS AND SERVICES, WE
WILL NOT BE ABLE TO COMPETE EFFECTIVELY AND OUR ABILITY TO GENERATE REVENUES
WILL SUFFER.

Our success will depend in part on our ability to continue to develop and
introduce new and enhanced payment and risk management products and services
that keep pace with competitive introductions, technological changes and
changing customer preferences. If we fail to anticipate or respond adequately to
new developments, we may lose opportunities for business with both current and
potential customers.

For example, we have announced that we intend to develop products and services
that effectively bundle various combinations of our transaction processing, risk
management and professional services offerings into higher-value integrated
product sets. We are continuing to evaluate the initial market opportunities
available to us for these offerings. If we are not successful in developing and
selling these enhanced products and services, our future growth expectations
could be diminished.



                                       24
<PAGE>
WE ARE DEPENDENT UPON CONTINUED GROWTH IN THE MARKET FOR ELECTRONIC DEBIT
PAYMENT SERVICES.

If the electronic debit payments market does not grow or grows more slowly than
expected, our business will suffer. Several factors could inhibit the acceptance
and growth of electronic debit payments, including:

     -    these types of payments are relatively new alternatives to the more
          familiar cash, check and credit card payment options. Consumers and
          businesses may be unwilling to change their established payment
          preferences and adopt these new forms of payment as quickly as we
          expect; and

     -    consumers may be concerned that these newer payment options are not as
          safe or reliable as more traditional payment methods. Consumers may
          also believe that these payment technologies offer a lower level of
          privacy.

IF WE EXPERIENCE SYSTEM FAILURES, THE PRODUCTS AND SERVICES WE PROVIDE TO OUR
CUSTOMERS COULD BE DELAYED OR INTERRUPTED, WHICH WOULD HARM OUR BUSINESS AND
REPUTATION AND RESULT IN THE LOSS OF CUSTOMERS.

Our ability to provide reliable service largely depends on the efficient and
uninterrupted operations of our computer and telecommunications network systems
and our data centers. Any significant interruptions could severely harm our
business and reputation and result in a loss of revenue and customers. Our
systems and operations could be exposed to damage or interruption from fire,
natural disaster, unlawful acts, power loss, telecommunications failure,
unauthorized entry and computer viruses. Although we have taken steps to prevent
system failures, we cannot be certain that our measures will be successful and
that we will not experience service interruptions. Further, our property and
business interruption insurance may not be adequate to compensate us for all
losses or failures that may occur.

LEGISLATION RELATING TO CONSUMER PRIVACY PROTECTION COULD HARM OUR ABILITY TO
COLLECT AND USE DATA, INCREASE OUR OPERATING COSTS OR OTHERWISE HARM OUR
BUSINESS.

Existing and new laws and regulations relating to consumer privacy protection
could harm our ability to collect and use consumer data, increase our operating
costs or otherwise harm our business. We collect personal data about consumers
for use in our decision support and risk management products. Due to the
increasing public concern over consumer privacy rights, Congress and state
legislatures have adopted and are considering adopting laws and regulations
restricting the purchase, sale and sharing of personal information about
consumers. For example, some states have restricted the sale of motor vehicle
records, including driver's license lists, and some states refuse to disclose
this information at all.

The new federal financial modernization law, known as the Gramm-Leach-Bliley
Act, imposes significant new consumer information privacy requirements on any
entity engaged in the business of providing financial services, including
entities that provide services to financial institutions. Federal agencies, such
as the Comptroller of the Currency and the Federal Trade Commission, have issued
regulations to implement these requirements. The Act requires covered companies
to develop and implement policies to protect the security and confidentiality of
consumers' nonpublic personal information and to disclose those policies to
consumers before a customer relationship is established and annually thereafter.
In addition, the Act requires covered companies to give an opt-out notice to
consumers before sharing consumer information with third parties. The opt-out
notice requirement in the Act is subject to several exceptions for credit
reporting and fraud prevention purposes. Although we believe these exceptions
apply to our business, government agencies could interpret their regulations in
a manner that could expand the scope of the Act in ways which could adversely
affect our business. In addition, even if the regulations do not affect us
directly, uncertainty over the scope of the regulations could make financial
institutions unwilling or reluctant to share consumer-related information with
us.



                                       25
<PAGE>
The Act does not prohibit state legislation or regulations that are more
restrictive on our collection and use of data. More restrictive legislation or
regulations have been introduced in the past and could be introduced in the
future in Congress and the states. For example, in the past legislation has been
proposed which would require consumers to opt in to any plan, which would allow
their nonpublic personal information to be disclosed. We are unable to predict
whether more restrictive legislation or regulations will be adopted in the
future. Any future legislation or regulations could have a negative impact on
our business.

IF THE SECURITY OF OUR DATABASES IS COMPROMISED, OUR REPUTATION COULD SUFFER AND
CUSTOMERS MAY NOT BE WILLING TO USE OUR PRODUCTS AND SERVICES.

If the security of our databases is compromised, our business could be
materially adversely affected. In our electronic payments business, we collect
personal consumer data, such as names and addresses, social security numbers,
drivers' license numbers, checking and savings account numbers and payment
history records. Unauthorized access to our database could result in the theft
or publication of personal confidential information and the deletion or
modification of personal records or otherwise cause interruptions in our
operations. These concerns about security are increased when we transmit
information over the Internet. A security or privacy breach may:

     -    deter customers from using our products and services;

     -    harm our reputation;

     -    expose us to liability;

     -    increase our operating expenses to remediate problems caused by the
          breach; and

     -    decrease market acceptance of electronic commerce transactions in
          general.

WE ARE DEPENDENT ON DELUXE FOR A SIGNIFICANT PORTION OF OUR REVENUE.

In the first nine months of 2001, net sales to Deluxe represented 9.2% of our
total net revenues. On a year-over-year basis, however, total revenues from
Deluxe declined by 18.8% to $35.8 million during the first three quarters of
2001 from $44.1 million in the first three quarters of 2000. Although Deluxe has
established minimum spending targets of $43 million per year through March 31,
2005 for software development, maintenance and other support services from us
and has indicated that it expects to purchase services from us in 2002 at
approximately this level, further efforts at expense reduction by Deluxe could
cause the revenues we receive from Deluxe to continue to decline. The loss of
Deluxe as a customer or a material reduction in the amount of services it orders
from us would materially adversely affect our future results of operations and
financial condition.



                                       26
<PAGE>
WE MAY EXPERIENCE SOFTWARE DEFECTS, DEVELOPMENT DELAYS AND INSTALLATION
DIFFICULTIES, WHICH WOULD HARM OUR BUSINESS AND REPUTATION AND EXPOSE US TO
POTENTIAL LIABILITY.

Our services and products are based on sophisticated software and computing
systems and we often encounter delays when developing new products and services.
Further, the software underlying our products and services has occasionally
contained and may in the future contain undetected errors or defects when first
introduced or when new versions are released. In addition, we may experience
difficulties in installing or integrating our products and technologies on
platforms used by our customers or in new environments, such as the Internet.
Defects in our software products, errors or delays in the processing of
electronic transactions or other difficulties could result in:

     -    delay in market acceptance;

     -    additional development costs;

     -    diversion of technical and other resources;

     -    loss of customers;

     -    negative publicity; or

     -    exposure to liability claims.

Although we attempt to limit our potential liability for warranty claims through
disclaimers and limitation-of-liability provisions in our license and client
agreements, we cannot be certain that these measures will be successful in
limiting our liability.

WE DEPEND ON THE CONTINUED SERVICES OF OUR KEY OFFICERS.

Our future success depends upon the continued services of a number of key
officers, including John Blanchard, our Chairman and Chief Executive Officer,
Paul Bristow, our Executive Vice President and Chief Financial Officer, Dr.
Nikhil Sinha, our Executive Vice President, Business Enterprise Group and Paul
W. Finch, our Executive Vice President, Global Customer Care. The loss of the
technical knowledge and industry expertise of any of these officers could
seriously harm our business.

OUR ATTEMPTS TO EXPAND BY MEANS OF ACQUISITIONS AND STRATEGIC ALLIANCES MAY NOT
BE SUCCESSFUL.

Tax requirements related to our Spin-Off from Deluxe will restrict our ability
to complete significant acquisitions through the issuance of our common stock.
Further, our ability to expand in this manner, including through our acquisition
of ACI, involves many risks, including:

     -    the operations, technology and personnel of any acquired companies may
          be difficult to integrate;

     -    the allocation of resources to consummate these transactions may
          disrupt our business;

     -    acquired businesses may not achieve anticipated revenues, earnings or
          cash flow;

     -    strategic alliances may not be successful or we may not realize
          anticipated benefits in a timely manner, or at all; and

     -    our relationships with existing customers and business partners may be
          weakened or terminated as a result of these transactions.



                                       27
<PAGE>
THERE ARE A NUMBER OF RISKS ASSOCIATED WITH OUR INTERNATIONAL SALES AND
OPERATIONS THAT COULD HARM OUR BUSINESS.

Because we currently sell some of our products and services in Europe, Australia
and South and Latin America, our business is subject to risks associated with
doing business internationally. Also, we may not be successful in selling our
services outside of the United States. In the first nine months of 2001, we
generated approximately 7.7% of our net sales outside of the United States. Our
future results could be harmed by a variety of factors, including:

     -    changes in foreign currency exchange rates;

     -    changes in a specific country's or region's political and economic
          conditions, particularly in emerging markets;

     -    potentially unfavorable tax rules;

     -    tariffs, duties and other trade barriers;

     -    reduced protection for intellectual property rights;

     -    challenges in managing widespread operations;

     -    changes in foreign laws and regulatory requirements or in foreign
          policy; and

     -    varying business practices in foreign countries.

CHANGES IN INDIAN TAX LAWS COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS.

The Company's Indian software development and business process management
operations qualify for tax incentives associated with businesses which operate
within designated geographic locations. These incentives generally provide us
with exemptions from Indian tax on certain business income generated from these
operations and phase out through March 2009. We cannot assure you that these tax
benefits will be continued in the future at their current levels or at all. If
these tax benefits were reduced or eliminated, our taxes in future periods would
likely increase.

WE MAY FACE COLLECTION RISKS ON SOME PAYMENTS.

We plan to introduce a check guarantee program pursuant to which we will
purchase certain checks presented at the point of sale at a discount from their
face value and assume the subsequent risk of collection. If we are unable to
collect on checks at the expected rates or if the payment quality of our
portfolio of returned checks deteriorates, we may incur a loss on the checks we
purchase.

OUR GOVERNMENT SERVICES BUSINESS HAS HISTORICALLY NOT BEEN PROFITABLE AND
DELUXE'S INDEMNIFICATION MAY NOT BE ADEQUATE.

Our government services business contributed operating losses of approximately
$106,000 during 2000, $6.6 million in 1999 and $47.7 million in 1998. These
amounts include losses we recognized in 2000, 1999 and 1998 that represent
probable future losses from unprofitable long-term service contracts and the
write-off of assets associated with this business. The losses on the long-term
service contracts result from the revenues from the contracts being lower than
expected and the expenses to service the contracts being higher than
anticipated. The assets associated with the government services business were
written off because this business has a negative overall cash flow and its
assets have no resale value.

Deluxe has agreed to indemnify us for future losses arising from any litigation
based on the conduct of the business prior to our initial public offering and
future losses on identified loss contracts in excess of the estimates
underlying our



                                       28
<PAGE>
$29.2 million loss contract reserves as of April 30, 2000. This indemnification
obligation does not apply to losses contemplated by the existing reserve and is
subject to a $14.6 million limit. In addition, Deluxe's indemnification does not
apply to any contract that was not in a loss position as of April 30, 2000 and
so if any of these profitable contracts were to become unprofitable, no
indemnification would be available. Our loss contract reserves are based on
estimates of the future performance of identified contracts, and the estimated
results may not be realized. As a result, we may incur losses beyond our current
reserves and Deluxe's indemnification. For example, a reduction in the number of
welfare recipients below our current expectations could increase our projected
future losses. These excess losses would be recognized in future periods and
decrease our earnings for those future periods.

WE FACE TERMINATION AND COMPLIANCE RISKS WITH RESPECT TO OUR GOVERNMENT
CONTRACTS.

All of our government contracts can be terminated at any time, without cause, by
the contracting governmental entity. We realized 8.2% of our net sales in the
third quarter of 2001 pursuant to contracts of this type. If a government
contract is so terminated, the contractor generally is entitled to receive
compensation only for the services provided or costs incurred at the time of
termination and a reasonable profit on the contract work performed prior to the
date of termination. In addition, all of our government contracts require us to
comply with various contract provisions and procurement regulations, and in some
cases, accounting requirements. Violations of some of these provisions could, if
not cured, result in termination of the contract and fines.

There may be a continuing decline in the revenues of the government services
segment, as existing contracts expire. Our Medicaid eligibility verification
contract with the state of New York has been extended through April 2002. The
minimum annual revenue from this contract is $11.3 million. New York has the
option to further extend this contract on a month-to-month basis after April
2002. There can be no assurance that New York will exercise any of its extension
options.

WE MAY BE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS.

Despite our efforts to protect our intellectual property rights, third parties
may infringe or misappropriate our intellectual property rights, or otherwise
independently develop substantially equivalent products and services. The loss
of intellectual property protection or the inability to secure or enforce
intellectual property protection could harm our business and ability to compete.
We rely on a combination of trademark and copyright laws, trade secret
protection and confidentiality and license agreements to protect our trademarks,
software and know-how. We have also applied for patent protection on some of the
features of our newer products. We may be required to spend significant
resources to protect our trade secrets and monitor and police our intellectual
property rights.



                                       29
<PAGE>
Third parties may assert infringement claims against us in the future. In
particular, there has been a substantial increase in the issuance of business
process patents, which may have broad commercial implications. Claims for
infringement of all types of patents are becoming an increasing source of
litigation. If we become subject to an infringement claim, we may be required to
modify our products, services and technologies or obtain a license to permit our
continued use of those rights. We may not be able to do either of these things
in a timely manner or upon reasonable terms and conditions. Failure to do so
could seriously harm our business and operating results. In addition, future
litigation relating to infringement claims could result in substantial costs to
us and a diversion of management resources. Adverse determinations in any
litigation or proceeding could also subject us to significant liabilities and
could prevent us from using some of our products, services or technologies.

OUR HISTORICAL FINANCIAL INFORMATION MAY NOT NECESSARILY REFLECT OUR RESULTS AS
A SEPARATE COMPANY.

We have only a limited operating history as an independent company. Some of the
historical financial information we have included in this Quarterly Report on
Form 10-Q has been carved out from Deluxe's consolidated financial statements
and may not necessarily reflect what our results of operations, financial
condition and cash flows would have been had we been a separate, stand-alone
entity during the periods presented.

THERE ARE TAX RISKS ASSOCIATED WITH THE SPIN-OFF.

Deluxe has received confirmation from the Internal Revenue Service that, for
U.S. federal income tax purposes, the Spin-Off was generally tax-free to Deluxe
and to its shareholders. This confirmation was premised on a number of
representations and undertakings made by eFunds and Deluxe to the Internal
Revenue Service, including representations with respect to each company's
intention not to engage in certain transactions in the future. The Spin-Off may
be held to be taxable to Deluxe and to its shareholders who received eFunds
shares if the Internal Revenue Service determines that any of the
representations made were incorrect or untrue in any respect, or if any
undertakings made are not complied with. If, notwithstanding the confirmation of
the Internal Revenue Service, the Spin-Off is held to be taxable, both Deluxe
and its shareholders who received eFunds shares could be subject to a material
amount of taxes. We will be liable to Deluxe for any such taxes incurred by
Deluxe to the extent such taxes are attributable to specific actions or failures
to act by us, or to specific transactions involving us following the Spin-Off.
In addition, we will be liable to Deluxe for a portion of any taxes incurred by
Deluxe if the Spin-Off fails to qualify a tax-free as a result of a retroactive
change of law or other reasons unrelated to the action or inaction of either us
or Deluxe.

Deluxe generally has sole authority to respond to and conduct all tax
proceedings and tax audits relating to our operations prior to the Spin-Off and
to file all related returns on our behalf. Our tax sharing agreement with Deluxe
also determines the amount of our liability to, or entitlement to payment from,
Deluxe with regard to taxes and tax refunds for these periods. This arrangement
may result in conflicts between Deluxe and us. Under the tax-sharing agreement,
Deluxe may choose to contest, compromise or settle any adjustment or deficiency
proposed by the relevant taxing authority in a manner that may be beneficial to
Deluxe and detrimental to us.

TAX LIMITATIONS ON ISSUANCE OF OUR SHARES WILL RESTRICT OUR ABILITY TO UNDERTAKE
ACQUISITIONS.

We may be limited in the amount of shares that we can issue because the issuance
of our shares may cause the Spin-Off to be taxable to Deluxe under Section
355(e) of the Internal Revenue Code. As a result of such possible adverse tax
consequences, we may be restricted in our ability to effect certain acquisitions
or to enter into other transactions that would result in a change of control of
us.



                                       30
<PAGE>
PROVISIONS IN OUR CHARTER DOCUMENTS AND DELAWARE LAW AND TAX CONSIDERATIONS
RELATED TO THE SPIN-OFF MAY DELAY OR PREVENT A CHANGE IN CONTROL.

Provisions of our certificate of incorporation and bylaws and Delaware law may
delay or prevent a change in control of the Company that you may consider
favorable. These provisions include the following:

     -    no cumulative voting by stockholders for directors;

     -    a classified board of directors with three-year staggered terms;

     -    the ability of our board to set the size of the board of directors, to
          create new directorships and to fill vacancies;

     -    the ability of our board to issue preferred stock, without stockholder
          approval, with rights and preferences that may be superior to our
          common stock;

     -    the ability of our board to amend the bylaws;

     -    a prohibition of stockholder action by written consent;

     -    advance notice requirements for stockholder proposals and for
          nominating candidates to our board;

     -    restrictions under Delaware law on mergers and other business
          combinations between us and any holder of 15% or more of our
          outstanding common stock; and

     -    a requirement that 66-2/3% of our stockholders and 66-2/3% of our
          directors approve certain corporate transactions, including mergers
          and consolidations, sales of assets or amendments to our certificate
          of incorporation.

In addition we have adopted a stockholder rights plan, which discourages the
unauthorized acquisition of 15% or more of our common stock or an unauthorized
exchange or tender offer. Our tax sharing agreement with Deluxe also provides
that we will indemnify Deluxe for any taxes due if the Spin-Off or some of the
related transactions fail to qualify as tax-free because of our actions or
inactions. An acquisition of us by a third party could have such an effect. As a
result, these tax considerations may delay or prevent a third party from
acquiring us in a transaction you may otherwise have considered favorable or
reduce the amount you receive as part of the transaction.




                                       31
<PAGE>
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a) The following exhibits are filed as part of this report:

<TABLE>
<CAPTION>
Exhibit No.                                         Description                                     Method of Filing
-----------                                         -----------                                     ----------------
<S>                 <C>                                                                             <C>
     2.1            Interest Purchase Agreement, dated as of August 31, 2001 by and between                 *
                    eFunds Corporation and ATM Holding, Inc. (incorporated by
                    reference to Exhibit 2.1 to the Current Report on Form 8-K
                    filed by the Company with the Securities and Exchange
                    Commission (the "Commission") on October 24, 2001)

      3.1           Amended and Restated Certificate of Incorporation (incorporated by                      *
                    reference to Exhibit 3.1 to the Registration Statement on Form S-1 (the
                    "S-1") filed by the Company with the Commission on April 4, 2000,
                    Registration No. 333-33992).

      3.2           Bylaws (incorporated by reference to Exhibit 3.2 to the S-1)                            *

      4.1           Form of common stock certificate (incorporated by reference to Exhibit 4.1              *
                    to Amendment No. 1 to the S-1 filed by the Company with the Commission on
                    May 15, 2000 ("Amendment No. 1"), Registration No. 333-33992)

      4.2           Form of Rights Agreement by and between the Company and Rights Agent,                   *
                    (incorporated by reference to Exhibit 4.2 to Amendment No. 1)

      4.3           Certificate of Designation of Series A Participating Preferred Stock                    *
                    (incorporated by reference to Exhibit 4.3 to the Company's Quarterly
                    Report on Form 10-Q for the quarter ended June 30, 2000)

     10.4           Change in Control Agreement between the Company and Paul W. Finch.               Filed herewith
</TABLE>


*Incorporated by reference

(b) Reports on Form 8-K:
    None



                                       32
<PAGE>
                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                            eFunds Corporation
                                            (Registrant)


Date: November 12, 2001                     /s/ J. A. Blanchard III
                                            J. A. Blanchard III,
                                            Chief Executive Officer and Chairman
                                            (Principal Executive Officer)



Date:November 12, 2001                      /s/ Paul H. Bristow
                                            Paul H. Bristow
                                            Executive Vice President and
                                            Chief Financial Officer
                                            (Principal Financial Officer)



                                       33
<PAGE>
INDEX TO EXHIBITS

<TABLE>
<CAPTION>
 Exhibit No.                                   Description                                          Page Number
 -----------                                   -----------                                          -----------
<S>                   <C>                                                                         <C>
     10.4             Change in Control Agreement between the Company and Paul W. Finch.
</TABLE>



                                       34