For any site whose main payment processor was iBill, this came as a shock today. iBill sent out the following: Included are additional background memos that explain iBill’s current state of emergency.

The dispute with First Data is currently affecting our ability to pay our clients. We are working to get this issue resolved so that we can resume our regularly scheduled payouts. We will post a daily message on CMI to keep clients up to date on the status of this issue.

We know how serious this matter is to you. Please be assured that everyone here at iBill is working diligently to correct these matters so that we can all return to business as usual. The next update will be posted tomorrow, FridayOctober 1, 2004 at 4:00 p.m.

iBill News,September 29, 2004 iBill Clients: Please know that paying our clients is our highest priority. iBill is continuing to negotiate the release of settlement funds being withheld by First Data in order to pay our clients. In addition to our continued negotiations with First Data, we are working on freeing up additional capital to speed up the remittance of past due payments to our clients.

As you all know, we have been working through the difficult issue of transitioning our domestic IPSP business to our new domestic merchant bank at a pace that was faster than what was initially proposed or had been planned. In order to ensure proper compliance for our US sponsored merchants we will not be accepting Visa transactions until each US sponsored merchant has completed their new iBill merchant agreement with our new domestic bank. All US clients will continue to have the ability to offer MasterCard, Discover, JCB, American Express, Online checks, Web 900 and WebPhone. iBill account managers will have agreements available on Friday, October 1st. Planned implementation is scheduled for as early as Friday, October 8th.

To further clarify, iBill EU clients are not affected by this and will continue to process Visa without interruption. Going forward, iBill will continue to operate under three business models:

1) iBill Direct US. iBill has an agreement with a domestic association-registered party. This involves processing and settling with a domestic bank. In this model, iBill will sponsor and accept the risk on behalf of our clients. Not only will clients have the ability to take advantage of the iBill products and services that they know today – 24X7 customer service, risk management, RevShare affiliate program, and password management – but, they will now be fundeddirectly by the bank and will have the option to be funded daily. We are extremely excited about this program and feel that it puts us steps ahead of our competition.

2) iBill EU. iBill will continue its current processing relationship in the EU. The program services remain the same and will continue to be expanded. We are also moving forward with establishing a direct merchant relationship with our EU processor and bank. This option will be similar to iBill Direct US, which allows for direct funding from the bank.

3) Asia-Pacific Merchant. iBill has established a merchant relationship in the Asia-Pacific region. More details to follow next week. We appreciate all of the support that our clients have given us over the last few days. We know how seriousthis matter is to you. Please be assured that everyone here at iBill is working diligently to correct these matters so that we can all return to business as usual.

Sincerely, Your iBill Team. For more information regarding iBill US Direct please contact our sales team at [email protected].

iBill UpdateAs previously reported, we have been involved in a dispute with First Data concerning iBill’s credit cardprocessing arrangement. First Data has chosen not to continue a business relationship with iBill. Last week, iBill obtained a court order requiring First Data to continue providing services to iBill. Yesterday, however, the Court vacated its order; as a result, for the time being First Data does not have to continue providing credit card processing services to iBill. We are currently evaluating whether to continue to pursue legal action against First Data as a result of First Data’s refusal to continue to provide services to iBill. As indicated yesterday, we finalized our move from First Data. First Data is presently withholding iBill’s remittances for the last week which has affected our ability to pay our clients. We are currently in negotiations with First Data seeking a release of these funds so that we can forward payment to our clients. We apologize for the short term business impact this has had and any inconvenience which has resulted. We value and appreciate your continued support. We will continue to keep you informed as to any further developments.

iBill Update: Stand-In Due to our dispute with First Data Corp, iBill has now moved our US business away from First Data. During the transition, we temporarily operated in stand-in processing from noon to 8:00 pm, Wednesday, 9/22/04. Please be advised that we are no longer doing stand-in processing. All US credit card transactions that occurred duringstand-in processing, including scheduled rebills, should now be appearing in CMI. Going forward, new sales will appear in CMI as usual.

Thank you for your continued patience and support, we greatly appreciate your business and look forward to our continued relationship.

Business Continuity Update for Clients Using HTTP Post Notification

As part of iBill’s business continuity plan, our entire data center is backed up with an onsite high capacity diesel generator. In the event of a power failure, all transaction processing and HTTP Post Notification will continue without interruption. However, it is important to note that we may experience network outages if Internet Service Providers and Telephone facilities are affected. Should iBill experience a network outage or lose local connectivity, we utilize an out of state data center as a secondary hot site for non-catalog transaction processing. Clients who perform IP validation for HTTP Post Notification will need to update their validation method to allow for our offsite IP address.