<PAGE>

     As filed with the Securities and Exchange Commission on April 4, 2000
                                                     Registration No. 333-

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM S-1
            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                               eFUNDS CORPORATION
             (Exact name of registrant as specified in its charter)

        Delaware                      7374                   39-1506286
    (State or other            (Primary Standard          (I.R.S. Employer
    jurisdiction of                Industrial           Identification No.)
    incorporation or          Classification Code)
     organization)

                            400 West Deluxe Parkway
                                 P.O. Box 12536
                           Milwaukee, Wisconsin 53212
                                 (414) 341-5000
  (Address, including zip code, and telephone number, including area code, of
                   registrant's principal executive offices)

                             John A. Blanchard III
                      Chairman and Chief Executive Officer
                               eFunds Corporation
                            400 West Deluxe Parkway
                                 P.O. Box 12536
                           Milwaukee, Wisconsin 53212
                                 (414) 341-5000
 (Name, address, including zip code, and telephone number, including area code,
                             of agent for service)

                                   Copies to:
      Jonathan B. Abram, Esq.                 Raymond W. Wagner, Esq.
        Dorsey & Whitney LLP                 Simpson Thacher & Bartlett
       Pillsbury Center South                   425 Lexington Avenue
       220 South Sixth Street                    New York, NY 10017
       Minneapolis, MN 55402                       (212) 455-2000
           (612) 340-2600                    Facsimile: (212) 455-2502
     Facsimile: (612) 340-0738

   Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.

   If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [_]

   If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [_]

   If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]

   If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]

   If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]

                                ----------------
                        CALCULATION OF REGISTRATION FEE

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                 Title of Each Class of                    Proposed Maximum Aggregate    Amount of
               Securities to be Registered                     Offering Price (1)     Registration Fee
--------------------------------------------------------------------------------
<S>                                                        <C>                        <C>
Common Stock, $.01 par value(2)..........................       $115,000,000.00          $30,360.00
</TABLE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(1)  Estimated solely for the purposes of computing the amount of the
     registration fee pursuant to Rule 457(o) under the Securities Act of 1933.
(2)  Includes certain associated preferred stock purchase rights that will be
     issued to each stockholder pursuant to a rights agreement.

                                ----------------
   The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information contained in this prospectus is not complete and may be       +
+changed. These securities may not be sold until the registration statement    +
+filed with the Securities and Exchange Commission is declared effective. This +
+prospectus is not an offer to sell these securities and it is not soliciting  +
+an offer to buy these securities in any state where the offer or sale is not  +
+permitted.                                                                    +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
                   Subject to Completion, dated April 4, 2000

PROSPECTUS
                                       Shares

[LOGO]

                                  Common Stock

--------------------------------------------------------------------------------

This is our initial public offering of shares of common stock. We are offering
           shares.We are presently a subsidiary of Deluxe Corporation. No
public market currently exists for our shares.We anticipate that the initial
public offering price will be between $         and $         per share.

We have applied to list the shares on the Nasdaq National Market under the
symbol "EFDS."

     Investing in our shares involves risks. Risk Factors begin on page 6.

<TABLE>
<CAPTION>
                                                                 Per Share Total
                                                                 --------- -----
<S>                                                              <C>       <C>
Public Offering Price...........................................   $       $
Underwriting Discount...........................................   $       $
Proceeds to eFunds..............................................   $       $
</TABLE>

We have granted the underwriters a 30-day option to purchase up to
additional shares of common stock on the same terms and conditions as set forth
above to cover over-allotments, if any.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.

Lehman Brothers, on behalf of the underwriters, expects to deliver the shares
on or about         , 2000.

--------------------------------------------------------------------------------

Lehman Brothers                                         Bear, Stearns & Co. Inc.

FAC/Equities                                        John G. Kinnard and Company,
                                       Incorporated

     , 2000
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                      Page
                                      ----
<S>                                   <C>
Prospectus Summary..................    1
Risk Factors........................    6
Forward-Looking Statements..........   16
Our Separation from Deluxe..........   16
Use of Proceeds.....................   17
Dividend Policy.....................   17
Capitalization......................   18
Dilution............................   19
Selected Financial Data.............   20
Management's Discussion and Analysis
 of Financial Condition and Results
 of Operations......................   22
Business............................   33
</TABLE>
<TABLE>
<CAPTION>
                                     Page
                                     ----
<S>                                  <C>
Management..........................  53
Agreements Between eFunds and
 Deluxe.............................  64
Principal Stockholder...............  70
Description of Capital Stock........  70
Shares Eligible for Future Sale.....  75
Certain United States Federal Tax
 Consequences to Non-United States
 Holders............................  76
Underwriting........................  78
Legal Matters.......................  81
Experts.............................  81
Where You Can Find More
 Information........................  81
Index to Consolidated Financial
 Statements......................... F-1
</TABLE>


                               ----------------

   You should rely only on the information contained in this prospectus. We
have not, and the underwriters have not, authorized anyone to provide you with
different information. We are offering to sell, and seeking offers to buy,
shares of our common stock only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of our common stock.

   AccountChex Plus(SM), Connex(TM), ChexSystems logo, DebitBureau(SM), eFunds,
FraudFinder(SM), Integreat!(SM), New AccountChex(SM), SCAN(SM), QualiFile(SM)
and DataNavigator(TM) are our trademarks and service marks. Other trademarks and
trade names referred to in this prospectus are the property of their respective
owners.

   Until         , 2000, all dealers selling shares of our common stock,
whether or not participating in this offering, may be required to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.


                                       i
<PAGE>

                               PROSPECTUS SUMMARY

   You should read the following summary with the more detailed information and
financial statements and related notes appearing elsewhere in this prospectus.

                               eFunds Corporation

Our Business

   We are a leading provider of end-to-end electronic debit payment solutions
to financial institutions, retailers, electronic funds transfer networks and e-
commerce providers. Our primary products and services include:

  .  decision support and risk management tools;

  .  electronic funds transfer processing, monitoring and settlement
     services; and

  .  professional services, including information technology consulting and
     business process management.

   We offer these products and services as comprehensive solutions or as
independent offerings. We are a single source of electronic debit payment
solutions whether payments are made using payment cards or paper checks, or
whether the transaction is accomplished at retail locations or automated teller
machines, or ATMs, through mail or telephone orders or over the Internet.

   Our decision support and risk management tools combat identity fraud and
account abuse, using our leading DebitBureau database of more than 2.7 billion
records. We are a leading third party processor of electronic funds transfers
in the United States and can process electronic payments cost-effectively to
all electronic funds transfer networks on a worldwide basis. As part of our
comprehensive solutions, we offer professional services, including
implementation and integration of our software, custom software development,
creation of e-commerce applications and business process management.

   Our clients include:

  .  16 of the 20 largest United States financial institutions, including
     Bank of America, Citibank and Bank One;

  .  17 of the 20 largest United States retailers, including Wal-Mart, Home
     Depot and Safeway;

  .  large electronic funds transfer networks, including STAR Systems and
     NYCE;

  .  e-commerce providers, including USA Bancshares.com and X.com; and

  .  international financial institutions, including Bank of Montreal,
     NatWest and The Royal Bank of Scotland.

Our Market Opportunity

   The global payment system is undergoing rapid change as new technologies and
new business requirements, primarily in e-commerce, cause newer electronic
payment methods to supplant traditional paper methods. Debit cards are among
the fastest growing payment method in the United States. The Nilson Report
estimates that the use of debit cards in the United States will increase from
3.7%, or $168 billion, of total consumer transactions in 1998 to 10.9%, or $743
billion, in 2005. The Nilson Report also estimates that the number of debit
card transactions in the United States will increase at a compound annual
growth rate of 21.6% from 1998 to 2005 and that the number of debit card
transactions will exceed credit card transactions by 2007.

                                       1
<PAGE>


   At the same time as consumers and businesses are seeking new payment
methods, merchants are seeking to reduce transaction costs by increasing the
use of electronic payments, which are typically one-third the cost of paper-
based transactions. Debit cards further lower transaction costs compared to
credit cards due to higher processing costs and fees for credit card payments.
Financial service companies also face pressures to adopt new payment
technologies, such as online banking and online brokerage accounts, to better
serve their customers and reduce costs. In addition, financial institutions and
retailers are increasing their use of external information technology service
providers to implement new technologies and e-commerce applications, control
costs and address shortages of information technology resources.

   Financial institutions and retailers also face significant payment costs
from debit fraud, including use of a false or stolen identity, and account
abuse, such as writing checks with insufficient funds or opening and closing
accounts to avoid payments. Debit fraud losses totaled $1.3 billion for banks
and $13 billion for merchants in the United States in 1998, according to the
Tower Group, and have increased for merchants at a rate of 5% per year since
1996.

Our Competitive Advantages

   To address the rapid changes and pressures in the global payment system, we
provide comprehensive electronic debit payment solutions that offer the
following advantages for our clients:

  .  End-to-End Solutions. We provide end-to-end solutions that enable our
     clients to manage the complete electronic debit payment cycle using our
     products and services. Our solutions help clients to reduce transaction
     costs, manage risks and enhance their customer relationships.

  .  Premier Database. Our DebitBureau database of more than 2.7 billion
     records is the most comprehensive source of debit data in the industry.
     DebitBureau aggregates data from over 86,000 financial service locations
     and 82,000 retail locations. The breadth and depth of our DebitBureau
     allow us to develop more powerful risk management and analytical tools.
     Our clients can draw on DebitBureau to make better risk management
     decisions, such as authorizing a new checking account or accepting a
     check, and to improve customer relationship decisions, such as
     identifying opportunities to cross-sell additional services to their
     customers.

  .  Global Processing Capabilities. Our electronic debit payment services
     give our clients the ability to process debit payment transactions
     through all electronic funds transfer networks on a worldwide basis. We
     are a leading third party processor of debit electronic funds transfers
     in the United States, processing approximately five billion transactions
     in 1999. Our processing services drive more than 98,000 point-of-sale
     devices and more than 9,500 ATMs. We monitor over 5,200 of these ATMs
     for system irregularities.

  .  Expertise in Electronic Commerce. We have focused on facilitating
     electronic debit payments since 1976. This long history and industry
     focus provides us with the experience and capabilities to facilitate
     electronic debit payments through any channel, including the Internet,
     point-of-sale devices or ATMs.

  .  Global Resources for Information Technology. Our information technology
     professionals customize and implement our electronic debit payment
     solutions, develop new software applications for our solutions as well
     as custom applications for our clients, and produce custom e-commerce
     and Internet-related software solutions. We team onsite consultants in
     the United States who analyze and manage the project with software
     developers in India who execute client-specific software solutions.

Our Strategy

   Our objective is to be the leading provider of electronic debit payment
solutions. We intend to implement the following strategies to achieve this
objective:

  .  Expand e-Commerce and Internet Delivery Capabilities. We intend to
     continue to adapt our core capabilities in transaction processing, fraud
     prevention and client account management for Internet

                                       2
<PAGE>

     applications and to develop products and services that will enable new
     e-commerce channels, such as business to business electronic payment
     transactions.

  .  Extend Technology Leadership. We intend to continue to enhance our
     position as a technology leader by introducing new products that provide
     greater risk management and value-added functionality.

  .  Expand Existing Client Relationships and Attract New Clients. We intend
     to expand our sales force to develop new clients, build brand awareness
     and cross-sell all the components of our comprehensive suite of products
     and services. We believe we can expand our relationships with existing
     customers as we continue to integrate our information and processing
     capabilities with our professional services into new comprehensive
     information-based electronic debit payment solutions. We are
     particularly focusing on Internet opportunities.

  .  Seek Acquisition and Strategic Alliance Opportunities. We intend to
     pursue acquisitions of complementary businesses, technologies or product
     lines. For example, we recently acquired an interest in a provider of
     ATM management and outsourcing services to retailers and financial
     institutions.

  .  Broaden International Sales. We intend to expand in international
     markets by further penetrating our existing client base and by focusing
     on emerging international markets lacking established electronic payment
     systems. We currently derive approximately 10% of our revenue from
     international sales in 22 countries.

Our Separation From Deluxe

   On January 31, 2000, Deluxe announced a plan to combine our businesses into
a separate, publicly-traded company. We believe that our complete separation
from Deluxe will enable us to realize the following benefits:

  .  direct access to the capital markets that will allow us to raise capital
     on a more cost effective basis to fund our growth initiatives;

  .  greater strategic focus on our core businesses and growth opportunities
     and elimination of any competition for available capital; and

  .  increased ability to attract, retain and motivate employees through
     incentive compensation tied to the market performance of our common
     stock.

   After this offering, Deluxe will own about     % of the outstanding shares
of our common stock, or about     % if the underwriters exercise their over-
allotment option in full. Deluxe has announced that it plans to distribute all
of its shares of our common stock to its shareholders through an offer to
exchange their Deluxe shares for our common stock owned by Deluxe. In this
prospectus we generally refer to that exchange offer as a split-off. Deluxe's
plans for a split-off are subject to receiving a private letter ruling from
the Internal Revenue Service that the split-off will be tax-free to Deluxe and
its shareholders for U.S. federal income tax purposes. Deluxe has the sole
discretion to determine whether to proceed with the distribution based on the
best interests of Deluxe's shareholders and to decide what will be the timing,
structure and terms of the split-off. Subject to these conditions, Deluxe
plans to complete the split-off within one year following the completion of
this offering. Deluxe has submitted a private letter ruling request to the
Internal Revenue Service.

Our Government Services Business

   Among our businesses is our government services business. This business
provides online electronic transfer of benefits under selected entitlement
programs on behalf of state and local governments, as well as Medicaid
eligibility verification services. The electronic benefits transfer business
has a history of losses that have resulted in special charges for loss
contracts and asset impairments. As a consequence, we have decided to exit
this business as soon as we complete our current contractual obligations in
2006. Deluxe has agreed to indemnify us for future losses on currently
unprofitable government services contracts up to a specified amount.

                                       3
<PAGE>


Information About Us

   We were incorporated in Delaware in December 1984. Our principal executive
offices are located at 400 W. Deluxe Parkway, P.O. Box 12536, Milwaukee,
Wisconsin 53212 and our telephone number is 414-341-5000. Our Internet address
is www.efunds.com. The information contained on our website is not a part of
this prospectus.

                                  The Offering

Common stock offered................           shares
Common stock to be outstanding
 after the offering.................
                                               shares
Use of proceeds.....................  General corporate purposes, including
                                      acquisitions, strategic alliances and
                                      working capital.
Proposed Nasdaq National Market       EFDS
 symbol.............................

   Unless we specifically state otherwise, all information in this prospectus
assumes that the underwriters do not exercise their over-allotment option. If
the underwriters exercise their over-allotment option in full,      shares of
common stock will be outstanding after this offering.

   The number of shares of our common stock to be outstanding immediately after
this offering does not take into account          shares of our common stock
reserved for issuance under our stock plans. We expect to grant options to
purchase an aggregate of          shares of our common stock upon completion of
this offering with an exercise price equal to the initial public offering
price, unless a lower price is required by foreign law or government
regulation.

   At the time of the split-off, all outstanding options to purchase Deluxe
common stock will be converted into new options to purchase Deluxe common stock
and options to purchase our common stock. The actual number of options will be
determined at the time of the split-off based on the market price of our common
stock and Deluxe common stock. Based upon an assumed initial public offering
price of $     per share and assuming the market price of Deluxe's common stock
at that time is the same as the market price on       , 2000, the number of our
shares for which options would be granted would be        and the weighted
average exercise price would be $       per share.

                                       4
<PAGE>

                             Summary Financial Data

<TABLE>
<CAPTION>
                                                  Year Ended December 31,
                                                 ----------------------------
                                                   1997      1998      1999
                                                 --------  --------  --------
                                                 (in thousands, except per
                                                           share
                                                    and operating data)
<S>                                              <C>       <C>       <C>
Statement of Operations Data:
Net sales....................................... $229,065  $267,520  $302,340
                                                 --------  --------  --------
  Cost of sales, excluding loss contract and
   asset impairment charges.....................  143,966   171,359   185,590
  Loss contract and asset impairment charges....      --     40,949     8,700
                                                 --------  --------  --------
    Total cost of sales.........................  143,966   212,308   194,290
                                                 --------  --------  --------
Gross margin....................................   85,099    55,212   108,050
                                                 --------  --------  --------
  Selling, general and administrative...........   70,542    81,198   105,382
  Research and development......................    1,398       625     3,756
  Asset impairment charges......................   11,831       --        --
                                                 --------  --------  --------
    Total operating expenses....................   83,771    81,823   109,138
                                                 --------  --------  --------
Income (loss) from operations...................    1,328   (26,611)   (1,088)
Other income (expense)
  Legal proceedings.............................  (40,050)    4,157     2,094
  Other income (expense)........................     (918)   (3,495)   (4,609)
  Interest income (expense).....................     (825)    2,789       963
                                                 --------  --------  --------
Loss before income taxes........................  (40,465)  (23,160)   (2,640)
                                                 --------  --------  --------
Benefit (provision) for income taxes............    6,397     8,569    (5,586)
                                                 --------  --------  --------
Net loss........................................ $(34,068) $(14,591) $ (8,226)
                                                 ========  ========  ========
Net loss per share--basic and diluted........... $(13,627) $ (5,836) $ (3,290)
Shares used in computing basic and diluted net
 loss per share.................................    2,500     2,500     2,500
Pro forma basic and diluted net loss per
 share(1).......................................
Shares used in computing pro forma basic and
 diluted net loss per share(1)..................
Operating Data:
Account verifications inquiries (millions)......     28.6      30.3      32.1
Transactions processed (millions)...............    3,313     3,944     5,019
ATMs driven at period end.......................    5,766     5,623     8,596
</TABLE>

<TABLE>
<CAPTION>
                                                            December 31, 1999
                                                         -----------------------
                                                          Actual  As Adjusted(2)
                                                         -------- --------------
                                                             (in thousands)
<S>                                                      <C>      <C>
Balance Sheet Data:
Cash and cash equivalents (3)........................... $ 35,849
Working capital.........................................   25,607
Total assets............................................  289,929
Long-term debt, excluding current portion...............    3,597
Total stockholder's equity..............................  199,105
</TABLE>
--------
(1)  Reflects a     for     stock split in connection with this offering.
(2)  As adjusted to reflect the sale of      shares of common stock in this
     offering, assuming a public offering price of $         per share, and the
     receipt of the net proceeds after deducting the underwriting discount and
     estimated offering expenses.
(3)  Excludes restricted cash which represents cash that we have supplied for a
     client's ATMs and cash that we temporarily hold in custodial accounts on
     behalf of clients.

                                       5
<PAGE>

                                  RISK FACTORS

   You should carefully consider the risks described below and other
information in this prospectus before making a decision to buy our common
stock.

Risks Relating to Our Business and Industry

   We have had net losses over the past several years, and we may not achieve
profitability.

   We had net losses of $8.2 million in 1999 and $14.6 million in 1998, and we
may not achieve or maintain profitability.

   Our governmental services business contributed operating losses of
approximately $6.6 million in 1999 and $47.7 million in 1998, including special
charges for loss contracts and asset impairments. We anticipate an additional
loss contract charge in early 2000 due to the execution of a definitive long-
term agreement with a prime contractor of electronic benefit transfer services
for whom we have been providing services. We intend to exit the government
services business after we complete our obligations under our long-term
contracts in 2006. Deluxe has agreed to indemnify us for any losses on
identified loss contracts in excess of the loss contract reserves up to $  .
The loss contract reserves are based on estimates of future performance of
identified contracts which may not be realized. As a result, we may incur
losses beyond our current reserves and Deluxe's indemnification. In addition,
we may be unable to manage effectively our exit from the government services
business if we are unable to retain key employees and maintain case load
volumes, which could result in further losses. Furthermore, our professional
services business is new and developing and has contributed operating losses of
$10.7 million in 1999 and $3.4 million in 1998. As a consequence, the prospects
for our professional services business must be considered in light of the risks
and uncertainties encountered by businesses in the early stage of development
in new and rapidly evolving markets.

   Our ability to achieve profitability will depend on growth in electronic
debit payments, our ability to attract new clients, the market acceptance of
our new products and services and our ability to control further losses on
government services contracts.

   Our inability to successfully integrate our existing businesses could limit
our growth.

   In April 1999, we began the process of combining various separate businesses
into an integrated electronic debit payment business. Our range of product and
service offerings has changed since that time and our business model is still
new and developing. We may not be able to realize the anticipated strategic and
other benefits of this combination in a timely manner. Our management will
continue to be required to devote substantial attention to the process of
integrating our operations, technologies and personnel and consolidating our
infrastructure. The diversion of management's attention and any difficulties
encountered during the transition could have an adverse impact on our on-going
business activities and limit our growth.

   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 electronic debit payment solutions 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.

   Legislation relating to consumer privacy protection could harm our ability
to collect and use data, increase our operating costs or otherwise harm our
business.

   The success of our business depends in part on our ability to collect
information for DebitBureau and provide risk management services to our
clients. Exisitng and new laws and regulations relating to consumer privacy
protection, however, could harm our ability to collect and use data, increase
our operating costs or

                                       6
<PAGE>

otherwise harm our business. 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.

   The new federal financial modernization law, known as the Gramm-Leach-Bliley
Act, imposes significant new consumer information privacy requirements on a
wide range of companies, including financial institutions from whom we obtain
information. 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, which we believe apply to our
business, thereby allowing banks to continue to provide nonpublic personal
information to us. The Act, however, also requires federal agencies, such as
the Comptroller of the Currency and the Federal Trade Commission, to issue
proposed regulations to implement these requirements. Certain provisions of the
Federal Trade Commission's proposed regulations, if enacted, would expand the
scope of the Act in ways which could adversely affect our business.

   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 and could be introduced in the future, in
Congress and the states. We are unable to predict whether such legislation or
regulations will be adopted or their effect on our business.

   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, including many that
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,
     Marshall and Illsley and Fifth Third National Bank;

  .  electronic data interchange and cash management providers, including
     Fiserv, CheckFree, M&I Data, EDS and Fundtech;

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

  .  electronic funds transfer software solution 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 fragmented information technology professional services market, we
compete with numerous firms. We believe that our principal competition to date
has been the internal information technology departments of current and
potential clients. In addition, we compete with systems consulting and
integration firms, application software firms, Internet professional service
companies, services divisions of computer hardware and software vendors,
facilities management and outsourcing companies, "Big 5" accounting firms and
strategic consulting firms.

   In addition to our current competitors, we expect substantial competition
from established and new companies as the e-commerce and Internet markets
continue to develop and expand. 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.

                                       7
<PAGE>

   Our future profitability is dependent upon the 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:

  .  the unwillingness of consumers and businesses to change their
     traditional payment methods; and

  .  adverse publicity and consumer concern about the reliability,
     performance, privacy and security of electronic payment transactions.

   The success of our strategy to expand our Internet delivery channels
depends on increased adoption by businesses and consumers of the Internet as a
means for commerce.

   An important part of our strategy is to expand the sale of our products and
services in the Internet channel. This strategy depends heavily on the
acceptance and use of the Internet as a means of commerce. If commerce over
the Internet does not become more accepted and widespread, our business and
results of operations could suffer.

   Factors that may affect Internet commerce adoption include:

  .  inadequate network infrastructure;

  .  security, privacy and authentication concerns;

  .  changes in, or insufficient availability of, telecommunication services
     to support the Internet; and

  .  increased government regulations or taxation.

   If we are unable to attract, integrate, motivate and retain skilled
personnel, our business will suffer.

   Our future success depends on our ability to attract, integrate, motivate
and retain additional skilled personnel, particularly software development
professionals. There is currently a shortage of software developers with
advanced technological skills in the United States and this shortage is likely
to continue. Furthermore, there is significant competition for personnel with
the skills and experience required to perform the services we offer in all of
our businesses. If we are unsuccessful in attracting, integrating, motivating
or retaining qualified personnel, our business will suffer.

   If we are unable to protect our name or expand our recognition in the
market place, our business may suffer.

   We believe that establishing and maintaining name recognition are critical
for attracting and expanding our customer base. If our reputation is damaged
or if potential customers are not familiar with us or the products and
services we provide, we may become less competitive. Promotion and enhancement
of our name will depend largely on our success in continuing to provide new
electronic payment management solutions. If customers do not perceive our
solutions to be effective or of high quality, our brand name and reputation
will suffer.

   In May 1999, we filed a trademark infringement action seeking to prevent
Citizen Advisers, Inc. from using the "E FUND" mark and efund.com Internet
domain. This action and any future litigation could be costly and time
consuming. If we are unsuccessful in preventing Citizen Advisers from using
our name, our business could be harmed.

   Security and privacy breaches in electronic and Internet transactions may
deter use of our products and services.

   If we are unable to protect the security and privacy of our electronic and
Internet transactions, our business could be materially adversely affected. A
security or privacy breach may:

  .  deter customers from using our products and services;

  .  harm our reputation;

                                       8
<PAGE>

  .  expose us to liability;

  .  increase our operating expenses to remediate the problem; and

  .  decrease market acceptance of electronic commerce transactions in
     general.

   While we believe that we use proven applications designed for premium data
security and integrity to process electronic and Internet transactions, we
cannot be certain that use of these applications will be sufficient to address
technology advances, changing market conditions or other developments. Any
failures in our security and privacy measures could have a material adverse
effect on our business.

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

   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 which often encounter development delays, and the underlying software
may contain undetected errors or defects. 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.

   Consolidation in the banking industry may adversely affect our ability to
sell our products and services.

   Mergers, acquisitions and personnel changes at financial institutions may
adversely affect our business, financial condition and results of operations.
Currently, the banking industry is undergoing large-scale consolidation,
causing the number of financial institutions to decline. This consolidation
could cause us to lose:

  .  current and potential customers;

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

                                       9
<PAGE>

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

   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,
Debra Janssen, our President and Chief Operating Officer, and Dr. Nikhil Sinha,
our Executive Vice President for Global Corporate Development. 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.

   We intend to expand our operations or market presence by entering into
business combinations, joint ventures or other strategic alliances in the
United States and internationally. We may not be able to identify or enter into
such combinations or alliances and tax requirements related to the split-off
may restrict our ability to complete a significant acquisition through the
issuance of our common stock. Our ability to expand in this manner 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 and we may not realize
     anticipated benefits in a timely manner; and

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

   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 international
markets and maintain facilities in India, 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. Our future results could
be harmed by a variety of factors, including:

  .  changes in foreign currency exchange rates;

  .  changes in political and economic conditions, particularly in India;

  .  elimination of favorable tax incentives in India;

  .  potentially unfavorable tax rules;

  .  tariffs, duties and other trade barriers;

  .  reduced protection for intellectual property rights;

  .  challenges in staffing and managing foreign operations;

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

  .  varying business practices in foreign countries.

   We face collection risks on some payments.

   Our debt collection services expose us to certain risks. For a limited
number of clients of our check authorization service, we purchase returned
checks at a discounted price to the stated check amount and assume the
collection risk on the checks. We base our discounted purchase price on the
collection history of each client. If we are unable to collect on returned
checks at the historical rate of our clients or the payment quality of the
portfolio of returned checks deteriorates, we may incur a loss on the portfolio
of purchased checks.

                                       10
<PAGE>

   We face termination and compliance risks with respect to our government
contracts.

   Some of our government contracts, by their terms, can be terminated at any
time, without cause, for the convenience of the government. 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 government contracts require compliance
with various contract provisions and procurement regulations, and in certain
cases, accounting requirements. If not cured, some violations of these
provisions could result in termination of the contract and fines.

   Our business could be harmed by cost overruns on fixed-price contracts.

   Our government services contracts are provided typically under fixed-price,
variable volume contracts. Under a fixed-price, variable volume contract, the
contractor agrees to perform for an agreed unit price and bears the entire risk
of cost overruns and changing volumes. In addition, we offer some of our
information technology services on a fixed-price, fixed-time basis. To avoid
losses from fixed-price contracts, we must, among other things, accurately
estimate the resources and time required to perform the project, effectively
manage our clients' expectations and complete projects within budget and to our
clients' satisfaction. If we do not successfully manage these project and
contract risks, we could suffer cost overruns and penalties and our reputation
and results of operations could be harmed.

   We may be unable to protect our intellectual property rights.

   We rely on a combination of trademark and copyright laws, trade secret
protection and confidentiality and license agreements to protect our
intellectual property rights. We may be required to spend significant resources
to protect our trade secrets and monitor and police our intellectual property
rights. Despite our efforts to protect our proprietary rights, parties may
infringe or misappropriate our proprietary 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.

   Although we believe our products and services do not infringe on the rights
of others, 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 for Internet-related business processes, which may
have broad implications for all participants in Internet commerce. Claims for
infringement of these 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 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.

   Fluctuations in our quarterly operating results may cause our stock price to
decline.

   Our quarterly operating results may fluctuate significantly for a variety of
reasons, including:

  .  demand for and market acceptance of our products and services;

  .  delays or problems in the introduction of new products and services;

  .  the mix of product sales;

  .  changes in the size and timing of orders for our products and services;

  .  costs associated with acquisitions or strategic alliances; and

  .  competitive pressures resulting in lower selling prices.

                                       11
<PAGE>

   As a result, we believe that period-to-period comparisons of our operating
results are not a good indication of our future performance. In addition, our
future quarterly operating results may fall below expectations of securities
analysts or investors. In this event, the market price of our common stock may
decrease significantly.

   Our expense levels are relatively fixed in the short term and are based, in
part, on our expected future revenues. Our inability to adjust spending in a
timely manner to compensate for any unexpected revenue shortfall could
accentuate the negative effect on our quarterly results.

                  Risks Relating to Our Separation From Deluxe

   If we are not able to obtain data from data suppliers, our business will be
seriously harmed.

   Historically, we have obtained a substantial portion of our debit and other
consumer data through Deluxe under its agreements with banks and other
financial institutions. As a result of the split-off from Deluxe, we must
secure our own separate agreements with these data suppliers. We cannot be
certain that we will be successful in securing agreements or otherwise continue
to obtain sufficient amounts of data on reasonable terms and conditions, if at
all. Any failure by us to obtain data would have an adverse effect on our
ability to update information in DebitBureau, the performance of our products
and services based on DebitBureau and new product development.

   We may not realize the benefits of our separation from Deluxe and our stock
price may decline if Deluxe does not complete the split-off.

   If Deluxe does not complete the split-off, Deluxe will continue to control
us and we may not fully realize the benefits we expect as a result of the
split-off. Deluxe has the sole discretion to determine the timing and terms of
any split-off and is not obligated to effect the split-off. In particular,
Deluxe will not complete the split-off unless it receives a favorable tax
ruling from the Internal Revenue Service to the effect that the split-off would
be tax-free to Deluxe and its stockholders for federal income tax purposes. We
cannot assure you whether or when Deluxe will receive a favorable tax ruling
from the IRS, or that the split-off will occur. In addition, if the split-off
is not completed, the liquidity of our shares in the market will be limited
unless and until Deluxe elects to sell some of its significant ownership.

   We will be controlled by Deluxe as long as it owns a majority of our common
stock, and our other stockholders will be unable to affect the outcome of
stockholder voting during this time.

   After the completion of this offering, Deluxe will own approximately     %
of our outstanding common stock. As long as Deluxe continues to hold a majority
of our outstanding stock, Deluxe will be able to elect all of our directors and
determine the outcome of all corporate actions requiring stockholder approval.
Because it controls us, Deluxe has the power to act without taking the best
interests of our company into consideration. For example, Deluxe will control
decisions with respect to:

  .  the business direction and policies of our company, including the
     election and removal of directors;

  .  mergers or other business combinations involving us;

  .  the acquisition or disposition of assets by us;

  .  our financing; and

  .  amendments to our certificate of incorporation and bylaws.

                                       12
<PAGE>

   There are potential business conflicts of interest with Deluxe.

   Because Deluxe controls us and our business objectives may differ,
conflicts of interest may arise between Deluxe and us regarding, among other
things:

  .  our past and ongoing relationships with Deluxe, including tax matters,
     employee benefits, indemnification, data sharing, and other matters
     arising from our separation from Deluxe;

  .  the nature, quality and pricing of transitional services Deluxe has
     agreed to provide us;

  .  potential competitive business activities; and

  .  sales or distributions by Deluxe of all or part of its ownership
     interest in us.

   For example, by virtue of its controlling beneficial ownership and the
terms of the tax-sharing agreement to be entered into between us and Deluxe,
Deluxe will effectively control all of our tax decisions until the split-off
is completed. Under the tax-sharing agreement, Deluxe will have sole authority
to respond to and conduct all tax proceedings and tax audits relating to us,
to file all returns on our behalf and to determine the amount of our liability
to, or entitlement to payment from, Deluxe under the tax-sharing agreement.
This arrangement may result in conflicts of interest between us and Deluxe.
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, except
that Deluxe is obligated under the tax-sharing agreement to act in good faith
with regard to all members included in the applicable returns.

   We may not be able to resolve any potential conflicts, and even if we do,
the resolution may be less favorable than if we were dealing with an
unaffiliated third party.

   We expect that some of our directors may have conflicts of interest because
they are also directors and officers of Deluxe.

   During the period that Deluxe controls us, we expect that some members of
our board of directors will continue to be directors and officers of Deluxe.
These directors will have obligations to us as well as Deluxe and may have
conflicts of interest with respect to matters potentially or actually
involving or affecting us.

   The transitional services being provided to us by Deluxe may not be
sufficient to meet our needs, and we may pay increased costs to replace these
services after our agreements with Deluxe expire.

   Deluxe has agreed to provide transitional services to us, including
services related to:

  .  accounting, financial and administrative services;

  .  treasury, cash management and insurance services;

  .  tax and legal services;

  .  employee benefits administration; and

  .  sales support.

   These services may not be provided at the same level as when we were a part
of Deluxe, and we may not be able to obtain the same benefits. These
transitional service agreements generally have a term of less than one year
following the separation. After the expiration of these agreements, we may not
be able to replace the transitional services in a timely manner or on terms
and conditions, including cost, as favorable as those we would receive from
Deluxe during the transition period.

   Our historical financial information may not be representative of our
results as a separate company.

   We have no operating history as an independent company. The historical
financial information we have included in this prospectus has been carved out
from Deluxe's consolidated financial statements and does not reflect what our
results of operations, financial condition and cash flows would have been had
we been a

                                      13
<PAGE>

separate, stand-alone entity during the periods presented. Following this
offering, we will be required to provide our own financial, administrative and
other resources to operate as an independent public company and to replace
other services provided by Deluxe to us. As a result, the historical financial
information is not necessarily indicative of what our results of operations,
financial condition and cash flows will be in the future. We have not made
adjustments to reflect all changes that we anticipate will occur in our cost
structure, funding and operations as a result of our separation from Deluxe.

   Risks Relating to the Securities Markets and Ownership of Our Common Stock

   We cannot predict the impact of the split-off on the price of our common
stock.

   We cannot predict the effect that the split-off will have on the market
price of our common stock. The split-off could involve the distribution of
about          shares of our common stock by Deluxe to its stockholders,
representing about     % of the equity value of our company, or about     % if
the underwriters exercise their over-allotment option in full. Substantially
all of these shares would be eligible for immediate resale to the public
market. Sales of substantial amounts of our common stock in the public market,
or the perception that substantial sales might occur, whether as a result of
this distribution or otherwise, could cause the market price of our stock to
decrease significantly. See "Shares Eligible For Future Sale."

   Our securities have no prior market, and our stock price may decline after
the offering.

   Our common stock has not been publicly traded, and an active trading market
may not develop or be sustained after this offering. The market price of our
stock could be subject to significant fluctuations after this offering due to
factors such as:

  .  actual or anticipated fluctuations in our results of operations;

  .  changes in or failure by us to meet securities analysts' expectations;

  .  success of our operating strategies; and

  .  realization of any of the risks described in this section.

   In addition, the stock market recently has experienced extreme price and
volume fluctuations, which have particularly affected the market prices for
securities of many technology companies. These market fluctuations may
adversely affect the trading price of our common stock, regardless of our
actual operating performance. We cannot assure you that you will be able to
resell your shares at or above the initial public offering price.

   Provisions in our charter documents and Delaware law 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 our company that a stockholder 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, without stockholder approval, to issue
     preferred stock, which may have rights and preferences that are superior
     to our common stock;

  .  the ability of our board to amend the bylaws;

  .  prohibition of stockholder action by written consent;

  .  advance notice requirements for shareholder proposals and for nominating
     candidates to our board;

                                       14
<PAGE>

  .  a stockholder rights plan, which discourages the unauthorized
     acquisition of 15% or more of our common stock or an unauthorized
     exchange or tender offer;

  .  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 of our certificate of
     incorporation.

                                       15
<PAGE>

                           FORWARD-LOOKING STATEMENTS

   This prospectus includes forward-looking statements. When we use the words
"believe," "anticipate," "plan," "expect," "estimate," "will" and similar
expressions, we are identifying forward-looking statements. We have based these
forward-looking statements on our current expectations and projections about
future events. We do not, however, represent forward-looking statements as
guarantees of future performance or results. Our actual results may vary
materially from those indicated in the forward-looking statements as a result
of a number of risks and uncertainties, including the risks described under
"Risk Factors" or elsewhere in this prospectus.

                           OUR SEPARATION FROM DELUXE

   Our electronic payment solutions, professional services and government
services businesses were previously conducted through various operating units
of Deluxe. On January 31, 2000, Deluxe announced a plan to combine those
businesses into a separate, publicly-traded company. The separation of our
businesses from those of Deluxe has been substantially completed.

Benefits of the Separation

   We believe that we will realize the following benefits from our complete
separation from Deluxe:

  .  Direct access to the capital markets. As a separate public company, we
     will be able to directly access the capital markets to issue equity or
     debt and to use stock-based acquisition currency to finance expansion
     and growth opportunities.

  .  Greater strategic focus. We expect to have a sharper focus on our
     businesses and growth opportunities as a result of our board and
     management team concentrating only on our core businesses. Further, the
     separation from Deluxe will eliminate any competition for capital
     generated in its or our business.

  .  Increased ability to attract, retain and motivate employees. We believe
     that incentive compensation arrangements for key employees, directly
     related to the market performance of our common stock, will provide
     enhanced incentives for performance. The separation will enable us to
     offer our key employees compensation directly linked to the performance
     of our businesses, which we expect to enhance our ability to attract and
     retain qualified personnel.

Separation and Transition Agreements

   We and Deluxe and, in some cases, our respective subsidiaries, have entered
into agreements providing for the separation of our businesses from Deluxe. For
additional information concerning these agreements, see "Agreements Between
eFunds and Deluxe."


The Exchange Offer

   After this offering, Deluxe will own about     % of our common stock, or
about     % if the underwriters exercise their over-allotment option in full.
Deluxe has announced that it plans to distribute all of its shares of our
common stock to its shareholders through a split-off. Deluxe's plans for a
split-off are subject to receiving a private letter ruling from the Internal
Revenue Service that the split-off will be tax-free to Deluxe and its
shareholders for U.S. federal income tax purposes. Deluxe has the sole
discretion to determine whether to proceed with the split-off based on the best
interests of Deluxe's shareholders and to decide what will be the timing,
structure and terms of the split-off. Subject to these conditions, Deluxe plans
to complete the split-off within one year following the completion of this
offering. Deluxe has recently submitted a private letter ruling request to the
Internal Revenue Service. We cannot be certain when or whether Deluxe will
receive a favorable tax ruling from the Internal Revenue Service, or that the
distribution by Deluxe will be completed.

                                       16
<PAGE>

                                USE OF PROCEEDS

   We estimate the net proceeds from the sale of our common stock in this
offering, based on an assumed public offering price of $      per share and
after deducting the underwriting discount and estimated offering expenses
payable by us, will be approximately $         million, or $         million if
the underwriters exercise their over-allotment option in full.

   We intend to use the net proceeds from this offering for working capital and
other general corporate purposes. In addition, we may use some of the net
proceeds for acquisitions of businesses, products and technologies that are
complementary to ours. We currently have no agreements with respect to any
material acquisitions as of the date of this prospectus. Pending use of the net
proceeds, we intend to invest the net proceeds from this offering in short-
term, interest-bearing, investment-grade securities.

                                DIVIDEND POLICY

   We do not anticipate paying any cash dividends on our common stock in the
foreseeable future. We currently intend to retain future earnings to fund the
development and growth of our business.


                                       17
<PAGE>

                                 CAPITALIZATION

   The following table sets forth our actual and as adjusted capitalization at
December 31, 1999, as described below. The as adjusted column gives effect to
the sale of          shares of our common stock in this offering, assuming an
initial public offering price of $         per share and after deducting the
underwriting discount and estimated offering expenses payable by us. This table
should be read in conjunction with our audited consolidated financial
statements and related notes, which are included elsewhere in this prospectus.

<TABLE>
<CAPTION>
                                                          December 31, 1999
                                                         ---------------------
                                                          Actual   As Adjusted
                                                         --------  -----------
                                                            (in thousands)
   <S>                                                   <C>       <C>
   Long-term debt, excluding current portion............ $  3,597   $
                                                         --------   --------
   Stockholders' equity:
    Preferred stock, $.01 par value; 100,000,000 shares
     authorized; no shares issued and outstanding.......      --         --
    Common stock, $.01 par value; 250,000,000 shares
     authorized; 2,500 shares issued and outstanding
     actual; and      shares issued and outstanding as
     adjusted...........................................
    Additional paid-in capital..........................  292,598
    Accumulated deficit.................................  (92,946)
    Accumulated other comprehensive loss................     (547)
                                                         --------   --------
     Total stockholders' equity.........................  199,105
                                                         --------   --------
   Total capitalization................................. $202,702
                                                         ========   ========
</TABLE>

   This table does not reflect          shares of common stock reserved for
issuance under our stock option plans. We expect to grant options to purchase
an aggregate of          shares of our common stock upon completion of this
offering with an exercise price equal to the initial public offering price,
unless a lower price is required by law or government regulation.

   At the time of the split-off, all outstandings options to purchase Deluxe
common stock will be converted into new options to purchase Deluxe common stock
and options to purchase our common stock. The actual number of options will be
determined at the time of the split-off based on the market price of our common
stock and Deluxe common stock. Based upon an assumed initial public offering
price of $     per share and assuming the market price of Deluxe's common stock
at that time is the same as the market price on       , 2000, then the number
of our shares for which options would be granted would be       and the
weighted average exercise price would be        per share.

                                       18
<PAGE>

                                    DILUTION

   If you invest in our common stock, your interest will be diluted to the
extent of the difference between the offering price per share of our common
stock in this offering and the pro forma net tangible book value per share of
our common stock immediately after this offering. Pro forma net tangible book
value dilution per share represents the difference between the amount per share
paid by purchasers of shares of common stock in this offering and the pro forma
net tangible book value per share of common stock immediately after completion
of this offering.

   Our pro forma net tangible book value as of December 31, 1999 was $116.3
million, or $    per share of common stock. Pro forma net tangible book value
per share represents the amount of our stockholders' equity, less intangible
assets, divided by the total number of shares of common stock outstanding for
the period immediately prior to this offering. After giving effect to the sale
of the       shares of common stock offered in this prospectus at the assumed
public offering price of $  per share and after deducting the estimated
underwriting discounts and offering expenses, our adjusted pro forma net
tangible book value as of December 31, 1999 would have been $    million, or $
per share of common stock. This represents an immediate increase in net
tangible book value of $  per share to existing stockholders and an immediate
dilution of $  per share to new investors purchasing shares in this offering.
The following table illustrates this per share dilution.

<TABLE>
<CAPTION>
   Assumed public offering price per share......................        $
   <S>                                                           <C>    <C>
   Net tangible book value per share before the offering........ $
   Increase per share attributable to new investors............. $
                                                                 ------
   Pro forma net tangible book value per share after this
    offering....................................................        $
                                                                        ---
   Dilution per share to new investors..........................        $
</TABLE>

                                       19
<PAGE>

                            SELECTED FINANCIAL DATA

   The following selected financial data should be read together with the
consolidated financial statements and related notes and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included in this prospectus. The selected statement of operations data shown
below for the years ended December 31, 1997, 1998 and 1999 and the balance
sheet data as of December 31, 1998 and 1999 are derived from our audited
consolidated financial statements included in this prospectus which have been
audited by Deloitte & Touche LLP, independent auditors. The selected statement
of operations data shown below for the years ended December 31, 1995 and 1996
and the balance sheet data as of December 31, 1995, 1996 and 1997 are derived
from our unaudited consolidated financial statements not included in this
prospectus.

   On February 19, 1999, we acquired all of the outstanding shares of an
electronic check conversion company. On April 13, 1999, we acquired the
remaining 50% ownership interest in a joint venture which comprises our
professional services business and which prior to the acquisition was recorded
in our financial statements under the equity method of accounting. The
acquisitions have been accounted for under the purchase method of accounting
and, as a result, our consolidated financial statements include the total
results of these businesses subsequent to their acquisition dates.

<TABLE>
<CAPTION>
                                        Years Ended December 31,
                              ------------------------------------------------
                                1995      1996      1997      1998      1999
                              --------  --------  --------  --------  --------
                                (in thousands, except per share data and
                                            operating data)
<S>                           <C>       <C>       <C>       <C>       <C>
Statement of Operations
 Data:
Net sales...................  $193,111  $201,681  $229,065  $267,520  $302,340
                              --------  --------  --------  --------  --------
  Cost of sales, excluding
   loss contract and asset
   impairment charges.......   104,239   131,379   143,966   171,359   185,590
  Loss contract and asset
   impairment charges.......       --        --        --     40,949     8,700
                              --------  --------  --------  --------  --------
    Total cost of sales.....   104,239   131,379   143,966   212,308   194,290
                              --------  --------  --------  --------  --------
Gross margin................    88,872    70,302    85,099    55,212   108,050
                              --------  --------  --------  --------  --------
  Selling, general and
   administrative...........    64,330    69,544    70,542    81,198   105,382
  Research and development
   (1)......................       --        --      1,398       625     3,756
  Asset impairment charges..       --        --     11,831       --        --
                              --------  --------  --------  --------  --------
    Total operating
     expenses...............    64,330    69,544    83,771    81,823   109,138
                              --------  --------  --------  --------  --------
Income (loss) from
 operations.................    24,542       758     1,328   (26,611)   (1,088)
Other income (expense)
  Legal proceedings.........       --        --    (40,050)    4,157     2,094
  Other income (expense)....      (313)        7      (918)   (3,495)   (4,609)
  Interest income
   (expense)................      (972)   (1,463)     (825)    2,789       963
                              --------  --------  --------  --------  --------
Income (loss) before income
 taxes......................    23,257      (698)  (40,465)  (23,160)   (2,640)
Benefit (provision) for
 income taxes...............    (9,733)   (5,203)    6,397     8,569    (5,586)
                              --------  --------  --------  --------  --------
Net income (loss)...........  $ 13,524  $ (5,901) $(34,068) $(14,591) $ (8,226)
                              ========  ========  ========  ========  ========
Net income (loss) per share
 -- basic and diluted.......  $  5,409  $ (2,360) $(13,627) $ (5,836) $ (3,290)
Shares used in computing
 basic and diluted net
 income (loss) per share:...     2,500     2,500     2,500     2,500     2,500
Pro forma basic and diluted
 net loss per share(2)......
Shares used in computing pro
 forma basic and diluted net
 loss per share:(2).........
</TABLE>

                                       20
<PAGE>

<TABLE>
<CAPTION>
                                                   December 31,
                                   --------------------------------------------
                                     1995     1996     1997     1998     1999
                                   -------- -------- -------- -------- --------
                                                  (in thousands)
<S>                                <C>      <C>      <C>      <C>      <C>
Operating Data:
Account verification inquiries
 (millions)......................  $   23.7 $   26.3 $   28.6 $   30.3 $   32.1
Transactions processed
 (millions)......................     1,356    2,526    3,313    3,944    5,019
ATMs driven at period end........       N/A      N/A    5,766    5,623    8,596
Balance Sheet Data:
Cash and cash equivalents(3).....     3,967   27,226   23,843   16,055   35,849
Working capital..................     8,735   38,666   39,686    1,869   25,607
Total assets.....................   150,614  177,230  187,810  186,335  289,929
Long-term debt, excluding current
 portion.........................     3,504    2,426    4,571    4,029    3,597
Total stockholder's equity.......   101,201  131,897   87,690   89,803  199,105
</TABLE>
--------
(1) Research and development expenses are included in, but were not separately
    recorded from, cost of sales and selling, general and administrative
    expenses for the years ended December 31, 1996 and 1995.
(2) Reflects a     for     stock split in connection with this offering.
(3) Excludes restricted cash which represents cash that we have supplied for a
    client's ATMs and cash that we temporarily hold in custodial accounts on
    behalf of clients.


                                       21
<PAGE>

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

   You should read the following discussion together with "Selected Financial
Data" and our consolidated financial statements and the notes to those
financial statements included in this prospectus. In addition to historical and
pro forma information, this discussion contains forward-looking information
that involves risks and uncertainties. Our actual results could differ
materially from those anticipated by us due to competitive factors, risks
associated with our expansion plans and other factors discussed under "Risk
Factors" and elsewhere in this prospectus.

Overview

   We are a leading provider of end-to-end electronic debit payment solutions
to financial institutions, retailers, electronic funds transfer networks and e-
commerce providers. Our primary products and services are decision support and
risk management tools, electronic funds transfer processing, monitoring and
settlement services and professional services, including information technology
consulting and business process management. We are a single source of
electronic payment solutions whether payments are made using payment cards or
paper checks, or whether the transaction is accomplished at retail locations or
ATMs, through mail or telephone orders or over the Internet.

   Our businesses have historically been operated as units of Deluxe. In April
1999, Deluxe announced that it was changing its business model to a holding
company structure with four independently operated business units: paper
payment systems, electronic payment solutions, professional services and
government services. In January 2000, Deluxe announced that its board of
directors approved a plan to combine the latter three businesses to form our
company as a separate, independent publicly traded company.

   We have entered into various agreements related to transition and ongoing
relationships with Deluxe. These agreements relate to, among others,
information technology development, business process management, employee
benefits, tax sharing, real estate, data sharing, indemnification and
transition services. For transition services, we will compensate Deluxe for
providing services and negotiate third-party rates after the transition
arrangements terminate. The transition period varies depending on the agreement
but many transition services will terminate upon completion of the split-off.
See "Agreements Between eFunds and Deluxe." Some of the transition agreements
may be extended beyond the initial transition period.

   Our consolidated financial statements have been prepared using the
historical results of operations and historical bases of the assets and
liabilities of the Deluxe businesses that comprise our company. The
consolidated financial statements also include allocations to us of certain
liabilities and expenses, including profit sharing, post-retirement, non-
qualified deferred compensation and other employee benefits; information
technology services; facility costs; and other Deluxe administrative services
costs. The expense allocations have been 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 are based on headcount, transaction processing costs, square footage
and relative sales.

   The financial information presented in this prospectus is not necessarily
indicative of what our financial position, results of operations or cash flows
would have been had we been a separate, stand-alone entity for the periods
presented nor is it indicative of our future financial position, results of
operations or cash flows. We anticipate that many changes will occur in our
funding and operations as a result of our operation as an independent entity
and through the split-off. In particular, our business was conducted as three
business segments by Deluxe. Accordingly, our financial statements reflect
those business segments: electronic payment solutions, professional services
and government services. It is our intention to integrate our operations more
fully, which may change our presentation of segment information in future
periods.

   Net Sales. Our net sales are generally comprised of transaction processing
and service fees, decision support fees, software licensing, maintenance and
support fees, government service fees and information

                                       22
<PAGE>

technology consulting and business process management services fees. Our
revenue recognition policies for these various fees are as follows:

  .  Transaction processing and service fees are recognized in the period
     that the service is performed. These services consist of processing our
     customers' electronic debit transactions through electronic funds
     transfer networks and settling the funds with the financial institutions
     involved in the transactions. Additionally, these services include
     monitoring ATMs and point-of-sale devices to alert our customers when
     potential problems occur. These fees are charged on a per transaction
     basis, depending on the contractual arrangement with the customer.
     Government services fees are recognized in the period services are
     provided based on monthly fees per benefits recipient.

  .  Decision support fees are recognized as revenue in the period the
     services are provided. Decision support services consist of new account
     applicant and check verification screenings to manage the risk
     associated with account openings and check acceptance. Decision support
     fees are based on the number of inquiries against the databases used for
     screening purposes or monthly fees based on the aggregate dollar value
     of checks authorized by the retailer, depending on the product and
     service.

  .  Software license fees for standard software products are recognized when
     delivery has occurred, the license fee is fixed and determinable,
     collectibility is probable and evidence of this arrangement exists.
     License fees are charged based on modules purchased by the customer.

  .  Software maintenance and support revenues are recognized ratably over
     the term of the contract, and/or as the services are provided. Support
     services such as customization of standard software modules, are charged
     on a time and materials basis and recognized as hours are completed.

  .  Revenues from professional services for information technology
     consulting and business process management are generally recognized
     under two methods, depending on contractual terms. Under the time and
     materials method, revenue is based on a fee per hour basis, and is
     recognized as hours are completed. Under the fixed contract method, a
     pre-set fee is agreed upon for a project, and revenue is recognized
     proportionately to the percentage completion of the project.

   Cost of Sales. Cost of sales consists primarily of salaries and benefits,
depreciation and maintenance of equipment and facilities and amortization of
software used to operate our data centers. Expenses are recognized when
incurred, with the exception of installation costs. Installation costs are
capitalized and recognized ratably over the life of the contract, which
approximates the revenue recognition.

   Expenses. Selling, general and administration expenses consist of salaries
and benefits, consulting fees, facilities and equipment costs, recruiting and
training, travel expenses, corporate administrative charges, depreciation and
amortization and all other corporate costs.

   Research and development expenses, which are expensed as incurred, relate to
investigating new or improved processes and techniques and developing such
research findings into a potential new product or service. Research and
development expenses reflect the cost of salaries and benefits, travel costs
and testing- related costs incurred in the early stages of product development.

   Interest expense represents the cost of funds for working capital and other
purposes and reflects Deluxe's internal cost of funds. Interest income consists
of interest credited to us for funds held in investment accounts.

Government Services

   Our government services business was started in response to federal mandates
that require state and local governmental agencies to convert to electronic
payment methods for the distribution of benefits under entitlement programs,
including food stamps and other welfare programs. In 1993, we rolled out our
first state-wide system to electronically deliver these benefits using our
electronic funds transfer capabilities. From 1994 through 1996 we bid on
contracts that secured business as a prime or subcontractor with over 30
states, including three subcontracts with coalitions of states. We were
providing services in over 30 states at the end of 1999.

                                       23
<PAGE>

All of our contracts are for service periods of five to seven years and are
based on a fixed price, variable volume model. We recognize revenue on long-
term service contracts when the service is performed. For several of the
contracts, we serve as a subcontractor in partnership with a financial
institution. An integral part of these partnerships was an exclusive switching
services agreement with that financial institution to provide merchants with
cross-border access to the benefits databases, beneficiaries and benefits among
states in a coalition.

   In 1997, we recorded a $40.0 million charge to legal proceedings expense for
a judgment entered against us in an action brought by Mellon Bank in connection
with a potential bid to provide electronic benefit transfer services to a state
coalition. In 1998, $4.2 million of the reserve was reversed and credited to
legal proceedings expense due to the denial of Mellon's motion for prejudgment
interest. In 1999, after we paid the judgment of $32.2 million in the Mellon
litigation, we reversed the remaining reserve of $2.1 million through a credit
to legal proceedings expense.

   In 1998, after a reorganization and management change in our government
services business and as many of the state systems were being fully
implemented, we concluded that net sales from our government services contracts
would be lower than anticipated because case volumes were lower due to welfare
reform and a strong economy. In addition, we underestimated the costs required
to support our services. The primary sources of additional costs were a need to
install a greater number of point-of-sale terminals, higher than expected
transaction volume per recipient and higher support costs. These higher costs,
which could not be recovered under our fixed-price variable volume contracts
when combined with lower sales, resulted in 1998 charges of $26.3 million and
$14.7 million to write off impaired government services assets and to accrue
for future contract losses. Subsequent to the 1998 charges, additional state
systems began operations while a continuing strong economy lead to further
reductions in the number of welfare cases and our prime contractor in state
coalition contracts notified us that it would not renew our exclusive switching
contract. As a result in 1999, we recorded additional charges totaling $8.7
million primarily for additional expected future contract losses. We anticipate
recording an additional charge in 2000 related to the execution of a definitive
contract with our coalition prime contractor for whom we have been providing
services without a finalized contract. This charge will be covered by our
indemnification agreement with Deluxe.

   We have decided to exit the government services business as soon as our
current contractual commitments expire in 2006. During the wind down period, we
intend to continue to take steps to improve the profitability of the current
business. Deluxe has agreed to indemnify us for any losses on identified loss
contracts in excess of the loss contract reserves up to $    . At December 31,
1999, we had reserves of $20.6 million.

Recent Events

   Acquisition of an Electronic Check Conversion Company. On February 19, 1999,
we acquired all of the outstanding shares of an electronic check conversion
company for $13 million. This company provides electronic check conversion and
electronic funds transfer solutions for financial services companies and
retailers and is included in our electronic payment solutions business. The
acquisition was accounted for under the purchase method of accounting. As a
result, our consolidated financial statements include the results of this
business subsequent to its acquisition date. Total cost in excess of net assets
acquired in the amount of $15.7 million is reflected as goodwill and is being
amortized over 10 years.

   Acquisition of Remaining 50% Ownership Interest in HCL-Deluxe, N.V. On April
13, 1999, we acquired the remaining 50% ownership interest in HCL-Deluxe, N.V.
for $23.4 million. The joint venture, which Deluxe entered into with HCL
Corporation of India commenced operations in September 1997. The acquisition of
this company, which comprises our professional services business, was accounted
for under the purchase method of accounting. Total cost in excess of net assets
acquired in the amount of $24.9 million is

                                       24
<PAGE>

reflected as goodwill and is being amortized over 15 years. Prior to the
acquisition, we recorded our 50% ownership of the joint venture's results of
operations in other expense under the equity method of accounting. Subsequent
to this acquisition, we changed the name of this entity to iDLX Technology
Partners.

   Transactions With Deluxe. Deluxe has been, and is expected to continue to
be, a significant client for our professional services business. In 1999, we
provided software development and business process management services on a
project-by-project basis to Deluxe. Revenue for these professional services was
$6.3 million on a pro forma full year basis. In 1999, sales to Deluxe
represented approximately 3.0% of our total net sales and approximately 37.0%
of the net sales of our professional services business. Sales to Deluxe for our
electronic payment solutions business were less than 1.5% of net sales.

   Beginning in 2000 our software services to Deluxe have been formalized into
a five year software development outsourcing agreement. During the term of the
agreement, we anticipate that Deluxe will spend approximately $43 million per
year for software development based on the actual number of hours of
information technology services that we provide to Deluxe. If Deluxe fails to
reach the $43 million spending target, it will be obligated to make payments
for a portion of our fees based on our estimates of lost profits. We also will
provide business process management services, including accounts receivable,
accounts payable and other general accounting services and mail order entry
services. Deluxe's annual minimum spending target for business process
management services will range from $8.1 million in 2000 to $4.2 million in
2004. The agreement will also provide for liquidated damages for non-
performance by us and bonuses for superior performances. The provision of
services by us under the agreement is non-exclusive, and Deluxe may contract
with any third party for the provision of professional services.

                                       25
<PAGE>

Results of Operations

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

<TABLE>
<CAPTION>
                                                           Year Ended
                                                          December 31,
                                                        ---------------------
                                                        1997    1998    1999
                                                        -----   -----   -----
<S>                                                     <C>     <C>     <C>
Net sales:
Electronic payment solutions...........................  88.2%   83.6%   79.8%
Professional services..................................    --      --     4.2
Government services....................................  11.8    16.4    16.0
                                                        -----   -----   -----
  Total net sales...................................... 100.0   100.0   100.0
                                                        -----   -----   -----
Cost of sales:
Electronic payment solutions...........................  50.1    47.5    45.6
Professional services..................................    --      --     3.0
Government services:
  Cost of sales, excluding loss contract and asset
   impairment charges..................................  12.7    16.6    12.8
  Loss contract and asset impairment charges...........    --    15.3     2.9
                                                        -----   -----   -----
    Total cost of sales................................  62.8    79.4    64.3
                                                        -----   -----   -----
Gross margin...........................................  37.2    20.6    35.7
                                                        -----   -----   -----
Operating expenses:
Selling, general and administrative....................  30.8    30.4    34.9
Research and development...............................   0.6     0.2     1.2
Asset impairment charges...............................   5.2      --      --
                                                        -----   -----   -----
  Total operating expenses.............................  36.6    30.6    36.1
                                                        -----   -----   -----
Income (loss) from operations..........................   0.6   (10.0)   (0.4)
Other income (expense):
Legal proceedings...................................... (17.5)    1.6     0.7
Other income (expense).................................  (0.4)   (1.3)   (1.5)
Interest income (expense)..............................  (0.4)    1.0     0.3
                                                        -----   -----   -----
Loss before income taxes............................... (17.7)   (8.7)   (0.9)
Benefit (provision) for income taxes...................   2.8     3.2    (1.8)
                                                        -----   -----   -----
Net loss............................................... (14.9)%  (5.5)%  (2.7)%
                                                        =====   =====   =====
</TABLE>

   Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

   Net sales. Net sales increased $34.8 million, or 13.0%, to $302.3 million in
1999 from $267.5 million in 1998. All segments experienced increases in net
sales during 1999. On a full year pro forma basis taking into account the HCL-
Deluxe acquisition, net sales increased $27.1 million, or 9.7%, to $306.7
million in 1999 from $279.6 million in 1998.

   Electronic payment solutions net sales increased $17.9 million, or 8.0%, to
$241.4 million in 1999 from $223.5 million in 1998. Increased net sales due to
greater transaction processing and account verification inquiry volumes and
price increases were partially offset by decreased software sales due to
customer reluctance to make significant software changes prior to Year 2000.
Transaction volumes increased 27.3%, and inquiry volumes increased 6.1% as the
result of higher volumes from existing customers. Net sales in 1999

                                       26
<PAGE>

included minimal contributions from several new products, such as QualiFile,
FraudFinder and Integreat!, which were launched in late 1999.

   Professional services net sales were $12.7 million in 1999. We recorded no
net sales for professional services in 1998 because of equity accounting prior
to the HCL-Deluxe joint venture acquisition in April 1999. On a full year pro
forma basis taking into account the HCL-Deluxe acquisition, professional
services net sales increased $4.9 million, or 40.6%, to $17.0 million in 1999
from $12.1 million in 1998. This growth was due to new clients, increased sales
to existing clients and the initiation of business process management services
for Deluxe.

   Government services net sales increased by $4.3 million, or 9.8%, to $48.3
million in 1999 from $44.0 million in 1998. This increase was due to the roll-
out of additional states during the latter half of 1998 and early 1999 and
price increases on contract extensions for online Medicaid eligibility
verification services. Government services net sales will likely decrease in
future periods as existing contracts expire because we are exiting the
government services business.

   Cost of sales. Cost of sales decreased $18.0 million, or 8.5%, to $194.3
million in 1999 from $212.3 million in 1998. This decrease in 1999 is the net
result of increased cost of sales primarily due to increased volumes and the
acquisition of HCL-Deluxe, offset by a $32.2 million reduction in loss contract
and asset impairment charges related to government services. As a percentage of
net sales, cost of sales decreased to 64.3% during 1999 compared to 79.4%
during 1998, mainly due to a reduction in loss contract and asset impairment
charges. Excluding these charges, cost of sales as a percentage of net sales
would have been 61.4% in 1999 and 64.1% in 1998.

   Electronic payment solutions cost of sales increased $11.0 million, or 8.6%,
to $138.0 million in 1999 from $127.0 million in 1998. As a percentage of
electronic payment solutions net sales, cost of sales increased to 57.2% during
1999 compared to 56.8% during 1998. This increase was due primarily to the
introduction of new services, primarily electronic check conversion services,
and amortization of software related to new products, primarily QualiFile,
DataNavigator and online banking in the United Kingdom.

   Professional services cost of sales were $9.0 million, or 71.1% of
professional services net sales in 1999. We recorded no cost of sales for
professional services in 1998 because of equity accounting prior to the HCL-
Deluxe joint venture acquisition in April 1999. On a full year pro forma basis
taking into account the HCL-Deluxe acquisition, cost of sales for professional
services increased $2.7 million, or 29.1%, to $11.9 million in 1999 from $9.2
million in 1998. As a percentage of professional services net sales, cost of
sales decreased to 70.0% in 1999 compared to 76.2% during 1998. This decrease
was primarily due to increased sales, execution of more profitable contracts,
less reliance on subcontractors through building of our own capabilities and
increased proportion of work being done offshore where margins are higher
despite lower billing rates.

   Government services cost of sales decreased $38.0 million, or 44.6%, to
$47.3 million in 1999 from $85.3 million in 1998. The decrease during 1999 was
due primarily to the $32.2 million reduction in loss contract and asset
impairment charges, as well as lower depreciation and amortization expense in
1999 due to asset impairment charges recorded in 1998. As a percentage of
government services net sales, cost of sales decreased to 97.9% during 1999
compared to 193.9% during 1998. Excluding the loss contract and asset
impairment charges, cost of sales as a percentage of government services net
sales would have decreased to 79.9% in 1999 compared to 100.8% in 1998.

   Gross margin. Gross margin increased $52.8 million, or 95.7%, to $108.1
million in 1999 from $55.2 million in 1998. As a percentage of net sales, gross
margin increased to 35.7% during 1999 compared to 20.6% during 1998. Excluding
the loss contract and asset impairment charges, our gross margin was 38.6% in
1999 and 35.9% in 1998.


                                       27
<PAGE>

   Selling, general and administrative. Selling, general and administrative
expenses increased $24.2 million, or 29.8%, to $105.4 million during 1999 from
$81.2 million during 1998. As a percentage of net sales, selling, general and
administrative expenses increased to 34.9% during 1999 compared to 30.4% during
1998. This increase was predominantly related to costs incurred in conjunction
with the development of DebitBureau, infrastructure investments and goodwill
amortization. These increases were partially offset by initiatives designed to
lower selling, general and administrative expenses, such as reductions in
hiring, travel cost and consulting fees, and lower restructuring charges. In
1999, we reversed $2.4 million of restructuring accruals from prior periods. In
1998, we recorded restructuring charges of $3.2 million for severance relating
to our initiative to reduce selling, general and administrative expenses.
During 1998, we also reversed $1.0 million of a 1996 restructuring charge.

   Research and development. Research and development expenses increased by
$3.1 million to $3.8 million in 1999 from $0.7 million in 1998. As a percentage
of net sales, research and development expenses increased to 1.2% during 1999
compared to 0.2% during 1998. All research and development expenses were within
the electronic payment solutions business and primarily reflect costs incurred
in conjunction with the development of DebitBureau. In addition to these
research and development costs, we also expended $17.3 million in 1999 and $3.2
million in 1998 for product development. These expenditures were capitalized
and are reflected in our consolidated balance sheets under the categories
computer and other equipment and internal use software. We intend to continue
to invest in new product development and product enhancements to respond to new
technologies and competitive pressures.

   Other income (expense). Other expense increased $1.1 million, or 31.9%, to
$4.6 million in 1999 compared to $3.5 million in 1998. The increase in expense
in 1999 was primarily due to losses on the disposal of fixed assets as a result
of a decision to replace an in-house developed system with purchased software
that has greater functionality. This increase was partially offset by the
reduced losses recorded under the equity method of accounting for HCL-Deluxe.
Prior to our acquisition of the remaining ownership interest in April 1999, we
recorded our 50% share of the joint venture's losses in other expense.

   Provision for income taxes. We recognized a provision for income taxes of
$5.6 million in 1999 as compared to a benefit of $8.6 million in 1998. We did
not record a tax benefit on the operating loss of the professional services
business because of its lack of profitability through 1999. Increased non-
deductible goodwill amortization resulting from the acquisition of the
electronic check conversion company also contributed to the provision for
income taxes.

Year Ended December 31, 1998 Compared to Year Ended December 31, 1997

   Net sales. Net sales increased $38.5 million, or 16.8%, to $267.5 million in
1998 from $229.1 million in 1997. All segments experienced increases in net
sales during 1998. On a full year pro forma basis taking into account the HCL-
Deluxe acquisition, net sales increased $47.3 million, or 20.4%, to $279.6
million in 1998 from $232.3 million in 1997.

   Electronic payment solutions net sales increased $21.4 million, or 10.6%, to
$223.5 million in 1998 from $202.1 million in 1997. Increased transaction
processing volume, higher inquiry volumes, higher software licensing and
professional services contributed to this increase. Transaction volumes
increased 19.0% and inquiry volumes increased 5.9% as a result of higher
volumes from existing clients. Software licensing and related services
increased due to clients' demands for new software systems to address potential
Year 2000 impacts.

   We recorded no net sales for professional services in 1998 and 1997 because
of equity accounting prior to the HCL-Deluxe joint venture acquisition in April
1999. On a full year pro-forma basis taking into account the HCL-Deluxe
acquisition, professional services net sales increased $8.9 million, or 277.5%,
to $12.1 million in 1998 from $3.2 million in 1997 when operations for this
business commenced late in the third quarter.


                                       28
<PAGE>

   Government services net sales increased by $17.0 million, or 63.1%, to $44.0
million in 1998 from $27.0 million in 1997. This increase was due to additional
state contracts and the roll-out of existing contracts.

   Cost of sales. Cost of sales increased $68.3 million, or 47.5%, to $212.3
million in 1998 from $144.0 million in 1997. As a percentage of net sales, cost
of sales increased to 79.4% in 1998 compared to 62.8% in 1997. This increase
was primarily due to the $26.3 million asset impairment charges and the
$14.7 million loss contract charges recorded in the government services
business. With these charges excluded, cost of sales as a percentage of net
sales would have been 64.1% in 1998 compared to 62.8% in 1997.

   Electronic payment solutions cost of sales increased $12.3 million, or
10.7%, to $127.0 million in 1998 from $114.7 million in 1997. The increase in
1998 was primarily due to higher revenue volumes. As a percentage of electronic
payment solutions net sales, cost of sales was 56.8% in both 1998 and 1997.

   We recorded no cost of sales for professional services in 1998 and 1997
because of equity accounting prior to the HCL-Deluxe joint venture acquisition
in April 1999. On a full year pro forma basis taking into account the HCL-
Deluxe acquisition, professional services cost of sales increased $6.7 million,
or 267.9%, to $9.2 million in 1998 from $2.5 million in 1997. The increase was
due to a full year of operations in 1998. As a percentage of professional
services net sales, cost of sales decreased to 76.2% in 1998 compared to 78.2%
in 1997.

   Government services cost of sales increased $56.0 million, or 191.7%, to
$85.3 million in 1998 from $29.2 million in 1997. This increase was primarily
due to loss contract and asset impairment charges totaling $40.9 million. As a
percentage of government services net sales, cost of sales increased to 193.9%
during 1998 compared to 108.4% during 1997.

   Gross margin. Gross margin decreased $29.9 million, or 35.1%, to $55.2
million in 1998 from $85.1 million in 1997. As a percentage of net sales, gross
margin decreased to 20.6% during 1998 compared to 37.2% during 1997, primarily
due to charges of $40.9 million for loss contracts and asset impairments in the
government services business. With these charges excluded, our consolidated
gross margin would have been 35.9% for 1998 and 37.2% for 1997.

   Selling, general and administrative. Selling, general and administrative
expenses increased $10.7 million, or 15.1%, to $81.2 million in 1998 from $70.5
million in 1997. This increase was predominantly related to increased selling
and marketing expenses associated with the electronic payment solutions
business and $2.7 million of costs incurred in connection with the development
of DebitBureau. These increases were partially offset by decreases within the
government services business due to lower legal costs. During 1998, we recorded
restructuring charges of $3.2 million for severance relating to our initiative
to reduce selling, general and administrative expenses, while we also reversed
$1.0 million of a 1996 restructuring charge. During 1997, we recorded
restructuring charges of $1.5 million for severance within the electronic
payment solutions business. This reduction was completed in 1998, with
severance payments of $1.4 million paid through December 31, 1999. As a
percentage of net sales, selling, general and administrative expenses were
constant at 30.4% during 1998 and 30.8% during 1997.

   Research and development. Research and development expenses decreased $0.8
million, or 55.3%, to $0.6 million in 1998 from $1.4 million in 1997. As a
percentage of net sales, research and development expenses decreased to 0.2%
during 1998 compared to 0.6% during 1997. All research and development was
within the electronic payment solutions business and primarily reflects the
costs incurred in conjunction with our development of neural network and other
fraud prevention technologies. In addition to these research and development
costs, we also expended $3.2 million in 1998 and $5.0 million in 1997 for
product development. These expenditures were capitalized and are reflected in
our consolidated balance sheets under the categories of computer and other
equipment and internal use software.


                                       29
<PAGE>

   Asset impairment charges. In 1998, there was no asset impairment charges in
operating expenses compared to $11.8 million of charges recorded in 1997. In
1997, we formulated a plan to divest the international unit of our electronic
payment solutions business. Based on fair market value estimates, we recorded a
charge of $11.8 million to write down the carrying value of these operations to
their estimated fair value less costs to sell.

   Other income (expense). Other expense increased $2.6 million to $3.5 million
in 1998 from $0.9 million in 1997. This increase is primarily due to the
increased losses recorded for our 50% ownership interest in the joint venture
HCL-Deluxe. In 1997, other expense does not include a full year of operations
because the joint venture began operations in September of that year.

Quarterly Results of Operations

   The following tables present our unaudited quarterly data for each quarter
of 1998 and 1999. The data has been prepared on a basis consistent with our
audited consolidated financial statements included in this prospectus and
include all necessary adjustments, consisting only of normal recurring
adjustments, that our management considers necessary for a fair presentation of
such information. This data should be read in conjunction with our annual
audited consolidated financial statements and the notes to those statements
included in this prospectus. The operating results for any quarter are not
necessarily indicative of results for any future quarter or year.

<TABLE>
<CAPTION>
                                                     Three Months Ended
                          -------------------------------------------------------------------------------
                          Mar. 31,  June 30,  Sept. 30,  Dec. 31,  Mar. 31,  June 30,  Sept. 30, Dec. 31,
                            1998      1998      1998       1998      1999      1999      1999      1999
                          --------  --------  ---------  --------  --------  --------  --------- --------
                                                       (in thousands)
<S>                       <C>       <C>       <C>        <C>       <C>       <C>       <C>       <C>
STATEMENT OF OPERATIONS DATA:
Net sales:
Electronic payment
 solutions..............  $54,086   $55,697   $ 56,775   $56,992   $56,546   $58,768    $61,510  $64,561
Professional services...      --        --         --        --        --      1,916      5,218    5,544
Government services.....    9,230    10,758     10,951    13,031    11,310    11,883     13,167   11,917
                          -------   -------   --------   -------   -------   -------    -------  -------
 Total net sales........   63,316    66,455     67,726    70,023    67,856    72,567     79,895   82,022
                          -------   -------   --------   -------   -------   -------    -------  -------
Cost of sales:
Electronic payment
 solutions..............   30,204    32,642     31,365    32,823    33,180    33,019     34,629   37,169
Professional services...      --        --         --        --        --      1,465      3,666    3,888
Government services:
 Cost of sales,
  excluding loss
  contract and asset
  impairment charges....   11,065    10,478     11,915    10,867     9,880    10,579     10,361    7,754
 Loss contract and asset
  impairment charges....      --        --      40,949       --         60        57        150    8,433
                          -------   -------   --------   -------   -------   -------    -------  -------
 Total cost of sales....   41,269    43,120     84,229    43,690    43,120    45,120     48,806   57,244
                          -------   -------   --------   -------   -------   -------    -------  -------
Gross margin............   22,047    23,335    (16,503)   26,333    24,736    27,447     31,089   24,778
Operating expenses:
Selling, general and
 administrative.........   21,861    21,345     21,375    16,617    17,887    24,844     28,378   34,273
Research and
 development............      187       172        133       133       536     1,518      1,380      322
                          -------   -------   --------   -------   -------   -------    -------  -------
 Total operating
  expenses..............   22,048    21,517     21,508    16,750    18,423    26,362     29,758   34,595
                          -------   -------   --------   -------   -------   -------    -------  -------
Income (loss) from
 operations.............       (1)    1,818    (38,011)    9,583     6,313     1,085      1,331   (9,817)
Other income (expense):
Legal proceedings.......      --        --       4,157       --      2,094       --         --       --
Other income (expense)..     (271)     (225)    (1,542)   (1,457)     (866)     (420)    (2,870)    (453)
Interest income
 (expense)..............      877       793        369       750       803       275         (3)    (112)
                          -------   -------   --------   -------   -------   -------    -------  -------
Income (loss) before
 income taxes...........      605     2,386    (35,027)    8,876     8,344       940     (1,542) (10,382)
(Provision) benefit for
 income taxes...........     (224)     (883)    12,960    (3,284)   (4,530)   (3,419)    (7,692)  10,055
                          -------   -------   --------   -------   -------   -------    -------  -------
Net income (loss).......  $   381   $ 1,503   $(22,067)  $ 5,592   $ 3,814   $(2,479)   $(9,234) $  (327)
                          =======   =======   ========   =======   =======   =======    =======  =======
</TABLE>

                                       30
<PAGE>

Liquidity, Capital Resources and Financial Condition

   As of December 31, 1999, cash and cash equivalents were $35.8 million. We
also had $3.4 million of restricted cash that we temporarily hold in custodial
accounts on behalf of clients and $28.9 million in restricted cash that we have
supplied to a client, who is a provider of ATM management and outsourcing
services, for use in the client's ATMs. We are obligated to provide up to $35
million of cash to this client. Funds advanced to this client earn interest at
a rate of prime plus 1% per annum.

   Deluxe has agreed to provide us with a $75 million unsecured, revolving
credit facility until the earlier of the effective date of the split-off or
August 28, 2000. We currently do not have borrowings outstanding under this
facility. Borrowings under the facility will be due at the split-off or
maturity and will accrue interest at the London Interbank Offered Rate, or
LIBOR, plus a variable additional margin based on Deluxe's credit rating. At
December 31, 1999, the applicable rate would have been 6.39% per annum. The
credit facility contains financial and restrictive covenants, including
limitations on our ability to incur secured debt, to dispose of assets, to
consolidate and merge and to sell substantially all of our assets, and
financial maintenance ratios. We intend to replace this facility with a new
credit facility with one or more financial institutions prior to the split-off
or maturity. A replacement credit facility may not be available to us, or if
available, we may not be able to obtain it on a timely basis or on terms
acceptable to us.

   At December 31, 1999, we also had a $5.0 million line of credit, which is
denominated in Indian rupees and guaranteed by Deluxe, available for use by our
international operations at an interest rate of 15.81%. The average amount
drawn on this line during 1999 was $2.7 million. As of December 31, 1999, $3.1
million was outstanding. In March 2000, this line of credit was increased to
$10.0 million and remains guaranteed by Deluxe until October 1, 2000.

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

<TABLE>
<CAPTION>
                                                    Summary of Cash Flows
                                                   Year ended December 31,
                                                   --------------------------
                                                    1997     1998      1999
                                                   -------  -------  --------
                                                        (in thousands)
   <S>                                             <C>      <C>      <C>
   Cash provided by (used in) operating
    activities.................................... $25,938  $ 7,821  $(12,150)
   Cash used in investing activities.............. (18,519) (31,537)  (73,209)
   Cash (used in) provided by financing
    activities.................................... (10,802)  15,928   105,153
                                                   -------  -------  --------
   Net (decrease) increase in cash and cash
    equivalents................................... $(3,383) $(7,788) $ 19,794
</TABLE>

   Cash used in operating activities was $12.2 million in 1999, primarily due
to $32.2 million to pay the judgment in legal proceedings related to our
government services business and the use of $25.0 million to supply cash to
ATMs operated by a client in our electronic payment solutions business.

   Cash used in investing activities was $73.2 million in 1999, primarily due
to purchases of capital assets of $38.2 million, which included $17.3 million
for product development related expenditures. We also invested $13.0 million to
purchase an electronic check conversion company and $23.4 million to purchase
the remaining 50% ownership interest in HCL-Deluxe.

   Cash provided from financing activities was $105.2 million in 1999, of which
$108.8 million was provided by Deluxe and $3.1 million from borrowings on our
line of credit. We used cash to repay debt of $6.7 million.

   We had capital expenditures of $38.2 million in 1999, $30.5 million in 1998
and $18.0 million in 1997. We anticipate a substantial increase in our capital
expenditures in 2000 to complete the integration of our infrastructure and for
continued spending on product development. In particular, we intend to
consolidate our data centers and customer contact centers. We estimate our
capital expenditures to be approximately $62.5 million in 2000.


                                       31
<PAGE>

   In March 2000, we used $20 million of cash to purchase a 24% interest in a
provider of ATM management and outsourcing services to retailers and financial
institutions. We are obligated to provide up to $35 million of cash for use in
this provider's ATMs.

   We believe that our cash, cash equivalents, proceeds from this offering and
borrowings under our credit facilities will provide sufficient capital to fund
our operations for the foreseeable future.

Recently Issued Accounting Standards

   In April 1998, the Accounting Standards Executive Committee issued Statement
of Position (SOP) 98-5, "Reporting the Costs of Start-up Activities," which
provides guidance on the appropriate accounting for start-up activities
beginning in 1999. Application of the SOP did not have a material impact on our
reported operating results or financial position.

   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. We anticipate that the effect of this pronouncement,
which is effective for us on January 1, 2001, will not have a material impact
on reported operating results.

Market Risk Disclosure

   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 intercompany foreign currency denominated balance sheet positions.
Historically, the effect of movements in the exchange rates have not been
material to our consolidated operating results.


                                       32
<PAGE>

                                    BUSINESS

Overview

   We are a leading provider of end-to-end electronic debit payment solutions
to financial institutions, retailers, electronic funds transfer networks and e-
commerce providers. Our primary products and services include decision support
and risk management tools, electronic funds transfer processing, monitoring and
settlement services and professional services, including information technology
consulting and business process management.

   Our decision support and risk management tools combat identity fraud and
account abuse, using our leading DebitBureau database of more than 2.7 billion
debit records. We are a leading third party processor of electronic funds
transfers in the United States and can process electronic payments cost-
effectively to all electronic funds transfer networks on a worldwide basis. As
part of our comprehensive solutions, we offer professional services, including
implementation and integration of our software, custom software development,
creation of e-commerce applications and business process management.

   We offer our products and services as comprehensive solutions or as
independent offerings. We are a single source of electronic debit payment
solutions whether payments are made using payment cards or paper checks, or
whether the transaction is accomplished at retail locations or ATMs, through
mail or telephone orders or over the Internet.

Industry Background

   Electronic Payments. The global payment system is undergoing rapid change as
new technologies and the new business requirements, primarily in e-commerce,
cause newer electronic payment methods to supplant traditional paper methods.
Although paper payments, such as personal check, cash, bank and travelers
checks and food stamps, continued to represent more than 70% by dollar volume,
or $3,255 billion, of U.S. consumer payments in 1998, the Nilson Report
estimates that paper payments will decline to 52.1%, or $3,556 billion, of U.S.
consumer payments by 2005 while the dollar volume of debt card payments will
increase from 3.7%, or $168 billion, of U.S. consumer payments in 1998 to
10.9%, $743 billion, in 2005.

   The Nilson Report estimates that the number of U.S. debit cards payments
will increase from 4.9 billion transactions, or 4.9% of total consumer
transactions, in 1998 to 19.1 billion transactions, or 14.0% of total consumer
transactions, in 2005, representing a compound annual growth rate in debit
transactions of 21.6%. This compares to the number of U.S. credit card payments
which Nilson expects to increase from 17.1 billion transactions, or 17.4% of
total consumer transactions in 1998 to 21.9 billion transactions, or 16.1% of
total consumer transactions, in 2005, representing a compound annual growth
rate of only 3.1%. The Nilson Report further estimates that the number of U.S.
debit card transactions will overtake credit cards by 2007. In many
international markets, including United Kingdom and Canada, debit cards have
replaced credit cards as the leading form of consumer electronic payment. As a
result, financial institutions and retailers will require electronic payment
processes that facilitate newer electronic payment methods as well as increase
the efficiency of continued paper payment transactions.

   The growth in debit cards use is increasing as a result of its convenience
and safety. Consumers use debit cards to direct a bank to pay money from a
demand deposit account, such as a checking account. Debit card use is
increasing because it is widely accepted by retailers and provides
substantially the same level of convenience in making a purchase as credit
cards. In addition, debit cards allow a consumer to avoid accumulating credit
card debt, provide a single statement of the consumer's debit card and check
transactions on the consumer's bank statements and in many cases provide a
cash-back feature at the point-of-sale. For retailers, debit cards generally
entail lower transaction costs than credit cards due to higher processing costs
and fees for credit card payments and fewer fraud losses in the cases where the
debit card transaction involves the use of a unique personal identification
number, or PIN, assigned to the cardholder.


                                       33
<PAGE>

   e-Commerce. Growth in e-commerce transactions is also expected to increase
the need for electronic payment solutions. According to Forrester Research,
online retail purchases by U.S. consumers will grow from $20 billion in 1999 to
$184 billion in 2004, reaching 7% of total retail spending that year. Payment
for Internet transactions are primarily made by payment card, with an estimated
90% made using credit cards. This dependence on credit cards presents issues
for e-commerce companies. E-commerce companies face the potential for a
substantial amount of credit card fraud due to identity manipulation. PIN-based
debit transactions could help alleviate this problem for merchants and give
consumers a higher degree of confidence in the security of PIN-based Internet
transactions. By failing to provide debit payment alternatives, e-commerce
providers exclude the estimated 32.4% of U.S. consumers, according to the
Federal Reserve Bank, who do not have a credit card. Consequently, we believe
e-commerce companies are increasingly likely to look to debit card transactions
to expand payment options for consumers, to lower transaction costs, to provide
greater transaction security and to deliver more successfully completed
transactions.

   Financial Institutions and Merchants. In general, merchants and financial
institutions are seeking to increase the use of electronic payment systems to
decrease transaction costs. A study by the Bank for International Settlements
estimates that the cost of using electronic payments is one-third of the cost
of paper-based transactions. To facilitate electronic payments, merchants and
financial institutions are installing greater numbers of ATMs and point-of-sale
debit terminals. The number of these devices increased by 36.6% from 1998 to
1999 according to Bank Network News. Retailers and banks are also adopting new
technologies to reduce costs associated with paper checks. Electronic check
conversion technologies in which physical checks are scanned at the point-of-
sale and converted into an electronic transaction, are gaining acceptance.
Using electronic check conversion, retailers and banks can realize cost savings
and cash management benefits while enabling customers to continue their check
writing practices. NACHA, the electronic payments industry association,
estimates that more than one million checks per month are currently being
converted into electronic transactions at the point-of-sale. NACHA also
estimates that 25,000 merchants and 50 to 100 banks are using electronic check
conversion devices.

   A significant factor in transaction costs is debit fraud, including use of a
false or stolen identity, and account abuse, such as writing checks with
insufficient funds or opening and closing accounts to avoid payments. Debit
fraud losses totaled $1.3 billion for banks and $13 billion for merchants in
the United States in 1998, according to the Tower Group, and have increased for
merchants at a rate of 5% per year since 1996. In order to combat fraud
effectively, financial services companies and retailers require payment history
data and risk management decision support tools that enable them to identify
potential risks. Debit card transactions can reduce fraud because transactions
using PINs are less likely to be fraudulent than signature based transactions.

   Financial service companies also face pressures to adopt new payment
technologies to better serve their customers and reduce costs. Banks, credit
unions and savings banks are making substantial investments in on-line banking,
while brokers require efficient mechanisms for online opening and funding of
trading accounts. In each case, the financial service companies must find
online methods that reduce or eliminate the need to deliver paper checks and
manage the risk of online account funding. Financial service companies require
these services to retain highly valued customers and to position themselves for
expanded e-commerce activities. At the same time as financial services
companies and retailers are responding to these increasing demands for new
technologies and the rapid growth in e-commerce and internet delivery channels,
they also must control costs and address shortages of information technology
resources. One consequence is that financial institutions and retailers are
increasing their use of external information technology service providers. The
Tower Group estimates that spending by U.S. commercial banks on external
information technology services will increase from $26 billion in 1998 to $33
billion in 2002.

   Market Opportunity. To accommodate the variety of payment methods in use
today, merchants and financial institutions need various technologies for
acquiring, authorizing and processing payment transactions. These technologies
must provide an initial means to capture transaction data. For example, a
consumer may

                                       34
<PAGE>

wish to use a debit card, ATM card, credit card or paper check to effect a
transaction. The financial institution or retailer must collect the consumer's
account and transaction information through a point-of-sale device, ATM,
telephone order, check or Internet interface. This account and transaction
information is processed through an electronic funds transfer system for
payment authorization and settlement. The system may also provide verification
and risk analysis filters to detect potential fraud. In addition, banks and
financial institutions need technologies that facilitate opening accounts
online, manage accounts more effectively and "cross-sell" additional services
through online access to customer payment data. The following diagram
illustrates the elements of the payment cycle.

              [DIAGRAM ILLUSTRATING THE FLOW OF THE PAYMENT CYCLE]

   To respond to the rapid changes and pressures in the payment industry,
companies require significant transaction processing and payment management
services and support. Financial service companies and retailers are seeking
tools that provide lower payment costs, fraud prevention and risk management,
decision support and secure transactions. In the past, these organizations have
needed to work with separate service providers to obtain the necessary tools.
The electronic payments industry has been divided between delivery and
transaction processing companies and information and analysis providers. At the
same time, financial service companies and retailers need access to
professional information technology resources so that they can exploit the
promise of new technologies.

Our Solution

   We offer comprehensive electronic debit payment solutions that enable our
clients to manage and combat fraud, transfer funds cost-effectively and enhance
their customer relationships. We provide a unique source of electronic debit
payment services that combines leading electronic funds transfer processing
capabilities and software with debit-based information and risk management
tools. In addition, our information technology professional services provide
clients with the resources to respond to the demands for new technology,
implement and integrate our solutions and develop new software applications.
With our products and services, our clients can enhance the value to them of
every debit transaction.

   Using our premier debit data, risk management tools and processing
capabilities, we can deliver integrated end-to-end payment management
solutions. Our products and services also can be deployed as separate modules
to fit our clients' needs. We believe this mix of leading capabilities and
flexible product offerings

                                       35
<PAGE>

address developing market opportunities and provide us with the following
competitive advantages that are key elements of our success.

   End-to-End Solutions. We enable our clients to manage the complete
electronic debit payment cycle using our products and services. Our solutions
reduce transaction costs, manage risks and enhance customer relationships for
our clients by providing:

  .  risk management and decision support tools based on DebitBureau, our
     leading debit information database;

  .  customer relationship tools for opening financial accounts,
     electronically funding these accounts, minimizing fraud and identifying
     cross-selling opportunities;

  .  transaction processing, monitoring and settlement on an efficient, cost-
     effective and worldwide basis;

  .  information technology professional services to create e-commerce and
     Internet solutions, integrate our solutions and new technologies and
     develop custom software applications; and

  .  business process management services.

   In the past, merchants, banks and other financial services companies needed
to integrate debit payment services from numerous providers using disparate
technologies and platforms. We believe we are the only single-source provider
of comprehensive electronic debit payment solutions on an integrated basis.
Clients, however, can use our individual services that fit their needs and we
can implement these services in any environment.

   Premier Database. Our DebitBureau database is the most comprehensive source
of debit data in the industry. The database contains more than 2.7 billion
debit records, including account openings and closings, demand deposit account
activity, insufficient funds check-writing histories and check order histories.
It also includes credit information and household-specific demographic data.
Approximately 1.7 million records are added daily to DebitBureau. DebitBureau
provides a unique source of information because it aggregates data from market
leading services including SCAN, the most widely accessed check verification
database in the United States, and ChexSystems, the leading new account
applicant verification service used by more than 86,000 financial locations. We
also receive data from clients of Deluxe and over 82,000 retail locations. In
addition, we obtain data from credit bureaus and other data sources.

   The breadth and depth of DebitBureau allow us to develop more powerful risk
management and analytical tools. Our clients can draw on DebitBureau to make
better risk management decisions, such as authorizing a new demand deposit
account or accepting a check, and to improve customer relationship decisions,
such as identifying opportunities to cross-sell additional services to their
customers. We offer solutions that provide our clients online access to the
database and proprietary risk assessment models. Information on a proposed
debit transaction or an account opening is entered by a client into our system
and is analyzed to determine the likelihood of identity fraud or account abuse
or to assess the overall risk of opening a new account. The system also
identifies customers of our client's who are most likely to accept client
product offers. For example, our system enables financial institutions to sell
credit cards and home equity loans more effectively to new demand deposit
account customers and to set more appropriate limits on the customer's
privileges, such as maximum withdrawals in debit card transactions.

   Global Processing Capabilities. Using our electronic debit payment services,
our clients have the ability to process debit payment transactions through all
electronic fund transfer networks on a worldwide basis. Our network connects
with over 15,000 links to other networks and institutions throughout the world.
We are a leading third party processor of debit electronic fund transfers in
the United States, processing approximately five billion transactions in 1999.
Our processing services drive more than 98,000 point-of-sale devices and more
than 9,500 ATMs.

                                       36
<PAGE>

   For example, we are the single gateway for all of a major U.S. financial
institution's ATM transactions outside its internal network on a worldwide
basis, processing approximately 125 million transactions in 45 countries in
1999. Our processing services can provide a single gateway for electronic funds
transfers that can sort and execute all of a client's electronic debit payment
transactions using the appropriate networks. We also consolidate and report in
real-time a client's net cash position at a single location or across the
client's entire system. These and other features of our solutions enhance our
clients' cash management capabilities. Our processing services and software
perform high-volume online transaction processing, accommodate a wide variety
of terminal types, ranging from the Internet to ATMs, and support complex
networking relationships. We drive and manage the services for all major ATM
models through multiple telecommunication configurations.

   Expertise in Electronic Commerce. We have focused on facilitating electronic
payments since 1976. This long history and industry focus provides us with the
experience and capabilities to facilitate electronic debit payments through any
channel, including the Internet, point-of-sale device or ATM. Based on these
skills, we are uniquely positioned to enable debit transactions on the
Internet. We recently introduced Integreat!, an online service for opening,
funding and managing demand deposit accounts over the Internet, which extends
our fraud management and client account management tools to the Internet. We
also offer Web EFT, a browser-based Internet application that allows clients
automatically to collect and deposit pre-authorized customer payments. We also
have developed close relationships with market-leading clients as payment
technologies, business models and global financial systems have changed
dramatically. These close relationships provide us with market insights into
our clients' needs and conditions in global markets.

   Global Resources for Information Technology Solutions. Our high quality
professional services provide information technology solutions by teaming
onsite consultants in the United States who analyze and manage the project with
software developers in India who execute client-specific software solutions. We
employ over 1,300 software programmers worldwide. Our global delivery
capabilities gives us the ability to provide high quality, round-the-clock
development services at competitive prices. Our information technology
professionals customize and implement our electronic debit payment solutions
for our clients, develop new software applications for our solutions as well as
custom applications for our clients, and create custom e-commerce and Internet-
related software solutions. We are presently engaged by 20 companies for our
information technology professional services, including Bank One, the Pershing
Division of Donaldson, Lufkin & Jenrette and ReliaStar Life Insurance Company.

Our Strategy

   Our objective is to be the leading provider of electronic debit payment
solutions and information technology solutions to the electronic payment
industry and financial institutions. Key elements of our business strategy are
to:

  .  Expand e-Commerce and Internet Delivery Capabilities. We plan to devote
     significant resources to exploit e-commerce and Internet related
     opportunities. Based on our processing capacities, information
     capabilities and industry expertise, we believe we are uniquely
     positioned to help our clients take advantage of the efficiencies and
     revenue opportunities of e-commerce. We intend to continue to adapt our
     core capabilities in transaction processing, fraud prevention and client
     account management for Internet applications and to develop products and
     services that will enable new e-commerce channels, such as business-to-
     business electronic payment transactions. Our services can help make
     debit payments, which are under-represented on the Internet as a payment
     option, safer, easier to use, and more widespread in Internet
     transactions. In our product development pipeline are:

    .  PIN-secured debit payment applications for purchases on the
       Internet;

    .  ATM management applications that provide Internet access to product
       advertising on the ATM screen; and

    .  Internet check acceptance software that can accept, authenticate,
       authorize and settle a checking account-based debit transaction
       initiated over the Internet.

                                       37
<PAGE>

  .  Extend Technology Leadership. We intend to continue to enhance our
     position as a technology leader by introducing new products that provide
     greater risk management and value-added functionality. We have
     introduced QualiFile, a new account opening service for banks and
     brokerage firms that features improved risk scoring, enhanced financial
     and demographic targeting of cross-selling opportunities and expanded
     customized instructions. We have recently launched DataNavigator, a web-
     based, real-time electronic funds transfer data management and customer
     support platform that provides full back-office support with transaction
     research, real-time settlement and reconciliation services. To extend
     our technology position, we intend to leverage the development skills of
     our information technology professionals and expand our research and
     development role on behalf of financial institutions. We believe the
     ability to combine information and transaction delivery services will be
     a critical element in our success. To that end, we plan to invest in the
     technology and personnel required to expand our payment information
     capabilities and merge them into new, broader, faster and more versatile
     delivery systems.

  .  Expand Existing Client Relationships and Attract New Clients. Most of
     our clients currently use only a portion of our services. As we continue
     to integrate our information and processing capabilities with our
     professional services into new comprehensive, information-based payment
     management solutions that provide greater value for our clients, we
     believe we can expand our relationships with existing clients to provide
     additional services. In addition, we plan to provide solutions to our
     clients' e-commerce needs as they emerge. We intend to expand our sales
     force to develop new clients, build brand awareness and cross-sell all
     the components of our comprehensive suite of electronic payment
     management services. We also are seeking new clients in rapidly growing
     Internet markets such as online banking, electronic bill presentment and
     payment and business-to-business e-commerce.

  .  Seek Acquisition and Strategic Alliance Opportunities. We intend to
     pursue acquisitions of complementary businesses, technologies or product
     lines. We believe there are opportunities to make accretive acquisitions
     by adding services to enhance our comprehensive solutions. In addition,
     we plan to seek strategic relationships with key industry participants
     in order to broaden our market presence, reach new geographic and
     vertical markets, and increase our sales penetration by leveraging each
     partner's technology and expertise in specific markets, industry
     reputation and sales and marketing resources. For example, we recently
     acquired a 24% interest in a client of our transaction processing
     services that is a provider of ATM management and outsourcing services
     to retailers and financial institutions.

  .  Broaden International Sales. We currently derive approximately 10% of
     our revenue from international sales in 22 countries. We intend to
     expand in international markets by further penetrating our existing
     client base and by focusing on emerging international markets lacking
     established electronic payment systems.

Our Products and Services

   We deliver electronic debit-based payment management solutions to financial
institutions, retailers, electronic funds transfer networks and gateways and e-
commerce providers. To address our clients' electronic payment management
needs, we offer a comprehensive suite of products and services. We offer the
following three broad categories of products and services:

  .  decision support and risk management tools;

  .  electronic funds transfer processing, monitoring and settlement
     services; and

  .  professional services, including information technology consulting and
     business process management.

   Our products and services can be deployed on a stand-alone basis, or
combined with each other to provide an end-to-end solution. This flexibility
enables our customers to select individual services they need to meet their
current business objectives and then to add additional services as their
requirements evolve.

                                       38
<PAGE>

  Decision Support and Risk Management Tools

   We offer a variety of tools to help financial institutions, retailers and
other businesses that accept debit payments to:

  .  determine the likelihood of account fraud and identity manipulation;

  .  assess the overall risks involved in opening new accounts or accepting
     payment transactions; and

  .  make better predictions about other products their customers are likely
     to purchase.

   Our decision support and risk management tools are based on our DebitBureau,
the most comprehensive source of debit data, as well as credit and demographic
data. DebitBureau contains over 2.7 billion records, including account opening
and closing information, deposit account collections data, retail insufficient
funds check-writing histories and check order histories. We also record and
store third party information that our models use to screen for potentially
incorrect, inconsistent or fraudulent social security numbers, home addresses,
telephone numbers, driver license information and other indicators of possible
identity manipulation. Using the data, for example, we perform various tests to
validate the consumer's identification, and apply analytic and predictive
statistical models to assess and rank account risk and to match customers with
targeted financial products.

   Check Authorization. We operate SCAN, or Shared Check Authorization Network,
the most widely accessed check verification database in the United States. SCAN
serves 17 of the top 20 retailers in the United States, including Wal-Mart,
Kmart and Home Depot. More than 82,000 retail locations report returned check
activity to the SCAN network. We verified checks with an aggregate value of
approximately $181 billion in 1998. The SCAN database helps retailers reduce
the risk of write-offs for dishonored checks due to insufficient funds and
other forms of account fraud and identity manipulation. When a check is
presented as payment at the point-of-sale, SCAN members electronically access
the database by running the check through a scanner. The information on the
check is then compared to the database and analyzed for the likelihood of
fraud. The check scanner then indicates whether the retailer should accept or
reject the check. Merchants pay a service fee for SCAN based on the aggregate
dollar value of checks authorized by the retailer using SCAN and additional
fees per inquiry for customer or retailer calls to the call centers.

   As part of an integrated solution to help retailers manage their check
acceptance programs, we offer collection services to some SCAN members. We
tailor our collection strategies to specific retailer needs. The services
generally involve sending letters and follow-up telephone calls to consumers
whose checks have been returned. In addition, we extend to a limited number of
SCAN members the option of a portfolio purchase solution. Under this solution,
we purchase the returned checks from the retailer at a mutually agreed upon
total discounted purchase price and assume the collection liability.

   New Account Verification. Our ChexSystems business is the leading provider
of new account applicant verifications. This service is used by more than
86,000 financial institution locations. ChexSystems provides access to more
than 22 million closed-for-cause account histories and 53 million records of
new account inquiries. ChexSystems receives on average about 2.7 million new
account inquiries per month. This service helps financial institutions assess
the risks involved in opening new customer accounts. Financial institutions may
access the service online or by telephone. We also are developing an Internet-
based new account verification service.

   We also offer enhanced versions of our new account verification service. New
AccountChex performs social security number validation, and indicates whether
the applicant has made any other new account inquiries within the past 90 days
and had any accounts closed for cause within the past five years. AccountChex
Plus provides in addition to new account applicant verification, returned check
activity information and driver's license validation. Financial service
companies may access these products online or by

                                       39
<PAGE>

telephone. We are also developing these products for use over the Internet.
Financial institutions pay a service fee for our new account verification
services based on the number of inquiries.

   As a separate service, we also provide collection services to financial
institution clients of ChexSystems. We do not assume any collection liability
for these services. We contract with a third party for extended collection
activity.

   FraudFinder. FraudFinder is an identity fraud-detection service for new
accounts which are opened in person or over the Internet. FraudFinder accesses
our comprehensive DebitBureau database to help financial service companies
identify potential identity manipulation and fraud. FraudFinder scores and
ranks new accounts according to their level of risk, using neural network
technology. A neural network is a complex mathematical model used to predict
the likelihood of future behavior by analyzing and learning from data supplied
about past behavioral patterns. The key to a neural network is the ability to
continuously "learn" from each new data input and thus improve its predictive
capability.

   The fee structure for FraudFinder consists of a one-time set-up fee and a
charge for each customer inquiry. FraudFinder, which we introduced in 1999, is
an enhanced version of our earlier fraud detection service. Currently, over 300
clients use FraudFinder, including Bank of the West, California National Bank
and Citizens Bank.

   In FraudFinder, we offer ID validation capabilities that assist businesses
in authenticating an individual and the personal information provided during an
account-opening event. These capabilities are incorporated in our on-line and
Internet-based account opening products. By validating and performing various
tests on an individual's social security number, driver's license information
and address and phone numbers, we are able to assess the likelihood of the
validity of the identity information provided.

   QualiFile. QualiFile is an online, real-time account-opening service. It
combines debit data from our DebitBureau with comprehensive credit, demographic
and financial product-use data to help financial service companies make
informed decisions about opening new accounts and financial product offerings
that new customers are more likely to accept. QualifFile has the following
features:

  .  QualiFile validates an applicant's identity and predicts the likelihood
     of account abuse by scoring the applicant's risk level.

  .  QualiFile creates a financial profile of the new customer and generates
     a list of targeted products that matches the customer's needs with the
     products offered by the financial institution.

  .  QualiFile simplifies and automates the account-opening process.
     QualiFile guides the new account representative through the new account
     process by presenting on-screen messages. These messages include whether
     to accept or deny the account, or review the decision with a manager, a
     customized list of products that may appeal to the new customer and
     product-offer dollar limits, rates and terms.

   The fee structure for QualiFile consists of a one-time set-up fee, a charge
for each customer inquiry and a monthly minimum participation fee. We
introduced QualiFile in September 1999. Clients using our QualiFile service
include BankUnited, Bank One, Union Planters and GTE Federal Credit Union.

   Integreat!. In December 1999, we introduced Integreat!, our first end-to-end
solution that helps financial services companies open new accounts for
consumers over the Internet. Integreat! streamlines the online account-opening
process by verifying the applicant's risk level, targeting financial product
offerings, funding accounts electronically and delivering checks, cards and
other account-related materials to the new customer. Integreat! incorporates
our QualiFile service to provide real-time ID verification, risk assessment and
customized financial product offerings. Once the new account is approved, the
applicant authorizes the

                                       40
<PAGE>

electronic transfer of funds to the new account from an existing outside
account, which eliminates the need to deliver paper checks and speeds up the
time to funding.

   The fee structure for Integreat! consists of a one-time setup fee, a charge
for each customer inquiry and a monthly minimum participation fee. Clients
using our Integreat! service include USA Bancshares.com and Umbrellabank.com.
We believe that our Internet account opening and funding service has potential
applications in other customer markets. We are currently targeting online
brokerage firms.

   Debit Report Service. In February 2000, we began to offer reports on
consumer debit transactions that can be used as part of credit reports and
scoring models that assess a consumer's payment risk. We are targeting the
service to major credit issuers and credit bureaus.

  Transaction Processing

   Transaction processing involves:

  .  capturing the information required to conduct an electronic transaction,
     such as an ATM withdrawal or debit card payment through a point-of-sale
     device;

  .  electronically locating the cardholder's bank and account;

  .  verifying the validity of the account;

  .  authorizing the financial institution or merchant to accept the
     transaction;

  .  debiting the cardholder's account;

  .  crediting the merchant's or financial institution's account; and

  .  then electronically transferring the funds settlement.

For example, when a cardholder inserts his debit card into an ATM or point-of-
sale device and enters his PIN and the type and amount of the transaction, the
device contacts the processing company that operates that particular device and
transmits the information. The processing company identifies the institution
that issued the card and works through all the validation and authorization
routines, such as the correct PIN, limits on withdrawals, and whether there are
sufficient funds in the account. If all the routines are executed successfully,
the processing company signals the device to complete the transaction.

   To carry out the tasks required in an ATM or point-of-sale device
transaction, each machine is typically connected to several computer networks.
These networks include private networks that connect the devices of a single
device owner, shared networks that serve several device owners in a region and
national shared networks that provide greater access to devices across regions.
Each shared network has numerous financial institution members. For example,
the NYCE network has over 2,300 financial institution members, including Chase
Manhattan and FleetBoston Financial, and the StarSystem Network has over 3,400
financial institution members, including Bank of America and First Union.
Gateway service providers, such as eFunds, provide access to multiple networks.
The computer driving the device will route the transaction to the lowest
network level that can complete the task.

   Debit-based Transaction Processing. We are one of the largest third-party
processors for regional automated teller machine, or ATM, networks in the
United States. We also provide transaction processing for various types of
retail point-of-sale terminals that authorize payments from debit cards, checks
and electronic checks. We drive or operate more than 9,500 ATMs and more than
98,000 point-of-sale terminals. In 1999, we processed approximately five
billion debit transactions, with 99.99% availability and at speeds up to 600
transactions per second. We process virtually all types of debit-based
transactions, including cash withdrawals, cash deposits, balance inquiries,
purchases, purchases with cash back and purchase returns. In addition, we
authorize cash advances and purchases initiated with credit cards at ATM or
point-of-sale locations. We have

                                       41
<PAGE>

the ability to process transactions to any electronic funds transfer network in
the world. This network accessibility enables a consumer to withdraw funds from
any ATM location, anywhere and at anytime.

   We are also developing Internet-based transaction processing. We have
entered into an agreement with NYCE, one of the largest operators of ATM and
debit card networks, to provide transaction processing over the Internet for
its SafeDebitTM, a PIN-based Internet debit payment product. This product
allows consumers to pay for purchases on the Internet with funds withdrawn
directly from their checking accounts.

   Our transaction processing services include: authorization and verification
of the payment transaction, capture and transmission of the transaction data,
settlement of the payment transaction and information reporting. We also
provide 24 hour a day, 7 days a week monitoring of 5,200 ATMs for system
irregularities, including the availability of ATM and point-of-sale terminals
and network access. Our transaction processing capabilities include:

  .  transaction processing from different types of ATMs and point-of-sale
     terminals, which may differ according to model, protocol and software;

  .  authorization and verification for online and offline debit and credit
     cards, including Mastercard or VISA bank cards, and paper and electronic
     checks;

  .  access to substantially all national and regional networks, such as
     MasterCard/Maestro/Cirrus, Visa/PLUS, American Express, Discover, STAR,
     NYCE, Pulse and MAC;

  .  transaction switching, allowing transactions to be routed
     internationally;

  .  data management through our DataNavigator, an optional product; and

  .  comprehensive settlement and reconciliation services.

   As part of our transaction processing services, we receive fees for
installation of the software and hardware; monthly transaction processing,
which includes a base fee plus a variable fee based on the number of
transactions; and additional services related to surcharged transactions,
network access and sponsorship, ATM operation, card and authorization services,
settlement services, ATM monitoring, testing resources and professional
services.

   EFT Processing Software. We license our electronic funds transfer software,
the same software that drives our electronic funds transfer processing
business, to in-house processors and regional networks in 22 foreign countries
and in the United States. In 1999, our licensees processed 10 billion
transactions around the world using our electronic funds transfer software. Our
electronic funds transfer software runs on IBM and Tandem computing platforms.
We also provide maintenance and support services.

   ACH Processing. We are one of the largest private sector automated
clearinghouse service, or ACH, providers. The ACH network is an electronic
payment delivery system used primarily to process repetitive payments, such as
payroll, social security payments and utility payments. The ACH network acts as
the clearing facility for routing electronic funds transfer entries between
financial institutions on behalf of their business customers. The Federal
Reserve is the largest ACH service provider.

   Our ACH services allow financial institutions to originate, receive,
balance, settle and edit their ACH transactions. We function as the financial
institution's ACH technology arm, giving the financial institution direct
control over its processing, but reducing the costs associated with operating a
processing and settlement infrastructure as an alternative to the Federal
Reserve as the exchange point. We also offer ACH switching services to members
of the American Clearing House Association which enable them to exchange and
settle ACH transactions with other member financial institutions. We also
provide calculation of daily settlement for ACH transactions, as well as
research and return capabilities.

   The fee structure for our ACH services consists of installation fees,
monthly fees and transaction fees.


                                       42
<PAGE>

   DataNavigator. DataNavigator is a user-friendly software tool for financial
services companies, networks and independent service providers that enables
real-time electronic funds transfer data management and customer support.
DataNavigator uses a client server architecture that features a comprehensive
data repository supported by both a Windows-based and web browser-based user
interface. DataNavigator helps cut costs and improve customer satisfaction by
speeding up settlement and reporting, streamlining transaction research and
reconciliation services.

   DataNavigator provides continuous settlement processing of electronic
transactions. Whether electronic funds transfer processing is handled in-house
or by a third party processor, DataNavigator can help users handle the
reporting, aggregation, reconciliation and settlement of transactions online,
as they arise. DataNavigator eliminates the traditional end-of-day bottleneck
for batch processing of settlement and reporting and simplifies transaction
research by providing a single point of access to all the electronic
transaction data on the user's network. Information is available to the
customer support staff immediately after a transaction occurs. DataNavigator
also provides detailed information about electronic funds transfer transactions
to help manage profitability and analyze consumer transaction behavior.
Transactions can be analyzed based on specific parameters, such as ATM location
or set dollar amounts at given locations. A bank that owns multiple ATMs, for
example, can determine its cash position at a particular ATM at any point
during the day. DataNavigator is fully operational in our transaction
processing centers and may be accessed by our transaction processing clients
for an additional fee or may be licensed by our software clients as an
additional module.

   Electronic Check Conversion. Our electronic check service converts paper
checks into electronic transactions at the point-of-sale. Under the electronic
check system, the consumer continues to write a check but the retailer runs the
check through a check reader to capture account data. The check is authorized
through SCAN OnLine, our real-time check verification service. Once the
transaction is accepted, the authorized amount of funds is deposited in the
retailer's account, generally within one day, and is debited from the
consumer's account using the ACH network.

   We believe that our electronic check service benefits retailers by reducing
paper check processing costs, minimizing bad-check write-offs and accelerating
funds collection. As of March 1, 2000, more than 3,000 locations use our
electronic check conversion service and seven companies remarket the service to
their merchant customers. We provide our electronic check service on a fee per
transaction basis.

   OnLine Banking. We offer an online banking software solution for Internet
delivery of financial services to home users and businesses. We are initially
targeting our Internet Financial Management product line to financial
institutions in western Europe and the United Kingdom. Our Internet Financial
Management product offers banking customers the flexibility to access their
bank accounts 24 hours a day, 365 days a year, using a web browser or new
devices such as web-enabled mobile phones and personal digital assistants.
Using our product, bank customers can:

  .  check account balances;              .  check the status of previous
                                             payment instructions;

  .  view transaction history;


                                          .  authorize or cancel payments
  .  search for a specific transaction;      awaiting processing;


  .  transfer funds between accounts;     .  maintain standing order and
                                             direct debit instructions; and


  .  maintain a list of payees;
                                          .  order checks and foreign
                                             currency.


   The software runs on the Windows NT operating system and employs the latest
encryption and authentication technology to enhance the security of
transactions. We introduced our Internet Financial Management product line in
June 1999. Currently, two clients are using the product on a pilot test basis.


                                       43
<PAGE>

   Electronic Bill Presentment and Payment. We plan to extend our ACH
processing services to help providers of electronic bill presentment and
payment and financial institutions manage payment origination, settlement and
collections. We are positioning our decision support and risk management tools
to address fraud and security concerns at the enrollment process. In addition,
we intend to use our information technology professional service capabilities
to help develop interoperability between developing electronic bill presentment
and payment systems and existing payment systems.

   Business-to-Business e-Commerce. Currently, we are developing systems and
services to facilitate the web-based delivery of various aspects of business-
to-business e-commerce including accounts receivable and accounts payable
processing and reporting, payment acquisition and settlement and the
electronification of retail and wholesale lockbox functions.

  Professional Services

   We have combined the information technology professionals from the various
business units being separated from Deluxe to form a single integrated
information technology professional services group. We offer a full range of
information technology professional services to complement our electronic debit
payment business and on a stand-alone basis. We specialize in the
implementation and integration of our own and third-party software products;
the development, redevelopment and maintenance of a broad range of computer
software applications; and the development of custom e-commerce and Internet
solutions. In addition, we offer business processing management services, such
as accounting operations, transaction processing and call center operations, at
our shared services center in Delhi, India. We offer our professional services
either on a fixed-price, fixed-time basis or on a time and materials basis. In
1999, we derived approximately 80% of our information technology service
revenue from time and material contracts. Currently, we are targeting our
services to financial institutions and other businesses that accept debit
payments, such as retailers and e-commerce providers.

   We provide our services through a global software development model which
combines industry, product and technical specialists based in our facilities in
the United States, United Kingdom, India and Australia. Our global delivery
capabilities give us the ability to provide high quality, round-the-clock
development services at competitive prices. Our information technology
professional services group includes over 1,300 consultants and software
developers, including approximately 900 people in the United States,
approximately 300 people in our two software development centers in India and
approximately 100 people in the United Kingdom. Our first software development
center has been assessed at Level 3 of the Software Engineering Institute's
Capability Maturity Model. The Software Engineering Institute's Capability
Maturing Model ratings are internationally recognized standard for assessing
the level of maturity and consistency of software development centers. The
Level 3 rating provides evidence of the quality and consistency of our offshore
software development capabilities, placing the center in the top 10% of all
software development facilities that have been rated. We opened our second
software development center in March 2000.

   Software Development Services. We provide a variety of software development
services that cover all stages of the software development cycle. We develop
new custom applications for our clients on a variety of technology platforms,
including mainframe and client-server based, and in a variety of programming
languages. We specialize in developing financial applications, particularly
those used by large complex financial institutions in the banking, insurance
and securities industries. Our experienced professional group can install,
implement and integrate third party software applications within our client's
information technology infrastructure. We perform testing and performance
tuning of customer and third-party applications, and perform migration of
customers' legacy applications to client-server and Internet platforms. We also
provide on-going support and maintenance of customer applications. In addition,
we provide a number of specialized software application services, including
workflow management and document imaging services, SAP implementation and
support services and project management services. Examples of our software
development projects include the development of a custody application for a
major stock transfer company and documenting management systems implementation
and workflow analyses for the corporate trust division of a major bank.

                                       44
<PAGE>

   Product Based Professional Services. To complement and support our
electronic debit payment solutions, we provide our clients with consulting
services, customization and implementation services and educational and
training programs. Specifically, our services include the installation of our
electronic debit payment solutions and implementation and integration of these
solutions within the customer's existing information technology infrastructure.
We also customize our standard products and develop new applications for
clients who want additional features and functionality. We help clients test
and performance tune our products in their information technology environments.
In addition, we provide on-site user training on our products and solutions for
the information technology, operations and management staff of clients. We
build long-term continuing relationships with our clients by providing on-going
maintenance and support of our software products and solutions.

   e-Commerce and Internet Services. We help clients to develop e-commerce and
Internet-related solutions. Our services enable our clients to process
business-to-customer, business-to-business and customer-initiated transactions
over the Internet. The scope of our capabilities include: multi-channel
integration for financial institutions, such as integration of call centers,
ATMs, personal computer and Internet banking, development of client extranets
and intranets and enablement of electronic bill presentment and payments. For
example, we are currently providing project management services to a major U.S.
bank to develop its Internet-based account opening process.

   Business Process Management Services. In addition to our information
technology professional services, we offer business process management and
outsourcing services. We focus on both back-office and customer support
business processes, such as accounting operations, transaction processing and
call center operations. Our business process outsourcing services are provided
primarily at our shared services facility in India. This facility is staffed
with over 150 experienced business process personnel. Our offshore business
processing capabilities allow the client to focus on its core processes, reduce
the client's direct personnel costs, allow the client to avoid non-core capital
investments and improve the quality of the client's outsourced operations.

   Currently, we provide process management services only to Deluxe under a
five year agreement. These services consist of accounts receivable, accounts
payable and general ledger processing services. For additional information
concerning this agreement, see "Agreements Between eFunds and Deluxe -- Master
Services Agreement" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Recent Events." We have recently started
to market our business process management services to financial institutions
and other clients as well. We believe this line of business will tie in to our
business-to-business e-commerce and workflow management services to provide a
complete end-to-end back-office management solutions to our clients.

  Government Services

   We provide online electronic benefits transfer services on behalf of
governmental agencies responsible for the administration and management of
selected entitlement programs, primarily the Food Stamps and Transitional Aid
to Needy Families (formerly Aid to Families with Dependent Children) program.
Our electronic benefits transfer processing system manages, supports and
controls the electronic payment and distribution of cash benefits to program
participants through ATMs and point-of-sale networks. Our services reduce
operating costs and fraud for the government agency administering the benefits
program, eliminate the food stamp stigma for recipients through the use of a
plastic ATM-like card and make benefits more readily available to recipients at
retail point-of-sale terminals and ATMs.

   We provide electronic benefits transfer services to individual state and
local governments or coalitions of state governments formed to purchase these
services jointly. We provide these services as a prime contractor or
subcontractor to nine individual state and local governments. We also are a
subcontractor for three coalitions of state governments, representing 21
states. Our services are typically provided for a fixed fee per welfare case

                                       45
<PAGE>

plus fixed fees per transaction through the system. State and local governments
require that we enter into long-term contracts, typically five to seven years
in duration.

   The principal components of this service include:

  .  transaction processing, including real-time transaction capture,
     authorization, and settlement;

  .  point-of-sale terminal deployment and terminal operation for merchants;

  .  telecommunications network management;

  .  benefits card production and database management;

  .  financial settlement of funds with automated clearing house transfers;

  .  help desk support for program participants, merchants and government
     personnel; and

  .  electronic funds transfer gateway services.

   We also offer a Medicaid eligibility verification processing service that
performs online verification of a person's eligibility for Medicaid services.
Our system provides authorization services, drug utilization review and
electronic claims capture and transmissions for pharmacies and managed care
firms. Currently, we provide the service for the State of New York's Medicaid
program. This program serves over 177,800 health care providers and 4.2 million
cardholders through 19,500 point-of-sale terminals. In 1999, our Medicaid
eligibility verification processing service generated revenues of approximately
$10.1 million, or about 21% of our government services revenue.

   We have had a history of operating losses and charges for asset impairment
related to our electronic benefit transfer services as described earlier in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." As a consequence, we have determined to exit this business as soon
as our current contractual commitments expire in 2006. During the wind down
period, we intend to continue to take steps to improve the profitability of the
current business. Deluxe has agreed to indemnify us for any losses on
identified loss contracts in excess of the reserves up to $      .

Clients

   The following is a representative list of our corporate clients.

<TABLE>
<CAPTION>
 Financial Institutions          Retail              Network/Gateway           Internet
------------------------  --------------------- ------------------------- ------------------
<S>                       <C>                   <C>                       <C>
        Bank One                Food Lion       Access Cash International USA Bancshares.com
       Bank PEKAO              Home Depot          Cashcard Australia      Umbrellabank.com
    Bank of America            J.C. Penney              Citishare               X.com
    Bank of Montreal              Kmart          CU Cooperative Systems
        Citibank                 Kroger                   NYCE
 FleetBoston Financial      Lowe's Companies     Primary Payment Systems
International Nederlande  National Data Funding         Pulse EFT
   The Royal Bank of
        Scotland                 Safeway               STAR System
    Wells Fargo Bank             Target
                                Wal-Mart
</TABLE>

   In 1999, none of our clients individually accounted for 10% or more of our
total revenues. In 2000, we expect that Deluxe will account for at least 10% of
our total revenues. We intend to expand our client base in new markets,
including e-commerce providers, online brokerages, telecommunication firms,
insurance companies and utilities.


                                       46
<PAGE>

Sales and Marketing

   We market our electronic payment management services and software products
and information technology professional services through a direct sales force
and indirect sales channels, such as distributors, resellers, alliances and
partnerships. We organize our direct sales force by customer market segment,
including financial institutions, networks and gateways, retailers and e-
commerce providers. Our direct sales force focuses on our customers needs and
is capable of selling all or a portion of our products and services to offer
the most effective solution for those needs. We work collaboratively with our
customers and prospective customers to help them identify and create new
solutions. Because many of our customers use a single product or service, or a
combination of products or services, our direct sales force has begun to target
existing customers to capture cross-selling opportunities. We plan to focus our
information technology services marketing efforts on large U.S. financial
institutions and other businesses that accept debit payments.

   We have full service direct sales offices in Milwaukee, Wisconsin;
Minneapolis, Minnesota; Phoenix, Arizona; Dallas, Texas; San Francisco,
California; New York, New York; and Charlotte, North Carolina. These offices
coordinate direct sales and arrange indirect sales channels in the various
regions. As of March 1, 2000, our direct sales force had 99 full-time
professionals. We intend to increase our sales force by adding new field sales
offices and by adding sales and marketing personnel to our existing
territories.

   To further facilitate broad market penetration and complement our direct
sales efforts, we plan to expand our indirect sales channels, especially in
international markets. These indirect channels includes resellers, distributors
and alliances. Our indirect sales partners include VISA USA, Access Cash
International, eProfile, IBM Australia/NZ and Card Soft International a.s.

   We build awareness of our products and services and the eFunds corporate
name through targeted advertising, public relations, participating in trade
shows and conferences and providing product information through our web site.

Customer Support, Technology and Infrastructure

   Customer Support. We believe that providing superior quality and accessible
and reliable customer and technical support is essential to developing and
maintaining customer relationships in each business segment. We provide
customer support services through our customer contact centers located in
Bloomington, Minnesota; Bothell, Washington; and Dallas, Texas. Our contact
centers are open 24 hours a day, 7 days a week and provide access to website,
e-mail and telephone support. As of March 1, 2000, we had 1,400 employees in
customer and technical support functions. In addition to user questions and
technical issues, we respond to inquiries in accordance with the Fair Credit
Reporting Act from consumers who have been denied check authorization or
rejected for a new account. We also provide on-site customer support services
in connection with our other products and services, and charge a separate fee
for these services based on an hourly rate.

   Technology. Our products are configured to run on operating systems widely
adopted by the electronic debit payment industry. These include the Tandem,
IBM, UNIX and Windows operating environments. Our software is developed using
C, C++, Cobol, HTML and other programming languages. Our software products are
modular in design and flexible in implementation, so that they can accommodate
specific customer requirements. Our software products are interoperable with a
wide range of terminal types and computer networks, and support a variety of
communications protocols, such as TCP/IP.

   As of March 1, 2000, we employed over 1,300 software programmers at our
offices in Milwaukee, Wisconsin; Minneapolis, Minnesota; Phoenix, Arizona;
Seattle, Washington; Toronto, Canada; Runcorn and Watford, United Kingdom;
Sydney, Australia; and Chennai, India.

   Data Centers. We operate two highly secure, fault-tolerant data centers in
New Berlin, Wisconsin and Phoenix, Arizona. Our data centers have been
engineered to ensure minimal exposure to systems failure and unauthorized
access. Our data centers contain multiple separate computer rooms to provide
containment and

                                       47
<PAGE>

isolation. Physical security has been implemented through restricted card key
access and closed circuit T.V. cameras. We use redundant uninterruptible power
supplies with battery backup and redundant generators to ensure continuous flow
of power to the data center in the event of any component failure or power
outage. The facilities have dual-entrance, fiber optic SONET service for
telecom redundancy.

Research and Product Development

   We believe that our future success will depend in large part on our ability
to develop new and enhanced electronic payment management solutions. We are
focusing our product development efforts on electronic payment software
solutions for Internet and e-commerce providers, as well as insurance
companies, utilities and telecommunication companies. For example, we are
currently working with a third party to develop the application of voice
authentication software and technology to the debit payments industry.

   We have developed all of our electronic payment software solutions
independently through our software development group. Our principal research
and development sites are located in Runcorn and Watford, United Kingdom;
Sydney, Australia; and Glendale, Wisconsin. Our research and development
expenses were $3.7 million in 1999, $625,000 in 1998 and $1.4 million in 1997.
Our capitalized software development costs were $17.3 million in 1999, $3.2
million in 1998 and $5.0 million in 1997.

Competition

   The market for electronic debit payment solutions is intensely competitive
and evolving. We face significant competition in all of our customer markets.
Further, we expect that competition will intensify as the e-commerce and
Internet markets continue to develop and expand. We believe that the principal
competitive factors include price, quality, features, functionality and
reliability, customer service and support, and the ability to deliver
comprehensive solutions. Our competition falls into the following categories:

  .  third-party network and credit card processors, such as First Data,
     Equifax, Total System Services, EDS, Concord EFS and Alliance Data
     Systems;

  .  financial institutions that have developed in-house processing
     capabilities or services similar to ours, such as Bank of America,
     Marshall and Illsley and Fifth Third National Bank;

  .  electronic data interchange and cash management providers, such as
     Fiserv, CheckFree, M&I Data, EDS and Fundtech;

  .  electronic bill payment providers, such as CheckFree, EDS, MasterCard,
     Spectrum and Visa;

  .  electronic funds transfer software solution providers, such as
     Transaction System Architects, SLMsoft, Oasis, Mosaic and PaySys; and

  .  national information database companies, such as Equifax, Experian and
     TransUnion, and other content providers.

   The information technology services market is highly competitive and is
served by numerous firms. To date, we have faced competition and sales
resistance from internal information technology departments of current and
potential customers. In addition to in-house information technology
departments, market participants include systems consulting and integration
firms, application software firms, Internet professional service companies,
professional services divisions of computer hardware and software vendors,
facilities management and outsourcing companies, "Big 5" accounting firms and
strategy consulting firms. We also expect that competition will increase as a
result of software industry consolidation. We compete by offering financial
institution industry experience, high quality services, competitive prices,
global delivery capability and technical expertise.

   In all areas of our businesses, many of our competitors have significantly
greater financial, technical, marketing and other resources, greater name
recognition and a larger installed base of customers than we do. In

                                       48
<PAGE>

addition, current and potential competitors have established or may establish
relationships with potential clients of ours, have extensive knowledge of our
business and have developed or are capable of offering alternative solutions.
In addition, current and potential competitors have established or may
establish alliances with third parties to increase their ability to develop and
market products and services. It is possible that new competitors or alliances
among established companies may emerge and rapidly acquire significant market
share.

Data Stewardship

   We collect consumer data from multiple sources, including through:

  .  participating members of SCAN;

  .  participating members of ChexSystems;

  .  Deluxe's check printing customers;

  .  credit bureaus;

  .  state governmental agencies (e.g., Department of Motor Vehicles); and

  .  federal governmental agencies (e.g., Social Security Administration).

   We obtain the data under agreements or licenses with suppliers. Some of
these agreements impose restrictions on the use and resale of the data and
others are governed by the Fair Credit Reporting Act. We do not use or sell the
data for direct marketing purposes.

   We have a strong commitment to the responsible use of data, including the
protection of consumer privacy rights. We have taken several measures to
fulfill this commitment, including actively participating in the development of
industry-wide privacy standards; maintaining strict information practices and
policies; and creating an internal information-practices council and systems to
oversee appropriate data usage.

   Our information practices and policies include the following:

  .  Accuracy. We use stringent procedures to ensure that information
     collected, used and exchanged will be accurate and complete.

  .  Security. We employ the most advanced security measures for protecting
     information from unauthorized access, use and disclosure.

  .  Compliance. We collect, use and disclose information in accordance with
     the federal Fair Credit Reporting Act, applicable state laws and
     contractual obligations.

  .  Confidentiality. We collect, use and exchange information in accordance
     with strict confidentiality standards.

  .  Privacy. We promote self-regulation in recognition of consumers'
     expectation of privacy and adhere with industry standards, such as those
     established by the Direct Marketing Association and the American Bankers
     Association.

  .  Responsiveness. We employ extensive internal monitoring systems and
     conduct ongoing customer surveys to maintain high quality and timely
     response standards with respect to consumer inquiries.

  .  Employee education. We educate our employees regarding sound information
     practices and the proper handling and use of information.


                                       49
<PAGE>

Government Regulation

   Various aspects of our businesses are subject to federal and state
regulation. Our failure to comply with any applicable laws and regulations
could result in restrictions on our ability to provide our products and
services, as well as the imposition of civil fines and criminal penalties.

   As a provider of electronic data processing services to financial
institutions, we are subject to regulatory oversight and examination by the
Federal Financial Institutions Examination Council, an interagency body
comprised of the various federal bank and thrift regulators and the National
Credit Union Association. In addition, we may be subject to possible review by
state agencies that regulate banks in each state where we conduct our
electronic processing activities.

   Because we collect and disclose debit data and other personal information
about consumers, we are subject to the federal Fair Credit Reporting Act and
any state laws providing greater consumer protections. The Fair Credit
Reporting Act provides that consumers have the right to know the contents of
the records pertaining to them and maintained at our consumer reporting
agencies, to challenge the accuracy of the information and to have the
information verified, updated or removed. To comply with these requirements we
maintain consumer relations call centers for each of our consumer reporting
businesses. We are also required to maintain a high level of security for the
computer systems in which consumer data files reside.

   Our financial institution customers will be subject to the consumer privacy
requirements of the new federal financial modernization law, known as the
Gramm-Leach-Bliley Act. The Act imposes significant consumer information
privacy requirements on any entity engaged in the business of providing
financial services, including entities that provide services to banks. The
privacy provisions of the Act impose on each entity subject to the new consumer
privacy requirements an affirmative obligation 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. The Act directs
each functional regulator to issue appropriate standards for carrying out this
duty. The banking regulators and the Federal Trade Commission have recently
issued proposed regulations implementing the privacy portions of the Act for
industry comment. The proposed banking regulations do not restrict the ability
of consumer reporting agencies to collect and disclose information subject to
the Fair Credit Reporting Act. The proposed FTC regulations, however, contain a
broad definition of "financial institution" which could, if enacted, subject
consumer reporting agencies, collection agencies, and data processors to the
disclosure and opt out requirements of the Act regardless of whether they have
consumers as customers.

   The privacy provisions of the Act require each financial institution to
provide an "opt-out" notice to consumers and an opportunity to opt-out before
sharing nonpublic personal information with an unaffiliated third party. There
are numerous exceptions that do not require that any notice or opportunity to
opt-out be given to consumers. These include:

  .  transfers of consumer information made to protect the confidentiality or
     security of a consumer's records; to protect against or prevent actual
     or potential fraud, unauthorized transactions, claims or other
     liability; for required institutional risk control; and for resolving
     customer disputes or inquires;

  .  transfers of consumer information to a consumer reporting agency
     pursuant to the Fair Credit Reporting Act; and

  .  transfers between affiliates of consumer reports produced by a consumer
     reporting agency in compliance with the Fair Credit Reporting Act.

   We believe these exceptions apply to our consumer reporting business and
will permit banks to provide debit data and other nonpublic personal
information to us without triggering the opt-out requirement. However,

                                       50
<PAGE>

Congress and many states are considering more stringent laws or regulations
that, among other things, restrict the purchase, sale or sharing of nonpublic
personal information about consumers. Given the current public concern over
consumer privacy rights, it is possible the Congress, individual states and
governmental agencies could enact new laws or regulations governing consumer
protection in the future. If enacted, these laws or regulations could directly
affect our ability to collect and use consumer data and could have a material
adverse effect on our business, results of operations and financial condition.

   Our debt collection services are subject to the Fair Debt Collection
Practices Act and state collections statutes and licensing requirements.

   Laws and regulations may be adopted in the future with respect to the
Internet or e-commerce covering issues such as user privacy, pricing, content,
copyrights, consumer protections, taxation and characteristics and quality of
products and services. New laws or regulations may impeded the growth of the
Internet. This could decrease the demand for our products and services and
increase our cost of doing business. Moreover, the applicability to the
Internet of existing laws governing property ownership, taxation, libel and
personal privacy is uncertain and may remain uncertain for a considerable
length of time.

Intellectual Property Rights

   We rely on a combination of trademark, copyright, trade secret law and
confidentiality or license agreements to protect our proprietary rights in
products, services, know-how and information. Intellectual property laws afford
limited protection. It may be possible for a third party to copy our products
and services or otherwise obtain and use our proprietary information without
our permission. There is no assurance that our competitors will not
independently develop services and products that are substantially equivalent
or superior to ours.

   With regard to our information technology services, our business consists of
software applications development. Ownership of this software is generally
assigned to the client. We also develop software components that can be reused
in software application development and software toolsets, most of which
remains our property.

Employees

   As of March 1, 2000, we had approximately 3,200 full-time employees,
including 2,500 persons employed within the United States and 700 persons
employed outside of the United States, including India. Of our total number of
employees, 1,300 persons were engaged in software development, 1,400 persons
were engaged in customer and technical support services, 140 persons were
engaged in sales and marketing and 360 persons were engaged in administrative
functions.

   None of our employees are represented by a labor union, and we consider our
employee relations to be good.

Facilities

   The following table sets forth a description of our principal facilities:

<TABLE>
<CAPTION>
                                      Owned or Lease
                          Approximate   Expiration
         Location         Square Feet      Date               Function
   ---------------------  ----------- -------------- ---------------------------
   <S>                    <C>         <C>            <C>
   Milwaukee, Wisconsin     171,250       Owned      Marketing, development and
                                                           administration
   New Berlin, Wisconsin     82,600       Owned              Data center
     Phoenix, Arizona        92,813       Owned              Data center
      Chennai, India         18,614    January 2008  Software development center
       Delhi, India          40,950    January 2002    Shared services center
</TABLE>

                                       51
<PAGE>

<TABLE>
<CAPTION>
                                       Owned or Lease
                           Approximate   Expiration
          Location         Square Feet      Date               Function
   ----------------------  ----------- -------------- ---------------------------
   <S>                     <C>         <C>            <C>
       Chennai, India        38,750    September 2002 Software development center
   Bloomington, Minnesota    50,623      June 2002      Customer contact center
    Shoreview, Minnesota     49,500    September 2001       DebitBureau and
                                                         professional services
    Bothell, Washington      34,309     August 2004     Customer contact center
    Bothell, Washington      24,702    September 2006        Office center
       Dallas, Texas         42,052     January 2001    Customer contact center
       Mesa, Arizona          3,208     August 2001     Business recovery site
   New Berlin, Wisconsin      5,500      June 2000             Warehouse
</TABLE>

   The leases set forth above generally have a term of 3 to 10 years, most of
which have options to extend for at least 3 years. We believe that our current
facilities are adequate to meet our space requirements and that additional
space will be available at a reasonable cost to meet our future needs.

Legal Proceedings

   On May 14, 1999, we filed a trademark infringement action against Citizen
Advisers, Inc. in the United States District Court for the Central District of
California. The complaint alleges false designation of origin and trademark
infringement, trade name infringement and unfair competition under California
law regarding the use of the "E FUND" mark and efund.com internet domain by
Citizen Advisers. We are seeking injunctive relief to prevent Citizen Advisers
from using the "E FUND" mark and efund.com internet domain, cancellation of
Citizen Advisers trademark registration of the "E FUND" mark and damages and
expenses, including attorneys' fees. The case is in the discovery stage and no
trial date has been set.

                                       52
<PAGE>

                                   MANAGEMENT

Directors and Executive Officers

   Our directors and executive officers are as follows:

<TABLE>
<CAPTION>
   Name                     Age                          Position
   ----                     ---                          --------
   <S>                      <C> <C>
   John A. Blanchard III...  57 Chairman of the Board and Chief Executive Officer, Director
   Debra A. Janssen........  43 President and Chief Operating Officer
   Dr. Nikhil Sinha........  39 Executive Vice President, Global Corporate Development
   Paul H. Bristow.........  57 Executive Vice President and Chief Financial Officer
   Steven F. Coleman.......  41 Senior Vice President, General Counsel and Secretary
</TABLE>

   John A. Blanchard III has served as Chairman of our Board of Directors and
Chief Executive Officer since March 1, 2000. Mr. Blanchard has served as
President and Chief Executive Officer of Deluxe since May 1995 and as Chairman
of the Deluxe Board of Directors since May 1996 and will continue to serve in
those capacities until the completion of the split-off from Deluxe. From
January 1994 to April 1995, Mr. Blanchard was executive vice president of
General Instrument Corporation, a supplier of systems and equipment to the
cable and satellite television industry. From 1991 to 1993, Mr. Blanchard was
chairman and chief executive officer of Harbridge Merchant Services, a national
credit card processing company. Previously, Mr. Blanchard was employed by
American Telephone & Telegraph Company for 25 years, most recently as senior
vice president responsible for national business sales. Mr. Blanchard also
serves as a director of Wells Fargo and Company and ADC Telecommunications Inc.

   Debra A. Janssen has served as our President and Chief Operating Officer
since March 1, 2000. Ms. Janssen joined Deluxe's Electronic Payment Solutions
division in February 1998 as Senior Vice President and was named President and
Chief Executive Officer of that division in March 1998. Prior to joining us,
Ms. Janssen worked for 14 years for M&I Data Services in a variety of
capacities, most recently as senior vice president and chief information
officer.

   Paul H. Bristow has served as Executive Vice President and Chief Financial
Officer since March 2000. From 1993 until joining our company, Mr. Bristow
served as Executive Vice President - Finance Administration and Chief Financial
Officer of Galileo International, a computer reservation system company for the
travel industry. Previously, Mr. Bristow held various finance, accounting and
auditing positions with London International Group, plc, ITT Europe, ITT
Canada, Philip Morris and Arthur Andersen.

   Dr. Nikhil Sinha has served as our Executive Vice President, Global
Corporate Development since March 1, 2000. Previously, Dr. Sinha served as
President and Chief Executive Officer of iDLX Technology Partners, Deluxe's
Professional Services Division, from June 1999 to February 2000. He was a
director of the Telecommunications and Information Policy Institute at the
University of Texas at Austin from September 1997 to May 1999 and associate
professor of International Communication from 1991 to 1997. Dr. Sinha has
worked as a consultant to the Informatics and Telecommunications Division for
the World Bank and as an advisor to the Indian Telecom Commission and the
Indian Planning Commission. Dr. Sinha also serves on the advisory committee of
the Indo-US Sub-Commission on Education and Culture. He is co-founder and
director of Sinha & Lariviere, Ltd., a consulting firm providing strategic and
investment advisory services to U.S. companies doing business in South Asia.

   Steven F. Coleman has served as Senior Vice President, General Counsel and
Secretary since March 2000. From 1996 until joining our company, Mr. Coleman
worked as a Senior Attorney for Deluxe. Prior to joining Deluxe, Mr. Coleman
was associated with Dorsey & Whitney, a law firm located in Minneapolis,
Minnesota, and Fried, Frank, Harris, Shriver & Jacobson, a law firm located in
New York, New York.


                                       53
<PAGE>

Board Composition

   Our board of directors is currently comprised of one director, Mr.
Blanchard. Prior to the completion of this offering, we expect that our board
will consist of seven directors. The additional directors will include three
interim directors, who will be representatives of Deluxe and will continue to
serve on our board until the completion of the split-off; two current directors
of Deluxe, who will continue to serve on Deluxe's board until completion of the
split-off; and one member of the current management team. In addition, we are
currently searching for additional independent directors. Our board of
directors will be divided into three classes for purposes of election. One
class will be elected at each annual meeting of stockholders to serve for a
three year term.

Board Committees

   Our board of directors will appoint an audit committee and a compensation
committee.

   Audit Committee. The functions of the audit committee, which consists of
     ,       and       include:

  .  reviewing the adequacy of our system of internal accounting controls;

  .  reviewing the results of the independent auditors' annual audit,
     including any significant adjustments, management judgements and
     estimates, new accounting policies and disagreements with management;

  .  determining the duties and responsibilities of the internal audit staff;

  .  reviewing the scope and results of our internal auditing procedures;

  .  reviewing our audited financial statements and discussing them with
     management;

  .  reviewing the audit reports submitted by both the independent auditors
     and our internal audit staff;

  .  reviewing disclosures by independent auditors concerning relationships
     with our company and the performance of our independent auditors and
     annually recommending independent auditors;

  .  adopting and annually assessing our charter; and

  .  preparing such reports or statements as may be required by Nasdaq or the
     securities laws.

   Compensation Committee. The compensation committee consists of      ,      ,
and      . The functions of the compensation committee currently include:

  .  reviewing our general compensation strategy;

  .  reviewing the terms of employment agreements for executives earning over
     a specified amount and approving compensation for executives if their
     compensation is, or may become, subject to Section 162(m) of the
     Internal Revenue Code; and

  .  administering our compensation and benefit plans.

Director Compensation

   We will compensate our non-employee directors with an annual retainer of
$15,000, meeting fees of $1,000, committee chair fees of $2,500 and annual
options under the 2000 Stock Incentive Plan valued at $50,000. We expect to
allow our directors to elect to receive stock in lieu of cash or to participate
in some form of deferred compensation plan.

Stock Ownership of Directors and Executive Officers

   All of our common stock is currently owned by Deluxe, and thus none of our
directors and executive officers own any shares of our common stock. To the
extent our directors and executive officers own shares of Deluxe common stock
at the time of the split-off, they will participate in the exchange offer on
the same terms as other holders of Deluxe common stock.

   The following table sets forth the number of shares of Deluxe common stock
beneficially owned on March 15, 2000 by each director, each executive officer
named in the Summary Compensation Table in the

                                       54
<PAGE>

"-- Executive Compensation" section below, and all of our directors and
executive officers as a group. Except as otherwise noted, the individual
director or officer had sole voting and investment power with respect to such
securities. The total number of shares of Deluxe common stock outstanding as of
March 15, 2000 was 72,218,276.

<TABLE>
<CAPTION>
                                                             Shares of Deluxe
                                                            Beneficially Owned
                                                            ------------------
Name of Beneficial Owner                                    Number  Percentage
------------------------                                    ------- ----------
<S>                                                         <C>     <C>
John A. Blanchard III (1).................................. 478,221     *
Debra A. Janssen (2).......................................  18,539     *
Dr. Nikhil Sinha (3).......................................  14,480     *
Paul H. Bristow............................................       0     *
Steven F. Coleman (4)......................................   4,415     *
All directors and executive officers as a group (5
 persons).................................................. 504,199     *
</TABLE>
--------
*  Represents holdings of less than one percent.
(1) Includes: 39,221 shares of common stock directly owned; 25,000 restricted
    shares, awarded May 1, 1995 under Deluxe's Stock Incentive Plan, which
    restrictions will expire on May 1, 2000 if, subject to certain conditions,
    Mr. Blanchard remains in continuous employment until such date; and options
    to purchase 414,000 shares of common stock that are currently exercisable
    or will be excercisable within 60 days.

(2) Includes: 1,649 shares of common stock directly owned; 1,889 restricted
    shares that will convert into shares of Deluxe common stock on January 28,
    2001 if, subject to certain conditions, Ms. Janssen remains in continuous
    employment until such date; and options to purchase 15,001 shares of common
    stock that are currently exercisable or will be exercisable within 60 days.

(3)  Includes: 3,024 shares of common stock directly owned; and 11,456
     restricted shares awarded January 29, 2000 under Deluxe's Stock Incentive
     Plan, which restrictions will expire on the one year anniversary of this
     offering if, subject to certain conditions, Dr. Sinha remains in
     continuous employment until such date.

(4)  Includes: 448 shares of common stock directly owned and options to
     purchase 3,967 shares of common stock that are currently exercisable or
     will be excercisable within 60 days.

                                       55
<PAGE>

Executive Compensation

   The following table sets forth the compensation earned by our Chief
Executive Officer and each of our other most highly compensated executive
officers who, based on the salary and bonus compensation information from
Deluxe, were the most highly compensated for the year ended December 31, 1999.
All information set forth in this table reflects compensation earned by these
individuals for services with Deluxe and its subsidiaries for each of the last
two fiscal years. Mr. Bristow was not an employee of Deluxe prior to joining us
in March 2000 and accordingly he is not shown in the table. This prospectus
refers to these individuals as the Named Executive Officers.

<TABLE>
<CAPTION>
                                                                     Long-Term
                                  Annual Compensation              Compensation
                         ------------------------------------- ---------------------
                                                               Restricted Securities  All Other
Name and Principal                                Other Annual   Stock    Underlying Compensation
Position                 Year  Salary   Bonus(1)  Compensation   Awards    Options       (2)
------------------       ---- -------- ---------- ------------ ---------- ---------- ------------
<S>                      <C>  <C>      <C>        <C>          <C>        <C>        <C>
John A. Blanchard III
 (3).                    1999 $680,000 $  680,000   $22,866        --      185,000     $136,400
  Chairman and Chief     1998 $600,000 $1,200,000   $13,848        --      176,000     $ 79,051
  Executive Officer
Debra A. Janssen........ 1999 $261,282 $  168,233   $ 8,719        --       25,000     $ 17,476
  President and Chief    1998 $198,892 $  168,300   $ 2,467        --       10,000           --
  Operating Officer
Dr. Nikhil Sinha (4).... 1999 $175,000 $   87,500        --        --       25,000     $ 28,846
  Executive Vice
  President, Global
  Corporate Development
Steven F. Coleman....... 1999 $132,000 $   26,400        --        --        2,000       14,820
  Senior Vice President, 1998 $120,000 $   42,000        --        --        1,500       15,237
  General Counsel and
  Secretary
</TABLE>
--------
(1) Recipients of awards under Deluxe's Annual Incentive Plan are entitled to
    elect to receive all or a portion of their incentive compensation in the
    form of shares of restricted stock or restricted stock units (whichever
    option is made available by the Compensation Committee of the Board of
    Directors of Deluxe). If an election is made to receive shares of
    restricted stock or restricted stock units, the amount of cash foregone is
    increased by 25 percent in determining the number of shares of restricted
    stock units to be awarded.

(2) All other compensation consists of (a) annual company contributions to
    qualified retirement plans, (b) amounts credited to a non-qualified
    supplemental retirement plan (defined contribution and profit sharing
    allocations in excess of ERISA limitations) and (c) amounts credited to a
    non-qualified deferred compensation plan as benefit plan equivalents.

(3)  Mr. Blanchard is entitled to supplemental retirement benefits (the
     "Supplemental Retirement Benefits") in addition to those ordinarily
     payable under Deluxe's profit-sharing, pension and supplemental retirement
     plans, and with respect to any company-paid portion of contributory
     retirement plans, such as Deluxe's 401(k) plan (collectively, the "Base
     Plans"). Deluxe is expected to make a lump-sum cash payment to
     Mr. Blanchard on December 31, 2000 in satisfaction of its obligations in
     respect of the Supplemental Retirement Benefits.

(4) Dr. Sinha began employment with Deluxe in April 1999. All other
    compensation includes $28,846 paid in respect of his vacation pay following
    the transfer of Deluxe employees to Deluxe Professional Services.

                                       56
<PAGE>

   The following table contains information concerning the grant of options to
purchase shares of Deluxe common stock to the Named Executive Officers during
the fiscal year ended December 31, 1999:

<TABLE>
<CAPTION>
                                                                    Potential Realizable
                                                                      Value at Assumed
                                                                   Annual Rates of Stock
                                                                   Price Appreciation for
                                     Individual Grants                Option Term (2)
                         ----------------------------------------- ----------------------
                                    Percent of
                         Number of    Total
                         Securities  Options
                         Underlying Granted to Exercise
                          Options   Employees   Price
                          Granted   in Fiscal    Per    Expiration
          Name              (1)        Year     Share      Date      5% ($)     10% ($)
          ----           ---------- ---------- -------- ---------- ---------- -----------
<S>                      <C>        <C>        <C>      <C>        <C>        <C>
John A. Blanchard III...  185,000     15.04%   $35.9375   1/4/09   $4,181,167 $10,595,897
Debra A. Janssen........   15,000      1.22    $35.6250  1/29/09   $  336,066 $   851,656
                           10,000       .81    $35.8125  5/04/09   $  225,223 $   570,759
Dr. Nikhil Sinha........   25,000      2.03    $37.5625  6/17/09   $  590,571 $ 1,496,624
Steven F. Coleman.......    2,000       .16    $35.6250  1/29/09   $   44,809 $   113,554
</TABLE>
--------
(1) All options were granted at an exercise price that equaled or exceeded the
    fair market value of the common stock on the date of grant, as determined
    by the last sale price as reported on the New York Stock Exchange. The
    options are exercisable in cumulative installments of 33-1/3 percent on
    each anniversary of the date of grant.

(2) The amounts represent hypothetical gains that might be achieved by the
    optionees if the respective options are exercised at the end of their
    terms. These gains are based on assumed rates of stock price appreciation
    of 5% and 10% mandated by rules of the Securities and Exchange Commission.
    These rates are shown for illustrative purposes only and do not represent
    our prediction of our stock price performance.

   The following table sets forth information regarding exercises of options to
purchase Deluxe common stock during the year ended December 31, 1999 and
unexercised options to purchase Deluxe common stock as of December 31, 1999, by
each of the Named Executive Officers:

<TABLE>
<CAPTION>
                                                Number of Securities
                                               Underlying Unexercised   Value of Unexercised In-
                                               Options at Fiscal Year     the-Money Options at
                                                         End               Fiscal Year End (1)
                                              ------------------------- -------------------------
                           Shares
                          Acquired    Value
          Name           on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
------------------------ ----------- -------- ----------- ------------- ----------- -------------
<S>                      <C>         <C>      <C>         <C>           <C>         <C>
John A. Blanchard III...     --        --       260,334      335,666        --           --
Debra A. Janssen........     --        --         3,334       31,666        --           --
Dr. Nikhil Sinha........     --        --           --        25,000        --           --
Steven F. Coleman.......     --        --         3,300        2,000        --           --
</TABLE>
--------
(1) The value of unexercised in-the-money option is determined by multiplying
    the difference between the exercise price and the closing price of Deluxe
    common stock on the NYSE on December 31, 1999 ($27.4375) by the number of
    shares underlying the options. If the exercise price is greater than the
    December 31, 1999 closing price, the options are not in-the-money and no
    value is listed.

                                       57
<PAGE>

Treatment of Deluxe Options

   As of March 31, 2000, options to purchase 4,338,385 shares of common stock
of Deluxe were outstanding. Immediately prior to the split-off of Deluxe's
remaining interest in our company following this offering, these outstanding
options will be converted into new options to purchase Deluxe common stock and
options to purchase our common stock. All persons who hold Deluxe options will
receive Deluxe options and eFunds options. The board of directors has adopted
the eFunds Corporation Stock Incentive Plan for Deluxe Conversion Awards to
provide for the eFunds options resulting from the converstion. Deluxe, as our
sole stockholder, has approved this plan, which is filed as an exhibit to our
registration statement of which this prospectus is a part.

   The stock options granted under this plan generally will have the same terms
and conditions as the Deluxe options to which they relate. The eFunds options
will be granted immediately prior to our split-off from Deluxe. Both the number
of eFunds options to be granted and the exercise price of options granted under
this plan to any participant will depend on a conversion equation described
below. The vesting provisions of the eFunds options will be the same as the
Deluxe options to which they relate, assuming for vesting purposes that the
date of the grant of the eFunds options was the same as the date of the grant
for the corresponding Deluxe options. The exercisability provisions and the
term of each eFunds option will be the same as the relevant provisions of the
Deluxe options to which they relate. Any exercisability or option term
provisions that are based on past employment or contingent on continued
employment will mean and include past-employment with Deluxe and continued
employment with eFunds for those participants who are employees of eFunds as of
the split-off date.

   The basic principle for the conversion of Deluxe options is to maintain the
same value of the options based on the difference between exercise price and
market price, or intrinsic value. The pre-split intrinsic value of all Deluxe
options outstanding is defined as the number of Deluxe options outstanding
multiplied by the difference (a) between the implied pre-split market value per
share of Deluxe common stock, which equals the sum of the market values of
Deluxe and eFunds divided by the number of shares of Deluxe common stock
outstanding, and (b) the weighted average exercise price. The pre-split
intrinsic value will be allocated after the split-off between the adjusted
Deluxe options and eFunds options according to the relative market valuations
of the two companies immediately prior to the split-off. The weighted average
exercise price of all eFunds options will equal the product of the market price
of eFunds common stock on the first day of trading following the split-off and
the ratio of (i) the pre-split weighted average exercise price for Deluxe
options to (ii) the implied pre-split market value per share of Deluxe common
stock. Dividing the intrinsic value allocated to eFunds options by the
difference between the market price of eFunds common stock on the first day of
trading following the split-off and the weighted average exercise price of
eFunds options results in the number of shares for which eFunds options will be
granted.

   For example, assume that there are options to purchase     million shares of
Deluxe common stock outstanding prior to the split and the weighted average
exercise price is $  . Deluxe has an implied pre-split value per share of
Deluxe common stock of $  . The pre-split intrinsic value of outstanding Deluxe
options is $    million ((  -  )*    million). Assume that the pre-split market
valuation of eFunds is $      million and the pre-split market valuation of
Deluxe is $     million. eFunds percentage of the total market value is    %,
which results in an intrinsic value of $     million allocated to eFunds
options. If we assume a market price for eFunds stock on the day of the split
off of $   , the weighted average exercise price will be $     (   *(  /  )).
The number of shares for which options will be granted would be          .

   This example uses hypothetical numbers that are unlikely to be accurate on
the day of the split-off. The number of eFunds options granted pursuant to the
conversion plan and the exercise price of those options is subject to a large
number of variables, particularly the relative market prices for our common
stock and Deluxe's common stock on the day before and on the day of the split-
off. At this time, we cannot provide any certainty regarding the number of
options we will grant pursuant to the conversion plan or the exercise price for
those options.

                                       58
<PAGE>

Employment Agreements

   John A. Blanchard III. We will enter into an Executive Employment Agreement
with Mr. Blanchard related to his service as our Chairman and Chief Executive
Officer. The term of the agreement begins as of the date of the split-off and
expires on December 31, 2002. Under the agreement, Mr. Blanchard will receive a
salary of $680,000, subject to increase at the discretion of our board.
Mr. Blanchard is also eligible to receive annual cash bonuses on the same basis
that we pay bonuses to our other executives, with a target bonus equal to his
base salary. Mr. Blanchard is eligible to participate in our stock incentive
plan. We anticipate that he will receive annual stock option grants having a
value equal to 200% of his base salary, as determined by the Black-Scholes
method. Mr. Blanchard will receive double-options in 2000, which are listed in
the table below under "-- 2000 Stock Incentive Plan Grants." In recognition of
the termination of Mr. Blanchard's Supplemental Retirement Benefits, Mr.
Blanchard is also entitled to receive $490,768 on or about January 2, 2003.
This amount is reflective of the present value on that date of the retirement
benefits Mr. Blanchard would have been entitled to under his supplemental
retirement benefit plan if that plan was continued throughout the term of his
Executive Employment Agreement. Mr. Blanchard has the option to receive the
economic equivalent of this benefit on an annuity basis for 15 years following
his retirement.

   If we terminate Mr. Blanchard's employment other than for cause, or if Mr.
Blanchard terminates his employment for good reason, Mr. Blanchard is entitled
to a lump sum payment equal to:

  .  the sum of (1) his unpaid base salary due through the date of
     termination, (2) the product of his most recent annual bonus and the
     fraction of the year he was employed and (3) any deferred compensation
     and any accrued vacation pay;

  .  an amount equal to the annual base salary that Mr. Blanchard would have
     earned during the remaining term of the Executive Employment Agreement
     had his employment not been terminated; and

  .  an amount equal to the annual bonus that Mr. Blanchard would have earned
     had he remained continuously employed throughout the employment period
     and been awarded his annual target bonus amount to the extent this bonus
     amount has not theretofore been paid.

   In addition, upon any such termination of Mr. Blanchard's employment, Mr.
Blanchard will be entitled to participate in all benefits plans, including
medical, disability, life and other health insurance benefits and to certain
out-placement services. All unvested options granted to Mr. Blanchard will
immediately vest and remain exercisable for a five year period (or, if less,
their remaining term) and all other restricted shares and restricted stock
units held by Mr. Blanchard under the stock incentive plan vest and are
converted into shares of common stock on the date of any termination other than
for cause or for good reason. Mr. Blanchard would also be entitled to retain
and earn any performance-based awards previously received under our stock
incentive plan as if he had continued in our employ until the expiration of the
relevant performance period. Any options granted to Mr. Blanchard will also
vest and remain exercisable for five years following any termination of
Mr. Blanchard's employment upon the expiration of his Executive Employment
Agreement.

   The agreement also provides that if any payment or benefit received or to be
received by Mr. Blanchard would be subject to the federal excise tax on "excess
parachute payments," we will pay Mr. Blanchard such additional amount as may be
necessary so that he realizes, after the payment of the excise tax and any
income tax or excise tax on that additional amount, the amount of such
compensation.

   Debra A. Janssen. We entered into a letter agreement with Ms. Janssen
effective as of March 1, 2000. The agreement provides for annual base salary of
$400,000 with a target bonus equal to 50% of base salary. Ms. Janssen is
eligible to receive annual stock option grants having a value equal to 225% of
her base salary, as determined by the Black-Scholes method. Ms. Janssen will
receive double-options in 2000, which are listed in the table below under "--
2000 Stock Incentive Plan Grants." Ms. Janssen's letter agreement also contains
a severance provision allowing her to receive one year's base salary plus a
second year of income continuation, if she is terminated for reasons other than
willful misconduct, gross negligence or unlawful actions toward us or toward
others involved with our business.

                                       59
<PAGE>

   Paul H. Bristow. We entered into a letter agreement with Mr. Bristow
effective as of March 1, 2000. The agreement provides for an annual base salary
of $300,000 with a bonus ranging from 0% to 100% of base salary, depending on
our performance. The target bonus is 50%, or $150,000 annually. Mr. Bristow is
eligible to receive annual stock option grants having a value equal to 150% of
his base salary, as determined by the Black-Scholes method. Mr. Bristow will
receive double-options in 2000, which are listed in the table below under "-
2000 Stock Incentive Plan Grants." Mr. Bristow's letter agreement also contains
a severance provision allowing him to receive one year's base salary plus a
second year of income continuation, if he is terminated for reasons other than
willful misconduct, gross negligence or unlawful actions toward us or toward
others involved with our business.

   Dr. Nikhil Sinha. We entered into a letter agreement with Dr. Sinha
effective as of March 1, 2000. The agreement provides for an annual base salary
of $300,000 with a bonus ranging from 0% to 100% of base salary, depending on
our performance. The target bonus is 50%, or $150,000 annually. Dr. Sinha is
eligible to receive annual stock option grants having a value equal to 115% of
his base salary, as determined by the Black-Scholes method. Dr. Sinha will
receive double-options in 2000, which are listed in the table below under
"-2000 Stock Incentive Plan Grants." Dr. Sinha also will be entitled to receive
an option grant having a value between $200,000 and $600,000 upon completion of
this offering in consideration for the termination of his iDLX Technology
Partners outstanding options provided to him under our 1999 employment
agreement. Dr. Sinha's letter agreement also contains a severance provision
allowing him to receive one year's base salary plus a second year of income
continuation, if he is terminated for reasons other than willful misconduct,
gross negligence or unlawful actions toward us or toward others involved with
our business.

   Steven F. Coleman. We entered into a letter agreement with Mr. Coleman
effective as of March 1, 2000. The agreement provides for an annual base salary
of $200,000 with a bonus ranging from 0% to 80% of base salary, depending on
our performance. The target bonus is 40%, or $80,000 annually. Mr. Coleman is
eligible to receive annual stock option grants having a value equal to 100% of
his base salary, as determined by the Black-Scholes method. Mr. Coleman will
receive double-options in 2000, which are listed in the table below under "-
2000 Stock Incentive Plan Grants." Mr. Coleman's letter agreement also contains
a severance provision allowing him to receive one year's base salary plus a
second year of income continuation, if he is terminated for reasons other than
willful misconduct, gross negligence or unlawful actions toward us or toward
others involved with our business.

Change in Control Arrangements

   We have entered into Change in Control Agreements with each of Ms. Janssen
and Messrs. Sinha, Bristow and Coleman. These agreements are designed to
diminish the distractions that could be caused by personal uncertainties and
risks associated with changes of control and other significant business
combinations involving our company by providing these officers with assurances
regarding their compensation and benefits expectations under such
circumstances.

   Under the Change in Control Agreements, each of these officers agrees to
remain in our employ, and we agreed to continue to employ each officer, until
the third anniversary following any "business combination" or "change in
control" involving our company. During that three-year period, each officer is
entitled to maintain a position, authority, duties and responsibilities at
least commensurate with the most significant of those held by such officer
during the 180 day period prior to the effective date of the business
combination or change in control and the base salary of an officer may not be
reduced below that earned by the officer during the twelve month period
preceding the effective date of the business combination or change-in-control.
In determining any increase in an officer's base salary during the three year
period, the officer is to be treated in a manner consistent with other peer
executives. The officers are also entitled to receive annual bonus payments,
stock option grants and other benefits during the three year period on the same
objective basis as other peer executives.

   If, during the three year period, we terminate an officer's employment other
than for "cause" or "disability" or the officer terminates his or her
employment for "good reason," the officer is entitled to a lump

                                       60
<PAGE>

sum payment equal to the sum of any unpaid base salary, accrued vacation pay
and a pro rated incentive award through the date of termination. In addition,
the officer is entitled to receive a lump sum payment equal to three times the
sum of the officer's annual base salary and the officer's historical incentive
award, plus the amount that we would have contributed to the retirement plans
in which the officer participated prior to his or her termination in respect of
such sum. The officers are also entitled to the continuation of their medical,
disability, life and other health insurance benefits for up to a three year
period after a qualifying termination and to certain out-placement services.

   All unvested options granted to an officer vest and remain exercisable for a
five year period or their remaining term following a qualifying termination and
all other restricted shares and restricted stock units held by the officer
under our stock incentive plan vest and are converted into shares of common
stock on the date of any such termination.

   The agreements also provide that if any payment or benefit received or to be
received by an officer, whether or not pursuant to his or her change in control
agreement, would be subject to the federal excise tax on "excess parachute
payments," we will pay to the officer such additional amount as may be
necessary so that the officer realizes, after the payment of such excise tax
and any income tax or excise tax on such additional amount, the amount of such
compensation.

2000 Stock Incentive Plan

   Our 2000 Stock Incentive Plan provides for grants of options to purchase
shares of common stock, stock appreciation rights, restricted stock and
restricted stock rights, performance awards and other stock-based awards. All
of our full-time employees are eligible for grants under this plan. Our
directors, consultants and advisors are also eligible for grants under this
plan.

   The maximum aggregate number of shares of common stock that may be
distributed under this plan is 20% of the total number of shares of our common
stock outstanding at the time of the award, subject to adjustment.

   Administration. This plan will be administered by our board of directors or
by a committee of directors appointed by our board of directors. The
compensation committee of the board will administer the plan.

   Stock Options. Our committee may award stock options under this plan and set
their terms, including the number and kind of stock options granted, the
exercise price of the stock options, the vesting schedule applicable to such
stock options, the period during which they can be exercised and the form of
consideration, which may include, without limitation, cash, common stock, other
securities, any combination thereof or any other form of valid consideration
that is acceptable to the committee. The exercise price of incentive stock
options cannot be less than 100% of the fair market value of a share of common
stock on the date of grant, unless required by law or government regulation. No
stock option can be exercised more than ten years after the date of grant. The
committee may provide that any option granted under the plan contain a reload
feature. If an option containing this feature is exercised using shares of
common stock or if shares are withheld or tendered as payment of the amount to
be withheld under applicable income tax laws, the optionee will receive an
additional option on a number of shares equal to the number of shares tendered
or withheld. The exercise price of this reload option will be equal to the fair
market value of our stock on the date the reload option is granted.

   Stock Appreciation Rights. Our committee may grant stock appreciation rights
under this plan and set their terms, including grant price, term, methods of
exercise, dates of exercise, methods of settlement and any other terms or
conditions of any stock appreciation right. Each stock appreciation right
entitles the holder to receive an amount equal to the excess of the fair market
value of a share of common stock on the date the holder exercises the stock
appreciation right over the grant price, as determined by the committee. The
grant price may not be less than 100% of the fair market value of a share of
common stock on the date of the grant, unless required by law or government
regulation.

   Restricted Stock And Restricted Stock Units. Our committee may grant shares
of restricted stock and restricted stock units and set their terms, including
voting rights for restricted shares and dividend rights with

                                       61
<PAGE>

respect to such shares and units. The committee may determine when restrictions
shall lapse. If the participant's employment or service terminates, the
participant will forfeit unvested restricted stock and restricted stock units
as of the date of such event, unless our committee determines otherwise with
respect to some or all of the unvested restricted stock and restricted stock
units.

   Performance Awards. The committee may grant performance awards, which
entitle the holder to receive payments upon the achievement of specified
performance goals and set their terms, including the performance goals to be
achieved during the performance period, the length of the performance period
and the amount and form of payment of the performance award. A performance
award may be denominated or payable in cash, shares of stock or other
securities, or other awards or property.

   Other Stock-Based Awards. The committee may grant other awards denominated
or payable in, valued by reference to, or otherwise based on or related to
shares of common stock as are deemed by the committee to be consistent with the
purpose of plan. The committee will determine the terms and conditions of such
other stock-based awards, including the consideration to be paid for shares of
common stock or other securities delivered pursuant to a purchase right granted
under such award. The value of such consideration shall not be less than 100%
of the fair market value of such shares or other securities as of the date such
award is granted, unless required by law or government regulation.

   Transfer Restrictions. The rights of a participant with respect to the stock
options, stock appreciation rights, restricted stock and restricted stock
rights, performance awards, dividend equivalents and other stock based awards
granted under this plan generally are not transferable by the participant other
than by will or the laws of descent and distribution.

   Amendment And Termination of this Plan. This plan may be terminated and may
be altered, amended, suspended or terminated at any time, in whole or in part,
by our board of directors, except that:

  .  no alteration or amendment will be effective without stockholder
     approval if approval is required by law or under the rules of the Nasdaq
     Stock Market or any stock exchange on which our common stock is listed;
     and

  .  no such termination, suspension, alteration or amendment may adversely
     alter or affect the terms of any then outstanding awards without the
     consent of the affected participant.

Grants as of this Offering

   Our board of directors has approved the grant of options to purchase up to
      shares of our common stock under our 2000 stock incentive plan, including
the grants to individuals listed in the table below. The table has been
prepared based on an assumed initial offering price of $     per share. The
exercise price of these options will be equal to the initial public offering
price. These options granted to our employees will vest in three equal
installments, beginning on the first anniversary of the date of grant, while
options granted to our outside directors will vest in two equal installments,
beginning on the first anniversary of the date of grant.

<TABLE>
<CAPTION>
                                                                        Number
                                                                          of
   Name                                                                 Options
   ----                                                                 -------
   <S>                                                                  <C>
   John A. Blanchard III..............................................
   Debra A. Janssen...................................................
   Paul H. Bristow....................................................
   Dr. Nikhil Sinha...................................................
   Steven F. Coleman..................................................
   All current executive officers as a group..........................
   All current members of our board of directors who are not executive
    officers as a group...............................................
   All employees, including current officers but excluding directors
    and executive officers, as a group................................
</TABLE>


                                       62
<PAGE>

Certain Transactions

   Prior to joining iDLX Technology Partners as its President and Chief
Executive Officer, Dr. Sinha was a 50% partner in a consulting firm employed by
Deluxe. The consulting firm provided international development consulting
services to Deluxe at per diem rates subject to minimum amounts. In 1999,
Deluxe paid $28,713 to the consulting firm for services rendered. In addition,
in connection with the hiring of Dr. Sinha and the consequent termination of
the consulting agreement, Deluxe paid approximately $1.1 million to the members
of the consulting firm in lieu of an equity interest in HCL-Deluxe N.V. Dr.
Sinha received 50% of this amount.


                                       63
<PAGE>

                      AGREEMENTS BETWEEN eFUNDS AND DELUXE

   We have provided below a summary description of the initial public offering
and distribution agreement along with the key related agreements. This
description, which summarizes the material terms of the agreements, is not
complete. You should read the full text of the agreements, which have been
filed with the Securities and Exchange Commission as exhibits to the
registration statement of which this prospectus is a part.

Initial Public Offering and Distribution Agreement

   General. On March 31, 2000, we entered into an initial public offering and
distribution agreement with Deluxe, which governs our respective rights and
duties with respect to offerings of our common stock and other securities,
including this offering and the distribution, and sets forth certain covenants
we will agree to for various periods following this offering and the
distribution. Although Deluxe has announced that it currently plans to complete
the distribution, and we will agree to cooperate with Deluxe in all respects to
complete the distribution or a similar transaction, Deluxe is not obligated to
do so. We cannot assure you as to whether or when the distribution will occur
or as to the terms of the distribution. We refer you to "Risk Factors -- Risks
Relating to Our Separation from Deluxe."

   Offerings of Securities of eFunds and the Distribution. We have agreed that
we will cooperate with Deluxe in all respects to accomplish:

  .  any primary offerings of our common stock and other securities,
     including this offering, prior to the distribution or other similar
     transaction; and

  .  the distribution or similar transaction.

   We also agreed that, at Deluxe's direction, we will promptly take all
actions necessary or desirable to effect these transactions, including the
registration under the Securities Act of shares of our common stock owned by
Deluxe. Deluxe has the sole discretion to determine whether or when the
distribution will occur and all terms of the distribution, including the form,
structure and terms of any transactions or offerings to effect the distribution
and the timing of and conditions to the completion of the distribution.

  Expenses relating to primary offerings of our securities. We will agree to
use the proceeds from this offering to pay all costs and expenses relating to
any primary offerings of our common stock and our other securities prior to the
distribution or other similar transaction, including this offering. In
particular, we will pay the underwriting discounts and commissions.

Expenses relating to the distribution. Deluxe will agree to pay all costs and
expenses relating to the distribution or other similar transaction.

   Access to Information. Generally, we and Deluxe have agreed to provide each
other with access to information relating to the assets, business and
operations of the requesting party. We and Deluxe will keep our books and
records for a specified period of time. Also, we and Deluxe will cooperate with
the other party to allow access to each others' employees, to the extent they
are necessary to discuss and explain all requested information mentioned above
and with respect to any claims brought against the other relating to the
conduct of the parties prior to completion of the distribution or similar
transaction.

   Covenants. We have agreed that, for so long as Deluxe is required to
consolidate our results of operations and financial position, we will:

  .  provide Deluxe with financial information regarding our company and our
     subsidiaries;

  .  not select a different accounting firm than Deloitte & Touche LLP to
     serve as our auditors;

  .  use reasonable commercial efforts to cause our auditors to complete
     their audit of our financial statements such that they will date their
     opinion the same date that the opinion of the audit of Deluxe's
     financial statements is dated;

                                       64
<PAGE>

  .  provide to Deluxe and its auditors all information required for Deluxe
     to meet its schedule for the filing and distribution of its financial
     statements;

  .  make our books and records available to Deluxe and its auditors, so that
     they may conduct reasonable audits relating to our financial statements;

  .  consult with Deluxe and provide Deluxe and its auditors with notice of
     any proposed determination of, or significant changes in, our accounting
     estimates and accounting principles.

   Other Covenants. The initial public offering and distribution agreement also
provides that as long as Deluxe beneficially owns 50% or more of our
outstanding shares of common stock, we may not take any action or enter into
any commitment or agreement that may reasonably be anticipated to result, with
or without notice and with or without lapse of time, or otherwise, in a
contravention or an event of default by Deluxe of:

  .  any provision of applicable law or regulation, including but not limited
     to provisions pertaining to the Internal Revenue Code or the Employee
     Retirement Income Security Act of 1974, as amended;

  .  any provision of Deluxe's articles of incorporation or bylaws;

  .  any credit agreement or other material agreement binding upon Deluxe; or

  .  any judgment, order or decree of any governmental body, agency or court
     having jurisdiction over Deluxe or any of its assets.

   Options. We have granted to Deluxe continuing options, assignable to any of
Deluxe's subsidiaries, to purchase, under specified circumstances, additional
shares of common stock. These options may be exercised immediately prior to the
issuance of any of our equity securities, other than in this offering or upon
exercise of the underwriters' over-allotment option:

  .  with respect to our voting stock, to the extent necessary to own at
     least 80.1% of the total combined voting power of all classes of our
     outstanding voting stock; and

  .  with respect to shares of nonvoting stock, to the extent necessary to
     own at least 80.1% of each outstanding class of such stock.

   The purchase price of the shares of voting stock purchased upon any exercise
will be the market price of our voting stock on the date of delivery of the
exercise notice. The purchase price of nonvoting capital stock will be the
price at which such stock may be purchased by third parties. These options will
terminate when Deluxe or its affiliates own less than 45% of the total combined
voting power of all classes of our outstanding equity of our company.

   Indemnification Procedures. The initial public offering and distribution
agreement sets forth the procedures that Deluxe and we will undertake if either
of us demands to be indemnified under any indemnification right given in any of
the agreements between Deluxe and us relating to this offering or the
distribution, other than the tax sharing agreement referred to below.

Registration Rights Agreement

   We and Deluxe have entered into a registration rights agreement which only
becomes effective in the event Deluxe determines not to proceed with the
distribution. The registration rights agreement will require us upon the
request of Deluxe to use our reasonable best efforts to register under the
applicable federal and state securities laws any of the shares of our common
stock owned by Deluxe for sale in accordance with Deluxe's intended method of
disposition. Deluxe will also have the right to include shares of our common
stock in other registrations of equity securities we initiate. Deluxe will pay
all costs and expenses relating to each such registration that Deluxe requests
or in which Deluxe participates except for our out-of-pocket expenses and the
fees of our attorneys, accountants and other advisors. Subject to specified
limitations, the registration rights agreement will be assignable by Deluxe and
its assigns. The registration rights agreement will contain indemnification and
contribution provisions that are customary in transactions similar to those
contemplated by this prospectus.

                                       65
<PAGE>

Assignment and Assumption Agreement

   Prior to the offering, we entered into an assignment and assumption
agreement with Deluxe, which governs the terms of the transfer to us of assets
and liabilities from Deluxe. The assignment and assumption agreement provides
that assets that cannot legally be transferred prior to March 31, 2000 will be
transferred as soon as is practical following receipt of all necessary consents
and approvals. All transfers by Deluxe to us are on an "as is, where is" basis,
and without any representations or warranties. As a result, we have agreed to
bear the economic and legal risks that any conveyances of assets are
insufficient to vest in us good and marketable title to such assets and as to
defects in the condition of the assets. We have also agreed with Deluxe that
Deluxe, on the one hand, and we, on the other hand, will transfer, without
additional consideration, to the other all assets which, subsequent to
March 31, 2000, the parties determine more properly belong in the other's
business.

   The assignment and assumption agreement provides for assumptions and
indemnities designed to place, as of March 31, 2000, sole financial
responsibility on the company and its subsidiaries for all liabilities, known
or unknown, actual or contingent, associated with our current and historical
businesses and operations and all of the assets transferred to us in connection
with the assignment and assumption and to place sole financial responsibility
for Deluxe's other businesses with Deluxe and its other subsidiaries.

Tax-Sharing Agreement

   We and some of our subsidiaries are, and after the offering may continue to
be, included in Deluxe's consolidated income tax group for U.S. federal income
tax purposes and our tax liability and the tax liability of some of our
subsidiaries may be included in the consolidated federal income tax liability
of Deluxe and its subsidiaries. In certain circumstances, we and some of our
subsidiaries may be included with Deluxe and some of its subsidiaries in
combined, consolidated, or unitary groups for state and local tax purposes.
Prior to this offering, we and Deluxe intend to enter into a tax-sharing
agreement. Under the tax-sharing agreement, we and Deluxe generally will make
payments to each other such that, with respect to tax returns for any taxable
period, the amount of taxes to be paid by us, subject to some adjustments, will
be determined as though we, together with our subsidiaries included in Deluxe's
consolidated group or any other applicable groups, were to file separate
federal, state and local income tax returns (including, except as provided
below, any amounts determined to be due as a result of a redetermination of the
tax liability of Deluxe arising from an audit or otherwise) as the common
parent of an affiliated group of corporations filing combined, consolidated or
unitary federal, state and local returns rather than a consolidated subsidiary
of Deluxe with respect to federal, state and local income taxes. We will be
responsible for any taxes with respect to tax returns that include us and our
subsidiaries. We will be reimbursed, however, for tax attributes that we
generate, such as net operating losses, if and when they are used on a
consolidated basis.

   In determining the amount of tax-sharing payments under the tax-sharing
agreement, Deluxe will prepare for us pro forma returns with respect to federal
and applicable state and local income taxes that reflect the same positions and
elections used by Deluxe in preparing the returns for Deluxe's consolidated
group and other applicable groups. Deluxe will continue to have all the rights
of a parent of a consolidated group prior to the split-off. Deluxe will have
similar rights provided for by applicable state and local law with respect to a
parent of a combined, consolidated or unitary group. Deluxe will be the sole
and exclusive agent for us in any and all matters relating to our income,
franchise and similar tax liabilities. Deluxe will have sole and exclusive
responsibility for the preparation and filing of consolidated federal and
consolidated or combined or unitary state income tax returns or amended
returns. Deluxe will have the power, in its sole discretion, to contest,
compromise or settle any asserted tax adjustment or deficiency and to file,
litigate or compromise any claim for refund on our behalf. In addition, Deluxe
has agreed to undertake to provide the aforementioned services with respect to
our separate state and local tax returns and our foreign tax returns.

   In addition, the tax-sharing agreement will provide that we will indemnify
Deluxe for any taxes arising out of the failure of the split-off or some of the
transactions related to it to qualify as tax-free as a result of actions

                                       66
<PAGE>

taken, or the failure to take required actions, by us or any of our
subsidiaries. We are required under the tax sharing agreement to comply with
the representations made to the Internal Revenue Service in connection with the
request for a private letter ruling that has been submitted to the Internal
Revenue Service regarding the tax-free nature of the split-off of our stock by
Deluxe to Deluxe's stockholders.

   The-tax sharing agreement will further provide for cooperation with respect
to tax matters, the exchange of information and the retention of records which
may affect the income tax liability of either party. Disputes arising between
Deluxe and us relating to matters covered by the tax-sharing agreement are
subject to resolution through specific dispute resolution provisions.

   In general, we will be included in Deluxe's consolidated group for federal
income tax purposes for so long as Deluxe beneficially owns at least 80% of the
total voting power and value of our outstanding common stock. Each member of a
consolidated group is jointly and severally liable for the federal income tax
liability of each other member of the consolidated group. Accordingly, although
the tax-sharing agreement will allocate tax liabilities between us and Deluxe,
during the period in which we are included in Deluxe's consolidated group, we
could be liable in the event that any federal tax liability is incurred, but
not discharged, by any other member of Deluxe's consolidated group.

Employee Benefits Agreement

   We will enter into an employee matters agreement with Deluxe to allocate
assets, liabilities, and responsibilities relating to our current and former
U.S. employees and their participation in the benefit plans that Deluxe
currently sponsors and maintains.

   All of our eligible employees will continue to participate in the Deluxe
benefit plans on comparable terms and conditions to those currently applicable
to them until the split-off or the time at which we establish comparable
benefit plans for our current and former employees. We intend to establish
these plans no later than the time of the split-off.

   At the time of the split-off, we expect to adopt benefit plans corresponding
to the Deluxe plans, including qualified retirement plans, executive deferred
compensation and supplemental benefit plans, health and welfare plans, fringe
benefit plans, and leave of absence programs.

   Once we establish our own benefit plans, we may modify or terminate any plan
in accordance with the terms of that plan and our policies. It is intended that
our benefit plans will generally provide that all service, compensation and
other benefit determinations that, as of the split-off, were recognized under
the corresponding Deluxe benefit plan will be taken into account under our
benefit plan.

   It is intended that our benefit plans will generally assume any liabilities
for our employees under the corresponding Deluxe benefit plan. Assets relating
to the employee liabilities are expected to be transferred to us or our related
plans and trusts from trusts and other funding vehicles associated with
Deluxe's benefit plans.

Real Estate Agreements

   We have purchased real property and a data center located in Phoenix,
Arizona and personal property from a subsidiary of Deluxe for approximately $10
million. As of the completion of this offering, we and Deluxe will enter into
several agreements pursuant to which Deluxe or its subsidiaries (other than us
and our subsidiaries), on the one hand, and we or our subsidiaries, on the
other hand, will agree to (1) lease nine different sites for use as
communication nodes, with Deluxe or one of its subsidiaries as landlord, and
eFunds as tenant, for a period of approximately 12-18 months, (2) sublease a
portion of a building in Shoreview,

                                       67
<PAGE>

Minnesota, with a subsidiary of Deluxe, as sublandlord, and eFunds as
subtenant, for a period of approximately 12 months, (3) lease a portion of a
data center in Phoenix, Arizona, with eFunds as landlord and Deluxe as tenant,
and (4) assign the rights as tenant under various leases from Deluxe or its
subsidiaries to eFunds or one of its subsidiaries. The real estate agreements
are subject to certain early termination rights and obligations.

Transitional Services Agreement

   As of the completion of this offering, we and Deluxe will enter into a
transitional services agreement pursuant to which Deluxe or its subsidiaries
(other than us and our subsidiaries), on the one hand, and we or our
subsidiaries, on the other hand, will agree to continue providing various
services to each other, including material procurement, financial and
administrative services, treasury, cash management and insurance services,
sales support, legal services, and employee benefits administration. Each
service provided under the transitional services agreements will be provided
for a specified time period beginning on completion of this offering and
continuing until the split off with respect to some services or until December
31, 2001 with respect to other services. Either party may terminate any or all
services that they receive under the transitional services agreements at any
time upon 60 days' prior written notice. Any or all services may be extended
for one additional 60 day period. During the applicable time period, the
parties are obligated to take all steps necessary to establish the processes
and systems to enable them to perform the relevant services on a stand alone
basis. The parties will be obligated to pay fees established in the
transitional services agreement based upon the type and amount of services
rendered.

Master Services Agreement

   Deluxe will enter into a master agreement with us, pursuant to which we will
provide Deluxe with:

  .  software development, maintenance and support services for information
     technology applications;

  .  financial shared services including accounts receivable, accounts
     payable and general accounting transaction processing; and

  .  data entry services.

   This agreement will have an initial term ending as of December 31, 2004, and
will automatically renew each year for an additional one year term unless
terminated by either party. In addition, this agreement will be terminable by
Deluxe at its option if we are acquired, whether by merger, sale, acquisition
or sale of all or substantially all its assets, by a third party. If Deluxe
exercises its termination rights, it will pay us a termination fee. During the
term of the agreement, we anticipate that Deluxe will spend approximately $43
million per year for software development, maintenance and support services for
information technology applications, which amounts will be based on the actual
number of hours of information technology services that we provide to Deluxe.
If Deluxe fails to reach the $43 million spending target per year, it will be
obligated to make liquidated damages payments for a portion of our fees based
on our estimates of lost margins. We also will provide business process
management services, including accounts receivable, accounts payable and other
general accounting services, and mail order entry services. Deluxe's annual
minimum spending target for these business process management services will
range from $8.1 million in 2000 to $4.2 million in 2004. The agreement will
also provide for liquidated damages for non-performance by us and bonuses for
superior performances as are typical for information technology professional
services. The provision of services by us under the agreement is non-exclusive,
and Deluxe may contract with any third party for the provision of information
technology and business process management services.

Third Party Indemnification Agreement

   Pursuant to the Third Party Indemnification Agreement, we agree to provide
Deluxe with full indemnification in connection with any liabilities incurred by
Deluxe after the distribution as a result of Deluxe's purchase or lease of
property or services for our benefit under any master agreement or for any
guaranties under which Deluxe guaranteed our performance of agreements with
third parties. We are obligated to indemnify Deluxe for any liability to the
extent such liability primarily relates to the past, present or future
operation of our business or operations.

                                       68
<PAGE>

ONE Channel Management Agreement

   As of the completion of this offering, Deluxe will provide us a license to
use its proprietary ONE channel management systems in order to provide our
products to financial institutions. In exchange for access to the ONE channel
management systems and the services provided by Deluxe, we will pay Deluxe its
cost of providing such services during 2000 and cost plus 10% in 2001. Under
the agreement, Deluxe will maintain ownership of all rights in the ONE channel
management system, except that we will own the interface between the ONE system
security layer and our back-end systems. The agreement will have a term ending
on December 31, 2001.

Data and Related Agreements

   We and Deluxe will enter into several agreements which will govern the
transfer of data between us.

   Pursuant to a data contribution agreement, a subsidiary of Deluxe will
provide us with consumer account records pertaining to its direct to consumer
check printing business. We will agree to only use this information for
purposes that are consistent with applicable federal, state and local laws,
including the Fair Credit Reporting Act. Customers of Deluxe will have the
ability to request that their information not be provided to us. The agreement
has a term that will end on July 1, 2001.

   Pursuant to a processing agreement, we will provide Deluxe with groups of
bank routing numbers to enable us to obtain check order history files from
Deluxe as long as we have obtained a consent from the applicable financial
institution to receive this data. Deluxe may only use the bank routing numbers
for the purpose of performing the processing requested by us. Either party may
terminate this agreement upon 30 days' prior written notice.

   Pursuant to an ACH Agreement, we will agree to provide Deluxe with ACH
services for a three year term. Deluxe may terminate this agreement upon 180
days' notice after expiration of the initial three year term. Deluxe has agreed
to pay us $29,000 per month under this agreement.

   We have also agreed to provide Deluxe with data relating to closed consumer
accounts pursuant to our standard agreement for the provision of this
information.

Loan Agreement

   Deluxe has agreed to provide us with a revolving credit facility of up to
$75 million until the earlier of the effective date of the split-off, or August
28, 2000. Borrowings under the facility will be due at the split-off or
maturity and will accrue interest at the London Interbank Offered Rate, or
LIBOR, plus a variable additional margin based on Deluxe's credit rating. The
credit facility includes financial and restrictive covenants. We intend to
replace this facility with a new credit facility with one or more financial
institutions prior to the split-off or maturity.

Indemnification Agreement

   Deluxe has agreed to indemnify us for any losses on identified government
services loss contracts in excess of the loss contract reserves. We are
required to calculate any charges for loss contracts in a manner consistent
with Deluxe's current loss accrual practices. Deluxe will also indemnify us
against any liabilities, losses or expenses arising from litigation and claims
asserted against us in connection with the operation of our government services
business prior to the completion of this offering. Deluxe's indemnification
obligations are limited to a maximum amount equal to $      .


                                       69
<PAGE>

                             PRINCIPAL STOCKHOLDER

   All of the shares of our common stock outstanding before this offering are
owned by Deluxe. After this offering, Deluxe will own about     % of our
outstanding common stock. Except for Deluxe, we are not aware of any person or
group that will beneficially own more than 5% of the outstanding shares of our
common stock following this offering.

                          DESCRIPTION OF CAPITAL STOCK

   Our authorized capital stock consists of 250 million shares of common stock,
$.01 par value per share, and 100 million shares of preferred stock, $.01 par
value per share. The following summary of certain provisions of the common
stock and preferred stock is subject to, and qualified in its entirety by, our
amended and restated certificate of incorporation and by-laws and by the
provisions of applicable law.

Common Stock

   Each holder of our common stock is entitled to one vote for each share held
of record on all matters to be voted upon by the stockholders. There are no
cumulative voting rights. Subject to the preferences of preferred stock issued
after the sale of the common stock in this offering, holders of common stock
are entitled to receive ratably any dividends that may be declared from time to
time by the board of directors out of funds legally available for that purpose.
In the event of our liquidation, dissolution or winding up, holders of common
stock would be entitled to share in our assets remaining after the payment of
liabilities and the satisfaction of any liquidation preference granted to the
holders of any outstanding shares of preferred stock. Holders of common stock
have no preemptive or conversion rights or other subscription rights and there
are no redemption or sinking fund provisions applicable to the common stock.

   All outstanding shares of common stock and the shares of common stock
offered by us in this offering, when issued and paid for, will be fully paid
and nonassessable, except for certain statutory liabilities which may be
imposed by Section 180.0622 of the Wisconsin Business Corporation Law for
unpaid employee wages. Section 180.0622 of the Wisconsin Business Corporation
Law provides that shareholders of every corporation that does business in
Wisconsin are personally liable to an amount equal to the par value of the
shares owned by them and for all debts owing to employees for services
performed for such corporation, but not exceeding six months' service in the
case of any individual employee. The rights, preferences and privileges of the
holders of common stock are subject to, and may be adversely affected by, the
rights of the holders of shares of any series of preferred stock that we may
designate in the future.

Preferred Stock

   Upon the closing of this offering, the board of directors will be
authorized, subject to any limitations prescribed by law, without stockholder
approval, from time to time to issue up to an aggregate of      million shares
of preferred stock, in one or more series, with each of such series to have
such rights and preferences, including, without limitation, voting rights,
dividend rights, conversion rights, redemption privileges and liquidation
preferences, as shall be determined by unlimited discretion of the board of
directors.

   Issuance of preferred stock, while providing desirable flexibility in
connection with possible acquisitions and other corporate purposes, could have
the effect of making it more difficult for a third party to acquire, or of
discouraging a third party from attempting to acquire, a majority of our
outstanding voting stock. We currently have no plans to issue any shares of
preferred stock.

Stockholder Rights Plan

   On              , 2000, the board of directors declared a dividend of one
preferred share purchase right for each outstanding share of common stock
outstanding on the business day immediately preceding the date of

                                       70
<PAGE>

this prospectus to the stockholders of record on that date. Each right entitles
the registered holder to purchase one one-hundredth of a share of Series A
Junior Participating Preferred Stock, par value $0.01 per share, at a price of
$       per one one-hundredth of a preferred share, subject to adjustment. The
description and terms of the share purchase rights are set forth in a Rights
Agreement between eFunds and            , as Rights Agent, a copy of the form
of which is filed as an exhibit to the registration statement of which this
prospectus is a part.

   Initially, the certificates for shares of common stock then outstanding will
evidence the rights and we will not distribute separate right certificates. The
rights will separate from the common stock on the share purchase rights
distribution date, which is the earlier of:

  .  the first date of public announcement that a person or group of
     affiliated or associated persons has become the beneficial owner of 15%
     or more of the outstanding common stock, subject to certain exceptions;
     and

  .  the close of business on the 10th day, or such later date as may be
     determined by the board of directors prior to such time as any person
     becomes the beneficial owner of 15% or more of the outstanding common
     stock, following the commencement or public announcement of a tender
     offer or exchange offer, the consummation of which would result in a
     person or group of affiliated or associated persons becoming the
     beneficial owner of 15% or more of the outstanding common stock.

   Under the plan, Deluxe's ownership of our stock will not cause the rights to
separate from the common stock or result in a share purchase rights
distribution date.

   The board of directors, after receiving such advice as it deems necessary
and giving due consideration to all relevant factors, may elect to approve a
tender offer or an exchange offer for all of our outstanding common stock if
the board determines the offer to be in our best interest and the best
interests of our stockholders. If the board does approve a tender offer or
exchange offer, the rights will expire.

   Until the share purchase rights distribution date,

  .  the rights will be evidenced by the certificates for shares of common
     stock and will be transferred with and only with the common stock;

  .  any common stock certificates issued after the business day immediately
     preceding the date of this Prospectus upon transfer or new issuance of
     the common stock will contain a notation incorporating the Rights
     Agreement by reference; and

  .  the transfer of any common stock will also constitute the transfer of
     the rights associated with the common stock.

   As promptly as practicable following the share purchase rights distribution
date, we will mail separate certificates evidencing the share purchase rights
to holders of record of the common stock as of the close of business on that
date, and such separate certificates alone will evidence the share purchase
rights.

   The holders of our common stock and the share purchase rights cannot
exercise the rights until the distribution date. The rights will expire on the
date that is ten years after the business day immediately preceding the date of
this prospectus, unless we extend or earlier redeem or exchange as described
below. We will not issue fractions of a preferred share, other than fractions
in integral multiples of one one-hundredth of a share, and, in lieu thereof, we
will make a cash adjustment on the closing price on the last trading date prior
to the date of exercise.

   We will adjust the purchase price payable and the number of preferred shares
issuable upon exercise of the rights from time to time to prevent dilution:

  .  in the event of a stock dividend on, or a subdivision, combination or
     reclassification of, the preferred shares;

                                       71
<PAGE>

  .  upon the grant to holders of the preferred shares of certain rights,
     options or warrants to subscribe for or purchase preferred shares or
     convertible securities at less than the then current market price of the
     preferred shares; or

  .  upon the distribution to holders of the preferred shares of any evidence
     of indebtedness or assets, excluding regular periodic cash dividends or
     dividends payable in preferred shares, or of subscription rights or
     warrants, other than those described in clause (2) of this paragraph.

   With certain exceptions, we are not required to adjust the purchase price
until cumulative adjustments require an adjustment of at least 1% in the
purchase price. We also will adjust the number of outstanding share purchase
rights and the number of preferred shares issuable upon exercise of the rights
in the event of a stock split of the common stock or a stock dividend on the
common stock payable in common stock or subdivisions, consolidations or
combinations of the common stock occurring, in any such case, prior to the
distribution date.

   We cannot redeem the preferred shares purchasable upon exercise of the
rights. Each preferred share will be entitled to a minimum preferential
quarterly dividend payment of $     per share but will be entitled to an
aggregate dividend of 100 times the dividend declared per share of common
stock. In the event of liquidation, the holders of the preferred shares will be
entitled to a minimum preferential liquidation payment of $         per share
but will be entitled to an aggregate payment of 100 times the payment made per
share of common stock. Each preferred share will have 100 votes, voting
together with the common stock. Finally, in the event of any merger,
consolidation or other transaction in which common stock is exchanged, each
preferred share will be entitled to receive 100 times the amount received per
share of common stock. These rights are subject to adjustment in the event of a
stock dividend on the common stock or a subdivision, combination or
consolidation of the common stock.

   In the event any person becomes the beneficial owner of 15% or more of the
outstanding common stock, each holder of a share purchase right shall
thereafter have a right to receive, upon exercise thereof at the then current
aggregate exercise price, in lieu of preferred shares, such number of shares of
our common stock having a current aggregate market price equal to twice the
current aggregate exercise price. In the event that at any time after there is
a beneficial owner of 15% or more of the outstanding common stock, we are
acquired in certain mergers or other business combination transactions or 50%
or more of our assets or earning power and our subsidiaries (taken as a whole)
are sold, holders of the rights will thereafter have the right to receive, upon
exercise thereof at the then current aggregate exercise price, such number of
shares of common stock of the acquiring company (or, in certain cases, one of
its affiliates) having a current aggregate market price equal to twice the
current aggregate exercise price.

   At any time after a person becomes the beneficial owner of 15% or more of
the outstanding common stock, subject to certain exceptions, and prior to the
acquisition by a person of 50% or more of the outstanding common stock, the
board of directors may exchange all or part of the rights for common stock at
an exchange ratio of one share of common stock per right, subject to
adjustment.

   At any time before a person has become the beneficial owner of 15% or more
of the outstanding common stock, the board of directors may redeem the rights
in whole, but not in part, at a price of $0.01 per right, subject to
adjustment. The redemption of the rights may be made effective at such time, on
such basis and with such conditions as the board of directors in its sole
discretion may establish.

   Until a right is exercised, the holder of the right will have no rights as a
stockholder, including without limitation, the right to vote or to receive
dividends.

   The rights have anti-takeover effects. The rights will cause substantial
dilution to a person or group that attempts to acquire us pursuant to an offer
that is not approved by the board of directors, unless the rights have been
redeemed. However, the rights should not interfere with any tender offer or
merger approved by the board because the board of directors may redeem the
rights or approve an offer at any time prior to such time as any person has
becomes the beneficial owner of 15% or more of the outstanding common stock.

                                       72
<PAGE>

Limitation of Liability and Indemnification Matters

   Our amended and restated certificate of incorporation limits the liability
of directors to the maximum extent permitted by Delaware law. Delaware law
provides that directors of a corporation will not be personally liable for
monetary damages for breach of their fiduciary duties as directors, except
liability for:

  .  breach of their duty of loyalty to the corporation or its stockholders;

  .  acts or omissions not in good faith or that involve intentional
     misconduct or a knowing violation of law;

  .  unlawful payments of dividends or unlawful stock repurchases or
     redemptions; and

  .  any transaction from which the director derived an improper personal
     benefit.

   This limitation of liability does not apply to liabilities arising under the
federal or state securities laws and does not affect the availability of
equitable remedies such as injunctive relief or rescission.

   Our amended and restated certificate of incorporation provides that we will
indemnify our directors, officers, employees and other agents to the fullest
extent permitted by Delaware law. We believe that indemnification under our
amended and restated certificate of incorporation covers at least negligence
and gross negligence on the part of indemnified parties. Our amended and
restated certificate of incorporation also permits us to secure insurance on
behalf of any officer, director, employee or other agent for any liability
arising out of his or her actions in such capacity, regardless of whether the
amended and restated certificate of incorporation would permit such
indemnifications.

   At present, there is no litigation or proceeding involving any of our
directors or officers in which indemnification is required or permitted, and we
are not aware of any threatened litigation or proceeding that may result in a
claim for indemnification.

Anti-Takeover Provisions

   Some provisions of our amended and restated certificate of incorporation and
bylaws could make more difficult the acquisition of control of our company, and
the removal of existing management:

  .  The amended and restated certificate of incorporation does not provide
     for cumulative voting for directors;

  .  We have a classified board of directors with each class serving a
     staggered three-year term;

  .  The board of directors fixes the size of the board of directors, may
     create new directorships and may elect new directors to serve for the
     full term of the class of directors in which the new directorship was
     created. The board of directors (or its remaining members, even though
     less than a quorum) also may fill vacancies on the board of directors
     occurring for any reason for the remainder of the term of the class of
     director in which the vacancy occurred.

  .  The board of directors may issue preferred stock without any vote or
     further action by the stockholders;

  .  The board of directors may adopt, amend, alter or repeal the bylaws
     without a vote of the stockholders;

  .  All stockholder actions must be taken at a regular or special meeting of
     the stockholders and cannot be taken by written consent without a
     meeting;

  .  We require advance notice procedures with respect to stockholder
     proposals and the nominations of candidates for election as directors;
     and

  .  Without the affirmative vote of the holders of at least 66-2/3% of the
     outstanding shares of common stock, together with the affirmative vote
     of at least 66-2/3% of the members of the board of directors,

                                       73
<PAGE>

     we may not (i) consolidate or merge with any other entity, (ii) convey,
     transfer, lease or otherwise dispose of all or substantially all of its
     property and assets, (iii) amend the certificate of incorporation to
     permit the removal of directors without cause or (iv) amend, modify or
     repeal the anti-takeover and indemnification provisions of the amended
     and restated certificate of incorporation.

   These provisions are expected to discourage coercive takeover practices and
inadequate takeover bids. They are also designed to encourage persons seeking
to acquire control of us to first negotiate with our board. We believe that
the benefits of increased protection give us the potential ability to
negotiate with the proponent of an unfriendly or unsolicited proposal to
acquire or restructure us and outweigh the disadvantages of discouraging such
proposals. Negotiating with the proponent could result in an improvement of
the terms of the proposal.

Section 203 of the Delaware General Corporation Law

   We are subject to Section 203 of the Delaware General Corporation Law,
which regulates corporate acquisitions. In general, Section 203 prohibits a
publicly held Delaware corporation from engaging in a business combination
with an interested stockholder for a period of three years following the date
the person became an interested stockholder, unless:

  .  the board of directors approved the transaction in which such
     stockholders became an interested stockholder prior to the date the
     interested stockholder attained such status;

  .  upon consummation of the transaction that resulted in the stockholder's
     becoming an interested stockholder, he or she owned at least 85% of the
     voting stock of the corporation outstanding at the time the transaction
     commenced, excluding shares owned by persons who are directors and also
     officers; and

  .  the business combination is approved by a majority of the board of
     directors and by the affirmative vote of at least two-thirds of the
     outstanding voting stock that is not owned by the interested
     stockholder.

   A business combination generally includes a merger, asset or stock sale, or
other transaction resulting in a financial benefit to the interested
stockholder. In general, an interested stockholder is a person who, together
with affiliates and associates, owns, or within three years prior to the
determination of interested stockholder status, did own, 15% or more of a
corporation's voting stock.

Transfer Agent and Registrar

   The transfer agent and registrar for our common stock is     .

                                      74
<PAGE>

                        SHARES ELIGIBLE FOR FUTURE SALE

   Upon completion of this offering, we will have outstanding an aggregate of
      shares of common stock, assuming no exercise of the underwriters' over-
allotment option. All of the shares of common stock sold in this offering will
be freely tradable without restriction under the Securities Act, unless such
shares are purchased by our "affiliates" as that term is defined in Rule 144
under the Securities Act. Persons who are affiliates may sell shares that are
issued in this offering in the public market only through registration under
the Securities Act or under an exemption from registration, such as the one
provided by Rule 144.

   Deluxe has announced that, subject to specified conditions, it intends to
distribute all of its shares of our common stock in a tax-free split-off
transaction within         . Any shares distributed by Deluxe will be freely
tradeable, except for shares received by our affiliates.

Rule 144

   In general, under Rule 144, beginning 91 days after the date of this
prospectus, a person who beneficially owns "restricted securities" within the
meaning of Rule 144 for at least one year would be entitled to sell within any
three-month period a number of shares that does not exceed the greater of:

  .  one percent of the number of shares of common stock then outstanding,
     which will equal approximately shares immediately after this offering;
     or

  .  the average weekly trading volume of the common stock on the Nasdaq
     National Market during the four calendar weeks preceding the filing of a
     notice of Form 144 with respect to that sale.

Sales under Rule 144 also are subject to manner of sale and notice requirements
and to the availability of current public information about us. Our affiliates
who purchase shares of our common stock pursuant to this offering or acquire
our shares of common stock in the tax-free distribution would be subject to the
resale restrictions of Rule 144 described above.

Lock-Up Agreements

   We, our executive officers and directors have agreed not to sell or
otherwise dispose of any shares of our common stock or any securities
convertible into or exchangeable for common stock, for a period of 180 days
after the date of this prospectus, without the prior written consent of Lehman
Brothers Inc., subject to limited exceptions. See "Underwriting -- No Sales of
Similar Securities."

Stock Options

   We will grant shares of our common stock pursuant to our stock plans. We
have reserved      shares of our common stock for issuance under our stock
option plans. We expect to grant options to purchase an aggregate of
shares of our common stock upon the completion of this offering with an
exercise price equal to the initial public offering price, unless a lower price
is required by law or government regulation. We currently expect to file a
registration statement under the Securities Act to register shares reserved for
issuance under our stock plans. Shares issued pursuant to our stock plans after
the effective date of that registration statement, other than shares issued to
affiliates, generally will be freely tradeable without further registration
under the Securities Act. In addition, at the time of the split-off, all
outstanding options to purchase Deluxe common stock will be converted into new
options to purchase Deluxe common stock and options to purchase our common
stock. See "Management -- Treatment of Deluxe Options."

                                       75
<PAGE>

  CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES TO NON-UNITED STATES HOLDERS

   The following discussion is a summary of the material United States federal
income and estate tax consequences of the ownership and disposition of our
common stock by non-United States holders. This discussion does not deal with
all aspects of United States federal income and estate taxation and does not
deal with foreign, state and local tax consequences. This discussion does not
address all tax considerations that may be relevant to non-United States
holders in light of their personal circumstances, or to certain non-United
States holders that may be subject to special treatment under United States
federal income or estate tax laws. Furthermore, this discussion is based on the
Internal Revenue Code of 1986, as amended, Treasury Department regulations,
published positions of the Internal Revenue Service and court decisions now in
effect, all of which are subject to change. You are urged to consult your own
tax advisor regarding the United States federal tax consequences of owning and
disposing of our common stock, as well as the applicability and effect of any
state, local or foreign tax laws.

   In this section we use the term United States holder to refer to a
beneficial owner of stock that is:

  .  a citizen or resident of the United States;

  .  a corporation, partnership or other entity created or organized in or
     under the laws of the United States or any political subdivision of the
     United States; or

  .  an estate the income of which is subject to United States federal income
     taxation regardless of its source;

  .  a trust that:

    -  is subject to the supervision of a court within the United States
       and the control of one or more United States persons; or

    -  has a valid election in effect under applicable United States
       Treasury regulations to be treated as a United States person.

   We use the term non-United States holder to refer to a beneficial owner of
stock that is not a United States holder.

Dividends

   Generally, any dividend paid to a non-United States holder will be subject
to United States withholding tax either at a rate of 30% of the gross amount of
the dividend or at a lesser applicable treaty rate. However, dividends that are
effectively connected with the conduct of a trade or business of the non-United
States holder within the United States and, where a tax treaty applies, that
are attributable to a United States permanent establishment of the non-United
States holder are not subject to the withholding tax but instead are subject to
United States federal income tax on a net income basis at applicable graduated
individual or corporate rates.

   In order for dividends paid to a non-United States holder to be exempt from
withholding under the effectively connected income exemption, the holder must
comply with certification and disclosure requirements. In some circumstances, a
foreign corporation that receives effectively connected dividends may be
subject to an additional branch profits tax at a 30% rate or a lesser
applicable treaty rate.

   Until January 1, 2001, dividends paid to an address outside the United
States are presumed to be paid to a resident of that country, unless the payer
has knowledge to the contrary, for purposes of the withholding tax discussed
above and, under the current regulations, for purposes of determining the
applicability of a reduced rate of withholding under the terms of a tax treaty.
If you wish to claim the benefit of an applicable treaty rate and avoid backup
withholding, as discussed below, for dividends paid after December 31, 2000,
final regulations effective after that date will require you to satisfy
applicable certification and other requirements.

   If you are eligible for a reduced treaty rate of United States withholding
tax pursuant to an income tax treaty, you may obtain a refund of any excess
amounts withheld by filing an appropriate claim for refund with the Internal
Revenue Service.

                                       76
<PAGE>

Gain on Disposition of Common Stock

   If you are a non-United States holder, you will generally not be subject to
United States federal income tax with respect to gain recognized on a sale or
other disposition of our common stock unless:

  .  the gain is effectively connected with a trade or business in the United
     States and, where a tax treaty provides, the gain is attributable to a
     United States permanent establishment of yours;

  .  you are an individual and hold our common stock as a capital asset, you
     are present in the United States for 183 or more days in the taxable
     year of the sale or other disposition and certain other conditions are
     met;

  .  you are subject to tax pursuant to the provisions of the United States
     federal income tax laws applicable to certain United States expatriates;
     or

  .  we are or have been a United States real property holding corporation
     for United States federal income tax purposes.

   We believe that we are not, and do not anticipate becoming, a United States
real property holding corporation for United States federal income tax
purposes. If we were to become a United States real property holding
corporation, so long as our common stock continues to be regularly traded on an
established securities market, you would be subject to federal income tax on
any gain from the sale or other disposition of the stock only if you actually
or constructively owned, during the five-year period preceding the disposition,
more than 5% of our common stock.

   Special rules may apply to non-United States holders, such as controlled
foreign corporations, passive foreign investment companies, foreign personal
holding companies and corporations that accumulate earnings to avoid federal
income tax, that are subject to special treatment under the Code. These
entities should consult their own tax advisors to determine the United States
federal, state, local and other tax consequences that may be relevant to them.

Backup Withholding and Information Reporting

   We must report annually to the Internal Revenue Service and to you the
amount of dividends paid to you and the tax withheld with respect to these
dividends, regardless of whether withholding was required. Copies of the
information returns reporting the dividends and withholding may also be made
available to the tax authorities in the country in which you reside under the
provisions of an applicable income tax treaty.

   Under current law, backup withholding at the rate of 31% generally will not
apply to dividends paid to you at an address outside the United States, unless
the payer has knowledge that you are a United States person. However, under the
final regulations effective for dividends paid on or after January 1, 2001, you
will be subject to backup withholding unless applicable certification
requirements are met.

   Payment of the proceeds of a sale of our common stock within the United
States or conducted through certain United States related financial
intermediaries is subject to both backup withholding and information reporting
unless you certify under penalties of perjury that you are a non-United States
holder and the payer does not have actual knowledge that you are a United
States person, or you otherwise establish an exemption.

   Any amounts withheld under the backup withholding rules may be allowed as a
refund or a credit against your United States federal income tax liability
provided you furnish the required information to the Internal Revenue Service.

Estate Tax

   Common stock held by an individual non-United States holder at the time of
death will be included in that holder's gross estate for United States federal
estate tax purposes, unless an applicable estate tax treaty provides otherwise,
and may be subject to United States federal estate tax.

                                       77
<PAGE>

                                  UNDERWRITING

   Under the terms of an underwriting agreement, which is filed as an exhibit
to the registration statement of which this prospectus is a part, the
underwriters of the offering named below, for whom Lehman Brothers Inc., Bear,
Stearns & Co. Inc., FAC/Equities, a division of First Albany Corporation and
John G. Kinnard & Company Incorporated are acting as representatives, have each
agreed to purchase from us the respective number of shares of common stock set
forth opposite its name below:

<TABLE>
<CAPTION>
                                                                          Number
                                                                            of
         Underwriters                                                     Shares
         ------------                                                     ------
      <S>                                                                 <C>
      Lehman Brothers Inc. ..............................................
      Bear, Stearns & Co. Inc. ..........................................
      FAC/Equities, a division of First Albany Corporation...............
      John G. Kinnard and Company, Incorporated..........................
                                                                           ----
        Total............................................................
                                                                           ====
</TABLE>

   The underwriting agreement provides that the underwriters' obligations to
purchase shares of common stock depend on the satisfaction of the conditions
contained in the underwriting agreement, and that if any of the shares of
common stock are purchased by the underwriters under the underwriting
agreement, then all of the shares of common stock which the underwriters have
agreed to purchase under the underwriting agreement must be purchased. The
conditions in the underwriting agreement include the requirement that the
representations and warranties made by us to the underwriters are true, that
there is no material change in the financial markets and that we deliver to the
underwriters customary closing documents.

   We have agreed to indemnify the underwriters against liabilities, including
liabilities under the Securities Act or to contribute to payments that the
underwriters may be required to make for these liabilities.

   We estimate that the total expenses of the offering, excluding underwriting
discounts and commissions, will be approximately $    .

   Fidelity Capital Markets, a division of National Financial Services
Corporation, will be facilitating electronic distribution of information
through the Internet, their Intranet and other proprietary electronic
technology.

   The underwriters have informed us that they do not intend to confirm sales
to discretionary accounts that exceed five percent of the total number of
shares of common stock offered by them.

   Certain of the underwriters and their affiliates provide investment banking,
financial advisory and other services to us and Deluxe for which they may
receive customary fees and commissions. Specifically, Lehman Brothers Inc. has
been engaged by Deluxe to act as exchange agent and provide advisory services
in connection with the split-off. Lehman Brothers Inc. will receive customary
fees in connection with the split-off transaction.

Commissions and Discounts

   The following table provides the per share and total underwriting discounts
and commissions to be paid to the underwriters by us. These amounts are shown
assuming both no exercise and full exercise of the underwriters' option to
purchase          addition shares described below.

<TABLE>
<CAPTION>
       Paid by Us                                      No Exercise Full Exercise
       ----------                                      ----------- -------------
       <S>                                             <C>         <C>
       Per share......................................
       Total..........................................
</TABLE>

                                       78
<PAGE>

   The representatives have advised us that the underwriters propose to offer
the shares of common stock directly to the public at the initial public
offering price set forth on the cover of this prospectus and to dealers, who
may include the underwriters, at the same price less a selling concession not
in excess of $    per share. The underwriters may allow, and the dealers may
reallow, a concession not in excess of $    per share to brokers and dealers.
After the offering, the offering price and other selling terms may change.

Over-Allotment Option

   We have granted to the underwriters an option to purchase up to an aggregate
of       additional shares of common stock, exercisable to cover over-
allotments, if any, at the initial public offering price less the underwriting
discounts and commissions shown on the cover page of this prospectus. The
underwriters may exercise this option any time during the 30-day period after
the date of this prospectus. If this option is exercised, each underwriter will
be committed, so long as the conditions of the underwriting agreement are
satisfied, to purchase a number of additional shares of common stock
proportionate to the underwriter's initial commitment as indicated in the
preceding table and we will be obligated, under the over-allotment option, to
sell the shares to the underwriters.

No Sales of Similar Securities

   We, Deluxe and our executive officers and directors have agreed not to
directly or indirectly do any of the following, whether any transaction
described in clause (1) or (2) below is to be settled by delivery of common
stock or other securities, in cash or otherwise, in each case without the prior
written consent of Lehman Brothers Inc. on behalf of the underwriters, for a
period of 180 days after the date of this prospectus:

  (1) offer for sale, sell or otherwise dispose of (or enter into any
      transaction or device which is designated to, or could be expected to,
      result in the disposition or purchase by any person at any time in the
      future of) any shares of common stock or securities convertible into or
      exchangeable for common stock or substantially similar securities,
      other than any of the following:

    .  the common stock sold under this prospectus;

    .  distribution of common stock pursuant to the split-off; and

    .  shares of common stock we issue under employee benefit plans,
       qualified stock option plans or other employee compensation plans
       existing on the date of this prospectus or under currently
       outstanding options, warrants or rights.

  (2)  sell or grant options, rights or warrants with respect to any shares
       of our common stock or securities convertible into or exchangeable for
       our common stock or substantially similar securities, other than the
       grant of options under option plans existing on the date of this
       prospectus.

Determination of Offering Price

   Prior to this offering, there has been no public market for the shares of
our common stock. The initial public offering price will be negotiated between
the representatives and us. In determining the initial public offering price of
the common stock, the representatives will consider, among other things and in
addition to prevailing market conditions, our performance and capital
structure, estimates of our business potential and earnings prospects, an
overall assessment of our management and the consideration of the above factors
in relation to market valuation of companies in related businesses.

Nasdaq National Market Listing

   We have applied for quotation of our common stock on the Nasdaq National
Market under the symbol "EFDS."


                                       79
<PAGE>

Price Stabilization, Short Positions and Penalty Bids

   Until the distribution of the common stock is completed, rules of the
Securities and Exchange Commission may limit the ability of the underwriters
and selling group members to bid for and purchase shares of common stock. As an
exception to these rules, the representatives are permitted to engage in
transactions that stabilize the price of the common stock. These transactions
may consist of bids or purchases for the purpose of pegging, fixing or
maintaining the price of the common stock.

   The underwriters may create a short position in the common stock in
connection with this offering, which means that they may sell more shares than
are set forth on the cover page of this prospectus. If the underwriters create
a short position, then the representatives may reduce that short position by
purchasing common stock in the open market. The representatives also may elect
to reduce any short position by exercising all or part of the over-allotment
option.

   The representatives also may impose a penalty bid on underwriters and
selling group members. This means that if the representatives purchase shares
of common stock in the open market to reduce the underwriters' short position
or to stabilize the price of the common stock, they may reclaim the amount of
the selling concession from the underwriters and selling group members who sold
those shares as part of this offering.

   In general, purchases of a security for the purpose of stabilization or to
reduce syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of those purchases. The
imposition of a penalty bid might have an effect on the price of a security to
the extent that it were to discourage resales of the security by purchasers in
this offering.

   Neither we nor any of the underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the common stock. In addition, neither
we nor any of the underwriters makes any representation that the
representatives will engage in such transactions or that such transactions,
once commenced, will not be discontinued without notice.

Reserved Shares

   At our request, the underwriters have reserved up to     % shares of the
common stock offered by this prospectus for sale to our directors and other
persons associated with us at the initial public offering price set forth on
the cover page of this prospectus. These persons must commit to purchase no
later than the close of business on the day following the date of this
prospectus. The number of shares available for sale to the general public will
be reduced to the extent these persons purchase the reserved shares.

Canadian Offers

   Any offers in Canada will be made only under an exemption from the
requirements to file a prospectus in the relevant province of Canada where the
sale is made.

                                       80
<PAGE>

                                 LEGAL MATTERS

   The validity of the issuance of shares of common stock offered by us in this
offering will be passed upon for us by Dorsey & Whitney LLP, Minneapolis,
Minnesota. Certain legal matters related to the offering will be passed upon
for the underwriters by Simpson Thacher & Bartlett, New York, New York.

                                    EXPERTS

   The consolidated financial statements as of December 31, 1999 and 1998 and
for each of the three years in the period ended December 31, 1999 included in
this prospectus have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their reports appearing in this prospectus and elsewhere
in the registration statement, and are included in reliance upon the report of
such firm, given upon their authority, as experts in accounting and auditing.

                      WHERE YOU CAN FIND MORE INFORMATION

   We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 with respect to the common stock offered by this
prospectus. This prospectus, which constitutes a part of the registration
statement, does not include all of the information contained in the
registration statement. For further information about us and our common stock,
you should refer to the registration statement and the exhibits. Statements
contained in this prospectus regarding the contents of any contract or any
other document to which reference is made are not necessarily complete. In each
instance, please refer to the copy of such contract or other document filed as
an exhibit to the registration statement. Each statement about the contract or
other document contained in the prospectus is qualified in all respects to the
actual document filed with the registration statement.

   Upon completion of this offering, we will become subject to the information
and periodic reporting requirements of the Securities Exchange Act of 1934 and,
in accordance therewith, will file periodic reports, proxy statements and other
information with the Commission. Our fiscal year ends on December 31. We intend
to furnish our stockholders with annual reports containing audited financial
statements and other appropriate reports.

   You may read and copy the registration statement on Form S-1 and any other
document we file with the Commission at its public reference room at 450 Fifth
Street, NW, Washington, DC 20549, as well as at its regional offices located at
7 World Trade Center, Suite 1300, New York, NY 10048 and Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, IL 60661. Please call the Commission
at 1-800-SEC-0330 for further information about its public reference facilities
and copy charges. Our filings are also available to the public from the
Commission's web site at http://www.sec.gov.


                                       81
<PAGE>

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S>                                                                         <C>
Independent Auditors' Report..............................................  F-2
Consolidated Balance Sheets at December 31, 1998 and 1999.................  F-3
Consolidated Statements of Operations for the Years Ended December 31,
 1997, 1998 and 1999......................................................  F-4
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended
 December 31, 1997, 1998 and 1999.........................................  F-5
Consolidated Statements of Cash Flows for the Years Ended December 31,
 1997, 1998 and 1999......................................................  F-6
Notes to Consolidated Financial Statements................................  F-7
</TABLE>

                                      F-1
<PAGE>

                          INDEPENDENT AUDITORS' REPORT

eFunds Corporation

We have audited the accompanying consolidated balance sheets of eFunds
Corporation and subsidiaries as of December 31, 1999 and 1998, and the related
consolidated statements of operations, comprehensive income (loss) and cash
flows for each of the three years in the period ended December 31, 1999. These
consolidated financial statements are the responsibility of the Company's
management. Our responsiblity is to express and opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of eFunds Corporation and
subsidiaries as of December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999 in conformity with accounting principles generally accepted
in the United States of America.

DELOITTE & TOUCHE LLP
Minneapolis, Minnesota
April 3, 2000

                                      F-2
<PAGE>

                               EFUNDS CORPORATION

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                               December 31,
                                                             ------------------
                                                               1998      1999
                                                             --------  --------
                                                                (dollars in
                                                                thousands)
<S>                                                          <C>       <C>
Current Assets
  Cash and cash equivalents................................  $ 16,055  $ 35,849
  Restricted custodial cash................................       545     3,429
  Accounts receivable--net.................................    49,620    52,834
  Deferred income taxes....................................    20,755    10,552
  Income taxes receivable..................................     2,799     7,109
  Prepaid expenses and other current assets................     3,428     3,061
                                                             --------  --------
   Total current assets....................................    93,202   112,834
Long-term Investments......................................     1,370     3,347
Deferred Income Taxes......................................       --      1,549
Restricted Cash............................................     3,921    28,939
Property and Equipment
  Land and land improvements...............................     5,001     4,993
  Buildings and building improvements......................    32,351    33,683
  Computer and other equipment.............................    76,522    80,211
                                                             --------  --------
   Total...................................................   113,874   118,887
  Less accumulated depreciation............................   (55,414)  (58,414)
                                                             --------  --------
   Property and equipment--net.............................    58,460    60,473
Intangibles
  Cost in excess of net assets acquired--net...............     9,258    46,905
  Internal use software--net...............................     5,550    20,746
  Other intangible assets--net.............................    14,574    15,136
                                                             --------  --------
   Total intangibles.......................................    29,382    82,787
                                                             --------  --------
   Total non-current assets................................    93,133   177,095
                                                             --------  --------
     Total assets..........................................  $186,335  $289,929
                                                             ========  ========
Current Liabilities
  Accounts payable.........................................  $ 10,728  $ 19,791
  Accrued liabilities:
   Accrued compensation and employee benefits..............    10,480    18,172
   Accrued contract losses.................................    14,697    20,599
   Reserve for legal proceedings...........................    35,754     1,554
   Other...................................................    18,184    22,116
  Borrowings on line of credit.............................       --      3,100
  Long-term debt due within one year.......................     1,490     1,895
                                                             --------  --------
   Total current liabilities...............................    91,333    87,227
Long-term Debt.............................................     4,029     3,597
Deferred Income Taxes .....................................     1,170       --
Commitments and Contingencies (Notes 11 and 14)
Stockholder's Equity
  Common shares $.01 par value (authorized: 250,000,000
   shares;
   issued and outstanding: 2,500 shares)...................         0         0
  Additional paid-in capital...............................    14,964   292,598
  Retained earnings (accumulated deficit)..................    74,967   (92,946)
  Accumulated other comprehensive loss.....................      (128)     (547)
                                                             --------  --------
   Stockholder's equity....................................    89,803   199,105
                                                             --------  --------
     Total liabilities and stockholder's equity............  $186,335  $289,929
                                                             ========  ========
</TABLE>

                 See Notes to Consolidated Financial Statements

                                      F-3
<PAGE>

                               EFUNDS CORPORATION

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                    Years ended December 31,
                                                   ----------------------------
                                                     1997      1998      1999
                                                   --------  --------  --------
                                                     (dollars in thousands,
                                                             except
                                                       per share amounts)
<S>                                                <C>       <C>       <C>
Net Sales........................................  $229,065  $267,520  $302,340
                                                   --------  --------  --------
  Cost of sales, excluding loss contract and
   asset impairment charges......................   143,966   171,359   185,590
  Loss contract and asset impairment charges.....       --     40,949     8,700
                                                   --------  --------  --------
    Total cost of sales..........................   143,966   212,308   194,290
                                                   --------  --------  --------
Gross Margin.....................................    85,099    55,212   108,050
                                                   --------  --------  --------
  Selling, general and administrative............    70,542    81,198   105,382
  Research and development.......................     1,398       625     3,756
  Asset impairment charges.......................    11,831       --        --
                                                   --------  --------  --------
    Total operating expenses.....................    83,771    81,823   109,138
                                                   --------  --------  --------
  Income (loss) from operations..................     1,328   (26,611)   (1,088)
Other Income (Expense)
  Legal proceedings..............................   (40,050)    4,157     2,094
  Other income (expense).........................      (918)   (3,495)   (4,609)
  Interest income (expense)......................      (825)    2,789       963
                                                   --------  --------  --------
Loss Before Income Taxes.........................   (40,465)  (23,160)   (2,640)
Benefit (Provision) for Income Taxes.............     6,397     8,569    (5,586)
                                                   --------  --------  --------
Net Loss.........................................  $(34,068) $(14,591) $ (8,226)
                                                   ========  ========  ========
Net Loss per Share--Basic and Diluted............  $(13,627) $ (5,836) $ (3,290)
                                                   ========  ========  ========
Weighted Average Common Shares Outstanding--Basic
 and Diluted.....................................     2,500     2,500     2,500
                                                   ========  ========  ========
</TABLE>


                 See Notes to Consolidated Financial Statements


                                      F-4
<PAGE>

                               EFUNDS CORPORATION

             CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

<TABLE>
<CAPTION>
                                                   Years Ended December 31,
                                                   ---------------------------
                                                     1997      1998     1999
                                                   --------  --------  -------
                                                    (dollars in thousands)
<S>                                                <C>       <C>       <C>
Net Loss.......................................... $(34,068) $(14,591) $(8,226)
Other Comprehensive (Loss) Income, Net of Tax--
  Foreign currency translation adjustments........     (972)       44     (419)
                                                   --------  --------  -------
Comprehensive Loss................................ $(35,040) $(14,547) $(8,645)
                                                   ========  ========  =======
Related Tax Benefit (Expense) of Other
 Comprehensive Income (Loss)--
  Foreign currency translation adjustments........ $    182  $    (26) $  (795)
                                                   ========  ========  =======
</TABLE>



                 See Notes to Consolidated Financial Statements

                                      F-5
<PAGE>

                               EFUNDS CORPORATION

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                    Years ended December 31,
                                                   ----------------------------
                                                     1997      1998      1999
                                                   --------  --------  --------
                                                     (dollars in thousands)
<S>                                                <C>       <C>       <C>
Cash Flows from Operating Activities
  Net Loss.......................................  $(34,068) $(14,591) $ (8,226)
  Adjustments to reconcile net loss to net cash
   provided by (used in) operating activities:
    Depreciation.................................     9,914    12,015    12,519
    Amortization of intangibles..................    12,834     9,504     9,982
    Asset impairment charges.....................    11,831    26,252       492
    Equity in pre-acquisition earnings of the
     professional services segment...............       665     1,759     1,114
    Loss on sales of capital assets..............       449     2,635     4,973
    Deferred income taxes........................   (13,521)   (6,529)    8,927
    Changes in assets and liabilities, net of
     effects from acquisitions:
      Restricted cash............................       --     (4,466)  (27,902)
      Accounts receivable........................    (5,256)   (6,629)      393
      Accounts payable...........................     1,996    (6,571)    7,963
      Income taxes receivable/payable............      (119)  (10,218)   (4,310)
      Reserve for legal proceedings..............    41,982    (6,228)  (34,200)
      Accrued contract losses....................       --     14,697     5,902
      Other assets and liabilities...............      (769)   (3,809)   10,223
                                                   --------  --------  --------
      Net cash provided by (used in) operating
       activities................................    25,938     7,821   (12,150)
                                                   --------  --------  --------
Cash Flows from Investing Activities
  Purchases of capital assets....................   (17,985)  (30,468)  (38,225)
  Payments for acquisitions, net of cash
   acquired......................................       --        --    (35,667)
  Proceeds from sales of capital assets..........       131        70     1,229
  Other..........................................      (665)   (1,139)     (546)
                                                   --------  --------  --------
      Net cash used in investing activities......   (18,519)  (31,537)  (73,209)
                                                   --------  --------  --------
Cash Flows from Financing Activities
  Net borrowings on lines of credit..............       --        --      3,054
  Proceeds from issuance of long-term debt.......       290        61        11
  Payments on long-term debt.....................    (2,293)   (2,125)   (6,665)
  (Distributions to) contributions by Deluxe.....   (8,799)    17,992   268,440
  Dividends paid to Deluxe.......................       --        --   (159,687)
                                                   --------  --------  --------
      Net cash (used in) provided by financing
       activities................................   (10,802)   15,928   105,153
                                                   --------  --------  --------
Net (Decrease) Increase in Cash and Cash
 Equivalents.....................................    (3,383)   (7,788)   19,794
Cash and Cash Equivalents at Beginning of Year ..    27,226    23,843    16,055
                                                   --------  --------  --------
Cash and Cash Equivalents at End of Year ........  $ 23,843  $ 16,055  $ 35,849
                                                   ========  ========  ========
Supplementary cash flow disclosure:
  Interest paid..................................  $    949  $    673  $  1,091
                                                   ========  ========  ========
</TABLE>

                 See Notes to Consolidated Financial Statements

                                      F-6
<PAGE>

                               EFUNDS CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1: Split-off and basis of presentation

   In January 2000, Deluxe Corporation (Deluxe) announced that its board of
directors approved a plan (the Plan) to combine its electronic payment
solutions, professional services and government services businesses into a
separate, independent publicly traded company to be called eFunds Corporation
(the Company). The Company, a Delaware corporation, changed its name from
Deluxe Electronic Payment Systems, Inc. to eFunds Corporation in September
1999. Electronic payment solutions provides comprehensive electronic payment
management solutions that combine transaction processing with decision support
and risk management tools to the financial services and retail industries.
Professional services provides information technology development, maintenance
and support and business process management to financial services companies and
to all of the Company's and Deluxe's businesses. Government services provides
electronic benefits transfer (EBT) services and online medical eligibility
verification services to state and local governments.

   Deluxe has announced that it plans to issue shares of the Company's common
stock to the public through an initial public offering (IPO). After this
offering, Deluxe will own at least 80.1% of the Company's outstanding shares.
Deluxe plans to distribute all of its shares of the Company's common stock to
its shareholders who tender shares of Deluxe's common stock in an exchange
offer (the Split-off). Deluxe has requested a private letter ruling from the
Internal Revenue Service that the Split-off would be a tax-free transaction to
Deluxe and its shareholders. The Split-off is contingent upon Deluxe receiving
a favorable tax ruling from the IRS.

   As part of the Split-off, the Company and Deluxe will enter into various
agreements that address the allocation of assets and liabilities between them
and that define their relationship after the separation. The agreements relate
to matters such as software development and business process management
services, indemnification, data sharing, real estate, tax-sharing and
transitional services.

   Under the Plan, 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 are under common control, the consolidated financial
statements of the Company include all of the assets, liabilities, revenues and
expenses of the businesses conducted through the electronic payment solutions,
professional services and government services segments.

   All transactions between the entities included in the consolidated financial
statements have been eliminated. The consolidated financial statements are
presented as if the Company had existed as a separate and independent business
for the periods presented and have been prepared using the historical bases in
the assets, liabilities, revenues and expenses that comprise the Company and
the Transferred Businesses.

   Included in the consolidated financial statements are allocated portions of
Deluxe's corporate assets, liabilities, equity and expenses relating to the
Transferred Businesses. Deluxe and the Company believe these allocations are
reasonable; however, they do not necessarily approximate the amounts or costs
that would have been or will be incurred by the Company on a stand-alone basis
(see Note 3).

   The consolidated financial statements may not necessarily reflect the
financial position and results of operations of the Company had it actually
existed as a separate, stand-alone company during all the periods presented. In
addition, these financial statements may not be indicative of the future
financial position or results of operations of the Company as a separate,
stand-alone entity.


                                      F-7
<PAGE>

Note 2: Significant accounting policies

   Consolidation--The consolidated financial statements include the accounts of
the Company and the Transferred Businesses. All significant intercompany
accounts, transactions and profits have been eliminated. For purposes of
consolidating the professional services business, which is primarily based in
India, the Company has used financial statements with a November 30 fiscal
period end. In 2000, due to the implementation of a new accounting system, the
Company expects to adjust that business' fiscal-year end to conform with the
Company's December 31 year-end.

   Cash and cash equivalents--The Company considers all cash on hand, money
market funds, outstanding transfers of cash for authorized settlement of
automated teller machines (ATMs) with financial institutions and other highly
liquid investments with original maturities of three months or less to be cash
and cash equivalents. The carrying amounts reported in the consolidated balance
sheets for cash and cash equivalents approximate fair value.

   Restricted cash--The Company has entered into agreements with a third party
to supply cash for ATMs maintained by the third party in various locations
throughout the United States. The agreements provide that the Company retains
control over and ownership of this cash. Subject to the approval of the
Company, the other party to the agreements determines the level of cash
required to be maintained within the ATMs up to an authorized level. The
Company currently has an aggregated outstanding authorized cash level of $35
million. The agreements are effective through August 31, 2004. The cash in the
ATMs is not available for general operating use and is reflected in the
Company's consolidated balance sheets as a non-current asset.

   In connection with the Company's electronic payment transactions, the
Company also has cash belonging to customers that temporarily resides in
custodial accounts maintained by the Company. The Company records these amounts
as current restricted custodial cash with a corresponding liability within
other accrued liabilities in the consolidated balance sheets.

   Accounts receivable--Accounts receivable are stated net of allowances for
uncollectible accounts of $2.0 million and $4.4 million at December 31, 1998
and 1999, respectively. As of December 31, 1998 and 1999, no one customer
accounted for 10% or more of total receivables. Bad debt expense related to
accounts deemed to be uncollectible was $1.5 million in 1997, $1.1 million in
1998 and $2.9 million in 1999.

   Long-term investments--Long-term investments consist principally of cash
surrender values of insurance contracts. The carrying values approximate their
fair values.

   Property and equipment--Property and equipment, including leasehold and
other improvements that extend an asset's useful life or productive
capabilities, are stated at historical cost. Buildings with 40-year lives and
computer and other equipment with lives of three to eight years are generally
depreciated using accelerated methods. Leasehold and building improvements are
depreciated on a straight-line basis over the estimated useful life of the
property or the life of the lease, whichever is shorter.

   Intangibles--Intangibles are presented in the consolidated balance sheets
net of accumulated amortization. Amortization expense is determined on the
straight-line basis over periods of 10 to 30 years for cost in excess of net
assets acquired (goodwill) and one to five years for internal use software and
other intangibles. Other intangibles consist primarily of licensed software and
software held for sale. Total intangibles at December 31 were as follows
(dollars in thousands):

<TABLE>
<CAPTION>
                                                               1998     1999
                                                              ------- --------
      <S>                                                     <C>     <C>
      Cost in excess of net assets acquired (see Note 4)..... $21,431 $ 61,577
      Internal use software..................................   5,699   28,123
      Other intangible assets................................  61,542   62,616
                                                              ------- --------
        Total................................................  88,672  152,316
      Less accumulated amortization..........................  59,290   69,529
                                                              ------- --------
      Intangibles--net....................................... $29,382 $ 82,787
                                                              ======= ========
</TABLE>


                                      F-8
<PAGE>

   Impairment of long-lived assets--The Company evaluates the recoverability of
long-lived assets not held for sale by measuring the carrying amount of the
assets against the estimated undiscounted future cash flows associated with
them. Should the sum of the expected future net cash flows be less than the
carrying value of the long-lived asset, an impairment loss would be recognized.
The impairment loss would be calculated as the amount by which the carrying
value of the asset exceeds the fair value of the asset. In evaluating whether
there is any impairment of long-lived assets associated with long-term service
contracts, the amount of any contract loss accrual is excluded from the
undiscounted future cash flows associated with the long-lived assets when
determining whether those assets are impaired.

   The Company evaluates the recoverability of long-lived assets held for
disposal by comparing the asset's carrying amount with its fair value less
costs to sell. Should the fair value less costs to sell be less than the
carrying value of the long-lived asset, an impairment loss would be recognized.
The impairment loss would be calculated as the amount by which the carrying
value of the asset exceeds the fair value of the asset less costs to sell.

   Income taxes--In most cases, the Company's domestic businesses are included
in the Deluxe consolidated tax return. Tax payments are made to Deluxe and tax
benefits are reimbursed by Deluxe to the extent they are used. The consolidated
financial statements include income tax provisions and liabilities calculated
as if separate tax returns were prepared for the periods covered. Deferred
income taxes result from temporary differences between the financial reporting
basis of assets and liabilities and their respective tax reporting bases.
Future tax benefits are recognized to the extent that realization of such
benefits is more likely than not.

   Translation adjustment--The financial position and results of operations of
the Company's international subsidiaries are measured using local currencies as
the functional currencies. Assets and liabilities of these operations are
translated at the exchange rate in effect at the balance sheet date. Income
statement accounts are translated at the average exchange rate during the year.
Translation adjustments arising from the use of differing exchange rates from
period to period are included in other comprehensive income in the
stockholder's equity section of the consolidated balance sheets. Gains and
losses that result from foreign currency transactions are included in earnings.

   Revenue recognition--Revenues are recorded net of any applicable discounts.
Transaction processing and service revenues and decision support revenues are
generally recognized as the services are performed. Revenues from software
license fees for standard software products are recognized when delivery has
occurred, the license fee is fixed and determinable, collectibility is probable
and evidence of the arrangement exists. Software maintenance and support
revenues are recognized ratably over the term of the contract and/or as the
services are provided. Professional services revenues for software development,
custom applications and business process management are generally recognized as
the services are performed or proportionately based on the percentage of
completion.

   Long-term service contracts--Long-term service contracts are definitive
agreements to provide services over a period of time in excess of one year and
with respect to which the Company has no contractual right to adjust the prices
or terms at or on which its services are supplied during the term of the
contract. Revenues are recognized for all long-term service contracts when the
service is performed. Total revenues for some long-term service contracts may
vary based on the demand for services. Expenses are recognized when incurred,
with the exception of installation costs. Any installation costs are
capitalized and recognized ratably over the life of the contract, which
approximates the anticipated revenue recognition. Any equipment and software
purchased to support a long-term service contract is capitalized and
depreciated or amortized over the life of the related contract or the life of
the asset, whichever is shorter.

   In determining the profitability of a long-term service contract, only
direct and allocable indirect costs associated with the contract are included
in the calculation. The appropriateness of allocations of indirect costs
depends on the circumstances and involves the judgment of management, but such
costs may include the costs of indirect labor, contract supervision, tools and
equipment, supplies, quality control and inspection, insurance,

                                      F-9
<PAGE>

repairs and maintenance, depreciation and amortization and, in some
circumstances, support costs. The method of allocating any indirect costs
included in the analysis is also dependent upon the circumstances and the
judgment of management, but the allocation method must be systematic and
rational. General and administrative costs and selling costs are not included
in the analysis. Provisions for estimated losses on long-term service
contracts, if any, are made in the period in which the loss first becomes
probable and reasonably estimable. Projected losses are based on management's
best estimates of a contract's revenue and costs. Actual losses on individual
long-term service contracts are compared to the loss projections periodically,
with any changes in the estimated total contract loss recognized as they become
probable and reasonably estimable.

   Certain direct costs associated with the EBT contracts discussed in Note 5
are common to a number of contracts and are attributed to each contract based
on its use of the services associated with these common direct costs. Revenues,
case counts or other applicable statistics are used to attribute these costs to
individual contracts.

   In the event an asset impairment loss is recognized on long-lived assets
used to support a long-term service contract, the original estimation of the
contract's costs is revised to reduce the depreciation and amortization
associated with the impaired assets.

   Research and development expense--Research and development costs, which are
expensed as incurred, relate to investigating new or improved processes and
techniques and developing such research findings into a potential new product
or service.

   Employee stock-based compensation--The Company participates in Deluxe's
stock incentive program. In connection with the IPO and the Split-off, the
Company intends to adopt new stock incentive programs. As permitted by
Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation," the Company continues to account for its employee
stock-based compensation in accordance with Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees." No compensation cost has
been recognized for fixed stock options issued under the Deluxe stock incentive
plan. The Company discloses pro forma net loss and net loss per share as if the
fair value method of SFAS No. 123 had been used (see Note 9).

   Stockholder's equity--As of January 27, 2000, the Company increased the
number of authorized shares to 250 million. The authorized shares have been
presented as if the 250 million shares had been authorized for all years shown.

   Use of estimates--The Company has prepared the accompanying consolidated
financial statements in conformity with accounting principles generally
accepted in the United States of America. In this process, it is necessary for
management to make certain assumptions and related estimates affecting the
amounts reported in the consolidated financial statements and attached notes.
These estimates and assumptions are developed based upon all information
available using management's best efforts. However, actual results can differ
from assumed and estimated amounts.

   New accounting pronouncements--In April 1998, the Accounting Standards
Executive Committee of the American Institute of Certified Public Accountants
issued Statement of Position (SOP) 98-5, "Reporting the Costs of Start-up
Activities," which provides guidance on the appropriate accounting for start-up
activities beginning in 1999. Application of the SOP did not have a material
impact on the Company's reported operating results or financial position.

   In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which provides
guidance on accounting for derivatives and hedge transactions. This statement
is effective for the Company on January 1, 2001. The Company anticipates that
the effect of this pronouncement will not have a material impact on reported
operating results.


                                      F-10
<PAGE>

Note 3: Transactions with Deluxe

   Purchase and sale transactions between the Company and Deluxe are executed
at either current market pricing or agreed-upon transfer prices. Purchases from
Deluxe were $1.0 million, $0.2 million and $2.9 million in 1997, 1998 and 1999,
respectively. Sales to Deluxe were $2.4 million, $1.6 million and $8.8 million
in 1997, 1998 and 1999, respectively. Under Deluxe's centralized cash
management system, advances from Deluxe and excess cash sent to Deluxe are
reflected as contributions by and distributions to Deluxe and are included in
stockholder's equity in the consolidated balance sheets.

   Deluxe allocated to the Company for the costs of corporate services provided
$15.5 million, $25.3 million and $25.6 million in 1997, 1998 and 1999,
respectively. These allocations, which were based on a percentage of Company
revenue to total Deluxe revenue, included expenses for various support
functions such as human resources, information services and finance. The
amounts allocated to the Company are included in selling, general and
administrative expense in the consolidated statements of operations.

   Deluxe also charges the Company for interest expense or credits the Company
for interest income based on the cash the Company has borrowed from or provided
to Deluxe. The Company was charged or credited net interest (expense) income
from Deluxe of $(0.7) million, $3.0 million and $2.8 million in 1997, 1998 and
1999, respectively. These amounts are included in interest (expense) income in
the consolidated statements of operations.

Note 4: Business combinations

   On February 19, 1999, Deluxe acquired all of the outstanding shares of an
electronic check conversion company for $13 million. The company provides
electronic check conversion and electronic funds transfer solutions for
financial services companies and retailers. The ownership of this company was
transferred to the Company under the Plan discussed in Note 1. The acquisition
was accounted for under the purchase method of accounting. Accordingly, the
consolidated financial statements of the Company include the results of this
business subsequent to its acquisition date. This business is included in the
electronic payment solutions segment in Note 13. The purchase price was
allocated to the assets acquired and liabilities assumed based on their fair
values on the date of purchase. Total cost in excess of net assets acquired in
the amount of $15.7 million is reflected as goodwill and is being amortized
over 10 years.

   On April 13, 1999, Deluxe acquired the remaining 50% ownership interest in
HCL-Deluxe, N.V. (HCL) for $23.4 million. The joint venture, which Deluxe
entered into with HCL Corporation of India in 1996, commenced operations in
September 1997. The company provides information technology development and
support services and business process management to financial services
companies and to all of the Company's and Deluxe's businesses. The ownership of
this company was transferred to the Company under the Plan discussed in Note 1.
The acquisition was accounted for under the purchase method of accounting.
Accordingly, the consolidated financial statements of the Company include the
entire results of this business from the date the Company acquired 100%
ownership. Prior to this, the Company recorded its 50% ownership of the joint
venture's results under the equity method of accounting. As such, their results
of operations prior to the acquisition are included in other expense in the
consolidated statements of operations. This business comprises the professional
services segment in Note 13. The purchase price was allocated to the assets
acquired and liabilities assumed based on their fair values on the date of
purchase. Total cost in excess of net assets acquired in the amount of $24.9
million is reflected as goodwill and is being amortized over 15 years.

Note 5: Contract losses

   During 1998, the Company recorded charges of $14.7 million to provide for
expected future losses on existing long-term contracts of the government
services segment. These charges are reflected in cost of sales in the 1998
consolidated statement of operations. Due to a continuing strong economy,
record low unemployment and welfare reform, the actual transaction volumes and
expected future revenues of this business are well below

                                      F-11
<PAGE>

original expectations. Additionally, actual and expected future
telecommunications, installation, help desk and other costs are significantly
higher than originally anticipated. These factors resulted in expected future
losses on the existing EBT contracts of this business.

   During 1999, charges of $8.2 million were recorded to provide for additional
expected future losses on the contracts of the government services segment.
These charges are reflected in cost of sales in the 1999 consolidated statement
of operations. A majority of the charges resulted from the conclusion of
settlement negotiations with a prime contractor regarding the timing and costs
of transitioning switching services from the Company to a new processor. Also,
lower than projected actual transaction volumes (primarily related to states
fully rolled-out in 1999) contributed to the changes in the estimates
underlying the 1998 charges. These increases to the reserve for accrued
contract losses were partially offset by the application of $2.3 million of
contract losses against the reserve during 1999.

Note 6: Impairment losses

   During 1997, the Company determined that it would dispose of certain
international operations of its electronic payment solutions segment. Based on
fair market value estimates, the Company determined that the long-lived assets
of these operations were impaired and recorded a charge of $11.8 million to
write down the carrying value of these operations to their estimated fair value
less costs to sell. These impairment charges are reflected as operating
expenses in the 1997 consolidated statement of operations. During 1998, there
was a change in the management of the electronic payment solutions segment. As
a result, in January 1999, the Company determined that the international
operations of this segment maintained a continuing strategic importance and
were no longer considered held for sale.

   During 1998, the Company recorded impairment charges of $26.3 million to
write down the carrying value of long-lived assets of the government services
segment. The assets consisted of point-of-sale equipment, internal-use software
and capitalized installation costs utilized in the EBT activities of this
segment. The Company concluded that the operating losses incurred by this
business would continue. This is primarily due to the fact that the variable
costs associated with supporting benefit recipient activity are higher than
originally anticipated and actual transaction volumes are below original
expectations. In calculating the impairment charge, the Company determined that
the assets utilized by this business have no fair market value. The point-of-
sale equipment was purchased via capital leases. The lease buy-out prices for
this equipment plus the deinstallation costs exceeded the amount equipment
resellers were willing to pay for the equipment. The utility of the internal-
use software was limited to its use in supporting the EBT business, and the
installation costs could not be resold. Thus, the long-lived assets of this
business were reduced to a carrying value of zero. These impairment charges are
reflected as cost of sales in the 1998 consolidated statement of operations.

   During 1999, due to the continued operating losses of the government
services segment, additional impairment charges of $0.5 million were recorded.
These charges represent the write-down of long-lived assets purchased by this
segment during 1999. These assets consisted primarily of software and
installation costs associated with the continued roll-out of additional states.
All assets purchased were reduced to a carrying value of zero, as they were in
1998. These impairment charges are reflected in cost of sales in the 1999
consolidated statement of operations.

Note 7: Restructuring charges

   During 1997, the Company recorded restructuring charges of $1.5 million for
severance relating to management changes within the electronic payment
solutions segment. This reduction of four employees was completed in 1998.
These charges are reflected in selling, general and administrative (SG&A)
expense in the 1997 consolidated statement of operations.

   During 1998, the Company recorded restructuring charges of $3.2 million for
severance associated with the Company's initiative to reduce its SG&A expense.
The Company anticipated eliminating 76 positions in

                                      F-12
<PAGE>

various support functions within sales, marketing, finance, human resources and
information services through 2000. As of December 31, 1999, 33 of the positions
have been eliminated. Also during 1998, the Company reversed $1.0 million of a
1996 restructuring charge. The 1996 charge related to planned reductions in
various support functions at the international operations of the electronic
payment solutions segment. Due to higher than anticipated attrition, it was
necessary to reduce this reserve. This accrual reversal and the new
restructuring accruals are reflected in SG&A expense in the 1998 consolidated
statement of operations.

   During 1999, the Company reversed $2.4 million of restructuring accruals
relating to its 1998 initiative to reduce SG&A expense and the 1996 plan to
reduce the workforce at the international operations of the electronic payment
solutions segment. The reduction in the SG&A expense initiative accrual was due
to higher than anticipated attrition, resulting in severance payments to 37
fewer employees than originally anticipated. Also, due to the Company's
decision in 1999 to retain the international operations of its electronic
payment solutions segment (see Note 6), planned reductions within that business
were canceled. These accrual reversals are reflected in SG&A expense in the
1999 consolidated statement of operations.

   The Company's consolidated balance sheets reflect restructuring accruals for
employee severance costs of $4.7 million and $1.2 million as of December 31,
1998 and 1999, respectively.

   The following table summarizes the change in the Company's restructuring
accruals for 1997, 1998 and 1999 (dollars in thousands):

<TABLE>
<CAPTION>
                                   1997              1998               1999
                             ----------------  -----------------  -----------------
                             Number of         Number of          Number of
                             employees         employees          employees
                             affected  Amount  affected  Amount   affected  Amount
                             --------- ------  --------- -------  --------- -------
   <S>                       <C>       <C>     <C>       <C>      <C>       <C>
   Balance--beginning of
    year...................     190    $3,500     174    $ 4,574     186    $ 4,672
   Severance paid..........     (20)     (442)    (19)    (2,053)    (18)    (1,031)
   Adjustments to accrual..       4     1,516      31      2,151    (162)    (2,399)
                                ---    ------     ---    -------    ----    -------
   Balance--end of year....     174    $4,574     186    $ 4,672       6    $ 1,242
                                ===    ======     ===    =======    ====    =======
</TABLE>

Note 8: Benefit (provision) for income taxes

   (Loss) income before income taxes consists of (dollars in thousands):

<TABLE>
<CAPTION>
                                                      1997      1998     1999
                                                    --------  --------  -------
      <S>                                           <C>       <C>       <C>
      Domestic..................................... $(25,620) $(24,591) $(2,163)
      Foreign......................................  (14,845)    1,431     (477)
                                                    --------  --------  -------
        Total...................................... $(40,465) $(23,160) $(2,640)
                                                    ========  ========  =======
</TABLE>

   The components of the benefit (provision) for income taxes are as follows
(dollars in thousands):

<TABLE>
<CAPTION>
                                                      1997     1998     1999
                                                     -------  ------  --------
      <S>                                            <C>      <C>     <C>
      Current tax benefit (provision):
        Federal..................................... $(6,866) $1,324  $  5,527
        State.......................................  (1,345)  1,169      (271)
                                                     -------  ------  --------
          Total.....................................  (8,211)  2,493     5,256
      Deferred tax benefit (provision):
        Federal.....................................  14,574   6,157   (10,811)
        State.......................................      34     (81)      (31)
                                                     -------  ------  --------
          Total..................................... $ 6,397  $8,569  $ (5,586)
                                                     =======  ======  ========
</TABLE>


                                      F-13
<PAGE>

   The Company's effective tax rate on pretax loss differs from the U.S.
Federal statutory tax rate of 35% as follows (dollars in thousands):

<TABLE>
<CAPTION>
                                                      1997     1998    1999
                                                     -------  ------  -------
   <S>                                               <C>      <C>     <C>
   Income tax at Federal statutory rate............. $14,163  $8,106  $   924
   State income taxes net of Federal income tax
    benefit.........................................    (852)    707     (196)
   Amortization and write-down of non-deductible
    intangibles.....................................  (3,132)   (231)  (1,074)
   Change in valuation allowance....................  (1,810)    636   (4,591)
   Other............................................  (1,972)   (649)    (649)
                                                     -------  ------  -------
   Benefit (provision) for income taxes............. $ 6,397  $8,569  $(5,586)
                                                     =======  ======  =======
</TABLE>

   Tax effected temporary differences which give rise to a significant portion
of deferred tax assets and liabilities at December 31, 1998 and 1999, are as
follows (dollars in thousands):

<TABLE>
<CAPTION>
                                       1998                      1999
                             ------------------------- -------------------------
                             Deferred tax Deferred tax Deferred tax Deferred tax
                                assets    liabilities     assets    liabilities
                             ------------ ------------ ------------ ------------
   <S>                       <C>          <C>          <C>          <C>
   Net operating loss carry
    forwards...............    $ 8,123       $  --       $ 13,249       $--
   Reserve for legal
    proceedings............     12,669          --            646        --
   Accrued contract
    losses.................      5,664          --          8,085        --
   Restructuring accruals..      1,793          --            476        --
   Property and equipment..        --         1,941           954        --
   Intangibles.............      1,343          --            718        --
   Employee benefit plans..        840          --            879        --
   Miscellaneous reserves
    and accruals...........        854          --          1,327        --
   All other...............        175          595           131        239
                               -------       ------      --------       ----
   Subtotal................     31,461        2,536        26,465        239
   Valuation allowance.....     (9,340)         --        (14,125)       --
                               -------       ------      --------       ----
   Total deferred taxes....    $22,121       $2,536      $ 12,340       $239
                               =======       ======      ========       ====
</TABLE>

   The valuation allowance at both dates relates to the uncertainty of
realizing foreign and state deferred tax assets.

   At December 31, 1999, net operating loss carryforwards relating to both
foreign and state jurisdictions totaled $92.1 million. Of these carryforwards,
$83.0 million expire in various years between 2001 and 2014 and $9.1 million
may be carried forward indefinitely.

Note 9: Employee benefit plans

   Stock purchase plan--The Company participates in Deluxe's employee stock
purchase plan that enables eligible employees to purchase Deluxe's common stock
at 75% of its fair market value on the first business day following each three-
month purchase period. Compensation expense recognized for the difference
between the employees' purchase price and the fair value of the stock was $0.6
million, $0.7 million and $0.7 million in 1997, 1998 and 1999, respectively.

   Stock incentive plan--The Company participates in Deluxe's stock incentive
plan. In connection with the IPO, the Company intends to adopt a new stock
incentive program. Under these plans, stock-based awards may be issued to
employees via a broad range of methods, including non-qualified or incentive
stock options, restricted stock and restricted stock units, stock appreciation
rights and other awards based on the value of the respective Company's common
stock. Options become exercisable in varying amounts beginning generally one
year after the date of grant.


                                      F-14
<PAGE>

   The Company also participates in Deluxe's DeluxeSHARES program. In 1998,
under this program, options were awarded to substantially all employees of the
Company (excluding foreign employees), allowing them, subject to certain
conditions, to purchase 100 shares of Deluxe common stock at an exercise price
of $33 per share. The options become exercisable when the value of Deluxe's
common stock reaches $49.50 per share or January 30, 2001, whichever occurs
first.

   All options under the Deluxe plans allow for the purchase of shares of
Deluxe's common stock at prices equal to their market value at the date of
grant. Options issued to Company employees under the Deluxe plans for the
purchase of 698,000 and 1.1 million were outstanding at December 31, 1998 and
1999, respectively.

   Deluxe issued 1,338 restricted shares and restricted stock units to Company
employees during 1997, 979 in 1998 and 6,264 in 1999. These awards generally
vest over periods ranging from one to five years.

   In connection with the Split-off (see Note 1), Deluxe and the Company have
decided that options outstanding as of the Split-off date will be converted to
options of the Company and options of Deluxe based on a formula. The formula
will be based on the market value of the Company's and Deluxe's common stock at
the Split-off date and is designed to maintain an equivalent intrinsic value
for the option holder. The Company does not expect a compensation charge to
result from this conversion process.

   Pro forma information regarding net loss and net loss per share has been
determined as if the Company had accounted for its employee stock-based
compensation under the fair value method. The fair value of options was
estimated at the date of grant using a Black-Scholes option pricing model. The
following weighted-average assumptions were used in valuing options issued in
1997, 1998 and 1999, respectively: risk-free interest rate of 6.0%, 5.9% and
6.7%; dividend yield of 4.0%, 4.5% and 4.6%; and expected volatility of 23.0%,
21.8% and 24.0%. The weighted-average expected option life was 7.2 years, 5.9
years and 9.0 years for 1997, 1998 and 1999, respectively. The weighted-average
fair value of options granted in 1997, 1998 and 1999 was $6.87, $6.13 and $8.28
per share, respectively. For purposes of pro forma disclosures, the estimated
fair value of the options was recognized as expense over the options' vesting
periods. The Company's pro forma net loss and net loss per share were as
follows (dollars in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                    1997      1998      1999
                                                  --------  --------  --------
      <S>                                         <C>       <C>       <C>
      Net loss:
        As reported.............................. $(34,068) $(14,591) $ (8,226)
        Pro forma................................ $(34,501) $(15,299) $(10,638)
      Basic and diluted net loss per share:
        As reported.............................. $(13,627) $ (5,836) $ (3,290)
        Pro forma................................ $(13,800) $ (6,119) $ (4,255)
</TABLE>

   These pro forma calculations only include the effects of grants made
subsequent to January 1, 1995. As such, these impacts are not necessarily
indicative of the pro forma effects on reported net income of future years.
Also, these calculations relate to options issued under the Deluxe plan, the
provisions of which may be different from the plan the Company intends to
adopt.

   Profit sharing, defined contribution and 401(k) plans--The Company
participates in Deluxe's profit sharing plans, defined contribution pension
plan and plans established under section 401(k) of the Internal Revenue Code to
provide retirement benefits for certain employees. The plans cover
substantially all full-time employees with approximately 15 months of service.
Contributions to the profit sharing and defined contribution plans are made
solely by the Company. Employees may contribute up to the lesser of $10,000 or
10% of their wages to the 401(k) plan. The Company will match the first 1% of
wages contributed and 50% of the next 4% of wages contributed. All
contributions are remitted to the plans' respective trustees, and benefits
provided are paid from accumulated funds of the trusts.

                                      F-15
<PAGE>

   Contributions to the defined contribution pension plan equaled 6% of
eligible compensation in 1997 and 4% of eligible compensation in 1998 and 1999.
Related expense allocated to the Company for these years was $2.1 million, $2.5
million and $3.2 million, respectively. Contributions to the profit sharing
plans vary based on the Company's performance. Related expense allocated to the
Company for these plans was $2.2 million, $4.6 million and $4.8 million in
1997, 1998 and 1999, respectively. Company contributions to the 401(k) plan
were $1.2 million, $1.5 million and $1.5 million in 1997, 1998 and 1999,
respectively.

   As part of the Split-off (see Note 1), the Company intends to establish its
own employee benefit plans. The specific provisions of such plans have not yet
been determined and may be different than the provisions of Deluxe's plans.

Note 10: Post-retirement benefits

   The Company provides certain health care benefits for a portion of its
retired employees. Employees included in the plan may become eligible for such
benefits if they attain the appropriate years of service and age while working
for the Company. The Company's benefit obligation under this plan is not
funded.

   The following table summarizes the change in benefit obligation during 1998
and 1999 (dollars in thousands):

<TABLE>
      <S>                                                                 <C>
      Benefit obligation, January 1, 1998................................ $ 577
        Service cost.....................................................    69
        Interest cost....................................................    41
        Actuarial (gains) and losses.....................................   125
        Benefits paid from general funds of the Company..................    (8)
                                                                          -----
      Benefit obligation, December 31, 1998..............................   804
        Service cost.....................................................    86
        Interest cost....................................................    54
        Actuarial (gains) and losses.....................................  (138)
        Benefits paid from general funds of the Company..................    (5)
                                                                          -----
      Benefit obligation, December 31, 1999.............................. $ 801
                                                                          =====
</TABLE>

   The status of the plan was as follows at December 31 (dollars in thousands):

<TABLE>
<CAPTION>
                                                                     1998 1999
                                                                     ---- ----
      <S>                                                            <C>  <C>
      Accumulated post-retirement benefit obligation................ $804 $801
      Less:
        Unrecognized net loss.......................................  296  141
        Unrecognized transition obligation..........................   71   66
                                                                     ---- ----
        Accrued post-retirement liability recognized in the
         consolidated balance sheets................................ $437 $594
                                                                     ==== ====
</TABLE>

   Net post-retirement benefit cost for the years ended December 31 consisted
of the following components (dollars in thousands):

<TABLE>
<CAPTION>
                                                                1997 1998 1999
                                                                ---- ---- ----
      <S>                                                       <C>  <C>  <C>
      Service cost--benefits earned during the year............ $62  $ 69 $ 86
      Interest cost on the accumulated post-retirement benefit
       obligation..............................................  22    41   54
      Amortization of transition obligation....................   5     6    5
      Recognized net amortization of gains and losses.......... --      6   17
                                                                ---  ---- ----
      Total post-retirement benefit cost....................... $89  $122 $162
                                                                ===  ==== ====
</TABLE>


                                      F-16
<PAGE>

   In measuring the accumulated post-retirement benefit obligation as of
December 31, 1999, the Company's health care inflation rate for 2000 and beyond
was assumed to be 5%. A one percentage point increase in the health care
inflation rate for each year would increase the accumulated post-retirement
benefit obligation by $139,000 and the service and interest cost components of
the net post-retirement benefit cost by $29,000. A one percentage point
decrease in the health care inflation rate for each year would decrease the
accumulated post-retirement benefit obligation by $119,000 and the service and
interest cost components of the net post-retirement benefit cost by $24,000.
The discount rate used in determining the accumulated post-retirement benefit
obligation as of December 31, 1998 and 1999 was 6.75% and 7.50%, respectively.

Note 11: Lease and debt commitments

   Long-term debt was as follows at December 31 (dollars in thousands):

<TABLE>
<CAPTION>
                                                                1998     1999
                                                               -------  -------
      <S>                                                      <C>      <C>
      Capital leases and other................................ $ 5,519  $ 5,492
      Less amount due within one year.........................  (1,490)  (1,895)
                                                               -------  -------
        Total................................................. $ 4,029  $ 3,597
                                                               =======  =======
</TABLE>

   Long-term debt consists principally of equipment capital leases on
equipment. The capital lease obligations bear interest rates of 6.7% to 15.7%
and are due through the year 2004. Carrying value materially approximates fair
value for these obligations. Maturities of long-term debt for the five years
ending December 31, 2004, are $1.9 million, $2.1 million, $1.3 million, $0.1
million and $0.1 million.

   The Company has entered into operating leases on certain facilities and
equipment. Future minimum lease payments for all noncancelable operating leases
for the five years ending December 31, 2004, are $17.0 million, $10.1 million,
$4.3 million, $2.2 million and $1.6 million and $2.9 million thereafter. Rental
expense was $14.7 million, $18.8 million and $20.7 million in 1997, 1998 and
1999, respectively.

   As of December 31, 1999, the Company had a $5.0 million line of credit,
which is denominated in Indian rupees and guaranteed by Deluxe, available to
its international operations at an interest rate of 15.81%. The average amount
drawn on this line during 1999 was $2.7 million. The line of credit was
increased on March 9, 2000 to $10.0 million and remains guaranteed by Deluxe
until October 1, 2000.

Note 12: Stockholder's equity

<TABLE>
<CAPTION>
                                                     Retained    Accumulated
                          Common stock  Additional   earnings       other         Total
                          -------------  paid-in   (accumulated comprehensive stockholder's
                          Shares Amount  capital     deficit)   income (loss)    equity
                          ------ ------ ---------- ------------ ------------- -------------
                                               (dollars in thousands)
<S>                       <C>    <C>    <C>        <C>          <C>           <C>
Balance, December 31,
 1996...................  2,500   $ 0    $  7,471   $ 123,626       $ 800       $ 131,897
Net loss ...............    --    --          --      (34,068)        --          (34,068)
Distributions to Deluxe,
 net....................    --    --       (9,167)        --          --           (9,167)
Translation adjustment..    --    --          --          --         (972)           (972)
                          -----   ---    --------   ---------       -----       ---------
Balance, December 31,
 1997...................  2,500   $ 0      (1,696)     89,558        (172)         87,690
Net loss ...............    --    --          --      (14,591)        --          (14,591)
Contributions by Deluxe,
 net....................    --    --       16,660         --          --           16,660
Translation adjustment..    --    --          --          --           44              44
                          -----   ---    --------   ---------       -----       ---------
Balance, December 31,
 1998...................  2,500   $ 0      14,964      74,967        (128)         89,803
Net loss ...............    --    --          --       (8,226)        --           (8,226)
Contributions by Deluxe,
 net....................    --    --      277,634         --          --          277,634
Dividends paid to
 Deluxe.................    --    --          --     (159,687)        --         (159,687)
Translation adjustment..    --    --          --          --         (419)           (419)
                          -----   ---    --------   ---------       -----       ---------
Balance, December 31,
 1999...................  2,500   $ 0    $292,598   $ (92,946)      $(547)      $ 199,105
                          =====   ===    ========   =========       =====       =========
</TABLE>


                                      F-17
<PAGE>

Note 13: Business segment information

   The Company has organized its business units into three operating segments
based on the nature of the products and services offered by each: electronic
payment solutions, professional services and government services. Electronic
payment solutions provides comprehensive electronic payment management
solutions that combine transaction processing with decision support and risk
management tools to the financial services and retail industries. Professional
services provides information technology development, maintenance and support
and business process management to financial services companies and to all of
the Company's and Deluxe's businesses. Government services provides EBT
services and online medical eligibility verification services to state and
local governments. The Company's segments operate primarily in the United
States. The electronic payment solutions and professional services segments
also have international operations. No single customer of the Company accounted
for more than 10% of net sales in 1997, 1998 or 1999.

   The accounting policies of the segments are the same as those described in
Note 2. In evaluating segment performance, management focuses on income from
operations. The income from operations measurement utilized by management
excludes special charges (e.g., restructuring charges, asset impairment
charges, certain one-time charges that management believes are not reflective
of on-going operations, etc.).

   Prior to the acquisition of the remaining 50% interest in HCL-Deluxe, N.V.
in 1999 (see Note 4), the results of this business were recorded under the
equity method of accounting. As such, the Company recorded its 50% ownership of
the joint venture's results of operations prior to the acquisition in other
expense in the consolidated statements of operations. To be consistent with
management reporting, the entire results of the joint venture for the pre-
acquisition periods are reflected in the business segment information as if the
business had been a consolidated entity.

<TABLE>
<CAPTION>
                                   Electronic
                                    Payment   Professional Government  Total
1997                               Solutions    Services    Services  Segments
----                               ---------- ------------ ---------- --------
                                             (dollars in thousands)
<S>                                <C>        <C>          <C>        <C>
Net sales to unaffiliated
 external customers..............   $199,662    $ 1,589     $ 26,965  $228,216
Net sales to external
 affiliates......................      2,438      1,615          --      4,053
Total net sales to external
 customers.......................    202,100      3,204       26,965   232,269
Intersegment sales...............        --          76          --         76
Operating income (loss) excluding
 special charges.................     27,744     (1,590)     (12,269)   13,885
Asset impairment charges.........     11,831        --           --     11,831
Other special charges............      2,316        --           --      2,316
Operating income (loss) including
 special charges.................     13,597     (1,590)     (12,269)     (262)
Depreciation and amortization
 expense.........................     19,168         12        3,580    22,760
Segment assets...................    141,360      3,704       46,115   191,179
Capital purchases................     17,295        151          690    18,136
</TABLE>

                                      F-18
<PAGE>

<TABLE>
<CAPTION>
                                   Electronic
                                    Payment   Professional Government  Total
1998                               Solutions    Services    Services  Segments
----                               ---------- ------------ ---------- --------
                                             (dollars in thousands)
<S>                                <C>        <C>          <C>        <C>
Net sales to unaffiliated
 external customers..............   $221,964     $7,994     $ 43,970  $273,928
Net sales to external
 affiliates......................      1,586      4,100          --      5,686
Total net sales to external
 customers.......................    223,550     12,094       43,970   279,614
Intersegment sales...............        --       1,134          --      1,134
Operating income (loss) excluding
 special charges.................     23,459     (3,406)      (6,496)   13,557
Asset impairment charges.........        --         --        26,252    26,252
Other special charges............      2,375        --        14,928    17,303
Operating income (loss) including
 special charges.................     21,084     (3,406)     (47,676)  (29,998)
Depreciation and amortization
 expense.........................     17,294        260        4,225    21,779
Segment assets...................    145,572      5,410       37,286   188,268
Capital purchases................     30,148      1,934          320    32,402
</TABLE>

<TABLE>
<CAPTION>
                                   Electronic
                                    Payment   Professional Government  Total
1999                               Solutions    Services    Services  Segments
----                               ---------- ------------ ---------- --------
                                             (dollars in thousands)
<S>                                <C>        <C>          <C>        <C>
Net sales to unaffiliated
 external customers..............   $237,885    $ 10,745    $48,277   $296,907
Net sales to external
 affiliates......................      3,500       6,258        --       9,758
Total net sales to external
 customers.......................    241,385      17,003     48,277    306,665
Intersegment sales...............        --        2,372        --       2,372
Operating income (loss) excluding
 special charges.................     14,842      (7,809)     3,454     10,487
Special charges (recoveries).....       (225)      2,938     10,096     12,809
Operating income (loss) including
 special charges.................     15,067     (10,747)    (6,642)    (2,322)
Depreciation and amortization
 expense.........................     20,681       1,963        --      22,644
Segment assets...................    210,661      36,200     34,410    281,271
Capital purchases................     34,068       3,373        929     38,370
</TABLE>

                                      F-19
<PAGE>

   Segment information reconciles to consolidated amounts as follows (dollars
in thousands):

<TABLE>
<CAPTION>
                                                    Years Ended December 31,
                                                   ----------------------------
                                                     1997      1998      1999
                                                   --------  --------  --------
<S>                                                <C>       <C>       <C>
Total net sales to external customers
  Total segment net sales to external customers... $232,269  $279,614  $306,665
  Professional services pre-acquisition
   elimination....................................   (3,204)  (12,094)   (4,325)
                                                   --------  --------  --------
    Total consolidated net sales to external
     customers.................................... $229,065  $267,520  $302,340
                                                   ========  ========  ========
Operating income (loss) including special charges
  Total segment operating loss.................... $   (262) $(29,998) $ (2,322)
  Professional services pre-acquisition
   elimination....................................    1,590     3,387     1,234
                                                   --------  --------  --------
    Total consolidated operating income (loss).... $  1,328  $(26,611) $ (1,088)
                                                   ========  ========  ========
Depreciation and amortization expense
  Total segment depreciation and amortization
   expense........................................ $ 22,760  $ 21,779  $ 22,644
  Professional services pre-acquisition
   elimination....................................      (12)     (260)     (143)
                                                   --------  --------  --------
    Total consolidated depreciation and
     amortization expense......................... $ 22,748  $ 21,519  $ 22,501
                                                   ========  ========  ========
</TABLE>

<TABLE>
<CAPTION>
                                                         December 31,
                                                  ----------------------------
                                                    1997      1998      1999
                                                  --------  --------  --------
      <S>                                         <C>       <C>       <C>
      Total assets
        Total segment assets....................  $191,179  $188,268  $281,271
        Professional services pre-acquisition
         elimination............................    (3,369)   (4,732)      --
        Income tax receivable and long-term
         deferred tax asset not allocated to
         segments...............................       --      2,799     8,658
                                                  --------  --------  --------
          Total consolidated assets.............  $187,810  $186,335  $289,929
                                                  ========  ========  ========
<CAPTION>
                                                   Year Ended December 31,
                                                  ----------------------------
                                                    1997      1998      1999
                                                  --------  --------  --------
      <S>                                         <C>       <C>       <C>
      Capital purchases
        Total segment capital purchases.........  $ 18,136  $ 32,402  $ 38,370
        Professional services pre-acquisition
         elimination............................      (151)   (1,934)     (145)
                                                  --------  --------  --------
          Total consolidated capital purchases..  $ 17,985  $ 30,468  $ 38,225
                                                  ========  ========  ========
</TABLE>

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

<TABLE>
<CAPTION>
                                                                   Long-Lived
                                                                     Assets
                                       Total External Net Sales   December 31,
                                      -------------------------- ---------------
                                        1997     1998     1999    1998    1999
                                      -------- -------- -------- ------- -------
   <S>                                <C>      <C>      <C>      <C>     <C>
   United States..................... $214,741 $245,682 $281,933 $55,763 $55,587
   United Kingdom....................   12,801   21,555   17,468   2,647   1,948
   India.............................      --       --     2,939     --    2,904
   Other foreign countries...........    1,523      283      --       50      34
                                      -------- -------- -------- ------- -------
     Total consolidated.............. $229,065 $267,520 $302,340 $58,460 $60,473
                                      ======== ======== ======== ======= =======
</TABLE>

                                      F-20
<PAGE>

Note 14: Legal proceedings

   During 1997, a judgment was entered against the Company in the U.S. District
Court for the Western District of Pennsylvania. The case was brought against
the Company by Mellon Bank (Mellon) in connection with a potential bid to
provide electronic benefit transfer services for the Southern Alliance of
States. In September 1997, the Company recorded a charge of $40 million to
reserve for this judgment and other related costs. This charge is reflected in
legal proceedings in the 1997 consolidated statement of operations.

   In 1998, Mellon's motion for prejudgment interest was denied by the district
court. The Company reversed $4.2 million of the $40 million liability. This
reversal is reflected in legal proceedings in the 1998 consolidated statement
of operations. At December 31, 1998, the remaining liability of $34.4 million
was included in the reserve for legal proceedings in the consolidated balance
sheet.

   In January 1999, the United States Court of Appeals for the Third Circuit
affirmed the judgment of the district court and the Company paid $32.2 million
to Mellon in February 1999. The portion of the reserve remaining after the
payment of this judgment ($2.1 million) was reversed and is reflected in legal
proceedings in the 1999 consolidated statement of operations. The United States
Supreme Court denied the Company's petition for a further review of this
judgment in June 1999.

Note 15: Subsequent events

   In March 2000, the Company paid $20 million for a 24% interest in a limited
liability company that provides ATM management and outsourcing services to
retailers and financial institutions. This investment will be accounted for
under the equity method of accounting. Accordingly, the Company's consolidated
statements of operations will reflect the results of this business in other
income (expense) within the Company's electronic payment solutions segment. The
Company has also entered into vault cash agreements with the limited liability
company to supply cash for ATMs in various locations throughout the United
States (see Note 2).

   Deluxe has agreed to provide the Company with a revolving credit facility of
up to $75 million until the earlier of the effective date of the Split-off or
August 28, 2000. Borrowings under the facility will be due at the Split-off or
maturity and will accrue interest at the London Interbank Offered Rate, or
LIBOR, plus a variable additional margin based on Deluxe's credit rating. The
credit facility includes financial and restrictive covenants.

   Beginning in 2000 the Company's software services to Deluxe have been
formalized into a five year software development outsourcing agreement. During
the term of the agreement, the Company anticipates Deluxe will spend
approximately $43 million per year for software development, maintenance and
support services for information technology applications. Amounts will be based
on the actual number of hours of information technology services that the
Company provides to Deluxe. If Deluxe fails to reach the $43 million spending
target per year, it will be obligated to make liquidated damages payments for a
portion of the Company's fees based on its estimates of lost margins. The
Company also will provide business process management services to Deluxe.
Deluxe's annual minimum spending target for business process management
services will range from $8.1 million in 2000 to $4.2 million in 2004. The
agreement will also provide for liquidated damages for non-performance by the
Company and bonuses for superior performances. The provision of services by the
Company under the agreement is non-exclusive, and Deluxe may contract with any
third party for the provision of professional services.

   After its current contractual commitments expire in 2006, the Company
intends to exit the government services business. Deluxe has agreed to
indemnify the Company for any losses on identified government services loss
contracts. The Company is required to calculate any charges for loss contracts
in a manner consistent with Deluxe's current loss accrual practices. Deluxe
will also indemnify the Company against any liabilities, losses or expenses
arising from litigation and claims asserted against the Company in connection
with the operation of the government services business prior to the completion
of this offering.

                                      F-21
<PAGE>

   On March 31, 2000, the Company purchased real property and a data center
located in Phoenix, Arizona and personal property from a subsidiary of Deluxe.
The Company previously rented portions of this facility.

   On April 4, 2000, the Company authorized 100 million shares of preferred
stock with a par value of $.01 per share. No shares are issued or outstanding.

                               EFUNDS CORPORATION

                SUMMARIZED QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
                                               1998 Quarter Ended
                                    -------------------------------------------
                                    March 31 June 30 September 30   December 31
                                    -------- ------- ------------   -----------
<S>                                 <C>      <C>     <C>            <C>
Net sales.......................... $63,316  $66,455   $ 67,726       $70,023
Cost of sales......................  41,269   43,120     84,229        43,690
Net income (loss)..................     381    1,503    (22,067)(1)     5,592
Per share of common stock
  Net income (loss)--basic and
   diluted......................... $   152  $   601   $ (8,826)      $ 2,237
                                    =======  =======   ========       =======
</TABLE>

<TABLE>
<CAPTION>
                                              1999 Quarter Ended
                                   ------------------------------------------
                                   March 31 June 30  September 30 December 31
                                   -------- -------  ------------ -----------
<S>                                <C>      <C>      <C>          <C>
Net sales......................... $67,856  $72,567    $79,895      $82,022
Cost of sales.....................  43,120   45,120     48,806       57,244
Net income (loss).................   3,814   (2,479)    (9,234)        (327)(2)
Per share of common stock
  Net income (loss)--basic and
   diluted........................ $ 1,526  $  (992)   $(3,694)     $  (130)
                                   =======  =======    =======      =======
</TABLE>
--------
  (1)  1998 third quarter results include charges of $14.7 million for losses
       on existing contracts of the government services segment, asset
       impairment charges of $26.3 million on the long-lived assets of the
       Government services segment and restructuring charges of $2.2 million.
  (2)  1999 fourth quarter results include charges of $8.2 million to reserve
       for additional expected future losses on existing contracts of the
       government services segment.


                                      F-22
<PAGE>

                                     [LOGO]


                                        Shares
[LOGO]
                                  Common Stock



                               -----------------

                                   PROSPECTUS
                                        , 2000

                               -----------------


                                Lehman Brothers

                            Bear, Stearns & Co. Inc.

                                  FAC/Equities

                          John G. Kinnard and Company,
                                  Incorporated



<PAGE>

                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

   The following is an itemized statement of the estimated amounts of all
expenses payable by the Registrant in connection with the registration of the
common stock offered hereby, other than underwriting discounts and commissions:

<TABLE>
      <S>                                                                  <C>
      SEC Registration Fee................................................ $
      NASD Filing Fee.....................................................
      Nasdaq Filing Fee...................................................
      Blue Sky fees and expenses..........................................
      Accountants' fees and expenses......................................
      Legal fees and expenses.............................................
      Printing and engraving expenses.....................................
      Transfer agent and registrar fees...................................
      Miscellaneous expenses..............................................
                                                                           ----
        Total............................................................. $
                                                                           ====
</TABLE>

Item 14. Indemnification of Officers and Directors

   Section 145 of the Delaware General Corporation Law (DGCL) authorizes a
corporation's board of directors to grant indemnity to directors and officers
in terms sufficiently broad to permit indemnification under certain
circumstances for liabilities (including reimbursement for expenses incurred)
arising under the Securities Act.

   As permitted by the DGCL, the Registrant's certificate of incorporation
provides that the Registrant shall indemnify its directors, officers, employees
and agents to the fullest extent permitted by the DGCL. As permitted by the
DGCL, the Registrant's certificate of incorporation also includes a provision
that eliminates the personal liability of its directors for monetary damages
for breach of the director's fiduciary duty, except for liability (1) for any
breach of the director's duty of loyalty to the Registrant or its stockholders;
(2) for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law; (3) under Section 174 of the DGCL
regarding payments of dividends, stock purchases or redemptions which are
unlawful; or (4) for any transaction from which the director derived an
improper personal benefit.

   The Registrant also intends to maintain director and officer liability
insurance.

   The underwriting agreement filed as Exhibit 1.1 to this Registration
Statement contains provisions indemnifying officers and directors of the
Registrant against liabilities arising under the Securities Act, or otherwise.

Item 15. Recent Sales of Unregistered Securities

   None.


                                      II-1
<PAGE>

Item 16. Exhibits

<TABLE>
<CAPTION>
 Exhibit
 Number  Description of Exhibit
 ------- ----------------------
 <C>     <S>
  1.1*   Form of Underwriting Agreement
  2.1    Initial Public Offering and Distribution Agreement, dated as of March
         31, 2000, by and between Deluxe and eFunds
  3.1    Amended and Restated Certificate of Incorporation of eFunds
         Corporation
  3.2    Bylaws of eFunds Corporation
  4.1*   Form of eFunds common stock certificate
  4.2*   Rights Agreement, by and between eFunds and            as Rights agent
  5.1*   Opinion of Dorsey & Whitney LLP
 10.1    Assignment and Assumption Agreement, dated as of March 31, 2000, by
         and between eFunds and Deluxe
 10.2*   Third Party Indemnification Agreement, dated as of March 31, 2000, by
         and between eFunds and Deluxe
 10.3    Registration Rights Agreement, dated as of March 31, 2000, by and
         between Deluxe and eFunds
 10.4*   Tax Sharing Agreement, by and between eFunds and Deluxe
 10.5*   Employee Benefits Agreement, by and between eFunds and Deluxe
 10.6*   Real Estate Agreements, by and between eFunds and Deluxe including:
 10.7*   Purchase Agreement, by and between eFunds and Deluxe
 10.8*   Transition Services Agreement, by and between eFunds and Deluxe
 10.9*   Master Services Agreement, by and between eFunds and Deluxe
 10.10*  ONE Channel Management Agreement, by and between eFunds and Deluxe
 10.11*  Data Sharing Agreements, by and between eFunds and Deluxe
 10.12*  Data Contribution Agreement, by and between eFunds and
 10.13*  Processor Agreement, by and between eFunds and Deluxe
 10.14*  Data License Agreement, by and between eFunds and Deluxe
 10.15*  ACH Agreement, by and between eFunds and Deluxe
 10.16*  Loan Agreement, by and between eFunds and Deluxe
 10.17*  Government Services Indemnity Agreement, by and between eFunds and
         Deluxe
 10.18*  eFunds Corporation 2000 Stock Incentive Plan
 10.19*  eFunds Corporation Stock Incentive Plan for Deluxe Conversion Awards
 10.20*  Form of Award Agreement
 10.21*  Executive Employment Agreement, by and between eFunds and John. A.
         Blanchard III.
 10.22*  Letter Agreement, dated as of February 28, 2000, by and between eFunds
         and Debra A. Janssen
 10.23*  Letter Agreement, dated as of February 29, 2000, by and between eFunds
         and Dr. Nikhil Sinha
 10.24*  Letter Agreement, dated as of      , 2000, by and between eFunds and
         Paul Bristow
 10.25*  Letter Agreement, dated as of      , 2000, by and between eFunds and
         Steven F. Coleman
 10.26*  Form of Executive Retention Agreements for eFunds executives
 21.1*   Subsidiaries of eFunds
</TABLE>

                                      II-2
<PAGE>

<TABLE>
<CAPTION>
 Exhibit
 Number  Description of Exhibit
 ------- ----------------------
 <C>     <S>
  23.1   Consent of Deloitte & Touche LLP
  23.2*  Consent of Dorsey & Whitney LLP (included in Exhibit 5.1)
  24.1   Power of Attorney (included on signature page)
  27.1   Financial Data Schedule
</TABLE>
--------
  *  To be filed by Amendment.

Item 17. Undertakings

   The undersigned Registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreement, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.

   Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of our counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

   The undersigned Registrant hereby undertakes that (1) for purposes of
determining any liability under the Securities Act, the information omitted
from the form of prospectus filed as part of this Registration Statement in
reliance upon Rule 430A and contained in a form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of this Registration Statement as of the time it was
declared effective; and (2) for the purpose of determining any liability under
the Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

                                      II-3
<PAGE>

                                   SIGNATURES

   Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Shoreview, State of
Minnesota, on April 4, 2000.

                                          eFunds Corporation

                                          By: /s/ John A. Blanchard III
                                             -------------------------------
                                                  John A. Blanchard III
                                             Chairman of the Board and Chief
                                                    Executive Officer

                               POWER OF ATTORNEY

   KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Paul H. Bristow and Steven F. Coleman, and each
of them, his or her true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement
(or any other registration statement for the same offering that is effective
upon filing pursuant to Rule 462(b) under the Securities Act of 1933) and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully and to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents, or his or her substitute or substitutes, may do
or cause to be done by virtue hereof.

   Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the indicated capacities
on April 4, 2000.

<TABLE>
<CAPTION>
                  Signature                               Title
                  ---------                               -----
 <C>                                         <S>
 By: /s/ John A. Blanchard III               Chairman of the Board and Chief
    ----------------------------------       Executive Officer (Principal
     John A. Blanchard III                   Executive Officer)

 By: /s/ Paul H. Bristow                     Executive Vice President and
    ----------------------------------       Chief Financial Officer
         Paul H. Bristow                     (Principal Financial and
                                             Accounting Officer)
</TABLE>

                                      II-4
<PAGE>

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
 Exhibit
 Number  Description of Exhibit
 ------- ----------------------
 <C>     <S>
  1.1*   Form of Underwriting Agreement
  2.1    Initial Public Offering and Distribution Agreement, dated as of March
         31, 2000, by and between Deluxe and eFunds
  3.1    Amended and Restated Certificate of Incorporation of eFunds
         Corporation
  3.2    Bylaws of eFunds Corporation
  4.1*   Form of eFunds common stock certificate
  4.2*   Rights Agreement, by and between eFunds and            as Rights agent
  5.1*   Opinion of Dorsey & Whitney LLP
 10.1    Assignment and Assumption Agreement, dated as of March 31, 2000, by
         and between eFunds and Deluxe
 10.2*   Third Party Indemnification Agreement, dated as of March 31, 2000, by
         and between eFunds and Deluxe
 10.3    Registration Rights Agreement, dated as of March 31, 2000, by and
         between Deluxe and eFunds
 10.4*   Tax Sharing Agreement, by and between eFunds and Deluxe
 10.5*   Employee Benefits Agreement, by and between eFunds and Deluxe
 10.6*   Real Estate Agreements, by and between eFunds and Deluxe including:
 10.7*   Purchase Agreement, by and between eFunds and Deluxe
 10.8*   Transition Services Agreement, by and between eFunds and Deluxe
 10.9*   Master Services Agreement, by and between eFunds and Deluxe
 10.10*  ONE Channel Management Agreement, by and between eFunds and Deluxe
 10.11*  Data Sharing Agreements, by and between eFunds and Deluxe
 10.12*  Data Contribution Agreement, by and between eFunds and
 10.13*  Processor Agreement, by and between eFunds and Deluxe
 10.14*  Data License Agreement, by and between eFunds and Deluxe
 10.15*  ACH Agreement, by and between eFunds and Deluxe
 10.16*  Loan Agreement, by and between eFunds and Deluxe
 10.17*  Government Services Indemnity Agreement, by and between eFunds and
         Deluxe
 10.18*  eFunds Corporation 2000 Stock Incentive Plan
 10.19*  eFunds Corporation Stock Incentive Plan for Deluxe Conversion Awards
 10.20*  Form of Award Agreement
 10.21*  Executive Employment Agreement, by and between eFunds and John. A.
         Blanchard III.
 10.22*  Letter Agreement, dated as of February 28, 2000, by and between eFunds
         and Debra A. Janssen
 10.23*  Letter Agreement, dated as of February 29, 2000, by and between eFunds
         and Dr. Nikhil Sinha
 10.24*  Letter Agreement, dated as of      , 2000, by and between eFunds and
         Paul Bristow
 10.25*  Letter Agreement, dated as of      , 2000, by and between eFunds and
         Steven F. Coleman
 10.26*  Form of Executive Retention Agreements for eFunds executives
 21.1*   Subsidiaries of eFunds
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
 Exhibit
 Number  Description of Exhibit
 ------- ----------------------
 <C>     <S>
  23.1   Consent of Deloitte & Touche LLP
  23.2*  Consent of Dorsey & Whitney LLP (included in Exhibit 5.1)
  24.1   Power of Attorney (included on signature page)
  27.1   Financial Data Schedule
</TABLE>
--------
  *  To be filed by Amendment.
[{"type": "S-1", "sequence": "1", "description": "FORM S-1", "secsgml_size_bytes": 421121}]
{"company-data": {"conformed-name": "EFUNDS CORP", "cik": "0001109190", "assigned-sic": "", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-33992", "film-number": "593405"}, "business-address": {"street1": "400 WEST DELUXE PARKWAY", "street2": "P O BOX 12536", "city": "MILWAUKEE", "state": "WI", "zip": "53212", "phone": "4143415000"}, "mail-address": {"street1": "400 WEST DELUXE PARKWAY", "street2": "P O BOX 12536", "city": "MILWAUKEE", "state": "WI", "zip": "53212"}}
As filed with the Securities and Exchange Commission on April 4, 2000
                                                     Registration No. 333-

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM S-1
            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                               eFUNDS CORPORATION
             (Exact name of registrant as specified in its charter)

        Delaware                      7374                   39-1506286
    (State or other            (Primary Standard          (I.R.S. Employer
    jurisdiction of                Industrial           Identification No.)
    incorporation or          Classification Code)
     organization)

                            400 West Deluxe Parkway
                                 P.O. Box 12536
                           Milwaukee, Wisconsin 53212
                                 (414) 341-5000
  (Address, including zip code, and telephone number, including area code, of
                   registrant's principal executive offices)

                             John A. Blanchard III
                      Chairman and Chief Executive Officer
                               eFunds Corporation
                            400 West Deluxe Parkway
                                 P.O. Box 12536
                           Milwaukee, Wisconsin 53212
                                 (414) 341-5000
 (Name, address, including zip code, and telephone number, including area code,
                             of agent for service)

                                   Copies to:
      Jonathan B. Abram, Esq.                 Raymond W. Wagner, Esq.
        Dorsey & Whitney LLP                 Simpson Thacher & Bartlett
       Pillsbury Center South                   425 Lexington Avenue
       220 South Sixth Street                    New York, NY 10017
       Minneapolis, MN 55402                       (212) 455-2000
           (612) 340-2600                    Facsimile: (212) 455-2502
     Facsimile: (612) 340-0738

   Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.

   If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [_]

   If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [_]

   If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]

   If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]

   If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]

                                ----------------
                        CALCULATION OF REGISTRATION FEE

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Title of Each Class of                    Proposed Maximum Aggregate    Amount of
               Securities to be Registered                     Offering Price (1)     Registration Fee
--------------------------------------------------------------------------------
Common Stock, $.01 par value(2)..........................       $115,000,000.00          $30,360.00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(1)  Estimated solely for the purposes of computing the amount of the
     registration fee pursuant to Rule 457(o) under the Securities Act of 1933.
(2)  Includes certain associated preferred stock purchase rights that will be
     issued to each stockholder pursuant to a rights agreement.

                                ----------------
   The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information contained in this prospectus is not complete and may be       +
+changed. These securities may not be sold until the registration statement    +
+filed with the Securities and Exchange Commission is declared effective. This +
+prospectus is not an offer to sell these securities and it is not soliciting  +
+an offer to buy these securities in any state where the offer or sale is not  +
+permitted.                                                                    +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
                   Subject to Completion, dated April 4, 2000

PROSPECTUS
                                       Shares

[LOGO]

                                  Common Stock

--------------------------------------------------------------------------------

This is our initial public offering of shares of common stock. We are offering
           shares.We are presently a subsidiary of Deluxe Corporation. No
public market currently exists for our shares.We anticipate that the initial
public offering price will be between $         and $         per share.

We have applied to list the shares on the Nasdaq National Market under the
symbol "EFDS."

     Investing in our shares involves risks. Risk Factors begin on page 6.
Per Share Total
                                                                 --------- -----
Public Offering Price...........................................   $       $
Underwriting Discount...........................................   $       $
Proceeds to eFunds..............................................   $       $
We have granted the underwriters a 30-day option to purchase up to
additional shares of common stock on the same terms and conditions as set forth
above to cover over-allotments, if any.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.

Lehman Brothers, on behalf of the underwriters, expects to deliver the shares
on or about         , 2000.

--------------------------------------------------------------------------------

Lehman Brothers                                         Bear, Stearns & Co. Inc.

FAC/Equities                                        John G. Kinnard and Company,
                                       Incorporated

     , 2000
TABLE OF CONTENTS
Page
                                      ----
Prospectus Summary..................    1
Risk Factors........................    6
Forward-Looking Statements..........   16
Our Separation from Deluxe..........   16
Use of Proceeds.....................   17
Dividend Policy.....................   17
Capitalization......................   18
Dilution............................   19
Selected Financial Data.............   20
Management's Discussion and Analysis
 of Financial Condition and Results
 of Operations......................   22
Business............................   33
Page
                                     ----
Management..........................  53
Agreements Between eFunds and
 Deluxe.............................  64
Principal Stockholder...............  70
Description of Capital Stock........  70
Shares Eligible for Future Sale.....  75
Certain United States Federal Tax
 Consequences to Non-United States
 Holders............................  76
Underwriting........................  78
Legal Matters.......................  81
Experts.............................  81
Where You Can Find More
 Information........................  81
Index to Consolidated Financial
 Statements......................... F-1
----------------

   You should rely only on the information contained in this prospectus. We
have not, and the underwriters have not, authorized anyone to provide you with
different information. We are offering to sell, and seeking offers to buy,
shares of our common stock only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of our common stock.

   AccountChex Plus(SM), Connex(TM), ChexSystems logo, DebitBureau(SM), eFunds,
FraudFinder(SM), Integreat!(SM), New AccountChex(SM), SCAN(SM), QualiFile(SM)
and DataNavigator(TM) are our trademarks and service marks. Other trademarks and
trade names referred to in this prospectus are the property of their respective
owners.

   Until         , 2000, all dealers selling shares of our common stock,
whether or not participating in this offering, may be required to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.

                                       i
PROSPECTUS SUMMARY

   You should read the following summary with the more detailed information and
financial statements and related notes appearing elsewhere in this prospectus.

                               eFunds Corporation

Our Business

   We are a leading provider of end-to-end electronic debit payment solutions
to financial institutions, retailers, electronic funds transfer networks and e-
commerce providers. Our primary products and services include:

  .  decision support and risk management tools;

  .  electronic funds transfer processing, monitoring and settlement
     services; and

  .  professional services, including information technology consulting and
     business process management.

   We offer these products and services as comprehensive solutions or as
independent offerings. We are a single source of electronic debit payment
solutions whether payments are made using payment cards or paper checks, or
whether the transaction is accomplished at retail locations or automated teller
machines, or ATMs, through mail or telephone orders or over the Internet.

   Our decision support and risk management tools combat identity fraud and
account abuse, using our leading DebitBureau database of more than 2.7 billion
records. We are a leading third party processor of electronic funds transfers
in the United States and can process electronic payments cost-effectively to
all electronic funds transfer networks on a worldwide basis. As part of our
comprehensive solutions, we offer professional services, including
implementation and integration of our software, custom software development,
creation of e-commerce applications and business process management.

   Our clients include:

  .  16 of the 20 largest United States financial institutions, including
     Bank of America, Citibank and Bank One;

  .  17 of the 20 largest United States retailers, including Wal-Mart, Home
     Depot and Safeway;

  .  large electronic funds transfer networks, including STAR Systems and
     NYCE;

  .  e-commerce providers, including USA Bancshares.com and X.com; and

  .  international financial institutions, including Bank of Montreal,
     NatWest and The Royal Bank of Scotland.

Our Market Opportunity

   The global payment system is undergoing rapid change as new technologies and
new business requirements, primarily in e-commerce, cause newer electronic
payment methods to supplant traditional paper methods. Debit cards are among
the fastest growing payment method in the United States. The Nilson Report
estimates that the use of debit cards in the United States will increase from
3.7%, or $168 billion, of total consumer transactions in 1998 to 10.9%, or $743
billion, in 2005. The Nilson Report also estimates that the number of debit
card transactions in the United States will increase at a compound annual
growth rate of 21.6% from 1998 to 2005 and that the number of debit card
transactions will exceed credit card transactions by 2007.

                                       1
At the same time as consumers and businesses are seeking new payment
methods, merchants are seeking to reduce transaction costs by increasing the
use of electronic payments, which are typically one-third the cost of paper-
based transactions. Debit cards further lower transaction costs compared to
credit cards due to higher processing costs and fees for credit card payments.
Financial service companies also face pressures to adopt new payment
technologies, such as online banking and online brokerage accounts, to better
serve their customers and reduce costs. In addition, financial institutions and
retailers are increasing their use of external information technology service
providers to implement new technologies and e-commerce applications, control
costs and address shortages of information technology resources.

   Financial institutions and retailers also face significant payment costs
from debit fraud, including use of a false or stolen identity, and account
abuse, such as writing checks with insufficient funds or opening and closing
accounts to avoid payments. Debit fraud losses totaled $1.3 billion for banks
and $13 billion for merchants in the United States in 1998, according to the
Tower Group, and have increased for merchants at a rate of 5% per year since
1996.

Our Competitive Advantages

   To address the rapid changes and pressures in the global payment system, we
provide comprehensive electronic debit payment solutions that offer the
following advantages for our clients:

  .  End-to-End Solutions. We provide end-to-end solutions that enable our
     clients to manage the complete electronic debit payment cycle using our
     products and services. Our solutions help clients to reduce transaction
     costs, manage risks and enhance their customer relationships.

  .  Premier Database. Our DebitBureau database of more than 2.7 billion
     records is the most comprehensive source of debit data in the industry.
     DebitBureau aggregates data from over 86,000 financial service locations
     and 82,000 retail locations. The breadth and depth of our DebitBureau
     allow us to develop more powerful risk management and analytical tools.
     Our clients can draw on DebitBureau to make better risk management
     decisions, such as authorizing a new checking account or accepting a
     check, and to improve customer relationship decisions, such as
     identifying opportunities to cross-sell additional services to their
     customers.

  .  Global Processing Capabilities. Our electronic debit payment services
     give our clients the ability to process debit payment transactions
     through all electronic funds transfer networks on a worldwide basis. We
     are a leading third party processor of debit electronic funds transfers
     in the United States, processing approximately five billion transactions
     in 1999. Our processing services drive more than 98,000 point-of-sale
     devices and more than 9,500 ATMs. We monitor over 5,200 of these ATMs
     for system irregularities.

  .  Expertise in Electronic Commerce. We have focused on facilitating
     electronic debit payments since 1976. This long history and industry
     focus provides us with the experience and capabilities to facilitate
     electronic debit payments through any channel, including the Internet,
     point-of-sale devices or ATMs.

  .  Global Resources for Information Technology. Our information technology
     professionals customize and implement our electronic debit payment
     solutions, develop new software applications for our solutions as well
     as custom applications for our clients, and produce custom e-commerce
     and Internet-related software solutions. We team onsite consultants in
     the United States who analyze and manage the project with software
     developers in India who execute client-specific software solutions.

Our Strategy

   Our objective is to be the leading provider of electronic debit payment
solutions. We intend to implement the following strategies to achieve this
objective:

  .  Expand e-Commerce and Internet Delivery Capabilities. We intend to
     continue to adapt our core capabilities in transaction processing, fraud
     prevention and client account management for Internet

                                       2
applications and to develop products and services that will enable new
     e-commerce channels, such as business to business electronic payment
     transactions.

  .  Extend Technology Leadership. We intend to continue to enhance our
     position as a technology leader by introducing new products that provide
     greater risk management and value-added functionality.

  .  Expand Existing Client Relationships and Attract New Clients. We intend
     to expand our sales force to develop new clients, build brand awareness
     and cross-sell all the components of our comprehensive suite of products
     and services. We believe we can expand our relationships with existing
     customers as we continue to integrate our information and processing
     capabilities with our professional services into new comprehensive
     information-based electronic debit payment solutions. We are
     particularly focusing on Internet opportunities.

  .  Seek Acquisition and Strategic Alliance Opportunities. We intend to
     pursue acquisitions of complementary businesses, technologies or product
     lines. For example, we recently acquired an interest in a provider of
     ATM management and outsourcing services to retailers and financial
     institutions.

  .  Broaden International Sales. We intend to expand in international
     markets by further penetrating our existing client base and by focusing
     on emerging international markets lacking established electronic payment
     systems. We currently derive approximately 10% of our revenue from
     international sales in 22 countries.

Our Separation From Deluxe

   On January 31, 2000, Deluxe announced a plan to combine our businesses into
a separate, publicly-traded company. We believe that our complete separation
from Deluxe will enable us to realize the following benefits:

  .  direct access to the capital markets that will allow us to raise capital
     on a more cost effective basis to fund our growth initiatives;

  .  greater strategic focus on our core businesses and growth opportunities
     and elimination of any competition for available capital; and

  .  increased ability to attract, retain and motivate employees through
     incentive compensation tied to the market performance of our common
     stock.

   After this offering, Deluxe will own about     % of the outstanding shares
of our common stock, or about     % if the underwriters exercise their over-
allotment option in full. Deluxe has announced that it plans to distribute all
of its shares of our common stock to its shareholders through an offer to
exchange their Deluxe shares for our common stock owned by Deluxe. In this
prospectus we generally refer to that exchange offer as a split-off. Deluxe's
plans for a split-off are subject to receiving a private letter ruling from
the Internal Revenue Service that the split-off will be tax-free to Deluxe and
its shareholders for U.S. federal income tax purposes. Deluxe has the sole
discretion to determine whether to proceed with the distribution based on the
best interests of Deluxe's shareholders and to decide what will be the timing,
structure and terms of the split-off. Subject to these conditions, Deluxe
plans to complete the split-off within one year following the completion of
this offering. Deluxe has submitted a private letter ruling request to the
Internal Revenue Service.

Our Government Services Business

   Among our businesses is our government services business. This business
provides online electronic transfer of benefits under selected entitlement
programs on behalf of state and local governments, as well as Medicaid
eligibility verification services. The electronic benefits transfer business
has a history of losses that have resulted in special charges for loss
contracts and asset impairments. As a consequence, we have decided to exit
this business as soon as we complete our current contractual obligations in
2006. Deluxe has agreed to indemnify us for future losses on currently
unprofitable government services contracts up to a specified amount.

                                       3
Information About Us

   We were incorporated in Delaware in December 1984. Our principal executive
offices are located at 400 W. Deluxe Parkway, P.O. Box 12536, Milwaukee,
Wisconsin 53212 and our telephone number is 414-341-5000. Our Internet address
is www.efunds.com. The information contained on our website is not a part of
this prospectus.

                                  The Offering

Common stock offered................           shares
Common stock to be outstanding
 after the offering.................
                                               shares
Use of proceeds.....................  General corporate purposes, including
                                      acquisitions, strategic alliances and
                                      working capital.
Proposed Nasdaq National Market       EFDS
 symbol.............................

   Unless we specifically state otherwise, all information in this prospectus
assumes that the underwriters do not exercise their over-allotment option. If
the underwriters exercise their over-allotment option in full,      shares of
common stock will be outstanding after this offering.

   The number of shares of our common stock to be outstanding immediately after
this offering does not take into account          shares of our common stock
reserved for issuance under our stock plans. We expect to grant options to
purchase an aggregate of          shares of our common stock upon completion of
this offering with an exercise price equal to the initial public offering
price, unless a lower price is required by foreign law or government
regulation.

   At the time of the split-off, all outstanding options to purchase Deluxe
common stock will be converted into new options to purchase Deluxe common stock
and options to purchase our common stock. The actual number of options will be
determined at the time of the split-off based on the market price of our common
stock and Deluxe common stock. Based upon an assumed initial public offering
price of $     per share and assuming the market price of Deluxe's common stock
at that time is the same as the market price on       , 2000, the number of our
shares for which options would be granted would be        and the weighted
average exercise price would be $       per share.

                                       4
Summary Financial Data
Year Ended December 31,
                                                 ----------------------------
                                                   1997      1998      1999
                                                 --------  --------  --------
                                                 (in thousands, except per
                                                           share
                                                    and operating data)
Statement of Operations Data:
Net sales....................................... $229,065  $267,520  $302,340
                                                 --------  --------  --------
  Cost of sales, excluding loss contract and
   asset impairment charges.....................  143,966   171,359   185,590
  Loss contract and asset impairment charges....      --     40,949     8,700
                                                 --------  --------  --------
    Total cost of sales.........................  143,966   212,308   194,290
                                                 --------  --------  --------
Gross margin....................................   85,099    55,212   108,050
                                                 --------  --------  --------
  Selling, general and administrative...........   70,542    81,198   105,382
  Research and development......................    1,398       625     3,756
  Asset impairment charges......................   11,831       --        --
                                                 --------  --------  --------
    Total operating expenses....................   83,771    81,823   109,138
                                                 --------  --------  --------
Income (loss) from operations...................    1,328   (26,611)   (1,088)
Other income (expense)
  Legal proceedings.............................  (40,050)    4,157     2,094
  Other income (expense)........................     (918)   (3,495)   (4,609)
  Interest income (expense).....................     (825)    2,789       963
                                                 --------  --------  --------
Loss before income taxes........................  (40,465)  (23,160)   (2,640)
                                                 --------  --------  --------
Benefit (provision) for income taxes............    6,397     8,569    (5,586)
                                                 --------  --------  --------
Net loss........................................ $(34,068) $(14,591) $ (8,226)
                                                 ========  ========  ========
Net loss per share--basic and diluted........... $(13,627) $ (5,836) $ (3,290)
Shares used in computing basic and diluted net
 loss per share.................................    2,500     2,500     2,500
Pro forma basic and diluted net loss per
 share(1).......................................
Shares used in computing pro forma basic and
 diluted net loss per share(1)..................
Operating Data:
Account verifications inquiries (millions)......     28.6      30.3      32.1
Transactions processed (millions)...............    3,313     3,944     5,019
ATMs driven at period end.......................    5,766     5,623     8,596
December 31, 1999
                                                         -----------------------
                                                          Actual  As Adjusted(2)
                                                         -------- --------------
                                                             (in thousands)
Balance Sheet Data:
Cash and cash equivalents (3)........................... $ 35,849
Working capital.........................................   25,607
Total assets............................................  289,929
Long-term debt, excluding current portion...............    3,597
Total stockholder's equity..............................  199,105
--------
(1)  Reflects a     for     stock split in connection with this offering.
(2)  As adjusted to reflect the sale of      shares of common stock in this
     offering, assuming a public offering price of $         per share, and the
     receipt of the net proceeds after deducting the underwriting discount and
     estimated offering expenses.
(3)  Excludes restricted cash which represents cash that we have supplied for a
     client's ATMs and cash that we temporarily hold in custodial accounts on
     behalf of clients.

                                       5
RISK FACTORS

   You should carefully consider the risks described below and other
information in this prospectus before making a decision to buy our common
stock.

Risks Relating to Our Business and Industry

   We have had net losses over the past several years, and we may not achieve
profitability.

   We had net losses of $8.2 million in 1999 and $14.6 million in 1998, and we
may not achieve or maintain profitability.

   Our governmental services business contributed operating losses of
approximately $6.6 million in 1999 and $47.7 million in 1998, including special
charges for loss contracts and asset impairments. We anticipate an additional
loss contract charge in early 2000 due to the execution of a definitive long-
term agreement with a prime contractor of electronic benefit transfer services
for whom we have been providing services. We intend to exit the government
services business after we complete our obligations under our long-term
contracts in 2006. Deluxe has agreed to indemnify us for any losses on
identified loss contracts in excess of the loss contract reserves up to $  .
The loss contract reserves are based on estimates of future performance of
identified contracts which may not be realized. As a result, we may incur
losses beyond our current reserves and Deluxe's indemnification. In addition,
we may be unable to manage effectively our exit from the government services
business if we are unable to retain key employees and maintain case load
volumes, which could result in further losses. Furthermore, our professional
services business is new and developing and has contributed operating losses of
$10.7 million in 1999 and $3.4 million in 1998. As a consequence, the prospects
for our professional services business must be considered in light of the risks
and uncertainties encountered by businesses in the early stage of development
in new and rapidly evolving markets.

   Our ability to achieve profitability will depend on growth in electronic
debit payments, our ability to attract new clients, the market acceptance of
our new products and services and our ability to control further losses on
government services contracts.

   Our inability to successfully integrate our existing businesses could limit
our growth.

   In April 1999, we began the process of combining various separate businesses
into an integrated electronic debit payment business. Our range of product and
service offerings has changed since that time and our business model is still
new and developing. We may not be able to realize the anticipated strategic and
other benefits of this combination in a timely manner. Our management will
continue to be required to devote substantial attention to the process of
integrating our operations, technologies and personnel and consolidating our
infrastructure. The diversion of management's attention and any difficulties
encountered during the transition could have an adverse impact on our on-going
business activities and limit our growth.

   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 electronic debit payment solutions 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.

   Legislation relating to consumer privacy protection could harm our ability
to collect and use data, increase our operating costs or otherwise harm our
business.

   The success of our business depends in part on our ability to collect
information for DebitBureau and provide risk management services to our
clients. Exisitng and new laws and regulations relating to consumer privacy
protection, however, could harm our ability to collect and use data, increase
our operating costs or

                                       6
otherwise harm our business. 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.

   The new federal financial modernization law, known as the Gramm-Leach-Bliley
Act, imposes significant new consumer information privacy requirements on a
wide range of companies, including financial institutions from whom we obtain
information. 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, which we believe apply to our
business, thereby allowing banks to continue to provide nonpublic personal
information to us. The Act, however, also requires federal agencies, such as
the Comptroller of the Currency and the Federal Trade Commission, to issue
proposed regulations to implement these requirements. Certain provisions of the
Federal Trade Commission's proposed regulations, if enacted, would expand the
scope of the Act in ways which could adversely affect our business.

   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 and could be introduced in the future, in
Congress and the states. We are unable to predict whether such legislation or
regulations will be adopted or their effect on our business.

   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, including many that
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,
     Marshall and Illsley and Fifth Third National Bank;

  .  electronic data interchange and cash management providers, including
     Fiserv, CheckFree, M&I Data, EDS and Fundtech;

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

  .  electronic funds transfer software solution 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 fragmented information technology professional services market, we
compete with numerous firms. We believe that our principal competition to date
has been the internal information technology departments of current and
potential clients. In addition, we compete with systems consulting and
integration firms, application software firms, Internet professional service
companies, services divisions of computer hardware and software vendors,
facilities management and outsourcing companies, "Big 5" accounting firms and
strategic consulting firms.

   In addition to our current competitors, we expect substantial competition
from established and new companies as the e-commerce and Internet markets
continue to develop and expand. 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.

                                       7
Our future profitability is dependent upon the 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:

  .  the unwillingness of consumers and businesses to change their
     traditional payment methods; and

  .  adverse publicity and consumer concern about the reliability,
     performance, privacy and security of electronic payment transactions.

   The success of our strategy to expand our Internet delivery channels
depends on increased adoption by businesses and consumers of the Internet as a
means for commerce.

   An important part of our strategy is to expand the sale of our products and
services in the Internet channel. This strategy depends heavily on the
acceptance and use of the Internet as a means of commerce. If commerce over
the Internet does not become more accepted and widespread, our business and
results of operations could suffer.

   Factors that may affect Internet commerce adoption include:

  .  inadequate network infrastructure;

  .  security, privacy and authentication concerns;

  .  changes in, or insufficient availability of, telecommunication services
     to support the Internet; and

  .  increased government regulations or taxation.

   If we are unable to attract, integrate, motivate and retain skilled
personnel, our business will suffer.

   Our future success depends on our ability to attract, integrate, motivate
and retain additional skilled personnel, particularly software development
professionals. There is currently a shortage of software developers with
advanced technological skills in the United States and this shortage is likely
to continue. Furthermore, there is significant competition for personnel with
the skills and experience required to perform the services we offer in all of
our businesses. If we are unsuccessful in attracting, integrating, motivating
or retaining qualified personnel, our business will suffer.

   If we are unable to protect our name or expand our recognition in the
market place, our business may suffer.

   We believe that establishing and maintaining name recognition are critical
for attracting and expanding our customer base. If our reputation is damaged
or if potential customers are not familiar with us or the products and
services we provide, we may become less competitive. Promotion and enhancement
of our name will depend largely on our success in continuing to provide new
electronic payment management solutions. If customers do not perceive our
solutions to be effective or of high quality, our brand name and reputation
will suffer.

   In May 1999, we filed a trademark infringement action seeking to prevent
Citizen Advisers, Inc. from using the "E FUND" mark and efund.com Internet
domain. This action and any future litigation could be costly and time
consuming. If we are unsuccessful in preventing Citizen Advisers from using
our name, our business could be harmed.

   Security and privacy breaches in electronic and Internet transactions may
deter use of our products and services.

   If we are unable to protect the security and privacy of our electronic and
Internet transactions, our business could be materially adversely affected. A
security or privacy breach may:

  .  deter customers from using our products and services;

  .  harm our reputation;

                                       8
.  expose us to liability;

  .  increase our operating expenses to remediate the problem; and

  .  decrease market acceptance of electronic commerce transactions in
     general.

   While we believe that we use proven applications designed for premium data
security and integrity to process electronic and Internet transactions, we
cannot be certain that use of these applications will be sufficient to address
technology advances, changing market conditions or other developments. Any
failures in our security and privacy measures could have a material adverse
effect on our business.

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

   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 which often encounter development delays, and the underlying software
may contain undetected errors or defects. 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.

   Consolidation in the banking industry may adversely affect our ability to
sell our products and services.

   Mergers, acquisitions and personnel changes at financial institutions may
adversely affect our business, financial condition and results of operations.
Currently, the banking industry is undergoing large-scale consolidation,
causing the number of financial institutions to decline. This consolidation
could cause us to lose:

  .  current and potential customers;

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

                                       9
.  revenue if the combined financial institution is able to negotiate a
     greater volume discount for, or discontinue the use of, our products and
     services.

   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,
Debra Janssen, our President and Chief Operating Officer, and Dr. Nikhil Sinha,
our Executive Vice President for Global Corporate Development. 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.

   We intend to expand our operations or market presence by entering into
business combinations, joint ventures or other strategic alliances in the
United States and internationally. We may not be able to identify or enter into
such combinations or alliances and tax requirements related to the split-off
may restrict our ability to complete a significant acquisition through the
issuance of our common stock. Our ability to expand in this manner 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 and we may not realize
     anticipated benefits in a timely manner; and

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

   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 international
markets and maintain facilities in India, 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. Our future results could
be harmed by a variety of factors, including:

  .  changes in foreign currency exchange rates;

  .  changes in political and economic conditions, particularly in India;

  .  elimination of favorable tax incentives in India;

  .  potentially unfavorable tax rules;

  .  tariffs, duties and other trade barriers;

  .  reduced protection for intellectual property rights;

  .  challenges in staffing and managing foreign operations;

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

  .  varying business practices in foreign countries.

   We face collection risks on some payments.

   Our debt collection services expose us to certain risks. For a limited
number of clients of our check authorization service, we purchase returned
checks at a discounted price to the stated check amount and assume the
collection risk on the checks. We base our discounted purchase price on the
collection history of each client. If we are unable to collect on returned
checks at the historical rate of our clients or the payment quality of the
portfolio of returned checks deteriorates, we may incur a loss on the portfolio
of purchased checks.

                                       10
We face termination and compliance risks with respect to our government
contracts.

   Some of our government contracts, by their terms, can be terminated at any
time, without cause, for the convenience of the government. 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 government contracts require compliance
with various contract provisions and procurement regulations, and in certain
cases, accounting requirements. If not cured, some violations of these
provisions could result in termination of the contract and fines.

   Our business could be harmed by cost overruns on fixed-price contracts.

   Our government services contracts are provided typically under fixed-price,
variable volume contracts. Under a fixed-price, variable volume contract, the
contractor agrees to perform for an agreed unit price and bears the entire risk
of cost overruns and changing volumes. In addition, we offer some of our
information technology services on a fixed-price, fixed-time basis. To avoid
losses from fixed-price contracts, we must, among other things, accurately
estimate the resources and time required to perform the project, effectively
manage our clients' expectations and complete projects within budget and to our
clients' satisfaction. If we do not successfully manage these project and
contract risks, we could suffer cost overruns and penalties and our reputation
and results of operations could be harmed.

   We may be unable to protect our intellectual property rights.

   We rely on a combination of trademark and copyright laws, trade secret
protection and confidentiality and license agreements to protect our
intellectual property rights. We may be required to spend significant resources
to protect our trade secrets and monitor and police our intellectual property
rights. Despite our efforts to protect our proprietary rights, parties may
infringe or misappropriate our proprietary 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.

   Although we believe our products and services do not infringe on the rights
of others, 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 for Internet-related business processes, which may
have broad implications for all participants in Internet commerce. Claims for
infringement of these 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 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.

   Fluctuations in our quarterly operating results may cause our stock price to
decline.

   Our quarterly operating results may fluctuate significantly for a variety of
reasons, including:

  .  demand for and market acceptance of our products and services;

  .  delays or problems in the introduction of new products and services;

  .  the mix of product sales;

  .  changes in the size and timing of orders for our products and services;

  .  costs associated with acquisitions or strategic alliances; and

  .  competitive pressures resulting in lower selling prices.

                                       11
As a result, we believe that period-to-period comparisons of our operating
results are not a good indication of our future performance. In addition, our
future quarterly operating results may fall below expectations of securities
analysts or investors. In this event, the market price of our common stock may
decrease significantly.

   Our expense levels are relatively fixed in the short term and are based, in
part, on our expected future revenues. Our inability to adjust spending in a
timely manner to compensate for any unexpected revenue shortfall could
accentuate the negative effect on our quarterly results.

                  Risks Relating to Our Separation From Deluxe

   If we are not able to obtain data from data suppliers, our business will be
seriously harmed.

   Historically, we have obtained a substantial portion of our debit and other
consumer data through Deluxe under its agreements with banks and other
financial institutions. As a result of the split-off from Deluxe, we must
secure our own separate agreements with these data suppliers. We cannot be
certain that we will be successful in securing agreements or otherwise continue
to obtain sufficient amounts of data on reasonable terms and conditions, if at
all. Any failure by us to obtain data would have an adverse effect on our
ability to update information in DebitBureau, the performance of our products
and services based on DebitBureau and new product development.

   We may not realize the benefits of our separation from Deluxe and our stock
price may decline if Deluxe does not complete the split-off.

   If Deluxe does not complete the split-off, Deluxe will continue to control
us and we may not fully realize the benefits we expect as a result of the
split-off. Deluxe has the sole discretion to determine the timing and terms of
any split-off and is not obligated to effect the split-off. In particular,
Deluxe will not complete the split-off unless it receives a favorable tax
ruling from the Internal Revenue Service to the effect that the split-off would
be tax-free to Deluxe and its stockholders for federal income tax purposes. We
cannot assure you whether or when Deluxe will receive a favorable tax ruling
from the IRS, or that the split-off will occur. In addition, if the split-off
is not completed, the liquidity of our shares in the market will be limited
unless and until Deluxe elects to sell some of its significant ownership.

   We will be controlled by Deluxe as long as it owns a majority of our common
stock, and our other stockholders will be unable to affect the outcome of
stockholder voting during this time.

   After the completion of this offering, Deluxe will own approximately     %
of our outstanding common stock. As long as Deluxe continues to hold a majority
of our outstanding stock, Deluxe will be able to elect all of our directors and
determine the outcome of all corporate actions requiring stockholder approval.
Because it controls us, Deluxe has the power to act without taking the best
interests of our company into consideration. For example, Deluxe will control
decisions with respect to:

  .  the business direction and policies of our company, including the
     election and removal of directors;

  .  mergers or other business combinations involving us;

  .  the acquisition or disposition of assets by us;

  .  our financing; and

  .  amendments to our certificate of incorporation and bylaws.

                                       12
There are potential business conflicts of interest with Deluxe.

   Because Deluxe controls us and our business objectives may differ,
conflicts of interest may arise between Deluxe and us regarding, among other
things:

  .  our past and ongoing relationships with Deluxe, including tax matters,
     employee benefits, indemnification, data sharing, and other matters
     arising from our separation from Deluxe;

  .  the nature, quality and pricing of transitional services Deluxe has
     agreed to provide us;

  .  potential competitive business activities; and

  .  sales or distributions by Deluxe of all or part of its ownership
     interest in us.

   For example, by virtue of its controlling beneficial ownership and the
terms of the tax-sharing agreement to be entered into between us and Deluxe,
Deluxe will effectively control all of our tax decisions until the split-off
is completed. Under the tax-sharing agreement, Deluxe will have sole authority
to respond to and conduct all tax proceedings and tax audits relating to us,
to file all returns on our behalf and to determine the amount of our liability
to, or entitlement to payment from, Deluxe under the tax-sharing agreement.
This arrangement may result in conflicts of interest between us and Deluxe.
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, except
that Deluxe is obligated under the tax-sharing agreement to act in good faith
with regard to all members included in the applicable returns.

   We may not be able to resolve any potential conflicts, and even if we do,
the resolution may be less favorable than if we were dealing with an
unaffiliated third party.

   We expect that some of our directors may have conflicts of interest because
they are also directors and officers of Deluxe.

   During the period that Deluxe controls us, we expect that some members of
our board of directors will continue to be directors and officers of Deluxe.
These directors will have obligations to us as well as Deluxe and may have
conflicts of interest with respect to matters potentially or actually
involving or affecting us.

   The transitional services being provided to us by Deluxe may not be
sufficient to meet our needs, and we may pay increased costs to replace these
services after our agreements with Deluxe expire.

   Deluxe has agreed to provide transitional services to us, including
services related to:

  .  accounting, financial and administrative services;

  .  treasury, cash management and insurance services;

  .  tax and legal services;

  .  employee benefits administration; and

  .  sales support.

   These services may not be provided at the same level as when we were a part
of Deluxe, and we may not be able to obtain the same benefits. These
transitional service agreements generally have a term of less than one year
following the separation. After the expiration of these agreements, we may not
be able to replace the transitional services in a timely manner or on terms
and conditions, including cost, as favorable as those we would receive from
Deluxe during the transition period.

   Our historical financial information may not be representative of our
results as a separate company.

   We have no operating history as an independent company. The historical
financial information we have included in this prospectus has been carved out
from Deluxe's consolidated financial statements and does not reflect what our
results of operations, financial condition and cash flows would have been had
we been a

                                      13
separate, stand-alone entity during the periods presented. Following this
offering, we will be required to provide our own financial, administrative and
other resources to operate as an independent public company and to replace
other services provided by Deluxe to us. As a result, the historical financial
information is not necessarily indicative of what our results of operations,
financial condition and cash flows will be in the future. We have not made
adjustments to reflect all changes that we anticipate will occur in our cost
structure, funding and operations as a result of our separation from Deluxe.

   Risks Relating to the Securities Markets and Ownership of Our Common Stock

   We cannot predict the impact of the split-off on the price of our common
stock.

   We cannot predict the effect that the split-off will have on the market
price of our common stock. The split-off could involve the distribution of
about          shares of our common stock by Deluxe to its stockholders,
representing about     % of the equity value of our company, or about     % if
the underwriters exercise their over-allotment option in full. Substantially
all of these shares would be eligible for immediate resale to the public
market. Sales of substantial amounts of our common stock in the public market,
or the perception that substantial sales might occur, whether as a result of
this distribution or otherwise, could cause the market price of our stock to
decrease significantly. See "Shares Eligible For Future Sale."

   Our securities have no prior market, and our stock price may decline after
the offering.

   Our common stock has not been publicly traded, and an active trading market
may not develop or be sustained after this offering. The market price of our
stock could be subject to significant fluctuations after this offering due to
factors such as:

  .  actual or anticipated fluctuations in our results of operations;

  .  changes in or failure by us to meet securities analysts' expectations;

  .  success of our operating strategies; and

  .  realization of any of the risks described in this section.

   In addition, the stock market recently has experienced extreme price and
volume fluctuations, which have particularly affected the market prices for
securities of many technology companies. These market fluctuations may
adversely affect the trading price of our common stock, regardless of our
actual operating performance. We cannot assure you that you will be able to
resell your shares at or above the initial public offering price.

   Provisions in our charter documents and Delaware law 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 our company that a stockholder 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, without stockholder approval, to issue
     preferred stock, which may have rights and preferences that are superior
     to our common stock;

  .  the ability of our board to amend the bylaws;

  .  prohibition of stockholder action by written consent;

  .  advance notice requirements for shareholder proposals and for nominating
     candidates to our board;

                                       14
.  a stockholder rights plan, which discourages the unauthorized
     acquisition of 15% or more of our common stock or an unauthorized
     exchange or tender offer;

  .  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 of our certificate of
     incorporation.

                                       15
FORWARD-LOOKING STATEMENTS

   This prospectus includes forward-looking statements. When we use the words
"believe," "anticipate," "plan," "expect," "estimate," "will" and similar
expressions, we are identifying forward-looking statements. We have based these
forward-looking statements on our current expectations and projections about
future events. We do not, however, represent forward-looking statements as
guarantees of future performance or results. Our actual results may vary
materially from those indicated in the forward-looking statements as a result
of a number of risks and uncertainties, including the risks described under
"Risk Factors" or elsewhere in this prospectus.

                           OUR SEPARATION FROM DELUXE

   Our electronic payment solutions, professional services and government
services businesses were previously conducted through various operating units
of Deluxe. On January 31, 2000, Deluxe announced a plan to combine those
businesses into a separate, publicly-traded company. The separation of our
businesses from those of Deluxe has been substantially completed.

Benefits of the Separation

   We believe that we will realize the following benefits from our complete
separation from Deluxe:

  .  Direct access to the capital markets. As a separate public company, we
     will be able to directly access the capital markets to issue equity or
     debt and to use stock-based acquisition currency to finance expansion
     and growth opportunities.

  .  Greater strategic focus. We expect to have a sharper focus on our
     businesses and growth opportunities as a result of our board and
     management team concentrating only on our core businesses. Further, the
     separation from Deluxe will eliminate any competition for capital
     generated in its or our business.

  .  Increased ability to attract, retain and motivate employees. We believe
     that incentive compensation arrangements for key employees, directly
     related to the market performance of our common stock, will provide
     enhanced incentives for performance. The separation will enable us to
     offer our key employees compensation directly linked to the performance
     of our businesses, which we expect to enhance our ability to attract and
     retain qualified personnel.

Separation and Transition Agreements

   We and Deluxe and, in some cases, our respective subsidiaries, have entered
into agreements providing for the separation of our businesses from Deluxe. For
additional information concerning these agreements, see "Agreements Between
eFunds and Deluxe."

The Exchange Offer

   After this offering, Deluxe will own about     % of our common stock, or
about     % if the underwriters exercise their over-allotment option in full.
Deluxe has announced that it plans to distribute all of its shares of our
common stock to its shareholders through a split-off. Deluxe's plans for a
split-off are subject to receiving a private letter ruling from the Internal
Revenue Service that the split-off will be tax-free to Deluxe and its
shareholders for U.S. federal income tax purposes. Deluxe has the sole
discretion to determine whether to proceed with the split-off based on the best
interests of Deluxe's shareholders and to decide what will be the timing,
structure and terms of the split-off. Subject to these conditions, Deluxe plans
to complete the split-off within one year following the completion of this
offering. Deluxe has recently submitted a private letter ruling request to the
Internal Revenue Service. We cannot be certain when or whether Deluxe will
receive a favorable tax ruling from the Internal Revenue Service, or that the
distribution by Deluxe will be completed.

                                       16
USE OF PROCEEDS

   We estimate the net proceeds from the sale of our common stock in this
offering, based on an assumed public offering price of $      per share and
after deducting the underwriting discount and estimated offering expenses
payable by us, will be approximately $         million, or $         million if
the underwriters exercise their over-allotment option in full.

   We intend to use the net proceeds from this offering for working capital and
other general corporate purposes. In addition, we may use some of the net
proceeds for acquisitions of businesses, products and technologies that are
complementary to ours. We currently have no agreements with respect to any
material acquisitions as of the date of this prospectus. Pending use of the net
proceeds, we intend to invest the net proceeds from this offering in short-
term, interest-bearing, investment-grade securities.

                                DIVIDEND POLICY

   We do not anticipate paying any cash dividends on our common stock in the
foreseeable future. We currently intend to retain future earnings to fund the
development and growth of our business.

                                       17
CAPITALIZATION

   The following table sets forth our actual and as adjusted capitalization at
December 31, 1999, as described below. The as adjusted column gives effect to
the sale of          shares of our common stock in this offering, assuming an
initial public offering price of $         per share and after deducting the
underwriting discount and estimated offering expenses payable by us. This table
should be read in conjunction with our audited consolidated financial
statements and related notes, which are included elsewhere in this prospectus.
December 31, 1999
                                                         ---------------------
                                                          Actual   As Adjusted
                                                         --------  -----------
                                                            (in thousands)
Long-term debt, excluding current portion............ $  3,597   $
                                                         --------   --------
   Stockholders' equity:
    Preferred stock, $.01 par value; 100,000,000 shares
     authorized; no shares issued and outstanding.......      --         --
    Common stock, $.01 par value; 250,000,000 shares
     authorized; 2,500 shares issued and outstanding
     actual; and      shares issued and outstanding as
     adjusted...........................................
    Additional paid-in capital..........................  292,598
    Accumulated deficit.................................  (92,946)
    Accumulated other comprehensive loss................     (547)
                                                         --------   --------
     Total stockholders' equity.........................  199,105
                                                         --------   --------
   Total capitalization................................. $202,702
                                                         ========   ========
This table does not reflect          shares of common stock reserved for
issuance under our stock option plans. We expect to grant options to purchase
an aggregate of          shares of our common stock upon completion of this
offering with an exercise price equal to the initial public offering price,
unless a lower price is required by law or government regulation.

   At the time of the split-off, all outstandings options to purchase Deluxe
common stock will be converted into new options to purchase Deluxe common stock
and options to purchase our common stock. The actual number of options will be
determined at the time of the split-off based on the market price of our common
stock and Deluxe common stock. Based upon an assumed initial public offering
price of $     per share and assuming the market price of Deluxe's common stock
at that time is the same as the market price on       , 2000, then the number
of our shares for which options would be granted would be       and the
weighted average exercise price would be        per share.

                                       18
DILUTION

   If you invest in our common stock, your interest will be diluted to the
extent of the difference between the offering price per share of our common
stock in this offering and the pro forma net tangible book value per share of
our common stock immediately after this offering. Pro forma net tangible book
value dilution per share represents the difference between the amount per share
paid by purchasers of shares of common stock in this offering and the pro forma
net tangible book value per share of common stock immediately after completion
of this offering.

   Our pro forma net tangible book value as of December 31, 1999 was $116.3
million, or $    per share of common stock. Pro forma net tangible book value
per share represents the amount of our stockholders' equity, less intangible
assets, divided by the total number of shares of common stock outstanding for
the period immediately prior to this offering. After giving effect to the sale
of the       shares of common stock offered in this prospectus at the assumed
public offering price of $  per share and after deducting the estimated
underwriting discounts and offering expenses, our adjusted pro forma net
tangible book value as of December 31, 1999 would have been $    million, or $
per share of common stock. This represents an immediate increase in net
tangible book value of $  per share to existing stockholders and an immediate
dilution of $  per share to new investors purchasing shares in this offering.
The following table illustrates this per share dilution.
Assumed public offering price per share......................        $
Net tangible book value per share before the offering........ $
   Increase per share attributable to new investors............. $
                                                                 ------
   Pro forma net tangible book value per share after this
    offering....................................................        $
                                                                        ---
   Dilution per share to new investors..........................        $
19
SELECTED FINANCIAL DATA

   The following selected financial data should be read together with the
consolidated financial statements and related notes and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included in this prospectus. The selected statement of operations data shown
below for the years ended December 31, 1997, 1998 and 1999 and the balance
sheet data as of December 31, 1998 and 1999 are derived from our audited
consolidated financial statements included in this prospectus which have been
audited by Deloitte & Touche LLP, independent auditors. The selected statement
of operations data shown below for the years ended December 31, 1995 and 1996
and the balance sheet data as of December 31, 1995, 1996 and 1997 are derived
from our unaudited consolidated financial statements not included in this
prospectus.

   On February 19, 1999, we acquired all of the outstanding shares of an
electronic check conversion company. On April 13, 1999, we acquired the
remaining 50% ownership interest in a joint venture which comprises our
professional services business and which prior to the acquisition was recorded
in our financial statements under the equity method of accounting. The
acquisitions have been accounted for under the purchase method of accounting
and, as a result, our consolidated financial statements include the total
results of these businesses subsequent to their acquisition dates.
Years Ended December 31,
                              ------------------------------------------------
                                1995      1996      1997      1998      1999
                              --------  --------  --------  --------  --------
                                (in thousands, except per share data and
                                            operating data)
Statement of Operations
 Data:
Net sales...................  $193,111  $201,681  $229,065  $267,520  $302,340
                              --------  --------  --------  --------  --------
  Cost of sales, excluding
   loss contract and asset
   impairment charges.......   104,239   131,379   143,966   171,359   185,590
  Loss contract and asset
   impairment charges.......       --        --        --     40,949     8,700
                              --------  --------  --------  --------  --------
    Total cost of sales.....   104,239   131,379   143,966   212,308   194,290
                              --------  --------  --------  --------  --------
Gross margin................    88,872    70,302    85,099    55,212   108,050
                              --------  --------  --------  --------  --------
  Selling, general and
   administrative...........    64,330    69,544    70,542    81,198   105,382
  Research and development
   (1)......................       --        --      1,398       625     3,756
  Asset impairment charges..       --        --     11,831       --        --
                              --------  --------  --------  --------  --------
    Total operating
     expenses...............    64,330    69,544    83,771    81,823   109,138
                              --------  --------  --------  --------  --------
Income (loss) from
 operations.................    24,542       758     1,328   (26,611)   (1,088)
Other income (expense)
  Legal proceedings.........       --        --    (40,050)    4,157     2,094
  Other income (expense)....      (313)        7      (918)   (3,495)   (4,609)
  Interest income
   (expense)................      (972)   (1,463)     (825)    2,789       963
                              --------  --------  --------  --------  --------
Income (loss) before income
 taxes......................    23,257      (698)  (40,465)  (23,160)   (2,640)
Benefit (provision) for
 income taxes...............    (9,733)   (5,203)    6,397     8,569    (5,586)
                              --------  --------  --------  --------  --------
Net income (loss)...........  $ 13,524  $ (5,901) $(34,068) $(14,591) $ (8,226)
                              ========  ========  ========  ========  ========
Net income (loss) per share
 -- basic and diluted.......  $  5,409  $ (2,360) $(13,627) $ (5,836) $ (3,290)
Shares used in computing
 basic and diluted net
 income (loss) per share:...     2,500     2,500     2,500     2,500     2,500
Pro forma basic and diluted
 net loss per share(2)......
Shares used in computing pro
 forma basic and diluted net
 loss per share:(2).........
20
December 31,
                                   --------------------------------------------
                                     1995     1996     1997     1998     1999
                                   -------- -------- -------- -------- --------
                                                  (in thousands)
Operating Data:
Account verification inquiries
 (millions)......................  $   23.7 $   26.3 $   28.6 $   30.3 $   32.1
Transactions processed
 (millions)......................     1,356    2,526    3,313    3,944    5,019
ATMs driven at period end........       N/A      N/A    5,766    5,623    8,596
Balance Sheet Data:
Cash and cash equivalents(3).....     3,967   27,226   23,843   16,055   35,849
Working capital..................     8,735   38,666   39,686    1,869   25,607
Total assets.....................   150,614  177,230  187,810  186,335  289,929
Long-term debt, excluding current
 portion.........................     3,504    2,426    4,571    4,029    3,597
Total stockholder's equity.......   101,201  131,897   87,690   89,803  199,105
--------
(1) Research and development expenses are included in, but were not separately
    recorded from, cost of sales and selling, general and administrative
    expenses for the years ended December 31, 1996 and 1995.
(2) Reflects a     for     stock split in connection with this offering.
(3) Excludes restricted cash which represents cash that we have supplied for a
    client's ATMs and cash that we temporarily hold in custodial accounts on
    behalf of clients.

                                       21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

   You should read the following discussion together with "Selected Financial
Data" and our consolidated financial statements and the notes to those
financial statements included in this prospectus. In addition to historical and
pro forma information, this discussion contains forward-looking information
that involves risks and uncertainties. Our actual results could differ
materially from those anticipated by us due to competitive factors, risks
associated with our expansion plans and other factors discussed under "Risk
Factors" and elsewhere in this prospectus.

Overview

   We are a leading provider of end-to-end electronic debit payment solutions
to financial institutions, retailers, electronic funds transfer networks and e-
commerce providers. Our primary products and services are decision support and
risk management tools, electronic funds transfer processing, monitoring and
settlement services and professional services, including information technology
consulting and business process management. We are a single source of
electronic payment solutions whether payments are made using payment cards or
paper checks, or whether the transaction is accomplished at retail locations or
ATMs, through mail or telephone orders or over the Internet.

   Our businesses have historically been operated as units of Deluxe. In April
1999, Deluxe announced that it was changing its business model to a holding
company structure with four independently operated business units: paper
payment systems, electronic payment solutions, professional services and
government services. In January 2000, Deluxe announced that its board of
directors approved a plan to combine the latter three businesses to form our
company as a separate, independent publicly traded company.

   We have entered into various agreements related to transition and ongoing
relationships with Deluxe. These agreements relate to, among others,
information technology development, business process management, employee
benefits, tax sharing, real estate, data sharing, indemnification and
transition services. For transition services, we will compensate Deluxe for
providing services and negotiate third-party rates after the transition
arrangements terminate. The transition period varies depending on the agreement
but many transition services will terminate upon completion of the split-off.
See "Agreements Between eFunds and Deluxe." Some of the transition agreements
may be extended beyond the initial transition period.

   Our consolidated financial statements have been prepared using the
historical results of operations and historical bases of the assets and
liabilities of the Deluxe businesses that comprise our company. The
consolidated financial statements also include allocations to us of certain
liabilities and expenses, including profit sharing, post-retirement, non-
qualified deferred compensation and other employee benefits; information
technology services; facility costs; and other Deluxe administrative services
costs. The expense allocations have been 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 are based on headcount, transaction processing costs, square footage
and relative sales.

   The financial information presented in this prospectus is not necessarily
indicative of what our financial position, results of operations or cash flows
would have been had we been a separate, stand-alone entity for the periods
presented nor is it indicative of our future financial position, results of
operations or cash flows. We anticipate that many changes will occur in our
funding and operations as a result of our operation as an independent entity
and through the split-off. In particular, our business was conducted as three
business segments by Deluxe. Accordingly, our financial statements reflect
those business segments: electronic payment solutions, professional services
and government services. It is our intention to integrate our operations more
fully, which may change our presentation of segment information in future
periods.

   Net Sales. Our net sales are generally comprised of transaction processing
and service fees, decision support fees, software licensing, maintenance and
support fees, government service fees and information

                                       22
technology consulting and business process management services fees. Our
revenue recognition policies for these various fees are as follows:

  .  Transaction processing and service fees are recognized in the period
     that the service is performed. These services consist of processing our
     customers' electronic debit transactions through electronic funds
     transfer networks and settling the funds with the financial institutions
     involved in the transactions. Additionally, these services include
     monitoring ATMs and point-of-sale devices to alert our customers when
     potential problems occur. These fees are charged on a per transaction
     basis, depending on the contractual arrangement with the customer.
     Government services fees are recognized in the period services are
     provided based on monthly fees per benefits recipient.

  .  Decision support fees are recognized as revenue in the period the
     services are provided. Decision support services consist of new account
     applicant and check verification screenings to manage the risk
     associated with account openings and check acceptance. Decision support
     fees are based on the number of inquiries against the databases used for
     screening purposes or monthly fees based on the aggregate dollar value
     of checks authorized by the retailer, depending on the product and
     service.

  .  Software license fees for standard software products are recognized when
     delivery has occurred, the license fee is fixed and determinable,
     collectibility is probable and evidence of this arrangement exists.
     License fees are charged based on modules purchased by the customer.

  .  Software maintenance and support revenues are recognized ratably over
     the term of the contract, and/or as the services are provided. Support
     services such as customization of standard software modules, are charged
     on a time and materials basis and recognized as hours are completed.

  .  Revenues from professional services for information technology
     consulting and business process management are generally recognized
     under two methods, depending on contractual terms. Under the time and
     materials method, revenue is based on a fee per hour basis, and is
     recognized as hours are completed. Under the fixed contract method, a
     pre-set fee is agreed upon for a project, and revenue is recognized
     proportionately to the percentage completion of the project.

   Cost of Sales. Cost of sales consists primarily of salaries and benefits,
depreciation and maintenance of equipment and facilities and amortization of
software used to operate our data centers. Expenses are recognized when
incurred, with the exception of installation costs. Installation costs are
capitalized and recognized ratably over the life of the contract, which
approximates the revenue recognition.

   Expenses. Selling, general and administration expenses consist of salaries
and benefits, consulting fees, facilities and equipment costs, recruiting and
training, travel expenses, corporate administrative charges, depreciation and
amortization and all other corporate costs.

   Research and development expenses, which are expensed as incurred, relate to
investigating new or improved processes and techniques and developing such
research findings into a potential new product or service. Research and
development expenses reflect the cost of salaries and benefits, travel costs
and testing- related costs incurred in the early stages of product development.

   Interest expense represents the cost of funds for working capital and other
purposes and reflects Deluxe's internal cost of funds. Interest income consists
of interest credited to us for funds held in investment accounts.

Government Services

   Our government services business was started in response to federal mandates
that require state and local governmental agencies to convert to electronic
payment methods for the distribution of benefits under entitlement programs,
including food stamps and other welfare programs. In 1993, we rolled out our
first state-wide system to electronically deliver these benefits using our
electronic funds transfer capabilities. From 1994 through 1996 we bid on
contracts that secured business as a prime or subcontractor with over 30
states, including three subcontracts with coalitions of states. We were
providing services in over 30 states at the end of 1999.

                                       23
All of our contracts are for service periods of five to seven years and are
based on a fixed price, variable volume model. We recognize revenue on long-
term service contracts when the service is performed. For several of the
contracts, we serve as a subcontractor in partnership with a financial
institution. An integral part of these partnerships was an exclusive switching
services agreement with that financial institution to provide merchants with
cross-border access to the benefits databases, beneficiaries and benefits among
states in a coalition.

   In 1997, we recorded a $40.0 million charge to legal proceedings expense for
a judgment entered against us in an action brought by Mellon Bank in connection
with a potential bid to provide electronic benefit transfer services to a state
coalition. In 1998, $4.2 million of the reserve was reversed and credited to
legal proceedings expense due to the denial of Mellon's motion for prejudgment
interest. In 1999, after we paid the judgment of $32.2 million in the Mellon
litigation, we reversed the remaining reserve of $2.1 million through a credit
to legal proceedings expense.

   In 1998, after a reorganization and management change in our government
services business and as many of the state systems were being fully
implemented, we concluded that net sales from our government services contracts
would be lower than anticipated because case volumes were lower due to welfare
reform and a strong economy. In addition, we underestimated the costs required
to support our services. The primary sources of additional costs were a need to
install a greater number of point-of-sale terminals, higher than expected
transaction volume per recipient and higher support costs. These higher costs,
which could not be recovered under our fixed-price variable volume contracts
when combined with lower sales, resulted in 1998 charges of $26.3 million and
$14.7 million to write off impaired government services assets and to accrue
for future contract losses. Subsequent to the 1998 charges, additional state
systems began operations while a continuing strong economy lead to further
reductions in the number of welfare cases and our prime contractor in state
coalition contracts notified us that it would not renew our exclusive switching
contract. As a result in 1999, we recorded additional charges totaling $8.7
million primarily for additional expected future contract losses. We anticipate
recording an additional charge in 2000 related to the execution of a definitive
contract with our coalition prime contractor for whom we have been providing
services without a finalized contract. This charge will be covered by our
indemnification agreement with Deluxe.

   We have decided to exit the government services business as soon as our
current contractual commitments expire in 2006. During the wind down period, we
intend to continue to take steps to improve the profitability of the current
business. Deluxe has agreed to indemnify us for any losses on identified loss
contracts in excess of the loss contract reserves up to $    . At December 31,
1999, we had reserves of $20.6 million.

Recent Events

   Acquisition of an Electronic Check Conversion Company. On February 19, 1999,
we acquired all of the outstanding shares of an electronic check conversion
company for $13 million. This company provides electronic check conversion and
electronic funds transfer solutions for financial services companies and
retailers and is included in our electronic payment solutions business. The
acquisition was accounted for under the purchase method of accounting. As a
result, our consolidated financial statements include the results of this
business subsequent to its acquisition date. Total cost in excess of net assets
acquired in the amount of $15.7 million is reflected as goodwill and is being
amortized over 10 years.

   Acquisition of Remaining 50% Ownership Interest in HCL-Deluxe, N.V. On April
13, 1999, we acquired the remaining 50% ownership interest in HCL-Deluxe, N.V.
for $23.4 million. The joint venture, which Deluxe entered into with HCL
Corporation of India commenced operations in September 1997. The acquisition of
this company, which comprises our professional services business, was accounted
for under the purchase method of accounting. Total cost in excess of net assets
acquired in the amount of $24.9 million is

                                       24
reflected as goodwill and is being amortized over 15 years. Prior to the
acquisition, we recorded our 50% ownership of the joint venture's results of
operations in other expense under the equity method of accounting. Subsequent
to this acquisition, we changed the name of this entity to iDLX Technology
Partners.

   Transactions With Deluxe. Deluxe has been, and is expected to continue to
be, a significant client for our professional services business. In 1999, we
provided software development and business process management services on a
project-by-project basis to Deluxe. Revenue for these professional services was
$6.3 million on a pro forma full year basis. In 1999, sales to Deluxe
represented approximately 3.0% of our total net sales and approximately 37.0%
of the net sales of our professional services business. Sales to Deluxe for our
electronic payment solutions business were less than 1.5% of net sales.

   Beginning in 2000 our software services to Deluxe have been formalized into
a five year software development outsourcing agreement. During the term of the
agreement, we anticipate that Deluxe will spend approximately $43 million per
year for software development based on the actual number of hours of
information technology services that we provide to Deluxe. If Deluxe fails to
reach the $43 million spending target, it will be obligated to make payments
for a portion of our fees based on our estimates of lost profits. We also will
provide business process management services, including accounts receivable,
accounts payable and other general accounting services and mail order entry
services. Deluxe's annual minimum spending target for business process
management services will range from $8.1 million in 2000 to $4.2 million in
2004. The agreement will also provide for liquidated damages for non-
performance by us and bonuses for superior performances. The provision of
services by us under the agreement is non-exclusive, and Deluxe may contract
with any third party for the provision of professional services.

                                       25
Results of Operations

   The following table presents, for the periods indicated, the relative
composition of net sales and selected statements of operations data as a
percentage of net sales:
Year Ended
                                                          December 31,
                                                        ---------------------
                                                        1997    1998    1999
                                                        -----   -----   -----
Net sales:
Electronic payment solutions...........................  88.2%   83.6%   79.8%
Professional services..................................    --      --     4.2
Government services....................................  11.8    16.4    16.0
                                                        -----   -----   -----
  Total net sales...................................... 100.0   100.0   100.0
                                                        -----   -----   -----
Cost of sales:
Electronic payment solutions...........................  50.1    47.5    45.6
Professional services..................................    --      --     3.0
Government services:
  Cost of sales, excluding loss contract and asset
   impairment charges..................................  12.7    16.6    12.8
  Loss contract and asset impairment charges...........    --    15.3     2.9
                                                        -----   -----   -----
    Total cost of sales................................  62.8    79.4    64.3
                                                        -----   -----   -----
Gross margin...........................................  37.2    20.6    35.7
                                                        -----   -----   -----
Operating expenses:
Selling, general and administrative....................  30.8    30.4    34.9
Research and development...............................   0.6     0.2     1.2
Asset impairment charges...............................   5.2      --      --
                                                        -----   -----   -----
  Total operating expenses.............................  36.6    30.6    36.1
                                                        -----   -----   -----
Income (loss) from operations..........................   0.6   (10.0)   (0.4)
Other income (expense):
Legal proceedings...................................... (17.5)    1.6     0.7
Other income (expense).................................  (0.4)   (1.3)   (1.5)
Interest income (expense)..............................  (0.4)    1.0     0.3
                                                        -----   -----   -----
Loss before income taxes............................... (17.7)   (8.7)   (0.9)
Benefit (provision) for income taxes...................   2.8     3.2    (1.8)
                                                        -----   -----   -----
Net loss............................................... (14.9)%  (5.5)%  (2.7)%
                                                        =====   =====   =====
Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

   Net sales. Net sales increased $34.8 million, or 13.0%, to $302.3 million in
1999 from $267.5 million in 1998. All segments experienced increases in net
sales during 1999. On a full year pro forma basis taking into account the HCL-
Deluxe acquisition, net sales increased $27.1 million, or 9.7%, to $306.7
million in 1999 from $279.6 million in 1998.

   Electronic payment solutions net sales increased $17.9 million, or 8.0%, to
$241.4 million in 1999 from $223.5 million in 1998. Increased net sales due to
greater transaction processing and account verification inquiry volumes and
price increases were partially offset by decreased software sales due to
customer reluctance to make significant software changes prior to Year 2000.
Transaction volumes increased 27.3%, and inquiry volumes increased 6.1% as the
result of higher volumes from existing customers. Net sales in 1999

                                       26
included minimal contributions from several new products, such as QualiFile,
FraudFinder and Integreat!, which were launched in late 1999.

   Professional services net sales were $12.7 million in 1999. We recorded no
net sales for professional services in 1998 because of equity accounting prior
to the HCL-Deluxe joint venture acquisition in April 1999. On a full year pro
forma basis taking into account the HCL-Deluxe acquisition, professional
services net sales increased $4.9 million, or 40.6%, to $17.0 million in 1999
from $12.1 million in 1998. This growth was due to new clients, increased sales
to existing clients and the initiation of business process management services
for Deluxe.

   Government services net sales increased by $4.3 million, or 9.8%, to $48.3
million in 1999 from $44.0 million in 1998. This increase was due to the roll-
out of additional states during the latter half of 1998 and early 1999 and
price increases on contract extensions for online Medicaid eligibility
verification services. Government services net sales will likely decrease in
future periods as existing contracts expire because we are exiting the
government services business.

   Cost of sales. Cost of sales decreased $18.0 million, or 8.5%, to $194.3
million in 1999 from $212.3 million in 1998. This decrease in 1999 is the net
result of increased cost of sales primarily due to increased volumes and the
acquisition of HCL-Deluxe, offset by a $32.2 million reduction in loss contract
and asset impairment charges related to government services. As a percentage of
net sales, cost of sales decreased to 64.3% during 1999 compared to 79.4%
during 1998, mainly due to a reduction in loss contract and asset impairment
charges. Excluding these charges, cost of sales as a percentage of net sales
would have been 61.4% in 1999 and 64.1% in 1998.

   Electronic payment solutions cost of sales increased $11.0 million, or 8.6%,
to $138.0 million in 1999 from $127.0 million in 1998. As a percentage of
electronic payment solutions net sales, cost of sales increased to 57.2% during
1999 compared to 56.8% during 1998. This increase was due primarily to the
introduction of new services, primarily electronic check conversion services,
and amortization of software related to new products, primarily QualiFile,
DataNavigator and online banking in the United Kingdom.

   Professional services cost of sales were $9.0 million, or 71.1% of
professional services net sales in 1999. We recorded no cost of sales for
professional services in 1998 because of equity accounting prior to the HCL-
Deluxe joint venture acquisition in April 1999. On a full year pro forma basis
taking into account the HCL-Deluxe acquisition, cost of sales for professional
services increased $2.7 million, or 29.1%, to $11.9 million in 1999 from $9.2
million in 1998. As a percentage of professional services net sales, cost of
sales decreased to 70.0% in 1999 compared to 76.2% during 1998. This decrease
was primarily due to increased sales, execution of more profitable contracts,
less reliance on subcontractors through building of our own capabilities and
increased proportion of work being done offshore where margins are higher
despite lower billing rates.

   Government services cost of sales decreased $38.0 million, or 44.6%, to
$47.3 million in 1999 from $85.3 million in 1998. The decrease during 1999 was
due primarily to the $32.2 million reduction in loss contract and asset
impairment charges, as well as lower depreciation and amortization expense in
1999 due to asset impairment charges recorded in 1998. As a percentage of
government services net sales, cost of sales decreased to 97.9% during 1999
compared to 193.9% during 1998. Excluding the loss contract and asset
impairment charges, cost of sales as a percentage of government services net
sales would have decreased to 79.9% in 1999 compared to 100.8% in 1998.

   Gross margin. Gross margin increased $52.8 million, or 95.7%, to $108.1
million in 1999 from $55.2 million in 1998. As a percentage of net sales, gross
margin increased to 35.7% during 1999 compared to 20.6% during 1998. Excluding
the loss contract and asset impairment charges, our gross margin was 38.6% in
1999 and 35.9% in 1998.

                                       27
Selling, general and administrative. Selling, general and administrative
expenses increased $24.2 million, or 29.8%, to $105.4 million during 1999 from
$81.2 million during 1998. As a percentage of net sales, selling, general and
administrative expenses increased to 34.9% during 1999 compared to 30.4% during
1998. This increase was predominantly related to costs incurred in conjunction
with the development of DebitBureau, infrastructure investments and goodwill
amortization. These increases were partially offset by initiatives designed to
lower selling, general and administrative expenses, such as reductions in
hiring, travel cost and consulting fees, and lower restructuring charges. In
1999, we reversed $2.4 million of restructuring accruals from prior periods. In
1998, we recorded restructuring charges of $3.2 million for severance relating
to our initiative to reduce selling, general and administrative expenses.
During 1998, we also reversed $1.0 million of a 1996 restructuring charge.

   Research and development. Research and development expenses increased by
$3.1 million to $3.8 million in 1999 from $0.7 million in 1998. As a percentage
of net sales, research and development expenses increased to 1.2% during 1999
compared to 0.2% during 1998. All research and development expenses were within
the electronic payment solutions business and primarily reflect costs incurred
in conjunction with the development of DebitBureau. In addition to these
research and development costs, we also expended $17.3 million in 1999 and $3.2
million in 1998 for product development. These expenditures were capitalized
and are reflected in our consolidated balance sheets under the categories
computer and other equipment and internal use software. We intend to continue
to invest in new product development and product enhancements to respond to new
technologies and competitive pressures.

   Other income (expense). Other expense increased $1.1 million, or 31.9%, to
$4.6 million in 1999 compared to $3.5 million in 1998. The increase in expense
in 1999 was primarily due to losses on the disposal of fixed assets as a result
of a decision to replace an in-house developed system with purchased software
that has greater functionality. This increase was partially offset by the
reduced losses recorded under the equity method of accounting for HCL-Deluxe.
Prior to our acquisition of the remaining ownership interest in April 1999, we
recorded our 50% share of the joint venture's losses in other expense.

   Provision for income taxes. We recognized a provision for income taxes of
$5.6 million in 1999 as compared to a benefit of $8.6 million in 1998. We did
not record a tax benefit on the operating loss of the professional services
business because of its lack of profitability through 1999. Increased non-
deductible goodwill amortization resulting from the acquisition of the
electronic check conversion company also contributed to the provision for
income taxes.

Year Ended December 31, 1998 Compared to Year Ended December 31, 1997

   Net sales. Net sales increased $38.5 million, or 16.8%, to $267.5 million in
1998 from $229.1 million in 1997. All segments experienced increases in net
sales during 1998. On a full year pro forma basis taking into account the HCL-
Deluxe acquisition, net sales increased $47.3 million, or 20.4%, to $279.6
million in 1998 from $232.3 million in 1997.

   Electronic payment solutions net sales increased $21.4 million, or 10.6%, to
$223.5 million in 1998 from $202.1 million in 1997. Increased transaction
processing volume, higher inquiry volumes, higher software licensing and
professional services contributed to this increase. Transaction volumes
increased 19.0% and inquiry volumes increased 5.9% as a result of higher
volumes from existing clients. Software licensing and related services
increased due to clients' demands for new software systems to address potential
Year 2000 impacts.

   We recorded no net sales for professional services in 1998 and 1997 because
of equity accounting prior to the HCL-Deluxe joint venture acquisition in April
1999. On a full year pro-forma basis taking into account the HCL-Deluxe
acquisition, professional services net sales increased $8.9 million, or 277.5%,
to $12.1 million in 1998 from $3.2 million in 1997 when operations for this
business commenced late in the third quarter.

                                       28
Government services net sales increased by $17.0 million, or 63.1%, to $44.0
million in 1998 from $27.0 million in 1997. This increase was due to additional
state contracts and the roll-out of existing contracts.

   Cost of sales. Cost of sales increased $68.3 million, or 47.5%, to $212.3
million in 1998 from $144.0 million in 1997. As a percentage of net sales, cost
of sales increased to 79.4% in 1998 compared to 62.8% in 1997. This increase
was primarily due to the $26.3 million asset impairment charges and the
$14.7 million loss contract charges recorded in the government services
business. With these charges excluded, cost of sales as a percentage of net
sales would have been 64.1% in 1998 compared to 62.8% in 1997.

   Electronic payment solutions cost of sales increased $12.3 million, or
10.7%, to $127.0 million in 1998 from $114.7 million in 1997. The increase in
1998 was primarily due to higher revenue volumes. As a percentage of electronic
payment solutions net sales, cost of sales was 56.8% in both 1998 and 1997.

   We recorded no cost of sales for professional services in 1998 and 1997
because of equity accounting prior to the HCL-Deluxe joint venture acquisition
in April 1999. On a full year pro forma basis taking into account the HCL-
Deluxe acquisition, professional services cost of sales increased $6.7 million,
or 267.9%, to $9.2 million in 1998 from $2.5 million in 1997. The increase was
due to a full year of operations in 1998. As a percentage of professional
services net sales, cost of sales decreased to 76.2% in 1998 compared to 78.2%
in 1997.

   Government services cost of sales increased $56.0 million, or 191.7%, to
$85.3 million in 1998 from $29.2 million in 1997. This increase was primarily
due to loss contract and asset impairment charges totaling $40.9 million. As a
percentage of government services net sales, cost of sales increased to 193.9%
during 1998 compared to 108.4% during 1997.

   Gross margin. Gross margin decreased $29.9 million, or 35.1%, to $55.2
million in 1998 from $85.1 million in 1997. As a percentage of net sales, gross
margin decreased to 20.6% during 1998 compared to 37.2% during 1997, primarily
due to charges of $40.9 million for loss contracts and asset impairments in the
government services business. With these charges excluded, our consolidated
gross margin would have been 35.9% for 1998 and 37.2% for 1997.

   Selling, general and administrative. Selling, general and administrative
expenses increased $10.7 million, or 15.1%, to $81.2 million in 1998 from $70.5
million in 1997. This increase was predominantly related to increased selling
and marketing expenses associated with the electronic payment solutions
business and $2.7 million of costs incurred in connection with the development
of DebitBureau. These increases were partially offset by decreases within the
government services business due to lower legal costs. During 1998, we recorded
restructuring charges of $3.2 million for severance relating to our initiative
to reduce selling, general and administrative expenses, while we also reversed
$1.0 million of a 1996 restructuring charge. During 1997, we recorded
restructuring charges of $1.5 million for severance within the electronic
payment solutions business. This reduction was completed in 1998, with
severance payments of $1.4 million paid through December 31, 1999. As a
percentage of net sales, selling, general and administrative expenses were
constant at 30.4% during 1998 and 30.8% during 1997.

   Research and development. Research and development expenses decreased $0.8
million, or 55.3%, to $0.6 million in 1998 from $1.4 million in 1997. As a
percentage of net sales, research and development expenses decreased to 0.2%
during 1998 compared to 0.6% during 1997. All research and development was
within the electronic payment solutions business and primarily reflects the
costs incurred in conjunction with our development of neural network and other
fraud prevention technologies. In addition to these research and development
costs, we also expended $3.2 million in 1998 and $5.0 million in 1997 for
product development. These expenditures were capitalized and are reflected in
our consolidated balance sheets under the categories of computer and other
equipment and internal use software.

                                       29
Asset impairment charges. In 1998, there was no asset impairment charges in
operating expenses compared to $11.8 million of charges recorded in 1997. In
1997, we formulated a plan to divest the international unit of our electronic
payment solutions business. Based on fair market value estimates, we recorded a
charge of $11.8 million to write down the carrying value of these operations to
their estimated fair value less costs to sell.

   Other income (expense). Other expense increased $2.6 million to $3.5 million
in 1998 from $0.9 million in 1997. This increase is primarily due to the
increased losses recorded for our 50% ownership interest in the joint venture
HCL-Deluxe. In 1997, other expense does not include a full year of operations
because the joint venture began operations in September of that year.

Quarterly Results of Operations

   The following tables present our unaudited quarterly data for each quarter
of 1998 and 1999. The data has been prepared on a basis consistent with our
audited consolidated financial statements included in this prospectus and
include all necessary adjustments, consisting only of normal recurring
adjustments, that our management considers necessary for a fair presentation of
such information. This data should be read in conjunction with our annual
audited consolidated financial statements and the notes to those statements
included in this prospectus. The operating results for any quarter are not
necessarily indicative of results for any future quarter or year.
Three Months Ended
                          -------------------------------------------------------------------------------
                          Mar. 31,  June 30,  Sept. 30,  Dec. 31,  Mar. 31,  June 30,  Sept. 30, Dec. 31,
                            1998      1998      1998       1998      1999      1999      1999      1999
                          --------  --------  ---------  --------  --------  --------  --------- --------
                                                       (in thousands)
STATEMENT OF OPERATIONS DATA:
Net sales:
Electronic payment
 solutions..............  $54,086   $55,697   $ 56,775   $56,992   $56,546   $58,768    $61,510  $64,561
Professional services...      --        --         --        --        --      1,916      5,218    5,544
Government services.....    9,230    10,758     10,951    13,031    11,310    11,883     13,167   11,917
                          -------   -------   --------   -------   -------   -------    -------  -------
 Total net sales........   63,316    66,455     67,726    70,023    67,856    72,567     79,895   82,022
                          -------   -------   --------   -------   -------   -------    -------  -------
Cost of sales:
Electronic payment
 solutions..............   30,204    32,642     31,365    32,823    33,180    33,019     34,629   37,169
Professional services...      --        --         --        --        --      1,465      3,666    3,888
Government services:
 Cost of sales,
  excluding loss
  contract and asset
  impairment charges....   11,065    10,478     11,915    10,867     9,880    10,579     10,361    7,754
 Loss contract and asset
  impairment charges....      --        --      40,949       --         60        57        150    8,433
                          -------   -------   --------   -------   -------   -------    -------  -------
 Total cost of sales....   41,269    43,120     84,229    43,690    43,120    45,120     48,806   57,244
                          -------   -------   --------   -------   -------   -------    -------  -------
Gross margin............   22,047    23,335    (16,503)   26,333    24,736    27,447     31,089   24,778
Operating expenses:
Selling, general and
 administrative.........   21,861    21,345     21,375    16,617    17,887    24,844     28,378   34,273
Research and
 development............      187       172        133       133       536     1,518      1,380      322
                          -------   -------   --------   -------   -------   -------    -------  -------
 Total operating
  expenses..............   22,048    21,517     21,508    16,750    18,423    26,362     29,758   34,595
                          -------   -------   --------   -------   -------   -------    -------  -------
Income (loss) from
 operations.............       (1)    1,818    (38,011)    9,583     6,313     1,085      1,331   (9,817)
Other income (expense):
Legal proceedings.......      --        --       4,157       --      2,094       --         --       --
Other income (expense)..     (271)     (225)    (1,542)   (1,457)     (866)     (420)    (2,870)    (453)
Interest income
 (expense)..............      877       793        369       750       803       275         (3)    (112)
                          -------   -------   --------   -------   -------   -------    -------  -------
Income (loss) before
 income taxes...........      605     2,386    (35,027)    8,876     8,344       940     (1,542) (10,382)
(Provision) benefit for
 income taxes...........     (224)     (883)    12,960    (3,284)   (4,530)   (3,419)    (7,692)  10,055
                          -------   -------   --------   -------   -------   -------    -------  -------
Net income (loss).......  $   381   $ 1,503   $(22,067)  $ 5,592   $ 3,814   $(2,479)   $(9,234) $  (327)
                          =======   =======   ========   =======   =======   =======    =======  =======
30
Liquidity, Capital Resources and Financial Condition

   As of December 31, 1999, cash and cash equivalents were $35.8 million. We
also had $3.4 million of restricted cash that we temporarily hold in custodial
accounts on behalf of clients and $28.9 million in restricted cash that we have
supplied to a client, who is a provider of ATM management and outsourcing
services, for use in the client's ATMs. We are obligated to provide up to $35
million of cash to this client. Funds advanced to this client earn interest at
a rate of prime plus 1% per annum.

   Deluxe has agreed to provide us with a $75 million unsecured, revolving
credit facility until the earlier of the effective date of the split-off or
August 28, 2000. We currently do not have borrowings outstanding under this
facility. Borrowings under the facility will be due at the split-off or
maturity and will accrue interest at the London Interbank Offered Rate, or
LIBOR, plus a variable additional margin based on Deluxe's credit rating. At
December 31, 1999, the applicable rate would have been 6.39% per annum. The
credit facility contains financial and restrictive covenants, including
limitations on our ability to incur secured debt, to dispose of assets, to
consolidate and merge and to sell substantially all of our assets, and
financial maintenance ratios. We intend to replace this facility with a new
credit facility with one or more financial institutions prior to the split-off
or maturity. A replacement credit facility may not be available to us, or if
available, we may not be able to obtain it on a timely basis or on terms
acceptable to us.

   At December 31, 1999, we also had a $5.0 million line of credit, which is
denominated in Indian rupees and guaranteed by Deluxe, available for use by our
international operations at an interest rate of 15.81%. The average amount
drawn on this line during 1999 was $2.7 million. As of December 31, 1999, $3.1
million was outstanding. In March 2000, this line of credit was increased to
$10.0 million and remains guaranteed by Deluxe until October 1, 2000.

   The following table sets forth a summary of cash flow activity and should be
read in conjunction with our consolidated statements of cash flows:
Summary of Cash Flows
                                                   Year ended December 31,
                                                   --------------------------
                                                    1997     1998      1999
                                                   -------  -------  --------
                                                        (in thousands)
Cash provided by (used in) operating
    activities.................................... $25,938  $ 7,821  $(12,150)
   Cash used in investing activities.............. (18,519) (31,537)  (73,209)
   Cash (used in) provided by financing
    activities.................................... (10,802)  15,928   105,153
                                                   -------  -------  --------
   Net (decrease) increase in cash and cash
    equivalents................................... $(3,383) $(7,788) $ 19,794
Cash used in operating activities was $12.2 million in 1999, primarily due
to $32.2 million to pay the judgment in legal proceedings related to our
government services business and the use of $25.0 million to supply cash to
ATMs operated by a client in our electronic payment solutions business.

   Cash used in investing activities was $73.2 million in 1999, primarily due
to purchases of capital assets of $38.2 million, which included $17.3 million
for product development related expenditures. We also invested $13.0 million to
purchase an electronic check conversion company and $23.4 million to purchase
the remaining 50% ownership interest in HCL-Deluxe.

   Cash provided from financing activities was $105.2 million in 1999, of which
$108.8 million was provided by Deluxe and $3.1 million from borrowings on our
line of credit. We used cash to repay debt of $6.7 million.

   We had capital expenditures of $38.2 million in 1999, $30.5 million in 1998
and $18.0 million in 1997. We anticipate a substantial increase in our capital
expenditures in 2000 to complete the integration of our infrastructure and for
continued spending on product development. In particular, we intend to
consolidate our data centers and customer contact centers. We estimate our
capital expenditures to be approximately $62.5 million in 2000.

                                       31
In March 2000, we used $20 million of cash to purchase a 24% interest in a
provider of ATM management and outsourcing services to retailers and financial
institutions. We are obligated to provide up to $35 million of cash for use in
this provider's ATMs.

   We believe that our cash, cash equivalents, proceeds from this offering and
borrowings under our credit facilities will provide sufficient capital to fund
our operations for the foreseeable future.

Recently Issued Accounting Standards

   In April 1998, the Accounting Standards Executive Committee issued Statement
of Position (SOP) 98-5, "Reporting the Costs of Start-up Activities," which
provides guidance on the appropriate accounting for start-up activities
beginning in 1999. Application of the SOP did not have a material impact on our
reported operating results or financial position.

   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. We anticipate that the effect of this pronouncement,
which is effective for us on January 1, 2001, will not have a material impact
on reported operating results.

Market Risk Disclosure

   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 intercompany foreign currency denominated balance sheet positions.
Historically, the effect of movements in the exchange rates have not been
material to our consolidated operating results.

                                       32
BUSINESS

Overview

   We are a leading provider of end-to-end electronic debit payment solutions
to financial institutions, retailers, electronic funds transfer networks and e-
commerce providers. Our primary products and services include decision support
and risk management tools, electronic funds transfer processing, monitoring and
settlement services and professional services, including information technology
consulting and business process management.

   Our decision support and risk management tools combat identity fraud and
account abuse, using our leading DebitBureau database of more than 2.7 billion
debit records. We are a leading third party processor of electronic funds
transfers in the United States and can process electronic payments cost-
effectively to all electronic funds transfer networks on a worldwide basis. As
part of our comprehensive solutions, we offer professional services, including
implementation and integration of our software, custom software development,
creation of e-commerce applications and business process management.

   We offer our products and services as comprehensive solutions or as
independent offerings. We are a single source of electronic debit payment
solutions whether payments are made using payment cards or paper checks, or
whether the transaction is accomplished at retail locations or ATMs, through
mail or telephone orders or over the Internet.

Industry Background

   Electronic Payments. The global payment system is undergoing rapid change as
new technologies and the new business requirements, primarily in e-commerce,
cause newer electronic payment methods to supplant traditional paper methods.
Although paper payments, such as personal check, cash, bank and travelers
checks and food stamps, continued to represent more than 70% by dollar volume,
or $3,255 billion, of U.S. consumer payments in 1998, the Nilson Report
estimates that paper payments will decline to 52.1%, or $3,556 billion, of U.S.
consumer payments by 2005 while the dollar volume of debt card payments will
increase from 3.7%, or $168 billion, of U.S. consumer payments in 1998 to
10.9%, $743 billion, in 2005.

   The Nilson Report estimates that the number of U.S. debit cards payments
will increase from 4.9 billion transactions, or 4.9% of total consumer
transactions, in 1998 to 19.1 billion transactions, or 14.0% of total consumer
transactions, in 2005, representing a compound annual growth rate in debit
transactions of 21.6%. This compares to the number of U.S. credit card payments
which Nilson expects to increase from 17.1 billion transactions, or 17.4% of
total consumer transactions in 1998 to 21.9 billion transactions, or 16.1% of
total consumer transactions, in 2005, representing a compound annual growth
rate of only 3.1%. The Nilson Report further estimates that the number of U.S.
debit card transactions will overtake credit cards by 2007. In many
international markets, including United Kingdom and Canada, debit cards have
replaced credit cards as the leading form of consumer electronic payment. As a
result, financial institutions and retailers will require electronic payment
processes that facilitate newer electronic payment methods as well as increase
the efficiency of continued paper payment transactions.

   The growth in debit cards use is increasing as a result of its convenience
and safety. Consumers use debit cards to direct a bank to pay money from a
demand deposit account, such as a checking account. Debit card use is
increasing because it is widely accepted by retailers and provides
substantially the same level of convenience in making a purchase as credit
cards. In addition, debit cards allow a consumer to avoid accumulating credit
card debt, provide a single statement of the consumer's debit card and check
transactions on the consumer's bank statements and in many cases provide a
cash-back feature at the point-of-sale. For retailers, debit cards generally
entail lower transaction costs than credit cards due to higher processing costs
and fees for credit card payments and fewer fraud losses in the cases where the
debit card transaction involves the use of a unique personal identification
number, or PIN, assigned to the cardholder.

                                       33
e-Commerce. Growth in e-commerce transactions is also expected to increase
the need for electronic payment solutions. According to Forrester Research,
online retail purchases by U.S. consumers will grow from $20 billion in 1999 to
$184 billion in 2004, reaching 7% of total retail spending that year. Payment
for Internet transactions are primarily made by payment card, with an estimated
90% made using credit cards. This dependence on credit cards presents issues
for e-commerce companies. E-commerce companies face the potential for a
substantial amount of credit card fraud due to identity manipulation. PIN-based
debit transactions could help alleviate this problem for merchants and give
consumers a higher degree of confidence in the security of PIN-based Internet
transactions. By failing to provide debit payment alternatives, e-commerce
providers exclude the estimated 32.4% of U.S. consumers, according to the
Federal Reserve Bank, who do not have a credit card. Consequently, we believe
e-commerce companies are increasingly likely to look to debit card transactions
to expand payment options for consumers, to lower transaction costs, to provide
greater transaction security and to deliver more successfully completed
transactions.

   Financial Institutions and Merchants. In general, merchants and financial
institutions are seeking to increase the use of electronic payment systems to
decrease transaction costs. A study by the Bank for International Settlements
estimates that the cost of using electronic payments is one-third of the cost
of paper-based transactions. To facilitate electronic payments, merchants and
financial institutions are installing greater numbers of ATMs and point-of-sale
debit terminals. The number of these devices increased by 36.6% from 1998 to
1999 according to Bank Network News. Retailers and banks are also adopting new
technologies to reduce costs associated with paper checks. Electronic check
conversion technologies in which physical checks are scanned at the point-of-
sale and converted into an electronic transaction, are gaining acceptance.
Using electronic check conversion, retailers and banks can realize cost savings
and cash management benefits while enabling customers to continue their check
writing practices. NACHA, the electronic payments industry association,
estimates that more than one million checks per month are currently being
converted into electronic transactions at the point-of-sale. NACHA also
estimates that 25,000 merchants and 50 to 100 banks are using electronic check
conversion devices.

   A significant factor in transaction costs is debit fraud, including use of a
false or stolen identity, and account abuse, such as writing checks with
insufficient funds or opening and closing accounts to avoid payments. Debit
fraud losses totaled $1.3 billion for banks and $13 billion for merchants in
the United States in 1998, according to the Tower Group, and have increased for
merchants at a rate of 5% per year since 1996. In order to combat fraud
effectively, financial services companies and retailers require payment history
data and risk management decision support tools that enable them to identify
potential risks. Debit card transactions can reduce fraud because transactions
using PINs are less likely to be fraudulent than signature based transactions.

   Financial service companies also face pressures to adopt new payment
technologies to better serve their customers and reduce costs. Banks, credit
unions and savings banks are making substantial investments in on-line banking,
while brokers require efficient mechanisms for online opening and funding of
trading accounts. In each case, the financial service companies must find
online methods that reduce or eliminate the need to deliver paper checks and
manage the risk of online account funding. Financial service companies require
these services to retain highly valued customers and to position themselves for
expanded e-commerce activities. At the same time as financial services
companies and retailers are responding to these increasing demands for new
technologies and the rapid growth in e-commerce and internet delivery channels,
they also must control costs and address shortages of information technology
resources. One consequence is that financial institutions and retailers are
increasing their use of external information technology service providers. The
Tower Group estimates that spending by U.S. commercial banks on external
information technology services will increase from $26 billion in 1998 to $33
billion in 2002.

   Market Opportunity. To accommodate the variety of payment methods in use
today, merchants and financial institutions need various technologies for
acquiring, authorizing and processing payment transactions. These technologies
must provide an initial means to capture transaction data. For example, a
consumer may

                                       34
wish to use a debit card, ATM card, credit card or paper check to effect a
transaction. The financial institution or retailer must collect the consumer's
account and transaction information through a point-of-sale device, ATM,
telephone order, check or Internet interface. This account and transaction
information is processed through an electronic funds transfer system for
payment authorization and settlement. The system may also provide verification
and risk analysis filters to detect potential fraud. In addition, banks and
financial institutions need technologies that facilitate opening accounts
online, manage accounts more effectively and "cross-sell" additional services
through online access to customer payment data. The following diagram
illustrates the elements of the payment cycle.

              [DIAGRAM ILLUSTRATING THE FLOW OF THE PAYMENT CYCLE]

   To respond to the rapid changes and pressures in the payment industry,
companies require significant transaction processing and payment management
services and support. Financial service companies and retailers are seeking
tools that provide lower payment costs, fraud prevention and risk management,
decision support and secure transactions. In the past, these organizations have
needed to work with separate service providers to obtain the necessary tools.
The electronic payments industry has been divided between delivery and
transaction processing companies and information and analysis providers. At the
same time, financial service companies and retailers need access to
professional information technology resources so that they can exploit the
promise of new technologies.

Our Solution

   We offer comprehensive electronic debit payment solutions that enable our
clients to manage and combat fraud, transfer funds cost-effectively and enhance
their customer relationships. We provide a unique source of electronic debit
payment services that combines leading electronic funds transfer processing
capabilities and software with debit-based information and risk management
tools. In addition, our information technology professional services provide
clients with the resources to respond to the demands for new technology,
implement and integrate our solutions and develop new software applications.
With our products and services, our clients can enhance the value to them of
every debit transaction.

   Using our premier debit data, risk management tools and processing
capabilities, we can deliver integrated end-to-end payment management
solutions. Our products and services also can be deployed as separate modules
to fit our clients' needs. We believe this mix of leading capabilities and
flexible product offerings

                                       35
address developing market opportunities and provide us with the following
competitive advantages that are key elements of our success.

   End-to-End Solutions. We enable our clients to manage the complete
electronic debit payment cycle using our products and services. Our solutions
reduce transaction costs, manage risks and enhance customer relationships for
our clients by providing:

  .  risk management and decision support tools based on DebitBureau, our
     leading debit information database;

  .  customer relationship tools for opening financial accounts,
     electronically funding these accounts, minimizing fraud and identifying
     cross-selling opportunities;

  .  transaction processing, monitoring and settlement on an efficient, cost-
     effective and worldwide basis;

  .  information technology professional services to create e-commerce and
     Internet solutions, integrate our solutions and new technologies and
     develop custom software applications; and

  .  business process management services.

   In the past, merchants, banks and other financial services companies needed
to integrate debit payment services from numerous providers using disparate
technologies and platforms. We believe we are the only single-source provider
of comprehensive electronic debit payment solutions on an integrated basis.
Clients, however, can use our individual services that fit their needs and we
can implement these services in any environment.

   Premier Database. Our DebitBureau database is the most comprehensive source
of debit data in the industry. The database contains more than 2.7 billion
debit records, including account openings and closings, demand deposit account
activity, insufficient funds check-writing histories and check order histories.
It also includes credit information and household-specific demographic data.
Approximately 1.7 million records are added daily to DebitBureau. DebitBureau
provides a unique source of information because it aggregates data from market
leading services including SCAN, the most widely accessed check verification
database in the United States, and ChexSystems, the leading new account
applicant verification service used by more than 86,000 financial locations. We
also receive data from clients of Deluxe and over 82,000 retail locations. In
addition, we obtain data from credit bureaus and other data sources.

   The breadth and depth of DebitBureau allow us to develop more powerful risk
management and analytical tools. Our clients can draw on DebitBureau to make
better risk management decisions, such as authorizing a new demand deposit
account or accepting a check, and to improve customer relationship decisions,
such as identifying opportunities to cross-sell additional services to their
customers. We offer solutions that provide our clients online access to the
database and proprietary risk assessment models. Information on a proposed
debit transaction or an account opening is entered by a client into our system
and is analyzed to determine the likelihood of identity fraud or account abuse
or to assess the overall risk of opening a new account. The system also
identifies customers of our client's who are most likely to accept client
product offers. For example, our system enables financial institutions to sell
credit cards and home equity loans more effectively to new demand deposit
account customers and to set more appropriate limits on the customer's
privileges, such as maximum withdrawals in debit card transactions.

   Global Processing Capabilities. Using our electronic debit payment services,
our clients have the ability to process debit payment transactions through all
electronic fund transfer networks on a worldwide basis. Our network connects
with over 15,000 links to other networks and institutions throughout the world.
We are a leading third party processor of debit electronic fund transfers in
the United States, processing approximately five billion transactions in 1999.
Our processing services drive more than 98,000 point-of-sale devices and more
than 9,500 ATMs.

                                       36
For example, we are the single gateway for all of a major U.S. financial
institution's ATM transactions outside its internal network on a worldwide
basis, processing approximately 125 million transactions in 45 countries in
1999. Our processing services can provide a single gateway for electronic funds
transfers that can sort and execute all of a client's electronic debit payment
transactions using the appropriate networks. We also consolidate and report in
real-time a client's net cash position at a single location or across the
client's entire system. These and other features of our solutions enhance our
clients' cash management capabilities. Our processing services and software
perform high-volume online transaction processing, accommodate a wide variety
of terminal types, ranging from the Internet to ATMs, and support complex
networking relationships. We drive and manage the services for all major ATM
models through multiple telecommunication configurations.

   Expertise in Electronic Commerce. We have focused on facilitating electronic
payments since 1976. This long history and industry focus provides us with the
experience and capabilities to facilitate electronic debit payments through any
channel, including the Internet, point-of-sale device or ATM. Based on these
skills, we are uniquely positioned to enable debit transactions on the
Internet. We recently introduced Integreat!, an online service for opening,
funding and managing demand deposit accounts over the Internet, which extends
our fraud management and client account management tools to the Internet. We
also offer Web EFT, a browser-based Internet application that allows clients
automatically to collect and deposit pre-authorized customer payments. We also
have developed close relationships with market-leading clients as payment
technologies, business models and global financial systems have changed
dramatically. These close relationships provide us with market insights into
our clients' needs and conditions in global markets.

   Global Resources for Information Technology Solutions. Our high quality
professional services provide information technology solutions by teaming
onsite consultants in the United States who analyze and manage the project with
software developers in India who execute client-specific software solutions. We
employ over 1,300 software programmers worldwide. Our global delivery
capabilities gives us the ability to provide high quality, round-the-clock
development services at competitive prices. Our information technology
professionals customize and implement our electronic debit payment solutions
for our clients, develop new software applications for our solutions as well as
custom applications for our clients, and create custom e-commerce and Internet-
related software solutions. We are presently engaged by 20 companies for our
information technology professional services, including Bank One, the Pershing
Division of Donaldson, Lufkin & Jenrette and ReliaStar Life Insurance Company.

Our Strategy

   Our objective is to be the leading provider of electronic debit payment
solutions and information technology solutions to the electronic payment
industry and financial institutions. Key elements of our business strategy are
to:

  .  Expand e-Commerce and Internet Delivery Capabilities. We plan to devote
     significant resources to exploit e-commerce and Internet related
     opportunities. Based on our processing capacities, information
     capabilities and industry expertise, we believe we are uniquely
     positioned to help our clients take advantage of the efficiencies and
     revenue opportunities of e-commerce. We intend to continue to adapt our
     core capabilities in transaction processing, fraud prevention and client
     account management for Internet applications and to develop products and
     services that will enable new e-commerce channels, such as business-to-
     business electronic payment transactions. Our services can help make
     debit payments, which are under-represented on the Internet as a payment
     option, safer, easier to use, and more widespread in Internet
     transactions. In our product development pipeline are:

    .  PIN-secured debit payment applications for purchases on the
       Internet;

    .  ATM management applications that provide Internet access to product
       advertising on the ATM screen; and

    .  Internet check acceptance software that can accept, authenticate,
       authorize and settle a checking account-based debit transaction
       initiated over the Internet.

                                       37
.  Extend Technology Leadership. We intend to continue to enhance our
     position as a technology leader by introducing new products that provide
     greater risk management and value-added functionality. We have
     introduced QualiFile, a new account opening service for banks and
     brokerage firms that features improved risk scoring, enhanced financial
     and demographic targeting of cross-selling opportunities and expanded
     customized instructions. We have recently launched DataNavigator, a web-
     based, real-time electronic funds transfer data management and customer
     support platform that provides full back-office support with transaction
     research, real-time settlement and reconciliation services. To extend
     our technology position, we intend to leverage the development skills of
     our information technology professionals and expand our research and
     development role on behalf of financial institutions. We believe the
     ability to combine information and transaction delivery services will be
     a critical element in our success. To that end, we plan to invest in the
     technology and personnel required to expand our payment information
     capabilities and merge them into new, broader, faster and more versatile
     delivery systems.

  .  Expand Existing Client Relationships and Attract New Clients. Most of
     our clients currently use only a portion of our services. As we continue
     to integrate our information and processing capabilities with our
     professional services into new comprehensive, information-based payment
     management solutions that provide greater value for our clients, we
     believe we can expand our relationships with existing clients to provide
     additional services. In addition, we plan to provide solutions to our
     clients' e-commerce needs as they emerge. We intend to expand our sales
     force to develop new clients, build brand awareness and cross-sell all
     the components of our comprehensive suite of electronic payment
     management services. We also are seeking new clients in rapidly growing
     Internet markets such as online banking, electronic bill presentment and
     payment and business-to-business e-commerce.

  .  Seek Acquisition and Strategic Alliance Opportunities. We intend to
     pursue acquisitions of complementary businesses, technologies or product
     lines. We believe there are opportunities to make accretive acquisitions
     by adding services to enhance our comprehensive solutions. In addition,
     we plan to seek strategic relationships with key industry participants
     in order to broaden our market presence, reach new geographic and
     vertical markets, and increase our sales penetration by leveraging each
     partner's technology and expertise in specific markets, industry
     reputation and sales and marketing resources. For example, we recently
     acquired a 24% interest in a client of our transaction processing
     services that is a provider of ATM management and outsourcing services
     to retailers and financial institutions.

  .  Broaden International Sales. We currently derive approximately 10% of
     our revenue from international sales in 22 countries. We intend to
     expand in international markets by further penetrating our existing
     client base and by focusing on emerging international markets lacking
     established electronic payment systems.

Our Products and Services

   We deliver electronic debit-based payment management solutions to financial
institutions, retailers, electronic funds transfer networks and gateways and e-
commerce providers. To address our clients' electronic payment management
needs, we offer a comprehensive suite of products and services. We offer the
following three broad categories of products and services:

  .  decision support and risk management tools;

  .  electronic funds transfer processing, monitoring and settlement
     services; and

  .  professional services, including information technology consulting and
     business process management.

   Our products and services can be deployed on a stand-alone basis, or
combined with each other to provide an end-to-end solution. This flexibility
enables our customers to select individual services they need to meet their
current business objectives and then to add additional services as their
requirements evolve.

                                       38
Decision Support and Risk Management Tools

   We offer a variety of tools to help financial institutions, retailers and
other businesses that accept debit payments to:

  .  determine the likelihood of account fraud and identity manipulation;

  .  assess the overall risks involved in opening new accounts or accepting
     payment transactions; and

  .  make better predictions about other products their customers are likely
     to purchase.

   Our decision support and risk management tools are based on our DebitBureau,
the most comprehensive source of debit data, as well as credit and demographic
data. DebitBureau contains over 2.7 billion records, including account opening
and closing information, deposit account collections data, retail insufficient
funds check-writing histories and check order histories. We also record and
store third party information that our models use to screen for potentially
incorrect, inconsistent or fraudulent social security numbers, home addresses,
telephone numbers, driver license information and other indicators of possible
identity manipulation. Using the data, for example, we perform various tests to
validate the consumer's identification, and apply analytic and predictive
statistical models to assess and rank account risk and to match customers with
targeted financial products.

   Check Authorization. We operate SCAN, or Shared Check Authorization Network,
the most widely accessed check verification database in the United States. SCAN
serves 17 of the top 20 retailers in the United States, including Wal-Mart,
Kmart and Home Depot. More than 82,000 retail locations report returned check
activity to the SCAN network. We verified checks with an aggregate value of
approximately $181 billion in 1998. The SCAN database helps retailers reduce
the risk of write-offs for dishonored checks due to insufficient funds and
other forms of account fraud and identity manipulation. When a check is
presented as payment at the point-of-sale, SCAN members electronically access
the database by running the check through a scanner. The information on the
check is then compared to the database and analyzed for the likelihood of
fraud. The check scanner then indicates whether the retailer should accept or
reject the check. Merchants pay a service fee for SCAN based on the aggregate
dollar value of checks authorized by the retailer using SCAN and additional
fees per inquiry for customer or retailer calls to the call centers.

   As part of an integrated solution to help retailers manage their check
acceptance programs, we offer collection services to some SCAN members. We
tailor our collection strategies to specific retailer needs. The services
generally involve sending letters and follow-up telephone calls to consumers
whose checks have been returned. In addition, we extend to a limited number of
SCAN members the option of a portfolio purchase solution. Under this solution,
we purchase the returned checks from the retailer at a mutually agreed upon
total discounted purchase price and assume the collection liability.

   New Account Verification. Our ChexSystems business is the leading provider
of new account applicant verifications. This service is used by more than
86,000 financial institution locations. ChexSystems provides access to more
than 22 million closed-for-cause account histories and 53 million records of
new account inquiries. ChexSystems receives on average about 2.7 million new
account inquiries per month. This service helps financial institutions assess
the risks involved in opening new customer accounts. Financial institutions may
access the service online or by telephone. We also are developing an Internet-
based new account verification service.

   We also offer enhanced versions of our new account verification service. New
AccountChex performs social security number validation, and indicates whether
the applicant has made any other new account inquiries within the past 90 days
and had any accounts closed for cause within the past five years. AccountChex
Plus provides in addition to new account applicant verification, returned check
activity information and driver's license validation. Financial service
companies may access these products online or by

                                       39
telephone. We are also developing these products for use over the Internet.
Financial institutions pay a service fee for our new account verification
services based on the number of inquiries.

   As a separate service, we also provide collection services to financial
institution clients of ChexSystems. We do not assume any collection liability
for these services. We contract with a third party for extended collection
activity.

   FraudFinder. FraudFinder is an identity fraud-detection service for new
accounts which are opened in person or over the Internet. FraudFinder accesses
our comprehensive DebitBureau database to help financial service companies
identify potential identity manipulation and fraud. FraudFinder scores and
ranks new accounts according to their level of risk, using neural network
technology. A neural network is a complex mathematical model used to predict
the likelihood of future behavior by analyzing and learning from data supplied
about past behavioral patterns. The key to a neural network is the ability to
continuously "learn" from each new data input and thus improve its predictive
capability.

   The fee structure for FraudFinder consists of a one-time set-up fee and a
charge for each customer inquiry. FraudFinder, which we introduced in 1999, is
an enhanced version of our earlier fraud detection service. Currently, over 300
clients use FraudFinder, including Bank of the West, California National Bank
and Citizens Bank.

   In FraudFinder, we offer ID validation capabilities that assist businesses
in authenticating an individual and the personal information provided during an
account-opening event. These capabilities are incorporated in our on-line and
Internet-based account opening products. By validating and performing various
tests on an individual's social security number, driver's license information
and address and phone numbers, we are able to assess the likelihood of the
validity of the identity information provided.

   QualiFile. QualiFile is an online, real-time account-opening service. It
combines debit data from our DebitBureau with comprehensive credit, demographic
and financial product-use data to help financial service companies make
informed decisions about opening new accounts and financial product offerings
that new customers are more likely to accept. QualifFile has the following
features:

  .  QualiFile validates an applicant's identity and predicts the likelihood
     of account abuse by scoring the applicant's risk level.

  .  QualiFile creates a financial profile of the new customer and generates
     a list of targeted products that matches the customer's needs with the
     products offered by the financial institution.

  .  QualiFile simplifies and automates the account-opening process.
     QualiFile guides the new account representative through the new account
     process by presenting on-screen messages. These messages include whether
     to accept or deny the account, or review the decision with a manager, a
     customized list of products that may appeal to the new customer and
     product-offer dollar limits, rates and terms.

   The fee structure for QualiFile consists of a one-time set-up fee, a charge
for each customer inquiry and a monthly minimum participation fee. We
introduced QualiFile in September 1999. Clients using our QualiFile service
include BankUnited, Bank One, Union Planters and GTE Federal Credit Union.

   Integreat!. In December 1999, we introduced Integreat!, our first end-to-end
solution that helps financial services companies open new accounts for
consumers over the Internet. Integreat! streamlines the online account-opening
process by verifying the applicant's risk level, targeting financial product
offerings, funding accounts electronically and delivering checks, cards and
other account-related materials to the new customer. Integreat! incorporates
our QualiFile service to provide real-time ID verification, risk assessment and
customized financial product offerings. Once the new account is approved, the
applicant authorizes the

                                       40
electronic transfer of funds to the new account from an existing outside
account, which eliminates the need to deliver paper checks and speeds up the
time to funding.

   The fee structure for Integreat! consists of a one-time setup fee, a charge
for each customer inquiry and a monthly minimum participation fee. Clients
using our Integreat! service include USA Bancshares.com and Umbrellabank.com.
We believe that our Internet account opening and funding service has potential
applications in other customer markets. We are currently targeting online
brokerage firms.

   Debit Report Service. In February 2000, we began to offer reports on
consumer debit transactions that can be used as part of credit reports and
scoring models that assess a consumer's payment risk. We are targeting the
service to major credit issuers and credit bureaus.

  Transaction Processing

   Transaction processing involves:

  .  capturing the information required to conduct an electronic transaction,
     such as an ATM withdrawal or debit card payment through a point-of-sale
     device;

  .  electronically locating the cardholder's bank and account;

  .  verifying the validity of the account;

  .  authorizing the financial institution or merchant to accept the
     transaction;

  .  debiting the cardholder's account;

  .  crediting the merchant's or financial institution's account; and

  .  then electronically transferring the funds settlement.

For example, when a cardholder inserts his debit card into an ATM or point-of-
sale device and enters his PIN and the type and amount of the transaction, the
device contacts the processing company that operates that particular device and
transmits the information. The processing company identifies the institution
that issued the card and works through all the validation and authorization
routines, such as the correct PIN, limits on withdrawals, and whether there are
sufficient funds in the account. If all the routines are executed successfully,
the processing company signals the device to complete the transaction.

   To carry out the tasks required in an ATM or point-of-sale device
transaction, each machine is typically connected to several computer networks.
These networks include private networks that connect the devices of a single
device owner, shared networks that serve several device owners in a region and
national shared networks that provide greater access to devices across regions.
Each shared network has numerous financial institution members. For example,
the NYCE network has over 2,300 financial institution members, including Chase
Manhattan and FleetBoston Financial, and the StarSystem Network has over 3,400
financial institution members, including Bank of America and First Union.
Gateway service providers, such as eFunds, provide access to multiple networks.
The computer driving the device will route the transaction to the lowest
network level that can complete the task.

   Debit-based Transaction Processing. We are one of the largest third-party
processors for regional automated teller machine, or ATM, networks in the
United States. We also provide transaction processing for various types of
retail point-of-sale terminals that authorize payments from debit cards, checks
and electronic checks. We drive or operate more than 9,500 ATMs and more than
98,000 point-of-sale terminals. In 1999, we processed approximately five
billion debit transactions, with 99.99% availability and at speeds up to 600
transactions per second. We process virtually all types of debit-based
transactions, including cash withdrawals, cash deposits, balance inquiries,
purchases, purchases with cash back and purchase returns. In addition, we
authorize cash advances and purchases initiated with credit cards at ATM or
point-of-sale locations. We have

                                       41
the ability to process transactions to any electronic funds transfer network in
the world. This network accessibility enables a consumer to withdraw funds from
any ATM location, anywhere and at anytime.

   We are also developing Internet-based transaction processing. We have
entered into an agreement with NYCE, one of the largest operators of ATM and
debit card networks, to provide transaction processing over the Internet for
its SafeDebitTM, a PIN-based Internet debit payment product. This product
allows consumers to pay for purchases on the Internet with funds withdrawn
directly from their checking accounts.

   Our transaction processing services include: authorization and verification
of the payment transaction, capture and transmission of the transaction data,
settlement of the payment transaction and information reporting. We also
provide 24 hour a day, 7 days a week monitoring of 5,200 ATMs for system
irregularities, including the availability of ATM and point-of-sale terminals
and network access. Our transaction processing capabilities include:

  .  transaction processing from different types of ATMs and point-of-sale
     terminals, which may differ according to model, protocol and software;

  .  authorization and verification for online and offline debit and credit
     cards, including Mastercard or VISA bank cards, and paper and electronic
     checks;

  .  access to substantially all national and regional networks, such as
     MasterCard/Maestro/Cirrus, Visa/PLUS, American Express, Discover, STAR,
     NYCE, Pulse and MAC;

  .  transaction switching, allowing transactions to be routed
     internationally;

  .  data management through our DataNavigator, an optional product; and

  .  comprehensive settlement and reconciliation services.

   As part of our transaction processing services, we receive fees for
installation of the software and hardware; monthly transaction processing,
which includes a base fee plus a variable fee based on the number of
transactions; and additional services related to surcharged transactions,
network access and sponsorship, ATM operation, card and authorization services,
settlement services, ATM monitoring, testing resources and professional
services.

   EFT Processing Software. We license our electronic funds transfer software,
the same software that drives our electronic funds transfer processing
business, to in-house processors and regional networks in 22 foreign countries
and in the United States. In 1999, our licensees processed 10 billion
transactions around the world using our electronic funds transfer software. Our
electronic funds transfer software runs on IBM and Tandem computing platforms.
We also provide maintenance and support services.

   ACH Processing. We are one of the largest private sector automated
clearinghouse service, or ACH, providers. The ACH network is an electronic
payment delivery system used primarily to process repetitive payments, such as
payroll, social security payments and utility payments. The ACH network acts as
the clearing facility for routing electronic funds transfer entries between
financial institutions on behalf of their business customers. The Federal
Reserve is the largest ACH service provider.

   Our ACH services allow financial institutions to originate, receive,
balance, settle and edit their ACH transactions. We function as the financial
institution's ACH technology arm, giving the financial institution direct
control over its processing, but reducing the costs associated with operating a
processing and settlement infrastructure as an alternative to the Federal
Reserve as the exchange point. We also offer ACH switching services to members
of the American Clearing House Association which enable them to exchange and
settle ACH transactions with other member financial institutions. We also
provide calculation of daily settlement for ACH transactions, as well as
research and return capabilities.

   The fee structure for our ACH services consists of installation fees,
monthly fees and transaction fees.

                                       42
DataNavigator. DataNavigator is a user-friendly software tool for financial
services companies, networks and independent service providers that enables
real-time electronic funds transfer data management and customer support.
DataNavigator uses a client server architecture that features a comprehensive
data repository supported by both a Windows-based and web browser-based user
interface. DataNavigator helps cut costs and improve customer satisfaction by
speeding up settlement and reporting, streamlining transaction research and
reconciliation services.

   DataNavigator provides continuous settlement processing of electronic
transactions. Whether electronic funds transfer processing is handled in-house
or by a third party processor, DataNavigator can help users handle the
reporting, aggregation, reconciliation and settlement of transactions online,
as they arise. DataNavigator eliminates the traditional end-of-day bottleneck
for batch processing of settlement and reporting and simplifies transaction
research by providing a single point of access to all the electronic
transaction data on the user's network. Information is available to the
customer support staff immediately after a transaction occurs. DataNavigator
also provides detailed information about electronic funds transfer transactions
to help manage profitability and analyze consumer transaction behavior.
Transactions can be analyzed based on specific parameters, such as ATM location
or set dollar amounts at given locations. A bank that owns multiple ATMs, for
example, can determine its cash position at a particular ATM at any point
during the day. DataNavigator is fully operational in our transaction
processing centers and may be accessed by our transaction processing clients
for an additional fee or may be licensed by our software clients as an
additional module.

   Electronic Check Conversion. Our electronic check service converts paper
checks into electronic transactions at the point-of-sale. Under the electronic
check system, the consumer continues to write a check but the retailer runs the
check through a check reader to capture account data. The check is authorized
through SCAN OnLine, our real-time check verification service. Once the
transaction is accepted, the authorized amount of funds is deposited in the
retailer's account, generally within one day, and is debited from the
consumer's account using the ACH network.

   We believe that our electronic check service benefits retailers by reducing
paper check processing costs, minimizing bad-check write-offs and accelerating
funds collection. As of March 1, 2000, more than 3,000 locations use our
electronic check conversion service and seven companies remarket the service to
their merchant customers. We provide our electronic check service on a fee per
transaction basis.

   OnLine Banking. We offer an online banking software solution for Internet
delivery of financial services to home users and businesses. We are initially
targeting our Internet Financial Management product line to financial
institutions in western Europe and the United Kingdom. Our Internet Financial
Management product offers banking customers the flexibility to access their
bank accounts 24 hours a day, 365 days a year, using a web browser or new
devices such as web-enabled mobile phones and personal digital assistants.
Using our product, bank customers can:

  .  check account balances;              .  check the status of previous
                                             payment instructions;

  .  view transaction history;

                                          .  authorize or cancel payments
  .  search for a specific transaction;      awaiting processing;

  .  transfer funds between accounts;     .  maintain standing order and
                                             direct debit instructions; and

  .  maintain a list of payees;
                                          .  order checks and foreign
                                             currency.

   The software runs on the Windows NT operating system and employs the latest
encryption and authentication technology to enhance the security of
transactions. We introduced our Internet Financial Management product line in
June 1999. Currently, two clients are using the product on a pilot test basis.

                                       43
Electronic Bill Presentment and Payment. We plan to extend our ACH
processing services to help providers of electronic bill presentment and
payment and financial institutions manage payment origination, settlement and
collections. We are positioning our decision support and risk management tools
to address fraud and security concerns at the enrollment process. In addition,
we intend to use our information technology professional service capabilities
to help develop interoperability between developing electronic bill presentment
and payment systems and existing payment systems.

   Business-to-Business e-Commerce. Currently, we are developing systems and
services to facilitate the web-based delivery of various aspects of business-
to-business e-commerce including accounts receivable and accounts payable
processing and reporting, payment acquisition and settlement and the
electronification of retail and wholesale lockbox functions.

  Professional Services

   We have combined the information technology professionals from the various
business units being separated from Deluxe to form a single integrated
information technology professional services group. We offer a full range of
information technology professional services to complement our electronic debit
payment business and on a stand-alone basis. We specialize in the
implementation and integration of our own and third-party software products;
the development, redevelopment and maintenance of a broad range of computer
software applications; and the development of custom e-commerce and Internet
solutions. In addition, we offer business processing management services, such
as accounting operations, transaction processing and call center operations, at
our shared services center in Delhi, India. We offer our professional services
either on a fixed-price, fixed-time basis or on a time and materials basis. In
1999, we derived approximately 80% of our information technology service
revenue from time and material contracts. Currently, we are targeting our
services to financial institutions and other businesses that accept debit
payments, such as retailers and e-commerce providers.

   We provide our services through a global software development model which
combines industry, product and technical specialists based in our facilities in
the United States, United Kingdom, India and Australia. Our global delivery
capabilities give us the ability to provide high quality, round-the-clock
development services at competitive prices. Our information technology
professional services group includes over 1,300 consultants and software
developers, including approximately 900 people in the United States,
approximately 300 people in our two software development centers in India and
approximately 100 people in the United Kingdom. Our first software development
center has been assessed at Level 3 of the Software Engineering Institute's
Capability Maturity Model. The Software Engineering Institute's Capability
Maturing Model ratings are internationally recognized standard for assessing
the level of maturity and consistency of software development centers. The
Level 3 rating provides evidence of the quality and consistency of our offshore
software development capabilities, placing the center in the top 10% of all
software development facilities that have been rated. We opened our second
software development center in March 2000.

   Software Development Services. We provide a variety of software development
services that cover all stages of the software development cycle. We develop
new custom applications for our clients on a variety of technology platforms,
including mainframe and client-server based, and in a variety of programming
languages. We specialize in developing financial applications, particularly
those used by large complex financial institutions in the banking, insurance
and securities industries. Our experienced professional group can install,
implement and integrate third party software applications within our client's
information technology infrastructure. We perform testing and performance
tuning of customer and third-party applications, and perform migration of
customers' legacy applications to client-server and Internet platforms. We also
provide on-going support and maintenance of customer applications. In addition,
we provide a number of specialized software application services, including
workflow management and document imaging services, SAP implementation and
support services and project management services. Examples of our software
development projects include the development of a custody application for a
major stock transfer company and documenting management systems implementation
and workflow analyses for the corporate trust division of a major bank.

                                       44
Product Based Professional Services. To complement and support our
electronic debit payment solutions, we provide our clients with consulting
services, customization and implementation services and educational and
training programs. Specifically, our services include the installation of our
electronic debit payment solutions and implementation and integration of these
solutions within the customer's existing information technology infrastructure.
We also customize our standard products and develop new applications for
clients who want additional features and functionality. We help clients test
and performance tune our products in their information technology environments.
In addition, we provide on-site user training on our products and solutions for
the information technology, operations and management staff of clients. We
build long-term continuing relationships with our clients by providing on-going
maintenance and support of our software products and solutions.

   e-Commerce and Internet Services. We help clients to develop e-commerce and
Internet-related solutions. Our services enable our clients to process
business-to-customer, business-to-business and customer-initiated transactions
over the Internet. The scope of our capabilities include: multi-channel
integration for financial institutions, such as integration of call centers,
ATMs, personal computer and Internet banking, development of client extranets
and intranets and enablement of electronic bill presentment and payments. For
example, we are currently providing project management services to a major U.S.
bank to develop its Internet-based account opening process.

   Business Process Management Services. In addition to our information
technology professional services, we offer business process management and
outsourcing services. We focus on both back-office and customer support
business processes, such as accounting operations, transaction processing and
call center operations. Our business process outsourcing services are provided
primarily at our shared services facility in India. This facility is staffed
with over 150 experienced business process personnel. Our offshore business
processing capabilities allow the client to focus on its core processes, reduce
the client's direct personnel costs, allow the client to avoid non-core capital
investments and improve the quality of the client's outsourced operations.

   Currently, we provide process management services only to Deluxe under a
five year agreement. These services consist of accounts receivable, accounts
payable and general ledger processing services. For additional information
concerning this agreement, see "Agreements Between eFunds and Deluxe -- Master
Services Agreement" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Recent Events." We have recently started
to market our business process management services to financial institutions
and other clients as well. We believe this line of business will tie in to our
business-to-business e-commerce and workflow management services to provide a
complete end-to-end back-office management solutions to our clients.

  Government Services

   We provide online electronic benefits transfer services on behalf of
governmental agencies responsible for the administration and management of
selected entitlement programs, primarily the Food Stamps and Transitional Aid
to Needy Families (formerly Aid to Families with Dependent Children) program.
Our electronic benefits transfer processing system manages, supports and
controls the electronic payment and distribution of cash benefits to program
participants through ATMs and point-of-sale networks. Our services reduce
operating costs and fraud for the government agency administering the benefits
program, eliminate the food stamp stigma for recipients through the use of a
plastic ATM-like card and make benefits more readily available to recipients at
retail point-of-sale terminals and ATMs.

   We provide electronic benefits transfer services to individual state and
local governments or coalitions of state governments formed to purchase these
services jointly. We provide these services as a prime contractor or
subcontractor to nine individual state and local governments. We also are a
subcontractor for three coalitions of state governments, representing 21
states. Our services are typically provided for a fixed fee per welfare case

                                       45
plus fixed fees per transaction through the system. State and local governments
require that we enter into long-term contracts, typically five to seven years
in duration.

   The principal components of this service include:

  .  transaction processing, including real-time transaction capture,
     authorization, and settlement;

  .  point-of-sale terminal deployment and terminal operation for merchants;

  .  telecommunications network management;

  .  benefits card production and database management;

  .  financial settlement of funds with automated clearing house transfers;

  .  help desk support for program participants, merchants and government
     personnel; and

  .  electronic funds transfer gateway services.

   We also offer a Medicaid eligibility verification processing service that
performs online verification of a person's eligibility for Medicaid services.
Our system provides authorization services, drug utilization review and
electronic claims capture and transmissions for pharmacies and managed care
firms. Currently, we provide the service for the State of New York's Medicaid
program. This program serves over 177,800 health care providers and 4.2 million
cardholders through 19,500 point-of-sale terminals. In 1999, our Medicaid
eligibility verification processing service generated revenues of approximately
$10.1 million, or about 21% of our government services revenue.

   We have had a history of operating losses and charges for asset impairment
related to our electronic benefit transfer services as described earlier in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." As a consequence, we have determined to exit this business as soon
as our current contractual commitments expire in 2006. During the wind down
period, we intend to continue to take steps to improve the profitability of the
current business. Deluxe has agreed to indemnify us for any losses on
identified loss contracts in excess of the reserves up to $      .

Clients

   The following is a representative list of our corporate clients.
Financial Institutions          Retail              Network/Gateway           Internet
------------------------  --------------------- ------------------------- ------------------
Bank One                Food Lion       Access Cash International USA Bancshares.com
       Bank PEKAO              Home Depot          Cashcard Australia      Umbrellabank.com
    Bank of America            J.C. Penney              Citishare               X.com
    Bank of Montreal              Kmart          CU Cooperative Systems
        Citibank                 Kroger                   NYCE
 FleetBoston Financial      Lowe's Companies     Primary Payment Systems
International Nederlande  National Data Funding         Pulse EFT
   The Royal Bank of
        Scotland                 Safeway               STAR System
    Wells Fargo Bank             Target
                                Wal-Mart
In 1999, none of our clients individually accounted for 10% or more of our
total revenues. In 2000, we expect that Deluxe will account for at least 10% of
our total revenues. We intend to expand our client base in new markets,
including e-commerce providers, online brokerages, telecommunication firms,
insurance companies and utilities.

                                       46
Sales and Marketing

   We market our electronic payment management services and software products
and information technology professional services through a direct sales force
and indirect sales channels, such as distributors, resellers, alliances and
partnerships. We organize our direct sales force by customer market segment,
including financial institutions, networks and gateways, retailers and e-
commerce providers. Our direct sales force focuses on our customers needs and
is capable of selling all or a portion of our products and services to offer
the most effective solution for those needs. We work collaboratively with our
customers and prospective customers to help them identify and create new
solutions. Because many of our customers use a single product or service, or a
combination of products or services, our direct sales force has begun to target
existing customers to capture cross-selling opportunities. We plan to focus our
information technology services marketing efforts on large U.S. financial
institutions and other businesses that accept debit payments.

   We have full service direct sales offices in Milwaukee, Wisconsin;
Minneapolis, Minnesota; Phoenix, Arizona; Dallas, Texas; San Francisco,
California; New York, New York; and Charlotte, North Carolina. These offices
coordinate direct sales and arrange indirect sales channels in the various
regions. As of March 1, 2000, our direct sales force had 99 full-time
professionals. We intend to increase our sales force by adding new field sales
offices and by adding sales and marketing personnel to our existing
territories.

   To further facilitate broad market penetration and complement our direct
sales efforts, we plan to expand our indirect sales channels, especially in
international markets. These indirect channels includes resellers, distributors
and alliances. Our indirect sales partners include VISA USA, Access Cash
International, eProfile, IBM Australia/NZ and Card Soft International a.s.

   We build awareness of our products and services and the eFunds corporate
name through targeted advertising, public relations, participating in trade
shows and conferences and providing product information through our web site.

Customer Support, Technology and Infrastructure

   Customer Support. We believe that providing superior quality and accessible
and reliable customer and technical support is essential to developing and
maintaining customer relationships in each business segment. We provide
customer support services through our customer contact centers located in
Bloomington, Minnesota; Bothell, Washington; and Dallas, Texas. Our contact
centers are open 24 hours a day, 7 days a week and provide access to website,
e-mail and telephone support. As of March 1, 2000, we had 1,400 employees in
customer and technical support functions. In addition to user questions and
technical issues, we respond to inquiries in accordance with the Fair Credit
Reporting Act from consumers who have been denied check authorization or
rejected for a new account. We also provide on-site customer support services
in connection with our other products and services, and charge a separate fee
for these services based on an hourly rate.

   Technology. Our products are configured to run on operating systems widely
adopted by the electronic debit payment industry. These include the Tandem,
IBM, UNIX and Windows operating environments. Our software is developed using
C, C++, Cobol, HTML and other programming languages. Our software products are
modular in design and flexible in implementation, so that they can accommodate
specific customer requirements. Our software products are interoperable with a
wide range of terminal types and computer networks, and support a variety of
communications protocols, such as TCP/IP.

   As of March 1, 2000, we employed over 1,300 software programmers at our
offices in Milwaukee, Wisconsin; Minneapolis, Minnesota; Phoenix, Arizona;
Seattle, Washington; Toronto, Canada; Runcorn and Watford, United Kingdom;
Sydney, Australia; and Chennai, India.

   Data Centers. We operate two highly secure, fault-tolerant data centers in
New Berlin, Wisconsin and Phoenix, Arizona. Our data centers have been
engineered to ensure minimal exposure to systems failure and unauthorized
access. Our data centers contain multiple separate computer rooms to provide
containment and

                                       47
isolation. Physical security has been implemented through restricted card key
access and closed circuit T.V. cameras. We use redundant uninterruptible power
supplies with battery backup and redundant generators to ensure continuous flow
of power to the data center in the event of any component failure or power
outage. The facilities have dual-entrance, fiber optic SONET service for
telecom redundancy.

Research and Product Development

   We believe that our future success will depend in large part on our ability
to develop new and enhanced electronic payment management solutions. We are
focusing our product development efforts on electronic payment software
solutions for Internet and e-commerce providers, as well as insurance
companies, utilities and telecommunication companies. For example, we are
currently working with a third party to develop the application of voice
authentication software and technology to the debit payments industry.

   We have developed all of our electronic payment software solutions
independently through our software development group. Our principal research
and development sites are located in Runcorn and Watford, United Kingdom;
Sydney, Australia; and Glendale, Wisconsin. Our research and development
expenses were $3.7 million in 1999, $625,000 in 1998 and $1.4 million in 1997.
Our capitalized software development costs were $17.3 million in 1999, $3.2
million in 1998 and $5.0 million in 1997.

Competition

   The market for electronic debit payment solutions is intensely competitive
and evolving. We face significant competition in all of our customer markets.
Further, we expect that competition will intensify as the e-commerce and
Internet markets continue to develop and expand. We believe that the principal
competitive factors include price, quality, features, functionality and
reliability, customer service and support, and the ability to deliver
comprehensive solutions. Our competition falls into the following categories:

  .  third-party network and credit card processors, such as First Data,
     Equifax, Total System Services, EDS, Concord EFS and Alliance Data
     Systems;

  .  financial institutions that have developed in-house processing
     capabilities or services similar to ours, such as Bank of America,
     Marshall and Illsley and Fifth Third National Bank;

  .  electronic data interchange and cash management providers, such as
     Fiserv, CheckFree, M&I Data, EDS and Fundtech;

  .  electronic bill payment providers, such as CheckFree, EDS, MasterCard,
     Spectrum and Visa;

  .  electronic funds transfer software solution providers, such as
     Transaction System Architects, SLMsoft, Oasis, Mosaic and PaySys; and

  .  national information database companies, such as Equifax, Experian and
     TransUnion, and other content providers.

   The information technology services market is highly competitive and is
served by numerous firms. To date, we have faced competition and sales
resistance from internal information technology departments of current and
potential customers. In addition to in-house information technology
departments, market participants include systems consulting and integration
firms, application software firms, Internet professional service companies,
professional services divisions of computer hardware and software vendors,
facilities management and outsourcing companies, "Big 5" accounting firms and
strategy consulting firms. We also expect that competition will increase as a
result of software industry consolidation. We compete by offering financial
institution industry experience, high quality services, competitive prices,
global delivery capability and technical expertise.

   In all areas of our businesses, many of our competitors have significantly
greater financial, technical, marketing and other resources, greater name
recognition and a larger installed base of customers than we do. In

                                       48
addition, current and potential competitors have established or may establish
relationships with potential clients of ours, have extensive knowledge of our
business and have developed or are capable of offering alternative solutions.
In addition, current and potential competitors have established or may
establish alliances with third parties to increase their ability to develop and
market products and services. It is possible that new competitors or alliances
among established companies may emerge and rapidly acquire significant market
share.

Data Stewardship

   We collect consumer data from multiple sources, including through:

  .  participating members of SCAN;

  .  participating members of ChexSystems;

  .  Deluxe's check printing customers;

  .  credit bureaus;

  .  state governmental agencies (e.g., Department of Motor Vehicles); and

  .  federal governmental agencies (e.g., Social Security Administration).

   We obtain the data under agreements or licenses with suppliers. Some of
these agreements impose restrictions on the use and resale of the data and
others are governed by the Fair Credit Reporting Act. We do not use or sell the
data for direct marketing purposes.

   We have a strong commitment to the responsible use of data, including the
protection of consumer privacy rights. We have taken several measures to
fulfill this commitment, including actively participating in the development of
industry-wide privacy standards; maintaining strict information practices and
policies; and creating an internal information-practices council and systems to
oversee appropriate data usage.

   Our information practices and policies include the following:

  .  Accuracy. We use stringent procedures to ensure that information
     collected, used and exchanged will be accurate and complete.

  .  Security. We employ the most advanced security measures for protecting
     information from unauthorized access, use and disclosure.

  .  Compliance. We collect, use and disclose information in accordance with
     the federal Fair Credit Reporting Act, applicable state laws and
     contractual obligations.

  .  Confidentiality. We collect, use and exchange information in accordance
     with strict confidentiality standards.

  .  Privacy. We promote self-regulation in recognition of consumers'
     expectation of privacy and adhere with industry standards, such as those
     established by the Direct Marketing Association and the American Bankers
     Association.

  .  Responsiveness. We employ extensive internal monitoring systems and
     conduct ongoing customer surveys to maintain high quality and timely
     response standards with respect to consumer inquiries.

  .  Employee education. We educate our employees regarding sound information
     practices and the proper handling and use of information.

                                       49
Government Regulation

   Various aspects of our businesses are subject to federal and state
regulation. Our failure to comply with any applicable laws and regulations
could result in restrictions on our ability to provide our products and
services, as well as the imposition of civil fines and criminal penalties.

   As a provider of electronic data processing services to financial
institutions, we are subject to regulatory oversight and examination by the
Federal Financial Institutions Examination Council, an interagency body
comprised of the various federal bank and thrift regulators and the National
Credit Union Association. In addition, we may be subject to possible review by
state agencies that regulate banks in each state where we conduct our
electronic processing activities.

   Because we collect and disclose debit data and other personal information
about consumers, we are subject to the federal Fair Credit Reporting Act and
any state laws providing greater consumer protections. The Fair Credit
Reporting Act provides that consumers have the right to know the contents of
the records pertaining to them and maintained at our consumer reporting
agencies, to challenge the accuracy of the information and to have the
information verified, updated or removed. To comply with these requirements we
maintain consumer relations call centers for each of our consumer reporting
businesses. We are also required to maintain a high level of security for the
computer systems in which consumer data files reside.

   Our financial institution customers will be subject to the consumer privacy
requirements of the new federal financial modernization law, known as the
Gramm-Leach-Bliley Act. The Act imposes significant consumer information
privacy requirements on any entity engaged in the business of providing
financial services, including entities that provide services to banks. The
privacy provisions of the Act impose on each entity subject to the new consumer
privacy requirements an affirmative obligation 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. The Act directs
each functional regulator to issue appropriate standards for carrying out this
duty. The banking regulators and the Federal Trade Commission have recently
issued proposed regulations implementing the privacy portions of the Act for
industry comment. The proposed banking regulations do not restrict the ability
of consumer reporting agencies to collect and disclose information subject to
the Fair Credit Reporting Act. The proposed FTC regulations, however, contain a
broad definition of "financial institution" which could, if enacted, subject
consumer reporting agencies, collection agencies, and data processors to the
disclosure and opt out requirements of the Act regardless of whether they have
consumers as customers.

   The privacy provisions of the Act require each financial institution to
provide an "opt-out" notice to consumers and an opportunity to opt-out before
sharing nonpublic personal information with an unaffiliated third party. There
are numerous exceptions that do not require that any notice or opportunity to
opt-out be given to consumers. These include:

  .  transfers of consumer information made to protect the confidentiality or
     security of a consumer's records; to protect against or prevent actual
     or potential fraud, unauthorized transactions, claims or other
     liability; for required institutional risk control; and for resolving
     customer disputes or inquires;

  .  transfers of consumer information to a consumer reporting agency
     pursuant to the Fair Credit Reporting Act; and

  .  transfers between affiliates of consumer reports produced by a consumer
     reporting agency in compliance with the Fair Credit Reporting Act.

   We believe these exceptions apply to our consumer reporting business and
will permit banks to provide debit data and other nonpublic personal
information to us without triggering the opt-out requirement. However,

                                       50
Congress and many states are considering more stringent laws or regulations
that, among other things, restrict the purchase, sale or sharing of nonpublic
personal information about consumers. Given the current public concern over
consumer privacy rights, it is possible the Congress, individual states and
governmental agencies could enact new laws or regulations governing consumer
protection in the future. If enacted, these laws or regulations could directly
affect our ability to collect and use consumer data and could have a material
adverse effect on our business, results of operations and financial condition.

   Our debt collection services are subject to the Fair Debt Collection
Practices Act and state collections statutes and licensing requirements.

   Laws and regulations may be adopted in the future with respect to the
Internet or e-commerce covering issues such as user privacy, pricing, content,
copyrights, consumer protections, taxation and characteristics and quality of
products and services. New laws or regulations may impeded the growth of the
Internet. This could decrease the demand for our products and services and
increase our cost of doing business. Moreover, the applicability to the
Internet of existing laws governing property ownership, taxation, libel and
personal privacy is uncertain and may remain uncertain for a considerable
length of time.

Intellectual Property Rights

   We rely on a combination of trademark, copyright, trade secret law and
confidentiality or license agreements to protect our proprietary rights in
products, services, know-how and information. Intellectual property laws afford
limited protection. It may be possible for a third party to copy our products
and services or otherwise obtain and use our proprietary information without
our permission. There is no assurance that our competitors will not
independently develop services and products that are substantially equivalent
or superior to ours.

   With regard to our information technology services, our business consists of
software applications development. Ownership of this software is generally
assigned to the client. We also develop software components that can be reused
in software application development and software toolsets, most of which
remains our property.

Employees

   As of March 1, 2000, we had approximately 3,200 full-time employees,
including 2,500 persons employed within the United States and 700 persons
employed outside of the United States, including India. Of our total number of
employees, 1,300 persons were engaged in software development, 1,400 persons
were engaged in customer and technical support services, 140 persons were
engaged in sales and marketing and 360 persons were engaged in administrative
functions.

   None of our employees are represented by a labor union, and we consider our
employee relations to be good.

Facilities

   The following table sets forth a description of our principal facilities:
Owned or Lease
                          Approximate   Expiration
         Location         Square Feet      Date               Function
   ---------------------  ----------- -------------- ---------------------------
Milwaukee, Wisconsin     171,250       Owned      Marketing, development and
                                                           administration
   New Berlin, Wisconsin     82,600       Owned              Data center
     Phoenix, Arizona        92,813       Owned              Data center
      Chennai, India         18,614    January 2008  Software development center
       Delhi, India          40,950    January 2002    Shared services center
51
Owned or Lease
                           Approximate   Expiration
          Location         Square Feet      Date               Function
   ----------------------  ----------- -------------- ---------------------------
Chennai, India        38,750    September 2002 Software development center
   Bloomington, Minnesota    50,623      June 2002      Customer contact center
    Shoreview, Minnesota     49,500    September 2001       DebitBureau and
                                                         professional services
    Bothell, Washington      34,309     August 2004     Customer contact center
    Bothell, Washington      24,702    September 2006        Office center
       Dallas, Texas         42,052     January 2001    Customer contact center
       Mesa, Arizona          3,208     August 2001     Business recovery site
   New Berlin, Wisconsin      5,500      June 2000             Warehouse
The leases set forth above generally have a term of 3 to 10 years, most of
which have options to extend for at least 3 years. We believe that our current
facilities are adequate to meet our space requirements and that additional
space will be available at a reasonable cost to meet our future needs.

Legal Proceedings

   On May 14, 1999, we filed a trademark infringement action against Citizen
Advisers, Inc. in the United States District Court for the Central District of
California. The complaint alleges false designation of origin and trademark
infringement, trade name infringement and unfair competition under California
law regarding the use of the "E FUND" mark and efund.com internet domain by
Citizen Advisers. We are seeking injunctive relief to prevent Citizen Advisers
from using the "E FUND" mark and efund.com internet domain, cancellation of
Citizen Advisers trademark registration of the "E FUND" mark and damages and
expenses, including attorneys' fees. The case is in the discovery stage and no
trial date has been set.

                                       52
MANAGEMENT

Directors and Executive Officers

   Our directors and executive officers are as follows:
Name                     Age                          Position
   ----                     ---                          --------
John A. Blanchard III...  57 Chairman of the Board and Chief Executive Officer, Director
   Debra A. Janssen........  43 President and Chief Operating Officer
   Dr. Nikhil Sinha........  39 Executive Vice President, Global Corporate Development
   Paul H. Bristow.........  57 Executive Vice President and Chief Financial Officer
   Steven F. Coleman.......  41 Senior Vice President, General Counsel and Secretary
John A. Blanchard III has served as Chairman of our Board of Directors and
Chief Executive Officer since March 1, 2000. Mr. Blanchard has served as
President and Chief Executive Officer of Deluxe since May 1995 and as Chairman
of the Deluxe Board of Directors since May 1996 and will continue to serve in
those capacities until the completion of the split-off from Deluxe. From
January 1994 to April 1995, Mr. Blanchard was executive vice president of
General Instrument Corporation, a supplier of systems and equipment to the
cable and satellite television industry. From 1991 to 1993, Mr. Blanchard was
chairman and chief executive officer of Harbridge Merchant Services, a national
credit card processing company. Previously, Mr. Blanchard was employed by
American Telephone & Telegraph Company for 25 years, most recently as senior
vice president responsible for national business sales. Mr. Blanchard also
serves as a director of Wells Fargo and Company and ADC Telecommunications Inc.

   Debra A. Janssen has served as our President and Chief Operating Officer
since March 1, 2000. Ms. Janssen joined Deluxe's Electronic Payment Solutions
division in February 1998 as Senior Vice President and was named President and
Chief Executive Officer of that division in March 1998. Prior to joining us,
Ms. Janssen worked for 14 years for M&I Data Services in a variety of
capacities, most recently as senior vice president and chief information
officer.

   Paul H. Bristow has served as Executive Vice President and Chief Financial
Officer since March 2000. From 1993 until joining our company, Mr. Bristow
served as Executive Vice President - Finance Administration and Chief Financial
Officer of Galileo International, a computer reservation system company for the
travel industry. Previously, Mr. Bristow held various finance, accounting and
auditing positions with London International Group, plc, ITT Europe, ITT
Canada, Philip Morris and Arthur Andersen.

   Dr. Nikhil Sinha has served as our Executive Vice President, Global
Corporate Development since March 1, 2000. Previously, Dr. Sinha served as
President and Chief Executive Officer of iDLX Technology Partners, Deluxe's
Professional Services Division, from June 1999 to February 2000. He was a
director of the Telecommunications and Information Policy Institute at the
University of Texas at Austin from September 1997 to May 1999 and associate
professor of International Communication from 1991 to 1997. Dr. Sinha has
worked as a consultant to the Informatics and Telecommunications Division for
the World Bank and as an advisor to the Indian Telecom Commission and the
Indian Planning Commission. Dr. Sinha also serves on the advisory committee of
the Indo-US Sub-Commission on Education and Culture. He is co-founder and
director of Sinha & Lariviere, Ltd., a consulting firm providing strategic and
investment advisory services to U.S. companies doing business in South Asia.

   Steven F. Coleman has served as Senior Vice President, General Counsel and
Secretary since March 2000. From 1996 until joining our company, Mr. Coleman
worked as a Senior Attorney for Deluxe. Prior to joining Deluxe, Mr. Coleman
was associated with Dorsey & Whitney, a law firm located in Minneapolis,
Minnesota, and Fried, Frank, Harris, Shriver & Jacobson, a law firm located in
New York, New York.

                                       53
Board Composition

   Our board of directors is currently comprised of one director, Mr.
Blanchard. Prior to the completion of this offering, we expect that our board
will consist of seven directors. The additional directors will include three
interim directors, who will be representatives of Deluxe and will continue to
serve on our board until the completion of the split-off; two current directors
of Deluxe, who will continue to serve on Deluxe's board until completion of the
split-off; and one member of the current management team. In addition, we are
currently searching for additional independent directors. Our board of
directors will be divided into three classes for purposes of election. One
class will be elected at each annual meeting of stockholders to serve for a
three year term.

Board Committees

   Our board of directors will appoint an audit committee and a compensation
committee.

   Audit Committee. The functions of the audit committee, which consists of
     ,       and       include:

  .  reviewing the adequacy of our system of internal accounting controls;

  .  reviewing the results of the independent auditors' annual audit,
     including any significant adjustments, management judgements and
     estimates, new accounting policies and disagreements with management;

  .  determining the duties and responsibilities of the internal audit staff;

  .  reviewing the scope and results of our internal auditing procedures;

  .  reviewing our audited financial statements and discussing them with
     management;

  .  reviewing the audit reports submitted by both the independent auditors
     and our internal audit staff;

  .  reviewing disclosures by independent auditors concerning relationships
     with our company and the performance of our independent auditors and
     annually recommending independent auditors;

  .  adopting and annually assessing our charter; and

  .  preparing such reports or statements as may be required by Nasdaq or the
     securities laws.

   Compensation Committee. The compensation committee consists of      ,      ,
and      . The functions of the compensation committee currently include:

  .  reviewing our general compensation strategy;

  .  reviewing the terms of employment agreements for executives earning over
     a specified amount and approving compensation for executives if their
     compensation is, or may become, subject to Section 162(m) of the
     Internal Revenue Code; and

  .  administering our compensation and benefit plans.

Director Compensation

   We will compensate our non-employee directors with an annual retainer of
$15,000, meeting fees of $1,000, committee chair fees of $2,500 and annual
options under the 2000 Stock Incentive Plan valued at $50,000. We expect to
allow our directors to elect to receive stock in lieu of cash or to participate
in some form of deferred compensation plan.

Stock Ownership of Directors and Executive Officers

   All of our common stock is currently owned by Deluxe, and thus none of our
directors and executive officers own any shares of our common stock. To the
extent our directors and executive officers own shares of Deluxe common stock
at the time of the split-off, they will participate in the exchange offer on
the same terms as other holders of Deluxe common stock.

   The following table sets forth the number of shares of Deluxe common stock
beneficially owned on March 15, 2000 by each director, each executive officer
named in the Summary Compensation Table in the

                                       54
"-- Executive Compensation" section below, and all of our directors and
executive officers as a group. Except as otherwise noted, the individual
director or officer had sole voting and investment power with respect to such
securities. The total number of shares of Deluxe common stock outstanding as of
March 15, 2000 was 72,218,276.
Shares of Deluxe
                                                            Beneficially Owned
                                                            ------------------
Name of Beneficial Owner                                    Number  Percentage
------------------------                                    ------- ----------
John A. Blanchard III (1).................................. 478,221     *
Debra A. Janssen (2).......................................  18,539     *
Dr. Nikhil Sinha (3).......................................  14,480     *
Paul H. Bristow............................................       0     *
Steven F. Coleman (4)......................................   4,415     *
All directors and executive officers as a group (5
 persons).................................................. 504,199     *
--------
*  Represents holdings of less than one percent.
(1) Includes: 39,221 shares of common stock directly owned; 25,000 restricted
    shares, awarded May 1, 1995 under Deluxe's Stock Incentive Plan, which
    restrictions will expire on May 1, 2000 if, subject to certain conditions,
    Mr. Blanchard remains in continuous employment until such date; and options
    to purchase 414,000 shares of common stock that are currently exercisable
    or will be excercisable within 60 days.

(2) Includes: 1,649 shares of common stock directly owned; 1,889 restricted
    shares that will convert into shares of Deluxe common stock on January 28,
    2001 if, subject to certain conditions, Ms. Janssen remains in continuous
    employment until such date; and options to purchase 15,001 shares of common
    stock that are currently exercisable or will be exercisable within 60 days.

(3)  Includes: 3,024 shares of common stock directly owned; and 11,456
     restricted shares awarded January 29, 2000 under Deluxe's Stock Incentive
     Plan, which restrictions will expire on the one year anniversary of this
     offering if, subject to certain conditions, Dr. Sinha remains in
     continuous employment until such date.

(4)  Includes: 448 shares of common stock directly owned and options to
     purchase 3,967 shares of common stock that are currently exercisable or
     will be excercisable within 60 days.

                                       55
Executive Compensation

   The following table sets forth the compensation earned by our Chief
Executive Officer and each of our other most highly compensated executive
officers who, based on the salary and bonus compensation information from
Deluxe, were the most highly compensated for the year ended December 31, 1999.
All information set forth in this table reflects compensation earned by these
individuals for services with Deluxe and its subsidiaries for each of the last
two fiscal years. Mr. Bristow was not an employee of Deluxe prior to joining us
in March 2000 and accordingly he is not shown in the table. This prospectus
refers to these individuals as the Named Executive Officers.
Long-Term
                                  Annual Compensation              Compensation
                         ------------------------------------- ---------------------
                                                               Restricted Securities  All Other
Name and Principal                                Other Annual   Stock    Underlying Compensation
Position                 Year  Salary   Bonus(1)  Compensation   Awards    Options       (2)
------------------       ---- -------- ---------- ------------ ---------- ---------- ------------
John A. Blanchard III
 (3).                    1999 $680,000 $  680,000   $22,866        --      185,000     $136,400
  Chairman and Chief     1998 $600,000 $1,200,000   $13,848        --      176,000     $ 79,051
  Executive Officer
Debra A. Janssen........ 1999 $261,282 $  168,233   $ 8,719        --       25,000     $ 17,476
  President and Chief    1998 $198,892 $  168,300   $ 2,467        --       10,000           --
  Operating Officer
Dr. Nikhil Sinha (4).... 1999 $175,000 $   87,500        --        --       25,000     $ 28,846
  Executive Vice
  President, Global
  Corporate Development
Steven F. Coleman....... 1999 $132,000 $   26,400        --        --        2,000       14,820
  Senior Vice President, 1998 $120,000 $   42,000        --        --        1,500       15,237
  General Counsel and
  Secretary
--------
(1) Recipients of awards under Deluxe's Annual Incentive Plan are entitled to
    elect to receive all or a portion of their incentive compensation in the
    form of shares of restricted stock or restricted stock units (whichever
    option is made available by the Compensation Committee of the Board of
    Directors of Deluxe). If an election is made to receive shares of
    restricted stock or restricted stock units, the amount of cash foregone is
    increased by 25 percent in determining the number of shares of restricted
    stock units to be awarded.

(2) All other compensation consists of (a) annual company contributions to
    qualified retirement plans, (b) amounts credited to a non-qualified
    supplemental retirement plan (defined contribution and profit sharing
    allocations in excess of ERISA limitations) and (c) amounts credited to a
    non-qualified deferred compensation plan as benefit plan equivalents.

(3)  Mr. Blanchard is entitled to supplemental retirement benefits (the
     "Supplemental Retirement Benefits") in addition to those ordinarily
     payable under Deluxe's profit-sharing, pension and supplemental retirement
     plans, and with respect to any company-paid portion of contributory
     retirement plans, such as Deluxe's 401(k) plan (collectively, the "Base
     Plans"). Deluxe is expected to make a lump-sum cash payment to
     Mr. Blanchard on December 31, 2000 in satisfaction of its obligations in
     respect of the Supplemental Retirement Benefits.

(4) Dr. Sinha began employment with Deluxe in April 1999. All other
    compensation includes $28,846 paid in respect of his vacation pay following
    the transfer of Deluxe employees to Deluxe Professional Services.

                                       56
The following table contains information concerning the grant of options to
purchase shares of Deluxe common stock to the Named Executive Officers during
the fiscal year ended December 31, 1999:
Potential Realizable
                                                                      Value at Assumed
                                                                   Annual Rates of Stock
                                                                   Price Appreciation for
                                     Individual Grants                Option Term (2)
                         ----------------------------------------- ----------------------
                                    Percent of
                         Number of    Total
                         Securities  Options
                         Underlying Granted to Exercise
                          Options   Employees   Price
                          Granted   in Fiscal    Per    Expiration
          Name              (1)        Year     Share      Date      5% ($)     10% ($)
          ----           ---------- ---------- -------- ---------- ---------- -----------
John A. Blanchard III...  185,000     15.04%   $35.9375   1/4/09   $4,181,167 $10,595,897
Debra A. Janssen........   15,000      1.22    $35.6250  1/29/09   $  336,066 $   851,656
                           10,000       .81    $35.8125  5/04/09   $  225,223 $   570,759
Dr. Nikhil Sinha........   25,000      2.03    $37.5625  6/17/09   $  590,571 $ 1,496,624
Steven F. Coleman.......    2,000       .16    $35.6250  1/29/09   $   44,809 $   113,554
--------
(1) All options were granted at an exercise price that equaled or exceeded the
    fair market value of the common stock on the date of grant, as determined
    by the last sale price as reported on the New York Stock Exchange. The
    options are exercisable in cumulative installments of 33-1/3 percent on
    each anniversary of the date of grant.

(2) The amounts represent hypothetical gains that might be achieved by the
    optionees if the respective options are exercised at the end of their
    terms. These gains are based on assumed rates of stock price appreciation
    of 5% and 10% mandated by rules of the Securities and Exchange Commission.
    These rates are shown for illustrative purposes only and do not represent
    our prediction of our stock price performance.

   The following table sets forth information regarding exercises of options to
purchase Deluxe common stock during the year ended December 31, 1999 and
unexercised options to purchase Deluxe common stock as of December 31, 1999, by
each of the Named Executive Officers:
Number of Securities
                                               Underlying Unexercised   Value of Unexercised In-
                                               Options at Fiscal Year     the-Money Options at
                                                         End               Fiscal Year End (1)
                                              ------------------------- -------------------------
                           Shares
                          Acquired    Value
          Name           on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
------------------------ ----------- -------- ----------- ------------- ----------- -------------
John A. Blanchard III...     --        --       260,334      335,666        --           --
Debra A. Janssen........     --        --         3,334       31,666        --           --
Dr. Nikhil Sinha........     --        --           --        25,000        --           --
Steven F. Coleman.......     --        --         3,300        2,000        --           --
--------
(1) The value of unexercised in-the-money option is determined by multiplying
    the difference between the exercise price and the closing price of Deluxe
    common stock on the NYSE on December 31, 1999 ($27.4375) by the number of
    shares underlying the options. If the exercise price is greater than the
    December 31, 1999 closing price, the options are not in-the-money and no
    value is listed.

                                       57
Treatment of Deluxe Options

   As of March 31, 2000, options to purchase 4,338,385 shares of common stock
of Deluxe were outstanding. Immediately prior to the split-off of Deluxe's
remaining interest in our company following this offering, these outstanding
options will be converted into new options to purchase Deluxe common stock and
options to purchase our common stock. All persons who hold Deluxe options will
receive Deluxe options and eFunds options. The board of directors has adopted
the eFunds Corporation Stock Incentive Plan for Deluxe Conversion Awards to
provide for the eFunds options resulting from the converstion. Deluxe, as our
sole stockholder, has approved this plan, which is filed as an exhibit to our
registration statement of which this prospectus is a part.

   The stock options granted under this plan generally will have the same terms
and conditions as the Deluxe options to which they relate. The eFunds options
will be granted immediately prior to our split-off from Deluxe. Both the number
of eFunds options to be granted and the exercise price of options granted under
this plan to any participant will depend on a conversion equation described
below. The vesting provisions of the eFunds options will be the same as the
Deluxe options to which they relate, assuming for vesting purposes that the
date of the grant of the eFunds options was the same as the date of the grant
for the corresponding Deluxe options. The exercisability provisions and the
term of each eFunds option will be the same as the relevant provisions of the
Deluxe options to which they relate. Any exercisability or option term
provisions that are based on past employment or contingent on continued
employment will mean and include past-employment with Deluxe and continued
employment with eFunds for those participants who are employees of eFunds as of
the split-off date.

   The basic principle for the conversion of Deluxe options is to maintain the
same value of the options based on the difference between exercise price and
market price, or intrinsic value. The pre-split intrinsic value of all Deluxe
options outstanding is defined as the number of Deluxe options outstanding
multiplied by the difference (a) between the implied pre-split market value per
share of Deluxe common stock, which equals the sum of the market values of
Deluxe and eFunds divided by the number of shares of Deluxe common stock
outstanding, and (b) the weighted average exercise price. The pre-split
intrinsic value will be allocated after the split-off between the adjusted
Deluxe options and eFunds options according to the relative market valuations
of the two companies immediately prior to the split-off. The weighted average
exercise price of all eFunds options will equal the product of the market price
of eFunds common stock on the first day of trading following the split-off and
the ratio of (i) the pre-split weighted average exercise price for Deluxe
options to (ii) the implied pre-split market value per share of Deluxe common
stock. Dividing the intrinsic value allocated to eFunds options by the
difference between the market price of eFunds common stock on the first day of
trading following the split-off and the weighted average exercise price of
eFunds options results in the number of shares for which eFunds options will be
granted.

   For example, assume that there are options to purchase     million shares of
Deluxe common stock outstanding prior to the split and the weighted average
exercise price is $  . Deluxe has an implied pre-split value per share of
Deluxe common stock of $  . The pre-split intrinsic value of outstanding Deluxe
options is $    million ((  -  )*    million). Assume that the pre-split market
valuation of eFunds is $      million and the pre-split market valuation of
Deluxe is $     million. eFunds percentage of the total market value is    %,
which results in an intrinsic value of $     million allocated to eFunds
options. If we assume a market price for eFunds stock on the day of the split
off of $   , the weighted average exercise price will be $     (   *(  /  )).
The number of shares for which options will be granted would be          .

   This example uses hypothetical numbers that are unlikely to be accurate on
the day of the split-off. The number of eFunds options granted pursuant to the
conversion plan and the exercise price of those options is subject to a large
number of variables, particularly the relative market prices for our common
stock and Deluxe's common stock on the day before and on the day of the split-
off. At this time, we cannot provide any certainty regarding the number of
options we will grant pursuant to the conversion plan or the exercise price for
those options.

                                       58
Employment Agreements

   John A. Blanchard III. We will enter into an Executive Employment Agreement
with Mr. Blanchard related to his service as our Chairman and Chief Executive
Officer. The term of the agreement begins as of the date of the split-off and
expires on December 31, 2002. Under the agreement, Mr. Blanchard will receive a
salary of $680,000, subject to increase at the discretion of our board.
Mr. Blanchard is also eligible to receive annual cash bonuses on the same basis
that we pay bonuses to our other executives, with a target bonus equal to his
base salary. Mr. Blanchard is eligible to participate in our stock incentive
plan. We anticipate that he will receive annual stock option grants having a
value equal to 200% of his base salary, as determined by the Black-Scholes
method. Mr. Blanchard will receive double-options in 2000, which are listed in
the table below under "-- 2000 Stock Incentive Plan Grants." In recognition of
the termination of Mr. Blanchard's Supplemental Retirement Benefits, Mr.
Blanchard is also entitled to receive $490,768 on or about January 2, 2003.
This amount is reflective of the present value on that date of the retirement
benefits Mr. Blanchard would have been entitled to under his supplemental
retirement benefit plan if that plan was continued throughout the term of his
Executive Employment Agreement. Mr. Blanchard has the option to receive the
economic equivalent of this benefit on an annuity basis for 15 years following
his retirement.

   If we terminate Mr. Blanchard's employment other than for cause, or if Mr.
Blanchard terminates his employment for good reason, Mr. Blanchard is entitled
to a lump sum payment equal to:

  .  the sum of (1) his unpaid base salary due through the date of
     termination, (2) the product of his most recent annual bonus and the
     fraction of the year he was employed and (3) any deferred compensation
     and any accrued vacation pay;

  .  an amount equal to the annual base salary that Mr. Blanchard would have
     earned during the remaining term of the Executive Employment Agreement
     had his employment not been terminated; and

  .  an amount equal to the annual bonus that Mr. Blanchard would have earned
     had he remained continuously employed throughout the employment period
     and been awarded his annual target bonus amount to the extent this bonus
     amount has not theretofore been paid.

   In addition, upon any such termination of Mr. Blanchard's employment, Mr.
Blanchard will be entitled to participate in all benefits plans, including
medical, disability, life and other health insurance benefits and to certain
out-placement services. All unvested options granted to Mr. Blanchard will
immediately vest and remain exercisable for a five year period (or, if less,
their remaining term) and all other restricted shares and restricted stock
units held by Mr. Blanchard under the stock incentive plan vest and are
converted into shares of common stock on the date of any termination other than
for cause or for good reason. Mr. Blanchard would also be entitled to retain
and earn any performance-based awards previously received under our stock
incentive plan as if he had continued in our employ until the expiration of the
relevant performance period. Any options granted to Mr. Blanchard will also
vest and remain exercisable for five years following any termination of
Mr. Blanchard's employment upon the expiration of his Executive Employment
Agreement.

   The agreement also provides that if any payment or benefit received or to be
received by Mr. Blanchard would be subject to the federal excise tax on "excess
parachute payments," we will pay Mr. Blanchard such additional amount as may be
necessary so that he realizes, after the payment of the excise tax and any
income tax or excise tax on that additional amount, the amount of such
compensation.

   Debra A. Janssen. We entered into a letter agreement with Ms. Janssen
effective as of March 1, 2000. The agreement provides for annual base salary of
$400,000 with a target bonus equal to 50% of base salary. Ms. Janssen is
eligible to receive annual stock option grants having a value equal to 225% of
her base salary, as determined by the Black-Scholes method. Ms. Janssen will
receive double-options in 2000, which are listed in the table below under "--
2000 Stock Incentive Plan Grants." Ms. Janssen's letter agreement also contains
a severance provision allowing her to receive one year's base salary plus a
second year of income continuation, if she is terminated for reasons other than
willful misconduct, gross negligence or unlawful actions toward us or toward
others involved with our business.

                                       59
Paul H. Bristow. We entered into a letter agreement with Mr. Bristow
effective as of March 1, 2000. The agreement provides for an annual base salary
of $300,000 with a bonus ranging from 0% to 100% of base salary, depending on
our performance. The target bonus is 50%, or $150,000 annually. Mr. Bristow is
eligible to receive annual stock option grants having a value equal to 150% of
his base salary, as determined by the Black-Scholes method. Mr. Bristow will
receive double-options in 2000, which are listed in the table below under "-
2000 Stock Incentive Plan Grants." Mr. Bristow's letter agreement also contains
a severance provision allowing him to receive one year's base salary plus a
second year of income continuation, if he is terminated for reasons other than
willful misconduct, gross negligence or unlawful actions toward us or toward
others involved with our business.

   Dr. Nikhil Sinha. We entered into a letter agreement with Dr. Sinha
effective as of March 1, 2000. The agreement provides for an annual base salary
of $300,000 with a bonus ranging from 0% to 100% of base salary, depending on
our performance. The target bonus is 50%, or $150,000 annually. Dr. Sinha is
eligible to receive annual stock option grants having a value equal to 115% of
his base salary, as determined by the Black-Scholes method. Dr. Sinha will
receive double-options in 2000, which are listed in the table below under
"-2000 Stock Incentive Plan Grants." Dr. Sinha also will be entitled to receive
an option grant having a value between $200,000 and $600,000 upon completion of
this offering in consideration for the termination of his iDLX Technology
Partners outstanding options provided to him under our 1999 employment
agreement. Dr. Sinha's letter agreement also contains a severance provision
allowing him to receive one year's base salary plus a second year of income
continuation, if he is terminated for reasons other than willful misconduct,
gross negligence or unlawful actions toward us or toward others involved with
our business.

   Steven F. Coleman. We entered into a letter agreement with Mr. Coleman
effective as of March 1, 2000. The agreement provides for an annual base salary
of $200,000 with a bonus ranging from 0% to 80% of base salary, depending on
our performance. The target bonus is 40%, or $80,000 annually. Mr. Coleman is
eligible to receive annual stock option grants having a value equal to 100% of
his base salary, as determined by the Black-Scholes method. Mr. Coleman will
receive double-options in 2000, which are listed in the table below under "-
2000 Stock Incentive Plan Grants." Mr. Coleman's letter agreement also contains
a severance provision allowing him to receive one year's base salary plus a
second year of income continuation, if he is terminated for reasons other than
willful misconduct, gross negligence or unlawful actions toward us or toward
others involved with our business.

Change in Control Arrangements

   We have entered into Change in Control Agreements with each of Ms. Janssen
and Messrs. Sinha, Bristow and Coleman. These agreements are designed to
diminish the distractions that could be caused by personal uncertainties and
risks associated with changes of control and other significant business
combinations involving our company by providing these officers with assurances
regarding their compensation and benefits expectations under such
circumstances.

   Under the Change in Control Agreements, each of these officers agrees to
remain in our employ, and we agreed to continue to employ each officer, until
the third anniversary following any "business combination" or "change in
control" involving our company. During that three-year period, each officer is
entitled to maintain a position, authority, duties and responsibilities at
least commensurate with the most significant of those held by such officer
during the 180 day period prior to the effective date of the business
combination or change in control and the base salary of an officer may not be
reduced below that earned by the officer during the twelve month period
preceding the effective date of the business combination or change-in-control.
In determining any increase in an officer's base salary during the three year
period, the officer is to be treated in a manner consistent with other peer
executives. The officers are also entitled to receive annual bonus payments,
stock option grants and other benefits during the three year period on the same
objective basis as other peer executives.

   If, during the three year period, we terminate an officer's employment other
than for "cause" or "disability" or the officer terminates his or her
employment for "good reason," the officer is entitled to a lump

                                       60
sum payment equal to the sum of any unpaid base salary, accrued vacation pay
and a pro rated incentive award through the date of termination. In addition,
the officer is entitled to receive a lump sum payment equal to three times the
sum of the officer's annual base salary and the officer's historical incentive
award, plus the amount that we would have contributed to the retirement plans
in which the officer participated prior to his or her termination in respect of
such sum. The officers are also entitled to the continuation of their medical,
disability, life and other health insurance benefits for up to a three year
period after a qualifying termination and to certain out-placement services.

   All unvested options granted to an officer vest and remain exercisable for a
five year period or their remaining term following a qualifying termination and
all other restricted shares and restricted stock units held by the officer
under our stock incentive plan vest and are converted into shares of common
stock on the date of any such termination.

   The agreements also provide that if any payment or benefit received or to be
received by an officer, whether or not pursuant to his or her change in control
agreement, would be subject to the federal excise tax on "excess parachute
payments," we will pay to the officer such additional amount as may be
necessary so that the officer realizes, after the payment of such excise tax
and any income tax or excise tax on such additional amount, the amount of such
compensation.

2000 Stock Incentive Plan

   Our 2000 Stock Incentive Plan provides for grants of options to purchase
shares of common stock, stock appreciation rights, restricted stock and
restricted stock rights, performance awards and other stock-based awards. All
of our full-time employees are eligible for grants under this plan. Our
directors, consultants and advisors are also eligible for grants under this
plan.

   The maximum aggregate number of shares of common stock that may be
distributed under this plan is 20% of the total number of shares of our common
stock outstanding at the time of the award, subject to adjustment.

   Administration. This plan will be administered by our board of directors or
by a committee of directors appointed by our board of directors. The
compensation committee of the board will administer the plan.

   Stock Options. Our committee may award stock options under this plan and set
their terms, including the number and kind of stock options granted, the
exercise price of the stock options, the vesting schedule applicable to such
stock options, the period during which they can be exercised and the form of
consideration, which may include, without limitation, cash, common stock, other
securities, any combination thereof or any other form of valid consideration
that is acceptable to the committee. The exercise price of incentive stock
options cannot be less than 100% of the fair market value of a share of common
stock on the date of grant, unless required by law or government regulation. No
stock option can be exercised more than ten years after the date of grant. The
committee may provide that any option granted under the plan contain a reload
feature. If an option containing this feature is exercised using shares of
common stock or if shares are withheld or tendered as payment of the amount to
be withheld under applicable income tax laws, the optionee will receive an
additional option on a number of shares equal to the number of shares tendered
or withheld. The exercise price of this reload option will be equal to the fair
market value of our stock on the date the reload option is granted.

   Stock Appreciation Rights. Our committee may grant stock appreciation rights
under this plan and set their terms, including grant price, term, methods of
exercise, dates of exercise, methods of settlement and any other terms or
conditions of any stock appreciation right. Each stock appreciation right
entitles the holder to receive an amount equal to the excess of the fair market
value of a share of common stock on the date the holder exercises the stock
appreciation right over the grant price, as determined by the committee. The
grant price may not be less than 100% of the fair market value of a share of
common stock on the date of the grant, unless required by law or government
regulation.

   Restricted Stock And Restricted Stock Units. Our committee may grant shares
of restricted stock and restricted stock units and set their terms, including
voting rights for restricted shares and dividend rights with

                                       61
respect to such shares and units. The committee may determine when restrictions
shall lapse. If the participant's employment or service terminates, the
participant will forfeit unvested restricted stock and restricted stock units
as of the date of such event, unless our committee determines otherwise with
respect to some or all of the unvested restricted stock and restricted stock
units.

   Performance Awards. The committee may grant performance awards, which
entitle the holder to receive payments upon the achievement of specified
performance goals and set their terms, including the performance goals to be
achieved during the performance period, the length of the performance period
and the amount and form of payment of the performance award. A performance
award may be denominated or payable in cash, shares of stock or other
securities, or other awards or property.

   Other Stock-Based Awards. The committee may grant other awards denominated
or payable in, valued by reference to, or otherwise based on or related to
shares of common stock as are deemed by the committee to be consistent with the
purpose of plan. The committee will determine the terms and conditions of such
other stock-based awards, including the consideration to be paid for shares of
common stock or other securities delivered pursuant to a purchase right granted
under such award. The value of such consideration shall not be less than 100%
of the fair market value of such shares or other securities as of the date such
award is granted, unless required by law or government regulation.

   Transfer Restrictions. The rights of a participant with respect to the stock
options, stock appreciation rights, restricted stock and restricted stock
rights, performance awards, dividend equivalents and other stock based awards
granted under this plan generally are not transferable by the participant other
than by will or the laws of descent and distribution.

   Amendment And Termination of this Plan. This plan may be terminated and may
be altered, amended, suspended or terminated at any time, in whole or in part,
by our board of directors, except that:

  .  no alteration or amendment will be effective without stockholder
     approval if approval is required by law or under the rules of the Nasdaq
     Stock Market or any stock exchange on which our common stock is listed;
     and

  .  no such termination, suspension, alteration or amendment may adversely
     alter or affect the terms of any then outstanding awards without the
     consent of the affected participant.

Grants as of this Offering

   Our board of directors has approved the grant of options to purchase up to
      shares of our common stock under our 2000 stock incentive plan, including
the grants to individuals listed in the table below. The table has been
prepared based on an assumed initial offering price of $     per share. The
exercise price of these options will be equal to the initial public offering
price. These options granted to our employees will vest in three equal
installments, beginning on the first anniversary of the date of grant, while
options granted to our outside directors will vest in two equal installments,
beginning on the first anniversary of the date of grant.
Number
                                                                          of
   Name                                                                 Options
   ----                                                                 -------
John A. Blanchard III..............................................
   Debra A. Janssen...................................................
   Paul H. Bristow....................................................
   Dr. Nikhil Sinha...................................................
   Steven F. Coleman..................................................
   All current executive officers as a group..........................
   All current members of our board of directors who are not executive
    officers as a group...............................................
   All employees, including current officers but excluding directors
    and executive officers, as a group................................
62
Certain Transactions

   Prior to joining iDLX Technology Partners as its President and Chief
Executive Officer, Dr. Sinha was a 50% partner in a consulting firm employed by
Deluxe. The consulting firm provided international development consulting
services to Deluxe at per diem rates subject to minimum amounts. In 1999,
Deluxe paid $28,713 to the consulting firm for services rendered. In addition,
in connection with the hiring of Dr. Sinha and the consequent termination of
the consulting agreement, Deluxe paid approximately $1.1 million to the members
of the consulting firm in lieu of an equity interest in HCL-Deluxe N.V. Dr.
Sinha received 50% of this amount.

                                       63
AGREEMENTS BETWEEN eFUNDS AND DELUXE

   We have provided below a summary description of the initial public offering
and distribution agreement along with the key related agreements. This
description, which summarizes the material terms of the agreements, is not
complete. You should read the full text of the agreements, which have been
filed with the Securities and Exchange Commission as exhibits to the
registration statement of which this prospectus is a part.

Initial Public Offering and Distribution Agreement

   General. On March 31, 2000, we entered into an initial public offering and
distribution agreement with Deluxe, which governs our respective rights and
duties with respect to offerings of our common stock and other securities,
including this offering and the distribution, and sets forth certain covenants
we will agree to for various periods following this offering and the
distribution. Although Deluxe has announced that it currently plans to complete
the distribution, and we will agree to cooperate with Deluxe in all respects to
complete the distribution or a similar transaction, Deluxe is not obligated to
do so. We cannot assure you as to whether or when the distribution will occur
or as to the terms of the distribution. We refer you to "Risk Factors -- Risks
Relating to Our Separation from Deluxe."

   Offerings of Securities of eFunds and the Distribution. We have agreed that
we will cooperate with Deluxe in all respects to accomplish:

  .  any primary offerings of our common stock and other securities,
     including this offering, prior to the distribution or other similar
     transaction; and

  .  the distribution or similar transaction.

   We also agreed that, at Deluxe's direction, we will promptly take all
actions necessary or desirable to effect these transactions, including the
registration under the Securities Act of shares of our common stock owned by
Deluxe. Deluxe has the sole discretion to determine whether or when the
distribution will occur and all terms of the distribution, including the form,
structure and terms of any transactions or offerings to effect the distribution
and the timing of and conditions to the completion of the distribution.

  Expenses relating to primary offerings of our securities. We will agree to
use the proceeds from this offering to pay all costs and expenses relating to
any primary offerings of our common stock and our other securities prior to the
distribution or other similar transaction, including this offering. In
particular, we will pay the underwriting discounts and commissions.

Expenses relating to the distribution. Deluxe will agree to pay all costs and
expenses relating to the distribution or other similar transaction.

   Access to Information. Generally, we and Deluxe have agreed to provide each
other with access to information relating to the assets, business and
operations of the requesting party. We and Deluxe will keep our books and
records for a specified period of time. Also, we and Deluxe will cooperate with
the other party to allow access to each others' employees, to the extent they
are necessary to discuss and explain all requested information mentioned above
and with respect to any claims brought against the other relating to the
conduct of the parties prior to completion of the distribution or similar
transaction.

   Covenants. We have agreed that, for so long as Deluxe is required to
consolidate our results of operations and financial position, we will:

  .  provide Deluxe with financial information regarding our company and our
     subsidiaries;

  .  not select a different accounting firm than Deloitte & Touche LLP to
     serve as our auditors;

  .  use reasonable commercial efforts to cause our auditors to complete
     their audit of our financial statements such that they will date their
     opinion the same date that the opinion of the audit of Deluxe's
     financial statements is dated;

                                       64
.  provide to Deluxe and its auditors all information required for Deluxe
     to meet its schedule for the filing and distribution of its financial
     statements;

  .  make our books and records available to Deluxe and its auditors, so that
     they may conduct reasonable audits relating to our financial statements;

  .  consult with Deluxe and provide Deluxe and its auditors with notice of
     any proposed determination of, or significant changes in, our accounting
     estimates and accounting principles.

   Other Covenants. The initial public offering and distribution agreement also
provides that as long as Deluxe beneficially owns 50% or more of our
outstanding shares of common stock, we may not take any action or enter into
any commitment or agreement that may reasonably be anticipated to result, with
or without notice and with or without lapse of time, or otherwise, in a
contravention or an event of default by Deluxe of:

  .  any provision of applicable law or regulation, including but not limited
     to provisions pertaining to the Internal Revenue Code or the Employee
     Retirement Income Security Act of 1974, as amended;

  .  any provision of Deluxe's articles of incorporation or bylaws;

  .  any credit agreement or other material agreement binding upon Deluxe; or

  .  any judgment, order or decree of any governmental body, agency or court
     having jurisdiction over Deluxe or any of its assets.

   Options. We have granted to Deluxe continuing options, assignable to any of
Deluxe's subsidiaries, to purchase, under specified circumstances, additional
shares of common stock. These options may be exercised immediately prior to the
issuance of any of our equity securities, other than in this offering or upon
exercise of the underwriters' over-allotment option:

  .  with respect to our voting stock, to the extent necessary to own at
     least 80.1% of the total combined voting power of all classes of our
     outstanding voting stock; and

  .  with respect to shares of nonvoting stock, to the extent necessary to
     own at least 80.1% of each outstanding class of such stock.

   The purchase price of the shares of voting stock purchased upon any exercise
will be the market price of our voting stock on the date of delivery of the
exercise notice. The purchase price of nonvoting capital stock will be the
price at which such stock may be purchased by third parties. These options will
terminate when Deluxe or its affiliates own less than 45% of the total combined
voting power of all classes of our outstanding equity of our company.

   Indemnification Procedures. The initial public offering and distribution
agreement sets forth the procedures that Deluxe and we will undertake if either
of us demands to be indemnified under any indemnification right given in any of
the agreements between Deluxe and us relating to this offering or the
distribution, other than the tax sharing agreement referred to below.

Registration Rights Agreement

   We and Deluxe have entered into a registration rights agreement which only
becomes effective in the event Deluxe determines not to proceed with the
distribution. The registration rights agreement will require us upon the
request of Deluxe to use our reasonable best efforts to register under the
applicable federal and state securities laws any of the shares of our common
stock owned by Deluxe for sale in accordance with Deluxe's intended method of
disposition. Deluxe will also have the right to include shares of our common
stock in other registrations of equity securities we initiate. Deluxe will pay
all costs and expenses relating to each such registration that Deluxe requests
or in which Deluxe participates except for our out-of-pocket expenses and the
fees of our attorneys, accountants and other advisors. Subject to specified
limitations, the registration rights agreement will be assignable by Deluxe and
its assigns. The registration rights agreement will contain indemnification and
contribution provisions that are customary in transactions similar to those
contemplated by this prospectus.

                                       65
Assignment and Assumption Agreement

   Prior to the offering, we entered into an assignment and assumption
agreement with Deluxe, which governs the terms of the transfer to us of assets
and liabilities from Deluxe. The assignment and assumption agreement provides
that assets that cannot legally be transferred prior to March 31, 2000 will be
transferred as soon as is practical following receipt of all necessary consents
and approvals. All transfers by Deluxe to us are on an "as is, where is" basis,
and without any representations or warranties. As a result, we have agreed to
bear the economic and legal risks that any conveyances of assets are
insufficient to vest in us good and marketable title to such assets and as to
defects in the condition of the assets. We have also agreed with Deluxe that
Deluxe, on the one hand, and we, on the other hand, will transfer, without
additional consideration, to the other all assets which, subsequent to
March 31, 2000, the parties determine more properly belong in the other's
business.

   The assignment and assumption agreement provides for assumptions and
indemnities designed to place, as of March 31, 2000, sole financial
responsibility on the company and its subsidiaries for all liabilities, known
or unknown, actual or contingent, associated with our current and historical
businesses and operations and all of the assets transferred to us in connection
with the assignment and assumption and to place sole financial responsibility
for Deluxe's other businesses with Deluxe and its other subsidiaries.

Tax-Sharing Agreement

   We and some of our subsidiaries are, and after the offering may continue to
be, included in Deluxe's consolidated income tax group for U.S. federal income
tax purposes and our tax liability and the tax liability of some of our
subsidiaries may be included in the consolidated federal income tax liability
of Deluxe and its subsidiaries. In certain circumstances, we and some of our
subsidiaries may be included with Deluxe and some of its subsidiaries in
combined, consolidated, or unitary groups for state and local tax purposes.
Prior to this offering, we and Deluxe intend to enter into a tax-sharing
agreement. Under the tax-sharing agreement, we and Deluxe generally will make
payments to each other such that, with respect to tax returns for any taxable
period, the amount of taxes to be paid by us, subject to some adjustments, will
be determined as though we, together with our subsidiaries included in Deluxe's
consolidated group or any other applicable groups, were to file separate
federal, state and local income tax returns (including, except as provided
below, any amounts determined to be due as a result of a redetermination of the
tax liability of Deluxe arising from an audit or otherwise) as the common
parent of an affiliated group of corporations filing combined, consolidated or
unitary federal, state and local returns rather than a consolidated subsidiary
of Deluxe with respect to federal, state and local income taxes. We will be
responsible for any taxes with respect to tax returns that include us and our
subsidiaries. We will be reimbursed, however, for tax attributes that we
generate, such as net operating losses, if and when they are used on a
consolidated basis.

   In determining the amount of tax-sharing payments under the tax-sharing
agreement, Deluxe will prepare for us pro forma returns with respect to federal
and applicable state and local income taxes that reflect the same positions and
elections used by Deluxe in preparing the returns for Deluxe's consolidated
group and other applicable groups. Deluxe will continue to have all the rights
of a parent of a consolidated group prior to the split-off. Deluxe will have
similar rights provided for by applicable state and local law with respect to a
parent of a combined, consolidated or unitary group. Deluxe will be the sole
and exclusive agent for us in any and all matters relating to our income,
franchise and similar tax liabilities. Deluxe will have sole and exclusive
responsibility for the preparation and filing of consolidated federal and
consolidated or combined or unitary state income tax returns or amended
returns. Deluxe will have the power, in its sole discretion, to contest,
compromise or settle any asserted tax adjustment or deficiency and to file,
litigate or compromise any claim for refund on our behalf. In addition, Deluxe
has agreed to undertake to provide the aforementioned services with respect to
our separate state and local tax returns and our foreign tax returns.

   In addition, the tax-sharing agreement will provide that we will indemnify
Deluxe for any taxes arising out of the failure of the split-off or some of the
transactions related to it to qualify as tax-free as a result of actions

                                       66
taken, or the failure to take required actions, by us or any of our
subsidiaries. We are required under the tax sharing agreement to comply with
the representations made to the Internal Revenue Service in connection with the
request for a private letter ruling that has been submitted to the Internal
Revenue Service regarding the tax-free nature of the split-off of our stock by
Deluxe to Deluxe's stockholders.

   The-tax sharing agreement will further provide for cooperation with respect
to tax matters, the exchange of information and the retention of records which
may affect the income tax liability of either party. Disputes arising between
Deluxe and us relating to matters covered by the tax-sharing agreement are
subject to resolution through specific dispute resolution provisions.

   In general, we will be included in Deluxe's consolidated group for federal
income tax purposes for so long as Deluxe beneficially owns at least 80% of the
total voting power and value of our outstanding common stock. Each member of a
consolidated group is jointly and severally liable for the federal income tax
liability of each other member of the consolidated group. Accordingly, although
the tax-sharing agreement will allocate tax liabilities between us and Deluxe,
during the period in which we are included in Deluxe's consolidated group, we
could be liable in the event that any federal tax liability is incurred, but
not discharged, by any other member of Deluxe's consolidated group.

Employee Benefits Agreement

   We will enter into an employee matters agreement with Deluxe to allocate
assets, liabilities, and responsibilities relating to our current and former
U.S. employees and their participation in the benefit plans that Deluxe
currently sponsors and maintains.

   All of our eligible employees will continue to participate in the Deluxe
benefit plans on comparable terms and conditions to those currently applicable
to them until the split-off or the time at which we establish comparable
benefit plans for our current and former employees. We intend to establish
these plans no later than the time of the split-off.

   At the time of the split-off, we expect to adopt benefit plans corresponding
to the Deluxe plans, including qualified retirement plans, executive deferred
compensation and supplemental benefit plans, health and welfare plans, fringe
benefit plans, and leave of absence programs.

   Once we establish our own benefit plans, we may modify or terminate any plan
in accordance with the terms of that plan and our policies. It is intended that
our benefit plans will generally provide that all service, compensation and
other benefit determinations that, as of the split-off, were recognized under
the corresponding Deluxe benefit plan will be taken into account under our
benefit plan.

   It is intended that our benefit plans will generally assume any liabilities
for our employees under the corresponding Deluxe benefit plan. Assets relating
to the employee liabilities are expected to be transferred to us or our related
plans and trusts from trusts and other funding vehicles associated with
Deluxe's benefit plans.

Real Estate Agreements

   We have purchased real property and a data center located in Phoenix,
Arizona and personal property from a subsidiary of Deluxe for approximately $10
million. As of the completion of this offering, we and Deluxe will enter into
several agreements pursuant to which Deluxe or its subsidiaries (other than us
and our subsidiaries), on the one hand, and we or our subsidiaries, on the
other hand, will agree to (1) lease nine different sites for use as
communication nodes, with Deluxe or one of its subsidiaries as landlord, and
eFunds as tenant, for a period of approximately 12-18 months, (2) sublease a
portion of a building in Shoreview,

                                       67
Minnesota, with a subsidiary of Deluxe, as sublandlord, and eFunds as
subtenant, for a period of approximately 12 months, (3) lease a portion of a
data center in Phoenix, Arizona, with eFunds as landlord and Deluxe as tenant,
and (4) assign the rights as tenant under various leases from Deluxe or its
subsidiaries to eFunds or one of its subsidiaries. The real estate agreements
are subject to certain early termination rights and obligations.

Transitional Services Agreement

   As of the completion of this offering, we and Deluxe will enter into a
transitional services agreement pursuant to which Deluxe or its subsidiaries
(other than us and our subsidiaries), on the one hand, and we or our
subsidiaries, on the other hand, will agree to continue providing various
services to each other, including material procurement, financial and
administrative services, treasury, cash management and insurance services,
sales support, legal services, and employee benefits administration. Each
service provided under the transitional services agreements will be provided
for a specified time period beginning on completion of this offering and
continuing until the split off with respect to some services or until December
31, 2001 with respect to other services. Either party may terminate any or all
services that they receive under the transitional services agreements at any
time upon 60 days' prior written notice. Any or all services may be extended
for one additional 60 day period. During the applicable time period, the
parties are obligated to take all steps necessary to establish the processes
and systems to enable them to perform the relevant services on a stand alone
basis. The parties will be obligated to pay fees established in the
transitional services agreement based upon the type and amount of services
rendered.

Master Services Agreement

   Deluxe will enter into a master agreement with us, pursuant to which we will
provide Deluxe with:

  .  software development, maintenance and support services for information
     technology applications;

  .  financial shared services including accounts receivable, accounts
     payable and general accounting transaction processing; and

  .  data entry services.

   This agreement will have an initial term ending as of December 31, 2004, and
will automatically renew each year for an additional one year term unless
terminated by either party. In addition, this agreement will be terminable by
Deluxe at its option if we are acquired, whether by merger, sale, acquisition
or sale of all or substantially all its assets, by a third party. If Deluxe
exercises its termination rights, it will pay us a termination fee. During the
term of the agreement, we anticipate that Deluxe will spend approximately $43
million per year for software development, maintenance and support services for
information technology applications, which amounts will be based on the actual
number of hours of information technology services that we provide to Deluxe.
If Deluxe fails to reach the $43 million spending target per year, it will be
obligated to make liquidated damages payments for a portion of our fees based
on our estimates of lost margins. We also will provide business process
management services, including accounts receivable, accounts payable and other
general accounting services, and mail order entry services. Deluxe's annual
minimum spending target for these business process management services will
range from $8.1 million in 2000 to $4.2 million in 2004. The agreement will
also provide for liquidated damages for non-performance by us and bonuses for
superior performances as are typical for information technology professional
services. The provision of services by us under the agreement is non-exclusive,
and Deluxe may contract with any third party for the provision of information
technology and business process management services.

Third Party Indemnification Agreement

   Pursuant to the Third Party Indemnification Agreement, we agree to provide
Deluxe with full indemnification in connection with any liabilities incurred by
Deluxe after the distribution as a result of Deluxe's purchase or lease of
property or services for our benefit under any master agreement or for any
guaranties under which Deluxe guaranteed our performance of agreements with
third parties. We are obligated to indemnify Deluxe for any liability to the
extent such liability primarily relates to the past, present or future
operation of our business or operations.

                                       68
ONE Channel Management Agreement

   As of the completion of this offering, Deluxe will provide us a license to
use its proprietary ONE channel management systems in order to provide our
products to financial institutions. In exchange for access to the ONE channel
management systems and the services provided by Deluxe, we will pay Deluxe its
cost of providing such services during 2000 and cost plus 10% in 2001. Under
the agreement, Deluxe will maintain ownership of all rights in the ONE channel
management system, except that we will own the interface between the ONE system
security layer and our back-end systems. The agreement will have a term ending
on December 31, 2001.

Data and Related Agreements

   We and Deluxe will enter into several agreements which will govern the
transfer of data between us.

   Pursuant to a data contribution agreement, a subsidiary of Deluxe will
provide us with consumer account records pertaining to its direct to consumer
check printing business. We will agree to only use this information for
purposes that are consistent with applicable federal, state and local laws,
including the Fair Credit Reporting Act. Customers of Deluxe will have the
ability to request that their information not be provided to us. The agreement
has a term that will end on July 1, 2001.

   Pursuant to a processing agreement, we will provide Deluxe with groups of
bank routing numbers to enable us to obtain check order history files from
Deluxe as long as we have obtained a consent from the applicable financial
institution to receive this data. Deluxe may only use the bank routing numbers
for the purpose of performing the processing requested by us. Either party may
terminate this agreement upon 30 days' prior written notice.

   Pursuant to an ACH Agreement, we will agree to provide Deluxe with ACH
services for a three year term. Deluxe may terminate this agreement upon 180
days' notice after expiration of the initial three year term. Deluxe has agreed
to pay us $29,000 per month under this agreement.

   We have also agreed to provide Deluxe with data relating to closed consumer
accounts pursuant to our standard agreement for the provision of this
information.

Loan Agreement

   Deluxe has agreed to provide us with a revolving credit facility of up to
$75 million until the earlier of the effective date of the split-off, or August
28, 2000. Borrowings under the facility will be due at the split-off or
maturity and will accrue interest at the London Interbank Offered Rate, or
LIBOR, plus a variable additional margin based on Deluxe's credit rating. The
credit facility includes financial and restrictive covenants. We intend to
replace this facility with a new credit facility with one or more financial
institutions prior to the split-off or maturity.

Indemnification Agreement

   Deluxe has agreed to indemnify us for any losses on identified government
services loss contracts in excess of the loss contract reserves. We are
required to calculate any charges for loss contracts in a manner consistent
with Deluxe's current loss accrual practices. Deluxe will also indemnify us
against any liabilities, losses or expenses arising from litigation and claims
asserted against us in connection with the operation of our government services
business prior to the completion of this offering. Deluxe's indemnification
obligations are limited to a maximum amount equal to $      .

                                       69
PRINCIPAL STOCKHOLDER

   All of the shares of our common stock outstanding before this offering are
owned by Deluxe. After this offering, Deluxe will own about     % of our
outstanding common stock. Except for Deluxe, we are not aware of any person or
group that will beneficially own more than 5% of the outstanding shares of our
common stock following this offering.

                          DESCRIPTION OF CAPITAL STOCK

   Our authorized capital stock consists of 250 million shares of common stock,
$.01 par value per share, and 100 million shares of preferred stock, $.01 par
value per share. The following summary of certain provisions of the common
stock and preferred stock is subject to, and qualified in its entirety by, our
amended and restated certificate of incorporation and by-laws and by the
provisions of applicable law.

Common Stock

   Each holder of our common stock is entitled to one vote for each share held
of record on all matters to be voted upon by the stockholders. There are no
cumulative voting rights. Subject to the preferences of preferred stock issued
after the sale of the common stock in this offering, holders of common stock
are entitled to receive ratably any dividends that may be declared from time to
time by the board of directors out of funds legally available for that purpose.
In the event of our liquidation, dissolution or winding up, holders of common
stock would be entitled to share in our assets remaining after the payment of
liabilities and the satisfaction of any liquidation preference granted to the
holders of any outstanding shares of preferred stock. Holders of common stock
have no preemptive or conversion rights or other subscription rights and there
are no redemption or sinking fund provisions applicable to the common stock.

   All outstanding shares of common stock and the shares of common stock
offered by us in this offering, when issued and paid for, will be fully paid
and nonassessable, except for certain statutory liabilities which may be
imposed by Section 180.0622 of the Wisconsin Business Corporation Law for
unpaid employee wages. Section 180.0622 of the Wisconsin Business Corporation
Law provides that shareholders of every corporation that does business in
Wisconsin are personally liable to an amount equal to the par value of the
shares owned by them and for all debts owing to employees for services
performed for such corporation, but not exceeding six months' service in the
case of any individual employee. The rights, preferences and privileges of the
holders of common stock are subject to, and may be adversely affected by, the
rights of the holders of shares of any series of preferred stock that we may
designate in the future.

Preferred Stock

   Upon the closing of this offering, the board of directors will be
authorized, subject to any limitations prescribed by law, without stockholder
approval, from time to time to issue up to an aggregate of      million shares
of preferred stock, in one or more series, with each of such series to have
such rights and preferences, including, without limitation, voting rights,
dividend rights, conversion rights, redemption privileges and liquidation
preferences, as shall be determined by unlimited discretion of the board of
directors.

   Issuance of preferred stock, while providing desirable flexibility in
connection with possible acquisitions and other corporate purposes, could have
the effect of making it more difficult for a third party to acquire, or of
discouraging a third party from attempting to acquire, a majority of our
outstanding voting stock. We currently have no plans to issue any shares of
preferred stock.

Stockholder Rights Plan

   On              , 2000, the board of directors declared a dividend of one
preferred share purchase right for each outstanding share of common stock
outstanding on the business day immediately preceding the date of

                                       70
this prospectus to the stockholders of record on that date. Each right entitles
the registered holder to purchase one one-hundredth of a share of Series A
Junior Participating Preferred Stock, par value $0.01 per share, at a price of
$       per one one-hundredth of a preferred share, subject to adjustment. The
description and terms of the share purchase rights are set forth in a Rights
Agreement between eFunds and            , as Rights Agent, a copy of the form
of which is filed as an exhibit to the registration statement of which this
prospectus is a part.

   Initially, the certificates for shares of common stock then outstanding will
evidence the rights and we will not distribute separate right certificates. The
rights will separate from the common stock on the share purchase rights
distribution date, which is the earlier of:

  .  the first date of public announcement that a person or group of
     affiliated or associated persons has become the beneficial owner of 15%
     or more of the outstanding common stock, subject to certain exceptions;
     and

  .  the close of business on the 10th day, or such later date as may be
     determined by the board of directors prior to such time as any person
     becomes the beneficial owner of 15% or more of the outstanding common
     stock, following the commencement or public announcement of a tender
     offer or exchange offer, the consummation of which would result in a
     person or group of affiliated or associated persons becoming the
     beneficial owner of 15% or more of the outstanding common stock.

   Under the plan, Deluxe's ownership of our stock will not cause the rights to
separate from the common stock or result in a share purchase rights
distribution date.

   The board of directors, after receiving such advice as it deems necessary
and giving due consideration to all relevant factors, may elect to approve a
tender offer or an exchange offer for all of our outstanding common stock if
the board determines the offer to be in our best interest and the best
interests of our stockholders. If the board does approve a tender offer or
exchange offer, the rights will expire.

   Until the share purchase rights distribution date,

  .  the rights will be evidenced by the certificates for shares of common
     stock and will be transferred with and only with the common stock;

  .  any common stock certificates issued after the business day immediately
     preceding the date of this Prospectus upon transfer or new issuance of
     the common stock will contain a notation incorporating the Rights
     Agreement by reference; and

  .  the transfer of any common stock will also constitute the transfer of
     the rights associated with the common stock.

   As promptly as practicable following the share purchase rights distribution
date, we will mail separate certificates evidencing the share purchase rights
to holders of record of the common stock as of the close of business on that
date, and such separate certificates alone will evidence the share purchase
rights.

   The holders of our common stock and the share purchase rights cannot
exercise the rights until the distribution date. The rights will expire on the
date that is ten years after the business day immediately preceding the date of
this prospectus, unless we extend or earlier redeem or exchange as described
below. We will not issue fractions of a preferred share, other than fractions
in integral multiples of one one-hundredth of a share, and, in lieu thereof, we
will make a cash adjustment on the closing price on the last trading date prior
to the date of exercise.

   We will adjust the purchase price payable and the number of preferred shares
issuable upon exercise of the rights from time to time to prevent dilution:

  .  in the event of a stock dividend on, or a subdivision, combination or
     reclassification of, the preferred shares;

                                       71
.  upon the grant to holders of the preferred shares of certain rights,
     options or warrants to subscribe for or purchase preferred shares or
     convertible securities at less than the then current market price of the
     preferred shares; or

  .  upon the distribution to holders of the preferred shares of any evidence
     of indebtedness or assets, excluding regular periodic cash dividends or
     dividends payable in preferred shares, or of subscription rights or
     warrants, other than those described in clause (2) of this paragraph.

   With certain exceptions, we are not required to adjust the purchase price
until cumulative adjustments require an adjustment of at least 1% in the
purchase price. We also will adjust the number of outstanding share purchase
rights and the number of preferred shares issuable upon exercise of the rights
in the event of a stock split of the common stock or a stock dividend on the
common stock payable in common stock or subdivisions, consolidations or
combinations of the common stock occurring, in any such case, prior to the
distribution date.

   We cannot redeem the preferred shares purchasable upon exercise of the
rights. Each preferred share will be entitled to a minimum preferential
quarterly dividend payment of $     per share but will be entitled to an
aggregate dividend of 100 times the dividend declared per share of common
stock. In the event of liquidation, the holders of the preferred shares will be
entitled to a minimum preferential liquidation payment of $         per share
but will be entitled to an aggregate payment of 100 times the payment made per
share of common stock. Each preferred share will have 100 votes, voting
together with the common stock. Finally, in the event of any merger,
consolidation or other transaction in which common stock is exchanged, each
preferred share will be entitled to receive 100 times the amount received per
share of common stock. These rights are subject to adjustment in the event of a
stock dividend on the common stock or a subdivision, combination or
consolidation of the common stock.

   In the event any person becomes the beneficial owner of 15% or more of the
outstanding common stock, each holder of a share purchase right shall
thereafter have a right to receive, upon exercise thereof at the then current
aggregate exercise price, in lieu of preferred shares, such number of shares of
our common stock having a current aggregate market price equal to twice the
current aggregate exercise price. In the event that at any time after there is
a beneficial owner of 15% or more of the outstanding common stock, we are
acquired in certain mergers or other business combination transactions or 50%
or more of our assets or earning power and our subsidiaries (taken as a whole)
are sold, holders of the rights will thereafter have the right to receive, upon
exercise thereof at the then current aggregate exercise price, such number of
shares of common stock of the acquiring company (or, in certain cases, one of
its affiliates) having a current aggregate market price equal to twice the
current aggregate exercise price.

   At any time after a person becomes the beneficial owner of 15% or more of
the outstanding common stock, subject to certain exceptions, and prior to the
acquisition by a person of 50% or more of the outstanding common stock, the
board of directors may exchange all or part of the rights for common stock at
an exchange ratio of one share of common stock per right, subject to
adjustment.

   At any time before a person has become the beneficial owner of 15% or more
of the outstanding common stock, the board of directors may redeem the rights
in whole, but not in part, at a price of $0.01 per right, subject to
adjustment. The redemption of the rights may be made effective at such time, on
such basis and with such conditions as the board of directors in its sole
discretion may establish.

   Until a right is exercised, the holder of the right will have no rights as a
stockholder, including without limitation, the right to vote or to receive
dividends.

   The rights have anti-takeover effects. The rights will cause substantial
dilution to a person or group that attempts to acquire us pursuant to an offer
that is not approved by the board of directors, unless the rights have been
redeemed. However, the rights should not interfere with any tender offer or
merger approved by the board because the board of directors may redeem the
rights or approve an offer at any time prior to such time as any person has
becomes the beneficial owner of 15% or more of the outstanding common stock.

                                       72
Limitation of Liability and Indemnification Matters

   Our amended and restated certificate of incorporation limits the liability
of directors to the maximum extent permitted by Delaware law. Delaware law
provides that directors of a corporation will not be personally liable for
monetary damages for breach of their fiduciary duties as directors, except
liability for:

  .  breach of their duty of loyalty to the corporation or its stockholders;

  .  acts or omissions not in good faith or that involve intentional
     misconduct or a knowing violation of law;

  .  unlawful payments of dividends or unlawful stock repurchases or
     redemptions; and

  .  any transaction from which the director derived an improper personal
     benefit.

   This limitation of liability does not apply to liabilities arising under the
federal or state securities laws and does not affect the availability of
equitable remedies such as injunctive relief or rescission.

   Our amended and restated certificate of incorporation provides that we will
indemnify our directors, officers, employees and other agents to the fullest
extent permitted by Delaware law. We believe that indemnification under our
amended and restated certificate of incorporation covers at least negligence
and gross negligence on the part of indemnified parties. Our amended and
restated certificate of incorporation also permits us to secure insurance on
behalf of any officer, director, employee or other agent for any liability
arising out of his or her actions in such capacity, regardless of whether the
amended and restated certificate of incorporation would permit such
indemnifications.

   At present, there is no litigation or proceeding involving any of our
directors or officers in which indemnification is required or permitted, and we
are not aware of any threatened litigation or proceeding that may result in a
claim for indemnification.

Anti-Takeover Provisions

   Some provisions of our amended and restated certificate of incorporation and
bylaws could make more difficult the acquisition of control of our company, and
the removal of existing management:

  .  The amended and restated certificate of incorporation does not provide
     for cumulative voting for directors;

  .  We have a classified board of directors with each class serving a
     staggered three-year term;

  .  The board of directors fixes the size of the board of directors, may
     create new directorships and may elect new directors to serve for the
     full term of the class of directors in which the new directorship was
     created. The board of directors (or its remaining members, even though
     less than a quorum) also may fill vacancies on the board of directors
     occurring for any reason for the remainder of the term of the class of
     director in which the vacancy occurred.

  .  The board of directors may issue preferred stock without any vote or
     further action by the stockholders;

  .  The board of directors may adopt, amend, alter or repeal the bylaws
     without a vote of the stockholders;

  .  All stockholder actions must be taken at a regular or special meeting of
     the stockholders and cannot be taken by written consent without a
     meeting;

  .  We require advance notice procedures with respect to stockholder
     proposals and the nominations of candidates for election as directors;
     and

  .  Without the affirmative vote of the holders of at least 66-2/3% of the
     outstanding shares of common stock, together with the affirmative vote
     of at least 66-2/3% of the members of the board of directors,

                                       73
we may not (i) consolidate or merge with any other entity, (ii) convey,
     transfer, lease or otherwise dispose of all or substantially all of its
     property and assets, (iii) amend the certificate of incorporation to
     permit the removal of directors without cause or (iv) amend, modify or
     repeal the anti-takeover and indemnification provisions of the amended
     and restated certificate of incorporation.

   These provisions are expected to discourage coercive takeover practices and
inadequate takeover bids. They are also designed to encourage persons seeking
to acquire control of us to first negotiate with our board. We believe that
the benefits of increased protection give us the potential ability to
negotiate with the proponent of an unfriendly or unsolicited proposal to
acquire or restructure us and outweigh the disadvantages of discouraging such
proposals. Negotiating with the proponent could result in an improvement of
the terms of the proposal.

Section 203 of the Delaware General Corporation Law

   We are subject to Section 203 of the Delaware General Corporation Law,
which regulates corporate acquisitions. In general, Section 203 prohibits a
publicly held Delaware corporation from engaging in a business combination
with an interested stockholder for a period of three years following the date
the person became an interested stockholder, unless:

  .  the board of directors approved the transaction in which such
     stockholders became an interested stockholder prior to the date the
     interested stockholder attained such status;

  .  upon consummation of the transaction that resulted in the stockholder's
     becoming an interested stockholder, he or she owned at least 85% of the
     voting stock of the corporation outstanding at the time the transaction
     commenced, excluding shares owned by persons who are directors and also
     officers; and

  .  the business combination is approved by a majority of the board of
     directors and by the affirmative vote of at least two-thirds of the
     outstanding voting stock that is not owned by the interested
     stockholder.

   A business combination generally includes a merger, asset or stock sale, or
other transaction resulting in a financial benefit to the interested
stockholder. In general, an interested stockholder is a person who, together
with affiliates and associates, owns, or within three years prior to the
determination of interested stockholder status, did own, 15% or more of a
corporation's voting stock.

Transfer Agent and Registrar

   The transfer agent and registrar for our common stock is     .

                                      74
SHARES ELIGIBLE FOR FUTURE SALE

   Upon completion of this offering, we will have outstanding an aggregate of
      shares of common stock, assuming no exercise of the underwriters' over-
allotment option. All of the shares of common stock sold in this offering will
be freely tradable without restriction under the Securities Act, unless such
shares are purchased by our "affiliates" as that term is defined in Rule 144
under the Securities Act. Persons who are affiliates may sell shares that are
issued in this offering in the public market only through registration under
the Securities Act or under an exemption from registration, such as the one
provided by Rule 144.

   Deluxe has announced that, subject to specified conditions, it intends to
distribute all of its shares of our common stock in a tax-free split-off
transaction within         . Any shares distributed by Deluxe will be freely
tradeable, except for shares received by our affiliates.

Rule 144

   In general, under Rule 144, beginning 91 days after the date of this
prospectus, a person who beneficially owns "restricted securities" within the
meaning of Rule 144 for at least one year would be entitled to sell within any
three-month period a number of shares that does not exceed the greater of:

  .  one percent of the number of shares of common stock then outstanding,
     which will equal approximately shares immediately after this offering;
     or

  .  the average weekly trading volume of the common stock on the Nasdaq
     National Market during the four calendar weeks preceding the filing of a
     notice of Form 144 with respect to that sale.

Sales under Rule 144 also are subject to manner of sale and notice requirements
and to the availability of current public information about us. Our affiliates
who purchase shares of our common stock pursuant to this offering or acquire
our shares of common stock in the tax-free distribution would be subject to the
resale restrictions of Rule 144 described above.

Lock-Up Agreements

   We, our executive officers and directors have agreed not to sell or
otherwise dispose of any shares of our common stock or any securities
convertible into or exchangeable for common stock, for a period of 180 days
after the date of this prospectus, without the prior written consent of Lehman
Brothers Inc., subject to limited exceptions. See "Underwriting -- No Sales of
Similar Securities."

Stock Options

   We will grant shares of our common stock pursuant to our stock plans. We
have reserved      shares of our common stock for issuance under our stock
option plans. We expect to grant options to purchase an aggregate of
shares of our common stock upon the completion of this offering with an
exercise price equal to the initial public offering price, unless a lower price
is required by law or government regulation. We currently expect to file a
registration statement under the Securities Act to register shares reserved for
issuance under our stock plans. Shares issued pursuant to our stock plans after
the effective date of that registration statement, other than shares issued to
affiliates, generally will be freely tradeable without further registration
under the Securities Act. In addition, at the time of the split-off, all
outstanding options to purchase Deluxe common stock will be converted into new
options to purchase Deluxe common stock and options to purchase our common
stock. See "Management -- Treatment of Deluxe Options."

                                       75
CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES TO NON-UNITED STATES HOLDERS

   The following discussion is a summary of the material United States federal
income and estate tax consequences of the ownership and disposition of our
common stock by non-United States holders. This discussion does not deal with
all aspects of United States federal income and estate taxation and does not
deal with foreign, state and local tax consequences. This discussion does not
address all tax considerations that may be relevant to non-United States
holders in light of their personal circumstances, or to certain non-United
States holders that may be subject to special treatment under United States
federal income or estate tax laws. Furthermore, this discussion is based on the
Internal Revenue Code of 1986, as amended, Treasury Department regulations,
published positions of the Internal Revenue Service and court decisions now in
effect, all of which are subject to change. You are urged to consult your own
tax advisor regarding the United States federal tax consequences of owning and
disposing of our common stock, as well as the applicability and effect of any
state, local or foreign tax laws.

   In this section we use the term United States holder to refer to a
beneficial owner of stock that is:

  .  a citizen or resident of the United States;

  .  a corporation, partnership or other entity created or organized in or
     under the laws of the United States or any political subdivision of the
     United States; or

  .  an estate the income of which is subject to United States federal income
     taxation regardless of its source;

  .  a trust that:

    -  is subject to the supervision of a court within the United States
       and the control of one or more United States persons; or

    -  has a valid election in effect under applicable United States
       Treasury regulations to be treated as a United States person.

   We use the term non-United States holder to refer to a beneficial owner of
stock that is not a United States holder.

Dividends

   Generally, any dividend paid to a non-United States holder will be subject
to United States withholding tax either at a rate of 30% of the gross amount of
the dividend or at a lesser applicable treaty rate. However, dividends that are
effectively connected with the conduct of a trade or business of the non-United
States holder within the United States and, where a tax treaty applies, that
are attributable to a United States permanent establishment of the non-United
States holder are not subject to the withholding tax but instead are subject to
United States federal income tax on a net income basis at applicable graduated
individual or corporate rates.

   In order for dividends paid to a non-United States holder to be exempt from
withholding under the effectively connected income exemption, the holder must
comply with certification and disclosure requirements. In some circumstances, a
foreign corporation that receives effectively connected dividends may be
subject to an additional branch profits tax at a 30% rate or a lesser
applicable treaty rate.

   Until January 1, 2001, dividends paid to an address outside the United
States are presumed to be paid to a resident of that country, unless the payer
has knowledge to the contrary, for purposes of the withholding tax discussed
above and, under the current regulations, for purposes of determining the
applicability of a reduced rate of withholding under the terms of a tax treaty.
If you wish to claim the benefit of an applicable treaty rate and avoid backup
withholding, as discussed below, for dividends paid after December 31, 2000,
final regulations effective after that date will require you to satisfy
applicable certification and other requirements.

   If you are eligible for a reduced treaty rate of United States withholding
tax pursuant to an income tax treaty, you may obtain a refund of any excess
amounts withheld by filing an appropriate claim for refund with the Internal
Revenue Service.

                                       76
Gain on Disposition of Common Stock

   If you are a non-United States holder, you will generally not be subject to
United States federal income tax with respect to gain recognized on a sale or
other disposition of our common stock unless:

  .  the gain is effectively connected with a trade or business in the United
     States and, where a tax treaty provides, the gain is attributable to a
     United States permanent establishment of yours;

  .  you are an individual and hold our common stock as a capital asset, you
     are present in the United States for 183 or more days in the taxable
     year of the sale or other disposition and certain other conditions are
     met;

  .  you are subject to tax pursuant to the provisions of the United States
     federal income tax laws applicable to certain United States expatriates;
     or

  .  we are or have been a United States real property holding corporation
     for United States federal income tax purposes.

   We believe that we are not, and do not anticipate becoming, a United States
real property holding corporation for United States federal income tax
purposes. If we were to become a United States real property holding
corporation, so long as our common stock continues to be regularly traded on an
established securities market, you would be subject to federal income tax on
any gain from the sale or other disposition of the stock only if you actually
or constructively owned, during the five-year period preceding the disposition,
more than 5% of our common stock.

   Special rules may apply to non-United States holders, such as controlled
foreign corporations, passive foreign investment companies, foreign personal
holding companies and corporations that accumulate earnings to avoid federal
income tax, that are subject to special treatment under the Code. These
entities should consult their own tax advisors to determine the United States
federal, state, local and other tax consequences that may be relevant to them.

Backup Withholding and Information Reporting

   We must report annually to the Internal Revenue Service and to you the
amount of dividends paid to you and the tax withheld with respect to these
dividends, regardless of whether withholding was required. Copies of the
information returns reporting the dividends and withholding may also be made
available to the tax authorities in the country in which you reside under the
provisions of an applicable income tax treaty.

   Under current law, backup withholding at the rate of 31% generally will not
apply to dividends paid to you at an address outside the United States, unless
the payer has knowledge that you are a United States person. However, under the
final regulations effective for dividends paid on or after January 1, 2001, you
will be subject to backup withholding unless applicable certification
requirements are met.

   Payment of the proceeds of a sale of our common stock within the United
States or conducted through certain United States related financial
intermediaries is subject to both backup withholding and information reporting
unless you certify under penalties of perjury that you are a non-United States
holder and the payer does not have actual knowledge that you are a United
States person, or you otherwise establish an exemption.

   Any amounts withheld under the backup withholding rules may be allowed as a
refund or a credit against your United States federal income tax liability
provided you furnish the required information to the Internal Revenue Service.

Estate Tax

   Common stock held by an individual non-United States holder at the time of
death will be included in that holder's gross estate for United States federal
estate tax purposes, unless an applicable estate tax treaty provides otherwise,
and may be subject to United States federal estate tax.

                                       77
UNDERWRITING

   Under the terms of an underwriting agreement, which is filed as an exhibit
to the registration statement of which this prospectus is a part, the
underwriters of the offering named below, for whom Lehman Brothers Inc., Bear,
Stearns & Co. Inc., FAC/Equities, a division of First Albany Corporation and
John G. Kinnard & Company Incorporated are acting as representatives, have each
agreed to purchase from us the respective number of shares of common stock set
forth opposite its name below:
Number
                                                                            of
         Underwriters                                                     Shares
         ------------                                                     ------
Lehman Brothers Inc. ..............................................
      Bear, Stearns & Co. Inc. ..........................................
      FAC/Equities, a division of First Albany Corporation...............
      John G. Kinnard and Company, Incorporated..........................
                                                                           ----
        Total............................................................
                                                                           ====
The underwriting agreement provides that the underwriters' obligations to
purchase shares of common stock depend on the satisfaction of the conditions
contained in the underwriting agreement, and that if any of the shares of
common stock are purchased by the underwriters under the underwriting
agreement, then all of the shares of common stock which the underwriters have
agreed to purchase under the underwriting agreement must be purchased. The
conditions in the underwriting agreement include the requirement that the
representations and warranties made by us to the underwriters are true, that
there is no material change in the financial markets and that we deliver to the
underwriters customary closing documents.

   We have agreed to indemnify the underwriters against liabilities, including
liabilities under the Securities Act or to contribute to payments that the
underwriters may be required to make for these liabilities.

   We estimate that the total expenses of the offering, excluding underwriting
discounts and commissions, will be approximately $    .

   Fidelity Capital Markets, a division of National Financial Services
Corporation, will be facilitating electronic distribution of information
through the Internet, their Intranet and other proprietary electronic
technology.

   The underwriters have informed us that they do not intend to confirm sales
to discretionary accounts that exceed five percent of the total number of
shares of common stock offered by them.

   Certain of the underwriters and their affiliates provide investment banking,
financial advisory and other services to us and Deluxe for which they may
receive customary fees and commissions. Specifically, Lehman Brothers Inc. has
been engaged by Deluxe to act as exchange agent and provide advisory services
in connection with the split-off. Lehman Brothers Inc. will receive customary
fees in connection with the split-off transaction.

Commissions and Discounts

   The following table provides the per share and total underwriting discounts
and commissions to be paid to the underwriters by us. These amounts are shown
assuming both no exercise and full exercise of the underwriters' option to
purchase          addition shares described below.
Paid by Us                                      No Exercise Full Exercise
       ----------                                      ----------- -------------
Per share......................................
       Total..........................................
78
The representatives have advised us that the underwriters propose to offer
the shares of common stock directly to the public at the initial public
offering price set forth on the cover of this prospectus and to dealers, who
may include the underwriters, at the same price less a selling concession not
in excess of $    per share. The underwriters may allow, and the dealers may
reallow, a concession not in excess of $    per share to brokers and dealers.
After the offering, the offering price and other selling terms may change.

Over-Allotment Option

   We have granted to the underwriters an option to purchase up to an aggregate
of       additional shares of common stock, exercisable to cover over-
allotments, if any, at the initial public offering price less the underwriting
discounts and commissions shown on the cover page of this prospectus. The
underwriters may exercise this option any time during the 30-day period after
the date of this prospectus. If this option is exercised, each underwriter will
be committed, so long as the conditions of the underwriting agreement are
satisfied, to purchase a number of additional shares of common stock
proportionate to the underwriter's initial commitment as indicated in the
preceding table and we will be obligated, under the over-allotment option, to
sell the shares to the underwriters.

No Sales of Similar Securities

   We, Deluxe and our executive officers and directors have agreed not to
directly or indirectly do any of the following, whether any transaction
described in clause (1) or (2) below is to be settled by delivery of common
stock or other securities, in cash or otherwise, in each case without the prior
written consent of Lehman Brothers Inc. on behalf of the underwriters, for a
period of 180 days after the date of this prospectus:

  (1) offer for sale, sell or otherwise dispose of (or enter into any
      transaction or device which is designated to, or could be expected to,
      result in the disposition or purchase by any person at any time in the
      future of) any shares of common stock or securities convertible into or
      exchangeable for common stock or substantially similar securities,
      other than any of the following:

    .  the common stock sold under this prospectus;

    .  distribution of common stock pursuant to the split-off; and

    .  shares of common stock we issue under employee benefit plans,
       qualified stock option plans or other employee compensation plans
       existing on the date of this prospectus or under currently
       outstanding options, warrants or rights.

  (2)  sell or grant options, rights or warrants with respect to any shares
       of our common stock or securities convertible into or exchangeable for
       our common stock or substantially similar securities, other than the
       grant of options under option plans existing on the date of this
       prospectus.

Determination of Offering Price

   Prior to this offering, there has been no public market for the shares of
our common stock. The initial public offering price will be negotiated between
the representatives and us. In determining the initial public offering price of
the common stock, the representatives will consider, among other things and in
addition to prevailing market conditions, our performance and capital
structure, estimates of our business potential and earnings prospects, an
overall assessment of our management and the consideration of the above factors
in relation to market valuation of companies in related businesses.

Nasdaq National Market Listing

   We have applied for quotation of our common stock on the Nasdaq National
Market under the symbol "EFDS."

                                       79
Price Stabilization, Short Positions and Penalty Bids

   Until the distribution of the common stock is completed, rules of the
Securities and Exchange Commission may limit the ability of the underwriters
and selling group members to bid for and purchase shares of common stock. As an
exception to these rules, the representatives are permitted to engage in
transactions that stabilize the price of the common stock. These transactions
may consist of bids or purchases for the purpose of pegging, fixing or
maintaining the price of the common stock.

   The underwriters may create a short position in the common stock in
connection with this offering, which means that they may sell more shares than
are set forth on the cover page of this prospectus. If the underwriters create
a short position, then the representatives may reduce that short position by
purchasing common stock in the open market. The representatives also may elect
to reduce any short position by exercising all or part of the over-allotment
option.

   The representatives also may impose a penalty bid on underwriters and
selling group members. This means that if the representatives purchase shares
of common stock in the open market to reduce the underwriters' short position
or to stabilize the price of the common stock, they may reclaim the amount of
the selling concession from the underwriters and selling group members who sold
those shares as part of this offering.

   In general, purchases of a security for the purpose of stabilization or to
reduce syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of those purchases. The
imposition of a penalty bid might have an effect on the price of a security to
the extent that it were to discourage resales of the security by purchasers in
this offering.

   Neither we nor any of the underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the common stock. In addition, neither
we nor any of the underwriters makes any representation that the
representatives will engage in such transactions or that such transactions,
once commenced, will not be discontinued without notice.

Reserved Shares

   At our request, the underwriters have reserved up to     % shares of the
common stock offered by this prospectus for sale to our directors and other
persons associated with us at the initial public offering price set forth on
the cover page of this prospectus. These persons must commit to purchase no
later than the close of business on the day following the date of this
prospectus. The number of shares available for sale to the general public will
be reduced to the extent these persons purchase the reserved shares.

Canadian Offers

   Any offers in Canada will be made only under an exemption from the
requirements to file a prospectus in the relevant province of Canada where the
sale is made.

                                       80
LEGAL MATTERS

   The validity of the issuance of shares of common stock offered by us in this
offering will be passed upon for us by Dorsey & Whitney LLP, Minneapolis,
Minnesota. Certain legal matters related to the offering will be passed upon
for the underwriters by Simpson Thacher & Bartlett, New York, New York.

                                    EXPERTS

   The consolidated financial statements as of December 31, 1999 and 1998 and
for each of the three years in the period ended December 31, 1999 included in
this prospectus have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their reports appearing in this prospectus and elsewhere
in the registration statement, and are included in reliance upon the report of
such firm, given upon their authority, as experts in accounting and auditing.

                      WHERE YOU CAN FIND MORE INFORMATION

   We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 with respect to the common stock offered by this
prospectus. This prospectus, which constitutes a part of the registration
statement, does not include all of the information contained in the
registration statement. For further information about us and our common stock,
you should refer to the registration statement and the exhibits. Statements
contained in this prospectus regarding the contents of any contract or any
other document to which reference is made are not necessarily complete. In each
instance, please refer to the copy of such contract or other document filed as
an exhibit to the registration statement. Each statement about the contract or
other document contained in the prospectus is qualified in all respects to the
actual document filed with the registration statement.

   Upon completion of this offering, we will become subject to the information
and periodic reporting requirements of the Securities Exchange Act of 1934 and,
in accordance therewith, will file periodic reports, proxy statements and other
information with the Commission. Our fiscal year ends on December 31. We intend
to furnish our stockholders with annual reports containing audited financial
statements and other appropriate reports.

   You may read and copy the registration statement on Form S-1 and any other
document we file with the Commission at its public reference room at 450 Fifth
Street, NW, Washington, DC 20549, as well as at its regional offices located at
7 World Trade Center, Suite 1300, New York, NY 10048 and Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, IL 60661. Please call the Commission
at 1-800-SEC-0330 for further information about its public reference facilities
and copy charges. Our filings are also available to the public from the
Commission's web site at http://www.sec.gov.

                                       81
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Independent Auditors' Report..............................................  F-2
Consolidated Balance Sheets at December 31, 1998 and 1999.................  F-3
Consolidated Statements of Operations for the Years Ended December 31,
 1997, 1998 and 1999......................................................  F-4
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended
 December 31, 1997, 1998 and 1999.........................................  F-5
Consolidated Statements of Cash Flows for the Years Ended December 31,
 1997, 1998 and 1999......................................................  F-6
Notes to Consolidated Financial Statements................................  F-7
F-1
INDEPENDENT AUDITORS' REPORT

eFunds Corporation

We have audited the accompanying consolidated balance sheets of eFunds
Corporation and subsidiaries as of December 31, 1999 and 1998, and the related
consolidated statements of operations, comprehensive income (loss) and cash
flows for each of the three years in the period ended December 31, 1999. These
consolidated financial statements are the responsibility of the Company's
management. Our responsiblity is to express and opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of eFunds Corporation and
subsidiaries as of December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999 in conformity with accounting principles generally accepted
in the United States of America.

DELOITTE & TOUCHE LLP
Minneapolis, Minnesota
April 3, 2000

                                      F-2
EFUNDS CORPORATION

                          CONSOLIDATED BALANCE SHEETS
December 31,
                                                             ------------------
                                                               1998      1999
                                                             --------  --------
                                                                (dollars in
                                                                thousands)
Current Assets
  Cash and cash equivalents................................  $ 16,055  $ 35,849
  Restricted custodial cash................................       545     3,429
  Accounts receivable--net.................................    49,620    52,834
  Deferred income taxes....................................    20,755    10,552
  Income taxes receivable..................................     2,799     7,109
  Prepaid expenses and other current assets................     3,428     3,061
                                                             --------  --------
   Total current assets....................................    93,202   112,834
Long-term Investments......................................     1,370     3,347
Deferred Income Taxes......................................       --      1,549
Restricted Cash............................................     3,921    28,939
Property and Equipment
  Land and land improvements...............................     5,001     4,993
  Buildings and building improvements......................    32,351    33,683
  Computer and other equipment.............................    76,522    80,211
                                                             --------  --------
   Total...................................................   113,874   118,887
  Less accumulated depreciation............................   (55,414)  (58,414)
                                                             --------  --------
   Property and equipment--net.............................    58,460    60,473
Intangibles
  Cost in excess of net assets acquired--net...............     9,258    46,905
  Internal use software--net...............................     5,550    20,746
  Other intangible assets--net.............................    14,574    15,136
                                                             --------  --------
   Total intangibles.......................................    29,382    82,787
                                                             --------  --------
   Total non-current assets................................    93,133   177,095
                                                             --------  --------
     Total assets..........................................  $186,335  $289,929
                                                             ========  ========
Current Liabilities
  Accounts payable.........................................  $ 10,728  $ 19,791
  Accrued liabilities:
   Accrued compensation and employee benefits..............    10,480    18,172
   Accrued contract losses.................................    14,697    20,599
   Reserve for legal proceedings...........................    35,754     1,554
   Other...................................................    18,184    22,116
  Borrowings on line of credit.............................       --      3,100
  Long-term debt due within one year.......................     1,490     1,895
                                                             --------  --------
   Total current liabilities...............................    91,333    87,227
Long-term Debt.............................................     4,029     3,597
Deferred Income Taxes .....................................     1,170       --
Commitments and Contingencies (Notes 11 and 14)
Stockholder's Equity
  Common shares $.01 par value (authorized: 250,000,000
   shares;
   issued and outstanding: 2,500 shares)...................         0         0
  Additional paid-in capital...............................    14,964   292,598
  Retained earnings (accumulated deficit)..................    74,967   (92,946)
  Accumulated other comprehensive loss.....................      (128)     (547)
                                                             --------  --------
   Stockholder's equity....................................    89,803   199,105
                                                             --------  --------
     Total liabilities and stockholder's equity............  $186,335  $289,929
                                                             ========  ========
See Notes to Consolidated Financial Statements

                                      F-3
EFUNDS CORPORATION

                     CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31,
                                                   ----------------------------
                                                     1997      1998      1999
                                                   --------  --------  --------
                                                     (dollars in thousands,
                                                             except
                                                       per share amounts)
Net Sales........................................  $229,065  $267,520  $302,340
                                                   --------  --------  --------
  Cost of sales, excluding loss contract and
   asset impairment charges......................   143,966   171,359   185,590
  Loss contract and asset impairment charges.....       --     40,949     8,700
                                                   --------  --------  --------
    Total cost of sales..........................   143,966   212,308   194,290
                                                   --------  --------  --------
Gross Margin.....................................    85,099    55,212   108,050
                                                   --------  --------  --------
  Selling, general and administrative............    70,542    81,198   105,382
  Research and development.......................     1,398       625     3,756
  Asset impairment charges.......................    11,831       --        --
                                                   --------  --------  --------
    Total operating expenses.....................    83,771    81,823   109,138
                                                   --------  --------  --------
  Income (loss) from operations..................     1,328   (26,611)   (1,088)
Other Income (Expense)
  Legal proceedings..............................   (40,050)    4,157     2,094
  Other income (expense).........................      (918)   (3,495)   (4,609)
  Interest income (expense)......................      (825)    2,789       963
                                                   --------  --------  --------
Loss Before Income Taxes.........................   (40,465)  (23,160)   (2,640)
Benefit (Provision) for Income Taxes.............     6,397     8,569    (5,586)
                                                   --------  --------  --------
Net Loss.........................................  $(34,068) $(14,591) $ (8,226)
                                                   ========  ========  ========
Net Loss per Share--Basic and Diluted............  $(13,627) $ (5,836) $ (3,290)
                                                   ========  ========  ========
Weighted Average Common Shares Outstanding--Basic
 and Diluted.....................................     2,500     2,500     2,500
                                                   ========  ========  ========
See Notes to Consolidated Financial Statements

                                      F-4
EFUNDS CORPORATION

             CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Years Ended December 31,
                                                   ---------------------------
                                                     1997      1998     1999
                                                   --------  --------  -------
                                                    (dollars in thousands)
Net Loss.......................................... $(34,068) $(14,591) $(8,226)
Other Comprehensive (Loss) Income, Net of Tax--
  Foreign currency translation adjustments........     (972)       44     (419)
                                                   --------  --------  -------
Comprehensive Loss................................ $(35,040) $(14,547) $(8,645)
                                                   ========  ========  =======
Related Tax Benefit (Expense) of Other
 Comprehensive Income (Loss)--
  Foreign currency translation adjustments........ $    182  $    (26) $  (795)
                                                   ========  ========  =======
See Notes to Consolidated Financial Statements

                                      F-5
EFUNDS CORPORATION

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31,
                                                   ----------------------------
                                                     1997      1998      1999
                                                   --------  --------  --------
                                                     (dollars in thousands)
Cash Flows from Operating Activities
  Net Loss.......................................  $(34,068) $(14,591) $ (8,226)
  Adjustments to reconcile net loss to net cash
   provided by (used in) operating activities:
    Depreciation.................................     9,914    12,015    12,519
    Amortization of intangibles..................    12,834     9,504     9,982
    Asset impairment charges.....................    11,831    26,252       492
    Equity in pre-acquisition earnings of the
     professional services segment...............       665     1,759     1,114
    Loss on sales of capital assets..............       449     2,635     4,973
    Deferred income taxes........................   (13,521)   (6,529)    8,927
    Changes in assets and liabilities, net of
     effects from acquisitions:
      Restricted cash............................       --     (4,466)  (27,902)
      Accounts receivable........................    (5,256)   (6,629)      393
      Accounts payable...........................     1,996    (6,571)    7,963
      Income taxes receivable/payable............      (119)  (10,218)   (4,310)
      Reserve for legal proceedings..............    41,982    (6,228)  (34,200)
      Accrued contract losses....................       --     14,697     5,902
      Other assets and liabilities...............      (769)   (3,809)   10,223
                                                   --------  --------  --------
      Net cash provided by (used in) operating
       activities................................    25,938     7,821   (12,150)
                                                   --------  --------  --------
Cash Flows from Investing Activities
  Purchases of capital assets....................   (17,985)  (30,468)  (38,225)
  Payments for acquisitions, net of cash
   acquired......................................       --        --    (35,667)
  Proceeds from sales of capital assets..........       131        70     1,229
  Other..........................................      (665)   (1,139)     (546)
                                                   --------  --------  --------
      Net cash used in investing activities......   (18,519)  (31,537)  (73,209)
                                                   --------  --------  --------
Cash Flows from Financing Activities
  Net borrowings on lines of credit..............       --        --      3,054
  Proceeds from issuance of long-term debt.......       290        61        11
  Payments on long-term debt.....................    (2,293)   (2,125)   (6,665)
  (Distributions to) contributions by Deluxe.....   (8,799)    17,992   268,440
  Dividends paid to Deluxe.......................       --        --   (159,687)
                                                   --------  --------  --------
      Net cash (used in) provided by financing
       activities................................   (10,802)   15,928   105,153
                                                   --------  --------  --------
Net (Decrease) Increase in Cash and Cash
 Equivalents.....................................    (3,383)   (7,788)   19,794
Cash and Cash Equivalents at Beginning of Year ..    27,226    23,843    16,055
                                                   --------  --------  --------
Cash and Cash Equivalents at End of Year ........  $ 23,843  $ 16,055  $ 35,849
                                                   ========  ========  ========
Supplementary cash flow disclosure:
  Interest paid..................................  $    949  $    673  $  1,091
                                                   ========  ========  ========
See Notes to Consolidated Financial Statements

                                      F-6
EFUNDS CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1: Split-off and basis of presentation

   In January 2000, Deluxe Corporation (Deluxe) announced that its board of
directors approved a plan (the Plan) to combine its electronic payment
solutions, professional services and government services businesses into a
separate, independent publicly traded company to be called eFunds Corporation
(the Company). The Company, a Delaware corporation, changed its name from
Deluxe Electronic Payment Systems, Inc. to eFunds Corporation in September
1999. Electronic payment solutions provides comprehensive electronic payment
management solutions that combine transaction processing with decision support
and risk management tools to the financial services and retail industries.
Professional services provides information technology development, maintenance
and support and business process management to financial services companies and
to all of the Company's and Deluxe's businesses. Government services provides
electronic benefits transfer (EBT) services and online medical eligibility
verification services to state and local governments.

   Deluxe has announced that it plans to issue shares of the Company's common
stock to the public through an initial public offering (IPO). After this
offering, Deluxe will own at least 80.1% of the Company's outstanding shares.
Deluxe plans to distribute all of its shares of the Company's common stock to
its shareholders who tender shares of Deluxe's common stock in an exchange
offer (the Split-off). Deluxe has requested a private letter ruling from the
Internal Revenue Service that the Split-off would be a tax-free transaction to
Deluxe and its shareholders. The Split-off is contingent upon Deluxe receiving
a favorable tax ruling from the IRS.

   As part of the Split-off, the Company and Deluxe will enter into various
agreements that address the allocation of assets and liabilities between them
and that define their relationship after the separation. The agreements relate
to matters such as software development and business process management
services, indemnification, data sharing, real estate, tax-sharing and
transitional services.

   Under the Plan, 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 are under common control, the consolidated financial
statements of the Company include all of the assets, liabilities, revenues and
expenses of the businesses conducted through the electronic payment solutions,
professional services and government services segments.

   All transactions between the entities included in the consolidated financial
statements have been eliminated. The consolidated financial statements are
presented as if the Company had existed as a separate and independent business
for the periods presented and have been prepared using the historical bases in
the assets, liabilities, revenues and expenses that comprise the Company and
the Transferred Businesses.

   Included in the consolidated financial statements are allocated portions of
Deluxe's corporate assets, liabilities, equity and expenses relating to the
Transferred Businesses. Deluxe and the Company believe these allocations are
reasonable; however, they do not necessarily approximate the amounts or costs
that would have been or will be incurred by the Company on a stand-alone basis
(see Note 3).

   The consolidated financial statements may not necessarily reflect the
financial position and results of operations of the Company had it actually
existed as a separate, stand-alone company during all the periods presented. In
addition, these financial statements may not be indicative of the future
financial position or results of operations of the Company as a separate,
stand-alone entity.

                                      F-7
Note 2: Significant accounting policies

   Consolidation--The consolidated financial statements include the accounts of
the Company and the Transferred Businesses. All significant intercompany
accounts, transactions and profits have been eliminated. For purposes of
consolidating the professional services business, which is primarily based in
India, the Company has used financial statements with a November 30 fiscal
period end. In 2000, due to the implementation of a new accounting system, the
Company expects to adjust that business' fiscal-year end to conform with the
Company's December 31 year-end.

   Cash and cash equivalents--The Company considers all cash on hand, money
market funds, outstanding transfers of cash for authorized settlement of
automated teller machines (ATMs) with financial institutions and other highly
liquid investments with original maturities of three months or less to be cash
and cash equivalents. The carrying amounts reported in the consolidated balance
sheets for cash and cash equivalents approximate fair value.

   Restricted cash--The Company has entered into agreements with a third party
to supply cash for ATMs maintained by the third party in various locations
throughout the United States. The agreements provide that the Company retains
control over and ownership of this cash. Subject to the approval of the
Company, the other party to the agreements determines the level of cash
required to be maintained within the ATMs up to an authorized level. The
Company currently has an aggregated outstanding authorized cash level of $35
million. The agreements are effective through August 31, 2004. The cash in the
ATMs is not available for general operating use and is reflected in the
Company's consolidated balance sheets as a non-current asset.

   In connection with the Company's electronic payment transactions, the
Company also has cash belonging to customers that temporarily resides in
custodial accounts maintained by the Company. The Company records these amounts
as current restricted custodial cash with a corresponding liability within
other accrued liabilities in the consolidated balance sheets.

   Accounts receivable--Accounts receivable are stated net of allowances for
uncollectible accounts of $2.0 million and $4.4 million at December 31, 1998
and 1999, respectively. As of December 31, 1998 and 1999, no one customer
accounted for 10% or more of total receivables. Bad debt expense related to
accounts deemed to be uncollectible was $1.5 million in 1997, $1.1 million in
1998 and $2.9 million in 1999.

   Long-term investments--Long-term investments consist principally of cash
surrender values of insurance contracts. The carrying values approximate their
fair values.

   Property and equipment--Property and equipment, including leasehold and
other improvements that extend an asset's useful life or productive
capabilities, are stated at historical cost. Buildings with 40-year lives and
computer and other equipment with lives of three to eight years are generally
depreciated using accelerated methods. Leasehold and building improvements are
depreciated on a straight-line basis over the estimated useful life of the
property or the life of the lease, whichever is shorter.

   Intangibles--Intangibles are presented in the consolidated balance sheets
net of accumulated amortization. Amortization expense is determined on the
straight-line basis over periods of 10 to 30 years for cost in excess of net
assets acquired (goodwill) and one to five years for internal use software and
other intangibles. Other intangibles consist primarily of licensed software and
software held for sale. Total intangibles at December 31 were as follows
(dollars in thousands):
1998     1999
                                                              ------- --------
Cost in excess of net assets acquired (see Note 4)..... $21,431 $ 61,577
      Internal use software..................................   5,699   28,123
      Other intangible assets................................  61,542   62,616
                                                              ------- --------
        Total................................................  88,672  152,316
      Less accumulated amortization..........................  59,290   69,529
                                                              ------- --------
      Intangibles--net....................................... $29,382 $ 82,787
                                                              ======= ========
F-8
Impairment of long-lived assets--The Company evaluates the recoverability of
long-lived assets not held for sale by measuring the carrying amount of the
assets against the estimated undiscounted future cash flows associated with
them. Should the sum of the expected future net cash flows be less than the
carrying value of the long-lived asset, an impairment loss would be recognized.
The impairment loss would be calculated as the amount by which the carrying
value of the asset exceeds the fair value of the asset. In evaluating whether
there is any impairment of long-lived assets associated with long-term service
contracts, the amount of any contract loss accrual is excluded from the
undiscounted future cash flows associated with the long-lived assets when
determining whether those assets are impaired.

   The Company evaluates the recoverability of long-lived assets held for
disposal by comparing the asset's carrying amount with its fair value less
costs to sell. Should the fair value less costs to sell be less than the
carrying value of the long-lived asset, an impairment loss would be recognized.
The impairment loss would be calculated as the amount by which the carrying
value of the asset exceeds the fair value of the asset less costs to sell.

   Income taxes--In most cases, the Company's domestic businesses are included
in the Deluxe consolidated tax return. Tax payments are made to Deluxe and tax
benefits are reimbursed by Deluxe to the extent they are used. The consolidated
financial statements include income tax provisions and liabilities calculated
as if separate tax returns were prepared for the periods covered. Deferred
income taxes result from temporary differences between the financial reporting
basis of assets and liabilities and their respective tax reporting bases.
Future tax benefits are recognized to the extent that realization of such
benefits is more likely than not.

   Translation adjustment--The financial position and results of operations of
the Company's international subsidiaries are measured using local currencies as
the functional currencies. Assets and liabilities of these operations are
translated at the exchange rate in effect at the balance sheet date. Income
statement accounts are translated at the average exchange rate during the year.
Translation adjustments arising from the use of differing exchange rates from
period to period are included in other comprehensive income in the
stockholder's equity section of the consolidated balance sheets. Gains and
losses that result from foreign currency transactions are included in earnings.

   Revenue recognition--Revenues are recorded net of any applicable discounts.
Transaction processing and service revenues and decision support revenues are
generally recognized as the services are performed. Revenues from software
license fees for standard software products are recognized when delivery has
occurred, the license fee is fixed and determinable, collectibility is probable
and evidence of the arrangement exists. Software maintenance and support
revenues are recognized ratably over the term of the contract and/or as the
services are provided. Professional services revenues for software development,
custom applications and business process management are generally recognized as
the services are performed or proportionately based on the percentage of
completion.

   Long-term service contracts--Long-term service contracts are definitive
agreements to provide services over a period of time in excess of one year and
with respect to which the Company has no contractual right to adjust the prices
or terms at or on which its services are supplied during the term of the
contract. Revenues are recognized for all long-term service contracts when the
service is performed. Total revenues for some long-term service contracts may
vary based on the demand for services. Expenses are recognized when incurred,
with the exception of installation costs. Any installation costs are
capitalized and recognized ratably over the life of the contract, which
approximates the anticipated revenue recognition. Any equipment and software
purchased to support a long-term service contract is capitalized and
depreciated or amortized over the life of the related contract or the life of
the asset, whichever is shorter.

   In determining the profitability of a long-term service contract, only
direct and allocable indirect costs associated with the contract are included
in the calculation. The appropriateness of allocations of indirect costs
depends on the circumstances and involves the judgment of management, but such
costs may include the costs of indirect labor, contract supervision, tools and
equipment, supplies, quality control and inspection, insurance,

                                      F-9
repairs and maintenance, depreciation and amortization and, in some
circumstances, support costs. The method of allocating any indirect costs
included in the analysis is also dependent upon the circumstances and the
judgment of management, but the allocation method must be systematic and
rational. General and administrative costs and selling costs are not included
in the analysis. Provisions for estimated losses on long-term service
contracts, if any, are made in the period in which the loss first becomes
probable and reasonably estimable. Projected losses are based on management's
best estimates of a contract's revenue and costs. Actual losses on individual
long-term service contracts are compared to the loss projections periodically,
with any changes in the estimated total contract loss recognized as they become
probable and reasonably estimable.

   Certain direct costs associated with the EBT contracts discussed in Note 5
are common to a number of contracts and are attributed to each contract based
on its use of the services associated with these common direct costs. Revenues,
case counts or other applicable statistics are used to attribute these costs to
individual contracts.

   In the event an asset impairment loss is recognized on long-lived assets
used to support a long-term service contract, the original estimation of the
contract's costs is revised to reduce the depreciation and amortization
associated with the impaired assets.

   Research and development expense--Research and development costs, which are
expensed as incurred, relate to investigating new or improved processes and
techniques and developing such research findings into a potential new product
or service.

   Employee stock-based compensation--The Company participates in Deluxe's
stock incentive program. In connection with the IPO and the Split-off, the
Company intends to adopt new stock incentive programs. As permitted by
Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation," the Company continues to account for its employee
stock-based compensation in accordance with Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees." No compensation cost has
been recognized for fixed stock options issued under the Deluxe stock incentive
plan. The Company discloses pro forma net loss and net loss per share as if the
fair value method of SFAS No. 123 had been used (see Note 9).

   Stockholder's equity--As of January 27, 2000, the Company increased the
number of authorized shares to 250 million. The authorized shares have been
presented as if the 250 million shares had been authorized for all years shown.

   Use of estimates--The Company has prepared the accompanying consolidated
financial statements in conformity with accounting principles generally
accepted in the United States of America. In this process, it is necessary for
management to make certain assumptions and related estimates affecting the
amounts reported in the consolidated financial statements and attached notes.
These estimates and assumptions are developed based upon all information
available using management's best efforts. However, actual results can differ
from assumed and estimated amounts.

   New accounting pronouncements--In April 1998, the Accounting Standards
Executive Committee of the American Institute of Certified Public Accountants
issued Statement of Position (SOP) 98-5, "Reporting the Costs of Start-up
Activities," which provides guidance on the appropriate accounting for start-up
activities beginning in 1999. Application of the SOP did not have a material
impact on the Company's reported operating results or financial position.

   In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which provides
guidance on accounting for derivatives and hedge transactions. This statement
is effective for the Company on January 1, 2001. The Company anticipates that
the effect of this pronouncement will not have a material impact on reported
operating results.

                                      F-10
Note 3: Transactions with Deluxe

   Purchase and sale transactions between the Company and Deluxe are executed
at either current market pricing or agreed-upon transfer prices. Purchases from
Deluxe were $1.0 million, $0.2 million and $2.9 million in 1997, 1998 and 1999,
respectively. Sales to Deluxe were $2.4 million, $1.6 million and $8.8 million
in 1997, 1998 and 1999, respectively. Under Deluxe's centralized cash
management system, advances from Deluxe and excess cash sent to Deluxe are
reflected as contributions by and distributions to Deluxe and are included in
stockholder's equity in the consolidated balance sheets.

   Deluxe allocated to the Company for the costs of corporate services provided
$15.5 million, $25.3 million and $25.6 million in 1997, 1998 and 1999,
respectively. These allocations, which were based on a percentage of Company
revenue to total Deluxe revenue, included expenses for various support
functions such as human resources, information services and finance. The
amounts allocated to the Company are included in selling, general and
administrative expense in the consolidated statements of operations.

   Deluxe also charges the Company for interest expense or credits the Company
for interest income based on the cash the Company has borrowed from or provided
to Deluxe. The Company was charged or credited net interest (expense) income
from Deluxe of $(0.7) million, $3.0 million and $2.8 million in 1997, 1998 and
1999, respectively. These amounts are included in interest (expense) income in
the consolidated statements of operations.

Note 4: Business combinations

   On February 19, 1999, Deluxe acquired all of the outstanding shares of an
electronic check conversion company for $13 million. The company provides
electronic check conversion and electronic funds transfer solutions for
financial services companies and retailers. The ownership of this company was
transferred to the Company under the Plan discussed in Note 1. The acquisition
was accounted for under the purchase method of accounting. Accordingly, the
consolidated financial statements of the Company include the results of this
business subsequent to its acquisition date. This business is included in the
electronic payment solutions segment in Note 13. The purchase price was
allocated to the assets acquired and liabilities assumed based on their fair
values on the date of purchase. Total cost in excess of net assets acquired in
the amount of $15.7 million is reflected as goodwill and is being amortized
over 10 years.

   On April 13, 1999, Deluxe acquired the remaining 50% ownership interest in
HCL-Deluxe, N.V. (HCL) for $23.4 million. The joint venture, which Deluxe
entered into with HCL Corporation of India in 1996, commenced operations in
September 1997. The company provides information technology development and
support services and business process management to financial services
companies and to all of the Company's and Deluxe's businesses. The ownership of
this company was transferred to the Company under the Plan discussed in Note 1.
The acquisition was accounted for under the purchase method of accounting.
Accordingly, the consolidated financial statements of the Company include the
entire results of this business from the date the Company acquired 100%
ownership. Prior to this, the Company recorded its 50% ownership of the joint
venture's results under the equity method of accounting. As such, their results
of operations prior to the acquisition are included in other expense in the
consolidated statements of operations. This business comprises the professional
services segment in Note 13. The purchase price was allocated to the assets
acquired and liabilities assumed based on their fair values on the date of
purchase. Total cost in excess of net assets acquired in the amount of $24.9
million is reflected as goodwill and is being amortized over 15 years.

Note 5: Contract losses

   During 1998, the Company recorded charges of $14.7 million to provide for
expected future losses on existing long-term contracts of the government
services segment. These charges are reflected in cost of sales in the 1998
consolidated statement of operations. Due to a continuing strong economy,
record low unemployment and welfare reform, the actual transaction volumes and
expected future revenues of this business are well below

                                      F-11
original expectations. Additionally, actual and expected future
telecommunications, installation, help desk and other costs are significantly
higher than originally anticipated. These factors resulted in expected future
losses on the existing EBT contracts of this business.

   During 1999, charges of $8.2 million were recorded to provide for additional
expected future losses on the contracts of the government services segment.
These charges are reflected in cost of sales in the 1999 consolidated statement
of operations. A majority of the charges resulted from the conclusion of
settlement negotiations with a prime contractor regarding the timing and costs
of transitioning switching services from the Company to a new processor. Also,
lower than projected actual transaction volumes (primarily related to states
fully rolled-out in 1999) contributed to the changes in the estimates
underlying the 1998 charges. These increases to the reserve for accrued
contract losses were partially offset by the application of $2.3 million of
contract losses against the reserve during 1999.

Note 6: Impairment losses

   During 1997, the Company determined that it would dispose of certain
international operations of its electronic payment solutions segment. Based on
fair market value estimates, the Company determined that the long-lived assets
of these operations were impaired and recorded a charge of $11.8 million to
write down the carrying value of these operations to their estimated fair value
less costs to sell. These impairment charges are reflected as operating
expenses in the 1997 consolidated statement of operations. During 1998, there
was a change in the management of the electronic payment solutions segment. As
a result, in January 1999, the Company determined that the international
operations of this segment maintained a continuing strategic importance and
were no longer considered held for sale.

   During 1998, the Company recorded impairment charges of $26.3 million to
write down the carrying value of long-lived assets of the government services
segment. The assets consisted of point-of-sale equipment, internal-use software
and capitalized installation costs utilized in the EBT activities of this
segment. The Company concluded that the operating losses incurred by this
business would continue. This is primarily due to the fact that the variable
costs associated with supporting benefit recipient activity are higher than
originally anticipated and actual transaction volumes are below original
expectations. In calculating the impairment charge, the Company determined that
the assets utilized by this business have no fair market value. The point-of-
sale equipment was purchased via capital leases. The lease buy-out prices for
this equipment plus the deinstallation costs exceeded the amount equipment
resellers were willing to pay for the equipment. The utility of the internal-
use software was limited to its use in supporting the EBT business, and the
installation costs could not be resold. Thus, the long-lived assets of this
business were reduced to a carrying value of zero. These impairment charges are
reflected as cost of sales in the 1998 consolidated statement of operations.

   During 1999, due to the continued operating losses of the government
services segment, additional impairment charges of $0.5 million were recorded.
These charges represent the write-down of long-lived assets purchased by this
segment during 1999. These assets consisted primarily of software and
installation costs associated with the continued roll-out of additional states.
All assets purchased were reduced to a carrying value of zero, as they were in
1998. These impairment charges are reflected in cost of sales in the 1999
consolidated statement of operations.

Note 7: Restructuring charges

   During 1997, the Company recorded restructuring charges of $1.5 million for
severance relating to management changes within the electronic payment
solutions segment. This reduction of four employees was completed in 1998.
These charges are reflected in selling, general and administrative (SG&A)
expense in the 1997 consolidated statement of operations.

   During 1998, the Company recorded restructuring charges of $3.2 million for
severance associated with the Company's initiative to reduce its SG&A expense.
The Company anticipated eliminating 76 positions in

                                      F-12
various support functions within sales, marketing, finance, human resources and
information services through 2000. As of December 31, 1999, 33 of the positions
have been eliminated. Also during 1998, the Company reversed $1.0 million of a
1996 restructuring charge. The 1996 charge related to planned reductions in
various support functions at the international operations of the electronic
payment solutions segment. Due to higher than anticipated attrition, it was
necessary to reduce this reserve. This accrual reversal and the new
restructuring accruals are reflected in SG&A expense in the 1998 consolidated
statement of operations.

   During 1999, the Company reversed $2.4 million of restructuring accruals
relating to its 1998 initiative to reduce SG&A expense and the 1996 plan to
reduce the workforce at the international operations of the electronic payment
solutions segment. The reduction in the SG&A expense initiative accrual was due
to higher than anticipated attrition, resulting in severance payments to 37
fewer employees than originally anticipated. Also, due to the Company's
decision in 1999 to retain the international operations of its electronic
payment solutions segment (see Note 6), planned reductions within that business
were canceled. These accrual reversals are reflected in SG&A expense in the
1999 consolidated statement of operations.

   The Company's consolidated balance sheets reflect restructuring accruals for
employee severance costs of $4.7 million and $1.2 million as of December 31,
1998 and 1999, respectively.

   The following table summarizes the change in the Company's restructuring
accruals for 1997, 1998 and 1999 (dollars in thousands):
1997              1998               1999
                             ----------------  -----------------  -----------------
                             Number of         Number of          Number of
                             employees         employees          employees
                             affected  Amount  affected  Amount   affected  Amount
                             --------- ------  --------- -------  --------- -------
Balance--beginning of
    year...................     190    $3,500     174    $ 4,574     186    $ 4,672
   Severance paid..........     (20)     (442)    (19)    (2,053)    (18)    (1,031)
   Adjustments to accrual..       4     1,516      31      2,151    (162)    (2,399)
                                ---    ------     ---    -------    ----    -------
   Balance--end of year....     174    $4,574     186    $ 4,672       6    $ 1,242
                                ===    ======     ===    =======    ====    =======
Note 8: Benefit (provision) for income taxes

   (Loss) income before income taxes consists of (dollars in thousands):
1997      1998     1999
                                                    --------  --------  -------
Domestic..................................... $(25,620) $(24,591) $(2,163)
      Foreign......................................  (14,845)    1,431     (477)
                                                    --------  --------  -------
        Total...................................... $(40,465) $(23,160) $(2,640)
                                                    ========  ========  =======
The components of the benefit (provision) for income taxes are as follows
(dollars in thousands):
1997     1998     1999
                                                     -------  ------  --------
Current tax benefit (provision):
        Federal..................................... $(6,866) $1,324  $  5,527
        State.......................................  (1,345)  1,169      (271)
                                                     -------  ------  --------
          Total.....................................  (8,211)  2,493     5,256
      Deferred tax benefit (provision):
        Federal.....................................  14,574   6,157   (10,811)
        State.......................................      34     (81)      (31)
                                                     -------  ------  --------
          Total..................................... $ 6,397  $8,569  $ (5,586)
                                                     =======  ======  ========
F-13
The Company's effective tax rate on pretax loss differs from the U.S.
Federal statutory tax rate of 35% as follows (dollars in thousands):
1997     1998    1999
                                                     -------  ------  -------
Income tax at Federal statutory rate............. $14,163  $8,106  $   924
   State income taxes net of Federal income tax
    benefit.........................................    (852)    707     (196)
   Amortization and write-down of non-deductible
    intangibles.....................................  (3,132)   (231)  (1,074)
   Change in valuation allowance....................  (1,810)    636   (4,591)
   Other............................................  (1,972)   (649)    (649)
                                                     -------  ------  -------
   Benefit (provision) for income taxes............. $ 6,397  $8,569  $(5,586)
                                                     =======  ======  =======
Tax effected temporary differences which give rise to a significant portion
of deferred tax assets and liabilities at December 31, 1998 and 1999, are as
follows (dollars in thousands):
1998                      1999
                             ------------------------- -------------------------
                             Deferred tax Deferred tax Deferred tax Deferred tax
                                assets    liabilities     assets    liabilities
                             ------------ ------------ ------------ ------------
Net operating loss carry
    forwards...............    $ 8,123       $  --       $ 13,249       $--
   Reserve for legal
    proceedings............     12,669          --            646        --
   Accrued contract
    losses.................      5,664          --          8,085        --
   Restructuring accruals..      1,793          --            476        --
   Property and equipment..        --         1,941           954        --
   Intangibles.............      1,343          --            718        --
   Employee benefit plans..        840          --            879        --
   Miscellaneous reserves
    and accruals...........        854          --          1,327        --
   All other...............        175          595           131        239
                               -------       ------      --------       ----
   Subtotal................     31,461        2,536        26,465        239
   Valuation allowance.....     (9,340)         --        (14,125)       --
                               -------       ------      --------       ----
   Total deferred taxes....    $22,121       $2,536      $ 12,340       $239
                               =======       ======      ========       ====
The valuation allowance at both dates relates to the uncertainty of
realizing foreign and state deferred tax assets.

   At December 31, 1999, net operating loss carryforwards relating to both
foreign and state jurisdictions totaled $92.1 million. Of these carryforwards,
$83.0 million expire in various years between 2001 and 2014 and $9.1 million
may be carried forward indefinitely.

Note 9: Employee benefit plans

   Stock purchase plan--The Company participates in Deluxe's employee stock
purchase plan that enables eligible employees to purchase Deluxe's common stock
at 75% of its fair market value on the first business day following each three-
month purchase period. Compensation expense recognized for the difference
between the employees' purchase price and the fair value of the stock was $0.6
million, $0.7 million and $0.7 million in 1997, 1998 and 1999, respectively.

   Stock incentive plan--The Company participates in Deluxe's stock incentive
plan. In connection with the IPO, the Company intends to adopt a new stock
incentive program. Under these plans, stock-based awards may be issued to
employees via a broad range of methods, including non-qualified or incentive
stock options, restricted stock and restricted stock units, stock appreciation
rights and other awards based on the value of the respective Company's common
stock. Options become exercisable in varying amounts beginning generally one
year after the date of grant.

                                      F-14
The Company also participates in Deluxe's DeluxeSHARES program. In 1998,
under this program, options were awarded to substantially all employees of the
Company (excluding foreign employees), allowing them, subject to certain
conditions, to purchase 100 shares of Deluxe common stock at an exercise price
of $33 per share. The options become exercisable when the value of Deluxe's
common stock reaches $49.50 per share or January 30, 2001, whichever occurs
first.

   All options under the Deluxe plans allow for the purchase of shares of
Deluxe's common stock at prices equal to their market value at the date of
grant. Options issued to Company employees under the Deluxe plans for the
purchase of 698,000 and 1.1 million were outstanding at December 31, 1998 and
1999, respectively.

   Deluxe issued 1,338 restricted shares and restricted stock units to Company
employees during 1997, 979 in 1998 and 6,264 in 1999. These awards generally
vest over periods ranging from one to five years.

   In connection with the Split-off (see Note 1), Deluxe and the Company have
decided that options outstanding as of the Split-off date will be converted to
options of the Company and options of Deluxe based on a formula. The formula
will be based on the market value of the Company's and Deluxe's common stock at
the Split-off date and is designed to maintain an equivalent intrinsic value
for the option holder. The Company does not expect a compensation charge to
result from this conversion process.

   Pro forma information regarding net loss and net loss per share has been
determined as if the Company had accounted for its employee stock-based
compensation under the fair value method. The fair value of options was
estimated at the date of grant using a Black-Scholes option pricing model. The
following weighted-average assumptions were used in valuing options issued in
1997, 1998 and 1999, respectively: risk-free interest rate of 6.0%, 5.9% and
6.7%; dividend yield of 4.0%, 4.5% and 4.6%; and expected volatility of 23.0%,
21.8% and 24.0%. The weighted-average expected option life was 7.2 years, 5.9
years and 9.0 years for 1997, 1998 and 1999, respectively. The weighted-average
fair value of options granted in 1997, 1998 and 1999 was $6.87, $6.13 and $8.28
per share, respectively. For purposes of pro forma disclosures, the estimated
fair value of the options was recognized as expense over the options' vesting
periods. The Company's pro forma net loss and net loss per share were as
follows (dollars in thousands, except per share amounts):
1997      1998      1999
                                                  --------  --------  --------
Net loss:
        As reported.............................. $(34,068) $(14,591) $ (8,226)
        Pro forma................................ $(34,501) $(15,299) $(10,638)
      Basic and diluted net loss per share:
        As reported.............................. $(13,627) $ (5,836) $ (3,290)
        Pro forma................................ $(13,800) $ (6,119) $ (4,255)
These pro forma calculations only include the effects of grants made
subsequent to January 1, 1995. As such, these impacts are not necessarily
indicative of the pro forma effects on reported net income of future years.
Also, these calculations relate to options issued under the Deluxe plan, the
provisions of which may be different from the plan the Company intends to
adopt.

   Profit sharing, defined contribution and 401(k) plans--The Company
participates in Deluxe's profit sharing plans, defined contribution pension
plan and plans established under section 401(k) of the Internal Revenue Code to
provide retirement benefits for certain employees. The plans cover
substantially all full-time employees with approximately 15 months of service.
Contributions to the profit sharing and defined contribution plans are made
solely by the Company. Employees may contribute up to the lesser of $10,000 or
10% of their wages to the 401(k) plan. The Company will match the first 1% of
wages contributed and 50% of the next 4% of wages contributed. All
contributions are remitted to the plans' respective trustees, and benefits
provided are paid from accumulated funds of the trusts.

                                      F-15
Contributions to the defined contribution pension plan equaled 6% of
eligible compensation in 1997 and 4% of eligible compensation in 1998 and 1999.
Related expense allocated to the Company for these years was $2.1 million, $2.5
million and $3.2 million, respectively. Contributions to the profit sharing
plans vary based on the Company's performance. Related expense allocated to the
Company for these plans was $2.2 million, $4.6 million and $4.8 million in
1997, 1998 and 1999, respectively. Company contributions to the 401(k) plan
were $1.2 million, $1.5 million and $1.5 million in 1997, 1998 and 1999,
respectively.

   As part of the Split-off (see Note 1), the Company intends to establish its
own employee benefit plans. The specific provisions of such plans have not yet
been determined and may be different than the provisions of Deluxe's plans.

Note 10: Post-retirement benefits

   The Company provides certain health care benefits for a portion of its
retired employees. Employees included in the plan may become eligible for such
benefits if they attain the appropriate years of service and age while working
for the Company. The Company's benefit obligation under this plan is not
funded.

   The following table summarizes the change in benefit obligation during 1998
and 1999 (dollars in thousands):
Benefit obligation, January 1, 1998................................ $ 577
        Service cost.....................................................    69
        Interest cost....................................................    41
        Actuarial (gains) and losses.....................................   125
        Benefits paid from general funds of the Company..................    (8)
                                                                          -----
      Benefit obligation, December 31, 1998..............................   804
        Service cost.....................................................    86
        Interest cost....................................................    54
        Actuarial (gains) and losses.....................................  (138)
        Benefits paid from general funds of the Company..................    (5)
                                                                          -----
      Benefit obligation, December 31, 1999.............................. $ 801
                                                                          =====
The status of the plan was as follows at December 31 (dollars in thousands):
1998 1999
                                                                     ---- ----
Accumulated post-retirement benefit obligation................ $804 $801
      Less:
        Unrecognized net loss.......................................  296  141
        Unrecognized transition obligation..........................   71   66
                                                                     ---- ----
        Accrued post-retirement liability recognized in the
         consolidated balance sheets................................ $437 $594
                                                                     ==== ====
Net post-retirement benefit cost for the years ended December 31 consisted
of the following components (dollars in thousands):
1997 1998 1999
                                                                ---- ---- ----
Service cost--benefits earned during the year............ $62  $ 69 $ 86
      Interest cost on the accumulated post-retirement benefit
       obligation..............................................  22    41   54
      Amortization of transition obligation....................   5     6    5
      Recognized net amortization of gains and losses.......... --      6   17
                                                                ---  ---- ----
      Total post-retirement benefit cost....................... $89  $122 $162
                                                                ===  ==== ====
F-16
In measuring the accumulated post-retirement benefit obligation as of
December 31, 1999, the Company's health care inflation rate for 2000 and beyond
was assumed to be 5%. A one percentage point increase in the health care
inflation rate for each year would increase the accumulated post-retirement
benefit obligation by $139,000 and the service and interest cost components of
the net post-retirement benefit cost by $29,000. A one percentage point
decrease in the health care inflation rate for each year would decrease the
accumulated post-retirement benefit obligation by $119,000 and the service and
interest cost components of the net post-retirement benefit cost by $24,000.
The discount rate used in determining the accumulated post-retirement benefit
obligation as of December 31, 1998 and 1999 was 6.75% and 7.50%, respectively.

Note 11: Lease and debt commitments

   Long-term debt was as follows at December 31 (dollars in thousands):
1998     1999
                                                               -------  -------
Capital leases and other................................ $ 5,519  $ 5,492
      Less amount due within one year.........................  (1,490)  (1,895)
                                                               -------  -------
        Total................................................. $ 4,029  $ 3,597
                                                               =======  =======
Long-term debt consists principally of equipment capital leases on
equipment. The capital lease obligations bear interest rates of 6.7% to 15.7%
and are due through the year 2004. Carrying value materially approximates fair
value for these obligations. Maturities of long-term debt for the five years
ending December 31, 2004, are $1.9 million, $2.1 million, $1.3 million, $0.1
million and $0.1 million.

   The Company has entered into operating leases on certain facilities and
equipment. Future minimum lease payments for all noncancelable operating leases
for the five years ending December 31, 2004, are $17.0 million, $10.1 million,
$4.3 million, $2.2 million and $1.6 million and $2.9 million thereafter. Rental
expense was $14.7 million, $18.8 million and $20.7 million in 1997, 1998 and
1999, respectively.

   As of December 31, 1999, the Company had a $5.0 million line of credit,
which is denominated in Indian rupees and guaranteed by Deluxe, available to
its international operations at an interest rate of 15.81%. The average amount
drawn on this line during 1999 was $2.7 million. The line of credit was
increased on March 9, 2000 to $10.0 million and remains guaranteed by Deluxe
until October 1, 2000.

Note 12: Stockholder's equity
Retained    Accumulated
                          Common stock  Additional   earnings       other         Total
                          -------------  paid-in   (accumulated comprehensive stockholder's
                          Shares Amount  capital     deficit)   income (loss)    equity
                          ------ ------ ---------- ------------ ------------- -------------
                                               (dollars in thousands)
Balance, December 31,
 1996...................  2,500   $ 0    $  7,471   $ 123,626       $ 800       $ 131,897
Net loss ...............    --    --          --      (34,068)        --          (34,068)
Distributions to Deluxe,
 net....................    --    --       (9,167)        --          --           (9,167)
Translation adjustment..    --    --          --          --         (972)           (972)
                          -----   ---    --------   ---------       -----       ---------
Balance, December 31,
 1997...................  2,500   $ 0      (1,696)     89,558        (172)         87,690
Net loss ...............    --    --          --      (14,591)        --          (14,591)
Contributions by Deluxe,
 net....................    --    --       16,660         --          --           16,660
Translation adjustment..    --    --          --          --           44              44
                          -----   ---    --------   ---------       -----       ---------
Balance, December 31,
 1998...................  2,500   $ 0      14,964      74,967        (128)         89,803
Net loss ...............    --    --          --       (8,226)        --           (8,226)
Contributions by Deluxe,
 net....................    --    --      277,634         --          --          277,634
Dividends paid to
 Deluxe.................    --    --          --     (159,687)        --         (159,687)
Translation adjustment..    --    --          --          --         (419)           (419)
                          -----   ---    --------   ---------       -----       ---------
Balance, December 31,
 1999...................  2,500   $ 0    $292,598   $ (92,946)      $(547)      $ 199,105
                          =====   ===    ========   =========       =====       =========
F-17
Note 13: Business segment information

   The Company has organized its business units into three operating segments
based on the nature of the products and services offered by each: electronic
payment solutions, professional services and government services. Electronic
payment solutions provides comprehensive electronic payment management
solutions that combine transaction processing with decision support and risk
management tools to the financial services and retail industries. Professional
services provides information technology development, maintenance and support
and business process management to financial services companies and to all of
the Company's and Deluxe's businesses. Government services provides EBT
services and online medical eligibility verification services to state and
local governments. The Company's segments operate primarily in the United
States. The electronic payment solutions and professional services segments
also have international operations. No single customer of the Company accounted
for more than 10% of net sales in 1997, 1998 or 1999.

   The accounting policies of the segments are the same as those described in
Note 2. In evaluating segment performance, management focuses on income from
operations. The income from operations measurement utilized by management
excludes special charges (e.g., restructuring charges, asset impairment
charges, certain one-time charges that management believes are not reflective
of on-going operations, etc.).

   Prior to the acquisition of the remaining 50% interest in HCL-Deluxe, N.V.
in 1999 (see Note 4), the results of this business were recorded under the
equity method of accounting. As such, the Company recorded its 50% ownership of
the joint venture's results of operations prior to the acquisition in other
expense in the consolidated statements of operations. To be consistent with
management reporting, the entire results of the joint venture for the pre-
acquisition periods are reflected in the business segment information as if the
business had been a consolidated entity.
Electronic
                                    Payment   Professional Government  Total
1997                               Solutions    Services    Services  Segments
----                               ---------- ------------ ---------- --------
                                             (dollars in thousands)
Net sales to unaffiliated
 external customers..............   $199,662    $ 1,589     $ 26,965  $228,216
Net sales to external
 affiliates......................      2,438      1,615          --      4,053
Total net sales to external
 customers.......................    202,100      3,204       26,965   232,269
Intersegment sales...............        --          76          --         76
Operating income (loss) excluding
 special charges.................     27,744     (1,590)     (12,269)   13,885
Asset impairment charges.........     11,831        --           --     11,831
Other special charges............      2,316        --           --      2,316
Operating income (loss) including
 special charges.................     13,597     (1,590)     (12,269)     (262)
Depreciation and amortization
 expense.........................     19,168         12        3,580    22,760
Segment assets...................    141,360      3,704       46,115   191,179
Capital purchases................     17,295        151          690    18,136
F-18
Electronic
                                    Payment   Professional Government  Total
1998                               Solutions    Services    Services  Segments
----                               ---------- ------------ ---------- --------
                                             (dollars in thousands)
Net sales to unaffiliated
 external customers..............   $221,964     $7,994     $ 43,970  $273,928
Net sales to external
 affiliates......................      1,586      4,100          --      5,686
Total net sales to external
 customers.......................    223,550     12,094       43,970   279,614
Intersegment sales...............        --       1,134          --      1,134
Operating income (loss) excluding
 special charges.................     23,459     (3,406)      (6,496)   13,557
Asset impairment charges.........        --         --        26,252    26,252
Other special charges............      2,375        --        14,928    17,303
Operating income (loss) including
 special charges.................     21,084     (3,406)     (47,676)  (29,998)
Depreciation and amortization
 expense.........................     17,294        260        4,225    21,779
Segment assets...................    145,572      5,410       37,286   188,268
Capital purchases................     30,148      1,934          320    32,402
Electronic
                                    Payment   Professional Government  Total
1999                               Solutions    Services    Services  Segments
----                               ---------- ------------ ---------- --------
                                             (dollars in thousands)
Net sales to unaffiliated
 external customers..............   $237,885    $ 10,745    $48,277   $296,907
Net sales to external
 affiliates......................      3,500       6,258        --       9,758
Total net sales to external
 customers.......................    241,385      17,003     48,277    306,665
Intersegment sales...............        --        2,372        --       2,372
Operating income (loss) excluding
 special charges.................     14,842      (7,809)     3,454     10,487
Special charges (recoveries).....       (225)      2,938     10,096     12,809
Operating income (loss) including
 special charges.................     15,067     (10,747)    (6,642)    (2,322)
Depreciation and amortization
 expense.........................     20,681       1,963        --      22,644
Segment assets...................    210,661      36,200     34,410    281,271
Capital purchases................     34,068       3,373        929     38,370
F-19
Segment information reconciles to consolidated amounts as follows (dollars
in thousands):
Years Ended December 31,
                                                   ----------------------------
                                                     1997      1998      1999
                                                   --------  --------  --------
Total net sales to external customers
  Total segment net sales to external customers... $232,269  $279,614  $306,665
  Professional services pre-acquisition
   elimination....................................   (3,204)  (12,094)   (4,325)
                                                   --------  --------  --------
    Total consolidated net sales to external
     customers.................................... $229,065  $267,520  $302,340
                                                   ========  ========  ========
Operating income (loss) including special charges
  Total segment operating loss.................... $   (262) $(29,998) $ (2,322)
  Professional services pre-acquisition
   elimination....................................    1,590     3,387     1,234
                                                   --------  --------  --------
    Total consolidated operating income (loss).... $  1,328  $(26,611) $ (1,088)
                                                   ========  ========  ========
Depreciation and amortization expense
  Total segment depreciation and amortization
   expense........................................ $ 22,760  $ 21,779  $ 22,644
  Professional services pre-acquisition
   elimination....................................      (12)     (260)     (143)
                                                   --------  --------  --------
    Total consolidated depreciation and
     amortization expense......................... $ 22,748  $ 21,519  $ 22,501
                                                   ========  ========  ========
December 31,
                                                  ----------------------------
                                                    1997      1998      1999
                                                  --------  --------  --------
Total assets
        Total segment assets....................  $191,179  $188,268  $281,271
        Professional services pre-acquisition
         elimination............................    (3,369)   (4,732)      --
        Income tax receivable and long-term
         deferred tax asset not allocated to
         segments...............................       --      2,799     8,658
                                                  --------  --------  --------
          Total consolidated assets.............  $187,810  $186,335  $289,929
                                                  ========  ========  ========
Year Ended December 31,
                                                  ----------------------------
                                                    1997      1998      1999
                                                  --------  --------  --------
Capital purchases
        Total segment capital purchases.........  $ 18,136  $ 32,402  $ 38,370
        Professional services pre-acquisition
         elimination............................      (151)   (1,934)     (145)
                                                  --------  --------  --------
          Total consolidated capital purchases..  $ 17,985  $ 30,468  $ 38,225
                                                  ========  ========  ========
Revenues are attributed to geographic areas based on the location of the
assets producing the revenues. The Company's operations by geographic area are
as follows (dollars in thousands):
Long-Lived
                                                                     Assets
                                       Total External Net Sales   December 31,
                                      -------------------------- ---------------
                                        1997     1998     1999    1998    1999
                                      -------- -------- -------- ------- -------
United States..................... $214,741 $245,682 $281,933 $55,763 $55,587
   United Kingdom....................   12,801   21,555   17,468   2,647   1,948
   India.............................      --       --     2,939     --    2,904
   Other foreign countries...........    1,523      283      --       50      34
                                      -------- -------- -------- ------- -------
     Total consolidated.............. $229,065 $267,520 $302,340 $58,460 $60,473
                                      ======== ======== ======== ======= =======
F-20
Note 14: Legal proceedings

   During 1997, a judgment was entered against the Company in the U.S. District
Court for the Western District of Pennsylvania. The case was brought against
the Company by Mellon Bank (Mellon) in connection with a potential bid to
provide electronic benefit transfer services for the Southern Alliance of
States. In September 1997, the Company recorded a charge of $40 million to
reserve for this judgment and other related costs. This charge is reflected in
legal proceedings in the 1997 consolidated statement of operations.

   In 1998, Mellon's motion for prejudgment interest was denied by the district
court. The Company reversed $4.2 million of the $40 million liability. This
reversal is reflected in legal proceedings in the 1998 consolidated statement
of operations. At December 31, 1998, the remaining liability of $34.4 million
was included in the reserve for legal proceedings in the consolidated balance
sheet.

   In January 1999, the United States Court of Appeals for the Third Circuit
affirmed the judgment of the district court and the Company paid $32.2 million
to Mellon in February 1999. The portion of the reserve remaining after the
payment of this judgment ($2.1 million) was reversed and is reflected in legal
proceedings in the 1999 consolidated statement of operations. The United States
Supreme Court denied the Company's petition for a further review of this
judgment in June 1999.

Note 15: Subsequent events

   In March 2000, the Company paid $20 million for a 24% interest in a limited
liability company that provides ATM management and outsourcing services to
retailers and financial institutions. This investment will be accounted for
under the equity method of accounting. Accordingly, the Company's consolidated
statements of operations will reflect the results of this business in other
income (expense) within the Company's electronic payment solutions segment. The
Company has also entered into vault cash agreements with the limited liability
company to supply cash for ATMs in various locations throughout the United
States (see Note 2).

   Deluxe has agreed to provide the Company with a revolving credit facility of
up to $75 million until the earlier of the effective date of the Split-off or
August 28, 2000. Borrowings under the facility will be due at the Split-off or
maturity and will accrue interest at the London Interbank Offered Rate, or
LIBOR, plus a variable additional margin based on Deluxe's credit rating. The
credit facility includes financial and restrictive covenants.

   Beginning in 2000 the Company's software services to Deluxe have been
formalized into a five year software development outsourcing agreement. During
the term of the agreement, the Company anticipates Deluxe will spend
approximately $43 million per year for software development, maintenance and
support services for information technology applications. Amounts will be based
on the actual number of hours of information technology services that the
Company provides to Deluxe. If Deluxe fails to reach the $43 million spending
target per year, it will be obligated to make liquidated damages payments for a
portion of the Company's fees based on its estimates of lost margins. The
Company also will provide business process management services to Deluxe.
Deluxe's annual minimum spending target for business process management
services will range from $8.1 million in 2000 to $4.2 million in 2004. The
agreement will also provide for liquidated damages for non-performance by the
Company and bonuses for superior performances. The provision of services by the
Company under the agreement is non-exclusive, and Deluxe may contract with any
third party for the provision of professional services.

   After its current contractual commitments expire in 2006, the Company
intends to exit the government services business. Deluxe has agreed to
indemnify the Company for any losses on identified government services loss
contracts. The Company is required to calculate any charges for loss contracts
in a manner consistent with Deluxe's current loss accrual practices. Deluxe
will also indemnify the Company against any liabilities, losses or expenses
arising from litigation and claims asserted against the Company in connection
with the operation of the government services business prior to the completion
of this offering.

                                      F-21
On March 31, 2000, the Company purchased real property and a data center
located in Phoenix, Arizona and personal property from a subsidiary of Deluxe.
The Company previously rented portions of this facility.

   On April 4, 2000, the Company authorized 100 million shares of preferred
stock with a par value of $.01 per share. No shares are issued or outstanding.

                               EFUNDS CORPORATION

                SUMMARIZED QUARTERLY FINANCIAL DATA (UNAUDITED)
1998 Quarter Ended
                                    -------------------------------------------
                                    March 31 June 30 September 30   December 31
                                    -------- ------- ------------   -----------
Net sales.......................... $63,316  $66,455   $ 67,726       $70,023
Cost of sales......................  41,269   43,120     84,229        43,690
Net income (loss)..................     381    1,503    (22,067)(1)     5,592
Per share of common stock
  Net income (loss)--basic and
   diluted......................... $   152  $   601   $ (8,826)      $ 2,237
                                    =======  =======   ========       =======
1999 Quarter Ended
                                   ------------------------------------------
                                   March 31 June 30  September 30 December 31
                                   -------- -------  ------------ -----------
Net sales......................... $67,856  $72,567    $79,895      $82,022
Cost of sales.....................  43,120   45,120     48,806       57,244
Net income (loss).................   3,814   (2,479)    (9,234)        (327)(2)
Per share of common stock
  Net income (loss)--basic and
   diluted........................ $ 1,526  $  (992)   $(3,694)     $  (130)
                                   =======  =======    =======      =======
--------
  (1)  1998 third quarter results include charges of $14.7 million for losses
       on existing contracts of the government services segment, asset
       impairment charges of $26.3 million on the long-lived assets of the
       Government services segment and restructuring charges of $2.2 million.
  (2)  1999 fourth quarter results include charges of $8.2 million to reserve
       for additional expected future losses on existing contracts of the
       government services segment.

                                      F-22
[LOGO]

                                        Shares
[LOGO]
                                  Common Stock

                               -----------------

                                   PROSPECTUS
                                        , 2000

                               -----------------

                                Lehman Brothers

                            Bear, Stearns & Co. Inc.

                                  FAC/Equities

                          John G. Kinnard and Company,
                                  Incorporated
PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

   The following is an itemized statement of the estimated amounts of all
expenses payable by the Registrant in connection with the registration of the
common stock offered hereby, other than underwriting discounts and commissions:
SEC Registration Fee................................................ $
      NASD Filing Fee.....................................................
      Nasdaq Filing Fee...................................................
      Blue Sky fees and expenses..........................................
      Accountants' fees and expenses......................................
      Legal fees and expenses.............................................
      Printing and engraving expenses.....................................
      Transfer agent and registrar fees...................................
      Miscellaneous expenses..............................................
                                                                           ----
        Total............................................................. $
                                                                           ====
Item 14. Indemnification of Officers and Directors

   Section 145 of the Delaware General Corporation Law (DGCL) authorizes a
corporation's board of directors to grant indemnity to directors and officers
in terms sufficiently broad to permit indemnification under certain
circumstances for liabilities (including reimbursement for expenses incurred)
arising under the Securities Act.

   As permitted by the DGCL, the Registrant's certificate of incorporation
provides that the Registrant shall indemnify its directors, officers, employees
and agents to the fullest extent permitted by the DGCL. As permitted by the
DGCL, the Registrant's certificate of incorporation also includes a provision
that eliminates the personal liability of its directors for monetary damages
for breach of the director's fiduciary duty, except for liability (1) for any
breach of the director's duty of loyalty to the Registrant or its stockholders;
(2) for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law; (3) under Section 174 of the DGCL
regarding payments of dividends, stock purchases or redemptions which are
unlawful; or (4) for any transaction from which the director derived an
improper personal benefit.

   The Registrant also intends to maintain director and officer liability
insurance.

   The underwriting agreement filed as Exhibit 1.1 to this Registration
Statement contains provisions indemnifying officers and directors of the
Registrant against liabilities arising under the Securities Act, or otherwise.

Item 15. Recent Sales of Unregistered Securities

   None.

                                      II-1
Item 16. Exhibits
Exhibit
 Number  Description of Exhibit
 ------- ----------------------
1.1*   Form of Underwriting Agreement
  2.1    Initial Public Offering and Distribution Agreement, dated as of March
         31, 2000, by and between Deluxe and eFunds
  3.1    Amended and Restated Certificate of Incorporation of eFunds
         Corporation
  3.2    Bylaws of eFunds Corporation
  4.1*   Form of eFunds common stock certificate
  4.2*   Rights Agreement, by and between eFunds and            as Rights agent
  5.1*   Opinion of Dorsey & Whitney LLP
 10.1    Assignment and Assumption Agreement, dated as of March 31, 2000, by
         and between eFunds and Deluxe
 10.2*   Third Party Indemnification Agreement, dated as of March 31, 2000, by
         and between eFunds and Deluxe
 10.3    Registration Rights Agreement, dated as of March 31, 2000, by and
         between Deluxe and eFunds
 10.4*   Tax Sharing Agreement, by and between eFunds and Deluxe
 10.5*   Employee Benefits Agreement, by and between eFunds and Deluxe
 10.6*   Real Estate Agreements, by and between eFunds and Deluxe including:
 10.7*   Purchase Agreement, by and between eFunds and Deluxe
 10.8*   Transition Services Agreement, by and between eFunds and Deluxe
 10.9*   Master Services Agreement, by and between eFunds and Deluxe
 10.10*  ONE Channel Management Agreement, by and between eFunds and Deluxe
 10.11*  Data Sharing Agreements, by and between eFunds and Deluxe
 10.12*  Data Contribution Agreement, by and between eFunds and
 10.13*  Processor Agreement, by and between eFunds and Deluxe
 10.14*  Data License Agreement, by and between eFunds and Deluxe
 10.15*  ACH Agreement, by and between eFunds and Deluxe
 10.16*  Loan Agreement, by and between eFunds and Deluxe
 10.17*  Government Services Indemnity Agreement, by and between eFunds and
         Deluxe
 10.18*  eFunds Corporation 2000 Stock Incentive Plan
 10.19*  eFunds Corporation Stock Incentive Plan for Deluxe Conversion Awards
 10.20*  Form of Award Agreement
 10.21*  Executive Employment Agreement, by and between eFunds and John. A.
         Blanchard III.
 10.22*  Letter Agreement, dated as of February 28, 2000, by and between eFunds
         and Debra A. Janssen
 10.23*  Letter Agreement, dated as of February 29, 2000, by and between eFunds
         and Dr. Nikhil Sinha
 10.24*  Letter Agreement, dated as of      , 2000, by and between eFunds and
         Paul Bristow
 10.25*  Letter Agreement, dated as of      , 2000, by and between eFunds and
         Steven F. Coleman
 10.26*  Form of Executive Retention Agreements for eFunds executives
 21.1*   Subsidiaries of eFunds
II-2
Exhibit
 Number  Description of Exhibit
 ------- ----------------------
23.1   Consent of Deloitte & Touche LLP
  23.2*  Consent of Dorsey & Whitney LLP (included in Exhibit 5.1)
  24.1   Power of Attorney (included on signature page)
  27.1   Financial Data Schedule
--------
  *  To be filed by Amendment.

Item 17. Undertakings

   The undersigned Registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreement, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.

   Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of our counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

   The undersigned Registrant hereby undertakes that (1) for purposes of
determining any liability under the Securities Act, the information omitted
from the form of prospectus filed as part of this Registration Statement in
reliance upon Rule 430A and contained in a form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of this Registration Statement as of the time it was
declared effective; and (2) for the purpose of determining any liability under
the Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

                                      II-3
SIGNATURES

   Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Shoreview, State of
Minnesota, on April 4, 2000.

                                          eFunds Corporation

                                          By: /s/ John A. Blanchard III
                                             -------------------------------
                                                  John A. Blanchard III
                                             Chairman of the Board and Chief
                                                    Executive Officer

                               POWER OF ATTORNEY

   KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Paul H. Bristow and Steven F. Coleman, and each
of them, his or her true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement
(or any other registration statement for the same offering that is effective
upon filing pursuant to Rule 462(b) under the Securities Act of 1933) and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully and to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents, or his or her substitute or substitutes, may do
or cause to be done by virtue hereof.

   Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the indicated capacities
on April 4, 2000.
Signature                               Title
                  ---------                               -----
By: /s/ John A. Blanchard III               Chairman of the Board and Chief
    ----------------------------------       Executive Officer (Principal
     John A. Blanchard III                   Executive Officer)

 By: /s/ Paul H. Bristow                     Executive Vice President and
    ----------------------------------       Chief Financial Officer
         Paul H. Bristow                     (Principal Financial and
                                             Accounting Officer)
II-4
EXHIBIT INDEX
Exhibit
 Number  Description of Exhibit
 ------- ----------------------
1.1*   Form of Underwriting Agreement
  2.1    Initial Public Offering and Distribution Agreement, dated as of March
         31, 2000, by and between Deluxe and eFunds
  3.1    Amended and Restated Certificate of Incorporation of eFunds
         Corporation
  3.2    Bylaws of eFunds Corporation
  4.1*   Form of eFunds common stock certificate
  4.2*   Rights Agreement, by and between eFunds and            as Rights agent
  5.1*   Opinion of Dorsey & Whitney LLP
 10.1    Assignment and Assumption Agreement, dated as of March 31, 2000, by
         and between eFunds and Deluxe
 10.2*   Third Party Indemnification Agreement, dated as of March 31, 2000, by
         and between eFunds and Deluxe
 10.3    Registration Rights Agreement, dated as of March 31, 2000, by and
         between Deluxe and eFunds
 10.4*   Tax Sharing Agreement, by and between eFunds and Deluxe
 10.5*   Employee Benefits Agreement, by and between eFunds and Deluxe
 10.6*   Real Estate Agreements, by and between eFunds and Deluxe including:
 10.7*   Purchase Agreement, by and between eFunds and Deluxe
 10.8*   Transition Services Agreement, by and between eFunds and Deluxe
 10.9*   Master Services Agreement, by and between eFunds and Deluxe
 10.10*  ONE Channel Management Agreement, by and between eFunds and Deluxe
 10.11*  Data Sharing Agreements, by and between eFunds and Deluxe
 10.12*  Data Contribution Agreement, by and between eFunds and
 10.13*  Processor Agreement, by and between eFunds and Deluxe
 10.14*  Data License Agreement, by and between eFunds and Deluxe
 10.15*  ACH Agreement, by and between eFunds and Deluxe
 10.16*  Loan Agreement, by and between eFunds and Deluxe
 10.17*  Government Services Indemnity Agreement, by and between eFunds and
         Deluxe
 10.18*  eFunds Corporation 2000 Stock Incentive Plan
 10.19*  eFunds Corporation Stock Incentive Plan for Deluxe Conversion Awards
 10.20*  Form of Award Agreement
 10.21*  Executive Employment Agreement, by and between eFunds and John. A.
         Blanchard III.
 10.22*  Letter Agreement, dated as of February 28, 2000, by and between eFunds
         and Debra A. Janssen
 10.23*  Letter Agreement, dated as of February 29, 2000, by and between eFunds
         and Dr. Nikhil Sinha
 10.24*  Letter Agreement, dated as of      , 2000, by and between eFunds and
         Paul Bristow
 10.25*  Letter Agreement, dated as of      , 2000, by and between eFunds and
         Steven F. Coleman
 10.26*  Form of Executive Retention Agreements for eFunds executives
 21.1*   Subsidiaries of eFunds
Exhibit
 Number  Description of Exhibit
 ------- ----------------------
23.1   Consent of Deloitte & Touche LLP
  23.2*  Consent of Dorsey & Whitney LLP (included in Exhibit 5.1)
  24.1   Power of Attorney (included on signature page)
  27.1   Financial Data Schedule
--------
  *  To be filed by Amendment.