DETROIT & TORONTO, (BUSINESS WIRE), Aug. 21, 2002–Catuity, Inc. (Nasdaq:CTTY) (ASX:CAT), a leader in loyalty software applications, today announced it has signed an agreement with KESM Transaction Solutions to be the exclusive provider of the loyalty application for Belgium-based Banksys terminals. The Banksys terminal–C-ZAM/Smash–is distributed in North America by BNA Smart Payment Systems, for which KESM also provides certified credit/debit applications. The Catuity loyalty application, considered best of breed, is expected to be installed along with payments on the multi-application terminal.

KESM will act as the application service provider (ASP), loading the Catuity loyalty application for deployment. Transactions and end of day reconciliation are performed with access to the Catuity loyalty application running on the KESM secure server. It marks the first such agreement for the Catuity application to be hosted by an Application Service Provider, KESM.

“We are excited to offer Catuity’s loyalty program to the ISO community on the Banksys terminal and at this point we plan to continue to work to provide additional applications, such as ECR Integration and Age Verification for the ISO channel. Our ultimate goal is to address any ISO’s preference on their hardware platform of choice,” said KESM President Bruce Murray. He noted, “in recent years, shipments of terminals into the North American market, including both the US and Canada, have exceeded 1.5 million units annually. Value added services, like loyalty programs, are viewed by industry experts as capabilities retailers increasingly look to add at the point of sale.”

Michael V. Howe, President and CEO of Catuity, said, “Catuity has always believed that our role as a provider of our software to ASPs will be important to our long-term success. This agreement is one that we believe sets the stage for continued growth in this additional segment of the industry. We look forward to our association with KESM and believe that our software can provide significant value for users of Banksys terminals.”

Catuity and KESM anticipate that the Banksys terminals with Catuity loyalty software will be in the marketplace by the end of the year.

KESM, in concert with BNA, will exhibit the Catuity application at the Electronic Transaction Association (ETA) meeting in Seattle, September 17-19, 2002.

About KESM Transaction Solutions

KESM Transaction Solutions, based in Toronto, provides design, development and support of applications specifically for the electronics payment industry. Those applications can include credit, debit, EBT, loyalty, e-purse, stored value and private label processing. Its software engineers and professional technical staff are among the leaders in JAVA and C application development on a wide range of POS platforms, including Banksys, Ingenico, Keycorp, Schlumberger and VeriFone. Support services provide encompass application staging, deployment and support. www.kesm.ca.

About Catuity, Inc.

Catuity, Inc. (Nasdaq:CTTY)(ASX:CAT) is a leading provider of application software that allows merchants, transaction processors and payment card issuers to establish and administer customer incentive and loyalty programs integrated to the payment system at the point of sale. Catuity Loyalty Software can be used by a broad range of sellers of goods and services, particularly those who sell through both store locations and over the Internet. Catuity’s software has been included on millions of credit, charge and debit cards, and works on magnetic stripe or chip or “smart” cards. With Catuity’s loyalty solution, merchants can offer their customers valuable benefits, thereby attracting and retaining customers as well as encouraging increased purchases. For more information, http://www.catuity.com.

In conjunction with the provisions of the “Safe Harbor” section of the Private Securities Litigation Reform Act of 1995, this release may contain forward-looking statements pertaining to future anticipated projected plans, performance and developments, as well as other statements relating to future operations. All such forward-looking statements are necessarily only estimates of future results and there can be no assurance that actual results will not materially differ from expectations. Further information on potential factors that could affect Catuity, Inc. is included in the Company’s Form 10-K, which is filed with the U.S. Securities & Exchange Commission.

CONTACT: MSS Communications (for KESM); Walter Murphy, 678/360-3793; wmurfe@aol.com or

Catuity; Jack Lowry, 313/567-4348; Chief Financial Officer; or

Martin E. Janis & Company, Inc. (for Catuity); Bev Jedynak, 312/943-1100 ext. 12; b.jedynak-janispr@att.net