Unbanked & Uncarded

Though hard to believe in today’s technologically-advanced society, many consumers — approximately 15 percent of U.S. households — do not own a checking account. Why not? How do these consumers cash their checks or pay their bills?

These questions and more are addressed in the latest issue of Economic Quarterly, a publication produced by the Federal Reserve Bank of Richmond. In their article entitled “Means of Payment, the Unbanked, and EFT ’99,” Fed economists Edward S. Prescott and Daniel D. Tatar, uncover the reasons that many low-income individuals forego checking account ownership. Cost is the primary factor. Rather than paying account fees, many cash their checks for free at banks and grocery stores and pay bills with cash or low-cost money orders. Surprisingly, few regularly use costly check-cashing outlets.

The Economic Quarterly is a free publication containing economic analysis pertinent to Federal Reserve monetary and banking policy. For copies or more information, contact the Federal Reserve Bank of Richmond’s Public Affairs office at 804-697-8108 or visit their Web site at [http://www.rich.frb.org][1].

Federal Reserve Bank of Richmond news releases can be found at [http://www.rich.frb.org][2].

[1]: http://www.rich.frb.org/
[2]: http://www.rich.frb.org/


CA-based CrediView introduced the first online anti-fraud solution to provide e-merchants with a 100% guarantee against chargebacks. With CrediView’s ‘eCredible Guaranteed’ service, an e-merchant pays a negotiated per transaction fee depending on the merchant’s volume and history. On a monthly basis, CrediView reimburses e-merchants for any chargebacks arising from fraudulent transactions that were authorized using the ‘eCredible Guaranteed’ service. The ‘eCredible Guard’ service is provided on a per transaction or fixed monthly fee, providing the merchant with a calculated risk score but without a guarantee. The merchant then has to decide whether or not to accept or reject the transaction based on its own risk tolerance. CrediView says independent tests shows the ‘eCredible Guard’ service has a fraud detection accuracy rate of about 90%. CrediView’s ‘eCredible’ patterns transactions, not people, and does not rely on personal histories and account information to precisely pinpoint fraud. ‘eCredible’ utilizes CrediView’s proprietary transaction patterning technology to analyze online transaction patterns consistent with fraud, rather than a purchaser’s personal information from credit card databases, to accurately determine fraud risk without sacrificing customer privacy.

3Q Portfolio Results

Bank credit card portfolio financials are beginning to stream into CardData and generally show an uptick in receivables during the third quarter. UT-based First Security reported 3Q/00 receivables of $232,570,024, up slightly from 2Q/00. However, First Security’s active accounts declined slightly to 125,400. Meanwhile, MS-based TrustMark National Bank reported $61,696,149 in receivables among 54,202 active accounts. LA-based Whitney National Bank reported $23,417,842 in receivables and 17,726 active accounts. The 3Q/00 CardData ([www.carddata.com][1]) portfolio survey will cover approximately 350 of the largest US issuers, representing 98% of the market.

[1]: http://www.carddata.com

LiquidCredit Deal

Fair, Isaac and Company, Inc. announced that direct online automotive provider CarsDirect.com has signed a multi-year agreement to incorporate Fair, Isaac’s LiquidCredit broker engine into its technology platform. CarsDirect.com will leverage LiquidCredit’s decision technology to instantly evaluate customers’ applications for financing and match those scored applications with lending partner criteria — presenting the right financing options to on-line customers within just seconds.

“Using LiquidCredit will not only help us pre-qualify more auto shoppers for the appropriate financing package more quickly, it will also help us turn these shoppers into buyers by offering them real-time purchasing power,” said Gene Schutt, CEO of CarsDirect.com’s CD1 Financial.com unit. “Only LiquidCredit offered us the combination of technologies we need for real-time access to the best credit origination decisions.”

Forrester Research estimates that by 2005 the number of U.S. households that will buy cars online will reach 1.1 million households spending a total of $33 billion in car sales.

“CarsDirect.com is a great example of how Fair, Isaac’s decision technology can boost leading and emerging e-businesses,” said Raffi Kassarjian, General Manager of Fair, Isaac’s LiquidCredit business unit. “LiquidCredit delivers the infrastructure and intelligence that optimizes CarsDirect.com’s Web-based automotive financing application process.”

LiquidCredit offers a Web-based decision engine, credit reporting agency interface, associated transaction management tools and the ability for businesses to design their own decision criteria and strategies, all delivered through a Web-centric service. The result is the right credit offer to the right customer at the right time.

Using the speed and cost savings of the netsourced (ASP) model, LiquidCredit provides clients with Fair, Isaac’s “gold standard” analytics and decision technology. In addition to LiquidCredit broker engine, Fair, Isaac also offers two other versions of LiquidCredit: decision engine for e-tailers and financial service providers with a Web presence, and application engine for financial service providers.

About Fair, Isaac

Fair, Isaac is a global provider of customer analytics and decision technology. Widely recognized for its pioneering work in credit scoring, Fair, Isaac revolutionized the way lending decisions are made. Today the company helps clients in multiple industries increase the value of customer relationships. Fair, Isaac has made the Forbes list of the top 200 U.S. small companies seven times in the last eight years, and was named by InformationWeek as one of the top 50 application service providers. Headquartered in San Rafael, California, Fair, Isaac has 20 offices worldwide.

NPC Signs Safeway

National Processing Company announced the signing of a multi-year agreement to provide authorization and settlement services for Safeway Inc., one of the largest food and drug retailers in North America.

“We are delighted that Safeway, a preeminent retailer and market leader, has entrusted its business to NPC and we look forward to a long and mutually beneficial relationship,” said Thomas A. Wimsett president and chief executive officer. “Safeway has established itself as an industry leader by staying focused on providing excellent customer service, superior quality and convenient locations.”

About Safeway

Safeway Inc. (NYSE: SWY) is a Fortune 50 company and one of the largest food and drug retailers in North America based on sales. The company operates 1,680 stores in the United States and Canada and has annualized sales exceeding $31 billion. Additional information regarding Safeway, Inc. can be obtained at [http://www.safeway.com][1] .

About NPC

NPC is a leading provider of merchant credit card processing. An 87 percent owned subsidiary of National City Corporation (NYSE: NCC) ( [http://www.national-city.com][2] ), a Cleveland based $85 billion financial holding company, NPC supports approximately 500,000 merchant locations, representing one out of every six Visa(R) and MasterCard(R) transactions processed nationally. NPC’s card processing solutions offer superior levels of service and performance. NPC assists merchants to compete and provide high-quality service to their customers through our world-class people, technology and service. Additional information regarding NPC can be obtained at [http://www.npc.net][3] .

[1]: http://www.safeway.com/
[2]: http://www.national-city.com/
[3]: http://www.npc.net/

AmEx Canada Settlement

Following the abrupt departure of Canadian Airlines from the American Express ‘Membership Rewards’ program, AmEx Canada announced yesterday it has settled a class action over the ‘Companion Ticket Certificate’ benefit for Platinum Cardmembers. AmEx also announced it has reached a settlement in another lawsuit involving its ‘Membership Rewards’ program. Under terms of the ‘Platinum’ settlement, new ‘Companion Ticket Certificates’ will be issued to ‘Platinum’ cardholders who received the original certificate and were cardholders at the time the original benefit was withdrawn. The new ‘Certificate’ can be used to get a free companion ticket with either Canadian Airlines or Air Canada for travel on flights to any destination between October 15, 2000 and May 31, 2001. Under terms of the ‘Membership Rewards’ settlement, cardholders will get a 20% discount when they redeem their points for ‘Membership Rewards Travel Certificates’ between January 15 and July 15, 2001. Certificates can be used for up to 50% of a range of travel related purchases, including air tickets on any airline for any destination and any class of travel, including sell offs and last minute deals and with no black out periods. Canadian Airlines had been a ‘Membership Rewards’ partner for eight years with its current contract set to expire in 2002. (See CF Library 4/27/00; 5/1/00; and 8/24/00)

Cyota Taps Bailey

Cyota, an international online payment security company, announced that James L. Bailey has joined the company as Chairman of its board of directors.

In this position, Mr. Bailey will work with Cyota’s executive team to provide overall guidance and direction in meeting the company’s strategic goals. Mr. Bailey is the former Executive Vice President of the Card Products Group at Citigroup, which includes all of the bank’s U.S. card businesses and international Diners Club businesses.

“With his business experience and industry expertise, Jim will provide Cyota with significant insights, guidance and direction,” said Gary Heatherington, CEO. “His counsel will be invaluable as we continue to make Cyota the leader in online payment security.”

“I look forward to working with the team at Cyota,” commented Mr. Bailey. “What drew me to Cyota was the quality of the management team and the competitive edge that they have over others in this space.”

Mr. Bailey brings more than 28 years of experience in banking and payment systems to Cyota’s board of directors, which includes Ira Rimerman, Kelly Doherty and Gary Heatherington. Before retiring in August, Mr. Bailey served as Citibank Executive Vice President and Corporate Quality Director. In this position, he created and launched a worldwide Six Sigma customer satisfaction and loyalty program. Prior to that, Mr. Bailey served as Executive VP in charge of Global Transaction Services. Mr. Bailey also served as Executive VP, US Consumer Banking Group where he managed all of Citigroup’s consumer business in the U.S. Additionally, Mr. Bailey has served on both the U.S. and International Board of Directors of Visa.

Cyota recently introduced its groundbreaking advance in online payment security, SecureClick(TM), a software solution that allows consumers to shop online without revealing their real credit card number.

About Cyota

Cyota is an online payment security company founded in 1999 by four veterans of elite intelligence units in the Israeli Defense Force. SecureClick(TM), developed under the supervision of a world leading security expert, Prof. Adi Shamir, is Cyota’s flagship product that provides credit card issuers and their customers complete online fraud protection. The company is headquartered in New York City, with an R&D subsidiary in Israel. Cyota is a privately held company, backed by a global venture capital corporation. For more information, please contact Cyota or visit our web site at [www.cyota.com][1].

[1]: http://www.cyota.com/


Capital One has taken over the BMG Entertainment co-branded bank credit card program from Wachovia. The new ‘Capital One/BMG VISA’ will enable cardholders to earn 3 points for every $1 spent in the BMG Music Service (CDs and other merchandise) and 1 point for every $1 spent elsewhere. The points may be redeemed for free CDs, concert tickets, audio equipment, and gift certificates to buy from the BMG Music Service catalog. New cardholders also receive a free CD for their first purchase with the new ‘BMG VISA’. Until Jan. 1, 2001, a portion of every ‘BMG VISA’ transaction will be donated to the Christina Aguilera Foundation benefiting abused, homeless or sick children. Cap One is charging an intro APR of 3.9% through the May 2001 billing period followed by an on-going APR of 12.9% (fixed) for the ‘Classic VISA’ version of the program. Students applying for the card will be issued the ‘College Student VISA’ card which carries an APR of 19.80% (fixed). The cobranded credit card is part of a larger promotional marketing relationship between the two companies. BMG and Capital One will also participate in several cross-promotional initiatives, including direct marketing, online and events. BMG Entertainment signed its first co-branded bank credit card agreement with Wachovia in May 1997. It was also the first co-branded program for Wachovia. The ‘Wachovia BMG VISA’ was introduced in Sept. 1997, and offered the same rewards program as the Capital One version. However the Wachovia version offered an intro APR of 7.9% and an on-going APR of prime +7.9%. This is the second major co-branded card program announced by Capital One in the past month. On Sept. 19, Capital One unveiled the new ‘Kmart MasterCard’. (See CF Library 5/20/97; 10/1/97; 9/19/00: and 9/26/00)

VISA Infinite

After two years, VISA’s global premium card is ready for prime time. National City Corp’s ‘Private Client Group’ will introduce the ‘VISA Infinite’ card on Oct. 16. The ‘VISA Infinite’ card, originally announced by VISA in Oct 1998, features no preset spending limit, a $20,000 minimum credit limit, a customized reward system and a premium concierge service. National City’s ‘Private Client Group VISA Infinite’ card allows its customers to carry a revolving balance and to choose the type of reward they prefer, for example: air miles, cash back, selected merchandise, or travel. Purchases are approved based on factors such as personal resources, account history, credit and payment records. The card is available to National City Corp’s ‘Private Client Group’ and ‘Sterling’ customers and carries a $150 annual fee. The ‘VISA Infinite’ concierge service provides assistance with restaurant reservations, gift arrangements, travel information, referrals, business services, and specialty services. The card also offers security features such as travel emergency assistance, travel evacuation coverage and purchase protection. In unveiling the card in 1998, VISA said the card would be targeted at technologically savvy affluent international travelers. (See CF Library 10/30/98)

Hypercom Deployment

Hypercom Corporation has been awarded a one-year contract with Concord EFS to deploy 50,000 Hypercom card payment terminals and peripherals, along with Hypercom’s ePicReceipts electronic receipt capture and retrieval package, to merchant sites throughout the United States. Concord EFS is one of the nation’s leading payment processors. The deployment is commencing immediately.

![][1] Hypercom’s ePic ICE card payment terminals are web-enabled and incorporate a standard HTML web browser. When used with Hypercom’s ePicPortz security and gateway server software, the terminals support a range of value-packed services including: e-mail, on-screen advertising, interactive electronic coupons, electronic receipt capture (ERC), access to DDA account information, merchant e-commerce function, and cash management reporting through a standard browser — in addition to traditional and smart card payment functions. The ePic ICE integrated web browser also supports easy application downloading and expanded networking functionality for merchants who want to access and/or process data from multiple locations from a single office.

“The ability to deliver revenue-generating, time-saving applications to the merchant’s countertop is clearly an imperative that Hypercom’s terminals enable us to meet,” said Edward A. Labry, Concord EFS president. “Merchants using the Concord network will be able to electronically capture and store millions of signatures and receipts and retrieve them for dispute resolution literally within seconds. And that is just one of several revenue-generating features our merchants can leverage to maintain their competitive edge.”

“Concord is on the cutting-edge of payment processing, and we are gratified by the endorsement of this national leader,” said Chris Alexander, president, Hypercom Transaction Systems.

Concord EFS, Inc. (NASDAQ: CEFT) is a leader in providing electronic transaction authorization, processing, settlement and funds transfer services to the supermarket, petroleum, convenience store, retail, and financial services industries. Concord’s primary activities include providing end-to-end processing for credit, debit and electronic benefit transfer (EBT) card transactions for merchant clients; and providing automated teller machine (ATM) processing and MAC(R) network access to the financial services industry. Concord also provides electronic payment, banking products and payroll services to trucking companies, truck stops and other niche segments of the market.

Hypercom Corporation (NYSE: HYC) is a global provider of end-to-end electronic payment solutions, including card payment systems, peripherals, network products, software and e-commerce payment solutions that add value at the point-of-sale for consumers, merchants and acquirers.

Headquartered in Phoenix, Arizona, Hypercom markets its products in more than 100 countries through a global network of affiliates and offices in Argentina, Australia, Brazil, Chile, China, Germany, Hong Kong, Hungary, Japan, Mexico, Puerto Rico, Russia, Singapore, Sweden, the United Kingdom and Venezuela. Hypercom’s Internet address is [www.hypercom.com][2].

[1]: /graphic/concord_efs/logo.gif
[2]: http://www.hypercom.com/

Oberthur Revs up

Oberthur Card Systems said this morning it is doubling output with an investment in new manufacturing equipment of approximately $5 million. The investment makes Oberthur’s Rancho Dominguez, CA, headquarters the largest smart card producing facility per day for GSM, memory and microprocessor applications in the U.S. The new equipment infrastructure will give Oberthur the capacity to create 160,000 cards per day just in Los Angeles. Combined with its existing manufacturing plant in Exton, PA, Oberthur can now produce and deliver 200,000 specialized cards designed to market specifications. Half of the 200,000 capacity will be dedicated to memory cards such as prepaid phone cards and half to microprocessor cards such as GSM cards.

Paymentech & inetBiller

Paymentech, the nation’s largest acquirer and processor of credit card transactions, and Derivion, the leading application service provider that delivers comprehensive B2C and B2B e-billing solutions designed for the Internet, have teamed to provide seamless credit card payment options for Internet bill presentment and payment. Built on the ASP model, the Derivion e-billing solution, inetBiller, will provide a transparent interface with Paymentech’s electronic payment processing system, enabling businesses nationwide to securely accept credit card payments via the Internet.

![][1] “By teaming with Derivion, we link our expertise in payment processing technology with proven e-billing solutions to enable telecommunications, cable, and insurance providers to improve customer relationships, and increase retention,” said John Irish, Paymentech’s vice president for direct response strategic sales. “Electronic credit card payments offer a secure, convenient, and cost-effective means to pay bills. With consumers spending over $4 billion annually just mailing payments, the potential savings from e-billing payments are compelling when you consider the satisfaction of eliminating checks, buying stamps, and worrying about postal delays.”

The combination of Paymentech’s automated recurring payment solutions and Derivion’s e-billing expertise equals a complete processing solution that will offer more convenience to consumers, and expedites the entire billing process. Electronic delivery of bills and acceptance of electronic credit card payments cut the payment cycle, assure quicker access to funds, and eliminate delays associated with paper checks. Lock box fees, collection agency fees, and insufficient funds charges are also reduced. End users can pay their bills online via credit card, debit card, or electronic check processing to directly debit the user’s pre-approved bank account for payment.

“Derivion provides the core infrastructure for e-billing presentment and payment, and leverages relationships with leading payment processors, such as Paymentech, to offer seamless support for our e-billers that accept online credit card payments,” says Andrew Wexler, EVP, strategic development, Derivion. “We are focused on enabling billers and establishing the framework to meet the ever increasing demand, from both billers and consumers, for ultimate flexibility and options for online transactions in our new economy.

Processing approximately three billion transactions and $93 billion in bankcard sales annually, Paymentech’s leadership in Internet payment markets will create new opportunities for Derivion’s e-billing application. “The combination of Derivion’s e-billing capabilities and Paymentech’s e-payment expertise delivers a powerful solution for service industry billers,” said Irish. According to industry estimates, 12 million households will use e-billing by 2003, and 40 percent of all bills will be delivered and paid via the Internet by 2010.

About Derivion

Derivion is the first ASP that designed comprehensive B2C, B2B, and small business e-billing solutions leveraging the flexibility and power of the Internet to automate the bill delivery, payment, and customer care processes for businesses of all sizes. Derivion offers three core e-billing solutions including inetBiller(SM), inetBiller B2B(SM), and a small business e-billing solution that utilizes self-enabled technology. Derivion supports clients with the DigitalCare(SM) program integrating both traditional and Internet- based CRM solutions to empower billers with tools that strengthen and enhance customer relationships. In addition, DigitalCare supports billers with Activation Marketing — a resource aimed at accelerating and building momentum for consumer adoption of e-billing. Derivion’s extensive network of partnerships with industry leaders in electronic bill distribution and payment processing include Checkfree, First Union, MasterCard RPPS, Comerica, and Texas Capital Bank. Derivion also connects billers to virtually all consumer access points such as Yahoo!, Quicken.com, Charles Schwab, and BankOne through strategic alliances with Paytrust, Intuit, and Checkfree. Derivion leads the industry with pioneering technology and multi-layered services currently working with more than 68 B2C and B2B billers, digitizing over 200 million bills annually. The Atlanta-based company was founded in 1998 and maintains research, development, and additional sales offices in Toronto, Canada. For more information about Derivion, please visit [http://www.derivion.com][2].

About Paymentech

Dallas-based Paymentech, founded in 1985, delivers premier electronic payment processing solutions for merchant acquiring, point-of-sale transaction processing and commercial card programs. The company is the nation’s largest acquirer and processor of bankcard transactions, as well as a leading commercial card issuer. Paymentech is also the leading processor for non- face-to-face and Internet credit card transactions. Paymentech annually processes approximately 3 billion transactions and $93 billion in bankcard sales volume. For more information, visit [http://www.paymentech.com][3].

[1]: /graphic/derivion/derivion.gif
[2]: http://www.derivion.com/
[3]: http://www.paymentech.com/