WWW Commerce

Explosive growth of the Internet will thrust Internet purchases sky high. In recent market research, International Data Corporation reports the amount of commerce conducted over the World Wide Web will top a staggering $1 trillion by 2003.

“Because of the increase in the number of people who make purchases over the Web, the growth of the average transaction size, and the adoption of the Web as a viable vehicle for business procurement, Internet commerce will grow substantially,” said Carol Glasheen, director of primary research and market models at IDC.

According to IDC, the number of users who make purchases over the Web will jump from 31 million in 1998 to more than 183 million in 2003. Furthermore, there is ample opportunity to expand the 183 million as it will represent only 36% of all Web users.

Although the number of Web users is increasing in many foreign countries, Internet commerce is currently U.S.-centric. In 1998, 56% of Web users resided outside the United States; however, non-U.S. Internet commerce accounted for only 26% of worldwide spending. By 2003, IDC estimates 65% of Web users will be international, and the United States will account for less than half of worldwide Internet commerce.

“There are several reasons for the U.S. focus today,” Glasheen said. “For example, home PC penetration and the percentage of business PCs that access the Internet are much lower outside the United States. Additionally, the smaller number of users and slightly smaller transaction sizes outside the country generate smaller amounts of commerce. But this is changing as Europe and other regions quickly accept the Web.”

IDC’s report, The Global Market Forecast for Internet Usage and Commerce (IDC #B19262), sizes the market for Internet commerce, including the number of users and devices accessing the Web, the value of commerce transactions per user, and the number of pages on the Web from 1995 to 2003. The forecast is segmented by region (the United States, Canada, Western Europe, Asia/Pacific, Japan, and the rest of world) and user segment.

The market sizings and forecasts included in the report come from IDC’s Internet Commerce Market Modela, which is based on more than 40,000 primary research interviews annually in 31 countries and on IDC’s supply-side forecasts for PCs, network computers, modems, and other technologies. This model offers a unique perspective on the Internet and provides a detailed understanding of Web demographics and behaviors.

To order a copy of the report, contact Sue Beauregard at 1-800-343-4952, ext. 4774 or at [email protected]

About IDC

International Data Corporation is the information technology industry’s most comprehensive resource on worldwide IT markets, trends, products, vendors, and geographies. IDC provides data, analysis, and advisory services to the world’s leading IT suppliers as well as IS professionals in finance,

insurance, entertainment, advertising, consumer goods, and publishing. IDC’s research and opinions are based on the results of more than 300,000 end-user surveys, in-depth competitive analysis, broad technology coverage, and strategic analysis. IDC is committed to providing global research with local content through its 500 analysts in more than 40 countries worldwide. Additional information on IDC can be found on its Web site at http://www.idc.com.

Chinese Payment Network

Intermost Corporation yesterday announced that it has signed a joint venture agreement with Jiayin Investment Company Ltd. to develop China’s first network payment system. Jiayin’s telephone banking system and computer network technology is used by 75% of commercial banks in Shenzhen, the high-tech and information technology capital of China.

The name of the new company is tentatively called Jiayin Electronic Payment Technology Co. Ltd., subject to the company registrar’s approval. Under the terms of the agreement, Intermost will hold 70% interest in the joint venture company. Jun Liang, President of Intermost, said, “The registered capital of the new company is 5 million RMB. However, total investment for the new business is expected to be much more.”

Mr. Liang continued, “This joint venture comes during a major growth stage in the Chinese Internet market. The number of Internet users has grown steadily since China lowered its nationalized Internet access fees in March. Since then, the number of Internet users in China has ballooned from about 2 million to over 5 million. That’s a 150% increase in three months; China has suddenly become one of the largest Internet-user communities in the world. Intermost has a significant opportunity here since there is a tremendous bottleneck caused by the lack of a national electronic payment system. E- commerce applications are extremely limited in this market. Through our joint venture, we will be able to promote Jiayin’s proprietary E-commerce system, which is already a market leader, both technologically and in marketshare.”

Jiayin also has an exclusive agreement with the Shenzhen Financial Settlement Center, a central bank organization in Shenzhen, to pilot test a telephone and Internet payment system. The final version of the Internet payment system has been completed and is awaiting approval from the People’s Bank, China’s central banking authority. Jiayin will assign all related existing contracts, technology and patents to the joint venture and will no longer operate payment-related business in China.

Intermost is the first US-listed information technology firm from China. The Company is an Internet content provider in China, focused on business-to- business content hosting and maintenance. Intermost is a market leader in providing services to large organizations and export-oriented companies. Investor information can be found on the web at: http://www.MarketManagement.com or http://www.Intermost.com .

Amex Publix

FL-based Publix Super Markets announced Monday that it will now accept ‘American Express Cards’ at its 593 stores throughout Florida, Georgia, South Carolina and Alabama. Publix, which is owned and operated by its more than 112,500 employees, is the seventh largest-volume food company in the USA with 1998 sales of $12.1 billion.

Banner Month

Deluxe Corp.’s eFunds business unit reported Monday that its EFT processing unit processed more than 103 million EFT transactions in May for the western states of the national Star Systems network. The volume record in May represents a large growth in point-of-sale debit transactions, which grew 9% in May and 13.7% over the monthly volume recorded in Dec. 1998. Deluxe says last year consumers conducted more than 11 billion ATM transactions and 4.8 billion POS transactions nationally.

Roman Smart Cards

Australian-based ERG Group and Motorola landed a major contract yesterday for a smart card system for the bus, rail and tram networks in Rome and the surrounding region of Lazio. Under the nine year agreement, the ERG Motorola Alliance will supply approximately 84 billion lira (US$46 million) of equipment and software which will form the initial infrastructure for the project. In return the Alliance will collect 7.88% of the total fare revenue. The revenue of the system in 2000 is forecasted to be approximately 550 billion lira (US$351 million) meaning that the gross revenue to be collected over the initial nine year contract term for the ERG Motorola Alliance will be approximately 5.7 trillion lira (US$3.8 billion). The Alliance is projected to earn approximately 455 billion lira (US$280 million) as its gross fee.Under the contract, the Alliance will supply and install approximately 9,700 validators capable of reading paper and contactless or combi smart card technology in the bus fleet, light rail and rail network in and around Rome, and the bus fleet and rail network in Lazio. The bus fleet totals 5,000 and there are three light rail lines and 76 rail stations. In addition, 200 portable smart card readers will be supplied for inspectors and a network of 30 bus depot computer systems and 76 rail station computers will be linked via a complete communication network to a central clearing and processing computer system. The system will initially have 300,000 – 500,000 contactless or combi smart cards issued. This number is expected to increase to over one million within 12 months. The project will see a small sub-set of the system installed within eight months, full implementation in Rome in 12 months and full system completion within 24 months.

Default Proof President

In a move designed to add management experience and strengthen the company’s position with the burgeoning markets for expanded ATM utility and Internet issued debit and credit cards, Default Proof Credit Card System Inc. named David J. Koss as its new president and chief financial officer.

Koss, a 17-year financial services professional, replaces the company’s founder Dr. Vincent Cuervo as president. Dr. Cuervo will remain as chairman and CEO of DPCCS.

DPCCS is anticipating the imminent approval of its newly developed ATM Debit and Credit Cards Dispenser (patent pending) technology. The company believes that this new technology will revolutionize the issuance and delivery of prepaid stored value debit cards. Importantly, the company has two additional patents pending, one related to additional features to the ATM, and the other to the fully constructed, multi-lingual Web Sites UBUYDEBITCARDS.COM and UBUYCREDITCARDS.COM, both domain names are integrated to the intellectual property of the company. According to Koss, “the implications of the company’s ability to combine Internet or POS debit and/or credit cards issuance, with ATM delivery are enormous. Default Proof will be in the position to challenge the traditional modes of card issuance and delivery, as well as, currency transfer and traveler check markets. DPCCS expects to become a major participant in the rapidly broadening universe of ATM utility.”

In addition, based upon the company’s ability to bypass the traditional channels of distribution for prepaid stored value debit cards, exploratory work is underway regarding a potential role for the company in the Federal Disbursement 2000 program. Other immediate objectives include, formation of strategic alliances, the negotiation of licensing agreements, in particular regarding the ATM Debit and Credit Cards Dispenser (patent pending) and renewed development and use of the patented Default Proof Resource(r) System.

CCB Exits

NC-based CCB Financial Corp. is throwing in the towel on its consumer credit card business. CCB announced Monday it will outsource its consumer credit card business to MBNA. Under terms of the agreement, CCB will become an agent bank of MBNA, and MBNA will purchase approximately $150 million in consumer credit card receivables from CCB’s specialized credit card bank, CCB-Georgia and CCB-Georgia’s affiliate banks, Central Carolina Bank and Trust Company and American Federal Bank, FSB. According to CardData ([www.carddata.com][1]) CCB has about 70,000 active accounts. The CCB/MBNA sale will close this week. CCB expects to recognize an after-tax gain of approximately $.48 per diluted share. CCB will continue to offer business credit cards in its markets and will retain its existing portfolio of business credit card receivables.


Receivables: $164,637,252
Ann Volume: $275,000,000
Accounts: 108,901
Actives: 70,499
Cards: 130,485

Source: CardData (www.carddata.com)

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

Aids MasterCard

The Toronto People With AIDS Foundation and Bank of Montreal launched a special affinity ‘MasterCard’ card Monday. The no-annual-fee ‘MasterCard’ also offers cardholders the choice of earning ‘AIR MILES’ travel miles or ‘FirstHome’ dollars. Revenues derived from the ‘Toronto People With AIDS Foundation Affinity MasterCard’ will be directed towards providing practical and direct support services for people living with HIV/AIDS. The Toronto People With AIDS Foundation is a community-based nonprofit organization with about 4,000 clients.

Coinstar Award

Coinstar Inc., a retail-based coin counting and electronic commerce company, Monday announced that its founder and CEO, Jens Molbak, is the recipient of this year’s Ernst and Young Pacific Northwest Entrepreneur of the Year award in the service category.

The award recognizes entrepreneurs who have demonstrated excellence in innovation, financial performance, and personal commitment to their business and community.

A panel of business and civic leaders based in the Pacific Northwest selected Mr. Molbak for his work in developing the Coinstar self-service coin counting machine. The on-line machine, found in more than 5,700 supermarkets around the country, makes it easy for consumers to turn their accumulated change back into cash.

The other two finalists in the service category were John T. Boden of Market Contractors, Ltd. and Robert McCausland of Home Mortgage USA.

Past recipients of the Pacific Northwest Entrepreneur of the Year award, now in its ninth year, include Howard Schultz, founder of Starbucks Coffee and Jeff Bezos, founder of Amazon.com.

As the winner in the service category, Mr. Molbak will now go on to the national Entrepreneur of the Year competition to be held later this year in Palm Springs.

Mr. Molbak got the idea for a self-service coin counting machine after moving from the west coast to the east coast and back again. Each time he moved, his growing jar of coins was the last thing to go into the moving truck. Finally in 1989, while a graduate student at Stanford University, Molbak decided it was time to take action. He and his wife stood outside supermarkets interviewing shoppers about their change. The interviews confirmed Molbak’s suspicions, Americans had millions of coins hidden away at home. Two years later Coinstar was founded.

Today, Coinstar has processed more than $1.4 billion of America’s change in more than 49 million customer transactions. In 1998 alone, Coinstar’s network of machines placed 15,838,542,632 coins back into circulation, resulting in Coinstar’s surpassing the U.S. Mint as the leading supplier of coin to the U.S. economy.

Coinstar Inc. and its subsidiaries provide consumers and retailers with value-added services that increase customer loyalty and retailer profitability. The Coinstar network currently delivers the company’s self-service coin counting product to more than 5,700 leading supermarkets in 38 U.S. states, the United Kingdom and Canada. The company’s new Coinstar Shopper product is designed to bridge the gap between the Internet and the store. Consumers can call 1-800-928-CASH, or visit http://www.coinstar.com for the location of the nearest Coinstar machine.

Money Talks

In response to the continued criticism of card issuers targeting college students, MasterCard announced this morning it is renewing its support for a national educational program for college students and their parents. The program is anchored around a free brochure called ‘Money Talks’ which encourages parents to take an active role in their child’s financial literacy. The ‘Money Talks’ program was developed last year in association with Washington, DC-based College Parents of America. The educational initiative was introduced by MasterCard in 1998 and was also supported by MBNA. More than 25,000 ‘Money Talks’ brochures are now in circulation. College Parents of America has also endorsed MasterCard?s ‘Fundamental Principles on Serving the College Segment’, a set of guidelines for credit card issuers serving the college market. CPA charges a $25 annual membership fee.

Chargeback Report

A new report from Gartner Group says the average chargeback rate to merchants for credit card transactions on the Internet is about 15%, and can soar as high as 30% for merchants delivering digital products immediately at the time of purchase. Gartner says merchants that do not address the potential growth in costs associated with Internet fraud and chargebacks will face losses that will threaten the viability of their E-business. The new report also identifies several fraud detection methods, including address verification services, rules-based screening services, card verification methods and digital certificate systems.

People’s Card Head

Mark K. Vitelli has been named executive vice president of Credit Card Services at People’s Bank. Vitelli will be responsible for overseeing the bank’s national and international credit card businesses.

Most recently, Vitelli was senior vice president, national credit card, where his aggressive use of technology has helped People’s achieve one of the most efficient operations in the credit card industry.

“Mark has been instrumental in the success of our national credit card business,” said David E.A. Carson, People’s chairman and CEO. “His leadership has brought the business to its current position as the 17th largest issuer in the U.S. with the best asset quality of the top 25 issuers.”

“Mark has a keen understanding of the credit card business,” said John A. Klein, People’s president, and the former head of Credit Card Services. “He has been a major architect in the design and development of our database marketing initiatives and our risk management capabilities; all critical to accomplishing our marketing and asset quality objectives.”

Vitelli joined the bank in 1984 as a management trainee and has served in various management positions throughout the bank. In 1990, he was promoted to vice president, area manager in People’s Hartford Region. In 1991, Vitelli became vice president, Consumer Credit. And in 1993, Vitelli was made first vice president, Consumer Credit, responsible for credit card administration and strategic planning, including finance, operations, asset protection and the consumer lending business.

Widely regarded within the credit card industry, Vitelli has spoken domestically and internationally on collections as well as automation, telephone services and securitization. He is a member of the Visa Risk and Operations Committee.

A Milford resident, Vitelli holds a bachelor’s degree in economics and history from Yale University and a master’s in business administration from Sacred Heart University.

People’s Bank () is a diversified financial services company providing commercial, consumer, insurance and investment services. Founded in 1842, it is the largest independent bank in Connecticut with managed assets of more than $12 billion, 129 branches and 197 ATMs. People’s is a leader in commercial banking, residential lending, Savings Bank Life Insurance sales and supermarket banking. People’s ranks 17th nationally as an issuer of MasterCard and Visa credit cards.

People’s subsidiaries offer brokerage services through People’s Securities, Inc., asset management through Olson Mobeck & Associates, Inc., equipment financing and leasing through People’s Capital and Leasing Corp., and insurance services through R.C. Knox and Company, Inc.