Bank of America announced Friday plans to sell its 20-percent stake in Unified Merchant Services to First Data Corp.’s First Data Merchant Services Corp.. BAMS will become the primary merchant servicer for the merged BofA and NationsBank. BofA says it expects to close the deal by year-end.
Bank of America and VeriSign announced Thursday that they are completing the first phase of the National Automated Clearing House Association’s Certification Authority Interoperability Pilot — an initiative designed to facilitate secure Internet commerce applications between banks, merchants and consumers.
The pilot is testing the use of digital certificates for digitally signing authorization agreements to debit users’ accounts for recurring payments via the Automated Clearing House (ACH). As a part of this pilot, Bank of America is one of the first financial institutions to take advantage of the Online Certificate Status Protocol (OCSP), a new protocol being established by the Internet Engineering Task Force (IETF) that allows a merchant to obtain the status of a consumer’s digital certificate online in real time.
Merchants will rely on their respective financial institutions to obtain validation of digital certificates issued to consumers of participating financial institutions. This validation is accomplished via Internet interaction between the consumers’ and merchants’ financial institutions. The BofA/VeriSign pilot will be analyzed to modify and further develop operating rules and business practices for use of broader, multi-purpose digital certificates within the banking industry.
“Bank of America’s participation in this pilot illustrates our commitment to providing leading-edge Internet technology solutions to our customers,” said Elizabeth Ghekiere, senior vice president of electronic commerce with Bank of America’s Interactive Banking division. “Working with the VeriSign OnSite solution, Bank of America will be able to provide both consumers and merchants with the necessary trust to conduct secure transactions via the Internet in real-time.”
Under today’s paper-based ACH system, consumers wishing to have their accounts debited for recurring payments — such as mortgages, utility bills and insurance premiums — must sign paper-based pre-authorization agreements. The consumer’s financial institution then approves these requests using the ACH network, a highly secure, reliable and efficient electronic payments system that links America’s banks to the nationwide electronic payment and collection infrastructure. Standardized by the US Federal Government in the mid-1970s to handle exploding check volumes, the ACH has become the backbone of the nation’s electronic payments system. This pilot program will be instrumental in advancing the ACH by bringing it onto the Internet.
In this pilot project, Bank of America is issuing digital certificates to pilot “consumers” (members of the NACHA Internet Council). Specially selected pilot users are provided with an easy-to-use, intuitive Web interface to obtain digital certificates, enabling the digital signing of authorizations over the Internet to debit test accounts via the ACH network. The pilot merchant [Science Applications International Corporation (SAIC)] receives the authorizations and certificates via the Internet and then relies on its financial institution, Bank of America, to obtain validation of the certificates. Validation is accomplished via Internet interaction between Bank of America as the merchant’s bank and the consumer’s financial institution using the OCSP.
“Bank of America has achieved a milestone in financial services with its implementation of this digital certificate pilot,” said Richard Yanowitch, vice president of marketing at VeriSign. “By leveraging the encryption and user authentication provided by digital certificates and signatures, Bank of America’s pilot merchant and test users benefit from the greatest degree of online security available to date while also taking advantage of the convenience and cost-effectiveness of the Internet.”
By selecting the VeriSign OnSite solution, Bank of America gains the ability to deploy digital certificates to a wide range of consumer and corporate customers. VeriSign has delivered the software and back-end processing services necessary for BofA to establish itself as a large-scale digital certificate authority.
As part of their NACHA pilot program, Bank of America and VeriSign will utilize the Online Certificate Status Protocol (OCSP) to communicate with other financial institutions and determine the status of an identified certificate in real-time. In the pilot, test merchants can issue a request to Bank of America regarding the revocation status of a specific digital certificate that was received from a test consumer. Using OCSP, Bank of America can then immediately send a real-time response to the test merchant informing them whether or not that digital certificate has been revoked, facilitating online commerce that over the Internet and private networks. VeriSign’s enterprise PKI solutions are available through VeriSign regional account representatives, resellers, and is both secure and fast.
About Bank of America
BankAmerica Corporation and its major banking subsidiary, Bank of America NT&SA, operate nearly 1,800 retail branch offices in nine states and more than 7,500 Versateller ATMs. Bank of America can be reached on the Internet at http://www.bankamerica.com and on America Online at Keyword: BofA. After the planned merger with NationsBank Corporation — which is subject to regulatory and shareholder approval and expected to close at the end of third-quarter 1998 — the new BankAmerica will have relationships with 29 million households in 22 states and Washington, D.C., and two million businesses throughout the world. Pro Forma total assets for the two companies at June 30, 1998, was $573 billion. The new company will have operations in 38 countries and America’s largest branch and ATM networks, with 4,800 branches and nearly 15,000 ATMs.
VeriSign, Inc. is the leading provider of Public Key Infrastructure (PKI) and digital certificate solutions used by enterprises, Web sites and consumers to conduct secure communications and transactions global affiliates. The company’s Digital IDs and Secure Server IDs are available through the company’s Web site at http://www.verisign.com. For more information visit VeriSign’s Web site at .
Bank of America is promoting its ‘VERSATEL/VISA Check Card’ as a stress reliever. BofA says consumers sweat with stress when writing checks, especially if they have poor penmanship. The bank said yesterday that bad handwriting costs Americans an estimated $200 million annually because of bookkeeping errors, misfiled information, illegible doctor’s prescriptions, and personal checks that can’t be deciphered. BofA is in the midst of a major summer promotion for its debit card. BofA is running a ‘Triple Win Sweepstakes’ this summer in which three new VW Beetles will be given away to customers whose names are picked in the sweepstakes drawing. In addition to these grand prizes, the bank is awarding triple the amount of purchases made by customers whose names are selected during weekly sweepstakes events.
Bank of America announced Wednesday that it will launch a smart card pilot program that allows ‘VISA Cash’ stored-value smart cards to be loaded with funds via the Internet to lead to transforming personal computers and other consumer devices into home ATMs. The new smart card pilot program is expected to be rolled out to several hundred Bank of America and VISA employees beginning next month. The pilot will allow participating BofA and VISA employees to use Bank of America’s Internet ‘HomeBanking’ service to transfer funds from their checking account to a ‘VISA Cash’ stored-value chip card. The ‘VISA Cash’ smart card can then be used to make purchases from participating merchants in the physical world or from Internet merchants who have been participating in a separate Bank of America/Visa smart card program that was launched in May 1997. Pilot participants will be able to load funds onto a ‘VISA Cash’ stored-value smart card via a portable, Fischer ‘smarty’ smart card reader that can be inserted directly into a personal computer’s diskette drive. Bank of America’s Smart Card Group is working with VISA and SPYRUS to develop the ‘VISA Cash’ Internet-load pilot.
Bank of America kicked off a summer POS sweepstakes for its ‘Versatel Check Card’ debit card last week. The ‘Triple Win Sweepstakes’ will award three grand prizes: three brand new, yellow, VW Beetles. To kickoff the promotion nineteen BofA employees stuffed themselves into a shiny new Yellow VW Beetle in San Francisco’s financial district. Customers who use the ‘Versatel Check Card’ to pay for purchases will automatically be entered in the ‘Triple Win Sweepstakes’ each time they use the card to make a purchase between now and August 31. A total of 1,000 customers, whose names are picked during weekly sweepstakes drawings, will win triple the amount of the purchase they made using their ‘Versatel Check Card’. All card users, whose names are entered during the July/August sweepstakes, will be eligible to win one of the three grand prizes.
The first study on the ‘World MasterCard’ was released yesterday by Atlanta-based Brittain Associates. Brittain says there are just three issuers of the new product: Bank of America, Household and First USA. BofA and First USA are charging a $49 annual fee while Household’s version comes with a $75 annual fee. Brittain also says BofA and Household require a minimum household income of $50,000, while First USA has lowered the threshold to $30,000.
The merger between NationsBank and Bank of America is pitting BofA’s BA Merchant Services against Nation’s/First Data Merchant Services’ Unified Merchant Services. BofA and NB decided Friday that BAMS will be the principal merchant servicer for their combined organization following the merger. NationsBank also said Friday it will seek to renegotiate its existing relationship with First Data Merchant Services in order to assure that there is a single provider of merchant services for the combined entity. NationsBank currently offers merchant services through Unified Merchant Services, a joint venture between NationsBank and First Data Merchant Services. BofA and NB said the impact on their respective merchant servicers is yet to be determined.
BA Master Credit Card Trust’s $648.75 million class A floating-rate asset backed certificates, series 1998-B, are expected to be rated ‘AAA’ by Fitch IBCA. In addition, the corresponding $41.25 million class B floating-rate certificates are expected be rated ‘A’.
The certificates are backed by a pool of credit card receivables generated under Bank of America MasterCard and Visa accounts. Fitch IBCA’s expected ratings are based on the high quality of the collateral pool, available credit enhancement, Bank of America’s servicing expertise, and the sound legal and cash flow structures.
Credit enhancement totaling 13.5% of the initial invested amount will be available to class A certificateholders through subordination of class B, equal to 5.5% of the total invested amount, and the collateral interest. Class B’s 8.0% credit enhancement stems from subordination of the $60 million collateral interest (CIA). The CIA is a privately placed, uncertificated ownership interest in the trust subordinate in payment rights to classes A and B.
Several economic and credit stress scenarios were devised by Fitch IBCA to determine appropriate credit enhancement levels. The scenarios simultaneously stress yield, chargeoff, and monthly payment rate steady state assumptions. In addition, to address the interest rate risk associated with uncapped floating-rate coupons, the coupon is stressed to worst case London Interbank Offered Rate (LIBOR) levels without a 1:1 adjustment to yield.
Under the available enhancement, class A withstands a 35% decrease in yield, a 45% decline in payment rates and chargeoffs increasing to 30% and still makes full and timely payments of investor principal and interest. Class B sustains a 25% decrease in yield, a 35% decline in payment rates and chargeoffs increasing to more than 20% without suffering a principal or interest loss.
Early amortization events protect certificateholders from prolonged exposure to deterioration in portfolio performance and/or a transferor/servicer default. Occurrence of an amortization event will trigger a rapid payout of principal and investors may be repaid earlier or, in rare circumstances, later than expected.
Series 1998-B is structured with a revolving period, during which class A and class B investors receive monthly interest payments of one-month LIBOR plus 0.12% and 0.28%, respectively. During the revolving period, principal collections are used to purchase new receivables. Following the revolving period, investors continue receiving monthly interest payments as principal collections are accumulated for distribution in one payment on the expected maturity date. Bank of America may vary the accumulation period length, based on certain conditions, but must maintain it at least a minimum of one month. Principal and a final interest payment is expected to be distributed to class A investors in one payment on the May 2004 distribution date, followed by a single principal distribution to class B investors, expected in June 2004.
Bank of America launched Tuesday a new security and encryption process for corporate clients who use ‘WANDA’ electronic services to transfer funds, initiate payments and manage their global accounts. WANDA is Bank of America’s integrated cash management services platform, currently used by more than 600 large BofA corporate clients, in 1,000 sites worldwide, to access their cash management accounts. The new smart cards offer encryption and authentication capabilities, while also providing BofA corporate clients with customization options and security monitoring to track user access to the system.
BA Merchant Services and EDS are gunning for the capture of state/local taxes and other government fees with a new nationwide electronic payment service launched Monday. The new service offers taxpayers the option of accessing, via 1-888-ALL-TAXX, a VRU-based credit card payment system. Consumers, using as touch-tone phone, simply enter the government entity’s tax bill number, the payment amount and their credit card number. A convenience fee, based on a percentage of the total payment, is added to the transaction. BAMS is handling the marketing to state/local governments and provides the transaction processing. PhoneCharge, Inc. is also participating in the direct sales to government entities and provides promotional services. EDS is providing the technology.
BankAmerica finalized the transfer yesterday of the card portfolios of First Omni and Dauphin Deposit. Both institutions are part of First Maryland Bancorp. BofA has also signed First Maryland to its agent program. The acquisition of the $614 million portfolio will boost BofA’s portfolio to $11 billion in receivables. At year- end 1997, BofA had $10,444,000,000 in receivables, $21,842,000,000 in year-to-date volume, 10,455,000 gross accounts, and 14,427,900 cards-in-force.
Concorde Solutions, Inc., a Bank of America company, announced Tuesday that with Bank of America and Hitachi, Ltd. the deployment of BankAmericacard online access using Concorde CreditCard OnLine (CCOL). The system allows all BofA cardholders inquiry access to their accounts over a secure Internet link.
CCOL is the first fruit, with much more to come, of the cooperative agreement announced one year ago between Concorde Solutions, Inc. and Hitachi, Ltd. to develop Internet-enabled software for banking applications using Hitachi, Ltd.’s TPBroker Object Transaction Manager.
BankAmericard online access demonstrates the potential of this new category of banking applications through the richness of its feature set. Customers may retrieve up-to-the-minute account balances and credit available and view up to 7 months of historical activity.
The deployment of new technology is important for three reasons
1. Bank of America’s consumer credit card customers now have access to their information through this increasingly important channel using world-class, cutting edge technology. While many credit card companies offer account information over the phone via an 800 number, now Bank of America can also offer customers up to 7 months of statement history that is viewable online and downloadable directly into financial management software.
2. In conjunction with Bank of America’s Interactive Banking Division, Concorde Solutions, Inc. and Hitachi Ltd delivered the project using new object-oriented technologies producing a code base that can be substantially reused in follow-up applications. Hitachi’s TP Broker is now proven in a production environment.
3. Concorde will now market CCOL to a wide range of financial institutions. The deployed application demonstrates strong competency in Internet applications for financial applications. “CCOL is ready for fast track implementation in any bank that deals with credit cards and wants to provide state of the art for its customers. Banks can save themselves from building from scratch the extensive infrastructure required to implement this complex technology,” said Isaac Appelbaum, President of Concorde Solutions, Inc. In the future, Concorde plans to develop other groundbreaking customizable financial applications and application packages based on object-oriented component methodology combining the strengths of Concorde in object-oriented development and Hitachi, Ltd.’s TPBroker technology, as well as its lead market position in banking systems.
TPBroker integrates a custom state-of-the-art implementation of Object Management Group (OMG) compliant Object Transaction Service (OTS) 1.1 with a CORBA 2.0 compliant Object Request Broker (ORB). TPBroker is the first Object Transaction Monitor (OTM) in the market. Hitachi is a market leader in the mission critical market in Japan. TPBroker is tailored with Hitachi’s leading-edge technology backed with experience in mission critical systems. TPBroker is the product to satisfy real mission critical requirements.
About Concorde Solutions, Inc.
Concorde Solutions, Inc. is the technological leader in object oriented applications. Founded in 1996, Concorde assembled a crack team of object- oriented programmers, many from the Bank of America, to solve the most exciting problems facing financial institutions today accessing existing legacy systems and connecting them to internal and external customers through cutting edge software applications. Concorde has developed Framework, a flexible advanced infrastructure which will serve as a base for the development of a wide range of financial software applications, including Concorde CreditCard OnLine. Concorde is a subsidiary of the Bank of America, the third largest bank in the United States.
About Bank of America (NYSEBAC)
BankAmerica Corporation and its consolidated subsidiaries provide diverse financial products and services to individuals, corporations, small and mid- size businesses, government agencies and financial institutions throughout the world.
About Hitachi, Ltd. (NYSEHIT)
Hitachi, Ltd., headquartered in Tokyo, Japan, is one of the world’s leading global electronics companies, with fiscal 1996 (ending March 31, 1997) consolidated sales of $68.7 billion (at an exchange rate of 124 yen to the dollar). The company manufactures and markets a wide range of products, including computers, semiconductors, consumer products and power and industrial equipment. For more information on Hitachi, Ltd., please visit Hitachi’s Web site at .