MasterCard International yesterday officially opened its new Global Technology & Operations headquarters in the St. Louis area. MasterCard says it processes as many as 26 million authorizations in this facility on a single day, and settles as much as $4 billion on a single day between financial institutions worldwide. The building is a four-wing complex that contains 550,000 square feet of space and is located in O’Fallon, Missouri. There are three wings of office space, as well as a Data Center. The building overlooks a 10-acre lake. MasterCard says its St. Louis payroll is $170 million and covers more than 2200 jobs.
Further evidence of the current recession was produced Friday with the release of the American Bankers Association’s ‘Consumer Credit Delinquency Bulletin’. Based on the number of credit card accounts, 3.93% were overdue during the second quarter, the highest level tabulated since 1980. In the previous quarter and in the same quarter one year ago, overdue credit card accounts were 2.99%. Based on total dollars outstanding, second quarter credit card delinquencies were 4.13%, the same as the previous quarter but significantly higher than the 3.54% figure for 2Q/00. The ABA says the stagnant economy and increased layoffs are impacting consumer finances. The ABA also says banks will continue to review their lending standards in light of the economic slowdown.
2Q CREDIT CARD DELINQUENCY HISTORY
(based on total dollars outstanding)
1999: 4.10% 1995: 3.58% 1991: 4.48% 1987: 3.28% 1983: 2.81%
1998: 4.57% 1994: 3.06% 1990: 3.46% 1986: 3.83% 1982: 3.03%
1997: 5.24% 1993: 3.86% 1989: 3.06% 1985: 2.88% 1981: 2.86%
1996: 4.61% 1992: 4.19% 1988: 3.44% 1984: 2.80% 1980: 3.25%
Source: American Bankers Association Delinquency Bulletin
Banks across the country have made contributions or established funds to assist with disaster releief. Wells Fargo said it will contribute $1 million to the American Red Cross disaster relief fund to support efforts to assist victims and families of this week’s national disaster. Bank of America is donating $1 million to a fund to ‘The September 11th Fund’, established nationally by the United Way of America and The New York Community Trust. Bank One Foundation announced it will match donations of the company’s 78,000 employees dollar-for-dollar, up to $1 million. The Wachovia Corporation said it will make a $1 million contribution to the American Red Cross National Disaster Relief Fund.
Image Data, pioneer of the use of identity verification to stop point-of-service frauds by putting a “face on every transaction,” announced a name change to Identico Systems LLC. The new name more closely reflects the company’s expanded business strategy and unique expertise in successfully securing financial transactions in today’s complex point-of-service environment.
According to CEO Larry Gilbert, the move also positions the company to take advantage of the broader market opportunities it has identified for its True ID service. “True ID’s growing and diverse customer base speaks for itself Â identity verification offers businesses better protection against payroll check, auto rental, and other point-of- service frauds,” said Gilbert. “Because our True ID Service verifies ‘the person, not the paper,’ customers have experienced a dramatic decrease in losses. True ID’s consumer-friendly process also alleviates growing consumer fears over the security of their personal and financial account information.”
The increasing acceptance of the True ID Service across market segments reflects the critical need for a new approach to providing secure payment solutions in face-to face-transactions. Businesses relying on traditional loss prevention systems are experiencing staggering losses, with worthless checks alone costing retailers and banks an estimated $15 billion annually. Gilbert noted, “The outdated approach of verifying easily counterfeited financial and identification documents is no longer effective against today’s technology-enabled identity criminal.”
True IDÂ® — a Better Solution
True ID’s ability to securely identify a consumer as the “true” owner of a financial account presented during a transaction means less fraud for businesses, better information for loss prevention investigations and increased protection for consumers. Retailers, banks, auto rental firms, and distribution centers are already successfully using True ID to deter fraud by as much as 80%, and increase restitution efforts by 50%.
True IDÂ® is simple to use and integrates easily into any point-of-service environment:
1) During a transaction, the consumer presents his or her photo ID to a clerk or teller. 2) The photo ID is scanned, encrypted, and transmitted to a secure Identico Systems database, where it is mapped to the consumer’s account data; and
3) The next time the consumer initiates a transaction at any business that uses True ID, the consumer’s image is securely sent back to the point of service for instant identity verification.
Because Identico Systems is committed to protecting consumer privacy, no information other than the image is sent to the point of service. The employee views the image, decides whether it matches the consumer’s face, and proceeds with the transaction.
“True ID has met with nearly 100% consumer acceptance everywhere it’s been used because people are increasingly aware of the threat of ID theft,” said Gilbert. “At the same time, businesses are realizing the need to be more proactive in protecting their honest customers from ID thieves, so they are welcoming a new technology that not only cuts their financial losses from fraud but also builds a loyal customer base.”
To learn more about Identico Systems, call 1-888-887-8343 (1-888-8TRUE-ID) or visit them online at [www.identicosystems.com]
‘The Internet Superstore’ may go dark next month unless it finds a new credit card processor. Aliso Viejo, CA-based Buy.com, which serves over 4 million customers, has until September 1st to locate a new processor after its current processor notified the company of its intention to terminate credit card services. The termination was to be effective July 23, but an extension was negotiated after Buy.com agreed to pay a 1% surcharge on the processing fee, and 5% hold back for a security deposit. The extension expires August 31st. The company has other woes including a delisting from The Nasdaq National Market on August 14. The company’s founder Scott Blum has signed a definitive merger agreement to buy the firm for $0.17 per share. Buy.com offers nearly 1,000,000 SKUs in a range of categories including computer hardware and software, electronics, wireless products and services, books, office supplies and more.
The co-branding relationship between Chase and Continental Airlines moved to a new plateau this week with the introduction of ‘the World MasterCard’ and ‘VISA Signature’ editions. Both cards offer top level concierge services plus the advantage of a no pre-set spending limit with the option to revolve a portion of the spending. Under the ‘World MasterCard’ and ‘VISA Signature’ programs, cardholders earn one ‘OnePass’ mile for every dollar spent and double miles for Continental Airlines ticket purchases. Existing Continental Airlines ‘Platinum MasterCard’ and ‘Platinum VISA’ customers can upgrade to the premium product. Charter member enrollees in 2001 will pay an annual fee of $65. Both cards carry a 7.9% six-month intro APR followed by a prime +9.4% interest rate. Chase and Continental also offer the first co-branded debit card air mileage card.The Chase/Continental/MasterCard-branded debit cards were introduced in February 1999. Continental Airlines is the fifth largest airline in the U.S., offering more than 2,200 departures daily to 133 domestic and 92 international destinations.
SmartStop, Inc. today announced the expansion of the truck stop industry’s first multi-application smart card in all Rip Griffin Travel Centers across the southern United States, as a result of the success of the Terrell, Texas showcase implementation, in operation since August 2000. OTI (Neuer Markt: OT5) provides the microprocessor-based smart card technology, products and solutions that support the SmartStop program.
At each Rip Griffin facility, truck drivers will use a smart card for access to the showers. Rip Griffin has also tested and plans to use the same smart card for loyalty points, on-island fueling, automated truck weighments, and prepaid e-cash for service or convenience store purchases. The e-cash and loyalty points will be transferable across the entire Rip Griffin Travel Center network, motivating drivers to choose Rip Griffin as their preferred truck stop. Future applications include funds transfer directly to the card, Internet access, personal and business telephone calls and other applications essential to the efficient movement of freight across the country.
‘The success of the Terrell Showcase demonstrates that the trucking industry can benefit from smart card technology. Drivers and fleets are looking for technologies that are more convenient, lower cost and provide greater control and security,’ said Mark Evers, President and CEO of SmartStop, Inc. ‘We look forward to greater success as the Rip Griffin network is brought on line.’
‘The truck stop environment demonstrates once again how OTI products and solutions can upgrade any existing platform with maximum efficiency and minimum investment. The secure and user-friendly OTI solution establishes a cutting-edge loyalty program that is both effective and economical’, said Ohad Bashan, President and CEO of OTI America, Inc.
The Jubitz Truck Stop in Portland, OR has also implemented the SmartStop smart card program, focusing on loyalty applications for truck drivers and local residents.
SmartStop, Inc., located in Portland, Oregon, is a national technology-based solutions provider to the trucking industry. The company provides products and services to hundreds of truck stops across the country.
For more information, please visit the company’s website, .
Established in 1990, OTI (On Track Innovations) designs and develops contactless microprocessor based smart card technology to address the needs of a wide variety of markets. Applications developed by OTI include product solutions for mass transit, parking, gas management systems, loyalty schemes, ID and secure campuses. OTI has regional offices in the US, Europe, Asia Pacific, and Africa to market and support its products. The company was awarded the prestigious ESCAT Award for smart card innovation in both 1998 and 2000. Visit OTI on the Internet at [www.oti.co.il.]
2001 The Smart Card Alliance today announced that it will undertake a survey to measure the usage of smart cards in the United States and Canada. The research will be conducted by KPMG.
‘As a strong voice for smart card adoption, the Alliance is proud to sponsor this original research that will provide the first concrete data on our industry in the 21st century. What we’re doing is establishing a benchmark,’ said Bill Randle, Chairman of the Smart Card Alliance.
The survey will ask the top ten smart card manufacturers supplying the US and Canadian markets to report on shipments according to ten specific industry categories, such as wireless, financial and retail. The initial survey will cover shipments made in 1999, 2000 and the first half of 2001. A follow-up survey covering the last half of 2001 will be made in the first quarter of 2002.
‘The US and Canadian smart card markets have experienced significant growth over the past several years’, said Dan A. Cunningham, Chairman of the Alliance’s Market Research Committee. ‘The purpose of the survey is to quantify this growth by industry, and distribute the results to our members and interested third parties.’
The survey is one of many initiatives of the Smart Card Alliance, a not-for-profit association formed earlier this year by the joining of forces of the Smart Card Forum and the Smart Card Industry Association. The goal of the Alliance is to promote the usage of smart card technology and related applications. The newly combined organization brings together all the players in the industry including leading banks and card issuers, technology firms as well as industrial and retail companies and government organizations interested in smart card development.
President and CEO of the Smart Card Alliance, Donna Farmer stated, ‘the combined resources and leadership of our new organization allow us to undertake projects like this survey, that neither predecessor organization could have done on its own.’
The results of the initial phase of the survey will be presented at the Alliance’s Annual Meeting in October 9-12th. The Alliance plans to continue the survey in 2002 and beyond to establish a well-defined trend line of smart card growth.
‘We’re excited about the opportunity to assist the Smart Card Alliance in this endeavor,’ stated Tim Harrison, a Principal in KPMG’s Information Risk Management group. ‘This survey will allow us to create a better understanding of the growth and use of smart card technology within the US and Canada over the past few years, ‘ he added.
About the Smart Card Alliance
The Smart Card Alliance is a not-for profit, multi-industry association of over 185 member firms working to accelerate the widespread acceptance of multiple application smart card technology. Through specific projects such as education programs, market research, advocacy, industry relations, and open forums the Alliance keeps its members connected to industry leaders and innovative thought. The Alliance also is the single industry voice for smart cards, leading industry discussion on the impact and value of smart cards in the U.S. More information about the Alliance is available at .
KPMG LLP is the accounting and tax firm that understands the needs of business in the global economy. We help our clients by devising results-oriented business strategies, providing insights that help them stay ahead of the competition and achieve market-leading results. KPMG LLP is the U.S. member firm of KPMG International. KPMG International’s member firms have more than 108,000 professionals, including 7,000 partners, in 159 countries. KPMG’s Web site is
Oberthur Card Systems announced this morning it has acquired the other half of Rapsodia Software from its joint venture partner Prosodie. Rapsodia Software, was formed in May 1999. It will now become a fully integrated business division of Oberthur Card Systems under the management of Olivier Leroux its current managing director. Rapsodia Software operates within the wireless industry to provide software platforms for mobile value-added services. Headquartered near Paris in Boulogne Billancourt, Rapsodia also has an office in Hong Kong, employees approximately 50 people and generated revenues of $3.2 million in 2000. Oberthur is paying $3.3 million for the Rapsodia acquisition.
The Federal Court of Australia ordered Catuity to provide Welcome Real-time with an affidavit listing an estimate of sums received arising from making or selling, or offering to make or sell, point of sale terminals, chip cards or software for use in the Catuity system. Catuity says it did not seek a stay of the Orders because the Orders were substantially those proposed by Catuity. Besides the affidavit, the court ordered Catuity to pay Welcome’s legal costs and to hand over to its solicitors, for safekeeping and destruction, all ‘CIT/Transcard’ and Catuity devices in its possession in Australia as of yesterday. The Federal Court of Australia ruled in May against Catuity and its Australian subsidiaries, Chip Application Technologies and CIT Cards (Australia) in a lawsuit filed last year by Welcome Real-time. Welcome claimed in the Court case that Catuity and its Australian subsidiaries had infringed its smart card loyalty patent by operating the CiT Transcard system in Western Sydney from July 1997, and by offering to supply upgrades of the system since that time. Catuity said the judge stated clearly that ‘the product, the use of which would infringe the patent, must be a product which infringes all the essential integers of the patent.’ Prior to the Orders, Catuity made changes to its product and therefore the Catuity product no longer infringes the patent.Catuity says these changes have had no detrimental effect on either the performance or functionality of the system. Catuity says it can now continue to develop, market and sell its product in Australia and elsewhere. Catuity says since it is impractical to change the existing Transcard operations in Western Sydney, they have agreed with the major customers that the previously planned closure of Transcard will occur as soon as possible. (CF Library 5/18/01; 5/22/01; 6/19/01)
Justice Peter Heerey of the Federal Court of Australia has made orders to implement the judgment he handed down on May 17th of this year in favor of Welcome Real-time against Catuity Inc. in the smart card loyalty system patent infringement case.
The court ordered Catuity to provide Welcome with an affidavit by September 17th setting out an estimate of sums received arising from making or selling, or offering to make or sell, point of sale terminals, chip cards or software for use in the Catuity system. Welcome then has the option to pursue either a damages claim or an account of Catuity’s profits arising from the infringements. If Welcome elects to pursue a damages claim, it has foreshadowed to Catuity that it will seek significant damages in respect of harm suffered by Welcome outside Australia as a foreseeable consequence of the promotion of the Catuity system from within Australia.
The court has further ordered that Catuity pay Welcome’s legal costs to date in this action. The court found that payment of such costs should not be delayed pending an eventual appeal, as there was a substantial hearing of the infringement and invalidity issues at the trial and “important substantive rights were established.
The court also ordered wide injunctions preventing Catuity from infringing Welcome’s patent in any way by whatever means. Welcome acknowledged that immediate implementation of the injunctions for the CIT/Transcard system could inconvenience Australian merchants and customers using that specific system and therefore agreed to Catuity winding down that system over a period of 3 months; however, no such delay was ordered for the operation of the injunctions against the Catuity system.
Finally, Catuity has also been ordered to hand over to its solicitors by September 17th, for safekeeping and destruction, all CIT/Transcard and Catuity devices in its possession in Australia as of today.
Catuity’s operations in Australia have related to the development and testing of the Catuity system which has been promoted in Australia and elsewhere. Given the injunction prohibiting infringement of the patent, Catuity must take action to ensure that the manufacture, installation, operation (including testing), and promotion of the system do not offend these orders.
Welcome Real-time commenced legal action in the Federal Court of Australia last year against the U.S. Company, Catuity Inc. and its Australian subsidiaries, Chip Application Technologies and CIT Cards (Australia). In his judgment issued May 17th, Justice Heerey found that Welcome’s patent had been infringed by the U.S. and Australian companies. Welcome’s patented technology covers the operation of customer loyalty and incentive schemes using customer cards with integrated circuits, commonly called smart cards.”
Catuity Comments On Welcome Real Time Lawsuit Judgment
Catuity, Inc. issued the following statement in connection with the Welcome Real Time lawsuit judgment issued in Australia:
“Justice Heerey of the Federal Court of Australia yesterday issued orders in relation to the Australian patent infringement action commenced by Welcome Real Time (WRT) against Catuity.
“In essence, the judge adopted a simple and straightforward approach and ordered Catuity not to infringe the WRT Australian patent in Australia. Catuity did not seek a stay of the Orders because the Orders were substantially those proposed by Catuity.
“The judge stated clearly that ‘the product, the use of which would infringe the patent, must be a product which infringes all the essential integers of the patent.’ Prior to these orders being issued, Catuity made changes to its product and therefore the Catuity product no longer infringes the patent. These changes have had no detrimental effect on either the performance or functionality of the system.
“Catuity can now continue to develop, market and sell its product in Australia and elsewhere.
“Since it is impractical to change the existing Transcard operations in Western Sydney, we have agreed with the major customers that the previously planned closure of Transcard will occur as soon as possible.”
Catuity, Inc. (www.catuity.com ) is a leading provider of loyalty software systems. The Catuity software includes an integrated suite of applications that provide loyalty, ticketing, access control and membership. The Catuity Loyalty System is ubiquitous in that it can operate on any device, any card program and with any payment process, including stored value, smart cards and wireless applications. Catuity unites the brick-and-mortar retailer with the Internet to enable cross-sell capabilities with consistent brand imaging across all channels. The Catuity loyalty system is currently the only loyalty software approved by Visa USA for use by its member banks that issue smart cards with loyalty applications
Thanks to increased debt consolidation and bankruptcy filings, credit card delinquencies made a surprisingly sharp drop during the first quarter. The rise in debt consolidation activity is being fueled by the lowering of interest rates by the Federal Reserve this year and robust competition among home equity loan providers. The uptick in personal bankruptcies is being driven by anticipation of new bankruptcy laws, likely to take effect early next year. Based on the number of credit card accounts, 2.99% were overdue during the first quarter, down 10% from 3.34% in the previous quarter, and 3.28% for first quarter 2000 according to the American Bankers Association’s ‘Consumer Credit Delinquency Bulletin’. First quarter credit card delinquencies, based on total dollars outstanding, were 4.13%, down from the previous quarter’s 4.25% but higher than 3.94% in the same period last year. The 1Q/01 figures are the lowest first quarter numbers reported in more than five years.
1Q CREDIT CARD DELINQUENCY HISTORY
(based on total dollars outstanding)
1999: 4.44% 1995: 3.50% 1991: 4.55% 1987: 3.71% 1983: 3.06%
1998: 5.42% 1994: 3.51% 1990: 3.29% 1986: 4.92% 1982: 3.33%
1997: 5.43% 1993: 3.98% 1989: 3.39% 1985: 3.10% 1981: 3.16%
1996: 4.62% 1992: 4.31% 1988: 3.71% 1984: 2.84% 1980: 3.00%
Source: American Bankers Association Delinquency Bulletin