E-Check Rules

Consumers will be able to make e-check payments over the telephone under new rules from NACHA — The Electronic Payments Association that became effective on September 14, 2001. The new rules permit merchants, billers and government agencies to offer e-checks by telephone as a payment option.

“An e-check authorized over the telephone is an easy and convenient option for consumers to make payments,” said Elliott C. McEntee, President and CEO of NACHA. “A consumer paying a bill or making a purchase would have an alternative to mailing a check.”

An e-check is an electronic debit to a checking account that is initiated on the Internet, at the point-of-sale, over the telephone, or even by a bill payment sent through the mail. An e-check is processed using the Automated Clearing House (ACH) Network, and typically takes 1-2 business days to be posted to a checking account.

Under the new rules, a consumer can verbally authorize an e-check payment by telephone. The authorization is either tape-recorded or a written confirmation notice is sent to the consumer.

E-checks by telephone are covered by the Federal Reserve’s Regulation E, which defines specific consumer protections from error and fraud. There are no similar protections for paper check payments. NACHA’s rules for e-checks by telephone mirror the Federal Trade Commission’s telemarketing sales rule, and provide an additional consumer protection by specifically prohibiting companies that cold-call consumers from using e-checks for any resulting sales.

Since July 1999, NACHA has been conducting a pilot program to test e-checks by telephone. From its inception through July 2001, the latest month for which statistics are available, the pilot has originated more than 10.5 million e-checks.

The NACHA Operating Rules standardize payment formats for the ACH Network, and define the rights, obligations and warranties of parties involved in ACH payments. Operating rules provide a uniform business and legal framework for the exchange of payments, which enhances participants’ confidence in the safety and reliability of the payments system.

The ACH Network serves 20,000 financial institutions, 3.5 million businesses, and 100 million individuals. The ACH Network is commonly used for Direct Deposit of payroll and government benefits such as Social Security, Direct Payment of consumer bills, business-to-business payments, federal tax payments, and, increasingly, e-checks and e-commerce payments. In 2000 there were 6.9 billion ACH payments made worth more than $20 trillion.

About NACHA — The Electronic Payments Association

NACHA is the leading organization in developing electronic solutions to improve the payments system. NACHA represents more than 12,000 financial institutions through direct memberships and a network of regional payments associations, and 650 organizations through its industry councils. NACHA develops operating rules and business practices for the Automated Clearing House (ACH) Network and for electronic payments in the areas of Internet commerce, electronic bill and invoice presentment and payment (EBPP, EIPP), e-checks, financial electronic data interchange (EDI), international payments, and electronic benefits transfer (EBT). Visit NACHA on the Internet at .


Online Commerce

Despite a softening US economy, the number of online users and buyers continues to grow, according to the new report released yesterday. The new report from eMarketer says that US B2C e-commerce revenues, which totaled $38.3 billion in 2000, will quadruple to $156 billion by 2005. The report also reveals that the online buying population continues to grow, reaching 79.3 million this year. Other key highlights include: the number of US Internet users will rise from 116.5 million last year to 184.1 million by 2005; and Americans buying online will more than double, from 64.1 million in 2000 to 130 million by 2005. eMarketer places the online customer conversion ratio at 2.9% for 2000, an improvement from 1.9% of 1999. For 2001, the ratio will jump to 3.5% as e-tailers attract and win new customers with more targeted, customized marketing campaigns. VISA projects online credit-card fraud rates between 25 cents and 28 cents per every $100 charged, significantly higher than the 7 cents for all transactions.


Revolt Spreads

Walgreen joined the caravan on Interlink opposers yesterday. The nation’s largest drug store chain says it will no longer accept debit cards using the VISA ‘Interlink’ network, effective Oct. 13. Walgreens will continue to accept debit cards processed through other networks, including Star, MAC, NYCE and Pulse networks. Fewer than 10% of Walgreens debit card transactions use the Interlink network. The company has 3,520 stores in 43 states. Earlier this week Florida-based Publix Super Markets announced it will stop accepting ‘Interlink’ point-of-sale debit cards in mid-October. Last week, Racetrac Petroleum, a gasoline convenience store retailer that operates stores in twelve Southeastern states, announced it will stop accepting Interlink debit cards next month. Two weeks ago, Wal-Mart Stores announced it will not accept VISA’s Interlink on-line debit cards in its 2,700 stores, effective October 13. On October 13th, VISA’s new rate schedule goes into effect which will raise the merchant fee from 20 cents to 45 cents per transaction. More than 50 million cards carry the Interlink logo with most of the U.S. cardholders located on the west coast, where the network was established. There are more than 675,000 Interlink merchant acceptance locations in the U.S. VISA made the decision in June to boost Interlink transaction fees for most merchants from 45 basis points (0.45%) +3 cents with a 20 cents maximum to 65 basis points (0.65%) +12 cents with a 45 cents maximum.


Laser VISA

Drexler Technology confirmed Thursday it has received a $4.8 million order for ‘LaserCard Triple-Image’ identification cards for an ongoing U.S. border-crossing ID card program. The new optical memory cards will be used as U.S. Department of State ‘Laser Visa’ cards for frequent visitors from Mexico crossing the border into the states of Texas, Arizona, and California. Mexico is the only country designated by the U.S. DOS to utilize the ‘Laser Visa’ card for tourist visas. The card order is part of an $81 million government procurement program for U.S. INS ‘Green Cards’ and DOS ‘Laser Visas’. Under the five-year U.S. government subcontract, awarded to Drexler last June, up to 24 million ‘LaserCard’ optical memory cards will be needed. The ‘Triple-Image ID’ card contains a color photo image on one side of the card, comparable to a drivers license face photo. On the opposite side is a laser-engraved image of the same face photo, which is used to compare with the color photo for confirmation of identity. It is virtually impossible to alter the matching laser-engraved facial image. The DOS and INS cards also contain the digital image and a biometric template of the cardholder’s fingerprint.


HH Re-signs Rhodes

Household International, the $101 billion (managed assets) consumer lender, announced that its retail services business has signed an exclusive five-year agreement to continue managing the Rhodes Furniture private-label credit card program including John M. Smyth’s Homemakers, which was recently acquired by Rhodes. As a result of this agreement, Household will manage more than $400 million in private-label credit card receivables for Rhodes, including both in-store and Internet sales.

“We have a true partnership between two companies that understand the needs and expectations of today’s consumer,” said Sandy Derickson, managing director and CEO of Household’s retail services business. “Household’s private-label credit card gives Rhodes customers a choice of flexible payment options and attractive financing promotions.”

This agreement extends a successful relationship between Household and Rhodes since 1992. “We have relied on Household to provide quality service to our customers for nearly 10 years,” said Joel Dugan, executive vice president/chief financial officer, Rhodes Furniture. “Rhodes, founded in 1875, has been serving customers for generations and the credit facility provided by Household enhances the customer buying experience.”

Household’s retail services business is one of the nation’s largest private-label credit card providers, processing over 3.6 billion transactions for 220 merchants annually in the U.S., U.K., and Canada. In addition to Rhodes, Household offers private-label credit cards and sales finance products for retailers and merchants in a variety of industries including consumer electronics, department stores, specialty discount, furniture, and apparel. Household also provides financing for dealers in motorcycles, ATVs, personal watercrafts, and snowmobiles.

About Rhodes

Atlanta-based Rhodes, which had furniture, bedding and accessories sales of $468.3 million last fiscal year, is ranked 13th of the top 100 furniture stores in the U.S. This privately-held company operates 89 retail stores under the names Rhodes, Marks Fitzgerald, and Homemakers, along the southeastern seaboard and into the Midwest.

About Household

Household’s businesses are leading providers of consumer loan, credit card, auto finance and credit insurance products in the United States, United Kingdom, and Canada. In the United States, Household’s largest business, founded in 1878, operates under the two oldest and most widely recognized names in consumer finance: HFC and Beneficial. Household is also one of the nation’s largest issuers of private-label and general purpose credit cards, including the GM Card and the AFL-CIO’s Union Plus card. For more information, visit the company’s web site at .


Pounding Continues

American Express and Providian lost again yesterday as the stock market ground both down to new 52-week lows. Providian hit $20.00 per share yesterday but closed up at $20.70 for a net loss of 2.8%. Providian is now trading at less than 30% of its $67.00 52-week high set in January. AmEx dropped to $25.20 per share yesterday, closing at $26.00, losing another 1.4%. Capital One and MBNA were knocked down by another 4.5% yesterday, while Advanta sunk 14%. The market opened sharply lower this morning.

9/19 9/18 9/19
Providian 20.70 -2.817 20.00*
NextCard 5.54 -1.110 5.50
Amer Exp 26.00 -1.380 25.20*
Metris 21.70 -2.472 20.40
Advanta 9.16 -13.66 9.16
Cap One 40.08 -4.480 37.57
MBNA 25.20 – 4.72 23.70
Household 52.30 – 0.64 49.40
* new 52-week low

Source: CardData (www.carddata.com)


USTT Investors

USA Technologies has completed the sale of slightly in excess of $4 million of equity capital to accredited investors in a private placement.

The offering consisted of shares of common stock at $.70 per share. For each share purchased, the investor received a warrant to purchase two shares of common stock at $.70 per share. One half of the warrants are exercisable on or before December 31, 2001 with the balance exercisable on or before June 30, 2002. If all of the warrants are exercised, the Company will receive additional funding of $8 million. These shares may not be offered or sold in the United States absent registration or applicable exemption from registration requirements.

A portion of the proceeds of the offering have been or will be used primarily to advance USA Technologies ability to help drive e-Port and e-Port Wireless into new and diverse worldwide markets. e-Port is turning vending machines into intelligent terminals capable of conducting e-business microtransactions. USA Technologies has recently penetrated the coin operated laundromat market and the taxi and limousine industry. The first cashless laundromat using e-Port technology opened in Chicago earlier this month and certain taxis and limousines could begin utilizing e-Port as early as January 2002.

George Jensen, Chairman and CEO of USA Technologies, stated, “This new financing is particularly exciting for the Company as we drive e-Port technology into new marketplaces. We believe our products and services have the potential to fundamentally change large, cash-based industries such as vending. e-Port will bring added convenience to consumers, and could fundamentally affect how companies market and sell their products and services as society moves more toward cashless transactions,” according to Jensen.

e-Port and its associated network services can be utilized in conjunction with vending machines, gas pumps, office equipment and almost any kind of point-of-sale terminal. The technology enables the conversion of unattended points of sale into intelligent “store fronts,” connected to the Internet, and capable of communicating operational data to operators, conducting cashless micro-transactions. It can come fitted with an interactive, touch screen that features interactive media/advertising at point of sale, giving location owners the ability to communicate with and improve the buying experience of consumers, promote products, provide free access to web based media such as news, sports and weather and possibly generate incremental revenues from interactive media.

USA Technologies is currently in negotiations with global consumer products, technology and other companies regarding mass rollout of e-Port and its related network services.

About USA Technologies:

USA Technologies is recognized as a leader in cashless micro transactions and interactive media technology and associated financial services. USA Technologies provides credit card activated and other cashless systems, allowing end users, ranging from consumers to business professionals, to communicate, conduct business or make ordinary commerce transactions, outside of the home or workplace. USA Technologies is an IBM (NYSE:IBM – news) Business Partner and an inaugural member of the Sprint (NYSE:FON – news) Enabling Application Service Provider Program for e-commerce. It has also established relationships with a number of global IT, multimedia, and telecommunications companies including Marconi Online Systems, RadiSys Corporation, DoubleClick Inc., and Xerox Corporation. Visit the USA Technologies home page at [www.usatech.com][1].

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


Smart Deployment

The US Army has selected SchlumbergerSema smart card readers for implementation of the DoD CAC program. This represents the largest single deployment of smart card readers in the US to-date. SchlumbergerSema said this morning that Logicon has acquired nearly 60,000 of its advanced ‘Reflex’ smart card readers for the US Army’s implementation of the Department of Defense ‘Common Access Card’ program. Previously EDS purchased 600,000 of Java-based ‘Cyberflex Access’ smart cards for the overall DoD CAC program. Logicon says this is the first time the GSA contract has been used by one of the services to support its smart card requirements. The US Army will utilize the ‘Reflex 72 USB’ and ‘Reflex 20 PCMCIA’ readers, which connect with desktop and portable PCs to authenticate smart cards used for secure network access, as part of their implementation of the DoD CAC program.


Perfectly Clear

IL-based Perfect Plastic Printing said Wednesday it has received a patent covering their clear card technology and manufacturing process. The technology dubbed ‘Perfectly Clear’ produces translucent cards that can be in read in all POS devices, ATM and standard card counters. PPP says the design possibilities for the translucent cards are extensive. PPP currently produces the translucent ‘Quantum’ card for MBNA. The use of translucent credit cards has been spreading throughout the industry. Eighteen months ago, American Express introduced the first translucent smart card with the launch the ‘Blue’ smart card. In July 2000, MBNA introduced the translucent ‘Quantum VISA/MasterCard’. In September 2000, Providian introduced a translucent card with the introduction of the first ‘smart VISA’ cards in the USA. The Providian card is called the ‘Clear smart VISA’. Schlumberger Test & Transactions has also unveiled the transparent ‘Luxea’ smart card. In France, Banque Directe introduced a translucent ‘VISA Carte Bleue’ smart card to be marketed as the ‘Directe Card’. (CF Library 6/16/00; 7/7/00; 10/26/00; 4/30/01)


Cross Country Contributions

Applied Card Systems and Cross Country Bank announced they have committed $1 million toward assisting relief efforts stemming from last week’s terrorists attacks on the World Trade Center and the Pentagon, and another $10 million for the purchase of war bonds as soon as they become available. Additionally, the companies will match funds pledged by their 4,500 Associates nationwide.

“In this time of national crisis, corporate America and indeed all Americans must pull together and support both the victims of this horrific event as well as our President as he orchestrates our nation’s response. The ramifications of these senseless acts will continue to affect many Americans for months to come and we hope our effort, when combined with so many others that are underway, will be a source of comfort for those directly impacted by the tragic events that have occurred,” said Rocco Abessinio, Chairman of Applied Card and its affiliate Cross Country Bank.

“Applied Card Systems and Cross Country Bank are pleased to be able to make these commitments to aid the relief efforts. On behalf of our Associates, I want to extend our deepest sympathies to all the victims and the families affected by this terrible tragedy, and our heartfelt thanks to the rescue workers who are making a Herculean effort,” Abessinio concluded.

Applied Card Systems and Cross Country Bank, headquartered in Wilmington, DE, specialize in the nontraditional credit card market. Applied Card Systems also has operation centers in Boca Raton, FL, Huntington, WV, Ashland, KY and Beckley, WV.


Payment Cartridge

CyberSource Corporation, a leading provider of risk management and electronic payment solutions for enterprise businesses, and a member of IBM PartnerWorld for Software, announced immediate availability of the CyberSource payment cassette for IBM WebSphere* Commerce. The CyberSource payment cassette, with IBM’s WebSphere Commerce, enables businesses to easily and efficiently deploy a seamless payment processing solution that supports credit, private label and procurement cards, as well as electronic checks.

“We are pleased to work with our IBM Business Partners like CyberSource to deliver sophisticated solutions that help drive e-commerce enablement and allow merchants to meet customer demand,” said Ed Harbour, Director, WebSphere Commerce, IBM Software Group. “By leveraging the strength of WebSphere Commerce, CyberSource is helping to provide enterprises with a scalable and flexible payment solution.”

“This pre-integrated component makes it easier than ever for businesses using IBM WebSphere to take advantage of the operational and scalability benefits provided by CyberSource’s payment solutions,” said Dave Daetz, Senior Vice President of Corporate Business Development, Marketing, and Product Management at CyberSource Corporation.

Businesses using the IBM WebSphere Commerce can take advantage of CyberSource’s payment solutions by installing the CyberSource payment cassette, which provides seamless integration with CyberSource’s payment software or outsourced payment services. Each operates behind-the-scenes to authorize and settle credit and debit cards and electronic check payments through built-in connections with third-party processors and merchant banks. CyberSource payment solutions also provide real-time, multiple currency support.

The CyberSource Payment Manager(TM) software is a powerful, transaction-processing server that supports multiple enterprise sales channels. The software integrates seamlessly with legacy front-end, financial management and customer relationship systems to provide in-house control and flexibility of payment operations.

The CyberSource payment service combines the advantages of robust functionality with the rapid deployment and management ease of an outsourced service. Enterprises can rely on fast, secure, reliable, electronic payment service, worldwide, without the complexity of maintaining an in-house system.

More on CyberSource payment solutions: [http://www.cybersource.com/solutions/electronic_payment/solutions/][1]

About IBM WebSphere Commerce

IBM WebSphere Commerce, the first integrated e-commerce solution, provides multiple easy-to-use features and functions for content management, relationship marketing, order management, and payment management for all types of Internet businesses, including business-to-business, business-to-consumer, and e-marketplaces. Sites built with WebSphere Commerce can easily integrate with both internal and external systems and grow with the changing needs of an e-business. IBM WebSphere Commerce customers benefit from the functionality of the WebSphere software platform for e-business, which integrates Web commerce, Web application server, Web application development tools, transaction processing and distributed component software from IBM (NYSE: IBM). Additional information about WebSphere Commerce is available at [ibm.com/software/websphere/commerce/][2].

About CyberSource

CyberSource Corporation is a leading provider of risk management and electronic payment solutions for enterprise businesses selling via multiple sales channels. CyberSource solutions manage transaction risk and enable real-time payment processing for Web, call center/IVR, and POS environments. CyberSource professional services designs, integrates and optimizes enterprise-wide commerce transaction systems. Over 3,000 businesses use CyberSource solutions, including over half of the Dow Jones Industrial companies. The company is headquartered in Mountain View, California, and has sales and service facilities in Japan, the United Kingdom, and other locations in the United States. For more information, please visit CyberSource’s web site at or email info@cybersource.com.

[1]: http://www.cybersource.com/solutions/electronic_payment/solutions/
[2]: http://ibm.com/software/websphere/commerce/


Omni 3700

VeriFone unveiled the ‘Omni 3700’ product family, its newest terminals based on the ‘Verix’ multi-application architecture. The terminal features a 32-bit processor, is compact with a large display and keys in an ATM-style user interface. In addition to payments, the ‘Omni 3700’s’ advanced information collection and remote diagnostic capabilities can be supported via VeriFone’s ‘VeriCentre Appliance Management Suite’, providing help desk operators with a window to the status of terminals’ device handlers, applications, and parameters. Paymentech has Class B-certified the latest version of VeriFone’s ‘SoftPay’ e-payment software that runs on both the ‘Omni 3700’ and the ‘Omni 3300/3350’.