TEENAGERS ONLINE

Independent market analyst, Datamonitor’s new report, Online Teen Payments finds that teenagers are
spending millions of dollars online across the US and Europe.
Teenage payment systems, such as prepaid plastic cards, are currently
provided by only a handful of suppliers. As such, the sector is lucrative,
but marketing and advertising to teenage consumers is likely to prove
difficult and operators should look to tie-in with larger teenage-friendly
brands. As teenage payment cards become increasingly commonplace, payment
providers should take responsibility to encourage money-management skills
among young consumers.

Datamonitor looked at teenage online spending across the US and 7 EU
countries and found that teenagers spent $483 million online in 2000.
Datamonitor’s forecasts reveal that this figure will increase to $10.6 billion
by 2005 with the development of new payment options, specifically targeted at
teenagers. Teenagers are among the most likely groups to pay on the Internet,
however, their inability to obtain credit cards and low online debit
acceptance has historically made online payment difficult.

Despite being one of the main groups of users on the Internet, many
teenagers have no way of purchasing goods online. With a low number of Web
sites accepting debit cards there is often no way a teen can independently
shop online. The primary means of payment used on the Internet, the credit
card, is not available to them. This implies that a market for an alternative
payment system targeted at teens (i.e. those who cannot apply for a credit
card) exists and that web merchants must integrate new solutions if they want
to target the teen market. Although teens can make purchases indirectly using
a parent’s credit cards, the buying experience is not the same due to the loss
of independence for the teenager.

Prepaid or stored value cards (with the former the money is stored in an
account whereas the latter stores the money on the card, like an ePurse) allow
teens to shop on the Internet securely and without getting into debt. It is
this type of product that is currently growing rapidly, both in use and the
number of competitors in the market.

Prepaid Cards Could Encourage Responsible Spending

“Payment providers must take responsibility for the product that they are
providing. In giving teens a card of any sort they are familiarizing them
with plastic. However, it is does not necessarily follow that they are
encouraging a debt ridden society. Prepaid cards reinforce the idea of using
plastic to pay for what you can afford, by only allowing transactions where
there are sufficient funds loaded onto the card. Payment providers should
encourage responsible spending behavior. Some operators are doing this
through the provision of money management information and tests on their
websites. This helps reassure parents that these products can help their
children learn about how to manage their finances,” comments Julie Cunningham,
Datamonitor financial services analyst.

An Attractive Target Market, Potentially Being Ignored by the Banks

Customer segmentation is increasingly vital as the card payment market in
general moves towards tailored solutions, providing differentiation and a
competitive advantage. Although individually teenagers have limited income,
together their income amounts to significant spending power. Combining this
with the fact that all teen income is disposable makes teens an attractive
segment for companies to target.

If banks and card issuers fail to target teenage business, other companies
providing tailored products will not only gain this business but also retain
it at later stages in the customer’s life.

“There is a need in the market for a teen payment product that allows
secure payments online. Teens want to have their independence and to shop
online. Both traditional players and new entrants have a part to play in this
market. New entrants can attract teens through the ‘cool factor,’ while
traditional players should use their established role in society as a way to
convince parents and to gain their support. If traditional players ignore
teenagers they face losing future, profitable customers and they will face an
uphill struggle against new, ‘cooler’ brands,” comments Ms. Cunningham.

Consolidation is Inevitable

Online teen payments will grow considerably in the next five years. This
is in part due to the growth of the Internet that will be seen across society.
However, growth is likely to be very different in the US compared to Europe.
US teenagers in general have much more money at their disposal than their
European counterparts. The dominance of the credit card in the US will allow
products connected to parents’ credit cards to flourish. However, Europe will
see more independent solutions emerging, with products developed by
independent companies such as Smartcreds and Splash Plastic, but also from
banks. Although the teen payment market seems large, it must be remembered
that teens have limited income and although there are possibilities to extend
this market, this will not stop consolidation occurring. As more companies
launch products aimed at this market consolidation is inevitable.

Tie-ins With Large Brands could Prove Successful

Teenage skepticism about large-scale advertising and marketing campaigns
makes them difficult to target. Marketing cannot be too over the top or
childlike, yet at the same time, the concept must be explicit enough to strike
a cord with teenagers. Teens are likely to switch as new products enter the
market and become ‘cool’ and cutting edge. One way branding can be used is by
creating links such as discounts with the large brands, for example Coca-Cola,
Nike etc. Although brand loyalty is likely to be low, the importance of a
strong, fun, cool image is vital. If something is seen as ‘cool,’ teens are
likely to pass on the word to their friends. This can be the strongest form
of marketing possible. Operators such as Splash Plastic and Visa Buxx have
found that when teens like the product, they are quick to pass on the details
to their peers.

“Teens may be hard to target but it is possible. The need for a payment
product that gives security and allows them to do something they currently
cannot do is almost enough to sell cards in itself. However, as competition
in the market increases, marketing will become more important. An offline
presence will be necessary, as will linking the products to current trends.
Care must be taken not to let the product get outdated as holding the interest
of the teen consumer is vital,” comments Ms. Cunningham.

Teenagers’ Will be Able to Use Plastic Offline
The importance of a presence in the offline environment should not be
underestimated. The majority of a person’s time is spent offline and as such
it is vital to advertise offline. With products such as Visa Buxx offering
both online and offline acceptance, this puts other companies under pressure
to provide the same. Currently, this is only true in the US, but as products
continue to be launched this will extend to other countries. With more
companies entering the market, it will be the one with the most features that
will survive. As such, offline acceptance will become a matter of course.

Online Teen Payments forms part of Datamonitor’s Cards & Payments Briefing
Service; a series of 12 monthly strategic briefings, providing in-depth market
analyses, case profiles, forecasts and action points for success.

Datamonitor plc is a premium business information company specializing in
industry analysis. We help our clients, 5000 of the world’s leading
companies, to address complex strategic issues. Through our proprietary
databases and wealth of expertise, we provide clients with unbiased expert
analysis and in-depth forecasts for six industry sectors: Automotive, Consumer
Markets, Energy, Financial Services, Healthcare, Technology. Datamonitor
maintains its headquarters in London and has regional offices in New York,
Frankfurt, and Hong Kong.

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VERIFIED COMPLIANCE

UniCERT Brasil, a joint operation backed by Telsul Communciations and American Bank Note Company, announced that it has become one of the first managed security service providers to receive compliance certification from the Brazilian Central Bank. As a result, UniCERT Brasil can now provide digital certificates for the Brazilian Payment System (SPB), a set of rules governing transactions between banks. These rules will apply to all of approximately 170 Brazilian banks.

UniCERT Brasil easily and successfully met the rigorous standards set forth by the Brazilian Central Bank. As a result, any Brazilian bank can now deploy digital certificates through UniCERT Brasil’s hosted certificate authority, with complete assurance that it will meet the requirements of the SPB.

The Brazilian Central Bank has two primary goals for the SPB. The first is to guarantee the authenticity of other banks through the use of digital certificates, creating a highly secure banking system. The second objective is to accelerate the payment cycle time among the member banks. Currently, banks have to wait several days before funds from other banks can clear. The secure system would allow the banks to automatically deposit funds and have those funds available immediately, as well as promptly check and approve deposits from other Brazilian banks.

UniCERT Brasil, based in Sao Paulo, provides security services for the financial and government markets based on Baltimore Technologies’ UniCERT(TM) Public Key Infrastructure (PKI) system. Baltimore UniCERT is one of the world’s leading Public Key Infrastructure (PKI) systems, providing the confidentiality, authentication, integrity and non-repudiation functions necessary for conducting secure e-business.

“There is a growing need for advanced security solutions in Brazil, particularly in the financial sector,” said Celio Ribeiro, president of UniCERT Brasil. “We are deeply committed to meeting that need with superior services built on industry standards and the best PKI technology available. Baltimore Technologies’ UniCERT is clearly unmatched in PKI technology leadership. The strength of our partnership with Baltimore, combined with our superior service and support, has been substantiated by our rapid completion of the certification process with the Brazilian Central Bank.”

About UniCERT Brasil

UniCERT Brasil is a company focused on the implementation of Public Key Infrastructures (PKIs) for the electronic commerce market. UniCERT Brasil operates a Certificate Authority (CA) with technology developed by Baltimore Technologies, a leading global supplier of security solutions and worldwide leader in the PKI-based electronic security market. The services provided by UniCERT Brazil include:

–Issuing UniCERT digital certificates for integrators and suppliers of PKI Solutions

–Issuing certificates that can be integrated into the solutions developed by companies or users

–Hosting of dedicated servers for Certificate Authorities (CA) of companies or other entities

–Hosting of customers’ critical and confidential files in storage devices located in a physically safe environment

UniCERT Brasil has offices in Rio de Janeiro, Sao Paulo and Porto Alegre.

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MOBILE CTR

Nordbanken has signed a two-year contract with Nocom AB for the operation and support of mobile banking services. The new infrastructure is based on Nocom’s e-channel center and its platform MobileCtrl.

“We chose Nocom primarily for their abilities in providing a total undertaking with all the components necessary for good mobile services. Additionally, their solution is well-proven and will give our customers excellent service with full security,” says Lennart Larsson, System Development Manager at Nordbanken.

During the past two years, Nocom has made substantial investments in the development of e-channel center, with the goal of offering businesses a cost-effective way of setting up and administering electronic customer channels. E-channel center is now established on the market with more than 20 major clients within the banking and financial sectors, and the travel and transportation industries.

“E-channel center is an important part of our product portfolio and reflects our tradition of innovative IT-solutions, service and long-term responsibility. That we have now been entrusted by the leading bank in the Nordic region is proof that our e-channel center is up to standard for the most demanding mobile services,” says Stefan Skarin, CEO at Nocom.

Nocom AB (OMX:NOCMb.) helps its customers to navigate profitably through technology shifts and to maximize the business benefits of having information available on user terms. Nocom’s operations are carried out in three business units – Nocom Communications, Tradevision and Nocom Travelutions. Nocom’s operations are directed from main offices in Uppsala with offices in Stockholm, Gothenburg, Oslo, Helsinki, Copenhagen, Riga, Warsaw, Frankfurt, London and Los Angeles. Nocom shares have been traded on the Stockholm Stock Exchange O List (NOCM-B) since 1999.

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HHonors Promotion

Hilton HHonors, the only guest reward program in the world that allows members to Double Dip to earn Points & Miles for the same stay, is offering double miles this fall.

From Sept. 1 through Nov. 15, 2001, members can earn twice as many airline miles for each Double Dip stay after one initial Double Dip stay during the promotion availability period. In addition, travelers who charge their Double Dip stay to their Visa(R) card will earn 1,000 HHonors bonus points for each of these additional stays at all HHonors hotels worldwide.

Participating hotels include Hilton, Conrad, Doubletree, Embassy Suites Hotels, Hampton Inn, Hampton Inn & Suites, Hilton Garden Inn and Homewood Suites by Hilton. All HHonors airline partners are participating in the promotion. “In our opinion, there’s no better way to help our customers reach their travel goals faster than by offering them Points & Miles for each stay,” said Jeffrey Diskin, president and chief operating officer of Hilton HHonors Worldwide. “But by doubling the amount of miles and increasing the number of bonus points our members can earn, HHonors is making it even easier for them to earn that extra vacation.”

About Visa

Visa is the world’s leading payment brand and the largest consumer payment system worldwide. Visa-branded cards generate almost US$2 trillion in annual volume and are accepted at more than 22 million locations around the world. The Visa organization plays a pivotal role in advancing new payment products and technologies to benefit its 21,000 member financial institutions and their cardholders. Visa is a leader in Internet-based payments and is pioneering the creation of u-commerce, or universal commerce — the ability to conduct commerce any time, anywhere, over any type of device.

About the HHonors Program

Hilton HHonors is a guest reward program that gives frequent travelers a faster way to earn the rewards they want most. Enrolled members can earn Points & Miles for the same stay, at nearly any rate, a benefit HHonors calls Double Dipping(R). Points & Miles are available at more than 2,100 participating Hilton, Conrad, Doubletree, Embassy Suites Hotels, Hampton Inn, Hampton Inn & Suites, Hilton Garden Inn and Homewood Suites by Hilton hotels around the world. In addition, HHonors is the only guest reward program that allows its members to exchange airline miles for hotel points and vice versa with selected airlines.

Because of the unmatched flexibility, generosity and value offered by HHonors program features, as well as the many attractive promotions that HHonors offers each year, the program has been recognized with numerous travel industry awards.

Membership in Hilton HHonors is free. Travelers may enroll online by visiting [www.hiltonhhonors.com][1]. Or, to enroll instantly in the program and make reservations, consumers in the United States and Canada may also call 800/HHONORS. Outside the United States and Canada, travelers may call the Hilton Reservations Worldwide office in their area.

Travelers also may pick up an enrollment form with a membership card at any participating Hilton, Conrad, Doubletree, Embassy Suites Hotels, Hampton Inn, Hampton Inn & Suites, Hilton Garden Inn or Homewood Suites by Hilton hotel around the world.

Hilton Hotels Corp. and Hilton International, a subsidiary of Hilton Group plc, have a worldwide alliance to market Hilton, the world’s best-known hotel brand. Collectively offering more than 2,300 hotels in more than 60 countries worldwide, both companies are recognized as leaders in the hospitality industry. Hilton International currently operates more than 380 hotels in more than 60 countries worldwide.

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

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INFOCORP RESTRUCTURES

Infocorp Computer Solutions Ltd., a leading provider of revenue management and electronic service
delivery solutions for e-government and e-retail, announced a
restructuring plan to reduce costs and focus resources on sales and marketing
initiatives.

As part of the restructuring, staff at the Company’s head office in
Winnipeg will be reduced by approximately one-third. The company’s
administrative head office and related functions will move to Infocorp’s
Toronto office. In addition, a significant portion of software product
development and support will be outsourced to Design Expo, a software product
development firm in India that is also a member of the SLMsoft.com Group of
Companies, which will result in further savings.

Restructuring efforts are being undertaken to bring financial results in
line with management’s expectations as softened demand for technology in the
retail sector and the deferral of certain key government projects have
impacted profitability.

“Infocorp is strongly committed to intensifying sales and marketing
efforts to increase awareness of our industry-leading products and solutions,”
said Dwayne Mathers, CEO of Infocorp. “With the cost saving initiatives and
the sales opportunities that we are targeting, our objective is to bring the
Company to break-even by year-end.”

Effective immediately, Khurram Quereshi is appointed Chief Financial
Officer of Infocorp and will assume the responsibilities of former Vice
President, Finance Doug Marrin, who will continue to assist the Company in its
transition toward profitability.

About Infocorp

A member of the SLMsoft.com Group of Companies, Infocorp (TSE: INP) is a
leader in the design and delivery of state-of-the-art revenue management
solutions for governments and specialty retailers. Infocorp’s solutions enable
product and service delivery, workflow automation, and payment transaction
processing through multiple delivery channels including over-the-counter,
Internet and kiosks. Its core e-government product, Access2Gov (formerly
POS+), has been installed in a variety of state, provincial and municipal
departments, and is a key component of electronic service delivery solutions.
Its core retail product, Softwear/P.O.S., is installed on over 10,000
workstations in retail organizations around the world, and is a fully
integrated retail management system, from point-of-sale to customer
relationship management and back office automation. Infocorp’s offices are
located in Canada and USA.
http://infocorpnow.com

About SLMsoft.com Inc.

Founded in 1986, SLMsoft.com . (TSE: ESP.a and ESP.b ) is a leading
developer of electronic payment systems and transaction processing solutions,
including e-commerce applications with a focus on the financial services
industry. SLMsoft.com provides real-time end-to-end e-banking solutions that
include Internet banking, interactive voice recognition (IVR), debit and
credit card issuing, automated teller machines and point-of-sale network
management, retail branch management, and e-CRM enabling technology.
SLMsoft.com also provides investment brokerage client and portfolio management
applications for the brokerage industry; e-health solutions which enable
health insurance claims to be evaluated at the point of service, processed and
settled in real time; and e-government solutions, which enable consumers to
pay fees for government services in person, at kiosks, through IVR or the
Internet.
http://www.slmsoft.com

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ATM Crash

Citibank’s ATM and debit card system is up and running this morning after experiencing a number of crashes this week. The ATM/POS network first crashed Tuesday night for 4.5 hours and then went down again Wednesday morning. However POS debit card was down nearly all day Wednesday. About two million cardholders were affected by the problems, which were blamed on software.

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VISA & VENTEK

VendTek Systems Inc. announces that it has entered into a co-operation agreement with Visa
International, Latin America and Caribbean Region to promote VendTek’s smart
card LVD terminal and Visa Cash among Visa Member banks in the region.

Visa Cash is a chip-based electronic purse card that offers consumers
a fast and convenient way of making low value purchases, such as a cup of
coffee, newspapers, pay phones and public transportation.
The Company also announces that Visa International has purchased five of
VendTek’s smart card LVD terminals to reload value onto Visa Cash
cards.

“Visa International has been a supporter and promoter of the LVD concept
from inception,” says VendTek President Paul Brock. “Visa recognizes the value
of our self-serve smart card load from cash and vend infrastructure as an
important element in building on the success of their Visa Cash product.
To-date we have sold the LVD system to Visa International and the Banco de
Costa Rica for a transit application in San Jose, Costa Rica, where it has
proved very successful. The purchase of LVD stations by Visa International
for live use and demonstration will significantly raise the exposure and
profile of the LVD product.”

About the smart card LVD

Smart cards are secure “electronic purses” that enable consumers to
purchase goods quickly and conveniently in an off-line transaction. VendTek’s
LVD is a flexible, self-serve platform that allows for reloading a smart
card from cash, credit card or associated account and the purchasing of a
card; it is the only self-serve reload from cash platform approved by Visa
International, Latin America and Caribbean Region, for the TIBC v1.0 smart
card operating system.

About VendTek

VendTek uses its expertise in payment and self-serve technologies, smart
cards and networking to develop systems for transaction automation. VendTek’s
secure proprietary systems reduce shrinkage, improve access for consumers,
increase the number of selling outlets and selling hours, and enhance overall
security making the systems superior to traditional distribution and
alternative channels.

About Visa International

Visa is the world’s leading payments brand and the largest payments
system worldwide. Visa-branded cards, over one billion, generate more than
US$1.8 trillion in annual volume and are accepted at over 22 million locations
around the world. The Visa organization plays a pivotal role in advancing new
payment products and technologies to benefit its 21,000 member financial
institutions and their cardholders. Visa is a leader in Internet based
payments and is pioneering the creation of u-commerce, or universal commerce –
the ability to conduct commerce anytime, anywhere, over any type of device.
Visit Visa, Latin America and Caribbean Region at http://www.visalatam.com.

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Card Stocks

While Providian’s stock fell another 5% yesterday, the spillover to other monoline stocks settled down. MBNA also released preliminary data yesterday to counter claims the credit card business is wavering in the face of a sluggish economy. MBNA and Capital One moved down slightly, while Household and Metris picked up a few cents. NextCard dropped another 2.5%. Providian closed at $28.90, now trading at 43% of its 52-week high. MBNA says it has added 1.5 million new accounts during July and August and has increased loans by $2.2 billion since June 30. MBNA also noted that managed loan losses in July and August were comparable to second quarter levels and are stable. On Monday, Providian lowered its earnings estimates for the year, citing a recent slowdown in customer purchase activity, softer loan demand relative to expectations, and ongoing credit tightening by the Company. However Providian expects to report an improvement in the 10.29% chargeoff rate for the third quarter.The news dropped Providian’s stock by more than 22% on Monday. (CF Library 9/4/01)

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