JCPenney Card To Relaunch

GE Capital and J.C.Penney Company, Inc. announced Monday they have closed the previously announced sale of JCPenney’s private label credit card business and credit card service facilities to GE Capital. GE Card Services, a GE Capital company, will manage the portfolio.

In a related ten-year credit card services agreement, GE Capital will re-launch the JCPenney credit card and enhance its benefits for customers, provide more favorable repayment terms and introduce new marketing programs such as support for customers shopping on-line.

“With the closing behind us, GE Card Services is focused on the tremendous opportunities JCPenney represents. This retailer has recognized the value of private label credit since 1958. For all of JCPenney’s distribution channels and formats, including the Internet, our credit card program will build on the relationship consumers already have with JCPenney, as well as attract new customers,” said Edward D. Stewart, president and chief executive officer, GE Card Services.

GE Card Services, a GE Capital company, is a leading North American provider of credit card-related financial services for retailers and consumers. With assets of more than US$300 billion, GE Capital is a global, diversified financial services company with 28 specialized businesses. A wholly owned subsidiary of General Electric Company (GE), GE Capital, based in Stamford, Conn., provides equipment management, mid-market and specialized financing, specialty insurance and a variety of consumer services, such as car leasing, home mortgages and credit cards, to businesses and individuals around the world. GE is a diversified manufacturing, technology and services company with operations worldwide.

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Internet Card Frauc

Despite widespread beliefs to the contrary, credit card theft affects very few online shoppers, according to a joint survey released Monday by BizRate.com and Shop.org.

BizRate.com ([http://www.bizrate.com][1]), the Internet’s leading e-commerce merchant rating and marketing research firm, conducted the survey in cooperation with Shop.org ([http://www.shop.org][2]), the trade association of online retailers, to gauge the experiences of consumers who use credit cards while shopping online. Nearly 13,500 online consumers participated in the real-time Flash Survey(TM). While 58 percent expressed concern that their credit card numbers would be “stolen” during transmission to a merchant, less than 2 percent of those surveyed actually experienced credit card number theft.

“Our overall findings are solid evidence that shopping online with a credit card is extremely safe,” said Paul Bates, vice president of Information Products Group at BizRate.com. “These results make a significant statement about the overall health of e-commerce and its tremendous potential for the future,” he added.

Despite the low incidence of credit card number theft, online consumers can improve their chances of having positive shopping experiences by using tools available on the Internet, including the BizRate.com Web site. “BizRate.com rates merchants based on consumers’ actual experiences,” Bates said. “These reports provide an added margin of safety. Also, shopping at sites with encrypted security at the point of sale is essential to preventing credit card theft.”

“The survey substantiates precisely what responsible online retailers have known for a long time, that using a credit card is safe on secured sites,” said Bob Smith, executive director of Shop.org. “As an industry, we have not witnessed theft of cards. We’re befuddled by continued consumer beliefs to the contrary.”

Other findings of the BizRate.com/Shop.org survey include: Even among the few online shoppers who had experienced credit card fraud, 94 percent were in the process of using a credit card to make an online purchase at the time they were surveyed. Nearly one-third of respondents indicated they would make online credit/debit card purchases only with “big-name” merchants. Seventy-six percent of online buyers indicated that encrypted security is a prerequisite for them to make credit card purchases online. Men feel more secure (38%) than women (26%) when making credit/debit card purchases online.

About BizRate.com

Founded in 1996, BizRate.com is an unbiased, independent rating guide built on the experience of millions of actual online buyers. The BizRate.com site combines valuable consumer information with a powerful set of shopping tools to help people find the store or product that they want. The site also offers recommendations based on user-specified criteria. BizRate.com is the only company trusted by more than 2,700 e-businesses to collect this direct consumer feedback and transactional information at the point of purchase. The online store performance ratings, derived from this data, denote the only statistically rigorous way of differentiating retailers on “quality of service” metrics. BizRate.com’s information also appears on Consumer Reports Online and in Consumer Reports magazine, as well as through top Internet portals such as AltaVista, Go2Net, Go Network, Microsoft Networks and Snap.

About Shop.org

Headquartered in Silver Spring, Md., Shop.org is the only trade association focused exclusively on online retailing. It was originally founded in November of 1996 by forward-thinking virtual retailers as an alliance and repositioned a year later as a full-service association. Today, its nearly 300 members represent all segments of online retailing, including virtual retailers, conventional retailers, catalogers, manufacturers and companies providing products and services for online retailers. This varied membership fosters cross-pollination among retailing disciplines and helps to fuel the creation of new eretailing business models and practices. For more information about Shop.org and its members, go to.

[1]: http://www.bizrate.com/
[2]: http://www.shop.org/

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CPS Sold

Concord EFS signed an agreement Monday to acquire NY-based Card Payment Systems, a reseller of payment processing services. CPS specializes in providing card-based payment processing services to ISOs. The firm currently services approximately 23,000 merchant accounts, adding over 2,000 new accounts per month and processing in excess of $1.8 billion in acquiring volume annually. CPS has about 250 salespersons. Concord will issue 6.2 million shares of its common stock to acquire CPS, which is expected to add approximately $84 million in revenues and $15 million in pre-tax net income in 2000. The deal is expected to close in the first quarter of 2000.

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Credit Analysis

Trans Union released data this morning that shows the average credit balances per active account grew in the third quarter for all types of consumer credit. Compared to the previous year, average mortgage balances grew by 5.9%, average installment balances by 3.8%, and average revolving balances increased by 5.3%. Consumers also consolidated their revolving account usage in the second and third quarters of this year; however, the rate of consolidation flattened in the third quarter. The average number of actively used revolving accounts per consumer that actively uses revolving credit was 0.27 accounts lower in the third quarter of this year, compared to last year. In the second quarter, the average number of actively used revolving accounts per active user of revolving credit fell by 0.31 accounts versus last year. The ‘TrenData’ report also showed that 30+ day borrower delinquency rates were roughly the same in the third quarter of this year for mortgage and installment credit, compared to the third quarter of 1998. The revolving credit delinquency rate, on the other hand, fell by 65 basis points compared to last year.

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Next Gen Fare Cards

Cubic Transportation Systems is seeking to put contactless fare cards into overdrive. The firm announced Monday it has selected Fujitsu Limited to manufacture wafers for Cubic-engineered expanded memory contactless fare cards. The agreement is related to Cubic’s development of a new high-speed chip for contactless smart card applications that require the ability to read and write data securely at very high speeds. A Cubic-designed chip currently in use in contactless smart cards in Washington, DC can handle transit transactions in less than one-tenth of a second. It offers transit customers data space with 50 times the memory and significantly higher transaction speeds than currently available on magnetic fare cards. This latest chip development utilizes ‘FRAM’. Fujitsu licenses the ‘FRAM’ technology from Ramtron International.

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Prism 5.0

Card fraud detection is getting more sophisticated. This week Nestor will unveil ‘PRISM 5.0’, a major enhancement to the company’s fraud detection system for credit, debit and retail cards. The upgrade provides card issuers with a solid infrastructure for customized, responsive enterprise risk management, while allowing the institutions to more easily customize the products to their unique fraud detection requirements. In addition, the new version includes a range of new features that provide true, multi-institution fraud detection services, and support Windows NT-based updates to PRISM’s built-in fraud risk models. ‘PRISM Credit 5.0’ and ‘PRISM Debit 5.0’ are intelligent and adaptive risk management solutions that utilize a combination of advanced neural networks, predictive transaction risk models, expert rules-based strategies and Windows-based, client/server software to monitor, detect and prevent credit and debit card fraud.

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CMSe

M&I Data Services’ Electronic Funds Delivery division has introduced an enhanced card management system. ‘CMSe’ features Internet connectivity; point-and-click functionality; cardholder access via Internet or VRU; customer PIN changes via Internet, VRU, or branch; cardholder plastics choice; photo cards; and alternative debit solutions. Debit options include payroll programs, incentive/reward programs, MSA accounts, gift cards, shopping mall cards, and campus cards. The new system also offers enhanced reporting capabilities including ad hoc reports.

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Internet Holiday Spending

The “busiest shopping day of the year” provided a windfall for retail web sites, as Internet users spent over $500 million during Thanksgiving week (November 22-28), nearly doubling what they spent the preceding week, a Goldman Sachs – PC Data Online weekly buying study disclosed this morning.

Significant increases in the number of buyers occurred in nearly all major categories with software, toys, music and books respectively claiming highest numbers this week.

The weekly survey is part of a study commissioned jointly by Goldman Sachs’ e-Tailing analyst Anthony Noto and PC Data Online to measure behaviors, attitudes and satisfaction levels of online buying during the upcoming Holiday season. A leading Internet research firm specializing in web commerce, PC Data Online surveyed 3,084 home-based Internet users about their online web buying between November 22 and 28 in cooperation with Goldman Sachs.

“What’s most impressive about this jump was the increase in buying across all categories,” said Cameron Meierhoefer, Internet analyst for PC Data Online. “It appears that a significantly larger and more diverse set of consumers is taking advantage of the widely expanded set of offerings this year.”

Meierhoefer also noted that more potential online shoppers are postured to join the masses online, with 40 percent of the respondents indicated they plan to “begin” online shopping after the Thanksgiving weekend.

“We have been tracking brick-and-mortar sales for many years. If similar buying patterns exist on the Internet during this Holiday season, then I expect that more than 70 percent of spending is yet to come between now and the end of the year,” Meierhoefer said.

Goldman Sachs is a leading global investment banking and securities firm, providing a full range of investing, advisory and financing services worldwide to a substantial and diversified client base, which includes corporations, financial institutions, governments and high net worth individuals. Founded in 1869, it is one of the oldest and largest investment banking firms. The firm is headquartered in New York and maintains offices in London, Frankfurt, Tokyo, Hong Kong and other major financial centers around the world.

Headquartered in Reston, VA, PC Data was established in 1991 and is a leader in technology intelligence and analysis. The PC Data Online suite of services was introduced in 1999 to track Internet usage. It has recently established a state-of-the-art capability to field Internet-based surveys.

Top Categories Among Internet Shoppers (Nov. 22-28)

Category Estimated Buy Rate Est. Amount % gift
Buyers Spent
(000) (000)

Computer Software 973 13.2% $ 54,968 25.0%
Toys 880 20.3% $ 61,989 84.9%
Music 846 11.3% $ 22,566 39.4%
Books 836 19.1% $ 28,030 36.0%
Videos/DVD 587 14.3% $ 16,354 35.8%
Health & Beauty 479 19.1% $ 12,611 28.3%
Computer Hardware 464 10.2% $119,126 19.6%
Apparel 464 16.1% $ 41,850 46.5%
Flowers/Cards 401 11.1% $ 8,174 78.4%
Pet Supplies 313 15.8% $ 7,656 23.1%
Travel 288 8.7% $ 87,455 19.7%
Food/Groceries 283 14.4% $ 12,005 22.0%
Electronics 283 6.4% $ 28,701 33.3%
Home and Garden 244 18.0% $ 20,277 39.2%
Sporting Goods 161 11.0% $ 12,859 25.0%
Entertainment 156 6.9% $ 5,127 21.2%
Autos 108 4.0% $ 5,351 18.2%

Total $545,098

Internet Spending by Category (Oct. 30 – Nov. 28)
(in thousands)

Category 10/31/99 11/7/99 11/14/99 11/21/99 11/28/99
Computer
Software $19,504 $25,506 $21,908 $28,674 $ 54,968
Computer
Hardware $34,957 $58,803 $37,250 $81,770 $ 119,126
Videos/DVD $ 5,693 $ 7,034 $ 6,499 $ 6,280 $ 16,354
Music $ 6,699 $11,399 $12,701 $ 8,546 $ 22,566
Flowers/Cards $ 3,988 $ 3,371 $ 3,801 $ 2,397 $ 8,174
Travel $35,153 $31,950 $35,915 $22,028 $ 87,455
Toys $10,608 $12,881 $14,134 $19,943 $ 61,989
Books $ 6,758 $ 7,877 $ 7,412 $ 9,748 $ 28,030
Health & Beauty $ 5,294 $ 4,671 $ 5,437 $ 8,787 $ 12,611
Apparel $ 8,911 $10,478 $11,862 $13,920 $ 41,850
Home and Garden $21,453 $ 5,959 $ 3,743 $20,298 $ 20,277
Autos $ 4,511 $ 7,767 $22,658 $13,431 $ 5,351
Food/Groceries $ 1,627 $ 2,736 $ 3,559 $ 3,597 $ 12,005
Electronics $13,255 $18,855 $ 9,960 $12,646 $ 28,701
Entertainment $ 5,061 $ 6,155 $ 2,488 $ 3,523 $ 5,127
Pet Supplies $ 3,807 $ 1,942 $ 3,438 $ 3,660 $ 7,656
Sporting Goods $11,988 $ 4,318 $ 5,481 $14,958 $ 12,859
Totals $199,267 $221,702 $208,245 $ 274,205 $ 545,098

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Top 10 Scoreboard

CardData ([www.carddata.com][1]) reported this morning that as of October 31, the nation’s ten largest issuers had $345.2 billion in receivables and $534.5 billion in year-to-date volume. The top ten also had a total of 246.6 million gross accounts and 147.5 million active accounts. The average active balance logged in at $2,248 while the average volume per active account came in at $3,439.

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

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Starwood AmEx Promotion

Building on the success of last summer’s “Free Fridays” promotion, Starwood Preferred Guest and American Express announce, “Free Fridays & More.” Here’s how it works: Members and new members of Starwood Preferred Guest, Starwood’s frequent guest program, who are American Express Cardmembers can participate in Free Fridays. Members who stay five times at Starwood Preferred Guest properties between December 1, 1999 and February 29, 2000 and pay with the American Express Card automatically receive two Free Fridays. Plus, Starwood Preferred Guest members who stay additional nights during the promotion period can earn up to $500 in Leisure Certificates good toward additional weekend stays.

This time around, Starwood is expanding its “Free Fridays” promotion from The Americas to the rest of the world. Now “Free Fridays” can be earned at more than 650 hotels around the world incorporating the Westin, Sheraton, Four Points, St. Regis, The Luxury Collection, and W hotel brands. “Free Fridays” can be redeemed at more than 600 participating Starwood hotels around the globe from January 7, 2000 to March 31, 2000. Leisure Certificates are good toward weekend stays when you pay with the American Express Card, and can be redeemed from June 1, 2000 to August 31, 2000.

Best of all, members can redeem their “Free Fridays” and Leisure Certificates with no hassles. Enjoy “Free Fridays” in Bali in February or over Valentine’s Day in Paris. Use your Leisure Certificates for a taste of summer in San Francisco or Italy. As always, Starwood Preferred Guest has no blackout dates or capacity controls, so members can use their “Free Fridays” and Leisure Certificates at participating properties around the globe when they want.

“‘Free Fridays’ was a hit because our members loved its simplicity,” said Josh Lesnick, Starwood’s vice president of loyalty marketing. “Now we’re enhancing the program by expanding ‘Free Fridays’ around the globe, and adding Leisure Certificates, which give our members the ultimate in flexibility because they can use them for rooms or incidental charges during their weekend stays this summer.”

“American Express is pleased to offer Cardmembers this valuable promotion,” said Judith King-Murray, vice president travel industries. “Not only can our Cardmembers earn Free Fridays at Starwood hotels and resorts, but they can enjoy the flexibility of using them without blackout restrictions.”

Less than a year old, Starwood Preferred Guest was already rated the #1 Hotel Loyalty Program as reported by USA Today. Starwood Preferred Guest is the only upscale hotel company in the world to abolish blackouts and capacity controls allowing members to go where they want, when they want.

Full terms and conditions of the program are available at [http://www.preferredguest.com][1] or by calling your nearest Starwood Preferred Guest customer service center.

Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) through its St. Regis, Luxury Collection, Westin, Sheraton, Four Points and W subsidiaries, is one of the leading hotel and leisure companies in the world with more than 700 hotels in 77 countries and 130,000 employees at its owned and managed properties.

American Express (NYSE: AXP) is a diversified worldwide travel, financial and network services company founded in 1850. It is a world leader in charge and credit cards, Travelers Cheques, travel, financial planning, investment products, insurance and international banking. For more information, visit [http://www.americanexpress.com][2].

[1]: http://www.preferredguest.com/
[2]: http://www.americanexpress.com/

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Web + Loyalty

CyberMark, the leading developer and supplier of smart card solutions for education, corporate, stadium, and government markets announces that it will team with FMC (Funding and Marketing Consultants) of Memphis to introduce a loyalty program that will combine both “brick and mortar” loyalty applications with web based services. CyberMark and FMC plan to target regional retailers who are interested in using both traditional and new Internet based loyalty and incentive programs.

“Combining both traditional and Internet based loyalty programs are key components for establishing a relationship between the cardholder and the community,” said Thomas K. Burke, Vice President of Marketing for CyberMark. He further stated, “The CyberMark SmartWorld(R) Plus offering will provide a strong value proposition for cardholders by offering loyalty incentives at both Internet sites and retail locations while also allowing cardholders access to their accounts on the web. We believe that teamed with local radio stations, non-profit organizations and the chambers of commerce, the combined program will provide a compelling offering for regional merchants.”

The SmartWorld(R) Plus offering will allow FMC to successfully implement the loyalty card concept in the Memphis area, which offers incentives to the cardholder and funds to local non-profit organizations with purchases in the community. FMC has formed a marketing partnership with BTR Enterprises, a leading incentive marketing company in the Mid-South, and will jointly market the SmartWorld(R) Plus offering to merchants and card issuers. Bob Daniels, President of FMC said “We believe that the SmartWorld(R) Plus card will allow merchants to realize a higher profit per customer by virtue of its unique incentive program.” Richard Carey, General Manager of BTR added “With this loyalty program the consumer will benefit by being able to collect their rebates from both Internet purchases and with local retail establishments while they shop.”

Founded in 1996, CyberMark is a leading electronic commerce company, specializing in the creation of smart card communities on the Internet and in closed environments. Cardholders conduct smart card based transactions using their cards at locations displaying the SmartWorld(R) logo. SmartWorld(R) is a registered trademark of CyberMark. CyberMark has shown tremendous growth and significant innovation as it continually fine-tunes its exceptional services for its customers. To learn more about CyberMark, visit [http://www.cybermark.com][1]

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

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M&I VAM

M&I Data Services’ Cardpro Services (an operating unit of the Electronic Funds Delivery division) is now offering a new Internet tool for its card personalization customers.

Cardpro has developed Virtual Account Manager, a Web site designed to provide clients with access to information regarding various aspects of their card issuance programs. VAM is a secure site, accessed only with a client-selected user name and password.

“VAM provides clients with the capability to easily exchange information with Cardpro via the Internet. Some of the many client benefits include 24-hour access, increased speed of data exchange versus traditional methods, and status updates that are posted regularly throughout the day,” said Frank D’Angelo, senior vice president and general manager of EFD Services at M&I Data Services.

VAM will play an integral role in keeping Cardpro clients informed of their order status. A key component of the program is its reporting capability. With standard reports, customers can obtain information on the status of daily orders, order receipt, order quantity, and ship date. Customizable reports allow viewing of open orders, closed orders, all orders, or information from a specific date range. These reports also include a summary of on-time percentage and turnaround distribution based on report criteria.

Headquartered in Milwaukee, Wis., M&I Data Services is a division of Marshalley Corporation (NYSE: MI), a $23.6 billion holding company. M&I Data Services had total revenue of $509 million in 1998 and provides leading-edge technology solutions to the financial services industry, offering consulting, software, and processing solutions for financial institutions worldwide. The company’s rapid growth is being fueled by innovative product development, strategic product acquisitions, and strong customer relationships.

The Electronic Funds Delivery (EFD) Services division of M&I Data Services provides transaction routing, switching, and authorization services for the electronics funds transfer industry. It supports all major makes and models of ATMs and provides ATM and debit card processing. EFD also performs network gateway services and has network interfaces to all of the major regional and national ATM and point-of-sale (POS) networks. The EFD Services division provides complete cardholder services, merchant services, credit approval, and portfolio risk management, and offers a neural-network fraud management solution and comprehensive card personalization services.

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