Low-Priced Contactless Cards

MA-based SatCon Technology Corp. announced that its subsidiary Film Microelectronics has developed a low-cost version of a ‘Radio Frequency Identification’ (RFID) card. Using proprietary thin film technology and a patent pending interconnect concept, FMI will be able to sell the 125kHz category card for about 25% less than current methods. SatCon says the new product could represent $5 million in annual sales in a year. The company notes that approximately 1 billion ‘RFID’ tags are being shipped per year.

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Makowski To Household

Household International, Inc. announced yesterday the appointment of Gordon Cliff, 39, as Managing Director — Strategy and Development. Mr. Cliff joins Household from Andersen Consulting, where he was a partner in the firm’s Financial Services Practice in New York. He will report to David A. Schoenholz, Executive Vice President and Chief Financial Officer.

“In this position, Gordon will focus on initiatives to build profitable growth. He will help us define and exploit significant opportunities in a number of major areas including customer segmentation, electronic commerce, and efforts to cross-sell Household products to existing Household customers,” said William F. Aldinger, Household’s chairman and chief executive officer.

Mr. Cliff was at Andersen Consulting from 1996 until joining Household. At Andersen, he helped clients with customer relationship management issues as well as customer segmentation and cross-selling initiatives. From 1985 to 1996 Mr. Cliff worked in the New York office of McKinsey & Company. He began his career with Morgan Stanley & Company in 1981, focusing on mergers and acquisitions. Mr. Cliff is a graduate of Williams College and earned an M.B.A. from Harvard Business School.

Household also announced the appointment of Paul Makowski, 47, as Managing Director and Chief Credit Officer, also reporting to David Schoenholz.

Mr. Makowski joins Household from Fair, Isaac & Co., where he was a Principal with Credit and Risk Management Associates, Inc. (CRMA), the company’s credit risk management and technology consulting unit. He joined CRMA in 1992 and remained with the unit following its sale to Fair, Isaac in 1996.

Commenting on Mr. Makowski’s appointment, Bill Aldinger said, “The addition of Paul Makowski to our management team will help the company achieve long-term, sustainable business growth at acceptable levels of credit risk. Paul brings exceptional experience in credit risk management and in the use of credit risk tools to improve performance.”

Mr. Makowski has been involved in different aspects of credit risk management for 23 years, with leading firms including Montgomery Ward, Mathematica, Inc., American Management Systems and Fair, Isaac & Company. He is a graduate of Kenyon College and earned an M.B.A. from the University of Chicago.

Household International, through its subsidiaries, is a leading provider of consumer finance, credit card, non-prime auto finance and credit insurance products in the United States, United Kingdom and Canada. In the United States, Household 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 Privilege card. For more information, visit the company’s web site at .

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Rate Adjustment

As the Federal Open Market Committee winds up its meeting today it is expected the Federal Reserve will announce a quarter point increase in short-term interest rates. Today’s announcement will undoubtedly push the Prime Rate to 8.0%. Since eight of the top ten issuers use Prime Rate-based pricing for most of their cards issued and since the Fed rate adjustment comes on the last day of the month and the last day of the quarter, the question is: How soon will the increased rates be passed on to cardholders? According to CardTrak ([www.cardtrak.com][1]) five of the eight prime-based major issuers will pass on the increase on during July while First USA will do so in August. Citibank and MBNA cardholders will not see the increase until October. CardTrak calculated earlier this week that a 25 basis point increase will generate at least $750 million in additional interest over the next twelve months. A typical household with $5,000 in card balances will pay about $13 extra over the next year due to the increase. (See CF 6/28/99 or CardTrak Online)

RATE ADJUSTMENT SCHEDULE FOR JULY STATEMENTS
(Among Top 10 Issuers Ranked by Outstandings)

ISSUER BASIS CUT-OFF
1. Citibank Prime June 15
2. Bank One/FUSA Prime June 22
3. MBNA Prime June 15
4. Discover Prime June 30
5. Chase Prime July 1
6. Bank of America Prime July 1
7. Capital One Libor July 5
8. Fleet Prime July 1
9. Household Prime July 1
10. Providian Fixed NA

SOURCE: CardTrak (www.cardtrak.com)

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

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You’ve Got Help

NOVA Corporation, one of the five largest integrated transaction processors in the nation, announced the launch of its “You’ve Got Help” campaign with the introduction of a new interactive channel, , for its customers. The channel provides a range of functionality from resolving common questions to adding services directly via the Internet.

As part of the company’s on-going customer service strategy, the site will enable merchants to:

* View recent deposits

* Order supplies direct from the web site

* View the status of pending chargebacks and retrievals

* Review the status of outstanding equipment orders (including the shipping/tracking number)

* Email questions into a customer service agent

“An important part of providing good customer service is understanding our client’s business needs,” said NOVA Chairman and CEO, Edward Grzedzinski. “The launch of http://www.merchantconnect.com gives our clients another tool to address their need to operate more effectively and efficiently.”

NOVA will continue to provide support to merchants through its 24-hour call center in addition to this new web enabled customer channel. Merchants now have the flexibility to utilize either an on-line approach or to talk directly to a call center agent for their business needs.

NOVA commissions the Center for Governmental Services at Auburn University to perform an annual Customer Satisfaction Survey of its merchants. The purpose of the survey is to identify NOVA’s customer’s needs and expectations and measure its performance against those needs. The results of the survey indicate on a consistent basis over 91% of its clients rated NOVA a 9 or above on a 10 point satisfaction scale. These merchants stated that they would recommend NOVA because of satisfaction with overall service.

“Customers are driving the innovations and expectations in the customer support market,” said NOVA Senior Executive Vice President and CIO Pam Joseph. “We have listened to our merchant feedback and it tells us Web enabled customer support is in demand.”

NOVA supports transaction processing for all major credit cards including private label. NOVA also provides access to debit card processing and check verification services. The company has developed a sophisticated operating environment which retains control of virtually all of the processing steps from customer service and sales support, to network development, data transmission and electronic capture of billing information.

About NOVA Corporation

NOVA Corporation (“NOVA”), headquartered in Atlanta, Georgia, manages and transports payment and other business information on behalf of retailers, community banks and financial institutions. NOVA specializes in providing integrated credit and debit card payment and information processing services, related software application products and value added services to more than 480,000+ merchants in the U.S. NOVA merchant customers typically include small- to medium-sized merchants that require a full spectrum of processing services.

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PKI Smart Cards

eFed, government’s premier Commercial-Off-the-Shelf-Web-based procurement solution; Entrust Technologies Inc., global leader in solutions that bring trust to e-business; and NDS Americas Inc., a world leader in advanced smart card-based security and technology, yesterday demonstrated the first fully integrated smart-card-based PKI procurement solution for the federal marketplace. The demonstration is a key part of a total government initiative, led by the three, to integrate smart card-based authentication, authorization, confidentiality, and accountability into a total PKI procurement solution.

The demonstration incorporates integration of the cryptographic smart card within the PKI to establish trust relationships, use of X.509 certificates for strong mutual authentication of buyers and sellers, and secure payment transactions using the government smart purchasing card and applications. Moreover, it shows that it is possible, today, to meet the guidelines set forth in the Paperwork Reduction Act and other US Government initiatives.

eFed also announced that it had chosen Entrust Technologies Inc. and NDS Americas as strategic partners in support of its combined efforts to demonstrate enhanced security in electronic transactions over the internet. The three strategic partners will provide highly secure and scaleable solutions for government as well as private enterprise applications.

The demonstration and announcement occurred at e-GOV, a government-focused electronic commerce conference and exposition held at the Washington Convention Center in downtown Washington, D.C. throughout this week

“With our strategic partners, we have successfully demonstrated that PKI is a viable solution for the government’s need to greatly improve security for electronic transactions over the Internet,” said Bob Sturm, Vice President of Business Development for EPI, the developers of eFed. “As government moves more towards using the Internet for all forms of electronic business transactions, it is important that agencies have a reliable and proven method of assuring that buyers are who they say they are and that financial transactions are transmitted with the appropriate level of security required by both civilian and DoD agencies.”

“This is the first real life implementation of an integrated Smart Card and PKI procurement solution,” said Gary Moore, Entrust’s Federal Technical Advisor. “The solution provides a range of implementation capabilities from Web based certificates to fully managed PKI certificates and addresses low value to very high value transactions. We are pleased to be working with both partners to provide strong and portable authentication means to the procurement process.”

“Smart card technology is an important enabler for public key authentication because of its portability and use of a secure active device”, said Moshe Kranc, Director of New Product Development for NDS Ltd. “The evolution of smart card technology, with its use of plug-compatible COTS components that interoperate with industry-standard PKI platforms, provides government IT decision-makers with a portable digital trust model, including certificate-infused smart cards, to secure transactions conducted over the open Internet.”

Concurrent with demonstrating the PKI capabilities in the next generation of eFed, EPI also announced two additional features of the next version of the software. They are to add level 2 and level 3 support for financial transactions and to ensure a new level of data interoperability among government agencies.

“We are pleased to be taking a leadership role in three important areas of e-commerce,” Sturm said. “We see managing the purchase card transaction lifecycle, providing enhanced levels of security and ensuring data interoperability as three key areas to the future success of all e-commerce.”

eFed is the only off-the-shelf web-based procurement solution that makes it fast and easy for federal, state and local and commercial buyers to compare and purchase products and services with maximum accuracy and minimum risk. With 35% of the federal government deployments, eFed is the market leader in federal government Internet procurement software and may be purchased off of the GSA Schedule, NASA SEWP II-UNISYS and NAVY ITSS-SAIC contracts.

About Entrust Technologies

Entrust Technologies Inc. is the global leader in providing products and services that allow e-businesses to manage trusted, secure electronic transactions over today’s advanced networks, including the Internet, extranets and intranets. Since 1994, Entrust Technologies has been providing award-winning solutions to global enterprises, government entities, small to mid-sized businesses and individuals. Over four million Entrust Technologies users have been licensed with digital certificates to date. Entrust Technologies Inc. is headquartered in Plano, Texas with offices in Canada, the United States, the United Kingdom, Switzerland, Germany and Japan. For additional company information please visit http://www.entrust.com.

About NDS

NDS provides open solutions that enable the delivery of entertainment and information to TVs and PCs. The company supplies the leading technology, products and services to enable businesses to profit from the emergence of interactive digital television and its intersection with the Internet via data broadcasting and e-commerce. NDS’ solutions are built on its recognized leadership in smart-card based security, encryption, video compression and digital software control and management systems and are supported by its extensive systems integration and customer support capabilities.

NDS, headquartered in the UK with offices world-wide, is providing its advanced technologies, products and services to many of the current and planned cable, satellite and terrestrial broadcasting systems around the world. Over 12 million subscribers around the globe use NDS conditional access systems to receive Pay-TV satellite and cable services. The company continues to make a major commitment to R&D, with over 700 of its 1,500 plus employees dedicated to its pioneering development work at research centers in Israel, the U.S. and the UK. NDS is a subsidiary of News Corporation (NWS), a leading global media company. NDS is on the World-Wide-Web at: http://www.ndsworld.com.

More information about AccessGear(TM) is available at www.securegear.com, or send an email inquiry to info@securegear.com. NDS Americas, Inc., located in Newport Beach, CA, handles relationships with a wide range of customers and partners in the United States.

About eFed

eFed is engineered by EPI, a privately-held company based in Reston, Virginia. Top EPI executives were among the first pioneers of electronic commerce in the federal marketplace having developed the first Web-based electronic system including EDI integration for government procurement in 1994. Further information about eFed is available by contacting Lorie Townshend at 877-333-3665 or visit us at www.elpress.com.

eFed is a trademark of EPI. Entrust is a registered trademark of Entrust Technologies in certain countries. All Entrust product names are trademark of Entrust Technologies. AccessGear is a trademark of NDS Ltd. All other company and product names may be trademarks or registered trademarks of their respective owners.

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Banner Month

Deluxe Corp.’s eFunds business unit reported Monday that its EFT processing unit processed more than 103 million EFT transactions in May for the western states of the national Star Systems network. The volume record in May represents a large growth in point-of-sale debit transactions, which grew 9% in May and 13.7% over the monthly volume recorded in Dec. 1998. Deluxe says last year consumers conducted more than 11 billion ATM transactions and 4.8 billion POS transactions nationally.

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Roman Smart Cards

Australian-based ERG Group and Motorola landed a major contract yesterday for a smart card system for the bus, rail and tram networks in Rome and the surrounding region of Lazio. Under the nine year agreement, the ERG Motorola Alliance will supply approximately 84 billion lira (US$46 million) of equipment and software which will form the initial infrastructure for the project. In return the Alliance will collect 7.88% of the total fare revenue. The revenue of the system in 2000 is forecasted to be approximately 550 billion lira (US$351 million) meaning that the gross revenue to be collected over the initial nine year contract term for the ERG Motorola Alliance will be approximately 5.7 trillion lira (US$3.8 billion). The Alliance is projected to earn approximately 455 billion lira (US$280 million) as its gross fee.Under the contract, the Alliance will supply and install approximately 9,700 validators capable of reading paper and contactless or combi smart card technology in the bus fleet, light rail and rail network in and around Rome, and the bus fleet and rail network in Lazio. The bus fleet totals 5,000 and there are three light rail lines and 76 rail stations. In addition, 200 portable smart card readers will be supplied for inspectors and a network of 30 bus depot computer systems and 76 rail station computers will be linked via a complete communication network to a central clearing and processing computer system. The system will initially have 300,000 – 500,000 contactless or combi smart cards issued. This number is expected to increase to over one million within 12 months. The project will see a small sub-set of the system installed within eight months, full implementation in Rome in 12 months and full system completion within 24 months.

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Default Proof President

In a move designed to add management experience and strengthen the company’s position with the burgeoning markets for expanded ATM utility and Internet issued debit and credit cards, Default Proof Credit Card System Inc. named David J. Koss as its new president and chief financial officer.

Koss, a 17-year financial services professional, replaces the company’s founder Dr. Vincent Cuervo as president. Dr. Cuervo will remain as chairman and CEO of DPCCS.

DPCCS is anticipating the imminent approval of its newly developed ATM Debit and Credit Cards Dispenser (patent pending) technology. The company believes that this new technology will revolutionize the issuance and delivery of prepaid stored value debit cards. Importantly, the company has two additional patents pending, one related to additional features to the ATM, and the other to the fully constructed, multi-lingual Web Sites UBUYDEBITCARDS.COM and UBUYCREDITCARDS.COM, both domain names are integrated to the intellectual property of the company. According to Koss, “the implications of the company’s ability to combine Internet or POS debit and/or credit cards issuance, with ATM delivery are enormous. Default Proof will be in the position to challenge the traditional modes of card issuance and delivery, as well as, currency transfer and traveler check markets. DPCCS expects to become a major participant in the rapidly broadening universe of ATM utility.”

In addition, based upon the company’s ability to bypass the traditional channels of distribution for prepaid stored value debit cards, exploratory work is underway regarding a potential role for the company in the Federal Disbursement 2000 program. Other immediate objectives include, formation of strategic alliances, the negotiation of licensing agreements, in particular regarding the ATM Debit and Credit Cards Dispenser (patent pending) and renewed development and use of the patented Default Proof Resource(r) System.

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CCB Exits

NC-based CCB Financial Corp. is throwing in the towel on its consumer credit card business. CCB announced Monday it will outsource its consumer credit card business to MBNA. Under terms of the agreement, CCB will become an agent bank of MBNA, and MBNA will purchase approximately $150 million in consumer credit card receivables from CCB’s specialized credit card bank, CCB-Georgia and CCB-Georgia’s affiliate banks, Central Carolina Bank and Trust Company and American Federal Bank, FSB. According to CardData ([www.carddata.com][1]) CCB has about 70,000 active accounts. The CCB/MBNA sale will close this week. CCB expects to recognize an after-tax gain of approximately $.48 per diluted share. CCB will continue to offer business credit cards in its markets and will retain its existing portfolio of business credit card receivables.

CCB FINANCIAL CARD PORTFOLIO (4Q/98)

Receivables: $164,637,252
Ann Volume: $275,000,000
Accounts: 108,901
Actives: 70,499
Cards: 130,485

Source: CardData (www.carddata.com)

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

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Aids MasterCard

The Toronto People With AIDS Foundation and Bank of Montreal launched a special affinity ‘MasterCard’ card Monday. The no-annual-fee ‘MasterCard’ also offers cardholders the choice of earning ‘AIR MILES’ travel miles or ‘FirstHome’ dollars. Revenues derived from the ‘Toronto People With AIDS Foundation Affinity MasterCard’ will be directed towards providing practical and direct support services for people living with HIV/AIDS. The Toronto People With AIDS Foundation is a community-based nonprofit organization with about 4,000 clients.

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Coinstar Award

Coinstar Inc., a retail-based coin counting and electronic commerce company, Monday announced that its founder and CEO, Jens Molbak, is the recipient of this year’s Ernst and Young Pacific Northwest Entrepreneur of the Year award in the service category.

The award recognizes entrepreneurs who have demonstrated excellence in innovation, financial performance, and personal commitment to their business and community.

A panel of business and civic leaders based in the Pacific Northwest selected Mr. Molbak for his work in developing the Coinstar self-service coin counting machine. The on-line machine, found in more than 5,700 supermarkets around the country, makes it easy for consumers to turn their accumulated change back into cash.

The other two finalists in the service category were John T. Boden of Market Contractors, Ltd. and Robert McCausland of Home Mortgage USA.

Past recipients of the Pacific Northwest Entrepreneur of the Year award, now in its ninth year, include Howard Schultz, founder of Starbucks Coffee and Jeff Bezos, founder of Amazon.com.

As the winner in the service category, Mr. Molbak will now go on to the national Entrepreneur of the Year competition to be held later this year in Palm Springs.

Mr. Molbak got the idea for a self-service coin counting machine after moving from the west coast to the east coast and back again. Each time he moved, his growing jar of coins was the last thing to go into the moving truck. Finally in 1989, while a graduate student at Stanford University, Molbak decided it was time to take action. He and his wife stood outside supermarkets interviewing shoppers about their change. The interviews confirmed Molbak’s suspicions, Americans had millions of coins hidden away at home. Two years later Coinstar was founded.

Today, Coinstar has processed more than $1.4 billion of America’s change in more than 49 million customer transactions. In 1998 alone, Coinstar’s network of machines placed 15,838,542,632 coins back into circulation, resulting in Coinstar’s surpassing the U.S. Mint as the leading supplier of coin to the U.S. economy.

Coinstar Inc. and its subsidiaries provide consumers and retailers with value-added services that increase customer loyalty and retailer profitability. The Coinstar network currently delivers the company’s self-service coin counting product to more than 5,700 leading supermarkets in 38 U.S. states, the United Kingdom and Canada. The company’s new Coinstar Shopper product is designed to bridge the gap between the Internet and the store. Consumers can call 1-800-928-CASH, or visit http://www.coinstar.com for the location of the nearest Coinstar machine.

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