Fee Feeding

According to another study, to be released next month, fee-based revenues earned by banks worldwide will surpass interest earnings within 3 years. Currently the growth in fee income within the bank credit card industry is outpacing the growth in card interest revenues. The forthcoming study by Killen & Associates projects the growth of the Internet and advances in on-line interconnected financial services will further drive the new market for fee-based services. Killen says banks will still conduct their bread-and-butter business, taking in moneys on deposit and making loans, but customers, both corporate and retail, will see new and expanded fee-based service offerings. These will be in on-line cash management, investment, asset management, credit card, EBPP, mortgage, and retail investment services, as well as in upgraded and expanded trade payment and letter of credit products and services. Killen concludes that the risk-reward model for fee-based income far surpasses that of the loan marketplace.

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ezCards

San Jose-based Trintech announced this morning the first one-click virtual credit card payment solution for Internet transactions. The ‘ezCard’ solution resides on the consumer’s PC and auto-populates online merchant payment forms. Trintech’s technology for creating ‘ezCards’ is ‘NetIssuer’, part of Trintech’s ‘PayGate’ platform. ‘NetIssuer’ will be generally available for UNIX in August. The new payment solution uses SSL communication encryption. Trintech says besides reducing the frustration of Internet credit card use the new solution also offers card issuers the option to determine the “look and feel” of their ezCards to maximize branding opportunities. In addition, each use of the ‘ezCard’ provides a clear channel of communication for the card issuer, which can be leveraged for customized marketing messages and cross-branding for partners and affinity programs.

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Racal Endorsements

Racal-Transcom has been acknowledged as an industry expert in the implementation of smart card technology after completing Europay International and MasterCard International’s Chip Vendor Services Programme. This programme recognises the company as a leader in terminal support and chip solutions, which means that Racal has the relevant expertise to assist Europay and MasterCard members with the implementation of chip technology.

Mike Harris, Head of MasterCard’s Chip Business Group, stressed the importance of a Terminal Management System (TMS) to any chip solution and said that Racal’s competence in this area is renowned industry-wide. He commented: “MasterCard developed the Chip Vendor Services Programme to identify and prepare vendors that have the expertise to support our members’ chip implementations. Racal’s involvement in the successful UKIS (United Kingdom integrated circuit card Interface Specification) smart card trials, combined with its proven TMS expertise, makes the company ideally placed to offer our members the very best in chip implementation support.”

Participation in the programme prepares Racal to support Europay and MasterCard member banks in all stages of the implementation process. These stages comprise card manufacture where the chip is inserted, followed by the personalisation process where the card is made `active’ by the integration of security data and personal information. The next stage is terminal estate deployment and management that calls for certified hardware and software upgrades. Extensive system adaptations are also required during the acquiring and issuing phases to manage the extra information carried by chip.

Europay and MasterCard’s programme, combined with Racal’s comprehensive knowledge of e-commerce, secure remote access and enterprise network security, allows the company to establish itself as a global frontrunner in providing expertise and support to banks planning the migration to chip technology. Racal can also call upon the expertise it has gained from its own smart card personalisation preparation technology (P3), for the early stages of chip implementation.

Managing director, Stephen Murphy, said: “Racal is the UK’s leading and fastest growing PoS (Point of Sale) terminal supplier and aims to be at the vanguard when it comes to assisting organisations in introducing chip technology. We are delighted to be one of the first companies in the world to have completed Europay and MasterCard’s Chip Vendor Services Programme.”

Racal-Transcom, which forms part of Racal’s Security and Payments business, is the UK’s leading supplier of card payment terminals with over 40 per cent market share in revenue terms and an installed base of 170,000 terminals in the domestic market.

Pre-eminent in secure payment, electronic commerce, secure remote access and enterprise network security, Racal Security and Payments manufactures a comprehensive range of world-leading point of sale terminals and management systems, as well as secure payment systems and network encryption solutions. For more than two decades Racal has been at the forefront of security and payment technology, co-operating and contributing to set the industry standards used for financial transactions and electronic commerce globally. Racal’s Security and Payments business is part of the Racal Electronics Group that has operating companies world-wide.

Notes to Editor:

MasterCard International has the most comprehensive portfolio of payment brands in the world, with 23,000 member financial institutions, serving consumers in 220 countries and territories. Nearly 700 million MasterCard, Maestro, Cirrus and Mondex cards are in circulation today. With more than 16.2 million locations, no card is accepted in more places and by more merchants than the MasterCard Card.

Europay International, headquartered in Waterloo, Belgium, is the European banks’ leading provider of personal payment and related services. At present, 213 million cards (Maestro, eurocheque, Cirrus and Eurocard- MasterCard) provide European and global debit and credit services, and offer cash access to Europe’s largest network of 214,000 ATMs in 38 countries. Through its alliance with MasterCard International, Europay offers banks products accepted at almost 464,000 ATMs and close to 16.2 million locations world-wide.

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Casino Cash ATM

Caesar’s Atlantic City and Sunset Station have recently installed 3-in-1Casino Cash Plus ATMs while four other properties have signed contracts to use the product, a technologically advanced financial transaction innovation from the leading providers of cash access services to the gaming industry, Global Cash Access (GCA) and Bank of America.

The 3-in-1 Casino Cash Plus product offers integrated ATM, credit and debit card transaction capability at a single location, providing added speed and convenience for patrons and diminished labor costs for the gaming property.

Historically offered only in Las Vegas, the 3-in-1 Casino Cash Plus is now available to gaming properties nationwide.

In addition to Caesar’s Atlantic City and Sunset Station (Las Vegas), gaming properties that have recently signed contracts to use 3-in-1 Casino Cash Plus include:

— Bay 101 – San Jose, Cal.

— Casino Arizona – Scottsdale, Ariz.

— Nisqually Redwind – Olympia, Wash.

— Paradise Casino – Ft. Yuma, Ariz.

“The convenience and speed of the 3-in-1 Casino Cash Plus(R) ATM have made a significant impact on our customers’ transaction numbers, with a 20 percent increase in debit card volumes, as well as increases in credit card cash advances,” said Kirk E. Sanford, GCA’s chief executive officer. “It also frees casino personnel to spend more time meeting other customer needs.

“Our technology lets patrons quickly perform any one or more of these transactions and provides them with options to continue their gaming entertainment,” he said.

Formed in 1998 through a joint venture of Bank of America (NYSE: BAC), First Data Corporation (NYSE: FDC) and USA Processing, Inc., Global Cash Access provides a full range of electronic funds transfer and other services to more than 1,200 gaming properties nationwide.

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smartX

Gemplus will announce this morning a new software technology that will simplify smart card-based application development and deployment, enable card and terminal independence, and allow for web-based maintainability. ‘smartX’ separates application development from the complexity of smart card device management, a breakthrough that for the first time allows easy implementation of the same application on different types or generations of smart card. Based on the XML standard, ‘smartX’ allows developers to write smart card applications independent of manufacturer-specific card management protocols, essentially enabling them to write virtual smart card objects that are platform (card and terminal) independent. Gemplus said it expects that ‘smartX’ technology will increase considerably the number of new generation smart cards being developed using popular programming languages such as Java technology, C++ and Visual Basic and will leverage widely deployed legacy systems. The company says not only will smart card applications leveraging ‘smartX’ technology have an enormous time-to-market advantage over their competitors, it also opens the market to a greater number of developers. Gemplus expects ‘smartX’ to accelerate the adoption of smart card technology to enhance applications such as electronic commerce, loyalty, banking, and access control.

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PlanetOut NextCard

NextCard and PlanetOut, the largest gay and lesbian online community, announced this morning a joint Internet marketing agreement to offer co-branded products and card services for PlanetOut members. Under the terms of the $11 million agreement, NextCard and PlanetOut will collaborate to offer the ‘PlanetOut VISA’ card for the site’s members and partners late this summer. NextCard says the ‘PlanetOut VISA’ will let customers demonstrate their economic power, and recognize their identity and relationships through NextCard’s ‘PictureCard’ personalization program.

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Fun Miles Works

Convincing employees about the value of merchant loyalty programs can provide a giant boost for program success, Fun Miles Antilles Acting Managing Director Udi Lesser told attendees of an industry conference last week. “If your employees are personally convinced that your company’s product is the best–and that your loyalty program provides value for your customers–they can do miracles,” said Lesser in a training and motivation speech entitled Using Employees to Promote Your Loyalty Program.

Lesser advised merchants to devise comprehensive loyalty program implementation plans prior to beginning, with goals for the programs clearly spelled out. A key plan element is obtaining employee buy-in. Lesser indicated that merchants’ own employees should be the first members of their loyalty programs. He said, “If the merchants’ employees are receiving value from their own programs, they will be motivated to communicate that value to their customers.”

Fun Miles installed the first customer loyalty management system in the Caribbean in late 1998, using Hypercom’s Ascendent(TM) Loyalty Management System (LMS) and card payment terminals. The Fun Miles loyalty program uses magnetic stripe cards at participating merchants’ points of sale to credit consumers with accumulated loyalty points they can redeem towards discounts on airline tickets and other promotional items.

Fun Miles Antilles was founded in 1998. Headquartered in Curacao, Fun Miles Antilles is a program that enables Netherlands’s Antilles merchants to reward their customers with discounts on travel and travel-related expenses.

Hypercom Corporation (NYSE: HYC) is a global provider of electronic payment solutions, including multi-function point-of-sale terminals, peripherals, network products, Ascendent payment and transaction software and Internet-based and electronic commerce payment solutions. On a global basis Hypercom(R) delivers the services and technology infrastructure required to quickly integrate and deploy new payment applications. These applications provide competitive value-added programs, improved business performance and low total cost of ownership.

Headquartered in Phoenix, Arizona, Hypercom markets its products in more than 70 countries through a global network of affiliates and offices in Argentina, Australia, Brazil, Chile, China, Hong Kong, Hungary, Japan, Mexico, Russia, Singapore, Sweden, the United Kingdom and Venezuela. Hypercom’s Internet address is [www.hypercom.com][1].

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

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Bank Plus Update

Los Angeles-based Bank Plus continues to deal with the fallout of its sub-prime credit card ventures. Total credit card portfolio delinquencies were 20.2% at May 31, 1999 compared to 16.8% at March 31, 1999. At May 31 total outstanding credit card balances were $291.9 million, a net decrease of $18.7 million from the March 31 balances. The delinquency rates for Bank Plus’ portfolio breaks out as follows: 6.4% for 30-59 days; 4.5% for 60-89 days; 3.2% for 90-119 days; 3.0% for 120-149 days; and 3.1% for 150+ days. For more information on Bank Plus visit CardData ([www.carddata.com][1]).

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

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Mondex Korea

Mondex is coming to South Korea. MasterCard Korea, Kookmin Bank, Korea Credit Communication Inc., the Amdahl Corp., KDB Capital and TeraSource Venture Capital will form the new franchise, Mondex Korea. Korea Telecom also announced last week a strategic alliance with Mondex Korea, whereby Korea Telecom plans to make the Korean telecoms infrastructure Mondex-compatible, including around one million public payphones. South Korea is currently Asia’s second largest card market, with MasterCard dominates. Mondex is globally interoperable and now is under development in 60 countries including 18 territories in Asia Pacific. The first Mondex smartcards in Korea will be launched at COEX, a high-tech intelligent building complex in Samsung-dong, Kangnam-ku. The hybrid smart card will provide multiple applications such as Mondex, MasterCard credit, Maestro debit and access entry, and a loyalty program. COEX is planning to go live with the cards as early as next year and it will be used by 50,000 employees as well as 200,000 visitors a day to the trade centre. Over 35,000 Mondex cards are to be issued to Hanyang University students later this year and will be used as student ID and for purchases at the campus’ cafeteria, bookstores and other stores off campus.

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Lockhart Promoted

AT&T announced yesterday the promotion of H. Eugene (Gene) Lockhart, 49, currently executive vice president and the company’s chief marketing officer, to the new position of president, AT&T Consumer Services.

Lockhart replaces Daniel H. Schulman, who is leaving AT&T to become president and COO of Priceline.com.

“Gene has an impressive record of marketing to demanding, savvy consumers in highly competitive environments,” said John D. Zeglis, president of AT&T. “His talent and experience make him the ideal choice for president of AT&T Consumer Services, with responsibility for the development, marketing, and after-sale care of segment-specific service bundles.” Lockhart will report to Zeglis.

Prior to joining AT&T in January 1999, Lockhart was president of Bank America Corporation’s Global Retail Bank, where he was responsible for the consumer, commercial, and small business banking services delivered through more than 3,000 branches around the world. Prior to joining BankAmerica, he was president and CEO of MasterCard International and CEO of Midland Bank PLC, where he was responsible for all consumer and corporate banking services in the United Kingdom.

Lockhart is on the Board of Directors of RJR Nabisco Holdings, the First Republic Bank, IMS Health, Inc., and the Academy of Arts in London. He is also a trustee of the Alumni Board of the University of Virginia, where he received his MBA and B.S. degrees.

He lives with his wife and four children in Greenwich, Conn.

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PMG & BancWare Team

PMG Systems, Inc., provider of profitability and activity-based costing software, and BancWare, Inc., provider of asset-liability and transfer pricing software, announced Thursday that they have formed an alliance to jointly market their products and services. Under the terms of the agreement, the two companies will conduct joint marketing and sales activities that leverage the strengths and experience of both sales and marketing teams to maximize sales to financial institutions worldwide.

“Increasingly, banks are looking for comprehensive, end-to-end solutions for delivering management information across the entire institution,” said Frank Donny, senior vice president of marketing at PMG Systems. “By leveraging BancWare’s premier product line and expertise, our solutions will be complemented by BancWare’s robust Insight funds transfer pricing software. In addition, we can now extend our offering to include asset-liability management and other critical solution areas.”

“Matt Mandalinci, president of BancWare commented, “We are very pleased to be working with PMG Systems. This deal represents the “best of breed” solution where BancWare provides the Funds Transfer Pricing and PMG Systems provides the profitability products.”

The products covered under the agreement include BancWare’s Insight funds transfer pricing software, Convergence asset-liability management software and ViewPoint, an advanced analytical solution for complex scenario modeling, and risk management software. PMG Systems’ full product line will be co-marketed by the two companies, including CPMS (Customer Profitability Management System), IPMS (Integrated Profit Management System), PWS (Profitability Workstation), CMW (Cost Management Workstation), Customer Profitability Workbench (CPW) and Planning and Budgeting Workbench (PBW).

About PMG Systems

Based in West Chester, Pennsylvania, PMG Systems offers leading-edge profitability measurement and activity-based costing software for financial institutions worldwide. Its principal products are the Customer Profitability Management System, Integrated Profit Management System, Cost Management Workstation, and Profitability Workstation. Leading banks licensing PMG software include First Union, PNC Bank, Canadian Imperial Bank of Commerce (CIBC), Wilmington Trust Company, Bank of Ireland, and Thomas Cook Financial in the United Kingdom. For more information, visit PMG Systems on the Web at [www.pmgsystems.com][1].

About BancWare Inc.

Headquartered in Boston, MA, BancWare serves more than 180 clients in over 14 countries worldwide. BancWare’s fully integrated and scalable solutions support data collection, transformation, and management; asset/liability management; comprehensive budgeting and planning; and advanced financial analysis, including term structure modeling and option adjusted value at risk. Founded in 1981, BancWare is an operating unit of SunGuard Data Systems Inc. SunGuard’s business is computer service and application software. SunGuard is the only large specialized provider of proprietary investment support systems, and is the pioneer and a leading provider of comprehensive disaster recovery systems. SunGuard Data Systems Inc. common stock is reported on the New York Stock Exchange under the symbol SDS.

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

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Business AAdvantage

Citibank and American Airlines launched a business card version of its ‘Citibank AAdvantage’ bank credit card Thursday. The ‘Citibank Platinum Select AAdvantage Business Card’ offers one ‘American AAdvantage’ mile for every dollar spent, up to 150,000 miles per calendar year. Awards earned on purchases made by employees accumulate toward the business owner’s ‘American AAdvantage’ frequent flyer account. Cardholders also qualify for discounts on computer equipment, automobile rentals and hotel stays. Other special benefits include ‘Reduced Mileage Awards’ and the opportunity to earn double miles for stays at Wyndham Hotels. The new ‘Citibank Platinum Select AAdvantage Business Card’ carries a $75 annual fee, plus $25 for each additional card, and an APR of Prime + 9.9%. The ‘AAdvantage’ frequent flyer program has more than 35 million members. It is estimated that Citibank has more than two million ‘AAdvantage’ bank credit card accounts. U.S. Bank also offers a business card version of its ‘Northwest Airlines WorldPerks’ bank credit card. According to CardTrak’s ‘Business Card Survey’, the ‘U.S. Bank WorldPerks Business VISA’ has no cap on the amount of mileage that may earned. U.S. Bank charges $75 per card and an APR of Prime +9.9%.

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