Orchard & First Union Subprime

Orchard Federal Savings Bank announced Tuesday its partnership with First Union Corporation and the acquisition of First Union’s existing secured card account portfolio. Under the new terms, Orchard Bank and its sister company, Renaissance Bankcard Services, will issue, service and closely manage First Union branded subprime accounts. The original partnership was formed in 1995 which enabled First Union to offer secured MasterCards with Renaissance servicing and managing the portfolio. First Union had marketed the secured card product through its branches and issued the credit cards. Under this new agreement, First Union Direct Bank will function as an agent of Orchard Bank.

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Business Cards

Interest rates for business credit cards hovers around 15.50% according to a new survey by CardTrak ([www.cardtrak.com][1]). Competition has pitted some of the biggest players against one another in this segment with some APRs below 13.00%. CardTrak (cardtrak.com) expanded its consumer service this month with a business credit card listing. The chart is available in the hardcopy edition as well as the online edition of CardTrak. An expanded consumer report on business cards will be available next week for $10 per copy. The executive version of the business card report will be released June 15 and is available for $499. For more information: 301-631-9100.

BEST BUSINESS CARDS
(nationally available cards)
BUSINESS ISSUER APR FEE
Bank One x9.99% None
AmSouth 12.75% $30 per card
Bank of Hawaii 12.75% $25 per card
MBNA x12.90% None
Cap One 12.90% None

x-fixed rate

SOURCE: CardTrak (www.cardtrak.com or 800-344-7714)

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

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Personalized Smart Cards

Nanopierce Technologies Inc. Wednesday announced that it has signed a Technology Cooperation Agreement with Munich, Germany-based Meinen, Ziegel & Co., one of the world’s leading producers of equipment and systems for the integrated production and personalization of Smart Cards.

Meinen, Ziegel & Co. is majority owned by DataCard Group (Minneapolis), which is a leading global provider of innovative financial card issuance systems, photo ID cards, printers, various identification systems, including health care patient identification systems.

Under the agreement, Nanopierce and Meinen, Ziegel will cooperate in the development, qualification and industrialization of a chip module embedding process utilizing Nanopierce Connection System and Meinen, Ziegel equipment for Dual Interface Smart Cards, known better as CombiCards. Meinen, Ziegel, using the process, can modify existing models and manufacture new models of its full line of equipment.

Paul Metzinger, president and CEO, said: “We anticipate this agreement will lead to the increased globalization of our technology. The excellent reputation and market presence of Meinen, Ziegel and DataCard in the Smart Card industry should prove valuable in the acceptance and application of our Nanopierce Connection System.”

The combined customer/potential customer database of Meinen, Ziegel and DataCard will be used to exploit those markets, which will have the greatest card volumes for Dual Interface Smart Cards, such as Southeast Asia, Korea, Japan, India and South America. Nanopierce management indicates that an independent market research firm, Killen & Associates, cites the current market for Smart Card manufacturers is growing at 59 percent annually, with $7.6 billion forecast for 2000, reaching $16 billion by 2005.

Nanopierce Technologies owns 11 patents, six patents pending and various other intellectual properties related to the company’s proprietary NCS; a system designed to provide significant improvement over conventional electrical interconnection methods for high-density circuit boards, connectors, semiconductor packaging and electronic systems. The public stock trades under the ticker symbol NPCT on the OTC bulletin board. Nanopierce Technologies is a subsidiary of Intercel Corp. (OTC/BB:INCE).

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Schwab ATM Benefits

Yesterday Charles Schwab & Co. announced all customers of ‘Schwab Access’ will be able to access ATMs at no charge. Schwab is the first financial institution to offer qualified customers this kind of access. The company will waive all of its fees and will rebate all surcharges imposed by other financial institutions when the customers use their ‘Schwab Access Gold Visa’ debit card to withdraw cash resulting in an ATM transaction without cost.

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Coinstar Exceeds Mint

Using supermarket-based ‘Coinstar’ machines, Americans returned more coins to the U.S. economy in the past year than the United States Mint produced. In 1998, Coinstar’s network of machines placed 15,838,542,632 coins back into circulation while the U.S. Mint produced 15,814,482,000 new coins during the same 12-month period. Since its inception, Coinstar has helped more than 45 million consumers return more than $1.3 billion in change to the economy.

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Rack Room Gets MPS

Midwest Payment Systems (MPS) is pleased to announce that it will provide Rack Room Shoes with Visa, MasterCard, Discover, American Express credit card processing services, offline debit card payment capabilities and credit card chargeback defense with electronic signature capture.

A member of the Deichmann Group, Rack Room Shoes is headquartered in Charlotte, North Carolina and operates a chain of family shoe stores located principally in the southeastern United States.

“Rack Room Shoes is an extremely successful company,” reports Rack Room Shoes Controller Ernie Shore, “and our growth dictated the need for a change. With MPS’ guidance, Rack Room was able to evolve from a ‘dial-up’ credit card approval process to a satellite environment. It’s a faster, more responsive way of doing business, and for our volume, it just made good sense.”

Shore continues, “Our partnership with MPS also gives us a single platform to process credit cards, debit cards and back office reports to help with inventory control. Finally, MPS’ electronic signature capabilities will provide us with a strong tool to investigate and defend ourselves against chargeback inquiries.”

MPS Executive Vice President Barry L. Boerstler remarks, “We offer a commitment to deliver the best combination of performance, technology, pricing and back office support available in the industry. Rack Room’s volume demands easy integration of all of their credit, debit and back office processing, as well as a cheaper, faster way to check out the validity of chargeback claims. We can do this — and more — and we are proud to deliver creative and cost effective processing to Rack Room Shoes.”

A subsidiary of Fifth Third, MPS was ranked #1 EFT provider by Faulkner & Gray in 1998. MPS processes over three billion ATM and POS transactions per year for more than 55,000 retail locations and financial institutions worldwide, including Federated Department Stores, The Kroger Co., Macy’s and CompUSA. MPS’ merchant customer base generates more than $30 billion in credit card sales annually.

Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. The Company, which is Y2K ready, has $29.7 billion in assets, operates 12 affiliate banks with 479 full-service Banking Centers, including 108 Bank Mart locations open seven days a week inside select grocery stores and 1,232 Jeanie ATMs in Ohio, Kentucky, Indiana, Florida, Arizona and Michigan. Fifth Third’s financial strength continues to be recognized by rating agencies with deposit ratings of AA- and Aa2 and commercial paper ratings of A1+ and P1 from Standard & Poor’s and Moody’s, respectively. Fifth Third operates four main businesses: Retail, Commercial, Investment Advisors, and Midwest Payment Systems, the Bank’s data processing subsidiary. Investor information and press releases can be viewed at

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ATM Locator

MasterCard International announced yesterday an ATM Locator application for the new Palm VII connected organizer. The locator software was designed to help business and leisure travelers. The application is a customized version of the ATM Locator tool found on the MasterCard web site. With this new software users have access to ATM information for all 50 United States as well as Canada, Australia, China, France, Mexico and South Africa-as well as ATM’s at the world’s busiest airports.

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AMEX Remedy

Remedy Corporation and American Express, Tuesday, announced an alliance that will automate the purchasing process from requisition through payment. The two companies will create an end-to-end solution using Remedy’s ‘Purchasing@Work’ electronic procurement solution and the American Express Corporate Purchasing Card. Remedy’s ‘Purchasing@Work’ is an electronic procurement application that automates and speeds the purchasing process for non-production materials and services.

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Equifax Processes Fininvest

Equifax yesterday announced that its transaction card processing operation in Brazil, Equifax Unnisa, has signed a contract with Fininvest, one of South America’s largest card issuers, to provide processing for its 2.9 million VISA, MasterCard and private label card accounts.

Equifax Unnisa, under this contract, will provide full service processing for Fininvest’s existing 400,000 card VISA program that will include card activation, customer service and transaction processing. In addition, this new umbrella contract provides for the conversion of Fininvest’s 2.5 million private label card base. The conversion of Fininvest’s cards to Equifax Unnisa is expected to be completed in 1999. Further, the contract allows Fininvest the capability to move its 1.2 million “Especial” card portfolio to Equifax Unnisa’s platform.

Lee A. Kennedy, Equifax executive vice president, Payment Services, said, “This exciting opportunity again confirms the recognition of our broad range of service capabilities by companies at the highest levels of world excellence. We are most confident that our unique, differentiating capabilities will continue to result in new processing contracts with world class Brazilian and multi-national companies in the Latin American market. With the addition of Fininvest and the recent contract with GE Capital, Equifax Unnisa is now the largest third party card processor in Brazil.”

Edson Bacha, president of Equifax Unnisa, said, “There are tremendous benefits for both companies from this association to further expand Fininvest’s significant card bases. Equifax Unnisa’s services will be employed to support Fininvest’s growth strategy by enabling it to focus on its core business — consumer credit.”

Jose R. M. Tosi, president of Fininvest, stated that the choice of Equifax Unnisa “was due to their technological and operational capacity to support the growth rate foreseen by Fininvest for the next five years. Fininvest intends to expand its clients base to over 20 million Brazilians, especially among those that have just started to get access to credit.”

Once these cards are converted, Equifax will be managing almost six million cards in Brazil, more than double the 2.5 million cards which Unnisa was processing when Equifax acquired its 59% interest in September 1998.

Fininvest is a financing company with total assets of US$ 1.0 billion and headquarters in Rio de Janeiro. Fininvest provides various personal, installment and term loan products to consumers. Fininvest showed significant revenue growth in the last two years with its assets increasing by 400%.

Equifax ([http://www.equifax.com][1] ), a worldwide leader in shaping global commerce, brings buyers and sellers together through its information management, transaction processing and knowledge-based businesses. Atlanta-based Equifax serves the financial services, retail, credit card, telecommunications/utilities, transportation, information technology and healthcare industries and government. Equifax adds knowledge, expertise, convenience and security to provide value-added solutions and processes for its customers wherever they do business, including the Internet and other networks. Entering its second century in business, Equifax employs about 13,000 associates in 18 countries with sales in almost 50 and has nearly $1.7 billion in revenue.

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

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P3 Smart Card System

Racal Secure Payment Systems yesterday announced the introduction of a Personalization Preparation Process (P3) card issuance system that allows card issuers to move into smart card schemes by reducing or eliminating the need to change existing card issuing systems. Racal’s P3 system either generates cardholder data files or receives the files generated from existing applications and adds the appropriate data for the smart card applications to produce composite files in a format ready for the personalization system. This includes electronic purse (DES and RSA) data, cryptographic keys and certificates, dedicated funding account application data as well as credit and debit card data. Interfacing directly to the card personalization systems, Racal’s P3 system uses data file formats that are widely used in the card industry.

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First Quarter Contraction

For first quarter 1999 card receivables slipped a modest 1.5% from the year end 1998 compared to a 2.0% drop for 1Q/98. According to CardData ([www.carddata.com][1]) first quarter receivables for bank credit cards logged in at $447.5 billion compared to $454.3 billion at year end 1998.

CARD INDUSTRY OVERVIEW
1Q/98 2Q/98 3Q/98 4Q/98 1Q/99
Receivables $433.7b $427.6b $440.5b $454.3b $447.5b
Volume $190.6b $201.8b $213.7b $227.6b $206.7b
Gross Accts 332.2m 328.5m 330.5m 335.2m 326.2m
Active Accts 222.6m 220.6m 221.1m 231.2m 224.5m
Cards-in-Force 484.9m 488.3m 492.0m 504.0m 509.0m

figures exclude debit cards and business cards; volume includes purchases
and cash advances
b-billions m-millions
SOURCE: CardData (www.carddata.com)

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

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