Diebold Promotion

Diebold, Incorporated announced the promotion of Jeffrey J. Van Cleve to vice president and general manager of Diebold Credit Corporation, Diebold’s wholly owned leasing subsidiary. He will report directly to Robert J. Warren, vice president and treasurer for Diebold. Van Cleve is responsible for leading global development of customer financing programs.

“Our strategic plan is to grow and expand financing options in order to support the sales of Diebold solutions globally,” said Gerald F. Morris, executive vice president and chief financial officer for Diebold. “Diebold Credit Corporation plays a key role by focusing on the unique leasing and financing needs of Diebold’s customers worldwide.”

Van Cleve joined the company in 1996 as manager, Diebold Credit Corporation. Prior to joining Diebold Credit Corporation, Van Cleve was senior sales representative for Dana Commercial Credit, Toledo, Ohio. He received a bachelor’s and master’s degree in business administration from Bowling Green State University in Ohio. A native of Toledo, Ohio, Van Cleve, currently resides in North Canton.

“Diebold Credit Corporation has a proven track record as a leading provider of customized financing solutions to Diebold’s customers,” said Warren. “Under Van Cleve’s direction, Diebold Credit Corporation is well positioned to continue its leadership in support of Diebold’s ongoing growth in global markets.”

Diebold, Incorporated is the global leader in providing integrated delivery systems and services. Founded in 1859, the company employs more than 6,000 associates in some 120 locations worldwide with headquarters in Canton, Ohio, USA. Diebold reported revenue of US$1.2 billion in 1998 and is publicly traded on the New York Stock Exchange under the symbol ‘DBD.’ For more information, visit the company’s Web site at [www.diebold.com][1].

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

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ECHO Acquires Magic

Electronic Clearing House Inc. Thursday announced the completion of the acquisition of Magic Software Development Inc..

ECHO had announced an agreement in principle on March 8, 1999, and final recording of the acquisition with the appropriate state agencies occurred on April 27, 1999. Magic, which will operate as a wholly owned subsidiary of ECHO, is based in Albuquerque, N.M., and is a provider of electronic check conversion, electronic check re-presentment, check verification, and check guarantee solutions to financial services companies and retailers across the nation.

Under the terms of the acquisition, ECHO issued 1 million shares of ECHO common stock. The shares will be held in escrow and 500,000 shares will be released to the Magic selling shareholders on April 1, 2001, and 500,000 shares will be released on April 1, 2002.

An additional 1 million shares of ECHO stock will be placed into escrow to be issued to the Magic selling shareholders under a performance clause wherein, should the Magic subsidiary’s performance meet or exceed predetermined earnings goals for fiscal year 2000 and 2001, a proportionate number of performance-based shares will be issued.

Any shares issued under the performance clause will be held in escrow and 50% will be released on April 1, 2003, and the balance will be released on April 1, 2004.

Kris Winckler, president of Magic, will remain the president of the ECHO subsidiary and Dave Griffin, vice president of ECHO, has been designated director of Check Services and will assist in the integration of Magic products and services with the ECHO family of products and services.

“We believe it is logical for a merchant to expect their payments processor to provide a full complement of payment options and, with the addition of Magic, ECHO will be one of a select few processors in the nation who will have fully integrated credit card and check services,” stated Joel M. Barry, chief executive officer of ECHO.

“We intend to make both forms of payment available in real time over the internet, which will further distinguish ECHO from other less technically capable processors, and maximize the benefit to our growing Internet base of merchants,” stated Barry.

Magic has been an active member of the Electronic Check Counsel, a group of national retailers, banks and electronic processors, that was set up by the National Automated Clearing House Association (NACHA) to investigate and advise NACHA on new electronic check products.

“NACHA just announced its approval of new rules relating to electronic check conversion which will result in substantial cost savings for both retailers and financial institutions,” said Winckler.

In a check conversion transaction, the consumer presents a retail merchant with a check which is run through an electronic reader to capture the consumer’s bank account number, routing information, and check serial number. The merchant then returns the check to the consumer with a “void” stamped on the check. The consumer signs a receipt authorizing the electronic transaction and keeps a copy as a record of the purchase.

The merchant initiates an Automated Clearing House (ACH) debit, using the check information and transaction amount, which is processed electronically through the ACH network. The ACH Network is commonly used for payments such as Direct Deposit of payroll and Social Security benefits, and automated bill payments. In 1998, more than 5.3 billion ACH payments were made worth over $16 trillion.

The benefits to retailers of using electronic checks at the point of sale include reduced costs from the elimination of paper handling, faster and more effective redeposit and return item processing, simplified reconciliation, detailed settlement and transaction reporting, improved customer information flow, and a lower incidence of fraud.

“Magic is a leader in developing and deploying electronic check services and, with ECHO’s background and capabilities in credit card and internet-based processing, the combined suite of services we will be able to offer to merchants should make ECHO a highly preferred processor with merchants across the nation,” stated Winckler.

“The Magic team of programmers and engineers match well with ECHO’s distinction as a technically competent company,” stated Barry. “We think some innovative products and services, especially in the internet, will naturally result from this combination of talent.”

Electronic Clearing House provides credit card processing, check guarantee, inventory tracking services and various Internet services to more than 19,000 retail merchants and U-Haul dealers across the nation. ECHO also designs, develops and manufactures software and point-of-sale hardware that is utilized as credit card processing terminals, automated money order dispensers, inventory tracking devices, and casino cash advance systems.

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ZeitControl’s BasicCard

ZeitControl cardsystems, developer of the world’s first smart card that can be programmed in BASIC, will be showcasing its inexpensive, easy-to-program BasicCard at CardTech/SecurTech ’99 in Chicago, IL.

Celebrating its 10th anniversary in the smart card business, the company has established a reliable track record by delivering highly cost-effective application development solutions to the marketplace.

Microsoft Corp. announced late last year its plans to develop a BASIC programmable smart card for its Windows operating system. But according to Wolfgang Salge, managing director for ZeitControl, his company’s unique BasicCard is already available and has proven itself to be an efficient smart card-based application development tool for the Windows environment.

“Using our proven platform, BASIC programmers can custom design their own smart card in a single afternoon, with no previous experience required,” Salge declares.

The BasicCard is available in two versions: the Compact BasicCard and the Enhanced BasicCard. Both products contain 256 bytes of RAM, plus user-programmable EEPROM: 1 kilobyte in the Compact BasicCard, and 8 kilobytes in the Enhanced BasicCard.

The Enhanced version now also contains a DES + 3DES algorithm as well as Elliptic Curve Cryptography, making it possible to process an electronic signature in only 9 seconds without coprocessor (a plug-in Elliptic Curve library will be on display at ZeitControl’s CTST booth).

Because these two cards require smaller chips compared to other programming alternatives, pricing is extremely attractive. The Compact BasicCard costs $3 and the Enhanced BasicCard is currently priced at $4.35.

ZeitControl, in partnership with Philips Semiconductor, is now developing a Mifare Pro BasicCard (contact and contactless in one chip). The first sample cards will become available by the end of the summer. Future products in their early planning stages include an RSA-based Public-Key BasicCard as well as a Multi-Application BasicCard.

ZeitControl expects to unveil the industry’s first PC/SC compatible reader with USB and a working PC/SC driver at this year’s CTST Show. The single unit price for the “cybermouse” will be $39, with large-volume orders running about $20 per unit. A slightly less expensive version of the “cybermouse” comes equipped with a serial interface (RS232).

ZeitControl cardsystems GmbH, headquartered in Minden, Germany, is a pioneer in the development of BASIC-programmable smart cards. The company designed the first chip card readers for the German health service.

Founded in 1989, ZeitControl has delivered more than 5 million cards to customers around the world. For more information on ZeitControl and its BasicCard, visit the company’s Web Site at www.basiccard.com or [www.zeitcontrol.de][1]

[1]: http://www.zeitcontrol.de

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CardTouch Apps

AZ-based Touch Technology International unveiled a suite of loyalty applications to run on its ‘CardTouch’ platform. The applications include: points, punch card, issuer rebate and discount. The ‘Points’ application enables the issuance of loyalty points based upon amounts purchased. When combined with the CardTouch multi-issuer/multi- acquirer back-end, the ‘Points’ application supports cross-promotional programs. The ‘Punch Card’ application works just like a traditional paper punch card, with as many as 100 merchants supported on a single, three-dollar, 1K smart card. The ‘Issuer Rebate’ application enables rebates to the cardholder based on purchases made from participating merchants. Finally, the ‘Discount’ application simply applies pre-determined discounts to qualifying purchases. The four distinct applications can be mixed and matched to fit any requirement.

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LendingTree VISA

Consumers who complete a LendingTree online ‘Qualification Form’ for a mortgage, home equity or auto loan can now automatically apply for a First USA VISA Card. If a loan is closed through LendingTree, consumers will also receive a credit up to $500 on that card. Consumers who close a mortgage will be credited $500; closing a home equity loan qualifies for a $250 credit and closing an auto loan qualifies for a $150 credit. Under terms of the partnership agreement, announced yesterday, First USA will also join The Lending Tree Network as an advertiser.

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TNS Exec Changes

Transaction Network Services, Inc. announced Wednesday the addition of Henry Graham to its senior financial management team. Thaddeus (Tad) Weed, currently Chief Financial Officer, will assume the role of Senior Vice President of Finance and Treasurer, and will focus on the financial analysis of the company’s investment strategy, international expansion, and merger and acquisition activities. Henry Graham, currently Senior Vice President and General Manager of the company’s OmniLink Communications division, will assume the role of Chief Financial Officer, directing the company’s day-to-day finance and accounting activities.

“TNS has grown tremendously over the past year, as have our financial analysis and reporting requirements,” commented TNS president and CEO John J. McDonnell, Jr. “We have chosen to segment our key financial positions and have filled those positions with senior personnel best suited to each role. Tad Weed has done exhaustive work over the last two years managing the company’s financial and accounting activities while working on the aggressive deals that have contributed to our recent growth. We will continue to rely on him for his expertise in that area. Henry Graham has extensive experience as the CFO of OmniLink Communications, which we acquired last year, and as CFO at Guardsman Products, Inc. and the Revlon Group, Inc., both NYSE-listed companies. We feel very fortunate to have someone of Henry’s caliber already in-house and believe that he will be a great asset to the TNS finance team as our new CFO,” McDonnell added.

Transaction Network Services, Inc. (TNS), headquartered in Reston, Virginia, provides data communications services for transaction-oriented applications. The company is listed on the NASDAQ Stock Market under the symbol TNSI. Additional company information is available on the TNS website at .

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Gemplus Americas President

Gemplus Group announced Wednesday the appointment of Remy de Tonnac as president of Gemplus Americas, managing all operations in North and Latin America. Leveraging his experience as president of Gemplus Asia Pacific, and his over 15 years in the technology industry, Mr. de Tonnac will take the helm from Dominique Trempont, who is leaving Gemplus to pursue a new business opportunity in the Silicon Valley area.

“Dominique Trempont was a significant contributor to Gemplus. He built an incredibly strong management team, and successfully focused the company’s America’s strategy and positioned it to take advantage of the growth opportunities that exist in this region. We wish him well as he moves on to this new opportunity,” said Daniel Le Gal, CEO of Gemplus Group. “Remy has played a significant role in the company and we believe the powerful combination of his expertise, the company’s increasing investment in the region, and the experience of the Americas management team positions the company well to take advantage of the growth opportunities that exist in both North and Latin America.”

Prior to his new appointment, Remy de Tonnac was president of Gemplus Asia Pacific for the past six years, where he led efforts in solidifying the company’s leadership position by establishing over fifty percent market share. Previously he was the sales director at Gemplus Card International in France. Before joining Gemplus, Remy was with ST Microelectronics.

“I look forward to this great opportunity to expand the smart card industry in the Americas region,” said Remy de Tonnac. “Gemplus Americas is an exceptional organization and is well positioned to dominate the rapidly evolving smart card software and solutions in this arena.”

Dominique Trempont will continue in an advisory role during the management transition and once a successor has been named for Asia Pacific. “Gemplus Americas has made tremendous strides in focusing its efforts and building the necessary leadership teams to go after the smart card opportunities that exist in the Americas,” he said. “I am honored to have been part of a group of people that has developed such innovative technology solutions. I am confident that Gemplus has the right strategy and right solutions to build on its successes in this region.”

About Gemplus

Gemplus S.C.A. (www.gemplus.com) is the world’s leading provider of plastic and smart card-based solutions (by units sold, source: Dataquest 1998). Gemplus sells magnetic stripe cards, memory and microprocessor-based smart cards, smart contactless cards, electronic tags and smart objects. The company designs and markets software, development tools and readers. Gemplus also provides consulting, training and personalization services to deliver the industry’s most comprehensive and flexible card-based solutions to its developers, distributors, partners, and customers.

With sales of over $US643 million in 1998, Gemplus employs more than 4,300 people in 10 manufacturing facilities, 5 R&D centers and 41 sales and marketing offices located in 27 countries around the world. Founded in 1988, Gemplus has successfully implemented portable and secure smart card-based solutions to simplify applications such as public and wireless communications, financial transactions, loyalty, transportation, education, healthcare, identity, physical access control, pay TV, electronic commerce, Internet security, logical access control and information technology.

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Bankruptcy Reform Update

This week both a Senate and House committee approved bankruptcy reform legislation that would limit the use of Chapter 7 by consumers with certain income levels. The Senate Judiciary Committee voted 14-4 yesterday to approve its version of the legislation. The House Judiciary Committee voted 22-13 on Tuesday to approve its version. The reform legislation stalled last year without a compromise between the House and Senate versions. There are differences between the Senate and House bills again this year. The House version requires debtors to file a Chapter 13 bankruptcy if they can pay at least $100 per month toward old debts. The Senate version includes the same requirement if the debtor can repay at least $250 per month. The House version also includes a number of additional disclosure requirements for creditors. A full House vote on ‘The Bankruptcy Reform Act of 1999’ is scheduled for next week. A full Senate vote on bankruptcy reform has not been scheduled yet but is expected before the Memorial Day break.

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Platinum Biz Cards

VISA announced yesterday it is taking its ‘VISA Business’ credit and debit cards to the ‘Platinum’ level on May 15. The new ‘VISA Business Platinum’ credit card or check card offers, among other typical ‘Platinum’ features, a 24/7 concierge service. Both new cards also offer, for an additional fee, a 24/7 small business help line and 24/7 access to a PC help desk. VISA’s announcement follows on the heels of MasterCard’s official unveiling yesterday of the ‘Business Bonuses’ program for small business cardholders. Under MasterCard’s program, ‘Business’ cardholders earn air miles for each purchase, and may redeem the points for free travel on any airline, with no black-out periods. (See CF 4/27 for details on the new MasterCard program.)

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VISA Sports Support

VISA U.S.A. announced Wednesday a partnership with the Women’s Sports Foundation that includes the establishment of a merchant donation program for the women’s group. Gart Sports and Toys “R” Us are the first to join VISA’s merchant donation program, which will run through Sep. 31, 2000. Over the next two years, VISA and select merchant partners are making a contribution of $350,000 to the Women’s Sports Foundation. Under terms of the agreement, VISA will also contribute an additional $150,000 to future initiatives with the Women’s Sports Foundation before September 2000.

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Card Fraud

MasterCard said yesterday that counterfeit and mail/telephone order fraud remain the major areas of focus this year in its fight against card fraud. MasterCard reported total dollar fraud losses worldwide of $526 million, a 13.7% increase over 1997’s $462 million. As a percentage of sales volume, this computes to 8.1 basis points, or 8.1 cents per $100 in transaction volume, compared to 7.1 basis points in 1997. MasterCard said the increases last year were largely the result of skimming activity and the proliferation of technologies such as account generation programs.

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Insurance Suit

A national class action on behalf of consumers who purchased credit card insurance from American Bankers Insurance Group, Inc., American Bankers Insurance Company of Florida, and Bankers American Life Assurance Company has been certified by the Supreme Court of the State of New York. The suit, filed by Wolf Popper, attorneys for the plaintiffs, charges these companies’ advertising material and solicitations are deceptive, because the large, bold typeface promises coverage if the insured cardholder dies, becomes disabled or becomes unemployed, but then the fine print restricts the availability of that coverage for a variety of reasons, including the state of the customer’s residence, the age of the customer, and whether or not the customer is self-employed, so that when a claim for insurance is made, the claim is denied. No trial schedule has been set.

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