Novato, CA-based Inabyte Inc. introduced ‘InaCardCheck’, a new tool for validating credit card account numbers. ‘InaCardCheck’ provides online businesses, telemarketers and traditional retailers the ability to instantly assess the authenticity of major credit card account numbers. The system verifies credit card account numbers and expiration date data using recognized algorithms. The tool is an Active X component that works with Visual Basic, C++, and Java. ‘InaCardCheck’ can also be hosted locally within an application, embedded within Web pages or hosted on the server side. The firm is offering the program for $199.


Fleet – FDC

Fleet Credit Card Services and First Data Corp. signed a 10-year agreement Tuesday for First Data’s card issuing unit, First Data Resources, to provide bankcard processing services for more than 8 million Fleet bankcard accounts. First Data will continue to provide credit card transaction processing and other card portfolio management services to Fleet under the new agreement. A card processing client since 1989, Fleet also uses a broad range of other services offered by First Data Corporation business units, including services provided by First Data Investor Services Group, Cash Tax and Western Union. According to CardData ([][1]) Fleet had $14.3 billion in receivables at year-end 1998.



EC Solutions Formed

CheckFree, the leading provider of financial electronic commerce services, software and related products, Tuesday announced the formation of EC Solutions — a new division of the Company that will assist CheckFree’s billers, financial institutions, software providers and service bureaus with the education and implementation of electronic billing and payment solutions. The new division, set to launch next month, will operate autonomously of other CheckFree business units and will report directly to Mark A. Johnson, vice chairman of corporate development.

“Since we began providing solutions for electronic billing and payment nearly three years ago, CheckFree has focused on driving the rate of adoption, integration and implementation of Internet-based solutions,” said Johnson. “By making knowledgeable resources available to connect financial institutions, billers and third parties to our proven infrastructure, we will enable partners to implement the appropriate services in a more efficient, timely and effective manner.”

The services offered by CheckFree EC Solutions will be fee-based and will range from strategic consulting services to contract development work. EC Solutions consultants will possess a variety of skills, including executive- level e-commerce knowledge and the latest Internet programming skills. All of the consultants will have an intimate understanding of services available in the industry as well as CheckFree’s product capabilities.

“Initially, we will maintain a staff of approximately 10-15 associates, with plans to grow our resources as CheckFree’s overall e-commerce business grows,” added Johnson. “This organization will operate at the highest level of professional objectivity, including the ability for our consultants to recommend a wide range of solutions.”

To take advantage of the current demand and interest among the highly active biller market, CheckFree will focus on providing billers with consulting services during the pre-sales and sales finalization cycles. To ensure sound strategic decision-making, EC Solutions consultants will first provide industry education on bill presentment and payment, internal education to promote the benefits of e-commerce solutions within the company, goal- setting, and market analysis. In addition, consultants will work with clients through implementation options, systems development and implementation support. These same services will also be offered to financial institutions in their role as billers.

In addition, the EC Solutions consultants will work with financial institutions as “retail service providers,” assisting them with specific needs in this part of the market. Consulting and professional services for software providers and service bureaus will cater to their particular area of the industry.

About CheckFree

Founded in 1981, CheckFree ( ), the operating subsidiary of CheckFree Holdings Corp., is the leading provider of electronic commerce services, software and related products for more than 2.6 million consumers, 1,000 businesses and 850 financial institutions. CheckFree designs, develops and markets services that enable its customers to make electronic payments and collections, automate paper-based recurring financial transactions and conduct secure transactions on the Internet.

After more than a year of beta testing, CheckFree launched the nation’s first fully integrated electronic billing and payment solution, CheckFree E-Bill, in March of 1997. Today, the Company has multi-year contracts with more than 40 of the nation’s top billers to provide online billing and payment through the CheckFree distribution network.


Biometric Study Concluded

International Biometric Group announced Tuesday that it has completed its evaluation of finger scan and face recognition biometrics conducted on behalf of Chase Manhattan Bank , Citibank and Visa International.

The results of this landmark test will help determine which biometric technologies will be used for ATM withdrawals, credit card purchases and Internet transactions. IBG’s Biometric Study also reveals to what extent age, sex, ethnicity and occupation affect the performance of biometric technologies.

According to Samir Nanavati, a partner with IBG, “PINs and passwords have been rendered obsolete in the age of the Internet. IBG’s Biometric Study provides the foundation upon which financial organizations will build customer identification systems as we enter the new millennium.” IBG has made the test results available to select customers.

“The IBG Biometric Study enables Visa to learn and independently validate which vendors have technologies best suited to customer applications for our Members. In addition, the test gives us crucial insight into which technologies our Members and their customers feel comfortable using,” said Chetan Patwardhan, Director of Technology Research at Visa International.

Industry insiders recognize the importance of the study. “This effort will increase our knowledge not only of specific devices, but of electronic finger imaging in general, particularly among sub-populations thought to be hard to fingerprint”, stated Dr. Jim Wayman, Director of Biometrics at San Jose State University.

Biometrics, including finger scan, face geometry, iris recognition, signature verification, speaker verification and hand geometry, are technologies that verify one’s identity based on personal traits. In addition to increasing the security of financial transactions, organizations are looking to increase customer convenience. Biometrics allow for faster processing at teller windows, increased withdrawal limits at ATMs, and a reduced chance that accounts will be fraudulently accessed.

Systems from the following vendors were evaluated: Sony (NYSE:SNE), Identix (AMEX:IDX), ST Microelectronics (NYSE:STM), Digital Persona, Mytec (Toronto: MYT), Veridicom, a spinoff of Lucent Technologies (NYSE:LU), Identicator, American Biometric Company, Miros and Visionics.

International Biometric Group () is the leading worldwide biometric consulting and integration firm. IBG operates the BiometricStore, a showroom in Manhattan that allows for the hands-on comparison of three dozen biometric systems.


DataCard’s P3 System

Datacard Worldwide announces a smart card Personalization Preparation Process (P3), that makes the issuance of smart cards faster, simpler and more secure. Banks, service bureaus and other institutions around the world are already using the new P3 system from Datacard Worldwide for a variety of financial smart cards, including Visa Smart (debit-credit), Visa Cash DES and Visa Cash RSA cards. Datacard Worldwide worked with Racal Airtech, Ltd. and Visa International to develop the P3 system for this application. Plans have been implemented to release upgrades to P3 that will enable the issuance of Multos cards.

“P3 represents a major breakthrough for smart card issuers,” said Bonnie Lervik, senior vice president of Datacard Worldwide. “Now, card issuers can issue smart cards in an extremely secure and productive manner–for any number of applications, including stored value, debit-credit and loyalty programs.”

How the P3 system works

The P3 system, supplied by Datacard Worldwide, includes a Racal(R) P3 RG7400 Host Security Module (HSM), a Windows(R) NT-based PC, and software modules that enable specific encryption algorithms. Card issuers use the P3 system to securely generate smart card data for each data record. This data typically includes purchase keys, certification keys and card update keys. The system also generates other sensitive data elements and calculates certificates for a smart card data record, which allows for verification later during the personalization process.

In the past, this kind of data had to be generated in real time, as the smart cards were being personalized with the Datacard(R) 9000 Series card issuance system. This proved to be cumbersome, particularly because the process relied on key cards. Datacard Worldwide, working with Racal and Visa, transferred much of the cryptographic processing off-line to Racal’s HSM where the smart card data could be generated quickly and securely in a format that can be used by a Datacard 9000 Series System.

“We are able to use such an off-line system because P3 produces a batch personalization file which can be transferred–via floppy disk or network connection–to a Datacard 9000 Series System for fast, secure smart card personalization,” Lervik said. “It’s a much simpler and faster process to generate required smart card data off-line in a batch mode. Conventional methods typically require key cards and other physical, time-consuming steps.”

Enabling multiple smart card applications

The P3 system, originally developed for Visa Smart (debit-credit) cards, was enhanced to accommodate Visa Cash DES and Visa Cash RSA card personalization and is currently being upgraded to enable the issuance of Multos cards, MCPA and loyalty applications. MCPA is MasterCard’s payment application, a debit-credit application, that runs on Multos. Datacard Worldwide plans to release a Multos upgrade to P3 within six months.

“P3 is the de facto standard for high-volume smart card issuance, especially in the financial arena,” Lervik said. “We have customers in Europe and Asia who are using it to issue stored value cards and other financial products today.

“Soon, we plan to offer P3 solutions for Datacard’s lower volume card issuance systems, including our desktop products,” Lervik said. “We fully expect to have a desktop Multos MCPA application ready this summer.”

Datacard Group is a diversified technology enterprise comprised of three autonomous companies. Datacard Worldwide provides financial institutions, retailers, loyalty marketers and service bureaus with the world’s best-selling card issuance systems. Credentia creates identity-based systems for corporate, government and education markets. MedAssure offers technologies that help healthcare organizations strengthen customer satisfaction, enhance efficiency and improve patient care. Datacard Group, a privately held enterprise based in Minnetonka, Minn., serves customers in more than 120 countries worldwide ([][1]).



Shifting Gears

MBNA Corporation announced Tuesday that net income for the first quarter of 1999 rose to $186.0 million or $.22 per common share, an increase of 22.2%, compared with $149.4 million or $.18 per common share for the first quarter of 1998.

Total managed loans at March 31, 1999 were $62.1 billion, a $12.0 billion increase over first quarter 1998. For the quarter, the Corporation acquired 81 new endorsements from organizations including 35 in the United Kingdom and Canada. Endorsements acquired in the first quarter include, for example, the Marine Corps Association, American Management Association, GO Network, First Virginia Bank, and the Pittsburgh Pirates. The Corporation also added 6.2 million new Customers (5.2 million new accounts). The characteristics of new cardholders are consistent with the superior quality of the Corporation’s existing cardholders.

Delinquency on total managed loans was 4.65% at March 31, 1999. Managed loan losses for the first quarter of 1999 were 4.36%. Loan losses continue to be significantly lower than published industry levels.

The previously announced agreement with American International Group, Inc. (AIG) has been finalized, and MBNA has begun marketing AIG automobile insurance to MBNA Customers. MBNA provides credit, property and casualty, and life and health insurance products to more than 1.7 million Customers.

MBNA Corporation, a bank holding company and parent of MBNA America Bank, N.A., a national bank, has $62.1 billion in managed loans. MBNA, the largest independent credit card lender in the world, also provides retail deposit, consumer loan, and insurance products.




New Brittain Studies

American consumers spent over $6.5 billion on-line during the 1998 holiday season, with over 90% of it charged on credit cards. With this rapid growth of the internet as an enormous “Mall of the World”, credit card issuers are scrambling to make their card the on-line shopper’s favorite. The primary tactic in this effort is to give consumers immediate benefits for using a particular credit card when buying on-line. These benefits include merchandise discounts, money safety guarantees, air miles and credit against outstanding card balances. Specific data regarding this new credit card battleground emerged from a just completed consumer-based study conducted by Atlanta-based, Brittain Associates. The study is being released to subscribers today.

“About one half of all on-line shoppers who use a credit card claim that they always use just one card on-line,” says Bruce Brittain, president. “I think that on-line card usage perks to encourage such behavior will become a hotter competitive area as issuers try to make their card the on-line favorite.”

Among the issuers who currently have cards that are frequently mentioned as favorites for on-line purchases are First USA, American Express, Citibank, Discover and MBNA.

Some issuers are also providing on-line customer service capabilities such as bill review and bill payment. Consumers overwhelmingly say that this gives these cards a competitive advantage.

“The data clearly show,” says Brittain, “that card owners who can review their statements or pay their bills on-line favor that card over other cards they own.”

According to Brittain, as the number of households in the U.S. who regularly use the internet climbs beyond the 34.7 million identified in this study, carving out a competitive advantage based on internet related issues will become am important strategy for issuers.

The study, the second in a planned series, indicates that the growth rate in the number of internet active adults in the U.S. is currently at 26% per year, up from 51.3 million measured last September to 57.9 million measured in March, 1999.

A full description of the study methodology, lines of inquiry and examples of selected results can be found at the research firm’s website: [][1].



Nacha 25

The National Automated Clearing House Association’s ‘Payments ’99’ annual conference attracted more than 1,400 payments professionals in Atlanta Monday. The conference marked NACHA’s 25th anniversary. NACHA says 25 years ago hardly anyone used ACH for direct deposit, now the ACH network is used by more than 20,000 financial institutions, 2 million businesses and 100 million consumers for direct deposit of payroll and Social Security benefits. NACHA emphasized that the ACH Network is the lowest cost interbank electronic payment network in the U.S.


Interchange Slammed

Discover Financial Services President David Nelms said yesterday that VISA’s recent interchange rate increases in the U.S. have alienated its merchant base. Nelms based his assertion on a survey of 500 merchants conducted by C & R Research Services, Inc. in March. The survey revealed that 63% of merchants nationwide are frustrated by the increase in credit card processing fees. Most of those merchants also said that they would encourage customers to use a particular credit card brand if that brand charged lower processing fees. Nelms said Discover estimates that U.S. merchants will pay more than $500 million annually in incremental fees due to this recent increase. Nelms urged merchants to shift their business away from VISA, MasterCard, and American Express and to encourage the use of Discover Card at the point of sale. He said consumers will also benefit from using Discover Cards more because a large portion of what merchants pay is directly returned to consumers in the form of Discover’s ‘Cashback Bonus’ award.


CU 1Q/99

More first quarter results show some of the mid-level credit unions weathered the seasonal contraction with modest gains in their account base. According to CardData’s ( ‘First Quarter 1999 Portfolio Survey’, AZ-based Desert Schools FCU picked up 1,500 accounts while MD-based Aberdeen Proving Ground FCU and CA-based Travis FCU added a few hundred accounts.

Travis FCU $93,149,371 $30,899,928 46,603 36,714 65,982
Security Srvc FCU $80,368,779 $26,978,517 42,462 32,102 64,079
Desert Schools FCU $60,968,234 $33,306,490 61,907 45,039 78,341
Visions CU $54,901,861 $10,428,321 36,973 31,435 47,635
Aberdeen Prov FCU $41,186,252 $13,546,670 19,263 16,079 25,651
Source: CardData (


ACH Soars

Automated clearing house payments totaled more that 5.3 billion in 1998, a 17.5% increase over 1997, according to statistics released by the National Automated Clearing House Association at its PAYMENTS 99 conference. The total dollar amount of the transactions for 1998 was $16.4 trillion, up 17% from $14 trillion in 1997. These figures include government, and inter-bank and “on-us” commercial transactions. The number of direct deposits in 1998 increased by 16.1% over 1997, from 1.9 billion to 2.2 billion. The dollar amount increased from $1.85 trillion to $2.17 trillion, a 15.1% increase. The number of bill and other consumer debit payments made over the ACH Network in 1998 totaled 1.2 billion, a 16.9% increase over 1997. The dollar amount was $678 billion, a 17.7% increase. The number of bill and other consumer debit payments made over the ACH Network in 1998 totaled 1.2 billion, a 16.9% increase over 1997. The dollar amount was $678 billion, a 17.7% increase. Use of the ACH Network for business payments, which include business-to-business payments and intra-business cash concentration and cash management transfers, increased from 644 million payments in 1997 to 757 million in 1998, an 17.5% increase. The dollar amount of these payments exceeded $11 trillion. NACHA says this is the highest growth rate since 1991.


MemberWorks Acquisition

MemberWorks Incorporated, a leading provider of innovative membership programs, announced Monday that it has acquired Quota-Phone, Inc., a privately-held wholesale provider of nationwide discount shopping services.

Quota-Phone, Inc. adds a broad portfolio of wholesale consumer products and services and a nationwide membership base of over three million members to MemberWorks. In addition, Quota-Phone brings established relationships with financial institutions and affinity groups, among others, to MemberWorks growing roster of client partners. The acquisition will expand MemberWorks current wholesale and MemberLink offerings.

“Quota-Phone fits perfectly with our strategy of delivering high-value membership-based direct marketing solutions,” said Gary Johnson, President and CEO of MemberWorks. “Quota-Phone broadens our product reach and provides a cost-effective means of delivering a wide variety of products and services. Their 17-year history of offering successful marketing solutions is a strong addition to the MemberWorks family.”

Barry Lewisohn, President of Quota-Phone, Inc. added, “I believe that Quota-Phone’s synergy with MemberWorks and the ability to tap into their well-developed infrastructure will allow Quota-Phone to significantly expand its client and customer base as well as add to our already broad product line.”

MemberWorks paid $9.25 million in cash and MemberWorks stock for all of the equity of Quota-Phone. The transaction will be accounted for as a purchase. Quota-Phone, located in White Plains, New York, will operate as an independent, wholly owned subsidiary of MemberWorks.

MemberWorks reported on October 8, 1998, that the SEC staff’s review of its revenue recognition practices was completed in connection with the reporting of its operations for fiscal 1998 and the SEC staff had not objected to the Company’s decision to presently continue to follow the revenue recognition practices consistently followed since its initial public offering in 1996. As the Company reported in its Annual Report for 1998, the SEC issued a press release on September 28, 1998 stating that the “SEC will formulate and augment new and existing accounting rules and interpretations covering revenue recognition, restructuring reserves, materiality, and disclosure;” for all publicly-traded companies. Until such time as the SEC staff issues such interpretative guidelines, it is unclear what, if any, impact such interpretative guidance will have on the Company’s current accounting practices. However, the potential changes in accounting practice being considered by the SEC staff could have a material impact on the manner in which the Company recognizes revenue. Any such changes would have no effect on reported cash flow or the economic value of the Company’s memberships.

Certain matters discussed in the news release are forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. These statements include statements regarding intent, belief or current expectations of the Company and its management. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties that may cause the Company’s actual results to differ materially from the results discussed in the forward-looking statements. Among the factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: uncertainty as to new and existing accounting rules and interpretations; uncertainty as to the Company’s future profitability; the Company’s ability to develop and implement operational and financial systems to manage rapidly growing operations; competition in the Company’s existing and potential future lines of business; the Company’s ability to integrate and operate successfully acquired businesses and the risks associated with such businesses; the Company’s ability to obtain financing on acceptable terms to finance the Company’s growth strategy and for the Company to operate within the limitation imposed by financial arrangements; uncertainty as to the future profitability of acquired businesses; the ability of the Company and its vendors to complete the necessary actions to achieve a Year 2000 conversion for its computer systems and applications; and other factors. Other factors and assumptions not identified above were also involved in the derivation of these forward-looking statements, and the failure of such other assumptions to be realized as well as other factors may also cause actual results to differ materially from those projected. The Company assumes no obligation to update these forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking statements.

Headquartered in Stamford, Connecticut, MemberWorks Incorporated is a leading provider of innovative membership programs.

MemberWorks offers its programs to increasingly sophisticated consumers seeking economy, efficiency and convenience in their purchase of products and services. As of March 31, 1999, there were approximately five million members enrolled in the Company’s programs.