Proton Update

Proton World announced it has acquired a Java applet for the Proton smart card that supports the ‘Java Card API’. The applet enables smart cards to accommodate several different applications. Proton investor Banksys SA launched a Proton card program for Belgian’s national health service. The Proton Belgian EBT program processed 3.3 million transactions last month. Proton World has also become a partner in the launch of ‘Smart Axis’, a new multi-currency e-commerce payment system.

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Denver Goes DGLine

Schlumberger Smart Cards & Terminals today announced that Ampco System, one of the largest private operators in the parking industry, has completed installation of a Schlumberger multi-space parking system in Denver, Colorado. The state-of-the-art DGLine parking systems will control more than 300 off-street spaces.

“We chose the Schlumberger systems because they have proven to be a convenient, secure method of revenue collection from pay parking programs like those in Park City, Utah, and Aspen, Colorado,” stated Jeff Nethery, senior branch manager, Ampco System. “The best advantages of the Schlumberger equipment are the revenue and audit controls. Every dollar, every coin and every credit card transaction is accounted for; and every customer receives a receipt. No other self-pay system offers this type of internal and external revenue control.”

The Schlumberger system is installed in an Ampco System-operated parking lot located at California, 15th, 14th and Welton Streets in downtown Denver, where they serve motorists visiting the nearby Convention Center and retail stores. Noting that Ampco System was awarded the project based on their plan to provide a secure method of collecting and accounting for revenue, Nethery said, “With their rugged, vandal-proof design and state-of-the-art technology, the Schlumberger terminals provide an ideal solution for meeting the demanding specifications of today’s security-conscious parking industry.”

Multi-Space System Provides Significant Benefits

The Schlumberger DGLine terminals installed in the Ampco System project in Denver are solar powered pay & display terminals. The motorist inserts payment, and the terminal issues a ticket that confirms the amount of time purchased. The motorist then returns to the vehicle and places the ticket in full sight on its dashboard. The displayed ticket provides proof of payment that can quickly be checked by parking enforcement officials.

The solar power capabilities offer the added advantage of providing all the reliability of multi-space equipment without the electrical hook-up requirements. Providing reliable operation even when sunlight is minimal, the solar powered units offer lower initial installation costs and operating expenses, and are easy to maintain.

The DGLine system installed at the Denver site accept coins, credit cards, private debit cards and dollar bills. The terminals feature high-security ball locks to deter theft, receipts for accurate collection of parking fees, and graphic capabilities for displaying messages.

World Leadership in Smart Parking

Schlumberger is a leading supplier of on-street and off-street parking systems. Globally, its technology controls more than 2 million parking spaces in over 2,000 towns and cities in 30 countries, including over 65,000 spaces in North America, including areas as diverse as New York City; Park City, Utah; Aspen, Colorado; Hollywood, Florida; Toronto, Canada and the San Francisco Bay Area. Schlumberger pay & display terminals accept multiple payment methods, including smart cards — credit card sized plastic cards with embedded computer chips that calculate monetary value stored on the card. Smart cards increase compliance with parking fees since motorists no longer need to carry correct change, allow municipalities to implement zoned parking to offer preferential rates for residents or off-peak usage, and enable retailers to offer free parking as a loyalty incentive to customers.

About Ampco System

Ampco System is one of the nation’s premier operators of parking facilities,presently serving clients in 26 states, and over 140 cities. Ampco System is a leader in the use and application of technology within the parking industry.

About Schlumberger

Schlumberger Smart Cards & Terminals is the leading provider of smart card-based solutions worldwide, shaping the new world of smart solutions by providing leading-edge technology to enable innovative smart card and terminal applications that enhance the security and convenience of businesses and communities of all kinds. Schlumberger smart card solutions encompass a wide range of cards, terminals, development tools and support in open configurations for operators, developers, integrators and distributors worldwide. As part of the Smart Village(r) vision, the Schlumberger offer includes the milestone Cyberflex(tm) card, the industry’s first Java(tm)-based smart card. The Smart Cards & Terminals group operates 45 facilities in 34 countries across the globe. Additional information is available on the World Wide Web at .

Schlumberger Test & Transactions is the parent division for Schlumberger Smart Cards & Terminals and Schlumberger Automated Test Equipment, leveraging the combined strengths of the two business units to provide leading-edge, cost-effective solutions to customers.

Schlumberger Test & Transactions is a business unit of Schlumberger Limited, a $11.8 billion global technology service company providing oilfield services, natural resources management, transactions-based technology and associated systems, and semiconductor test equipment.

Cyberflex is a trademark and Smart Village is a registered trademark of Schlumberger. Java is a trademark of Sun Microelectronics.

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AmEx E-Purchasing Card

Not to be upstaged, American Express Corporate Services and CA-based Commerce One also announced yesterday they have joined together to deliver an end-to-end purchasing solution that links card-based purchasing solutions with e-commerce solutions. Commerce One operates the MarketSite.net Website, a business-to-business marketplace portal. Both companies said the combined solution allows organizations to integrate their entire purchasing process from sourcing and ordering through payment, data integration and reconciliation, via the internet/intranet, while maintaining strict controls on the ‘AmEx Purchasing Card’ program. Separately AmEx announced an alliance with CA-based Ariba for a business-to-business e-commerce solution that automates the purchasing process from requisition to payment.

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Oberthur/Hyperport

Oberthur Smart Cards USA and Hyperport International Inc. Monday announced the establishment of a long-term strategic partnership and cooperative agreement.

Under this dynamic relationship, Oberthur becomes the preferred vendor of Smart Card technology and personalization services to global Hyperport facilities. Oberthur and Hyperport will research and evaluate global opportunities for the utilization of the next generation of Smart Cards and related Oberthur products in Hyperport locations.

OSC and HII will mutually explore the acquisition of complimentary technologies to facilitate commerce, education and technology in Hyperport facilities and other Hyperport global venues.

Richard G. Marklund, president and chief executive officer of HII, stated that “Oberthur’s leadership position worldwide is important to us as we introduce Hyperports into various parts of the world. Hyperports are dynamic 21st Century globally connected facilities featuring the very best from worldwide sources of learning, discovery, technology, entertainment and business.”

“Oberthur’s smart card will be the key to securely accessing Hyperport information portals throughout the entire world,” said David Mooney, vice president, Advanced Technology Group of Oberthur Smart Cards USA.

Oberthur Smart Cards, a Total Solution Card and Services provider, offers a full range of expertise including card layout and design, manufacturing, milling and embedding, and personalization, for magnetic stripe, memory and microprocessor cards.

“This is an opportunity for us to partner with one of the most exciting business ventures for the 21st Century. By working together with Hyperport International, Oberthur Smart Cards USA will be introducing creative and personalized services for the next century,” said Philippe Tartavull, chief operating officer of Oberthur Smart Cards USA.

“OSC’s main focus is on a high tech variety of smart cards and this relationship with Hyperport International will be an important ingredient in our marketing plans,” Tartavull concluded.

About Oberthur Smart Cards

Oberthur Smart Cards, a leading manufacturer, technology and solutions provider of microprocessor cards and systems, is a division of Francois-Charles Oberthur, the world’s largest manufacturer of micro-processor transaction cards, the third largest fiduciary printer, and the number one manufacturer of instant lottery tickets.

Oberthur manufactures and personalizes smart cards and magnetic stripe cards in three production centers in the United States and Europe. Oberthur Smart Cards produced over 225 million cards in 1998, including 75 million smart cards.

About Hyperport International

Hyperports are dynamic 21st Century, globally connected destination gateways. They feature the very best from worldwide sources of learning, discovery, technology, entertainment and business.

Hyperports are (a) global destinations for personal discovery, exploration, life-long learning, business solutions and commerce, (b) showcases for emerging technologies, goods and services, and educational alternatives, and (c) places with continuously changing attractions, programs, and experiences appealing to everyone and every business.

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GTE to Distribute SignaSURE

Datakey Inc., a leading provider of information security systems, announced that they have entered into a global distribution agreement with GTE CyberTrust, one of the most experienced providers of public key infrastructure solutions. CyberTrust will distribute Datakey’s SignaSURE family of smart card-based information security solutions to its clients, which include both commercial and government markets.

The SignaSURE solutions use smart cards designed and manufactured by Datakey. The cards support industry accepted cryptographic standards including the widely accepted PKCS#11 standard and Microsoft’s CryptoAPI. The Datakey solutions provide on-card processing and storage of cryptographic data that enables user identification and authentication, secure data exchange and information validation.

CyberTrust’s industry-leading certification authority products and services allow corporations to issue and manage digital certificates that are stored on the smart cards. CyberTrust recognized the growing acceptance of smart cards as a security device because they provide significant advantages over software-only information security solutions. These advantages include two-factor authentication, protection of private keys, on-card processing of all private key functions, and portability of digital credentials.

“We are delighted that CyberTrust is continuing to expand its focus on enterprise needs by providing Datakey’s portable smart card information security solutions for global applications,” said Carl Boecher, president and CEO of Datakey. “Datakey is a pioneer in smart card-based information security technology. We have long recognized PKI as an excellent foundation for information security and we are pleased to collaborate with CyberTrust to enable secure business solutions through the integration of our SignaSURE CIP smart card solutions.”

Craig Jones, vice president of product management for CyberTrust, was also enthusiastic about the agreement. “CyberTrust’s relationship with vendors such as Datakey displays our commitment to offering PKI security solutions that are fully integrated with leading smart card technology,” he said. “Our customers can now benefit from increased portability and two-factor authentication, in addition to our proven PKI security offerings.”

The CyberTrust Security Family of public key infrastructure (PKI) security products and services enables organizations of any size — including financial institutions, telecommunication companies and large multinational corporations — to issue and manage digital certificates for use in a wide range of network-based applications. As businesses move their applications to the Internet, CyberTrust protects an organization’s employees, partners and customers with a comprehensive suite of products, hosting and consulting services. With more than 20 years of certificate lifecycle management experience, its standards-based solutions meet the most stringent security requirements of individual enterprises and national certification authorities.

Datakey Inc. is an international supplier of electronic products and services. The Company provides product, subsystem, and system solutions to record, store, and transmit electronic information. Datakey also provides products and systems for information security markets that enable user authentication, secure data exchange and information validation. It also provides OEM products, consisting of proprietary memory keys, cards, and other custom-shaped tokens, that serve as a convenient way to carry electronic information and are packaged to survive in rugged environments. Shares of Datakey’s common stock are traded on the Nasdaq/NNM under the symbol DKEY. The Web address is

Datakey press releases are available by fax through Company News On-Call at 800-758-5804, ext. 231950, or at .

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German ATM Net Doubles

Euronet Services Inc. signed a major agreement Friday with GE’s German bank, Service Bank GmbH & Co. KG, to acquire 252 installed ATMs in Germany and 35 ATMs in inventory. Under terms of the deal Euronet will pay DEM 12.2 million (US$ 6.7 million) for the established ATM network. Friday’s agreement more than doubles the size of Euronet’s network in Germany. The new agreement extends the existing arrangements under which Euronet has been providing services to Service Bank, and brings the total number of live ATMs owned and/or serviced by Euronet in Germany to approximately 450.

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One Million DUET Cards

For our company, 1998 was a year of great plans and expectations. It was a year of several major projects that had required a long time of preparation. Those projects were part of the company’s strategic direction. The first half of the year confirmed the feasibility of our expectations. In intense competition with other participants BGS won the tender of the Moscow Municipal Bank for the right to issue the Pensioners Social Card. Another project for several tenthousand cards was under development with the Savings Bank of the Russian Federation. The implementation of this project would have driven the SBERCARD system to a new level. The pilot project with the Russian diamond producer ALROSA was approaching the stage of full-scale implementation in the middle of the year.

Obviously, the crisis of August 98 influenced the plans of our company. We are not going to claim that nothing has changed or that our business has not been affected. The financial crisis swept away Russia’s biggest banks, and practically destroyed the banking system of the country. Banks were the main customers of the company. Little wonder then, that their problems had an effect on the company’s strategic plans.

However, the crisis has not been fatal for BGS. Notwithstanding a significant revision of the SBERCARD plans, this system continues to develop. At the end of 1998 GEMPLUS completed an order for 100,000 cards for the SBERCARD system. Plans for future orders were modified, but not cancelled. At the end of the first/beginning of the second quarter of 1999 we anticipate to receive the next major order for this system.

In the CIS countries the consequences of the crisis were either belated or alleviated by the strictly centralized financial systems. The Markets of CIS countries made an important contribution to the financial stability of BGS in the second half of 1998. The full-scale stage of the project with the Uzbekistan National Bank for Foreign Trade (installations in 12 regions), the project with ASAKA bank, several projects in the Ukraine and a rise in the card business of the Kazakh banks compensated for the reduced developments in the Russian market.

At the beginning of 1998 BGS announced several new projects based on a new system – DUET for Administrations. This system is focused towards the realization of regional welfare programs and the management of local budgets. After successfully testing it, the company signed a comprehensive agreement with the Administration of one region of the Russian Federation targeting the large-scale deployment of the system in this region. At present a plan is under development aimed at the financing of the project by Western investors in the framework of intergovernmental agreements.

Another system is DUET for Corporations. It provides capabilities for solving the problem of mutual non-payments with the help of smart cards. Within this a package of anti-crisis proposals also a payback scheme achieving the return of investment within a short period of time was prepared.

The continuing approach of extending the capabilities of the base version of the system – DUET for Banks – enables our customers to implement various loyalty schemes and to use the Internet for purposes within the payment system. The trial functioning of such a system is jointly being realized with the Savings Bank of the Russian Federation.

In autumn of 1998 the company announced the creation of a new department within the company’s organizational structure, the department of Applied Technologies. The principal task of the new department is to help the customers to successfully implement the DUET system in the most effective way in a short period of time. The new department organized several specialized seminars and workshops in Kiev and Moscow (at the Academy of the Savings Bank of RF). Consulting services were also rendered to customers in Kazakhstan where BGS shared the financial risk of implementing several projects in Almaty and one of the regions.

During the project development, the company frequently came across the necessity of storing different types of information on the card (different currencies, identification data, etc.). This problem may be resolved by a multi-application card. Unfortunately though, in spite of a huge worldwide interest toward this solution (JAVA, MULTOS, Microsoft Card), there is still a long way to go before the adoption of working standards, although the market already demands it. That is why BGS began the development of its own multi-application card that should meet some special requirements and be compatible with the existent DUET system whilst open to support a worldwide standard when confirmed. The company plans to finish the development and testing of the multi-application card within 1999 as part of a plan of a continuing smooth evolution of the present system.

Successes in numerous projects in several countries as well as the company’s financial standing resulted in positioning BGS Smartcard Systems AG as a leading edge technology company capable of realizing complicated large-scale projects with smart cards all over the world. This allowed us to begin the planned expansion into new markets. In 1998 the company’s efforts in this direction were concentrated on the markets of South-East Asia and Latin America. In the near future the company is going to open its new offices in Delhi (India), Colombo (Sri-Lanka) and Sao-Paolo (Brazil).

To date, BGS has supplied more than 900,000 smart cards and over 7,200 merchant terminals. We are looking forward to celebrating a significant event for our company – the delivery of the 1,000,000th DUET card.

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ICE Award

Hypercom’s new ‘ICE 5000’ POS terminal was nominated last week as one of this year’s “Most Innovative Products.” The ‘ICE 5000’ offers an interactive and intuitive user interface, high speed printer and a ‘FastPOS’ 9600 bps modem. The terminal supports credit, debit, smart cards and loyalty programs. When used in conjunction with Hypercom’s ‘Ascendant Server Environment’ the ‘ICE 5000’ will also support online advertising, electronic signature and receipt capture. The nomination was made at the ‘Smart Cards ’99’ convention in London.

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Hottest Segment

Based on end-of-1998 portfolio statistics, the sub-prime/secured segment remains the fastest growing card sector in the USA market. Issuers focused in the sub-prime/secured market grew an average of 51%, based on outstandings, last year according to CardData ([www.carddata.com][1]). This is nearly twice the 27% growth of the cobranded/affinity segment. Leading the pack is SD-based First Premier Bank with a 55% gain. OR-based First Consumers Bank surged by 53% while major issuers Providian and Metris/Direct Merchants grew 49% and 47% respectively.

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

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Fee Frenzy

Average late payment fees crossed the $23.00 mark according to latest data released by CardData ([www.carddata.com][1]). Based on February pricing statistics, late payment fees now average $23.22 industry wide. Among the nation’s top ten issuers late payment fees average $26.50, with $29.00 as the most commonly charged late fee. The surge this year has been driven by MBNA and First USA. One year ago the average late payment fee stood at $19.33 according to CardData. Over-the-limit fees also continue their climb. According to CardData, over-the-limit fees now average $22.40 industry wide compared to $18.53 one year ago. Other fees such as cash advance fees and annual fees are also rising steadily. Over the past eighteen months a number of new fees have been introduced such as balance transfer fees, dormancy/inactivity fees, account closing fees, customer service/participation fees and monthly membership fees. The upcoming April issue of CardTrak (www.cardtrak.com) will examine the rise in cardholder fees as well as recent policy changes affecting cardholders.

FEE HISTORICAL
Period Late Fee Over-limit Fee
Feb 94: $11.94 $12.54
Feb 95: $12.66 $12.83

Feb 96: $13.27 $13.19
Feb 97: $15.01 $14.72
Feb 98: $19.33 $18.53
Feb 99: $23.22 $22.40
Source: CardData (www.carddata.com)

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

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Mag-Tek Drivers

Mag-Tek announced Friday the availability of nine new device drivers for Windows 95 and 98 operating-system environments. The software utilities enable Mag-Tek’s magnetic-stripe card readers, encoders, PINpads and the MICR check readers to be easily integrated into end-user applications. The device drivers will help application developers to control hardware devices without the technical knowledge of hardware, and support both RS-232 serial and keyboard wedge interfaces.

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KY Banks Go E-Bill

Classic Bancshares, Inc. , the bank holding company for Classic Bank, Ashland, KY and First National Bank, Paintsville, KY, announces the introduction of its transactional web site at www.bank-anywhere.com , www.classicbank.com , or www.firstnat.com . In addition to offering customers the ability to access their bank accounts, transfer funds, view statement history, apply for loans and pay bills, the site also offers shareholders and potential investors corporate information on Classic Bancshares through online viewing and downloading of annual reports, quarterly press releases and current stock quotes.

“Online banking and electronic bill pay services will give customers of our subsidiary banks greater control, convenience and choice of the delivery channels they demand from their financial institution,” said David B. Barbour, President and Chief Executive Officer. “We have employed state-of-the-art technology to provide a secure platform for maximum flexibility so customers of our banks can have anytime, anywhere access to their accounts. The Internet access will complement our current dial-up PC product utilized by our business customers for cash management and further our goal of providing all segments of our customer base with the advantages of state-of-the-art technology, while enabling them to maintain comfortable relationships with local bankers they know and trust.”

World Wide Web users of this service will access their accounts via a secure web browser such as Netscape Navigator or Microsoft Explorer utilizing industry-standard SSL protocol and RSA encryption capability to ensure secure transmission of data. Seven days, twenty-four hour customer services will be provided to customers using the online capabilities of the web site.

“This product introduction will put Classic Bancshares subsidiary banks in the first 15% of community banks in the nation to offer fully transactional web sites,” continued David B. Barbour, “and offers the flexibility and convenience to our customers of banking anywhere, anytime.”

Classic Bancshares, Inc. is headquartered in Ashland, Kentucky and has two subsidiaries, Classic Bank and First National Bank of Paintsville. Classic Bank operates at 344 – 17th Street, Ashland, Kentucky with two branch offices located in Boyd and Greenup counties. First National Bank of Paintsville, operates at 240 Main Street, Paintsville, Kentucky with one branch office located in Johnson County, Kentucky. Classic Bancshares, Inc. has entered into a Definitive Agreement to acquire Citizens Bank of Grayson, Kentucky with closing anticipated in the second quarter of 1999.

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