Hidden Charges

New York City-based PT-1 Communications agreed Thursday to pay $300,000 in monetary relief as part of a settlement with the Federal Trade Commission in regard to PT-1’s failure to fully disclose charges associated with its prepaid phone card. The FTC alleged the company regularly advertised its prepaid phone cards as providing 19 cents per minute calling within the United States, while imposing undisclosed connect fees on card users. The FTC also charged that PT-1 imposed a 25 cents maintenance fee on all cards outstanding for more than a month without disclosing that fee. In addition, the FTC’s complaint alleges that PT-1 imposed a service fee, reducing the value of its pre-paid phone cards 25 cents per card for each month after the first month of active use, without disclosing this fee to consumers.

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MasterCard Purchasing Solutions

In conjunction with the Microsoft Commerce Solutions Briefing held for press and analysts in San Francisco Thursday, Microsoft Corp., MasterCard International Inc. and Clarus Corp. announced plans to cooperatively market integrated Internet-based corporate purchasing solutions. Together, the three companies plan to provide Internet buyers and sellers with an integrated solution for streamlined purchasing, payment and procurement reporting. Microsoft contributes its globally recognized, robust and proven Commerce Platform, based on the Windows operating system. MasterCard, one of the world’s leading providers of corporate payment solutions, provides global merchant acceptance, corporate purchasing card control features and line-item data reporting. And Clarus offers leading Web-based commerce solutions, including its business-to-business electronic procurement product.

“We are very pleased to be working with companies of MasterCard and Clarus’ caliber,” said Rich Tong, vice president, applications marketing at Microsoft. “Microsoft Commerce Platform, combined with Clarus(TM) E-Procurement and the MasterCard Corporate Purchasing Card, offers our joint customers a unique opportunity to reduce the cost of corporate purchasing while making Internet commerce a strategic asset to their organization.”

Making Corporate Procurement Easier

The cooperative marketing plans between Microsoft, MasterCard and Clarus are designed to make corporate purchasing easier, less expensive and more efficient. Instead of issuing requests for proposals (RFPs), poring over catalogs and calling dozens of suppliers to investigate product availability and pricing, corporate buyers will be able to shop for goods and services easily and securely from their intranet using the Clarus E-Procurement solution, built on the Microsoft Commerce Platform. Using the MasterCard Corporate Purchasing Card, employees can find approved goods and services over the Internet, conduct workflow and approval processes, and execute payment. Suppliers can easily create commerce-focused Web sites that seamlessly integrate transactions and product updates with their corporate buyers’ systems.

“The agreement with Microsoft and Clarus will provide unparalleled opportunities for our corporate customers to quickly and easily take advantage of e-commerce for purchasing,” said Steve Abrams, senior vice president, corporate products at MasterCard International. “Corporate purchasing cards have been embraced because they reduce costs and enhance data capture. With this program, we will integrate these strengths with the real-time benefits that the Internet provides.”

MasterCard has implemented this integrated Web-based procurement solution in its own organization, allowing the company to slash the average time required to fill a purchase order by 70 percent and cut the cost of processing purchase orders from $125 to $40. (To read the full case study, see .)

Three Leaders Come Together

Microsoft, MasterCard and Clarus offer customers leadership status in their respective businesses. Microsoft today announced plans for extending its popular Commerce Platform, which currently consists of the Microsoft Windows NT(R) Server operating system version 4.0, Microsoft SQL Server(TM) version 7.0 and Site Server Commerce Edition version 3.0, to include three new software products and services: Microsoft BizTalk Server, Small Business Commerce Services and Microsoft Commerce Server. (See the related press release for more information on Microsoft’s platform announcements.)

MasterCard is accepted at over 16 million merchants worldwide, and, in a recent study conducted by Gunn Partners of Fortune 500 companies, was ranked as the card brand chosen most often when companies implemented corporate purchasing card programs.

Clarus E-Procurement, built entirely on the Microsoft Commerce Platform, is a leading-edge Web-based solution for managing the procurement of all operational goods and services. It includes advanced features such as event-based purchasing, flexible business rules modeling and a robust approval-routing engine. The product also supports comprehensive catalog content management, corporate back-office system integration, the Microsoft Commerce Interchange Pipeline for supplier integration and MasterCard’s Corporate Purchasing Card for streamlined payment and reporting.

“The Microsoft Commerce Platform provides a scalable and flexible foundation that is paramount for broad-based deployment of strategic solutions such as Clarus E-Procurement,” said Steve Jeffery, CEO and president at Clarus. “Teaming with MasterCard and Microsoft will help us bring advanced corporate purchasing solutions to a broader market of Internet buyers and sellers.”

The three companies plan to comarket their integrated Internet corporate purchasing solutions and services to corporate customers and prospects through a national campaign. The solution will be implemented through MasterCard’s network of financial institutions; by Microsoft’s network of solution providers, system integrators and Internet service providers; and by Clarus Professional Services and its partners. More details of the marketing agreement and the integrated solution will be available at the upcoming Gartner Group Internet and Electronic Commerce Conference and Exposition (iEC) and National Association of Purchasing Management conferences in April and May.

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, MasterCard is the industry leader in quality and innovation. Nearly 700 million MasterCard, Maestro, Cirrus and Mondex cards are accepted at more than 16.2 million locations worldwide. In 1998, gross dollar volume exceeded $650 billion. MasterCard can be reached through its World Wide Web site at .

Atlanta-based Clarus Corp. ( ) is the leading provider of Business Resource Management (BRM) solutions through its Web-based Commerce applications. These products enable organizations to get control of their operational resources at the front lines, which dramatically contributes to its bottom line. Since 1991, the company’s Web-based Commerce, Financial and Human Resource Management solutions have served such customers as First Data Corp., MasterCard International, Hyatt Regency Chicago, T. Rowe Price Associates Inc., Investment Technology Group, Toronto Dominion Bank, The Container Store, Arkansas Blue Cross and Blue Shield, H.D. Vest Financial Services, Land’s End Inc. and Chartwell Re Holdings Corp.

Founded in 1975, Microsoft is the worldwide leader in software for personal computers. The company offers a wide range of products and services for business and personal use, each designed with the mission of making it easier and more enjoyable for people to take advantage of the full power of personal computing every day.

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EBT Interoperability

Interoperability among state EBT programs became a reality this week. EBT recipients of states that use the ‘Quest Operating Rules’ now have access to their benefits at any ATM or POS terminal throughout the country that bears the Quest service mark. As of March 1, forty states and the District of Columbia have implemented full-scale or pilot EBT programs, 22 of which are using the Quest rules. The ‘Quest Operating Rules’ were adopted in April 1996 by the EBT Council of the National Automated Clearing House Association. The EBT Council negotiated an agreement, effective this week through Aug. 31, with the contractors that provide EBT transaction processing services to the states.

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BlueGill & billserv.com

billserv.com Inc. announced that it has formed an alliance with BlueGill Technologies to offer professional services for certain companies seeking an electronic billing presentment and payment solution.

Under the terms of the agreement, billserv.com will be licensed to perform implementation services and install BlueGill’s EBPP software. billserv.com’s professional services staff will participate in BlueGill’s comprehensive product training in April.

Louis A. Hoch, president and chief operating officer of billserv.com, stated, “We are excited to team with BlueGill in the marketplace. Their product is an important addition to the product offering within our eConsulting group. We will utilize BlueGill’s EBPP software for our customers who either wish to maintain an in-house solution for EBPP or utilize eServ, billserv.com’s Internet billing clearinghouse service.”

Vinay Gupta, chief financial officer of BlueGill stated, “We at BlueGill are pleased to be a part of the solutions being offered by billserv.com and are confident that customers seeking an effective EBPP system will benefit from the combined expertise of billserv.com and BlueGill Technologies.”

About BlueGill Technologies

Founded in 1996, BlueGill Technologies (www.bluegill.com) is an international software development company with business solutions that enable companies to transform legacy systems into interactive web applications for managing customer relationships, services and transactions.

About billserv.com

billserv.com is a consolidator in the Electronic Bill Presentment and Payment Industry. The Company has four product offerings: Internet billing clearinghouse services (eServ(SM)), ePublishing(SM), customer care services (eCare(SM)) and professional consulting services (eConsulting(SM)).

Certain statements contained herein are “forward-looking” statements (as such term is defined in the Private Securities Reform Act of 1995). Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements.

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I-Bill Promoters

Billing over the Internet is a hot, new trend according to CA-based Killen & Associates. Killen’s “Enterprise e-Billing and Payments Markets” study reports that financial, utility, and telecommunications service companies are moving briskly to issue consumer and commercial bills via the Internet. The study cites the following companies as early adopters of I-billing: AirTouch, Boston Edison, Chase, and MCI WorldCom.

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SCTI Launch

The SmartCard Technology Institute will be launched this morning at an initiation program in Toronto, Canada. The `Executive Insights’ program is slated to begin in late March with sessions in Toronto, New York, Washington, D.C. and San Francisco. SCTI president Murray Johnston will lead this morning’s initiation. Smart card experts Dan Cunningham and Catherine Johnston will join forces to deliver the ‘Executive Insights’ program in the U.S..The SCTI organization comprises a partnership of leaders in the smart card industry.

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Mobile Drives Smart Cards

The UK’s SJB Research released a new smart card report that concludes the worldwide boom in digital mobile telephones is going to be a major driver for the smart card market. SJB says the next big push in smart card chip technology will take place in the area of dual interface chips. These will initially be required for combined transport and payment applications. The 400-page smart report with over 100 case studies is available by contacting enewham@sjbresearch.com.

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E-Bill Fight

Intuit Inc. announced Wednesday it is filing suit against Checkfree Corp. over the way it distributes E-bills. The complaint, filed in California’s Santa Clara County Superior Court, seeks damages and injunctive relief against Checkfree. The court papers allege that Checkfree is not complying with the terms of its April, 1998 bill presentment agreement with Intuit. In the 1998 contract, Checkfree agrees to support Intuit web-based bill presentment products with its processing services, and not to offer web-based bill presentment products of its own in certain distribution channels. Checkfree is the primary provider of bill pay and bill presentment processing services for Intuit and the financial institutions it works with. Intuit owns 19.9 percent of Checkfree.

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Alaska ATM Crash

Saturday and Monday were good days to not have been counting on modern banking technology, as about 120 of the state’s 330 automated teller machines experienced intermittent outages.

The temporary outages also affected debit cards serviced by the Alaska Option system, according to John Shipe, president of Alaska Options Services Corp.

Alaska Option contracts out to run the processing of ATMs for many financial institutions in the state. The company also serves as the intermediary when one bank’s card is used at an ATM owned by another institution.

The system processes about 1.5 million transactions a month, with weekends and the end of the month busier than normal, Shipe said.

This weekend fell into both of those categories, with Friday being payday for those who normally get paid at the end of the month, he said.

Alaska Option ATMs were down intermittently for about four hours on Saturday and another two hours Monday, Shipe said.

The problems stem from Alaska Option Services converting to new software, Shipe said. The company has the software installed and is converting its customers and ATMs to the new system in 15 steps.

The last four steps in the software conversion should be completed within two weeks, he said.

The company experienced a problem in June with its first conversion. That glitch gave one member institution problems for about two weeks, Shipe said.

No other problems were experienced with the software changeover until Saturday.

The new systems are tested and retested, but it’s almost impossible to catch all the glitches, Shipe said.

Alaska USA Federal Credit Union, the state’s largest credit union, received about 100 phone calls concerning the problem, according to spokeswoman Nancy Usera.

The manager of the call center guessed most of the calls came from the Lower 48, where customers who are traveling or in the military were concerned about why their cards didn’t work, Usera said. Local customers could have gone into a branch office, she said.

“We were having problems from around 12:30 to 2 p.m. (Monday),” Usera said.

First National Bank of Anchorage experienced some problems associated with the Alaska Option system early Monday morning, said Cheri Gillian, vice president of marketing. She did not have any specifics on what the problems were.

The bank has been experiencing some unrelated momentary problems with its out-of-town ATMs, she said. The problems last only a few seconds and are being blamed on sunspot activity disrupting communications, Gillian said.

Alaska Option Services is owned by seven institutions, including Alaska USA, Credit Union 1 and National Bank of Alaska, Shipe said.

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Amex Targets Canada’s Middle Market

American Express today announced that it plans to increase its marketing focus on the $4.6 billion Canadian “middle market” for business and travel related expenses. The card and travel company, which is already the market leader in corporate expense management, says there is even greater opportunity to help growing mid-sized companies with 20 to 100 travellers gain greater control over ballooning business and travel costs.

According to Amex Canada Inc. research, mid-sized organizations spend a whopping $4.6 billion annually on business travel and entertainment (T&E) and an average of $13,200 per traveller each year. T&E ranks as the second largest controllable expense for mid-sized companies, behind salaries and ahead of data management.

Bill Stanwick, head of Amex’s Mid-Market Program, says that until now mid-sized companies have been under-served by travel management companies. The company estimates 25% of its current business comes from the middle market.

“Our research shows mid-sized companies typically believe they are too small to get real savings through negotiated programs with airlines and hotels, or through improvements to their internal business processes, like Fortune 500 companies can. And travel agencies have not done a good job of providing them with real cost advantages and travel management advice,” Stanwick says adding, “We want to change all that. We know there are millions in savings waiting to be realized. And our new program is intended to help mid-sized companies find these savings.”

Stanwick says that most of the businesses in the mid-sized travel market consider themselves growth companies that expect to increase their level of travel and expenses as their operations expand. Over half (51%) of their workforce travels at least once a year on business, which represents a 46% increase since 1994. And there has been a 38% increase in spending on business travel to the U.S. during the same period.

Stanwick also says that only 22% of such organizations take advantage of negotiated airfares compared to three times as many large companies (67%). By using the buying power of American Express, mid-sized companies now have access to preferred pricing for air, hotel and car rental rates as low as those many big companies enjoy. He reports that this can mean up to 53% off standard corporate hotel rates.

“We are developing a range of travel management products and services specifically designed to give these companies the same level of control over expenses as big companies,” says Stanwick. He adds that Amex is also offering the option of outsourcing expense management functions. By outsourcing, companies can save time and money on administration and focus more attention on growing their businesses, he says.

According to Amex research, mid-sized companies are also early adapters of technology. As part of this new initiative, the company is offering fast and convenient on-line interactive booking. Business travellers can access Amex’s preferred airfares, rental car and hotel rates through their desktop PC or laptop computers. For more personalized service, small teams of dedicated travel counsellors are available to make reservations and arrange complicated itineraries.

Amex has also reconfigured the way it helps each mid-sized company manage their business travel and expense payment processes by providing one point of contact. This Account Representative can help develop travel policy, consult on management information reports, identify specific ways to save money, and provide information and education on travel management trends.

American Express in Canada operates as Amex Canada Inc. and Amex Bank of Canada. Amex Canada Inc. is a leading provider of travel related services in Canada and assists companies in managing and controlling their business and travel expenses. Amex Bank of Canada is the issuer of American Express Cards in Canada. Both companies are wholly-owned subsidiaries of the New York-based American Express Travel Related Services Company, Inc., the largest operating unit of American Express Company, which provides a wide range of financial and travel related services for consumers and companies.

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Taxing Proposals

Is charging U.S. personal taxes with a bank credit card a worthwhile proposition? According to a recent survey by Roper Starch more than three quarters of consumers surveyed say they would rather pay by check than cash or credit card. However the March issue of CardTrak (cardtrak.com), due to be released tomorrow, cites specific examples of how the advantages of charging federal personal income taxes via bank credit cards can be very rewarding. For example, CardTrak cites the example of a United Airlines ‘Mileage Plus MasterCard’ cardholder who recently charged a $5,000 tax bill. The cardholder, who paid a $125 service charge for the transaction, earned 5,000 United Airlines air miles for the transaction. While the nominal value for most airline miles is two cents per mile, under certain scenarios the miles can be worth far more. The cardholder cited in the above example, booked a round-trip ‘Business Class’ seat for late March for $882 and 20,000 United Airline miles. The normal cost of a United Airlines ‘Business Class’ round-trip seat to London is $5,300. Since the cardholder is a frequent flyer, at the United Airlines ‘Premier Executive’ level, earning double miles, the March trip to London will earn the cardholder approx. 15,000 UA miles. The net result is the consumer’s $5,000 credit card/income tax transaction was worth a net gain of $4,293 ($5300 ticket value minus $882 cash and minus an $125 fee for the income tax transaction.) According to Karen Hube of the Wall Street Journal, some cardholders have inquired as to charging as much as $1 million to $4 million worth of taxes this year. A transaction of this size could have a net value of more than $300,000 according to the March issue of CardTrak. Incidentally, Intuit, which accepts the Discover card for personal income tax payments, reported yesterday that, so far this year, more than 175,000 taxpayers have filed via ‘WebTurboTax’, which is nearly nine times that of last year’s total volume.

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