Phonecard Lawsuits

APCC Services, Inc. and Data Net Systems, LLC have filed two more lawsuits in Federal district court in Alexandria, Virginia, against switch-based resellers and prepaid calling card issuers who have failed to pay payphone service providers compensation for the use of their payphones, as mandated by Federal Communications Commission regulations. These lawsuits, the second and third in a series of suits APCC Services and Data Net will be filing, name Business Telecom, Inc. of Raleigh, North Carolina and EconoPhone, Inc. of Paramus, New Jersey.

According to Vincent R. Sandusky, President of APCC Services, “Business Telecom and EconoPhone, like PT-1 Communications which was named in the first suit we filed, have not responded to our bills and demands for payment. They have flagrantly violated their legal obligations under the Federal Communications Commission regulations and have caused considerable hardship to independent payphone service providers and misled consumers by failing to make their required payments. These lawsuits seek not only the amounts owed for compensable calls since the regulations took effect in October 1997, but also interest, punitive damages and attorneys fees.” Federal Communications Commission regulations require these long distance carriers to track and pay per call compensation at $.284 per call for the period in question.

Sandusky also noted that there will be more lawsuits filed in the coming weeks against other resellers and prepaid calling card issuers that continue to disregard their payment obligations. “We are vigorously pursuing these collection actions, but we are also in negotiations with several companies that have indicated a desire to resolve these disputes without the need for litigation,” he said. Sandusky said “carriers who come forward now without the need for litigation may be able to avoid punitive damages.”

APCC Services, Inc. and Data Net Systems, LLC are duly authorized billing and collection agents for over 2,000 payphone service providers for purposes of collecting payphone compensation from carriers such as Business Telecom, Inc. and EconoPhone, Inc.

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Alitalia JCB Card

Italy’s Alitalia and Japan’s JCB Co. announced this morning they will begin accepting applications for a new co-branded credit card next week. The new, ‘Alitalia/JCB Card’ will offer cardholders the option of earning air miles on Alitalia airlines. The card also offers double miles for purchases at designated stores, including famous Italian fashion boutique Max Mara. JCB said yesterday it projects signing-up 50 million cardholders in the first year. This is Alitalia’s first co-branded credit card. According to the ‘Nikkei Industrial Daily’, Alitalia has eight flights a week between Japan and Italy, and carries around 110,000 passengers a year on the route.

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Comm E-Commerce to Top $1 Trillion

A survey carried out by WEFA Group on behalf of Visa International has revealed that the worldwide market for commercial electronic commerce is expected to exceed US$1 trillion by 2003, representing a compound annual growth of 69 per cent over the next five years. In 1998, approximately US$77 billion was spent through commercial trading over the Internet.

The estimate is significantly higher than previous forecasts and outstrips the forecast for consumer spending over the Internet, which is expected to reach US$100 billion by the year 2002*. It is a major indication of the way in which companies will be doing business over the next decade and reveals how electronic commerce has the potential to dramatically reshape the business-to-business marketplace.

The Visa survey is the most comprehensive evaluation of the commercial electronic commerce market to date and includes detailed analysis of 17 markets around the world, representing 85 per cent of the total market opportunity. It also looks at which industries will be making most use of the Internet, the size of companies trading over the Net and the type of goods and services purchased.

Among the key findings are:

– of the 17 countries studied, 94 per cent of purchase volume will be focused in five countries: France, Germany, Japan, UK and USA

– the US represents 59 per cent of volume with Europe and Asia Pacific each representing nearly 20 per cent

– the services and manufacturing sectors will be the largest users of Internet technologies to carry out commercial transactions, followed by government/education, financial services, and retail trade

– while medium (50-249 employees) and very large (500+ employees) businesses have the highest volumes, small businesses (1-49) will see the fastest growth

– 39 per cent of purchases will be from businesses providing maintenance, repair and operational services such as temporary and janitorial services, training classes and office supplies. Some 12 per cent will be travel related purchases, such as booking business flights and hotels

– while the Internet currently accounts for over 95 per cent of electronic commerce activity, by 2003, 27 per cent will be carried out over Extranets. These are computer networks that link a company to a supplier or supplier network, creating a related community of specific companies and suppliers.

According to Visa, the findings show considerable potential for the use of commercial payment cards as the preferred payment method over the Internet. Silvia Harris-Payne, senior vice president, Commercial Products and Services, Visa International, said: “This study suggests that significant market opportunities exist for all Visa commercial products, including Visa Corporate, Visa Purchasing and Visa Business cards. By integrating emerging technology and existing Visa commercial programs we are meeting the growing needs of commercial customers for secure, reliable service in the virtual world. For Visa member banks, the opportunity exists to add value to their card programs by offering their commercial card product as the best way to pay, and be paid, over the Internet.”

While total Internet transactions currently comprise only a fraction of Visa’s global volume of US$1.3 trillion, online purchases represent one of Visa’s fastest growing market segments and commercial online transactions will account for a significant proportion of this amount.

About Visa International

As the World’s Best Way to Pay, Visa is the leading payment brand and the largest consumer payment system worldwide with more volume than all other major payment cards combined. Visa plays a pivotal role in advancing new payment products and technologies to benefit its 21,000 member financial institutions and their cardholders. Visa has more than 70 smart card programs in 33 countries and on the Internet, with 23 million Visa chip cards, including over eight million Visa Cash cards. Visa is pioneering SET Secure Electronic Transaction? programs to enable and advance Internet commerce. There are more than 630 million Visa-branded cards, which generate over US$1.3 trillion in annual volume. Visa is accepted at more than 15 million worldwide locations, including at over 450,000 ATMs in the Visa Global ATM Network.

* 1998 Visa projection based on assessing the level of electronic commerce activity in numerous countries around the globe.

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Egregious Practices

Legislation was introduced Tuesday in the U.S. House by Rep. John J. LaFalce (D-NY) to provide consumers with protections from the so-called “egregious” and “unjustifiable” practices of credit card issuers. The “Credit Card Protection Amendments of 1999” attacked late payment penalties, teaser rates, solicitations to students and minors, convenience checks, unsolicited credit cards and the imposition of annual fees for non-revolvers. The legislation would prohibit the canceling or fining of cardholders who consistently pay-off card balances each month. Rep. LaFalce is also calling for a ban on cards issued to consumers under the age of 21, unless there is evidence they have an independent means for repaying debt. The proposal also calls for the monthly disclosure of the total cost of repaying the card balance if a cardholder makes the minimum payment.

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Comdata Accelerates

Ceridian Corp. revealed Tuesday it has acquired a majority interest in Stored Value Systems, Inc., a former subsidiary of National City Corp. Ceridian has the option to purchase the remainder of SVS at a later date. SVS will become part of Ceridian’s Comdata division, which currently issues the ‘Comchek’ card to the transportation industry. SVS provides a private-label electronic retail cash card to retailers and oil companies such as Mobil, BP, Citgo, Kmart, The Gap and JCPenny. SVS has 65 employees and generated revenues in excess of $15 million in 1998.

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LML Earnings Report

LML Payment Systems Inc. announced Tuesday results from its 3rd quarter of fiscal 1999, ended December 31, 1998. During the quarter, the Company continued to introduce its “Electronic Checking” product to the retail point of sale market. Based upon our proprietary operating system, and supported by the legal protections embodied within our Electronic Checkwriting Patent, we continued to implement the first phase of our initial roll-out of “Electronic Checking”.

For the nine months ended December 31, 1998 we had revenues of $164,763, an increase of $38,971 from the corresponding period for the previous year. Operating and administrative expenses, exclusive of non cash items, were $973,485, an increase of $815,851 from the previous year. This increase is attributable to the operations of the Company’s ChequeMARK subsidiaries. There was an earnings before interest, income tax, depreciation and amortization (“EBITDA”) loss of $833,309 or $(0.0798) per share for the period ended December 31, 1998. This EBIDTA loss was consistent with the Company’s nine month projection as revised in December. There was a net loss of $1,190,927 or $(0.1141) per share for the period, which was again consistent with the revised projections.

The Company further announces that as of trading March 2, 1999 the “F” in its Nasdaq ticker symbol will be removed with the new symbol being: LMLA.

The Company owns U.S. Patent No. 5,484,988 with specific regard to a “Checkwriting Point of Sale System” and operates The ChequeMARK System, a central database and authorization system administering various consumer payment services, collectively referred to as “Electronic Checking.”

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Expense Express

InterPro Expense Systems Inc. Tuesday announced the release of Expense Express Version 2.6.

Version 2.6 includes several new enhancements that further streamline and automate the expense management and time entry processes for global enterprises. InterPro is a leading provider of software solutions for enterprisewide administrative processes.

The centerpiece of InterPro’s new release is Time Express, a fully integrated time entry product line. Time Express offers service- and project-oriented companies the ability to record, track and manage labor hours from within Expense Express’ user friendly environment.

Labor hours may be recorded by accounting or project number and associated with specific project-oriented expenses. Users can also leverage Expense Express’ comprehensive workflow, approval and auditing functionality to support program-charging policies.

“It’s simply how many of our customers prefer to do business,” stated Ted Comfoltey, president of InterPro Expense Systems. “Integrating time entry and expense reporting capabilities can help shorten the costly time lag between work performance and billing while increasing the accuracy and traceability of project-related expenses.

“At InterPro, we are committed to working with our customers to understand their needs and providing them with integrated solutions that fit their businesses.”

Expense Express Version 2.6 also includes many new features that can increase front- and back-office productivity, efficiency and user satisfaction. An Automated Charge Dispute capability provides Corporate and Purchase Card users the ability to automatically generate credit card dispute forms for erroneous card charges, which may be electronically delivered to credit card vendors.

This capability provides significant time savings and captures revenues that might not otherwise be recovered, due to the amount of time and effort that is normally required by this process.

Enhanced audit and approval functionality has been included. Customers can now model complex, enterprisewide expense and time management policies utilizing Version 2.6’s improved workflow capabilities.

Expense Express provides automated management of multilevel approval processes and the ability to structure multilevel audits that can support corporate expense policies with category limits by country, division, user type, per diem (multinational), cumulative weekly sums, cumulative trip sums or cumulative program sums.

System administration capabilities have also been improved with new administration scheduling capabilities that enable system administrators to develop and automatically execute sophisticated administration schedules for system backups, currency exchange rate table downloads, policy distribution and charge card transaction downloads.

This new capability lowers operations costs, improves expense management process efficiency, and helps to ensure data integrity and timeliness.

About Expense Express

Expense Express is the most comprehensive and configurable expense management solution specifically designed to regulate, enforce and manage the unique expense policies and processes of large multinational corporations. It is easy to learn, easy to use and works with the systems and software global customers already have in place.

Expense Express handles every aspect of the expense reimbursement process from electronically preparing, auditing and approving expense reports to tracking payments and recording them in a customer’s existing accounting system. Expense Express leverages its users’ existing technology investments by integrating seamlessly with all major enterprise systems.

Companies using Expense Express experience a rapid return on their investment, improve employee satisfaction, work more productively, negotiate with vendors more aggressively, and reduce the cost associated with processing expense reports by more than 50 percent.

About InterPro

Established in 1998, privately held InterPro Expense Systems develops, markets, implements and supports administrative software solutions that fit the specific needs of global businesses. InterPro provides comprehensive highly configurable applications that integrate seamlessly with its customers’ existing information system infrastructure.

InterPro supports the global enterprise with feature-rich expense reporting and time recording products that include multilingual, multicurrency and multitax capabilities.

InterPro is located at 4125 Hopyard Road, Pleasanton, Calif. 94588-8534. Phone: 925/730-3700 or toll-free at 800/290-2010. FAX: 925/730-1192. URL: .

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Cardxx Passes Test

Cardxx, Inc., developer of the System T-9 smartcard manufacturing process, announced it has completed its test samples of contactless smartcards that had been requested by Indala, the Smartcard Division of Motorola, Inc. , a global leader in advanced electronic systems and services.

Cardxx is currently qualifying their contactless smartcards in Motorola’s access control program. The production-run sample cards contain 125kz low frequency long-range radio-frequency devices designed specifically for the access control market. The qualification test by Motorola will cover all ISO standards and some proprietary testing on thermal dye quality.

“Acceptance into Motorola’s access control program would be a strong endorsement of our contactless smartcard technology and would strongly position Cardxx as a leader in providing contactless cards to the access control market,” said Harry Tiffany, President and COO of Cardxx.

The System T-9 is a state of the art, cost-effective, new core technology that is a superior alternative to the lamination process for the production of contactless (RFID) smartcards that are used in the access control market.

The System T-9 card manufacturing system utilizes a unique proprietary low pressure, room temperature process that encapsulates an integrated circuit and/or an antenna while the card is being formed. Because the process does not use high temperatures or pressures associated with the lamination process, the resulting encapsulated devices are not subject to stresses that can adversely affect the performance of the card. This results in a longer life card with less field failures.

The System T-9 is currently being used for both short and long runs providing for minimal waste and damage to the implanted devices.

ABOUT CARDXX

Cardxx manufactures contactless smartcards utilizing a proprietary break-through process that securely encapsulates an integrated circuit within a plastic card. In addition, the Company supplies and licenses its proprietary technology to current card manufacturers and systems integrators.

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Xtranet Mexico

Xtranet Systems says it has increased its ownership interest in DataBank International S.A. de C.V. from 49% to 80%. Xtranet operates its credit card processing operations in Mexico under DataBank. The company also announced that it is processing credit card transactions in Mexico through the Mexico City branch of one of the world’s largest international banks. The firm says it anticipates this particular merchant banking relationship to lead to the opening of additional operational offices in other offshore, European and Pacific Rim jurisdictions through branches of this same merchant bank. Xtranet projects that it will process over $800,000,000 in total credit card transactions in 1999.

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Gemini Verify Score

Equifax and HNC Financial Solutions announced the joint development of an identity authentication service. The ‘Equifax Gemini Verify Score’ will give U.S. credit grantors an enhanced application fraud risk predictor as part of a credit file. It combines the strength of Equifax’s credit data with HNC’s neural network technology and fraud control experience to systematically identify credit applications that present a real fraud risk. Initial test results show that 50% or more of potential frauds can be detected by inspecting just 5% of the lowest scoring applicants. Performance improvements over other scoring solutions range from 150% to over 500%. And because the score is being developed on a broad range of data, ‘Gemini Verify Score’ will provide a measurement tool that will aid in exploring markets and customer segments not previously considered.

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50 Billion Viewers

MasterCard International announced from Zurich yesterday it has renewed its official sponsorship of soccer’s FIFA World Cup, which will be held during the summer of 2002 in Japan and South Korea. In Tuesday’s press conference MasterCard also announced the continuation of its relationship with three-time World Cup champion Pele, who has been MasterCard’s exclusive World Cup spokesman since 1991. Under terms of the four-year FIFA agreement, MasterCard maintains exclusivity for all card account access devices such as credit and debit cards, ATM cards, telephone cards, etc., and receives exclusive global category rights to use the FIFA World Cup official marks, logos and designations in advertising, promotions and merchandising. The Pele contract requires the champion to appear in company and member advertisements and promotional materials, and to make personal appearances at various functions such as meetings with MasterCard’s member financial institutions. MasterCard also unveiled yesterday its first two 2002 FIFA World Cup card designs for 1999. The marketing program will feature a total of eight World Cup card designs, with two card designs introduced each year. MasterCard estimates it will receive a cumulative global television audience in excess of 50 billion through the sponsorships.

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Check Cashing Machine Tested

Greenland Corporation confirmed that on February 26, 1999, it had installed its second automated check-cashing machine in Santa Ana, CA for beta testing. This machine, like the first machine which was installed on January 7, 1999, is a freestanding kiosk with automated payroll check-cashing capability, full ATM functionality, and money order dispensing services.

The Company announced that the second machine features improvements including easier interior access for module maintenance and more robust software for enhanced diagnostic capabilities.

Lee Swanson, CEO of Check Central, a wholly-owned subsidiary of Greenland that is developing this technology, stated, “The response to the first machine has been fantastic. We have had very positive feedback from the storeowner and his customers, and potential distributors and purchasers of the machine who have visited the first installation site. We are very excited about our second machine and expect the public response to be just as enthusiastic.”

Mr. Swanson further indicated that the beta results for the first machine will be available for public release in about one week.

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