Payment Discrimination

U.S. Congressman Chaka Fattah (D-PA) reintroduced the ‘Cash Consumer Protection Act’ yesterday. HR 599 simply states that no one may refuse to engage in a commercial transaction because a consumer does not have a credit card. The ‘Cash Consumer Protection Act’ would amend the ‘Consumer Credit Protection Act’ and says “no person may, in the course of a business transaction involving a sale or lease, refuse to make the sale or lease because the purchaser or lessee does not possess a credit card.” The seller or lessor is protected by being allowed to use other means, including the collection of cash deposits to protect their assets. Fattah, who initially introduced the legislation fifteen months ago, reintroduced the bill in honor of National Consumer Protection week.

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ATM Refunder

Internet banker TeleBank rolled-out a promotion Thursday to instantly credit customers for any ATM fees charged by another bank when using that bank’s ATM. The TeleBank ‘ATM Refunder’ is a new product exclusively for users of Yahoo! Finance who sign up for TeleBank accounts through an advertising campaign to run on the Yahoo! network. The ‘ATM Refunder’ will instantly credit a Yahoo!/TeleBank customer’s account for any foreign ATM fees up to $1.50 per transaction and up to four transactions per month. TeleBank’s Internet checking account holders receive interest on account balances over $2,500, free unlimited online bill payments, free Internet account access, free printed checks, a free ATM/debit card and pay no monthly fees.TeleBank currently has over 50,000 accounts representing more than $1.1 billion in deposits.

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BAMS & Furr’s

BA Merchant Services Inc. and its technology partner I-Way Corp., Newport Beach, Calif. have implemented an Internet commerce site for Furr’s Supermarkets Inc., a 70-store chain based in Albuquerque, N.M. Furr’s Online will sell all products normally sold in a Furr’s Supermarket, including perishables, with the added convenience of delivery to home or office or pick-up at designated stores.

“We believe this is extremely significant E-commerce technology,” said Jim Aviles, senior vice president at BA Merchant Services. “Bringing I-Way’s On-line store to our customers offers them a secure E-commerce solution in the competitive virtual marketplace.”

All credit cards are transacted through BA Merchant Services Inc. vPOS gateway offering enhanced security features. BA Merchant Services Inc. and I-Way Corp. have been working together for several years on secure E-commerce payment solutions.

“The key to our On-line store technology is integrating tightly to existing supermarket systems,” said David Isaacs, president of I-Way. “I-Way’s technology extends our customers’ marketplace in effect creating a store with no walls. Hosting the system on our own hardware greatly reduces client-side system complexity so the retailer can concentrate on their strength — selling groceries. Our systems enhance our customers’ marketplace, not compete with it as others seek to do.”

I-Way hosts the system in its secure Irvine, Calif. data center. “Furr’s Online is truly groundbreaking technology,” said Melissa Porter, director of Non-Traditional Commerce for Furr’s. “It tightly integrates into our physical store structure. Our Frequent Shopper Program, product picking and fulfillment and sales reporting all flow from and through our legacy systems. Furr’s Online is a seamless extension of our physical stores.”

According to published industry reports the Retail Grocery Industry alone generates approximately $400 billion in sales per year (Food Marketing Institute). According to Price Waterhouse, 10% or $40 billion in retail grocery sales will be electronic by 2005.

BA Merchant Services and I-Way Corp. will be displaying their E-commerce systems in New Orleans at Marketechnics ’99, Booth No. 910, Feb. 26-28.

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Diebold Philippines

Diebold, Incorporated announced it has appointed Prime Systems Plus Inc. as its distributor in the Philippines. Previously, Prime Systems acted as a distributor for International Business Machines (IBM), marketing Diebold self- service solutions under the IBM name.

Under the distributor agreement, Prime Systems will provide sales, marketing and customer support services for Diebold automated teller machine (ATM) installations and other self-service solutions throughout the Philippines. Together, Diebold and Prime Systems offer financial institutions more than 150 years of bank technology experience.

“The Philippines has been an excellent market for Diebold with more than 30 local banks using Diebold-designed and manufactured ATMs for more than a decade,” said James Chen, Diebold vice president and managing director, Asia/Pacific. “We are pleased to establish a stronger presence in the Philippines.

“Our relationship with Prime Systems is an important part of our drive to expand our operations in Asia,” Chen said. “It allows us to get closer to our customers and introduce new products and technologies to them. The closer we are, the better service we can provide.”

Chen added that Prime Systems’ experience in the ATM business and its intimate knowledge of the market would be a great asset to Diebold’s customers in the Philippines.

Honorio Ingal, president of Prime Systems Plus, said the two companies are well-suited and that he is optimistic the partnership will be successful.

“This agreement is of special significance because the relationship between Diebold and Prime goes back a long way,” he said. “We have supplied Diebold solutions to the Philippines’ ATM and self-service market for more than 10 years.”

Prime Systems Plus Inc. is a leading systems integration company focused on banking and imaging solutions.

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

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

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Igniting Sales

TX-based ATM manufacturer, Tidel Technologies, Inc., reported Thursday that its introduction of the new ‘Ignition’ series of ATMs in October has increased the number of units shipped in the last quarter by 45% compared to the same quarter a year ago. The company expects to sell the remaining inventory of the ‘AnyCard ATM’, the predecessor to the ‘Ignition’ series ATM, by Mar. 31. Tidel says the current quarter’s results should be further enhanced by the first shipments of its new cash controller model, the ‘TACC IV’.

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Super Smart Card

Philips Semiconductors and IBM Research revealed plans Thursday to jointly develop a new generation of multi-function smart cards. The new IBM-Philips approach will mark the first time that multiple smart card applications can be written in different programming languages and then loaded onto the same card after it is issued. The new approach supports applications written in native assembler language, high-level languages such as C compiled to native binary code, and interpreted languages such as Java. The cards, based on Philips Semiconductors’ ‘SmartXA’ smart card processor, will incorporate a highly secure operating system and enhanced JavaCard virtual machine software being developed by IBM Research. The ‘SmartXA’ also features a smart card hardware firewall, a future-oriented 16-bit CISC processor and a state-of-the-art memory configuration. It provides approximately 30 times the performance of today’s 8-bit architectures, enabling it to run software interpreters such as Java quickly and efficiently. Both firms hope to launch a pilot in 2001.

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Another Trucking Card

Portland, OR-based SmartStop, Inc., yesterday introduced the first nationwide smart card network for the U.S. trucking industry. SmartStop, a national telecommunications-based solutions provider to the trucking industry, says its new network will enable fleets and drivers to use the cards to electronically store and pay for the items they purchase, use for phone calls, and facilitate the transfer of funds between fleet and driver accounts. Users will also be able to access and/or pay for such services as fueling, repairs, meals and convenience items. Industry loyalty programs can also be integrated into the multi-application trucking card. The technology for SmartStop’s wireless/contactless smart card was developed by On Track Innovations Ltd..

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HHonors Responds

Hilton said yesterday that despite all the new bells and whistles in the new Starwood hotel frequent guest program it falls short of the double dipping and credit card advantages of Hilton’s ‘HHonors’ loyalty card program. Hilton HHonors is now the only hotel program that allows its members to simultaneously accumulate both airline miles and hotel points for the same business-rate stay through its ‘Double Dip’ earnings feature. The ‘Westin Premier’ program also offered this feature until yesterday when it was replaced by the ‘Starwood Preferred Guest’ program. The ‘Hilton HHonors’  also offers a unique two-way exchange of points to miles and miles to points with 30 partner airlines. In a special promotion through Mar. 31 guests charging their stay to any American Express card earn double points and double miles. Hilton’s response also attract too much Internet traffic . . . it’s Web site has also been down since early Wednesday. For details on the new program visit CardWatch ([www.cardwatch.com][1]).

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

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SCF to Educate

The Smart Card Forum , a multi-industry organization working to accelerate the widespread acceptance of smart card technology, today announced that it has created a new membership category to serve the education sector.

This mirrors the fact that colleges and universities are enjoying a great deal of success in the deployment of smart cards and systems on campuses across the continent.

“College and university campuses have proven very successful environments for community-wide adoption of smart card technology, so the Forum is expanding its membership spectrum to both reflect and support that growth,” says SCF President and CEO Donna Farmer. “Now that educational institutions have a formal seat at our table, we can learn from their successful marketplace experience and they can benefit from access to all the know-how and networks our current members offer them.”

There is a very unique dynamic within the education arena that is conducive to rapid rollouts of smart cards to large numbers of people. Campuses are concentrated and “closed” communities that allow the multi-application possibilities and benefits of smart cards to be realized by large numbers of people. From the library to the laundry room to the campus bookstore, smart cards make sense for students. They also make sense for local merchants, whose businesses profit from proximity to students able to use a new form of payment that they are able to accept.

The Forum also announced that the University of Illinois has joined its ranks as an Education Member. While the university*s card program is currently magnetic stripe and bar code, the school is planning a move to smart cards to provide more applications and greater security.

“We look forward to the tremendous benefit we’ll receive from the market-driven data and expert information to which we will have direct access as a member of the Smart Card Forum,” says Gary Brinkley, technical director with the University of Illinois. “The combined knowledge and experience of the Forum*s members will help us make better decisions and design systems that will work together. The campus environment is ripe for smart cards, and the addition of a new membership category to serve the unique needs of organizations like ours will help speed the deployment of smart cards on campus.”

The University of Michigan, which runs a campus smart card program nearly 100,000 cards-strong, has been a member of the Forum since early last year. U of M adopted the *Mcard* in 1995. It serves as a photo ID, access/entry card, and ATM, debit, calling, library and entree card. In addition to that, many off-campus Ann Arbor merchants accept the card for payment.

“Some of our corporate members are now involved in more than 25 campus card programs in the U.S. and Canada,” says Farmer. “This kind of cross-sector cooperation is what the Forum is all about — and these partnerships are resulting in a fast-increasing number of successful implementations. What we have called a ‘rising tide’ of acceptance in other contexts is now becoming a tidal wave on many campuses. That’s why this is the right time for universities and colleges to join the Forum.”

The Forum is inviting universities and colleges to join its growing ranks. To qualify, the institution must be accredited and either run a smart card program now or express clear interest in exploring the possibility of smart card deployment in the future.

The Forum is currently holding its latest Educational Institute and Work Group Meetings in Salt Lake City. SCF Work Groups — including education, health care, interoperability, legal and public policy, multi-application, network applications, retail, technology, telephony, transportation, and travel and entertainment — serve the needs of many key sectors and reflect the diversity of both the Forum’s membership and the new applications being developed and implemented by them.

In Salt Lake City, the Joint Work Group Meetings will address the issue of secure access in the college campus environment during one of its many information sessions.

In addition to the new Education category, the Forum’s membership types include: Principal, Auditing and Government.

The Smart Card Forum ([www.smartcardforum.org][1]) is a non-profit, multi-industry organization of 200 members working to accelerate the widespread acceptance of multiple application smart card technology by bringing together, in an open forum, leading users and technologists from both the public and private sectors.

[1]: http://www.smartcardforum.org

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BannerDirect Unbound!

In a week replete with announcements of new hires, BannerDirect added three new positions to its rolls. After a watershed year, the direct marketing firm announced today that it has created the three new positions in order to satisfy the increasing demands of its growing business. “Banner Direct has surpassed its expected goals in such a manner as to demand the introduction of these new positions,” said Christine Fontana, president.

The new positions are strategically located across the country and include creative director for the production division in Wilmington, NC andearlier this week BannerDirect named Kinga Baransky to fill this post; Richard Mcintosh has been placed to conduct accont management, and will be operating out of the marketing firm’s headquarters in New York, NY; and working from the sales and marketing base in Milwaukee, WI, Rosalyn Piecka has been named strategis development manager.

“It became evident during the course of the past year that BannerDirect was expanding beyond its previous limitations and stretching its boundaries,” said Ms. Fontana. “This staff development will not only ease our collective workload but will galvanize the business further in ways we can’t even begin to imagine!”

As an agency devoted primarily to direct response marketing for financial, entertainment, oil, and retail companies, BannerDirect, Inc. was founded in 1990. The company is a full-service direct marketing agency, developing response marketing via direct mail, with a concentration on the credit card industry — from acquisition, to product fulfillment, to incentives for activation and usage. Its specialty is in bringing co-branded and affinity cards to the public, and in developing both business-to-consumer and business-to-business marketing lans. As today’s announcement attests, BannerDirect is ever expanding, not only of a client base in different industries and exciting catagories, but its employee-base as well. The company is geographically positioned to meet the needs of its clients with corporate headquarters in New York City, production management headquarters in Wilmington (NC), and account management offices in Milwaukee (WI), New York City, and Carson City (NV).

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Retail Card Securities

In step with consumers’ appetite for credit, retail credit card usage has gained momentum in recent years, with total outstanding receivables fast approaching $100 billion.  With traditional programs flourishing and acceptance of retail commerce and card programs taking hold on the internet, Fitch IBCA expects retail and private label lending to proliferate further in the coming years.

As retail and private label card issuers increasingly turn to the securitization markets to fund their growing portfolios, the need for consistent analysis across all credit card portfolios has arisen.  As such, Fitch IBCA is releasing its criteria for rating securities backed by retail and private label card portfolios entitled “Retail Card ABS in the New Millennium.”

Among retailing giants like Sears, Roebuck and Co. and JC Penney, lie specialty players such as The Limited, Inc., Pier 1 Imports, and Circuit City Stores, Inc. and others that issue proprietary cards to purchase their goods and services.  In addition, many banks and finance companies issue private label cards tailored specifically for retailers without the capacity or desire to run their own portfolios.

The programs benefit issuers, cardholders, and merchants alike.  For retailers, proprietary cards function as effective marketing tools helping to increase sales and build customer loyalty.  For consumers, the programs provide alternative and often attractive financing options, many of which include discounts on purchases, deferred payments, and rewards-type programs.

Fitch IBCA’s criteria used in rating retail card ABS transactions generally follows that used for rating portfolios backed by general purpose Visa, MasterCard, and Discover portfolios.  However, the need to account for corporate bankruptcy issues and industry, merchant and geographic concentrations in retail and private label card ABS gives rise to additional stresses and assumptions when setting appropriate credit enhancement levels. The new report highlights the key differences Fitch IBCA’s general purpose and retail card ABS analysis and details reasoning used in arriving at its assumptions for both.

Copies of the new report “Retail Card ABS in the New Millennium” and Fitch IBCA’s general-purpose credit card criteria titled “ABCs of Credit Card ABS,” are available on Fitch IBCA’s website at [www.fitchibca.com][1] or by calling 800-753-4824.

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

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Exclusive Online Card

One of the largest on-line marketing deals was sealed yesterday between America Online and First USA. The five-year agreement is anticipated to generate up to $500 million if expected thresholds are met, and contains significant guaranteed revenue to AOL and significant marketing commitments to First USA. With yesterday’s agreement, First USA becomes the exclusive marketer of credit card products and services on AOL, the CompuServe service, AOL.COM and AOL Instant Messenger in the U.S. and Canada, and will also market products and services on a non-exclusive basis within AOL’s Digital City. Wednesday’s agreement extends the AOL/FUSA relationship that began in 1996 with the introduction of the ‘AOL VISA’ card. America Online has more than 15 million paying subscribers and CompuServe has about 2 million paying members. Based on current industry intelligence AOL attracts about 31 million on-line visitors each month.

                            WEB  TRAFFIC  LEADERS
                      Internet Firm        Monthly Visitors
                     America Online:         30.9 million
                     Microsoft               27.7 million
                     Yahoo                   27.2 million
                     Lycos                   25.6 million
                     Netscape                17.2 million
                     Excite                  17.1 million
                         Source: BlueJag’s WebStuff

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