Java Card Moves Forward

Java Card Forum yesterday announced significant contribution to the Java Card API standardisation process and its industry-specific extensions. The Java Card Forum is a consortium of Java Card licensees of Sun Microsystems Inc., including all of the major smart card manufacturers committed to the Java Card standard. The Forum has established a Strategic Partner program with industry-leading smart card issuers from three major industry sectors: Telecommunications, Banking/Finance and Information Technology. The aim of this program is to gather input on business and technical issues to formulate industry-specific extensions to the Java Card API.

Among the results of the latest series of Java Card Forum working meetings are descriptions of market requirements for each of these vertical industries. In the Telecommunications group, the specification for a GSM API has been defined and agreed upon between the Forum members and the Strategic Partners. This GSM API is being transferred to ETSI SMG9, the standardization body which is now officially represented in the Technical Committee of the Java Card Forum. This GSM API will complement the generic Java Card API. ETSI SMG9 is taking this GSM API into its process to make it a standard by the end of this year.

“The wireless telecom industry needs a more open platform to deliver new services in a timely fashion. It is the role of ETSI SMG9 to build the standard for this new GSM platform. SMG9 is pleased to take the Java Card Forum specifications as a major contribution for this standard,” said Mark GREEN, Chairman of the ETSI SMG9 API Subgroup.

Michel ROUX, Chairman of the Business Committee, declared: “We are very satisfied to see the involvement of the Strategic Partners in the Forum. Their active participation is the promise of rapid acceptance of solutions meeting their needs, particularly in terms of interoperability, security and productivity.”

After its significant contributions to the Java Card API 2.0 specification, the Java Card Forum has agreed with JavaSoft on the specification of the Java Card API 2.1. The main topics included in the Java Card API v2.1 are object sharing between applets, transient objects, cryptography API, file system management and byte code format.

Bertrand du CASTEL, Chairman of the Technical Committee said, “The technical cooperation between the Java Card Forum members and JavaSoft, driven by the needs of the Strategic Partners, proves to be very effective and is leading to an open standard based on a powerful and secure architecture.”

Christian GOIRE, President of the Forum declared, “The Java Card Forum allows the fast creation of the first standard allowing open, secure and interoperable solutions for smart cards. Java with such a wide acceptance between card manufacturers, card issuers and customers is definitely a major step for the smart card industry.”

Evidence of the success of this new technology will be given at Cartes 98 (October 27-29) through implementations of the Java Card API and of vertical applications in smart cards.

Founded in February 1997 by Gemplus and Schlumberger, the Java(TM) Card Forum aims at promoting the Java Card API as an industry standard platform for smart cards. Strongly endorsed by Sun Microsystems, Inc., creator of the Java language and the Java Card API, the Java Card Forum is opened to Java licencees and has been joined by major hardware and software companies.

The Java Card Forum holds regular meetings to allow the exchange of technical information between participants, and makes technical contribution to Sun Microsystems,Inc., for the Java Card API specification, as well as to standardization bodies such as ETSI.

To ensure the deployment of Java-based smart card applications, Strategic Partners from key markets (Banking/Finance, Telecommunications, Information Technology…) are invited to work with the Forum members regarding technical issues and possible industry-specific extensions for the Java Card specification.

The current members of the Java Card Forum are: Bull, CitiCorp, De La Rue, Gemplus, Giesecke & Devrient, Hitachi, IBM, Inside Technologies, IPM, Keycorp, Motorola, Natwest, Oberthur, Orga, Schlumberger and Toshiba.

For more information see the Java Card Forum web site at .

The Java Card API was developed by JavaSoft, in collaboration with smart card manufacturers. It is based on Java and the Java Virtual Machine concept, a popular object-oriented software platform, which belongs to Sun.

ETSI SMG9 is responsible for the specification of the Integrated Circuit (IC) card / Mobile Equipment interface for GSM, DCS1800 and UMTS, and for monitoring developments relating to the use of IC cards outside of ETSI (European Telecom Standards Institute).



CoinBank Automated Systems, Inc.reached agreements with one national and three regional retailers to install ‘CoinBank’ machines on a trial basis. While the company did not disclose the retailers it did say two are NYSE companies and operate a combined total of 2,119 store locations throughout the U.S.. The parent company, Cash Technologies, Inc. develops and markets e-commerce kiosks, including advanced self-service coin counters and the multifunction ATM-X automated teller machines.  The Company also provides computerized cash processing services to banks, armored carriers, rapid transit agencies and other cash-intensive businesses.


Paymentech Update

The nation’s third largest payment processor, Paymentech, Inc., reported third calendar quarter earnings of $5.0 million compared to $3.8 million last year. During the fiscal 1999 first quarter, bankcard sales volume increased approximately 16% and transaction volume increased approximately 31% over the prior-year quarter.  Paymentech processed approximately $13 billion in bankcard sales volume, and nearly 550 million bankcard and third-party authorization and capture transactions for the quarter ended September 30. The company also announced Thursday the appointment of Richard W. Vague to the Paymentech board of directors as chairman.  Vague is the chairman and chief executive officer of First USA. Also Kathryn J. Kessler was promoted to chief financial officer.


Bank One 3Q

The megamerger of Bank One and First Chicago and the acquisition of Chevy Chase Bank FSB’s portfolio will propel Bank One  by year’s end to the coveted number one position in the card industry with about $70 billion in receivables. Based on figures released Thursday, Bank One/First USA held managed credit card loans (bank cards & private label) of $48 billion at the end of the third quarter. First Chicago reported third quarter bank credit card receivables of $17.4 billion and the Chevy Chase portfolio is currently at $4.9 billion. However, Bank One said yesterday its credit card spreads were wider and losses lower, offsetting the impact of slower balance growth. Card balances are only growing at a 10% annual rate. For the third quarter, new credit card account generation added some 2.2 million new accounts, up from 2.0 million in the second quarter. Bank One currently has 47.5 million cardholders. Third quarter volume was $13.2 billion. The managed credit card net charge-off ratio declined to 5.16% for the third quarter from 5.75% a year ago and 5.84% in the second quarter.  The 90-day delinquency ratio for managed credit card receivables was 2.07% at quarter-end, up slightly from 2.02% in 1997’s third quarter, but down from 2.18% at the end of the second quarter. The 30-day delinquency rate stood at 4.70% at the end of the third quarter compared to 4.61% for the second quarter. For complete 3Q financials for Bank One visit CardData ([][1])



Leeds VISA Cash Anniversary

As it approaches its first Birthday, the Visa Cash program in Leeds is the largest electronic purse program in the UK. To date, some 60,000 electronic purse cards have been issued and 1,400 locations are accepting the cards. Today Visa announces that it is building on this success by expanding the program.

Ken Bignall, Managing Director of Visa UK said: “The Leeds program has shown where an electronic purse adds real convenience for cardholders. For example Visa Cash transactions have already replaced cash by up to 10 percent in car parks and have also proved popular in fast food restaurants, sandwich shops and newsagents. We plan to extend our coverage in these areas as well as other everyday applications such as public transport.”

Research has shown high levels of satisfaction. Over 80 percent of Visa Cash cardholders are highly satisfied with the Visa Cash Leeds program, and the majority expect to use their card more in the future.

“This is just the beginning” said Bignall. “Visa will be building on this success by exploring opportunities with member banks for Visa Cash elsewhere in the UK and expects to bring more banks on board. As people realize just how convenient an electronic purse is, so they will demand its availability more and more,” he said.

David James, Operations Manager, National Car Parks

Ltd (NCP), showed his enthusiasm for the program: “We’ve had a positive response, particularly from regular customers using Visa Cash and we expect to see an increase in the number of customers who prefer to pay by such convenient, cashless methods. From NCP’s perspective Visa Cash is another benefit to offer our customers.”

The financial institutions who have issued Visa Cash cards to date include Abbey National, Barclaycard, Barclays Bank, The Co-operative Bank, The Halifax, Lloyds Bank, The Royal Bank of Scotland and TSB. It is expected that there will be a number of new participants joining the UK program in the near future.

Today’s announcement follows the recent commitment by Visa International and other leading electronic purse players to establish a common standard. Approximately 90 percent of the world’s electronic purse schemes have now agreed to adopt this standard. Interoperability between purse schemes is expected in the next two to three years and will allow consumers to use their electronic purse cards around the world.

In addition, the UK banking industry has also announced that they will be rolling out a chip-based infrastructure for debit and credit cards.

Ken Bignall concluded: “Clearly Visa Cash is an excellent new payment product and has been given the thumbs up by consumers. There is no doubt that the age of the chip is upon us.”

Visa is the preferred payment brand and the largest consumer payment system worldwide with more volume than all other payment cards combined. It plays a pivotal role in advancing new payment products and technologies to benefit its 21,000 member financial institutions, their cardholders and the global economy. As the leader in emerging technologies, Visa has more then 70 smart card programs in 31 countries and on the Internet, with 22 million Visa chip cards, including over eight million Visa Cash cards. Visa’s 642 million cards, generating over US$1 trillion in annual volume, are accepted at over 15 million worldwide locations, including 400,000 ATMs in the Visa Global ATM Network.

Visa Cash is a payment card embedded with a computer chip which stores money as electronic data. Up to GBP 50 can be loaded onto the card which is drawn from the cardholder’s debit or credit card account. Money is loaded onto the card at one of 60 loading machines situated in and around Leeds.

There are currently more than 8 million Visa Cash cards being used in 18 countries around the world, including the USA, Australia, Spain, Italy, Hong Kong and Japan. As well, an Internet pilot is being conducted in the U.S. and a Loyalty application has been added to the Visa Canada pilot.

* Cardholder research carried out by Research Services Limited among 889 Visa Cash cardholders.


Another HNC Patent

The European Patent Office has issued European Patent No 0669032 to HNC Software Inc. for its technology for detecting fraudulent transactions in customer accounts. The patent covers techniques for applying current transaction and customer data to a predictive model based on past transaction data in order to score an account transaction for the likelihood of fraud.

Robert L. North, President and CEO of HNC Software Inc., said, “Although HNC already owns a number of patents, this one and the one issued in the US 6 October are especially significant in that they protect the intellectual property of Falcon, our flagship product in the financial services market. We are elated.”

HNC’s Falcon payment card fraud detection system is used by card issuers in Brazil, Canada, Germany, Japan, The Netherlands, Mexico, South Africa, the United Kingdom, and the United States. Currently monitoring over 260 million credit and debit card accounts worldwide, Falcon is generally credited with helping to curtail the meteoric rise in credit card fraud losses of a few years ago. In 1992, MasterCard and Visa reported a fraud rate of 18 and 19 cents per $100, respectively. By 1997, the rate had dropped to approximately 8 cents per $100. HNC customers cite use of Falcon as a major factor in these savings.

Other HNC products covered by the new patent include Falcon Cheque, a checking account fraud detection solution, and VeriComp, a Worker’s Compensation claims fraud detection system. The Falcon family, including Falcon Cheque, is developed and marketed by HNC Software’s Financial Solutions division. VeriComp is developed and marketed by the company’s Insurance Solutions division.

Headquartered in San Diego, California, HNC Software Inc. is a world leader in the development and delivery of predictive software solutions in client/server environments. HNC provides innovative predictive software systems in the financial services, retail, insurance information, and electronic commerce markets. For more information, see or contact Patsy Campbell, Director of Marketing, HNC Financial Solutions, 5930 Cornerstone Court West, San Diego, CA 92121, (619) 546-8877. For investor relations hotline, call (800) 396-8052.


Smart IDs

Litronic, Inc. and DataCard jointly debuted yesterday a new line of identification and authentication token-based security designed to help government agencies, corporations, banks and other large enterprises take full advantage of the cost efficiencies and service improvements available with modern electronic financial systems.    The new token-based security solution features Litronic’s ‘ProFile Manager’, a smart card initialization management application, along with a digital photo ID system from DataCard, which has the ability to personalize individual smart cards.


Y2K – Business Catalyst?

A new paper released yesterday says that despite the doom and gloom forecasts about the Year 2000 computer problem, the so-called “millennium bug” offers significant business opportunities for the nation’s financial institutions, including credit card firms. The paper entitled: “Year 2000 and the Financial Industry: Technological Cataclysm or Business Catalyst?” was released by an EDS executive at the second annual Conference of the Brookings-Wharton Papers on Financial Services. Among the opportunities cited is the suggestion to create and maintain asset levels. Year 2000-ready financial institutions should focus on implementing innovative marketing programs to create short-term incentives for retaining cash flows, such as offering free checking through the Year 2000 in exchange for a high level of deposits. Another suggestion is to exploit servicing capacity.  Year 2000-ready institutions will gain market share by buying business lines from less-prepared institutions that decide to exit a business line or to outsource it to another firm rather than repair or replace their systems.  Institutions with larger capacity in specific business lines, such as loan servicing or credit card processing, will be able to take on additional volumes from other institutions seeking to outsource rather than exiting the business or making the necessary investment in Year 2000-compliant hardware and software. For a copy of the complete paper dial [][1].



Retail Beats Promo Phonecards

For the first time, 1997 revenues for the carriers from retail sales for prepaid calling cards were higher than revenues from promotional calling cards, says a new study from Atlantic-ACM. The four markets for prepaid calling cards are promotional, retail, collectible, and fundraising. “Calling and Prepaid Cards: Market Dynamics and Forecasts 1998 – 2002,”  also projects that as the telecommunications market evolves, prepaid and smart cards will increasingly become substitutes for traditional calling cards.The report says the size of the US marketplace for all prepaid and smart cards has grown from $12 million in 1992 to $2.2 billion in 1997 to $3.2 billion in 1998.


ABN Holographics 3Q

American Bank Note Holographics, Inc. announced results for the third quarter and nine months ended September 30, 1998.

Sales for the nine month period ended September 30, 1998 were up 38% to $27.1 million from $19.6 million in 1997, while net income increased 57% to $6.8 million, or $.50 per share, from $4.4 million, or $.32 per share, in the first nine months of 1997. Sales for the third quarter increased 30% to $10.5 million from $8.1 million for the third quarter of 1997, while net income increased 22% to $2.8 million, or $.20 per share, from $2.3 million, or $.17 per share in 1997.

Josh Cantor, President of ABH, commented, “We are pleased with the continued growth in the third quarter and nine month periods. The strategy of being market specific in our sales approach is yielding strong results. The improved performance is due to expansion of our product authentication and security applications, including holograms for currency use, as well as continued growth in the transaction card segment, where we extended our contract with MasterCard until February 2003.”

Mr. Cantor continued, “Gross margin percentage remains strong at 64% for the third quarter. Product authentication and other secure holographic applications present significant opportunities, and as a result, these sales are growing and are becoming a larger percentage of overall sales. We continue to leverage our market leadership to expand, diversify and introduce new holographic applications and thus gain new customers, as we did in the current quarter.”

American Bank Note Holographics (“ABH”) is the world leader in the origination, controlled production, and marketing of mass-produced secure holograms. The Company’s holograms are used for security applications and counterfeiting protection for licensed products, identification cards and documents of value, tamper resistance and authentication of high-value consumer and industrial products, as well as for counterfeiting protection for credit and other transaction cards.

               (In thousands, except per share amounts)
                               Three Months Ended   Nine Months Ended
                                    Sept. 30,           Sept. 30,

                                 1998       1997     1998     1997

Sales                          $10,524    $8,104   $27,140  $19,641
Cost of goods sold               3,781     2,617    10,226    7,837

  Gross profit                   6,743     5,487    16,914   11,804

Selling and administrative
  expense                        1,872     1,448     4,630    3,861
  EBITDA                         4,871     4,039    12,284    7,943

Depreciation and amortization
  expense                          237       288       821      869
  Operating income               4,634     3,751    11,463    7,074

Interest income, net (expense)    (137)      122      (158)     337
  Income before taxes            4,497     3,873    11,305    7,411

Tax on income                    1,726     1,598     4,462    3,057

  Net income                  $  2,771   $ 2,275  $  6,843 $  4,354

Earnings per common share –
basic and diluted                $0.20     $0.17     $0.50    $0.32

Shares used in computing per
  share amounts                 13,636    13,636    13,636   13,636


First Chicago 3Q

First Chicago reported lower losses, lower delinquency and higher fee revenue in its card portfolio. FCC’s managed credit card charge-off ratio in the third quarter was 5.98%, down from both 6.80% in the year-ago quarter and 6.94% in the second quarter. The 90-day delinquency ratio for managed credit card receivables was 1.44% at quarter-end, versus 1.80% one year ago and 1.46% at the end of the second quarter. Managed credit card fee revenue was $257 million, up 30% from $198 million in the year-ago period and up substantially from the second quarter, partially reflecting repricing. For complete 3Q financials for First Chicago visit CardData ([][1])

3Q-1998             2Q-1998             3Q-1997
Receivables:    $17,409,895,927     $17,107,846,200     $17,307,591,095
Q-Volume:       $11,721,058,163     $11,928,265,887   $11,888,521,490
Accounts:            13,282,357          12,954,778          14,838,975
Active Accts:         7,579,499           7,630,053           8,435,675
Cards:               18,685,518          18,592,709          21,211,060
  Source: CardWeb’s CardData (



Euronet Update

Euronet Services Inc. reported yesterday that transactions by cardholders on its ATM network in Hungary, Poland, Germany, Croatia and the Czech Republic totaled 1,333,144 in August and 1,375,809 in September. Approximately 4% of the total August transactions and 6% of the total September transactions were processed for client bank ATMs under network management service agreements. Last month Euronet brought live its first connection to a bank in France and is now processing transactions for Credit Municipal de Nantes. As of this week, Euronet was operating a total of 1,170 ATMs, including 446 in Hungary, 413 in Poland, 214 in Germany, 62 in Croatia, 34 in the Czech Republic, and one in France. Of the total 1,170 ATMs, 8% or 97 ATMs are operated by the company for client banks under network management service agreements.