Excellence

MasterCard International was one of ten companies, two individuals and a public relations agency honored in Boston yesterday for their commitment to communications measurement and research. The ‘Delahaye Circle of Excellence’ honored MasterCard with an award in ‘International Measurement’. MasterCard began evaluating its domestic public relations efforts two years ago. After a successful international pilot program in 1996, it launched its global competitive measurement program at the beginning of 1997 and has since expanded it to cover 17 individual markets. MasterCard uses the measurement to track the effectiveness of programs in different regions and to ensure message consistency throughout its global markets.

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Happy E-Birthday

Security First Network Bank is celebrating its third anniversary this week as the world’s first Internet bank and the first Internet bank to be FDIC-insured and approved by the Office of Thrift Supervision to operate on the World Wide Web. Among many other “firsts”, SFNB was the first to do online bill presentment with a ‘Security First  Network Bank VISA’ credit card, introducing this service in 1996. Security First Network Bank was acquired last month by Canada’s Royal Bank Financial Group. As a new subsidiary, SFNB continues to operate under its original name and supports the U.S. banking needs of Royal Bank Financial Group’s customers worldwide.

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Netscape E-Commerce

Netscape Communications Corporation announced Monday it is seeing accelerated momentum for Netscape security solutions. More than 20 vendors, including Check Point Software Technologies, RedCreek and Litronic, are licensing or integrating Netscape products for improved security in virtual private networks (VPNs), firewalls, smart cards and other security products. In addition, Netscape today announced Netscape Security Services (NSS), a developer product that enables enterprise service providers (ESPs) such as StampMaster and other independent software vendors (ISVs) to incorporate Netscape’s widely deployed security technology into their own software products.

From Internet postage to stock trading and financial services over the Web, online transactions are raising the stakes in Internet commerce, and companies are increasingly turning to Netscape as demand grows for enhanced security. Companies are deploying Netscape products — including NSS, Netscape Directory Server and Netscape Certificate Server software — as the foundation for Internet security and expanding the infrastructure using compatible partner products.

“Security is an integral part of business-to-business and business-to-consumer commerce over the Internet,” said David Weiden, vice president of directory server and security products. “With more than 20 companies now integrating Netscape directory and certificate server software into their own security solutions, Netscape is increasingly becoming a key strategic partner in the Internet security marketplace.”

StampMaster, a groundbreaking new e-commerce Internet postage solution, is one of the first customers using NSS. NSS is a developer product that allows ISVs to easily build SSL encryption, authentication and other public key infrastructure (PKI) security into their client or server products. NSS provides support for open standards such as X.509 v3 certificates and PKCS#11 hardware acceleration and smart cards, and is also FIPS 140-1 validated to meet stringent federal and financial industry procurement requirements.

“Netscape Security Services is a critical component of StampMaster’s Internet postage solution,” said John M. Payne, president & chief executive officer of StampMaster. “It provides the secure channel necessary to protect our customers’ privacy and important financial information.”

With the growth in Internet commerce and corporate Extranets, companies need strong security for their e-commerce applications to address the high scalability and privacy demands of Internet users. To meet these needs, ESPs and Netscape partners are deploying Netscape Certificate Server and Directory Server today to deliver a wide range of Internet security capabilities — from directory-based authorization, single sign-on and delegated administration for personalized customer service, to more sophisticated PKI-based authentication using digital certificates and signatures for the most sensitive Web transactions.

Check Point, a leading enterprise security vendor with more than 30 percent market share worldwide, is the latest among a growing number of security vendors leveraging Netscape Directory Server as a cost-effective way to administer and control access to corporate networks.

“Netscape’s Directory Server software allows us to offer a scalable, high performance user management mechanism for FireWall-1 and VPN-1 to better identify individuals accessing IP networks,” said Asheem Chandna, vice president of marketing and business development at Check Point Software Technologies. “Check Point uniquely offers this type of integrated, standards-based solution to customers.”

Other partners licensing or integrating Netscape products for improved security include Bay Networks, Bull, Security Dynamics, enCommerce, Sirrus, Netegrity, KyberPASS, VPNet and Secure Computing.

Netscape server software provides real-time directory and security services that enable centralized, low cost management of the myriad of Internet applications deployed by ESPs and ISVs. Netscape’s service-ready infrastructure is ideal for companies competing in the Net Economy where high performance, scalability, 24×7 reliability and strong security that extends outside the enterprise are critical for success.

The Netscape Security Services product is available immediately at a price of US $70,000 for the standard version and $150,000 for the FIPS 140-1 government certified version.

Netscape Communications Corporation is a leading provider of software and services for businesses that want to transform the way they create and keep customers in the emerging Net Economy. The company offers a full line of enterprise software solutions, professional services, and a leading Internet portal to help companies build, buy or outsource Internet applications that drive revenue growth, build customer loyalty, and create new levels of business efficiency. Traded on Nasdaq under the symbol NSCP, Netscape Communications Corporation is based in Mountain View, California.

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Sub-Prime Card Bonds

The Credit Store, Inc. announced that on Oct. 14, 1998, it completed its first securitization of credit card receivables. The transaction involved the sale of approximately $6.2 million of seasoned, fully performing credit card receivables to a wholly-owned qualified special-purpose corporation, TSC Funding I, Inc. This transaction was funded by the special-purpose corporation in part through a $4 million, 39 month term loan from a Midwest financial institution. The Company has agreed to service the credit cards for TCS Funding I, Inc.

Martin J. Burke, Chairman and Chief Executive Officer, commented: “This securitization is a milestone for us and for the industry we are helping to create. It opens up an important source of capital for the Company.”

The Company also announced that, to improve its balance sheet, $10 million of currently outstanding subordinated debt has been converted into 10,000 shares of a newly-issued Series E of convertible preferred stock, in a dollar-for-dollar exchange. The Series E Preferred Stock carries no voting rights and can be converted into common shares of the Company at any time, and from time to time, prior to August 31, 2001, at a ratio of 285 common shares per share of Series E Preferred. The Company, at its option, may redeem all or part of the Series E Preferred Stock at par plus accrued dividends. The newly-issued Series E Preferred Stock is to pay a dividend of eight percent per annum, payable on Dec. 31 annually, and prorated from the date of issuance for 1998. The subordinated debt being retired carried an annual interest rate of twelve percent. The transaction was completed August 31, 1998.

Separately, the Company said that it expects to release its financial results for the fiscal year 1998, which ended May 31,1998, within the next several weeks. “The release of our financial statements is later than we had hoped,” commented Burke. “However, we made an important decision for the Company’s future by moving from a small regional accounting firm to a nationally recognized firm with a strong background in financial services and in our specific industry niche. Unfortunately, the new engagement did not take place until mid-July and the field work for the audit would typically have begun 60 days earlier.”

“In addition,” continued Burke, “after careful consideration, we have decided to adopt a new accounting method related to the recognition of portfolio acquisition costs which required a restatement of these revenues and costs back to our inception date in October, 1996. This adjustment is in keeping with the more conservative trends we are seeing in the business. The combination of a new firm and the change in accounting methods has caused us to require more time to complete the fiscal year audit.”

Under the newly adopted method, the Company will not recognize revenue from a newly acquired portfolio of non-performing debt until it has fully recovered the acquisition price of that portfolio through collections and through monthly payments from credit cards originated from the portfolio. The accounting change will cause the Company to report significantly lower revenues than would have been reported using the prior accounting method. The Company said that it will restate FY 1997 results to reflect this new accounting method. The Company emphasized that the accounting change has no impact on its cash flow. The accounting change only impacts the timing of revenue recognition and portfolio acquisition costs.

The Credit Store, Inc. is a nationwide financial services company engaged in the acquisition and collection of non-performing consumer receivables and the origination and servicing of credit cards. The Company acquires portfolios of non-performing consumer debt at substantial discounts, and then uses its direct marketing expertise to contact and negotiate settlements with consumers, most of the time placing settlement on new unsecured credit cards offered through an unaffiliated bank.

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Brand Support

The four major payment card brands spent $143 million during the second quarter in ad expenses according to figures released yesterday by NY-based Competitive Media Research. While overall ad spending grew less than 6% compared to second quarter 1997, American Express boosted its second quarter spending by 40% offsetting Discover’s 60% reduction in ad spending.

       Brand          2Q-1998              2Q-1997
       VISA             $49.3 million     $46.9 million
       AmEx          $46.1 million      $32.8 million
       MasterCard    $37.3 million         $29.4 million
       Discover       $10.3 million          $26.3 million
       Total          $143 million          $135.4 million
         Source: Competitive Media Research

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CU-3Q 1998

Mid-sized credit union card portfolios posted mixed results for the third quarter. According to CardWeb’s CardData service ([www.carddata.com][1]) the University of Colorado credit union, with an average balance of $1757 per card, outpaced its peers for the third quarter. The data are from CardData’s ‘Third Quarter 1998 Portfolio Survey’ now underway. CardData provides current and historical quarterly financials on more than 350 issuers in real-time.

CREDIT UNION         3Q-98 RECV CHNG CARDS

Tinker CU (OK)      $34,991,209     (-10%)    50,006
Provident Central CU (CA)  $33,459,156     (-63%)    32,232
NWA FCU (MN)              $30,900,302    (+3%)   49,819
University of CO (CO)     $28,958,350 (+21%)   16,485
Tenn Valley FCU (TN)      $25,131,547    (-6%)   15,604
Source: CardData (www.carddata.com)     
CHNG-percentage of change since 2Q-97

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

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High Tech

Philips Semiconductors revealed Monday that its ‘P83W858′ cryptocontroller has set new benchmarks with its high-level security features designed to prevent hackers from accessing a smart card holder’s personal information. The results were confirmed by the TNO Evaluation Center based in The Netherlands. Based on the ’80C51’ architecture, the ‘P83W858′ is the world’s first smart card IC to use a new fully automated design technique called glue logic design. Glue logic significantly reduces the risk of hackers tapping into the card’s information by finding signals or nodes to physically attack the IC. The glue logic design process will be transferred to all of Philips Semiconductors’ smart card controllers and cryptocontrollers by the end of 1998. The comprehensive security features of the ‘P83W858’ also include anti-hacking sensors that disable the chip when it is used outside normal operating conditions and a unique 32 byte FabKey identifier, which acts as a security key during manufacture and distribution. Datakey recently announced its decision to use the ‘P83W858’ as the cryptographic processing chip in its ‘SignaSURE Model 320 Smart Card’ and ‘Model 370 Smart Key’ smart-token operating systems.

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Bankruptcy Reform Con

The National Association of Consumer Bankruptcy Attorneys (NACBA) expressed thanks to the President, Members of Congress and a broad-based group of allies for standing firm against the credit card companies’ $50 million campaign to destroy America’s bankruptcy laws.  NACBA’s allies include advocates for consumers, civil rights, women, the elderly, working men and women; victims of drunk drivers; and many others who are concerned with just and fair reform of the bankruptcy system.  NACBA and its allies came together to counter an extraordinary lobbying and public relations campaign mounted by credit card companies and large banks.

“NACBA and its allies insisted from the start that the credit industry take its fair share of responsibility for American bankruptcies,” said Norma Hammes, president of NACBA.  “We said all along that even-handed bankruptcy reform legislation must address the unfair and abusive lending practices of credit card compa industry refused to accept its fair share of responsibility, the industry’s misguided bankruptc President and Members of Congress who took a strong stand against this one- sided bankruptcy

“The credit card compa i undermine the nation’s bankruptcy system,” said Ike Shulman, NACBA’s legislative director.  “The big banks made millions in campaign contributions; spent millions on lobbyists, public relations people, and advertising; hired key former Congressional staffers; and even wrote key provisions of the legislation.”

“Fortunately, the President and key Members of Congress agreed with NACBA and its allies that the credit industry’s proposed legislation totally ignored the responsibility of the banking industry for the increase in American consumer indebtedness,” sai made our case that the credit industry- sponsored legislation would have hurt women, children, working families, older Americans, and victims of drunk drivers.”

NACBA president Norma Hammes and le islative director “to continue to work with our allies in a strong and unified fashion in order to protect against any future attempts by credit card companies to spend millions of dollars in the pursuit of self-serving but counterproductive legislation.”

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Bankruptcy Reform Pro

The National Retail Federation, the world’s largest retail trade association, condemned the administration’s failure to act on meaningful legislation to correct misuse of the nation’s bankruptcy system.  Despite overwhelming bipartisan support from both the House and Senate, the bankruptcy reform bill fell victim to the Congressional clock and the White House’s threat of a veto.

“The American people have spoken — personal responsibility matters,” said Mallory Duncan, Vice President and General Counsel, NRF.  “We’re disappointed that the White House chose to ignore that message”

Duncan added, “We’re  puzzled that a bill that helps those in need and enhances protection for ex-spouses and children has yet to receive the President’s endorsement.”

Over the past year, NRF has helped to lead the effort to educate consumers and Congress as to the gross misuse of the system.  NRF is urging Congress and the White House to place bankruptcy reform high on the legislative agenda of the 106th Congress when it reconvenes.

The National Retail Federation (NRF) is the world’s largest retail trade association with membership that includes the leading department, specialty, discount, mass merchandise and independent stores, as well as 32 national and 50 state associations.  NRF members represent an industry that encompasses more than 1.4 million U.S. retail establishments, employs more than 20 million people — about 1 in 5 American workers — and registered 1997 sales of more than $2.5 trillion.   NRF’s international members operate stores in more than 50 nations.

For more information about NRF, visit its Web site at

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Rainbow & VeriFone

Rainbow Technologies, Inc. , a provider of high-performance security solutions for the Internet and electronic commerce, and VeriFone, Inc., the global provider of secure electronic payment solutions, yesterday announced a relationship in which Rainbow’s CryptoSwift II web server accelerator will provide secure key generation and storage for VeriFone’s vPOS merchant Internet payment software and vGATE Internet gateway software for financial institutions. CryptoSwift II will enhance performance, thus reducing transaction times experienced by end users when financial transactions are processed over the Internet.

VeriFone’s vPOS and vGATE interact to enable secure, seamless payment over the Internet utilizing RSA public-key cryptography and the Secure Sockets Layer (SSL) and MasterCard/Visa SET Secure Electronic Transaction protocol. Rainbow’s CryptoSwift II web server accelerator will handle the processor-intensive encryption and authentication associated with these transactions.

“We’re committed to working with leading technology providers such as Rainbow in delivering highly secure Internet payment solutions to our customers,” says Elizabeth Ames, general manager for VeriFone. “Offloading the public key encryption processing to CryptoSwift reduces overall transaction times providing efficient, high performance processing of financial transactions via the Internet.”

CryptoSwift II

Rainbow’s CryptoSwift II is user installable and simply plugs into the PCI slot of a secure web server. CryptoSwift II accelerates the SSL and SET transactions, and can handle 200 transactions per second and perform a reference RSA signature in 5 milliseconds. In comparison, a Pentium II processor at 400Mhz takes 25 milliseconds — five times longer — to complete the same operation. In real-world servers, CryptoSwift II improves server response time by up to 90 percent by offloading and accelerating public key cryptography.

CryptoSwift is widely deployed in Internet applications, including applications for e-commerce, brokerage, financial services, education and other markets in which high-performance secure Web servers are required. In addition, CryptoSwift supports Certicom’s elliptic curve cryptography (ECC) and RSA cryptography.

vPOS

VeriFone’s vPOS Merchant Software is a flexible point-of-sale application that easily handles payments for Internet-based merchants. Merchants can accept online payments from their customers and conduct follow-on transactions to their financial institution with security, convenience and flexibility. vPOS allows the merchant’s online storefront to process transactions sent by a consumer with either the SET protocol or the SSL (Secure Sockets Layer) Internet protocol. vPOS Software also enables secure transmission of data between the merchant and the financial institution’s gateway, or point of contact, via the SET protocol.

vGATE

VeriFone’s vGATE software lets merchant banks and other financial service providers accept transactions from Internet storefronts-without altering the institution’s existing host system. The software can simultaneously accept secure online messages and manage transactions from multiple Internet merchant servers. Financial institutions using vGATE Software can communicate with their customers via the SET protocol.

About VeriFone

VeriFone, Inc. (), a wholly owned subsidiary of Hewlett-Packard Company, is the leading global provider of secure electronic payment solutions for financial institutions, merchants and consumers. VeriFone has shipped more than six million electronic payment systems, which are used in over 100 countries.

About Rainbow Technologies

Founded in 1984, Rainbow Technologies is a world leader in providing cryptographic solutions. Rainbow’s products and technologies include software protection, asset and license management, and Internet distribution for software developers and IT managers. Addressing the security needs of the U.S. government, aerospace industry and companies conducting business on the Internet, Rainbow’s products include sophisticated cryptographic chips for public and private networks, wireless and satellite communications; and high-speed accelerator boards for secure web servers. Rainbow’s expertise has focused on changing the way the world secures business. Rainbow is headquartered in Irvine, California. For more information visit our web site at www.rainbow.com or contact us at (949) 450-7300.

CryptoSwift is a registered trademark of Rainbow Technologies, Inc. VeriFone, the VeriFone logo, vGATE, and vPOS are either registered trademarks or trademarks of VeriFone, Inc., in the US and/or other countries.

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Instant Approvals

VA-based American Management Systems yesterday released a Web-based software application that enables financial institutions to provide their customers direct access to instant loan decisions, including credit card applications online. ‘ACAPS Credit Xpress’ is an object-oriented loan server that interfaces in real time with a bank’s legacy loan origination system, giving customers an answer within seconds. The subsystem was originally developed with Bank of Montreal last year as part of the first banking Web site in North America to offer and immediately decision mortgage, student loan and credit card applications online.

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Save The Children Card

First USA and the international relief and development organization Save the Children rolled-out the ‘Save the Children Platinum MasterCard’ Monday. The affinity program will generate donations for the non-profit organization based on charge volume. The no-annual-fee card offers applicants three unique card designs: “Children of the United States”; “Helping Children and Families Around the World”; and “My Town”. Each design was created by a child and selected by a panel of judges for the annual Save the Children Art Contest. Since Save the Children will not directly promote the new card, First USA will run a direct mail campaign and advertise on several websites, including iVillage.com; Parentsoup.com; and Parentsplace.com. Meanwhile, MasterCard International will join Save the Children and First USA to sponsor the Save the Children Art Contest for this year, with the winning artwork to be featured on a future ‘First USA Save the Children MasterCard’.

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