Neural Net for Checks

TeleCheck Services, Inc. and Deep View Systems joined together Monday to create the industry’s first on-line neural network-based system to process all check authorizations. Currently, 180 customized networks are on-line. TeleCheck’s existing risk management system utilizes scorecards to evaluate more than 30 relevant transaction variables, including type of merchandise, check number and time of day, to determine the likelihood that a check will be good or bad.Neural networks take scorecard technology much further, recognizing patterns and uncovering hidden relationships in complex data sets.

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Internet Fraud Screening for Merchants

Anacom Communications Inc. announced Monday it is rolling out its Internet Fraud Screening program for merchants conducting business on the Internet who are concerned about the potential for fraudulent credit card orders.

Hosting companies and Internet Service Providers will be able to offer the benefits to their commercial accounts as well. IFS is a series of filters which can be customized by each merchant to meet their specific needs.

Anacom ([www.anacom.com][1]) is a leading provider of low cost order processing and real-time payment solutions for merchants, shopping cart vendors, hosting companies and ISPs conducting e-commerce on the Internet.

Anacom acts as a subscription-based service bureau allowing merchants and resellers to outsource the highly technical challenge of enabling their sites to accept credit card payment transactions. Their services all stress simplicity in allowing the merchant to become e-commerce empowered without installation or management of payment software.

Working with hundreds of their merchant customers, Anacom’s extensive transaction processing experience allowed them significant insight into merchant concerns and experiences. They have responded with IFS, which can be customized by each merchant.

IFS is available to all Anacom customers and the customers of all hosting companies, shopping cart vendors and ISPs who utilize Anacom as their transaction processing engine. IFS is intended to dramatically reduce the number of potentially fraudulent orders and chargebacks experienced by those selling on the Net.

IFS automatically applies a number of basic filters such as card number verification, field integrity checking, address verification (“AVS”), and a proprietary duplicate transaction avoidance system, but also allows the merchant to customize additional fraud screening filters at green, yellow or red levels on a number of optional parameters including:

—   Customizable “Negative credit card” database screening options

—   Area Code and Zip Code State matching routines

—   Email domain checking against customizable “Negative email domain” list.

—   Matching source of customer against “Negative I.P.” database

—   Country-by-country order blocking capability

Anacom is best known for its popular SecurePay service which provides a universal real-time payment gateway for existing web sites. The IFS functionality can be seen in a detailed demonstration at their web site. Anacom’s web site is

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

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SuperStar Ultimate Card

CSI Credit Systems International Inc. President James Christensen announced Monday that the Superstar Group Ltd., a Richmond based group of sport apparel and footware companies, has chosen CSI to develop and operate a customer loyalty system for them. The program will be operated at 54 store locations in British Columbia, Alberta and Ontario.

The Superstar Group will be launching two customer tracking and loyalty programs using CSI’s ERNEX system. The Superstar Ultimate Card program will operate at Superstar, Planet Superstar, Lady Superstar, Superstar Kids, Champion Store, Adidas Store and Nike Shop locations. The Shoes Strings Plus Club card program will operate at all Shoe String locations. ERNEX features such as Instant Win and Electronic Gift Cards will be used in addition to the “points” based rewards program. CSI’s terminals will also be used to process credit card and Interac debit card payments at all locations.

The real-time ability of ERNEX will inform Superstar customers of their “point” totals immediately at the point of sale, by printing the information on the customer’s receipt. CSI will provide detailed reporting on participating customers purchase patterns to Superstar management on an on-going basis. CSI derives revenue from the sale of its GT-100 terminals and the processing of loyalty transactions.

“CSI’s experience in executing card based loyalty solutions and the ease of integrating their solution into our retail operation were big factors in choosing CSI,” says Andrea Johnston, Chief Financial Officer for the Superstar Group. “ERNEX’s host based flexibility means that future program improvements will be quick and cost effective, preserving our ability to keep programs fresh for our customers. This program is a major initiative for us and CSI has become an important partner.”

“Superstar is a leader in their industry and we are very pleased to have such a high profile client participate in the ERNEX network,” says James Christensen, President & CEO of CSI. “Superstar is a believer in the value of customer loyalty and retention.”

CSI is positioned to lead businesses into the future through the innovative management of transaction information utilizing its multifunction point of sale terminals and advanced parking equipment, value-added card programs and data collection.

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Platinum Dividend Miles

NationsBank and US Airways also upgraded their airline carrier-based, co-branded program yesterday to ‘Platinum’. The ‘Dividend Miles Visa Platinum Card’  now offers cardholders a 20% monthly mileage dividend or 1.2 air miles for each dollar spent in purchases. The program becomes the first carrier-based airline credit card program to offer the accelerated mileage. The ‘American Express Delta SkyMiles Optima Card’ requires cardholders to revolve their balance to earn a 20% mileage bonus. US Airways and NationsBank are also offering cardholders a 5,000 mile bonus with the first use of the card, double miles on US Airways ticket purchases, and unlimited mileage earning potential. The program is also one of the few airlines programs offering air mileage that does not expire. Other exclusive benefits of the Dividend Miles Visa Platinum card include $99 companion tickets annually after members’ anniversary date, $75 off a new membership to the 26 US Airways Clubs, as well as dedicated 24-hour, 7-day customer service, a year-end account summary and $1 million travel accident insurance.

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Diebold ATMs Mondex Approved

Diebold, Incorporated announced Monday that it’s i Series and ix Series ATMs received Mondex approval for use in global Mondex Electronic Cash Purse implementations.  Mondex approval allows Diebold customers to develop and deploy Mondex functionality in their ATMs.

![][1]     “This certification process assures Diebold customers that Diebold ATMs meet our requirements,” said Gillian Chard, head of procurement and licensing at Mondex International.  “As a result, ATM deployers will have the ability to use their established ATM network to provide the necessary value-load and unload transactions onto smart cards.  In turn, these cards can be used for many different purposes such as stored-value purchases at the point-of-sale and person-to-person payments.”

Mondex type approval ensures that the i and ix Series ATMs adhere to the standards required for Mondex transactions.  Both the i and ix Series ATMs are developed to be easily upgradable to accommodate rapidly expanding self- service systems technology and applications.  As a result, ATMs that are currently installed can be upgraded to accommodate Mondex functionality.

“We’ve created our ATMs to expand as the technology expands.  By providing Mondex capability, current and future customers can process transactions from Mondex card systems,” said Thomas W. Swidarski, senior director of worldwide marketing for Diebold.  “Consumers are comfortable using an ATM for financial transactions.  It is only natural that ATMs are a part of this new payment technology.”

While this particular certification pertains to Mondex, Diebold ATMs have the flexibility to support any smart card applications that meet the ISO- standard for integrated-circuit chip cards.

Mondex International is a subsidiary of MasterCard International.  Mondex International grants licenses to franchisees to allow them to exploit the Mondex electronic cash technology in a given territory.  Since its incorporation in 1996, Mondex has issued 30 licenses across six continents and is being developed by franchisees in over 50 countries.  Mondex is the only electronic cash system in the world to operate with a single global technology allowing for cross-border payments.  It allows up to five different currencies to be carried on the card at any one time in separate electronic pockets.

Mondex is currently being used in 23 implementations around the world including Australia, Canada, Hong Kong, Costa Rica, Philippines, UK and USA.

The following companies are shareholders (directly or indirectly) in Mondex International:  MasterCard International, National Westminster Bank, Ulster Bank, Midland Bank, Scotiabank, Credit Union Central of Canada, The National Bank of Canada, Bank of Montreal, Canada Trust, Le Mouvement des caisses Desjardins, Toronto-Dominion Bank, Royal Bank of Canada, Canadian Imperial Bank of Commerce, The Hongkong and Shanghai Banking Corporation, Wells Fargo, Citibank NA, Chase Manhattan, First Chicago NBD, Australia and New Zealand Banking Group, Commonwealth Bank of Australia, National Australia Bank, Westpac Banking Corporation (Australia), ANZ Banking Group (New Zealand), Bank of New Zealand, Countrywide Banking Corporation, The National Bank of New Zealand, ASB Bank and Westpac Banking Corporation (New Zealand).

Diebold, Incorporated (pronounced DEE-bold), headquartered in Canton, Ohio, is a global leader in providing card-based transaction systems, security and service solutions to the financial, education and healthcare industries. Founded in 1859, the company develops, manufactures, sells and services automated teller machines, campus systems, smart card systems, electronic and physical security equipment, automated medication and supplies dispensing systems, integrated systems solutions, software and supplies.  For more information about Diebold, Incorporated, visit the company’s web site at [www.diebold.com][2].

[1]: /graphic/mondex/mondex.gif
[2]: http://www.diebold.com

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ITS Signs Delta Dental

Delta Dental Plan of California, California’s largest dental health plan, has recently contracted with Imperial Technology Solutions (ITS), a division of Los Angeles-based Imperial Bank, to incorporate ITS’ software into a multifunction online electronic payment system for use by participating Delta dentists. ITS’ Receivables Payment Manager (RPM) reduces billing and collection costs by electronically verifying insurance eligibility, benefit information and patient copayment levels online, while accepting patients’ credit cards, ATM cards and check-guarantee services for automatic direct payment into a dental practice’s account.

With more than 10.6 million California enrollees and 22,000 dental offices throughout the state participating in Delta programs, the impact for Delta patients and dentists alone offers to significantly change the insurance aspects of dental-care delivery in California.

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Sub-Prime Failure

The Colorado State Bank Commissioner closed sub-prime VISA credit card issuer BestBank Thursday and appointed the FDIC as receiver. According to the Bank Commissioner, BestBank, based in Boulder, CO, was critically undercapitalized. The FDIC spent the weekend attempting to arrange a transaction under which the failed bank’s insured deposits will be assumed by a healthy bank and reopen for business this morning. In the interim the FDIC and VISA will continue to honor BestBank’s 500,000 VISA cards. The issuer specializes in sub-prime and secured credit cards on a nationwide basis. In the first six months of 1998, BestBank’s receivables surged 52%. Two weeks ago BestBank purchased $5 million of credit card loans from SD-based The Credit Store.  The Credit Store’s principal business is the acquisition of charged-off consumer debt and the conversion into new unsecured credit card accounts. With the acquisition BestBank became a MasterCard issuer too. Columbia Capital Corp. and First Independent Computers, BestBank’s processor, said it expects the closing to have little effect on their contract despite the fact that it derives a substantial portion of its revenue from the BestBank contract. This is the first bank failure in Colorado since July 1993.

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Household Stumble

Attrition among Household’s U.S. bankcard and private label credit card business dampened second quarter results somewhat. Second quarter receivables declined by $167 million from the first quarter, according to figures reported to CardData Friday. Household also completed the most significant event in the history of the company June 30, the merger, with Beneficial. According to CardData, Beneficial National Bank reported 2Q receivables of $165 million; 2Q volume of $102 million; gross accounts of 292,000; active accounts of 132,000 and cards-in-force of 212,000. Household noted last week that discounting the Beneficial merger its overall delinquency and chargeoff rates declined during the second quarter.

       HOUSEHOLD  2Q  SNAPSHOT (inc. Beneficial)
                               2Q-98               1Q-98
RECEIVABLES:     $17,169,077,000     $17,336,014,000
Q VOLUME :       $ 8,508,233,000     $ 8,139,392,000
ACCOUNTS:             16,950,000          16,760,000
ACTIVES:               7,883,000           7,846,000
CARDS:                22,883,000          22,627,000
Source: CardWeb’s CardData, www.carddata.com

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State Leaders

More than 40% of the nation’s bank credit card debt is owed by residents of five states and nationwide the average U.S. household owes $4,848. The statistics come from the July issue of Bankcard Barometer, published by Card Management Information Services LLC of Frederick, MD, and were released this morning. Based on EOY 97 bank credit card outstandings and the total number of households in each state: Californians owe $6,105; New Yorkers owe $5,712; Floridians owe $6,137; Texans owe $4,033 and Illinois residents owe $3,197 per household. The biggest annual growth in card debt among states with at least one million households: Iowa (+21%); South Carolina (+13%); Oregon (+12%); Washington (+12%) and New Jersey (+11%).

THE  TOP  FIVE  STATES  IN  BANK  CARD  OUTSTANDINGS

    STATE             EOY 97          EOY 96 CHANGE
    California      $63.5 billion     $57.9 billion  +10%
    New York     $37.7 billion     $34.5 billion     +9%
    Florida         $31.3 billion     $28.6 billion     +9%
    Texas          $24.2 billion     $22.6 billion     +7%
    Illinois        $22.7 billion     $21.0 billion     +8%
Source: Bankcard Barometer, July Issue, 301-695-4897

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Debit Card Woes

The recent explosion of POS debit cards, especially VISA and MasterCard branded off-line debit cards, is creating a bookkeeping nightmare for some consumers and product confusion for others. The findings come from recent studies conducted by BAIGlobal which found many cardholders struggling to keep track of cash flow and balances in their accounts. As a result, cardholders are trying to track their funds in a variety of creative ways, including “back-of-the-envelope” ledger systems and daily calls to issuers’ 800-number customer service lines. The study also uncovered consumer confusion where issuers had converted private label ATM cards to branded debit cards using the VISA or MasterCard logo. BAIGlobal says the VISA and MasterCard brand are synonymous with credit cards, and cardholders have an adjustment to make when they see these brands now on debit cards.  In some cases the company found cardholders who thought they had a hybrid credit/debit card. The study concludes that despite problems within the debit card marketplace there is significant opportunity for growth. BAIGlobal says while debit cards penetrated nearly two of three households, cards are linked to only one third of all the household’s financial accounts, meaning debit cards have the potential to be linked to other accounts. The firm estimates most consumers have 2.7 financial relationships on average.

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Security Seminar

VISA announced Friday it will co-sponsor a seminar on Internet commerce security at its world headquarters in Foster City, CA. The half-day seminar on September 17, 1998 will cover over 200 specific control measures which can protect Internet merchant systems. The seminar is based on the research report ‘Best Practices in Internet Commerce Security’, a white paper to be published by CommerceNet and Baseline Software this week. The report examines the controls employed by merchants, hosting firms, Internet Service Providers, third party security service providers, and Internet payment systems. The event is open to all organizations.

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GZS & Intl Software Partners Team

Programmer’s Paradise, Inc. announced last week that it’s wholly owned German subsidiary, International Software Partners, GmbH , has formed a strategic alliance with GZS, the largest German credit card processor. Under terms of the alliance, ISP*D will be a preferred supplier of the Internet/Intranet front-end platform of GZS’s Corporate Automated Purchasing System (CAPS), a purchasing card back-office electronic solution for corporates. eCAPS, as the front-end platform will be called, is a subset of ISP*D’s Electronic Commerce Ordering System, (e COS) which was introduced this past March.

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