Card processor BA Merchant Services reported total net revenue of $45.2 million for the second quarter, a 16% increase over net revenue of $38.9 million for the same period in 1997. Total sales volume processed in the second quarter of $10.0 billion increased 25% above the same period last year. Included in second quarter 1998 net income were after-tax charges of approximately $800,000 due to a loss on one merchant and increased losses and reserves related to higher than usual backlogs in chargeback processing which have since been resolved.


Diners Club Upgrades

Coming off its most successful year in its 48-year history, Citicorp ‘Diners Club’ and Captura Software announced Tuesday they will partner to offer global customers an integrated solution to their corporate card needs. As a ‘Diners Club’ preferred vendor, Captura’s will offer global expense management products and services including automated expense report processing. Captura’s products also feature accurate financial reporting data and analysis for forecasting and global expense management. Last year Diners racked up $32 billion in sales volume among eight million cardholders.


Card Mail Reponse Drops

Immediate response to issuers’ direct mail promotions designed to stimulate credit card usage and promote other services was a low 0.5 percent, according to Inside Track, the competitive credit card retention and activation tracking service managed by BAIGlobal Inc., the market research firm headquartered in Tarrytown, N.Y.

However, response by consumers planning to capitalize on offers in the future was strong–close to 3.0 percent.

“The higher passive response of cardholders who are planning to take advantage of marketing programs in the future suggests that current promotions are capturing their attention–the promotions just do not have a strong call to action,” said Lisa Itzkowitz, director of marketing for BAIGlobal.  “This means issuers have a great opportunity to convert cardholders’ passive response into immediate action.  Direct mail reminders such as sending a message in the following month’s billing statement or remailing the promotion separately are potential ways to help lift active response.”

Itzkowitz added, “Reminding consumers through other channels, such as telephones, e-mail or on an issuer’s web site, may help stimulate response as well.”

Issuers Target Cardholders with Multiple Promotions

Each month, on average, holders of more than half of all general purpose cards in the marketplace received at least one communication, and in most cases multiple communications, aimed at getting them to retain their cards and use them more, according to Inside Track. Communications tried to encourage a variety of transactions including purchases through discounts at merchants, balance transfers by providing checks, or cash advances at ATMs by offering special low rates.

“Issuers are targeting cardholders with  high volume and variety of communications because competition for share of wallet is intense, as evidenced by the large percentage of households that, on average, hold more than one credit card,” said Itzkowitz.

Card Promotions Marketed Most Heavily

Marketed most heavily by issuers were various card promotions sent to cardholders to encourage card transactions.  Special merchandise offers sent to generate additional revenue for issuers was the second heaviest, while fee service offers sent for the same purchase were fourth.

The more heavily sent card promotions, which include credit line access programs, sweepstakes, travel and entertainment discounts and coupons, were sent each month on average to holders of nearly 40 percent of all cards in the marketplace, according to Inside Track.  These promotions were sent as either a statement insert or separate mailing.

Combined immediate and passive response to this category of promotions was 3.2 percent.  Although only 0.5 percent generated as active response where the cardholder used the offer in the same month it was received, a passive response where the cardholder held onto the promotion for future use was a strong 2.7 percent.

Inside Track estimates that 20 – 30 percent of these passive responders do ultimately take advantage of a promotion at a later date.  For example, cardholders may hold a balance transfer check until they need cash for an upcoming vacation, or hold a restaurant coupon until the next time they dine out.

Merchandise offers, the next most heavily promoted category, were sent each month to holders of about 25 percent of all cards in the marketplace.

“Merchandise has been heavily promoted in the past few years,” said Itzkowitz.  “Cardholders use to see merchandise offers only around the holidays, but today issuers send them year round.  Since price competition has intensified, many issuers have turned to merchandise offers not only to generate extra revenue but to create an additional relationship with a cardholder.”

According to Inside Track, cardholders’ combined active and passive response to all merchandise offers was quite strong at 2.7 percent, with active response 0.5 percent and passive 2.2 percent.

Fee service offers for products such as card payment insurance, life insurance and emergency auto services were sent to holders of about 20 percent of all cards in the marketplace, on average, each month.  These offers generated a combined active and passive response of 1.4 percent, with active response 0.5 percent and passive 0.9 percent.

“Overall, because the majority of people carry more than one credit card, it’s imperative issuers do all they can win their loyalty,” said Itzkowitz. “But, with direct mail costs rising,  it’s critical issuers mail efficiently and maximize response to their card usage programs.”

Inside Track is a competitive tracking service available to all issuers.

Founded in1969, BAIGlobal is a full-service, international market research firm.   Its Clients include a broad list of major companies and financial institutions in the United States and around the world.  The firm is an independent subsidiary of Market Facts, Arlington Heights, Ill., the nation’s 11th largest market research and information company.


DOJ Probe

The U.S. Department of Justice has reportedly confirmed it is looking into the possibility of discriminatory practices by major ATM networks. The issue centers around whether or not the major networks are forcing smaller institutions to follow the network’s rules pertaining to surcharging. Many smaller institutions have formed groups that refuse to impose ATM surcharges. Sen. Alfonse D’Amato, chairman of the Senate Banking Committee, charges that ATM surcharges put smaller banks and credit unions at a disadvantage to big institutions. D’Amato says customers at smaller institutions are driven to switch their accounts to a bigger bank rather than pay surcharges for using its ATM. News of the DOJ probe comes on the heels of the defeat of legislation to ban ATM surcharges. Last Thursday the Senate Banking Committee voted 11-7 to reject the proposed ban.


Paymentech Up 122%

Paymentech reported 122% growth in its commercial card business over the last 12 months. Paymentech added a record number of new commercial card clients in the first six months of calendar year 1998 for a total sales volume of $351 million. Recent monthly volumes reached 140% growth over prior year. The company issues MasterCard and Visa commercial cards through its commercial card financial institution in Salt Lake City.

Fueling this growth are market trends toward technological solutions such as Internet reporting, new products such as the corporate fleet card, which offers multiple payment capabilities, and marketing partnerships with other travel services providers. Paymentech announced several recent new customer signings and also highlighted the success of its industry marketing alliances at the National Business Travel Association’s Annual Convention and Exposition held in Orlando.

Paymentech launched corporate, purchasing and one card (combined fleet, purchasing and corporate functionality) programs for new customers such as Brown University, Burlington Coat Factory, Discovery Communications, Inc., Jet Propulsion Lab (a major NASA supplier), SEI Investments Company, and United Dominion Industries.

Paymentech has leveraged corporate card marketing alliances with industry leaders such as Rosenbluth, Travel One and British Airways. “Companies like SEI Investments have benefited by having their vendor, in this case Travel One, identify a corporate card provider that can bundle a payment program into a complete travel services offering,” said David B. Cramer, senior vice president of business development for Paymentech’s commercial card unit.

Paymentech also issues the British Airways MasterCard Corporate Card, the industry’s first bankcard with air mileage rewards for employee cardholders. The joint effort recently launched an Executive Card version of the product. Recent British Airways MasterCard rollouts included United Dominion Industries, headquartered in Charlotte, NC, and suburban Philadelphia-based SEI Investments. Paymentech has activated over 1,500 cards for associates of the two companies.

Paymentech also launched a number of one-card programs utilizing Paymentech’s Internet reporting system, PaymentNet, said Mark A. Nesci, vice president and COO of Burlington Coat Factory, discussing his company’s recently launched Visa corporate/purchasing card program, “Our goal was to automate the payment process as much as possible, including the reporting and management of cardholder data.”

“Burlington Coat Factory prefers vendors like Paymentech that are technology leaders in their fields,” said Nesci. He anticipates Burlington Coat Factory will realize substantial operational savings within the payment program.

“While managing this growth, Paymentech has also been able to focus on the retention and expansion of existing clients,” said Cramer. “We are just as pleased about our near 100% client retention rate.”

Formerly known as First USA Paymentech, Paymentech, Inc., founded in 1985, provides full-service electronic payment solutions for commercial card payment and information programs, and for merchant acquiring a third-party transaction processing. Paymentech is a leading issuer of commercial cards and the third largest processor of bankcard transactions in the United States.


Debit Fraud System

MasterCard announced Monday that it has successfully completed initial beta testing of the industry’s first client/server-based system designed to report, monitor and combat debit fraud. MasterCard has been testing the system since early this year in conjunction with Mellon Bank and Europay. MasterCard said yesterday it expects to move ‘Fraud Advisor’ into production with additional banks in the coming months. When fully implemented ‘Fraud Advisor’ will offer a user-friendly, desktop-based reporting mechanism, a debit fraud warehouse/database for evaluating fraud trends, analytical tools, online common purchase point notification and scheduled debit fraud reports. The system will be available round-the-clock via ‘MasterCard OnLINE’.


NYCE Dial-Up

NYCE Corp. announced Monday it is now adding the capability of allowing leased line terminals to make use of standard dial-up phone lines without sacrificing functionality. NYCE and Transaction Network Services developed the service which utilizes the ‘TransXpress 1000’, a dial-up modem which can be retrofitted to make almost every make and model of ATM that supports leased line connectivity. Transactions acquired at the retrofitted machines are processed via a proprietary ‘Host Interface Processor’ which emulates a leased line environment. Known as spoofing the host, this process provides dial-up connectivity without the costly, complex hardware and software modifications generally associated with reconfiguring ATM communications.


Debit Card Ed

Consumers still need to learn the ins and outs of debit cards, according to a survey conducted for the National Consumers League.  The cards growing in popularity and used by more than a third of those surveyed, are still a mystery to many users.

“We were concerned to learn that people are using a card without knowing their liability and how they are protected,” said Linda F. Golodner, President of the Naional Consumer League.  “That’s why our new education campaign is so important.”

The campaign, funded by Visa U.S.A., includes increased outreach and education about debit cards through public service announcements, a radio media tour, and increased distribution of the NCL brochure, “Debit Cards: Beyond Cash and Credit.”  Information on the campaign is available via the League’s web site [][1]

“Debit cards can be an excellent tool to manage your finances, and limit your debt load.  They are a self-limiting payment tool, since you only spend what you have, instead of borrowing as you do with a credit card,” said Golodner.

The League’s campaign will focus on educating consumers about liability in the case of loss or the theft of their cards.  New industry limits go well beyond what is required by law.  The League web site will post information on liability protections for different cards. According to the survey by Opinion Research Corporation International:

* One third of those interviewed (1006 adults) have a debit card

* 93 precent of debit card owners have used their card in the past year. Those who use a debit card believe “it is convenient and accepted by most places” (88 percent). 55 percent of the consumers polled believe debit cards are “more secure than cash.”

* Only 1/3 believe they can use a debit card to help keep to a budget and help you financial management.

* 3 out of 4 believe that “if they used a debit card to buy a product or service and never received it, or feltlike it was misrepresented they have a right to dispute the debit.

* More than half (56 percent) of those with debit cards plan to take a summer vacation.  Of the debit card owners who plan to take a summer vacation, more than 1/3 (36 percent) will be using their debit card on vacation.  Among all debit card owners, when given a list of possible reasons for using their debit card on vacation, 71 percent say it is widely accepted as a method of payment and half believe (48 percent) that it is easy to obtain foreign currency with the debit card.  Only 1/3 (37 percent) mention that there is a cap on their liability if the card is lost or stolen.

* 55 percent believe that you have the same purchase protections that a credit card provides when using a debit card.  Twenty-five precent don’t think they have the same protection and 1/3 don’t know what their protections are.

* 47 percent believe that they are only liable for $50 if their debit card is lost or stolen and used by someone else (15 percent don’t know and 38 percent thought their liability could be greater than $50). But federal law limits liability to $50 only if the loss or theft is reported withing teo days; if the lost or stolen card is reported after two days and before 60 days, liablitity is capped at $500, and if it’s not reported until after 60 days, the consumer could lose all the money in the account.  However, Vise and MasterCard have decided not to hold consumers liable for any amount if they report the loss or theft immediately ( within two business days for Visa, 24 hours for MasterCard).  And they are voluntarily capping the maximum amount that consumers could lose to $50. (See the League’s web site for additional information.)

Said Goldoner, “Under federal law, consumers can dispute debits that they never authorized or that are the wrong amount for 90 days.  However, there are no legal dispute rights for defective merchandise, non-delivery or misrepresentation, as there are with credit card purchases.  Nonetheless, card issuers generally treat these types of disputes the same whether the consumer should know their protections before they shop.”

For a copy of the survey, contact the National Consumers League, 202-835-3323.



ATM Monitoring via Web

Card Capture Services, Inc. (CCS), a leading independent provider of ATMs nationally, has added a unique new customer service component to its web site, [][1].

Instanteous transaction reporting

In addition to receiving monthly reporting on machine transaction volumes in the mail, CCS customers can now monitor up to the minute machine transactions by accessing the company’s web site. A password enables customers to call up their personal accounts for viewing.

ATM as a marketing tool

Increasingly CCS customers are using CCS MediaPak, CCS’ proprietary bundle of technology which enables ATM advertising and custom couponing, to support in-store promotions. With the new web-based transaction viewing capability, customers now have the ability to measure the impact of machine promotions on transaction volumes and thereby judge their effectiveness.

Card Capture Services, Inc. (CCS) was incorporated in 1993, in Portland Oregon. CCS offers turnkey ATM programs providing transaction processing, machine maintenance, customer service, accounting and reporting to a growing base of merchant owned and operated Automated Teller Machines (ATMs) nationwide. By tapping non-traditional and unsaturated markets, CCS is leading the wave of independent ATM deployments nationally. The company currently has 50 employees and a nationwide network of 30 independently contracted dealers.



Equifax Award

Equifax has achieved certification of the procedures for maintaining the quality, integrity and stability of its Consumer Information Master Database.  Cap Gemini, one of the world’s leading information technology and business consultancy companies, awarded the certification.  Equifax is the only major consumer information company to receive this certification , which is modeled after ISO 9000 criteria.

Equifax has established a highly skilled quality data management team that developed a process for analyzing input to the database daily to determine any anomalies and immediately research and correct them.  The result has been an increase in both accuracy and quality if information posted to the database. The quality data management team also continues to develop additional processes to add vale to the database and increase the level and quality of support to customers.

This program has been very beneficial to Equifax and to our customers, said Jim Allhusen, Equifax executive vice president and group executive, North American Information Services.  Continuous auditing of our data and audits completed in partnership with our customers strengthen our approach to overall data management.  The result is improvement in an information system already well known for high quality, he added.

As the processes for quality enhancement were developed, Equifax decided to have its own procedures audited by an outside third party and to seek certification of the processes. Cap Gemini was chosen as the external auditor for its commitment to quality processes in the consulting industry and because it is an ISO9001 certified company worldwide.  Their audit led to Equifax being awarded a Level 1 certification.

Although this is significant achievement, we do not intend to stop here, said Rich Crutchfield, corporate vice president and chief technology officer at Equifax.  We will continue to improve the processes and quality of information. Crutchfield made his remarks at a ceremony on July 13 at the quality team’s officers in Alpharetta, Ga., at which Cap Gemini presented him and his team with the certificate.

Cap Gemini vice president Dan O’Dea, who presented the certificate, said. Cap Gemini has significant experience in defining and maintaining quality processes at client sites and in our own company.  We are proud to partner with Equifax in their initiative to improve the quality of their information management processes.

Equifax plans to go through another audit later in the year, shooting for a Level 2 certification from Cap Gemini.  Each level of certification is based on continuous improvement and increased functionality of data analysis operations.  Rom Fournet, Equifax senior vice president, North American Information Technology Center, said, I have empowered each of our associates to put quality first.  Each has the authority to stop the line if they see any indication of irregularity.

Equifax’s worldwideknowledge-based information, transaction processing, consulting and software businesses are designed to bring buyers and sellers together, thus changing the shape of global commerce.  Equifax serves the banking, financial, retail, credit car, telecommunications/utilities, automotive, government and health care industries.  It is a leading supplier of business information solutions in Canada, the UK and Latin America.  Equifax operates in 17 countries with sales in 42 countries.  Founded in 1899 in Atlanta, Equifax today has about 12,000 employees around the world. Revenues for the 12 months ended June 30, 1998, were nearly $1.5 billion. Visit the company’s Internet web site at [][1].



100% Pure Java Verified

Home Financial Network, Inc. announced Monday the “100% Pure Java” verification of it’s Home ATM software. Home ATM is the first Web banking application to fully exploit Java technology’s “Write Once, Run Anywhere” capability.  As such, the availability of Home ATM on the Sun Connect architecture offers banks the opportunity to provide personal banking solutions on a wide variety of Internet devices.  HFN illustrated this flexibility at several recent industry conferences, where the company demonstrated Home ATM running on a PC, a Network Computer, Web TV, a personal digital assistant (PDA), a UNIX workstation and other Internet access devices.  Comerica Banks, Detroit MI will be the first bank to implement the Java version of Home ATM, using a Sun server.

Home ATM’s simple navigation and large, on-screen buttons make it easy to use on any Internet device, from a television’s low resolution screen to the limited viewing area of a PDA or screen phone.  For consumers, using the same version of Home ATM, regardless of access device, means there’s nothing new to learn and no confusion from multiple interfaces.  For the banks, this common interface dramatically reduces technical support requirements, in that they need not support multiple interfaces — as is the case when HTML pages or PFM’s are used with screen phones or Internet-enabled TVs.

The addition of the Home ATM interface to the SunConnect(SM) program line- up represents the latest move by Sun to integrate a full range of delivery channels for secure financial transactions via the web.  HFN is the first SunConnect ally to offer an Internet banking solution designed expressly for the requirements of the great majority of on-line banking customers, those who prefer a simplified, quick-to-learn solution for their financial interactions. Home ATM is also the first stand-alone user interface in the SunConnect program.  This provides financial institutions with an opportunity to select the middleware that best meets their needs from an expanded menu of choices.

Banks can see the Java platform version of Home ATM at Sun Labs in San Francisco, at HFN’s technology center in Orem, UT or by calling HFN.

“The SunConnect program is about enabling financial institutions to exploit the Web to reach the broadest possible range of customers,” said Rob Hall, vice president, worldwide financial services marketing, at Sun.  “The Sun Connect architecture provides a secure, platform-independent environment for Internet-based financial transactions.  Home Financial Network’s technological prowess and commitment to bringing Internet banking to the mass market makes them an important ally in the Sun Connect initiative.”

“Banks that are serious about developing the Internet channel to reach as many customers as possible will appreciate the connectivity options provided by the Sun Connect program in conjunction with Home ATM,” said Daniel M. Schley, chairman and CEO of Home Financial Network.  “The Java technology- based, server-centric architecture of Home ATM enables banks to reduce both software distribution and telecom costs.  With the security, back-end connectivity and delivery device options provided by the Sun Connect architecture, you’ve got a solution that meets the needs of both banks and their customers.”

“For Comerica, the Java version of Home ATM completes our strategy of allowing our customers to choose the channel they prefer for remote banking by providing a Web alternative to the dial-up version of Comerica Home ATM,” said Richard G. Lyons, Jr., senior vice president Electronic Banking and Marketplace Technology for Comerica.  “We selected a Sun server because it provides us with the robust, highly reliable platform we demand to serve our Internet banking customers.”

Home ATM was verified “100% Pure Java” by Sun Microsystems through an independent testing and confirmation process performed by Key Labs.  The 100% Pure Java verification process indicates to both banks and banks’ customers that Home ATM meets Sun’s strict standards for Java applications.

“Our goal to drive the adoption of 100% Pure Java solutions into the enterprise will require solutions like Home Financial Network’s Home ATM,” said George Paolini, director of corporate marketing at Sun Microsystems’ Java Software.  “100% Pure Java verification indicates to customers that Home ATM is a truly platform-independent application.”

Home ATM

Home Financial Network’s home banking software looks and functions like the ATMs consumers already know how to use.  The software is designed specifically to enable banks to serve the preferences of the middle/mass market customer — the largest and fastest growing segment of PC-banking customers.  Characterized as “transactors,” this segment overwhelmingly prefers simple, task-oriented PC banking that allows them to “get the job done.”  HFN’s Home ATM suite of Internet and dial-up banking software is engineered from the ground up to offer these consumers the simplicity they want.  HFN’s product design includes full customization to promote the bank’s unique, proprietary brand names and brand image.

The Sun Connect Architecture

Sun Connect is a framework based on the Java platform providing a complete and secure foundation for building and deploying Web-based financial services. The Sun Connect architecture allows financial services organizations to exploit the Web as a powerful new delivery channel, reaching a new range of customers.  The Sun Connect architecture supports all industry-leading specifications for online transactions, including Open Financial Exchange (OFX) and other messaging specifications.

About Home Financial Network, Inc. ([][1])

Home Financial Network of Westport, CT, is the premier developer of Internet banking software tailored to middle/mass market customers.  HFN provides fully customized, bank-branded solutions to financial institutions, home banking outsourced service providers, and bill-payment processors.  HFN has formal alliances with CheckFree, Integrion, Security First and First Data Corporation, as well as leading home-banking platform vendors.  HFN offers technology leadership to banks through state-of-the-art transactional and marketing functions, sophisticated user interface features, economy and speed of implementation, and low technology support costs.  HFN products are Y2K- compliant and conform to all major home banking protocols, including ADMS, OFX and Gold.