MDC Buys Into Qualtech

MDC Communications Corp of Toronto announced Tuesday that its Business and Technology Services Group has acquired a 66 percent interest in Qualtech Processing Inc., one of Canada’s largest independent providers of remittance and sales draft processing services to leading corporations and financial institutions. The current management will continue to participate as partners in the future growth and development of the firm.

Established in 1992, Qualtech currently employs 105 people at its operating facility in Markham, Ontario. The company provides remittance and sales draft processing services to such notable organizations as The Bank of Nova Scotia, GE Capital, Consumers Gas, National Retail Credit Corporation, Imperial Oil, and Petro Canada.

“The acquisition of Qualtech fits perfectly with our strategy of providing additional secure transaction products and services to our established customer base,” stated Miles S. Nadal, President and Chief Executive Officer of MDC. “We intend to capitalize on the increasing trend for both financial institutions and corporations to outsource their items processing functions.”

Roy MacNeil, President of Qualtech, commenting on the transaction said, “We were looking for a strategic partner to enable our organization to grow to an entirely new level. With the breadth of resources and relationships within MDC’s Secure Transaction Products and Services Division, we will be able to immediately pursue a number of opportunities which could significantly expand our business.”

MDC’s Business and Technology Services Group, an operating unit of the Secure Transaction Products and Services Division, provides services in areas such as customer communication design, database management, information presentation, statement outsourcing and business process services. This Group intends to expand upon MDC’s long standing customer relationships with financial institutions by offering both additional and complementary services. MDC is planning to expand the Group’s current revenue of $25 million to $250 million within 5 years through internal growth and additional strategic acquisitions.

“We are proud to partner with Qualtech to expand the breadth of outsourcing services we offer our clients in the marketplace,” stated Jon Hantho, President and Chief Operating Officer of MDC’s Business and Technology Services Group.

“The outsourcing market for the types of services that we provide to financial institutions and major corporations is a multi-billion dollar industry across North America, growing in excess of 15 percent annually. The addition of Qualtech allows us to offer specialized business process services that are unmatched by our competitors and highly valued by our customers.”

MDC Communications Corporation is a publicly traded international organization with operating units in Canada, the United States, the United Kingdom, and Australia. The Company is a leading provider of secure transaction products and services as well as communications and marketing services to customers in over 65 countries around the world. MDC has a strong record of growth, generated both internally and from strategic corporate acquisitions. MDC offers secure transaction products and services through four primary areas:

secure personalized products such as cheques and credit, debit, and smart cards; secure ticketing products such as airline, transit, and event tickets; stamps, both postal and excise; and business and technology services such as customer communication design, database management, information presentation, statement outsourcing and business process services.

MDC shares are traded on the Toronto Stock Exchange under the symbol MDZ.A and on the American Stock Exchange under the symbol MDQ. Visit MDC’s website for additional corporate information at: [http://www.mdccorp.com.][1]

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

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Java Boost

VISA’s ‘Java’ smart card platform gained a few points on MasterCard’s ‘MULTOS’ smart card platform yesterday as five U.S. banks joined the Visa ‘Open Platform Users’ Group’.  Bank of America, Citibank, First Union, NationsBank and U.S. Bank  will join 18 financial institutions from other nations. The news came in tandem with the first live ‘VISA Open Platform’ demonstration of a multi-function smart card by Standard Chartered Bank in Singapore. The demonstration featured a VISA smart card that includes a credit line, a loyalty program, and a SET digital certificate. Because the ‘Open Platform’ uses ‘Java Card’, developers only need to write a program in Java, yet it will run on any of the card manufacturers’ operating systems that support ‘Java Card’. More than 85 software and hardware suppliers have already committed resources to foster development of  ‘Java Card’.

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Banc One Credit COO

Auto lending king Banc One Credit Company named R. Jeffrey Brooks as Chief Operating Officer yesterday and that it will be based in Phoenix. Brooks had been with First Commerce Corporation of New Orleans since 1981, serving as EVP and Director of Consumer Products, including credit cards, for the past year.  He had previously been vice president of operations and data processing with Euclid National Bank in Cleveland. He is currently a Director and member of the Executive Committee of PULSE EFT and was a Director of GULFNET, Inc. from 1988 to 1977.  He also served as a member of VISA USA’s National Risk Advisory Committee for four years.

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Shop While You Wait Gets Boost

Betting Inc. will be using the free deployment of Shop While You Wait terminals into the US market as the entry point for self service open or replenishing of sports accounts or Off Track Betting accounts by ATM cards or value added smart cards.

SWYW is a joint venture between Unicomp and Electronic Transactions and Technologies to market the service of Shop While You Wait.

“We’ve been informed that SWYW free terminal deployments will begin in June. We expect a 20% daily usage of these Shop While You Wait terminals to be used to open or replenish wagering accounts by ATM card and value added cards. By the Fall, we could well see 600 of these terminals a day being used 4 to 5 times daily in public locations to open or replenish wagering accounts,” stated Tom Hughes, CEO of Betting Inc.

The service of Shop While You Wait, which is people shopping while they have time on their hands at hair salons, airport lounges, hotel lobbies, clinics, etc., expects a universe of several thousand free SWYW terminals to be deployed into waiting areas by November of 1998.

SWYW estimates a universe of 50,000 terminal locations by Fall 1999. Betting Inc. estimates that 20% of the universe of these terminals will be used 4 or 5 times daily for an opening or replenishing of a track or sports account.

The player will be charged a flat fee of $6 for this service and will have a printed receipt per transaction. Betting Inc. will use Shop While You Wait in the same manner in establishing presence in the United Kingdom, Australia, and South Africa by first quarter 1999. Wagering in these countries will be on a pay per play basis.

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TNS-EDS Sign

Transaction Network Services signed a multi-year contract with EDS to provide a dial-up network system for the EFT processor’s ATM operations. Yesterday’s  deal will make dial-up ATM transport capabilities available to ATMs currently processing via leased lines on the EDS system. TNS will use its ‘TransXpress ATM Connect’ service and its ‘TransXpress 1000’ dial-up modem. The ‘TransXpress 1000’ modem allows legacy ATMs that lack built-in dial-up capabilities to accomplish dial-up transactions via standard phone lines without any modifications to the ATM itself. In addition, ‘TransXpress ATM Connect’ provides a platform to facilitate ISDN, CDPD, and other wireless access.

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ATM Challenges

Robin Abrams, CEO of VeriFone, says “If you really care about how the market will take shape for the next generation of ATM machines and smart cards, and about the growing power of Microsoft software in the retail and banking markets, you are in for a special treat.”

TCI and Palo Alto Cable Co-op are currently airing interviews conducted by Michael Killen, President of Killen & Associates, with experts from leading ATM/cash dispenser providers.

The interviews will run TCI Channel 15A on Tuesdays at 8:00 p.m. and on Palo Alto Cable Co-op Channel 6 starting on Thursday, June 11 at 10:00 p.m., repeated on Sundays at 4:00 p.m., beginning June 14.

Stefan Bucek, General Manager of TCI in San Jose, Calif., states, “Over the past 6 years, Michael Killen has produced programs that attract a select audience interested in identifying new markets driven by technology changes and user needs. This series continues this trend and offers viewers more choice programming.”

Executives interviewed by Mr. Killen for this series are:

—   Haydn Abbott, Managing Director, DeLaRue Cash Systems

—   Javier Lopez-Bartolome, Vice President, Sales, Siemens Nixdorf, Information Systems AG

—   Neill Collins, Vice President, Operations & Financial Controller, Fujitsu-ICL Systems Inc.

—   Reinoud G. J. Drenth, Corporate Vice President, Managing Director & Chief Executive, Europe, Middle East & Africa, Diebold, Inc.

—   Mike Hudson, Senior Vice President, Tidel Engineering

—   Neil P. Marcous, E.V.P./General Manager, Electronics Markets, EDS

—   Bob Tramontano, Vice President, NCR Financial Systems Limited

—   Gregory Riche, Advisory I/T Specialist, IBM Global Services

—   Paul A. Krykorka, ABM Product Manager, IBM Canada Ltd.

The combined ATM shipments of these companies account for 67% of the global ATM market.

For additional information, visit Killen & Associates Web site: [http://www.killen.com ][1]

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

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New Risk Module

Honolulu-based Kamakura Corp introduced ‘Kamakura Risk Manager-dc’ yesterday, a standalone module that enables banks to easily and accurately calculate the value of credit card loans. The ‘KRM-dc’ module utilizes a practical and realistic valuation approach that leads to accurate interest-rate risk analysis. The tool uses analytics including: yield curve smoothing techniques; various term structure models; term structure parameter fitting functions; Delta hedge calculations; and various types of sensitivity analysis. The module automatically calculates regression equations using historical data for balances and rates.  To properly define the evolution of market rates, product rates and portfolio balances, users can use the ‘KRM-dc’ software to select a term structure model and derive the proper parameters.  Value, delta, duration and convexity, and Delta hedges are also automatically calculated.  ‘KRM-dc’ can be integrated into third-party tools.

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Canmax to Build Prepaid Phone Card Biz

Canmax Inc., a leading supplier of point-of-sale automation and telecommunications services to convenience stores and petroleum retailers, announced that Scott R. Matthews has joined Canmax as Vice President of Telecommunications Development/Sales and Marketing.

An original player in the young and rapidly growing prepaid phone card industry, Matthews has helped facilitate the substantial growth of several companies in the past six years including ATCALL, Inc. and Galaxy Communications, Inc.  After success with ATCALL, Matthews left and, in 1995, started Crystal Communications, Inc., which he built to $24 million in annual revenue and, in 1996, sold to Galaxy Long Distance.  As Vice President of Sales and Marketing at Galaxy, he was instrumental in helping the company double its revenues during his tenure.

“We are extremely pleased to have Scott on board,” said Roger Bryant, president and chief executive officer of Canmax.  “Scott brings a new business opportunity to Canmax.  Our objective is to unite his strong prepaid phone card marketing capabilities with Canmax’s 17 years of experience in point-of- sale software development and customer service.  Our software applications will conveniently and efficiently allow prepaid cards to be activated at the time of purchase by the issuer of the card, dramatically reducing card theft and shelf life.  We will provide not just the calling card programs but also customer support, activation and service. This is a huge opportunity for Canmax, and we are extremely pleased to have Scott with us to develop this market.”

“Canmax is uniquely positioned to deliver a brand new and highly needed service to the prepaid phone card industry,” commented Matthews. “Convenience stores and petroleum resellers are demanding this service, and we are in a position to deliver it.  This will be a huge convenience for customers and a significant selling point.  I am pleased to be a part of this opportunity.”

“Scott brings unparalleled experience and extensive relationships with both wholesalers and retailers of prepaid phone cards,” continued Bryant. “We intend to build this business by leveraging our relationships in ways that will generate cash flow and increasingly higher sales levels. Additionally, we are looking for acquisitions and partners with whom we can enhance our marketing and technical capabilities.”

As of 1997, industry sources identify the prepaid phone card business as a $1.5 billion industry projected to grow to more than $5 billion by the year 2000.  Canmax plans to address this market through three sales channels: telemarketing, direct sales and wholesale distribution.

Matthews graduated from Florida State University with a bachelors degree in business management and marketing.  After graduation, Matthews played professional baseball for three years with the St. Louis Cardinals.  Before entering the prepaid phone card business, Matthews was involved in sports advertising with IMG and Wyse Advertising in Cleveland.

Canmax is a leading developer and supplier of point-of-sale software for the convenience store and retail petroleum industries, and general telecommunications to a broad market.

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Bankruptcy Pace

Personal bankruptcies set an all-time record for any 12-month period and are growing about 6% annually according to figures released yesterday by the industry-funded Bankruptcy Issues Council. Based on data collected by the Administrative Office of the U.S. Courts, 1.37 million personal bankruptcy petitions were filed for the 12-month period ending March 31. During the first quarter of this year, 341,708 personal petitions were filed, a 6% increase over the same period last year. BIC says it does not make sense that the number of personal bankruptcies is growing while unemployment and interest rates are falling and the stock market is booming. Bankruptcy reform bills are currently bouncing around Congress. The full House of Representatives may consider H.R. 3150, the Bankruptcy Reform Act of 1998, next week.

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AmEx Musical Chairs

American Express Vice Chairman Chuck Farr is leaving the company at the end of June, it was announced Tuesday. Farr was in charge of the AmEx smart card and debit card initiatives. He was also responsible for completing the assessment and reassignment of the remaining stored value product areas, as well as leading AmEx’s Foreign Exchange Services business. Anne Busquet, head of American Express Relationship Services, has now been given responsibility for the company’s smart card development efforts. Phillip Riese, head of the U.S. Consumer Card Services Group, will take on responsibility for debit card initiatives.

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Trintech Speaks in London

John McGuire, CEO, Trintech Group said yesterday at the Venture Market Europe conference in London: “The Internet has been a medium for communication and the exchange of information for a number of years.

“Including more commercial functions, such as electronic commerce, has proved a more difficult task.  A combination of security concerns, consumer and merchant indifference and banking reluctance has combined to keep Web-based commerce in the margins of retailing.  Nevertheless, the Internet’s potential to be the vehicle for conducting significant volumes of commercial activity seems to have arrived thanks to a number of factors.

“In essence, Internet users tend to be younger, wealthier and are moving to on-line buying in increasing numbers as their busy lives get even busier. The missing piece of the puzzle is technology and most importantly, payment software.  Providing a secure and robust payment infrastructure has been one of the challenges banks and merchants have had to overcome in order to exploit the latent potential of electronic commerce.

“This is where Trintech has proven its pre-eminence.  As a company with ten years experience exclusively in payment software, Trintech has been perfectly positioned to develop Internet payment solutions that comply with the latest industry standards.  What Trintech’s experience has taught us is that pedigree is everything.

“The company client list includes American Express, MasterCard, Visa, Deutsche Bank, SAP among others.  Its global partners are the leaders in their field and include Microsoft, Oracle, Tandem and Netscape. What has impressed all of the companies listed is Trintech’s ability to deliver a payment component essential for their success on-time and to specification.  Trintech can boast on being the only payment company in the world that works across all the major operating systems and platforms.

“As banks and retailers struggle to make sense of what should prove to be a wonderful opportunity, technical interoperability is essential if e-commerce is to be a success.  Trintech has been doing it for ten years in the physical world and is doing it now in the virtual world.”

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