People’s Card Bonds Rated

People’s Bank Credit Card Master Trust’s $343.0 million class A and $27.0 million class B floating-rate asset-backed certificates, series 1998-1, are expected to be rated ‘AAA’ and ‘A’, respectively, by Fitch IBCA. This is the eighth issuance out of the People’s Bank Credit Card Master Trust. The ratings are based on the quality of the VISA and MasterCard receivable pool, available credit enhancement, People’s Bank’s underwriting and servicing capabilities, and the sound legal and cash flow structures.

Series 1998-1 class A benefits from credit enhancement totaling 14.25%, comprised of 6.75% subordination of class B and a 7.50% collateral interest amount (CIA). Class B, in turn, is protected by the 7.50% CIA.

Investors are further protected from prolonged exposure to deterioration in credit card performance and/or servicer default by early amortization events, which would trigger a rapid payout of principal. In addition, series 1998-1 benefits from the sharing of principal and finance charges with other designated series in the master trust.

With the levels of credit enhancement available, series 1998-1 can withstand a decline of 40% in monthly payment rates while chargeoffs increase to a level of 30% and still make full interest and principal payments to class A investors. The class B enhancement covers simultaneous decline of 30% in monthly payment rate while chargeoffs rise to a level of 21%.

The risk of increase in coupon rate to the master trust is capped at 9% at all times. However, class A and class B investors will receive additional interest above the stated cap level from the cap provider, Lehman Brothers Financial Products, Inc., which Fitch IBCA rates ‘AAA’. Upon the expiration of the cap agreement at the expected maturity of the series 1998-1, additional coupon expense on the remaining class A and class B invested amount that is above the 9% capped-rate will be paid from the available excess finance charges.

People’s Bank is a successful low cost provider of Visa and MasterCard credit cards nationwide, servicing roughly 2.3 million accounts with $3.2 billion in credit card receivables balance.


Gemplus & SCM

SCM Microsystems and Gemplus signed agreements Wednesday for the development and manufacturing smart card readers. The agreement contains firm, non-cancelable orders of approximately $1 million to SCM Microsystems in 1998, and contains volume forecasts which could result in SCM providing in excess of $20 million of smart card readers to Gemplus over the next three years. The product development part of the agreement covers a USB-based, PC/SC compliant smart card reader and development of a B1/CT API compatible transparent serial smart card reader. The manufacturing supply agreement requires Gemplus to utilize SCM Microsystems’ cost-effective manufacturing capabilities to produce certain Gemplus reader products including the PCMCIA Type II reader targeted at the mobile PC market.


Ariba Integrates vPOS

VeriFone, Inc and Ariba Technologies announced yesterday plans to integrate VeriFone’s vPOS merchant Internet payment software with Ariba ORMS.

With business-to-business transactions outnumbering those between businesses and consumers, the combined VeriFone and Ariba solution represents a major step in enabling widespread secure electronic network payment among businesses over the Internet.

The Ariba ORM solution uses corporate Intranets and the Internet to automate the entire process of acquiring operating resources, from requisition creation, through approval, payment, and receiving. By integrating VeriFone’s vPOS Internet payment software based on the Secure Socket Layer (SSL) and SET Secure Electronic Transaction(TM) protocols to this process:

— purchasing organizations can make secure online payment easily, cost effectively and in an organized manner – significantly reducing accounts payable costs;

— suppliers can also dramatically reduce costs and payment cycles – significantly improving cash flow.

“Today, most business-to-business payment is accomplished through paper invoicing, purchase orders and checks — an expensive, tedious and labor-intensive process,” said Bobby Lent, vice president strategic alliances, Ariba Technologies, Inc. “Issuing a check may cost a purchasing organization as much as $65, and collection of a payment may cost the supplier as much as $35. Through online payment, this can be reduced to pennies for purchasing organizations and a few dollars for the supplier.”

In the ORM solution model, vPOS software resides with suppliers. Purchasing organizations pay the supplier using online purchase cards — credit cards designed to serve the business-to-business market. The suppliers with vPOS software receive payment through vGATE-enabled financial institutions. The vPOS product is the merchant component of VeriFone’s complete Internet payment solution based on SSL and SET, which also includes vGATE gateway software for financial institutions and vWALLET software for consumers.

“The Ariba ORM system using VeriFone vPOS creates an opportunity to use purchase cards to extend business-to-business on-line payment to corporations and suppliers that cannot cost-justify EDI,” said George Hoyem, vice president and general manager, Internet Commerce Division, VeriFone, Inc. “The purchasing card model provides smaller suppliers access to the considerable reporting and infrastructure support of the credit card industry.”

“The use of the Visa purchasing card can open on-line business-to-business payment to a much broader set of businesses,” said Thomas Proctor, vice president Electronic Commerce, Visa International. “Through the established credit card infrastructure, businesses of all sizes can take advantage of on-line payment. VeriFone’s delivery of vPOS to suppliers is a significant step in enabling this new means of business-to-business electronic commerce.”

Ariba ORMS combined with VeriFone’s vPOS software is designed to accelerate the use of business-to-business electronic systems by large and small suppliers alike. While 95 percent of the Fortune 1,000 companies are using electronic data interchange (EDI), according to Forrester Research, only 2 percent of the 6 million businesses in the U.S. use such technology. The low transaction costs and standardized communication protocols of Internet should encourage the adoption of business-to-business electronic commerce by even the smallest of businesses.

Operating Resources are items that support a company’s day-to-day operations, such as office supplies or capital equipment. They account for a third or more of the expenditures made by a typical Fortune 1000 company. More importantly, nearly 95 percent of all operating resources are acquired and managed using paper-based processes. According to Killen & Associates, a 5 percent savings in these purchasing costs will commonly result in a 28 percent increase in a company’s profits.

The integrated vPOS and ORM network payment solution will be discussed in detail as part of the ORM Supplier Summit, March 24 in Santa Clara, Calif. The Summit is co-sponsored by Ariba, VeriFone, Visa and Federal Express and is intended to help suppliers learn to support buying organizations in the ORM model. For more information regarding the ORM Supplier Summit call 1-800/355-5808.

About Ariba

Ariba Technologies, Inc. is the leader in Operating Resource Management (ORM) solutions for Global 2000 corporations. The company’s products deliver a high Return on Investment through reduced ORM transaction costs and improved management of the acquisition of the goods and services required to operate a company. The products leverage the Internet and Intranets to connect buyers to suppliers and thin-client network computing to make deployment to every desktop possible. The Ariba Internet address is .

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.


Card Chips Are Up

SGS-THOMSON Microelectronics released figures this morning that confirms its leadership in the manufacture and sales of smartcard chips. Last year sales of smartcard chips totaled $222 million of the estimated $515 million market giving SGS-THOMSON a 43% market share. This also represented a 30% increase over 1996. In 1997 the firm shipped more than 100 million units of MCU-based smartcard chips. According to smartcard industry tracker IMS, 1.15 billion smartcard chips were shipped in 1997. This figure is forecasted to rise to 2.5 billion units in the year 2000. SGS-THOMSON anticipates the market to rise to $600 million this year and to more than $1.4 billion in the year 2000. Some $500 million of the 1998 market is projected to be for MCU-based chips, a portion expected to rise to more than $1.25 billion in the year 2000. The company’s analysis for MCU-based smartcard applications in 1998 shows the network market, such as GSM SIM, dominating with 41%, followed by the financial sector with 38% and the government sector with 19%. The remaining 2% are attributed to the newly emerging market for transport cards.



San Jose-based American Microdevice Manufacturing rolled out the world’s first 4 megabit smart card yesterday. The ‘MEGACARD’ was created by a unique ABS injection molding semiconductor manufacturing technology and a new 4MB Flash IC. It resembles standard smart card, unlike the laser cards manufactured by Drexler. The company said yesterday the card has enough space to store 40 x-rays, making it ideal for healthcare applications. The company has booked its first order from a hospital in China.


People’s Securitizes $400 Million

People’s Bank announced Tuesday that People’s Bank Credit Card Master Trust has priced $400 million of five-year floating rate credit card asset-backed securities.

The securitization transaction features two classes of publicly traded securities (Class A and Class B) and a separate privately placed collateral invested amount.

The transaction, Series 1998-1, includes $343 million of Class A (senior) floating rate asset-backed certificates, $27 million of Class B (subordinate) floating rate asset-backed certificates and a $30 million privately placed floating rate collateral invested amount.

The Class A certificates accrue interest at 14 basis points over the one month London Interbank Offered Rate (LIBOR). The Class B certificates accrue interest at 34 basis points over the one month LIBOR. Both the Class A and Class B certificates were priced at par. Goldman Sachs & Co. was the lead manager of the transaction; J.P. Morgan & Co., Lehman Brothers, and Salomon Smith Barney were co-managers. The transaction is scheduled to close April 1, 1998.

The offering of these securities will be made only by means of a prospectus. This press release does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.

People’s Bank is a 156-year-old financial services institution offering consumer and commercial banking as well as asset management, investment and leasing services. With managed assets of more than $10.8 billion and 128 branches, it is the largest independent bank in Connecticut. Based in Bridgeport, People’s leads the state in mortgage lending and Savings Bank Life Insurance sales. An international issuer of bank credit cards, People’s ranks as the 24th largest issuer nationally of Visa and MasterCard.

People’s Securities, Inc. in Bridgeport, People’s Capital and Leasing Corp. in Waterbury and Olson Mobeck & Associates in Rocky Hill and Litchfield, are subsidiaries of People’s Bank.


VISA Signature

VISA offered up its answer to the ‘World MasterCard’ yesterday with the introduction of the ‘VISA Signature Card’. Associates National Bank began test marketing the card last week and expects to begin national marketing by the end of April. The high-end, hybrid charge card/credit card, offers cardholders two key benefits: a ‘Preferred Access’ program and a ‘Preferred Travel’ program. The ‘Preferred Access’ program offers cardholders VIP access to exclusive and unusual events. For example, VISA says cardholders will enjoy special hospitality and access to the Sydney 2000 Olympic Games. VISA says the program will capitalize on other exclusive sponsorships. The ‘Preferred Travel’ program offers cardholders automatic upgrades, late check-out and access to special room blocks through VISA’s alliances with various T&E partners. Currently VISA has alliances with Ritz-Carlton Hotels, Le Meridien Hotels and Avis. VISA indicated it is developing an airmile rewards program that may include the option for cardholders to apply mileage bonus points to any line carrier.



MA-based LitleNet changed its name yesterday to OrderTrust and announced its has landed a deal with 1-800-FLOWERS. The firm process an average of 1.5 million transactions per day with an annual volume of more than $1 billion. OrderTrust offers a range of merchant services including complex electronic order processing, fulfillment integration, fraud screening, payment presentment and loyalty development. The company says it will now provide order processing services for real-time online credit card authorizations for 1-800-FLOWERS.


Cable TV Banking

Four major firms joined together yesterday to develop a system to deliver financial services to consumers over their television sets. BankAmerica, Intuit, TCI and the @Home Network have signed agreements to automate financial services for millions of cable subscribers who don’t have Internet access. @Home Network is a pioneer in high speed Internet access via the cable television infrastructure. TCI said yesterday it expects to deliver the new service to its cable customers, via advanced digital set-top devices, next year. Initially the service will provide access to a wide variety of financial services from Bank of America including e-bills, investments, mortgages, consumer loans, insurance and tax assistance.


NBD E-Banking

NBD Bank will offer the convenience of electronic banking at Detroit’s Renaissance Center Thursday when it powers up its first Access Banking Center available to customers.

NBD’s Access Banking Center in Tower 200 Level Two will offer electronic banking to save customers time and introduce them to a wide range of services, said Sandra E. Pierce, senior vice president for Metropolitan Banking.

“The Access Banking Center gives customers the freedom to do their banking electronically without waiting in a teller line,” she said, “We are committed to meeting customers’ financial needs now and into the future by offering them more convenient ways to do their banking.”

The center features a newly developed touch-screen kiosk that helps customers learn more about NBD’s electronic banking channels. The kiosk even has an electronic host, “Ed Access”, who appears on the screen to make it easy to find information on a variety of products and services, including online banking.

The kiosk also provides customers with access to the bank’s Internet site (), where they can explore NBD’s full range of retail, business, insurance and investment services and apply for loans and other products.

In addition to two large-screen, full-service ATMs, the Access Banking Center includes a telephone banking kiosk that will link customers with:

* NBD’s Telephone Banking Center for fund transfers, account balance inquiries, loan and mortgage applications and other inquiries.

* NBD Mortgage Information Hotline for prospective buyers seeking information about rates and qualifications.

* First Chicago NBD Investment Services for information on investments, including mutual funds and investment accounts.

From March 26 through April 3, NBD representatives will demonstrate the touch-screen and telephone kiosks, the Internet site and the ATMs to help customers see how NBD’s Access Banking Center can make electronic banking easy. NBD opened its first Access Banking Center for employees last August in the Bank’s Troy Tower on Crooks Road.

NBD Bank is a subsidiary of First Chicago NBD Corporation (NYSE: FCN), the 9th largest U.S. bank holding company and the Midwest’s number one provider of financial products and services to consumers, middle market companies and large corporations. NBD Bank serves about 1.1 million consumers in Michigan.


Tax Via Cards

American Express reported yesterday its ‘Everyday Spending Index’ shows 22% of Americans want to pay their annual tax bill with a credit or charge card. AmEx says last year its cardholders charged 49% more than 1996 for federal, state and local government services. The ‘Index’ also revealed the amount of taxes due had a strong influence on consumers’ willingness to use cards for taxes. Only 10% of those owing an average of $2,704 were inclined to use a payment card.