Card Data Bank

Here’s a look at cardholder and pricing stats as compiled by the latest edition of CardTrak – Executive Edition. The data are based on year-end 1997 issuer statistics and excludes debit and charge card activity.

                                  U.S. CONSUMERS
                               AVG BAL            AVG VOL            AVG CRDS
      Per Person              $1740.03           $3,181.85          1.95
      Per Card                $ 893.40           $1,633.41          NA
      Per Acct                $1,286.82          $2,352.71          1.44
      Per Household           $4,495.83          $8,219.79          5.03
                                  INTEREST  RATES
      Standard Card APR                    u17.55%            w18.83%
      Gold Card APR                        u16.40%            w17.90%
      Platinum Card APR                    u14.82%            w15.44%
      Overall Interest Rate                u17.17%            w18.52%
      Range of Rates                       8.50%     to        32.60%     
      Fixed/Variable Mix                   19% fix            81% var
             u-unweighted      w-weighted to receivables
      Standard Ann Fee               u$17.08           w$18.04
      Gold Ann Fee                   u$31.39           w$32.25
      Late Pay Fee                   u$14.22           w$19.30
      Over-limit Fee                 u$13.39           w$18.46
             u-unweighted      w-weighted to receivables
      69% of standard cards and 32% of gold card do not charge
        annual fees and are excluded from the average
   SOURCE CardTrak Executive Edition Mar 98 ($299/yr; 301-695-4660)


MBNA’s First 1998 Card Bond

MBNA Corporation announced yesterday that MBNA America Bank, N.A., its wholly owned subsidiary, priced $750 million of five-year floating rate credit card asset backed securities from the MBNA Master Credit Card Trust II.

The transaction, Series 1998-A, includes $637.5 million of Class A (Senior) floating rate asset backed certificates, $56.25 million of Class B (Subordinate), privately placed, floating rate asset backed certificates and a $56.25 million, privately placed, floating rate collateral invested amount.  The 5.0 year Class A certificates accrue interest at 11 basis points over the one month London Interbank Offered Rate (“LIBOR”).  The Class A certificates were priced at par.  The transaction, which is scheduled to close March 18, 1998, was lead managed by J.P. Morgan & Co. and co-managed by Bear, Stearns & Co. Inc., Chase Securities Inc., Credit Suisse First Boston, and Goldman, Sachs & Co.

MBNA Corporation, a bank holding company and parent of MBNA America Bank, N.A., a national bank, has $49.4 billion in managed loans.  MBNA, the largest independent credit card lender in the world and one of the two largest overall, also provides retail deposit, consumer loan, and insurance products.


First Union Buys Money Store

First Union Corporation has signed a definitive merger agreement with The Money Store Inc. to create the nation’s number one coast-to-coast provider of home equity loans. The combined company will also be the nation’s top provider of SBA loans and the number three provider of student loans.

Under the terms of the agreement, First Union will pay $34 per share in First Union common stock for each share of The Money Store’s common stock. First Union also will issue shares of First Union common stock in exchange for The Money Store’s outstanding convertible preferred stock as described below. The total purchase price is approximately $2.1 billion.

In connection with the transaction, First Union expects to repurchase a number of its outstanding shares of common stock equal to the number of such shares to be issued in the merger, which First Union currently estimates will be approximately 41 million shares based on First Union’s current market price.

The transaction will be accounted for as a purchase and is expected to be completed in the third quarter of 1998, subject to approval by The Money Store’s shareholders and regulatory agencies and other conditions of closing. The transaction is expected to be immediately accretive to First Union’s earnings.

“We are excited by the opportunity this partnership presents for us to fill an important gap in meeting the credit needs of a broader range of customers with expanded and very complementary products,” said John Georgius, president of  First Union Corporation. “The combination with The Money Store fits perfectly with our retail strategy of meeting the needs of all customers when, where and how they want.”

The Money Store will retain its 31-year-old name, a leading brand in the financial services industry, as well as its management. It will operate as a separate delivery channel within the First Union Consumer Group, which includes the mortgage business, home equity bank, electronic and telephone banking, credit card, consumer credit and automobile finance businesses. The Money Store’s Chief Executive Officer Marc Turtletaub, who helped build the company with his father, founder Alan Turtletaub, will continue to lead The Money Store.

“First Union and The Money Store are ideal partners,” Marc Turtletaub said. “We decided to combine with First Union only after a thorough examination of all strategic alternatives. That process clearly showed that these two companies share the same values of community outreach and commitment to superior service, convenience and product range for our customers.”

The Money Store expands First Union’s ability to provide credit to homeowners who may not otherwise qualify for bank credit.  Home equity products can be an excellent strategy to allow consolidation of high-interest, revolving-credit debt into lower-interest loans, improving the borrower’s monthly cash flow and often offering a tax deduction.  Since 1994, First Union has also been providing home equity credit for these homeowners, and securitizing the loans through its Capital Markets Group.  Securitization frees up additional capital to be reinvested in First Union’s communities.

“First Union is taking a giant leap forward in meeting the need for all American families to obtain credit and reduce their reliance on higher- interest revolving credit,” said Jack Antonini, head of the First Union Consumer Group.  “First Union can now provide more customers with the money they need and a range of options that can become part of their long-term credit-improvement strategies – and keep them First Union customers for life.”

First Union is also intensifying its commitment to low- and moderate- income communities. The First Union Special Home Improvement Loan will be extended nationwide through The Money Store’s network.  This product offers low rates, no origination fee and flexible guidelines that make it easier for a low- to moderate-income borrower to qualify for a loan.  The borrower will also earn a 2 percent rebate of the annual interest expense if payments are made on time.

In addition, in New Jersey, Pennsylvania and Delaware, First Union will increase its recently announced $13 billion Community Reinvestment Plan by $1 billion, ensuring additional credit to low- and moderate-income neighborhoods and small businesses.

Because First Union and The Money Store have significant complementary strengths with very little overlap in operations, no office closings are planned.  First Union currently expects to take a one-time merger restructuring charge of approximately $20 million in the third quarter of 1998.

With headquarters in Union, N.J., and a significant corporate presence in Sacramento, Cal., The Money Store has 4,800 employees doing business in all 50 states through 172 branches and call centers responding primarily to individual consumers through the well-known 1-800-LOAN-Yes(R) line.

First Union Home Equity Bank’s focus is primarily business-to-business, working with brokers and home improvement contractors through its 120 branches in 34 states.  First Union’s student loan business, focused on the individual student, fits well with The Money Store’s college-based approach with primarily government-secured student loans made through admission offices.

First Union Direct’s 24-hour, 7-day a week sales and service, complements The Money Store’s 1-800-LOAN-YES(R) in providing consumers nationwide with choice in when, where and how to do their financial business at 1-800-ASK-FUNB.

The transaction is intended to be generally tax free to the holders of The Money Store common stock and The Money Store convertible preferred stock. Each share of The Money Store convertible preferred stock (NYSE MON PrA) will be exchanged for First Union common stock having a value of $34 times .92, subject to the approval of the holders of such shares.   If such holders do not approve the exchange, they will receive shares of a new series of First Union convertible preferred stock containing substantially similar terms as the The Money Store convertible preferred stock, as adjusted to reflect the merger.

Also, in connection with the execution of the merger agreement, First Union was granted an option to purchase, under certain circumstances, up to 24.9 percent of the outstanding shares of The Money Store common stock.

First Union Corporation is a leading provider of financial services to more than 12 million retail and commercial customers throughout the East Coast and the nation. At  Dec. 31, 1997, First Union had assets of $157 billion. First Union’s pending merger with CoreStates Financial Corp (NYSE CFL), with assets of $48.5 billion as of Dec. 31, 1997, was approved by shareholders of both companies on Feb. 27, 1998, and is currently pending regulatory approval. First Union operates full-service banking offices in Connecticut, Delaware, Florida, Georgia, Maryland, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Maryland and Washington, D.C.


World MC On Track

MasterCard says its ‘World MasterCard’ product is exceeding projections. Since its launch, the new upscale, hybrid charge/credit card has exceeded the average transaction amount by 62% and the average number of transactions per account has nearly tripled from the original projections. MasterCard says yesterday it will introduce the product in other regions of the world over the next several months. In the U.S. the card is primarily issued by Bank of America and Household Credit Services. MasterCard also announced yesterday it has signed agreements with Avis Rent A Car and Summit Hotels & Resorts. Summit, a network of 150 luxury hotels, will offer WMC cardholders upgrades, a special arrival gift and discounted ‘Summit Club’ memberships. Avis will provide WMC cardholders discount rates, one-card group upgrades and free ‘Avis Preferred Select’ memberships. MasterCard says it will also offer WMC cardholders exclusive access to unique experiences in the areas of entertainment, travel and sports, including backstage passes, later this year.


Motorola Accelerates Chip Production

Motorola Wednesday announced steps it will take to radically accelerate its smartcard semiconductor process roadmap.

To date, the industry, unlike other sectors in the semiconductor market, has continued to use 6-inch wafer fabs. The dramatic growth forecast in volume and increasing demands for card memory capacity, however, has stimulated the need for change. Motorola has, therefore, made the strategic decision to be the first in this industry to move to 8-inch wafers for its flagship products.

One of Motorola’s most advanced factories, MOS 12 in Phoenix, where the Semiconductor Product Sector recently announced a $1.1 billion expansion, has been selected to meet the challenge.

Chris Belden, consumer and transportation’s director of manufacturing, said “We are delighted to help this emerging industry meet the future explosive demand. We have been preparing for this program in the last year and are excited to help fulfill the vision of products that can personalize everything from your wallet to your phone and even your PC.”

A technology leap to 0.4 micron feature sizes has been made to date and a further shrink plan to 0.27 micron will be implemented in the near future. Motorola has emphasized that the strategy of its decision to proceed with 8-inch wafers was taken with the firm understanding that its aim is to evolve and upgrade the product’s technology over time.

Mike Inglis, division manager for Motorola Smart Information Transfer, explained the company’s rationale. “We believe advanced technology will play a significant role in encouraging our customers to migrate towards increased feature cards — for example, more data in a health card or more ‘phone numbers’ in a GSM card. The technology will also enable the emerging multi-application card markets so that points gained from loyalty schemes can be debited directly to the card user’s bank account.

“The new smaller feature size process offers the capability for increased EEPROM capacity and superior ROM and RAM to expand memory capacity. We will also reduce personalization times and enhance security.”

The first of the devices to be processed will use the industry standard 8-bit M68HC05 microprocessor core. This means that existing tried and tested security assembler code can be used — consequently, providing customers with reassurance about re-use.

Inglis went on to comment “Later in the year we will have even more to discuss with the unveiling of a new secure Advanced core for smartcards. The former answers today’s market demands by providing additional capabilities and introducing the possibility of multiple applications, while still allowing the use of current accredited applications. The latter holds the key to creating true multi-application cards and provides a platform from which smartcards can leap into the next century and support emerging operating systems such as JavaCard and Multos.”

Inglis concluded “We are delighted with the improvements the new process offers, as well as the avenues it will open up. Fifteen months ago Motorola dramatically changed all its smartcard semiconductor plans following a major strategic review. During the last 12 months we have been working to consolidate these plans. Our major customers are all very excited by these products, as are the financial and communications markets.

“The benefits Motorola’s new process will bring reaffirm the company’s flare for innovation and capacity to lead the market by producing cost-effective answers for today and radical new solutions for tomorrow.”

EDITOR’S NOTE The Smart Information Transfer Division is a business within Motorola’s Semiconductor Products Sector, and is one of the world’s leading suppliers of microprocessor chips for smartcards with shipments of more than 300 million units to date.

With 1997 worldwide sales of $8.0 billion, Motorola’s Semiconductor Products Sector develops the essential building blocks to help its customers create new opportunities in the consumer, networking and computing, transportation and wireless communications markets.

In the global marketplace, Motorola also is one of the leading providers of wireless communications, advanced electronic systems, components and services. Major equipment businesses include cellular telephone, two-way radio, paging and data communications, personal communications, automotive, defense and space electronics and computers. Corporate sales in 1997 were $29.8 billion.

Further information on Motorola’s Semiconductor Products Sector can be found in the SPS Web site —


Wisconsin GameCash

Game Financial Corporation, a subsidiary of Travelers Express Company, Inc., announced Tuesday it has received notification that it has been issued a gaming-related contractor certificate from the State of Wisconsin Department of Administration, Division of Gaming. The company has operated GameCash(R) service centers in the state of Wisconsin since 1991 and currently provides services to five casinos in the state.

Game Financial Corporation provides gaming establishments, particularly casinos, with comprehensive services that allow their patrons to access cash through the use of credit card cash advance, check cashing and automated teller machine (ATM) services. Through proprietary PC-based systems, the company is an innovative leader in using the credit card cash advance transaction as an opportunity to provide promotional programs and other value-added customer reward and retention services to its host establishments.

In December, 1997, Game Financial Corporation merged with Travelers Express, a leading processor of money orders, electronic bill payments and official checks. Travelers Express is a subsidiary of Viad Corp (NYSEVVI), a Phoenix-based company that includes airline catering, convention services, payment services, and travel and leisure



GlobeSet Guarantee

GlobeSet, Inc., announced yesterday that it will guarantee full interoperability for its SET products with all SET applications from other vendors receiving a SET Mark. GlobeSet’s guarantee, the first in the industry, underscores the company’s leadership role in SET interoperability and further promotes the advancement of SET interoperability and compliancy among SET vendors.

The SET Mark, managed by SET Secure Electronic Transaction LLC, is licensed to software vendors and merchants who successfully pass SET compliancy tests (see http// GlobeSet is the first and only SET vendor to enroll all four products for SET Mark testing. The SET Secure Electronic Transaction specification is the emerging standard for secure payment card transactions over the Internet.

SET interoperability is critical since many SET solutions are comprised of applications from different vendors. A SET solution includes a certificate authority (CA) application to issue and manage digital ID certificates; an electronic wallet for the card holder; a merchant POS application for the merchant server; and a payment gateway application that provides an interface to existing payment card processing systems. These SET applications must work together seamlessly to support electronic commerce over the Internet.

Today’s announcement is the latest in a series of GlobeSet milestones for SET interoperability

—   February, 1998–GlobeSet announces that its SET product suite is accessible on a website () to other SET vendors for interoperability testing. To verify full interoperability, vendors run test messages between their SET applications and GlobeSet’s products.

—   January, 1998–Working with MasterCard, GlobeSet’s merchant POS and gateway applications interoperate with wallet and CA applications from IBM in a SET solution for NationsBank.

—   June, 1997–GlobeSet POS and wallet applications interoperate with SET applications from American Express and GTE to help make possible the first North American SET transaction in the first SET pilot, conducted for the Wal-Mart Online store. In a subsequent phase of the same pilot, the GlobeSet POS application interoperates with wallet, gateway and CA applications from IBM.

“This is an industrywide guarantee, for any and all products with the SET Mark,” said Dennis Jolly, vice president, sales and operations, at GlobeSet. “We believe, as with many others, that interoperability is key to the success of SET, so we’re proud to take a leadership role in this development. We also extend a clear and definite invitation to any SET vendor to visit our interoperability testing website at , so they can test the interoperability of their applications with ours.”

“As an OEM provider, GlobeSet has been focused on the technical issues of SET interoperability from the very beginning,” said Wes Byrne, vice president, development, at GlobeSet. “That’s why we can now guarantee full interoperability with any product receiving the SET Mark in the industry.”

About GlobeSet

GlobeSet is the world’s largest OEM provider of SET Secure Electronic Transaction software solutions for secure, credit card transactions over the Internet. The company provides applications for the electronic wallet, the merchant point of sale, the financial processing gateway, and the certificate authority. GlobeSet is a member of the SET protocol design team, and has been at the forefront of SET development since its inception. General availability for GlobeSet SET products was announced December, 1997. GlobeSet is a strategic SET solution provider for Tandem Computers, a Compaq Company. GlobeSet also provides SET solutions to Hypercom Corporation and Sun Microsystems. Founded in 1994, GlobeSet is a privately held corporation headquartered in Austin, Texas. Additional information on GlobeSet is available on the World Wide Web at .


FV Hires AmEx Exec

First Virtual Holdings Inc. announced the appointment of David Ehrenthal to vice president of sales and marketing.

Ehrenthal was a marketing director for American Express Travel Related Services in Europe and strategic planning associate in New York. During his tenure at American Express, Ehrenthal was instrumental in developing the Small Business Corporate Card business in Europe. Most recently, Ehrenthal was chief executive officer and co-founder of The Thursley Group, a travel merchandise direct marketing firm subsequently acquired by Genesis Direct Inc. Ehrenthal received an M.A. in International Economics from The Johns Hopkins University and a B.A. in Economics at Bates College.

“David understands the dynamics of direct marketing and catalog selling, and has a proven record of achieving aggressive sales penetration in new markets,” said Keith Kendrick, president of First Virtual Holdings. “He articulates solutions in terms of compelling business cases and has established relationships with early technology adopters that will help drive acceptance of our Interactive Messaging Platform, making round-trip transactional e-mail pervasive in the direct marketing industry.”

Founded in 1994, First Virtual Holdings Inc. (NASDAQFVHI), is a leader in advanced marketing and customer service systems for Internet commerce. The company pioneered secure online payment systems and now focuses on supplying an integrated system for relationship-based transactive messaging using standard e-mail. First Virtual maintains its headquarters in San Diego as well as a data center in Dallas. The company has strategic relationships with First Data Corp., Paymentech Inc., and GE Capital Corp.

First Virtual Holdings Inc. 11975 El Camino Real, Suite 300, San Diego, CA 92130. Tel 619/793-2700; fax 619/793-2950; e-mail; Web site [][1].



High Rollers

Lauda Air of Austria introduced casino-style gaming onboard yesterday. Entertainment provider InterGame of Irvine, CA, installed their cashless video gaming products on Lauda’s new Boeing 777 aircraft. The InterGame program will also be installed on two Lauda B-767 and will be fully installed on all of Lauda’s wide-body fleet over the next several years. The InterGame program offers casino-style gaming on a passenger’s major credit card. Wins are credited to the card and expenditures are debited. The maximum expenditure per passenger is $350. Lauda Air is based in Vienna, Austria, and was established by Formula One championship racing driver Niki Lauda.


97 Industry Pulse

According to data compiled by Bankcard Update/CardData, 1997 went out like a lion for the card industry. The fourth quarter surge was apparently driven by intense platinum card marketing. Accounts and cards soared by more than 7% in the final three months of 1997 while volume and receivables grew about 3.5%.

                                    YEAR  END  STATS
                          (Visa, MasterCard, Discover & Optima)
                EOY 1997           EOY 1996          CHANGE
RECEIVABLES  $431.6 billion    $404.7 billion        +6.7%
VOLUME       $789.1 billion    $698.3 billion        +13.0%
ACCOUNTS      335.4 million     311.1 million         +7.8%
ACTIVES       226.7 million     211.9 million         +7.0%
CARDS         483.1 million     443.2 million         +9.0%
       Source Bankcard Update/CardData (Feb 98 issue)


FDMS to Resell StoreManager

ClearCommerce Corporation, formerly Outreach Communications, announced an agreement with First Data Merchant Services Corporation to resell ClearCommerce’s StoreManager Pro, Plus and Lite, Web storefront building and management software packages.  In addition, First Data Merchant Services Corporation will provide a channel for distributing the ClearCommerce Merchant Engine and Hosting Engine products. FDMS, a subsidiary of First Data Corporation, is a leading global provider of merchant processing services and will sell and market ClearCommerce Internet transaction management software products through its strong channels of Alliance partners and processing clients.  FDMS’ Alliance partners and other processing clients will be able to offer merchants the ClearCommerce transaction processing software they need to conduct secure commerce via the Internet.

Each FDMS Alliance is jointly owned and managed by FDMS and the bank partner, and is poised to take advantage of scale and technology in order to build, retain and grow their merchant customer base.  This agreement provides a significant channel for ClearCommerce, a leader in Internet e-commerce transaction payment, fraud, processing and reporting technology, to sell its Internet transaction software products to merchants.

FDMS will also license ClearCommerce SET and SSL Gateways to process Internet merchant transactions that use the Secure Electronic Transaction (SET) protocol in addition to other secure transaction methods. ClearCommerce’s chief technology officer, Julie Fergerson, resides on the SET committee and has been an integral member of the SET team helping to bring this Internet security protocol into the marketplace.

“Commercial Internet systems are increasingly polarized between transaction processing software and Internet-based customer interaction, or catalog, systems,” said Chris Stevens, analyst with the Boston-based Aberdeen research firm.  “These systems are sufficiently complex to support specialized subsystems or out-sourced services — credit card payment processing requires both.  There remains a strong demand among new and seasoned Internet merchants for any product that will help reduce the risk of credit card fraud — provided that it does not inconvenience consumers or require extensive and expensive merchant system integration.”

“First Data Merchant Services is an essential partner to have and we’re excited that they have chosen ClearCommerce products,” said Robert J. Lynch, CEO of ClearCommerce.  “With FDMS’ Alliance partners and processing clients offering merchants our Internet transaction products, ClearCommerce is helping to build the bridge between the Internet merchants and the banks to make e-commerce a secure and affordable reality.  The payment systems industry, banks and processors, is in a great position to offer the merchant Internet transaction products as a value-add to the services they offer in the physical world.”

“We chose to offer ClearCommerce to our Alliance partners and processing clients because their leading edge technology addresses the issues important to merchants wanting to conduct business over the Internet,” said Allen A. Weinberg, senior vice president at FDMS.  “Merchants want to embrace the Internet as a new sales channel, and getting the best Internet transaction products to them is critical for the financial success of their e-commerce offerings.”

About ClearCommerce Corporation

ClearCommerce Corporation, based in Austin, Texas, is a leader in Internet e-commerce transaction payment, fraud, processing and reporting technology, and is dedicated to advancing technology and safe commerce practices in the Internet e-commerce marketplace.  Since 1995, ClearCommerce has been helping merchants, banks and processors implement successful Internet site and transaction processing strategies.  ClearCommerce products are entering the third generation of development.  For more information on ClearCommerce and its line of Internet payment processing solutions visit or call 888-280-9999.

About First Data Corporation

First Data Merchant Services, a subsidiary of First Data Corporation (NYSE FDC), is a leading provider of one-source merchant transaction and information processing services, as well as electronic commerce and business-to-business purchasing services over the Internet.

Hackensack, N.J.-based First Data Corporation is a global leader in payment systems, electronic commerce and information management products and services.  First Data and its principal operating units process the information that allows millions of consumers to pay for goods and services by credit, debit or stored value card at the point of sale or over the Internet; by check or wire money.  For further information about First Data, visit the company on the Internet at .


Ultra-Thin Contactless

SCS Corporation and Hitachi Maxell Ltd. announced yesterday that Maxell will begin manufacturing SCS’s patented ‘i2 (Interactive Identification) System’s’ labels in an ultra-thin, contactless card format. The first of their kind in the world, the 0.25-mm-thick RF/ID cards are enabled by drastically reducing the thickness of the ICs and embedding them in a thin, paper-like card that will run through virtually any printer. Users get a complete read/write database in each card, capable of storing 1,024 bits of information, about five times more than found on the mag strip of a credit card. Applications for the cards include airline/mass transit ticketing and phone debit cards. Introduced in June 1997 in the US, the i2 System is the first and only low-cost, passive, read/write RF/ID product on the market.