SoftCart to use PGP

Mercantec, Inc., (), a leading provider of open retail electronic commerce solutions, today announced it has signed an agreement to incorporate Pretty Good Privacy, Inc.’s PGP encryption software with its Mercantec SoftCart virtual store application. The agreement will make PGP’s encryption an integral part of the SoftCart virtual store software package, as opposed to requiring on-line merchants to purchase additional security software and integrating it themselves.

By integrating PGP’s encryption, the strongest commercially available (no less than 128 bits), Mercantec SoftCart becomes the first virtual store software to incorporate PGP’s protection at the server level as a turnkey part of its offering. SoftCart has always supported SSL encryption to protect shoppers’ credit card information over the Web. In addition, Mercantec has encouraged merchants to use PGP encryption from the time the order is complete until a merchant retrieves the order on his own PC. Integrating PGP into SoftCart now makes the process of protecting customer orders from potential hackers at an ISP’s server or merchant’s own Web server simple and invisible to the merchant.

“Web merchants and consumers are concerned about stolen credit card numbers and orders on the Internet, so Mercantec wants to ensure we’re doing all we can to make it easy to protect SoftCart merchants and their on-line customers,” said Bill Tait, vice president, product management at Mercantec, Inc. “Mercantec is removing what might have been potential barriers to utilizing the strongest security possible for merchants. Now even if the server or the merchant’s PC is illegally accessed, merchants can rest assured that their transactions will still be secure.”

PGP technology protects the privacy and security of on-line e-mails and files with the strongest encryption commercially available, compared to messages encrypted with standard 40-bit technology. By integrating PGP with SoftCart, any information that SoftCart receives on a merchant’s on-line store, such as credit card numbers, customer orders or files, will automatically be encrypted by SoftCart and can only be decrypted at the merchant, or client, level. SoftCart including PGP will be released in first quarter 1998. Current SoftCart customers will receive the upgrade free, as part of their licensing agreement.

“We’re pleased that a leader in electronic commerce retail software chose to license PGP’s technology, which offers the strongest protection possible for merchants on the Internet today. The flexible architecture of both PGP and SoftCart allows merchants to easily and cost-effectively realize the benefits of secure e-commerce,” said Olivia Dillan, vice president, product development at PGP. “By integrating PGP with SoftCart, Mercantec has demonstrated that it truly cares about the security of its on-line merchants — and their customers.”

About Pretty Good Privacy, Inc.

Pretty Good Privacy, Inc. based in San Mateo, California, is the pioneer and leading provider of applied cryptographic solutions for securing corporate digital assets and protecting individual privacy. PGP is committed to providing the most advanced security products for the digital age, safeguarding the communication and storage of information. With over four million users in 50 countries, and translations into 25 languages, PGP is the worldwide de facto standard for Internet email and file encryption. For more information, visit our Web site at

About Mercantec, Inc.

Since its founding in 1995, Mercantec, Inc., has become the leading provider of open retail electronic commerce software. Mercantec SoftCart software enables merchants to expand their geographic reach by marketing and selling goods and services via the World Wide Web. Mercantec has partnered with a worldwide network of more than 60 Internet Service Providers (ISPs) and Web hosting service providers, including Hiway Technologies, MindSpring, and PSINet, to offer affordable hosting and electronic commerce solutions to merchants. Mercantec’s other distribution channels include American Express, Web consultants, software developers, integrators and OEMs, including Tandem Computers. SoftCart utilizes StateTrack technology to provide 100 percent shopper privacy.

Mercantec SoftCart supports all known Web servers including Microsoft, Netscape, Spyglass, and APACHE. Mercantec SoftCart runs on Windows NT, Windows 95 and the most popular UNIX platforms including Sun Solaris, SGI IRIX, Linux, SCO UNIX, HP/UX, Free BSD and BSDI.

Mercantec is headquartered in Lisle, Ill. To learn more about Mercantec, visit the company Web site at

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Fitch Rates New Advanta

Advanta Corp.’s (and related entities) debt remains on FitchAlert evolving, following the company’s announcement it will contribute its consumer credit card business and related debt and deposits to a newly formed limited liability company that will be roughly 99% owned by Fleet Bank (senior debt rated ‘A’) and 1% owned by Advanta, says Fitch. A list of the approximately $2.9 billion of deposits and $2.5 billion of debt of Advanta and Advanta National Bank (ANB) affected follows below. Fleet will be paying a premium of roughly $500 million, in addition to the assumption of roughly $2.3 billion of ANB’s debt and deposits. Subsequent to the transaction, Advanta will initiate a tender offer for roughly $750-$850 million of the company’s class A and B common stock.

Ratings on the debt and deposits of ANB that will be transferred to the new company are expected to be raised to the ratings of Fleet Bank. Ratings on the debt of Advanta and the obligations of ANB that will remain with Advanta will either be affirmed or lowered depending on a full due diligence of the remaining operations. Ratings on the banks’ asset-backed securities transactions are not affected by this action.

Advanta, with $16.3 billion of total managed receivables at Sept. 30, 1997, has historically been concentrated in the credit card sector, with roughly 80% of its revenues represented by that line and the remainder coming primarily from the mortgage business and a small ticket leasing and business credit card operation.

The disposition of Advanta’s $10.5 billion credit card portfolio eliminates a large element of risk from the company, as that portfolio has been suffering from substandard asset quality performance. Margins, which fell significantly, started to recover during the second and third quarters of 1997, as the company implemented broad-scale risk-based repricing programs and tightened underwriting and collection efforts. The portfolio has also been shrinking, due to tighter underwriting and higher attrition from the repricing efforts.

However, Advanta will be substantially smaller and highly concentrated in the mortgage sector. After the disposition of the credit card receivables, pro forma managed receivables of roughly $5.8 billion will be comprised nearly 80% of mortgage receivables. The mortgage business, which focuses on the nonconforming segment of the home equity loan market, has been growing rapidly. Managed receivables nearly doubled to roughly $4.6 billion at Sept. 30, 1997 from $2.3 billion a year earlier. In addition, the contract servicing portfolio increased over four-fold in the last year to $8.9 billion at Sept. 30, 1997.

After the disposition of the credit card assets and the tender offer for the company’s common stock, Advanta’s equity will decline to $646 million from $980 million. Each of these figures includes $100 million of capital securities. Leverage will decline substantially, with equity to managed assets increasing to a strong 7.2% from 4.7% at Sept. 30, 1997.

Issues affected are:
Advanta Corp.
‘BBB’ medium-term notes
‘BBB’ medium-term notes, series C
‘BBB’ medium-term notes, series A shelf registration
‘BBB’ medium-term notes, series B shelf registration
‘BB+’ stock appreciation income linked securities (SAILS)
‘BB+’ capital securities (Issued by Advanta Capital Trust I)
Advanta National Bank
‘BBB’ subordinate notes
‘BBB’ subordinate notes shelf registration
‘BBB+/F-2’ certificates of deposit
‘BBB+/F-2’ bank notes
‘BBB+/F-2’ bank notes shelf registration

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DCR Rates New Advanta

Duff & Phelps Credit Rating Co. (DCR) has placed the ratings for Advanta Corp. and its subsidiaries on Rating Watch– Uncertain and has reaffirmed the ratings of Fleet Financial Group and its subsidiaries. The entities affected by today’s rating action are listed below. The rating action is in response to the announcement today that the companies have reached a definitive agreement whereby Fleet Financial Group will acquire Advanta’s consumer credit card business. Fleet will also assume a portion of Advanta National Bank’s liabilities. The ratings of the liabilities assumed by Fleet will be raised to the ratings of Fleet’s bank subsidiaries. The amount and specific identity of the debt and deposit obligations to be assumed by Fleet will be determined at closing.

Currently, Advanta possesses $10.5 billion of managed credit card loans, which represents the company`s largest business. After the transaction is completed, Advanta will have a managed loan portfolio of slightly less than $6 billion, which is highly concentrated in non-conforming mortgage loans. DCR recognizes that the disposition of the credit card operation eliminates a business that has produced highly volatile results for Advanta in recent periods. The Rating Watch–Uncertain status reflects a balance between certain quantitative strengths the ‘new’ Advanta will possess, with uncertainty surrounding the strength of Advanta’s franchise in non-conforming mortgages and small-ticket business leasing.

The ‘new’ Advanta will possess a strong level of liquidity and leverage measures that are projected to be superior in comparison to the level Advanta has carried in the past. After consideration of a planned tender offer of $750 to $850 million of common stock, tier equity I to managed assets will approach 8 percent. The relatively higher level of liquid assets on the balance sheet combined with the high degree of liquidity associated with residential mortgage loans will provide Advanta with a strong level of liquidity. DCR believes the positive momentum established in Advanta’s mortgage and leasing businesses warrants retention of the current ratings in the near-term. However, the long-term prospects of Advanta’s ability to effectively and profitably compete in two businesses that are a keen focus of numerous larger financial services providers needs to be evaluated. Further, Advanta’s long-term strategic direction for its business will need to be assessed to evaluate management’s outlook for its business mix and financial performance targets. The reaffirmation of Fleet Financial Group reflects DCR’s belief that the acquisition does not materially alter Fleet’s risk profile. While the transaction will result in a modest increase in leverage, it also enhances Fleet’s earnings and geographic diversification.

The combination of Fleet’s risk management discipline and Advanta’s marketing expertise should allow the company to effectively compete in the rapidly evolving credit card industry. Further, Fleet’s success with recent acquisitions mitigates concerns associated with the integration of Advanta`s credit card operations. DCR believes the separate and specific business focus of Fleet’s three pending acquisitions minimizes the risk that the integration of any of the three will be compromised due to lack of resources.

Ratings Reaffirmed:
Fleet Financial Group
Senior Debt A (Single-A)
Subordinated Debt A- (Single-A-Minus)
Preferred Stock BBB+ (Triple-B-Plus)
Commercial Paper D-1 (D-One)
Fleet National Bank
Long-Term Obligations A+ (Single-A-Plus)
Short-Term Obligations D-1 (D-One)
Fleet Bank, N.A.
Long-Term Obligations A+ (Single-A-Plus)
Short-Term Obligations D-1 (D-One)
Fleet Bank-New York
Long-Term Obligations A+ (Single-A-Plus)
Short-Term Obligations D-1 (D-One)
Fleet Bank of Maine
Long-Term Obligations A+ (Single-A-Plus)
Short-Term Obligations D-1 (D-One)
Fleet Capital Trust I
Preferred Stock BBB+ (Triple-B-Plus)
Fleet Capital Trust II
Preferred Stock BBB+ (Triple-B-Plus)
Ratings Placed on Rating Uncertain:Advanta Corp.
Senior Debt BBB- (Triple-B-Minus)
Preferred Stock BB (Double-B)
Advanta National Bank
Long-Term Obligations BBB (Triple-B)
Subordinated Notes BBB- (Triple-B-Minus)
Short-Term Obligations D-2 (D-Two)
Advanta Capital Trust I
Preferred Stock BB (Double-B)

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S&P Rates New Advanta

Standard & Poor’s ratings of Advanta Corp. and its subsidiaries remain on CreditWatch; however, the implications are revised to negative from developing. Standard & Poor’s ratings on senior bank notes, subordinated notes, and CDs of Advanta National Bank and Advanta National Bank USA remain on CreditWatch with developing implications. (see list below)

In addition, Standard & Poor’s affirmed its ratings on Fleet Financial Group Inc. and related entities. These ratings are not on CreditWatch. The outlook remains positive.

Standard & Poor’s placement of Advanta Corp. on CreditWatch followed the announcement of a proposed transfer of its credit card business to a Fleet Financial Group subsidiary.

Without the credit card business, Advanta Corp. will be considerably smaller and less well-diversified. Its non-prime mortgage and small ticket leasing operations carry a relatively high risk profile that could result in a slightly lower rating than the current double-‘B’ rating for Advanta Corp. and double-‘B’-plus rating for the bank subsidiaries. Therefore, all ratings of Advanta Corp. and its subsidiaries’ counterparty ratings are revised to CreditWatch negative pending further discussions with management about the strategies for the remaining business lines.

Certain certificates of deposits and most debt issues of National Bank and Advanta National Bank USA are to be transferred to Fleet Bank, N.A., which is rated single-‘A’, but the final determination of which liabilities will be made at the time the transaction is consummated.

Standard & Poor’s will upgrade the liabilities assumed by Fleet Bank to Fleet’s rating. Other liabilities that remain with Advanta could be downgraded. Therefore, these liabilities remain on CreditWatch with developing implications.

The ratings of Fleet Financial Group Inc. (Fleet) and its affiliates are affirmed, as is their positive outlook. The agreement to acquire the credit card receivables from Advanta in a transaction accounted for as a purchase will increase the company’s goodwill and other intangibles by about $600 million. Nevertheless, financial risks are moderate and within Fleet’s capital capacity. While there is no question that the asset quality deterioration of the Advanta credit card portfolio has been significant over the past two years, overall indicators suggest that problems may have already or will soon peak. Fleet management is aware of the portfolio quality and has already begun considering the appropriate steps to manage credit quality to more acceptable levels.

The Advanta receivables transaction is the third of a series of recent acquisitions that Fleet has announced including asset manager Columbia Management and retail brokerage Quick & Reilly. While each acquisition is distinct in its business profile and in method of financing, the potential for problems in execution are similar and the combination of the three will challenge Fleet’s operational and managerial abilities. Successful combination with each will greatly enhance the value of the franchise and diversity of revenue mix.

Given the type of businesses being acquired, the method of financing and the degree of standalone infrastructure being acquired in these deals, Standard and Poor’s believes the level of business risk is acceptable and will continue to maintain its positive outlook.

Fleet Financial Group Inc. with about $84 billion of assets is among the largest bank holding companies in the country and the largest in New England. In addition to its regional retail and commercial franchise, Fleet has about $53 billion of assets under management, not including the Columbia acquisition, which would add an additional $22 billion. Fleet has focused on growing its regional banking operation and more recently on diversifying its national business product lines.

No rating action has been taken by Standard & Poor’s on Advanta’s triple-‘A’ rated Class A asset-backed certificates and single-A rated Class B asset-backed certificates. Given Fleet’s acquisition of substantially all of Advanta’s credit card operations, receivables, and personnel, Standard & Poor’s does not expect the transaction to adversely affect performance of the portfolio, Standard & Poor’s said. — CreditWatch

RATINGS STILL ON CREDITWATCH; IMPLICATIONS REVISED TO NEGATIVE
Advanta Corp.
Senior unsecured debt BB
Preferred stock B+
Long-term counterparty BB
Short-term counterparty B
Advanta National Bank USA
Advanta National Bank
Long term counterparty BB+
Short term counterparty B
Advanta Capital Trust I
Preferred stock B+

RATINGS REMAINING ON CREDITWATCH WITH DEVELOPING IMPLICATIONS
Advanta National Bank USA
Advanta National Bank
Senior Bank Notes BB+/B
Subordinated Bank Notes BB-/B
CDs BB+/B

RATINGS AFFIRMED; NOT ON CREDITWATCH
Fleet Financial Group Inc.
Long-term counterparty A-
Short-term counterparty A-2
Senior debt A-
Subordinated debt BBB+
Preferred stock BBB
Commercial paper A-2
Fleet Capital Trust II
Preferred stock BBB
Fleet National Bank, MA
Fleet Bank, Albany, NY
Fleet Bank of Maine, Portland
Fleet Bank N.A.
Fleet Bank-New Hampshire, Nashua
Long-term counterparty A
Short-term counterparty A-1
CDs A/A-1
Bank notes A/A-1
Subordinated bank notes A-
Fleet Mortgage Group Inc.
Long-term counterparty A
Senior debt A

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NYCE Signs Three NJ Banks

The NYCE Network continues to strengthen its presence in New Jersey with the recent signings of three large financial institutions.

The three instutions, all of which joined NYCE during the last two months, include $5.2 billion-asset Valley National Bank, Wayne; $2.6 billion-asset The Trust Company of New Jersey, Jersey City; and $2 billion-asset Provident Savings Bank, Jersey City. Provident Savings Bank and Trust Company are live with NYCE today; Valley National Bank is expected to be operational in the Network by the first quarter of 1998. Combined, they have 158 automated teller machines (ATMs) and more than 180,400 ATM cardholders.

In addition to these three organizations, ten other New Jersey-based financial institutions joined NYCE in 1997, adding 24 ATMs and more than 19,000 ATM cards to the Network.

NYCE Corporation –operator of the NYCE Network– underscored its commitment to New Jersey’s financial services community earlier this year with the addition of Princeton-based Summit Bancorp so its roster of principal shareholders. Currently, about 150 of the Network’s 1,300 participants and 2,000 of the Network’s 18,700 ATMs are located in New Jersey.

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Sesame Street Card

Global Telecommunications Solutions of Philadelphia announced Monday it will issue a ‘Sesame Street’ phone card in honor of the show’s 30th anniversary. GTS says it is also creating a limited edition of 5,000 numbered, 30-minute cards, featuring eight Sesame characters and a special greeting from the show’s ‘Count’ character. The commemorative phone cards will go on sale this Thursday for $10 each.

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AmEx Results

American Express’ card volume continues to grow at an above average pace while card loans soar, according to third quarter results released Monday. U.S. card volume is up 16.4% over 3Q96 for a total quarterly volume of $38 billion. AmEx year-to-date volume now logs in at $109.8 billion according to CardData. Card receivables are growing 20.3% annually, hitting $13.5 billion at the end of 3Q97. Meanwhile AmEx fee income continues to dwindle as its worldwide average fee per card over the past twelve months has dropped from $43 to $38 and its average discount rate has slipped from 2.75% to 2.72%. American Express ended the third quarter with 29.6 million cards-in-force in the U.S., 30+ day delinquency of 3.6% and net chargeoffs of 6.5%.

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NDC Signs Two Natl Accts

National Data Corporation (NDC) announced several new contract signings today for its electronic payment services. The agreements are with Taylor Made Golf, Calico Corners and the Empire State Restaurant and Tavern Association.

Under the terms of the agreements, NDC will provide credit card processing services to the new accounts.

“We are pleased with the continued, strong demand and growth that we are seeing in our payment systems business,” said Tom Dunn, NDC’s senior vice president of Integrated Payment Systems. “At the same time, signing these prestigious accounts demonstrates our ability to serve a wide array of vertical markets with our full range of payment solutions.”

Taylor Made Golf, based in Carlsbad, Calif., is one of the nation’s leading manufacturers of golf supplies and equipment. The company will use NDC’s business to business credit card transaction services.

Pennsylvania-based Calico Corners, a nationwide interior design, fabrics and furniture store chain with 83 locations, has signed with National Data for credit card processing services.

NDC also renewed a marketing agreement with the Empire State Restaurant and Tavern Association, based in Albany, New York. As its preferred provider, NDC will market a full range of payment solutions to the association’s more than 3,000 restaurant members.

National Data Corporation is a leading provider of information services for the payment systems and health care markets.

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Blue Monday

Yesterday’s 554 point DJIA drop left little untouched as the massive sell-off produced a 7.2% overall drop, erasing $700 billion in market cap. Among card industry stocks First Data and Advanta realized higher than average erosion. Advanta gave up 9% of its Class A stock value, 8% on its Class B stock while FDC closed down 8% lower at $28.62. MBNA, Capital One and American Express all dropped about 7%.

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MC Settles Nuisance Suit

MasterCard International reached a settlement with St. Louis-based Meridian Enterprises pertaining to alleged infringement of Meridian’s rewards card patent. Meridian holds a 1994 patent for the administering of an incentive award program using a credit card as the redemption mechanism. Meridian has previously reached out- of-court settlements with VISA, Associates and Union Oil. The company said it also extracted settlements yesterday with Banc One and British Petroleum although no actual suit was filed in those two claims. Meridian says it currently has open litigation with GE Capital, Exxon, Chase, Shell Oil, Fleet, BankAmerica, Cumberland Farms and Sun Co.

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Internet Phone for JCB Cardholders

NetUSA is pleased to announce that it has reached an agreement with Crenet Company, Ltd., Tokyo, Japan. Under the agreement, NetUSA will install Internet phone services in 70 cities in Japan.

NetUSA’s Global Voice Over the Net (GVON) service employs state-of-the-art Internet technology to provide high-quality voice transmission over the Internet. However, unlike conventional Internet Phone (I-Phone) service, no computer hardware or software is required by the end user. The costs to the user will be much lower than regular phone systems, as NetUSA’s technology allows multiple signals to be transmitted at the same time. “The new technology is an opportunity for entrepreneurs to build a ‘poor man’s’ version of long-distance carriers such as AT&T or MCI,” said Dr. Wun C. Chiou, Sr., the President of NetUSA. NetUSA currently possesses six voice servers in Taiwan and one in Hong Kong, and this agreement will greatly increase NetUSA’s Asian presence.

Other than its voice-service, Crenet is a major credit card settlement company in Japan, Thanks to its strategic partnership with Japan Credit Bureau (JCB), Crenet has access to 25 million JCB credit card holders along with its own 6 million customers. These cardholders form a potential customer base for the NetUSA/Crenet Internet Phone System. Mr. Kanehide Yoneyama, the President of Crenet, said, “Because of our existing relationship with these 25 million cardholders, a significant number of them will become customers of the new Internet Phone System.”

Crenet Company, Ltd., was established in 1992 and is headquartered at 5-18-9 Shiroganedai Minato-Ku, Tokyo, Japan. Crenet is Japan’s largest private network. Its services, other than its credit card services, include information and data processing outsourcing, network and system strategy planning for telephony and PBX, payment system, digital network project management, and telecommunications services.

NetUSA is a public company with three business divisions: NetUSA Communications, Software, and Web Center. NetUSA Communications offers Global Access, Interfaxing, and Voice over the Net service, allowing inexpensive worldwide communications and connectivity. The software division operates under the name Pacific Micro and is the publisher for the well-known software products Mac-In-DOS and Common-Link. The Web Center owns 25 domain names, including http://www.softwarecenter.com, which has become one of the largest software shopping malls on the World Wide Web, and the NetUSA Internet Centers. NetUSA’s web site is .

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