NextCard Bonds

NextCard’s total delinquency for the January reporting period hit 7.10% and the gross charge-offs were at 11.56%. Standard & Poor’s warned yesterday that if charge-offs continue to increase, or are accelerated as a result of the adverse impact on servicing caused by the NextCard situation, the excess spread rate could decline significantly in future months for its credit card securitizations. The FDIC indicated that an early amortization, based solely on insolvency or appointment of the FDIC as receiver, is not enforceable against the FDIC. However, the FDIC has not indicated any questions or doubts regarding the validity of any other trigger events, including events based on collateral performance. The FDIC is seeking a buyer for the portfolio and has completed a substantial modification of the subservicing agreement, which essentially eliminates the agreement and transfers servicing responsibility from NextCard back to the servicer, NextBank. The FDIC expects the transfer of NextCard employees to Automated Management Services Co. to be completed in the near future. AMSC is a contract employment agency, which has entered into a contract with the FDIC as receiver for NextBank to service the collateral. In an effort to avoid attrition of NextBank’s servicing personnel, which currently totals approximately 600 employees, the FDIC is offering retention bonuses. So far, NextBank has only experienced modest attrition of its servicing personnel. (CF Library 2/13/02)


CardLess ATM

A small CT-based firm announced this morning that it will deliver an ATM in May that enables consumers to obtain cash using only a thumb signature or retina scan. City-Money Inc. says its new eyeTeller ATM can also be used at the POS, enabling consumers to make purchases without a payment card. The company says the new ATM will also offer bill pay, maps, money and wire transfers, ability to read e-mail, send e-mail, buy movie and concert tickets, and other Internet-based transactions. Under the program, the customer fills out an application for a line of credit and then accesses the funds through an eyeTeller machine. It also utilizes fingerprint authentication for sales transactions and payroll check cashing, and offers customers the option of electronic check processing. The eyeTeller sells for $10,000 to 20,000 depending on functions and services. The firm describes itself as an online merchant services company.



Paradata Systems
announces that Moneris Solutions, North America’s sixth largest merchant
solutions provider, will offer Paradata’s payment services to its merchants in
the United States.

Under the e-SELECT name, Moneris is extending the branding of Paradata’s
Merchant Integration Kit and payment service from Canada into the United

“Paradata’s agreement with Moneris shows our dedication to creating long term,
solid partnerships with financial organizations to help build strong brands
provide merchants with comprehensive integrated payment options,” comments
Shannon Byrne, Paradata’s president and chief executive officer. “By combining
Moneris’ acquiring strengths with Paradata’s technical knowledge, e-SELECT
be the brand name of choice to meet the current and future payment
of North American businesses.”

“The strength of e-SELECT is that it adds incredible versatility to Moneris
Solutions’ product mix,” says Andrea Goldstein, sr. vice president & general
manager, Moneris U.S. “Whether you’re a web start-up company or a large firm
requiring a customized solution for Level II business-to-business
e-SELECT is the perfect choice.”

e-SELECT is an award-winning online tool and virtual point-of-sale terminal
that enables merchants to set up and process payments over the Internet. The
benefits include: real-time online transactions, advanced security, total
flexibility and scalability, easy to integrate into most shopping carts, 24.7
customer service and technical support, web-based access to complete financial
and transaction information.

e-SELECT is based on advanced 128-bit security technology and supports a
variety of payment protocols, such as Visa Payer Authentication, SSL and SET.

About Paradata Systems Inc.

Paradata Systems Inc. founded in 1993, provides industry leading Global
Integrated Payment Systems and services. The company has applied its expertise
in software development, security technology, and transaction processing to
fill a niche in global commerce. Paradata’s full service offering to financial
organizations and their merchants includes web-based tools that simplify
enablement and end-to-end, 24.7 technical support.
To learn more about Paradata, go to,
800/604-DATA (3282) or
contact Caroline Grimont, vice president of Business Development and Marketing

About Moneris Solutions Inc.

Moneris Solutions is a leading North American technology and merchant
processing company that was formed in December 2000 as a result of a joint
investment between the merchant services divisions of the Royal Bank of Canada
Financial Group, Bank of Montreal and Harris Bank. In less than a year,
has over 300,000 North American customers; 18 ISO’s; a staff of 900 employees;
and offices in Buffalo Grove, Illinois; Toronto, Ontario; and Montreal,
For more information, visit


i-GEN MasterCard

While some teen payment cards have floundered, MasterCard is gearing up to make a stronger push for the i-GEN MasterCard. Yesterday, Pasadena, CA-based Next Estate Communications signed a deal to expand marketing of the personalized, prepaid card to retailers nationwide. In May 2001, Next Estate Communications and GA-based Synovus’ pointpathbank teamed to begin introducing the iGEN MasterCard to the teen retail market, via 3,600 Rite Aid stores in 30 states. The new card was initially made available in about 100 Rite-Aid stores in the metropolitan Washington, D.C. area. Next Estate is now in the process of rolling out the i-GEN MasterCard Card at The Pantry, Inc.’s 1,325 convenience stores throughout the Southeast. Under the program customers buy an activation card at a retail store and load money onto the card as part of the same transaction. The customer then activates the card by calling a toll-free phone number, after which the i-GEN MasterCard Card arrives in the mail within 5 to 10 business days. Meanwhile, the customer can immediately begin using the pre-paid balance via a MasterCard account number for online purchases, catalog purchases over the phone, and any other transactions that do not require the physical card to be presented. The card is available in any denomination between $20 and $500 for a convenience fee of $3.95 per card. iGEN MasterCard accounts can be reloaded at Rite-Aid stores, toll-free phone call or on the iGEN Web site. Columbus Bank and Trust Company is the issuer of the card. (CF Library 5/29/01)


Enron Fallout

The impact of the Enron scandal is spreading to the financial services industry. Household International announced Wednesday that it will switch its independent auditors from Arthur Andersen to KPMG for 2002. The appointment will be presented to Household’s stockholders for ratification at the 2002 annual meeting. Household’s Board of Directors said that due to the current uncertainty about the future direction of Arthur Andersen, it was in the best interest of the company to make this change.


Genpass Resigns Comm Fed

Genpass Service Solutions, a subsidiary of Genpass Technologies, LLC, and the largest independent ATM maintenance and servicing company in the U.S., on Wednesday announced a major, long-term, contract renewal with Commercial Federal Bank of Omaha, Nebraska

Genpass Technologies – operating arm of Genpass Inc. – is one of the top five ATM drivers in the U.S. and owner and operator of the MoneyMaker and MONEY BELT EFT networks.

Commercial Federal Corporation is the parent company of Commercial Federal Bank, a $13 billion federal savings bank, which currently operates branches located in Nebraska, Iowa, Colorado, Kansas, Oklahoma, Missouri, Arizona, and Minnesota. Commercial Federal Bank has a very active program of electronic banking, including bank-by-phone, web-banking and 235 ATMs that they operate to supplement their 190+ branch system.

Commercial Federal has signed with Genpass Service Solutions for the third time as Christine Christensen, assistant vice president and manager of ATM and Card Services for Commercial Federal, explains: “For over 100 years Commercial Federal has provided customers with the financial tools to help build better lives. Our customer service philosophy has been a pillar for our institution. Genpass Service Solutions shares this philosophy and proves it with their customer service standards, which is why we are pleased to continue our long-standing relationship.”

Christensen adds that the EFT program at Commercial Federal has become one of the leading sources of non-interest income for the bank and is an integral part for customers of its overall banking services package.

Genpass Service Solutions has experienced rapid growth over the past year, expanding its business more than 20%. Ownership of Genpass Service Solutions makes Genpass Technologies the only top processor and network owner that has a vertically integrated product line.

Service Solutions offers maintenance, supply and cash replenishment for ATMs, in addition to Genpass Technologies’ processing, gateways, card services, and ATM driving businesses.

Tim Connor, president of Genpass Service Solutions explains the importance of this complete servicing philosophy: “The management of Genpass is committed to providing quality EFT services on a broad scope. By offering our customers what we call `one source EFT,’ we insure that their service issues are dealt with quickly and without the typical passing of callers from one vendor to another.”

Connor added that customers like Commercial Federal Bank keep re-signing with Genpass because Genpass honors its commitment to keep every Genpass product technologically competitive and cost effective.

About Commercial Federal Bank

Commercial Federal Corporation is the parent company of Commercial Federal Bank, a $13 billion federal savings bank that currently operates branches located in Nebraska, Iowa, Colorado, Kansas, Oklahoma, Missouri, Arizona, and Minnesota. Commercial Federal operations include consumer and commercial banking, mortgage banking, commercial lending, insurance and investment services, and Internet banking. Commercial Federal operates 235 ATMs across the Midwest.

About GTCR Golder Rauner, LLC, Genpass Inc., Genpass Technologies, LLC, and Genpass Service Solutions

GTCR Golder Rauner, LLC, a leading private equity investment firm, owns and operates Genpass Inc., the parent company of Genpass Technologies, LLC, and its subsidiaries. GTCR currently manages more than $4 billion in equity capital invested in companies providing transaction processing, information technology services, financial services and marketing services. Genpass Inc., with headquarters in Pennsylvania, owns the MoneyMaker(SM) and MONEY BELT(R) EFT networks through its Dallas-based subsidiary Genpass Technologies. Genpass Technologies is listed in The EFT Data Book (2002 edition) as one of the top five ATM drivers in the U.S., with over 20,000 ATMs spanning the country, and in the top 10 networks for annual transactions processed and for switch volume. Genpass processes over 360 million transactions annually. The company also operates Genpass ATM Solutions — providing a strategic solution to ATM-owning and placement — and Genpass Card Solutions, offering specialized card services such as payroll and medical benefits card programs. Genpass Service Solutions, a wholly owned subsidiary of Genpass Technologies, LLC, is the largest independent ATM servicing company in the U.S. The company serves over 500 financial institutions, independent sales organizations, and corporate customers providing monitoring, service dispatch, maintenance, cash replenishment, and operating supplies for virtually every model of ATM hardware.



Trintech Group Plc, a global provider of
secure electronic payment infrastructure solutions, unveiled PayWare
OpenPOS, the world’s first open source POS terminal architecture designed
to run a range of secure PIN-based card payment applications. Trintech plans
to target OpenPOS at the estimated 18 million POS terminals installed
today worldwide that are due to be upgraded to incorporate new technologies,
including chip.

The new technology, showcased at CeBIT 2002, will be available to create
powerful product suites — including in-store applications, such as PINPads
and PIN-enabled POS terminals, and applications in unattended environments,
such as kiosks and ATMs. Trintech will make the products and technology
modules available to Value Added Resellers (VARS), system integrators, and OEM

At Cebit (stand no. A24/35 Hall 18RG), Trintech will be demonstrating how
OpenPOS can dramatically reduce the transaction time of secure
PIN-based smart card payments. The demonstration will take place using the
German debit card scheme, electronic cash, which uses smart card technology
and requires the verification of the cardholder’s PIN number. OpenPOS(TM)
performs the encryption tasks required by the debit card scheme in
milliseconds, significantly shortening the overall transaction time for
cardholders at the point-of-sale. The higher encryption requirements of the
EMV standard that are expected to be fully adopted by in Europe by 2005 will
drive the demand for faster technology such as OpenPOS(TM).

In introducing the new technology, Trintech has leveraged its 10 years
experience in high security and tamper-proof PINPads to ensure the technology
meets the highest security requirements. OpenPOS(TM) is currently undergoing a
certification process with T-Systems ISS GmbH (previously called Debis), an
internationally recognized security certification institute.

The OpenPOS(TM) modules exhibited at CeBIT are deployed within a range of
concept devices including standalone PINPads, POS terminals with integrated
PINPads and screen-based terminals. OpenPOS(TM) will also be incorporated into
specific elements of Trintech’s product set following close analysis of
customer requirements and will be actively marketed to Trintech’s growing
international community of VARs.

“The move to embedded Linux is a very significant development for the POS
industry as it signals a move away from proprietary and incompatible vendor
and industry standards to a more widely available, open source development
environment,” said John Harte, EVP and General Manager of Trintech’s ePOS
Division. “OpenPOS(TM) is an industry first that will significantly reduce
transaction times providing multiple advantages to our customers and

A broad range of open source software is immediately available for the
OpenPOS platform. In particular, the embedded Linux real-time operating system
from Lineo Inc., will allow Trintech’s OpenPOS(TM) technology to overcome the
real-time limitations of standard Linux faced by VARs and system integrators.

About OpenPOS(TM)

OpenPOS(TM) utilizes the 32-bit ARM(TM) processor that supports a wide
range of interfaces such USB and Ethernet. It also supports an extensive range
of LCD displays — from small graphic LCD displays, to touch screen and TFT
displays. The new OpenPOS(TM) platform supports the use of multi-media cards
and compact flash, allowing memory to be scaled from 4MB to more than 64MB. Its
in-built Memory Management Unit also provides a very reliable and dynamic
system for application fire-walling. The use of ARM as a platform means that
software code is compatible across a range of different ARM processors,
including ARM10, Strong Arm, and X-Scale.

About Lineo, Inc.

Lineo(R), Inc. provides embedded systems and real-time solutions that
cover the full spectrum of embedded development, including operating system
software, host development environments and professional services. Lineo
distributes vertical solutions (Smart Handheld, Residential Gateway, Digital
Media/TV) that allow OEMs to create smart embedded devices and systems. While
helping OEMs to reduce system requirements, per-unit costs and time-to-market.
Lineo’s key product lines include: Embedix(R) SDK (a fully featured and
integrated embedded developer tool chain), Embedix(R) (embedded Linux system
software for MMU-less and MMU-full processors), Embedix(R) BridgeWorks(TM)
(operating systems and tools for multiprocessor device Support and legacy code
migration) and RTXC(TM) Quadros(TM) (a highly configurable microprocessor and
DSP real-time operating system). Contact Lineo at , via
e-mail to or by calling 801-426-5001.

About ARM

ARM(R) is the industry’s leading provider of 16/32-bit embedded RISC
microprocessor solutions. The company licenses its high-performance, low-cost,
power-efficient RISC processors, peripherals, and system-chip designs to
leading international electronics companies. ARM also provides comprehensive
support required in developing a complete system. ARM’s microprocessor cores
are rapidly becoming the volume RISC standard in such markets as portable
communications, hand-held computing, multimedia digital consumer and embedded
solutions. More information on ARM is available at

About Trintech

Founded in 1987, Trintech is a leading provider of secure electronic
payment infrastructure solutions for card-based transactions for physical
world commerce, eCommerce and mobile commerce. The company offers a complete
range of payment software products for credit, debit, commercial and
procurement card applications, as well as being a world leader in the
deployment of payment solutions for Internet commerce that are fully SSL and
SET(TM) compliant. Trintech’s range of scalable open systems architecture
solutions for UNIX(R) and Windows NT(TM) platforms covers consumer, merchant
and financial institution requirements for physical payments and the emerging
world of electronic commerce. Trintech can be contacted on the Web at .


Siebel Enhances CRM Software

Siebel Systems, Inc., the world’s leading provider of eBusiness applications software, announced new and enhanced retail finance functionality for Siebel eFinance 7. Siebel eFinance 7 is a comprehensive suite of customer relationship management, employee relationship management, and partner relationship management applications. The retail finance features of Siebel eFinance 7 are designed to meet the most demanding sales, marketing, contact center, and customer service requirements of financial institutions that serve retail banking consumers, including mass affluent, high net worth, and small business customers.

Reflecting Siebel Systems’ proven domain, industry, and technology expertise, Siebel eFinance 7 provides depth and breadth of functionality in sales, marketing, service, and other retail banking customer-touching business processes, resulting in faster deployments, high rates of end user adoption, and a rapid return on investment. Siebel eFinance has been selected by retail finance industry leaders including American Express Company, Bank of America Corporation, National Australia Bank Ltd., FleetBoston Financial Corporation, Nykredit A/S, Societe Generale, and Westpac Banking Corporation as their CRM standard.

Unparalleled CRM Functionality Delivers Compelling Return on Investment

Siebel eFinance 7 launches with the industry’s most comprehensive, out-of-the-box eBusiness functionality mapped to support the business processes specific to the retail finance industry. With escalating competition and the proliferation of new delivery channels, retail financial services organizations must be able to recognize their most profitable sales opportunities and deliver superior customer service to survive. Siebel eFinance 7 supports this business requirement by enabling financial services organizations to adopt a customer-centric sales and service approach that spans multiple products (deposit, credit, advisory, insurance, investments and securities), multiple channels of communication (call centers, branches, Internet, kiosks, relationship managers) and multiple customer groups (consumer, small business, corporate). Furthermore, organizations can leverage their investments in existing legacy and back office systems while simultaneously providing users with a unified view of business information, functionality, and processes. With innovative eBusiness solutions that improve the customer relationship across all channels and touchpoints, financial services companies will increase customer loyalty and wallet share and thrive in a competitive and customer-driven environment.

“In the retail finance industry, ensuring customer satisfaction is a critical key to success. At ATB Financial, we wanted to build a world-class contact center that allows us to establish and maintain a customer-centric focus. And with Siebel eFinance, we have done just that,” stated Ken Casey, Senior Vice President, Electronic Banking and Central Service, of ATB Financial (formerly known as Alberta Treasury Branches). “Siebel eFinance has allowed us to improve our customer focus and increase customer satisfaction. Its powerful CRM capabilities enable us to provide the right level of service to the right customer. The latest release of Siebel eFinance 7 features new teller capabilities that will help meet the unique needs of retail finance organizations looking to drive revenue growth and improve customer retention.” Siebel eFinance 7 includes a range of new products and features that will be of particular benefit to retail finance organizations. Benefits of implementing Siebel eFinance 7 include:

— Increased Share of Wallet — With a holistic view of each client’s profile, financial accounts, loans, credit history, assets, and other relevant data, financial professionals are armed with the tools they need to understand and manage every aspect of their institution’s relationship with the customer. This consolidated view enables retail finance organizations to more effectively up-sell and cross-sell products and services and maximize lifetime value by increasing revenue per customer. Furthermore, the real-time personalization capabilities of Siebel Marketing and Siebel Analytics help financial institutions deliver the right offer, to the right people, at the right time, through the right channel and optimize every customer interaction.

— Increased Loyalty Through Superior Service — By helping organizations deliver a personalized, consistent, and seamless customer experience, Siebel eFinance 7 enables organizations to differentiate themselves and improve customer loyalty. Retail finance organizations can personalize the customer’s experience across all channels, including web self-service, to ensure that each interaction builds upon previous interactions to better target the specific needs of each individual.

— Increased Sales Effectiveness — The effectiveness of corporate, regional or branch sales and marketing campaigns can be increased with the new performance management, training and real-time executive reporting capabilities of Siebel eFinance 7. Furthermore, to increase the productivity of each relationship manager, Siebel eFinance 7 provides an aggregated view of their entire book of clients, allowing seamless management of all client relationships from a single user interface. The final result is less time spent on administrative tasks and more time spent generating revenue.

— Reduced Costs and Lowered Operating Expenses — Siebel eFinance 7 features workflow and automation tools to help retail finance organizations automate complex business processes to reduce cost. Cost reduction is achieved through improved consistency, fewer errors, and increased efficiency. By automating business processes, organizations can also shorten their training times and lower their training costs. Siebel Systems’ out-of-the-box retail finance functionality and template-based administration dramatically reduce set up times and total cost of ownership by reducing the amount of customization needed.

“Siebel Systems engages leading retail finance organizations and systems integration partners in the design, development, and testing of our applications to ensure that they exceed industry-specific business requirements,” said David Carter, General Manager, Siebel Retail Finance. “By distilling the best practices of industry thought leaders into our applications, we enable our customers to quickly deploy market-leading eBusiness functionality at the lowest total cost of ownership. On average, our finance customers report a 7 percent increase in revenue, a 17 percent increase in employee productivity, a 12 percent increase in customer satisfaction, and a 19 percent increase in customer retention after deploying Siebel eBusiness Applications.”

Smart Web Architecture Enables Rapid Deployment and High User Acceptance

Siebel eFinance 7 was built on the foundation of the newly announced Siebel 7 platform. With the release of Siebel 7, Siebel Systems introduced the Siebel Smart Web Architecture, the industry’s first and only zero-footprint Web architecture that provides high levels of interactivity previously available only from Windows desktop applications. Siebel 7 was built from the ground up to operate in heterogeneous environments and by supporting integration via an “application network,” allowing organizations to not only integrate front office and back office systems, but also hundreds of other applications essential to the institutional finance industries. By offering robust application network support, Siebel eFinance 7 ensures interoperability with the many applications within a financial services organization’s systems environment, including homegrown legacy systems, industry-specific niche applications, and external applications for collaborating with partner systems.

Robust Analytical Capabilities Provide Customer and Business Insight

Siebel eFinance 7 is also shipping with Siebel Analytics 7, which includes visual, prepackaged and fully configurable reports and interactive dashboards with best practice metrics for sales, marketing, service, partner management, and executive users. All Siebel Industry Applications deliver tailored and robust analytical and reporting capabilities that provide role-based analytics with insight into customer trends and overall business performance.

Automated Upgrade Path Provides Low Total Cost of Ownership

Siebel eFinance 7 offers a clear upgrade path for customers, including automated upgrade functionality, resulting in reduced deployment times and the lowest TCO. Unlike most applications software, Siebel eFinance 7 allows existing customers to employ an automated process to upgrade to the latest version of the application by combining and merging customizations with new functionality on the enhanced platform.

About Siebel Systems

Siebel Systems, Inc. is the world’s leading provider of eBusiness applications software. Siebel Systems provides an integrated family of eBusiness applications software enabling multichannel sales, marketing and customer service systems to be deployed over the Web, call centers, field, reseller channels, retail and dealer networks. Siebel Systems’ sales and service facilities are located in more than 32 countries. For more information, please visit Siebel Systems’ Web site at .


MasterCard Board

MasterCard’s U.S. Region Board yesterday elected Capital One CEO Richard Fairbank as its new chairman to succeed MBNA Vice Chairman Michael Rhodes, who served as chairman since 2000. MasterCard also announced that Richard Srednicki, head of the credit card business at JPMorgan Chase, has been named as vice chairman of its U.S. Region Board. Additionally, MasterCard said that Jeffery Dye, president of GE Capital Financial, and Tom Wimsett, president and CEO of National Processing Company, were also named to its U.S. Region Board. Other continuing board members include Eula Adams, EVP of First Data; Steven Freiberg, president & CEO, North America Cards, Citigroup; Richard Hartnack, vice chairman, Union Bank of California; Alan Heuer, SVP of MasterCard International; John Klein, president & CEO, People’s Bank; Ruth Ann Marshall, president, North America, MasterCard International; Siddharth Mehta, group executive, Household International; Patrick Swanick, president & CEO, Key Electronic Services; Mark Wright, president & CEO, USAA Federal Savings Bank; and Ronald Zebeck, president & CEO, Metris Companies, Inc.


SIM Voice Card

SchlumbergerSema, a business unit of Schlumberger Limited, and Domain Dynamics Limited, the UK voice and signal specialist, announced a security breakthrough for mobile phones which safeguards access to handsets by means of voice authentication. This new system runs on a SIM (subscriber identity module) card and requires no additional hardware, making it cost-effective and simple to introduce.

The technology ensures that only legitimate users can access a phone by using a locking mechanism, which operates in the familiar fashion of a PIN code. Authentication simply requires the user to speak a phrase or word as the phone is switched on, which is compared in real-time with a reference voiceprint stored inside the tamper-proof SIM card’s memory.

Voice authentication is the most natural method of introducing state-of-the-art security into the mobile phone marketplace,” said Jorgen Rasmussen, president, Cards at SchlumbergerSema. “By basing the solution on the standardized SIM platform, it becomes cost-effective and simple, providing a highly flexible mechanism for operators to address the widespread public concern over privacy and security.”

The new system has been developed through a partnership between SchlumbergerSema, which provides the SIM ToolKit applet, Domain Dynamics Ltd, which provides the voice authentication algorithm, and Mitsubishi Electric Telecom, which has implemented the technology on the Trium Mondo GSM/GPRS PDA phone.

The system is provided as a SIM ToolKit applet, which may be loaded onto any standard Java Card(TM) SIM. Leveraging the unique nature of the signal processing algorithm designed by Domain Dynamics Ltd, and the lean nature of the man-machine interface program, the applet is extremely small — requiring just 2.5 Kbytes of memory in total.

SchlumbergerSema ([][1]) is a leading information technology services company providing consulting, systems integration, managed services, and products to the telecommunications, energy and utilities, finance, transport, and public sector markets. Domain Dynamics Ltd ([][2]) the voice and signal specialist provides powerful, compact and cost-efficient solutions for word recognition, voice authentication biometrics, signal processing, and machinery condition monitoring and is focusing primarily on solutions to applications in noisy or restricted environments. Java Card is a trademark of Sun Microsystems.




SCM Microsystems, Inc., a leading provider of
solutions that open the Digital World, announced that it will acquire
Towitoko AG, a leading supplier of smart card-based security solutions for
home banking and private PC access in the German-speaking market. With this
acquisition, SCM strengthens its PC Security business with the addition of
proven software applications for smart card data management and security, as
well as by increasing its market penetration in Germany.

SCM expects the acquisition of Towitoko AG will be completed during the
second quarter of 2002. The company further expects the acquisition to result
in additional revenues of approximately $5 million and operating income of
$500,000 in the current fiscal year. SCM is paying approximately $5 million in
cash to purchase Towitoko AG, a private company based in Munich.

Towitoko AG is a leading supplier of smart card readers and smart
card-based solution packages to the German market. Its customers include
leading German banks, such as Deutsche Bank and Dresdner Bank, who use its
smart card readers to deploy home banking applications to their account
holders. In addition, Towitoko AG provides a variety of offerings based on its
proprietary software applications that allow home PC users to implement their
own smart card-based security or data management systems.

“The acquisition of Towitoko will extend SCM’s market share and technology
leadership within the smart card-based PC Security sector,” said
Robert Schneider, chief executive officer of SCM Microsystems. “The
combination of its application software and our strong reader platform, which
is designed to be compliant with all emerging standards for the use of smart
cards, further strengthens our product offerings. In addition, Towitoko’s
strong position as a supplier to the German home banking industry boosts our
competitive position in this emerging market, at a time when financial
institutions worldwide are increasingly adopting smart card-based programs to
increase security and differentiate themselves with customers.”

About Towitoko AG

Towitoko AG is a leading supplier of intelligent IT security solutions in
the area of smart card readers and smart card solutions. The company addresses
the dramatically increasing demands on security for electronic data transfer
with products that emphasize quality, functionality and terrific
price-performance ratio. As a result, Towitoko is a leader in the growing
market for smart card readers and smart card-based solutions. Towitoko’s
customers include a large number of extensive reference projects, including
Motorola, Giesecke & Devrient, Visa, Dresdner Bank and UBS. For more
information, please visit the company’s Web site at

About SCM Microsystems

SCM Microsystems is a leading supplier of solutions that open the Digital
World by enabling people to conveniently access digital content and services.
SCM’s Security business provides smart card reader technology for the PC
platform and conditional access modules for the digital TV platform to OEM
customers in the government, financial, enterprise and broadcasting markets
worldwide. The company’s Digital Media and Video business provides hardware,
software and silicon solutions for creating and sharing digital media content
to the worldwide retail market under the Dazzle(TM) brand. Global headquarters
are in Fremont, California, with European headquarters in Ismaning, Germany.
For additional information, visit the SCM Microsystems Web site at


Online Ads 2002

While online ad spending by credit card issuers collapsed during 2001, some tracking firms are predicting an 8% to 10% rise in Internet marketing this year. Two of the most active online credit card marketers, NextCard and Providian, withdrew ads during the fourth quarter following financial turmoil spurred by accounting problems. According to NYC-based Taylor Nelson Sofres, Providian spent $29.3 million last year for online ads, the third largest amount behind eBay and GM. Boston-based Compete says NextCard and Providian each received about 260,000 online credit card applications monthly. Troubled sub-prime issuers CompuCredit and Net First National Bank, also active during 2001, have stopped online marketing. Other major issuers such as Bank of America and Capital One reduced online marketing last year. Juniper Bank is currently cutting back on Internet marketing. Nevertheless, Taylor Nelson Sofres says overall ad spending will grow by 8.8% this year after falling 14.7% last year. The research firm estimates total online ad spending hit $2.5 billion during 2001. Meanwhile, the suspension of online marketing by the most active credit card advertisers has proven to be a boon for other issuers during the first two months of 2002. Response rates for current advertisers, such as Discover, have soared by 75% this year, according to CardWatch ([][1]). (CF Library 10/31/01; 1/11/02)