Handheld Future

Despite the collapse of investor enthusiasm in technology, the future for handheld computer devices couldn’t be brighter. Wireless handheld devices represent the most significant emerging segment of the payment card industry aside from smart cards. Yesterday, MA-based IDC forecast that the worldwide handheld market will grow from 12.9 million units in 2000 to over 63.4 million by 2004. The research firm predicts that 2001 will prove to be the year when mobile access devices hit their stride. Most personal handhelds ship with the Palm operating system. However, new products from Microsoft and Research In Motion have softened Palm’s grip on the market-leading position. According to IDC, smart phones will be the fastest-growing segment of the smart handheld devices market. From 480,000 in 2000, shipments of smart phones will increase at compound annual growth rate of 164% to over 23 million by 2004. Major credit card issuers such as Providian, and up and coming issuers such as Juniper Bank, are already poised to lead the handheld bandwagon.

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Cap One Drops Sprint

Capital One Financial Corporation announced Thursday the conclusion of a direct marketing test relationship with Sprint PCS that began in August 2000. Under the terms of this agreement, Capital One originated wireless telephone accounts for Sprint PCS and Sprint PCS provided the wireless telephone service and managed these accounts as Sprint PCS customers. This relationship was in a test phase to determine the economic value of this business to both companies.

“After evaluating the test results, we determined that the rates of return available to us in this relationship did not compare favorably with our other investment opportunities,” said Richard D. Fairbank, Chairman and Chief Executive Officer for Capital One. “The talent and resources that were devoted to this relationship will best serve Capital One by being deployed to business segments producing higher returns.”

Headquartered in Falls Church, Virginia, Capital One Financial Corporation ([http://www.CapitalOne.com][1] ) is a holding company whose principal subsidiaries, Capital One Bank and Capital One, F.S.B., offer consumer lending products. Capital One’s subsidiaries collectively had 33.8 million customers and $29.5 billion in managed loans outstanding as of December 31, 2000. Capital One is a FORTUNE 500 company that trades on the New York Stock Exchange under the symbol “COF” and is included in the S&P 500 index.

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

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EU VISA Cards

VISA’s EU Board met last week and decided to invest ‘168m to accelerate the migration to chip cards and chip technologies. The investment is being allocated to provide financial incentives to member banks for chip card issuance, support to vendors to increase the range of products and equipment, technical assistance to suppliers within the electronic EPOS industry, placement of terminals at large retail sites, and the targeting and supporting of those retailers suffering from high levels of fraud loss. VISA EU says it expects more than 180 million ‘VISA’ and ‘VISA Electron’ cards to be carrying an EMV chip by December 2004. In the UK, over 8.5 million chip cards have already been issued and over 80% of payment cards are expected to be chip-based in the next two years. By January of 2005 changes to the VISA EU ‘Regional Operating Regulations’ will become effective, such that those VISA members that have not implemented a chip infrastructure will be liable for all fraud that could have been prevented through its use. The ‘Regional Operating Regulations’ also require all acquirer systems and networks to be re-certified as capable of carrying EMV/VISchip data in authorization and clearing messages by October of this year.

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Wireless Big Mac

Toronto-based MIST confirmed yesterday that it is now conducting a major pilot of its wireless POS terminal with McDonald’s in Canada. The MIST ‘Freedom II’ pilot is being conducted in the Vivencia Restaurant franchise at the Stouffville, Ontario, Canada location. Customers can operate the portable device at both the drive-through windows and at the restaurant’s counter. There are now more than 1,100 McDonald’s restaurants in Canada that serve approximately 3 million Canadians every day.

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Card Bond Outlook

While declining asset quality is a concern among credit card-backed securities, the decline in interest rates should have an indirect positive benefit, as many borrowers may look to refinance their mortgages in an effort to consolidate their debt. Another contributing factor is that increased fee income has helped keep most credit card companies risk-adjusted revenue margins at historically high levels which will help offset the expected increase in chargeoffs that will inevitably occur once the economy softens. Nevertheless Fitch says the modest decline in asset quality experienced during the fourth quarter of 2000 is likely to be a prelude to higher loss rates for 2001. The biggest impact of this will be seasoning of existing receivables, with the highest increase of net chargeoffs expected for the nonprime/subprime borrower base. With a slowing U.S. economy, the level of net chargeoffs are anticipated to be up throughout 2001. Notwithstanding, Fitch believes specialized credit card lenders should continue to report solid profitability based on historically relatively strong asset quality, effective cross-selling of fee-based products and services, more active account management, and in some cases an increased risk appetite.

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NCR Markets Voyager

Corillian Corp., a leading global provider of eFinance solutions, and NCR Corporation announced the signing of a multi-year reseller agreement to deliver comprehensive eFinance solutions for financial institutions in North and South America.

Under the terms of the agreement, NCR will sell Corillian’s Voyager platform as its preferred retail Internet banking offering for mid to large-sized financial institutions looking for a comprehensive, scalable eFinance solution. NCR’s Internet banking service is run in a managed server model and targeted for financial institutions looking to outsource, rather than deploy Corillian’s Voyager on-site.

“We conducted extensive scalability and ease-of-use testing of the major Internet banking packages and Corillian’s Voyager came out on top,” said Greg Hanson, general manager of eCommerce Solutions, NCR. “This agreement will help enhance NCR’s Internet banking offering to mid-to-large sized financial institutions.”

Corillian Voyager — The Operating System for eFinance(TM) — is a high-performance platform that allows for the delivery of financial services to customers over the Internet by providing a link between a financial institution’s legacy host system and its consumers, using Internet browsers, personal financial management programs and Internet-ready wireless devices. Voyager’s open architecture design allows the institution to quickly integrate emerging technologies, deploy the platform in-house or in a secure data center, and customize the entire Internet banking presentation to its customers.

“NCR’s vast experience in working with financial institutions on delivering enhanced Internet banking solutions made them the perfect partner for us,” said Ted Spooner, chief executive officer of Corillian. “This experience is critical in the eFinance industry as financial institutions are looking for ways to take advantage of the Internet as a compelling delivery channel. We are excited about the possibilities that this partnership will bring to the industry.”

About Corillian Corporation

Based in Oregon, and with international offices in Europe and Asia, Corillian Corporation is an award-winning provider of eFinance-enabling software for the financial services industry. Built on the Microsoft Windows 2000 platform, Corillian applications support Internet banking, bill delivery and payment, brokerage, customer relationship management, enhanced data aggregation, and small business transactions. Voyager can be deployed on-site at the financial firm or at a secure data center. Corillian technology also enables Open Financial Exchange (OFX) access by finance management software packages such as Quicken(R), QuickBooks(R) and Microsoft(R) Money. For more information about Corillian Corporation, visit the company’s Web site at [http://www.corillian.com][1].

About NCR Corporation

NCR Corporation (NYSE:NCR) is a leader in providing Relationship Technology(TM) solutions to customers worldwide in the retail, financial, communications, manufacturing, travel and transportation, and insurance markets. NCR’s Relationship Technology solutions include privacy-enabled Teradata(R) warehouses and customer relationship management (CRM) applications, store automation and automated teller machines (ATMs). The company’s business solutions are built on the foundation of its long-established industry knowledge and consulting expertise, value-adding software, global customer support services, a complete line of consumable and media products, and leading edge hardware technology. NCR employs 32,900 in 130 countries, and is a component stock of the Standard & Poor’s 500 Index. More information about NCR and its solutions may be found at [www.ncr.com][2].

[1]: http://www.corillian.com/
[2]: http://www.ncr.com/

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VISA GC

VISA International announced Thursday that Guy Rounsaville has been hired as EVP and General Counsel. Rounsaville was most recently co-managing partner at the San Francisco office of the law firm of Allen Matkins Leck Gamble & Mallory LLP where he was responsible for the firm’s Corporate Department. His practice focused on corporate, business, and banking law. Rounsaville succeeds Bennett Katz who retired from VISA International in late 1999.

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OPC in NY

Official Payments Corporation announced the company has launched a new website and telephone service accepting credit card payments for New York State individual income taxes. Taxpayers in New York can now make balance-due tax payments and extension tax payments with their credit cards by visiting [www.officialpayments.com][1] or calling 1-800-2PAY-TAX. The New York State Department of Taxation and Finance has authorized Official Payments to provide this service. Official Payments provides a similar service for the Internal Revenue Service for federal income tax payments, and for 17 state governments including Connecticut and New Jersey. Information on the credit card payment options is included in federal and state tax instruction booklets.

“Credit card tax payments are a matter of convenience, cash management, and rewards,” said Thomas R. Evans, Chairman & CEO of Official Payments. “We offer consumers the lowest price in a convenient, safe, reliable, and secure environment for making tax payments via telephone or Internet. As a bonus, taxpayers using credit cards with bonus rewards programs can, depending on their card’s program, earn rewards, points, and cash-back or airline frequent flyer miles for paying their taxes,” Mr. Evans added.

Official Payments will charge New York taxpayers a 2.5% convenience fee ($1.00 minimum charge) for processing these credit card transactions. The 2.5% pricing is the lowest price available from the two companies listed in the New York State tax instructions as providing credit card tax payment services to taxpayers. For example, a taxpayer who owed New York $900.00 and charged their taxes would find a total of $922.50 on their credit card statement: $900.00 for the tax bill and $22.50 for the convenience fee. American Express, Discover Card, and MasterCard are the credit cards accepted by the program.

“We are pleased to launch this new service for New York taxpayers,” Mr. Evans continued. “New York represents a $6.4 billion personal income tax market opportunity for Official Payments. During the 1999 tax season we collected federal income tax payments from thousands of New York citizens. Now those same people will be able to use our systems to make state tax payments,” Mr. Evans added.

About Official Payments Corporation

Official Payments Corporation (Nasdaq: OPAY) is the leading provider of electronic payment options to government entities. The company’s principal business is enabling consumers to pay their government taxes, fees, fines, and utility bills by credit card, via Internet and telephone. The company is unequaled in market penetration and national footprint. Official Payments is the incumbent in agreements with the Internal Revenue Service, 17 state governments, and well over 700 county and municipal governments in 41 states across the United States. In 2000, Official Payments collected and processed over $925 million in federal, state, and local government payments.

Official Payments was founded in the San Francisco Bay area in 1996. Thomas R. Evans, the former President & CEO of the Internet company GeoCities, became Chairman & CEO of Official Payments in the summer of 1999. Mr. Evans brought Official Payments public in November of 1999, raising $80 million in its IPO on the NASDAQ national market. The company has experienced rapid and sustained growth over the past six reported quarters in revenue, new client acquisition, and addition of incremental services to existing clients. The company’s success can be attributed to the combination of an enormous market opportunity with a highly skilled and experienced management and staff, aggressive sales and marketing, and a core competency in developing and implementing leading-edge technical systems.

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

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Advanta Closes Deal

Advanta Corporation announced that it has completed the sale of its mortgage business to Chase Manhattan Mortgage Corp. for a cash price of in excess of $1 billion. With the conclusion of the strategic alternatives process, the Company anticipates book value per share of $16.00 to $17.00 at March 31, 2001, after restructuring and other charges.

Advanta will now focus on its profitable business credit card business, already one of the nation’s largest issuers of MasterCard business credit cards. “The completion of this strategic transaction has converted a substantial portion of our book value to cash. The proceeds from the sale will be used to reduce debt and enhance the Company’s funds available to invest in our very successful small business credit card operation,” said Chairman and Chief Executive Officer Dennis Alter. “With the disposition of the Mortgage business, our best resources are now focused on Business Cards and we are poised to take every advantage of a growing and profitable market,” said Alter.

Advanta is a highly focused financial services company which has been providing innovative financial solutions since 1951. Advanta leverages its first-class direct marketing and information based expertise to develop state-of-the-art data warehousing and statistical modeling tools that identify potential customers and new target markets. Over the past five years, it has used these distinctive capabilities to become one of the nation’s largest issuers of MasterCard business credit cards to small businesses. Learn more about Advanta at [www.advanta.com][1].

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

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Shell easyPAY

Shell Canada Products announced the launch of its new easyPAY payment technology at participating Shell retail sites in Vancouver, Edmonton, Toronto, Ottawa and Montreal. This follows a successful introduction to the Calgary market last fall. Shell is the first gasoline retailer in Canada to introduce this breaking technology which provides a faster and easier payment method for customers.

Shell easyPAY uses a microchip and short-range radio transmitter embedded in a tag that fits on a key ring. It communicates with a pump-mounted receiver to automatically bill fuel to the customer’s chosen credit card and instantly record AIR MILES(R) reward miles.

With a Shell easyPAY key tag, customers can drive to participating Shell retail sites, present their personally programmed key tag in front of the easyPAY symbol on a pump and fill up without swiping a credit card. Customers can identify participating sites by the easyPAY logo on the street signs.

“Shell conducted extensive research that revealed speed and convenience are becoming increasingly important factors for consumers purchasing gasoline,” says Terry Blaney, Shell Vice President of Retail Sales and Marketing. “We designed easyPAY to meet the needs of consumers who want to have a simple, quick and efficient experience when fuelling up,” he added.

Customers have three options when applying for their free easyPAY tag. They can apply online at [www.shell.ca/easypay][1], pick up an application form at participating Shell retail sites in Vancouver, Calgary, Edmonton, Toronto, Ottawa and Montreal, or call 1-877-EASYPAY or 1-866-6FACILE in French-speaking Canada.

[1]: http://www.shell.ca/easypay

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CANADA

Shell Canada Products announced the launch
of its new easyPAY payment technology at participating Shell retail sites
in Vancouver, Edmonton, Toronto, Ottawa and Montreal. This follows a
successful introduction to the Calgary market last fall. Shell is the first
gasoline retailer in Canada to introduce this breaking technology which
provides a faster and easier payment method for customers.

Shell easyPAY uses a microchip and short-range radio transmitter embedded
in a tag that fits on a key ring. It communicates with a pump-mounted receiver
to automatically bill fuel to the customer’s chosen credit card and instantly
record AIR MILES(R) reward miles.

With a Shell easyPAY key tag, customers can drive to participating Shell
retail sites, present their personally programmed key tag in front of the
easyPAY symbol on a pump and fill up without swiping a credit card. Customers
can identify participating sites by the easyPAY logo on the street signs.

“Shell conducted extensive research that revealed speed and convenience
are becoming increasingly important factors for consumers purchasing
gasoline,” says Terry Blaney, Shell Vice President of Retail Sales and
Marketing. “We designed easyPAY to meet the needs of consumers who want to
have a simple, quick and efficient experience when fuelling up,” he added.

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iSimplify Card Award

The third annual Advanced Card Award, in London 21st February 2001, has selected the iSimplify! Card, developed by Bull CP8 and announced at the Paris-based Cartes’1999 fair, as the most innovative product of the year.

The iSimplify! card is based on an innovative technology which transforms a smart card into a true node of the Internet network and is the first smart card to integrate this concept.

The card is designed to simplify and secure personal access to the Internet by integrating Internet protocol (IP) communications within the smart card. The iSimplify! card stores each user Internet ID, enabling secure, hardware-independent access to personal data such as bookmarks and e-mail address books. The Oversoft technology used in the iSimplify! card is a communication architecture that adds a new function to the smart card. The card “talks IP”, is proactive and can achieve operations requested via the Internet.

iSimplify! selected by Dataquest

Dataquest highlighted the iSimplify! card as particularly relevant to network security applications and as one of the most innovative developments in the smart card industry in 1999. Dataquest identifies secure network access as the fastest-growing smart card application, particularly in North America, which will retain more than 56 percent of worldwide share throughout 1999-2004 period.

Schlumberger, for its part, has been selected for the “Best loyalty implementation” and “Best Communications Implementation” awards.

The Advanced Card Awards play a critical role in the advanced card industry, by supporting the quest for excellence in the development and implementation of advanced card technology and applications across a wide range of market sectors.

About Bull CP8 ([http://www.cp8.bull.net][1]) Since 1998, under the direction of CEO David Levy, Bull CP8 has been focusing its strategy on the development and marketing of software for microprocessor cards, more popularly known as smart cards, integrating a high level of security.

Bull CP8 is the undisputed leader in smart card technology since its first patent in 1977 until the realization of the first 32-bit smart card.

Bull CP8 is the worldwide leader in the banking sector: debit-credit and e.purse, with a 30%.worldwide market share.

In 1999, the company ventured into the GSM market and is now at the leading edge in the development of UMTS, the third generation of SIM cards. The company is also promoting the world’s first “Internet” smart card.

[1]: http://www.cp8.bull.net/

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