Whirlpool Card Deal

Fiserv Orlando’s PLUS System, the industry’s leading credit-processing solution, was selected by Whirlpool Financial Corporation to handle all aspects of its private label credit card processing operations, Fiserv announced Thursday.

Whirlpool Financial parent, Whirlpool Corporation, headquartered in Benton Harbor, Michigan, is the world’s leading manufacturer and marketer of major home appliances. With approximately 60,000 employees, Whirlpool manufactures in 13 countries and markets products in more than 170 countries under 11 major brand names.

![][1] ‘It is an honor to welcome Whirlpool Financial Corporation into the Fiserv client family,’ said Max Narro, Vice President for Fiserv’s Credit Processing Services. ‘We were gratified that we could help Whirlpool Financial resolve a unique situation with their credit card portfolio.’ Whirlpool Financial’s Specialized Needs Require Accuracy and Ease of Transition Whirlpool Financial Corporation, the financial subsidiary of Whirlpool Corporation, was left with a sizeable account base to service its private label credit card operation. While the majority of its credit card accounts were sold to Transamerica Distribution Finance Corporation in 1997, Whirlpool Financial was left without a system for handling the remaining portfolio. The problem was, explained Bob LaForest, vice president of Whirlpool Financial, ‘along with their purchase, Transamerica bought our in-house software program, VisionPLUS.’

In looking for an alternate solution, Whirlpool Financial decided they no longer wanted to service the accounts in-house. LaForest noted, ‘Our priority was to find an outsourced solution that could ease the transition and put less strain on staff. We were looking for someone who used the VisionPLUS system, because our people were very familiar with the system.’

Whirlpool Financial selected Fiserv Orlando, ‘primarily because we had worked with them before and I knew they understood our priorities and what our tasks were in managing this portfolio,’ said LaForest. The Fiserv VisionPLUS tools were implemented in November, LaForest said, and the transition is nearing completion. ‘We had to transition over the Holidays, which slowed things up, but Fiserv has been very responsive.’

As the remaining accounts phase out, there is still a need for good service, LaForest pointed out. ‘It’s a different kind of situation from most. What we really need at this point is a smooth transition, and accuracy in the billing out of our remaining accounts. That’s why we chose Fiserv.’

More About Fiserv and Its Credit-Processing Services

Fiserv’s PLUS System unites PaySys® International’s VisionPLUS credit processing software-the industry’s leading credit-processing solution-with Fiserv’s decades of information-processing expertise. This powerful mix of software and service provides a state-of-the-art foundation upon which businesses can build innovative private-label revolving credit card, bankcard, and installment credit programs.

Credit-processing clients of Fiserv’s Orlando-based business unit include such industry leaders as Conseco Finance Servicing Corp., Bombardier Capital, John Deere Credit, Shoppers Charge Accounts Co., EDS, Statesman Financial, Orchard Supply Hardware, and others. Every month, Fiserv processes about 50 million credit transactions nationwide.

Fiserv, Inc. (NASDAQ: FISV), the parent corporation of Fiserv Orlando, is an independent, full service provider of software and information management systems to the world’s financial-services industry. Fiserv’s staff of over 13,000 serves more than 10,000 clients worldwide, including finance companies, banks, credit unions, financial planners, broker/dealers, insurance companies, mortgage companies, and savings institutions. Visit Fiserv on the Internet at [www.fiserv.com][2].

[1]: /graphic/whirlpool/whirlpool.gif
[2]: http://www.fiserv.com/


ICE Storm

Hypercom’s ‘ePIC ICE’ POS terminals continue to take the market by storm. Yesterday Hypercom nailed a $50 million contract with a major player in the prepaid phone card market, one of the biggest deals in POS terminal history. Miami-based Blackstone awarded Hypercom a $50 million contract for a widescale rollout of Hypercom’s ‘ePic ICE’ card payment terminals and web appliances in support of Blackstone’s POS prepaid activation program. The rollout will enable tens of thousands of retailers across the USA to more easily sell prepaid calling cards as well as the new prepaid products and services including prepaid dial tone, Internet access and prepaid wireless services on the same device that handles their traditional credit card payment functions. Using Hypercom’s secure, browser-based ‘ICE’ touch-screen, menu-driven terminal, merchants can quickly and easily print and activate the calling cards, access accounting information via the Internet, accept smart cards/ATM/debit and EBT cards, process check verifications and American Express, Discover Card, MasterCard and VISA transactions. Blackstone offers more than 50 prepaid calling cards, prepaid paging, prepaid dial tone, prepaid wireless, one plus long distance, Internet services, and point-of-sale terminals at more than 300,000 retail locations nationwide.


Top Ten 4Q/00

Among the top ten U.S. bank credit card issuers, FleetBoston has posted the largest gain in receivables since 1995. FleetBoston soared by 825% over the past five years, from $1.6 billion to $14.8 billion in receivables, driven largely by its acquisition of the Advanta portfolio. Mergers and acquisitions have played a major role in the growth of other top issuers including Bank One/First USA +283% and Bank of America +164%. Without the benefit of M&A, American Express has churned out an impressive 187% gain, nearly triple Discover’s growth. Chase and Household have posted modest gains of 36% and 18% respectively over the past five years according to CardData ([www.carddata.com][1]).

(with percentage of change from 4Q/95 receivables)
1. Citibank $87.7 billion $48.8 billon +96%
2. MBNA $70.5 billion $29.5 billion +180%
3. Bank One/First USA $67.0 billion $37.1 billion +283%
4. Discover $47.1 billion $22.8 billion +71%
5. Chase $36.2 billion $18.1 billion +36%
6. American Express $28.7 billion $59.0 billion +187%
7. Providian $26.7 billion $ 7.6 billion +493%
8. Bank of America $24.3 billion $23.1 billion +164%
9. Household $15.2 billion $ 9.0 billion + 18%
10. Fleet $14.8 billion $ 5.3 billion +825%

* excludes Capital One which has not reported to CardData as of 2/8/01.
Source: CardData (www.carddata.com)

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


Counterfeit Cop

First Data Merchant Services , a subsidiary of First Data Corp., a global leader in electronic commerce and payment services and the world’s largest provider of merchant processing services, and ConSyGen, Inc., a high technology software development company have entered into an agreement where FDMS clients will sell the Counterfeit Cop to merchants in a proactive effort to stop fraud.

The Counterfeit Cop is a small footprint device, utilizing both UV light and incandescent light, designed to detect counterfeit currency. The Counterfeit Cop examines the content of the paper, the polymer threads and hidden watermarks (in new currency). It also detects imbedded holograms on credit cards and the security features of travelers checks, drivers licenses, personal checks, U.S. government checks, casino chips, event tickets and many forms of identification.

Under the terms of the agreement, the Counterfeit Cop will be made available to merchants through FDMS’ clients including, Chase Merchant Services, L.L.C., Huntington Merchant Services, PNC and Unified Merchant Services, as a way to combat currency fraud for merchants. The Counterfeit Cop is suitable for any market segment and merchant size.

“First Data Merchant Services recognizes that counterfeit crime is a significant problem for merchants and how accepting only a small amount of counterfeit currency can greatly impact the bottom line,” said Steve VanFleet, sr. vice president, First Data Merchant Services product development. “FDMS strives to provide innovative technology that benefits merchants, and by working with ConSyGen, First Data is able to continue to provide the most current device on the market to combat counterfeit crime.”

“We are confident that no other counterfeit detection device on the market has the ability to detect the wide variety of items that the Counterfeit Cop can detect, said Michael Garza, managing director of business products, ConSyGen, Inc. “Through the use of the Counterfeit Cop, First Data Merchant Services’ clients merchants will see a marked difference in the amount of counterfeit currency accepted.

About First Data

Atlanta-based First Data Corp. (NYSE: FDC) helps move the world’s money. As the leader in electronic commerce and payment services, First Data serves more than two million merchant locations, 1,400 card issuers and millions of consumers, making it easier, faster and more secure for people and businesses to buy goods and services using virtually any form of payment. With more than 27,000 employees worldwide, the company provides credit, debit and stored- value card issuing and merchant transaction processing services; Internet commerce solutions; Western Union money transfers and money orders; and check processing and verification services throughout the United States, United Kingdom, Australia, Mexico, Spain and Germany. Its money transfer agent network includes approximately 101,000 locations in more than 185 countries and territories. For more information, please visit the company’s Web site at [http://www.firstdata.com][1].

About ConSyGen

Established in 1996 as a high technology software development and R&D company, ConSyGen, Inc. has focused its business on providing innovative and superior commerce solutions worldwide. The primary CSGI product lineup includes the Counterfeit Cop(TM) and BizPay(TM).

The Counterfeit Cop(TM) provides a very quick and easy process for merchants and banks to protect themselves from losses associated with counterfeit payment and ID. Counterfeit Cop(TM) works with U.S. and international currencies, traveler’s checks, bank checks, money orders, casino chips, credit cards and passports. For more information, please visit the company’s websites at [http://www.counterfeitcop.com][2] or [http://www.consygen.com][3]

[1]: http://www.firstdata.com/
[2]: http://www.counterfeitcop.com/
[3]: http://www.consygen.com/


Concord 4Q/00

Memphis-based Concord EFS reported yesterday that 4Q/00 revenue grew 32% to $353.3 million compared to $268.1 million in the fourth quarter of 1999. Net income for the fourth quarter of 2000 was $59.0 million, up 39%, over 4Q/99. Total transactions at Concord grew from 4.2 billion in 1999 to 5.3 billion in 2000, a 26% increase. Network Services transactions grew 18% in 2000, while Payment Services transactions were up 33% year over year. Concord completed its acquisition of Star Systems on February 1. STAR, which had revenue of approximately $183 million in 2000, will become part of Concord’s Network Services, which includes ATM and debit card processing provided primarily to financial institutions. For complete details on Concord’s 4Q/00 results visit CardData ([www.carddata.com][1]).

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


Vital Gets Bradford

Vital Processing Services announced the appointment of Kevin Bradford, a recognized leader in the financial services processing industry, to serve as executive vice president of business development. Bradford will report to Jonathan Palmer, Vital’s president and CEO, and serve on Vital’s senior management committee.

As head of business development, Bradford will lead Vital’s efforts in identifying and evaluating partnership, merger and acquisition and strategic alliance opportunities that are aligned with Vital’s business objectives. He also will lead Vital’s efforts to capitalize on those opportunities.

“Vital will continue to expand our value for merchants and merchant acquirers as we build on our array of commerce enabling services. The experience Kevin brings with him will be valuable to Vital’s future, as he will play a pivotal role in fostering and managing strategic growth,” said Jonathan Palmer.

Prior to joining Vital, Bradford held senior-level positions at a distinguished roster of financial services companies. Recently, Bradford served as senior vice president of business development for Electronic Payment Services, Inc. (now part of Concord EFS), where he led its strategic growth initiatives in revenue with large financial institutions. Previously, Bradford gained more than 20 years experience at the following companies: BISYS Group, Inc., First Financial Management Corporation (now part of First Data Corporation), Union Bank, Southwest Corporate Federal Credit Union and Salomon Smith Barney.

“Vital is well positioned to capitalize on the growth and consolidation in the electronic payments industry, backed by strong ownership from TSYS(R) and Visa(R) U.S.A., an impressive client base and a strong management team led by Jonathan Palmer. I feel fortunate to be a part of this team,” said Kevin Bradford.

About Vital Processing Services ([http://www.vitalps.com][1])

Arizona-based Vital Processing Services(R) (Vital(R)) is a leader in technology-based commerce enabling services. Vital’s clients include acquirers and merchant service providers that offer electronic payment processing services to merchants. Vital provides leading point-of-sale (POS) products and services, electronic authorization and data capture; VirtualNet(TM) Internet-commerce services; clearing, settlement and exception processing; accounting, billing and reporting; risk management; and customer service. Vital is a merchant processing joint venture of Visa(R) U.S.A. and Total System Services, Inc.(R) (NYSE: TSS”) (TSYS).

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


AmEx Strategy

American Express’ new strategy of buying portfolios of existing VISA and MasterCard accounts from a bank, and then converting those cards with American Express cards maybe flawed according to the February issue of CardTrak, released yesterday. VISA says it conducted a poll early this month that shows just 27% of Bank of Hawaii VISA cardholders are likely to keep and use their new American Express cards when they come in the mail. In late December, Bank of Hawaii agreed to sell its $226 million VISA card portfolio to American Express. VISA says the general reaction to the American Express-Bank of Hawaii deal among Hawaiians is negative, the most intensely negative group toward it are Bank of Hawaii credit cardholders themselves. VISA found that 69% of Bank of Hawaii cardholders think Bank of Hawaii is making a mistake by turning over their credit card accounts to AmEx. Even if AmEx can persuade all of Bank of Hawaii’s credit cardholders to accept and use an AmEx card, there is still a question as to whether or not the acquisition can be profitable. It is widely believed that American Express paid a very high premium to acquire the VISA card portfolio. The average amount paid by bank credit card issuers to acquire a credit card account last year was around $170. Considering the inflated premium that AmEx may have paid, the cost per credit card account for the Bank of Hawaii may be as high as $300 per account. Last July, American Express purchased a co-branded MasterCard portfolio from New Jersey-based Valley National Bank and began the conversion to AmEx cards this month. The Bank of Hawaii conversion is expected to begin this summer according to CardTrak ([www.cardtrak.com][1]).

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


Reform Push

The National Retail Federation encouraged the U.S. Senate to move bankruptcy reform legislation, without additional amendments, early in the legislative session.

Testifying before the Senate Judiciary Committee, Dean Sheaffer, Vice President and Director of Credit at Boscov’s Department Stores, urged Members to approve pending bankruptcy legislation (S. 220) without tampering with the current provisions or adding irrelevant amendments unrelated to bankruptcy reform.

“On behalf of the National Retail Federation, we urge members of Congress to take swift legislative action to address the problems confronting the nation’s bankruptcy system,” Sheaffer testified. “Otherwise, in the not too distant future, we may find that among a large segment of our society, bankruptcy filings will become the rule rather than the exception. I believe that it is imperative for Congress to pass common sense bankruptcy reform legislation in the form of S. 220 without amendments now.”

NRF has promoted fair, needs-based bankruptcy legislation for some time. At issue are those debtors who can afford to repay a significant portion of what they owe, yet choose to walk away from their debts.

“Bankruptcy must remain an option for those who have experienced serious financial setbacks and who have no other means of recovering,” Sheaffer said. “We must be very careful to distinguish the average filer, who uses the system properly, from that smaller, but important group of others who misuse the system for their benefit.”

Bankruptcy legislation has enjoyed broad, bipartisan support in Congress for three years. The House of Representatives and the Senate approved legislation identical to the current bill by veto-proof margins, but the measure was pocket vetoed by President Clinton last year.

“Bankruptcy filings are more than triple now than they were during the much worse economic conditions that existed in the 1980’s,” Sheaffer noted. “If the current rate of filings holds within the next decade, 1 in every 7 American households will have filed for bankruptcy. The system is seriously flawed.”

Studies have shown that ending misuse of the bankruptcy system will save Americans more than $4 billion annually. NRF supports needs-based bankruptcy reform, ensuring that those who can repay their obligations do and those that cannot are provided the relief they need.

The National Retail Federation (NRF) is the world’s largest retail trade association with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalogue, Internet and independent stores. NRF members represent an industry that encompasses more than 1.4 million U.S. retail establishments, employs more than 20 million people — about 1 in 5 American workers — and registered 2000 sales of $3.2 trillion. NRF’s international members operate stores in more than 50 nations. In its role as the retail industry’s umbrella group, NRF also represents 32 national and 50 state associations in the U.S. as well as 36 international associations representing retailers abroad.

For more information about NRF, visit the organization’s Website at [http://www.nrf.com][1].

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


Tidel 4Q/00

Houston-based Tidel Technologies reported net income for the quarter ended 12/31/00 of $1,888,019, an increase of 27% from $1,481,067 for the same quarter in 1999. Revenues for the quarter were $16,696,463, an increase of 21% from the same quarter a year ago. For 4Q/00 Tidel shipped 3,310 ATM units, an increase of 50% over the 2,213 units shipped in the comparable quarter in 1999. Tidel pointed out yesterday that even though the sales of ATMs grew 50%, corresponding revenues only increased 21%. Tidel says this was due to a decline in the average sales price per unit of approximately $950 over the past year. Sales to Tidel’s largest customer, Credit Card Center, were $11.6 million, or about 70% of total revenues for the period. For details on Tidel’s latest quarterly performance visit CardData ([www.carddata.com][1]).

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


ECHO Hires Masaki

Electronic Clearing House, Inc. announced the appointment of Mr. Geoffrey Masaki as Vice President of Special Programs.

Masaki will report to the Company’s Chief Information Officer, Larry Brown. Masaki joined the Company in July, 1997, programming terminals as a Senior Project Leader. In October, 1999, he was designated Director of Special Programs, managing Web-based projects. Prior to joining ECHO, Masaki was a Senior Systems Analyst for Software Dynamics, Inc. and has been performing technical and management duties in the computer industry since 1969. Masaki holds a B.A. degree in Mathematics from Occidental College in Los Angeles and an M.S. degree in Computer Science from the University of Maryland.

“Geoffrey has proven himself in two critical areas,” stated Larry Brown. “He has consistently met his commitment dates and he has shown great skill in managing a development team of programmers. We are very fortunate and pleased to have Geoffrey part of our management team.”

Electronic Clearing House, Inc. provides credit card processing, check guarantee, check verification, check conversion, and inventory tracking to over 58,000 retail merchants and U-Haul dealers across the nation.


Credit Data

Experian has joined the trend of offering consumers copies of credit records online as well as access to credit ratings. The Experian program will be launched in phases, with most components available by July 1., and will provide consumers with the ability to receive their credit reports and dispute them online, receive a credit risk score, and learn how to better manage their financial health through a variety of educational tools. In addition to their Experian risk score, consumers will receive score factors, education about how to interpret them and suggested steps to take in improving their scores. The risk score will be available for $6. The price of a credit report will remain $8.50, or as authorized by individual state laws.Additional features available on July 1 include: Credit Manager, a comprehensive credit management service designed to help consumers better understand, protect and manage their credit health; an electronic registration and protection service for debit/credit and other in-wallet consumer information; the automated dispute of credit report entries and tri-bureau credit report services.



Schlumberger Test & Transactions, a business segment of Schlumberger Limited
issued its annual review of the smart card industry. The
report notes that the worldwide smart card industry came of age in 2000, with
open platform cards achieving mass volumes for the first time. Despite
substantial silicon shortages, shipments still grew 27% to reach 1,790
confirming the pivotal role the smart card is playing in providing portable,
personal security across the spectrum of end-user sectors.

Among the forecasts Schlumberger makes for 2001 is continued double-digit
growth in demand, driven largely by wireless applications, with the emergence
of mobile commerce adding a new dimension to this segment. Also of note, the
coming year will see the first volume roll-outs of USB (Universal Serial Bus)
compatible cards, and substantial growth in the emerging US market.

Looking Back at 2000

For the first time, the most significant industry event was not related to any
development in card applications or technology, but to a shortage of silicon.
Booming demand for semiconductors led to restricted allocations of silicon to
manufacturers, and as many as 30% of chip orders may have gone unfulfilled.
This situation led some end-users to over order and build up inventory, partly
explaining the healthy shipment figures. This trend will probably continue
until expected increases in semiconductor capacity come on-stream at the
end of

The star application sector for smart cards was, as expected, SIM (subscriber
identity module) cards for mobile phones, which expanded by more than 70%.
surge was due to the strong demand from consumers for mobile phones and — in
the high-end of the market — the intensive drive by operators to roll-out
value-added services based on SIM ToolKit (STK). The high-end segment of the
market has effectively standardized on Java(TM) cards, and was the major
contributor to an astonishing year-on-year growth of 700% in open platform
technology. Java cards now accounts for some 15% of all shipments of
microprocessor-based smart cards.

“Java Card technology has had a radical impact on the SIM card market, and
than two thirds of those operators deploying STK services today actively
to base them on Java card SIMs,” noted Xavier Chanay, Schlumberger vice
president, Mobile Communication Products. “The latest SIM card standards —
which stabilized in mid-2000 — complete the chain to ensure that the process
of creation and deletion of STK applets is fully standardized.”

Banking cards — the next largest market sector for microprocessor smart cards
— achieved healthy double-digit growth, although not as high as in 1999. This
slowdown occurred for a number of reasons The massive GeldKarte roll-out had
passed its peak, some countries extended their card life cycles by an extra
year, and silicon was in short supply.

Among other microprocessor card applications, pay TV and ID cards grew
strongly, with the continued rise of digital TV and the emerging need for PC,
intranet and Internet security. The specialist application segment of health
cards remained fairly static because of its cyclical nature and reliance on
large projects, of which the two most pre-eminent — the French and the German
projects — have been more or less completed.

Payphone cards, the major application category for memory chip-based cards,
accounted for well over half of the industry’s total card shipments Over a
billion units in terms of volume, but only one-sixth of the industry’s
This market remained stable, predictable and very much a commodity market, now
dominated by the two major suppliers.

North America

“In 2000, the US saw the introduction of the first major roll-out of smart
cards in the financial sector with the Blue card from American Express,” said
Paul Beverly, vice president, Smart Cards, North America for Schlumberger.
“Visa, MasterCard and their member banks — such as Fleet Boston, First USA
Providian — followed quickly with announcements about their own smart banking

US government agencies — such as the Department of Defense and the US Postal
Service — took early roles last year in defining projects that use smart
for a variety of projects, including identification cards for physical access
to buildings and logical access to computer networks. Strong interest also
began to be shown in the US in late 2000 for Java-powered smart cards for
financial, information security and mobile communications applications.
The Health Insurance Portability and Accountability Act (HIPPA), which
that health care providers must develop processes for secure electronic
exchanges of confidential patient information, has driven heated discussions
about privacy and information security, spurring increased interest in smart
cards-based technology.

Another important development in information security this year was Sun’s
deployment of its Sun Ray(TM) appliance architecture for network access
control. The new system allows users to access their desktops anywhere within
the network simply by inserting their smart card into the computing device.

2001 Major New Opportunities

This coming year will witness double digit growth of over 20% in overall smart
card shipments, forecasts Schlumberger.

Mobile communications — which represents close to 70% of microprocessor-based
card shipments — remains the key focus for the larger players because it is
such a strong driver of both technology and revenue. In technology terms,
mobile communications has created the first mass market for interoperable open
platform cards, and customers continue to demand ever higher levels of memory.
The revenue derives from the high-end nature of the cards — at least for
used to provide subscriber services — and the additional services that
accompany such sales in terms of STK application programming and turnkey
systems deployment.

Last year’s growth in this segment is unlikely to be repeated, as the market
has matured, but there are still many bright spots to look forward to in 2001.
For one, the SIM card concept should be exported to non-GSM areas of the
telecommunications world. Schlumberger expects to see CDMA (Code Division
Multiple Access) operators starting to implement the benefits of the Removable
UIM (User Identity Module) standard, which will initially be used to

However, a more interesting trend is likely to start as CDMA operators
begin to adopt a more flexible approach to value-added services offered by the portable
identity module, in contrast to the current firmware-based approach. This
general shift might even migrate into the North American TDMA (Time Division
Multiple Access) market where operators — who are increasingly becoming part
of world-scale alliances — may exploit the shift to 2.5G and 3G technologies
to adopt the flexible SIM concept.

The next major boost to the mobile communications market is likely to come
later in the year. The first introduction of GPRS (General Packet Radio
Service) high-speed digital networks will provide the data communication speed
to make WAP (Wireless Application Protocol) a commercial success and create a
demand for WIM (WAP Identity Module) that will secure mobile commerce

Schlumberger also expects to see the first trials of 3G networks, again
to fresh demand for SIMs in the shape of the new Universal SIM device. With
Japan involved in this market, the latter half of the year could see the first
high volume shipments of mobile communications smart cards to that country.
However, mass volumes of USIMs are not anticipated until 2002.
The market for financial cards is expected to grow strongly at around 25%,
driven primarily by a number of national programs to replace existing magnetic
stripe bank cards with secure smart cards built on the EMV (Europay Mastercard
Visa) standard. Affected markets this year include the UK — with its current
EMV replacement program; Mexico, which is starting to see the first volumes of
Proton cards; and Brazil and China. Although most smart card programs are
driven primarily by the desire of banks to reduce fraud, the strong commercial
success of the American Express Blue smart card program in the US and
Canada is
viewed as likely to stimulate competition to release new chip-based cards.
A high spot for the industry will occur this year with the rapid rise of
enterprise and IT security smart card applications, which is expected to more
than double. The growth is stimulated by the general need for intranet and
Internet network security, and the particular support for smart card security
tokens which is built into Windows(TM) 2000. By 2003, Schlumberger estimates
that nearly half of online transactions will be secured by smart cards,
creating continued growth rates of over 40% in this market.

Technologically, the major event for 2001 is likely to be the widespread
availability of USB-compatible smart cards, which allow PCs and similar
to interface with smart cards without the cost of a conventional reader.
As regards open platform cards, Java card technology has now reached true mass
market maturity, while the other contenders — MULTOS and Smart Cards for
Windows(TM) — remain in their infancy. Whether these systems can catch up —
particularly MULTOS, which has suffered from its focus on banking cards — is
questionable. Both MULTOS and Smart Cards for Windows are looking to the
communications market, and one critical test is almost certain to be the
of take-up there.

North America

One geographic region that stands out for 2001 is the US, with its outlook for
a significant increase in smart card sales. Although the US market has grown
more slowly than the rest of the world, this year has three major forces for
change the demand for IT security, the stimulus to the bank card market to
follow the American Express Blue initiative, and the growing adoption of SIMs
for TDMA and CDMA platforms. Combined, these forces could result in sustained
growth rates of over 50% for the next three years.

Recently passed US law now mandates that electronic signatures are as legally
binding as personal ones. Schlumberger sees this as another key driver for
increased demand for PKI-based smart card applications — which secure the
authenticity of electronic signatures. The security provided by smart cards
and the growing number of computer hardware manufacturers integrating chip card
readers as PC standards may help drive growth of back-end e-commerce systems
and networks that accept smart cards as user identification for secure
financial, retail and corporate applications.

“We anticipate that this coming year will see the announcement of substantial
smart card-enabled network access projects in North America,” stated Beverly.
“Mobile commerce is another potential growth area, with the possibility of
major retailers utilizing smart card-enabled wireless technology to sell their
products and services to mobile phone users.”

Reflecting the growth trend for smart cards in the financial sectors,
Schlumberger also anticipates a higher demand in the US for smart card-ready
point-of-sale (POS) terminals and wireless devices for managing secure card
transactions. The recent announcement by AT&T, the third largest mobile
network operator in the US, about the addition of the GSM platform to its offering, is
another factor heralding increased growth for SIMs in North America.
“2001 could be a breakthrough year in the US market for smart cards,” said
Olivier Piou, president, Schlumberger Smart Cards. “With three major drivers
stimulating change, we may at last see this huge potential market begin to see
significant activity.”

About Schlumberger Test & Transactions

Schlumberger Test & Transactions provides consulting, integration and products
for testing and measurement of semiconductor devices, smart card-based
transactions, IP (Internet Protocol) network security and wireless services.
With 2000 revenue of $1.4 billion and over 8,000 employees in more than 40
countries, it is a business segment of Schlumberger Limited (NYSESLB), a
global technology services company with 2000 revenue of $9.6 billion. More
information is available at