The South Korean government is reportedly considering lifting the long-held ban
on conglomerates issuing credit cards. The restriction on new credit card
business licenses went into effect in 1988. Since then the control of the South
Korean credit card market has been in the hands of only three issuers. The
Financial Supervisory Service said three domestic business groups, namely SK,
Lotte and Hyundai have indicated an interest in issuing cards. Japan’s
Mitsubishi and the U.K.’s HSBC have also reportedly shown interest in credit
card licenses. Twenty-six companies are in the credit card business, including
seven exclusive credit card operators BC, LG Capital, Samsung, Kookmin, Korea
Exchange, Diners and Tongyang Amex.


NCR Deal with CCC

NCR Corporation and Credit Card Center have joined forces in a three-and-a-half year global deal making NCR the “preferred provider” for Credit Card Center of ATMs to serve the booming convenience sector.

The first deal under the Credit Card Center agreement is for 50,000 NCR ATMs, representing a commitment in ATM hardware and software for convenience stores and restaurants in the U.S. and Canada.

“NCR is an excellent strategic long-term fit with Credit Card Center as NCR and its worldwide presence will enable us to serve global markets as well,” said Andrew Kallok, president of Credit Card Center, the Philadelphia- headquartered distributor of ATMs. “NCR has a growing formidable range of software and hardware for the entry level market, which will enable the introduction of web-based services and increased revenues for ATM deployers worldwide.”

Pat Cronin, senior vice president of the Financial Solutions Division of NCR, said the strategic alliance is another prime example of NCR’s strong commitment to the provision of ATMs to the convenience market.

“Credit Card Center’s superior distribution capabilities, NCR’s global service organization and our worldwide leadership as an ATM provider make for a powerful self-service solution for owners of retail ATMs,” Cronin said.

About Credit Card Center

Credit Card Center is an independent sales organization located in Philadelphia, Pennsylvania, with offices throughout the United States and Canada. Credit Card Center is one of the fastest growing ATM distributors in North America having sold or leased over 5,000 ATMs in 1999.

About NCR Corporation

NCR Corporation (NYSE: NCR) is a US$6.2 billion 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 32,500 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 [][1] .



E-Payment Cards

A new breed of electronic payments has emerged that addresses the constraints of traditional credit cards and will change the future of e-commerce transactions. New technologies and payment processes are offering easier ways to pay for goods and services that are flexible, affordable and secure for both the buyer and seller. Additionally, payment service providers have evolved: offering packaged payment solutions that represent a fundamental shift in the delivery of e-payment methods. In fact, a new report from independent research and consulting company Ovum, finds that second-generation e-payment methods are capable of displacing cards from e-commerce entirely.

“Credit cards are necessary for e-commerce, but not sufficient, ” says Duncan Brown, Ovum principal analyst and lead author of Second Generation E-payments: E-business Beyond the Credit Card. “Today’s payment cards are suited to only a subset of potential e-commerce participants and there is a pent up demand for new e-payment methods.” Limitations to traditional types of payment and the emergence of new technologies are allowing for new ways of charging for goods and services. In addition, a wide range of devices and access channels are coming on stream – moving the domain of e-commerce beyond the desktop and creating the need for alternative means of payment.

Ovum finds that there are five key types of e-payment method, including:

— Metered payments – e-commerce transactions that appear as itemized entries on a bill, along with, for example, phone calls or units of electricity.

— Optimized card payments – built-in payment card enhancements such as virtual cards, wallets and smart cards that can offer enhanced security.

— E-cheques – the migration of the traditional paper method to the on-line environment. Such methods involve funds being paid from the buyer’s bank account to the seller’s bank account.

— E-cash – `cash-like’ payments designed for high volume, low value transactions, such as micropayments for digital goods.

— Alternative currencies – non-cash initiatives, such as Beenz, PayPal and RocketCash, which replace traditional currencies.

While these methods and technologies create new ways of conducting electronic transactions, the report finds that payment service providers (PSPs) will emerge to dominate e-payments. “PSPs serve as the payment intermediary between the buyer and seller, and as the central broker of e-payments, are responsible for ensuring the effective transfer of funds,” states Brown. “They are about making it easier for sellers to sell and buyers to buy, acting as mediators between the two parties, banks and other payment method providers.”

Ovum finds that the key factor driving the PSP model is service, not technology. Second-generation e-payment technologies threaten the current dominance of banks in the payments market. In order to succeed in displacing banks, players in this space will need to differentiate themselves by developing the services that surround the transaction and facilitate the e-payment. A full service offering means that providers will be able to duplicate the trust relationship and recourse that banks have historically provided. Basic services to be offered may include brokerage, optimization, aggregation, internationalization and billing.

The report is also quick to point out that relationships within the market will be strained, especially as banks and telcos go head-to-head. “Telcos have long been hovering on the verge of financial services, and are now empowered to offer e-payments with little effort and cost,” confirms Brown. “Banks will need to take history and experience into the new market and embrace the idea of the PSP. If not, they run the risk of complacency, and by not establishing themselves in this emerging market, victims of their own egos.” Additionally, network operators, ISPs and even utility companies are well positioned to dominate micropayments, especially as banks have little play in offering these types of payments.

About the report

Second Generation E-payments: E-business Beyond the Credit Card, by Duncan Brown, Christina Kasica and Paola Bassanese, is available now and costs $3695, (pound)2095, (EURO)3355 or A$5025. The report provides in-depth analysis of the new technologies and emerging business models enabling second-generation e-payments, and global forecasts of transactions through 2005. A market map outlines the services that will gain acceptance and identifies the e-payment offerings that players will embrace in order to compete effectively in the e-commerce market. For further product information contact Ovum at (800) 642-OVUM or visit [][1]

About Ovum

Ovum is an independent research and consulting company, offering expert advice on IT, telecoms and e-commerce. Our mission is to help you make successful decisions. The authority, quality and clarity we apply means our analysis of key developments is highly respected worldwide.

With expected sales in 2000 of more than $30 million and growth of more than 50% per year, Ovum now has offices in London, Boston, Melbourne and Buenos Aires. Our 300 staff are dedicated to delivering authoritative analysis, tailored consulting and customer support to over 10,000 senior executives around the world.



Zero Liability

VISA expanded its consumer ‘Zero Liability’ policy into Canada this week. The policy has been introduced to coincide with the launch of the largest VISA consumer online-shopping promotion in Canada to date. The $1 million-plus program will run from November 1 to December 25. It will allow online shoppers at Baskits,,, Compaq,,, La Vie En Rose, Lush,,, Sport Mart, and Videoflicks to save between 10% and 20% on all purchases they make with a VISA card. The ‘Zero Liability’ policy will apply to more than 22 million VISA-branded consumer payment cards in Canada. The only transactions not covered under the policy are those conducted on VISA commercial cards including ‘VISA Purchasing’, ‘VISA Corporate’ and ‘VISA Business’ and on pin-based transactions carried out with VISA cards. For credit card information on Canada visit CardPlanet ([][1]).

[1]: /cardplanet/main.html



Global TeleMedia International, Inc. announced that the multi-function Smart-e-Card and the Smart-e-Cash multi function ABM machine will be publicly showcased for the first time at the Discovery Expo 2000, in New York on October 23rd 2000. The Discovery Expo sponsored by Emerging is principally for NASDAQ and AMEX companies. However, due to its advanced application for AMEX listing, GTMI was able to secure a booth at the show.

The Discovery Expo ([ .html][1]) to be held at the Hilton Towers in New York, is a premier showcase for emerging companies and products. The last show in spring 2000 broke all records with over 1,200 attendees, 41% of which were broker dealers and 28% of which were fund managers, an excellent way to present GTMI to a broader level of investors.

![][2] President Jonathon Bentley-Stevens said, “We are very pleased to have such a prestigious show at which to showcase the Smart-e-Card(TM) and Smart-e-Cash(TM) machine for the first time. In mid-1999, GTMI, determined to lead the way in the development of card based e-commerce solutions, began developing the architecture of a multi-function worldwide access Smart-e-Card. The strategy was to not only develop a proprietary card but also to own, manage or control the networks and systems, which supported a proprietary card.

Smart-e-Cards to be accessible worldwide require IP and VoIP, conventional Telecommunications, Software development, transaction processing platforms and seamless connectivity from our networks to other major worldwide networks.

GTMI acquired and its subsidiaries and became an ISP/VoIP, Long Distance Carrier, financial and encryption software developer and transaction processor. With the recent formation of another subsidiary, Smart-e-Card Inc, () in a joint venture with Big Wheel Promotions, in Houston Texas, we now control the world wide marketing and distribution of the Smart-e-Cards(TM). This type of corporate structure makes it very difficult for competitors to duplicate, and this will keep GTMI ahead of the competition.

The Smart-e-Cash(TM) machines which will dispense the Smart-e-Card(TM) will be the first of its kind. Imagine being able to approach a machine and by inserting cash or personal check obtain a Smart-e-Card, then by swiping your Smart-e-Card(TM), cash a personal check, e-transfer funds world-wide, withdraw funds, purchase money orders, pay bills and re-value your card in real-time 24 hours a day 7 days a week. The Smart-e-Card(TM) and Smart-e-Cash(TM) machines bring e-commerce and electronic bill paying ability to almost 41 million non-banked or credit challenged Americans. Marketing has only been active for a few weeks and reactions to the Smart-e-Card(TM) and Smart-e-Cash(TM) machines combination from small business and convenience stores has been phenomenal.

The machine and card combination has world-wide applications and we are exploring networking regional banks in the USA, Australia and the Philippines through the Smart-e-Cash(TM) machines. GTMI’s foundation is now built on solid infrastructure, networks and products that have long productivity cycles. Our software division is aggressively developing the world-wide connectivity of the Smart-e-Card for unified Messaging and personal/medical information availability for our next generation Global Connexion Card. GTMI is committed in leading the way and acquiring global revenues and lasting world-wide market share.”

Contact : Tim Garlin, 1-866-774-6468.

Global TeleMedia International, Inc., located in Newport Beach, California, and Atlanta, Georgia, through its subsidiary, ([][3]) is a leading developer of interactive software for complex E-commerce solutions, multi-media and high speed Internet and wireless communication systems, including international & long distance Voice over IP, LAN VPN (Virtual Private Network), ISP, Virtual ISP, and PC-PC, PC-Phone transmission of data and voice. It also owns manufacturing and, telecom, ISP, and software development facilities in Australia, Malaysia and the Philippines.

[2]: /graphic/smartecard/abm.gif


Audubon Affinity Card

MBNA and The National Audubon Society announced the foundation of a unique credit card partnership that benefits Audubon’s conservation and education work.

Founded in 1905, with over 550,000 members and supporters in 530 chapters throughout the Americas, the National Audubon Society has a commitment to conserve and restore natural ecosystems, focusing on birds and other wildlife, for the benefit of humanity and the earth’s biological diversity. The Society is named for John James Audubon (1785-1851), naturalist, explorer, and wildlife artist.

“We are proud to partner with MBNA, whose dedication to customer service has made them the leader in the affinity credit card business,” says Clare Tully, senior vice president of marketing and communications for Audubon. “MBNA’s commitment to educational philanthropy in their communities is consistent with our strategy of educating and inspiring people to protect nature through our growing network of local Audubon Centers. We encourage our members and the general public to take part in this unique program which supports our conservation mission.”

“We are pleased to be forming a relationship with such a prestigious organization as the National Audubon Society,” said John Cochran, chief marketing officer of MBNA. “We look forward to providing their membership and supporters with the high level of financial products and Customer service they expect from MBNA.”

MBNA Corporation (NYSE: KRB), a bank holding company and parent of MBNA America Bank, N.A., a national bank, has $84.7 billion in managed loans. MBNA, the largest independent credit card lender in the world, also provides retail deposit, consumer loan, and insurance products. ([][1]) provides credit card, consumer loan, retail deposit, travel, and shopping services.



Metris Rolls-On

Sub-prime specialist Metris Companies/Direct Merchants Bank reported yesterday it opened more than half a million new credit card accounts and added over $600 million in card receivables during the third quarter. About 170,000 of the new accounts came from the acquisition of the Banco Popular portfolio. As of Sept. 30, Metris/Direct Merchants had $8.5 billion in managed credit card loans and 4.4 million gross accounts. Managed credit card fees, interchange and other credit card income increased 26% to $131.5 million for the third quarter of 2000 from $104.1 million in the third quarter of 1999. Credit card charge volume increased 35% to approximately $2.1 billion in the third quarter of 2000 compared to approximately $1.5 billion in the third quarter of 1999. The managed net charge-off rate was 9.8% for the third quarter of 2000 compared to 9.5% for the prior quarter and 8.8% for the third quarter of 1999. Without the impact of purchase accounting related to acquired portfolios, the charge-off rate was 9.9% for the third quarter of 2000, 9.7% for the second quarter of 2000, and 10.3% for the third quarter of 1999. The managed delinquency rate was 8.2% percent at Sept. 30, compared to 7.7% at June 30 and 7.5% at Sept. 30, 1999. Without the impact of purchase accounting related to acquired portfolios, delinquency rates were 8.3% for the third quarter of 2000, 7.7% for the second quarter of 2000, and 8.1% for the third quarter of 1999. For details on Metris/Direct Merchants 3Q/00 results as well as historical data visit CardData ([][1]).



Chase 3Q/00

The Chase Manhattan Corporation reported third quarter results.

Operating earnings: On an operating basis, which excludes special items, diluted earnings per share for the third quarter of 2000 were $0.68 per share, compared with $0.92 per share for the same 1999 period. Earnings in the 2000 third quarter were $905 million, compared with $1.19 billion in the same quarter of 1999. On the same basis, diluted earnings per share were $2.68 per share for the first nine months of 2000, compared with $2.83 per share for the same period of the prior year. Earnings in the first nine months of 2000 were $3.48 billion, compared with $3.71 billion for the first nine months of 1999.

Reported earnings: On a reported basis, which includes special items, diluted earnings per share for the third quarter of 2000 were $0.66 per share, compared with $0.92 per share for the same 1999 period. Net income in the 2000 third quarter was $884 million, compared with $1.19 billion in the same quarter of 1999. On the same basis, diluted earnings per share were $2.57 per share for the first nine months of 2000, compared with $2.86 per share for the same period of the prior year. Net income in the first nine months of 2000 was $3.34 billion, compared with $3.75 billion for the first nine months of 1999.

Third Quarter Highlights:

Earnings for the third quarter of 2000 were lower than last year’s third quarter results and lower than analysts’ estimates primarily due to lower income in Chase Capital Partners and to a lesser extent in the Investment Bank:

— In Chase Capital Partners, unrealized write-downs, primarily due to price declines in publicly-held securities, more than offset record realized (cash) gains of $538 million on the sales of investments. (See page 7 for a comparison of the corporation’s key financial measures including and excluding Chase Capital Partners for the current and previous quarters of 2000 and those of 1999.)

— In the Investment Bank, trading revenues and corporate finance fees were up from the third quarter of 1999 but down from the second quarter of 2000 due to lower market volatility and trading volumes and a slowdown in leveraged finance. The expense growth rate was high because of the buildup of the investment banking platform.

Strengths during the third quarter of 2000 included:

— Record earnings in Global Services, National Consumer Services and Wealth Management.

— Sound management of credit and market risk. Credit losses and nonperforming assets in the quarter were lower than the previous quarter and the year ago quarter. There were no days in the third quarter in which Chase had a trading loss.

“While third quarter performance did not meet our expectations, the results do not diminish the confidence we have in the growth capacity of our businesses,” said William B. Harrison, Jr., Chairman and Chief Executive Officer. “Though the value of our private equity investment portfolio may vary from quarter to quarter, we remain firmly committed to Chase Capital Partners’ with its ability to create substantial long-term cash returns on investments. In addition, we are focused on achieving a better balance of expense to revenue growth in the Investment Bank. Across the franchise, our Global Services, National Consumer Services and Wealth Management businesses achieved record results, underscoring the importance of a diverse business mix.”

Merger Update:

On September 13, 2000, The Chase Manhattan Corporation and J.P. Morgan & Co. Incorporated agreed to merge. The merged firm will be named J.P. Morgan Chase & Co. The merger is expected to be consummated by the first quarter of 2001. Since the merger was announced, the following progress has been made:

— Over 35 senior positions were named upon the announcement of the merger; an additional 250 key positions will have been announced by the end of this week.

— The major U.S. regulatory applications have been filed; the joint proxy statement was filed with the SEC on October 5.

— Clients are reacting favorably to the proposed merger by inviting Chase and J.P. Morgan to make joint pitches for business; the two firms have won a number of joint investment banking mandates as a result.

“Integration efforts have been proceeding swiftly,” said Mr. Harrison. “We have more evidence that the combined and complementary product mix and client base of the new firm will promote growth opportunities and business synergies ahead. We will have a broader and more diversified wholesale banking platform, along with significant opportunities to moderate investment spending and to improve operating efficiencies.”

Financial Information:

Third quarter 2000 results reflect the acquisitions of The Beacon Group, LLC, on July 6, and Robert Fleming Holdings Limited on August 1.


Operating revenues in the investment bank were $1.87 billion in the third quarter of 2000, up 16 percent from $1.62 billion in the third quarter of 1999. Cash operating earnings in the third quarter of 2000 were $384 million, down nine percent from $420 million in the third quarter of 1999. A decline in shareholder value added during the third quarter to $46 million reflected both the decline in cash operating earnings and the higher equity allocated to the Investment Bank as a result of the acquisition of Flemings.

— Total trading revenues, including related net interest income, were $680 million, compared with $679 million in the third quarter of 1999 and $841 million in the second quarter of 2000. Gains in fixed income trading were offset by declines in foreign exchange and interest rate derivatives due to slower trading activity and an overall decline in market volatility, which adversely affected the flows and spreads of those businesses.

— Investment banking fees were $613 million, up 26 percent from third quarter 1999 levels, and down from $639 million in the second quarter of 2000. Growth in fees from merger and acquisition advisory services and equity underwriting was partially offset by lower fees from loan syndication and high yield bond underwriting due to a slowdown in the leveraged lending markets.

— Cash expenses of $1.26 billion in the third quarter of 2000 were up 47 percent from the 1999 third quarter, and up from $1.06 billion in the second quarter of 2000. Increases were driven by acquisitions and spending to build up the investment banking platform.


Private equity gains in the third quarter of 2000 were negative $25 million, compared with gains of $377 million in the same 1999 quarter and $298 million in the second quarter of 2000. Gains included cash realized from the sale of both private and public securities that were held in the portfolio and the unrealized change in the value of investments held in the portfolio, primarily publicly traded securities. Realized (cash) gains on the sale of securities in the third quarter of 2000 were $538 million, more than double the amount of cash gains realized in the third quarter of 1999. These gains were more than offset by declines in the carrying values of investments (primarily in telecommunications) in the publicly held portion of the portfolio. Despite these declines, the current carrying value of the investments in the publicly traded portfolio is approximately 2.6 times their original cost. Approximately 80 percent of the carrying value of the Chase Capital Partners’ portfolio consist of privately-held securities.


In the third quarter of 2000, Global Services’ operating revenues increased nine percent over the third quarter of 1999 to $875 million, reflecting increased activity in its securities businesses. Cash operating earnings for Global Services for the third quarter of 2000 were up 24 percent compared with the third quarter of 1999. Shareholder value added increased to $93 million, an 82 percent increase over the prior-year quarter.

Operating revenues in Global Investor Services (custody) increased 14 percent from last year, reflecting net asset growth and higher transaction volume and net interest income, partially offset by a decline in foreign exchange revenue. Capital Markets Fiduciary Services’ (institutional trust) operating revenues increased 20 percent from last year primarily in structured finance in the U.S. and U.K. Chase Treasury Solutions’ (cash management) operating revenues increased two percent over the 1999 third quarter, driven by higher product revenues across all products and higher balances, partially offset by the repositioning of the trade finance business. Operating leverage continues to improve, with expenses growing at a slower rate than revenues.


Chase’s wealth management businesses include private banking and asset management.

— Revenues from the Global Private Bank increased to $305 million, up 36 percent from the third quarter of 1999. These results reflect broad-based global growth. Cash operating earnings grew 16 percent compared with the prior year. As of September 30, the Global Private Bank had over $180 billion in client assets.

— Revenues from Asset Management increased to $165 million, compared with $43 million in the third quarter of 1999. Results include revenues from Flemings. As of September 30, assets under management were $182 billion.


Operating revenues for National Consumer Services increased to $2.6 billion, an increase of three percent over the third quarter of 1999. Cash operating earnings of $492 million increased by 13 percent over the third quarter of 1999. All five businesses reported double-digit earnings growth.

— Cash operating earnings for cardmember services for the third quarter of 2000 were up 14 percent compared with the third quarter of 1999, reflecting significantly improved credit quality. Operating revenues were essentially flat from the prior year and up six percent from the second quarter of 2000, as higher consumer purchase volume and higher fee-based revenues offset the impact of higher interest rates and a lower level of late fees. Expenses were up reflecting the impact of higher marketing spending. New account acquisitions were significantly higher, and credit card outstandings were up over $1 billion from the second quarter of this year.

— Home finance cash operating earnings were up 21 percent, and revenues increased 13 percent, from the third quarter of 1999. The improved results were due to growth in servicing fee income and gains on securities to hedge mortgage servicing, partially offset by declines in residential mortgage warehouse activity.

— Regional banking group cash operating earnings grew 36 percent, and revenues rose seven percent, from the third quarter of 1999, reflecting higher deposit levels in the consumer and small business sector, higher banking, debit card, and brokerage fee income and disciplined expense management.

— Diversified consumer services cash operating earnings were up 24 percent, and revenues increased five percent from the same 1999 quarter. Income growth was positively affected by a change in internal cost allocation as well as improving auto origination volumes and growth in the discount brokerage business, which was partially offset by the effect of higher interest rates. Brown & Co., Chase’s online trading business, averaged over 41,000 trades per day during the third quarter of 2000 versus 32,000 trades per day during the same period of 1999.

— Middle markets cash operating earnings were up 13 percent and revenues increased four percent from the third quarter of 1999. These results reflect new business and disciplined expense management.


— The merger agreement between Chase and J.P. Morgan & Co. Incorporated, which has been approved by the boards of directors of both companies, provides that 3.7 shares of Chase common stock will be exchanged for each share of J.P. Morgan common stock. Each series of preferred stock of J.P. Morgan will be exchanged for a similar series of preferred stock of Chase, the surviving corporation of the merger. The transaction is expected to be accounted for as a pooling of interests and to be tax-free to J.P. Morgan and Chase stockholders and is subject to approval by stockholders of both companies, as well as by the U.S. Federal and state and foreign regulatory authorities.

— Chase’s operating revenues, excluding the impact of Flemings and Chase Capital Partners, were up five percent compared with the third quarter of 1999. Cash expenses, on the same basis, were up nine percent compared with the third quarter of 1999. Amortization of goodwill, a non-cash charge to earnings, amounted to $0.11 per share, or $149 million, in the third quarter of 2000, compared with $0.05 per share, or $70 million, in the third quarter of 1999. Similarly, the non-cash charge for the first nine months of 2000 was $0.25 per share, or $318 million, compared with $0.17 per share, or $219 million, for the first nine months of 1999.

— On September 1, Chase announced it had agreed to sell its Hong Kong-based retail banking business, including Chase Manhattan Card Company Limited, to Standard Chartered PLC for approximately $1.3 billion in cash. Subject to regulatory approvals and satisfaction of certain conditions, the sale is expected to be completed by December 2000.

— On October 16, Chase agreed to sell its interest in ChaseMellon Shareholder Services, currently a 50-50 joint venture between Chase and Mellon Financial Corporation. The transaction, the terms of which were not disclosed, is expected to be completed during the fourth quarter of this year, pending regulatory approvals.

— Total assets at September 30, 2000 were $426 billion, compared with $396 billion at June 30, 2000 and $371 billion at September 30, 1999. Chase’s Tier One capital ratio was 7.9 percent at September 30, 2000, compared with 8.7 percent on June 30, 2000. The decline is due to the acquisition of Flemings. There were no repurchases of Chase common stock during the third quarter of 2000.

— On a managed basis, including securitizations, net credit losses were $541 million in the third quarter of 2000, down from $574 million in the second quarter of 2000 and down from $633 million in the third quarter of 1999. Consumer net charge-offs on a managed basis were $476 million, down from $482 million in the second quarter of 2000 and $531 million in the third quarter of 1999, primarily reflecting a decline in the credit card net charge-off ratio to 4.97 percent. Commercial net charge-offs in the third quarter of 2000 were $65 million, compared with $92 million in the second quarter of 2000 and $102 million in the third quarter of 1999. For the third quarter of 2000, total net charge-offs on a reported basis were $305 million, and the provision for loan losses was $305 million. The allowance for loan losses was $3.49 billion at the end of the third quarter of 2000, compared with $3.46 billion at the end of the second quarter of 2000. Nonperforming assets at September 30, 2000 were $1.82 billion, compared with $1.90 billion at June 30, 2000 and $2.02 billion at September 30, 1999.

— Operating results (revenues, expenses and earnings) exclude the impact of credit card securitizations, restructuring costs and special items. In the third quarter of 2000, special items included a gain of $53 million (after-tax) from the sale of a business in Panama, a loss of $23 million (after-tax) resulting from the economic hedge of the purchase price of Robert Fleming Holdings Limited prior to its acquisition, and the restructuring costs of $51 million (after-tax) associated with previously announced relocation initiatives. There were no special items in the third quarter of 1999. For the first nine months of 2000, special items included a loss of $115 million (after-tax) resulting from the economic hedge of the purchase price of Flemings prior to its acquisition, $83 million (after-tax) of restructuring costs associated with previously announced relocation initiatives, and the $53 million (after-tax) gain from the sale of a business in Panama. For the first nine months of 1999, special items included a $61 million (after-tax) gain on the sale of a building, a $46 million (after-tax) gain on the sale of branches in Texas, and a $65 million (after-tax) special contribution to The Chase Manhattan Foundation.

Chase, with $426 billion in assets, is one of the world’s premier financial services institutions, with operations in more than 50 countries around the world. Chase has top-tier rankings in many areas of investment banking, asset management, private banking, trading and global markets activities as well as information and transaction processing. Chase is a leading provider of financial solutions to large corporations, government entities, commercial banking clients, small businesses and individuals, and has relationships with more than 30 million consumers across the United States.

For more information, current and historical, on Chase visit CardData ([][1]).



TSYS 3Q/00

Total System Services reported net income for the third quarter of $19.1 million compared to $16.9 million for the same period last year. Revenues for the third quarter of 2000 were $149.0 million, an increase of 8.1%, compared with revenues of $137.8 million for the third quarter of 1999. TSYS also projected yesterday that it does expect the second half of 2001 to be more robust than the first half of 2001. There is an expected increase in revenue in the second half of 2001 highlighted by the scheduled conversion of the Royal Bank of Scotland Group’s portfolio. Preceding this increase in revenue in the second half of 2001, infrastructure costs of global expansion and the loss of the Citibank UCS portfolio. TSYS will incur personnel and equipment costs associated with establishing its international processing center in England as well as initiating a sales branch office in Japan. Citibank deconverted the UCS portfolio to its in-house processing system in August 2000. Due to this, on a comparative basis, revenues for the first half of 2001 will not include revenues from the UCS portfolio when compared to the first half of 2000. For details on TSYS 3Q/00 results as well as historical data visit CardData ([][1]).



Telecom eFalcon

HNC Telecommunications Solutions, a division of HNC Software Inc., announced the availability of its telecom-specific version of the eFalcon Fraud Risk Management Service to communication service providers worldwide.

As carriers increasingly allow customers to pay for services with credit cards, eFalcon can increase carrier profits by reducing lost revenues from charge-backs and by saving valid orders that appear risky.

The telecom-specific version of eFalcon uncovers payment fraud patterns in real time, protecting both consumers and businesses from unauthorized use of credit card numbers. eFalcon is the only solution to provide strategy management and customer service tools to help businesses accepting electronic credit card orders (card-not-present, or CNP, transactions) to save those transactions that appear risky, but are indeed legitimate. Companies that implement eFalcon can also set policies for accepting and rejecting transactions on a global scale, resulting in increased profits and better customer relationships.

HNC offers intelligent payment fraud detection and risk management services that enable telecom carriers to detect credit card fraud in the account pre-activation stage of customer acquisition.

“As carriers introduce new prepaid service plans and flexible credit card payment options over the Internet, they are getting hit hard with credit card fraud. Not only are they liable for losses, carriers with excessive chargebacks can even lose the right to accept credit cards. eFalcon minimizes losses and ensures that carriers can rely upon credit cards — a required payment option in today’s competitive marketplace,” said Tony Patterson, president, HNC Telecommunications.

Carriers can experience CNP fraud when accepting bankcards for pre-activation through multiple sales channels including the Internet and email, voice response units (VRUs) that accept credit card numbers keyed on touch-tone phone dial pads, traditional call centers, and faxed applications for service.

eFalcon is able to recognize the most subtle patterns associated with CNP fraud often missed by less advanced methods of fraud detection. eFalcon uses some of the same advanced technology as HNC’s credit card fraud detection solution for card issuers, Falcon(TM), which protects more than 300 million cardholders today. Falcon is used by nine of the top 10 largest Visa and MasterCard credit card issuers in the U.S., and 15 of the 25 largest bankcard issuers worldwide.

About HNC Telecommunications Solutions

HNC Telecommunications Solutions, a division of HNC Software Inc. (Nasdaq:HNCS) provides end-to-end customer solutions to over 80 wireline and wireless communications service providers that maximize the value of individual customer relationships from acquisition to retention. Carriers using HNC’s telecom solutions include Telefonica Mundo 188, S.A., Telecom Personal, AT&T Local Services; VoiceStream Wireless; Intermedia Communications; Viatel; and Sprint Communications. For more information, visit HNC Telecommunications Solutions at the HNC Web site at [][1] or contact Kim Knouse at 858/799-3600.

About HNC Software Inc.

Headquartered in San Diego, HNC Software is the leading provider of predictive software solutions for the services industry, including financial, telecommunications, insurance and e-commerce. HNC’s suite of predictive software solutions can provide real-time insight into customer relationships based on transaction-level data, helping companies manage their relationships with individual customers. By accurately predicting customer behaviors, these companies can create initiatives to mitigate risk and attrition; improve customer service; develop marketing programs to enhance profitability, and detect fraudulent customer transactions. For more information, visit HNC’s Web site at [][2] or contact Melinda Bateman, HNC Software Inc., 5935 Cornerstone Court West, San Diego, CA 92121, 858/799-3880.



Fleet 3Q/00

Fleet Credit Card Services reported a $600 million jumped in card receivables during the third quarter. However delinquency edged up while chargeoffs edged down. At the end of 3Q/00 Fleet had $14.4 billion in card receivables versus $13.8 billion for 2Q/00. Delinquency climbed from 4.38% in the second quarter to 4.61% for the third quarter. Meanwhile chargeoffs dipped from 5.78% in the second quarter to 5.24% for 3Q/00. Credit card profits have increased 18% over the past year despite an 8% decline in overall credit card revenue. Fleet has taken a leadership role in smart cards with the introduction last month of the ‘Fusion smart VISA’ card. Fleet is the only issuer offering the card directly to the public through its Web site. The other ‘smart VISA’ issuer, Providian, is making its ‘Clear’ smart card initially available to select super prime customers. For complete details on Fleet’s 3Q/00 results as well as prior quarter financials visit CardData ([][1]).



CNP Services

Retail Decisions, a leading card-not-present risk management and online transaction services business for e-commerce, today announced that they have signed a partnership agreement with First of Omaha Merchant Processing, a wholly owned subsidiary of First National Bank of Omaha and one of the USA’s leading credit card processors. The referral marketing agreement will enable First of Omaha to offer Retail Decisions’ risk management and fraud detection services as an extension of their product offerings to clients.

![][1] “First of Omaha Merchant Processing provides credit card transactions and payment solutions for over 70,000 merchants nationwide,” said Carl Clump, CEO of Retail Decisions. “The relationship will enable us to introduce our services to the entire First of Omaha client base and help us develop our position in the fraud protection services industry.”

Faulkner & Gray’s Card Industry Directory lists First of Omaha as one of the top 10 merchant acquiring banks in the world, based on their annual volume of dollars processed. According to Faulkner & Gray, First of Omaha generated $19 billion in revenue from over 260 million transactions last year.

First of Omaha and Retail Decisions are joining marketing efforts to provide customers with added-value solutions. The relationship will provide Retail Decisions with a new distribution channel for their fraud protection services and First of Omaha benefits by being able to offer their clients a leading protection service.

“Retail Decisions is a leader in credit card fraud protection services and provides our telecommunications and service providers with services that they need,” said Nick Baxter, President of First of Omaha Merchant Processing. “As a leader in the merchant processing industry, we are constantly looking for new ways to assist clients in the reduction of chargebacks. Our relationship with Retail Decisions will enable us to further differentiate our merchant services from the competition and provide a more comprehensive payment solution for our clients.”

About First of Omaha Merchant Processing:

First of Omaha Merchant Processing is a premier payment processor specializing in providing service to both the traditional and Internet marketing industry, as well as the traditional face to face card acceptance market. First of Omaha provides financial management and payment processing solutions for large and small retailers, restaurants, lodging merchants, petroleum marketers, associations/franchise groups and banks in both the business to consumer and business to business marketplaces. Known for their superior customer service, First of Omaha specializes in providing clients the latest in card processing technologies. Through development of a diversified product line, First of Omaha has become a leader in the merchant processing industry, assisting clients in the reduction of chargebacks and fraud. First of Omaha Merchant Processing is a wholly owned subsidiary of First National Bank of Omaha and is one of the few remaining in-house bank processors.

First National Bank of Omaha, founded in 1863, is the 32nd oldest nationally chartered bank in existence. First of Omaha’s Web site address is [][2].

About Retail Decisions

Retail Decisions (ReD) has more than fourteen years’ experience in card-not-present risk management and payment settlement services initially to the telecommunications industry in the United States, and now to e-commerce customers including, iSolve, IPC Media, Paymentplus and DataCash.

ReD’s global e-commerce fraud detection and prevention service, ebitGuard, provide real time risk assessment recommendations. ebitGuard incorporates eFalcon, a neural technology, developed by HNC the leading neural software organization, with a number of other sophisticated processes, databases and CNP experience to provide clients with a fully integrated service that delivers high quality risk management results.

ReD also collates and distributes the UK’s most comprehensive ‘Hot Card File’ of lost and stolen cards, which is continually updated and is available to retailers 24 hours a day, every day of the year. The company currently protects nearly 10,000 retail sites in the UK, principally in high-payment volume sectors. Last year, ReD checked in excess of 1.0 billion transactions, stopping an estimated $190 million in fraudulent purchases. ReD also has offices in South Africa and Australia.

ReD is publicly traded on the official list of the London Stock Exchange under the trading symbol, “RTD”. More information about ReD is available by visiting the company Web site at [][3].

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