Debt Roller Coaster

Revolving consumer credit downshifted during July. For the second consecutive month revolving credit, mostly credit card debt, has slipped below last years’ growth levels. According to preliminary figures released Friday by the Federal Reserve, Americans added nearly $4 billion in outstanding revolving credit during July, compared to $5.7 billion in June and $6.4 billion in May. Since the start of this year, American consumers have tacked about $43 billion onto total revolving consumer debt. Overall consumer credit is now growing at a 7.7% rate, according to the FRB. At the end of July, American consumers were $1.472 trillion in debt, exclusive of home mortgages.

REVOLVING CREDIT HISTORICAL
Jul00 Jun00 May00 Apr00 Mar00 Feb 00 Jan00
%GRWTH: 7.2% 10.9 12.7 13.5 13.8 9.4 18.5
$OWED: $638.4b 634.6 628.9 622.5 615.5 608.5 605.0

Dec99 Nov99 Oct99 Sep 99 Aug99 Jul99 Jun99
%GRWTH: 12.5 10.2 -0.5 0.0 2.5 12.1 13.8
$OWED: 595.8 589.8 584.3 584.5 584.5 584.6 578.5

Source: Federal Reserve; revised figures as of 09/08/00; For complete
historical data visit www.cardata.com.

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HNC Acquisition

HNC Software said Friday it has acquired privately held Systems/Link Corporation, headquartered in Cranbury, NJ. Systems/Link develops and markets mobile phone roaming data management, fraud and pre-paid billing software solutions for wireless telecommunications providers. HNC has acquired all of Systems/Link’s outstanding stock and other securities in a merger in exchange for approximately 600,000 shares of HNC common stock, including shares subject to options that will be assumed by HNC in the acquisition and $5.6 million in cash. HNC also agreed to retire $5.7 million in debt. Systems/Link’s flagship product, ‘RoamEx’, the wireless industry’s roaming data exchange network, covers more than 95% of the cellular POPs in North America for delivery of roaming calls back to home carrier target applications for fraud, pre-paid billing management, post-pay usage monitoring and other mission-critical applications.

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Deutsche Expands E-Cash

Deutsche Bank 24 AG announced this morning an expansion of payments enabled by the eCash payment engine in Germany. New eCash features that include mobile access through cell phones and PDAs, payments at physical retail locations, new user interfaces and enhanced merchant administration and settlement. Aral AG, Data Becker, Vobis Microcomputers and Spinnrad GmbH are among the new merchants being added to the service. At least 25 top German merchants have been added , with plans for over 300 additional merchants to come online by the end of this year. Under terms of today’s deal Deutsche Bank 24 will take a minority equity stake in eCash Technologies. Deutsche Bank 24 began offering eCash payments to customers in February in combination with the cobranded Yahoo MasterCard credit card, after a multiyear pilot program with eCash Technologies.

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NextCard Milestone

NextCard confirmed this morning it has topped $1 billion in credit card loans and has also surpassed 500,000 customer accounts. The growth represents a 100% increase in six months. NextCard also says it is on track to hit profitability in the fourth quarter. The issuer of Internet-centric VISA cards attributed its quick climb to the $1 billion mark to adherence to a calculated growth plan, smart direct marketing and customer acquisition, development of our profile-based pricing system, and meticulous risk management. According to CardData, NextCard hit the 100,000 account and $250 million milestone just one year ago.

NEXTCARD’S CARD MARCH
3Q/00* 2Q/00 1Q/00 4Q/99 3Q/99 2Q/99
Recv: $1,0b+ $829.7m $638.8m $416.3m $268.0m $163.4m
Accts: 500k+ 443k 337k 220k 134k 85k
* as of 9/11/00; Recv- receivables; Accts- accounts; Source: CardData
(www.carddata.com)

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Card Hackers

Western Union confirmed Sunday that hackers broke into its Web site last week and made off with the credit and debit card information of 15,700 customers who transferred money on the site. The Web site remains out-of-service this morning. A subsidiary of First Data, Western Union said VISA and MasterCard began monitoring the compromised accounts over the weekend, and as of last night, no fraudulent transactions had been reported. According to published reports, the problem occurred while the site was undergoing maintenance. Western Union said the problem was caused by human error and not an inherent technical flaw. Systems employees conducting regular maintenance left parts of it unprotected, allowing hackers to break in. The apparent hack occurred some time last week and was discovered on Friday. The problem involved [www.westernunion.com][1] and not [www.westernunionmoneyzap.com][2]. Western Union launched its transactional Web site in June.

[1]: http://www.westernunion.com/
[2]: http://www.westernunionmoneyzap.com/

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Proton World Execs

Proton World announced the appointment of two new members of its management team: Mr Yves Bouquiaux becomes Vice-President, Product Development, and Mr Guy Verniers takes over as Vice-President, Europe, Middle East & Africa (EMEA) Sales.

Proton World has grown from its original 50 employees in 1998 to over 150 today. These new appointments take account of this growth and are part of the new structure that brings together all the teams that deal with customers under the direction of Mr Graham Frost, the Deputy Managing Director and Executive Vice-President,Sales and Services. The two new managers will report to Mr Frost, who in turn reports to Dr Armand Linkens, the Managing Director and CEO.

Yves Bouquiaux is 43, and was born in Belgium. He has a Master’s degree in Civil, Electrical and Electronic Engineering from the University of Mons. He began his career as a System Engineer at SESA and was then a Software Manager and Sales Manager at Digital. He then spent five years at Belgacom, (the Belgian state-owned telco) where he was responsible for a series of large projects: firstly the establishment of Belgacom’s first call centre, then the setting-up of a new residential customer service system. In 1998 he led the team that developed and implemented a new billing system, before assuming responsibility for orders management. “I have joined Proton World,” he said, ” to be a key player for the world’s leading smart card solutions provider, where quality, accountability and commitment are not negotiable.”

Guy Verniers is 44, and first took a Master’s degree in Civil Engineering and Architecture, and then a degree in Information Technology, both from the University of Louvain. He began his career at IBM, moving to Giesecke & Devrient, the specialist banknote and cheque printer and manufacturer of bank and smart cards, as a Sales Manager in 1990. He became General Manager of G & D’s Belgian operations (turning over 400 million BEF/year) in 1995. “In its first two years,” he said, “Proton World has known a tremendous success and I intend to drive another step into the growth of the company’s sales”.

Graham Frost, Deputy Managing Director and EVP, Sales & Services at Proton World, said: “I welcome Yves and Guy to the Proton World team and am sure that their drive and expertise will help the company to reach its ambitious objectives in this crucial period of our development.”

Proton World was created by American Express, Banksys, ERG, Interpay and Visa International to promote and implement common smart card and electronic purse standards. Proton World delivers smart card solutions world-wide, continuing the development and licensing of Proton technology-based smart card applications, which have already been chosen by 21 countries. Proton is the world’s most broadly implemented smart card technology in national roll-outs and is the most actively used world-wide: Proton-based smart card schemes have together performed more than 181 million e-purse transactions since their introduction. There are more than 286,000 Proton-compatible terminals installed world-wide.

The Proton technology supports multiple applications (e.g. e-commerce, access control, loyalty schemes, campus cards etc.) and is compatible with the Common Electronic Purse Specifications (CEPS) which will ensure the interoperability of electronic purse schemes world-wide.

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Natl City Signs With AOL

National City Corporation announced Friday is has signed a one year marketing agreement with AOL’s Digital City and America Online.

Under the agreement, National City will become the local financial services sponsor of AOL’s Digital City online network in six major markets. The markets are all within National City’s footprint and include: Chicago, Cleveland, Indianapolis, Pittsburgh, Columbus and Grand Rapids, Mich. Beginning this month, National City promotional banner ads will appear on AOL’s Digital City online network in the six cities. The banner ads will also appear in these markets on other America Online properties, including Netscape, CompuServe, Mapquest and Moviefone. National City has the potential of reaching an estimated six million people online as a result of this partnership. In addition, the two companies are exploring the possibility of providing access to AOL-produced content from National City’s recently re- designed web site at

“This marketing agreement will give us the opportunity to promote National City’s rapidly growing list of National City online services, including personal online banking ( [http://www.onlinebanking.nation al-city.com][1]) to millions of America Online customers,” said A. Joseph Parker, executive vice president and head of Retail Sales and Distribution for National City. “It will also serve as a platform for promoting future initiatives including small business online banking and National City’s new VISA Buxx(TM) card, a new stored-value card for teens. America Online is a dynamic, far-reaching brand that carries tremendous clout among online consumers and National City is looking forward to this opportunity.”

About National City

National City Corporation (NYSE: NCC) is an $85 billion financial holding company headquartered in Cleveland, Ohio. The company offers a full range of financial services, from investment banking and brokerage services to traditional banking services for individuals and businesses. National City has offices is Ohio, Pennsylvania, Indiana, Kentucky, Illinois and Michigan. National City can be found on the World Wide Web at .

About America Online

Founded in 1985, America Online, Inc., based in Dulles, Virginia, is the world’s leader in interactive services, Web brands, Internet technologies, and e-commerce services. America Online, Inc. operates: America Online, with more than 23 million members, and CompuServe, with more than 2.8 million members, the company’s two worldwide Internet services; several leading Internet brands including ICQ, AOL Instant Messenger and Digital City, Inc.; the Netscape Netcenter and AOL.COM portals; the Netscape Netcenter and Communicator browsers; AOL Moviefone, the nation’s No.1 movie listing guide and ticketing service; and Spinner.com and NullSoft’s Winamp, leaders in Internet music. Through its strategic alliance with Sun Microsystems, the company develops and offers easy-to-deploy, end-to-end and enterprise solutions for companies operating in the Net Economy.

About AOL’s Digital City

AOL’s Digital City is the #1 local online network. Created in 1995, Digital City is a pioneer and innovator in serving the local consumer and advertiser online. It was the first local portal to build a national network in 1998, the first to turn profitable in 1999, and the first to be “local everywhere” with the expansion to 200 markets and the launch of a wireless product in early 2000. With the strength of its leadership in the consumer marketplace, Digital City drives record growth in local advertising and e- commerce and delivers results for its more than 2,000 local advertisers on both national and local levels.

[1]: http://www.onlinebanking.national-city.com/

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FU & Devrion

First Union, the nation’s sixth largest bank holding company and third largest cash management provider, and Derivion, the leading application service provider that delivers comprehensive e-billing solutions designed for the Internet, announced this morning a joint initiative to bring e-billing services to the business-to-business market.

![][1] Derivion and First Union will work together to apply their significant experience in business-to-consumer (B2C) transactions to address the complex needs of B2B clients. The agreement will leverage Derivion’s own technology and First Union’s superior multi-channel distribution and payment network to provide an unmatched opportunity to reach new customers in the growing B2B e- commerce marketplace. The B2B e-billing solution will feature workflow and approval management; analysis and reporting; dispute resolution; and payment authorization and initiation.

“The decision to market Derivion’s B2B e-billing application to the commercial market is in direct response to the increasing demand for Web-based solutions that cut costs and create new business opportunities,” said Alison Quigley, First Union Vice President of Global Electronic Payments. “Given our success with Derivion’s B2C e-billing solution for our midsize to small billers, selecting them as our B2B solution provider was a natural extension of our strategic partnership and an integral part of our commitment to create enduring value for all of our clients.”

According to Gartner’s recent biller survey, 70 percent of billers expect banks to take a leading role (25 percent said because of trust) in the e- billing marketplace but also found that 70 percent of billers trust banks and non-banks the same with their business. “Expectations for banks to provide the latest e-billing innovations have sharply risen while competition for e- billing solutions are applying strong pressure for financial institutions to take the lead quickly,” said Avivah Litan, research director, Financial Systems Payment Services. “First Union and Derivion will together offer a cost-effective, flexible solution for the B2B e-billing market, which according to Gartner research, is outpacing the consumer market. Billers are transitioning their B2B business from a limited set of EDI-based invoice solutions to a wider set of solutions that operate on the Internet.”

With Derivion’s unique ASP model, First Union will offer its clients a powerful alternative to costly in-house e-billing solutions. First Union’s B2B clients will be able to transition to an e-billing system designed specifically for B2B interactions in as little as 60-90 days with maximum control for the biller and their customers.

“By embracing our industry-defining B2B solution, First Union has reinforced its confidence in our e-billing solutions and validated Derivion’s ability to expand its technology beyond the B2C market,” said Dushyant Sharma, president and CTO of Derivion. “Together, First Union and Derivion are targeting the rapidly increasing commercial market segment by leveraging core competencies to provide an e-billing solution that specifically addresses the demands of the B2B environment.”

Derivion’s full-service solution includes the design and presentation of online invoices, online communication and payment capabilities, and strategic support to launch and promote customer enrollment in the new service. To address the unique B2B invoicing issues, sophisticated features include line item dispute, online negotiation and approval, and integration into both biller and buyer accounting applications that streamline invoicing functions, speed up payments, and strengthen the relationship between billers and buyers.

“Since our partnership was established early this year, Derivion and First Union have been working to supply e-billing solutions for multiple First Union B2C customers including Baltimore Gas & Electric and Service Electric Cable TV and Communications,” said Greg Rable, CEO of Derivion. “This next phase in our relationship taps a market ripe for an e-billing solutions provider that has the experience and resources to handle the complexities of the B2B interface.”

Gartner reports that B2B e-commerce will be a $7.3 trillion market by 2004 with e-marketplace transactions expected to account for more than one-third of the B2B market. As B2B commerce continues to grow, so will the need for expediting the settlement of transactions. Businesses are increasingly turning towards e-billing as the means to manage this challenge and thereby improve overall customer satisfaction.

About First Union

First Union, with $258 billion in assets and stockholders’ equity of $14 billion at June 30, 2000, is a leading provider of financial services to 15 million retail and corporate customers throughout the East Coast and the nation. The company, with headquarters in Charlotte, North Carolina, operates full-service banking offices in 12 East Coast states and Washington, D.C., and full-service brokerage offices in 41 states and international offices worldwide. Online banking products and services can be accessed through [http://www.firstunion.com][2].

About Derivion

Derivion is the first e-billing ASP that fully leverages the flexibility and power of the Internet to automate the bill delivery, payment, and customer care processes for companies driven by recurring billing such as telecommunications, utility, insurance, and financial services companies. Derivion(R) inetBiller(SM) service provides complete e-billing implementation including electronic bill design, e-mail notification, bill presentment, payment processing, enrollment marketing, and customer care for the B2C and B2B environment. These capabilities provide clients with a competitive advantage, enabling them to make bill delivery and bill payment simple and convenient for their customers and providing a path to e-bill consolidation at consumer access points as needed. The Atlanta-based company was founded in 1998 and maintains research, development, and additional sales offices in Toronto, Canada. For more information about Derivion, please visit [http://www.derivion.com][3].

[1]: /graphic/derivion/derivion.gif
[2]: http://www.firstunion.com/
[3]: http://www.derivion.com/

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CardSystems & Paynet!

VA-based CardSystems announced Friday it has signed a long-term processing agreement with PayNet! to provide backroom merchant accounting, including chargeback management. PayNet!, an ISO, will use CardSystems’ ‘eCardSMART Back-End’ solution for acquirers, which includes the ‘eCardSMART EMS’ (exceptions management system) chargeback management solution. The CardSystems’ ‘eCardSMART Back-End’ solution also includes a suite of web-enabled tools for risk management, fraud monitoring, web-based reporting, and data analytics. Many of the ‘eCardSMART’ components are delivered to clients in an application service provider-enabled environment.

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China Tourism Card

American Express Card has once again been designated by the China National Tourism Administration as the “Official Card of Tourism for China” for a further three-year period — from 2001 until the year 2003.

A signing ceremony between Mr. Jonathan Linen, Vice Chairman of American Express and Mr. He Guangwei, Chairman of the China National Tourism Administration took place at American Express Tower in New York City on September 8 to commemorate the occasion.

“This agreement symbolizes another important milestone in a long history of cooperation between American Express and the China National Tourism Administration,” said Mr. Linen.

“The Official Card Program represents one of American Express’ key initiatives to contribute to the long-term growth of tourism in China. American Express, with one of the most extensive travel networks in China, is pleased to have contributed to the significant growth of China’s tourism industry in recent years,” Mr. Linen said.

China National Tourism Administration is now participating in a series of cultural events organized by the Chinese State Council in the United States called “Experience Chinese Culture in the US” to promote tourism to China.

The China National Tourism Administration first designated American Express as the Official Card of Tourism for China in 1994. Both organizations jointly developed a series of marketing and advertising campaigns throughout North America to promote tourism to China.

To further stimulate the growth of tourism in China, American Express has continued to make substantial contributions to the preservation of historic sites and to support tourism education. Last year, a donation of US$50,000 was made to the restoration of Divine Kitchen in Xian Nong Tan. Tremendous effort was also spent on producing and distributing the “Official Guide to China” to tourists. Respectively in 1997 and 1998, American Express donated US$30,000 for crucial conservation work at San Xing Dui, an historic site in Sichuan and another US$30,000 for the restoration of Jufu Hall in Beijing. American Express’ joint Tourism Training Center in Beijing has successfully trained over 900 tourist industry managers since its establishment in 1992.

At present, American Express has four company-owned offices in Beijing, Shanghai, Guangzhou and Xiamen and 18 Travel Service Offices in 12 cities, assisting travelers and cardmembers in China, including replacement of lost and stolen cards, report of lost or stolen Travelers Cheques, Cardmember inquiries, Cardmember payment, receiving client mail and providing travel assistance. The company has also partnered with Bank of China and Industrial & Commercial Bank of China to expand the ATM network to offer greater convenience to travelers.

Today’s agreement comes on the heels of American Express’ recent announcement of the establishment of its China headquarters in Beijing, scheduled to open later this year. The Beijing headquarters will be engaged in coordinating the company’s increasing activities in China, and liaison with government agencies and business partners. The establishment of the Beijing headquarters demonstrates American Express’ long-term commitment to the China market.

American Express, which is celebrating its 150th anniversary this year, is a diversified worldwide travel, financial services and network services company. Founded in 1850, it is a leader in charge and credit cards, travelers cheques, travel, financial planning, investment products, insurance and international banking. For more information about American Express, visit the worldwide web site at

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Private Payments

American Express yesterday introduced a new series of products involving online privacy and security. The product, known as ‘Private Payments’, enables customers to purchase online without transmitting their actual card account number over the Internet. When a cardholder is ready to make an online purchase they simply go the AmEx ‘Private Payments’ web site. This launches the service, which then prompts them for user name and password, and to select the AmEx card they want linked to the ‘Private Payments’ number. A unique ‘Private Payments’ number with expiration date is then randomly created. The cardholder’s actual card account number is not sent over the Internet. The Private Payments number is designed to be used for a single purchase and to expire after the merchant authorization process is completed. ‘Private Payments’ will be available free within the next month to AmEx consumer and small business cardholders in the U.S. American Express also announced it has signed an agreement with and made a minority investment in Privada, Inc., a digital privacy infrastructure provider, to deliver a second product that will enable customers to choose how much of their information is shared when they browse any site on the Web. This private browsing product will allow customers to select from settings that range from sharing their full identity to anonymity. AmEx says this service will be introduced later this year.

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500 RPMS

InnoVentry Corp. announced this morning its 500th cash management machine deployment in the U.S. The ‘RPM’ cash management machine, and its predecessor Mr. Payroll, offer secure check cashing, utilizing advanced facial recognition technology to identify the customer. Since June 1997, when the first Mr. Payroll machine went live at a convenience store in Fort Worth, TX, the company has rolled out 500 Mr. Payroll and RPM machines in grocery and convenience store locations across the country, including Kroger, Circle K, H-E-B Pantry Foods, Wal-Mart, K-Mart, Texaco and RaceTrac. Since the summer of 1999, all InnoVentry installments have been with the more advanced RPM machines. InnoVentry plans to deploy an additional 500 RPM machines by 2001.

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