Smart Card Lawsuit

The Federal Court of Australia this week rejected Catuity’s attempt to split the patent infringement lawsuit filed by France-based Welcome Real-time. Welcome Real-time filed the lawsuit against three Catuity group companies on July 20. The suit charges infringement of one of Welcome Real-time’s Australian patents that broadly covers the emerging use of smart cards to deliver, store and process frequent shopper incentives. The patent also covers the subject matter of Welcome Real-time’s French patent, filed in early 1996. In addition to Australia, Welcome Real-time’s extensive smart card loyalty patent portfolio covers numerous other regions, including the US, Europe and Asia. Catuity had applied to the Court asking whether it would hear the issue of infringement as quickly as possible and delay all other issues in the litigation, including whether the patent was valid, until later. Catuity must now offer its defense by August 30. The trial is set for March 2001. (See CF 7/24/00)

Details

ECHOTERM 2.0

Electronic Clearing House, Inc. announced the initiation of a pilot program that allows merchants to accept multiple forms of payment on one platform. The program, referred to as ECHOTERM 2.0, gives ECHO merchants the ability to accept credit cards, debit cards and to verify checks against National Check Information Services, one of the top negative file databases in the nation.

“For the last few months, ECHO has been working on integrating all of the services of ECHO, RMRS, and XpressCheX, Inc. into one platform and the Verifone Tranz line of terminals is the first of several terminal types that will operate the new platform,” stated Joel M. Barry, CEO. RMRS, a national check verification provider, was acquired by ECHO in January of 2000 and XpressCheX, an ACH processor who also provides verification service, was acquired by ECHO in April of 1999. Verifone Tranz terminals are the most common terminals in use in the merchant marketplace today.

The new software also offers enhanced security features to protect merchants from fraudulent credit card transactions and allows full entry of commercial card data, lowering processing costs to ECHO merchants.

In addition to making ECHOTERM 2.0 available to all new merchants, a direct marketing effort and in-house cross-selling program using ECHO’s 24/7 customer support staff will be launched to encourage all existing ECHO merchants to install the new software and consider adding the new services to their credit card processing with ECHO.

The following services and enhancements make up the ECHOTERM 2.0 software:

— XPRESSVERIFICATION(sm) — A real time check verification of the NCIS database.

— Debit Cards — Using a PIN pad attached to the merchant’s terminal, ECHO merchants have access to Interlink, Maestro, and STAR networks for authorization of their debit card activity.

— Address Verification Service — Having the ability to confirm the home address of the cardholder eliminates unauthorized or stolen card use.

— Security Code Verification — By entering preprinted security numbers on the card, the merchant gains certain chargeback rights and minimizes fraudulent activity.

— Commercial Card support — By accommodating the data entry requirements related to accepting a Commercial Card, the merchant lowers his processing costs and satisfies his business-based customer.

Electronic Clearing House, Inc. provides credit card processing, cash advance services, check guarantee, check verification, check conversion, inventory tracking and/or various Internet services to over 41,000 retail merchants, and U-Haul dealers across the nation. ECHO also designs, develops and integrates software and point-of-sale hardware that is utilized as credit card processing terminals, automated money order dispensers, inventory tracking devices, and cash advance systems.

Details

Priceless Lawsuit

MasterCard’s CEO made a phone call last night to Ralph Nader to make one final plea to discontinue the use of MasterCard’s “Priceless” advertising theme in Nader’s presidential campaign advertising. Robert Selander says the attempt to reach an amicable solution with Nader was unsuccessful. Therefore MasterCard confirmed this morning it has reluctantly filed a lawsuit against Ralph Nader and his presidential campaign committee, seeking to stop them from running a promotional ad misappropriating MasterCard’s “Priceless” campaign. MasterCard says the Nader ad, which has been running on national television, misleads viewers into believing that MasterCard is endorsing Mr. Nader’s campaign. MasterCard says it generally does not mind ‘Priceless’ being spoofed in a good-natured, non-commercial way, by entertainment vehicles such as Saturday Night Live however the card association has not hesitated to file lawsuits against other parties that illegally copy the “Priceless” theme for personal promotion, benefit, or commercial gain. MasterCard launched the highly successful ad campaign in October 1997. The suit seeks a court order banning Nader from running the ad, and at least $5 million in damages.

The video below is in Quicktime. If you have quicktime just click on the play button.

Details

GetThere and AmEx

GetThere Inc. announced that more than 1000 companies are now utilizing the American Express RezPort interactive travel booking solution for small and mid-size businesses, a system that is powered by the GetThere Marketplace platform. With this recent expansion of its relationship with American Express, GetThere now provides the online reservations platform to more than 1,200 companies, including large corporations and small and mid-size businesses.

Until now, small and mid-sized companies have had limited options to manage online travel booking for employees. These businesses can now gain the benefits of an online booking system, reducing the travelers’ time and hassle in making reservations and ensuring that a company receives a full picture of its business travel expenditures. Companies can choose from two different American Express products: RezPort, which provides the core interactive booking and reporting capabilities, and RezPort+, which incorporates preferred vendors, negotiated rates and policy guidelines. Unlike many unmanaged travel sites, both RezPort booking solutions are integrated with a global network of local travel offices — the American Express customer service network, which includes dedicated travel counselors in more than 1,700 travel offices worldwide.

“American Express has moved very quickly to reinforce its leadership in providing e-business services to companies of all sizes,” said Rich Miller, Vice President of Small Business Travel. “The GetThere Marketplace provides a robust and flexible technology platform that lets us deliver powerful online travel solutions that were previously available only to the largest corporations.”

“After entering into partnership with American Express in September 1999, we’ve developed new solutions for their corporate clients,” said Gadi Maier, president and CEO of GetThere. “Beyond supporting Corporate Travel Online, American Express’ online product for large corporations, which was introduced in June of this year, GetThere can now bring the benefits of online booking to smaller organizations. These are companies that are eager to implement online tools because they can see quick, tangible savings and can better support their tech-savvy travelers.”

The GetThere Marketplace

The GetThere Marketplace has the largest base of corporate travel buyers and leading travel suppliers of any Internet-based B2B travel marketplace. It provides comprehensive online booking to corporate employees by connecting them with suppliers of travel services, such as air, hotel, rail and car rental companies. The GetThere Supplier Network enrolls major travel suppliers as direct participants in the GetThere Marketplace. The members of the Supplier Network are working with GetThere to develop direct connect solutions that further improve booking speed, enable new services and content, and provide economic efficiencies to corporate buyers and suppliers.

About American Express Corporate Services

American Express Company ([http://www.americanexpress.com][1]) is the leading global provider of commercial cards and one of the world’s largest business travel agencies. Through its Corporate Services group, formed in 1982, the company counts more than 70% percent of the Fortune 500, along with tens of thousands of mid-sized companies, as customers of its Business Travel, Corporate Card, Corporate Purchasing Card and Consulting Services.

American Express Company is a diversified worldwide travel, financial 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.

About GetThere

GetThere operates the world’s largest Internet marketplace focused on business-to-business travel services. GetThere’s systems are used to provide online travel procurement to employees at leading corporations such as Boeing, Chevron, Cisco, Cox Enterprises, Lucent, MetLife, Nike and Xerox. GetThere also powers online travel sites for leading airlines, including Alitalia, All Nippon Airways, America West, British Airways, Northwest Airlines, TWA and United Airlines. GetThere can be found on the Web at [http://www.GetThere.com][2].

[1]: http://www.americanexpress.com/
[2]: http://www.getthere.com/

Details

LML – ChequeMARK Patent Dispute

LML Payment Systems Inc. wishes to provide clarification regarding certain rumors and reports surrounding the ownership of United States Patent No. 5,484,988; certain litigation involving one of the original vendors; certain records contained in the recordation division of the United States Patent and Trademark Office; and, a complaint filed by Global Transaction Systems LLC against the Company for alleged patent infringement.

Background

On March 11, 1998, the Company acquired substantially all the assets (the “Assets”) of ChequeMARK Technologies Corporation (“CTC”). The Company also purchased all rights, title and interest to United States Patent No. 5,484,988 describing a check writing point-of-sale system (the “Patent”) from two individuals, Mr. Henry R. Nichols and Mr. Robert R. Hills (collectively, the “Vendors”), who each held an undivided interest in the Patent.

Repurchase Option

In connection with its purchase of the Assets and the Patent, the Company agreed to provide certain development funding (the “Funding”). In the event the Company failed to provide the agreed Funding, the Vendors and CTC had, under certain circumstances, the option for 90 days to repurchase the Patent (the “Vendors’ Option”) and the Assets (the “CTC Option”) for and in consideration of the repayment of all cash consideration paid, all the Funding advanced and either all shares of the Company’s stock issued in connection with the acquisitions or an amount equal to the actual proceeds of their sale after taxes attributable thereto.

Proper exercise of the CTC Option to repurchase the Assets and the Vendors’ Option to repurchase the Patent would have required: (i) a breach by the Company of its Funding obligation, (ii) due notice of such a breach, (iii) failure to cure the breach within 30 days of such notice and (iv) the repayment to the Company of all cash consideration paid, all the Funding advanced and either all shares of the Company’s stock issued in connection with the acquisitions or an amount equal to the actual proceeds of their sale after taxes attributable thereto (collectively, the “Pre-conditions”).

The Company confirms the Pre-conditions did not occur. The Company confirmed the Funding was made in its entirety in its 1999 Annual Report in Note 14.(b) to its Audited Financial Statements. Further, neither the Vendors nor CTC has repaid to the Company any of the cash consideration paid, nor any of the Funding advanced, nor returned any of the Company’s shares issued in connection with the acquisition of the Assets and the Patent, or alternatively, an amount equal to the actual proceeds of their sale after taxes attributable thereto. The Company confirms the Patent and the Assets have not been repurchased by the Vendors or CTC.

Litigation with Vendor

On March 10, 1999, the Company commenced legal action in the United States District Court for the Middle District of Florida, Jacksonville Division, against Robert R. Hills and Mark Technologies Corporation (formerly known as CTC), seeking, among other relief, a declaratory judgment that the defendant Hills effected a “unilateral resignation” under the terms of the employment agreement he entered into in connection with the Company’s acquisition of the Assets and the Patent. On July 27, 1999, the claim relating to the declaration of a “unilateral resignation” was dismissed on procedural grounds, and on October 4, 1999, the Company’s remaining claims were amended to include the specific performance by Mr. Hills of his obligations to the Company and its affiliates, including his continuing obligation to sign all documents and do all things necessary regarding a new, but related, patent application (U.S. Patent Application Serial No. 08/775,400) being pursued by the Company (the “Internet Patent”). Despite the above, legal counsel for the Company was able to successfully continue the prosecution of the Internet Patent application with the United States Patent and Trademark Office (“USPTO”) on behalf of the Company. On March 27, 2000, the Company announced it had received a “Notice of Allowance” from the USPTO for the Internet Patent. The Internet Patent contains all the same claims as the Patent and specifically includes the authorization via the internet of electronic checking transactions. The Company expects the USPTO to formally issue the Internet Patent in the near future.

On April 13, 2000, during a deposition related to the above mentioned legal action, Mr. Hills testified that in September, 1998, he had filed documentation with the recordation division of the USPTO attempting to transfer the Patent from the Company’s subsidiary ChequeMARK Patent Inc. to himself. The Company confirms that Mr. Hills has never been an employee, officer, director, authorized agent or authorized signatory of ChequeMARK Patent Inc.

Mr. Nichols has confirmed to the Company that he was in no way associated with filing any documentation related to any purported assignment of the Patent from ChequeMARK Patent Inc. to Mr. Hills, and that Mr. Hills acted alone without seeking information or support from Mr. Nichols.

On April 19, 2000 legal counsel for ChequeMARK Patent Inc. filed correcting documents with the recordation division of the USPTO which correct the record. The Company has been advised there exists a considerable lag between the time documents are filed with the recordation division of the USPTO and their availability via electronic access.

Mr. Hills also testified in his deposition that he assigned his interest in the Patent to a company named Global Technology (“Global Technology”). Documentation alleging this assignment was also recorded in the recordation division of the USPTO. The Company and its legal counsel have been unable to discover the legal existence of this company or locate any agent of record for Global Technology. The Company is advised that the recordation division of the USPTO simply records documentation transmitted to it. The recordation division of the USPTO does not have a procedure to determine the authenticity of ownership interests regarding intellectual property.

New Complaint

On July 20, 2000, a different company named Global Transaction Systems, LLC, a Nevada limited liability company (“Global Transaction”), as plaintiff, filed a complaint against the Company in the United States District Court, Southern District of Florida, for patent infringement and for a permanent injunction against continued infringement. To date, the Company has not been served with the complaint. The Company is of the opinion that the legal complaint filed by Global Transaction against the Company has no basis and is without merit. If, indeed, the complaint is pursued by Global, the Company intends to contest and defend the complaint vigorously.

Company’s Position

The Company’s position in these matters is that since March 11, 1998, the date the Company purchased the Patent, there has been no repurchase, sale or effective assignment of the Patent and ChequeMARK Patent Inc. a subsidiary of the Company, remains the sole owner of the Patent.

Details

Discover

Discover announced yesterday the expansion of its ‘Discover Educators Card’ and a doubling in the size of Discover Online users. Discover ‘s ‘Educators Card’ has added new merchant partners offering a 5% ‘Cashback Bonus’. Teachers will continue to receive a ‘Cashback Bonus Award’ of up to 2% of their total purchases, and will now be eligible for an additional 5% ‘Cashback Bonus Award’ for purchases made at Cooking.com, FTD.com, Laura Ashley, Reebok, Smartkids.com, and World of Science. Discover is also donating a portion of each ‘Discover Educators Card’ transaction to Communities in Schools. To date, the program has produced more than $150,000 in donations. Discover also announced that the Account Center at Discovercard.com has registered over two million accounts, double the size of its registered user population eight months ago.

Details

On The Run

ExxonMobil is launching a new convenience store that utilizes the ‘SpeedPass’ payment technology. The new convenience store will be called ‘On The Run’. The new stores will be as large as 4,000 square feet and will include a new proprietary food service. The first of the new ‘On The Run’ stores will debut at Exxon-branded service stations in Charlotte, N.C., in December, and will expand nationally in 2001. ExxonMobil recently extended the ‘Speedpass’ payment technology inside Mobil convenience stores, expanded ‘Speedpass’ to its Exxon-branded service stations and convenience stores, and launched the cross-acceptance of Mobil and Exxon credit cards.

Details

Chinese Smart Cards

FL-based Leapfrog Smart Products and China’s TOP Group have formed China Capital Ventures to utilize the Internet security smart card system developed by Leapfrog for Chinese.com. The signed agreement allows Leapfrog to acquire 49% of Chinese.com for business-to-business transactions to and from Chinese businesses. Leapfrog and TOP originally joined forces in November 1999 to build a factory at the Chengdu hi-tech campus where the Leapfrog smart card biometric reader is manufactured under the ‘LeapTOP’ brand name.

Details

Police Terminals

Traffic offenders will soon be able to pay their fines at the point of violation. MasterCard and Elan Merchant Services have launched a wireless acceptance terminal pilot program for Wisconsin State patrol cars which allows the acceptance of credit and debit cards from motorists for moving violation payments. In the past, motorists would have to accompany the officer to the police station to pay their appearance bond. MasterCard is providing Wisconsin State Patrol cars with a ‘Lipman Nurit 2090’ mobile terminal with a built-in printer. The ‘Nurit’ uses the BellSouth Wireless Data network and process transactions in 6 to 8 seconds. The Wisconsin State Patrol says the new program will allow its police officers to reconcile the violation payment and get back on the road in half the time.

Details

Vital Executives

Vital Merchant Services announced the appointment of two senior executives to its leadership team.

Ric Coulombe has been named chief operating officer and Greg Cohen vice president of sales and marketing, according to Keith Smith, president and chief executive officer of Vital Merchant Services.

“Vital Merchant Services will become the premiere provider of terminal management and merchant portfolio management services in the industry. We aim to achieve that by making considerable investments in our people, our products, technology and customer service. To complement the strong management team we currently have, hiring Ric and Greg illustrates our commitment to putting the leadership in place to make certain our client needs are met,” said Smith.

Coulombe is responsible for all operations at Vital Merchant Services. Formerly vice president and general manager with IVI Checkmate, Coulombe brings more than two decades of high-tech operational leadership experience to the company.

Cohen is responsible for leading sales and marketing efforts as well as the development of new products and services. Most recently, Cohen served as vice president of business development at BankServ, a San Francisco-based provider of electronic payment technology and e-commerce solutions.

Vital Merchant Services was formed in July of this year when Vital Processing Services acquired the assets and business of Aurora Merchant Systems, LLC (AMS) of Sacramento, Calif. and its subsidiary, SupplyXpress.

About Vital Merchant Services

Headquartered in Sacramento, Vital Merchant Services provides a variety of point-of-sale support services including terminal equipment procurement and deployment, inventory management, replacement and repair services, merchant training and installation, merchant supplies replenishment and world-class help desk support. The company is a wholly owned subsidiary of Vital Processing Services. For more information, contact Vital Merchant Services Sales at 800-686-1999.

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, such as POS products, electronic authorization and data capture; VirtualNet(TM) Internet-commerce services; clearing, settlement and exception processing; accounting, billing and reporting; operational fulfillment services; risk management; and customer service. Vital is a merchant processing joint venture of Visa(R) USA and Total System Services, Inc.(R) (NYSE: TSS) (TSYS).

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

Details

Consolidation

The acquisition of First Union’s card portfolio by MBNA further consolidates the market power of the nation’s top ten issuers. According to data compiled by CardData, the market share of the nation’s top ten issuers will increase to 79% following the acquisition. At mid-year the nation’s ten largest issuers held 78% of the total outstandings. Ten years ago the top ten market share stood at 49%. The MBNA/First Union acquisition may also move MBNA in the #2 position, dislodging Bank One/First USA.

Top Ten Bank Credit Card Issuers as of June 30, 2000
(ranked by $billions in credit card loans)

1. Citibank $79.1
2. Bank One/First USA $66.3
3. MBNA $61.1
4. Discover $44.2
5. Chase Manhattan $31.9
6. American Express $25.9
7. Providian $21.5
8. Bank of America $20.0
9. Capital One $16.4
10. Fleet $14.0

Total Top 10: $380.4 billion
Total Market: $490.0 billion
Market Share: 78%

Source: CardWeb.com’s CardData

Top Ten Bank Credit Card Issuers as of June 30, 1990
(ranked by $billions in credit card loans)

1. Citibank $25.3
2. Discover $ 9.3
3. Chase Manhattan $ 7.5
4. First Chicago $ 6.3
5. MBNA $ 5.7
6. American Express $ 5.7
7. Bank of America $ 5.2
8. Bank of New York $ 3.6
9. Manufacturers Hanover $ 3.3
10. Wells Fargo $ 2.7

Total Top 10: $ 74.6
Total Market: $151.2
Marketshare: 49%
Source: CardWeb.com’s CardData

Details

Jensen on Trintech Board

Trintech Group PLC announced the appointment of Edward Jensen to the Board of Directors effective immediately. Jensen succeeds Wolfgang Heinrich, who served as a Board member since June 1999. Heinrich is stepping down following his departure from Visa International in pursuit of other professional endeavors.

Jensen served as President and Chief Executive Officer of Visa International from 1994 to 1999 and is now involved with several venture capital firms and serves as an advisor and Director for several high-tech companies in Silicon Valley. Prior to his tenure at Visa International, Jensen held the posts of Vice Chairman and Chief Operating Officer at US Bancorp, where he worked for two decades. Jensen graduated with a Bachelor’s degree in finance from the University of Washington. Jensen will also continue in his role as Chairman of Trintech’s advisory board, a position he has held since May 1999.

“I am delighted, along with all our directors, to welcome Mr. Jensen on board,” says Cyril McGuire, Executive Chairman at Trintech. “With his 25 years of experience in the financial and payment card sector he will bring considerable experience and invaluable market insights to our Board.”

About the appointment, Jensen says, “Trintech’s Internet payment strategy compliments my experience at Visa International and US Bancorp. I’m excited to combine my knowledge of banking and finance with Trintech’s innovative payment technologies at a Board of Directors level, and look forward to ensuring the continuation of their recent successes.”

About Trintech

Trintech Group PLC is a leading provider of secure electronic payment infrastructure solutions for real world, Internet and wireless transactions. The company, which was founded in 1987, offers a complete range of payment software products for credit, debit, commercial and procurement card applications. Trintech’s secure product range is deployed in over 35 countries worldwide and cover the payment requirements of consumers, card issuing banks, merchant acquiring institutions, merchants, eMerchants, telcos, wireless operators, ISPs/CSPs, Portals and large corporations. Trintech’s range of scalable, open systems architecture solutions for UNIX(R) and Windows NT(TM) platforms covers consumer, merchant and financial institution requirements for all card-based payments, including e-commerce and the emerging world of mobile commerce. Trintech can be contacted in the U.S. at 2755 Campus Drive, San Mateo, CA 94403 (Tel: 650/227-7000) and in Ireland at Trintech Building, South County Business Park, Leopardstown, Dublin 18 (Tel: 353-1-207-4000). Trintech can be reached on the Web at [http://www.trintech.com][1]. Investor information can be found at [www.trintech.com/investor][2].

[1]: http://www.trintech.com/
[2]: http://www.trintech.com/investor

Details