Credit Card Sectors

The sub-prime credit card segment remained the top performing segment for 1999 in the US. London-based RAM Research Group Ltd. reports this morning the sub-prime segment, as a group, grew 36% in receivables between 4Q/98 and 4Q/99. Providian, the leading sub-prime issuer, grew an astonishing 61%. Other top sub-prime performers include SD-based First Premier Bank, up 93%, and OR-based First Consumers National Bank, up 55%. RAM’s ‘Bankcard Barometer’ also shows that credit unions increased receivables by 14% last year compared to an industry average of 7%.

SECTOR MONITOR (4Q/99 vs 4Q/98 Receivables)

Co-branded/Affinity: +6% Sub-Prime/Secured: +36
Low Rate (>$3 B): +3% Low-Rate (www.ramresearch.com)

[![][1] Click Here][2]

[1]: http://bankcards.ramresearch.com/imgs/bb.gif
[2]: http://www.ramresearch.com

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TowerGroup CEO

TowerGroup, a leading research and consulting firm specializing in the impact of technology in the financial services industry, Friday announced the appointment of Mark Sievewright as President and Chief Executive Officer.

Mr. Sievewright was previously President of PSI Global, a division of NFO Worldwide, a provider of custom research and syndicated market information to all segments of the financial services industry. Mr. Sievewright joined PSI Global in 1995 from Europay International, where he had overall responsibility for marketing, corporate communications, IT/business management, and brand management. He began his career in 1978 at Midland Bank, part of HSBC, in London.

Diogo Teixeira, founder of TowerGroup, will step down as Chief Executive Officer. However, he will continue to actively conduct research for TowerGroup, and will remain a director of TowerGroup. “TowerGroup faces an exciting future as technology and the Internet continue to reshape the global financial services industry. I am looking forward to spending more time on thought leadership initiatives and working with our clients,” Mr. Teixeira said.

On November 12, 1999, Reuters, the global information and news group, acquired a controlling interest in TowerGroup. Brad Hanson of Reuters and Chairman of the Board of TowerGroup, and Diogo Teixeira jointly recruited Mr. Sievewright to the firm. “Mark Sievewright is a strong, proven leader to take the vision already crafted by Diogo Teixeira to the next level,” said Mr. Hanson. “His strong experience in managing client relationships and his sales and marketing background and international experience will make a significant impact on TowerGroup’s market position.”

“I’m very excited to be joining TowerGroup and am looking forward to working closely with TowerGroup’s existing management team to build a large, global business” said Mr. Sievewright. “With the rapid pace of technological change in the financial services industry, there are tremendous opportunities to translate trends into actionable information that will help our clients to make informed investment decisions. Our partnership with Reuters will enable TowerGroup to grow its research coverage and distribution into global markets, and to serve our growing client base better than any time in the past.”

About TowerGroup

TowerGroup ([www.towergroup.com][1]) is the leading provider of information technology research, advisory and consulting services focused exclusively on the global financial services industry. TowerGroup conducts research addressing securities, investments, banking, and insurance information technology, products, vendors, markets, investment trends, and issues. TowerGroup serves a global client base, including some of the largest financial, technology, and consulting firms in the world.

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

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eMoneyMail

The unprecedented success of PayPal.com’s email payment system among ebay.com customers has created a mad dash by competitors. One of most formidable competitors to join last week’s list of companies offering email payment services is the nation’s fourth largest bank holding company. Bank One unveiled ‘eMoneyMail’, to enable U.S. consumers to send or receive, via email, up to $500 in cash at one time. The Bank One system requires the use of a ‘VISA’ credit card, ‘VISA Check’ card, or a checking account. However a user does not have to be a Bank One customer or open a separate account with ‘eMoneyMail’. Bank One says it will soon give receiving customers the option of having a paper check sent in lieu of having funds transferred to a ‘VISA’ card or a checking account. Under the ‘eMoneyMail’ system the sender pays a $1.00 convenience charge for each transaction. There is a $1.00 convenience charge for recipients only if a paper check is requested. Funds sent using a ‘VISA’ credit card or debit card are available for use by receivers immediately. But funds sent from a checking account will take the usual three to four business days to clear. Bank One is offering the new system to business partners as a cobranded program. eCash Technologies also introduced last week its email payment system, ‘eCash P2P’ (CF Library 3/10). Other competing email payment systems have recently been launched by X.com and dotBank.

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MagIC 1100

Among the new payment gizmos announced at last week’s ETA show in Las Vegas is Schlumberger’s ‘MagIC 1100’. The new smart PIN-pad is designed specifically for customer-activated smart card payments, including credit/debit transactions, loyalty applications and e-purse functionality. The hand-held ‘MagIC 1100’ integrates a smart card reader, two-line display and key pad to meet consumer need for control of the e-purse throughout the payment process. Fully EMV compliant, the new PIN-pad gives the consumer a simple and discreet way of authorizing a payment. The ‘MagIC 1100’ is ready for immediate deployment as a key part of the EMV infrastructure migration, through direct connection to the ‘MagIC 6000’ payment terminal. All electronics and software are totally self-contained within the ‘MagIC 1100’, so no modifications to the ‘MagIC 6000’ are required.

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Eitingon Joins i-Escrow

i-Escrow Inc., the largest provider of online transaction settlement services, Friday announced the appointment of Daniel R. Eitingon, former president of the global support services group at Visa International, to the company’s board of directors.

In addition to strengthening and enhancing Visa’s core services and products — such as credit, debit and VisaNet — Eitingon, who has more than 30 years of financial and technology industry experience, evaluated and developed strategies to capitalize on emerging technologies and strengthen Visa’s competitive position in the global payment industry. A member of Visa’s management executive committee, he worked closely with Visa members and staff worldwide to advance strategic objectives in such areas as multi-application chip cards, debit products and Visa’s next generation of system architecture.

“Dan brings global perspective, a breadth of experience and an intimate understanding of the payment industry, all of which will be valuable assets as we expand our product suite to serve the B2B market,” said i-Escrow Founder and CEO Sherman Kwok.

Eitingon formerly was executive vice president and head of First Interstate Bank’s technology banking group as well as a member of the bank’s executive operating committee. He previously directed the bank’s 400-branch network throughout California and was directly responsible for that unit’s financial performance. He serves on the boards of NextCard and onGain.com, and holds a BS in electrical engineering from Cornell University, a MSEE in computer sciences from the University of California at Berkeley and an MBA from the University of Chicago.

“i-Escrow’s intention to parlay its experience as a trusted intermediary in consumer e-commerce into the B2B market has tremendous potential,” said Eitingon. “My aim is to tap into strategic resources to advance i-Escrow’s ability to offer the full range of transaction settlement services the B2B market needs.”

About i-Escrow Inc.

i-Escrow Inc., the largest provider of online transaction settlement services, enables safe and convenient Internet transactions by protecting businesses and consumers as they exchange goods for payment. Partners include proven and emerging brands in business-to-business, business-to-consumer and consumer-to-consumer e-commerce. Users include corporate buyers and sellers, unbranded retailers, active hobbyists, avid collectors and casual shoppers who frequent auctions, classifieds, storefronts and newsgroups on the Internet. The company’s financial backers include Infinity Capital, U.S. Venture Partners, AIG Financial Products and Red Rock Ventures.

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Sky Pearl Card

Frequent flyer cards are catching on in The People’s Republic of China. China Southern Airlines announced this weekend that its ‘Sky Pearl’ frequent flyer loyalty club now has 122,871 active cardholders. The program was launched in November 1998. China Southern says it is now beefing-up its customer service operations to meet the growing demands of ‘Sky Pearl Club’ members. To bolster the program, Bank of China Credit Card Ltd. announced it plans to solicit its 600,000 credit card members to join the ‘Sky Pearl Club’. Bank of China card members who join China Southern Airlines’ ‘Sky Pearl Club’ may exchange their credit card points into kilometers. Every eight credit card points will equal 1 kilometer of ‘Sky Pearl Club’ mileage. Ranked No. 1 in passengers carried in China for the past 20 years, China Southern Airlines connects to more than 80 cities around the globe.

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SafeTPay

Internet start-up SafeTPay announced a new service last week that allows consumers to purchase goods and pay bills over the Internet using their existing ATM-card with PIN (Personal Identification Number). The service enables Internet merchants to accept ATM-card payments in a safe and secure manner. This benefits consumers, merchants and card issuing banks, and lowers fees paid by merchants. This unique service also makes credit card transactions more secure.

The SafeTPay service will be marketed to Internet merchants by Banks and ISO’s (Independent Sales Organizations). Universal Payment Processing, a wholly owned subsidiary of Universal Savings Bank, a leader in merchant processing, has signed an agreement with SafeTPay making them the first reseller for this service.

Consumers use a low-cost device, attached to their PC, to safely perform the transactions. This device reads the magnetic stripe on the consumer’s card, and in the case of ATM cards, encrypts the consumers’ PIN. Internet merchants have indicated an interest in deploying these devices to their frequent customers, in order to lower their transaction fees. SafeTPay devices will initially be provided by Innovonics. Additional vendors may be certified in the future, and the needed equipment will eventually be built into new PCs at the factory.

Ken Biel, Chairman & CEO of Universal Payment Processing, adds; “SafeTPay offers merchants significantly lower fees by enabling PIN entered Debit transactions through the Internet. And by requiring that the card is present, the system greatly reduces the risk of fraudulent transactions and chargebacks. SafeTPay, combined with Universal’s other services, provides a comprehensive payments solution for Internet merchants. We are very excited to be the first organization to offer SafeTPay”.

Using a simple installation program SafeTPay designed into the system, most merchants will be able to implement SafeTPay in less than one day, with no outside assistance. The system works with merchant web sites on UNIX, Windows NT, and LINUX platforms.

According to Harry Hargens, President and co-founder of SafeTPay, “The SafeTPay service is a real breakthrough for merchants, consumers and card issuers. For consumers, the benefit is security in using cards for Internet transactions that involve their credit and debit accounts”.

“With SafeTPay, the consumer’s card data is heavily encrypted before leaving their PC, and the encrypted data goes directly to a bank processor, without passing through the merchant’s hands. Security methods used by SafeTPay include and exceed standards followed for transmitting transactions from ATM and POS machines”.

“There are over 120,000,000 ATM Cards in use today. All those consumers can now use SafeTPay to pay Internet merchants in a way that is safer for all, and lowers fees paid by merchants. SafeTPay has filed for a patent to protect this unique process”.

“Until now, consumers had to send card numbers over the Internet relying only on SSL security, which according to a NY Times article has been broken. They also had to rely on merchants to keep card data safe. Consumers do not trust this payment method, as demonstrated by reports that over 50% of shopping carts are abandoned when the time comes to enter credit card data. The recent incident where 300,000 card numbers were stolen validates consumers’ fear. The benefit to merchants is obvious, more transactions and lower transaction fees. For card issuers, it enhances the value of their credit and debit cards by encouraging Internet transactions”.

“We began manufacturing our patented encryption devices several years ago to provide the best solution for credit-, debit-, and smart-card eCommerce transactions”, stated Dereck Clark, President of Innovonics. “We are pleased that SafeTPay selected our products for their exciting eCommerce solution. We have customers in 40 countries, and our products have even been used via the Internet to load eCash to smart cards. However, SafeTPay is the first company in the USA to integrate our products in an eCommerce system for true on-line debit.”

This SafeTPay System is especially attractive to Internet merchants with frequent shoppers such as Retail, Grocery, On-line Brokerage, Airlines, Utilities, Bill Payments, Pharmacy, Fast Food, etcetera, etcetera, etecera..

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Metris Projections

Metris Companies announced Thursday it expects earnings per share for the first quarter to range from $0.70 to $0.75 per share. The increase in expectations is driven in part by stronger revenues from both the credit card and fee-based businesses, stronger margins and improved credit quality than earlier estimated. Metris also increased its earnings guidance for full year 2000 to $2.80 to $2.85 per share.

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eCashP2P

eCash Technologies yesterday announced ‘eCash P2P’, a person-to-person e-mail payment service. ‘eCash P2P’ is available for immediate implementation by financial institutions serving the United States. Already deployed in Germany through a partnership with Deutsche Bank 24, the ‘eCash’ person-to-person solution is a payment product that can be installed directly at financial institutions or accessed seamlessly through a hosted service.

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Vital Update

Vital Processing Services announced the launch of POS-partner 2000, a PC-based point-of-sale software product that enables retailers and direct marketers to accept and process many kinds of payment vehicles from multiple point-of-sale venues, and to capitalize on the information gathering as part of the payment process. Vital Processing Services also announced it has expanded its integrated debit solution to include EBT processing at the merchant point-of-sale. Finally, Vital announced the promotion of Barb Gregg to SVP of product development.

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eCashPads

eConnect will announce this morning an agreement to supply 1,000 free ‘eCashPads’ to Kanakaris Communications. eConnect also announced this week it has structured a licensing arrangement with PalmPilot to enable first-ever wireless hand-held Internet terminal transactions. The eConnect ‘eCashPad’ simply attaches to the consumer’s computer keyboard, enabling Kanakaris customers to download entertainment programs with a card swiped “bank eyes only” cash ATM card and PIN payment or a credit card payment, whereby Kanakaris Communications never sees the credit card data nor is the credit card stored at the KKRS Web site. eConnect says it expects to distribute 100,000 ‘eCashPads’ to major Internet business sites. The PalmPilot deal is part of a joint venture deal with FL-based Pilot Island Publishing’s ‘PocketPay’ solution. EConnect’s has been a high-flying stock this week.

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Emerging Markets

MasterCard said Thursday that the public sector and recurring payments represent huge growth opportunities for payments cards in the next few years. Out of annual Federal and State tax payments of almost $450 billion, today only one percent is paid using payment cards. Similarly, only five percent of the $37 billion Americans spend at the Post Office each year is paid using payment cards, and two percent of the $14 billion collected by Motor Vehicle offices around the country. Utility bills, cable TV, insurance, Internet service providers, and newspaper delivery are areas where recurring payments are now popular. On-line services now account for 80 percent of recurring payments. MasterCard’s research shows that 56 percent of current credit card users would consider recurring payments for other bills. Nineteen percent of those not participating in recurring payments would at least consider a trial using their credit card.

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