4Q/99 Update

Mid-size issuers turned in better-than-average performance during 1999 according to CardWeb’s 4Q/99 survey of more than 350 major bank credit card portfolios.

Issuer 4Q/99 $Recv 4Q/98 $Recv Chg%
BanPonce $532,987,836 $484,556,272 +10.0%
Pentagon FCU $398,041,557 $381,553,382 +4.3%
First Security $238,144,518 $221,374,225 +7.6%
Boeing Emp CU $229,518,426 $207,940,731 +10.4%
Pa St Emp CU $183,750,996 $173,494,178 +5.9%

Source: CardData 4Q/99 Portfolio Survey (www.carddata.com) FULL STORY:

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Proton – Latin America

Proton World this week announced that an agreement has been signed with Visa International Latin America and Caribbean Region for the joint marketing of Proton-based e-purse smart card systems as “Visa Cash-compatible” in most of the Visa LAC region.

This agreement offers Visa member banks an alternative technology for launching new Visa Cash e-purse schemes, although the Visa Cash e-purse programmes in Argentina, Brazil, Colombia and Peru will continue to use the existing technology. It is proof of Visa LAC Region’s commitment to supporting its Member banks by offering them a choice of technologies.

Visa and Proton World will draw up joint marketing plans for each country in the region and will make joint sales visits to new and existing customers.

The Proton multiple application smart card technology allows dynamic creation of applications; conforms to the EMV specifications; will conform to CEPS and Global Platform; is open to multiple sourcing of chips, cards and terminals from any certified manufacturers and can be integrated into a contact/contactless system.

The Proton technology is also in use in diverse applications such as telecommunications, access control, cardholder identification, closed user groups, automated transport fare collection and secure Internet payments. It is compatible with all of the world’s leading smart card platforms.

Daniel Skala, Executive Vice-President, Sales at Proton World, said: “We are convinced that this agreement will open new markets for Visa Cash and Proton World in Latin America. It is a major step forward in our collaboration with Visa, combining the world’s most advanced multi-application smart card technology with the world’s leading international e-purse brand.”

Javier Pino, Vice-President, Chip Technology, at Visa International LAC region, said :” Visa is committed to giving its Members a choice of technologies and to protecting their investments in smart card systems. This agreement with Proton World gives our Members maximum choice and promotes innovation in the market place.”

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GM Card Match & Win

Networts subsidiary NTN Interactive Network Inc. has entered into a three year advertising/sponsorship agreement with The GM Card through its agency.

NTNIN has launched an aggressive sponsorship and advertising campaign promoting “The GM Card” on the NTN Network broadcast to over 530 subscribing pubs and restaurants across Canada. NTNIN’s unique advertising medium offers The GM Card access to an untapped – captive audience of more than 3 million viewers per month.

The GM Card is the title sponsor of one of NTNIN’s most successful programs – The GM Card Match & Win Game which challenges the player to match the score posted at the start of every GM Card Game instead of achieving the highest score. The 1/2 hour interactive programd Monday, Tuesday and Wednesday nights only on the NTN Network. Substantial prizes will be awarded to players who match as well as a superior grand prize.

“We are delighted that this agreement is such a great fit for both NTNIN and GM..it gives NTNIN a chance to increase revenues through a whole new channel” says Dave Redgers, President of NTNIN. The GM Card(R) applications are now available at each participating NTNIN subscribing location across the country. With The GM Card(R) as the official credit card of the network, NTNIN will gain revenue from each valid application returned to General Motors.

NTNIN’s audience is young, well educated, and affluent. Eighty percent of players fall into the attractive 18-49 age category, eighty percent are college educated and the average household income is over $50,000. Current advertisers including Pennzoil, Headline Sports, Pro-Line, Lotto 6/49 and The Canadian Football League to name a few, have found this highly desirable combination irresistible.

The NTN Network is the world’s leading network of live, interactive entertainment available in pubs and restaurants across North America. Last month, 3.1 million Canadians coast to coast watched and played big-name sports, games and live event programs. NTN Interactive Network Inc. (NTNIN) is the exclusive Canadian licensee of NTN Communications, Inc. (AMEX:NTN) a leading producer and programmer of interactive television, on-line and Internet entertainment.

Networks North Inc.’s other operating units include wholly owned Magic Lantern Communications Ltd., Interlynx Multimedia Inc. and GalaVu Entertainment Network Inc. Magic Lantern is Canada’s premier distributor of educational media resources, with exclusive rights to over 14,000 titles in English and French. Magic subsidiaries provide MPEG encoding, DVD authoring, video duplication, and fulfillment services for broadcasters. Interlynx Multimedia Inc. is a developer of web-based interactive software in the areas of training, knowledge management and e-business. GalaVu Entertainment Network Inc. is a technology-based entertainment provider of interactive in-room entertainment systems for over 200 hotels in Canada.

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Radicchio

The global initiative to unleash the potential of wireless e-commerce added sixteen new members Tuesday including VISA and MasterCard. Radicchio members now include 28 companies committed to promoting ‘Public Key Infrastructure’ or ‘PKI’ solutions for secure transactions over wireless networks. Launched last Sept., Radicchio’s most recent members include Across Wireless AB, Baltimore Technologies, CYLINK Corp., Entrust Technologies, Gray Cell Inc., iD2 Technologies, Lucent Technologies, MasterCard International, Mobile Telephone Networks, NTT DATA Corp., Saraide, Synamic Limited, VeriSign Inc., Virgin Mobile, VISA International and Vodafone Airtouch. Initial members included Sonera SmartTrust, Gemplus and EDS. Radicchio is the also exclusive sponsor of the conference “Wireless E-Commerce – Clearing the Road for Global Expansion,” which gets underway tomorrow at the Olympia Conference Centre in London.

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Marriott – AmEx

Marriott International and American Express have teamed up for a joint NCAA basketball promotion. Each Marriott guest who charges their stay to an AmEx card between now and Mar. 31 is automatically entered to win a grand prize VIP trip to the ‘2001 Final Four’ in Minneapolis next year. For each day of the promotion, Marriott will give away 10,000 ‘Rewards Points’ or ‘Miles’ and American Express will give away 10,000 ‘Membership Rewards Points’. An additional January bonus entitles one lucky winner who stayed in a Marriott property this month to 100,000 Marriott ‘Rewards Points’ or ‘Miles’ and 100,000 ‘Membership Rewards Points’ from AmEx.

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E*Trade & OPC

E*TRADE Group and Official Payments Corp. announced Tuesday a strategic alliance in which the two companies will cross-market and jointly promote services to each other’s customer bases. Last year E*TRADE invested $5 million in Official Payments Corp. prior to OPC’s IPO. The first phase of the alliance involves a marketing program to promote each other’s products during this tax season. As part of the program, Official Payments will be a featured content provider in the E*TRADE tax center on the E*TRADE website, and E*TRADE will be the preferred online brokerage partner of Official Payments Corporation on the OPAY website.

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Pearle Vision Goes Omni 3200

VeriFone, a division of Hewlett-Packard Company, announced that Pearle Vision, a subsidiary of Cole National Corporation, is using the Omni 3200 payment terminal with SoftPay software to process credit-card transactions in all of its 450 corporate locations throughout the United States. Based on positive experiences with the solution in its corporate stores, Pearle Vision also plans to offer the Omni 3200 payment terminal to all of its 400 franchise locations nationwide. Fifth Third Bank/MPS, the largest processor of electronic transactions in the United States, is providing the solution to the leading vision-care center.

“Our organization chose VeriFone’s Omni 3200 because of VeriFone’s leadership reputation for providing reliable e-payment solutions to the market,” said Lisa Ross, manager of finance and treasury at Cole National Corporation. “We chose the Omni 3200 so that we could provide our customers with credit-card processing capabilities today and position ourselves to offer customers future payment services, such as check verification, debit-card acceptance and stored-value loyalty card programs.”

“Pearle Vision was looking for a cost-effective solution to streamline its transaction-processing operations on a national level, and the Omni 3200 solution was a logical choice,” said Joe Pappano, vice president, National Merchant Sales at Fifth Third Bank. “Both deployment and training for the solution were hassle-free, which means lower costs for the merchant because fewer calls will be made to our help desk for service and support.”

“It took our associates very little time to learn how to use the Omni 3200 after it was installed at our site,” said Ross. “The display makes it easy to use, and the menu prompts simplify the batch closing process. The compact terminal design with integrated printer takes up less counterspace, leaving more room for displaying our merchandise.”

“Pearle Vision’s selection of the Omni 3200 and SoftPay is another proof point about the ease of use and convenience that the terminal provides to businesses,” said Bud Waller, vice president of North American sales at VeriFone. “Merchants looking to improve their payment offerings are finding that the Omni 3200 solution allows them to enhance customer service while lowering their total cost of ownership over the life of the terminal.”

Cole National, including Pearle franchisees, has more than 2,700 locations in the United States, Canada, Puerto Rico and the Virgin Islands, as well as a 24 percent stake in Pearle Europe, which has 577 optical stores in the Netherlands, Belgium, Germany, Austria and Italy.

About the Omni 3200

The Omni 3200 is the first system in VeriFone’s new family of POS payment terminals that provides hardware and software flexibility to meet merchants’ current and future needs. The Omni 3200 is a sleek, compact POS payment terminal with a fast, integrated thermal printer designed to speed up transactions and lower the total cost of ownership, while occupying less counterspace than comparable solutions. The large graphical display and familiar ATM-style, screen-addressable keys provide a simple, familiar interface to improve clerk operation and reduce merchant training and help-desk costs. Through its modular design and Flash memory, upgrades can be deployed and terminals can be managed remotely, eliminating the need for additional on-site maintenance.

The Omni 3200 features SoftPay, VeriFone’s premier software payment application, which supports current and future requirements for credit, debit, check, EBT and loyalty applications. SoftPay’s intuitive and comprehensive reporting system improves and simplifies money management.

About VeriFone

VeriFone ([http://www.verifone.hp.com][1]), a division of Hewlett-Packard Company, is the leading global provider of secure electronic-payment solutions for financial institutions, merchants and consumers. The division has shipped more than seven million electronic-payment systems, which are used in more than 100 countries.

About HP

Hewlett-Packard Company — a leading global provider of computing and imaging solutions and services for business and home — is focused on capitalizing on the opportunities of the Internet and the proliferation of electronic services.

HP plans to launch Agilent Technologies as an independent company by mid-calendar 2000. Agilent consists of HP’s test and measurement, semiconductor products, chemical analysis and healthcare solutions businesses, and has leading positions in multiple market segments.

HP has 83,200 employees worldwide and had total revenue from continuing operations of $42.4 billion in its 1999 fiscal year. Information about HP, its products and the company’s Year 2000 program can be found on the World Wide Web at [http://www.hp.com][2].

[1]: http://www.verifone.hp.com/
[2]: http://www.hp.com/

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TSYS 2000

Total System Services forecasted a net income increase of 20% in 2000 despite the anticipated loss of one of its largest customers, AT&T Universal Card Services, which will be taken in-house by Citigroup. TSYS reported Tuesday that net income and revenues for the 1999 increased 25.1% to $68.6 million, up from $54.8 million for 1998. Net income for the fourth quarter increased 14.2% to $20.3 million, up from $17.8 million, for the same period last year. The increase in net income for the fourth quarter was limited by the growth in expenses related to conversion employment expenses; accelerated equipment lease expenses; occupying the new river front campus; a new card production facility; and the establishment of an international office in London.

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First USA Overhaul

Bank One revealed yesterday it will take a special charge of $725 million against fourth quarter 1999 earnings. More than half of the special charge is directly related to Bank One’s credit card division, First USA. Bank One says $185 million of the special charge involves the write-down of certain assets and other charges at First USA due to the projected earnings decline at the credit card division. The bank pointed to unprofitable marketing and affinity deals and interest-only strips of securitized loans as contributors to the problem. Another $200 million of the special charge is related to the early adoption of the Federal Financial Institutions Examination Council’s new consumer credit guidelines. Of that, $176 million represented an increase in provisions for credit losses, reflecting the new guidelines for consumer credit charge-offs. An additional $21 million of non-interest expense for credit card fraud losses is related to the new guidelines requiring a shorter time frame for recognizing fraud losses. As part of its recovery program Bank One projected yesterday it will reduce attrition from 17% to 13% and reduce expenses by 15% at First USA. However profits at the credit card division are expected be off by 30% to 35% for year 2000. Pre-tax credit card return on outstandings may decline to 1.00% in 2000 compared to 2.50% in 1999. Bank One also indicated card outstandings may drop by as much as 5% this year to around $65 billion. Despite the overhaul plans, Fitch IBCA lowered the long-term credit ratings for Bank One yesterday and dropped its rating of First USA from ‘B’ to ‘B/C’. Standard & Poor’s and Moody’s took similar actions.

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LVD for VISA Cash

VendTek Systems Inc. announces that it has received certification from Visa International of Miami, Florida, USA., for its smartcard load and vend device. This certification is the culmination of over 15 months of development work, undertaken in close co-operation with Visa, in conceiving, designing, developing and testing a sophisticated, self serve smartcard transaction station. “Visa Cash(TM)” customers in Latin America will be able to load cash onto their smartcard from a credit card, debit card, associated bank account, or through a cash deposit directly at the automated station. Customers will also be able to check their electronic-purse cash balance, review recent transactions, or even purchase a smartcard directly from the station. The LVD(TM) is VendTek’s purpose built solution for Visa International member banks in Latin America wanting to implement a full featured, automated distribution and load network for smartcards.

Smartcards are electronic-purses designed to hold cash or cash equivalent value such as transit credits. Smartcards are intelligent cards that contain a computer chip directly embedded on the card.

VendTek Company President, Paul Brock, comments:

“Visa International’s certification of our smartcard terminal represents a major milestone for VendTek. It is also the first self serve load from cash device certified by VISA International for the TIBC v1.0 smartcard operating system, used by VISA in Latin America. Concurrent with this certification, the Company has already received inquiries from two Visa member banks in Latin America, seeking to purchase LVD(TM) units for pilot testing. The market for this product in Latin America alone is huge. The LVD(TM) is highly sophisticated, secure and flexible. It can be expanded to include other smartcard based products and applications, such as transit, amusement, government social security, university programs and more.”

VendTek Systems Inc., through its wholly owned subsidiary VendTek Industries Inc., specializes in developing automated transaction systems, network and host system software, and electronic vending system solutions, for major Canadian, US and international corporations. VendTek has produced solutions for companies in the pre-paid long distance, smartcard, lottery, postal, and transit industries and prepaid cellular.

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E-Debt.com

Another debt exchange marketplace is under development. Akron, OH-based E-Debt Exchange said Tuesday it plans today to launch e-debt.com in March. E-Debt.com says it will offer a real-time exchange of consistently formatted, up-to-date debt portfolios. The site will also offer the latest news and developments in the debt-trading industry. The site’s ‘Just-in-Time-Scrub’ uses the latest available information to eliminate uncollectable debt resulting from bankruptcy, death and bad address information. In addition, debt portfolios posted on the site can be sold in three ways: at price, at auction or through private online negotiations.

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ActivCard Investment

Schlumberger today announced that its Test & Transactions business unit has made a strategic investment in ActivCard S.A..

The $3 million investment, subject to February 9, 2000 approval of ActivCard’s shareholders, provides Schlumberger with 174,825 newly issued shares of ActivCard stock at $17.16 per share. Separately, ActivCard will nominate Irwin Pfister, executive vice president of Schlumberger, to its board of directors, subject to approval by ActivCard shareholders at its annual meeting planned in May 2000.

“ActivCard’s digital identity technology is a strategic component in the Schlumberger smart card-based corporate ID solution for physical and network access, which the company began implementing in five key international locations in 1999 using an internal LDAP directory and Entrust Technology’s PKI technology,” said Ashok Belani, vice president of Business Development at Schlumberger Test & Transactions. By delivering smart card-based digital identity to ensure user authenticity, the companies’ e-business systems provide secure access control, user authorization, data integrity, data confidentiality, and non-repudiation. Schlumberger has been providing smart cards to ActivCard for several years.

ActivCard is a key partner to Schlumberger in the provision of corporate ID security solutions.

About ActivCard

ActivCard S.A. (EASDAQ: ACTV) develops, markets and supports software and related products that provide or enable authentication, electronic certification and digital signatures for use on the Internet or in network systems, services and applications. ActivCard has corporate headquarters in Fremont, CA; Suresnes, France; and Singapore. Further information is available at (510) 574-0100, e-mail: info@activcard.com and web site: [www.activcard.com][1].

About Schlumberger

Schlumberger Test & Transactions provides smart card-based solutions; semiconductor equipment and services; and corporate IP and network solutions to customers throughout the world. It is a business unit of Schlumberger Limited, an $11.8 billion global technology services company. Additionally information is available at .

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

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