Under 20 Card

While First USA targets the 50+ group with its ‘Reader’s Digest’ card and American Express goes after the GenX and GenY segment with its new ‘Blue’ card, a San Francisco-based company announced Tuesday an Internet payment card for teens. Cybermoola Inc. premiered its ‘Cybermoola’ card yesterday which combines the features of a pre-paid phone card and the benefits of an online cash account. Teens activate their ‘Cybermoola’ cards by filling out a brief form at the Cybermoola web site. Upon completion of registration, they receive an account and PIN number. The card can then be used at participating e-merchant sites such as CelebritySightings.com, EZCD.com, Outletmall.com and SaulGoodman.com. The cards are available in denominations of $10-$500 and can be purchased and recharged online. As part of the charter launch, the company will be giving away 100,000 ‘Cybermoola’ Internet cash cards worth a total of nearly $2 million. The cards will be distributed between now and the end of October, distributed mainly to teens 13-18 years of age in select major markets including Atlanta, Boston, Chicago, Los Angeles and San Francisco. The sampling program will be conducted at a variety of teen-oriented events such as movies, concerts, school assemblies, and through email.

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Delinquencies Head South

Further confirming the downward trend in delinquencies, the ABA’s ‘Consumer Credit Delinquency Bulletin’ shows consumer credit loan delinquencies are at a four-year low. According to the report, released Tuesday, 3.33% of all accounts were delinquent in the second quarter, compared to 3.58% in the previous quarter. Second quarter credit card delinquencies, based on total dollars outstanding, dropped for the third consecutive quarter to 4.10% in the second quarter from 4.44% in the first quarter of 1999.

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PayWare Net in VSEC

Trintech, a leading provider of secure electronic payment solutions, Tuesday announced the implementation of its PayWare Net as part of the Visa Secure Electronic Commerce program in Peru. The Trintech PayWare Net product provides Visanet del Perº, the country’s single merchant acquirer and its merchant affiliates, an electronic commerce solution that allows them to process Visa transactions in a secure way utilizing the SET (Secure Electronic TransactionTM) and SSL (Secure Sockets Layer) protocols. The first implementation of the VSEC solution was with Telefonica de Peru, the largest telephone company in Peru, which began processing transactions in early September.

The ambitious VSEC in Peru initiative enables Visa cardholder and merchant authentication by means of SET digital certificates Currently, five of Peru’s largest banks – Banco de Cr©dito del Perº, Banco Santander, Banco Continental Interbank, Banco Sudamericano y Citibank NA – are actively participating in the project and facilitating electronic payment transactions using Trintech technology, including PayWare Net and NetWallet. To ensure security, Visanet del Peru chose the SET standard developed by Visa in conjunction with leading security and technology companies.

“Trintech’s PayWare Net met our stringent demands for scalability, performance and security,” said Bruno Bertolotti, general director of Visanet del Perº. “We are quickly rolling out our scheme to incorporate dozens of merchants and thousands of Peruvian Internet users. PayWare will enable us to handle the rapid volume increase and maintain our high standards of security and service,” added Bertolotti.

“This is a significant development for secure electronic commerce, not only in Peru, but the region as well,” said Jurgen Wassmmann, manager of Visa International Latin America and Caribbean Region. “The decision to use the SET protocol for online transactions is a move in the right direction and we are confident that this initiative will also encourage other banks in the Andean Region to adopt SET.”

“Peru is a country that has shown great willingness to embrace the Internet,” said John McGuire, CEO of Trintech. “The implementation of a secure e-commerce pilot using proven payment technology from Trintech, backed by trusted brand such as Visa, will help Peruvian banks, merchants and consumers leapfrog legacy technology and trade with confidence on the Internet.”

About PayWare Net

PayWare Net is a highly flexible, merchant payment platform for the acceptance of electronic payment transactions in the physical, remote and virtual environments. With PayWare Net merchants and customers can utilize multiple card electronic payment types (credit, debit, chip, Internet), multiple card acceptance channels (physical, remote, Internet), a variety of currencies and many communication and security protocols. Other features include:

o Extensive range of security features with the goal of preventing Internet card fraud:

o Scalable payment technology designed to scale to increased eMerchant sales volume

o Merchant storefront integration

o Sophisticated payment features

o ERP Integration Support

o Shipping/Tracking Integration Interface allows for more streamlined customer service

o Interoperability

o Business-to-Business eCommerce

About Visa As the “World’s Best Way to Pay,” Visa is the leading payment brand and the largest payment system in the world with more volume than all other major payment cards combined. Visa plays a pivotal role in advancing new payment products and technologies to benefit its 21,000 member financial institutions and their cardholders. Visa has more than 70 smart card programs in 33 countries and on the Internet, with 23 million Visa chip cards, including 8 million Visa Cash cards. Visa is pioneering SET Secure Electronic Transaction? programs to enable and advance Internet commerce. There are over 850 million Visa, Visa Electron, Interlink, PLUS and Visa Cash cards, which generate more than US$1.4 trillion in annual volume. Visa-branded cards are accepted at over 17 million worldwide locations, including at more than 500,000 ATMs in the Visa Global ATM Network. Visa, Latin America and Caribbean Region, Internet address is [www.visalatam.com][1].

About Visanet del Peru

Visanet Peru is a member of the acquiring group formed by the member institutions of Visa in Peru and by Visa International to handle, with exclusivity, the Visa card payments at their merchants. It has been operating since 1997 and has 15,000 merchants located in 60 cities within Peru. Its network of PoS terminals (Point of Sale) process 90% of electronic transactions in the country. Visanet Peru has 10 branches in other important cities in Peru to facilitate the needs of its member merchants and its member institutions with the Visa brand. Visanet can also be contacted through its Web site at [www.visanet.com.pe][2]

About Trintech

Founded in 1987, Trintech is a leading provider of secure electronic payment solutions for card-based transactions in the physical world and over the Internet. The company offers a complete range of payment software products for credit, debit, commercial and procurement card applications, as well as being a world leader in the deployment of payment solutions for Internet commerce that are fully SSL- and SET-compliant. Trintech’s range of scalable open systems architecture solutions for UNIX® and Windows NT? platforms covers consumer, merchant and financial institution requirements for physical payments and the burgeoning world of electronic commerce. Trintech can be contacted at 2105 South Bascom Avenue, Campbell, CA 95008, USA (Tel: 408 879 1884). Trintech can be reached on the Web at [http://www.trintech.com][3].

[1]: http://www.visalatam.com/
[2]: http://www.visanet.com.pe/
[3]: http://www.trintech.com/

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Hot Teen Segment

More than 10 million, or two-thirds of all U.S. teen net users will make a purchase online by the year 2002, a dramatic increase from the 2 million (22%), estimated for 1998 and projected 1999 year-end figures of 3.9 million (35%), according to a new study by eMarketer. The ‘eRetail Report’ shows the number of teenagers (aged 13-17) who actively use the web will rise from 11.1 million in 1999 to 15.3 million in 2002, teen users as a percent of all net users in America will shrink from 16% in 1999 to 14.8% in 2002. The report also indicates that while teens as a group have significantly greater access to the web than their adult counterparts, they are currently less likely than adults to actually make purchases online. Teens will spend $161 million online in 1999, representing less than 1% of total U.S. online spending. Teen online spending will climb to over $1.4 billion by 2002, representing 2.2% of total consumer e-commerce.

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LendingTree to MoneyTree

NC-based LendingTree, Inc., announced Tuesday that the company has completed its third round of financing totaling $50 million in private equity capital. The group of corporate and institutional investors, led by Capital Z Financial Services Fund II, L.P, includes GE Capital, The Goldman Sachs Group, Inc., Marsh & McLennan Capital and priceline.com. The eye-popping deal is one of the top Internet funding deals this year. This year, LendingTree has grown its number of lenders on the network from nine to more than 80. LendingTree currently processes over $65 million a day in loan demand from consumers seeking home mortgages, home equity, automobile financing, personal loans and credit cards. LendingTree said it will use the fresh capital to intensify marketing efforts specifically focused on brand building among consumer and business audiences.

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Holiday Sales

Consumers are expected to spend $6 billion online during the months of November and December, up from $3.1 billion spent during the same period in 1998, according to figures released yesterday by Jupiter Communications. Of that $6 billion, $5 billion will be spent on products, $1 billion on travel services. Overall online shopping is expected to grow to $78 billion by 2003. Jupiter expects that 10 million online users will begin shopping this year. However, the research firm cautioned that a Jupiter consumer survey of more than 2,100 online shoppers fielded immediately after the 1998 holiday season found that the overall level of online shopping satisfaction dropped from 88% in the second quarter of 1998 to 74% in the fourth quarter of 1998.

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Teachers Card

Discover Financial Services announced Tuesday the launch of the ‘Discover Educators Card’ which rewards teachers with a 5% special ‘Cashback Bonus’ award for purchases made at merchant partners in the ‘Discover Educators Card’ network. The reward is in addition to the annual ‘Cashback Bonus’ award of up to 1%. Charter partners include Zany Brainy and Ramada Franchise Systems. Zany Brainy is an 8-year old multimedia educational superstore for kids with 95 stores in 25 states. As part of the new program, Discover will donate a portion of each ‘Discover Educators Card’ transaction to Communities In Schools, Inc.

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ATM-X in Rent-Way Pilot

Cash Technologies, Inc. announced Tuesday that it has signed an agreement with Rent-Way, Inc., a leader in the rent-to-own industry, to install its multi-function ATM-X machines at Rent-Way store locations in the Western United States.

Driven by Cash Tech’s EMMA(TM) transaction processing platform, the ATM-X machines will provide multiple e-commerce functions for the very first time on an ATM, representing a major milestone in the ATM industry’s 30 year history. With this new system, Rent-Way customers will be able to easily cash checks, pay bills, get prepaid phone cards and other valuable services, in addition to standard ATM functions, all from a single ATM in the store. In addition, the machine’s bill acceptor will permit the purchase of products and services from the machine with cash. This is expected to be of particular value to Rent-Way’s customers, most of whom make their weekly rental payments in person using cash.

“We are looking forward to demonstrating the commercial viability of ATM-X and its supporting system, the EMMA(TM) transaction processing platform, in a retail environment,” said Bruce Korman, Chairman and CEO of Cash Technologies. “Our technology, the result of intensive development efforts and partnerships with leading electronic commerce firms, will harness the existing ATM network to make non-banking and Internet commerce services a convenient reality at ATMs for the first time.”

“We’re pleased to be able to participate in the first commercial demonstration of the ATM-X,” said Jeff Conway, Chief Financial Officer of Rent-Way, “With more than 300,000 customers visiting our stores every week, we believe that this new system can leverage our existing operations to provide new services and valuable additional revenue.”

A pilot consisting of 3 or 4 stores is expected to be installed in November at locations to be determined and, if successful, shall be expanded throughout the rest of the Rent-Way chain over the next 18 months.

About Rent-Way

Rent-Way operates 866 stores in 35 states under the brand names RentWay and Home-Choice Rentals. Rent-Way rents quality, brand name merchandise such as home entertainment equipment, furniture and major appliances on a week-to-week or month-to-month basis under full service rental-purchase agreements that permit the customer to acquire ownership of the merchandise at the conclusion of an agreed upon rental period.

About Cash Technologies

Cash Technologies Inc. ([http://www.cashtechnologies.com][1]) develops and markets innovative e-commerce kiosks and systems, including the EMMA(TM) transaction processing software, the multifunction ATM-X(TM) automated teller machine (ATM) and the CoinBank(R) advanced self-service coin counter. The Company also provides computerized cash processing services to banks, armored carriers, rapid transit agencies and other cash-intensive businesses.

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

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FDIC Shows 27% Drop in COs

Commercial bank earnings fell just short of a new record in the second quarter of 1999, according to preliminary data from the FDIC. Industry profitability remained strong, especially in banks’ domestic operations. Commercial banks earned $17.0 billion during the three months from April through June. Bank earnings were $1.0 billion lower than the record quarterly total of $18.0 billion in the first quarter, but were still the second-highest quarterly earnings ever reported by the industry.

“It may have not been the very best quarter ever, but as a bank regulator and insurer – who has to address problems and pay for bank failures – the FDIC welcomed it as the second best,” said Donna Tanoue, FDIC Chairman. Compared to the second quarter of 1998, industry earnings were up by $854 million (5.3 percent). For the first six months of 1999, commercial bank earnings totaled $34.9 billion, a $2.9 billion (9.1 percent) improvement over the same period in 1998.

Second-quarter results for the 8,675 commercial banks and 1,652 savings institutions that are insured by the FDIC are contained in the agency’s latest Quarterly Banking Profile, which is based on quarterly reports of condition and income filed by FDIC-insured institutions. The latest Profile analyzes trends in bank and thrift performance during the second quarter and for the first half of 1999. Highlights follow.

Commercial Banks

The decline in bank earnings from the first quarter was primarily attributable to higher expenses at one large institution that was acquired during the second quarter. Noninterest expenses were $1.2 billion (2.4 percent) higher than in the first quarter, and all but $52 million of the increase was caused by merger-related expenses at that one institution.

Industry earnings also were held down by lower income from international operations and lower trading revenue. Net income from international operations totaled $1.6 billion, down $742 million from the first quarter and $450 million less than a year earlier. Income from trading activities fell to $2.2 billion in the second quarter, from a record $3.6 billion in the first quarter. In the second quarter of 1998, banks’ trading activities generated $2.5 billion in revenue. Earnings strength was evident in fee income, which rose by $1.4 billion (9.0 percent) from the first quarter. Fee income was up by $3.4 billion (26.8 percent) from a year ago. Earnings also benefited from lower expenses for loan losses. Banks set aside $4.9 billion in provisions for future loan losses; that amount is $490 million (9.0 percent) less than in the previous quarter and $172 million (3.4 percent) less than in the second quarter of 1998.

The industry’s annualized return on assets (ROA), a fundamental yardstick of industry profitability, was 1.25 percent in the second quarter. That ROA is the same as a year ago, but down from 1.32 percent in the first quarter of 1999. The second quarter of 1999 marks the 26th consecutive quarter — dating back to the first quarter of 1993 — that the industry’s ROA has been above one percent. Almost two out of every three banks — 63.6 percent — reported an ROA of one percent or higher in the second quarter.

Asset-quality indicators showed signs of improvement during the quarter. In addition to the decline in provisions for loan losses, both noncurrent loans and net loan charge-offs improved. Net charge-offs totaled $4.6 billion, down $424 million (8.5) percent from the first quarter and $197 million (4.1 percent) lower than in the second quarter of 1998. Noncurrent loans (those 90 days or more past due or in nonaccrual status ) fell by $1.1 billion (3.3 percent), but ended the quarter $2.1 billion (7.1 percent) higher than a year earlier. The percentage of loans that were noncurrent fell from 0.99 percent to 0.94 percent, matching the all-time lows reached in the second and third quarters of last year.

The greatest improvement in asset quality occurred in consumer loans, especially credit cards. Net charge-offs on credit cards were $545 million (20.4 percent) lower than in the first quarter and $769 million (26.5 percent) less than a year ago. Loans to commercial and industrial borrowers were the only major exception to the trend of improving asset quality. Net charge-offs on loans to commercial and industrial borrowers were up by $269 million (26.6 percent) from the first quarter, and were $554 million (76.0 percent) higher than a year ago. Noncurrent commercial and industrial loans increased by $217 million (2.1 percent) during the quarter, and were up by $2.3 billion (29.2 percent) in the past 12 months.

Total assets of commercial banks rose by $58.0 billion during the quarter, following a seasonal decline of $31.5 billion in the first quarter. Through the first six months of 1999, industry assets have grown by only $26.5 billion, or 0.5 percent. Real estate loans increased by $26.9 billion (2.0 percent) in the second quarter, loans to depository institutions rose by $13.5 billion (13.0 percent), and commercial and industrial loans grew by $14.3 billion (1.6 percent). The quarterly increase in commercial loans was the smallest since the third quarter of 1997.

The number of insured commercial banks declined by 46 during the second quarter. One bank failed and 103 banks were merged into other institutions. There were 55 new banks added during the quarter. Six savings institutions converted to commercial bank charters, one commercial bank converted to a thrift charter, and two banks voluntarily liquidated. The number of commercial banks on the FDIC’s “Problem List” declined from 64 to 62 during the quarter.

Savings Institutions

Insured savings institutions reported $2.9 billion in net income in the second quarter. Those earnings are the second-highest quarterly total ever reported by the thrift industry, exceeded only by the $3.0 billion earned in the third quarter of 1998. Earnings were $180 million (6.7 percent) higher than in the first quarter and $54 million (1.9 percent) more than thrifts earned in the second quarter of 1998.

Strong growth in noninterest income and lower expenses for future loan losses were two of the main sources of earnings improvement. The industry’s ROA in the second quarter was 1.03 percent, an improvement from the 0.98 percent average of the first quarter, but below the 1.09 percent average in the second quarter of 1998. Larger thrifts enjoyed stronger profitability than smaller institutions; only 29 percent of all savings institutions had second-quarter ROAs above one percent.

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SCF Signs Up 15 More

The Smart Card Forum, a multi-industry organization working to accelerate the widespread acceptance and application of smart card technology, Tuesday announced that 15 new leading technology companies have joined the growing ranks of the Forum as Principal and Auditing Members. The addition of these newest members contributes to the continued record growth rate the organization has experienced since last fall. The new members include:

Principal Members:

* MCI Worldcom – [www.wcom.com][1] * Oberthur Smart Cards USA – [www.oberthurusa.com][2] * Wachovia Bank – [www.wachovia.com][3] Auditing Members:

* Collective Dynamics – [www.coldyn.com][4] * Dyncom – [www.d-c.com][5] * Entandem – [www.entandem.com][6] * K-Vell Consulting – [www.k-vell.com][7] * LaserCard Systems – [www.lasercard.com][8] * Logicon – [www.logicon.com][9] * Maosco – [www.moltus.com][10] * PaySys International – [www.paysys.com][11] * Racal Security and Payments – [www.racal.com][12] * SiVault, Inc. * Litton/TASC – [www.tasc.com][13] * Litronic – [www.litronic.com][14] “We are excited to see our 1999-2000 year start off with such a great addition to our member roster,” said SCF President and CEO Donna Farmer. “It is fulfilling to see these security and payment systems innovators participate with our other members in utilizing the wide range of information and resources that are available through the Forum. These new members are joining the nearly 200 companies from many different industries that make up the Forum, which will help us fulfill our goals of advancing smart card technology to have a more prominent role in the Internet economy.”

Each Principal Member is entitled to privileged access to The Smart Card Forum Consumer Research, other Forum sponsored research and documents, along with attendance at the Quarterly Meetings and work groups, Smart Card Forum Educational Institute programs, and the Annual Meetings.

* MCI Worldcom is a global business telecommunications company. Operating in more than 65 countries, the company is a premier provider of facilities-based and fully integrated local, long distance, international and Internet services. The common shares of MCI WorldCom stock trade on the Nasdaq National Market (U.S.) under the symbol WCOM.

* Oberthur Smart Cards USA is the North American division of Oberthur Smart Cards, France’s leading manufacturer of bank cards, Europe’s largest producer (over 80 Million microprocessor cards manufactured to date) and the world leader in micro-processor transaction cards.

* Wachovia Corporation is a leading bank holding company with Wachovia Bank, N.A., its principal subsidiary. At June 30, 1999, Wachovia had

$67 billion in assets and ranked 16th among U.S. banking firms. Additionally, Wachovia had total trust assets of approximately $133.8 billion under administration, including about $41.3 billion under discretionary investment management. Wachovia Bank, N.A. has more than 700 offices and 1,300 ATMs in Florida, Georgia, North Carolina, South Carolina and Virginia. Wachovia also is a leading corporate bank with business relationships in 50 states and global activity in 40 countries.

About The Smart Card Forum

The Smart Card Forum is a non-profit, multi-industry organization of nearly 200 members working to accelerate the widespread acceptance of multiple application smart card technology by bringing together, in an open forum, leading users and technologists from both the public and private sectors. The Smart Card Forum is the leading organization for education and awareness of topical issues associated with the use and adoption of smart card systems. The Smart Card Forum also operates the Smart Card Forum Educational Institute, the industry-leading course dedicated to providing smart card education that has set the standard in the industry. The curriculum is based on leading edge educational models and methodologies utilizing experienced instructors who are experts in the smart card industry. For more information about The Smart Card Forum, log on to the organization’s Web site at [www.smartcardforum.org][15].

[1]: http://www.wcom.com/
[2]: http://www.oberthurusa.com/
[3]: http://www.wachovia.com/
[4]: http://www.coldyn.com/
[5]: http://www.d-c.com/
[6]: http://www.entandem.com/
[7]: http://www.k-vell.com/
[8]: http://www.lasercard.com/
[9]: http://www.logicon.com/
[10]: http://www.moltus.com/
[11]: http://www.paysys.com/
[12]: http://www.racal.com/
[13]: http://www.tasc.com/
[14]: http://www.litronic.com/
[15]: http://www.smartcardforum.org/

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Over 50 Card

The demographic segmentation of the bank credit card industry is picking up steam following yesterday’s announcement that First USA and The Reader’s Digest Association have signed a co-branded credit card agreement. The deal will enable First USA to market a credit card to Reader’s Digest customer database of approximately 50 million names. The Reader’s Digest database is heavily weighted with consumers in the 50+ age group. The magazine says its strength among graying consumers with disposable income, and the range of interests that encourages them to obtain and use consumer credit vehicles, will be a boon for First USA. The initiative is the latest of three marketing relationships for financial services announced by Reader’s Digest. Last week, the company announced partnerships with Torchmark Corp. in the USA and Canada, and American International Group in 26 other nations for the marketing of various insurance products to Reader’s Digest customers. Ironically the October issue of Reader’s Digest features an article about ‘Credit Card Tricks’ in which First USA is cited as an example for playing games with interest rates and late fees.

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