Providian in KY

Providian Financial announced this morning plans to open a new operations center in Louisville, Ky., to support the growth and expansion of the company’s consumer lending businesses. This is the company’s fifth expansion in 1999 and comes only one month after the State of Kentucky offered Providian preliminary approval for tax credits totaling $20 million for one thousand new jobs the company expects to create there in the next two years.

“The strong growth of the Company’s businesses has created the need to open an additional operations center. We are excited to be expanding our operations in the Louisville Metropolitan area,” said Providian Chairman and Chief Executive Officer Shailesh J. Mehta, “and as we grow, we are happy to be part of Kentucky’s economic development efforts.”

The new operations center will be Providian’s second in Kentucky. The company has had an established presence in Louisville since 1995, and currently employs 500 people there. Expected to open in the fall of 1999, the new office will comprise 90,000 square feet of leased space at the Hurstburne Green Office Park. The majority of that space will be devoted to operations for Providian’s credit card business and the company’s wholly-owned subsidiary, First Select Corporation. The remaining space will serve as a 5,000 square-foot training facility for the new sales, telecredit, and collections personnel who will staff those operations.

Today, Providian employs more than 8,000 people nationwide. Since becoming a public company in June 1997, they have created more than seven jobs per day. So far this year, the company has established new operations facilities in Pleasanton and Oakland, Calif.; Arlington, Texas; and London, aggregating approximately 350,000 square feet of space. Providian Financial Corporation

([http://www.providian.com][1]) is a leading provider of lending and deposit products to customers nationwide and now offers credit cards in the United Kingdom. Providian serves a broad, diversified market with loan products that include credit cards, home equity loans, secured cards and membership services. With $18 billion in assets under management and over 10 million customers, Providian is committed to providing 100% customer satisfaction. San Francisco-based Providian Financial is one of the ten largest bankcard issuers in the nation, and in 1998 ranked as the seventh best performing stock in the S&P 500 and the single best performing stock in the S&P Financial Composite Index.

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

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Mellon ACH Pilot

Mellon Global Cash Management announced Thursday it processed its first live cross-border transaction on July 23, 1999, through a pilot that allows the origination of Automated Clearing House (ACH) transactions to corporate and consumer customers in Canada. Mellon is the first financial institution to initiate payments to Canadian consumers under the pilot.

Sponsored by the Federal Reserve Bank of Minneapolis, the pilot allows participating banks to originate debits or credits to Canada by taking advantage of the existing ACH network and its file formats.

“Processing the first live transaction under the cross-border pilot is a significant accomplishment for Mellon,” said Robert W. Stasik, executive vice president and head of Mellon GCM. “It provides an opportunity to expand the level of service to our customers by exploiting channels already in place and augments our long-standing capability to deliver payments globally in a cost- effective manner.”

Through the pilot, customers can send cross-border transactions to participating U.S. banks which, in turn, send the items to the Minneapolis Federal Reserve with normal activity. The Fed recognizes the items as cross- border and routes the transactions to the Canadian gateway operator, Toronto Dominion Bank, which converts them to Canadian dollars and routes them to appropriate Canadian banks for posting. The entire process takes only approximately one day, the same as a domestic ACH transaction.

“We are now able to electronically deliver payments to our pensioners living in Canada,” said Michael Fallon, controller of the Board of Pensions of the Presbyterian Church (USA), whose beneficiary received the first payment. “It has increased efficiency by allowing us to originate payments through Mellon using standard, domestic ACH file formats and our existing benefit payment software.”

In a separate pilot sponsored by The Cross Border Council of the National Automated Clearing House Association, Mellon will play a role in a multiyear effort to develop a global ACH network. Tentatively called the Worldwide Automated Transaction Clearing House (WATCH), the pilot will provide guidelines and a communications network by which batch payment transactions can be delivered from one country’s clearing house to another country’s. Mellon is one of 33 international banks to participate.

“The global pilot will play an important role in the future of international ACH transactions,” said Michael W. Anderson, director of Mellon GCM’s Customer Solutions Center. “Our goal is to develop the capability to easily deliver batch payment transactions to and from virtually any country.” Mellon Global Cash Management, an industry leader known for its innovation and expertise, designs complete solutions through its comprehensive line of cash management services to meet the specialized treasury needs of middle market to large multinational corporations, government agencies, nonprofit organizations and financial institutions.

A broad-based financial services company with a bank at its core, Mellon Bank Corporation (NYSE: MEL) ranks among the nation’s largest financial services companies in market capitalization. With approximately $2.4 trillion in assets under management, administration or custody, including approximately $415 billion under management, Mellon provides a full range of banking, investment and trust products and services to individuals and small, midsize and large businesses and institutions. Its mutual fund companies, The Dreyfus Corporation and Founders Asset Management in the United States, and Newton Management Limited in the United Kingdom, place Mellon as one of the world’s leading managers of mutual funds. Mellon also is a global leader in benefits consulting through its Buck Consultants, subsidiary in New York. Headquartered in Pittsburgh, Mellon’s principal subsidiary is Mellon Bank, N.A.

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IBM Smart Cards

IBM and IC One, announced a smart card partnership yesterday, including plans for reciprocal licensing agreements and revenue sharing arrangements. IBM also secured the option to obtain an equity position in IC One. In joint technical development for two-and-a-half years, IC One and IBM built a complete open smart card architecture solution, supported by a robust back-end, data-management system, powered by an IBM DB2 database. The system provides smart card Plug-N-Play compatibility. Plans for continued joint development rollout schedules and strategies are underway.

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P-Card Growth

VISA says a recently commissioned study of purchasing managers and CFOs shows the number of firms using internet-based software for procurement has grown by nearly 50% from the previous year. The survey also found that, of the 57% of companies currently engaged in electronic purchasing, 32% are already using their purchasing card to pay for goods and services ordered electronically, and a strong 57% indicated their intentions to do so in the future. Surprisingly, those companies that are not currently engaging in electronic purchasing are not necessarily put off by the steep up-front costs associated with such a system, as only 14% cite this factor as an inhibitor. Rather, 45% of companies cite lack of senior management support as the reason they are not making purchases electronically. VISA’s Market Sizing Research Study, released in January, projects the worldwide market for commercial e-commerce will grow to approximately $1.1 trillion by 2003, with the U.S. accounting for more than 58% of that volume.

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NextCard 2Q/99

Despite a 263% increase in revenues and beating analysts’ projections, NextCard continued to get hammered in the stock market yesterday. NextCard’s common stock closed at $22.50 per share inching close to its IPO price of $20.00 share. NextCard’s stock opened at $33.50 on May 14 and climbed to $50.00 per share before free-falling this week. Yesterday NextCard released its second quarter earnings report which shows that revenues for the second quarter were $3.6 million, a 263% increase over revenues of $1.0 million for the first quarter. By comparison, NextCard generated $1.2 million in revenues for the full year of 1998. Total customer accounts increased to approximately 85,000 at June 30 from approximately 55,000 at March 31. Since launching the ‘NextCard VISA’ in Dec. 1997 the company has processed 2 million applications for its online credit card products. The delinquency rate (30+ days) on total managed loans was 1.2% for the second quarter, compared with 1.0% as of March 31. The annualized net charge-off rate for managed loans increased to 1.3% for second quarter 1999, compared with 0.9% for first quarter 1999.

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Wachovia Campus Card

Wachovia Bank was named Wednesday as the primary bank for the ‘UNC One Card’, the official student and employee ID card at the University of North Carolina at Chapel Hill. Beginning this fall, students, faculty and staff will be able to add optional Wachovia banking services to their campus ID cards. The program offers access to 24,000 students and 11,000 employees. Yesterday’s announcement brings to more than 100,000 the number of students, faculty and staff members who will have access to Wachovia through campus card programs in the Southeast. Wachovia also will introduce campus card programs at Georgia Perimeter College in metropolitan Atlanta and Mercer University in Macon, Ga., this summer. Early next year, a program will begin at North Carolina A&T University in Greensboro, and Wake Forest University in Winston-Salem, N.C., is scheduled to introduce its program in the fall of 2000. Wachovia already has campus card relationships with Clayton College & State University in Morrow, Ga., and Virginia Commonwealth University in Richmond.

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Voyager Card Sold

U.S. Bancorp is acquiring Voyager Fleet Systems, Inc. from Associates First Capital. Voyager Fleet Systems provides comprehensive fleet management information services to corporations and is the leading provider for state and federal government agencies that operate large fleets of cars, light trucks and vans. Voyager facilitates payments and provides data and electronic reporting through the use of fleet credit cards. Voyager serves more than 765,000 vehicles and is accepted at more than 145,000 fueling and maintenance locations nationally. Transaction volume for this year is estimated to be approximately $580 million, an increase of 244% from 1998. U.S. Bancorp currently issues co-branded ‘Voyager’ cards to the federal government and corporate sector. The acquisition is pending regulatory approval and is expected to close next month.

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US West e.card

First USA has taken its e.card to the co-branding level. U S West and First USA rolled-out the ‘U S WEST e.card Platinum VISA’ card yesterday. The program offers cardholders a 5% cash-back reward for online purchases made at more than 20 Internet merchants including Amazon.com, Audiobookclub.com, CDnow.com, EToys.com, FlowersUSA.com, Garden.com, Outpost.com, SharperImage.com, ValueAmerica.com, Virtual Vineyards and more. The ‘U S West e.card’ also offers a local, long-distance and international calling card feature with step-by-step dialing instructions printed right on the back of the card. First USA also offers cardholders online access to account information. The no-annual-fee card offers a 3.9% fixed APR for the first five months on purchases and balance transfers, followed by a 9.99% fixed annual percentage rate. U S West has 25 million customers nationwide.

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Theater Smart Cards

The Pathways Group, Inc. announced this morning that it has signed a Memorandum of Understanding with SmartCard Solutions, inc., a privately held company based in Aspen, Colorado. Under the terms outlined in the Memorandum, Pathways and SmartCard Solutions will collaborate on the definition and implementation of a pilot project for a major theater chain. It is anticipated that the integration of the respective technologies of these two companies will result in a business solution that will deliver both services and products that have been unavailable in the marketplace to date. These include a fully integrated ticketing solution involving both attended and unattended vending along with Smart Card access.

Both Pathways and SmartCard Solutions have independently demonstrated their expertise in ticketing and smart card solutions in venues such as ski areas, amusement parks, movie theaters, destination resorts, and transportation services. Integrating the complementary technologies of both companies into a joint business solution is expected to result in a new and unique level of smart card products and services to the marketplace. Preliminary discussions indicate that the new systems will provide remote and unattended ticketing, customer loyalty, stored value, financial integration and the capability to interface with existing enterprise sales and accounting systems.

The Pathways Group, Inc. is a leading U.S. developer of smart card-based technologies offering smart card and transaction processing solutions for commerce, retail, education, recreation, amusement, government, and transaction. The Pathways Group also designs and manufactures SPRINTICKET unattended ticketing dispensers. Every SPRINTICKET systems operate on state-of-the-art hardware platforms using standard Microsoft operating systems and an SQL database. In addition to accepting all major credit cards, SPRINTICKET dispensers are designed to accept and recharge smart cards. Pathways perform the credit card processing for all SPRINTICKET transactions, including authorization at the time of purchase and end-of-day account reconciliation. SPRINTICKET dispenser are currently installed at ski areas, amusement parks, and transportation services across the United States.

SmartCard Solutions, Inc. is a Colorado corporation with offices in Aspen, Denver, and Colorado Springs. It is a technology-based company with expertise in enterprise systems design and development, telecommunication, financial systems and application development for ticket dales access control and rental/retail for destination resorts and campus style environments.

SmartCard Solutions focuses on delivery of turnkey solutions and services based on multiple year partnering relationships with its clients rather that typical vendor-vendee relationship. Through its technology partnerships, SmartCard Solutions offers a migration path to a higher level of management information and guest enhancement services facilitated through the application of bar codes, radio frequency, and smart card technologies. SmartCard Solutions services multiple vertical market including ski and golf resort, special events, cruise lines, college and corporate campuses.

MR Jay D. Lussan, CEO of SmartCard Solutions, Inc., was quoted as saying, ‘We at SmartCard Solutions, Inc. are excited about and anticipate significant market impact from the alliance with The Pathways Group, Inc. The integration of our two companies’ combined technologies and services for this initiative will give us a total enterprise management solution heretofore unseen in the marketplace. We look forward to expanding this technology-based solution into additional vertical markets, including destination winter and summer resorts, movie theaters, campus environments, and special events.’

Mr Bob Haller, Executive Vice President of The Pathways Group, Inc., added, ‘Our teaming with SmartCard Solutions in this endeavor is a natural progression of both groups core technological and market solution offerings, culminating in what we think will be new, advanced systems which will have a significant impact in movie theater operation, as well as other markets. We have been looking for some time to find a complementary company, both technically and philosophically, and a unique business opportunity which we can combine to develop and implement batter, more advanced solutions which take advantage of various technological advancements we have been putting together the past several years. We are very excited we have found those pieces and anticipate great acceptance and success in bringing new enterprise solutions to our chosen markets.

The Pathways Group, Inc., which recently celebrated its 12th anniversary, provides clients with innovative and unique solutions for securely creating, capturing and processing data and electronic transactions using customer application software and hardware systems. The company, established in 1987 by Carey Daly, has evolved into a leader in the development of custom software and hardware for electronic banking, data and transaction processing, and smart card applications. Pathways’ creation of proprietary ‘back office’ systems allows for the capture and processing of data and transfer of funds via ‘ACH’ protocol, the standard used in the banking industry for transfer of funds in retail, medical and institutional environments.

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