Library Cards

Diebold will demo its ‘CS Gold’ product line and its ‘CSVT’ terminal this week in New Orleans. ‘CS Gold’ is a card-based transaction system that stores personal identification, account and stored value information on smart chip or magnetic stripe cards. The product line is part of Diebold Card Systems, which is used by more than 300 colleges and universities across the country. The ‘CS Gold’ system relies on a multi-function photo identification card that includes a memory chip, a magnetic stripe, or both, depending on the functionality required by the library. The card can also contain a barcode for use in legacy library applications. The ‘CSVT’ is an automated value load station that allows library patrons to purchase stored value cards that can be used for fee and fine payment, copier and printer charges, vending, PC or Internet access fees, or to purchase other services or materials. The value terminal resembles an automated teller machine with a card dispenser to dispense smart chip or magnetic stripe cards. Patrons can purchase a card by inserting $1, $5, $10 or $20 bills into the CSVT. Customers can also use the terminal to inquire about a balance or add value to an existing card. The same card can be reloaded with value many times.


Rate Hike?

The consensus continues to build that the Federal Reserve will boost interest rates tomorrow by at least 25 basis points, possibly 50 basis points. The rate hike will most likely force the Prime Rate to 8.00% or 8.25%. Since more than 80% of bank credit cards have variable interest rate structures, the Fed action will invariably raise card rates. Of the 400 million bank credit cards carrying variable rates, about 300 million are tied directly to the Prime Rate. (Other indices used by card issuers include LIBOR, T-bills and the Discount Rate.) The approximate 300 million Prime Rate-based cards represent nearly $300 billion in card receivables or outstandings. Therefore a 25 bp rise in the Prime Rate will generate a minimum of $750 million in additional interest revenue over the next year. A 50 bp jump will produce at least $1.5 billion in additional interest charges over the next twelve months. Tomorrow’s expected rate action is good news for issuers as it comes ahead of the start of the third calendar quarter, enabling issuers to pass on the new rates rapidly.


Citibank Prime Rate Quarterly
BankOne/FUSA Prime Rate Quarterly
MBNA Prime Rate Quarterly
Discover Prime Rate Monthly
Chase Prime Rate Monthly
Bank of America Prime Rate Quarterly
Capital One LIBOR Monthly
Fleet Prime Rate Quarterly
Household Prime Rate Monthly
Providian Fixed Rates NA
Source: CardTrak (


TPII Supports Visa Cash In Tokyo

IFS International announced that its TPII software has been licensed to provide the EFT management system to support the use of Visa Cash smart cards for Visa International’s large-scale smart card program in Tokyo, Japan.

Located in Shibuya, a major shopping and entertainment district of Tokyo, the program will initially allow cardholders to use disposable and reloadable Visa Cash cards and a multifunction card combining a reloadable Visa Cash function and a Visa Smart Credit application.

The TPII system in Shibuya is now in live production on behalf of Visa International and the Shibuya Smart Card Society whose members include 10 Visa member credit card companies and 10 Japanese banks. It is anticipated that 100,000 Visa Cash Cards and multifunction cards will be issued over an 18 month period and the cardholders will be able to make low-value purchases at over 2,000 locations in the district.

Mr. Hitoshi Kondo, Vice President of Visa International in Japan, stated, “IFS’ TPII system provided the functionality that was needed to allow our members’ Visa Cash card holders to conveniently reload currency on their cards. The TPII system also allowed members the freedom to select the load device manufacturer of choice providing access to customer operated reload machines suited for specific environments. We are pleased with the overall performance of the system and IFS’ willingness to participate in this project.”

IFS International, Inc. and Network Controls International, Inc. are divisions of IFS International, Inc. which has headquarters in the USA and subsidiary offices in the USA, UK, Singapore, Australia and Germany.

IFS International, Inc. develops, markets, and supports software products for the Electronic Funds Transfer (EFT) market. IFS International’s TPII suite of software products provide support for ATM, POS, network switches, smart-card, card management, bank teller platform, home banking and call-centre solutions. NCI, Inc. provides complementary products, such as NCI Business Centre, an enterprise-wide retail bank branch solution designed to deliver traditional and Internet/Intranet based transactions.


CardStore ATM

Yesterday at the Tecnobanca trade show in Mexico City, ICL introduced its ‘CardStore’ application for the ‘Fujitsu Series 7000’ automated teller machines, combining fourth-generation ATM and cash-dispensing capabilities with a fingerprint scanner. The technology is being installed in a manufacturing facility in Mexico and will provide employees access to cash from their paychecks. At the beginning and end of a work shift, an employee inserts a smart card in an electronic reader and their finger in a fingerprint scanner. to identify themselves, enabling employers to collect time and attendance information. At the end of a pay period, the employee can retrieve their cash from an ATM as needed.


Stock Deal Killer

CheckFree decided yesterday not close on its 3.8 million share secondary stock offering after watching its stock price free fall this week. CheckFree’s stock declined sharply on the news that three major banks were forming an e-bill routing service called ‘The Exchange’. CheckFree says it was stung by implications that it somehow managed to time the secondary offering to beat the banks’ announcement. However CheckFree insisted that none of the banks involved ever spoke to CheckFree about this effort nor indicated the formation of this group, nor gave any indication they intended to make an announcement of such an organization. The company says it does not need the funding from the secondary to complete its expanded Internet distribution strategy. CheckFree say it has sufficient resources to execute its plans, and they will do so with force.


Dime Chooses Opus

Online Resources & Communications Corporation, a leading provider of Internet and remote banking services, yesterday announced that The Dime Savings Bank of New York FSB, a $22 billion regional bank serving the greater New York City metropolitan area, has chosen Online’s Opus Bill Payment service for Dime’s Internet-based Online Banking program due to be launched later this year.

Dime becomes Online Resources’ second largest institutional client in terms of asset size and the largest to launch Online’s standalone bill payment service.

The Dime will link its Internet-based banking software with the Opus Bill Payment service, which was designed for institutions that have online banking consumer software and want to enhance it with a consumer bill pay service. Online Resources will implement the company’s established ATM network-based payments process through the NYCE ATM network. NYCE is one of more than 50 ATM networks, core processors and other financial technology companies to which Online has links through its EFT Gateway. Online will pay bills to virtually any payee that Dime customers designate, whether electronically or manually.

Amy Radin, executive vice president and chief marketing officer of Dime, said, “Online Resources’ consumer interface and bill pay mechanism match our customers’ needs extremely well. Moreover, their extensive merchant database means a higher percentage of our customers’ payments will be transmitted electronically. We also like Online’s pay-on-time guarantee because it means our customers can rest easily that a bill will be paid on a timely basis.”

Online Resources guarantees payment in two days if the payee accepts electronic funds, and five days if it accepts only checks. Currently, 54% of bills paid by Online Resources are paid electronically.

Dime’s customers will have their accounts debited in real-time. Customers will be dealing with a single account balance that is up to date at the time the transaction is scheduled. Overdrafts are minimized in this process, and the payee is guaranteed good funds. Real-time debiting also eliminates database duplication required with batch file online banking systems.

McLean, Va.-based Online Resources & Communications Corporation ( ) is a leading provider of privately-branded outsourced electronic commerce services to regional and community financial institutions. Online’s clients connect to its Internet financial hub to deliver its proprietary banking and billpaying services to their retail and small business customers. Complementary financial services, such as loan approval, insurance shopping, investment information and securities trading, are provided through Online’s Financial Service Center. Online also operates a fully integrated customer care and technical support center and provides consumer co-marketing support through its web site and direct marketing services. The company’s Opus services are fully integrated and operate substantially in real-time, for a powerful, single-source solution with a variety of electronic commerce capabilities. Online Resources was founded in 1989 and serves more than 325 financial institutions nationwide.

The Dime Savings Bank of New York, FSB ( ) is a regional bank serving consumers and businesses and has 100 branches located throughout the greater New York City metropolitan area. Directly and through its North American Mortgage Company subsidiary ( ), Dime also provides mortgage banking and selected consumer financial services throughout the United States. Dime is a wholly-owned subsidiary of Dime Bancorp, Inc.


Discover 2Q/99

Morgan Stanley Dean Witter reported yesterday a significant improvement in Discover’s delinquency and charge-off rates during the second quarter, boosting net income by 23%. (MSDW second fiscal quarter ended May 31, 1999.) Discover’s net charge-off rate dropped to 5.55% compared to 6.58% one year ago and delinquency (30+ days) declined to 5.94% from 7.07% last year. Net income soared from $171 million in 2Q/98 to $211 million for 2Q/99. Discounting the sale of the ‘Prime Option’, ‘SPS’ and ‘Bravo’ portfolios last year, Discover posted a net gain of $1.7 billion in receivables over the past twelve months. As of May 31, Discover held $32.8 billion in managed consumer loans compared to $32.1 billion for 1Q/99. Discover’s second quarter interest yield and interest spread stood at 14.39% and 8.81%, respectively. For MSDW’s complete second fiscal quarter report visit CardData ([][1])



Fitch Rates Metris

Fitch IBCA expects to assign its rating of `BB-‘ to Metris Companies Inc.’s (Metris) $150 million senior notes issue due 2006.

Fitch IBCA also assigns ratings of `BB’ to the multi-term $300 million revolving credit facility of Metris, and `BB’ to the long-term unsecured certificates of deposit of Direct Merchants Credit Card Bank, N.A. (DMCCB), the company’s wholly owned credit card bank.

Metris’ ratings reflect its solid earnings performance to date, its good capitalization, which was enhanced by a $300 million investment in 1998 by the Thomas H. Lee (T.H. Lee) Co., and its established niche presence in the subprime credit card sector. Concerns center on Metris’ relatively limited track record, rapid balance sheet growth and unseasoned nature of its credit card assets, and the company’s dependence on asset securitization as its primary funding source. The ratings also factor in the announcement that Metris will recognize a $152 million, one-time, non-cash, accounting charge reflecting the impact from the conversion of the $300 million investment by affiliates of the T.H. Lee Co. to the series C perpetual convertible preferred stock. Also, Metris ratings consider the expected completion of the purchase of a portion of the consumer bank card portfolios of GE Capital, which approximated $1.3 billion of receivables as of March 31, 1999.

Metris has reported solid earnings to date despite aggressive provisioning against an expected rise in future net write-offs. While future provisioning should more closely match annual charge-off levels, seasoning of the loan portfolio is expected to lead to higher loss rates in the future. Net income at Metris has been supplemented by increased fee-based income generated by the company’s fee- based services, which include debt waiver programs, membership clubs, third party insurance, and extended service plans.

While loss rates in Metris’ portfolio have to date been as expected, the performance of a nonprime unsecured credit card product has yet to be tested through a full economic cycle. Fitch IBCA is concerned that a period of economic weakness, combined with the limited amount of seasoning of the firm’s existing credit card portfolio, could lead to greater loss levels for the company in the future. As of March 31, 1999, Metris annualized managed net charge-off and 30-day delinquency ratios were 9.40% and 8.00%, which were expectedly above industry norms. These ratios have improved from prior periods as a result of the impact of purchase accounting related to acquired portfolios whose loss characteristics were better than Metris’ existing credit card portfolio. Partially offsetting the high loss rates has been Metris ability to appropriately price its credit card portfolio for risk. Also, the company has maintained healthy excess spreads in its existing securitizations.

In order to reduce the company’s heavy reliance on the securitization market for funding, Metris has begun to diversify its funding sources to include jumbo certificates of deposit issued through DMCCB, as well as senior unsecured debt through the parent company.

With $5.1 billion in total managed receivables at March 31, 1999, St. Louis Park, Minn.-based Metris is an information- based direct marketer of consumer credit card products and fee-based services, primarily to moderate income consumers.

Details spread it wings yesterday with a major ad campaign to officially launch its “financial supersite”. is a division of FCC National Bank, a Bank One subsidiary. covers a wide range of personal finance services including e-payment and e-loans. The site also features instant decisioning for credit products including home equity loans, installment loans and credit cards. Bank One says it has set up a special ‘iBoard of Directors’ to make suggestions, quarterly, on new Web services to offer.



Paymentech announced this week that it has begun utilizing frame relay telecommunication environments with TCP/IP for processing POS transactions for large hotel and resort clients. The company says dedicated network connectivity provides broader bandwidth for larger transaction and batch volume as well as increased speed for faster authorization. Among the hospitality clients to use TCP/IP are Venetian and New York New York hotels and resorts in Las Vegas.


Symposium Aquires Two

Symposium Corporation yesterday announced that, as part of its overall strategy to identify, acquire and consolidate companies in niche markets in direct marketing and financial services, it entered agreements to acquire two transaction-oriented companies.

Symposium has acquired from Direct Sales International LP (“DSI”) an option to purchase all of DSI’s assets for $22.9 million plus the amount necessary to enable DSI to repay its bank loan and the assumption of DSI’s accounts payable, accrued expenses and deferred revenues. The amount necessary to enable DSI to repay its bank loan is expected to be less than $1 million. The option expires on November 30, 1999.

DSI, which is based in Atlanta, Georgia, is a subscription sales agent provider for consumer magazines in the United States. DSI has been granted the direct authority to act on behalf of magazine publishers, accepting magazine subscription orders either directly from consumers or from independent telesales organizations and placing those orders with fulfillment houses designated by the publishers. The magazine subscriptions are sold to the customers in bundles of magazines. DSI generally finances these purchases by accepting from customers’ 12 equal monthly payments which are automatically charged to the customers’ credit cards. According to DSI, these receivables, net of reserves, exceeded $22 million at December 31, 1998.

According to unaudited financial statements provided by DSI, DSI had revenues of approximately $106 million and EBITDA of approximately $5.3 million for the year ended December 31, 1998. At that date, DSI’s accounts payable, accrued expenses and deferred revenues were approximately $3 million.

Symposium also signed an agreement with AmeriNet, Inc. to purchase 50.1% of the outstanding common shares of AmeriNet, Inc. for $5 million. This acquisition is scheduled to close within 45 days of the completion of AmeriNet’s audit, which has recently commenced. According to unaudited financial statements provided to Symposium by AmeriNet, AmeriNet processed approximately $16 million of transactions in 1998, its first full year of operation, with a loss before taxes, depreciation and amortization of approximately $400,000 for the year.

Based in Oregon, AmeriNet seeks to capitalize on the growth in E-commerce by offering a complete direct electronic debit service known as “debit-it”(TM) both to merchants selling goods over the Internet as a method of payment by the customer and as a service for business to business transactions. AmeriNet’s service permits merchants to offer customers an alternative to payment by credit card, which is particularly important in generating E-commerce sales to the estimated 40% of American adults who do not have a credit card. Payment by this method has approximately the same cost to the merchant as a credit card and is designed to be as easy to use by the customer as a credit card. AmeriNet, which conducts business under the name, currently services over one hundred individual merchants. These merchants include calling centers, distributors and fulfillment centers, all of which deal with transactions generated through infomercials and direct response commercials, as well as transactions which result from outbound and inbound direct marketing via telemarketing.

Rupert Galliers-Pratt, Co-Chairman and CEO of Symposium Corporation, commented, “These acquisitions represent an important step in our overall strategy and define the business and technology platform upon which Symposium expects to continue to grow. These companies each enjoy a prominent position in niche markets, have low capital expenditure requirements, operate in a fragmented competitive landscape and offer the opportunity for high growth potential and a high rate of return on investment. Each of these businesses, once acquired, will be actively managed so as to take full advantage of economies of scale, encourage third-party competitive pricing, capitalize on symbiotic opportunities and create additional transactional opportunities by leveraging the personal preference information produced by the transactions of these businesses. Moreover, Symposium will use each of these businesses as a springboard upon which to pursue a consolidation strategy in specific niches.”

Symposium is in the process of completing due diligence for each of these transactions. In addition, Symposium does not presently have the cash necessary to complete either the DSI or AmeriNet transaction. Accordingly, there is no assurance that Symposium will be able to complete either transaction.

Symposium also noted that the shareholders of Hamilton Telecommunications Ltd. had agreed to extend the final closing date to August 14, 1999 (from June 14, 1999). With the commencement of quotation for the Common Stock of Symposium on the OTC Bulletin Board, the principal remaining condition to closing that acquisition is obtaining the financing for the $5.75 million cash portion of the purchase price. Symposium is presently seeking to raise that financing, but as of this date has no commitments. Hamilton is an international audiotext service operator.

Lastly, Symposium announced that it had sold to Richard Prochnow, the principal owner and President of DSI and a 50% owner of AmeriNet, 2.5 million shares of Symposium Common Stock representing approximately 20% of the outstanding Common Stock, for a secured promissory note due December 31, 1999. Mr. Prochnow has the right to rescind the transaction, and the Company has the right to repurchase the shares, under certain conditions. As a result of that purchase, Mr. Prochnow has become the largest shareholder of Symposium. If the DSI transaction is completed, it is anticipated that Mr. Prochnow would become a member of the Board of Directors of Symposium.