Mid-Year Snapshot

Delinquency and charge-offs continue to improve this year. Since Jan. 1, delinquency (30+ days) has dropped a total of 19 basis points while charge-offs have declined 27 basis points according to CardData ([www.carddata.com][1]). However bankruptcy related charge-offs, as a percentage of total charge-offs, has edged up to 42.3% at mid-year compared to 41.8% for June 1998 and 41.6% for January 1999.

Jan 99 5.00% 5.46% 41.6%
Feb 99 4.96% 5.37% 41.9%
Mar 99 4.94% 5.32% 41.9%
Apr 99 4.95% 5.27% 41.9%
May 99 4.89% 5.24% 42.1%
Jun 99 4.81% 5.19% 42.3%

Source: CardData (www.carddata.com) * based on previous months experience

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



CO-based ProCard, Inc. announced this morning the availability of ‘PVS Net Version 3’. ‘V3’ is the next in a series of enhancements to ProCard’s Internet offering that will give clients the ability to put a greater share of enterprise purchasing and travel expenditures on credit cards with no loss of control. PVS ‘Net Version 2’, which became available just a month ago, introduced a key automation tool to the market. For the first time, a web based commercial card application could determine how a credit card transaction should be allocated within an organization based on the expense type. In addition, Version 2 enhanced performance for member banks and their clients, while extending the amount of on-line transaction data to a full 13 months.


ECHO Database Agreement

Electronic Clearing House Inc. Tuesday announced the signing of a Database Access Agreement between Magic Software Development Inc. (“Magic”), a wholly owned subsidiary of ECHO, and Rocky Mountain Retail Systems Inc. (RMRS), a Colorado corporation.

Both companies provide retail merchants with check verification processing from point-of-sale terminals in retail establishments. This Agreement allows both companies to cross market these services, including access to each other’s databases through their respective systems, to their current and prospective members. By accessing both databases, merchants receive an increased level of protection.

“The teaming of these two companies is extremely rewarding in that this relationship will enable us to offer our customers one of the largest, quality, up-to-date databases in the nation at very competitive prices,” stated Kris Winckler, Magic president.

Electronic Clearing House provides credit card processing, check guarantee, inventory tracking services and various Internet services to more than 19,000 retail merchants and U-Haul dealers across the nation. ECHO also designs, develops and manufactures software and point-of-sale hardware that is utilized as credit card processing terminals, automated money order dispensers, inventory tracking devices, and casino cash advance systems.

To take advantage of the new “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, readers you are hereby cautioned that this release contains forward-looking statements that are based upon current expectations and involve a number of risks and uncertainties. Actual operations and results may differ materially from those expressed in the forward-looking statements made by the company.


Terabyte Harvesting

NCR Corporation unveiled Tuesday its ‘TeraMiner Stats’ data mining software for ‘Teradata Warehouse’ customers. ‘TeraMiner Stats’ includes scalable pre-processing components that address critical areas of data mining, including data description, derivation, reduction, reorganization and sampling/partitioning. By leveraging the inherent parallelism and processing power of the ‘Teradata’ engine, ‘TeraMiner Stats’ enables customers to use all their detail level data in performing complex data mining analyses, such as customer segmentation, propensity to buy, sales forecasting, attrition and retention. ‘TeraMiner Stats’ runs on the ‘Windows NT’ operating system and is priced from $5,000 to $40,000, depending on the number of nodes in the NCR ‘Teradata Warehouse’. Additional ‘TeraMiner’ products will be released in 2000 and provide statistical and machine-learning algorithms, as well as model deployment, monitoring and lifecycle maintenance.


Cybercash Acquisition

CyberCash announced yesterday it will acquire San Jose-based Tellan Software. The merger is expected to close by July 15. Tellan, a privately held company founded in 1992, produces payment processing software for Internet commerce, as well as global enterprises wishing to consolidate disparate payment applications into a centralized payment platform. The company’s leading brands include ‘MacAuthorize’, ‘PCAuthorize’ and ‘WebAuthorize’. CyberCash says the acquisition will consolidate its dominance in the payment software market, including physical points of sale and integrated enterprise payment solutions, and add to the company’s leadership position in Internet payment software and services.


USPS Contract

The United States Postal Service has awarded NCR Corp. a $67 million ‘Stage IIA Point-of-Service ONE’ contract extension that will enable the Postal Service to continue to expand the services it offers at retail customer windows. As options are exercised by the USPS, the ‘Stage IIA’ program would approach a $176 million contract value. ‘POS ONE’ is a major USPS initiative to replace current retail systems. NCR, along with IBM, was previously awarded the first ‘Stage’ of the ‘POS ONE’ contract. The three stage ‘POS ONE’ program calls for 73,000 POS terminals to be deployed in 20,000 postal retail units. The new retail systems will replace the more than 63,000 outdated retail terminals. The first ‘Stage’ rollout of NCR systems began in Ashland, VA., in January, 1998 and has extended to more than 1,000 post offices in the United States to date. Completion of the entire program is expected within the next five years.


Cardservice Partnership

Cardservice International Tuesday announced a technology- development partnership with Computer Associates International Inc. (CA) that will enable developers and end users to integrate credit card merchant accounts and secure payment gateway services into applications implemented with Jasmine, CA’s intelligent information infrastructure for e-business applications.

“Our partnership with Computer Associates underscores Cardservice’s commitment to providing our partners and merchants with the industry’s most advanced tools for rapidly enabling merchant payment acceptance and securely transporting transactions,” said Todd Whiton, senior vice president of the Internet Commerce Group at Cardservice International.

As a result of the partnership, merchants will be able to quickly and easily apply online for services such as setting up a merchant account via Cardservice WebApp(sm) and credit-card processing directly through Jasmine. These fully integrated payment solutions will enable approved merchants to begin accepting credit-card payments over the Internet within 24 hours of building their virtual storefronts.

Expanded processing services also include authorization, data capture and settlement services, and online reporting capabilities. These services complement the comprehensive suite of tools already offered through Cardservice International’s LinkPoint Secure Payment Gateway.

“The integration of Cardservice’s payment and merchant services enhances CA’s comprehensive e-commerce offerings,” said Mike LaTorraca, vice president, CA development partner program. “This partnership will empower enterprises using Jasmine as their electronic commerce infrastructure to easily and effectively enable credit-card transactions.”

The LinkPoint Secure Payment Gateway provides real-time processing, increased fraud protection and enhanced security. With the LinkPoint Secure Payment Gateway, funds are automatically authorized from the consumer’s credit card and set aside for the merchant to collect.

The collection or capture process is done entirely through the World Wide Web. No longer is there a need for separate credit-card equipment, or for printing orders and manually entering them into credit-card-processing machines. For consumers, the LinkPoint Secure Payment Gateway provides an extra level of security because the credit card is encrypted and is seen only by authorized gateway personnel.

Jasmine is the perfect solution for building and deploying intelligent, next-generation business systems over Internet and client/server computing environments. It offers developers an object- oriented platform ideally suited for dynamic multimedia applications while delivering the integrity and practical data management required for mainstream business solutions.

About Cardservice International

Cardservice International is a technology-driven, customer- focused company that provides merchant account services and secure transport of financial transactions for businesses in both the physical and virtual worlds. Cardservice International has headquarters in Agoura Hills, with 200 field offices throughout the United States. For additional information, visit .


Hypercom Korea

KS VAN, Korea’s leading service provider for issuer and acquirer banks, confirmed yesterday it will deploy 20,000 Hypercom ‘T77G-GS’ high-performance card payment systems to support 18,000 retail merchants throughout Korea. Hypercom’s card payment systems will process approximately 3 million credit, debit and smart card payment transactions per month. The deployment represents one of the largest ever conducted in the South Korean marketplace. It is expected to be completed within 12 months of a phase-one pilot program consisting of 2,000 terminals.


Low-Priced Contactless Cards

MA-based SatCon Technology Corp. announced that its subsidiary Film Microelectronics has developed a low-cost version of a ‘Radio Frequency Identification’ (RFID) card. Using proprietary thin film technology and a patent pending interconnect concept, FMI will be able to sell the 125kHz category card for about 25% less than current methods. SatCon says the new product could represent $5 million in annual sales in a year. The company notes that approximately 1 billion ‘RFID’ tags are being shipped per year.


Makowski To Household

Household International, Inc. announced yesterday the appointment of Gordon Cliff, 39, as Managing Director — Strategy and Development. Mr. Cliff joins Household from Andersen Consulting, where he was a partner in the firm’s Financial Services Practice in New York. He will report to David A. Schoenholz, Executive Vice President and Chief Financial Officer.

“In this position, Gordon will focus on initiatives to build profitable growth. He will help us define and exploit significant opportunities in a number of major areas including customer segmentation, electronic commerce, and efforts to cross-sell Household products to existing Household customers,” said William F. Aldinger, Household’s chairman and chief executive officer.

Mr. Cliff was at Andersen Consulting from 1996 until joining Household. At Andersen, he helped clients with customer relationship management issues as well as customer segmentation and cross-selling initiatives. From 1985 to 1996 Mr. Cliff worked in the New York office of McKinsey & Company. He began his career with Morgan Stanley & Company in 1981, focusing on mergers and acquisitions. Mr. Cliff is a graduate of Williams College and earned an M.B.A. from Harvard Business School.

Household also announced the appointment of Paul Makowski, 47, as Managing Director and Chief Credit Officer, also reporting to David Schoenholz.

Mr. Makowski joins Household from Fair, Isaac & Co., where he was a Principal with Credit and Risk Management Associates, Inc. (CRMA), the company’s credit risk management and technology consulting unit. He joined CRMA in 1992 and remained with the unit following its sale to Fair, Isaac in 1996.

Commenting on Mr. Makowski’s appointment, Bill Aldinger said, “The addition of Paul Makowski to our management team will help the company achieve long-term, sustainable business growth at acceptable levels of credit risk. Paul brings exceptional experience in credit risk management and in the use of credit risk tools to improve performance.”

Mr. Makowski has been involved in different aspects of credit risk management for 23 years, with leading firms including Montgomery Ward, Mathematica, Inc., American Management Systems and Fair, Isaac & Company. He is a graduate of Kenyon College and earned an M.B.A. from the University of Chicago.

Household International, through its subsidiaries, is a leading provider of consumer finance, credit card, non-prime auto finance and credit insurance products in the United States, United Kingdom and Canada. In the United States, Household operates under the two oldest and most widely recognized names in consumer finance — HFC and Beneficial. Household is also one of the nation’s largest issuers of private-label and general purpose credit cards, including the GM Card and the AFL-CIO’s Union Privilege card. For more information, visit the company’s web site at .


Rate Adjustment

As the Federal Open Market Committee winds up its meeting today it is expected the Federal Reserve will announce a quarter point increase in short-term interest rates. Today’s announcement will undoubtedly push the Prime Rate to 8.0%. Since eight of the top ten issuers use Prime Rate-based pricing for most of their cards issued and since the Fed rate adjustment comes on the last day of the month and the last day of the quarter, the question is: How soon will the increased rates be passed on to cardholders? According to CardTrak ([www.cardtrak.com][1]) five of the eight prime-based major issuers will pass on the increase on during July while First USA will do so in August. Citibank and MBNA cardholders will not see the increase until October. CardTrak calculated earlier this week that a 25 basis point increase will generate at least $750 million in additional interest over the next twelve months. A typical household with $5,000 in card balances will pay about $13 extra over the next year due to the increase. (See CF 6/28/99 or CardTrak Online)

(Among Top 10 Issuers Ranked by Outstandings)

1. Citibank Prime June 15
2. Bank One/FUSA Prime June 22
3. MBNA Prime June 15
4. Discover Prime June 30
5. Chase Prime July 1
6. Bank of America Prime July 1
7. Capital One Libor July 5
8. Fleet Prime July 1
9. Household Prime July 1
10. Providian Fixed NA

SOURCE: CardTrak (www.cardtrak.com)

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


You’ve Got Help

NOVA Corporation, one of the five largest integrated transaction processors in the nation, announced the launch of its “You’ve Got Help” campaign with the introduction of a new interactive channel, , for its customers. The channel provides a range of functionality from resolving common questions to adding services directly via the Internet.

As part of the company’s on-going customer service strategy, the site will enable merchants to:

* View recent deposits

* Order supplies direct from the web site

* View the status of pending chargebacks and retrievals

* Review the status of outstanding equipment orders (including the shipping/tracking number)

* Email questions into a customer service agent

“An important part of providing good customer service is understanding our client’s business needs,” said NOVA Chairman and CEO, Edward Grzedzinski. “The launch of http://www.merchantconnect.com gives our clients another tool to address their need to operate more effectively and efficiently.”

NOVA will continue to provide support to merchants through its 24-hour call center in addition to this new web enabled customer channel. Merchants now have the flexibility to utilize either an on-line approach or to talk directly to a call center agent for their business needs.

NOVA commissions the Center for Governmental Services at Auburn University to perform an annual Customer Satisfaction Survey of its merchants. The purpose of the survey is to identify NOVA’s customer’s needs and expectations and measure its performance against those needs. The results of the survey indicate on a consistent basis over 91% of its clients rated NOVA a 9 or above on a 10 point satisfaction scale. These merchants stated that they would recommend NOVA because of satisfaction with overall service.

“Customers are driving the innovations and expectations in the customer support market,” said NOVA Senior Executive Vice President and CIO Pam Joseph. “We have listened to our merchant feedback and it tells us Web enabled customer support is in demand.”

NOVA supports transaction processing for all major credit cards including private label. NOVA also provides access to debit card processing and check verification services. The company has developed a sophisticated operating environment which retains control of virtually all of the processing steps from customer service and sales support, to network development, data transmission and electronic capture of billing information.

About NOVA Corporation

NOVA Corporation (“NOVA”), headquartered in Atlanta, Georgia, manages and transports payment and other business information on behalf of retailers, community banks and financial institutions. NOVA specializes in providing integrated credit and debit card payment and information processing services, related software application products and value added services to more than 480,000+ merchants in the U.S. NOVA merchant customers typically include small- to medium-sized merchants that require a full spectrum of processing services.