80% Smart Card Growth

The market for chips for contactless smart cards is expected to grow at an average 80% per year, leading to a 15% share of the total smart card chip market after 2000, according to a survey of the smart card chip market published today by SJB Research. And, after last year’s growth slowdown and overcapacity problems in the smart card chip market, manufacturers are looking forward to an upturn that will see chip prices stabilising and even increasing.

The survey, in the June edition of SJB’s card industry newsletter, Card Technology Today, includes leading smart card chip manufacturers’ views on emerging trends in the industry, as well as providing detailed tabulated information on the product offerings and status of 15 major smart card chip manufacturers around the world. A demand for phone cards will spur the market for security memories (both contact and contactless), resulting in an average annual growth rate of 10% through to 2003 reports the Ctt survey. Card Technology Today is an industry newsletter, published ten times each year, and available by paid subscription only from SJB Research.

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Robust Carte Bleue

Toronto-based Oasis Technology has installed a high-performance payment gateway to handle millions of bank and credit card authorization transactions for France’s Carte Bleue. The gateway is enabled by Oasis Technology’s ‘IST/Switch’ E-commerce payment system and was installed in less than four months. Carte Bleue holds the VISA licenses for France and operates a gateway between France and the 200 other countries in which ‘VISA’ cards are used for payments. Last year 74 million authorization transactions were processed through the Carte Bleue VISA gateway. VISA authorization transactions passing through the Carte Bleue gateway have been increasing at a compounded annual growth rate of 36%.

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UK Deployment

Diebold has been awarded a $6.5 million contract by the Co-Operative Bank to supply ATMs in the Co-Operative Retail Societies’ convenience stores throughout the UK. The contract marks the first committed roll out of ATMs into retail locations in the UK. Diebold is providing a combination of models, which will include the small counter top ‘1060i’ cash dispenser, the ‘1071ix’ through-the-wall unit and the ‘CashSource Plus 400’. The Co-Operative has 2,500 retail sites in the UK and the order for 350 ATMs represents the initial part of the program.

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Omni 3200 Certified

VeriFone, a division of Hewlett-Packard Company, yesterday announced that Vital Processing Services, a leading full-service merchant processing company, has certified and fully supports VeriFone’s new Omni 3200 point-of-sale (POS) terminal running SoftPay 2.1, the latest version of VeriFone’s retail and restaurant payment-authorization software.

The announcement was made here at the Vital Client Symposium. “Our goal is to provide our clients with the most current and cost-effective payment systems available in today’s marketplace,” said Donna Embry, senior vice president of Product Development and Marketing at Vital. “We are pleased to offer the VeriFone Omni 3200 terminal and SoftPay software as a state-of-the-art solution for accepting a variety of electronic payments at the point of sale.”

“By certifying the Omni 3200 and SoftPay solution, Vital will help bring merchants into the next century, with an innovative point-of-sale solution that can accept virtually any type of electronic payment,” said Bud Waller, vice president and general manager of North America for VeriFone. “With VeriFone’s SoftPay software, merchants can accept new forms of payment with minimal impact to the way they do business today.”

The Omni 3200 contains a fully integrated thermal printer, which helps to reduce costs through simplified installation and improved reliability, thanks to fewer moving parts and cables. In addition, the covered paper path greatly reduces paper jams. 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 compact design of the terminal takes up less counterspace than comparable solutions. Compatibility with VeriFone’s SoftPay software ensures that the Omni 3200 can support existing SoftPay applications, with minor changes to the user interface, and enables rapid development of new applications.

SoftPay software provides merchants with the flexibility to process credit, debit, check and EBT transactions on one device at the point of sale. The software package, which includes SoftPay Assist, a PC-based configuration software tool, and a flexible terminal application, allows for a wide range of options that can be tailored to meet specific merchant requirements.

About Vital Processing Services

Vital Processing Services(R) (Vital(TM)) is a leading full-service merchant processing company. Its clients include financial institutions and their agents that provide payment card processing to merchants. Headquartered in Tempe, Vital offers financial institutions and their agents portfolio management services and merchant POS products without competing with their merchant business.

Its services include merchant POS products, electronic authorization and data capture; Internet commerce; clearing, settlement and exception processing; merchant accounting, billing, and reporting; operational fulfillment services (including chargeback and retrieval processing); risk management; and customer service. Vital is a merchant processing joint venture of Visa(R) U.S.A. and Total System Services, Inc.(R) (TSYS(R)) (NYSE:TSS)(www.totalsystem.com). Vital’s Internet address is [www.vitalps.com][1].

About VeriFone

VeriFone (), a division of Hewlett-Packard Company (NYSE:HWP) is the leading global provider of secure electronic payment solutions for financial institutions, merchants and consumers. VeriFone has shipped more than 7 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 had computer-related revenue of $39.5 billion in its 1998 fiscal year. HP plans to launch a new company consisting of its industry-leading test-and-measurement, semiconductor products, chemical-analysis and medical businesses. These businesses represented $7.6 billion of HP’s total revenue in fiscal 1998. With leading positions in multiple market segments, this technology-based company will focus on opportunities such as communications and life sciences. HP has 123,000 employees worldwide and had total revenue of $47.1 billion in its 1998 fiscal year.

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

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Wireless Fast Food Terminal

NPC confirmed Wednesday it is conducting the first major pilot of Hypercom ‘ICE 5000’ handheld 900MHz wireless touch-screen card payment system at one of the country’s top five fast food restaurant chains. Hypercom’s system is the payment industry’s first interactive, portable wireless terminal device for restaurants.The pilot is being conducted at 41 restaurants in metro-Phoenix. Plans call for Hypercom’s payment system to be installed at more than 8,000 quick-service restaurants nationwide. Equipped with Hypercom’s ‘FastPOS’ technology, Hypercom’s portable wireless unit completes transactions in six seconds or less.

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Instant Destiny

Destiny Software Corporation announced yesterday that it has provided Fleet Credit Card Services with instant credit decisioning capability for the Internet. This new functionality allows Fleet to evaluate Web-based credit card applications in seconds. Fleet says instant decisioning is critical to its drive to be a dominant issuer on the Internet. In late April, Destiny Software delivered a strategic Internet system for creating, managing and processing Web-based credit card applications to Fleet.

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Aspire Online

Online loan marketer LendingTree, Inc signed an agreement with CompuCredit Corp. yesterday to market the ‘Aspire VISA’ sub-prime credit card through the Lending Tree network of lenders. Consumers applying through Lending Tree fill-out a ‘Qualification Form’ which is immediately sent to up to four lenders. whose credit criteria match the consumers’ information, in the Lending Tree network. So far this year LendingTree’s volume of credit card requests has increased more than 300% to 10,000 per month. CompuCredit, through its traditional application process, is adding between 20,000 and 25,000 new ‘Aspire VISA’ cardholders each week. CompuCredit went public in April.

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eN-Counter 4000 Certified

IVI Checkmate Corp. yesterday announced at the second annual Vital Client Symposium in Tempe, Arizona that Vital Processing Services® has Class-A certified the IVI Checkmate eN-Counter 4000 POS terminal, formerly known as the DataCard Jigsaw®, with an integrated 12 line per second printer.

The IVI Checkmate eN-Counter 4000 POS solution has also been certified to operate with the Vital-developed POS-partner® PC package, a software application that uploads batches for merchant transaction batch consolidation and reporting in a PC/terminal hub environment.

The Vital Class A certification means that users of the IVI Checkmate eN-Counter 4000 POS terminal and integrated high-speed printer can enjoy 24-hour, seven-day-a-week help desk support for all related software and hardware.

“The Class A certification awarded by Vital demonstrates their confidence in the eN-Counter 4000,” stated John Mamalakis, Vice President and General Manager of IVI Checkmate’s Financial Systems division. “Vital recognizes the tremendous value the IVI Checkmate eN-Counter 4000 brings to its POS product line offerings.”

POS-partner easily accommodates the unique industry requirements of retailers, restauranteurs, hotels, direct marketers and billers. This high demand, Windows®-based PC system can link multiple terminals together within a merchant’s business, consolidating authorization transactions for reporting, balancing and settlement. eN-Counter 4000 terminals can now easily interface to POS-partner.

“The eN-Counter 4000 offers a true turnkey solution for merchants operating on the POS-partner platform, requiring no additional development effort to get them online,” Mamalakis adds. “It’s an ideal solution for merchants looking to add a powerful, affordable POS solution to complement Vital’s POS-partner PC application software.”

The IVI Checkmate eN-Counter 4000 is a modular POS solution that can be configured with an external Personal Identification Number (PIN) pad or with the PIN pad integrated into the eN-Counter 4000 stand-alone transaction terminal. The eN-Counter 4000’s cartridge-style integrated thermal printer plugs into the top of the eN-Counter 4000 and prints up to 12 lines per second. The eN-Counter 4000 terminal offers an intuitive and feature rich retail/restaurant application suite which includes combined credit and debit support, a wide range of tip options, the ability to add and personalize operator prompts, mail order/telephone order with address verification (AVS), and multiple levels of password protection. The application also provides an outstanding training mode, which dramatically reduces training time.

“We’re pleased to fully support eN-Counter 4000 and its high-speed integrated printer, because these products widen the selection of terminals and printers available to clients using our software,” said Donna Embry, senior vice president of product development at Vital. “The IVI Checkmate eN-Counter 4000 POS terminal solution meets our long-standing objective of making the best, most cost-effective POS products fully compatible with our systems and software.”

IVI Checkmate recently acquired DataCard’s Financial Systems subsidiary, which developed and marketed the Jigsaw (now known as the eN-Counter 4000) POS solution. The former DataCard subsidiary has been renamed the IVI Checkmate Financial Systems division.

Vital Processing Services® (Vital’) is a leading full-service merchant processing company. Its clients include financial institutions and their agents that provide payment card processing to merchants. Headquartered in Tempe, Ariz., Vital offers financial institutions and their agents portfolio management services and merchant POS products without competing with their merchant business. Its services include merchant POS products, electronic authorization and data capture; Internet commerce; clearing, settlement and exception processing; merchant accounting, billing, and reporting; operational fulfillment services (including chargeback and retrieval processing); risk management; and customer service. Vital is a merchant processing joint venture of Visa® U.S.A. and Total System Services, Inc.® (TSYS®) (NYSE: ‘TSS’) ([www.totalsystem.com][1]). Vital’s Internet address is [www.vitalps.com][2].

IVI Checkmate is the third largest electronic transaction solutions provider in North America. The Company designs, develops, and markets innovative payment and value-added solutions that optimize transaction management at the point-of-service in the retail, financial, travel & entertainment, healthcare, and transportation industries. IVI Checkmate’s software, hardware, and professional services minimize transaction costs, reduce operational complexity, and improve profitability for its customers in the U.S., Canada and Latin America. For more information on IVI Checkmate, visit its web site at .

[1]: http://www.totalsystem.com
[2]: http://www.vitalps.com

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Southern DataComm Expands

Southern DataComm, Incorporated (SDC), an electronic payments solutions provider, announced Wednesday a strategic company expansion into the Japan, Pacific, Australia, and Asia (JPAA) region.

Southern DataComm’s JPAA expansion involves three global leaders in their respective industries: American Express, the dominant travel and entertainment charge card issuer; MICROS-Fidelio, the world’s leading vendor of property and restaurant management systems; and Westpac Bank, one of the largest banking institutions and card issuers in the JPAA region.

The expansion began last year as a pilot program at the prestigious Chateau Sydney, a four-star property in Sydney, Australia. Southern DataComm’s payment processing software, ProtoBase(r) with SofTrans(r) and the ProtoBase Administrator (PbAdmin(tm)), is integrated into a MICROS-Fidelio property management system. SDC developed special credit/charge card interfaces to American Express, Westpac Bank, JCB, and Diners Club specifically for the JPAA region.

Justin Higgs, Product Manager at SDC, commented, “We are very excited about the opportunities in the JPAA market. The success of the Chateau Sydney can especially be attributed to the involved parties working together on this project. We look forward to continued success in this region well into the 21st century.”

The ProtoBase product line offers consolidation and networking of all credit and charge card transactions. The software alleviates the need of settling multiple locations individually, as all transactions are located on a single server. This consolidation saves processing time and money over non-integrated, stand-beside terminal applications. The ProtoBase software provides detailed reporting for a complete audit trail and eases the chargeback research burden.

Southern DataComm Incorporated is a software development firm, founded in 1985, specializing in electronic payment software solutions. Southern DataComm products provide a generic interface to enable simple integration into point-of-sale systems. The software supports transaction processing for credit/debit/check with virtually any third-party processor or acquirer. The applications support a variety of vertical markets including Lodging, Restaurant, Auto Rental, Retail, Gaming, Grocery, Mail and Phone Order, Subscriber Management, Cable TV, Public Utilities, Internet, Medical, and Government. Southern DataComm is headquartered in Clearwater, Florida.

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Credit Store Increase

The Credit Store, Inc. (EBB: PLCR) — whose principal business is to acquire portfolios of non-performing consumer debt at substantial discounts, and then through its direct marketing expertise, transfer a significant portion of the debt onto newly issued credit cards — released today its results for the third quarter and first nine months of its fiscal year 1999 (unaudited).

Third Quarter FY1999 Results

FY 1999, 3Q FY 1998, 3Q
ended 2/28/99 ended 2/28/98

Total Revenues $ 12.34 million $ 4.00 million
Total Expenses $ 10.28 million $ 11.05 million

Net Income (Loss) $ 2.06 million $(7.05) million
Preferred Dividends $ 500 thousand $ 99 thousand

Net Income (Loss)
Applicable To Common
Stock $ 1.56 million $ (7.15) million

Earnings per Share $0.04 $(0.22)

Weighed Average Shares
Outstanding 34,761,965 33,109,781

For the three months ending Feb. 28, 1999, the third quarter of fiscal 1999, total revenue was $12.34 million versus $4.00 million in the prior third quarter, an increase of 208%. Total expenses in the third quarter (including operating expenses, interest expenses and provision for losses) were $10.28 million, versus $11.05 million in the prior third quarter, a decrease of approximately 7%. Net income applicable to the common stock was $1.56 million or $0.04 per common share, versus a loss of $7.15 million or a loss of $0.22 per share in the prior third quarter. The weighed average of common shares outstanding was 34.76 million, versus 33.11 million in the prior third quarter.

Martin J. Burke, III, chairman and chief executive officer of The Credit Store commented, “The Credit Store continues to make substantial progress in fulfillment of its basic business plan. We have defined a new niche in the consumer credit marketplace and made it profitable. While it is important to note the inherent risks in our business, it is equally important to note that The Credit Store now has been profitable on an operating basis for three consecutive quarters and on a per share basis for two.”

Third Quarter Revenues

The 208% increase in year-over-year total revenue was due primarily to increased customer credit card payments and to the proceeds received from a December 1998 securitization, which had been reported previously.

Revenue in excess of costs recovered (ECR) increased nearly fourfold from the year-ago quarter, to $10.097 million from $2.584 million in the year ago quarter. The Credit Store realizes these gains on a portfolio basis after the full purchase price of an acquired portfolio has been recovered. Interest revenue from performing assets increased approximately 57%, to $599 thousand from $340 thousand in the year-ago quarter. Fee revenue from performing accounts rose approximately 41%, to $922 thousand from $654 thousand in the year-ago quarter. Servicing revenue remained virtually unchanged in the quarter at $374 thousand, versus $376 thousand in the year ago quarter. The Credit Store generally continues to service receivables that the Company has sold or securitized. Income from unconsolidated affiliates increased from $22 thousand to $298 thousand during the period, primarily due to the seasoning of portfolios owned by a joint venture operation.

The Company utilizes the cost recovery method of accounting, which is the more conservative option prescribed in FASB Practice Bulletin 6 for recognizing the purchase cost of distressed assets. The accounting method requires that cash flows related to a portfolio purchased at a discount must first be applied to reduce the purchase price of the portfolios on the balance sheet prior to recognizing revenue from that portfolio. As a result, in quarters when the Company makes substantial portfolio purchases, costs related to the marketing and servicing of these portfolios may exceed the revenues. Once the cost of a portfolio has been recovered, portions of the ensuing cash flow may be recorded as the ‘Excess of revenue over Cost Recovered’ (ECR). The use of the cost recovery method of accounting holds the potential that operating income of the Company will fluctuate significantly from quarter to quarter.

Third Quarter Expenses

Total expenses fell 7% in the third quarter 1999 in part due to a substantially smaller provision for loan losses and also in part due to lower interest expense.

The smaller loan loss provision for the quarter, $923 thousand versus $2.355 million in the year-ago quarter, was made possible by a lower average amount of owned receivables during the period and by the accumulation and analysis of seasoned portfolios which allows the Company to reserve for defaults on a more accurate basis. The two asset securitizations completed by The Credit Store in September and December 1998 and a portfolio sale in June 1998, all previously reported, removed a total of $21 million in seasoned credit card receivables from the Company’s wholly-owned portfolio.

Two conversions of subordinated debt into preferred stock of the Company, previously reported, allowed interest expense to drop to $892 thousand from $1.357 million in the year-ago quarter. The drop in interest expense was offset substantially by a rise in dividends accrued on the preferred stock.

Other Third Quarter Data

Inception through the end of the third quarter, The Credit Store had purchased a cumulative $2.630 billion gross principal of non-performing consumer debt through various transactions. This cumulative total includes $43.1 million gross principal of non-performing debt purchased during the third quarter. After the third quarter’s end, and as announced previously, the Company sold $238 million gross principal of non-performing consumer debt that had accumulated as residuals from routine operations over the last two years.

The Company owned $60.6 million in performing credit card receivables at Feb. 28, 1999 versus $71.3 million at Feb. 28, 1998. The decline was due to the sale and securitization of receivables that took place during the first three fiscal quarters. At Feb. 28, 1999, the Company also serviced an additional $16.5 million in receivables held in joint ventures and/or securitizations, versus $3.6 million at Feb. 28, 1998.

Nine Months FY 1999 Results FY 1999, 9 mnths. FY 1998, 9 mnths.
ended 2/28/99 ended 2/28/98

Total Revenues $ 33.62 million $ 7.82 million
Total Expenses $ 29.81 million $ 31.43 million

Net Income (Loss) $ 3.8 million $ (23.6) million
Preferred Dividends $1.30 million $ 300 thousand

Net Income (Loss) Applicable
To Common Stock $ 2.51 million $ (23.92) million

Earnings per Share $0.07 $(0.72)

Weighed Average Shares
Outstanding 34,761,965 33,109,781

For the nine months ending Feb. 28, 1999, total revenue was $33.62 million versus $7.82 million for the year ago period. Total expenses (including operating expenses, interest expenses and provision for losses) were $29.81 million, versus $31.43 million in the year-ago nine months. Net income applicable to the common stock was $ 2.51 million or $0.07 per common share, versus a loss of $23.92 million or a loss of $0.72 per share for the year-ago nine months. The weighed average of common shares outstanding was 34.76 million, versus 33.11 million in the prior third quarter.

The unaudited financial statements for the quarter and nine months ended Feb. 28, 1999 are available from the Company upon request.

The Credit Store is a nationwide financial services company engaged in the acquisition and recovery of non-performing consumer receivables and the origination and servicing of credit cards. The Company acquires portfolios of non-performing consumer receivables and originates new credit cards to those consumers who agree to pay all or a portion of the outstanding amount due on their debt. The new card is issued with an initial balance and credit line equal to the agreed repayment amount. After appropriate seasoning, The Credit Store attempts to sell or securitize the credit card receivables generated by its business strategy.

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Register OnSoftware

Cydoor Technologies Inc., the leader in technology which provides software programs with the ability to run and display Internet Ads and execute other Web-related utilities, announced Wednesday that it has signed a partnership contract with CyberCash Inc. a world leader in e-commerce technologies and services. The contract will allow Cydoor to provide Internet payment solutions through Cydoor’s Register OnSoftware service.

As an Internet industry first, the Cydoor Technologies and CyberCash Inc., combined capability will allow software companies to charge users a fee, via a window within the program, instead of the user having to browse the Web. Software companies can use the service to sell a registration license, obtain payment for an upgraded version or charge a transfer of data to their users.

“Cydoor is very pleased to be cooperating with CyberCash,” said Shaul Eyal, VP Business Development of Cydoor Technologies. “The flexible and powerful payment solutions that are provided by CyberCash enable us to provide software companies with the best payment methods possible.”

Shimon Gruper, an Executive VP at Aladdin Knowledge Systems, Ltd. said, “We feel that Cydoor’s new service will allow an easy way for customers to pay for our products and increase the actual number of purchases.”

“Cydoor’s Ads OnSoftware(TM) product was recently launched and has already drawn the interest of several software companies,” said Mr. Eyal, “Large advertisers such as Amazon.com, and CDNOW.com are currently running Cydoor’s innovative technology for targeting ads directly to their potential customers,” added Mr. Eyal. Cydoor is a participant in the Amazon.com Associates Program. Cydoor is also an affiliate member of C2, CDNOW’s Corporate Community program. Cydoor introduced its Ads OnSoftware(TM) service in October, 1998.

About CyberCash

CyberCash is a world leader in e-commerce services and technologies, enabling e-commerce across the entire market spectrum from electronic retailing environments to the Internet. CyberCash provides a complete line of software products and services allowing merchants, billers, financial institutions and consumers to conduct secure transactions using the broadest array of popular payment forms. Credit, debit, purchase cards, cash, checks, smart cards and alternative payment types (e.g., “frequent buyer” or loyalty programs) are all supported by CyberCash payment solutions. Leading brands of CyberCash include ICVERIFY(R), PCVERIFY(TM), CashRegister, NetVERIFY(TM), PayNow(TM), and InstaBuy(TM). [http//www.cybercash.com][1]

About Cydoor Technologies Inc.

Cydoor Technologies Inc., is the provider of OnSoftware(TM), a unique suite of services that brings the power of the Web to the user interface of software programs. Cydoor provides software programs with the ability to run Internet-based utilities such as powerful advertising media and e-commerce utilities. Cydoor’s technology also allows for easy, fast and safe payment solutions over the Internet and operates a distribution network that can significantly enlarge the user base of software companies. With offices in San Francisco and New York, Cydoor provides sales and services through expanding regional offices and a growing network of international subsidiaries, distributors, and strategic partners.

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

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EarthWeb MBNA Card

EarthWeb and MBNA announced yesterday that they have signed a multi-year affinity credit card marketing deal estimated to be worth seven figures in revenue to EarthWeb over the term of the agreement. MBNA and EarthWeb will work together to market financial service products to IT professionals. The co-branded credit cards will be issued through MBNA’s affinity credit card program, which awards cardholders discounts and other special promotions including 20% discount on EarthWeb’s ‘ITKnowledge’ service. EarthWeb will donate a percentage of each retail transaction to the ‘Trickle Up Program’, an international non-profit organization which provides low-income people with the opportunity to develop their own microenterprises.

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