Spyrus Smart Card Reader

SPYRUS, a leading provider of cryptographic token and toolkit security solutions, Monday introduced the SPYRUS Smart Card Reader, which interfaces to desktop computers for high-assurance security applications. The SPYRUS Smart Card Reader is the first reader to feature its own keyboard for PIN entry, making it the ideal security solution for enterprises and governments looking for cost- effective and portable high-assurance protection of valued digital property.

“This announcement is a break-through in price/performance, and makes high-assurance smart card security cost effective for widespread use by enterprises and government,” said Sue Pontius, SPYRUS president and CEO. “Our new security reader used together with SPYRUS Rosetta smart cards reduces the cost-per-seat of high- assurance security by 80 percent.”

The Smart Card Reader is as thin as a credit card and can fit in a wallet, yet it includes a keyboard and display, so it can be used for PIN entry or other secure data entry applications. It connects to the PC through a serial port, and is compatible with Microsoft’s PC/SC standards for smart card readers.

Smart Card Readers and SPYRUS Rosetta smart cards work together to provide high-assurance public key security for use as a digital identity for local or Internet applications access control, encryption, or signature. Both products are key components of the SPYRUS Integrated Enterprise Security solution for enterprises and governments.

About SPYRUS

SPYRUS is a leading provider of network security solutions to enterprises and governments. Recently, the company was named as the fourth fastest-growing technology company in the Deloitte & Touche Silicon Valley Fast 50. The company’s end-to-end security solutions protect valued digital property in corporate IS, WWW/Internet, Intranet, electronic commerce, and government applications. High-assurance security tokens, available as smart cards and PCMCIA cards, provide a personal, portable electronic identity that enables encryption, digital signature, access control, and metering. SPYRUS’ solutions include Certification Authority (CA) and Public Key Infrastructure (PKI) services, Secure Electronic Transaction (SETT) payment card security, Secure Sockets Layer (SSL) channel security, and Secure HTTP (S-HTTP) document security. SPYRUS is a privately-held company headquartered in San Jose, California with offices in England and Australia. In September 1998, SPYRUS acquired Signet Systems Pty. Ltd. of Australia, an international provider of Certification Authority (CA) solutions for Public Key Infrastructure. In 1997, SPYRUS acquired Terisa Systems(R) Inc. For more information about SPYRUS, visit the Web site at [www.spyrus.com][1]

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

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Atomic & GTE Sign Pact

Atomic Software, Inc. has entered into an OEM agreement with GTE Wireless to provide a GTE branded version of its Authorizer for Windows 95/98/NT electronic payment software.

The GTE product will be named PC-Retailer and will use GTE’s CDPD (Cellular Digital Packet Data) technology for ultra-fast credit card authorization times. GTE will bundle the software, CDPD modem, and the airtime, for a single low monthly cost to the merchant that is substantially lower than the cost of a traditional credit authorization terminal with a dedicated phone line. PC-Retailer will be marketed through the financial channel including banks, transaction processors, merchant service providers, and GTE’s direct channel of stores, agents, and its direct sales force.

PC-Retailer is designed to process credit card, debit card, purchase card, and check authorizations for all types of environments including: traditional retailers, Internet, kiosks, fast food, mobile, trade shows, delivery, seasonal and temporary merchants, and most other merchants that require ultra-fast transaction times or do not have access to a standard phone line. Transaction times are typically 5-6 seconds versus 12-30 seconds using a traditional phone line. CDPD service is available in most major metropolitan areas.

“PC-Retailer will provide electronic payment capability to mobile merchants that were heretofore unable to collect guaranteed payments before” states Thomas McCole, President of Atomic Software. “Moreover, it opens new markets such as fast food stores with its lightning fast transaction times.”

Atomic Software will also provide and support an Application Program Interface to software developers who wish to integrate CDPD service into their applications directly,and then purchase site licenses for their customers from GTE Wireless. The API offers both a DLL and a file interface for developers, and includes comprehensive technical support to ensure a quick and successful implementation.

Atomic Software is a privately held corporation that specializes in electronic commerce and payment solutions for retailers, mail/phone order companies, Internet merchants, hotels and restaurants. For more information, contact Glynda Murphy at 770 417-1228, or visit our Web-site at [www.atomic-software.com][1].

GTE Wireless is a division of GTE Corporation, a global telecommunications company. For more information, contact Ed Huelsman at 972 527-3268.

[1]: http://www.atomic-software.com

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Authentication

Equifax Secure Inc. and Security First Network Bank announced Monday the first commercial use of next-generation technology that authenticates consumer identity beyond wallet data. Equifax announced the new technology Jan 5. Unlike traditional methods that rely solely on wallet information such as Social Security number, driver’s license number and address to identify users online, the Equifax Secure authentication engine requests both financial and non-financial information that should be known only to the user. The engine compares and analyzes multiple elements in the furnished information against consumer data from Equifax and other consumer and business information sources, including information maintained by the customer. The Equifax Secure authentication service simplifies the sign-on process while verifying the user’s identity in a simple, real-time process which requires the user to complete and submits an online application form. The authentication engine then displays a multiple-choice questionnaire compiled from information managed by consumer and business information sources. The user then completes and submits the multiple choice questionnaire form.

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Teleservices Merger

TeleSpectrum Worldwide Inc. announced  it has entered into a merger agreement with International Data Response Corp..The combined companies, with 30 call centers in the U.S, 4 in Canada, and over 11,000 employees, will become the 7th largest teleservices company in the industry, based on combined 1998 revenues of approximately $330 million.  It will operate under the TeleSpectrum name. The combined company will be headquartered in King of Prussia, PA., at TeleSpectrum’s current headquarters.  Combined, its 34 call centers will have 6,014 seats.  The company also has a consulting and an interactive voice response business.

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Bank One Breaks $70 Billion

Bank One announced this morning that managed card loans ended 1998 at $70,027,000,000. Average managed credit card loans were 15% higher in the 1998 fourth quarter than one year earlier and included the positive impact of the acquired Chevy Chase portfolio. On an end-of-period basis, balances in the VISA/MasterCard portion of the credit card portfolio, which represents 99% of credit card loans, were up 21%. Bank One’s First USA also added a record 2.9 million new accounts in the 1998 fourth quarter.  Cardholders at year-end totaled 56.6 million, down from 57.2 million at the end of the third quarter, the net change related to a joint venture established for the private label business.Net chargeoffs at year-end for managed card loans stood at 4.79% compared to 5.91% one year ago. Delinquency (30+ days) logged in at 4.47% on Dec. 31 compared to 4.90% for Dec. 31, 1997. For complete 4Q/98 earnings report for Bank One visit CardData ([www.carddata.com][1]).

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

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VeriFone Omni 3200

VeriFone, Inc., Monday introduced the Omni 3200 — a sleek, compact POS payment terminal with a fast, integrated thermal printer designed to speed up transactions and lower the total cost of ownership, while occupying less counterspace than comparable solutions.

The new Omni 3200 is the first system in VeriFone’s new family of POS payment terminals that provides hardware and software flexibility to meet merchants’ current and future needs.

Atlanta-based Lynk Systems, Inc. is the first company to offer the Omni 3200 product to its merchant base. The initial release has been a success and Lynk plans to offer this terminal in their suite of product offerings.

“There are a broad array of requirements and emerging applications that payment terminals must accommodate, whether it’s debit and credit applications or new card technologies, such as smart cards,” said Claude Epps, director of Payment Products at Lynk Systems, Inc. “But, it is important that terminal vendors don’t lose sight of the critical needs in the marketplace, such as cost and compatibility. With the Omni 3200 we are very pleased that VeriFone put an emphasis on lowering the cost of ownership and making the migration to new applications a simple process.”

A fully integrated thermal printer helps the Omni 3200 reduce costs by simplifying installation and improving reliability with fewer moving parts and cables, and the covered paper path greatly reduces paper jams. At 12.5 lines per second, the printer helps merchants speed through transactions. 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.

“Over the life of a terminal, there are costs that go far beyond the price of the terminal itself. The Omni 3200 is a durable solution that not only maximizes flexibility and functionality for banks and merchants, but also minimizes the long-term costs of deploying and managing POS payment solutions,” said Pierre Francois Catte, vice president and general manager of VeriFone’s Appliance Systems Division. “With that said, we maintain our focus on future demands for new applications, so we have designed the product with programmable technology and the ability to leverage our powerful and flexible SoftPay software platform.”

The Omni 3200 also helps prepare merchants for the future by enabling easy migration of existing applications. In addition, it provides a path to new applications and virtually any card process and technology. 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

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 Lynk Systems, Inc.

Atlanta-based Lynk Systems, Inc. is an integrated provider of electronic payment services, cash dispensing services and other related value-added products and services. Payment services include the processing of credit and debit cards, check authorization and guarantee and electronic benefits transfer (EBT) transactions from merchant point of sale terminals. Cash dispensing services involve processing transactions from automatic teller machines (ATMs). Lynk operates using internally developed, proprietary processing systems and technologies and differentiates itself by focusing on a single source approach to serving its customers. This strategy provides Lynk customers one company to call upon for all their processing needs and allows Lynk to control quality of service.

About VeriFone

VeriFone, Inc., a wholly owned subsidiary of Hewlett-Packard Company, 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 over 100 countries.

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Mellon Bails Out

Less than three weeks after PA-based PNC Bank announced the sale of its card portfolio, Pa-based Mellon Bank announced, this past weekend, its intentions to exit the credit card business. Mellon said it plans to sell its mortgage business, credit card portfolio and network services transaction processing unit as part of an initiative to sharpen its strategic focus on businesses with the highest return potential. Mellon says the sales of the credit card and mortgage businesses will reduce its exposure to higher-risk assets and reduce potential earnings volatility by eliminating approximately $3.5 billion in loans and mortgage servicing rights from Mellon’s balance sheet. According to CardData, Mellon’s portfolio has $1.7 billion in receivables among 1.6 million accounts. Goldman Sachs & Co. will advise Mellon on the sales of the mortgage and credit card businesses.  Morgan Stanley Dean Witter & Co. will be the adviser in connection with the sale of Network Services. The transactions are expected to be completed by the end of the third quarter. Mellon’s 4Q/98 full earnings report is available via CardData ([www.carddata.com][1]).

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

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Holiday Recap

According to the ‘American Express Retail Index’ second annual holiday spending re-cap, consumers reported they spent 15% more this year versus last year. More than half of retailers reported that the 1998 holiday season was stronger than 1997, with 33% of those saying sales improved by 10% or more. The spending re-cap is based on two surveys, one of 500 consumers and one of 275 retailers, conducted Dec. 28-30. According to the study, shoppers spent an average of $1,148 on total holiday expenses, 14% less than they said they would spend when surveyed just before the holidays. According to the American Express Retail Index, 39% of retailers reported more frequent use of credit cards this year compared with last year. Consumers used a variety of other payment methods to purchase holiday items including checks (39%) and ATM/debit cards (15%).  Seventy-two percent of holiday credit card users report they will pay off their holiday bills by February.

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New DataCard Tools

DataCard introduced two new software products Monday that will make the smart card personalization process faster and easier for developers, integrators and value-added resellers. The new DataCard ‘Smart Card Framework for QuikWorks’ software and the DataCard ‘QuikWorks Production API’, which uses ‘Microsoft ActiveX’, provide all the tools needed to personalize smart cards as part of a seamless, inline card issuance process. The company said they expect the new software products will be used initially for data security applications, but they’re designed to accommodate a full range of smart card-based applications.

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Drexler’s Strong 4Q

Drexler Technology Corp. , a supplier of PC-based optical memory cards and related systems software and peripherals, today reported substantially higher profits for its fiscal 1999 third quarter and nine months ended Dec. 31, 1998.

Net income rose 48% for the three months ended Dec. 31, 1998, to $1,003,000, or 10 cents per share diluted, from $676,000, or 7 cents per share, for last year’s third quarter. Revenues increased 26% for the third quarter ended Dec. 31, 1998, to $4,056,000 from $3,229,000 for the year-ago third quarter.

For the nine months ended Dec. 31, 1998, net income rose over 200% to $2,971,000, or 30 cents per share diluted, versus $978,000, or 10 cents per share, for the nine months ended Dec. 31, 1997. Revenues for the first nine months of fiscal 1999 rose 52%, to $11,563,000 from $7,620,000 for last year’s first nine months.

At Dec. 31, 1998, the company’s cash and cash equivalents totalled approximately $7,750,000 compared to approximately $4,800,000 at March 31, 1998. The company has no debt.

On Nov. 19, 1998, the company announced receipt of a $3 million LaserCard order that included optical memory cards for use as “Laser Visa” cards by the U.S. State Department. Initial shipments of some of these cards were included in third-quarter revenues.

Based in Mountain View, Drexler Technology Corp. manufactures LaserCard(R) optical memory cards. Drexler’s wholly owned subsidiary, LaserCard Systems Corp., develops system software for PC-based optical card systems. At Dec. 31, 1998, Drexler Technology had 9,781,670 shares of common stock outstanding.

              Drexler Technology Corp. and Subsidiaries
      Summary Consolidated Statements of Operations (Unaudited)
                (In thousands, except per share data)

                         Three Months Ended       Nine Months Ended
                         12/31/98  12/31/97       12/31/98 12/31/97 
                                                        
Revenues                 $  4,056  $  3,229       $ 11,563 $  7,620 
Cost of sales               1,982     1,709          5,674    4,214 
Operating expenses          1,072       893          2,997    2,508 
Other income, net              33        72            170      115 
Income tax expense             32        23             91       35 
                                                        
Net income               $  1,003  $    676       $  2,971 $    978 
Net income per share                                    
  Basic                  $    .10  $    .07       $    .31 $    .10 
  Diluted                $    .10  $    .07       $    .30 $    .10 
                                                        
Shares used in computing                                
net income per share:                                   
  Basic number of shares    9,781     9,525          9,736    9,324 
  Diluted number of shares  9,918     9,780         10,016    9,579

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4Q/98 Update

Among issuers reporting strong fourth quarters: Wachovia, Norwest and SunTrust. According to CardData’s ‘4Q/98 Portfolio survey’ Wachovia’s cards-in-force jumped by one million during the last three months of 1998.

4Q/98  PORTFOLIO  STATISTICS
              RECEIVABLES      YTD  VOLUME     ACCOUNTS   ACTIVES      CARDS
Wachovia    $5,511,228,734   $7,896,785,002   5,026,940   2,449,729  7,424,877
Norwest     $1,254,679,737   $2,283,248,147   1,348,075    702,797   1,713,829
SunTrust    $1,053,818,000   $2,092,741,000   1,123,369     545,799   1,572,717
Source: CardData (www.carddata.com)

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AmEx Super Bowl

American Express will debut a new, 60-second TV spot during the Super Bowl featuring Jerry Seinfeld. AmEx is mum on the content except to say the new spot will include references to Seinfeld episodes and will also include another Seinfeld celebrity. AmEx says the commercial tells a story with a surprise ending.To promote the new Super Bowl commercial, AmEx launched four 15-second teaser ads during the playoffs this past weekend. The commercial is a collaboration by Jerry Seinfeld and Ogilvy & Mather. The spot was directed by Backyard Productions and edited by Big Sky.

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