Cash Back Suit

The Discover card has filed suit against American Express over its use of the “cash back” phrase for promoting AmEx cards. Novus Credit Services filed the suit in New York City just before the Thanksgiving Day holiday break. The suit stems from an AmEx recent promotion of a ‘Cash Back Card’ offering up to 2% back. Discover has offered 1% cash back to its cardholders since 1986. In court papers filed, Novus alleges American Express acted in a “willful, wanton and egregious way”.


Moody’s Stats

Credit card chargeoffs and delinquency dipped a bit during the October collection period according to Moodys’ Investors Services. Based on data for securitized credit card pools chargeoffs dipped to 6.11% in October compared to 6.60% one year ago. Delinquency dropped to 5.17% in October compared to 5.36% last year. Moody’s noted, however, that repayment rates have escalated. During October, cardholders paid-off 14.90% of their balances. Moody’s tracks $260 billion worth of credit card bonds.



VISA’s major brand re-positioning is drawing fire from the Independent Bankers Association of America. The IBAA issued the following statement over the holiday: “The community bankers of this nation were among the founders of the Visa member association nearly 30 years ago.  These same banks, under the leadership of Visa’s first CEO Dee Hock, helped transform the Visa mark into the top brand in card products and one of the most widely recognized brands in the world today.  While many brands have fallen because of competition, it is inconceivable that the strength of the brand all Visa members have built could be toppled solely through the influence of one board member.  The Independent Bankers Association of America, representing over 5,000 community banks, condemns this action and urges all Visa members to call for a thorough airing of this matter and the brand positioning issue among all members.” The IBAA says what is especially disturbing is the cavalier manner in which Visa appears to have handled it.



idealab! announced Friday the introduction of eWallet, the first PC program that allows consumers to make safe, secure purchases anywhere on the Web with a single click.

eWallet can be quickly and easily downloaded for free at [][1].

eWallet is stored securely on a user’s PC, eliminating the need to go to a special Web site first to get it to work. It is also compatible with all existing credit and debit cards — no need to sign up for anything new. Consumers enter their billing and shipping information in their eWallet just once, eliminating the need to reenter that same information every time they visit a new online shopping site. Because eWallet is designed to work at every e-commerce site on the Web, users’ shopping options through eWallet are limitless. And unlike other forms of virtual or electronic “cash,” use of the eWallet is free to both consumers and merchants.

“E-commerce has taken off and people are more comfortable buying on the Web every day. But it still hasn’t caught on with the majority of consumers in part because of how cumbersome the purchase process is once you find what you’re looking for — most people, in fact, are so put off by all the forms they have to fill out that they actually abandon their online shopping carts once they reach the checkout screen,” said Bill Gross, CEO.

“It reminds me of the early days of credit cards when every transaction had to be manually authorized. We’ve created eWallet to be as easy as swiping your credit card through a magnetic card reader, making checking out on the Internet even faster and easier than in the real world.”

Here’s how eWallet works: After the program has been downloaded (which takes less than five minutes at normal modem speeds), consumers simply input their credit card and shipping information once and encrypt it on their own PC with a personal identification number (PIN). Then they do all of their online shopping as they normally would. Once they encounter a checkout screen at an e-commerce site, they simply click on their wallet, enter their PIN and drag the credit card of choice over to the form. All of the credit card and shipping information is entered automatically and instantly. Once the ‘submit’ button is pressed, the transaction is complete.

eWallet also makes finding goods and services on the Web easier by letting consumers query several leading search engines directly from the eWallet task bar, which resides at the bottom of the PC screen, and by providing direct links to some of the more popular merchants on the Web. In addition, eWallet is unique in that it is stored on a user’s own PC and resides outside of the browser. It is completely secure and available anytime for users to change or update their information offline.

eWallet requires Microsoft Windows(R) 95 or 98 and works either with Netscape Navigator/ Communicator 4.0 or higher or with Microsoft Internet Explorer 4.0 or higher.

eWallet is the latest business to spawn from idealab!, the nation’s leading Internet incubator. Founded in March 1996 by entrepreneur Bill Gross, idealab! currently has more than 20 businesses including CitySearch, the industry-leading local information service,, the fastest-growing Internet search engine, and eToys, the leading online toy retailer.



MAC-MAS Record

EPS reported last week that its subsidiary Money Access Services processed 386 million switch transactions during the third quarter, an 18% growth over one year ago. ATM volume was also up 18% to 349 million transactions, while MAC POS transactions soared 25% for the third quarter to 37 million. EPS also announced that the MAC network was the first regional network to announced it will raise its online POS interchange from 6.5 cents to 10 cents, effective July 1, 1999.


Holiday Sales Up 4%?

Holiday sales are expected to increase 4% over last year, according to a survey of three dozen retail industry analysts conducted by the International Council of Shopping Centers (ICSC) for the fifth consecutive year.

“This survey confirms what we’ve been hearing from shopping center executives over the past few weeks: sales will be strong this holiday season. Economic indicators like unemployment, inflation, interest rates, weekly earnings and consumer confidence are indicative of a robust economy. Retail sales have been strong all year long and if we finish the year with the same momentum, and all indicators are telling us we will, retailers will be pleased,” said Dr. John Konarski, vice president of research for ICSC.

In addition to a seasonal prediction, the analysts were asked to identify the most popular merchandise categories and the type of retailers that will capture the most sales. Questions included:

1.   Because of improved product offerings, this will be a particularly strong year for:

———————————————————– ———-
                                                            % of resp.
                    MERCHANDISE CATEGORIES
———————————————————– ———-
Computers, computer-related products                            53%
———————————————————– ———-
Other electronic items, such as TVs, stereos                    53%
———————————————————– ———-
Household items, such as glassware, linens, appliances          47%
———————————————————– ———-
Entertainment products, such as CDs, videos, video games        47%
———————————————————– ———-
Clothing, shoes and accessories                                 32%
———————————————————– ———-
Books, magazines                                                26%
———————————————————– ———-
Recreation items, such as camping gear and sports equipment     18%
———————————————————– ———-
Furniture                                                       15%
———————————————————– ———-
Toys                                                            15%
———————————————————– ———-

The majority of the analysts believe that 1998 will be a particularly strong year for computers & computer-related products (53%) and other electronic items (53%). Household items and entertainment products tied for second place, with nearly half of the analysts believing that this will be a particularly strong year for these two merchandise categories.

Fewer than 20% of the analysts believe that this will be a particularly strong year for recreation items (18%), furniture (15%) and toys (15%). In view of the wide publicity for toys, the 15% rating for this merchandise is very low.

2.   Please state whether the following retail formats will capture more, the same or less of total holiday sales this year:

—————————————– —— —— ——
             RETAIL FORMAT                 MORE   SAME   LESS
—————————————– —— —— ——
Department Stores                           9%     24%   68%
—————————————– —— —— ——
Discount Stores                             91%    9%     0%
—————————————– —— —— ——
Specialty Stores                            52%    36%   12%
—————————————– —— —— ——
Factory Outlets                             3%     41%   56%
—————————————– —— —— ——
Warehouse Clubs                             48%    42%    9%
—————————————– —— —— ——
Big Box/Category-killer                     42%    48%    9%
—————————————– —— —— ——
On-line (web-based) retailers              100%    0%     0%
—————————————– —— —— ——
Mail order catalogs, TV shopping channels   16%    48%   35%
—————————————– —— —— ——

According to the survey, four retail formats will capture more of total holiday sales this year, namely discount stores (91%), specialty stores (52%) and warehouse clubs (48%). All the surveyed analysts rated on-line retailers (100%) as capturing more of total holiday sales this year.

Big box/category-killers (48%) and mail order catalogs & TV shopping channels (48%) will capture the same amount of total holiday sales as last year.

Department stores will capture less of total holiday sales this year, according to a little more than two-thirds of the surveyed analysts. Factory outlets will also capture less of this year’s holiday sales (56%).

3.   Indicate your prediction about how people will pay for their holiday purchases, compared with last year:

———————————— ——– ——– ——–
          FORM OF PAYMENT              MORE     SAME     LESS
———————————— ——– ——– ——–
Cash/check/debit cards                  29%      50%      21%
———————————— ——– ——– ——–
Major credit cards                      62%      38%      0%
———————————— ——– ——– ——–
Store-issued credit cards               15%      46%      39%
———————————— ——– ——– ——–

About 62% of the analysts predict consumers to use major credit cards for holiday purchases more than they did last year. Cash/check/debit cards (50%) and store-issued credit cards (46%) will be used about the same as last year.

The International Council of Shopping Centers is the trade association of the shopping center industry, representing more than 37,000 members in U.S., Canada and over 70 other countries. For more information on the holiday season log onto ICSC’s web site: [][1].



BMW Card

MBNA America and the BMW Car Club of America teamed up late last week to issue an affinity credit card to more than 47,000 BMW members. MBNA says more than 1.5 million customers have chosen an MBNA credit card connected to the more than 300 motorsports groups that endorse MBNA, including NASCAR, the Indianapolis Motor Speedway, and the National Hot Rod Association.  MBNA offers more than 70 credit card programs designed for automotive enthusiasts and car club members.


E-Commerce Ed

A pioneering effort to help build industry consensus around new ways to charge for digital information delivery was announced last week by University of Massachusetts researchers.

The Internet Information Payments Collaborative ([IIPC.NET][1]) is part of a broader electronic-commerce research center formed by computer science, business and economics faculty, researchers say.

“Internet development is a group effort, and we think public- private collaboration among academic and business researchers is to everyone’s advantage,” says Dr. Leslie D. Ball, a professor at the Isenberg School of Management who is co-directing both initiatives.

The info-payments effort is the first of a broader research initiative at UMass called the Interdisciplinary Center for Electronic Commerce (ICEC). International Business Machines Corp. has contributed “significant hardware and software resources” to the ICEC, Ball added.

“Publishers are confused by the array of unproved options for managing and selling information on the Internet,” says Stephen C. Mott, IIPC’s other co-director. “We provide a way to pool research- and-development around finding a common infrastructure for on-demand purchase of digital information, including words, sounds and pictures.”

The payments collaborative plans a summit conference Feb. 28- March 2. (See: [][2]). It will also study and market-test information-payment technologies, including one offered by a Massachusetts-based startup, Clickshare Service Corp., which is an IIPC technology collaborator.

Both Mott and Ball said they saw the need for the IIPC emerging from the failure of several pioneering information-payment protocols to gain a critical-mass of commercial adoption.

They said it is clear the market for information sales needs a forum for developing consensus on an operating structure. The network operating structure needs to support competitive yet interoperable marketing and pricing beyond subscriptions and advertising sales, they added.

Ball says the collaborative plans an initial budget of $400,000 derived from a three-tiered corporate sponsorship structure. It will assess after a nine-month research-and-trial program whether to disband, continue or merge with an existing standards body.

Ball joined UMass in September after more than a decade with Computer Sciences Corp., most recently running a multi-million dollar practice group within the El Segundo, Calif.-based information-technology consultant.

Mott is a consultant and former senior vice president for electronic commerce with MasterCard International Corp. who preceding his business career with a stint in journalism at Dallas and Washington, D.C. dailies. He is also a director of Clickshare.

Clickshare has provided initial resources to help establish the IIPC but the company will not control IIPC’s research or recommendations, and relationships with other technology partners are likely, said Ball. He said publishers, banks, telcos and ISPs are among potential sponsors expressing interest in joining the collaborative.

An established, not-for-profit technology-transfer organization chartered and controlled by UMass faculty will manage IIPC’s technical work at the direction of IIPC’s member steering committee. The Applied Computing Systems Institute of Massachusetts Inc. (ACSIOM), is based adjacent to the Amherst campus.

The Internet Information Payments Collaborative c/o The Applied Computing Systems Institute of Massachusetts Inc. Massachusetts Venture Center 100 Venture Way Hadley MA 01035 (413) 587-2180 [][3]



Mondex Anniversary

Mondex Asia, Hong Kong Bank and Hang Seng Bank celebrate the first anniversary of the commercial roll-out of Mondex electronic cash in Hong Kong this morning. This represents the world’s largest Mondex electronic cash implementation. Over 165,000 cards are currently in circulation with more than 700 ATMs available for loading value onto those cards.  Mondex electronic cash is now accepted in over 7,000 merchants across Hong Kong Island. Mondex indicated this morning that it expects to issue multi-application MULTOS cards in Hong Kong, during 1999. Mondex says in contrast to other e-cash programs, the people of Hong Kong are actively signing up as opposed to being issued a card.  More importantly, people are re-loading their cards, using them regularly and making them part of their everyday life. The company says with success in places like Hong Kong, and Chile and France, Mondex and MULTOS are looking to the global markets.


Natl Online Shopping Week

The Association for Interactive Media (AIM), a subsidiary of the Direct Marketing Association (The DMA), will co-sponsor the first annual National Online Shopping Week (NOSW), November 27 – December 4, 1998.  This joint effort with MasterCard International (), EZSpree (), and FamilyPC Magazine ([][1]), was developed to raise consumer awareness about safe Internet transactions, and promote the fun and convenience of shopping online. You can link to the National Online Shopping Week web site from the AIM Web site at .

“Our members are committed to promoting consumer confidence on the Web and utilizing ethical business practices,” said Andrew L. Sernovitz, president of AIM.  “All consumers should know that shopping on the Internet is as safe as any other way to shop.  Plus, nothing beats the convenience and efficiency of shopping online.”

Participating members include BigYellow, BuyItNow!, Discovery Channel Shopping, BMG Music Service, CDnow, Crutchfield Stereo, First Auction, Fragrance Counter, Impulse! Buy Network, Music Boulevard, Office Depot, Omaha Steaks, PC Flowers & Gifts, The Sports Store @ CBS Sportsline, Sony Pictures Studio Store,, Travelocity, and Universal Studios.

“This is a terrific opportunity for online retailers to show consumers that shopping online is safe and efficient,” said Robin Lebo, director, customer acquisition, Crutchfield Corporation.  “By delivering a positive and secure shopping experience, we are building consumer confidence in the Internet and developing this as an efficient channel for trade in the next millennium.  As a member of AIM, we commend them for sponsoring this strategic initiative.”

AIM members participating in NOSW are required to adhere to the latest in secure transaction protocols, have a consumer privacy policy that is accessible online, and offer consumer incentives during National Online Shopping Week.  AIM members are offering interesting incentives to online shoppers; for example, Crutchfield will offer free shipping to shoppers who link to its site from the NOSW site; and First Auction is offering Click Rewards to all auction winners which can be redeemed as frequent flyer miles or for other goods and services; PC Flowers & Gifts will offer 10% off on purchases; and CDnow is featuring a $5 discount on purchases.

Companies participating in the NOSW program can be identified by the National Online Shopping Week logo on their Web sites.  Links to these web sites can be found at .

The Association for Interactive Media, a subsidiary of The DMA, was founded in 1993 and is the largest Internet trade association.  AIM’s more than 300 member companies are committed to maximizing the value of the Internet to businesses and consumers.  AIM’s mission centers on defending the industry in Washington; promoting consumer confidence; and providing business-to-business networking opportunities.  AIM delivers unmatched benefits to members such as power lobbying, conferences, insider-only news services, and the best source of business leads available to the industry.



Brownstone Card

NY-based Diplomat Direct Marketing Corporation announced Tuesday that it has launched the ‘Brownstone’ private label credit card for use in its Brownstone Woman and Brownstone Studio catalogs. The ‘Brownstone’ card follows the introduction of the ‘Lew Magram’ private label credit card in the Spring of 1993. The company now has a total of over 130,000 private label credit holders between its Lew Magram and Brownstone brands.


Smart/Crypto Builder

Bull announces Smart Builder and Crypto Builder, two development tools that will enable personal computer users to create their own custom smart card applications in a Microsoft Windows environment. Included in the tool-box are examples which make it easy for users to build and validate their own scenarios.

With its “cryptographic” cards, Crypto Builder can be used to develop applications requiring the highest level of security. This is because the TB Crypto smart card that will embody the application provides strong security mechanisms protecting the card holder’s identity.

For example, with Smart Builder and Crypto Builder, value-added resellers or company departments can develop applications dedicated to:

— Identification — the smart card secures access to Internet, Intranet, Extranet and protects information that is considered sensitive — Transportation — the card stores information such as ticket type, date of validity and destination — Education — the smart card protects course content in remote learning environments. — Secured use of Microsoft’s Outlook Express(tm) and Internet Explorer 4.0(tm) software — the card implements a digital signature capability to ensure the integrity and non-repudiation of messages.

Easy to install, Smart Builder and Crypto Builder each come in a box containing two plug and play smart card readers running in the Microsoft 95, 98 and NT5 environments. Smart Builder and Crypto Builder comply with specifications developed by the Personal Computer/Smart Card (PC/SC) consortium, of which Bull is a founding member.

Smart Builder

Smart Builder includes two SmarTLP3 “plug and play” card readers, ten TB cards (seven pre-customized and three customized cards), a Secure Access Module (SAM), a CD-ROM containing the documentation and development tools. Recommended retail price for Smart Builder is 4,000 FF

Crypto Builder

Crypto Builder includes two SmarTLP3 “plug and play” card readers, five customized TB Crypto cards, a Secure Access Module (SAM), a CD-ROM containing the documentation and development tools. The TB Crypto card can contain personal information, public and private access codes and two X.509 or higher certificates. Recommended retail price for Crypto Builder is 4,800 FF

Bull: Founding Member of PC/SC Consortium

The PC/SC Consortium was set up in May 1996 in partnership with the biggest suppliers to the micro-computing and smart cards market, including Bull. The group’s main aim was to develop specifications to solve problems of interoperability. In December 1997, version 1.0 of these specifications was published. As its name suggests, the PC/SC specification provides a non-proprietary interface through which a PC-based application can communicate with card readers and smart cards.

About Bull Smart Cards & Terminals

Bull Smart Cards & Terminals is the industry leader in the field of secured financial transactions. Bull designs, develops and markets global smart card solutions for financial, loyalty, transport, telecommunications, healthcare and other applications. Products include contact-contactless cards plus a full range of general purpose and EFT/POS terminals, automated teller machines, as well as associated software and services.

Bull Smart Cards & Terminals is the acknowledged industry leader in research, development and security related to smart cards & related terminals. The company is also the worldwide leader in electronic purse cards. Since inventing the microprocessor smart card in 1976, Bull has obtained more than 1200 patents in the field, and has received certification for smart card security that is the highest level ever achieved by a smart card.

In 1997, Bull Smart Cards & Terminals earned revenues of 1416 million of FF ($280 million). By relying on Bull international network, the division achieves 80% of the revenue abroad.

About Bull

Bull is an international I.T. group based in Europe with 21,000 people and operations in nearly 100 countries. In 1997, Bull earned revenues of $4.2 billion including over 65% outside of France, its country of origin.

Bull offers a wide range of systems, infrastructure software and I.T. services, through focused innovation, alliances with the best partners and its own integration expertise. In its industry, Bull is recognized for innovative products including Escala family of open servers, smart cards and software such as OpenMaster for secure management of systems and networks. In I.T. services, Bull is ranked in Europe as the third largest systems integrator and fifth in maintenance and support services. Information on Bull is available at:     More information on these activities can be found on the World Wide Web at: , on Groupe Bull at: