Brand Support

The four major payment card brands spent $143 million during the second quarter in ad expenses according to figures released yesterday by NY-based Competitive Media Research. While overall ad spending grew less than 6% compared to second quarter 1997, American Express boosted its second quarter spending by 40% offsetting Discover’s 60% reduction in ad spending.

       Brand          2Q-1998              2Q-1997
       VISA             $49.3 million     $46.9 million
       AmEx          $46.1 million      $32.8 million
       MasterCard    $37.3 million         $29.4 million
       Discover       $10.3 million          $26.3 million
       Total          $143 million          $135.4 million
         Source: Competitive Media Research


CU-3Q 1998

Mid-sized credit union card portfolios posted mixed results for the third quarter. According to CardWeb’s CardData service ([][1]) the University of Colorado credit union, with an average balance of $1757 per card, outpaced its peers for the third quarter. The data are from CardData’s ‘Third Quarter 1998 Portfolio Survey’ now underway. CardData provides current and historical quarterly financials on more than 350 issuers in real-time.


Tinker CU (OK)      $34,991,209     (-10%)    50,006
Provident Central CU (CA)  $33,459,156     (-63%)    32,232
NWA FCU (MN)              $30,900,302    (+3%)   49,819
University of CO (CO)     $28,958,350 (+21%)   16,485
Tenn Valley FCU (TN)      $25,131,547    (-6%)   15,604
Source: CardData (     
CHNG-percentage of change since 2Q-97



High Tech

Philips Semiconductors revealed Monday that its ‘P83W858′ cryptocontroller has set new benchmarks with its high-level security features designed to prevent hackers from accessing a smart card holder’s personal information. The results were confirmed by the TNO Evaluation Center based in The Netherlands. Based on the ’80C51’ architecture, the ‘P83W858′ is the world’s first smart card IC to use a new fully automated design technique called glue logic design. Glue logic significantly reduces the risk of hackers tapping into the card’s information by finding signals or nodes to physically attack the IC. The glue logic design process will be transferred to all of Philips Semiconductors’ smart card controllers and cryptocontrollers by the end of 1998. The comprehensive security features of the ‘P83W858’ also include anti-hacking sensors that disable the chip when it is used outside normal operating conditions and a unique 32 byte FabKey identifier, which acts as a security key during manufacture and distribution. Datakey recently announced its decision to use the ‘P83W858’ as the cryptographic processing chip in its ‘SignaSURE Model 320 Smart Card’ and ‘Model 370 Smart Key’ smart-token operating systems.


Bankruptcy Reform Con

The National Association of Consumer Bankruptcy Attorneys (NACBA) expressed thanks to the President, Members of Congress and a broad-based group of allies for standing firm against the credit card companies’ $50 million campaign to destroy America’s bankruptcy laws.  NACBA’s allies include advocates for consumers, civil rights, women, the elderly, working men and women; victims of drunk drivers; and many others who are concerned with just and fair reform of the bankruptcy system.  NACBA and its allies came together to counter an extraordinary lobbying and public relations campaign mounted by credit card companies and large banks.

“NACBA and its allies insisted from the start that the credit industry take its fair share of responsibility for American bankruptcies,” said Norma Hammes, president of NACBA.  “We said all along that even-handed bankruptcy reform legislation must address the unfair and abusive lending practices of credit card compa industry refused to accept its fair share of responsibility, the industry’s misguided bankruptc President and Members of Congress who took a strong stand against this one- sided bankruptcy

“The credit card compa i undermine the nation’s bankruptcy system,” said Ike Shulman, NACBA’s legislative director.  “The big banks made millions in campaign contributions; spent millions on lobbyists, public relations people, and advertising; hired key former Congressional staffers; and even wrote key provisions of the legislation.”

“Fortunately, the President and key Members of Congress agreed with NACBA and its allies that the credit industry’s proposed legislation totally ignored the responsibility of the banking industry for the increase in American consumer indebtedness,” sai made our case that the credit industry- sponsored legislation would have hurt women, children, working families, older Americans, and victims of drunk drivers.”

NACBA president Norma Hammes and le islative director “to continue to work with our allies in a strong and unified fashion in order to protect against any future attempts by credit card companies to spend millions of dollars in the pursuit of self-serving but counterproductive legislation.”


Bankruptcy Reform Pro

The National Retail Federation, the world’s largest retail trade association, condemned the administration’s failure to act on meaningful legislation to correct misuse of the nation’s bankruptcy system.  Despite overwhelming bipartisan support from both the House and Senate, the bankruptcy reform bill fell victim to the Congressional clock and the White House’s threat of a veto.

“The American people have spoken — personal responsibility matters,” said Mallory Duncan, Vice President and General Counsel, NRF.  “We’re disappointed that the White House chose to ignore that message”

Duncan added, “We’re  puzzled that a bill that helps those in need and enhances protection for ex-spouses and children has yet to receive the President’s endorsement.”

Over the past year, NRF has helped to lead the effort to educate consumers and Congress as to the gross misuse of the system.  NRF is urging Congress and the White House to place bankruptcy reform high on the legislative agenda of the 106th Congress when it reconvenes.

The National Retail Federation (NRF) is the world’s largest retail trade association with membership that includes the leading department, specialty, discount, mass merchandise and independent stores, as well as 32 national and 50 state associations.  NRF members represent an industry that encompasses more than 1.4 million U.S. retail establishments, employs more than 20 million people — about 1 in 5 American workers — and registered 1997 sales of more than $2.5 trillion.   NRF’s international members operate stores in more than 50 nations.

For more information about NRF, visit its Web site at


Rainbow & VeriFone

Rainbow Technologies, Inc. , a provider of high-performance security solutions for the Internet and electronic commerce, and VeriFone, Inc., the global provider of secure electronic payment solutions, yesterday announced a relationship in which Rainbow’s CryptoSwift II web server accelerator will provide secure key generation and storage for VeriFone’s vPOS merchant Internet payment software and vGATE Internet gateway software for financial institutions. CryptoSwift II will enhance performance, thus reducing transaction times experienced by end users when financial transactions are processed over the Internet.

VeriFone’s vPOS and vGATE interact to enable secure, seamless payment over the Internet utilizing RSA public-key cryptography and the Secure Sockets Layer (SSL) and MasterCard/Visa SET Secure Electronic Transaction protocol. Rainbow’s CryptoSwift II web server accelerator will handle the processor-intensive encryption and authentication associated with these transactions.

“We’re committed to working with leading technology providers such as Rainbow in delivering highly secure Internet payment solutions to our customers,” says Elizabeth Ames, general manager for VeriFone. “Offloading the public key encryption processing to CryptoSwift reduces overall transaction times providing efficient, high performance processing of financial transactions via the Internet.”

CryptoSwift II

Rainbow’s CryptoSwift II is user installable and simply plugs into the PCI slot of a secure web server. CryptoSwift II accelerates the SSL and SET transactions, and can handle 200 transactions per second and perform a reference RSA signature in 5 milliseconds. In comparison, a Pentium II processor at 400Mhz takes 25 milliseconds — five times longer — to complete the same operation. In real-world servers, CryptoSwift II improves server response time by up to 90 percent by offloading and accelerating public key cryptography.

CryptoSwift is widely deployed in Internet applications, including applications for e-commerce, brokerage, financial services, education and other markets in which high-performance secure Web servers are required. In addition, CryptoSwift supports Certicom’s elliptic curve cryptography (ECC) and RSA cryptography.


VeriFone’s vPOS Merchant Software is a flexible point-of-sale application that easily handles payments for Internet-based merchants. Merchants can accept online payments from their customers and conduct follow-on transactions to their financial institution with security, convenience and flexibility. vPOS allows the merchant’s online storefront to process transactions sent by a consumer with either the SET protocol or the SSL (Secure Sockets Layer) Internet protocol. vPOS Software also enables secure transmission of data between the merchant and the financial institution’s gateway, or point of contact, via the SET protocol.


VeriFone’s vGATE software lets merchant banks and other financial service providers accept transactions from Internet storefronts-without altering the institution’s existing host system. The software can simultaneously accept secure online messages and manage transactions from multiple Internet merchant servers. Financial institutions using vGATE Software can communicate with their customers via the SET protocol.

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 six million electronic payment systems, which are used in over 100 countries.

About Rainbow Technologies

Founded in 1984, Rainbow Technologies is a world leader in providing cryptographic solutions. Rainbow’s products and technologies include software protection, asset and license management, and Internet distribution for software developers and IT managers. Addressing the security needs of the U.S. government, aerospace industry and companies conducting business on the Internet, Rainbow’s products include sophisticated cryptographic chips for public and private networks, wireless and satellite communications; and high-speed accelerator boards for secure web servers. Rainbow’s expertise has focused on changing the way the world secures business. Rainbow is headquartered in Irvine, California. For more information visit our web site at or contact us at (949) 450-7300.

CryptoSwift is a registered trademark of Rainbow Technologies, Inc. VeriFone, the VeriFone logo, vGATE, and vPOS are either registered trademarks or trademarks of VeriFone, Inc., in the US and/or other countries.


Instant Approvals

VA-based American Management Systems yesterday released a Web-based software application that enables financial institutions to provide their customers direct access to instant loan decisions, including credit card applications online. ‘ACAPS Credit Xpress’ is an object-oriented loan server that interfaces in real time with a bank’s legacy loan origination system, giving customers an answer within seconds. The subsystem was originally developed with Bank of Montreal last year as part of the first banking Web site in North America to offer and immediately decision mortgage, student loan and credit card applications online.


Save The Children Card

First USA and the international relief and development organization Save the Children rolled-out the ‘Save the Children Platinum MasterCard’ Monday. The affinity program will generate donations for the non-profit organization based on charge volume. The no-annual-fee card offers applicants three unique card designs: “Children of the United States”; “Helping Children and Families Around the World”; and “My Town”. Each design was created by a child and selected by a panel of judges for the annual Save the Children Art Contest. Since Save the Children will not directly promote the new card, First USA will run a direct mail campaign and advertise on several websites, including;; and Meanwhile, MasterCard International will join Save the Children and First USA to sponsor the Save the Children Art Contest for this year, with the winning artwork to be featured on a future ‘First USA Save the Children MasterCard’.



Mitsubishi Corp. and three other companies threw in the towel late Friday as the group announced it is dissolving a joint venture to develop noncontact-smart-card systems. Mitsubishi and Toyota Motor Corp.,  Nippon Oil Co. and FamilyMart Co. established the venture exactly two years ago. The group aimed to develop electronic-currency systems using noncontact smart cards in place of cash, designing the systems for convenience stores, gas stations and other retail outlets. After a two-year research period the the group could not come to terms over the 10-20 billion yen required for start-up. The assets of the smart-card-systems firm will now be liquidated, however the basic system concepts and patents will be held jointly by the group.


Fraud Case Study

West Marine has learned the ins and outs of fraud prevention and detection. By utilizing internal systems and services from its credit card processor, the water craft and sport accessory retailer uncovered internal fraud in its catalog operations that created significant exposure. One of the key tactics that helped nab the dishonest employees was contributed by Paymentech, the marketer’s payment processor. Paymentech identified false credit card refunds that proved to have no recorded corresponding order and payment transaction.

Paymentech clients have benefited in many ways from such fraud prevention and detection tools and services. For example, Paymentech has identified and helped stop 13 cases of internal fraud this year alone as well as reducing external fraud risk. Paymentech, the largest credit card processor for direct marketers, is highlighting testimonials from major direct marketers at the Direct Marketing Association’s annual conference held October 11-14 in San Francisco.

“Paymentech’s fraud prevention tools are a superb complement to internal controls,” said Dave R. Rowan, director of management controls for West Marine Products. “Paymentech has developed some excellent products geared to the special needs of direct response marketers. They are a great partner for both customer service and fraud control.”

In West Marine’s case, order entry personnel generated false credits to personal credit cards. Paymentech has developed specific internal exception reports to assist Paymentech’s risk management staff in detecting unusual and potentially fraudulent activity. The risk group, utilizing their experience and knowledge, are quick to identify significant variances or exceptions which warrant closer review and investigation.

Paymentech noticed irregularities on West Marine’s refund report. The payment services provider tracked down and confirmed the suspicious transactions and verified the cardholders’ identity. With this evidence, West Marine was able to confront the suspected employees, who confessed to the crime. The company also implemented extra internal controls to address the risk issue.

In addition to specific tools, many merchants benefit from consultation with Paymentech on how to enhance internal processes. According to Sam Rivera, accounting and collections supervisor with automotive parts direct marketer JC Whitney, “This kind of support enables us to focus more on customer service. Paymentech supplies data for our systems and their transaction activity reports aid us in monitoring internal and external exposure.”

Some of the recommendations that Paymentech’s direct response unit makes to clients through fraud seminars and training include the following:

track orders to recognize patterns that are above normal purchasing trends,

attach order numbers to every credit processed so that loss prevention can identify credits that do not have a corresponding sale or original order,

do not issue refunds to “no charge” shipments,

create reports to track and verify high dollar returns and non-receipt claims,

purge prospect lists against external negative file sources and exclude the hits from marketing efforts, and

use telephony resources such as caller ID to capture fraudulent numbers for a negative file.

Paymentech’s management system reduces the administrative burden of risk management for customers using its direct marketing processing. A few of these tools include:

Address Verification System (AVS): Paymentech pioneered this service with the card associations specifically for direct marketers. By passing the cardholder’s “bill to” address during authorization, direct marketers can verify it matches the address with the card issuing bank.

Automatic AVS: Ordinary AVS messaging requires merchant intervention to determine whether or not to ship product. Paymentech’s automatic AVS manages this processes through preset criteria that automatically determine whether or not Paymentech processes the transaction or returns it as a non-deposit item.

Transaction Ceiling Limits: This function blocks any transaction greater than a dollar amount (average order value) that a particular merchant pre-establishes.

Personalized Risk Management: Paymentech monitors current customer activity against a historical data base that can detect abnormalities.

Duplicate Detection: Paymentech scans incoming deposit files to determine if duplicate transactions were previously processed on the merchant’s behalf. Repeated purchases of the same amount often indicate fraud.

About JC Whitney

Established in 1915, JC Whitney (Chicago, IL) is the largest direct marketer of automotive parts and accessories. Known for being a source of unique, hard to find and custom products for vehicles dating back to the 1920s, JC Whitney offers over 55,000 high quality brand name and private label products with 4.2 million applications for domestic and imported cars, pickup trucks, motorcycles, and JeepÒ and VolkswagenÒ vehicles. JC Whitney markets to millions of customers – including auto professionals, hobbyists and businesses – through its family of catalogs and Internet site ([][1]).

About West Marine

West Marine is the nation’s largest specialty retailer of recreational and commercial boating supplies and apparel, and operates under the names West Marine and E&B Discount Marine. The Company sells through 212 specialty retail stores, the Internet, catalogs and through a wholesale division operating under the name Port Supply.

About Paymentech([][2])

Paymentech, Inc., founded in 1985, is the leading provider of full-service electronic payment solutions to the direct response industry (catalogue, direct marketing, telemarketing and response television). Paymentech is the nation’s third largest processor of bankcard transactions and a leading issuer of MasterCard and Visa commercial cards.



Fee Frenzy

The march towards still higher card fees continues as Advanta is now assessing cardholders of its ‘No-Fee MasterCard BusinessCard’ a $35.00 late payment fee and a $35 over-limit fee. Industry wide the average late payment fee broke through the $20 level last month according to CardData ([][1]). This month the average over-limit fee also broke through the $20 level. CardData says the average late payment fee now stands at $21.58 while over-limit fees now average $20.44. A review by CardWatch ([][2]) of card solicitations mailed in the past 60 days shows the nation’s ten largest issuers now charge late fees averaging $26.10 and over-limit fees averaging $25.70. Based on historical data, late fees have climbed 15% and over-limit fees have climbed 17% in the past twelve months. However late fees have surged 58% and over-limit fees have surged 53% since September 1996.

Issuer Late Fee          O/L Fee
Citibank $25.00           $25.00
MBNA 25.00            25.00
Bank One/FUSA 29.00            25.00
Discover 25.00            25.00
Chase 29.00            29.00
Household            25.00            25.00
First Chicago        29.00            29.00
Fleet                29.00            29.00
Cap One              25.00            25.00
B of A               20.00            20.00
AVG                 $26.10           $25.70
      Source: CardWatch ( 1-800-260-7448



Analog Prints

delSecur’s ‘del-ID’ system has been endorsed by the Computer Research Institute of Montreal. The delSecur system processes fingerprint image data through analogical, not digital means. The abstract image of the fingerprint is then implanted into products such as a credit card, cellular phone or computer, and is recognized as a personal electronic signature to be used for access. The company says its approach can guarantee privacy, security and is low-cost because its architecture is unusually simple. In March 1998, delSecur announced the signing of an agreement in principle with Tianjin Global Magnetic Card Co Ltd, the giant Chinese enterprise whose commercial interests include printing of the bank notes of the Peoples Republic of China and exclusive management of VISA and Master Card operations throughout China.