Federal Heat

The U.S. Department of Justice has not shelved its probe into alleged antitrust violations by VISA and MasterCard. Assistant attorney general Joel Klein told the Senate Judiciary Committee this week that he continues to be “personally” and “extensively” involved in the investigation. Klein indicated the delay in action is due to the fact that the bank card association issue is so “broad and profound for America’s economy”. Klein said “the matter has not receded into the twilight” and remains a top priority. At least one other member of the Committee expressed concern over the recently announced bank mega mergers which would concentrate the bank card industry even more. Reportedly the Federal Trade Commission has now launched a probe into debit card use.


Garfield MasterCard

Tomorrow marks the 20th birthday of cartoon character ‘Garfield’, and MBNA is set to release a special MasterCard to honor the big, fat hairy cat. The wisecracking, nap-taking, coffee-guzzling, lasagna-loving, Monday-hating, dog-punting, credit-card-carrying fat cat was created by Jim Davis and is managed by Davis’ company, Paws, Inc. MBNA and IN-based Paws have teamed up to offer the card which will offer rewards towards ‘Garfield’ merchandise. ‘Garfield’ first appeared in 41 U.S. newspapers in 1978 and has grown to 2,550 newspaper clients, and nearly 600 licensees located in 111 countries around the globe. The cartoon character is read by over 220 million readers daily.


AmEx Senior Marketer to Intellipost

Intellipost Corporation has named Randy Wise its Senior Vice President of Consumer Marketing, drawing on Wise’s direct marketing experience at American Express to strengthen the company’s member acquisition and product development efforts.

“Randy has spent the last decade perfecting the process of consumer acquisition and retention through database marketing and loyalty programs,” said Steve Markowitz, Intellipost President and CEO.  “His expertise is exactly what we need to meet the goals that we’ve established for Intellipost.”

Those goals include boosting membership in BonusMail , Intellipost’s flagship service that rewards consumers to receive targeted offers by email, into the millions.  Intellipost currently boasts more than 800,000 member relationships in BonusMail and co-branded versions of the company’s loyalty currency, Rew@rds.

During his tenure as Vice President of Acquisition Marketing in the Consumer Card Services Group of American Express Travel Related Services, Wise was directly responsible for over 75% of the credit card giant’s annual growth in consumer card membership.  In addition, Wise led the launch of over 20 new credit and charge cards to meet the multiple needs of American Express prospects.

Wise, who terms himself a “classically trained direct marketer who gets the Net,” has extensive experience in database marketing, product development and the use of rewards programs to promote brand affinity.  While concentrating on cardmember loyalty in American Express’s Charge Card Group, Wise increased card transactions and retention by introducing a successful loyalty program to recognize and reward the most profitable cardmembers.  At Intellipost, Wise will lead the aggressive push for new members while overseeing the development of new products and partnerships.

Corporate Background

Intellipost Corporation, a privately held company based in San Francisco, operates BonusMail, the Internet’s only program that rewards consumers to receive targeted advertisements by email.  Among the company’s investors are Henry R. Kravis and other partners of investment giant Kohlberg Kravis Roberts & Co. (KKR); Applewood Associates, a unit of GeoCapital, one of the world’s biggest venture investors; Brierley & Partners, a world leader in loyalty marketing; and Dai Nippon Printing Co., Ltd., the world’s largest printing company.


AmEx CFO Finds Job

Nicholas-Applegate Capital Management announced Wednesday that John McDonnell will become the firm’s Chief Operating Officer, with responsibilities for operations, technology services and corporate support areas, including finance, legal, compliance, human resources, facilities, and administration for the worldwide investment management firm.

Mr. McDonnell, 46, who leaves the post of Chief Financial Officer at the American Express Company’s Travel Related Services (TRS) division, brings a wealth of experience to his new role at Nicholas-Applegate.  He was responsible for the financial staff and all worldwide financial functions at TRS, American Express’ largest business unit, accounting for 60-70 percent of company income.

“John McDonnell adds new leadership and depth to our seasoned and capable team,” said Art Nicholas, founder and managing partner.  “He is well known and respected in the US and international business communities.  His strategic planning, change management, and budgeting skills will be a driving force for our firm as we build our business and operations in the United States and abroad.”

In 20 years with American Express, Mr. McDonnell served in a number of corporate and company positions.  Among his corporate posts were: Senior Vice President and Comptroller — Information Delivery; and Director of Internal Audit.  At the TRS Co. his positions included: Worldwide Controller; Controller for Europe, the Middle East, and Africa; Chief Financial Officer of the Travel Services Group; and Chief Financial Officer of American Express Centurion Bank.  He also served as Assistant to the President of TRS Co. Europe, and as Assistant to the Chairman of  TRS Co.

Prior to joining American Express, he worked as International Finance Manager for Ever Ready (Holdings) Company in London and in financial positions for Westland Aircraft and Hoover Products, also both in the United Kingdom.

Mr. McDonnell will join Nicholas-Applegate as a partner reporting directly to Art Nicholas.  He will serve as a member of the firm’s Executive Committee along with Mr. Nicholas; Jill Jordon, Head of Global Sales and Marketing; Fred Robertson, Chief Investment Officer — Fixed Income; and Catherine Somhegyi, Chief Investment Officer — Global Equities.

“I am thrilled to become a member of this respected and growing company,” said Mr. McDonnell.  “Nicholas-Applegate enjoys an excellent reputation as an innovative and performance-driven investment manager growing both in the United States and internationally.”

Mr. McDonnell is a native of the United Kingdom.  He attended Harrow College of Technology and Arts and Watford College of Technology, with studies leading to his Fellowship of the Institute of Chartered Management Accountants and his Fellowship of the Chartered Association of Certified Accounts.

Nicholas-Applegate was founded in 1984 on the guiding principle of offering excellence in both investments and client service.  The Nicholas- Applegate group of companies has offices in San Diego, San Francisco, Houston, New York, Singapore, Hong Kong and London.  The group manages more than $30 billion in stock and bond investments worldwide, including $25 billion for institutional clients and $6 billion for individuals in separate accounts and mutual funds.


Online Shopping Takes Shape

Cyber Dialogue and Organic released new findings Wednesday from the Consumer Online Commerce Report.  The recently released report provides an in-depth profile of current online shoppers and details how online shopping is impacting retail and mail-order distribution channels.  The results of this report will help online businesses better identify, segment and target online consumers while outlining the opportunities of the Web as a profit center for retailers.

With a history of pioneering the interactive communications industry and e-commerce arena, Organic is using the report’s findings to help clients understand and anticipate market factors that impact their online businesses. “There isn’t a Fortune 500 company out there that isn’t examining how it can make money, or better service customers using the Internet,” said Craig Gugel, Organic’s VP and chief research services officer. “The data from this study, coupled with online focus group and survey results conducted through Cyber Dialogue, helps us continuously maintain the relevancy of the Web sites and advertising content we develop for our clients.”

“Existing and potential online businesses need to understand the interplay between factors such as online information searching and off-line spending for them to be successful online,” says Liz Melcher, Executive Vice President of Cyber Dialogue.  “This report provides an e-commerce roadmap for success.”

E-commerce Growing Rapidly

Findings from the report indicate that Internet purchasing continues to grow rapidly.  In 1997, the number of online shoppers increased to 11.2 million. Seventy-six percent of these shoppers made multiple purchases. Consumer spending on the Internet is projected to grow to more than $34 billion by 2002.

Online Retailing Outlets Significantly Impact Their Off-line Counterparts

The report concludes that online shopping is beginning to displace traditional retail shopping habits among American consumers. Twenty-nine-and-a-half million adults researched product information online. Of those, 15.8 million completed their shopping in traditional retail outlets or by mail-order, totaling $4.2 billion in off-line spending.  Twenty-three percent of online purchasers indicated that Internet use decreased their time spent shopping.  “These findings are particularly useful to traditional retailers doing business on the Web, including several of Organic’s clients, who derive great value from understanding their customers’ needs and buying habits,” said Gugel.

New Categories Selling Well Online

The study also revealed new categories of products selling well online. While sales of software, books, PC hardware and music led online sales, the report revealed a significant increase in gift, apparel, automotive, and food purchases. The study also found that women, for the first time, outspent men in certain categories.  Twenty-six percent of women, for example, purchased gifts online — a significant increase from previous findings.  Such shopping and buying patterns help companies plan more effective offerings and promotions appropriate to their audiences.

Concerns about Using Credit Cards are Diminishing

Contrary to reports of widespread fear among consumers of using credit cards online, the study reveals that 2/3 of all online shoppers have used their credit cards online to complete transactions.  More than 7.3 million consumers have already used credit cards to purchase products online.  The report also analyzes specific card use online, revealing opportunities for partnerships and promotions.

Availability and Cost

The Consumer Online Commerce Report is available for $1995.  To purchase this report, please contact Stuart Gibbel at [sgibbel@cyberdialogue.com][1].

About Cyber Dialogue

Cyber Dialogue enables its clients to understand online users and build valuable, enduring interactive customer relationships.  The company develops advanced market research and database marketing techniques combined with tracking, targeting and measurement software to send the most relevant message to the right customers at the right time.  Many Fortune 500 companies and leading online brands rely on Cyber Dialogue to maximize return on their Internet investment.

About Organic

As pioneers of the industry, Organic () has been helping clients build businesses online since 1993.  Their integrated structure, comprehensive capabilities, strategic insight, and experience in the industry have made them uniquely able to create effective E-commerce and other interactive solutions for their clients. The company offers expertise in: strategic marketing and technology consulting; online advertising and promotions development; media planning and placement; research services and facilities; user interface design and turnkey production services; software development; and secure hosting. Clients range from global brands and E-commerce category leaders such as Barnes and Noble, Nike, Ringling Bros. and Barnum & Bailey, Starbucks, Levi-Strauss, and Fragrance Counter, to nonprofit organizations such as Impact Online.

[1]: mailto:sgibbel@cyberdialogue.com


ECA Launched

TeleCheck Services launched its new ‘Electronic Check Acceptance’ service nationwide Wednesday. ‘ECA’, in which checks are processed similarly to credit cards with the paper check is returned to the consumer, follows nine months of extensive testing and a limited market introduction. During the test, TeleCheck processed 125,000 transactions at 300 merchants in six markets: Boston, Cleveland, Houston, Orlando, St. Louis and San Diego. A strong 82% of consumers elected to have their checks processed electronically when offered a choice. TeleCheck’s ‘ECA’ process moves transactions through the ACH network, and follows NACHA pilot rules for electronic checks at the POS.  Last year TeleCheck authorized more than $98.3 billion in checks.


Magazine Marketing

Enhanced magazine subscription marketing to credit cardholders will take hold as NYC-based Main Street Marketing announced Wednesday an alliance with American Family Enterprises. AFE is well known for its American Family Publishers consumer sweepstakes which offers discounted magazine subscriptions. MSM, a provider of value-added programs to more than 200 credit card firms, formed the Publications Direct division two years ago to market magazines to credit cardholders. The new alliance will expand MSM’s title selections and enable the company to develop contests for cardholders.



WA-based The Pathways Group rolled out the latest unattended POS device, ‘TIKITBOX  II,  at the National Ski Area Association annual meeting yesterday in Florida. The new product offers an outdoor, fully weatherized model of a ticketing ATM as well as an indoor kiosk model featuring  touch screen data entry.  Both models run on MS’s NT 4.0 operating system, and have been programmed using MS’s Visual Basic 5.0 programming language coupled with development tools from third parties, as well as the company’s own proprietary tools.  Other features include: customizable screens/sound/scripts; automated price changes; ability to recharge smart cards; and on line authorization of credit card charges.


CheckMate Aims for T&E

Checkmate Electronics, Inc. announced Wednesday its entry into the travel and entertainment industry at the Hospitality Industry Technology Exposition and Conference.

Hotels, resorts, gaming properties, tour operators, cruiselines, restaurants, fast food chains and car rental companies will benefit from the introduction of Checkmate’s new touch screen technology combined with electronic signature capture and verification, in a leading edge credit/debit/smart card platform.

In both LAN and portable options, Checkmate’s eN-Touch 1000 Guest Activated Terminal will provide capture and display capabilities for a variety of travel and entertainment applications. These include: automating the retrieval and processing of chargebacks; automating check-in and checkout; automating electronic signature capture in restaurants, bars, room service, gifts shops, resort facilities, and door-to-door deliveries; and providing displays for gaming applications, electronic concierge and point of sale electronic advertising.

To facilitate the easy integration of Checkmate’s eN-Touch 1000 terminal with existing lodging and POS applications, Checkmate contracted Orlando-based Global Card Services, Inc., (GCS) to develop a Software Developer’s Kit (SDK) with industry application `intelligence.’ GCS is well known in the industry as a processor of credit transactions for cruiselines, and for providing Resolution, a software/archiving service which helps properties and transaction processors automate the resolution of retrieval requests and chargeback disputes throughout the industry.

GCS’s chief executive officer, Bill Marshall, says: “Solution providers wanting to integrate Checkmate’s eN-Touch 1000 terminals with their legacy applications can plan on integration times measured in days, or weeks, instead of months using C++ programmers. Checkmate’s SDK will provide rich client side and host side application libraries supported by API’s with hooks to all the popular industry applications whether UNIX, AS/400 or PC-based.”

Checkmate’s president and chief operating officer, Gregory A. Lewis, says: “In most hotel properties, savings on chargeback and retrieval losses could pay for ten or twelve terminals per property within the first year easily cost justifying the investment in these systems. Checkmate’s strategy will be to encourage existing POS and lodging software providers to integrate the eN-Touch 1000 with their existing offerings and then offer the touch screen and electronic signature solutions to their existing customer bases. Our research shows that the drive for improved customer intimacy and loyalty is paramount in the travel and entertainment industry. Developers and transaction processors who first allow their customers the opportunity to use the eN-Touch 1000 technology will not only differentiate their software, they will help their customers differentiate their own guest services.”

Les Cowie, Checkmate’s vice president of corporate development, who is leading Checkmate’s drive into the hospitality and travel and entertainment industry, says: “At a recent user’s group conference, hosted by one of the most successful software providers in the industry, Checkmate’s eN-Touch 1000 was voted as “Best of Show” in their vendor showcase. We are receiving a lot of interest in the eN-Touch 1000, primarily because, when combined with the GCS Resolution software, signed retrievals and chargebacks can be displayed before they become a dispute.”

Checkmate Electronics, Inc., supplies innovative payment solutions. With Checkmate products already installed in 62 of the top 100 US retailers, and many of the top US banks, Checkmate is considered to be the leading supplier of cost justified interactive platforms in the US. Checkmate’s products include point-of-sale software and terminals, comprising industry nt check readers, credit/debit and smart card terminals, electronic signature capture and signature verification terminals all packaged into leading payment, loyalty and electronic advertising applications. As a full service provider, Checkmate supports its partners and direct customers with services including software development, consulting, project management, installation services and TotalCARE support and maintenance services. Headquartered in Roswell, Ga., Checkmate Electronics, Inc., has over 185 employees. Checkmate’s home page can be reached on the world wide web at . Checkmate recently announced its intention to merge with Toronto-based International Verifact, Inc. IVI’s homepage can be reached at .

Founded in 1993, Orlando, Fla.-based Global Card Services (GCS) is a hospitality and travel niche provider of credit related processing services, developing and integrating custom designed software and systems with customer-driven support. GCS provides electronic credit card validation services for merchants located in areas where conventional communication is poor or non-existent. For example, GCS services the cruise line industry with the Cruise Card System product. Over 70% of the cruise industry uses this system for onboard credit card processing. GCS also offers related products to the airline industry. GCS’s web page can be reached at .


Another Bankruptcy Poll

According to a TechnoPolitics/Public Opinion Strategies poll of 1200 adults, a substantial majority of Americans believe that those filing bankruptcy should be required to pay back at least a portion of their debts and a near majority believe that Federal laws make it too easy to go broke in America.

The national sampling asked, “When people file for personal bankruptcy, do you believe that they should be forgiven all past debts with no obligation–or, that people should be required to use any assets they have to pay off a portion of their debts.”

Only 10 percent said people should be forgiven all past debts, while 68 percent felt they should be required to pay off at least a portion of their debts. Twenty three percent didn’t know.

The survey also asked respondents to agree or disagree with this statement: “Federal law makes it too easy for people to file bankruptcy and avoid responsibility for paying their bills.” fourty-nine percent agreed, while 25 percent disagreed and 26 percent didn’t know.

The house last week passed legislation that would make it tougher for those filing personal banruptcy to walk away from their debts. The Senate is expected to act on a similar measure later this summer.

TechnoPolitics is the national PBS television series that covers the intersection where science, technology, and the environment collide with politics. TechnoPolitics is produced by the Blackwell Corporation of Arlington, Virginia. Series host is James K. Glassman. Executive Producer is Neal B. Freeman.


MC- Relais & Chateaux

MasterCard and the upscale, international hotel and restaurant chain Relais & Chateaux announced yesterday a deal to provide exclusive benefits to MasterCard cardholders. The first initiative is a special service for ‘World MasterCard’, ‘Platinum MasterCard’, ‘Corporate MasterCard’ and ‘Executive MasterCard’ cardholders, which will offer a toll-free, priority worldwide reservations system for Relais Gourmands, the restaurants of Relais & Chateaux. The service  will be operational in July. MasterCard and Relais & Chateaux will also develop an Internet site specifically for the new restaurant service. Both firms are also planning to develop special hotel packages, based upon each property’s location and regional attractions. The package might include an invitation to a private vineyard, a complimentary dinner or a gift unique to the area. Relais & Chateaux has 415 hotels and 114 restaurants in 40 countries.


VISA Interchange

VISA U.S.A.’s interchange rates will rise again next April. The standard interchange rate will rise to 2.17% plus 10 cents and the retail credit rate will go from 1.31% to 1.45%.  Offline check cards will jump from 1.04% plus 6 cents to 1.16% plus 10 cents. Supermarkets will see offline check card rates bump up to 40 cents from 36 cents and credit card fees nudge up to 1.20% from 1.15%. VISA’s new dual online/offline ‘Check Card’, to be launched this fall, will initially carry a 25 cent interchange for online use in supermarkets and a 0.56% plus 10 cents rate for online retail use.