DAMARK Proc Deal

Paymentech, the largest processor of credit card payments for direct marketers, announced the implementation of an electronic payment program for DAMARK International, Inc. DAMARK is a major integrated relationship marketer providing consumers with a wide range of tailored programs, products and services through direct mail and telemarketing channels.

In addition to credit card processing, DAMARK utilizes Paymentech’s electronic check processing (ECP) verification services and receives all merchant reporting via the processor’s recently launched E-mail reporting service. With Paymentech’s “Email Reporting,” DAMARK simply opens E-mail to retrieve merchant reports that arrive every morning. The service, requiring only standard E-mail and PGP encryption software, replaces mailed or faxed reports.

“Paymentech’s direct response unit delivers strong customer service and outstanding product offerings,” said Mark A. Cohn, DAMARK’s president. “No other processor has developed such a robust menu of products geared to the special payment needs of direct response marketers.”

Paymentech, the nation’s third largest electronic payment solutions provider, expects to process over seven million credit card transactions annually for approximately $500 million in sales volume for DAMARK.

According to Kim H. Plahn, vice president of finance for DAMARK, the company also benefits from Paymentech’s specialized chargeback and retrieval program. “This enables DAMARK to focus on customer operations while allowing Paymentech to manage chargeback issues and retrieval requests related to credit card purchases. Paymentech does the work for us and then provides the information we need to proactively resolve a consumer’s issue,” said Plahn.

Paymentech’s automated chargeback management system shields the merchant from this administrative burden. A dedicated chargeback specialist develops a customized solution for direct merchants and manages compliance and arbitration of chargebacks on the merchant’s behalf. Paymentech fulfills all retrieval requests within 24 hours of receipt, maintains an on-line order history database, and fully protects the merchant’s chargeback rights. In 1997 Paymentech customers enjoyed an overall chargeback rate lower than the industry average.

DAMARK International, Inc., headquartered in Minneapolis, is an integrated relationship marketer providing consumers with a range of tailored programs, products and services through direct mail and telemarketing channels. DAMARK offers a variety of membership clubs which provide members with discounts on numerous lifestyle and convenience products. Almost 1.4 million consumers belonged to a DAMARK-managed membership program at the start of 1998. Brand-name, value-priced merchandise is also sold through catalogs in six broad categories: computers, home office, consumer electronics, home decor, home improvements and sports/fitness.

Paymentech , founded in 1985, is the leading provider of full-service electronic payment solutions to the direct response industry. Paymentech () is the third largest processor of bankcard transactions and a leading issuer of commercial cards in the United States.


S1 Surpasses 100,000 Accounts

Security First Technologies (S1), a wholly-owned subsidiary of Security First Network Bank (Nasdaq: SFNB), announced today that at the end of the first quarter, 100,000 accounts, representing more than 70,000 customers of client financial institutions, are using S1’s Virtual Financial Manager(TM) solution to bank, pay bills and manage their money over the Internet.

“It’s quite a milestone for us to reach the 100,000 accounts level,” said James S. Mahan III, chief executive officer of Security First Technologies. “Many of the institutions we serve are just starting to launch their transactional web sites, and others are just beginning to market their new services to their customers. We expect to see significant growth in users of our banking software in the coming months. It’s tremendously satisfying to see our client institutions and their customers embrace our technology,” he said.

More than 69,000 accounts are processed through the S1 Data Center. The balance is processed by client institutions in-house or through third party data processors. Twelve (12) institutions currently use the S1 Data Center for transaction processing with five (5) of the 12 representing 98% of the volume. The number of accounts processed represents a 40% increase over figures for December 1997.

Mahan explained, “Typically, there’s a significant period of time between implementation of Internet financial services applications by an institution and a commercial offering to their customers. This allows for testing, friendly-user trials and soft launches. That’s why,” he added, “it’s important for S1 to focus on our long-term goals for growth and market share.”

In total, 66 financial entities, including bank holding companies and insurance service providers, with combined assets of more than $800 billion and representing more than an estimated 40 million customers are offering or are planning to offer Internet-based personal financial management systems using S1’s technology. This includes institutions that are direct licensees of S1’s software, institutions who process their VFM transactions through third party data processors and those who process through S1’s Data Center.

Virtual Financial Manager(TM) is the suite of products S1 offers to client institutions. Currently, Virtual Bank Manager(TM) and Virtual Credit Card Manager(TM) are available. Virtual Investment Manager(TM) is slated for later this year. Insurance and loan applications are planned as future product offerings.

Security First Technologies develops integrated, brandable Internet applications that enable financial institutions to offer products, services and transactions over the Internet in a secure environment. S1 also offers strategic marketing support, training, product integration, and customer and data service center outsourcing. Security First Technologies, through direct sales and channel partnerships, has agreed to provide software applications and technology to 66 financial entities, including 15 of the top 100 U.S. financial institutions.


TSYS Tops 20% for 1Q98

Today, Total System Services, Inc.(R)(TSYS(R)) announced record revenues and net income for the quarter ended March 31, 1998.

Net income for the quarter increased 20.4% to $10.3 million, or basic and diluted earnings per share of $.08, up from $8.5 million, or basic and diluted earnings per share of $.07, for the same period last year. Revenues for the first quarter of 1998 were $96.3 million, an increase of 15.9%, compared with revenues of $83.1 million for the first quarter of 1997.

Chairman of the Board and Chief Executive Officer, Richard W. Ussery, said, “We are pleased to announce our financial results for the first quarter of 1998. Continuing our commitment to develop and deliver new products and services to our clients, we announced an alliance with CheckFree which will allow cardholders of TSYS clients to receive and pay their credit card bills over the Internet. We were extremely pleased to announce that five of the six approved card issuers for the U.S. General Service Administration’s contract for commercial card services are our clients.”

Ussery continued, “We announced the formation of TSYS Canada, Inc.(sm) (TCI), a wholly owned subsidiary headquartered in Columbus, Georgia, to support new customers, such as Royal Bank of Canada and Canadian Tire Acceptance Limited. We also announced that TCI opened an office in Welland, Ontario, Canada.

“We are continuing the conversion of the Citicorp Universal Card Services (formerly AT&T Universal Card Services) portfolio to TS2 with approximately two million accounts converted in the first quarter of 1998. Also, we continue to make steady progress on our campus project and eagerly await the completion of the first phase. Our efforts to ensure that all of the Company’s non-compliant processing systems, including our general cardholder system, become Year 2000 compliant remain on schedule,” Ussery said.

TSYS () is one of the world’s largest credit, debit, commercial and private-label card processing companies. An 80.7% owned subsidiary of Synovus Financial Corp. (), TSYS serves card-issuing institutions throughout the United States, Puerto Rico, Canada and Mexico. Creating innovative processing solutions, TSYS makes it possible for more than 92 million cardholders to use their debit, commercial and private-label cards anytime, anywhere, without fail. We enable card- issuing institutions to profitably compete and better serve their customers through our world class people, technology and service.

TOTAL SYSTEM SERVICES, INC. Financial Highlights (In thousands, except per share data)

Three months ended
March 31,
1998 1997 Change
Revenues $ 96,318 83,137 15.9
Expenses 83,766 72,312 15.8
Equity in Income of Joint Ventures 2,028 1,769 14.6
Operating Income 14,580 12,594 15.8
Other Income 759 452 68.1
Income before Income Taxes 15,339 13,046 17.6
Income Taxes 5,089 4,529 12.4
Net Income $ 10,250 8,517 20.4
Basic Earnings Per Share $ 0.08 0.07 20.3
Diluted Earnings Per Share $ 0.08 0.07 20.1

Average Common Shares Outstanding 129,333,443 129,289,680

Average Common and Common Equivalent
Shares Outstanding 129,718,184 129,460,884


Segmenting Internet Users

The Yankee Group formally released NetMigration, what the first is calling the first Internet segmentation that both accounts for consumers’ evolving use of the Internet, and attaches an economic value to each phase of their evolution. Browsers, Engagers, Private Transactors, and Engaged Transactors. Engaged Transactors account for roughly 6% of the United States’ 44 million PC households, and represents the most valuable on-0line customer, with expected monthly revenues form advertising and commerce as much as four times that of the other segments. The segments are defined by a consumer’s current on-line states, their predisposition to offer information about themselves for gain, and their use of “value-centric” applications such as shopping, on-line trading, home banking, and on-line travel booking.


Intl Cash Tips

When traveling overseas, don’t forget to pack the cash. Fodor’s Travel Publications, Inc., America’s leading travel authority, offers tips on traveling with foreign currency.

“Many travelers are so used to relying on plastic or travelers checks that they forget there are important reasons to also bring along cash,” said Bonnie Ammer, president and publisher of Fodor’s Travel Publications, Inc. “You’ll want to have a little cash for tips, cabs, buses and other incidental expenses. Local currency is especially helpful for trips to small towns or off the beaten path. Also, if your credit card is stolen or lost — or you can’t find an ATM when you need it — having a little foreign currency is probably the smartest way to avoid problems.”

Preparing For Your Trip

— Become familiar with the foreign currency denominations before you go, that way you’ll know if you’re receiving the correct change for your transactions and not tipping the cab driver $20 for a $2.00 ride.

— Having foreign currency when you arrive saves time and avoids inconveniences. Airport ATM’s often have long lines, the local exchange booths may be closed for the day, and local holidays can close banks or delay replenishing ATM machines.

— Check your local bank to see if they have a currency exchange program. Or consider an exchange service like International Currency Express, Thomas Cook Currency Services or Chase “Currency to Go”.

When You Arrive

— Check the newspaper in the country you’re visiting to find out the exchange rate,

— Banks typically give more favorable exchange rates than hotels, railway stations, airports, currency kiosks and retail stores. Look for a bank that doesn’t levy a charge in addition to the normal conversion fee.

— ATM’s are a convenient way to get “quick” cash and are becoming commonplace even in developing countries. Local bank cards may not work overseas. Remember to get a four-digit PIN before you leave the country — some pins may need to be re-programmed for international travel.

On The Road

— Avoid converting one foreign currency to another if you’re traveling to several countries. Each time you convert, you lose buying power.

— Separate each country’s currency in zippered plastic bags so you don’t confuse the currency. Use the plastic bags to hold receipts from the local purchases, facilitating your return through Customs.

— Left over currency can make a great souvenir for kids.

Fodor’s Travel Publications, Inc., a division of Random House, Inc., is the largest English-language travel guidebook publisher in the world. With more than 230 titles in print, Fodor’s publishes nearly 5.5 million guidebooks annually. Fodor’s is the only travel publisher endorsed by The American Society of Travel Agents; other broad range marketing partnerships include Rand McNally, American Airlines, Discovery/Learning Channel and General Motors. The Fodor’s Travel Show is a weekly call-in radio program on WOR-710 AM talk and information radio station in New York and is syndicated in more than 80 markets nationwide. Fodor’s is located on the World Wide Web at .


Chargeoffs Up Again

Rising delinquencies caught up with chargeoffs last month, sending the Fitch IBCA Credit Card Chargeoff Index noticeably higher for the first time in 10 months. The decline in delinquencies was the first in six months and, coupled with the rise in chargeoffs, indicates a shakeout of problem credits. Taken with first quarter-end bankruptcy figures, the results project a return to chargeoff stability in the coming months. Compiled using data reported in March for the February collection period, Fitch IBCA’s Chargeoff Index rose 17 basis points to 6.69% while delinquency index dropped to 3.50% from March’s record 3.73%. The chargeoff rise was the index’s first significant increase since peaking last May. Higher chargeoffs were widespread throughout the index’s universe, with more than two-thirds of the master trusts tracked posting worse results. Capital One, Citibank, First USA and Discover master trusts reported the largest chargeoff increases over the month-earlier period. Countering the trends with improved results were Fleet II, Chase and Household Affinity.


Surcharge Suit

The Owner-Operator Independent Drivers Association files a class action in Tennessee, against the Flying J. Inc., and Pilot Corporation truck stop chains and EFS National Bank for the improper imposition of surcharges upon credit card purchases of diesel fuel by truck operators. OOIDA alleges that the Flying J and Pilot truck stop chains charge a higher price for diesel fuel when the driver’s credit card is used to pay for diesel fuel. OOIDA also alleges that EFS National Bank, the bank that processes these credit card fuel purchases, is violating its obligation to VISA, MasterCard and other credit card companies to enforce the no-surcharge promise. OOIDA estimates that several thousand credit card users are being overcharged through surcharges on fuel purchases on a daily basis. OOIDA is seeking both monetary damages and injunctive relief on behalf of a class who uses credit cards to purchase diesel fuel at truck stops. Founded in 1973, OOIDA is comprised of over 40,000 owner-operators, professional drivers, and small business truckers from all 50 states and Canada.


Triton SmartPay

Triton PCS Inc. and Triton Cellular Partners announced Wednesday the selection of National Telemanagement Corp.’s SmartPay Wireless prepaid billing system for its cellular and personal communications service markets. Terms of the agreement weren’t disclosed. Under the agreement, Triton Cellular will offer its customers a prepaid billing option, beginning in May. Triton PCS will introduce the SmartPay service when it launches services late this year. To initiate SmartPay service, customers simply establish a permanent prepaid billing account with Triton with cash, bank draft or credit card. From that point on, the customer simply places and receives calls as usual with no need to enter a PIN number or debit-card authorization code. The SmartPay equipment is installed at the switch, which eliminates the need and expense of backhauling each call. All calls including roaming calls are processed on site.



Breakthrough Software, Inc. and Cardservice International have created the industry’s first simplified merchant account process for small to medium-sized businesses and entrepreneurs. Breakthrough Software will be offering its ISP partners the ability to sign their end-user customers up for a merchant account, enabling ISP to offer a valuable and efficient service. Breakthrough also gains access to Cardservice’s nationwide network of agents to distribute its product line.



Leapfrog Smart Products Inc., an Orlando-based Smart card development company, was awarded a contract with Chambers Benefits Inc., a subsidiary of the Greater Orlando Chamber of Commerce, to develop and supply a Smart card Membership and Loyalty program for the Chamber’s members called SmartPoints. All of the Chamber’s 5000+ members will be issued a personalized Smart card that will be used for access to Chamber events, store loyalty points and be used as an electronic purse at events. Giesecke & Devrient America Inc will be supplying Leapfrog the cards for SmartPoint. Leapfrog will also be utilizing Giesecke & Devrient’s proprietary STARCOIN purse.


Intrapay TE

CitX Corporation of Quakertown, Pa, and NCR Corporation of Dayton, Ohio announced their alliance to deploy unique Internet-based document publishing, manufacturing, and delivery services, via the CitX fee-for-use Web-enabled payment platform called Intrapay TE. The Intrapay TE platform was developed by CitX and its strategic partner, NCR Corporation of Dayton, OH to facilitate business-to-business and business-to-consumer Internet-based EC solutions, via the Internet. Plans are in place to launch the first series of services into several beta test sites, in the nest 6 to 8 weeks.


Citibank Bonds Rated

Citibank Credit Card Master Trust I’s (CCIMT I) $750 million 5.85% class A credit card participation certificates, series 1998-6, are expected to be rated ‘AAA’ by Fitch IBCA. The corresponding $48 million 6.00% class B certificates are expected to be rated ‘A+’. In addition, Fitch IBCA expects to affirm its master trust ratings, indicating the issuance of series 1998-6 will not result in a reduction or withdrawal of current ratings assigned to outstanding trust certificates.

The expected ratings reflect the quality of the receivables generated from Visa and MasterCard credit card accounts, the available credit enhancement, the servicing expertise of Citibank (South Dakota) and the transaction’s sound legal and financial structures.

Class A’s enhancement, equal to 11% of the total initial invested amount, is derived from a 5% shared cash collateral account (CCA) and the subordination of the 6% class B certificates. The shared CCA will first support class A then class B, covering losses not paid by excess finance charge collections. Class B’s enhancement, equal to 7% of the total initial invested amount, is derived from a 2% CCA dedicated just to class B along with the 5% shared CCA.

Credit enhancement levels were determined by stressing portfolio steady state yield and payment rate assumptions to determine the level of defaults the enhancement could sustain. Class A is able to support a 35% decrease in yield, payment rates dropping in half and defaults increasing to a level above 30%, and still make full and timely payments to investors. Class B can sustain a 25% decrease in yield, along with a decline in payment rates by more than 40% and defaults increasing to a level above 25%, while meeting all investor principal and interest obligations.

Class A and B investors will receive semiannual interest payments at the aforementioned rates throughout the revolving and accumulation periods and on the scheduled final payment date. If an early payout occurs, class A and B investors will receive principal on an accelerated schedule along with monthly interest payments. Following the variable accumulation period, principal is expected to be paid to class A and class B certificateholders on the April 2001 distribution date. Series termination is set in April 2003’s distribution date.

Series 1998-6’s terms contain an accelerated payout feature to protect investors from deteriorating collateral or a servicer default. If certain triggers are breached, the amounts available in the 5% shared CCA will be drawn upon and immediately distributed to class A investors. In addition, the 2% CCA dedicated solely to class B will be drawn upon and immediately distributed to class B investors.