Pathways Certified

The Pathways Group, Incorporated has reported certification of its Point of Sale terminal software Smart SCRIP v.1.4) and its back-room management software system for transaction processing Fund Master. The Pathways software platforms enable the Delta-21 POS terminal, manufactured by Schlumberger, to process smart card transactions and credit card transactions seamlessly within the same software processing platform.

Merchants will now be able to accept both types of payment transactions using the same system (Hardware and Software) and will be able to take advantage of the Pathways umbrella to receive volume credit card rates for relatively small numbers of local transactions.  Additionally, participating merchants will be able to benefit from the extensive array of accounting reports and controls afforded by the proprietary Pathways system.

Certification of both the hardware and the software was awarded by First Data Merchant Services (FDMS).  In order to certify LAN/WAN software for processing credit card transactions, First Data requires that the software being certified is able to reliably upload transactions from individual merchant POS terminals.  The LAN/WAN software must determine the appropriate format required by FDMS for each transaction depending on its type, e.g., sale, refund, etc.  It also must determine whether or not the data from the card was entered manually or magnetically captured. It then must submit an online batch of transactions using a proprietary communications protocol implemented by First Data.

When processing credit cards, detailed information contained in the magnetic stripe on the cards is stored in the Pathways Smart Card System Database (Fund Master), along with approval codes and other data received directly by the POS terminals from First Data when a merchant seeks authorization for a transaction.  Likewise, transactions involving smart cards are captured on the merchant terminal and are processed through the same transaction gateway at Pathways.

This comprehensive retention of data enables Pathways to quickly ascertain the validity of any transaction.  Attempts at fraud are immediately identified, resulting in the inclusion of the card in a blacklist which is subsequently downloaded to the POS terminals of merchants enrolled in the Pathways Merchant Network.  This system also services transactions being processed by the proprietary network of Pathways ticketing equipment (TIKITBOX) nationally.

The significance of this achievement is that this certification puts Pathways on the leading edge of the Smart Card revolution, with a product that supplements existing credit and debit card infrastructure without having to “retool” or rewrite expensive software systems.  Further, the technology that has been developed by Pathways is not currently matched by any other transaction processor in the country.

Carey F. Daly II, President and CEO of Pathways was quoted as saying, “This is a major accomplishment for our company.  Our merchant base will now have the ability to process credit and smart card transactions in one database without special handling.  They will receive all of the benefits of our back room processing, which includes  merchant specific reporting tailored to their business, a comprehensive suite of on-line inquiry tools reserved for their use, monthly transaction reports and full transaction tracking on our processing center’s archive database system.

These capabilities as well as the First Data certification represent unique accomplishments for Pathways within the smart card processing industry. Our next step will be to develop a Bank Debit/ATM transaction system to integrate into our Fund Master product”.

The Pathways Group, Inc. provides clients with innovative and unique solutions for securely creating, capturing and processing data and electronic transactions using custom application software and hardware systems. The company was established in 1987 by Carey Daly and has evolved into a leader in the development of custom software and hardware for electronic banking, data and transaction processing, and smart card applications. Pathways creation of proprietary “back room” systems allows for the capture and processing of data and transfer of funds via “ACH” protocol, the standard used in the banking industry for transfer of funds in retail, medical and institutional environments.

Forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Act of 1995.  Actual results may differ materially from those projected in any forward-looking statement. Investors are cautioned that such forward looking statements involve risk and uncertainties, including, but not limited to, dependence on the developing smart card marketplace; market acceptance of the company’s products; the rate at which the company’s customers deploy smart card solutions; and dependence on third party marketing arrangements. A description of the risks and uncertainties attendant to The Pathways Group Inc. and other factors which could affect the company’s financial results are included in the company’s Securities and Exchange Commission filing on Form 1-A.


MBNA Card Bond Rated

MBNA Master Credit Card Trust II’s $637.5 million class A floating rate asset-backed certificates, series 1998-A, are expected to be rated ‘AAA’ by Fitch IBCA.  The corresponding class B floating rate asset-backed certificates will be privately placed.  The certificates are backed by a pool of receivables generated under MBNA MasterCard and Visa accounts.  The expected ratings are based on the high quality of the receivables pool, available credit enhancement, MBNA’s underwriting and servicing expertise, and sound legal and cash flow structures.

Credit enhancement for the class A certificates totals 15% and is comprised of 7.5% subordination of class B certificates and a 7.5% collateral interest.

With the levels of credit enhancement available, series 1998-A can withstand simultaneous declines of 35% in yield and 45% in monthly payment rates, while chargeoffs increase to a level of 28% and still make full interest and principal payments to class A investors.  In addition, to address the interest rate and basis risk associated with uncapped floating coupons, the available enhancement enables a coupon stress to historic high LIBOR levels without a corresponding increase in portfolio yield.

Investors are protected from a deterioration in credit quality by early amortization events, which would trigger an early payout of investor principal.  However, MBNA’s historically healthy and stable excess spread levels help to minimize this early amortization risk.

Class A certificateholders will receive monthly interest payments of 11 basis points over one-month LIBOR throughout the revolving and accumulation periods and on the scheduled payment date, provided an early payout event does not occur.  Interest will be paid on the 15th of each month commencing in May 1998.  Following a variable accumulation period, principal is expected to be paid to certificateholders on the March 2003 distribution date.  The series termination date is Aug. 2005.  As a part of Group One, series 1998-A will share excess principal collections with other Group One series.


Smart VISA Corp Cards Coming

A smart card in every wallet may not be what industry experts are predicting this year, but the utility and value of these micro-chip bankcards are rising, according to Visa U.S.A.

“The U.S. business case for smart cards is becoming stronger as financial institutions and other businesses evaluate how single-function and multi-function cards with micro chips can solve business problems regarding payment, customer service and other benefits,” said Diana P. Knox, senior vice president of chip products for Visa U.S.A. “Today’s telecommunications are very efficient for authorizing traditional magnetic-stripe bankcards, so it is the value-added service that will increase our nation’s demand for smart-cards.”

Smart cards with payment and other functions stored on a single micro chip are being rolled out in United States today. Later this year, a major company will put in Visa Corporate smart cards in the hands of hundreds of its business travelers who frequently rely on a major airline, hotel and rental-car agency. The program is expected to substantially reduce travel costs by ensuring that employees pay the lower rates negotiated by their corporate travel planner.

Multi-use smart cards are also in use on corporate campuses. All employees at Bank of America’s Clock Tower Building in San Francisco carry and identification card that has a traditional, multi-function “contact” micro chip (with Visa Cash and two PC security applications), and a “contactless” micro chip (that allows access to the office building of parking garage when read by a proximity reader).

“Multi-function Visa smart cards are real today, and we are developing our open chip-card platform to enable financial institutions to flexibility utilize whatever range of applications they choose,” said Knox. “For example, an issuer might put Visa Cash stored value in three currencies, credit and several loyalty applications on a chip. It is really up to each bank.”

Visa’s Open Platform strategy, which features the globally popular Java programming language, will enable bankcard issuers to select applications (such as credit, debit, Visa Cash, loyalty, and transit) for their card programs. Issuers can use a range of operating systems. Using Java’s “Write Once, Use Anywhere capability, financial institutions will be able to develop their own non-payment applications and place them onto any Java-based micro chip. Issuers will also be able to dynamically update customer accounts without re-issuing cards.

Single-function smart cards are also helping solve business problems today. Visa Cash, the most widely used open-systems, stored-value product in the world, is being used in a number of environments to reduce cash-handling costs. At Ft. Leonard Wood, Mo., for example, thousands of new soldiers are using Visa Cash cards, instead of hard currency, for everyday purchases on the base. Supported by First Union and the U.S. Department of Treasury’s Financial Management Service (FMS), the program has significantly reduced the flow of actual cash.

The Internet, an environment where cash and coins cannot be exchanged, is transmitting real Visa Cash purchases today. Approximately 500 employees of Bank of America and Visa are using reloadable Visa Cash cards to make purchases from seven merchants on the World Wide Web.

Overall in the United States, 3 million Visa Cash cards have been produced by seven financial institutions since the product was introduced in 1996.

To help financial institutions strategically assess the smart-card industry. Visa is introducing Visa Smart, a communications initiative that packages key industry trends, technologies, products and services.

The new initiative includes Visa Smart Solutions, a program designed to help financial institutions plan and implement their eventual migration to smart cards. To be introduced to financial institutions later this year, the program will combine planning and implementation support, endorsed lists of leading chip-card and terminal manufacturers, Visa Smart Solutions is being designed to give financial institutions a streamlined approach to adopting smart-card technologies, by including:

– Visa Smart products – Visa Smart Credit and Visa Cash – as well as value-added applications such as loyalty programs;

– Customized planning services to help financial institutions manage and prepare for marketplace changes and trends; and

– Implementation services to support planning and program launches.

“As the circles of smart-card activity on the U.S. map grow in number, they will eventually become concentric and fill in any remaining pockets over time … probably in five to 10 years,” said Diana P. Knox, senior vice president of chip products, Visa U.S.A. “Our role is to support our member financial institutions by helping to acheive open and global chip-card standards, and by streamlining research, planning and implementation services.”

Visa is the leader in the emerging payment technology arena with more than 21 million smart cards issued, and more than 70 chip-based and electronic commerce programs in 30 countries.

As the world’s best way to pay, Visa is the preferred payment brand and the largest consumer payment system worldwide, with more volume than all othe major payment cards combined. Visa plays a pivotal role in advancing new payment products and technologies to benefit its 21,000 member financial institutions, their cardholders and the global economy.

In addition to its leadership in smart cards, Visa is pioneering SET Secure Electronic Transaction programs to enable and advance Internet commerce. Visa’s 618 million cards, generating $1 trillion in annual volume, are accepted at more than 14 million worldwide locations, including 380,000 ATMs in the Visa Global ATM Network.


Providian Gift

Providian Financial Corporation announced yesterday its commitment to provide a major grant of $400,000 to the San Francisco Child Care Facilities Fund.  The fund is designed to expand child care capacity and improve quality.  It was established by the Mayor’s Office of Children, Youth and their Families and the Department of Human Services and is administered by the Low Income Housing Fund, a non-profit lending agency.

“Providian Financial Corporation has made public child care initiatives a major focus of the company,” said Shailesh J. Mehta, Chairman and Chief Executive Officer of Providian.  “As a San Francisco based financial institution and a substantial employer, we recognize the positive impact that this investment will have on our community’s working parents and their families.  Providian has a very strong commitment to child care issues and we are very pleased to be working with San Francisco Mayor Willie L. Brown Jr. and the child care community in this public-private partnership dedicated to enhancing child care in the city.”

Providian Financial Corporation, headquartered at 201 Mission Street in San Francisco, is a leading provider of lending and deposit products to consumers nationwide.  The company is a member of the S&P 500 Index (Consumer Finance Industry Group).  With over $11 billion in assets under management and over four million customers, the company serves a broad, diversified market with loan products which include credit cards, revolving lines of credit, home loans, secured credit cards, and fee-based services.  Providian Financial ranks among the 15 largest credit card issuers in the nation and is the largest issuer of secured credit cards.


Jones to Emcee VISA JA Ceremony

Renowned actor and Bell Atlantic spokesman James Earl Jones will serve as the Master of Ceremonies for Junior Achievement’s National Business Hall of Fame Conference on March 19th in Washington, DC.  Mr. Jones will emcee the induction of seven business legends, including Motown Founder Berry Gordy, Jr. and Intel CEO Dr. Andrew Grove, into the National Business Hall of Fame.  The event is being sponsored by Visa, USA and Bell Atlantic.

The other inductees are Amway co-founders Richard DeVos & Jay Van Andel, FedEx Founder Frederick W. Smith and, receiving posthumous honors, Roberto C. Goizueta, the late Chairman of Coca-Cola, and J.W. Marriott, Sr., the Founder of Marriott Corp.

These seven honorees join over 170 business leaders who have been inducted into the Junior Achievement National Business Hall of Fame since its founding in 1975.  The inductees were selected by a survey of Forbes 500 CEOs, which was conducted by Forbes magazine and Junior Achievement, for their contributions to the world of business.  The Hall of Fame is housed at Chicago’s Museum of Science and Industry.

Junior Achievement (JA) is the largest and fastest-growing nonprofit economic education organization in the world.  Each year, nearly 2.7 million elementary, middle and high school students across the U.S. participate in JA programs.  An additional 800,000 young people in 100 countries also take part in JA programs on an annual basis.


Hypercom Health Cards

Hypercom Corp. Wednesday announced a US$5 million agreement to provide ImpSat Corp.’s ConeXia with Hypercom’s Pinnacle client/server transaction software and Hypercom point-of-sale terminals.

ImpSat will use the Hypercom terminals and Hypercom’s Pinnacle client/server software to connect the offices of health-care providers in Argentina with a national medical-information source. Hypercom provides full-service consulting, installation, testing, implementation and technical-support services with its Pinnacle client/server transaction software.

To date, approximately 2,000 office locations have the solution, based on Hypercom’s Pinnacle Network Terminal System (NTS) client/ server software and the Hypercom NT7PQ Network Terminal. Hypercom point-of-sale transaction terminals have been deployed in locations to serve members of Union Personal, a Buenos Aires-based HMO serving about 250,000 government employees.

“ImpSat’s selection of Hypercom as the sole point-of-sale transaction supplier for ConeXia further strengthens our leadership position in Latin America and demonstrates the benefit of our solutions in health-care environments,” said Jairo E. Gonzalez, president of Hypercom’s International division.

“The combination of a Hypercom network terminal running Hypercom’s Pinnacle client/server transaction software underscores our ability to provide end-to-end POS solutions that meet users’ needs, in this case providing immediate access for patients and physicians to an online medical-information service,” Gonzalez said.

After “swiping” the patient’s card, the Hypercom solution enables health-care providers to instantly access ConeXia to verify insurance eligibility and benefits and electronically authorize medical services and prescriptions.

ConeXia has automated manual, paper-based processes to the benefit of health-care providers, insurance companies and patients. Eventually, the number of Hypercom solutions providing access to ConeXia, up and running since September 1997, is expected to reach 10,000 terminals.

Phoenix-based Hypercom is a leading supplier of point-of-sale (POS) terminals, enterprise networking equipment and client/server software payment-processing solutions. The company, which sells its products in more than 50 countries worldwide, is the largest POS technology supplier in Latin America.

ImpSat is a leading provider of private telecommunications network services in Latin America and the largest satellite- communications carrier in Argentina. ImpSat’s ConeXia provides health-care solutions.

“Health care worldwide is poised to move from paper-based to electronic communications,” said Ted Cole, vice president of Hypercom’s Pinnacle Software Group. “The implementation of systems such as ConeXia represents an enormous opportunity for both health-care providers and insurance companies to reduce the paperwork costs involved in filing, verifying and paying insurance claims.

“Hypercom’s solutions also make the patient’s life much simpler. By using Hypercom’s Pinnacle NTS client/server software, which is scalable to thousands of terminals, ImpSat now has an infrastructure to handle the growth potential it foresees for ConeXia.”

ImpSat began investigating offering an online service for health-care organizations in early 1996. After considering terminal products from a number of leading POS manufacturers as well as the Internet, ImpSat chose the Hypercom solution — the NT7PQ Network Terminal and Pinnacle NTS software — based on performance, reliability and the ability of Hypercom to serve as a single source for a complete solution.

How ConeXia Works

Once a health-care organization joins ConeXia, ImpSat accesses all the participants’ medical records and programs the network to accept the organization’s cards.

The health-care provider can also authorize medical services and prescriptions online, thus eliminating the need, for example, for the patient to bring paperwork to an X-ray location. The X-ray technician simply swipes the patient’s card through the Hypercom network terminal to access the necessary authorization.

Since ConeXia is an open service, all health-care providers in Argentina are eligible to sign up. Health-care providers pay per transaction processed by ImpSat, which also uses Internet-working equipment from Hypercom’s Network Systems Division in its network. Currently, an average of 4,000 ConeXia transactions are being processed each week by ImpSat.

Hypercom NT7PQ/Pinnacle NTS

The Hypercom NT7PQ Network Terminal is equipped with a QWERTY keyboard and offers the same functionality as other members of Hypercom’s highly popular T series of POS terminals except that it acts purely as a conduit between the patient’s card and ConeXia.

With Hypercom’s Pinnacle NTS client/server transaction software, the “brain” of ConeXia resides at the server or network level. The architecture of Hypercom’s Pinnacle client/server software allows application processing to take place on a centralized server without requiring any changes to the legacy host mainframe.

With the Hypercom solution, the server supports the entire terminal population. This centralized approach reduces terminal costs and enables user organizations to quickly carry out software updates. Software down-line loading is replaced by database updates.

Hypercom’s Pinnacle Network Terminal System (NTS) software is one application in a suite of Hypercom client/server transaction software.

Hypercom’s Pinnacle transaction software products run under UNIX and Microsoft’s Windows NT, which allow transaction processors to preserve host integrity while adding more applications and transaction types. This approach enables merchants and banks to offer advanced payment products, such as chip cards, and value-added services, such as loyalty programs.

Hypercom’s Pinnacle NTS client/server transaction software serves as an “adaptive layer” by working in concert with legacy mainframe systems. Pinnacle software is scalable, interoperable and fault- tolerant. The multitier architecture of Hypercom’s Pinnacle software supports high performance with current and emerging payment methods, including debt, credit, smart cards and Internet-based commerce.

ImpSat is a leading provider of Latin American business telecommunications solutions. The company provides a wide array of integrated digital voice, video, data and Internet services, and operates the most extensive shared-hub VSAT network in the world.

With 18 regional teleports, fiber-optic networks in eight cities, more than 5,000 remote Earth stations and thousands of miles of digital microwave networks, ImpSat provides telecommunications services to more than 650 corporate customers throughout Latin America.

Hypercom is the world’s leading independent supplier of point-of-sale technology. The company also supplies Internet-based payment-processing solutions. Hypercom provides innovative solutions for delivering and processing secure electronic payments and the infrastructure to quickly and cost-effectively integrate and deploy new payment applications.

Hypercom’s end-to-end product family of terminals, peripherals, POS network products and software enables merchants and service providers to automate credit, debit and other electronic payment transactions with seamless integration, scalability and interoperability.

With headquarters in Phoenix, Hypercom markets its products in more than 50 countries through a global network of offices and affiliates in Argentina, Australia, Brazil, Chile, China, Hong Kong, Hungary, Japan, Mexico, Russia, Singapore, the United Kingdom and Venezuela. Hypercom’s Internet address is [][1].

Certain matters discussed within this news release are forward- looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although management of Hypercom believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from expectations include industry, competitive and technological changes; risks associated with international operations and foreign-currency fluctuations; management retention; the composition, timing and size of orders from and shipments to major customers; and other risks detailed from time to time in Hypercom’s Securities and Exchange Commission reports, including the company’s prospectus dated Nov. 13, 1997.



Card Data Bank

Here’s a look at cardholder and pricing stats as compiled by the latest edition of CardTrak – Executive Edition. The data are based on year-end 1997 issuer statistics and excludes debit and charge card activity.

                                  U.S. CONSUMERS
                               AVG BAL            AVG VOL            AVG CRDS
      Per Person              $1740.03           $3,181.85          1.95
      Per Card                $ 893.40           $1,633.41          NA
      Per Acct                $1,286.82          $2,352.71          1.44
      Per Household           $4,495.83          $8,219.79          5.03
                                  INTEREST  RATES
      Standard Card APR                    u17.55%            w18.83%
      Gold Card APR                        u16.40%            w17.90%
      Platinum Card APR                    u14.82%            w15.44%
      Overall Interest Rate                u17.17%            w18.52%
      Range of Rates                       8.50%     to        32.60%     
      Fixed/Variable Mix                   19% fix            81% var
             u-unweighted      w-weighted to receivables
      Standard Ann Fee               u$17.08           w$18.04
      Gold Ann Fee                   u$31.39           w$32.25
      Late Pay Fee                   u$14.22           w$19.30
      Over-limit Fee                 u$13.39           w$18.46
             u-unweighted      w-weighted to receivables
      69% of standard cards and 32% of gold card do not charge
        annual fees and are excluded from the average
   SOURCE CardTrak Executive Edition Mar 98 ($299/yr; 301-695-4660)


MBNA’s First 1998 Card Bond

MBNA Corporation announced yesterday that MBNA America Bank, N.A., its wholly owned subsidiary, priced $750 million of five-year floating rate credit card asset backed securities from the MBNA Master Credit Card Trust II.

The transaction, Series 1998-A, includes $637.5 million of Class A (Senior) floating rate asset backed certificates, $56.25 million of Class B (Subordinate), privately placed, floating rate asset backed certificates and a $56.25 million, privately placed, floating rate collateral invested amount.  The 5.0 year Class A certificates accrue interest at 11 basis points over the one month London Interbank Offered Rate (“LIBOR”).  The Class A certificates were priced at par.  The transaction, which is scheduled to close March 18, 1998, was lead managed by J.P. Morgan & Co. and co-managed by Bear, Stearns & Co. Inc., Chase Securities Inc., Credit Suisse First Boston, and Goldman, Sachs & Co.

MBNA Corporation, a bank holding company and parent of MBNA America Bank, N.A., a national bank, has $49.4 billion in managed loans.  MBNA, the largest independent credit card lender in the world and one of the two largest overall, also provides retail deposit, consumer loan, and insurance products.


First Union Buys Money Store

First Union Corporation has signed a definitive merger agreement with The Money Store Inc. to create the nation’s number one coast-to-coast provider of home equity loans. The combined company will also be the nation’s top provider of SBA loans and the number three provider of student loans.

Under the terms of the agreement, First Union will pay $34 per share in First Union common stock for each share of The Money Store’s common stock. First Union also will issue shares of First Union common stock in exchange for The Money Store’s outstanding convertible preferred stock as described below. The total purchase price is approximately $2.1 billion.

In connection with the transaction, First Union expects to repurchase a number of its outstanding shares of common stock equal to the number of such shares to be issued in the merger, which First Union currently estimates will be approximately 41 million shares based on First Union’s current market price.

The transaction will be accounted for as a purchase and is expected to be completed in the third quarter of 1998, subject to approval by The Money Store’s shareholders and regulatory agencies and other conditions of closing. The transaction is expected to be immediately accretive to First Union’s earnings.

“We are excited by the opportunity this partnership presents for us to fill an important gap in meeting the credit needs of a broader range of customers with expanded and very complementary products,” said John Georgius, president of  First Union Corporation. “The combination with The Money Store fits perfectly with our retail strategy of meeting the needs of all customers when, where and how they want.”

The Money Store will retain its 31-year-old name, a leading brand in the financial services industry, as well as its management. It will operate as a separate delivery channel within the First Union Consumer Group, which includes the mortgage business, home equity bank, electronic and telephone banking, credit card, consumer credit and automobile finance businesses. The Money Store’s Chief Executive Officer Marc Turtletaub, who helped build the company with his father, founder Alan Turtletaub, will continue to lead The Money Store.

“First Union and The Money Store are ideal partners,” Marc Turtletaub said. “We decided to combine with First Union only after a thorough examination of all strategic alternatives. That process clearly showed that these two companies share the same values of community outreach and commitment to superior service, convenience and product range for our customers.”

The Money Store expands First Union’s ability to provide credit to homeowners who may not otherwise qualify for bank credit.  Home equity products can be an excellent strategy to allow consolidation of high-interest, revolving-credit debt into lower-interest loans, improving the borrower’s monthly cash flow and often offering a tax deduction.  Since 1994, First Union has also been providing home equity credit for these homeowners, and securitizing the loans through its Capital Markets Group.  Securitization frees up additional capital to be reinvested in First Union’s communities.

“First Union is taking a giant leap forward in meeting the need for all American families to obtain credit and reduce their reliance on higher- interest revolving credit,” said Jack Antonini, head of the First Union Consumer Group.  “First Union can now provide more customers with the money they need and a range of options that can become part of their long-term credit-improvement strategies – and keep them First Union customers for life.”

First Union is also intensifying its commitment to low- and moderate- income communities. The First Union Special Home Improvement Loan will be extended nationwide through The Money Store’s network.  This product offers low rates, no origination fee and flexible guidelines that make it easier for a low- to moderate-income borrower to qualify for a loan.  The borrower will also earn a 2 percent rebate of the annual interest expense if payments are made on time.

In addition, in New Jersey, Pennsylvania and Delaware, First Union will increase its recently announced $13 billion Community Reinvestment Plan by $1 billion, ensuring additional credit to low- and moderate-income neighborhoods and small businesses.

Because First Union and The Money Store have significant complementary strengths with very little overlap in operations, no office closings are planned.  First Union currently expects to take a one-time merger restructuring charge of approximately $20 million in the third quarter of 1998.

With headquarters in Union, N.J., and a significant corporate presence in Sacramento, Cal., The Money Store has 4,800 employees doing business in all 50 states through 172 branches and call centers responding primarily to individual consumers through the well-known 1-800-LOAN-Yes(R) line.

First Union Home Equity Bank’s focus is primarily business-to-business, working with brokers and home improvement contractors through its 120 branches in 34 states.  First Union’s student loan business, focused on the individual student, fits well with The Money Store’s college-based approach with primarily government-secured student loans made through admission offices.

First Union Direct’s 24-hour, 7-day a week sales and service, complements The Money Store’s 1-800-LOAN-YES(R) in providing consumers nationwide with choice in when, where and how to do their financial business at 1-800-ASK-FUNB.

The transaction is intended to be generally tax free to the holders of The Money Store common stock and The Money Store convertible preferred stock. Each share of The Money Store convertible preferred stock (NYSE MON PrA) will be exchanged for First Union common stock having a value of $34 times .92, subject to the approval of the holders of such shares.   If such holders do not approve the exchange, they will receive shares of a new series of First Union convertible preferred stock containing substantially similar terms as the The Money Store convertible preferred stock, as adjusted to reflect the merger.

Also, in connection with the execution of the merger agreement, First Union was granted an option to purchase, under certain circumstances, up to 24.9 percent of the outstanding shares of The Money Store common stock.

First Union Corporation is a leading provider of financial services to more than 12 million retail and commercial customers throughout the East Coast and the nation. At  Dec. 31, 1997, First Union had assets of $157 billion. First Union’s pending merger with CoreStates Financial Corp (NYSE CFL), with assets of $48.5 billion as of Dec. 31, 1997, was approved by shareholders of both companies on Feb. 27, 1998, and is currently pending regulatory approval. First Union operates full-service banking offices in Connecticut, Delaware, Florida, Georgia, Maryland, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Maryland and Washington, D.C.


World MC On Track

MasterCard says its ‘World MasterCard’ product is exceeding projections. Since its launch, the new upscale, hybrid charge/credit card has exceeded the average transaction amount by 62% and the average number of transactions per account has nearly tripled from the original projections. MasterCard says yesterday it will introduce the product in other regions of the world over the next several months. In the U.S. the card is primarily issued by Bank of America and Household Credit Services. MasterCard also announced yesterday it has signed agreements with Avis Rent A Car and Summit Hotels & Resorts. Summit, a network of 150 luxury hotels, will offer WMC cardholders upgrades, a special arrival gift and discounted ‘Summit Club’ memberships. Avis will provide WMC cardholders discount rates, one-card group upgrades and free ‘Avis Preferred Select’ memberships. MasterCard says it will also offer WMC cardholders exclusive access to unique experiences in the areas of entertainment, travel and sports, including backstage passes, later this year.


Motorola Accelerates Chip Production

Motorola Wednesday announced steps it will take to radically accelerate its smartcard semiconductor process roadmap.

To date, the industry, unlike other sectors in the semiconductor market, has continued to use 6-inch wafer fabs. The dramatic growth forecast in volume and increasing demands for card memory capacity, however, has stimulated the need for change. Motorola has, therefore, made the strategic decision to be the first in this industry to move to 8-inch wafers for its flagship products.

One of Motorola’s most advanced factories, MOS 12 in Phoenix, where the Semiconductor Product Sector recently announced a $1.1 billion expansion, has been selected to meet the challenge.

Chris Belden, consumer and transportation’s director of manufacturing, said “We are delighted to help this emerging industry meet the future explosive demand. We have been preparing for this program in the last year and are excited to help fulfill the vision of products that can personalize everything from your wallet to your phone and even your PC.”

A technology leap to 0.4 micron feature sizes has been made to date and a further shrink plan to 0.27 micron will be implemented in the near future. Motorola has emphasized that the strategy of its decision to proceed with 8-inch wafers was taken with the firm understanding that its aim is to evolve and upgrade the product’s technology over time.

Mike Inglis, division manager for Motorola Smart Information Transfer, explained the company’s rationale. “We believe advanced technology will play a significant role in encouraging our customers to migrate towards increased feature cards — for example, more data in a health card or more ‘phone numbers’ in a GSM card. The technology will also enable the emerging multi-application card markets so that points gained from loyalty schemes can be debited directly to the card user’s bank account.

“The new smaller feature size process offers the capability for increased EEPROM capacity and superior ROM and RAM to expand memory capacity. We will also reduce personalization times and enhance security.”

The first of the devices to be processed will use the industry standard 8-bit M68HC05 microprocessor core. This means that existing tried and tested security assembler code can be used — consequently, providing customers with reassurance about re-use.

Inglis went on to comment “Later in the year we will have even more to discuss with the unveiling of a new secure Advanced core for smartcards. The former answers today’s market demands by providing additional capabilities and introducing the possibility of multiple applications, while still allowing the use of current accredited applications. The latter holds the key to creating true multi-application cards and provides a platform from which smartcards can leap into the next century and support emerging operating systems such as JavaCard and Multos.”

Inglis concluded “We are delighted with the improvements the new process offers, as well as the avenues it will open up. Fifteen months ago Motorola dramatically changed all its smartcard semiconductor plans following a major strategic review. During the last 12 months we have been working to consolidate these plans. Our major customers are all very excited by these products, as are the financial and communications markets.

“The benefits Motorola’s new process will bring reaffirm the company’s flare for innovation and capacity to lead the market by producing cost-effective answers for today and radical new solutions for tomorrow.”

EDITOR’S NOTE The Smart Information Transfer Division is a business within Motorola’s Semiconductor Products Sector, and is one of the world’s leading suppliers of microprocessor chips for smartcards with shipments of more than 300 million units to date.

With 1997 worldwide sales of $8.0 billion, Motorola’s Semiconductor Products Sector develops the essential building blocks to help its customers create new opportunities in the consumer, networking and computing, transportation and wireless communications markets.

In the global marketplace, Motorola also is one of the leading providers of wireless communications, advanced electronic systems, components and services. Major equipment businesses include cellular telephone, two-way radio, paging and data communications, personal communications, automotive, defense and space electronics and computers. Corporate sales in 1997 were $29.8 billion.

Further information on Motorola’s Semiconductor Products Sector can be found in the SPS Web site —


Wisconsin GameCash

Game Financial Corporation, a subsidiary of Travelers Express Company, Inc., announced Tuesday it has received notification that it has been issued a gaming-related contractor certificate from the State of Wisconsin Department of Administration, Division of Gaming. The company has operated GameCash(R) service centers in the state of Wisconsin since 1991 and currently provides services to five casinos in the state.

Game Financial Corporation provides gaming establishments, particularly casinos, with comprehensive services that allow their patrons to access cash through the use of credit card cash advance, check cashing and automated teller machine (ATM) services. Through proprietary PC-based systems, the company is an innovative leader in using the credit card cash advance transaction as an opportunity to provide promotional programs and other value-added customer reward and retention services to its host establishments.

In December, 1997, Game Financial Corporation merged with Travelers Express, a leading processor of money orders, electronic bill payments and official checks. Travelers Express is a subsidiary of Viad Corp (NYSEVVI), a Phoenix-based company that includes airline catering, convention services, payment services, and travel and leisure