Outstanding  . . . NOT

Revolving credit posted its smallest monthly increase in nearly five years according to December consumer credit figures released by the Federal Reserve Friday. Revolving credit inched up a mere 40 basis points following a 3.4% contraction during November. Overall outstanding consumer credit increased by 3.9% annual rate, due to a significant rebound in automobile credit. For December 1996 revolving credit grew at an annual rate of 10.3%. While final tabulations for fourth quarter credit card outstandings have not been released, a preliminary review of RAM Research’s ‘Fourth Quarter Portfolio Survey’ indicates credit card outstandings grew about 6%, on average, last year. It appears 1997 will post a slower rate of growth than the recessionary year of 1991. Tapped-out personal credit lines and the surge of consolidation loans via high LTV home equity credit have contributed to the weakness in credit card debt. Overall consumer credit for December totalled $1.2 trillion.

                                 REVOLVING CREDIT HISTORICAL
       Dec 97   Nov 97  Oct97  Sep97  Aug97 Jul97  Jun97  May97 Apr97  Mar97 
%GRWTH 0.4%    -3.4    8.7    6.2    8.0    9.4    4.2    4.6   6.9    0.5
$OWED 528.9   528.7  530.2  526.4  523.7 520.2  516.2  514.3 512.4  509.5
Source Federal Reserve; revised figures as of 02/06/98

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NextCard VISA

A San Francisco firm rolled out a new credit card Friday billed as the “First True Internet VISA”. The ‘NextCard VISA’ offers instant credit approvals via the Internet and the company’s proprietary online application process called “Rapid Results”. The card, launched by Internet Access Financial Corporation, provides online access to account information and offers applicants the ability to design their own card features. The firm said Friday it has received “thousands” of applications since going online in December. The card is being issued through Heritage Bank of Commerce of San Jose.

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VISA Names Emerging Tech Head

Visa International announced yesterday the appointment of Stephen Schapp as executive vice president, Emerging Electronic Payments group, a newly created position, effective immediately.

Schapp, a veteran of 23 years with Visa, most recently served as executive vice president, Products and Marketing, for Visa’s European Union region with headquarters in London.

“Steve brings a wealth of experience and expertise to this key position. His broad understanding of all phases of the payment service business will serve Visa well as we continue to help our Members take full advantage of new opportunities in emerging electronic payments,” said Daniel R. Eitingon, president, Global Support Services Group.

Under Schapp, Visa’s Emerging Electronic Payments group will focus on the acceptance environments and the payment services enabled by new technology.

Visa’s Chip Products group, which works with Visa Member financial institutions in implementing microchip-based card products, will also report to Schapp until such time as an executive is named to head that unit. Previously, both Chip Products and Emerging Electronic Payments were headed by Francois Dutray who has assumed a position with Motorola.

Visa leads the industry with more than 21 million chip cards issued in 30 countries, including more than 7 million Visa Cash stored value chip cards.

Schapp, a native of San Francisco, California, holds a BS degree in Business Administration from California State University.

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 other 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.  As the leader in emerging technologies, Visa has 70 chip card programs in 30 countries and on the Internet, with 21 million Visa chip cards, including more than 7 million Visa Cash cards.  Visa is pioneering SET Secure Electronic Transaction(TM) programs to enable and advance Internet commerce.  Visa’s 618 million cards, generating more than US$1 trillion in annual volume, are accepted at more than 14 million worldwide locations, including 380,000 ATMs in the Visa Global ATM Network.  Visa’s Internet address is .

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United Expands E-Tickets

United Airlines will expand the airline industry’s most extensive international electronic ticketing service next month on flights operating between Canada and the United States.  The new international E-Ticket service(SM) between United’s U.S. gateway cities and Calgary, Toronto and Vancouver will be in addition to the service the airline already offers between the United States and the United Kingdom.

International E-Ticket service between the U.S. and Canada opened for sale on Feb. 1 and will be available for travel on flights beginning March 1.

Tickets can be purchased in the U.S. and Canada directly from the airline or through a U.S.-based travel agency.  Upon completion of software development by computer reservations systems companies Galileo and Sabre, Canadian-based travel agencies also will be able to sell United’s E-Ticket product.  This development is expected to be completed in March.

“We are seeing strong customer demand for both our international and domestic E-Ticket service,” says Sue Fullman, United Airlines director-sales distribution.  “This expansion into Canada solidifies United’s position as an industry leader with electronic ticketing, and reinforces our long-term goal to introduce the service to more markets around the world.”

Currently, the monthly usage of United Airlines E-Tickets is at an all- time high with 2.7 million coupons used last December.  During 1997, more than 40 percent of all eligible United Airlines itineraries were ticketed electronically.

Check-in, security and customs procedures for international travel using an E-Ticket are the same as current procedures for passengers with paper tickets.  Travelers using United’s international E-Ticket service will check in with their passport and the ticket receipt and, if booked by phone with United reservations, with the credit card used to purchase the ticket. Duplicate receipts and itineraries can be obtained at United ticket counters or via fax, and all customers are provided with a copy of the Warsaw Convention articles governing international travel.

United Airlines introduced its E-Ticket service in the United States on Shuttle by United flights in November 1994.  Less than one year later, United was the first airline to expand electronic ticketing nationwide on all its U.S. flights.

As the largest air carrier in the world and the largest majority employee- owned company, United Airlines offers more than 2,200 flights a day to 139 destinations in 30 countries and two U.S. territories.

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MIFARE Standard

Philips’ ‘MIFARE Architecture Platform’ is emerging as the industry standard for contactless smart card systems with a 90% share of the current market. Thursday Hitachi Ltd. announced a joint agreement with Philips to produce, market and sell products based on the ‘MIFARE’ technology without any limitation. The Philips’ contactless platform is a family of compatible card ICs and IC readers based on ‘MIFARE’ and consists of card and reader components working at an operating frequency of 13.56 MHz.

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Prepaid Cell Cards

A number of phone companies are jumping on the prepaid cellular phone card bandwagon as the projected number of wireless phone subscribers in the U.S. is expected to grow from 53.4 million to 80 million by the year 2000. Yesterday L.A. Cellular, a partnership controlled by AT&T and BellSouth, announced the ‘PayFirst’ prepaid cellular time card, targeted towards new market segments within the Southern California region. ‘PayFirst’ will be available as a $50 time card and will be distributed through 7- Eleven stores. L.A. Cellular prepaid rates are 75 cents per minute for local and long distance calls and $1.95 per minute for roaming.

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VISA – USPS Promo

To showcase the largest U.S. retailer accepting payment cards, and to drive Visa usage, Visa U.S.A. is launching a promotion with the United States Postal Service (USPS) offering customers a free gift with purchase.

During the month of February, every customer who uses a Visa credit of debit card for purchases at the USPS will receive a set of four postcards featuring winning designs from Visa’s Olympics of the Imagination international children’s art contest.

This is the first premium-based promotion involving Visa and the USPS, which began accepting credit and debit cards in 1995 and now accepts them at more than 32,000 offices nationwide. For the fiscal year that ended Sept. 30, 1997, consumers used plastic for more than 29.8 million postal transactions, which translated into more than $1.2 billion in purchases. This number is expected to increase significantly in 1998.

By accepting payment cards, the USPS has not only enhanced customer convenience, but also reaped considerable financial savings, due to the fact that the cost of processing payment card transactions is approximately half that of processing cash and checks.

A Visa promotion with the USPS is a natural fit, according to Armen Khachadourian, Visa’s senior vice president, new and emerging market development. “Offering a gift with purchase to post office customers allows us the chance to highlight the products and services the USPS offers, as well as the convenience and flexibility of Visa cards as a payment option,” he said. “We are proud to be working with the nation’s largest retailer.”

The Visa Olympics of the Imagination international art contest challenges schoolchildren between the ages of nine and 13 years old to create artwork that shows a person they admire participating in an Olympic Winter Games sport. More than 3,500 schools in the U.S. and schools in 14 other countries participated in this year’s contest. Four winning representatives from the U.S., will travel with one parent or guardian each, to join their international counterparts at the 1998 Winter Games in Nagano, Japan from February 5-11, 1998, as guests of Visa.

Visa is the preferred payment brand and the largest consumer payment system worldwide. It plays a pivitol role in advancing new payment products and technologies to benefit its 21,000 member financial institution, their cardholders, and the global economy. Visa is the only consumer payment system to facilitate $1 trillion worth of purchases of goods and services in a fiscal year. Visa’s 618 million cards are accepted at more than 14 million worldwide locations, including 370,000 ATMs in the Visa/PLUS Global ATM Network. Visa’s Internet address is [www.visa.com][1].

[1]: http://www.visa.com

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Smart Cards Like Space Shuttle

Labeling chip technology as “nothing short of revolutionary” and the driving force that will “literally rocket the payments industry into the next century,” Robert Selander, President and CEO, MasterCard International, focused on the need of the financial services community to make technology accessible to everyone in an era of unprecedented global complexities. Selander made his remarks today at the Annual Meeting of the World Economic Forum in Davos, Switzerland.

Mr. Selander’s presentation centered on the idea that, in order for a company to survive and prosper in the world of information technology (IT), it must embrace technology and make it accessible to everyone. He said that a payment services company must build its corporate strategy around leveraging technology that everyone can use.

![][1] “From the perspective of the payments industry, the way to survive the IT challenge is to demystify technology,” Selander said. “Once this is done, we must embrace it and democratize it.”

Mr. Selander’s presentation was part of a panel discussion titled “Surviving the Challenge of the Technology Revolution.” In addition to Mr. Selander, the panel included Paul S. Otellini, Executive Vice President, Intel Corporation, and W. Brian Arthur, Professor, Santa Fe Institute, and was moderated by Paul Saffo, Director, Institute for the Future.

According to Selander, MasterCard is leading the charge in the payments industry to make technology accessible to everyone, through the development of smart cards. He highlighted MasterCard’s development of MULTOS, the payments industry’s only open, truly global operating system for smart cards. MULTOS will allow multiple products and services to be held securely and independently on a single smart card.

“Going from magnetic stripe cards to chip cards is like going from a horse and buggy to a space shuttle. In doing so, we will make it possible for people to carry computers in their pockets,” he added.

Chip cards built on the MULTOS platform, which can store up to 80 times more information than magnetic stripe, will enable cardholders to put a number of different applications on their cards, and also tailor cards with just the right applications to suit their individual needs.

Selander said that in order for MasterCard’s member financial institutions to keep up with the rapid changes in information technology, accessibility – allowing everyone to use technology as a tool – is “not only the best way to survive the IT challenge, but the only way.”

“By embracing technology ourselves, we are equipped to help our members take leadership positions in the payments industry and respond to the market’s changing needs, Selander said.”

[1]: /graphic/mastercard/mastercard.jpg

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Bankruptcy Reform Moves Forward

The Bankruptcy Issues Council today praised the introduction of comprehensive reform legislation in the House of Representatives that would return fairness to the bankruptcy system by ensuring that individuals who file for bankruptcy are not allowed to walk away from debts they have enough income to repay.

The Bankruptcy Reform Act of 1998, introduced today by Reps. George Gekas, R-PA, James Moran, D-VA, Bill McCollum, R-FL, and Rick Boucher, D-VA, would create a bankruptcy system based on need, ensuring that a debtor receives the amount of debt relief he or she needs, no more and no less. Gekas, chairman of the Judiciary Subcommittee on Commercial and Administrative Law, which has jurisdiction over the legislation, said today that hearings would begin early next month and that the subcommittee hopes to complete action on the bill by late March.

“We are very pleased that Representative Gekas and his colleagues have seen the need for comprehensive bankruptcy reform and have pledged quick action on this bill,” said a statement from the BIC, which includes representatives of MasterCard, Visa and their member banks. “Last year, Americans filed a record 1.3 million-plus bankruptcy petitions, which erased an estimated $40 billion in consumer debt. Those losses are passed on to all consumers and will continue to grow every day that Congress delays enacting this important measure.”

“More than 70 percent of all bankruptcy filers choose Chapter 7, in which they receive complete relief from their debts,” said Richard Jones, vice president of MasterCard International. “The overwhelming majority of Americans who pay their bills end up picking up the tab for those who do not, and that’s just not fair. The bill will create a system that is fair to everyone – debtors, creditors and consumers.”

“This legislation will ensure that debtors receive only the amount of debt relief they need,” said Thomas Layman, senior vice president of Visa U.S.A. “But the bill also recognizes that many people who file for bankruptcy are in serious financial difficulty and need complete relief from their debts. We want to make sure the courthouse doors remain open for those in real financial trouble.”

The legislation incorporates virtually all the provisions of H.R. 2500, a bankruptcy reform bill introduced last fall by Reps. McCollum and Boucher that has attracted a bipartisan group of more than 160 co-sponsors. Central to both bills is the establishment of a “needs-based” system, which uses a formula, based on a debtor’s income and obligations, to determine a debtor’s ability to repay at least a portion of his or her unsecured debts. If the debtor can repay all of his or her secured debts, such as mortgage or auto loans, and priority debts, such as alimony or child support, and at least 20 percent of unsecured debts over a five-year period, the debtor would have to file under Chapter 13 and begin a repayment plan. Individuals who could not repay at least 20 percent of unsecured debts could file under Chapter 7 and receive complete debt relief.

But the bill goes beyond H.R. 2500 and includes provisions on such subjects as small business and farm bankruptcies, the appeals process and tax collections.

The consumer bankruptcy portion of the bill also includes two education-related provisions. Each filer must receive information about his or her choices when filing, both within the bankruptcy system and alternatives to bankruptcy, such as credit counseling or another financial management plan. The bill also creates a pilot program of financial management training for debtors.

In addition, the bill addresses the growing problem of “bankruptcy mills” – law firms and other businesses that push consumers into bankruptcy without advising them of the potential repercussions of doing so. The legislation sets out a “Debtor’s Bill of Rights” that outlines exactly what information an attorney or a for-profit “debt relief counseling organization” must provide to a consumer and offers the consumer protection if he or she receives inadequate or improper advice.

Finally, the legislation provides for better bankruptcy data collection, including the creation of a uniform, national reporting form and the recommendation that bankruptcy information be available via the Internet. Congress can use this national data to monitor the system and make further changes as necessary.

“This is a very strong bill that is already attracting widespread support on Capitol Hill,” the BIC statement said. “We hope Congress will move quickly to enact this legislation. Far too many Americans are simply walking away from their debts, even if they could repay, placing the burden on responsible, bill-paying consumers. We look forward to working with Congress this spring to fix our flawed bankruptcy laws and hope to see enactment of these sensible reforms.”

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Wireless Email

Three leading telecommunications companies have signed a Memorandum of Understanding to build the first wireless e-mail application based on GSM smart cards. Using the potential of the latest GSM specification, Alcatel, Schlumberger (NYSE: SLB) and Sendit have created an open and highly-versatile system for adding Internet e-mail capability to mobile phones.

The technology promises to deliver Internet-based e-mail and other services to mobile users at extremely low cost, by exploiting the independent computing capability of the economic subscriber smart card modules incorporated in digital cellular phones. By utilizing industry standards, the application could be implemented with ease by any network operator in the world, to provide the foundation for advanced data communication services for the full spectrum of users.

The wireless e-mail application is based on the `pro-active’ commands which are part of the latest Phase2+ release of the GSM specification. These provide a toolkit to implement added-value applications using the intelligence and memory of the smart card-based SIM (subscriber identity module). Using this, the SIM can run software independently and call on the phone’s user interface resources as required, allowing Internet e-mail services to be provided via friendly menu-driven sequences. New applications such as Internet e-mail can even be programmed into the phone’s SIM `over-the-air’, after purchase.

This approach has major benefits for the mobile telecommunications market: facilitating `mass customization’ which allows operators and users to tailor a phone and a range of services to suit an individual’s needs using a low-cost card.

All three parties in this joint marketing venture are leaders in their respective sectors of GSM technology. Alcatel is the first to introduce a phone handset compatible with the latest Phase 2+ specification, and Schlumberger were the first with a compliant SIM card. Sendit is the recognized leader in server technology to support the use of Internet services in cellular phone networks.

The synergy between these individual specializations led the parties to co-operate and build a working SIM-based wireless e-mail application, to demonstrate its potential and accelerate the roll-out of this exciting technology.

The mobile terminal is Alcatel’s One Touch PRO – a GSM phone which includes a large graphical display – ideal for implementing friendly menu-based functions. The SIM cards are Schlumberger’s brand new Activa range with up to 16k of memory, enough for the basic SIM application plus wireless e-mail and further programs. This remote computing capability is supported by Sendit’s Internet Cellular Smart Access (ICSA) server, the first product of its type with commercially working installations.

“The GSM industry is highly competitive” notes Vittorio di Mauro, Marketing Manager of Alcatel Business Systems. “This marketing venture will provide network operators with a completely integrated and standardized solution which can cut months off time-to-market for mobile Internet services, yet still leave enormous flexibility for competitive differentiation.”

“As the capability of networks extends ever further, smart cards are proving the ideal way to allow individuals to exploit the technology quickly and effectively” said Schlumberger’s Stephan Le Gentil, Mobile Communications Marketing Manager. “They allow sophisticated technology products to be customized for individuals, and provide enormous scope for implementing security measures such as encryption – vitally important as business and commerce starts to rely on open networks”.

“Our company strategy is to catalyse the potential of wireless information services by providing server products and working with customers to realize solutions,” added Edouard Mercier, Sales and Marketing Director of Sendit. “The new SIM toolkit is an important part of this work, as it is available today, and we look forward to working with our partners and network operators to improve subscriber acceptance of wireless Internet applications.”

Several network operators in Europe, Asia and North America are actively considering Sendit’s Internet cellular server. Alcatel, Schlumberger and Sendit aim to provide them with a fully packaged solution in order to simplify access to the service for the end-user. A number of bundled packages will be released soon.

The first operator to reach the market with open wireless e-mail technology will be Hongkong Telecom CSL, who are currently implementing it as a new option for its `One2Free’ GSM service. “We are very excited about offering these new services and have already received an overwhelmingly enthusiastic response from our customers” comments Richard Midgett, General Manager, Product Development at Hongkong Telecom CSL. “We look forward to working on further developments of the Sendit ICSA platform”.

About Alcatel

The mission of Alcatel’s Professional & Consumer Division (PCD) is to serve world markets in professional and consumer telephony. Its products range from small communication systems for business use to residential, mobile (with a focus on GSM and derivative standards) and Internet telephones for the mass market. Alcatel achieved more than 25% growth in value terms in 1997 with fast growing visibility and market share in the consumer segment of the market – thanks in particular to the global success of the One Touch(R) GSM product range. By the year 2000, Alcatel PCD aims to become a worldwide leader in the mobile telephone and Internet access markets.

About Schlumberger

Schlumberger Electronic Transactions offers a flexible portfolio of smart card-based solutions for businesses and communities of all kinds. The company provides cards, terminals, development tools and support in open configurations for operators, developers, integrators and distributors worldwide. Under The Smart Village brand, the Schlumberger offer includes the milestone Cyberflex(TM) card, the industry’s first Java(TM)-based smart card.

Schlumberger is unique in that it provides both smart cards and turnkey solutions along with a full range of tools and services for Telecom, Banking, Retail, Mass Transit & Parking, Healthcare and Networks. The company has design and manufacturing facilities in Europe, North America, Asia and Latin America.

The Electronic Transactions group employs over 5,000 people and operates 45 facilities. Among dedicated facilities in 34 countries, the group has 9 research and development centers strategically located in Europe, Asia and North America.

Schlumberger Electronic Transactions is a business segment of Schlumberger Ltd., a $10.65 billion global technology and service company providing oilfield services, natural resource management, smart card transactions-based technology and associated systems, and semiconductor test equipment.

About Sendit

Active since 1995, Sendit AB is the leading provider of Wireless E-Mail, secure Internet access and content delivery client-server solutions to cellular operators with operational sites at Europolitan, Vodafone, Hong Kong Telecom CSL and other GSM operators in Europe and Asia. Wireless E-Mail enables cellular subscribers to receive, forward and send e-mails to and from their mobile terminals. Sendit’s Internet Cellular Smart Access (ICSATM(R)) is designed as a client-server solution where the clients are ordinary digital cellular terminals, Smart Phones, Personal Digital Assistants or Notebooks PCs. Sendit has partnered with major cellular terminal suppliers on the implementation of its technology in their product range. Sendit is further developing ICSA(R) with its partners to offer Unified Messaging applications integrating e-mail, fax and voice services.

Planned new wireless interactive information applications protocols will also be supported in ICSA, enabling cellular operators to provide a complete range of Wireless Internet services to all their subscribers from a single Applications Server. Sendit is listed on the SBI in Stockholm.

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G&A Imaging Names CFO

Today, G&A Imaging announced the appointment of Kenneth D. Charbonneau as Chief Financial Officer. Formerly Partner, High Technology Practice at KPMG, Mr. Charbonneau joins G&A Imaging to oversee the company’s national and international expansion, and to direct the corporate financing activities leading to an initial public offering.

“G&A Imaging is poised for substantial growth and success,” says Charbonneau, “I am pleased to be part of such an innovative and capable company, and I look forward to the challenges of guiding G&A forward.” For the past twenty-one years, Ken Charbonneau has provided a wide range of business, finance, tax, securities, due diligence and financial reporting services through KPMG to many technology organizations in Ottawa-Carleton. Since 1990, he has served KPMG Ottawa as leader of the High Technology Practice Group; Human Resources partner; and Due Diligence Assistance Services leader.

According to G&A Imaging President, Ray St-Maurice: “Ken Charbonneau joins us at a very interesting point in the company’s history as we prepare for an IPO and establish a new subsidiary company in Germany. Ken’s proven track record of working with many of Ottawa’s high tech companies speaks for itself. We are proud that such an experienced and well-respected member of KPMG has become an integral member of the G&A team.”

Ken Charbonneau graduated in 1976 with a Bachelor’s Degree in Commerce from Carleton University, and received his CA designation from the Institute of Chartered Accountants of Ontario in 1979. Ken Charbonneau is based at G&A Imaging’s world headquarters in Ottawa-Hull, Canada.

About G&A Imaging Founded in 1988, G&A Imaging offers dynamic and innovative digital image management solutions to clients that range from home computer users to multinational corporations. G&A Imaging’s internationally recognized EPISUITE and PhotoRecall software lines reflect the company’s commitment to quality and excellence in product development. G&A Imaging’s clients include IBM France, CN Tower, Deutsche Bank, BASF, Egypt Army, Mexican Voter’s Registration, Sabena Belgium and Mercedes Benz. G&A Imaging has offices in the U.S., Singapore, Germany and Canada.

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