Holding Pattern

Credit card charge-offs among card-backed securities remain stable, dropping slightly to 6.60%, according to Fitch IBCA’s ‘Credit Card Performance Index’ for the December collection period. Fitch noted yesterday that its charge-off index is actually showing an 18 basis point rise to 6.84%, however the data are skewed due to an accounting change at Capital One. Cap One now charges off accounts at 180 days. Issuers reporting declines include MBNA, Citibank, Chevy Chase and First Chicago. Issuers experiencing an uptick include Providian, Advanta, Wachovia and AT&T Universal.

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IVI Snags Argentina Terminal Contract

International Verifact Inc. announced yesterday that its Latin American joint venture, IVI Ingenico Inc., has received an order commitment in excess of US $1.5 million to supply CREDIRED with Ingenico’s Elite 500 electronic payment terminals.

The terminals will be used in merchant locations throughout Argentina to process credit card transactions based on a pre-approved amount stored on a smart card. These credit cards will be issued to people with low income levels who would otherwise not qualify for a traditional credit card. The credit limit on the smart card is pre-approved based on an individual’s qualifications – with the amount of the purchase charged against this credit limit each time the card is used.

The merchant will redeem the electronic transactions for cash at regional centers spread throughout the country. “The system is designed to save communication costs by not having to authorize each transaction on-line every time. Further cost savings are realized as printing and mailing monthly statements are not required as the card holder knows the balance on their card every time they use the card,” said Jorge Fernandez, Executive Vice President and General Manager, IVI Ingenico. Software will be developed as a partnership between CREDIRED and IVI Ingenico.

Nestor Yoan, Vice President and General Manager, CREDIRED stated, “Among the factors that convinced us to purchase IVI-Ingenico terminals included their superior technology and know-how in smart card based EFT-POS as well as their superior price/performance. Additionally, their UNICAPT(R) operating environment allows us to write and maintain our own applications while providing us with the security and flexibility that we will need in managing different applications in the future.”

“We have spent the last year building a strategic approach to the Latin American market and we are now starting to see the benefits of our efforts. These countries are evolving quickly to modern technology such as smart cards. Our world leading expertise and technology is a perfect fit for such markets,” said L. Barry Thomson, Chairman of IVI Ingenico. Mr. Thomson is also President and CEO of IVI.

Based in Argentina, CREDIRED is in the business of granting credit to individuals of low income. This credit is granted in the form of a set, pre-approved credit line which the card-holder may use to purchase goods and services at approved merchants. While the card works similar to a conventional credit card, their product serves people who would otherwise not qualify for a conventional credit card.

IVI Ingenico, based in Coral Gables, Florida, is a joint venture between IVI and its strategic alliance partner, Groupe Ingenico, of Paris, France.

Group Ingenico is engaged in the design, development and sale of secured terminals and complete systems dedicated to electronic payments, loyalty and electronic benefits transfer, and is the recognized leader in smart card technology in Europe, Africa and the Asia-Pacific areas.

IVI is engaged in the design, development and sale of electronic payment solutions for retailers, financial institutions, governments and other businesses. The company’s hardware and software products include solutions for point-of-sale debit/credit/EFT/EBT terminals, check readers, smart card readers, POS printers and secure PIN entry devices. Additional company information is available on IVI’s website at .

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TNS-NDC Contract

Transaction Network Services, Inc. announced Tuesday that it has signed a multi-year agreement with National Data Corporation to provide transaction transport services through the year 2000.

NDC is one of TNS’ largest POS customers. TNS provides communication services for both NDC’s health care and payment systems lines of business. NDC is one of the top information service providers, and its health information services business is the largest processor of real-time health care transactions. It offers value-added information services and systems to a broad range of health care customers, including physicians, hospitals, pharmacies and dentists. It also services HMOs, insurance carriers, nursing homes, outpatient clinics and government health care agencies. NDC also offers an expanded range of value-added services for its customers in the payment systems market, such as credit, debit, check, smart card, purchase card and Internet-based services. It serves 750,000 merchants in North America, 12,000 corporations, more than 700 financial institutions and numerous federal and state government agencies.

“One of our goals is to grow the healthcare portion of our POS business,” commented Brian Bates, senior vice president and general manager of TNS’ POS division. “We look forward to the opportunity to work closely with NDC to achieve that goal.”

“With the signing of this agreement, we now have commitments from all of our largest customers through the year 2000,” commented TNS president and CEO John J. McDonnell, Jr. “We’re pleased that NDC has chosen to renew its service agreement with TNS, and we hope to expand our relationship with NDC over the next several years.”

Transaction Network Services, Inc. (TNS), headquartered in Reston Virginia, provides data communications services for transaction-oriented applications. The company is listed on the NASDAQ National Market under the symbol TNSI. Additional company information is available on the TNS website at [www.tnsi.com][1].

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

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Banner Ad Card Transactions

Narrative Communications Corp., a pioneer in high-impact advertising solutions for the Web, today publicly demonstrated, for the first time, a complete solution for commerce-enabled Web advertisements and direct marketing campaigns. Through tight integration with Microsoft’s Site Server 3.0, Commerce Edition, the newly unveiled Enliven(tm) ad for Eddie Bauer supports secure credit card transactions within a banner, enabling the company to directly market and sell its products to customers through online advertising. Shown at the DEMO 98 conference in Indian Wells, Calif., the ad is an example of a long-awaited class of one-to-one marketing applications designed to facilitate electronic commerce by eliminating the gap between demand generation and branding activities and the actual sale. More information about Eddie Bauer, an international specialty retailer of casual lifestyle merchandise ([www.eddiebauer.com][1]), and its goals for the Enliven ad can be found on Narrative’s Web site at .

“With our sales continuing to build at a high incremental rate, we believe a tremendous opportunity exists in extending our points of presence on the Internet through highly targeted, transaction-oriented advertising campaigns,” said Judy Neuman, vice president of interactive marketing for Eddie Bauer. “For the first time, Enliven is allowing us to embrace this opportunity by providing an innovative platform for conveying the Eddie Bauer message to a much broader segment of the Internet market. Customers benefit from the ability to simply and conveniently purchase Eddie Bauer products without leaving the context of their current Web page, resulting in more effective ads that sell products and quickly return critical market research data.”

Designed to sell men’s jeans, the initial Eddie Bauer prototype ad addresses all aspects of the sales cycle — from demand generation and brand awareness to information distribution and sales — within the context of a banner ad. The engaging ad immediately grabs the attention of users while encouraging interaction with the banner, spurring users to choose from multiple color choices, as well as enter size, shipping and credit card information. Upon completion of the transaction, an order confirmation number is automatically returned to the buyer.

The Eddie Bauer ad was created by ImaginEngine, an Internet advertising agency located in Venice, Calif. It represents the first time a secure credit card solution has been used to execute commercial transactions within a Web advertising campaign.

“Before commerce can really take off on the Web, advertisers need access to an easy-to-use platform that effectively standardizes the process of creating, deploying and measuring transaction-based advertisements and direct marketing campaigns,” commented Scott Kliger, chief technology officer at Narrative Communications Corp. “Narrative is on the verge of delivering on this need with industry-leading technologies that set the stage for a whole new era of revenue generating, business-to-business and business-to-consumer ads.”

Integration with Microsoft Site Server 3.0

The Enliven ad solution demonstrated today takes advantage of Microsoft Site Server’s extensible Commerce Edition by delivering commerce transactions directly to Eddie Bauer’s back-end. Additional support for the Enliven ad solution is provided in Site Server 3.0 and its new Ad Server, that natively supports Enliven’s ad format, including full capabilities for managing, scheduling and targeting of Enliven ads. This allows sites to extend revenue opportunities with Site Server by hosting Enliven ads and using the Enliven ad format to extend their reach across the Web. A future version of Enliven with enhanced Site Server integration will add payment and transaction capabilities to the companies’ combined offerings. For Internet publishers and advertisers, this translates into more effective campaigns that seamlessly integrate advertising with commerce.

“By combining the power and ease of use of Microsoft’s Site Server with the elegance of Narrative’s Enliven Web advertising solution, the Internet advertising community will have access to a well-integrated, highly-sophisticated platform for deploying next-generation advertising and marketing campaigns,” said Russ Stockdale, Site Server Group Manager.

About Enliven

Enliven is the industry’s first “no plug-in” advertising solution that enables the delivery of highly engaging, interactive and uniquely measurable ads on the Web. Designed specifically to develop and deploy sophisticated Web advertising and marketing applications, Enliven is comprised of three components the Enliven Client, a small Java applet (approx. 20KB) that provides users with fast, transparent, cross-platform access to ads; the Enliven Xtra, a Macromedia Director add-in that automatically converts Director movies into Java media streams and optimizes them for Web delivery; and Enliven Server, a high-performance media server that reliably streams Web advertisements to thousands of users simultaneously. The Enliven server also provides extensive logging, tracking and reporting capabilities to advertisers and Internet publishing sites. These measurement details aid in media placement, campaign performance and creative approach decision-making, resulting in more effective and efficient Internet advertising.

About Narrative Communications Corp.     Narrative Communications Corp., with headquarters in Waltham, Mass., and offices in Los Altos, Calif., is a pioneer in high-impact advertising solutions for the Web. Narrative’s Web site and e-mail address are and info@narrative.com, respectively. The company is located at 1601 Trapelo Road, Waltham, MA, 02154, and can be reached by telephone at (781) 290-5300.

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

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Mall VIP Visa Promo

Cardholders of the ‘Mall VIP Visa Card’ will receive a commemorative ‘VISA Olympic’ pin for VISA purchases of $25 or more at Simon DeBartolo’s 131 malls nationwide. The exclusive promotion is latest in a series of customer-designed programs between VISA and DeBartolo’s Simon Brand Ventures unit. VISA says its partnership with the shopping mall king will also open up a testing ground for smart cards and electronic gift certificates.

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Advanta Prices New Card Bond

Advanta Corp. announced Tuesday that Advanta National Bank, its wholly-owned subsidiary, has priced a $1.15 billion credit card securitization transaction.

The closing is expected to be Feb. 6, 1998.

The transaction, Series 1998-A, consists of three classes of uncapped floating-rate certificates which will be issued by Advanta Credit Card Master Trust II. The senior Class A Certificates, representing $966 million in receivables, will have an expected average life of approximately three years.

The coupon rate for Class A will reset monthly and will equal one-month LIBOR plus four basis points. The $86.25 million in subordinated Class B Certificates will have an expected average life of approximately three years carrying a coupon that will reset monthly equaling one-month LIBOR plus 24 basis points.

The Certificates were priced at a discount with the Class A Certificates priced at 99.81% and the Class B Certificates priced at 99.80%. Salomon Smith Barney is the lead underwriter for the Class A Certificates and is joined by J.P. Morgan & Co., Bear, Stearns & Co. Inc. and Chase Securities Inc. as co-managers. J.P. Morgan & Co. is the sole underwriter for the Class B Certificates.

In addition to the publicly offered Certificates, a subordinated interest which will provide credit enhancement for both the Class A and Class B Certificates will be sold in a private placement.

This credit card securitization is the company’s 18th issuance out of Master Trust II, which will bring the total outstanding from Master Trust II to over $8.8 billion.

The Class A Certificates are expected to be rated “AAA” by Standard & Poor’s, “Aaa” by Moody’s and “AAA” by Fitch; the Class B Certificates are expected to be rated “A” by Standard & Poor’s, “A2” by Moody’s and “A” by Fitch. Advanta National Bank will retain the servicing and customer relationships of the credit card accounts.

With over six million customers, $21 billion in managed assets and 4,400 employees, Advanta is a financial services enterprise that serves consumers and small businesses through innovative offerings of credit cards, mortgages, leases, insurance and deposit products.

This press release contains forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected.

The most significant among these risks and uncertainties are: (1) factors that affect consumer debt; (2) competitive pressures; and (3) the ratings on the debt of the company and its subsidiaries.

Additional risks that may affect the company’s future performance are detailed in the company’s filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q.

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Mid-Size Players Part II

Growth rates for mid-size players within the $200 million to $500 million peer group reflect overall increases posted by smaller mid-size players. Among this segment secured card issuer First Consumers National Bank posted the strongest gain. Non-bank issuers Beneficial and Nordstrom experienced some erosion. Several regional players posted solid gains.

       ISSUER               97 EOY RECV          96 EOY RECV          CHG
       First Security      $205,686,368         $201,115,385          +2%
       Beneficial           223,000,000          237,000,000          -5%   
       Nordstrom            227,500,000          233,000,000          -2%
       SouthTrust           234,997,271          199,857,308          +17%
       Compass (AL)         250,859,224          199,610,339          +25%
       Frst Consumers       287,030,146          221,251,796          +29%
       Bancorp Hawaii       288,620,420          290,615,220          NC
       Fifth Third          351,000,000          381,000,000          -7%
       BB&T                 358,466,878          293,346,315          +22%
       Star Banc            436,100,000          418,783,000          +4%
       Banponce             440,563,795          359,100,071          +22%
       AmSouth              449,615,207          478,931,140          -6%
       GROUP TOTAL          $3,753,439,309       $3,513,610,574       +6%
              Source Bankcard Update/CardData Jan 98 issue

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GlobeSet SET Online

GlobeSet, Inc. has announced that its SET Secure Electronic Transaction 1.0 product suite is now accessible on a website to other SET vendors for interoperability testing. Located at , the site reconfirms GlobeSet’s leading role as a pro-active agent for increased interoperability throughout the SET industry.

To verify full interoperability, vendors can run test messages between their SET(TM) applications and GlobeSet’s electronic wallet, point-of-sale (POS), financial processor gateway, and certificate authority applications. The test site is accessible through password to any SET(TM) vendor in the industry.

The SET Secure Electronic Transaction(TM) protocol supports secure credit card transactions over the Internet. Software interoperability is critical because a SET(TM) transaction requires four different applications a digital certificate authority (CA) application that generates and issues digital identification certificates, a payment gateway application connecting the merchant to the payment processor’s legacy systems, a merchant point-of-sale (POS) application, and a cardholder’s electronic wallet. A vendor like GlobeSet can supply all four of these components. However, many SET(TM) installations today use software from multiple vendors, hence the importance of proven interoperability among SET(TM) applications.

As a major OEM provider of SET(TM) software, GlobeSet has established a strong record of interoperability in the industry. In June, 1997, GlobeSet applications interoperated with SET(TM) applications from American Express and GTE to help make possible the first North American SET(TM) transaction in the first SET pilot, conducted for the Wal-Mart Online store. In a subsequent phase of the same pilot, the GlobeSet POS application interoperated with wallet, gateway and CA applications from IBM.

The GlobeSet interoperability test site has been established in the spirit of other major industry efforts supporting the SET(TM) software standard managed by SET Secure Electronic Transaction LLC, an entity recently formed by Visa and MasterCard, which will be jointly owned with American Express and Japan’s JCB. SET Secure Electronic Transaction LLC has been established for the management of the “root key” for SET(TM) digital certificates, compliance testing, and future versions of the SET(TM) protocol. It also oversees maintenance and enforcement of the SET(TM) trademarks, the use of which is granted under license to software vendors and merchants who successfully pass compliance testing.

“We encourage any effort that advances interoperability and allows SET vendors to test their programs against each other,” said Steve Mott, MasterCard’s senior vice president, electronic commerce/new ventures. “We believe efforts like these from GlobeSet and others ultimately will increase the efficiency and performance of SET in the marketplace.”

“Visa applauds GlobeSet for their ongoing efforts to make SET a true global e-commerce standard and for providing a venue for vendors to test interoperability of their SET solutions,” said Steve Herz, senior vice president – Internet commerce, Visa International. “SET will continue to gain momentum in the marketplace because of organizations like GlobeSet and their commitment to interoperability,” added Herz.

“True SET interoperability means more than agreement between two vendors,” said Dennis Jolly, vice president, sales and operations at GlobeSet. “It means proving that your products will work anytime, anywhere, with any SET-compliant application in the marketplace. That’s why we applaud efforts such as SETco to manage industrywide technology. We also want to formally invite the entire SET software industry to make use of our site to facilitate interoperability efforts. As an OEM provider, we have always been focused on interoperable solutions for our channel partners and their customers. Now we can pave the way for vendors around the world to achieve full interoperability for SET products. It’s a win-win situation for everyone.”

About GlobeSet

GlobeSet is a world leader in SET Secure Electronic Transaction(TM) software solutions for secure, credit card transactions over the Internet. The company provides applications for the electronic wallet, the merchant point of sale, the financial processing gateway, and the certificate authority. GlobeSet is a member of the SET(TM) protocol design team, and has been at the forefront of SET(TM) development since its inception. General availability for GlobeSet SET(TM) products was announced December 10th, 1997. GlobeSet is a strategic SET(TM) solution provider for Tandem Computers, a Compaq Company. GlobeSet also provides SET(TM) solutions to Hypercom Corporation and Sun Microsystems. Founded in 1994, GlobeSet is a privately held corporation headquartered in Austin, Texas. Additional information on GlobeSet is available on the World Wide Web at .

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BAMS First Year

BA Merchant Services’ processing volume grew 28% in its first year as a public company. BAMS says the strong growth reflects the success of their direct sales efforts. During 1997 BAMS opened eight new sales offices and increased its sales staff by 51%. BAMS also pushed hard into the East Coast and mid-West regions. BAMS also picked up a 4,200 merchant portfolio from First Data Systems during the third quarter which is now producing an annual credit card sales volume of $850 million.

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