G&D Supplies NYC VISA Cash Pilot

G&D was the major supplier to ’96 Summer Olympic Games Visa Cash pilot

Giesecke & Devrient America Inc. (G&D) announced Thursday that the firm is a leading supplier of Visa Cash(R) cards for Citibank’s innovative smart card project involving more than 700 merchants in Upper Manhattan.

The New York program is the largest smart card project conducted in the U.S. today. This is the second time G&D has participated in a major test of the Visa Cash program, the previous one being the 1996 Summer Olympic Games smart card program in Atlanta where G&D supplied nearly one million cards in the largest implementation of Visa Cash in the U.S. market.

The New York Smart Card Program is an unprecedented alliance involving Citibank, Visa, Chase Manhattan Bank, and MasterCard. In this major project, Citibank and Chase are providing more than 50,000 cards to their customers on Manhattan’s Upper West Side to explore the financial and technological advantages of an electronic payment system designed as an alternative to checks, cash, and coins at the retail level.

“The Citibank smart card program represents an important technological milestone in the development of cashless payment systems in the U.S.,” stated Juergen Nehls, a member of G&D’s board of directors and the head of G&D’s Cards and Payment Systems Division.

Looking to the future, Nehls observed that, “usage of electronic purses, such as the Visa Cash card, will expand from everyday shopping to complex payment systems on the Internet, to closed environments such as stadiums and amusement parks. G&D’s experience in developing secure and innovative payment systems for the world’s leading commercial banks make our firm the ideal partner as the smart card revolution gets underway in the U.S.”

The cards developed and manufactured by G&D, featuring Visa Cash, are being issued by Citibank to its local customers. Consumers will be able to load cash value onto the cards at special loading kiosks located throughout the Upper West Side. The smart cards’ stored value can be used to purchase goods and services at a variety of merchants including restaurants, food stores, dry cleaners, and other retail establishments.

The Citicard, Citibank’s ATM card, and the stand alone, reloadable “Money Card,” provide a convenient alternative to cash for small-value transactions, while offering significant savings in cash handling costs for participating merchants and banks.

“G&D has been an important and responsive supplier of our branded Citicard smartcards for the New York City Smart Card Program. Their products have performed well, they met their delivery schedules and quality targets, and often went beyond the usual to help us meet our schedules,” commented Henry Lichstein, vice president of Horizon Planning at Citibank.


Citibank is a subsidiary of Citicorp (NYSE: CCI), a global financial services organization serving consumers, businesses, government, and financial institutions through 3,200 locations in 98 countries and territories. In the metropolitan New York City area, Citibank serves customers and small businesses through a network of 217 branches.


Giesecke & Devrient GmbH is a world leader in the development and production of cards and card systems, including microprocessor, memory, and magnetic stripe cards. A privately-held Munich-based corporation, Giesecke & Devrient employs 4,300 people worldwide in its operating units in Germany, Belgium, Spain, Mexico, China, Russia, Singapore, South Africa, and the United States.

The rapidly expanding G&D America manages 950 employees and is a wholly- owned subsidiary of Giesecke and Devrient. The Virginia-based company focuses its North American sales and development efforts on products for G&D’s Card and Card Systems Division and its pioneering currency processing systems which are used by major central banks and leading commercial banks throughout the world.

As one of the largest manufacturers of secure magnetic stripe and chip cards in North America, G&D operates production and research facilities in Cleveland; Bedford, Mass.; and Philadelphia; as well as in Toronto and Mexico City. Visa Cash(R) is a registered trademark of Visa International. Citicard is a registered trademark of Citicorp.


Contactless Card Manufacturer Struggles

Racom Systems, Inc. a pioneer in the development of contactless smart cards, reported its unaudited financial results for the third quarter ended September 30, 1997, with a net loss of $791,701 or ($.06) per share on revenues of $69,218.

These results compare to a net loss of $876,889 or ($.07) per share on revenues of $76,456 for the corresponding prior year period, and a net loss of $762,969 or ($.06) per share on revenues of $336,815 during the second quarter of the same year.

“At the end of the quarter two major contracts had not been closed as expected,” said Richard Horton, President and CEO of Racom. “While we are disappointed in our inability to close these contracts and the resulting negative impact on our quarterly earnings, we believe the prospects for a successful outcome are quite good. We remain enthusiastic about the explosive potential of smart cards and are confident that our business plan is on track for addressing this market.”

Racom generates revenues principally from fee-based development projects, sale of its smart card products and selective licensing of its technology. Licensing and project-related revenues are typically billed in stages based upon completion of milestones and therefore quarterly financial results have historically fluctuated significantly. Racom is now expanding its engineering, marketing and sales efforts to address substantially larger business opportunities, with emphasis on generating recurring revenues from product sales and services. A primary example of such an opportunity is Racom’s participation as a founding member of the Tran$Cash Consortium which offers full turnkey, entrepreneurial solutions for electronic fare, toll collection and E-ticketing in major transportation markets.

Racom Systems, Inc., headquartered in Denver, Colorado, develops and delivers smart card-based systems that automate transactions for electronic commerce, information technology and industrial automation. Whether at home, work or play, Racom’s systems put people in charge of their lives with solutions that provide secure, convenient and personalized access to money, information, property, and services. For further information about Racom, its technology and products, contact Racom at its Web address, , by telephone at (303) 771-2077, or by fax at (303) 771-4708.

Investors should carefully consider the preceding information as well as other information contained in this press release before making an investment in the Common Stock. Information contained in this press release contains “forward-looking statements” which can be identified by the use of forward-looking terminology such as “believes,” “expects,” “may,” “should” or “anticipates” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy. No assurance can be given that the future results covered by the forward-looking statements will be achieved. The following matters constitute cautionary statements identifying important factors with respect to such forward-looking statements, including certain risks and uncertainties, that could cause actual results to vary materially from the future results covered in such forward-looking statements. Other factors could also cause actual results to vary materially from the future results covered in such forward-looking statements.


Nestor up 148%

Nestor, Inc., a leading provider of intelligent software applications, reported revenues of $1,592,344 for the third quarter ended September 30, 1997, an increase of 148% compared to revenues of $640,867 for the third quarter of 1996.

The Company reported a modest net loss in the third quarter ended September 30, 1997, of $61,959 or $0.02 per share, compared to a net loss of $364,731 or $0.05 per share, for the third quarter of 1996.

For the nine-month period ended September 30, 1997, revenues rose 24% to $4,899,489 from $3,953,359 for the comparable period in 1996. Net income for the first nine months of 1997 was $29,116 compared to $371,186 for the first nine months of 1996. Revenue in 1997 and 1996 includes $105,032 and $2,078,000, respectively, and net income in 1997 and 1996 includes $105,032 and $1,140,000, respectively, from the intelligent character recognition (ICR) product line exclusively licensed to National Computer Systems, Inc. in June 1996.

David Fox, President and CFO of Nestor, said “Revenues for the Financial Solutions Division continue to increase with new licensing agreements for our PRISM risk-management products. A series of new PRISM installations signals our continued emergence as a major supplier of risk-management solutions to the financial-services market. Nestor is pleased that its recent partners have begun to generate orders for PRISM in their respective markets.

“CSK Corporation, a Nestor reseller and Japan’s leading independent software services provider, recently completed its first installation of PRISM at a major Japanese financial institution, Nippon Shinpan Card Company, Ltd. In addition, Nestor’s partnership with Total System Services, Inc. (TSYS) is building transaction-fee revenues. On-line use of PRISM began in August 1997 under a licensing agreement signed in the first quarter of this year. TSYS is now providing PRISM to several of their client banks. TSYS is the second largest transaction-processing provider, servicing over 140 financial institutions in the U.S., Puerto Rico, Canada and Mexico.

“Nestor’s strategic alliance with Applied Communications Inc. (ACI) is also building market momentum. During September, ACI executed its first PRISM license with Honor Technologies, Inc. one of the largest electronic funds transfer (EFT) organizations in the U.S.

“In October, a leading Canadian credit-card issuer licensed PRISM directly from Nestor to detect fraudulent transactions in their portfolios. This important PRISM installation in Canada positions us to expand our presence in that market.

“We are seeing only the beginning of the opportunities that exist for our neural-network technology. For example, we are continuing our development of InterSite, an intelligent advertising manager and personalization software for on-line Web site marketing. On October 31, 1997, Nestor Interactive, a wholly-owned subsidiary which develops and markets products for Web site marketing, executed an agreement to provide InterSite to Lycos, Inc. one of the world’s largest Internet navigation providers. InterSite is expected to help with Lycos’ goal of delivering to each on-line user the information best tailored to his or her individual interests.

“Nestor’s Intelligent Sensors subsidiary continues to gain ground with TrafficVision, its video traffic-monitoring product line, which has begun shipping in the U.S. and Korea. Testing of TrafficVision is under way by various Departments of Transportation including Rhode Island, California, Connecticut, and Texas, as well as in Korea, where TrafficVision was recognized as one of the top products in a government traffic-monitoring product comparison.”

Certain information in this press release may include forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Although the Company believes that the expectations are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved.

Nestor, Inc. is a leading provider of intelligent-decision-support solutions for the financial-services industry. Nestor’s client/server products incorporate innovative pattern-recognition technologies ideally suited for data-intensive, mission-critical decision applications in real-time environments. The Company’s products for financial institutions support fraud detection and case management for credit, debit, retail and corporate card fraud, as well as merchant fraud; database marketing; and Internet customer- support applications. Nestor’s patented technology is also being applied to intelligent-decision applications addressing a variety of other markets, including real-time traffic management, and intelligent character recognition. Nestor’s technology is also available embedded in the Ni1000 Recognition Accelerator(TM) chip (developed with Intel Corporation) and the IBM ZISC(TM) digital integrated neural network chip. More information can be obtained via the Company’s web site at .

All trademarks are the property of their respective owners.

Consolidated Statements of Operations

Three Months Ended Nine Months Ended

9/30/97 9/30/96 9/30/97 9/30/96

Revenues $1,592,344 $640,867 $4,899,489 $3,953,359

Net income (Loss) $(61,959) $(364,731) $29,116 $371,186

Income (Loss)
Per Common Share $(0.02) $(0.05) $(0.03) $0.01

Primary Shares
Outstanding 9,336,312 8,534,326 9,205,998 11,917,485


Hot Way to Pay

MasterCard and Opinion Research Corp. released results of a national survey showing 24% of Americans will use a debit card for making purchases this holiday season. The survey also showed that 54% of consumers will use a credit card if they receive an additional discount at the point of sale. About 40% said they would use certain cards if the receive either rebates with their statement or if the purchase is covered under a purchase protection plan.


Granite Sculptor

Pa-based Destiny Software unveiled a new comprehensive online credit card application development and management system yesterday. ‘Granite Sculptor’ enables issuers to create, manage and market credit card applications across the Internet thus providing a centralized mechanism for controlling the entire process. Using a browser-based interface and a graphical development environment, one person without programming skills, can operate the entire system. ‘Granite Sculptor’ also offers real time statistical reporting, providing issuers with the ability to evaluate the program effectiveness. Destiny’s system also eliminates the need to manage static HTML forms by dynamically generating and presenting each application on the Web. Destiny’s current clients include GE Capital, First USA and Advanta.


Mastercard’s VPN Up

MasterCard launched a global virtual private network for its transaction processing system yesterday. The new network, development in an alliance with AT&T, will link areas of the world not previously part of the global payments infrastructure and will significantly reduce transaction time. The network incorporates bandwidth-on-demand, reducing the cost to MasterCard members by eliminating the need to maintain excess capacity during off- seasons. MasterCard says VPN, compared to its previous network, has cut transaction time by four-tenths of a second. The MC VPN is handling more than 80% of MasterCard’s current transactions. By late next year members and gateways in Latin America, Asia Pacific, the Middle East and Africa will have migrated to the new network.



The European Web Site launched this week by a consortium of computing, financing, consulting, and shipping firms featuring consumer products from more than twenty European retailers may turn out to be the holiday season’s hottest Web site. Consumers around the world will be able to shop online among major European department stores to small European providers of specialty goods. The site features a search engine function to help match gifts to the profile of friends and family. ‘e-Christmas’ is multi-lingual and provides integrated multi-currency pricing at the point of sale. VISA and MasterCard are both participating in the initiative to educate and increase awareness of the global e-commerce market.


Gemplus Netsmart Team

Gemplus Corporation (Gemplus) announces that it has signed a value-added reseller agreement with Netsmart Technologies, Inc. of Islip, New York. According to terms of the agreement, Netsmart (NASDAQ: NTST) will develop solutions based on Gemplus’ smart card technologies, and will sell them to the financial and managed care markets.

Netsmart is a software developer and systems integrator of advanced technology, electronic transaction and system products. The company will be utilising Gemplus’ smart card products in its applications that include the CarteSmart System for rapid smart card application development, SmarteFinance transaction processing and settlement system, SmarteCare managed healthcare system, SmarteCampus higher education system and its SmartePay Financial Services Kiosk and Server E-Commerce System.

About Gemplus Corporation

Gemplus Corporation is the North American subsidiary of Gemplus Group (Gemplus), the world’s leading producer of magnetic stripe and smart cards. Gemplus manufactures and sells memory cards, microprocessor cards (both contact and contactless), magnetic stripe cards, as well as electronic tags. It also designs and markets software, terminals and systems; and provides personalisation, consultancy and training services to offer its customers comprehensive solutions.

In 1996, Gemplus’ total sales were $440 million (equivalent to GBP 268 million on 10 November 1997). By the end of 1997, the company will have a production capacity of 900 million plastic and smart cards. Gemplus sells its products world-wide for such applications as public and cellular telephony, financial transactions, loyalty, transportation, education, healthcare, gaming, identity, access control, pay TV, security for computer networks and electronic commerce. Information about Gemplus’ products and services can be found on the World Wide Web at:

About Netsmart

Netsmart is a software developer and systems integrator specialising in distributed network systems for the health, public sector and financial fields. Information about Netsmart’s products can be found on the World Wide Web at:


Hong Kong – World Payment Model

Hong Kong is well positioned to become the worldwide model for payment technologies said MasterCard President and CEO Robert W. Selander. With its early adoption of new technology, Hong Kong is currently the only market in the world testing both MasterCard electronic commerce and chip card programs with consumers.

During this trip, Selander will meet with government officials and senior executives of some of the world’s largest financial institutions to discuss MasterCard’s strategy for helping move the payment industry to the next stage of development. On the immediate horizon is the integration of chip cards and Mondex electronic cash into the mainstream cards business and maximizing the potential of electronic commerce.

“Hong Kong has long been the financial window of China and its role in the payments industry has been as a driver and test-bed of new technology,” Selander said. “Hong Kong is the leading example of a market taking the initiative to bring new technologies to market to improve the payments infrastructure and consumer choice.”

Selander went on to say that knowledge transfer from Hong Kong to Greater China and the rest of the globe will be a critical driver in how the world evolves in the adoption of new payment methods.

Selander cited several recent initiatives will help set the stage for rapid movement:

· With a 51% stake in Mondex International, MasterCard has the most advanced and secure electronic cash product in the world. In addition, a core part of MasterCard’s chip strategy is MULTOS—an open, multi-application operating system that will make multi-function lifestyle cards a reality.

· Mondex Asia has been formed as a subsidiary company set up to bring Mondex electronic cash to market in 13 countries/territories in Asia. The Mondex pilot in Hong Kong is set to expand very shortly to a Hong Kong-wide initiative.

· MasterCard has more electronic commerce pilots going on in Asia than anywhere else in the world, so the region is poised for explosive growth. Recently, MasterCard launched its sixth electronic commerce pilot in the Asia/Pacific region in Hong Kong.

· Maestro, MasterCard’s on-line debit program, has experienced tremendous growth in the five years since its launch. Today, there are more than 100 million Maestro cards around the world, 32 million of those in Asia/Pacific.

“Just as markets such as Hong Kong have evolved over the years, so too has MasterCard,” said Selander. “Fifteen years ago, MasterCard was perceived as a US-based credit card company. Today, clearly, we are a global payments company, and no where is that more evident than in Hong Kong,” he added.


Retriever Payment New Prez

William H. Higgins has been named president of Retriever Payment Systems, Inc., a wholly owned subsidiary of First National Bank of Omaha. Mr. Higgins, who has been with First National Bank for over 10 years, was promoted from his current position as Sr. Vice President.

“Under Bill Higgins’ leadership, Retriever Payment Systems will strengthen our #6 position in the bank card acquiring marketplace,” comments Elias Eliopoulos, executive vice president of First National Bank of Omaha. “With his excellent background and tenure in the credit card industry, we are confident that Bill will surpass our expectations.”

Retriever’s corporate office, located in Houston, Texas, provides full customer service and support for 100 plus sales organizations representing over 1,000 salespeople.

“Our vision is to become a world class direct sales and marketing transaction acquisition company by focusing on our people, customers, service and quality, and by exceeding industry standards in all areas of performance,” stated Higgins.

Retriever Payment Systems was founded in 1986 and is a leader in the merchant credit card processing industry. Retriever provides service, support, and proprietary terminal software applications for a diverse range of industries including traditional retail, start-up, Internet, mail and telephone order. In 1993, Retriever became a wholly owned subsidiary of First National Bank of Omaha.

Founded in 1863, First National Bank of Omaha is the 32nd oldest nationally chartered bank in existence. First National has more than 6.5 million customers, more than $7.9 billion in assets, is a top 25 Visa and MasterCard issuer and ranks 6th as a Visa and MasterCard processor.

First National Bank of Omaha is an active creator and marketer of traditional and innovative banking services, serving the financial needs of both Fortune 500 companies, as well as local, mom-and-pop corner stores.

First of Omaha Merchant Processing, a wholly owned subsidiary of First National Bank of Omaha, contracts with merchants to process credit, debit and other forms of payment. First of Omaha authorizes and settles transactions and pays merchants for these sales.

Ranking 6th as a national credit card processor, First of Omaha is the 2nd largest in-house bank processor in the country with over 92,000 locations in all fifty states. First of 0maha has experienced an average yearly increase in credit card sales volume of 28% since 1987. Credit card sales volume in 1996 was $15.7 billion representing 224 million credit card transactions.

First of Omaha Merchant Processing operates out of six major cities in addition to the national headquarters in Omaha: Atlanta, Dallas, Minneapolis, Los Angeles, Kansas City and Houston.


Pa ATM Fee Ban Renewed

Sen. Leonard J. Bodack (D-Allegheny) has renewed his call for action on legislation (SB 21) to ban automated teller machine (ATM) surcharge fees in Pennsylvania.

Bodack, in a letter to Sen. Edwin G. Holl (R-Montgomery), the Republican chairman of the Senate Banking and Insurance Committee, said it was “long past time” for Holl’s committee to “release” the anti-surcharge, pro- consumer legislation to the full Senate for debate and action.

Noting that it’s been “well over a year” since he and Sen. Albert V. Belan first introduced a bill to stop financial institutions from “double charging” consumers for ATM services, Bodack, the Senate Democratic Whip, said the facts remain the same.

“About the only thing that has changed over the course of the past year is that the price-gouging practice of ATM surcharging has spread like wildfire, and many, many more consumers, small banks and credit unions are getting burned,” Bodack wrote Holl.

He cited a federal General Accounting Office (GAO) report that found ATM surcharges nationwide had more than tripled in a 14-month study that ended in February. The GAO report also discovered a 320 percent increase in the number of ATMs that surcharge, from 15,400 to 64,400 machines, with big banks more likely to impose the surcharge than smaller banks.

Meanwhile, Bodack said the number of surcharging ATMs operated through the MAC network, the predominant regional ATM network serving Pennsylvania, has nearly doubled from only 31 percent in October, 1996, to approximately 60 percent of all MAC machines today (Source: PA Credit Union League).

And Bodack reiterated that the “excuses” espoused by the larger financial institutions that launched the ATM surcharge “steamroller” don’t hold up against the facts.

He said institutions that impose the ATM surcharge already get, and are continuing to receive, a “network interchange payment” to cover the cost of ATM service to customers whose ATM cards and accounts are with other institutions.

Further, Bodack added, the ATM surcharge continues to pose a serious competitive threat to small community-based banks, savings institutions and credit unions.

“After buying into a shared network ATM strategy over the past 20 years,” Bodack said, hundreds of smaller financial institutions “are now being hurt badly by a change in the rules in the middle of the game.”

Bodack and others, including the Pennsylvania Credit Union League, numerous individual community banks and the U.S. Public Interest Research Group, contend that the large banks — which own most of the ATMs — are using the extra charge on non-customers of their institutions as part of an unfair scheme to entice small bank consumers to become big bank customers.

“ATM surcharging not only penalizes consumers if they don’t have accounts with the largest ATM-owner banks, but it has brought about a perverse form of competition, driving rival institutions out of business by increasing consumer costs. Under a fair and free market for competitive banking services, consumers should be enjoying reduced costs; certainly not ever- increasing and higher fees,” Bodack said.

In his letter to Holl, Bodack said consumer “outrage” over ATM surcharging, “contrary to what some surcharging institutions had hoped”, has “not subsided” but, in fact, has increased throughout Pennsylvania and the nation.

He cited the recent introduction in the state House of nearly identical legislation to ban ATM surcharge fees by state Rep. Eugene McGill, a Republican from Sen. Holl’s own Montgomery County. And Bodack said similar anti-ATM surcharge efforts are gaining momentum in at least 12 other states and in Washington, D.C.

Connecticut and Iowa already outlaw the ATM surcharge; state bans, Bodack noted, that apply to both state and federally-chartered financial institutions.

“It’s time for Pennsylvania to stand on the side of its consumers, and to stand up for a fair, free and competitive market for banking services within our borders.

“It’s time to act affirmatively on legislation to outlaw the anti- competitive and profit-padding ATM surcharge,” Bodack said.