Sears Ratings Not Affected

Duff & Phelps Credit Rating Co. (DCR) does not expect there to be any negative rating implications for Sears Roebuck and Co. as a result of Sears recent earnings announcement, which disclosed adverse trends in its credit card business.

Of concern is that the company is continuing to record significant increases in delinquency and charge-off rates, contrary to industry experience. While the adverse credit trends will likely affect fourth quarter 1997 results, the negative impact should be mitigated by the recent implementation of more proactive risk management practices. Positively, Sears` retail businesses remain fundamentally strong and well positioned. DCR rates the senior debt of Sears, Roebuck and Co. and its financing subsidiary, Sears Roebuck Acceptance Corp. (SRAC) `A` (Single-A). SRAC`s commercial paper is rated `D-1` (D-One).

Adjusting for FAS 125, Sears recorded an 85 percent or $231 million increase in the provision for uncollectibles during third quarter 1997. While there has been a flattening of personal bankruptcy filings, delinquencies and losses continue to rise. At the end of third quarter 1997, 60-day-plus delinquencies comprised 6.9 percent of the portfolio versus 5.3 percent a year ago and 5.9 percent at the end of second quarter 1997. The higher delinquencies and losses are largely associated with Sears aggressive investment in new account growth of recent years. Sears has responded by slowing new account origination activity, bolstering its collections operation and reducing credit lines to customers who are showing negative trends in behavioral patterns and creditworthiness. Positively, higher pricing initiated earlier this year allowed the net interest margin to expand by $259 million or 288 basis points, which mitigated the effects of rising losses. Sears` asset quality trends are contrary to industry performance and are deviating from the company`s own historical experience. Consequently, management is not comfortable in forecasting near-term financial performance in its credit card operations or on a consolidated basis, but DCR does not believe the current difficulties will warrant any rating action.


Rapidly Expanding

Banc One’s ‘Rapid Cash’ ATM program signed up the Rite Aid Corporation yesterday. Under terms of Monday’s agreement, Banc One will install up to 2,000 ‘Rapid Cash’ machines in Rite Aid drugstores by April of next year. Rite Aid has a total of 3,963 stores in 31 states. Yesterday’s deal will bring the total number of Banc One ‘Rapid Cash’ ATMs, installed or under contract, to well over 8,000. Among previous deals, Banc One announced in mid-July it will install more than 800 ATMs among all Sears’ full-line stores in the U.S.


Kmart Card Sweepstakes

Kmart kicked off its ‘Reward Yourself’ sweepstakes this week offering top prizes of a 1998 Jeep Grand Cherokee and a 7-day cruise to more than one million Kmart credit cardholders. Cardholders are automatically entered each time they make a purchase through Dec 31 and consumers applying for the private label card are also entered. Kmart and Beneficial National Bank launched the card during August 1996.


No-Fee AmEx Transaction Processing

Paymentech and American Express are targeting restauranteurs with ‘Network PIP’ and ‘SE Workstation’ this week. Paymentech is the first third-party payment processor to offer the AmEx network plural interface processing service which transmits American Express card transactions directly to AmEx and eliminates transaction processing fees. The ‘Network PIP’ service is available exclusively through NXT Corporation. The ‘SE Workstation’ product enables merchants to receive and respond online to cardholder inquiries for both AmEx and other bankcard transactions. Paymentech and AmEx say merchants can reduce chargebacks by enabling merchants to respond to a greater percentage of disputes.


Apron Size Terminal

Hypercom introduced a new wireless, portable POS terminal for restaurant waiters Monday at the International Foodservice Technology Exposition, underway in Philadelphia. The new terminal dubbed ‘ICE Portable’ (ICE for Interactive Customer Equipment) is about the size of a portable CD player and incorporates touch screen, electronic signature capture and wireless technologies. The terminal can handle all credit/debit payments and includes a captive card reader for smart cards that prevents the card from being inadvertently removed during the transaction, thereby avoiding data corruption. The new terminal integrates easily with Hypercom’s ‘T’ series terminals, with up to 16 portable devices operated by a single controller terminal. ‘ICE Portable’ can transmit up to 75 feet and holds a two hour battery charge.


Industry Behind on YR2000 Issue

American Management Systems (AMS), a leading business and information technology consulting firm, announced today the formation of a new practice to help financial institutions prepare for the Year 2000. “Financial institutions face disrupted cash flows, customer defections, and increasing regulatory and competitive pressure unless they move faster to address Year 2000 issues,” said Ray Strecker, vice president and leader of AMS’s Year 2000 finance industry practice. Credit card authorizations, interest calculations, electronic payments, securities settlements and many other transactions will be affected because most computers store the year as two digits instead of four and cannot distinguish the year 2000 from the year 1900.

Building on its significant consulting engagement with Chase Manhattan Bank, AMS’s group will help major institutions accelerate their Year 2000 programs. “Time is running out,” said Strecker. “AMS’s Year 2000 practice was formed to help financial institutions move into high gear using best practices from Chase and other leaders. Banks and brokerage houses that get this right will have a tremendous strategic advantage, the freedom to bring new and innovative services to the market while competitors are still bogged down with the Year 2000. Firms that fall too far behind will be worrying about survival.”

A Comprehensive, Program Management Approach

Chase’s Brian Robbins, senior vice president and manager of the Chase2000 Enterprise Program Office, said, “While much of the work for Year 2000 is technical, the impact to the organization is huge and necessitates the active involvement and direction of senior management. Activities must be coordinated across the organization. AMS is a key partner in helping us run our program office.”

Strecker, who has more than twenty years of financial industry experience, said, “The Year 2000 problem is the toughest management challenge most CIO’s have ever faced, and the deadline is completely inflexible. AMS helps clients assess, upgrade and test all applications, hardware, system software, desktops, and physical equipment that contains embedded microchips.

“Financial institutions face special challenges. They must preserve customers’ and regulators’ confidence, and be alert to the credit and market risks that can arise if their customers do not become compliant. AMS’s experience in large scale program planning and management can help mobilize the entire organization to deal with the whole problem set.”

AMS uses a program management approach supplemented by a Year 2000 methodology and tool kit, including:

* Year 2000 problem assessment, remediation and testing for applications, data centers, desktops and facilities

* Continuous monitoring and sharing of evolving Year 2000 best practices

* Comprehensive project estimating tools

* External vendor and industry interface management

* Customer and corporate stakeholder communication

* Program and project status reporting and risk management

* Credit and market risk identification, assessment, monitoring and control

AMS’s finance industry clients include all of the top 10 U.S. banks, several major Canadian banks, a number of leading brokerage and securities firms and over 150 major institutions around the world. Within the banking and finance industry, AMS offers specialized capabilities in consumer credit services, customer value management, trade services, corporate connectivity, securities processing, and global risk management.

AMS’s business is to partner with clients to achieve breakthrough performance through the intelligent use of information technology. AMS is an international business and information technology consulting firm that provides a full range of services: business re-engineering, change management, systems integration, and systems development and implementation. AMS, which completed its 27th consecutive year of growth, is headquartered in Fairfax, Virginia, with offices in 53 cities worldwide. AMS’s revenues for 1996 were $812 million.

AMS’s site on the World Wide Web is:


Lucky Strike Phone Card Dispensers

Bingo & Gaming International, Inc. (OTC Bulletin Board: BING), announced today that it has signed an agreement with Prestige Distributing, Inc. of Guthrie, Oklahoma to distribute its Lucky Strike Pre-Paid Phone Card Dispenser. The agreement gives Prestige Distributing, Inc. the exclusive distribution rights for the state of Oklahoma for this cartridge based, video enhanced phone card dispenser.

The Lucky Strike Pre-Paid Phone Card Dispenser vends a two-minute phone card with a promotional sweepstakes game piece attached. Cash prizes up to $1000 are paid at the retail location.

“The Lucky Strike Prepaid Phone Card Dispenser will do as well in Oklahoma, as it has done in Texas. We feel fortunate to have an aggressive distributor in Oklahoma who has experience and contacts in both charitable and Indian Bingo operations. Barry Cogburn understands the market, has a vision of the potential of the Lucky Strike Prepaid Phone Card Dispenser, and will work diligently to secure locations for the dispensers. His first installation has already exceeded our goal of $250 per day per unit, and this was achieved on their first day in service,” stated Bingo & Gaming International’s CEO Reid Funderburk.

“A HOME RUN!!!!” … that’s how Barry Cogburn, President of Prestige Distributing described his first night of operating the Lucky Strike Phone Card Dispensers. “Lines of anxious customers were waiting for Lucky Strike Phone Card Dispensers to become available at our first bingo hall installation here in Guthrie on November 1st. We have other locations lined up and anticipate placing hundreds of phone card dispensers throughout the state of Oklahoma. These machines, combining the sale of a popular prepaid phone card with a McDonald’s type promotional sweepstakes game, will be a hit throughout the state,” concluded Cogburn.


First Holiday Projections

[Click Here For 1997 Holiday Spending Trend][1]

American Express projects holiday spending for this year will be up 6%, from an average of $1,160 per shopper last year to $1,233 for the 97 Xmas shopping season. The ‘1997 American Express Retail Index’ shows about $879 of total holiday spending this year will be spent on gifts with the balance going to travel, decorations and entertainment. The annual survey of 800 consumers also shows spending by men is up sharply this year and that Southerners plan to spend the most on gifts. AmEx also found that approx. 20% of households with annual incomes over $100,000 will redeem credit card reward points to obtain items they will give as gifts.

[1]: /graphic/americanexpress/97holidaytrends.html


NYCE Names VP Of Data Center Ops

NYCE Corporation has named Armand Keim to the position of Vice President of Data Center Operations.

In his new role, Mr. Keim will be responsible for overseeing all activity at NYCE’s processing center in Secaucus, New Jersey. The center currently handles on-line, real-time transaction processing for Electronic Funds Transfer (EFT) Services, Remote Banking Services and Switching Services for the NYCE Network. Mr. Keim’s area of responsibility spans technical operations, telecommunications support and client services. He will report directly to Steven A. Rathgaber, Executive Vice President. ![][1]

Mr. Keim has more than 30 years of experience in providing technology solutions for the financial services community. Prior to joining NYCE, he was Managing Director and Chief Information Officer at Cowen & Company, where he was responsible for the Information Services Division supporting the front and back offices of this full-service institution. Most recently, he was President of Keim Consulting Associates, serving as a senior consultant involved in all aspects of information systems in the financial services arena. Mr. Keim has also held senior management positions with National Securities Clearing Corporation; Bear, Stearns & Company; Donaldson, Lufkin & Jenrette; and Automatic Data Processing.

Mr. Keim received a Bachelor of Science degree in electrical engineering from Polytechnic University and a Master of Business Administration degree from Baruch College.

Based in Woodcliff Lake, New Jersey, NYCE Corporation provides financial institutions with flexible, state-of-the-art processing services that include telephone and PC-based banking and bill payment solutions, ATM terminal driving, card authorization, card management, and gateway access. The corporation also operates the NYCE Network, the largest shared regional electronic funds transfer (EFT) network in the Northeast.

[1]: /graphic/nyce/keim.gif


HONOR the Web

An address on the World Wide Web is quickly becoming a requirement for financial institutions and businesses of all sizes. To provide its member institutions with expanded internet capabilities, HONOR today announced an innovative web hosting program with several levels of service.

To initiate the service, HONOR will offer each member a web page through the main HONOR web address. this site will provide to members free of charge for the first year, and may contain up to one and one-half pages of institution-specific information, such as branch locations, service offerings or loan and deposit rates.

HONOR will also provide several other levels of internet service, including full-service web hosting either through easy-to-implement templated sites or customized sites. These HONOR-hosted sites will provide financial institutions with their own domain name registration, site security and e-mail access.

“This service is the first step in helping our members use the power of the internet, and to prepare for a future that will have a greater focus on electronic commerce,” said T.O. Bennion, president and CEO of HONOR. “Many members don’t have the time and resources to establish and maintain their own web sites, and this initiative will provide that service for them with comprehensive, turnkey solutions. For HONOR members who currently have a web address, our service will provide even more exposure, as well as an optional link that can connect users on the HONOR site directly to the institution’s home page.”

In a later phase of the new initiative, HONOR’s web site will be expanded to include an extranet exclusively for HONOR members. Members will have access to operating regulations, compliance information, data on HONOR products and services, the annual member profile, and other items of interest which may be read or printed as needed. The address of the HONOR web site is [][1].

HONOR is headquartered in Maitland, Fla. and serves more than 45 million cardholders and 2,750 financial institution members with more than 33,000 ATMs and 370,000 merchant Point of sale terminals. HONOR processes more than 90 million transactions per month, and offers a variety of EFT services such as MasterMoney and Visa Check Card processing, terminal driving, card production, and home banking and internet services.

HONOR serves members across the United States, with primary operations in Alabama, Arkansas, Delaware, Florida, Georgia, Illinois, Kansas, Kentucky, Maryland, Missouri, North Carolina, New Jersey, New Mexico, Oklahoma, Pennsylvania, South Carolina, Tennessee, Virginia, Washington D.C. and West Virginia. In addition to its Maitland headquarters, HONOR has offices in Birmingham, Ala; Reston, Va; Columbia, S.C.; St. Louis, Mo; Wichita, Kan., Alburquergue, N.M. and Altarmonte Springs, Fla.



SFNB VISA Doubles Miles

Security First Network Bank), the world’s first Internet bank, and Virtual Vineyards, the Internet’s leading wine and food retailer, today announced a co-marketing agreement in which SFNB awards double bonus miles to customers who use SFNB Visa credit cards to purchase Virtual Vineyards wines and foods online.

SFNB’s program, called SecureMiles, awards cardholders one airline mile for each dollar spent. Awards are given in the form of a voucher accepted by all major commercial airlines, without blackout dates.

Virtual Vineyards specializes in offering online shoppers hard-to-find wine, gifts and specialty foods along with advice on food and wine pairing, menus and recipes for entertaining, and personalized wine advice from Master Sommelier Peter Granoff. SFNB offers its customers a complete Internet Banking Solution.

“Virtual Vineyards is pleased to work with SFNB on this promotion,” said Robert Olson, CEO and co-founder of Virtual Vineyards. “Consumers benefit from the extra SecureMiles they receive while SFNB and Virtual Vineyards benefit from increased business.”

“We want to establish SFNB as a value center for the Internet community. Working with a recognized Web-based quality leader like Virtual Vineyards is good for us and better for our customers,” said Eric Hartz, SFNB president.

About Virtual Vineyards

Founded in 1994, Virtual Vineyards is one of the Internet’s leading retailers, offering distinctive, hard-to-find wine, food and gift selections. Items may be purchased online at or by dialing 800-289-1275. Located in Palo Alto, CA, the company is privately held.

About Security First Network Bank

Security First Network Bank (), the world’s first Internet bank, opened its doors to the Internet community on October 18,1995. FDIC-insured SFNB provides its services using Virtual Financial Manager (VFM), a software system created by and licensed through its wholly-owned subsidiary Security First Technologies (S1). Utilizing a multilayered security platform also developed by S1, SFNB’s online transactions are protected by the same trusted operating system used by the U.S. Department of Defense and other military intelligence agencies.

About Security First Technologies (S1)

Security First Technologies () is a wholly-owned subsidiary of the world’s first Internet bank, Security First Network Bank. S1 provides an integrated suite of financial management applications designed to help financial institutions offer products and services online in a secure environment. S1 also offers business and network security consulting, training services, product integration, and data and customer service center outsourcing.

NOTE: SecureMiles is a registered trademark of Security First Network Bank and Virtual Financial Manager is a trademark of Security First Technologies. All other trademarks mentioned are property of their respective organizations.


NCR Scanmaster Solution

Electronic Payment Services, Inc. (EPS) announced the certification of an electronic payment processing solution for NCR’s ScanMaster Windows NT point-of-sale (POS) system. Available now, the solution pairs EPS’ Manta Systems Spectrum EFT software with the ScanMaster system and enables retailers to accept debit, credit and EBT payments in the check-out lane.

The system combines NCR’s 745x POS terminal and 5944 PIN pad, the NCR ScanMaster Windows NT server and Manta Systems Spectrum EFT controller on a single LAN. EPS’ Manta Systems development group has written software for the NT server which sends transactions to Spectrum for payment processing, including:

— Store and forward processing — batching and resubmitting transactions when communication with the host is unavailable

— EBT voucher processing — submitting off-line EBT transactions electronically as required by state EBT programs

— Accounting — cashier and terminal accountability, daily and weekly reporting, daily settlement, real-time status reporting

Ron Nuti, National Software Sales Executive, explains the advantages of the Spectrum/ScanMaster configuration: “Using Spectrum for payments separates that activity from the ScanMaster server, conserving resources for other applications. NCR dealers favor the two-server approach for reliability and performance. Using Spectrum also enabled them to produce a solid solution in a very short time. This solution is a perfect migration path for retailers who want to upgrade their 2127/Spectrum systems, and it is also an excellent choice for anyone selecting the ScanMaster POS system.”

Electronic Payment Services, Inc. (EPS), a privately held company headquartered in Wilmington, Delaware, is a leading electronic funds transfer (EFT) processor in the United States, with over 2 billion transactions annually. EPS is the holding company for BUYPASS Corporation, a major third-party POS processor and debit transaction acquirer with annual transaction volume of over 900 million; and MONEY ACCESS SERVICE INC., an EFT processor driving 18,500 ATMs in all 50 states. MONEY ACCESS SERVICE is also operator of the MAC(R) EFT network, the largest EFT network in the United States based on over 1 billion switch transactions annually, with over 28,000 ATMs and 400,100 POS terminals nationally. Over 2,100 financial institutions are members of the MAC network, with 36.5 million customers carrying cards bearing the MAC logo. MONEY ACCESS SERVICE INC. controls the license rights for the registered trademark MAC. Electronic Payment Services, Inc., is an NCR solutions partner. For more information about the EPS ScanMaster solution and other EPS payments, products and services, please contact Ron Nuti at 510-416-3208.