Wachovia-Central Fidelity Merger Approved

Central Fidelity Banks Inc., the parent of Central Fidelity National Bank in Richmond, Va., and Wachovia Corporation today announced they have received Federal Reserve approval for the merger between Central Fidelity and Wachovia. The merger was first announced June 24, 1997.

The agreement, which has been approved by the boards of directors of both companies, is subject to the approval of Central Fidelity shareholders. Shareholders are expected to vote Nov. 21, and assuming all required approvals have been received, the merger is expected to close in mid-December. Central Fidelity will continue to operate under its name until March 20, 1998, when the merger and integration with Wachovia Bank, N.A, is completed.

Central Fidelity Banks Inc., headquartered in Richmond, Va., had assets of $10.5 billion as of Sept. 30, 1997, and is the third largest Virginia-based banking company.

Wachovia Corporation, the parent of Wachovia Bank, N.A., is the 20th largest U.S. banking company with assets totaling $47.5 billion at Sept. 30, 1997. Upon completion of mergers with Central Fidelity, Jefferson Bankshares Inc. in Charlottesville, Va., and 1st United Bancorp of Boca Raton, Fla., Wachovia will be the 17th largest banking holding company in the country with assets exceeding $60 billion. U.S. Banker magazine rated Wachovia the No. 1 banking company in the country for 1996 among banking companies with assets of more than $25 billion.


EFT Platform for Winn-Dixie

Applied Communications, Inc. (ACI), a subsidiary of Transaction Systems Architects, Inc. (Nasdaq: TSAI), announces that Winn-Dixie Stores, Inc., the fifth largest food retailer in the U.S., has selected a suite of software from ACI to process, route and acquire EFT transactions for the retail chain. The integrated solution will be facility managed by U.S. Processing, Inc. (USPI), an EFT transaction processing firm, and will give Winn-Dixie a robust platform designed to meet high-performance requirements.

An integrated pair of ACI BASE24 products will form the core of the platform. BASE24-atm and BASE24-pos operating on Tandem NonStop(R) Himalaya(R) computer servers will process transactions generated by the retailer’s 1,180-store network of 1,000 ATMs and 14,000 POS devices. BASE24-atm gives Winn-Dixie a state-of-the art processing and switching system that provides ATM terminal driving, transaction authorization, flexible routing, host and interchange interfaces and network control. BASE24-pos gives the retailer a completely automated and centralized EFT system to authorize, capture and process debit, credit and EBT transactions at the point-of-sale.

“BASE24 offers Winn-Dixie a high performance, reliable platform that supports the convenient, around-the-clock services customers demand,” said Ed Mangold, senior vice president of ACI’s Americas division. “It allows Winn- Dixie to offer customers an assortment of payment options, from debit card to credit card to EBT. In addition, the system is expandable to support emerging forms of service delivery.”

TRANS24-Settlement Manager and ICE (Intersystem Communications Environment) round out the applications to be integrated with the BASE24 transaction platform. TRANS24-Settlement Manager from ACI affiliate USSI, Inc. provides the tools needed to manage the settlement process for complex acquirer networks. ICE, a networking solution from Insession Inc. and distributed by ACI, offers powerful connectivity capabilities.

The platform will be managed and run by USPI at its Brown Deer, Wisconsin, facility. USPI provides transaction processing services for the EFT industry, including both financial institutions and retail clients. The company supports ATM, POS, credit card, debit card, smart card and record retention applications. USPI offers a comprehensive package, including single-point settlement, monitoring of ATMs, and network access-available around the clock.

USPI is an alliance partner of Transaction Systems Architects, Inc., parent company of ACI and USSI. The companies exchange technical, strategic and market development information. USPI uses BASE24 and TRANS24 software solutions in combination with the latest Tandem and IBM hardware offerings for its processing operation

“USPI is very pleased to be doing business with a major player in the food industry such as Winn-Dixie,” said Michael R. Shutters, president of USPI. “The project is an excellent example of the synergy that results from our strategic alliance with TSA.”

Applied Communications, Inc. and USSI, Inc. are subsidiaries of Transaction Systems Architects, Inc. (Nasdaq: TSAI). Transaction Systems’ software facilitates electronic payments by providing consumers and companies access to their money. The company’s products are used to process transactions involving credit cards, debit cards, EBT cards, smart cards, remote banking services, checks, wire transfers and automated clearing and settlement. Its solutions are used on more than 2,700 product systems in 69 countries on six continents. Visit TSA, ACI and USSI, Inc. on the World Wide Web at .

All trademarks are property of their respective owners. Please use upper case with no spaces between letters and numbers of BASE24 and TRANS24.


AT&T Bails Out

After seven and half years AT&T wants out of the credit card business. In making its announcement yesterday AT&T said it is making the divesture to focus on “only businesses central to AT&T’s communication services strategy”. Besides dumping the AT&T Universal Card portfolio the company is also unloading AT&T Solutions Customer Care, a relationship-management services firm for Fortune 500 companies. AT&T also named C. Michael Armstrong as company chairman and CEO.

While AT&T sent shockwaves through the credit card industry in March 1990 with its launch of a no-annual-fee-for-life VISA and MasterCard, yesterday’s announcement did not come as a surprise. AT&T initially signed up cardholders at an unprecedented rate, more than one million accounts per month. However the company has been frustrated in building its profitability in line with industry averages. AT&T’s average balance per active account is $1106 compared to an industry average of $2109. Universal’s YTD charge volume per active account is $1492 compared to an industry average of $2374. The portfolio ranks as the third largest VISA and MasterCard portfolio in terms of number of accounts but ranks as the seventh largest VISA and MasterCard portfolio in terms of outstandings. At the end of the third quarter AT&T Universal had $14.2 billion in receivables, $6.9 billion in third quarter volume, $19.7 billion in YTD volume, 18.9 million accounts and 22.5 million cards-in-force, according to CardWeb, Inc.’s CardData.

Smith Barney has been designated as the adviser to AT&T on the sale of UCS. Portfolio premiums have been averaging about 13% this year but the UCS portfolio has unique characteristics. The portfolio contains a disproportionate number of non-revolving cardholders and significant percentage of cardholders with no-annual-fee-for-life status. Under current market conditions the ability to assess annual fees is crucial to profitability. AT&T’s timing is good as the company has brought chargeoffs and delinquencies under control and has recovered from an quarterly operating loss less than one year ago. However the market has a glut of portfolios on the block including Advanta’s $10.5 billion portfolio and overall industry profitability.


Java Card Forum Meets

For the first time, the Java Card Forum, a consortium of smart card manufacturers committed to the Java Card standard, have consulted with industry-leading smart card issuers to further stimulate the growing market for Java-based smart card applications. At its recent meeting in Paris, the Java Card Forum for the first time included in its discussions “Strategic Partners” from 3 major industry sectors including banking and finance, represented by American Express, Citibank, Banksys, Barclay’s, GIE Carte Bancaire, Mondex and Visa. The information technology industry was represented by Hewlett- Packard and NTT Data; and the telecommunications industry was represented by Swisscom and Telecom Finland.

The Strategic Partners provided input to the Forum members (Bull, De La Rue, Gemplus, Giesecke & Devrient, Hitachi, IBM, Keycorp, Schlumberger and Toshiba) regarding technical issues and industry-specific extensions that could be made to the Java Card specifications. The goal of involving the industry partners is to ensure interoperability of Java Card applications across all industry segments, thereby extending the Write Once, Run Anywhere(R) promise of Java to the world of smart cards and smart card readers. The use of Java on smart cards will mean that all cards can be used in any type of card reader terminal, from automatic teller machines to cell phones to computer system access devices.

Also at the Paris meeting, the Java Card Forum Technical Committee provided its input to Sun on version 2.0 of the Java card specification, which was posted at for public review on September 12th.

To reflect the growing demand for Java-based smart cards, the Java Card Forum plans to expand its Strategic Partner Program in the future to include representatives from the Health Care, Television Broadcasting and Transportation industries.

The Java Card members were present at the Cartes ’97 exhibition in Paris from October 15th until the 17th where they demonstrated their most recent Java Card implementations.

About Gemplus

Gemplus Corporation is the North American subsidiary of Gemplus Group, the world’s leading producer of magnetic stripe and smart cards. It 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 personalization, consultancy and training services to offer its customers comprehensive solutions.

In 1996, Gemplus Group’s total sales were $440 million. By the end of 1997, the company will have a production capacity of 900 million plastic and smart cards.

Gemplus sells its products worldwide 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: . All trademarks are the property of their respective owners.


Bankruptcy Not Hurting Banks Says Author

Creditors are pressuring Congress to ignore the National Bankruptcy Review Commission’s proposed recommendations, due out today. Creditors who offered consumers easy access to their drug of choice — credit — are crying “foul” over rising consumer bankruptcy rates. But are creditors really being hurt? Or are they making a political issue out of bankruptcy for their own gain?

Record bankruptcy rates certainly haven’t kept credit card issuers from raking in the profits. Small lenders, like First America and Provident Financial, saw third quarter profits soar 55% and 71%, respectively. Larger creditors are expected to post an average third quarter increase of 16.6%, according to analysts, who predict declines in credit card loss ratios at large credit-issuing banks this year.

Consumer bankruptcy advocate and author Paula Langguth Ryan believes creditors are “trying to get the public to buy their ‘poor-me’ story that deadbeat consumers are milking them dry. Nothing could be further from the truth and it’s time creditors took responsibility for their actions.”

As the bankruptcy guru for America Online’s Moneywhiz personal finance forum, Ms. Ryan speaks daily with consumers who are deluged with offers, even as their drowning in credit card debt.

Credit card issuers sent out a record 880 million mailings the second quarter of 1997, up 39% from last year. Who will receive the bulk of these mailings? College students, small business owners and consumers who pay the minimum payment on their credit cards. Newly bankrupt consumers are also favorite targets, as Ms. Ryan points out in her book, “Bounce Back From Bankruptcy” (Pellingham Casper, $14.95; 800-507-9244). Creditors are tightening their lending standards — but not in the way you think. Instead of cutting back on applications to high-risk consumers, creditors are pulling the plug on good-paying customers.

“Creditors don’t make money off good paying customers,” says Ryan. “Creditors make money off folks who only pay minimum payments. Why do you think Beneficial Bank of Delaware canceled twelve thousand accounts that were paid in full each month? Creditors don’t want your business if you don’t have a credit habit. They only want your business if they’ve gotten you hooked on credit.”

Nearly every amendment to the consumer bankruptcy laws since 1978 has been pro-creditor. Ryan, once bankrupt herself, was the only consumer to testify before the Commission.


Certificate Validity Management

ValiCert, Inc., a new company delivering encryption technology and services for assuring the validity of digital certificates, today began operations and introduced a comprehensive suite of offerings for certificate validity management, consisting of the ValiCert Toolkit(TM), the ValiCert Server(TM) and the ValiCert Service(TM). The company today also announced the support of several key industry partners including Entegrity Solutions, Entrust Technologies, GTE CyberTrust and Netscape(R) Communications Corporation.

Founded by some of the world’s leading cryptographers, ValiCert’s goal is to develop a broad certificate validation and revocation infrastructure for the Internet. The company’s technology and services enable users to determine, in a time-critical manner, the validity of X.509 digital certificates for secure electronic communications and commerce. ValiCert’s technology achieves this by differentiating between valid and compromised digital certificates — encrypted electronic “signatures” that bind a person’s or server’s identify to a message or transaction. Until the availability of ValiCert’s products, there has been no efficient way to check the validity or revocation status of digital certificates which are being used increasingly to authenticate electronic communications and transactions over the Internet and intranets.

“Users of digital certificates today face a problem similar to the one users of credit cards faced 25 years ago before automated authorization,” said Chini Krishnan, founder and chairman of ValiCert. “Merchants had to manually verify each credit card presented to them using a cumbersome, outdated printed list of bad numbers.

“Similarly, certificate acceptance has entailed the use of large, unscalable certificate revocation lists, or CRLs, which has posed a barrier to their widespread deployment. ValiCert’s technology removes this barrier by making it quick and painless to verify, during a transaction, the status of any digital certificate.”

Prof. Martin Hellman, co-inventor of public key cryptography, added, “solving the issue of certificate compromise is central to building a reliable authentication infrastructure for secure communications and commerce. ValiCert addresses a basic and troublesome roadblock associated with digital certificates in a truly novel way.” Dr. Hellman is part of ValiCert’s scientific advisory board, and has been instrumental in reviewing, refining and promoting ValiCert’s technology.

“The industry anticipates that by the end of this century, hundreds of millions of digital certificates will be in use,” said Yosi Amram, president and CEO of ValiCert. “Without the robust, scalable validation infrastructure that ValiCert is providing, it will be impossible to manage this tremendous volume effectively.”

ValiCert Products

ValiCert is introducing three core products centered around certificate validity management: ValiCert Server, ValiCert Toolkit and the ValiCert Service.

The ValiCert Toolkit(TM) is targeted at software developers writing applications that consume certificates. By embedding the toolkit into their applications, vendors enable products to efficiently check certificate validity in Internet or intranet communications. ValiCert also provides a comprehensive developer’s guide, fully documented code and access to on-site consulting services.

The ValiCert Server(TM) is targeted at enterprises that deploy certificate systems and provides all the technology necessary for confirmation issuance in an intranet setting. The ValiCert Server constructs a certificate revocation tree from a certificate revocation list, and when requested by client application programs, constructs and issues confirmation of digital certificate status. The ValiCert Server will also be embedded in certificate issuance and management systems utilized by public certificate authorities (CAs).

The ValiCert Service will be targeted at enterprises that are conducting broad-based Internet communications and commerce. It will be a clearinghouse for checking the validity of digital certificates across organizational boundaries. The service will enable certificate issuers to distribute their certificate revocation lists in a timely, secure manner and to make them easily available to applications and people they wish to conduct business with around the world. It will also enable any application accepting certificates, regardless of its source, to be assured of the certificate’s validity.

ValiCert’s Certificate Revocation Tree

ValiCert’s technology solves what is known as the certificate revocation problem. This problem arises because applications that accept certificates need to determine not only that the certificate presented was in good standing at the time of issuance, but also that the certificate has not been revoked subsequently and is valid at the time of acceptance.

The current solution for managing certificate revocation is to maintain electronic lists of bad numbers, called certificate revocation lists (CRLs), which can become very large, cumbersome and difficult to download and process in real time. An application needing to verify a digital certificate must obtain the latest list from the appropriate list issuer, and plow through the list to ensure that the certificate in question is not on the list. This process is slow, inefficient, unscalable and bandwidth intensive. It makes revocation checking unsuitable for mass-market electronic commerce transactions and secure communications.

ValiCert’s technology solves the certificate revocation problem more efficiently by using a new cryptographic technique called a certificate revocation tree. This technique allows anyone with a digital certificate to pre-approve the certificate with a very small piece of tamper-proof data that proves the validity of the certificate beyond doubt to a recipient. Furthermore, because this data is very cheap to construct and process and the cost of the system only scales as the logarithm of the number of revoked certificates, certificate revocation trees are a basis for a truly scalable, global validation infrastructure on the Internet. More information on the mathematics and cryptographic basis of certificate revocation trees is available from ValiCert’s site at .

Product Availability

The ValiCert Server and ValiCert Toolkit are available now. Field trials of the ValiCert Service will begin later this year.

About ValiCert

ValiCert was established in February 1996, by a group of leading cryptographers and executives from the Internet security industry to build a broad validation infrastructure for electronic commerce. Utilizing technology based on an innovative cryptographic technique called certificate revocation trees, ValiCert delivers an efficient, scalable and transparent solution for checking the validity of digital certificates in any Internet or intranet transaction. ValiCert is headquartered in Sunnyvale, Calif. and is available on the World Wide Web at , or by e-mail at info@valicert.com.

ValiCert, ValiCert Toolkit, ValiCert Server and ValiCert Service are trademarks of ValiCert, Inc. All other product and brand names are trademarks or registered trademarks of their respective owners.


Wireless Smart Card Pilot

Gemplus, Motorola, CyberMark and Powertel announced yesterday they will test an upgraded ‘FSUCard’ that enables student cardholders to place and receive calls, pages and short-text messages using Motorola’s new ‘StarTAC’ wireless PCS handset. The Florida State University smart card currently has 37,000 faculty and student cardholders. The ‘FSUCard’ offers four electronic purses for bookstores, laundromats, restaurants and vending machines.


GlobalCenter & iCat Join Forces

GlobalCenter, Inc., the first global digital distribution company, today announced that it has joined forces with iCat Corporation, a leading provider of Internet catalog software, to offer businesses a one-stop solution for both electronic commerce and content management on the Internet. GlobalCenter will build and host customer websites using the iCat Electronic Commerce Suite(TM) allowing growing companies to use the Internet as a strategic channel for commerce initiatives. GlobalCenter customers can now easily publish, manage and sell an inventory of products to a worldwide audience and use the Internet as an efficient distribution channel.

“We envision a world in which people everywhere are more closely connected to content,” said Joel Davis, General Manager, Channel Management for GlobalCenter. “By working with iCat we are helping businesses establish the Net as a strategic channel for content, commerce and communication, using two best-of-breed solutions.”

GlobalCenter and iCat’s combined service, called PrimeWeb iCat Commerce(R), offers all the components that enable electronic commerce, including dynamic catalogues with sophisticated merchandising features such as up-sell and cross-sell, shopping carts, tax and shipping tables, customer tracking and registration, as well as secure credit card processing. This service provides everything a growing company needs to keep an online business open 24 hours a day, seven days a week and efficiently service customers with immediate and dependable access to content.

Opening for Business

PrimeWeb iCat Commerce lets businesses easily build a database of products by entering information or importing it from existing data files. The user then chooses a layout and design from predefined templates, and publishes the product catalogs with a single mouse click. Once in business, the catalogs, sales and customers can be managed remotely from any Internet browser. GlobalCenter takes care of the complexities associated with maintaining a dynamic Internet catalog and insures efficient access to all Web site content.

“We have worked with the likes of Time Warner, Boeing, Ziff-Davis and many others to create Internet catalogs and intranet applications,” said Craig Danuloff, president and CEO of iCat. “We have found that our customers appreciate being insulated from the complexities of making their website a highly effective sales and marketing vehicle. GlobalCenter’s experience in distributing content for Yahoo!, Netscape and others makes this alliance a winning proposition for growing businesses that envision the Internet as a path toward new markets and new revenues.”

Pricing and Availability

PrimeWeb iCat Commerce is now available, starting at $349 a month.

About iCat Corporation

iCat Corporation, founded in 1993 and based in Seattle, Washington, delivers the most complete, powerful, and flexible electronic commerce solution for creating the best catalogs on the Web. The privately held company has technology and marketing relationships with over 300 companies including Open Market, UPS, Compaq, HP, EDS, and CyberCash. Its flagship Electronic Commerce Suite has won more than ten industry awards, including “Best of Class” at Internet Commerce Expo in September 1997. The software is available in the US, France, Germany and Japan from any of iCat’s business partners, leading distributors such as TechData, Ingram Micro, MicroAge, and Trans Cosmos Incorporated, and resellers such as Software Spectrum. For more information, visit the iCat Web site at , or call 888-BUY-ICAT.

About Global Center, Inc.

Sunnyvale, California-based GlobalCenter is the first global Digital Distribution company. GlobalCenter enables businesses to establish and manage the Internet as a strategic channel and provides digital distribution services that connect people everywhere more closely to content. GlobalCenter currently handles 400 million Internet requests and up to a quarter million Internet downloads a day for customers including new media/content providers, software companies, and Internet-focused businesses. Currently, GlobalCenter is the content manager of choice for Netscape, Yahoo!, Quote.com, Playboy, Cox Interactive and more. Additional information can be found at .


One Million Personalized Smart Cards

Gemplus Corporation today announced that its smart card personalization center in Shakopee, MN, has personalized its 1 millionth smart card. Personalization is the process by which smart cards are formatted according to a card issuer’s specifications. When a card is personalized, information about the issuer’s services as well as information pertinent to the user is programmed into the smart card’s chip.

Shakopee is the only North American smart card facility certified to personalize GSM, Visacash, and Mondex cards. Gemplus, in keeping with certification guidelines, must adhere to strict production procedures and meet special quality and security standards.

“Personalization services throughout the world have become a core competency for Gemplus, and our dedication to this business ensures a commitment to complete customer satisfaction,” said Scott Rau, vice president of the North American financial transactions business division for Gemplus. “Gemplus continues to focus energy and business strategy towards personalization services particularly in the Americas, to ensure competency and excellence in a variety of customer business disciplines.”

About Gemplus

Gemplus Corporation is the North American subsidiary of Gemplus Group, the world’s leading producer of plastic and smart cards. It 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 personalization, consultancy and training services to offer its customers comprehensive solutions.

In 1996, Gemplus Group’s total sales were $440 million. By the end of 1997, the company will have a production capacity of 900 million plastic and smart cards.

Gemplus sells its products worldwide 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: .


US Treasury/VA Smart Card Test

The U.S. Department of the Treasury’s Financial Management Service (FMS) and the U.S. Department of Veterans Affairs (VA) announced the beginning of a one-year pilot to test the use of stored value card technology to improve service to citizens, reduce government costs and streamline Federal operations.

The Treasury-initiated program will test a variety of smart card applications at the Bronx Veterans Affairs Medical Center located in New York City. The trial represents the Treasury’s first use of this technology as a Federal collection mechanism. NationsBank will operate the elaborate program as Treasury’s financial agent and will utilize Visa U.S.A. stored value technology. The pilot will place Visa Cash in the hands of patients, physicians, visitors, volunteers and employees of the VA facility.

“The Treasury is conducting several electronic money initiatives to test the viability of using emerging electronic technologies to make Federal transactions,” said FMS Commissioner Russell D. Morris. “FMS is also implementing a series of pilots on military bases to test stored value cards as a Federal Payment mechanism. Stored value technology may prove useful in managing government operations on a wide scale and in eliminating the need to handle currency in many types of Federal facilities.”

“The VA’s goal is to improve service to its customers and employees and make VA facilities more efficient,” said Bronx Medical Center Director MaryAnn Musumeci. “We believe this partnership with Treasury will help the VA improve operations.”

During the pilot, an estimated 25,000 cards will be issued and used to test numerous applications, including the combination of identification badge and electronic purse; vending machine acceptance; integrated cash registers and terminals; reloadable cards; and cashless ATMs that transfer cash value onto reloadable cards, rather than distribute currency.

Up to 4,000 reloadable cards will be used as identification badges and meal tickets, as well as personal patient checking accounts at the VA’s Bronx Medical Center. The stored value cards will be accepted at all operations run by the onsite Veterans Canteen Service, a division of the VA that supplies retail, food, clothing, other goods, and vending services in all 172 VA hospitals.

“NationsBank has had significant experience with chip card technology,” said Terri Hayden, NationsBank Stored Value project manager. “We expect to learn a great deal from this program, and we view it as evidence of our commitment to stay in the forefront of chip technology development.”

“Our program with the Treasury and NationsBank illustrates how chip cards can provide a diverse range of services in any environment,” said Diana P. Knox, vice president of chip card products for Visa U.S.A. “The experiences we gain from this important program will result in additional solutions that deliver exceptional value to cardholders, governments and businesses.”

The Financial Management Service, a bureau of the U.S. Department of the Treasury, is the Federal Government’s cash manager. The Service issues over 850 million payments each year and manages the collection of Federal revenues. The Financial Management Service is responsible for developing and implementing secure and efficient methods to manage the Federal Government’s cash flows.

The Department of Veterans Affairs (VA) is responsible for providing Federal benefits to veterans and their dependents. The VA operates nationwide programs of health care, assistance services and national cemeteries to an estimated veteran population of 26 million.

NationsBank is the fifth-largest banking company in the United States with a retail banking franchise in 16 states and the District of Columbia. As of September 30, 1997, NationsBank had total assets of $242 billion.

Visa is the largest consumer payment system worldwide. It advances new payment products and technologies to benefit its 21,000 member financial institutions, their cardholders and the global economy. Visa’s nearly 600 million cards are accepted at more than 14 million worldwide locations, including 370,000 ATMs in the Visa/Plus Global ATM network.


Ticketmaster Platinum MC

First USA and Ticketmaster Group rolled out the ‘Ticketmaster Platinum MasterCard’ yesterday offering five Ticketmaster Reward Points for every dollar spent at Ticketmaster and one point for each dollar spent elsewhere. Points are redeemable towards Ticketmaster gift certificates, event tickets, merchandise and fantasy entertainment experiences. First USA is offering a five-month intro APR of 5.9% followed by a 14.99% fixed APR.


New ATM Surcharge Study

Study on ATM Usage Shows That Relatively Few Pay Majority of Optional Surcharges; Most Consumers Pay None; Research Also Reveals That Banking Relationships Are Unaffected

Research findings on consumer usage patterns of automated teller machines (ATMs) where surcharges exist show that a relatively small percentage of consumers pay the majority of the fees, those who do pay choose to at their option, and the vast majority of the public pays no convenience fees at all.

A 1997 study conducted over seven southern and southwestern states by Rice University Marketing Professor Dr. Richard R. Batsell through Analytica, a Houston-based research organization, combined with usage information collected by PULSE EFT Association from its Texas customers, revealed the following:

— Among 1,000 adult consumers, the convenience access fees would have been paid by barely 30 percent.

— Almost 70 percent of adults have never paid such fees.

— About 18 percent of cardholders pay 60 percent of the total convenience fees collected.

— Of those who have paid convenience access fees, only 27 percent say they have paid more than $1. That translates to only 8.5 percent of the total adult sample.

— An overwhelming majority of ATM users, more than 80 percent, say they avoid ATMs where they know convenience fees are charged.

— Nearly 90 percent of ATM users feel they are sufficiently informed by their financial institutions on the ATM fees they are charged.

The research also showed that among those who use ATMs, 61.2 percent of consumers judged the fees they paid to be either “just right,” “a bargain,” or “a real bargain.”

On a question regarding the effect of convenience fees on banking relationships, the study shows that fewer than 2 percent of consumers ever have switched their accounts to another financial institution either solely or partly because of such fees.

The Analytica research was commissioned by PULSE EFT Association, one of the nation’s oldest and largest shared electronic funds transfer networks.

Batsell, who does extensive consumer research on ATMs and point-of sale (POS) installations, said that the findings demonstrate that the public is making informed choices.

“It is evident that the free market is functioning with regard to ATM use,” he said. “The data shows that consumers are clearly aware of their options, and they adjust their behavior when presented with the fees. Those who want to avail themselves of the extra convenience do so with frequency. And the majority who avoid ATMs which impose convenience fees obviously seek out and take advantage of the other options available to them.”

Those choices include the use of non-charging ATMs, the availability of getting cash back with no charge at point-of-sale locations and conventional banking and check cashing options.

Stan Paur, president of PULSE, said that the finding of the mass of empirical data collected by his company surprised him.

“It is understandable that some are concerned about the impact of these fees,” he said. “When our association was advised in a judicial proceeding that PULSE should allow optional convenience fees, we presumed there would be disastrous results for our network.

“Instead, those revenues have fueled the enormous growth in ATM deployment at nonfinancial institution sites which would not be economically feasible without such fees. This includes airports, sports facilities, shopping malls, hospitals, supermarkets and gas stations. As a result, consumers are enjoying unprecedented convenience in obtaining cash almost on impulse.”

Paur said that the growth in ATM deployment is not limited to any one segment of the financial services marketplace. He cites the case of a small town banker who initiated a 50 cent convenience fee to help him turn a money-losing customer service into a break-even proposition. He said that the banker reported to him several months later that the convenience fees had enabled him to install two more ATMs to better serve his rural area customers. Paur noted that the 700-member Independent Bankers Association of Texas has formally endorsed allowing ATM owners to choose whether to levy such fees.

He also pointed out that more than 40 percent of ATMs sold last year were to operators outside the financial institutions industry. Diebold, Incorporated, a leading manufacturer of ATM equipment, estimates investment in technology and facilities of more than $617 million for 1996 alone, with that total approaching almost $2 billion over the past four years.

PULSE, based in Houston, is a not-for-profit association with more than 2,000 members in eight states, ranging from banking giants to independent community banks, credit unions and savings and loans. It serves participants in Arkansas, Colorado, Louisiana, Mississippi, New Mexico, Oklahoma, Tennessee and Texas with more than 30,000 ATMs and 122,000 PULSE PAY point-of-sale terminals.