Smart Card Banks a Reality

Managers from Santander, Telefonica, VISA, and other companies can gain valuable insights into the emerging opportunities in financial services by attending a special seminar to be presented by IEGDE (Spanish Institute of Business Management) in Madrid on Oct. 27, 1997.

Michael Killen, President of Killen & Associates, a Silicon Valley based market research firm that specializes in analyzing the opportunities created by advances in computer and communications technology, will share his thoughts and answer questions on the financial services market. Killen, who has recently addressed similar audiences in Asia, Europe, the Middle East, South America, and the U.S., will explain why he thinks:

— The smart card will become the bank of the future

— The Internet and smart cards will enable merchants and telephone companies to offer financial services that previously only the banks could think of offering

— Banks and other organizations must think clearly about business-to-business and business-to-consumer opportunities that arise from technology advancements

Killen plans to focus on business opportunities such as Internet banking, smart card payment systems, and secure electronic transactions (SET). He will also share his insights on the impact of the Euro and the Year 2000 date change on MIS budgets. Killen will also identify the key management processes we need as we face the challenges of the 21st century.

Killen will draw on his work with bankers and telephone executives worldwide, and on Killen & Associates studies such as:

— Non-Banks’ Smart Card Strategies: New Sources of Revenue

— Hewlett-Packard’s Electronic Commerce Strategies: Tilting the Playing Field

— Personal ATM Services: Opportunities for Financial Services, Telephone Companies, and Merchants

— IBM’s Strategies for the Payments Market

Antonio Lopez de Avila Munoz, Director of IEGDE, said, “We selected Mr. Killen to address Spain’s financial companies because he is a leader in understanding the impact of high technology on financial institutions, and Spanish financial managers and executives want to add his insights to their own.”

The seminar, titled “Impact of High Technology on Banks: Card Issuing, Merchant Acquiring, and Retail Services Lines of Business,” is ideal for everyone who has questions about the opportunities in financial services created by advances in technology.


UK Bill Pay Network

A new bill payment network went on-line this week in London after seventeen months of development by several U.K. utility concerns. The ‘PayPoint’ network consists of 7,300 U.K. retailer locations, most with 24 hour operations, and is primarily aimed at the 20% of British households who are unbanked. Utility and other service companies participating in the service will issue payment cards or bar-coded bills for use in the special ‘PayPoint’ terminals. There will be no service charge for using the network however consumers may also purchase meter tokens or reload smart cards via ‘PayPoint’.


VISA Explores Web Advertising

ASI Market Research Inc., a leading advertising and marketing research firm, announced today that its Interactive Division has organized the ASI Consortium of Interactive Advertisers (ASI CIA) which consists of leading companies such as: Chevrolet, IBM, Kodak, Levi Strauss, Procter & Gamble, Sprint and Visa. Participating as content providers are HomeArtes, Geo Cities, Starwave and Time Warner, and as technology providers Web TV, @Home, Unicast, Yahoo and others. The goal of the ASI CIA is to study and truly comprehend the nature and effect of advertising on the Internet.

The ASI CIA represents the first time that these major players in Corporate America have come together to discuss learnings about advertising on the Internet. Over the next six months the ASI CIA will conduct ground-breaking research of Internet advertising by testing 150 to 250 different Internet and interactive advertisements covering a wide variety of brands and techniques.

“When we first started to organize this consortium, we listed the companies that we felt were the leaders in their respective markets in terms of advertising creativity and influence, and worked to bring them together,” said Marianne Foley, vice president of ASI Interactive. “The information that comes from the ASI CIA will be the most expansive and comprehensive available, setting the baseline for advertising on the Internet for years to come.”

ASI will help ASI CIA members with copy testing, attitudinal tracking and web site evaluations. They will be using ASI’s specialized techniques to judge the actual usefulness of advertising on the Internet for advertisers.

“This is the first time that someone has tried to bring together a group of major companies to truly study the effect of advertising on the Internet on a large scale,” said Dennis Murphy, director marketing communication research at IBM. “Other studies have looked at this topic from various points of view, but this is the first time that someone will be looking from the advertisers point of view. The quality and quantity of advertisements that will be studied will finally apply many traditional advertising testing and research techniques to the Internet. We expect to gain invaluable data and real knowledge on how to effectively advertise in this burgeoning medium.”

“Everyone keeps talking about the Internet as the medium of the next century,” Foley said. “But we realize that in order for the Internet to become truly pervasive, it must have the content needed to attract the majority of the general population. And until advertisers really know what they can accomplish by using the Internet, they will not support it like they have other major media such as television and radio.”

ASI Market Research Inc. has headquarters in Stamford, Conn. and additional offices in Cincinnati, Ohio and Glendale, Calif. Though best known for its industry-leading advertising testing services, ASI is also heavily involved in measuring in-market advertising response, brand equity and in providing research for interactive media.


eToys Launched

Hoping to capture the holiday spirit two California entrepreneurs launched a new Web service enabling Internet surfers to purchase toys electronically. eToys is initially offering more than 1,000 products from more than 100 manufacturers at discounted prices with plans to quickly expand to 5,000 toys. The new service will use ‘SSL’ encryption for credit card transactions. It was developed in partnership with Digital Boardwalk and will use the Netscape commerce system. All fulfillment will be done in-house with in-stock orders shipped within 24 hours.


The Cash Gets EPS Certified

NCR Corporation, the world leader in automated teller machines (ATMs), today announced that its newest ATM, The Cash, has been certified by Electronic Payment Services, Inc. (EPS), operator of the MAC(R) network, and a leading electronic transaction processor with over 2 billion transactions annually.

“The EPS certification enables NCR to offer an attractive solution for retailers looking for experience and customer satisfaction by backing our ATM with the largest electronic funds network,” said Andy Orent, NCR’s vice president, Self Service. “The speed with which NCR received EPS certification is an indication of NCR’s commitment to quality and reliability,” he said.

Last week, NCR introduced its easy-to-maintain ATM designed for retail outlets such as gasoline stations; restaurants; convenience, discount and department stores. The Cash is tailored to the needs of retailers who compete for consumer loyalty and want to offer their customers the convenience of instant cash availability without leaving the store or restaurant.

“NCR’s introduction of ‘The Cash’ exemplifies their continued commitment to new technologies for the convenience of the retail consumer,” said John Beahn, executive vice president, EPS. “EPS is excited to be a part of NCR’s newest ATM product introduction,” said Beahn.

EPS is the parent company of Money Access Service Inc., operator of the MAC network and BYPASS Corporation. EPS provides access to 46 credit, debit and electronic benefits transfer (EBT) gateways, and, through the MAC switch, processes one out of every five transactions in the United States, making it the country’s largest electronic funds transfer network based on switch transactions. The MAC network is comprised of more than 2,100 financial institution members, 27,000 ATMs, 400,000 point-of-sale terminals, and 36.5 million cardholders in 50 states.

EPS is the parent company of MONEY ACCESS SERVICE INC., operator of the MAC network and BUYPASS Corporation. EPS provides access to 46 credit, debit and electronic benefits transfer (EBT) gateways, and through the MAC switch, processes one out of every five transactions in the U.S., making it the country’s largest electronic funds transfer network, based on switch transactions.

The MAC network is comprised of more than 2,100 financial institution members, over 27,000 ATMs, 400,100 POS terminals and 36.5 million customers carrying cards bearing the MAC logo in 50 states. BUYPASS Corporation, headquartered in Atlanta, Georgia, is a major third-party POS processor and debit transaction acquirer with annual transaction volume of over 900 million. BUYPASS provides processing for 50 of the top 200 grocery store chains in the United States.

NCR supplies banks and other financial institutions with Banking Solutions in the Age of the Consumer — solutions that are tailored to our customers’ individual needs so that they can offer the best services to their consumers. Apart from ATMs, these solutions include relationship management systems, image and payment systems and consumer delivery systems. NCR Corporation’s computer systems, store automation, banking systems, consulting and support services are used by customers in more than 130 countries around the world. NCR is located on the World Wide Web at .


Nippon T&T to Use Transact

Signaling a bold move into the Internet commerce arena, Nippon Telegraph and Telephone Corporation (NTT), the world’s largest telecommunications company, today announced that it will use Open Market’s powerful Transact(TM) Internet commerce software within a significant pilot test conducted by the Electronic Commerce Network (ECN) Project in Japan.

NTT is planning to start an Internet commerce services trial based on the robust functionality of Transact, enabling Japanese companies to sell their goods and services to the public via the World Wide Web. This announcement caps off tremendous recent expansion for Open Market, a leading provider of Internet commerce software, in the Japanese marketplace, led by Kazuo Kojima, general manager of Open Market’s Japanese operations in Tokyo.

NTT will conduct the trial beginning in the fourth quarter of this year with more than 2,000 NTT Group Card holders and 20 online businesses, providing centralized back-office order processing, store management, and payment processing for Internet malls and merchants. Beginning in December and continuing through May, NTT will then extend the trial to include online credit card settlement. Buyers will be able to shop securely for physical and digital goods via commerce-enabled Websites and online catalogs offered by online businesses.

The Japanese Internet user population is the second-largest in the world, with at least 6.7 million people in Japan having access to the Internet today, according to a recent Nikkei telephone survey. Well-known market researcher FIND/SVP projects that number will grow to more than 10 million Japanese adults by the year 2000. The Nikkei study reports that more than 35% of Japanese Internet users have already shopped online, but most purchases are from the U.S. because of the lack of Japanese merchants online.

“Open Market is incredibly pleased to gain a customer of NTT’s stature,” said Gary Eichhorn, president and CEO of Open Market. “Together, we will be able to expedite convenient, online shopping for the Japanese public. Also, it’s important to note that with this announcement, Open Market has effectively captured the entire worldwide telecommunications market for Internet commerce.”

Eichhorn noted that Open Market is the only company in the world to provide Internet commerce software to major telecommunications and financial service providers as the basis of their Internet commerce services, offering businesses and their customers complete order management, online customer service, security, authentication, record-keeping, flexible purchasing and payment models, and secure transaction processing, including sales tax and shipping charges. Already the preeminent software for business-to-consumer Internet commerce, Transact powers many of the world’s largest commerce Websites and also benefits business-to-business manufacturers and distributors, who use the system for a complete, end-to-end Internet commerce solution.

More About NTT

Nippon Telegraph and Telephone Corporation () was incorporated as a private company on April 1, 1985, and now has a total of 240 subsidiaries and affiliates. NTT is the largest supplier of telecommunications services in Japan, offering telephone, telegraph, leased circuit, data communication facility, sale of telecommunication equipment, and other services.

More About Open Market

Founded in 1994, Open Market, Inc., (Nasdaq: OMKT) develops, markets, licenses, and supports high-performance software products that allow its customers to engage in business-to-consumer and business-to-business Internet commerce. Open Market’s innovative technology enables the separation of the management of business transactions from the management of content, thereby allowing companies to securely, centrally, and efficiently manage business transactions over the Web. The company, headquartered in Cambridge, MA, can be reached at 617-949-7000 and on the World Wide Web at .

The Folio Products Division of Open Market is the world’s leading provider of software for publishing professional information. Folio products are installed on an estimated 30 million desktops. More than 700 publishers use Folio software to create and distribute approximately 3,500 electronic titles. For more information about Folio products and services, contact Folio at 801-229-6710 or visit .

This news release contains forward-looking statements that involve a number of risks and uncertainties. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are the company’s limited operating history, delays in product development, development of the Internet market, competitive pressures, and the risk factors detailed from time to time in the company’s periodic reports and registration statements filed with the Securities and Exchange Commission.

NOTE: Open Market, Transact, and We ARE Internet Commerce are trademarks or registered trademarks of Open Market, Inc. in the United States and other countries. All other names are used for identification purposes only and may be trademarks of their respective owners.


Jeanie Expands Florida Presence

Jeanie(R), a regional ATM network from the Midwest, recently became Florida’s newest snowbird to declare residency! The network, owned by Fifth Third Bancorp (Nasdaq: FITB) and operated by the Bancorp’s data processing subsidiary, Midwest Payment Systems (MPS), has been expanded to provide service to Pelican National Bank in Naples, Florida and South Florida Bank in Fort Myers, Florida. Bank Brevard in Melbourne, Florida, has also signed a deal with MPS for its ATM processing in the Honor(R) network.

Until this year, Jeanie’s Florida duty had been limited to customers of Fifth Third Bank of Florida, located in Naples and Bonita Springs. MPS, one of the country’s leading electronic fund transfer and ATM processors, forged an agreement with First Integrated Systems to provide ATM processing. MPS will complement First Integrated Systems’ product processing capabilities to offer ATM terminal driving, settlement, card authorization and debit card services.

MPS processes over 1.8 billion ATM and POS transactions per year for more than 1,100 financial institutions and 25,000 merchants worldwide. MPS provides direct access to virtually all major ATM networks, including Jeanie, Cirrus(R), MAC(R), Honor, Most(R), Star(R) and Plus(R), with unsurpassed service and technical expertise.

First Integrated Systems provides comprehensive data processing services to over 50 banks located in 10 states. Its customers range in size from $15 million to $3 billion in assets. First Integrated Systems is a division of First National Bank of Omaha, a $4 billion bank known nationwide as a leader in the credit card, merchant processing and ACH processing business.

“MPS offered us the ability to present a total, cost effective processing solution for our customers,” reports Fran Marshall, First Integrated Systems. “MPS’ ATM processing expertise complements our processing products, such as First Integrated Systems’ on-line teller solution, First Teller, Signature Verification, Macrosoft Optical products for report archival, and Large Cash Transaction Reporting.”

“We are thrilled to have First Integrated Systems’ recommendation,” said Barry L. Boerstler, Senior Vice President, MPS. “It offers us the opportunity to expand our Jeanie network and introduce our capabilities to many more financial institutions.”

Also, Jeanie can now be used at all ATMs and POS devices at all Florida, Georgia and South Carolina Publix stores, thanks to a sharing arrangement between the Jeanie network and the Publix Presto network.

Founded in 1858, Fifth Third Bank is headquartered in Cincinnati, Ohio. The Bank is one of 11 affiliate banks of Fifth Third Bancorp, which has $20.7 billion in assets, 415 full-service Banking Centers, including 97 Bank Mart(R) locations open seven days a week inside select grocery stores and 859 Jeanie(R) ATMs in Ohio, Kentucky, Indiana and Florida. Fifth Third Bank’s financial strength continues to be recognized by rating agencies with deposit ratings of AA- and Aa2 from Standard & Poor’s and Moody’s, respectively. Fifth Third operates four main businesses: Retail, Commercial, Fifth Third Investment Advisors and Midwest Payment Systems, the Bank’s data processing subsidiary. Bancorp investor information can be accessed on the Internet at . The company’s common stock trades on The Nasdaq Stock Market under the symbol: FITB.


Chargeoffs Dip

More evidence that chargeoffs declined in August was presented yesterday by Fitch Investors Service. The ‘Fitch Credit Card Performance Index’ showed a chargeoff rate of 6.59% for the August collection period compared 6.91% for the July collection period. Fitch says this is the largest one month decline in four years and was driven by improved results reported by nearly three-fourths of the issuers followed in the index. The Fitch index tracks $154 billion of card bonds or about 38% of total industry receivables.


Dove Acquires Learning Design

International management consulting firm Dove Associates has acquired The Learning Design Group, a Minneapolis-based company that focuses on individual performance enhancement through the design and development of custom learning solutions and training programs. The newly-added division joined Dove Associates on September 30, 1997, and will continue to operate from its Minneapolis offices under The Learning Design Group name. This acquisition, combined with Dove’s ongoing growth, will help the firm approach $20 million in 1997 with approximately 100 employees.

A recognized leader in the custom training and development industry, The Learning Design Group has helped numerous clients improve their effectiveness through innovative, cost-effective training solutions that address critical performance challenges. According to Dove president David W. Dove, “The Learning Design Group is the best in their field. They are sought after for their deep expertise in sales, service, and leadership skill development; performance management; curriculum design; competency modeling; and multi-media learning by leading organizations such as American Express, Campbell Soup, Disney, General Mills, Lucent Technologies, Motorola, UPS, and Zeneca Pharmaceuticals. The Learning Design Group has also been called upon to design and develop off-the-shelf products for some of the most prominent training and education suppliers in the world, including the Harvard Business School.”

“The Learning Design Group’s work with Dove on a major healthcare company’s on-going, worldwide executive development program brought to light the perfect strategic and cultural fit between Dove and our organization,” explains The Learning Design Group founder and president/CEO Dr. Stephen L. Cohen. “Dove took the lead on creating the overall concept for the executive development process, then The Learning Design Group helped develop a learning process and codified it into guides for program leaders and handbooks for participants. Since this is such an immense, long-term undertaking that spans divisions around the world, standardizing the program was crucial to ensure that all of the client’s leaders who participate walk away with the same basic learnings.”

“We’re looking forward to partnering with Dove on key client projects to help support other leadership and change management initiatives,” continues Dr. Cohen. “There is also a great deal of intellectual capital resident within Dove that we plan to package so a wider audience of executives can benefit from Dove’s expertise in addressing strategic and organizational challenges.”

The Learning Design Group was founded in 1991 by its current president and CEO. Dr. Stephen L. Cohen, who has earned worldwide recognition for his accomplishments in the field of human resources development. He has served on the board of directors for the American Society for Training and Development, and was recently elected president of the Instructional Systems Association, whose members include the most prominent performance enhancement and training companies.

Founded in 1981, Dove Associates is an international management consulting firm specializing in strategy and organization effectiveness, with offices in Boston, Atlanta, London, San Francisco, and Washington. Dove counts among its clients leading organizations worldwide, including PepsiCo, MetroMedia, UNUM Corporation, and Banc One. For more information, please



A Massachusetts superior court judge denied a temporary restraining order yesterday requested by BJ’s Wholesale Club to halt Beneficial National Bank’s action to drop non-revolving cardholders from the ‘BJ’s MasterCard’ program. Beneficial is currently notifying about 12,000 customers, whose cards expired yesterday, that a the card will not be re-issued since no finance charges where paid in the previous twelve months. BNB began negotiating with BJ’s about a year ago to make adjustments in the program to assure profitability. The negotiations broke down in mid-September with both parties filing suit. BNB said yesterday it has no intention of terminating the program, merely modifying it. A January court date has been set to hear BNB’s case in Delaware. Despite yesterday’s setback for BJ’s, the wholesale club says it will go forth “vigorously” with its complaint filed in Massachusetts.


AmEx Says Travelers Will Pay

In the wake of recently announced commission cuts by major U.S. airlines, American Express, the nation’s largest travel agency, sees its future more than ever as aligned with the needs of travelers for good value, freedom of choice, unbiased advice and global customer service.

“It’s ironic that the major air carriers have sharply cut the commissions they pay travel agents, just when the need for objective travel advice and unbiased cost comparisons is growing. With fares up 17 percent this year, searching out airfare values and knowing the details about special offers and restrictions is more important than ever,” said Marianne Toldalagi, Senior Vice President, American Express Consumer Travel.

“And when you consider the time crunch that working families, small businesses and large firms face, the role of the agent as traveler advocate becomes even more vital. With 100,000 airfare changes every day, only a knowledgeable travel agent can provide the advice and cost comparisons that the traveling public needs,” she noted.

On September 18, United Airlines reduced travel agency commissions on all flights by 20 percent. Most other major carriers have taken the same action. Commissions on most roundtrip domestic flights had already been capped at $50 for the past 2-1/2 years.

“We know customers will continue to insist on seeing all travel options to determine the best value. A good travel agent knows how to find a lower fare by offering an alternate airport, a connecting flight or a non-peak departure. In addition, airlines lately have been restricting seat availability in the lowest fare categories and giving travelers less than a few hours to make a commitment or face a higher fare. Travel agents are familiar with these tactics and adept at protecting their clients from paying more than they should.

“Airlines have created confusion in pricing and consumers are bewildered. Only a travel agent has the skill to cut through the maze of fares and restrictions to find the best fare for the traveler.

“Despite the fact that they provide a vital service, under the new economic model many agencies will have a hard time surviving without changing the way they do business. We expect the commission cuts to be particularly difficult for travel agencies that serve low fare customers.

“Because agents across the U.S. are no longer being compensated at economically viable rates by carriers, it is likely that travelers — rather than airlines — will be paying for agency services in the future,” she explained.

In a national study in December 1996, the U.S. Public Interest Research Group (PIRG), an independent consumer group showed that when it came to providing the public with the lowest airfares, travel agents were the best source in the majority of cases.

“Any traveler who tries to arrange a trip on his or her own knows how invaluable the advice and planning experience of a professional can be. Even when you know your dates and destination, there are dozens of phone calls, price schedules and date changes which come with planning a trip. It usually involves far more time and effort than most people expect,” she warned.

American Express operates the world’s largest travel agency, with more than $15.8 billion in travel sales worldwide in 1996 through more than 1,700 travel service outlets. American Express Company is a diversified worldwide travel, financial and network services company founded in 1850. It is a leader in charge and credit cards, Travelers Cheques, travel, financial planning, investment products, insurance and international banking.