France’s New Smart Health Cards

ORGA, one of the world’s leading manufacturers of smart card systems, is taking part in the Sesam Vitale project being organized by the French Ministry of Health. By the start of next year, the company will, through an agreement with Bull, have begun supplying some 8 million microprocessor-based smart cards to insured persons involved in the project. The smart cards will be personalized in France by one of the partners of ORGA and Bull.

The first phase of the Sesam Vitale project due to start in 1998 will see selected families provided with “smart” health insurance cards which aim both to speed up and simplify data flows, including the capture of services data, billing, and reimbursement within the French health system. A read/write device in conjunction with the patient’s card will enable services rendered to be entered immediately each time a patient visits the doctor, then forwarded electronically to the respective health authority and insurer in the form of a set of encrypted data records. These organizations can then reimburse patients their share of the costs directly.

This procedure should render hand-written bills and prescriptions, along with time-consuming administrative transactions obsolete, while reducing processing times and cutting costs. The issuing of Sesam Vitale cards to all insured persons is already planned for the second phase of the project due to begin in 1999. Equipped with increased storage capabilities, these cards will be able to record a patient’s medical history and thus help enhance the quality of the service provided.

France will become one of the first countries in the world to introduce smart cards for its health insurance system across the board. The French concept will see the first fully automatic system based on microcontroller cards implemented for practical everyday use. According to Dr. Heiner Gronewald, head of ORGA’s Health Insurance business, “ORGA has always played a pioneering role in smart card development; Sesam Vitale will give the smart card a major boost in the health insurance field, and we are pleased that our participation in the project led by Bull again underlines our status as a technological leader in this sector.”

ORGA USA is the North American subsidiary of ORGA Kartensysteme GmbH Germany, one of the world’s leading developers and suppliers of microprocessor-based smart card technology, with more then 550 employees worldwide. ORGA offers turnkey solutions for health care, banking, telecommunications and other emerging markets. The company’s capabilities include quality card manufacturing, full system integration and project management.

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Debit Card’s 10% Share

Off-line debit card transaction volume will exceed $100 billion this year according to mid-year ‘VISA Check Card’ and MasterMoney’ data. As of June 30 there were 67.6 million debit cardholders in the U.S. generating more than one billion transactions since the first year, representing slightly less than $50 billion in year-to-date card volume. While the number of cardholders is growing about 42% annually, debit card volume is nearly doubling this year. Truly this is a market segment that is no longer in infancy. Total U.S. card volume, including debit and credit cards, will exceed $1 trillion this year. Credit card volume is growing about 14.5% annually according to CardData’s mid-year computations.

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Y2K Problem is Tip of Iceberg

The president of a Silicon Valley software firm which helps major corporations ready their computer systems for the year 2000 (Y2K), commented on reports from the White House Office of Management and Budget (OMB) that it will cost $3.8 billion to prepare government computer systems for 2000. He believes their cost will be “double that.”

Doug Engfer, president of The Windward Group, a software design, development, quality assurance, and documentation consultancy here said: “Problems with Y2K go far beyond computers thinking ’00’ means 1900 instead of the year 2000. Companies and the government need to get their arms around a problem that seems to grow without stopping.

“If shareholders of America’s major corporations knew the state of the Y2K assessment in those companies, they’d be appalled,” said Engfer. “At least the government is trying to understand the scope of what they face. This is not the last such surprise we will get from the OMB, and the final budget will likely be at least double current estimates.

“We can count on similar ‘bombs’ from industries we have trusted in the private sector, including banks, credit card companies and others,” Engfer said. “Even if they begin work immediately, most organizations will not be able to complete their projects in time.”

The Windward Group provides software design and development, documentation, and quality assurance services to a diverse client base. Their success in a broad spectrum of technologies springs from their ability to create long-term partnerships, dedication to quality, and experienced associates with strong technical expertise. Key clients include: FedEx Ship (shipping software for the SOHO market), PIM software and handheld-to-desktop architecture for Palm Computing Division of 3COM Corp., and GUIA (Genesis Utility Information Applications) for Itron Inc.

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Arkansas Banks Go Online

During the next year, all banks within the First United Bancshares Inc. system will have online real-time banking capabilities available through the Internet. With this service, bank customers anywhere in the world will be able to access their accounts and bank services through the Internet.

With the online banking product, bank customers will be able to make inquiries on their loan and deposit accounts, get online account statements, transfer funds, make loan payments, order checks, request stop payments, apply for loans, and open new accounts. Customers will also be able to download account information into home accounting software such as Quicken. The system will also be capable of supporting electronic bill payments and check image displays when these services are fully implemented. An extensive online help section will be provided for users.

“We are very pleased to introduce this service at our banks,” said James V. Kelley, chairman, president and chief executive officer of First United. “Many of our customers have asked for the online banking product and we anticipate that acceptance will grow rapidly. Online banking makes it easier and more convenient for our banks’ customers to access their accounts from their homes, offices or any site with Internet access.”

“Online banking is part of a broader array of services that banks must offer in order to meet the needs of a diverse population and First United is leading the way in providing our customers with this outstanding product,” Kelley continued. “Our customers will continue to be able to handle their transactions at the bank if they prefer, but the segment of our customers who prefer to use the online method will be able to do so.”

Fredonia State Bank, which is headquartered in Nacogdoches, Texas, introduced the product in August. Internet banking will be available at all First United Bancshares locations within the next year.

First United is a multi-bank holding company with nine affiliate banks and a non-bank subsidiary, First United Trust Company, N.A., serving 30 communities in Arkansas and Texas. The member banks are: First National Bank of El Dorado, Ark.; First National Bank of Magnolia, Ark.; Merchants & Planters Bank, N.A. of Camden, Ark.; City National Bank of Fort Smith, Ark.; Commercial Bank at Alma, Ark.; First United Bank, Stuttgart, Ark.; The Bank of North Arkansas, Melbourne, Ark.; FirstBank, Texarkana, Texas; and Fredonia State Bank, Nacogdoches, Texas.

In addition, First United has signed a definitive agreement to obtain City Bank & Trust, a $64 million bank in Shreveport, La. Also, First United has signed a definitive agreement to purchase Citizens National Bancshares Inc., a $263 million bank holding company headquartered in Hope, Ark. Citizens National Bancshares owns Citizens National Bank of Hope, Ark. and Texarkana, Ark., as well as Peoples Bank and Loan Company in Lewisville, Ark.

First United’s stock is listed on the NASDAQ National Market System under the symbol “UNTD.”

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Turkey’s SET Pilot

VeriFone, a leading global provider of secure payment solutions, has announced a major project with Garanti Bank in Turkey to provide a total Internet payment solution for its Secure Electronic Transaction (SET) pilot program. Garanti Bank ranks second in the world in terms of profit on capital and fourth in terms of returns on assets and will adopt VeriFone’s complete end-to-end suite of SET pilot products. This will enable it to offer a complete Internet payment solution for its merchant partners.

The three-fold solution will be based on VeriFone’s vPOS, vGATE and vWALLET software, conforming to the SET protocol and running on HP servers, to enable electronic commerce and create new retail banking opportunities via the Internet as an alternate delivery channel.

The SET protocol, originally proposed by Visa and MasterCard, is being developed with contributions from VeriFone and other companies as the standard for Internet bankcard transactions. VeriFone is committed to rolling out SET pilot and production solutions that are fully compliant with the latest MasterCard/Visa SET protocol standards.

“Internet commerce is an emerging market in Turkey and is showing promising growth,” commented Husnu Erel, General Manager, Garanti Ticaret. “Garanti Bank was the first bank in Turkey to extend on-line/real time service to its entire branch network and will also be the first bank in Turkey to use the VeriFone Internet commerce solution. VeriFone’s proven expertise and experience in the PoS and payment systems arena, together with Hewlett-Packard, means that we are in a position to offer merchants the best possible solution to compete in the market.”

“This Garanti Bank project extends the global momentum behind the adoption of the VeriFone and HP SET solutions,” commented Jan-Erik Rottinghuis, vice president of VeriFone, Europe, Middle-East and Africa regions. “Turkey is one of the fastest growing countries for payment cards in Europe and VeriFone is introducing multiple new solutions to meet the requirements of the Turkish banks and their merchants.”

“Together, HP and VeriFone have been able to offer Garanti Bank a turn-key solution encompassing hardware, electronic commerce software, banking and payment systems and consulting services. This should enable Garanti Bank to establish a leading position in SET-enabled electronic commerce just as it has with its Internet Banking offering,” commented Jean-Richard Bloch, electronic commerce program manager, financial services Europe, HP.

VeriFone brings its leading Internet payment software and solutions and a combination of International and local payment expertise, whilst HP provides world-class enterprise computing and services, including consulting and systems integration expertise.

VeriFone’s SET Products will offer a complete end-to-end software solution for Internet payment, and consist of VeriFone’s vPOS, vGATE and vWALLET software. Versions of these products are already being used to provide live Internet payment services to Internet merchants in Europe, North America and Asia.

With paid-in capital of TL 40 trillion, Garanti Bank () ranks among the largest 1,000 banks in the world according to The Banker and was named “Best Bank” in Turkey for the last three years by Euromoney. It prides itself on providing its customers with quality service and a diverse range of products. Garanti has applied the principles of market segmentation, customer focus and relationship management, transforming branches into dedicated marketing units offering integrated financial services to corporate, commercial and retail customers.

HP is a global provider of computing, Internet and intranet solutions, services, communications products and measurement solutions, all of which are recognized for excellence in quality and support. HP has 120,500 employees and had revenue of $38.4 billion in its 1996 fiscal year. Information about HP and its products can be found on the World Wide Web at .

Istanbul-based Iletisim Teknoloji Danismanlik Ticaret A.S, ITD () distributes VeriFone’s payment solutions throughout Turkey. The company was established in 1991 and is a market leading solutions provider in the voice systems and electronic payments technology markets.

VeriFone, Inc. (), a wholly owned subsidiary of Hewlett-Packard Company, is the leading global provider of secure electronic payment solutions for financial institutions, merchants and consumers. VeriFone has shipped more than six million electronic payment systems, which are used in over 100 countries.

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Experian Certified

After an embarrassing start in selling consumer credit reports over the Internet last month Experian announced yesterday it will adopt the National Computer Security Association’s ‘Secure Web Vendor’ program. Experian is also requiring all its Internet partners to achieve NCSA certification. The NCSA program requires Web sites to meet certain security criteria and to pass remote and on-site inspections. Experian suspended its on-line consumer report service Aug 15.

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Partnerships & Smart Cards

The Smart Card Forum opened its fifth annual meeting yesterday in Washington, DC with more than 400 global members in attendance. This year’s meeting is focusing on the importance of alliances in both the technical and business areas of smart card development. The Forum says partnerships generate better outcomes in terms of response times, product and service performance, quality levels, and costs, resulting in a competitive advantage.

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Responsible Bankruptcy

Two members of the House of Representatives introduced legislation yesterday aimed at correcting alleged flaws in the current personal bankruptcy code. ‘The Responsible Borrower Protection Bankruptcy Act of 1997’ , sponsored by Rep. Bill McCollum, R-Fla., and Rep. Rick Boucher, D-Va., will restrict personal bankruptcy options by forcing borrowers with the ability to repay at least 20% of their unsecured debts into a Chapter 13 filing, instead of a the full liquidation provided under a Chapter 7 filing. The proposed legislation also calls for significant changes in the time period between bankruptcy filings, implementation of administrative reforms and creation of a clearinghouse of bankruptcy statistics. Yesterday’s action is backed by the credit card industry which has been thwarted in its efforts to change the code by way of the National Bankruptcy Review Commission. The NBRC will present its recommendations to Congress next month.

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The Cash

NCR Corp rolled out its new low -priced ATM yesterday, called ‘The Cash’. The machine is designed for retail outlets and features a swipe card reader, two denomination currency dispenser and a Windows-based remote management software system, all for less than $5,200. NCR said the number of ATMs installed in U.S. retail locations nearly doubled last year, from 12,000 to 22,000. The company is promoting its ATMs by showing retailers that cash customers are more profitable because their transaction cost is lower: 7 cents per transaction compared to 43 cents for checks and 80 cents for credit card.

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People’s Second 97 Securitization

People’s today announced that People’s Bank Credit Card Master Trust has priced $500 million of five-year floating rate credit card asset-backed securities.

The securitization transaction features two classes of publicly traded securities (Class A and Class B) and a separate privately placed collateral invested amount.

The transaction, Series 1997-2, includes $425 million of Class A (senior) floating rate asset-backed certificates, $33.75 million of Class B (subordinate) floating rate asset-backed certificates and a $41.25 million privately placed floating rate collateral invested amount.The Class A certificates accrue interest at 13 basis points over the one month London Interbank Offered Rate (LIBOR). The Class B certificates accrue interest at 33 basis points over the one month LIBOR. Both the Class A and Class B certificates were priced at par. J.P. Morgan & Co. was the lead manager of the transaction; Goldman Sachs & Co., Lehman Brothers Inc., and Salomon Brothers Inc., were co-managers. The transaction is scheduled to close September 24, 1997.

The offering of these securities will be made only by means of a prospectus. This press release does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.

People’s Bank, the largest independent bank headquartered in Connecticut, has assets of approximately $7.9 billion and 110 branches statewide. Based in Bridgeport, the 155-year-old institution offers diversified consumer and commercial financial services as well as investment services provided by its wholly owned subsidiary, People’s Securities, Inc. People’s is the leading mortgage lender in the state and the 26th largest issuer nationally of Visa and MasterCard credit cards.

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Card Capture Hits 2,940 ATMS

Card Capture Services Inc. (CCS) installed 340 new ATMs to its portfolio during the months of April, May and June of this year, bringing the total number of ATMs under CCS management as of June 30, 1997, to 2,940 nationwide.

As a result, the company posted an average of 868,930 transactions per month during second-quarter 1997, compared to an average of 466,944 transactions per month during second-quarter 1996. Second-quarter revenues for the four-year-old, privately held company exceeded $5.7 million.

Card Capture Services Inc. was incorporated in May 1993 in Portland, Ore. CCS offers turnkey ATM programs providing transaction processing, machine maintenance, customer service, accounting and reporting to a growing base of merchant owned and operated Automated Teller Machines (ATMs) nationwide. By tapping non-traditional and unrealized markets, CCS is leading the wave of independent ATM deployments nationally. The company currently has 34 employees and a nationwide network of 45 independently contracted dealers.

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