Credit Cards Online Information

ComSense today announced it has begun shipping the production version of its ComDot(TM)-powered reader-free Internet cards. This marks the world's first volume production and general availability of a self-powered ISO card. ComDot-powered cards authenticate users at any telephone or connected PC eliminating the need for a card reader or other specialized hardware. Customers include online service providers, credit card issuers, and retailers.

In November, Network World recognized the ComDot technology with an Editor's Choice "Category Breaker" award in the security realm. What makes the self-powered ComDot cards unique is that they are both active and reader-free, meaning they communicate with server-based applications by means of the PC, mobile phone, telephone, and other devices without a card reader. This is achieved by using sound, a capability that is standard with these and many other personal electronic devices. ComDot-powered cards provide a standard, ubiquitous means for easy and secure account access and Internet transactions for online health care, network access, membership, loyalty, and e-commerce. Since ComDot-powered cards are ISO 7810/7816 compliant, they can also be credit cards.

Separately ComSense announced several field trials of the world's first reader-free Internet card, including:

-- iMetrikus, for the interactive health care community MyHealthChannel.com

- Nippon Shinpan Company, one of Japan's largest credit card issuers

-- Sofmap, one of Japan's largest consumer electronics and online retailers

-- Marubeni Information Systems, a major Japanese company with broad expertise
in telecommunications and information systems and a division of trading company
Marubeni Corporation, an investor in ComSense and the company's distributor in
Japan

"We are pleased and gratified that companies of such stature all around the world are beginning to embrace ComDot technology," said Alon Atsmon, president and chief executive officer of ComSense. "Convenience, privacy, and security are universal values that strengthen any company's customer relationships. We are particularly excited about the potential our technology holds for network security. Information system providers have been waiting for a security solution like ours that is easy to install and use anywhere."

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WILMINGTON, Del. -- Today, JPMorgan Chase (NYSE: JPM) announced that it has entered into a strategic alliance with Kohl's Corporation (NYSE: KSS) to enhance Kohl's credit card operations. As part of the alliance, Chase will purchase for cash more than 13 million private label credit card accounts with approximately $1.5 billion in outstanding balances. The transaction is expected to close within the next 90 days.

In addition, Chase and Kohl's will enter into an ongoing arrangement under which Chase will offer private label credit cards to both new and existing customers. The two companies will work together on marketing initiatives designed to enhance Kohl's sales and grow the credit card business. Kohl's will continue to manage all customer service, advertising and marketing functions.

"Chase is extremely excited about this partnership because it offers many tremendous opportunities," said Rich Srednicki, chief executive officer, Chase Card Services. "We are pleased to be partnering with Kohl's, one of the nation's best retail brands and a great growth company. We are eager to work with Kohl's to expand their private label business and to continue working closely with Kohl's to offer great service and value-added products to consumers."

Larry Montgomery, Kohl's chairman and chief executive officer, commented, "We are excited to be partnering with Chase. Our credit card program is an instrumental part of Kohl's success, and our relationships with our cardholders are extremely important to us. Like Kohl's, Chase has many years of experience in running credit operations with a focus on customer relationships, so we will leverage the expertise of both companies to build a best in class credit card program to support our continued growth."

About JPMorgan Chase & Co.

JPMorgan Chase & Co. (NYSE: JPM) is a leading global financial services firm with assets of $1.2 trillion and operations in more than 50 countries. The company has more than 100 million credit cards issued. Under the JPMorgan and Chase brands, the firm serves millions of consumers in the United States and many of the world's most prominent corporate, institutional and government clients.

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University Bank in St. Paul, Minn., has introduced a stored value card designed to serve unbanked and under-banked consumers. Bank officials also expect it to be useful for college students and consumers looking for safer e-commerce transactions. The stored value card, which the bank is calling the "University Personal Cash Card," features many of the benefits of cash and credit cards without the requirements needed to open a bank account - such as a government-issued ID or a minimum balance. The cards function like a pre-paid retail gift card; they can be used one time and discarded, or money can be re-loaded onto the cards for continued use.

University Bank President David Reiling said the new cards might be used, for instance, by recent immigrants to the Twin Cities who don't have traditional bank accounts because they lack proper ID, money to maintain minimum balances, or the ability to communicate in English. The new card will allow people to deposit their paychecks directly onto the card and avoid check-cashing fees. They gain the security of not carrying cash, plus nationwide access to cash through ATMs.

Reiling said his bank, which is located in an area populated with immigrants, turns down four out of five new account applications because the applicants can't meet minimum requirements.

"We also found out through our check cashing service that there are some people who simply don't want a bank account," Reiling said. "We wanted to offer a product that met them in the middle. This card, in the long run, will help them become more comfortable with financial institutions."

On paper, the cards look a lot like bank accounts. From a regulatory standpoint, however, Reiling said several differences take them out of the account category.

"It's about as close as we could come to getting something to look like a bank account without actually being a bank account," Reiling said. "For starters, the money on the cards is not FDIC insured. You cannot overdraft these cards. Once their value is depleted, that's it. The cards themselves carry no personal information about the carrier. They break the chain of identity theft."

The stored value accounts can be opened without a state-issued ID. Reiling said the bank will follow the standards laid out by the USA Patriot Act, although rules about stored value cards aren't specified in the act. As for regulatory requirements, the new cards have yet to be fully scrutinized by regulators.

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John, a junior at State U., approaches the campus health building, draws a card from his wallet and passes it near a door sensor. He hears a beep, and the door clicks open. Inside, he stops at a vending machine, inserts the same card and purchases a soft drink.

John enters the pharmacy and hands the card to the pharmacist who swipes it through a card reader. Her screen shows that John has two refills left on his prescription. She hands him the medication, swipes the card again, and the purchase is instantly billed to the John's account.

On the way to his dorm, John stops at the library and withdraws a book and a video with the same card. Next he uses the card to register his vote in the student government election. Returning to the residence hall, John presents his card to a dorm monitor who slides it into a reader and verifies that John is a student who lives in that building. In awhile, he'll use the card to buy dinner and do his laundry.

It's an extreme example, but this scene plays out daily in varying degrees on campuses around the country. The all-in-one campus card has become such an integral part of daily life for some, that the school is virtually a cash-less society.

Campus access cards have come a long way from the simple photo identification cards of not too long ago. Today's cards feature technologies for identification, building access, vending, library lending, Internet access, meal plans, banking and even medical information.

The first campus-wide, multi-application cards were introduced in 1974. They combined several features such as building access and meal plans on a "mag stripe" that interacted with a central database.

During the next few years cards became more versatile. Cards could access "stored value" applications such as copiers, microfilm readers, printers and vending machines. Bar code cards became the universal system in libraries. Digital photos were added. Proximity or "prox" cards contained a transmitter that opened locks when passed near a sensor. "Smart cards" incorporated a memory chip to store user information.

Now, new "fourth generation" cards take advantage of the Internet for a variety of administrative and user operations. (See chart below.)

Card Tricks

At St. Lawrence University in Canton, New York, campus cards fulfill multiple roles, says Pat Gagnon, assistant director of security and safety and manager of access systems.

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Sending your kid off to college: priceless.

Paying tuition bills with a credit card: That'll cost you.

A growing number of California State University campuses are switching to a third-party service that adds an extra fee onto tuition bills paid over the Internet with credit cards, which have become an increasingly popular payment option for students and families coping with rising tuition costs.

The extra fee varies from campus to campus, although the norm is generally 2.9 percent of the transaction amount. Students at Sacramento State and Cal Poly San Luis Obispo, though, will pay 3.15 percent.

The extra charges can add anywhere from $78 to $125 per year onto tuition bills for the average full-time student. Annual tuition varies from $2,704 to $3,974 at CSU's 23 campuses.

There's no extra fee to pay with cash, money order or check on campus.

And while campus officials are sympathetic to parents and students who are struggling with higher tuition, many say they turned to the extra fee because cash-poor campuses could no longer shoulder the burden of credit card transaction fees.

Up until April, Sacramento State didn't pass any of those transaction fees onto students and was paying more than $600,000 a year out of its own pocket, said campus spokeswoman Ann Reed. As state budget cuts mounted, however, officials realized they had to stem the flow.

In June, Sacramento State rolled out CASHNet SmartPay, an online service offered by Alameda-based Informed Decisions Corp. that allows students to pay tuition bills with a credit card either over the Internet or with a touch-tone telephone. The service adds 3.15 percent on all credit card transactions.

The fee covers costs associated with the service, including software and training, technical support, administrative services and more, Informed Decisions Chief Operating Officer Nancy Banker wrote in an e-mail.

At least 15 CSU campuses -- including Sacramento and those in Hayward, San Jose and San Francisco -- also offer CASHNet SmartPay. CSU Northridge will implement a similar credit-card fee in fall 2005, according to information from the CSU Chancellor's Office.

Jack Azevedo, student financial services officer at Cal State Hayward, said the campus started offering the CASHNet option in 2003. Students who use the online option will pay a 2.9 percent convenience fee.

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A recent study of business travelers by international consulting firm Accenture revealed that 51 percent of them choose an airline based on its frequent-flyer programs and 25 percent cite rewards programs as a determining factor in where they stay once they arrive.

The question here is how to find the right program for you. Although a number of Web sites have credit card information, most are limited by corporate self-interest. You get information on one or two major credit card companies and no more, which lowers the odds that you will find what you want.

At the online Consumer Credit Cards Guide, the staff continuously monitors the credit card market and displays the offerings -- from every major company -- side by side so you easily can compare key factors such as interest rates, annual fees and other features.

From the left-hand column of the home page you can limit your search for deals based on low interest charges, instant approval, rewards, frequentflyer miles and other criteria. The "airline credit cards" section alone has 17 options to consider.

If you find a card deal that works for you, the Web site offers an online credit card application form. In some cases, a credit decision is reached within 60 seconds.

Don't be fooled by the simple, clean, almost austere graphic design of Travelconsumer.com. It's modeled after the Google and Yahoo! approach and shouldn't mask a wide-ranging collection of resources, advice, great writing and unbiased recommendations. Travelconsumer.com's Web-based discussion group provides an opportunity for travelers to share their adventures, recommendations and frustrations with one another.

travelconsumer.com

Mobissimo.com was born out of entrepreneur Beatrice Tarka's frustration with online flight booking. If no one else was willing to create a Web site that could yield instant airline price comparisons, then she would. Just type in where you want to go, the dates, class and type, and Mobissimo does the research for you, working through 55 providers. All for free. A test search for a roundtrip flight from Denver to London in economy class showed a range from $575.72 to $1,471.61.

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As mechanics tinker with a car engine to improve performance, so lenders are now doing the same with their own profit motors - your credit cards. The effects of this ferociously competitive market on margins has forced them to fine-tune customers' cashback deals, cutting the rates on offer.

Capital One has halved the cashback on its Circle Rebate card from 1 per cent to 0.5 per cent for existing and new customers. If you spend pounds 500 a month on the card for a year, you will now be losing out on pounds 30.

Last month, Halifax's One credit card chopped its cashback in half for new customers, from 0.5 per cent to 0.25 per cent.

Egg cut its cashback in April, from 0.5 per cent to 0.1 per cent - one of the most miserly rates on the market. However, existing customers were offered a second "blue" Egg card that still pays 0.5 per cent cashback, although its other terms are not so generous.

What's going on?

Egg says research shows that customers prefer 0 per cent deals to cashback, but Halifax has a more realistic answer: "The credit card market has changed, and we are pricing to stay competitive," says its spokesman, Alex Barnett.

Research from the financial information website moneysupermarket.com also casts doubt on Egg's findings. It says online applications for cashback cards are up by more than 200 per cent.

Credit lenders like to categorise customers, and those who favour cashback are labelled "reward seekers". By contrast, "chasers" looking to switch their debts hare after offers of 0 per cent interest on balance transfers, and "heavy spenders" simply want a card with a low annual percentage rate (APR).

Cashback can be a great perk. "You are in effect being paid to use a product," says Stuart Glen- dinning of moneysupermarket.com. "For people who clear their debt at the end of each month, it's almost madness not to use a cashback or loyalty card."

Cashback cards pay you for the spending you rack up each month, regardless of whether you pay it off straight away or not. Watch out, though; if you are slow to clear your debt and are not on a 0 per cent deal for new purchases, the APR cost will usually offset the cashback.

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The Privacy Leadership Initiative (PLI) today released its latest series of Internet public service advertisements aimed at educating consumers who are interested in learning more about how to protect their privacy online and offline.

The release of the latest wave of online ads coincides with National Consumer Protection Week (NCPW)(1) and ties into its theme of identity theft.

The four new ads arm consumers with information they need to protect credit card information, disable Internet cookies, eliminate unwanted emails and learn other effective privacy practices.

The ads are the second wave of a highly successful campaign launched last October between the PLI and the Interactive Advertising Bureau (IAB) that is expected to generate over 530 million impressions worth more than $13 million over 12 months. The campaign has generated hundreds of thousands of monthly visitors to www.understandingprivacy.org since the campaign began Oct 2.

"Our online ad campaign has been so successful we have introduced a new round of creative ads," said David Klaus, Executive Director of the PLI. "Our aim is to educate consumers and we are delighted to be able to tie-in our latest generation of ads to the celebration of National Consumer Protection Week."

A total of 26 IAB member companies plus Eastman Kodak have contributed the banner ad space and pledged ad space that could well exceed 600 million impressions for the year. Included in this second wave is another state-of-the-art, enriched media ad, designed to maximize consumer interest and encourage people to think about their own privacy.

The success of the online campaign has led the PLI to expand its privacy advertising campaign to radio and print. These campaigns are scheduled to begin in the spring and run for the next year.

The PLI has a number of initiatives underway to educate the public on the benefits to consumers when personal information is used responsibly by businesses and managed effectively by the consumer.

In addition to the consumer ad campaigns, the PLI has launched the Privacy Managers Resource Center; partnerships with several leading business organizations; conducted cutting edge privacy research with Harris Interactive polling; and underwritten a series of studies on the impact of restrictions on information.

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Customer Preference-based Model Drives Cross-Sell, Up-Sell Sales

Approach in Consumer Financial Services

Identity theft was the leading consumer fraud complaint in the U.S. last year, according to the Federal Trade Commission (FTC).

Accounting for 42% of all complaints to the FTC in 2001, the theft of someone's personal information is the nation's fastest-growing crime. Armed with consumers' personal information stolen from intercepted mail or carelessly discarded credit card receipts, crooks typically open false bank and credit card accounts, pass bad checks, or set up cell phone service.

In response to this growing trend, CompuCredit Corporation, a marketer of general-purpose credit cards and related fee-based products and services, has chosen to partner with Online Insight to help their customers pinpoint and select the fraud protection services best suited for them based on their personal preferences. Online Insight is the only provider of solutions designed to help companies consistently sell products and services more quickly, predictably and profitably by aligning products that match customers' personal preferences, at the point of interaction, across all channels.

"Identity theft has been sharply on the rise over the past several years with thieves becoming much more sophisticated in how they steal consumer data," said Gregg Mahoney, president and chief executive officer at Online Insight. "Through our sales and marketing effectiveness solutions, we want to help CompuCredit customers find the right resources to protect themselves and better manage their credit information."

In June, CompuCredit will launch an interactive e-direct campaign, powered by Online Insight, targeting over 100,000 of its Aspire(R) cardholders. The campaign will invite customers to select fraud protection products and services that match their unique preferences for features such as access to credit report and score, personal credit fraud alerts, protection from unsolicited marketing, credit education and annual subscription fee.

"We are extremely excited to be working with CompuCredit," said Mahoney. "We believe that learning what motivates their customers will help CompuCredit design and offer more beneficial products that will enhance customer relationships."

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Business Editors

Internet gaming companies could see their growth potential cut in half over the next year as major banks refuse to accept online gaming transactions, according to a new study by Bear Stearns senior managing director and gaming analyst Jason Ader. Growth rates in the industry could be sliced in 2003 from 43% to 20%, or to roughly $4.2 billion in total industry-wide revenues.

"This is a real challenge for e-gaming companies," said Ader. "Credit card transactions are their life blood, without them it will be tough for the sites to thrive."

Many large credit card issuers, such as Bank of America, Fleet, Direct Merchants Bank, MBNA, and Chase Manhattan Bank have already begun to block Internet gaming transactions. More recently, Citibank, which controls approximately 12% of the US credit card industry also joined in.

These moves by banks, as well as an unprecedented amount of negative sentiment toward the Internet gaming industry on both a state and federal level, could have several implications for the fast-growing e-gaming sector. According to Ader, market contraction, an accelerated shift to international markets and possible consolidation could all result. "While we have not yet scaled back our overall industry estimates, we may look to do so if we do not see a fundamental shift in operator business models in the near-term," concluded Ader, the author of two major Internet gaming research publications, including "E-Gaming: Endangered Species or Rising Star?" and "E-Gaming Revisited: At Odds With the World."

Founded in 1923, Bear, Stearns & Co. Inc. is a leading worldwide investment banking and securities trading and brokerage firm, and the major subsidiary of The Bear Stearns Companies Inc. (NYSE:BSC). With approximately $31.1 billion in total capital, Bear Stearns serves governments, corporations, institutions and individuals worldwide. The company's business includes corporate finance and mergers and acquisitions, institutional equities and fixed income sales, trading and research, private client services, derivatives, foreign exchange and futures sales and trading, asset management and custody services. Through Bear, Stearns Securities Corp., it offers prime broker and broker dealer services, including securities lending. Headquartered in New York City, the company has approximately 10,500 employees worldwide.

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TAMPA, FLORIDA, U.S.A., 2000 MAR 23 (NB) -- According to a new study of borrowers' online credit habits, many consumers routinely surf the Web for the best credit offers. But, when it comes time to apply, less than half of Web credit shoppers will use the online application. That's the key conclusion of a report released today by PSI Global, a company owned by NFO Worldwide, Inc. [NYSE:NFO].

Among the key findings of the PSI Global study of online lending is the fact that credit cards currently account for the majority of online credit applications.

"Consumers' willingness to apply for credit online differs widely among various types of products," said Roger Swales, PSI Global's president and CEO. "Consumers readily respond online to offers for new credit card accounts, but are far less willing to complete the more detailed applications required for other types of credit, such as mortgages," he said. One of the reasons, Swales explained was that, "consumers want assurance that their personal financial information will be handled in a secure, confidential manner."

The study identified price and the lender's reputation as two key factors in creating a greater consumer willingness to complete credit applications online. Eighty-three percent of online consumers surveyed responded that saving money would motivate them to apply for credit online, while an almost equal number (80 percent), said that an offer of credit from a known and trusted provider would be important in their decision.

"The importance of price is undeniable, and relationships matter in the online space," Swales said.

However, the basic fact remains that the percentage of people who actually apply for credit on the Internet is not that impressive. The study found that only 47 percent of Web credit shoppers actually applied online. Of this percentage, 61 percent of shoppers for a credit card completed an online application, while only 23 percent of people who researched mortgage loans applied online. The fewest percentage of people applying for credit online were those who were looking for an auto loan or a lease.

According to Maria Erickson, PSI Global executive vice president, research, the study's findings show that consumers were divided in their preference for a high-tech versus a low-tech approach to lending, with almost as many online credit shoppers preferring to complete the application face-to-face as using the automated online process.

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A survey by CyberSource Corp, a provider of e-commerce transaction services, has revealed that 75% of Internet merchants are worried about credit card fraud, yet 41% don't know that they are held liable when online fraud occurs.

The research, which questioned over 100 web-based businesses worldwide, found that online merchants were most concerned about consumers' lack of confidence, followed by stolen credit cards, unauthorised access to customer information, hacking and chargeback fees. Of the respondents, 72% believed that sales would increase if online shoppers were not worried about fraud, while 74% expected online fraud to increase this holiday season.

Supporting this warning is E-commerce specialist TrustMarque, which has said that Internet credit card fraud over the Christmas period could cost them millions of pounds.

BMRB research indicates that the number of British consumers shopping on-line over the holiday period will increase by an extra 2.4 million - compared with 4.8 million shoppers during the first eleven months of the year. There is a risk that up to 8% of the total revenues from these transactions could be fraudulent, says TrustMarque, and retailers, as well as being liable for the transactions, are charged a fee by the credit card companies each time.

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