Copyright violations

[alzheimer@juno.com (Ronald Raygun Remailer)]

Financial Times: Tuesday, November 9, 1996 
 
Visa Set to Test 'Electronic Purse' 
 
By George Graham
 
Visa, the international payments card consortium, has picked Leeds for a
trial
next year of its electronic purse, a plastic card with an embedded
computer
chip which can be loaded with cash and used for small purchases.
 
The Visa Cash card was launched last year in the US and widely promoted
this summer in Atlanta during the Olympic Games. Other pilots have been
launched in Argentina, Australia, Canada, Colombia, Hong Kong, New
Zealand and Spain. 
 
The card will clash directly with the UK-developed Mondex card, another
electronic purse about to be taken over by MasterCard. 
 
Mondex is currently on trial in Swindon, and at the universities of
Exeter and
York, and a Hong Kong trial was launched this week. 
 
Visa Cash will be launched by Abbey National, Barclays Bank, the
Co-operative Bank, Halifax Building Society, Lloyds TSB and the Royal
Bank of Scotland.
 
Visa said it did not expect banks to charge customers for the empty card
during the pilot. It hopes that 2,000-3,000 merchants will accept the
card. 
 
Electronic purses are designed to act as a substitute for cash for
regular
purchases such as newspapers or bus tickets. 
 
Because the money is already loaded on the card, a shop can accept it
immediately without a signature or a personal identification number, and
without a telephone call to the bank's computer for authorisation. 
 
That makes them economical for much smaller transactions than a credit or
debit card would be used for. 
 
But ordinary bank cards will soon also contain a computer chip. The
Association for Payment Clearing Services, which runs the UK's payment
systems, plans to start chip card trials next October in Bristol,
Edinburgh and
Northampton. 
 
Banks could start replacing the UK's 90m magnetic strip cards with chip
cards by next summer. 
 
The initial purpose is to produce a card that is harder to counterfeit
than
today's magnetic strip cards. 
 
But extra security features such as electronic signature recognition or
even
biometric keys -- retina scans or palm prints -- could also be loaded on
to
the chip. 
 
Plastic card fraud losses have halved in the last four years to #83.3m
last
year, and many banks now doubt whether chip cards will cut fraud by
enough to justify their extra cost. 
 
But bankers are also intrigued by the potential for using the chip to add
extra
services to their payment cards. 
 
 
American Banker: Wednesday, November 13, 1996
 
Mellon Starts Internet-Based Corporate Service
 
By STEVEN MARJANOVIC
 
Mellon Bank Corp. has launched an Internet-based electronic commerce
service for its corporate customers. 
 
The service, which uses encryption and authentication software from
Premenos Technology Corp. of Concord, Calif., lets corporate customers
send payments and related information to the bank over the Internet using
standard electronic data interchange formats. 
 
The deal is a new example of how banks are slowly growing more confident
about the security of sending sensitive payment and business information
over
the public network. 
 
Mellon says it is confident it can conduct secure transactions over the
open
medium after a six-month "testing" phase of Premenos' security features. 
 
The goal of the pilot was to "try to kill the software," by cracking its
public
key-private key data encryption features, said Mauro DeFelice, manager of
security and technical services at Pittsburgh-based Mellon. 
 
"We wanted to make sure we knew what our risk was," he said. 
 
A rising number of banks are looking to use the Internet as a channel for
corporate banking transactions. 
 
The attraction, according to Lawrence Forman, cash management analyst at
Ernst & Young, is that the Internet is much cheaper than alternatives,
like the
automated clearing house network or value-added private networks. 
 
But he said not all banks are comfortable with the Internet yet. Further,
he
questioned whether Internet security issues have been adequately
addressed,
and noted that many institutions, like Citicorp, remained "very wary of
it." 
 
Encryption measures are still relatively new technologies, Mr. Foreman
noted, and "as volume picks up, the incentive for criminals to break
these
algorithms will grow," he said. 
 
Several banks send and receive EDI payment transmissions over the
Internet,
including BankAmerica Corp., and Banc One Corp. 
 
Chase Manhattan Corp. recently struck a deal with Premenos to conduct
EDI transactions with Diamond Shamrock Inc., an oil refinery based in San
Antonio, Texas. 
 
Mellon's first customer for its new service is Bell Atlantic Corp. 
 
Mellon now issues as many as 10,000 payment and payment-related
transmissions daily. The bank receives files via the Internet, processes
them
with its EDI translation system, and initiates ACH transactions, Fed Wire
electronic funds transfers, or issues checks. 
 
Mellon has offered customers EDI services using payment formats found on
the ACH network for five years. The Internet's advantage, aside from its
ubiquity, is cheaper transmission rates. The deal between Mellon and
Premenos is mutually beneficial. 
 
Mr. DeFelice said the bank, which licensed Premenos' software at a
discount, can offer competitive EDI services to a larger market of
business
customers. Premenos gets access to Mellon's extensive corporate customer
base. 
 
Bell Atlantic at one point wanted to develop EDI software for the
Internet
with Mellon. But it scrapped those plans, opting instead to use software
Premenos had already developed. 
 
  
 
Financial Times: Tuesday, November 12, 1996
 
US Lawyers Turn to Fraud-Busting
 
In murder mysteries, getting rid of the body is the biggest problem.
Fraudsters face a different dilemma: they need to lay their hands on the
spoils
once the hue and cry has calmed. 
 
Two American lawyers have set up a company to prevent them doing just
that. Mr Irving Cohen and Mr Martin Kennedy believe there are enormous
opportunities for recovering money taken illegally. 
 
"The US Treasury has estimated that $ 500bn of off-shore funds are assets
protected from creditors," says Mr Kennedy, who has worked on bad debt
recovery with banks such as CIBC and Bank of Tokyo. The reason the
money is not recovered, he says, is because "there is no understanding
that
deliberately hidden assets can be recovered." 
 
Interclaim plans to take advantage of that with a form of global
factoring. It 
is looking for debts worth at least $ 5m, and with an average value of $
20m. 
 
"This is a completely new kind of company," Mr Kennedy says, "but it is
going to open up a field where there is going to be competition in five
to 10
years." 
 
The reasons large sums lie unrecovered are a combination of financial
services regulations and psychology. A bank faced with a probable bad
debt
is legally required to make provisions, but that act moves the debt from
a
profit centre to the bank's recovery or special loans department. 
 
More crucially, once the provision has been made, the bank and its
shareholders have already accepted the loss; it is written into the
accounts
and the impetus to pursue it is lost. "Institutions have lost their faith
in
traditional methods of recovery," Mr Kennedy say. According to KPMG,
the accountants, such methods usually recover 2-4 per cent of the debt;
Interclaim believes its recovery rates will be closer to 20 per cent. 
 
Part of that success will come from its "find, freeze and settle"
philosophy. It
aims to find the money and freeze the assets, thus immobilising the
fraudster
and bringing him to the settle ment table quickly. 
 
"These individuals are not interested in complying with the rule of law,"
Mr
Irving says. "And we are not interested in grinding through the
legislation for
five or 10 years. If we find someone whose 12-year-old daughter has $ 10m
in her bank account, we can be sure she didn't get that from a paper
round." 
 
The philosophy relies on an understanding of the fraudster and his
assumptions. He is, says Mr Kennedy, not only cunning but arrogant; he
regards his victims with derision. But criminals are also usually
pragmatic. So
when faced with an adversary who outwits them, they capitulate quickly. 
 
Interclaim either buys claims outright for between 0.5 per cent to 6 per
cent
of their value, or works with the institution in a joint venture. It will
spend
between $ 250,000 and $ 500,000 to enforce and prosecute a claim, though
the cost of recovery bears no relation to the size of the claim.