VHSN: .15x.18, SmartCard, starting to run
Sympathy play with EISQ
Business Editors & Technology Writers
MISSISAUGA, Ontario--(BUSINESS WIRE)--May 20, 1999--VHS Network
(OTC BB:VHSN) announced today that according to recent reports, a
group of payment companies, including Visa, are working to create a
standard specification for smart card readers. The readers will allow
customers to use smart cards for electronic commerce and Internet
banking services across Europe. According to the research company
Datamonitor, Europe leads the world in smart card spending with almost
$1 billion expected to be spent on new projects in 1999. More than 80%
of the smart card market, which looks set to exceed $3.5 billion by
2002 is centered in Europe (Source: Reuters 1/26/99).
"Even though Europe is far ahead of the United States, we believe
that once major companies learn about the benefits of smart card
technology, the U.S. will catch up with Europe very quickly," says
Elwin Cathcart, president of VHS Network. VHS Network Inc.
(OTC BB:VHSN) recently entered into a major agreement with Groupmark
Canada Ltd., to exclusively license its SmartCARD(TM) technology in
the U.S.
According to Cathcart, increase in Internet usage will fuel the
rapid expansion of SmartCARD(TM) technology in the U.S. "Banks and
other major financial institutions have a growing concern over the
vulnerability of the magnetic strip cards to fraud. With the growing
use of card transactions over the Internet, the concern becomes even
greater. SmartCARD(TM) technology effectively eliminates most of these
safety fears, making it the ideal method of payment for Internet
transactions. And since the Internet market penetration in the U.S. is
much higher than in Europe, it should be just a matter of time before
the SmartCARD(TM) market will explode in the U.S.," Cathcart explains.
But SmartCARD(TM) technology is not just for the Internet.
SmartCARDs store up to 8,000 characters of valuable information, vs.
125 characters in a typical magnetic charge card, making them an ideal
choice for retail loyalty card programs and charge and debit cards.
SmartCARD(TM) can also act as a preloaded electronic purse.
Many grocery and convenience stores already have loyalty programs
in place. Cardholders get additional savings when they purchase
certain advertised items. SmartCARDs can take these programs one step
further. Because of the huge amount of information that can be stored
in your card -- and not in the retailer's information system -- your
card is practically a portable database.
"The retailer can offer instant point of sale special promotions
on high-margin merchandise or instant rewards or gifts based on your
past consumption patterns. They can use the system to increase both
the average order size as well as the total amount of monthly
spending. Stores are able to attract more repeat business, and even
decrease the importance of advertising low prices to attract
customers. In fact, with SmartCARD(TM)-based loyalty programs,
retailers can do individualized marketing within the store without
ever posting sale prices on store windows or walls. This makes it
harder for the competition to know what and how much the store is
discounting," explains Cathcart.
But it is not just the industry that benefits from VHS Network's
SmartCARD(TM) technology either. "Loyal customers will benefit by
getting additional discounts on the items that they have a track
record of being interested in. Consumers own their consumption
profile. That can be a powerful tool," says Cathcart.
Because the information is accessed instantly and further data is
collected without linking to a network, SmartCARD(TM) is also
extremely cost-efficient. The retailer can load updates on the central
database just once a day.
However, SmartCARD(TM) may not be for everyone, at least in the
beginning. As with all new technologies, a certain demographic segment
typically adapts the technology in its early stages. "SmartCARD(TM)
technology seems to appeal most to 25-50 year olds, who already have
high expectations of advanced technology to simplify their lives. From
both VHS Network's and our client companies' perspective, this doesn't
matter. That demographic segment includes approximately 50% of the
population and the majority of the purchasing power," Cathcart says.
In Europe, credit card associations and banks are promoting smart
cards as a convenient and safe method of payment. "It really is a
win-win situation for everyone involved. Even though merchants will
have to buy a card reader that may cost $50-$400, they are relieved of
the safety risk of handling cash. Banks like the system, because they
can issue cards to people with a less than perfect credit records. And
customers can manage their credit better and don't have to fumble for
change for small purchases that normally couldn't be charges," points
out Cathcart.
VHS Network is one of the emerging players in the SmartCARD(TM)
market. Groupmark Canada, the licensor of SmartCARD(TM) technology,
has been a leading Canadian loyalty marketing firm for over 25 years.
Groupmark was the first company in North America to offer a service
totally dedicated to the implementation, marketing and management of
the SmartCARD(TM).
Certain statements in this release are forward-looking. Although
VHS Network (the Company) believes its expectations are based on
reasonable assumptions within the bounds of its knowledge of its
business and operations, there can be no assurance that actual results
will not differ materially from its expectations. Merger
Communications (Merger) is a media relations firm employed by the
Company. Statements and opinions presented here represent the views of
the Company, not Merger, as the release is based on information
provided by the Company. Merger and the Company believe that all
information in this release has been obtained from sources considered
reliable, but cannot guarantee that the statements presented herein
are accurate or complete. Merger's compensation for its media
relations services consists of a fee and stock. Merger can have a long
position in the securities of the companies in which it distributes
information for media use, and may be buying or selling securities in
the course of its regular business.
--30--SCP/ho*
CONTACT: Merger Communications, Houston
David Drake, 713/267-2328
daviddrake@earthlink.net |
