Thursday August 24, 1:16 pm Eastern Time

Press Release

One Time Card Number System Protects Financial Institutions and Consumers From Online Payment Fraud

BOCA RATON, Fla.--(BUSINESS WIRE)--Aug. 24, 2000-- MerchantOnline.com (OTCBB:MRTO - news; Frankfurt:WKZ928256) and (Berlin:WKZ928256), provider of secure credit and debit card processing for Internet e-tailers today announced a revolutionary, patent-pending technology designed to change the way consumers transact with merchants on the Internet.

This advanced easy-to-implement technology allows processors such as First Data Corp. (NYSE - FDC) and banking institutions such as Citibank (NYSE - C), MBNA (NYSE - KRB), Bank of America (NYSE - BAC), ABN AMRO (NYSE - ABN), Bank One Corp (NYSE - ONE), and Chase Manhattan (NYSE - CMB) to enable their merchant and credit/ATM/Debit card base over the Internet.

This system protects the consumer from the possibility of a card number being intercepted over the Internet or stored on merchant databases and protects the merchant from the liability of storing and protecting sensitive personal and financial data. As a result, chargebacks and fraud will be significantly reduced.

PC Pay® Agent is activated on the consumer's computer when he or she installs a PC Pay swipe terminal. PC Pay Agent populates the merchant's payment screen with a one-time use card number that routes the encrypted card data to the appropriate processing center. MerchantOnline's system then decodes the data and sends an approval code to the merchant. It provides the major credit card companies such as American Express (NYSE - AXP), VISA, MasterCard and Discover (NYSE - BDJ) the tools they need to truly protect their credit card numbers from being resident on unsecured databases and computer systems.

``Recent studies indicate that more than 35% of the population will not put their credit card number on the Internet. Other studies indicate that Internet credit card fraud in the US is 12 times that of real world merchants,'' said Tarek Kirschen, president and CEO, MerchantOnline. ``PC Pay Agent is intended to significantly reduce the amount of money that banks and merchants lose by virtually eliminating this type of fraud from both the consumer and the merchant sides. Furthermore, although many Internet security developers claim to be working on various systems and solutions to solve fraud issues, MerchantOnline's system is the lowest cost solution we know of. It is virtually compatible now with all online credit card processors and can do ATM transactions as well. Our system does not require any private Intranets or expensive hardware costs for integration and will be priced economically for everyday consumers. Furthermore, due to its inherent compatibility, it may also be incorporated into existing system infrastructures as a `security adjunct.'''

``One of the primary obstacles to the implementation of previous e-payment mechanisms has been the requirement to integrate with the hundreds of e-Commerce platforms. The PC Pay Agent eliminates this requirement, enabling all of the financial institutions, merchants or cardholders to participate,'' said James Gitney, chief operating officer, MerchantOnline.com.

MerchantOnline.com and Cardservice International recently announced an agreement to utilize and co-market each other's services by integrating PC Pay®, the patented encryption card swipe device and smart card reader, with Cardservice International's state-of-the-art LinkPoint Secure Payment Gateway. Developed by MerchantOnline.com subsidiary Innovonics, PC Pay incorporates patented ``next generation'' encryption technology using bank ATM network standards. The swipe device, similar to those used by customers in retail stores and gas stations, plugs into home or office PCs to accept ATM, debit, credit and smart cards. Unlike other encryption technology for PCs, card data and personal identification numbers (PINs) are encrypted within the secure device before entering a computer, offering a higher level of security.

About MerchantOnline.com

Founded in December 1997, MerchantOnline.com provides a secure transaction network that enables businesses and consumers to use one payment system for both their real world and virtual world needs utilizing credit card, ATM/debit card and other payment programs. For more information see www.MerchantOnline.com.

Innovonics, a subsidiary of MerchantOnline.com, was founded in 1991 and has customers in over 45 countries and patent coverage in over 50 countries. Innovonics' customers include many large banks, credit unions, e-commerce companies, computer and software companies, and the U.S. Government. For more information, see www.Innovonics.com.

Except for historical matters, the matters in this press release are forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements reflect assumptions and involve risks and uncertainties, which might affect the company's business and prospects and cause actual results to differ materially from these forward-looking statements.