Frequently Asked Questions

Q: Why do I need a Pocket Vault?

A: Convenience and security. With today’s reliance on credit and debit cards, it is sometimes difficult to keep track of what’s in your wallet, and what’s in your accounts. Pocket Vault can reduce the clutter and help you manage your funds, putting information about balances, credit available and number of transactions right in the palm of your hand. Pocket Vault is easy to use, and with its fingerprint-based security system, you will never have to worry about your credit cards being stolen again.

Of course, there are many other reasons you will want to own the Pocket Vault. For example, if PV owners choose to, they can receive discounts and other promotions from retailers and media issuers, and have those available "in their wallets" at the touch of a button.

Q: The technology you talk about using in the Pocket Vault sounds rather far-fetched. Are you sure this is doable?

A: All of the components for the Pocket Vault (e.g., fingerprint reader, mag-stripe emulating filament, on-card displays) are commercially available, tested technologies that are in use today in other applications. For example, fingerprint readers that connect to PCs to provide security are available from several companies. From an engineering perspective, our main challenges relate to “packaging” these components in a unique way, and for a unique purpose. We are not trying to invent any new technologies.

Q: Where can I use the Chameleon Card?

A: The Pocket Vault System and Chameleon Card can be used at any ATM, cash register, or other terminal that works by reading a magnetic strip. Because it does not require merchants to upgrade their systems, the Pocket Vault can be used in all of the same places you use your ordinary credit cards!

Q: What can I store on my Pocket Vault?

A: Any card with a magnetic strip, bar code or smart card chip, as well as certain digital files.  Here are just a few things your Pocket Vault can hold:

• Credit Cards (MC, Visa, AMEX, Discover, Diner’s Club, etc.)
• ATM Cards
• Store Discount/Preferred Customer cards
• Library cards
• Auto club cards
• Frequent flyer cards
• Video rental cards
• Digital family photos
• Digital business cards

Q: What happens to my fingerprint when I set up the Pocket Vault and each time I turn it on?

A: When you set up the Pocket Vault the first time, before any cards can be loaded, you set yourself up as the owner of the Pocket Vault, including putting two fingers (one at a time) on the fingerprint reader. The fingerprint reader, using sophisticated software, records unique characteristics of each finger's print and stores them locally on the Pocket Vault. Once completed, the fingerprint reader verifies that you alone can access your wallet information when you want to use it.

Q: Is my fingerprint information secure?

The fingerprint information required to turn on a Pocket Vault remains resident on an individual's Pocket Vault and is NEVER transmitted or stored anywhere else.

The fingerprint security, in turn, protects the individual from exposure to identity theft issues that consumers may confront when they have a traditional wallet stolen.

Q: How do credit cards and debit cards get loaded onto the Pocket vault?

A: Credit and debit cards can only be loaded to a person's Pocket Vault while the Pocket Vault is docked to a PC or Mac and the legitimate owner of the Pocket Vault has established a secure Internet session. Cards are loaded one-by-one by dipping them into the Pocket Vault card slot. The information is then verified with the original card issuers that all cards the consumer is attempting to load are owned by the person doing the loading and are active cards in good standing. If the card information passes the verification test, the card info is then remotely loaded onto the Pocket Vault, without further action by the consumer. The security and simplicity of our loading process are two of the elements that impressed card industry executives.

Q: So if you tried to load a visa card into the machine it would ask visa for the customer's name and make sure it matched the name of the person who owned the vault?

A: Yes, that is part of it. Essentially, key identifying information used by the card issuers in regularly identifying you when you call them, will be requested during the Pocket Vault setup process and input by you on your PC for use in the verification procedures. This may include your providing mother's maiden name, social security number, and billing address to complete the initial verification with the card issuer and loading of your cards into the Chameleon Network Pocket Vault. The password/security information will not be stored by Chameleon Network unless you request us to do so.

Q: How is Pocket Vault powered? Will I have to recharge it often?

A: Pocket Vault is powered by a rechargeable lithium battery. If you use your Pocket Vault frequently, you will probably need to make sure you recharge the battery about every 6 weeks. There will be a power meter that will let you know when your Pocket Vault battery is running low.

Q:  I have concerns about privacy issues and wonder how the Pocket Vault will be accepted by consumers, given those concerns.  How are you addressing growing public awareness of privacy issues?

A:  There are several privacy issues that relate to Chameleon Network, including the one you asked about.  Let me briefly cover them, since they are inter-related:

Privacy Regarding Identity Information
The fingerprint information required to turn on a Pocket Vault remains resident on an individual's Pocket Vault and is NEVER transmitted or stored anywhere else.

The fingerprint security, in turn, protects the individual from exposure to identity theft issues that consumers may confront when they have a traditional wallet stolen.

Privacy Regarding Wallet Media Information
The wallet information stored on a Pocket Vault is NEVER stored on the consumer's PC where it could be accessed by unintended persons.

The wallet information stored on our database and accessible through our website will have security systems similar to those used for the Federal Reserve Bank's interbank transaction network.  Access to this information will be limited to the specific consumer who "owns" their own information, with two limited exceptions:

1. To the extent a Pocket Vault Holder "opts in" to certain marketing offerings (there are 4 levels of 'opt in'), CNI may have access, not to the individual account numbers, but to the fact that a particular consumer has and makes use of a certain type of wallet media.  If the consumer does not opt in, Chameleon Network will not even have access to this profile information.
2. If a consumer loses her Pocket Vault and needs a temporary retail authorization using a piece of wallet media stored in her profile, the consumer may call our 800 number and provide the information necessary to achieve one-time access to reveal this information, so that we can validate it to a retailer (e.g., to a hotel check-in desk).

Our ability to deliver the required level of security on our website is critical to our success.  There are only two viable software partners to do this for us.  One is SRI, which did the Federal Reserve Bank System work.  A second firm, based in Virginia , is the primary security contractor for the US Treasury.  We have already had initial conversations with the Fed about SRI.

Providing the security is only part of the equation.  Gaining consumer confidence is the other part.  We do not intend to build a new brand that will be magically endowed with this level of consumer trust.  It is more likely that consumers will put their valued wallet information with the same people who hold their precious belongings in a safe deposit box -- their banks.  Pocket Vault holders are likely to access our website/database through their existing banks.  For example, a Wells Fargo customer would go to Wells Fargo's website and click Pocket Vault update. The web page banner would say Wells Fargo throughout the customer's on-line session, although he they would be interacting with our website. During that session the customer could update/access all his wallet information.

While the information is on the Pocket Vault it is protected by the fingerprint.  While the data is en route over the Internet, it will be encrypted using state-of-the art encryption. While the data is stored on our database, it will be protected by firewalls and security structures similar to those used by the Federal Reserve (which, incidentally, uses an HP technology called Virtual Vault).  This is one of the reasons we have higher software costs budgeted than a typical dot.com.  If you did not already notice this, our Chief Technology Officer has done encryption security work for Visa and MasterCard in his work at Arthur D. Little, a technology and management consulting firm.

Q:  Some card issuers such as American Express have offered customers free smart card readers that attach to PCs.  Does this affect the attractiveness of the Pocket Vault?

A:  We see this as a really good thing.  One of the key obstacles for smart cards is the inability to know what value is on the smart card before and after a purchase.  Certainly being able to read smart cards at home is useful, but the PVS offers two advantages over simple smart card readers:

1. The Pocket Vault will read smart cards not only in the home, but also at POS, in fact, anywhere.
2. Once we sell the idea of the PV, the banks will not have to make and sell readers; they can simply utilize the Pocket Vault infrastructure.  This presents another cost advantage for them.

Q:   Does the prototype say Pocket Vault on it? Hope so, but I don't see that or a logo on the picture anywhere.

A:  No... Given this environment we have decided that building a brand is not the best way to launch the business.  We will leverage our partner's brands.  Citi may call it the CitiVault, Bank of America may call it AmeriVault, etc.  Generically, we call it the Pocket Vault as Microsoft calls things PocketPCs but HP calls their PocketPC an iPaq.

Q:  I think the idea that consumers will shell out money to buy this device is a stretch. It is interesting technology, but the go-to-market model is shaky. However, I confess one of my colleagues says she is ready to pay for it  (about $25?), so that her credit cards couldn't get stolen.

A:  Most of the investors we speak to are not in our target market.  The Homemaker market is our sweet spot.  Homemakers see the utility in the Pocket Vault and continually tell us they want it.  But, from our 'go to market' strategy, a few points:

1. A substantial number of the units are likely to be provided to consumers free-of-charge, or at substantially reduced cost,  by financial institutions or large employers.
2. A significant number of the 'units sold' will be licensed functionality incorporated into other platforms.  The cost of integrating this functionality is modest, as compared to the total cost of the other platforms.  Consumers will pay very little, if anything, for the functionality delivered in this fashion.  
3. Consumers today routinely pay up front and ongoing costs related to their wallets.  For example, consumers buy traditional wallets that cost from $20-$100.  Many frequent business travelers maintain multiple wallets and/or supplement their wallets with planners and other items to hold business travel cards.  Consumers also buy devices to store family photographs in the purses.  And consumers routinely pay for credit card usage, for credit card security, travelers check fees (think of them as debit card security fees), and card cancellation/replacement services.

Q:  My primary question concerns how the anticipated slowdown in the economy is affecting the level of enthusiasm of those companies that have shown an interest in the product.  Have you noticed any shift in attitude?  What are your thoughts about how the economy will affect interest in your business?

A:  To answer your question, the slowing economy has not yet had any apparent effect on the investment plans of our major potential strategic partners (though it has affected some smaller investors).  But frankly, it is too early to see much of an effect.  The fact that our major potential partners have not yet indicated any consequence on their ability to fund our efforts does not mean it will not happen in the months ahead.  However, we believe that the slowdown in the economy will affect us in mostly positive ways.  To help make sense of the probable ways a slowing economy will likely affect us, let us describe four groups of potential strategic partners, the first two of which are critical to our success:

1. Financial industry companies (banks, for the most part),
2. Computer manufacturers/consumer electronics computers,
3. Venture Capital, and
4. Angel and other Seed Round investors.

Financial Industry Companies
Banks would likely benefit from a moderate downturn (because of declining short-term interest rates paid to depositors, while much of their existing commercial and residential loans are fixed rate).  Also, declining rates result in refinancing transactions that generate fees.  In addition, a declining economy heightens the need for better control of credit card fraud and credit card loss limitation control, both of which we can provide with the Pocket Vault.  Banks make very few strategic investments of the sort we represent.  We do not see a downturn, even a strong downturn, changing the amount of money a bank would be willing to invest.  Further, we need the agreement of a bank as a strategic partner more than we need its money.  That is, if we signed 1 or 2  financial industry strategic partners, we would have no difficulty raising the funding from other sources.

Computer Manufacturers/Consumer Electronics Computers
These companies are actually being hit by two negative forces, a slowing economy, and the lack of any compelling need for computer users to upgrade to better/faster computers.  In short, they lack a compelling product at the moment.  The slowing economy will likely reduce overall capital spending and venture type investments by these companies. However, such spending will diminish, not evaporate.  For this reason, it helps greatly that we are not yet another dot-com with a plan to sell dog food on the internet.  We believe there are several reasons why even strapped-for-cash computer companies are likely to invest in us over the next 6 months:

1. Reduced budgets are still looking for smart investments.  Computer companies will shy away from questionable business plans. However, they will continue to invest, even if at lower levels.
2. CNI presents a better risk/reward ratio. High-risk/low-gain ventures are not likely to be funded during this period.  Chameleon Network is a moderate-high risk, very high-gain venture.  
3. Our PVS technology can boost consumer electronics sales. Chameleon Network's offerings will:
1. Breathe new life into an existing, stale set of product offerings.  
2. Encourage on-line shopping and thereby accelerate the growth in the number of web users
3. Provide another reason for upgrading consumer Internet connections
4. Create a clear roll-out path for wireless communications technology into the retail setting, thereby accelerating wireless acceptance.

Venture Capital
This group has been hit hard over the last 6 months.  The drying up of the Venture Capital (VC) funds, partly as a result of their questionable dot.com investments, will cause the VCs to be much more selective about their next wave of investing.  Thankfully, we are not a dot.com.  In addition, VCs continue to attract new capital.  However, even if new capital infusions slow, the existing funds of those VCs we are talking with (with one exception) already have ample capital to back our First Round.

Angel and Other Seed Round Investors
The slowing of the economy and subsequent stock market decline has both hurt and helped us with this group.  On the one hand, some potential investors have lost so much of their portfolio value that they are not able to invest in us.  Others, having lost considerable amounts in technology stocks generally, realize that some of their other investments were much riskier than they realized.  As a result, the risk/reward profile of Chameleon Network, appears noticeably enhanced by comparison to other investment options.

Q: Will the Pocket Vault support the new MasterCard/VISA/AMEX RFid payment standard, which MasterCard refers to as PayPass?

A:  Yes.  The basic Pocket Vault with no technical changes will support this technology. The Pocket Vault provides a low cost implementation of this technology that minimizes any banks' need to manufacture these cards.

Q: How does the announcement that Palm and Verifone partnered to use Infra-Red (IrFM) technology in new POS devices to enable Palm Pilots to act as wallets affect you?

A:  Its a great announcement for us.  As you know, timing to market is critical for a business like this to succeed.  When announcements like this create interest and demand in the market for electronic wallets it is good for us.  And the fact that Palm and HP (parent of Verifone) paid for this education is excellent.  But as described below our competitive advantage positions us well to benefit from their efforts.

1. From the very start of the CNI concept we shared the same basic vision as those involved in IrFM-- a POS environment that is e-wallet enabled without the use of plastic
2. From the very start its been our intent to include Infra-Red capability in our e-wallet with a roadmap that includes a migration to Bluetooth (should the industry move in that direction)
3. The IrFM initiatives validate our belief that we are catching the wave early rather than bucking it.  Our business plan goes one step beyond in a material way that we think leads to our competitive advantage. While the path mapped by IrFM must wait until all POS terminals are IrFM enabled (there are approximately 20 million POS terminals in the U.S. ), CNI will enable cardholders to use their e-wallets at all existing and new IrFM enabled POS terminals from day one.

By the time the vast majority of POS are IrFM enabled, CNI will be an established company with a majority and defendable stake in the segment.

Top

If you have a question that is not answered by the information provided on this site, please let us know