PAUL EGAN - FREESTAR TECHNOLOGIES INC (FSTI)
CEO Interview - published 12/17/2001

DOCUMENT # NAR618

PAUL EGAN is currently the President and Chief Executive Officer of
Freestar Technologies, Inc., following the acquisition of ePayLatina SA,
a company that has developed its own secure electronic payment solution.
Mr. Egan attended Terenure College, Dublin, in 1981, studied
Construction Management in Birmingham, England, and worked for Trafalgar
House Construction Division on major projects in London's banking
district. In 1992, he was recruited by the South African Firm ENGEN to
oversee its New Project Division after its acquisition of Mobil Oil
South Africa and to implement the new company's construction projects
and corporate identity. In 1997, Mr. Egan moved to Santo Domingo in the
Dominican Republic, where he became Vice President of Inter-Leisure, SA.
In 2000 he founded ePayLatina. 

Sector: INTERNET SERVICE PROVIDERS

TWST: Would you begin with a brief historical sketch and an overview of
Freestar Technologies.

Mr. Egan: ePayLatina was formed two years ago to counteract the credit
card fraud that was escalating here, especially in the Latin American
region and the Caribbean. ePayLatina worked with Banco Nacional de
Cr‚dito, a financial institution here in the Caribbean associated with a
major financial institution called GFN, which owns telecommunication
companies, insurance companies, Internet ISPs and various other
affiliates that could use an internal payment system and external
payment system for their clients. And ePayLatina did what no other firm
has done before. It went to the bank and requested from the bank what it
needed and suggested what form e-commerce payments should take. It's an
advantage to them and not something that we would push on them as a
speculative 'system for the future.' Together we decided that the only
secure form of payment that we could see over the Internet would be
credit card, debit card and ATM card transactions utilizing PIN codes to
allow the transaction to go directly to the bank, rather than the
merchant. Therefore, the client's financial data and information are
never seen or stored by the merchant. The transaction takes place from a
card-swipe terminal which plugs into the keyboard of the client's
computer. It is activated and programmed to contact the bank directly.
The bank will then accept the transaction and inform the merchant that a
transaction has taken place. Therefore, the security advantages are two-
fold: this system offers protection for the client from security fraud,
and it protects the merchant from charge-backs. One key is that this is
a 'card-present' transaction, which is a Visa and MasterCard
requirement. The second built-in security feature is PIN authentication,
to assure that the user of the card is the authorized user. It took us
one and a half years of testing and developing this software through the
banking system of Banco Nacional de Cr‚dito, which operates in a similar
way as the central banking system for the United States. We looked
further at North America and decided that we needed a partner. We had
numerous conversations and negotiations with SSP Solutions, evaluating
their encryption technology, and found that we had synergy between both
companies to introduce this product in the format of a complete system
integrated into a financial institution or in an embedded application in
their embassy chip, which is going to be distributed worldwide. This
gives ePayLatina the opportunity to distribute its software worldwide
without requiring the actual purchase of a card-swipe device. We then
proceeded to form strategic alliances with major ISPs, other banking
institutions, telecommunication companies; and in the securities
industry, we have formed an alliance with Gibraltar Clearing, which will
allow their clients to purchase stock from their brokers by using our
payment system, because it's a debit or cash payment using ATM or debit
with PIN authentication. And as you're aware, credit card purchase of
stock is forbidden both in the US and Latin America. Our relationship
with Gibraltar means we will be the first company with an e-commerce
solution that allows people to purchase stocks on the Internet using
their PIN-authenticated ATM and debit cards.  In connection with the
fraud that is associated with credit cards and now is widespread in
Latin America, the only parties that are actually being hurt by these
transactions via credit cards are the merchants, because the client and
the bank take no responsibility. Using our system, PaySafeNow, allows
the merchant to be assured that the transaction that takes place from
our terminal is a valid transaction, that he can release the goods
immediately. He is assured that his transaction is as valid as a cash
transaction and he knows where the transaction is coming from. That's
the brief description of ePayLatina. And in August of this year, to get
our product to market and to gain more investor awareness, we purchased
a shell company called Freestar Technologies. We recapitalized the shell
by merging ePayLatina into Freestar Technologies. Our stock symbol is
FSTI. We trade on the OTCBB at present.  And in the following weeks, we
have, together with SSP, which has a strategic partnership with EDS,
launched our PaySafeNow system at COMDEX in November. We feel that our
company is the perfect opportunity for investment. We are a young
company. We are out of our research and development phase and in full
operational mode now with a revenue stream that's based at present on
the Latin American market. Our partnership with SSP gives us global
access now, gives us the opportunity to enter into North America by
selling to merchant portals, banks and, more importantly, their client
base. Our card-swiped terminal is currently selling now for $60. In the
future, we hope to get our prices down to around $10-$12 per unit,
depending on volume.

TWST: Is anybody competing directly with you? Is anybody offering
anything similar to what you're doing?

Mr. Egan: Yes. There have been some companies that have offered similar
products. eConnect, Inc., out of California, is making a product similar
to ours. They call it the eCash Pad. This device is a credit-card swipe
device. It does not allow ATM and PIN transactions. They are utilizing
the VeriSign backbone just to pass on a transaction. And basically, we
would say they are a reseller for VeriSign. And there are other
products, such as PayPal and ActiveX card readers, but all of these are
utilizing a completely different system. A survey was carried out by
StarNet in conjunction with several major switch companies to do a pilot
program, where they had a disk-like device that would slip into the disk
compartment of your computer and activate a browser which would then
connect you to a merchant base. You could then enter your PIN number,
and a debit card transaction would be accepted. The reason this pilot
scheme was not successful was simple. Visa or Mastercard do not allow
PIN storage. And also the whole idea of their transaction was
concentrating on sending the transaction to the merchant, with the
merchant then asking the bank for the approval. At that point, between
the merchant and the bank, you see the scenario which is known to
everybody, the biggest security headache of the Internet right now:
hackers accessing that financial data and that client's information,
including PIN code. ePayLatina and Freestar Technologies have completely
circumvented that scenario. We've turned it around and kept the
transaction between the bank and client. Who is the trusted party here?
The trusted party is your bank. This is where we can claim to be, and
have proven to be, the only people in the world today to activate credit
card, debit card, and ATM card transactions over the Internet, where
you're transacting with your bank and not with your merchant.

TWST: Could you sketch out your game plan or your scenario for the next
two or three years?

Mr. Egan: Of course, our biggest objective is to enter the North
American market. I think we've set in stone our procedures to pursue
that by partnering with a company such as SSP. SSP, in conjunction with
EDS, is the second largest integrator of financial software in the world
and has signed a 20-year strategic alliance and joint marketing venture
with us to promote, distribute and integrate our system into the
financial portals, the merchant portals and the big corporations. And
going further than that, we found out that our product was not only
usable for the client. In conjunction with VisaNet and CardNet, which is
Visa and Mastercard, we are in two pilot schemes right now aimed at the
small business user, where volume is too low for Visa or Mastercard to
use verification machines. What they have decided to do is to take our
unit and distribute it to those small merchants, micro-cap businesses
where the volume wouldn't produce sufficient financial gain for them to
use a conventional machine. They're placing our unit, for a cost between
$100 and $150, in those premises. And they're capturing that transaction
volume, especially in the rural areas of Latin America and Western
Europe. We see big potential in that and we see in excess of over three
or four million readers being distributed to these small micro-cap
businesses by the Big Two, Visa and Mastercard.  Our game plan is not to
go after individual merchants, but to go after the institutions that
will give us the channels and distribution arms to get our product to
market. And I think we have gone a long way in that by partnering with
SSP, by partnering with Visa card and Mastercard. And we have got,
through our link with Banco Nacional de Cr‚dito in Latin America, access
and networks in 21 different countries in Latin American regions.  And a
big step toward our going forward is we signed a contract recently with
a company which is called La Nacional de Envios. This company is
comparable to a Western Union. This company has 30 years of presence in
the United States, Spain, Puerto Rico and Venezuela. And it concentrates
particularly on the ex-Dominican or Latino expatriate who lives and
works in the United States and sends money home on a regular basis. Of
record, $1.6 billion is transferred from the United States to the
Dominican Republic yearly, an average transaction of $160 per month. In
our contract, La Nacional and Banco de Cr‚dito and ourselves are
offering their clients the opportunity to place this unit in their home
for $60, so they can transact using ATM, debit or credit cards over the
Internet to send money down to the respective family members anywhere in
the country. Those family members don't have to proceed to a Western
Union office or an office of La Nacional. They can actually withdraw
that money, using their debit card, from any ATM network in the country.
La Nacional has 26 branches in the New York area, where 1.9 million
Dominican expatriates reside. And they have 300 agents all over the
United States and in Spain, Puerto Rico and Venezuela.  Our PaySafeNow
system is giving non-credit-worthy consumers a chance to use the
Internet in purchasing goods. A lot of people out there don't have
credit cards. But they do have ATM and debit cards. And while this is
true in America, it's especially important in the Latin American regions
and Western European regions where people are given a debit card
immediately upon opening a bank account. Our transaction takes
approximately 10 seconds. There is no typing of any of your financial
data, your credit card number, your expiration date, your mother's
maiden name, your date of birth. This is a simple transaction. It can be
seen on our Website at www.epaylatina.com. There are demonstrations of
it and our card units can be purchased from our site too.

TWST: Is it reasonable to expect that, apart from convenience, this
could stimulate the economy of the Dominican Republic?

Mr. Egan: We'd like to say that. We've encountered a concern that there
is not enough Internet usage in the Dominican Republic. And what we've
done in conjunction with the bank is that the bank is offering financial
packages to small micro-cap businesses and to clients, such as students,
who normally couldn't afford to go out and purchase a computer. They
have offered packages of payments over two years, and those packages
include our product. Our product is given with a PC, a printer, a card-
swipe device that we supply and all the software necessary to operate
the computer. And that package has grown from 160,000 users already to
200,000 users. The bank has placed an order with us for 30,000 units,
and we expect that to increase to 60,000 units before our second
quarter.

TWST: Can you give us some idea of the benchmarks or milestones that
investors should use to judge your progress over the next few years?
When will you start making money, etc.?

Mr. Egan: We feel that because of the way we've structured the company
and we recapitalized the shell company we merged into, our first
quarterly report was very important to us, to show investors the
credibility of our company. We asked Ernst & Young to come in and audit
our report for our first quarter, which was finished on September 30.
That audit, was released in November, does not show all the sales volume
that we have actually achieved and the orders that we have received from
the bank. Those orders will be reflected in our first quarter next year,
when we will show 5,000-6,000 units purchased. It will show that our
operational costs are very, very low due to the fact that we utilize the
distribution and marketing capabilities of our affiliates rather than
going out and doing it ourselves. So we intend to show a two-channel
revenue stream ' one revenue stream on the sale of our products and
another revenue stream on the volume of transactions that occur through
our units.

TWST: What difficulties or obstacles could lie in your way? What might
you have to worry about?

Mr. Egan: At first, we had the worry of encouraging the public out there
to actually purchase a unit, an extra device, a plug-and-play device, to
make transactions over the Internet. But with the economic conditions
right now, security is one of the most important aspects both for
purchasing on the Internet and elsewhere in our daily life. We feel that
our product is giving that client that added, extra confidence of
security, knowing that he is doing a transaction with his bank and not
with a merchant, since personal financial data is never seen nor stored.
We also feel that there's more and more credit card charges that clients
do not accept and fraud and complaints, so Visa or Mastercard themselves
are actually moving toward password authorization, PIN authorization,
with the ATM card as the form of payment. Because it's a cash payment.
It moves the money quickly. In fact, anybody using a debit card on our
system right now, if they have access to their bank via the Internet, as
soon as they swipe their card, they will see the actual transaction take
place in their own banking system.

TWST: Is there anything else you'd like to say about the relation of the
world situation or general economic and social conditions to what you
are doing and will be doing?

Mr. Egan: As I said, I can emphasize the security aspect. And with SSP,
we are going out there aggressively to market our products based on
security considerations. And I think that the people are accepting it
more and more. Our product was not received well at first because of the
disinclination of people to purchase something extra to make a payment
over the Internet. That scenario has gone away. People now know that by
taking security issues into their own hands, they are taking control and
not leaving the security question to the merchant or the Internet, which
is obviously open to fraud of all kinds. We feel that our product is
being accepted and that our company is going to thrive in this
environment. We feel that our stockholders are only going to benefit.
Our stock is trading now between $.25 and $.30. Our expectations are
between $5 and $6. And we hope, at that stage, when we can interest
institutions in our stock, that we will see great growth and great
growth potential in the future.

TWST: Could you give us a sense of what you might reasonably expect to
see for the company in the year 2004?

Mr. Egan: In the year 2004, our pro forma projections are running
currently now at $144 million in volume. That's gross revenue taking in
both transaction fees and product sales. We feel at that stage, we
should be a strong market contender against anybody out there. Because
we plan to be the first now in this market position. And we think that
being the first gives us the advantage. In fact, a February 2001 survey
of US consumers done by StarNet and partners quite clearly stated that
'first-come, first-served' applies here. This market is open to the
person who comes in first. And we claim to be first. We feel that our
stock has reflected that since we took over Freestar Technologies. We
feel that our alliances, our affiliates, our contracts we have in place
are putting us in a very, very strong position to go out there, to
expand and to gain access to all the other regions that we need to
access. We intend to place our services and our servers in each and
every country. We're very aggressive, we're very young and we offer the
investor a good opportunity at these prices.

TWST: Would you go back over the countries that you intend to approach?
You've got the Dominican Republic, then portions of South America. Then
you mentioned North America in the long run.

Mr. Egan: I mentioned Dominican Republic first because ePayLatina's
operations are here now because of our strategic partner, Banco Nacional
de Cr‚dito. ePayLatina is structured and the PaySafeNow system is
structured now so that it can grow territory by territory. For example,
we have 21 countries such as Panama, Guatemala, Bolivia, Brazil and
Argentina and most of the Caribbean countries that have contracted with
our bank to place our systems in these countries. Our next move, which
is already in progress, is with SSP and EDS, to enter the North American
market in conjunction with them. With myself and my brother and
colleague Ciaran Egan both being Irish, probably the natural instinct
would be to offer our services to Ireland. We have offered and set up
some negotiations, which will take place in early January. And Europe we
feel is a perfect opportunity for this, because in, for example, Russia,
Yugoslavia, Bulgaria, the incidence of fraud is so high. We are offering
an opportunity for institutional banks and ISPs and merchants in these
regions to allow themselves to start transacting over the Internet,
knowing that our PaySafeNow system will provide security.

TWST: Could you crystallize everything you've been saying and give us
the three or four best reasons why the long-term investor should be
paying close attention to you?

Mr. Egan: As I stated before, it's 'first-come, first-served.' We are
the first in the marketplace right now to offer secure ATM and debit
transactions over the Internet, cash transactions. We claim to be the
first in the market to allow both client and merchant to experience an
e-commerce transaction with zero fraud risk. We are fortunate to be
actually working with banks and with financial institutions to implement
their software. We are a company that believes in asking the client what
he needs. That's our strategy. We ask the client what he needs and we
produce for that client, and not on a cost basis, but in partnership. We
produce for the client on a basis that we know that we will develop it,
we will deploy it and we will utilize those clients and those
institutions as our marketing and distribution arms.

TWST: Is there anything that we've left out that you'd like to add, or
is there a closing statement you would like to make?

Mr. Egan: We have gone through two years of intensive research and
development and testing within the financial institutions. We have a
proven operational and working product today with security advantages
built in, which I don't think many companies in this space can claim.

TWST: Anything further?

Mr. Egan: I would just say that our revenue stream will dictate our
stock prices, obviously. And we feel very, very confident that we can
reach our milestone targets of $3 to $5 within the coming months.

TWST: Can you give us some sense of how you developed your thinking and
what in your background led you to this?

Mr. Egan: My background is in construction and in the entertainment
industry. What led me to this was that my own fear of putting my credit
card information over the Internet led me to believe that there had to
be alternatives to enter this explosive growth market, the e-commerce
market. And I also thought about why has it just got to be the Internet,
brick and mortar, or brick and click, as we say? If you have a shop and
you have an Internet Web page, you can utilize both. And if you have
both, why not develop a device that can actually allow you to accumulate
revenue? Our concept was to offer consumers and merchants a card-present
transaction. Card-present transaction capability, which is a very
important concept, complies with all the Visa and Mastercard standards.

TWST: Thank you. (MC)

PAUL EGAN
 President & CEO
 Freestar Technologies, Inc.
 Avenida 27 de Febrero
 Esq. Tiradentes Plaza
 Merengue 2 Do Piso
 Suite 202
 Santo Domingo
 Dominican Republic
 (809) 732-5911
 www.epaylatina.com
 e-mail: info@freestartech.com

Each Executive who is the featured subject of a TWST Interview is
offered the opportunity to include an Investors Brief or other highlight
material to be provided and sponsored by and for the company. This
Interview with Paul Egan, President & CEO of Freestar Technologies ,
Inc., is accompanied by an Investors Brief containing corporate
information.

Copyright 2001 The Wall Street Transcript Corporation
All Rights Reserved


The Wall Street Transcript (TWST) interviews are published verbatim, and TWST does not in any way endorse or guarantee the accuracy of any information or opinions expressed herein and all opinions are subject to change without notice. Nothing herein constitutes a solicitation to buy or sell any securities. TWST interviews with CEOs may include include "forward-looking statements", which are based on factors that involve risks and uncertainties. Actual results may differ materially from those expressed or implied. TWST shall have no liability whatsoever for any trading losses arising out of use of this information. Copyright 1999 Wall Street Transcript Corporation. All Rights Reserved.