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| ## Comptroller of the Currency                                        |
|                                                                       |
| > Administrator of National Banks                                     |
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Washington, DC 20219

**Corporate Decision #2003-6**

**April 2003**

April 16, 2003

Charles F. Andrews, Esq.

Bank One Corporation, OH-101-0152

1111 Polaris Parkway

Columbus, Ohio 43271-0152

Subject: Operating Subsidiary Application by Bank One, N.A., Chicago,
IL, Application Control Number: 2003-ML-08-0007

Dear Mr. Andrews:

Bank One, National Association ("Bank"), Chicago, Illinois, has filed an
application under 12 CFR § 5.34(e)(5) to establish an operating
subsidiary that will purchase and then sell or license data processing
software that performs functions regarding the charges and payments on a
corporate credit card. Specifically, the software ("Software") enables
corporate credit card customers to automatically collect information on
corporate card use and then to merge the data, to generate invoices, and
to approve and make payments. The Software will be sold or licensed to
large corporate credit card users. Based upon the commitments and
representations in the Bank's application, this application is approved.

#### **Background**

With two other investors that will own minority interests, Bank proposes
to organize SPS Newco, LLC (the "Company") as a limited liability
company under the laws of Illinois or, possibly, Georgia. With OCC
approval, the Bank will acquire approximately 53.3% (but in any event
more than 50%) of the voting shares and equity of the Company.[^1] As
the holder of 50% or more of its voting securities, the Bank will be
able to ensure that the Company engages only in activities authorized
for a national bank and operates in a safe and sound manner.

The Company will sell or license the Software to the Bank's Corporate
MasterCard customers. In the future, Company will expand the
capabilities of the Software so that it will function with VISA credit
cards as well as MasterCards and allow the Company to sell or license
the Software to Bank One's Corporate VISA customers. Finally, the
Company anticipates that it may license the Software to non-customer
corporate credit card users on a fee basis.

The Software was designed for use by large companies ("users") to work
with their enterprise resource planning software package software.[^2]
The Software will integrate with a corporation's ERP software to
simplify and enhance the corporation's use of corporate cards and to
eliminate steps in the traditional corporate credit card use and payment
process. More specifically, the Software, when used with a compatible
ERP software, will automate most corporate card purchasing steps and
back-end processes and will integrate systems and functions. The
Software will also allow a corporate user to integrate its ERP and
accounting system with those of its trading partners. Additionally, the
Software will enable a corporate user to automatically collect
purchasing data, approve transactions, generate invoices, merge data
with its general ledger, make split payments, download individual
transaction information, create an invoice, auto-reconcile and effect
payment of its monthly statement to its corporate credit card provider.

## 

## Discussion

OCC has permitted national banks to produce and market software both as
part of the business of banking and as incidental to the business of
banking. The distinction between these two bases of authority is
significant because the software that is part of the business of banking
can be sold without regard to any other banking product or services,
whereas software that is incidental must be shown to be in some way to
be convenient or useful to another activity that is authorized for
national banks. Compare 12 CFR 7.5001(c) with 7.5001(d). Here, we find
that the Software at issue may be sold as part of the business of
banking.

As part of the business of banking, OCC has long held that the
production and sale of financial services software is permissible where
the software essentially performs a function or service that banks have
traditionally performed through electronic or non-electronic means for
their customers.[^3] Likewise, as part of the business of banking,
national banks may sell software to other financial institutions as a
form of correspondent service if the software performs bank-related data
processing functions.[^4]

Incidental to the business of banking, OCC has permitted a national bank
to sell software that will enable bank customers to use or receive
electronic banking services from the bank such as a specialized payment
service or informational services. As an incidental product, the
software is necessary to use or fully enjoy the permissible service and,
thus, is either part of the service (if limited function) or incidental
thereto (if full function).[^5]

The Software the Company will sell and license is part of the business
of banking and not merely incidental. The OCC recently adopted a final
regulation on electronic banking activities of national banks. Among
other things, this regulation codified the existing OCC position on a
national bank's authority to engage in data processing activities. The
new regulation states in relevant part:

It is a part of the business of banking under 12 U.S.C. 24 (Seventh) for
a national bank to provide data processing and data transmission
services, facilities (including equipment, technology, and personnel),
data bases, advice and access to such services, facilities, data bases
and advice, for itself and for others, where the data is banking,
financial, or economic data, and other types of data if the derivative
or resultant product is banking, financial, or economic data. For this
purpose, economic data includes anything of value in banking and
financial decisions.

12 CFR § 7.5006(a). Accordingly, software that processes predominantly
banking, financial or economic data may be sold or licensed as part of
the business of banking.

Here, the Company proposes to license and sell software that has
applications with respect to charges on and payments made on a corporate
credit card, facilitating payment of outstanding credit card balances.
Thus, the Software processes predominantly data that is banking,
financial, and economic in nature and its sale would be part of the
business of banking.

Since the distribution of the Software is part of the business of
banking, the Company is not limited to selling or licensing the Software
only to Bank customers for use with their existing corporate credit card
accounts with the Bank. Rather, the Company may also license and sell
the Software to non-Bank customers, including those that do not hold
corporate credit accounts with the Bank.

##### Conclusion

Accordingly, based upon the foregoing, the Bank's application to
establish the Company as an operating subsidiary is approved.[^6]

Sincerely,

##### Julie L. Williams

Julie L. Williams

First Senior Deputy Comptroller and Chief Counsel

[^1]: Two other companies involved in the development of the Software
    will acquire minority interests of approximately 33.3% and 13.3%.

[^2]: ^?^ Enterprise resource planning ("ERP") software seeks to
    integrate all departments and functions (including financial
    functions) across a company onto a single computer system that can
    serve all those different departments\' particular needs. ERP
    software can include integrated applications, interfaces, and
    business planning resources; it frequently involves a single shared
    database.

[^3]: This would include software with banking, tax estimation,
    financial planning, and investment analysis components, and
    ancillary services related thereto. *See, e.g.*, Interpretive Letter
    No. 677, \[1994-1995 Transfer Binder\] Fed. Banking L. Rep. (CCH) ¶
    83625 (June 28, 1995) (national bank can engage in a joint venture
    to develop and distribute home banking and financial management
    software and data processing services to be distributed both through
    the bank and through retail outlets). *See also*, Interpretive
    Letter No. 756, \[1996-1997 Transfer Binder\] Fed. Banking L. Rep.
    (CCH) ¶ 81-120 (Nov. 5, 1996) (cash management software), and
    Interpretive Letter No. 868 \[1999-2000 Transfer Binder\] Fed.
    Banking L. Rep. (CCH) ¶ 81-362 (Aug. 16, 1999) (national bank may
    invest in a company that develops and produces software that enables
    Internet-based payment transactions through cash equivalents, credit
    or debit card transactions).

[^4]: Interpretive Letter No. 449, \[1988-1989 Transfer Binder\] Fed.
    Banking L. Rep. (CCH) ¶ 85673 (Aug. 29, 1988) (a national bank may
    provide software applications and systems for bank back office
    operations to secure funds transfers, sort and process transactions,
    research and retrieve customers account information, prepare forms,
    and engage in record keeping).

[^5]: *See* OCC Conditional Approval No. 221 (Dec. 4, 1996) (providing
    full-function web browser software is a permissible incidental
    activity when a national bank is offering a home banking system
    based on web server technology using "Internet compatible" browser
    software). *See also* Interpretive Letter No. 516, \[1990-1991
    Transfer Binder\] Fed. Banking L. Rep. (CCH) ¶ 83220 (July 12,
    1990) (national bank that is providing customers with a permissible
    database service of information relating to financial instruments
    can also provide software that enables the customers to download and
    analyze the information); Interpretive Letter No. 419, \[1988-1989
    Transfer Binder\] Fed. Banking L. Rep. (CCH) ¶ 85643 (Feb. 16, 1988)
    (national bank that is providing customers with a permissible
    electronic transactional and information service can provide
    software that enables customers to participate in the system);
    Interpretive Letter No. 875, \[1999-2000 Transfer Binder\] Fed.
    Banking L. Rep. (CCH) ¶ 81-369 (Oct. 31, 1999) (incidental to
    hosting commercially enabled web sites, a national bank could
    provide software that enabled the hosted merchant to design and
    update their web sites); and Conditional Approval No. 267 (Jan. 12,
    1998) (national bank providing digital certificate services could
    also provide and sell software that generates the public-private key
    pairs for subscribers and other software that enabled subscribers to
    create or receive messages with digital signatures, verify digital
    signatures using public keys, and confirm that messages were
    properly signed by the sender).

[^6]: This approval, and the activities and communications by OCC
    employees in connection with the filing, do not

    constitute a contract, express or implied, or any other obligation
    binding upon the OCC, the U.S., any agency or

    entity of the U.S., or an officer or employee of the U.S., and do
    not affect the ability of the OCC to exercise its

    supervisory, regulatory, and examination authorities under
    applicable law and regulations. The foregoing may not

    be waived or modified by any employee or agent of the OCC or the
    U.S.