catalogue that sold American handicrafts, parlayed it into a payment processing empire for the direct-marketing industry, and sold in 1995 to First USA Inc. for undisclosed millions.

That was before the Internet. Today Mr. Litle is founder and chairman of OrderTrust Inc., a Lowell, Mass.-based company that tracks on-line orders for major retailers -- such as 1-800-Flowers and SkyMall -- and manages the flow of data among the merchants, their warehouses, and their financial services providers.

Mr. Litle -- who goes by "Tim" -- is regarded as a founding father in mail-order/telephone-order processing, the challenging part of the payments business known as MOTO.

In the days when credit cards could only be used in face-to-face transactions, he coaxed Visa U.S.A. to establish a new category of card acceptance, "card not present," which became a boon to the card industry.

One of Mr. Litle's marketing ideas gave the mail-order industry a way to target prospects more precisely. He negotiated with the U.S. Postal Service for the "carrier route presort" system, which assigns four-digit codes that enable computers to sort mailings by individual letter carrier.

OrderTrust is said to be breaking new ground in electronic commerce. It offers a back-end system that ties together all the components necessary for on-line shopping. Most individual retailers could not hope to develop the equivalent on their own.

SkyMall, for example, sells goods through a paper catalogue familiar to airline travelers as well as through a Web site. Its merchandise comes from dozens of suppliers with different systems.

Without OrderTrust's keeping track of and routing payments and orders to the right places, Mr. Litle said, a customer who called to check on an order might be told that information was unavailable -- or might be routed into oblivion.

"We are the gateway internally to each of the channels and suppliers a retailer has to have to make this work," said Mr. Litle, 59.

"All those people with their heterogeneous systems have to see the same data."

Some merchants are trying to cobble together comparable systems from multiple vendors, Mr. Litle said, but "we don't see anyone approaching it from our point of view as an independent service."

When Internet aficionados talk about companies that "get it" -- understand the gravity of the Web and what it bodes for the future of commerce -- banks tend to be low on the list, and companies like OrderTrust are high.

One recent endorsement came in the form of a $33 million equity financing that OrderTrust announced on Sept. 29.

A significant portion came from Fingerhut Cos., a division of Federated Department Stores Inc.

Fingerhut also signed to resell OrderTrust's services through its Fingerhut Business Services subsidiary and to integrate fulfillment systems for its own catalogue and on-line businesses with OrderTrust's network.

John Buck, president of Fingerhut Business Services of Minnetonka, Minn., said his company's goal is to "establish OrderTrust as an industry standard by making its order management services available to Fingerhut Cos., and by reselling them to our growing base of world-class fulfillment clients."

Also contributing cash to OrderTrust, which has 130 employees and has talked of going public next year, are Far West Capital Management, a venture capital firm, and private backers including Mr. Litle and William N. Melton, chairman and chief executive officer of Cybercash Inc. of Reston, Va.

"Tim has done a lot of really rather amazing things," said Mr. Melton, who is also noted for founding the point of sale terminal leader Verifone Inc.

Mr. Melton said his own career "developed in parallel" with Mr. Litle's. Despite constant comparisons drawn between the two, they had met only recently.

Mr. Melton said OrderTrust and Cybercash have some common goals and interests.

Both were developed to solve logistical problems posed by the translation of existing payment methods into Internet terms.

"On the surface, the payments world is always theoretically about payments, but it is deeply involved in solving the real-world problems behind it," Mr. Melton said.

"Unless the real-world problems that fall in the crack between the (card) issuer and the (merchant) acquirer can be solved easily and quickly, this new world of e-commerce is not really going to take off."

Traditionally, in a case of fraud, a customer dispute, or a shipment problem, the merchant-acquiring bank "usually has to sort that out," Mr. Melton said.

On the Internet, "the acquirer may be representing a merchant that may have four or five other parties involved in the transaction," such as the fulfillment house that stocks the inventory, the manufacturer, the shippers, and their respective customer service centers.

"Present this sort of quandary to the traditional acquirer shop and they're going to be scratching their heads and saying, 'What in the world is this?' "

Mr. Melton said. OrderTrust "fills a vacuum" by connecting acquirers and merchants to the information they need from various constituencies.

OrderTrust executives say they see many ways in which Internet and real-world retailing differ, and have observed the struggles of some companies to sell through multiple channels: physical stores, catalogues, and the World Wide Web.

"It's very difficult to return stuff bought through a Neiman-Marcus catalogue to a store, for example," Mr. Litle said.

"If you were stimulated to buy from a catalogue but placed your order on the Internet -- that's happening a lot -- and you didn't like it so you brought it back to the local store, that drives everybody nuts. They just can't do it."

"In 10 years, anybody who can't operate in all three channels isn't going to be around," Mr. Litle said.

"One of our objectives is to allow a customer to have a seamless experience using multiple channels."

Banks and payment processors are two of the spokes connected by the OrderTrust hub. The company says it can reach 95% of U.S. banks through links with the merchant processors First Data Corp. and Paymentech Inc.

The latter, formerly First USA Merchant Services Inc., bought Mr. Litle's Litle & Co., a Salem, N.H., firm that handled transaction processing for 1,000 direct marketers, in 1995.

First USA simultaneously bought Direct Marketing Guaranty Trust Corp. of Nashua, N.H., which provided this service for 700 companies.

DMGT was founded by Mr. Litle but taken over by an estranged partner. Bank One Corp. bought First USA and its Paymentech division in 1997.

"We're trying to do a really good job of linking order data to payment data, so that they're properly correlated," said Jim Daniell, chief executive officer of OrderTrust.

Mr. Litle recruited Mr. Daniell, 35, from AT&T, where he was chief operating officer of networked commerce services. Mr. Daniell said that job involved a lot of work on the AT&T Universal card and potential e-commerce applications.

One of Mr. Daniell's current preoccupations is with how banks and their Internet merchants can reduce credit card chargebacks and declined authorizations.

Speeding up the process of card acceptance may help reduce frustration on all sides, he said.

"We do an awful lot around automating real-time settlement," Mr. Daniell said.

"Most people don't realize that over half the high-end Web sites still don't offer real-time credit card authorization. Big names like Amazon, L.L. Bean, Dell Computer" are authorizing transactions later in batches.

When a retailer must decline a cardholder who placed an order hours earlier, "you've lost your moment with the customer to come back and get another number," Mr. Daniell said. "OrderTrust offers those real-time capabilities as part of our order processing services."

Mr. Daniell uses the metaphor of a house to describe OrderTrust's role. On the top floor is the "pampered high-tech shopper, sitting in a leather chair, clicking an interactive television" to order merchandise from the Web.

The information flows to the merchant on the ground level, who forwards it to OrderTrust. "We're sort of in the basement," Mr. Daniell said, parceling out the order information to banks, processors, warehouses, and customer service centers, and acting as a clearing house for the responses sent back.

Unlike Mr. Litle's earlier ventures, which handled the actual payment processing for MOTO companies, OrderTrust serves as a conduit that makes sure retailers' order data and payment data wind up in the right places.

(A noncompete agreement with Paymentech makes Mr. Litle eager to set forth the distinction.)

Mr. Litle began his career at high-tech companies in the exurbs of Boston.

He was, he said, an electronic engineer and rocket scientist. In 1977 he and his wife, Joan, bought a bankrupt mail-order catalogue.

Mrs. Litle "did whatever was necessary to get someone to decide to buy, and I was the one who made sure they had a good experience," Mr. Litle said.

"That definition stuck in the direct-marketing industry. Now they call it the 'demand side' and 'supply side.' "

In the late 1970s, Mr. Litle said, the reputation of MOTO merchants "wasn't all that clean." Chargeback and fraud rates were relatively high, and mistrustful banks arbitrarily charged higher fees to MOTO retailers. "It was really a dumping ground for a lot of people," he said.

After sizing up the landscape, Mr. Litle began working on several fronts. One order of business was to use his engineering know-how to circumvent the troublesome card processors.

"Tim said, 'Look, we know the problems. If you guys won't solve them for us, I'll solve them,' " Mr. Melton said.

"He got a computer system and programmed it and built a processing center targeted at the direct-mail card-not-present segment of the market."

In the early 1980s, this processing system evolved into DMGT, which used First USA as its sponsor bank. "We showed other catalogues how to set up a company of between six and 10 people, run a $20 million company, and we would take care of the whole back end for them," Mr. Litle said.

"We built all of our systems from scratch. I was basically just selling (credit card processing) to my friends. We only did MOTO stuff."

At first, DMGT handled about 4% of that industry's business, Mr. Litle said. Ultimately he claimed a 50% market share.

After splitting from DMGT in 1985, he founded Litle & Co. and "handily overtook DMGT after a number of years," said Mr. Litle.

Working with the Direct Marketing Association, Mr. Litle sought to call greater attention to ethical and privacy issues.

Over time these efforts have "improved the view of MOTO," Mr. Litle said. He is a founding member of the DMA's privacy task force and sits on the association's board of directors.

"Tim has been a real pioneer," said H. Robert Wientzen, president and chief executive officer of the Direct Marketing Association in New York. "He really helped the direct-marketing industry, particularly the catalogue industry, deal with the complicated transaction part of our business."

If not for the processing systems Mr. Litle developed, "our business would never have taken off as it did," Mr. Wientzen said.

Mr. Litle was also instrumental in crafting the "privacy promise" that all DMA members must deliver, Mr. Wientzen said.

This includes notifying consumers about how information about them is used and letting them "opt out" of marketing campaigns.

In the early days of their catalogue business, the Litles had also attempted to run what Mr. Litle described as a "full-service fulfillment company" that handled both telemarketing and warehousing.

The idea was that "a merchant who properly runs a catalogue or an e-commerce business is not really very good at managing the integration process of a whole bunch of suppliers that do different things," he said

"Nobody had ever done this before," Mr. Litle said. "And we quickly learned why."

The 14 catalogues served under the umbrella of the Litle's own catalogue company carried merchandise of all sizes and shapes, requiring a variety of warehouse shelving and endless wholesaling headaches.

"We didn't get any sort of efficiencies of scale, and our employees had to completely change their mental thought process when dealing with consumers complaining about different types of things," from computers that wouldn't boot to food products that arrived spoiled.

"Even though we expected to give world-class service, the best we could really be was mediocre," Mr. Litle said.

These were the kinds of problems Mr. Litle hoped to solve when, after selling his processing businesses, he founded Litlenet, which evolved into OrderTrust.

Components of the direct marketing and fulfillment processes are outsourced to various specialists, which trade data through the OrderTrust network. Thus, OrderTrust keeps track of where the merchandise is and whether payments have been processed.

SkyMall originally tried to warehouse all the products it sells and found itself "headed 100 miles per hour toward a brick wall," said Mr. Litle, who sits on SkyMall's board.

"To (chief executive officer) Bob Worsley's credit, he said, 'I'm going to change the whole company and outsource everything we possibly can outsource.' "

If someone on an airplane orders five items from three different companies, a traditional mail-order vendor would be hard-pressed to handle it, Mr. Litle said -- especially if the customer changes his mind or returns an item.

OrderTrust's data base can give the status of the order at any time, keeping customer service, suppliers, and banks and payment processors constantly informed.

Other OrderTrust customers include Lycos,,, Catalog City, Impulse, and Buy Network Inc.

According to Mr. Daniell, Web merchants that lack his company's tracking network are often hobbled by inefficiencies.

They may take payment for an on-line order, only to discover that the supplier does not have the item in stock or has discontinued the product. When the customer calls to find out what happened, customer service cannot unravel the problem.

"That causes you to become at the very least a dissatisfied customer," Mr. Daniell said. "Maybe you cancel the order."

Mr. Daniell said OrderTrust can help merchant-acquiring banks and their on-line retail customers use payment data to keep track of loyalty points.

"This whole concept of order management or order-processing networks is somewhat new, but it wasn't long ago that payment processing wasn't really understood either," Mr. Daniell said.

Banks have been slow to respond to the on-line retail environment, he said, but they could view the OrderTrust system "as an opportunity to gain some momentum in this space around e-commerce."

Mr. Litle said he was "looking at doing OrderTrust in the physical world before e-commerce came along," but now that it is here, on-line retailers are "moving a lot more quickly than the traditional" ones.

"They've gone through the stage where the techies run things, and now the marketers run things," he said.

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