March 2017 Issue 541 www.cardsinternational.com

WHAT ARE THE BEST NORTH AMERICAN APPS?

The biggest FIs in the region go head-to-head

• PRODUCTS: Prepaid in Canada • DISTRIBUTION: ATMs at 50 • GUEST COMMENT: ACI Worldwide • COUNTRY SURVEYS: The Philippines, Estonia & Cambodia

CI 541.indd 1 06/03/2017 17:01:43 Simple, secure and effortless digital solutions for fi nancial services organisations

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IE Adverts - 2017.indd 1 21/12/2016 11:53:12 Cards International EDITOR’S LETTER

CONTENTS EDITOR’S LETTER 6 DISTRIBUTION: ATMS AT 50 Time for credit card issuers According to the ATM Industry Association (ATMIA), there are approximately three million ATMs to up their mobile game across the globe. As the self-service kit hits its 50th birthday, Patrick Brusnahan writes on how the financial mainstay is still developing K customers are connected in a far more modu- ly of – but as for the rest, how 7 MOBILE: CREDIT CARD APPS increasingly willing lar and component-based way many really good credit card Canadian and US banks generally provide a single mobile app for to multi-bank, and across organisational bounda- account apps are out there? banking and credit card account already more than a ries. A number of major issuers do management, and the most U Making infrastructure avail- not even offer the most basic half (53%) take their credit advanced examples also include fraud prevention. Robin Arnfield card from an alternative to able through standardised inter- account-management features reviews leading North American their current account provider. faces will be a major trigger for on their mobile banking apps. issuers’ offerings, and if one single app is the key to success Is there scope for credit card new competition, from many Too many banks have taken issuers to win market share by different sources. the view that they aim for one 10S: NEW ANALYSIS sharing consumers’ financial Open Banking will give rise to front door in terms of mobile It is not often that a conference data with third parties in return new business models, with some interaction with the consumer speaker gets up and delivers a slating of a host country’s ecosystem for benefits? providers choosing to specialise – one app for all products with – but that is exactly what happened A report released by PwC, in niche areas rather than offer the credit card added on as an in Berlin at the Merchant Payment afterthought. Ecosystems conference. Anna Milne Who are you calling a challeng- a traditional suite of products reports er? How competition is improv- or attempt to manage the cus- With annual credit card- ing customer and driving tomer’s end-to-end experience. switching rates in the mid-teens, 11 PRODUCTS: PREPAID IN CANADA innovation in the UK banking In the credit card sector, how- against the current miserable While prepaid open-loop and closed-loop transactions are the market, states that 39% of con- ever, there is much scope for rate of 3% for current accounts, fastest-growing POS transaction sumers would agree such a deal improvement and optimisation consumers are already more types in Canada, they still only account for small proportions of POS with their financial institution. of the customer experience. The than willing to shop around. volume and value. But the prepaid Increasingly, retail customers majority of banks do not offer A decent credit card manage- growth opportunities are significant, are not seeking more full-service separate apps for different prod- ment app is no longer a luxury. especially in the open-loop segment, reports Robin Arnfield banks, but rather providers that ucts such as credit cards. Expect issuers to offer apps specialise in specific products or As customers shift to digital including travel notifications, 14 COUNTRY SURVEY: THE PHILIPPINES segment needs. channels, issuers will be under the option to block and unblock 16 COUNTRY SURVEY: ESTONIA As the report notes, the pressure to optimise their mobile cards, and personalised rewards. 18 COUNTRY SURVEY: CAMBODIA advent of Open Banking, ena- and online channels to increase Or how about geo-location controls, enabling cardholders 20 GUEST COMMENT: ACI WORLDWIDE bled by technology and regula- conversion rates. With a new fast payments ecosystem, tory developments, will be par- Speaking purely as a to say their card can only be how open is too open? Customers ticularly influential on competi- cardholder and not an editor, used within so many miles of a will not sacrifice convenience for tive dynamics. the Amex app is outstanding, specific location in proximity to security, so what is the best way to strike an effective balance between Supported by a new regula- offering personalised notifica- their smartphone? the two without sacrificing the tory regime, the initiative means tions for payment and spending We may even see issuers offer- values of both? ACI Worldwide’s banks will be able – and required reminders, balance updates and ing an incentive to cardholders Silvia Mensdorff-Pouilly writes – to share more customer infor- statements. As a non-customer, prepared to share financial data mation than ever before. Barclaycard and Capital One with third parties. This will be achieved via APIs also offer standalone credit card Douglas Blakey which enable systems to be apps that colleagues speak high- [email protected]

Editor: Douglas Blakey Director of Events: Ray Giddings For more information on Verdict, visit our Tel: +44 (0)20 7406 6523 Tel: +44 (0)20 3096 2585 website at www.verdict.couk. Email: [email protected] Email: [email protected] As a subscriber, you are automatically Financial News Publishing, 2012 entitled to online to Cards Deputy Editor: Anna Milne Sharon Howley Registered in the UK No 6931627 Head of Subscriptions: International. For more information, please Tel: +44 (0)20 7406 6701 Tel: +44 (0)20 3096 2636 telephone +44 (0)20 7406 6536 or email ISSN 0956-5558 Email: [email protected] Email: [email protected] [email protected]. Unauthorised photocopying is illegal. The Senior Reporter: Patrick Brusnahan contents of this publication, either in whole or Sales Executive: Harry Hooker London Office Tel: +44 (0)20 7406 6526 71-73 Carter Lane part, may not be reproduced, stored in a data Tel: +44 (0)20 3096 2586 Email: [email protected] London retrieval system or transmitted by any form or Email: [email protected] EC4V 5EQ means, electronic, mechanical, photocopying, Group Publisher: Ameet Phadnis recording or otherwise, without the prior Tel: +44 (0)20 7406 6561 Customer Services: Asia Office permission of the publishers Email: [email protected] Tel: +44 (0) 20 3096 2636 1 Finlayson Green, #09-01 or +44 (0)20 3096 2622 Singapore 049246 Sub-editors: Patrick Fogarty, Nick Midgley Email: [email protected] Tel: +65 6383 4688 Fax: +65 6383 5433 Email: [email protected]

www.cardsinternational.com March 2017 y 1

CI 541.indd 1 06/03/2017 17:01:53 NEWS: DIGEST Cards International

DIGITAL Grameen America, Citi and for over 86,000 low-income female entre- women entrepreneurs through access to capi- MasterCard to unveil digital preneurs across the US. tal, credit and asset-building services.” finance platform Citi and MasterCard will support the The upgrades includes the disbursement of deployment of cloud-based management reloadable MasterCard cards issued by Citi information system infrastructure to mod- Prepaid Services. These will be used by Gra- ernise and boost Grameen America’s opera- meen America to provide microloans to its tional capacity. members. Grameen America will be able to standard- MasterCard’s president of the centre ise and modernise its back-office processes, for inclusive growth, Shamina Singh, said: achieve better efficiency, scale services, and “Connecting people to the networks that launch new features. power the modern world will unlock their Grameen America president and CEO economic potential and continue a cycle of Andrea Jung said: “Solving the need for digi- equitable economic growth and poverty tal banking services among low-income com- reduction. Microfinance organisation Grameen Ameri- munities in the US is a pressing priority. “Working with Grameen America, we are ca has partnered with Citi and MasterCard “This collaboration represents a perfect glad to join a partnership that will advance to launch a range of fintech solutions to pro- marriage of the key players in technology and economic mobility through entrepreneurship mote digital financial access and inclusion financial services, coming together to empower in the US.”<

STRATEGY DISTRIBUTION PRODUCTS HNB, UnionPay agree to accept Doha Bank, MasterCard to offer CIBC FirstCaribbean to issue card payments in Sri Lanka payment solutions in Qatar contactless cards Hatton National Bank (HNB), a Sri Lankan Doha Bank and MasterCard have signed a CIBC FirstCaribbean International lender, has teamed up with UnionPay Inter- long-term agreement to launch a range of Bank has decided to issue chip-and-PIN national to accept card payments. payment solutions, including remittance contactless debit and credit cards for its Visa The contract will enable Sri Lankan mer- offerings and contactless payments, in Qatar. cardholders. chants which use HNB’s POS devices to According to Doha Bank, the agreement CIBC FirstCaribbean’s MD of customer accept UnionPay cards. will enable both partners to provide innova- relationship management and strategy, Tre- HNB senior manager of card centre tive products to the country’s workforce. vor Torzsas, believes the development is a Roshantha Jayatunge commented: “By The new initiative backs efforts by the ‘significant milestone’ as it increases ease of moving proactively to partner with Union- Ministry of Labour and Social Affairs, and use for small purchases while maintaining Pay International, we believe HNB has taken Qatar Central Banks to provide a safe work- security. a vital first step towards further integrating ing environment for workers, while ensuring Torzsas said: “We’ve introduced a series Sri Lanka into the international economic wages are electronically transferred to their of innovations to our services, including our system.” bank accounts. very popular Mobile Banking app, to give UnionPay International senior head of Commenting on the agreement, Doha our clients more choice in how they bank South Asia Derek Chang said: “We are Bank group CEO Raghavan Seetharaman and make payments. The app is performing delighted to be partnering with HNB. Sri said: “Our partnership serves to bring the beyond our expectations. Lanka is an important market for UnionPay best card products to our growing customer “We now have a banking solution to fit International in South Asia. base and is in line with Doha Bank’s strat- everyone’s lifestyle, and our smart cards will “We are uniquely positioned and ready egy to deliver the utmost value to employ- provide our cardholders additional com- to contribute to the growth of the tour - ers and payroll customers within the entire fort that they can make payments in a safe, ism industry by providing travellers with a framework of the Wages Protection System secure, yet flexible manner. Security is para- secure and easy payment option.”< implementation.”< mount to our client base.”<

DIGITAL Vibe, WEX sign virtual payments agreement which allows automated supplier payments in 24 currencies worldwide. US-based payment technology firm WEX WEX Europe commercial director for vir- has signed an agreement with Vibe Systems tual payments Ian Johnson said: “Our aim is to combine travel technology and payments to make our payment solutions available to for a better supplier payment experience. the travel industry, regardless of the systems Vibe provides advanced front- and mid- they already use.” office technology to travel businesses, includ- Vibe group e-commerce director Martin ing online travel agencies, retail agencies, Eade said: “We are delighted to offer our cli- travel management companies and consoli- ents the ability to enable WEX payment solu- dators. tions on their Vibe online booking platform. WEX’s virtual debit, prepaid and credit “Combining WEX’s payment expertise cards will be directly integrated with either with Vibe’s technology is an exciting pros- pre- or credit funding into the Vibe platform, pect and one we are excited to continue.”<

2 y March 2017 www. cardsinternational.com

CI 541.indd 2 06/03/2017 17:01:54 Cards International NEWS: DIGEST

RESEARCH Visa launches new innovation through which Visa aims to ‘excite and create new, secure ways to pay’. centre in London engage visitors’, including applications relat- Visa executive vice-president for innova- ed to the Internet of Things in connected car tion and strategic partnerships Jim McCarthy Visa has opened a new innovation centre in and home environments. said: “What makes the approach we take in London, where the company will work with According to Visa: “Visitors will experi- our innovation centres unique is that they’re financial institutions, merchants and other ence the future of retail using virtual reality all about collaborating with clients to solve partners to develop the next generation of to pick just the right seat for an upcoming real-world consumer pain points or business payment solutions. Formula E race and biometric authentication problems using digital solutions.” The 1,000m2 facility is located at Visa’s to pay for tickets.” The new facility joins a global network European headquarters in Paddington Basin. Coinciding with the opening of the cen- of innovation centres and studios located in It is described as the largest of Visa’s global tre, Visa announced that fintech develop- technology hotspots, including Berlin, Dubai, network of innovation centres. ers across Europe will now be able to take Miami, San Francisco, Singapore, São Paulo It features practical demonstrations advantage of the Visa Developer Platform ‘to and Tel Aviv. <

MOBILE UnionPay launches mobile QuickPass in Hong Kong

UnionPay International has debuted Union- Pay mobile QuickPass products in Hong Kong, in collaboration with Bank of China (Hong Kong). The move follows the issuance of Union- Pay HCE mobile QuickPass products in Macau and South Korea. Cardholders can now link mobile phones with UnionPay dual-currency credit cards issued by Bank of China to make daily transactions by mobile phone. phone, wearable devices and UnionPay chip 20,000 POS terminals in Hong Kong by mer- UnionPay said its mobile QuickPass facil- cards, as well as online mobile payments. chants such as Sogo, 7-Eleven, Mannings, ity supports offline payments with smart- Mobile QuickPass is currently accepted at and Tsui Wah Restaurant. <

STRATEGY Barclaycard, TMC sign card The new programme integrates a fuel with Centrica, providing a fuel programme agreement with Centrica expenses Barclaycard with accurate, audited that will not only be simpler for their drivers mileage and comprehensive manage- and fleet managers but will also help the Barclaycard Commercial Payments has ment information. business reduce its fuel costs. secured a contract from Centrica – the par- In association with TMC, the “Securing this contract really ent company of British Gas – to offer a single Barclaycard Fuel+ features chip & demonstrates the value of the fuel card programme for its van and car fleets PIN security and Visa acceptance, Barclaycard Fuel+ in association in collaboration with TMC, allowing Centrica drivers to refuel with TMC proposition for larger The contract, which was awarded after a at virtually any petrol forecourt in fleets.” competitive tender process, runs for three the UK. Centrica head of fleet Steve Winter years, providing Centrica with a single fuel Barclaycard head of multinational said: “Barclaycard Fuel+ in association programme for both its commercial and corporate business Michael Pechner com- with TMC is an exciting opportunity to take company car fleets. mented: “We are delighted to be working our fuel programme to the next level.”<

STRATEGY JCB becomes principal member versal card payment standards through new payment networks utilising SEPA-compliant of nexo Standards protocols and the implementation of speci- terminals. fications with integrated retail and terminal It also delivers a one-stop-shop for EMV JCB International, a subsidiary of Japan- management systems. and SEPA -compliant terminal testing, headquartered JCB, has become a princi- As a principal member, JCB will confirm decreasing the risk of interoperability obsta- pal member of nexo Standards in its card that its technical requirements are supported cles emerging between payment applications, schemes category. by nexo protocols, with a particular focus on and thereby promoting an open market for Headquartered in Brussels, nexo Standards the nexo-Fast suite of specifications. EMV and SEPA terminals. is the open standards association dedicated The specifications offer a clear description The move means that payment acceptors, to the creation of implementation specifica- of the application on an EMV chip-and-PIN processors, payment service providers and tions for card payment acceptance. which provides compli- vendors will now be able to implement JCB It works on behalf of all card stakeholders ance with the European Payments Council's contact and contactless transaction kernels to harmonise payment acceptance. The asso- SEPA cards framework. nexo-FAST allows into their EMV and SEPA compliant termi- ciation is developing a new generation of uni- a uniform transaction user experience on all nals, as specified by nexo-Fast. <

www.cardsinternational.com March 2017 y 3

CI 541.indd 3 06/03/2017 17:02:05 NEWS: DIGEST Cards International

REGULATION Allpay’s cards pass Visa’s ment of the cards, access control, HR train- The original building will be modernised to physical audit ing, credit and police checks. incorporate a larger manufacturing layout. The audit follows a £1m ($1.2m) Hologram, chip embedding and card UK-based payment specialist investment into the UK payment -inspection machinery will enable Allpay to Allpay has passed the annual specialist’s design and produc- create custom-designed cards for clients. physical audit of its card- tion facilities. New hires include a production planner manufacturing bureau car- With the investment, Allpay and stock controller, a manufacturing and ried out by Visa towards the obtained a new building, the bureau operation manager, and a new direc- end of 2016. latest equipment, and expand- tor, Ceri Davies. Against the highest stand- ed its card manufacturing Allpay head of card manufacturing and ards of PCI Compliance, the team from 24 to 49 staff over a bureau operations Jamie Taylor said: “We annual physical audit assessed 12-month period. are delighted with the near-perfect score various security factors with regards Currently, the bureau facility is awarded to our card-manufacturing bureau, to the building, physical control and move- operating from a new purpose-built building. following its annual physical audit.”<

MOBILE MasterCard to empower MasterCard aims to foster a higher level of checkout with a smartphone, or by entering 150,000 Kenyan merchants with inclusion for MSMEs in East Africa through a merchant identifier code. MasterPass QR the digital payment initiative. MasterCard division president for Sub- The regional commitment to impact over Saharan Africa, and head of financial inclu- MasterCard has committed to provide its 150,000 MSMEs in Kenya is part of Master- sion for international markets Daniel Mone- MasterPass QR secure digital payment solu- Card’s global goal of connecting 40 million hin said: “Kenyans are entrepreneurial by tion to more than 150,000 micro, small and micro and small merchants to its electronic nature and there are incredibly exciting busi- medium-sized enterprises (MSMEs) in Kenya payment network by the end of 2020 – a ness ideas coming from the region. during 2017. goal that MasterCard hopes it will be able to “We want to help business owners to grow The mobile-driven person-to-merchant achieve before that date. and prosper by delivering solutions that meet (P2M) payment solution will be launched Consumers can pay for in-store purchas- their needs. To this end we feel that Master- through numerous financial institutions. es by scanning a QR code displayed at the Card’s commitment is a valuable one.”<

STRATEGY SECURITY SECURITY Visa partners with IBM for POS MePIN launches biometric Santander UK enables payments solution extensions to curb online fraud through voice command

Visa has collaborated with tech giant IBM Finland-based MePIN/Meontrust has intro- Santander UK has launched a feature on its to incorporate POS solutions and commerce duced additional biometric authentication mobile app to allow users to authorise pay- into any device, including watches and rings, options to its MePIN Universal Authentica- ments using voice commands. using IBM’s Watson Internet of Things (IoT) tion platform. As well as enabling fund transfers, the new platform. The new Human Recognition and User voice-recognition technology will also allow Through the platform, businesses will Recognition authentication policies can be users to check balances, and report lost or be able to connect to billions of connected used alongside traditional authentication stolen cards. devices, sensors and systems wherever Visa methods. The technology is currently in the process is accepted. The solution is currently used by The provider claims the new policies of being piloted on the iOS version of the more than 6,000 IBM clients. extend the existing MePIN Public Key Infra- bank’s SmartBank app. The partnership will allow companies to structure-based non-repudiation without Santander’s head of technology inno - incorporate secure payments into various affecting the user experience. vation, Ed Metzger, said: “The worlds of product lines using the Visa Token Service, MePIN/Meontrust CEO Markku Mehtala technology and banking continue to evolve a technology that replaces sensitive account told Cards International: “Card-not-present at pace, working hand in hand to deliver a information found on payment cards with a fraud has not been solved with clumsy friction-free user experience. unique digital identifier. authentication solutions. “We are excited to be the first UK high IBM Watson IoT general manager Har- “MePIN provides non-repudiation for street bank to enable customers to make riet Green said: “IoT is literally changing transactions while minimising the friction of payments using just their voice, offering the world around us, whether it’s allowing authentication. them another channel of choice in how they businesses to achieve unimaginable levels of “It is important that consumer privacy is wish to bank. efficiency or enabling a washing machine to not forgotten. Face recognition must be used “Appetite for simple, intuitive banking ensure we never run out of detergent. wisely,” Mehtala continued. solutions has grown,” Metzger continued. “This combination of IBM’s IoT technol- Available as a software development kit, “This pioneering technology has huge ogies with Visa payment services signifies the MePIN biometric solution can be inte- potential to become an integral part of the the next defining moment in commerce, by grated by the issuers or pay- future banking experience, playing a trans- allowing payments on any connected object ment service providers into mobile apps, or formational role in the industry and redefin- with new levels of simplicity and conveni- used as a template to launch new payment ing how customers choose to manage their ence,” Green added. < security apps.< money.”<

4 y March 2017 www. cardsinternational.com

CI 541.indd 4 06/03/2017 17:02:06 Cards International NEWS: DIGEST

DIGITAL PRODUCTS MOBILE Billtrust unveils Virtual Card Yes Bank launches NFC-enabled MTS introduces new mobile Capture for automated virtual debit cards for contactless wallet to integrate payment credit card acceptance payments solutions

India’s Yes Bank has launched its latest range Russia-based Mobile TeleSystems (MTS) has of NFC-enabled debit cards. launched its latest mobile wallet with ‘easy Yes Prosperity and Yes First have, accord- one-click access’ to its financial services. ing to the bank, been ‘designed around the The MTS Money Wallet combines all pay- specific needs of customers’. ment tools on a single platform, and custom- The Yes Prosperity card range features ers have the option to make payments and Payment cycle management firm Billtrust the Yes Prosperity Titanium, Titanium , transfer money from the e-wallet by smart- has launched the Virtual Card Capture ser- Platinum and Rupay Platinum debit cards, phone. vice to improve efficiency and automate the whereas the Yes First range comprises the All MTS Money Wallet users will be auto- cash application process for email credit Yes First World debit card. matically enrolled onto the MTS Bonus card payments. The bank has also introduced two cards programme, which offers loyalty points and The solution claims to address a grow- on India’s domestic card payment network, access to exclusive offers and discounts. ing problem for account departments that Rupay. MTS vice-president for strategy and mar- receive payments by email using virtual Cardholders can earn reward points on keting Vasyl Latsanych said: “Today we credit cards from buyers. These are not only all expenditure, and benefit from access to are entering into a new era of mobile and costly to manage, but also create a burden Yes InControl, which it operates through financial services. We created the unified for organisations with limited resources. MasterCard, allowing users to set custom- ecosystem, which will become a convenient, Payment instructions sent by banks and ised spending limits for different locations transparent, and secure alternative for cash accounts payable platforms are rerouted to and categories. and bank cards. Billtrust for processing through Virtual Card Yes Bank senior group president for retail “The initial functions included in the ser- Capture. and business banking Pralay Modal said: vice only mark the beginning of our journey. Funds are deposited into a supplier’s bank “Our debit card portfolio has been designed We will combine all possible payment solu- the following business day, and remittances to offer superior features and benefits to our tions with leading loyalty programmes. are consolidated for all payment sources and valued customers. “We believe that cash and cards will matched to open invoices. “The launch will augment our efforts become redundant in the near future. All The new solution claims to reduce the towards encouraging customers to move we’ll need for comfortable communications burden of acceptance of virtual credit cards, towards a cashless economy. Digitalistion is and financial management is a smartphone. which was previously a manual process. < the future, but cards are the present.” < We want to give people the future today.” <

DISTRIBUTION Barclaycard signs new payments million contactless transactions to date – in 10 pay-as-you-go journeys on London’s agreement with TfL covering journeys made by bus, Tube, tram, buses, Tube and rail services. Docklands Light Railway, London Over- Commenting on the extension, TfL chief Barclaycard has extended its contract to offer ground, TfL Rail, Emirates Air Lines, River technology officer Shashi Verma said: solutions to Transport Bus and most of London’s daily National “Contactless payments have completely for London (TfL) for another seven years, Rail services. transformed the way people pay for travel with the option to extend the agreement for The contract extension will enable in London, with more than 800 million jour- a further three years. Barclaycard to support the introduction of neys already made and around 1.8 million TfL and Barclaycard have been working the new Elizabeth line, while assisting the journeys being made every day. together for more than 20 years and have launch of contactless payments for train “This new 10-year contract will help transformed how users pay for travel across travel beyond London. ensure these numbers continue to grow while the UK’s capital. As TfL’s merchant acquirer, According to Barclaycard, contactless also providing support to allow us to develop Barclaycard has processed more than 278 transactions currently represent almost four our ticketing system.”<

MOBILE BharatQR payments launched in issuing cards and establishing expensive POS India terminals and infrastructure’. Customers of any bank can use a smart- BharatQR, a common quick response (QR) phone to make payments through the app by code that allows consumers with debit or scanning the relevant QR code at the POS credit cards to pay directly from a phone by and entering the transaction amount. scanning a QR code, has been launched in Once authorised, the amount is transferred India. directly from the customer’s account to the The new payment system was developed merchant’s account. by MasterCard, Visa, and Leading Indian financial institutions, the National Payment Corporation of India, BharatQR aims to reduce the country’s including Axis Bank, Bank of Baroda, Bank which is responsible for operating the RuPay dependency on cards, with a goal of help- of India and HDFC Bank, all currently sup- card network. ing to ‘disrupt the card network’s business of port the new app. <

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CI 541.indd 5 06/03/2017 17:02:06 DISTRIBUTION: ATMS AT 50 Cards International

Fifty years on, the ATM is still developing Inaugurated by comedy actor Reg Varney in 1967, the ATM is still with us; according to the ATM Industry Association (ATMIA), there are approximately three million ATMs currently in operation across the world. However, one of the mainstays of modern banking is not resting on its laurels. Patrick Brusnahan writes

aunched by Barclays in its Enfield Town branch, the automated tell - er machine (ATM) has gone from L strength to strength. From sim - ple withdrawals to deposits to security checks, features are constantly added to the service. Some say the right ATM could even replace a branch. NCR has launched the SelfServ 80 Series of ATMs which are set to do just that. Accord- ing to the firm, it will ‘redefine the banking experience and change the way consumers interact with the ATM forever’. Hefty claims. Rachel Nash, director for financial services at NCR, tells CI: “The new 80 Series fam- ily is really quite groundbreaking in terms of how we can deliver services to consumers. Just from an aesthetic feel, it’s very modern and tablet-like, not your typical old grey box, which really does fit into what custom- ers expect from a digital experience and how they want to interact and transact with every organisation.”

Video banking Features of the new hardware include an advanced 19-inch multi-touch display and be very convenient for people to pop into a started to interact in that space has changed built-in video banking. This will be crucial if branch, even when one isn’t there. how they wanted to interact in our space. It’s the ATM is to replace branches, as research “In some cases, absolutely, if they want another digital touchpoint,” Nash continues. from NCR states that 80% of the transac- to go to a full-service branch, they should. One of the biggest lessons we learned is tions completed inside a physical branch We’re not saying one solution fits everything, that the change in mainstream consumer would be a more complete experience if a we’re just providing a flexible platform that technology is impacting the solutions we live video teller had a presence at an ATM. allows different types of format and deploy- deliver to market.”< “What we’re really trying to think about is ment to suit the customers’ needs.” how we can reposition self-service as part of Is the ATM takeover imminent? Not as the whole experience. You may have a cus- soon as one might think, as there are issues Extreme locations tomer that is perfectly happy to serve them- with wide-scale deployment. “We do have a selves and interact in a 100% self-service lot of legacy across the globe. An organisa- As part its celebration of the 50th way, and this enables that,” Nash explains. tion is not going to replace everything over- anniversary of the ATM, the ATMIA collated “But there may be a time they might need night; it is going to be gradual,” notes Nash. some of the most extreme ATM locations: local and in-person assistance, which is part So how has the ATM changed in the last • The Antarctic ATM is located inside the of the tablet banking solution, to alert a 50 years? Nash concludes: “Things that we McMurdo Station near the South Pole. member of staff to their call for remote assis- have tried in the past, such as video bank- tance. These aren’t bolt-ons as they have ing, were cumbersome, clunky and difficult • A desert ATM in the Australian Outback been in the past. It has helped streamline the to implement. is accessible only via Aboriginal way staff members help customers.” “Now, advancements in technology mean tracks. On average it completes 500 withdrawals and 200 balance inquiries One problem with an ATM replacing a we can incorporate mainstream technology each month. branch is that if customers want branch ser- across all platforms. vices, they would surely visit a branch. Nash “The other thing we’ve seen is that none • An ATM in Sust, Pakistan is located says: “I can see a branch-in-a-box-type envi- of us ever envisioned the idea of an iPhone, 2,375m above sea level, in sub-zero ronment working in a retail outlet. It would a touchscreen in your hand. How customers conditions. <

6 y March 2017 www. cardsinternational.com

CI 541.indd 6 06/03/2017 17:02:08 Cards International MOBILE: CREDIT CARD APPS

Which North American credit card app would make it onto your homepage?

Canadian and US banks generally provide a single mobile app for banking and credit card account management, and the most advanced examples also include fraud prevention. Robin Arnfield reviews leading North American issuers’ offerings, and their key features and innovations hen the mobile channel was Mobile card applications ware vendors have yet to catch on to includ- first introduced, there was In her Aite Group report, US Credit Card ing card controls in their apps.” a lot of discussion among Issuers’ Digital Account-Opening Processes, However, Malauzai has offered credit and “WNorth American banks about Montez says most US credit card issuers have debit card control functionality within its whether they should have standalone the basic foundational capability to accept mobile banking app for the last four years. apps for different products,” says Tiffani online credit card applications, collecting the “The first generation of card control soft- Montez, senior analyst at US-based Aite data required for the application, verifying ware just integrated with a bank’s core bank- Group. applicants’ identity, and presenting disclo- ing system,” says Gaynor. “Those credit card issuers that also have sures, and ensuring applicants qualify for a “Our software now offers integration with other banking products primarily want one specific card. the card networks and processors for more front door in terms of the mobile interaction “Aite Group’s assessment of the mobile effective controls. We find that around 15% with the consumer. application shows the overall immaturity of of our clients’ active mobile bankers go in to “Consequently, most US banks and credit the account-opening process,” Montez out- the card control module at some point each unions don’t have separate apps for different lines in her report. month.” products such as credit cards, mortgages or “Most mobile application experiences - Gaynor says Malauzai’s US banking and chequeing accounts,” Montez continues. ror online application experience and, at this credit union clients are not using his firm’s “It’s just one mobile app with access to all point, use few of the phone’s native features mobile banking and card control app yet for accounts, depending on the type of relation- to optimise the experience.” credit cards. “Half of our 450 clients have ship a customer has with that financial insti- Montez believes that, over the next rolled out debit card controls using our app,” tution. few years, as customers increasingly shift he notes. “But it can definitely be used for “Generally, the apps let cardholders obtain towards digital channels from branches and credit card controls. balance information, make bill payments, see call centres, credit card issuers will be under “A useful feature which we offer is geo- purchase information, view rewards, and pressure to optimise their mobile and online location controls, which allow cardholders track spending. Some issuers, such as Capital channels to increase conversion rates. to say that their card can only be used within One, have apps that allow you to view your a 10-mile radius of a particular location. credit score.” Card fraud prevention apps Customers can also use our GPS control to Montez expects issuers to increasingly Visa, MasterCard and major US card proces- specify that their card has to be used in prox- offer more mobile-first credit card account- sors such as Vantiv offer standalone credit imity to their smartphone. management features in their apps, instead and debit card control apps for issuers to “But we don’t see much uptake of that as of just replicating features provided in their provide to their customers to prevent fraud. it’s heavy on phone batteries. Our most heav- online services, given that customers always A key provider of card control software to ily used control feature is turning a card off have their smartphone with them. the processors is US-based Ondot Systems. when it isn’t in use to prevent fraud.” “For example, they are starting to intro- “Hundreds of US financial institutions are Gaynor notes that none of his firm’s cli- duce the ability for cardholders to provide rolling out these standalone apps to their ents have asked them to provide a standalone travel notifications, receive spending alerts, cardholders,” says Robb Gaynor, chief prod- app for card controls. set spending thresholds, freeze and unfreeze uct officer at US-based mobile banking app “There’s a big question mark as to whether cards, and report lost or stolen cards via vendor Malauzai Software. “The reason for standalone card controls make sense and as mobile,” she says. this is that many of the mobile banking soft- to whether consumers will want a separate

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CI 541.indd 7 06/03/2017 17:02:10 MOBILE: CREDIT CARDS APPS Cards International

app for controlling their cards’ usage,” he says. “Standalone is a strategy the banks and credit unions are forced to pursue because mobile banking vendors are behind. The standalone phenomenon will be short-lived as mobile banking vendors will build the nec- essary card controls into their apps.”

Market research data According to Lynda Lovett and Mary- Anne Huestis of Canadian financial market research firm MarketSense, 52% of Cana- dian credit cardholders have downloaded a mobile banking app, up five percentage points from a year ago. “Incidence is highest for TD with 12% of cardholders, and Royal Bank of Canada (11%), followed by CIBC (8%), ‘any credit union’ (7%), BMO Bank of Montreal (7%), Scotiabank (7%), Desjardins Group (7%), and Scotiabank’s direct banking subsidiary: Tangerine (7%).” According to MarketSense, 48% of Cana- dian survey respondents are interested in ❙❙Citi’s -resolution feature: step one using smartphones to redeem rewards, and 32% to book travel. “Both measures are sta- ble over last year,” Lovett and Huestis say. customers when they are spending more, the free Fico [Fair Isaac Co.] scores and intro- A survey of 3,000 US adults in June 2016 same, or less than usual. duced the ability to manage card rewards on for Mercator Advisory Group’s US Con- Desjardins offers the InstaBalance feature mobile.” sumers and Credit: Young Adults Return to which lets credit cardholders view balances BankAmeriDeals offers up to 15% Credit Card Use report found that 47% of without having to log into the Quebec-based cashback when customers make purchases at US smartphone and tablet owners indicated cooperative financial institution’s AccèsD selected retailers with BofA debit and credit interest in mobile-enabled - mobile banking app. InstaBalance provides cards. prevention controls, up from 44% in 2015 budget information such as maximum and and 41% in 2014. Interest was highest in the minimum account limits and goals in graphi- Capital One Canada 25-34 age group, with 67% in this segment cal form. “Our team of over 80 Toronto-based soft - indicating interest in 2016. ware studio associates aims to open up new “We asked smartphone and tablet owners American Express Canada digital possibilities for customers to man- if they would be interested in a new mobile “American Express Canada is focused on age their accounts,” a Capital One Canada app from their issuer enabling them to con- reaching its mobile-first customers via the spokesperson says. trol how and when their credit cards can be Amex App,” an Amex Canada spokesper- “Via our mobile banking app for iOS and used, either to limit spending or avoid fraud, son tells CI. Android smartphones, Capital One Canada by setting limits by dollar amount, location “In September 2016, we launched Use customers can view their credit card transac- of the phone, or shopping category, that Points for Purchases, which lets cardmembers tions, check their balance and available cred- can be turned on and off in real time,” says redeem points towards purchases made on it, see payment due dates and minimum pay- Karen Augustine, Mercator’s manager, pri- an eligible American Express card via the ment required, view their credit card rewards, mary data services. Amex Mobile App.” and contact customer service within the app.” The Amex App offers personalised notifi- Capital One Canada’s mobile app recently PFM tools cations for payment and spending reminders, added push notifications sending real-time Several issuers provide credit cardholders such as payment due, balance updates and alerts to customers’ phones providing details with personal financial management (PFM) statement ready. such as transaction amount and merchant; tools to help with budgeting. and multi-factor authentication for security CIBC offers the Personal Spend Manager Bank of America (BofA) verification. tool which lets credit cardholders monitor “Credit card account management is built The app offers Live Chat and Second Look, spending, set budgets and create alerts. Cur- into BofA’s mobile banking app,” a BofA which sends an automatic email alert when rently, CIBC’s Personal Spend Manager is spokesperson says. a potential mistake is identified on a custom- only available to online banking users. “Our newest feature is a spending and er’s account, such as a duplicate charge. TD offers the TD MySpend app for its budgeting tool that tracks spending on cus- bank account and credit card holders, which tomers’ BofA deposit accounts and cards, Citi is based on PFM software from US-based fin- and helps them create budgets. In 2016, Citi launched 86 digital features in tech Moven. TD’s MySpend offers real-time We recently enhanced our BankAmeri- the Citi mobile banking app, including Quick notifications and virtual receipts and uses Deals program to show deals based on the Lock, which enables cardholders to lock and red, yellow and green traffic lights to warn customer’s location. Last year, we rolled out unlock cards, file a dispute in-app, and track

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CI 541.indd 8 06/03/2017 17:02:11 Cards International MOBILE: CREDIT CARD APPS

a replacement card. “As a result, in 2016 alone, North America mobile app custom- ers grew by 50% and mobile app downloads doubled,” a Citi spokesperson says. “We saw over 3.25 million downloads in 2016.” “Our ultimate goal is enabling the entire customer experience – including everything that a customer can do right now by phone or in the branch – in mobile,” Alice Milligan, chief customer and digital experience officer for Citi Global Cards and Consumer Services, tells CI. Since January 2017, US Citi customers have been able to scan their credit cards using their mobile device’s camera in the Citi Mobile App, instead of having to manu- ally enter their 16-digit card number for activation. Citi says it is the only major US credit card issuer to offer the ability to scan embossed and non-embossed credit cards within a mobile app. Other features offered by the Citi Mobile App include the managing of replacement cards, Fico scores, redeeming rewards, tem- porarily locking and unlocking accounts, and setting up alerts.

National Bank of Canada “All credit card account management features are offered in our mobile banking app, which people who only have a credit card with us can also use,” says Joel Pomerleau, National Bank of Canada’s senior manager of digital channel support and transformation. “There’s no standalone credit card account- management app. Features offered include balance, transaction history, the ability to off pay card balance, set transaction limits, advise the bank when one is going abroad, ❙❙ cash in points, cashback and loyalty points Citi’s dispute-resolution feature: step two balance. “Credit card accounts are much easier to ers to turn travel alerts on and off, and man- “We don’t yet offer the ability to alert the open on mobile, while investment products age default cards for payments.” bank via the mobile app if the card is com- are much harder.” promised – we’re working on this.” Wells Fargo Instead of developing a proprietary mobile RBC “In 2016, Wells Fargo redesigned its mobile wallet, National Bank, Canada’s sixth-larg- RBC currently does not offer credit card app, which provides banking services to est bank, plans to support the wallets offered account management features within its 19.6 million active customers, to be simpler by the ‘Pays’, such as Apple Pay, says Pomer- mobile banking app or RBC Wallet. and more intuitive for customers, while leau. “We’ll include a deep link within our “This is clearly an important capability that providing more content and features that mobile app to these mobile wallets. we’re looking at developing to ensure we’re are better aligned to a customer’s needs,” a “We’ve seen quite a lot of usage of our delivering to meet our clients’ expectations,” Wells Fargo spokesperson says. mobile app by our credit cardholders,” an RBC spokesperson says. The app offers credit cardholders features Pomerleau continues. The RBC Wallet is primarily a payment such as the ability to manage alerts for pur- “There’s been a shift from online and call vehicle for RBC credit and debit cards, but chase amounts, decline transactions and centre transactions to mobile, which is our allows cardholders to view their balance, report any suspicious card activity. It also strongest growing channel now by far.” available credit, and RBC Rewards Point bal- lets users know when they are approaching Pomerleau says National Bank is working ances. RBC offers a standalone app where their . heavily on product origination across all its cardholders can redeem reward points. Cardholders can view spending reports digital channels, without specifying which aggregated across multiple accounts, includ- types of product. Scotiabank ing credit card, debit card and chequeing “You can already apply online and via “We have a robust mobile banking app, which accounts. They can also access Wells Fargo’s mobile for a bank account and credit card includes My Mobile Wallet,” a Scotiabank Go Far Rewards programme, and view their with us,” he says. spokesperson explains. “It enables custom- credit score from the app. <

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CI 541.indd 9 06/03/2017 17:02:13 NEWS: ANALYSIS Cards International

EPC chairman bashes Germany’s payments scene It is not often that a conference speaker gets up and, off the cuff, delivers a single-handed slating of a host country’s ecosystem that everyone would usually be there to promote – but that is exactly what happened in Berlin at the Merchant Payment Ecosystems conference. Anna Milne reports uch was the dire experience of Javi- accepted”; and the other three, Visa and less” POS system and German airport cabs er Santamaría Navarrete, chair of MasterCard, “were not legible”. that do not take cards. Those that do, often the European Payments Council “After half an hour of trying to pay for charge for the so-called privilege, accord- (EPC), trying to buy a ticket on the a €3.40 ticket, I had to rush for the train,” ing to Sheri Brandon, Head of Transaction S whereupon he was promptly issued a pen- Deutsche Bahn upon arrival in Berlin for Banking at Tieto. Having been asked to pay the Merchant Payment Ecosystems con - alty charge, which, of course, he had to pay a €1.10 charge to use a card for a €9 cab ference, that he issued a dressing down of in cash. journey, she reached for her cash purse. the highest order. Even in the words of the Emerging Pay- For the hosts: embarrassing. And it was Money where your mouth is ments Association in a recent report on ideal not the first reference to the fact that Ger- The EPC says it is committed to safe, reliable, European bases for fintechs, Germany was many lags behind the rest of Europe in terms efficient, convenient, economically balanced seen as resistant to change. of electronic payments. and sustainable payments, but some were not “Germany has built an impressive reputa- For Navarrete, who freely shared that he convinced. tion for being antagonistic to the innovative travels with several cards to avoid a scenario “Yesterday was not safe, not reliable, not European payments sector. whereby one or more may not be accepted, efficient, not convenient, not economically “In nearly every aspect of interpretation of the situation clearly warranted a rant. balanced and not sustainable,” Navarrete the key EU laws in this sector, Germany has Despite several machines at the train sta- quipped. often excelled at taking the narrowest inter- tion, he could not use cash because each “After this experience, the myths I had pretation.” one accepted exact cash only. Handy when about Germany being developed have been If the world is going to be cashless by 2040, you’ve just arrived in a country. obliterated,” he continued. Ouch. Germany looks like it might lag behind. Of Navarrete’s seven cards, two are Dave Birch had kicked off proceedings in But, in the interests of balance, they’re Amex, “so, no use”; two are debit, “so, not the morning with a rant against BA’s “point- alright at football, aren’t they?<

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CI 541.indd 10 06/03/2017 17:02:19 Digital touch briefings ad copy - MF 18042016.indd 1 18/04/2016 11:15:29 Cards International PRODUCTS: PREPAID IN CANADA

Canadian open-loop prepaid market open to growth

While prepaid open-loop and closed-loop transactions are the fastest-growing POS transaction types in Canada, they still only account for small proportions of POS volume and value. Despite this, the prepaid growth opportunities are significant, especially in the open-loop segment, reportsRobin Arnfield

2016 report from Mercator based • The average load onto all categories responsible for running the country’s core on a survey of issuers and pro - of corporate-funded prepaid card was payments infrastructure. gramme managers conducted C$125, and A with the Canadian Prepaid Pro - Corporate prepaid and GPR viders Organisation (CPPO) estimates • The average load onto corporate-fund- Peoples is seeing the most growth in corpo- that C$3.1bn ($2.37bn) was loaded onto ed cards used for consumer and employ- rate prepaid issuance, says Read. Canadian Amex-, MasterCard- or Visa- ee/partner incentives was C$110. “This can be corporations giving pre - Don’t have online account details? branded prepaid cards in 2015. paid cards to consumers as rewards for “The Canadian open-loop prepaid market Growth opportunities buying one of their products, incentives, or has eight active segments, compared to 17 in “My view is that there’s room for growth in corporate prepaid cards that are used for You and your associates may be entitled to online the US, showing significant growth oppor- the Canadian prepaid card market,” says Peter B2B [business-to-business] activities such tunity for Canadian prepaid programmes,” Read, president of Vancouver-based prepaid as receivables payments, purchasing/pro- login credentials. The benefits of full online the report says. The Canadian market is card issuer Peoples Card Services. curement, payroll or controlling employee access are as follows: expected to follow US trends, where open- “Excluding US government prepaid cards expenses,” he says. loop prepaid cards are the fastest-growing the US open-loop prepaid card market is “There’s a lot of room for corporate B2B form of electronic payment.” running at around $200bn a year in loads. prepaid cards to grow. There has always been • Timely daily news updates The Mercator study revealed that: Assuming that Canada is about 10% of a lot of business for corporate B2C [busi- the US market, we should be seeing around ness-to-consumer] prepaid incentive cards, • Access the latest analysis • General-purpose reloadable (GPR) $20bn a year in prepaid loads, but we’re and this particular segment will continue to • Monthly editions sent directly to your inbox card loads totalled C$1.84bn in 2015, nowhere near there yet.” grow. Another important segment in Canada with the average load per card being According to Payments Canada’s 2016 is GPR prepaid cards.” • News alerts direct to your inbox C$2,016; Canadian Payment Methods and Trends Report, prepaid open- and closed-loop trans- • Comments from key industry influencers and leaders • Total loads onto open-loop gift and actions are the fastest-growing POS transac- • Search for specific, relevant content mall cards that use a restricted access tion type, but still only account for small pro- network over open-loop rails amounted portions of POS volume and value. • Access the archive to C$1.03bn, with the average load per In 2015, prepaid cards represented 1.1% card being C$83; of total Canadian payments by volume, accounting for 236 million transactions To create or activate your account please contact: • The average load onto all categories worth C$18bn says Payments Canada. of consumer-funded prepaid card was Formerly known as the Canadian Pay- [email protected] C$218; ments Association, Payments Canada is

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CI 541.indd 11 06/03/2017 17:02:26 Digital touch briefings ad copy - MF 18042016.indd 1 18/04/2016 11:15:29 PRODUCTS: PREPAID IN CANADA Cards International

“We’re seeing more consumer GPR pre- The survey, commissioned by the CPPO, paid cards being launched in Canada as an found that 8% more Canadian consumers alternative to bank accounts or for discre- are seeking out Amex, MasterCard and Visa tionary spending,” says Jennifer Tramon- prepaid cards compared to 2015. tana, the CPPO’s executive director. “Nearly half of these consumers make “Both prepaid travel and prepaid com- under C$40,000 a year, and 57% are under mercial cards are areas we believe are poised the age of 45, with a third being under 35,” for growth in Canada,” says a Visa Canada the CPPO says. spokesperson. “Overall, an Amex, MasterCard and Visa prepaid card user is more likely to be male, Cheque replacement between the ages of 18 and 44, and a user of A major area of growth for prepaid cards in an alternative payment method.” es of open-loop prepaid cards were slightly Canada will be to replace cheques. “A large higher in 2015 than in 2016. number of cheques could be replaced by Insurtech “The five-year trend shows significant open-loop prepaid cards,” Read says. “One area of fintech that could well be growth in the purchase of prepaid cards from According to a Peoples Card Services white applied to prepaid cards is insurtech, as 19% of credit cardholders in 2012 to 36% paper, Canadian consumers and businesses insurance payouts remain a market to be in 2015,” MarketSense’s Lynda Lovett and wrote nearly one billion cheques, worth cracked for prepaid cards,” says Read. Mary-Anne Huestis tell CI. “In 2016, 32% C$3.9trn, in 2014. Most of these were writ- Insurtech can be defined as the use of tech- of credit cardholders purchased at least one ten to and from businesses and government. nology to modernise and make more user- prepaid card.” According to Payments Canada, use of friendly insurance processes such as custom- The majority of prepaid cards purchased cheques has declined by 25% since 2011. er service, pricing strategy, claims processing are Visa-branded, bought by 19% of credit However, the total value of cheques has been and payouts. cardholders in 2016, MarketSense found. buoyed by their continuing use by Canadian Insurance payouts for car repairs, for Prepaid Visa gift cards outnumbered businesses, growing by over 2% on average example, can be distributed via prepaid cards reloadable prepaid cards in 2016, with 16% each year, the industry body says. that can only be used on a restricted authori- buying gift cards while 3% bought reloadable zation network to insurance claimants for cards. Prepaid MasterCards were purchased Fintech use solely at approved garages. by 8% of credit cardholders, with gift cards “Anything tied in with fintech will be a a more popular choice than reloadable cards growth area for prepaid cards in Canada,” Technology Strategies International (6% compared to 2%). Read says. According to Canadian consultancy Tech- Only 2% of credit cardholders purchased “One example is linking GPR prepaid nology Strategies International’s (TSI) 2016 a prepaid Amex card in 2016. cards to a card provider’s mobile app that Canadian Consumer Payments Survey con- “It appears that prepaid cards are attract- lets cardholders manage their budgeting ducted in March 2016, 17.3% of Canadian ing business travellers (41%) and those from their phone. I also think there will be adults had bought a prepaid card brand- who revolve their credit card loans growth under the umbrella of fintech in pay- ed with one of the major card “Almost (37%) at higher numbers,” roll, business expenses and business disburse- schemes in the previous year, all the prepaid say Lovett and Huestis. ment cards.” up from 14.95% in the “Members of the lead- Examples of GPR prepaid cards linked to 2015 survey. segment transactions take ing travel rewards mobile personal financial management apps The average value place in POS environments, programmes also include Koho’s prepaid Visa card, which is of prepaid cards pur- where average prepaid growth rates register higher issued by Peoples, and Mogo Finance Tech- chased in the year incidences of nology’s Platinum Prepaid Visa card, which prior to March 2016 have topped that of both credit and purchasing pre- is issued by Toronto-based Home Trust and was C$114.93, debit cards – at 12% volume and 16% paid cards – for linked to the digital Mogo Spending Account. compared to in terms of value in the period example WestJet Vancouver-based Mogo says cardholders C$120.32 in the 2011-2015. Closed-loop e-commerce Rewards mem- can link existing bank accounts to the Mogo previous survey. bers (48%), Aer- Spending Account and transfer funds instant- TSI’s Canadian transactions were used by 25% of oplan Distinction ly. “The Mogo account is designed to help Payments Forecast online shoppers in 2015” members (54%), consumers monitor and control spending in 2016 says the value of Michael Tompkins Air Miles Gold a convenient, engaging way, through features open-loop prepaid cards research lead, members (37%) and such as instant transaction alerts with each purchased by Canadians in Payments Canada Onyx members (47%). purchase along with updated real-time bal- 2015 was C$1.79bn and repre- It’s also worth noting a much ances and no monthly account fees,” it says. sented 14.9 million cards. The report higher incidence of prepaid card “Mogo cardholders have access to Mogo’s anticipates that the market will grow to purchases among those who have transferred other products, including free monthly credit C$2.1bn in terms of the value of cards pur- a credit card balance at least once in the past score monitoring, mortgages and personal chased, with a total of 18.8 million cards and two years (49%).” loans.” an average value per card of C$113 in 2020. One in four gift cards were purchased for The November 2016 How Canadians Pay personal use in 2016 (39% of the 32% of Today survey of 1,006 Canadian consumers MarketSense credit cardholders who bought prepaid cards found that while 99% have bank accounts, Canadian financial market research firm in 2016), with a slightly smaller proportion there is a growing interest, especially among MarketSense’s survey of 5,257 adult Cana- (36% of those who had bought prepaid younger people, in alternative payment tools. dian credit cardholders found that purchas- cards) purchased for family or friends, Mar-

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CI 541.indd 12 06/03/2017 17:02:27 Cards International PRODUCTS: PREPAID IN CANADA

ketSense found. Cards purchased for chil- n CANADA – PREPAID CARDS IN CIRCULATION n CANADA – PREPAID CARD TRANSACTION dren were less common, with 9% purchased 2010–2019 (MILLION) VALUES 2010–2019 ($BN) for those living at home and 8% for children living away. “Eight in 10 respondents agreed that it 15 5 is important to be able to easily determine the balances remaining on prepaid cards,” 12 4 Lovett and Huestis say. “Six in 10 agreed that prepaid cards are a useful way to edu- cate people about the appropriate use of 9 3 credit cards. An equal proportion said they are likely to purchase prepaid cards for chil- 6 2 dren under the age of 18 or to use prepaid cards as an alternative to travellers’ cheques or foreign currency when travelling.” 3 1

Prepaid card regulations 0 0 In Canada, private-label or closed-loop 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 retailer-branded gift cards are regulated at provincial level. In British Columbia, gift cards cannot have expiry dates unless they Source: Cards International Source: Cards International are issued or sold for charitable or promo- tional purposes for a specific good or service. In May 2014, the Canadian Federal Gov- dedicated mobile app, and the Smart Prepaid are actually used by the person who buys ernment introduced regulations for open- Travel Visa card, available through CIBC them. “They buy prepaid cards so they can loop prepaid cards. The Prepaid Payment which stores US dollars, euros, pounds and shop anonymously online, not for gifting,” Product Regulations include a ban on card Mexican pesos. he says. maintenance fees for at least a year after the Peoples is also active in the travel prepaid card is activated, a ban on expiry dates for Peoples Card Services segment. In February 2017, it launched the non-promotional open-loop prepaid cards, Peoples Card Services acts as a sponsor for Cash Passport prepaid MasterCard-brand- a requirement that issuers disclose all fees multiple prepaid card programme managers, ed multi-currency travel card with Canada associated with the card in an information offering a range of card programmes they Post and prepaid card distributor Payment box printed on the card’s packaging, and a can sell to customers. Source. requirement for terms and conditions to be “We provide a one-stop shop for program disclosed, including how to get balance infor- managers,” explains Read. “Peoples Card Koho mation. Services acts as the issuer for its programme Canadian fintech startup Koho will launch The Financial Consumer Agency of Cana- manager clients, managing the relationships a GPR prepaid Visa card issued by Peoples da (FCAC), a federal body, is responsible for with Visa, MasterCard, and the proces - at the end of the first quarter of 2017. Users enforcing compliance with Canada’s open- sors, acting as BIN sponsor, managing the will be able to have their salary deposited to loop prepaid card rules, which apply to all cardholder funds, and ensuring that all the their Koho card, withdraw cash from ATMs, federally regulated financial institutions such parties – prepaid program managers, proces- transfer money and pay bills. as banks and trust companies. sors, distributors – are compliant with fed- “The Koho card will be focused at millen- eral regulations.” nials,” says Read. “It will be accompanied Issuers Peoples Card Services also offers secured by a mobile financial management app that Peoples Card Services, the card-issuing arm credit cards that users have to prepay in lets cardholders manage their Koho card and of Peoples Trust, is the largest Canadian advance. “These credit cards are designed to their finances on their phone. open-loop prepaid card issuer in terms of establish or rebuild a cardholder’s credit rat- “You’ll be able to enter your expenses and market share, says Jennifer Tramontana, the ing, as the cardholder’s usage is reported to income into the Smart Spending Account app CPPO’s executive director. “Home Trust also the credit bureaux,” says Read. and it will tell you how much discretionary has a sizeable piece of the Canadian open- Currently, open-loop prepaid cards sold by money you have left to spend, which will loop prepaid card market,” she says. retailers are the largest segment for Peoples. help you become more financially responsi- “The big six Canadian banks, in general, “This comprises both GPR cards that cus- ble,” Read continues. tend to issue prepaid cards to their own cus- tomers can deposit the cash from their pay- “This is disruptive to standard bricks-and- tomer base as an added benefit,” says Read. cheque onto, and retailer-branded anony- mortar banking, as Koho lets you manage However, Royal Bank of Canada recently mous prepaid shopping cards,” Read adds. your finances via your phone.” withdrew from the open-loop prepaid card “The vast majority of the prepaid funds Initially, Koho cardholders will not be able market. we see being loaded onto our cards are onto to use a mobile app for mobile shopping at In September 2016, CIBC launched two shopping cards and GPR cards sold in super- the point of sale. prepaid travel cards: the CIBC Air Canada markets. The biggest GPR card that we offer “As the Koho card is registered in the card- Conversion Visa Prepaid Card, a reloadable is the Titanium MasterCard.” holder’s app, it can be used for online shop- prepaid card available only through Air Read says that while Peoples’ retailer- ping,” says Read. “We’re working on add- Canada that allows clients to store up to 10 branded open-loop prepaid cards are sold ing the ability to do NFC payments from the currencies in a single location, managed by a in supermarkets as gift cards, 75% of these cardholder’s phone in stores.” <

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CI 541.indd 13 06/03/2017 17:02:28 COUNTRY SURVEY: THE PHILIPPINES Cards International

Credit cards hoping to keep the limelight in The Philippines

Although small in size, the Philippines’ credit card market is poised for growth due to the implementation of the central bank’s Interbank Debt Relief Programme which has calmed a consumer aversion to borrowing. Can credit cards maintain this positive trajectory, or will alternatives steal the show?

ash continues to be the most popu- payment transaction volume, primarily as a Cash’s share is set to gradually decline lar consumer payment instrument in result of a lack of banking infrastructure, between 2017 and 2021 due to the central the Philippines, particularly in rural highly limited consumer awareness of elec- bank’s financial inclusion programme. The C areas. In total, it accounts for an tronic payments, and restricted acceptance emergence of contactless technology is also overwhelming 99.5% of the country’s total at retailers. expected to support payment card growth.

n VALUE OF CHEQUE PAYMENTS ($BN) IN THE n VALUE OF PAYMENT CARDS ($BN) IN THE The unbanked – a large untapped market PHILIPPINES, 2012–2016 PHILIPPINES, 2012–2016 The percentage of the population aged 15 or above with a bank account was 34.3% in 2016. The government has launched a num- 0.8 25 ber of initiatives, programmes and policies to bring a greater proportion of the population 0.7 into the formal banking system. 20 0.6 The Philippine Development Plan 2011– 2016 includes the promotion and delivery 0.5 15 of financial services in rural areas, financial 0.4 literacy programmes, consumer education, and the development of loan and banking 10 0.3 products to meet the needs of women, and 0.2 low-income and disabled individuals. 5 As part of the government’s financial 0.1 inclusion plan, a number of micro-banking

0.0 0 offices, microfinance providers, pawn shops, and remittance agents are being employed to 2012 2013 2015 2016 2016 2014 2012 2013 2014 2015 provide access to financial services in un- or underserved areas. The growth of electronic money will bring more people into the for- Source: Verdict Source: Verdict mal banking system.

14 y March 2017 www. cardsinternational.com

CI 541.indd 14 06/03/2017 17:02:37 Cards International COUNTRY SURVEY: THE PHILIPPINES

Rising inflow of remittances n PHILIPPINE DEBIT CARD MARKET SHARES BY n PHILIPPINE DEBIT CARD MARKET SHARES BY Remittances form a key part of the Philip- ISSUER (%), 2016 SCHEME (%), 2016 pines’ economy, accounting for 10% of the country’s GDP. Remittances also play an important role in driving growth in the debit cards market, as many Filipinos emigrate. Inward remittances Land Bank rose from $24.6bn in 2012 to $27.9bn in of the Others Philippines 2016, and are expected to grow as more Fili- 20.5% 21.9% pinos seek work abroad. MegaLink Others 39.0% With rising migration rates, many banks 46.8% Visa offer bank accounts and debit cards that 16.3% 13.1% facilitate money transfers to beneficiaries back home. Land Bank of the Philippines BPI BancNet has formed a partnership with Trans-Fast 15.0% 27.4% Remittance LLC, a provider of multicur- rency cross-border payments solutions in September 2015, to enable remittance trans- fers for Trans-Fast customers. The partner- ship enables Filipinos in the US and Canada Source: Verdict Source: Verdict to use Trans-Fast to make real-time instant transfers into Land Bank of the Philippines n PHILIPPINE PAY LATER CARD MARKET SHARES n PHILIPPINE PAY LATER CARD MARKET SHARES accounts. Funds can then be withdrawn with BY ISSUER (%), 2016 BY SCHEME (%), 2016 a debit card.

Others Robust credit card market growth 6.4% Debit cards remained the largest card type American in terms of transaction value with an 81.7% Banco Express de Oro 11.0% share, a proportion that is expected to 18.0% grow over the next five years as more of the unbanked population is brought into the for- Others Metrobank mal banking system. 49.0% MasterCard Although small in size, the credit cards 17.8% Visa 47.0% market registered robust growth between 35.6% 2012 and 2016, both in terms of transaction BPI value and volume. 15.2% Such growth can be attributed to economic expansion and a steady rise in the middle-class and young working populations. Monthly instalment facilities and pricing benefits such as annual fee waivers, reward Source: Verdict Source: Verdict programmes and cashback are also driving credit card transactions. The enactment of the central bank’s Inter- billing in June 2016. A number of mobile and chases. Payment cards accounted for 41.2% bank Debt Relief Programme to control digital wallets are available in the market, of the total e-commerce transaction value in , and the arrival of global including PayPal, GCash, Straight2Bank, 2016. credit bureaux, are expected to strengthen Smart Money and PayMaya. Banks also offer exclusive cards for online the market. purchases. Rizal Commercial Banking Cor- The E-commerce to support growth poration offers a MasterCard-branded web Alternatives gain prominence Philippines’ The Philippines’ e-commerce shopper card with no annual membership Rising preference for electron- market is one of the fast - fee, and a maximum credit limit of $636.10. ic payments with enhanced e-commerce market est growing in Southeast Cardholders receive reward points when they security features, coupled is one of the fastest Asia, primarily driven by make online purchases. with growth in the young growing in Southeast increases in online and In addition to payment cards, digital, population and smartphone Asia, primarily driven by smartphone use. The value mobile wallets and carrier billing are gain- penetration, saw banks, pay- of e-commerce rose from ing prominence, and collectively accounted ment service providers and increases in online and $1.2bn in 2012 to $3.6bn in for 22.0% of the total e-commerce transac- telecoms companies launch smartphone 2016, at a CAGR of 31.10%; tion value in 2016, increasing from 15.7% solutions. use. it is expected to reach $10.6bn in 2012. Philippines-based telecoms pro- by the end of 2021. Digital wallets such as Smart Money and vider Globe Telecom partnered with For- The fast-growing e-commerce market GCash are becoming popular for online pur- tumo, an Estonia-based mobile payments is acting as a driver of payment card mar- chases, mainly as a result of the added secu- solution provider, to introduce direct carrier ket growth, as most users make online pur- rity and convenience they offer. <

www.cardsinternational.com March 2017 y 15

CI 541.indd 15 06/03/2017 17:02:41 COUNTRY SURVEY: ESTONIA Cards International

Estonia’s younger consumers making the digital push

Estonia’s population aged 18-25 are substituting cash for payment cards; the country has the highest debit card penetration in the Baltic region. With the floodgates for contactless and e-commerce very much open, digitalisation is the natural step given the younger generation’s responsiveness to cashless alternatives ard transactions in Estonia record- Payment card penetration stood at 1.40 in payments industry. A 2015 report by the ed robust growth between 2012 and 2016, which is higher than Latvia (1.25) and European Central Bank indicated that at five 2016, surpassing cash to become Lithuania (1.24). Estonia’s young population instances of fraud per 1,000 people, Estonia C the dominant payment instrument. are among the most prolific users of payment was the lowest-ranking nation in the Single In terms of transaction volume, payment cards in the Baltic region. According to a sur- Euro Payments Area, where the average is cards accounted for 44.3% of the cards vey by SEB in 2015, 76% of the Estonian 20. and payments industry in 2016, while population aged 18-25 used payment cards The country has a robust banking infra- cash accounted for 33.6%. In total, 90% for all purchases, in comparison to 59% in structure. ATM penetration – the number of individuals used payment cards for Latvia and 40% in Lithuania. of ATMs per 100 inhabitants – stood at 7.8, daily purchases in 2015, as compared to Low levels of card fraud make Estonia a lower than its Baltic peers Latvia and Lithu- only 33% in 2001. model country in the European cards and ania, which had respective penetration rates

n VALUE OF CREDIT TRANSFERS ($BN) IN n VALUE OF CHEQUE PAYMENTS ($BN) IN n VALUE OF PAYMENT CARDS ($BN) IN ESTONIA, ESTONIA, 2012–2016 ESTONIA, 2012–2016 2012–2016

350 0.008 6

0.007 300 5 0.006 250 0.005 4 200 0.004 3 150 0.003 2 100 0.002

50 0.001 1

0.000 0 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016

Source: ECB and Verdict Source: ECB and Verdict Source: ECB and Verdict

16 y March 2017 www. cardsinternational.com

CI 541.indd 16 06/03/2017 17:02:47 Cards International COUNTRY SURVEY: ESTONIA

n ESTONIAN DEBIT CARD MARKET SHARES BY n ESTONIAN DEBIT CARD MARKET SHARES BY Debit cards remained the most ISSUER (%), 2016 SCHEME (%), 2016 widely used payment card

between 2012 and 2016. Others Others They accounted for 91.8% of Nordea 4.9% 0.1% 3.7% the total transaction volume Visa and 90.5% of the total value 8.9% of payment card transactions

in 2016. Sebbank 31.5% Swedbank 59.9% of 10.5 and 11.7. POS terminal penetration MasterCard stood at 346.9, compared to the same two 91.0% countries which had respective rates of 335.8 and 536.7. All ATMs are expected to have contactless functionality by 2020, while new POS ter- minals are expected to have contactless functionality by the end of 2017. Swedbank, Source: Verdict Source: Verdict Nordea Bank and LHV Pank have already launched contactless cards to expedite the process. n ESTONIAN PAY LATER CARD MARKET SHARES n ESTONIAN PAY LATER CARD MARKET SHARES BY ISSUER (%), 2016 BY SCHEME (%), 2016 Highest debit penetration in Baltic region Debit cards remained the most widely used Others payment card between 2012 and 2016, and Visa 5.5% accounted for 91.8% of the total transaction 6.1% volume and 90.5% of the total value of pay- Others ment card transactions in 2016. 10.% At 116.3 cards per 100 inhabitants, debit Nordea 10.% card penetration in Estonia is the highest in the Baltic region, compared to Latvia with Swedbank 85.2 and Lithuania with 108.9. According Sebbank 60.0% MasterCard to the World Bank’s Global Findex Survey, 20.% 88.4% banking penetration in Estonia reached 98.1% in 2016; as debit cards are generally complementary account products, the reason for their high penetration rate is clear. In addition to banks, mobile banking ser- vice provider Pocopay launched its service in February 2016. It allows customers to open Source: Verdict Source: Verdict and operate Pocopay bank accounts using mobile phones. There are three account to embrace the technology. Estonia had an of 70,000 online purchases were made each types: Poco Power, Poco Basic, internet penetration rate of 88.4% day during the first quarter of 2016; this and Poco Power Youth. Poco According in 2015 and in 2016, smart - included 50,000 purchases from domestic Basic has no monthly fee to a survey phone penetration measured online retailers. but has limited transaction 38%. SEB plans to introduce While online banking remains the most functionality. The Poco by SEB in 2015, contactless cards by 2017. popular method of payment at domestic Power account is available 76% of the Estonian Due to a government focus e-retailers, bank cards are generally used to for a monthly fee of $3.20 population aged 18-25 on improving broadband make purchases from foreign websites. (€2.90), and carries no used payment cards penetration and speeds, the Consumers also used e-wallets, mobile transaction fees. The Poco advent of 3G and 4G technol- wallets and carrier billing services. According Power Youth account is for for all their ogies, and the growing popu- to Eesti Pank, for online transactions com- individuals aged 18-26, car- purchases larity of smart devices, penetra- pleted in the first quarter of 2016 an average ries a monthly fee of $1 and has tion is anticipated to deepen. payment of $57.10 was made through bank the same features as the Poco Power links, while for payment cards the average account. All account holders are offered a E-commerce was $54.90. MasterCard contactless debit card. Estonia’s e-commerce transaction value The average online purchase via a payment rose from $126.3m in 2012 to $216.4m in card was $73.90, and the average payment Contactless to gain prominence 2016. Internet banking services remained via credit card was notably higher than the Europe has the world’s highest adoption of the most popular online activity. According average payment by debit card, at $66.10 contactless payments. Estonian banks plan to the Central Bank of Estonia, an average and $48.20 respectively.<

www.cardsinternational.com March 2017 y 17

CI 541.indd 17 06/03/2017 17:02:49 COUNTRY SURVEY: CAMBODIA Cards International

Cambodia’s cards making a real push

With some 90% of the population living in rural areas, card penetration in Cambodia is low. However, the establishment of the Credit Bureau of Cambodia has begun a regulatory dialogue that, if continued, could bolster consumer confidence and encourage the deeper penetration of payment infrastructure

ambodia is a cash-based society. 2021 are anticipated to register a CAGR of educating customers and merchants about This is a result of low banking pen- 12.52% in terms of transaction value. the benefits of card-based payments. etration, a lack of consumer knowl- Use of cards is mostly limited to cash with- Cambodia is a highly dollarised economy. C edge of other payment instruments, drawals at ATMs, with little use recorded at Most payment instruments are paid in two and limited payment infrastructure. merchant outlets – card transactions at POS currencies: US dollars and Cambodian riel. The government and banks are focusing terminals accounted for only 4% of the total Over 70% of card transactions are carried on providing financial access to the country’s card transactions in 2016. out in US dollars, with POS payments only unbanked population, expanding banking A major challenge to the growth of card- available in this currency. infrastructure, and introducing agent-based based payments in Cambodia is the practice banking. of merchants charging additional fees. Inter- Low banking penetration Payment cards are gradually becom - national scheme providers and commercial Debit card penetration stood at 10.1 per ing more accepted, and between 2017 and banks are working to remove surcharging by 100 individuals in 2016, which is lower than in peers such as China (369.8), Malaysia n VALUE OF CHEQUE PAYMENTS ($BN) IN n VALUE OF PAYMENT CARDS ($BN) IN (140.7), Thailand (116.5), Vietnam (114.4), CAMBODIA, 2012–2016 CAMBODIA, 2012–2016 India (60.7), the Philippines (49), Indonesia (48.2) and Pakistan (15.7). Low banking penetration and limited 30 0.20 consumer awareness of the benefits of cards remain primary reasons for low debit card 25 uptake among the public. 0.15 As the majority of the population resides in 20 rural areas, exposure to electronic payments is relatively low. 15 0.10 To this end, banks and the government are undertaking various measures to bring more 10 people into the formal banking system. 0.05 Local operator Wing is focusing on provid- 5 ing access to financial services to rural and remote locations; the bank has expanded its 0.00 presence in 25 provinces and serves consum- 0 2012 2013 2015 2016 ers through a network of 5,000 branches. 2012 2013 2014 2015 2016 2014 Wing also offers agent-based banking servic- es, with its three million customers carrying out around 60 million transactions annually Source: Central Bank of Cambodia and Verdict Source: Central Bank of Cambodia and Verdict through agents.

18 y March 2017 www. cardsinternational.com

CI 541.indd 18 06/03/2017 17:02:55 Cards International COUNTRY SURVEY: CAMBODIA

To increase access to infrastructure, Acle- n CAMBODIA’S DEBIT CARD MARKET SHARES BY n CAMBODIAN DEBIT CARD MARKET SHARES BY da Bank increased its ATM network from ISSUER (%), 2016 SCHEME (%), 2016 219 machines in 2014 to 280 in 2015, and the number of POS terminals from 2,116 to 2,595 over the same period. These initiatives provided a much-needed Others boost to the government’s financial inclu- 10.0% sion programme, and resulted in the banked population rising from 10% in 2012 to 33% Others 26.3% in 2016. Acleda Bank 57.7% Scope for growth for credit cards market Cambodian Visa With the majority of the population belong- Public Bank Canadia 4.9% Bank 90.0% ing to the lower middle class, and with 90% 11.3% residing in rural areas, exposure to credit cards is very low. Banks are therefore focusing more on cor- porate, upper-middle-class, high-income cus- tomers, and travellers. An absence of bankruptcy laws has also Source: Central Bank of Cambodia and Verdict Source: Verdict hindered credit card adoption, as supplying credit cards to consumers without any legal n CAMBODIAN PAY LATER CARD MARKET SHARES n CAMBODIAN PAY LATER CARD MARKET SHARES assurance of receiving repayments is risky for BY ISSUER (%), 2016 BY SCHEME (%), 2016 issuers. Despite being small in size, the credit card market has registered significant growth in terms of both the number of cards in circula- tion and the transaction value. The Credit Bureau of Cambodia (CBC) Acleda Others Bank was established in 2011 to help develop the MasterCard 36.8% 29.2% country’s credit cards market. The CBC is a 35.0% private company, regulated and licensed by Visa the NBC, and is responsible for the adminis- Union 65.0% tration of credit information. Canadia Commerical The CBC has provided the market with a Bank Bank framework and some regulatory structure, 14.5% 19.5% which has built confidence in issuers and cus- tomers. Since the CBC’s establishment, the credit cards market has registered an aver- age annual growth rate of 17.3% in terms of transaction value. Source: Verdict Source: Verdict Banks offering own m-payment services All major banks in Cambodia are now devel- ment services such as provisions for utility It also has statutory responsibility for pay- oping their own mobile wallets (m-wallets), bill payments, mobile phone top-ups and ment system oversight and supervision. The in an aim to offer convenient banking ser- fund transfers. NBC has the authority to implement Anu- vices to customers,. Kret and Prakas. Anu-Kret is an executive Maybank launched its MayBank Mobile Regulation and compliance regulation prepared by relevant ministries, app in May 2016, allowing customers The NBC was established on December and must be adopted by the Council of Min- to conduct transactions, transfer Banks 23, 1954, and operates as the cen- isters and signed by the country’s Prime Min- funds and make online purchas- and the tral bank of Cambodia. ister. Prakas covers all regulations made at es. Similarly, ABA introduced According to the law on ministerial level. ABA Mobile in May 2016, government Banking and Financial In 2011, the NBC published the Banking which facilitates person-to- are taking various Institutions, it licenses and Code 2011, which is applicable to all finan- person payments, cash with- measures to bring more supervises all banks in the cial institutions. The code was subsequently drawals at ATMs via a code of the population into country. updated in accordance with Basel Committee system, transaction and bal- As of December 2015, principles. ance history checks, and utility the formal banking there were 36 commercial In 2012, the NBC upgraded the National bill payments. system banks, 11 specialised banks, Clearing House to an automated system, to Acleda Bank launched a mobile eight foreign bank representative allow clearances of cheques, credits, direct banking solution, Acleda Unity, which offices, 58 microfinance institutions, debits and credit remittances in a central enables customers to view balances in the 104 credit operators and nine leasing com- location. In addition to these, it will facilitate form of a mini statement, and provides pay- panies active. intra-bank electronic payments.<

www.cardsinternational.com March 2017 y 19

CI 541.indd 19 06/03/2017 17:02:57 GUEST COMMENT: ACI WORLDWIDE Cards International

Payments regulation: bringing down walls, letting innovation in

With a new fast payments ecosystem, how open is too open? Customers will not sacrifice convenience for security, so what is the best way to strike an effective balance between the two? Silvia Mensdorff-Pouilly, general manager of Europe processors and networks at ACI Worldwide, writes

he move to a cashless society is vis- ible everywhere you look. While Germans love their cash payments, T even autobahn restrooms (yes, the ones most people whizz by at 180kmh) are going contactless. Accumulating enough small change for three children’s needs on a long car journey used to be a regular challenge: No more – we just tap. This is just one example of why I am personally grateful for an increasingly open payments ecosystem! The speed of this digital revolution is increasing, driven in part by a more techno- logically and commercially open payments ecosystem. The regulatory drive for competition and and authentication comes into play. But the question remains: When it comes innovation is, in turn, spawning new pay- It is about providing frictionless pay - to payments, how open is too open? We are ments players across the full spectrum of ser- ments without it feeling like pickpocketing. talking about people’s money, and while vices. From frictionless checkout to real-time This can be accommodated by the payments everyone wants convenience, when that con- payments, new business models are rapidly industry by building in authorisation prefer- venience opens the door to fraud, suddenly appearing. ence management – happy transactions are the tables turn. So does this mean a smaller slice of the pie fast, open and secure. This being the case, no one can argue for incumbents? Not at all. There are still PSD2 will drive an open marketplace, against the fact that we have to regulate plenty of areas of payments which are cur- where digital payments abound. And digital financial services because of the massive rently underserved, and not just in the con- payments require a fast ecosystem. Beyond impact on society. There is, however, a ten- sumer space. the fast instant transfer of money (in real- dency for the payments ecosystem to expect The SME market holds revenue oppor- time), the entire customer experience needs doom and gloom regarding new regulations, tunities for those who develop a business to be fast. seeing them as restrictive, interfering, costly, model for tailored services, micro payments, From customer onboarding, right up to the or all of the above. bespoke instant payments, business-to-busi- immediate transfer of funds, all the stages of The reality is that the Payments Services ness discounts, and more. a fast digital payment offer opportunities to Directive 2 (PSD2), alongside other regula- In the cards space, MasterCard and Visa bring new services to market, which meet the tory changes being enacted across Europe are investing in strategic acquisitions and demand for real-time customer experiences. and the world, is a massive opportunity for developing new technologies to develop their Payment initiation in particular will be a hot- all participants in the payments ecosystem person-to-person and instant offerings. bed of innovation as payment initiation and to carve out new revenue streams. PSD2 is The one-trick payments pony may dis - account information service providers spring shaking up the industry, and for good reason. appear in this new payments ecosystem, as up to take advantage of these new and excit- Open payments require new kinds of col- acquirers, processors, fintechs and banks ing opportunities. laboration between traditional payments expand their payments offerings to meet cus- These fast services will require open partner- players and new entrants, and successful col- tomer demand for greater choice. The key is ships in order to succeed, whether that means laboration has its foundations in trust. to put the customer at the centre of the pay- partnering with other financial institutions The payments ecosystem is changing, ments equation, and then build a model that and intermediaries for access to new customers with new technologies, schemes and regu- serves their needs. and capabilities, or being an attractive partner lators working to bring down the walls. It is especially important to keep the cus- through both attitude and ease of integration. However, strong regulation is required to tomer in mind when it comes to the innova- In an open payments environment we have aim the wrecking ball. The goal is to enable tion part of the equation. Frictionless is the to think of the regulator as a partner, helping us new kinds of payments service through data current buzzword, and it is true that custom- to develop new revenue streams. We all want access, but not at the expense of privacy. ers do want frictionless payments – look at to be successful, but as Charles Darwin said: Regulation opens up payments and mandates the uptake of contactless card payments. “It is not the strongest of the species that sur- data access and transparency, while also But customers also want a sense of control, vives, nor the most intelligent, but the one most encouraging competition and innovation. which is where regulation around secure ID responsive to change.”<

20 y March 2017 www.cardsinternational.com

CI 541.indd 20 06/03/2017 17:03:01 Retail Banking Conference & Awards: London 2017 11th May 2017 • Waldorf Hilton, London

Retail Banking: London 2017 brings together high-street banks, Why Attend? retailers, new market entrants, financial professionals and industry • Hear from key senior industry thought leaders via informative and disruptors in an active discussion of the key issues facing the industry: inspiring keynote sessions • How is the Internet of Things (IOT) driving industry change? • Network with speakers, participants, partners and share best practise • Artificial Intelligence - friend or foe? with your peers • Generation Y Banking Solutions • Discover the latest key industry trends and discuss practical solutions to the most pressing industry questions • Challenger Banks disrupting the landscape • Celebrate at our black tie awards dinner recognising those at the top • Cybercrime, Identity Theft and the DarkWeb of their game • The Future of Payments

Top industry movers and shakers will meet to debate the importance of new strategies, business practices and partnerships in the industry. We invite you to become an active voice in this discussion to shape the future of retail banking. For more details please contact Victoria Pennell on [email protected] or call +44 (0) 20 3096 2634.

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