Savantor MarketEye: 17 – 31 July 2015 2011

Savantor Limited 68 Lombard St London EC3V 9LJ This is a high-level industry news and business intelligence update Tel: 0870 734 6250 Fax: 0870 734 6251 bulletin. For further information on any of the items contained within the email: [email protected] bulletin or to discuss the potential impact of these items on your www.savantor.com business, please contact Savantor on [email protected] .

Items in this issue: Savantor’s View ...... 1 Stripe signs deal with Visa ...... 2 An Unstructured View ...... 1 Royal Mint sees increased demand for coins ...... 3 Visa confirms Visa Europe acquisition talks...... 3 Products & Initiatives ...... 1 Card fraud rises across Europe - ECB...... 3 CSC and HCL to form core banking joint venture ...... 1 First Data prepares for multibillion dollar listing ...... 3 MasterCard to connect Europe to ...... 1 Atom Bank signs for Intelligent Environments platform .... 2 Mobile Money ...... 3 Startup vows to 'humanise' credit market via social ING Bank introduces voice-activated mobile payments ... 3 media data ...... 2 Santander unveils 'cash kitty' app ...... 4 Azimo and HomeSend partner on mobile remittances ..... 2 Equity Bank takes on M-Pesa with mobile money launch ...... 4 Market News ...... 2 TfL warns users of fines for flat batteries ...... 4 MasterCard pays out $61 million to settle Tesco interchange suit ...... 2

Savantor’s View

An Unstructured View For some time now we have heard, even seen products and services that claim to use unstructured data from public sources such as social media to take a view, in whatever context, on an individual. According to Hello Soda, a new Fintech startup, this can also apply to people’s credit-worthiness. Structured data can be hard and/or expensive to come by and widely used, static processes that are based on this data are inevitably costly and time-consuming to adapt, update or replace. It is easy, therefore, to see how social media could be seen as a cheap, inadvertently surrendered source of a variety of information. On the face of it, the idea that a person’s online activity – an inherently incomplete and probably skewed picture of a personality – can be analysed to determine whether or not they are a good credit risk in the real world seems questionable at best... but who is to say? On a general note, the amount of unstructured data that is publically available about people, their preferences, views and activities will continue to grow. As we develop the ability to analyse, segment and perhaps even understand this data, we can likely expect to see it play a larger part in consumer finance decisions than perhaps we can foresee (or wish for) today. Products & Initiatives

CSC and HCL to form core banking joint venture CSC and India's HCL Technologies have signed a definitive joint venture agreement to form a banking software and services company addressing the multi-billion-dollar, global core banking software market. CSC, which currently serves over 100 banking and financial services clients in 15 countries, will provide its core banking, cards, payments and default management industry software and product development expertise to the venture. HCL, which draws 25% of its revenue from the banking sector, will provide capital investment, experience in product engineering and application implementation services, as well as banking sales and client engagement expertise. CSC is likely to be the lead partner in the venture, drawing on its experience in the market with its Hogan core banking platform and CAMS card management suite. (Source date: 31 July 2015)

MasterCard to connect Europe to Samsung Pay Samsung has struck a deal with MasterCard to connect European card issuers to the handset

Whilst Savantor Limited (“Savantor”) has used reasonable efforts to obtain information from sources which it believes to be reliable it does not make any representations or give any warranties or guarantees that the information provided or any opinions expressed herein are accurate, reliable or complete and none should be relied upon as statements of fact. In no event, including (without limitation) negligence, and in no circumstances will Savantor be liable for any loss or damage of any kind whatsoever, in cluding (without limitation) any direct, special indirect or consequential damages, caused by the use of or reliance upon inf ormation provided or opinions expressed herein.

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manufacturer's forthcoming mobile payments service. Under the agreement, European banks will be able to connect to the MasterCard Digital Enablement Service platform and activate the Samsung Pay service upon launch. Much like Apple Pay, consumers will be able to activate their credit, debit, reloadable prepaid and small business cards in the Samsung Pay service and use their mobile devices to make purchases at contactless and magstripe terminals across the continent. (Source date: 30 July 2015)

Atom Bank signs for Intelligent Environments platform British digital challenger bank Atom has picked Intelligent Environments' software platform to underpin its mobile apps. The decision to use Intelligent Environments' Interact for its front office technology comes after US vendor FIS was chosen for the back office. The choice of vendors comes despite the fact that Atom founder Anthony Thomson teamed up with another firm, Fiserv, last year specifically to develop a cloud platform designed to help the raft of new challengers bidding to enter the UK banking market. (Source date: 27 July 2015)

Startup vows to 'humanise' credit market via social media data A fintech startup is attempting to humanise the credit market by using unstructured data such as social media signals. The new company, Hello Soda, has developed a platform that assesses customers' creditworthiness based on what its founders believe is more relevant data than the traditional credit rating model which are based on historical financial performance. Hello Soda also believes that its approach will not only reduce fraud but lead to more responsible lending through a greater reliance on human behaviour in the credit decision making process. (Source date: 21 July 2015)

Azimo and HomeSend partner on mobile remittances Azimo and MasterCard-controlled outfit HomeSend have teamed up to enable users throughout Europe to send money to loved ones in Africa and Asia through their mobile phones. Under the deal, Azimo customers in 20 European countries can send funds to mobile money accounts in Armenia, Burkina Faso, Fiji, Ghana, Indonesia, Kenya, Nepal, Nigeria, the Philippines and Somaliland. A joint venture between MasterCard, eServGlobal and Bics, HomeSend acts as a global remittance hub, bridging the gap between banks, telcos and others. (Source date: 21 July 2015)

Market News

MasterCard pays out $61 million to settle Tesco interchange suit MasterCard has shelled out $61 million to UK supermarket chain Tesco in the first of an expected wave of settlements by card schemes over interchange fee lawsuits lodged by British retailers. Tesco was one of 20 UK retailers which filed suit against MasterCard in 2013 alleging historic overpayment of 'anti-competitive' interchange fees. Earlier this month, EU anti-trust regulators issued a formal 'Statement of Objections' against MasterCard, accusing the card scheme of using its rules to artificially inflate fees and of over-charging retailers for purchases made by non-EU cardholders. (Source date: 31 July 2015)

Stripe signs deal with Visa Hot payments startup Stripe has landed a new round of funding from investors including American Express, Visa and Sequoia Capital, valuing the San Francisco-based company at $5 billion. The most interesting aspect of the deal is the recruitment of Visa to the Stripe fanbase. The startup says it has signed an agreement with the card scheme to work on digital transactions like website 'buy buttons' and payments security. With Visa onboard, Stripe will not only gain access to a much larger merchant base, it will also be able to grow its business internationally, expanding beyond the 25 countries currently serviced by the company. (Source date: 28 July 2015)

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Royal Mint sees increased demand for coins Despite talk of cash's imminent demise, the Royal Mint supplied 2.4 billion coins in the UK in the last year, up from two billion in the previous 12 months. With contactless payments taking off and Apple leading the charge for mobile money, many are forecasting the beginning of the end for notes and coins. Yet the Mint says that is saw strong demand from UK banks and the Post office in the year to March. Circulating coin sales increased by five per cent to £106 million, with operating profit from this up 16% to £15.8 million. (Source date: 24 July 2015)

Visa confirms Visa Europe acquisition talks Visa has confirmed that it is in talks about buying back its former subsidiary Visa Europe, with a decision on whether to complete a deal expected by October. While they share the same brand, Visa Europe and Visa Inc. have been separate entities since 2007, when they split ahead of the US business listing on the New York Stock Exchange. The European business is owned by member banks. Visa Inc. has a call option to buy shares in the bank-owned European organisation, while Visa Europe's members have a put option to sell them to Visa Inc. In May, citing sources, Bloomberg reported that talks between the two were underway but were at an early stage and could stumble over price, which is expected to be in the $15 billion to $20 billion range. (Source date: 23 July 2015)

Card fraud rises across Europe - ECB The European Central Bank (ECB) has reported an eight percent increase in fraud among cards issued or acquired within the Single Euro Payments Area (Sepa) for 2013. The total value of fraudulent card transactions amounted to $1.44 billion and is the highest in absolute terms for five years, according to a report issued this week by the ECB. The 2013 figures also showed changes in the type of frauds committed with 66% of the total value (€958 million) resulting from so-called card-not-present (CNP) payments made via the internet, post or phone. Indeed, CNP fraud was the only type of fraud loss to record an increase from the previous year, a rise of 20.6% compared to ATM and PoS fraud which both fell by 13.7% and 7.9% respectively. The ECB report attributes the fall in card present fraud to the near complete adoption of EMV standards within Sepa and the growing adoption rate among terminals outside of Europe. The report also warns that CNP fraud could continue to rise unless necessary mitigation measures were adopted, such as the guidelines issued by the European Banking Authority (EBA) and the Eurosystem for secure internet payments and card payment oversight respectively. (Source date: 22 July 2015)

First Data prepares for multibillion dollar listing Payments processor First Data has filed for an IPO that could be worth billions, just eight years after the company went private in one of the biggest leveraged buy-outs ever seen. It is estimated the action could raise somewhere between $25 and $40 billion. As one of the largest processors in the payments industry, US-based First Data works with over six million merchants and, in 2014, handled more than 74 billion transactions globally, including 45% of US credit card transactions. (Source date: 21 July 2015)

Mobile Money

ING Bank introduces voice-activated mobile payments ING Bank in the Netherlands is introducing voice-activated payments through its mobile app, enabling customers to authorise transactions by conversing with a virtual assistant on their phone. Over 100,000 ING Netherlands’ customers already use the avatar in the mobile app, called Inge, to do basic tasks such as check their bank balance or issue payments within the app.

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The bank says that feedback from early users has helped refine the application to the extent that it now feels confident to extend deployment to payments initiation, describing it as smart, intuitive alternative to PINs and passwords. (Source date: 29 July 2015)

Santander unveils 'cash kitty' app The UK arm of Santander has launched a virtual 'cash kitty' app that lets up to 100 people create and manage collective pots of money. Developed with Kalixa Payments and Monitise, the iOS and Android KiTTi app is available to anyone aged 18 or over with a debit card in the UK. Once a user downloads the app and registers as a KiTTi "owner" they are sent a prepaid contactless MasterCard and can begin inviting friends to join via the app, which shoots off text messages. Members enter their debit card details and begin paying into the KiTTi, which can be given a name, target value and payment milestones. A 35p charge is applied each time money is put into the pot. (Source date: 22 July 2015)

Equity Bank takes on M-Pesa with mobile money launch Kenya's Equity Bank has officially launched its mobile money service Equitel in a bid to take on the hugely popular Safaricom-owned M-Pesa. Equity is offering customers super Thin SIMs that are applied as an overlay to an original SIM card to offer mobile financial services irrespective of carrier control. Users can then access a range of services, such as money transfers, loans and insurance. In addition, thanks to a recently-secured mobile virtual network operator license, the bank is also taking on Safaricom on its own turf by offering voice, SMS and data services. (Source date: 21 July 2015)

TfL warns Apple Pay users of fines for flat batteries Transport for London is warning Apple Pay users that they could end up paying over the odds for tube journeys if their iPhone batteries run flat. Apple Pay launched in the UK earlier this week, with its compatibility with London's public transport system trumpeted as a major selling point. However, TfL has issued a statement urging passengers to make sure they have enough battery on their iPhones and Apple Watches before embarking on journeys. Meanwhile, on Twitter there have been grumblings about the slowness of Apple Pay compared to Oyster, as well as the odd complaint about using Touch ID in the sweltering summer heat. (Source date: 17 July 2015)

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