www.cardsinternational.com Issue 575 / january 2020
TALKING POINTS AND OBSERVATIONS
INDUSTRY EXPERTS REFLECT ON 2019 AND LOOK AHEAD TO THE NEW YEAR
INSIGHT NEWS COUNTRY SNAPSHOTS
Mastercard’s Mike Cowen Visa looks to build its Key payments market on the major trends likely mobile money market share data and analysis for Italy, to influence e-commerce with MFS Africa deal Estonia and Pakistan
CI January 2020 575.indd 1 13/12/2019 13:53:03 contents this month
COVER STORY NEWS 10 05 / EDITOR’S LETTER 06 / DIGEST • Mastercard, Doconomy team up to tackle climate change • bunq rolls out metal credit card • Visa agrees mobile money deal with MFS Africa • Desjardins data breach hits 1.8 million cardholders • Transferwise partners with Visa to simplify international transfers • N26 expands benefits programme for US customers • Amazon’s Alexa to assist Discover cardholders • Citi and Lazada target tech-savvy Singaporeans with new card 2020 FORECASTS 07
Editor Group Editorial Director: Director of Events: Douglas Blakey Ana Gyorkos Ray Giddings +44 (0)20 7936 6858 +44 (0)20 7832 4396 +44 (0)20 7936 6512 [email protected] [email protected] [email protected]
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2 | January 2020 | Cards International
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COUNTRY SNAPSHOTS 16 / ITALY 16 Italians remain slow adopters of electronic payments, primarily due to a strong inclination towards cash. The country also has a comparatively low penetration of payment cards, despite a robust POS terminal network 18 / ESTONIA Estonians are prolific users of payment cards. At 211.3, the frequency of overall card payments in Estonia is much higher than in other mature markets such as the UK (140.8), the US (109.8) and Germany (54.1) in 2019 20 / PAKISTAN Use of cash for day-to-day transactions remains prevalent among Pakistani consumers, due primarily to a high unbanked population, limited financial awareness and a largely inadequate payment infrastructure 18 FEATURE 10 10 / 2020 FORECASTS Experts from the cards and payments sector look back at the significant talking points of 2019, and look ahead to 2020 to discuss with Douglas Blakey the key priorities for the industry in the new year and beyond 14
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INDUSTRY INSIGHT 22 / IDEX BIOMETRICS As we look forward to the year 2020, Mike Cowen, head of digital payments at Mastercard UK, Ireland Nordics and Baltics, reflects on the major trends likely to influence e-commerce and the payments industry
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CI January 2020 575.indd 3 13/12/2019 13:53:17 11th Annual Retail Banker International Asia Trailblazer Summit & Awards 2020 5 March 2020 Singapore
Share experiences, challenges and opportunities with an unrivalled selection of peers from the private banking and wealth management global community.
Register now on rbiasiatrailbalzer.verdict.co.uk
CI January 2020 575.indd 4 13/12/2019 13:53:18 editor’s letter
Germany: a record year for card sales, and finally some Apple Pay progress
Douglas Blakey, Editor
parkasse and Commerzbank customers can finally in Germany the corresponding figure is a mere 11.1%. Due add their Visa and Mastercard credit cards to Apple to high card sales in the UK, the share in the EU (excluding S Pay; however, support for Sparkasse’s girocard Germany) is even twice as high (22%) as in Germany. debit card will not come until sometime in 2020. Paysys argues that when using the indicator of card turnover th Apple Pay came late to Germany – back in December 2018, to GDP, it should be borne in mind that many transactions that 11 Annual Retail Banker four years after its US debut. Initial progress has been slow, are carried out abroad with a card are carried out in Germany with Sparkasse and Commerzbank just two of the important efficiently by direct debit. International Asia Trailblazer partners not signed up in its early days. The two growth drivers for 2018 were card sales Germans famously hold more cash in the average purse or transactions generated by international card brands – Summit & Awards 2020 wallet than their European peers. The European Central Bank Mastercard, Visa, American Express, etc. – which rose by reported not so long ago that the average German wallet 19.7%, and transactions from the German national debit card 5 March 2020 contains over €100 ($111); at the time, the corresponding scheme girocard, which were up 15.1%. figures for the Netherlands, France and Portugal were a mere As Godschalk notes, growth in the girocard scheme came Singapore €44, €32 and €29 respectively. Cash displacement German- mainly from the substitution of competing signature-based style has not been helped by some of its biggest retailers. ELV transactions, also triggered by the girocard. German supermarket chain Aldi, for example, did not start to Visa, Mastercard winning market share accept credit cards until 2015. In 2018, ELV lost around €15bn in volume to the girocard Germany continues to play catch-up with other European scheme, abruptly stopping decades of continuous growth in markets, but there is progress to report and, looking ahead to the ELV system. 2020, cause for optimism. In November, German legislators The reason for the shift between schemes is price Share experiences, challenges and voted to amend an anti-money laundering law that, if competition. Due to targeted price reductions for the passed, will force operators such as Apple Pay to open up its acceptance of the girocard, ELV, whose costs remained opportunities with an unrivalled selection mobile payments system to rivals. The proposed legislation relatively stable, lost attractiveness for many merchants. is interesting, as it can give a potential boost towards cash Overall, the growth of transactions triggered by girocard – displacement in Germany. It will become even more interesting girocard plus ELV – for 2018 showed only moderate growth of peers from the private banking and if similar legislation is mooted in other markets. of 3.9%. The CAGR for card sales volumes generated with the Card sales rise by 8.5%: Paysys girocard is slightly higher for the period 2013-2018, at 4.6%. wealth management global community. Meantime, I am obliged to thank Dr Hugo Godschalk of Volumes for cards of the international schemes – consultancy Paysys for sharing data that flags up 2018 as a Mastercard, Visa and so on – show a significantly higher CAGR record year for German card sales. of 8.5% for the past five years, according to Paysys. Card sales in Germany rose by almost €29bn to reach This statistical development reflects a significant €379bn in 2018. Historically, this increase represents an intensification of competition between the card systems, unprecedented record in the German card business: according triggered in particular by the EU Interchange Fee Regulation. to Paysys, it corresponds to growth of 8.5%, against the prior And so the German domestic girocard card scheme is facing year’s rate of 6.8%. These figures relate to the card sales growing competition from Mastercard and Visa. Indeed, volume generated in Germany with predominantly debit issuers are increasingly issuing debit cards exclusively branded and credit cards in all sectors – not only retail – at physical Visa or Mastercard. terminals and in distance selling. In recent years, German coverage has tended to focus on Register now on Almost 40% of the consumer spending that is potentially Deutsche Bank integrating Postbank at the speed of dark, or suitable for card payments in Germany is now made by card; failed Deutsche-Commerzbank merger discussions. Not to rbiasiatrailbalzer.verdict.co.uk 10 years ago, this share was only 27%. Despite this rapid mention the plunging share prices of the country’s two largest growth, German card sales languish compared to the European retail banks. It would certainly make a pleasant change in 2020 average when measured by GDP. On average, card sales in to be reporting on some positive news from Germany, even if the eurozone (excluding Germany) amount to 18.4% of GDP; trailblazing product innovation may be too much to hope for. <
Get in touch with the editor at: [email protected]
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CI January 2020 575.indd 5 13/12/2019 13:53:19 News | Digest
news digest Mastercard, Doconomy team up to tackle climate change comes together for the UN Climate Change Conference COP25, we’re putting even more power in the hands of people to have an impact on their – and the planet’s – future.” Doconomy uses the Åland Index, a cloud-based software service, to track the CO2 emission of every transaction. The index connects each transaction category to its impact on the planet. The index has also been enhanced with data through a newly formed partnership with Trucost, a part of S&P Global. Today, the first bank in the US, and Nordea in the Nordics have announced that they will begin tracking carbon levels. Doconomy has also been named as a partner to the United Nations Framework Mastercard has teamed with sustainable targets and renewable energy. Now Convention on Climate Change. card group Doconomy in a move to combat we’re helping to accelerate the action our Niclas Svenningsen, manager, global the threat of climate change. cardholders can take every day.” climate action at the UN Climate The new alliance enables any Mastercard Doconomy was founded in 2018, Change Secretariat, said: “We all have issuer to offer cardholders the ability to offering the first credit card to measure a responsibility to contribute to the track their carbon footprint based on CO2 emissions to lessen the financial solutions for the climate emergency we are purchases made. sector’s global impact. experiencing.” Mark Barnett, divisional president As part of its new partnership, Svenningsen added: “Time is running for UK, Ireland, Nordic and Baltics at Mastercard has made an equity investment out. Many individuals are willing to do their Mastercard, said: “Addressing climate in Doconomy, to further scale the part, but in many cases they find it difficult change is bigger than any one company. expansion of the carbon tracking and as they don’t know what else they can do. This is an important next step to continue offsetting platform to additional markets. Through our collaboration with Doconomy, progress and move from promise to action. Doconomy CEO Nathalie Green said: we hope to provide clear, effective “We’ve made commitments to manage “We see this as a milestone moment in channels to support these individuals’ daily our own impact through science-based battling climate change. As the world climate action.” < bunq rolls out metal credit card Dutch mobile bank bunq has introduced a Built on the Mastercard platform, the new “sustainable” credit card. The new bunq new Green Card does not levy any foreign Green Card is said to be ‘greener’ than tradi- exchange charges. tional plastic cards, as it made of metal. To use the credit card, cardholders need The app-only Dutch bank said it will plant to open the Bunq app and recharge their one tree for every €100 ($111) spent by credit card account. cardholders. bunq has partnered with Eden If there is an insufficient balance in the ac- Reforestation Projects to carry this out. count, the transaction being made through The bunq metal card can also be used as the bunq Green Card will be declined, in a a travel card. bunq offers traditional bank similar way to a debit card. accounts; however, cardholders are now The Travel Card charges users $9.99 for given an option to choose a Travel Card or a the card, but does not apply any monthly Green Card, and continue with their existing fees. The Green Card applies an annual fee bank accounts. of €99. <
6 | January 2020 | Cards International
CI January 2020 575.indd 6 13/12/2019 13:53:21 News | digest
Visa agrees mobile money deal with MFS Africa Visa has agreed a deal with MFS Africa as it ramps up efforts to build its share of Africa’s highly lucrative mobile money market. The agreement aims to help bridge the gap between the rapidly growing mobile money ecosystem in Africa and the world of online digital payments. Moreover, it significantly expands Visa’s reach and its ability to open up e-commerce to the region. Sub-Saharan Africa has the largest and fastest-growing mobile money market in the world. The region is currently responsible for 45.6% of mobile money transactions, worth an estimated $26.8bn in 2018. MFS Africa is the largest digital payments hub in Africa, with over 180 million mobile wallets connected. The company partners with mobile money services, money transfer companies, banks and merchants to power affordable, inclusive channels for remittanc- es, financial services and payments. MFS Africa will integrate Visa’s real-time push payment solution, Visa Direct. This will allow users of the MFS Africa platform MFS Africa connects 120 million mobile Okoudjou added: “We have found in Visa to access a fast, convenient and secure way wallets, making it the largest network in an invaluable partner to support us in the to send and receive money and remittances Sub-Saharan Africa through partnerships next stage of our expansion. The reach of the directly from and into their mobile money Airtel, Econet, MTN, Orange, Tigo and Visa network is unparalleled, and we look wallets via eligible card credentials. Vodafone. forward to working with Visa to realise our Jack Forestell, EVP and chief product of- MFS Africa founder and CEO Dare Ok- vision of a world in which no one is limited ficer at Visa, commented: “Africa is adopting oudjou said: “In the past few years, we have in what they can achieve when it comes to a mobile-led, digital payments ecosystem, been relentlessly focused on creating new payments.” and with Visa looking to accelerate the dis- digital pathways between mobile money According to the World Bank, remittances tribution of payment credentials and expand users in Africa. to Sub-Saharan Africa are set to increase by the acceptance space for digital payments, “Having reached significant scale, we are over 5.6% between 2019 and 2020, reaching this partnership is an important one. now turning our focus to connecting our $51bn. However, the region remains the “MFS Africa will help us enable digital network to the wider world, to unleash the most expensive in the world to which to payment use cases at scale through its aggre- wealth of opportunity that trade with Africa send money, with an average cost of 9.3%, gation model.” presents to the global economy.” making it also the most profitable. < Desjardins data breach hits 1.8 million cardholders Canadian mutual Desjardins has PIN and data related to security questions and the creation of the Desjardins Group announced that the personal information remains safe. Security Office, we’re substantially of nearly 1.8 million credit In order to avoid a repeat security increasing our security budget moving cardholders was compromised incident, Desjardins reshuffled forward.” during a data breach first its senior management Desjardins said that its identity- revealed in June. team and established protection programme will cover all its The affected credit the Desjardins Group members and clients. cardholders were Security Office. Desjardins group president and CEO not members of By deploying an Guy Cormier stated: “As we’ve been saying Desjardins; some 4.2 industry-standard since we first announced it, we intend to million Desjardins security reporting update Desjardins Identity Protection as members were process, the security needs evolve. initially believed to office will safeguard “Until Canada develops a robust digital have been affected. the assets and personal identity system, we believe that expanding Reports suggest that the information of Desjardins coverage to a larger group of people is data breach was an insider act. members and clients. the right thing to do. In the meantime, we Desjardins said that only personal Desjardins CFO Réal Bellemare intend to offer the best possible protection information had been compromised, said: “In addition to the security against identity theft. We hope the rest of adding that credit card, debit card data, investments we made earlier this year the industry will follow suit.” <
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CI January 2020 575.indd 7 13/12/2019 13:53:24 News | Digest
Transferwise partners with Visa to simplify international money transfers Visa SVP and global head of Visa Direct Bill Sheley said: “Technology is bringing us closer together, yet there are still challeng- es that it hasn’t solved when it comes to individuals and small businesses moving money around the world. The TransferWise collaboration is the latest addition to Visa’s efforts to help our clients enable individuals and small businesses to send and receive international payments quickly and securely by utilising the power of Visa Direct.” TransferWise CEO and co-founder Kristo Käärmann added: “TransferWise is on a mission to move money around the world in a cost-efficient, quick and transparent way. Integrating Visa Direct further eases the transfer process and brings us another step closer to achieving our mission.” TransferWise has teamed up with Visa to The service initially rolled out in Spain; it Visa Direct has processed 2 billion trans- enable its customers to transfer money to will then launch in Hungary, Romania, the actions this year, and Visa is working with debit cards in real time. Czech Republic and Bulgaria. a number of firms to continue this growth The collaboration will enable Transfer- TransferWise plans to continue its co-op- next year. Wise customers to use Visa’s real-time push eration with Visa and expand its services MoneyGram has also rolled out a debit payments platform, Visa Direct, to send and using Visa Direct across Europe and world- card deposit service in Spain and the Philip- receive funds globally. wide next year. pines in collaboration with Visa. < N26 expands benefits programme for US customers German mobile bank N26 has expanded its debit card benefits programme for customers in the US, in collaboration with a number of partners including Booking. com and Lime. Other partners that have joined the benefits programme include Curology, Headout, YOOX, Headspace and Babbel. The Perks programme provides N26 debit cardholders with exclusive cashback rewards along with discounts on shopping travel, education, mobility, wellness and fashion. Cardholders can obtain up to 15% cashback on travel reservations in over 155,000 destinations when purchasing on Booking.com. The scheme offers a near-50% rebate to cardholders who choose to use the Lime a 5% off on a tailored skincare monthly to receive benefits and discounts when ride-hailing service. Additionally, users subscription, while cardholders can get booking travel, trying new experiences and can obtain up to 8% cashback on monthly up to 10% off any three purchases on products, or simply using the products they subscriptions to exercises and meditations Broadway show tickets via Headout. love every day. This is just one way we aim provided by Headspace. N26 US CEO Nicolas Kopp commented: to help make our customers’ money work As part of the programme, Babbel is also “N26 aims to connect all aspects of our for them.” offering up to 8% discount on a monthly users’ lives seamlessly and that includes Established in 2013, N26 serves more subscription when users learn a foreign partnering with their favourite brands. than 3.5 million customers in 25 countries language. Curology has agreed to offer These new Perks enable our customers across Europe. <
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Amazon’s Alexa to assist Discover cardholders to Alexa. They can then access the service by the voice command: “Alexa, open Discover.” Discover e-business VP Shaida Lynch said: “We are committed to providing our customers with valuable solutions that fit their routines, whether through our mobile app, on the web or with voice. “As more consumers embrace voice- assisted technologies like Alexa to help manage various aspects of their lives, we’ll continue to provide solutions that meet our cardmembers’ needs, wherever or however they prefer to manage their accounts.” Alexa leverages Amazon’s automatic speech recognition and language technology. Users can ask Alexa questions or make requests related to recent transactions, available credit and current balances. “We are always listening to our customers and are consistently evaluating our strategies to align with their needs,” Lynch added. Discover has reached an agreement with voice commands to Alexa. They will also “As consumer use of voice-assisted Amazon, enabling cardholders to obtain be able to check available credit, recent technology continues to climb, we expect account information using the Alexa virtual transactions, current balances, rewards customer demand for new ways to manage assistant service. information and payment due dates. their accounts to also grow and anticipate Discover cardholders will be able to To access the new facility, Discover building out our skill’s functionality manage their credit card accounts by giving cardholders will need to link their account further.” < Citi and Lazada target tech-savvy Singaporeans with new card Citi has teamed up with e-commerce giant Lazada to introduce a co-branded credit card for technically savvy customers in Singapore. The Lazada Citi credit card, has been launched to attract millennial online shop- pers. Citi and Lazada aim to serve more than 50% of young professionals using the new credit card over the next few years. For every $1 spent on the site, cardhold- ers earn 10 reward points. It also offers five points on dining, commuting, travel and entertainment payments worldwide. Loyalty points can be redeemed for vouch- ers, airline miles and cash discounts during online shopping, as well as Grab or Go-Jek rides and food delivery. Cardholders are able ecosystems, and deepening our engagement meet consumers’ expanding needs, Citi to earn a maximum of 10,000 reward points with the growing e-commerce customer base and Lazada are unified by a common goal per month. in Singapore.” to develop the e-commerce ecosystem and Citibank Singapore CEO Brendan Carney Lazada Singapore CEO James Chang said provide more value to digital natives,” Chang commented: “With over 30% of our custom- that the millennials are now buying more added. ers’ credit card spend now made via digital groceries, household items and cosmetic Earlier this year, Citi and Lazada launched channels, it is important for us to continue products than ever before. “As e-commerce a co-branded credit card in Malaysia, Thai- expanding our presence and scale in digital in Southeast Asia continues to flourish and land and Vietnam. <
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CI January 2020 575.indd 9 13/12/2019 13:53:31 feature | 2020 forecasts
2020 forecasts: view of the year and 2020 in focus
Experts from the cards and payments sector look back at the significant talking points of 2019, and look ahead to 2020 to discuss with Douglas Blakey the key priorities for the industry in the new year and beyond
BIJAN SANII, INETCO 1. Increasing both speed and accuracy individual customer risk models on the when it comes to payment fraud fly and extract anomalous behavioural Customer engagement and fraud detection and prevention patterns based on past card transactions mitigation will drive real-time payments The authentication or decline of a will have a huge impact on customer Prime time for real time. Over the past transaction is often the defining factor experience, operational efficiency, fraud year, there have been notably more business of end-customer experience. Yet risk loss and organisational reputation. systems incorporating continuous intelligence scoring for card-present and CNP 3. Supporting collaboration both that uses real-time context data to improve transactions is still notoriously internally and externally decisions. inaccurate, often failing Aristotle once said: “The When it comes to banking and real-time to detect high-risk whole is greater than payments, there is no doubt that data is most customers while the sum of its parts.” valuable at the moment of creation. There are generating thousands When it comes to many real-time levers in play for 2020, but of false positives. guaranteeing that every Inetco predicts the main drivers to be: Inetco predicts payment transaction • Customer engagement: Customers expect that there will be completes as expected, instant gratification, immediate response continued interest in this statement could and undisrupted service; improving data quality and not be more accurate. • Revenue uplift: Banks who do not align conquering the real-time data- This is why more financial cards and service offerings, at the right acquisition challenges associated organisations are looking to adopt time and through the right channel, risk with disparate data stores, multiple cross-functional software platforms customer dissatisfaction; payment schemas and different update that help to break down the barriers of • Fraud and risk mitigation: The more frequencies. Easy access to all transaction operational and infrastructure silos. time it takes to identify or prevent fraud, message fields will greatly improve the In an effort to combat increasing the greater hit on financial loss, customer precision of both rules-based alerting and complexity in payment ecosystems, loyalty and reputation. real-time risk-scoring models. there is a major trend towards network 2. Conducting continuous assessment operations, application support, channel Fraud detection of real-time payments and customer systems management, fraud and security In 2020, many banks will be under increasing interactions teams collaborating on everything from pressure to protect susceptible customers Inetco also predicts an increased infrastructure design to incident response. by identifying payment fraud threats faster, dependency on adaptive behavioural 2020 will continue to see these teams and proactively protecting against fraudsters analytics and machine learning models exploring new ways of working together to responsible for the rise of sophisticated attacks to effectively manage the service and drive efficiency, reduce operational costs, such as card-not-present (CNP) fraud, man- fraud security aspects of every real-time speed up fraud detection and support the in-the-middle malware attacks, application payment. The trend will be towards easier unified goal of delivering the best end-to- fraud, transaction reversal fraud and multi- configuration and building of models and end customer experience possible. vector (rapid succession) cash-out attacks. scoring so that teams can be equipped to In addition to cross-team collaboration, We see the following priorities continuing to address their specific payment ecosystem 2020 may also be the year where we see dominate the mindshare of chief information threats and quickly show the ROI. more cross-industry collaboration and security officers, channel management and The ability to examine transaction intelligence sharing – a banding together fraud prevention teams: performance in milliseconds, rebuild against fraudulent activity. <
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CI January 2020 575.indd 10 13/12/2019 13:53:32 feature | 2020 forecasts
Kirsty Morris, Barclaycard Payment Solutions Reflections on the year and predictions for 2020 2020 will also see a continued rise in the use of biometrics The payments landscape in 2019 was defined by an increased in payments, as consumers become more willing to provide focus on customer safety, sustainable shopping habits and a fingerprint or eye scan as verification. While it is important on maximising value. While the demand for a completely not to consider the use of biometrics as a ‘silver bullet’ frictionless, seamless payments experience remained strong, when it comes to customer authentication, it could have an we saw pushback from regulators trying to protect customers important role to play in the roll-out of SCA. from cybercrime – a tussle that will gain momentum in A focus on sustainable shopping 2020. Likewise, we saw the beginning of a move We know that the majority of UK consumers towards more mindful shopping practices and want to reduce their environmental footprint a focus on seeking out value from purchases, with their shopping habits, with just under two trends that we expect to take centre half concerned about the impact of over- stage in 2020 and beyond. ordering and returning goods bought A push on customer safety online. Our research also tells us that one The introduction of Strong Customer in 10 customers has reduced the amounts Authentication (SCA) legislation was they order and return because of this. expected to have a huge impact on As customers pay more attention to merchants when it came into force this sustainability issues when it comes to how year. However, the granting of an 18-month they shop, we are seeing a rise in their calls for implementation extension has meant that retailers to do the same. Businesses that listen becoming SCA compliant will remain a focus for to their customers and make changes to reduce their retailers throughout 2020. environmental impact in 2020 and beyond will undoubtedly Focused on mitigating fraud and cyberthreats, the SCA increase their consumer appeal. requires all EEA transactions to go through a two-factor A move towards maximising value authentication process, unless they qualify for an exemption. Another key trend to shape the 2020 landscape will be an On the spectrum of speed and customer safety, the increased customer focus on value. We know this from our legislation clearly sits closer to the latter. recent research, which found that 61% of UK adults state The challenge for merchants in 2020 will be to get compliant that they are seeking value for money from their purchases. while still maintaining the ability to provide a great customer For everyday items, such as washing up liquid or laundry experience. This will be a delicate balance, requiring powder, we expect to see more people seek out value by significant planning and testing. It is essential that steps turning to discount stores and supermarkets. However, on are taken now if the March 2021 legislative deadline is to the other hand, we will see growth in areas where consumers be met without any adverse effects – to merchants or their are willing to spend more, such as experiences. < customers. PAT BERMINGHAM, ADFLEX companies and consumers can have on their spending, the better, as it enables a clear The payments industry has been moving view of finances and the ability to make away from static card numbers and towards better decisions. This has even more tangible digital wallets for several years, albeit with a benefits for businesses than consumers, as few hiccups along the way, and this continued increased automation and better data ‘close in 2019. One of the biggest launches of the the loop’, simplifying payment reconciliation year encapsulated this trend: the Apple Card, and tax compliance. which has no card number, signature or expiry date. Secure remote commerce (SRC) This is reflected in the B2B space too, Something that will have a significant where we have seen demand for virtual cards impact on the industry in 2020 and beyond sharply rise due to the increased security and is SRC, a card-based payments system that financial control they enable – particularly further builds on the concept of eliminating in industries with complex supply chains. I passwords and card numbers in e-commerce. predict that payment card numbers will soon The effects will be long-term, but eventually, be out of the public domain altogether. the hosted pay page will go the way of the fax Digital banks like Monzo, which allows as enterprise-scale buyers and merchants move users to see exactly where they are spending to more flexible, self-service payment APIs. and categorise payments for their reference, The key trends will be the move towards have continued to grow their user bases. digital wallets and ubiquity, as the single ‘Pay’ The threads that link these shifts in button will reduce the amount of differently consumer and business behaviour are data branded payment methods at checkout, such and transparency. The more insight that as MasterPass and Visa Checkout. <
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CI January 2020 575.indd 11 13/12/2019 13:53:33 feature | 2020 forecasts
LEO MACHADO, TRUSTONIC Data security remains a challenge safely and securely make high-value payments. Threats to data and apps remained a This requires the whole payments chain to The evolution of mPOS disrupts payments challenge. Although legislative mandates like work together to deploy solutions that achieve The evolution of mPOS has been one of PSD2, SCA and GDPR have been driving secure PIN entry on all COTS devices. the most exciting and disruptive payment forces for the development and adoption While we might not reach ‘mPOS acceptance trends this year. Using consumer of better security, many at C-level nirvana’ in 2020 – i.e. secure payment off-the-shelf (COTS) smartphones still do not fully recognise the acceptance and PIN entry happening on the for payment acceptance is security risks that must be same device using the smartphone’s NFC delivering huge benefits to guarded against when taking technology – we are not far off! traders, small retailers and new app-based banking, When investing in mPOS solutions, SMEs, as well as payment fintech and payment services to merchants will need to focus on identifying platforms and solution market. Fraudulent transactions solutions that are secure by design and providers. emanating from compromised protected by in-app protection solutions that Adoption costs are plummeting, devices, for example, are a real have been evaluated by relevant industry enabling a broader range of merchants threat that must be taken more seriously. bodies like the Payment Card Industry to accept card and mobile payments. This in That said, there has been good progress in Security Standards Council and EMVCo. turn is increasing customer satisfaction with the app security space. Banks and financial We are starting to see more of these solutions reduced queuing time and enabling more service providers are realising that there does available on standard smartphones, and this personalised checkout experiences. not have to be a trade-off between security will continue into 2020. It is no surprise then that the global mPOS and functionality. Cybersecurity can be a Away from the commercial world, market was valued at $26bn in 2018 and tool to deliver richer and faster services that government initiatives are working hard to continues to rise – reports predict the market enhance the user experience, not limit it. drive greater financial inclusion. In Indonesia, will grow by 35% from 2018 to 2025. Early for example, the provision of secure eKYC, adopters in the hospitality and retail sectors A look to 2020 with our partners like Vida, is driving striking have been quick to adopt this trend and other The continued success of smartphone mPOS shifts in financial inclusion – from 20% in verticals will not be far behind. depends very much on consumers’ ability to 2011 to 49% in 2017. < Sam Murrant, globaldata 2020: The year of instant payments – the company has since gone on to help build numerous The payments discourse in the last few years has focused on instant payment systems. the big buzzword technologies: AI, blockchain, biometrics, Instant payments have already proven themselves in the US the Internet of Things. However, the most transformative – one of the last developed markets to adopt the technology technology for payments in 2020 will not be any of those, but – as shown by the popularity of the Zelle P2P payments instead instant bank-to-bank payments systems. service. Zelle is built on a private instant payments system The ability to send money in real time between bank accounts maintained by Early Warning Services, a joint venture owned has obvious applications for remote payments, and by major American banking brands. It does not cover many popular online and P2P payment services all US banking brands, but it has already overtaken in the developed world rely on these systems to Venmo in terms of number of transactions. underpin their fast, cheap domestic transfers. A step forward However, the real prize is electronic payments at The biggest step forward in 2019 for instant the POS, long dominated by cards. payments, though, was the development of Instant payment systems can offer much lower TIPS, a cross-border instant payment system processing costs than cards, making them attractive based on the SCTInst infrastructure. It only allows to merchants – and they can also offer functionality for transfers between participating banks within (such as P2P payments) and settlement speed that card- the eurozone, but it represents a step outside of domestic based payments cannot match, making them attractive to payments markets for these systems. consumers. These factors make instant payments a direct TIPS has already set its sights on disrupting POS payments, threat to card-based payments infrastructure, albeit only and if it can build enough of a user base via P2P, it will be within the markets where instant payment systems are able to make a strong case for merchant acceptance based on available. its much lower cost per transaction than card payments. Threat to card payments The difficulty in making these systems a true challenge to the Visa and Mastercard are already well aware of these card-based infrastructure that dominates the cross-border existential threats to the business model on which they have payments market, though, is in making them interoperable relied for decades, and have made moves to buy companies with one another. Once that starts to happen, the card- and invest in technologies to retain relevance as instant based infrastructure will rapidly fade into the background. payment become more popular and prevalent. In the immediate term, these systems will continue to build Mastercard, for example, took the opportunity to buy instant domestic momentum, leading up to challenging the card payments infrastructure specialist VocaLink back in 2016 schemes at the point of sale. <
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Andy Roe, fis Real-time payments see rapid increase payments from an ‘intelligent’ switch. Business too will Real-time payments are spreading. This year’s Flavors of Fast start to derive real benefits from the globalisation of faster report from FIS found 54 countries with active real-time payments with real-time reconciliation of payments and more payment programs. That is an increase of 35% year-over- tight control of their money movement. year and a fourfold gain since 2014. What is more, growth Machine learning in global card expenditure shows no sign of abating with Payment providers should also embrace ‘Fraud 2.0’, where double-digit growth forecast to continue to 2023. dynamic risk-scoring models that self-learn from every While the growth in global payments is impressive, transaction will predict new and previously unknown the digital payment revolution is still only just fraud. beginning. Next year, more solutions will New behavioural biometrics will recognise how break through and reach the masses as more a person usually swipes or holds a device. Some investment pours into the industry. 65% of banks say use of machine learning is a Some 250 million vehicles will include embedded top priority for preventing fraud. This is set to connectivity by the end of 2020. Around 47% increase out of fear of losing customer trust. of US commuters use in-car connectivity to find Cloud computing is also taking off, as payment a petrol station and order coffee, and they use it an providers look to improve speed to market with the latest average of 65 times a year. While the smart car lags the smart innovations, as well as cut processing costs, and improve home, the automobile industry and financial institutions flexibility and reach. continue to integrate automobiles into the Internet of Things. This will allow consumers to pay directly via their cars for Next year will likely see augmented reality bridge AI and road tolls, car parking, petrol bills and even the drive-through machine learning to human understanding, bringing the high order. street to homes. Consumers can fully experience the goods and the brand without leaving their sofa - this is the new Consumer behaviour drives faster payments frontier. Investment in ‘paymentech’ has never been higher Changing consumer behaviour will drive demand for invisible with venture capitalists betting big on payment entrants in payments. Increasingly customers will use a mobile, wearable the $1.9trn industry. or another connected device for purchases to save time. The majority of merchants are inclined to offer a universal The greater the industry consolidation and investment, the ‘buy’ button, paving the way to universal acceptance of faster we will see new the technologies mentioned above stored digital payments credentials to converge with invisible accelerate in adoption, value and volume. <
CRISTINA ASTORE, SIA Both initiatives involving SIA show the about travel itinerary patterns from enormous potential of Blockchain to provide contactless ticketing, unobtainable with paper Blockchain was the star in 2019 solutions in the context of communities tickets, to better serve travellers by adapting 2019 was expected to focus on PSD2 and sharing common business processes based on transit lines to customer usage. In 2020, Open Banking; however, it has not yet decentralised applications. we expect strong development of Big Data shown its full potential in practical terms. systems based on payments in other sectors. Blockchain instead began to attract attention. Innovation improves mobility The deployment of relevant initiatives Mobility is another area where The Internet of Things (IoT) based on permissioned distributed- innovation has brought a significant IoT will also contribute to streamlining some ledger technology (DLT) went improvement in the user automatic payment processes. We foresee a beyond the proof of concept. experience. Following Milan in rise in the number of such devices, driven by The Spunta project, 2018, Rome deployed contactless advances in technology and the expansion commissioned by the Association ticketing on the underground and of 5G mobile networks. We are working of Italian Banks, greatly improves local railway network. Travellers are to better integrate them within payments the resolution of interbanking able to use a normal contactless credit infrastructure, in association with AI to reconciliation issues. The initiative will be or debit card at the turnstile, removing the develop increasingly sophisticated use-cases. fully operational across the whole Italian need for paper tickets. Consolidation in payment and financial banking community in the second half of A similar move happened at the Venice services will accelerate. One example is 2020, increasing automation and cutting public transport authority, with the adoption the roadmap to the Eurosystem Single the time to redress reconciliation issues from of Android SmartPOS terminals on every Market Infrastructure Gateway promoted three days to less than three hours. vaporetto boat in order to digitise the by the European Central Bank; another is Another example is a project in Bari, in the purchase of tickets by residents and tourists. reflected by our progress in business process south of Italy, to digitise in total security the Payment digitisation generates significant outsourcing of large card portfolios. administrative processes related to sureties volumes of data that can be exploited to Finally, we expect strong e-commerce and achieve greater efficiency, eliminating improve services and develop new ones growth, supported by solutions for mobile manual error and preventing fraud, by using answering customer needs. For example, payments based on Open Banking access-to- DLT and smart contracts. transport authorities gain crucial information account solutions introduced by PSD2. <
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CI January 2020 575.indd 13 13/12/2019 13:53:35 feature | 2020 forecasts
Josh Wiles, Novo Dia Group Accelerated adoption of electronic payments in grocery among POS systems, smaller grocers have had to catch up. Today, the underserved merchants eligible to accept EBT have the option to upgrade from legacy POS terminals to intuitive, user-friendly and Over 45 million low-income Americans spend more more cost-effective mobile alternatives that provide than $70bn a year to buy produce and other simpler and faster checkout by accepting SNAP healthy food at grocery retailers and farmers and WIC—along with cash, credit and debit—on markets using Supplemental Nutrition one system. Assistance Program (SNAP) mag-stripe cards. Recently, the USDA’s Food and Nutrition As the Special Supplemental Nutrition Services group announced a co-operative Program for Women, Infants, and Children agreement with the National Association of completes roll-out of its e-card by October Farmers Market Nutrition Programs to provide 2020, we will see electronic payments in the markets who accept SNAP with access to Mobile grocery segment hit critical mass in 2020, helped Market+, a secure mobile transaction processing by two major developments: application that accepts EBT and all other forms of While most national retail chains integrate electronic benefit payment, and runs on a cellular or Wi-Fi connection without transfer (EBT) payments such as SNAP and WIC into their a local electrical power source. <
STAN SWEARINGEN, Our latest research found 62% of IDEX BIOMETRICS Generation Z think all banks should offer biometric payment cards to help reduce fraud. Biometrics will be at forefront in 2020 In response to this demand, banks will have At Idex Biometrics, we are seeing the potential to introduce fingerprint biometric payment for a lot of growth in the biometric payment cards to keep young customers, protect card and access-control markets for 2020. users from fraud and build trust with the We expect to see positive developments in consumers of tomorrow. manufacturing and certification of biometric payment cards, thanks to increasing consumer 5. Financial inclusion will come to the fore demands for secure payments. Some 1.7 billion adults remain unbanked It is my strong belief that both the today. 2020 is the year this will have to biometric payment card and access-control change. Payment methods must be accessible markets will fully materialise in the coming an important way for retailers to balance and come at an affordable cost for all year. Therefore, my predictions for the security measures that comply with the SCA consumers. biometric industry in 2020 are: regulation while also delivering ease of use for In the coming year, fingerprint the consumer. authentication cards will eradicate a number 1. Asia-Pacific will lead the way in of obstacles that stand in the way of financial biometric adoption 3. Contactless payment limits will inclusion. Consumers can be linked Biometric payment technology will become disappear directly to their card by their fingerprint increasingly necessary to combat payment Thanks to advancements in biometric alone, supporting those without official fraud in 2020. It looks like Asia will be fingerprint authentication technology, identification, while home enrolment devices leading the way in this field, in terms of payment security no longer comes at the also save individuals from having to leave the adoption, production and implementation. cost of convenience. Next year, increased house to register. This will allow consumers to The coming year will be pivotal as we start to fingerprint biometric authorisation will secure hold on to financial independence for longer, see certification for the biometric payment payment cards, removing the need for PINS no matter their physical or financial restraints. card take off across Asia. and reducing the need for the £30 payment Idex is also excited to see growing interest limit, all while making the transaction process 6. CNP fraud will be tackled head-on from Australasia. We expect to be introducing faster. The next crucial step for Idex Biometrics biometric smart cards there in 2020 with and the wider industry will be to tackle Quest Payment Systems, Australia’s largest 4. Young consumers will demand card-not-present (CNP) fraud effectively. payment technology supplier. biometric adoption Biometric payment cards have the potential to Regulation aside, it will ultimately be people strengthen online payment security and SCA 2. European regulation will drive power that propels biometric payment compliance for e-commerce retailers. innovation technology to mass adoption. We already The addition of a digital dynamic Card Delays to the Strong Customer know that Generation Z will make up 40% of Verification Value number on the card, Authentication (SCA) ruling will prove a key all consumers by 2020, so it is important to for example, will present a new one-time driver for biometric adoption in 2020. acknowledge that they expect to be using new, code whenever the card owner’s fingerprint The use of biometric payment cards to secure biometric technology for increased is presented on the card, making online authenticate online payments will offer payment security and convenience. payment fraud a thing of the past. <
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CI January 2020 575.indd 14 13/12/2019 13:53:37 feature | 2020 forecasts
DOUG GROSS, NGDATA less painful and more enjoyable for customers. So far, Open Banking legislation has led to The key will be to move from a superficial to the emergence of apps like Cake, which run A 2020 ‘perfect vision’ for financial a deeper understanding of customers in order on this premise. But with the rising adoption services: what will your bank do for you? to build the services which will hit the right of technologies like machine learning and It has been an exciting year in the banking note with audiences. AI, in the near future, banks and other sector. Along with innovation being pushed financial services providers will collaborate along by the industry, there has also been the Time for bank brands to get chatty? more on building new, relevant services and added pressure of regulatory change, such as While marketing teams have been democratising the availability of on-demand the introduction of 2FA this September. preoccupied with becoming omnichannel expert financial advice and communications. In the past few years, much has been for several years now, the truth This will be part of a wider trend in made of the potential for technologies such is that the consumer world is which your bank will now be able as blockchain, IoT and cryptocurrencies to already miles ahead – becoming to offer you goal-oriented help, revolutionise the industry. However, adoption ‘channel neutral’. But there rather than just new products. and progress seem to have been slower is nothing more jarring for than analyst estimates – with Accenture the consumer than disjointed Profit v purpose announcing we were close to AI critical mass communications across What marketers need to back in September 2018. channels, which belie banks’ learn in 2020 is that there is But could the moment finally be upon compartmentalised approach to indeed a business case for brand us? It seems like an ideal time to look to dealing with customers. purpose in the financial services the future and imagine what the retail bank In 2020, banks will bring down walls industry. Building brand loyalty in 2020 will of the future may look like. Here are my between the siloes of data generated by have a foundation of authenticity and deep predictions for the trends we’ll see emerging different channels and platforms. This will understanding of customers, where customers or continuing in 2020: allow them to make the customer interactions and brands are telling stories together. seamless across branch, online, mobile and Research from Kantar Consulting has Innovation must equal experience more. Going forward, the power to choose shown that consumers expect companies As a range of industries increasingly move the channel of communication will be that of to exercise their influence over the world towards the ‘freemium’ model, banking is no the consumer, not the bank – and they will responsibly – and that when it becomes exception. 2019 was certainly another year be able to expect the same level of customer the foundation of everything a company full of exclusive premium features – from service whichever channel they choose. does, that company will be more financially metal banking cards released by N26 and successful. Yes, banks offer practical services Revolut, to a high street bank releasing a Banks become data vaults that are necessities of modern living, but fingerprint biometric card. As customers, we are becoming increasingly likewise they need authentic motives in order The challenge for the financial services aware of the need to protect our data. Banks to gain the trust of audiences who are now sector in 2020 will be to see beyond their are the perfect candidates to become our ‘data looking for brands across verticals to align often-gimmicky appearance and branding, to vaults’ – becoming the central guardian of with their own priorities and social interests. truly understand underlying customer desires. our personal data and acting as a platform to The message to banks is clear: evolve or die. What do consumers need and how can the manage it and handle data transactions. With an ever-growing number of competitors bank fulfil that need? This could lead to an Data has been called the new currency, from a variety of industries – from fintech exciting new suite of services for customers, but in the new future we can expect banks to to big tech – in 2020, the financial services where the bank acts as a facilitator for a range position themselves as a trusted advisor over sector will be challenged to truly show its of activities outside of hardcore banking. data as they did traditional cash and credit. worth by letting go of traditional inflexible Think of the way you currently buy tickets This will mean a significant rethink of their approaches and focusing on its position as for public transport or find offers for specific business models in order to capitalise on these a trusted customer advisor – irrespective of events: banks could make these interactions opportunities. platform, channel or industry. <
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CI January 2020 575.indd 15 13/12/2019 13:53:39 country snapshot | italy
ITALY
country snapshot: italy Payment card use inches up
talians remain slow adopters of total payment transaction volume in 2019. The government is making efforts to electronic payments, primarily as a The country has a comparatively low promote electronic payments through Iresult of a strong inclination towards penetration of payment cards, although it financial inclusion initiatives and a cap cash, which accounts for 78.5% of the has a robust POS terminal network. on cash transactions, with the EU cap on
value of credit transfers value of payment cards value of cheque payments
bn bn bn 12,000 0 00
00 10,000 00
2 0 8,000 00 200 ,000 00 1 0 ,000 200 100
2,000 0 100
0 0 0
201 2018 201 201 201 e 202 2018 201 e 202 2018 201 e 202
Source: ECB, Banca d’Italia, GlobalData Source: ECB, Banca d’Italia, GlobalData Source: ECB, Banca d’Italia, GlobalData
16 | January 2020 | Cards International
CI January 2020 575.indd 16 13/12/2019 13:53:43 country snapshot | italy
interchange fees also playing a role. As a Debit card shares by issuer Debit card shares by scheme result, a gradual increase in payment card usage was recorded during 2015-19. Payment card market growth has partly a tercar been driven by the rise of contactless and ni re it 1 18 the emergence of digital wallets. However, digital wallets still need to demonstrate i a greater benefits and convenience t er 1 1 1 nte a anpaolo compared to payment cards. 1 The frequency of card payments ancomat 0 increased from 30.1 times per card per Po te year in 2015 to 39.4 in 2019, and is taliane 12 further expected to reach 45.9 by 2023. The emergence of digital-only banks and strong e-commerce growth are expected
to further boost electronic payments over Source: GlobalData Source: GlobalData the period 2019-2023. BANCOMAT DOMINATES pay later shares by issuer pay later shares by scheme Bancomat is the dominant debit card scheme provider in Italy. t er With 233 Italian partner banks, most 0 debit cards issued in Italy bear Bancomat e i Payment 2 8 branding, and are usually co-badged with a major international scheme to allow use a tercar t er outside the country. i a nte a anpaolo 8 Bancomat also offers Bancomat Pay, 12 a digital wallet currently available to 37 million card holders. A o While Bancomat continues to dominate, international schemes Visa and Mastercard have strengthened their positions. As a result, Bancomat’s share of the transaction Source: GlobalData Source: GlobalData value declined from 82.4% in 2015 to 70.5% in 2019. have resulted in enhanced consumer Targeting students of the University of REWARD PROGRAMS confidence in online transactions. The Milan and other educational institutions Credit and charge card penetration in Italian e-commerce market is dominated by affiliated with the bank, Intesa Sanpaolo Italy is low, standing at 0.5 cards per PayPal, primarily as a result of the ease of offers reloadable prepaid cards, which can individual in 2019. Italians prefer charge use and security it offers. be used for cash withdrawals as well as cards over credit cards in order to benefit Credit and debit cards collectively in-store and online purchases. from interest-free credit periods and avoid account for nearly 23% of the total falling into debt. e-commerce value. With the introduction POS TERMINALS Banks offer a variety of rewards and of alternative solutions such as Apple Pay, The number of POS terminals recorded benefits to drive credit card use. Agos Google Pay and Amazon Pay, the market is strong growth, increasing from 2 million in Bank offers 10 interest-free instalments forecast to register healthy growth in the 2015 to 3.7 million in 2019, at a CAGR of on its Visa Agospay Zero credit card for coming years. 16.5%; the figure is anticipated to reach all purchases of €500 ($573) or above. 4.9 million in 2023. Meanwhile, Poste Italiane offers the PREPAID CARDS The growing acceptance of cashless BancoPosta Più credit card, which enables Italy has one of the largest prepaid card transactions by Italian retailers has led to holders to repay purchases in up to 24 markets in Europe, with 28.7 million a rise in the installation of POS terminals instalments. prepaid cards in circulation in 2019. The throughout the country. Consequently, number of prepaid cards in circulation rose service providers are launching new E-COMMERCE GROWTH recorded a CAGR of 3.4% between 2015 products to meet rising demand for The e-commerce market is growing and 2019. cashless transactions. significantly, rising from $19bn in 2015 to Major Italian banks also offer prepaid In August 2018, Nexi launched $36bn in 2019. cards to serve various consumer segments, SmartPOS, an integrated POS terminal that Ongoing improvements in technology such as travellers, the younger population accepts cash, card, contactless, mobile, and rising online and mobile penetration and pensioners. voucher and QR code payments. <
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CI January 2020 575.indd 17 13/12/2019 13:53:44 country snapshot | estonia
ESTONIA
country snapshot: estonia Debit cards retain market dominance
stonians are prolific users of payment such as the UK (140.8), the US (109.8) and infrastructure and better security cards. At 211.4, the frequency of Germany (54.1) in 2019. associated with card payments have Eoverall card payments in Estonia is High consumer awareness of the supported the growth of card-based much higher than in other mature markets benefits of cards, improved payment transactions in the country.
value of credit transfers value of payment cards value of cheque payments bn bn m 2 0 12 0
10 0 200
8 0 1 0
0
100 2 0
0 1 2 0 Data na ailable rom 201
0 0 0
201 201 2018 201 201 2018e 2022 201 e 202 201 201 e 202
Source: ECB, Eesti Pank, GlobalData Source: ECB, Eesti Pank, GlobalData Source: ECB, Eesti Pank, GlobalData
18 | January 2020 | Cards International
CI January 2020 575.indd 18 13/12/2019 13:53:47 country snapshot | estonia
Debit cards are the most popular card Debit card shares by issuer Debit card shares by scheme type, and are primarily used for card payments, with frequency of use of 211.3 in 2019. This is much higher than for ATM t er i a t er 0 1 0 cash withdrawals (21.9). minor Given the strong hold of debit cards, ank credit and charge cards have been slow to take off in Estonia. However, the credit e bank and charge card market is expected to record a CAGR of 5.5% in terms of overall 0 1 transaction volume over the four-year a tercar period of 2019-2023. Rising disposable 8 household incomes, higher rates of employment, and value-added benefits offered by banks will continue to support
this growth. Source: GlobalData Source: GlobalData The emergence of digital-only banks, alternative payment methods and pay later shares by issuer pay later shares by scheme contactless technology, and growth in the e-commerce market are also anticipated to support payment card market growth. t er minor 2 i a ank 8 HIGH BANKED POPULATION 10 8 Debit cards are the most popular payment card type in Estonia, and are frequently used for low-value, day-to-day 2 0 e bank transactions. Consumer preference for 1
debt-free payments and prudent spending a tercar has resulted in the dominance of debit 1 cards in terms of both transaction volume and value. However, a strong banked population – standing at 98.1% in 2019 – has resulted Source: GlobalData Source: GlobalData in stagnation of debit cards in terms of the number in circulation. Banks are offering various products E-COMMERCE GROWTH for online transactions will further aid such as basic low-cost accounts, account- e-commerce growth in the country. switching facilities, bundled products, The e-commerce market has registered online account opening and enhanced significant growth, rising from €226.6m PAYMENT INFRASTRUCTURE security in a bid to further increase debit ($259.6m) in 2015 to $576.6m in 2019 The number of POS terminals recorded card adoption. at a CAGR of 22.1%. Growth has been grew from 31,684 in 2015 to 40,977 in supported by rising internet penetration, 2019 at a CAGR of 6.6%. CREDIT AND CHARGE CARDS emerging online retailers, benefits such as To increase electronic card acceptance, Credit and charge cards account for a discounts offered by e-retailers, and rising banks offer POS and mobile POS solutions. small proportion of the overall payment consumer preference for online shopping. Banks including Swedbank and SEB offer card market in Estonia. The availability To capitalise on e-commerce growth, a range of card-acceptance solutions, of overdrafts has reduced the need for a many retailers are introducing online including conventional and mobile POS separate credit card for many consumers. stores in the country. In April 2016, H&M terminals as well as cash register systems. Stricter eligibility criteria for credit launched its online store in Estonia, while Banks also offer benefits such as card issuance are also a challenge for the Swedish furniture retailer Ikea followed merchant discounts to encourage POS market. To prevent customers from falling suit in August 2019. installation. For instance, Swedbank is into debt, banks have set minimum income Meanwhile, many online retailers offer offering a 50% discount on its six-month requirements for credit products. However, attractive discounts on occasions such as rental POS terminal. many Estonian banks are offering benefits Black Friday and Cyber Monday, in order to With the rising preference for such as instalment facilities, discounts, drive e-commerce business. contactless payments, merchants are also reward points and cashback. These value- Banks also offer cards exclusively for installing contactless terminals in their added services resulted in steady growth in online purchases, such as SEB’s Visa stores. According to Eesti Pank, around the credit card space during the four years Virtual Card. The availability of alternative 81% of terminals accepted contactless to 2019. solutions such as PayPal and Paytailor payments as of June 2019. <
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CI January 2020 575.indd 19 13/12/2019 13:53:47 Country snapshot | pakistan
PAKISTAN
country snapshot: pakistan Government initiatives key to boosting financial inclusion
akistan is a cash-dominated to factors such as a high unbanked Financial inclusion remains a top priority, society. Use of cash for day-to-day population, limited financial awareness with the government and other commercial Ptransactions remains prevalent and a largely inadequate payment banks introducing initiatives to improve among Pakistani consumers, due primarily infrastructure. banking penetration. The government launched the National value of payment cards value of cheque payments Financial Inclusion Strategy in May 2015, which aims to bring 50% of the adult bn bn 8 1,200 population into the formal banking system by 2020. 1,000 Adoption of basic bank accounts, increasing the number of bank branches, 800 offering banking services via banking agents, expanding ATM and POS terminal 00 networks, and promoting financial awareness are the key objectives. The 00 2 rise of Islamic banking is also expected to 200 support payment card growth. 1 Branchless banking is among the main 0 0 drivers of financial inclusion in the country.
201 2018 201 The number of accounts opened via 201 e 202 2018 201 e 202 branchless channels rose from 37.3 million Source: State Bank of Pakistan, GlobalData Source: State Bank of Pakistan, GlobalData in 2017 to 47.2 million in 2018.
20 | January 2020 | Cards International
CI January 2020 575.indd 20 13/12/2019 13:53:52 Country snapshot | pakistan
LOW-COST ACCOUNTS Debit card shares by issuer Debit card shares by scheme
Debit cards account for 96.3% of total payment card transaction value in 2019, including ATM withdrawals. The introduction of low-cost Asaan accounts 22 8 t er and an expanded agent banking network t er i a have driven debit card adoption. 0 Banks are increasingly using banking Allie ank agents to reach the unbanked populations 18 in rural areas. There were 425,199 agents a tercar operating in Pakistan as of December ank 1 2018. United Bank offers Omni branchless 1 banking services through its network of 42,000 agents, branded as Omni Dukan,
located in 900 cities and towns in the Source: GlobalData Source: GlobalData country. CREDIT CARDS pay later shares by issuer pay later shares by scheme Credit cards are not popular among
Pakistani consumers, accounting for only American 3.7% of the total payment card transaction t er pre value in 2019. This is because banks tend 1 8 to follow stringent application procedures, tan ar artere and also for religious reasons, as Islam 1 a tercar forbids interest. i a A kari ank ank Al ala 8 8 With the growing popularity of Islamic 11 1 0 banking, many banks are offering Sharia- compliant credit cards. Standard Chartered offers the Saadiq Visa credit card for a fixed monthly fee, with no interest charged on outstanding amounts. To encourage adoption, banks are also offering interest- Source: GlobalData Source: GlobalData free balance transfers and instalment facilities on credit card purchases. laundering and terrorism financing, and The large unbanked population remains E-COMMERCE GROWTH should ultimately promote the growth the key focus for banks looking to increase E-commerce grew significantly from of prepaid cards by enabling financial prepaid card uptake. Allied Bank offers a PKR6.3bn ($45.1m) in 2015 to $206.6m institutions to offer prepaid cards through PayPak-branded domestic prepaid card in 2019 at a CAGR of 46.3%. This growth third-party authorised agents. called EZCash, targeted at the unbanked was mainly supported by the expansion population. The cards can be loaded of internet access, and rising smartphone with up to $3,577.69 and used for ATM penetration. withdrawals and in-store payments. New e-commerce merchants and government initiatives have supported CARD ACCEPTANCE growth. Online retailers conduct various The country’s card acceptance events to boost online sales. Meanwhile, infrastructure is underdeveloped, with the availability of alternative solutions Branchless banking only one POS terminal for every 4,062 such as Easypaisa, JazzCash, MCB Lite and individuals. However, the number of FonePay also benefits e-commerce. is among the main terminals will record a CAGR of 3.4% over the four-year period to 2023. PREPAID CARD MARKET drivers of To encourage acceptance among smaller The number of prepaid cards in circulation merchants, HBL and Bank Alfalah offer declined at a CAGR of 5.8% between 2015 financial inclusion low-cost mobile POS solutions. and 2019. This is due to the introduction in Banks are also introducing POS May 2016 of regulations on prepaid cards. in the country terminals. Allied Bank has installed The regulations were developed in terminals at its 22 branches, allowing compliance with the Financial Action Task customers to make utility bill payments, Force to address risks related to money balance enquiries and cash withdrawals. <
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CI January 2020 575.indd 21 13/12/2019 13:53:55 industry insight | mastercard PRIVATE BANKER
HEAR • NETWORK • DISCOVER • CELEBRATE help us to do this by making personalisation much smarter and more accurate, allowing ten trends set to impact service providers to offer customers an individually relevant experience. Private Banking and Wealth Management: 8. It pays to pay payments and The average UK consumer participates in London 2020 Conference and Awards 14 loyalty programmes, but only presents a loyalty card for 20% of qualifying London • 11 June 2020 transactions. e-commerce Often, the limiting factor is simply the number of cards that a person has to carry. Following an incredible 2019 edition, we are delighted to announce our 2020 date for your diary. While it has been possible for several years As we look forward to 2020, Mike Cowen, head of for consumers to store loyalty cards digitally The daytime conference will explore core themes impacting the UK private banking and wealth digital payments at Mastercard UK, Ireland Nordics and in mobile phones, this has not significantly management sector, including how technical innovations can offer solutions and improvements Baltics, reflects on the major trends likely to influence changed the situation – perhaps because to enable companies to win greater market share. The event will showcase how private banks many POS scanners are not able to read a and wealth management companies can remain competitive, become future-proof and capitalise e-commerce, and the payments industry in particular barcode from the screen of a mobile phone. In 2020, we will see the emergence on affluent markets to ultimately enhance profitability margins. 1. Making payments as easy as ABC through tokenised digital wallets such as of new loyalty propositions that release The evening will celebrate the most impressive and successful initiatives from the sector over the 2019 has seen a massive shift to new Apple Pay, Google Pay and Samsung Pay. In the consumer’s desire to participate from interfaces, enabling consumers to shop, live 2020, we will see the next phase of this trend, the tyranny of the loyalty card, helping past 12 months. Awards will be given for a wide range of achievements, and will highlight leaders and pay without the need to pick up a mobile with many large merchants replacing all their consumers to maximise recognition and in the industry and efforts to progress the overall sphere of private banking. phone or other device in order to do so. stored cards on file with secure tokens. retailers to improve return on investment. With voice shopping set to hit $40bn We look forward to welcoming you. by 2022, the need to adapt payments for 5. The online world gets its ‘chip and PIN’ 9. Delivering peace of mind these channels has risen. One example is We will also see the last piece of the Consumers need peace of mind, not only the introduction of audio idents; in 2019 ‘tokenisation puzzle’ start to fall into place regarding their money but also – increasingly Mastercard launched its own sonic brand as with a programme for the UK industry roll- – as regards their data. This becomes even way for customers to be reassured that their out of the Secure Remote Commerce (SRC) more relevant as the range of services that a payment is secured by Mastercard, even in a standard. consumer can access via their bank becomes voice-only interaction. SRC allows us to completely rethink the much broader through initiatives such as online checkout by removing the PSD2 and Open Banking. 2. Pay as you live need to manually type card In 2020, in addition to 2020 will see the expansion of payments via details and replacing the permitting third-party the channels people already use every day. card number with a requests to access Increasingly, the channels we use most will token. Much as the UK their data, we will be used to make payments – for example, roll-out of chip and see the emergence sending money to social media and messaging PIN in 2004-2006 of digital identity contacts – will become as easy as sending a slashed in-store fraud, services which photo or video clip is today. SRC can do the allow a consumer to same for e-commerce prove their identity 3. Putting an end to password rage while also improving electronically without Throughout 2020 we will see a steady the online payment the inconvenience to improvement in the way that issuers experience. having to produce their authenticate cardholders for online payments passport, driving licence or with more and more offering authentication 6. The end of manual card entry! utility bills. by fingerprint or facial recognition on your Under SRC, rather than having to type a mobile phone. This not only improves 16-digit card number, the cardholder simply 10. The next frontier for mobile banking security, but also removes friction, enhancing selects the image of the card they want to The mobile banking app will play an the overall customer experience. use. Already live in the US, the UK will be increasingly important role, not only in the one of the next markets to benefit from this authorisation of payments but also controlling 4. Streamlining the online checkout wholesale upgrade of the online payment access to one’s personal and financial data. Historically, the different elements of experience. This will contribute to growth in the the online payment process, such as card popularity of account-based payments, with selection, confirmation and authentication, 7. Knowing me, knowing you services such as Pay By Bank App appealing in Become an event sponsor! have all been quite separate, resulting Increasingly, consumers want to feel valued particular to consumers who want the control Contact us to find out more. sometimes in a fractured payment experience. and recognised as individuals. Advances in of being able to manage every payment This started to change a few years ago technology such as artificial intelligence will through their mobile banking app. < To register now, or for more information, contact Carlo Mancini on 22 | January 2020 | Cards International [email protected] or call +44 (0)20 7832 3584
CI January 2020 575.indd 22 13/12/2019 13:53:56 PRIVATE BANKER
HEAR • NETWORK • DISCOVER • CELEBRATE Private Banking and Wealth Management: London 2020 Conference and Awards London • 11 June 2020
Following an incredible 2019 edition, we are delighted to announce our 2020 date for your diary. The daytime conference will explore core themes impacting the UK private banking and wealth management sector, including how technical innovations can offer solutions and improvements to enable companies to win greater market share. The event will showcase how private banks and wealth management companies can remain competitive, become future-proof and capitalise on affluent markets to ultimately enhance profitability margins. The evening will celebrate the most impressive and successful initiatives from the sector over the past 12 months. Awards will be given for a wide range of achievements, and will highlight leaders in the industry and efforts to progress the overall sphere of private banking. We look forward to welcoming you.
Become an event sponsor! Contact us to find out more.
To register now, or for more information, contact Carlo Mancini on [email protected] or call +44 (0)20 7832 3584
CI January 2020 575.indd 23 13/12/2019 13:53:56 HEAR • NETWORK • DISCOVER • CELEBRATE Retail Banking International Conference and Awards London • 22 April 2020 SHAPE THE FUTURE OF RETAIL BANKING
Following a phenomenally successful 2019 edition, Retail Banking International will return in 2020 for its 35th annual conference and awards. The show will bring together industry leaders to examine how the retail banking sector is embracing digital innovation, enhancing operational efficiency and delivering new, improved services for customers. We will explore the current banking landscape, industry collaboration and how to protect against economic upheaval to thrive in a fast-paced and critical time for creating innovative customer products. The content-driven conference will offer delegates the opportunity to hear the latest developments, and explore new innovation through thought-provoking sessions. We look forward to welcoming you.
Silver Partner Bronze Partner
To register now, or for more information, contact Carlo Mancini on [email protected] or call +44 (0)20 7832 3584
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