January / February 2019

COVER STORY PAYMENT CARDS IN EUROPE

BLOCKCHAIN OUT OF THE BLOCKS? Payments that know no borders

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PaymentsCARDS & MOBILE January / February 2019 Volume 11, Issue 1

Welcome to 2019! PCM very much hopes that Production Team everyone had a chance to down tools and enjoy Alexander Rolfe Editor-in-chief and publisher some time off during the busy holiday season. Tel (+44) 1263 711 800 [email protected] After a sleepy first week it seems like we are back up to speed and the year has really James Wood kicked off. As such, we always want to make the January/February Issue one of the Editor best, despite the obvious lack of news over the holiday period. [email protected]

Wendy Sanders Nonetheless, we have a packed issue and indeed some of the most important Head of Business Development elements of our annual diary are addressed right here in the first issue of the year. Tel (+44) 1263 711 801 [email protected] Whilst we are all aware that digitisation is the buzzword of the moment, let us take a moment to reflect on where digital payments have their birth place – the card. Humble Gemma Rolfe card payments are still the dominant driving force behind consumer payments and General Manager Tel (+44) 1263 711 800 the annual Payments Cards Statistical Yearbook is ready to be delivered. In this cover [email protected] feature we take a look at the KPIs the industry set in 2018 and pack the feature full of useful tables to take you through 2019. Gemma Haywood Subscriptions and General Tel (+44) 1263 711 800 Next up we focus in on Blockchain. Blockchain has been called the most over-hyped [email protected] innovation in the world today, with the hysteria surrounding it sometimes compared Adam Unsworth to the infamous “dot.com” bubble. What is the rationale behind the hype? Where Graphic Design does the payments industry stand on blockchain? What are the possible future Tel (+44) 7932905744 implementations of blockchain technology in payments? [email protected]

Printing Finally, a range of pressures are bearing down on acquiring and processing Micropress Printers businesses, including the emergence of new technologies such as faster payments and blockchain solutions – not to mention increasing customer and consumer expectations, and competition from ‘big tech’. Acquiring and processing is such an Editorial Advisory Board important and integral part of the payments industry, it is critical to understand its John Berns future direction. Managing Partner, Accourt

Sylvie Boucheron-Saunier SVP Financial Institutions, North America & Europe, ACI

Chris Harris VP Sales Performance & Global Accounts at Group Alexander Rolfe, Siobhan Moore Partner, Global Head Cards and Payments at Locke Lord LLP

AlexRolfe Fiona Wilkinson Editor-in-chief and publisher, PCM Board Member Payments Cards & Mobile

All rights reserved. No part of the publication may be reproduced or transmitted in any form without the publisher’s prior consent. While every care is taken to provide accurate information, the publisher cannot accept liability for errors or omissions, no matter how caused. Payments Cards and Mobile The Stable, Hall Yard, Kelling © PaymentsCM LLP 2019 Holt, NR25 7EW, United Kingdom Payment Cards and Mobile™ is owned and published by PaymentsCM LLP ISSN 1759-829X +44 1263 711800 / paymentscm.com contents

06 - 07 PAYMENTS NEWS 22 - REGULATION GRANTED E-MONEY LICENCE Google has announced that it has been

NEWS IN BRIEF VARYING REGULATION BETWEEN REGIONS granted an e-money licence and authorised All the latest news from the past 60 days. HAMPERS INNOVATION as a payment institution in the Republic of Different approaches to the regulation of new Ireland, paving the way for it to begin providing 08 - 11 CARD NOTES payments technologies is creating confusion new to consumers and and uncertainty for payments companies businesses both in Ireland and the EU. NEW FINTECH STUDY REVEALS GROWTH and consumers within different regions and CHALLENGES between countries. 26-27 MOBILE PAYMENTS MagnaCarta Communications has published its 2019 FinTech Disruptors study, “Removing 24-25 ISSUING & ACQUIRING M-COMMERCE NOW ACCOUNTS FOR ONE Roadblocks: The New Road of FinTech” in QUARTER OF SPENDING partnership with . STRONG GROWTH IN CARD ACCEPTANCE As online shopping continues to grow, CONTINUES GLOBALLY especially through mobile commerce, the UK BCG/SWIFT PREDICT MAJOR SHIFTS IN The number of merchant outlets accepting now has the lowest proportion of high street GLOBAL PAYMENTS card payments worldwide grew by 13 percent spending in Europe. A new report from SWIFT and the Boston throughout 2017 to reach 69.2 million at the Consulting Group, Global Payments 2018, end of the year. HUAWEI PAY SETS SIGHTS ON GLOBAL has projected major shifts in emphasis and ROLL-OUT structure for the payments industry over the EC CLOSE TO INTERCHANGE FEES DEAL Huawei is set to launch a major expansion to next decade. WITH CARD NETWORKS its mobile payments platform, Huawei Pay, as it Visa and Mastercard have offered to cut looks to take on the likes of Apple and Samsung. SURVEY FINDS INDUSTRY INVESTING IN merchant interchange fees for non-EU credit TECH TRANSFORMATION and debit cards by at least 40 percent to end an DO WE WANT A CASHLESS SOCIETY? The tenth anniversary edition of the EFMA EU antitrust investigation, part of a decades- Travelex has released a study into attitudes report, Innovation in Retail Banking, long crackdown by the European Commission towards cash and other payment technologies: reports that banks are increasing levels of against such interchange fees. Do we really want a cashless society? investment in payments technologies and channels in an effort to keep up with the MILLENNIUM BCP FIRST TO ISSUE UNIONPAY CHINESE MOBILE PAYMENTS MARKET digital revolution. Millennium bcp has become the first European PROJECTED TO REACH $96.73 TRILLION bank to issue UnionPay cards in Europe. Chinese mobile payments are projected to grow 21.8% from 2017 to hit $96.73 trillion (£75.96 trillion) in 2023, driven partly by increasing demand for e-commerce.

COVER STORY P16-19 PAYMENT CARDS IN EUROPE

4 payments cards & mobile magazine - january / february 2019 www.paymentscm.com contents

29 CONTACTLESS OPTAL HELPS SWAPS CREDIT CARDS FOR VANS 38 CONFERENCES Optal says health and security risk

DIGITAL AND MOBILE WALLET: GLOBAL management services provider Healix MERCHANT PAYMENTS ECOSYSTEM USAGE STATISTICS International is the latest multi-national to 19-21 February, Berlin Digital and mobile wallets have been spoken transform its payment processes with Optal merchantpaymentsecosystem.com about in the industry for many years. Since their Virtual Account Numbers (VANs). MEFTECH 2019 inception, the payments industry in particular 25-26 February, Riyadh has paid close attention to the underlying SQUARE LAUNCHES PAYMENTS SDK FOR www.meftechksa.com technologies and companies that power MOBILE APPS Square has launched its Square In-App these platforms. MOBILE WORLD CONGRESS Payments SDK (Software Development Kit), 25-28 February, Barcelona enabling developers and sellers to process 31 E-COMMERCE www.mobileworldcongress.com payments with Square within their consumer-

CROSS-BORDER CONSUMER RESEARCH 2018 facing mobile apps for the first time. MONEYLIVE SPRING 2019 PayPal and Ipsos have released a new 11-13 March, Madrid e-commerce report, Cross-Border Consumer 33 CONTRACTS new.marketforce.eu.com/money-live/ events/spring Research 2018. The report, which investigates the online shopping habits of approximately INGENICO COMPLETE JV WITH BS PAYONE IN MONEY2020 ASIA 34,000 consumers in 31 countries, reveals a GERMANY 19-21 March Singapore healthy e-marketplace which continues to Ingenico and Deutscher Sparkassenverlag Asia.money2020.com grow rapidly. (DSV), have announced the completed merger of BS PAYONE, a Sparkassen-Finanzgruppe TECHNOVA:AI IN FINANCIAL SERVICES subsidiary, with Ingenico Retail assets in DACH 32 PRODUCTS 27 March, London (Germany, Austria, Switzerland) following new.marketforce.eu.com/technova/ NORDIC API GATEWAY SPIIR GETS BIG BANK the approval of the German competition events/ai-financial-services/ INVESTMENT regulator Bundeskartellamt and the Financial Hot on the heels of Tieto launching its API Hub, Supervisory Authority. SELF-SERVICE BANKING ASIA 3-4 April, Bangkok Spiir’s Nordic API Gateway has received a €5.2 https://www.rbrlondon.com/ million investment from DNB and Danske Bank NETS FINALISES MERGER WITH CONCARDIS conferences/ssba/ as the banks continue their plans to build their Nets and Concardis have confirmed that they PSD2 and Open Banking infrastructure in have completed their merger, as originally SEAMLESS MIDDLE EAST announced in June 2018. the Nordics. 10-11 April, Dubai www.seamless-expo.com/ME VISA TO BUY EARTHPORT FOR £198 MILLION NEW ANTI-MONEY LAUNDERING PLATFORM Visa Inc is to pay £198 million to buy Earthport LAUNCHED IN UK RBI DIGITAL BANKING CONFERENCE EU Plc, a British firm that facilitates international Pay.UK’s Faster Payments team has announced April, London payments transactions for banks the official launch of the anti-money laundering retailbankinginnovation.fintecnet.com and businesses. Mule Insights Tactical Solution (MITS) following /index. a successful pilot by participants.

FEATURE P12-14 FEATURE P20-22 BLOCKCHAIN: OUT ACQUIRING AND OF THE BLOCKS? PROCESSING: THE NEXT WAVE

www.paymentscm.com payments cards & mobile magazine - january / february 2019 5 news in brief global payments news from the last 60 days

MASTERCARD HAS launched an AI-based ELAVON IS the first payments provider and cards taking the top slot at 38 percent, cash is system based on the EMV 3D-Secure 2.0 ecommerce company to directly connect to a close second at 28 percent and credit cards standard. The system takes into account the UK Faster Payments Service, enabling at 22 percent. The use of e-payment devices more than 150 different variables related merchants to receive funds to their UK bank is more popular amongst 18-24 year olds. to a transaction to help card issuers make accounts more rapidly. Previously, only major Nearly 1 in 4 (22 percent) of the people within a more accurate, insight-based decision banks and building societies enjoyed direct this age group prefer mobile payments and whether to approve a transaction or decline to the scheme: however, the new wearables as means of payment, compared it. These variables include such factors as access model - delivered by Faster Payments to only 4 percent of those aged 55 years screen brightness, device owner gestures in collaboration with the Bank of England, above. Tony Hammond, Managing Director and shopping purchase history. Mastercard FCA and HM Treasury - opens the service to of FreedomPay Europe, commented: “This claim this new system, which incorporates new players and markets. Direct connection research clearly shows that passengers want elements of machine learning, will reduce to Faster Payments helps UK businesses speed of payment and convenience when it the number of disputed transactions and optimise revenue by facilitating 24/7, real- comes to shopping.” false declines, with false declines alone time funding up to £250,000 without third- responsible for $303 billion of lost revenue to party transaction limits. Elavon joins 25 retailers in 2017 according to the US Federal participating financial organisations already Reserve. The US Fed says false declines lead part of the UK Faster Payments service, such consumers to abandon their card or mobile as HSBC, and Lloyds TSB. transactions completely and seek alternative payments channels. US-BASED company QRails has successfully completed the integration of CyberloQ into its fraud prevention and transaction security IMPORT.IO, a US-based web data integration platform for issuing banks and, via an app, solution provider, has closed a $15.5 million consumers. QRails says this integration will Series B funding round to accelerate global allow issuers to design fraud ID and prevention growth and expand its product offerings to programmes with specific parameters such meet growing customer needs, including those as digital “on/off switches” at a transaction of banks and payment processing firms. With level. Cardholders can freeze and unfreeze 90 percent of the world’s data created in the their cards anytime via QRails’ mobile app, last two years, demand for analysis based on SMS, or website. Customers can restrict card web data continues to grow. Total spend on LONDON-BASED fintech Shieldpay has agreed usage to certain locations within a defined web data integration will hit $5 billion in 2019 a partnership with Visa to deliver secure card radius, block or select vendors, shops and according to Opimas Research, while IBM payments across peer to peer marketplaces regions. “Not only does this level of card estimates poor-quality data capture costs and classified ad sites. The partnership opens control provide significant security and fraud financial services firms and others more than up the use of debit and credit cards to the improvement, it also improves top of wallet US$3 trillion annually. Talis Capital, a London- £120bn online classified advertising industry. and cardholder confidence”, said Naseer based venture capital firm, led the investment Shieldpay’s solution mitigates the risk of Nasim, CEO of QRails. with participation from existing investors fraud by verifying the identity of all parties, IP Group, OpenOcean, Oxford Capital and holding funds securely and only releasing Wellington Partners. funds when all sides agree they are happy. Through the partnership, Shieldpay will work FISERV HAS announced it will acquire First with Visa’s CyberSource platform to enable Data in a deal worth $22 billion. Fiserv access to new verticals where secure peer to CEO Jeffery Yabuki will become CEO of the peer payments have been tough in the past combined entity, while First Data’s CEO Frank – such as classified ad platforms and peer Bisignano will become president and COO. to peer marketplaces. Peter Janes, CEO and After the deal closes, Fiserv shareholders Founder of Shieldpay, said: “Fraud is a huge will own 57.5 percent of the combined concern for users company, with First Data shareholders owning of these platforms, A STUDY by FreedomPay involving 2,500 42.5 percent. and the security adults undertaken in UK airports suggests This merger is part of a general trend to Visa and Shieldpay that ease of payment and transaction speed consolidate the financial services ecosystem, can now offer will are the two most important factors influencing provide a one-stop-shop to clients, and build revolutionise the consumers’ experience. Whilst traditional more integrated services. Traditional banks space.” methods of payment remain popular with debit have been disrupted in the last 10-15 years

6 payments cards & mobile magazine - january / february 2019 www.paymentscm.com news in brief

with the emergence of a host of startups Anne Carøe Hald, global head of payments offering faster, more agile solutions based on products at Danske Bank says: “Pay Later is an ‘Leaders accelerating new cloud architectures, AI and machine learning. opportunity for banks to serve their customers finance propositions & These challengers improve responsiveness better and offer appropriate finance where and business models to deliver and the overall user experience, as well as when customers need it.” real value’ What does that undercutting banks on fees and offering better mean to you? rates of interest. R3 HAS launched Corda Network to link Other tech companies like and Apple participants via an open shared blockchain At the Open Banking World Congress 2019 (7-8 May in London) we’re also are throwing their weight in terms of network based on Corda. The new network focusing on how Open Banking will “owning” customers’ financial expenditures. will be operated and managed by a new shape a new finance ecosystem. This Fiserv and First Data will combine their independent not-for-profit organisation, the isn’t a theoretical exercise – far from it work into integrated offerings. Examples Corda Network Foundation. – and if you are in any way responsible include the merger of First Data’s digital Corda Network aims to provide a common for strategy, execution or delivery of finance products and services in an merchant account enrollment capabilities into identity for developers using Corda and increasingly Open Banking world then Fiserv’s digital banking solutions which serve Corda Enterprise. The infrastructure is we’re looking to you… thousands of financial institutions. They will open and shared, enabling compatibility also be investing $500 million over the next between participants on the network. Corda five years on new tech in areas like merchant Network will allow for the transfer of data solutions, digital services, risk management and digital assets between communities of and payments. business networks and different CorDapps. “Through this transformative combination, we Participants can create private ecosystems Shouting out: expect to redefine the manner in which people within their organisation, or with trusted • What excites you most about the and institutions move money and information,” commercial partners, while remaining possibilities of Open Banking? • What do you know that the wider said Jeffery Yabuki, President and Chief interoperable with the wider Corda community community doesn’t yet? Executive Officer of Fiserv. where appropriate. • Who is inspiring you with the sheer R3 says the new network will provide global genius of their approach? open governance, enabling new participants • Have you had a light-bulb moment? to join Corda easily. It will also help developers • What do you need to know to keep ahead? create new applications for Corda and Corda • What approaches do you think Enterprise quickly, securely and at lower will really deliver true value to cost. The mission to encourage companies consumers? to adopt Corda Network will be transitioned from R3 to the Corda Let us amplify your thoughts and achievements, and help Network Foundation, with your needs. Contact us via which will operate openbankingcongress.com SWIFT HAS announced an API standard independently of R3 to get involved. which enables banks to provide instant with decision-making loan approvals for customers at point-of- transparent to all Want to meet up regularly? We recommend Open Banking sale. Pay Later is an instant online payment network members. Excellence (OBE), an open forum think facility offering customers the ability to use tank that meets monthly for those in traditional bank loan financing to pay for THE U.S. Secret Service has issued a warning the industry to contribute, educate, goods purchased online. that criminal gangs that deploy stolen credit share and collaborate with what is The banking co-operative says their and debit cards are increasingly hedging now a global movement to make bank data accessible. The goal of OBE is Transactional Finance Application their chances of getting caught with multiple to create an authentic, collaborative Programming Interface provides merchants counterfeit cards by relying on Fuze Cards, channel for like-minded people to share with a single standard connection to member a FinTech that allows users to store dozens their stories and collectively have a banks around the world, avoiding the need of cards on a single device. Users can store greater impact within the immediate for multiple costly implementations. SWIFT up to 30 credit/debit cards on a data storage industry at a practical, real-world level. http://obexcellence. has published Version 1.0 of the Pay Later device that looks like a regular . wpengine.com/ API, using business definitions from the The card displays no numbers, instead established ISO 20022 messaging standard. relying on a small display screen on the We’d love you SWIFT members believe the introduction of front that cardholders can use to change to join us…. the interface will help the banking industry which stored card is to be used to complete transition into the world of digital platforms. a transaction.

www.paymentscm.com payments cards & mobile magazine - january / february 2019 7 card notes GLOBAL

NEW FINTECH STUDY REVEALS GROWTH CHALLENGES

MagnaCarta Communications has published percent) also citing open banking as a major or suspend investment in the UK. A record its 2019 FinTech Disruptors study, “Removing area for investment. 58 percent of those surveyed believe that Roadblocks: The New Road of FinTech” in Michael Rouse, Chief Commercial Officer at Brexit will accelerate the growth of other partnership with Klarna. This study, which Klarna, which sponsored FinTech Disruptors European FinTech hubs, while the number sought responses from 5,000 professionals 2019, said: “The four elements defined as of those believing Brexit will have no impact across Europe, the Middle East and Africa, key for FinTech in this report are critical is at its lowest level (33 percent) since claims to identify four elements critical to to building customer-oriented solutions. In 2016. Somewhat countering these findings, the future development of FinTech: relevance, the right mix, these elements can enable respondents also gave the lowest figure openness, automation and data management. solutions which will empower customers on record for Europe’s future as a FinTech Considering the sector as a whole in 2019, in managing their daily financial life. A hub (27 percent, down 10 percent from the report reveals pressure growing on lot of time has been spent on making the 2017), whereas the UK actually improved its FinTech players from increasing regulatory technology work: let's focus more on how it standing as a global FinTech hub over the past oversight, heightened customer demands works for consumers as that is where the real year, with 56 percent of respondents seeing it and the integration of emerging technologies. impact and value lies.” as a future global hub, up three percent over The report argues that the FinTech sector “FinTech is maturing as a sector”, said 2017 and the second-highest ranking in the needs to collaborate more at a time when Simon Hardie, Partner at MagnaCarta world after the US/Canada and China. fewer established financial institutions are Communications. “This year’s study shows a When it comes to data management, interested in FinTech partnerships, preferring change from early-stage growth issues such established FIs reveal they are twice as to acquire start-ups or purchase white-label as creating new and alternative payments likely (42 percent vs 23 percent) as FinTechs FinTech solutions for rebranding. methods towards more complex challenges to deploy sophisticated data mining and FinTech Disruptors 2019 also provides such as the regulatory environment, how to interrogation techniques to their customer evidence of a significant shift in industry apply AI and automation for customer benefit, data. The most common uses for customer focus, away from new payments technologies and how best to manage increasing volumes data lie in building business cases and and towards open banking and the application of customer data.” developing products, although surprisingly of AI in FinTech. This year, just 37 percent of few (10 percent of those surveyed) use respondents cited payments as a major Brexit: The Good, customer data to try to interpret what further future investment area for FinTech, compared the Bad, and… products customers would like, or (20 with 71 percent in 2018. At the same time, percent) to solicit feedback from existing 57 percent of those surveyed identified AI, The survey found that just under half (49 customers during the development process. automisation and digitisation as a key future percent) of those surveyed believed that When deploying AI and automation in investment focus, with more than half (51 Brexit would cause companies to reconsider their businesses, FinTechs are almost equal with established FIs, with 41 percent of FinTechs saying they use AI techniques in BUILDING BLOCKS OF FINTECH'S NEW ROAD their business, compared to 43 percent of A NEW ROAD FOR FINTECH? FIs. In a further sign of the growing maturity of the FinTech sector, banks expressed RELEVANCE OPENNESS AUTOMATION DATA IMPACT IMPACT IMPACT IMPACT record levels of interest in purchasing white- Customers & distribution Strategy & culture Service & systems Manufacturing & modelling RELEVANT OR RELIC? OPEN…TO OPPORTUNITY? AUTO-MATE? PROFIT POOL…OR PURPOSE? labelled FinTech products for rebranding

Double the proportion and use in their business (46 percent vs. of banks struggle to Trying to define Investment in of fintechs use meet changing PSD2 value AI will dominate 56% 56% 57% customer insight for customer needs proposition 2019 33 percent in 2018), and also in acquiring × product design as banks 2 FinTech companies (45 percent vs 22 percent

...BUT ROADBLOCKS REMAIN in 2018). Trade challenges Poor data & analytics A lot of work still to do... At the same time, the level of bank interest in Insight is used in the product design stage Establishing a culture of innovation COMPANIES THINK partnering with FinTechs, while still high at 68 BREXIT WILL HURT 53% 0% 50% 100% 1 in 2 UK FINTECH Use customer insight to define use cases percent for 2019, is the lowest figure recorded Leveraging data and analytics Will accelerate growth of other 58% 42% European fintech hubs in the three years of the survey’s existence. Customer feedback built into every stage of 0% 50% 100% product development 45% Meeting changing customer needs Taken together, these findings show that 38% 32% Understanding which segments to pay most 0% 50% 100% banks are aware of the threat posed by Companies will reconsider or 49% attention to is challenging Integrating new technologies to reduce costs suspend investment in UK fintech FinTechs to their business - confirmed by the 26% 0% 50% 100% 36% Understand precisely what our customers finding that banks surveyed this year believe 31% demand and expect Using technology to enhance relationships

2017 2018 2019 22% 0% 50% 100% 31 percent of their overall revenues are at risk of being taken by FinTechs.

8 payments cards & mobile magazine - january / february 2019 www.paymentscm.com card notes GLOBAL

BCG/SWIFT PREDICT MAJOR SHIFTS IN GLOBAL PAYMENTS

A new report from SWIFT and the Boston Digital Diversity card payments as they encourage links Consulting Group, Global Payments 2018, between digital wallets and bank accounts has projected major shifts in emphasis Although BCG and SWIFT follow other via payment cards. To further enhance and structure for the payments industry commentators in seeing e-retailing as the this competitive advantage, the authors over the next decade. Whilst describing largest single category of online spending, recommend that card schemes embrace payments as “one of the brightest spots in they also predict the emergence of other initiatives to make authentication easier, such the financial services universe”, and noting online spending categories. These include as biometric ID and ID tokenisation. that the payments business can expect to subscription services for digital content (e.g. add more than $1 trillion in new revenue in music, magazines and video), a category which Act Now to Avoid the years to 2027, BCG and SWIFT also see the authors predict will account for around 10 Disintermediation this rapid market growth leading to increased to 20 percent of the global e-commerce market. competition and significant threats to long- Other emerging categories include real-time, Incumbent players in the payments market are established payments actors such as card contextual commerce in social platforms (such vulnerable because they have been slow to networks and banks. as booking a restaurant from within ) or address long-standing customer pain-points, In keeping with other recent projections, by “searching nearby” on Google Maps, as well including a failure to reduce friction in the BCG and SWIFT find most growth in Rapidly as expanding Direct-to-Consumer offerings for consumer payments experience, and a need Developing Economies (RDEs) such as China, products such as mattresses (Caspar in the US) to grow their data and analytics capabilities. India, and Latin America. or food (Spud in Canada). For consumers, BCG/SWIFT argue that card The new BCG/SWIFT report diverges issuers and merchants must look to provide from other recent studies, however, in also Cards Still Present more tailored services and offerings. On the identifying these RDEs as the source of merchant side, the report authors say more most current and future payments innovation. In keeping with PCM’s recent editorial line must be done to take advantage of open As evidence, they cite the growth of new, on this subject (see The Death of Cards?, banking innovations that allow for plug-and- alternative payments methods such as RuPay PCM November-December 2018), BCG/SWIFT play solutions to be easily integrated into (India; volume growth of more than 2,000 believe that card payments will continue to merchants’ existing operations. percent since 2016) and (India; volume grow over the next decade, notwithstanding Finally, the report predicts that corporate growth of 900 percent since 2016.) threats from fast-rising merchant wallet treasurers are also looking for improved The slower, but still significant, growth in schemes such as and service in the B2B payments market, payments revenues experienced in the US (4 MercadoPago. Peer-to-Peer (P2P) payment especially since there is now more pressure percent p.a. up to 2027) and Europe (6 percent schemes could also become a significant on their positions as the remit of finance p.a. to 2027) will be marked by increased M&A threat to card payments if they can do more departments grows. New solutions such as and consolidation activity, as established to promote their accounts as being flexible and Tipalti are emerging rapidly to players seek to enhance their profitability and enough to handle physical payments. The provide alternatives for corporate treasury defend against threats from rapidly developing report argues that developments such as functions, automating invoicing, payroll and economies, as well as incursions by digital- the advent of the second Payments Services other areas via the cloud. In this as in other only payments methods into traditional Directive (PSD2) in Europe and the United areas, incumbent players must act rapidly to retail environments. Payments Interface (UPI) in India have helped avoid disintermediation. BCG and SWIFT predict that established payments actors such as card networks, NUMBER OF WORLDWIDE NON-CASH TRANSACTIONS (BILLIONS), BY REGION 2012-2016 issuers and acquirers will try to expand into CAGR Growth other areas of the buying journey, working with 550 (2012–16) (2014–15) (2015–16) 482.6 Global 9.8% 11.7% 10.1% search engines and retailers to improve access 438.4 40.1 440 to credit, create an omni-channel shopping 392.5 38.9 52.2 Latin America 5.8% 5.0% 3.2% ns ) 360.7 37.0 44.6 experience, and reduce cart abandonments 331.7 70.6 CEMEA 13.8% 16.5% 17.1% 16.5%

(Billi o 35.2 330 38.3 56.4 32.0 34.5 in e-commerce. However, these established 38.7 50.0 Emerging Asia 31.1% 45.9% 25.2% Developing 31.1 29.2 45.3 23.9 41.3 players will face a double threat from 37.3 Mature 10.6% 9.6% 10.3% 220 33.5 100.8 108.5 Asia-Pacific on-line companies looking to expand sh Transa ct ion s 87.9 93.5 a 83.5 Europe 6.8% 7.8% 7.7% into the physical environment, and new, 7.1% (Including No n- C 110 Mature 161.1 Eurozone) alternative payments methods from emerging 127.7 136.6 143.7 152.5 economies like Ant Financial (China) and North America 6.0% 6.1% 5.7% 0 GrabPay (Singapore) seeking to enter 2012 2013 2014 2015 2016 Source: World Payments Report, 2018. mature markets.

10 payments cards & mobile magazine - january / february 2019 www.paymentscm.com card notes

SURVEY FINDS INDUSTRY INVESTING IN TECH TRANSFORMATION

The tenth anniversary edition of the EFMA – a process which is well underway, as the according to EFMA, is that they do not see report, Innovation in Retail Banking, reports that report notes – EFMA recommend a root-and- themselves as innovation leaders, and lack banks are increasing levels of investment in branch cultural change programme in banks the top-level commitment to cultural change payments technologies and channels in an effort to ensure they are focused on innovation. which would allow significant innovations to to keep up with the digital revolution. At the same More challenging recommendations from the flourish. At present, innovations are adopted time as levels of investment are increasing, report include urging banks to take more incrementally – and, by implication, slowly – however, the survey also reveals a need for risks and to seek the disruption of their own so that opportunities are lost, and the huge greater leadership in innovation, with fewer than existing (and successful) business models. potential returns on investment that come half (48 percent) of the banks surveyed having In part, the need to disrupt their own business from truly disruptive innovations are never appointed a Chief Innovation Officer (CIO), and a models stems from the burden of legacy realised by the banking sector. similar proportion (49 percent) lacking a clearly- technology systems: the report authors refer Worse news for traditional banking models defined innovation strategy. to retail banks’ older technologies as the comes in the shape of established digital Investment in innovation is necessary, the “great inhibitor” for future innovation. commerce platforms such as Amazon and report argues, because banks have been In terms of how the report’s Alibaba which EFMA see as likely to emerge losing the battle for customer engagement recommendations might be implemented, as clear innovation leaders over the next three over the past decade. In 2004, bank branches EFMA sees fintech start-ups as a rich breeding years. Consumer technology companies such were involved in 50 percent of all customer ground for successful innovations that can be as Google and Apple come a close second. interactions. By 2018, this figure had dropped implemented in banks, either by partnering The biggest threat for banks comes not to less than 10 percent – and the number arrangements or by acquisition. When it from their own industry but from “big tech” of these interactions owned by banks is comes to culture, Mr. Sanat Rao, CEO of players with deep pockets and advanced declining. This decline in bank engagement report sponsors Infosys Finacle, urges banks digital capabilities in critical areas. is moving so quickly that the report authors to avoid, “a facelift of select touch points and Progressive banks have already begun estimate fewer than 50 percent of all financial pockets limited to the front office”, and instead cultivating innovation ecosystems and interactions will be undertaken by banks by to embrace, “a holistic transformation that is establishing a “platform” business model that 2022, with new technology players picking up digital to the core.” allows them to integrate products from other these opportunities. However, instilling a culture of innovation providers with their own offering. EFMA’s Globally, retail banks’ main areas of is no easy task – and the findings of this 2019 findings reveal that the traditional front- investment in innovation were technology EFMA study suggest that it may be most to-back office banking model, with no room (74 percent), payment channels (73 percent) challenging for established larger financial for partnerships, is visibly disintegrating and the customer experience (69 percent). Of institutions in Western Europe and North into specialist roles which place a growing these three areas, banks identified improving America, where a traditionally risk-averse and premium on deep expertise and customer customer delivery channels as the most compliance-focused sector is under threat relationships. Banks are aligning themselves important area of investment, and stated from a technology industry that embraces more strongly with the behaviour of their intention to partner with third-party and rewards risk-taking and creativity. manufacturing or distribution companies organisations and fintech start-ups on the The problem with the current approach to affirm their central position in this implementation of new technologies. to innovation on the part of larger banks, new landscape. Perhaps most interestingly, banks did not identify themselves as innovation leaders PRESENCE OF CLEARLY DEFINED over the next five years, instead pointing to PRESENCE OF INNOVATION STRATEGY INNOVATION OFFICER digital commerce platforms such as Amazon and Alibaba, consumer tech firms like Google and Apple, and emerging fintech players as 7% innovation leaders. As report author Jim Marous notes in his introduction, “Increasing consumer demands, fuelled by digital 44% 42% 10% 48% experiences from technology leaders, are No, 49% but we plan to within relegating the banking industry to playing the next 18 months

“catch-up” – this is particularly the case with No Yes smaller banks, which often lack the resources to delivery the same digital functionality as Yes No Don’t know their larger peers.” Source: Efma-Infosys Finacle Digital Banking Report Survey 2018 Aside from increasing their levels of investment

www.paymentscm.com payments cards & mobile magazine - january / february 2019 11 BLOCKCHAIN: OUT OF THE BLOCKS?

by James Wood, PCM Editor

Blockchain has been called the most over-hyped innovation in the world today, with the hysteria surrounding it sometimes compared to the infamous “dot.com” bubble of 1999-2000. PCM Editor James Wood looks at the rationale behind the hype, where the payments industry stands on blockchain, and what possible future implementations of blockchain technology might look like.

At first, it seemed simple enough. In “blocks” are time-stamped and associated passes without another blockchain application 2008, the inventors of Bitcoin, working with individual users, each “block” is unique. being touted in the media. In one sense, this under the pseudonym Satoshi Nakamoto, The second advantage is that is possible for is unsurprising, since our internet-enabled needed a means of keeping a record of an individual “block” to be utilised as a form world now thrives on data. Forbes magazine who had been buying and selling their new of digital identification multiple times and in recently estimated that 90 percent of all data cryptocurrency. So they created a digital list different environments, effectively switching in existence today was created in the last two (the “chain”) of linked records, or “blocks”, its utility from transaction record to a form years – and that the human race is currently using cryptography to retain the anonymity of Digital ID and permanent record of any generating a further 2.5 quintillion bytes of of parties to the transaction. By adding a transaction or movement. data records every day. timestamp and transaction data to these Over the past decade, the potential of The financial services industry was not slow records, it became possible to know when blockchain to significantly improve any human to appreciate the potential of blockchain a bitcoin trade occurred, associating this endeavour involving the transfer of large across its entire range of activities, from trade with counterparties via their encrypted amounts of data – and, in particular, sensitive trading desks to settlement, lending digital signature. data – has been the subject of an avalanche operations, mortgages – and, of course, Two great advantages of what was originally of interest. From medical records to exam payments. This year, investment in blockchain known as “the block chain” quickly became results, haulage and logistics, international technologies by banks is expected to hit $400 apparent: the first was that, because the trade and government records – barely a week million – with VC funding for blockchain-based

12 payments cards & mobile magazine - january / february 2019 www.paymentscm.com blockchain

start-ups reaching half a billion US dollars four Stephen Poloz dismissing Bitcoin trading as digital transactions, it may be possible to years ago. “gambling.” At the same time, though, Poloz make existing technologies more secure and And these trends show no sign of slowing recognised blockchain technology as “a true transparent, rather than switching wholesale.” down: a late 2018 survey by PwC suggested piece of genius.” While careful to state that FIS will work with that 14% of all VC funds world-wide intend to This distinction is important, since the its clients to build the best solutions for their invest in some form of blockchain in 2019. Not present and medium-term applications of business, Pigg notes the huge variations all of this money is going to payments – in fact, blockchain appear to be more focused in the in processing times experienced by some many commentators believe some of the most clearing and settlement arena than in replacing companies that have trialled blockchain-based interesting use cases for blockchain lie in the fiat currencies with crypto-currencies. processing. The challenge is the length of areas of compliance, claims processing, loan the chain involved in any given transaction origination and corporate finance. German Word on the Block – if multiple parties, jurisdictions and car company Porsche provided a recent high- currencies are involved, then confirming the profile example, when it sourced a corporate To understate the case, there is a wide range chain associated with that transaction can loan of $150m on favourable terms from a of opinion regarding the extent to which involve significant amounts of computing blockchain-based lending platform. blockchain will change the processing, clearing power and, lest we forget, energy. As the BIS’s and settlement aspects of the payments condamnatory review of blockchain in its 2018 Unblocking Payments business. Proponents of the technology, Annual Report noted, "to process the number such as Elixxir’s David Chaum or Ripple’s of digital retail transactions currently handled When it comes to payments, blockchain’s basic David Schwartz, predict that blockchain by selected national retail payment systems, premise is that by establishing decentralised will completely revolutionise the payments the size of the ledger would swell well beyond ledgers for payments, the technology will industry by 2025. For blockchain’s champions, the storage capacity of a typical smartphone facilitate faster transactions at lower fees than the world’s payment networks are unreliable, in a matter of days, beyond that of a typical banks can manage. Its proponents claim that outdated, expensive and slow, overly liable to personal computer in a matter of weeks blockchain offers a high-security, low-cost fraud, involve too many intermediaries and are and beyond that of all servers in a matter of way of sending payments that cuts down on not fit for purpose in the twenty-first century. months." the need for verification from third parties and Against these arguments, blockchain’s beats processing times for traditional bank detractors argue that it’s too early to tell Block Party Happening transfers. When polled on blockchain’s utility whether the technology will be able to in late 2018, 90 percent of members of the operate at the scale required to cope with the Despite these jeremiads, there is solid European Payments Council said they believed billions of transactions processed annually evidence of the successful implementation this technology will fundamentally change the by existing networks. Esther Pigg, Senior of blockchain in payments, albeit – to date – industry by 2025. Vice-President of Product Strategy at global in limited environments or closed systems. banking services group FIS, says: “Presently, One example of this is BitPesa, a blockchain The Chain not the Coin blockchain-based processing systems lack company focused on facilitating B2B the scaleability and interoperability of existing payments in Kenya, Nigeria, and Uganda. As of At this point, it’s important to make the arrangements. Card networks as they exist the end of 2018, the company had processed distinction between blockchain technology today are tremendously fast at processing $340 million in transactions, reportedly and the digital or crypto-currencies associated large numbers of transactions per second. growing 20% month-over-month, and serving with it, of which Bitcoin and Ethereum are the Where there are challenges, such as ID in 25,000 corporate customers across Africa. In most well-known. These digital currencies offer a store of value which can be exchanged BLOCKCHAIN BANK SPENDING FORECAST (USD MIL.) electronically without reference to a bank using what’s called distributed ledger technology. 500 Understandably, then, banks are not keen on crypto-currencies, with JP Morgan’s Jamie 400 Dymon famously describing Bitcoin as, “worse 300 than tulip bulbs… it won’t end well”, and his counterpart at Goldman Sachs, Lloyd Blankfein, 200 commenting that Bitcoin, “feels like a vehicle to perpetuate fraud.” 100 Central bankers are no less dismissive, with the Bank of Intenational Settlements 0 2014 2015 2016 2017 2018 2019 (BIS) describing cryptocurrencies as “a Source: Aite Group catastrophe”, and Bank of Canada Governor

www.paymentscm.com payments cards & mobile magazine - january / february 2019 13 blockchain

the Middle East and South Asia, Emirates NDB to the US dollar (a so-called “stablecoin”), IBM partnered with India’s ICICI Bank on a proof- and its partners claim to be able to clear and of-concept project in which remittances and settle transactions almost instantaneously "Many banking trade finance deals were successfully cleared without reference to third parties. leaders are and settled using blockchain. Meanwhile, In mid-2018, Oracle fully launched a US-based BitPay, a bitcoin payment service blockchain-based system it had previously optimistic about provider that helps merchants accept and been trialling with select corporate clients. store Bitcoin payments, has more than 40 Not limited to payments, Oracle’s system blockchain." integrations, partnering with e-commerce allows clients to monitor supply chains, track - Sanat Rao, Finacle platforms like Shopify and LemonStand to shipments – and pay customers and suppliers. facilitate Bitcoin payments. Similar enterprise management systems blockchain offers for the infrastructure of the These small successes have encouraged based on blockchain have been launched by new digital banking world.” larger players to sit up and take notice. While SAP and Microsoft as these giants recognise Raymond Qu, CEO of China’s specialist both Visa and Mastercard have applied for blockchain’s potential help in the complex clearing and settlement provider GeoSwift, patents related to blockchain – principally payments environment corporations face agrees: “There have been challenges with in the area of transaction security and when doing business internationally. blockchain of late – but the technology is cardholder identification, Bank of America’s improving, and the use case makes sense. If recent work on blockchain has resulted in Revolution in the Head? you think about Moore’s law [where processing 43 patents. Overall, according to Fortune power doubles every eighteen months] and the magazine, there were 1,245 US patent To date, though, none of these solutions have level of investment we’re seeing in blockchain, applications relating to blockchain in 2018 – achieved anything like the scale or speed it’s clear there is value for the industry. However, up from 313 just two years ago. In terms of of established payments infrastructures. the industry will also have to agree on a set of current patents, Mastercard, Visa and Bank of To take one example, blockchain payments standards if blockchain is going to be effective America were all in the top ten holders of live specialist firm Ripple, one of the largest and – exactly the same challenge SWIFT and other blockchain-related patents worldwide. most successful start-ups in this area, works organisations faced years ago.” with around 100 financial institutions world- Perhaps the most likely future for blockchain Go Big or Go Home wide on blockchain transactions, clearing in payments is the slow accretion of a variety of and settlement. By comparison, Visa and smaller, successful schemes (such as Africa’s These smaller-scale successes and patent Mastercard serve approximately 30,000 bitPesa) which merge into larger projects over activities speak to blockchain’s clear potential financial institutions around the world. a period of time. After all, the 2,000-year-old for the payments business. The challenge Nonetheless, there is firm belief among leaders concept of cash has yet to fully disappear, now is whether blockchain can be scaled up in the payments business that blockchain and is unlikely ever to do so. Similarly, we will to function internationally in the consumer has a role to play in the industry’s future. perhaps see the proliferation of a number and wider corporate environments without Sanat Rao, Chief Business Officer at Finacle, of national and regional blockchain-based “breaking the internet”, as the BIS claims. comments: “The understanding and application systems over the next ten years which work Recent launches by major international of blockchain technology has matured over alongside and are interoperable with existing corporations like IBM and Oracle suggest a the last few years. Many banking leaders payments infrastructure. For payments, as for high level of confidence that such scale can, are optimistic about the authentication, much of the rest of nature, evolution will be and will, be achieved. traceability, accountability and efficiency that preferred to revolution. At SIBOS 2017 in Toronto, IBM announced the launch of a blockchain-based system which it VC FUNDING FOR BITCOIN AND BLOCKCHAIN (USD MIL.) claimed would make payments faster, cheaper, more secure and with richer data features. 500 Essentially a pilot project, this system processes transactions in 12 under-served 400 currency corridors between the Pacific Islands 300 and Australia, New Zealand and the United

Kingdom, using digital currencies as a foreign- 200 exchange bridge to allow for near-real-time transaction settlement. The company followed 100 this announcement with the late 2018 launch of IBM Blockchain World Wire, a financial rail 0 2012 2013 2014 2015 that claims to clear and settle transactions in Source: CoinDesk/Goldman Sachs Global Investment Research near-real time. By pegging a crypto-currency

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More payment methods mean more customers Contact us today to find out how we can help With a single contract, single API and single monthly payment, your customers: you as a (PSP) or acquirer get centralised access to more than 140 local LPMs from all over the world. We [email protected] at PPRO help you to integrate our API and provide merchants with www.ppro.com the payment methods they need to accept more payments and meet their business goals. COVER STORY PAYMENT CARDS IN EUROPE

by Horst Foerster

Driven by contactless card payments and by increased card usage, in 2017 the number of card payments continued to grow across the 33 countries covered by our Yearbook. POS payments showed further strong growth, while cash withdrawals by card declined. In addition, cardless bank payment services and mobile payment apps gained momentum. Horst Foerster, Head of Research at Payments Cards and Mobile, examines the statistics and significant trends.

Cards and Card Use in Europe in the E33 countries, a growth rate of 11.4 • Higher card use led to a growing number percent over 2016. There was an average of POS and online payments and more low- By the end of 2017, card payments by number of 127.1 payments per capita, ranging from value contactless payments. In 2017, card accounted for 55.3 percent of cashless 18.3 in Bulgaria and 23.5 in Romania to a payments by number and by value once again payments in Europe, up from 52.2 percent the high of 421.5 in Iceland and 425.4 in Norway. grew more rapidly than the compound annual previous year. In addition, online payments and payments growth rate (CAGR) between 2012 and 2017. Across the 33 European countries covered initiated from mobile devices grew by more • All the E33 countries promoted contactless by the Yearbook, there were 1,034.2 million than 10 and 20 percent respectively over 2016. card payments and mobile HCE NFC payment cards in circulation at the end of 2017, up 3.2 The value of card payments across the E33 services, including all the European domestic percent over 2016, of which 68.6 percent were countries grew by 3.5 per cent to €3,395 billion schemes. Almost all banks issued debit cards. On average, there were 1.59 cards by the end of 2017, up by 45.8 percent over the contactless cards in 2017. per capita in the 28 EU countries, and 1.71 in five years since 2012. The calculated Average • Contactless card payments, now considered the E33 countries. The number of cards held Transaction Value (ATV) per card payment the new normal in Europe and embraced varied significantly between countries, from declined to €43.65, down by 7.1 percent from by many cardholders, showed significant a low of 0.83 in Romania to a high of 4.32 in 2016, reflecting more lower-value payments. growth rates. In December 2018, around 30 Luxembourg. Notable trends across the E33 countries percent of all card payments in the UK were In 2017, there were 77.8 billion card payments include: contactless payments.

16 payments cards & mobile magazine - january / february 2019 www.paymentscm.com yearbook

• More European banking groups supported number of debit cards due to consolidation • Instead of pushing debit card use on the digital wallets such as MasterPass and Visa of card portfolios following the rollout of internet, more European banks launched mobile Checkout, as well as the ‘Giant Pays’: Apple contactless cards. The greatest declines were banking apps combined with IBAN-based Pay, Samsung Pay, and , all of which seen in Iceland (-9.4 percent) and Sweden payments direct from the account alongside launched in more European markets in 2017. (-5.7 percent). Latvia, Cyprus, Turkey, Greece immediate mobile P2P money transfers. • More European banks combined their and Poland showed higher debit card growth • The last active e-purse system in Europe, mobile banking apps with IBAN-based bank than usual. German GeldKarte, will be replaced by payments directly from bank accounts. There were 63.6 billion payments on debit contactless cards. Among others, payment apps such as cards in 2017, a 11.3 percent increase on BLIK, Jiffy, PayConiq, Swish and Vipps use 2016, with a total value of €2.58 trillion. All Credit/Delayed Debit Cards QR-codes as bridging technologies to enable the major developed markets continued to cardless bank payments in-store. show significant growth in the number of debit In 2017, the total credit/delayed debit card • Effective from 9 December 2015 and 9 June payments in 2017. The leaders, the UK and base grew by 8.8 million cards to 324.8 million, 2016, respectively, an cap and France, accounted for 29.2 billion debit card up slightly by 2.8 percent over 2016. There payment application selection provision were payments in 2017, an impressive 45.8 percent were 0.53 credit cards per capita on average implemented in all countries of the EEA region. of the regional total. With specific regard to across the E33 countries, although credit card • New challenges for the payments industry Germany, 1.5 billion card-initiated IBAN-based countries, such as Greece, Ireland, Turkey and emerging in 2017 included 3D-Secure 2.0, ELV direct debits totalling €76.5 billion are not the UK accounted for 131.7 million credit/ tokenisation security, and the implementation included in the debit card total. delayed debit cards, 40.5 percent of the total. of strong customer authentication according Notable trends across the E33 countries There were 14.1 billion delayed debit/credit to technical regulatory standards relating to include: card payments in 2017. With a CAGR of 8.0 the PSD2 (RTS SCA). • All domestic debit card schemes issued percent growth over the last five years, credit/ contactless cards in 2017, including the delayed debit card payments increased at a Debit Cards card schemes Girocard in Germany, in lower rate than debit cards, which grew by 12.3 Turkey, and in Russia. percent over the same period. In 2017, just two In 2017, the E33 region’s total debit card base • More card issuers replaced their countries – Latvia and Belgium – recorded grew by 23.7 million cards to 709.4 million, and Electron cards with contactless cards a fall in the number of payments on credit/ an increase of 3.5 percent, and CAGR of 2.2 branded Debit Mastercard or , delayed debit cards. percent. On average, there were around 1.15 respectively. Even in Girocard-country The value of credit/delayed debit cards debit cards per capita across Europe. Only Germany, nine card issuers launched Debit payments was €813.2 billion, a rise of 2.2 six countries recorded a decline in the total Mastercard cards. percent over 2016. The UK credit card market

TABLE 1 - SELECTED REGIONAL CARD MARKET SUMMARY

2013 2014 2015 2016 2017 GR 16/17 CAGR 5Y

Total cards in the European E33 countries (m) 955.8 965.0 988.3 1,001.7 1,034.2 3.24% 2.16%

- thereof debit cards (m) 660.8 664.5 671.3 685.7 709.4 3.46% 2.23%

- thereof credit cards and/or deleyed debit cards (m) 295.1 300.5 317.0 316.0 324.8 2.76% 2.02%

Average payments per card per year 54.4 58.6 63.4 69.7 75.2 7.88% 9.05%

Payment cards per capita (EU28) 1.50 1.51 1.54 1.56 1.59 1.80% 1.52%

Debit cards in % of cards total 69.1% 68.9% 67.9% 68.5% 68.6% 0.21% 0.07%

Card payments in the E33 countries (m) 51,978.8 56,524.4 62,697.5 69,839.2 77,784.4 11.38% 11.41%

Value of card payments in the E33 countries (€bn) 2,678.1 2,891.4 3,202.7 3,281.0 3,395.1 3.48% 7.84%

ATV per card payment €51.52 €51.15 €51.08 €46.98 €43.65 -7.09% -3.20%

Card payments per capita 84.9 92.3 102.4 114.1 127.1 11.38% 9.21%

- thereof debit card payments per capita 68.3 74.4 83.4 93.4 103.9 11.31% 11.97%

- thereof credit card and delayed debit card payments per capita 16.9 18.1 19.2 20.9 23.0 9.83% 7.61%

Note: around 30.8% of all cards in the E33 region are either credit card and/or delayed debit card.

Source: Yearbook Research (European E33 countries).

www.paymentscm.com payments cards & mobile magazine - january / february 2019 17 yearbook

has essentially been flat for several years but POS ATV varies by country and reflects national retailers intend to offer omni-channel grew again from 2009 and showed moderate payment habits. At one end of the scale, Latvia retailing services. The implication of this growth of 0.8 percent in 2017. The value of had an ATV per POS payment of €15.6, while at is a growing demand for multiple payment spending on credit/delayed debit cards fell in the other end, Italy boasted an ATV of €67.8 for services at any type of checkout device from Latvia, Turkey, Belgium and Sweden. each POS payment. supporting acquirers, both for cards and for Notable trends across the E33 countries POS payments per capita once again cardless bank payments. include: showed a range from 15.7 POS payments in • Most credit/delayed debit cards are Bulgaria up to an extremely high 443.1 POS ATMs and Cash Withdrawals contactless cards, including the remaining payments for each person in Iceland. The domestic credit card schemes. PIN Nordic countries topped the POS payments The number of ATMs continued to decline authentication will replace signature-based table: Iceland, Norway, Sweden, Denmark and slightly, with 459,645 ATMs across the E33 authentication. Finland occupied the top five spots. They were countries covered in the Yearbook. This • More European banks launched mobile HCE followed by the UK, , the Netherlands, decline of -0.3 percent from 2016 compares NFC payments on credit cards in 2017. France and Belgium. with a low CAGR of +0.4 percent in ATM • The domestic interchange fee cap for delayed Notable trends across the E33 countries include: numbers over the last five years. The number debit/credit consumer cards is stimulating • 79.2 percent of all domestic POS payments of cash withdrawals per ATM each month credit card acceptance in many European on cards in Europe are now EMV transactions, amounted to an average of 2,494 withdrawals. merchant outlets. according to the European Central Bank. This In Europe, there is a medium-term trend of includes contactless payments and mobile declining ATM installations owing to bank POS Terminals and POS HCE NFC payments. mergers, branch closures and the higher use Payments • The rollout of contactless POS terminals and of cards. In 2017, ATM density per million tablet-based retailing solutions combined inhabitants showed a wide range, from 247 in In 2017, the POS terminal base across the with contactless mPOS terminals continues. mature Sweden to a high of 1,315 in Portugal. E33 countries grew by 7.3 percent to 15.8 Innovations at POS include various payment The total number of cash withdrawals across million (CAGR: 6.1 percent). The roll-out and loyalty applications based around the all E33 countries covered in the Yearbook of contactless POS terminals and mPOS display of QR-codes, Bluetooth Smart (BLE) showed an overall decline of -2.2 percent terminals for small merchants has contributed and beacon technologies. from 2016 and a compound annual growth to stronger growth since 2015. • Combined tablet PC and mPOS retailing rate of +0.1 percent over the last five years. The total number of POS payments was 69.9 solutions have allowed for mobile payments There were 13.76 billion cash withdrawals billion, up from 55.7 billion in 2015. There was in-store both on cards and on cardless performed across the E33 countries. In 2017, an overall growth rate of 14.6 percent compared payment means. This includes in-app there were 22.4 withdrawals on cards per to 2015, which was again higher than the CAGR payments with mobile banking apps. capita, ranging from 7.7 withdrawals in Norway of 9.5 percent seen over the last five years. On • Cash advances on cards at POS terminals up to an elevated 44.9 withdrawals per capita average, there were 113.7 POS payments per in merchant outlets is a hot topic, since this in Portugal. capita each year, with a statistical POS ATV of allows for the circumvention of ATMs. The total value of cash withdrawals on cards €42.17 across the E33 countries. Naturally, the • Driven by connected consumers, modern declined overall by 3.1 percent from 2016,

TABLE 2 - POS TERMINALS IN EUROPE

2013 2014 2015 2016 2017 GR 16/17 CAGR 5Y

POS terminals (000s) in E33 region 11,797.7 12,761.7 13,477.2 14,734.7 15,809.2 7.29% 6.09%

Ø Number of TXs per POS per month 335.7 328.7 345.7 344.7 368.2 6.82% 3.23%

POS payments (m) 47,528.0 50,343.8 55,904.9 60,949.8 69,852.6 14.61% 9.51%

Value of POS payments (€bn) 2,377.2 2,448.7 2,649.8 2,848.9 2,945.8 3.40% 5.14%

ATV per POS payment €50.02 €48.64 €47.40 €46.74 €42.17 -9.78% -3.99%

POS payments per capita per year 78.6 82.8 91.7 99.6 113.7 14.18% 9.03%

POS terminals per 1 million capita (E33) 19,519.6 20,985.5 22,115.8 24,068.1 25,727.4 6.89% 5.47%

POS terminals per 1 million capita (EU28) 17,827.4 20,763.2 21,893.2 24,114.0 26,436.1 9.63% 7.52%

Note: figures are for card payments at POS terminals made with domestic cards and with cards issued abroad.

Source: Yearbook Research (E33 countries).

18 payments cards & mobile magazine - january / february 2019 www.paymentscm.com yearbook representing a compound annual growth rate Cards and Remote Payments mobile devices, and 41 percent made online of 2.5 percent between 2012 and 2017. A total on the Internet purchases using tablets or smartphones. of €1,787.7 billion was withdrawn from ATMs Thanks to digital technologies (tablets, across in the region in 2017, with the ATV per In 2017, around 87 percent of households in smartphones, mobile apps, QR codes, withdrawal being €129.94. The UK, France and the 28 EU member states had internet access, 1D-barcodes, Bluetooth BLE and HCE NFC with Germany accounted for 47.8 percent of the 85 percent of individuals in the EU28 countries tokenisation security), both digital commerce total of cash withdrawn by value, down from used the internet and 51 percent were online and retail outlets with POS terminals are 59.4 percent in 2005. banking users. converging into an omnichannel commerce Notable trends across the E33 countries include: In 2017, online payments and mobile ecosystem, including in-app payments and • ATM terminals installed and cash withdrawals payments in the E33 countries showed mobile in-store payments. by number and by value continued to continued growth rates higher than 10 percent decline in many countries. This compares and 20 percent respectively. With eGDP The European Payment Cards with notably higher card use, including representing a 7.9 percent share of total GDP, Yearbook 2018-19 contactless payments. the UK is the largest e-commerce market in • Applicable ATM technologies include: touch Europe and the third largest worldwide, behind The latest edition of the European Payment screens, contactless functions, the display of China and the US. Cards Yearbook 2018-19 is based on end-2017 QR codes and cardless withdrawal functions. In Europe, the online payment mix varies by payment industry figures. It reports recent • In addition, other ATM services offered country, reflecting national payment habits. card market developments and the latest include: account balance statements, credit This mix is composed of credit cards, debit card business trends. Rich statistical data is transfer functions, cash-in functions, bank cards, prepaid cards, IBAN-based payments provided for each country, including typical advertising and recharging of prepaid mobiles. directly from bank accounts, wallets such as key performance indicators to document the • Cardless ATM pilot projects are allowing for PayPal, prepaid products and, from November growth of cards in issue and the growth of cash withdrawals initiated by mobile banking 2017, immediate payments. transactions by number and by value. apps using one-time token authentication In addition, online merchants accept Further information on leading issuers, systems. Biometric ATMs with finger vein traditional payment services such as payment acquirers, processors and PSPs, on cards and authentication are being trialled in the UK, on invoice, payment in advance, card/cash on card-less payments, on ATM/POS payments Denmark and elsewhere. delivery, instalment payments and payment on and online payments, digital wallets and • Contactless ATMs, cardless withdrawals delivery in outlets (click&collect). mobile payments initiatives by country are initiated using mobile banking apps, Online payments and mobile payments are also included, along with notable trends. biometric authentication and the extension indispensable parts of digital commerce in the Note: This article has been compiled using of the ATM as a self-service channel both E33 countries. Online buyers purchase using detail information adapted from individual in-branch and outside of core banking hours PCs, notebooks, tablets and smartphones, country profiles and from the European are becoming more widespread. and initiate more and more remote payments Overview section of the European Payment • Cash advances on cards at POS terminals from their internet-capable mobile devices. In Card Yearbook 2018-19. are competing with outdoor ATMs in retail 2017, for example 83 percent of mobile phone locations. users in the UK accessed the internet via www.paymentyearbooks.com

TABLE 3 - ATMS IN EUROPE

2013 2014 2015 2016 2017 GR 16/17 CAGR 5Y

ATM Terminals in E33 region 452,110 466,294 462,429 461,190 459,645 -0.34% 0.41%

Ø Number of TXs per ATM per month 2,533.7 2,457.1 2,538.3 2,540.8 2,494.2 -1.83% -0.28%

ATM cash withdrawals (m) 13,746.1 13,748.6 14,085.2 14,061.5 13,757.3 -2.16% 0.12%

Value of ATM cash withdrawals (€bn) 1,623.1 1,678.6 1,764.7 1,844.3 1,787.7 -3.07% 2.28%

ATV per ATM cash withdrawal €118.08 €122.10 €125.29 €131.16 €129.94 -0.93% 2.15%

ATM cash withdrawals per capita per year 22.7 22.6 23.1 23.0 22.4 -2.53% -0.27%

ATMs per 1 million capita (E33) 748.0 766.8 758.8 753.3 748.0 -0.70% 0.02%

ATMs per 1 million capita (EU28) 857.2 896.5 879.3 857.3 846.6 -1.25% -0.51%

Note: figures are for cash withdrawals at ATMs made with domestic cards and with cards issued abroad.

Source: Yearbooks Research (E33 countries).

www.paymentscm.com payments cards & mobile magazine - january / february 2019 19 ACQUIRING AND PROCESSING: THE NEXT WAVE

by James Wood, PCM Editor

A range of pressures are bearing down on acquiring and processing businesses, including the emergence of new technologies such as faster payments and blockchain solutions – not to mention increasing customer and consumer expectations, and competition from ‘big tech’. PCM Editor James Wood considers these challenges and the innovations being launched in response.

Most commentators recognise payments as linked to security features offered by card of increased competition among banks and an industry full of opportunity, with the total issuers and networks. Debit and Credit Cards, insurance companies, it creates challenges for market value of the sector set to hit $110 alongside cash, ruled the payments business processors, who now have to contend with the trillion in the next ten years. New payments on-line and off-line, while Bitcoin was still in its prospect of authenticating transactions routed methods such as mobile, wearable, voice and cradle and DLT sounded more like a sandwich through both a bank and a third-party provider others are making their presence felt, while order than a revolutionary technology. that shares a user interface with that bank – consumer expectations of seamless, fully- Fast forward a decade, and the landscape such as a mobile phone company offering life integrated, “omnichannel” payments grow has changed so much it’s barely recognisable. insurance through a bank’s customer website. every year. From an acquiring and processing So much so that bespoke processor Payarc At the same time, companies like China’s perspective, however, these positive predicts mobile payments will outstrip cards GeoSwift and WorldFirst in the UK are providing developments come at a price: customer at point of sale in the US by 2020, with $503 corporates and high-net worth individuals expectations of flawless product integrations billion of payments by mobile in that country. with bespoke services that, once again, sit at ever-lower cost continue to rise. And these By the end of 2020, there will also be more than outside the confines of traditional banking. demands arrive on top of increasing regulatory 15 million mobile-enabled POS devices in the As Darren Hutchinson, Head of Commercial requirements for more and better Know Your US, according to Business Insider. for WorldFirst in the Americas puts it, “We Customer (KYC) and Anti-Money Laundering bypass the complexities and bureaucracy, (AML) checks that can handle multi-method, Open to Offers and offer a faster and cheaper version of multi-currency, international transactions, international banking.” As with Open Banking identifying potential criminal elements quickly Open banking and the EU’s PSD2 Directive in the UK, though, the presence of these and effectively. are among the biggest changes to hit the providers further complicates the picture financial services industry in recent years. when it comes to acquiring and processing, Acceptable in the Naughties Since the UK introduced its Open Banking with more parties involved in the mix. Finally, framework and associated legislation on 1 processing firms must keep a watchful eye on Looking back to 2009, processing platforms January 2018, there have been 88 applications the continued rise of blockchain, which has could offer competence in e-commerce, from third-party providers such as mobile seen bank investment rise by 85 percent in physical POS and mail order and telephone phone and utilities companies to provide the last three years, and which promises to order (MOTO) transactions and earn a financial services products, with 13 schemes revolutionise back and middle office systems respectable margin on these services, from these providers now in operation. in banks. Again, the pressure falls on acquiring coupling them with anti-fraud measures Whilst Open Banking offers the prospect and processing firms to ensure their systems

20 payments cards & mobile magazine - january / february 2019 www.paymentscm.com acquiring and processing

are fully interoperable and up-to-date with and established processing firms, where larger between App providers more easily. these new technologies. firms buy in “white label” technologies to help Nicky Koopman, Vice President Content them deal with specific challenges related to & Value Added Services at AEVI, says that Show Me the Money the rapidly-evolving business environment. merchants are also facing a rapidly-changing Other companies like Acquired Payments landscape: “The point of sale is rapidly Industry trends and challenges aside, today’s and BlueSnap adopt a different approach, one transforming into a point of interaction where acquiring and processing specialist can find it which centres around maximising the flexibility payment becomes an integrated feature of the a struggle to achieve profitability. As Rob Clark, and quality of their service offering. Acquired’s consumer's journey in the new world of smart Managing Director of Acquired Payments, a Rob Clark says, “the more agile and tech-savvy apps and devices.” leading payments gateway with a specialism in acquiring firms are adopting the strategy of consumer finance, puts it: “The past few years focusing on specific sectors, creating bespoke Constant Change a Certainty have seen a low-margin race to the bottom for products and focusing on service and adding acquirers, with increasing regulation and an value.” While acknowledging the pressures How far the industry will continue to use POS endless tsunami of technological disruption on the acquiring and processing sector, Clark terminals as we know them today remains leading the acquiring sector into the unknown.” maintains that, “the opportunities are greater the great unknown, however, with data from Clark is not alone in this view: Deloitte’s than ever before – and the merchant is at the Eurostat revealing that 54 percent of Swedes 2019 InFocus brief on processing predicts we centre of the picture. Those acquirers able to prefer to pay on-line, even when goods and will see the “trends-driven commoditisation get flexible technologies embedded rapidly services are being browsed or purchased of products, increasing collaboration with with merchants, and deliver valuable data that in physical environments, with markets new fintech firms, and some consolidation improves their customer’s bottom line, will win such as the UK and Germany not far behind. among firms to achieve scale and margins” the day.” Furthermore, with tech giants such Facebook, in the next few years. In this context, Apple, Google and Microsoft known to be commoditisation means merchants expecting Merchants Mission Critical extending the reach of their payment services seamless integrations as standard practice; into new environments such as remittances, banks expecting rich data and accurate, rapid Merchants are clearly the industry’s focus in P2P and messaging services, one wonders flagging and handling of potential fraud – this turbulent period. As processing becomes how long it will be before they formally enter the all while consumers expect faster, easier more of a commodity, the companies that can payment gateway/processing platform space. payments as standard practice. deliver seamless integrations, outstanding Solid evidence of this development came Faced with these pressures, how is the sector execution and rich data sets for every last September, when IBM launched its responding? Simon Wilson, Global Sales transaction hold an edge over their rivals. cross-border payments platform based Director at Icon Solutions, which provides Indeed, the last six months have seen a number on blockchain. Claiming faster processing banks with the technology to access multiple of innovative developments for merchants speeds, lower costs for all involved, the payment rails, says the future of processing right along the value chain, from US banks elimination of inefficient multi-party is all about providing “the right product in the teaming up with card companies and geo- processing and better data granularity, right channel”, especially when it comes to location services to offer merchants deeper IBM says its new system could replace the the digital environment. Whilst recognising customer data, right through to innovations on payments environment we’ve known for the that niche digital-only players appear to the POS terminal itself. last fifty years – though significant challenges be well-placed when it comes to that task, German company AEVI recently launched a remain with blockchain implementations (see Wilson notes that today’s leading processing new product called AppFlow which promises “Out of the Blocks?” feature, page 12). firms have a few distinct advantages. Firstly, to make the introduction of new features The picture emerging for today’s acquiring they know their market and already have on smart POS devices faster and easier for and processing firms is one of seismic change relationships with approximately 90 percent of developers. By making the different features and serious competition – not just from peers, the merchants and issuers out there; secondly, on a POS device independently interoperable but from tech giants with deep pockets and the larger firms are well-accustomed to dealing with each other, AppFlow removes the powerful capacities for innovation. In the with high levels of regulation – something requirement to reconfigure POS devices every medium term, it looks like the future belongs to which fintech challengers and digital-only time a new feature is introduced, and makes specialist firms able to provide a level of client processors are only recently coming to terms it possible for merchants to combine loyalty service and bespoke data packages which with. Against this, established processing programmes and communication with the tech giants cannot match. Looking out five to firms are struggling to come to grips with acquirer in any order they choose on the ten years, the picture is less certain, however the challenge of modernising their systems device. This relieves merchants of the fear trend data supports a continued emphasis on to meet the demands of an emerging Open that any change to the core POS solution could digital transactions, and on some kind of role Banking and blockchain-based environment. “break” other SmartPOS apps, and ensures for blockchain. It’s also likely that a disruptive For Wilson, one possible outcome is the developers don’t have to continually rework technology could completely change acquiring development of partnerships between fintechs their integrations. It also allows merchants to and processing as we know them today.

www.paymentscm.com payments cards & mobile magazine - january / february 2019 21 regulation

VARYING REGULATION BETWEEN REGIONS HAMPERS INNOVATION

Different approaches to the regulation of new fraud. This collaborative approach differs from payments, while Brazil’s status as a regulatory payments technologies is creating confusion that of the EU, for instance, where standards laggard among major markets stems from that and uncertainty for payments companies are typically created centrally then mandated country’s attempt to introduce new payments and consumers within different regions and from the centre to individual markets. methods on older technology infrastructures. between countries. This uncertainty risks The approaches adopted by the US and The biggest challenge for payments arising impeding innovation and slowing down the UK show how a change in emphasis can from this regulatory variation is the time and acceptance of new systems such as faster also affect regulatory outcomes. BNP/ effort invested in global compliance by the payments, or technologies based on open Capgemini argue that the UK has successfully industry – time and effort which, the report banking initiatives. emphasised enabling new technologies and argues, diverts resources from focusing on The World Payments Report 2018 from innovation via regulatory initiatives such as customers and the development of innovative CapGemini and BNP Paribas has found the Fintech sandbox and the New Payments new technologies such as those based on significant variations between the regulatory System Operator initiative. In the US, by distributed ledger technologies (DLT) or regimes of some regions – even where the contrast, the focus is on risk reduction and blockchain. (See cover feature, “Out of the goal is to harmonise regulation in that region. standardisation through AML and financial Blocks?” page 12). While successful regulatory initiatives exist, stability rules. These different approaches Finally, this report identifies what it calls “Key such as the EU’s PSD2 Directive, there are also have an effect on how rapidly payments Regulatory and Industry Initiatives”, or KRIIs, examples of widespread non-compliance with innovations are adopted in these economies arguing that these can as often be mutually international regulatory regimes. – although new US regulations for open contradictory as they are reinforcing. This One example of variable compliance is the banking and real-time payments are expected happens because intentions overlap, hindering EU’s SCT Inst scheme for Faster Payments. to considerably enhance that country’s the regulation’s clarity and, by extension, the SCT Inst aims to facilitate Faster Payments regulatory flexibility. development of the payments ecosystem. (FP) between European economies and allow To help explain this dynamic, the report’s BNP/Capgemini offer examples of where well- for the integration of national FP networks. authors have created a graphic showing considered initiatives can enhance each other Although many national schemes, including markets which adopt a “proactive” (i.e. – as is the case, they argue, with Europe’s those of Italy, Spain, Portugal, France, Belgium forward-looking) approach to new payments PSD2 regulations for open banking and eIDAS and the Netherlands are updating their systems technologies, versus those which react. The for Digital Identification. Taken together, these to comply with SCT Inst, only 20 percent of graph also demonstrates which markets two sets of regulations help to foster growth in the banks in those countries have achieved respond to the need for better regulation before Europe’s digital economy. compliance – a factor which risks impeding it’s required, versus those that respond only On the other hand, overlaps in scope can faster payments growth across Europe. when necessary. create challenges for everyone. In Europe, the According to BNP Paribas and Capgemini, The below graph shows both India and China authors identify PSD2 as conflicting with the there is an identifiable dynamic between becoming more dynamic in their approach to the EU’s GDPR legislation, since freeing access to innovation in payments technologies on the regulation of new payments technologies, with customer data (PSD2) is at odds with the data one hand, and the attempt to understand Sweden, Singapore, Australia and the UK among protection aims of GDPR. Globally, the study and regulate these innovations on the other. those markets most receptive to innovation finds regulation relating to crypto-currencies Further complicating the picture is the fact and new technologies from a regulatory point uneven and often conflicting, and points out that different regions of the world regulate of view. Sweden’s highly flexible approach that this kind of regulation risks reducing the same waves of innovation to different may result from its long tradition of non-cash clarity in an already poorly-understood area. levels and with different intent. To simplify the regulatory landscape for larger corporates EVOLUTION OF REGULATORY LANDSCAPE ACROSS SELECT COUNTRIES and speed up new technology adoption, BNP/ Sweden Singapore Capgemini recommend aligning individual y d a countries’ regulatory regimes through the e UK

R US Australia establishment of interoperability standards, France while also reducing the number of global and d-Side Pull n a t Thailand China international regulatory initiatives and bodies. n India m a e t c D

Several Asian markets, including Singapore, u Brazil l e

Thailand, Indonesia, China and Cambodia, R have embarked on the harmonisation of those countries’ payments standards with a view Reactive Proactive Supply-Side Push to improving the systemic efficiency of their Source: Capgemini Financial Services Analysis, 2018. markets and safeguarding customers from

22 payments cards & mobile magazine - january / february 2019 www.paymentscm.com issuing & acquiring

STRONG GROWTH IN CARD ACCEPTANCE CONTINUES GLOBALLY

The number of merchant outlets accepting card interchange fees was announced in March or the geography of the country, for instance card payments worldwide grew by 13 percent 2018, and in Malaysia, where interchange fees when it is made up of a large number of islands throughout 2017 to reach 69.2 million at the have been capped since 2015 as part of the or has large remote, rural areas. Examples of end of the year. country’s Reform Framework. this are Indonesia and the Philippines. The two least-developed regions in terms “Merchants across the world are being of acceptance, Asia-Pacific and central and Financial inclusion initiatives persuaded of the benefits of accepting cards, eastern Europe, were also those which grew and tourism will continue even for low-value payments. As consumers the fastest, driven in part by new regulation. to encourage growth in increasingly expect to be able to pay by card, For example, in India the government has acceptance the number of outlets where they can do so will placed caps on terminal charges and has also continue to grow,” comments Daniel Dawson, put pressure on banks – many of which are The number of outlets which accept cards is who led the RBR study. state-owned – to increase efforts to recruit forecast to grow at an average of 8 percent merchants. In Czechia, merchants are now per year between the end of 2017 and the end NUMBER OF MERCHANT OUTLETS required to keep electronic records of sales, of 2023 to reach 111.7 million, according to WORLDWIDE, 2017 AND 2023 and accepting cards at EFTPOS terminals RBR. There is potential for significant growth (MILLIONS) allows them to do so efficiently. in some markets in Asia-Pacific, central and Regulations on interchange fees are also eastern Europe and the Middle East and Africa, 111.7 having a knock-on effect on merchant service as ongoing financial inclusion initiatives are charges. As the fees which acquirers have boosting card issuance, thereby encouraging 69.2 to pay to issuers fall, merchants are more acceptance. confident about refusing to pay higher fees Tourism can also be a significant driver themselves. of growth in acceptance. Japan is a prime This then encourages merchants to begin example, where the 2020 Tokyo Olympics is accepting cards when they were previously driving the government to facilitate tourist reluctant. This is most commonly the case in spending. 2017 2023 the European Union, where interchange fees Despite these measures, it should be noted Source: Global Payment Cards were capped in 2015. that in many developing markets, acceptance Data and Forecasts to 2033 (RBR) It also applies in Brazil, where a cap on debit is still held back by a lack of infrastructure

EC CLOSE TO INTERCHANGE FEES DEAL WITH CARD NETWORKS Visa and Mastercard have offered to cut Under the terms of the offer for online commitments. Our voice has been heard and merchant interchange fees for non-EU credit payments, debit card charges would be 1.15 overall, this is good news for our industry,” and debit cards by at least 40 percent to percent and 1.50 percent for credit cards, and says Jacques Parson, Chairman of Kappé end an EU antitrust investigation, part of a the commitments would apply for five-and-a- International, a member of the coalition. decades-long crackdown by the European half years. “I am however perplexed at the distinction Commission against such interchange fees. The case affects foreign tourists using their created between bricks and mortar and online The EC argued that interchange fees result in cards in the 28-country bloc. Third parties stores. I am not sure that will help the EU’s higher consumer prices. have a month to provide feedback before the stated policy for e-commerce, which shows The two largest card networks have proposed Commission decides whether to accept the more work is needed in these areas to create a 0.2 percent fee on debit card payments offer or demand a bigger fee reduction. a truly fair framework between customers, the carried out in shops and a 0.3 percent fee on Mastercard said it expected to incur a $650 schemes and the banks. We shall definitely credit card payments, the Commission said. million (£507.02 million) charge in Q4 2018 be reacting to the public consultation.” The changes would bring their interchange because of a substantial fine related to a “The case is still ongoing and we cannot fees in line with those charged for EU cards, second EU antitrust investigation. comment further on it,” Commission which were also the subject of a lengthy EU Three years ago, the Commission charged spokesman Ricardo Cardoso said. investigation, triggered by a 1997 complaint the company with imposing rules which by business lobbying group EuroCommerce. blocked banks in one EU country from offering The group, whose members include Carrefour, lower interchange fees to a retailer in a second Marks & Spencer, Lidl and Metro, welcomed EU country. the offer but criticised the difference between “I welcome the Commission’s announcement online and offline transaction fees. regarding MasterCard and Visa’s

24 payments cards & mobile magazine - november / december 2018 www.paymentscm.com MILLENNIUM BCP FIRST TO ISSUE UNIONPAY The future of mPOS Terminals, Millennium bcp has become the first more significantly with fraud, security & biometrics in European bank to issue UnionPay cards. the roll-out of large 2019 and beyond. Chinese President Xi Jinping joined Portugal’s numbers of UnionPay Prime Minster Antonio Costa to witness the cards to Portuguese The presence of an omni-channel commerce is signing of an agreement between UnionPay domestic customers. becoming much more of a reality in 2019 and International and Millennium bcp. With over 7 billion cards cumulatively Mobile POS is the natural next step in a multi- channel payments providing customers with a Under the agreement, Millennium bcp, issued worldwide, UnionPay has the world’s seamless CX across all retail channels. Portugal’s largest private bank, will begin to largest cardholder base. Its continuously issue UnionPay cards to its customers and expanding acceptance network laid a A report from Global Market Insights, Inc., rolling out UnionPay's QuickPass and online solid foundation for local card issuance claims the mobile POS terminals market size is payment service. in Portugal. anticipated to surpass $55 billion by 2024. The agreement follows on from a The initial focus for UnionPay International memorandum of understanding agreed by and Millennium bcp will be on those According to new research from IHL Group: the two organisations last year. Under this customers who travel between Portugal and - Mobile POS is continuing its rapid adoption agreement, Millennium bcp also becomes an China, either for business or pleasure, with in the enterprise, driving the overall installed acquirer for all UnionPay Cards, irrespective bilateral trade between the two countries base of units up 24.9% in 2017 of the country of issuance. having increased by 8 percent to $5billion in - those enterprise retailers using Mobile POS are seeing sales growth 42% higher than The UnionPay brand has already become the first 10 months of 2018. those that do not use mPOS. familiar to Portuguese customers as the Besides that, the two will be quickly country’s entire ATM network accepts expanding beyond this customer group, The ability of mPOS to take payments from UnionPay cards, as well as more than 50 providing many more innovative products anywhere in the store encourages impulse percent of merchants, a figure which is set to Millennium bcp customers in the buying and reduces checkout lines. It also to grow to 80 percent by the end of the year future as well. allows retailers to convert checkout space and expected to reach full acceptance the In Europe, UnionPay is now accepted to selling space, by converting cashiers following year. by more than 3.3 million merchants in 40 to salespeople who can make a sale from This growing acceptance has seen countries and regions, covering more than anywhere in the store. a considerable increase in the volume of 60 percent of all merchants that accept transactions carried out through UnionPay bank cards in Europe. Meanwhile, its global The other trend that moves the merchant payments industry forward in conjunction in Portugal. In 2018, volumes have grown network has extended to 171 countries and with mPOS is the rise of biometrics. New and by more than 15 percent on the previous regions, which covers 52 million merchants better methods to authenticate users are seen year, a figure which is set to increase even and over 2.6 million ATMs worldwide. as vital, because passwords and PINs are an “inherently weak authentication mechanism.

GOOGLE GRANTED E-MONEY LICENCE FOR EU The future of mPOS, fraud, security and new Google has announced that it has been issue and redeem electronic money, as well as methods of customer authentication like granted an e-money licence and authorised provide payment services. biometrics will be discussed at the MPE 2019 as a payment institution in the Republic of Currently, Google only offers limited financial conference and exhibition in Berlin, Feb 19-21 Ireland, paving the way for it to begin providing services through its Google Pay . by speakers from: new financial services to consumers and Obtaining the different licences, however, Handpoint, Nexi, MagicCube, Square, ETA, businesses both in Ireland and the EU. could enable the company to significantly TouchBistro, GS1, RBI, IntesaSanPaolo, LIDL, The Central Bank granted authorisation expand on this. Valitor, Digifood.fr, Connective Payments, OP, to Google Payment Ireland under the “We are constantly working to support our SBA Retail Workgroup, Threatmetrix, ebio.com, second Payment Services Directive (PSD2) customers in Europe. We have applied for a InAuth, Ravelin, Risk.Ident, Simility, PCI DSS regulation on Christmas Eve. Having obtained payment licence in Ireland as part of these and Argos. authorisation, the company will be allowed efforts”, said a spokesman. to issue and acquire payments across the MPE is Europe’s largest merchant payments European Union under passporting rights. acceptance conference & exhibition, The move comes two years after Facebook connecting 1000+ merchants, acquirers, PSPs, obtained an e-money licence from the Central payment processors, schemes, regulators, Bank. It also follows on from the granting of a gateways, POS HW/SW solution providers and FinTechs from 40+ countries. full e-money licence to Google from the Bank of Lithuania late last month which allows it to To request the agenda & register please visit: www.merchantpaymentsecosystem.com www.paymentscm.com 25 mobile payments

M-COMMERCE NOW ACCOUNTS FOR ONE QUARTER OF SPENDING

As online shopping continues to grow, Karppinen, Head of Retail at Mastercard UK. The major sources especially through mobile commerce, the UK “The most successful stores are always of frustration range now has the lowest proportion of high street gearing themselves around the overall from being forced to spending in Europe. shopping experience. These shops are repeat information According to new research by Mastercard, becoming places to interact and personalise (69 percent) to just 43 percent of all money spent (volume) products rather than simply a place to buy obligatory sign- is done physically in stores, while online things. We expect to see this trend to grow up processes (54 commerce – in all its forms – accounts for as smaller retailers realise they can offer percent) and limited more than half. something the online world can’t.” payment options Of the 57 percent of volumes spent online, As an example of the difficulties, two- (41 percent). almost half of this (27 percent) is made up thirds of consumers will abandon mobile The most popular by mobile commerce spending, according to transactions out of principle if the process products being purchased through mobile data from a pan-European survey of more than is too difficult, according to research commerce are clothes and accessories, with 18,000 people. from Elavon. just over half of British adults having bought The UK is not the only country surveyed to It asked 2,000 UK adults about their mobile them (55 percent). Food and beverage is the see physical POS spend drop below the 50 shopping experience and identified that next most popular category, with 45 percent of percent mark – Germany and Hungary were two-thirds of shoppers will abandon online UK shoppers having made a mobile purchase both at 44 percent while Italy and Poland were transactions when the process is too difficult. – the highest in Europe. both at the 50 percent level. Furthermore, over half (58 percent) surveyed 80 percent of British shoppers have made “Technology will have an increasingly reported that a poor experience would impact a mobile purchase from the comfort of their important role in helping retailers woo their decision to shop with the brand in sofa, but as many as six percent have made a shoppers back to the high street,” says Janne the future. purchase while they are in the bath.

Portion of spend across Europe (Percentage)

TOTAL ITALY GERMANY FRANCE SPAIN UK POLAND N'LANDS SWEDEN SW'LAND HUNGARY RUSSIA IRELAND

Physically in store 51 50 44 53 53 43 50 57 53 56 44 59 53

Online via PC or laptop 24 26 24 28 22 30 25 24 24 20 29 20 19

Smartphone or tablet - 17 18 23 14 17 20 16 13 16 17 17 15 20 at home or work

Smartphone or tablet - 7 7 8 6 8 7 9 7 7 7 10 5 8 elsewhere

HUAWEI PAY SETS SIGHTS ON GLOBAL ROLL-OUT Huawei is set to launch a major expansion to to access Huawei Pay outside China for is compatible with 20 mobile devices in total, its mobile payments platform, Huawei Pay, as the first time, with 66 banks supporting including several smartwatches. it once again looks to take on the likes of Apple Speaking at the launch, Zhang Ping’an, and Samsung. president of Huawei consumer cloud services The Chinese phone manufacturer will be stated, “open sharing is an important teaming up with payments provider UnionPay direction for the future of digital economy International to roll out its own Huawei Pay and intellectual interconnection, which is service across the world, with Russia the first why Huawei end-user cloud services are country on the list for the expansion. building an open and globalised smart mobile UnionPay helped Huawei set up its own ecosystem for end users.” mobile payments service back in 2016 as the “Huawei hopes to work with partners such as latter looked to offer its customers a different UnionPay International to provide more secure way to pay for goods and services using their and convenient mobile payment services to smartphones and other devices. the technology. Both Huawei and Honor each and every user of Huawei smart devices Under the agreement, it will now be possible smartphones will carry the new service, which around the world.”

26 payments cards & mobile magazine - january / february 2019 www.paymentscm.com CHINESE MOBILE PAYMENTS MARKET PROJECTED TO REACH DO WE WANT A CASHLESS SOCIETY? $96.73 TRILLION Travelex has released a study into attitudes how far along a country is on the “cashless towards cash and other payment technologies: journey”. Even if people have good access to Chinese mobile payments are projected to Do we really want a cashless society? cashless technology, they still want access grow 21.8% from 2017 to hit $96.73 trillion The study, which looks at cash and cashless to cash (£75.96 trillion) in 2023, driven partly by technology usage in four markets — the UK, • There is a core of people who will never give increasing demand for e-commerce. Australia, Brazil, and South Africa — shows up cash, no matter how convenient cashless that a cashless society may not be a realistic payment technology becomes China has a growing middle class with an ambition. In fact, the survey revealed an • Cash is no longer king — but neither is it dead. appetite for all forms of modern technology “immovable” 24 percent of consumers who The cashless society is on hold, at least for now and gadgets. As a result, Chinese mobile will never abandon cash — no matter what payments are expected to witness three-fold technological advance or leap forward is The findings suggest that cashless growth. The number of active mobile payment available to them. technologies will not replace cash completely, users is expected to double by 2023. In Brazil and South Africa, where cash use instead people are happier with an equilibrium is more common, there is a strong desire for between the two. The Frost & Sullivan report highlights a wider acceptance of cashless technologies “While the proliferation of cashless number of growth opportunities such as such as payment cards and digital wallets. payment technologies has generally led to senior citizens in China make up 10.8% of the In both markets, 60 percent say that they are a reduction in cash usage across developed population or 150 million people. The report worried about having cash stolen from them economies, banknotes have unique properties says this is a huge potential market for mobile which suggests fear of theft is a key driver that consumers value, such as security payments in China. rather than convenience. against fraud,” said Michael Batley, Head of In the UK and Australia, however, where the use Strategy, Travelex. China has also seen an increase in cross- of cashless technologies is more widespread, “As long as this is the case, it’s unlikely that border payment transactions. This is primarily people are happier with their use of cash. Around any attempts to abandon cash completely will due to growth in sectors such as e-commerce, 80 percent of people in both markets say that succeed. Even Sweden’s bid to go cashless, travel and overseas education. Cross-border they are comfortable using cash. touted as a successful model, has seen transactions amounted to $6.66 trillion in Respondents across all countries saw cash as pushback. Ultimately, only consumer demand 2016. E-commerce plays an important role in part of their day-to-day lives. They carry cash at will drive the change towards a truly cashless these transactions. all times, replenishing their wallets and purses society and our research indicates this is regularly at ATMs, and are unwilling to go that further away than many realise.” Frost & Sullivan reported that nearly 65% of last extra mile and never use cash again. As well as revealing a lack of appetite for Chinese tourists have used mobile payments a cashless society, the study also reveals abroad, approximately six times higher than Key takeaways: that opinion is split on whether it is even the average non-Chinese traveller. possible. The UK, the most ‘cashless’ • Most people neither expect nor desire an end country surveyed, represented the highest The market for mobile payments services in to cash. Instead, they want a mix of payment proportion (47 percent) of respondents that China is expected to grow at a rate of 21.8% methods to be available, including cash do not see an end to cash, closely followed by from 2017 to 2023. This represents a three- • ATM use is remarkably consistent, no matter Australia (42 percent). fold rise from $29.93 trillion to $96.73 trillion. The total number of active mobile payment customers is expected to reach 956 million DO YOU THINK IT WOULD BE DESIRABLE TO LIVE WITHOUT CASH, Source: Travelex AND ONLY PAY USING CARDS OR OTHER DIGITAL MEANS? by 2023 from 562 million in 2017.

80% A recently published report by 70% highlighted that in 2017, 40% of Chinese users 60% Overall carried less than RMB¥100 ($15) in cash. This 50% UK underlines the popularity of mobile payments 40% Australia 30% Brazil among Chinese citizens. 20% South 10% Africa The Chinese market for mobile payment 0% offers not only market opportunities for Yes, cash is outdated No, digital payments are We need a balance solution providers intending to operate within and is no longer risky and we should revert between cash and the domestic market but also learning points relevant to the security of cash digital for global mobile payment solution providers. www.paymentscm.com 22041 Open Banking WC Advert1.qxp_Layout 1 16/01/2019 14:21 Page 1

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DIGITAL AND MOBILE WALLET: GLOBAL USAGE STATISTICS

Digital and mobile wallets have been spoken when it comes to the adoption of mobile Who’s Using What? about in the industry for many years. Since their wallets, with an estimated 20 percent of inception, the payments industry in particular smartphone owners using digital wallets. Mobile payments are used has paid close attention to the underlying • Australia - The research reveals phone users every day by millions of technologies and companies that power these down under are opting for the convenience people, but which apps have LEADERS ACCELERATING NEW FINANCE PROPOSITIONS platforms. Now though, we have some real data more than many other international become most popular? As and insight into their usage around the world. counterparts. With 19 percent using mobile always, there seems to be & BUSINESS MODELS TO DELIVER REAL VALUE In 2014, Apple launched their first mobile wallets, they rank fifth above the likes of USA endless competition between wallet app, followed by Samsung and Android and Singapore. Apple and Android. 7-8 May 2019, 133 Houndsditch, London a year later. By 2022, it’s estimated that • All Day - transaction value via mobile payment apps will Across the Ages Following its introduction, reach nearly $14 trillion, illustrating the fast 36 percent of iPhone users had set up pace of the industry. Different age demographics adopt technology Apple Pay on their phone. In 2017, it was Payment apps have been adopted more at different speeds, particularly when it comes estimated that 87 million people used the app quickly in China than anywhere else, but which to mobile wallets. Merchant Marine researched worldwide. countries are catching up in the market? the attitudes of different age groups. • Sad for Samsung - Last year, Apple Pay Merchant Machine collated the facts and enjoyed more than double the users of an overview of figures behind mobile wallets • Young Guns - The 18-34 bracket Samsung Pay, with the latter having only 34 to give a landscape for one of the fastest unsurprisingly takes top spot when it comes million users. Even worse was that usage of moving technology markets in the world. Their to both iinterest in and use of mobile wallets. Samsung pay has dropped by four percent research looks at usage across countries, Just under half of smartphone users in this since its introduction two years ago. ages and different mobile wallets. Some of the demographic have a mobile wallet, with 32 • WeChat Pay Winners - In terms of mobile key findings are outlined below: percent stating that they are interested by the payment platforms, Chinese company idea of one. WeChat Pay leads the way. Their 600 million Mobile-Savvy Nations • Post Millennials - Venturing up the age users outstrips many of their competitors groups, one might expect to see a drastic combined. Fellow Chinese platform A country is often defined by its attitude decrease in mobile wallet usage, but 44 also performs well, with an estimated 400 towards technology, since technology often percent of 35-44 year old smartphone users million users in 2017. advances that country socially. In the mobile have a mobile wallet, with just under a quarter ‘It’s inevitable that digital wallets are wallet market, the residents of these countries not interested by the app. continuing to soar in popularity and this have adopted Apple, Android and many other • Older Generations - It appears that the older research only furthers this argument," says Ian payment apps the most rapidily. generation is becoming more tech-savvy Wright from Merchant Machine. every day. Just under 30 percent of those "With a well-established customer-base in • China - WeChat pay and Alipay are the two surveyed between the ages of 55-64 claimed China and other Asian countries, combined dominant payment platforms in a country with to have a mobile wallet, with a further 27 with the rising popularity of mobile pay in the a very high GDP, making their market share percent saying that they are attracted by the US and UK, one can only imagine where this all the more valuable. It’s estimated that 47 prospect of using one. industry is headed’. percent of phone owners use mobile wallets. • Norway - Scandinavian nations are revered 350+ Finance innovators discussing what the best, CLAIM YOUR NUMBER OF USERS OF SELECTED GLOBAL MOBILE PAYMENT PLATFORMS 2017 ADDITIONAL 10% for their innovative societies, and their brightest and most innovative are doing, how they’ll payment methods mirror this reputation. At 42 OFF LISTED PRICES percent usage, mobile wallet usage is higher commercialise it, and what results they see. QUOTING PCM10 proportionally in Norway than in any other European nation. • United Kingdom - The convenience of mobile wallets could well have contributed GUEST SPEAKER, Congress Sponsor KEYNOTE to their popularity in the UK, with 24 percent RENOWNED FUTURIST: INTERVIEW WITH: of phone users using payment apps, placing Mark Stevenson, Yeming WANG, them third globally. Alibaba Cloud Expert on trends and innovation & best-selling author • Japan - Much like China, the advancement of the tech industry in Japan has often been Source: Statista mirrored by its inhabitants. This is no different

Formerly Open Banking Summit www.paymentscm.com payments cards & mobile magazine - january / february 2019 29 Europe 2016-18, the original & WWW.OPENBANKINGWORLDCONGRESS.COM leading Open Banking event The world’s leading event to unite the greatest minds in Financial Services, pioneering the future of money is returning to Asia. Join the leaders from the global giants, rising superstars and trailblazing challengers across APAC and beyond at Money20/20 Asia this March in Singapore, to discover tomorrow’s game-changing innovations and connect with the decision makers ready to do business.

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M20A19_MEDIA PARTNERS PRINT AD v3.indd 1 22/01/2019 16:50 e-commerce

CROSS-BORDER CONSUMER RESEARCH 2018

PayPal and Ipsos have released a new cross-border shoppers in France, Greece, top export markets of US and China frequently e-commerce report, Cross-Border Consumer Ireland, Italy, Norway, Spain and Sweden all shopping on their mobiles. Research 2018. The report, which investigates choosing the UK as one of the ‘top three’ In the US, 61 percent of cross-border shoppers the online shopping habits of approximately countries to buy from. have made an online purchase in the past 12 34,000 consumers in 31 countries, reveals a months via smartphone, whilst in China this healthy e-marketplace. Why do consumers shop figure is 84 percent – the highest of all markets More overseas shoppers are buying online abroad? surveyed. from UK businesses than any other nation in Nicola Longfield, director of small business Europe, with British goods in high demand The main reason why shoppers buy from foreign at PayPal UK, said: “As growth in the UK among foreign shoppers. The global study found countries is to seek a bargain, with seven in economy remains modest, it’s time for all that 1 in 7 (14 percent) of global online shoppers 10 (72 percent) respondents who shop cross- British businesses to open their doors to the have bought goods from the UK in the past border indicating that they buy from other international shopper. 12 months. countries because of cheaper prices. “International shopping is increasing at a The next popular destination in Europe is The fall in the pound following the EU rapid pace, and this study highlights the small Germany, with 1 in 10 (10 percent) global referendum, PayPal’s data suggests, has made adjustments that businesses can make to e-commerce shoppers buying from UK goods even more attractive. Other reasons capture more global sales. If you set a border this country. why consumers shop online internationally around your business, you are simply putting a rather than in their own country include: limit on your sales. Europe’s top five online exporters are: “Shoppers from Austria to Australia, Belgium to 1. UK • Because certain products are not available in Brazil have all bought from UK online businesses 2. Germany their own country (49 percent) in the past 12 months. With the UK punching 3. France • To discover new and interesting products above its weight and leading Europe when it 4. Italy (34 percent) comes to global e-commerce, we hope that 5. Netherlands • Because product quality is higher from other businesses are encouraged to sell their overseas (29 percent) products online and overseas.” The US is the largest export market for UK • Because shipping costs are affordable e-commerce businesses. Shoppers from the (24 percent) Barriers for consumers who US bought an estimated £12.5 billion worth of shop online goods from the UK in the past 12 months – more What channels do consumers than any previous year. use for shopping? A quarter of global cross-border shoppers (25 China has been identified as another key percent) cited shipping costs as the top barrier market for UK online businesses, buying an The majority of online purchases are still to buying from international websites, whilst estimated £5.7 billion worth of products in the made via desktop or laptop – but smartphone half of online shoppers said that they would not past 12 months. shopping is fast catching up. Across Europe and feel comfortable buying from a foreign website The new research also reveals the importance the US, the proportion of smartphone purchases in a different language (57 percent) or paying in of European markets to British exports, with has almost doubled since 2016, with the UK’s foreign currency (47 percent).

ONLINE AND CROSS-BORDER COMMERCE SIZE AND GROWTH ESTIMATES US AND CHINA ARE THE BIGGEST MARKETS IN TERMS OF ONLINE SPEND, BUT JAPAN AND INDIA ARE GROWING FAST

700 100 650 90 Total domestic spend 600 2017 ($USbn) 550 80 Total x-border online 500 70

450 CA G spend 2017- ($US bn) 60

400 R 350 50 ( % Compound annual growth ) US$BN 300 rate: total ecommerce 40 250 (CAGR) 200 30 150 Compound annual growth 20 rate: mobile commerce 100 10 (CAGR) 50 0 0 US CA UK IRE FR DE IT ES NL SE BE NO AT RU HU PL CZ GR IL UAE BR MX ARG SA IND CN JP SN HK AU PH Source: PayPal Cross-Border North America Western Europe Eastern Europe Middle East Latin America Africa Asia Pacific Consumer Research 2018

www.paymentscm.com payments cards & mobile magazine - january / february 2019 31 products

NORDIC API GATEWAY SPIIR GETS BIG BANK INVESTMENT

Hot on the heels of Tieto launching its API it's, "a huge milestone for us to onboard the Nordic banks and will soon also include a way Hub, Spiir’s Nordic API Gateway has received a second strategic investor”, and DNB is a, “great to initiate payments directly from account to €5.2 million investment from DNB and Danske match as we share the same overall strategic account, although no timeframe for this has Bank as the banks continue their plans to build goals of igniting innovation for everyone in the been given as yet. their PSD2 and Open Banking infrastructure in field of finance.” Back in June, Jyske Bank in Denmark went the Nordics. According to Spiir, the API Gateway is available live with account aggregation for its personal Spiir offers its API Gateway as a service that for anyone before the full roll-out of the banking customers. The solution was built connects with any Nordic bank and gives third PSD2 regulation. on top of the Nordic API Gateway. The total parties a way of executing PSD2 projects. It currently provides unified API access to amount of investments in the gateway in 2018 Rune Mai, CEO of Nordic API Gateway, says both personal and business accounts from all is now €8.5 million.

VISA TO BUY EARTHPORT FOR £198 MILLION Visa Inc is to pay £198 million to buy proposal was “fair and reasonable” and that it to have a single relationship instead of Earthport Plc, a British firm that facilitates would recommend its shareholders take up the multiple ties with various payments channels international payments transactions for banks all-cash offer. around the world. and businesses. Earthport’s shares, listed on the London For Visa, cross-border payments, or Visa International Service Association, Stock Exchange’s secondary market, have transactions that involve parties in two or more a unit of Visa, has offered 30 pence for fallen more than 28 percent this year amid countries, represents a growing business. The each Earthport share, a price that was four growing losses and expenses, forcing the firm volume of such payments rose 10 percent in times the stock’s Monday closing price of to say last month that “fundamental” change the 2018 fiscal year, Visa said in October. 7.45 pence.Earthport shares surged in early was required in its strategy. Earthport, which counts Bank of America trading on Thursday and went up to match the Earthport says it offers a lower-cost Merrill Lynch and Japan Post Bank among offer price. alternative to traditional payments systems its clients, said Visa’s offer was a revised The London-headquartered firm said Visa’s by allowing banks and money transfer firms proposal that followed an indicative offer.

OPTAL HELPS SWAPS CREDIT CARDS FOR VANS Optal says health and security risk management risk management and medical and security and we’re delighted with the results so far. services provider Healix International is the assistance services for their employees Now a transaction statement is generated latest multi-national to transform its payment and customers. immediately so we can track who made the processes with Optal Virtual Account This means the firm has a large network of payment, instead of at the end of each month Numbers (VANs). global suppliers that often require upfront under the previous system.” Healix has forged an impressive reputation as payment in time-critical scenarios. Optal VANs are automatically generated, a global provider of high quality, cost effective “Previously we were using credit cards to single-use, 16-digit card numbers that can be services for clients who want control over their pay these suppliers, but we were looking for used to pay suppliers much faster than legacy health, travel and security risk provision. something that provided greater security and processes. They optimise traditional payment Corporates, governments, NGOs and auditability,” says Marise Caunter, Director of processes to strip away banking costs, human insurance providers leverage the company’s Operations, Healix International. error, manual overheads and security and unique expertise to provide global travel, “That’s why we switched to Optal VANs fraud risk.

SQUARE LAUNCHES PAYMENTS SDK FOR MOBILE APPS Square has launched its Square In-App With this SDK, developers leave the complexity solution for all their payment Payments SDK (Software Development Kit), of payments to Square and focus instead needs,” says Carl Perry, enabling developers and sellers to process on providing buyer experience. The In-App Developer Lead at Square. payments with Square within their consumer- payments SDK is available for iOS, Android, “From software to hardware facing mobile apps for the first time. and Flutter in the US, Canada, UK, Australia to services, Square offers a complete With just a few lines of code, developers and Japan. payments experience all in one cohesive open can easily and professionally build a fully PCI “With the introduction of in-app mobile platform. Even better, developers and sellers compliant, secure and elegant payments flow payments to the Square platform, developers can manage all their payments across in-store, in their Android or iOS apps. now have a complete, omni-channel payments mobile and online all in one place.”

32 payments cards & mobile magazine - january / february 2019 www.paymentscm.com contracts

INGENICO COMPLETE JV WITH BS PAYONE IN GERMANY

Ingenico and Deutscher Sparkassenverlag (DSV), retailers will enable the joint venture to accelerate Chief Executive Officer of Ingenico Group. have announced the completed merger of BS its development with a comprehensive offering “Our strong positioning in the German market PAYONE, a Sparkassen-Finanzgruppe subsidiary, covering the in-store and online needs of all types as a Network Service Provider, and the ongoing with Ingenico Retail assets in DACH (Germany, of merchant. deployment of the Bambora Austria, Switzerland) following the approval of the Over the period to 2021, the joint venture model, coupled with the local German competition regulator Bundeskartellamt is expected to grow at a low teens CAGR in footprint of BS PAYONE and and the Financial Supervisory Authority. term of revenues and a high teens CAGR in the German Sparkassen, The joint venture will create a leading payment term of EBITDA. The combination between the will enable the Group to provider in Germany, the third largest market in two assets is expected to generate significant accelerate its direct-to- Europe and a promising country for electronic synergies of €30 million, largely realised merchant strategy and to grow payment where cash transactions remain by 2022. the retail business unit. predominant. “The combination of our DACH assets provides We are confident that the new The high degree of synergies between BS a wide range of market offerings for today’s and PAYONE division will create PAYONE's positioning as the second largest future customers. Hence, it will be definitely a strong value to Deutscher international card acquirer in Germany and game changer in a region that offers such solid Sparkassenverlag and Ingenico Ingenico within the SMB market as well as large growth perspectives,” says Nicolas Huss, the new Group’s shareholders.

NETS FINALISES MERGER WITH CONCARDIS Nets and Concardis have confirmed that they and the DACH region, we will be able to Ballerup, Denmark, and Nets and Concardis have completed their merger, as originally accelerate our European expansion and be a Group will retain their respective brands. announced in June 2018. driving force behind ongoing consolidation The resulting scale should enable more Bo Nilsson will lead the combined in the European payments industry,” investments in innovation and service group as CEO, and Robert Hoffmann will comments Nilsson. improvements for customers, allowing the continue as Concardis Group CEO reporting The merger creates a business with group to reinforce its position in Europe. directly to Nilsson. approximately €500 million of EBITDA and The newly formed group is backed by private “By combining our market-leading positions €1.3 billion of net revenue. equity investors Hellman & Friedman, Advent as payment champions in the Nordics The headquarters of the group will be in International and Bain Capital.

NEW ANTI-MONEY LAUNDERING PLATFORM LAUNCHED IN UK Pay.UK’s Faster Payments team has announced in suspected illegal activities. service further reinforced banks’ fraud the official launch of the anti-money laundering MITS will help the UK’s financial institutions prevention processes, reducing the time Mule Insights Tactical Solution (MITS) following detect and respond to criminal activity across necessary to identify and take action against a successful pilot by participants of the UK’s the payments network, and has the potential suspected accounts. real-time payment service. to disrupt fraud and money laundering worth The anti-money laundering technology – millions annually. developed by – enables suspicious During the pilot, based on a limited number of payments to be tracked as they move between suspicious transactions submitted for tracing bank and building society accounts, regardless to test MITS operational capability: of whether the payment amount is split between • Thousands of UK accounts were subject multiple accounts or those accounts belong to to further investigation due to suspicious the same or different financial institutions. activity – a significant percentage of which MITS creates a visual map of where and were subsequently identified as mules. when money has moved, providing data driven • Multiple, large, well-concealed money insights and new intelligence for fraud teams to laundering rings were uncovered – where take action. money was being moved between networks By bringing together payments data from of accounts and institutions. multiple banks and overlaying it with cutting- • Hundreds of mule accounts previously edge proprietary analytics and algorithms, completely unknown to authorities were MITS can accurately pinpoint individual identified. accounts (known as mule accounts) involved • The insights offered by the new tracking

www.paymentscm.com payments cards & mobile magazine - january / february 2019 33 PCM2 ad print.pdf 1 23/01/2019 09:53 conferences REGISTER with 10% OFF UPCOMING EVENTS February 19-21, 2019 Berlin DISCOUNT CODE: mpePCM10 Merchant Payments Ecosystem 2019 promises to be a good year for interesting and varied conferences 19-21 February, Berlin and exhibitions involving payments. merchantpaymentsecosystem.com The largest European conference focused on merchant payments MEFTECH 2019 The year starts for Payments Cards and Mobile with Merchant Payments Ecosystem in Berlin 25-26 February, Riyadh 19-21 February. Once again it has expanded its range of conference sessions, exhibitors and www.meftechksa.com the number of delegates, including more merchants. The MPE Awards dinner on 20 February is Mobile World Congress always successful and engaging not just for the winners, but all attendees. 25-28 February, Barcelona www.mobileworldcongress.com Event like no other... Mobile World Congress, Barcelona 25-28 February, is a fixture in the calendar for over 100,000 visitors. This year's main theme is Intelligent Connectivity, which includes IoT (the Internet of MONEYLIVE Spring 2019 Things), AI and Big Data. 11-13 March, Madrid new.marketforce.eu.com/money-live/ events/spring ... all you need to know about Money2020 Asia expects to have over 3,500 attendees including 1,400 companies and 300 speakers. Main themes include Banking Innovation, Risk, Security & Fraud, eCommerce, Money2020 Asia Cross Border Payments, Real Time Payments and Card Schemes, and Cryptocurrencies and 19-21 March Singapore card acquiring and alternative payments in Tokenisation. Asia.money2020.com

TechNOVA:AI in Financial Services Moneylive Spring 2019 in Madrid combines two conferences in one, allowing you to choose 27 March, London which sessions you’d like to attend in MoneyLive:Cards & Payments and MoneyLive: Retail new.marketforce.eu.com/technova/ Banking Europe. events/ai-financial-services/

C Self-Service Banking Asia Another notable event is TechNOVA: AI in Financial Services on 27 March in London M 3-4 April, Bangkok in 3 days https://www.rbrlondon.com/ Y For more details on these and future events, visit the Payments Cards and Mobile website conferences/ssba/ CM https://www.paymentscardsandmobile.com/conferences/

Seamless Middle East MY 10-11 April, Dubai CY Ad Index January / February 2019 www.seamless-expo.com/ME CMY RBI Digital Banking Conference EU K Merchant Payments Ecosystem merchantpaymentsecosystem.com P25 / P34 April, London Money20/20 Asia www.asia.money2020.com P17 retailbankinginnovation.fintecnet.com Open Banking World Congress www.openbankingworldcongress.com P7 / P29 Connect:ID Payments Yearbooks www.paymentsyearsbooks.com P23 29 April-1 May, Washington DC PPRO www.ppro.com P15 https://www.terrapinn.com/exhibition/ RS2 www.rs2.com Cover P4 connect-id/index.stm Tieto www.trustech-event.com P9 Open Banking World Congress 2019 Trustly www.trustly.com/ecommerce P11 7-8 May, London www.openbankingworldcongress.com

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