August 2016 Issue 350 www.electronicpaymentsinternational.com

Europe’s anti-money laundering battleplan

•Review: The Digital Banking Club Debate •Analysis: MasterCard & VocaLink •Comment: Mobile money Afghanistan •Country Surveys: China, Russia, Vietnam

EPI 350.indd 1 16/08/2016 10:00:23 Multichannel digital solutions for fi nancial services providers

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IE RBI final design.indd 1 05/05/2016 10:36:41 EDITOR’S LETTER NEWS

CONTENTS Now a ‘fully fledged chicken’, NEWS just how far will Zapp go? 3: DIGEST

FEATURE After the speculation came the deal, then the system with ‘request to pay’ functionality, capable flurry of media coverage. What next for VocaLink, of handling big data. 6: ANTI-MONEY LAUNDERING under MasterCard? And is it really all good news? At present in the UK we only have a real time Europe is beginning to crackdown on money laundering schemes through newer, digital The potential is far-reaching, with Master- credit system, not an open system standard. options such as blockchain and prepaid Card’s global footprint and VocaLink’s world Before it reaches these shores, in less than five cards. Patrick Brusnahan writes on the new class real time payments innovation, to mention years’ time, it will most likely have been launched regulation from the European Commission but two lucrative resources the scheme and system in other countries, says Yates. 7: M&A operator now share. “The hottest markets for us right now are all Patrick Brusnahan reports on the much- anticipated deal between MasterCard and The next thing to mention is of course Zapp. the way across South East Asia; the SEPA zone has VocaLink, which was acquired for $920m. MasterCard provided the spark needed to get determined they wish to have a real time clearing This is a great deal for both parties involved, Zapp off the ground. As David Yates, CEO system for euro payments. Obviously the US has but how will it affect the consumer? VocaLink and now on the management com- already gone. The other markets in the Americas 8: MOBILE MONEY mittee team at MasterCard, says, “It had been a are looking as well. This is pretty much a global Afghanistan remains a hugely cash-based chicken and egg scenario; the banks saying ‘show phenomenon, everybody is looking at this ques- economy, but the government, mobile network operators and many more are trying me the merchants and the merchants saying show tion.” to encourage the usage of mobile money. me the banks’. Well, I now have a fully fledged VocaLink and MasterCard together couldn’t be Robin Arnfield investigates chicken and the banks are jumping on board.” better placed to deliver. 10: THE DIGITAL BANKING CLUB Yates confirms said chicken was indeed going The burning question is what’s to stop Are fintech firms friends or foes of the to be deployed globally, subject to re-branding. MasterCard hiking up the cost to access the incumbent banks? The latest TDBC debate, The Link name will not be used in any way at all; system a little further down the line? Given the sponsored by Mitek, is set to answer that very question. Jessica Longley reports VocaLink will remain a brand but the Zapp brand Payment Systems Regulator’s (PSR) mandate will be reinvented. to democratise the UK’s payments scene, many SURVEY “We will have to think carefully about how might argue that endorsing VocaLink’s sale to a to reposition that,” Yates adds. He feels the key company such as MasterCard veers in the oppo- 13: CHINA differentiator for Zapp is the real time billing and site direction of the commitment, not promising 14: RUSSIA invoicing capability. And the e- and m-commerce much by way of keeping the system competitive offering. for all system users. Yates, however, repudiates this 15: VIETNAM Zapp is the focus going forward, being the ser- wholeheartedly. COMMENT vice that can be deployed on the fast and open pay- “We have made it clear to the PSR that we ments system VocaLink has developed and honed know and expect that there will be a competitve 2: INAUTH in key advanced markets such as Singapore, Swe- process, the chance of this being an environment den, Thailand and the US. There was a time when in which you could even dream of increasing the 16: CXPARTNERS their UK Faster Payments system was best in class; prices is just not realistic.” well, fast forward five years and Faster Payments In the meantime, we eagerly await Zapp's will be brought up to speed, as it were. And this launch .< straight from the horse’s mouth. The all new, souped up version will be, as in the other four aforementioned markets, an ISO 20 022, open standard real time credit and debit ANNA MILNE, [email protected]

Editor: Anna Milne Sub-editor: Nick Midgley For more information on Timetric, visit Tel: +44 (0)207 406 6701 our website at www.timetric.com. As a Ray Giddings Email: [email protected] Director of Events: subscriber, you are automatically entitled Tel: +44 (0)203 096 2585 to online access to Electronic Payments Financial News Publishing, 2012 Group Editor: Douglas Blakey Email: [email protected] International. For more information, please Registered in the UK No 6931627 Tel: +44 (0)207 406 6523 telephone +44 (0)207 406 6536 or email ISSN 0956-5558 Email: [email protected] Head of Subscriptions: Sharon Howley [email protected] Unauthorised photocopying is illegal. The Tel: +44 (0)203 096 2636 Senior Reporter: Patrick Brusnahan London Office contents of this publication, either in whole or Email: [email protected] Tel: +44 (0)207 406 6526 71-73 Carter Lane part, may not be reproduced, stored in a data Email: [email protected] London retrieval system or transmitted by any form or Sales Executive: Alexander Koidis Tel: +44 (0)203 096 2586 EC4V 5EQ means, electronic, mechanical, photocopying, Asia Editorial: Xiou Ann Lim Email: [email protected] recording or otherwise, without the prior Tel: +65 6383 4688 Asia Office 1 Finlayson Green, #09-01 permission of the publishers Email: [email protected] Customer Services: Singapore 049246 Group Publisher: Ameet Phadnis Tel: +44 (0)203 096 2636 Tel: +65 6383 4688 Tel: +44 (0)207 406 6561 or +44 (0)203 096 2622 Fax: +65 6383 5433 Email: [email protected] Email: [email protected] Email: [email protected]

www.electronicpaymentsinternational.com August 2016y 1

EPI 350.indd 1 16/08/2016 10:00:27 Electronic Payments International COMMENT INAUTH

How mobile devices support PSD2 regulations Traditional browser-based online banking will eventually lose market share to mobile devices with the ability to peform real-time transactions. While cash is currently the most direct way of paying for products and services, it could soon be a thing of the past. Michael Lynch, Chief Strategy Officer at InAuth, writes

he terms PSD2, EBA, 2FA, and phishing and malware. device IDs, security enhances the customer Article 97 might appear at first In an effort to stay ahead of fraudsters, experience rather than deterring it. What glance to be typical regulatory modern security standards follow more makes this possible is that the mobile device jargon, but make no mistake; they stringent requirements that rely less on tem- itself can serve as a unique identifier. T When handled in this fashion, we can look have huge implications in the world of porary identifiers and knowledge that can be digital payments. guessed. Instead they use more permanent at cybersecurity as a transaction enabler that What do they all mean? The European attributes associated with users that cannot enhances customer service, rather than as an Banking Authority (EBA) is poised to issue a be easily changed, altered, or guessed. existing as a barrier. The two no longer have new round of regulations and requirements The highest form of 2FA security includes to be mutually exclusive. In the future, cyber- in their annual Payment Services Directive the use of biometrics such as finger print or security will aid and assist in the comfort of (PSD2). This edict regulates payment services eye scans to ensure the 100% authentication the user by remaining in the background, and payment service providers throughout of users. However, since this technology is quietly greasing the wheels of the transaction. the European Union. In short, it is a big deal. not yet widely commercially available, 2FA is As written, PSD2 extends and accelerates expected to be made up of the next best thing Positioning for the cashless economy many of the existing trends in European – a combination of inalterable attributes asso- Organisations that comply by using mobile banking and online retail. This includes ciated with the users’ electronic device. as a secure 2FA token will be far better posi- regulations encouraging non-traditional This change represents a major opportuni- tioned for the cashless economy. The chal- parties to participate in payments and accel- ty for mobile technology because the unique lenge will be dealing with the elimination of erates competition within the banking com- identifiers associated with a mobile device the lag time that has traditionally been in munity through multi-banking. In this new can be combined to form security that is place for suspicious transactions. Electronic PSD2 system, users will interface with banks stronger than a browser on a PC. Fraudsters payments have typically required a manual through portals that consolidate all of their just can’t fake it. review of potentially fraudulent transactions. banking accounts, thereby forcing the banks This unique identifier can then operate That will no longer be the case. into commodity-style competition. as a secure token, authenticating the user’s Clearly, a move to faster payments is These trends are good news for consumers true identity, adding a layer of security that something everyone – consumers, business- but have got security professionals on edge. protects the organisation—as well as their es, financial institutions, and governments The pros know a network is only as secure as respective customers—during any customer – wants to happen. While cash has always its weakest link and the introduction of third- transactions on the device. been the most immediate form of payment, party portals could potentially compromise it it is an expensive instrument. The US spends for everyone. With this in mind, Article 97 of Strong security enables frictionless $200bn to keep its cash system working and, PSD2, due out in a few months, is expected Financial institutions and online retailers according to the European Central Bank, the to require strong two-factor authentication have a conflicted relationship with these pre- total cost of cash in the European Union is (2FA) on all online transactions. dicted changes in security regulations. On 1% or more of GDP. the one hand, they realise PSD2 is a good Stronger authentication models put in The importance of strong 2FA mechanism for reducing fraud. On the other, place now are key to enabling faster pay - 2FA is a method of confirming a user’s they expect the new regulations and height- ments, eliminating the processing lag and claimed identity by using a combination ened security will negatively affect their abil- executing the transaction in real-time. Many of two different components. These com - ity to create a frictionless experience for their of the anti-fraud tools and processes used by ponents may be something the user knows, customers. banks are either performed manually, or are possesses, or an attribute that is inseparable Based on past experience, this fear of slow- geared around having a built-in time delay. from the user’s identity. Using a combination ing down transactions is understandable. To These slower payments processes give insti- of two components from this list forms the many organisations, tighter security means tutions more time to detect and prevent pos- backbone behind strong security. more forms for customers to fill out, more sible fraud. A good example of 2FA in everyday life challenge questions, and more passwords for Customers won’t be satisfied with delays. is withdrawing of money from an ATM. them to remember. Financial institutions and Strong device authentication and risk assess- Only the correct combination of a bank card retailers know their customers don’t want ment is necessary. (something the user possesses) and a PIN these barriers; they just want their transac- Many experts, including the consulting (something the user knows) allows the trans- tion processed. Slowing the process down firm Deloitte, are predicting that cash, while action to be carried out. However, this form unnecessarily is an irritation for customers still the fastest way to pay for something, of 2FA constitutes relatively weak security that puts the entire transaction in jeopardy. could become a thing of the past, with real- and is ineffective against modern threats like In this new paradigm of using permanent time payments as its successor. <

2 y August 20166 www.electronicpaymentsinternational.com

EPI 350.indd 2 16/08/2016 10:00:27 Electronic Payments International DIGEST NEWS

MOBILE Apple Pay now available in On the Apple Pay France website, Apple 2, and both iPad Pro models. It does not France and Hong Kong said Boon and Orange will also start sup- require Apple Pay-specific contactless pay- porting the service very soon. ment terminals, and can work with existing Tech giant Apple has launched its mobile In Hong Kong, MasterCard, Visa, Ameri- contactless terminals. payment system Apple Pay in France and can Express payment cards issued by banks When a consumer adds a credit card to Hong Kong. The service is now available in HSBC, Bank of China (Hong Kong), Hang Apple Pay, the actual card numbers are not eight countries. Seng, DBS and Standard Chartered will sup- stored on the device, or on Apple servers. In France, the mobile payment service port Apple Pay. Instead, a unique device account number is will be compatible with Mastercard and The service allows customers to make assigned, encrypted and securely stored in Visa credit and debit cards issued by Carre- purchases at participating stores with their the secure element on the device. Each trans- four Banque and Ticket Restaurant as well iPhone 6, iPhone 6 Plus, iPhone 6s, iPhone action is authorised with a one-time unique as Banque Populaire and Caisse d'Epargne. 6s Plus, Apple Watch, iPad mini 4, iPad Air dynamic security code.<

DIGITAL REGULATION DISTRIBUTION South African lender Absa Number26 rebrands and Mobile banking usage surges introduces MasterPass digital re-launches in UK as banking via websites wallet slows

South African financial services giant Customers used mobile banking apps Absa has launched MasterCard’s digital more than 7,610 times a minute, or four payment platform MasterPass to enable billion times a year, the Way We Bank its clients to make online payments via a Now report found. virtual wallet. The Germany-based start-up bank, Internet banking log-ins dropped 4.3 mil- Called Absa MasterPass, the app can Number26, has received a full banking lion a day in 2015 compared with 4.4 mil- be used to make online purchases wher- license from the Federal Financial Super- lion in 2014, the report says. Mobile apps ever MasterPass is accepted. visory Authority and the European Cen- were used 11 million times a day in 2015, Absa, a wholly owned subsidiary of tral Bank. As a result, it has changed its up from seven million a day in 2014. Barclays Africa Group, said that its cus- name to N26. The volume of payments using mobile tomers will also soon be able to do in- One and a half years after launch, the apps was 347 million in 2015, up 54% or store shopping using Absa MasterPass. digital-only N26 now has regulatory 122 million from 2014. Payments using Introduced in 2013, MasterPass approval to conduct banking operations internet banking stood at 417 million in securely stores consumers’ credit, debit across Europe. It plans to launch real- 2015, an increase of 2% or nine million or cheque card information, and ship- time credit, increased security through from 2014. ping and billing address details in a secure artificial intelligence and expense sharing The annual use of contactless cards data centre at the issuing bank and sends over the next twelve months. also rose by 250%, with £1.1bn ($1.4bn) cardholder information to the merchant Currently holding 200,000 custom- spent in March 2016 alone. Banks issued during the payment process. ers across eight European countries, its 15 million contactless cards in last year, a To pay, users open the app and scan the different features include CASH26 (cash surge of 54% compared with 2014. quick response (QR) code on the website, withdrawals at retailers) and Money- The study, supported by EY, also select the card they wish to use, and enter Beam (money transfers via SMS or email found that over 13.8 million apps were their PIN number. in seconds). downloaded in 2015, a jump of 25% MasterCard launched the digital pay- Whether this encourages more custom- compared with the year ago figures. ment service in South Africa in July 2014. ers to sign up or not remains to be seen. BBA CEO Anthony Browne said: “Our Currently, MasterPass is accepted at N26 received some negative press earlier influential Way We Bank Now report Vodacom, Forever Resorts, Lancet Labs, this year for cancelling several hundred shows a staggering increase in people Lottostar, South African Airways, and bank accounts without notice. This was using mobile apps, proving it’s now easier Takealot. attributed to excessive ATM withdrawls. than ever to interact with your bank. Willie van Zyl, head of card issuing, Currently, N26 customers can make “We are in the midst of a consumer-led Absa Retail and Business Banking, said: three free withdrawals a month, five for revolution in the way we do our day-to- “We are seeing a huge change in the way primary customers, with a €2 (US$2.20) day banking. Customers love the new our customers shop and pay for things charge for withdrawals outside this limit. technology that is allowing us to bank and the Absa MasterPass App is another Valentin Staff, founder and CEO of round the clock. step on our mobile banking journey as N26, said: “This banking license is an “You can set up standing orders while we respond to the changing needs of our important additional step for us to sus- standing in the queue for the bus and customers. It also gives them access to a tainably change the value chain in retail check your balance while checking in at smooth shopping experience – from start banking. This will allow us to significant- the airport. The choice now on offer from to finish and in real time. It allows people ly enhance the diversity of our product banks, from state-of-the-art branches to to conduct the transaction of their choice portfolio. For our customers, that means cutting edge apps, has put customers through the channel of their choice – any access to the best financial products, right firmly in the driving seat on the way we time and in any place.”< on the app.”< bank.”<

www.electronicpaymentsinternational.com August 2016y 3

EPI 350.indd 3 16/08/2016 10:00:30 Electronic Payments International NEWS DIGEST

RESEARCH Indian digital payments market to be worth $500bn by 2020 consumers, are 90% as likely, to use digital ments is undergoing rapid transformation payments for both online as well as offline and is set to grow four times in value by The size of digital payments industry in transactions. 2020. India is on an even more exponential India will be $500bn by 2020, account - By 2020, more than 60% of digital pay- growth trajectory. The smartphone explo- ing for 15% to the country’s gross domes- ments value will be accounted for by offline sion will usher in a new era in digital pay- tic product (GDP), according to a report points of sale such as unorganised retail, ments in India over the next few years that by Google and Boston Consulting Group eateries, and transport. will see digital payments exceed $500bn by (BCG). Google vice-president for SEA & India 2020 and non-cash transactions exceed cash Non-cash contribution in the consumer Rajan Anandan said: “Spurred by smart- transactions by 2023.” payments segment will double to 40% by phone penetration, and supported by pro- The study, based on Nielsen’s qualitative 2020. Non-cash includes cheques, demand gressive regulatory policy, the digital pay- and quantitative research with over 3,500 drafts, net-banking, credit/debit cards, ments industry is at an inflection point and respondents, also highlighted that micro- mobile wallets and UPI. is set to grow 10 times by 2020. It is telling transactions will form a substantial portion The report noted that 81% of exist - that half of India’s internet users will use of the industry, with over 50% of person-to- ing digital payment users prefer it to any digital payments and that the top 100 mil- merchant transactions expected to be under other non-cash payment methods. Online, lion users will drive 70% of the GMV – a INR100 ($1.40). shopping, payment of utility bills and buy- clear indicator of the growing importance The report predicts that the value of ing movie tickets emerged as the three top of the digital consumer.” remittances and money transfer that will things that a user primarily interacts with. BCG senior partner and managing direc- pass through alternate digital payment The report further revealed that Indian tor, Alpesh Shah, said: “Global digital pay- instruments will double to 30% by 2020.<

MOBILE One Horizon unveils new device. the world, thereby increasing our attrac- cashless payment service for One Horizon will manage both tiveness as a cashless payment provider. mobile telcos banking relationship and custom - Simplifying payments for both the customer ers interface management, and remit and the operator allows the operator to con- 70% of the payment directly to the centrate on the promotion of the app and One Horizon Group, a developer of carrier- operator. the customer is secure in the knowledge that grade VoIP solutions, has launched a new One Horizon added that its solution will they can securely pay anytime, anyplace, Android mobile wallet for mobile operators. never store user’s credit card data either on anywhere." This enables users to purchase call credit app or on servers and will be transported "Our revenue model is simple; we charge using only their debit or credit card for the using the highest internet security standards for 30% of the purchase and making the transaction. available. purchase as simple to follow as possible is The company said that its new cashless One Horizon Group CEO Brian Collins the key. payment service will enable mobile opera- said: "Continuing to drive innovation inside “Users love it, operators love it and the tors to take credit and debit card payments our R&D teams means that we expand our One Horizon bottom-line loves it too," Col- Don’t have online account details? from their subscribers on any Android commercial offerings to operators around lins added.<

SECURITY You and your associates may be entitled to online

Payments Association of South The Payments Association of South Afri- MasterCard division president for South login credentials. The benefits of full online Africa launches new biometrics ca (PASA) – working in partnership with Africa Mark Elliott said: “Through this access are as follows: standard for payments MasterCard and Visa – has announced a new interoperable biometric verification stand- standardised specification for facilitating bio- ard in South Africa, we can connect a com- metric authentication on payment cards. plicated web of players who operate with • Timely daily news updates The new technology framework, which different rules and technologies. • Access the latest analysis has been developed to ensure interoperable “Together, we can drive ubiquity, safety, solutions, will support biometrics. and utility of biometric payments, while • Monthly editions sent directly to your inbox MasterCard and Visa have designed helping to accelerate the number of smart fingerprint biometric systems that can be and secure biometric payment solutions • News alerts direct to your inbox securely accepted by a biometric reader, available to consumers on these platforms.” • Comments from key industry influencers and leaders encrypted, and then validated. Visa country manager for South Africa PASA CEO Walter Volker said: “As an James Simpson said: “To support the adop- • Search for specific, relevant content industry we are proud to have facilitated tion, it is equally important that solutions the world’s first truly interoperable biomet- are scalable and based on open standards. • Access the archive ric specification that will unlock the benefits Building on the current standards, this pro- of biometric verification and make it avail- vides a common, interoperable foundation, able to an open community in a way that is as well as encourages innovation in cutting- To create or activate your account please contact: affordable, reliable and secure.” edge biometric solutions.”< [email protected]

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EPI 350.indd 4 16/08/2016 10:00:35 Digital touch briefings ad copy - CI 18042016.indd 1 18/04/2016 11:17:37

EPI 350.indd 5 www. Digital touchbriefings adcopy -CI18042016.indd 1 Electronic Payments International Electronic Payments WePay foraysintoUKmarket DISTRIBUTION business intelligence, data security and mer employees focused on technology research, 300 nearly for space have will office commerce internationally. digital accelerate Valleyto Silicon in ity Visa has unveiled plans to open a new facil Silicon Valley Visa toopennewofficein DISTRIBUTION Situated in Palo Alto, the new 5,760m new the Alto, Palo in Situated - - 2 that enable our teams to collaborate in the bilities globally and are investing in facilities expand our research and development capa to “Wecontinue Tanejasaid: Rajat ogy Foster City and San Francisco locations. Bay Area, adding to the company’s existing Francisco San the in operations its widen chant solutions. national has traditionally been a frustrating frustrating a been traditionally has national enter the UK market. partners, and the credit card associations to numerous UK and EU regulators, banking ings to new UK business. protections, compliance and support offer crowdfunding and other marketplaces. including sector payment label white the intoreach its expand to UK the into vices for online platforms, has expanded its ser WePay, a provider of payments-as-a-service Visa executive vice-president of technol will facility new the that believes Visa WePay CEO Bill Clerico said: “Going inter with closely worked company The The company also extended its fraud risk To create or activate your account pleasecontact: [email protected] access areasfollows: login credentials. You and your associates may beentitled to online Don’t have onlineaccount details? www.privatebankerinternational.com • • • News alertsdirect to your inbox • Monthly editionssent directly to your inbox • Accessthelatest analysis • Timely daily news updates • Access thearchive Search for specific,relevant content Comments from key industry influencers andleaders The benefits of full online - - - - - San Francisco Bay Area. rently has more than 3,500 employees in the cur andValley 1970s con early the since scientists, engineers, entrepreneurs.” with the Silicon Valley community of data pool and build an even stronger connection draw on the diversity of the Bay Area talent creation of digital commerce solutions. said. company the hours, business US and UK office will deliver customer support during business development, while the Providence Providence, Rhode Island. WePayandLondon in offices new opened America, North in growth company's the Atlantic, safely and seamlessly.” level of payments service on both sides of the integrate once and immediately offer the same By partnering with WePay, platforms can now payments. offer that companies for process The company has had a presence in Sili to us allows office Alto Palo new “Our The London office will focus on overseas as well as expansion this Tosupport < < DIGEST 16/08/2016 10:00:38 18/04/2016 11:17:37 - -

NEWS Electronic Payments International FEATURE ANTI-MONEY LAUNDERING

Cracking down on money laundering There is a common cycle in financial security. A criminal adapts to security protocols and regulation, the regulator adapts to combat the development and this repeats ad infinitum. The European Commission’s (EC) anti-money laundering (AML) division is making progress, however. Patrick Brusnahan reports

hreats associated with instrument.” money laundering, which Furthermore, anonymous pre- can lead to terrorist paid cards issued outside the EU T financing, are constantly will only be used in the union evolving. The EC has stated where they can be shown to com- that recent terrorist attacks in ply with requirements equivalent the European Union (EU) and to the ones presented in this regu- beyond, as well as the 'Panama lation. Papers' scandal, have brought Monaco said: “As far as pre- this issue further into the fore - paid cards are concerned, the ground. fact that the European Com - In May 2015, the EU adopted mission proposal indicates that the Anti-Money Laundering Pack- anonymous prepaid cards issued age, a significant step forward in outside of the Union will only combating money laundering. be used in the Union where they Just over a year later, amendments can be shown to comply with have been made to Directive (EU) monitoring as other financial institutions. requirements equivalent to the 2015/849 on preventing the use of financial Monica Monaco, Founder and Manag- ones in 4AMLD, clearly shows that for UK system for money laundering or terrorist ing Director of TrustEu Affairs, said: "It is issued prepaid cards - whether after Brexit financing. interesting that virtual currency exchange the UK gets a EEA status or starts a bilat- platforms and custodian wallet providers eral agreements negotiation with the EU- Digital currencies are becoming obliged entities and that defi- prepaid cards issued in the UK will need to A key measure added to the regulation nitions of custodian wallets and exchanges comply with EU regulation equivalent to be regards digital and virtual currencies. Vir- are in the proposal; this is the first time that used in the EU.” tual currency exchange platforms and wal- virtual currencies exchange platforms and However, David Parker, founder and let providers have been added to the list of custodian wallets are defined under Euro- CEO of Polymath Consulting, believes this obliged entities to regulation. This means pean law and I think this comes with a very new regulation to be unnecessary. that, as gatekeepers, they are the first step clear message from the European Commis- Speaking to EPI, he said: “How many for the public to enter the marketplace and sion, that they embrace and value technol- terrorists are really going to wander about need to be monitored. ogy as long as the prevention of anti-money buying gift cards to use when the limit is This means the sector is now obligated laundering and terrorism financing can con- already so low? Will lowering the limit by to undergo the same level of regulation and tinue and improve" €100 really affect the use of these products by terrorists or just provide a nice headline The Nine New Measures Tackling the anonymous within prepaid for politicians? I would contest that a gift • Designate virtual currency exchange platforms Two propositions were put forward with card of €250 is still only half a European- (and wallet providers) as obliged entities regards to prepaid instruments. Firstly, issued €500 note that really is totally anony- • Tackle the use of anonymous prepaid instru- lowering the amount, from €250 (US$277) mous.” ments to €150, for non-reloadable prepaid instru- He was even harsher on the measure for • Give new powers to FIUs to request informa- ments to which Customer Due Diligence prepaid instruments issued outside of the tion from any obliged entity (CDD) applies. Secondly, to suppress CDD EU. • Enable FIU and competent authorities to iden- exemptions for the online usage of prepaid Parker continued: “Totally unenforce- tify holders of bank and payment accounts cards. able in the real world. How will a merchant • Harmonise the EU approach towards high-risk The intention is to better serve identifica- know to decline the transaction from a card third countries tion purposes and widen customer verifica- issues in, let's say, Mongolia? If the acquirer • Improve transparency: new rules on access to tion requirements. has to decline, they will need a list of what beneficial ownership information In a factsheet, the EC stated: “Limiting programmes to not meet the AML require- • Interconnection on national central registers the anonymous use of prepaid instruments ments. Who provides this? Who vets it? • Additional technical clarifications will provide a clear disincentive for use Who says it falls short? • Earlier transposition for terrorist and criminal purposes. Pre- “This is a great political statement that paid cards will continue to be an accessible cannot be practically enforced.”<

6 y August 2016 www.electronicpaymentsinternational.com

EPI 350.indd 6 16/08/2016 10:00:41 Electronic Payments International Electronic Payments International M&A FEATURE

VocaLink finally captured by MasterCard MasterCard’s acquisition of VocaLink bolsters confidence in Britain remaining an attractive destination for international investors. It’s been argued that the sale will improve competition in the UK banking industry, but will it deliver a new payments proposition? Patrick Brusnahan writes on the deal

fter months of speculation, sumers. MasterCard has entered into a Dunne believed this to not be the case: £700m (US$920m) agreement to “We have contracts in place to run the core acquire VocaLink. VocaLink’s service for 4–5 years and those contracts A were fixed at the time of renewal. There investors could also receive a potential £169m earn-out if performance targets is no additional cost or fee to the end con- are met. sumer. Consumers benefit from most of Under the agreement, a majority of these services for free anyway and that’s the VocaLink’s shareholders, primarily UK- nature of the payments ecosystem.” based banks, will retain 7.6% ownership One of VocaLink’s more promising prod- for at least three years. ucts is Zapp, also known as Pay by Bank The sale process effectively kicked off in think we can take it to many more. app. It has had a turbulent time with launch February this year when the UK Payment “In addition, there are a bunch of new delayed more than once and its CTO, Ian Systems Regulator Hannah Nixon recom- value added services that VocaLink have Sayers, leaving to join Danske Bank. How- mended the UK’s biggest banks sell their added which, given where MasterCard is in ever, Barnett remains enthusiastic. stakes in VocaLink. She argued that such a the UK, makes it really important to scale “Zapp is a fantastic e- and m-commerce sale would help to improve banking com- that bit of business in the UK.” solution. It reverses the logic of a payment petition in the UK and deliver clear benefits Barnett isn’t the only one pleased with so consumers push a payment rather than to challenger banks, fintechs, UK consumers the deal. The UK’s finance minister, Philip getting pulled. MasterCard can bring that and small businesses. Hammond, said: “MasterCard’s decision to solution to the POS market. We have 40 Nixon said: “There needs to be a funda- buy VocaLink shows that Britain remains million acceptance locations globally. Com- mental change in the industry to encourage an attractive destination for international bine those two things and I think you have new entrants to compete on service, price investors. Britain is and continues to be an a new payments proposition which is cheap, and innovation in an open and transparent open and globally facing country in which secure, simple, and smart. It is a real innova- way.” to do business.” tion,” Barnett said. Italian payments group, SIA, and a num- With the banks losing a huge chunk of That’s a lot of expectation, but Dunne ber of private equity firms had also been their stake in VocaLink, there are worries believed that ‘people will be using this very linked with possible bids for VocaLink prior that this will lead to increased costs to the soon’, even as early as the beginning of next to MasterCard’s successful bid. banks, which would be moved onto con- year.< In an investors’ call following Master- Card’s acquisition of VocaLink, VocaLink Group Editor, Douglas Blakey’s Comment: VocaLink is a great deal for MasterCard CEO David Yates claimed that the compa- ny had ‘outgrown its UK bank shareholder For MasterCard, the VocaLink deal looks a good bet. 4% or so. Expect that to rise in the medium term as base’. MasterCard will target new revenue by trying to shift Speaking to RBI, Chris Dunne, director of The £700m ($920m) cash deal to acquire a 92.4% UK banks debit card portfolios away from Visa. market development at VocaLink, expanded stake in VocaLink will have a negligible effect on VocaLink has enjoyed international success with on Yates’ point. MasterCard earnings, reducing earnings per share by the expansion of its real-time network and has He said: “I think David was talking about an estimated $0.05 per share for a couple of years. licensed its technology to support faster payments the success that VocaLink has been having For VocaLink’s UK banks owners: RBS for example systems in the US, Sweden, Singapore and Thailand. recently in other markets. We have won a will no doubt find it handy to book a £150m pre-tax MasterCard will no doubt look to cash in on the number of contracts to take the technology gain; ditto Barclays (£104m) and Cooperative Bank growing international demand for interbank infra- that we’ve been running here in the UK into will surely find a good use for the £22m that it will structure services. other markets, such as Singapore.” pocket. If, however, MasterCard looks to recoup the pur- Mark Barnett, president of MasterCard In a conference call, MasterCard’s chief financial chase price through increased connectivity and UK and Ireland, explained the reasoning for officer Martina Hund-Mejean said that the deal was transaction fees, the VocaLink deal may not look the acquisition. an ‘important component of our strategy to actively quite such a good deal for all stakeholders in a few He said: “The best real-time ACH plat- participate in all types of electronic payments and years’ time. form in the world is VocaLink’s. They payment flows’. As MasterCard ramps up its cash displacement proved they can take it internationally to a The deal will do more than that. MasterCard’s cur- strategy, how long can UK consumers expect over few markets and, with our global reach, we rent share of the UK debit card market is a miserable 97% of all LINK ATM transactions to be free?

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EPI 350.indd 7 16/08/2016 10:00:43 Electronic Payments International FEATURE MOBILE MONEY

Mobile money takes off slowly in Afghanistan Afghanistan hasn’t seen the levels of mobile money adoption that Kenya has with M-Pesa. Mobile money is still embryonic and Afghanistan remains a cash-based society. But the government, mobile network operators (MNOs), and NGOs are working to foster adoption of mobile money, Robin Arnfield reports

fghanistan is one of the least and has ordered government agencies to use going for hundreds of years and is in all the banked countries in the world, non-cash payments, or electronic money, villages.” with the World Bank estimating whenever practical. A that only 10% of the population “The Government of Afghanistan fully Regulations aged over 15 had a bank account in 2014. supports the implementation of mobile Mobile money or e-money services pro - However, around 72% of the population money, and the Ministry of Communication vided by non-financial institutions such as have mobile phones in 2016, according and Information Technology has started MNOs have to comply with Afghanistan’s to GSMA Intelligence. Around 90% of working on biometric registration of SIM Electronic Money Institution (EMI) regu- the population have mobile communica- cards, which will make mobile money regis- lations, which are under the control of the tions coverage. tration much easier,” Abdul Razaq Wahidi, Central Bank of Afghanistan (Da Afghani- “Currently, there are a total of 16 banks Minister of Communication and Informa- stan Bank). operating mostly in the capital, Kabul, tion Technology, said in October 2015. Four types of e-money account are per- as well as Herat, Nengarhar and Balkh,” “It’s still a novelty for Afghans to use mitted: a cash card, a debit card, a mobile says the Better Than Cash Alliance report: mobile wallets, but eventually they will wallet, and a stored-value account card. Building a Gateway to Digital Payments in get accustomed to them and like their con- Prior to the introduction of the EMI regu- Afghanistan: The World Food Programme’s venience,” says Katrin Fakiri, author of the lations in October 2011, e-money service E-Voucher Initiative. “There are over 400 Building a Gateway to Digital Payments in providers needed to have a Money Service full-service and limited-service bank branch- Afghanistan: The World Food Programme’s Provider licence. es across the country.” E-Voucher Initiative study and a consultant The EMI legislation is specifically for on financial inclusion. non-financial institutions. Afghan banks Mobile money services “The President’s vision is for all Afghan and deposit-accepting microfinance institu- While Afghanistan’s banks are based in the civil servants to be paid via mobile wallets, tions (MFIs) are allowed to offer e-money major cities, the majority of the population starting with the Police and Military.” services under the regulations governing lives in rural areas. Because the penetration banks and non-bank financial institutions. of mobile phones in Afghanistan is so high, Savings The EMI regulations state that e-money mobile is a tool for providing financial ser- So far, mobile wallets are primarily used as must be fully deposited in the banking sys- vices to the unbanked. transactional vehicles, not for savings. “To tem in a trusteeship account, “the benefi- With the support of United States Agency get people saving money in mobile wallets, ciaries of which are the individual custom- for International Development (USAID), you need incentives,” Fakiri says. ers of the EMI licence-holding entity that three of Afghanistan’s four-largest MNOs, “It’s probably a few years away before deposits the funds.” Afghan Wireless Communication Company Afghans starting saving in mobile wallets. In addition, the trustee of the account (AWCC), Etisalat, and Roshan, have rolled Currently, the leaders in South Asia for must be the EMI entity depositing the out mobile money services. mobile money are Bangladesh, India, and e-money. Recipients of an EMI licence are Roshan’s service is M-Paisa, while Pakistan, all of whom are more advanced required to have minimum capital equiva- AWCC’s service is My Money, and Etisalat’s than Afghanistan.” lent to $1m. is M-Hawala. The other leading Afghan Traditionally, Afghanistan has been a Consumer-to-consumer mobile transfers MNO – MTN – has yet to launch its mobile cash-based economy. In common with other are limited to 10 transactions a day with a money service. countries in the region, Afghanistan has an maximum limit of AFN15,000 ($220) per Three international money transfer com- informal cash-based value transfer system transaction. There are no limits for con - panies provide remittances to Afghanistan called Hawala (Arabic for transfer). sumer-to-business, business-to-business, from abroad: MoneyGram; Western Union, Based on trust relationships between or business-to-consumer transactions. The which offers cash payouts at over 350 senders, recipients and money brokers, maximum amount that can be held in an Afghan agent locations; and TransferTo, a Hawala has no documentation and no audit e-money account is AFN150,000 ($2,200). global airtime remittance and mobile money trial. “While an e-money account can receive transfer platform owned by Ingenico. “In Afghanistan, the real competition incoming remittances from abroad, it can- to mobile money is Hawala,” says Fakiri. not be used to send money outside Afghani- Afghan government “My view is that mobile money schemes stan. Afghan President Ashraf Ghani Ahmadzai shouldn’t try to beat Hawala but join it has stated that a cash-only system is risky, and get the Hawala agents to become their Roshan inefficient, and vulnerable to corruption, mobile money agents. Hawala has been Roshan, which has 6.5 million total sub-

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EPI 350.indd 8 16/08/2016 10:00:47 Electronic Payments International MOBILE MONEY FEATURE

scribers compared to Etisalat’s five million, to the unbanked population of Afghanistan, accountability among mobile money opera- was the first Afghan mobile operator to leading to greater financial inclusion.” tors and their agents and merchants. launch a mobile money service. It formed Provided an M-Paisa customer has a “These amendments were approved by a partnership with Vodafone Group to bank account with one of Roshan’s partner the Central Bank’s Supreme Council in July launch M-Paisa in November 2008, based banks, they can link their bank account to 2011, and implemented in October 2011,” on the UK-based telco’s M-Pesa platform. their M-Paisa account by visiting one of says Qadeer. “So far, the Central Bank has Paisa means cash in both of Afghanistan’s their bank’s branches. “At the bank, they issued EMI licenses to Roshan, followed by national languages Dari and Pashto. will be issued with a PIN, and their two Etisalat and AWCC.” In April 2011, Roshan received an EMI accounts will be linked within 24 hours,” Mobile money initiatives supported by licence for M-Paisa from the Central Bank the Roshan spokesperson says. USAID/FAIDA include the World Food Pro- of Afghanistan, marking the first issuance of M-Paisa allows its users to send money to gram’s (WFP) program to pay food aid via this type of licence in Afghanistan. Roshan customers of other Afghan service provid- mobile money, which involves partnerships had been operating under a Money Service ers, but M-Paisa users are unable to receive with AWCC and Etisalat; electricity bill Provider licence since introducing M-Paisa funds from them, says the Roshan spokes- payments via AWCC, Etisalat and Roshan; in 2008. person. “We call this feature: send money to private-sector salary payments via AWCC, “M-Paisa has over 100,000 customers, non-registered customers,” he says. Etisalat and Roshan; government salary and processes over $4m per month,” says “In terms of the number of M-Paisa payments via AWCC; and microfinance a Roshan spokesperson. “M-Paisa has transactions, buying airtime top-ups is the loan repayments via Roshan. over 350 active agents across Afghanistan largest transaction type, followed by salary As of June 2016, the WFP has over 77,000 who provide cash withdrawal services to payments, cash-in/cash-out, P2P transfers, registered users of its monthly mobile ben- M-Paisa customers. Of these agents, 132 are bill payments, and merchant payments,” he efit payment service, while 78,000 people branches of the country’s four major banks continues. are making bi-monthly mobile electricity – Afghanistan International Bank (AIB), “M-Paisa has proven to be an effective payments. Afghan United Bank (AUB), Azizi Bank, tool in fighting corruption; it was used in a In addition, 41,000 people are receiving and First Micro Finance Bank (FMFB).” pilot to pay salaries to around 1,300 Afghan monthly private-sector salaries, 11,000 are Customers open an M-Paisa account at a National Police officers in 13 provinces and receiving monthly government salaries, and registered M-Paisa agent’s location by pro- districts from 2009 to 2014. 5,600 people are making monthly microfi- viding their Roshan SIM card and mobile “In some cases, the officers receiving their nance loan repayments. number, their national ID card, and a colour salaries through M-Paisa saw an immediate “Normally, each month around $170,000 photo of themselves. increase of 30%, which came about because is disbursed via mobile money on the above The spokesperson explains M-Paisa the middlemen were eliminated, so the offic- projects,” says Qadeer. “This amount varies works on all GSM-based mobile phones, ers received their salaries in full.” on the size of electrically bills.” from the most basic to the most advanced, as it uses Unstructured Supplementary Ser- The role of USAID National payments switch vice Data (USSD). USAID’s Financial Access for Invest - Switzerland-based BPC Banking Technolo- After dialing a USDD number, customers ing in the Development of Afghanistan gies has supplied its SmartVista software can select the necessary options on an IVR- (FAIDA) program says it ‘works with the for Afghanistan’s national payments switch, based menu in Dari, Pashto, and English. Afghan government and the private sec - which went live in 2016. “As M-Paisa can be used with any type of tor to develop a robust financial services “SmartVista is being used as the nation- phone via USSD, we don’t have a mobile industry, as well as to develop a finan - al cards and mobile payment switch in web interface or a phone app as yet,” the cial services legal framework and market Afghanistan to provide interoperability and spokesperson says. infrastructure’. is intended to interconnect all banks, mobile USSD is a protocol which enables GSM- “USAID/FAIDA is working to harness wallets, third-party aggregators, etc.,” based cellphones to communicate in real- the power of technology for mobile money, says Zaheer Bawar, Managing Director of time with a service provider's computers. branchless banking and electronic payments Afghanistan Payment System. In 2012, Roshan signed an agreement as service delivery mechanisms through APS is a consortium of financial institu- with TransferTo under which Afghans living partnerships with the Afghan government tions funded by the Afghan Central Bank abroad can send mobile money to Roshan and between banks, MNOs, MFIs, and val- through the World Bank, which aims to subscribers in Afghanistan. ue-added service providers,” says Maseehul- develop the Afghan retail banking market “Recipients can use this money for what- lah Qadeer, Better Than Cash Team Leader by providing interoperable electronic and ever purpose they like, for example buy- at USAID/FAIDA and Technical Advisor to mobile payment services. ing airtime or paying utility bills,” says the the Afghan President’s Policy Coordination “For mobile wallets to scale, there has to Roshan spokesperson. Unit. be interoperability between the schemes and “As more customers sign up for M-Paisa, These initiatives include helping the Cen- a good agent network,” says Fakiri. we have been using more features includ- tral Bank to make several key amendments “Now that there is interoperability in ing banking services, money transfers and to the previous provisions of the Money Ser- Afghanistan, it’s possible to send mobile purchasing goods and services,” says the vice Provider license. money from one scheme to another and spokesperson. These include KYC registration, AML, from one bank to another. “M-Paisa users can link their bank and Counter-Terrorism Financing provi- “But Afghan mobile money agents are accounts to their M-Paisa accounts to trans- sions; stricter regulations and enforcement proprietary to a specific scheme for the fer funds between the two. This feature has for suspicious transaction reporting; and most part, and my hope is that the agents effectively expanded the frontier of banking measures to improve transparency and will become interoperable.”<

www.electronicpaymentsinternational.com August 2016 y 9

EPI 350.indd 9 16/08/2016 10:00:47 Electronic Payments International FEATURE THE DIGITAL BANKING CLUB

Fintechs: Friend or foe to FS firms? London has gained a reputation as a leading fintech hub, hosting more and more innovative technology start-ups but can they be considered as friends or enemies of financial services? This is exactly what the latest debate from the Digital Banking Club (TDBC) set to find out.Jessica Longley reports

osted at the prestigious Law Society tive models can find great synergy in working in London, and sponsored by global together rather than bending over backwards leader of mobile capture and iden- to accommodate banks.” tity verification software Mitek, Not only can fintechs survive without H banks, they are also threatening banks’ prof- June’s TDBC debate took a slightly more traditional approach. easier to experiment under a new brand than its as they start to encroach on the end-to-end Sophie Guibaud, George Depastas and Jon under a 100-year-old brand.” value chain. Hall argued for the motion against a team She illustrated that ‘the P2P lending part- According to Cadbury: “The opposition comprising Simon Cadbury, Roy Vella and nership between Zopa and Metro Bank is a might argue that only a small percentage of David Parker. The motion: fintech, friend or perfect example of fintechs and banks work- revenue is migrating to fintechs, but it should foe? Guibaud, vice-president of European ing together hand in hand. Zopa offers Metro be the potential that is concerning them. expansion at Fidor, kicked off the debate in Bank clients a service that the bank itself Experts believe that 40-60% of global bank- support of the motion. would not be able to offer’. ing profits worth $1trn are at risk.” She argued that in spite of a rocky start, the Cadbury expressed his fears that tradition- relationship between fintechs and banks have The end of the ‘toothbrush era’ al banks are ‘having their no-frills moment, evolved and continue to evolve – with the In response, Simon Cadbury, director of strat- just like the national airlines in the 1990s. arrival of PSD2 – into a more symbiotic one. egy and innovation at Intelligent Environ- They’ve had to accept lower profitability and ments, made his case against the motion with remodel their proposition’. Fintechs and banks, a symbiotic relationship? five concise points. He considered that banks are unprepared Guibaud explained how fintechs were born, Basing his arguments on research from PwC to face the second stage of advancement of painting a picture of a change in consumer and McKinsey, he stated that fintechs are dis- fintechs. Indeed, the future of fintechs is behaviour over the past 20 years with the arriv- ruptive, steal profits, do not need banks and expected to be propelled by the proposition al of the internet and smartphones, allowing are a threat to the future of banking. As a of a launch that will create a central hub for customers to be permanently connected. result, the traditional players are left unde- fintechs called the marketplace bank. This led to the emergence of new agile com- cided and unsure of how to proceed. Cadbury explained: “The marketplace panies as banks struggled to keep up with the He said: “We’re undergoing a natural evo- banks will compete directly with the tradi- change. lution. You can describe the previous two or tional banks on core banking services with- “Banks took a while to adapt as quickly to three years as the ‘toothbrush era’, where out the need to build all the products. And on change as other sectors for a few reasons such fintechs have been taking one function and this model, there’s a very good chance that as legacy and strict regulation. Organisations performing it considerably better than any- they will actually scale much more quickly have a strong hierarchy and are not used to one else.” than we’ve seen historically.” listening to what customers want. Cadbury clarified: “Fintechs are typically As Cadbury’s speech came to an end, it “For fintechs, it is easier to swiftly develop bound to be light, free from the burden of was the turn of George Depastas, the head of new products and respond to customer needs meddlesome systems and have smart unbun- product and real-time analytics at Barclays, because of their new business model and bet- dled business models. The fintechs’ disrup- to point out the inaccuracies and supposedly ter customer experience,” Guibaud explained. She further outlined the banks’ and fintechs’ need for each other. On one hand, banks depend on fintechs to better connect with their customers and improve their understanding of their customer base. On the other, fintechs need the investment and brand that banks offer to assert themselves in the market. Partnerships between the two entities can come in the form of affiliations or through the banks’ use of fintechs’ already-developed-and- tested technology. Guibaud clarified: “Investments are a way for fintechs to reach out to other audiences that are not their main target audience. “It is also a way to experiment as it’s always

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EPI 350.indd 10 16/08/2016 10:00:49 Electronic Payments International THE DIGITAL BANKING CLUB FEATURE

ture of them, but once you zoom in on the teeth, they become threatening,” admitted Vella, insinuating that piranhas are the fin- techs and great white sharks are the banks. Vella concluded that we no longer need a middleman, such as the bank, in a world where we have diversity and choice. Jon Hall, in favour of the motion, fought back the opposition by playing into their analogy game. He decided to compare fintechs to Tesla, arguing that Tesla is a company that turned electric cars from geeky to cool and acces- sible. false arguments found in Cadbury’s speech. opinions. Hall explained that fintechs are to finan- “You’ve said that the essence of startups Parker dubbed banks the ‘manufactur- cial services what Tesla is to the car industry: is disruption. This is so last year; creation is ers of rich tea biscuits,’ and introduced fin- appealing to a niche market and developing the new bloc. techs as the ‘Tesco providing the rich tea through innovation and understanding of the “The big players in the market are not biscuits”’to explain how profits depend on customer. trying to chip-in the existing pipe, they are who knows the customer best and who con- Hall commented: “Fundamentally, fin- trying to create new markets,” announced trols the margins. techs are advancing in gaps. They are dealing Depastas. In short, Parker showed the dependence of with underserved markets, they are listening Indeed, Depastas is convinced that ‘the pie banks on fintechs for customer data. to what customers want and they are there is large enough to feed everyone. They don’t He stated: “Fintechs, with all their weird responding to customer needs. It is about a have to kill each other’. and wonderful logos, are building brands social purpose more than a numbers game.” Banks and fintechs have complimentary and emotional relationships to their custom- Hall disputed that by working with finan- sets of skills and resources that allow them er base. Banks are purely manufacturers; they cial services, fintechs were demonstrating to work together. Depastas called it co-com- have no understanding of where the market their maturity, sustainability and scalability. petition: “Cooperation with some elements is going and no idea what the consumer is He believed the recipe for success for banks of healthy competition.” looking for in the future.” was a combination of two things: “Financial The huge potential for them to be and Parker argued that fintechs could not be services need to be emotional and rational as remain friends comes from, as Guibaud men- considered friendly when they were effective- well. They need to perform and they need to tioned, two things. ly taking profits away from the banks. “A look good.” “For one, fintechs need the funding, profit pie was mentioned. It’s a bit like a bal- branding and established relationships the loon. I don’t believe that profits go up and up The bloodbath banks bring. The slow dinosaur banks on the until that balloon explodes. There is only a As moderator Douglas Blakey, group edi- other can benefit from the agile mindset and certain amount of profit available,” he said. tor of consumer finance titles at Timetric, cutting-edge technology the fintechs offer,” According to Parker, fintechs are now serv- opened up the floor to questions. The panel claimed Depastas. ing the profitable customers of that profit pie got their claws out to fight it out one last time Depastas further proved his point by while the banks are left with the unprofit- before voting on the motion. admitting that very few startups have actu- able customers: “[The banks] are left with When asked about how fintechs could be ally passed the 100,000 users threshold. the commodity-based wholesale business.” considered foe when they need such high He explained that these startups rely on As a dramatic conclusion to his speech, capital requirements to survive, Vella replied: banks’ brands to provide their customers Parker specified: “This lack of real customer “The aspect that you’re missing is time. with the trust and loyalty they desperately insight therefore becomes self-fulfilling. “When it is explained that there is a poten- need. “The less you understand about them tial to hack into the $1trn industry and that On the other hand, banks cannot survive today, the less you understand about them all the current players are dinosaurs, there is if they do not jump on the digital wave: they tomorrow and the less you know about them money to be had.” understand the urgency of investing in fin- in the future. Fintechs will leave with 60% of An audience member reiterated the ques- techs. your profits in the pocket.” tion: “Are they a foe now or in 20 years’ In his closing statement, Depastas conclud- Vella backed Parker’s arguments up by cre- time?” ed that the $20bn investment in fintechs by ating his very own analogy around sea ani- Vella took up the question once more: banks reflected the confidence banks have in mals. He first described the paradigm shift “You stole my thunder! They may appear to start-ups: “Fintechs have proven that essen- financial players are currently facing. be friendly at the moment, but time is the fac- tially they want to participate in the wider In this highly connected world where the tor that people are not considering.” ecosystem. They want to optimise processes global digital participation is unprecedent- Guibaud retorted: “Fintechs need larger and build on top of APIs.” ed, there is “in Murdoch’s words, a signifi- players over time. If you don’t have the capi- cant dynamic of the fast beating the slow,” tal, you need to stop. Biscuits, piranhas or electronic cars? explained Vella. “A lot of investment money needs to be Speaking for the opposition, David Parker, “We are no longer in waters that worry spent on marketing to actually reach out to CEO of Polymath Consulting, and Roy about great white sharks, but rather we are people and build a customer base.” Vella, digital expert and consultant, chose now scared of the little players taking little Another member of the audience added: original and quirky analogies to express their bites. Piranhas are cute when you see a pic- “Let’s assume it is 10 years from now.

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EPI 350.indd 11 16/08/2016 10:00:51 Electronic Payments International FEATURE THE DIGITAL BANKING CLUB

not fulfil certain services that fintechs offer. It is slightly to their detriment’. A member of the audience asked if innova- tion will bring the death of money licenses. Parker purported that they are increasingly easier to get: “It is easier to buy it off a manu- facturer. That is Tesco’s attitude.”

The aftermath As the debate came to an end and as the results were about to be announced, a mem- ber of the audience added that the IT depart- ments throughout large corporations are often the blockers of innovation. The battle had been fought and the audi- ence had made up their minds. Describe what the world would look like still customers of the big banks.” So, who is the clear winner? Prior to the after all these great partnerships.” Parker shut Depastas down by affirming: debate, the voting stood at 84% for the “[Fintechs and banks] will be able to go “Certain things are predictable. It’s very motion in comparison to 16% against the the extra step. Fintechs feel there is a gap in simple: when someone gets good service and motion. the market and can offer services that banks good products, they tend to go back. After the debate, the second poll resulted can’t; such as loans to high risk customers,” “Banks will lose the customer relationship with only 55% for the motion and a stagger- Guibaud replied. as fintechs gain that customer relationship.” ing 45% against the motion. Depastas regretted to say that it is ‘hard to Hall cut in to explain that ‘the future will It was decided at the beginning of the imagine the future in three years, even more be more diverse, but I don’t think it’s a ques- debate that the winner would be based on the so in 10’. tion of one or another. Banks need to be clear swing between the number of votes before He stated: “You go to banks for their over on what they are going to serve. Choice is and after the debate. all package. Insights, advice... Customers going to be phenomenal’. On that basis, the opponents of the motion want specific offerings from fintechs but are Meanwhile, Cadbury felt that ‘banks can- won the debate, with a swing of 29%. <

n DEBATE PARTICIPANT PROFILES FOR THE MOTION AGAINST THE MOTION George Depastas, head of product, real-time analytics, data products and Simon Cadbury, director of strategy and innovation, Intelligent Environments platforms, Barclays Depastas heads the real-time analytics product for Barclays Africa, driving the wider Cadbury is a product marketer and strategist with 18 years’ experience working for a innovation agenda and working closely with start-ups, to deliver cutting edge dynamic range of major international brands. customer experiences. Cadbury’s role is to work with Intelligent Environments’ investors to set and deliver the Depastas comes from an engineering background, and has experience in the areas of company’s mid- and long-term strategy, as well as overall responsibility for product digital user experience, business optimisation and innovation strategy. development and management for Interact, the company’s core product offering. Cadbury joined in 2013 from Lloyds Banking Group where he was responsible for payment technology, and also sat on the credit card division’s leadership team. Prior to this he worked on the launches of a number of firsts in new technology: the Blackberry (BT Cellnet), BT Openzone (BT Retail), 3G Live! (Vodafone Australia) and Sky HD (BSKYB). Sophie Guibaud, vice-president European expansion, Fidor David Parker, CEO, Polymath Consulting Guibaud started her career in investment banking in New York before joining a growth Parker is founder and CEO of Polymath Consulting, which has now delivered over 50 capital fund in Paris. Along with investing in startups, she advised them on their projects for clients in prepaid cards and emerging payments. The company’s current development strategy. work includes projects in the Middle East, US, Asia, Africa and Europe. However, wanting to be more involved in startup operations, she moved to London and Parker has an in-depth knowledge of payments and payment cards and is known for his was instrumental in launching HelloFresh, a Rocket Internet food subscription-based work with prepaid cards, mobile money/mobile wallets and M-pos. company. Parker has previously worked for companies such as the Gaming Bourse, the Pepper After heading product strategy and commercialisation at Bankable, a payment Corporation and Saatchi & Saatchi (Saudi Arabia). solutions company, she is now in charge of the European roll-out of Fidor. Jon Hall, MD, Masthaven Bank Roy Vella, digital expert and consultant Hall will lead Masthaven Bank, which has unveiled plans to become a new UK retail Vella is a digital entrepreneur and independent consultant to brands such as Visa, bank with a launch planned for the summer of 2016. Vodafone, GSMA, and small startups. Hall joined Masthaven in January 2015 from Saffron Building Society where he had Before offering his expertise at large, Vella served as leader of RBS global mobile been CFO since August 2004, and subsequently CEO from 2011. banking efforts. Before this, he spent five years at PayPal, starting out as director of Hall was part of the senior management teams with CT capital, a specialist mortgage business development in USA merchant services before leading the mobile payments lender and intermediary, Aviva and PwC, both in the UK and Bermuda. initiative across Europe. Prior to PayPal, Vella worked as VP of sales and marketing at 4charity, Inc., then as partner of Quantum Technology Ventures, a corporate VC firm focused on the storage industry.

12 y August 2016 www.electronicpaymentsinternational.com

EPI 350.indd 12 16/08/2016 10:00:59 SURVEY Electronic Payments International CHINA COUNTRY

China is looking at other options The share of the Chinese population aged 15 or above with a bank account increased from 63.8% in 2011 to 78.9% in 2014, according to the World Bank Global Findex survey. China UnionPay holds the entirety of the payment cards market, but consumers are beginning to lean towards contactless mobile payments

hina is Asia’s largest payment cards lets and the adoption of contactless technol- share, as they need to build up infrastructure market in terms of card transac - ogy have supported the growth of payment from scratch. tion value and volume, accounting cards since 2011. This trend is anticipated to for 74.7% and 41.2% respectively. continue over the next five years. The rising Contactless m-payments C acceptance of payment cards was also sup- The average annual spend per card is Contactless m-payments are expected to gain also high in China, at $1,501.40 – com - ported by the country’s improved payment prominence in China, as retailers and mobile pared to some of its regional peers such infrastructure. operators actively promote contactless tech- as Malaysia ($651.20), Indonesia ($290) nology to improve their business. Consumer and India ($88.70). China UnionPay maintains its stranglehold preferences for secure payment services that Cash, however, remains a popular pay- In China, CUP is the sole scheme provider allow them to purchase products are also ment instrument among Chinese consumers, of payment cards. According to central bank gaining ground. especially in rural areas. This was primarily regulations, all banks and card issuers oper- Companies are also embracing this tech- due to a lack of knowledge among the popu- ating in the country are required to route nology to benefit from the expansion of the lation about the benefits of electronic pay- their Yuan-based transactions through CUP’s m-payment market. The latest initiative was ments, and limited access to banking infra- electronic payment network. the launch of Apple Pay, Samsung Pay and structure. However, following a complaint filed by Huawei Pay in 2016, in association with As the government and banks began the US against China via the WTO with CUP. to provide basic financial access to the regards to discriminating against foreign Apple Pay entered the Chinese market in unbanked population, by expanding banking companies in 2012, the WTO directed the February 2016, in partnership with CUP. infrastructure, launching new branches and Chinese government to open up its payment To offer secure payments, the service uses making efforts to change consumer payment cards market to foreign operators. Conse- tokenisation technology. Upon adding a habits, payment cards gradually became quently, in October 2014, the Chinese gov- payment card to Apple Pay, no actual card more accepted, with their use consequently ernment announced its decision to allow for- numbers are stored on the mobile phone, and growing between 2011 and 2015. eign companies to set up their own payment instead a unique device account number is Consequently, the share of Chinese popu- card clearing businesses, effective from June encrypted and securely stored, with transac- lation aged 15 or above with a bank account 1, 2015. tions authorised with a one-time dynamic increased from 63.8% in 2011 to 78.9% in This move by the Chinese government is security code. 2014, according to the World Bank Global anticipated to intensify competition in the Following the launch of Apple Pay, Sam- Findex survey. Chinese payment cards market, and end CUP sung also launched its m-payment service in A rise in the economically active popula- dominance as the country’s only authorised China in March 2016, in alliance with CUP. tion and per capita disposable income, the card clearing organisation. However, Visa Previously in June 2013, CUP and China growing popularity of online shopping, the and MasterCard have a long way to go Mobile launched a NFC-based mobile wal- increased acceptance of cards at retail out- before they can make a dent in CUP’s market let, CUP Wallet, in 14 cities.<

n CHINA’S CARD TRANSACTION VALUE BY n CHINA’S CARD TRANSACTION VOLUME BY n NUMBER OF ATMS AND POS TERMINALS IN CHANNEL ($TRN), 2011–2020 CHANNEL (BILLION), 2011–2020 CHINA (THOUSAND), 2011–2020 ATM POS ATM POS ATM POS 2011 1.9 2.4 2011 10.3 6.4 2011 333.8 4,826.5 2012 2.4 3.3 2012 11.5 9.0 2012 415.6 7,117.8 2013 3.1 5.1 2013 12.9 13.0 2013 520.0 10,632.1 2014 3.6 6.9 2014 13.7 19.8 2014 614.9 15,935.2 2015 3.9 7.9 2015 14.7 24.6 2015 857.1 20,731.7 2016 4.3 9.1 2016 15.6 30.0 2016 1,025.6 24,915.2 2017 4.8 10.5 2017 16.5 35.5 2017 1,172.4 28,792.7 2018 5.2 12.1 2018 17.2 40.7 2018 1,286.7 31,851.3 2019 5.6 13.9 2019 17.9 45.6 2019 1,371.6 34,248.6 2020 5.9 15.8 2020 18.3 50.5 2020 1,419.3 35,986.6 Source: Bank for International Settlements and Timetric Source: Bank for International Settlements and Timetric Source: Bank for International Settlements and Timetric

www.electronicpaymentsinternational.com August 2016 y 13

EPI 350.indd 13 16/08/2016 10:01:02 SURVEY COUNTRY RUSSIA Electronic Payments International

Russia aiming to be a digital behemoth With digital wallets, m-payments services and contactless payment facilities all introduced during the last couple of years, is contactless technology about to gain prominence in Russia? And will it overtake or enhance the existing payment system that Russia had developed itself?

espite economic turmoil, the Rus - according to the World Bank Global Find- and MasterCard agreed to join the NPCS. sian payments card market grew ex survey 2014, with the percentage of the On January 12, 2015, MasterCard signed substantially between 2011 and Russian population aged 15 or above with an agreement to join the NPCS, while Visa 2015, in terms of both volume and an account at a financial institution increas- signed the agreement on February 19, 2015, D ing from 48.2% in 2011 to 67.4% in 2014. and from April 1, 2015, both companies value. Economic growth has been slow, mainly as a result of falling global com - These initiatives are anticipated to encourage started processing domestic card payments modity and oil prices, and US sanctions electronic payments and reduce dependence through the new system. against Russia. on cash. The Russian government took several ini- Gradual uptake of contactless technology tiatives to promote electronic payments in Russia develops its own domestic payment among Russian consumers the country during the last five years, in the system and payment card Contactless technology is expected to gain form of financial inclusion programmes, reg- Following an invasion on Crimea on March prominence among Russian consumers. The ulation to cap cash payments and the intro- 18, 2014, the US government imposed sanc- Russian government is also actively involved duction of a domestic payment card system, tions against Russia; consequently, Visa and in the promotion of contactless technology, the National Payment Card System (NPCS). MasterCard stopped processing card pay- especially in the areas of public transporta- A number of initiatives were taken to speed ments in Russia. To counteract this move tion. Banks and payment service providers up the pace of financial inclusion in the coun- by the US, the Russian government created are also keen to promote contactless tech- try. These include the appointment of non- the NPCS in April 1, 2014, and the national nology, and are launching a new service to banking agents, allowing them to offer ser- payment card, Mir was launched in Decem- increase its uptake. vices such as opening savings accounts, loan ber 2015. The Russian government plans to The latest of these is the launch of the Visa repayment, money transfers and tax pay- issue Mir cards on a large scale, and promote Qiwi Wallet in August 2015, which incorpo- ments. The ‘Financial Inclusion and Shadow the card among government employees in rates Visa’s payWave contactless technology Banking: Innovation and Proportionate 2016. A total of 35 banks have expressed by Visa and Qiwi. Previously in June 2013, Regulation for Balanced Growth’ seminar, their interest in issuing Mir cards, and seven Russia Standard Bank, MasterCard and featuring 100 participants from 28 countries, banks have already issued these cards during Mobile TeleSystems launched contactless was co-hosted by the central bank of Russia the pilot. m-payment service. Similarly, Mobile Tel- and the Alliance for Financial Inclusion (AFI) To give a fillip to the new payment system esystems (MTS), a leading telecommunica- in Moscow in November 2015. Previously, and Mir cards, the Russian government put tion operator, introduced contactless pay- in October 2014, the central bank of Rus- forth a condition for Visa and MasterCard ment facilities in Lukoil petrol stations in sia and AFI co-hosted a similar workshop in to make a security deposit equalling 25% of Perm and the Moscow subway in 2010, fol- Moscow to improve financial inclusion. their average daily turnover with the central lowed by Megafon in 2011, which launched Consequently, Russia has made substan- bank, if they wanted to operate in Russia. contactless payments in the St. Petersburg tial progress in terms of financial inclusion After a series of negotiations, however, Visa subway.<

n RUSSIA’S CARD TRANSACTION VALUE BY n RUSSIA’S CARD TRANSACTION VOLUME BY n NUMBER OF ATMS AND POS TERMINALS IN CHANNEL ($BN), 2011–2020 CHANNEL (BILLION), 2011–2020 RUSSIA (THOUSAND), 2011–2020 ATM POS ATM POS ATM POS 2011 488.9 114.9 2011 2.5 1.7 2011 1.9 2.4 2012 589.1 169.6 2012 2.9 2.9 2012 2.4 3.3 2013 674.2 255.5 2013 3.2 4.6 2013 3.1 5.1 2014 629.0 314.2 2014 3.3 6.8 2014 3.6 6.9 2015 428.5 272.1 2015 3.4 9.3 2015 3.9 7.9 2016 404.2 315.5 2016 3.6 12.2 2016 4.3 9.1 2017 439.3 410.1 2017 3.7 15.5 2017 4.8 10.5 2018 480.6 513.8 2018 3.8 18.8 2018 5.2 12.1 2019 535.8 637.7 2019 3.9 21.9 2019 5.6 13.9 2020 583.1 748.9 2020 4.0 24.7 2020 5.9 15.8 Source: Bank for International Settlements and Timetric Source: Bank for International Settlements and Timetric Source: Central Bank of Russia and Timetric

14 y August 2016 www.electronicpaymentsinternational.com

EPI 350.indd 14 16/08/2016 10:01:07 SURVEY Electronic Payments International VIETNAM COUNTRY

Vietnam’s fertile cards & payments field Nearly 50% of issued payment cards are dormant, and 90% of active cards are only used to make cash withdrawals at ATMs. A large proportion of Vietnam’s population lives in rural areas and depends on moneylenders and other informal providers to access financial services. Is Vietman primed for growth?

ietnam remains a cash-dominant been taking initiatives to improve banking consumer awareness of the financial system. country, with much of its popula- penetration in Vietnam. The government tion having no access to the for - plans to grow microfinance in phases by Growing middle- and high-income V mal banking system. The percent- 2020, by developing a safe and sustainable populations age of the population aged 15 or above financial system to serve low-income con- Credit cards accounted for 3.6% the pay- with a bank account was 30.9% in 2014, sumers and small businesses. ment card transaction value in 2015. Credit according to the World Bank’s Global This includes formulating microfinance- card penetration in Vietnam was 4.9 cards Findex survey. related guidelines, developing a credit per 100 inhabitants in 2015, lower than in Payment card uptake in Vietnam is low, bureau, and revising the legal framework for peer countries including Thailand (32.0) and with card penetration (cards per inhabitant) microfinance institutions and linking them to the Philippines (8.3). Despite its small size, at 1.03. This is a result of limited consumer other credit institutions. the credit card market offers growth poten- awareness of the benefits of electronic pay- To promote financial literacy, independ- tial, supported by rising middle- and high- ments, and insufficient access to formal ent consumer protection body the Vietnam income populations, and changing consumer banking. Standards and Consumers Association (Vina- habits. Nearly 50% of issued payment cards in stas) is educating consumers about savings, The rapidly growing middle- and high- the country are dormant, and 90% of active loans and other financial services. income populations have driven the growth cards are only used to make cash withdraw- The Women’s Union and the Vietnam of credit cards in Vietnam. According to a als from ATMs; only 10% are used for in- Farmer’s Union play key roles in promoting survey by the Boston Consulting Group store payments. The average number of financial inclusion by providing information (BCG) in 2014, Vietnam had the fastest- monthly card transactions at POS terminals about financial services to consumers, and growing middle-class and high-income pop- is very low, at 0.05, which is lower than in helping them overcome financial problems. ulation in Southeast Asia; this population is peer countries including Thailand, the Philip- These initiatives are expected to improve expected to reach nearly 30 million by 2020. pines, Cambodia and Pakistan. Consumer shopping behaviour is also However, with the government and banks n VIETNAM’S PAYMENT CARDS BY TYPE OF CARD changing gradually, with nearly 80% of making efforts to increase banking penetra- (MILLION), 2011–2020 consumers occasionally shopping at mod- tion, payment card use is expected to rise Debit Cards Pay Later Cards ern retail outlets such as supermarkets and over the next five years. hypermarkets. However traditional brick- 2011 39.5 1.1 and-mortar shops are the main consumer Government and other bodies’ efforts to 2015 90.4 4.5 sales points, according to the BCG survey. increase banking penetration 2016 105.9 5.7 Growth in modern trade combined with With the country’s large unbanked popula- deals, discounts and promotions offered by 2020 150.1 10.2 tion, financial inclusion remains a priority, retailers encourage consumers to use credit and the government and other bodies have Source: Source: Central Bank of Vietnam and Timetric cards more frequently.<

n VIETNAM’S CARD TRANSACTION VALUE BY n VIETNAM’S CARD TRANSACTION VOLUME BY n NUMBER OF ATMS AND POS TERMINALS IN CHANNEL ($BN), 2011–2020 CHANNEL (MILLION), 2011–2020 VIETNAM (THOUSAND), 2011–2020 ATM POS ATM POS ATM POS 2011 37.0 3.7 2011 424.1 15.0 2011 13.3 70.0 2012 41.7 4.7 2012 467.8 18.8 2012 14.3 104.5 2013 47.5 6.1 2013 526.6 24.3 2013 15.3 129.7 2014 58.6 7.5 2014 618.2 32.9 2014 16.0 172.0 2015 71.5 8.8 2015 670.0 56.0 2015 16.9 223.4 2016 82.9 10.4 2016 725.5 80.6 2016 17.8 278.2 2017 92.4 12.2 2017 782.0 109.8 2017 18.6 338.4 2018 100.3 14.2 2018 835.5 141.6 2018 19.3 400.0 2019 106.0 16.4 2019 883.3 175.0 2019 20.0 459.8 2020 109.9 18.7 2020 925.4 209.4 2020 20.7 513.3 Source:Central Bank of Vietnam and Timetric Source: Central Bank of Vietnam and Timetric Source: Central Bank of Vietnam and Timetric

www.electronicpaymentsinternational.com August 2016 y 15

EPI 350.indd 15 16/08/2016 10:01:08 Electronic Payments International COMMENT CXPARTNERS

PSD2 and Open Banking? Set to change everything The new payment services directive (PSD2) will make possible the kind of personalised banking experience you probably don’t yet have unless you are a high net worth individual. Account Information Service Providers (AISPs) will lie at the heart of this service. Mark Hicks, UX director at cxpartners, writes

n finance, really great service is only security and gain their permission to access in a very powerful position. Suddenly state- available to the wealthy, provided financial services on their behalf. When ments such as ‘we notice you are paying £ to by specialists who actively manage that’s done they will be able to provide a ser- a competitor credit card provider, shall we I clients’ wealth. However, if recent vice that will enable the consumer to view all move your balance interest free and guaran- history tells us anything, it’s that technol- of their multi-bank/financial service provid- tee our lower rate card?’ are possible. This ogy has huge potential to empower and er details in one place. AISPs will be able to allows customers to benefit from the kind of promote information equality for anyone interrogate an account, consolidate account proactive assistance and guidance that only with access to that technology. information in one place and acquire insight- high net worth individuals get today. A new PSD2 will be implemented in ful data about the customer and make pay- Let’s go a bit further, all financial service Europe in 2018 and will bring big changes. ments – or move money about – on their providers are keen to cut costs from their It is likely be good news for the customer and behalf. businesses so the kind of proactive service I present headaches for traditional financial The dominant AISPs will win trust and describe above is not delivered by people – services providers. With good and careful deliver value and convenience to the custom- it’s delivered by smart technologies. design, and some breaking wave technology er – that’s consistent with the web-enabled The dominant AISPs will be smart, vigilant, magic, PSD2 and Open Banking initiatives service revolution that we are living through proactive assistants that make the best of will make possible the kind of personalised at the moment. It will be no different for whatever resources a customer has; they will banking experience you probably don’t yet financial services. look for opportunities to do things the cus- have unless you are a high net worth indi- A pre-existing relationship with a customer tomer may not see or think about, or want to vidual. will give a wannabe AISP a great start – so think about; they will check the customer’s The legislation is designed to introduce Facebook, Google, Apple, Paypal, a host of money is optimised to achieve their goals and choice to the payments markets and so will comparison sites and customer friends will watch for things going wrong; they will sug- have a surprisingly deep and disruptive be well placed to capitalise on this oppor- gest new behaviours and better ways to do impact on the customer experience of finan- tunity. PSD2 will offer lucrative cross-selling things; they might be permitted to make cer- cial services. HM Treasury is keen to get for these new providers, and opportunities tain decisions or payments. They will behave things moving more quickly so UK business for banks to try to dis-intermediate others by a bit like very focused personal advisers. has a first-mover advantage. providing really attractive AISPs. Challenger If you trusted such a thing, you would wel- banks such as Starling and fintech start-ups come it and use it and so would many others. PSD2 is European, so what about Brexit? such as Oak have already made clear their It will offer the customer the kind of advan- At this point it’s hard to call. However, PSD2 intention of taking advantage of Open Bank- tage you would only get currently if you had will be implemented before any Brexit actu- ing and PSD2. a few million squirrelled away in a private ally occurs, and unless we return to a barter bank – with a personal banker thinking eve- economy, it’s difficult to see how we in the So what kind of service will AISPs offer? ryday how to help you get where you wanted UK could run a monolithic ‘closed bank’ in Firstly, customer needs will lie at the heart to go, even if it’s just until the next pay day. a continent of Open Banks. Arguably the of the service. AISPs will have to understand When third-parties such as Google, Apple, urgency to get PSD2 out there and adopted their customers’ needs, what their prefer- Paypal and Facebook are given the opportu- has become even more pronounced in the ences are and, for the first time, where the nity to become AISPs that aggregate informa- wake of the referendum. potential for customer value lies in the pre- tion across all their customers’ accounts and The real disruptor in PSD2 lies in the direct viously untapped opportunity to aggregate providers; track and interpret their behav- connection between retailers and the banks and monitor multiple accounts. We know iours and with that wealth of information that will be enabled using application pro- the value doesn’t solely lie in a bunch of pie- and intelligence suggest actions, products gramming interfaces (APIs). Many of us hold charts and histograms because the current and services – what do you think they will products across multiple banks and payment pre-PSD2 aggregators have tried that, with- do? enabled financial service providers, such as out great success. Instead, at the very least, it Working out how these systems should credit cards. Currently we have access to will have a natural language interface, pre- behave, look, feel and communicate; defin- the silos that are providers’ individual digi- dictive technologies and will be able to spot ing the nature of the dialogue between them tal eco-system. PSD2 will introduce a whole opportunities for the customer through their and us, and how that discourse will be man- new category of service provider called financial transactions. aged, is a topic that is engaging the minds of AISPs, which will join these silos up. Once the customer has agreed their bank- many experience design specialists across all An AISP won’t necessarily be a bank, in for customers ‘their bank’ is the one that sectors, not just financial services. The future fact it could be anyone who can authenticate holds their current account- can ‘see’ and is coming very fast, seize the day or regret the customer with the appropriate level of access all their accounts, this puts that bank you didn’t!<

16 y August 20166 www.electronicpaymentsinternational.com

EPI 350.indd 16 16/08/2016 10:01:09 Title Sponsor

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