www.cardsinternational.com Issue 548 / october 2017

NEW CARD, NEW TRICK?

ASSESSING THE BENEFITS OF INSTANT ISSUANCE

COUNTRY SNAPSHOTS FEATURE ANALYSIS

Key data and insight into The Uber Barclaycard co- claims a first card payments in Israel, branded . Next with the launch of cashback Ireland and Turkey stop, world domination? on debit cards

CI October 548.indd 1 16/10/2017 15:47:00 contents this month

NEWS COVER STORY 05 / EDITOR’S LETTER INSTANT ISSUANCE, 06 / DIGEST • Elavon, Poynt to offer smart in Canada THE NEW CARD TRICK • Wells Fargo adds NFC capability • Maybank teams with FC Barcelona • Mastercard opens Indian lab • Discover allows cashback redemption via • Evry signs five-year deal with Aktia • Commonwealth Bank to launch card with interest rate below 10% • Mastercard, Andhra Pradesh agree MoU • Mastercard, PayPal expand partnership • BNZ to add Apple Pay support • Bitflyer launches Visa prepaid card • Mobile to surpass credit cards by 2019: UN report 14 • CPP launches wallet-tracking card

Editor: Douglas Blakey Group Editorial Director: Director of Events: Ray Giddings +44 (0)20 7406 6523 Ana Gyorkos +44 (0)20 3096 2585 [email protected] +44 (0)20 7406 6707 [email protected] [email protected] Senior Reporter: Patrick Head of Subscriptions: Brusnahan Sub-editor: Nick Midgley Alex Aubrey +44 (0)20 7406 6526 +44 (0)161 359 5829 +44 (0)20 3096 2603 [email protected] [email protected] [email protected]

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2 | October 2017 | Cards International

CI October 548.indd 2 16/10/2017 15:47:37 contents october 2017 12 16

s to talk about cracking China, disrupting SWIFT,COUNTRY and leveraging SNAPSHOTS WeCha 16 / ISRAEL Israel is one of the most developed markets in the Middle East. Despite this FEATURES and numerous central bank efforts, however, consumers remain largely inclined towards 10 / CREDIT CARDS IN cash, with debit cards struggling in particular CANADA 18 / IRELAND Canadian credit card borrowing has risen Cash has been a preferred instrument for Irish sharply, and the Bank of Canada has consumer payments, accounting for 55.7% warned that rising household debt creates of the total payment transaction volume in vulnerabilities for the country’s financial 2016. However, its use is expected to decrease system. Robin Arnfield reports as electronic payments grow 20 / TURKEY 12 / UBER CREDIT CARD The Turkish cards market remains highly Undaunted by its recent licence problems competitive, with successful economic in London, ride-sharing business Uber performance, a young population and a well- Technologies plans to continue its apparent developed payment infrastructure making it quest for world domination by launching a appealing to banks and issuers co-branded credit card with Barclaycard this autumn. Robin Arnfield writes ANALYSIS 14 / INSTANT ISSUANCE Financial institutions that offer instant debit 22 / DEBIT REWARDS card issuance in their branches stand to Scotiabank has unveiled its new Scotiabank reap multiple benefits from the initiative, Passport , allowing Canadians to particularly in terms of increased card- use debit cards to earn travel rewards. The activation rates and higher interchange fees. 18 bank says the initiative gives it a competitive Robin Arnfield takes a closer look advantage, writes Douglas Blakey

www.cardsinternational.com | 3

CI October 548.indd 3 16/10/2017 15:47:43 Retail Banking: Europe 2017 15th November 2017 l Amsterdam Navigating the Transformation of Retail Banking in Europe

Top industry movers and shakers will meet to debate the importance of new strategies, business practices and partnerships in the industry. We invite you to become an active voice in this discussion to shape the future of retail banking.

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0817Timetric_RBE_Ad.indd 1 01/09/2017 10:38 editor’s letter

As connected commerce gathers pace will we see ATMs in branches?

Douglas Blakey, Editor

t Diebold’s International Management Seminar With PSD2’s imminent arrival, the four “global forces” in Amsterdam in mid-October – its 30th such combine and the financial sector needs to embrace this. A event but the first one as Diebold Nixdorf since He added: “Connected commerce means providing an the Wincor merger – particular attention was paid to app that isn’t only financial advice, but also provides tips ‘connected commerce’. for lifestyle. By 2018, a billion accounts’ information will However, ATMs may not be part of this connection – at least be available. So why not be the first to aggregate all this in-branch. Philippine Risch, director of ING’s branches and information into your app?” cash in the Netherlands, believed ING’s purpose was to help its Death of cash, no future for ATMs or cards – the daily pitch. customers stay ahead by being “a tech company with a banking Rarely does a day go by without some call or email from a licence”. breathless PR telling the writer about the imminent death of Is there a need for branches in an increasingly digital world? cash. Or a discussion with a banker arguing that consumers no Risch argued strongly in the affirmative. She said: “The ultimate longer want to use cash. Often of course they have a strong experience is digital mixed with human experience.” vested interest, such as a banker from one of the new startups However, she highlighted that the branch would only be that will not be rolling out its own ATMs. useful if it was there to satisfy a customer’s needs. Even if a The one consistent feature is their determination to ignore branch is not needed, customers can feel relieved to see one. a few facts that they dislike as they do not fit their own Additional services that a branch can provide are human help agenda. Such as the total value of notes in circulation in the and guidance. UK increasing by 10% last year to exceed £70bn ($92.9bn) for Risch added: “Sometimes people just even want to vent the first time. Or the total aggregate value of ATM withdrawals frustration at their bank and appreciate general attention. in the UK stubbornly remaining constant in recent years at The human contact makes the difference in a customer around £190bn each year. relationship. The human touch adds to the heart and the Sadly, UK banks missed a trick to boost ATM functionality by emotion of the digital relationship.” ING’s branches will now not adapting ATMs to offer the range of services readily found focus on being advice branches or experience branches. in Europe. The UK has a dismal record compared with the One thing that may not have a future in ING’s branch is continent in terms of ‘recycle’ ATMs. ATMs. Risch would not elaborate, but said cash will retain a It is a safe forecast to say that UK ATM numbers, currently large role in Dutch society, but will not play a huge part in standing at all-time high of about 70,000, have peaked. As in branches. Therefore, ATMs would eventually be removed. the Netherlands, we can expect to see fewer ATMs in the UK Christian Weisser, senior vice-president and MD for Europe, within the diminishing numbers of branches. Middle East and Africa at Diebold Nixdorf, said: “We see But if Payments UK is to be believed – and I have no reason four global forces in our space: automation, digitalisation, to doubt its forecast – cash will still account for about a fifth individualisation, and a strong trend to consume everything as of all payments in 10 years’ time. Unless, of course, the new a service. Cash as a service, ATMs as a service, everything is a digital entrants to the market succeed in denying consumers service – these forces drive retail and banking.” the of how they wish to pay; that would be somewhat Weisser described the future as not necessarily a ‘cashless’ ironic, given that public policy in the UK is to encourage the society, but definitely a ‘cash-lite’ one. new players to widen consumer choice. <

Get in touch with the editor at: [email protected]

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CI October 548.indd 5 16/10/2017 15:47:46 News | Digest

news digest

Maybank teams with Elavon, Poynt to offer smart FC Barcelona to issue payment terminal in Canada co-branded cards Payments company Elavon, a wholly owned The terminal’s user-friendly HQ subsidiary of US Bancorp, has partnered dashboard enables merchants to closely with California-based Poynt to offer the monitor sales and transaction activity Poynt Smart Terminal to businesses in from the terminal screen, or via the web Canada. or mobile device, and provides immediate Poynt has been designed as a wireless, insight into critical operational trends. dual-touch-screen smart terminal that Elavon’s general manager for Canada, enables businesses to accept payments Mia Huntington, said: “Poynt makes the anywhere. The payment terminal is suitable payment experience easy and engaging for Barcelona Football Club has teamed up with for businesses such as retail, lodging, customers, which is not something they’ve Maybank to launch co-branded credit and restaurants and health and wellness. experienced with traditional payment debit cards in Malaysia and Singapore. The new smart payment terminal terminals. The Malaysian lender will also act as a includes real-time reporting, apps and a “It builds trust and loyalty for businesses regional partner of the club until 2020, and built-in scanner and printer, as well as a while protecting their payment data. It is as the official FC Barcelona Bank in Malaysia second screen with private tipping options. also scalable, so it can flex and grow with and Singapore. The terminal allows customers to pay the business.” The agreement will allow Maybank to offer using chip and PIN, or contactless, Poynt CEO Osama Bedier said: “We a suite of FC Barcelona co-branded credit and including mobile payments using Apple Pay are proud to expand into Canada with debit cards to boost its position in the card and Android Pay. Elavon; we are thrilled to be the first to market in Malaysia. Maybank FC Barcelona It also features built-in Wi-Fi and offer businesses the ability to create the Cards will provide cardholders with rewards broadband capabilities which allow most modern payment experience for their such as a free-for-life annual fee, cashback on businesses to accept payments at the customers thanks to sleek features and retail spending and a 0.10%-per-year interest counter, in-aisle or at the table. ultimate payment flexibility.” < rate on savings account for debit card holders who sign up for the Maybank2U Premier Account online. Wells Fargo adds NFC-enabled FC Barcelona commercial director Xavier Asensi said: “It is with much pleasure that we ATM withdrawal capability welcome Maybank as a regional partner of the club in Malaysia and Singapore. Through this The US’s largest bank by branch numbers, code through the Wells Fargo mobile new partnership, FC Barcelona will be able Wells Fargo, has launched near-field banking app launched in March 2017. to continue to increase its popularity while communication (NFC) functionality for Wells Fargo’s head of virtual channels, getting closer to our fans in Malaysia and debit card customers at more than Jim Smith, said: “According to Singapore.” 5,000 ATMs in the country. Forrester, by 2021 mobile Maybank head of cards and financial The new feature will allow payments volume in the US services B Ravintharan: “This partnership customers to initiate an ATM will triple. Our customers are with FC Barcelona represents another key transaction via wearables or increasingly using mobile to step in the bank’s consumer banking strategy mobile wallets such as Apple manage their finances and to ensure that it continues to build on its Pay, Android Pay or Samsung make payments, which makes strong franchise in the region by offering Pay, as well as Wells Fargo’s own it ever important for Wells distinct value propositions for different Android wallet app. Fargo to provide our more than market segments. Bank customers will see a contactless 20 million mobile banking and mobile “We anticipate that we will be issuing symbol on the ATM display, and then enter wallet customers with a seamless mobile 15,000 new co-branded cards in the first year their Wells Fargo debit or EasyPay card PIN authentication and access experience at of launch and hope to be able to expand the to complete the transaction. our ATMs, online, and in our branches.” partnership to our other regional markets, NFC-enabled ATM terminals can The bank plans to upgrade the rest of where there is a demand and strong following currently be used without a physical card, the company’s over 13,000 ATMs with the of FC Barcelona, with Singapore being the with the generation of a one-time access hardware by 2019. < first overseas market in January 2018.” <

6 | October 2017 | Cards International

CI October 548.indd 6 16/10/2017 15:47:53 News | digest

Mastercard opens innovation lab in India Mastercard has established its first Using Mastercard’s Start Path launch of the first Mastercard Labs in India innovation lab in India, to focus on programme, the lab will work with startups is evidence of our commitment to designing digital payments, data solutions, financial to develop next-generation solutions. solutions that drive commerce and create inclusion, alternative payment methods and The new hub, which is Mastercard’s more inclusive societies around the world. security. ninth worldwide and second in Asia-Pacific, “By bringing together a team of Supporting the Indian government’s will build new concepts and innovations passionate individuals from diverse cashless agenda, the new lab in Pune, through incubation, proof of concept, pilot cultures and disciplines, we seek to further Maharashtra will work in collaboration and commercialisation for consumers and accelerate and enhance our ability to with financial institutions, merchant businesses in India. launch innovations that help us enhance partners and fintechs to help develop the Mastercard executive vice-president the lives of everyday Indians and help them digital economy while increasing financial Ken Moore said: “Learning, innovation and move closer to our vision of a world beyond inclusion. collaboration cannot exist in isolation. The cash,” Moore added. < Discover allows cashback EVRY signs five-year redemption via Apple Pay deal with Aktia Norway-based banking tech vendor Evry and Finland-based Aktia Bank have signed a five-year agreement under which Evry will provide the entire value chain for card payments to the Finnish lender. Under the deal, worth NOK150m ($18.7m), Evry will provide virtual debit and credit cards for Aktia’s digital wallet service, Aktia Wallet. Evry’s new software for digitising cards on mobile devices will issue new cards, enabling customers to pay with mobile phones at payment terminals that accept contactless payments globally. Evry will offer physical debit and credit cards to digital card payments and related services, including card administration, authorisation processing, transaction monitoring and security solutions that detect and prevent fraud. Aktia Bank’s director of loans and cards, US card issuer Services a unique code is generated when paying Anton Tulikoura, commented: “Aktia has announced that members can now for an item. continuously improves its redeem cashback bonus rewards for Commenting on the launch, Discover’s and products and their availability. We statement credit through Apple Pay. vice-president of e-business, Szabolcs therefore need a collaboration partner The new feature requires a Paldy, said: “Cashback Bonus redemption that leads the field in the development to be added to Apple Pay, the Discover through Apple Pay can happen in just two of card and payment solutions and offers mobile app, and a rewards balance higher touches for Discover card members. innovative and stable services. than the purchase amount. “We are committed to providing simple “We are working hard to offer Discover card members can redeem and valuable solutions to our customers new solutions that will make it easier cashback points by making a qualifying wherever and whenever they need them,” for our customers to manage their purchase greater than $1, selecting Tap Paldy continued. finances on a day-to-day basis, and this for Details under the Discover redemption “Customer experience hinges on collaboration with Evry will help accelerate message in Apple Wallet, and then tapping embracing mobile-first technologies developments in this area. to redeem the cashback bonus as a like Apple Pay, and this new ability will “The breadth of Evry’s deliveries mean statement credit in the purchase amount. make Cashback Bonus redemption even that we only need to have a relationship Apple Pay does not store users’ credit or easier and more convenient for our card with one collaboration partner in the card debit card details on their devices; instead members.” < area,” Tulikoura added. <

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CI October 548.indd 7 16/10/2017 15:47:57 News | Digest

Commonwealth Bank to launch card Mastercard, PayPal with interest rate below 10% expand partnership Mastercard and PayPal have expanded their digital partnership to include Canada, Europe, Latin America, the Caribbean and the Middle East and Africa. Both partners aim to improve customer choice, optimise the consumer experience and make Mastercard a favoured payment option within PayPal worldwide. The move follows the recent expansion of PayPal and Mastercard’s collaboration into the US and Asia-Pacific regions. Similar to earlier agreements, Mastercard will be presented as a clear and equal payment option in the PayPal Wallet, enabling Mastercard and its issuers to be easily identifiable when making payments. Users will be able to select Mastercard as a default payment option to facilitate the checkout process. Additionally, both Commonwealth Bank of Australia has is categorised automatically in the partners will work to use new Mastercard announced plans to launch a new credit CommBank App, allowing customers to payment flow technologies, in a bid card with an interest rate of less than 10% see where they are spending and compare to offer increased value to Mastercard and more control options for holders. expenditure across months. cardholders, financial institutions and The single-digit-interest-rate card, Commonwealth Bank’s executive general PayPal customers. designed to give customers more visibility manager, Clive van Horen, said: “We’ve Using Mastercard’s tokenisation services, and control over their personal finances, heard feedback from customers and PayPal will have the opportunity to expand will be available from early 2018. consumer groups and understand there’s a its POS presence. The collaboration will Applicable interest on the credit card will need to offer a greater range of affordable enable users to use a tokenised Mastercard be 9.90%, with an account-keeping fee of and easy-to-manage products. in a PayPal Wallet to make in-store A$5 ($3.92) per month. “We know there’s strong demand for purchases at over 6.5 million contactless As well as receiving real-time alerts for a simple credit card option, and we also locations worldwide. PayPal will also allow credit card repayments and high-value recognise we need to help our customers consumers to cash out funds held in PayPal transactions, cardholders will receive avoid credit card late-payment and accounts to a Mastercard debit card. notifications on overdrawn accounts. overdrawn-account fees. Masterpass will be offered as a payment Holders will also be able to lock, “The real-time alerts in our CommBank option for merchants that process block and limit transactions on cards, App give customers even more tools to payments through Braintree in Europe, including ATM withdrawals and overseas help manage their spending and avoid fees Latin America and the Caribbean, and the expendtiture. Each credit card transaction and charges.” < Middle East and Africa in addition to the US and Asia-Pacific. PayPal chief commercial officer Gary Mastercard, Andhra Pradesh sign MoU Marino said: “Today’s news is the latest in Mastercard and the state government of Mastercard president and CEO Ajay Banga a line of great partnership developments Andhra Pradesh (AP), India have signed said: “Around the world, Mastercard has with Mastercard. Together we expect a memorandum of understanding (MoU) partnered with governments to unleash the to accelerate digital payment adoption to make the state a cashless society and power and potential of digital transformation. across the world, improve the payment strengthen its foothold as a smart city. “We can do this by empowering small experience online, in-app and in-store, The MoU covers a two-year period and farmers to access new markets and financial and empower millions of consumers to aims to create Fintech Valley, an initiative to services through a digital marketplace created seamlessly manage and move their money.” support secure digital payments in the state. in India by our new Mastercard Labs. Mastercard international president Ann The collaboration will allow Mastercard and Banga continued: “We can build on six Cairns said: “People everywhere know the AP government to focus on smart transit transit programs in India with interoperable and trust the familiar Mastercard brand, solutions with advanced digital payment open platforms, which means ease and whether they’re paying in the physical or modes and transparent pricing for farmers via accessibility for people in using more than one digital world. Our expanded partnership safer and simpler pricing mechanisms. It will mode of transit, helping to make cities more with PayPal affirms our commitment to our also increase digital literacy and expertise. efficient.” < billions of cardholders across the globe.” <

8 | October 2017 | Cards International

CI October 548.indd 8 16/10/2017 15:48:00 News | digest

BNZ to add Apple Pay support for CPP group launches contactless payments in New Zealand wallet-tracking card

Bank of New Zealand (BNZ) is to add Apple Banking Group (ANZ) to offer Apple’s Pay support for its customers, allowing service in New them to pay with an Apple iPhone or Zealand. ANZ introduced Apple Pay in New Watch at a contactless terminal. Zealand last year. Scheduled for launch in October, Apple BNZ cards eligible for Apple Pay include Pay can be used to pay in-store, in-app and the BNZ Advantage Visa Platinum, BNZ online with a compatible iPhone or Apple Advantage Visa Classic, BNZ Advantage Watch device. Visa Business, BNZ Flexi Debit Visa, BNZ Once launched, BNZ will be the second Lite Visa, BNZ Visa Classic and BNZ Visa bank after Australia and New Zealand Platinum. <

UK-based CPP Group has launched a Japanese bitcoin exchange Bitflyer wallet-monitoring card, Lasu, which allows customers to cancel cards immediately if their wallet is lost. launches Visa-branded prepaid card The Lasu tracker card is integrated with Bitflyer, a Japan-based bitcoin exchange, limit of JPY1m per card. The card, which the thinnest Bluetooth tracker currently has launched a yen-denominated bitcoin does not charge sign-up or annual fees, available on the market, and CPP’s card- Visa-branded prepaid card. has a life span of five years and its balance blocking and replacement service. The Bitcoin Visa Prepaid Card allows cannot exceed JPY100,000. Balances will The card syncs with a smartphone app users to top up using Bitflyer or other be displayed in Japanese yen. Customers to ensure constant monitoring. If a user bitcoin wallets, and use the card at any are required to apply online. cannot locate their wallet or cards, they retail outlets that accept Visa cards. In September 2017, Bitflyer obtained a can be cancelled instantly through the Cardholders can load JPY30,000 license from the Japan Financial Services app or online. CPP will then contact the ($266.4) at a time. It has a monthly load Agency (FSA) to operate as a registered relevant card providers on behalf of the limit of JPY120,000 and a lifetime load virtual currency exchange. < customer to arrange to cancel and replace lost cards. The new product will be available in Mobile to surpass credit cards CPP’s international markets, following a beta launch in the UK. by 2019: UN report CPP Group product and marketing director Sid Mouncey said: “In our Mobile payment will surpass credit cards on delivery, and reliance on cash is even more ever-more-mobile lives, we expect to to become the most preferred way to pay pronounced in least-developed countries. do everything and anything on the go. for e-commerce by 2019, the United The report noted that in China, the That means carrying our worlds with us Nations Conference on Trade and preferred payment method as we move. Our research found that Development has said in a for business-to-consumer the prospect of losing a card or wallet report. e-commerce is Alipay, which is commonplace, and consumers want Credit and debit cards is used by 68% of all online to reduce the time taken to realise that accounted for nearly 51% shoppers in the country. their wallet is lost to prevent hassle and of all e-commerce payments In Kenya, mobile money is potential misuse. in value terms in 2014. more commonly used than “We’re really excited by the launch of However, their share is credit cards for e-commerce, Lasu. For over 30 years we have brought expected to drop to 46% by although cash on delivery peace of mind to millions of customers 2019 as e-wallets and other remains the main method. across the world in the event of card loss. alternative payment methods rise in E-wallets were the most popular Lasu provides greater control to prevent importance. method of payment for cross-border lost cards in the first place, but also Digital payments are dominated by credit transactions, although distributed ledger provides immediate resolution if those and debit cards in developed regions, followed technologies such as blockchain may become cards are lost or stolen. by e-wallets. However, in developing nations increasingly used for cross-border payments in “We have the experience, the scale and credit cards are rarely preferred as new online the future. the passion to provide this service and to and mobile payment methods are growing in “This technology can make online make sure that the things that matter in popularity, the report noted. payments safe, and being peer-to-peer, it is people’s mobile lives – such as their wallets In countries such as Egypt, around 90% less expensive than intermediated payment – are always with them, wherever they go, of e-commerce transactions are paid by cash platforms,” the report stated. < whatever they do.” <

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CI October 548.indd 9 16/10/2017 15:48:03 Feature | credit cards in canada

cash transactions,” says Christie Christelis, president of Canadian consultancy Technology Strategies International. “But now it’s more canada: about people switching from contact-based to contactless card payments.” While Canadian banks have been issuing contactless debit cards containing debit credit Interac’s Flash contactless application, CI understands they have been doing so gradually, rather than a wholesale migration to contactless debit. This means debit-preferred debt records consumers wanting to make contactless payments must use contactless credit cards if their debit card is still contact-based. “But the percentage of contactless credit card sudden growth transactions due to debit cardholders forced to do contactless credit card payments as they don’t yet have contactless debit cards, is small,” Canadian credit card borrowing has risen sharply, says Christelis. and the Bank of Canada has warned that rising The drawback for banks of offering customers the option of making contactless household debt creates vulnerabilities for the debit payments as well as contactless credit country’s financial system. Robin Arnfield reports card payments is that they risk eroding their interchange on contactless credit card payments. In Canada, debit interchange is a “ he Bank of Canada [BoC] has is set to decline significantly, accounting for fixed amount, while credit card interchange is been flagging the issue of elevated just 10% of spending by 2030. ad valorem. Thousehold debt for some time in its According to the Canadian Bankers Mastercard took an early lead in contactless bi-annual Financial System Review [FSR], Association (CBA), as at 30 October 2016 credit card payments in Canada, which meant published in June and December,” says a there were 75.3 million Mastercard and Visa that BMO , as a major BoC spokesperson. credit cards in circulation and 35.4 million Canadian Mastercard issuer, had to face this The BoC’s two FSRs in 2016 highlighted credit card accounts with balances in Canada. dilemma, Christelis says. “the evolution of financial system In the year to 30 October 2016, the net “Interac Flash is enabled on every new or vulnerabilities related to the high level of retail volume on these credit cards totalled replacement BMO debit card, but there may indebtedness of Canadian households and C$419.8bn, an increase from C$390.7bn a be some existing users with older contact-only imbalances in certain housing markets.” year earlier. cards since BMO didn’t force-issue new cards Potentially unsustainable house price rises to every customer,” a BMO spokesperson in cities such as Vancouver and Toronto DELINQUENCY RATE says. “Since June 2016, BMO now has have added to the risk factors for household approximately 2.9m Interac Flash-enabled borrowing in Canada. The 90-days-and-over delinquency rate – cards in the market, comprising 66.7% of our The Bank for International Settlements representing the percentage of outstandings at total debit cards.” (BIS) warned in September 2017 that there the end of the fiscal year – rose from 0.8% in According to Visa Canada’s VisaNet data, are early warning indicators in credit-to-GDP the year to 30 October 2016 to 0.95% a year there were 27 Visa payWave transactions per ratios signalling “vulnerabilities” in Canada. later, according to the CBA. second in March 2017 in Canada, or one It added that the stresses to the Canadian “In the past, we’ve seen debit card Visa payWave transaction every .04 seconds. banking system are linked to property price transactions moving to credit cards without In March 2017, Visa payWave transaction gaps above critical thresholds, a measure debt levels increasing,” says a penetration for total domestic, face-to-face linked to overheated housing markets. spokesperson. “We believe the consumer transactions was 41.7%, up from 31.1% in In March 2017, the Canadian Mortgage preference to use credit cards may be due March 2016. and Housing Corp., a government to other reasons: collecting points and Government agency Statistics Canada’s corporation, warned that the steady rise of rewards, ease-of-use for contactless, and the data indicates that in the second quarter of Canada’s household debt-to-GDP level was overall decline in the use of cash in favour of 2017, household credit market debt as a putting Canada’s long-term economic growth electronic payments.” proportion of household disposable income prospects at risk. The convenience of contactless credit (excluding pension entitlements) increased Historically, Canadians have been heavy cards, which do not require PIN entry, from 166.6% in the first quarter of 2017 to debit card users, but data from Canadian unlike contact-based cards, has contributed 167.8%, as household income (+1.2%) rose processor Moneris Solutions indicates that to the rise in credit card spending. “When more slowly than household credit market credit cards now dominate card spending in contactless credit cards first appeared debt (+1.9%). This means that in the second Canada. Moneris also says that cash spending some years ago, they definitely replaced quarter of 2017 there was C$1.68 in credit

10 | October 2017 | Cards International

CI October 548.indd 10 16/10/2017 15:48:04 Feature | credit cards in canada

CANADIAN CARD SPENDING DATA CREDIT CARD DELINQUENCY – VISA AND MASTERCARD Quarter Credit Share Debit Share delinquency rate net loss rate year period end (90 days+) (annualised) Q2 2017 64.6% 35.4% Jan 31 0.82% 3.10% Q1 2017 64.8% 35.2% Apr 30 0.80% 3.07% Q4 2016 63.8% 36.2% 2014 Jul 31 0.75% 3.01% Q3 2016 65% 35% Oct 31 0.78% 3.12% Q2 2016 64.84% 35.16% Jan 31 0.87% 3.47% Q1 2016 64.66% 35.34% Apr 30 0.81% 3.48% Q4 2015 62.7% 37.3% 2015 Jul 31 0.74% 3.30% Q3 2015 63% 37% Oct 31 0.81% 3.13% Q2 2015 58.84% 41.16% Jan 31 0.90% 3.40% Q1 2015 62.73% 37.27% Apr 30 0.87% 3.64% Q4 2014 63.3% 36.7% 2016 Jul 31 0.82% 3.50% Q3 2014 60.2% 39.8% Oct 31 0.87% 3.24% Q2 2014 59.7% 40.3% 2017 Jan 31 0.93% 3.55% Q1 2014 59.74% 40.26% Source: Canadian Bankers Association Source: Moneris Solutions Includes data from all Visa and Mastercard issuers

market debt for every dollar of household 21-22% of total credit card spending, which 4%, as some people think, interest rates will disposable income. According to Equifax isn’t as alarming as it might seem to be.” rise dramatically. But, if interest rates increase, Canada’s 2017 Q2 National Consumer Credit this will kill the housing market, which Trends Report, total Canadian consumer MACROECONOMIC FACTORS has really been a driver for the Canadian debt (including mortgages) climbed 6.2% economy.” to $1.8trn nationally from $1.67trn in the Christelis says credit card borrowing should When the Canadian economy tanked in the second quarter of 2016. be viewed in terms of macroeconomic factors, last recession, consumers found it very hard to “Even in the face of potential interest rate and is unconvinced by claims that Canada’s get credit cards. “Now banks are pretty much increases, consumers across Canada continue economy is set for significant growth. giving credit cards away,” Christelis says. to borrow and spend to some degree,” Regina “Some people are talking about 4.5% “People do realise they will be paying 20% or Malina, Equifax Canada’s senior director of growth in Canada, and that is not at all likely,” whatever on credit card loans. data and analytics, said in a statement. “Their he says. “I do not see where this growth will “But, if they see sharp rises in interest overall ability to pay back this money on come from. Canada has been in wonderland charges on their mortgages or lines of credit, time remains stable, though. As interest rates for the last six years due to low interest rates. this will make it hard for them to pay credit gradually rise, and borrowing costs increase, “Currently, the Canadian debt-to- card interest. If you are faced with paying your this trend may be impacted over time.” household income ratio is 170%, which is not or your mortgage, which Equifax notes that Canadian delinquency critical yet. If the economy does increase by will you pay?” < rates, which were already low, are moving in the right direction nationwide compared to previous trends. In the second quarter of q&a with rbc 2017, the average consumer debt (excluding What card payment trends has RBC seen among its Canadian customers? mortgages), increased to C$22,595 and the Our clients consistently say they look for credit cards offering great benefits that are relevant to them – like earning loyalty points redeemable for rewards suiting their tastes and lifestyle. overall delinquency rate fell to 1.09%. We know Canadians like being rewarded for using their credit card for everyday expenditures in Banking and Financial Statistics The BoC’s exchange for travel, merchandise, et cetera. September 2017 report says that in the second The growth of our retail cards portfolio is very strong, and the most recent Nilson data puts RBC quarter of 2017 was up 5.4% again as number one in purchase volume in Canada. from C$101.3bn in the second quarter of Has RBC noticed significant growth in Canadian customers moving from cash to debit or credit cards? 2016 to C$106.8bn, while mortgages rose The recent changes in the payments industry have accelerated with the advent of mobile and by 7.3% from C$1.11trn to C$1.18trn. contactless card payments. In addition to the added convenience of new payment methods, our Compared to the second quarter of 2012, clients increasingly look to be rewarded for their loyalty. credit card debt was up 29% in the second The changes shaping the rewards space today directly impact the experience customers receive from their program. RBC is continuously bringing personalised, flexible and innovative products, quarter of 2017, with mortgages up 34%. programmes and innovations that meet our clients’ needs. “We’ve been seeing a big rise in credit card We have increasingly noticed merchants are starting to offer more payment options, which further borrowing,” says Christelis. “There’s a lot of supports the increase in credit card usage. concern about this. But, as a percentage of Have contactless credit card payments taken a greater share of cash in Canada? credit card spending volumes, credit card We continue to see growth in contactless payments. We’re strong proponents of providing clients borrowing has stabilised in the past few years. with the ability to choose how they pay and providing convenient solutions to support their payments needs. < Credit card debt seems to be hanging around

www.cardsinternational.com | 11

CI October 548.indd 11 16/10/2017 15:48:05 Feature | uber credit card

product launch: uber readies credit card

Undaunted by its recent licence problems in London, ride-sharing business Uber Technologies plans to continue its apparent quest for world domination by launching a co-branded credit card with Barclaycard this autumn. Robin Arnfield reports

ccording to The Wall Street In the UK, Uber has a partnership with US-based payments analyst specialising in the Journal, both Uber and its rival Barclaycard, under which UK Barclaycard payments industry. A Lyft are planning credit cards for personal credit cardholders get a free Uber ride their US customers, with Uber opting for a in the UK, up to the value of £15 ($19.75), ‘LOYALTY 101 AT ITS BEST’ Visa-branded card. for every 10 rides paid for via Barclaycard An Uber spokesperson confirmed to CI the until 31 December 2017. “Each wants to get their users locked into accuracy of the WSJ report, but declined to The offer applies to any cities Uber operates using a particular service. If I have a credit provide details about the card. Lyft did not in worldwide. Also, under the agreement, card from one of those ride-sharing services, respond to CI’s requests for comment. first-time Uber users who add a Barclaycard or I’m going to be more inclined to stick with Despite regulatory challenges in some Barclays personal debit card to the app receive one over the other because of the rewards I’ll markets such as London, which recently up to £10 off each of their first two trips receive when I use that card to pay for rides. revoked Uber’s business licence, demand for booked through Uber. It’s Loyalty 101 at its best.” ride-sharing services seems set to grow. “In adopting this strategy [of credit card According to a report by UK-based Juniper INDUSTRY COMMENT issuance], Uber is following a path well Research, Sharing Economy: Opportunities, trodden in recent times by high-profile brands Impacts and Disruptors 2017-2022, the “Barclays is trying to incentivise its customers seeking to retain customer loyalty while number of ride-sharing drivers will increase to register their Barclays credit and debit cards developing additional revenue streams,” says from 4.3 million globally in 2017 to 8.6 for Uber payments, as a way to get them to Windsor Holden, head of forecasting and million by 2022. register their Barclays cards for other new consultancy at Juniper Research. The report predicts that ride-sharing is services that use card-on-file,” says Anthony “As Uber is now one of the top US brands set to represent 47% of sharing economy Pickup, an IT delivery specialist in retail – and one that generates significant per-user platform revenues by 2022. Ride-sharing payments at retailCURe, a credit union for revenues – it’s perhaps not surprising that it’s platform providers can expect revenues to UK retail employees. emulating companies such as .” almost double across the period, from $11bn Uber has an agreement with American “Uber’s plans to launch a credit card with this year to $19bn in 2022, Juniper says. Express in the US, under which Amex Barclaycard was announced during Barclays’ Platinum card members receive $15 in Uber earnings call in July 2017,” says Zilvinas PARTNERSHIPS credits for US rides every month, a bonus Bareisis, a UK-based senior analyst with $20 in December, which totals up to $200 Celent. In the US, Barclaycard offers co-branded per year. “While there are few details available, it credit cards with high-profile partners such as Lyft has a partnership with US airline seems like it will be a co-branded deal, so airlines Jet Blue and American Airlines, and Delta under which people linking their Delta will likely offer rewards and perks related to retailer Barnes & Noble. SkyMiles and Lyft accounts earn one mile for Uber services. Generally, people who hold According to Tiffani Montez, a senior every dollar spent on Lyft. co-branded cards tend to be amongst the most analyst at Boston-based consultancy Aite “It has almost become a game of one- loyal supporters of that brand.” Group, Barclaycard is among the top 10 credit upmanship between those two brands, Uber “This isn’t a real surprise, as both ride- card issuers in the US. and Lyft,” according to Will Hernandez, a hailing companies [Lyft and Uber] have

12 | October 2017 | Cards International

CI October 548.indd 12 16/10/2017 15:48:06 Feature | uber credit card

millions of riders, as well as opportunities to cross-sell services,” according to Raymond hail lebanon’s new prepaid king Pucci, associate director, research services The award-winning UberBLOM prepaid card launched in 2015 advisory service at Mercator Advisory Group. In September 2015, Uber partnered with well as parents wanting safe, reliable rides for “Competition is heating up between the Lebanon-headquartered lender BLOM Bank their children. two companies, and Uber has been stumbling to launch its first card-based product, the “The introduction of UberBLOM in Beirut, the UberBLOM prepaid card. of late due to some mis-steps of its own first card of its kind in the world, is further The first Visa prepaid reloadable card testimony to the added benefits Uber can bring making. So Uber figures a branded credit card developed exclusively for Uber passengers to Beirut and the support we have received in will be a valuable marketing and loyalty tool collected CI’s award for Product Innovation at the city,” Wakim explains. to not only keep existing customers, but also the CI Prepaid Awards 2016 in Dubai. The UberBLOM reloadable prepaid card, win back those who have driven off with Lyft. Sebastien Wakim, general manager at Uber which can be personalised, has an annual fee Beirut, says UberBLOM was developed in of $8 and offers all first-time Uber riders who “In any case, credit card networks and response to many requests received from the purchase the card their first two rides free of issuers will continue to love the high-volume public, especially among younger people, as charge. < payment transactions and the fees that go along with them.” events or Uber Eats. Because there is a price “We introduced the Square Cash Card for One potential market for Uber’s credit card war between Uber and Lyft and many ride all Square Cash customers in June 2017,” a is its drivers. “The Uber co-branded card is service customers are very price-sensitive, Square spokesperson says. a clever move on two levels,” notes Pickup. Uber needs to find ways to keep its customers “The physical card offers Square Cash “Uber drivers are micro-businesses with loyal. I could also see Barclaycard tying in customers another way to spend their balance, regular spending on fuel, etcetera. Secondly, some of its reward partners like airlines to the in addition to our virtual Square Cash debit Uber has to perform significant KYC on its Uber card.” card which was previously made available to drivers, and thus pre-checks these individuals our customers.” who may not have a large identity footprint in DEBIT CARDS While Square Cash funds can be transferred certain countries.” instantly to bank accounts, there is a 1% fee; Two other non-bank entrants to the cards next-day transfers to customers’ bank accounts REWARDS market are Square, which recently announced are, however, free of charge. The Square virtual an application for a US industrial loan debit card can be used to make online and Montez says the Uber-Barclaycard co-brand company licence, and Venmo. in-app payments. As an additional feature to card has the potential to offer more than just Square has launched a prepaid appeal to its younger demographic, it offers free Uber rides as rewards. card for users of its Square Cash money users the ability to make purchases with Apple “Uber is playing in a number of areas, such transfer service, which enables them to spend Pay at bricks-and-mortar retailers. as Uber Eats which involves ordering take-out the funds in their Square Cash account. “In the case of Venmo and Square’s debit food for delivery by Uber drivers,” she notes. According to US publication TechCrunch, cards, the play is a bit different from Uber Another business area is Uber’s e-commerce Venmo has invited some of its active US and Lyft offering credit cards, but loyalty is delivery service, UberRush. customers to join a beta test of its Visa- involved to an extent,” notes Hernandez. “Uber is working closely with branded debit card. The Venmo card will be “Venmo wants to give its users the ability entertainment venues to become the preferred issued by Metropolitan Bank through Shift to use the funds in their account whenever ride service or to offer discounts on tickets,” Financial, a company that provides physical they want, instead of waiting a day or two Montez continues. “I can see the Uber credit and virtual debit cards to payments providers, to transfer those funds to a traditional bank card offering rewards linked to entertainment the publication says. account. “Its debit card enables the user to utilise the funds stored in their Venmo account at bricks- and-mortar retailers. That should make banks nervous because it means lost transaction fees to Venmo. A Venmo-branded debit card also helps the company stay top-of-mind with its users,” Hernandez adds. “As for Square, it’s the same concept of giving users instant access to Square Cash funds without having to transfer that money into a traditional current account. A user doesn’t have to wait, and can enjoy the instant satisfaction of spending their money,” he explains. “Think about the college student in that situation: Do they really have time to wait a day or two for funds to clear if they need to use that money from their family to pay for books or food? Probably not.”<

www.cardsinternational.com | 13

CI October 548.indd 13 16/10/2017 15:48:07 feature | instant issuance

us financial institutions expand instant card issuance

Financial institutions offering instant debit card issuance in their branches reap multiple benefits, particularly in terms of increased card-activation rates and higher interchange fees. Robin Arnfield reports

ccording to Aite Group senior to be ready and willing to use digital debit and CHASE analyst Tiffani Montez’s report, digital credit cards.” A Instant Issuance: US Current Montez says FIs have found that it is more To the US banking industry’s general surprise, State Assessment, at the end of 2016, expensive to issue cards in branches than in Chase discontinued its in-branch instant debit 2,715 US financial institutions (FIs) had the mail, but that the customer satisfaction far card issuance programme in 2017. implemented instant issuance across 40,771 outweighs the cost of in-branch issuance. “It is Chase was one of the first US banks to branches. This amounted to 23% of total also about getting a card activated in front of introduce instant card issuance in 2012. FIs in the US. someone so they do not stick an unactivated Other US banks such as TD Bank and PNC The report predicts that, by the end of card in a drawer or delay a few days before continue to offer instant debit card issuance, 2017, some 3,312 FIs will have implemented activating,” she says. while Wells Fargo offers temporary non- instant issuance at 46,444 branches in the US. “Also, when you bring people into a branch, personalised debit cards in its branches. By 2021, this number will increase to 5,483 you can talk them through digital services “We offer instant issue debit and credit FIs at 67,075 branches, representing 55% like mobile banking and explain product cards across our 1,200-plus US locations,” a market adoption across FIs in the US, it says. features such as overdraft protection or reward TD Bank spokesperson tells CI. Montez estimates that 39% of US banks programmes.” “There was a lot of speculation about why with over $10bn in assets have adopted instant Montez says instant issuance will not rise Chase discontinued its instant card-issuance issuance, which will put pressure on smaller beyond 55% penetration in the US market programme,” says Montez. “It sounds like FIs to adopt the technology. by 2021, as digital issuance solutions will be it had more to do with cost. But Chase’s rolled out over the next few years and there move went against a strategic trend and what DEBIT will be less need for instant issuance. consumers expect.” The Wall Street Journalreported that Montez says the majority of FIs offering Chase had experienced fraudulent claims for instance issuance just do so for debit, not instantly issued debit cards in its branches credit cards. from people with false IDs. However, a “This is partly due to fraud prevention, and Chase spokesperson tells CI that this issue because they started instantly issuing debit as was resolved. “We found the issue and fixed pilots. Some FIS will eventually start issuing No one’s really the process almost two years ago, virtually credit cards in branches, while others are eliminating the problem, and well before we holding out for digital credit card issuance,” doing digital decided to stop offering the service,” she says. she tells CI. The Chase spokesperson goes on to explain “This means sending a virtual credit card issuance yet, that if customers lose their card, they can have direct to a mobile wallet and then mailing the a temporary ATM-only card printed at the plastic card. although it’s on branch, or they can simply use a human teller “No one’s really doing digital issuance yet, to withdraw or deposit cash. although it’s on everyone’s roadmap, and everyone’s roadmap They can also pay a small fee to have a new solutions will start to appear in the market card sent to them within 48 hours, if they do over the next few years. But consumers have not want to wait.

14 | October 2017 | Cards International

CI October 548.indd 14 16/10/2017 15:48:08 feature | instant issuance

CPI CARD GROUP

CPI Card Group offers the Card@Once in- branch personalised card-issuance platform. “Branches offering instant issue debit and credit cards eliminate the delay associated with postal delivery in instances of new accounts and compromised, lost or stolen cards,” says Rob Dixon, the business’s product director for instant issuance “Also, they allow customers to use their card immediately, increasing card usage and interchange revenue. Card@Once isn’t currently provided [outside the US] internationally, except at some FIs that serve military bases across the globe. Currently, we have over 1,100 banks and credit unions actively using Card@Once across over 5,100 branches.” cardholders on why a chip has been added – desktop PC-based instant-issuance solution Dixon says individual FIs offering instant higher security – and how to use it – dip it, for FIs. issuance need to implement effective ID not swipe it. According to Fiserv’s US 2016 consumer authentication procedures to ensure they issue “In addition, instant issuance has provided research, only 63% of cards are activated cards to the correct cardholders. “The Card@ FIs with the ability to respond in real time to on the day they arrive in the mail. Also, the Once application has reporting that can be security breaches at a time when those events majority of cards that are activated at home leveraged to assist programme managers to are at historic highs. are not used in the first 30 days, Fiserv says. identify potential fraudulent activity,” he says. “Not only is instant issuance of benefit in “This means that the cardholder activates “But the identification policies reside with the the traditional increased revenue sense, it helps the card when they receive it, but they do bank or credit union. the bottom line by minimising card portfolio not put it into their wallet and start using it,” “The majority of our customers report attrition caused by changes in technology due explains Sharon Pazlar, director of Fiserv’s that they experience operational savings from to fraud-related events outside the control of output solutions. instant issuance, but these are hard to estimate the issuing FI.” “When a card is activated in the branch, with the variance in card types and fulfilment Dixon says that the ability to issue virtual the customer can go next door immediately costs,” Dixon notes. credentials at the same time as issuing physical and start using it for purchases. If a card is not used, then the bank is not getting any interchange revenue on that card. We have found from surveys that cards instantly issued When a card is activated in the branch, the in branches have a higher transaction volume than cards activated at home” customer can go next door immediately and Pazlar says the cost of instant-issuance technology can be offset by additional start using it for purchases products and services sold to customers who come into a branch to activate their card. “Our research also found that 47% of consumers we interviewed said it would be “Traditionally, FIs have viewed their instant credentials has natural synergies to the very important to get their card from their issuance programmes from a traditional traditional instant-issuance value proposition. branch, and 36% said instant issuance would business case perspective: increased revenue “As mobile wallets and ‘tap and go’ influence where they bank,” she says. through higher activation and usage of the contactless payments catch on in the US, we Pazlar says that Rochester, Minnesota-based cards issued and top-of-wallet position.” anticipate the demand for virtual card issuance First Alliance Credit Union has found that, With consumers demanding convenience within instant issuance programmes to rise,” by deploying Fiserv’s tablet-based instant- and higher security, FIs are starting to see the he concludes. issuance technology, it brings more millennial benefit of instant issuance shift from those customers into its branches. traditional drivers to being able provide a FISERV “First Alliance gives the instant-issuance product via the branch that satisfies those tablets to concierges who greet customers customers’ demands, Dixon says. US banking software vendor Fiserv offers when they come into the branch,” she says. “Our [US] customers have seen their a platform called Instant Issue Advantage: “If the customer needs to activate a card, instant-issuance programs ease their customers Tablet, which lets FIs issue Visa- or then they will sit down with the concierge in a through the EMV transition by providing Mastercard-branded mag-stripe or EMV debit living room-style environment in the front of the FI with the opportunity to educate or credit cards using tablets. It also offers a the branch.” <

www.cardsinternational.com | 15

CI October 548.indd 15 16/10/2017 15:48:08 country snapshot | israel

country snapshot: israel

ISRAEL

Israel is one of the most developed payment card markets in the Middle East. Despite this and numerous central bank efforts, however, consumers remain largely inclined towards cash, with debit cards in particular struggling for acceptance

onsumers in Israel are prolific users transactions per card, as compared to Saudi Despite growth in non-cash payments of payment cards. Arabia with 99.0, Iran with 62.0, Kuwait in the last decade, Israeli consumers are C The country registered the with 54.9, the UAE with 49.8, Lebanon still strongly inclined towards cash. The highest frequency of payment card use in with 31.3, Oman with 22.4 and Bahrain Bank of Israel has made several regulatory comparison to its peers in 2016, with 155.4 with 18.1. interventions to boost electronic payments

value of credit tRanSfers value of payments value of payment cards

$bn $bn $bn 80 1,200 300 70 1,000 250 60

800 200 50

40 600 150

30 400 100 20 200 50 10

0 0 0

2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016

(estimated) (estimated) (estimated) Source: Central Bank of Israel, GlobalData Source: Central Bank of Israel, GlobalData Source: Central Bank of Israel, GlobalData

16 | October 2017 | Cards International

CI October 548.indd 16 16/10/2017 15:48:17 country snapshot | israel

and reduce dependence on cash, such as Debit card shares by issuer Debit card shares by scheme introducing a cap on cash transactions. Israeli regulators are looking to open

up competition by allowing new types of Others banking, such as mobile-only banks. 10.3% In February 2017, Bank Leumi launched Pepper, a mobile-only banking service offering savings and lending products. In January 2015, Bank Leumi launched 100% a service enabling personal customers Isracard from all banks to open an account via the 89.7% internet or mobile apps, without needing to visit a branch. DEBIT CARDS Source: GlobalData Source: GlobalData Israel’s payment cards market is dominated by pay later cards, with limited adoption of pay later shares by issuer pay later shares by scheme debit cards. All credit cards are a combination of deferred debit and credit cards, and

function more like charge cards. Generally, ICC Cal credit cardholders are billed for purchases 16.6% Others 27.1% at the end of a month; however, in Israel the total outstanding amount in a given Visa Isracard 45.0% month is automatically debited from the 51.3% customer’s current account. Bank Leumi 32.1% Adoption of debit cards remained low Mastercard as retailers were reluctant to accept them 27.9% due to the lengthy transaction process and high merchant service charges. While debit cardholders were charged immediately, amounts were credited to retailers’ Source: GlobalData Source: GlobalData accounts at a later date – similar to the timing of deferred debit transactions – typically after a month. BANKING SECTOR encouraged to become banks and will be In addition, retailers paid high merchant subject to various incentives such as lower service charges for debit card transactions, A key aspect of Israel’s payment cards capital requirements. at a similar rate to credit card transactions. market is the entrenched positions held by With no incentive to favour a debit the three main credit card issuers, owned ALTERNATIVES transaction over a credit transaction, by the country’s main banking groups. merchants had little incentive to accept The dominance of Isracard, Leumi Card A growing preference for secure electronic debit cards. and ICC Cal has long gone unchallenged payments and deeper smartphone Debit card penetration in Israel was 10.3 for several reasons, including the barriers penetration saw credit card companies, cards per 100 individuals in 2016, lower to entry for foreign issuers which lack the payment service providers and telecoms than peers Iran (337.3), the UAE (109.3), wide branch networks and distribution companies launch alternative payment Bahrain (97.4), Kuwait (93.1), Oman (85.8), points of domestic issuers. solutions, the latest being Mastercard’s Saudi Arabia (75.8) and Lebanon (33.4). Another factor is that Israel is, at least Masterpass in November 2015. The central government took several in card payment terms, a small country. Users can shop online without providing initiatives between 2012 and 2016 to This has not gone unnoticed by banking payment and shipping information on every curtail cash transactions and encourage regulators, which are cracking down on the purchase. For online payments, Masterpass debit card use, including requiring banks perceived duopoly of and allows users to pay from a list of pre-stored to issue debit cards free of charge to Leumi Card. As a result, both banks have cards and shipping information stored in a new and existing accounts, reducing been asked to separate ownership of their digital wallet. interchange fees on debit card transactions, credit card companies. The fast-growing e-commerce market and abolishing bank fees for debit card The country‘s third main credit card is also supporting growth in alternative transactions. These initiatives are expected issuer, ICC Cal will be unaffected for payments in Israel. PayPal, ICC Cal and to increase overall debit card penetration four years, when the issue will be re- mobile carrier service provider, Pelephone and use. examined. Standalone credit card units are have active presences in the country. <

www.cardsinternational.com | 17

CI October 548.indd 17 16/10/2017 15:48:20 country snapshot | ireland

country snapshot: ireland

IRELAND

Cash has been a preferred instrument for Irish consumer payments, accounting for 55.7% of the total payment transaction volume in 2016. However, its use is expected to decrease as electronic payments grow, although credit card growth remains sluggish

rish government initiatives to encourage Debit cards remain the preferred debit cards over , the removal of the use of card payments, a surge payment card among Irish consumers, stamp duty on ATM transactions, and the Iin consumer and retailer uptake accounting for 81.6% of the payment lowering of interchange fees to a minimal of contactless payments, and strong card transaction value in 2016. Rising 0.1% were key factors supporting use of preference for emerging payments such consumer use of debit cards for low- debit cards. as digital and mobile wallets are all value transactions, the growing banked High interest rates on credit cards and expected to reduce cash’s share in favour population, the government’s launch of the ready availability of overdraft facilities of electronic payments in Ireland over the the National Payments Plan to encourage also shifted consumer preference towards forecast period. use of electronic instruments such as debt-free financial products.

value of credit tRanSfers value of cheque payments value of payment cards

$bn $bn $bn 2,500 350 50

300 2,000 40 250

1,500 200 30

150 1,000 20

100 500 10 50

0 0 0

2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016

(estimated) (estimated) (estimated)

Source: ECB, GlobalData Source: ECB, GlobalData Source: ECB, GlobalData

18 | October 2017 | Cards International

CI October 548.indd 18 16/10/2017 15:48:31 country snapshot | ireland

Overall, the credit cards market Debit card shares by issuer Debit card shares by scheme

registered a sluggish CAGR of 0.59% Mastercard between 2012 and 2016 in terms of 1.3% transaction value. As bank lending slowed Others during the eurozone crisis, Irish consumers 12.6% began to limit credit card spending. Ulster Bank Banks also applied more stringent lending 8.6% Allied Irish Bank requirements, which increased the 41.9% adoption of debit cards, as consumers

preferred to spend only what they had. Bank of Ireland 36.8% Visa INTERNATIONAL ACQUIRERS 98.7%

International merchant acquirers are entering the Irish payment cards market

through partnerships and acquisitions. Source: GlobalData Source: GlobalData US-based acquirer First Data, with Allied Irish Banks, entered into a partnership pay later shares by issuer pay later shares by scheme with China UnionPay (CUP) in June 2014, to become the first merchant acquirer in Ireland to provide payment acceptance services for CUP debit and credit cards. Others In August 2014, Evo Payments, a leading 16.3% merchant acquirer in North America and Europe, partnered with Bank of Ireland to Avantcard Allied Irish Bank 11.4% 37.4% Mastercard Visa expand its merchant acquiring business in 46.3% 53.7% Ireland. The services are marketed through

Bank of Ireland Payment Acceptance, Bank of Ireland which is primarily responsible for offering 35.0% payment card solutions to Irish merchants. E-COMMERCE GROWTH

Source: GlobalData Source: GlobalData E-commerce in Ireland posted a CAGR of 11.77%, growing from $7.7bn (€7.3bn) in 2012 to $12bn in 2016. Rises in POS INSTALLATIONS DEMAND FOR PREPAID online and smartphone penetration, the number of online shoppers and the The number of POS terminals in Ireland A wide range of prepaid card variants availability of payment gateways supported rose from 152,144 in 2012 to 159,375 are issued on the Visa and Mastercard e-commerce’s growth in the country. in 2016, at a CAGR of 1.17%. This was networks in Ireland. Mastercard offers Leading e-commerce websites in Ireland supported by an increase in the number three types of prepaid card to Irish include Linwoods Health Foods, James of installations at smaller retail outlets, consumers, the Mastercard Everyday Whelan Butchers and McElhinney’s enabling growth in card-based payments. Money Prepaid Card, the Mastercard Gift Ballybofey Donegal. In addition, global POS terminal numbers are expected to Prepaid Card and the Mastercard Travel giants eBay, Apple, Zynga.com and Amazon increase further in the near future, to reach Prepaid Card. have presences in the country. 169,840 in 2020, as the number of retailers While banks in Ireland focus on Although payment cards were the most installing contactless POS terminals rises. promoting debit and credit cards, non- preferred mode of e-commerce payment, The growing payment cards market banking companies tend to focus on accounting for 75.4% of online payments has encouraged several mPOS solution prepaid cards. In 2009, An Post issued the in 2016, emerging methods such as digital providers to enter the Irish market. For first Mastercard-branded prepaid card in and mobile wallets are gaining prominence instance, Payleven launched a low-cost association with airline Ryanair. in e-commerce. Overall, digital and mobile mPOS terminal for $67.30 in March 2015. An Post offers the PostFX Mastercard wallets and carrier billing accounted for In October 2014, online payment solution Currency Card, which is issued free of 24.2% of the total e-commerce transaction provider Paysafe partnered with Irish charge with no top-up charges. It can be value in 2016, up from 12.8% in 2012. mPOS solution provider Handpoint to loaded with UK pounds and US, Canadian Several international operators, including introduce mPOS terminals. The terminals or Australian dollars. In 2013, the Good Masterpass, PayPal and Single-Click, are are compatible with Android and iOS Food Ireland Foundation offered a expanding into Ireland to benefit from the smartphones and tablets, and can be linked Mastercard-branded prepaid card, accepted lucrative market. via Bluetooth. at hotels, restaurants, cafes and pubs. <

www.cardsinternational.com | 19

CI October 548.indd 19 16/10/2017 15:48:34 Country snapshot | turkey

country snapshot: turkey

TURKEY

The Turkish cards market remains highly competitive, with factors such as successful economic performance, a young population and a well-developed payment infrastructure making it appealing to banks and issuers

urkey’s card penetration stands The average annual spend per card in the awareness it is gradually being displaced by at 2.3 cards per inhabitant – the country is higher than for most of its peers. payment cards. Thighest level among peers including Cash remains a key part of the overall With various marketing initiatives, such Poland, Russia, Romania, Ukraine, in Turkey, although with as the Bye Bye Cash campaign conducted Kazakhstan and Azerbaijan. time and increased financial literacy and by banks and the Interbank Card Centre

value of credit tRanSfers value of cheque payments value of payment cards

$bn $bn $bn 150 200 20,000

120 150 15,000

90

10,000 100 60

5,000 50 30

0 0 0

2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016

(estimated) (estimated) (estimated)

Source: Central Bank of Turkey, GlobalData Source: Central Bank of Turkey, GlobalData Source: Central Bank of Turkey, GlobalData

20 | October 2017 | Cards International

CI October 548.indd 20 16/10/2017 15:48:42 Country snapshot | turkey

of Turkey (BKM) to create consumer Debit card shares by issuer Debit card shares by scheme

awareness of the benefits of electronic Others payments, the share of cash-based 3.1% transactions is expected by fall further over the next five years. In contrast to payments at retail outlets, Ziraat Bankasɪ 23.9% most online payments are made with cards and, increasingly, alternative instruments. Others Visa 56.3% Mastercard VakɪfBank 46.4% 50.5% Contactless technology is gradually 10.0% gaining popularity in Turkey, with the number of contactless payment cards rising DenizBank from 10.3 million in 2012 to 29.1 million in 9.8% 2016; it is anticipated to rise further to 55 million by 2020. The rising number of contactless cards

and growing number of retailers accepting Source: GlobalData Source: GlobalData contactless payments will further drive payment card transaction values and pay later shares by issuer pay later shares by scheme volumes. Others CREDIT CARD REVIVAL 1.5%

Excessive use of credit cards and rising Yapɪ Kredi 20.5% individual and corporate loans have led to increased consumer debt in Turkey in the past five years. Others Mastercard Visa 50.6% Garanti Bank 46.1% 52.4% In February 2014, the Banking 15.2% Regulation and Supervision Agency (BRSA) Isbank placed limits on credit card use in relation 13.8% to cardholder income, and restrictions on instalment facilities for certain products. Also, the minimum monthly repayment for outstanding credit card debt was raised Source: GlobalData Source: GlobalData to from 25% to 30% of the total amount, and banks increased interest rates on credit card borrowings. These measures led to a 85.0% of the total e-commerce transaction Gift cards are slowly gaining popularity slowdown in credit card market growth. value in 2016. among Turkish consumers, as many However, in a move to spur consumer However, alternative payment individuals prefer gift cards for occasions spending, the BRSA relaxed regulations on instruments are gaining prominence, with such as birthdays and holidays. The cards credit card and consumer loans in 2016. banks, mobile network operators and can be loaded with the desired amount and According to the new guidelines, consumer payment solution providers launching then given as a gift. loan maturity limits rose from 36 to 48 new products. A number of alternative For instance, Yapı Kredi offers Visa months, and credit card purchases can be payment solutions, such as BKM Express, Electron World Gift card. Funds can be made in 12-month instalments, up from Masterpass, PayMobile and PayU are loaded at all World Member Business nine months. This measure is expected to present in the country. Locations. Similarly, Edenred Company provide a push to the country’s credit cards Mobile wallets, digital wallets and carrier provides the Mastercard Ticket market. billing collectively accounted for 7.3% of Compliments gift card that can be used at the total e-commerce transaction value in over 1 million terminals. ALTERNATIVES GAIN 2016 – up from 1.2% in 2012. In addition to retail customers, a number of prepaid cards are offered to corporate The fast-growing e-commerce market is PREFERENCE FOR PREPAID customers in the form of travel, payroll and acting as a driver of payment cards market business cards. in Turkey. E-commerce registered a CAGR The Turkish prepaid cards market recorded For example, Garanti Bank offers of 32.88% in the space of five years, rising a significant CAGR of 16.96% between the Corporate Travel card, which helps from $7.8bn (TRY27.9bn) in 2012 to 2012 and 2016. employees to effectively manage travel and $24.3bn in 2016. A large unbanked population drove other expenditure. Similarly, Best Western Conventional instruments, including demand for prepaid cards in the country, Turkey, a leading hotel chain, offers prepaid payment cards, remain the preferred mode as the unbanked population accounted for corporate travel cards, which are available of payment for e-commerce, accounting for 42.9% of the total population in 2016. in multiple currencies. <

www.cardsinternational.com | 21

CI October 548.indd 21 16/10/2017 15:48:45 analysis | canadian debit rewards

The Scotia Momentum Mastercard Card earns 1% cashback on gas, grocery scotiabank claims and drug store purchases and recurring payments, plus 0.5% on everyday purchases thereafter, with no annual fee and no limit on cash back. • Scotiabank has updated its credit travel first in debit offering with another card option: The Scotiabank Card has been relaunched as a no-annual-fee travel credit card that enables customers to earn card rewards Scotia Rewards on everyday purchases. LOVE AND LOYALTY Scotiabank has unveiled its new Scotiabank Passport The Canadian love of rewards programmes debit card, allowing Canadians to use debit cards to earn is evidenced by a rise of 25% in total travel rewards. As the only Canadian financial institution programme enrolment over the past four years to offer entertainment, cashback and now travel rewards to 12.2 programmes per member The cumulative points liability for all on debit, Scotiabank says the new card initiative gives it a programmes in Canada is estimated to be competitive advantage, writes Douglas Blakey valued at roughly C$16bn, according to Bond Brand Loyalty. This value represents both risk and ighty per cent of consumers want debit purchases. Every debit card purchase opportunity for loyalty operators – redeeming to be rewarded for their business, offers one Scotia Rewards point for every even a small proportion of these points would Eaccording to the 2015 Financial C$5 spent. The card features a bonus likely create many great member experiences, Consumer Survey, and debit rewards are introductory offer of up to 10,000 points; however the sheer value of this unredeemed unique in the Canadian market. • Scotiabank GM Visa Business Card. currency highlights the importance for loyalty Canadian debit cardholders can now Business owners can now separate business operators to offer cost-effective redemption maximise the rewards they earn on everyday and personal expenses while earning GM options. purchases, according to Scotiabank, with its Earnings towards the purchase price or The fact that Canadians have collected new Scotiabank Passport Debit Card. lease of a new Chevrolet, Buick, GMC and not redeemed such a high level of points In a May 2017 survey, The Battle for Love or Cadillac. Business owners earn 5% suggests that programmes could be doing a and Loyalty, sponsored by Visa and published in GM Earnings on the first C$10,000 much more effective job of engaging members by Bond Brand Loyalty, Scotiabank was spent annually on their card, and 2% on and driving redemption behaviour. ranked first by customers on all rewards everyday purchases thereafter, with no Around 40% of members do not have a metrics, including ‘programme satisfaction’ earning or redemption caps. redemption goal; in other words, they do not and ‘likelihood to recommend. • Scotia Momentum Mastercard. This have an intended use for their accumulating “We know that Canadians are increasingly Mastercard credit card launches this points. Members without a goal are 10% less looking to be rewarded for their business in a quarter and is designed to cement satisfied, suggesting that the simple process meaningful way,” says Mike Henry, executive Scotiabank’s position as the first financial of encouraging members to set a redemption vice president, retail payments, deposits and institution in Canada to offer customers objective can drive up member satisfaction. unsecured lending, Scotiabank. the choice of rewards cards from all three However, the number of programmes in “Our new Passport Debit Card strengthens credit card providers: American Express, which members are active, meaning they our travel rewards offering to one of the best Visa and Mastercard. have earned or burned programme benefits or in the industry. By offering a variety of reward rewards, is virtually unchanged at just under options on both debit and credit cards, and 7.2 (60%). with new cards added to our portfolio, we are The Bond report suggests that this means providing customers more flexibility in the reward programme members have an way they earn and more choice in how they interest in continuing to enrol in additional can redeem their rewards.” programmes, yet their capacity to engage has According to Scotiabank, the keyword is reached a threshold. ‘choice’: choice in rewards and choice in how The Bond report surveyed over 28,000 customers want to be rewarded. consumers earlier this year. In the best The products launching or relaunching this Canadian co-branded debit card survey, PC quarter include: Financial’s debit card ranked first ahead of • Scotiabank Passport Debit Card. Use Scotiabank’s Scene debit card and Bank of debit to earn travel rewards on everyday Montreal’s BMO Air Miles debit card. <

22 | October 2017 | Cards International

CI October 548.indd 22 16/10/2017 15:48:45 Simple, secure and effortless digital solutions for fi nancial services organisations

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