Visa's B2b Connect Looks to Change the Game in Cross-Border Payments

www.electronicpaymentsinternational.com Issue 386 / august 2019

CHAIN REACTION

VISA’S B2B CONNECT LOOKS TO CHANGE THE GAME IN CROSS-BORDER PAYMENTS

FEATURE INSIGHT COUNTRY SURVEYS

How contactless wearable ISO 20022 will bridge Market analysis and payments are now at the a fundamental gap in payments data for Japan, front of most banks’ minds r-l;m|v1ollmb1-ঞom Luxembourg and the UK contents this month

COVER STORY NEWS 11 05 / EDITOR’S LETTER 06 / DIGEST • NatWest, RBS suffer outages as millions struggle to access accounts • Wirecard partners with emonvia to digitise charging stations • Noor Bank partners with UnionPay for QR-based payments • StanChart and SAP Ariba agree partnership • HSBC signs licence with Australian fintech Identitii • Square integrates with POS software Goodtill • Melissa launches technology to ease ID verification • FreedomPay and Vista to collaborate in UK and Europe • JPMorgan to close Chase Pay app in early 2020 VISA B2B CONNECT 06

Editor: Group Editorial Director: Director of Events: Douglas Blakey Ana Gyorkos Ray Giddings +44 (0)20 7406 6523 +44 (0)20 7406 6707 +44 (0)20 3096 2585 [email protected] [email protected] [email protected]

Senior Reporter: Sub-editor: Head of Subscriptions: Patrick Brusnahan 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]

Junior Reporter: Publishing Assistant: Sales Executive: Evie Rusman v;m- ;उbul;m1b Jamie Baker +44 (0)20 7406 6701 +44 (0)20 3096 2633 +44 203 096 2622 [email protected] [email protected] [email protected]

Customer Services: +44 (0)20 3096 2603 or +44 (0)20 3096 2636, [email protected]

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2 | August 2019 | Electronic Payments International contents august 2019

COUNTRY SNAPSHOTS 17 19 / JAPAN Despite lower penetration, credit cards are the preferred card type, accounting for 98% of the total payment transaction value in 2018. Their popularity among consumers is largely a result of associated reward programmes 20 / LUXEMBOURG Luxembourg’s payment card market is mature, with a high penetration rate of 4.6 cards per inhabitant. Cards accounted for 54.1% of the total consumer payment transaction volume in 2018 21 / UK The UK payments market is highly mature – arguably even overserved by its financial institutions. There were more debit cards in circulation than individuals in the UK in 2018, by a considerable margin ANALYSIS FEATURES 21 10 / SPORTS SPONSORSHIP 11 / VISA B2B CONNECT Sponsorship has become an important tactic Visa’s blockchain-based B2B Connect for payments service providers that are network provides a way to process high-value looking to gain some extra recognition and corporate cross-border payments globally, appeal to sports fans. Evie Rusman analyses without needing correspondent banking some of the biggest deals currently in place relationships. Robin Arnfield reports 14 / WEARABLE TECH With ever-growing advances in technology, contactless wearable payments are now at the forefront of most banks’ minds. Evie Rusman looks at the latest trends in the sector, and speaks to industry experts about its future 17 / SCA ROUND-UP Over the last few weeks, SCA has caused something of a headache for the payments industry. Countries are now increasingly planning to delay the new regulations. Evie Rusman and Asena Değirmenci investigate INDUSTRY INSIGHT 19 22 / CAPCO ISO 20022, the new standardised messaging scheme for financial services, will bridge a fundamental gap in payments 14 communication. Alex Yip, consultant at Capco, looks at the potential benefits

www.electronicpaymentsinternational.com | 3 HEAR ҋ NETWORK ҋ DISCOVER ҋ CELEBRATE Leasing Life Conference & Awards 2019 Barcelona, Spain ҋ 28 November 2019

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Has Australian BNPL reached critical mass?

Douglas Blakey, Editor

et me take you to Australia for a moment. The buv|o@ķ1omvb7;u|_;o;u-ѴѴl-uh;|ĺ$o|-Ѵ|o|-Ѵ local buy-now-pay-later (BNPL) sector is worth v-Ѵ;vbmv|u-Ѵb--m7;,;-Ѵ-m7|o|-ѴŪѶĺƓ0mĺ"oķ-v L a glance. -Ѵ;uvom-u];vķ-11om|v=ou-l;u;Ɩѵ0-vbv BNPL players allow shoppers to purchase products robm|vbml-uh;|v_-u;ĺ"r;1bC1-ѴѴ-vu;]-u7v[;ur-ķb|_ without paying up front. And crucially, the consumer avoids v-Ѵ;vo=ŪƓĺƒ0mb|;mfov-0o|ƓƖ0-vbvrobm|vo=|o|-Ѵ the regulatory hurdle of applying for a credit card or loan. v-Ѵ;vĺ u|_;ulou;ķ-Ѵ;uvom1-ঞomv|_-|[;ur-Ľvu-|; $o0;=-buķ|_;u;bv-v|uom]rb|1_ĺ"|-ঞm]|_;o0bovķ o=]uo|_bmƑƏƐƖ_-vvѴo;70-uom7|oŊ|_bu7vĺ v]uo|_r;-h;7Ĵ-_ث-technology is making electronic payments easier, and the [;ur v;u;r;ub;m1;1omঞm;v|oblruo;-|vr;;7ĺmѴbm; $_-|0;]v|_;t;vঞomĹ_-v[;ur-Ľvr_;mol;m-Ѵ]uo|_ v_orrbm]1omঞm;v|ovo-uķ-m7v|u-Ѵb-m1omvl;u |o7-|;-Ѵu;-7r;-h;7ĵ||_;v-l;ঞl;ķom;lb]_| 1omC7;m1;bm|_;bm1l0;m|0-mhv|ooh-_-ll;ubm] rom7;ub=[;ur-Ľv-m7b|vr;;uvĽmb1_;bm|_;l-uh;|bv at the recent Royal Commission. This all combines with going to remain limited to certain market segments – a evidence that younger adults are less keen on credit cards |rb1-Ѵ;-lrѴ;oѴ70;ol;m-];70;|;;mƐѶ-m7ƒƔĺ |_-m|_;bur-u;m|vĽ];m;u-ঞomĺ ѴѴ|_;_bѴ;ķ7;0b|1-u7|u-mv-1ঞomv]u;0Ɛƒѷbm $_bvbv_;u;b|];|vbm|;u;vঞm]ĺ$_;u;bv-m-u]l;m| ƑƏƐѶĺ$_-|bv|_;=-v|;v|u-|;o=]uo|_bm=ou;-uvĺ that Australian BNPL vendors will transform how As Halverson comments, it hardly suggests that BNPL is Australians pay for things. Similar comments apply to ;Ѵblbm-ঞm]o|_;u;Ѵ;1|uomb1=oulvo=r-l;m|ĺ consumers in New Zealand, and once these markets are $_;0vbm;vv0-vb1vo=-u;|_-|-ŪƐƏƏv-Ѵ; 1omt;u;7ķ|_;u;bvv1or;=oubm|;um-ঞom-Ѵ;r-mvbomĺ |rb1-ѴѴ7;Ѵb;uvŪƔbmu;;m;-m7ķ_or;=ѴѴķŪƏĺƑƏ If analyst enthusiasm is borne out, then there is an bmruoC|ĺѴm|Ѵķ0vbm;vv;v-u;;uŊ_b]_ŊoѴl;ķ obvious threat to growth rates for all other electronic ;uŊѴoŊl-u]bm0vbm;vv;vķvo-7uoro=omѴom;ou|o r-l;m||r;vĺomvb7;u|_;;m7ou[;ur-ķ=ou;-lrѴ;ĺ basis points is a major factor. It derives around 80% of its revenue from vendors; the rest mƑƏƐƖķ[;ur-Ľvv-Ѵ;vbm,;u;ŪƓĺƒ0mķ0|b|v comes from late payment fees from customers. l-u]bm7uorr;7vb0-vbvrobm|v=uolƔĺƑѷbmƑƏƐѶ|oƓĺѵѷ [;ur-v_-u;vѴbv|;7bmƑƏƐѵ-|ŪƐŐŪƏĺѵѶőĸ0Ѵ-|; bmƑƏƐƖĺmu;-Ѵlom;ķ|_-|l;-mvѴov|u;;m;o=ŪƑƓlĺ ]v|ķ|_;[;ur-v_-u;rub1;_-7vo-u;7r-v|ŪƒƏĺ v-Ѵ;uvom-u];vķ-fobm|l-uh;|1-ro=ŪƐƏĺƓ0mbv- $_;u;bvķ_o;;uķlou;|o|_;l-uh;||_-mfv|[;ur-Ĺ huge bet on this small tech sector. He tells EPI: “There is no Ѵo1-Ѵub-Ѵ,brom;bv]uobm]-|r-1;ķ-m7-m;vঞl-|;7 market globally that has reached this level. You have to go ƐƏѷo=v|u-Ѵb-m1omvl;uv-u;-Ѵu;-7v;uvo=;b|_;u 0-1h|o&"ƑѴ;m7;uvbmƑƏƐƒŊƑƏƐƓ=ou-vblbѴ-u000Ѵ;ķ [;ur-ou,brom;ĺ and that ended in tears.” Zip’s service is already all over Australia, and earlier this ;-ub|-mmom1;7|_-|b|_-7vb]m;7ro;uƐƏķƏƏƏu;|-bѴ BNPL – SALES VS MARKET CAPITALISATION partners. Its customer numbers approach one million. July 2019: Visa enters the sector ANZ BNPL 2019 sales share ASX market cap $_;rovbঞom0;1-l;;;mlou;bm|;u;vঞm]bmѴb|_ [;ur-Ŋ,omѴ A$4.3bn 51% A$8bn news that Visa is to enter the BNPL sector. This caused an Flexi A$2.4bn 29% A$720m bll;7b-|;ƐƏѷ7uorbm[;ur-Ľvv_-u;rub1;ķ-Ѵ|_o]_b| ,brom; A$1.1bn 13% A$1.32bn has since more than recovered. So does this mean BNPL is Latitude A$0.2m (e) 2% N/A u;-1_bm]1ubঞ1-Ѵl-vvĵubv|_;u;-m-u]l;m||_-||_bvbv -ro|;mঞ-ѴCm|;1_000Ѵ;ĵ-lo0Ѵb];7|omo|;7v|u-Ѵb-Ŋ Others A$0.4m (e) 5% Splitit, Sezzle A$336m 0-v;7-m-Ѵv|u-m|-Ѵ;uvomķ -m7 -|1;-m Total A$8.4bn 100% A$10.37bn !o1_;ķ=ouv_-ubm]vol;C]u;vĺ "ou1;Ĺ1;-m!o1_;

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

www.electronicpaymentsinternational.com | 5 News | Digest news digest -|);v|ķ!"v@;ul-fouo|-];v-v millions struggle to access accounts NatWest and Royal Bank of Scotland have apologise for the inconvenience caused. We towards to online and app-based banking, suffered major service outages to their online are aware of the problem and are working hard they must make sure that their systems are banking platforms. to fix it.” ready when disaster strikes. If not, they risk Complaints about the outages first appeared Both NatWest and RBS said the mobile upsetting customers, which may result in at 9am on Tuesday 27 August. app remained unaffected and urged reputational damage.” Millions of customers were left customers to use that instead. Outages such as this have become unable to access their accounts, The incident followed a increasingly common in the banking industry, with many taking to Twitter to host of issues for NatWest resulting in calls for institutions to invest in express their concerns. and RBS over the past few necessary preventive measures. One customer commented: months. According to the Bradley added: “Banks need to turn to “This really isn’t good enough. BBC, NatWest experienced 25 solutions that prevent IT disasters from This is the first day after the outages during the 12 months to occurring in the first place. bank holiday and we have online the end of June. “Real-time data replication ensures constant banking to do today.” Another Commenting on this, Mick Bradley, availability of data due to its ability to rewind complained of NatWest staff being unaware VP EMEA at data-protection provider back to a point in time before an outage or an of the issue when asked how long the website Arcserve, said: “In today’s global economy, unplanned event. This removes the need to would be down. ‘always on’ literally means always transactional. recover in the first place, so banks can always A spokesperson for NatWest told The Daily From NatWest’s outage today, it’s clear that deliver on the service their customers expect.” Express: “We are aware that customers are the industry is feeling the pressure. NatWest was victim to a similar type of currently experiencing issues accessing our “As banks undergo digital transformation, outage in September 2018, when customers websites and online banking login pages. We deploy newer technologies and move further struggled to access their accounts. Wirecard partners with emonvia to digitise charging stations

r0Ѵb1ঞѴbঞ;vbm;ul-m1uu;m|Ѵv; b|_bmmo-ঞ;1olr-mb;vv1_-v the energy services of N-Ergie, the joint emonvia, we are working to ensure that venture behind emonvia. the trend reaches our daily lives. Wirecard will process all payments, ľ$_;;mঞu;ruo1;vvlv|0;1olrѴ;|;Ѵ 0bѴѴbm]-m7r-o|=ou|_;voѴঞomb-b|v digital, and this is where our digital 7b]b|-ѴrѴ-oulĺ$_;l-bm|-u];|1Ѵb;m|v rѴ-oul1ol;vbm|orѴ-ķ_-m7Ѵbm] comprise businesses such as airports, -ѴѴCm-m1b-Ѵruo1;vv;v0;|;;m;m7 hotels and supermarkets. consumers, charge point operators and Employees of Laser specialist Trumpf corporate customers.” Group, an early adopter of the technology, ;lomb- 7-u7"1_Ѵঞv-77;7Ĺ are able to charge vehicles in one of “For electric vehicles to fully establish the largest charging parks in Germany. themselves, consumers must be able m7bb7-Ѵ|u-mv-1ঞomv-u;v;Ѵ;7 to charge them everywhere, simply, -|ol-ঞ1-ѴѴķb|_r-l;m|vbll;7b-|;Ѵ transparently and safely. The payment assigned to booking accounts and receipts process plays a central role in this. With sent to drivers. Wirecard, we are pleased to have an $_;;lomb-voѴঞom-blv|oruob7;-m experienced partner at our side that Germany-based Wirecard is teaming up easy means of entry into electric vehicles, can reliably automate these important b|_fobm|;m|u;;lomb-|o7b]bঞv; o@;ubm]-voѴঞom1olrubvbm]0o|_ processes for us.” several thousand electric vehicle charging vo[-u;-m7_-u7-u;ĺ emonvia is a joint venture between v|-ঞomvĺ “E-mobility is one of the biggest trends Germany’s largest energy provider, The businesses are launching charge@ of the coming years,” said Jan Rübel, head N-Ergie, and leading charging work, a secure and sustainable charging of sales travel and mobility at Wirecard. infrastructure provider ABL, among others. voѴঞom=ou1olr-m1-ur-uhvĺou; “By 2025, the market is expected to Its stated goal is to make electromobility than 60,000 corporate customers and experience a tenfold growth. By partnering available as easily as possible.

6 | August 2019 | Electronic Payments International News | Digest

Noor Bank partners with UnionPay for QR-based payments 1o7;Ŋv1-mmbm]Ŋ0-v;7r-l;m|voѴঞom bv-1ov|Ŋ;@;1ঞ;-Ѵ|;um-ঞ;|o1-v_ payments for consumers and retailers alike. m7b|bѴѴ=u|_;u7ub;|_;v_b[|o-u7v- cashless society within the UAE.” oou-mh o_movvbC7bv-77;7Ĺ “Noor Bank is pleased to work with &mbom-m|;um-ঞom-Ѵ|o7;rѴo ! r-l;m|voѴঞomvĺ$_bv;m-0Ѵ;v-Ѵ-u];u customer base to go cashless. ľ);CulѴ0;Ѵb;;v1_-1oѴѴ-0ou-ঞ; -rruo-1_bѴѴruolo|;Cm-m1b-Ѵ inclusiveness and deliver outstanding customer experiences. In the UAE’s rapidly evolving digital landscape, QR 1o7;r-l;m|v-u;mo|omѴ-=|ubvঞ1ķ ѴoŊ1ov|voѴঞom=oul;u1_-m|vķ|_;-Ѵvo enable consumers to make instant and secure payments on the go.” More than one million Chinese tourists UAE-based Noor Bank is partnering with to access the cross-border capability of bvb|;7|_;& bmƑƏƐѶķvo-11;rঞm] Chinese payments giant UnionPay to UnionPay’s QR code payment service. UnionPay cards is increasingly seen enable customers to make instant, secure Noor Bank is the largest issuer of as good business sense. UnionPay is mobile payments. UnionPay cards in the UAE, with over 1uu;m|Ѵ-11;r|;7m-ঞomb7;0o|_-|" oou-mhbvuoѴѴbm]o|b|vCuv| (o 550,000 cards issued through local terminals and ATM machines, and for both QR-based mobile payment service, Cm-m1b-Ѵv;ub1;v]uorbm|b77Ѵ; -v|ĺ omѴbm;-m7oZbm;|u-mv-1ঞomvbm|_;& ĺ enabling customers and merchants to use Han Wang, Middle East general manager $_;m;voѴঞombv;r;1|;7|ob7;m UnionPay QR code scanning for payments. at UnionPay, said: “The UAE is making acceptance and increase the number -uঞ1br-ঞm]u;|-bѴķu;v|-u-m|-m7|oubvlŊ strides to enhance electronic payments of QR-code-enabled merchants in the focused merchants will, as a result, be able -m7ruolo|;Cm-m1b-Ѵbm1Ѵvbomĺ$_; !Ŋ country by end of 2019. StanChart and SAP Ariba agree partnership Standard Chartered and SAP Ariba have -m7=-1bѴb|-ঞm]bm1u;-v;71oll;u1;-1uovv -]u;;7-v|u-|;]b11oѴѴ-0ou-ঞom|ol-h; the world. |_;0-mhĽvvrrѴŊ1_-bmvoѴঞomvlou; bv-!o0bmvķ]Ѵo0-Ѵ_;-7o=|u-mv-1ঞom easily accessible to businesses in the Asia- banking at Standard Chartered, said: “Our -1bC1u;]bomĺ goal is to make life easier for our clients Ariba is the world’s largest digital and their ecosystems. As their businesses 0vbm;vvm;|ouhķ1omm;1ঞm]lou;|_-m evolve, so do we. We are delighted to 4.2 million companies in 190 countries. collaborate with SAP Ariba to support our By the end of 2019, buyers using Ariba clients throughout their procure-to-pay Network will be able to manage payments lifecycles and beyond. -m7vrrѴŊ1_-bmCm-m1;m;;7vb|_|_; “As we embrace open banking, we "ub0-7b]b|-ѴrѴ-oulĺ"rrѴb;uvbѴѴ 1omm;1|1ollmbঞ;v-1uovvou=oo|rubm|ĺ -Ѵvo_-;tb1h;u-11;vv|oCm-m1bm]-m7 And we provide access to integrated foreign exchange services via Standard voѴঞomv|_-|;m-0Ѵ;ou1Ѵb;m|v|o]uo Chartered’s global network. their businesses sustainably.” $_;1oѴѴ-0ou-ঞom-blv|o-11;Ѵ;u-|; Sean Thompson, senior VP, business |_;7b]bঞv-ঞomo=|_;o;u-ѴѴvrrѴ1_-bmķ network and ecosystem at SAP Ariba and _b1_|_;0-mhv-b7bѴѴblruo;;L1b;m1ķ SAP Fieldglass, added: “Customers expect that enhance value for our customers, transparency and accuracy for both buyers the procure-to-pay process to be easy, it allows them to complete the procure- and suppliers. ;L1b;m|ķ1olru;_;mvb;-m7v;-lѴ;vvŋ to-pay process end to end on a single The move also aims to support and rightly so. rѴ-oulĺĿ sustainable economic growth and make “We are thrilled to welcome Standard According to SAP Ariba, more than Cm-m1bm]lou;-11;vvb0Ѵ;|o1olr-mb;vķ-v Chartered into our ever-expanding $2.9trn of commerce is conducted every ;ѴѴ-v1omm;1ঞm]0vbm;vv1ollmbঞ;v ;1ovv|;lĺ7;Ѵb;ubm]Cm-m1bm]orঞomv day on its network.

www.electronicpaymentsinternational.com | 7 News | Digest

"vb]mvѴb1;m1;b|_v|u-Ѵb-mCm|;1_7;mঞঞb Revenue for the new licence will be generated through professional service fees for upfront technology implementation work. There will also be an ongoing monthly licence fee. Implementation work is expected to complete in the second quarter of 2020, following which Overlay+ is expected to go live at HSBC Australia. Overlay+ aims to enable peer-to-peer communication of any type of data or document between parties and to regulators. In addition, according to Identitii, the platform will facilitate the secure sharing of HSBC has signed a new licence agreement to Identitii CEO Nick Armstrong said: “We structured or unstructured settlement data, provide the Identitii Overlay+ platform to the are very happy to announce that we have along with clearing, remittance and regulatory bank’s Australian customers. signed a new licence agreement for Overlay+. reporting information. The new licence agreement comes after This is our second technology licence with The Australian fintech made its debut HSBC partnered with Identitii in June to HSBC, and it delivers on a key part of on the Australian Securities Exchange last launch its Digital Accounts Receivable Tool. our growth strategy, which is deepening October. Since then, it has raised A$11m The expanded agreement is for an initial relationships with existing customers. ($7.5m) through its initial public offering. five-year term, with a minimum contract “It also represents the commercialisation of Identitii also partnered with message value of $511,600, which could be extended. a new use case for Overlay+. This seamlessly transformation software provider Trace Termination clauses are consistent with the integrates with existing systems to ensure Financial in April 2019. Its aim is to give current HSBC Global Framework Agreement compliance with regulatory reporting banks an easier means of migration to ISO with Identitii. requirements.” 20022 financial message standards. Square integrates with POS software Goodtill

bvb-7Ŋ0-v;7ķ_b1_]b;vl;Y;b0bѴb| whether I’m at the restaurant or working an event. ľ-Ѵvom;;7;7-m-@ou7-0Ѵ;-m7vblrѴ; way to accept card payments, and the bm|;]u-ঞomo=oo7ঞѴѴb|_"t-u;_-v made this possible. Square also deposits our takings next business day, which helps b|_1-v_YoĺĿ Square launched in the UK in 2017, b|_-]o-Ѵ|o]b;v;ѴѴ;uv1_ob1;-m7o@;u them the best tools. It has more than 40 partners currently that provide tools that Payments company Square has announced so they never miss a sale and get their integrate with Square POS. b|vbm|;]u-ঞomb|_oo7ঞѴѴ"ĺ money the next working day.” Square enables sellers to accept The move gives Square access to oo7ঞѴѴ1oŊ=om7;u-m77bu;1|ouѴb;u payments from all major credit and debit =m1ঞom-Ѵbঞ;vv1_-vѴo-Ѵ|1-r-0bѴbঞ;v !o0ou1oll;m|;7Ĺľoo7ঞѴѴvo[-u; cards with no monthly fees or long-term and inventory management. Businesses is helpful and easy for merchants, and 1om|u-1|vĺ|1_-u];vƐĺƕƔѷr;u|u-mv-1ঞom vbm]oo7ঞѴѴ-u;mo-Ѵvo-0Ѵ;|oruo1;vv by partnering with Square we are now for in-person payments, and 2.5% for payments using Square. able to serve more merchants without telephone payments, online orders and Nick Harris, partnerships lead at Square, compromising on their experience. invoices. said: “Square is focused on forming ľm|;]u-ঞm]ourobm|o=v-Ѵ;b|_ In March 2019, it launched a mobile app partnerships with best-in-class companies Square payment tools means a broader set to enable merchants to create, manage |o_;Ѵrl;;||_;7b;uv;-m7vr;1bC1 o=vl-ѴѴ-m7Ѵ-u];l;u1_-m|v1-mঞѴbv;|_; and send invoices from anywhere. The needs of the merchants we serve.” tools they need to start, run and grow.” Square Invoices app eliminates the need -uubv1omঞm;7Ĺľ)b|_|_bvbm|;]u-ঞomķ -_;l;;Ŋo;ѴѴķ1oŊ=om7;u for manual invoices and acceptance of 0vbm;vv;v1-m0;m;C|=uol|_;;uঞ1-ѴŊ of London-based African food restaurant cheques. The company claims that more vr;1bC1robm|o=v-Ѵ;=uoloo7ঞѴѴ-m7 oѴѴo=oķ-77;7Ĺľ$_;oo7ঞѴѴrobm|o= than 60% of the invoices it processes are accept all forms of payment with Square, sale works for the business because it paid the same day.

8 | August 2019 | Electronic Payments International News | Digest

Melissa launches technology to ease id verification Melissa KYC uses technology including r-vvrou|oum-ঞom-Ѵ 1-u7ķ-m71_;1hbm] 1-u7-m77o1l;m|-|_;mঞ1-ঞomķ |_;l0orঞ1-Ѵ1_-u-1|;uu;1o]mbঞomĺ| 0bol;|ub1v-m7ľѴb;m;vvĿ1omCul-ঞomĺ -Ѵvo;ubC;v-r;uvomĽvľѴb;m;vvĿ0|_; $_;rѴ-oulbv7;vb]m;7|ol-h;1v|ol;u blinking of eyes, and uses biometrics to ;ubC1-ঞomv;ub1;vvloo|_;uķ;m-0Ѵbm] 1omCul|_-||_;v1-mm;7r_o|o-m7Ѵb; 1olr-mb;v|o1omC7;m|Ѵ-7_;u;|o person are the same. 1olrѴ;]o;uml;m|u;]Ѵ-ঞomvĺ ;Ѵbvv-+Ľv;ubC1-ঞom=;-|u; u;]uomķ(o=]Ѵo0-Ѵl-uh;ঞm] -|_;mঞ1-|;v;-1_v0lbvvbom0vbm] at Melissa, said: “Whether verifying an u;-ѴŊঞl;-m7lѴঞŊvou1;77-|-ĺ$_bv address or working to prevent online is then used to standardise, correct fraud, the business process must be and match customer records globally, easily implemented and meet customer -m7-Ѵb7-|;|_;7-|--m7b7;mঞঞ;vo= ;r;1|-ঞomv=ou1om;mb;m1;-m7vr;;7ĺ customers or suppliers. “Melissa KYC ensures that compliance Melissa uses an online system to review -1ঞbঞ;v-u;v;-lѴ;vv=ou|_;0vbm;vvķ customer submissions, and generate and -m71u;-|;-v|u-b]_ou-u7ķ=ub1ঞomŊ=u;; store customer due diligence reports to experience for end users.” meet compliance requirements. These ;Ѵbvv-ķ-&Ŋ0-v;7ruob7;uo=b7;mঞ|Ŋ The Melissa KYC mobile app uses or;u-ঞomvu;rou|;7Ѵ|-h;rѴ-1;b|_bm ;ubC1-ঞomvoѴঞomvķbvѴ-m1_bm];Ѵbvv- =-1b-Ѵu;1o]mbঞom|o1-r|u;b7;mঞ| seconds, reducing the strains associated KYC to help businesses verify customers 7o1l;m|-ঞomĺ$_;-|_;mঞ1-ঞom with compliance for customer service and more easily. process consists of digitally scanning a om0o-u7bm]-1ঞbঞ;vĺ FreedomPay and Vista to collaborate in UK and Europe Payments platform FreedomPay and Vista “Vista will provide FreedomPay customers customers to innovate and share efficiency Technology Services have entered into with thousands of on-site, qualified engineers gains, and it is only fitting that we will work a global technology project and support to help manage software and/or hardware in partnership with FreedomPay as one of the partnership. installation,” said FreedomPay founder most innovative and exciting businesses in the The three-year deal will give FreedomPay and CEO Tom Durovsik. “FreedomPay’s payments and loyalty sector.” immediate access to over 4,000 engineers in commitment to the highest standard of FreedomPay expanded to the UK and over 30 European countries. This will allow customer service will be enhanced through Europe at the beginning of 2019. Considering FreedomPay to manage the installation and this exciting partnership.” itself the first truly “open” customer-centric maintenance of payment solutions across the Vista Technology Services CEO James commerce platform, the US-based business region. The partnership also provides on-site, Pepper added: “We are very proud to be hopes to aid hundreds of thousands of 24/7 service to FreedomPay customers. working in partnership with FreedomPay. businesses in the continent. It also currently Vista will provide fully point-to-point Vista was the first service provider globally works with lodging, retail, restaurant, stadium encryption (P2PE)-compliant warehousing to launch a PIM [product information and other hospitality merchants. and logistics services. These are designed to management] that met the P2PE FreedomPay currently serves over a million maintain a full “chain of custody” throughout requirements, and since then we have sites in the US across several sectors. Clients the delivery, installation and maintenance enhanced the security around our offering include the world’s top five food service lifecycles of FreedomPay’s payment platform and levels of attestation at every opportunity. providers, the top four gaming providers, and systems. Vista has a culture of working with our the fourth-largest e-commerce retailer. JPMorgan to close Chase Pay app in early 2020

ou]-m_-v;bvv;||ov_;ub|vv|-m7Ŋ Chase Pay head Eric Connolly said: “We “They already are using Chase Pay on alone Chase Pay app early next year. 1omঞm;|o=o1vomou1v|ol;uvķ-m7 websites and in merchant apps such as The app, which launched in 2015, will |_;-u;vbm]|_;_-v;-0omom Starbucks, Shell, United and Atom Tickets. soon be unavailable for use for in-store merchant websites and in merchant apps, They can also link Chase Pay to their r-l;m|vķѴool0;u]u;rou|;7ķ1bঞm]-m and now their tap-to-pay Chase cards more PayPal account to shop at millions of places email. However, customers will be able than ever. online.” to use Chase Pay on merchant apps and ľ"oķ;Ľu;v_b[bm]ou=o1v|o;r-m7 Chase Pay is just the latest digital websites, such as that of online food Chase Pay’s presence in more merchant endeavour by JPMorgan to have failed. ou7;ubm]Culu0_0-m7b|vrouoѴbo apps and websites. This will make it quick Earlier this year, the bank closed its mobile company LevelUp. Customers will also be and easy for Chase’s 51 million digitally banking app, Finn. The bank also recently rewarded for Chase Pay use on merchant -1ঞ;1v|ol;uv|ov;|_;bu_-v;Ŋbvv;7 v1u-rr;7b|v1oѴѴ-0ou-ঞomb|_vl-ѴѴ websites or apps. Visa debit and credit cards at more places. business lender OnDeck.

www.electronicpaymentsinternational.com | 9 analysis | sports sponsorship

sports sponsorship: american express leads the field

Sponsorship has become an important tactic for payments service providers that are looking to gain some extra recognition and appeal to sports fans. Evie Rusman analyses some of the biggest deals currently in place Venus Williams n the field of tennis sponsorship, The payments giant has also undertaken the-scenes access through team partnerships. American Express tops the table, a partnership with Venus Williams, sister The company currently has deals with six I having struck over 10 deals within the of former tennis world number one Serena. NBA teams. last three years. The value of this sponsorship is estimated at In the English football sector, Amex has Amex’s biggest tennis deal is with the around $600,000 a year, and runs until 2019. agreed a shirt sponsorship deal with Premier United States Tennis Association (USTA), a Another big sponsorship deal in the League club Brighton and Hove Albion. partnership that is entering its 26th year, and tennis world is between Mastercard and The new sponsorship, which is set to begin Amex introduced a range of initiatives for Tennis Australia, the body that covers events in 2020 and end in 2032, has an estimated card members at the 2019 US Open Tennis including the country’s most famous tennis worth of $10.13m a year. Championships, which began on 26 August. tournament, the Australian Open. This Outside the top six clubs, this is the largest The deal, which was renewed in 2016, has partnership is worth an annual total of $6m, deal in the Premier League. It also represents a an annual total worth of $10m, and is the and began in 2017. 20-fold increase on Brighton’s existing 10-year biggest tennis payments partnership in 2019. American Express sponsorship, which began To celebrate its long-standing relationship GLOBAL EVENTS in 2010. The new partnership also allows with the US Open, Amex set up a number Amex to keep the naming rights to Brighton’s of on-site experiences to attract customers Not only has Amex dipped its toes into the home stadium, the American Express heading to Flushing Meadows. These included tennis industry, it has also formed alliances Community Stadium. interactive centres, cashback initiatives and with a number of different sporting events Other notable sponsorships include ticket giveaways. across the world. Amex’s alliance with the United States Golf In addition, last year the US payments Also in the US, Amex has been a sponsor Association worth an annual total of $2.5m. provider announced its partnership with the of the National Basketball Association (NBA) The payments company has also struck a All England Tennis Club as an official supplier since 2015. Returning as half-time sponsor, deal with American football team Seattle for the Wimbledon Tennis Championships. this is Amex’s biggest-ever sporting deal, with Seahawks, worth $1.5m. The two-year deal has a total annual worth of a total annual worth of $30m. Data for this piece was sourced from Sportcal, $4m and is set to end in 2021. The current deal was renewed in 2017, and a division of EPI publisher GlobalData. Every As part of Amex’s new deal, it offers similar as in previous years, Amex cardholders receive day, Sportcal gathers, analyses and connects vast benefits to those at the US Open such as a hospitality programs and ticket offers around amounts of sports industry data via its news, member’s lounge and a fan experience centre. the NBA All-Star Game and other behind- media, sponsorship and events platforms.

LARGEST AMERICAN EXPRESS SPORTS SPONSORSHIP DEALS Product Sport Status Deal start Deal finish Annual cost ($)

NBA Basketball Sponsor/partner 2017 N/A 30m Brighton and Hove Albion Football Shirt sponsor 2020 2032 10.13m US Open Championships Tennis Main sponsor 2016 2020 10m $_;_-lrbomv_brvŋ)bl0Ѵ;7om Tennis Official supplier 2019 2021 4m United States Golf Association Golf Sponsor/partner 2016 N/A 2.5m Seattle Seahawks American football Sponsor/partner 2016 N/A 1.5m "ou1;Ĺ"rou|1-Ѵ

10 | August 2019 | Electronic Payments International feature | visa b2b connect

visa b2b connect challenges correspondent banking networks

Visa’s blockchain-based B2B Connect network provides a way to process high-value corporate cross-border payments globally, without needing correspondent banking relationships. Robin Arnfield reports

ther payments-related blockchain compared to typically five to seven days via says Ed Adshead-Grant, general manager of initiatives include Ripple, the correspondent banking networks. payments at Bottomline. OIBM Blockchain World Wire, To address security concerns, B2B Connect “Every corporate on B2B Connect is R3/Corda, the JP Morgan Interbank tokenises sensitive data including banking AML/KYC and OFAC [Office of Foreign Information Network and the Stellar details and account numbers, giving them a Assets Control] sanction-checked,” adds Development Foundation. unique identifier for facilitating transactions Adshead-Grant. “This data is loaded into B2B In 2018, India’s Infosys Finacle formed on the network. Connect, so a bank can check the credentials a blockchain-based trade network with a Initially available in 30 trade corridors, Visa of the corporate where money is about to be consortium of seven Indian banks, called plans to make B2B Connect available in 90 sent – this means less risk and more security.” India Trade Connect. countries by the end of 2019. Adshead-Grant says banks have the option In 2017, SWIFT launched SWIFT gpi Visa’s partners for B2B Connect include of providing the FX in the B2B Connect (global payments innovation) to reduce the payments software firms Bottomline transaction themselves, or taking Visa’s time for cross-border payments settlement, Technologies and FIS, which are providing FX rates. “This can also be determined by and in response to competition in the cross- B2B Connect-participating bank clients with payment corridor, so Visa is utilised in the border payments market, particularly from access to the network. B2B Connect uses the low-volume, relatively expensive exotic blockchain-based initiatives such as Ripple. open-source Hyperledger Fabric blockchain corridors,” he says. SWIFT has been conducting a blockchain framework. Using Hyperledger, which is “Corporates know the fees and charges at proof of concept for gpi using R3’s Corda hosted by the Linux Foundation and was the point of the transaction, and they know platform. developed by IBM, it provides an improved when the money is going to be received – Launched in June following a trial with process to facilitate financial transactions on a there’s no potential to take multiple payment four banks, B2B Connect allows banks’ scalable, permissioned network, Visa says. hops, as there is with correspondent banking. corporate customers to make medium- to “The corporates know each party on the high-value (over $15,000) international CONTRAST WITH SWIFT network is fully AML/KYC and sanction- payments directly from their bank accounts to checked, and can have access to this data. recipients’ accounts. B2B Connect differs from SWIFT in With a new supplier on SWIFT, they Visa says that, because B2B Connect two respects: firstly, the Visa system uses wouldn’t have this level of assurance.” facilitates transactions from the bank of origin blockchain technology, and secondly, it Diego Rodriguez, Visa’s VP of business directly to the beneficiary bank, this removes is a private payment network performing solutions for Latin America and the inefficiencies and time spent on cross-border messaging and settlement, whereas SWIFT Caribbean, explains: “The terms blockchain corporate transactions, while increasing only provides messaging. and Hyperledger are getting a lot of attention, transparency and consistency of data. “This means banks using SWIFT need but the fundamental value that B2B Connect Transfers occur either same day or next day a correspondent banking network, which brings to the market is the change in the in the 23 fiat currencies in which Visa settles, can be expensive to maintain and manage,” business model.”

www.electronicpaymentsinternational.com | 11 feature | visa b2b connect

“Today, when banks or businesses send payments across the world, they have to work with networks of correspondent banks. So each sending bank needs multiple correspondent banking relationships to ensure the money gets to the recipient. This one-to-one model requires banks to negotiate bilateral contracts and ensure AML and OFAC compliance for each bank they work with, in order to create a network for international payments.” £247m ($301m) in May 2019. Earthport its first platform based on Hyperledger. “The Visa proposes to eliminate the bilateral provides cross-border payment services to opportunity we’re pursuing is to bring a correspondent relationship model by banks, money transfer service providers, and completely new system into the market,” he offering banks a single relationship with B2B businesses via its independent ACH network. notes. Connect, through which banks can send Visa said that acquiring Earthport will allow In accordance with Visa’s ‘API-first’ strategy, money anywhere in the world where Visa is clients to enable individuals, businesses and B2B Connect leverages Visa’s open APIs and present, Rodriguez says. governments to utilise the Visa network to its Visa Developer platform. “We’ve created “Visa’s business model for B2B Connect send and/or receive money through bank APIs to facilitate the use and integration of will bring banks fundamental efficiency gains accounts around the world, bypassing public various Visa B2B and consumer services,” in the international transfer process, and offer and private wire-transfer rails. Rodriguez says. businesses faster cross-border payments,” “Initially, B2B Connect is focusing on Visa says on its website: “Open APIs Rodriguez says. cross-border B2B transfers and not P2P allow developers to take our capabilities and “With correspondent banking, there are transfers,” says Rodriguez. “But we could to build solutions that can quickly scale in additional costs for banks and sending and leverage some of the features of Earthport’s multiple markets. With B2B Connect APIs receiving businesses, due to fees charged network. It’s too early to say, as we are still exposed in the Visa Developer Platform, B2B by the various banks participating in each integrating Earthport.” Connect is designed to harness the power of transfer. There are also uncertainties due to Rodriguez says Europe and the US are very the global developer community to enable a the fact that senders and receivers don’t know important trading corridors for B2B Connect. smarter cross-border B2B payments flow.” when the funds will arrive.” With the rise of cross-border B2C and B2B B2B Connect offers finality of payment e-marketplaces, the Latin America-China ANALYST COMMENTS and transparency about fees. This means that trading corridor is also expanding. In her report Blockchain in Action in Corporate Banking, Contenders out of the Blocks, Celent Visa and Mastercard have both been senior analyst Alenka Grealish writes: “(B2B Connect’s) target market is tier 2 banks in the trying to capture the cross-border US and national banks outside of the US. As its ecosystem evolves, larger banks could play payment market opportunity an important role in custody, settlement and/ or FX. “B2B Connect is designed to be backward- when a sender notifies a recipient that it is “We’re working on developing all the compatible with existing bank treasury- sending a transfer, both parties know exactly trade corridors,” says Rodriguez. “Initially, management services. Unique among when the money will reach the receiving we’re implementing our platform in the 30 blockchain-based payment platforms, Visa is account and how much will be charged, corridors that are live, but we’ll expand the creating a corporate enterprise identification explains Rodriguez. number of corridors very rapidly.” number, a feature that would enable clear “Our system is an end-to-end messaging, B2B Connect will particularly help Latin and unique identification of all corporate payment and settlement system,” he America’s domestic banks such as Banco do participants involved in the transaction. continues. “Currently, B2B Connect is Brasil, Bradesco or Banorte, which currently “Importantly, Visa is facilitating integration focused on payments, but, in the future, lack global presence. by allowing bank participants to use their we could add documents, contracts and “The global banks operating in Latin preferred data format – for example, invoices to add value to our system. These America and the Caribbean [LAC] are ISO20022 or MT 103 – to communicate potential features are part of the reason why from outside the region,” Rodriguez says. with the network, and is handling the message we’re leveraging Hyperledger technology, “Because major Latin American banks aren’t translation.” as it allows us to expand the network’s global, they rely on correspondent banking Erika Baumann, senior wholesale banking functionality.” relationships, which are very important for analyst at Aite Group, tells EPI: “Visa Rodriguez says that B2B Connect them. So we think we can add a lot of value and Mastercard have both been trying to could eventually incorporate some assets for banks and corporates in LAC.” capture the cross-border payment market of Earthport, the global cross-border Rodriguez explains that B2B Connect is opportunity. Both companies are taking the payments company that Visa bought for Visa’s first non-card-based system, and also emphasis away from cards, but leveraging

12 | August 2019 | Electronic Payments International feature | visa b2b connect

their knowledge – which is deeper and wider “In the enterprise space, you’ve got to be Raymaekers adds that the first stage of the than any other provider – to facilitate these integrated into some of the large enterprise gpi Link proof of concept aims to bring the payments. B2B Connect is another step systems and build a network of partners. So benefits of gpi – speed, ubiquity and certainty in Visa’s commitment to the cross-border we’re going to continue to seek ways to build – to DLT-enabled trade. payments space. With cross-border payments, partnerships and look for investments like “The proof of concept addresses the need transparency and speed have always been the ones we made in PayMate and BillDesk, for DLT-based commerce to be supported by barrier to the seamless process that corporates because that’s going to be key to unlocking global, fast, secure and transparent settlement demand. Visa understands this dynamic, and the volume in the non-carded space of B2B.” using fiat currencies by enabling ‘off-ledger’ has the network scalability to execute.” Visa CFO, executive VP and vice-chair payment settlement based on gpi,” he says. Vasant Prabhu continued: “Our B2B strategy “A prototype will be demonstrated at Sibos in B2B EFFORTS has many components, of which B2B London in September 2019.” Connect is one. B2B Connect addresses As well as Earthport and B2B Connect, high-value cross-border transactions. Through MONEYGRAM Visa has several other B2B initiatives. Earthport and Visa Direct, we can address These include a global agreement with and B2B for low-value transactions at a high MoneyGram is not currently part of B2B investment in Tel Aviv-based Behalf, which volume on a cross-border basis. We also have Connect, having signed a commercial provides POS financing for SMEs making initiatives that go beyond cross-border to agreement with Ripple in June 2019. e-commerce purchases from large merchants. domestic accounts receivable and accounts “Ripple is MoneyGram’s key partner for Visa will offer Behalf’s SME clients payable – for example, our accounts receivable cross-border settlement using its XRP digital reusable, tokenised Visa virtual cards, giving partnership with Billtrust.” assets,” says a MoneyGram spokesperson. businesses instant loans for their purchases “This will give MoneyGram the ability to and flexible repayment schedules. SWIFT GPI improve the profitability of transactions when Visa has also partnered with Western Union using the RippleNet platform to settle foreign to support quicker remittances, and has According to SWIFT, payments sent via gpi currencies. alliances with Wex and financial management are credited within 24 hours of initiation. “The partnership is focused on improving software vendor Wave Financial. Wave is “SWIFT gpi now accounts for over half our operations, and won’t be visible to the end deploying Visa Direct to provide instant of cross-border payment instructions carried user. Our integration of XRP will help us be payouts for small businesses, and corporate over SWIFT,” says SWIFT gpi programme more efficient in how we move money from payment solution provider Wex is rolling out manager Wim Raymaekers. point A to point B, while maintaining the Visa virtual credit cards to its corporate clients “By the end of 2020, every cross-border same high level of compliance MoneyGram to enable global B2B payments. SWIFT payment will be a gpi payment, and currently gives its customers.” In July, Visa invested in Indian B2B every bank on the network will be able to The spokesperson continues: “An important payments company PayMate, which offer end-to-end delivery with full tracking part of Ripple’s technology is its use of KYC automates the procure-to-pay payments cycle and transparency, throughout the payment processes to ensure regulatory compliance. This won’t change our current intensive KYC approach to our money transfers.” Blockchain technology has the potential MoneyGram also believes that blockchain and the use of appropriate cryptocurrencies to change the way business transacts will be an important aspect of the future of money transfers. across almost every industry “Blockchain technology has the potential to change the way business transacts across almost every industry,” the spokesperson for businesses. In November 2018, Visa made chain. More than 3,500 banks, accounting for says. “The distributed infrastructure’s ability a minority investment in BillDesk, an Indian 85% of SWIFT’s total payments traffic, are to securely share information and ensure online payment and bill payment gateway, now committed to adopting gpi.” data integrity makes it an important tool and said it is collaborating with Billtrust on Raymaekers says SWIFT believes that in building trust among businesses and the US fintech’s open buyer-supplier Business blockchain and distributed ledger technology consumers.” Payments Network. have significant potential to influence the The integrated platform will use XRP as a In its third-quarter 2019 analyst call, future of the financial services industry. treasury management option, relating directly Visa executives explained the firm’s B2B “Recently, we thoroughly assessed the and only to cross-border FX transactions. strategy. “The enterprise-level volume that has technology and concluded that it wasn’t yet MoneyGram customers will not be interacting traditionally been wires and cheques is going mature enough for cross-border payments,” with XRP or RippleNet. to require a whole different approach than the he says. “We’re continuing our R&D efforts “Through this strategic partnership, approach in the carded area, where we rely on to explore how and whether our users can MoneyGram will be able to settle key issuers and on P-cards, corporate cards, small benefit from distributed-ledger technology currencies and match the timing of funding business cards and virtual cards in order to [DLT] and continue to investigate how it with its settlement requirements reducing succeed,” commented Visa chair and CEO could bring about further improvements to costs, improving its balance sheet efficiency, Alfred Kelly. the customer experience.” and reducing risk,” the spokesperson says.

www.electronicpaymentsinternational.com | 13 feature | wearable tech

wearable tech: the hottest new trend in Payments

With ever-growing advances in technology, contactless wearable payments are now at the forefront of most banks’ minds. Evie Rusman looks at the latest trends in the sector, and speaks to industry experts about its future

y 2021, global wearable device design wearables that first and foremost look payment ring that allows customers to pay shipments are set to hit more than like high-end accessories.” for purchases at any merchant that accepts B500 million. Analysts estimate She continues: “Making the payment contactless Mastercard payments. that some 20% of these devices will be process as easy as a tap or a swipe means “K Ring is just one of many passive devices “connected” with a payment, transport or payment-enabled wearables will be the next that we have enabled with issuers in Europe,” access-control application. phase of consumer desire for practicality says Casey. “We offer everything from rings So, just when you thought “tap-and-go” infused with ‘Insta-ready’ looks.” to necklaces to watches, and believe that this payments could not get any easier, more and Leading the way in terms of the wearable variety has contributed to the rapid growth more companies are continuing to offer new payments market are Apple, Samsung and we are seeing in consumer adoption.” and improved wearable technology as a way Fitbit, all of which offer an array of stylish Aware of concerns about accidental for customers to carry out transactions. So, is smartwatches and fitness trackers. payments, the K Ring’s design means it must wearable tech becoming the normal? be within 4cm of a contactless reader, with Speaking to EPI, Caroline Casey, VP of the wearer’s hand in the right position before innovation at Mastercard, explains how she a transaction is activated. believes wearable technology is the future of This slick new addition to wearable payments. payments is priced at £99.99 ($121), and “Europe leads the world in contactless payment-enabled comes in 14 different colour combinations. payments, and its overwhelming success ABN Amro is currently the only bank to offer has created a demand for even greater wearables will be the product, along with a number of other convenience,” she says. “Shoppers’ trust payment accessories. In fact, the Dutch bank in contactless is greater than ever, and in the next phase of is the world’s first to offer wearables, and only turn it seems they are ready to take this one launched this platform in January 2019. stage further by trying contactless through consumer desire connected devices, like wearables.” BESPOKE WEARABLES

THE FASHION-CONSCIOUS Smaller brands such as Kiroco are also launching an array of stylish necklaces and With the aim of tackling a more fashion- The Apple Watch first hit the scene in bracelets that feature Swarovski crystals and conscious market, businesses have increased 2015 and is one of the most popular payment allow contactless payments. their focus on making payment-enabled devices used today. In the second quarter of Founded in 2013, Kiroco is a UK-based wearables look high-end. This has led to an 2019, Apple shipped 5.7 million units of its business that aims to combine bespoke increase in payment devices, ranging from smartwatch, nearly five times more than rival jewellery with digital technology. In August smartwatches and jewellery to keyrings. Fitbit, which shipped 1.2 million. 2019, it launched its first-ever line of wearable Casey says: “For technology providers, the One of the newer devices on the market payments jewellery. challenge is making processes as smooth and is the K Ring, which features Mastercard Speaking to EPI, Fiona Cartwright, UK unobtrusive as possible to empower brands to payment functionality. K Ring is a contactless sales and marketing director at Kiroco,

14 | August 2019 | Electronic Payments International feature | wearable tech

Kiroco’s Swirl pendant K Ring bm]b|Ľv$ob"ou]-1-u0omC0u;0u-1;Ѵ;| explains why the brand decided to make the The collection currently includes two key number of issues surrounding it. As wearable leap into wearable payments. fobs, which can also be put onto chains as payments become next to normal, fraud and “At Kiroco we were already working with necklaces, and four bracelets. security seem to be the main drivers of worry NFC in jewellery, and had secured a patent when it comes to using these accessories. portfolio for our invention of using metals WEARABLES IN THE UK “Technology has increased our connectivity, with NFC tags,” she says. “We were aware allowing digital commerce to flourish, that contactless payments used the similar Barclays has been the frontrunner when it now growing at twice the speed of physical technology, and as its usage was growing comes to affordable wearables. As part of its transactions. But it has also created greater exponentially, we took the decision to move Pingit initiative, the UK bank has launched complexity and less peace of mind,” cautions into this sector.” an e-store offering a large selection of Casey. “From our phone to our fitness tracker She adds: “We knew that our wearables wearable payment accessories. The products to our fridge to however we will pay in the would help make peoples’ lives more currently on offer are a Pingit wristband, a future, we are primed to replicate the security, convenient and secure, which is what people key fob and a loop that customers can add to simplicity and control we experience in store look for in wearables, but we also wanted our their existing watch or fitness band. All three in the digital world.” wearables to look good.” are reasonably priced at under £10. In response to this issue, Mastercard has In order to create a wearable payment Mastercard is also planning to roll out introduced the Mastercard Tokenization device that is unique from the other products new initiatives over the coming years to system, which ensures that a customer’s card on the market, Kiroco consulted an award- increase consumer use of wearable technology, number is not used or stored on a wearable winning jewellery designer. particularly in the UK. device. Instead, an alternative number, a ‘token’, is allocated to each new device for the purpose of making secure transactions. this is not just for fitness fanatics IS IT FOR EVERYONE? or early adopters. There really is a When brands look at modern technology, the wearable for everyone and anyone primary focus tends to be on millennials as the target demographic. However, wearable payments seem to be different in that “K-pay’s point of difference from other Casey says: “We will continue to expand banks are seeing people of all ages as ideal products in the market is that we work with wearables in the UK, and have a wide range customers. metal, so our jewellery range has products of opportunities for banks to provide for their Casey tells EPI: “With the ever-expanding made of white anti-tarnish metal with customers. This will enable them to move variety of payment-enabled wearables rhodium plating, gold-coloured metal with and innovate with customer expectations, available, this is not just for either fitness anti-tarnish, and hallmarked sterling silver by delighting them with new and even more fanatics or early adopters. There really is a with rhodium plating,” says Cartwright. frictionless ways to pay.” wearable for everyone and anyone. “Each piece has a design in the precious “Mastercard is working with lots of resin, and half the range incorporates genuine CHALLENGES FOR TECH manufacturers in watch, ring and fitness Swarovski crystals.” brands for future wearable payment devices, The new range was launched with Barclays’ Even though developments in wearable which range in price from the hundreds of mobile transfer platform, Pingit, and is technology have brought huge opportunities euros to the thousands, so there’s something currently only available to Pingit customers. for the payments industry, there remain a for everybody.”

www.electronicpaymentsinternational.com | 15 feature | sca round-up

sca delay: what are the major eea countries doing?

Over the last few weeks, Strong Customer Authentication (SCA) has caused something of a headache for the electronic payments industry. Countries are now increasingly jumping on the bandwagon, led by the UK, and have made plans to delay the new European regulations. Evie Rusman and Asena Değirmenci investigate

CA has caused numerous concerns On 21 June 2019, the European Banking fraud, make shopping online inconvenient, over disruptions to the online Authority (EBA) decided to grant national the potential damage to retailers in lost digital Spayments system. authorities the power to extend the September sales could be significant.” Keith McGill, head of ID and fraud at deadline for SCA, with an aim of giving As a result, the UK was one of the first Equifax, previously told EPI that SCA could businesses sufficient time to implement and countries to extend the deadline, with make online shopping inconvenient. With the meet the regulation requirements. the Financial Conduct Authority (FCA) original deadline now even closer, he explains McGill notes: “The online economy announcing on 13 August that it would that it is important for payment service is booming because customers find the allow companies an extra 18 months to make providers to strike the right balance between experience friendly and frictionless. If the preparations. This has led other countries to customer convenience and security. new SCA requirements, designed to reduce follow suit and set their own SCA plans. united kingdom germany The FCA has implemented an German regulator BaFin announced 18-month delay to SCA. According to on 21 August that it will give the FCA, the delay was implemented 1olr-mb;vlou;ঞl;|oblrѴ;l;m| to coincide with the EBA’s opinion "u;]Ѵ-ঞomvĺ |_-|lou;ঞl;-vm;;7;7ĺ Payment service providers based Due to the complexity of SCA requirements and the lack of in Germany will now be allowed to make credit card ru;r-u-ঞomķ|_; 0;Ѵb;;v|_;-77bঞom-Ѵঞl;bѴѴ_;Ѵr payments on the internet from 14 September 2019 |olbmblbv;|_;ro|;mঞ-Ѵ7bvurঞom|o1v|ol;uvĺ without using SCA. - bmĽv7;1bvbom-blv|oru;;m|7bvurঞom|obm|;um;| r-l;m|vķ-m7_or;v|o-ѴѴo-vloo|_|u-mvbঞom|o|_; ireland new requirements of PSD2. Quickly following in the UK’s 11ou7bm]|o- bm;vঞl-|;vķ1-u7Ŋbvvbm]r-l;m| footsteps, the Central Bank of service providers in Germany are prepared for the new Ireland announced the unlikeliness u;tbu;l;m|vĸ|_;vb|-ঞombv7b@;u;m|ķ_o;;uķ=ou|_; o=0vbm;vv;vl;;ঞm]|_;oub]bm-Ѵ numerous companies that use credit cards for the receipt deadline. It added that a limited of online payments. lbঞ]-ঞomr;ubo7oѴ70;r|bmrѴ-1;|olbmblbv; There remains a considerable need for adjustment among 7bvurঞom|o|_;r-l;m|vvv|;lĺ online merchants. To enable consumers and companies to The bank also said that plans to consult the EBA, and 1omঞm;|or-omѴbm;b|_1u;7b|1-u7vķ- bm_-vv-b7b| hopes to agree a harmonised approach to the extended will temporarily suspend the need for SCA for online credit periods across the EU. card payments.

16 | August 2019 | Electronic Payments International feature | sca round-up

italy romania The Bank of Italy announced on 6 $_;-ঞom-Ѵ-mho=!ol-mb-Ő!ő August 2019 that it would provide has not yet implemented plans to -77bঞom-Ѵঞl;|o1olrѴ;|;|_;-7- delay SCA. However, it says it is justments required for SCA. ]-|_;ubm]bm=oul-ঞom=uolr-l;m| Furthermore, the Italian Payments l-uh;|r-uঞ1br-m|vbmu;Ѵ-ঞom|o|_; ollb;;_-vv-b7|_-|b||_bmhv-]u-7-Ѵ|u-mvbঞom Ѵ;;Ѵvo=ru;r-u-ঞombm|_;bm7v|uĺ towards SCA will greatly reduce the risks of service The NBR expects to have a completed view by September, bm|;uurঞomvbm1-u7Ŋ0-v;7omѴbm;r-l;m|vķ-v;ѴѴ-v and will then decide on plans for the future. It assumes 7bvurঞom|oomѴbm;1oll;u1;ĺ that the Romanian payments industry will require a delay in In order for companies to make use of the limited order to meet SCA requirements. extension, they must provide a detailed plan, which should bm1Ѵ7;1ollmb1-ঞom-m71v|ol;uŊu;-7bm;vvl;-vu;v bmu;Ѵ-ঞom|ol;u1_-m|v-m71-u7_oѴ7;uvĺ Poland oѴ-m7ĽvCm-m1b-Ѵu;]Ѵ-|ouķ ķ_-v -ѴѴo;7Ѵo1-Ѵl;u1_-m|v-77bঞom-Ѵ Iceland ঞl;|oblrѴ;l;m|"ĺ$_bvbv|o -ob7-m7bvurঞomoubm1om;mb;m1; Iceland is further ahead than to payment service users. l-mbm|;ulvo=blrѴ;l;mঞm] SCA. A spokesperson for the The extension means no other supervisory measure Financial Supervisory Authority u;Ѵ-ঞm]|o|_;=-bѴu;|ov;"bѴѴ0;-rrѴb;7|o says: “The Icelandic government, r-l;m|v;ub1;ruob7;uv-[;uƐƓ";r|;l0;uĺ$_;v; bm1oŊor;u-ঞomb|_|_;1;Ѵ-m7b1 ruob7;uvķ_o;;uķlv|-rrѴ=ou;|u-ঞl;-m7v0lb| banks, has implemented a common PKI infrastructure -rruorub-|;lb]u-ঞomrѴ-mvĺ b|_|_;o0f;1ঞ;|ovrrou|t-ѴbC;7;Ŋ v=ouv|uom] -|_;mঞ1-ঞom-m7-Ѵb7Ѵ;]-Ѵvb]m-|u;vĺ ľ$_;;Ŋ v-u;blrѴ;l;m|;7omlo0bѴ;r_om;vŋom|_; "1-u7vŋ-m7-u;--bѴ-0Ѵ;omrѴ-vঞ11-u7vĺov|o= |_;rorѴ-ঞom_-;-Ѵu;-7|-h;m|_;;Ŋ vbmv;ĺѴѴ|_; 0-mhv-m7|_;]o;uml;m|vrrou||_;v;o=|_;v;;ŋ v in on-line banking and e-goverment services. “The PKI infrastructure and the e-IDs are in compliance b|_|_;; "u;]Ѵ-ঞomķ-m7bѴѴvrrou|"-v required by PSD2.“ luxembourg Luxembourg is another country that is expected to fall in line with the EBA. "" ķ;l0ou]ĽvCm-m1b-Ѵu;]Ѵ-|ouķ has sent out a survey to a number of payment service providers in order to determine a reasonable delay that could be granted following the EBA’s opinion published in June. france vroh;vr;uvom=ou"" v-vĹľ);-u;--bঞm]u;vromv;v by 21 August 2019, which we will then be aggregated and $_; u;m1_-mhbm] ;7;u-ঞomŐ ő sent to EBA by 2 September. Once the feedback has been has welcomed the EBA’s opinion on ]-|_;u;70 =uol|_;-ubovm-ঞom-Ѵ1olr;|;m| -ѴѴobm]m-ঞom-Ѵ-|_oubঞ;vlou; -|_oubঞ;vķ|_;v_oѴ7rovbঞom|_;lv;Ѵ;vb|_u;vr;1| ঞl;|oblrѴ;l;m|"ĺ to a reasonable delay.” $_; _-vo|Ѵbm;7-ঞl;|-0Ѵ; "" bvrѴ-mmbm]|ol-h;|_bvbm=oul-ঞomr0Ѵb10;=ou; blrѴbm]|_-|lov||u-mv-1ঞomvv_oѴ70;1olrѴb-m|0|_; 14 September, and expects further delays to the end of 2020, with the remainder being completed within blrѴ;l;m|-ঞomo="ĺ three years.

www.electronicpaymentsinternational.com | 17 feature | sca round-up

Netherlands Malta The Netherlands is believed to -Ѵ|-Ľv;m|u-Ѵ-mh_-v1omCul;7 be weighing up an extension for that it will be allowing payment 0vbm;vv;vķ-[;ub|-vu;1;m|Ѵ service providers in the online reported that regulators in the gambling hub to delay compliance country had cited concerns over the with EU rules on SCA. 7-|-Ŋruo|;1ঞom;Ѵ;l;m|vo=" Ƒĺ vbm;vv;vbѴѴ0;-ѴѴo;7|oruo71;-lb]u-ঞomrѴ-m=ou compliance with the regulatory technical standards of SCA. Liechtenstein Liechtenstein’s FMA has prepared the Slovakia m-ঞom-Ѵ|u-mvrovbঞomo=" Ƒķ_b1_ Banks and payment service providers is scheduled to come into force on 1 bm"Ѵo-hb--u;Cm-Ѵbvbm]ru;r-u-ঞomv October 2019. to implement the provision of SCA for The FMA, like most of the EU, will payments. =ѴѴ-rrѴ"-[;u-|u-mvbঞom-Ѵr;ubo7o=ƐѶlom|_vĺ $_;-ঞom-Ѵ-mho="Ѵo-hb-bv An FMA spokesperson says it hopes to work together with 1omvѴঞm]b|_|_;"Ѵo-hb-m0-mhbm]1ollmb|om|_; |_;bm7v|u|o1u;-|;-tb1h-m7vloo|_blrѴ;l;m|-ঞom best way to implement SCA. of SCA in Liechtenstein. Slovenia finland A spokesperson for the Bank of The Financial Supervisory Authority Slovenia tells EPI that it intends to (Fin-FSA) in Finland has not yet taken decide whether to allow limited -v|-m7om-77bঞom-Ѵঞl;=ou|_; -77bঞom-Ѵঞl;=our-l;m|v;ub1; blrѴ;l;m|-ঞomo="ķ0|bѴѴvoom ruob7;uv|olb]u-|;|o-|_;mঞ1-ঞom r-uঞ1br-|;bm7bv1vvbomvb|_|_; approaches that comply with SCA. EBA on the subject. Fin-FSA released a statement in June urging merchants to be prepared for the original September deadline.

Czech Republic $_;;1_-ঞom-Ѵ-mhŐőbv mo-vvbvঞm]|_; bm7;|;ulbmbm] _-|Ѵblb|;7-77bঞom-Ѵঞl;bv appropriate to reach full compliance Croatia with the SCA requirements in the Czech Republic and the EU, and will vroh;vr;uvom=ou|_;uo-ঞ-m EPI factor the EBA’s decision into its supervisory approach. -ঞom-Ѵ-mh|;ѴѴv |_-|ķmঞѴ the EBA makes a further public CNB says it is paramount that customers should be able to announcement, it will not be l-h;r-l;m|vķbm1Ѵ7bm]omѴbm;ķ-[;u"|-h;v;@;1|ĺ expressing any opinion on the issue.

Norway Spain ou-Ľvu;]Ѵ-|ouķ bm-mvঞѴvm;|ķ The Bank of Spain is currently in has agreed to provide an extension discussions about what to do in terms =oul;u1_-m|vbm-m-;lr||o-ob7 consequences for users who pay by o="blrѴ;l;m|-ঞomĺ card when shopping online. |bv-;lrঞm]|o7;|;ulbm;ķbm Payment service providers may be granted an extension by 1omvѴ|-ঞomb|_|_;bm7v|uķ-ѴѴ|_; -ubovblrѴb1-ঞomvo="ĺ vr;1b-Ѵ-]u;;l;m|b|_ bm-mvঞѴvm;|ĺ

18 | August 2019 | Electronic Payments International country snapshot | japan

country snapshot: JAPAN japan

Credit cards remain the preferred type

-r-mĽvr-l;m|Ѵ-m7v1-r;1omঞm;v ;0b|1-u7r;m;|u-ঞombv;u_b]_bm ;vrb|;|_;buѴo;ur;m;|u-ঞomķ to be dominated by cash, which Japan, with each individual holding over credit cards are the preferred card type, Jaccounted for 76.2% of the overall three debit cards in 2018, supported by -11omঞm]=ouƖѶѷo=|_;|o|-Ѵr-l;m| payment volume in 2018. |_;1om|uĽvv|uom]0-mh;7rorѴ-ঞomĺ |u-mv-1ঞom-Ѵ;bmƑƏƐѶĺ$_;rorѴ-ub| )b|_]o;uml;m|bmbঞ-ঞ;v|oruolo|; o;;uķv;_-v0;;mlov|Ѵ1omCm;7|o of credit cards is largely a result of their ;Ѵ;1|uomb1|u-mv-1ঞomv-m7]uobm] cash withdrawals at ATMs, and the cards associated reward programmes, which are payment infrastructure, payment cards are rarely used for payments. 1omvb7;u;7=-ulou;0;m;C1b-Ѵ|_-m|_ov; gained prominence during 2014-2018. Overall, ATM cash withdrawals o@;u;7=ou7;0b|-m7ru;r-b71-u7vĺ The upcoming 2020 Olympic and accounted for 87.9% of the total debit Another important factor is wider Paralympic Games are expected to 1-u7|u-mv-1ঞom-Ѵ;bmƑƏƐѶĺ$_bvbv-| acceptance, with credit cards now provide impetus to the country’s cards and least partly a result of limited consumer accepted by all types of merchants. Issuers payments industry. To supplement these awareness of the ability to use debit cards have also partnered with merchants to global events, all the country’s major banks at the POS. -u-1|m;1v|ol;uv-m7Ѵ-m1_1oŊ are making their payment infrastructure Debit cards are also unpopular with branded credit cards. 1olr-ঞ0Ѵ;b|_=ou;b]mŊbvv;71-u7vķ-m7 l;u1_-m|v7;|o|_;buѴom]v;Ѵ;l;m| Japan is one of the few countries to -u;-Ѵvobmv|-ѴѴbm]$v-|Ѵo1-ঞomvb|_ periods. Payments conducted via J-Debit have a crypto-friendly regulatory regime, _b]_=oo-ѴѴķv1_-v|oubv|-u-1ঞomv-m7 cards are can take three days or longer to -m7_-voL1b-ѴѴu;1o]mbv;7b|1obm-v supermarkets. reach merchants’ accounts. a legal payment instrument since April Meanwhile, issuers and payment service 2017. There has also been a gradual rise in providers are focusing on developing PAYMENT CARDS BY TYPE (MILLION) cryptocurrency acceptance at merchants, payment infrastructure via the expansion Debit Pay later _b1_-u;bm1u;-vbm]Ѵorঞm]=ou|_bv of the payment-acceptance network. l;|_o7o=r-l;m|7;|o0;m;C|vv1_ 2014 421.7 258.9 The market is also seeing developments -vѴo;u|u-mv-1ঞom=;;vķmo1_-u];0-1hv 2017 441.2 278.3 in payment card security and convenience, and cheaper acceptance from tourists. with issuers and technology companies 2018e 451.5 285.0 Large merchants such as Bic Camera and ;r;ubl;mঞm]b|_|;1_moѴo]b;vv1_-v 2022f 478.9 303.3 Yamada Denki in Japan also now accept blockchain and biometrics. "ou1;ĹѴo0-Ѵ -|- cryptocurrency payments. CARD TRANSACTION VALUES BY CARD TRANSACTION VOLUMES BY NUMBER OF ATMS AND POS TERMINALS CHANNEL ($ BILLION) CHANNEL (MILLION) (THOUSAND) ATM POS ATM POS ATM POS

2014 114.2 428.1 2014 265.1 8,148.7 2014 136.8 2,019.5 2015 110.7 461.3 2015 251.4 8,889.2 2015 136.7 2,081.8 2016 109.1 499.9 2016 250.9 9,768.8 2016 136.8 2,141.3 2017 107.6 542.3 2017 243.9 10,635.4 2017 137.0 2,201.5 2018e 106.3 587.6 2018e 238.8 11,619.6 2018e 137.1 2,255.8 2019f 105.0 634.2 2019f 235.3 12,332.0 2019f 137.1 2,310.2 2020f 103.9 675.1 2020f 231.3 12,964.0 2020f 136.4 2,350.2 2021f 102.6 715.6 2021f 227.0 13,688.6 2021f 136.0 2,382.2 2022f 101.5 752.6 2022f 223.2 14,356.3 2022f 135.5 2,420.9

www.electronicpaymentsinternational.com | 19 country snapshot | luxembourg

country snapshot: LUXEMBOURG luxembourg

);-Ѳ|_-m7_b]_Ѳ0-mh;7rorѲ-ࢼom7ub;v]uo|_

uxembourg’s payment card market is contactless payments, this trend will three cards as of 2018. Consumers are l-|u;ķb|_-_b]_r;m;|u-ঞomu-|; 1omঞm;|o7ub;1-u7|u-mv-1ঞom-Ѵ;v avid users of credit cards, which accounted Lof 4.6 cards per inhabitant. -m7oѴl;vmঞѴƑƏƑƑ-|Ѵ;-v|ĺ for 61.8% of the total card payment value Cards are the preferred payment ;0b|1-u7r;m;|u-ঞomv|-m7v-|Ɛĺƒ bmƑƏƐѶĺ-m0-mhvo@;u1u;7b|1-u7v-v bmv|ul;m|ķ-11omঞm]=ouƔƓĺƐѷo=|_; cards per individual, supported by a high part of banking packages, with card use |o|-Ѵ1omvl;ur-l;m||u-mv-1ঞom -7Ѵ|0-mh;7rorѴ-ঞomķ_b1_v|oo7-| -Ѵvo0;m;Cঞm]=uolubv;vbm7bvrov-0Ѵ; volume in 2018. Improved payment 99.2% in 2018. The entry of digital-only bm1ol;-m7_ov;_oѴ71omvlrঞomĺ infrastructure, high consumer awareness, banks such as N26 and Ferratum Bank has -mhv-Ѵvoo@;urub-|;0-mhbm]v;ub1;v ;m_-m1;7v;1ub|-m7]uobm]-7orঞom also supported debit card market growth. with premium credit cards and a range of of contactless will support growth. Frequency of debit card payments is value-added services to wealthy customers Luxembourg is also host to a number rising, registering a healthy CAGR of 5.5% as part of bundled packages. of wealthy individuals and large |obm1u;-v;=uolƕѶĺƐঞl;v-;-ubmƑƏƐƓ E-commerce in Luxembourg grew from 1ourou-ঞomvķ-m7lov|0-mhvo@;u |oƖѵĺƖঞl;vbmƑƏƐѶĺ!bvbm]v;_-v0;;m €535m ($612.9m) in 2014 to $928.5m in private banking, wealth management and supported by the availability of value- 2018, at a CAGR of 10.9%. Growth was asset management services. Credit cards added services and growing merchant supported by growing interest in online -u;lov|Ѵo@;u;7-vr-u|o=0m7Ѵ;7 acceptance of contactless debit cards. v_orrbm]ķ]o;uml;m|bmbঞ-ঞ;v-m7-m packages, while debit cards are widely u;7b|1-u7r;m;|u-ঞombv_b]_bm increasing number of online merchants. used for low-value card payments. Luxembourg, with each individual holding To capitalise on this, major banks E-commerce registered robust growth o@;ubu|-Ѵ1-u7v;1Ѵvb;Ѵ=ouomѴbm; between 2014 and 2018, and this trend PAYMENT CARDS BY TYPE (MILLION) v_orrbm]ĺ$_;--bѴ-0bѴb|o=-Ѵ|;um-ঞ; bv;r;1|;7|o1omঞm;ķruob7bm] Debit Pay later voѴঞomvv1_-v b]b1-v_ķ-v_1Ѵo7-m7 orrou|mbঞ;v=ou|_;r-l;m|vl-uh;|ĺ PayPal is also expected to further boost 2014 0.7 1.5 !bvbm]-7orঞomo=1om|-1|Ѵ;vv the e-commerce market. 2017 0.8 1.8 technology contributed to growths in In September 2018 the Ministry of the |_;r-l;m|1-u7|u-mv-1ঞomoѴl; 2018e 0.8 2.0 1omolѴ-m1_;7m-ঞom-Ѵ;Ŋ1oll;u1; -m7-Ѵ;o;u|_;r-v|C;;-uvĺ)b|_ 2022f 1.0 2.6 marketplace LetzShop, enabling local -]uobm]ml0;uo=u;|-bѴ;uv-11;rঞm] "ou1;ĹѴo0-Ѵ -|- merchants to sell goods online. CARD TRANSACTION VALUES BY CARD TRANSACTION VOLUMES BY NUMBER OF ATMS AND POS TERMINALS CHANNEL ($ BILLION) CHANNEL (MILLION) (THOUSAND) ATM POS ATM POS ATM POS

2014 3.6 8.3 2014 18.5 101.6 2014 0.5 14.0 2015 3.6 9.1 2015 18.4 111.8 2015 0.5 15.1 2016 3.9 9.7 2016 18.8 124.0 2016 0.5 13.5 2017 4.4 10.9 2017 19.9 143.1 2017 0.6 13.3 2018e 4.8 12.1 2018e 20.9 160.9 2018e 0.6 13.4 2019f 5.2 13.2 2019f 21.6 178.1 2019f 0.6 13.6 2020f 5.5 14.4 2020f 22.2 195.0 2020f 0.7 13.8 2021f 5.8 15.6 2021f 22.6 212.0 2021f 0.7 14.1 2022f 6.0 16.8 2022f 23.0 228.8 2022f 0.7 14.5

20 | August 2019 | Electronic Payments International country snapshot | uk

country snapshot: UNITED KINGDOM united kingdom

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he UK payments market is highly Brexit referendum result also leaves the deployment of contactless POS terminals, l-|u;ŋ-u]-0Ѵ;;mo;uv;u;7 future of the UK payment market unclear. coupled with backing from the big T0b|vCm-m1b-Ѵbmvঞ|ঞomvĺ !bvbm]ru;vvu;omruoC|-0bѴb|-m7 banks and consumer enthusiasm for the There were more debit cards in growing consumer preference for online convenience of contactless. 1bu1Ѵ-ঞom|_-mbm7bb7-Ѵvbm|_;&bm banking are driving digital-only banks in According to UK Finance, there 2018, by a considerable margin. Access to |_;&ĺ|ol-mh-v|_;Cuv|v1_0-mhķ were 118.9 million contactless cards =oul-ѴCm-m1b-Ѵv;ub1;vbm|_;&bv;-v and this model is also used by Starling bm1bu1Ѵ-ঞom-vo= ;1;l0;uƑƏƐƕķr -m7lov|Ѵ=u;;ķѴ;-7bm]|o-rorѴ-ঞom Bank, Monzo and Fidor Bank. from 58.7 million in 2014. The number of that is highly comfortable with credit and In September 2018, Goldman Sachs’s contactless payments made in the UK rose debit cards, both in-store and online. digital bank, Marcus, was launched in the by 97% during 2017 to 5.6 billion. These Contactless card numbers and use have UK, followed by Germany-based digital consisted of 4.9 billion contactless debit also seen strong growth in recent years, bank N26 in October, allowing customers card payments and 0.7 billion contactless with the vast majority of contactless to carry out all banking tasks 24/7 from credit card payments. users in the UK seeing the cards as -mѴo1-ঞomĺ$_;ruoѴb=;u-ঞomo=7b]b|-ѴŊ The e-commerce market value registered _;Ѵr=Ѵĺm7;;7ķb7;vru;-7-7orঞom only banks is likely to further heighten robust growth from £103.4bn ($131.9bn) o=1om|-1|Ѵ;vvŋ0-1h;70v|uom] 1olr;ঞঞombm|_;0-mhbm]vr-1;ĺ in 2014 to $212.3bn in 2018, driven bm=u-v|u1|u;ŋbv-mঞ1br-|;7|o=u|_;u Contactless payments are growing by growing internet and smartphone drive electronic payments in the country. in popularity due to retailers’ extensive r;m;|u-ঞomĺmѴbm;v_orrbm];;m|vv1_ u-m];o=1-u7Ŋbvvbm]-m7-Ѵ|;um-ঞ; PAYMENT CARDS BY TYPE (MILLION) as Black Friday and Cyber Monday also payment brands covering e-commerce and helped boost e-commerce sales. mobile proximity payments are available, Debit Pay later The UK e-commerce market is led by including Apple Pay, Samsung Pay and payment cards, with debit and credit cards 2014 96.4 63.3 Google Pay. However, there are notable -11omঞm]=oum;-uѴƓƖѷo=-ѴѴomѴbm; 2017 102.7 64.1 areas of weakness: the mobile proximity spending. PayPal, the third-most-popular r-l;m|vl-uh;|bmr-uঞ1Ѵ-ubvvঞѴѴ 2018e 104.1 65.0 online payment tool, is also mainly funded underdeveloped, and many UK consumers 2022f 109.6 66.9 by payment cards, with convenience and vঞѴѴru;=;u1-v_|o-1;u|-bm;|;m|ĺ$_; "ou1;ĹѴo0-Ѵ -|- security being key factors. CARD TRANSACTION VALUES BY CARD TRANSACTION VOLUMES BY NUMBER OF ATMS AND POS TERMINALS CHANNEL ($ BILLION) CHANNEL (MILLION) (THOUSAND) ATM POS ATM POS ATM POS

2014 241.1 768.6 2014 2,765.2 13,013.0 2014 69.4 1,781.9 2015 240.1 843.7 2015 2,725.9 14,560.0 2015 70.3 1,958.4 2016 240.8 904.6 2016 2,684.7 16,369.0 2016 70.0 2,157.1 2017 231.7 963.6 2017 2,542.4 18,251.0 2017 69.6 2,417.0 2018e 228.7 1,014.5 2018e 2,502.8 20,017.3 2018e 63.2 2,670.8 2019f 229.1 1,046.4 2019f 2,458.4 21,571.0 2019f 60.5 2,884.9 2020f 230.3 1,085.3 2020f 2,445.1 22,970.5 2020f 60.6 3,089.6 2021f 230.8 1,130.9 2021f 2,439.0 24,095.9 2021f 61.8 3,259.3 2022f 231.0 1,184.0 2022f 2,435.4 25,161.4 2022f 62.5 3,395.7

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www.electronicpaymentsinternational.com | 21 industry insight | capco

iso 20022: how it will transform financial payments

ISO 20022, the new standardised messaging scheme for financial services, will bridge a fundamental gap in payments communication. Alex Yip, consultant at Capco, looks at the potential benefits for operators

urrently, there are several domestic cross-border transactions which will, in turn, will be improved clarity in predicting cash and international payment improve confidence, resiliency and security in inflows and outflows. Organisations can Cmessaging formats, which vary in the payments process. also identify new revenue streams through structure, meaning and policies. We believe there will be a convergence product and service innovations that leverage Without a standardised system, we have the of payment types triggered by ISO 20022. the clean, structured data that makes up the same difficulty that humans encounter when payment instructions. trying to carry a conversation with someone speaking another language. BEYOND PAYMENTS ISO 20022 provides a universal way for people and technology to understand Opportunities to leverage ISO 20022 financial payment instructions, allowing Opportunities to capabilities are abundant. With the ability companies, public authorities and individuals to support both structured and unstructured to exchange payments with greater efficiency leverage ISO 20022 data, the addition of dimensions in the and accuracy. payment message can produce new insights. capabilities are Organisations can utilise rich data GLOBAL INTEROPERABILITY from ISO 20022 payment messaging to abundant forecast customer or business needs across Payment messages follow various formats all industries, and deliver a customised based on payment networks and use cases experience for each client segment. With – for example, high value versus low value, improved data quality, consistency and the batch versus real time. Variances cause Specialised payment messages including introduction of new data fields, detailed payment information to become truncated or electronic fund transfers and electronic data transactional records can be leveraged for new translated as it moves between banks, creating interchange will no longer be required, as they opportunities. a challenge for organisations to seamlessly transition to a single ISO 20022 standard that optimise payments products with multiple will be adopted over time. BRINGING IT TOGETHER financial institutions. Between jurisdictions and banks, there IMPROVED PROFITABILITY There are extensive capabilities that ISO may also be different understandings of 20022 offers to improve the payments terminology. In these situations, the sender Reducing the number of payment formats, ecosystem and gain a competitive advantage. and receiver of the payment will be required nuanced processes and support resources It is important to take a proactive rather than to communicate through external means to is beneficial. Converging towards a single reactive stance for ISO 20022 with customers, clarify the details of the payment. standard will result in lower overall IT suppliers and partners to reap the rewards. As ISO 20022 is syntax-independent, support and operational costs, decreased Organisations that are strategic in their it will align financial communication and technological footprint, easier maintenance approach to ISO 20022 can use it to deliver enhance interoperability between systems and troubleshooting. a superior customer experience, create new and jurisdictions. The standard will enable Along with improved accuracy and offerings, increase operational efficiency and, improved traceability for domestic and understanding of money movement, there ultimately, improve profitability.

22 | August 2019 | Electronic Payments International