September 2016 Issue 535 www.cardsinternational.com THE CRUCIAL COMBINATION

Cards International talks to NCR, Wincor Nixdorf and the ATMIA on ATMs

• M&A: • TECHNOLOGY: Transparency • COUNTRY SURVEYS: New Zealand, South Korea and Ukraine • GUEST COMMENTS: myPINpad & Collinson Group

CI 535.indd 1 27/09/2016 15:37:46 Multichannel digital solutions for fi nancial services providers

To fi nd out more about us please visit: www.intelligentenvironments.com

Intelligent Environments is an international provider of innovative mobile and online solutions for fi nancial services providers. Our mission is to enable our clients to always stay close to their own customers.

We do this through Interact®, our single software platform, which enables secure customer acquisition, engagement, transactions and servicing across any mobile and online channel and device. Today these are predominantly focused on , PCs and tablets. However Interact® will support other devices, if and when they become mainstream.

We provide a more viable option to internally developed technology, enabling our clients with a fast route to market whilst providing the expertise to manage the complexity of multiple channels, devices and operating systems. Interact® is a continuously evolving technology that ensures our clients keep pace with the fast moving digital landscape.

We are immensely proud of our achievements, in relation to our innovation, our thought leadership, our industrywide recognition, our demonstrable product differentiation, the diversity of our client base, and the calibre of our partners.

For many years we have been the digital heart of a diverse range of fi nancial services providers including Atom Bank, Generali Wealth Management, HRG, Ikano Retail Finance, Lloyds Banking Group and Think Money Group.

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

CONTENTS EDITOR’S LETTER 6 INTERVIEW: NCR Patrick Brusnahan catches up with Happy first birthday for US chip NCR’s Rachel Nash and Steve Nogalo to see what they think about some of the industry’s latest developments adoption

7 GUEST COMMENT: WINCOR NIXDORF ons said bank, ahead of payment networks (81%), Wincor Nixdorf managing director hey took their time about it but once the Richard Broadbent discusses the US finally shifted to chip, banks, mer - global online brands (70%), and mobile telcos importance of changing, quickly and chants and consumers are the winners. companies (64%). when neccessary On the first anniversary of the liability Just two years ago, 65% of Britons said that 8 DISTRIBUTION: ATMIA Tshift, 88% of MasterCard consumer credit cards banks were most trusted when the inaugural Visa Robin Arnfield reports on the ATM have chips, a year-on-year increase of 105%. Industry Association’s call for card Biometric Payments study was conducted. networks to abolish rules prohibiting For merchants, MasterCard reports two million Fingerprint authentication (88%) is considered higher surcharge fees for more chip-active merchants – one third of all US mer- the most secure form of payment, ahead of iris- expensive cards chants – a whopping 468% increase since October scanning (83%) and facial recognition (65%). 10 GUEST COMMENT: MYPINPAD 2015. The last snippet of positive news comes courtesy David Poole discusses how card Of the two million chip-active merchant loca- companies need to up their game of the British Retail Consortium as CI goes to press: tions, 1.3 million are regional and local merchant when it comes to online and mobile cash was used for less than half (47.15%) of all commerce locations, representing a 159% increase since Octo- retail transactions across the UK in 2015, falling ber 1, 2015. 11 AWARDS: CEPI ASIA five percentage points on the previous year. Cards International and Electronic For consumers, MasterCard reports that 90% of Almost 20% fewer transactions are made with Payments International have Americans frequently use chip cards, a 38 percent- announced the winners of the third cash than in 2011 according to the BRC. Cash dis- age point increase year-over-year. CEPI Asia Awards placement has of course been driven by retailers MasterCard is fully entitled to claim that the fig- 12 M&A: VOCALINK ures represent ‘significant progress’. investing in new payments technology and by card David Yates, CEO of VocaLink and issuers, with around 55% of cards currently in use now on the MasterCard management As an extra little nudge to US retailers yet to committee, speaks to Anna Milne adopt chip, it can flag up, again, the security angle. now featuring contactless technology. about MasterCard’s acquisition of For the record, cash (47.15%) remains ahead of VocaLink, and what the future holds MasterCard fraud data shows a 54% decrease for the two companies in counterfeit fraud costs at US retailers who have debit cards (38%), credit/charge cards (11%) and non-card payments (3.6%). 13 TECHNOLOGY: TRANSPARENCY completed or are close to completing EMV adop- At Sibos, one of the key topics of tion, when comparing April 2016 to April 2015; With a record quantity of cash in circulation, discussion was how technology counterfeit fraud costs increased by 77% year-over- an all-time high of 70,000 ATMs in the UK and can aid transparency. Anna Milne reports year among large US merchants who have not yet three million people in the UK who use cash for the migrated or have just begun the migration to chip. majority of their transactions, there remains life in 14 COUNTRY REPORT: NEW ZEALAND And while we are at it, there is positive news from cash for the foreseeable. 16 COUNTRY REPORT: SOUTH KOREA In one sense, September does witness the begin- 18 COUNTRY REPORT: UKRAINE the UK, this time courtesy of research from Visa. 20 GUEST COMMENT: COLLINSON Banks are the most trusted institution in the pro- ning of the end of paper cash in the UK, with the GROUP vision of biometric authentication for payment ser- launch of the polymer £5 note. With smartphones reaching the vices with Britons twice as likely to trust banks as It is a seismic change; polymer £10 and £20 notes peak of their popularity, there is no excuse not to invest in a feature- government agencies to store their biometric infor- will follow. rich banking experience, writes mation (60% versus 33%). Christopher Evans of Collinson Group Asked who is best placed to offer biometrics Douglas Blakey authentication to confirm identity, 85% of Brit- [email protected]

Editor: Douglas Blakey Sub-editor: Nick Midgley For more information on Timetric, visit our Tel: +44 (0)20 7406 6523 website at www.timetric.com. Director of Events: Ray Giddings Email: [email protected] As a subscriber, you are automatically Tel: +44 (0)20 3096 2585 entitled to online access to Cards Email: [email protected] Financial News Publishing, 2012 Deputy Editor: Anna Milne International. For more information, please Registered in the UK No 6931627 Tel: +44 (0)20 7406 6701 telephone +44 (0)20 7406 6536 or email Email: [email protected] Head of Subscriptions: Sharon Howley [email protected] ISSN 0956-5558 Tel: +44 (0)20 3096 2636 Unauthorised photocopying is illegal. The Senior Reporter: Patrick Brusnahan Email: [email protected] London Office contents of this publication, either in whole or Tel: +44 (0)20 7406 6526 71-73 Carter Lane part, may not be reproduced, stored in a data Email: [email protected] Sales Executive: Alex Aubrey London retrieval system or transmitted by any form or Tel: +44 (0)20 3096 2602 EC4V 5EQ Asia Editorial: Xiou Ann Lim means, electronic, mechanical, photocopying, Email: [email protected] recording or otherwise, without the prior Tel: +65 6383 4688 Asia Office permission of the publishers Email: [email protected] 1 Finlayson Green, #09-01 Customer Services: Singapore 049246 Group Publisher: Ameet Phadnis Tel: +44 (0)20 3096 2636 Tel: +65 6383 4688 Tel: +44 (0)20 7406 6561 or +44 (0)20 3096 2622 Fax: +65 6383 5433 Email: [email protected] Email: [email protected] Email: [email protected]

www.cardsinternational.com September 2016 y 1

CI 535.indd 1 27/09/2016 15:37:52 NEWS: DIGEST Cards International

PAYMENTS Wirecard to manage payment services for Wizz Air

Wirecard has signed an agreement with of this business. For us, service and inno- Reiche said: “The partnership with Wizz Hungary-based low-cost airline Wizz Air to vation are a priority and we work hard to Air for Central and Eastern Europe is really manage its payment services in the field of ensure that our passengers have a smooth positive news for us. We will not only now be card acquiring. Irrespective of location, cus- and hassle-free experience throughout all able to further expand our global portfolio, tomers can book flights online using Visa, stages of their journey. but also to demonstrate the efficacy of our MasterCard or Maestro. “One of the crucial elements is to give our payment platform.” To make the payment process more con- customers the opportunity to pay in their Wirecard Group supports all sales chan- venient, Wirecard has agreed to support pay- preferred currency. Wirecard’s first-class nels with credit card acceptance. As well ment settlement in around 20 currencies. global coverage and optimum technical as being a principal member of Visa and Wizz Air head of corporate finance and structure made the selection of our partner MasterCard, Wirecard has acquiring licence fleet acquisition Andras Sebok said: “Wizz an easy choice for us.” agreements with JCB, American Express, Air is focused on every controllable cost item Wirecard head of sales airlines Eckart Discover/Diners, UnionPay and UATP. <

MOBILE Ecobank, MasterCard launch Masterpass QR in Nigeria Ecobank Group has partnered with on a smartphones, or entering a merchant “SMEs are Africa’s future wealth creators, MasterCard to introduce Ecobank Master- identifier into a feature phone. This elimi- and Masterpass QR is designed with these pass QR, an enhancement to the Masterpass nates the need to carry cash or physical bank increasingly tech-aware businesses in mind.” digital payment service, in Nigeria. cards. MasterCard division president for Sub- The new service will allow millions of Ecobank group CEO Ade Ayeyemi said: Saharan Africa Daniel Monehin said: “Mas- SMEs in the country to accept fast and secure “Ecobank Masterpass QR serves the rapidly terpass QR is a game-changer for Nigeria’s digital payments from consumers for the first expanding needs of individuals and mer- payment industry, and we can now offer time, helping them to move from cash to dig- chants in Nigeria and across Africa who are affordable acceptance solutions to acquir- ital payments. increasingly turning to mobile for payments. ers that have previously struggled to provide Customers using Ecobank’s mobile bank- “Enabling prosperity in Africa is about expensive mobile POS devices to SMEs.” ing platform can securely pay for online bringing many millions quickly into an After Nigeria, Ecobank is set to launch and in-store purchases by scanning a Quick organised financial system on the continent Ecobank Masterpass QR in an additional 34 Response (QR) code displayed at checkout and globally. markets. <

DISTRIBUTION Co-Op Financial taps FIS solution for cardless ATM withdrawals Co-Op Financial Services has selected FIS launched during the first quarter of 2017. FIS COO of banking and payments Antho- Cardless Cash for its terminal-driving servic- FIS Cardless Cash protects consumers ny Jabbour said: “Cardless Cash combines es that enable customers to withdraw cash by decreasing the risk of card skimming innovation, efficiency, convenience and secu- from an ATM without a card. and shoulder surfing. By using FIS Mobile rity to create both a valuable end-user ser- Co-Op offers members of participat- Banking with TouchID, customers can safely vice and a new revenue source for financial ing credit unions surcharge-free access to access funds and authorise amounts without institutions. accounts through its national ATM network. inserting a card into an ATM. “This partnership extends FIS’s leadership Co-Op will add FIS Cardless Cash to its Working as a remote control for the ATM, as one of the largest cardless cash ecosystems, menu of Co-Op ATM terminal-driving ser- the mobile banking app offers privacy and and will further drive end-user adoption of vices, with a pilot programme expected to be security for consumers. the capability.”<

STRATEGY MasterCard signs partnership with Malaysia Retail Chain Association MasterCard has entered into a five-year stra- The collaboration will enable the imple- a safe and secured infrastructure for payment tegic collaboration with the Malaysia Retail mentation of new payment propositions that transactions, and also in helping them boost Chain Association (MRCA) to bring the lat- will allow merchants to realise the advan- operational efficiencies. est payment technology to 310 retail chain tages of electronic payments. “The collaboration allows us to continue operators and 20,000 outlets in Malaysia. MasterCard country manager for Malay- building on our suite of electronic payments The collaboration was announced during sia and Brunei Perry Ong said: “We are offerings as Malaysia moves away from cash the recently concluded MasterCard-MRCA pleased to embark on this collaboration and cheques. memorandum of understanding exchange- with MRCA to offer simple, safe and smart “The rollout of tech- of-documents ceremony. e-payment propositions to help retailers and nology as part of the collaboration is also MasterCard will share its knowledge and merchants grow and support them as they crucial, and underscores the importance we expertise in payment technology with retail- are increasingly going digital. place in encouraging greater adoption of ers and merchants in MRCA’s network. “These propositions are vital in providing e-payments among Malaysians.” <

2 y September 2016 www. cardsinternational.com

CI 535.indd 2 27/09/2016 15:37:54 Cards International NEWS: DIGEST

STRATEGY PayPal’s to add Visa Checkout

PayPal and Visa have expanded their rela- Visa senior vice-president for digital solu- on giving our merchants the flexibility and tionship, enabling Braintree merchants to use tions Sam Shrauger commented: “With the freedom to choose from the best commerce the Visa Checkout payment service. Visa card at the centre of the payment expe- experiences available. The online payment service enables Visa rience, Visa Checkout brings familiarity and “Offering simple and easy access to Visa cardholders to pay on any connected device trust to digital shopping offered by Brain- Checkout through Braintree’s platform rein- using their Visa account. tree’s customers – some of the most inno- forces our commitment to merchants as we From 2017, Visa Checkout will be avail- vative merchants driving ecommerce and continue adding relevant payment services to able to US merchants through Braintree’s m-commerce today.” our platform, and will be an important way SDK, a seamless integration that offers a sim- Braintree general manager Juan Benitez we continue to expand on our partnership ple way for merchants to accept payments. said: “At Braintree, we’re singularly focused with Visa.”<

RESEARCH DCC Forum: Brits falling out of love with cash abroad One in three British people no longer buy for- foreign money stolen and 9% have lost cash eign currency in cash before they go abroad, on a night out. as travellers are becoming more hesitant Jennifer Conneely, board member of the about carrying large amounts of cash. DCC Forum, said: “As the amount of cash In addition, almost two-thirds of British that we carry at home continues to fall, it’s holidaymakers use credit or debit cards to no surprise we’re also keen to ditch the notes make payments abroad. and coins while on our holidays. According to research from DCC Forum, “Carrying large amounts of cash is stress- 31% of UK citizens abroad deliberately try ful and can ruin the enjoyment of our sum- to keep the amount of foreign currency they mer getaway. take abroad to an absolute minimum. “With more of us choosing to use our debit Of the 1,199 adults surveyed, 39% stat- and credit cards abroad, however, holiday- ed that they worry about carrying large be a victim of crime. makers need to ensure that they check any amounts of foreign cash, and 33% worried This level of caution is reflected in some of fees that their bank or card provider might about leaving too much cash in their hotel the report’s other results. Almost half (46%) charge, and that they understand fully rooms. Close to one in five respondents felt of respondents have had foreign currency the options available to them at the point that carrying cash made them more likely to lost, stolen or damaged, while 10% have had of payment.”<

DIGITAL UOB launches instant digital credit card issue Singapore-based United Overseas Bank tions specific to the credit card, or replace UOB will also launch contactless ATMs by (UOB) has launched an instant digital missing cards. the end of September 2016, enabling bank card issue facility, which enables its credit United Overseas Bank Singapore head of customers to withdraw cash simply by tap- cardholders to apply for, receive and use a personal financial services Dennis Khoo said: ping a registered . digital credit card by smartphone. “Consumers today want hassle-free modes of Customers with MasterCard credit and By the end of October 2016, cardholders payment anywhere, anytime. debit cards on will be first to have will be able to use the digital credit card “With instant digital card issuance, UOB access to contactless ATMs. through the UOB Mighty app. card members can apply for and receive The services will be extended to Android The new service will allow card mem - a digital credit card in minutes and use it phone users through the UOB Mighty Pay bers to take advantage of instant promo - immediately to enjoy its benefits.” app by January 2017.<

MOBILE Visa launches solution in Kenya

Visa has launched its mVisa mobile payment M-Pesa’s stranglehold in Kenya. The mVisa payment app runs on the Visa solution in Kenya, as part of a strategy to The new service, which will operate global network, so transactions can be car- strengthen its hold in the country’s mobile through the use of quick response (QR) ried out at virtually any outlet that accepts payments market. codes, will enable bank customers to access Visa, regardless of currency. The firm, which has partnered with Co- all funds in their accounts to pay merchants The service will also enable merchants to Operative Bank, Family Bank, KCB and NIC and individuals. To complete a payment, accept e-payments directly into their bank Bank for the mVisa launch, hopes to break users scan the QR code and enter the PIN. accounts without a POS terminal. <

www.cardsinternational.com September 2016 y 3

CI 535.indd 3 27/09/2016 15:37:56 NEWS: DIGEST Cards International

REGULATION MasterCard faces £14bn claim for overcharging in UK

MasterCard has been sued for £14bn to stores when shoppers use debit or credit The EU said that the fee system was anti- ($18.72bn), the biggest legal claim in UK cards, and ultimately were passed on to competitive, and charged unnaturally inflat- history, for imposing illegal charges upon 46 consumers in the form of inflated prices for ed prices for consumers. million UK consumers. goods and services. By allowing banks charge higher fees, The claim was filed under the Consumer According to the suit, MasterCard charged MasterCard gave them an incentive to issue Rights Act 2015 on behalf of all UK con - the excessive processing fees for 16 years its cards ahead of those of its rivals. sumers at the Competition Appeal Tribunal between 1992 and 2008, earning billions of Merricks commented: “MasterCard (CAT) in London. The recently introduced pounds in the process. charged billion of pounds of unlawfully high Act paves the way for consumer groups in The case stems from the decision by the fees for its sole benefit, and to the detriment the UK to seek collective compensation on European Court of Justice in 2014, which of consumers. behalf of all individuals affected in the case. said that MasterCard violated EU antitrust “It has already been found to have broken Led by the UK’s former chief financial ser- rules by charging high interchange fees on competition law, the basis of which was to vices ombudsman Walter Merricks, the col- businesses that accept MasterCard debit and protect consumers, and that cannot be dis- lective claim has become the first to be filed credit cards. puted. under the Consumer Rights Act 2015. The suit also states that cardholders’ banks “There is no basis upon which MasterCard The case accuses MasterCard of fixing ille- charged interchange fees to retailers’ banks can contend that its card fees were not gally high interchange fees that were charged every time a consumer made a card payment. unlawful.”<

REGULATION Wells Fargo to pay $185m over illegal accounts

Wells Fargo Bank has been ordered to pay staff applied for almost 565,000 credit card a $100m fine by the US Consumer Finan - accounts that may not have been author- cial Protection Bureau (CFPB) for the ised by consumers. Many consumers were widespread illegal sales practice of secretly charged annual fees, as well as associated opening unauthorised deposit and credit finance or interest charges and other fees card accounts. on those unauthorised credit cards. Wells Fargo neither admitted nor denied CFPB Director Richard Cordray said: the allegations; however, it agreed to pay “Wells Fargo employees secretly opened the fine and submit to a consent order to unauthorised accounts to hit sales targets settle civil claims brought by the US Office and receive bonuses. of the Comptroller of the Currency (OCC), “Because of the severity of these viola - the CFPB and the city attorney. tions, Wells Fargo is paying the largest pen- The bank will pay full compensation to to secretly open deposit and credit card alty the CFPB has ever imposed. all victims, an additional $35m penalty to accounts and funded them by transfer - “Today’s action should serve notice to the OCC, and another $50m to the City ring money from customers’ authorised the entire industry that financial incentive and County of Los Angeles. accounts without their knowledge, often programmes, if not monitored carefully, The financial watchdog found that bank racking up fees or other charges. carry serious risks that can have serious incentives to boost sales led employees The probe also revealed that Wells Fargo legal consequences.”<

MOBILE JCB to bring Apple Pay to Japan Japan-based card company JCB is set to offer Watch users need to double-click the side ing with diversifying consumer needs and Apple Pay when it launches in October. button before holding it near the reader. technological advancements. JCB said the new move will enable users to JCB said the recently launched JCB Token “The simple and intuitive user experience pay with iPhone 7, iPhone 7 Plus and Apple Platform will play a vital role in the technol- that Apple Pay provides, together with JCB’s Watch Series 2 devices in stores, within apps ogy for secure mobile payments, as it replac- unique position in Japan as an issuer, acquir- and on the web. es the original card number with a unique er and payment system, will help create a The QUICPay acceptance network, device-specific number for Apple Pay users. new payment lifestyle that is both secure and launched in 2005, can now be used for Customers can also use the JCB Card to convenient for everyday use. Apple Pay transactions, enabling everyday top up prepaid cards on Apple Pay, “Apple Pay represents another giant step use at locations including convenience stores, including recharging Suica balances, and towards the realisation of a cashless soci- supermarkets and drugstores. continue to receive rewards and benefits ety. As a global brand and a pioneer in the Apple Pay users simply place a compat- offered by the credit cards. payment industry, we are committed to sup- ible device near the contactless reader, and JCB president and CEO Ichiro Hamakawa porting this trend in both Japan and abroad complete the payment using Touch ID. Apple said: “The payment industry is rapidly evolv- through our network.”<

4 y September 2016 www. cardsinternational.com

CI 535.indd 4 27/09/2016 15:37:59 Cards International NEWS: DIGEST

MOBILE CardFlight launches new mobile card readers

Mobile POS (mPOS) technology provider offer merchants the Bold B500 and Bold ware development kit product that enables Cardflight has launched two new mobile B550 devices, which are EMV-certified with mobile app developers to integrate card-pre- card readers that communicate with iOS and First Data and ready to use. sent payments into their applications without Android devices using Bluetooth technology. CardFlight said the Bold B500 is ideal performing their own EMV certifications. The Bold B550 and Bold B500 enable mer- for smaller merchants who want to accept CardFlight founder and CEO Derek Web- chants to accept payments using the latest EMV payments or prefer to connect to a ster said: “Our partners look to CardFlight mobile payment technology, including EMV card reader via Bluetooth. The Bold B550 to provide the best mobile payment accept- chip cards, contactless NFC payments and provides NFC contactless payments accept- ance technology for today and for the future. mobile wallets such as Apple Pay, Android ance, as well as EMV chip card and magnetic “Today’s announcement reinforces our Pay and . stripe support. commitment to supporting new payment Resellers of SwipeSimple, another mPOS The Bold B500 and Bold B550 will be technologies and providing the best platform solution offered by CardFlight, can now available through CardFlight SDK, a soft- for mobile merchants of all types.”<

MOBILE MOBILE Chase adds Android Pay support OT, Toppan unveil new generation of Chase, the US consumer and commercial rewards, benefits and services when using banking business of JPMorgan Chase & Chase Visa credit and debit cards. powered cards Co, has added Android Pay support for Visa Android Pay processes payments securely cardholders. using a unique masked account number, Oberthur Technologies (OT), a French pro- Chase Visa consumer credit and debit known as a token. vider of embedded security software prod- cardholders can now use Android Pay to When a purchase is made, a payment con- ucts and services, has teamed with Japanese make simple and secure payments in stores firmation will offer purchase and merchant printing firm Toppan to launch a new gen- and using mobile apps. details. This enables customers easily manage eration of powered cards in Japan. Chase cardholders will receive all the usual and track purchases. < The partnership will roll out a dynamic cryptogram payment card, known as OT STRATEGY Motion Code, and Cosmo OTP, a payment card that generates one-time passwords Citi collaborates with Grab to (OTPs). The announcement was made dur- ing the FIT exhibition in Tokyo. promote cashless payments To provide an added layer of security in e-commerce, the OT Motion Code technol- Banking giant Citi has partnered with Grab, ogy uses a mini screen that displays a ran- a Singapore-based ride-hailing platform, to dom code that changes automatically, typi- promote cashless payments. cally every hour. It replaces the conventional The partnership will be launched in five static three-digit security code printed on the markets in Asia-Pacific, beginning in the back of the card. Philippines and Singapore, with Indonesia, OT said that the solution is completely Malaysia and Thailand to follow shortly. transparent and secure and does not require The partnership will allow the bank’s the installation of plug-ins on web browsers. credit card holders to pay for Grab rides with There are no buttons to press, and the code credit card points. appears at the same location on the card as Joel Yarbrough, head of payments and before. commerce product at Grab, said: “As cus- The Cosmo OTP card includes a six-digit tomers use Grab for their regular transport e-paper display and a button used to gen- needs, many of them are choosing to go cash- erate an OTP. This functionality is typically less by adopting GrabPay for a more seam- offered by a separate dongle; however, it has less ride experience. been combined with payment in the same “We are thrilled to partner with Citi to card, reducing the banks’ distribution and extend its best-in-class loyalty capabilities to “By integrating our services into key management costs. make it easier to serve and reward our cus- applications such as Grab we also will drive OT financial services institutions business tomers in the region.” growth in our cards business via new acquisi- MD Eric Duforest said: “OT found in Top- Citi head of Asia-Pacific consumer bank- tions and increased customer loyalty.” pan the perfect partner to bring our technol- ing Anand Selva said: “We have seen that the Grab currently operates in 30 cities in Sin- ogy to the Japan market. rapid adoption of mobile and other digital gapore, Indonesia, the Philippines, Malaysia, “Our partnership will combine Top - channels has truly transformed how and Thailand and Vietnam – markets and cities pan’s expertise and knowledge of their where people bank and we are delighted to through which Citi offers consumer banking Japanese customers with OT’s innovation partner with Grab. services including credit cards.”< leadership.”<

www.cardsinternational.com September 2016 y 5

CI 535.indd 5 27/09/2016 15:38:02 INTERVIEW: NCR Cards International

Diebold Nixdorf not a ‘disruptive force’ As always, the payments market is in the middle of several big developments. With a huge merger in the ATM sector, new regulatory reports and a shift towards innovative offerings in the industry, there is much to talk about. Patrick Brusnahan catches up with NCR’s Rachel Nash and Steve Nogalo to find their views

The merger between Diebold and Wincor something we welcome. Rachel Nash, UK&I director of financial The focus on innovation services at NCR: “That’s a fairly substantial and choice we absolutely transaction in the market. In terms of the welcome. wider global merger, I think we can under- “Choice, flexibility and stand the reasons why. It’s a good geographic innovation are all there change for them and it creates an opportu- to be supported. Whether nity and increases reach.” that should be enforced or Steve Nogalo, vice-president for payment imposed seems to be the solutions at NCR: “Wincor and Diebold approach the Competition are both formidable competitors, strong in and Markets Authority the traditional ATM world, and this allows (CMA) is taking. Let’s see them to bring together their businesses geo- how the market responds graphically, making them stronger in certain to that.” regions, but it doesn’t really make them a dis- Nogalo: “The move ruptive force in the marketplace.” towards an open API eco- system in financial services Open banking is clearly a disruptive force Nash: “From a tech point of view, our cus- in the marketplace. tomers were saying they want that flexibility “Interestingly, in the UK and agility within the tech architecture they market it is being driven build. It’s a challenge. by the CMA, but I’m see- Steve Nogalo, NCR “For any of our traditional retail banking ing leading progressives in customers with a big legacy infrastructure, other geographies, who don’t have a regula- cal criteria for consumers: These are all areas it’s a real challenge to try and navigate that tory push for an open API, making moves in where start-ups or non-traditional players change.” that direction as well. You have to ask why are focusing their energies. It’s all about mak- a leading financial institution would do that. ing it easier for that consumer.” A level playing field “As a financial institution, you can unlock Nash: “The opening up of the market is a superior customer experience by exposing What does it take to win in innovation? APIs in an ecosystem Nash: “That’s the million-dollar question. of partners. You can From my perspective, none of us have the leverage to build great crystal ball, but we do know that things innovative services that will change at a speed that we’ve never seen still depend on you as before. a provider and you can Having the right environment and flexibil- augment. I think that’s ity that can adapt to change is critical. The where the opportunity fintechs do have an advantage by not having is. a legacy infrastructure, so it’s how technol- “It’s really all about ogy providers bridge that gap for those insti- ease of use and a fric - tutions that do have one.” tionless experience, as Nogalo: “The future is uncertain. The well as choice. industry is changing at an accelerated pace. “It will really come The financial institutions that are able to down to the value that invest in flexible technology platforms will consumers see in what ultimately be positioned for success. [new players] are offer- It is a significant change to the business ing versus what the mar- model in which financial institutions have ket is offering. operated. They need to identify new ways “Ease of use, consist- to monetise the services they are providing ency across channels as some of their historic revenue streams Rachel Nash, NCR and frictionless are criti- shift.”<

6 y September 2016 www. cardsinternational.com

CI 535.indd 6 27/09/2016 15:38:05 Cards International GUEST COMMENT: WINCOR NIXDORF

Does technology hold the key to relationships in banking?

Digital technologies are rapidly, and fundamentally, changing the way financial organisations and their customers think about customer service, and companies which fail to adapt quickly enough to industry- wide shifts tend to lose out, writes Richard Broadbent, MD of banking, UK and Ireland at Wincor Nixdorf

e only have to look at how customer As a result, financial institutions worldwide provide user-friendly services which align more experience has changed in almost are rolling out a broad array of initiatives that closely to their digital offerings. every sector in the last few years to place bold bets on new digital technologies, Technology can be used as a key enabler to see the extent to which technology which they expect will fundamentally change transform customer, staff and cash journeys. W how they attract and retain customers. Routine tasks can be automated to provide a has been the driving force in that evolution. These changes are driven partly by the rapid They are investing in biometrics, facial rec- speedy service for customers, and technology emergence of the ‘we want it now’ consumer. ognition technology such as Alibaba’s recently can deliver personalised services for each indi- Technology is also exclusively responsible for announced ‘smile to pay’ function, and branch vidual, displaying tailored offers which match changing expectations around the availability service automation, such as the robots designed products and services to specific customers. of services, which has created a new and some- for Japan’s Bank of Tokyo Mitsubishi UFJ. Intelligent technology not only enhances the times obsessive consumer relationship with overall banking experience, but can also deliver technology. Customers increasingly expect a Playing catch-up process, time and cost efficiencies, helping personalised experience, demand it in a shorter Experience shows that those companies which financial institutions to become more agile in timeframe than before and want it delivered fail to adapt quickly enough to industry-wide a time where adaptability is crucial. However through their channel of choice. shifts tend to lose out to those which use ongo- with customer service key, organisations need Dr Larry Rosen, professor emeritus of psy- ing technological transformation to redefine to embed innovation and technology into the chology, has discussed the possibility of this new and enrich the customer experience. Unfortu- heart of the organisation, rather than skirt on consumer relationship with technology as being nately there are a myriad of examples, but the edge of technological advances. an ‘addiction’. companies such as Kodak and Blockbuster, The use of artificial intelligence (AI) is on He says: “Addiction means you are trying to which were slow to step up to the digital the horizon. RBS, for example, has trialled its get your brain to release neurotransmitters that challenge, were eventually overcome by Luvo AI customer service assistance to inter- we have learned signal a pleasurable experience. innovative newcomers in faster, lower-cost act with staff and potentially serve customers When we are addicted to [technology] we strive digital imaging and online video streaming. in the future. AI could also have a big impact for the pleasure it brings.” In comparison to other sectors, innovation on back-end operations. Indeed, a study by Exploring this idea further, it is possible to within the financial services industry has been Deloitte went as far as saying that ‘automation see why customers are starting to draw direct somewhat restrained. One criticism levelled at using artificial intelligence might be the next links between a positive customer service and the banking sector is that it simply wasn’t ready game changer in terms of process efficiency in the technology that they use in the process. for the digital revolution due to its traditionally the financial industry’. A recent report has also identified how con- unchallenged position in the market. It continued: “Autonomics is particularly sumer demands and behaviour are changing in Certainly you can argue that as a retail con- useful in back-office centres performing high with societal trends driven by the digital cept, the branch hasn’t kept pace with changes volume, rules based work.” revolution. The findings highlighted how cus- in the digital age. Until recently, the design of Banks need to focus their strategies on tomers are more informed but less loyal and the typical UK bank branch hadn’t altered that remaining relevant and building engagement tolerant, emphasising that consumers no longer much for over 100 years, and many changes with the customer. simply make comparisons with competitors in which have taken place were as a result of con- While many financial institutions are look- the same sector, but now make direct compari- sumer demand, rather than through banking ing beyond physical branches to connect with sons across all sectors. innovation. empowered customers, the truth is that most It’s no secret that the retail banking sector is So how can the financial services industry customers want it all: mobile, online, call centre, currently going through one of the biggest peri- keep up with constantly changing technology in-person and everything in between. ods of change in history, and technology is play- and strengthen customer relationships? In the drive to deliver an integrated online ing a pivotal role in this journey. Most banks have invested heavily in smart- and offline digital bank, there’s a balance which Only last month, the industry has been debat- phones and tablet apps which make it easy for organisations need to strike between tech- ing the introduction of ‘open banking’ for all customers to conduct a wide range of banking nologies which streamline business processes customers, to be fuelled by third-party technol- activities on the go. In addition, banks are look- and deliver cost efficiencies and those which ogies and data sharing. ing beyond the pure customer touch point and improve the customer experience. Advances in technology are changing eve- tackling the much bigger issues of infrastruc- The urgent task for financial institutions is rything – especially how customers complete ture, platforms and business processes. to try to understand what truly matters to their banking journeys. In the age of the empowered As part of this broader bank transformation, customers and deliver the experience people are customer, financial institutions can no longer most high street banks are in the process of eval- looking for. Utilising technology to help deliver count on traditional channels and journeys to uating in-branch offerings, removing traditional effective customer journeys and experiences will structure customer interactions. banking barriers and utilising technology to be vital for success in today’s digital age. <

www.cardsinternational.com September 2016 y 7

CI 535.indd 7 27/09/2016 15:38:05 DISTRIBUTION: ATMIA Cards International

ATMIA calls for ATM surcharge freedom The ATM Industry Association (ATMIA) is calling on card networks such as Visa and MasterCard to abolish rules prohibiting higher surcharge fees for more expensive cards. Robin Arnfield reports on the development and the effects it is having on the US market at large

n an August 2016 position paper, ATMIA operators higher transaction fees than the remainder owned by merchants and retailers. said it ‘believes that the freedom to apply other networks, the requirement for uni- In 2010, ATMIA raised the issue of Visa a convenience (or surcharge) fee on ATM form charges means ATM operators can’t and MasterCard’s ban on discriminatory transactions is a fundamental economic recoup their costs from accepting Visa and charges for their cards at US ATMs with the I MasterCard cards.” and business right for independent ATM US Department of Justice, arguing that the deployers (IADs) and small financial institu- “The inability to vary cost-based ATM two networks were being anti-competitive. tions (FIs), and is a practice which is conducive convenience fees in response to supply and However, the DoJ chose not to intervene on to greater convenience, choice and fee trans- demand dynamics will lead inevitably to the issue, Tente says. parency for consumers’. shrinkage of the convenience ATM market, In June 2016, the US Supreme Court ATMIA is a global non-profit trade associa- as is happening already in some regional agreed to hear appeals by Visa, MasterCard, tion for all participants in the ATM industry. markets,” ATMIA says. “This, in turn, will JPMorgan Chase, Bank of America and Wells The position paper asks all card networks reduce expenditure of cash at retail locations, Fargo. The appeals asked the Supreme Court worldwide to remove any rule prohibiting dif- and damage consumer economies around the to reject three class-action lawsuits claiming ferential variable ATM convenience fees. world.” the networks and banks conspired to inflate “The removal of such restrictions stifling ATMIA argues that ‘bans and restrictions ATM access fees charged to cardholders in competitive price movements, would encour- on ATM convenience fees in various ATM violation of antitrust law, Reuters reports. age the use of more cost-effective networks networks, whether domestic, national or The plaintiffs want the Supreme Court, and make ATM networks far more competi- international, are a threat to the model of an whose next term runs from October 2016 to tive and sustainable for a dual-sector industry ATM industry servicing a broad, society-wide June 2017, to overturn an August 2015 ruling (comprising FI-owned ATMs and conveni- customer base with conveniently located, by the US Court of Appeals for the District of ence/off-premise ATMs) than is currently the competitively priced, fee-transparent ATMs Columbia Circuit on the three lawsuits. case,” ATMIA says. in urban and rural environments’. These lawsuits, two of which were brought “The National ATM Council is supportive ATMIA notes that de-installation of off- by consumers and the third by the National of the ATMIA’s call for the card networks’ premise ATMs would hurt low-income con- ATM Council and several IADs, accused rules banning variable differential surcharg- sumers with basic bank accounts because MasterCard and Visa of adopting rules to pro- ing at ATMs to be removed,” says Bruce ATMs can provide basic banking services tect themselves from competition with lower- Renard, executive director of the National such as access to money transmission servic- cost ATM networks. These rules prevented ATM Council, a Jacksonville, Florida-based es, lower transaction costs on payments and ATM operators from charging cardholders Don’t have online account details? US retail ATM trade association. receipts, and quicker access to funds. lower fees when ATM transactions were pro- “All the US card networks allow ATM cessed by lower-cost networks, the lawsuits You and your associates may be entitled to online operators to charge convenience fees to their The US alleged. customers,” says David Tente, ATMIA’s exec- Tente says the issue of differential variable They also benefited major US banks, which login credentials. The benefits of full online utive director, USA and Latin America. ATM surcharging is very important in the US were shareholders in Visa and MasterCard “After the card networks introduced rules which has 16 primary PIN-debit/ATM net- before the two networks’ IPOs, the two con- access are as follows: authorising surcharging at US ATMs and the works. This contrasts with the UK and Canada, sumer lawsuits alleged. first IAD-owned ATMs appeared in 1994, the both of which have just one shared interbank The US Court of Appeals said in August • Timely daily news updates number of ATMs in the US more than dou- ATM network, Link and Interac respectively. 2015 that the US District Court for the Dis- bled. This was because non-banks were able The US also has a much higher penetration of trict of Columbia had been wrong to decide in • Access the latest analysis to install convenience ATMs that charged for non-bank ATMs than the UK and Europe. February 2013 that consumers had no stand- • Monthly editions sent directly to your inbox usage.” According to the National ATM Coun- ing to sue and had not adequately alleged anti- The problem is that Visa and MasterCard’s cil, around 300,000 of the around 430,000 trust violations. It then remanded the three • News alerts direct to your inbox Access Fee Rules do not allow ATM operators ATMs in the US in 2014 were operated by consolidated lawsuits to the District Court for to discriminate against cards bearing Visa or IADs. further proceedings, Reuters said. • Comments from key industry influencers and leaders MasterCard branding by charging a higher The US ATM trade association estimated Tente says ATMIA is considering its strate- • Search for specific, relevant content convenience fee compared to cards routed over that three-quarters of the off-premise ATMs gies both for the Supreme Court appeals and lower-cost PIN-debit networks. deployed at US non-bank locations in 2014 for the issue of DoJ intervention on Visa and • Access the archive “Visa and MasterCard insist that any ATM were operated by IADs, with the remainder MasterCard’s Access Fee Rules. surcharges on their cards mustn’t be higher being operated by FIs. Tente says that pressure on ATM fees has a than convenience fees for cards routed over According to ATMIA, around 20% of non- negative effect on ATM deployers because of To create or activate your account please contact: other networks,” says Tente. bank ATMs in the US in 2014 were owned the thin margins in the ATM industry. “As Visa and MasterCard charge ATM by independent ATM companies, with the “ATM interchange fees have been declining [email protected]

8 y September 2016 www. cardsinternational.com www. www.privatebankerinternational.com

CI 535.indd 8 27/09/2016 15:38:10 Digital touch briefings ad copy - MF 18042016.indd 1 18/04/2016 11:15:29 Cards International DISTRIBUTION: ATMIA

in several markets around the world, including ATM deployers. We think that there may be The purpose of the US Common Debit AID the US,” he says. some loss of ATMs in the US if ATM owners is to ensure that EMV cards comply with the “Also, in many cases, a non-bank ATM decide it is too expensive to migrate their ATMs Durbin Amendment’s requirement that mer- operator has to share their surcharge fee rev- to EMV. Also, non-EMV-compliant ATM chants be provided with a choice between at enue with the retailer housing their ATM.” operators risk being disconnected by their least two unaffiliated networks for purchases Card issuers pay interchange to the owner acquirers who don’t want to carry the cost of made with debit cards. of an ATM, with ATM interchange fee rates any resulting fraud losses.” The Common Debit AID is also designed to being set by Visa, MasterCard and other PIN MasterCard’s EMV migration deadline meet concerns that with the move to EMV, US debit networks such as US-based NYCE, is October 2016, while Visa has set October ATM deployers’ already limited routing choice Pulse and Star. Visa, MasterCard and other 2017 as its deadline. is not further eroded. ATM/debit networks charge ATM owners an There has historically been limited freedom “The introduction of the Common Debit acquiring fee for each transaction for provid- at US ATMs for ATM deployers to choose AID means that, if a US debit card contains ing access to their networks. over which network to route transactions, the Common AID, then the ATM processor Currently, the gross interchange fee paid by says Renard. should be able to route the transaction over a cardholder’s issuer to a US ATM operator “This is because many US debit cards are a lower-cost PIN debit network instead of a is between $0.00 and $0.60 per transaction. proprietary cards, where the issuer has agreed costlier Visa or MasterCard ATM network,” MasterCard and Visa charge high network with MasterCard or Visa to use their network says Renard. services fees, so ATM operators receive as lit- for ATM transactions,” he says. However, there are still concerns that, tle as $0.06 –0.29 per domestic transaction “In fact, many US debit cards just contain a despite the Common Debit AID, MasterCard over these networks. However, a transaction Visa or MasterCard badge, not the badge of a and Visa may have an advantage over lower- routed over a lower-cost ATM network can PIN debit network.” cost PIN debit networks at ATMs. result in net interchange of up to $0.50. With the advent of EMV, the global card “If there is an issue with the Common AID, Compliance costs have generally been rising networks and US PIN debit networks have then the ATM transaction would default to a for ATM operators over the past decade. agreed on a standard known as the US Com- Visa or MasterCard network,” says Renard. “US ATM deployers are required to migrate mon Debit Application Identifier (AID) to “ATMIA is calling for ATM operators in their ATMs to EMV or face a fraud liability facilitate routing EMV debit card transactions the USA to have transaction routing choice at shift from Visa and MasterCard,” Tente says. to multiple payment networks supported by their ATMs,” says Tente. “EMV migration is a major expense for the issuer. “We’re very vocal about that.”<

Don’t have online account details?

You and your associates may be entitled to online login credentials. The benefits of full online access are as follows:

• Timely daily news updates • Access the latest analysis • Monthly editions sent directly to your inbox • News alerts direct to your inbox • Comments from key industry influencers and leaders • Search for specific, relevant content • Access the archive

To create or activate your account please contact: [email protected]

www.cardsinternational.com September 2016 y 9 www. www.privatebankerinternational.com

CI 535.indd 9 27/09/2016 15:38:12 Digital touch briefings ad copy - MF 18042016.indd 1 18/04/2016 11:15:29 GUEST COMMENT: MYPINPAD Cards International

The importance of security in online and mobile commerce Although advent of chip and PIN in the UK closed one door to fraudsters, the simultaneous boom in e-commerce opened another. Consumer-facing businesses need to view security as an essential and inherent part of their products and services says David Poole, business development director at myPINpad

oday, we are doing more and value security. more with our mobiles. Bank - With data breaches never far from the ing, making payments and retail headlines, consumers have never been T shopping are just a few of the more aware of the necessity of staying activities that, in the past, we would safe online and preventing their personal have had to go to the high street to do. and financial details from falling into the Now, in the digital age, and with the wrong hands. increasing dominance and capability of Earlier this year, we published a report our mobile devices, we are able to do all based on consumer research that we had these things wherever we are. carried out which demonstrated that con- While this has undoubtedly improved sumers are actually willing to add a lim- the user experience for consumers and ited amount of friction to transactions to allowed for greater interaction with such make them secure. services, it has also resulted in massive We revealed that 85% of consumers amounts of consumer data being shared would like to be notified, by text, of a over the internet. high-value transaction they had carried Organisations in the banking, financial out, and then authorise it by entering their services and retail industries, particularly PIN. the e-commerce and m-commerce sectors, Balancing security and convenience is are storing and transporting significant no easy task, but that does not mean that amounts of consumer data. security needs to be or should be compro- This includes highly sensitive informa- mised. tion including, financial data and even bio- Companies are striving to improve the user Equally, our own research has shown that metric identifiers. experience for consumers in order to increase consumers want a balanced approach of con- Organisations are now facing greater chal- sales. venience and security. lenges of leaving consumers exposed if they They are making it easier for the consumer The European Union’s upcoming Second do not operate appropriate data-protection to buy and make payments, by offering fric- Payment Services Directive (PSD2) is a step measures. tionless one-click payments. Yet this has led in the right direction. Failure to do this is resulting in greater to concerns that security is being compro- It requires payment service providers instances of data breaches, where the con- mised in favour of convenience. (PSPs) to apply ‘strong customer authenti- sumer data is obtained by hackers and then Services such as Amazon Prime and Uber cation’ (multi-factor authentication) when used to commit fraud. have adopted compelling strategies in con- payers initiate ‘an electronic payment trans- This has been occurring at an increasing sumer convenience and have reaped the action’. rate in the UK, which has now been labelled rewards; however, their pursuit of one-click If we are to fight fraud, all the entities as Europe’s capital of fraud. payments has increasingly left their custom- involved in the process need to play a part. ers open to fraud. Consumers need to be more aware of the Fraud losses get higher We believe that the technology exists that risks of fraud, and empowered to know how Fraud losses in the UK increased by 18% could help reduce many such instances of to better protect themselves. (£88.5m) in 2015. Of this, 75% (£66.7m) is fraud, but can be de-prioritised in favour of Companies need to place greater empha- card-not-present fraud, and £42.4m of this developments that are seen to have a more sis on security and proactively take action came from e-commerce. immediate commercial return. against fraudsters. The advent of chip and PIN in the UK Consumer-facing businesses need to view The fintech industry also needs to play closed one door to fraudsters, but the simul- security as an essential and inherent part of an active role, creating solutions that can taneous boom in e-commerce opened anoth- their products and services, rather than as a seamlessly integrate with the current infra- er, and criminals grabbed the opportunities secondary consideration. They need to see structure. This means working with existing available with both hands. the long-term value in providing a strong entities, rather than disrupting the current Now, with mobile taking centre stage as and secure authentication solution that is market. the dominant platform for e-commerce, also convenient for the consumer. It needs to be a collaborative effort, work- fraudsters are turning their attention to it as ing with all parties and not picking out one never before. Security for mobile commerce What do the customers want? particular area of the process as responsible has never been more important. It should also be remembered that consumers for the fraudulent conduct .<

10 y September 2016 www. cardsinternational.com

CI 535.indd 10 27/09/2016 15:38:13 Cards International AWARDS: CEPI ASIA

Winners of CEPI Asia Awards 2016 announced at Singapore gala dinner Cards International and Electronic Payments International, the leading global publications for the cards and payments sectors, with a strong focus on Asia, have announced the winners of their third CEPI Asia Awards. Congratulations to the worthy winners, and also to the highly commended nominees

he award winners were announced Ruben Kempeneer, regional director for ticipation of local and foreign institutions at a gala dinner on 8 September Timetric, told Cards International: “The across Asia-Pacific.” 2016 at the Grand Copthorne prestigious CEPI Asia Awards are the only “Furthermore, the quality of submissions T Waterfront Hotel Singapore. one of their kind that focus on innovation continues to be increasingly impressive, as a Now in its third year, the CEPI Asia within Asia’s competitive cards and pay - testament to Asia’s banks, payments provid- Awards maintain growth across categories ments space. ers, merchant acquirers and vendors’ contin- including card issuing, merchant acquiring, “They continue to expand in reach and ued push to innovative in the fast-changing payments, marketing and communications interest, with year-on-year growth in the and highly competitive payments landscape,” and technology. number of submissions received, with par- Kempeneer concluded. < CEPI Asia Awards 2016 Winners: BEST CARD DESIGN BEST INITIATIVE BEST SOCIAL MEDIA MARKETING WINNER: E.SUN BANK WINNER: CTBC Bank WINNER: TAISHIN BANK Highly Commended: RCBC Bankard BEST BRAND ENGAGEMENT PROGRAMME Highly Commended: CTBC BANK BEST CONTACTLESS CARD INITIATIVE WINNER: DBS BANK BEST INITIATIVE FOR CUSTOMER WINNER: CB BANK BEST MERCHANT ECOMMERCE SOLUTION ENGAGEMENT BEST CREDIT CARD OFFERING – WINNER: DBS BANK WINNER: DBS BANK NORTH ASIA BEST OMNI-CHANNEL PAYMENTS INITIATIVE BEST NEW PRODUCT, SERVICE OR WINNER: E.SUN BANK WINNER: STANDARD CHARTERED INNOVATION LAUNCH BEST CREDIT CARD OFFERING – BEST MERCHANT ACQUIRING TECHNOLOGY WINNER: DBS BANK SOUTH AND CENTRAL ASIA SOLUTION Highly Commended: Standard Chartered Bank WINNER: CITY BANK (BANGLADESH) WINNER: E.SUN BANK (Singapore) BEST CREDIT CARD OFFERING – Highly Commended: DBS Bank Highly Commended: E.Sun Bank SOUTHEAST ASIA BEST REMITTANCE OFFERING BEST SECURITY INITIATIVE WINNER: RCBC BANKARD WINNER: WORLDREMIT WINNER: E.SUN BANK Highly Commended: Kasikornbank Highly Commended: Emirates NBD BEST NFC-ENABLED SERVICE INITIATIVE BEST DEBIT CARD OFFERING BEST CASH MANAGEMENT SOLUTION WINNER: VERIFONE MOBILE MONEY WINNER: DBS BANK WINNER: E.SUN BANK Highly Commended: Standard Chartered BEST PREPAID CARD PRODUCT – BEST PAYMENTS INITIATIVE – OVERALL MOST INNOVATIVE DIGITAL SOLUTION – ASIA-PACIFIC WINNER: STANDARD CHARTERED BANK CONSUMER WINNER: YES BANK (SINGAPORE) WINNER: TAISHIN BANK BEST CREDIT CARD PRODUCT – ASIA-PACIFIC Highly Commended: DBS Bank Highly Commended: Verifone Mobile Money WINNER: DBS BANK BEST AFFINITY CO-BRANDED PROGRAMME Highly Commended: Maybank Highly Commended: RCBC Bankard WINNER: DBS BANK MOST INNOVATIVE DIGITAL SOLUTION – BEST COMMERCIAL CARD PRODUCT – BEST LOYALTY PROGRAMME COMMERCIAL ASIA-PACIFIC WINNER: KASIKORNBANK WINNER: RHB BANK WINNER: CIMB BANK Highly Commended: CTBC Bank BEST TECHNOLOGY IMPLEMENTATION – BEST MERCHANT PRODUCT OFFERING Highly Commended: RCBC Bankard BACK OFFICE WINNER: E.SUN BANK BEST DIGITAL MARKETING WINNER: DBS BANK Highly Commended: Panin Bank BEST MERCHANT CRM PROGRAMME WINNER: CITIBANK SINGAPORE WINNER: FIRST DATA Highly Commended: Taishin Bank BEST TECHNOLOGY IMPLEMENTATION – (ICICI MERCHANT SERVICES) BEST CSR INITIATIVE FRONT END Highly Commended: E.Sun Bank WINNER: BANK ISLAM MALAYSIA WINNER: STANDARD CHARTERED MALAYSIA BEST MERCHANT ACQUIRING INITIATIVE Highly Commended: DBS Bank Highly Commended: Panin Bank WINNER: RHB BANK BEST MARKETING CAMPAIGN – OVERALL CEPI ASIA DISRUPTOR AWARD – INDIVIDUAL Highly Commended: E.Sun Bank WINNER: KASIKORNBANK WINNER: JOSEPH CHAN, CEO, ASIAPAY MOST INNOVATIVE RETAILER ADOPTION Highly Commended: DBS BANK CEPI ASIA LEADERSHIP AWARD – INDIVIDUAL WINNER: E.SUN BANK BEST MOBILE POINT-OF-SALE INITIATIVE WINNER: MAGGY CHOU, VICE-PRESIDENT, E.SUN Highly Commended: Standard Chartered WINNER: E.SUN BANK BANK BEST PEER-TO-PEER Highly Commended: Standard Chartered CEPI ASIA LEADERSHIP AWARD – INSTITUTION WINNER: BANGKOK BEST DATA ANALYTICS PROGRAMME WINNER: STANDARD CHARTERED Highly Commended: Standard Chartered WINNER: CTBC BANK Highly Commended: Bangkok Bank

www.cardsinternational.com September 2016 y 11

CI 535.indd 11 27/09/2016 15:38:14 M&A: VOCALINK Cards International

Zapp bang wallop! VocaLink aims to bring the functionality and capability of real-time systems to home turf in the next five years.Anna Milne gets the lowdown from industry experts about MasterCard’s acquisition of VocaLink, and what its future holds

ince the news of MasterCard’s therein, citing MasterCard research, which good at doing commerce- you can’t use your acquisition of UK payment system found that across the top 50 markets around bank account at POS or to buy something operator VocaLink broke, industry the world, 50% of all payment markets are online. This is where Zapp comes in. S commentators have proffered their carried across automated clearing house “As cards dematerialise, it doesn’t matter views and opinions on what the new deal (ACH) systems. which money transmission network you use, spells for the payments ecosystem both in whether it’s a card clearing network or an the UK and abroad. Convergence of networks ACH clearing network, you’re just moving VocaLink has exported and developed “From that point of view, VocaLink- money from one bank account to another,” a real time payments system that has been regarded as a world leader in ACH- enables Yates continued. deployed in Sweden, the US, Singapore and them to have the right tools to tackle those “Our view is there will be convergence, and Thailand and is planning on bringing it home paymentflows on a global basis. all of this functionality just needs to be pro- (to the UK) in the next five years. “What ACHs have typically been very vided efficiently. Speaking to CI, David Yates, CEO of good at is transporting bulk payment and in “We think that in a world of electronic VocaLink and now also on the management doing very automated regular payments like commerce and mobile commerce, the pre- committee team at MasterCard, explained direct debits and standing orders. requisite is a real-time system, and we hap- how VocaLink views the market and its place “Traditionally, ACHs have not been very pen to have one.” <

Industry view: VocaLink’s acquisition by MasterCard could mean big changes for payments in the UK and globally

Jeremy Nicholds, strategic advisor to fintech Tom Hay, head of payments, Icon Solutions which Visa has dominated for years now. startups “MasterCard’s acquisition of VocaLink has created a “The concept could also be rolled out in Europe, “MasterCard’s acquisition of Vocalink, including its new payment powerhouse in Europe and beyond, and giving MasterCard a dominant position in alternative Zapp subsidiary, is an inspired move – albeit a move represents a win-win for both companies. (non-card) retail payments and potentially relieving which Visa would not have been allowed to make on “VocaLink knows that payments processing is a scale the downward pressure on card fees that would result from other players offering alternative payments. competition grounds. game, and having a virtual monopoly in the UK, the “It places them right back in the game with current only way to drive further scale is to pick up volumes “As real-time payments become ‘the new normal’ account-funded transactions. in mainland Europe and beyond. we may finally be seeing the convergence of card payment networks with non-card payment networks. “With Visa’s tight grip on UK debit cards unlikely “For MasterCard the rationale is twofold: The first to be broken in this new world of regulated is VocaLink’s Immediate Payments System, which is “A global MasterCard network offering real-time fees, MasterCard otherwise faced relatively slow live in Singapore and forms the basis of VocaLink’s payments of both types is a force to be reckoned transaction growth from its credit portfolios, as solution for US Faster Payments. This gives with.” well as potential exposure – and disintermediation MasterCard a presence in non-card payments, and David Parker, CEO, Polymath Consulting – from PSD2-instigated direct merchant-to-bank its global reach and network of banks would drive “This is a very logical move for MasterCard. transactions. a level of market penetration that VocaLink could Its business, one could argue, is owning the “With the Vocalink transaction they are now playing never achieve alone. infrastructure that banks and consumers rely on to in new and attractive spaces, including faster “Mastercard is now well placed to offer a pan- make payments and move money. payments and the still-emerging mobile payments European Instant Sepa Credit Transfer service, “Vocalink – both in the UK but also globally in other business. bypassing national clearing houses. markets – is in the business of creating interbank “This is a great deal for the Vocalink team, including “The second jewel in the crown is the Zapp system. and consumer bank no-scheme rails. This therefore Zapp, which MasterCard can help to internationalise. Zapp has been struggling to achieve ignition, and offers a very good fit for them. It is also another big payday for Britain’s big MasterCard’s backing could provide the boost that “How much competition authorities may be banks, and a step forward for developing electronic it needs to get it across the line. This would give concerned with the greater concentration of payments generally.” MasterCard a new route into UK debit payments, payment rails is another question.” <

12 y September 2016 www. cardsinternational.com

CI 535.indd 12 27/09/2016 15:38:21 Cards International TECHNOLOGY: TRANSPARENCY

Sibos: The race for trace(ability) A panel of banks, all members of SWIFT’s Global Payments Initiative, convened at Sibos to discuss why they signed up to SWIFT’s service in a climate of ever-increasing competition in the global payments space. One thing they agreed is transparency in payments is more valuable than speed. Anna Milne writes

anks are losing market share to The likes of Xoom, MoneyGram, West- “Gpi is, by definition, ‘same day corre- closed network systems that can ern Union, whose key advantage is having spondent banking’,” added Wachs. offer complete transparency. So a closed network system, which gpi seeks to Hunter said, “The process of getting the what are they doing about it? Well, emulate, are encroaching on the big banks’ pilot going was not arduous, we were only B piece of the payments pie. Clients have adding an extra message into our system,” a lot of them are joining SWIFT’s Global Payments Initiative (gpi) (those that aren’t become accustomed to real time tracking which was to update the network of the sta- may be joining Ripple in its new venture, and complete transparency throughout the tus of a given payment. Global Payments Steering Group). journey. He explained the only addition to the The key factor in corporate payments to Some 80% of ‘at risk’ payments are in present system was adding a moniker to the get right, for JP Morgan, is cer- bank’s payment messaging system tainty. John Hunter, managing “There is a lot of dialogue around ‘faster’ but as an identifier in the gpi network. director, USD Clearing, Treasury corporates don’t always want faster, they just need Services, JP Morgan, on the gpi certainty to provide transparency” Gpi vs. Blockchain panel at Sibos, Geneva, said of The burning question is how does gpi, this service sit alongside block- “Many new competitors in the payments the B2B segment. At risk being those pass- chain based technologies; does it compete, is space have closed systems. As a network ing through various markets and held up it under threat, is it just a cheaper interim (gpi), to agree to a standard set of SLAs and by AML differences in different markets; solution until such time as DLT truly takes methodologies allows us to compete in that equally those which get lost en route due to over? space. The Amazons, the DHLs, the FedEx’s something like a missing purpose code. Westerham alluded to the fact that the gpi have taught clients they can and should see Another problem can be a different cooperative has not ruled out implementing the payment tracked. amount of money being credited at the end DLT technology, saying: “We are all explor- “There is a lot of dialogue around ‘faster’, than was pledged at the outset, this often ing [DLT]. Corporates want payments to but corporates don’t always want ‘faster’- being due to fee charges applied at the end work, to be robust. There is a strong basis whether it’s 14 seconds or seven hours, it of the payment journey, unbeknownst to the of cooperation with gpi and further versions doesn’t matter, they just need certainty so remitter. with new technology can be built in.” they can provide transparency to Interestingly, however, none the remitter and the beneficiary.” “There are gaps, open questions re scalability and of the panel refuted that it was For both Deutsche Bank and network effects” indeed the future of payments Standard Chartered, also on the when it was put to them by an panel, the main advantage of gpi is the track- Gpi has a group of banks on board, from audience member. ing, tantamount to the same thing: transpar- Germany, the US, Brazil and China, offering Stanley Wachs, head of bank engagement, ency. a new set of rails which provides a tracker, gpi, SWIFT, moderating the panel, said DLT Gpi uses a new set of rails with existing directory and observer to endure full adher- only solved specific aspects , eg nostro vostro modus operandi (ie it is not much of a diver- ence by participants to the rules. accounts, etc. “There are gaps, open ques- sion from the status quo of payment messag- Stanley Wachs, head of bank engagement tions re scalability and network effects.” ing, and creates a network between banks so for SWIFT and chair of the panel, said the Magnus Carlsson, treasury and payments that they can streamline the payments ser- value proposition for banks was clear: to manager, Association for Financial Profes- vice, providing reliability, transparency and protect traffic, grow customer base and sionals, in response to this said there were certainty for their customers. hence market share, and save costs. still issues with blockchain technology and It seeks to address the main challenges for Swift’s gpi now has 86 banks on board that gpi is a better solution vis-à-vis compli- corporates in the B2B payments space: time since its inception in 2015, which represent ance, data privacy and sheer reach. As he delay, liquidity issues and capital informa- 70% of SWIFT traffic, indeed touting gpi as gently described it: “It has all the features in tion. “the DHL of payments”. place.” <

www.cardsinternational.com September 2016 y 13

CI 535.indd 13 27/09/2016 15:38:27 COUNTRY SURVEY: NEW ZEALAND Cards International

New Zealand all for new opportunities

Its cards and payments market is well developed, use of cash is the lowest in the OECD, and banking penetration is high; what opportunities remain in the traditionally debt-conscious New Zealand? Alternative payments and mobile wallets look to be the most likely new destinations

ew Zealand’s cards and payments February 2016, 49% of survey participants Underpenetrated pay later market industry is well developed, and the expect cash payments to cease in the next Consumers in New Zealand have tradition- country’s consumers are prolific 10 years. The country leads other OCED ally been debt-conscious. They prefer to pay N users of payment cards. countries in terms of cashless payments, with available funds rather than on credit, The country recorded the highest fre - with four of every five payments made elec- and are therefore more inclined to use debit quency of use among its Asia-Pacific peers, tronically. cards than pay later cards. with 116.2 transactions per card per year in Banks and payment companies are taking In terms of transaction value, debit cards 2015. New Zealand was followed by Aus- regular initiatives to improve financial lit- accounted for 61.9% of the overall payment tralia (109.6), South Korea (63.3), Singapore eracy in New Zealand. Initiatives like these card market in 2015. Debit card penetra- (40.9), Hong Kong (28.0), Japan (13.4) and led to high banking penetration, driving tion in New Zealand is 238.3 cards per 100 Taiwan (12.6). demand for banking products such as cur- individuals, higher than peers including Sin- New Zealand has the lowest level of cash rent accounts and debit cards. gapore (206.3), Australia (178.7) and Hong use among the Organisation for Economic The share of New Zealanders aged 15 or Kong (77.4). Co-operation and Development (OECD) above with a bank account reached 99.5% In contrast, pay later card penetration countries. in 2014, according to the World Bank’s remains low, at 57.1 cards per 100 individu- According to a survey by MasterCard in Global Findex survey. als, the lowest in the region. To increase

n VALUE OF CREDIT TRANSFERS ($BN) IN NEW n VALUE OF CHEQUE PAYMENTS ($BN) IN NEW n VALUE OF PAYMENT CARDS ($BN) IN NEW ZEALAND, 2011–2015 ZEALAND, 2011–2015 ZEALAND, 2011–2015

5,000 200 60

50 4,000 150 40 3,000

100 30 2,000 20 50 1,000 10

0 0 0

2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015

Source: Timetric Source: Timetric Source: Timetric

14 y September 2016 www. cardsinternational.com

CI 535.indd 14 27/09/2016 15:38:37 Cards International COUNTRY SURVEY: NEW ZEALAND

consumer uptake of pay later cards, banks n NEW ZEALAND’S DEBIT CARD MARKET SHARES n NEW ZEALAND’S DEBIT CARD MARKET SHARES offer various benefits such as balance trans- BY ISSUER (%), 2015 BY SCHEME (%), 2015 fer services and lower interest rates on card transactions. For instance, Bank of New Zealand Visa 3.0% (BNZ) offers the Low Rate MasterCard, MasterCard providing an interest-free balance transfer 7.6% service for 12 months, and a standard pur- ANZ Bank 23.9% chase interest rate after 12 months. Others Similarly, the Low Rate MasterCard 38.8% offered by ANZ Bank charges an annual interest rate of 13.90% on purchases, 22.95% on cash advances and 1.99% on Westpac balance transfers. 18.8% Eftpos Non-banking companies are pushing for ASB Bank 89.1% share in New Zealand’s pay later card mar- 18.5% ket. For instance, financial service provider Gem offers credit cards, personal loans, insurance and interest-free and promotional retail finance to consumers. Source: Timetric Source: Timetric The company offers a number of pric - ing benefits such as low interest rates and n NEW ZEALAND’S PAY LATER CARD MARKET n NEW ZEALAND’S PAY LATER CARD MARKET reward programmes. SHARES BY ISSUER (%), 2015 SHARES BY SCHEME (%), 2015 Gem Visa cardholders are offered 0% interest for the first six months on transac- tions above $250 (NZD357.40). Others 9.5% Focus on innovation to stay afloat With the growing importance of self-service ANZ Bank Others 27.3% channels, banks in New Zealand are intro- 31.0% ducing new digital solutions to attract cus- MasterCard tomers and remain competitive. 26.4% Westpac launched the Westpac One digi- Visa tal banking platform in February 2015, 64.0% BNZ Westpac which can be used on smartphones, tablets 22.3% and desktops to apply for everyday banking 19.4% products such as accounts, term deposits, home and personal loans, and credit cards. The launch led to a 7% annual increase in the number of digital consumers, which

reached 705,000 in September 2015. The Source: Timetric Source: Timetric bank also reported that more than half of its customers used digital channels, and 67% used mobile phones to connect with it According to a survey by MasterCard, the provide support and training to online mer- in 2015. number of consumers using contactless pay- chants. ANZ Bank updated its FastPay mobile ments in New Zealand rose by more than To provide further growth opportunities banking app in October 2015. FastPay was 20% in 2015 compared to the previous year. to online businesses, the state-owned New initially launched in October 2013, and The survey also suggests that two-thirds Zealand Post Group offers assistance to allows business customers to process pay- of consumers regularly make contactless domestic companies to develop e-commerce ments made through Visa, MasterCard and payments, mainly at supermarkets, retail operations and build customer bases by Eftpos using smartphones or tablets. stores and coffee outlets. offering a range of services such as demand With ANZ FastPay, users can have more generation, supply chain management and than one card reader, smartphone or tablet Rise in e-commerce after-sales services. linked to a single business account. E-commerce grew from $2.3bn in 2011 to New Zealanders prefer traditional meth- $3.3bn in 2015, at a CAGR of 9.63%. Wide- ods such as payment cards and credit trans- Increasing adoption of contactless spread digital access in the form of growing fers to pay for online purchases. Quick payments using contactless cards internet and mobile penetration rates is a However, emerging payments such as have grown in popularity among both key driver for the growth of e-commerce in digital and mobile wallets, and voucher- consumers and retailers in New Zealand, New Zealand. based payments are also increasingly being with the number of retail outlets accepting E-commerce growth is also partly driven used for e-commerce transactions. goMon- contactless payments rising. ANZ, Westpac, by the availability of e-commerce design and ey Wallet by ANZ and Visa Checkout are ASB, BNZ and Kiwi Bank all offer cards development websites, which help to develop among the latest alternative payments intro- with contactless functionality. e-commerce sites and email marketing, and duced in the country.<

www.cardsinternational.com September 2016 y 15

CI 535.indd 15 27/09/2016 15:38:41 COUNTRY SURVEY: SOUTH KOREA Cards International

Competition hotting up in South Korea

South Korean consumers are prolific users of payment cards, and the market is mature and well developed. Market focus has recently shifted from products to channels and services, and non-bank companies – telecoms and mobile companies in particular – are looking to compete with more traditional operators

outh Korea has long been a well- Strategies such as personalised card sung and LG, and telecoms operators such developed payment card market. designs and segment-specific promotions as SK Telecom have all launched contactless Korean consumers are among the and benefits have increasingly been used m-payment solutions. S region’s most prolific users of pay- over the last five years. Samsung launched the Samsung Pay ment cards, with a frequency of use of 63.3 m-payment service in South Korea in per card per year – higher than Singapore Telecoms and mobile push contactless August 2015; transactions worth $1bn with 40.9, Hong Kong with 28.0, Japan with Growth in contactless mobile payments (KRW1.2trn) have since been made using 13.4 and Taiwan with 12.6. (m-payment) is expected to accelerate in the service. Between 2011 and 2015, South Korea’s South Korea, as telecoms and mobile opera- Similarly, LG introduced the LG Pay payment card market changed rapidly, with tors actively promote contactless technology contactless m-payment solution in Novem- the focus of innovation shifting from prod- as part of efforts to improve the user experi- ber 2015, allowing users to make payments ucts to channels and services. ence and retain customers. using LG smartphones. Although issuers continue to develop new These companies are increasingly striving SK Telecom launched its T-Pay contactless products, this tends to be little more than to position themselves as competitors rather m-payment service in March 2016, and has fine-tuning and modification of existing than service partners to payment companies: already registered more than 100,000 sub- products. Major handset manufacturers such as Sam- scribers.

n VALUE OF CREDIT TRANSFERS ($BN) IN SOUTH n VALUE OF CHEQUE PAYMENTS ($BN) IN SOUTH n VALUE OF PAYMENT CARDS ($BN) IN SOUTH KOREA, 2011–2015 KOREA, 2011–2015 KOREA, 2011–2015

800 20,000 8,000

7,000 700

15,000 6,000 600

5,000 500

10,000 4,000 400

3,000 300

5,000 2,000 200

1,000 100

0 0 0

2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015

Source: Timetric Source: Timetric Source: Timetric

16 y September 2016 www. cardsinternational.com

CI 535.indd 16 27/09/2016 15:38:48 Cards International COUNTRY SURVEY: SOUTH KOREA

Regulation and data security breaches n SOUTH KOREA’S DEBIT CARD MARKET SHARES n SOUTH KOREA’S DEBIT CARD MARKET SHARES The South Korean credit card market was BY ISSUER (%), 2015 BY SCHEME (%), 2015 deeply affected by security concerns raised by leaks of credit card customer data between 2011 and 2015. In January 2014, the FSS announced Shinhan that the information of 20 million credit Card Others card users had been stolen by a temporary 15.2% 18.1% employee at the Korea Credit Bureau. In a separate incident in April 2014, the NongHyup FSS announced that hackers had stolen the Bank 14.1% MasterCard 47.9% personal data of 200,000 credit card users, Others 57.8% using some to make fake cards to transact KB Kookmin Visa around $113,859. Card 33.9% The regulator ordered all credit card 12.9% companies in the country to upgrade fraud detection to prevent similar data thefts. In addition, the government also enforced stringent regulations to curb rising credit card debt and illicit marketing practices. Source: Timetric Source: Timetric The Korean financial authorities and card issuers developed the Best Practices on Issu- n SOUTH KOREA’S PAY LATER CARD MARKET n SOUTH KOREA’S PAY LATER CARD MARKET ance of New Credit Cards and the Setting of SHARES BY ISSUER (%), 2015 SHARES BY SCHEME (%), 2015 Credit Lines in October 2012, limiting the eligibility of new credit card subscribers to adults with certain minimum credit ratings (grades 1–6), and making it mandatory to consider the cardholder’s disposable income Others when establishing a credit line. Shinhan Card 20.2% 18.0% Issuers are also required to periodically monitor cardholder statuses to ensure com- pliance. Others Samsung Card Visa 52.8% 54.9% 14.4% MasterCard Growing e-commerce market 27.1% The combined e-commerce transaction value in South Korea stood at $29.7bn in 2015, NongHyup Bank registering a compound annual growth rate 12.6% of 15.44% over the last five years. E-commerce growth in the country pro- vides significant potential for payment cards,

as it continues to be the most-preferred pay- Source: Timetric Source: Timetric ment method among online shoppers. To capitalise on this, card issuers are offering new card features with enhanced Prepaid offers growth prospects around the country and also in stores. It security measures. Prepaid cards in South Korea registered con- permits swift reloading of credit through For instance, KB Kookmin Card, in asso- stant growth between 2011 and 2015. The automatic recharging machines at subway ciation with MasterCard, launched a virtual cards are often used to pay for transport, stations, and also at convenience stores for credit card number scheme called SecurePay admission to tourist sites, shopping, accom- less than $1.30. in September 2014. modation, and gifts. A key growth driver for gift cards was the This protects users against personal infor- In South Korea, prepaid gift cards are pop- introduction of digital gift cards with stand- mation theft by giving a virtual credit card ular during holidays, or at weddings or birth ard or customised designs. Digital gift cards number instead of a real one when the con- celebrations, and are generally viewed as an were introduced by Home plus, the Shin - sumer makes a transaction with an online attractive alternative to cash. segae department store, and e-mart. retailer. All KB MasterCard users can use Government organisations are pushing Korean retailers partnered with HID the service free of charge. the growth of prepaid cards. The Korea Global to introduce customised designs, Subway virtual stores have also emerged Tourism Organisation offers the Korea Pass which could be ordered online. HID as an important e-commerce market driver. card for foreign tourists in Korea, allowing installed printers and systems in retail Virtual stores were introduced in 2011, them to load up to $442.10 for use on sub- stores, allowing customers to personalise which display products such as food, elec- ways in various cities, accommodation, and cards with digital files. tronics, office supplies and toiletries at sub- entrance fees to popular destinations. Digital gift cards have remained popular, way stations with barcodes which custom- The South Korea transport authority and are expected to remain an important ers can scan with a smartphone; the prod- offers the well-known contactless T-Money driver of the prepaid card market over the ucts are then delivered to their homes. card, which is used on transport networks next five years.<

www.cardsinternational.com September 2016 y 17

CI 535.indd 17 27/09/2016 15:38:52 COUNTRY SURVEY: UKRAINE Cards International

The light at the end of the tunnel

Badly affected by the global economic crises and with the situation in Crimea creating uncertainty, Ukraine has struggled in recent years. However, as e-commerce grows, pay later card use becomes more widespread and contactless gains traction on public transport, the market is showing promise

kraine’s economy was severely This contributed to growth in the overall n VALUE OF PAYMENT CARDS ($BN) IN UKRAINE, 2011–2015 affected by the global econom - payment card transaction volume between ic crises, and the country was 2011 and 2015. extended a financial bailout pack- 25 U age by the IMF and the EU to restore Payroll programmes dominate debit cards growth and revive its beleaguered bank- In Ukraine, payroll programs have led to 20 ing sector. widespread issue of debit cards, which However, prospects over the next five accounted for 80.4% of the total payment years are uncertain, as a result of the conflict cards in circulation in 2015. 15 in the Crimea region. Payroll card programs are gaining promi- The Ukrainian government is undertaking nence, and all major banks in the country – several initiatives to foster the banking sec- such as PrivatBank, Oschadbank, Raiffeisen 10 tor’s growth in the form of programmes to Bank Aval and UkrSibbank – offer them. promote financial inclusion, payment infra- For instance, PrivatBank, through its Sal- 5 structure modernisation and the adoption of ary Project, offers salary packages with a technologically advanced payment cards. range of benefits such as free cash withdraw- The government has also supported mod- als at any of the bank’s ATMs. 0 ernisation in the retail sector, and regula- Accountholders are offered Visa or Mas- 2011 2012 2013 2014 2015 tions introduced in September 2010 require terCard-branded debit cards. all retailers of goods and services to accept Similarly, Oschadbank offers MasterCard Source: National Bank of Ukraine and Timetric card-based payments. Electronic, MasterCard Cirrus Maestro,

18 y September 2016 www. cardsinternational.com

CI 535.indd 18 27/09/2016 15:38:59 Cards International COUNTRY SURVEY: UKRAINE

MasterCard Electronic ZP and Visa Electron n UKRAINE’S DEBIT CARD MARKET SHARES BY n UKRAINE’S DEBIT CARD MARKET SHARES BY cards for salary account holders. ISSUER (%),2015 SCHEME (%), 2015

Pay later cards steadily gain ground Pay later card transactions at ATMs were very high until 2013, as Ukrainian consum- Others ers used pay later cards to help meet short- 10.8% term financing needs and avoid liquidity Others constraints. 25.3% Banks launched a number of marketing PrivatBank MasterCard programmes and also introduced convenient 52.8% 29.0% Visa payment options, such as instalment facili- 60.2% ties, to encourage pay later card transactions at POS terminals. Raiffeisen Bank As a result, pay later card transaction vol- Aval 7.1% umes and the frequency of use at POS termi- State Savings Bank nals increased significantly from 2014. How- (Oschadbank) 14.9% ever, pay later average transaction values at POS terminals decreased, signifying more prudent consumer spending. Source: Timetric Source: Timetric

Gradual uptake of contactless n UKRAINE’S PAY LATER CARD MARKET SHARES n UKRAINE’S PAY LATER CARD MARKET SHARES Contactless technology is expected to gain BY ISSUER (%), 2015 BY SCHEME (%), 2015 prominence among Ukrainian consumers. The Ukrainian government is also actively involved in the promotion of contactless Others technology, especially on public transport. 2.3% In September 2015, the Kiev Municipal State Administration introduced contactless payments at turnstiles on the city’s sub - Others 26.8% MasterCard way, enabling passengers to pay fares with 25.3% MasterCard contactless cards. PrivatBank As of July 2016, 17 of a total 52 subway 54.0% stations in Kiev offered contactless pay - Visa ments; the remainder will be equipped with 72.8% Raiffeisen Bank contactless terminals in phases. Aval 5.7% Banks are also keen to promote contactless State Savings Bank technology, and are launching new services (Oschadbank) 12.6% to increase its uptake. The latest of these is the launch of the contactless m-payment solution by Privat- Source: Timetric Source: Timetric Bank in February 2014. Alfa Bank launched a contactless m-payment pilot project in The number of card-based payments for minals with contactless functionality. partnership with Kyivstar in January 2014. communications, utilities and mobile top-ups In January 2013, payment solution provid- is also growing. er Ingenico, in partnership with Oschadbank, E-commerce market to increase scope Another trend observed by UPC is growth launched the PINPad iPP350 contactless POS Ukraine’s e-commerce transaction value in the number of transactions on foreign terminal at all McDonald’s stores in Ukraine. stood at $1.3bn (UAH28.1bn) in 2015. websites. In 2015, AliExpress was the most According to UPC, 10,700 POS terminals, According to the Ukrainian Processing preferred foreign website where online trans- representing 49% of all POS terminals con- Centre (UPC), there was growth in the num- actions were made. nected to UPC, accept contactless payments. ber of online shops and purchases with pay- According to the central bank of Ukraine, ment cards on the internet between 2014 and Increasing number of POS terminals as of June 27, 2016 there were 88,000 con- 2015. The number of sites that accept Visa The number of POS terminals recorded a tactless-enabled POS terminals in Ukraine, and MasterCard payments grew by 27% compound annual growth rate of 12.01%, equivalent to 45.9% of the total. during the same period. rising from 123,540 in 2011 to 194,478 in The growing payment cards market MasterCard’s launch of MasterPass in July 2015; the figure is expected to increase fur- encouraged operators in the market to intro- 2016 is expected to drive online card-based ther to reach 206,155 in 2020. duce mobile POS (mPOS) terminals. For transactions. Contactless POS terminals are gaining instance, Raiffeisen Bank Aval, Visa and UPC also noted that consumers in Ukraine popularity among Ukrainian merchants. MTS Ukraine introduced the Pay-Me mPOS often pay for train, bus and air tickets with Retailers such as Metro Cash&Carry, terminal in November 2014. payment cards. Cinema, theatre and concert Silpo, ATB, Novus, MegaMarket, Arsen, The cost of the terminal is around $30, and tickets are also increasingly being purchased Intertop, Butterfly cinemas and the MaxFoxy the bank charges a 2.75% fee for payment online. fast-food network have all installed POS ter- processing.<

www.cardsinternational.com September 2016 y 19

CI 535.indd 19 27/09/2016 15:39:02 GUEST COMMENT: COLLINSON GROUP Cards International

Where next for digital engagement in financial services? Customers who are coming of age and growing in value to banks are using mobile for almost everything, writes Collinson Group’s Christopher Evans. With the smartphone market reaching saturation point, there is simply no excuse not to invest in developing a feature-rich banking experience

f you were in any doubt that mobile is It is still significant that a banking app is Apple, Samsung and Google have all stolen the platform bringing the next genera- almost considered equal in experience terms a march on the industry, and though some tion of innovation, look no further than to the branch. banks have dipped their toes in the water Pokémon Go. The future of digital engagement lies in with their own attempts, none has a sure-fire I tapping into what customers want, and deliv- winner on their hands. Since launch only a few weeks ago it has kick-started a global phenomenon, ering services that excel on mobile. When we Around 38% of the affluent global mid- reinvigorated augmented reality technology, gauged how important digital banking was to dle class has a digital wallet installed on their earned huge revenues for its creator, and consumers, 63% answered ‘very’. For mobile phones. When we look at the demographics boosted Nintendo’s share price dramatically. banking, this was 57%. So it seems obvious within that, 26% are baby boomers, 38% The fact is, mobile is now the de facto plat- to claim that consumers the world over are are Generation X, and 46% are millennials. form of choice for today’s consumer. With demanding banks launch and improve their The trend is clear: the customers who are the smartphone market reaching saturation digital offer. But how can they do that? coming of age and growing in value to banks point, there is simply no excuse not to invest The answer lies in looking at consumer are using mobile for almost everything. It is in developing a feature-rich banking experi- behaviour in adjacent industries. Fuelled by almost as if the customer has now become ence. This includes everything from check- technology and the rise in prominence of the point of sale: They choose the platform ing statements, to transferring money, paying millennials, global society has flocked to on- and the services they want, and if banks are bills, depositing cheques, opening accounts, demand culture that prioritises convenience. not meeting expectation, they will move on. and real-time customer service. We binge-watch whole TV seasons over a We saw a 4% rise in consumers agreeing In our global research into the top 10-15% weekend instead of an episode every week. that they received a consistent experience of earners, we found that 81% used apps to We summon cars at the tap of a screen, and across all channels, including digital and manage their finances, and almost two-thirds we wait at home for our groceries to come mobile, in the past 18 months. However, this (63%) agreed they made digital payments to us. The banking industry needs to emu- could be in jeopardy if investment in the digi- whenever possible. late this digitally as the millennials and the tal experience does not continue, leaving cus- The key to business success has always next crop, Generation Z, become even more tomers to feel their needs are not being met. been to be where the customer is. In decades important over the next five years. The Take, for example, a spend analysis of cus- past, that led to the deployment of country- industry needs to place the customer experi- tomer outgoings: Nearly half (48%) want wide branch infrastructure, but as the digital ence at the centre of product development. their bank to offer this. It would take some revolution took hold, the investment now Looking at the services that customers smart software to automatically catego - looks precarious at best. value, we see that convenience resonates rise spending habits, but the added value is Banks are either cutting back inventory to in banking too. The most valued account immediately apparent. save costs, or experimenting with new ideas add-ons, according to our research, are So too would be a loyalty programme that – such as being a hub for click-and-collect health insurance, travel insurance, lost card rewards customers with targeted offers based purchases – in an attempt to continue the rel- assistance, vehicle breakdown recovery and on spending. For example, if a bank could evance of the branch. identity theft protection. And yet how many notice if parents had just been on holiday The fact that 46% of respondents would banks are using their digital platforms to sell with their kids – thanks to hotel and hire car consider a branchless digital bank if they these services? bills, alongside foreign exchange charges – were to switch in future is the loudest, clear- Travel insurance obtained via a bank was they could offer a discounted spa weekend est signal yet that change is coming. the most popular add-on, but even that once they returned. This takes engagement to With banking licences for digital-exclusive was only obtained by 18% of our survey’s an emotive level that is much more likely to banks like Starling becoming more common, 6,000+ respondents. Imagine if banks effec- strengthen the customer relationship. you begin to understand just how impactful tively marketed these services, expanded into Of course, the large incumbents may not this disruption will be. new areas like airport lounge access, and find it easy to implement such a strategy, but When we asked how people like to bank, managed all interactions too. The customer the danger is, for those that delay, that chal- the results are evenly split: 29% prefer using would instantly feel a closer affinity to their lengers are already thinking about all these the website, 26% choose visiting a branch, bank, something that would go some way to things. And they also come from a culture 24% bank via an app and 21% over the upping the degree of personalisation offered where engagement is central to everything phone. The accepted reasoning for this is as well as raising trust scores too. they do. because discussing a mortgage or a loan is If the banking industry wants to go further Digital and mobile are the future, of that still something people would rather do face- to expand its digital offering, it should look there can be no doubt. The winners will be to-face, while sorting out a problem is always into integrating payment platforms into its those that fully grasp how important deliver- easier over the phone. services. ing an unbeatable customer experience is.<

20 y September 2016 www. cardsinternational.com

CI 535.indd 20 27/09/2016 15:39:03 Title Sponsor

Prepaid Summit: Europe 2016 – Conference & Awards 27 October 2016 • Principe di Savoia, Milan, Italy

Prepaid Summit: Europe 2016 brings together prepaid professionals Why Attend? and industry disruptors in an active discussion of the key issues • Hear from senior industry figures on current challenges and facing the cards industry: benchmark your success • Expanding the Prepaid Footprint • Network and share best practise with your peers in the prepaid • Capitalising on Private Label Programmes community • Identifying Latest Innovative Products Across Europe • Discover high level content and case studies delivered over four comprehensive sessions • Creating a Customer Focused and Competitive Market • at our awards dinner recognising those at the top of • Future Growth – What is Next for Prepaid? Celebrate their game The informative keynote sessions and inspiring case studies provide you with first hand exclusive insights. The informative keynote sessions and inspiring case studies provide you with first hand exclusive insights. Top industry movers and shakers will meet to debate the importance of new strategies, business practices and partnerships. We invite you to become an active voice in this discussion to shape the future of prepaid. For more details please contact Victoria Pennell on [email protected] or call +44 (0) 20 3096 2634.

Event supported by

Silver Sponsor Brand Sponsor Supported by

Untitled-6VI_Visa_ad.indd 1 1 27/09/201622/08/2016 16:0610:42 POWERED BY

Join thousands of fi nancial Intelligent Environments, the international provider services professionals who of digital fi nancial services solutions in association with have joined The Digital Retail Banker International, Banking Club to understand Cards International, Electronic Payments the future of mobile and International, Private Banker International, and Motor

online fi nancial services Finance publications.

Membership benefi ts 10% discount

for new subscribers/purchasers on:

Annual subscription to Retail Banker International, Cards International, Electronic Payments International

World Market Intelligence’s archive of over 250 Retail Banking and Cards & Payments research reports

Subscription to the Retail Banking and Cards International Intelligence Centres

World Market Intelligence Ltd.’s bespoke research and consultancy services.

Join The Club! www.thedigitalbankingclub.com Membership is free Or

For further information please email: [email protected]

TDBC RBI - final design.indd 1 10/05/2016 14:52:37